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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 27 2001
TENTH CIRCUIT
__________________________ PATRICK FISHER
Clerk
JOHNNY L. GUYTON,
Plaintiff-Appellant,
v. No. 00-3028
(D. Kan.)
OTTAWA TRUCK DIVISION, (D.Ct. No. 98-CV-2488-GTV)
KALMAR INDUSTRIES U.S.A.,
INC.,
Defendant-Appellee.
____________________________
ORDER AND JUDGMENT *
Before TACHA Chief Circuit Judge, and SEYMOUR and BRORBY, Circuit
Judges.
Mr. Guyton appeals from the district court’s grant of summary judgment in
favor of Ottawa Truck Division of Kalmar Industries U.S.A., Inc. (“Ottawa
Truck”). Mr. Guyton alleges Ottawa Truck racially discriminated against him in
violation of 42 U.S.C. §§ 2000e to 2000e-17 (“Title VII”) and 42 U.S.C. § 1981
*
This order and judgment is not binding precedent except under the doctrines of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.
(“Section 1981”), and seeks damages pursuant to 42 U.S.C. § 1981a. We have
jurisdiction pursuant to 28 U.S.C. § 1291, and affirm.
BACKGROUND
In January 1998, Mr. Guyton began working for Ottawa Truck as a
“contract drafter.” He was the only African-American employee in Ottawa
Truck’s engineering department at that time. He obtained a temporary position
“with ... the possibility of being hired later if [his] performance was okay.” As a
“contract drafter,” his responsibilities included “mak[ing] changes and
produc[ing] new drawings, as necessary, to facilitate [Ottawa Truck] building
trucks that pulled trailers.”
Drafters at Ottawa Truck used a computer aided design system loaded with
drafting software entitled “Computer Vision.” Mr. Guyton lacked experience
with Computer Vision, but was familiar with computer aided design systems.
Because of Mr. Guyton’s inexperience with Computer Vision, Mr. Brown, a
design engineer, trained him during his first week of work at Ottawa Truck.
On Mr. Guyton’s fourth day of work, his supervisor, Mr. Lehman, assigned
him a training exercise. He completed the assignment and submitted it to Mr.
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Lehman, who testified in deposition that he viewed Mr. Guyton’s drawing as
technically unsatisfactory and untimely. Mr. Lehman never proffered his
criticism to Mr. Guyton when he submitted his drawing; however, Mr. Guyton
noticed Mr. Lehman appeared displeased with his performance.
Mr. Halverson, the Director of Engineering at Ottawa Truck, fired Mr.
Guyton six days after he began working for the company. Before terminating
him, Mr. Halverson spoke with Mr. Lehman and Mr. Brown about Mr. Guyton’s
drafting performance. Mr. Lehman told Mr. Halverson he was displeased with
Mr. Guyton’s submitted drawing and drafting abilities. Mr. Brown told Mr.
Halverson “there were some basic mechanical things that [Mr. Guyton] didn’t
know how to draw.”
According to Mr. Guyton, Mr. Halverson told him of his termination,
expressed his regrets and explained, “we’re going to have to let you go because
we don’t feel that we could bring you up to speed. We thought that your technical
abilities were more than what they were, and we’re going to let you go at this
point.” Mr. Guyton then retrieved his briefcase, and left the building.
Two or three weeks after his discharge, Mr. Guyton received a telephone
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call from Mr. Vasquez, another temporary employee at Ottawa Truck. Mr.
Vasquez explained he overheard Mr. King, who at the time was Chief Engineer at
Ottawa Truck, remark “[w]e finally got rid of that nigger.” Mr. Guyton was
surprised Mr. Vasquez called him to report the racial slur because Mr. Guyton
found the people he worked with at Ottawa Truck “very nice and very polite.”
In October 1998, Mr. Guyton filed a complaint in district court alleging
racial discrimination in violation of Title VII and Section 1981, and seeking
damages pursuant to 42 U.S.C. § 1981a. After the parties filed cross-motions for
summary judgment, the district court granted Ottawa Truck’s motion and denied
Mr. Guyton’s motion. The district court held Mr. Guyton neither suffered
disparate treatment nor experienced a racially hostile work environment, and was
not entitled to punitive damages. Regarding Mr. Guyton’s disparate treatment
allegation, the district court concluded he failed to present sufficient evidence
showing Ottawa Truck’s reasons for terminating him were pretextual. On appeal,
Mr. Guyton argues he proffered sufficient prima facie and pretext evidence to
withstand summary judgment. 1
1
Mr. Guyton does not appeal, and we do not address, his hostile work
environment claim. In addition, because we affirm the district court’s summary judgment
ruling in favor of Ottawa Truck, we need not discuss: (1) Mr. Guyton’s request for
damages under 42 U.S.C. § 1981a; and (2) Ottawa Truck’s argument that an inference of
nondiscrimination arises when the same person hires and fires the employee alleging
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“We review the district court’s grant of summary judgment de novo,
applying the same legal standard used by the district court.” Simms v. Oklahoma,
165 F.3d 1321, 1326 (10th Cir.), cert. denied, 528 U.S. 815 (1999). “Summary
judgment is appropriate ‘if the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)). “Summary
judgment may be granted if the evidence is merely colorable or is not
significantly probative.” Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir.
1993). “[W]e view the evidence and draw reasonable inferences therefrom in the
light most favorable to the nonmoving party.” Simms, 165 F.3d at 1326.
DISCUSSION
Mr. Guyton relies on indirect evidence to support his claim of
discriminatory discharge under Title VII and Section 1981. 2 The elements of an
discrimination. See Griffin v. Davies, 929 F.2d 550, 554 (10th Cir. 1991) (“We will not
undertake to decide issues that do not affect the outcome of a dispute”).
2
As discussed below, Mr. Guyton claims that Ottawa Truck’s reasons for
terminating him are false, he was disparately treated, and its managers harbor racial
animus. Although he describes this as only a disparate treatment case, it is more
accurately characterized as alleging discriminatory discharge. Accordingly, we will not
limit our review exclusively to his disparate treatment allegation.
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employee’s discriminatory discharge claim are the same whether brought under
Title VII or Section 1981, and we analyze them using the burden-shifting
framework first articulated in McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973). See Kendrick v. Penske Transp. Servs., Inc., 220 F.3d 1220, 1225-26
(10th Cir. 2000). We are mindful that “[a]lthough the general rule that an
employer can discharge an at-will employee for any reason or no reason is still
valid, an employer can no longer terminate an at-will employment relationship for
a racially discriminatory reason.” Perry v. Woodward, 199 F.3d 1126, 1133 (10th
Cir. 1999), cert. denied, 529 U.S. 1110 (2000).
Pursuant to the McDonnell Douglas framework, the employee “must carry
the initial burden under the statute of establishing a prima facie case of racial
discrimination.” Kendrick, 220 F.3d at 1226 (quotation marks and citation
omitted). Once the employee establishes a prima facie case, “the burden then
must shift to the employer to articulate some legitimate, nondiscriminatory reason
for its employment action.” Id. (quotation marks and citation omitted). If the
employer satisfies his burden of production, the employee must then show that the
employer’s justification is pretextual. Id. Accordingly, “[an employee’s] prima
facie case, combined with sufficient evidence to find that the employer’s asserted
justification is false, may permit the trier of fact to conclude that the employer
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unlawfully discriminated.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 135 (2000).
A. Prima Facie Case
The district court assumed Mr. Guyton proved his prima facie case of
discrimination. To establish a prima facie case, Mr. Guyton must show: “(1) he
belongs to a protected class; (2) he was qualified for his job; (3) despite his
qualifications, he was discharged; and (4) the job was not eliminated after his
discharge.” Kendrick, 220 F.3d at 1229. Although both the parties and the
district court identified an inaccurate prima facie standard, we find it appropriate
to assume, for the purposes of this opinion, that Mr. Guyton established a prima
facie case of discrimination and proceed directly to the second and third steps of
the McDonnell Douglas analysis. Bullington v. United Air Lines, Inc., 186 F.3d
1301, 1316 n. 11 (10th Cir. 1999) (recognizing it is appropriate for this court to
focus on the pretext element of a discrimination lawsuit when the district court
concentrated its analysis on that element).
B. Legitimate, Non-Discriminatory Reason for Termination
Having assumed Mr. Guyton established his prima facie case, the burden
shifts to Ottawa Truck to provide a legitimate, non-discriminatory reason for
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terminating him. Ottawa Truck’s stated reasons for discharge are: (1) he was not
technically proficient at drafting parts for the trucking industry; and (2) it would
take too long to train him on the drafting software. Accordingly, we hold Ottawa
Truck articulated legitimate, non-discriminatory reasons for firing Mr. Guyton.
C. Pretext
To satisfy his burden of showing pretext, Mr. Guyton offers two arguments.
First, he claims Reeves obviates an employee’s obligation to show pretext. In the
alternative, Mr. Guyton argues he presented sufficient pretext evidence
demonstrating: (1) Ottawa Truck’s justifications are false – he is, in fact,
proficient and requires only minimal additional training on the drafting software;
(2) he was treated less favorably than a “similarly situated” white contract
drafter; 3 and (3) Ottawa Truck’s managers harbor racial animus.
Before examining his alternative argument, we briefly express our
disagreement with Mr. Guyton’s first assertion that Reeves eliminates the
3
In the district court, Mr. Guyton argued he was treated less favorably than Mr.
Vasquez, who, according to Mr. Guyton, was a similarly situated contract drafter. The
district court held Ottawa Truck’s decision not to terminate Mr. Vasquez failed to show
pretext. Mr. Guyton does not challenge the district court’s holding regarding Mr.
Vasquez on appeal; thus, we deem this matter waived. See State Farm Fire & Cas. Co. v.
Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1994).
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employee’s burden of showing pretext. In Reeves, the Supreme Court reiterates:
[T]he ultimate burden of persuading the trier of fact that the
[employer] intentionally discriminated against the [employee]
remains at all times with the [employee]. And in attempting to
satisfy this burden, the [employee] – once the employer produces
sufficient evidence to support a nondiscriminatory explanation for its
decision – must be afforded the opportunity to prove by a
preponderance of the evidence that the legitimate reasons offered by
the [employer] were not its true reasons, but were a pretext for
discrimination.
530 U.S. at 143 (quotation marks and citations omitted). It is evident Reeves
rejects certain circuit courts’ attempt to require an employee to introduce
sufficient evidence to find both that the employer’s reasons are false and that the
real reason is discrimination. Id. at 2104-05, 2108-09 (rejecting pretext-plus
standard). However, the case does not eliminate Mr. Guyton’s obligation to
establish his prima facie case and provide sufficient evidence to disbelieve
Ottawa Truck’s legitimate, non-discriminatory explanations for firing him. Id. at
2109 (holding “[an employee’s] prima facie case, combined with sufficient
evidence to find that the employer’s asserted justification is false, may permit the
trier of fact to conclude that the employer unlawfully discriminated”). Based on
our reading of Reeves, we hold Mr. Guyton’s first argument necessarily fails.
Therefore, we focus our attention on his alternative argument and examine his
evidence of pretext.
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1. False Justification for Termination
In his alternative argument, Mr. Guyton claims he provided sufficient
evidence showing Ottawa Truck’s reasons are false. Mr. Guyton primarily argues
his deposition testimony and affidavit, in which he claims he is proficient and
able to draft without significant additional training, creates a genuine issue of
material fact that Ottawa Truck’s reasons are false. Additionally, he cites Mr.
Vasquez’s affidavit and deposition testimony as support for his contention he is in
fact proficient and requires “very little training.” We conclude Mr. Guyton’s
subjective evaluation of his own drafting aptitude and ability to work without
substantial additional training, and Mr. Vasquez’s similar perspective, do not
create a material fact dispute, because the relevant inquiry is the decisionmaker’s
perception of the employee’s performance. See Shorter v. ICG Holdings, Inc.,
188 F.3d 1204, 1209 (10th Cir. 1999); see also Bullington, 186 F.3d at 1318.
As this court consistently recognizes, we must “look at the facts as they
appear to the person making the decision to terminate [the employee].” Kendrick,
220 F.3d at 1231; see also Shorter, 188 F.3d at 1209 (recognizing “it is the
manager’s perception of the employee’s performance that is relevant,” and “not
[the employee’s] subjective evaluation of [his] own relative performance” in
determining pretext) (quotation marks omitted). Thus, “[t]he relevant inquiry is
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not whether [the employer’s] proffered reasons were wise, fair or correct, but
whether [the employer] honestly believed those reasons and acted in good faith
upon those beliefs.” Bullington, 186 F.3d at 1318.
Mr. Halverson, the Director of Engineering, made the decision to fire Mr.
Guyton because he believed Mr. Guyton lacked proficiency in drafting parts for
the trucking industry and required substantial training on the drafting software.
Mr. Halverson solicited comments and feedback from Mr. Brown and Mr.
Lehman. According to Mr. Halverson, Mr. Brown told him that Mr. Guyton
lacked the ability to draft “basic mechanical things.” In addition, both parties
agree Mr. Lehman, who was personally familiar with Mr. Guyton’s drawings,
complained to Mr. Halverson about the quality of Mr. Guyton’s work and his lack
of drafting proficiency. Accordingly, the fact that Mr. Halverson consulted with
people familiar with Mr. Guyton’s work and received negative commentary,
suggests Mr. Halverson honestly believed his proffered reasons.
Mr. Guyton’s alleged aptitude simply does not show that when Mr.
Halverson decided to terminate him, Mr. Halverson did not honestly believe his
proffered reasons. Similarly, even if we assume Mr. Vasquez’s affidavit and
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deposition testimony are admissible, 4 the evidence attesting to Mr. Guyton’s
proficiency is insufficient to create a genuine issue of material fact on the issue of
pretext. Mr. Vasquez neither reviewed Mr. Guyton’s drafting samples nor
possessed decisionmaking or supervisory authority over Mr. Guyton; thus, Mr.
Halverson did not ask for his opinion about Mr. Guyton’s technical ability to draft
parts for the trucking industry. This evidence suggests, at most, Ottawa Truck
may have unwisely discharged Mr. Guyton, but it fails to show Mr. Halverson
dishonestly fired him. See Bullington, 186 F.3d at 1318.
With this inquiry in mind, we examine Mr. Guyton’s three ancillary
arguments. He claims pretext is shown by: (1) his trainer, Mr. Brown, provided
him with positive feedback on his drafting; (2) he drafted “actual production
work,” rather than training exercises, during his first week at Ottawa Truck; and
(3) his mechanical drawings drafted while working for other employers. After
reviewing the record, we conclude this evidence does not preclude summary
judgment for Ottawa Truck because it, too, fails to establish Mr. Halverson did
4
Mr. Vasquez’s affidavit speaks to Mr. Guyton’s drafting proficiency in general,
conclusory terms. “While an affidavit is certainly an appropriate vehicle to establish a fact
for summary judgment purposes, the affidavit must set forth facts, not conclusory
statements.” Bancoklahoma Mortgage Corp. v. Capital Title Co., 194 F.3d 1089, 1101
(10th Cir. 1999) (addressing the summary judgment requirement that “facts” be
established by evidence that would be admissible at trial).
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not honestly believe his stated reasons for terminating Mr. Guyton. We address
each argument in turn.
First, Mr. Guyton’s claim the trainer provided him with positive feedback
fails to create a genuine issue of material fact that Mr. Halverson’s reasons for
firing him are pretextual. The record is replete with evidence the trainer was not
“the person making the decision to terminate” Mr. Guyton. See Kendrick, 220
F.3d at 1231. According to the trainer, he did not recommend Mr. Guyton’s
termination, and was unaware of Mr. Halverson’s decision to do so. In fact, he
was attending another meeting when Mr. Halverson announced his decision.
Thus, we must look at the facts as they appear to Mr. Halverson only, not the
trainer. Id.
As noted above, Mr. Halverson did solicit the trainer’s assessment of Mr.
Guyton’s drafting abilities. Unlike the alleged positive feedback he gave to Mr.
Guyton, the trainer told Mr. Halverson “there were some basic mechanical things
that [Mr. Guyton] didn’t know how to draw.” In other words, drawing all
inferences in Mr. Guyton’s favor, the trainer provided positive feedback to Mr.
Guyton, but negative commentary to Mr. Halverson. However, the trainer’s
inconsistent feedback fails to cast doubt on Mr. Halverson’s honest belief in his
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reasons for firing Mr. Guyton because Mr. Halverson is “entitled to the
assumption that those people he did consult were telling the truth.” Rand v. CF
Indus., Inc., 42 F.3d 1139, 1145 (7th Cir. 1994) (acknowledging “[a]ny pretext
determination is concerned with whether the employer honestly believes in the
reasons it offers, not whether it made a bad decision.”) (quotation marks and
citation omitted).
We next examine Mr. Guyton’s argument that he allegedly handled
“production work,” rather than mere training exercises, during his first week of
work at Ottawa Truck. In essence, he suggests the trainer’s decision to assign
him production work demonstrates Ottawa Truck deemed him sufficiently
proficient and capable of drafting parts for the trucking industry on its software
without substantial additional training.
We disagree with Mr. Guyton’s contention Mr. Halverson’s reasons for
terminating him are pretext simply because his trainer assigned him production
work. As previously mentioned, the trainer was not the person who decided to
terminate Mr. Guyton. Accordingly, the trainer’s decision to assign Mr. Guyton
production work does not cast doubt on Mr. Halverson’s belief he lacked
proficiency and required substantial training. Moreover, Mr. Guyton admits in his
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deposition testimony the actual production drawings were drafted by someone
other than himself, and his job was simply to make “minor changes” to these
drawings. He never completed these minor changes because the computer
network malfunctioned; therefore, his changes were never reviewed by a
supervisor for “accuracy, content, completeness, clarity and [to] make sure that
[the drawing] was what it was supposed to be.” Thus, the trainer’s decision to
assign Mr. Guyton the task of drafting minor changes to pre-existing production
drawings, which were never reviewed by a supervisor, fails to show Mr.
Halverson did not honestly believe Mr. Guyton lacked drafting proficiency and
required substantial training.
Finally, Mr. Guyton submits three mechanical drawings to prove Mr.
Halverson’s reasons are pretext, and that he is, in fact, a proficient drafter. 5
These drawings, too, fail to create a genuine issue of material fact that Mr.
Halverson’s reasons for terminating him are pretextual.
5
At oral argument, Mr. Guyton’s counsel suggested a mechanical drawing that his
client allegedly produced while at Ottawa Truck recently surfaced and shows his
technical proficiency. However, this is nothing more than a passing comment; the
evidence was not before the district court, and is not before us now. See Thomas v.
Denny’s, Inc., 111 F.3d 1506, 1510 n. 5 (10th Cir.) (recognizing that raising an issue for
the first time at oral argument “comes too late.”), cert. denied, 522 U.S. 1028 (1977).
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The drawings lack probative value because Mr. Guyton’s affidavit and
attached resume reveal these drawings were created with the “Autocad” drafting
software, not the Computer Vision drafting software required by Ottawa Truck.
See Vitkus, 11 F.3d at 1539 (“Summary judgment may be granted if the evidence
is merely colorable or is not significantly probative.”). More importantly, it is
apparent Mr. Guyton produced these documents for employers not engaged in the
trucking industry, who presumably have different standards for drafting
proficiency than Ottawa Truck. A company must be allowed to judge for itself
whether an employee is proficient on its own software and in its industry; this
court is ill-suited to second guess such judgment based on three unrelated
mechanical drawings. See Kendrick, 220 F.3d at 1233 (recognizing a court must
not “act as a super personnel department that second guesses employers’ business
judgments”) (quotation marks and citation omitted). “Different decisionmakers
are entitled to be concerned about different things. Just as we will not dictate
employment criteria to any company, we will not require separate decisionmakers
for different, albeit related, companies to use the same criteria.” Chapman v. AI
Transport, 229 F.3d 1012, 1031 n.21 (11th Cir. 2000). Even viewing this
evidence in the light most favorable to Mr. Guyton, it fails to undermine Mr.
Halverson’s beliefs about Mr. Guyton’s drafting proficiency.
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2. Disparate Treatment
Having concluded the deposition, affidavit, and drafting sample evidence
fail to show Ottawa Truck’s proffered explanations for terminating Mr. Guyton
are false, we turn our attention to his claim he established pretext by presenting
evidence that he was treated less favorably than a white contract drafter.
The district court did not discuss whether the white employee is similarly
situated to Mr. Guyton. Pursuant to our de novo review, we conclude Mr. Guyton
raised the issue of the white employee’s differential treatment to the district court.
In Mr. Guyton’s response to Ottawa Truck’s motion for summary judgment, he
cites Mr. Vasquez’s affidavit as evidence a white drafter was “similarly situated”
to himself but treated differently. Mr. Vasquez’s affidavit states, “[s]hortly after
Mr. Guyton, was terminated, Ottawa Truck hired a Caucasian contract drafter
with no prior experience on the Computer Vision software program. This
Caucasian contract drafter was given much more training on this program than
was Mr. Guyton. The people training him included the chief engineer, Harold
King.” According to Mr. Guyton, the white drafter received preferential
treatment despite the fact that he “demonstrated no aptitude on the software
program” and “required significant hands-on training.” However, Mr. Guyton’s
assertion of disparate treatment does not create a genuine issue of material fact
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because he fails to present evidence that the white drafter is similarly situated to
himself.
An employee may “show pretext on a theory of disparate treatment by
providing evidence that he was treated differently from other similarly situated,
non-protected employees.” Kendrick, 220 F.3d at 1232; Gossett v. Oklahoma, No.
98-5084, 2001 WL 355846, at *2 (10th Cir. Apr. 10, 2001) (acknowledging
“[e]vidence sufficient to raise a fact issue on whether an [employer’s] proffered
explanation is pretextual may take a variety of forms, including evidence that the
[employer] treated the plaintiff differently from others who were similarly
situated, which we have held is especially relevant to a showing of pretext”). We
recognize “[a]n employee is similarly situated to the plaintiff if the employee
deals with the same supervisor and is subject to the same standards governing
performance evaluation and discipline.” Id. (quotation marks and citation
omitted). When determining whether Mr. Guyton is similarly situated to a
comparable employee, we “should also compare the relevant employment
circumstances, such as work history and company policy.” Id. We are also
mindful that “the failure of the plaintiff and affiant to share the same supervisor
does not preclude the consideration” of evidence when “the plaintiff contends he
is the victim of the discriminatory applicationn of a facility-wide [or company-
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wide] policy and has other evidence of that policy.” Id., at *3.
Mr. Guyton presented absolutely no evidence to indicate he and the white
drafter shared the same supervisor and trainers, and possessed comparable
drafting skills and proficiency in the trucking industry. Nor has he alleged
Ottawa Truck discriminated on the basis of race in applying a company-wide
“policy,” such as allowing a probationary period for contract drafters. See id., at
*3 (holding plaintiff alleged the school “routinely discriminated on the basis of
gender in applying its school-wide policy of allowing failing students to receive
incomplete grades and extra time to improve their performance”). Therefore, we
hold Mr. Guyton failed to show the white contract drafter was “similarly
situated”; the mere assertion of different treatment is insufficient to create a
genuine issue of material fact on the issue of pretext.
3. Circumstantial Evidence of Racial Animus
Finally, we examine whether Mr. Guyton’s additional circumstantial
evidence of racial animosity establishes pretext. Mr. Guyton contends racial
animus is demonstrable because “on the same day [Mr. Guyton] was terminated,
[Mr. King,] the chief engineer said that ‘We got rid of the nigger.’ This sort of
attitude and comment was consistent with management philosophy: [Mr.
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Guyton’s] supervisor and the Director of Engineering did nothing to stop,
discourage or report racial discrimination in the Engineering Department.” We
disagree with Mr. Guyton’s contention that this evidence is sufficient to suggest
Ottawa Truck’s reasons are pretextual.
“Language not amounting to direct evidence, but showing some racial
animus, may be significant evidence of pretext once [an employee] has set out the
prima facie case.” Jones v. Bessemer Carraway Med. Ctr., 151 F.3d 1321, 1323
(11th Cir. 1998); see also Shorter, 188 F.3d at 1209-10 (acknowledging
derogatory comments may serve as circumstantial evidence of discrimination).
After Reeves, we are mindful that these comments need not be made “in the direct
context” of the employee’s termination. 530 U.S. at 139. Moreover, Reeves
recognizes the person harboring racial animus need not be the actual
decisionmaker provided that the racially hostile individual is “principally
responsible” for the employee’s firing. 530 U.S. at 151; see also Kendrick, 220
F.3d at 1231 (recognizing other circuits’ caselaw that an employer “may be held
liable if the manager who discharged the [employee] merely acted as a rubber
stamp, or the ‘cat’s paw,’ for a subordinate employee’s prejudice, even if the
manager lacked discriminatory intent”). With these principles in mind, we
examine Mr. Guyton’s evidence of racial animus.
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Although the district court did not have the benefit of Reeves, its opinion is
not undermined by the Supreme Court’s decision. See 530 U.S. at 151. The
district court concluded “[t]here is no evidence ... that King had any input in [Mr.
Guyton’s] termination decision or that racial motivation for the decision existed
... [Mr. Guyton] has produced no evidence that King was involved at all in the
decision to terminate [him].” We agree with the district court and address the
issue in light of Reeves.
In this instance, Mr. Guyton’s circumstantial evidence of racial animosity is
insufficient to demonstrate pretext. Mr. Guyton merely attributes the racial slur
to Mr. King, notes the timing of the remark, and points out Mr. King’s job title as
chief engineer at Ottawa Truck. Presumably, Mr. Guyton recognizes Mr. King
did not actually fire Mr. Guyton, and instead is suggesting a person’s job title
alone is sufficient to establish the individual’s influence in the workplace.
Assuming this is Mr. Guyton’s argument, he misses the point.
A non-decisionmaking employee’s job title, without more, is insufficient to
establish the individual is “principally responsible” for the employee’s firing. Cf.
Russell v. McKinney Hosp. Venture, 235 F.3d 219, 221, 227-28 (5th Cir. 2000)
(recognizing the Director of Operations, who did not have the authority to fire
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plaintiff, acted as the “de facto decisionmaker” because he exerted great informal
influence over the actual decisionmaker when (1) he provided her with an
ultimatum that he would quit if she did not fire the plaintiff, and (2) his father
was CEO of the parent corporation). In this case, there is no evidence to
substantiate Mr. King was “principally responsible” for, or even involved with,
the decision to fire Mr. Guyton, or that he exerted any influence over the official
decisionmaker. Cf. Reeves, 530 U.S. at 151; Russell, 235 F.3d at 227-28. After
thoroughly reviewing the record and construing the evidence and inferences in the
light most favorable to Mr. Guyton, we hold Mr. King’s racial slur, though clearly
reprehensible, does not evidence pretext.
Having concluded Mr. King’s racial epithet fails to show Ottawa Truck’s
reasons are pretextual, we now consider Mr. Guyton’s contention that Mr.
Halverson and Mr. Lehman’s tolerance of other employee’s racial slurs
establishes pretext. Mr. Guyton cites to both men’s deposition testimony, where
they acknowledged that the word “nigger” had been used in the engineering
department, but did not know how often or by whom the slur was spoken.
As we have already mentioned, the comments need not be made “in the
direct context” of the employee’s discharge. Reeves, 530 U.S. at 151 (quotation
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marks omitted). However, Mr. Guyton fails to establish any context for these
remarks, and instead simply asserts these comments are typical of “management
philosophy.” It is obvious from the record that these alleged remarks are
unquantified, uttered by unknown employees, and occurred at some point in the
unspecified past. See Wixson v. Dowagiac Nursing Home, 87 F.3d 164, 171 (6th
Cir. 1996) (holding that the discharged employees failed to show pretext when
alleging numerous instances of disparate treatment and a hostile work
environment in conclusory terms with no reference to names, times and
occasions). Therefore, we conclude this evidence suffers fatal shortcomings, and
is insufficient to create a genuine issue of material fact on the issue of pretext.
See id.
Accordingly, we hold Mr. Guyton failed to present sufficient evidence
showing Ottawa Truck’s reasons for terminating him are pretext. We AFFIRM
the district court’s grant of summary judgment in favor of Ottawa Truck.
Entered by the Court:
WADE BRORBY
United States Circuit Judge
-23-
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Order Michigan Supreme Court
Lansing, Michigan
March 4, 2016 Robert P. Young, Jr.,
Chief Justice
Stephen J. Markman
150643(92) Brian K. Zahra
Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
PEOPLE OF THE STATE OF MICHIGAN, Joan L. Larsen,
Justices
Plaintiff-Appellee,
SC: 150643
v COA: 313670
Wayne CC: 94-000424-FH
BOBAN TEMELKOSKI,
Defendant-Appellant.
________________________________________/
On order of the Chief Justice, the second motion of defendant-appellant to extend
the time for filing his brief on appeal is GRANTED. The brief will be accepted as timely
filed if submitted on or before April 22, 2016.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
March 4, 2016
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855 P.2d 822 (1993)
The PEOPLE of the State of Colorado, Petitioner,
v.
Chris CISNEROS, Respondent.
The PEOPLE of the State of Colorado, Petitioner,
v.
Willie Louis ATES, Respondent.
Nos. 91SC467, 92SC71.
Supreme Court of Colorado, En Banc.
July 6, 1993.
Rehearings Denied July 26 and August 30, 1993.
Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., John Daniel Dailey, Deputy Atty. Gen., Robert Mark Russel, First Asst. Atty. Gen., Clement P. Engle, Asst. Atty. Gen., Appellate Section, Denver, for the People.
Cherner and Blackman, Barbara S. Blackman, Denver, for Chris Cisneros.
Karen Chilton Beverly, Duncanville, TX, for Willie Louis Ates.
Justice VOLLACK delivered the Opinion of the Court.
The People of the State of Colorado (the People) petition from the decision of the court of appeals in People v. Cisneros, 824 *823 P.2d 16 (Colo.App.1991), wherein the court of appeals affirmed respondent Chris Cisneros' convictions of second-degree burglary[1] and theft,[2] and his adjudication as a habitual criminal on the basis of four prior felony convictions, but remanded the case to the trial court to conduct an extended proportionality review of his sentence to life imprisonment with eligibility for parole after forty years.[3] The court of appeals held that an extended proportionality review was required in light of Cisneros' age[4] because, "for all practical purposes, [Cisneros] is ineligible for parole." Cisneros, 824 P.2d at 19.
The People also petition from the court of appeals decision in People v. Ates, No. 89CA1593 (Colo.App.Apr. 4, 1991) (not selected for publication), wherein the court of appeals affirmed Willie Louis Ates' conviction of possession of a controlled substance (cocaine),[5] and his adjudication as a habitual criminal on the basis of three prior felony convictions, but vacated Ates' sentence to life imprisonment,[6] and remanded the case to conduct an extended proportionality review of the sentence. As in Cisneros, the court of appeals in Ates reasoned that Ates is essentially ineligible for parole by virtue of his age.[7]
We granted the People's petitions for certiorari review of the court of appeals' conclusions in Cisneros and Ates, and consolidated the cases for our review. We first determine that an abbreviated form of proportionality review is appropriate in both Cisneros and Ates, and, after conducting such a review in each case, we reverse the judgments of the court of appeals in both Cisneros and Ates.
I.
A.
Cisneros
On April 2, 1987, a tenant returning home discovered that his apartment door was ajar and that an intruder was inside. The intruder struck the tenant several times and then escaped from the apartment building. The manager of the apartment building observed the intruder drive away in a red Toyota pickup truck. The tenant found that his dresser drawers had been ransacked, and that jewelry which he had inherited from his father, a $7,800 watch, and $1,200 in cash were missing. The tenant reported the incident to Denver police officials, and the apartment manager provided the police with the license number of the pickup truck and a description of the intruder. The police determined that Chris Cisneros owned the red pickup truck, and both the tenant and the apartment building manager positively identified Cisneros as the intruder. Cisneros was arrested the following day.
The People subsequently filed a complaint and information charging Cisneros with the offenses of second-degree burglary and theft. The People later amended the complaint and information to charge Cisneros as a habitual criminal.[8] The additional seven convictions charged included:
*824 (1) Count 3: attempted second-degree burglary[9] (1986) (sentenced pursuant to guilty plea);
(2) Count 4: second-degree burglary[10] (1982) (sentenced pursuant to guilty plea);
(3) Count 5: attempted second-degree burglary[11] (1979) (sentenced pursuant to guilty plea);
(4) Count 6: attempted possession of narcotic drug[12] (1976) (sentenced pursuant to guilty plea);
(5) Count 7: possession of burglary tools[13] (1971) (sentenced pursuant to guilty plea);
(6) Count 8: second-degree burglary[14] (1967) (sentenced pursuant to guilty plea);
(7) Count 9: receiving stolen property[15] (1960) (sentenced pursuant to plea of nolo contendere).
Cisneros collaterally attacked the prior convictions at a pretrial hearing, and the court suppressed the convictions alleged in count 7 and count 8, because Cisneros made an unrebutted prima facie showing of their invalidity. The court also granted a judgment of acquittal as to count 6 due to a technical failure of proof.
On June 22, 1989, a jury found Cisneros guilty of both of the substantive charges, and Cisneros was convicted of second degree burglary, a class 3 felony, and theft, a class 4 felony. Cisneros subsequently waived his right to a jury trial on the habitual criminal charges, and was adjudicated as a habitual criminal on the basis of four of the nine charged prior felony convictions. The four prior convictions underlying the habitual criminal adjudication included: (1) attempted second-degree burglary (1986); (2) second-degree burglary (1982); (3) attempted second-degree burglary (1979); and (4) receiving stolen property (1960). According to the pre-sentence report, Cisneros was on parole at the time that he committed the present offenses.
Prior to sentencing, Cisneros filed a motion with the trial court requesting a proportionality review[16] of the mandatory life sentence which the trial court was required to impose pursuant to the habitual criminal statute. Cisneros argued that, in light of his age, he was effectively precluded from parole consideration. Cisneros also contended that a comparison of his offense to others similarly situated would establish that imposition of the mandatory sentence required under the habitual criminal statute would constitute cruel and unusual punishment.[17]
The trial court denied Cisneros' motion for proportionality review. The trial court declined to conduct a proportionality review because an individual sentenced pursuant to the habitual criminal statute is eligible for parole, and because either the court of appeals or this court could conduct a proportionality review on appeal. In accordance with section 16-13-101(2), 8A C.R.S. (1986), of the habitual criminal statute, the trial court sentenced Cisneros to life imprisonment with eligibility for parole after forty years.[18]
On appeal, Cisneros argued that the trial court erred in denying his motion to conduct a proportionality review of his sentence. The court of appeals found that, because Cisneros was fifty-nine years old, the forty-year sentence was the equivalent *825 of a life sentence without the possibility of parole, and that Cisneros was therefore entitled to an extended proportionality review. People v. Cisneros, 824 P.2d 16, 18-19 (Colo.App.1991). The court of appeals reasoned as follows:
Under the Solem[ v. Helm, 463 U.S. 277, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983) ] ruling, an extended proportionality review is mandated by the Eighth Amendment protection against cruel and unusual punishment if the defendant is faced with a life sentence without the possibility of parole.... In our view,... the fact that defendant's life will likely end before he is eligible for parole makes this situation comparable to that in Solem v. Helm, and, therefore, an extended proportionality review is required.
Id. at 18-19. The court of appeals concluded that the record on appeal did not permit it to conduct an extended proportionality review; accordingly, the court of appeals remanded the case to the trial court with directions to conduct such a review.
The People filed a cross-petition for writ of certiorari, asserting that the court of appeals erred in holding that Cisneros was entitled to an extended proportionality review even though he was eligible for parole in forty calendar years.[19]
B.
Ates
On April 23, 1988, Colorado Springs Police officials entered an alleged crack house, pursuant to a warrant, and discovered the respondent, Willie Louis Ates, alone in one of the bedrooms. The police searched both Ates and the room, and found cocaine, a scale with cocaine residue, and paraphernalia associated with the manufacture, distribution, and consumption of crack cocaine.
The police arrested Ates and subsequently charged him with the offenses of possession of a controlled substance (cocaine),[20] and possession of a controlled substance (cocaine) with intent to distribute, dispense, or sell.[21] The People later amended the complaint and information to charge Ates as a habitual criminal based upon three prior felony convictions. The first conviction, for the sale of narcotic drugs (cocaine, two counts),[22] occurred in 1981. The second conviction, for felony menacing with a knife,[23] occurred in 1986; and the third conviction, for violation of bail bonds conditions,[24] occurred in 1987.
Prior to trial, Ates moved to dismiss the habitual criminal charges and the trial court denied this motion. The trial court reasoned as follows:
I think that the supporting criminal charges here of sale of narcotics, menacingโEven, in my opinion, bail jumping or violation bail bond conditions is not theโ certainly not the most heinous crime in the world but does carry a penalty potentially of up to eight years in prison. So society has deemed it not an unsubstantial offense. I wouldn't think that they were so minor in their nature as to constitute cruel and unusual punishment at this time.
The jury found Ates guilty of count 1, the offense of possession of a controlled substance (cocaine), a class 3 felony.[25] In bifurcated proceedings under the habitual statute, the jury subsequently determined *826 that Ates had been convicted of three prior felonies. Pursuant to section 16-13-101(2), the trial court sentenced Ates to life imprisonment without the possibility of parole for forty years.[26]
Ates appealed his convictions, arguing that his sentence constituted cruel and unusual punishment in view of the "minor" offenses underlying his conviction as a habitual criminal. He also argued that he was entitled to a proportionality review of his sentence.[27]
On appeal, the court of appeals affirmed Ates' convictions, but vacated his sentence and remanded the case to the trial court with directions to conduct an extended proportionality review. The court of appeals reasoned that
[Ates] was 40 years old at the time of sentencing and will not be eligible for parole until he reaches age 80. See ง 17-22.5-104(2)(c), C.R.S. (1986 Repl. Vol. 8A). Further, under the statutory mortality tables, one who has completed the age of 40 years has a life expectancy of 37.0 years. Section 13-25-103, C.R.S. (1987 Repl. Vol. 6A). Accordingly, for all practical purposes, [Ates] is, in effect, ineligible for parole. On that basis, we conclude that the defendant is entitled to an extended, rather than an abbreviated, proportionality review of his life sentence.
People v. Ates, No. 89CA1593, slip op. at 4 (Colo.App. Apr. 4, 1991).
C.
We granted certiorari in Cisneros to determine "[w]hether the court of appeals erred in holding that the petitioner was entitled to an extended proportionality review, although petitioner was eligible for parole in forty calendar years." Similarly, we granted certiorari in Ates to decide "[w]hether an extended proportionality review of an habitual offender sentence is required simply because the individual's life expectancy does not exceed his period of parole ineligibility."
Based upon previous decisions by this court and by the United States Supreme Court, we conclude that mitigating factors, such as the defendant's age, are irrelevant in determining whether a punishment is proportionate to the crime under the Eighth Amendment. See Harmelin v. Michigan, ___ U.S. ___, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991); Solem v. Helm, 463 U.S. 277, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983); People v. Smith, 848 P.2d 365 (Colo.1993); People v. Gaskins, 825 P.2d 30 (Colo.1992); Alvarez v. People, 797 P.2d 37 (Colo.1990); People v. Drake, 785 P.2d 1257 (Colo.1990); People v. Hernandez, 686 P.2d 1325 (Colo.1984). We further conclude that an abbreviated form of proportionality review is warranted, and that this court may conduct such a review in both Cisneros and Ates.
II.
The Eighth Amendment to the United States Constitution provides: "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." U.S. Const. amend. VIII. In interpreting the cruel and unusual punishment clause of the Eighth Amendment, the United States Supreme Court held that "a criminal sentence must be proportionate to the crime for which the defendant has been convicted." Solem, 463 U.S. at 290, 103 S.Ct. at 3009. Solem articulated a three-pronged proportionality analysis which provides as follows:
When sentences are reviewed under the Eighth Amendment, courts should be guided by objective factors that our cases have recognized. First, we look to the gravity of the offense and the harshness of the penalty....
*827 Second, it may be helpful to compare the sentences imposed on other criminals in the same jurisdiction....
Third, courts may find it useful to compare the sentences imposed for commission of the same crime in other jurisdictions.
Id. at 290-92, 103 S.Ct. at 3009-11. Because Solem's three-part test examines whether a sentence is proportionate to the crime, and whether the sentence is excessive compared with sentences given for such crimes in the same and other jurisdictions, the individual characteristics of the criminal are not at issue under the Solem test.
Relying on Solem, this court has held that an abbreviated form of the proportionality review articulated in Solem is required when a defendant, in either a habitual or a non-habitual offender case, challenges the constitutionality of a life sentence. Smith, 848 P.2d 365; Gaskins, 825 P.2d 30; Alvarez, 797 P.2d 37; Drake, 785 P.2d 1257; Hernandez, 686 P.2d 1325. As in Solem, our focus in conducting a proportionality review has consistently been whether the sentence is proportionate to the crime when considering the gravity of the offense and the harshness of the penalty. Smith, 848 P.2d 365; Gaskins, 825 P.2d 30; Alvarez, 797 P.2d 37; Drake, 785 P.2d 1257; Hernandez, 686 P.2d 1325.
In Smith, we held that Donald Eugene Smith's sentence to life imprisonment with no possibility of parole for forty years was not disproportionate, and did not violate the Eighth Amendment's prohibition against cruel and unusual punishment by virtue of Smith's age or his lack of prior felony convictions. Smith, 848 P.2d at 372. We found in Smith that the United States Supreme Court had already addressed and rejected the argument for individualized sentencing in non-capital cases based upon "mitigating" factors such as the age of the defendant. Smith, 848 P.2d at 374-75 (relying on Harmelin, ___ U.S. ___, 111 S.Ct. 2680); see Harmelin, ___ U.S. at ___, 111 S.Ct. at 2702.
Justice Scalia delivered the opinion of the Court in Harmelin with respect to part V of the opinion, wherein the Harmelin Court held that individualized sentencingโ consideration of mitigating factors such as ageโis only required in capital cases. Harmelin, ___ U.S. at ___, 111 S.Ct. at 2702. The Harmelin Court specifically considered the example of a sixty-five-year-old man sentenced to a term of life imprisonment without parole for twenty years, or even a lengthy term sentence without the possibility of parole, and acknowledged that, "[i]n some cases, ... there will be negligible difference between life without parole and other sentences of imprisonment." Id. Nevertheless, the Harmelin Court concluded that "[w]e have drawn the line of required individualized sentencing at capital cases, and see no basis for extending it further." Id.
Accordingly, in Smith, we expressly relied on Harmelin in concluding that mitigating factors such as the defendant's age and prior criminal record are irrelevant in determining whether a sentence is disproportionate in violation of the Eighth Amendment. See Smith, 848 P.2d at 374-75.[28] The Harmelin Court's holding that individualized sentencing is not required in *828 non-capital cases is dispositive in the present actions.
Based upon this court's previous holdings, as well as our examination of federal law, a defendant's age should not be considered in determining whether a sentence is disproportionate under the Eighth Amendment. See Smith, 848 P.2d 365; Gaskins, 825 P.2d 30; Alvarez, 797 P.2d 37; Drake, 785 P.2d 1257; Hernandez, 686 P.2d 1325; Harmelin, ___ U.S. ___, 111 S.Ct. 2680; Solem, 463 U.S. 277, 103 S.Ct. 3001; United States v. Murphy, 899 F.2d 714 (8th Cir.1990); United States v. Mendoza, 876 F.2d 639 (8th Cir.1989); United States v. O'Driscoll, 761 F.2d 589 (10th Cir.1985). Thus, we find that Cisneros and Ates are not entitled to an extended proportionality review simply because their respective life expectancies do not exceed the forty-year period of parole ineligibility.
III.
We now consider whether an abbreviated form of proportionality review is appropriate in the present cases, and whether this court may conduct such a review in both Cisneros and Ates.
A.
In determining whether this court may conduct an abbreviated proportionality review under the existing record in both Cisneros and Ates, we must first examine the requirements of an abbreviated proportionality review. We held in Gaskins that
[t]he abbreviated review itself simply consists of a scrutiny of the offenses in question to determine whether in combination they are so lacking in gravity or seriousness as to suggest that a life sentence is constitutionally disproportionate to the crime, taking into account the defendant's eligibility for parole.
Gaskins, 825 P.2d at 36 (emphasis added). Thus, under Gaskins, the critical inquiry is whether the offenses in question, when examined in combination, are lacking in gravity or seriousness. In Gaskins, we found that
[t]he determination of whether the crimes involved in a habitual criminal conviction are grave or serious necessarily is somewhat imprecise. Solem offers helpful guidance in evaluating the gravity of an offense. The Court observed that offenses can be compared "in light of the harm caused or threatened to the victim or society, and the culpability of the offender."
Id. (quoting Solem, 463 U.S. at 292, 103 S.Ct. at 3010). In Gaskins, we suggested the following relevant considerations in assessing the harm caused or threatened to society:
[R]elevant considerations include whether the crime involves violence, and the absolute magnitude of the crime (e.g., theft of a large amount usually can be viewed as more serious than theft of a small amount, other circumstances being the same). In general, a lesser-included offense is not as serious as the greater-inclusive offense, an attempt is less serious than a completed crime, and an accessory after the fact should not be subject to a higher penalty than the principal.... Motive is also relevant.
Id. at 36-37 (citations omitted). This is not an exhaustive list of relevant factors; rather, this list illustrates that there are "generally accepted criteria for comparing the severity of different crimes on a broad scale, despite the difficulties courts face in attempting to draw distinctions between similar crimes." Solem, 463 U.S. at 294, 103 S.Ct. 3011; see Gaskins, 825 P.2d at 37.
We held in Gaskins that an abbreviated form of proportionality review was appropriate in that case. Gaskins, 825 P.2d at 37. In deciding whether the trial court or the appellate court should conduct the abbreviated proportionality analysis, we explained that,
[i]n the absence of a need for a refined analysis inquiring into the details of the specific offenses or a detailed comparison of sentences imposed for other crimes in this or other jurisdictions, an appellate court is as well positioned as a trial court to conduct a proportionality *829 review. In such circumstances, there is no need or justification for remand....
In less clear cases, however, a court may need to examine the facts underlying the offenses in question in order to assess the harm caused or threatened to the victim or society and the culpability of the offender.... The proportionality review may require factual findings concerning the crime, the level of violence, and the other factors Solem identified in evaluating the severity of the crimes in question.
Id. at 37-38. Based upon the facts in Gaskins, we held that the court of appeals did not err in remanding the case to the district court to develop the factual record and conduct an abbreviated proportionality review. Id. at 39.
John Harvey Gaskins, the defendant in Gaskins, was convicted of third-degree assault, a class 1 misdemeanor,[29] and criminal attempt to commit theft, a class 5 felony.[30] In addition, Gaskins was also adjudicated as a habitual criminal. The first of Gaskins' three underlying felony convictions occurred in 1976, when Gaskins pleaded guilty to a charge of second-degree assault, a class 4 felony, for an assault on a police officer.[31] Gaskins' second felony conviction occurred in June of 1981, when a jury found him guilty of attempt to commit criminal trespass, a class 5 felony.[32] In August of 1981, Gaskins pleaded guilty to a charge of theft, a class 4 felony, for entering an apartment and taking a jacket, tie tack, and knife, and received his third felony conviction.[33] We concluded in Gaskins that "[n]one of the underlying crimes are intrinsically so grave or serious that the court of appeals can be held to have abused its discretion in remanding the case to a forum better adapted for development of the facts and circumstances surrounding the crimes." Id.
We conducted an abbreviated form of proportionality review in Alvarez, Drake, and Hernandez, however, based upon the existing appellate record. See Alvarez, 797 P.2d at 38, 41 (defendant convicted of aggravated robbery, theft, and conspiracy to commit aggravated robbery and theft, and was adjudicated as a habitual criminal based upon previous convictions for second-degree burglary, criminal attempt to commit theft, first-degree criminal trespass, and criminal attempt to commit second-degree burglary); Drake, 785 P.2d at 1267 (defendant convicted of accessory to the crime of first-degree murder and as a habitual criminal based upon prior felony convictions for habitually giving a worthless check,[34] theft of property valued over $50,[35] and forgery[36]); Hernandez, 686 P.2d at 1329 (defendant convicted of second-degree burglary and conspiracy to commit second-degree burglary, and was adjudicated as a habitual criminal based upon prior convictions for six felonies including robbery and sale of narcotic drugs).
B.
Based upon our examination of prior Colorado case law, we find in Cisneros that an abbreviated proportionality review is appropriate, and that this court "is as well positioned as a trial court to conduct [such] a proportionality review." Gaskins, 825 P.2d at 38; see Alvarez, 797 P.2d at 38; Drake, 785 P.2d at 1267; Hernandez, 686 P.2d at 1329.
Cisneros was convicted of two offenses in the case-in-chief: burglary and theft. The offenses underlying Cisneros' conviction as a habitual offender include three burglary offenses and one offense of *830 receiving stolen property. We have previously noted that the offense of burglary "involve[s] violence or potential for violence by [its] very nature." Gaskins, 825 P.2d at 37. We conclude that, in combination, the six offenses committed by Cisneros meet the requisite requirement of gravity or seriousness to support a sentence of life imprisonment with eligibility for parole after forty years. We therefore find that Cisneros' sentence is not disproportionate in violation of the Eighth Amendment.
C.
Similarly, in Ates, we conclude that the existing record is sufficient for the purpose of conducting an abbreviated proportionality review, and that, in the interest of judicial economy, this court should conduct such a review. See Gaskins, 825 P.2d at 38; Alvarez, 797 P.2d at 38; Drake, 785 P.2d at 1267; Hernandez, 686 P.2d at 1329.
This court and the United States Supreme Court have determined that the possession and sale of narcotic drugs are grave and serious offenses. Harmelin, ___ U.S. at ___, 111 S.Ct. at 2706 (Kennedy, J., concurring in part and concurring in the judgment) ("Petitioner's suggestion that his crime [of possession of cocaine] was nonviolent and victimless ... is false to the point of absurdity. To the contrary, petitioner's crime threatened to cause grave harm to society."); Gaskins, 825 P.2d at 37 ("Sale of narcotic drugs is viewed with great seriousness because of the grave societal harm caused by sale of illegal drugs and the evils associated with their use.").
The crime of felony menacing with a knife is also grave or serious under the standard articulated in Solem and adopted by this court in Gaskins. Under Solem, courts may judge the gravity of an offense by comparing "the harm caused or threatened to the victim and society, and the culpability of the offender." Solem, 463 U.S. at 292, 103 S.Ct. at 3011; see Gaskins, 825 P.2d at 36. Under section 18-3-206, "[a] person commits the crime of menacing if, by any threat or physical action, he knowingly places or attempts to place another person in fear of imminent serious bodily injury." ง 18-3-206, 8B C.R.S. (1986) (emphasis added). Felony menacing further requires the use of a deadly weapon. Felony menacing is a grave or serious offense under the standard announced in both Solem and Gaskins because, by definition, felony menacing involves the use of a deadly weapon to place, or attempt to place, another individual in fear of imminent serious bodily injury.
Ates' convictions for possession of a controlled substance (cocaine), sale of narcotic drugs (cocaine), felony menacing with a deadly weapon (a knife), and violation of bail bonds conditions, in combination, are not so lacking in gravity as to suggest that Ates' mandatory sentence of life imprisonment without the possibility of parole for forty years violates the Eighth Amendment's prohibition against cruel and unusual punishments. Accordingly, we conclude that Ates' sentence to life imprisonment without the possibility of parole for forty years is not disproportionate in violation of the Eighth Amendment.
IV.
The judgments of the court of appeals in both Cisneros and Ates are reversed.
ERICKSON, J., specially concurs.
KIRSHBAUM, J., specially concurs in part and dissents in part, and LOHR and MULLARKEY, JJ., join in the special concurrence and dissent.
Justice ERICKSON specially concurring:
I join the majority opinion in its entirety and agree with the underlying conclusion that a defendant's age is irrelevant in determining whether a sentence is proportionate to a crime under the Eighth Amendment of the United States Constitution. Maj. op. at 828. I write separately to emphasize that our resolution of these cases is dictated by United States Supreme Court decisions addressing the Cruel and Unusual Punishment Clause of the Eighth Amendment.
*831 Under the structure of our national system, a state court decision interpreting the federal Constitution is of course no less authoritative than a lower federal court decision. Lockhart v. Fretwell, ___ U.S. ___, ___, 113 S.Ct. 838, 846, 122 L.Ed.2d 180 (1993) (Thomas, J., concurring); Steffel v. Thompson, 415 U.S. 452, 482 n. 3, 94 S.Ct. 1209, 1227 n. 3, 39 L.Ed.2d 505 (1974) (Rehnquist, J., concurring). The Supreme Court, however, is the final judicial interpreter of the federal Constitution. Cooper v. Aaron, 358 U.S. 1, 78 S.Ct. 1401, 3 L.Ed.2d 5 (1958); Lujan v. Colorado State Bd. of Educ., 649 P.2d 1005 (Colo.1982).
As such, a state court is bound by Supreme Court precedent interpreting the federal Constitution and cannot impose greater limitations or afford more protections under the federal Constitution than the Supreme Court has in its decisions. Oregon v. Hass, 420 U.S. 714, 719, 95 S.Ct. 1215, 1219, 43 L.Ed.2d 570 (1975); see, e.g., Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 461-63 n. 6, 101 S.Ct. 715, 722-23 n. 6, 66 L.Ed.2d 659 (1981); Fare v. Michael C., 442 U.S. 707, 717, 99 S.Ct. 2560, 2567, 61 L.Ed.2d 197 (1979); North Carolina v. Butler, 441 U.S. 369, 376, 99 S.Ct. 1755, 1759, 60 L.Ed.2d 286 (1979); accord People v. Berger, 185 Colo. 85, 88-89, 521 P.2d 1244, 1245 (1974); American Fed'n of Labor v. Reilly, 113 Colo. 90, 96, 155 P.2d 145, 148 (1944); Wilcox v. People, 46 Colo. 382, 384, 104 P. 408, 409 (1909); Smith v. Farr, 46 Colo. 364, 370, 104 P. 401, 403 (1909). Nor can a state court dictate a restriction as a matter of federal constitutional law that the Supreme Court has specifically refrained from imposing. Hass, 420 U.S. at 719, 95 S.Ct. at 1219.
In Harmelin v. Michigan, ___ U.S. ___, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991), Justice Scalia, writing for the majority, specifically refrained from requiring individualized sentencing for noncapital cases. See id. at ___, 111 S.Ct. at 2702 ("[w]e have drawn the line of required individualized sentencing at capital cases, and see no basis for extending it further"). Following the Supreme Court's decision in Harmelin, it would contradict the axiomatic principles of Hass to interpret the Eighth Amendment as requiring consideration of mitigating factors such as the defendant's age in a noncapital case.
Justice KIRSHBAUM specially concurring in part and dissenting in part:
With unusual indifference to Eighth Amendment jurisprudence developed by the United States Supreme Court and by this court, the majority adopts a narrow rationale to reach the severely rigid conclusion that the age of a defendant is constitutionally irrelevant in cruel and unusual punishments challenges to sentences imposed upon recidivists in this state. Maj. op. at 828.[1] The majority also apparently concludes, contrary to our unanimous decision in People v. Gaskins, 825 P.2d 30 (Colo.1992), that trial and appellate courts have no discretion to determine the scope of proportionality review to be conducted in some circumstances and that this court is available to conduct a proportionality review in any recidivist sentencing case.
I cannot agree with those conclusions or with the rationale underlying them. In my view, based upon decisions of the United States Supreme Court and of this court exploring the extent of the prohibition against cruel and unusual punishments established by the Eighth Amendment, a defendant's age may be considered by trial or appellate courts in assessing the constitutional proportionality of a sentence. For reasons substantially different from those embraced by the majority, I concur in the majority's decision to conduct an abbreviated proportionality review of respondent Cisneros' sentence and to affirm that sentence. I also concur in the majority's apparent conclusion that the court of appeals *832 erred in holding that Ates must be accorded an extended proportionality review as a matter of law. However, I respectfully dissent from the majority's reversal of the court of appeals conclusion that People v. Ates should be remanded to the trial court with directions that the trial court should conduct a proportionality review of the sentence imposed upon Ates. In view of our holding in Gaskins, I believe that the court of appeals had discretion to require the trial court to determine the proportionality of Ates' sentence and that the trial court had discretion to determine the scope of the proportionality review to be performed.
I
A
The history of United States Supreme Court adjudication of Eighth Amendment issues in the context of recidivist legislation includes five cases: Solem v. Helm, 463 U.S. 277, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983); Rummel v. Estelle, 445 U.S. 263, 100 S.Ct. 1133, 63 L.Ed.2d 382 (1980); Graham v. West Virginia, 224 U.S. 616, 32 S.Ct. 583, 56 L.Ed. 917 (1912); McDonald v. Massachusetts, 180 U.S. 311, 21 S.Ct. 389, 45 L.Ed. 542 (1901); and Moore v. Missouri, 159 U.S. 673, 16 S.Ct. 179, 40 L.Ed. 301 (1895).[2] However, in view of that court's diverse views regarding the historical origin and the scope and consequences of that amendment, compare Harmelin v. Michigan, ___ U.S. ___, ___, 111 S.Ct. 2680, 2686, 115 L.Ed.2d 836 (1991) with id. at ___, 111 S.Ct. at 2709, any review of that Court's Eighth Amendment jurisprudence must include non-recidivist cases. Furthermore, the prohibition against cruel and unusual punishments contained in the Eighth Amendment is not limited to particular types of sentences.
The language of the Eighth Amendment reflects a fundamental acknowledgement of the essential dignity of each person and a concomitant recognition that legislative prerogatives of defining and punishing criminal conduct, while accorded great deference, are not absolute. Coker v. Georgia, 433 U.S. 584, 597, 97 S.Ct. 2861, 2868, 53 L.Ed.2d 982 (1977) (plurality opinion); Gregg v. Georgia, 428 U.S. 153, 173, 96 S.Ct. 2909, 2925, 49 L.Ed.2d 859 (1976) (plurality opinion); Trop v. Dulles, 356 U.S. 86, 100, 78 S.Ct. 590, 597, 2 L.Ed.2d 630 (1958) (plurality opinion); Weems v. United States, 217 U.S. 349, 373, 30 S.Ct. 544, 551, 54 L.Ed. 793 (1910). See Stanford v. Kentucky, 492 U.S. 361, 391-92, 109 S.Ct. 2969, 2986-87, 106 L.Ed.2d 306 (1989) (Brennan, J., dissenting).
Prior to Weems,[3] but subsequent to the adoption of the Fourteenth Amendment, the Court had addressed Eighth Amendment issues in summary fashion, primarily in the context of challenges to particular modes of carrying out death penalties. See, e.g., McElvaine v. Brush, 142 U.S. 155, 12 S.Ct. 156, 35 L.Ed. 971 (1891) (rejecting Eighth Amendment challenge to provision of New York statute requiring solitary confinement of convicted murderers prior to their executions); In re Kemmler, 136 U.S. 436, 10 S.Ct. 930, 34 L.Ed. 519 (1890) (rejecting Eighth Amendment challenge to provision of New York statute authorizing death by electricity for convicted murderers); Wilkerson v. Utah, 99 U.S. 130, 25 L.Ed. 345 (1879) (rejecting Eighth Amendment challenge to provision of Utah territorial statute authorizing judicial *833 designation of death by firing squad as means of execution for convicted murderers). But see O'Neil v. Vermont, 144 U.S. 323, 339-40, 12 S.Ct. 693, 699-700, 36 L.Ed. 450 (1892) (Field, J., dissenting) (provisions of Vermont statute permitting separate fines for each offense of selling intoxicating liquor without authority and authorizing sentence to prison at hard labor of three days for every dollar of fines and costs not paid by prescribed date, when applied to defendant conditionally sentenced to 19,914 days if fines and costs totaling $6,638.72 for 307 offenses not timely paid, violated Eighth Amendment prohibition "against all punishments which by their excessive length or severity are greatly disproportionate to the offences charged."). In Weems, the Court, for the first time, examined at length the history and scope of the Eighth Amendment. The Court held that a provision of the Philippine Constitution couched in language nearly identical to the terms of the Eighth Amendment prohibited the imposition of a sentence of cadena temporal upon a public official convicted of falsifying two expense vouchers with a combined value of 616 pesos. The sentence of cadena temporal included imprisonment for twelve years and one day at hard labor with a chain at the ankle and wrist.
Emphasizing that no prior case had required an exhaustive consideration of the scope of the Eighth Amendment, the Weems Court canvassed the history of the adoption of the Amendment, noting that commentators held different views concerning its purposes;[4] reaffirmed the principle that the Amendment prohibited blatantly barbaric modes of punishment; and stated that legislative authority to define and punish offenses, while normally unfettered, is limited by a principle of proportionality inherent in the purpose of the Amendment and implicit in the language thereof. To illustrate this proportionality principle the Court quoted language from Justice Field's dissent in O'Neil and dicta from McDonald v. Commonwealth, 173 Mass. 322, 53 N.E. 874 (1899), aff'd, 180 U.S. 311, 21 S.Ct. 389, 45 L.Ed. 542 (1901), a decision of the Supreme Judicial Court of Massachusetts ("imprisonment in the state prison for a long term of years might be so disproportionate to the offense as to constitute a cruel and unusual punishment," McDonald, 53 N.E. at 875). The Weems Court compared the penalty and the offense with other punishments and offenses defined by United States and Philippine Island legislation, declared the subject legislation to be unconstitutional, reversed the defendant's conviction, and dismissed the case.[5]
The Court addressed Eighth Amendment issues in various contexts only cursorily after its decision in Weems[6] until its decision *834 in Trop v. Dulles, 356 U.S. 86, 78 S.Ct. 590, 2 L.Ed.2d 630 (1958). That case arose in the context of a civil action filed by Trop against the United States Secretary of State and others seeking a declaration that he was a United States citizen. Because he had earlier been convicted of desertion in a court martial proceeding for leaving his foreign military base without authorization for one day, Trop lost his citizenship by virtue of a provision of the Nationality Act of 1940, Pub.L. No. 853, ง 401(g), 54 Stat. 1137, 1168-69 (1940) (amended by Pub.L. No. 221, ง 1, 58 Stat. 4, 4 (1944)). Although a majority of the Court concluded that the statutory provision at issue was unconstitutional, prophetically, the Court disagreed respecting the reasons for that conclusion. Chief Justice Warren authored a plurality opinion that found the legislation violative of the Eighth Amendment. Noting that the scope of the Eighth Amendment remained unclear, the plurality opinion described it as follows:
The phrase in our Constitution was taken directly from the English Declaration of Rights of 1688, and the principle it represents can be traced back to the Magna Carta. The basic concept underlying the Eighth Amendment is nothing less than the dignity of man. While the State has the power to punish, the Amendment stands to assure that this power be exercised within the limits of civilized standards. Fines, imprisonment and even execution may be imposed depending upon the enormity of the crime, but any technique outside the bounds of these traditional penalties is constitutionally suspect. This Court has had little occasion to give precise content to the Eighth Amendment, and, in an enlightened democracy such as ours, this is not surprising. But when the Court was confronted with a punishment of 12 years in irons at hard and painful labor imposed for the crime of falsifying public records, it did not hesitate to declare that the penalty was cruel in its excessiveness and unusual in its character.
Trop, 356 U.S. at 100, 78 S.Ct. at 597 (Opinion of Warren, C.J.) (footnotes and citation omitted). The plurality recognized "that the words of the Amendment are not precise, and that their scope is not static. The Amendment must draw its meaning from the evolving standards of decency that mark the progress of a maturing society." Id. at 100-01, 78 S.Ct. at 597-98 (footnote omitted). The plurality then referred to the treatment of deserters in eighty-four nations in the course of concluding that a punishment of denationalization for the offense of desertion was unconstitutional.
In spite of its uncertainty as to the origin and scope of the Eighth Amendment, in Robinson v. California, 370 U.S. 660, 82 S.Ct. 1417, 8 L.Ed.2d 758 (1962), the Court held that a California statute punishing the medical status of drug dependency violated the Amendment.[7] In finding the Amendment applicable to legislative definitions of offenses as well as to legislative determinations of sanctions, the Court made the following observation:
To be sure, imprisonment for ninety days is not, in the abstract, a punishment which is either cruel or unusual. But the question cannot be considered in the abstract. Even one day in prison would be a cruel and unusual punishment for the "crime" of having a common cold.
Id. at 667, 82 S.Ct. at 1421. As in Trop and Weems, the Court in Robinson suggested that concern for human dignity lies at the heart of the Amendment.
*835 Further discussions by the Supreme Court concerning the scope of Eighth Amendment jurisprudence appear in several death penalty cases, commencing with the ten opinions delivered in Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972). See, e.g., Gregg v. Georgia, 428 U.S. 153, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976); Proffitt v. Florida, 428 U.S. 242, 96 S.Ct. 2960, 49 L.Ed.2d 913 (1976); Jurek v. Texas, 428 U.S. 262, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976); Woodson v. North Carolina, 428 U.S. 280, 96 S.Ct. 2978, 49 L.Ed.2d 944 (1976); Roberts v. Louisiana, 428 U.S. 325, 96 S.Ct. 3001, 49 L.Ed.2d 974 (1976); Coker v. Georgia, 433 U.S. 584, 97 S.Ct. 2861, 53 L.Ed.2d 982 (1977); Enmund v. Florida, 458 U.S. 782, 102 S.Ct. 3368, 73 L.Ed.2d 1140 (1982); Tison v. Arizona, 481 U.S. 137, 107 S.Ct. 1676, 95 L.Ed.2d 127 (1987); Stanford v. Kentucky, 492 U.S. 361, 109 S.Ct. 2969, 106 L.Ed.2d 306 (1989). These cases reveal the Court's consistent recognition that the proportionality component of the Eighth Amendment reflects constitutional concern for human dignity. For example, in Coker, the Court, in holding unconstitutional a Georgia statute requiring imposition of a sentence to death for the offense of rape of an adult woman, stated that the "Eighth Amendment bars not only those punishments that are `barbaric' but also those that are `excessive' in relation to the crime committed." Coker, 433 U.S. at 592, 97 S.Ct. at 2866. In Enmund, the Court held that the imposition of a sentence of death upon a person convicted of felony murder and robbery who did not commit any murder, was not present at the site of any murders, and did not intend that any murder should occur violated the Eighth Amendment. Emphasizing the particular circumstances of the offense and the conduct of the defendant, the Court concluded that the death penalty, which is "unique in its severity and irrevocability," was excessive and grossly disproportionate when imposed on a robber who did not take human life. Enmund, 458 U.S. at 797, 102 S.Ct. at 3376 (quoting Gregg, 428 U.S. at 187, 96 S.Ct. at 2931). In Tison, 481 U.S. 137, 151-52, 107 S.Ct. 1676, 1684-85, the Court reaffirmed the principle that consideration of Eighth Amendment challenges to death sentences requires consideration of the particular conduct of the defendant. See Stanford v. Kentucky, 492 U.S. 361, 109 S.Ct. 2969, 106 L.Ed.2d 306 (1989) (application of Solem proportionality analysis appropriate in determining whether the imposition of death penalties on juveniles survived cruel and unusual punishments challenge). Thus proportionality analysis in non-capital as well as in capital cases requires consideration to some extent of the nature of the relevant offenses as well as the characteristics of particular punishments.[8]
*836 It must also be emphasized, however, that the proportionality principle of the Eighth Amendment also reflects great deference to the sentencing prerogative of the legislative branch of government. Harmelin v. Michigan, ___ U.S. ___, ___, 111 S.Ct. 2680, 2703, 115 L.Ed.2d 836 (1991); Solem v. Helm, 463 U.S. 277, 290, 103 S.Ct. 3001, 3009, 77 L.Ed.2d 637 (1983); Rummel v. Estelle, 445 U.S. 263, 275-76, 100 S.Ct. 1133, 1139-40, 63 L.Ed.2d 382 (1980). This principle, rooted in separation of powers doctrine, acknowledges that legislatures are constitutionally responsible for defining criminal conduct and determining the sanctions appropriate to punish or deter such conduct. As a result, sentencing provisions adopted by legislatures will be declared constitutionally disproportionate by courts on only rare occasions. Hutto v. Davis, 454 U.S. 370, 374, 102 S.Ct. 703, 705, 70 L.Ed.2d 556 (1982); Rummel, 445 U.S. at 272, 100 S.Ct. at 1138.
In an effort to appropriately balance these two policies, the Supreme Court in Solem v. Helm, 463 U.S. 277, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983), adopted certain objective standards for Eighth Amendment proportionality review. The Court described those standards as follows:
When sentences are reviewed under the Eighth Amendment, courts should be guided by objective factors that our cases have recognized. First, we look to the gravity of the offense and the harshness of the penalty.... Second, it may be helpful to compare the sentences imposed on other criminals in the same jurisdiction.... Third, courts may find it useful to compare the sentences imposed for commission of the same crime in other jurisdictions.
Id. at 290-92, 103 S.Ct. at 3009-11 (footnote omitted).
The difficulty of delineating objective standards for proportionality review is dramatically reflected by the Court's opinions in Rummel v. Estelle, 445 U.S. 263, 100 S.Ct. 1133, 63 L.Ed.2d 382 (1980), and in Solem. In Rummel, the Supreme Court rejected a formula for evaluating proportionality claims adopted by the Court of Appeals for the Fourth Circuit in Hart v. Coiner, 483 F.2d 136 (4th Cir.1973), cert. denied, 415 U.S. 938, 94 S.Ct. 1454, 39 L.Ed.2d 495 (1974).[9] Three years later, in Solem, the Court essentially adopted the Hart test. See Solem, 463 U.S. at 310-11, 103 S.Ct. at 3020-21 (Burger, C.J., dissenting).
B
As the foregoing review demonstrates, the proportionality prong of the Eighth Amendment prohibition against cruel and unusual punishments not only recognizes the significance of evolving standards of humanitarian principles but also accords great deference to legislative determinations of punishments. Our cases dealing with cruel and unusual punishments challenges to sentences imposed upon habitual offenders have also reflected this tension.
In People v. Bergstrom, 190 Colo. 105, 544 P.2d 396 (1975), we rejected the argument that the imposition of a life sentence under our recidivist statute upon a defendant convicted of possession of weapons by a previous offender violated the Eighth Amendment. The defendant had previously been convicted of the offenses of grand larceny, automobile theft, robbery, and *837 burglary. We held that "[t]he habitual criminal act has been specifically upheld in spite of its increased penalty provisions [and] [t]he legislature may, within broad limits, decide the penalty for each offense." Id. at 108, 544 P.2d at 398-99 (citations omitted). Chief Justice Pringle dissented on the basis of his conclusion that "imposing life imprisonment under the circumstances of this case, where ordinarily the penalty would be at most five years, is so grossly disproportionate as to constitute cruel and unusual punishment under the Eighth Amendment." Id. at 112, 544 P.2d at 401 (Pringle, C.J., concurring in part and dissenting in part).[10]
Subsequently, in People v. Gutierrez, 622 P.2d 547 (Colo.1981), we held that a life sentence imposed upon an habitual offender[11] did not violate the Eighth Amendment. We rejected the defendant's argument that reliance on a nonviolent felony offense to support the habitual criminal charge constituted cruel and unusual punishment, finding that "`the presence or absence of violence does not always affect the strength of society's interest in deterring a particular crime or in punishing a particular criminal.'" Id. at 557 (quoting Rummel v. Estelle, 445 U.S. 263, 275, 100 S.Ct. 1133, 1139, 63 L.Ed.2d 382 (1980)). However, we left open the question of "[w]hether there might be circumstances in which a mandatory life sentence would constitute cruel and unusual punishment because the crimes supporting habitual criminal status taken together with the substantive crimes giving rise to the habitual criminal determination are so minor in nature...." Id.
In People v. Hernandez, 686 P.2d 1325 (Colo.1984), we concluded that a defendant asserting an Eighth Amendment challenge to a sentence to life imprisonment imposed pursuant to our recidivist statute need be accorded only an abbreviated proportionality review. Under then applicable legislation the defendant was eligible for parole consideration twenty years after the commencement of his confinement. See ง 17-2-207, 8 C.R.S. (1978 & 1983 Supp.). The defendant, who was convicted of second degree burglary and conspiracy to commit second degree burglary in the case-in-chief had previously committed six other felonies: robbery, theft, attempt to commit second degree forgery, sale of narcotic drugs, second degree burglary and theft over $100, and possession of contraband.
We adopted the tri-partite test of Solem and concluded that an abbreviated proportionality review, utilizing only the first of the three Solem criteria, was sufficient to permit the determination that the sentence did not violate the Eighth Amendment's prohibition against cruel and unusual punishments. Hernandez, 686 P.2d at 1330. We observed that, unlike the South Dakota statute scrutinized in Solem, our recidivist statute provided for the possibility of parole. Id. Our conclusion that a comparison of the eight underlying offenses to the admittedly harsh sentence was sufficient reflected deference to the legislative determination of the appropriate sanction for repeat offenders as well as concern for the humanitarian principle of the proportionality prong of the prohibition against cruel and unusual punishments.
In People v. Drake, 785 P.2d 1257, 1275 (Colo.1990), we concluded that an abbreviated proportionality review was sufficient to enable us to reject a cruel and unusual punishments challenge to a life sentence imposed upon a defendant convicted of accessory to first degree murder who had previously committed three felonies. We noted that, as in Hernandez, the applicable sentencing provisions permitted parole consideration within twenty years after the defendant's initial confinement, and that such factor entered into the proportionality review to which the defendant was entitled.
*838 In Alvarez v. People, 797 P.2d 37 (Colo. 1990), the defendant was convicted of aggravated robbery, theft and conspiracy to commit aggravated robbery and theft. He was also adjudicated to be an habitual criminal on the basis of four prior felony convictions of second degree burglary, attempt to commit second degree burglary, attempt to commit theft, and first degree criminal trespass. The applicable legislation, as in the cases here considered, permitted parole consideration only after the expiration of forty years from the initial confinement. ง 17-22.5-104(2)(c), 8A C.R.S. (1986). Our conclusion that an abbreviated proportionality review was sufficient again reflected deference to the legislative selection of a sanction, while our adherence to the Solem requirement of evaluating the gravity of the underlying offenses reflected our recognition of the humanitarian prong of proportionality analysis. We arrived at that conclusion by emphasizing the gravity of the seven underlying offenses as well as recognizing the severity of the sanction adopted by the General Assembly. Alvarez, 797 P.2d at 41-42.
In People v. Gaskins, 825 P.2d 30 (Colo. 1992), we thoroughly reviewed our three prior decisions of Hernandez, Drake, and Alvarez as well as the then recent Supreme Court decision of Harmelin v. Michigan, ___ U.S. ___, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991), in articulating criteria for determining the scope of the proportionality review required in cases presenting cruel and unusual punishments challenges to sentences imposed pursuant to our recidivist statute. The defendant in Gaskins was convicted of two felonies in the case-in-chief: third degree assault and attempt to commit theft. He was also convicted of being an habitual offender on the basis of three prior felony convictions: second degree assault on a police officer, attempt to commit criminal trespass, and theft. Under applicable legislation, the defendant was not eligible for parole until forty years after the commencement of his confinement. ง 17-22.5-104(2)(c), 8A C.R.S. (1986). The court of appeals vacated the defendant's sentence and remanded the case to the trial court with directions to conduct a proportionality review thereof. The court concluded that the trial court was in a better position to conduct the review because examination would focus on the defendant's entire record rather than only on the gravity of the two offenses for which he had been convicted in the case-in-chief. Gaskins, 825 P.2d at 32.
We affirmed the judgment of the court of appeals on the ground that it did not abuse its discretion in ordering the trial court to conduct the requisite proportionality review of the defendant's sentence as an habitual criminal. Gaskins, 825 P.2d at 32, 39. However, we emphasized that in most circumstances the requisite proportionality review could be conducted by either an appellate or a trial court on the basis of information concerning the defendant's current and past convictions disclosed by the record. Id. at 38. We thus rejected the rationale of the court of appeals insofar as that rationale suggested that a trial court would always be in the best position to evaluate the gravity of relevant offenses.
In Gaskins we also rejected the argument that federal and state prohibitions against cruel and unusual punishments do not require proportionality review of habitual offender sentences because our statutes authorize parole consideration after some defined period of time and because "trivial misconduct" is not classified as a felony by the General Assembly. Id. at 34. Our decision thus underscored the significance of the humanitarian principle of the proportionality prong of cruel and unusual punishments analysis while acknowledging the judicial deference due legislative determinations of what conduct is criminal and what sanctions are appropriate for such conduct.
Our decision in Gaskins delineated the criteria applicable to the determination of the scope of the proportionality review required of sentences imposed pursuant to our recidivist statute. We indicated that in most circumstances the review will be limited to an examination of the harshness of the sentence and the gravity of all relevant offenses, including the offenses underlying *839 the habitual criminal conviction, on the basis of the information contained in the record of the case. Id. at 36. If the examination of the record convinces the trial or appellate court that no further inquiry into the circumstances of the commission of any of the relevant offenses in question is necessary and that such offenses in combination are not so lacking in gravity as to raise an inference that the penalty, however harsh, is constitutionally disproportionate, no further review will be necessary. Id. In this scenario, the court will have properly applied the first of the three Solem criteria, albeit in a limited or abbreviated manner requiring examination only of the record before it.
However, we also recognized that because application of even the first of the three Solem criteria requires an assessment of the gravity of specific offenses, in rare circumstances the court conducting the proportionality review might conclude that matters not disclosed by the record of the trial proceedings should be considered. Gaskins, 825 P.2d at 38. Any such record would in all probability contain ample evidence of the circumstances surrounding the commission of the offenses underlying the defendant's conviction or convictions in the case-in-chief. Such record might not, however, contain sufficient information regarding the circumstances surrounding the commission of a particular offense underlying the defendant's conviction as an habitual offender to permit a thorough assessment of the gravity thereof. If the court were to conclude that evidence outside the record is necessary to permit proper application of the first of the three Solem criteria or to determine whether application of one or more of the other Solem criteria would be appropriate, some form of extended proportionality review would be required.[12]Gaskins, 825 P.2d at 38.
Of course, the court might ultimately conclude, on the basis of limited additional evidence, that the question of constitutional proportionality may be determined without the introduction of evidence comparing sentences imposed for the same or other crimes in this or other jurisdictions. Id. at 38 n. 13. The question of whether a particular habitual offender should be accorded an abbreviated or an extended proportionality review thus turns on the discretionary judicial determination of whether evidence in addition to matters contained in the record is necessary to conduct the review.
We recently reaffirmed the analysis and holding of Gaskins in People v. Smith, 848 P.2d 365 (Colo.1993). In Smith, the trial court, pursuant to section 16-11-103, 8A C.R.S. (1986 & 1989 Supp.), imposed a mandatory sentence of life imprisonment without the possibility of parole for forty years on a defendant convicted of the offense of first degree murder. On appeal the defendant argued, inter alia, that the sentence violated the "spirit of the Eighth Amendment."[13] In rejecting that challenge, we noted that in Harmelin v. Michigan, ___ U.S. ___, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991), a majority of the Supreme Court held in Part V thereof that in non-capital cases the Eighth Amendment does not encompass the individualized sentencing principle that must infuse sentencing procedures in capital cases. Id. at ___, 111 S.Ct. at 2702. We emphasized the Harmelin majority's observation that imposition of a mandatory sentence of life imprisonment without possibility of parole in the absence of consideration of mitigating factors such as the defendant's lack of prior convictions did not violate the Eighth Amendment, Smith, 848 P.2d at 375, and discussed four federal Court of Appeals decisions: United States v. O'Driscoll, 761 *840 F.2d 589 (10th Cir.1985), United States v. Abreu, 962 F.2d 1425 (10th Cir.1992), United States v. Murphy, 899 F.2d 714 (8th Cir.1990), and United States v. Mendoza, 876 F.2d 639 (8th Cir.1989). We then concluded our analysis as follows:
Based upon the foregoing analysis and the facts of this case, we find that Smith's statutorily mandated sentence of life in prison with no possibility of parole for forty years for committing the crime of first degree murder is not disproportionate, and does not violate the Eighth Amendment.
Smith, 848 P.2d at 375.
II
The foregoing review of decisions of the United States Supreme Court and of our court requires the conclusion that a defendant's age is a relevant factor in assessing whether a sentence imposed is unconstitutionally disproportionate. A person's age is a question of historical fact. Consideration of the effect of a defendant's life expectancy on the results of a sentence necessarily requires consideration of the defendant's age. See O'Driscoll, 761 F.2d at 599; Mendoza, 876 F.2d at 640. A defendant's age is no less objective a factor than the fact of a person's history of prior convictions. Moreover, we noted in Gaskins that the determination of whether particular crimes were particularly grave for purposes of proportionality review was "somewhat imprecise," Gaskins, 825 P.2d at 36, and that such factors as mens rea and motive could in some circumstances be considered. Id. at 37. We thus acknowledged in Gaskins that in some circumstances specific information about an offender could be relevant for purposes of proportionality review. See also Solem, 463 U.S. at 297 n. 22, 103 S.Ct. at 3013 n. 22 ("Helm, who was 36 years old when he was sentenced, is not a professional criminal. The record indicates an addiction to alcohol, and a consequent difficulty in holding a job. His record involves no instance of violence of any kind.") The majority concludes that any acknowledgement that age may be a relevant factor in cruel and unusual punishments analysis would contravene the conclusion in Part V of Harmelin that the doctrine of individualized sentencing is not applicable in non-capital Eighth Amendment cases and would turn proportionality review into a comparison of the sentence to the offender rather than a comparison of the sentence to the offense.
The majority thus equates Harmelin's rejection of the individualized sentencing doctrine in the non-capital and non-recidivist context of that decision with rejection of consideration of a defendant's age in all Eighth Amendment contexts, and then concludes that Harmelin is dispositive of the latter issue. Such reading of Harmelin would, of course, require our conclusion that defendant's age is irrelevant in cruel and unusual punishments analysis. U.S. Const. art. VI, ถ 2. However, I do not construe Harmelin as establishing the inflexible principle adopted by the majority.
The doctrine of individualized sentencing discussed in part V of Harmelin refers to a discrete aspect of Eighth Amendment jurisprudence. In developing cruel and unusual punishments criteria, the Supreme Court has distinguished between capital sentences and all other sentences. "The penalty of death differs from all other forms of criminal punishment, not in degree but in kind. It is unique in its total irrevocability. It is unique in its rejection of rehabilitation of the convict as a basic purpose of criminal justice. And it is unique, finally, in its absolute renunciation of all that is embodied in our concept of humanity." Furman v. Georgia, 408 U.S. 238, 306, 92 S.Ct. 2726, 2760, 33 L.Ed.2d 346 (1972) (Stewart, J., concurring).
One important distinction between capital and non-capital cases is that in capital cases mandatory sentences are constitutionally forbidden. At the time the Bill of Rights was adopted, "States uniformly followed the common-law practice of making death the exclusive and mandatory sentence for ... offenses ... including at a minimum, murder, treason, piracy, arson, rape, robbery, burglary, and sodomy." Woodson v. North Carolina, 428 U.S. 280, 289, 96 S.Ct. 2978, 2984, 49 L.Ed.2d 944 (1976) (Opinion of Stewart, Powell, and Stevens, *841 JJ.) (footnotes omitted). When these sentences proved unworkable, primarily because juries not infrequently acquitted guilty defendants rather than sentence them to automatic death sentences, states eventually granted juries discretion to withhold death sentences in light of mitigating factors. Id. at 290-91, 96 S.Ct. at 2984-85.
In response to the Supreme Court's decision in Furman, wherein the death sentences found violative of the Eighth Amendment were described as "wantonly" and "freakishly imposed," Furman, 408 U.S. at 310, 92 S.Ct. at 2762 (Stewart, J., concurring), several states adopted mandatory death sentences for certain crimes in an effort to limit the sentencer's discretion. However, the Supreme Court concluded that sentencing schemes affording no discretion to the sentencer also violated the Eighth Amendment because they were unduly harsh and unworkably rigid, Woodson, 428 U.S. at 303, 96 S.Ct. at 2990; they failed to "focus on the circumstances of the particular offense and the character and propensities of the offender," Roberts v. Louisiana, 428 U.S. 325, 333, 96 S.Ct. 3001, 3006, 49 L.Ed.2d 974 (1976); and they "fail[ed] to provide a constitutionally tolerable response to Furman's rejection of unbridled jury discretion in the imposition of [death]." Woodson, 428 U.S. at 302, 96 S.Ct. at 29.
As the Supreme Court continued to review different death sentencing schemes, a common theme emerged: "`[I]n capital cases the fundamental respect for humanity underlying the Eighth Amendment ... requires consideration of the character and record of the individual offender and the circumstances of the particular offense as a constitutionally indispensable part of the process of inflicting the penalty of death.'" Sumner v. Shuman, 483 U.S. 66, 75, 107 S.Ct. 2716, 2722, 97 L.Ed.2d 56 (1987) (quoting Woodson, 428 U.S. at 304, 96 S.Ct. at 2991). Reiterating that "`an individualized [sentencing] decision is essential in capital cases,'" the Court recently stated: "`There is no perfect procedure for deciding in which cases governmental authority should be used to impose death. But a statute that prevents the sentencer in all capital cases from giving independent weight to aspects of the defendant's character and record and to circumstances of the offense proffered in mitigation creates the risk that the death penalty will be imposed in spite of factors that may call for a less severe penalty.'" Graham v. Collins, ___ U.S. ___, ___, 113 S.Ct. 892, 899-900, 122 L.Ed.2d 260 (1993) (quoting Lockett v. Ohio, 438 U.S. 586, 605, 98 S.Ct. 2954, 2965, 57 L.Ed.2d 973 (1978) (plurality opinion)). Thus under what has been commonly referred to as the individualized capital sentencing doctrine, the Eighth Amendment commands that "[j]ust as the State may not by statute preclude the sentencer from considering any mitigating factor, neither may the sentencer refuse to consider, as a matter of law, any relevant mitigating evidence." Eddings v. Oklahoma, 455 U.S. 104, 113-14, 102 S.Ct. 869, 876, 71 L.Ed.2d 1 (1982) (emphasis in original).
In Harmelin, the defendant, who was sentenced to a mandatory term of life without the possibility of parole upon conviction of possessing more than 650 grams of cocaine, argued that imposition of the mandatory sentence without consideration of his lack of a criminal record constituted cruel and unusual punishment. In concluding that the Eighth Amendment did not bar the mandatory sentence, the court refused to equate the effects of mandatory capital sentencing schemes with mandatory non-capital sentencing schemes. "Petitioner asks us to extend this so-called `individualized capital-sentencing doctrine,' to an `individualized mandatory life in prison without parole sentencing doctrine.' We refuse to do so.... We have drawn the line of required individualized sentencing at capital cases, and see no basis for extending it further." Harmelin, ___ U.S. at ___ _ ___, 111 S.Ct. at 2701-02 (citation omitted).
Harmelin did not address the narrow question of whether a court conducting a proportionality review of an habitual offender's sentence may consider the offender's age. In refusing to apply the individualized sentencing doctrine of death-penalty *842 jurisprudence to the Eighth Amendment challenge there reviewed,[14] the majority neither expressly nor, in my view, by implication held that a defendant's age may never be considered in other cruel and unusual punishments contexts. This view of Harmelin is reinforced by the fact that seven of the justices recognized the continued vitality of Solem. The conclusion that a court may consider a defendant's age in conducting an extended proportionality review in non-capital cases by no means requires the additional conclusion that the broad individualized sentencing doctrine must be extended to other Eighth Amendment contexts.[15]
In my view, in Gaskins this court unanimously rejected the reading of Harmelin adopted by the majority. In Gaskins we recognized the Harmelin decision and then reaffirmed the applicability of the Solem criteria for evaluating the gravity of a particular offense. Gaskins, 825 P.2d at 34 n. 10, 36. We quoted that portion of Solem stating that offenses can be compared "`in light of the harm caused or threatened to the victim or society, and the culpability of the offender.' Solem, 463 U.S. at 292, 103 S.Ct. at 3010." Gaskins, 825 P.2d at 36. We then stated that in evaluating the culpability of the offender "[m]otive is also relevant," id. at 37, and observed that in certain exceptional cases "a court may need to examine the facts underlying the offenses in question in order to assess the harm caused or threatened to the victim or society and the culpability of the offender." Id. at 38. A principle of law that requires a court to ignore the defendant's age when evaluating that defendant's culpability in the course of an extended proportionality review ignores reality and requires adherence to the fiction that a defendant's age is never relevant to an evaluation of the defendant's culpability.[16] In my view, the rule adopted by the majority is not required by Harmelin and is incompatible with Gaskins.
Other courts have concluded that the defendant's age is a relevant factor in cruel and unusual punishments analysis. For example, in Naovarath v. State, 105 Nev. 525, 779 P.2d 944 (1989), the Supreme Court of Nevada concluded that in deciding whether a punishment was constitutional under the United States and Nevada Constitutions "it is necessary to look at both the age of the convict and at his probable mental state at the time of the offense." Id. 779 P.2d at 946. In that case a sentence of life imprisonment without possibility of parole was imposed upon a defendant who was convicted based on a guilty plea of an unspecified degree of murder. At the time of the offense, the defendant was thirteen years old and, according to the record, was psychotic, delusional and unable to distinguish reality from fantasy. After finding, in light of the defendant's age and mental state, that the sentence imposed would not further any of the generally accepted moral and social purposes of punishment, retribution, deterrence, and segregation, and after determining that the prohibition of cruel and unusual punishments depends largely upon the humanitarian instincts of the judiciary, the court concluded that the sentence imposed constituted cruel and unusual punishment under both the federal and state constitutions. Accordingly, the court ordered that a sentence *843 of life with the possibility of parole be imposed. See also Young v. Miller, 883 F.2d 1276 (6th Cir.1989) (in assessing whether the sentence of life imprisonment without possibility of parole for possession with intent to deliver 650 grams or more of heroin constituted cruel and unusual punishment, court considers age of defendant), cert. denied, ___ U.S. ___, 111 S.Ct. 2886, 115 L.Ed.2d 1052 (1991); United States v. Darby, 744 F.2d 1508 (11th Cir.1984) (in assessing whether sixty-year prison term constituted cruel and unusual punishment, although court refuses to equate a lengthy sentence imposed upon defendants who were in their late forties and late fifties to imprisonment without possibility of parole, court states that "[w]ithout question, the probability that a defendant will spend the rest of his life in prison is a relevant consideration," id. at 1526 n. 10), cert. denied, 471 U.S. 1100, 105 S.Ct. 2322, 85 L.Ed.2d 841 (1985); Rogers v. State, 257 Ark. 144, 515 S.W.2d 79 (1974) (life imprisonment without possibility of parole for first degree rape conviction imposed upon defendant, age 17 at time of trial, held not cruel and unusual punishment), cert. denied, 421 U.S. 930, 95 S.Ct. 1656, 44 L.Ed.2d 87 (1975); People v. Dillon, 34 Cal.3d 441, 194 Cal.Rptr. 390, 668 P.2d 697 (1983) (in finding that a sentence of life imprisonment imposed upon defendant convicted of first degree murder constituted an unconstitutional punishment under California Constitution, court considered age of defendant); People v. Eshelman, 225 Cal.App.3d 1513, 275 Cal.Rptr. 810 (1990) (in assessing whether a sentence of seventeen years' imprisonment for the crime of second degree murder constituted cruel and unusual punishment, court considers age of defendant); State v. Broadhead, 120 Idaho 141, 814 P.2d 401 (1991) (a sentence of life imprisonment with the first 15 years fixed and the balance indeterminate for the crime of second degree murder imposed upon a defendant, age 14 at the time of the crime, held constitutional), overruled on other grounds, State v. Brown, 121 Idaho 385, 825 P.2d 482 (1992); Workman v. Commonwealth, 429 S.W.2d 374 (Ky.1968) (life imprisonment without possibility of parole for conviction of forcible rape imposed upon defendants, age 14 at time of crime, constituted cruel and unusual punishment under Kentucky Constitution).[17]
The majority's suggestion that many of these decisions are unpersuasive because they were decided prior to Harmelin is itself unpersuasive. Seven members of the Harmelin court recognized the continuing vitality of Solem. Thus, as we recognized in Gaskins, the humanitarian principle of cruel and unusual punishments analysis culminating in Solem was reaffirmed in Harmelin. The majority's conclusion that the defendant's age is not relevant in cruel and unusual punishments analysis prohibits Colorado courts from considering such challenges to lengthy sentences by very young offenders as was successfully argued to the Nevada Supreme Court in Naovarath. I find the rationale and result of that decision compelling as well as convincing.
The conclusion that age and life expectancy are relevant factors in cruel and unusual punishments analysis for assessing the harshness of a particular sentence and, in an extended proportionality review, the gravity of a particular offense does not *844 suggest that such factors are controlling or that they or any other particular circumstances must be explored in every case in which a defendant asserts an Eighth Amendment challenge to a sentence. As we emphasized in Gaskins, 825 P.2d at 36, the initial judicial weighing may consist of a brief consideration of the gravity of the offense and the harshness of the sentence. See People v. Smith, 848 P.2d 365 (Colo. 1993) (no extensive analysis necessary when sentence of life imprisonment with parole eligibility in forty years imposed for offense of first degree murder). The question in most such cases is not whether the sentencing scheme is constitutional, but rather whether the particular sentence imposed under a constitutional statute nevertheless violates Eighth Amendment proportionality standards. See State v. Bartlett, 171 Ariz. 302, 303 n. 8, 830 P.2d 823, 829, 830 n. 8, cert. denied, ___ U.S. ___, 113 S.Ct. 511, 121 L.Ed.2d 445 (1992). Only when a court in its discretion concludes that an extended review is warranted will evidence of such matters be admissible. See Gaskins, 825 P.2d at 37. Thus a court's determination in a particular case that an extended proportionality review is warranted does not authorize the defendant to introduce general evidence of his or her personal characteristics in mitigation. The issues are limited at all times to comparisons of the harshness of the sentence with the gravity of the offense.
The conclusion that the court of appeals did not err in finding age to be a relevant factor in cruel and unusual punishments analysis and that, considering that factor, Cisneros and Ates received harsh penalties does not require the further conclusion that they must be accorded extended proportionality reviews. The question of the appropriate scope of proportionality review for sentences imposed upon habitual offenders initially requires both an evaluation of the severity of the particular sentence and the gravity of the particular underlying offenses on the record to determine whether an inference of disproportionality has been established requiring additional review. Id. at 36. In these cases, the court of appeals in effect concluded that Cisneros and Ates were entitled to extended proportionality reviews simply because their sentences were extremely harsh. Such analysis improperly fails to assess the gravity of the underlying offenses on the record before deciding whether extended proportionality reviews are required. Extremely harsh sentences are not constitutionally disproportionate when imposed for the commission of grave offenses.
III
Turning now to the majority's disposition of these cases, I agree that in the case of People v. Cisneros, 824 P.2d 16 (Colo.App. 1991), this court is competent to conduct an abbreviated proportionality review and that such review is sufficient to establish that the sentence imposed does not violate the Eighth Amendment. However, I disagree with the majority's decision to conduct an abbreviated review of the sentence in People v. Ates. In my view, the court of appeals properly exercised its discretion in determining that the case should be remanded to the trial court. Although the court of appeals erred in requiring the trial court to conduct an extended proportionality review, I believe the trial court is in a far superior position to determine the scope of the review.
A
In People v. Cisneros, the trial court denied Cisneros' motion to conduct a proportionality review. The trial court erroneously concluded that proportionality review was not required because the applicable sentencing statutes provided for the possibility of parole. Some form of proportionality review is required when a defendant challenges a sentence imposed pursuant to our recidivist statute. Gaskins, 825 P.2d at 34. The determination of the scope of the requisite proportionality review requires an initial evaluation of the severity of the sentence and the gravity of the underlying offenses. The record contains sufficient information to permit this court to determine that the sentence imposed *845 upon Cisneros does not violate the Eighth Amendment's prohibition against cruel and unusual punishments and that no extended proportionality review is required. Thus I concur in the result reached by the majority with respect to this case.
B
While the record in People v. Cisneros contains sufficient information to permit this court to conduct an abbreviated proportionality review, the record in People v. Ates does not. I therefore conclude that the court of appeals did not abuse its discretion in remanding the case to the trial court with directions to conduct an appropriate proportionality review. The court of appeals did err, however, in concluding that Ates was entitled to an extended proportionality review as a matter of law. In my view, the scope of the proportionality review should be determined by the trial court in its discretion.
Prior to trial, Ates moved to dismiss the habitual criminal charge filed against him. Relying upon People v. Gutierrez, 622 P.2d 547 (Colo.1981), he argued that the three offenses underlying the habitual criminal charge were so minor in nature that sentencing pursuant to the recidivist statute would constitute a cruel and unusual punishment. Those offenses included a conviction for the offense of sale of narcotic drugs, a conviction for the offense of menacing by use of a deadly weapon, and a conviction for the offense of violating bail bond conditions. The trial court expressed reservations about the gravity of the offense of violating bail bond conditions, but stated that in view of the legislative classification of that offense as a felony punishable by imprisonment for up to eight years it was not a minor offense. The trial court also stated that the other offenses underlying the habitual offender charge were "not minor" and denied the motion. However, because Ates did not ask the trial court to conduct a proportionality review subsequent to his conviction, it did not consider all the relevant offenses.
We stated in Gaskins, 825 P.2d at 37, that the offense of sale of narcotic drugs is viewed with great seriousness. Thus, for purposes of cruel and unusual punishments analysis, the record establishes that Ates' 1981 conviction is a conviction for a grave offense.
However, while the offense of menacing with a deadly weapon would appear by its very definition to involve a threat of harm or violence to another, the record suggests that Ates' conduct in the course of committing that offense might not have placed others in jeopardy. The offense is defined as follows:
Menacing. A person commits the crime of menacing if, by any threat or physical action, he knowingly places or attempts to place another person in fear of imminent serious bodily injury. Menacing is a class 3 misdemeanor, but, if committed by the use of a deadly weapon, it is a class 5 felony.
ง 18-3-206, 8B C.R.S. (1986). We have held that the gist of this offense is the intent to cause fear, not the intent to cause injury. People v. McPherson, 200 Colo. 429, 432, 619 P.2d 38, 40 (1980); People v. Stout, 193 Colo. 466, 467, 568 P.2d 52, 53 (1977). While the use of a deadly weapon exacerbates the potential for violence or harm, the circumstances surrounding the commission of the offense might warrant the conclusion that as committed the offense was not substantially grave for purposes of cruel and unusual punishments analysis.
The record of Ates' conviction for the offense of menacing with a deadly weapon consists of copies of the complaint and information, the trial court's minute orders, a mittimus, and an amended mittimus. The record also contains copies of fingerprint charts and photographs. The complaint and information initially charged Ates with two offenses of menacing with a deadly weapon occurring on the same date but involving two separate victims. One of the charges was dismissed at the conclusion of a preliminary hearing. Ates was convicted of the remaining charge after a bench trial. Because the offense of menacing encompasses a broad range of conduct, further information concerning the circumstances *846 of the offense as committed by Ates might be deemed significant by a court evaluating the severity of that offense for proportionality purposes.
If the record clearly established that all but one of the four relevant offenses in this case were very grave for purposes of proportionality review, an abbreviated review would no doubt prove sufficient to warrant the conclusion that in combination the underlying offenses were of sufficient gravity to warrant the harsh penalty imposed upon Ates. However, the record also suggests questions with respect to the gravity of the offense of violation of bail bond conditions. The record of that conviction consists of a transcript of the providency hearing, copies of the information and the trial court's minute orders, and copies of fingerprints and photographs. The trial court's minute orders reflect that Ates was convicted of felony menacing on June 3, 1986; that a sentencing hearing was set for July 11, 1986, and Ates' bond was continued to that date; that on July 11, 1986, the sentencing hearing was continued to August 1, 1986, and Ates' bond was revoked; that on July 17, 1986, Ates was released from custody; and that on August 1, 1986, Ates did not appear for the scheduled sentencing hearing. The transcript of the providency hearing contains testimony by Ates explaining his failure to appear at the August 1, 1986, hearing. A court conducting a proportionality review might conclude that further information concerning the characteristics of this offense would be appropriate in assessing its gravity.
The record thus suggests that two of the offenses underlying the habitual offender charge filed against Ates may not be particularly grave offenses. In these circumstances, I conclude that the trial court is more appropriately positioned to determine on the basis of the record whether all the offenses, including the offenses for which Ates was convicted in the case-in-chief, are in combination of sufficient gravity to permit the conclusion that the sentence is not constitutionally disproportionate or whether further information not contained in the record would be required to permit such conclusion.
The majority has determined in these cases that this court should conduct limited proportionality reviews without considering the ages of Cisneros and Ates. While this court is as capable as any other Colorado court to conduct a limited proportionality review, Gaskins holds that appellate courts also have discretion to require trial courts to conduct proportionality reviews in particular cases. The court of appeals exercised such discretion in People v. Ates; under the circumstances, its decision to remand the case did not constitute an abuse thereof. By electing to reverse the court of appeals decision, the majority invites appellants and appellees unhappy with lower court decisions respecting Eighth Amendment challenges to seek relief from this court. Such prospect will impair, rather than enhance, judicial economy. I would follow Gaskins in according lower courts discretion to determine what objective factors may be relevant in particular cases involving Eighth Amendment challenges. See Austin v. United States, ___ U.S. ___, ___ n. 15, 113 S.Ct. 2801, 2812 n. 15, 125 L.Ed.2d 488 (1993).
IV
The majority opinion precludes this and all other Colorado courts from considering the age of a defendant for any purpose in responding to Eighth Amendment challenges to habitual offender sentences. While one federal appeals court has stated that age is irrelevant to cruel and unusual punishments analysis, other federal and state courts have not ascertained so rigid a constraint on the humanitarian principles embodied in that amendment. The majority has also decided to conduct a limited proportionality review in a case wherein it has not found that the court of appeals abused its discretion in remanding the case to the trial court for a proportionality review. I disagree with those conclusions and with the rationale underlying them, and therefore concur specially in the result in People v. Cisneros and respectfully dissent in People v. Ates.
*847 I am authorized to state that Justice LOHR and Justice MULLARKEY join in this special concurrence and dissent.
NOTES
[1] ง 18-4-203(2)(a), 8B C.R.S. (1986).
[2] ง 18-4-401(1)(a), (2)(c), 8B C.R.S. (1986).
[3] Cisneros was sentenced to life imprisonment pursuant to Colorado's habitual criminal statute, ง 16-13-101, 8A C.R.S. (1986), and is eligible for parole after forty years under ง 17-22.5-104(2)(c), 8A C.R.S. (1986).
[4] Cisneros was fifty-nine years old at the time of sentencing.
[5] ง 12-22-310, 5A C.R.S. (1986); ง 18-18-105, 8B C.R.S. (1986).
[6] See ง 16-13-101(2), 8A C.R.S. (1986).
[7] Ates was forty years old at the time of sentencing.
[8] The relevant portion of the habitual criminal statute provides as follows:
XX-XX-XXX. Punishment for habitual criminals....
(2) Every person convicted in this state of any felony, who has been three times previously convicted, upon charges separately brought and tried, and arising out of separate and distinct episodes, either in this state or elsewhere, of a felony ... shall be adjudged an habitual criminal and shall be punished by imprisonment in a correctional facility for the term of his or her natural life.
ง 16-13-101(2), 8A C.R.S. (1986).
[9] งง 18-2-101(1), 18-4-203(2), 8B C.R.S. (1986).
[10] ง 18-4-203(2), 8 C.R.S. (1978 & 1981 Supp.).
[11] งง 18-2-101(1), 18-4-203(2), 8 C.R.S. (1978).
[12] ง 18-2-101(1), 8 C.R.S. (1973); ง 12-22-302, 5 C.R.S. (1973).
[13] ง 40-3-7, 3 C.R.S. (1963).
[14] ง 40-3-5, 3 C.R.S. (1963).
[15] ง 40-5-12, 3 C.R.S. (1953).
[16] Cisneros did not specify in his motion whether he was seeking an extended or an abbreviated form of proportionality review.
[17] Although Cisneros did not specify at trial whether he was relying upon the Eighth Amendment of the United States Constitution or article II, section 20, of the Colorado Constitution, his brief before the court of appeals asserted a violation only of the Eighth Amendment. We therefore deem his challenge here to be based solely upon the Eighth Amendment.
[18] See ง 17-22.5-104(2)(c), 8A C.R.S. (1986).
[19] Cisneros filed a petition for certiorari on the issue of "whether counts 3, 5, and 9 could not be used for habitual criminal purposes, as Mr. Cisneros' prima facie showing of unconstitutionality was unrebutted by the prosecution." We denied this petition.
[20] ง 12-22-310, 5A C.R.S. (1986); ง 18-18-105, 8B C.R.S. (1986).
[21] ง 12-22-310; ง 18-18-105.
[22] งง 12-22-302, -322(2)(b), 5 C.R.S. (1978 & 1980 Supp.).
[23] ง 18-3-206, 8B C.R.S. (1986).
[24] ง 18-8-212(1), 8B C.R.S. (1986).
[25] The jury was unable to reach a verdict as to count 2, the charge of possession of a controlled substance with intent to distribute, dispense, or sell. The prosecution orally moved for a dismissal of count 2, and the district court granted this motion.
[26] See ง 17-22.5-104(2)(c), 8A C.R.S. (1986). Ates did not again request a proportionality review of his sentence, but he preserved the issue of the trial court's denial of his pretrial motion for such review in a post-trial motion.
[27] Because the record on appeal does not contain a transcript of the sentencing hearing, we cannot ascertain whether Ates again requested the trial court, at sentencing, to consider the constitutionality of the life sentence prescribed by the habitual criminal statute.
[28] In Smith, we also considered federal cases from the Tenth and Eighth Circuit Courts of Appeals in concluding that age is not a relevant factor in proportionality analysis. People v. Smith, 848 P.2d 365, 375 (Colo.1993); see United States v. O'Driscoll, 761 F.2d 589, 599 (10th Cir.1985) ("A sentence of imprisonment for a very long term of years, the effect of which is to deny a prisoner eligibility for parole until a time beyond his life expectancy, does not violate the Eighth Amendment prohibition of imposition of cruel and unusual punishment."); United States v. Murphy, 899 F.2d 714, 719 (8th Cir.1990) (emphasis added) (holding that forty-year-old narcotics defendant's "present age is irrelevant to the validity of his sentences under the Eighth Amendment," and that, "[a]lthough the sentences are stringent, we hold that they do not violate the constitutional prohibition against cruel and unusual punishment"); United States v. Mendoza, 876 F.2d 639, 640-41 (8th Cir.1989) (holding that a fifteen-year sentence imposed upon a defendant convicted of narcotics offenses did not constitute cruel and unusual punishment in violation of the Eighth Amendment, even though the defendant suffered from chronic kidney failure, and claimed that his life expectancy was substantially shorter than normal).
[29] ง 18-3-204, 8B C.R.S. (1986).
[30] ง 18-2-101, 8B C.R.S. (1986).
[31] Gaskins received a sentence of four years' imprisonment for the 1976 conviction.
[32] Gaskins received a sentence of eighteen months' imprisonment plus one year of parole for the June 1981 conviction.
[33] The court sentenced Gaskins to four years' imprisonment plus one year probation for the August 1981 conviction.
[34] Kan.Stat.Ann. ง 21-3708.
[35] Kan.Stat.Ann. ง 21-3701.
[36] Kan.Stat.Ann. ง 21-3710.
[1] Inexplicably, the majority also holds that "Cisneros and Ates are not entitled to an extended proportionality review simply because their respective life expectancies do not exceed the forty-year period of parole ineligibility." Maj. op. at 828. If a defendant's age cannot be considered in a proportionality review of a sentence, the defendant's life expectancy, which is calculated on the basis of age, must also be irrelevant to either the substantive or procedural prongs of cruel and unusual punishments analysis.
[2] The Court addressed the Eighth Amendment issues only cursorily in Graham, McDonald, and Moore.
[3] Prior to the adoption of the Fourteenth Amendment, the Eighth Amendment was held applicable only to the United States Government. Pervear v. Commonwealth, 72 U.S. (5 Wall.) 475, 480, 18 L.Ed. 608 (1866); Ex Parte Watkins, 32 U.S. (7 Pet.) 568, 574, 8 L.Ed. 786 (1833). However, in Pervear the Court made the following observation in the course of rejecting various challenges to a Massachusetts statute imposing fines for maintaining a tenement for the sale or keeping of intoxicating liquors without appropriate license:
We perceive nothing excessive, or cruel, or unusual in this. The object of the law was to protect the community against the manifold evils of intemperance. The mode adopted, of prohibiting under penalties the sale and keeping for sale of intoxicating liquors, without license, is the usual mode adopted in many, perhaps, all of the States.
Pervear, 72 U.S. at 480.
[4] Debates over the sources influencing the adoption of the Eighth Amendment and the actual knowledge and intent of those who drafted its language has not abated. Compare Anthony F. Granucci, "Nor Cruel and Unusual Punishments Inflicted:" The Original Meaning, 57 Cal.L.Rev. 839 (1969); Deborah A. Schwartz and Jay Wishingrad, The Eighth Amendment, Beccaria, and the Enlightenment: An Historical Justification for the Weems v. United States Excessive Punishment Doctrine, 24 Buff.L.Rev. 783 (1975); Thomas E. Baker and Fletcher N. Baldwin, Jr., Eighth Amendment Challenges to the Length of a Criminal Sentence: Following the Supreme Court "From Precedent to Precedent", 27 Ariz. L.Rev. 25 (1985) with Note, The Cruel and Unusual Punishment Clause and the Substantive Criminal Law, 79 Harv.L.Rev. 635 (1966) and Charles W. Schwartz, Eighth Amendment Proportionality Analysis and the Compelling Case of William Rummel, 71 J.Crim.L. & Criminology 378 (1980).
[5] Some commentators have read Weems narrowly to hold only that the Eighth Amendment prohibits barbaric modes of punishment. See, e.g., William H. Mulligan, Cruel and Unusual Punishments: The Proportionality Rule, 47 Ford. L.Rev. 639 (1979). This view does not explain the majority's references to other punishments for other offenses or the fact that Justice White's dissent concluded that the Amendment does not contain a proportionality principle.
[6] See Badders v. United States, 240 U.S. 391, 36 S.Ct. 367, 60 L.Ed. 706 (1916) (Eighth Amendment challenge to federal statute authorizing separate fines for separate mail fraud offenses rejected in single statement no ground existed for declaring the punishment unconstitutional); Graham v. West Virginia, 224 U.S. 616, 32 S.Ct. 583, 56 L.Ed. 917 (1912) (Eighth Amendment challenge to West Virginia recidivist statute requiring life sentence for defendant twice previously sentenced to confinement in penal institutions rejected in single statement that cruel and unusual punishment had not been inflicted on the defendant). In Louisiana ex rel. Francis v. Resweber, 329 U.S. 459, 463-64, 67 S.Ct. 374, 376-77, 91 L.Ed. 422 (1947), the Court held that a convicted murderer was not subjected to a constitutionally impermissible method of punishment when a second gubernatorial warrant authorizing death by electrocution was issued because an initial effort to electrocute the defendant was unsuccessful due to an equipment malfunction. Due to the unique circumstances of the cases, none of the opinions considered questions of proportionality.
[7] The Court also held in Robinson that the due process clause of the Fourteenth Amendment made the Eighth Amendment directly applicable to the states. Robinson, 370 U.S. at 666-67, 82 S.Ct. at 1420-21.
[8] Cases addressing Eighth Amendment challenges to conditions of incarceration also illustrate recognition of this principle. See Helling v. McKinney, ___ U.S. ___, 113 S.Ct. 2475, 125 L.Ed.2d 22 (1993); City of Revere v. Massachusetts Gen. Hosp., 463 U.S. 239, 103 S.Ct. 2979, 77 L.Ed.2d 605 (1983); Rhodes v. Chapman, 452 U.S. 337, 101 S.Ct. 2392, 69 L.Ed.2d 59 (1981); Estelle v. Gamble, 429 U.S. 97, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976). Cf. Schick v. Reed, 419 U.S. 256, 95 S.Ct. 379, 42 L.Ed.2d 430 (1974). See also Naovarath v. State, 105 Nev. 525, 779 P.2d 944, 947 (1989), quoting unpublished draft opinion, Box 171, Harold Hitz Burton Papers, Library of Congress, quoted in D. Danelski, "The Riddle of Frank Murphy's Personality and Jurisprudence," 13 Law & Social Inquiry 196 (1988), as follows:
More than any other provision in the Constitution the prohibition of cruel and unusual punishment depends largely, if not entirely, upon the humanitarian instincts of the judiciary. We have nothing to guide us in defining what is cruel and unusual apart from our consciences. A punishment which is considered fair today may be considered cruel tomorrow. And so we are not dealing here with a set of absolutes. Our decision must necessarily spring from the mosaic of our beliefs, our backgrounds and the degree of our faith in the dignity of the human personality.
In a recent decision addressing Eighth Amendment issues, the Court held the amendment and its statutorily based proportionality principle applicable to civil forfeitures of property seized in connection with drug-related offenses. Austin v. United States, ___ U.S. ___, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). The Court held that such in rem forfeitures should be deemed punishments for Eighth Amendment purposes, emphasizing that the amendment was designed to limit the government's power to punish. Id. at ___, 113 S.Ct. at 2803-04. The majority indicated that in developing appropriate Eighth Amendment challenges to in rem tests in the context of forfeiture proceedings, lower courts could consider factors other than the relationship between the forfeited property and the offense. Id. at ___ n. 15, 113 S.Ct. at 2812 n. 15.
[9] In Hart v. Coiner, 483 F.2d 136 (4th Cir.1973), cert. denied, 415 U.S. 938, 94 S.Ct. 1454, 39 L.Ed.2d 495 (1974), the Court of Appeals for the Fourth Circuit held that a life sentence imposed upon a defendant convicted over a twenty-year period of time of perjury, writing a check for $50 on insufficient funds, and transporting forged checks totaling $140 over state lines under a West Virginia recidivist statute violated the Eighth Amendment. The court examined several factors in reaching its conclusion: the nature and gravity of the offense, including whether the offense was violent; the legislative purpose behind the severe punishment; other severe punishments adopted by the legislature; a comparison of punishments for recidivism adopted in other states; and a comparison of punishments for other offenses adopted in the same jurisdiction. Id. at 140-42.
[10] Cases prior to Bergstrom in which we upheld cruel and unusual punishments challenges by persons sentenced as habitual criminals include People v. Thomas, 189 Colo. 490, 542 P.2d 387 (1975), and Bernard v. Tinsley, 144 Colo. 244, 355 P.2d 1098 (1960), cert. denied, 365 U.S. 830, 81 S.Ct. 718, 5 L.Ed.2d 708 (1961).
[11] In view of the provisions of our habitual criminal statute, ง 16-13-101(2), 8A C.R.S. (1986), I employ the article "an" to modify the term "habitual offender" or "habitual criminal."
[12] A defendant sentenced as an habitual offender might seek to establish that, for purposes of constitutional proportionality review, the circumstances surrounding the commission of a particular prior offense supports the conclusion that the offense was not substantially grave.
[13] The defendant's entire proportionality argument consisted of the following two sentences:
The automatic and impliedly objective and non-quantitative imposition of [the] statutory sentence in the instant situation denied the defendant of [sic] any type of proportionality consideration. The automatic sentencing of a twenty year old offender with no prior felony record is repugnant to the spirit of the Eighth Amendment Constitutional prohibition against Cruel and Unusual punishment.
[14] In People v. Bullock, 440 Mich. 15, 485 N.W.2d 866 (1992), the Michigan Supreme Court concluded that the statutory provision at issue in Harmelin violated the prohibition against "cruel or unusual punishment" established by art. 1, ง 16, of the Michigan Constitution.
[15] In Austin v. United States, ___ U.S. ___, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993), the Supreme Court held that in developing a test to determine whether a civil forfeiture imposed upon a drug offender violated the proportionality principle embodied in the Eighth Amendment, lower courts were free to consider factors other than the penalty and the gravity of the offense. This approach mirrors the flexibility we emphasized in Gaskins and supports the conclusion that rigid rejection of the specific factor of age is incompatible with cruel and unusual punishments jurisprudence in recidivist sentencing contexts.
[16] In imposing punishment pursuant to statutes establishing ranges of sentences for a particular offense, trial courts routinely consider the age of a particular offender when selecting the appropriate period of incarceration.
[17] In United States v. Murphy, 899 F.2d 714, 719 (8th Cir.1990), the court observed that the defendant's "present age is irrelevant to the validity of his sentences under the Eighth Amendment" in rejecting a forty-year-old defendant's argument that concurrent sentences, the longest of which was for twenty-five years, were constitutionally disproportionate. The defendant was convicted of three separate offenses: distribution of methamphetamine, aiding and abetting the distribution of methamphetamine, and conspiracy to distribute and to possess with intent to distribute cocaine and methamphetamine. However, the court also stated that "the sentences are stringent," id., thus acknowledging the defendant's argument that because of his age the sentence amounted to a life sentence without possibility of parole. In view of the gravity of the three offenses, no extended review was necessary. To the extent the quoted sentence may be construed to suggest a conclusion that the factors of a defendant's age and life expectancy can never be deemed relevant for any purpose in limited or extended proportionality review, I would adhere to our decision in Gaskins to reject so narrow a construction of Eighth Amendment jurisprudence.
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530 F.2d 967
Georgev.Ansell
75-2226
UNITED STATES COURT OF APPEALS Fourth Circuit
11/19/75
1
D.Md.
VACATED AND COMPLAINT DISMISSED AS MOOT
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101 S.W.3d 490 (2002)
Lufus FOSTER, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-00-01424-CR.
Court of Appeals of Texas, Houston (1st Dist.).
November 21, 2002.
Rehearing Overruled March 14, 2003.
*493 R. Jeanette Parham, Hempstead, for Appellant.
Sherry L. Robinson, Criminal District Attorney, Stephanie K. Stephens, Assistant Criminal District Attorney, Hempstead, for Appellee.
Panel consists of Justices NUCHIA, JENNINGS and RADACK.
OPINION
SHERRY RADACK, Justice.
A jury found appellant, Lufus Foster, guilty of possession with intent to deliver cocaine weighing between 4 and 200 grams and assessed punishment at five years' confinement. In six points of error appellant contends the trial court erred by: (1) denying his motion to suppress evidence; (2) denying his motion to suppress appellant's statement; (3) admitting evidence for which the State had failed to establish a proper chain of custody; (4) refusing to rule on certain pretrial motions; (5) refusing to submit a jury charge of the lawfulness of the police conduct; and (6) depriving him of a fair trial. We affirm.
BACKGROUND
On July 14, 1998, Waller County Sheriff Sergeant Robert Burns stopped a green Hyundai for traveling 77 miles per hour in a 70 miles per hour traffic zone. Ruben Lee was driving the car and appellant was his passenger. Burns approached the driver's side window, and appellant immediately leaned over and handed his identification card to Burns. Although the air conditioner appeared to be on high, appellant had sweat on his forehead.
Lee stepped out of the car to have a conversation with Burns. Although Lee told Burns that he and appellant had been in Galveston all day visiting Lee's grandmother, Lee did not know where his own grandmother lived. He told Burns that he drove around Galveston until he saw a familiar house.
Burns then spoke with appellant, who told him that the two men had tried to go to a flea market in Houston, but that the flea market was closed. After that, appellant said that he and Lee had driven around Houston talking to some girls. Appellant also told Burns that he and Lee had not been anywhere else that day. Burns then asked Lee for consent to search the car, and Lee agreed, signing a voluntary consent to search form.
Before searching the car, Burns asked Lee to sit in the rear of his patrol car because:
*494 I generally ask the people if they would mind sitting in my car, number one, I don't have to worry about them getting run over by somebody that drives off the road. And number two, you don't have to worry about somebody sneaking up behind you while you are looking in a vehicle.
Burns patted Lee down before Lee got in the back of the patrol car. Lee had a small knife, which Burns took from him. The knife was not illegal, and Burns planned to return it after the search.
Burns then explained to appellant that Lee had given permission to search the car. Burns also asked appellant if he would sit in the back of the patrol car, and explained that waiting in the back of the patrol car was for appellant's own safety, as well as that of the officer. Before appellant got in the patrol car, Burns patted him down and removed a small knife, which Burns took.
At the motion to suppress evidence hearing, Burns testified about the initial encounter with the appellant and Lee as follows:
Q: And so you placed Mr. Lee and Mr. Foster in the back of your patrol car?
Burns: Correct.
Q: Did you handcuff them?
Burns: Nope.
Q: Okay. Did you tell them hey, if you change your mind at any time, you can stop this search?
Burns: Yes.
Q: Did you tell them that?
Burns: Told them they were not under arrest, and that for their safety and mine, I was going to ask them if they would sit in the back seat of my patrol car.
Q: And they cooperated?
Burns: Yes, voluntarily.
As Lee and appellant waited in the patrol car, Burns called for a canine unit to conduct the search. The dog alerted on the driver's side floorboard, but no narcotics were found in the car. This, in Burns's experience, led him to believe that the narcotics were located in the socks or shoes of the car's occupants.
Burns asked if Lee would remove his shoes and socks, which Lee did voluntarily. There were no drugs in Lee's shoes or socks. As Lee was taking off his socks and shoes, Burns noticed that appellant, who was still in the patrol car, was making furtive gestures down near his feet. When Burns shined his flashlight on appellant, appellant sat up quickly. Burns opened the door of the police car and noticed that appellant had his hands down the front of his pants. When appellant removed his hands from his pants and got out of the car, Burns noticed that there were two lumps in the front of appellant's pants that had not been there earlier.
At this point, there is some dispute about whether or not Burns immediately began a second pat-down search of appellant. At a pretrial hearing, Burns testified that he began a second pat-down search when a bag of white powder fell out of appellant's shorts. However, after reviewing his police report, Burns testified that the bag of white powder actually fell out of appellant's shorts as appellant was getting out of the car, before Burns began a second pat-down search.
After the bag fell out of appellant's shorts, there was a brief altercation between appellant and Burns, during which a second bag of powder fell out of appellant's shorts. Appellant was arrested and taken to the Waller County jail. Once there, he was searched and a third bag of powder was discovered in appellant's pants. Subsequent *495 testing revealed cocaine weighing approximately 65.66 grams.
ISSUES AND ANALYSIS
1. The Motion to Suppress Evidence
In point of error one, appellant contends the trial court erred in denying his motion to suppress evidence. Specifically, he argues Sergeant Burns's two pat-down searches were illegal.
In reviewing the trial court's ruling on the motion to suppress, we apply a bifurcated standard of review. Carmouche v. State, 10 S.W.3d 323, 327 (Tex. Crim.App.2000). We give almost total deference to the trial court's determination of historical facts, while we conduct a de novo review of the trial court's application of the law to those facts. Id. During a motion to suppress hearing, the trial court is the sole trier of fact; accordingly, the trial judge may choose to believe or disbelieve all or any part of a witness's testimony. See State v. Ross, 32 S.W.3d 853, 855 (Tex. Crim.App.2000); King v. State, 35 S.W.3d 740, 742 (Tex.App.-Houston [1st Dist.] 2000, no pet.). When, as here, no findings of fact are filed, we must view the evidence in the light most favorable to the ruling and sustain the decision if it is correct on any applicable theory of the law. Ross, 32 S.W.3d at 855-56; King, 35 S.W.3d at 742.
A. Initial pat-down
Appellant first argues that the initial pat-down search and detention of appellant in the back of the patrol car were illegal because Burns did not advise appellant that he did not have to submit to the search at all and he had no information giving rise to a reasonable suspicion that criminal activity was occurring. However, Burns testified that he told appellant and Lee that they were not under arrest and that he asked them to sit in the back of the patrol car for his safety, as well as their own. He further testified that they cooperated voluntarily. We have previously held that it is not unreasonable per se for an officer to request a consent to search after the completion of a traffic stop. See Spight v. State, 76 S.W.3d 761, 768 (Tex. App.-Houston [1st Dist.] 2002, no pet.). A search pursuant to voluntary consent does not require reasonable suspicion. Id. at 770-71. Constitutional prohibitions against warrantless searches and seizures do not come into play when a person gives free and voluntary consent to search. Id. at 768. Here, the record supports an implied finding that appellant's consent to the initial pat-down search and request to stay in Burns's patrol car was given freely and voluntarily.
B. Second pat-down
Appellant also argues that because Burns had already conducted his first pat-down search and determined appellant was not carrying any weapons, any search subsequent to that was no longer a valid search. Specifically, appellant argues that Burns did not have sufficient probable cause to warrant the second pat-down search, because the first pat-down search had revealed no weapons.[1]
1. Probable cause
Here, the second pat-down search was not a Terry pat-down for weapons.[2]*496 The second search was a warrantless search based on probable cause developed during the consensual searches of Lee, appellant, and Lee's car. Moreover, exigent circumstances[3] existed justifying the second warrantless search.
A passenger's mere presence in a car that the police have probable cause to suspect contains contraband does not, in and of itself, give the police the right to also search the passenger. See United States v. Di Re, 332 U.S. 581, 586-87, 68 S.Ct. 222, 224-25, 92 L.Ed. 210 (1948). Probable cause to search a car does not, automatically, confer an incidental right to search all persons in the car. Id.
In this case, Sergeant Burns had Lee's consent to search the car. After the dog positively alerted on the car,[4] Sergeant Burns had developed the following information, which indicated that narcotics were probably on appellant's person: (1) appellant and Lee had given contradictory stories about where they had been that day; (2) appellant appeared nervous and had sweat on his forehead; (3) Burns, in his experience, knew that when a dog alerts on a floorboard, the contraband is often discovered in an occupant's shoes or socks; (4) no drugs were discovered in Lee's shoes or socks; (5) appellant had made furtive gestures toward his feet while Burns was searching Lee; and (6) Burns noticed two bulges in appellant's shorts where he had seen none earlier.
Under these circumstances, we hold that Burns's second pat-down search of appellant was not unreasonable because Burns had developed had probable cause to search to appellant's person.
2. Exigent Circumstances
We turn now to the issue of whether exigent circumstances were present such that obtaining a warrant was impracticable. See McNairy, 835 S.W.2d at 107. In this case, Burns was conducting a car search, as well as a search of appellant's person, on the side of the road, after a traffic stop. "As in all car-search cases, the `ready mobility' of an automobile creates a risk that the evidence or contraband will be permanently lost while a warrant is obtained." Wyoming v. Houghton, 526 U.S. 295, 304, 119 S.Ct. 1297, 1302, 143 L.Ed.2d 408 (1999). The same exigency that justifies a warrantless car search based on probable cause also justifies a search of the car's occupant, if the police officer also has probable cause to believe that the contraband is located on the occupant. Thus, we hold that the second search of appellant was not unreasonable under either the United States or Texas Constitutions.[5]
Therefore, the trial court did not err by denying appellant's motion to suppress evidence.
We overrule point of error one.
*497 2. Admissibility of Appellant's Statement
In point of error two, appellant contends his written statement should have been suppressed because it was not freely and voluntarily given. Specifically, appellant argues his statement was involuntary because: (1) Burns promised that Lee would be released if appellant gave a statement; (2) Burns woke appellant up to take the statement; and (3) appellant's low level of intelligence prevented him from understanding the statement. We address each contention separately.
A. Promise to release Lee
Appellant testified that Burns promised to release Lee in exchange for a statement. Burns, however, denied making such a promise. The trial court, as the fact finder, was entitled to believe Burns and disbelieve appellant. See Ross, 32 S.W.3d at 855.
B. Appellant awakened to give statement
Appellant testified that he was asleep when Burns woke him up to take his statement. However, there is no evidence in the record that appellant was suffering from sleep deprivation such that he did not understand what he was doing. Lack of sleep for as long as 16 hours does not, in and of itself, render a confession involuntary. See Barney v. State, 698 S.W.2d 114, 120 (Tex.Crim.App.1985).
C. Appellant's level of intelligence
Appellant testified that he is "a child still stuck in a grown body." To support his claim that he was unable to understand his statement, he points to Burns's testimony that Burns had, at times, to explain the meaning of words used in the statement. This argument mischaracterizes the following testimony by Burns:
[Defense Counsel]: You have testified that the statement or words that came out of Mr. Foster's mouth, but then when you read them back to him, he didn't understand the words he used?
[Burns]: I would say better way for me to put that would be he did not recognize some of the words that he had spoken that were then written down on the paper. He was capable of, of speaking the word, but did not necessarily recognize them
[Defense Counsel]: He didn't recognize
[Burns]: in print.
[Defense Counsel]: He didn't recognize them when you spoke them?
[Burns]: No, ma'am. He would recognize the, I assume when he spoke them because they were his words. But on the paper, the word itself, as I told you, we went along word for word. And when we would come to a word that he did not recognize, he would ask now, what was that or what is that?
Burns's testimony was not that appellant did not understand the words he used when he dictated his statement to the officer, but was that appellant could not read the printed words when his statement was reduced to writing. However, a person's illiteracy alone will not necessarily render his statement inadmissible. The Court of Criminal Appeals has held that there is no requirement that a person be literate before his statement can be admissible. Westley v. State, 754 S.W.2d 224, 229 (Tex.Crim.App.1988) (citing Pete v. State, 501 S.W.2d 683, 685 (Tex.Crim.App. 1973)).
Accordingly, we overrule point of error two.
*498 3. Chain of Custody
In point of error three, appellant contends the trial court erred by admitting the cocaine into evidence because the State did not establish a proper chain of custody. It is within the trial judge's discretion to determine the sufficiency of a predicate, and, absent an abuse of discretion, we will not reverse the trial court's judgment. Smith v. State, 683 S.W.2d 393, 405 (Tex.Crim.App.1984).
Burns testified that State's Exhibit 3 was the cocaine he recovered from appellant and placed in the narcotics lock box at the Waller County Sheriff's Department. Officer Glenn White testified that State's Exhibit No. 3 was the same cocaine that he took to the Department of Public Safety's crime lab for testing. Dottie Collins testified that Exhibit No. 3 was the cocaine she analyzed.
Appellant contends that this chain of custody is insufficient because Officer White testified that he had no independent recollection of delivering the cocaine to the lab or writing the report from which he testified. We disagree.
If a substance is properly identified, most questions concerning care and custody go to the weight to be given the evidence, not to its admissibility, unless there is a showing that the substance was tampered with or changed. Gallegos v. State, 776 S.W.2d 312, 315 (Tex.App.-Houston [1st Dist.] 1989, no pet.). When the State shows the beginning and the end of the chain of custody, any gaps in between go to the weight rather than admissibility, particularly if the chain of custody through to the laboratory is shown. Id. at 315-16.
In this case, the State showed a complete chain of custody from seizure to the lab. As there was no evidence of tampering, any gaps caused by Officer White's testimony went to the weight of the evidence, not its admissibility.
We overrule point of error three.
4. Pretrial motions
In point of error four, appellant contends that the trial court erred by refusing to rule before trial on his motions regarding the State's intent to introduce extraneous-offense evidence. Appellant argues that "[t]his denial of the court to conduct these hearings before trial denied defendant the ability to make an informed assessment of whether or not the defendant could testify in his own behalf during guilt or innocence." Appellant's argument seems to be that, had he known that he would not be impeached with extraneous offenses, he might have chosen to testify.
Appellant cites no authority for requiring the trial court to rule on the admissibility of extraneous offenses pretrial. Tex. R.App. P. 38.1. Accordingly, we overrule point of error four.
5. Jury Charge
In point of error five, appellant contends the trial court erred by refusing to submit a jury charge on the legality of the second pat-down search of appellant. If evidence admitted at trial raises any doubts as to the legality of how it was obtained, the jury shall be instructed that if it believes, or has reasonable doubt, that the evidence was obtained illegally, then the jury must disregard the evidence. Tex.Code Crim. Proc. Ann. art. 38.23(a) (Vernon Supp.2002). When there is a factual dispute as to how evidence was obtained, the trial court is statutorily required to give an article 38.23 instruction in the jury charge. Wesbrook v. State, 29 S.W.3d 103, 121 (Tex.Crim.App.2000); see also Malik v. State, 953 S.W.2d 234, 241 (Tex.Crim.App.1997).
*499 Appellant argues that a 38.23 instruction was required because there was a factual dispute about whether the cocaine fell out of appellant's pants before or after Burns began the second pat-down search. However, we have already held that, even if Burns had already begun the second pat-down search when the cocaine fell, he had the requisite level of probable cause necessary to validate such a search. Therefore, the resolution of the alleged factual dispute would not have decided whether the search was lawful. Accordingly, the trial court did not err by refusing the requested 38.23 instruction.
We overrule point of error five.
6. Unfair Trial
In point of error six, appellant attacks three separate rulings, or comments, made by the trial court during the trial: (1) the denial of an instruction to disregard unrecorded statements made while appellant was in custody; (2) the introduction, at punishment, of the forfeiture of $17,000, by another person unrelated to this case; and (3) repeated instructions to defense counsel, both before and outside the presence of the jury, on the proper method of cross-examining a witness with prior inconsistent statements. Appellant summarily concludes that all three alleged errors violated article 2.03(b) of the Texas Code of Criminal Procedure by denying appellant the right to a fair trial. However, we decline to address this point of error because it is multifarious and inadequately briefed.
A multifarious point is one that embraces more than one specific ground. Stults v. State, 23 S.W.3d 198, 205 (Tex. App.-Houston [14th Dist.] 2000, pet. ref'd). By combining more than one contention in a single point of error, an appellant risks rejection on the ground that nothing will be presented for review. Cuevas v. State, 742 S.W.2d 331, 336 n. 4 (Tex.Crim.App. 1987). However, an appellate court may address a multifarious point that is sufficiently developed in the brief.
In this case, appellant's brief is not sufficiently developed because it provides no argument or authority to show why the actions of the trial court were erroneous. Tex.R.App. P. 38.1. Instead, appellant merely quotes the language of article 2.03(b) and concludes that the presumption of innocence was impeded by the conduct of the trial court. Therefore, we hold this point of error is inadequately briefed, and, as such, is waived. See Lockett v. State, 16 S.W.3d 504, 505 n. 2 (Tex.App.-Houston [1st Dist.] 2000, pet. ref'd); see also Tex. R.App. P. 38.1(h)
We overrule point of error six.
CONCLUSION
We affirm the trial court's judgment.
NOTES
[1] As mentioned earlier, there was some dispute about whether the first bag of cocaine fell out of appellant's shorts before or after Burns began his second pat-down search of appellant. For purposes of this opinion, we accept appellant's assertion that the cocaine fell from his shorts during the second pat-down search. Therefore, the issue we decide today is whether Burns had sufficient probable cause to warrant a second pat-down search.
[2] Under Terry v. Ohio, an officer may conduct a limited pat-down search of a person's clothing when a reasonable and prudent person, given all of the surrounding circumstances, would be warranted in the belief that his safety or that of others was in danger. See Terry, 392 U.S. 1, 27, 88 S.Ct. 1868, 20 L.Ed.2d 889; O'Hara v. State, 27 S.W.3d 548, 551 (Tex.Crim.App.2000).
[3] A search based on probable cause, plus exigent circumstances, is an exception to the warrant requirement. See McNairy v. State, 835 S.W.2d 101, 107 (Tex.Crim.App.1991).
[4] A positive alert by a drug-sniffing dog is sufficient to establish probable cause to search. See Harrison v. State, 7 S.W.3d 309, 311 (Tex.App.-Houston [1st Dist.] 1999, pet. ref'd).
[5] See U.S. Const. amend. IV and Tex. Const. Art. 1, § 9.
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86 F.3d 1391
65 USLW 2045, 1996-2 Trade Cases P 71,472
James P. MARTIN, Plaintiff-Appellee, Cross-Appellant,v.MEMORIAL HOSPITAL AT GULFPORT, Wray Anderson, MitchellSalloum, Edward Reid, and Myrtis Franke,Defendants-Appellants, Cross-Appellees.
No. 95-60186.
United States Court of Appeals,Fifth Circuit.
July 10, 1996.
Larry D. Moffett, C. Michael Ellingburg, Lucy Carroll Lacey, Daniel, Coker, Horton and Bell, Jackson, MS, James Anthony Keith, Simpson & Keith, Gulfport, MS, for Martin.
Neville Henry Boschert, Richard Glenn Cowart, Watkins, Ludlam & Stennis, Jackson, MS, Robert C. Galloway, Gulfport, MS, William M. Rainey, Franke, Rainey & Salloum, Gulfport, MS, for defendants-appellants-cross-appellees.
Appeals from the United States District Court for the Southern District of Mississippi.
Before POLITZ, Chief Judge, and DeMOSS and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
1
The principal question presented by this case is whether a hospital, owned and operated by a municipality and a state subdivision hospital district, and the hospital's board of trustees, are immune from an antitrust claim under the Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) state action doctrine.
2
A nephrologist brought this antitrust action against the hospital and its board seeking to enjoin the enforcement of the hospital's contract with the medical supervisor (also a nephrologist) of its End Stage Renal Disease facility (ESRD). The contract grants the medical supervisor authority to plan, organize, conduct and direct the professional ESRD services and to provide and maintain complete physician care of ESRD patients personally or through his designated representative. Subsequently the hospital adopted a resolution formally interpreting the contract to mean that only the medical supervisor or his medical practice associate working under the direction and control of the medical supervisor, for whom the supervisor accepts full responsibility, has the right to perform chronic dialysis in the ESRD. Because the plaintiff nephrologist is not associated with the medical supervisor in practice, the hospital's enforcement of the contract and its resolution prevents the nephrologist from personally performing chronic renal dialysis for his patients in the hospital's ESRD.
3
The district court denied the hospital and the board a summary judgment declaring them to be immune from the federal antitrust claim, and they appealed. We reverse and remand for the entry of a summary judgment dismissing the federal antitrust action. We have jurisdiction of the appeal under the collateral order doctrine because the district court's ruling conclusively determines the disputed question, resolves an important issue completely separate from the merits of the action, and is effectively unreviewable on appeal from a final judgment. The state action doctrine immunizes the enforcement of the municipal-state subdivision hospital's exclusive contract with its ESRD supervisor because suppression of competition was the foreseeable result of the state statutes which (1) authorize only a health care provider having obtained a certificate of need to establish an ESRD, and (2) empower the hospital to contract with any individual for the providing of services by or to the hospital regarding any facet of the operation of the hospital or any division or department thereof, or any related activity, and to terminate such contract when deemed in the best interests of the hospital.
1. Facts and Procedural History
4
The parties by itemizations and responses stipulated to the facts for purposes of the motion for summary judgment. End Stage Renal Disease (ESRD) units are kidney dialysis units in which chronic renal dialysis is performed. Mississippi law prohibits the establishment, expansion, or relocation of an ESRD unless a Certificate of Need is first obtained from the state department of health. The Memorial Hospital at Gulfport obtained certificates of need for several ESRD facilities including the one involved in this case. The hospital began the operation of its ESRD units in 1981. Subsequently, the hospital entered into an exclusive medical director contract with Dr. Douglas Lanier whereby only Dr. Lanier or his designated representative had the right to perform chronic dialysis in the hospital's ESRD units. In 1986, the hospital and Dr. Lanier recruited Dr. James Martin to come to Gulfport to practice with Dr. Lanier as his associate. Dr. Martin was granted full medical staff privileges including the authority to perform chronic dialysis in the hospital's ESRD units. In November 1988, Dr. Martin and Dr. Lanier encountered some differences and terminated their relationship. Dr. Martin began practicing separately from Dr. Lanier. Afterwards, Dr. Martin did not attempt to perform chronic dialysis at the hospital's ESRD unit until March 1989 when he sought to admit a patient for chronic dialysis. The hospital refused to allow him to perform the chronic dialysis basing its action on the exclusive contract with Dr. Lanier. Dr. Martin wrote to the hospital asserting that he had a right to treat patients in the chronic ESRD unit. On June 26, 1989, the board of trustees of the hospital reevaluated whether Dr. Lanier's contract should remain exclusive and passed a resolution that reaffirmed the exclusive medical director contract, interpreting the contract to mean that only a physician in practice with and under the supervision and control of Dr. Lanier could perform chronic dialysis in the ESRD unit. In November of 1990, Dr. Martin's medical staff privileges were renewed with the exception of his right to personally perform chronic dialysis in the ESRD units, which the hospital denied based on the exclusive contract with Dr. Martin. Dr. Martin retained the authority to admit patients to the hospital and perform acute ESRD services on them as in-patients, but he must permit the medical supervisor or his associate-designee to perform chronic ESRD services for them as out-patients. The Memorial Hospital at Gulfport is a community hospital existing under Miss.Code Ann. § 41-13-10 et seq., and is jointly owned by the City of Gulfport and the Gulfport-West Harrison County Hospital District, a subdivision of the State of Mississippi. See Enroth v. Memorial Hospital at Gulfport, 566 So.2d 202, 206 (Miss.1990).
5
In 1990, Dr. Martin filed suit in the district court alleging that the hospital and its board had violated federal antitrust laws, violated his constitutional due process rights, interfered with his contractual relationships with his patients, and violated the state antitrust laws. The hospital and its board moved for summary judgment on all claims. The district court granted the defendants' motions in part and denied them in part. The hospital's motion for summary judgment was granted only to the extent of dismissing plaintiff's claims for damages under the general prohibition against recovery of damages for antitrust violations from any local government. 15 USCS § 35. The hospital's motion for summary judgment was denied as to all other claims for relief by plaintiff. The motion for summary judgment by the individual hospital board members was denied insofar as the plaintiff's claims for injunctive relief, attorneys fees and court costs under the federal anti-trust laws. As to all other claims for relief asserted by the plaintiff, the motion for summary judgment dismissing these claims against the individual hospital board members was granted.
6
The hospital and its board appealed from the district court's denial of summary judgment that they are entitled to state action immunity from suit or liability under the federal anti-trust laws. Dr. Martin filed a motion to dismiss the appeal for lack of jurisdiction on the grounds that the district court's ruling was interlocutory and not a final judgment. The appellants contend, however, that the ruling is appealable under the collateral order doctrine. Accordingly, the principal issues for our appellate review are (1) whether the district court's ruling that rejected the defendants' claim of state action immunity is appealable under the collateral order doctrine; and, if so, (2) whether the hospital and its board members are entitled to state action immunity from the plaintiff's federal anti-trust claim.
2. Jurisdiction
7
The district court's refusal to grant defendants' motions for summary judgment vindicating their entitlement to state action immunity is appealable under the collateral order doctrine. The district court's ruling meets all of the requisites of an appealable collateral order, viz., that it (a) is "effectively unreviewable" on appeal after trial; (b) conclusively determines the disputed question; and (c) resolves an important issue completely separate from the merits of the action. Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169 (5th Cir.1988).
8
Title 28 U.S.C. § 1291 provides for appeal from "final decisions of the district courts." Appeal is thereby precluded "from any decision which is tentative, informal or incomplete," as well as from any "fully consummated decisions, where they are but steps towards final judgment in which they will merge." Puerto Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 142-143, 113 S.Ct. 684, 687, 121 L.Ed.2d 605 (1993) (quoting Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546, 69 S.Ct. at 1225 (1949)). Nevertheless a judgment that is not the complete and final judgment in a case will be immediately appealable if it:falls in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.
9
Id. Thus, in Cohen, the Court held that appeal could be taken from a district court order denying the defendant's motion to compel the plaintiffs in a shareholder derivative suit to post a bond. The Court found the order appealable because it "did not make any step toward final disposition of the merits of the case and [would] not be merged in final judgment" and because, after final judgment, it would "be too late effectively to review the present order, and the rights conferred by the [bond] statute, if it is applicable, will have been lost." Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct. at 687.
10
The Court has held that orders denying individual officials' claims of absolute and qualified immunity, see Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982); Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) and Eleventh Amendment immunity, Puerto Rico Aqueduct, 506 U.S. 139, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993), are among those that fall within the ambit of Cohen. In Mitchell, the Attorney General of the United States appealed from a district court order denying his motion to dismiss on grounds of qualified immunity. The court of appeals held that the order was not appealable and remanded the case for trial. The Supreme Court reversed, holding that the order denying qualified immunity was collateral order immediately appealable under Cohen. The Court found that, absent immediate appeal, the central benefits of qualified immunity--avoiding the costs and general consequences of subjecting public officials to the risks of discovery and trial--would be forfeited, much as the benefit of the bond requirement would have been forfeited in Cohen. "The entitlement is an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial." Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815.
11
The Court in Puerto Rico Aqueduct, supra, held that the same rationale applies to claims of Eleventh Amendment immunity made by states and state entities possessing a claim to share in that immunity. Id. 506 U.S. at 144, 113 S.Ct. at 687. Under the terms of the Amendment, "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State....". U.S. Const. amend. XI. This withdrawal of jurisdiction effectively confers an immunity from suit. Id.
12
We conclude that Parker v. Brown state action immunity shares the essential element of absolute, qualified and Eleventh Amendment immunities--"an entitlement not to stand trial under certain circumstances." Mitchell v. Forsyth, 472 U.S. at 525, 105 S.Ct. at 2815. The Court in Parker v. Brown found "nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature." Parker v. Brown, 317 U.S. at 350-351, 63 S.Ct. at 313. Accordingly, the Court concluded:
13
In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.
14
The Sherman Act makes no mention of the state as such, and gives no hint that it was intended to restrain state action or official action directed by a state.
15
Id. 317 U.S. at 351, 63 S.Ct. at 313. While the Eleventh Amendment effectively confers an immunity from suit by a withdrawal of jurisdiction, Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct. at 687, the Sherman Act does so by not undertaking to prohibit a sovereign state from imposing an anticompetitive restraint as an act of government. See Parker v. Brown, 317 U.S. at 352, 63 S.Ct. at 314. One of the primary justifications of state action immunity is the same as that of Eleventh Amendment immunity--"to prevent the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties," Puerto Rico Aqueduct, 506 U.S. at 146, 113 S.Ct. at 689, and to "ensur[e] that the States' dignitary interests can be fully vindicated." Id.
16
A second major conception animating all of the immunity doctrines is that "where an official's duties legitimately require action in which clearly established rights are not implicated, the public interest may be better served by action taken 'with independence and without fear of consequences.' " Harlow v. Fitzgerald, 457 U.S. 800, 819, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982) (quoting Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 1217, 18 L.Ed.2d 288 (1967)). The "consequences" with which the court was concerned in Harlow were not limited to liability for money damages; they also included the general costs of subjecting officials to the risks of trial--distraction of officials from their governmental duties, inhibition of discretionary action, and deterrence of able people from public service. Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815; Harlow, 457 U.S. at 816, 102 S.Ct. at 2737. "Indeed, Harlow emphasizes that even such pretrial matters as discovery are to be avoided if possible, as '[i]nquiries of this kind can be peculiarly disruptive of effective government.' " Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815 (quoting Harlow, 457 U.S. at 817, 102 S.Ct. at 2737).
17
With these concerns in mind, the Harlow Court refashioned the qualified immunity doctrine in such a way as to permit the resolution of many insubstantial claims on summary judgment and to avoid subjecting government officials either to the costs of trial or to the burdens of broad-reaching discovery in cases where the legal norms the officials are alleged to have violated were not clearly established at the time. The entitlement is an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial. Mitchell, 472 U.S. at 527, 105 S.Ct. at 2815. Accordingly, the reasoning that underlies the immediate appealability of an order denying absolute, qualified or Eleventh Amendment immunity indicates that the denial of state action immunity should be similarly appealable: in each case, the district court's decision is effectively unreviewable on appeal from a final judgment. See Praxair, Inc. v. Florida Power & Light Co., 64 F.3d 609, (11th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1678, 134 L.Ed.2d 781 (1996); Commuter Transportation Systems, Inc. v. Hillsborough County, 801 F.2d 1286, 1289 (11th Cir.1986); see also Askew v. DCH Regional Health Care Authority, 995 F.2d 1033, 1036 (11th Cir.), cert. denied, 510 U.S. 1012, 114 S.Ct. 603, 126 L.Ed.2d 568 (1993); Segni v. Commercial Office of Spain, 816 F.2d 344, 345 (7th Cir.1987):
18
Where the right asserted by way of defense to a lawsuit is (or includes) a right not to bear the burden of the suit itself, regardless of outcome, the denial of that right, as by denying a motion to dismiss the suit, is appealable immediately by virtue of the collateral order doctrine. An appeal after judgment would come too late to protect the right. It is on the basis of this reasoning that the rejection of a double-jeopardy defense, the rejection of a defense of a public official's qualified immunity from suit, and the rejection of a witness's absolute immunity from suit, are appealable immediately. See Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977); Mitchell v. Forsyth, 472 U.S. 511, 524-30, 105 S.Ct. 2806, 2814-18, 86 L.Ed.2d 411 (1985); San Filippo v. U.S. Trust Co. of New York, Inc., 737 F.2d 246, 254 (2d Cir.1984).
19
But see Huron Valley Hospital v. City of Pontiac, 792 F.2d 563 (6th Cir.), cert. denied, 479 U.S. 885, 107 S.Ct. 278, 93 L.Ed.2d 254 (1986) (Contains contrary, less persuasive dicta but is inapposite because the requirement that the immunity claim be completely separate from the merits of the original claim was not met).
20
An appealable interlocutory decision must satisfy two additional criteria: it must conclusively determine the disputed question and that question must involve a claim of right separable from, and collateral to, rights asserted in the action. Mitchell, 472 U.S. at 527, 105 S.Ct. at 2816. The denial of a state or state entity's motion for dismissal or summary judgment on the ground of state action immunity easily meets these requirements: (i) denials of states' and state entities' claims to state action immunity clearly purport to be conclusive determinations that they have no right not to be sued under federal antitrust laws for actions by the state or its officers or agents directed by its legislature; and (ii) a claim of such state action immunity is conceptually distinct from the merits of the plaintiff's claim that he has been damaged by the defendants' alleged violation of the federal antitrust laws. An appellate court reviewing the denial of the state or state entity's claim of immunity need not consider the correctness of the plaintiff's version of the facts, nor even determine whether the plaintiff's allegations actually state a claim. In a case involving alleged anticompetitive acts by a state's municipality or subdivision, all it need determine is a question of law: whether the state entity acted pursuant to a clearly articulated and affirmatively expressed state policy.
21
Accordingly, we hold that a district court's denial of a claim of state action immunity, to the extent that it turns on whether a municipality or subdivision acted pursuant to a clearly articulated and affirmatively expressed state policy, is an appealable "final decision" within the meaning of 28 U.S.C. § 1291 notwithstanding the absence of a final judgment.
3. The Parker v. Brown
State Action Doctrine
22
In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Supreme Court held that Congress did not intend for the antitrust laws to apply to states acting in their capacities as sovereigns. In subsequent cases, the Court extended the state action doctrine to cover, under certain circumstances, acts by private parties that stem from state power or authority, California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), as well as acts by political subdivisions, cities and counties. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985). Congress endorsed and expanded the state action doctrine by the Local Government Antitrust Act of 1984, which protects municipalities against antitrust damage claims. 15 USCS § 35; 16E Julian O. von Kalinowski, Business Organizations-Antitrust Laws and Trade Regulations § 40.01 (1996), (hereafter von Kalinowski).
23
The Supreme Court in Parker v. Brown, found the Sherman Act inapplicable to actions by a state because "[t]here is no suggestion of a purpose to restrain state action in the Act's legislative history." Parker v. Brown, 317 U.S. at 351, 63 S.Ct. at 313. To the contrary, the Act was found to be intended only to prohibit anticompetitive conduct by "business combinations." Id. 317 U.S. at 351, 63 S.Ct. at 313. Justice Stone's opinion in Parker makes clear that the decision regarding the reach of the antitrust laws was predicated on principles of federalism and state sovereignty stemming from the Supremacy Clause of the Constitution. von Kalinowski, § 40.02 at 40-6. The Court concluded that "[i]n a dual system of government, an unexpressed intent to nullify a state's control over its officers and agents is not lightly to be attributed to Congress." Parker, 317 U.S. at 351, 63 S.Ct. at 313.
A.
Application of the Parker
24
Doctrine to Actions by Municipalities and Other
Political Subdivisions
25
In Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985), the Supreme Court clarified the application of the Parker doctrine to actions by municipalities and other political subdivisions. Municipalities are not automatically immune under Parker, because they are not sovereign. Town of Hallie, 471 U.S. at 38, 105 S.Ct. at 1716. See also City of Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 412, 98 S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). But a municipality or subdivision of the state is immune when it acts pursuant to a clearly articulated and affirmatively expressed state policy. Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1720. Furthermore, the active state supervision prerequisite to a private party's immunity should not be imposed in cases in which the actor is a municipality. Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720. The court explained:
26
[T]he requirement of active state supervision serves essentially an evidentiary function: it is one way of ensuring that the actor is engaged in the challenged conduct pursuant to state policy.... Where a private party is engaging in the anticompetitive activity, there is real danger that he is acting to further his own interests, rather than the governmental interests of the State. Where the actor is a municipality, there is little or no danger that it is involved in a private price-fixing arrangement.
27
Town of Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720.
28
The Hallie Court also "fully considered ... how clearly a state policy must be articulated for a municipality to be able to establish that its anticompetitive activity constitutes state action." Town of Hallie, 471 U.S. at 40, 105 S.Ct. at 1717. If the city acts pursuant to a clearly articulated state statutory scheme, it is irrelevant that the statutes make no express mention of anticompetitive conduct. It is sufficient that these statutes demonstrate that the state legislature clearly contemplated anticompetitive conduct in the provision of governmental services. Town of Hallie, 471 U.S. at 40, 105 S.Ct. at 1717; see von Kalinowski § 40.03[z] at 40-45. The Court explained:
29
The statutes clearly contemplate that a city may engage in anticompetitive conduct [by acquiring a monopoly over the provision of sewage treatment services and by tying the provision of those services to the provision of sewage collection and transportation services.] Such conduct is a foreseeable result of empowering the City to refuse to serve unannexed areas. It is not necessary ... for the state legislature to have stated explicitly that it expected the city to engage in conduct that would have anticompetitive effects.
30
Town of Hallie, 471 U.S. at 42, 105 S.Ct. at 1718. Also, the Court explicitly ruled that a municipality need not show that it was compelled to engage in anticompetitive activity in order to be immune. Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1719-1720; von Kalinowski, Id. "This is so because where the actor is a municipality, acting pursuant to a clearly articulated state policy, compulsion is simply unnecessary as an evidentiary matter to prove that the challenged practice constitutes state action." Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1720.
31
The Supreme Court in City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991) elaborated on the Hallie "clear articulation" standard. The Omni court said:
32
We have rejected the contention that [the clear articulation] requirement can be met only if the delegating statute explicitly permits displacement of competition. It is enough, we have held, if the suppression of competition, is the "foreseeable result" of what the state authorized.
33
Omni, 499 U.S. at 372-373, 111 S.Ct. at 1350. The Court found that the zoning regulation challenged in Omni "amply" satisfied this standard because the "very purpose of zoning regulation is to displace unfettered business freedom in a manner that regularly has the effect of preventing normal acts of competition." 499 U.S. at 373, 111 S.Ct. at 1350; see von Kalinowski, § 40.03[z] at 40-45.
34
Lower courts have applied Town of Hallie standards not only to municipalities but also to counties and other public entities and offices. See von Kalinowski § 40.03 at 40-46, 40-47 and 40-48 and authorities cited therein. Eg., Independent Taxicab Drivers' Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th Cir.) (city was immune for having granted taxi-cab company exclusive right to provide airport's taxicab transportation where statute granted city regulatory power over taxi-cab industry and separate statute specifically authorized municipality to grant contracts for services at airports), cert. denied sub nom. Arrow Northwest Inc. v. Greater Houston Transp. Co., 474 U.S. 903, 106 S.Ct. 231, 88 L.Ed.2d 230 (1985).
B.
Application of Parker v. Brown
35
State Action Doctrine to the Actions of the
Memorial Hospital at Gulfport, Jointly
Owned by a Municipality and
Subdivision of the State
36
Applying the Hallie and Omni precepts to the present case, we conclude that the Memorial Hospital at Gulfport is immune under the Parker v. Brown state action doctrine from claims that it violated the federal antitrust laws by entering an exclusive contract with Dr. Lanier granting him the sole authority as Director or through his designee to operate the hospital's ESRD.
37
The Memorial Hospital at Gulfport is a subdivision of the state or municipal corporation thereof within the meaning and contemplation of Miss.Code Ann. §§ 41-12-10 et seq. (1972 and supplements). Enroth v. Memorial Hospital at Gulfport, 566 So.2d 202, 205 (Miss.1990). Consequently, to bring itself under the aegis of the Parker v. Brown immunity doctrine the hospital need prove only that it acted pursuant to a clearly articulated and affirmatively expressed state policy. The hospital may satisfy this requirement by showing a statutory scheme that demonstrates that the state legislature clearly contemplated the challenged anticompetitive conduct or that suppression of competition was the foreseeable result of what the state authorized. It is not necessary for the state legislature to have compelled or explicitly permitted the hospital to enter exclusive contracts having anticompetitive effects, Independent Taxicab Drivers', 760 F.2d at 610; it is enough if such suppression of competition was the "foreseeable result" of what the state authorized. Omni Outdoor Advertising, 499 U.S. at 372-373, 111 S.Ct. at 1350; Town of Hallie, 471 U.S. at 42, 45-46, 105 S.Ct. at 1718-1720.
38
The Mississippi statutes demonstrate that the state legislature clearly contemplated anticompetitive conduct by (1) authorizing a hospital to enter an exclusive contract with a single individual to operate any aspect, division or department of its operations, including its ESRD facility, and (2) requiring a hospital to obtain a certificate of need, based on criteria such as population base and projected caseload, prior to establishing a health facility, including an ESRD facility. See Mississippi State Dept. of Health v. Golden Triangle Regional Medical Center, 603 So.2d 854 (Miss.1992) (certificate of need to establish cardiac catheterization services).
39
The Miss.Code Annotated § 41-13-35(5)(g) (1972) authorizes the board of trustees of a community hospital to contract with any individual for the providing of services by or to the community hospital regarding any facet of the operation of the hospital or any division or department thereof, or any related activity, and to terminate said contracts when deemed in the best interests of the community hospital.1 The Mississippi Health Care Certificate of Need Law of 1979 prohibits the construction, development, establishment or relocation of a health care facility without obtaining the required certificate of need. Miss.Code Ann. § 41-7-191(1)(a) & (b) (1979). A certificate of need shall not be granted or issued unless the proposal has been reviewed for consistency with the specifications and criteria established by the State Department of Health and substantially complies with the projection of need as reported in the state health plan in effect at the time the application for the proposal was submitted. § 41-7-193. A "Certificate of Need" means a written order of the State Department of Health setting forth the affirmative finding that a proposed health facility, including an ESRD facility, sufficiently satisfies the plans, standards and criteria prescribed for such service or other project by Section 41-7-171 et seq., and by rules and regulations promulgated thereunder by the State Department of Health. Id. at § 41-7-173(b). "End stage renal disease (ESRD) facilities" means kidney disease treatment centers, which include freestanding hemodialysis units and limited care facilities. Id. at § 41-7-173(h)(v). "Health care facility" includes, inter alia, end stage renal disease (ESRD) facilities. Id. at § 41-7-173(h).
40
The Hallie- Omni standards are amply met here. The very purpose of a hospital's exclusive contract with a physician to supervise a special unit and perform its critical functions is to obtain the doctor's dedicated services by displacing unfettered professional medical freedom in a manner that prevents normal acts of competition, particularly on the part of other physicians qualified to supervise and operate such a unit. Likewise, a certificate of need law restricting the establishment of new health facilities including ESRD facilities necessarily protects existing facilities against competition from newcomers. Certificate of need programs are federally funded, state-administered regulatory mechanisms providing for review and approval by health planning agencies of capital expenditures and service capacity expansion by hospitals and other health care facilities. Their primary purpose is to discourage unnecessary investment in health care facilities and to channel investment so as to preserve and improve the quality of institutional health care. See James B. Simpson, Full Circle: The Return of Certificate of Need Regulation of Health Facilities to State Control, 19 Ind.L.Rev. 1025, 1028-1033 (1986).
41
The hospital's allegedly anticompetitive conduct could have been reasonably anticipated by the Mississippi Legislature when it gave the hospital the power to enter a contract with an individual physician to operate any aspect, division or department of its operations. The state's certificate of need program necessarily displaces unfettered competition of physicians operating health facilities and restricts the entry of medical facilities and services to those administratively found to be medically necessary and affordable. Having concluded that the allegedly anticompetitive results were foreseeable under the state action doctrine, we reverse the district court's holding that the state action doctrine fails to immunize the hospital's actions in entering an exclusive contract for the operation of its ESRD unit.
4. The District Court's Decision
42
The district court concluded that the hospital and its board were not entitled to state action immunity because the displacement or suppression of competition was not a foreseeable result of the state statutory scheme. We do not agree with the district court's interpretation of the state statutes. As we explained earlier in this opinion, § 41-13-35(g) of the Mississippi Code does not merely provide general authority for the hospital to enter contracts. The statute clearly, affirmatively and articulately empowers the hospital to contract with any individual for the providing of services by or to the hospital regarding any facet of the operation of the hospital or any division or department thereof, or any related activity. It is clearly a foreseeable result of what the statute authorizes that a hospital would enter an exclusive contract with an individual physician to supervise and perform the critical functions of its ESRD units. The very purpose of the statutory authorization is to enable the hospital to displace unfettered competition among physicians in the performance of critical operations such as chronic dialysis in ESRD units so as to promote efficiency of health care provision, reduce the hospital's supervisory burden, and control its exposure to liability. Similarly, the certificate of need law, § 41-7-171 et seq., restricts the establishment and operation of ESRDs and necessarily protects existing units against some competition from newcomers.
43
The Supreme Court has "rejected the contention that this requirement [the clear articulation of a state policy to authorize anticompetitive conduct] can be met only if the delegating statute explicitly permits the displacement of competition ... It is enough ... if suppression of competition is the 'foreseeable result' of what the statute authorizes...." City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 372-373, 111 S.Ct. 1344, 1349-1350, 113 L.Ed.2d 382 (1991); Independent Taxicab Drivers', 760 F.2d at 610. That condition is amply met here.5. Disposition of Other Issues
44
The hospital contests the trial court's refusal to dismiss plaintiff Dr. Martin's claims for damages under 42 U.S.C. § 1983, for deprivation of Martin's constitutionally protected property and liberty rights, for damages under state antitrust laws and interference with existing and prospective business relations claims. We lack jurisdiction to reach the merits of that appeal. Although the collateral order doctrine allows review of the district court's denial of state action immunity to the defendants against the federal antitrust claims, that allowance does not confer "pendent appellate jurisdiction" over the other issues. Although in Swint v. Chambers County Commission, 514 U.S. 35, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995), the Court implied that in rare circumstances pendent appellate jurisdiction may be proper--if issues were "inextricably intertwined" or where "review of the former was necessary to ensure meaningful review of the latter", id. at ----, 115 S.Ct. at 1208--defendants have not advanced reasons for review more compelling than those rejected by the Court in Swint. See also Woods v. Smith, 60 F.3d 1161 (5th Cir.1995), cert. denied sub nom. Palermo v. Woods, --- U.S. ----, 116 S.Ct. 800, 133 L.Ed.2d 747 (1996); Silver Star Enterprises, Inc. v. M/V Saramacca, 19 F.3d 1008 (5th Cir.1994).
45
Dr. Martin filed a cross-appeal contending that the district court erred in deciding that the Local Government Antitrust Act shields the individual board members with absolute immunity from federal antitrust damages; the individual board member defendants are entitled to summary judgment under qualified immunity as to the constitutional due process claims of the plaintiff; and the individual board member defendants are entitled to qualified immunity as to the plaintiff's state claims. For the same reasons expressed above, we have no jurisdiction to consider the court's interlocutory orders.
Conclusion
46
The judgment denying summary judgment on the grounds of Parker v. Brown state action immunity to the hospital and its individual board members is REVERSED and the case is REMANDED to the district court for the entry of such a summary judgment. The other appeals and cross-appeals are DISMISSED for lack of appellate jurisdiction.
1
§ 41-13-35, in part provides:
(5) The power of the board of trustees shall specifically include, but not be limited to, the following authority:
(g) To contract by way of lease ... or otherwise, with any agency, department or other office of government or any individual, partnership, corporation, owner, other board of trustees, or other health care facility, for the providing of property, equipment or services by or to the community hospital or other entity or regarding any facet of the construction, management, funding or operation of the community hospital or any department or division thereof, or any related activity, including without limitation, shared management expertise or employee insurance and retirement programs, and to terminate said contracts when deemed in the best interest of the community hospital.
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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 13 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KARRI LEN WHEELER, an individual, No. 18-35907
Plaintiff-Appellant, D.C. No. 3:18-cv-05060-BHS
v.
MEMORANDUM*
WELLS FARGO HOME MORTGAGE, a
division of Wells Fargo N.A.,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
Benjamin H. Settle, District Judge, Presiding
Submitted March 3, 2020**
Before: MURGUIA, CHRISTEN, and BADE, Circuit Judges.
Karri Len Wheeler appeals pro se from the district court’s judgment
dismissing her action alleging claims under the Truth In Lending Act (“TILA”),
Real Estate Settlement Procedures Act (“RESPA”), Fair Debt Collection Practices
Act (“FDCPA”), and state law arising out of foreclosure proceedings. We have
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
jurisdiction under 28 U.S.C. § 1291. We review de novo a district court’s
dismissal under Federal Rule of Civil Procedure 12(b)(6). Cervantes v.
Countrywide Home Loans, Inc., 656 F.3d 1034, 1040 (9th Cir. 2011). We may
affirm on any ground supported by the record. Gordon v. Virtumundo, Inc., 575
F.3d 1040, 1047 (9th Cir. 2009). We affirm.
The district court properly dismissed Wheeler’s TILA and RESPA claims
because these statutes do not apply to loans taken primarily for business purposes.
See 12 U.S.C. § 2606(a)(1) (RESPA does not “apply to credit transactions
involving extensions of credit . . . primarily for business, commercial, or
agricultural purposes . . . .”); 15 U.S.C. § 1603(1) (TILA does not “apply to . . .
[c]redit transactions involving extension of credit primarily for business,
commercial, or agricultural purposes . . . . ”); Johnson v. Wells Fargo Home
Mortg., Inc., 635 F.3d 401, 417 (9th Cir. 2011) (explaining that loans taken to
acquire “non-owner-occupied rental properties” were loans for business purposes
under Regulation Z to which RESPA did not apply).
Dismissal of Wheeler’s FDCPA claim was proper because Wheeler failed to
allege facts sufficient to show how defendant Wells Fargo violated the FDCPA.
See 15 U.S.C. § 1692e (prohibiting “any false, deceptive, or misleading
representation or means in connection with the collection of any debt”); § 1692f(6)
(prohibiting the “taking or threatening to take any nonjudicial action to effect
2 18-35907
dispossession or disablement of property if there is no present right to possession
of the property”); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (to avoid
dismissal, “a complaint must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face” (citation and internal quotation
marks omitted)).
The district court properly dismissed Wheeler’s claim under the Washington
Consumer Protection Act (“CPA”) because Wheeler failed to allege facts sufficient
to state any element of a CPA claim. See Hangman Ridge Training Stables, Inc. v.
Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986) (elements of the CPA cause
of action).
The district court did not abuse its discretion in denying Wheeler further
leave to amend because amendment would have been futile. See Cervantes, 656
F.3d at 1041 (setting forth standard of review and explaining that a district court
may deny leave to amend where amendment would be futile).
We do not consider matters not specifically and distinctly raised and argued
in the opening brief. See Padgett v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009).
AFFIRMED.
3 18-35907
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982 F.2d 526
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.Charles E. JOHNSON, Plaintiff Appellant,v.Walter LEAPLEY, Warden of the South Dakota StatePenitentiary; Roger Tellinghuisen, AttorneyGeneral of the State of South Dakota,Defendants Appellees.
No. 91-3447.
United States Court of Appeals,Eighth Circuit.
Submitted: June 9, 1992.Filed: November 10, 1992.
1
Before BOWMAN, LOKEN, Circuit Judges, and HUNTER,* Senior District Judge.
PER CURIAM
2
Charles E. Johnson appeals the district court's1 denial of his petition for a writ of habeas corpus. Johnson, a black man who pleaded guilty to first degree rape of a white woman while he was serving in the Air Force, contends that his plea was coerced by the ineffective assistance of his now-deceased trial counsel. Johnson alleges that counsel advised Johnson that he would not get a fair trial due to racial prejudice in Rapid City, South Dakota; failed to inform Johnson of various trial rights; failed to prepare for trial by interviewing Johnson's alibi witnesses; failed to seek a change of venue; and failed to conduct plea negotiations for a lesser sentence. Johnson further contends that the district court erred in refusing him an additional evidentiary hearing to expand upon the record developed at the hearing on his earlier habeas corpus petition in state court.
3
In an exhaustive twenty-five page opinion that thoroughly reviews the relevant facts and prior proceedings, the Magistrate Judge found that Johnson had failed to satisfy the prejudice prong of the ineffective assistance of counsel test, see Strickland v. Washington, 466 U.S. 668 (1984), first, because Johnson's decision to plead guilty "was prompted by his knowledge of his guilt, the strength of the state's case against him and the hope that by pleading guilty he might get a lighter sentence than if he stood trial," second, because "the likelihood of achieving a change of venue based solely upon race was very remote," and third, because the State was "not disposed to negotiate" its recommendation that Johnson receive the maximum sentence of twenty-five years in prison. After careful review of the record of all prior proceedings, we conclude that Johnson's petition for a writ of habeas corpus was properly denied for the reasons stated in the Magistrate Judge's opinion. See 8th Cir. R. 47B.
4
Johnson's contention that he should have been granted an additional evidentiary hearing to expand or embellish upon the record developed at his state habeas hearing is foreclosed by the Supreme Court's recent decision in Keeney v. Tamayo-Reyes, 112 S. Ct. 1715 (1992). Johnson has failed to show the requisite cause and prejudice for failing to adequately develop the facts in the state court proceedings.
5
The judgment of the district court is affirmed.
*
The HONORABLE ELMO B. HUNTER, Senior United States District Judge for the Western District of Missouri
1
The HONORABLE RICHARD H. BATTEY, United States District Judge for the District of South Dakota, who accepted the findings and recommendations of the HONORABLE THOMAS PARKER, United States Magistrate Judge for the District of South Dakota
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118 Ill. App.3d 33 (1983)
454 N.E.2d 691
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
JEFFREY ALEXANDER, Defendant-Appellant.
No. 81-3108.
Illinois Appellate Court First District (2nd Division).
Opinion filed September 6, 1983.
Rehearing denied October 25, 1983.
Steven Clark and Donna Finch, both of State Appellate Defender's Office, of Chicago, for appellant.
Richard M. Daley, State's Attorney, of Chicago (Michael E. Shabat, Marie Quinlivan, and Thomas J. Finn, Assistant State's Attorneys, of counsel), for the People.
Affirmed in part and vacated in part.
*34 PRESIDING JUSTICE DOWNING delivered the opinion of the court:
Defendant, Jeffrey Alexander, appeals from his convictions of armed robbery (Ill. Rev. Stat. 1979, ch. 38, par. 18-2); burglary (Ill. Rev. Stat. 1979, ch. 38, par. 19-1); unlawful restraint (Ill. Rev. Stat. 1979, ch. 38, par. 10-3); and, armed violence (Ill. Rev. Stat. 1979, ch. 38, par. 33A-2). The sentences imposed were concurrent terms of 20 years' imprisonment on both the armed robbery and armed violence counts; seven years' imprisonment on the burglary count; and three years' imprisonment on the unlawful restraint count.
Three grounds for reversal are presented by defendant: (1) that his four convictions are violative of the double jeopardy clause of the fifth amendment to the United States Constitution; (2) that the trial court clearly abused its discretion in determining his sentence; and (3) that his conviction for unlawful restraint should be vacated since it is based on the same act as the armed violence conviction. As the issue of reasonable doubt was not raised, only the pertinent evidence will be summarized.
On the afternoon of October 31, 1979, defendant broke into the Perkins' residence located in Flossmoor, Illinois. Armed with an Ivers-Johnson .22-caliber revolver, defendant grabbed complainant, Mrs. Leola Perkins, demanded her money and jewelry and, while brandishing the gun, threatened to return and kill her if she reported the incident to the police.
Upon discovering that complainant's husband and children were to arrive home later that afternoon, defendant compelled complainant to go to various rooms to secure jewelry and money in the total amount of $115. At one point, complainant ran for the front door, but defendant grabbed her around the neck before she could reach the outside. He then held complainant between his arm and body, and proceeded to strike her in the face three or four times while yelling obscenities at her. Dragging her down the hall back to the kitchen, defendant pushed complainant on the floor and told her to stay there as he continued to search through the purse.
For the fifth time, defendant made a demand for more money. Complainant, sensing his desperation, informed defendant that more money was available in her children's savings account. At gunpoint, complainant was then forced into her 1973 Buick Electra, and was instructed to drive to South Suburban Federal Savings located in Flossmoor Commons. On the way to the bank defendant told complainant that she was to go into the bank alone, withdraw funds from the account and, were she not to bring the money out, he would return and *35 kill her as well as everyone in her family. Leaving the keys in the car with defendant, complainant entered the bank and immediately advised bank personnel of the situation. As an employee of the bank was telephoning the police, defendant drove off in the Buick Electra.
On the night of November 11, 1979, officers of the Crete police department found defendant sitting behind the wheel of complainant's car as it was parked along a street in Crete, located in Will County, Illinois. Following a registration check confirming that the vehicle had been stolen, the police officers placed defendant under arrest.
The State's Attorney of Will County thereupon charged defendant with the felony theft of complainant's car, in violation of section 16-1(a)(1) of the Criminal Code of 1961 (Ill. Rev. Stat. 1977, ch. 38, par. 16-1(a)(1)). After a bench trial in June 1980, defendant was found guilty as charged and received a three-year sentence. That conviction was affirmed by both the appellate and supreme courts. People v. Alexander (1981), 99 Ill. App.3d 810, 425 N.E.2d 1386, aff'd (1982), 93 Ill.2d 73, 442 N.E.2d 887.
On February 4, 1980, a Cook County grand jury charged defendant with having committed armed robbery, burglary, home invasion, armed violence and unlawful restraint. Following a jury trial, defendant was found guilty of armed robbery, burglary, unlawful restraint and armed violence. From these convictions defendant now appeals.
I
1 We first consider defendant's contention that his Cook County convictions are violative of the double jeopardy clause of the fifth amendment to the United States Constitution. Specifically, he maintains that since these crimes, as well as the Will County felony theft, were not joined and tried in Cook County the place of complainant's residence and South Suburban Federal Savings the present action proceeded in violation of the constitutional prohibition against double jeopardy. We find this assertion to be without merit.
Defendant's reliance on People v. Zegart (1980), 83 Ill.2d 440, 415 N.E.2d 341, cert. denied (1981), 452 U.S. 948, 69 L.Ed.2d 961, 101 S.Ct. 3094, is misplaced. The Zegart court held that the double jeopardy clause was violated where the State attempted to charge defendant for reckless homicide, after he was already convicted of crossing over a highway dividing median. The State was thus precluded from using the same factual basis which led to the first conviction as the basis for the second conviction. 83 Ill.2d 440, 445.
Here, defendant was tried and convicted on completely distinct offenses, the commission of which occurred in two counties on two separate *36 dates. Moreover, the State in no way attempted to prove that defendant committed armed robbery, burglary, armed violence and unlawful restraint in Cook County on October 31, 1979, by showing defendant's exertion of unauthorized control over the Buick Electra in Will County on November 11, 1979. Defendant cites the related case, People v. Alexander (1981), 99 Ill. App.3d 810, 425 N.E.2d 1386, aff'd (1982), 93 Ill.2d 73, 442 N.E.2d 887, for the proposition that the State is prohibited from bringing a second prosecution based on the same factual situation which led to a conviction in a prior trial. We do not question the accuracy of this statement of well-settled decisional law. However, we find no merit to defendant's assertion that the facts of this case warrant the application of such authority. The factual basis which led to the felony conviction in Will County was not used as the basis for the Cook County convictions; for, the Alexander court concluded that "the State's theory was directed towards proof of the defendant's guilt of exertion of unauthorized control over Ms. Perkins' automobile in Will County, not with the initial theft in Cook County" (emphasis added). People v. Alexander (1982), 93 Ill.2d 73, 81.
It is well established that there is no requirement of joinder or of a single disposition of multiple crimes which arise from a series of acts. (People v. Griffin (1967), 36 Ill.2d 430, 433-34, 223 N.E.2d 158; People v. Patete (1980), 91 Ill. App.3d 655, 657, 419 N.E.2d 921.) Because the offense in Will County was a crime entirely separate from the events which were the bases for the Cook County indictment, we are of the opinion that multiple prosecutions were permissible.
Moreover, proper venue over the charges of armed robbery, burglary, armed violence and unlawful restraint could only lie in Cook County; for, all of the events giving rise to these crimes occurred in Flossmoor, a village located within Cook County. Whereas, the supreme court in People v. Alexander (1982), 93 Ill.2d 73, 81, indicated that proper venue over the charge of felony theft existed in Will County; for, it was there that defendant was found by the Crete police officers to be exerting unauthorized control over complainant's car.
We further note that reference to the 1973 Buick Electra as an item stolen from the person and presence of complainant, at gunpoint, was stricken from count II of the Cook County indictment. Thus, as the trial court correctly stated: "The elimination, then, of the 1973 Buick motor vehicle from Count II eliminates the problem of double jeopardy." See Illinois v. Vitale (1980), 447 U.S. 410, 65 L.Ed.2d 228, 100 S.Ct. 2260; North Carolina v. Pearce (1969), 395 U.S. 711, 23 L.Ed.2d 656, 89 S.Ct. 2072.
*37 II
2, 3 Next, defendant contends that the trial court clearly abused its discretion in determining his sentence. We disagree.
Our supreme court has firmly established that the determination of a sentence is a matter of judicial discretion and that, absent an abuse of this discretion, the sentence imposed by the trial court may not be altered upon review. People v. Cox (1980), 82 Ill.2d 268, 275, 412 N.E.2d 541; People v. Perruquet (1977), 68 Ill.2d 149, 153, 368 N.E.2d 882.
In addition to providing for the possibility of the offender's rehabilitation, we recognize that the trial court is also charged with the "delicate responsibility" of fashioning a sentence that will protect the interests of society. (People v. Perruquet (1977), 68 Ill.2d 149, 155, 368 N.E.2d 882.) Our review of the record in the present case clearly indicates that the lower court was fully aware of defendant's past record, as well as his personal traits and family situation. However, it is also readily discernible that the court was faced with the task of imposing on defendant a penalty that was commensurate with the degree of seriousness involved in the offenses he committed.
Here, as the trial court aptly commented, complainant was put through "an experience in terror that will affect her sense of security for a long time to come." For, upon breaking into her home, defendant did not just take cash and jewelry, and then leave. Rather, he proceeded to first put a .22-caliber revolver to complainant's head and threaten to kill her, as well as her entire family, should she ever cooperate with the police in his apprehension; second, he repeatedly dragged her throughout her own home in search of more and more money and jewelry; third, after grabbing complainant by the neck to foil her escape attempt, he angrily beat her in the face three or four times while screaming obscenities at her; fourth, he then threw her on the floor and continued to desperately demand, as well as search for, more money; fifth, he forced complainant at gunpoint to drive him in her car to a bank in order that she could withdraw money from her children's savings account to further satisfy his financial desires; and sixth, while en route to the bank, he once again threatened to return and kill complainant, as well as her entire family, were she not to comply with his instructions.
At the hearing in aggravation and mitigation, there was a stipulation that if Barbara Broderick were called to the witness stand, she would testify that on October 24, 1979, upon returning to her home in Flossmoor, she was confronted by a man closely resembling defendant. This man proceeded to grab and drag her into a bedroom; he made a *38 demand for money and jewelry; he made her lay on the floor while he bound her; and, he then robbed her of jewelry and over $100 in cash. Defendant asserts that his counsel withdrew this stipulation; however, our review of the record indicates that the trial court did not permit the withdrawal, and referred to it only for the purpose of illustrating defendant's modus operandi on October 31, 1979.
Defendant asserts that Ms. Broderick's stipulated testimony was incompetent information erroneously considered by the trial court as an aggravating factor. We find this argument to be without substance since our supreme court has recently held that evidence of other offenses not resulting in a conviction can be considered by a trial judge when determining a particular defendant's sentence; for, the court is not strictly limited to consideration of only that information which would be admissible under the adversary circumstances of a trial. People v. La Pointe (1981), 88 Ill.2d 482, 499, 431 N.E.2d 344.
In addition to the foregoing, the trial court indicated that a presentence report had been received. Recognizing that the trial court's determination of a sentence is entitled to great deference and weight on appeal, we are of the opinion that, based upon a review of the record in the case at bar and irrespective of the alleged facts in the Broderick incident, defendant's 20-year sentence should not be reduced.
III
4 Defendant maintains that his conviction for unlawful restraint should be vacated since it is based on the same act as the armed violence conviction. As the State concedes, however, it is defendant's armed violence conviction that must be vacated in accordance with People v. Wisslead (1983), 94 Ill.2d 190, 446 N.E.2d 512. We do not believe that the vacation of this single conviction necessitates resentencing defendant on the remaining charges. The sentence of 20 years imposed on the armed robbery count was within the limits permitted by statute (Ill. Rev. Stat. 1979, ch. 38, par. 1005-8-1(3)), and was justified based upon the nature and gravity of defendant's acts. Likewise, the other concurrent sentences were justified.
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed in part and vacated in part in accordance with the views expressed herein.
Affirmed in part and vacated in part.
STAMOS and PERLIN, JJ., concur.
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659 F.2d 1086
U. S.v.Thackery
81-1179
UNITED STATES COURT OF APPEALS Seventh Circuit
6/30/81
1
C.D.Ill.
AFFIRMED
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56 Wn.2d 275 (1960)
352 P.2d 809
IRENE ZVOLIS, as Executrix, Appellant,
v.
JAMES J. CONDOS, Respondent.[1]
No. 35191.
The Supreme Court of Washington, Department Two.
May 26, 1960.
Ursich & Jensen, for appellant.
Brodie & Fristoe, for respondent.
*276 FOSTER, J.
Appellant, plaintiff below, is the executrix[2] of the will of Nick Zvolis, deceased. It was executed five years before she was divorced from him on April 8, 1957. She sued to set aside the testator's quitclaim deed to real property in Pierce county to the respondent, James J. Condos. The appeal is from a judgment dismissing that action.
The real property in question was devised to their only son, Tommy, who was seventeen at the time of the trial. The respondent, James J. Condos, is decedent's stepson by a prior marriage and had been raised by him from the time he was five until he was sixteen years of age.
Tommy's custody was awarded to the appellant by the divorce decree. Although his parents had separated sometime before the divorce action was started, nevertheless, Tommy continued to live with his father until entry of the decree when he transferred his allegiance and thereafter resided with his mother.
On July 29, 1957, three months following the divorce, the deceased executed a general power of attorney to the respondent. On the 10th day of September, 1957, deceased conveyed the property by quitclaim deed to the respondent who agreed to provide for him for the remainder of his lifetime. He died October 23, 1957.
Other relevant findings of fact may be summarized as follows:
When the property was quitclaimed, the respondent agreed to pay some obligations of the deceased in addition to providing for him for the remainder of his life. The deceased intended the property as a gift to the respondent in so far as the value exceeded this consideration. Although almost blind, Zvolis was competent at the time of the execution of the deed and knew the natural objects of his bounty. The conveyance was of his own free will and accord. *277 The deed was not executed as a result of the influence of the respondent or anyone else.
[1] All but two of the twenty-three assignments of error relate to disputes of fact. It is sufficient to say that all findings of fact are supported by substantial evidence. The most favorable view of appellant's argument is that there was evidence to the contrary. This court does not retry factual disputes. Thorndike v. Hesperian Orchards, 54 Wn. (2d) 570, 343 P. (2d) 183; Kelly v. Kelly, 55 Wn. (2d) 494, 348 P. (2d) 652; Stewart v. Smith, 55 Wn. (2d) 563, 348 P. (2d) 970.
[2] As part of her case in chief, appellant's counsel called the respondent as an adverse witness and examined him concerning the execution of both the deed and the power of attorney. Subsequently, when the respondent testified in his own behalf as to the same transactions with the decedent, the appellant objected in one instance on the ground that such was prohibited by RCW 5.60.030. Thus the appellant sought to use the respondent's testimony for her own purposes and then, when he testified in his own behalf, to raise the bar of the dead man's statute. This, however, was waived when she called him as her own witness and examined him respecting the transaction in question.
In Johnson v. Peterson, 43 Wn. (2d) 816, 264 P. (2d) 237, the late Judge Olson for this court reviewed our decisions and collected relevant literature. The conclusion there reached was stated very simply:
"Plaintiff waived the bar of the statute by examining defendant as we have stated. Where the incompetency imposed upon a witness by the statute is waived at all, it is waived as to all facts pertinent to the matters developed from the witness by the party for whose benefit the statute was enacted...."
Based upon Hemrich v. Hemrich, 117 Wash. 124, 201 Pac. 10, and Meyer v. Campion, 120 Wash. 457, 207 Pac. 670, appellant argues "... that by virtue of the admission by the defendant of the relationship of trust and confidence, the deed is invalid as a matter of law unless given upon independent advice...." While there are New Jersey *278 cases[3] so holding, we find nothing in our decisions expressing that view. Indeed, after reviewing the Hemrich case, the court concluded in Meyer v. Campion, supra:
"While it is not necessary for us to adopt the principle of independent advice in all cases, the lack of it in this case seems to us a very important factor...."
[3] We think the true rule is that stated in the fifth edition of Pomeroy's Equity Jurisprudence as follows:
"A gift by a principal to his agent may be valid and be sustained, if the absolute good faith, knowledge, and intent of both the parties is clearly established." 3 Pomeroy's Equity Jurisprudence, § 959c, p. 825, 828.[4]
Appellant's argument overlooks completely that the findings of the trial court are that the respondent sustained the burden of proving the gift was entirely free from undue influence and that the grantor executed the deed of his own free will and accord. The argument is that all gifts to fiduciaries are void if there is not independent advice. This gift was not even initiated by respondent. He never dominated the grantor in anything. Even in New Jersey the independent advice rule is not applicable unless the proof shows that the recipient dominated the grantor.[5]
*279 [4] The independent advice rule is resorted to only if there is no other way of proving the absence of undue influence. In any event, it is only one of the whole group of circumstances to be considered in determining whether the gift is the free and voluntary act of the donor or whether the gift was the result of the undue influence of the recipient. Independent advice is one way, but not the exclusive method, of establishing the fairness of the transaction and that it was voluntarily made, free from undue influence. Kidd v. Williams, 132 Ala. 140, 31 So. 458, 56 L.R.A. 879 (1901).
This same argument was pressed upon the Supreme Court of Oregon in Rowe v. Freeman, 89 Ore. 428, 451, 172 Pac. 508, 174 Pac. 727. That court answered as follows:
"According to the great weight of authority, it is not reasonable to hold that because A has confidence in and trusts B the former is under such disability that he cannot give the latter anything unless he is able to, and does, find some stranger who will advise the execution of the gift. The circumstance of want of independent advice is nearly always found as an auxiliary or makeweight to a decision where there is a defect of mental capacity or other conditions which of themselves tend to nullify the questioned transaction...."
In 1908, the Court of Appeals, the court of last resort in Maryland, in Zimmerman v. Frushour, 108 Md. 115, 69 Atl. 796, 16 L.R.A. (N.S.) 1087, 15 Ann. Cas. 1128, was confronted with this identical question which it stated in the following sentence:
"The only question remaining therefore in the case is whether a gift from a principal to an agent, satisfactorily appearing to be the uninfluenced, deliberate, and intelligent *280 act of the donor is to be held void merely because the donor had not independent advice."
A painstaking and exhaustive analysis of both the American and English decisions was made and the conclusion announced was that there was no hard and fast rule that independent advice is essential to sustain a gift between persons occupying a fiduciary relation.
The independent advice rule does not prevail in Ohio. Federman v. Stanwyck (Ohio App.), 108 N.E. (2d) 339 (1951).
Appellants' argument in Pfingst v. Goetting, 96 Cal. App. (2d) 293, 215 P. (2d) 93, was stated by the court as follows:
"Appellants' second point is that `The decision of the court was erroneous for the reason that the decedent had no independent advice in any of the transactions involved in this case.'"
The court held independent advice was not indispensable to the validity of the gift. It said:
"It is now definitely settled that independent advice is not indispensable. In Brown v. Canadian etc. Co., supra [209 Cal. 596, 289 Pac. 613], at page 599, the court says: `In some early cases of this court, where the factual situation was particularly aggravating, expressions may be found, when considered separately and without reference to the text, which imply that independent advice is essential to the validity of such a gift. (Ross v. Conway, supra [92 Cal. 632, 28 Pac. 785]; Dolliver v. Dolliver, 94 Cal. 647 [30 P. 4]; Yordi v. Yordi, 6 Cal. App. 20 [91 P. 348]; Nobles v. Hutton, supra [7 Cal. App. 20 (93 P. 289)].) But those cases were never intended to hold that independent advice was indispensable. We are in accord with the rule that where a fiduciary relationship exists between the donor and donee, the absence of independent advice is a circumstance to be considered in determining whether the gift should be avoided because of alleged undue influence or fraud, but its nonexistence alone does not authorize the court to avoid the gift. All utterances to the contrary have been squarely repudiated by this court....'"
Fifteen years ago the supreme court of Arizona in Amado v. Aguirre, 63 Ariz. 213, 161 P. (2d) 117, 160 A.L.R. 1126, had occasion to examine the state of the law upon this subject. *281 The results of that court's survey are stated in the following passage from its opinion:
"There are numerous decisions on the question of independent advice necessary to sustain a gift whenever a relationship of trust and confidence exists between the donor and the donee. It must be borne in mind, however, that the rule is applied only where the donee is the dominant person in the relationship. New Jersey and Tennessee hold that the gift will not be sustained whenever there is a relationship of trust and confidence unless the donor had competent and independent advice. This also appears to be the English and Canadian rule. However, in the greater number of the states the rule is that independent advice is not essential to the validity of the gift, although a fiduciary relationship exists between the donor and the donee, but the absence of such advice is a circumstance to be considered in determining whether the gift should be avoided because of undue influence or fraud. Brown v. Canadian Industrial Alcohol Co., 209 Cal. 596, 289 Pac. 613; Burnham v. Witt, 217 Cal. 397, 18 Pac. (2d) 949; Luiz v. Queen of Angels Hospital, 53 Cal. App. (2d) 310, 127 Pac. (2d) 966; Farmer v. Associated Professors, etc., 166 Md. 455, 171 Atl. 361; Hawkins v. Gray, 128 Ark. 143, 193 S.W. 509; Rowe v. Freeman, supra [89 Ore. 428, 172 Pac. 508, 174 Pac. 727]; Kidd v. Williams, 132 Ala. 140, 31 So. 458, 56 L.R.A. 879. We think the better reasoning supports the majority holding. Even though a party had independent advice, it might be the worst possible advice, and under such circumstances the rule should not be utilized to support the gift. As stated in the majority cases, it is our view that lack of independent advice is merely an element to be considered...."
That court was in error, however, in the following sentence:
"... This also appears to be the English and Canadian rule...."
Independent advice in the case of a gift to a fiduciary is not indispensable in either Canada[6] or England.[7]
*282 [5] The presence or absence of independent advice is not conclusive. If a gift to a fiduciary is challenged, often the only way the recipient is able to show the lack of undue influence is by proof that the donor received independent advice. Consequently, if such proof is absent, courts frequently avert to that fact as one point in the failure to prove lack of undue influence. But here the court found that the respondent did prove by extrinsic evidence not only the capacity of the donor but that it was his free and voluntary act initiated entirely by himself.
Affirmed.
WEAVER, C.J., HILL, FINLEY, and ROSELLINI, JJ., concur.
NOTES
[1] Reported in 352 P. (2d) 809.
[2] RCW 11.12.050 provides, in part:
"... A divorce, subsequent to the making of a will, shall revoke the will as to the divorced spouse."
The right of the appellant to serve as the executrix of the will of her divorced husband is not challenged in this record.
[3] Chandler v. Hardgrove, 124 N.J. Eq. 516, 2 A. (2d) 661; Croker v. Clegg, 123 N.J. Eq. 332, 197 Atl. 13; Kelso v. Kelso, 95 N.J. Eq. 544, 123 Atl. 250, affirmed 96 N.J. Eq. 354, 124 Atl. 763, 33 A.L.R. 587.
[4] Pomeroy makes the following comment in the footnote to the quoted passage from his text:
"The equitable rule concerning gifts between principal and agent does not seem to be as stringent as that which regulates the similar dealings of trustees and their beneficiaries. Ralston v. Turpin, 129 U.S. 663, 32 L.ed. 747, 9 S.Ct. 420, affirming 25 F. 7, 18; Adair v. Craig, 135 Ala. 332, 33 So. 902; Hemenway v. Abbott, 8 Cal. App. 450, 97 P. 190 (quoting the text); Zimmerman v. Freshour, 107 [108] Md. 115, 69 A. 796, 16 L.R.A. (N.S.) 1087, 15 Ann. Cas. 1028 (quoting the text mere absence of independent advice does not avoid gift; English and other cases examined); Moseley v. Johnson, 144 N.C. 257, 274, 56 S.E. 922; Smith v. Moore, 149 N.C. 185, 62 S.E. 892; Hobart's Adm'r v. Vail (Taylor v. Vail) 80 Vt. 152, 66 A. 820 (gift sustained)." 3 Pomeroy's Equity Jurisprudence (5th ed.), § 959c, note 8, p. 828.
[5] "The situation is quite different, however, when there is no evidence that the donor is dependent upon or servient to the donee. In such case, independent advice is not a prerequisite to the validity of an improvident gift even though the relationship between the parties is one of trust and confidence. James v. Aller, 68 N.J. Eq. 666 (E. & A. 1905); Farley, et al., v. First Camden National Bank & Trust Co., 107 N.J. Eq. 272 (Ch. 1930); Chandler v. Hardgrove, 124 N.J. Eq. 516 (Ch. 1938); Griffiths v. Griffiths, 142 N.J. Eq. 751 (E. & A. 1948). If it appears the donee was not the dominant party in the relationship, then the presumption is in favor of the validity of the gift and the complainant has the burden of proving circumstances which make it voidable. In re Fulper, 99 N.J. Eq. 293 (Prerog. 1926); Dill v. Dill, 118 N.J. Eq. 374 (Ch. 1935); affirmed, 119 N.J. Eq. 467 (E. & A. 1936)." Seylaz v. Bennett, 5 N.J. 168, 74 A. (2d) 309.
[6] In 1902, the supreme court of Canada reviewed the English cases and reached the same conclusion in Trusts & Guarantee Co. v. Hart, 32 Can. S.Ct. 553.
The Canadian and English law again summarized in 9 Can. Encyclopedic Digest (2d ed.), Gifts, § 23, p. 47, 51:
"Where the fiduciary or confidential relationship is not such as to raise the presumption of undue influence, the donee is not called upon to prove that the donor had independent advice; and even in cases where the donee is required to rebut the presumption, he is not always compelled to show that the donor had such advice. Proof of independent advice is always required in the case of a gift from a client to his solicitor, but not in the relations of parent and child, husband and wife, or principal and agent."
[7] The highest court in the British Empire in 1929 made an independent survey of the law respecting independent advice and reached the same conclusion:
"... But their Lordships are not prepared to accept the view that independent legal advice is the only way in which the presumption can be rebutted; nor are they prepared to affirm that independent legal advice, when given, does not rebut the presumption, unless it be shown that the advice was taken. It is necessary for the donee to prove that the gift was the result of the free exercise of independent will...." Inche Noriah v. Shaik Allie Bin Omar, 1929 App. Cas. 127, 135.
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440 F.2d 1077
UNITED STATES of America, Plaintiff-Appellee,v.Paul Leonard SMITH, Defendant-Appellant.
No. 30465.
United States Court of Appeals, Fifth Circuit.
April 16, 1971.
Appeal from the United States for the Middle District of Florida; William A. McRae, Jr., District Judge.
Richard L. Brown, Jacksonville, Fla., for defendant-appellant.
John L. Briggs, U. S. Atty., M. D. of Florida, Joseph W. Hatchett, Harvey E. Schlesinger, Asst. U. S. Attys., Jacksonville, Fla., for plaintiff-appellee.
Before WISDOM, BELL, and AINSWORTH, Circuit Judges.
PER CURIAM:
Affirmed. See Local Rule 21.2
Notes:
2
See NLRB v. Amalgamated Clothing Workers of America, 5 Cir. 1970, 430 F. 2d 966
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478 F.Supp.2d 651 (2007)
David Scott McMILLAN, Plaintiff,
v.
WEEKS MARINE, INC., Defendant.
Civil Action No. 03-0006 JJF.
United States District Court, D. Delaware.
March 22, 2007.
*652 *653 Rudolph V. DeGeorge, II, Esquire, of Barish Rosenthal, Philadelphia, PA. Leo John Ramunno, Esquire of Leo John Ramunno, Esquire, Wilmington, DE, Attorneys for Plaintiff.
Mary Elisa Reeves, Esquire, of Donna Adelsberger & Associates, P.C., Glendside, PA. Carmella P. Keener, Esquire, of Rosenthal, Monhait & Goddess, Wilmington, DE, Attorneys for Defendant.
MEMORANDUM OPINION
FARNAN, District Judge.
Pending before the Court are three Motions filed by Defendant Weeks Marine, Inc., a Motion For Judgment As A Matter Of Law Under Fed.R.Civ.P. 50 (D.I.77), a Motion To Vacate The Award Of Past And Future Lost Earnings And For A New Trial On Damages (D.I.86), and a Motion For Stay Of Execution Of Judgment Pending Disposition Of Post Trial Motions (D.I.88). For the reasons discussed, the Court will deny Defendant's Motion For Judgment As A Matter Of Law (D.I.77), grant Defendant's Motion To Vacate The Award Of Past And Future Lost Earnings And For a New Trial On Damages (D.I.86), and deny as moot Defendant's Motion For Stay Of Execution Of Judgment Pending Disposition Of Post Trial Motions (D.I.88).
I. BACKGROUND
On January 3, 2002, Plaintiff, David McMillan, filed this lawsuit against Defendant in the Eastern District of Pennsylvania alleging that Defendant, through its negligence and unseaworthy vessels, subjected him to unsafe working conditions from which he sustained injuries. (D.I.1). Plaintiff alleged that he had been working on an overly muddy scow and was not *654 given a chance to wash the mud off his boots before transferring to another boat. As a result, he alleges, he slipped and fell off the boat, sustaining facial and shoulder injuries. The Pennsylvania court transferred the case to this Court on January 3, 2003. (D.I.11).
From April 26 to May 1, 2006, the Court held a jury trial on the issues of whether Defendant was negligent under the Jones Act, 46 U.S.C.App. § 688, and whether Defendant's vessels were unseaworthy. At the close of all of the evidence, Defendant moved the Court for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a). (D.I.77). The Court deferred judgment on the Motion and allowed the case to proceed to the jury. On Plaintiffs unseaworthiness claim, the jury returned a verdict in favor of Defendant. On Plaintiffs negligence claim, the jury returned a verdict finding that Defendant was negligent, and awarding Plaintiff damages in the amount of $620,546. However, the jury also found that Plaintiff acted negligently and that thirty-nine percent of Plaintiffs negligence contributed to his own injury. (D.I.79). Accordingly, the total damages awarded to Plaintiff were reduced by 39 percent, resulting in final damages of $378,533.06. Judgment was entered on May 11, 2006. By the instant Motions, Defendant renews its request for judgment as a matter of law, and alternatively, requests the Court to vacate the jury's award for past and future lost earnings and order a new trial on those damages.
II. LEGAL STANDARD
A. Motion For Judgment As A Matter Of Law
A court may grant judgment as a matter of law when "there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Fed.R.Civ.P. 50(a). In assessing the sufficiency of the evidence, a court must review all of the evidence in the record, viewing it in the light most favorable to the non-moving party and giving the non-moving party the benefit of all fair and reasonable inferences that could be drawn from it. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The court may not weigh the evidence, make credibility determinations, or substitute its version of the facts for the jury's version. Id. Motions for judgment as a matter of law are granted "sparingly" and only in those circumstances in which "the record is critically deficient of the minimum quantum of evidence in support of the verdict." Johnson v. Campbell 332 F.3d 199, 204 (3d Cir.2003). The question the Court must answer then, is "whether, viewing the evidence in the light most favorable to the verdict, a reasonable jury could have found for the prevailing party." Id.
B. Motion For a New Trial
A court may grant a new trial "to all or any of the parties and on all or part of the issues . . . in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States. . . ." Fed. R.Civ.P. 59(a). A court should grant a new trial where the verdict is contrary to the weight of the evidence and a miscarriage of justice would result if the verdict were to stand. Brennan v. Norton, 350 F.3d 399, 430 (3d Cir.2003) (citing Williamson v. Consolidated Rail Corp., 926 F.2d 1344, 1352 (3d Cir.1991)). However, where the ground for a new trial is that the jury's verdict was against the weight of the evidence, the court should proceed cautiously, because such a ruling would necessarily *655 substitute the court's judgment for that of the jury. Klein v. Holdings, 992 F.2d 1285, 1290 (3d Cir.1993). A motion for a new trial is also appropriately granted where a substantial error occurred in the admission or rejection of evidence. Goodman v. Pennsylvania Turnpike Comm'n, 293 F.3d 655, 676 (3d Cir.2002).
In determining whether to grant a motion for a new trial under Rule 59(a), the court need not view the evidence in the light most favorable to the verdict winner, a distinction from similar motions under Rule 50. Whelan v. Teledyne Metalworking Prods., 2006 WL 39156, *3, 2006 U.S. Dist. LEXIS 1908 at *20 (W.D.Pa. Jan. 6, 2006)(citing Bullen v. Chaffinch, 336 F.Supp.2d 342, 347 (D.Dei.2004)). However, a new trial should only be granted where "a miscarriage of justice would result if the verdict were to stand," the verdict "cries out to be overturned," or where the verdict shocks the conscience. Williamson v. Conrail, 926 F.2d 1344, 1352 (3d Cir.1991); see also Price v. Delaware Dep't of Correction, 40 F.Supp.2d 544, 550 (D.Del.1999). The moving party has the burden of proving that a new trial is warranted. Whelan, 2006 WL 39156, at *3, 2006 U.S. Dist. LEXIS 1908 at *20.
III. DISCUSSION
A. Whether Defendant Is Entitled To Judgment As A Matter Of Law On Plaintiff's Claim Under The Jones Act
By its Motion, Defendant contends that the evidence Plaintiff presented at trial does not, as a matter of law, establish that Defendant was negligent. (D.I.77). Defendant also contends that Plaintiff failed to establish causation under the Jones Act, 46 U.S.C.App. § 688. According to Defendant the evidence offered at trial clearly demonstrates that Plaintiffs accident was caused exclusively by his own negligence, because he knew his boots were muddy yet failed to clean or change them. In response, Plaintiff contends that the jury's verdict was supported by the evidence.
The Jones Act provides that "any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury." 46 U.S.C.App. § 688(a); see Neely v. Club Med Mgmt. Servs., 63 F.3d 166, 194 (3d Cir.1995). Though a plaintiff alleging claims under the Jones Act must prove the traditional elements of negligence (duty, breach, notice, causation and damages), the standard of proof for causation is "featherweight." Evans v. United Arab Shipping Co. S.A.G., 4 F.3d 207, 210 (3d Cir.1993). Under this "featherweight" standard of proof, causation is satisfied "if the proofs justify with reason the conclusion that employer negligence played any part, even the slightest, in producing the injury." Wilburn v. Maritrans GP, Inc., 139 F.3d 350, 357 (3rd cir.1998). In a Jones Act case, issues of negligence are questions for the jury to resolve. Southard v. Indep. Towing Co., 453 F.2d 1115, 1118 (3d Cir.1971) (the jury "plays a preeminent role" in Jones Act cases).
Viewing all of the evidence in the light most favorable to Plaintiff, as must be done for Rule 50 motions, the Court concludes that sufficient evidence supports the jury's verdict finding Defendant negligent. Plaintiff testified as to the condition of the scow, the operational urgency of moving scow men at the end of the job, and his knowledge of gangplanks being used by others in the industry for transferring dredge workers between tugs. (D.I.94). He also testified that the amount of mud on the scow on the day of the accident was "uncommon to any of the other times[,]" *656 with the walking surface of the scow covered with four to six inches of mud in lower areas and up to two feet of mud in other areas. (D.I. 94 at 31, 37, 40). Plaintiff testified that the dredge operator customarily rinsed the mud off the scow to create a safe work area, but on the day of the accident the mud had not been rinsed off. (D.I. 94 at 32-34). Plaintiff further testified that he complained about the scow's muddy condition to Captain Wise immediately before the accident (D.I. 94 at 35).
Plaintiff then testified that, while Plaintiff was still on the scow, Captain Wise called to him, telling him to "hurry up" and get onto a tug boat, the Shelby, for transfer to another boat, the Virginia, that would be taking the crew home. (D.I. 94 at 35, D.I. 97 at 9). Plaintiff further testified that his belongings were already packed and were handed to him when he arrived on the Shelby, so he would be able to get to the Virginia more quickly, adding to his perception of urgency. (D.I. 94 at 43). Plaintiff next testified that while on the Shelby, he tried to wipe the mud off his boots as best as he could, but that he felt there was no time for him to take off his boots or to put on his street shoes. (D.I. 94 at 43). Because Defendant did not equip its boat with gangplanks, Plaintiff testified, he transferred between the Shelby and the Virginia by stepping from a bulwark on the Shelby to another on the Virginia in one long step, without a handrail, from a height of two feet above the deck. (Id. at 45). Plaintiff testified that it was during that long step that he fell. The Court finds Plaintiffs testimony, along with the other record evidence is sufficient to establish the elements of a negligence claim, including the slight causation requirement of the Jones Act. Thus, the Court concludes that Plaintiffs evidence was sufficient to support the jury's verdict finding Defendant partially negligent. Accordingly, the Court will deny Defendant's Motion For Judgment As A Matter Of Law (D.I.77) on Defendant's negligence claims.
B. Whether Defendant Is Entitled To Have The Jury's Damages Award Vacated And A New Trial
In the event the Court concludes the that the jury verdict should stand, Defendant contends in the alternative, that the jury's damages award of past lost earnings ($100,000) and future lost earnings ($377,000) should be vacated and a new trial ordered on those damages. Specifically Defendant challenges the Court's decision to admit the testimony and expert reports of Plaintiffs economist, Royal A. Bunin ("Mr.Bunin"), on the amount of Plaintiffs lost earnings. Defendant contends that Mr. Bunin's testimony was improper because: (1) Mr. Bunin based his entire wage calculation on speculation, hearsay and insufficient evidence; (2) Defendants were not provided with an expert report wherein Mr. Bunin employed an alternative wage calculation until the night before trial; and (3) Mr. Bunin's testimony was outside the scope of his expert report, as well as his expertise as an economist.[1]
*657 In response, Plaintiff contends that the Court did not abuse its discretion in admitting Mr. Bunin's testimony because (1) Mr. Bunin was qualified to testify as to Plaintiffs post-injury earning capacity, and (2) Mr. Bunin's last minute report, insofar as it actually reduced Plaintiffs lost wages, was not prejudicial. Thus, Plaintiff contends that the jury's damages award was supported by competent evidence, and, therefore, a new trial is not warranted.
1. Whether Mr. Bunin's Testimony Lacked A Proper Foundation
Defendant contends that Mr. Bunin's testimony lacked the proper foundation for admission into evidence because Mr. Bunin (1) calculated Plaintiff's lost earnings projection by relying on a very limited period of time that immediately preceded and immediately followed Plaintiffs injury and (2) used his "knowledge" of how seniority in a union ensures steady work to speculate that, had Plaintiff not been injured, he would have achieved and maintained full-time employment in the dredging industry. (D.I. 87 at 9-10).
The trial court has broad discretion to admit or exclude evidence under the Federal Rules of Evidence. Gumbs v. Int'l Harvester, Inc., 718 F.2d 88, 97 (3d Cir.1983); see Weinstein's Federal Evidence § 702.02. However, expert testimony cannot be submitted to the jury unless it is accompanied by a sufficient factual foundation. Benjamin v. Peter's Farm Condo. Owners Ass'n, 820 F.2d 640, 642 (3d Cir. 1987). Although mathematical exactness is not required, testimony of post-injury earning capacity must be based upon the proper factual foundation. Id. At 643; Fed.R.Evid. 702. Moreover, an expert's testimony should be excluded as speculative if it is based on unrealistic assumptions regarding the plaintiff's future employment prospects, including his wage rate and ability to maintain full-time work in seasonal or other part-time industries. Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21-22 (2d Cir.1996); see also Gumbs, 718 F.2d at 98. In the present case, Mr. Bunin's projections of Plaintiffs lost earnings were based on his assumption that Plaintiff would work for the rest of his work-life on a full-time basis at an artificially determined wage. The Court concludes that the evidence does not establish any foundation for Mr. Bunin's future wage projections.
Mr. Bunin is an actuarial-economic expert who was called to "project the values of future life time earnings of individuals allowing for future growth[.]" (D.I. 95 at 5). Mr. Bunin testified that the purpose of this calculation is "to determine how much money a person has lost due to a death or disability." Id. He also testified that, when preparing actuarial-economic reports, he "like[s] to get tax returns or some type of employment history on the individual, information about their date of birth [and] the injury and what happened," as well as "the residual capacity that would come from a medical report, a vocational report, and those sort of things." (D.I. 95 at 8). When the wage information is not for a complete year, Mr. Bunin prorates the wage information he has, meaning he calculates annual earnings by assuming a client's partial wage information will be constant throughout the year.
Mr. Bunin prepared two actuarial-economic expert reports for this litigation. For his first report ("Basis 1"), Mr. Bunin calculated Plaintiffs lost earnings capacity by "prorat[ing] on an annualized basis" the $9,420 that Plaintiff earned during "the last position he held prior to the injury," i.e. his seven-week seasonal position *658 with Defendant. (Id. at 9, 29). Mr. Bunin testified that he did not factor Plaintiffs prior or subsequent employment history in the dredging industry into his "Basis 1" calculation. (D.I. 95 at 30-32). In making his "Basis 1" calculation, Mr. Bunin assumed that Plaintiffs injury was the reason why his employment ended with Defendant. This assumption was based solely on the opinion of Plaintiffs orthopedic surgeon that Plaintiff could not return to work as a scowman or deckhand. (D.I. 95 at 12, 27).[2]
Mr. Bunin prepared a second report ("Basis 2") after learning that "the reason [Plaintiff] stopped working [for Defendant] on June 7th was that was the last day of work, . . . he didn't stop working because he was injured on the job" and that Plaintiff actually did return to work as a deckhand after the surgery. For his "Basis 2" calculation, Mr. Bunin also considered Plaintiffs wages during his two month employment at another dredging employer, C.J. Langenfelder, after Plaintiffs accident, as well as the downtime between Plaintiffs job with Defendant and his job with C.J. Langenfelder. When these additional factors were considered, Plaintiffs projected pro-rated lost earnings capacity fell from the $79,722 projected under "Basis 1" to $50,430. (D.I. 95 at 13, D.I. 87 Ex. A). However, Mr. Bunin still did not consider Plaintiffs prior work in the dredging industry or subsequent work outside of the dredging industry. "Basis 2" also did not anticipate periods of unemployment in the dredging industry.
The Court concludes that Mr. Bunin's expert reports and subsequent testimony about Plaintiffs lost wages lack a `proper foundation because he failed to consider Plaintiffs complete work history and the seasonal nature of Plaintiffs dredging industry positions prior to the injury. The projected earnings estimates in both "Basis 1" and "Basis 2" are significantly higher than Plaintiffs 2005 W-2 earnings of $34,680, and both exceed any recorded annual earnings in Plaintiffs work history. (D.I. 87 Ex. A). Additionally, neither "Basis 1" nor "Basis 2" were adjusted downward for any periods between jobs when Plaintiff would not have been paid, even though Mr. Bunin acknowledged under cross examination that "these jobs are called on for a period of time, . . . then the job is over."[3] (D.I. 95 at 10, 39).
In sum, the evidence at trial demonstrates that dredging jobs are seasonal and would not have been available to Plaintiff on a regular, full time basis. Indeed, during the year and a half that Plaintiff worked in the dredging industry, he experienced downtime or gaps in his employment and worked for multiple employers. (D.I. 94 at 15-21; D.I. 95 at 31, 35). Further, both Plaintiffs job with Defendant and his subsequent work with C.J. Langenfelder were seasonal jobs. (D.I. 94 at 39, D.I. 97 at 31-32). Yet, Mr. Bunin failed to consider this important evidence in his wage earning calculation. Thus, the Court concludes that Mr. Bunin's expert reports and testimony were not based on realistic wage estimates, and were instead based on the faulty and unsupported assumption that Plaintiff would be able to maintain full-time work in a seasonal and part-time industry. Accordingly, the *659 Court concludes that Mr. Bunin's expert reports should have been excluded from evidence because they lacked a proper foundation.
2. Whether Mr. Bunin's Testimony Exceeded The Scope Of His Expert Report
Defendant also contends that Mr. Bunin exceeded the scope of his expert report when he testified about the role of union membership in securing full time work for its members. (D.I. 87 at 5). Pursuant to Federal Rule of Civil Procedure 26(a)(2)(B), an expert's report "shall contain a complete statement of all opinions to be expressed and the basis and reasons therefor; [and] the data or other information considered by the witness in forming the opinions." Fed.R.Civ.P. 26(a)(2)(B). The purpose of this disclosure rule is to give opposing parties a reasonable opportunity to prepare for effective cross examination or to secure their own expert witness. Advisory Committee Notes to 1993 Amendments to Fed.R.Civ.P. 26(a)(2)(B).
When an expert's testimony goes beyond the parameters of that expert's report, the Court's procedure is to consider objections at the conclusion of trial because of the difficulty of resolving such disputes during trial. If the verdict is adverse to the objecting party, the Court then undertakes consideration of whether or not the expert testified outside the parameters of the Rule 26 report. For a party to prevail on this argument, it must demonstrate that the expert's testimony exceeded the scope of the Rule 26 report, and that the objecting party suffered undue prejudice because of the violation. If the Court finds that the opinions offered at trial were not disclosed, the Court then considers whether a new trial is warranted and what sanctions, if any, should be imposed.
During trial, Mr. Bunin, an actuarial economist expert witness, was permitted to testify, over Defendant's objection, about the employment frequencies, hours worked, and employment experiences of workers in the dredging industry. He testified that "while earlier on in a person's career there may be fluctuation as they're getting known in the industry picking up work, but once they're known in the industry, they get picked up and their work seems to be more solid year around." (D.I. 95 at 11). He also testified that this opinion derived from other reports he had prepared for other workers in the dredging industry who were members of the Union of Operating Engineers Local 25. Id. After reviewing Mr. Bunin's expert reports, the Court finds that these opinions were not disclosed as required, nor did Mr. Bunin provide any bases to support them. Moreover, the Court concludes that Mr. Bunin's testimony on Plaintiffs future prospects of employment in the dredging industry reflects vocational experience outside the scope of his expert report, discipline and prior experience as an actuarial-economist.
3. Summary
In sum, the Court concludes that Mr. Bunin's testimony was both unsupported and beyond the scope of his expert reports. Because the Court finds that Mr. Bunin's testimony was integral to the jury's verdict on lost wages,[4] the Court concludes that Defendant suffered undue prejudice warranting a new trial on damages. Accordingly, the Court will grant *660 Defendant's Motion to vacate the damages award for past lost earnings ($100,000) and future lost earnings ($377,000), and schedule a new trial on these damages.
IV. CONCLUSION
For the reasons discussed, Defendant's Motion For Judgment As A Matter Of Law Under Fed.R.Civ.P. 50 (D.I.77) will be denied, Defendant's Motion To Vacate The Award Of Past And Future Lost Earnings And For a New Trial On Damages (D.I.86) will be granted, and Defendant's Motion For Stay Of Execution Of Judgment Pending Disposition Of Post Trial Motions (D.I.88) will be denied as moot.
An appropriate Order will be entered.
ORDER
At Wilmington, this 22nd day of March 2007, for the reasons discussed in the Memorandum Opinion issued this date;
IT IS HEREBY ORDERED that:
1) Defendant's Motion For Judgment As A Matter Of Law Under Fed.R.Civ.P. 50 (D.I.77) is DENIED.
2) Defendant's Motion To Vacate The Award Of Past And Future Lost Earnings And For a New Trial On Damages (D.I.86) is GRANTED.
3) Defendant's Motion For Stay Of Execution Of Judgment Pending Disposition Of Post Trial Motions is DENIED AS MOOT.
4) The jury's damages award (D.I.79) of $378,533.08 is VACATED to the extent that it awarded damages for past lost earnings ($100,000) and future lost earnings ($377,000). The Judgment Order (D.I.83) is VACATED as to past lost earnings and future lost earnings. Judgment stands against Defendant and in favor of Plaintiff in the amount $87,563.06 (for past and future loss of life's pleasures ($40,000), past pain and suffering ($42,000), future pain and suffering ($55,000), and dental expenses ($6,546), as reduced by thirty-nine (39) percent to reflect Plaintiffs negligence ($55,982.94).
NOTES
[1] Defendant offers several other contentions for why a new trial on damages should be granted. Specifically, Defendant contends that Defendant should have been permitted to rebut the testimony of Plaintiff's medical experts with its own experts. Defendant also contends that the Court erred in allowing Plaintiff to testify about hearsay conversations related to job security and seniority in the Union, in allowing Mr. Bunin's second expert report even though it was submitted after 6:00 p.m. the night before trial, and in refusing to provide certain jury instructions. (D.I.86). Because the Court concludes that a new trial is warranted for the reasons discussed in this Memorandum Opinion, it declines to address these additional issues.
[2] Mr. Bunin testified that he did not consider the opinions of Plaintiff's treating physician or surgeon, both of whom did believe that Plaintiff could return to work, because "it would be beyond my [Mr. Bunin's] expertise to give a medical opinion." Id.
[3] "Basis 2" did include the period between Plaintiff's job with Defendant and his job with C.J. Langenfelder when Plaintiff was not paid. However, the calculation assumed that this brief period was the only time Plaintiff would be without work for the entire year.
[4] The jury's verdict on past and future lost wages was approximately 80% of Mr. Bunin's Basis 2 calculations. D.I. 87, n. 1.
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526 F.3d 1111 (2008)
Darius RAMANAUSKAS, Petitioner-Appellant,
v.
UNITED STATES of America, et al., Respondents-Appellees.
No. 07-1877.
United States Court of Appeals, Eighth Circuit.
Submitted: January 15, 2008.
Filed: June 2, 2008.
*1112 James E. Ostard, argued, Minneapolis, MN, for appellant.
Nathan Paul Petterson, argued, AUSA, Minneapolis, MN, James Lackner, AUSA, on the brief, for appellee.
Before LOKEN, Chief Judge, MURPHY, Circuit Judge, and JARVEY,[*] District Judge.
LOKEN, Chief Judge.
Effective March 31, 2003, the United States and Lithuania entered into the Extradition Treaty Between the Government of the United States of America and the Government of the Republic of Lithuania, Oct. 23, 2001, S. Treaty Doc. No. 107-4 (the "Treaty"). In October 2004, the United States, acting on behalf of Lithuania, filed a complaint in the United States District Court for the District of Minnesota seeking the extradition of Darius Ramanauskas to face Lithuanian criminal charges.
After a hearing, the district court rejected various defenses asserted by Ramanauskas and issued an Amended Certification of Extraditability. See 18 U.S.C. § 3184. Because there is no direct appeal from an extradition certification, Matter of Assarsson, 687 F.2d 1157, 1159 (8th Cir. 1982), Ramanauskas filed a petition for a writ of habeas corpus, asserting that his extradition is barred by Article 5 of the Treaty, a double jeopardy provision (known internationally as a non bis in *1113 idem clause) that has ancient roots and is commonly included in modern extradition treaties. See generally Sindona v. Grant, 619 F.2d 167, 177-78 (2d Cir.1980). The district court[2] denied the writ. Ramanauskas appeals. Construing the provisions of the Treaty de novo, we affirm.
In 2002 and 2003, United States and Lithuanian law enforcement agencies investigated a group of Lithuanian citizens smuggling counterfeit U.S. currency and the controlled substance "Ecstacy" into the United States. In the District of Minnesota, Ramanauskas pleaded guilty to two counts of counterfeiting (passing counterfeit $100 bills) in May 2003. He served an eight-month prison sentence. Meanwhile, Lithuanian authorities filed drug and counterfeiting criminal charges and submitted a request to the U.S. Department of State that he be extradited.
Before Ramanauskas could be deported or extradited, he and two others were indicted in the District of Minnesota for conspiring to deal in, and passing, counterfeit U.S. currency that they received from Lithuania during the time period described in the pending Lithuanian charges. The indictment contained no reference to the smuggling of Ecstacy or other drug trafficking. Ramanauskas pleaded guilty to the conspiracy offense and one substantive counterfeiting offense. The lengthy written plea agreement included the following provision:
The United States Attorney's Office for the District of Minnesota agrees to not bring any additional charges against [Ramanauskas] based upon information known to it ... as of March 19, 2004-to wit: ... [his] participation in the distribution of Ecstacy. This commitment... does not apply to any other agency or department of the United States, or to any other proceeding such as deportation, extradition, or the like. Upon acceptance of the plea and the plea agreement, the United States will move to dismiss any remaining charges. . . .
Following acceptance of Ramanauskas's guilty plea, the probation office prepared a presentence investigation report that described his receipt of both counterfeit currency and Ecstacy from conspirators in Lithuania. Ramanauskas objected and requested the deletion of all references to drug activities "in order to preserve his rights . . . in Lithuania." The government's sentencing memorandum responded that "the United States did not pursue the Ecstasy charges because of a request from the Lithuanian government." The district court sustained the objection, deleted all references to uncharged drug conduct from the PSR, and sentenced Ramanauskas to eighteen months in prison for the counterfeiting offenses.
Less than one month before Ramanauskas was sentenced for the counterfeiting offenses, the United States filed its extradition complaint on behalf of Lithuania. Consistent with the Lithuanian charging documents, the complaint initially included both drug and counterfeiting offenses. However, after judgment was entered on Ramanauskas's second counterfeiting conviction, the United States moved to dismiss the complaint insofar as it sought extradition for the Lithuanian counterfeiting charges, explaining that those offenses now fell within the Article 5 of the Treaty, which is entitled "Prior Prosecution" and provides:
1. Extradition shall not be granted when the person sought has been convicted or acquitted in the Requested State for the offense for which extradition *1114 is requested. Conviction or acquittal also means, under Lithuanian law, an agreed resolution approved by a court with final and binding effect.
2. Extradition shall not be precluded by the fact that the competent authorities of the Requested State have decided either:
(a) not to prosecute the person sought for the acts for which extradition is requested;
(b) to discontinue any criminal proceedings which have been instituted against the person sought for those acts; or,
(c) to investigate the person sought for the same acts.
Ramanauskas argues on appeal, as he did to the district court, that Article 5.1 of the Treaty bars his extradition for the Lithuanian Ecstacy charges. Habeas review of an extradition order is limited, but it includes the determination of whether the crime for which the requesting country seeks extradition "fell within terms of the treaty." Assarsson, 687 F.2d at 1159. The purpose of extradition treaties is "the surrender of fugitives to be tried for their alleged offenses." United States v. Wiebe, 733 F.2d 549, 554 (8th Cir.1984). "[I]f a treaty fairly admits of two constructions, one restricting the rights which may be claimed under it, and the other enlarging it, the more liberal construction is to be preferred." Factor v. Laubenheimer, 290 U.S. 276, 293-94, 54 S.Ct. 191, 78 L.Ed. 315 (1933).
Relying on a portion of the second sentence in Article 5. 1, Ramanauskas contends that, when the Minnesota United States Attorney agreed "to not bring any additional charges" in a plea agreement that was then approved by the district court, the plea agreement became an "agreed resolution approved by a court with final and binding effect." Therefore, though drug offenses were never charged in the United States, drug offenses equivalent to the alleged Lithuanian drug offenses were "resolved" by a court in the United States (which in this case is the "Requested State" for purposes of Article 5), and so the Lithuanian drug offenses are expressly excluded from extradition by the second sentence of Article 5. 1, just as offenses for which "convictions" and "acquittals" have been obtained in the Requested State are expressly excluded from extradition by the first sentence of Article 5.1. Like the district court, we disagree.
The contention is fatally flawed because it ignores the previous words in the second sentence, "under Lithuanian law." In our view, the plain import of these limiting words is that the second sentence was inserted because, under Lithuania's legal system, the words "convicted or acquitted" in the first sentence of Article 5.1 might not include dispositions of Lithuanian criminal proceedings to which the double jeopardy protection should apply. In other words, the second sentence only applies when Lithuania, rather than the United States, is the "Requested State." The Treaty's legislative history in the United States confirms this interpretation. In urging ratification, the Report of the Senate Committee on Foreign Relations explained:
ARTICLE 5(1) PRIOR PROSECUTION
The Lithuanian delegation expressed concern that the terms "convicted or acquitted" used in the first sentence are not broad enough to cover all matters under Lithuanian law. Therefore, the following sentence was added to provide a broader definition: "Conviction or acquittal also means, under Lithuanian *1115 law, an agreed resolution approved by a court with final and binding effect."
S. EXEC. REP. No. 107-13, at 5 (2002).
This interpretation of Article 5.1 is reinforced by the plain meaning of Article 5.2, which provides in relevant part that "[e]xtradition shall not be precluded by the fact that the competent authorities of the Requested State have decided . . . not to prosecute the person sought for the acts for which extradition is requested. . . ." Here, as the district court concluded, the Minnesota United States Attorney's commitment in the plea agreement not to bring additional charges was a decision "not to prosecute" known but uncharged drug offenses for which Lithuania was seeking extradition. The plea agreement expressly stated that it did not apply "to any other proceeding such as . . . extradition," and Ramanauskas later asked the district court to remove any references to drug activity from the PSR "to preserve his rights, whatever those may be in Lithuania." Ramanauskas offers no support, textual or otherwise, for his assertion that Article 5.2 only applies when the Requested State's authorities make a "unilateral" decision not to prosecute, without court approval.
Ramanauskas complains that, under the government's interpretation of Article 5.2, Lithuania may now prosecute him for the additional counterfeiting charges the United States dismissed pursuant to the plea agreement. This contention confuses distinct Treaty provisions. The government dropped all Lithuanian counterfeiting charges from the extradition complaint. If he is extradited, Lithuania has agreed in Article 16.1(a) of the Treaty (titled the "Rule of Speciality") to prosecute him only for offenses "for which extradition was granted." On the other hand, had the United States not dropped the Lithuanian counterfeiting charges from the extradition complaint, the district court would have needed to decide before issuing a certificate of extradition whether those specific charges were barred by Article 5 of the Treaty. Compare Elcock v. United States, 80 F.Supp.2d 70 (E.D.N.Y.2000); Matter of Montiel Garcia, 802 F.Supp. 773 (E.D.N.Y.1992), aff'd, 987 F.2d 153 (2d Cir.), cert. denied, 509 U.S. 930, 113 S.Ct. 3056, 125 L.Ed.2d 740 (1993).
The judgment of the district court is affirmed.
NOTES
[*] The HONORABLE JOHN A. JARVEY, United States District Judge for the Southern District of Iowa, sitting by designation.
[2] The HONORABLE MICHAEL J. DAVIS, United States District Judge for the District of Minnesota, adopting the Report and Recommendation of the HONORABLE JEANNE J. GRAHAM, United States Magistrate Judge for the District of Minnesota.
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT April 6, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 16-1429
(D.C. Nos. 1:16-CV-01381-LTB and
MICHAEL WALKER, JR., 1:06-CR-00320-LTB-2)
(D. Colo.)
Defendant - Appellant.
_________________________________
ORDER AND JUDGMENT
_________________________________
Before MATHESON, BACHARACH, and PHILLIPS, Circuit Judges.
_________________________________
This matter comes on for consideration of the defendant’s response to this court’s
order of March 24, 2017, in which the defendant was ordered to show cause why the
district court judgment should not be summarily affirmed in light of the Supreme Court
decision in Beckles v. United States, 137 S. Ct. 886 (2017) (holding that the United States
Sentencing Guidelines, including § 4B1.2(a), are not subject to vagueness challenges
under the Due Process Clause). In response, the defendant states that “Undersigned
counsel has failed to identify any legal argument refuting that Beckles controls this case.”
Response at p.1.
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. 32.1.
Accordingly, the judgment of the district court is AFFIRMED.
The mandate shall issue forthwith.
Entered for the Court
Per Curiam
2
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379 A.2d 710 (1977)
Earl COLEMAN, Appellant,
v.
UNITED STATES, Appellee.
No. 10365.
District of Columbia Court of Appeals.
Argued September 15, 1977.
Decided October 31, 1977.
*711 William J. Genego, appointed by this court, with whom Stuart H. Gitlitz, Washington, D. C., appointed by this court, was on the brief, for appellant.
Earl J. Silbert, U. S. Atty., John A. Terry, William D. Pease, Lawrence H. Wechsler and Steven D. Gordon, Asst. U. S. Attys., Washington, D. C., were on the brief, for appellee which was submitted without oral argument.
Before NEWMAN, Chief Judge, and GALLAGHER and YEAGLEY, Associate Judges.
YEAGLEY, Associate Judge:
Appellant appeals from his conviction on three counts of first-degree premeditated murder (D.C.Code 1973, § 22-2401), three counts of first-degree felony murder (D.C. Code 1973, § 22-2401), attempt to commit robbery while armed (D.C.Code 1973, §§ 22-2902, -3202), first-degree burglary while armed (D.C.Code 1973, §§ 22-1801(a), -3202), carrying a pistol without a license (D.C.Code 1973, § 22-3204) and carrying a dangerous weapon (a shotgun) (D.C.Code 1973, § 22-3204). We find his assignments of error to be without merit and therefore affirm.
On the evening of October 24, 1974, a man and two women were murdered. The evidence introduced against appellant at his trial indicated that the man had been appellant's partner in a narcotics distribution operation and that appellant killed him and the two women after a falling out over a debt which appellant claimed the man owed him. Appellant presented as his defense the alibi that at the time the three murders were committed, he was home in bed. Several witnesses testified in support of appellant's alibi.
The first claim raised on appeal is that the trial court erred in ruling that appellant could not assert his Fifth Amendment privilege against self-incrimination as a bar to certain questions asked by the government on cross-examination. It is *712 well settled that a defendant who takes the stand on his own behalf may not utilize his Fifth Amendment privilege in order to bar cross-examination reasonably related to the scope of direct examination. Branch v. United States, 84 U.S.App.D.C. 165, 171 F.2d 337 (1948); 8 Wigmore, Evidence § 2276(2) (McNaughton rev. 1961). Furthermore, the extent of cross-examination in any particular case is a matter within the discretion of the trial court and this discretion is extremely broad when the defendant asserts an alibi defense. United States v. Higginbotham, 539 F.2d 17 (9th Cir. 1976).
In this case, defendant testified extensively on direct examination as to the narcotics operation in which he and his associates were involved. On cross-examination, the prosecutor suggested to appellant that the apartment where he met his associates on the night in question was the base of their narcotics operation. When appellant denied that this was the only base, the prosecutor asked him, "[w]here else did you have?" Appellant asserted his privilege against self-incrimination, and the trial judge ruled that he had waived his Fifth Amendment privilege with respect to the prosecutor's question by his direct testimony. The witness, however, stood firm, did not answer the question, and later, in the absence of the jury, was found in contempt of court. Consequently, we are not faced with a question of the erroneous admission of testimony.
Even if we assume that appellant ought to have been able to interpose his Fifth Amendment privilege, as he did, the conclusion is inescapable that the court's ruling and the lack of a subsequent cautionary instruction were harmless beyond a reasonable doubt under the standard enunciated in Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). Appellant had testified to his narcotics activities on direct examination, so the question posed no prejudice in that regard. Further, overwhelming evidence of his guilt was amassed at trial.
Appellant's next claim concerns a government exhibit, a photograph of the defendant with a .45 caliber pistol in his waistband which was taken five months before the alleged murders. The photograph was admitted, over defense objection, after a friend had identified it as a photograph she had taken of appellant and further identified the pistol shown in it as being the weapon she had thrown in the river the morning following the murders. Appellant argues that the photograph was not probative of any issue in the case and was therefore irrelevant. He bases this assertion on two factors, the remoteness in time of the photograph to the murders and the witness' failure to explain how she knew this was a picture of the gun she had thrown in the river. Appellant further argues that even if the photograph had some relevancy, it was prejudicial error to admit it in evidence because its prejudicial impact on the jury outweighed its probative value. We cannot agree.
A trial court has broad discretion in determining the admissibility of photographic evidence and its ruling should not be disturbed in the absence of an abuse of discretion. Pittman v. United States, D.C. App., 375 A.2d 16 (1977). We find that in this case the trial court did not abuse its discretion. The photograph showed that prior to the murders, appellant possessed a .45 caliber pistol, the type of gun used in this case. An accused person's prior possession of the physical means of committing the crime is some evidence of the probability of his guilt, and is therefore admissible. Morton v. United States, 87 U.S.App.D.C. 135, 183 F.2d 844 (1950). Although the age of the photograph reduced its probative value, it did not render it irrelevant. Finally, the picture was not so inflammatory that the judge abused his broad discretion in admitting it. Pittman v. United States, supra at 19; United States v. Ravich, 421 F.2d 1196, 1204 (2d Cir.), cert. denied, 400 U.S. 834, 91 S.Ct. 69, 27 L.Ed.2d 66 (1970).
Appellant's final claim is that court appointed counsel was ineffective. In order to prevail on a claim of ineffective assistance of counsel, defendant must show *713 that his counsel was so ineffective that he was deprived of a substantial defense. Johnson v. United States, D.C.App., 364 A.2d 1198 (1976); Hampton v. United States, D.C.App., 340 A.2d 813 (1975); Angarano v. United States, D.C.App., 312 A.2d 295 (1973), rehearing en banc denied, 329 A.2d 453 (1974). We have reviewed the record and find that only two of the instances which appellant cites as examples of ineffectiveness require comment. The first concerns defense counsel's summation to the jury. Appellant describes the summation as "mechanical" and "perfunctory" because of its brevity and lack of content. He places special emphasis on the fact that defense counsel never once mentioned the alibi testimony of the defense witnesses. We find that counsel's summation did not rise to the level of ineffectiveness required by our decisions. In his summation counsel emphasized a number of factors which tended to undermine the credibility of the government's witnesses. He also raised questions concerning the incompetency of the police investigation. In light of the fact that the alibi witnesses had seriously contradicted each other, we cannot discount the possibility that defense counsel's failure to discuss the alibi defense was strategically motivated.
Our second comment concerns the assertion that defense counsel did not adequately prepare his witnesses. As we have indicated, the defense witnesses seriously contradicted each other. Although defense counsel should thoroughly investigate the circumstances of the case and assist witnesses in preparing for trial, see American Bar Association Project on Standards for Criminal Justice, The Defense Function, § 4.1 (Approved Draft 1971), his role is not to tell the witnesses what they saw or knew about the relevant events. On the record before us we cannot say that the discrepancies in the witnesses' testimony resulted from inadequate preparation by defense counsel. Lastly, we note that appellant did not raise his claim of ineffectiveness by an appropriate motion to the trial court. We pointed out the importance of following that procedure in Angarano v. United States, supra, 329 A.2d 453.
The judgment below is
Affirmed.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-2225
___________
Lulseged Gebrehiwot, *
*
Petitioner, *
* Petition for Review of an Order
v. * of the Board of Immigration Appeals.
*
John Ashcroft, Attorney General, *
*
Respondent. *
___________
Submitted: April 16, 2004
Filed: June 29, 2004 (Corrected: 7/2/04)
___________
Before MORRIS SHEPPARD ARNOLD, MAGILL, and MURPHY, Circuit Judges.
___________
MAGILL, Circuit Judge.
Lulseged Gebrehiwot petitions for review of an order of the Board of
Immigration Appeals ("BIA") affirming without opinion an immigration judge's ("IJ")
denial of his application for asylum and withholding of removal. We have
jurisdiction pursuant to 8 U.S.C. § 1252, and we affirm the BIA's order of removal.
Gebrehiwot is a citizen of Ethiopia. He is ethnically Amhara and was raised
in a region of Ethiopia consisting primarily of ethnic Oromos and Somalis.
Gebrehiwot first came to the United States in 1981; he completed a master's degree
in Agronomy at the University of Georgia and returned to Ethiopia in 1983. Upon
his return, he worked for the Mengistu government as a division head at the National
Institute of Agricultural Research from 1983 to 1988 and from 1989 to 1990. Though
he worked for the government, Gebrehiwot testified he did not belong to a political
party, and apparently does not fear persecution based on his work for the Mengistu
government. He returned to the United States in 1990 to obtain his Ph.D. in
Agronomy. The terms of his program provided that he was to spend at least two years
in Ethiopia following its completion so that his country might share in the benefit of
his education. While Gebrehiwot was in the United Sates, the government of
Ethiopia changed control during a violent period in the early 1990's, and the
Ethiopian People's Revolutionary Democratic Front ("EPRDF") took power. The
EPRDF renewed Gebrehiwot's passport and never demanded that he return to
Ethiopia. Gebrehiwot completed the Ph.D. program at the University of Missouri in
1994. He testified that agronomists are in demand in Ethiopia; however, instead of
returning, Gebrehiwot applied for asylum based on a fear of persecution due to his
ethnicity and political beliefs.
Gebrehiwot testified to no political involvement while living in Ethiopia.
Rather, his fear springs from his membership in various groups in the United States
which protest the ethnic policies and human rights abuses of the EPRDF. To this end,
Gebrehiwot became a member of the following groups: the All-Amhara Relief and
Development Association, which is the Western version of the Ethiopian All-Amhara
People's Organization ("AAPO"); the Coalition of Ethiopian Democratic Forces; and
the Ethiopian National Congress.
Gebrehiwot does not claim that he has ever been persecuted in Ethiopia. He
argues instead that the EPRDF is hostile to Amharas, and will persecute him because
of his ethnicity and criticism of its divisive ethnic policies. In support of his
persecution claim, Gebrehiwot cites the following factors: in 1991, his family was
forced from their land by armed members of the Oromo People's Democratic
Organization who gave the land to ethnic Oromos; in 1992, his half brother was
-2-
arrested and detained for three months because he was Amhara; in 1994, his cousin
was killed by government forces because he was Amhara and a member of the
AAPO; his brother and sister were fired because they are Amhara; in 1995, his
property, which he had not visited in more than five years, was confiscated by the
government without compensation because he was considered a chauvinist Amhara
and a defector; his wife, Azeb Yigalem, was arrested and imprisoned by the
government because of her AAPO activities in 1993, twice in 1995, and in 1997.1
The IJ denied Gebrehiwot's application for asylum and withholding of removal.
It relied heavily on a Department of State Country Report ("Report") and a Profile of
Asylum Claims and Country Conditions ("Profile") in holding that Gebrehiwot had
not established a well-founded fear of future persecution.
Because the BIA affirmed the IJ without opinion, we review the IJ's decision
directly as the final agency action. Melecio-Saquil v. Ashcroft, 337 F.3d 983, 986
(8th Cir. 2003). We will affirm an IJ's denial of asylum if it is supported by
substantial evidence on the record as a whole. Menendez-Donis v. Ashcroft, 360
F.3d 915, 918-19 (8th Cir. 2003). In order to overturn the IJ's findings, we would
have to conclude "not only that a persuasive case has been made for the opposite
position, but that any reasonable fact-finder would be persuaded by it." Id. at 918;
see also 8 U.S.C. § 1252(b)(4)(B) ("[A]dministrative findings of fact are conclusive
unless any reasonable adjudicator would be compelled to conclude to the contrary.").
Gebrehiwot bears the burden of establishing a well-founded fear of persecution
on account of his ethnicity or political opinion. 8 U.S.C. § 1101(a)(42)(A). Any such
fear must be objectively reasonable, meaning that he was required to present
"credible, direct, and specific evidence of facts that show a reasonable person in [his]
1
We know little more about these alleged events than the bare bones we state
here. Gebrehiwot's brief and hearing transcript do not flesh out the facts.
-3-
position would fear persecution if returned to" Ethiopia. Ghasemimehr v. INS, 7 F.3d
1389, 1390 (8th Cir. 1993).
The record does not contain sufficient evidence to compel a conclusion
contrary to that reached by the IJ. Nor can we say that the evidence in the record
which supports the IJ's determination is insubstantial. The IJ considered
Gebrehiwot's testimony concerning the reasons he feared persecution in light of the
State Department documents and found the latter more convincing. We have
previously held that an IJ "'reasonably may rely upon the State Department's
assessment of current country conditions as they relate to the likelihood of future
persecution, given the Department's expertise in international affairs.'" Navarijo-
Barrios v. Ashcroft, 322 F.3d 561, 564 (8th Cir. 2003) (quoting Toptchev v. INS, 295
F.3d 714, 722 (7th Cir. 2002)); see also Kayembe v. Ashcroft, 334 F.3d 231, 235-37
(3d Cir. 2003) (holding that a Country report provided substantial evidence for
affirming a denial of asylum based on fear of future persecution because of ethnicity);
Gonahasa v. United States INS, 181 F.3d 538, 542 (4th Cir. 1999) ("In most cases,
a State Department report provides such substantial evidence. Absent powerful
contradictory evidence, the existence of a State Department report supporting the
BIA's judgment will generally suffice to uphold the Boards' decision.").
The State Department documents were in many instances directly contrary to
Gebrehiwot's thinly supported claims that Amhara supporters of the AAPO are being
persecuted. The Profile states "we have seen no evidence that the [Federal
Democratic Republic of Ethiopia] would harm or harass such persons as long as they
renounce violence as a means of gaining their ends." R. at 512. The Profile similarly
notes that members of the AAPO in Ethiopia are not arrested based on their
membership alone, and are allowed to demonstrate and publish material. R. at 515.
It contradicts Gebrehiwot's fear that, despite the value of his education to the country,
the Ethiopian government is willing to persecute him because of his political
activities abroad:
-4-
Adjudicator's may wish to bear in mind that the FDRE has consistently
demonstrated its willingness to accept, without major repercussions,
those members of COEDF . . . or other exile groups who renounce their
affiliation with these groups and the violent aims of these groups.
Almost all Ethiopian asylum applicants claim membership in one or the
other of these exile groups . . . there are no reports in recent years of
members of exile groups facing a trial or conviction solely for anti-
government activities conducted overseas upon returning to Ethiopia.
R. at 510. Moreover, the government has encouraged expatriates to return to Ethiopia
and participate in its political process should they renounce violence. R. at 509. The
Profile similarity contradicts Gebrehiwot's claim of ethnic persecution: "there is no
evidence that the FDRE is targeting ethnic Amharas for mistreatment, as is often
alleged by applicants." R. at 514. In light of the speculative nature of Gebrehiwot's
fear, the bareness of many of his supporting allegations, and the State Department
documents, we find that the IJ's decision was supported by substantial evidence.2
Accordingly, we deny the petition.
______________________________
2
Our holding on Gebrehiwot's asylum claim dooms his withholding of removal
claim. An applicant must show eligibility for withholding by a clear probability, a
higher standard than must be met for asylum. See, e.g., Chay-Velasquez v. Ashcroft,
367 F.3d 751, 755 (8th Cir. 2004).
-5-
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45 Cal.App.2d 345 (1941)
THE PEOPLE, Respondent,
v.
GUS PHOTO, Appellant.
Crim. No. 612.
California Court of Appeals. Fourth Dist.
June 13, 1941.
Richard C. Fildew for Appellant.
Earl Warren, Attorney-General, and Eugene M. Elson, Deputy Attorney-General, for Respondent.
GRIFFIN, J.
Appellant Gus Photo, also known as Constantine Photopoulos, and Pete Adams were each charged in separate informations with the crime of grand theft in that they did on November 14, 1940, wilfully and feloniously steal, take and carry away 398 boxes of oranges of the value of $398, the personal property of Mrs. J. A. Prescott. Gus Photo was also charged with a prior conviction of a felony which he admitted. After a plea of not guilty a jury was waived by both Photo and Adams. The two cases were consolidated for trial by stipulation. Both defendants were found guilty by the trial court and sentenced to state's prison. From the judgment and the order denying them a new trial each has perfected a separate appeal. The facts involving each of the appellants may be thus summarized:
James Plakos resided in Los Angeles and was engaged in the business of buying and selling citrus fruits. He knew the appellant Photo and on November 10, 1940, at the latter's request, he went with one Peter Regis and appellant Photo to Orange County with the end in view of obtaining oranges which Photo might purchase. These parties all called at the home of a Mrs. Prescott. Plakos went inside the house and found Mrs. Prescott to be ill in bed at the time. He had a conversation with her about oranges and thereafter came outside the house where Regis and Photo were waiting for him. Plakos told Photo that Mrs. Prescott knew somebody else who *347 had some oranges; that Mrs. Prescott wanted 75 a box for oranges and 25 a box for picking, hauling and washing. With a Mr. Allen, foreman for Mrs. Prescott, they all went to the orange grove of a Mr. Holmes. Upon arriving at the Holmes grove Photo looked around the grove, saw the oranges on the trees, and gave Holmes a deposit of $30 and each signed an agreement as follows:
"November 10, 1940. Sold to Constantine Photopoulos, address 2445 Clement Street, San Francisco. 500 (more or less) boxes of oranges at 75 per box. All oranges to be paid for before hauling from grove."
(Signed) Constantine Photopoulos.""
And
"November 10, 1940. Received of Constantine Photopoulos $30.00 on oranges as down payment. Balance to be paid as they are picked not later than November 13, 1940."
"Signed F. R. Holmes."
"500/ boxes (more or less) of oranges at 75 per box to be paid road side."
"Signed F. R. Holmes."
Appellant Photo told Holmes that Mrs. Prescott was going to pick the oranges, and after some conversation they all left. Plakos went back to Mrs. Prescott's home and had a conversation with her and then returned to Los Angeles. Upon arriving in Los Angeles Plakos phoned Mrs. Prescott and told her that Photo had told him to tell her not to wash the oranges; that she did not have the right equipment. Mrs. Prescott then said that she would take 25 a box in any event, whether she washed them or not, or she would not "give the fruit". Plakos forwarded this information on to appellant Photo. Photo returned on November 11th and consulted with Mrs. Prescott, who was still ill in bed, about the oranges. Photo informed her he was the man who bought the oranges and wanted enough to make up 450 boxes. Photo then examined the fruit in the packing house. 40 boxes had been washed. The foreman and Photo returned to her room. He left a draft drawn on the Western Union for $125. $120 of it was to apply on the payment for the fruit. Holmes had previously refused to accept the check in payment for his fruit and referred Photo to Mrs. Prescott. Photo argued *348 about the price being charged for the washing. After some discussion he told her to go ahead and wash the fruit. She replied that "the fruit would be a dollar a box". On Thursday, November 14th, Photo motored to the Prescott ranch in his own Chevrolet automobile. Adams, a truck driver for Photo, first appears in the picture. He drove a truck and trailer, owned by Photo, to the packing house shed at Photo's direction for the purpose of trucking the oranges back to San Francisco. They arrived there about noon. The foreman for Mrs. Prescott and Adams loaded the truck with the 382 boxes of oranges which had been picked from the Holmes grove. 16 extra boxes were Mrs. Prescott's oranges and were loaded later, by one of the packing house men who claimed the price of the 16 boxes was to be $1.40 each. After the fruit had been loaded Photo returned to Mrs. Prescott's room with Holmes and informed her that the fruit was on his truck and said that he was ready to pay for the fruit. Adams remained at the truck. Mrs. Prescott and Photo figured up that he owed her $382 for the Holmes fruit (which included 25 per box to her and 75 per box for Holmes). Her testimony in reference to the price and sale of the 16 boxes of oranges is confusing and not clear. It rather indicates that she intended to charge Photo $1 per box for her fruit. He then paid $140 in currency to her, making $290 in all which she turned over to Mr. Holmes. It was stipulated that Holmes was paid in full for his fruit. She testified that she figured the balance due her was $92. Photo then asked her to call the Western Union in Santa Ana and see if there was some money there for him. She called and was informed that there was, but the amount was not specified. He said: "I will go in there and get that money and I will be right back." He left in the Chevrolet automobile. Adams remained around the premises all afternoon, conversing with Mrs. Prescott. Both wondered what had happened to Photo because he had not returned up until 9 p. m. Adams was given his dinner at her home. About 9 p. m. Adams suggested that he leave the key to the truck and his operator's license with her because he "was ready to throw things up and go on home". Mrs. Prescott asked him to stay in her living room and said that they would probably hear from Photo soon but "under any circumstances, you must not move this truck tonight, because I would have to report it to *349 the police if you moved it. ... You must leave the fruit until morning". Adams replied that he "couldn't make it until the next night anyway because the truck wouldn't pull" the ridge in the day time, to which she replied, "Well, ... there would be no harm in your waiting". She offered him a ride to town to a hotel but he said he would walk. After giving her his name, the key, and operator's license and after being told by Mrs. Prescott that "he looked like an honest boy", he walked to the city and later found Photo. Mrs. Prescott testified that before Photo left, there had been no discussion as to when the fruit was to be taken except "they were ready to leave as soon as he paid for it". It was not stated at that time that Mrs. Prescott was retaining possession of the fruit. It was voluntarily and unconditionally placed on Photo's truck. Nothing was said at any time as to Mrs. Prescott's claiming any lien thereon under section 3051 of the Civil Code or otherwise.
F. J. Oxnard, assistant court reporter in Orange County, testified that he saw appellant Photo on November 14th in the court room in Santa Ana; that appellant Photo walked in and talked to him; that he asked how soon he could contact a Mr. Burke, an attorney; that he wanted the advice of an attorney and Oxnard told him that Burke was engaged in trying a case and that it would be an hour or so before he would be free to talk to him; that appellant Photo then told the witness that he had bought some oranges and that there was a dispute as to the price; that he claimed he had to pay so much and the other party was to pay so much; that he was anxious to get the advice of an attorney so he could take the load to San Francisco that night; that appellant Photo then asked him if he could impound the money with the sheriff for the amount that he was supposed to pay and take the fruit; and that Oxnard replied that he probably could and then afterwards fight it out as to the price. Appellant and Adams were not permitted to take the stand and testify at the trial upon advice of counsel. Although appellant's brief recites the fact that Photo did go to the sheriff's office and endeavor to impound some money and that the sheriff refused to accept it due to the fact that it was a civil case, the evidence does not disclose this fact. It was stipulated that no money was impounded with the sheriff. It was also *350 stipulated that Photo received $70 at 3:40 p. m. at the Western Union Telegraph office.
Some time after 9 p. m. on November 14th, Photo, with Adams, returned to the Prescott ranch. Photo had a duplicate set of keys for the truck. He drove the truck and oranges to Los Angeles. Adams drove the Chevrolet to that city. Adams then rode on the truck with Photo to San Francisco. Their arrest on the charges herein specified followed. On their return to Santa Ana they were questioned by the officers. Appellant Photo, it is claimed, stated that he had not taken Mrs. Prescott's fruit; that he had taken his own fruit; that 25 a box was too much for handling it; that before leaving with the fruit he had consulted with an attorney in Santa Ana to get his advice on procedure before removing the fruit so he could keep out of trouble; that he wanted to put up a bond or cash equivalent to a bond; that he saw a man outside of the court room where Burke was then engaged in trial who told him that it was all right to go ahead and move the fruit, and let them make the first move; that he then started out for the Prescott ranch but had trouble with his car and didn't arrive until later in the evening; that Adams was driving the car and when they arrived at the ranch appellant Photo had another key to the truck and Photo drove the truck out; that Adams drove the Chevrolet; that Photo was willing to pay for the fruit if Mrs. Prescott would cancel the charge of 25 a box for hauling and washing; and that with reference to the 16 boxes belonging to her and which the packing house man had loaded on the truck, he had made no deal to purchase any oranges from her.
Mrs. Prescott's packing shed was about 400 feet back from her house and a road ran in front of the shed cutting through the premises to the highway. The truck was parked on this roadway in front of the shed and the fruit was loaded onto the truck while in this position. Upon this evidence the trial court found both defendants guilty as charged.
On a motion for new trial appellant offered, under the ground of newly discovered evidence, an affidavit showing that Mrs. Prescott did not, during all the times herein mentioned, have a license to act as either a produce dealer or a commission merchant, as required by section 1261, subdivisions e and f, and section 1273 of the Agricultural Code. *351 Appellant claims error in denying his motion for new trial on this ground as well as on the ground that the verdict is contrary to the law and the evidence.
It is first argued: (1) That under the charge, appellant did not "take the property of another"; (2) that the oranges were fully paid for and were the property of appellant Photo; (3) that the only interest Mrs. Prescott could have had in and to the oranges purchased from Holmes was a special interest created by virtue of a lien under section 3051 of the Civil Code; (4) that she was not rightfully in possession of the fruit, under the evidence, and therefore no lien was created; (5) that she was not a produce dealer or commission merchant within the meaning of the Agricultural Code, had no license as such, and therefore was not entitled to claim a lien; (6) that if she had a lien it was lost by her failure to make a separate demand for her charges; (7) that the services rendered did not improve the fruit and were not therefore a basis for a lien under section 3051 of the Civil Code; (8) that Mrs. Prescott's employees delivered possession of the fruit to appellant Photo and Adams, when they placed it upon appellant Photo's truck, thereby extinguishing any lien under that section; (9) that there was no intent to steal; that appellant Photo took his own property under a claim of right and upon advice of a court attache whom appellant thought was a lawyer; (10) that the value of services performed did not amount to grand theft but if anything, petit theft; and (11) that there is a fatal variance between the proof and the charge in that the information does not plead the fact that the appellant Photo took his own property which was subject to a lien.
[1] The allegation in the information that appellants "took the personal property of another", as that term is used in section 484 of the Penal Code, means property in the possession of another who is entitled as bailee, lien claimant, or otherwise, to retain possession thereof for some benefit or profit to himself to the exclusion of all others, rather than the absolute ownership, defined in section 679, Civil Code. If the proof established such right in the instant case, the offense of grand theft was properly pleaded. If Mrs. Prescott had and maintained a valid lien on the fruit, her possessory right was to all the oranges and not merely those of a value to the extent of the lien. (People v. Cain, 7 Cal.App. 163 *352 [93 P. 1037].) Such a lien may be created under section 3051, Civil Code; Golden State Orchards v. Harter, 93 Cal.00 App. 390 [269 P. 735]. The question whether Mrs. Prescott was a licensed produce dealer or commission merchant did not become involved under the evidence. All of the other contentions of appellant are sufficiently answered by the holding in People v. Cain, supra, except these questions: (1) Whether Mrs. Prescott had and retained a lien on the fruit when appellant Photo drove the truck away; (2) whether the evidence related overcame the presumption of innocence and established beyond a reasonable doubt that the appellant did wilfully and feloniously steal the property of Mrs. Prescott; and (3) if appellant Photo can be found guilty under the charge, is the evidence sufficient to support a conviction of Adams as an accomplice or an accessory. Appellant cites People v. Devine, 95 Cal. 227 [30 P. 378], which holds that to constitute the offense of larceny, there must be a felonious intent, and where there is absence of proof of such intent, and the evidence tends to prove that the property taken was honestly believed to be the property of the defendant accused of larceny, the fact that he took and carried away the property of another does not justify a verdict of larceny. The court there said, "Appellant acted throughout as he would be expected to act if he thought he was dealing with his own property, and the evidence tends strongly to prove that he really and honestly so thought. We think that the evidence, coupled with the presumption of innocence, which attends the accused from first to last, sufficient to overcome the presumption of a guilty intent, arising from a wrongful appropriation of the property of another." Many cases are cited, including State v. Homes, 17 Mo. 379 [57 Am. Dec. 269], quoting Mr. Freeman: "To constitute the offense of larceny, it is absolutely necessary that the taking of the goods be with a felonious intent. ... We cannot sustain the conviction without confounding the distinction between criminal acts and such as, however reprehensible, involve only a violation of private rights and injuries, for which there is a remedy only by civil action". Section 511, Penal Code, provides: "Upon any indictment for embezzlement, it is a sufficient defense that the property was appropriated openly and avowedly, and under a claim of title preferred in good faith, even though such claim is untenable. But this provision does *353 not excuse the unlawful retention of the property of another to offset or pay demands held against him." This rule also applies to larceny. (Burke v. Watts, 188 Cal. 118 [204 P. 578].)
People v. Eastman, 77 Cal. 171 [19 P. 266], involved the taking of a mare, which was pledged by the owner with another party for a disputed unpaid claim for wages. The defendant took the mare openly and without any concealment and pledged her to another party. The court there said: "It is one thing to take and carry off personal property with the intention to steal, and another to take it away under a mistaken idea of legal rights honestly entertained, ...".
[2] Felonious intent is an essence of the crime of larceny. The general rule stated in 36 C.J., section 105, page 764, is: "If one, in good faith, takes the property of another, believing it to be legally his own, or that he has a legal right to its possession, he is not guilty of larceny, although his claim is based on a misconception of the law or of his rights under it, for although ignorance of law and honest intentions cannot shield a man from civil liability for a trespass committed by him, yet they do protect him from criminal liability, by divesting the act of the felonious intent without which it cannot be a crime. It is necessary, however, in all cases that the claim of right to be a bona fide one, and not a mere cover for a felonious taking, and must be something more than a vague impression; it must amount to an honest conviction. Knowledge of the existence of an adverse claim by another person does not negative the existence of good faith."
From the evidence it appears that Photo apparently took the fruit, under a claim of title in himself, and if done in good faith after receiving what he thought was legal advice though it might have been erroneous, a presumption arose in his favor that the taking lacked the elements necessary to constitute larceny. This theory is upheld in Groover v. State, 82 Fla. 427 [90 So. 473, 26 A.L.R. 375], and cases there cited. However, in view of the following determination this point becomes unnecessary to decide.
[3] Respondent endeavors to uphold the felony conviction solely on the theory of the lien claimed by Mrs. Prescott on the Holmes fruit at the time of the alleged taking. All *354 agree that if she had no lien at that time on that fruit the felony charge must fall as to both appellants. It is also admitted that her lien thereon was dependent upon possession, and if she voluntarily relinquished possession of the fruit to appellants, her lien was extinguished. We are not without authority upon this point in our own state. (People v. Knox, 32 Cal.App. 158 [162 P. 407]; Pacific States Finance Corp. v. Freitas, 113 Cal.App. Supp. 757 [295 P. 804]; Covington v. Grant, 82 Cal.App. 749 [256 P. 213].) The law is clear that if a lien is lost by voluntary and unconditional surrender of possession to the owner, it cannot be revived by any subsequent reacquired possession. (Davis v. Young, 75 Cal.App. 359 [242 P. 743].) [4] The question here presented is whether the voluntary and unconditional delivery and loading of the fruit on appellant's truck by Mrs. Prescott's agents without any reservation whatever, under the circumstances here related, constituted a delivery of possession of the fruit to its legal owner. The evidence is clear that nothing was said by Mrs. Prescott or anyone else about her having or claiming a lien on the fruit. The price of $1 per box was fixed as the price appellant Photo must pay to her for the Holmes fruit. The evidence discloses that Mrs. Prescott and appellant Photo had considerable controversy as to the amount she was charging for the washing of the fruit. Mrs. Prescott at one time agreed to "take off a nickel a box ... if you do not want it washed. ..." Photo suggested that Mrs. Prescott make the price of the Holmes fruit less than $1 per box, to which she replied, "it is difficult for me to make the price of the fruit less, because that day we had turned down two opportunities to sell the fruit for $1.30 a box, and that I couldn't see how we could charge less for the fruit when we had an opportunity to sell it, even though he didn't want it washed ..., the price of the oranges is here in the packing house, ... ... he was to pay a dollar a box for the oranges at Mr. Holmes' grove, ..." Evidence also discloses that Photo asked Mrs. Prescott to give him 4 or 5 more boxes of oranges due to shrinkage, to which she replied, "You go on. If you don't want that fruit, I will take it myself. ..." It was not until the truck was loaded and ready to be moved that appellant Photo encountered difficulty in settling the price to be paid and the time and method of payment. Photo was not told by *355 Mrs. Prescott that he could not remove the truck until the price was paid. It was not until 5 or 6 hours after the truck was loaded and after Photo left, that Adams was told not to move the truck until the money was received. The giving of the key and license to her was purely voluntary on the part of Adams and was most convincing evidence of his good faith in the transaction. The evidence forces the conclusion that when the truck was loaded and appellant Photo was placed in possession of his fruit, Mrs. Prescott's lien thereon was extinguished. In effect, she was merely endeavoring to hold his truck with the fruit thereon to insure the collection of her charges, or the most that could be said was that she was endeavoring to regain possession of the fruit after she had parted with possession. (People v. Eastman, supra; Simons v. Hill Street Fire Proof Building Co., 69 Cal.App. 129 [230 P. 955].) Accordingly, the conviction of grand theft cannot be upheld.
It is therefore ordered that the judgment and order denying a new trial are and each is reversed.
Barnard, P. J., concurred.
MARKS, J.,
Concurring.
I concur.
I concur in the judgment and agree with that portion of the opinion which holds that Mrs. Prescott had waived her lien on the oranges by unconditionally delivering them to Photo when her agents loaded them on the truck.
The only lien Mrs. Prescott could have claimed on the oranges was under the provisions of section 3051 of the Civil Code which makes the lien dependent on possession in cases of this kind. Section 2913 of the Penal Code provides that the voluntary surrender to the owner of the property on which the lien is asserted extinguishes the lien.
It is clear that Photo became the owner of the Holmes oranges when he paid for them in accordance with the terms of his written contract. Mrs. Prescott was never the owner of that fruit. Her lien, therefore, was extinguished when she delivered unconditional possession to Photo and it could not be revived by her subsequently taking possession of the property. (See, Davis v. Young, 75 Cal.App. 359 [242 P. 743]; Covington v. Grant, 82 Cal.App. 749 [256 P. 213]; Lundblade v. Pierce, 95 Cal.App. 192 [272 P. 329]; Jewett v. City *356 Transfer v. Storage Co., 128 Cal.App. 556 [18 PaCal.2d 351]; C. I. T. Corp. v. Biltmore Garage, 3 Cal.App.2d Supp. 757 [36 PaCal.2d 247].)
The exact terms of the transaction involving the delivery to Photo of the sixteen boxes of oranges belonging to Mrs. Prescott are not at all clear. The delivery was voluntarily made by Mrs. Prescott's foreman and the circumstances point to a sale of that fruit on credit which would not support the charge of the theft of that fruit. However, the sixteen boxes of oranges did not have sufficient value to support the conviction of grand theft. (Sec. 487, Pen. Code.)
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Fourth Court of Appeals
San Antonio, Texas
July 5, 2018
No. 04-18-00237-CR
Flanzo Lafonte TOWNES,
Appellant
v.
The STATE of Texas,
Appellee
From the 226th Judicial District Court, Bexar County, Texas
Trial Court No. 2009CR0764
Honorable Sid L. Harle, Judge Presiding
ORDER
On July 2, 2018, appellant filed a motion alleging the appellate record is incomplete.
Specifically, appellant refers to the attachments to the Petition for Writ of Mandamus appellant
filed on November 17, 2014. The attachments, which are referred to in the petition, are not
included in the clerk’s record. We therefore ORDER the trial court clerk to supplement the
appellate record in this appeal on or before July 15, 2018 with the attachments to the Petition
for Writ of Mandamus filed on November 17, 2014, which is included in the clerk’s record at
pages 168 through 171.
_________________________________
Irene Rios, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 5th day of July, 2018.
___________________________________
KEITH E. HOTTLE,
Clerk of Court
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41 B.R. 51 (1984)
In re Nathan H. WISE, Peggy A. Wise, d/b/a Haughton Otasco C-151.
Bankruptcy No. 581-01480-S.
United States Bankruptcy Court, W.D. Louisiana, Shreveport Division.
April 12, 1984.
Walter E. Dorroh, Jr., Coushatta, La., for D.I. Dupree.
Johnny E. Dollar, Monroe, La., for debtors.
FINDINGS OF FACT
LeROY SMALLENBERGER, Bankruptcy Judge.
On December 28, 1981, the 341 Meeting of Creditors in this Chapter 11 proceeding was held. At that meeting the date set as the last date upon which a claim could be filed was set to be: "Any Date Prior to Approval of the Disclosure Statement or as Fixed by the Court". The Court did not fix another date; therefore, the date that the disclosure statement was approved was the bar date for filing a proof of claim in this bankruptcy proceeding.
The disclosure statement was approved, on July 22, 1982. Mr. Dupree knew of the bankruptcy proceeding, but did not file a proof of claim as a secured creditor until September 17, 1982.
Mr. Dupree's claim was objected to at the hearing on the confirmation of the plan because the claim was not timely filed. At the confirmation hearing the Court disallowed Mr. D.I. Dupree's claim because the claim was not timely filed.
Mr. Wise has subsequently sold certain items alleged to be collateral securing the debt claimed by Mr. Dupree.
The issue before the Court is the validity of the liens claimed by Mr. Dupree.
CONCLUSIONS OF LAW
11 U.S.C. Section 506(d) provides:
"To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless
*52 (1) a party in interest has not requested that the court determine and allow or disallow such claim under Section 502 of this title; or
(2) such claim was disallowed only under Section 502(e) of this title."
Under 11 U.S.C. Section 502 a claim may be objected to because the claim was not timely filed as set out in Bankruptcy Rule 3003(c)(3).
In this case, Mr. Dupree's claim was objected to at the hearing on the confirmation of the plan because the claim was filed after the bar date for filing claims set by the Court.
"In order to be properly understood, Section 506(d) may be viewed as a reconciliation of two principal competing interests: the need for a debtor to obtain a fresh start, on the one hand, and the right of a lienholder to be protected from the deprivation of his property without due process. The interests are reconciled by requiring that the lienholder be given the opportunity for his `day in court' before any action affecting his lien can be taken. If he is given the opportunity for his day in court, his lien will survive (unless he agrees to a different treatment) to the extent his claim is allowed and will be voided to the extent his claim is disallowed (for any reason other than it is a claim for reimbursement or contribution within the purview of Section 502(e))."
3 Collier on Bankruptcy Section 506.07 at page 48.
In this case the Court found that Mr. Dupree knew of the bankruptcy proceeding, but did not file a proof of claim until after the bar date set by this Court. Therefore, the Court concludes that Mr. Dupree had his opportunity for his "day in court", and the Court disallowed his claim entirely because it was not timely filed. Since Mr. Dupree was afforded an opportunity for his "day in court", and the Court disallowed his claim entirely, then Mr. Dupree's lien is voided.
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183 F.3d 1018 (9th Cir. 1999)
UNITED STATES OF AMERICA, Plaintiff-Appellee,v.FRANK A. M. LUCA, Defendant-Appellant.
No. 98-10041
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Argued and Submitted February 8, 1999.Filed July 7, 1999
[Copyrighted Material Omitted][Copyrighted Material Omitted]
Dennis P. Riordan, Marc J. Zilversmit, Riordan & Rosenthal, San Francisco, California, for the defendant-appellant.
Stephen G. Winerip, Assistant United States Attorney, Pheonix, Arizona, for the plaintiff-appellee.
Appeal from the United States District Court for the District of Arizona; Stephen M. McNamee, District Judge, Presiding. D.C. No. Cr-96-00077-SMM.
Before: Betty B. Fletcher and A. Wallace Tashima, Circuit Judges, and James K. Singleton, Jr., District Judge.1
SINGLETON, District Judge:
Frank Luca ("Luca") appeals his sentence imposed after he pleaded guilty to seventeen counts of mail fraud, interstate transport of stolen property and securities fraud in connection with a Ponzi scheme he ran. Luca contends that the district court erred in imposing three enhancements to his sentence. We have jurisdiction pursuant to 28 U.S.C. S 1291. We vacate Luca's sentence and remand for re-sentencing.
I. STANDARD OF REVIEW
This court reviews de novo the district court's interpretation and application of the sentencing guidelines. See United States v. Shrestha, 86 F.3d 935, 938 (9th Cir. 1996). Findings of fact regarding the application of the sentencing guidelines are reviewed for clear error. See United States v. Mares-Molina, 913 F.2d 770, 772 (9th Cir.1990).
II. DISCUSSION
Luca challenges a two-level enhancement based on United States Sentencing Guidelines ("U.S.S.G.")S 3C1.1,2 applied as a result of the district court's conclusion that Luca had obstructed or impeded the investigation of his crimes; a fourlevel enhancement based on the district court's conclusion that Luca was an organizer or leader of a criminal enterprise that was "otherwise extensive" under U.S.S.G.S 3B1.1(a); and a two-level enhancement based on the district court's conclusion that Luca's victims were "vulnerable victims" under U.S.S.G. S 3A1.1(b).3 We affirm the obstruction of justice enhancement but conclude that the record does not contain sufficient evidence to uphold the "leader or organizer" or "vulnerable victim" enhancements.
A. U.S.S.G. S 3C1.1
[1] Section 3C1.1 of the sentencing guidelines provides for a two-level enhancement "[i]f the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense. . . ." The commentary to S 3C1.1 indicates that the enhancement is warranted for "providing a materially false statement to a law enforcement officer that significantly obstructed or impeded the official investigation or prosecution of the instant offense. " See U.S.S.G. S 3C1.1 n.3(g). Luca challenges the obstruction enhancement on two grounds. First, he argues that even if the judge found that Luca submitted false or misleading documents during a state investigation, such activities should not support the obstruction of justice enhancement. He additionally attacks the sufficiency of the district court's findings. We reject both arguments.
1
While the commentary to S 3C1.1 does not explicitlyinclude false statements made to state administrative agencies within its examples of obstructive conduct, the examples set forth are not exhaustive. See id n. 3. "Obstructive conduct can vary widely in nature, degree of planning, and seriousness.. . . [C]omparison of the examples set forth in Application Notes 3 and 4 should assist the court in determining whether application of this adjustment is warranted in a particular case." Id. n. 2.
2
The district court determined that Luca had intentionally submitted false prospectuses in response to an investigative subpoena issued by the Arizona Securities Division of the Arizona Corporations Commission ("ACC"). The court concluded that "based on the documents given to the Arizona Corporations Commission, which were in fact false documents . . . it was [Luca's] intent to divert the Arizona Corporation Commission from beginning its preliminary investigation, and it allowed for additional investors to be procured during this time."
3
For the obstruction of justice enhancement to apply, the district court must find that the defendant willfully provided a materially false statement to law enforcement officers that actually obstructed or impeded the official investigation or prosecution of the instant federal offense. See U.S.S.G. S 3C1.1 & n. 3(g). See also United States v. Solano-Godines, 120 F.3d 957, 963-64 (9th Cir. 1997) (interpreting "statement" and "significant hindrance" requirements), cert. denied, 118 S. Ct. 722 (1998); United States v. Zagari, 111 F.3d 307, 329 (2d Cir.) (perjury in state civil environmental enforcement action could justify obstruction of justice enhancement where material to federal crime), cert. denied sub nom., Herzog v. United States, 118 S. Ct. 445 (1997) & cert. denied sub nom., Shay v. United States, -U.S.-,119 S. Ct. 1585, 143 L.Ed.2d 679(1999). It is important to stress that the state agency was investigating "the offense," namely the Ponzi scheme that Luca generated and which resulted in his conviction and sentence in this case. For purposes of applying the obstruction enhancement, we can find no convincing reason to distinguish between state and federal law enforcement officers who are investigating the same offense.
4
Luca's argument that an implicit distinction exists between obstruction of state and federal law enforcement officials misapprehends the focus of the obstruction enhancement, which addresses the effect of the obstructive conduct rather than the level of law enforcement that was obstructed. For example, the guideline's commentary indicates that some obstructive conduct, such as providing a false name or identification at arrest or making false unsworn statements to law enforcement officials, should not ordinarily result in an enhancement. Where "such conduct actually resulted in significant hindrance to the investigation or prosecution," however, the severity of the obstruction justifies a sentence enhancement. Compare U.S.S.G. S 3C1.1 n. 4(a) and (b), with id. n. 3(g). Under the obstruction guideline's commentary, it is immaterial which law enforcement agency was obstructed. So long as the defendant provided information that was materially false, with a willful intent to obstruct or attempt to obstruct the discovery of his or her scheme, and which had the effect of significantly impeding the investigation, the obstruction enhancement is appropriate.
5
Willfully providing material false statements to federal law enforcement officials undisputedly justifies the obstruction enhancement where actual obstruction occurs. See, e.g., United States v. McNally, 159 F.3d 1215, 1217 (9th Cir. 1998) (false statements to FBI denying whereabouts of kidnapped child constituted obstruction); United States v. Ancheta, 38 F.3d 1114 (9th Cir. 1994) (false statements to DEA agents denying involvement in drug transaction constituted obstruction); United States v. Benitez, 34 F.3d 1489, 1497 (9th Cir. 1994) (enhancement appropriate where defendant provided false date and place of birth to federal pretrial services and failed to disclose outstanding warrant). In Zagari, the Second Circuit held that perjury in a state regulatory suit could support the obstruction enhancement in a related federal criminal conviction. See 111 F.3d at 328. We agree with the Second Circuit: so long as the district court found that the defendant "willfully and materially impeded the search for justice in the instant offense ," the enhancement should apply, even if the obstruction occurred before state rather than federal law enforcement officials. See id. at 328-29 (emphasis added).
6
Certain types of crimes, for example securities crimes and violations of environmental laws, are commonly investigated jointly by state and federal agencies. Others, such as some drug offenses, are investigated initially by local or state law enforcement officials, and only later do federal officials join the investigation. In either circumstance, efforts made to obstruct a local or state investigation may also obstruct the federal investigation. To limit the application of the obstruction of justice enhancement to circumstances where the defendant directed his or her obstructive conduct to federal law enforcement officials would interfere with the guideline's goal of punishing more severely those whose actions "significantly obstruct or impede the official investigation" of the federal crime.
7
The Supreme Court has interpretedS 3C1.1 as requiring sentencing courts to "review the evidence and make independent findings necessary to establish a willful impediment to, or obstruction of, justice, or an attempt to do the same." See United States v. Dunnigan, 507 U.S. 87, 95 (1993). The enhancement is mandatory where the court finds that the defendant provided false testimony on a material matter with willful intent. See Ancheta, 38 F.3d at 1118. Here, the trial court's conclusion, which finds ample support in the record, justifies imposing the enhancement to Luca's sentence. First, he trial court found that Luca's submissions to the ACC were false. The court also found that Luca intentionally submitted the documents in order to forestall the investigation and that the obstruction was material since the documents diverted the ACC and gained Luca enough additional time to secure other victims. Finally, the court found that Luca's obstruction was related to the instant offense because the State was investigating the same scheme to which Luca eventually pled guilty in federal court. We affirm the two-level enhancement for obstruction of justice.
B. U.S.S.G. S 3B1.1(a)
8
The district court enhanced Luca's offense level by four levels after determining that U.S.S.G. S 3B1.1(a) applied because Luca's fraud was "otherwise extensive. " The guideline provides:Based on the defendant's role in the offense, increase the offense level as follows:
9
(a) If the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive, increase by four levels.
10
See U.S.S.G. S 3B1.1(a). The commentary to this enhancement provides that "[t]o qualify for an enhancement under this section, the defendant must have been an organizer, [or] leader . . . of one or more participants." See id n. 2. Accord United States v. Anderson, 942 F.2d 606, 615 (9th Cir. 1991) (en banc); United States v. Avila, 95 F.3d 887, 889 (9th Cir. 1996) ("there must be evidence that the defendant exercised some control over others involved in the commission of the offense [or was] responsible for organizing others for the purpose of carrying out the crime"). "A `participant' is a person who is criminally responsible for the commission of the offense, but need not have been convicted." U.S.S.G. S 3B1.1 n. 1. Unknown facilitators of crimes will not be considered criminally responsible participants. See United States v. Cyphers, 130 F.3d 1361, 1363 (9th Cir. 1997).
11
The court explicitly concluded that it did not need to identify any "participants" whom Luca oversaw or managed. Luca argues that the opinion in Anderson, 942 F.2d 606, requires us to invalidate the S 3B1.1(a) enhancement because the district court did not explicitly find that there was another participant in the crimes. Luca also contends that alternate grounds which might exist in the record are insufficient to support an enhancement as a matter of law under U.S.S.G. S 3B1.1(a). We agree.
12
When the district court sentenced Luca, it based the S 3B1.1(a) enhancement on Luca's leadership role in an"otherwise extensive" criminal activity:
13
[B]y the overwhelming evidence -- not by preponderance, but by the overwhelming nature of the evidence -- before me, including factual basis at the change of plea, this fraud was extensive, and it involved a whole host of entities and people, wittingly and unwittingly, to keep this thing rolling for the period of time that it did.
14
While noting that "there is probable cause to believe that others helped Luca perpetrate some of these frauds that would qualify them as participants," the district court elected not to identify any other participant. The court suggested that it would need to hold an evidentiary hearing in order to identify any additional participants. "[T]hose people haven't been charged and I don't know who they are." The district court's decision to impose the enhancement without identifying another participant constituted legal error.
15
U.S.S.G. S 3B1.1(a) cannot apply unless the district court identifies a participant over whom the defendant exercised managerial or organizational control. See Anderson, 942 F.2d at 615. Here, the district court chose not to identify any other participant in Luca's scheme. It would be inappropriate for this court to make necessary findings of fact that the district court expressly declined to make. We vacate this enhancement and remand for further findings.
C. U.S.S.G. S 3A1.1(b)
16
Luca argues that the district court erred in enhancing his sentence by two points pursuant to the vulnerable victim provision of U.S.S.G. S 3A1.1(b). The vulnerable victim enhancement provides: "[i]f the defendant knew or should have known that a victim of the offense was unusually vulnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct, increase by 2 levels." U.S.S.G. S 3A1.1(b). The district court, principally relying on the P.S.R., concluded that "many of the victims" were vulnerable based on their ages and their membership in the church in which Luca held a leadership position. Luca argues that the court's conclusion regarding his victims' church affiliation could not give rise to a finding of vulnerability and that there was insufficient evidence in the record to support the enhancement based on his victims' ages.4
17
A trial judge considering an enhancement on this basis must make essentially two determinations. First, the judge must determine whether one or more of the victims belong to a class that is particularly vulnerable to the criminal activity in question, and second, is there one or more specific individual victims whom the defendant knew or should have known were unusually vulnerable by virtue of membership in the class identified. Thus the trial judge must first validate a class of individuals as unusually vulnerable and then identify one or more individuals whom the defendant knew or should have known were members of the class and victims of the offense. Here, the two guideline bases for enhancement -- age and church membership -- require slightly different analyses.
18
The commission has already determined that age on either end of a person's life qualifies as a protected class; thus in order to impose the vulnerable victim enhancement where a known victim was very young or very old, the trial judge need only identify the victim and find, based upon evidence in the record, that the individual was in fact unusually vulnerable because of youth or advanced age.5 In contrast, where the government relies upon a classification not spelled out in the guidelines -- such as membership in a particular religious group -- to show that a particular victim was "otherwise particularly susceptible," the class must first be validated and only then can the trial court determine whether in the particular case an identified victim's membership in the class rendered him or her unusually vulnerable. Here, it is necessary to remand the case to permit the trial court to reconsider the vulnerable victim enhancement in light of this court's decisions in Castellanos, 81 F.3d 108, and United States v. Peters, 962 F.2d 1410 (9th Cir. 1992).
19
This court has explained its determination of vulnerability as follows:
20
Section 3A1.1 will apply to increase the offense level where (1) a victim was either (a) unusually vulnerable due to age, physical or mental condition, or (b) otherwise particularly susceptible to the criminal conduct, and (2) the defendant knew or should have known of such vulnerability or susceptibility.
21
See United States v. Randall, 162 F.3d 557, 560 (9th Cir. 1998) (internal citations omitted). The record here does not demonstrate that the district court made factual findings sufficient to support the enhancement.
22
The vulnerable victim enhancement is not appropriate based on Luca's victims' ages because the trial court did not identify in his findings of fact specific individuals whose ages rendered them particularly vulnerable. The government is correct that a finding by the district court that a specific victim was unusually vulnerable due to age is enough to support a S 3A1.1(b) enhancement. As the Castellanos court noted, age "may per se render a victim worthy of the special protection" of U.S.S.G. S 3A1.1. See 81 F.3d at 110. Age standing alone, however, does not establish someone as a specific victim. Here, the district court made insufficient findings to support an age-based enhancement. While in some circumstances it is appropriate for a sentencing court to base sentence enhancements on the factual findings in presentence reports, see, e.g., United States v. Morgan, 164 F.2d 1235, 1238 (9th Cir. 1998), the P.S.R. here did not mention Luca's victims' ages. It was not until Luca's sentencing hearing that the court found Luca's victims unusually vulnerable due to their age; the district court made no other age-based findings. See United States v. Chavez-Gutierrez, 961 F.2d 1476, 1480-81 (9th Cir. 1992); United States v. Rigby, 896 F.2d 392, 394 (9th Cir. 1990).
23
We also find insufficient evidence to support the district court's finding that Luca's victims' church membership made them "otherwise particularly susceptible to the criminal conduct." See Randall, 162 F.3d at 560. The P.S.R. noted that
24
members of the Eagle's Nest Christian Assembly were convinced of the propriety of investing with Luca, in part, by and through Luca's prominent position and leadership role in the church. The direct and implied representations Luca was a `man of God' effectively lowered the guard of church members to the fraud
25
In response to Luca's objection to the P.S.R., the probation officer noted that "in some Pentecostal Christian Protestant churches, the importance and role of spiritual gifts, which would include prophetic utterances directly from God, are magnified and they are often relied on to assess situations and make decisions." We conclude that these findings were insufficient to support the enhancement.
26
We have enunciated two means of determining whether a defendant's victim is "otherwise particularly susceptible" for purposes of the vulnerable victim enhancement. In Peters, we directed the district courts to analyze "the characteristics of the defendant's victim, the victim's reaction to the criminal conduct, . . . the circumstances surrounding the criminal act [and] whether the defendant could reasonably have anticipated the victim's reaction." See 962 F.2d at 1416. In Castellanos, however, we cautioned against employing the vulnerable victim enhancement where there was no finding that the defendant's victims "are those who are in need of greater societal protections" or where some condition of the defendant's chosen victims "render the defendant's conduct more criminally depraved," see 81 F.3d at 111 (internal citations omitted). The district court's findings are insufficient to support the enhancement under either analysis.6
27
There is evidence that Luca's leadership position in the church caused some victims to trust him. A number of Luca's victims commented during allocution that Luca manipulated their faith to gain access to their money. For example, one victim testified that "the church out there where we went, where Mr. Luca went, endorsed him highly, the pastor did. I trusted the pastor, and thus, we trusted Mr. Luca." Another victim described how Luca prayed with her just before he showed her fraudulent layouts for his purported developments. The P.S.R. quoted a letter written by a former member of the church:
28
Luca was constantly being praised from the pulpit as an "anointed Christian businessman," with visiting prophets prophesying about his future successes and blessings from God. His later legal problems were called demonic attacks by these same people. . . Normally I could spot someone like Luca a mile away, but believing the EN [Eagle's Nest] active promotion of him, I turned off my internal alarms. . . Luca skillfully manipulated my faith in God to his advantage, looking me in the eye while praying to God to bless the investment, all the while stealing my life savings. . . To summarize, Luca is an expert at using people's faith in God as a means of getting to their savings, reaching through their souls to pick their pockets, taking not only their savings but also their faith.
29
Moreover, Luca clearly used his victims' faith to target investors. A brochure printed by the church invited parishioners to invest with Luca, announcing that "[i]n almost every case, our plan will be able to at least match or out perform your current yields, and at the same time earn dividends for our church and its future. These funds will become the backbone of our plan to build the church campus and retire all debt within five years." In soliciting parishioners' investments, Luca announced:
30
We can take . . . individuals who have whether its [sic] $2 hundred dollars [sic] in a savings account or $2 hundred thousand dollars [sic] in mutual funds, and we can allow you to retain the principal, but you use that interest . . . to help build God's kingdom, and also receiving the same rate that you're receiving currently from the bank. . . . I consider it a real honor and a privilege to be able to be an elder of this church and to be able to take part . . . in a vision that . . . will allow us . . . to quadruple in size . . . and when we finally get this facility, were [sic] gonna be able to minister to so much [sic] more people.. . .
31
However, the district court did not point to any facts that made the victims less able to defend themselves than a typical victim. Regardless of whether we employ the Peters or Castellanos analysis, we cannot conclude that the district court addressed thus court's concern that Luca's victims be "particularly susceptible" to the fraud.
32
In Castellanos, the defendant formed a company that targeted Spanish-speaking customers for investments and billed itself as a "proudly Hispanic company." The company turned out to be fraudulent. The district court made no specific findings as to the susceptibility of any of the individual victims, but enhanced the sentence because the defendant "targeted Spanish-speakers, many of whom may have placed trust in the defendant because he was one of their own." See 81 F.3d at 110. We vacated the enhancement, noting that while district courts do not need to make specific finding of individual victims' susceptibility,
33
[n]othing in the record supports a finding that the Spanish-speaking population of Southern California as a whole shares some unique susceptibility to fraud that warrants the law's protection, or that makes Castellanos' crime especially reprehensible. Nor is there any showing that the entire Hispanic population of Southern California shares any such susceptibility.
34
See id. at 112.
35
We recognized that criminals typically direct their activities toward those who are more likely to succumb to the scheme and indicated that the district court must consider more than the fact that a defendant would likely succeed in defrauding his or her targeted victim. See id. at 111. We noted that an affinity scam might support the enhancement where a finding was made that victims possessed specific vulnerabilities, but refused to find an entire ethnicity vulnerable because of their shared language or cultural heritage. See id. By looking to whether the victims are in greater need of social protection, the analysis set forth in Castellanos directs the trial court to focus on which of the victims' traits makes the defendant's criminal activity more depraved. See id. The analysis distinguishes the average victim, who may be "more likely to fall victim to the scheme," see id., from the victim who is "otherwise particularly susceptible," see U.S.S.G. S 3A1.1(b). While the Peters factors allow the sentencing court to consider a broader range of factors than does the analysis described in Castellanos, the focus must still remain on which characteristics made the victims especially liable to fall for the scheme. See Peters, 962 F.2d at 1416.
36
The district court here did not make any findings regarding Luca's victims susceptibility to his scam. At the sentencing hearing the district court concluded that Luca's victims were vulnerable as "a result of their association with Mr. Luca through church affiliated activities, where he was .. . a church official who was elected to be in charge of finances." The court later indicated that it applied the vulnerable victim enhancement because Luca "use[d] religious connections to aid in the perpetuation of the scheme. . . ." On remand the district court should evaluate the record in the light of Castellanos and Peters and make specific fact findings regarding the vulnerability of Luca's victims.7
37
Luca's sentence is VACATED and REMANDED for resentencing consistent with this decision.
Notes:
1
The Honorable James K. Singleton, Jr., Chief United States District Judge for the District of Alaska, sitting by designation.
2
Luca was sentenced on January 5, 1998. The applicable Guidelines are those in effect on the date the defendant was sentenced. Thus, the November 1, 1997 Guidelines apply to this case.
3
The government contends that Luca did not preserve for appeal either the vulnerable victim or obstruction of justice enhancements. If he did not, this court would review the district court's application of those enhancements for clear error. See United States v. Koff, 43 F.3d 417, 419 (9th Cir. 1994). The trial judge announced a tentative decision finding these enhancements, as well as the other enhancement discussed in this decision, to be applicable. The court then asked Luca's counsel for comments. Luca was given time to consult with counsel and thereafter informed the court that he only wished to be heard further on the supervisor enhancement. The hearing then proceeded without further mention of the other enhancements. Luca is correct that his objections to the presentence report ("P.S.R.") preserved his right to appeal the issues. See United States v. Barnes, 993 F.2d 680, 685 (9th Cir. 1993). We have carefully reviewed the record and conclude that counsel's declining further comment on these enhancements did not, in context, constitute a waiver.
4
We reject Luca's argument that application of the 1997 edition of the sentencing guidelines violates the Ex Post Facto Clause of the United States Constitution. See U.S. CONST. art. I, S 9, cl. 3 ("No Bill ofAttainder or ex post facto Law shall be passed."). A district court should apply theversion of the sentencing guidelines in effect on the date the defendant is sentenced, unless the application of such guidelines would violate the Ex Post Facto Clause, in which event the court should apply the guidelines in effect on the date of the offense. See U.S.S.G. S 1B1.11(a) and (b)(1). Luca's fraud occurred during a time when the commentary to the vulnerable victim guideline contained an explicit requirement that the "adjustment applies to offenses where an unusually vulnerable victim is made a target of criminal activity by the defendant." See U.S.S.G. S 3A1.1 n. 1 (1994). Some circuits interpreted the language of application note 1 to the 1994 guideline as imposing a requirement that the defendant select his or her
victim based on the victim's vulnerability. See, e.g., United States v. Callaway, 943 F.2d 29, 31 (8th Cir. 1991) (refusing to apply the vulnerable victim enhancement where the victim was young and handicapped because the record did not indicate that the defendant chose her victim based on those factors). However, in United States v. O'Brien, 50 F.3d 751 (9th Cir. 1995), we determined that the pre-amendment guideline's plain language was inconsistent with a targeting requirement. See 50 F.3d at 755.
Some circuits that imposed a targeting requirement prior to the guideline's amendment have found ex post facto violations where district courts applied the post-amendment guideline to pre-amendment conduct. See, e.g., United States v. Cain, 134 F.3d 1345, 1351 (8th Cir. 1998) ("application of the amendment to the defendants' case would violate the constitutional guarantee against ex post facto laws"). Cf. United States v. Gill, 99 F.3d 484, 488 (1st Cir. 1996) ("if the 1995 amendment did away with a previously required element of targeting motivation, the prior guideline might have to be followed under ex post facto principles"). Because this circuit never imposed a targeting requirement for enhancing a sentence pursuant to U.S.S.G. S 3A1.1, application of the post-amendment guideline to pre-amendment conduct does not violate the Ex Post Facto Clause. See Collins v. Youngblood, 497 U.S. 37, 52 (1990); Means v. Northern Cheyenne Tribal Court, 154 F.3d 941, 947 (1998). See also United States v. Burgos, 137 F.3d 841, 843-44 (5th Cir. 1998) (application of 1995 amendment did not violate Ex Post Facto Clause because the Fifth Circuit never interpreted S 3A1.1 to impose a targeting requirement), cert. denied, 119 S. Ct. 833 (1999); United States v. Cruz, 106 F.3d 1134, 1138-39 (3d.Cir. 1997) (holding that no ex post facto violation occurred because court held that S 3A1.1 never imposed a targeting requirement).
5
We reject the argument that a person of advanced age or extreme youth is by that fact alone "unusually vulnerable" without regard to her or his individual characteristics. Rather, we understand the dicta in United States v. Castellanos, 81 F.3d 108, 110 (9th Cir. 1996) about age rendering a victim per se worthy of protection to mean that a particular person may be vulnerable to some crimes and not others because of age or youth. Some men and women in their nineties are quite capable of arranging their affairs and seeing through a Ponzi scheme but may invest anyway in the hope that they are in on the ground floor and as a result will reap unfair benefits before the house of cards collapses. By the same token an older man who was a commando in his youth, skilled in all forms of martial arts, might be quite capable of defending himself against a younger, though less-skilled assailant. In each case, the victim's age would be a necessary condition for the enhancement, but in the absence of an individualized finding of vulnerability would not be sufficient to find the enhancement.
6
To the extent that Castellanos mandates a more narrow analysis than that required by Peters, the cases appear inconsistent. However, since both modes of analysis focus primarily on the victim and the district court here failed to explain why membership in the church made Luca's victims more susceptible, we need not resolve that apparent inconsistency.
7
We note the possible availability of other enhancements that could relate to Luca's activities. See, e.g., U.S.S.G. S 3B1.3 ("If the defendant abused a position of public or private trust . . . in a manner that significantly facilitated the commission or concealment of the offense, increase by 2 levels."). At oral argument both the government and Luca indicated that the abuse of trust enhancement more closely addresses Luca's exploitation of his relationship with the church and its minister. The trial judge, however, was correct to conclude that there is overlap between the obstruction and abuse of trust enhancements and both should not be applied.
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182 P.3d 325 (2008)
219 Or. App. 429
WRIGHT
v.
HILL.
No. A130663.
Court of Appeals of Oregon.
April 16, 2008.
Affirmed without opinion.
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9 N.Y.3d 975 (2007)
In the Matter of the COMMISSIONER OF SOCIAL SERVICES OF ULSTER COUNTY, on Behalf of DIANN F. MONTGOMERY, Respondent,
v.
KENLEY POWELL, Appellant.
Court of Appeals of the State of New York.
Submitted October 9, 2007.
Decided November 19, 2007.
Motion for leave to appeal dismissed upon the ground that the order sought to be appealed from does not finally determine the proceeding within the meaning of the Constitution.
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United States Court of Appeals
For the First Circuit
No. 17-1261
UNITED STATES OF AMERICA,
Appellee,
v.
DERRICK FAVREAU,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Nancy Torresen, U.S. District Judge]
Before
Lynch, Circuit Judge,
Souter, Associate Justice,
and Selya, Circuit Judge.
Jamesa J. Drake and Drake Law, LLC for appellant.
Renée M. Bunker, Assistant United States Attorney,
Appellate Chief, with whom Halsey B. Frank, United States
Attorney, was on brief, for appellee.
March 23, 2018
Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
SOUTER, Associate Justice. The defendant, Derrick
Favreau, pleaded guilty to a serious drug offense, violation of
21 U.S.C. §§ 841(a)(1) and (b)(1)(C), but he reserved his right
to appeal the district court's denial of his motion to suppress
the drug evidence as having resulted from a search unlawful
under the Fourth Amendment. We affirm.
Police stopped Favreau's car for a highway offense.
After police officers had completed the license check that is
usual when a car is stopped for a driving offense, the drugs
were found hidden in the car during a search prompted by a drug
detection dog's indication of their presence. The issues on
appeal are whether, after checking the license and related
matters, the police had reasonable suspicion that a drug offense
was being committed, so as to justify a further period of
detention while the dog repeatedly circled the car, and whether
the added time so consumed (of about three minutes) exceeded the
permissible duration for the dog's reconnaissance. See
Rodriguez v. United States, 135 S. Ct. 1609, 1612 (2015); United
States v. Sokolow, 490 U.S. 1, 7 (1989) ("[T]he police can stop
and briefly detain a person for investigative purposes if the
officer has a reasonable suspicion supported by articulable
facts that criminal activity 'may be afoot,' even if the officer
- 2 -
lacks probable cause." (quoting Terry v. Ohio, 392 U.S. 1, 30
(1968))).
We review these legal issues de novo. See United
States v. Dickerson, 514 F.3d 60, 65–66 (1st Cir. 2008). The
facts about events preceding the encounter are not in dispute at
this point, and in any event the district court's findings are
amply supported to survive the scrutiny for clear error
appropriate in reviewing the trial court's factual findings
grounding the denial of a suppression motion. See United States
v. Tiru-Plaza, 766 F.3d 111, 114–15 (1st Cir. 2014) ("Under this
clear-error review, we grant significant deference to the
district court, overturning its findings only if, after a full
review of the record, we possess 'a definite and firm
conviction' that a mistake was made." (quoting United States v.
McGregor, 650 F.3d 813, 820 (1st Cir. 2011))).
State Trooper Pappas was aware of Favreau's reputation
as a drug dealer, and about a year before the confrontation in
question he had received an informant's tip that Favreau
possessed a vehicle that contained a "trap," a secret
compartment in which drugs could be hidden and transported.1
1 The parties dispute the reliability of the information
the tipster had provided prior to this tip, and consequently the
reasonableness of crediting the tip itself. But, owing to the
synergy of the content of the tip and the facts that unfolded
prior to and during the stop of Favreau's car, reliability ex
ante is not a significant question here. The content of the tip
- 3 -
More pressing assignments kept Pappas from following up on the
tip, but when his schedule allowed it, he decided to conduct
surveillance on Favreau, with the help of Trooper Gagnon, as
well as Trooper Rooney (who worked with a drug detection dog).
Rooney drove a marked cruiser, but both Pappas and his unmarked
car were well known in the vicinity where the relevant events
took place.
On the day in question Pappas and Gagnon drove to
where Favreau's house could be seen. They saw him get in the
car the tipster had mentioned, pull away, signal a turn into a
cross street, nevertheless drive straight through the
intersection and, at a point where Pappas and Gagnon's police
car was visible, reverse direction and then turn into the cross
street in the direction opposite to his original directional
signal. Rooney testified that reversing direction as Favreau
had done was known as a tactic by suspects trying to elude
police following them. Soon after, the troopers located the car
parked in the lot of a store, which Favreau entered and left
multiple times. Before driving out of the lot he looked
was significant in making sense of the other facts recited
below, which themselves suggested that the tip might well be
true; all, together, had a degree of coherence that raised a
reasonable suspicion of wrongdoing, which in turn justified the
dog sniff that provided the further fact sufficient for probable
cause to search the car.
- 4 -
intently up and down each of the streets at the nearby
intersection.
After the suspect had left the store lot and made
another turn, this time without signaling, Rooney (following
him) put on the blue lights and siren. In violation of Maine
law, Favreau did not stop promptly, but turned down another
street before pulling over. In the ensuing conversation about
Favreau's driving violations, the status of his operating
license and any current court involvement, Favreau accused the
officers of mounting the very surveillance they had engaged in,
thus indicating that his driving maneuvers had been made with
the police consciously in mind. He was manifestly nervous and
had difficulty following directions for a pat-down, which
disclosed a wad of cash that Favreau said was $400. When asked
where he was going his answer was that he was going home, a
patent lie in light of his observed itinerary.
At this point the facts warranted reasonable suspicion
that Favreau's behavior before and after the stop showed a
degree of concern so far beyond anything normal as to suggest
that he was in fear of revealing evidence of wrongdoing. The
license check having been completed, Rooney circled the car with
the dog, and although the animal was initially distracted by
unrelated activity nearby, the several circuits of the car took
less than three minutes before the dog alerted and thus raised
- 5 -
suspicion to the level of probable cause to justify the search
that led to discovery of the trap and a commercial quantity of
cocaine within it.
On our de novo review, we agree with the district
court's mixed fact-law conclusion entirely. Although the
officers' initial and primary interest in observing Favreau was
his possible activity in the illegal drug trade, not the bizarre
driving for which they stopped him, or his unlawful failure to
respond readily to the lights and siren, their ulterior motive
is of no consequence under the Fourth Amendment. See Whren v.
United States, 517 U.S. 806, 813 (1996) (Supreme Court precedent
"foreclose[s] any argument that the constitutional
reasonableness of traffic stops depends on the actual
motivations of the individual officers involved"). Nor is there
any question that Favreau's driving justified the stop for the
license check and ensuing interview. The observations and
conversation provided evidence of ostensibly erratic driving and
behavior that would reasonably justify a stop and enquiry, but
in this case pointed to something more than difficulty following
the normal rules of the road: the apparent intent to evade known
police cars, the unnatural scrutiny of roadways before driving
from the store, the driver's accusation that the police had him
under surveillance, and abnormal nervousness together with clear
dishonesty about his immediate destination. The officers could
- 6 -
sensibly believe that he was afraid of something that concerned
the police, and the tip about the trap gave coherence to his
behavior and his fear. The officers could, as they did,
reasonably suspect transportation of drugs or some other
contraband concealed in the car. Nor, finally, is there any
basis to claim that the time consumed in the initial interview
and records check up to the point of ordering the dog sniff was
unusual or unreasonable.
Because the interview during this initial period of
detention was clearly lawful on the basis of traffic regulation
and incidentally disclosed further reason to suspect drug crime,
the reasonably justifiable time for further detention to test
the growing suspicion should be measured from the end of that
initial period. While there is no exact metric to measure it,
the times that have passed muster in prior cases of justifiable
detention on reasonable suspicion of criminal activity have
generally been relatively brief. See Terry, 392 U.S., at 30
("Each case of this sort will, of course, have to be decided on
its own facts."); United States v. Pontoo, 666 F.3d 20, 31 (1st
Cir. 2011) ("The appropriate length of a Terry stop is gauged by
whether the officer diligently pursued a reasonable
investigative approach . . . ."). And brief was the period
here, of about three more minutes until the dog's response
raised suspicion to the point of probable cause to search.
- 7 -
There is no serious question that this falls within the zone
considered reasonable under the Terry rationale. The probable
cause to search was therefore not the product of any
unconstitutionally lengthy detention prior to the search that
could be said to taint the validity of the search itself.
Affirmed.
- 8 -
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T.C. Memo. 2007-243
UNITED STATES TAX COURT
GREGORY ALAN LINDSTROM, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23478-06. Filed August 23, 2007.
Gregory Alan Lindstrom, pro se.
Molly H. Donohue, for respondent.
MEMORANDUM OPINION
GALE, Judge: This matter is before the Court on
respondent's motion to dismiss for lack of jurisdiction.
Respondent's motion contends that the Court lacks jurisdiction
because the petition was not timely filed. Petitioner argues
that the notice of deficiency was invalid because it was not
mailed to his "last known address"; that respondent's failure to
- 2 -
use the last known address is not cured by petitioner's actual
receipt, because petitioner had insufficient time after receipt
to file a petition; and, in the alternative, that the petition
was timely. The Court conducted a hearing at which the parties
proffered evidence in support of their respective positions.
Background
At the time the petition was filed, petitioner, Gregory Alan
Lindstrom, resided in Massachusetts.
In January 2006, petitioner moved from 954 State Route 20,
New Lebanon, New York 12125 (New Lebanon address) to 38 Ensign
Street, Dalton, Massachusetts 01226 (Dalton address). Petitioner
filed a Change of Address form with the U.S. Postal Service
(USPS) indicating his move to the Dalton address on January 27,
2006. Petitioner subsequently moved from the Dalton address to
241 2nd Street, Pittsfield, Massachusetts 01201 (Pittsfield
address) prior to his receipt of the notice of deficiency and
again notified the USPS of his change of address.
Respondent mailed a notice of deficiency with respect to
petitioner's 2002 taxable year to the New Lebanon address.
Respondent's receipt for certified mail1 records that the notice
of deficiency was deposited with the USPS on August 14, 2006,
which is also the date on the face of the notice. No postmark
appears on the envelope in which the notice of deficiency was
1
USPS Form 3877, Firm Mailing Book for Accountable Mail.
- 3 -
sent. On August 18, 2006, the USPS affixed a label bearing that
day's date and the Pittsfield address to the envelope containing
the notice, and forwarded the notice to the Pittsfield address.
Petitioner admits that he received the notice of deficiency on
August 30, 2006, 75 days before the statutory deadline for filing
a petition in this Court with respect to the notice of deficiency
(November 13, 20062).
Petitioner prepared and signed a petition using this Court's
one-page petition form (T.C. Form 2). Paragraph 4 of the form
petition, which permits the taxpayer to "Set forth the relief
requested and the reasons why you are entitled to such relief",
had an entry of six sentences.
The petition was undated. Petitioner used a private
delivery service, FedEx, to deliver his petition to the Court.
The FedEx envelope which contained the petition bears an
electronically generated label with a "Ship Date" denoted as
November 14, 2006, and the notation "Standard Overnight". The
petition was received and filed by the Court on November 15,
2006.
2
The 90th day after the Aug. 14, 2006 mailing of the notice
of deficiency was Nov. 12, 2006, which was a Sunday. The notice
of deficiency also stated that the last day on which to file a
petition with this Court was Nov. 13, 2006.
- 4 -
Discussion
In a deficiency case, our jurisdiction depends upon the
Commissioner's issuing a valid notice of deficiency to the
taxpayer and the taxpayer's timely filing a petition in this
Court. Frieling v. Commissioner, 81 T.C. 42, 46 (1983); Bjelk v.
Commissioner, T.C. Memo. 1998-169. Generally, a petition is
timely if it is filed within 90 days following the date that the
notice of deficiency was mailed. Sec. 6213(a).3 When a petition
is not filed within the applicable period with respect to a valid
notice of deficiency, the case must be dismissed for lack of
jurisdiction. Masino v. Commissioner, T.C. Memo. 1998-118
(citing Pugsley v. Commissioner, 749 F.2d 691, 692 (11th Cir.
1985)).
Petitioner argues that the 90-day period provided by section
6213(a) began August 18, 2006, when the USPS forwarded the notice
of deficiency to its final destination. We disagree. Section
6213(a) plainly provides that, except where a notice of
deficiency is addressed to a person outside the United States, a
Tax Court petition may be filed within 90 days of the date that
the notice "is mailed". In the absence of a postmark on the
envelope itself, the date stamped on the Commissioner's certified
mail receipt is the "next best evidence" of the date of mailing
3
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986 as in effect for the year in
issue.
- 5 -
(and commencement of the 90-day period). Traxler v.
Commissioner, 61 T.C. 97, 100 (1973), modified 63 T.C. 534
(1975). Here, the envelope contains no postmark, and the date on
the certified mail receipt is August 14, 2006. We accordingly
conclude that the notice was mailed on August 14, 2006, for the
purpose of applying section 6213(a).
The 90th day following the date of mailing was Sunday,
November 12, 2006. Section 6213(a) provides that a Sunday is not
counted as the last day of the period. Consequently, the last
day for filing a timely petition in this case was Monday,
November 13, 2006. (The November 13, 2006 deadline was also
stated on the face of the notice of deficiency, pursuant to
section 3463(a) of the Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, 112 Stat. 767.)
The petition in this case was received by the Court on
November 15, 2006. However, a petition that is delivered to the
Court after the expiration of the period provided by section
6213(a) shall be deemed timely if it bears a timely USPS
postmark. Sec. 7502(a). Section 7502(f) provides that the
petition may similarly be deemed timely when the taxpayer uses a
"designated delivery service" rather than the USPS. The
Commissioner has designated the private delivery service used by
petitioner, FedEx Standard Overnight, as such a service for the
purpose of section 7502. Notice 2004-83, 2004-2 C.B. 1030. In
- 6 -
these circumstances, the date on an electronically generated
FedEx label, created and applied by a FedEx employee, is
conclusive proof of the date of mailing equivalent to a USPS
postmark. Austin v. Commissioner, T.C. Memo. 2007-11; Notice 97-
26, 1997-1 C.B. 413, 414. We are persuaded that the
electronically generated label on the FedEx envelope containing
the petition was created and applied by a FedEx employee; the
"Ship Date" of November 14, 2006, that appears on the label is
therefore treated as the date of mailing for purposes of section
7502. Consequently, the petition is not deemed timely under that
section.
We next consider whether the notice of deficiency was valid.
When the Secretary determines that there is a deficiency, "he is
authorized to send notice of such deficiency to the taxpayer by
certified mail or registered mail." Sec. 6212(a). Such notice
of deficiency "shall be sufficient" if mailed to the taxpayer's
last known address as specified in section 6212(b)(1). Section
6212(b)(1) does not create a mandatory address to which a notice
of deficiency must be mailed; rather, it is a "safe harbor"
available to the Commissioner which renders a notice of
deficiency valid irrespective of actual receipt. Borgman v.
Commissioner, 888 F.2d 916, 917 (1st Cir. 1989), affg. T.C. Memo.
1984-503; Mulvania v. Commissioner, 81 T.C. 65, 67-68 (1983).
Section 6212(b)(1) does not invalidate other methods of
- 7 -
communication that result in actual notice to the taxpayer.
Mulvania v. Commissioner, supra.
Consequently, petitioner's contention that the notice of
deficiency was invalid because it was not sent to his last known
address is without merit. In petitioner's circumstances, we need
not and do not decide whether the notice of deficiency was mailed
to petitioner at his last known address. See Mulvania v.
Commissioner, supra at 66-67; Masino v. Commissioner, supra.
It is settled law that the validity of a notice of
deficiency will be sustained when "mailing results in actual
notice to the taxpayer without prejudicial delay". Mileti v.
Commissioner, T.C. Memo. 1990-383; see, e.g., Miller v.
Commissioner, 94 T.C. 316, 329-331 (1990); Mulvania v.
Commissioner, supra at 67-69; Frieling v. Commissioner, supra at
52-53. Petitioner argues that receipt of the notice of
deficiency 75 days prior to the deadline for filing the petition
constituted prejudicial delay such that the notice of deficiency
should be adjudged invalid. We do not agree.
Whether a taxpayer has been prejudiced by a delayed notice
of deficiency is a question of fact. Looper v. Commissioner, 73
T.C. 690, 699 (1980). Petitioner contends that 75 days was
insufficient time for him to prepare and file the petition
because he had to locate and contact his former spouse who
possessed the necessary records. The petition as filed, however,
- 8 -
consists of a single-page, standardized Tax Court form. The
lengthiest portion of the form petition, on which petitioner set
forth the relief requested and his reasons therefor, consists of
six sentences. Therein, petitioner disputes the notice of
deficiency's determination that he failed to file a return for
2002,4 as well as the notice's treatment of two real estate
transactions.
Considering the record as a whole, we are not persuaded that
petitioner was prejudiced by the 16-day delay in receiving the
notice of deficiency. Given the relative simplicity of the
petition he filed, petitioner had ample time to prepare and file
it when he received the notice of deficiency. Consequently,
petitioner's receipt of the notice of deficiency 16 days after it
was mailed did not constitute prejudicial delay.
We hold that the notice of deficiency herein is valid.
Accordingly, respondent's motion to dismiss for lack of
jurisdiction will be granted, and this case will be dismissed for
4
The petition asserts that "On April 15, 2002, a 2002
MARRIED FILING JOINTLY Taxpayer return was filed [sic]". (We
assume that petitioner meant to aver that he timely filed the
return on Apr. 15, 2003.) Respondent asserts in his response to
petitioner's objection to the motion to dismiss that "On January
12, 2007, after issuance of the Notice of Deficiency for the 2002
tax year at issue in this case, respondent's service center in
Andover received from petitioner and his spouse a Form 1040 for
the tax year ending December 31, 2002." Petitioner thereafter
apparently abandoned his claim of having filed timely; he has
subsequently failed to address respondent's allegation that a
Form 1040 for 2002 was not received until Jan. 12, 2007.
- 9 -
lack of jurisdiction on the grounds that the petition was
untimely.
To reflect the foregoing,
An order of dismissal for lack
of jurisdiction will be entered.
| {
"pile_set_name": "FreeLaw"
} |
72 Cal.App.3d 804 (1977)
140 Cal. Rptr. 475
MORLEY TURNER et al., Petitioners,
v.
THE SUPERIOR COURT OF KERN COUNTY, Respondent; BERNARD E. COOKE et al., Real Parties in Interest. BERNARD E. COOKE, Petitioner,
v.
THE SUPERIOR COURT OF KERN COUNTY, Respondent; MORLEY TURNER et al., Real Parties in Interest.
Docket Nos. 3518, 3528.
Court of Appeals of California, Fifth District.
August 24, 1977.
*807 COUNSEL
Thorne, Clopton, Herz, Stanek & Manchester, John Thorne, John R. Hetland and Anthony G. Wilson for Petitioners in Civ. No. 3518 and for Real Parties in Interest Turners in Civ. No. 3528.
Sims & Solomon and Gabriel W. Solomon for Petitioner in Civ. No. 3528 and for Real Party in Interest Cooke in Civ. No. 3518.
No appearance for Respondent or for Real Party in Interest Great Western Savings and Loan Association.
OPINION
BROWN (G.A.), P.J.
Upon the petition of Morley Turner and Janet Turner in 5 Civil No. 3518 we issued an order directing the Superior Court of Kern County to show cause why it should not be prohibited from confirming a proposed sale by its rents and profits receiver of the property generally known as the Bakersfield Inn for $3.7 million. Real party in interest Bernard E. Cooke filed his return and reply thereto; concurrently Cooke filed a petition for writ of mandate upon which we issued an order directing the superior court to show cause why the Bakersfield Inn's liquor license No. 47-29199 should not be included in the proposed receiver's sale; real party in interest Turners filed their return and reply thereto. The two matters have been consolidated for consideration and decision.
In sum, the ultimate issues are: (1) the power of the superior court to authorize a rents and profits receiver appointed at the behest of a beneficiary under a deed of trust (Great Western Savings and Loan Association) in a foreclosure proceeding to take possession of property which is not a part of the security for the debt, and (2) the authority of the superior court to authorize its rents and profits receiver to sell all of the property in his possession (part of which is security for the debt and part of which is not) while judicial and nonjudicial foreclosure proceedings are pending.
The predecessors in interest of Turners and Cooke in the Bakersfield Inn property on February 8, 1971, executed a promissory note in favor of Great Western Savings and Loan Association (hereinafter Great Western) in the amount of $1.3 million. The installment note was secured by *808 a deed of trust to the real property, improvements and trade fixtures, "TOGETHER WITH all interest which Trustor now has or may hereafter acquire in or to said property and in and to: (a) All rents, issues, profits, royalties, tolls, earnings and incomes therefrom ..." all of which was referred to as "the property."
Paragraph 16 of the master provisions in the deed of trust further provided in pertinent part that "Upon default by the Trustor ... Beneficiary may ... without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent ... or by receiver to be appointed by a court, (a) enter into possession and hold, occupy, possess and enjoy the property ... (e) take, receive and collect all or any part of the rents, issues, profits, royalties, tolls, earnings, income and installments ... as it becomes due and payable. After paying such costs of maintenance and operation of the property as it in its judgment may deem proper, Beneficiary may apply the balance upon the entire indebtedness then secured hereby." It is to be noted that this provision authorizes Great Western to take possession of all of the security including rents and profits.
The record title to the property passed by mesne conveyances to Cooke and Turners separately and they became embroiled in a quiet title action (action No. 140717) over the title to the real and personal property constituting the Bakersfield Inn business operation. On May 4, 1977, after a three-month trial, the trial court entered a judgment that Cooke is the sole owner of the entirety of that certain business together with that certain real and personal property known as the Bakersfield Inn, excluding only a certain liquor license No. 47-29199 and all the cash, liquor and food inventory and certain business records and filing cabinets. The court held that the excluded property is owned by Turners. An appeal by each party from that judgment is pending and undetermined.
The deed of trust being in default in excess of the sum of $160,000 on March 16, 1977, Great Western filed the complaint in this action, being action No. 146104, seeking judicial foreclosure of the deed of trust, praying for the appointment of a receiver to take possession of and operate the property and collect the rents, issues and profits pursuant to the terms of the deed of trust, and for a deficiency judgment against Turners and Cooke. Great Western seeks also to accelerate the due date of the entire obligation which amounts to more than $1.1 million.
*809 Great Western is in addition pursuing a concurrent course of nonjudicial foreclosure by having recorded on April 8, 1977, a notice of default and election to sell the property on or after August 8, 1977 (see Civ. Code, § 2924c).[1]
Upon Great Western's request a hearing was held on March 16, 1977, at which all parties were represented and after which the court by stipulation appointed David Ray as the receiver and ordered him to "take possession of that certain real property and all the improvements located thereon and therein in the City of Bakersfield, County of Kern, State of California, commonly known as the Bakersfield Inn ... and more specifically described in plaintiff's complaint, and care for, preserve, and maintain the property, and incur the expenses necessary for the care, preservation and maintenance of the real property and personalty located thereon" and to "collect the rents due and hereafter coming due from the tenants of any portion of the real property and the improvements located thereon," and to pay taxes and assessments and interest and principal on the note secured by the deed of trust now due or to become due. The court further authorized the receiver to operate and conduct the business of managing, maintaining and collecting the rent from all the tenants in and to said real property and to employ labor as may be necessary, purchase supplies and to incur the risks and obligations ordinarily incurred by owners, managers and operators of similar businesses. The order was filed on March 24, 1977.
The liquor license was not part of the security for the debt which the deed of trust secured. In order to gain the advantage of operating the cocktail lounge as an integral part of the business the receiver on March 25, 1977, petitioned the court for approval of an agreement whereby Turners would operate the cocktail lounge business and pay the receiver 10 percent from that business. On the theory that the right to possession and use of the liquor license passed to the receiver upon his appointment, Cooke on March 30 filed an ex parte petition to order Turners to surrender the license to the receiver. On April 1, the court ordered the receiver to take possession of the liquor license and to operate the cocktail lounge business based on the 10 percent formula theretofore offered by Turner.[2]
*810 On May 17, 1977, after a hearing held on May 5 pursuant to Cooke's noticed motion, the court issued an order authorizing the receiver to sell the Bakersfield Inn subject to confirmation. The proposed sale encompasses all tangible and intangible real and personal property and assets of every kind and nature of that certain motel, restaurant, banquet and cocktail lounge business commonly known as the Bakersfield Inn, excepting only the Bakersfield Inn liquor license No. 47-29199. The total purchase price is to be $3.7 million with $550,000 in cash and the remainder in promissory notes, including the assumption of the Great Western deed of trust.
The proposed purchaser is Westwater-Bakersfield, Inc., composed of a group of Canadian citizens who had not as of the date of the order authorizing the sale filed articles of incorporation in California and in fact did not do so until June 23, 1977. Nothing appears with regard to their financial responsibility or business experience.
On June 9 Cooke noticed a motion to confirm the sale to be heard on June 17. On June 17, pursuant to Turners' petition, this court issued a stay order halting the hearing for confirmation of the order authorizing the sale.
Lastly, it is noted that Great Western appeared at the hearing in the trial court on May 5 and opposed the sale on the ground that it should not be authorized in the absence of the consent of all interested parties.
*811 Adverting to the merits, Code of Civil Procedure section 564[3] contains a principal source of authority for trial courts to appoint receivers. In addition there are other special statutes authorizing the appointment of receivers under more specific situations. (See 2 Witkin, Cal. Procedure (2d ed. 1970) Provisional Remedies, § 236, p. 1629.)
(1a) The requirements of Code of Civil Procedure section 564 are jurisdictional, and without a showing bringing the receiver within one of the subdivisions of that section the court's order appointing a receiver is void. (Rondos v. Superior Court (1957) 151 Cal. App.2d 190, 195 [311 P.2d 113].) There was no showing herein at the time of the hearing under subdivision 2 of section 564 that "the property is probably insufficient to discharge the mortgage debt." (Bank of Woodland v. Stephens (1904) 144 Cal. 659, 660 [79 P. 379].) (2) Nevertheless, such a showing is not required where the creditor, as here, seeks to specifically enforce a provision of the mortgage or deed of trust assigning the rents and profits from the security to the creditor upon default or specifically providing for the appointment of a receiver to take possession of the security and collect the rents and profits therefrom. (Title Guarantee & Trust Co. v. Monson (1938) 11 Cal.2d 621, 625 [81 P.2d 944]; Barclays Bank of California v. Superior Court (1977) 69 Cal. App.3d 593, 598-600 [137 Cal. Rptr. 743].) Although couched in terms of specific performance of a contractual provision, jurisdiction of the court to appoint a receiver under such circumstances is not derived from an agreement between the parties but rather from the omnibus statutory provision contained in subdivision 7 of section 564. (See fn. 3, ante.)
(1b) It is settled that "[a] receiver may not be appointed except in the classes of cases expressly set forth in the statutes. (Miller v. Oliver (1917) 174 C. 407, 410, 163 P. 355; Takeba v. Superior Court (1919) 43 C.A. 469, 475, 185 P. 406." (2 Witkin, Cal. Procedure (2d ed. 1970) Provisional *812 Remedies, § 236, p. 1629.) "[W]here one's entitlement to a receiver is not otherwise established, a mortgagee or beneficiary of a trust deed may not by stipulation or consent, however manifested, confer jurisdiction upon the superior court to appoint such a receiver." (Barclays Bank of California v. Superior Court, supra, 69 Cal. App.3d 593, 600; Mines v. Superior court (1932) 216 Cal. 776, 778 [16 P.2d 732].)
(3) On the other hand, if the rents, issues and profits are not part of the security for the debt, not having been contractually assigned for that purpose, the court has no power under section 564 to authorize the receiver to take possession of the rents, issues and profits and apply them to the debt. (Locke v. Klunker (1898) 123 Cal. 231, 235-238 [55 P. 993].) To do so would be to make a new contract for the parties extending the lien over property not actually mortgaged. (Locke v. Klunker, supra.) Thus, the contractual agreements and the pleadings are factors to take into evidential consideration in determining the purpose for which the receiver was appointed and the power of the court to extend the receiver's grasp to property which may be beyond his reach. (Barclays Bank of California v. Superior Court, supra, 69 Cal. App.3d 593, 599-602.)
Great Western in its judicial foreclosure complaint sought specific performance of the assignment of the rents, issues and profits provisions of the deed of trust by having a receiver appointed "pending the trial of the issues of this case, to take possession of the real property hereinabove described, to care for and operate said real property and to collect the rentals, earnings, income, receipts, revenues, issues and profits from said premises, and to pay therefrom the costs of operating said real property, the Court costs, including Receiver's fees and other charges allowed by the Court, and to pay the balance thereof to the holders of encumbrances of record relating to the said property in order of their priority until such time as the indebtedness of defendants owing to plaintiff herein is fully paid." The order appointing the receiver followed generally the language of the complaint, making plain that the purpose of the receivership was to manage and operate the property for the purpose only of collecting the rents, issues and profits and applying the same to the debt. In short, the receiver was authorized to take possession of the property for the purpose of collecting and paying over to Great Western the net rents, issues and profits.
Having decided that Ray is a rents, issues and profits receiver, we next approach the issue of the extent of property which the trial court can empower a rents and profits receiver to take into his possession by the *813 force of the order appointing him as receiver or by reason of subsequent orders of the court. (4) In this connection we must, of course, keep in mind that a receiver is an agent of the court, not of the parties, and the receivership estate consisting of property which is properly in his hands is under the control and continuous supervision of the court. (Lesser & Son v. Seymour (1950) 35 Cal.2d 494, 499 [218 P.2d 536]; People v. Riverside University (1973) 35 Cal. App.3d 572, 583 [111 Cal. Rptr. 68].)
The substance of Cooke's argument is that a receiver is a receiver regardless of the purpose for which he is appointed and that pursuant to its inherent equitable powers the court can expand the receivership to include property not originally included therein, particularly where the possession of such property is necessary or convenient to the operation of a business in the hands of a rents and profits receiver; otherwise, no rents and profits could be produced. However, the deed of trust does not guarantee that rents and profits will be generated by the land and improvements thereon. We have been cited to no authority for the proposition that a court has the power to authorize a receiver in the course of the performance of his duties to reach out and latch onto the appropriate property to the use of the receivership which is not properly a part of the receivership estate.[4] On the contrary, what authority there is on the subject points unerringly to a contrary result.
In this regard, the words of Mr. Justice Cardozo in DuParquet Huot & Moneuse Co. v. Evans (1936) 297 U.S. 216 [80 L.Ed. 591, 56 S.Ct. 412] are instructive. In that case the court held that the appointment of a rents and profits receiver pursuant to a mortgage foreclosure action was not an act of bankruptcy because such a receiver is not a full equity or general receiver within the meaning of the law: "A receivership in a foreclosure suit is limited and special. The rents and profits are impounded for the benefit of a particular mortgagee to be applied upon the debt in the *814 event of a deficiency. [Citations.] The corporation retains its other property, if it has any, unaffected in its power of disposition by the decree of sequestration. The creditors retain their remedies except against the income subject to the lien. There is neither winding up of the business nor attempt to reorganize it and set it going anew." (297 U.S. 216, 221 [80 L.Ed. 591, 594].)
After explaining that an equity or general receiver takes possession of all of the debtor's assets and attempts to satisfy creditors out of those assets and may be permitted to completely reorganize the financial status of the debtor, Justice Cardozo continues: "But the situation is very different if the receivership in view is one for the foreclosure of a mortgage. In its normal operation such a receivership does not connote possession of all the property of the debtor or even all the property within the appointing jurisdiction. The mortgage may be a lien upon one parcel or a few, leaving other property of abundant value for payment of the debts. Indeed, the cases must be many where the owner of a mortgaged building, not personally liable for the payment of the mortgage debt, will hold it the part of prudence, whether he is solvent or insolvent, to let the building go." (297 U.S. 216, 223 [80 L.Ed. 591, 596].) (See also Tuttle v. Harris (1936) 297 U.S. 225 [80 L.Ed. 654, 56 S.Ct. 416].) Accordingly, the court held that the estate of a rents and profits receiver is limited to the property standing as security.
The text writers support this concept. Thus, Clark, in his treatise on receivers, states that: "Property not involved in complainant's mortgage ... is not property in the hands of a receiver." (4 Clark, Law of Receivers (3d ed. 1959) § 936.) And Professor Osborne concurs: "Where the mortgagor conducts a business on the mortgaged premises instead of renting them or occupying them as a home the first problem is whether the business is subject to the mortgage either by virtue of its being a product of the land or of an express inclusion under the terms of the mortgage. This is so because it is clear that a mortgage foreclosure receiver cannot take into his possession or control property not covered by the mortgage, and a `mortgage covers the land and building not the business enterprise housed.'" (Osborne, Mortgages (2d ed. 1970) Receivership, § 157, p. 266.)
California authority is in accord. For example, the court in Cal. T.I. & T. Co. v. P'dm't. Cable Co. (1897) 117 Cal. 237, 240-241 [49 P. 1], limited the receiver's possession to property specifically referred to in the mortgage: "The mortgage did not cover the assets of the corporation *815 defendant therein, beyond the property as hereinbefore stated, and the receiver was appointed, not to collect the debts due the corporation defendant, but only to take possession of the mortgaged property, operate the road, etc. [¶] When, therefore, he took possession of the money of the defendant and collected money due to it before his appointment, and which was not covered by the lien of the mortgage, he transcended his authority as receiver, and it was no defense to the motion for him to say he had mingled the funds thus received with those received in the course of his receivership and had paid out the money." (See also Locke v. Klunker, supra, 123 Cal. 231 a receiver appointed under a mortgage which does not contain an assignment of rents and profits as part of the security has no authority to take possession of and collect the rents and profits.)
Again, in Santacroce Bros. v. Edgewater-Santa Clara, Inc. (1966) 242 Cal. App.2d 584 [51 Cal. Rptr. 613], the court upheld the appointment of a receiver to take possession of real property improved by a 72-room motel which was the security on a promissory note pursuant to the following provision in the trust deed: "`Upon any such default [in payment by trustor], Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name, sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same less cost and expenses of operation and collection, including reasonable attorneys' fees, upon any indebtedness secured hereby and in such order as Beneficiary may determine.'" (Id., at p. 585, fn. 1.) The trial court in Santacroce appointed a receiver with power to take possession of the property and to operate the business of the motel, including the collection of the rents. The Court of Appeal upheld that appointment. The debtor at oral argument attempted to raise the issue of the disposition of the furniture in the motel. The Court of Appeal concluded that it was not faced with that issue since the order appointing the receiver did not refer to the furniture. The debtor also argued that the order appointing the receiver empowered the receiver to seize all money which the debtor had on hand or in bank accounts at the time of his employment and was therefore overly broad. The Court of Appeal agreed and struck that portion of the order.
(5) We agree with the reasoning of the foregoing authorities and conclude that in the absence of consent from the owners of the property *816 that it may be used by the rents and profits receiver, the decree ex propio vigore does not authorize, and the court exceeds its jurisdiction insofar as it may purport to authorize, a rents and profits receiver to take into his possession property which is not hypothecated in the deed of trust.[5]
Accordingly, in the case at bench the orders of the trial court purporting to imbue the rents and profits receiver with authority to take into his possession any property of the Bakersfield Inn which is not hypothecated under the deed of trust without the consent of those entitled to give or withhold consent were beyond its power. This property would include the liquor license, food and beverage inventories, the furniture and television sets, and perhaps other personal property the extent and nature of which does not fully appear in this record.[6]
Turning to the issue of the authority of the trial court to authorize the receiver to sell all the property in his possession, Cooke relies upon Code of Civil Procedure section 568.5 which provides: "A receiver may, pursuant to an order of the court, sell real or personal property in his possession as such receiver, upon the notice and in the manner prescribed by law for the sale of such property under execution. The sale shall not be final until confirmed by the court. Sales made pursuant to this section shall not be subject to redemption."
In authorizing the sale the trial court found that there is a substantial risk the entirety of the real and personal property of the Bakersfield Inn, excepting the liquor license, would be lost via either judicial or nonjudicial foreclosure proceedings being pursued by Great Western. The court further found that the Bakersfield Inn is currently being operated at a substantial financial loss and that there is no reasonable assurance that the court's receiver will in the future be able to operate the business without continuing monthly net financial losses. In addition, the court found that the proposed $350,000 default-curing cash downpayment ($550,000 less broker's fee) itself prima facie establishes the *817 financial responsibility and financial credibility of the proposed buyer. In addition, the court concluded that the proposed sale would save petitioner Turner and Eugene Majeski (a cosigner) from the risk of personal deficiency judgments in favor of Great Western. Finally, the court found that the conditions of the proposed sale are prima facie fair and reasonable and in the best interests of Great Western and petitioner Turner and real party in interest Cooke, regardless of which of the latter may ultimately be adjudged to be the true owner of the property threatened with foreclosure.
Cooke argues that pursuant to Code of Civil Procedure section 568.5 and the inherent equitable power of the court, the court can authorize a rents and profits receiver to sell the receivership estate where the business is losing money and the equity of the debtors is threatened by foreclosure of an existing deed of trust. As in the case of the first issue, he argues that a receiver is a receiver regardless of the purpose for which he was originally appointed and that Code of Civil Procedure section 568.5 makes no facial distinction as to the type of receiver involved. He relies on a number of cases, many of which do not involve rents and profits receivers and are distinguishable on that ground. For example, cited are Wulff v. Superior Court (1895) 110 Cal. 215 [42 P. 638] receiver during partnership dissolution; Rosenthal v. Rosenthal (1966) 240 Cal. App.2d 927 [50 Cal. Rptr. 385] receiver in divorce action to liquidate a joint interest in property pursuant to judgment; People v. Riverside University, supra, 35 Cal. App.3d 572 receiver appointed pursuant to the Attorney General's petition for a public or charitable trust under Corporations Code section 9505 with broad powers to operate a school; Baumann v. Bedford (1941) 18 Cal.2d 366 [115 P.2d 437] receiver in a partition action. He also relies upon Toby v. Oregon Pac. R.R. Co. (1893) 98 Cal. 490 [33 P. 550], and McLane v. P. & S.V.R.R. Co. (1895) 66 Cal. 606 [6 P. 748]. In Toby the court upheld a sale by a rents and profits receiver. However, the case involved perishable personal property (a decaying ship) and a judgment of foreclosure had already been entered. In McLane the receiver was appointed with broad power to operate a railroad for the benefit of bondholders. Aside from the roadbed the railroad would be predominantly personal property. Because of the general public nature of the business, the receiver had broader powers than other kinds of receivers (see Title Ins. etc. Co. v. California Dev. Co. (1915) 171 Cal. 227, 231 [152 P. 564]; annot. (1927) 50 A.L.R. 146) and the court upheld the authorization of the receiver to sell the railroad in view of the fact that the railroad could only be run at a loss, there were no funds to repair it, and the railroad, if unused, would simply decay.
*818 To the contrary, Turners' principal arguments are that the court lacks power to authorize a rents and profits receiver to sell the estate; that the assignment of rents and profits provision passes only a security interest (Childs etc. Co. v. Shelburne Realty Co. (1943) 23 Cal.2d 263, 268 [143 P.2d 697]; Lee v. Ski Run Apartments Associates (1967) 249 Cal. App.2d 293, 297 [57 Cal. Rptr. 496]) and the receiver is limited to the contractual authorization contained in the deed of trust to collect the rents as additional security; that to determine the receiver's authority one must look to the purpose for which he was originally appointed and draw a sharp distinction between various types of receivers; that in any event the only thing the rents and profits receiver could possibly sell would be the security interest and not title to the underlying real property and improvements; that a rents and profits receiver as distinguished from some other types of receivers cannot liquidate or sell the security, particularly in the face of existing equities in an outstanding deed of trust and a judicial foreclosure action. They point to the fact that a receiver takes possession of property subject to all equities and liens existing as of the date of his appointment (Allen v. Ramsay (1960) 179 Cal. App.2d 843, 854 [4 Cal. Rptr. 575]) and to authorize such a sale by a receiver would conflict with traditional protections the law has thrown around mortgagors in that it would truncate the debtor's right to redemption (Civ. Code, §§ 2903, 2905; Code Civ. Proc., §§ 725a, 568.5) and would violate Code of Civil Procedure section 726 limiting the foreclosure of a deed of trust to one action. (See Walker v. Community Bank (1974) 10 Cal.3d 729 [111 Cal. Rptr. 897, 518 P.2d 329].) Also, in the case at bench Turners have filed a cross-complaint against Great Western seeking subrogation to some $600,000 Turners made in payments on the deed of trust while they were in possession of the property and prior to the appointment of the receiver. The sale, Turners argue, would likely destroy their claim.
As interesting as this unresolved issue is, we need not finally decide it in this case.
The sale authorized by the court below included all the real and personal property and the business known as the Bakersfield Inn (excluding only the liquor license). Since we have determined that it was beyond the court's power to order that property not part of the rents and profits receivership estate may be taken into possession by the receiver, it is apparent that it is beyond the authority of the court to authorize the receiver to sell property which is not part of the security without the consent of all persons having an interest therein. Accordingly, the trial court's order authorizing the present sale is in all events beyond the *819 power of the court and we therefore need not reach or decide the question of the limits upon the rents and profits receiver's authority to sell the receivership estate consisting of the security only under the circumstances of this case.
In view of our conclusion that the trial court did not have the authority to turn the liquor license over to the receiver and does not have the power to authorize the receiver to sell it, it follows that Cooke's petition in 5 Civil No. 3528 for writ of mandate to require the trial court to authorize the sale of the liquor license must be denied.
Let a peremptory writ of prohibition issue under the seal of this court prohibiting the respondent court from confirming the sale by the receiver of the property described in its order authorizing sale of May 17, 1977, and to take no action with regard to said order except to vacate and set it aside.
Petitioner Bernard E. Cooke's petition for writ of mandamus compelling inclusion of the Bakersfield Inn liquor license within the order authorizing sale of said business is denied and the order to show cause is discharged.
The injunctive stay order heretofore issued by this court on June 29, 1977, enjoining Great Western Savings and Loan Association from proceeding with any nonjudicial foreclosure sale pursuant to the power of sale contained in its deed of trust and from relying upon the period of time during which this injunction is in effect as part of the three months' period set forth in Civil Code section 2924c shall remain in effect until this judgment becomes final or the Supreme Court grants a hearing herein, whichever may first occur.
The order of this court dated June 29, 1977, staying all proceedings in Kern County Superior Court action No. 146104 is terminated.
Gargano, J., and Franson, J., concurred.
A petition for a rehearing was denied September 1, 1977, and the petition of real party in interest Cooke for a hearing by the Supreme Court was denied October 27, 1977.
NOTES
[1] At the time of issuing the order to show cause this court issued an injunctive stay order enjoining Great Western from proceeding with the nonjudicial foreclosure until further order of this court.
[2] The court in its minute order made reference to the appointment of Ray as the liquor license receiver in action No. 140717 (the quiet title suit) as well as in the foreclosure action, No. 146104. While the main thrust of Cooke's position herein does not rely on this appointment in the quiet title action, it is appropriate to comment that the record before us cannot support such an appointment.
Code of Civil Procedure section 564, subdivision 4, provides for the appointment of a receiver pending an appeal to preserve the property during appeal or to force the judgment debtor to dispose of the property according to the judgment. Since the judgment in the quiet title action directed that the liquor license belonged to Turner, the only showing that would support appointment of a receiver in the quiet title action is to preserve the property pending appeal. There is nothing in this record indicating that such a showing has been made. Secondly, an order upon ex parte application "... should only be issued in cases of emergency which make it imperatively necessary to act at once without notice." (2 Witkin, Cal. Procedure (2d ed. 1970) Provisional Remedies, § 249, p. 1637) and the appointment of a receiver is a drastic remedy and should be exercised with caution. (Hoover v. Galbraith (1972) 7 Cal.3d 519, 528 [102 Cal. Rptr. 733, 498 P.2d 981].) No such showing has been made here.
Moreover, the stringent procedural requirements of California Rules of Court rule 238 which must be met before an ex parte appointment of a receiver can be approved were not satisfied in this instance. It also appears that an appeal was taken from the formal order signed by the judge on April 21 and entered on April 25 and, finally, the trial court purported to vacate that order on August 12 (entered Aug. 16).
[3] Code of Civil Procedure section 564 provides in pertinent part:
"A receiver may be appointed, in the manner provided in this chapter, by the court in which an action or proceeding is pending in any case in which such court is empowered by law to appoint a receiver.
"In superior courts a receiver may be appointed by the court in which an action or proceeding is pending, or by a judge thereof, in the following cases:
".....................
"2. In an action by a mortgagee for the foreclosure of his mortgage and sale of the mortgaged property, where it appears that the mortgaged property is in danger of being lost, removed, or materially injured, or that the condition of the mortgage has not been performed, and that the property is probably insufficient to discharge the mortgage debt;
".....................
"7. In all other cases where receivers have heretofore been appointed by the usages of courts of equity."
[4] Cooke's reliance upon Goes v. Perry (1941) 18 Cal.2d 373 [115 P.2d 441] as support for this position is misplaced. That case was one aspect of complicated litigation involving a large building and the furniture and fixtures therein being operated as a club. (See Baumann v. Harrison (1941) 46 Cal. App.2d 73 [115 P.2d 523]; Baumann v. Harrison (1941) 46 Cal. App.2d 84 [115 P.2d 530]; Baumann v. Bedford (1941) 18 Cal.2d 366 [115 P.2d 437].) A deed of trust covering the building only had been foreclosed. In Baumann v. Bedford, supra, a partition action, the court appointed a receiver after the sale under the deed of trust had been consummated. Goes v. Perry, supra, involved the furniture and fixtures in the building only and was an action in claim and delivery to recover possession of the furniture and fixtures after there had been a foreclosure of a security instrument in which that personal property was security. For convenience and because the club was still being operated as a unit, the court appointed the same receiver who had been appointed in the real property partition action. In no way does this case authorize a receiver to take possession of property not legitimately part of the receivership estate.
[5] This holding, of course, does not preclude the receiver from entering into consensual arrangements with persons owning property not subject to the deed of trust to use such property in the operation of the business.
[6] It appears the personal property (other than the liquor license) which is not subject to the deed of trust is being used by the receiver with the permission of those who have an interest therein. Though the record before us is unclear in this regard, it would appear that the owner or owners thereof would be entitled to compensation from the receiver for the use of that property. (Baumann v. Harrison, supra, 46 Cal. App.2d 73, 80-81 (hg. den.) The conditions under which the liquor license is being used are unclear and subject to further judicial proceedings now in progress.
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731 F.2d 889
U.S.v.Battle*
NO. 83-7509
United States Court of Appeals,eleventh Circuit.
APR 03, 1984
1
Appeal From: S.D.Ala.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
| {
"pile_set_name": "FreeLaw"
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-03-002-CV
WARRANTECH
CORPORATION AND APPELLANTS
WARRANTECH
CONSUMER PRODUCTS
SERVICES,
INC.
V.
COMPUTER
ADAPTERS SERVICES, APPELLEES
INC.
D/B/A COMPUTER ACCESSORIES
SERVICES,
LOU BRAUN, AND
VICTORIA
CLYDE
------------
FROM
THE 67TH DISTRICT COURT OF TARRANT COUNTY
------------
OPINION
------------
I. Introduction
Warrantech
Corporation (Warrantech) and Warrantech Consumer Products Services, Inc. (WCPS)
(collectively, the Warrantech Parties) appeal from the trial court’s judgment
in favor of Computer Adapters Services, Inc. d/b/a Computer Accessories Services
(CAS), Lou Braun, and Victoria Clyde. The primary issue we must decide is
whether the trial court abused its discretion by excluding, based on the
attorney-client privilege, a letter from Clyde to her attorney that showed some
of Clyde’s trial testimony to be false. Because we conclude that the trial
court did not abuse its discretion by excluding the letter and that the ruling,
even if erroneous, would not have caused the rendition of an improper judgment,
and because the Warrantech Parties do not prevail on their remaining appellate
issues, we will affirm.
II. Background Facts and Procedural History
Warrantech
provides service contracts to businesses that sell computers and related
equipment. Pursuant to these contracts, product purchasers may obtain warranty
services in the event they encounter problems with the products. Warrantech
provides its service contract services via Warrantech Help Desk, Inc./WCPS.1 Thus, if a customer has a problem with a computer
and calls the number provided on the service contract, the customer will reach
WCPS. WCPS attempts to diagnose and solve the problem over the phone, but
if that proves unsuccessful, WCPS refers the customer to a repair company, which
performs repair services on the computer and bills WCPS for the work.
During the time when most of the events relevant to this case occurred, WCPS
used hundreds of repair companies.
Braun
and Clyde are husband and wife. From April through August 1997, Braun, and
occasionally Clyde, performed consulting work for Warrantech on a contract
basis. In 1997, Warrantech hired Braun as a full-time employee, as Vice
President of Operations for WCPS. Braun and Clyde were living in Michigan at the
time, but they moved to Texas so Braun could take the job. Clyde continued to do
contract work as a consultant for Warrantech in its claims department. From
August 1997 through early 1998, Warrantech paid Clyde’s consulting fees to a
company she had formed while still in Michigan. Sometime in 1998, however, Clyde
began billing Warrantech for her time through the contracting company that
Warrantech used. Clyde took the contract position only temporarily, until she
could find something else to do.
Braun
was employed as Vice President of Operations for WCPS from August 1997 until
August 1998. In that capacity, Braun became intimately familiar with, among
other things, how WCPS selected repair companies to use for the services it
provided and how WCPS processed repair companies’ claims for payment. Braun
also played a role in selecting which companies WCPS chose to use as repair
service providers. In addition, Braun became aware of Warrantech’s
conflict of interest policy, which provided that no Warrantech employee could
have an interest in a competitor or supplier without Warrantech’s approval.2 He also learned, however, that several Warrantech
employees, including WCPS’s president, Judy Thomas, owned companies “on the
side” that did work for Warrantech and that Warrantech employees moonlighted
as employees of service providers that performed service repairs for Warrantech.
In
her contract consultant capacity in WCPS’s claims department, Clyde also
became intimately familiar with how WCPS processed and paid service providers’
requests for payment for both parts and labor. She continued, however, to
look for something else to do on a part-time basis. She had inherited some
money that she wanted to invest in opening a business, but while she worked for
Warrantech, those plans “went on hold.”
In
May 1998, Warrantech hired Mato Dill as WCPS’s Vice President of Services.
Braun and Dill knew each other because, in the 1980s, they had both worked for a
company known as Highland Super Stores. Braun also knew Judy Thomas from his
days as a Highland employee. Thomas assigned Dill some of Braun’s
responsibilities, such as selecting which companies WCPS would use as repair
service providers.
On
August 13, 1998, Warrantech laid off Braun and terminated Clyde’s consulting
contract. That same day, Braun signed a severance agreement that contained
confidentiality and noncompete provisions, for which he was paid $22,500. The
agreement provided that, for the three-month period ending November 18, 1998,
Braun would not own, operate, direct, invest in, or accept managerial employment
from any entity that (1) competed with Warrantech or (2) solicited any of
Warrantech’s customers.
Sometime
between August 14 and August 18, 1998, CAS was formed and began soliciting
WCPS’s computer repair business. Clyde was CAS’s owner and president. She
testified that starting CAS was solely her idea, formed the day after she and
Braun were laid off from Warrantech. There is other evidence, however, that
Braun, Clyde, Dill, and a Warrantech employee named James Schupbach had begun as
early as June 1998 to discuss starting a company like CAS.
Throughout
most of CAS’s relationship with WCPS, Clyde, Braun, and some of CAS’s
employees attempted to conceal CAS’s identity. For example, as we
discuss in greater detail in section IV, CAS’s employees used aliases in their
communications with WCPS. In addition, WCPS required potential repair
companies to fill out a service provider questionnaire that provided information
about the repair company, including its responsible party or officer. The
service provider questionnaire that CAS submitted to WCPS listed Kevin Wichers,
Braun’s son-in-law, as CAS’s responsible party or officer and gave his
address as being in Hurst, Texas. Wichers lived in Michigan, however, and he had
no actual involvement in CAS’s operations. Clyde or Braun had merely discussed
with Wichers the possibility of him eventually managing one of CAS’s branches,
and Wichers had authorized the use of his name on service provider applications.
In
late August 1998, WCPS approved CAS as a service repair provider and began
sending CAS work. At that time, Dill was still actively involved, as WCPS’s
Vice President of Services, in selecting its repair service providers. He
instructed WCPS employees to send CAS repair business. During the next few
months, CAS submitted, and WCPS paid, $360,000 worth of invoices for repair
services and parts. CAS also submitted $213,000 worth of other invoices for
repair work and parts that WCPS did not pay.
Consequently,
CAS sued the Warrantech Parties for breach of contract, quantum meruit, and
fraud, alleging that the Warrantech Parties had not paid for many of the repair
services CAS had rendered and that it was the Warrantech Parties’ common
practice to defraud repair service providers by issuing repair orders for
services that were not, or might not be, under warranty and then refusing to pay
for them. The Warrantech Parties countersued CAS and named Braun and Clyde
as third-party defendants, asserting claims for breach of contract, fraud,
conspiracy, and breach of fiduciary duty. The Warrantech Parties alleged that
appellees had fraudulently induced them to enter into a service provider
agreement with CAS by providing false information on their service provider
questionnaire; had conspired with Dill to defraud the Warrantech Parties by
using information Braun and Clyde had obtained during their employment with
Warrantech to form CAS and then submit bills to WCPS for repair services that
had never been performed; and had bribed Dill and other Warrantech employees to
send CAS business by paying them “kick-backs.” The Warrantech Parties
further alleged that CAS had breached the service provider agreement by padding
its bills and that Braun had breached his severance agreement with Warrantech.
After
a jury trial, the jury returned a 10-2 verdict for CAS on its breach of contract
and quantum meruit claims, against CAS on its fraud claim, and against the
Warrantech Parties on all of their claims against CAS, Braun, and Clyde. The
trial court rendered judgment on the verdict and denied the Warrantech
Parties’ postverdict and postjudgment motions. This appeal followed.
III. Issues on Appeal
In
five issues, the Warrantech Parties complain:
•The
trial court reversibly erred by excluding from evidence defendant’s exhibit
982 (DX 982), which included a letter from Clyde to her attorney in which she
admitted CAS had used fake names when communicating with WCPS.
•The
trial court improperly admitted prejudicial and inaccurate character evidence of
Warrantech’s allegedly fraudulent behavior against entities not involved in
this case.
•The
trial court erroneously denied the Warrantech Parties a new trial because some
of Clyde’s trial testimony demonstrated that CAS had committed discovery abuse
that prejudiced the Warrantech Parties.
•The
evidence is legally and factually insufficient to support the jury’s finding
that Braun and Clyde fulfilled their fiduciary duties to WCPS.3
•The
judgment should be reformed to reflect a lower postjudgment interest rate
enacted while this appeal was pending.
IV. Trial Court’s Evidentiary Rulings
In
their first and second issues, the Warrantech Parties assert that the trial
court reversibly erred by excluding part of DX 982, a letter from Clyde to her
attorney that directly contradicted her trial testimony about appellees’ use
of fake names in their contacts with WCPS, and by admitting “bad character”
evidence against Warrantech. The Warrantech Parties contend that, because the
trial turned on the parties’ credibility, these erroneous evidentiary rulings
probably caused the rendition of an improper judgment and therefore warrant a
new trial. See Tex. R. App. P. 44.1(a)(1).
A
trial court’s rulings admitting or excluding evidence are reviewable under an
abuse of discretion standard. Nat’l Liab. & Fire Ins. Co. v. Allen,
15 S.W.3d 525, 527 (Tex. 2000); Drilex Sys. v. Flores, 1 S.W.3d 112,
117-18 (Tex. 1999). To determine whether a trial court abused its discretion, we
must decide whether the trial court acted without reference to any guiding rules
or principles—in other words, whether the act was arbitrary or unreasonable. See
Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 687 (Tex. 2002); Downer
v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert.
denied, 476 U.S. 1159 (1986). Merely because a trial court may decide a
matter within its discretion in a different manner than an appellate court would
in a similar circumstance does not demonstrate that an abuse of discretion has
occurred. Downer, 701 S.W.2d at 241-42.
A. Exclusion of DX 982
At
trial, Clyde testified on cross-examination that neither she nor Braun ever told
anyone who worked at CAS to use an alias when talking to WCPS about computer
repairs. Clyde further testified that she did not know that a woman named Paula
Pittman worked at WCPS, that CAS’s technicians were not authorized to talk to
Warrantech, and that she was not aware of anyone at CAS ever talking to Pittman
or doing so using a fake name. To rebut this testimony, the Warrantech Parties
sought to admit into evidence Clyde’s letter to her attorney, which read in
pertinent part:
Paula
Pittman is in Resolutions at Warrantech. When she first phoned, we were not
prepared and we asked a tech to speak with her. Both our manager and I know her.
The tech used to work at Warrantech also so did not give his real name. She
asked for the information on this repair order and also asked who our lawyer
was.
We
phoned her back and asked her to fax us in writing as we had not dealt with her
before. She asked who the President and owner and manager of the Warrantech
account were. We did not give names.
Appellees’
attorney objected to admission of Clyde’s letter based on the attorney-client
privilege, and the trial court excluded it on that basis. The Warrantech Parties
contend that this ruling was erroneous because Clyde and CAS had waived the
attorney-client privilege with respect to the letter and the offensive use and
crime/fraud exceptions to this privilege apply.
1. Waiver of Attorney-Client Privilege
The
Warrantech Parties contend that Clyde and CAS waived their claim of privilege
with respect to Clyde’s letter by producing it as part of DX 982, by failing
to assert the privilege for three years after its production, and by failing to
assert the privilege within ten days after the Warrantech Parties listed DX 982
on their trial exhibits list.
A
party who produces material or information without intending to waive a claim of
privilege does not waive that claim if—within ten days or a shorter time
ordered by the court, after the producing party actually discovers that the
production was made—the producing party amends the response, identifying the
material or information produced and stating the privilege asserted. Tex. R. Civ. P.
193.3(d). The focus of Rule 193.3(d) is on the intent to waive the
privilege, not the intent to produce the material or information. Id. cmt.
4, 977-978 S.W.2d (Tex. Cases) LVI. Therefore, a party who fails to diligently
screen documents before producing them does not waive a claim of privilege, and
the ten-day period runs from the party’s first awareness of the mistake, not
from the date of production. Id.4 To
avoid complications at trial, however, a party may identify before trial the
documents intended to be offered, thereby triggering the obligation to assert
any overlooked privilege under this rule. Id.
The
record in this case shows that Clyde’s letter was inadvertently produced to
the Warrantech Parties’ counsel three years before trial. After production,
the Warrantech Parties bates-stamped Clyde’s letter as “CAS 00648,”
apparently because the documents were not bates-stamped when CAS produced them.
Meanwhile, CAS bates-stamped a completely different document as 00648.
On
their trial exhibits list filed nearly a month before trial, the Warrantech
Parties identified DX 982 as “Invoice with attachments”—the identical
description given to hundreds of other exhibits, each of which was comprised of
an invoice from CAS to WCPS and any related correspondence. The Warrantech
Parties’ counsel admitted to the trial court that Clyde’s letter, which was
one of the attachments to the invoice in DX 982, was not further identified or
mentioned in that exhibits list. The day before trial, the Warrantech
Parties amended their trial exhibits list and, for the first time, identified
Clyde’s letter as “Letter from Clyde to Cramb.”5
CAS and Clyde did not, however, discover that production had been made until the
Warrantech Parties offered the letter three days later during trial, at which
time they immediately asserted the attorney-client privilege with respect to it.
“Identify”
means “to establish the identity of.” Merriam
Webster’s Collegiate Dictionary 575 (10th ed. 1994). Under
the circumstances presented here, the trial court could have reasonably
concluded that the Warrantech Parties’ original designation of “Invoice with
attachments” on their trial exhibits list did not sufficiently establish the
identity of Clyde’s letter. Although the letter was more clearly
identified the day before trial, CAS and Clyde’s assertion of the privilege
three days later when the letter was offered into evidence was well within Rule
193.3(d)’s ten-day grace period. Therefore, the trial court did not
abuse its discretion by ruling that CAS and Clyde had not waived their claim of
privilege by failing to timely assert it.
2. Offensive Use Exception
The
Warrantech Parties also assert that CAS and Clyde waived the attorney-client
privilege by offensive use. Under the offensive use doctrine, the
attorney-client privilege may be waived if the party asserting the privilege
uses it as a sword rather than a shield. Republic Ins. Co. v. Davis, 856
S.W.2d 158, 163 (Tex. 1993) (orig. proceeding). To determine whether a waiver
has occurred due to offensive use, the trial court considers three factors:
•whether
the party asserting the attorney-client privilege is seeking affirmative relief;
•whether
the privileged information sought is such that, if believed by the fact finder,
in all probability it would be outcome determinative of the cause of action
asserted; and
•whether
disclosure of the confidential communication is the only means by which the
aggrieved party may obtain the evidence.
Id.
With regard to the second factor, mere relevance is insufficient; the
confidential communication must go to the very heart of the affirmative relief
sought. Id. Further, if any one of these three requirements is lacking,
the trial court must uphold the privilege. Id.
In
this case, it is undisputed that CAS and Clyde were seeking affirmative relief.
The Warrantech Parties assert that the letter was outcome determinative because
it showed that Clyde testified falsely about CAS’s use of aliases when
communicating with WCPS, her acquaintance with Paula Pittman, and whether
CAS’s technicians were authorized to talk to Warrantech personnel. The
Warrantech Parties contend that the letter showed Clyde was not a credible
witness and that, if the jury had known about it, they would not have believed
any of her other testimony and would not have returned a verdict in appellees’
favor.
Apart
from the letter, however, there was other evidence before the jury that called
Clyde’s credibility into question and showed that appellees had attempted to
withhold CAS’s true identity from the Warrantech Parties. For example, Clyde
admitted at trial that she had signed Wichers’s name on the service provider
questionnaire and had denied doing so at her deposition. Clyde also admitted
that she had listed Wichers’s address and telephone number as being in Hurst,
Texas, which was incorrect because he lived in Michigan. In addition, Clyde
admitted that she had made hand-written notes on an invoice sent to WCPS, which
were signed by someone named “Sue”—although she denied knowing who
“Sue” was.
Although
Clyde had stated on CAS’s service provider questionnaire that Wichers was
CAS’s manager, Wichers testified that he had never managed CAS and had been to
its Texas office only on one brief occasion when Braun wanted to show it to him.
The jury also learned that someone at CAS had sent numerous emails from Kevin
“Wickers” to various people at WCPS, even though Wichers had not authorized
the emails. The same misspelling of Wichers’s name appeared on both the emails
and CAS’s service provider questionnaire that Clyde admitted signing.
Cheryl
Schupbach testified that CAS hired her because no one at WCPS knew her and she
could talk to WCPS on CAS’s behalf without tipping off WCPS employees.
Schupbach further testified that Braun had instructed her and others to use fake
names in their communications with WCPS. Schupbach also testified that Braun
told her he was attempting to keep CAS’s existence a secret from WCPS, at
least until November 1998.
Melinda
Bratton, who had moonlighted briefly as a technician at CAS while working for
Warrantech, testified that she had used an alias when contacting Warrantech on
CAS’s behalf. Bratton testified that two of CAS’s other technicians told her
to use an alias so that Warrantech would not associate her with CAS. Bratton
further testified that CAS’s technicians wrote their aliases and real names on
a chalk board in their work area at CAS.
In
light of this other evidence, we hold that Clyde’s letter was not outcome
determinative of either appellees’ or the Warrantech Parties’ claims.
Therefore, the trial court did not abuse its discretion by refusing to apply the
offensive use exception.
3. Crime/Fraud Exception
The
Warrantech Parties assert that Clyde’s letter was admissible under the
crime/fraud exception to the attorney-client privilege because her attorney had
a duty to disclose its existence in order to prevent her from working a fraud
upon the court with her false testimony. The Warrantech Parties further assert
that the letter should have been admitted because, although CAS’s and
Clyde’s use of aliases when dealing with WCPS was not in itself actionable,
the use of the fake names “tend[ed] to support” their fraud claims against
appellees.
A
client has the privilege to refuse to disclose and to prevent another person
from disclosing confidential communications between herself and her lawyer made
for the purpose of facilitating the rendition of professional legal services to
the client. Tex. R. Evid.
503(b)(1)(C). The attorney-client privilege does not apply, however, if the
lawyer’s services were sought to enable anyone to commit what the client knew
or reasonably should have known to be a crime or fraud. Tex. R. Evid. 503(d)(1).
The crime/fraud exception applies only if (1) the party asserting it makes out a
prima facie case of contemplated fraud and (2) there is a relationship
between the document for which the privilege is challenged and the prima facie
proof offered. Granada Corp., 844 S.W.2d at 227; Kugle v.
DaimlerChrysler Corp., 88 S.W.3d 355, 362-63 (Tex. App.—San Antonio 2002,
pet. denied) (en banc op. on reh’g). The fraud must have been ongoing or about
to be committed when the document was prepared. In re Monsanto Co., 998
S.W.2d 917, 933-34 (Tex. App.—Waco 1999, orig. proceeding); Freeman v.
Bianchi, 820 S.W.2d 853, 861-62 (Tex. App.—Houston [1st Dist.]
1991, orig. proceeding).
The
Warrantech Parties made no showing that Clyde contemplated committing a fraud
upon the court when she wrote her letter. The letter was written in December
1998, more than two months before suit was filed and several years before the
case went to trial. The Warrantech Parties assert, however, that Clyde’s
attorney had the duty to disclose the letter’s existence to prevent her from
working a fraud upon the court with her false testimony that was contrary to the
letter. This argument is premised on section 3.03(a) of the Texas Disciplinary
Rules, which prohibits a lawyer from knowingly offering or using false evidence
or knowingly failing to disclose a fact to a tribunal when disclosure is
necessary to avoid assisting in a fraudulent act. Tex. Disciplinary R. Prof’l Conduct § 3.03(a)(2), (5), reprinted
in Tex. Gov’t Code Ann. tit. 2,
subtit. G app. A (Vernon 1998) (Tex. State Bar R. art. X, § 9); see also Volcanic
Gardens Mgmt. Co. v. Paxson, 847 S.W.2d 343, 347-48 (Tex. App.—El Paso
1993, orig. proceeding) (holding that attorney-client privilege does not prevent
attorney from making disclosures of intended fraud required or allowed by
disciplinary rules). Section 3.03(a) is inapplicable here because it only
addresses an attorney’s duties;6 it does not
address the admissibility of evidence.7
Further,
although the letter is evidence that Clyde and CAS were attempting to conceal
CAS’s true identity, it does not show that they were contemplating or engaged
in ongoing fraud as alleged by the Warrantech Parties. The Warrantech Parties’
fraud claims were that appellees fraudulently induced WCPS to enter the service
provider agreement by concealing CAS’s identity and then used insider
information to charge WCPS for repairs that CAS did not make and repair parts
that CAS did not buy. Clyde’s letter is not evidence that she was
contemplating fraudulently inducing WCPS to enter the service provider agreement
because it was written in December 1998, several months after the agreement had
been entered.
In
addition, nothing in the letter or the rest of DX 982 indicates that CAS’s use
of aliases was due to the fact that it was charging or intended to charge WCPS
for nonexistent repairs or parts. To the contrary, DX 982 pertained to a
computer that CAS believed could not be repaired under warranty because it had
been damaged due to customer abuse. CAS communicated this information to WCPS
and also estimated, in response to WCPS’s inquiry, that the computer could be
repaired for $900. Clyde’s letter tells her attorney that the repairs were
never made because WCPS did not approve them and that the computer owner was
going to sue as a result. Thus, neither Clyde’s letter nor the use of fake
names is evidence of an ongoing or contemplated fraud at the time the letter was
written, and the trial court did not abuse its discretion by concluding that the
crime/fraud exception did not apply to DX 982.
Despite
the fact that Clyde’s letter does not fall within the crime/fraud exception,
the Warrantech Parties assert that they are entitled to a new trial because
appellees procured their favorable judgment with Clyde’s perjury, which the
Warrantech Parties were precluded from revealing to the jury. A judgment is not
procured by perjury unless the perjury prevented the injured party from fully
presenting its case at trial or resulted in the court or jury being deceived as
to a material issue. McMurry v. McMurry, 67 Tex. 665, 4 S.W. 357, 360
(1887); Pinkston v. Pinkston, 266 S.W.2d 515, 519 (Tex. Civ. App.—Waco
1954, writ ref’d n.r.e.).8 Assuming for
argument’s sake that Clyde’s credibility was a material issue, there was, as
we have discussed, ample other evidence before the jury that her testimony was
untruthful, including: her admission that she had lied about signing Wichers’s
name—misspelled as “Wickers”—on CAS’s service provider questionnaire
and providing false information about his address and phone number; her
admission that she had made hand-written notes on an invoice to WCPS that was
signed by “Sue,” but no one named Sue worked for CAS; evidence that someone
at CAS had sent WCPS numerous emails from Kevin “Wickers”; and testimony
from former CAS employees that they had been instructed to use—and had
used—aliases in their dealings with WCPS. Thus, Clyde’s apparently false
testimony did not prevent the Warrantech Parties from fully presenting their
case at trial or result in the jury being deceived as to a material issue.9
The
Warrantech Parties’ real complaint is that they should have been allowed to
impeach Clyde with her letter and that, if they had, the entire outcome of the
trial would have been different because Clyde’s obvious lack of credibility
would have caused the jury to find against appellees and in favor of the
Warrantech Parties. In light of all the evidence before the jury, however, we
conclude that, even if the trial court had abused its discretion by excluding
Clyde’s letter, it is not probable that a different ruling would have caused
the result asserted by the Warrantech Parties. See Tex. R. App. P. 44.1(a)(1).
Accordingly, for all of the reasons we have discussed, we overrule the
Warrantech Parties’ first issue.
B. Admission of “Bad Character” Evidence
In
their second issue, the Warrantech Parties complain that the trial court
reversibly erred by allowing the president of a service provider unrelated to
CAS to testify—in violation of the court’s prior limine ruling—that
Warrantech had an across-the-board policy of refusing to pay 15-20% of its
service providers’ invoices, regardless of their merit. This complaint is
waived because the Warrantech Parties’ general statement of “objection”
when the testimony was offered, followed by an off-the-record bench conference,
did not create a record sufficient to preserve the complaint for our review. See
Tex. R. App. P. 33.1(a)
(requiring timely, specific objection and ruling on record to preserve complaint
for appellate review); Pool v. Ford Motor Co., 715 S.W.2d 629, 637 (Tex.
1986) (op. on reh’g) (holding that timely, specific objection is necessary to
preserve error regarding question asked in contravention of sustained motion in
limine). We overrule the Warrantech Parties’ second issue.
V. Discovery Abuse
In
their third issue, the Warrantech Parties contend that the trial court abused
its discretion by denying their motion for new trial because CAS withheld a
“critical piece of evidence” during discovery—a check that it had given to
Dill. The Warrantech Parties assert that their first knowledge of the withheld
check came during Clyde’s trial testimony. They further assert that this
discovery abuse prejudiced them because the check tended to prove their claim
that appellees were paying Dill to send them WCPS’s computer repair business.
During
discovery, the Warrantech Parties asked appellees to produce all documents that
reflected payments from any of them to Dill. Appellees responded that they had
no documents responsive to this request. At trial, Clyde testified that no one,
including Dill, had ever asked her or CAS for payment in exchange for
Warrantech’s business or for approving CAS as a vendor. Dill also testified
that he had never received any compensation from CAS.
During
a deposition given about three weeks before trial, however, Clyde admitted that
she had written Dill a check from her NationsBank company account for just under
$4,000 to get computer repair business from a manufacturer known as Proteva.
Clyde made the same admission during cross-examination at trial. She testified
that she made this payment to Dill after he had stopped working for Warrantech
and had become a consultant for Proteva. She admitted that she had never given
the Warrantech Parties a copy of the check.
Both
Dill and Dwight Wayne Rogers, Jr., one of Warrantech’s and CAS’s former
technicians, testified that Dill had worked for Proteva as a consultant or
independent broker for several months after his employment with Warrantech was
terminated in late October 1998. Rogers also testified that, in early December
1998, CAS paid Dill $3,500 plus expenses to broker a laptop service repair
contract between CAS and Proteva. According to Rogers, Clyde authorized the
payment and wrote the check, but he actually discussed the brokerage arrangement
with Dill and delivered the check on CAS’s behalf.
Contrary
to much of this testimony, Mindy Bratton testified that, during the two weeks in
which she worked for CAS in September 1998, she heard James Schupbach and Rogers
discuss how they needed to repair as many units for WCPS as possible because
Dill would get a “kickback” for each unit. Bratton further testified that
Dill once came to CAS’s offices—apparently when Clyde was not
there—laughing and talking about how he needed to pick up his money from
Clyde. Bratton admitted, however, that she never actually saw anyone pay Dill
any money, and she did not know whether he received any.
During
closing argument, appellees’ attorney argued to the jury:
Miss
Bratton testified that, well, I heard Matt Dill come in when Lou Braun and
Victoria Clyde weren’t there and said, Where’s Victoria? I want my check.
So, what check? What payment?
You
know, they say that Matt Dill was demanding bribes, they say Matt Dill was
taking kickbacks, they say Matt Dill was getting paid for every repair order
that went to Warrantech. They’ve got no evidence that Matt Dill was paid
anything other than surmise and speculation. They’ve shown you no evidence of
any payment to anybody.
The
Warrantech Parties did not object to this argument.
As
this record shows, Clyde first informed the Warrantech Parties of the check to
Dill at her deposition three weeks before trial. The Warrantech Parties’
attorney acknowledged this undisputed fact on the record when Clyde made the
same admission during her trial testimony. He suggested that Clyde’s admission
had been induced by his predeposition subpoena of her bank records. Despite this
admitted pretrial knowledge, the Warrantech Parties do not direct us to any
place in the record—apart from their motion for new trial—where they lodged
an objection or sought any relief from the trial court based on the discovery
abuse. While we do not condone the failure to produce the check, the trial court
could have reasonably concluded the check was not a “critical piece of
evidence” or that the Warrantech Parties’ failure to offer documentary
evidence of kickbacks at trial was not, as they contend, due to CAS’s
discovery abuse. Accordingly, we hold that the trial court did not abuse its
discretion by denying the Warrantech Parties’ motion for new trial.10 See Strackbein v. Prewitt, 671 S.W.2d 37,
38 (Tex. 1984); Pabich v. Kellar, 71 S.W.3d 500, 510 (Tex. App.—Fort
Worth 2002, pet. denied) (op. on reh’g) (both applying abuse of discretion
standard of review to trial court’s ruling on motion for new trial). We
overrule the Warrantech Parties’ third issue.
VI. Fiduciary Duty
In
their fourth issue, the Warrantech Parties challenge the legal and factual
sufficiency of the evidence to support the jury’s finding that Braun and Clyde
complied with their fiduciary duties to WCPS. They contend that Braun and Clyde
breached their fiduciary duties as a matter of law because they began to look
for office space for CAS while still employed by Warrantech,11
but did not disclose this fact or their “involvement” with CAS to WCPS. The
Warrantech Parties carefully point out, however, that they have “never
asserted” that Braun and Clyde could not go into business after leaving
Warrantech or that they stole WCPS’s customers.
The
Warrantech Parties cite no legal authority for the proposition that an employee
must inform his employer that he is considering starting a business that will
not compete with the employer. Therefore, this complaint is waived due to
inadequate briefing. See Tex. R. App. P. 38.1(h)
(providing that appellate briefs must contain appropriate citations to legal
authorities); Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d
279, 284 (Tex. 1994) (noting long-standing rule that point may be waived due to
inadequate briefing).12 Further, Braun,
Rogers, and Bratton all testified that Warrantech had no policy against its
employees moonlighting for service repair facilities that did business with
Warrantech or repairing computers on their own. To the contrary, Braun and
Rogers knew several Warrantech employees, including WCPS’s president, who
either owned companies “on the side” that did work for Warrantech or
moonlighted as employees of service providers that performed work for
Warrantech. WCPS’s president sanctioned the moonlighting and once even
instructed Braun not to restructure WCPS’s work schedules in a manner that
would interfere with its employees’ second jobs.
The
Warrantech Parties also contend that the severance agreement Braun entered with
WCPS in August 1998, which provided that he would not engage in any conduct that
would “reflect negatively on or harm the business interest of [WCPS],”
obligated him to “refrain from taking any action that might violate a
fiduciary duty.” This argument is not briefed; moreover, the jury found
that Braun did not breach the severance agreement, and the Warrantech Parties do
not challenge that finding. We overrule the Warrantech Parties’ fourth issue.
VII. Postjudgment Interest
In
their fifth issue, the Warrantech Parties assert that the trial court’s
judgment should be reformed to reflect a 5% postjudgment interest rate. The
trial court’s judgment, which was signed on December 6, 2002, provides for a
postjudgment interest rate of 10%. The Warrantech Parties filed their notice of
appeal on January 3, 2003. In June 2003, the legislature amended Texas
Finance Code section 304.003 to reduce the postjudgment interest rate from 10%
to 5% per year “if the prime rate as published by the Federal Reserve Bank of
New York [on the date of computation] is less than five percent.”13 This amendment applies to a “case in which a
final judgment is signed or subject to appeal on or after the effective date of
this Act.”14
The
Warrantech Parties contend that because their appeal was pending in this court
when the amendment to section 304.003 became effective, the judgment is
“subject to appeal on or after the effective date” of the legislation and
the new postjudgment interest rate should apply. We recently rejected this
construction of this phrase, holding instead that the 5% postjudgment interest
rate applies only to cases in which a judgment is signed or becomes capable of
being appealed on or after the effective date of amended section 304.003. Columbia
Med. Ctr. v. Bush, 122 S.W.3d 835, 866 (Tex. App.—Fort Worth 2003, pet.
filed). The judgment at issue here was signed and became capable of being
appealed months before the effective date of the amendment; therefore, the 5%
postjudgment interest rate in amended section 304.003 does not apply. We
overrule the Warrantech Parties’ fifth issue.
VIII. Conclusion
Having
overruled all of the Warrantech Parties’ issues on appeal, we affirm the trial
court’s judgment.
JOHN
CAYCE
CHIEF
JUSTICE
PANEL
A: CAYCE, C.J.; LIVINGSTON and GARDNER, JJ.
DELIVERED:
April 8, 2004
NOTES
1.
While the underlying case was pending, Warrantech Help Desk, Inc., a Warrantech
subsidiary, merged with WCPS, and the parties stipulated that WCPS would be
liable for any indebtedness that Help Desk owed CAS. Therefore, Help Desk is not
a party to this appeal. For simplicity, we refer to Help Desk and WCPS
collectively as WCPS.
2.
The conflict of interest policy provided:
No
employee of the Company shall engage in the same or a similar line of business
or research as that carried on by the Company. An employee shall not have a
financial interest in a company which is a competitor of or supplier to the
Company without full disclosure and approval. Financial interests held by
immediate family members in such companies are to be disclosed to the Company so
that a determination can be made as to whether a conflict exists. Members of the
employee’s immediate family include spouse, children, and any other relative
sharing the same home as the employee.
3.
Apart from this issue, the Warrantech Parties do not challenge any of the
jury’s findings on any of the parties’ claims.
4.
The Warrantech Parties’ reliance on Granada Corp. v. Honorable First Court
of Appeals as contrary authority is misplaced. See 844 S.W.2d 223,
226-27 (Tex. 1992) (holding that claim of privilege as to inadvertently produced
document was waived where not asserted until eleven months after production). Granada
Corp. was overturned by Rule 193.3(d) to the extent the two conflict. Tex. R. Civ. P. 193.3(d) cmt.
4; see also In re Carbo Ceramics Inc., 81 S.W.3d 369, 376 (Tex.
App.—Houston [14th Dist.] 2002, orig. proceeding).
5.
G. Stanley Cramb was Clyde’s attorney.
6.
Appellees’ counsel did not, as the Warrantech Parties contend, violate these
duties. He did not offer Clyde’s testimony; it came in on cross-examination.
Further, he did not improperly fail to disclose any facts to the trial court
because there is no evidence that he remembered the letter’s existence, or
knew that it would contradict Clyde’s testimony on cross-examination, until
both were offered at trial.
7.
The cases on which the Warrantech Parties rely are also inapposite because they
involved situations in which the attorney-client communications themselves
showed an intent to commit a fraud upon the court. See Helton v. State,
670 S.W.2d 644, 646 (Tex. Crim. App. 1984) (where client had told attorney of
defense witness’s intent to perjure herself at trial); Volcanic Gardens
Mgmt. Co., 847 S.W.2d at 348 (where client had told attorney of intent to
file fraudulent lawsuit). Clyde’s letter, by itself, shows no such intent.
8.
The Warrantech Parties also rely on several cases that involved new trial
requests based on newly discovered evidence that the judgments at issue were
procured by perjury. See McMurry, 4 S.W. at 358; Steed v. Winder,
130 S.W.2d 403, 404-05 (Tex. Civ. App.—Galveston 1939, no writ); Dixie Gas
& Fuel Co. v. Jacobs, 47 S.W.2d 457, 461-62 (Tex. Civ. App.—Beaumont
1932, writ dism’d w.o.j.); see also Tex. R. Civ. P. 324(b)(1)
(providing for new trial based on newly discovered evidence). These cases have
no application here because neither Clyde’s letter nor the fact that it was
inconsistent with her trial testimony was discovered after trial.
9.
We decline the Warrantech Parties’ invitation to apply the Texas Penal
Code’s definition of what constitutes a material statement for purposes of a
criminal perjury conviction to our determination of whether Clyde’s apparently
false testimony was sufficiently material to warrant a new trial. The penal code
definition does not pertain to civil proceedings, nor does it govern the
admissibility of evidence. See Tex. Penal Code Ann. § 37.04(a)
(Vernon 2003) (providing that statement is sufficiently “material” to
sustain aggravated perjury conviction if it could have affected the course or
outcome of an official proceeding, regardless of statement’s admissibility
under rules of evidence); Ly v. State, 931 S.W.2d 22, 24 (Tex.
App.—Houston [1st Dist.] 1996, no pet.) (explaining that aggravated
perjury test for materiality should not be mistaken as an evidentiary rule).
10.
The Warrantech Parties also contend that a new trial is warranted because the
quoted jury argument was an assertion that Clyde’s check to Dill did not exist
or that the Warrantech Parties’ failure to offer the check at trial was their
fault. This complaint is waived because the Warrantech Parties never objected to
the jury argument at trial. See Standard Fire Ins. Co. v. Reese, 584
S.W.2d 835, 839-40 (Tex. 1979); Wells v. HCA Health Servs. of Tex., Inc.,
806 S.W.2d 850, 854 (Tex. App.—Fort Worth 1990, writ denied) (both setting out
steps for preserving complaints of improper jury argument); see also Tex. R. Civ. P. 324(b)(5)
(providing that complaint of incurable jury argument must be raised in motion
for new trial if trial court did not otherwise rule on complaint). Further, the
complaint takes appellees’ jury argument out of context.
11.
The Warrantech Parties state that Braun and Clyde were employed by WCPS. Braun
and Clyde testified that they were employed by Warrantech, but performed work
for WCPS.
12.
Also waived for the same reason is the Warrantech Parties’ unexplained
contention that Braun and Clyde breached their fiduciary duty not to use insider
information gained through their employment at Warrantech to the Warrantech
Parties’ detriment by “concoct[ing] a scheme while still employed at WCPS .
. . to defraud WCPS.”
13.
Acts of June 2, 2003, 78th Leg., R.S., ch. 204, § 6.01 & ch. 676, § 1,
2003 Tex. Gen. Laws 847, 862, 2096, 2096-97 (current version at Tex. Fin. Code Ann. § 304.003(c)(2) (Vernon Supp.
2004)).
14.
Tex. Fin. Code Ann. § 304.003 historical &
statutory notes; see also Acts of June 2, 2003, 78th Leg., R.S., ch. 204,
§ 6.04 & ch. 676, § 2(a), 2003 Tex. Gen. Laws 847, 862, 2096, 2096-97.
| {
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} |
15 A.3d 513 (2010)
COM.
v.
BAILEY.
No. 312 WDA 2009.
Superior Court of Pennsylvania.
October 1, 2010.
Affirmed.
| {
"pile_set_name": "FreeLaw"
} |
144 F.Supp.2d 1272 (2001)
Edward BOYD, Plaintiff,
v.
THE TOWN OF HAYNEVILLE, ALABAMA, Defendant.
No. CIV. A. 00-A-1657-N.
United States District Court, M.D. Alabama, Northern Division.
May 31, 2001.
*1273 *1274 Adams M. Porter, Birmingham, AL, for plaintiff.
T. Randall Lyons, Rick A. Howard, Montgomery, AL, for defendant.
MEMORANDUM OPINION
ALBRITTON, Chief Judge.
I. INTRODUCTION
This matter is before the court on a Motion to Compel Arbitration (doc. # 4) filed by Defendant Town of Hayneville, Alabama (hereinafter "Town of Hayneville") in response to Plaintiff's Complaint.
Edward Boyd ("Plaintiff") filed his two count Complaint in this court on December 5, 2000, alleging violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq. (Count I) and of 42 U.S.C. § 1983 (Count II). This court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343(a)(4).
The Town of Hayneville contends that Plaintiff is required by contract to submit these claims to binding arbitration and, therefore, has filed this Motion to Compel Arbitration. For reasons to be discussed, the Motion is due to be GRANTED.
II. FACTUAL SUBMISSIONS & ALLEGATIONS
Plaintiff, a black male, began working for the Town of Hayneville as Police Chief in June of 1997. In the fall of 1998, Plaintiff started suffering fainting spells. Plaintiff's doctor diagnosed Plaintiff in November of 1998 as having low blood pressure and prescribed Plaintiff medication for his condition. Thereafter, Plaintiff returned to work with the permission of his doctor. On the day of his return to work, Plaintiff was allegedly relieved of his supervisory authority over police department vehicles by the acting mayor of the Town of Hayneville, J.W. Wible, a white male. Plaintiff contends that Mayor Wible then entrusted Sergeant John Shaner, a white male, with authority over the vehicles and restricted Plaintiff from driving any such vehicles.
Later, Plaintiff alleges that Mayor Wible, without legal cause, placed Plaintiff on indefinite leave and made Sergeant Shaner the acting Police Chief. Plaintiff also claims that Mayor Wible sent Plaintiff a letter accusing Plaintiff of engaging in various acts of malfeasance and misconduct with respect to his job. This letter allegedly stripped Plaintiff of his supervisory authority over other employees at the Town of Hayneville Police Department. Plaintiff claims that he refused to return to work until Mayor Wible restored Plaintiff's supervisory authority. Mayor Wible demanded that Plaintiff return to work, but did not restore Plaintiff's supervisory authority. Plaintiff did not return to work. Plaintiff insists that the various adverse actions taken against him were on account of his race.
Plaintiff signed an employment contract with the Town of Hayneville on June 23, 1997 that contained among its terms the following arbitration clause:
Arbitration
6.03. Any controversy or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment on the award rendered may be entered in any court having jurisdiction over the matter.
Attachment to Town of Hayneville's Motion to Compel.
Based on this provision in Plaintiff's employment contract, the Town of Hayneville now seeks to compel arbitration.
III. THE FEDERAL ARBITRATION ACT
Pursuant to the Federal Arbitration Act, a written arbitration "provision in any ... *1275 contract evidencing a transaction involving commerce ... [is] valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Section 4 of the FAA allows a "party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement" to petition the court "for an order directing that such arbitration proceed." When a court is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue," the court is required to "make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4.
The Supreme Court has acknowledged that large arbitration costs could preclude a litigant from effectively vindicating his federal statutory rights. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 522, 148 L.Ed.2d 373 (2000). The party seeking to avoid arbitration bears the burden of establishing the likelihood of incurring such prohibitive costs. Id.
IV. DISCUSSION[1]
Plaintiff raises only one argument in opposition to the Town of Hayneville's Motion to Compel Arbitration.[2] He contends that the arbitration agreement he entered into should not be enforced because he "cannot afford to pay the anticipated costs of arbitration."[3] Pl's Br. at 6. Alternatively, in the event that the court is inclined to grant the Town of Hayneville's Motion to Compel Arbitration, Plaintiff requests the court to order the Town of Hayneville to pay all costs of arbitration other than one-half of the filing fee required by the American Arbitration Association ("AAA"). The Town of Hayneville has not responded to either Plaintiff's argument opposing arbitration or his suggested fee-sharing arrangement.
A. AAA's National Rules for the Resolution of Employment Disputes
As noted in section 6.03 of the employment contract, any arbitration between Plaintiff and the Town of Hayneville is to be governed by the AAA's Rules. Plaintiff has provided the court with a copy of the 1999 version of the AAA's Rules covering employment disputes.[4] The AAA Rules state the following regarding the costs and fees associated with the arbitration of Plaintiff's claims:
38. Administrative Fees
As a not-for-profit organization, the AAA shall prescribe filing and other administrative *1276 fees to compensate it for the cost of providing administrative services. The AAA administrative fee schedule in effect at the time the demand for arbitration or submission agreement is received shall be applicable.
The filing fee shall be advanced by the initiating party or parties, subject to final apportionment by the arbitrator in the award.
The AAA may, in the event of extreme hardship on any party, defer or reduce the administrative fees.
39. Expenses
Unless otherwise agreed by the parties, the expenses of witnesses for either side shall be borne by the party producing such witnesses. All expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives, and any witness and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator directs otherwise in the award.
40. Neutral Arbitrator's Compensation
Arbitrators shall charge a rate consistent with the arbitrator's stated rate of compensation. If there is disagreement concerning the terms of compensation, an appropriate rate shall be established with the arbitrator by the AAA and confirmed to the parties.
Any arrangement for the compensation of a neutral arbitrator shall be made through the AAA and not directly between the parties and arbitrator. Payment of the arbitrator's fees and expenses shall be made by the AAA from the fees and moneys collected by the AAA from the parties for this purpose.
41. Deposits
The AAA may require the parties to deposit in advance of any hearing such sums of money as it deems necessary to cover the expenses of the arbitration, including the arbitrator's fee, if any, and shall render an accounting to the parties and return any unexpended balance at the conclusion of the case.
ADMINISTRATIVE FEE SCHEDULE
Administrative Fee
The AAA's administrative fees are based on filing and service charges. Arbitrator compensation is not included in this schedule. Unless the parties agree otherwise, arbitrator compensation and administrative fees are subject to allocation by the arbitrator in the award.
Filing Fees
For disputes which arise out of employer-promulgated plans:
In cases before a single arbitrator, a nonrefundable filing fee in the amount of $500 is payable in full by a filing party when a claim is filed, unless the plan provides otherwise.
Hearing Fees
For each day of hearing before a single arbitrator, an administrative fee of $150 is payable by each party.
Hearing Room Rental
The hearing fees described above do not cover the rental of hearing rooms, which are available on a rental basis. Check with the administrator for availability and rates.
*1277 Suspension for NonPayment
If arbitrator compensation or administrative charges have not been paid in full, the administrator may so inform the parties in order that one of them may advance the required payment. If such payments are not made, the tribunal may order the suspension or termination of the proceedings. If no arbitrator has yet been appointed, the administrator may suspend the proceedings.
Exh. 4 (attached to Pl's Br.) (emphasis in bold added).
Plaintiff has submitted evidence which indicates that the range of AAA arbitrator compensation for employment cases is between $100 and $300 per hour. Exh. 3 at ¶ 7 (attached to Pl's Br.). Plaintiff's counsel estimates that, in the event Plaintiff were required to pay one-half of the cost of the AAA administrative and arbitrator fees, arbitration of his employment discrimination claims would cost him between $1,150 and $6,400. Pl's Br. at 8. Of course, at this point Plaintiff has not been assessed with any arbitration fees or costs, and it is unclear under the AAA Rules, which provide for hardship deferment and/or reduction and allocation of fees and costs in the award, what Plaintiff's arbitration related expenses would be.
B. Plaintiff's Financial Condition
Plaintiff is currently a police officer in Union Springs, Alabama. In addition to his job as a law enforcement officer, Plaintiff teaches D.A.R.E. classes for the Lowndes County Board of Education. Exh. 2 at ¶ 3 (attached to Pl's Br.). Plaintiff and his wife have three children who live with them. Id. at ¶ 5. Plaintiff and his wife take home $2,078 per month, and their average monthly bills total $1,951. Id. at ¶¶ 3 & 4.
In addition to supporting their children, Plaintiff and his wife provide some assistance to Plaintiff's mother-in-law. Id. at ¶ 7. "They do not own any property other than their home. Plaintiff has a retirement plan with the State Retirement System. Other than that, neither plaintiff nor his wife own any stocks or other such investments. They do not have a savings account. They own two cars, but they each need a car to get to work and transport the children." Pl's Br. at 5-6.
C. Enforceability of the Arbitration Provision
Plaintiff argues that the AAA Rules incorporated into his employment contract render the arbitration provision unenforceable because those rules make it impossible for Plaintiff to vindicate his federal statutory rights in the arbitral forum. In support of this argument, Plaintiff relies on the Supreme Court's decision in Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), the Eleventh Circuit's decision in Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054 (11th Cir.1998), and the D.C. Circuit's decision in Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465 (D.C.Cir. 1997).
Before considering those cases, the court notes that the FAA was enacted and codified by Congress in order to "reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The FAA manifests a liberal policy favoring arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The Supreme Court has recently reminded the courts of the efficacy of that pro-arbitration policy. Randolph, 121 S.Ct at 522; see also Randolph *1278 v. Green Tree Fin. Corp.-Alabama, 244 F.3d 814, 818-19 (11th Cir.2001) ("According to the Supreme Court, the last time this case was before us we made the mistake of giving too little weight to the FAA's pro-arbitration policy. We decline to make the same mistake again.").
In its recent Randolph decision, the Supreme Court addressed the question of "whether an arbitration agreement that does not mention arbitration costs and fees is unenforceable because it fails to affirmatively protect a party from potentially steep arbitration costs." 121 S.Ct at 517. While grappling with this question, the court noted that "[i]t may well be that the existence of large arbitration costs could preclude a litigant such as Randolph from effectively vindicating her federal statutory rights in the arbitral forum." Id. at 522. The record before the Court gave no indication of what costs Randolph would bear in arbitration. Consequently, the Court stated that:
[t]he record reveals only the arbitration agreement's silence on the subject, and that fact alone is plainly insufficient to render it unenforceable. The "risk" that Randolph will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement. To invalidate the agreement on that basis would undermine the "liberal federal policy favoring arbitration agreements." ... It would also conflict with our prior holdings that the party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration.... [W]here, as here, a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs.... How detailed the showing of prohibitive expense must be before the party seeking arbitration must come forward with contrary evidence is a matter we need not discuss. ...
Id. at 522-23 (citations omitted and emphasis added).
While the Supreme Court never reached the precise issue presented in this case, it did provide some guidance. First, the Court reemphasized the federal policy favoring arbitration. Second, the Court refused to nullify an arbitration agreement based upon speculation concerning the possibility of a claimant incurring prohibitive costs in the arbitral forum. Finally, the Court placed the burden of demonstrating the "likelihood" of incurring such prohibitive costs on the party opposing arbitration.
In Paladino, a case that preceded the Supreme Court's opinion in Randolph, the Eleventh Circuit confronted an arbitration clause which, had it been enforced according to its terms, would have limited a Title VII claimant to contract damages. 134 F.3d at 1062. The Eleventh Circuit held that the arbitration clause "defeat[ed] the statute's remedial purposes because it insulated [the employer] from Title VII damages and equitable relief." Id.
In addition, the Eleventh Circuit identified another problem with the arbitration clause in Paladino. That clause would have required the claimant to pay a "steep" filing fee of $2000 and up to one-half of the "hefty cost of arbitration." Id. The Eleventh Circuit noted that costs of this magnitude constituted a "legitimate basis" for holding that the arbitration clause did not "comport with statutory policy." Id. The Paladino court concluded that "a clause such as this one that deprives an employee of any hope of meaningful relief, while imposing high costs on the employee, undermines the policies that support Title VII. [The arbitration clause] is not enforceable." Id.
*1279 Obviously, Paladino is distinguishable from the present case. The arbitration clause in Paladino substantially circumscribed the remedies available to the employee-claimant under Title VII, whereas the arbitration clause in this case places no such limitations on the Plaintiff. Additionally, the filing fee required of the claimant in Paladino was $2000. The filing fee in this case is $500. While such a fee is certainly not insignificant, it pales in comparison to the "steep" filing fee criticized by the Eleventh Circuit in Paladino. Finally, the AAA Rules applicable in this case provide for "extreme hardship" deferral and/or reduction of administrative fees and allocation of arbitrator compensation and administrative fees in the award. These provisions tend to show that the arbitration clause and the AAA Rules it incorporates comport with federal statutory policy.
In Cole, the D.C. Circuit held that, in a case such as this one, an employer cannot require an employee to arbitrate all disputes growing out of the employer-employee relationship as a condition of employment and also require the employee to pay all or part of the arbitrator's fees. 105 F.3d 1465, 1468. Instead, the D.C. Circuit effectively adopted a per se rule against splitting the costs of an arbitrator in employment cases where the employer has required arbitration as a condition of employment. The rationale supporting the Cole opinion is as follows:
There is no doubt that parties appearing in federal court may be required to assume the costs of filing fees and other administrative expenses, so any reasonable costs of this sort that accompany arbitration are not problematic. However, if an employee like Cole is required to pay arbitrators' fees ranging from $500 to $1000 per day or more, ... in addition to administrative and attorney's fees, is it likely that he will be able to pursue his statutory claims? We think not ... These fees would be prohibitively expensive for an employee like Cole, especially after being fired from his job, and it is unacceptable to require Cole to pay arbitrators' fees, because such fees are unlike anything that he would have to pay to pursue his statutory claims in court. Arbitration will occur in this case only because it has been mandated by the employer as a condition of employment. Absent this requirement, the employee would be free to pursue his claims in court without having to pay for the services of a judge. In such a circumstance where arbitration has been imposed by the employer and occurs only at the option of the employer arbitrators' fees should be borne solely by the employer.
Id. at 1484-85.
The Cole court enforced the arbitration agreement after interpreting it to require the employer to pay all of the arbitrator's fees. Id. at 1485.
While the Tenth Circuit has adopted the reasoning supporting the Cole decision and its per se rule against sharing arbitrator's fees in employment discrimination cases, see Shankle v. B-G Maintenance Mgmt. of Colorado, Inc., 163 F.3d 1230, 1233-36 (10th Cir.1999), other circuit courts of appeals have refused to do so. See, e.g., Bradford v. Rockwell Semiconductor Sys., Inc., 238 F.3d 549, 555-58 (4th Cir.2001) (rejecting per se rule followed in Cole); Williams v. Cigna Financial Advisors Inc., 197 F.3d 752, 762-65 (5th Cir.1999) (upholding an arbitration agreement that required an ADEA claimant to pay $3,150, or one-half share, of arbitration costs which included arbitrator's fees); Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 15-16 (1st Cir. 1999) (rejecting Cole approach and noting that arbitration is frequently far more affordable to plaintiffs and defendants than *1280 pursuing a claim in court); Koveleskie v. SBC Capital Mkts., Inc., 167 F.3d 361, 365-66 (7th Cir.1999) (following Rosenberg). The Eleventh Circuit has not decided this issue.
Absent any binding authority from the Eleventh Circuit, this court believes that the more prudent course, given the Supreme Court's recent decision in Randolph, is to follow the lead of those circuit courts which have declined to adopt a per se rule against fee-splitting. The possibility that a claimant could be required to pay a share of the arbitration costs, including part of an arbitrator's fees, is not, by itself, a sufficient reason to invalidate an arbitration clause prior to arbitration. Rosenberg, 170 F.3d at 15-16; Koveleskie, 167 F.3d at 366. Such arbitration related expenses are acceptable so long as they do not render the arbitral forum inaccessible to the statutory claimant.
Here, Plaintiff has provided the court with a range of what he describes as "anticipated" arbitration costs. The problem with these cost projections is that they amount to nothing but conjecture. It is not possible, given the record before this court, to know with any degree of certainty, what Plaintiff's arbitration costs might be. For example, under the AAA Rules, Plaintiff's financial situation will presumably be factored into the assessment of costs under the hardship provision. Moreover, depending on the merits of Plaintiff's case, his costs may or may not, in whole or in part, be awarded him. To the extent that the arbitration clause requires Plaintiff to pay his own attorney's fees and litigation expenses, "such burden is one borne by any litigant in federal court as well."[5]Dabney v. Option One Mortgage Corp., 2001 WL 410543, *4 (E.D.Pa. April 19, 2001). In short, Plaintiff has only demonstrated the "risk" that he might be encumbered with prohibitive arbitration costs. Under Randolph, the risk that Plaintiff might be saddled with prohibitive costs is "too speculative" to require invalidation of this arbitration clause prior to enforcement.
This court recognizes that, given Plaintiff's financial situation, the costs of either litigating or arbitrating his federal claims could place him in a precarious position. Should the costs of arbitration in this case not be roughly symmetrical to the costs of litigating the same claims in federal court, judicial review of the arbitration award would be available. See Rosenberg, 170 F.3d at 16 (holding that the imposition of unreasonable fees on an employee by an arbitrator is reviewable); Koveleskie, 167 F.3d at 366 (same); Palmer-Scopetta v. Metropolitan Life Ins. Co., 37 F.Supp.2d 1364, 1370 (S.D.Fla.1999) ("If ... Plaintiff becomes liable for substantial fees and costs, this likely will constitute `a legitimate basis for a conclusion that the arbitration clause does not comport with statutory policy.' If that occurs, Plaintiff may present to this Court her contention that the referral to arbitration or the arbitration award is inconsistent with [federal statutory law].") (citations omitted). As the Supreme Court stated in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 n. 4, 111 S.Ct. 1647, 114 L.Ed.2d 26 *1281 (1991), "although judicial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute at issue."
D. Reformation of Plaintiff's Employment Contract
In his Opposition Brief, Plaintiff recognized the possibility that the Town of Hayneville's Motion to Compel Arbitration would be granted in this case and, as a result, proposed an "alternative resolution to the motion." Pl's Br. at 9. Specifically, Plaintiff has requested that this court order the Town of Hayneville to pay all costs of arbitration pursuant to the employment contract except for one-half of the filing fee. To determine whether reformation of the employment contract entered into by the parties is proper, the court turns to Alabama law as it applies generally to all contracts. Young v. Jim Walter Homes, Inc., 110 F.Supp.2d 1344, 1346 (M.D.Ala. 2000).
The remedy of reformation is equitable in nature. McCay v. Jenkins, 244 Ala. 650, 15 So.2d 409, 410 (1943). It is an extraordinary remedy available for the purpose of establishing and perpetuating "true agreement between parties by making the instrument express [the] real intent of the parties." Rohleder v. Family Shows, Inc., 435 So.2d 95, 97 (Ala.Civ.App. 1983). Reformation is not available for the purpose of making new agreements. Id.
A party may seek to reform an instrument where (1) there has been a meeting of the minds of the contracting parties, and a mutual mistake in executing an instrument not expressive of their common intent; or (2) one party has made a mistake, and the other party has acted in such a way as to make it "inequitable to deny a mutual mistake." McCay, 15 So.2d at 410. The burden is on the reform-seeker to prove his case by clear, convincing, and satisfactory evidence. Federated Guaranty Life Ins. Co. v. Painter, 360 So.2d 309, 311 (Ala.1978).
Plaintiff is simply requesting that this court rewrite the agreement he entered into with the Town of Hayneville. It is beyond doubt, however, that Plaintiff cannot meet the heavy burden placed upon him by Alabama law as it relates to the equitable modification of such agreements. Because this court does not have the authority to make a new agreement for the parties, the Plaintiff's requested "alternative resolution to the motion" is due to be denied.
V. CONCLUSION
For the foregoing reasons, and especially given the liberal federal policy favoring arbitration, this court will not deny enforcement of the arbitration clause. If, however, Plaintiff incurs substantial costs in arbitration which preclude him from effectively vindicating his federal statutory rights, Plaintiff may petition this court for review and relief.
The Town of Hayneville's Motion to Compel Arbitration is due to be granted. Plaintiff's request for reformation of the employment contract is due to be denied. A separate Order will be entered in accordance with this Memorandum Opinion.
NOTES
[1] Many issues relating to the fairness of arbitration, including the topic of costs and fees discussed below, remain unresolved by the appellate courts. Since this case involves a developing area of the law, this court's resolution of the present motion should be viewed in light of the particular record developed in this case and the positions advanced by the parties.
[2] In his initial Response, Plaintiff indicated that he might seek a stay of arbitration on the grounds that employment contracts are not subject to the FAA. Plaintiff has since abandoned this argument given the United States Supreme Court's recent decision in Circuit City Stores, Inc. v. Adams, ___ U.S. ___, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001).
[3] Plaintiff concedes that he signed the arbitration provision at issue and that, under its broad terms, the provision covers the present dispute.
[4] It is unclear from the record whether these are the most recently promulgated rules of the AAA relating to employment disputes. Because the Town of Hayneville has not objected to the AAA Rules provided by Plaintiff, the court considers these AAA Rules to be applicable to the arbitration of the instant dispute between Plaintiff and the Town of Hayneville.
[5] It is noteworthy that Plaintiff has not provided any evidence relating to the comparative expense of litigating his claims. Such evidence is highly relevant to the question presented in this case. See Bradford, 238 F.3d at 556 n. 5 ("The cost of arbitration, as far as its deterrent effect, cannot be measured in a vacuum or premised upon a claimant's abstract contention that arbitration costs are `too high.' Rather, an appropriate case-by-case inquiry must focus upon a claimant's expected or actual arbitration costs and his ability to pay those costs, measured against a baseline of the claimant's expected costs for litigation and his ability to pay those costs.").
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282 S.W.2d 307 (1955)
Hilman R. KNIGHT, Appellant,
v.
James O. STEWART, Appellee.
No. 14979.
Court of Civil Appeals of Texas, Dallas.
July 8, 1955.
Rehearing Denied October 7, 1955.
*308 Charles C. Whitener, Dallas, for appellant.
Fred R. Brown, Garland, John Griggs and John F. Harrison, Dallas, for appellee.
YOUNG, Justice.
The suit relates to an intersectional collision of automobiles, occurring at Plano Road and Forest Lane, outside Dallas City limits. Plano Road is a north-south public way, some 30 feet wide, and Forest Lane, a four-lane east-west Highway with dirt parkway in between, each lane some 15 feet widemiddle parkway 10 feetoverall width, 70 feet.
A stop sign had been maintained on the Plano Road side of the intersection, but was broken down, when on December 25, 1953 defendant Knight approached same from the north; admittedly not seeing plaintiff Stewart, traveling east on Forest Lane, until he (Knight) was in the north part of Forest Lane, moving about 40 miles per hour. According to plaintiff, when he was some 75 feet west of the crossing, Knight was 25 feet north of same; Stewart having observed defendant earlier but assuming that he would stop before entering the intersection, or at least at the middle parkway of Forest Lane. The locality was open country, time about 8:30 at night.
The result was a collision, plaintiff skidding some 25 to 27 feet into defendant's car, striking it about middle of right side. Each car was damaged, the jury answering issues in favor of plaintiff, with judgment of $800 in accordance.
On the trial, several sets of issues were found against defendant Knight; such as failure to keep a proper lookout, to apply brakes, turn to the left, excessive speed; also issues 12 and 13: "Do you find from a preponderance of the evidence that Knight failed to yield the right of way to Stewart on the time and occasion in question? * * Yes." "Do you find from a preponderance of the evidence that such failure, if any, on the part of Knight to yield the right of way, was a proximate cause of the collision in question? * * * Yes." Plaintiff Stewart was acquitted of negligence on similar issues, inclusive of No. 25: "Do you find from a preponderance of the evidence that Stewart failed to yield the right of way to Knight on the time and occasion in question?" (Answer, No.) Corollary issue No. 26 on proximate cause concerning Stewart was not reached because of conditional submission of issue 25, preceding.
Regulatory of vehicular movements at public intersections and therefore material here, is section 71, Art. 6701d, V.A.C.S.: "Sec. 71. (a) The driver of a vehicle approaching an intersection shall yield the right-of-way to a vehicle which has entered the intersection from a different highway. (b) When two (2) vehicles enter an intersection from different highways *309 at approximately the same time the driver of the vehicle on the left shall yield the right-of-way to the vehicle on the right. (c) The right-of-way rules declared in subdivision (a) and (b) are modified at through highways and otherwise as hereinafter stated in this Article." An absence of proof that either of these thoroughfares is a "through highway", section 13(f), makes inapplicable the further provisions of section 73(a).
The court's charge embodied above provisions of section 71 in its definition of "right of way," as follows: "Right of Way', as used herein, means the privilege of the immediate use of the highway. In this connection, you are instructed that the driver of a vehicle approaching an intersection shall yield the right of way to a vehicle which has entered the intersection from a different highway. However, when two vehicles enter the intersection from different highways at approximately the same time the driver of the vehicle on the left shall yield the right of way to the vehicle on the right." Relevant thereto, the court overruled defendant's motion for instructed verdict filed at close of evidence, reading: "The defendant had the right of way as a matter of law; that plaintiff failed to yield the right of way as a matter of law, since the uncontroverted evidence in this case shows defendant had proceeded into the intersection first and proceeded well through the intersection before it was ever entered by plaintiff in any manner, and under the laws and statutes of this State, * * * that right of way is defendant's as a matter of law." Likewise after trial, the court denied defendant's similar motion for judgment notwithstanding the jury verdict; said motion containing recitals of evidence which, Knight alleged, "conclusively" established his prior entry into the intersection and negligence per se as against plaintiff. Such is the substance of appellant's two points of appeal, arguing that Stewart's statutory failure to yield the right of way also concluded the issue of proximate cause adverse to plaintiff as a matter of law.
We turn to the evidence which will be discussed only so far as necessary to this opinion; without prejudice to a free development of material facts on retrial. The testimony of plaintiff Stewart has contradictory features; but, even so, fully supports the argument made that Knight had first penetrated the intersection (from the north) of Plano Road and Forest Lane. We quote from Stewart's narrative of the collision on redirect examination: "Q. You say the front of his (Knight's) car, when you applied your brakes real hard, was about the center of the north lane of Forest Lane where traffic would be going west on Forest Lane; is that right? A. Yes, sir. The Court: He so testified. Q. How far were you from that point and the edge of the intersection you were approaching? A. Just about 10 feet or at the edge of it." And in his brief, there appears a like statement: "Appellee had slowed to approximately 25 miles per hour and had reached a point 10 feet west of the intersection, when he realized that the appellant had no intention of stopping in view of the fact that appellant was then about half way through the north lane of Forest Lane and had not slackened his speed." (Above underscoring ours).
However, even if appellee's violation of section 71(a) be conceded, it does not follow that such prohibited movement on his part constitutes a proximate cause of the ensusing collision as a matter of law. "Whether an act of negligence was the proximate cause of an injury is a fact issue. This is true, even though the defendant is guilty of negligence per se. The issue as to whether the plaintiff's act or omission in violation of a statute was a proximate cause of the catastrophe may be submitted to the jury. * * *." 30-B Tex.Jur., Negligence, sec. 174, pp. 454, 455. "It is essential to the maintenance of an action for damages for personal injury, founded on the violation of a statute, to establish not only the violation, but that such violation was the proximate cause of the injury." Waterman Lumber Co. v. Beatty, 110 Tex. 225, 218 S.W. 363, syl. 1. See also 29 Tex. Dig., Negligence, *310 (25). Recent cases involving section 71 (a), Art. 6701d, have invariably made the issue of proximate cause (as corollary to the issue of failure to yield the right of way), one of fact for the court or jury. See Pressler v. Moody, Tex.Civ.App., 233 S.W.2d 165; Ferris v. Stableford, Tex. Civ.App., 248 S.W.2d 186; Wenski v. Kabitzke, Tex.Civ.App., 257 S.W.2d 153; Dansby v. Brown-College Traction Co., Tex.Civ.App., 271 S.W.2d 306; and Duplantis v. Martin, Tex.Civ.App., 266 S.W.2d 179, holding (syl. 2): "In action against motorist who had been approaching intersection from plaintiff's right for damages occurring to plaintiff's automobile when it collided with motorist's automobile in intersection, question whether motorist's own alleged excessive speed, rather than plaintiff's failure to yield right of way, was proximate cause of collision was for jury."
When the provisions of section 71 (a) are properly invoked by parties to an intersectional collision, the controlling issues relate to who first entered the intersection from a different highway, and/or whether the vehicles entered "at approximately the same time". Pressler's appeal, supra, in background of facts is strikingly similar to the situation at hand; and the San Antonio Court there suggests a proper method of determining liability between the parties, in so far as concerns section 71(a). It was with respect to the primary issues just mentioned that the following statement was made [233 S.W.2d 166]: "An examination of the pleadings leads us to the conclusion that the two issues under attack were properly raised by the pleadings. Appellant alleged as his first ground of negligence, `that at said time and place, the driver of defendant's automobile failed to yield the right-of-way to plaintiff.' Appellee in his cross-action alleged that appellant was negligent in that he `failed to yield the right-of-way to the automobile which entered the intersection to his right as required by law.' In other words, each party alleged that the other failed to yield the right-of-way, and the court submitted preliminary fact issues for both plaintiff and defendant to determine which did have the right-of-way. Plaintiff, in order to claim the right-of-way, was required to show under his pleading that he was first in the intersection, since the other vehicle was in fact to his right. The defendant, in order to claim the right-of-way at least was required to show under his pleadings that the two vehicles reached the intersection at approximately the same time. The burden was upon each of the parties to prove their claim to the right-of-way, and until this was done no subsidiary issues could be submitted. * * *" (Emphasis ours.)
Manifestly, the court's method of submission in the instant case was not explicitly determinative of these issues, for which reason the same must be reversed and remanded for trial anew. Likewise untenable is the argument of appellee of sufficiency of evidence to justify a conclusion that the vehicles had entered the intersection at approximately the same time, absent a jury finding to such effect.
The judgment under review is accordingly reversed and remanded for another trial.
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940 F.2d 1168
Bankr. L. Rep. P 74,119In re Kenneth TRANEL and Beverly Tranel, Debtors.Kenneth TRANEL and Beverly Tranel, Appellants,v.ADAMS BANK AND TRUST COMPANY, Appellee.In re Lavern TRANEL and Doris Tranel, Debtors.Lavern TRANEL and Doris Tranel, Appellants,v.ADAMS BANK AND TRUST COMPANY and Prudential InsuranceCompany of America, Appellees.
No. 90-1502.
United States Court of Appeals,Eighth Circuit.
Submitted March 11, 1991.Decided Aug. 5, 1991.
William Needler, argued, Ogallala, Neb. for appellants; Roger C. Elletson, Alta, Wyo., on the brief.
Steven C. Turner, argued, Omaha, Neb. for appellees; Anne M. Breitkreutz, Omaha, Neb., on the brief.
Clifton R. Jessup, Jr. and Steven J. Kahler, Dallas, Tex., on the brief, of Prudential Ins. Co.
Before BOWMAN, Circuit Judge, HEANEY, Senior Circuit Judge, and LARSON,* Senior District Judge.
HEANEY, Senior Circuit Judge.
1
In this case, Nebraska farmers, the Tranels, filed for Chapter 11 bankruptcy. Over their objections, the bankruptcy court confirmed their creditors' reorganization plan. The district court affirmed this decision. The Tranels appeal. We affirm.
BACKGROUND
2
Doris and Lavern Tranel and their son, Kenneth, and his wife, Beverly, are western Nebraska farmers. In 1984, Lavern and Kenneth jointly founded a trucking business. Both families were indebted to Adams Bank & Trust (Bank), while Doris and Lavern Tranel were also indebted to the Prudential Insurance Company of America (Prudential). These debts arose from both their trucking and farming operations. According to the Bank and Prudential, as of August 8, 1986, Beverly and Kenneth Tranel owed the bank approximately $547,000, excluding interest, and Doris and Lavern Tranel owed the Bank approximately $678,000, excluding interest, while also owing Prudential $246,000.
3
On July 1, 1986, the Bank commenced an action in Nebraska state court to foreclose on the Tranels' trucks and trailers. The Tranels responded by filing Chapter 11 petitions for reorganization in early August, 1986,1 and Lavern and Doris Tranel filed their disclosure statement on November 24, 1986. Beverly and Kenneth Tranel submitted their reorganization plan on January 22, 1987; the Bank and Prudential filed a joint reorganization plan and a creditors' disclosure statement on October 7, 1987; Doris and Lavern Tranel did not submit a reorganization plan until July 21, 1988.
4
The Tranels objected to the disclosure statement filed by the Bank and Prudential. The bankruptcy court ordered amendments to that statement, and Prudential and the Bank filed an amended disclosure statement. The Tranels objected to the now amended disclosure statement. At this point, the bankruptcy court ordered an evidentiary hearing to help it decide whether to confirm the creditors' plan.
5
Prior to the evidentiary hearing, the Tranels moved the court to allow them to employ separate counsel to bring an action for fraud in state court.2 Inferring that the action would be against it, the Bank objected to the Tranels' motion. The court denied the Tranels' motion because the Tranels waited over two years to bring the action to the attention of the court and had not prominently listed the action in any of their disclosure statements during that time. The district court affirmed. The Tranels appeal this decision, arguing that they should be able to bring the action in state court, or alternatively at least pursue their claims in federal court.
6
After the district court's affirmance of its motion denial, the bankruptcy court held the evidentiary hearing concerning the confirmation of the creditors' plan. After reviewing the case, the bankruptcy court confirmed the creditors' Joint Plan of Reorganization (Joint Plan) and denied the confirmation of the Tranels' plan. The district court also affirmed this decision, prompting the Tranels to appeal this confirmation to this court.
DISCUSSION
I. Confirmation of Creditors' Joint Plan
7
We first address whether the Tranels filed their reorganization plan within the 120-day exclusivity period provided by 11 U.S.C. Sec. 1121(b) (1979).3 This exclusivity period gives the debtor the "first shot" to negotiate a reorganization plan satisfactory to its creditors. The Tranels claim that they filed plans and disclosure statements within the 120-day period. The Bank and Prudential contest this claim and argue that the Tranels did not file a reorganization plan until after the 120-day exclusivity period. Our review of the record supports the creditors' position. Neither the bankruptcy docket sheet nor the record submitted by the parties indicate that the Tranels filed a reorganization plan within the 120-day exclusivity period. Because none of the Tranels submitted a reorganization plan within the 120-day period, the creditors were entitled to file their Joint Plan under 11 U.S.C. Sec. 1121(c)(3) (1991).4 The bankruptcy court eventually confirmed this Joint Plan, rather than confirming either the plan submitted by Kenneth and Beverly before the Joint Plan was submitted or Lavern and Doris' plan, which was submitted after the Joint Plan.
8
The issue before us is whether this confirmation was appropriate. In In the Matter of Button Hook Cattle Co., Inc., 747 F.2d 483 (8th Cir.1984) and its companion case, In the Matter of Cassidy Land and Cattle Co., Inc., 747 F.2d 487 (8th Cir.1984), this circuit held that a farmer who files a Chapter 11 petition but "fails to submit a reorganization plan within 120 days from filing, is thereafter vulnerable to a liquidation plan filed by a party in interest to the chapter 11 proceeding." Button Hook, 747 F.2d at 484. Based on this ruling, Button Hook proceeded to approve the bankruptcy court's confirmation of the creditor's reorganization plan despite the objections of the debtor-farmer. Id. at 487. The Tranels argue that because their plan was submitted before the creditors,5 Button Hook is irrelevant, and therefore their plan should be confirmed, despite the fact that they missed the 120-day exclusivity period. 11 U.S.C. Sec. 1121(c)(2) (1979) and (3) (1991) clearly mandate, however:
9
(c) Any party in interest ... may file a plan if and only if--
10
(2) the debtor has not filed a plan before 120 days after the date of the order for relief under this chapter; or
11
(3) the debtor has not filed a plan that has been accepted, before 180 days after the date of the order for relief under this chapter, by each class of claims or interests that is impaired under the plan.
12
In this case, both of these alternative conditions were satisfied. Appropriately, the bankruptcy court considered confirming the Bank's and Prudential's Joint Plan, despite the objections of the Tranels. See In re Jorgensen, 66 B.R. 104, 107 (Bankr. 9th Cir.BAP 1986) (debtor submitted a plan after 120-day exclusivity period thereby creating the possibility that "a creditor's liquidating plan may be confirmed over farmer-debtors' objection.").
13
The Tranels' argument that Button Hook is inapplicable here fails, since Button Hook stands, in part, for the proposition that farmer-debtors can be forced into liquidation despite their objections under Chapter 11. While the bankruptcy court could consider confirming the creditors' Joint (liquidation) Plan under Button Hook, it was still obligated to also consider confirming the debtors' plan, particularly since at least one of the debtors (Beverly and Kenneth Tranel) submitted their reorganization plan before the Joint Plan of the creditors' was filed. In the situation where both the creditors and debtors have filed plans, if the debtors' plan was not considered for confirmation by the court, the court might unnecessarily assist the creditors in forcing farmers into liquidations, although the farmers might have developed and offered a reorganization plan which would satisfy the demands of the creditors but which did not require liquidation. See 11 U.S.C. Secs. 303(a) (1979),6 and 1112(c) (1979),7 (evincing a preference that farmers not be forced into liquidation). Here, the bankruptcy court did consider the Tranels' plan for confirmation.8 However, the court found that they failed to present substantial evidence in support of their plan and that their plan severely underestimated the value of their assets and therefore could not be confirmed.
14
Our ruling that the bankruptcy court could consider confirming the Joint Plan over the objections and the alternative plan submitted (after the 120-day exclusivity period) by the Tranels does not end our inquiry. We next determine whether the Joint Plan met the confirmation requirements outlined in 11 U.S.C. Sec. 1129 (1991). The Tranels raise several arguments regarding this issue.
A. Best Interest Test
15
First, citing 11 U.S.C. Sec. 1129(a)(7) (1979), the Tranels claim that the bankruptcy court did not apply the "best interest of the creditors" test. This statute requires that the creditors receive "property of a value ... that is not less than the amount that they would so receive or retain if the debtor were liquidated under Chapter 7...." Id. The Tranels claim that the test was not satisfied, because the court did not consider three aspects of Chapter 7 analysis. First, the Tranels argue that the creditors did not present any liquidation analysis to the court, thus making it impossible to determine whether the reorganization plan was in their best interest. Second, the Tranels claim that without liquidation analysis, there can be no assurance that their tax liabilities will be fulfilled. Finally, the Tranels contend that the trustee's compensation under the plan was too indefinite to allow the court to determine whether the plan met the best interest of the creditors.
The bankruptcy court found:
16
Each holder of a claim or interest has accepted the plan or will receive or retain under the plan property of a value, as of the plan's effective date, that is not less than the amount that such holder would receive or retain if debtors were litigated under Chapter 7 of the Bankruptcy Code on such date.9
17
Our review of the record supports this finding, as the court had ample evidence, such as claims of the creditors, tax returns of the Tranels, and real estate and property appraisals, on which to base its conclusion. With regard to the Tranels' specific claims that a liquidation analysis, including the tax consequences of liquidation, were necessary, we find that the Amended Disclosure Statements prepared by the Bank for both Kenneth Tranel and Lavern Tranel satisfy the complaints of the Tranels, since each of the Amended Disclosure Statements contained a liquidation analysis and an analysis of the resulting tax consequences. In addition to these considerations, the court also heard the testimony of the Tranels' own expert witness, who, despite his affiliation, admitted that there would be little or no tax liability with respect to any disposition of the assets under the Chapter 11 plan.
18
With regard to trustee compensation, the Tranels argue that under the confirmed plan, there are no provisions for how the trustee is to be paid nor an estimate as to the amount of his compensation, other than the stipulation that the trustee will be paid an hourly wage. We disagree.
19
The Joint Plan provides in Paragraph 7.09: "the Trustee shall be compensated for services rendered as Trustee as provided in 11 U.S.C. Sec. 326." 11 U.S.C. Sec. 326(a) (1979) outlines a precise fee schedule for a trustee.10 Given this statutory provision and the Joint Plan's reliance on it, the Tranels cannot persuasively claim that there is no provision for trustee payment in this case nor that the trustee is to be paid an hourly wage. We further find the Tranels' allegation that the fee of the trustee is unpredictable and thus confounds the application of the best interest test to be meritless for two reasons. First, section 326(a) deals in precise figures, therefore the cost of trustee compensation is projectable. Second, the Joint Plan expressly requires the trustee to submit his compensation claims to the bankruptcy court for approval, at which time the Tranels can raise any objections, thus providing an opportunity to ensure that trustee compensation does not jeopardize compliance with the best interest test.
B. Trustee Disinterestedness
20
The Tranels next contend that the bankruptcy court did not consider other assets which could be recovered under a Chapter 7 proceeding. Specifically, the Tranels claim that the court should have examined and considered their requested leave to file a state court lawsuit against the Bank. According to the Tranels, a Chapter 7 trustee normally would investigate the validity of this claim, but in their case, the trustee is not disinterested and thus was not inspired to fulfill his duty and investigate their complaint. See, e.g., In re Microdisk, Inc., 33 B.R. 817, 818 (D.C.Nev.1983) ("A bankruptcy trustee may not have an interest adverse to that of the trust he is administering; by requiring the trustee to forbear all opportunities to advance his own self-interest, the undivided loyalty of his administration dissuades any questioning as to his disinterestedness." (citing Mosser v. Darrow, 341 U.S. 267, 271, 71 S.Ct. 680, 682, 95 L.Ed. 927 (1951) ("Equity tolerates in bankruptcy trustees no interest adverse to the trust."))); see also King, 5 Collier on Bankruptcy p 321.01 at 321-4-5 (15th ed. 1991) (trustee disinterestedness probably still a legal requirement).
21
To support their allegation of trustee bias, the Tranels attached to their appellate brief a letter written by the trustee to the Bank's attorney in which the trustee requested the Bank to guarantee that he would be compensated for his services.11 It does not appear that this letter was part of the record submitted to the bankruptcy court. If it had been, we believe that the best course of action would have been for the court to disqualify the appointed trustee and name a substitute. We will not interfere with the bankruptcy court's discretion, however, since the bankruptcy court directed the trustee to investigate the Tranels' claim against the Bank, and more importantly, provided recourse for the Tranels should the trustee fail to perform his duty.12 As for the Tranels' claim that because the trustee did not investigate their state court action and thus prevented the bankruptcy court from considering the Tranels' "other assets" (i.e., their proposed state court suit against the Bank), their argument is contradicted by the bankruptcy court's order denying their motion for reconsideration.13
C. Secured and Unsecured Creditors
22
The Tranels finally argue that the bankruptcy court erred in placing the secured and unsecured creditors in the same class in one section of the Joint Plan. Specifically, the Tranels object to language which reads, "The Allowed Secured Claim of the general unsecured creditors...." Read in isolation this language is troubling. After reviewing the entire Joint Plan, however, this language clearly results from a typographical error, which, in correct form, either should have deleted the word "Secured" or changed the word "Secured" to "Unsecured."
23
Even in its current state, we do not find that the secured and unsecured creditors are placed in the same class.14 Similarly, we do not believe that the parties were confused by the typographical error. The Tranels did not object to this language prior to the confirmation of the Joint Plan, nor did they object to it at trial, indicating that the Tranels understood from the outset that the secured and unsecured creditors were classified differently.
24
II. Denial of Leave to Bring State Court Action
25
The Tranels claim that the bankruptcy court erred in denying them the right to bring a state court action against third parties. To support their claim, the Tranels cite Bankruptcy Rule 6009 which states: "With or without court approval, the trustee or debtor in possession may prosecute or may enter an appearance and defend any pending action or proceeding by or against the debtor, or commence and prosecute any action or proceeding on behalf of the estate." We find the Tranels' reliance on Rule 6009 puzzling. If it is true that the Tranels could bring a state court action without the bankruptcy court's approval, we do not understand why the Tranels sought the court's approval in the first place or how the Tranels can argue that the bankruptcy court prevented them from exercising their right to do so.
26
The Tranels additionally argue that their proposed state court action was not a core proceeding and thus could not be brought before the bankruptcy court, and therefore should be litigated in state court. See 28 U.S.C. Sec. 157(b)(1) (1991).15 Section 157 delineates a host of actions which it deems core proceedings. Included in this list are "proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship...." 28 U.S.C. Sec. 157(b)(2)(O) (1991). The contemplated state court action strikes at the heart of the debtor-creditor relationship, and as such, is a core proceeding over which the bankruptcy court retained jurisdiction. See Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183 (5th Cir.1990) (core proceeding must involve decision that ultimately affects distribution of debtor's assets).
27
After denying the Tranels leave to sue in state court, the bankruptcy court ruled that the Tranels could not interrupt the bankruptcy proceeding by litigating their claims against the Bank and its officers in federal court. To support its ruling, the bankruptcy court relied on the fact that the Tranels did not prominently list their claims against the Bank on the disclosure statement filed by the Tranels in connection with their proposed Chapter 11 plan. In reaching this decision, the bankruptcy court commented that the Tranels' attempt to bring a federal court action against the Bank was apparently motivated by a desire to delay the bankruptcy proceeding.
28
The Tranels argue that they properly disclosed their claims pursuant to 11 U.S.C. Sec. 1125.16 Their primary disclosure consisted of a reference to the Bank's state court action against them, followed by the words "counterclaim pending;" this reference was made in Kenneth and Beverly Tranels' "Statement of Affairs and Schedules." In addition, in both families' "Statements of All Liabilities of Debtor," the Tranels disputed the Bank's claimed security interests in their property, thus implying that they intended to file a suit against the Bank for its fraudulent loaning practices.
29
Implicit in section 1125 of the Bankruptcy Code is the recognition that "[i]n reorganization cases, there is frequently great uncertainty, [and t]herefore the need for flexibility is greatest." H.R.Rep. No. 595, 95th Cong., 1st Sess., 408-409 (1977), U.S.Code Cong. & Admin.News 1978, pp. 5787, 6364, 6365. Nonetheless, the disclosure in question--in this case, the Tranels' action against the Bank--must be sufficient to "enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan." 11 U.S.C. Sec. 1125(a)(1).
30
Based on this requirement, we agree with the bankruptcy court that the Tranels did not adequately disclose their proposed state court action to their creditors and could not rely on their cryptic references to a lawsuit to justify bringing their suit in federal court at the time they requested to do so. In reaching this decision, we note that the Tranels' suit against the Bank can still be brought by the trustee. Indeed, although the bankruptcy court initially denied the Tranels' motion to bring their action prior to confirmation of the creditors' plan, it recognized that "the trustee is required to investigate and determine the existence of claims against proponents of the plan ... and to bring the appropriate actions against such creditor." Moreover, the bankruptcy court expressly provided recourse for the Tranels should the trustee fail to perform this duty.17
CONCLUSION
31
We affirm the district court's affirmance of the bankruptcy court.
*
The Honorable Earl R. Larson, United States Senior District Judge for the District of Minnesota, sitting by designation
1
Specifically, Beverly and Kenneth Tranel filed for reorganization on August 9, 1986, while Doris and Lavern filed on August 8, 1986. Because this case involves two bankruptcy actions sharing similar facts and identical legal issues, the two cases have been consolidated
2
The Tranels claimed that the Bank maliciously and intentionally manipulated the value of the collateral held by the Bank as security for the Tranels' loans so as to gain control of the Tranels' farming and trucking operations. The Tranels further alleged that the Bank tried to gain control of their farming and trucking businesses by constantly interfering with the Tranels' farming and trucking operations, spreading false information about the Tranels, refusing to cooperate in the use of certain cash collateral, retaliating against the daughter of Lavern and Doris Tranel for her testimony supporting her parents in the proposed state court action, unlawfully compounding interest on debts owed by the Tranels, fraudulently applying funds received from the Tranels to the wrong accounts, and fraudulently obtaining a deed of trust from Lavern and Doris Tranel for certain lands owned by the Tranels
3
Section 1121(b) provides:
(b) Except as otherwise provided in this section, only the debtor may file a plan until after 120 days after the date of the order for relief under this chapter.
4
Section 1121(c)(3) provides as follows:
(c) Any party in interest, including the debtor, the trustee, a creditors' committee, an equity security holders' committee, a creditor, an equity security holder, or any indenture trustee, may file a plan if and only if--
(3) the debtor has not filed a plan that has been accepted, before 180 days after the date of the order for relief under this chapter, by each class of claims or interests that is impaired under the plan.
5
As explained supra at 1170, Kenneth and Beverly filed their plan before the creditors filed their Joint Plan, while Lavern and Doris filed their plan after the Joint Plan
6
Section 303(a) provides that:
(a) An involuntary case may be commenced only under chapter 7 or 11 of this title, and only against a person, except a farmer or a corporation that is not a moneyed business, or commercial corporation, that may be a debtor under the chapter under which such case is commenced.
7
Section 1112(c) provides:
(c) The court may not convert a case under this chapter to a case under chapter 7 of this title if the debtor is a farmer or a corporation that is not a moneyed, business, or commercial corporation, unless the debtor requests such conversion.
8
Apparently, the bankruptcy court viewed the separate reorganization plans filed by the respective Tranel couples to be so similar that the two plans could be considered as one for confirmation purposes
9
We feel that the bankruptcy court's conclusions here contradict the Tranels additional argument that the bankruptcy court did not compare the Chapter 11 assets recovery with what could be recovered under Chapter 7
10
Section 326(a) provides:
(a) In a case under chapter 7 or 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee's services, payable after the trustee renders such services, not to exceed fifteen percent on the first $1,000 or less, six percent on any amount in excess of $1,000 but not in excess of $3,000, three percent on any amount in excess of $3,000 but not in excess of $20,000, two percent on any amount in excess of $20,000 but not in excess of $50,000, and one percent on any amount in excess of $50,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.
11
The pertinent part of this letter reads:
I would still be willing to serve as Trustee in both of the cases. In that connection, you will recall that I earlier mentioned that in addition to the provisions in the Plan for payment of fees and expenses to the Trustee, I would like to have some sort of a separate guaranty from the bank. Although you mentioned that you felt that would cause a problem, I am certain something can be worked out to provide for payment of my fees and expenses by way of advances from the bank on a monthly basis with reimbursement back to the bank from me upon receipt of fees and expenses after approval of applications by the court.
In any event, I would appreciate it if you would give the above further thought and discuss it with your bank and advise.
12
The bankruptcy court ordered:
The liquidating trustee is authorized by the terms of the plan and the order to liquidate all assets of the debtors. This must mean that the trustee is required to investigate and determine the existence of claims against proponents of the plan. If the liquidating trustee fails to investigate and determine the validity of such claims or fails, to the satisfaction of the debtors, to bring the appropriate actions against such creditors, the debtors, as interested parties, can bring this matter before the Court.
13
The bankruptcy court commented:
... Paragraph 3 additionally suggests that the Court summarily denied the debtors the right to litigate the Bank's secured claims in state court before a jury. As counsel well knows, this Court, after hearing argument concerning the appointment of an attorney to represent the debtors to commence state court litigation, denied the request. The debtors, pursuant to such request, alleged they had a state court cause of action against the Bank which existed prepetition. Several years after the bankruptcy case was filed, without listing such cause of action either on their original schedules or on their disclosure statement, the debtors requested the opportunity to go to state court to litigate it. If they have a cause of action, it can be litigated in the bankruptcy court or the federal district court after it is appropriately scheduled and disclosed....
14
In the Joint Plan, Classes A-E exclusively involve "The Allowed Secured Claim[s]" of various creditors and the descriptions of these classes never invoke the word "unsecured." In contrast, Class F refers to "unsecured creditors" and "unsecured portions of the claims previously classified in this Plan, claims classified as disputed, contingent and unliquidated,...."
15
Section 157(b)(1) provides:
(b)(1) Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection ( ) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title.
16
Section 1125(a)(1) provides:
(a) In this section--
(1) "adequate information" means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan, but adequate information need not include such information about any other possible or proposed plan[.]
17
See supra note 12 at 1173
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779 F.Supp. 402 (1991)
ANONYMOUS FIREMAN, Plaintiff,
v.
The CITY OF WILLOUGHBY, William Ryan, William E. Crosier, Dr. Joseph Koelliker, International Association of Firefighters, Local 2291, Defendants.
No. C88-1182.
United States District Court, N.D. Ohio, E.D.
December 13, 1991.
*403 *404 Gordon G. Beggs, Cleveland, Ohio, for plaintiff.
B. Lawrence Allen, Director of Law, Willoughby, Ohio, Mary G. Balazs, Reid, Johnson & Berry, Joseph Diemert, Cleveland, Ohio, for defendants.
MEMORANDUM OF OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW
KRENZLER, District Judge.
This case, in general, involves the issue of mandatory testing for the AIDS virus ("HIV") by a governmental agency. In particular, this case requires this Court to decide whether the City of Willoughby, Ohio, can require mandatory testing of its firefighters and paramedics for the AIDS virus as part of its annual physical examination for fitness to serve.
PLAINTIFF'S ALLEGATIONS
Plaintiff alleges, in substance, that he is a fireman and paramedic who has been an employee of the City of Willoughby for over ten years, and that he seeks to enforce his right to be free from unreasonable searches, seizures, unwarranted invasions of privacy by the City and to remedy violations of his substantive due process rights based on the Fourth, Ninth and Fourteenth Amendments to the United States Constitution.
Plaintiff alleges that on the morning of May 10, 1988, without prior notice, he and the rest of his squad were transported to Bio-Path Lab in Willoughby and ordered to submit to a human immunodeficiency virus ("HIV") blood test, that he objected to the test, but that he complied with the directive to take the test, and that his blood was drawn.
He alleges that the City has no medical or other justification for imposing mandatory routine HIV testing on all fire division personnel, including plaintiff. The City has no facts constituting probable cause or reasonable cause or suspicion of HIV positive status as to any divisional personnel, including plaintiff. The City has no procedures for obtaining warrants authorizing the HIV test nor does it plan to obtain warrants. The City had not adopted a policy to deal with division employees who tested positive for HIV. The City's testing policy contains no provision for education or counseling, either before or after testing, and the City did not afford plaintiff such education or counseling upon testing him. The City has not adopted procedures adequate to insure the confidentiality of HIV test data.
The plaintiff prays for a declaratory judgment that the City's testing violates the Fourth, Ninth and Fourteenth Amendments to the United States Constitution and seeks a permanent injunction prohibiting the City from conducting such testing.
MUNICIPAL DEFENDANTS' ANSWER
In response, all of the municipal defendants (including the City of Willoughby, the Mayor, the Fire Chief and the City Physician) filed a joint answer which, in effect, was a denial of the principal substantive allegations of the plaintiff's complaint.
In addition, the municipal defendants contend that the plaintiff's constitutional rights were waived because a collective bargaining agreement which provided for HIV testing was executed by and between the union which represented plaintiff, International Association of Firefighters, Local 2291 ("IAF" or "the Union"), and the City. Further, the municipal defendants contend that no warrant is required in order to proceed with HIV testing, that the City's rules and policies with respect to the HIV testing are reasonable, and that plaintiff has failed to exhaust the administrative remedies available to him under the collective bargaining agreement.
ANSWER OF INTERNATIONAL ASSOCIATION OF FIREFIGHTERS, LOCAL 2291
In substance, the defendant Union filed an answer in the form of a general denial, and also filed counter and cross claims which deal more with the attorney fee issue than with the substantive issues raised by the complaint and the answer of the municipal defendants.
*405 AIDS
Much has been written and said about the subject of Acquired Immune Deficiency Syndrome, or AIDS. It has now reached epidemic proportions, both in the United States and throughout the world. At the present time, there is no known cure for AIDS. The only way to stop its spread is by education and prevention until some cure is found. Billions of dollars are now being spent to find a cure for AIDS but, so far, these efforts have not been successful.
Universal precautions developed by the Center for Disease Control ("CDC") which provide for the use of gloves, glasses, garments and other protective coverings are required and used in some instances as a preventive against the transmission of the HIV virus.
A question in regard to testing for AIDS is whether there should be testing and, if so, whether it should be voluntary or mandatory. There are those who argue that any AIDS testing, especially testing by governmental agencies of their employees, must be either voluntary or based on probable cause or reasonable suspicion, and that otherwise it violates the Fourth Amendment to the United States Constitution as an unreasonable search and seizure.
There are those who argue that testing for AIDS, especially by governmental agencies involving high-risk employees, should be mandatory and that because of the epidemic proportions of AIDS, any such testing cannot be considered as an unreasonable search and seizure but as reasonable, under all the facts and circumstances.
In this case, we are dealing with a governmental agency, to wit, the City of Willoughby, which requires mandatory AIDS testing of its firefighters and paramedics as part of an annual physical examination.
It is noted that there is a difference in regard to the constitutional challenge between governmental and private employers and employees.
The defendants are contending that mandatory testing is proper because AIDS is an epidemic and firefighters and paramedics are high-risk employees and are at risk to contract and/or transmit AIDS in their line of duty.
Hopefully, a cure will be found for AIDS in the immediate future, but until then, we have to deal with the issue of mandatory testing by a governmental agency in this case.
It is well established that AIDS is principally caused by infection through sexual intercourse (especially anal sex), use of unsterilized needles, through blood transfusions, in pregnancy from mother to fetus, from mother to child through breast feeding, or from contact with contaminated blood and other bodily fluids which have blood in them, like mucus or saliva. It may take a number of years from the contact which transmitted the AIDS virus before a person knows he or she has AIDS or the AIDS virus.
After listening to all of the testimony in the case and reviewing all of the exhibits, it becomes obvious and well established that AIDS has now reached epidemic proportions and many things must be done including, but not limited to, the following:
1. Education. The public must be educated in regard to AIDS.
2. Prevention. Prevention must be practiced by everyone. The effective use of universal precautions are one known way of preventing the spread of AIDS.
3. Pre-Test Counseling. There must be counseling before AIDS tests are given.
4. Post-Test Counseling. There must be intensive counseling of those persons who have contracted AIDS so they can deal with the subject and the disease throughout the remaining years of their lives.
5. Public Tolerance. The public must become more tolerant of those persons who have contracted AIDS.
6. Research Cure. Massive amounts of both public and private funds and efforts must be invested to find a cure for AIDS.
7. Health Care Insurance. Health care insurance must continue to be provided for persons with AIDS. In other words, people with AIDS should not be denied *406 health care insurance because they have contracted AIDS.
8. Job Security. People with AIDS should not be discriminated against in the workplace.
9. Privacy Discrimination. The privacy of persons with AIDS must be protected. The fact that a person has AIDS should not become public knowledge, and those persons with AIDS should not be discriminated against.
The Court assumes that this case is a first step in a long hard road. The Court is assuming that this case will go on to the United States Circuit Court of Appeals and, ultimately, to the United States Supreme Court.
PLAINTIFF'S POSITION
The plaintiff contends that the mandatory testing for AIDS is not a necessary part of an annual physical examination for fitness for duty. The plaintiff says HIV testing is not the same as other physical examinations because it is intrusive. The plaintiff contends that the taking of blood for AIDS testing violates the Fourth Amendment as an unreasonable search and seizure. It also violates a firefighter's right to privacy. The plaintiff is also critical of the City of Willoughby because there is no counseling provided for those with AIDS.
The plaintiff also contends that conducting the test for AIDS from the same blood taken for the annual physical examination still amounts to an unreasonable search and seizure. You cannot use the same blood for additional tests. The testing for AIDS must be measured by the same standards as any other intrusion.
DEFENDANTS' POSITION
The defendants contend that the blood is already drawn and, therefore, it is reasonable to use it for AIDS testing and such testing is not a search. There was a waiver by the Union of the plaintiff's rights, and there was a failure by the plaintiff to exhaust his administrative remedies. Also, firefighters have no expectations of privacy, and firefighters and paramedics are in a high-risk position which makes the HIV test a reasonable search, if it is considered to be a search. The defendants contend that the City wants to protect the firefighters and the public, and that any lacerations or any flowing blood may transmit the HIV virus, and the virus may also be transmitted by mouth-to-mouth resuscitation. The defendants contend that this compelling government interest outweighs any private interest.
TESTS FOR AIDS
There are two tests for determining AIDS: First, the ELISA test is given, and if it is positive, the Western Blot test is given for confirmation.
EXPERT WITNESSES FOR PLAINTIFF
1. Dr. Leonard Calabrese. He is head of the Immunology Section of the AIDS Activity Committee at The Cleveland Clinic. He testified that since 1981 he has treated more than 500 AIDS patients; that health care workers are no more susceptible of contracting AIDS than the general public; that he does not consider saliva, mucus or feces to be a transmitter unless there is blood involved; that firefighters and paramedics generally are not at high risk to get infected on the job; that the high risks are homosexuals and drug addicts who use needles and syringes; that firefighters and paramedics are not at as high a risk as compared to doctors and nurses; that exposures such as puncture wounds make a high risk; that the occupational risk for firefighters is low.
He testified that the universal precautions for health care workers protects both the public and the health care workers, and he does not recommend mandatory AIDS testing as a means of control; that doctors who have AIDS should not operate or perform surgery; He testified that one dentist transmitted AIDS he acquired off the job to three patients. This dentist subsequently died. He agreed that the universal precautions are not always used.
He testified that the use of gloves, goggles, or protective clothing depends on what you are examining and what you intend to do; that whenever you come into contact with blood, you need a protective covering, including goggles and gloves. He did agree that firefighters who are HIV *407 positive are dangerous because they can transmit diseases. A HIV positive test only indicates that a person was exposed to the virus.
Unfortunately, if people know other people have AIDS, the AIDS patients are shunned by their family and friends; they lose their jobs and cannot get insurance. Intensive counseling is needed because it is an infectious disease with no cure. People do not want to know if they are infected with the AIDS virus and when they do know, the psychological response runs from guilt to anger to fear to paranoia, etc.
2. Dr. Michael Lederman. He testified that AIDS is an infectious disease which spreads through sexual contact, contaminated blood by transfusions or bad needles; that a mother who has AIDS may transmit AIDS to a newborn child by breastfeeding; that health care workers are at low risk of becoming infected with AIDS or transmitting AIDS; that getting stuck with a needle when drawing blood is a one in 250 chance, based on statistics; that blood splashing was not a serious threat and that there was no risk of casual transmission of AIDS. This is based on family studies of people living at home, sharing the same beds and eating together.
He did testify that contaminated blood is a means of transmission of the AIDS virus, and that gloves, gowns, protective eyewear, etc, should be worn in dealing with blood and blood-contaminated fluids. He estimated that there are 1.5 million persons in the United States with AIDS.
He testified that counseling is very important, both before and after the AIDS test, and that if a test result is positive, it affects people's lives in regard to insurance, employment, etc. If people test positive for the AIDS virus, they get anxious and even suicidal. Because of the problems with positive findings, he recommends only voluntary testing because persons with HIV infections are ostracized from society.
EXPERT WITNESSES FOR DEFENDANTS
1. Dr. Brian McNamee. He testified that AIDS is now an epidemic with 150,000 reported cases in America. There is an incubation period of five to ten years for the symptoms of AIDS to appear. It is a long incubation period. The incidence of AIDS is increasing.
AIDS is spread by sex of all types, including homosexual and heterosexual intercourse, oral sex, anal sex, etc., as well as by blood and breast-feeding. We are early in the epidemic and there is a lag in the reporting period. Further, it takes a long time for AIDS to show itself. HIV is identified in every bodily fluid including blood, saliva and tears. Firefighters and paramedics are at high risk because of the nature of their work. Firefighters and paramedics are at higher risk than persons in hospitals because it is a non-controlled setting, as compared to an emergency room which is more controlled.
The universal precautions for firefighters, such as a space suit, boots, masks, gloves, etc., are not very practical because it is difficult to function wearing all of these garments; it is too much paraphenalia to work efficiently.
He also described the two AIDS tests, ELISA and the Western Blot, and he said that they are used in complementary fashion. These are very accurate tests. He said people should be educated first and then counseled later if they are HIV positive.
He justifies mandatory AIDS testing because firefighters and paramedics are at a high risk to get AIDS and are at a high risk to transmit AIDS.
2. Dr. Stanley Fox. He testified that AIDS is transmitted both dermatologically and sexually, and that he wants all cases of AIDS reported; that the universal precautions are not used and do not mean a thing in practice; that counseling should not be done before the blood test; that there should be early testing and early treatment in order to extend life; that baseline testing is a way to make early identification and that a baseline is needed to show the beginning of the disease and the early conditions; that if you notify a patient early, it is important and extends life; that with *408 sexual contact a partner should be notified; that education does not work because it has not worked to prevent pregnancies; that health care workers are high risks and that AIDS should be treated the same as any other ordinary disease.
He testified that doctors are scared because they are at high risk to contract AIDS. He said that the HIV test reports are sent from the laboratory to the doctor and are sealed and kept confidential.
FINDINGS OF FACT
1. This is a civil rights action in which plaintiff challenges the routine mandatory screening of firefighters and paramedics for the human immunodeficiency virus ("HIV"). Plaintiff brings claims under the Fourth, Ninth and Fourteenth Amendments to the United States Constitution.
Parties and Witnesses
2. Plaintiff in this case has been employed by the defendant City of Willoughby as a firefighter and paramedic for approximately 10 years and is a resident of Lake County, Ohio.
3. Defendant the City of Willoughby is a charter municipality organized pursuant to the home rule provision of the Ohio Constitution, Article XVIII, Section 7.
4. Defendant William Ryan is the Mayor and the Safety Director of the City of Willoughby.
5. Kenneth Stafford, Sr., was the Fire Chief of the City of Willoughby from 1971 to December 31, 1989, and was named as a defendant in plaintiff's complaint. William E. Crosier is the current Chief of Police and Fire and is substituted for Kenneth Stafford, Sr., as defendant pursuant to Rule 25(d) of the Federal Rules of Civil Procedure. Prior to this position, Crosier was the Chief of Police and was associated with the Police Department for over 20 years.
6. Defendant Joseph Koelliker has been the Willoughby City Physician since 1959 or 1960 and is a medical doctor who routinely advises the City on medical matters and conducts annual physical examinations for firefighters. Dr. Koelliker issued orders for HIV tests for firefighters.
7. Gary Johnson is a labor attorney who was the City's chief labor negotiator in 1988.
8. Defendant IAF has been at all relevant times the collective bargaining representative for the firefighters and paramedics in the City of Willoughby.
9. David Byrne is the President of the Cuyahoga County Firefighters and has represented defendant IAF in collective bargaining with the City of Willoughby from at least 1988 to the present as the Union's chief negotiator.
10. Melvin House was the President of defendant IAF and a member of the Union negotiating team in 1988.
11. Dr. Brian McNamee, Dr. Stanley Fox, and Dr. Michael Lederman are Medical Doctors, and Dr. Leonard Calabrese is a Doctor of Osteopathy, all of whom were admitted by the parties and the Court to be medical experts in the field of Acquired Immune Deficiency Syndrome ("AIDS").
City's HIV Testing Policy, History of the Policy, and Testing of Plaintiff
12. The City policy in question requires routine mandatory HIV testing of all fulltime firefighters and paramedics in the Willoughby Fire Department as part of their annual physical examinations. The purpose of these examinations is to certify fitness for duty.
13. The HIV testing policy is applicable to all new employees in the Willoughby safety forces, and to those presently employed in the safety forces, including firefighters and paramedics.
14. The required annual physical examination to determine fitness for duty has been a City policy since at least the early 1960's.
15. The physical examination routinely given to the City's firefighters and paramedics includes a variety of laboratory tests, including a number of tests on blood extracted from each person subject to the examination.
*409 16. Blood tests given in conjunction with annual physical examinations provide a wide range of information about a person's general health.
17. The HIV test involves an additional examination of blood already drawn in conjunction with the annual physical examination, without additional blood being drawn.
18. The City uses an ELISA screening test for the HIV virus confirmed by a Western Blot test.
19. All experts agree that the ELISA test, performed in conjunction with the Western Blot test, are the most appropriate tests to determine if an individual is HIV positive. The accuracy of these tests approaches 99 percent.
20. Dr. Koelliker gave negative test results to firefighters over the telephone.
21. No accidental disclosure of laboratory reports has ever occurred for Willoughby employees or Bio-Path Laboratories.
22. Prior to the adoption of the HIV testing policy, Dr. Koelliker recommended voluntary HIV testing to City officials.
23. Dr. Koelliker communicated frequently with City officials regarding the subject of HIV testing, but never recommended mandatory testing.
24. Dr. Koelliker recommended that counseling and education be provided in connection with the HIV testing. Such counseling should occur prior to the testing.
25. Dr. Koelliker recommended that HIV test results be kept confidential because of the sensitivity of the test.
26. In January 1988, the Mayor of the City of Willoughby first announced the City's decision to add the HIV test to its examination of blood already drawn during the annual physical examination.
27. The policy as originally issued by Mayor Ryan on January 20, 1988, provided for voluntary testing.
28. On January 22, 1988, as part of the annual physical examination, the City offered Fire Department personnel voluntary HIV testing for the initial purpose of baseline testing.
29. Baseline testing is necessary to determine when an employee may have been exposed to the HIV virus, and if that exposure was employment related.
30. After City officials were advised that 100 percent participation in the HIV testing might not be achieved, thereby defeating the baselining concept, the Mayor revised his memorandum to require the additional examination of blood being drawn for HIV on all current and existing safety personnel at the annual physical examination to obtain a baseline for each employee.
31. That same date, Mayor Ryan issued a memorandum mandating HIV testing during the annual physical examination.
32. The City gave fire division personnel their annual physical examination without testing for HIV in February and March of 1988.
33. Upon objection by the Union, the testing was postponed pending negotiations with the Union, which remained incomplete until December 1988.
34. Upon request of David Byrnes, who had been contacted by Mel House, the City agreed to suspend HIV testing as part of the employees' physical examinations until a policy was negotiated concerning the treatment of HIV positive employees.
35. In the collective bargaining negotiations, the City took the position that it had the management right to do HIV tests on firefighters and paramedics.
36. The Union agreed that the City had the right to conduct HIV testing on firefighters and paramedics at the annual physical examination.
37. During the course of the collective bargaining negotiations around April 8, 1988, an AIDS testing policy was drafted by Gary Johnson and signed by Gary Johnson, Mel House, and David Byrnes.
38. During the course of collective bargaining negotiations, on or about May 5, 1988, the Union agreed to an AIDS testing policy, and this agreement was signed by representatives of both the Union and the *410 City. The Union was advised that the City would implement the HIV test.
39. On May 10, 1988, plaintiff and other members of the Fire Department were transported to the Bio-Path Lab for HIV blood screening as part of their annual physical examination. The plaintiff objected and the Lab personnel refused to perform the test. Other members of the Fire Department were given the blood test at this time. Later that same morning, plaintiff returned to the Lab and had his blood drawn.
40. The City of Willoughby had no suspicion that any firefighter was HIV positive on May 10, 1988.
41. The day the testing occurred Dr. Koelliker received a call from Sharon Bashis at Bio-Path Lab indicating that plaintiff did not want to have his blood drawn, and Dr. Koelliker instructed the Lab not to draw the blood for the HIV test.
42. The City provided no education or counseling to plaintiff at the time of his HIV testing.
43. Subsequent to May 10, 1988, the AIDS testing policy was amended by the City and the Union to the language appearing in the 1988 and 1990 collective bargaining agreements.
Collective Bargaining Agreements Between City and IAF
44. The Union and the City of Willoughby have been parties to successive collective bargaining agreements. A collective bargaining agreement between the City of Willoughby and the Union was entered into and effective from April 1, 1986, until its expiration on March 31, 1988. Said agreement did not provide for HIV testing.
45. The most recent collective bargaining agreement is effective from April 1, 1990, through March 31, 1992, and the prior collective bargaining agreement was effective from April 1, 1988, through March 31, 1990.
46. Article VII of the 1988 and 1990 collective bargaining agreements embody the City's and the Union's agreement to the City's conducting of HIV testing as part of the employees' physical examinations, and address many of the plaintiff's concerns about mandatory testing, including counseling, confidentiality and job security.
47. The collective bargaining agreement, paragraph 12.03, indicates that a positive result on an ELISA screening test (the first test) will be shared with a firefighter before confirmation by the Western Blot (the second test).
48. Paragraph 12.03 of the 1988 and 1990 collective bargaining agreements provides that the physician performing the HIV tests must counsel each employee as to the testing process, the possibility of inaccurate test results, and any other medically appropriate subjects.
49. Paragraph 12.03 further provides that the results of the HIV test are to be kept confidential.
50. HIV-infected individuals showing no symptoms of related disease and without significant immune system dysfunction remain eligible for all employment benefits. No employee will be separated, and benefits will not be affected by a finding of HIV infection.
51. Under paragraphs 12.06-08 of the 1988 and 1990 collective bargaining agreements, if an employee tests positive for the AIDS antibodies, but is not afflicted with the actual disease AIDS, the City may either (a) make no changes in the employee's duties, (b) transfer the employee to another position in the Fire Department where the employee will not be in contact with the general public, (c) transfer the employee to another position outside the Fire Department, but the employee's wages will not be reduced and he will be kept in the Firemen's Pension System until his pension benefits vest, or (d) remove the employee from all duties, but continue to pay him his existing wages until his retirement, worker's compensation or pension benefits are approved.
52. Under paragraphs 12.04-05 of the 1988 and 1990 collective bargaining agreements, if an employee is actually afflicted with AIDS, the City may either (a) allow the employee to continue to work until he *411 is physically unable to do so, or (b) relieve the employee from duty, place him on injury leave for up to 90 days, then if necessary, put him on sick leave, pending approval of his retirement from the Firemen's Pension System. If the employee's sick leave is exhausted before his retirement is approved, the City will give the employee enough additional sick leave to keep him at full pay until his retirement is approved.
53. Under paragraph 26.01 of the 1988 and 1990 collective bargaining agreements, the City continued to pay the full premium for the hospitalization and medical insurance protection that existed when the agreement was entered into. There is no special provision concerning insurance coverage for employees with AIDS.
54. In both 1988 and 1990, the contracts containing these provisions were ratified by the Union members and by the City Council.
AIDS Generally
55. AIDS is an epidemic in the United States and in the world that causes illness, disability and death.
56. Approximately 1.5 to 2 million Americans may be infected by the HIV virus.
57. In Greater Cleveland, it is estimated by the Center for Disease Control ("CDC"), based on emergency room studies, that 3 of every 1,000 people are infected by the HIV virus.
58. An estimate of HIV positive persons in Lake County can be derived by multiplying reported AIDS cases (25 through November 1990) by 10 (the CDC national ratio of estimated HIV positives to AIDS cases). This yields 250 HIV positive persons.
59. The number of AIDS cases is underreported as accurate diagnoses do not appear on death certificates.
60. The HIV retro-virus is responsible for the AIDS epidemic.
61. HIV does not equate with AIDS. HIV is the virus. AIDS is the extreme clinical form of the disease.
Transmission of AIDS
62. The HIV virus exists in varying proportions in all bodily fluids of an infected person.
63. A person who has tested positive for HIV may remain healthy for four to seven years but continues to be infectious to others through his or her bodily fluids.
64. Transmission of the HIV virus occurs when the bodily fluid of an uninfected individual is contaminated by the bodily fluid of an infected individual.
65. HIV positive individuals, including firefighters and paramedics, may be carriers of infections and expose the public, or may contract those infections from the public.
66. An HIV-infected individual may become more infectious as times progresses.
67. HIV is transmitted sexually, by the passage of blood through the skin as in an intravenous injection, and in pregnancy from a mother to a fetus.
68. The most efficient means of HIV transmission are through a contaminated blood transfusion, sex (especially anal sex), sharing of needles, and from mother to fetus.
69. The CDC estimates the risk of contracting AIDS from a needlestick injury is 1 in 200.
70. Reports have indicated that AIDS may be spread through saliva, splashes to the skin, oral sex, and the mucous membranes.
71. The limits of HIV transmissability have not yet been completely defined.
72. The CDC has recently issued a report wherein it concluded that a Florida dentist transmitted HIV to three of his patients, although it was previously believed HIV could not be transmitted in this manner.
73. Unlike influenza, tuberculosis, the common cold or other epidemics, HIV is not transmitted through the air by droplet infection.
74. HIV is not transmitted by day-to-day, on-the-job contacts with co-workers.
*412 75. There have been extensive studies of the risk of transmission of HIV in the health care worker context.
76. The incidence of AIDS among health care workers is almost twice that among the general population for unknown reasons.
77. Hospitals do not require their staffs to submit to routine screening for HIV.
Reducing Risk of AIDS Transmission
78. To address and minimize the risk of transmission of HIV in the health care setting, the CDC, in 1985, developed a strategy of universal blood and bodily fluid precautions.
79. These universal precautions are now part of the routine provision of health care in the United States, and have been implemented by the Willoughby Fire Department.
80. Universal precautions assume that all health care workers and all patients are seropositive.
81. They include gloves, masks, gowns, and protective eyewear to be used as the situation requires.
82. Some of the methods used to reduce risk includes observing the CDC's "universal precautions"; engineering controls (e.g., the use of puncture-resistant containers for the disposal of needles), and work practices (e.g., requiring employees to wash their hands after contacting blood and other potentially infectious materials).
Firefighters as Risk Group
83. Firefighting is not a casual environment and firefighters who are EMTA's and/or paramedics are in a high-risk occupation and are a high-risk group for contracting and/or transmitting the HIV virus.
84. Firefighters and paramedics are in a high-risk group for the contracting and transmission of the HIV virus since their duties include a significant risk of being exposed to blood, bodily secretions and bodily fluids. This line of work exposes the employees to high risk of bodily injury, lacerations, exposure to bleeding victims, puncture wounds and the like.
85. Firefighters and paramedics are at a higher risk than persons in hospitals for contracting or transmitting the HIV virus, because they work in a non-controlled setting. The universal precautions for firefighters, such as gloves, masks and other protective clothing, may not be practical in this setting.
86. The City of Willoughby has a legal obligation and duty to protect the residents of the City from contracting the HIV virus from such high-risk employees.
87. All the medical experts agree that mandatory HIV testing is medically appropriate in certain situations, including testing for certain high-risk groups and pre-employment testing. The United States Armed Forces and the State Department test all new applicants for HIV.
88. The additional examination for HIV of blood already drawn is medically appropriate for firefighters and paramedics in the City of Willoughby to protect the public, the firefighters, and to conduct baseline testing.
HIV Testing
89. HIV tests show the presence of antibodies to the virus, rather than the presence of the virus itself.
90. The appearance of the antibodies is termed seroconversion. Prior to seroconversion, HIV is present in the blood and the individual is capable of transmitting HIV, although he or she tests negative.
91. Most individuals seroconvert within six to twelve weeks after exposure to the HIV virus, but seroconversion often does not occur until up to six months after an occupational exposure.
92. In cases of sexual transmission of the HIV virus, seroconversion may take one to three years.
93. All experts agree that the ELISA test, performed in conjunction with the Western Blot test, are the most appropriate tests to determine if an individual is HIV positive. The accuracy of these tests approaches 99 percent.
*413 94. Both the ELISA and Western Blot tests for AIDS are performed on one blood sample prior to any result being communicated to a physician.
95. Dr. Lederman, who has ordered over 1,000 HIV tests, testified it is important to counsel patients because HIV tests carry significant importance to a person. Because of the significance of HIV tests to individuals and the risk of false positives, persons who are being offered testing should be counseled regarding the results and consequences of the tests, both before and after the test results are known.
AIDS Symptoms
96. Persons with HIV are generally asymptomatic for at least 5-7 years, and many HIV positive persons have been asymptomatic for over 10 years.
97. Early symptoms of AIDS are feeling washed out, a flu-like condition, swollen glands, and loss of weight.
98. Dementia may appear before any evidence of infection.
99. HIV is always fatal.
100. Early diagnosis and treatment of AIDS patients allows doctors to more effectively treat AIDS patients. New drugs administered early in the course of the disease may extend the life of the patient.
Patient and Societal Reaction to AIDS
101. A report of a positive HIV test, whether a true or false positive, is a very foreboding kind of message and the reaction of patients to this news is devastation.
102. Such reactions include depression, anxiety, inability to function properly at work, and mental breakdown, sometimes requiring hospitalization. In addition to these consequences, HIV positive persons must also contend with the social stigma of being HIV positive. This involves being disowned by family and friends, and being discriminated against in employment, insurance and housing. Dr. Calabrese testified that these HIV test results are like no other piece of news that he has to give to patients.
103. Failure to maintain confidentiality of information relating to HIV status creates a likelihood of discrimination against an individual.
104. If not handled properly, a positive HIV test result can lead to disaster, including suicide.
105. Because of the foreboding message that accompanies a positive HIV test result, some people simply do not want to know if they are infected.
CONCLUSIONS OF LAW
Jurisdiction
1. Jurisdiction is conferred on this Court by 28 U.S.C. § 1331:
The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.
2. Jurisdiction is also conferred by 28 U.S.C. § 1343(a)(3):
The district courts shall have original jurisdiction of any civil action authorized by law to be commenced by any person:
* * * * * *
To redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States.
3. In this case, the defendants contend that this Court does not have jurisdiction because there is a collective bargaining agreement between the City of Willoughby and the Union which requires an employee to follow grievance and arbitration procedures before commencing litigation.
4. The AIDS testing policy agreed to on May 5, 1988, and the two subsequent AIDS testing provisions embodied in the collective bargaining agreements are valid and enforceable contracts.
5. At all times pertinent to this case, a legally enforceable collective bargaining agreement existed between the City of Willoughby and the IAF pursuant to Ohio Rev. Code Ann. Chapter 4117. The agreement *414 contained grievance and arbitration provisions which detailed administrative procedures available to plaintiff.
6. This Court finds that it does have jurisdiction because it would have been a vain act for the plaintiff to follow the grievance procedures of the collective bargaining agreement. Further, the plaintiff has raised United States constitutional issues which supersede the grievance and arbitration procedures of the collective bargaining agreement.
Fourth Amendment Analysis Generally
7. The Fourth Amendment states:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and persons or things to be seized.
U.S. Const., Amend. IV.
8. The Fourth Amendment applies to the states through the Fourteenth Amendment, and has also been applied to cover the conduct of government officials in various civil activities. O'Connor v. Ortega, 480 U.S. 709, 107 S.Ct. 1492, 94 L.Ed.2d 714 (1987).
9. Public employers are subject to the constraints of the Fourth Amendment. National Treasury Employees Union v. Von Raab, 489 U.S. 656, 109 S.Ct. 1384, 103 L.Ed.2d 685 (1989); O'Connor v. Ortega, 480 U.S. 709, 717, 107 S.Ct. 1492, 1499 (1987).
10. The Fourth Amendment is implicated in a case only if the plaintiff can show that the conduct of the defendant has infringed on an expectation of privacy that society is prepared to consider reasonable.
11. The Fourth Amendment does not prohibit all searches, only those that are unreasonable. Schmerber v. California, 384 U.S. 757, 768, 86 S.Ct. 1826, 1834, 16 L.Ed.2d 908 (1966). The determination of the reasonableness of a search requires balancing the need to search against the invasion which the search entails. On one side of the balance is placed the individual's legitimate expectations of privacy; on the other, the government's need for effective methods to deal with legitimate governmental interests. Skinner v. Railway Labor Executives' Ass'n, 489 U.S. 602, 619, 109 S.Ct. 1402, 1414, 103 L.Ed.2d 639 (1989).
12. A determination of the standard of reasonableness for the search requires a balancing of the nature and quality of the intrusion on the individual's Fourth Amendment interests against the importance of the government interest alleged to justify the intrusion. O'Connor, 480 U.S. at 719-20, 107 S.Ct. at 1498-99; Skinner v. Railway Labor Executives Ass'n., 489 U.S. at 619, 109 S.Ct. at 1414 (1989); Glover v. Eastern Nebraska Commentary Office of Retardation, 686 F.Supp. 243 (D.Neb. 1988), aff'd 867 F.2d 461 (8th Cir.1989), cert. denied, 493 U.S. 932, 110 S.Ct. 321, 107 L.Ed.2d 311 (1989).
13. Under this standard, both the inception and the scope of the intrusion must be reasonable:
Determining the reasonableness of any search involves a twofold inquiry: first, one must consider whether the ... action was justified at its inception; second, one must determine whether the search as actually conducted was reasonably related in scope to the circumstances which justified the interference in the first place.
O'Connor, 480 U.S. at 726, 107 S.Ct. at 1502; Van Raab, 489 U.S. 656, 109 S.Ct. 1384.
14. One of the touchstones of the Fourth Amendment is that a search must be supported by a warrant issued upon probable cause. However, when a Fourth Amendment intrusion serves a special governmental need, it is necessary to balance the individual's privacy expectations against the government's interest to determine whether it is impractical to require a warrant or to require some level of individualized suspicion in the particular context.
15. Where privacy interests implicated by the search are minimal and the *415 governmental interest furthered by the intrusion would be placed in jeopardy by a requirement of individualized suspicion, a search can be reasonable despite the absence of such suspicion.
16. A governmental employer need not show evidence of individualized suspicion in order to conduct drug or alcohol testing. Skinner, supra, and Von Raab, supra.
17. Skinner and Von Raab abandoned any requirement for particularized, individualized suspicion as a predicate for random drug testing in the special circumstances of those two cases. Skinner, 489 U.S. at 634, 109 S.Ct. at 1422; Von Raab, 489 S.Ct. at 665-66, 109 S.Ct. at 1390; National Treasury Employees Union v. Watkins, 722 F.Supp. 766, 770 (D.D.C.1989); Brooks v. East Chambers Consolidated Independent School District, 730 F.Supp. 759, 766 (S.D.Tex.1989).
18. Skinner and Von Raab, thus permit urine testing without reference to reasonable suspicion of individual employees only in narrowly tailored circumstances where there is substantial generalized suspicion implicating compelling government interests and where individual privacy concerns are considered minimal. Id.
19. Skinner and Von Raab offer guidance, but they do not dispose of this case; instead, the Court must assess all the circumstances surrounding the search and seizure and the nature of the search and seizure themselves in order to determine whether the City's routine mandatory HIV testing satisfies the Fourth Amendment standard of reasonableness. Skinner, 489 U.S. at 619, 109 S.Ct. at 1414.
HIV Test is a Search
20. The constitutional protection against unreasonable searches by the government does not simply disappear because the government has the right to make reasonable intrusions by conducting physical examinations in its capacity as employer. The HIV test requires a separate chemical analysis to obtain new and distinct information from that previously obtained in the blood tests given as part of the annual physical examination. The HIV test is a new search and is subject to a separate analysis under the Fourth Amendment. O'Connor, 480 U.S. at 719, 107 S.Ct. at 1498; Arizona v. Hicks, 480 U.S. 321, 325-26, 107 S.Ct. 1149, 1153, 94 L.Ed.2d 347 (1987); Patchogue-Medford Teachers Congress v. Board of Education, 70 N.Y.2d 57, 517 N.Y.S.2d 456, 510 N.E.2d 325 (1987).
21. HIV testing on blood already drawn from public employees as part of an annual physical examination constitutes an intrusion and a search and seizure within the meaning of the Fourth Amendment. The issue is whether it is reasonable or unreasonable. United States v. Jacobsen, 466 U.S. 109, 113, 104 S.Ct. 1652, 1656, 80 L.Ed.2d 85 (1984); see Katz v. United States, 389 U.S. 347, 361, 88 S.Ct. 507, 516, 19 L.Ed.2d 576 (1967).
Individual Privacy Interests at Stake
22. A labor organization cannot waive an individual's constitutional rights in a collective bargaining agreement with a city. A constitutional right can only be waived by the person involved. In addition, if mandatory AIDS testing is otherwise an unreasonable search and seizure, it cannot be considered reasonable because a provision in a collective bargaining agreement provides for mandatory AIDS testing.
23. The "... intrusion occasioned by a blood test is not significant, since such tests are a commonplace in these days of periodic physical examinations and experience with them teaches that the quantity of blood extracted is minimal, and that for most people the procedure involves virtually no risk, trauma or pain." Ibid. Skinner thus confirmed "society's judgment that blood tests do not constitute an unduly extensive imposition on an individual's privacy and bodily integrity." Skinner, 489 U.S. at 625, 109 S.Ct. at 1417.
24. The fire and police industries are among the most highly regulated of any industry with respect to the performance of their employees. Penny v. Kennedy, 915 F.2d 1065 (6th Cir.1990) (Wellford, J., concurring). "[T]he expectations of privacy *416 of covered employees are diminished by reason of their participation in an industry that is regulated pervasively to ensure safety, a goal dependent, in substantial part on the health and fitness of covered employees." Skinner, supra.
25. If a person tests positive for the AIDS virus, the effects of the disease may not be readily or immediately noticed, and that person may perform his or her job effectively and efficiently for a considerable period of time. Under these circumstances, there would be no apparent reason to treat that employee any differently than any other employee. Further, the reasons for privacy are important at this stage of the disease.
26. However, at later stages of the disease, when it becomes obvious to anyone observing the person with AIDS that that person is suffering for some illness, and there is a reasonable suspicion that that person is suffering from AIDS, the privacy issue becomes diminished.
27. While obviously psychological concerns of a deep personal nature may arise when a person is informed of a HIV infection following a test, these concerns do not themselves raise constitutional privacy issues, especially as other serious diseases notably cancer that may be revealed by blood tests undoubtedly present similar concerns. Local 1812, American Federation of Government Employees v. United States Department of State, 662 F.Supp. 50 (D.D.C.1987).
Governmental Interests at Stake
28. Because plaintiff's Fourth Amendment interests are implicated by HIV testing, it is incumbent on the City to offer a justification based upon the public interest, O'Connor, 480 U.S. at 727-29, 107 S.Ct. at 1503-04, and the Court finds the City's evidence does support the City's mandatory HIV testing.
29. Criminal standards applying the unreasonable search and seizure tests to the City of Willoughby are inappropriate, since firefighters have a diminished expectation of privacy due to their heavily regulated public employment. Chicago Fire Fighters Union, Local 2 v. Chicago, 717 F.Supp. 1314 (N.D.Ill.1989).
30. Mandatory AIDS testing by a governmental agency for the sole purpose of obtaining a baseline to determine whether an employee contracted AIDS on the job and thereby determine the validity of any future worker's compensation claims, is not valid. Mandatory AIDS testing of employees can be valid only if the group of employees involved is at a high risk of contracting and/or transmitting AIDS to the public.
31. The City's justification for the testing offered here is the pursuit of a safe work environment for its employees and the public.
32. The City of Willoughby must exercise its lawful authority to protect the public pursuant to Ohio Constitution, Article XVIII, Section 3.
33. The City of Willoughby has a duty to keep its employees free from the risk of a contagious disease and to provide a safe workforce. Leckelt v. Bd. of Commissioners of Hospital, District No. 1, 909 F.2d 820 (5th Cir.1990).
34. Fitness for duty is a compelling governmental interest for safety forces, including firefighters and paramedics.
35. That the AIDS "epidemic" is a matter of great concern to the public and to the government is a matter of common knowledge. The devastating character of this disease is frightening to everyone. Glover, 686 F.Supp. at 250.
36. The protection of the public from the contraction and transmission of AIDS by firefighters and paramedics is a compelling governmental interest. Stopping the spread of the deadly AIDS epidemic is a compelling governmental interest.
37. It is critical that in such circumstances governmental units, the public and, most importantly, the courts, do not overreact and permit unreasonable invasions into a carefully formulated and preserved *417 constitutional right as a response to this concern.
38. Whenever a government agency wants to order mandatory testing of its employees, the burden is on that governmental agency to prove that mandatory testing is necessary and that other precautions against the transmission and contraction of AIDS will not be effective.
39. Mandatory testing, in and of itself, does not prevent the contraction and/or transmission of AIDS. This Court recognizes that universal precautions are the most accepted method of preventing the contraction and/or transmission of the HIV virus. There is a direct link or nexus between the information conveyed by mandatory HIV test results for high-risk public employees and the prevention of the contraction and/or transmission of the HIV virus and AIDS. For high-risk government employees, mandatory testing and universal and other precautions against transmission of the disease are integrally related.
The information provided by mandatory HIV testing of high-risk government employees serves a compelling government interest and a public purpose. Negative test results advise the person that he or she does not have the HIV virus. This will give them a sense of relief and peace of mind. These persons, like all other persons who do not have the HIV virus, can practice prevention through the use of universal precautions and other means. Those persons who test positive for the HIV virus or AIDS itself will receive that information. It is recognized that this may have a negative effect on them, but it is important for them to know that they have the HIV virus before the symptoms occur. If a positive result is known at an early enough stage, the infected person can take medication and other means to prolong their lives. The Court sincerely hopes that in the meantime a new drug or drugs will be invented or created that will cure AIDS.
Obviously, a positive HIV test result will not prevent AIDS in that person. However, for persons who have tested positive for the HIV virus or AIDS, extra precautions can be taken to avoid the spread of AIDS by these persons. These infected persons who are in high-risk work may take extra precautions in their work, knowing that they have the HIV virus or AIDS. The universal precautions and other precautions can be practiced in a more thorough and meaningful manner. Also, as an alternative, such persons who are in highrisk work where there is a probability that they will transmit AIDS may be assigned to other non-high-risk work where the chance of transmission is mitigated or eliminated. Persons in non-high-risk work can continue to work and should practice all of the known precautions in order to prevent the spread of AIDS.
As long as persons who test positive for the HIV virus can perform their work at whatever level and there is no danger of transmitting the HIV virus, there should be no problem. These persons should not be discriminated against or ostracized from society or in their employment. What is trying to be accomplished is preventing persons from contracting and/or transmitting the HIV virus or AIDS. If persons do test positive and have the HIV virus or AIDS, trying to prevent its spread is a compelling governmental interest.
40. The medical evidence demonstrates that the risk of HIV transmission in the performance of the duties of firefighter paramedic is high.
41. On the evidence before the Court, the City's inclusion of the test for HIV infection in the annual physical examination of its firefighters and paramedics is rational and closely related to fitness for duty and is a compelling governmental interest. Local 1812, American Federation of Government Employees v. United States Department of State, 662 F.Supp. 50 (D.D.C.1987).
42. The current conventional methods of dealing with AIDS is by the use of universal precautions and voluntary testing. This does not mean that mandatory testing is not available for use in high risk jobs. If an employer wants to use mandatory testing, it must demonstrate that universal *418 precautions and voluntary testing will not prevent the contracting and/or spread of AIDS by high-risk employees or professionals. The City has made such a demonstration here.
43. State and local authorities have compelling interests in ensuring that its firefighters and paramedics are performing their duties free of having AIDS. Reasonable and particularized suspicion is not necessary as a precondition to mandatory AIDS testing of firefighters and paramedics. Penny v. Kennedy, 915 F.2d 1065 (6th Cir.1990).
Conclusions
44. After careful consideration, the Court finds that the City's mandatory HIV blood testing policy for firefighters and paramedics is justified at its inception and is not an unreasonable search and seizure in violation of the Fourth Amendment to the United States Constitution.
45. The City of Willoughby, pursuant to the Fourth Amendment of the Constitution, is not required to obtain a warrant to conduct mandatory HIV testing of firefighters and paramedics. Skinner v. Railway Labor Executives Association, 489 U.S. 602, 109 S.Ct. 1402 (1989); National Treasury Employees Union v. Von Raab, 489 U.S. 656, 109 S.Ct. 1384 (1989).
46. The City of Willoughby need not show any individualized suspicion to conduct HIV testing of firefighters and paramedics.
47. This case does not stand for the general proposition of mandatory testing of all employees for AIDS, whether they be public or private, or mandatory testing for AIDS of the general public. This is a very limited decision and only stands for the proposition that mandatory testing may be ordered for high-risk government employees such as firefighters and paramedics. A high-risk government employee is one who has a high risk of contracting AIDS or transmitting AIDS. This is not the first time that a court has upheld mandatory testing for AIDS. Mandatory testing for AIDS has been upheld for United States military personnel and by the State Department for overseas personnel.
48. If mandatory testing is warranted by a governmental employer under all of the facts and circumstances, the Court urges, although it does not require, that the mandatory testing should be combined with a variety of other things that will help with the prevention and spread of the disease and also ease the burdens and effect of the disease on those persons contracting AIDS. These factors include, but are not limited to, the following: (1) prevention by use of universal precautions, (2) pre- and post-testing counseling, (3) education, (4) job security as long as the infected person can perform his or her job, (5) alternative jobs commensurate with the capacity to perform the job, (6) health insurance, (7) disability benefits, and (8) right of privacy, so long as possible.
49. The City's routine mandatory HIV testing does not violate plaintiff's right to privacy as protected by the Fourth, Ninth and Fourteenth Amendments to the United States Constitution.
50. The collective bargaining agreement, paragraph 12.03, indicates that a positive result on a screening test (the first test) would be shared with a firefighter before confirmation by the Western Blot (the second test). Such a testing procedure in which the results of a screen are shared with the subject prior to conducting a Western Blot Test is medically inappropriate as preliminary screen results should not be given to the subject. The subject should be told only after the Western Blot test is given and the results are known.
51. Because of the significance of HIV tests to individuals and the risk of false positives, the Court urges that persons who are being offered HIV testing should be counseled regarding results and consequences of the tests both before and after the test results are known.
52. Based upon the foregoing Findings and Conclusions, this Court determines that the City's mandatory HIV testing policy for firefighters and paramedics is not an unreasonable search and seizure in violation of the Fourth Amendment, and does *419 not violate plaintiff's right to privacy as protected by the Fourth, Ninth and Fourteenth Amendments to the United States Constitution. Accordingly, the Court will enter judgment in favor of the defendants on plaintiff's complaint.
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548 U.S. 928 (2006)
BROWN
v.
TEXAS.
No. 06-5356 (06A70).
Supreme Court of United States.
July 19, 2006.
Application for stay of execution of sentence of death, presented to JUSTICE SCALIA, and by him referred to the Court, denied. Certiorari denied.
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288 F.2d 504
61-1 USTC P 9293
Michael BOTTA, Ernest Montagni and Salvatore Santaniello, Appellants,v.Thomas E. SCANLON, District Director of Internal Revenue forthe District ofBrooklyn, New York, Appellee.
No. 236, Docket 26563.
United States Court of Appeals Second Circuit.
Argued Jan. 12, 1961.Decided March 6, 1961.
Daniel H. Greenberg, New York City, for appellants.
Fred E. Youngman, Department of Justice, Washington, D.C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, Department of Justice, A. F. Prescott, Department of Justice, Washington, D.C.; Cornelius W. Wickersham, Jr., U.S. Atty. for the Eastern District of New York, Jon H. Hammer, Asst. U.S. Atty., Eastern District, Brooklyn, N.Y., of counsel), for appellee.
Before CLARK, MAGRUDER and MOORE, Circuit Judges.
LEONARD P. MOORE, Circuit Judge.
1
The plaintiffs, Michael Botta, Ernest Montagni and Salvatore Santaniello appeal from an order dismissing their complaint against the District Director of Internal Revenue for the District of Brooklyn, New York (the Director). In substance the complaint alleged that Thru-County Plumbing and Heating Co., Inc. (Thru-County), a New York corporation, was adjudicated a bankrupt on February 14, 1958; that Thru-County owed to Internal Revenue Service (IRS) withholding and employment taxes amounting to some $9,070.16 for which a claim had been filed by IRS in the bankruptcy proceedings; that during the period in which these taxes became payable Botta was Vice-President of Thru-County, Santaniello was Secretary, and Montagni held no office; that none of the plaintiffs 'was charged with the duty of preparing, signing and filing' withholding or employment tax returns for Thru-County or of paying said taxes; that the Director made a 100% Penalty assessment against plaintiffs and filed tax liens against them and their property; and that such action is causing 'irreparable harm and damage' for which they have no adequate remedy at law.
2
The relief demanded is that the penalty assessments be declared void; that the Director be enjoined from collecting such assessments and that the tax liens and notices of levy be cancelled. The Director challenges plaintiffs' right to enjoin collection and relies on Section 7421 of the Internal Revenue Code of 1954 (the Code) (26 U.S.C.A. 7421)1 as prohibiting suits to restrain collection and argues that the exceptions therein specified are not applicable in this case.
3
The district court (187 F.Supp. 857) held that the 'ninety day letters' requirement did not apply to assessments under Subtitle C of the Code; that Section 7421 bars all actions to restrain collection except 'where (a) the tax assessment is an illegal exaction in the guise of a tax and (b) there are present 'special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence.' Miller v. Standard Nut Margarine Co. of Florida, 1932, 284 U.S. 498, 509, 52 S.Ct. 260, 263, 76 L.Ed. 422.' The court concluded that 'to come within this judicial exception to the statute plaintiffs must meet both of the above requirements' and that the bare allegation of 'irreparable harm' is inadequate to invoke equity jurisdiction.
4
This so-called 'judicial exception' apparently emanates from the Nut Margarine case, supra. However, it would be very questionable reasoning to conclude from a single case decided upon the facts therein presented that it expressed the only exception which might be required to make the injunctive statute compatible with more underlying constitutional principles. Certainly there are other and different 'special and extraordinary' circumstances than a tax imposed under an inapplicable oleomargarine statute. Thus, the injunction of the Fifth Amendment relating to deprivation of property without due process of law may well be entitled to priority consideration under appropriate circumstances. Moreover, even the collection of taxes should be exacted only from persons upon whom a tax liability is imposed by some statute.
5
Upon what basis is the assessment here made? The applicable sections of the Code creating the asserted liability are 6671 and 6672. Paraphrased briefly, any person (Thru-County) required to collect, but who wilfully fails to collect and pay over, a tax shall be liable to a penalty equal to the tax, to wit, 100%. Thru-County may be regarded as the primary taxpayer but it is bankrupt. However, a 'person' includes an officer or employee of a corporation who 'is under a duty to perform the act in respect of which the violation occurs' (Sections 6671(b), 6672, Code). Not every 'officer' or 'employee' of a corporation is subject to the 'penalty' but only if he be 'under a duty to perform the act,' namely, be responsible for making the deductions and payments. The assessment provisions relating to a 'tax' also refer to 'penalties.'
6
Against this background should be projected the case of the plaintiff Montagni who, according to the complaint, was not an officer and was not charged with any duty of preparing, signing and filing such tax returns or paying such taxes. A fair reading of the relevant sections shows an intent to impose a 'penalty.' The only 'person' liable for such penalty is the 'person required to collect, truthfully account for, or pay over any tax * * *.' As additional proof that the penalty is addressed to specific individuals, it applies solely to those who 'wilfully' fail to collect and/or pay over. Were a person in no manner obligated to collect or pay over the tax, any assessment against him or seizure of his property to pay a penalty imposed against another would scarcely seem consistent with that protection, whether it be called equity, due process or merely common sense justice, which our system of jurisprudence purportedly bestows upon our citizens.
7
The basis for the decision below was the injunctive bar of Section 7421. We had rather recently recognized that 'it has long been settled that this general prohibition is subject to exception in the case of an individual taxpayer against a particular collector where the tax is clearly illegal or other special circumstances of an unusual character make an appeal to equitable remedies appropriate.' National Foundry Co. of N.Y. v. Director of Int. Rev., 2 Cir., 1956, 229 F.2d 149, 151.
8
In Communist Party, U.S.A. v. Moysey, D.C.S.D.N.Y.1956, 141 F.Supp. 332, the trial judge in an action to restrain the collection of a tax assessed against the plaintiff therein made a comprehensive and careful analysis of the situations and categories which he classified as exceptions to the general rule, namely:'(a) Suits to enjoin collection of taxes which are not due from the plaintiff but, in fact, are due fom others. For example, Raffaele v. Granger, 3 Cir., 1952, 196 F.2d 620, 622, in which the Court enjoined the distraint against a bank account in the joint names of husband and wife "as tenants by the entireties" when the tax was due solely from the husband.
9
'(b) Cases in which plaintiff definitely showed that the taxes sought to be collected were 'probably' not validly due. For example, Midwest Haulers, Inc. v. Brady, 6 Cir., 1942, 128 F.2d 496 and John M. Hirst & Co. v. Gentsch, 6 Cir., 1943, 133 F.2d 247.
10
'(c) Cases in which a penalty was involved. For example, Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453, 66 L.Ed. 822; Lipke v. Lederer, 259 U.S. 557, 42 S.Ct. 549, 66 L.Ed. 1061; Regal Drug Corporation v. Wardell, 260 U.S. 386, 43 S.Ct. 152, 67 L.Ed. 318; Allen v. Regents of the University System of Georgia, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448.
11
'(d) Cases in which it was definitely demonstrated that it was not proper to levy the tax on the commodity in question, such as Miller v. Standard Nut Margarine Company of Florida, 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422.
12
'(e) Cases based upon tax assessments fraudulently obtained by the tax collector by coercion. For example, Mitsukiyo Yoshimura v. Alsup, 9 Cir., 1948, 167 F.2d 104' (141 F.Supp. at page 338).
13
In the present case, if any of the plaintiffs are not subject to any tax liability, such plaintiff might well be within the exception stated in 9 Mertens, Law of Federal Income Taxation, 49.213, Chap. 49, p. 226 as follows:
14
'As an exception to the general rule, the courts have entertained injunction suits by third parties to prevent the taking of their property to satisfy the tax liability of another' (citing many cases in support of this principle).
15
As said by the court in Raffaele v. Granger, 3 Cir., 1952, 196 F.2d 620, 623:
16
'This court and others have consistently held that Section 3653(a) of Title 26 does not prevent judicial interposition to prevent a Collector from taking the property of one person to satisfy the tax obligation of another.'
17
And in Rothensies v. Ullman, 3 Cir., 1940, 110 F.2d 590, 592:
18
'We think that the section of the Internal Revenue Code which we have quoted was not intended to deprive the courts of jurisdiction to restrain revenue officers from illegally collecting taxes out of property which does not belong to the person indebted to the government.'
19
The rationale behind Section 7421 and the exceptions thereto cannot be better or more succinctly stated than by the court in Adler v. Nicholas, 10 Cir., 1948, 166 F.2d 674, 678, in a case wherein the plaintiff and his wife brought an action against the Collector of Internal Revenue to determine title to property against which the Collector had issued a warrant of distraint. The trial court dismissed the complaint against the Collector, holding that it was without jurisdiction. The Court of Appeals reversed with instructions to permit the pleading to be recast. The court said:
20
'(1) The reason why a taxpayer may not ordinarily challenge the validity of a tax claim asserted against him by the Government by an action to enjoin its collection is founded upon public policy and the necessity of prompt payment of such taxes in order to enable the Government to properly function. In order, however, to protect the rights of the individual, Congress has provided a means for adjudicating such rights. Thus, Congress has provided that one challenging the legality of a tax may pay it under protest and then institute an action in a court of competent jurisdiction to recover the amount so paid. Ordinarily this is the taxpayer's sole remedy. It has long been recognized that this satisfies the constitutional requirements of due process.
21
'(2) It is equally well setted that the Revenue laws relate only to taxpayers. No procedure is prescribed for a nontaxpayer where the Government seeks to levy on property belonging to him for the collection of another's tax, and no attempt has been made to annul the ordinary rights or remedies of a non-taxpayer in such cases. If the Government sought to levy on the property of A for a tax liability owing by B, A could not and would not e required to pay the tax under protest and then institute an action to recover the amount so paid. His remedy woluld be to go into a court of competent jurisdiction and enjoin the Government from proceeding against his property.'
22
In Tomlinson v. Smith, 7 Cir., 1942, 128 F.2d 808, the plaintiff, a trustee suing to protect a mortgage lien, brought an action to restrain the Collector, who was seeking to collect Social Security taxes allegedly owed by members of a partnership, from distraining certain partnership property on which the plaintiff claimed a prior lien. The court affirmed an order granting an interlocutory injunction and noted the 'distinction between suits instituted by taxpayers and non-taxpayers' (at page 811).
23
We recognize, of course, the many cases which hold that a taxpayer against whom an assessment is made must pay the tax and bring an action to recover the payment. Thus, the amount of the tax, its legality or even constitutionality are not to be tested by injunctive action to restrain collection. Nor do 'special and extraordinary' circumstances embrace financial hardship in making the payment. 'The decided cases dealing with what constitutes irreparable injury are legion in number' (Stanton v. Machiz, D.C.Md. 1960, 183 F.Supp. 719, 726) but thus far plaintiffs here only plead an insufficient conclusory allegation.
24
Whether this case would come within the 'penalty' category and controlled by the cases cited in subparagraph (c) of Communist Party, U.S.A.,supra, need not now be decided. The same conclusion is reached as to whether plaintiffs acted 'willfully.' This issue can be tested in any suit brought for a refund. For the present, it is sufficient to decide that plaintiffs should have an opportunity to replead if they so desire in an amended complaint (Conley v. Gibson, 1957, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80; Nagler v. Admiral Corp., 2 Cir., 1957, 248 F.2d 319). Plaintiffs may or may not be able to allege facts showing that Section 7421 is inapplicable to them. However, a reasonable construction of the taxing statutes does not include vesting any tax official with absolute power of assessment against individuals not specified in the statutes as persons liable for the tax without an opportunity for judicial review of this status before the appellation of 'taxpayer' is bestowed upon them and their property is seized and sold. A fortiori is the case where the liability is asserted by way of a penalty for a willful act.
25
The judgment should be modified to grant permission to serve an amended complaint and the case is remanded for this purpose.
26
CLARK, Circuit Judge (concurring).
27
I concur in the result reached by my brothers, but believe the exception for the granting of an injunction against the collection of a tax should be stated less broadly.
28
'A showing of extraordinary and exceptional circumstances must be found in the complaint if an escape is to be made from the prohibition of Section 7421, Internal Revenue Code.' Holdeen v. Raterree, D.C.N.D.N.Y., 155 F.Supp. 509, 510, affirmed on opinion below, 2 Cir., 253 F.2d 428. The complaint before us makes no such showing. Indeed, it does not even allege that plaintiffs are unable to pay the amount of the assessments and then sue for refunds. Paragraph 19 of the complaint states in conclusory fashion that plaintiffs are suffering and will continue to suffer 'irreparable harm and damage,' but this is insufficient to show the required 'extraordinary and exceptional circumstances.' Furthermore, mere hardship or difficulty in raising the amount of the tax is insufficient to justify the injunction. E.g., Matcovich v. Nickell, 9 Cir., 134 F.2d 837. On the other hand, an injunction has been granted to prevent destruction of a business, John M. Hirst & Co. v. Gentsch, 6 Cir., 133 F.2d 247; Midwest Haulers v. Brady, 6 Cir., 128 F.2d 496, or to prevent reduction of the taxpayer to a state of destitution, Long v. United States, D.C.S.D.Ala., 148 F.Supp. 758. While the cases are not all consistent on the degree of hardship that must be shown, plaintiffs have not qualified under even the most lenient test.
29
The authorities relied on by my brothers deal principally with the proposition that a nontaxpayer may enjoin seizure of his property to pay taxes owed by another. These cases are not strictly applicable to the present case, since they involve 'nontaxpayers' against whom the government was not asserting any liability. In the present case the government does assert liability against the plaintiffs. Somewhat closer to the present case are decisions enjoining collection of tax from alleged transferees, where the court has found that transferee liability was not properly imposed. Holland v. Nix, 5 Cir., 214 F.2d 317; Shelton v. Gill, 4 Cir., 202 F.2d 503. These cases, together with those relied upon by my brothers, indicate that a court will more readily find 'extraordinary and exceptional circumstances' where the party seeking the injunction is not the primary taxpayer and where he makes a showing that he cannot be properly subjected to any derivative liability. The present complaint does not make a showing of such circumstances; but I am willing to join my brothers to permit the plaintiff to attempt to make such a showing, if he can, in an amended complaint.
1
'(a) Tax.-- Except as provided in sections 6212(a) and (c), and 6213(a), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.'
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42 So.3d 245 (2010)
ARTIST
v.
STATE.
No. 5D10-2437.
District Court of Appeal of Florida, Fifth District.
August 10, 2010.
Decision Without Published Opinion Affirmed.
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352 U.S. 995
77 S.Ct. 554
1 L.Ed.2d 540
CENTRAL OF GEORGIA RAILWAY COMPANY, petitioner,v.BROTHERHOOD OF RAILROAD TRAINMEN, LOCAL LODGE NO. 721, et al.
No. 84.
Supreme Court of the United States
February 25, 1957
Mr. John B. Miller, for petitioner.
Messrs. Benning M. Grice and Wayland K. Sullivan, for respondents.
On writ of certiorari to the United States Court of Appeals for the Fifth Circuit.
PER CURIAM.
1
Upon the suggestion of mootness the writ is dismissed on the ground that the cause is moot.
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i i i i i i
MEMORANDUM OPINION
No. 04-08-00784-CR
IN RE Dempsey L. SUTTON
Original Mandamus Proceeding1
PER CURIAM
Sitting: Alma L. López, Chief Justice
Sandee Bryan Marion, Justice
Rebecca Simmons, Justice
Delivered and Filed: November 19, 2008
PETITION FOR WRIT OF MANDAMUS DENIED AS MOOT
On October 23, 2008, relator Dempsey L. Sutton filed a petition for writ of mandamus,
seeking to compel the trial court to rule relator’s second motion for post-conviction DNA testing.
On October 30, 2008, the trial court signed an order denying relator’s second motion for post-
conviction DNA testing. In light of the trial court’s action, the complaint presented in relator’s
petition is now moot. Accordingly, the petition for writ of mandamus is denied as moot.
PER CURIAM
DO NOT PUBLISH
1
… This proceeding arises out of Cause No. 1985-CR-1279A, styled State of Texas v. Dempsey Leon Sutton,
in the 186th Judicial District Court, Bexar County, Texas, the Honorable Maria Teresa Herr presiding.
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08-2930-ag
Li v. Holder
BIA
A073 508 034
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 27th day of October, two thousand ten.
5
6 PRESENT:
7 DENNIS JACOBS,
8 Chief Judge,
9 JON O. NEWMAN,
10 PIERRE N. LEVAL,
11 Circuit Judges.
12 _________________________________________
13
14 FANG MEI LI,
15 Petitioner,
16
17 v. 08-2930-ag
18 NAC
19 ERIC H. HOLDER, JR., UNITED STATES
20 ATTORNEY GENERAL,*
21 Respondent.
22 _________________________________________
*
Pursuant to Federal Rule of Appellate Procedure
43(c)(2), Attorney General Eric H. Holder, Jr., is
automatically substituted for former Attorney General
Michael B. Mukasey as respondent in this case.
08232010-30
1 FOR PETITIONER: Robert J. Adinolfi, Louis &
2 Adinolfi, LLC, New York, New York.
3
4 FOR RESPONDENT: Gregory G. Katsas, Assistant
5 Attorney General; Ernesto H. Molina,
6 Jr., Assistant Director; Joanna L.
7 Watson, Trial Attorney, Office of
8 Immigration Litigation, United
9 States Department of Justice,
10 Washington, D.C.
11
12 UPON DUE CONSIDERATION of this petition for review of a
13 Board of Immigration Appeals (“BIA”) decision, it is hereby
14 ORDERED, ADJUDGED, AND DECREED, that the petition for review
15 is DENIED.
16 Fang Mei Li, a native and citizen of China, seeks
17 review of a May 30, 2008, BIA order denying her motion to
18 reopen. In re Fang Mei Li, No. A073 508 034 (B.I.A. May 30,
19 2008). Li’s motion to reopen was based on her claim that
20 she fears involuntary insertion of an intrauterine device
21 (“IUD”) on account of the birth of her U.S. citizen child.
22 For largely the same reasons this Court set forth in Jian
23 Hui Shao v. Mukasey, 546 F.3d 138, 169 (2d Cir. 2008), we
24 find no error in the BIA’s conclusion that Li did not
25 demonstrate a change in country conditions sufficient to
26 excuse the untimely filing of her motion to reopen. See id.
27 at 168-72. Nor did the BIA err in finding that Li failed to
28 demonstrate her prima facie eligibility for relief because
08232010-30 2
1 although the evidence she submitted reflected that
2 sterilization and the use of an IUD are mandatory for
3 certain individuals, it did not indicate that those who fail
4 to comply are forcibly sterilized or inserted with an IUD.
5 See id. at 172. Subsequent to the BIA’s decision in this
6 case, we found permissible the BIA’s conclusion that an
7 involuntary IUD insertion is not a per se ground for asylum.
8 See Xia Fan Huang v. Holder, 591 F.3d 124, 129-30 (2d Cir.
9 2010).
10 Finally, contrary to Li’s contention, the BIA did not
11 err in concluding that she failed to provide a valid basis
12 for equitably tolling the time limitation applicable to her
13 motion to reopen because she did not assert that
14 extraordinary circumstances prevented her from timely filing
15 her motion. See Iavorski v. U.S. INS, 232 F.3d 124, 129 (2d
16 Cir. 2000) (“Equitable tolling applies as a matter of
17 fairness where a [party] has been prevented in some
18 extraordinary way from exercising his rights.”) (internal
19 quotation marks and citation omitted).
20 For the foregoing reasons, this petition for review is
21 DENIED. As we have completed our review, any stay of
22 removal that the Court previously granted in this petition
23 is VACATED, and any pending motion for a stay of removal in
08232010-30 3
1 this petition is DISMISSED as moot. Any pending request for
2 oral argument in this petition is DENIED in accordance with
3 Federal Rule of Appellate Procedure 34(a)(2), and Second
4 Circuit Local Rule 34.1(b).
5 FOR THE COURT:
6 Catherine O’Hagan Wolfe, Clerk
7
08232010-30 4
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272 B.R. 510 (2002)
In re HEALTHCO INTERNATIONAL, INC., Debtor.
Hicks, Muse & Co., Inc., et al Gemini Partners, L.P. and Lazard Freres & Co., LLC, Appellants,
v.
William A. Brandt, Jr., Trustee Appellee.
Nos. MW 01-040 to MW 01-042.
United States Bankruptcy Appellate Panel of the First Circuit.
February 1, 2002.
David Lee Evans, D. Ethan Jeffery, Boston, MA, Mark N. Parry, New York *511 City, Arnold P. Messing, E. Kenly Ames, Boston, MA, Thomas G. Rafferty, New York City, for appellants.
Daniel C. Cohn, David B. Madoff, Boston, MA, for appellee.
Before HAINES, DEASY & KORNREICH, U.S. Bankruptcy Appellate Panel Judges.
HAINES, Bankruptcy Judge.
In this consolidated proceeding the appellants challenge the bankruptcy court's order determining that costs awarded to them following their successful defense of actions initiated by the Chapter 7 trustee in the U.S. District Court are general unsecured claims, not entitled to administrative priority. For the reasons set forth below, we reverse.
Introduction
Healthco International, Inc., filed a voluntary Chapter 11 petition on June 9, 1993. The case was converted to Chapter 7 on September 1, 1993. William A. Brandt was appointed trustee shortly thereafter.
In June 1995, Brandt initiated suit against multiple defendants, alleging that a pre-bankruptcy leveraged buyout of Healthco was a fraudulent transaction. Brandt's complaint sought to impose liability against various persons and entities for their respective roles in the buyout transaction. A number of defendants settled with Brandt. The appellants[1] did not, and they prevailed against Brandt after a 27-day jury trial in the U.S. District Court.[2] As prevailing parties, the appellants sought, and received, orders for costs from the district court pursuant to Fed.R.Civ.P. 54(d) and 28 U.S.C. § 1920.[3] The Lazard Freres cost award was $62,283.62. The Gemini Partners award totaled $89,511.40. The Hicks, Muse Defendants' costs were allowed in the amount of $129,367.70.
When Brandt declined the appellants' requests that their allowed costs be paid pursuant to the district court's orders, they filed motions in the bankruptcy court asking that the costs bills be recognized as administrative expenses and paid, with interest, at once. In a one-page order dated *512 May 22, 2001, the bankruptcy court ruled that the appellants' entitlements were general, unsecured claims and, therefore, not entitled to priority payment. This appeal ensued.
Jurisdiction
The order denying appellants' request for administrative priority and demand for payment is a final order. See In re Saco Local Dev. Corp., 711 F.2d 441 (1st Cir.1983) (discussing principles of finality for purposes of bankruptcy appeals); Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643 (1st Cir. BAP 1998) (same). We have jurisdiction pursuant to 28 U.S.C. § 158(a) & (b).
Standard of Review
The appellants challenge only the bankruptcy court's legal conclusions. We exercise de novo review over questions of law. United States v. Yellin (In re Weinstein), 272 F.3d 39, 42 (1st Cir.2001); Aetna Cas. & Sur. Co. v. Markarian (In re Markarian), 228 B.R. 34, 35 (1st Cir. BAP 1998).
Discussion
The bankruptcy court concluded that, because the appellants' claims for costs "arise out of the Chapter 7 Trustee's non-frivolous pursuit of recovery for the claimants' allegedly actionable prepetition conduct, all in the due course of the Trustee's liquidation and administration of [Healthco's] estate," the outcome was controlled by Cramer v. Mammoth Mart, Inc. (In re Mammoth Mart, Inc.), 536 F.2d 950, 954 (1st Cir.1976), and Woburn Assocs. v. Kahn (In re Hemingway Transport, Inc.), 954 F.2d 1, 6-7 (1st Cir.1992). The court determined that the appellants could not prevail under those authorities.
Mammoth Mart, a pre-Code decision, retains vitality as the First Circuit's signal articulation of the distinction between prepetition claims and postpetition claims entitled to administrative priority. It stands for the proposition that claims founded on executed prepetition contracts are prepetition claims, even though the right to payment may not have accrued until after bankruptcy's commencement. In re Mammoth Mart, Inc., 536 F.2d at 954-55.
Hemingway applied Mammoth Mart's teachings to a claim for attorneys' fees from a party who had successfully defended a Chapter 7 trustee's postpetition action seeking indemnification for certain environmental clean-up costs. The defendant/claimant prevailed against the trustee on summary judgment, and, relying on a pre-bankruptcy indemnification agreement with the debtor, received an attorneys' fees award. It then sought administrative priority treatment for the award. In re Hemingway Transport, Inc., 954 F.2d at 4. The bankruptcy court denied the request for administrative priority because the fee award arose under the terms of the prepetition indemnification agreement. Id. The district court affirmed, as did the First Circuit. The court of appeals explained that a claim will generally qualify for administrative expense treatment if:
(1) the right to payment arose from a postpetition transaction with the debtor estate, rather than from a prepetition transaction with the debtor, and (2) the consideration supporting the right to payment was beneficial to the estate of the debtor.
Id. at 5. Claims without the required components may qualify for administrative treatment only in limited circumstances, where "fundamental fairness" requires it. Id. More specifically, entities "injured" by the debtor-in-possession's business operations may receive priority payment, even though their claims did not arise from *513 "transactions" necessary to preserve or rehabilitate the estate. Id. at 5-6 (elucidating the so-called "Reading exception," citing Reading Co. v. Brown 391 U.S. 471, 477, 88 S.Ct. 1759, 20 L.Ed.2d 751 (1968), and the extension of the Reading exception effected in Spunt v. Charlesbank Laundry, Inc. (In re Charlesbank Laundry, Inc.), 755 F.2d 200, 203 (1st Cir.1985)). In a nutshell, the "fundamental fairness" exception is recognized when the debtor's postpetition operations occasion tortious injuries to third parties (Reading), or when the claim arises from postpetition actions that deliberately violate applicable law and damage others (Charlesbank).[4]
The bankruptcy court considered that appellants' claims arose from the trustee's liquidation and collection of estate assets (causes of action) arising from prepetition transactions and occurrences. It concluded that appellants had established neither garden variety administrative priority nor the requisites for exceptional, "fundamental fairness" administrative treatment.
Although we agree that the claims the trustee pursued were rooted in pre-bankruptcy events, and although we agree that the fundamental fairness exceptions do not apply, those factors are beside the point. The appellants' claims for costs are entitled to administrative priority under the express, unambiguous terms of the pertinent statutory provision.
The Bankruptcy Code's Chapter 7 distribution scheme is established by § 726(a), which references § 507.[5] Administrative claims entitled to first priority are specified in § 507(a)(1):
(a) The following expenses and claims have priority in the following order:
(1) First, administrative expenses allowed under section 503(b) of this title, and any fees and charges assessed against the estate under Chapter 123 of title 28 [28 U.S.C. §§ 1911 et seq.].
11 U.S.C. § 507(a)(1) (emphasis supplied). As "charges assessed against the estate," the appellants' claims for costs assessed by the district court after their successful defense of the trustee's action fit the statute precisely.[6] We reject Brandt's argument that the word "and" in § 507(a)(1) must be read to require that any such assessment be accompanied by, or bound up with, a § 503(b) claim. If it were to be so read, the converse would apply: no administrative expense allowance could receive first priority unless it were accompanied by an assessment of costs a patently absurd proposition. Such claims are not routinely litigated to judgment.[7]
*514 Our conclusion is consistent with Hemingway's teachings. Hemingway rejected the claim for administrative treatment of an attorney's fees award because the claimant's fee entitlement sprang from the terms of its prepetition indemnity agreement with the debtor. In re Hemingway Transport, Inc., 954 F.2d at 4-5. The bankruptcy court had expressly found that the trustee's third party complaint was not "frivolous and ill-advised," id. at 4, and the court of appeals observed:
[The claimant] was not awarded attorney fees in its postpetition third party action with the trustee in bankruptcy. Instead, its § 503(a) request for payment of its attorney fees as an administrative expense was based entirely on its prepetition lease indemnification agreement with Hemingway.
Id. at 5 n. 4. Thus, Hemingway strongly intimated that, had fees been assessed as a consequence of the litigation, rather than awarded as an entitlement under the prepetition contract, a different result might have obtained.[8]
The appellants ask that we direct the bankruptcy court to order the trustee to pay them at once. We hesitate to venture so far. The record is unclear as to the estate's present resources and the bankruptcy court, having concluded that administrative priority did not apply, has yet to consider the question.
Therefore, the bankruptcy court's order determining that appellants were not entitled to administrative priority under § 507(a)(1) for the Bills of Costs assessed by the district court is REVERSED, and the case is REMANDED to the bankruptcy court for further proceedings consistent with this opinion.
NOTES
[1] The appellants are the so-called "Hicks, Muse Defendants:" Hicks, Muse & Co. (TX), Inc., formerly known as Hicks, Muse & Co., Inc., Healthco Holding Corp., formerly known as HMD Holding Corp., Thomas O. Hicks, John R. Muse, and Jack E. Furst; as well as Gemini Partners, L.P. and Lazard Freres & Co., LLC. As their interests and arguments are identical, they henceforth will be referred to collectively.
[2] The district court's judgment was affirmed by the First Circuit. See Brandt v. Wand Partners, 242 F.3d 6 (1st Cir.2001).
[3] Rule 54(d) provides, in pertinent part:
(d) Costs . . . (1) Costs Other Than Attorneys' Fees. Except when express provision therefor is made either in a statute of the United States or in these rules, costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs. . . .
Section 1920 of Title 28 provides:
A judge or clerk of any court of the United States may tax as costs the following:
(1) Fees of the clerk and marshal;
(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and copies of papers necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.
[4] We acknowledge that some courts have criticized the First Circuit's Mammoth/Hemingway model as unduly restricting the notion of administrative claim. See, e.g., In re Beyond Words Corp., 193 B.R. 540, 546-47 (N.D.Cal.1996) (administrative status would be accorded anticipated attorneys' fees, to accrue under a pre-bankruptcy contract, as a result of postpetition litigation to be initiated by trustee). However, our circuit law is clear and, in the end, such criticisms are beside the point for today's purposes.
[5] All references to the "Bankruptcy Code" or the "Code" are to the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. § 101 et seq. Unless otherwise indicated, all citations to statutory sections refer to sections of the aforementioned Code.
[6] As costs assessed under 28 U.S.C. § 1920, supra n. 3, there can be no contest that they fit § 507(a)(1)'s exact cross-reference.
[7] Moreover, chapter 123 of title 28, to which § 507(a)(1) refers, includes, in addition to 28 U.S.C. § 1920 (under which the costs at issue here were assessed), 28 U.S.C. § 1930, which sets fees that may be charged in bankruptcy cases and authorizes the Judicial Conference to prescribe additional fees, including the U.S. Trustee's fee in Chapter 11 cases. See 4 Lawrence P. King, Ed., Collier on Bankruptcy ¶ 507.03 at 507-23 (15th Ed.Rev.) (2001).
[8] We will not tarry with Brandt's counsel's assertion at oral argument that, in the court below, the appellants did not pursue the line of argument we find convincing. We have perused the record and are satisfied that, although both parties were sidetracked with arguments about Hemingway's import, the appellants cited § 507(a)(1) and sought payment under its terms.
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Filed 5/5/16 P. v. Moses CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
THE PEOPLE, 2d Crim. No. B267541
(Super. Ct. No. 14C-48655)
Plaintiff and Respondent, (San Luis Obispo County)
v.
KEVIN DESHAUN MOSES,
Defendant and Appellant.
Kevin Deshaun Moses appeals the judgment entered after he pled no
contest to assault by means of force likely to cause great bodily injury (Pen. Code, § 245,
subd. (a)(4)1 and admitted a prior strike conviction (§§ 667, subds. (d) & (e); 1170.12,
subds. (b) & (c)) and a prior prison term enhancement (§ 667.5, subd. (b)). Appellant
was sentenced to nine years state prison and ordered to pay a $300 restitution fine,
(§ 1202.4, subd. (b)), victim restitution, and various statutory fines and fees.
We appointed counsel to represent appellant in this appeal. After
examining the record, counsel filed an opening brief raising no issues. On February 22,
2016, we advised appellant that he had 30 days to personally submit any contentions he
wished us to consider. No response has been received from appellant.
1 All further statutory references are to the Penal Code unless otherwise stated.
We have reviewed the entire record and are satisfied that appellant's
attorney has fully complied with his responsibilities and that no arguable issues exist.
(People v. Kelly (2006) 40 Cal.4th 106, 126; People v. Wende (1979) 25 Cal.3d 436,
443.)
The judgment is affirmed.
NOT TO BE PUBLISHED.
` YEGAN, J.
We concur:
GILBERT, P. J.
PERREN, J.
2
Donald G. Umhofer, Judge
Superior Court County of San Luis Obispo
______________________________
Richard B. Lennon, under appointment by the Court of Appeal, for
Defendant and Appellant.
No appearance for Plaintiff and Respondent.
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708 A.2d 554 (1998)
Camille E. ALLARD
v.
Albert R. ALLARD.
No. 96-427-Appeal.
Supreme Court of Rhode Island.
March 25, 1998.
*555 Douglas James Rose and Robert A. Mitson, Woonsocket, for Plaintiff.
Gerald M. Brenner, Woonsocket, for Defendant.
Before WEISBERGER, C.J., and LEDERBERG, FLANDERS and GOLDBERG, JJ.
OPINION
WEISBERGER, Chief Justice.
This case comes before us on appeal by Albert R. Allard (Albert) from an order of the Family Court denying, in part, his motion to modify the final decree of divorce ordering him to pay a percentage of his weekly disability benefits to his former spouse Camille E. Allard (Camille). The issue is whether a disability pension is subject to equitable distribution to the extent that it represents an employed spouse's vested retirement pay earned during the marriage. We are of the opinion that it is, and for the reasons set forth below, we affirm the judgment of the Family Court. The undisputed facts underlying this appeal are as follows.
Albert and Camille were married on November 11, 1972. On December 8, 1974, Albert was hired as a firefighter/rescue worker by the Woonsocket Fire Department. On March 15, 1991, the Family Court granted Albert and Camille an absolute divorce on the ground of irreconcilable differences. The final judgment of divorce was entered on June 24, 1991. At that time the three children born of the marriage were minors residing with Camille. Presently one minor child lives with Camille and is supported by Albert. The parties' two other children are emancipated.
Pursuant to the terms of the final judgment of divorce Camille was given the option to sell the marital domicile, the net proceeds of which were to be divided between Camille and Albert, sixty-five percent and thirty-five percent, respectively. The final judgment also awarded Camille onehalf of the value of Albert's pension plan, which he maintains through his employer, the City of Woonsocket Fire Department. Albert had contributed to the retirement pension out of the couples' marital assets throughout the parties' eighteen-year marriage. The terms of the judgment provided that Albert was to pay Camille one-half the present value of his retirement pension evaluated as of March 15, 1991, from his share of the proceeds of the sale of the marital domicile. Mark B. Magnus, an actuary hired by Camille, calculated the present value of Albert's twenty-year-retirement pension to be $167,098. Half that sum, or $83,-549, represents the amount to which Camille is entitled pursuant to the terms of the final judgment of divorce.
On May 18, 1994, Albert and Camille entered into a consent decree wherein Albert conveyed his interest in the marital domicile to Camille in return for a $35,500 credit toward the dollar amount owed from his pension plan. According to the terms of the consent decree the city of Woonsocket would pay to Camille twenty-nine percent of Albert's monthly pension payments when Albert began receiving such payments until the balance of $48,000 was paid.
On July 29, 1994, Albert suffered a jobrelated injury. On January 29, 1995, the mayor of the city of Woonsocket granted Albert's request for a disability-retirement pension. Albert had nonetheless become eligible to apply for a twenty-year-retirement *556 pension fifty-two days earlier. Had Albert retired without a disability in January 1995, he would have received a pension equal to sixty percent of his weekly pay, and Camille would have been entitled to receive one-half of that weekly sum until the balance owed to her pursuant to the consent decree was paid. By qualifying for a disability-retirement pension, Albert took payments equal to 66 2/3 percent of his weekly salary, or $52.15 per week more than what he would have received in straight retirement pay. The disability payments received by Albert may enjoy certain tax advantages.
On April 11, 1995, Albert moved to modify the final judgment of divorce, seeking in part to avoid payments to Camille of a percentage of his retirement pension on the basis that he is receiving a disability pension not subject to equitable distribution. He also sought reimbursement of $35,500his interest in the marital domicile conveyed to Camille in return for a reduced interest in his retirement pension, which Albert claims no longer exists. On September 7, 1995, the Family Court entered a decision finding Camille entitled to fifty percent of the value of Albert's retirement pension evaluated as of March 15, 1991, reduced by the $35,500 credit Albert received for his interest in the marital domicile. On October 6, 1995, an order was entered in accordance with the Family Court's decision, to which Albert objected. The order was temporarily stayed until February 12, 1996, when the Family Court overruled the objection and reinstated the order, nunc pro tune. Albert then filed a timely appeal to this court.
On appeal Albert asserts that his entire disability pension is his separate property under our decision in Thompson v. Thompson, 642 A.2d 1160 (R.I.1994), and, therefore, the trial justice erred in awarding Camille an interest in any portion of his pension. The sole purpose of a disability pension, he contends, is to compensate the employee spouse for lost earning capacity and is thus "totally differentiated" from the function of a retirement pension. We are of the opinion, however, that defendant assigns to Thompson a meaning more sweeping than its holding, which we find not dispositive of the rights of the parties in this case.
In Thompson this court drew a distinction between a contributory retirement pension, which is subject to equitable distribution under G.L.1956 § 15-5-16.1, and a "true" disability pension, which is not.[1]Thompson, 642 A.2d at 1164. In that instance we held that the trial master improperly considered the husband's disability pension marital property and erred by awarding the wife a sixty-five percent interest in it. Id. at 1163-64. The husband began receiving disability payments in 1975 after suffering a job-related injury as a firefighter with the City of Warwick Fire Department. Id. at 1163. He had been employed by the department for only ten years. Id. For the next seventeen. years the husband's biweekly disability payments were used to pay household expenses and to increase the marital estate. Id. On December 8, 1992, the Thompsons divorced. On the basis of these facts we concluded that the husband's disability payments were not equivalent to contributory retirement benefits. Id. at 1164. In a contributory retirement pension the "family loses its ability to spend a portion of its income when that income is deferred and placed in a pension." Moran v. Moran, 612 A.2d 26, 33 (R.I.1992) *557 (quoting Young v. Young, 507 Pa. 40, 488 A.2d 264, 269 (1985)). It is tantamount to a forced savings account whose funds become available upon retirement. Stevenson v. Stevenson, 511 A.2d 961, 965 (R.I.1986).
"To the extent earned during the marriage, the benefits represent compensation for marital effort and are substitutes for current earnings which would have increased the marital standard of living or would have been converted into other assets divisible at dissolution. Subjecting the benefits to division is just, because in most cases the retirement benefits constitute the most valuable asset the couple has acquired and they both have relied upon their pension payments for security in their older years." Id. (quoting 3 Rutkin, Family Law and Practice § 37.07[1] at 37-81 (1985)).
Conversely, the disability payments at issue in Thompson were used by the parties throughout their marriage to increase the marital estate. 642 A.2d at 1163. To the extent that such benefits were put into savings or were used to purchase property during the marriage, those assets were divisible at dissolution. Adopting the reasoning expressed in Ciliberti v. Ciliberti, 374 Pa.Super. 228, 542 A.2d 580 (1988), this court held that Thompson's pension payments were true disability benefits intended to compensate him for personal suffering caused by the disability and for lost earning capacity. Thompson, 642 A.2d at 1163-64. The benefits that were paid to Thompson were in lieu of earnings that would have been paid to him if he had been able to work and could have been terminated if he lost his disabled status.[2]Id. at 1163 (citing Ciliberti, 542 A.2d at 582).
Therefore, of the functions disability pensions potentially serve an employee, we implicitly found only two served by Thompson's disability pension: (1) compensation for personal suffering and (2) compensation for lost earnings resulting from a diminished ability to compete in the employment market. Thompson, 642 A.2d at 1163-64. To the extent that the disability pension compensates the recipient for lost earning capacity and suffering caused by the disability, it is the sole and separate property of the employee spouse and is not subject to equitable distribution. Id.; see also Ciliberti, 542 A.2d at 582.[3]
At the same time we recognized that a disability pension may serve to replace a retirement pension "by providing support for the disabled [employee] and his [or her] family after he [or she] leaves the job." Thompson, 642 A.2d at 1164 (quoting Ciliberti, 542 A.2d at 582). In Ciliberti the Pennsylvania Superior Court declined to hold that true disability benefits are marital property subject to equitable distribution but went on to say that when it can be shown that a portion of an employee spouse's disability pension represents retirement benefits, the amount received by the disabled employee in lieu of retirement benefits remains marital property subject to distribution. 542 A.2d at 582. Clearly, as the employee spouse approaches retirement, this component may become the predominate function served by the disability pension. See In re Marriage of Stenquist, 21 Cal.3d 779, 148 Cal.Rptr. 9, 14, 582 P.2d 96, 101 (1978).
In the present case Albert possessed the option of electing either of two retirement programs. The disability pension offered not only greater benefits but also payments free from taxation. Albert did not begin to receive his disability pension until after he was entitled to receive a twenty-year-retirement pension. In these circumstances the disability pension's function to compensate Albert for lost earning capacity and personal suffering is additional to the objective of providing retirement support As explained by the Supreme Court of California in comparable circumstances:
*558 "[W]here the employee spouse elects to receive disability benefits in lieu of a matured right to retirement benefits, only the net amount thus received over and above what would have been received as retirement benefits constitutes compensation for personal anguish and loss of earning capacity and is, thus, the employee spouse's separate property. The amount received in lieu of matured retirement benefits remains * * * property subject to division on dissolution." In re Marriage of Stenquist, 148 Cal.Rptr. at 14, 582 P.2d at 101 (quoting In re Marriage of Mueller, 70 Cal.App.3d 66, 137 Cal.Rptr. 129, 132 (1977)).
Many other jurisdictions are in accord. Villasenor v. Villasenor, 134 Ariz. 476, 657 P.2d 889 (Ariz.App.1982); Dunn v. Dunn, 35 Ark.App. 89, 811 S.W.2d 336 (1991); In re Marriage of Stenquist, 21 Cal.3d 779, 148 Cal.Rptr. 9, 582 P.2d 96 (1978); Freeman v. Freeman, 468 So.2d 326 (Fla.Dist.Ct.App. 1985); Gilbert v. Gilbert, 442 So2d 1330 (La. CtApp.1983); Queen v. Queen, 308 Md. 574, 521 A.2d 320 (1987); Avallone v. Avallone, 275 N.J.Super. 575, 646 A.2d 1121 (1994); West v. West, 115 A.D.2d 601, 496 N.Y.S.2d 263 (1985); Newell v. Newell, 121 Misc.2d 586, 468 N.Y.S2d 814 (Sup.Ct.1983); In re Hoag and Hoag, 122 OrApp. 230, 857 P.2d 208 (1993); Ciliberti v. Ciliberti, 374 Pa.Super. 228, 542 A.2d 580 (1988); Nuss v. Nuss, 65 Wash.App. 334, 828 P.2d 627 (1992). A compelling rationale underlying this weight of authority is the principle that one spouse should not be allowed to defeat the other spouse's interest in an asset earned and accumulated during the marriage by invoking a condition wholly within his or her control. See, e.g., In re Marriage of Stenquist, 148 Cal.Rptr. at 14-15, 582 P.2d at 101-02; Avallone, 646 A.2d at 1125. We find this reasoning persuasive. If we were to reject this rationale and adopt the approach urged by defendant, Camille would be deprived of a share in her husband's retirement pension that for over eighteen years had been funded by the parties' marital assets. Such an outcome runs counter to our recognition that marriage is, among other things, an economic partnership and that pension benefits can be one of the largest assets of that partnership. Stevenson, 511 A.2d at 964. Indeed the very purpose of our equitable-distribution statute would be defeated because the Family Court would be precluded from providing "a fair and just assignment of the marital assets * * on the basis of the joint contribution of the spouses to the marital enterprise." Stanzler v. Stanzler, 560 A.2d 342, 345 (R.I. 1989).
The defendant, on the other hand, would have us believe that culling the retirement component from his disability pension is contrary to our decision in Kirk v. Kirk, 577 A.2d 976 (R.I.1990). In Kirk, however, this court examined the purpose of a personal-injury settlement in determining whether any portion thereof was subject to equitable distribution under § 15-5-16.1. Id. at 977. In doing so, we concluded that components of the settlement that compensate a spouse for losses that have depleted funds of the marital estate, such as lost wages and uninsured medical expenses incurred during marriage, are marital assets subject to distribution. Id. at 978. Conversely that portion of the settlement compensating the injured spouse for pain and suffering is nonmarital property not subject to distribution. Id. Similarly, losses incurred after entry of final divorce, including future loss of wages, future medical expenses, and future loss of earning capacity, are the injured spouse's separate property and are not divisible. Id. at 978-79. Workers' compensation benefits likewise constitute marital property to the extent that they compensate for lost wages and medical expenses incurred during the marriage. Id. at 979. However, payments that compensate for disfigurement, loss of a limb, lost future wages, or lost future medical expenses are property of the injured spouse. Id. In a manner consistent with this analysis we conclude today that only that portion of defendant's disability pension attributable to his retirement pay is marital property subject to equitable distribution. Anything in excess of that amount represents compensation for defendant's disability and lost earning capacity and is his separate property not subject to distribution under § 15-5-16.1.
*559 Our equitable-distribution statute requires us to examine the nature and the quality of the assets of the marital enterprise and each spouse's contribution to that enterprise before a division of property equitable to both parties is made. Thompson, 642 A2d at 1162; Stevenson, 511 A.2d at 965 n. 4. The Family Court justice is vested with broad discretion to divide the marital property justly and fairly between the parties, and unless he or she misconceives material evidence or is otherwise clearly wrong, this court will not disturb his or her findings on appeal. Thompson, 642 A.2d at 1162; Stevenson, 511 A.2d at 964. In this instance we are of the opinion that the trial justice properly apportioned defendant's pension benefits. He first determined the present value of defendant's twenty-year-retirement pension as of the time final judgment of divorce entered. He then calculated Camille's share of the retirement pension. This sum was later reduced by $35,500 pursuant to the parties' consent decree. The balance remaining represents Camille's interest in the retirement portion of defendant's disability pension, which is to be paid to Camille in monthly increments equal to twenty-nine percent of defendant's monthly disability payments. In light of these circumstances we find no error in the determinations made by the trial justice.
Albert next contends that the trial justice erred in awarding to Camille a percentage of his disability pension because pursuant to G.L.1956 § 9-26-5 a firefighter's disability pension is statutorily exempt from attachment.[4] We do not agree.
Section 9-26-5 does not preclude the Family Court from awarding Camille an interest in the retirement portion of defendant's disability pension because the antiattachment statute is designed to protect pension funds from creditors and not from the families of employees. See Duke v. Duke, 675 A.2d 822, 823 (R.I.1996); Moran, 612 A.2d at 33.
Previously we have held that the provision of § 9-26-5 cannot operate to preclude a police officer's pension from being considered marital property for the purposes of equitable distribution. Stevenson, 511 A.2d at 965. In Stevenson we noted that the pension was analogous in form to a forced savings account by means of which the employee and his family deferred compensation for the purpose of their future financial security and, therefore, should be considered marital property subject to division. Id. Subsequently we applied this same rationale to firefighters' pensions. Duke, 675 A.2d at 823. Specifically we held that the antiattachment statute cannot prohibit the Family Court from ordering a spouse to fulfill his or her support obligations.[5]Id.
Likewise in Moran this court held that a municipal-retirement pension was not exempt from equitable distribution upon divorce by virtue of G.L.1956 § 36-10-34. Moran, 612 A.2d at 33. Section 36-10-34, like § 9-26-5, purports to exempt from attachment state and municipal employees' retirement benefits.[6] The applicable principle, we held, has been explained by the Pennsylvania Supreme Court with particular acuity:
"It would be terribly unfair to read an exemption statute, which was created to protect a pension for the benefit of a retired employee's family, in such a way that *560 the exemption would bar children or a former spouse from receiving support from the very fund created for their benefit, and would once again deny them the benefits of the income they sacrificed to a pension years before." Moran, 612 A.2d at 33 (quoting Young, 488 A.2d at 269).
We find this reasoning persuasive and conclude that § 9-26-5 does not preclude the Family Court from ordering the defendant to pay a percentage of his disability benefits to his former spouse.
For the reasons stated, the defendant's appeal is denied and dismissed and the order declining to modify the final judgment entered by the Family Court is affirmed. The papers in the case may be remanded to the Family Court.
BOURCIER, J., did not participate.
NOTES
[1] General Laws 1956 § 15-5-16.1 provides in pertinent part:
"Assignment a properly.(a) In addition to or in lieu of an order to pay spousal support made pursuant to a complaint for divorce, the court may assign to either the husband or wife a portion of the estate of the other.
* * *
(b) The court may not assign property or an interest therein held in the name of one of the parties if the property was held by the party prior to the marriage, but may assign income which has been derived therefrom during the term of the marriage, and the court may assign the appreciation of value from the date of the marriage of property or an interest therein which was held in the name of one party prior to the marriage which increased in value as a result of the efforts of either spouse during the marriage. The court also shall not assign property or an interest therein which has been transferred to one of the parties by inheritance before, during, or after the term of the marriage. The court shall not assign property or an interest therein which has been transferred to one of the parties by gift from a third party before, during, or after the term of the marriage."
[2] In the present race, even if defendant is divested of his disability pension, he is entitled to receive benefits equal to sixty percent of his weekly income pursuant to his twenty-year-retirement pension.
[3] Such benefits are nonetheless to be considered by the Family Court as a source of income from which alimony and child-support orders can be paid. Thompson v. Thompson, 642 A.2d 1160, 1164 (R.I.1994).
[4] General Laws 1956 § 9-26-5 provides in pertinent part:
"No interest of any person in any pension fund or in any pension derivable therefrom, for the benefit of police officers or firefighters * * * by any city or town * * * to which fund the city or town contributes * * * shall be subject to trustee process or liable to attachment on any writ, original, mesne, or judicial, or be taken on execution or any process, legal or equitable; and no assignment of any such interest shall be valid."
[5] It should be noted that in Duke v. Duke, 675 A.2d 822, 824 (R.I.1996), we modified the order of the Family Court to avoid direct attachment of the pension funds by directing the court to order the employee spouse to assign funds to his former spouse.
[6] General Laws 1956 § 36-10-34 provides in pertinent part:
"Exemption of benefits and contributions from attachmentAny and all retirement benefits and contributions in the state employees' and municipal employees' retirement systems shall be exempt from lien, attachment, or garnishment and shall not be transferable or assignable."
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787 N.W.2d 202 (2010)
AMERICAN BANK OF ST. PAUL, Respondent,
v.
COATING SPECIALTIES, INC., et al., Defendants, and
Co-op Credit Union of Montevideo, Appellant,
v.
Coating Specialties, Inc., et al., Defendants.
No. A09-2059.
Court of Appeals of Minnesota.
August 10, 2010.
*203 Samuel J. H. Sigelman, Kirstin D. Kanski, Lindquist & Vennum P.L.L.P., Minneapolis, MN, for respondent.
Douglas D. Kluver, Nelson Oyen Torvik P.L.L.P., Montevideo, MN, for appellant.
Considered and decided by TOUSSAINT, Chief Judge; LANSING, Judge; and SHUMAKER, Judge.
*204 OPINION
TOUSSAINT, Chief Judge.
Appellant Co-op Credit Union of Montevideo (the credit union) challenges the summary judgment for $50,000 granted to respondent American Bank of St. Paul (the bank) on the basis of the parties' subordination agreement. Because we conclude that the district court did not erroneously apply the law in granting summary judgment or in denying the credit union's motion for reconsideration, we affirm.
FACTS
The bank issued two $25,000 short-term loans, or promissory notes, to Coating Specialties, Inc. (CSI). The security agreements executed with the notes defined "note" as "the Note executed by [CSI] in the principal amount of $25,000 ... together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement." About one month later, the two $25,000 loans were rolled into a single $100,000 line of credit.
The credit union, which held a first-priority security interest in CSI's assets, drafted and executed a subordination agreement stating that:
[The bank] has agreed to Loan $50,000.00 to [CSI] for the following purposes: operating expenses[.]
... [The credit union] hereby (1) consents for [CSI] to obtain said loan from [the bank] for such purposes and (2) agrees to and hereby subordinates in favor of [the bank] and its successors and assigns all liens, security interests, rights, claims, and demands of every kind against the property of the premises specifically described as:
Inventory, accounts receivable, and equipment.
When CSI defaulted on its repayment obligation, the bank accelerated payment. The bank then brought a lawsuit against CSI; it resulted in a judgment of $76,851.93 for the bank. The bank then filed a cross-claim against the credit union to enforce the subordination agreement against the $66,790.25 that the credit union had received as gross proceeds from the sale of CSI's inventory and equipment that the credit union had seized.
The district court concluded that the subordination agreement was unambiguous, that the subordination agreement applied to CSI's current indebtedness to the bank, that the subordination agreement could not be altered by alleged oral statements, and, on the credit union's motion for reconsideration, that the credit union's net proceeds from the sale, $54,028.34, exceeded the subordination amount, and the district court granted summary judgment for $50,000 to the bank on its cross-claim against CSI. The district court denied the credit union's motion for reconsideration on the issue of tracing the proceeds back to the sale of the collateral, which had been argued for the first time in the motion.
The credit union challenges the summary judgment and the partial denial of its motion for reconsideration.
ISSUES
I. Did the district court err in concluding that the subordination agreement was unambiguous and applied to the line of credit?
II. Did the district court err in denying reconsideration on the issue of tracing proceeds back to the sale of the collateral?
ANALYSIS
I.
On appeal from summary judgment, we review the record to "determine whether *205 there are any genuine issues of material fact and whether a party is entitled to judgment as a matter of law." In re Collier, 726 N.W.2d 799, 803 (Minn.2007). A genuine issue of material fact exists if the evidence would "permit reasonable persons to draw different conclusions." Gradjelick v. Hance, 646 N.W.2d 225, 231 (Minn. 2002). We view the evidence in the record "in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993).
"The construction and effect of a contract presents a question of law, unless an ambiguity exists." Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn.1998). Whether a contract is ambiguous is a legal determination. Blattner v. Forster, 322 N.W.2d 319, 321 (Minn.1982). A contract is ambiguous if its terms are reasonably susceptible to more than one interpretation. Id. Unambiguous language must be accorded its plain and ordinary meaning. SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311 (Minn.1995).
The credit union argues that the subordination agreement did not apply after the two $25,000 notes were consolidated into the $100,000 line of credit because the agreement included neither any identification of the notes to which it applied nor an expiration date. The credit union goes on to argue that the agreement was ambiguous and that extrinsic evidence, showing the agreement was intended to apply only to the two $25,000 notes and to expire no later than the due date of the second note, is admissible.
But a party that fails to include a term in a contract is bound by the agreement and cannot use extrinsic evidence to alter unambiguous contract language. Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578, 586-87 (Minn.App.2003). Although the subordination agreement included no terms specifying either the loans or an expiration date, it was a complete agreement. When a written agreement is complete on its face, it is impermissible to use extrinsic evidence to add a term to the agreement when "the writing contains nothing on the particular [term] to which the [extrinsic] evidence is directed." United Artists Commc'ns, Inc. v. Corporate Prop. Investors, 410 N.W.2d 39, 42-43 (Minn.App.1987).
Both security agreements defined "note" to include "all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement." The credit union argues that it should not be bound by this language because it was not a party to the promissory notes issued by the bank to CSI. We disagree. "[T]he execution of a renewal note evidences a new promise to pay the same debt. It does not constitute discharge of the original note; it merely extends the time for payment." Stewart v. Stewart, 400 N.W.2d 157, 159 (Minn.App. 1987); see also Renewal Note as Discharging Original Obligation or Indebtedness, 52 A.L.R. 1416 (stating that "[w]here collateral security has been pledged for the payment of a debt, it is not released by the acceptance of a new note") (citing Anglo-California Trust Co. v. Wallace, 58 Cal. App. 625, 209 P. 78 (1922)). Accordingly, because the credit union drafted the subordination agreement without specifying either the loans to which it applied or an expiration date, the district court properly concluded that the subordination agreement was unambiguous and applied to the $100,000 line of credit.
The credit union also argues that the subordination agreement is ambiguous because it does not state the amount to which the credit union agreed to subordinate its *206 interest in CSI's assets. But the agreement specifically refers to the $50,000 loan, then states that the credit union "consents for [CSI] to obtain said loan from [the bank] for such purposes and ... agrees to and hereby subordinates in favor of [the bank]." When read as a whole, the only reasonable interpretation of the subordination agreement is that the credit union agreed to subordinate its interest in the amount of $50,000. The district court did not err in declining to consider extrinsic evidence on this issue. See Johnson Bros. Corp. v. Rapidan Redevelopment Ltd. P'ship, 423 N.W.2d 725, 729 (Minn.App. 1988) (affirming summary judgment when contract, read as whole, supported district court's interpretation of contract).
II.
"Motions to reconsider are prohibited except by express permission of the court, which will be granted only upon a showing of compelling circumstances." Minn. R. Gen. Pract. 115.11. Motions for reconsideration are not opportunities to present facts that were available when the prior motion was considered and will not be allowed to supplement the record on appeal. Minn. R. Gen. Pract. 115.11 (1997) advisory comm. cmt; see also Sullivan v. Spot Weld, Inc., 560 N.W.2d 712, 716 (Minn.App.1997) (noting that district court record cannot be supplemented by new evidence after court grants summary judgment), review denied (Minn. Apr. 24, 1997).
The district court denied reconsideration on the issue of tracing proceeds back to the sale of collateral. The credit union concedes that it raised the issue of tracing proceeds for the first time after entry of the initial summary judgment order. The district court, therefore, properly denied reconsideration on that issue.
DECISION
The district court properly granted summary judgment for the bank and denied reconsideration on the tracing issue.
Affirmed.
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IN THE SUPREME COURT OF PENNSYLVANIA
WESTERN DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 409 WAL 2018
:
Respondent :
: Petition for Allowance of Appeal from
: the Order of the Superior Court
v. :
:
:
PARIS LYNELL JAMES, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 10th day of April, 2019, the Petition for Allowance of Appeal is
DENIED.
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755 F.2d 927
Grindstaffv.Cox
82-6303
United States Court of Appeals,Fourth Circuit.
2/22/85
1
E.D.Va.
AFFIRMED
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32 Cal.App.3d 478 (1973)
108 Cal. Rptr. 179
THE PEOPLE, Plaintiff and Respondent,
v.
LEO GUERRERO AGUILAR, Defendant and Appellant.
Docket No. 21575.
Court of Appeals of California, Second District, Division Five.
May 18, 1973.
*480 COUNSEL
Helen E. Simmons, under appointment by the Court of Appeal, for Defendant and Appellant.
Evelle J. Younger, Attorney General, Edward A. Hinz, Jr., Chief Assistant Attorney General, William E. James, Assistant Attorney General, Howard J. Schwab and Lawrence P. Scherb II, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
KAUS, P.J.
An amended information charged defendant with the murder (Pen. Code, § 187) of Hector J. Solis. It also charged that the defendant, in committing the offense, used a firearm. (Pen. Code, § 12022.5.) After lengthy deliberations a jury found defendant guilty of second degree murder. The firearm charge was found to be true. Defendant appeals.
FACTS
The homicide occurred during the night between June 23 and June 24, 1971. There is no question that defendant killed Solis with defendant's own .22 semi-automatic pistol in the garage of his residence. There is *481 also compelling evidence that Solis had been carrying on an affair with defendant's wife and that defendant knew about it. Unquestionably when defendant and the victim somehow faced each other in defendant's garage, the atmosphere was charged. As the evidence developed the sole question became whether defendant murdered the victim or killed him in self-defense.
On June 23 defendant was upset and crying. He said that he did not want to leave and that he loved his wife and children very much. Defendant and Solis arranged by telephone that Solis should come over for a talk.
At about 2:51 a.m. Mrs. Aguilar called the police and reported a shooting. Somebody who identified himself as defendant said over the telephone that he had shot the victim over a family argument. The police arrived at defendant's residence about an hour later. Solis' body was found in a supine position. It was warm to the touch. Later, when it was moved, an unlit filter tip cigarette was found under the body. The .22 pistol was on the floor at the victim's right side. One live round was in the chamber and two in the magazine. The hammer was down but there was no firing pin mark on the remaining live round, indicating that the hammer had been carefully released and placed in the down position. An unlit match from a book of paper matches was found near the body. A book of matches was found in the victim's shirt pocket. Microscopic analysis indicated that the match had been torn from that particular book. With the exception of the body of the victim, nothing in the garage indicated that there had been an altercation. Nothing about the defendant's person showed that he had been in a fight. No "defensive wounds" were observed on the victim's hands.
When the police first arrived at the scene and an inquiry was made as to what happened, defendant said: "I did it." He was calm.
The pathologist's testimony indicated that four different bullets had caused six different wounds to the victim, one bullet having passed through one of his hands and then entered his chest. Two other bullets entered the chest directly. A fourth bullet entered the head from the back and was found on the left front of the head.
The defense was, essentially, self-defense. To defendant's knowledge the victim was a karate expert, fond of demonstrating his ability to break boards with his fists or feet. He would explain that he could break a man's neck in the same fashion. He had a short temper. On the night of the homicide Solis came to defendant's house to talk to him. He came with defendant's wife who had not been home for dinner. The two men went to *482 the garage. Solis said: "Look, you son of a bitch, ... I just got through laying your wife again, and I want you to divorce her or I will kill you, and I will get your daughter next." He produced a motel key. He then hit defendant across the chest with a karate chop. Defendant was knocked across some shelves and reached for the gun which he had kept in the garage. He told the victim to leave him and his wife alone. The victim cried "like a wild animal" and charged at defendant with a side kick, turning his head to the left. Defendant cocked the gun and fired until the victim dropped.
DISCUSSION
On appeal defendant makes six contentions:
1. The evidence was insufficient to sustain the conviction.
2. The prosecution improperly referred to prior acts of misconduct by defendant.
3. The jury was improperly coerced to reach a verdict.
4. The court erred in not instructing the jury on manslaughter.
5. The additional sentence pursuant to section 12022.5 of the Penal Code denies defendant equal protection and constitutes excessive, cruel or unusual punishment.
6. The prosecution improperly offered evidence that defendant, after he had been arrested, did not claim to have acted in self-defense.
I.
(1) Though counsel on appeal makes a valiant effort to reargue the evidence, we cannot possibly say that it does not support the verdict. No particular purpose would be served by detailing it further. Suffice it to say that pursuant to the provisions of section 1105 of the Penal Code, as interpreted by many decisions, the People had clearly made out a case of second degree murder. (See generally, People v. Loggins, 23 Cal. App.3d 597 [100 Cal. Rptr. 528].) The jury was instructed and reinstructed that the defense evidence on self-defense only had to raise a reasonable doubt as to defendant's guilt of murder. It is evident that defendant did not succeed in doing so.
II.
(2) One John Miramontes, a close friend of defendant who had known him for eight years, described him as "not very aggressive," "not hot tempered," and "always real calm." He further testified that he had discussed *483 defendant's character for aggressiveness, temper and their opposites with other people in the community. Defendant's reputation was good and the witness had never heard of him getting excited or being in a fight. The victim, on the other hand, was an aggressive loudmouth. On cross-examination Miramontes was asked the two questions copied in the footnote.[1] No objection was made. The witness answered both questions in the negative.
In view of the lack of an objection below, we probably should not discusse the matter further. In form the questions fit the classic mold of impeachment of character witnesses. (See generally, Michelson v. United States, 335 U.S. 469 [93 L.Ed. 168, 69 S.Ct. 213]; People v. Eli, 66 Cal.2d 63, 78-80 [56 Cal. Rptr. 916, 424 P.2d 356].) While perhaps some question might be raised concerning the possible relevance of rumors concerning the 1959 incident in Chicago, it would be impossible to say that any prejudice resulted.
Defendant claims that he was not permitted to explain the alleged incidents, citing People v. Zerillo, 36 Cal.2d 222, 230 [223 P.2d 223]. The principle referred to in People v. Zerillo, supra, has nothing to do with this case. There evidence of other crimes was admitted on the merits. Here the questions were asked for the sole purpose of testing the character witness. The court instructed the jury concerning the limited purpose for which the evidence had been admitted. (CALJIC No. 2.42.) There was no error.
III.
(3) It cannot be gainsaid that it took the jury a long time to reach its verdict. The case was placed in its hands on the Wednesday before Thanksgiving, 1971, and it did not have a verdict until the late afternoon of Wednesday, December 8. Thus 15 calendar days elapsed from submission to verdict. On six of those, however, the jury did not deliberate.
A day-by-day summary of what happened will be found in the footnote.[2]
*484 The following matters are noteworthy:
1. The jury was not sequestered. Coercion because of threatened further separation from home and family therefore does not enter the picture.
2. In a sense the deliberations started anew when an alternate juror started to take part on December 1.
3. When the jury declared itself hopelessly deadlocked just before being excused on December 2, the court, in excusing it for the evening, exerted no pressure whatever and merely suggested that a good night's rest, preceded by "an old T.V. movie" might be a good thing and that it would be "to the benefit of all parties for you to make your best effort to resolve this matter."
4. At no point thereafter was the court again informed that things were "hopeless." Each further announcement of a deadlock was coupled with some expression of optimism.
5. Never was there a hint whether the majority of the jury was voting to convict or to acquit.
6. It is difficult to tell from the record we have what additional instruction or instructions were given on December 6. The instructions given on December 7, however, hardly favored the prosecution. While they did stress that there was no reason to suppose that the case would look different to another jury, they also emphasized in no uncertain words the People's *485 burden to "establish every part of [their case] beyond a reasonable doubt." The court also pointed out again that defendant's evidence concerning self-defense only had to raise a reasonable doubt in order to entitle him to an acquittal.
It should be further observed that for the reasons discussed in the next part of this opinion the jury's task was an unusually difficult one. Defense counsel had very adroitly painted such a picture of the victim that the jury may well have thought that in disposing of him defendant had rendered a public service, regardless of what they objectively felt had happened just before the fatal shots were fired.
We find no coercion.
IV.
(4) It may well be that the range of the evidence would have justified an instruction on manslaughter. (People v. Modesto, 59 Cal.2d 722, 727-731 [31 Cal. Rptr. 225, 382 P.2d 33]; People v. Miller, 57 Cal.2d 821, 829-830 [22 Cal. Rptr. 465, 372 P.2d 297].) We need not pause to examine that point. The record indicates that at one point defendant requested over a dozen instructions which dealt with voluntary and involuntary manslaughter in one way or another. All are marked "withdrawn." Neither transcript indicates the circumstances under which they were withdrawn.
In our opinion it thus sufficiently appears that the error, if any, was invited. (People v. Phillips, 64 Cal.2d 574, 580, fn. 4 [51 Cal. Rptr. 225, 414 P.2d 353]; cf. People v. Newton, 8 Cal. App.3d 359, 378-381 [87 Cal. Rptr. 394].)
The tactical reasons for not wanting the jury to have a manslaughter option are obvious: the proof presented the jury with a hard choice between the physical evidence and defendant's version of the events. The legend of the "unwritten law" dies hard. A manslaughter compromise may well have seemed not just in the cards, but a strong probability. Yet from the point of view of duration of actual incarceration, it may have made little difference to defendant whether he went to prison as one convicted of manslaughter or as a murderer.
As far as we are concerned the record fairly compels the conclusion that the withdrawal of the manslaughter instructions was a tactical decision which, unfortunately from the defense point of view, backfired.
*486 V.
(5) Defendant claims that section 12022.5[3] is unconstitutional, at least as applied in a case such as this, in that it impermissibly distinguishes between those murderers who use firearms on their victims and those who use other means.[4]
Defendant's point assumes that, when applied to murder or attempted murder, section 12022.5 demands that a firearm be the means by which the accused kills or attempts to kill his victim. We need not decide whether that interpretation of the section is correct. We do point out, however, that the language of section 12022.5 does not demand it. Of course, if defendant's interpretation is wrong, his point merits no further discussion.
Assuming defendant's interpretation to be correct, it is, of course, undeniable that the victim of a murder is no more dead if he had been shot than if he has been poisoned, smothered or drowned. The purpose of the statute is, however, at least partly prophylactic: to cause fewer people to be murdered in the first place. When certain properties of firearms are considered in combination, it becomes obvious that section 12022.5 is based on a rational distinction, even when applied to murder: 1. the disadvantage of the unarmed victim vis-a-vis the murderer who "has the drop" on him; 2. the peculiarly lethal nature of firearms; and 3. the relative speed with which a potential killer armed with a firearm can execute an intent to kill, once it is formed. (See generally People v. McDaniels, 25 Cal. App.3d 708, 712-716 [102 Cal. Rptr. 444].)
VI.
(6) Defendant's last contention that the prosecution improperly offered evidence that he did not claim self-defense after his arrest was suggested by us after our initial review of the record. The point was *487 then informally briefed by both sides. After a more thorough study of the entire record, we have come to the conclusion that counsel for defendant was quite right in not urging the matter in the first place.
There is no doubt that on two occasions the People, over appropriate objection, offered evidence that defendant failed to claim self-defense after he was arrested for murder and either was, or should have been, advised of his constitutional rights. (In re Banks, 4 Cal.3d 337, 351-352 [93 Cal. Rptr. 591, 482 P.2d 215].) Standing alone these rulings were error.
The error was, however, harmless beyond a doubt. The record contains several references to defendant's failure to claim self-defense. These came into the record without objection, either because they were not subject to objection (People v. Manasse, 153 Cal. 10, 13-14 [94 P. 92]) or because counsel did not object.
The judgment is affirmed.
Stephens, J., and Cole, J.,[*] concurred.
Appellant's petition for a hearing by the Supreme Court was denied July 12, 1973.
NOTES
[1] "Now, Mr. Miramontes, have you heard that, on February 15, 1959, in Chicago, Mr. Aguilar was arrested by the Chicago Police on a charge of disorderly conduct on a Complaint brought by his wife?"
"And have you heard that, on May 12, 1968, in Desert Hot Springs, California, at approximately 4:15 in the morning, the police were called to a trailer park where Mr. Aguilar had his trailer parked on a Complaint that Mr. Aguilar had been beating someone's daughter and threatening her with a gun?"
[2] Wednesday, November 24: 9:40 a.m. Jury starts deliberations. Excused at 4 p.m.
Monday, November 29: Jury deliberates until 1:50 p.m. Certain testimony reread until 3:37 p.m. Jury excused at 4:07 p.m.
Tuesday, November 30: Jury starts deliberations at 9 a.m. Further testimony reread 3:20-3:50 p.m. Jury excused.
Wednesday, December 1: One juror having reported sick, an alternate juror is substituted. Rereading of testimony resumes. Jury deliberates balance of day and is excused at 3:50 p.m.
Thursday, December 2: Jury deliberates 9 a.m. to 3:19 p.m. Declares itself "hopelessly deadlocked." Is excused at 3:19 p.m.
Friday, December 3: Jury starts deliberating at 9 a.m. At 10:12 a.m. foreman gives pessimistic report to court, but states that jury is rereading instructions. Court instructs jury to proceed. At 2:45 p.m. foreman announces that jury stands 8 to 4 and declares possibility that vote might change slightly if additional testimony is reread. Jury excused for weekend at 2:52 p.m.
Monday, December 6: Testimony of ballistic expert reread 9:45-10:17 a.m. Jury deliberates until 3:10 p.m. Reports no change in numerical division. Further instructions given. At 5 p.m. jury reports "some progress." Excused until next day.
Tuesday, December 7: Jury starts deliberating at 9:30 a.m. Jury is further instructed at 11:05 a.m. Jury deliberates 11:15 a.m. to 4:30 p.m. when progress is reported. Jury is excused at 4:33 p.m.
Wednesday, December 8: Jury starts deliberating at 9:30 a.m. Defense moves for mistrial at 3:55 p.m. Motion is denied. Jury has verdict at 4:10 p.m.
[3] Section 12022.5: "Any person who uses a firearm in the commission or attempted commission of a robbery, assault with a deadly weapon, murder, rape, burglary, or kidnapping, upon conviction of such crime, shall, in addition to the punishment prescribed for the crime of which he has been convicted, be punished by imprisonment in the state prison for a period of not less than five years. Such additional period of imprisonment shall commence upon expiration or other termination of the sentence imposed for the crime of which he is convicted and shall not run concurrently with such sentence.... This section shall apply even in those cases where the use of a weapon is an element of the offense."
[4] Defendant also claims that the punishment prescribed by section 12022.5 is excessive, cruel and unusual. No argument in support of these claims is made and we therefore do not discuss them.
[*] Assigned by the Chairman of the Judicial Council.
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217 Ga. 94 (1961)
121 S.E.2d 113
SMITH
v.
STATE OF GEORGIA, by HAYES, SOLICITOR-GENERAL, et al.
21293.
Supreme Court of Georgia.
Argued June 13, 1961.
Decided July 6, 1961.
J. C. Murphy, for plaintiff in error.
Kelley & Mobley, Sumter Kelly, John H. Mobley, Bennett, Pedrick & Bennett, John W. Bennett, Dewey Hayes, Solicitor-General, Q. L. Garrett, Joe Screiber, Eugene Cook, Attorney-General, *95 Ariel V. Conlin, Assistant Attorney-General, Sheldon C. Dorough, Deputy Assistant Attorney-General, contra.
W. L. Stone, Crenshaw, Hansell, Ware, Brandon & Dorsey, C. Edward Hansell, for party at interest.
CANDLER, Justice.
Article 7, Section 6, Paragraphs 1 and 2, of the Constitution of 1877 were amended in 1938 so as to authorize Ware County and the City of Waycross to levy a tax, in addition to those each was then authorized to levy, not to exceed one mill on all of the taxable property in that city and county, for the purpose of acquiring and creating a fund to be set aside and used exclusively by each in assisting, promoting, and encouraging the location of new industries in the City of Waycross or elsewhere in Ware County (Ga. L. 1937, pp. 1129 and 1131). These two amendments were carried forward into the Constitution of 1945 (Code Ann. § 2-6301). The General Assembly in 1953 adopted a resolution proposing an amendment to Article 5 of the Constitution of 1945 (Ga. L. 1953, Nov.-Dec. Sess., p. 266). In part, Section 1 of the resolution provides: "That Article V of the Constitution of the State of Georgia is hereby amended by adding to the end thereof a new section and paragraph to be known as Section VIII, Paragraph I, which shall read as follows: . . . There is hereby created a body corporate and politic to be known as the `Waycross and Ware County Development Authority' which shall be deemed to be an instrumentality of the State of Georgia and a public corporation, its scope and jurisdiction to be limited to the territory embraced by Ware County and the corporate limits of the City of Waycross. The County of Ware and the City of Waycross may contract with the Authority as a public corporation as provided by the Constitution of Georgia." The resolution also provides that the Authority shall consist of eight members who shall have such control, duties, powers, and authority as it confers on it and as may be prescribed or provided for by the General Assembly of Georgia, and such additional powers as may be delegated to it by Ware County and the City of Waycross; that the members of the Authority shall be residents of Ware County within or without the corporate limits of the City of Waycross; that the General Assembly shall provide for the appointment *96 of the Authority's members; that all lands and improvements thereon title to which is vested in the Authority, and all debentures and revenue-anticipation certificates issued by the Authority shall be exempt from State and local taxation; that the Authority is created for the purpose of developing and promoting for the public good and general welfare industry, agriculture, commerce, natural resources and vocational training, and the making of long-range plans for the co-ordination of such development, promotion, and expansion within its territorial limits; that the Authority shall not be empowered or authorized in any manner to create a debt against the State of Georgia, the County of Ware, or the City of Waycross; that it is created for non-profit purposes; and that all property acquired by it and any funds realized by it shall be used continually and exclusively for the purposes for which it is created. Section 2 of the resolution authorizes and instructs the Governor to cause such proposed amendment to be published as provided in Article 13, Section 1, Paragraph 1, of the Constitution of 1945 as amended (Code § 2-8101), for two months previous to the time of the general election, at which the proposed amendment shall be submitted to the electors for ratification as provided for in that paragraph of the Constitution; and Section 2 of the resolution also provides that, if a majority of the electors qualified to vote for members of the General Assembly voting thereon in Ware County and also a majority of the electors voting thereon in the City of Waycross shall vote for ratification of the amendment, it shall become a part of the Constitution of Georgia when the Governor issues a proclamation to that effect. When this amendment was submitted to the qualified voters of the City of Waycross and of Ware County for ratification, Article 13, Section 1, Paragraph 1 of the Constitution of 1945 (Code § 2-8101) had been previously amended by adding thereto the following words: "Provided, however, that proposed amendments to the Constitution which only affect or apply to one or more counties, or one or more municipalities, shall only be submitted to the voters of the county or counties or to the voters of the municipality or municipalities, which the proposed amendment affects or applies. If the amendment affects more than one *97 county or more than one municipality, the total vote of the area shall be consolidated and a majority of the whole vote shall be required as a condition precedent to ratification. . ." (Ga. L. 1961, p. 681).
The proposed amendment was submitted for ratification to the qualified voters of Ware County and also to the qualified voters of the City of Waycross at the general election held in 1954, and the record shows that 2,685 voted in favor of its ratification and 431 voted against its ratification; that a majority of the votes so cast both in Ware County and in the City of Waycross were in favor of ratifying the proposed amendment; and that the Governor subsequently issued a proclamation declaring it to be a part of the Constitution of 1945, and no contention is here made that the proposed amendment was not legally ratified if it affects or applies only to the City of Waycross and Ware County. But as to proper ratification, see Cartledge v. City Council of Augusta, 189 Ga. 267, 269 (5 SE2d 661).
In 1955, the General Assembly passed an act captioned: "An act to create the Waycross and Ware County Development Authority; to provide the purpose, duties, control, organization and powers of said Authority; to provide for issuing revenue-anticipation certificates and for the validation of such certificates; to repeal conflicting laws; and for other purposes." Ga. L. 1955, p. 2840. This act was introduced and passed as a local or special bill, and in compliance with the provisions of Article 3, Section 7, Paragraph 15 of the Constitution of 1945 (Code § 2-1915). Section 6 (1) of the act authorizes the Authority to issue revenue-anticipation certificates for the purpose of paying all or any part of the cost of any project of the Authority, and provides that the revenue-anticipation certificates which it is authorized to issue must be issued and validated under and in accordance with the applicable provisions of the Revenue Certificate Law of 1937 (Ga. L. 1937, pp. 761-774), as subsequently amended in 1939 (Ga. L. 1939, p. 362). Section 7 of the act exempts from State and local taxation all lands and improvements and personal property the title to which is vested in the Authority, and all debentures, notes, bonds, and revenue-anticipation *98 certificates issued by it. The legislature in 1957 (Ga. L. 1957, p. 36) passed an act substituting the words "revenue bonds" for the words "revenue-anticipation certificates" wherever the latter words appear in the Revenue Certificate Law of 1937, as amended in 1939. On March 27, 1961, and pursuant to the procedure provisions of the Revenue Certificate Law of 1937 as amended in 1939. On March 27, 1961, and pursuant to the procedure provisions of the Revenue Certificate Law of 1937 as amended in 1939, the State of Georgia, acting through the Solicitor-General of the Waycross Judicial Circuit, filed a petition in the Superior Court of Ware County against the Waycross and Ware County Development Authority, the City of Waycross, and Ware County, to validate and confirm Series 1961 revenue bonds in the principal amount of $115,000, which the Authority desired to issue and sell for the purpose of providing funds to pay the purchase price in whole or in part for certain realty in the City of Waycross and for the purpose of paying in whole or in part the cost of constructing thereon and equipping an industrial, manufacturing and commercial facility for lease or rent to Waycross Sportswear, Inc., including the usual and related appurtenances useful in connection therewith and for the purpose of paying costs and expenses incident to the financing of such project. The petition also alleges that the Authority, the City of Waycross, and Ware County entered into a contract on September 13, 1960, which terminates on January 1, 1976, whereby the City and County agreed that each would continue to levy an annual tax not to exceed one mill on all taxable property located within its respective territorial limits, as it had constitutional authority to do, and each would from such tax founds pay the Authority for the use of its authorized services in developing and promoting a new industry to be located in the City of Waycross, $8,400 in the year 1961, $7,200 in each of the years 1962, and 1963, and $6,000 in each of the years 1964 to 1975, inclusive, which amounts the Authority would use for the purpose of making annual payments on the principal and interest of its Series 1961 revenue bonds and for the purpose of paying necessary operating expenses of the Authority during such contract period. There is a prayer that the contract be decreed to be a valid and binding obligation between the parties. The record also shows that the Authority on May 23, 1960, entered *99 into a contract with Waycross Sportswear, Inc., a Georgia corporation, for a period of 15 years by the terms of which the Authority agreed to purchase and lease to Sportswear a described lot of land in the City of Waycross, and to erect and equip a building on it containing 20,000 square feet suitable for lessee's use as a manufacturing plant, and Sportswear agreed: (1) to lease or rent the lot and building for a period of 15 years at a monthly rental of $1,053.18, (2) it would at its expense maintain the property for all normal repairs and upkeep, and (3) it would use the building for a garment manufacturing plant and employ the maximum number of people for a building of such size, consistent with seasonable requirements. There is also a prayer that such contract be decreed to be a valid and binding obligation between the parties.
The defendants by their answers admitted the allegations of the petition and prayed that the prayers thereof be granted. Henry Smith, as a citizen and taxpayer of the City of Waycross and of Ware County, presented and had allowed by order of the court an intervention in his own behalf, and in behalf of all others similarly situated, objecting to validation of the Authority's Series 1961 revenue bonds, to a judgment declaring the two aforementaioned contracts valid and binding obligations between the parties thereto; and to any and all other relief sought by the petitioner. His intervention alleges several different reasons why the prayers of the petition should not be granted, and each of those objections will be dealt with in the rulings we will hereinafter make. It was stipulated by the parties that the intervention raised only questions of law and no issue of fact. After a hearing, the prayers of the petition were granted, and the exception is to that judgment.
1. The intervenor contends that the proposed amendment to Article 5 of the Constitution of 1945 never became a part of that instrument since it directly affects or applies to the State as a whole, and was submitted for ratification only to the qualified voters of the City of Waycross and of Ware County. This contention is predicated on the proposition that the amendment created a public corporation which is deemed to be an instrumentality of the State, and also on that provision of the amendment *100 which expressly exempts the property of the Authority and the debentures and revenue bonds it issues from State taxation. Respecting the first position, it was held in State of Ga. v. Regents of University System, 179 Ga. 210 (175 SE 567) and in Sheffield v. State School Building Authority, 208 Ga. 575 (68 SE2d 590), that a public corporation having the character of the one here involved is not the State, nor a part of the State nor an agency of the State, but is a mere creature of the State. This being true and since the scope and jurisdiction of the Authority are expressly restricted to the territorial limits of the City of Waycross and of Ware County, it does not for this alleged reason directly affect or apply to the State as a whole, and it was therefore not necessary for the amendment to be submitted for ratification to all of the qualified voters of the State.
The intervenor's other contention is also without merit; and this is so since the General Assembly in 1946, pursuant to the provisions of Article 7, Section 1, Paragraph 4 of the Constitution of 1945 (Code § 2-5404), passed an act (Ga. L. 1946, p. 12) which exempts from taxation "all institutions of purely public charity; . . . provided the property so exempted be not used for the purpose of private or corporate profit and income, distributable to shareholders in corporations owning such property or to other owners of such property, and any income from such property is used exclusively for religious, educational and charitable purposes, or for either one or more of such purposes and for the purpose of maintaining and operating such institution." When thus tested, we hold that the Authority here involved is an institution of purely public charity, and when the amendment creating it was adopted by the required number of the qualified voters of the City of Waycross and of Ware County, it was settled in this State beyond any question of doubt by the rulings of this court in Williamson v. Housing Authority of Augusta, 186 Ga. 673, 691 (199 SE 43); Elder v. Henrietta Egleston Hospital, 205 Ga. 489 (53 SE 751); Sheffield v. State School Building Authority, supra; McLucas v. State Bridge Building Authority, 210 Ga. 1 (77 SE2d 531); State of Ga. v. Georgia Rural Roads Authority, 211 Ga. 808 (89 SE2d 204); and since then by the holding in Sigman v. Brunswick Port Authority, *101 214 Ga. 332 (104 SE2d 467), that its property and all debentures and revenue bonds issued by it were exempt from all State and local taxation. Hence, the inclusion of the tax-exemption provision in the amendment creating this Authority was wholly unnecessary to accomplish that result; it added nothing to the law as it then existed. This being true, the amendment did not for that reason directly affect or apply to the State as a whole, and it was therefore not necessary, as the intervenor contends, that it be submitted for ratification to all of the qualified voters of the State.
2. The 1953 amendment to the Constitution of 1945 and the act which the General Assembly passed pursuant thereto in 1955 (Ga. L. 1955, p. 2840) created the Waycross and Ware County Development Authority for the purpose of developing and promoting for the public good and general welfare industry, agriculture, commerce, natural resources and vocational training, and the making of long-range plans for the co-ordination of such development, promotion, and expansion, within its territorial limits. Section 1 of the amendment provides in part that the Authority, as a constitutional corporation, "shall consist of eight members who shall have such control, duties, powers and authority as are hereby conferred and as may be prescribed or provided for by the General Assembly of Georgia, and such additional powers as may be delegated to the Authority by the County of Ware and the City of Waycross." Section 6 of the enabling act which the General Assembly passed in 1955 expressly authorizes the Authority to erect and equip buildings on lands owned or leased by it, to issue and sell revenue bonds for the purpose of raising funds needed, in whole or in part, in paying for the cost of such a project, and to rent or lease its project for a use which will accomplish any one or more of the purposes for which the Authority was created. Such revenue bonds to be issued by the Authority and validated under and in accordance with the applicable provisions of the revenue-certificate law of 1937 as amended in 1939. It is alleged in the intervention that the referred-to portion of the act of 1955 is null and void because it offends Article 7, Section 7, Paragraph 5 of the Constitution of 1945 (Code Ann. § 2-6005), which enumerates the projects or facilities which may be financed with funds derived *102 from the issuance and sale of revenue bonds. This position is untenable. Developing and promoting for the public good and general welfare industry within Ware County was one of the constitutional purposes for which the Authority was created, and the amendment expressly provides that it may have such powers and authority as are conferred upon it by the General Assembly, and the amendment itself emphatically declares that all debentures and revenue bonds issued by it for the purpose of financing any one or more of its authorized projects shall be exempt from State and local taxation. Beazley v. DeKalb County, 210 Ga. 41 (77 SE2d 740) and Tippins v. Cobb County Parking Authority, 213 Ga. 685 (100 SE2d 893), relied upon by the plaintiff in error are neither in point nor controlling. The projects there involved, which were to be financed by revenue bonds were not authorized, as here, by the Constitution, and the issuance and sale of revenue bonds for the purpose of financing them were clearly unauthorized by Article 7, Section 7, Paragraph 5 of the Constitution of 1945; but the 1954 amendment to the Constitution and the act passed pursuant thereto in 1955 require a different ruling in the instant case.
3. The contract which the City of Waycross and Ware County made with the Authority on September 23, 1960, and which by its terms ends on January 1, 1976, is not illegal for any reason alleged in the intervention. The amounts which the city and county thereby agreed to pay the Authority annually were payable from tax funds which the 1938 amendments to the Constitution of 1877, carried forward into the Constitution of 1945 authorized them to levy and collect for the purpose of acquiring and creating a fund to be set aside and used exclusively by each in assisting, promoting, and encouraging the location of new industries in the City of Waycross or elsewhere in Ware County. Article 7, Section 6, Paragraph 1 (a) of the Constitution of 1945 (Code Ann. § 2-5901) provides: "The State, state institutions, any city, town, municipality or county of this State may contract for any period not exceeding fifty years, with each other or with any public agency, public corporation or authority now or hereafter created for the use by such subdivisions or the residents thereof of any facilities or services of the State, State institutions, any city, town, municipality, *103 county, public agency, public corporation or authority, provided such contracts shall deal with such activities and transactions as such subdivisions are by law authorized to undertake." And Section 1 of the constitutional amendment here involved, and Section 4 of the 1955 enabling act which was passed pursuant to the provisions thereof, also expressly authorize the City of Waycross and Ware County to enter into contracts with this particular Authority as a public corporation, section 6 (c) of such act also authorizes and empowers this Authority to enter into contracts with the City of Waycross and Ware County, and by the terms of such contract the Authority obligated itself to perform those services for the City of Waycross and Ware County which such city and county were authorized to perform under the 1938 amendments to the Constitution of 1877 as carried forward into the Constitution of 1945.
(a) And since the City of Waycross had ample constitutional power to contract with the Authority for the use of its services in performing an activity or transaction which the city itself was authorized to undertake, there is clearly no merit in the contention that the contract, insofar as the city is concerned, is ultra vires and void because it is prohibited by Code § 69-202, which provides that one council may not by ordinance bind itself or its successors so as to prevent free legislation in matters of municipal government.
4. The lease or rental contract which the Waycross and Ware County Development Authority entered into with Sportswear, Inc., a Georgia corporation, on May 23, 1960, for a period of 15 years from the date thereof, is not illegal for any reason alleged in the intervention. Section 6 (f) of the 1955 enabling act expressly authorizes and empowers the Authority, among other things, to make leases and rental contracts with respect to the use of projects which it erects or acquires; and, as previously pointed out, the constitutional amendment which created the Authority expressly provides that it shall have such powers and authority as may be prescribed or provided for it by the General Assembly of Georgia.
5. We conclude and hold that the judgment complained of is not erroneous for any reason alleged in the intervention.
Judgment affirmed. All the Justices concur.
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58 Wis.2d 321 (1973)
206 N.W.2d 193
CARAWAY, Administratrix of the Estate of Eulalia Smith, Plaintiff,
v.
LEATHERS and others, Defendants:
MILWAUKEE MUTUAL INSURANCE COMPANY, Defendant and Appellant:
FINNEGAN and another, Respondents.[*]
No. 61.
Supreme Court of Wisconsin.
Argued March 26, 1973.
Decided April 20, 1973.
*322 For the appellant there were briefs by Cannon, McLaughlin, Herbon & Staudenmaier, attorneys, and L. William Staudenmaier of counsel, all of Milwaukee, and oral argument by L. William Staudenmaier.
For the respondents there was a brief by Frisch, Dudek, Slattery & Denny, attorneys for defendants-respondents Howard D. Finnegan and American States Insurance Company; Robert E. Hackett, Jr., attorney for plaintiff-respondent Mary Jean Caraway; and C. Michael Hausman of counsel, all of Milwaukee; and oral *323 argument by Mr. Hackett for plaintiff-respondent and James D. Friedman of Milwaukee for defendants-respondents.
HALLOWS, C. J.
The trial court denied the motion for summary judgment solely on the ground the pleadings created a material issue of fact of whether Danny Leathers had permission to drive his father's car; this was error. Of course, pleadings must create a material issue,[1] but this conflict in the pleadings is not a sufficient basis to deny summary judgment. The issue created by the pleadings must be supported by sufficient evidentiary facts in proper affidavit form to create a material issue of fact in the proposed evidence. For this purpose, pleadings may not be considered as evidence or other proof. Marshall v. Miles (1972), 54 Wis. 2d 155, 161, 194 N. W. 2d 630; Milwaukee County v. Schmidt (1968), 38 Wis. 2d 131, 156 N. W. 2d 493; McCluskey v. Thranow (1966), 31 Wis. 2d 245, 142 N. W. 2d 787. As stated in Weber v. Hurley (1961), 13 Wis. 2d 560, 109 N. W. 2d 65, sec. 270.635 (2), Stats.,[2] requires "evidentiary facts" and the statute would be *324 meaningless if conclusions of law or statements of ultimate facts in the pleadings were held to raise issues for the jury on motion for summary judgment.
However, this error does not require reversal if there exists in fact an issue created by the evidentiary facts presented by the affidavits. Prior to the bringing of the motion, Mr. and Mrs. Leathers, Danny Leathers, and six other prospective witnesses were adversely examined. Their adverse examinations were made a part of the motion for summary judgment and the pertinent parts thereof extracted and called to the court's attention in accordance with the requirements of Hyland Hall & Co. v. Madison Gas & Electric Co. (1960), 11 Wis. 2d 238, 105 N. W. 2d 305, and Dottai v. Altenbach (1963), 19 Wis. 2d 373, 120 N. W. 2d 41. This pertinent testimony, however, does not raise any material issue of fact on the only issue presented, namely, the permission of Danny Leathers to drive the car at the time of the accident.
At one of these adverse examinations, Danny Leathers testified that just prior to the accident, he was at his sister's wedding reception. He asked his father if he could leave the reception and go to their farm, and his father replied "trot along." Danny did not interpret this as meaning he could take his father's car, since he had not said anything about using the car. He knew he was not supposed to take the car, but did anyway, finding the keys underneath the seat of the car. Although he did not have a driver's license, Danny had previously driven the car on the family farm and, unknown to his parents, had driven a few times on public roads. He knew he did not have his father's permission on the date of the accident.
Danny's father, Kenneth Leathers, testified at discovery that Danny had taken the car without his permission on the day of the accident. He did not know that Danny had ever previously taken the car without *325 permission. Danny's mother, Marilyn Leathers, testified that she did not know Danny was driving the car until after the accident.
Also examined at discovery were James D. Glassburn and Donald Simpsen, both of whom overheard the conversation between Danny and his father relative to Danny's going to the farm. Mr. Glassburn testified that Mr. Leathers told Danny he could leave, "you're doing a good job, just hop to it," or words to that effect. The word "walk" or "hot-footing" was in the conversation, but no mention was ever made as to use of the car. Mr. Simpsen, on the other hand, testified that Danny had asked if he could use the car, but his father replied, "Hell no, you can walk to the farm."
Two girls who occupied the car with Danny as passengers, Jeanne Phillips and Esther Miller, also were adversely examined. Miss Phillips had no conversation with Danny relating to his permission to drive the car. Miss Miller stated she asked Danny after the accident whether he had permission, but he would not say. However, Miss Miller's father, Rev. Norbert Miller, testified that he advised Danny if he had permission to admit it. He further testified that he asked Mr. Leathers whether he had given the boy permission and Mr. Leathers replied he told his son to "trot along." Mr. Leathers then added that "trot along could mean go on your own two feet if somebody wanted to interpret it that way." Rev. Miller interpreted this as meaning Mr. Leathers had in fact given Danny permission to drive. The Reverend's wife testified her husband was under the impression that Danny had driven with permission.
The rules governing summary judgment are well known. Under the rule of Hyland Hall & Co. v. Madison Gas & Electric Co., supra, and Dottai v. Altenbach, supra, we first examine the moving papers and documents to determine whether the moving party has made a prima *326 facie case for summary judgment under sec. 270.635 (2), Stats., and if he has, we then examine the opposing party's affidavits and other proof to determine whether facts are shown which the court deems sufficient to entitle the opposing party to a trial. If the material facts are not in dispute and if the inferences which may reasonably be drawn from the facts are not doubtful and lead only to one conclusion, then there is presented only a matter of law, which should be decided upon the motion. Voysey v. Labisky (1960), 10 Wis. 2d 274, 103 N. W. 2d 9; Rabinovitz v. Travelers Ins. Co. (1960), 11 Wis. 2d 545, 105 N. W. 2d 807; Bond v. Harrel (1961), 13 Wis. 2d 369, 108 N. W. 2d 552. McWhorter v. Employers Mut. Casualty Co. (1965), 28 Wis. 2d 275, 137 N. W. 2d 49; Leszczynski v. Surges (1966), 30 Wis. 2d 534, 141 N. W. 2d 261; American Mut. Liability Ins. Co. v. St. Paul Fire & Marine Ins. Co. (1970), 48 Wis. 2d 305, 179 N. W. 2d 864.
Milwaukee Mutual has made more than a prima facie case for nonpermission. American States' affidavit in opposition to the motion also relies on the testimony of the examination, adds no evidentiary facts and raises only the question of credibility of witnesses and the possibility of drawing a different inference from the facts. Credibility of witnesses is only important if there is a conflict of testimony so that the trier of the fact must choose one version which requires the rejection of the testimony supporting a conflicting version. This case presents no such situation. But American States argues that different inferences from the facts may be reasonably drawn. We find no facts giving rise to reasonable inferences of conflicting versions of whether Danny Leathers had his father's permission to drive the car. True, there are some minor variations in the stories told by witnesses, but no real conflicts. Only one reasonable inference can be drawn from the facts and that is one of no permission.
*327 Danny Leathers asked for permission to go to the farm. Neither he nor his father testified that Danny asked for the car or for permission to use the car. The father's answer "trot along" cannot under any view be construed as granting a fifteen-year-old boy with no driver's license permission to use the car, particularly where the father had never previously given such permission. The positive testimony of both Danny Leathers and his parents is to the effect that Danny Leathers did not have permission. Their testimony is that Danny asked if he "could go to the farm," which was about two miles away. The testimony of Glassburn and Simpsen creates no issue. Glassburn testified there was no request to use the car; Simpsen testified there was a request which the father refused. No inference of permission can be raised from this testimony.
The only testimony to the contrary is the opinion and conclusion of Rev. Norbert Miller, formed after a conversation with Mr. Leathers subsequent to the accident. In this conversation Mr. Leathers did not say he gave Danny permission. Rev. Miller's testimony is merely that he received such an impression from Mr. Leathers' statements, but his impression is not pertinent evidence. It is entirely negative and not probative, even if admissible, to raise an issue by any reasonable inference.
While summary judgment is a drastic remedy and should not be employed to create a trial on affidavits or adverse examination,[3] if sec. 270.635 (2), Stats., is to mean anything, it must be used to avoid useless trials when no factual issue of merit is presented. The final question on summary judgment is always whether one of the parties, because of the evidence he has produced *328 on the motion or in opposition thereto, is entitled to a trial on some material factual issue upon which the ultimate result of the case rests. A question of law such as insurance coverage or the meaning of the contract are customarily decided on such a motion. See Rabinovitz v. Travelers Ins. Co., supra; Bond v. Harrel, supra.
There are some cases in which this court defers to the trial court when it is in doubt concerning the sufficiency of the evidentiary facts to raise a material issue and exercises its discretion to deny the motion for summary judgment because it desires a trial on the facts,[4] but this case is not presented to us in such a posture.
By the Court.Order reversed.
NOTES
[*] Motion for rehearing denied, with costs, on June 29, 1973.
[1] See Younger v. Rosenow Paper & Supply Co. (1971), 51 Wis. 2d 619, 188 N. W. 2d 507.
[2] "270.635 Summary judgments....
"(2) The judgment may be entered in favor of either party, on motion, upon the affidavit of any person who has knowledge thereof, setting forth such evidentiary facts, including documents or copies thereof, as shall, if the motion is by the plaintiff, establish his cause of action sufficiently to entitle him to judgment; and, if on behalf of the defendant, such evidentiary facts, including documents or copies thereof, as shall show that his denials or defenses are sufficient to defeat the plaintiff, together with the affidavit of the moving party, either that he believes that there is no defense to the action or that the action has no merit (as the case may be) unless the opposing party shall, by affidavit or other proof, show facts which the court shall deem sufficient to entitle him to a trial."
[3] Voysey v. Labisky, supra; Jahns v. Milwaukee Mut. Ins. Co. (1968), 37 Wis. 2d 524, 155 N. W. 2d 674; Schandelmeier v. Brown (1968), 37 Wis. 2d 656, 155 N. W. 2d 659.
[4] See, e.g., Zimmer v. Daun (1968), 40 Wis. 2d 627, 162 N. W. 2d 626.
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262 B.R. 719 (2001)
In re DAYTON TITLE AGENCY, INC., Debtor-In-Possession.
Dayton Title Agency, Inc., et al., Plaintiffs,
v.
The White Family Companies, Inc., et al., Defendants.
No. 99-35768. Adversary No. 99-3664.
United States Bankruptcy Court, S.D. Ohio, Western Division.
May 15, 2001.
*720 *721 *722 BOK Mortgage, Tulsa, OK, pro se.
Sharyn J. Bennett, Robert B. Berner, Stephen K. Dankof, Donald F. Harker, III, Ronald S. Pretekin, Walter Reynolds, Charles D. Shook, Dayton, OH, David S. Cupps, Frederick L. Ransier, Columbus, OH, Stewart H. Cupps, Roger E. Luring, De Wayne Smith, Troy, OH, William B. Fecher, Jerome J. Metz, Jr., Cincinnati, OH, James P. Hickey, Jr., Oakwood, OH, for creditors.
Alan A. Biegel, Kettering, OH, Robert J. Eilerman, Lawrence S. Walter, Dayton, OH, for Interested parties.
Courtney M. Brady, Dayton, OH, pro se.
Centex Home Equity, Dallas, TX, pro se.
Fifth Third Mortgage, Cincinnati, OH, pro se.
Anne M. Frayne, Dayton, OH, for debtor.
GMAC Mortgage Corp., Waterloo, IA, pro se.
Liberty Lending Services, Inc., Wilmington, OH, pro se.
Mary Stickelman, Franklin, OH, pro se.
WILLIAM A. CLARK, Bankruptcy Judge.
DECISION OF THE COURT:
1) GRANTING PARTIAL SUMMARY JUDGMENT TO DEFENDANTS THE WHITE FAMILY COMPANIES, INC. AND NELSON WENRICK ON THE ISSUE OF DAYTON TITLE AGENCY, INC. BUSINESS TRUST'S INELIGIBILITY FOR SEPARATE BANKRUPTCY TREATMENT;
2) GRANTING SUMMARY JUDGMENT TO DAYTON TITLE AGEN- *723 CY, INC. ON RECOVERY OF FRAUDULENT TRANSFERS UNDER OHIO'S UNIFORM FRAUDULENT TRANSFER ACT AND DENYING SUMMARY JUDGMENT TO DEFENDANTS ON SAME;
3) DETERMINING NATIONAL CITY BANK'S MOTION FOR SUMMARY JUDGMENT TO BE MOOT; AND
4) GRANTING DAYTON TITLE AGENCY, INC.'S REQUEST FOR PREJUDGMENT INTEREST AND COURT FILING COSTS.
The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the standing General Order of Reference entered in this district. This matter is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(E) and (H). The following decision is determined in accordance with Fed.R.Bankr.P. 7056.
This matter is before the court upon the following three motions for summary judgment and responsive memoranda:
1) The Motion of Plaintiff National City Bank for Summary Judgment filed against Defendants The White Family Companies, Inc. and Nelson Wenrick [Adv.Doc. # 99-1], Defendants' Memorandum Contra [Adv.Doc. # 121-1] and Reply Memorandum of Plaintiff National City Bank [Adv. Doc. # 135-1];
2) The Motion of Plaintiffs Dayton Title Agency, Inc. and Dayton Title Agency, Inc. Business Trust for Summary Judgment Against Defendants The White Family Companies, Inc. and Nelson Wenrick [Adv.Doc. # 103-1], Defendants' Memorandum Contra [Adv.Doc. # 133-1] and Reply Memorandum of Plaintiffs Dayton Title Agency, Inc. and Dayton Title Agency, Inc. Business Trust [Adv.Doc. # 136-1]; and
3) The Defendants, White Family Companies, Inc. and Nelson Wenrick's, Motion for Summary Judgment Against Dayton Title Agency, Inc., Dayton Title Agency, Inc. Business Trust and National City Bank and Memorandum in Support [Adv. Docs.# 125-1 and 126-1], Memorandum of Plaintiff National City Bank in Opposition [Adv.Doc. # 134-1], Memorandum of Plaintiffs Dayton Title Agency, Inc. and Dayton Title Agency, Inc. Business Trust in Opposition [Adv.Doc. # 138-1], Defendants' Reply to National City Bank's Memorandum [Adv.Doc. # 140-1] and Defendants' Reply to Dayton Title's Memorandum [Adv.Doc. # 143-1].
FACTUAL AND PROCEDURAL BACKGROUND
Debtor-in-Possession, Dayton Title Agency, Inc. ("Dayton Title"), whose bankruptcy case is jointly administered with the related Dayton Title Agency, Inc. Business Trust ("DTABT") bankruptcy, was a Dayton area title agency founded in 1973. [Adv.Doc. # 67-1, Depo. of Alex Katona ("Katona Depo."), p. 42.] Beginning in 1996, Dayton Title conducted closing agent services on real estate transactions for Krishan Chari ("Chari"), a real estate broker affiliated with Don Wright Realty. [Adv.Doc. # 70-1, Depo. of Pam Folino ("Folino Depo."), pp. 25-27.] Many of these transactions involved Chari channeling funds through Dayton Title's trust accounts which were used primarily to hold third party escrow funds related to the title agency's real estate closings. [Id., pp. 17-18.]
Beginning in November of 1998, Dayton Title experienced difficulties collecting funds from Chari to cover disbursements made at his direction through the trust *724 accounts. In at least one transaction, Dayton Title disbursed funds on behalf of Chari before Chari made a deposit into its account. [Adv.Doc. # 129-1, Ex. 3.] In connection with this same transaction and many others, Chari's checks were returned for insufficient funds. [Id., Exs. 3, 5, 11-18, 20-21, 23-24.] Some of the bounced checks resulted in substantial overdrafts in a Dayton Title trust account. [Adv.Doc. # 130-1, Ex. 70 at NCB 00277 and Adv. Doc. # 131-1, Ex. 71 at NCB 00255.]
At the center of the present dispute are transactions conducted at Chari's direction through one of Dayton Title's trust accounts with National City Bank involving Chari's real estate investment enterprise, Invesco, LLC. [Folino Depo., pp. 27-28.] Invesco was run by Chari and his partner Michael Karaman. [Id.] Beginning in December of 1998, two separate entities, the White Family Companies, Inc. ("WFC") and Nelson Wenrick ("Wenrick") provided short term financing, called bridge loans, to Invesco for purported real estate transactions. [Adv.Doc. # 52-1, Depo. of Timothy White ("White Depo."), pp. 28-30; Adv.Doc. # 53-1, Depo. of Nelson Wenrick ("Wenrick Depo."), pp. 14-29.] The purpose of the loans, each involving over one million dollars, was to facilitate Invesco in the purchase of commercial real estate for attractive prices. [White Depo., p. 30; Adv.Doc. # 132-1, Ex. 95.] The duration of each loan was only 30 or 45 days, long enough for Invesco to procure permanent financing. [Adv.Doc. # 90-1, Depo. of Dave Alexander ("Alexander Depo."), p. 148; White Depo., pp. 30, 34-36; Wenrick Depo., p. 29.] These loan transactions were usually closed at Dayton Title's facilities [Alexander Depo., pp. 34-35, 53, 68, 87-88, 101, 113; Wenrick Depo., p. 16] and were evidenced by notes signed by Michael Karaman on behalf of Invesco [Adv.Doc. # 132-1, Ex. 95]. Each note carried a second signature of Michael Karaman as personal guarantor. [Id.]
Between December 1, 1998 and July 12, 1999, WFC made five bridge loans to Invesco ranging from $1,900,000.00 to $3,200,000.00. [Id.] In a completely separate transaction, Wenrick furnished a $1,200,000.00 bridge loan to Invesco on August 4, 1999. [Id.] Each loan transaction was carried out by the lender depositing the funds into one of Dayton Title's accounts. [Adv.Doc. # 132-1, Exs. 99-103, 105.] These loans were paid back in fall, but not always before the due dates. [Adv.Doc. # 132-1, Ex. 95; Adv.Doc. # 103-1, Exs. G, N, T, AA, GG; Wenrick Depo., pp. 235-236.]
On September 3, 1999, WFC and Wenrick each provided a final bridge loan to Invesco of $3,200,000.00 and $1,600,000.00 respectively. [Adv.Doc. # 132, Ex. 95.] The loans were made in connection with the supposed purchase of property containing a Staples retail office supply store. [Wenrick Depo., pp. 242-244; White Depo., pp. 144-145.] Like the previous loans, these were evidenced by notes containing Michael Karaman's signature as President of Invesco and a second signature of Michael Karaman as personal guarantor of the loans. [Adv.Doc. # 132-1, Ex. 95.] According to the notes, Invesco was to repay the principle and interest on the short-term loans on or before October 3, 1999. [Id.]
Soon after the loans were past due, WFC and Wenrick were repaid with checks drawn on a Texas IOLTA account of John Lewis. [Adv.Doc. #103-1, Ex. 00; Alexander Depo., pp. 118-119; Wenrick Depo. pp. 24-25.] Both checks were returned for insufficient funds. [Wenrick Depo. pp. 24-25; Alexander Depo., pp. 122-123.]
Subsequently, on October 19, 1999, Krishan Chari had a $5,000,000.00 check *725 deposited into Dayton Title's trust account with National City Bank for the purpose of paying WFC and Wenrick. [Adv.Doc. # 99-1, App. A, Ans. to Interrog. 3(c); Adv.Doc. # 132-1, Exs. 97 and 98.] The check was purportedly drawn on a DCW Investments account at Oak Hill Bank. [Id.] The teller at National City Bank did not place a hold on the check Chari deposited. [Adv.Doc. # 132-1, Ex. 109.] On that same day, pursuant to Chari's instructions, Dayton Title issued a check payable to WFC in the amount of $3,260,000.00 and a check payable to Wenrick in the amount of $1,625,000.00 from the trust account. [Adv.Doc. # 103-1, Ex. 2, Affidavit of Pam Folino ("Folino Aff."), ¶ 4; Adv.Doc. # 132-1, Ex. 111.] The remaining $115,000.00 from Chari's $5,000,000.00 check was to remain in Dayton Title's trust account for fees payable to Dayton Title for unrelated transactions. [Folino Aff., ¶ 4.]
On October 20, 1999, Tim White presented the WFC check to a teller at National City Bank and obtained an official bank check in return. [White Depo., pp. 154-155; Adv.Doc. # 99-1, App. A., Ans. to Interrog. 3(a).] Wenrick deposited his check in an account at Security National Bank. [Wenrick Depo., pp. 39-45.] Wenrick's check cleared the trust account at National City Bank on October 25, 1999. [Adv.Doc. # 99-1, App. A., Ans. to Interrog. 3(b).]
On or about October 26, 1999, National City Bank received notification that the check deposited by Chari in Dayton Title's trust account was being returned. [Adv. Doc. # 132-1, Ex. 97.] However, WFC and Wenrick's checks were honored by National City Bank prior to the bank's discovery that Chari's check was a forgery drawn on a non-existent account. [Adv. Doc. # 99-1, App. A, Ans. to Interrog. 3(a) through 3(c), 5 and 6.] Chari deposited two subsequent $5,000,000.00 checks into Dayton Title's trust account which also bounced. [Adv.Doc. # 131-1, Ex. 79; Adv. Doc. # 132-1, Exs. 97 and 118.] Consequently, National City Bank made the decision to freeze Dayton Title's accounts on November 4, 1999. [Adv.Doc. # 132-1, Ex. 119.]
Because Chari's checks were returned, the funds in Dayton Title's trust account did not cover the checks written to WFC and Wenrick that were already honored by National City Bank. This chain of events caused Dayton Title's trust account to be substantially overdrawn. According to an account statement, Dayton Title had a negative balance of $4,142,151.38 in the trust account as of November 19, 1999 [Adv.Doc. # 131-1, Ex. 80] indicating that approximately $742,848.62 of the funds transferred to WFC and Wenrick represent money that had been in Dayton Title's trust account at the time of the conveyance. No party disputes that the funds in the account represent third party escrow funds held in trust by Dayton Title. [Adv. Doc. # 129-1, Ex. 2; Folino Depo., pp. 17-18.]
After learning of the forgery and the loss of over $ 4,000,000.00 in the trust account, Dayton Title Agency, Inc. and Dayton Title Agency, Inc. Business Trust filed separate Chapter 11 bankruptcy petitions on November 8, 1999. On November 10, 1999, both entities initiated adversary proceedings[1] against WFC and Wenrick to recover the $4,885,000.00 paid out of Dayton Title's trust account as fraudulent *726 transfers under provisions of the Bankruptcy Code and Ohio statutory law. National City Bank has been joined as a plaintiff-intervenor in the recovery of the funds.
All of the parties have filed motions for summary judgment asserting that the essential facts to the resolution of this adversary proceeding are undisputed. After reviewing the motions for summary judgment, the responsive memoranda, and the oral arguments of counsel, the court is prepared to render its decision.
LEGAL ANALYSIS
A. Summary Judgment Standard
The appropriate standard to be used by the court to address the motions for summary judgment filed in this adversary proceeding is contained in Fed.R.Civ.P. 56(c) and incorporated in bankruptcy adversary proceedings by reference in Fed. R.Bankr.P. 7056. Rule 56(c) states in part that a court must grant summary judgment to the moving party if:
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(c). In order to prevail, the moving party, if bearing the burden of persuasion at trial, must establish all elements of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the burden is on the non-moving party at trial, the movant must: 1) submit affirmative evidence that negates an essential element of the nonmoving party's claim; or 2) demonstrate to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. Id. at 331-332, 106 S.Ct. 2548. Thereafter, the opposing party "must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citations omitted); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Matsushita, 475 U.S. at 586-588, 106 S.Ct. 1348.
B. Dayton Title Agency, Inc. Business Trust's Ineligibility for Bankruptcy Protection
Initially, the court will discuss WFC and Wenrick's collateral argument that one of the debtors, Dayton Title Agency, Inc. Business Trust ("DTABT"), is ineligible for separate bankruptcy protection from Dayton Title because DTABT does not meet the definition of a true business trust.
Under § 109(a) of the Bankruptcy Code, only individuals defined as "persons" are eligible for bankruptcy relief. Persons include corporations and, as a subset of corporations, business trusts. 11 U.S.C. § 101(9)(A)(v) and (41). Trusts other than business trusts are not eligible for bankruptcy protection. Brady v. Schilling (In re Kenneth Allen Knight Trust), No. 96-5353, 1997 WL 415318, at *2 (6th Cir. July 22, 1997).
The Bankruptcy Code does not define "business trust" and the courts have not adopted a uniform definition of the term for bankruptcy eligibility. Knight, 1997 WL 415318, at *2-3. However, because the term is included in the Bankruptcy Code as a species of corporation, it must have attributes of a corporation to be a business trust. Id. at *3. One main *727 characteristic determining a business trust is whether it was created with the primary purpose of transacting business or carrying on commercial activity for a profit. Id. at *4 (relying on the analysis set forth in In re Treasure Island Land Trust, 2 B.R. 332 (Bankr.M.D.Fla.1980)). Trusts designed merely to preserve the trust res for beneficiaries do not meet this definition. Id.
In this case, DTABT has few, if any, attributes of a corporation separate from Dayton Title. DTABT has no written agreement or articles of incorporation memorializing its creation. [Katona Depo., pp. 89-92.] Furthermore, the trust has no principals, officers or tax identification number separate from Dayton Title. [Id., p. 90; Adv.Doc. # 132-1, Ex. 121.] Most significant to the Sixth Circuit's interpretation of business trust is the fact that DTABT generates no income. [Katona Depo., p. 90.] Instead, the business trust is a group of escrow accounts used by the title agency to collect and disburse funds for real estate closings. [Id., pp. 79-81.] It was created as a requirement of the underwriters issuing Dayton Title Agency, Inc.'s insurance policy to make certain that the escrow funds coming in for closings and related business were not commingled with the title agency's operating funds. [Id., p. 89.]
Although these activities may fall within the definition of "business trust" for the underwriters' purposes, they do not qualify the entity as a business trust for bankruptcy eligibility. As such, the business trust and its accounts are more properly considered within the context of Dayton Title's bankruptcy filing. The court grants summary judgment to WFC and Wenrick with regard to this issue.
While DTABT does not qualify as a business trust for bankruptcy purposes, the court finds no reason why this determination should effect proceedings related to the adversary complaint filed by Dayton Title. The two identical adversary proceedings initiated by Dayton Title and DTABT against WFC and Wenrick have been jointly administered until this juncture. Because no party disputes that Dayton Title is a proper debtor before the bankruptcy court and may maintain adversarial claims against WFC and Wenrick, the court will continue its analysis of the issues remaining on summary judgment with respect to Dayton Title disregarding DTABT as a separate debtor.
C. Recovery of the Transfers Under Ohio's Uniform Fraudulent Transfer Act
In its motion, Debtor-in-Possession Dayton Title requests summary judgment asserting that the funds transferred to WFC and Wenrick from the Dayton Title trust account are recoverable as fraudulent transfers under the Ohio Uniform Fraudulent Transfer Act ("UFTA"), Ohio Rev. Code §§ 1336.01 et. seq. Avoidance of a transfer under state fraudulent transfer laws is permitted by the "strong arm" provisions of the Bankruptcy Code found in 11 U.S.C. § 544. Corzin v. Fordu (In re Fordu), 201 F.3d 693, 697 n. 3 (6th Cir.1999). Under § 544, a bankruptcy trustee, or a debtor-in-possession acting with the powers of a trustee, steps into the shoes "of a creditor in order to nullify transfers voidable under state fraudulent conveyance acts for the benefit of all creditors." Id.
The significant provision of the UFTA is Ohio Rev.Code § 1336.04 which provides, in pertinent part:
(A) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, whether the claim of the creditor arose before or after the transfer *728 was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation in either of the following ways:
(1) With actual intent to hinder, delay, or defraud any creditor of the debtor;
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and if either of the following applies:
(a) The debtor was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction;
(b) The debtor intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
Ohio Rev.Code § 1336.04. While § 1336.04(A)(1) covers claims of actual fraud, § 1336.04(A)(2) has a broader scope encompassing claims of constructive fraud where the focus is on the effect of the transaction rather than the intent with which it was undertaken. Aristocrat Lakewood Nursing Home v. Mayne, 133 Ohio App.3d 651, 667, 729 N.E.2d 768, 780 (Ohio Ct.App.1999). In fact, a constructive fraud claim under § 1336.04(A)(2) may exist even without any intent on the part of the debtor to hinder, delay, or defraud a creditor. Id.
Dayton Title focuses specifically on the unreasonably small asset theory of § 1336.04(A)(2)(a). Under this provision, the party attempting recovery must prove that the debtor transferred an interest in its property for less than reasonably equivalent value leaving it with unreasonably small assets compared to the debtor's "historical level of assets or cash flow and current needs." Mayne, 133 Ohio App.3d at 668, 729 N.E.2d at 780. This very broad provision does not require proof of any mental state on the part of the debtor. Id.
WFC and Wenrick dispute the existence of all three elements required to be proven under this section of the UFTA. First, because of the nature of Dayton Title's account as a trust account holding third party escrow funds, WFC and Wenrick dispute whether Dayton Title possessed a property interest in the funds transferred to WFC and Wenrick. Second, they dispute Dayton Title's assertion that it received no reasonably equivalent value in exchange for the checks paid to WFC and Wenrick. Finally, WFC and Wenrick question whether the transfer left the title agency with an unreasonably small amount of assets. The court will discuss each of these elements below.
1. Dayton Title has a "property interest" that was transferred through the checks paid to WFC and Wenrick
As a threshold issue, the UFTA requires proof that the transfer involved a property interest of the debtor. Ohio Rev. Code § 1336.01(L) (defining "transfer" to include any direct or indirect, absolute or conditional, and voluntary or involuntary method of parting with a debtor's interest in an asset). This threshold issue arises in the context of both fraudulent and preferential transfers in bankruptcy. See, e.g., In re Smith, 966 F.2d 1527 (7th Cir.1992); Nordberg v. Sanchez (In re Chase & Sanborn Corp.), 813 F.2d 1177 (11th Cir.1987). In this case, Dayton Title asserts that it has legal title to and, therefore, a property interest in, the funds transferred to WFC and Wenrick. In opposition, WFC and Wenrick note that the escrow funds in the account belong to third parties and were only held in trust by Dayton Title. As *729 such, they argue that Dayton Title had no real property interest in the funds and, consequently, the funds are not recoverable for the benefit of the bankruptcy estate and its creditors.
In general, where a debtor's account is a mere conduit through which third party funds exchange hands, the debtor does not have a property interest recoverable for a bankruptcy estate as either a fraudulent or preferential transfer. Chase & Sanborn, 813 F.2d at 1181-1182. See also McLemore v. Third National Bank in Nashville (In re Montgomery), 983 F.2d 1389, 1395 (noting that a debtor has no interest in borrowed funds specifically earmarked by the lender for payment to a designated creditor even if the funds pass through the debtor's hand in getting to the selected creditor). This situation generally arises when a third party lends money to the debtor for the intended purpose of paying a selected creditor. Montgomery, 983 F.2d at 1394-1395; Smith, 966 F.2d at 1533. In such circumstances, the transfer of "earmarked" funds does not involve property of the debtor because: 1) the debtor never exercised control over the third party funds; and 2) the debtor's property was not diminished by the transfer. Montgomery, 983 F.2d at 1394-1395; Smith, 966 F.2d at 1533.
This case would present an earmarking situation if Chari's check had cleared. The parties intended the Dayton Title trust account to be a mere conduit through which the $5,000,000.00 deposited by Krishan Chari would be channeled to WFC and Wenrick. However, the situation is distinguished by the unfortunate fact that Chari's check was a forgery. The check, drawn on a non-existent account, had no real value. All subsequent checks deposited by Chari also bounced. As such, the effect of the transfer was not the channeling of Chari's funds to WFC and Wenrick through Dayton Title's account.
Instead, Chari's fraudulent activities caused the unintended transfer of the following to WFC and Wenrick: 1) $742,848.62 in escrow funds held by Dayton Title in trust for the benefit of third parties and 2) approximately $4,142,151.38 from a provisional loan by National City Bank to Dayton Title needed to cover the overdraft created in the account after the escrow funds were exhausted. Because of the unique nature of this mistaken transaction involving the unintended transfer of escrow funds and a provisional loan rather than the intended transfer of Chari's funds, the court concludes that the transaction did involve a property interest of Dayton Title.
First, a debtor must exert control over funds transferred out of its account to demonstrate a property interest in them. Montgomery, 983 F.2d at 1394-1395 (noting that a debtor has a property interest in a bank's provisional loan, even if the loan is only an unauthorized extension of credit to cover an account overdraft created by kited checks, if the debtor exerts dominion and control over the funds); Chase & Sanborn, 813 F.2d at 1181; Smith, 966 F.2d at 1533. A debtor exercises control over funds when it makes the decision to use the funds to make a purchase or a payment to a creditor. Montgomery, 983 F.2d at 1395. When the debtor is not the entity directing the use of the funds, such as when borrowed funds are specifically earmarked for payment to a designated creditor, the funds are not within the debtor's control. Id.
WFC and Wenrick argue that because the escrow funds were to be paid out according to the direction of third parties who placed the funds in the trust account, Dayton Title had no control over the funds. They assert that Dayton Title's *730 lack of control over the funds is further supported by the fact that WFC and Wenrick were not creditors of Dayton Title when they received payment. For this proposition, they cite Chase & Sanborn in which the Eleventh Circuit notes that the presumption of a debtor controlling the payment of funds is not compelling when payment is to a non-creditor and the debtor receives no direct benefit from the transfer. 813 F.2d at 1181. In such circumstances, it is likely that the party providing the funds is controlling the transfer rather than the debtor. Id.
However, in this case, there is no question that the parties providing the funds did not control the transfer. Neither the third parties with escrow funds in the trust account nor National City Bank with its provisional loan of $4,142,151.38 directed payment of their funds to WFC and Wenrick. Instead, Dayton Title made the critical decision to write checks to WFC and Wenrick from the trust account, without waiting for Chari's $5,000,000.00 deposit to clear, thus setting in motion the provisional credit extended by National City Bank. The court concludes that by these acts, Dayton Title exerted clear control over the escrow funds and provisional loan from the bank.
Dayton Title's control over the transfer does not, by itself, establish a property interest in the funds. Rieser v. Bruck Plastics Co. (In re Trinity Plastics, Inc.), 138 B.R. 203, 208 (Bankr.S.D.Ohio 1992). As a second requirement, the transfer must diminish the value of the debtor's estate. Id.; Montgomery, 983 F.2d at 1394-1395; Smith, 966 F.2d at 1535-1536. This occurs if the transfer results in the depletion of funds generally available for distribution causing detriment to some or all of the debtor's creditors. Chase & Sanborn, 813 F.2d at 1181.
WFC and Wenrick argue that the funds in the trust account would never have been available for distribution to general unsecured creditors of Dayton Title. Therefore, the transfer of those funds to WFC and Wenrick did not effect the assets of Dayton Title's estate. Again, WFC and Wenrick would be correct about the effect of the transaction if it had occurred as planned resulting in the channeling of Chari's funds to WFC and Wenrick through Dayton Title's account. See Chase & Sanborn, 813 F.2d at 1181 (concluding that where third party funds simply pass through a debtor's possession without actually being property of the debtor, the transfer does not cause a depletion of the debtor's assets and the return of the money to the estate would create a windfall for creditors).
However, this is not the situation presented in this case. Because Chari's checks were forgeries with no value behind them, Dayton Title did not transfer Chari's funds. Instead, Dayton Title transferred the escrow funds of unrelated third parties and the funds loaned by National City Bank. This wrongful transfer of third party funds created $4,885,000.00 in new claims against Dayton Title that did not exist prior to the transfer. The newly created claims of the escrow account beneficiaries and National City Bank depleted the assets available to Dayton Title's other creditors. Thus, the transfer to WFC and Wenrick did diminish the Debtor's estate.
The court recognizes that in most circumstances involving a transfer of funds from an escrow account, the funds held in trust for third parties are not the debtor's property and are not recoverable by a debtor's estate as either a preference or fraudulent transfer. However, because of the unique circumstances of this case, the transfer from the account meets the two requirements establishing that Dayton Title *731 had a property interest in the funds. First, Dayton Title exerted control over the trust account funds by directing payment to WFC and Wenrick using the existing money in the account and National City Bank's provisional loan without waiting for Chari's check to clear. Second, the transfer created new claims against Dayton Title that did not exist prior to the transfer thus diminishing the amount of assets available to other creditors. For these reasons, the court concludes that a property interest of Dayton Title was transferred to WFC and Wenrick.
2. Dayton Title received no reasonably equivalent value in exchange for the transfer of funds to WFC and Wenrick
In order to prevail on its fraudulent transfer claim under Ohio's UFTA, Dayton Title must further establish that it received nothing of reasonably equivalent value in exchange for the transfer of funds to WFC and Wenrick. Ohio Rev.Code § 1334.06(A)(2). To assess whether a challenged transfer is supported by reasonably equivalent value, "courts generally compare the value of the property transferred with the value of that received in exchange for the transfer." Corzin v. Fordu (In re Fordu), 201 F.3d 693, 707 (6th Cir.1999). It is not necessary for there to be "mathematical precision" or a "penny-for-penny" exchange in order to establish reasonably equivalent value. Coan v. Fleet Credit Card Services, Inc. (In re Guerrera), 225 B.R. 32, 36 (Bankr. D.Conn.1998). However, courts should keep the equitable purposes behind fraudulent transfer law in mind, recognizing that any significant disparity between the value received and the value surrendered will significantly harm innocent creditors. Id.
Dayton Title demonstrated that the transfer created a negative balance in its trust account and $4,885,000.00 in claims against Dayton Title that did not exist prior to the transfer.[2] In exchange, Dayton Title asserts that it received nothing of value from WFC and Wenrick. WFC and Wenrick disagree noting that they deposited a total of $4,800,000.00 in Dayton Title's trust account on September 3, 1999 representing the proceeds from their final bridge loans to Invesco. They argue that no documentary evidence supports that Dayton Title disbursed that money. Thus, the funds they initially deposited constitute reasonably equivalent value to what they received in the transfer.
If Dayton Title failed to disburse the $4,800,000.00 in loan proceeds received from WFC and Wenrick, this could amount to reasonably equivalent value for Dayton Title's $4,885,000.00 loss. However, in response to WFC and Wenrick's argument, Dayton Title submits evidence, in the form of Pam Folino's affidavit, bank records and Dayton Title's Escrow Account Ledgers, demonstrating that the loan proceeds from WFC and Wenrick were, in fact, disbursed. [Adv.Doc. # 136-1, Folino Aff. attached at Ex. B and attached Exs. 1-6.] The $3,200,000.00 in Invesco loan proceeds which Dayton Title received from WFC on September 3, 1999 *732 was wire transferred from the trust account to John Lewis on the same day. [Id., Folino Aff. and attached Exs. 1 and 2.] In addition, Dayton Title disbursed the $1,600,000.00 in Invesco loan proceeds received in two wire transfers from Wenrick as follows: 1) $1,500,000.00 to John Lewis; 2) $34,000.00 to McDuffie Construction Management Group; and 3) $66,000.00 to Invesco. [Id., Folino Aff. and attached Exs. 3-6.] WFC and Wenrick have provided no evidence to contradict these facts. Because Dayton Title retained none of the funds loaned to Invesco by WFC and Wenrick, the loan proceeds do not constitute reasonably equivalent value for Dayton Title's loss.
Next, WFC and Wenrick request the court to consider indirect benefits received by Dayton Title as reasonably equivalent value. WFC and Wenrick note the significant value Dayton Title placed on its business relationship with Chari. Even before the transactions with WFC and Wenrick, Dayton Title allowed Chari to have substantial extensions of credit by floating returned checks with other funds in the trust account in exchange for Chari's continued business. They assert that the transaction involving WFC and Wenrick, channeled through the trust account, enabled Dayton Title to facilitate this business relationship with Chari believed to be financially advantageous.
WFC and Wenrick are correct that courts should analyze both direct and indirect benefits to a debtor in determining whether reasonably equivalent value has been received. Enwotwen Indus., Inc. v. Brookstone Limited Partnership (In re Newtowne), 157 B.R. 374, 378 (Bankr. S.D.Ohio 1993). However, the economic value of any indirect benefits must be fairly concrete and quantifiable to merit consideration by the court. SPC Plastics Corp. v. Griffith (In re Structurlite Plastics Corp.), 224 B.R. 27, 31 (6th Cir. BAP 1998) (noting that the speculative value of indirect benefits like the opportunity to acquire additional loans or new managerial talent does not constitute fair consideration); Leonard v. Norman Vinitsky Residuary Trust (In re Jolly's Inc.), 188 B.R. 832, 843 (Bankr.D.Minn.1995) (noting that the defendant-creditors carry "the burden of production as to the concreteness of the indirect benefit, and its reasonable equivalence of value.").
While goodwill and the continuation of business relationships can be indirect benefits to a business debtor, WFC and Wenrick have not attempted to measure or quantify the economic value of Dayton Title's continued relationship with Chari. Instead, they only speculate, without evidentiary support, that the value of Dayton Title's ongoing relationship with Chari is reasonably equivalent to the $4,885,000.00 loss experienced by Dayton Title forcing it to close its doors and seek bankruptcy protection. The court finds this assertion too speculative to merit consideration. Consequently, the court concludes Dayton Title received no reasonably equivalent direct or indirect benefit for the $4,885,000.00 transfer to WFC and Wenrick.
3. The Transfer Left Dayton Title with An Unreasonably Small Amount of Assets in Relation to the Transaction
The third requirement under Ohio's UFTA, requires Dayton Title to demonstrate that the debtor engaged in a transaction "for which the remaining assets of the debtor were unreasonably small in relation to . . . the transaction[.]" Ohio Rev.Code § 1336.04(A)(2)(a). The unreasonably small asset theory under this provision is the broadest kind of fraudulent conveyance claim applying when the "debtor *733 is left with unreasonably small assets, compared to his historical level of assets or cash flow and current needs." Aristocrat Lakewood Nursing Home v. Mayne, 133 Ohio App.3d 651, 668, 729 N.E.2d 768, 780 (Ohio Ct.App.1999). Care must be taken, however, not to invalidate "all transfers simply because a debtor subsequently happened to encounter financial problems." Id.
Dayton Title's financial problems did not simply occur as a coincidence after the transfer to WFC and Wenrick. Its problems were a direct result of the transfer of funds from the trust account creating $4,885,000.00 in new claims against Dayton Title that did not exist prior to the transfer. The transfer not only depleted Dayton Title's assets, but left it unable to continue in business. The court concludes that the transfer of funds left Dayton Title with unreasonably small assets, so that Dayton Title meets this final element of a fraudulent conveyance under Ohio's UFTA.
D. Prejudgment Interest, Costs and Attorney Fees
Upon prevailing on its motion for summary judgment, Dayton Title asserts that the estate should be entitled to costs, attorney fees and interest on the award, at a rate of 10% per annum, calculated from October 19, 1999, the date of the fraudulent transfer to WFC and Wenrick. WFC and Wenrick do not respond to Dayton Title's request in their memoranda.
With respect to prejudgment interest, the Bankruptcy Code does not address such an award in actions to avoid fraudulent transfers. In the absence of a statutory prohibition, a trial court may exercise its discretion to award prejudgment interest taking into consideration the relative equities of the parties and the need to fully compensate the debtor's estate for the use of funds for the period of time they were withheld from the estate. Yoder v. T.E.L. Leasing, Inc. (In re Suburban Motor Freight, Inc.), 124 B.R. 984, 1005-1006 (Bankr.S.D.Ohio 1990). The good faith dispute over the funds being property of the estate does not warrant a different result. Hunter v. Patton (In re Patton) 200 B.R. 172, 178 (Bankr. N.D.Ohio 1996). For these reasons, the court will award Dayton Title prejudgment interest to compensate the estate for its loss of the use of the funds transferred to WFC and Wenrick while this litigation proceeded.
Although Dayton Title requests prejudgment interest to run from the date of the transfer to WFC and Wenrick, prejudgment interest is generally awarded from the date of the demand on the defendants or, absent this, the date the adversary proceeding was filed. Suburban Motor Freight, 124 B.R. at 1006. In this case, Dayton Title provides no demand date. Thus, the court concludes that the appropriate date for the accrual of prejudgment interest to begin is the date the adversary proceeding was initiated.
In conclusion, the court grants prejudgment interest to the Plaintiff, Dayton Title, running from the date the adversary complaint was filed on November 10, 1999. The applicable rate of interest shall be the rate set forth in 28 U.S.C. § 1961(a). See Id. at 1006; Hunter v. Patton (In re Patton), 200 B.R. at 178; Sicherman v. Jelm (In re Harvard Manufacturing Corp.), 97 B.R. 879, 884 (Bankr.N.D.Ohio.1989).
Furthermore, Plaintiff Dayton Title is awarded court filing costs. The court deems an award of attorney fees or other costs to the Plaintiff to be inappropriate.
CONCLUSION
The court grants partial summary judgment to Defendants The White Family *734 Companies, Inc. and Nelson Wenrick with respect to Dayton Title Agency, Inc. Business Trust's ineligibility for separate bankruptcy protection from Dayton Title Agency, Inc.
The court grants summary judgment to Plaintiff Dayton Title Agency, Inc., as Debtor-in-Possession, on its claim for recovery of the $3,260,000.00 transferred to Defendant The White Family Companies, Inc. and the $1,625,000.00 transferred to Defendant Nelson Wenrick under 11 U.S.C. § 544 and Ohio Rev.Code § 1336.04.[3] Summary judgment to Defendants on the same issue is hereby denied.
The Plaintiffs are entitled to only one recovery from WFC and Wenrick. Therefore, the court deems National City Bank's motion for summary judgment to be moot. For this reason, the court need not reach National City Bank's separate claims for recovery nor the Defendants' separate defenses to recovery by the bank.
The court awards prejudgment interest to Plaintiff Dayton Title Agency, Inc. from November 10, 1999 at the rate prescribed in 28 U.S.C. § 1961(a) and court filing costs.
It is so ordered.
NOTES
[1] Because they contain identical claims against WFC and Wenrick, the two adversary proceedings of Dayton Title Agency, Inc. (Adv. # 99-3664) and Dayton Title Agency, Inc. Business Trust (Adv.# 99-3663) have been jointly administered for procedural purposes with filings located in Adv. # 99-3664.
[2] With respect to whether Dayton Title received reasonably equivalent value for the transfer, WFC and Wenrick again argue that the Debtor's estate experienced no loss as a result of the transfer of funds from the trust account because the funds belong to third parties. As noted previously, the wrongful transfer of those funds, as well as the transfer of the provisional loan from National City Bank, created $4,885,000.00 in new claims against Dayton Title that would not exist except for the transfer to WFC and Wenrick. Consequently, the court rejects WFC and Wenrick's continued argument that the transfer did not effect Dayton Title's net worth.
[3] The court, having concluded that Dayton Title is entitled to recovery under Ohio Rev. Code § 1336.04, will not address Dayton Title's alternative claim for recovery of the fraudulent transfers under Bankruptcy Code § 548.
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464 F.3d 878
In re Keith MASON, Debtor,Educational Credit Management Corporation, Appellant,v.Keith Mason, Appellee.
No. 04-35988 BAP.
No. 04-01075 BMAP.
No. 04-01077 BMAP.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted June 9, 2006.
Memorandum Filed June 29, 2006.
Memorandum Withdrawn and Opinion Filed September 28, 2006.
COPYRIGHT MATERIAL OMITTED Daniel Fisher, Jones, Gledhill, Hess, Andrews, Fuhrman, Bradbury & Eiden, PA, St. Paul, MN, for the appellant.
Joseph M. Meier, Cosho Humphry, LLP, Boise, ID, for the appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel, Perris, Marlar, and Brandt, Bankruptcy Judges, Presiding.
Before DAVID R. THOMPSON, A. WALLACE TASHIMA, and CONSUELO M. CALLAHAN, Circuit Judges.
ORDER AND OPINION
TASHIMA, Circuit Judge.
ORDER
1
Appellant's unopposed request for publication is granted. The mandate issued on July 26, 2006, is recalled and the memorandum disposition filed on June 29, 2006, 2006 WL 1876890, is withdrawn, and replaced by the authored opinion filed concurrently with this order. No further petitions for rehearing may be filed.
OPINION
2
Educational Credit Management Corporation ("ECMC") appeals from the decision of the Bankruptcy Appellate Panel ("BAP"), which affirmed the bankruptcy court's partial discharge of government-insured student loans held by Debtor-Appellee Keith Mason ("Mason"). See Educ. Credit Mgmt. Corp. v. Mason (In re Mason), 315 B.R. 554 (9th Cir. BAP 2004). The bankruptcy court held that full repayment of the loans would cause Mason an undue hardship within the meaning of 11 U.S.C. § 523(a)(8). It therefore discharged all amounts that Mason owed to ECMC in excess of $32,400.1 The bankruptcy court had jurisdiction under 28 U.S.C. § 157(b). The BAP had jurisdiction under § 158(c). We have jurisdiction under § 158(d), and we reverse.
BACKGROUND
3
At the time of the bankruptcy adversary proceeding, Mason was 33 years old, single, in good physical health, and had no dependents. Mason is well-educated, having earned an undergraduate degree in philosophy from Boise State University in 1995, and a law degree from Gonzaga University in 1999. Mason financed his education by acquiring federally-insured student loans from various lenders totaling approximately $193,000 in principal and accrued interest. At issue in this proceeding is approximately $100,000 owed to ECMC in its capacity as successor-in-interest to Northwest Education Loan Association.2
4
Despite his education, Mason has had difficulty putting his education to use because of a learning disability that has affected his ability to concentrate, focus on details, read, and write. Mason's mother testified that he was diagnosed with the learning disability in the third grade, and that she initially thought that he would be unable to complete high school. Mason did, however, finish high school, and then served in the Army and National Guard for eight years. Following his service, Mason enrolled at Boise State, and earned a philosophy degree in 1995. After college, Mason took the Law School Admission Test and applied to law school. Despite his low test scores and GPA, Mason was accepted at Gonzaga University Law School. Although Mason initially struggled in law school, the University provided for special testing accommodations, and Mason earned his law degree in 1999.
5
In December 1999, Mason began working for MicronPC in Boise as a "process analyst" earning $26,000 per year. Mason took the position with the hope of ultimately joining Micron-PC's legal department. In 2000, Mason took the Idaho bar examination, but failed. In May 2001, Mason became a "government contracts technician" at MicronPC, earning $14.00 per hour, but was laid off in January 2002. After receiving unemployment benefits for a few months, Mason began working as an independent contractor in April 2002, installing home siding for Diamond Construction.
6
The bankruptcy court found that Mason is currently earning between $1,000 and $1,200 per month as a part-time contractor for Diamond Construction, and that his monthly expenses average between $1,300 and $1,340. Mason has no fixed schedule and works on an "as needed basis," which allows Mason to apply for other jobs and attend interviews. Mason has worked with an employment service counselor, and considered a variety of jobs, but has had poor results. Based on his experience, Mason has testified that he does not expect his law degree will improve his chances of securing employment.
7
While Mason has a commercial truck driver's license, he has been unable, or unwilling, to work as a truck driver.
8
Mason filed a petition for relief under Chapter 7 of the Bankruptcy Code on January 16, 2003. Mason owed a total of $209,070.91 in unsecured, nonpriority claims, the majority of which were for student loan debts. Mason sought discharge of his student loan obligations pursuant to 11 U.S.C. § 523(a)(8). Applying Brunner v. New York State Higher Education Services Corp. (In re Brunner), 831 F.2d 395, 396 (2d Cir.1987), and Saxman v. Educational Credit Management Corp. (In re Saxman), 325 F.3d 1168, 1174-75 (9th Cir.2003), the bankruptcy court partially discharged Mason's debt owed to ECMC, to the extent it exceeded $32,400. The BAP affirmed, and ECMC now appeals.
STANDARD OF REVIEW
9
"Because we are in as good a position as the BAP to review bankruptcy court rulings, we independently examine the bankruptcy court's decision, reviewing the bankruptcy court's interpretation of the Bankruptcy Code de novo and its factual findings for clear error." Miller v. Cardinale (In re DeVille), 361 F.3d 539, 547 (9th Cir.2004) (citation and internal quotation marks omitted). We have held that whether repayment of a student loan debt would impose an undue hardship requires a determination of the "legal effect of the bankruptcy court's findings" regarding the student's circumstances, a question of law which we review de novo. Rifino v. United States (In re Rifino), 245 F.3d 1083, 1087 n. 2 (9th Cir.2001).
DISCUSSION
10
An educational loan is dischargeable in bankruptcy if "excepting such debt from discharge . . . would impose an undue hardship on the debtor and the debtor's dependents." 11 U.S.C. § 523(a)(8). To determine if excepting student debt from discharge will impose an undue hardship, we apply the three-part test first enunciated in In re Brunner, 831 F.2d at 396. See United Student Aid Funds, Inc. v. Pena (In re Pena), 155 F.3d 1108, 1112 (9th Cir.1998) (adopting the Brunner test). Under the Brunner test, the debtor must prove that: (1) he cannot maintain, based on current income and expenses, a "minimal" standard of living for himself and his dependents if required to repay the loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period; and (3) the debtor has made good faith efforts to repay the loans. Id. at 1111; Brunner, 831 F.2d at 396. "[T]he burden of proving undue hardship is on the debtor, and the debtor must prove all three elements before discharge can be granted." In re Rifino, 245 F.3d at 1087-88 (citation omitted).
I. Minimal Standard of Living
11
The first prong of the Brunner test requires that Mason prove that he cannot maintain a minimal standard of living if he were required to repay the loans. See In re Saxman, 325 F.3d at 1173; In re Rifino, 245 F.3d at 1088. The bankruptcy court found that Mason's average monthly income generally fluctuated between $1,000 and $1,200 per month, and that in some months it was below that amount. The bankruptcy court also found that Mason's necessary average monthly expenses, excluding his loan payments, were between $1,300 and $1,340 per month. Based on these findings, the bankruptcy court concluded that Mason satisfied the first prong of the Brunner test because he would not be able to maintain a minimal standard of living if required to repay the loans.
12
"The method for calculating a debtor's average monthly expenses is a matter properly left to the discretion of the bankruptcy court." In re Pena, 155 F.3d at 1112. Because ECMC does not dispute the bankruptcy court's findings regarding Mason's monthly income and expenses, we will not disturb them. See id.; Pa. Higher Educ. Assistance Agency v. Birrane (In re Birrane), 287 B.R. 490, 496 (B.A.P. 9th Cir.2002).3
II. Additional Circumstances
13
The second prong of the Brunner test requires a debtor to prove that "additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans." In re Brunner, 831 F.2d at 396. We recently clarified that a "debtor does not have a separate burden to prove `additional circumstances,' beyond the inability to pay presently or in the future." Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 446 F.3d 938, 945 (9th Cir. 2006) (holding that that bankruptcy court erred in requiring debtor to show exceptional circumstances beyond the inability to pay in the present and a likely inability to pay in the future).
14
Here, the bankruptcy court found that Mason's learning disability, and his inability to put his law degree to use, were additional circumstances indicating that Mason's financial circumstances would not improve for a significant period of time. ECMC argues that the bankruptcy court erred because: (1) Mason presented legally insufficient evidence of any disability; (2) Mason should not be permitted to rely on a preexisting circumstance (i.e., a disability that predated his decision to take out the loans); and (3) despite Mason's learning disability, there is every indication that Mason's situation will improve.
15
ECMC's first argument — that Mason presented legally insufficient evidence of his disability — is being raised for the first time on appeal; heretofore, ECMC has never disputed the existence of Mason's learning disability. In fact, ECMC's own vocational expert acknowledged that Mason had a learning disability that might affect his performance. See In re Burnett, 435 F.3d at 975-77 (holding that an argument is generally considered waived if not presented to the BAP). In addition, Mason testified regarding his learning disability and the impact it has had on his ability to succeed. Mason's testimony was also corroborated by his mother's testimony and the special accommodations he received in law school. Thus, sufficient evidence supports the bankruptcy court's finding that Mason has a learning disability.
16
ECMC further argues that even if Mason has provided corroborating evidence of the existence of his learning disability, he failed to provide any evidence of how his learning disability impaired his ability to work. While ECMC's position has some merit, see Brightful v. Pa. Higher Educ. Assistance Agency (In re Brightful), 267 F.3d 324, 330-31 (3d Cir.2001) (holding that the bankruptcy court cannot merely assume that debtor's psychiatric problems precluded her from finding employment, and requiring some showing of how disability affected debtor's ability to earn income), the record establishes that Mason's learning disability has made it difficult for him to hold positions that require particular attention to detail or concentration. Moreover, unlike in Brightful, the bankruptcy court in this case did make specific findings that Mason's learning disability diminished his prospects of succeeding in any professional career and has placed him at a relative disadvantage compared to other job applicants. Cf. id. ("What is missing from the Bankruptcy Court's analysis, however, is any discussion of the nature of Brightful's emotional and psychiatric problems, or how these problems prevent her from being gainfully employed."). We conclude that the bankruptcy court did not clearly err in finding that Mason suffered from a learning disability that impaired his ability to earn a sufficient income now or in the future.
17
ECMC next argues that Mason should not be permitted to rely on an "additional circumstance" that predated his decision to take out the loans, relying on Thoms v. Educational Credit Management Corp (In re Thoms), 257 B.R. 144, 149 (Bankr.S.D.N.Y.2001). We have never drawn such a distinction between pre-existing and later-arising "additional circumstances," and ECMC cites no binding authority supporting its position. As the BAP aptly noted:
18
[N]o circuit court has held that a circumstance or condition in existence at the time the debtor obtained the educational loan in question must be excluded from consideration in the persistence analysis, or that the debtor must show a worsening or exacerbation to carry his burden on the second Brunner prong.
19
315 B.R. at 561. We agree with the BAP's reasoning and, consequently, reject this argument. See also Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 308 B.R. 436, 446 (9th Cir. BAP 2004) (explaining that "[t]he `additional circumstances' test does not focus on a debtor's past choices, but on currently existing circumstances and what those circumstances show with regard to the debtor's future financial situation"), aff'd, 446 F.3d 938 (9th Cir.2006).
20
Finally, ECMC argues that despite Mason's learning disability, there is every indication that Mason's situation will improve. The bankruptcy court agreed, concluding that Mason would, at some point, be able to make loan payments, and thus granted Mason only a partial discharge of his loan debt. Because ECMC does not argue that these findings are erroneous, and the bankruptcy court held that Mason had satisfied the second prong of the Brunner test only with respect to a portion of his student loans, see In re Saxman, 325 F.3d at 1174 ("A debtor who wishes to obtain a discharge of his student loans must therefore meet the requirements of § 523(a)(8) as to the portion of the debt to be discharged before that portion of his or her debt can be discharged." (citation omitted) (emphasis added)), we reject this claim.
III. Good Faith
21
The final prong of the Brunner test requires that the debtor exhibit good faith in his efforts to repay the student loans. See In re Pena, 155 F.3d at 1114. "Good faith is measured by the debtor's efforts to obtain employment, maximize income, and minimize expenses." In re Birrane, 287 B.R. at 499 (citations omitted); see also In re Pena, 155 F.3d at 1114. Courts will also consider "[a] debtor's effort — or lack thereof — to negotiate a repayment plan," In re Birrane, 287 B.R. at 499, although a history of making or not making payments is, by itself, not dispositive, see id. at 499-500.
22
The bankruptcy court concluded that Mason exhibited good faith because he attempted to maximize his income, minimize his expenses, and negotiate with his student loan creditors. The court rejected ECMC's argument that Mason has not shown good faith based on his failure to attempt the bar exam a second time, his failure to obtain a second part-time job in the evening, and his failure to sign up for the Income Contingent Repayment Plan ("ICRP"). ECMC now renews these arguments on appeal.
23
In In re Birrane, the Ninth Circuit BAP recently reversed the bankruptcy court, inter alia, because the debtor did not use her "best efforts to maximize her income" and failed to take steps towards re-negotiating a repayment schedule under the ICRP. See 287 B.R. at 499-500; 34 C.F.R. § 685.209.4 There, the BAP reasoned that the debtor failed to maximize her income because she worked only part-time and provided no evidence that "she explored the possibility, or was even willing, to take a second job outside her field." Id. at 499. While the BAP recognized that the debtor had "previously made some effort in negotiating repayment of her student debt," it further reasoned that the debtor's failure to explore the ICRP option that became available to her also weighed against finding that she had met her burden of proof on the issue of good faith. Id. at 499-500.
24
We conclude that, like the debtor in In re Birrane, Mason has not met his burden of establishing good faith in attempting to pay back the student loans. While Mason has minimized his expenses, he has not maximized his income, nor has he made adequate efforts to obtain full-time employment. Mason works only part-time as a home siding installer, despite holding a bachelor's degree in philosophy and a law degree. Mason sought to justify his unwillingness to find a second part-time job on the ground that it would make it difficult for him to continue his ongoing search for a full-time position. The record belies this testimony, instead revealing that Mason's search for full-time employment has been inadequate in light of the significant free time his schedule provides him. See In re Birrane, 287 B.R. at 499-500 (finding lack of good faith, in part, because debtor declined to obtain a second part-time job).
25
Mason also claims that he is unable to seek work as an attorney because he cannot pass the bar examination. Mason has, however, made only one attempt to pass the Idaho bar exam, without requesting special testing accommodations, despite blaming his failure on his learning disability. Mason further testified that he does not intend to take the bar exam a second time, even though he acknowledged that he has substantial free time that he could dedicate to studying. See Pobiner v. Educ. Credit Mgmt. Corp. (In re Pobiner), 309 B.R. 405, 418 (Bankr.E.D.N.Y.2004) ("In general, courts have found that failure to pass the bar exam is not a sufficient reason for the discharge of student loans." (citations omitted)); Parks v. Graduate Loan Ctr. (In re Parks), 293 B.R. 900, 904 (Bankr.N.D.Ohio 2003) (refusing to discharge law school loans after debtor failed bar exam primarily due to insufficient effort to retake exam).
26
Finally, while Mason appears to have made some previous efforts to negotiate repayment of his debt, his efforts have been inadequate. The record demonstrates that Mason could have attempted renegotiation of his debt under the ICRP, but failed to pursue this option with diligence. See In re Birrane, 287 B.R. at 500 (finding lack of good faith, where debtor previously made some effort in negotiating repayment of her student debt but failed to pursue ICRP option when it became available). For the foregoing reasons, we conclude that the bankruptcy court clearly erred in finding that Mason demonstrated good faith efforts to repay his loans.
CONCLUSION
27
Accordingly, the BAP's decision is REVERSED and REMANDED for further proceedings consistent with this opinion.
Notes:
1
Mason owed ECMC approximately $100,000
2
The record indicates that Mason has entered into a repayment plan with another lender, Help Services Group, Inc., in order to repay a separate $65,000 student loan obligation
3
ECMC argues that the bankruptcy court erred because Mason failed to establish that he maximized his income. As a preliminary matter, ECMC did not raise this argument before the bankruptcy court or the BAP, and therefore has waived it on appealSee Burnett v. Resurgent Capital Servs. (In re Burnett), 435 F.3d 971, 975-77 (9th Cir.2006) ("[A]n issue is waived if not presented to the BAP, unless exceptional circumstances exist to justify consideration of the issue."). Even if we were to reach the argument, however, ECMC's contention that Mason must establish that he maximized his income in order to meet the first prong of Brunner does not find support in the case law. Although ECMC claims that United Student Aid Funds, Inc. v. Nascimento (In re Nascimento), 241 B.R. 440 (B.A.P. 9th Cir.1999), requires that Mason prove that he has maximized his income, Nascimento appears to impose no such requirement. See In re Nascimento, 241 B.R. at 444-45. In any event, even if Nascimento could be read to require a debtor to prove that he maximized his income to meet the first prong of the Brunner test, we have not specifically imposed such a requirement. See In re Rifino, 245 F.3d at 1088 (requiring only that debtor prove she could not maintain a minimal standard of living based on her current income and expenses); In re Pena, 155 F.3d at 1112-13 (determining whether first prong of Brunner test was met by subtracting debtor's average monthly expenses from their net monthly income). Accordingly, ECMC's contention fails.
4
Under the ICRP, a debtor's monthly payments vary based on the debtor's ability to pay. After 25 years, any debt remaining on the consolidated loans is forgivenSee 34 C.F.R. § 685.209(c)(4)(iv).
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COURT
OF APPEALS
SECOND
DISTRICT OF TEXAS
FORT
WORTH
NO.
2-06-035-CR
CURTIS LESLIE HARRIS APPELLANT
V.
THE STATE OF TEXAS STATE
------------
FROM THE 367TH
DISTRICT COURT OF DENTON COUNTY
------------
MEMORANDUM OPINION[1] AND JUDGMENT
------------
Appellant Curtis
Leslie Harris appeals his conviction for intoxication assault. After Harris filed his notice of appeal, he
filed a timely motion for new trial, which the trial court timely granted. See Tex.
R. App. P. 21.8(a). The granting
of a motion for new trial restores the case to its position before the former
trial. Tex.
R. App. P. 21.9. Therefore, the
appeal has become moot, and on our own motion we dismiss the appeal as
moot. Tex.
R. App. P. 43.2(f).
Harris shall pay
all costs of this appeal, for which let execution issue.
PER
CURIAM
PANEL D: WALKER, J.; CAYCE, C.J.; and MCCOY, J.
DO NOT PUBLISH
Tex.
R. App. P.
47.2(b)
DELIVERED: May 11, 2006
[1]See Tex. R. App. P. 47.4.
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The State of TexasAppellee
Fourth Court of Appeals
San Antonio, Texas
October 23, 2014
No. 04-14-00095-CR
Jesus PADILLA,
Appellant
v.
The STATE of Texas,
Appellee
From the County Court at Law No. 6, Bexar County, Texas
Trial Court No. 394254
Honorable Wayne A. Christian, Judge Presiding
ORDER
Appellant’s brief was originally due on July 9, 2014, but was not filed. On July 21, 2014,
the clerk of this court notified appellant that the brief was late and instructed appellant to either
file the appellant’s brief or a motion for extension within ten days. Appellant filed a motion for
extension which was granted to September 8, 2014. The appellant’s brief was not filed. The
clerk of this court left several phone messages for appellant’s counsel informing him that the
deadline to file the appellant’s brief had passed. On October 7, 2014, counsel for appellant filed
another motion for extension of time to file the appellant’s brief requesting an extension to
October 30, 2014. At the time this motion for extension was filed, a total of 90 days had passed
since the appellant’s brief was originally due. The State has not opposed the appellant’s pending
motion for extension.
In the interest of judicial efficiency, appellant’s motion for extension is GRANTED, such
that the appellant’s brief must be filed on or before October 30, 2014. NO FURTHER
MOTIONS FOR EXTENSION WILL BE CONSIDERED.
_________________________________
Rebeca C. Martinez, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 23rd day of October, 2014.
___________________________________
Keith E. Hottle
Clerk of Court
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940 P.2d 1189 (1997)
123 N.M. 394
1997-NMCA-046
HIGH RIDGE HINKLE JOINT VENTURE and Gene Hinkle, Petitioners-Appellants,
v.
The CITY OF ALBUQUERQUE, et al., Respondents-Appellees,
Embudo Canyon Neighborhood Association, Interested Party-Appellee.
No. 17285.
Court of Appeals of New Mexico.
March 17, 1997.
Certiorari Granted May 19, 1997.
*1190 George R."Pat" Bryan, III, Timothy V. Flynn-O'Brien, Bryan & Flynn-O'Brien, Albuquerque, for Petitioners-Appellants.
Robert M. White, City Attorney, Randy M. Autio and Carolyn S. Fudge, Assistant City Attorneys, Albuquerque, for Respondents-Appellees City of Albuquerque, et al.
Ethelinda Dietz, Albuquerque, for Interested Party-Appellee Embudo Canyon Neighborhood Ass'n.
OPINION
DONNELLY, Judge.
1. We review for the second time an appeal by Appellants High Ridge Hinkle Joint Venture and Gene Hinkle, individually, from an adverse decision of the district court upholding the Albuquerque City Council's decision interpreting its city zoning ordinance. We discuss Appellants' contentions that the district court erred (1) in upholding the decision of the City Council interpreting provisions of its C-2 zoning ordinance, and (2) in denying Appellants' request to introduce new evidence. For the reasons discussed herein, we affirm.
PROCEDURAL POSTURE AND BACKGROUND
2. Appellants are the owners of a large tract of land zoned C-2 under the Albuquerque zoning ordinance. In 1991 they sought to develop a portion of their property by building a miniature golf course and arcade, and an amusement facility featuring go-carts and bumper boats. Appellants sought and obtained a declaratory ruling on August 23, 1991, by a city zoning enforcement officer that the proposed miniature golf course and arcade constituted a permissive use under the ordinance, and that go-carts and bumper boats were conditional uses for property located in the C-2 zoned area. The Albuquerque Zoning Code allows as a conditional use *1191 in C-2 zoned areas "[o]utside storage or activity, except as specifically made a permissive use." The decision of the zoning enforcement officer was reversed by the City Council, which ruled that go-carts and bumper boats were not encompassed by the phrase "outside storage or activity." The City Council's decision was affirmed by the district court.
3. In High Ridge Hinkle Joint Venture v. City of Albuquerque, 119 N.M. 29, 888 P.2d 475 (Ct.App.1994) (Hinkle I), this Court reversed both the decision of the City Council and the district court, and remanded the matter back to the City Council for a new hearing concerning the proper interpretation and meaning of the language "`[o]utside storage or activity, except as specifically made a permissive use.'" Id. at 38, 43, 888 P.2d at 484, 489 (quoting Section 7-14-22(B)(13) of the City of Albuquerque Comprehensive City Zoning Code).
4. Following this Court's remand, the City Council again declined to follow the decision of its zoning enforcement officer, and held that the words "[o]utside storage or activity, except as specifically made a permissive use" under the Zoning Code was limited to storage activities, and that recreational activities, such as go-carts and bumper boats, were not conditional uses authorized in areas that are zoned C-2. In arriving at its ruling, the City Council found, among other things, that:
14. The Zoning Hearing Examiner ("ZHE") is the person designated by the Zoning Code to determine whether to approve or deny a conditional use application. There have been at least three Zoning Hearing Examiners since the Zoning Code was adopted in 1975.
15. The ZEO [Zoning Enforcement Officer] has, for matters other than the Hinkle matter, allowed outside activities in the C-2 zone to operate if they have received conditional use approvals.
....
18. The past determinations by the ZEO and ZHE indicate that some outside activities other than mere storage were allowed as conditional uses in C-2 zones under Sec. 22.B.13.
19. The City Council had not had the opportunity to rule on the past interpretations and applications of the Sec. 22.B.13 of the Zoning Code until this matter came before [it].
20. To interpret Sec. 22.B.13 to mean that "any outside activity" (except as specifically made a permissive use) may be a conditional use in a C-2 zone leads to a result that is inconsistent with the structure and intent of the Zoning Code.
....
25. The intent of the drafters was to limit "outside activities" to outside storage and storage related activities.
....
28. ... [P]rior applications by the ZEO and ZHE of Sec. 22.B.13 have been incorrect to the extent they allowed any outside activity to apply for a conditional use in the C-2 zone, and to the extent any outside activities which were not related to outside storage were approved as conditional uses in the C-2 zone.
5. Subsequent to the City Council's ruling, Appellants again sought relief in the district court. At the district court hearing, Appellants proffered evidence which had not been presented at the hearing before the City Council. The district court denied the tender of additional evidence and issued an order on February 5, 1996, upholding the decision of the City Council.
DISCUSSION
6. Appellants assert that following this Court's decision and remand for further proceedings, the City and district court erred in refusing to apply the interpretation of the city zoning enforcement officer concerning the meaning of "outside storage or activity except as specifically made a permissive use." Interpretation of the provisions of an ordinance presents a question of law which the courts review de novo. See Downtown Neighborhoods Ass'n v. City of Albuquerque, 109 N.M. 186, 189, 783 P.2d 962, 965 (Ct.App.1989). The polestar for construing either a *1192 statute or ordinance is to ascertain and give effect to the intention of the legislative body at the time of enactment. Id. at 190, 783 P.2d at 966.
7. In Hinkle I this Court found the meaning of "outside activity," as used in the Zoning Code (city ordinance), was ambiguous and that in reviewing decisions of administrative agencies interpreting their own regulations or ordinances, the courts will generally defer to the agency's interpretation unless it is plainly erroneous or inconsistent with the language of the ordinance or regulation in question. Id., 119 N.M. at 38, 888 P.2d at 484. Although recognizing this general rule, this Court remanded the matter back to the City Council for three reasons. First, remand would allow for further development of the record to clarify whether the City Council's construction of the ordinance constituted a departure from its previous interpretations or practices regarding such ordinance. Second, remand would eliminate the possibility that the City Council was erroneously substituting its current views of policy for an interpretation of what the ordinance meant when enacted. Third, remand would eliminate the question of whether one of the council members should have recused herself from voting on the administrative appeal because of an alleged conflict of interest. Id. at 40-43, 888 P.2d at 486-89.
8. Appellants point to evidence presented at the second hearing before the City Council indicating that the interpretation of the zoning enforcement officer of the terms "outside activities" and "storage related activities" has been applied by zoning officials in several prior instances. Appellants also argue that deference in the interpretation of the ordinance should be accorded to the declaratory ruling of the zoning enforcement officer, not to the City Council. Appellants reason that since the zoning enforcement officer is the individual whom the City Council has empowered to enforce the Zoning Code, deference should be given to his interpretation of the language in question. Appellants additionally argue that Hinkle I gave mixed signals as to whether deference in interpreting the Zoning Code should be given to the City Council or to the administrative officer charged with the responsibility of enforcing the Code. We think Appellants misread Hinkle I.
9. In the first appeal, it was unclear whether the interpretation adopted by the zoning enforcement officer had been ratified or approved by the City Council in other cases, or whether this case presented the first opportunity for the City Council to consider the meaning of the disputed language. Although persuasive weight is generally accorded to long-standing administrative interpretations of statutes by the agency or officials charged with administering them, TBCH, Inc. v. City of Albuquerque, 117 N.M. 569, 572, 874 P.2d 30, 33 (Ct.App.1994), a reviewing court will also give deference to an administrative body's interpretation which is not contrary to the plain language of the statute when the interpretation is contemporaneous with the enactment in question, and the interpretation has been followed by the agency over time. See New Mexico Envtl. Improvement Div. v. Thomas, 789 F.2d 825, 831-32 (10th Cir.1986).
10. Where there has been a significant time lapse between the time an ordinance was enacted and the time a legislative body is first called upon to interpret such language, a court is not required to give persuasive weight to a City Council's finding of legislative intent, because statutes are to be interpreted as the legislative body understood them at the time they were enacted. TBCH, Inc., 117 N.M. at 572, 874 P.2d at 33. In such instance a reviewing court may also examine other factors which may evidence legislative intent, including examination of the history of the governmental body's application of the law in order to ascertain whether the interpretation adopted by the City Council is consistent with its past actions and rulings. Hinkle I, 119 N.M. at 39, 888 P.2d at 485.
11. Although Appellants correctly point out that the zoning enforcement officer has previously reached a different result and applied a different interpretation in several other cases, nevertheless, as indicated in the City Council's Finding No. 19, here, there is no showing that the City Council has previously issued a ruling inconsistent with its *1193 current interpretation, or that it has ratified past decisions of the zoning enforcement officer concerning the meaning of the language in question. In such instance, substantial deference may properly be accorded to the interpretation of the City Council rather than the zoning enforcement officer, because the Council is presumed to have a greater knowledge regarding the interrelationships among the several provisions of the ordinance and the philosophy and policy giving rise to the adoption of the enactment. Hinkle I, 119 N.M. at 39, 888 P.2d at 485; see also Gage v. City of Portland, 319 Or. 308, 877 P.2d 1187, 1191 (1994) (Deference may be accorded "local governing body's interpretation of its own ordinance, because that governing body [is composed of politically accountable representatives] responsible for enacting the ordinance and [they are presumed] to have a better understanding ... of the intended meaning of the ordinance.").
12. Appellants also argue that the district court erred in excluding newly discovered evidence sought to be presented to the court. Responding to this argument, the City asserts that the evidence sought to be introduced consisted of decisions of the zoning hearing examiner on requests for outside uses and activities on property zoned C-2 during the time period after the second City Council hearing. The City argues this information does not satisfy the test of newly discovered evidence. We agree. Generally, a party will not be permitted to introduce evidence that was not raised at the administrative hearing conducted below. See Thomas, 789 F.2d at 835-36 (agency's action should be reviewed on evidence and proceedings before it at the time it acted).
CONCLUSION
13. The decision of the district court is affirmed.
14. IT IS SO ORDERED.
PICKARD and ARMIJO, JJ., concur.
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268 Cal.App.2d 375 (1968)
THE PEOPLE, Plaintiff and Respondent,
v.
RAYMOND TELLEZ, Defendant and Appellant.
Crim. No. 14069.
California Court of Appeals. Second Dist., Div. Three.
Dec. 20, 1968.
Richard H. Levin, under appointment by the Court of Appeal, for Defendant and Appellant.
Thomas C. Lynch, Attorney General, William E. James, Assistant Attorney General, and Suzanne E. Graber, Deputy Attorney General, for Plaintiff and Respondent.
MOSS, J.
Defendant was convicted of selling (count I) and possessing (count II) heroin in violation of sections 11501 and 11500 respectively of the Health and Safety Code. After trial to the court he was sentenced to state prison on each count, the sentences to run concurrently. He appeals from the judgment on the ground that the heroin which provided the basis for the conviction for possession charged in count II was the product of an illegal search. He does not question the conviction for selling charged in count I. *377
Count I relates to a sale of heroin made by defendant to a police informant, Frank Gill, in the presence of Deputy Sheriff Mary E. Marez at noon on February 7, 1967, in defendant's car on the parking lot of the Royal Market in Culver City. Deputy Marez and Gill entered defendant's car when he arrived; Deputy Marez gave Gill $20 of state-advanced funds, which he handed to defendant. Defendant in turn removed from his mouth two balloons, which he gave to Gill. The balloons contained heroin.
Two weeks later, on February 21, 1967, two officers assigned to the narcotics bureau of the Los Angeles County sheriff's department and three other officers went to defendant's residence to serve a warrant for defendant's arrest on the charge of selling heroin. This charge presumably related to the above described sale. The officers did not have a search warrant. Without identifying themselves, knocking, or announcing their presence, the officers entered through the rear door. (There was a conflict of testimony as to whether the door was open before the first officer entered.) They went through the kitchen and into the front room, where defendant was sitting in an armchair in the presence of his wife. The officers placed defendant under arrest, handcuffed him, and advised him of his rights. The five officers then proceeded to search defendant's apartment without his permission. Forty minutes later one of the officers saw a red balloon in a light fixture on a bedroom wall. Defendant, when asked if the balloon were his, stated, "Yes." The balloon contained heroin. The balloon with its contents and defendant's admission that it was his were received in evidence over defendant's objection that the entry was unlawful and that the search which followed was unreasonable.
Defendant contends that the search was unlawful because the officers entered without complying with the requirement of section 844 of the Penal Code that an officer explain his purpose and demand admittance before breaking into a house. It has been held that section 844 does not apply where the entry is through an open door. (People v. Bradley, (Cal.App.) 70 Cal.Rptr. 339; see United States v. Williams (6th Cir. 1965) 351 F.2d 475, 477 [383 U.S. 917, 15 L.Ed.2d 671, 86 S.Ct. 910]; cf. People v. Rosales, 68 Cal.2d 299, 302 [66 Cal.Rptr. 1, 437 P.2d 489].) In this case, one officer testified that the door was open when the first officer entered and another testified that the door was opened by the first officer to enter. *378 The objection as to the lawfulness of the entry and the reasonableness of the search that followed were argued together. The trial judge received the balloon found in the search in evidence without ruling separately on the objections. Although defendant based his objection in part on the legality of the entry, none of the parties explored the question of whether the door was open or closed and the trial judge made no finding thereon. We need not determine whether under the facts of this case the entry was lawful because we have concluded that regardless of the lawfulness of the entry the search was unreasonable.
[1] "The 4th Amendment forbids every search that is unreasonable and is construed liberally to safeguard the right of privacy" (United States v. Lefkowitz, 285 U.S. 452, 464 [76 L.Ed. 877, 882, 52 S.Ct. 420, 82 A.L.R. 775].) [2] A search is lawful as an incident to a valid arrest when it is limited to the premises where the arrest is made, has a definite object and is reasonable in scope. (People v. Cockrell, 63 Cal.2d 659, 667 [47 Cal.Rptr. 788, 408 P.2d 116]; see Preston v. United States, 376 U.S. 364, 367 [11 L.Ed.2d 777, 780, 84 S.Ct. 881].) Here the arrest, having been made pursuant to a warrant, was valid. The search was limited to the premises where the arrest was made. [3] However, as we shall explain, the search did not have a definite object and was unreasonable in scope.
In People v. Jackson, 198 Cal.App.2d 698 [18 Cal.Rptr. 214], a narcotics officer, working undercover, purchased narcotics from the defendant at his home on February 18. On September 18 of the same year seven officers went to the defendant's home with an arrest warrant based upon the prior sale. The officers also had information that the defendant was placing his narcotics back of the chicken coop and that there was considerable traffic in and out of that location. They had no search warrant. Upon arrival, the officers handcuffed the defendant and searched the premises including the area around the chicken coop. While looking around they found marijuana in a bag lying open on top of a radio near the front door and more in plain view on the floorboard of the defendant's car. They also found some bags of marijuana on the trash pile behind the chicken coop. The court concluded that the searches were not lawful as incident to the arrest under warrant because the searches were not connected with the specific offenses for which the arrest was made: "The sale was completed on February 18, 1959, and the evidence of that crime was already in the possession of the police. Any narcotics *379 discovered seven months later would not be instrumentalities or evidence of the particular crime for which the arrest was made. The motivation could not have been the hope of obtaining evidence of that offense and, in the absence of probable cause for arrest upon an additional charge, the searches were unauthorized. Rather, they were general and exploratory and conducted for the sole purpose of discovering incriminating evidence--the type of search that is condemned in People v. Mills, 148 Cal.App.2d 392, 399-402 [306 P.2d 1005], and in People v. Schaumloffel, 53 Cal.2d 96, 100-101 [346 P.2d 393]." [fn. 1]
The same reasoning applies here even though the search took place two weeks rather than seven months after the sale which was the basis for the issuance of the arrest warrant. The sale had been made in the presence of a police officer who was available to testify and the heroin sold was in the possession of the police. Therefore, the motivation in the search could not have been to find evidence of the earlier sale.
[4] The Attorney General suggests that it is reasonable to assume that the officers were searching for evidence that would corroborate the prosecution's case such as a large cache of heroin or packaging devices or narcotics paraphernalia. Contrary to the cases relied upon by the Attorney General in support of this suggestion, there is here no evidence that defendant had engaged in any illegal activity in the place searched as in People v. Winston, 46 Cal.2d 151, 154 [293 P.2d 40], and People v. Carella, 191 Cal.App.2d 115, 132-133 [12 Cal.Rptr. 446], or that defendant's action upon the arrival of the police corroborated information given to the police that defendant had narcotics in his home as in People v. Ghimenti, 232 Cal.App.2d 76 [42 Cal.Rptr. 504], or that the police were searching for the items which were the subject matter of the crime for which the defendant was being arrested as in People v. Gallup, 253 Cal.App.2d 922, 926-928 [61 Cal.Rptr. 709]. There being no evidence in the record that the arresting officers could reasonably have believed that the search would produce evidence material to the earlier sale, we are left with the conclusion that the sole motive for the search was to find evidence of other crimes and therefore that the scope of the search as an incident to the arrest under the *380 warrant was too broad to meet the test of reasonableness. (People v. Schaumloffel, supra, 53 Cal.2d 96, 100-101; People v. Mills, supra, 148 Cal.App.2d 392, 399-402; United States v. Lefkowitz, supra, 285 U.S. 452; [fn. 2] Jack v. United States (9th Cir. 1967) 387 F.2d 471; see People v. Baca, 254 Cal.App.2d 428 [62 Cal.Rptr. 182].)
[5] The Attorney General next contends that the sale of heroin two weeks earlier in defendant's car provided probable cause for the officers to believe that the defendant had possession of heroin in his home, and therefore that the search was incidental to his valid arrest on that charge. This argument is premised upon the probability that a seller of narcotics will usually be in possession of more narcotics in order to have some to sell at a future date. The inference to be drawn from the fact that a person has committed an offense in the past does not of itself provide probable cause to believe that he is presently guilty of a similar offense. (People v. Sanders, 46 Cal.2d 247, 250 [294 P.2d 10]; see People v. Amos, 181 Cal.App.2d 506, 509 [5 Cal.Rptr. 451].) In People v. Handy, 200 Cal.App.2d 440 [19 Cal.Rptr. 409] and People v. Reed, 202 Cal.App.2d 575 [20 Cal.Rptr. 911], relied upon by the Attorney General, unlike the case at bar, the probability of present possession was supported not only by the fact that the arresting officers knew that the defendant had been in possession one or two weeks before the arrest but, in Handy, by information that the defendant was a dealer in narcotics and, in Reed, by the fact that at the time of the search cigarette papers of the kind used in rolling marijuana cigarettes were found on the defendant's person.
[6] Lastly, the Attorney General argues that the officers did not find the balloon in the lamp fixture in the bedroom as the result of a search because the balloon was in plain view. A search implies that the object searched for has been hidden or intentionally put out of the way; the observation of that which is in plain view is not a search. (See Witkin, Cal. *381 Evidence (2d ed. 1966), 105, p. 101.) The balloon containing heroin which was the subject of count II of the information was found only after a forty-minute search by several officers, in a light fixture located in a different room from that in which defendant was arrested. The "plain view" doctrine has no application to these facts.
The judgment as to count I is affirmed, and as to count II is reversed.
Ford, P. J, and Cobey, J., concurred.
NOTES
[fn. 1] 1. The court went on to hold, however, that the marijuana which was in plain view was not the product of a search, and that the marijuana found outside was not the product of an unreasonable search because the protection of the Fourth Amendment as applied to the states through the Fourteenth Amendment does not extend to "open fields."
[fn. 2] 2. In Lefkowitz, federal agents raided an illegal liquor business pursuant to an arrest warrant and seized a number of items, including business records, which they found after a thorough search of the premises. The court suppressed the evidence because the search was too broad and alternatively because the items seized were mere evidence under the rule of Gouled v. United States, 255 U.S. 298 [65 L.Ed. 647, 41 S.Ct. 261]. Although Gouled has been apparently overruled (Warden, Maryland Penitentiary v. Hayden, 387 U.S. 294 [18 L.Ed.2d 782, 87 S.Ct. 1642]), Lefkowitz still stands for the proposition for which it is cited because reliance by the court on the "mere evidence" rule was an alternative and superfluous ground for exclusion of the evidence. (People v. Thayer, 63 Cal.2d 635, 641 [47 Cal.Rptr. 780, 408 P.2d 108].)
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
JUDGMENT RENDERED AUGUST 14, 2014
NO. 03-13-00535-CV
The Railroad Commission of Texas, Appellant
v.
CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Entex and CenterPoint
Energy Texas Gas, Appellee
APPEAL FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY
BEFORE JUSTICES PURYEAR, GOODWIN, AND FIELD
REVERSED AND DISSMISSED -- OPINION BY JUSTICE GOODWIN
This is an appeal from the judgment signed by the trial court on July 19, 2013. Having reviewed
the record and the parties’ arguments, the Court holds that there was reversible error in the trial
court’s interlocutory order. Therefore, the Court reverses the trial court’s interlocutory order and
dismisses the Utilities’ claims for lack of jurisdiction. The Utilities’ shall pay all costs relating to
this appeal, both in this Court and in the court below.
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190 A.2d 19 (1963)
Henry T. CLAUS, Caesar A. Grasselli, R. Riggs Griffith, IV, and J. B. S. Holmes, Plaintiffs,
v.
John E. BABIARZ, Mayor of the City of Wilmington, et al., Defendants.
Civ. A. No. 1553.
Court of Chancery of Delaware, New Castle.
April 8, 1963.
Rodney M. Layton and Max S. Bell, Jr., of Richards, Layton & Finger, Wilmington, for plaintiffs.
Joseph M. Kwiatkowski and James M. Mulligan, Jr., Wilmington, for The Mayor and Council of Wilmington and certain individual defendants. Norman N. Aerenson and Sidney Balick, Wilmington, for Metropolitan Associates, Inc.
SHORT, Vice Chancellor.
This case is now before the court on plaintiffs' application for the taxing of certain items as costs and for the award of counsel fees and expenses. The merits of this litigation were disposed of by the court's opinion dated November 7, 1962. See Claus v. Babiarz, Del.Ch., 185 A.2d 283. With respect to the taxing of costs *20 and award of counsel fees it was there held that the individual defendants were not liable for costs or for plaintiffs' fees. It was also provided in said opinion that the costs of the proceeding were taxed against The Mayor and Council of Wilmington, a municipal corporation. This is the decision upon plaintiffs' application for the taxing of costs and award of counsel fees against the municipal corporation.
Plaintiffs first ask that costs aggregating $155.52 as shown upon the records of the Register in Chancery be taxed. Defendant municipal corporation agrees that these costs are properly taxable as constituting the "fee bill." They are allowed.
Plaintiffs next ask that fees of their expert witnesses, Brown and Hickman, in the respective amounts of $550 and $50 be assessed. Defendant municipal corporation does not take exception to the amount of these fees but suggests that the court, in the exercise of its discretion, should refuse the allowance. I am satisfied that these fees are properly chargeable as costs in spite of the fact that the case was decided upon grounds with respect to which the expert testimony had no relation. See Consolidated Fisheries Co. v. Consolidated Solubles Co., 35 Del.Ch. 125, 112 A.2d 30.
Plaintiffs ask that the premium of $300 on the injunction bond filed by them in this proceeding be taxed. Defendant municipal corporation objects to the taxing of this item on the authority of Muhleman & Kayhoe, Inc. v. Brown, 4 Terry 481, 50 A.2d 92. In the cited case Judge Speakman refused to tax replevin bond premiums. Judge Speakman's ruling was undoubtedly in accord with the weight of authority in state courts in law actions. See 20 C.J.S. Costs § 214, p. 451. The rule in the Federal courts is not uniform, but see Hodgman v. Atlantic Refining Co., D.C.Del., 8 F.2d 777, wherein Judge Morris, sitting in equity, allowed the premium on a surety bond as costs. The statute pursuant to which this court may award costs, § 5106, Title 10, provides that the court may make such order "as is agreeable to equity." Under the authority thus conferred I am satisfied that this court may, in appropriate circumstances, award to successful plaintiffs as costs the premium required to be paid by them for a bond furnished to effectuate a temporary restraining order. Compare Peyton v. William C. Peyton Corp., 23 Del.Ch. 365, 8 A.2d 89. The cost of the injunction bond involved will be allowed to plaintiffs as costs.
Plaintiffs finally ask for an allowance of counsel fees and expenses. The latter consist of the cost of depositions and trial transcript, totalling $710. The argument advanced by plaintiffs in support of their application for the allowance of attorney fees is that public spirited citizens who are successful in litigation resulting in benefit to the municipal authority of which they are tax payers should not be shouldered with the entire burden of their suit expenses, and that this court, in doing equity, should require these expenses to be shared by all of the members of the class which they represent. They say that the result of their action here has conferred a substantial benefit upon the municipal corporation and therefore upon all tax payers. They argue that the court should consider their application as governed by the same principles which apply in stockholders' class actions. Whether or not the analogy thus drawn is appropriate it is not necessary to decide. Assuming its propriety, I am not satisfied that plaintiffs have brought themselves within any recognized exception to the general rule that parties in litigation must pay their own counsel fees and expenses. Let us examine, briefly, the stockholders' actions upon which plaintiffs rely.
In Maurer v. Internation Re-Insurance Corp., 33 Del.Ch. 456, 95 A.2d 827, the Supreme Court pointed out certain recognized exceptions to the general rule. The court noted that the exceptions to the rule generally arise "in connection with the creation, protection or distribution of a *21 common fund or common property subject to administration by the Court of Chancery," and cited minority stockholders' suits resulting in the recovery of money or property as an example. Other exceptions mentioned by the court were proceedings instituted by a trustee or executor for instructions, receiverships, interpleader suits and cases of the appointment by the court of counsel to uphold the side of a question that no party is willing to advocate. The court noted, however, that the examples cited were "not necessarily all-inclusive." It is obvious that the circumstances here appearing do not bring the case within any of the exceptions mentioned in Maurer.
In Mencher v. Sachs, Del.Ch., 164 A.2d 320, the Supreme Court affirmed an award of counsel fees by this court in a stockholders' action in which plaintiff obtained an order for the holding of a stockholders' meeting and for the cancellation of certain stock illegally issued. The court held that the case presented another proper exception to the general rule. In answer to an objection that there was no "dollar basis" for measuring any benefit to the corporation resulting from the cancellation of the illegally issued stock the court observed: "Cancellation of illegally issued stock is in itself a benefit. Although the benefit may be difficult of evaluation in dollars and cents, it is still a benefit."
In Richman v. DeVal Aerodynamics, Inc., Del.Ch., 185 A.2d 884, the Chancellor awarded counsel fees in a stockholders' class action which resulted in a final judgment enjoining the corporation's board of directors from carrying out proposed action (granting of stock options and the lease or purchase of certain equipment) which a majority in interest of the stockholders considered to be detrimental to the corporation. The Chancellor said: "Recovery of expenses in such cases is predicated on the conferring of some benefit on the interested class and not merely on petitioner himself. * * * The benefit conferred must also be `substantial' in the sense that its value to the interested class is immediately discernible rather than speculative in character."
While the above cases apparently establish that the award of counsel fees may be proper even though there is no fund brought before the court for administration, they also establish that in order to justify such an award it must appear that a substantial benefit is conferred on the interested class. Applying this principle to the circumstances of the present case, it would seem obvious that plaintiffs here have failed to bring themselves within the limits of the rule. They argue that the present action has resulted in requiring public officials to comply with lawful sales procedures. This, they say, confers a benefit not only upon the plaintiffs but upon all other tax payers as well. While this result may, in one sense, be regarded as beneficial to the tax payers of Wilmington, it is not, in my view, the type of benefit which would warrant an award of counsel fees. Moreover, the premise of this alleged benefit is illconceived in the circumstances of the present case. The injunction granted by the court was based solely on the ground that the Metropolitan bid contained a substantial and material variance from the terms of the proposal. Variance, therefore was the only procedural matter to which the court gave its attention. No attempt was made to determine whether or not the city officials had otherwise failed to comply with lawful procedures. It should be observed that much of plaintiffs case on the merits was devoted to an attack upon the procedure followed by city officials but it is extremely doubtful that even if the court had been required to consider the procedural questions that plaintiffs could have prevailed upon this ground. The court found no evidence of fraud or bad faith. In these circumstances questions as to time and conditions of the proposed sale were within the discretion of the city council. Drexler v. Commissioners of Bethany Beach, 15 Del.Ch. 214, 135 A. 484; Taylor v. Smith, 13 Del.Ch. 39, 115 A. 405. Furthermore, as defendants *22 point out, the ground of the court's decision on the merits might well have been properly resolved by defendants themselves, as the variance contained in the Metropolitan offer was not acceptable to the city solicitor who was delegated to work out with Metropolitan the details of the formal contract. In such circumstances, it is difficult to see how any substantial benefit was obtained in requiring city officials to reject the Metropolitan offer on the ground of variance.
Plaintiffs also say that their expert testimony conclusively establishes that the city would have lost in excess of $100,000 by a sale in accordance with the Metropolitan offer. While the court in disposing of the case on the merits did not find it necessary to consider the value of the property involved, plaintiffs now ask me to determine valuation to show that their action has resulted in a substantial saving to the city and thereby warrant a finding that counsel fees may be properly awarded to them. In the exercise of discretion, I might well decline to enter upon such a consideration. However, as I do not feel that the testimony of valuation relied upon by plaintiffs is sufficient, in the circumstances, to show any such loss as is alleged, I will now give some consideration to that testimony.
Plaintiffs' expert, Brown, testified that the property involved had a market value of $225,000. This valuation was based on what Mr. Brown considered to be the highest and best use for the property, namely, for a commercial office building. It is clear from his testimony that he arrived at his valuation on the basis of a professional sale. He gave no consideration to the fact that the property was being exposed to sale by the proposal and bid process. He admittedly had had no experience with this method of property disposal and he frankly acknowledged that he did not know whether such a method would affect the price. He stated that the property in question was not of the type that moves quickly and that it required plenty of exposure to the market. His appraisal was not made with the conditions set forth in the proposal in mind. In his opinion, the conditions specified would tend to lower the market value of the property because they would discourage potential bidders. It was his belief that the advertising campaign was inadequate, particularly with respect to time and detail. While plaintiffs do not suggest that disposition of the subject property by the proposal and bid method was improper, they do contend that the conditions imposed by the city and the insufficient time allowed to bidders to arrange for financing and prepare and submit an intelligent bid discouraged bidding and were therefore improper. But as has already been indicated, in the absence of fraud or bad faith time and conditions of the proposed sale were within the discretion of the governing authorities. Drexler v. Commissioners of Bethany Beach, supra. This discretion was in no way limited by the provisions of the surplus property statute, Chapter 37, Volume 53 Laws of Delaware. Nor does the fact that competition in the bidding was restricted by the conditions imposed necessarily render the municipal contract invalid. Bleecker Luncheonette v. Wagner, Sup., 141 N.Y.S.2d 293, aff'd 286 App.Div. 828, 143 N.Y.S.2d 628; Summer Cottagers' Association v. City of Cape May, 34 N.J.Super. 67, 111 A.2d 435, aff'd 19 N.J. 493, 117 A.2d 585. It is apparent, therefore, that plaintiffs' expert in determining the market value of the property involved should have given consideration to the conditions of the proposal and the time allowed bidders to prepare their bids.
The record of this case indicates that the Wilmington Planning Commission report of August 1, 1961 recommended that in the disposal of the property involved the city should be more concerned with the use to which the property would be put by the purchaser and the prompt tax return therefrom rather than the price to be derived from the sale. This recommendation was apparently accepted by the members of the council. Obviously, plaintiffs' *23 expert did not take this into consideration in evaluating the worth of the property. Though plaintiffs, in the case on the merits, challenged the propriety of consideration being given to this factor, I am satisfied that it was a proper matter for the council to consider in the acceptance of a bid. It has been held by eminent authority that a municipality in disposing of property is not required to consider only the price which is offered. It may take into consideration its economical, financial and industrial interests, including the tax yield from proposed development. Roberts v. Northern Pacific R. R. Co., 158 U.S. 1, 15 S.Ct. 756, 39 L.Ed. 873; Haesloop v. City Council of Charleston, 123 S.C. 272, 115 S.E. 596; Quackenbush v. City of Cheyenne, 52 Wyo. 146, 70 P.2d 577.
In view of the discretion vested in the municipal authorities to attach conditions to the proposal and to give consideration in the acceptance of a bid to factors other than the amount thereof, it is obvious that an apprasial made on the basis of the value of the property upon a professional sale is of little aid to the court in determining the issue of value under an admittedly proper method of disposal.
Plaintiffs have cited cases in other jurisdictions wherein counsel fees have been allowed in successful taxpayers' suits. It is not necessary to give consideration to these cases because in each of them it is obvious that a substantial benefit, in the sense used by the Chancellor in Richman v. DeVal Aerodynamics, supra, was conferred upon the interested class. Here, on the contrary, the benefit is not substantial but is speculative at best.
Plaintiffs suggest that if the benefit derived by the city can not now be evaluated, determination of their application be postponed until after the property has been sold. There is no duty upon the city to again offer this property for sale. Conceivably some municipal use therefor may be found. Whether it will ever be offered for sale is uncertain. In these circumstances determination of the issue involved should not be postponed.
The application for the award of counsel fees and expenses is denied. Order on notice.
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101 F.3d 1027
45 Fed. R. Evid. Serv. 880
UNITED STATES of America, Plaintiff-Appellee,v.Charles William McHAN, Defendant-Appellant.UNITED STATES of America, Plaintiff-Appellant,v.Charles William McHAN, Defendant-Appellee.
Nos. 94-5464, 94-5657.
United States Court of Appeals,Fourth Circuit.
Argued Jan. 29, 1996.Decided Dec. 4, 1996.
ARGUED: Sean Patrick Devereux, Whalen, Hay, Pitts, Hugenschmidt, Master, Devereux & Belser, P.A., Asheville, NC, for Appellant. B. Frederic Williams, Jr., Assistant United States Attorney, Kenneth Davis Bell, Office of the United States Attorney, Charlotte, NC, for Appellee. ON BRIEF: Mark T. Calloway, United States Attorney, Charlotte, NC, for Appellee.
Before HALL, NIEMEYER, and LUTTIG, Circuit Judges.
OPINION
NIEMEYER, Circuit Judge:
1
After pleading guilty in 1988 to conspiring to distribute marijuana, Charles William McHan was convicted again in 1992 of participating in another marijuana distribution conspiracy, operating a continuing criminal enterprise, and committing various narcotics and tax offenses. The district court sentenced McHan to 150 months imprisonment and ordered him to forfeit $395,670 in proceeds from his drug operations.
2
On appeal from his 1992 conviction, McHan contends that the district court committed reversible error (1) in denying his motions to quash his indictment on transactional and use immunity grounds; (2) in denying his motion to dismiss various counts of his indictment on double jeopardy grounds; and (3) in admitting at his trial the grand jury testimony of a cooperating co-conspirator who had died before trial. On its cross-appeal of McHan's sentence, the government contends that the district court erred (1) in departing downward under U.S.S.G. § 5G1.3 on the basis of McHan's 1988 sentence even though McHan had completed serving that sentence by the time of his sentencing in this case, and (2) in deducting from McHan's forfeitable drug proceeds the costs of his drug operations as well as one-half of the proceeds received by a drug joint venture of which McHan was a one-half partner.
3
Finding no error in McHan's 1992 prosecution, we affirm his conviction. But because we conclude that the district court abused its discretion in departing downward to credit McHan for his discharged sentence and erred in deducting from the amount of McHan's criminal forfeiture both the costs of his drug operations and one-half of his drug partnership's revenues, we vacate McHan's sentence and remand this case for resentencing.
4
* On May 3, 1988, Charles McHan was arrested while attempting to purchase 200 pounds of marijuana from an undercover government agent, and he and others were indicted for conspiring to possess with the intent to distribute 200 pounds of marijuana, in violation of 21 U.S.C. § 846. McHan pled guilty, and the court sentenced him to 52 months imprisonment.
5
Contemporaneously with McHan's guilty plea, Paul Cunningham, an indicted co-conspirator, entered into a plea agreement with the government, promising to testify truthfully in any proceedings later designated by the United States. At that time, the government knew that Cunningham was suffering from advanced emphysema and was not expected to live more than two years. To preserve Cunningham's testimony, the government brought him before a federal grand jury in October 1988, where he testified about, inter alia, McHan's involvement in both the 1988 conspiracy and earlier marijuana dealings. Cunningham died less than five months later.
6
When McHan later learned that the government was considering using his conspiracy plea as a predicate offense for a continuing criminal enterprise (CCE) charge against him, he attempted to withdraw his 1988 guilty plea. The district court, however, denied McHan's motion. On appeal of his 1988 conviction, we affirmed the district court's refusal to allow McHan to withdraw his guilty plea, but we remanded the case for resentencing because the court had erroneously granted McHan a downward departure "in recognition of his strong community ties and substantial charitable contributions." United States v. McHan, 920 F.2d 244, 245 (4th Cir.1990) (McHan I). The district court resentenced McHan in March 1991 to 63 months imprisonment.
7
Following resentencing, the government obtained in rem civil forfeitures of two of McHan's automobiles and McHan's interest in a 35-acre property. And we affirmed those forfeitures with an unpublished, per curiam opinion. United States v. 35 Acres, No. 90-7376, 940 F.2d 654 (4th Cir. Aug. 15, 1991) (Table) (McHan II).
8
Beginning in September 1989, during litigation over his attempt to withdraw his 1988 plea, McHan began negotiating a cooperation agreement with the government. When McHan and his attorney, Mark Kadish, met with Assistant United States Attorney (AUSA) Max Cogburn on January 16, 1990, to discuss McHan's potential cooperation, Cogburn questioned McHan about his and others' drug-related activities. Then, on February 2, 1990, two weeks after his initial meeting with Cogburn, McHan submitted to an interview without his counsel by State Bureau of Investigation (SBI) Agent Tom Frye and Federal Bureau of Investigation (FBI) Agent Joe Gilson. No transcript was made of either the January or February interviews.
9
In March 1990, McHan was indicted in this case for distributing and conspiring to distribute marijuana. Following indictment, his new attorney, Sean Devereux, not only wrote to AUSA Cogburn maintaining that McHan had reached an oral agreement with the government in January 1990 that precluded McHan's indictment, but also filed two motions to quash the indictment, one asserting transactional immunity and the other, use immunity. Nevertheless, Devereux also notified the government of McHan's continued availability for questioning and a polygraph examination.
10
While the parties "agreed to disagree" about the existence of a nonprosecution agreement, the United States further availed itself of McHan's cooperation in July 1990. FBI Agent Frye and an Internal Revenue Service (IRS) agent questioned McHan on July 17, 1990, and two IRS agents questioned him on July 25, 1990. Sean Devereux attended both debriefing sessions, and a court reporter transcribed the proceedings.
11
The grand jury returned a superseding 17-count indictment against McHan in September 1990. Count 1 charged that from November 1984 to November 1986 McHan conspired to possess with the intent to distribute and to distribute more than 50 kilograms of marijuana, in violation of 21 U.S.C. § 846. Counts 2-12 alleged various substantive drug offenses during the summer of 1985, in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. §§ 2 and 545. Counts 13-15 alleged that McHan had filed false income tax returns from 1985 through 1987, in violation of 26 U.S.C. § 7206(1). Count 16 charged McHan with operating a CCE by "doing, causing, facilitating, and aiding and abetting the importation, possession with intent to distribute, and distribution of marijuana" from November 1984 to May 1988, in violation of 21 U.S.C. § 848. And Count 17 sought a forfeiture under § 853 of any property, including $1,830,870 in currency, that McHan had either "obtained directly or indirectly as a result of" or "used or intended to ... use[ ] ... in any manner or part, to commit, or to facilitate the commission of the felony drug violations charged in the Superseding Indictment."
12
McHan refiled his motions to quash on immunity grounds. After an evidentiary hearing before a magistrate judge, the judge made findings and recommended denial of McHan's motion asserting transactional immunity. The district court adopted the recommendation. Upon McHan's request, the district court deferred ruling on McHan's second motion, which asserted use or derivative use immunity, until the presentation of evidence at trial. Trial commenced in March 1991.
13
Shortly after trial began, McHan reached a plea agreement with the government, which the district court accepted. McHan's wife, however, refused to forfeit certain property as required by the agreement, and the court rescheduled McHan's trial to begin again in December 1991.
14
As the trial began for the second time, McHan filed motions to dismiss his superseding indictment as violative of the Fifth Amendment's Double Jeopardy Clause. The district court denied McHan's motion, and on McHan's interlocutory appeal, we affirmed, holding (1) that McHan's 1984-86 conspiracy constituted "a separate and distinct offense from the 1988 conspiracy" and (2) that "McHan's participation in each of the conspiracies, even though alleged to be predicate acts of a [CCE], constitute[d] separate offenses" from the CCE offense charged. See United States v. McHan, 966 F.2d 134, 136 (4th Cir.1992) (McHan III).
15
McHan's third trial began on July 20, 1992. On the first day of trial, McHan announced his decision to plead guilty to Counts 2-7 of the superseding indictment, charging him with possessing, distributing, and aiding and abetting the possession and distribution of marijuana in April, July, and August, 1985. During the trial on the remaining counts (except Count 17 seeking forfeiture), the government read Paul Cunningham's grand jury testimony into the record over McHan's objection. The jury convicted McHan of Counts 1 and 8-16.
16
In his post-trial motions for judgments of acquittal, McHan renewed his double jeopardy challenges, asserting that his trial had developed a fuller evidentiary record than was available to the trial court when it denied his motions earlier. The district court denied those motions. McHan also filed a post-trial motion in December 1993 for a hearing under Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212(1972), on the government's "direct or derivative use" of information that McHan had provided during his February and July, 1990 debriefings. Following a separate hearing on the motion, the district court also denied it.
17
After McHan waived his right to a jury trial on Count 17, the forfeiture count, the court conducted a bench trial, beginning in August 1992. At that trial, the United States sought forfeiture of the currency McHan had received in the deals that formed the basis for the other counts in his indictment. At the conclusion of trial, the district court ordered McHan to forfeit $395,670. Based on the evidence presented, the court found that from the marijuana sales McHan had conducted either individually or together with Paul Cunningham, McHan had received $1,489,350. The court then deducted from that sum (1) $857,030, representing the total amount that McHan had expended to purchase and transport the marijuana he sold, and (2) $236,650, representing Cunningham's one-half share of receipts from the McHan-Cunningham drug partnership.
18
At McHan's sentencing on June 10, 1994, the district court calculated McHan's base offense level at 34 and his criminal history category at III, calling for a sentencing range of 188-235 months imprisonment. But because, in December 1993, McHan had completed serving the 63-month sentence on his 1988 conviction, the court granted McHan's motion for a downward departure of 56 months to credit McHan for the time he actually served, explaining that "the guidelines as drafted did not contemplate a situation where the defendant had already served a sentence for some of the relevant conduct." The court then sentenced McHan to 150 months imprisonment, a sentence towards the middle of the adjusted guideline range.
19
McHan has appealed to this court, challenging his conviction, and the government has cross-appealed McHan's sentence. For the reasons that follow, we affirm McHan's conviction but remand this case for resentencing.II
20
McHan contends first that the district court erred in denying his motions to quash his indictment because the government violated the transactional and use, or derivative use, immunity it had given him. Because we conclude that the district court did not clearly err in finding that the parties' agreement provided McHan with use and derivative use, but not transactional, immunity and that the government did not violate the use or derivative use immunity, we affirm the court's denial of McHan's motions.
21
* In his transactional immunity argument, McHan contends that by pursuing the instant indictment against him, the government violated (1) the parties' express oral agreement that McHan would not be prosecuted further if he cooperated with government agents; (2) the implied non-prosecution agreement that AUSA Cogburn accepted when he opted to debrief McHan despite his awareness that McHan's counsel insisted on transactional immunity for his client; and (3) McHan's "equitable immunity" that arose from his good faith, reasonable reliance on the government's conduct indicating "that, if he kept his part of the bargain, he would not be punished further." The government responds that it never offered McHan a non-prosecution agreement and that McHan submitted to debriefing merely "in hopes this would lead to an agreement." Alternatively, the government maintains that even if it did accord McHan transactional immunity, McHan forfeited that immunity by lying about his criminal conduct during his debriefings.
22
Agreements to exchange cooperation for transactional immunity are governed by traditional principles of contract law, United States v. Thompson, 25 F.3d 1558, 1562 (11th Cir.1994); United States v. Liranzo, 944 F.2d 73, 77 (2d Cir.1991); see also Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498-99, 30 L.Ed.2d 427 (1971) (defendant entitled to enforcement of bargained-for plea agreement), and, therefore, may be express or implied. While a contract is made when the parties verbally express their mutual assent to its essential terms, it may also be implied when the parties' conduct manifests their agreement. See 1 Restatement (Second) of Contracts § 19 (1979). Under the concept of "equitable immunity," moreover, courts may enforce informal grants of transactional immunity where:
23
(1) an agreement was made; (2) the defendant has performed on his side; and (3) the subsequent prosecution is directly related to offenses in which the defendant, pursuant to the agreement, either assisted with the investigation or testified for the government.
24
Rowe v. Griffin, 676 F.2d 524, 527-28 (11th Cir.1982); see also United States v. Carter, 454 F.2d 426, 427-28 (4th Cir.1972) (en banc) (government bound by promise of immunity when defendant incriminated himself in reliance on the promise). Accordingly, to succeed on his transactional immunity argument, however it is stated, McHan must demonstrate at least a meeting of the minds that the government would refrain from further prosecuting him in exchange for his cooperation.
25
At the November 1990 hearing on McHan's transactional immunity claim, Max Kadish, McHan's former counsel, testified that an agreement was reached regarding disposition of all pending litigation, including a pending forfeiture action and a pending appeal on the 1988 conviction; cooperation by McHan; and immunity from further prosecution. In reaching agreement he testified that he had told AUSA Cogburn that McHan would not submit to debriefing unless the government guaranteed that there "wouldn't be any further criminal prosecution." Kadish also stated that he and McHan had decided on that position together and that he understood Cogburn to acquiesce in their conditions. Kadish admitted, however, that the alleged nonprosecution agreement was never memorialized "in any kind of document," and that he could not remember essential terms of the alleged agreement, including the length of sentence McHan would receive on the pending 1988 prosecution, or when the government agreed to those terms. Moreover, in response to Mr. Cogburn's inquiry on cross-examination as to whether it "would ... be accurate to say that the only real agreement that occurred between [Kadish] and [Cogburn] at that time with regard to any specifics was that nothing that Mr. McHan said during the debriefing would be used against him," (emphasis added), Kadish conceded, "[T]hat was very clear. Right."
26
Although AUSA Cogburn understood that use immunity would be applied to information McHan furnished the government during debriefings, Cogburn testified that the government did not contemplate a "promise not to prosecute." He explained that he told Kadish that they could "probably come to some sort of agreement at some point about Mr. McHan['s] ... sentenc[e]," but insisted that he "was unwilling to say that [the government] would not prosecute Mr. McHan again on any other charges, although that's what Mr. Kadish wanted."
27
After the hearing, the magistrate judge recommended denying McHan's motion to quash the superseding indictment based on a transactional immunity agreement. The judge concluded that while the government's evidence of what had transpired was "highly persuasive and credible," McHan's version of events was implausible. It "stretch[ed] the bounds of reasonableness to infer" that the government--despite its general practice in that district of reducing all agreements to writings signed by the parties--"would jeopardize its interest in assets totaling over $1,000,000 and felony prosecutions" with an oral agreement. And it was "also difficult [for the magistrate judge] to accept as true ... that the most experienced prosecutor in th[e] district would jeopardize his career by compromising matters he had no approval to compromise" and that "a seasoned criminal attorney would rely on a 'gentleman's agreement' where his client's liberty and the security of his family [were] at stake."
28
Reviewing the magistrate judge's recommendation de novo, the district court adopted his proposed findings of fact and conclusions of law. The court believed it an "inescapable conclusion ... that there was no agreement between defense counsel Mark Kadish and Assistant United States Attorney Max Cogburn." Based on the record evidence, we cannot conclude that the district court committed clear error in finding that McHan and the government did not reach agreement that included a promise not to prosecute.
B
29
While the parties disagree about whether they reached a nonprosecution agreement, they do agree that they had entered into an agreement for McHan's oral cooperation in exchange for use immunity. While the complete terms of that agreement are contested, it is undisputed that McHan agreed to provide truthful information during debriefing sessions and that the United States agreed to refrain from using any such statements against him. McHan argues on appeal that the district court erred in denying his motion to quash the indictment against him because the government materially breached the agreement by making both direct and indirect use of his immunized statements. The government maintains that it did not use any of the statements McHan provided pursuant to the agreement and that McHan, in any event, breached the agreement by providing untruthful information to government agents.
30
In Kastigar v. United States, the Supreme Court held that the Fifth Amendment Self-Incrimination Clause not only requires the government to provide use and derivative use immunity in exchange for a defendant's compelled testimony, but also imposes upon the government the burden of demonstrating that it did not use such testimony either directly or indirectly against the defendant in a subsequent prosecution. 406 U.S. at 452-53, 460, 92 S.Ct. at 1660-61, 1664-65. Whether the oral use-immunity agreement at issue in this case is subject to the full Kastigar protections is doubtful because McHan voluntarily cooperated with the government. See United States v. Roberson, 872 F.2d 597, 611-12 (5th Cir.) (holding Kastigar protections inapposite where cooperation was not compelled but was voluntarily provided pursuant to immunity agreement), cert. denied, 493 U.S. 861, 110 S.Ct. 175, 107 L.Ed.2d 131 (1989); United States v. Eliason, 3 F.3d 1149, 1152-53 (7th Cir.1993) (same); United States v. Camp, 72 F.3d 759, 761 (9th Cir.1995) (same), cert. denied, --- U.S. ----, 116 S.Ct. 1557, 134 L.Ed.2d 658 (1996). We will assume arguendo, however, that the agreement provided McHan with the full panoply of Kastigar guarantees because we conclude that McHan has failed to demonstrate any Kastigar violation.
31
According to McHan, at the December 3, 1991 hearing on his motion to dismiss his indictment on double jeopardy grounds, AUSA Cogburn cross-examined him with his admission, given during his July 17, 1990 debriefing, that he had gone to Colombia, South America, pointing out that McHan's answers were inconsistent with statements he had made at his debriefings. McHan further submits that Cogburn again improperly cross-examined him about the Colombia trip at his trial. Finally, McHan argues that the United States used the written transcript from his July 17, 1990 interview to refresh "several government memories." Specifically, he refers to the government's use, while cross-examining him at trial, of information that Harold Shook, an associate of McHan's, had stored marijuana on property managed by McHan's real estate company.
32
The government responds that with respect to the alleged direct use of McHan's admission that he had gone to Colombia, SBI Agent Frye testified at the Kastigar hearing that Tom Posey had told agents that McHan had gone to Colombia. And, with respect to the alleged indirect use of McHan's statement about the marijuana incident involving Harold Shook, Agent Frye testified that he had learned that information in 1987 by questioning Flora Ellison, a former employee of McHan's real estate business.
33
McHan rests much of his argument on the absence of written records showing that government agents knew about the information for which they claimed independent sources. He contends that the interviews during which Agent Frye claims to have first learned of McHan's Colombia trip were summarized in reports, but that there is no record of the trip in any of those summaries. He further suggests that Agent Frye's failure to mention the Colombia trip and the Flora Ellison interview anywhere in his "37-page affidavit reporting, as of April 28, 1988, every conceivable suspicion about McHan as far back as 1978," calls his testimony into question.
34
At its core, therefore, McHan's argument is predicated on the credibility of Agent Frye's testimony. But the district court found Agent Frye credible, and we are given no reason to challenge that finding. Because we do not believe that the district court clearly erred in concluding that the government derived the evidence that McHan challenges from independent sources, we affirm its denial of McHan's motion to quash his indictment on use immunity grounds. See United States v. Jones, 542 F.2d 186, 199 (4th Cir.) (findings of fact related to independence of evidence from immunized testimony will be upset only if clearly erroneous), cert. denied, 426 U.S. 922, 96 S.Ct. 2629, 49 L.Ed.2d 375, 376 (1976).
35
In light of our conclusions that McHan never had transactional immunity and that the government did not violate his use immunity, we need not reach the government's alternative argument that McHan breached the agreements by lying to government agents during his debriefings.
III
36
McHan next argues that the district court violated his rights secured by the Sixth Amendment's Confrontation Clause by admitting into evidence the grand jury testimony of Paul Cunningham, a coconspirator who had died before trial. The district court admitted Cunningham's testimony under Federal Rule of Evidence 804(b)(5), the residual exception to the hearsay rule. Because we find that Cunningham was unavailable to testify at trial because of his death and that his statements possessed the "requisite indicia of reliability," we conclude that the admission of the Cunningham grand jury testimony did not violate McHan's Sixth Amendment rights.
37
The Sixth Amendment provides that "[i]n all criminal prosecutions, the accused shall enjoy the right ... to be confronted with the witnesses against him." Despite its absolute language, the Confrontation Clause "permits, where necessary, the admission of certain hearsay statements against a defendant despite the defendant's inability to confront the declarant at trial." Maryland v. Craig, 497 U.S. 836, 847-48, 110 S.Ct. 3157, 3164, 111 L.Ed.2d 666 (1990). But in Ohio v. Roberts, 448 U.S. 56, 65-66, 100 S.Ct. 2531, 2538-39, 65 L.Ed.2d 597 (1980), the Supreme Court established that before introducing a declarant's prior testimony, the Confrontation Clause requires the prosecution to show (1) that the use of the hearsay is necessary because the declarant is unavailable and (2) that the hearsay bears "indicia of reliability" sufficient to enable the factfinder to evaluate the truth of the hearsay. See also White v. Illinois, 502 U.S. 346, 353-57, 112 S.Ct. 736, 741-43, 116 L.Ed.2d 848 (1992) (confining unavailability requirement to statements from prior judicial proceedings and finding indicia of reliability); Idaho v. Wright, 497 U.S. 805, 814-15, 110 S.Ct. 3139, 3145-47, 111 L.Ed.2d 638 (1990) (holding that reliability may be shown by reference to established hearsay exception or particularized guarantees of trustworthiness); United States v. Inadi, 475 U.S. 387, 394-96, 106 S.Ct. 1121, 1125-27, 89 L.Ed.2d 390 (1986) (holding unavailability requirement inapplicable to co-conspirator's statements and finding indicia of reliability). We have applied Roberts ' two-prong test to out-of-court statements admitted under Federal Rule of Evidence 804(b)(5) so long as a "particularized" showing of trustworthiness is made. See United States v. Shaw, 69 F.3d 1249, 1253 (4th Cir.1995); United States v. Workman, 860 F.2d 140, 144 (4th Cir.1988) cert. denied, 489 U.S. 1078, 109 S.Ct. 1529, 103 L.Ed.2d 834 (1989).
38
* While a deceased declarant is indisputably "unavailable" to testify at trial, McHan contends in this case that the government cannot satisfy the unavailability requirement because it "stage-managed" Cunningham's unavailability by failing to depose him pursuant to Federal Rule of Criminal Procedure 15 when it knew he would die before trial. Rule 15 provides that "[w]henever due to exceptional circumstances of the case it is in the interest of justice that the [witness'] testimony ... be taken and preserved for use at trial," a court may allow "a party" to depose a "prospective witness of a party," Fed.R.Crim.P. 15(d), so long as the opposing party is given notice of the deposition and an opportunity to engage in cross-examination of the same "scope and manner ... as would be allowed in the trial itself," Fed.R.Crim.P. 15(d). Because "Cunningham was 'available' to tell his story" in a way "by which [his] testimony and McHan's right to confront its source could have both been preserved," McHan insists that the Confrontation Clause does not countenance "the government's choice to extract Cunningham's statement in the secrecy of the grand jury chambers."
39
Underlying McHan's argument on the first prong of the Roberts test is a premise, for which he provides no authority, that where the government knows in advance that a potential witness may become unavailable to testify at trial, the Confrontation Clause requires it to secure the witness' testimony in a manner that reasonably preserves the potential defendant's ability to confront and cross-examine the witness. We have found no authority for that proposition. As long as the government did not create or contribute to the declarant's unavailability at trial, we do not read Roberts and its progeny to hold that the necessity created by the witness' unavailability is somehow lessened simply because the government knew in advance that the witness would be unavailable. When the government knows that a witness will be unavailable, it has the choice of seeking to preserve the witness' testimony under Federal Rule of Criminal Procedure 15, or relying at its own risk on its ability to introduce hearsay (such as the witness' grand jury testimony), or losing the benefit of the witness' testimony altogether. The election it makes, however, does not bear on the Roberts test of whether, at the time of trial, the witness is unavailable. See Roberts, 448 U.S. at 65-66, 100 S.Ct. at 2538-39. Absent any suggestion that the government intentionally procured a declarant's unavailability for trial, we reject McHan's attempt to read the Confrontation Clause's "rule of necessity" differently from the hearsay rule's simple "unavailability" requirement and, thereby, to inject a best evidence requirement into the Confrontation Clause jurisprudence.
40
We add, as further reason to reject McHan's argument, that Federal Rule of Criminal Procedure 15(a) speaks only of depositions by "a party" of "a prospective witness of a party." Because, in this case, McHan had not yet been indicted or charged when Cunningham testified before the grand jury, Rule 15 was not an available avenue for preserving Cunningham's testimony.
B
41
McHan argues further that the district court erred in finding adequate indicia of reliability to justify the admission of Cunningham's grand jury testimony, a finding we review for clear error. See Workman, 860 F.2d at 144. Grand jury testimony is given in the solemn setting of the grand jury, under oath and the danger of perjury, and in the presence of jurors who are free to question witnesses and assess their credibility and a court reporter who prepares an official transcript of the testimony. The nature of grand jury testimony thus provides some indicia of trustworthiness. See United States v. Murphy, 696 F.2d 282, 286 (4th Cir.1982), cert. denied, 461 U.S. 945, 103 S.Ct. 2123, 2124, 77 L.Ed.2d 1303 (1983); United States v. Garner, 574 F.2d 1141, 1144 (4th Cir.), cert. denied sub nom. McKethan v. United States, 439 U.S. 936, 99 S.Ct. 333, 58 L.Ed.2d 333 (1978); United States v. West, 574 F.2d 1131, 1136 (4th Cir.1978). Nonetheless, it should not be concluded that simply because the hearsay is grand jury testimony it automatically satisfies the second prong of the Roberts test. See United States v. Clarke, 2 F.3d 81, 83-84 (4th Cir.1993), cert. denied, 510 U.S. 1166, 114 S.Ct. 1194, 127 L.Ed.2d 544 (1994); Garner, 574 F.2d at 1144. Rather, we must "examine the 'totality of the circumstances that surround the making of [a proffered hearsay] statement' for 'particularized guarantees of trustworthiness.' " Clarke, 2 F.3d at 84 (quoting Wright, 497 U.S. at 822, 110 S.Ct. at 3150); see also Shaw, 69 F.3d at 1253 ("The issue ... is whether ... statements were made under circumstances that guaranteed their trustworthiness such that cross-examination would have been of marginal utility in testing their accuracy").
42
While there is no "mechanical test for determining 'particularized guarantees of trustworthiness' under the [Confrontation] Clause," Wright, 497 U.S. at 822, 110 S.Ct. at 3150, we believe that Cunningham's grand jury testimony in this case is supported by numerous guarantees which, taken together, justify the district court's decision to admit it. First, Cunningham testified before the grand jury voluntarily. See United States v. Ellis, 951 F.2d 580, 583 (4th Cir.1991), cert. denied, 505 U.S. 1220, 112 S.Ct. 3030, 120 L.Ed.2d 901 (1992). Second, because Cunningham had participated with McHan in the narcotics offenses, he testified from personal knowledge. See Dutton v. Evans, 400 U.S. 74, 88-89, 91 S.Ct. 210, 219-20, 27 L.Ed.2d 213 (1970); Siegfriedt v. Fair, 982 F.2d 14, 20 n. 6 (1st Cir.1992). Third, when Cunningham gave his grand jury testimony, he had already been sentenced pursuant to a plea bargain that granted him immunity. See Curro v. United States, 4 F.3d 436, 437 (6th Cir.1993); Ellis, 951 F.2d at 583. Fourth, Cunningham was gravely ill, and expected to die within two years. See Barker v. Morris, 761 F.2d 1396, 1401 (9th Cir.1985), cert. denied, 474 U.S. 1063, 106 S.Ct. 814, 88 L.Ed.2d 788 (1986); see also Mattox v. United States, 156 U.S. 237, 244, 15 S.Ct. 337, 340, 39 L.Ed. 409 (1895) ("[T]he sense of impending death is presumed to remove all temptation to falsehood, and to enforce [a] strict ... adherence to the truth ..."). Finally, and perhaps most importantly, McHan acknowledged that Cunningham's grand jury testimony, with a few exceptions mostly pertaining to dates, was "fairly accurate" and "close enough." Cf. Fed.R.Evid. 801(d)(2)(B) (excluding from the definition of "hearsay" statements which are offered against a party where the party has manifested an adoption or belief in their truth).
IV
43
To support McHan's contention that his superseding indictment violated the Fifth Amendment Double Jeopardy Clause, he advances three independent arguments. We find none persuasive.
44
First, reiterating the position that we rejected on interlocutory appeal, McHan argues that his prosecution for the conspiracy and CCE counts in his 1990 superseding indictment were barred by his 1988 conspiracy conviction. In McHan III, we held that McHan's guilty plea to the 1988 drug conspiracy did not bar his prosecution for the 1984-86 conspiracy charged in Count 1 of his superseding indictment. 966 F.2d at 139. While recognizing that McHan had raised a "non-frivolous question about whether there was only one continuous conspiracy," we concluded that the district court was not clearly erroneous in finding from the testimony presented that McHan's "original conspiracy, which was active in 1985 and 1986, had withered by the end of 1987 at the latest." Id. at 138-39. Because we do not agree with McHan that the evidence adduced at his trial demonstrates that his "criminal activities from 1984 through 1988 constitute one continuous, on-going conspiracy," we see no reason to revisit our decision in McHan III.
45
McHan further contends that the earlier in rem civil forfeitures of his automobiles and his interest in his 35-acre property preclude his prosecution on the 1990 conspiracy and CCE counts. His argument, however, is directly foreclosed by United States v. Ursery, --- U.S. ----, 116 S.Ct. 2135, 135 L.Ed.2d 549 (1996), in which the Supreme Court recently held that a criminal prosecution following a civil forfeiture does not implicate the Double Jeopardy Clause because civil forfeitures "do not constitute 'punishment' for purposes of the Double Jeopardy Clause." Id. at ----, 116 S.Ct. at 2138. Because the forfeitures of McHan's automobiles and his interest in the 35-acre property were not "punishment," McHan's contention that his subsequent criminal prosecution represented a second jeopardy is untenable.
46
Finally McHan argues that a two-level increase in his offense level that he received for his 1988 conspiracy conviction as an organizer, leader, manager or supervisor under § 3B1.1(c) bars his CCE conviction because the CCE statute requires the same element, that he be an organizer, supervisor, or manager of five or more other individuals. See 21 U.S.C. § 848(c)(2)(A). But this argument fails to recognize that sentencing enhancements are not the crime for which McHan was charged. The Supreme Court held in Witte v. United States, --- U.S. ----, ----, 115 S.Ct. 2199, 2206, 132 L.Ed.2d 351 (1995), that the "use of evidence of related criminal conduct to enhance a defendant's sentence for a separate crime within the authorized statutory limits does not constitute punishment for that conduct within the meaning of the Double Jeopardy Clause" because the Sentencing Guidelines punish for only the defendant's offense of conviction. Sentence-enhancing conduct, accordingly, does not preclude later prosecution for that conduct.
V
47
We now turn to the government's cross-appeal of McHan's sentence, considering first the government's contention that the district court erred as a matter of law in deciding to depart downward and reduce McHan's sentence by 56 months based on the fact that McHan had just finished serving 56 months for his 1988 conviction, which conviction served as predicate conduct for the conviction in this case. The government argues that the Sentencing Guidelines address that issue at U.S.S.G § 5G1.3 and do not permit the downward departure for that reason. We agree.
48
Section 3553(b) of Title 18 requires a court to impose a sentence within the applicable sentencing guidelines range "unless the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described." We have repeatedly explained that § 3553(b) envisions a two-prong test for evaluating the propriety of a departure. First, the departure must be based on circumstances that were not adequately considered by the Sentencing Commission. Second, the special mitigating or aggravating circumstances present in the case must be of sufficient importance and magnitude to justify a departure. See McHan I, 920 F.2d at 247-48; United States v. Van Dyke, 895 F.2d 984, 986 (4th Cir.), cert. denied, 498 U.S. 838, 111 S.Ct. 112, 112 L.Ed.2d 82 (1990); United States v. Summers, 893 F.2d 63, 66 (4th Cir.1990); Cf. United States v. Rybicki, 96 F.3d 754, 757 (4th Cir.1996).
49
The Sentencing Guidelines expressly permit district courts to give sentencing credit only for terms of imprisonment "result[ing] from offense(s) that have been fully taken into account in the determination of the offense level for the instant offense" if the previous term of imprisonment is "undischarged." U.S.S.G. § 5G1.3. The Application Notes and Background Statement to § 5G1.3 similarly limit its application to undischarged terms of imprisonment. And, despite several amendments to the Sentencing Guidelines, the Sentencing Commission has not altered § 5G1.3 to include credit for discharged sentences. See U.S.S.G.App. C, amendments 289, 385, 465, 494, 535. Applying the interpretive maxim expressio unius est exclusio alterius, we conclude that the Sentencing Commission did not leave unaddressed the question of whether a sentencing judge can give credit for discharged sentences, but rather consciously denied that authority. Accord Prewitt v. United States, 83 F.3d 812, 817-18 (7th Cir.1996); United States v. Bernard, 48 F.3d 427, 431-32 (9th Cir.1995); United States v. Ogg, 992 F.2d 265, 266 (10th Cir.1993).
50
Our decision in United States v. Rogers, 897 F.2d 134 (4th Cir.1990), on which the district court relied to support its decision to depart downward, does not compel a different conclusion. In Rogers, we held that the district court erred in concluding that it retained no discretion to depart from the mandatory imposition of consecutive sentences under U.S.S.G. § 5G1.3 in sentencing for an offense that the defendant committed while serving an unexpired sentence for an unrelated offense. Id. at 136. But we never even intimated in Rogers that downward departures may be appropriate to credit defendants for previously discharged sentences. Because the district court's downward departure was based on an error of law, we conclude per se that it abused its discretion. See Koon v. United States, --- U.S. ----, ----, 116 S.Ct. 2035, 2047, 135 L.Ed.2d 392 (1996) ("whether a factor is a permissible basis for departure under any circumstance is a question of law" and a "district court by definition abuses its discretion when it makes an error of law").
51
On appeal, McHan also contends for the first time that the 22-month delay between his conviction and sentencing justified the district court's downward departure in this case because his previous sentence only became discharged during the 22-month period. The Sentencing Guidelines, however, direct district courts to determine credit for prior sentences at the time of sentencing and provide no exceptions for cases in which the defendant's sentencing has been delayed. Moreover, it was McHan who is principally responsible for bringing about delays in his trial and sentencing by engaging in proactive negotiation and sometimes dilatory litigation. At least where there is no indication that the government intentionally delayed the defendant's processing for the purpose of rendering § 5G1.3(c) inapplicable, we decline to undermine the Sentencing Guidelines' general preference for repose and specific preference for denying sentencing credit for previously discharged sentences. Cf. Prewitt, 83 F.3d at 817 (rejecting ineffective assistance argument based on counsel's failure to argue that § 5G1.3(c) applied to defendant's sentence where defendant had already been discharged from previous sentence and record contained no evidence that government had intentionally delayed defendant's indictment for the purpose of rendering § 5G1.3(c) inapplicable).
52
Because we conclude that the Sentencing Commission adequately considered--and rejected--credit for previously discharged sentences, the district court's downward departure was based on an error of law, constituting per se an abuse of discretion. See Koon, --- U.S. at ----, 116 S.Ct. at 2047. For the same reason, we need not decide whether the district court abused its discretion in concluding that a departure was reasonably justified in McHan's case or whether § 5G1.3(a) denies McHan the benefit of concurrent sentences because he committed part of the conduct underlying his 1992 conviction after he was sentenced on his 1988 conviction.
VI
53
Finally, the government contends that the district court, in forfeiting $395,670 under 21 U.S.C. § 853 as proceeds from McHan's continuing criminal enterprise, improperly deducted McHan's cost of the drugs sold and included only one-half of the proceeds of one transaction because a partner received the other half. After holding a bench trial, the court determined that McHan had received $1,252,700 from marijuana transactions including $236,650 as a one-half share from a transaction in which he had participated jointly with Paul Cunningham. The total proceeds received, including the partnership transaction were $1,489,350. To compute the amount forfeitable, the district court deducted $857,030 representing the cost of marijuana sold and $236,650 representing the one-half share that Cunningham received, leaving $395,670, which is the amount it ordered forfeited. The government maintains that both deductions were improper. We agree.
54
* The government first argues that 21 U.S.C. § 853 reaches gross proceeds from illegal transactions, and not net profits. The district court concluded, however, that in using the term "proceeds" in § 853, Congress intended to give the district court "factual discretion" on what "proceeds" should include. Reasoning that by forfeiting gross proceeds, the court would be twice forfeiting the same property--the cost paid as well as gross proceeds which includes the cost paid--the court forfeited only net profits. In doing so, we believe it erred.
55
The CCE statute originally limited criminal forfeitures for a person convicted of engaging in a continuing criminal enterprise to "profits obtained ... in such enterprise," 21 U.S.C. § 848(a)(2) (1982) (emphasis added). But that provision was replaced in 1984 by 21 U.S.C. § 853 which is applicable to this case because McHan's continuing criminal enterprise continued after Congress' amendments to the CCE forfeiture provisions in the Comprehensive Forfeiture Act, Chapter 3 of the Comprehensive Crime Control Act of 1984, became law. See P.L. 98-473, Tit. II, § 235(a)(1), 98 Stat.2031-32 (1984); see also United States v. Johnson, 537 F.2d 1170, 1175 (4th Cir.1976) (holding that application of statute providing penalties for those engaged in CCE did not constitute ex post facto application of statute even though CCE was in operation before effective date of statute). Section 853(a)(1) now authorizes the forfeiture of "any property constituting, or derived from, any proceeds ... obtained, directly or indirectly, as the result of" a CCE offense. (Emphasis added). In using the term "proceeds," as distinguished from "profits," we believe Congress intended the distinction plainly made.
56
Webster's preferred definition of "proceeds" reads "what is produced by or derived from something ... by way of total revenue: the total amount brought in." Webster's Third New International Dictionary 1807 (1961); see also Black's Law Dictionary 1204 (6th ed. 1990) (defining proceeds as "the sum, amount, or value of property sold or converted into money or into other property"). "Profit," by contrast, is defined as "the excess of returns over expenditure in a transaction or series of transactions," Webster's Third New International Dictionary 1811, or "the gross proceeds of a business transaction less the costs of the transaction," Black's Law Dictionary 1211. Not only did Congress make the distinction in adopting the 1984 amendments, it did so within § 853(a) where it provides that "[i]n lieu of a fine otherwise authorized by this part, a defendant who derives profits or other proceeds from an offense may be fined not more than twice the gross profits or other proceeds." (Emphasis added). The text of the CCE forfeiture statute, therefore, does not appear to suggest an interpretation of "proceeds" so restrictive as to include only the profits realized from a continuing criminal enterprise, and we are instructed to construe the statute liberally to effectuate its remedial purpose. See 21 U.S.C. § 853(o).
57
The legislative history corroborates our conclusion. In adopting the 1984 amendments, Congress intended to render forfeitable under § 853(a)(1) "[t]he same type of property [that was already] subject to civil forfeiture under 21 U.S.C. § 881(a)(6)." S.Rep. No. 98-225, 98th Cong., 2d Sess., at 211 (1984), U.S.Code Cong. & Admin.News 1984, 3182, at 3394 (emphasis added). And § 881(a)(6) authorizes the forfeiture of "[a]ll moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter." The civil forfeiture provision has never been interpreted to permit a deduction for the costs of illicit drug transactions, as McHan urges here for the criminal provision. See United States v. $4,255,000.00, 762 F.2d 895, 905 (11th Cir.1985) (suggesting that cumulative forfeitures may be permissible under § 881(a)(6)), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986); see also United States v. Banco Cafetero Panama, 797 F.2d 1154, 1161 n. 9 (2d Cir.1986) (same).
58
Further evidence of Congress' design in § 853 to require the forfeiture of the gross proceeds from continuing criminal enterprises may be gleaned from RICO's parallel criminal forfeiture provision. Congress enacted the Comprehensive Forfeiture Act to amend both the RICO and CCE forfeiture provisions, see Pub.L. 98-473, Tit. II, Ch. III, 98 Stat. 2040, and now the language of the CCE forfeiture provision, 21 U.S.C. § 853, closely tracks that of the RICO forfeiture provision, 18 U.S.C. § 1963. The legislative history to § 1963(a)(3) reveals that Congress believed "[i]t should not be necessary for the prosecutor to prove what the defendant's overhead expenses were" and, therefore, used the term "proceeds" rather than "profits" in the RICO forfeiture statute "to alleviate the unreasonable burden on the government of proving net profits." S.Rep. No. 225, 98th Cong., 2d Sess., at 199 (1984), U.S.Code Cong. & Admin.News 1984, at 3382. Because we generally construe the drug and RICO forfeiture statutes similarly, see In re Billman, 915 F.2d 916, 921 (4th Cir.1990), cert. denied sub nom. McKinney v. United States, 500 U.S. 952, 111 S.Ct. 2258, 114 L.Ed.2d 711 (1991); United States v. Amend, 791 F.2d 1120, 1127 n. 6 (4th Cir.), cert. denied, 479 U.S. 930, 107 S.Ct. 399, 93 L.Ed.2d 353 (1986), and the legislative history to the CCE forfeiture statute specifically indicates that Congress used the term "proceeds" to define the property forfeitable under § 853 for the same reason that it used that term in § 1963, see S.Rep. No. 98-225, 98th Cong., 2d Sess., at 211 (1984), we believe that the RICO forfeiture statute further reveals Congress' intent to forfeit under § 853 all tainted revenues received by a CCE.
59
Finally, sound policy considerations support the forfeiture of the gross proceeds rather than the profits of criminal enterprises under § 853. The proper measure of criminal responsibility generally is the harm that the defendant caused, not the net gain that he realized from his conduct. Otherwise we would be rewarding unsuccessful drug dealers, or those who could adequately manipulate "their books." Cf. United States v. Jeffers, 532 F.2d 1101, 1116-17 (7th Cir.1976) (holding that "substantial income" requirement of CCE statute, 21 U.S.C. § 848(b)(2)(B), can be established by substantial gross receipts or substantial gross income), aff'd. in part and vacated in part on other grounds, 432 U.S. 137, 97 S.Ct. 2207, 53 L.Ed.2d 168 (1977); United States v. Sisca, 503 F.2d 1337, 1346 (2d Cir.1974) (same), cert. denied, 419 U.S. 1008, 95 S.Ct. 328, 42 L.Ed.2d 283 (1974). Were we to read proceeds in § 853 to mean only profits, moreover, we would create perverse incentives for criminals to employ complicated accounting measures to shelter the profits of their illegal enterprises. The purpose of forfeiture is to remove property facilitating crime or property produced by crime--all of which is tainted by the illegal activity.
60
In any event, regardless of whether the costs of McHan's drug operations were included in "proceeds" under § 853(a)(1), they would be forfeitable under § 853(a)(2). That section directs the forfeiture of any "property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of" a CCE offense. Because the amounts McHan spent to buy and transport marijuana were used to "facilitate" his criminal enterprise, § 853(a)(2) subjects those amounts to forfeiture. See Autullo v. United States, Nos. 93-3713 and 95-2439, 1996 WL 149346, * 4 (7th Cir.1996) (unpublished) (relying entirely on § 853(a)(2) in rejecting defendant's argument that "cash forfeiture should have been based on profits rather than proceeds" where forfeiture was "based on the cash value of the cocaine that he distributed"); see also United States v. Harris, 903 F.2d 770, 777-78 (10th Cir.1990) (affirming forfeiture under § 853(a)(2) of $413,493 where sufficient evidence demonstrated that defendant intended to use currency to facilitate possession of marijuana with the intent to distribute).
B
61
The government also contends that the district court erred in deducting from gross proceeds Cunningham's one-half share of the proceeds received in a transaction in which both McHan and Cunningham were involved. Section 853(a)(1) provides for the forfeiture of tainted property "obtained, directly or indirectly" from a CCE by any person convicted of a CCE offense. (Emphasis added). Construing that section liberally, see 21 U.S.C. § 853(o), it is not limited to property that the defendant acquired individually but includes all property that the defendant derived indirectly from those who acted in concert with him in furthering the criminal enterprise. See United States v. Benevento, 663 F.Supp. 1115, 1118 (S.D.N.Y.1987), aff'd, 836 F.2d 129 (2d Cir.1988) (per curiam). As a member of the McHan-Cunningham joint venture, McHan received all proceeds of the partnership. Simply because the partners thereafter agreed to divide the take does not negate the existence of the proceeds and the taint caused by the illegal activity.
62
The imposition of vicarious liability under § 853 also resonates with established criminal law principles. Just as conspirators are substantively liable for the foreseeable criminal conduct of a conspiracy's other members, see Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946), they are responsible at sentencing for co-conspirators' "reasonably foreseeable acts and omissions ... in furtherance of the jointly undertaken criminal activity," U.S.S.G. § 1B1.3(a)(1)(B) (Relevant Conduct); see also United States v. Lamarr, 75 F.3d 964, 972 (4th Cir.1996), cert. denied --- U.S. ----, 117 S.Ct. 358, 136 L.Ed.2d 250 (1996); United States v. Irvin, 2 F.3d 72, 77 (4th Cir.1993), cert. denied sub nom. Gonzales v. United States, 510 U.S. 1125, 114 S.Ct. 1086, 127 L.Ed.2d 401 (1994). Because a criminal forfeiture ordered under § 853(a) is "an element of the [defendant's] sentence," Libretti v. United States, --- U.S. ----, ----, 116 S.Ct. 356, 363, 133 L.Ed.2d 271 (1995), it follows that conspirators should be liable under § 853 for their drug partnerships' receipts.
63
Finally, the few courts to consider the precise question of whether § 853(a) imposes vicarious liability on co-conspirators have held that it does. See Benevento, 836 F.2d 129 (2d Cir.1988) (per curiam); United States v. McCarroll, No. 95 CR 48, 1996 WL 355371 (N.D.Ill. June 25, 1996) (unpublished). And in cases involving the RICO forfeiture statute, courts have unanimously concluded that conspirators are jointly and severally liable for amounts received pursuant to their illicit agreement. See United States v. Hurley, 63 F.3d 1, 22 (1st Cir.1995), aff'g United States v. Saccoccia, 823 F.Supp. 994 (D.R.I.1993); United States v. Masters, 924 F.2d 1362, 1369-70 (7th Cir.), cert. denied, 500 U.S. 919, 111 S.Ct. 2019, 114 L.Ed.2d 105 (1991); Fleischhauer v. Feltner, 879 F.2d 1290, 1301 (6th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1122, 107 L.Ed.2d 1029, and cert. denied, 494 U.S. 1027, 110 S.Ct. 1473, 108 L.Ed.2d 611 (1990); United States v. Caporale, 806 F.2d 1487 (11th Cir.1986), cert. denied, 483 U.S. 1021, 107 S.Ct. 3265, 97 L.Ed.2d 763 (1987); United States v. Wilson, 742 F.Supp. 905, 909 (E.D.Pa.1989), aff'd, 909 F.2d 1478 (3d Cir.) (Table), cert. denied, 498 U.S. 1016, 111 S.Ct. 589, 112 L.Ed.2d 593 (1990).
64
For the foregoing reasons, we affirm McHan's convictions, but vacate his sentence and remand this case to the district court for resentencing in accordance with this opinion.
65
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
66
K. K. HALL, Circuit Judge, concurring in part and dissenting in part:
67
I agree with almost everything Judge Niemeyer has written for the majority. I disagree only with the reversal of the 56-month credit for time served on the prior conspiracy conviction. This downward departure was within the district court's discretion, and I would affirm it.
68
My main concern arises from the structure of the enterprise McHan stands convicted of directing. I concurred in our holding in McHan III that a continuing criminal enterprise, which is itself a conspiracy, could be composed of discontinuous smaller conspiracies.1 Though I concede the theoretical possibility of such a conspiracy-upon-conspiracy structure--a theory proved by example here--I believe that it is far enough from "the heartland" of the guidelines as to provide enough discretion to grant the departure, especially inasmuch as conviction and punishment for CCE and the inevitable continuing lesser-included conspiracy is impermissible. Rutledge v. United States, --- U.S. ----, 116 S.Ct. 1241, 134 L.Ed.2d 419 (1996); Jeffers v. United States, 432 U.S. 137, 97 S.Ct. 2207, 53 L.Ed.2d 168 (1977).
69
The majority relies most heavily on U.S.S.G. § 5G1.3. That guideline describes, in considerable detail, what role undischarged sentences should play in setting the total sentence, and it recognizes an uncommon degree of discretion in the district courts to fashion a reasonable sentence in complex situations. See § 5G1.3(c) & comment. (nn. 3-5). Applying the hoary maxim expressio unius est exclusio alterius, the majority concludes that no such discretion exists as to discharged sentences.
70
I disagree. There are three ways the Sentencing Commission may address a potential ground for departure: (i) it may forbid the factor's use, (ii) encourage it, or (iii) discourage it. Koon v. United States, --- U.S. ----, ----, 116 S.Ct. 2035, 2045, 135 L.Ed.2d 392 (1996) (citing United States v. Rivera, 994 F.2d 942, 949 (1st Cir.1993)). Only in the first case is the district court's discretion entirely foreclosed. The most we can say about discharged sentences from the text of § 5G1.3, even with the help of expressio unius ... , is that they are not an encouraged basis for departure. To infer that the basis is forbidden is more than the old saw can bear.
71
Concluding that the district court had some, if limited, discretion to consider a departure here, I must address whether it abused that discretion, giving "substantial deference" to its decision. Koon, --- U.S. at ---- - ----, 116 S.Ct. at 2046-47. I see no abuse, for two reasons.
72
First, as I stated above, it is an odd paradox that a continuing agreement could be composed of discrete, discontinuous sub-agreements. As Rutledge resolves once and for all, a CCE is simply a conspiracy with certain aggravating characteristics, and conviction of the same conspiracy without those characteristics is unconstitutional. The "series of violations" required by 21 U.S.C. § 848(c)(2) was clearly intended to refer, in the overwhelming majority of cases, to substantive crimes.2 Moreover, conversely to Rutledge 's holding as to lesser-included conspiracy, conviction and punishment for predicate substantive crimes and the larger CCE is generally permissible. Garrett v. United States, 471 U.S. 773, 105 S.Ct. 2407, 85 L.Ed.2d 764 (1985).
73
Within the two extremes--Rutledge and Garrett--lies this peculiar case, where we have, for § 848(c)(2)'s purposes at least, what amount to substantive conspiracies. I would hold that this peculiarity places this case well outside the "heartland" of the guidelines, and the district court's decision that credit for time served was appropriate was not an abuse of discretion.
74
Second, McHan was convicted in July 1992, but not sentenced until June 1994. Had he been sentenced any time within sixteen months of his conviction, his prior sentence would have been undischarged. A delay of that length was not, in my view, envisioned by the Commission when it drew its distinction between discharged and undischarged sentences, and the delay thus provides an independent basis for the departure.
75
To the extent stated above, I respectfully dissent. Otherwise, I join the judgment and opinion of the court.
1
United States v. McHan, 966 F.2d 134, 139-42 (4th Cir.1992)
2
In dicta in Rutledge, the Supreme Court referred to the "series of violations" as the "series of substantive violations." --- U.S. at ---- n. 7, 116 S.Ct. at 1246 n. 7
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979 F.2d 195
Linda SWERHUN, Plaintiff-Appellant,v.The GUARDIAN LIFE INS. CO. OF AMERICA, Defendant-Appellee.
No. 91-3412.
United States Court of Appeals,Eleventh Circuit.
Dec. 15, 1992.
William C. Owen, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, Fla., for plaintiff-appellant.
Ricky Polston, Robert L. Hinkle, Aurell, Radey, Hinkle & Thomas, Tallahassee, Fla., for defendant-appellee.
Scott Mager, Brian F. Spector, Cooney, Ward, Lesher & Damon, West Palm Beach, Fla., for amicus Academy of Florida Trial Lawyers.
Appeal from the United States District Court for the Northern District of Florida.
Before TJOFLAT, Chief Judge, BIRCH, Circuit Judge, and RONEY, Senior Circuit Judge.
TJOFLAT, Chief Judge:
1
This case involves allegations of breach of contract and bad faith denial of claims for benefits under an employee benefit plan as defined by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (1988) (ERISA). We affirm the district court's dismissal of this case on ERISA preemption grounds.
I.
2
The facts of this case are not in dispute. On May 1, 1989, appellant Linda Swerhun applied for health insurance with The Guardian Life Insurance Company of America (Guardian) through her employer's group health insurance plan. Guardian approved Swerhun's application and, effective August 1, 1989, she became a plan participant. The parties agree that Guardian's plan covers chiropractic services.
3
After the plan's effective date, Swerhun sought treatment from Dr. Camilla S. Superson, a chiropractic physician in Downers Grove, Illinois. Dr. Superson diagnosed and treated Swerhun for "severe biochemical imbalance compounded with possible neurological damage," and prescribed laboratory testing, massage therapy, and vitamin supplements. Swerhun submitted her initial claims for Dr. Superson's services to Guardian. Guardian denied these claims. In March 1990, Swerhun received medical treatment from Dr. Rick M. Smith, a chiropractic physician in Winter Haven, Florida. Swerhun submitted claims for Dr. Smith's services, which Guardian denied months later.
4
In August 1990, Swerhun filed suit against Guardian in Florida state court, alleging that Guardian had breached its insurance contract by refusing to pay her claims. Guardian removed the action to federal district court pursuant to 28 U.S.C. § 1441(b) (1988), asserting federal question jurisdiction under 28 U.S.C. § 1331 (1988), because Swerhun's claims arose under ERISA. On October 22, 1990, the district court denied Swerhun's motion to remand the case to state court and held that ERISA preempted the breach of contract claim. On November 7, 1990, the court granted Swerhun's motion voluntarily to dismiss the case.
5
By mid-November 1990, Swerhun resubmitted, and Guardian again denied, her claims for services rendered by Drs. Superson and Smith. On November 29, 1990, after learning that Dr. John O. Susac, a neurologist in Orlando, Florida, had diagnosed Swerhun as having multiple sclerosis, Guardian paid nearly all of Swerhun's previously submitted claims for services rendered by Drs. Smith and Superson. Guardian still declined to pay for the vitamin supplements that Dr. Superson had prescribed.
6
In January 1991, Swerhun filed a two-count complaint in Florida state court. Count I alleged that Guardian had (1) breached its insurance contract by failing to recognize and pay Swerhun's claims in a timely manner, and (2) construed its insurance policy contrary to the provisions of Fla.Stat.Ann. § 627.419(4).1 Count II alleged that Guardian's refusal to pay Swerhun's claims in a timely manner constituted bad faith in violation of Fla.Stat.Ann. § 624.155.2
7
On February 6, 1991, Guardian again removed the case to federal district court. Asserting that ERISA preempted Swerhun's claims, Guardian filed a motion to dismiss. After briefing and oral argument, the district court, on April 8, 1991, granted Guardian's motion and dismissed Swerhun's complaint with prejudice. Swerhun appeals.
II.
8
The district court's decision to dismiss counts I and II of Swerhun's complaint on ERISA preemption grounds is subject to our plenary review. See O'Reilly v. Ceuleers, 912 F.2d 1383, 1385 (11th Cir.1990).
9
ERISA is a comprehensive statute that subjects employee benefit plans to federal regulation. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732, 105 S.Ct. 2380, 2385, 85 L.Ed.2d 728 (1985); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983). Section 514(a) of ERISA, the preemption clause, provides that ERISA "supersede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. 29 U.S.C. § 1144(a). The Supreme Court has noted that the preemption clause "is conspicuous for its breadth," FMC Corp. v. Holliday, 498 U.S. 52, ----, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990), and has instructed that the clause should be "expansively applied," Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, ----, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990).
10
ERISA's preemptive effect upon state law operates in three stages. First, as a general rule, ERISA preempts all state laws that relate to ERISA covered plans. 29 U.S.C. § 1144(a). Second, the exception to the general rule is the "saving clause" which provides that nothing in ERISA "shall be construed to exempt or relieve any person from any law of any State which regulates insurance...." 29 U.S.C. § 1144(b)(2)(A). Third, the exception to the exception is the "deemer clause" which provides that no employee benefit plan "shall be deemed to be an insurance company or other insurer ... or to be engaged in the business of insurance ... for purposes of any law of any State purporting to regulate insurance companies...." 29 U.S.C. § 1144(b)(2)(B).
11
Swerhun does not dispute that the Guardian plan is an ERISA-covered plan.3 Nor does she dispute that her complaint is based on state laws that "relate to" an ERISA plan and, hence, fall within ERISA's preemption clause. Indeed, the Supreme Court has determined that a state statute "relates to" an ERISA plan "if it has a connection with" such a plan, see Shaw, 463 U.S. at 96-97, 103 S.Ct. at 2900; see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co., 471 U.S. at 739, 105 S.Ct. at 2389, and we have held that "there can be no dispute that the common law causes of action asserted by the plaintiffs--bad faith refusal to pay, fraud and breach of contract--'relate to' an employee benefit plan and therefore fall within ERISA's express preemption clause," Amos v. Blue Cross-Blue Shield of Ala., 868 F.2d 430, 431 (11th Cir.1989); see also First Nat'l Life Ins. Co. v. Sunshine-Jr. Food Stores, Inc., 960 F.2d 1546, 1549-50 (11th Cir.1992) (ERISA preempts claim alleging "mishandling of benefits payments and failure to adhere to terms of [a] group policy"). Rather, Swerhun contends that she has alleged state statutory claims which survive ERISA's preemptive force. She asserts that section 627.419, which construes health insurance plans to include payments to chiropractors, and section 624.155, which provides damages for bad faith refusals to settle claims, are laws "regulating insurance" and thus "saved" from ERISA preemption. We disagree.
A.
12
In count I of her complaint, Swerhun alleged that Guardian breached its contract by failing to pay her claims in a timely manner, and violated section 627.419 by refusing to provide coverage for her chiropractic care. We have consistently held that ERISA preempts state law breach of contract claims. See, e.g., First Nat'l Life Ins. Co., 960 F.2d at 1550; Williams v. Wright, 927 F.2d 1540, 1550 (11th Cir.1991); Amos, 868 F.2d at 431; Jackson v. Martin Marietta Corp., 805 F.2d 1498, 1499 (11th Cir.1986). Similarly, in Pilot Life Insurance Co., the Supreme Court squarely held that ERISA preempts "state common law tort and contract actions asserting improper processing of a claim for benefits." 481 U.S. at 57, 107 S.Ct. at 1558. To the extent that count I states a claim for breach of contract, it is preempted by ERISA.
13
Swerhun argues, however, that section 627.419 is a law "which regulates insurance," and thus "saved" from ERISA preemption. Section 627.419 declares that insurance policies must be construed to include chiropractic services and may very well be a law regulating insurance. Section 627.419, however, neither creates a private right of action nor is a necessary element of count I; count I is simply a breach of contract claim. Because the Florida statute through which Swerhun hopes to reach the saving clause is irrelevant, count I remains preempted.
14
First, Swerhun has failed to establish that section 627.419 creates a private right of action enabling her to sue for violation of the statute. In Farlow v. Union Cent. Life Ins. Co., 874 F.2d 791 (11th Cir.1989), we refused to read a private right of action into Alabama's "twisting" statute, Ala.Code § 27-12-6 (1977), and held that ERISA preempted plaintiffs' claims for fraudulent misrepresentation and negligence. We noted our "reluctan[ce] to read private rights of action in state laws where state courts and state legislatures have not done so." Id. at 795 (quoting A & E Supply Co., Inc. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669, 674 (4th Cir.1986), cert. denied, 479 U.S. 1091, 107 S.Ct. 1302, 94 L.Ed.2d 158 (1987)). Section 627.419's plain language does not establish a private right of action, and we will not infer one.
15
Second, because Guardian's policy covers chiropractic services, it is unnecessary to construe the policy to include such services under section 627.419. Count I of Swerhun's complaint states a straightforward claim for breach of contract. Section 627.419 simply never comes into play.
16
Even so, Swerhun maintains that section 627.419's looming presence somehow converts her breach of contract claim into a claim that implicates a statutory concern, which she apparently believes is a different beast altogether. That section 627.419--mere surplusage though it is in this case--is a statute does not thwart ERISA's preemptive force. Section 514(a) preempts "all State laws," not merely common law causes of action. Congress defined "State law" as used in section 514 to include "all laws, decisions, rules, regulations, or other State action having the effect of law." 29 U.S.C. § 1144(c)(1); see also Ingersoll-Rand Co., 498 U.S. at ----, 111 S.Ct. at 482-83 ("[T]o underscore its intent that § 514(a) be expansively applied, Congress used equally broad language in defining the 'State law' that would be preempted."); Anschultz v. Connecticut Gen. Life Ins. Co., 850 F.2d 1467, 1469 (11th Cir.1988) (ERISA preempts both common law and "statutorily based claim[s] for relief."). On its face, ERISA's preemption clause extends to statutory law.4 ERISA preempts count I of Swerhun's complaint in its entirety.
B.
17
Swerhun argues that her bad faith claim based on section 624.155 survives preemption. In Anschultz v. Connecticut General Life Insurance Co., 850 F.2d 1467 (11th Cir.1988), we considered the precise issue of whether ERISA preempts section 624.155. We held that the Florida statute was not a law regulating insurance, fell outside of ERISA's saving clause, and was preempted. Id. at 1469.
18
Swerhun nevertheless suggests that we not follow Anschultz in light of the Supreme Court's subsequent decision in FMC Corp. v. Holliday, 498 U.S. ----, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). She contends that FMC Corp. did not employ, and therefore rejected, the McCarran-Ferguson analysis5 on which the Anschultz court relied to find that section 624.155 fell outside the saving clause. The FMC Corp. Court did not utilize the McCarran-Ferguson analysis because the parties agreed that the relevant state law fell within the saving clause. In the wake of FMC Corp., other circuits have continued to employ the McCarran-Ferguson analysis. See, e.g., Gahn v. Allstate Life Ins. Co., 926 F.2d 1449, 1453 (5th Cir.1991); Tomczyk v. Blue Cross & Blue Shield, 951 F.2d 771, 775-76 (7th Cir.1991); Metropolitan Life Ins. Co. v. Hanslip, 939 F.2d 904, 907 (10th Cir.1991). We conclude that FMC Corp. does not diminish Anschultz's validity.6
III.
19
We conclude that ERISA preempts counts I and II of Swerhun's complaint. Accordingly, we affirm the district court's order dismissing this case.
20
AFFIRMED.
1
As it did when Swerhun filed her complaint, § 627.419(4) provides:
Notwithstanding any other provision of law, when any health insurance policy, health care services plan, or other contract provides for the payment for medical expense benefits or procedures, such policy, plan, or contract shall be construed to include payment to a chiropractic physician who provides the medical service benefits or procedures which are within the scope of a chiropractic physician's license.
Fla.Stat.Ann. § 627.419(4) (West Supp.1992).
2
Section 624.155 provides:
(1) Any person may bring a civil action against an insurer when such person is damaged:
....
(b) By the commission of any of the following acts by the insurer:
....
1
Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his interests
Fla.Stat.Ann. § 624.155 (West 1984).
3
ERISA plans include
any plan, fund, or program, which ... is ... established or maintained by an employer ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, ... medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment....
29 U.S.C. § 1002(1).
4
The Supreme Court has demonstrated none of Swerhun's suggested misgivings about holding that ERISA preempts state statutory law. See, e.g., FMC Corp., 498 U.S. at ----, 111 S.Ct. at 411 (ERISA preempts 75 Pa.Cons.Stat. § 1720 (1987), an antisubrogation statute); Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 829, 108 S.Ct. 2182, 2185-86, 100 L.Ed.2d 836 (1988) (ERISA preempts Ga.Code Ann. § 18-4-22.1 (1982), a garnishment statute); Shaw, 463 U.S. at 108-09, 103 S.Ct. at 2906 (ERISA preempts part of N.Y.Exec.Law §§ 290-301 (McKinney 1982 & Supp.1982-83), an antidiscrimination statute)
5
The McCarran-Ferguson Act provides that "[t]he business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business." 15 U.S.C. § 1012(a) (1988). The Supreme Court borrowed its test for determining whether a state law regulates insurance for purposes of ERISA's saving clause from its jurisprudence surrounding the McCarran-Ferguson Act. See Metropolitan Life Ins. Co., 471 U.S. at 743, 105 S.Ct. at 2391. Under this test, courts consider "first, whether the [regulated] practice has the effect of transferring or spreading a policyholder's risk; second, whether the practice is an integral part of the policy relationship between the insurer and the insured; and third, whether the practice is limited to entities within the insurance industry." Id. (emphasis omitted) (quoting Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129, 102 S.Ct. 3002, 3008, 73 L.Ed.2d 647 (1982)); see also Pilot Life Ins. Co., 481 U.S. at 48-49, 107 S.Ct. at 1553-54
6
Swerhun also contends that the distinction between fully insured and self-funded plans that the Court drew in FMC Corp. and Metropolitan Life Ins. Co. fundamentally alters ERISA preemption analysis. This is of no moment in the present case. The Supreme Court addressed this distinction strictly in the context of the interplay between the saving clause and the deemer clause. See FMC Corp., 498 U.S. at ----, 111 S.Ct. at 409-11; Metropolitan Life Ins. Co., 471 U.S. at 746-47, 105 S.Ct. at 2392-93. Because Swerhun's claims are not "saved" by the saving clause, the deemer clause is immaterial, and her reliance upon the fully insured/self-insured distinction in the Court's deemer clause jurisprudence is misplaced
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 5, 2009
No. 07-50843 Charles R. Fulbruge III
Summary Calendar Clerk
MICHELLE DAVIS
Plaintiff-Appellant
v.
CROTHALL HEALTH CARE INC
Defendant-Appellee
Appeal from the United States District Court
for the Western District of Texas
USDC No. 6:06-CV-125
Before HIGGINBOTHAM, BARKSDALE, and ELROD, Circuit Judges.
PER CURIAM:*
Michelle Davis, proceeding pro se, appeals the summary judgment
awarded Crothall Health Care, Inc. against her claims: (1) for racial
discrimination under Title VII of the Civil Rights Act of 1964; (2) under the Fair
Labor Standards Act (FLSA); and (3) that Crothall violated immigration laws.
(Davis was represented in district court. Here, after her counsel was permitted
to withdraw, her motion for appointment of counsel was DENIED.)
*
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. 07-50843
Davis provided housekeeping services on the campus of Baylor University.
She was assigned to Stacy Riddle Forum, a residential building in which Baylor’s
sororities were housed in nine “chapter suites”.
Crothall, Davis’ employer, has a policy in its handbook which states “[f]ood
may be consumed only in the cafeteria and approved break areas”. The Stacy
Riddle Forum has neither a cafeteria nor a dedicated break room. This action
arises out of Crothall’s transfering Davis to another building after it received a
complaint, on 8 September 2005, from a sorority advisor that Davis was taking
her break, and eating lunch, in one of the rooms she was assigned to clean,
against company policy.
Davis did not deny using the sorority common room for her lunch break.
On the other hand, she became very upset upon learning she had been assigned
to the new building.
Shortly thereafter, Davis missed several weeks of work for health reasons.
On 27 September 2005, Crothall’s operations manager for Baylor’s campus, Vicki
Pierce, had a telephone conversation with Davis, in which Davis alleged for the
first time discrimination in her transfer to the new building. Davis claimed a
fellow housekeeper in the Stacy Riddle Building had informed her she had been
transferred because an unidentified sorority member complained she was “not
comfortable around black people”. Pierce assured Davis the only reason for her
transfer was the 8 September complaint from the sorority advisor regarding her
unauthorized use of that sorority’s suite.
Despite repeated requests from Crothall about Davis’ intentions to return
to work, Davis refused to state whether she desired to remain employed with
Crothall. On 14 October 2005, Crothall’s director of housekeeping sent Davis a
letter requesting she contact Crothall within three days about her next
scheduled shift. When Davis failed to do so, Crothall terminated her
employment.
2
No. 07-50843
Davis filed a Charge of Discrimination with the Texas Workforce
Commission on 13 October 2005. Upon receiving a right-to-sue letter, she filed
an action in Texas state court claiming: (1) race discrimination under Title VII
in her transfer from the Stacy Riddle Forum to the new housekeeping location;
(2) violations of the FLSA; and (3) immigration law violations. Crothall removed
the action to federal district court, which granted summary judgment against all
claims. Davis’ motion to reconsider was denied.
A summary judgment is reviewed de novo. E.g. Stover v. Hattiesburg Pub.
Sch. Dist., 549 F.3d 985, 991 (5th Cir. 2008). Additionally, because the district
court did not specifically reference any new materials presented in Davis’ motion
to reconsider in denying the motion, our review of the denial is for abuse of
discretion. See Templet v. HydroChem Inc., 367 F.3d 473, 477 (5th Cir. 2004).
Because Davis has failed to adequately brief her claims, they could be
considered abandoned. In any event, the district court wrote a thorough and
well-reasoned opinion granting summary judgment against all claims.
Essentially for the reasons stated in that opinion, we AFFIRM the summary
judgment. In addition, we AFFIRM the denial of the motion to reconsider.
3
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504 A.2d 605 (1986)
Muriel YASUNA, Petitioner,
v.
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.
No. 84-981.
District of Columbia Court of Appeals.
Argued October 8, 1985.
Decided February 5, 1986.
*606 Louis P. Robbins, with whom Stephen O. Hessler, Washington, D.C., was on brief, for petitioner.
Richard B. Nettler, Asst. Corp. Counsel, with whom Inez Smith Reid, Corp. Counsel, John H. Suda, Principal Corp. Counsel, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., were on brief, for respondent.
Before NEBEKER and TERRY, Associate Judges, and GALLAGHER, Senior Judge.
GALLAGHER, Senior Judge:
This is an appeal by landlord Muriel Yasuna from a decision and order of the Rental Housing Commission which affirmed an award of treble damages for alleged rental overcharges to tenant John Simmons. The landlord challenges the assumption of the Rental Housing Commission's (RHC) jurisdiction to rule on rental overcharges in light of prior Superior Court judgments in her suits for possession. The landlord also argues that the award of treble damages was inconsistent with RHC regulations. We find no merit in these arguments and accordingly affirm the order of the RHC.
On July 8, 1982, tenant moved into 1531 31st Street, N.W., Apartment 4, paid $650 as a security deposit, and $434 as a pro-rated rent payment for July rent. Tenant's failure to pay rent in August and September and to sign a lease agreement prompted the landlord to serve tenant with a notice to quit and, in October, to file suit for possession based on nonpayment of rent in the Landlord and Tenant Branch of Superior Court (hereinafter Simmons I). A protective order was entered and tenant was ordered to pay monthly rent of $650 into the court registry. On October 27, 1982, tenant wrote the landlord concerning housing conditions, and subsequently received a second notice to quit and vacate after the first had apparently expired.
On November 18, 1982, landlord was served with an emergency notice of a housing code violation for failing to provide tenant's apartment with heat. The violation was not abated until December 9, 1982, when the landlord was served with another notice of housing code violations. That same day, the landlord filed another suit for possession based on breach of lease in the Superior Court (Simmons II) following expiration of the second notice to quit.
While the two Simmons cases were pending before the Superior Court, and before filing answers to either of the complaints, tenant filed a complaint with the Rental Accommodations Office (RAO) on December 17, 1982. Among other complaints, tenant alleged that landlord's rent exceeded the applicable rent ceiling. Supporting this claim were allegations that landlord had neither properly registered with the RAO since 1977, when rent for the unit was $425, nor filed proper rent increase forms. Tenant realleged these claims in his answer to Simmons I filed on December 27, 1982. The tenant filed a motion to dismiss the complaint in Simmons II.
On January 11, 1983, a hearing on Simmons I was held in the trial court concerning the existence of a lease and the circumstances surrounding occupancy of the unit. The trial of Simmons I was concluded on January 26, 1983, and the case taken under advisement. A hearing on Simmons II was held on January 31, 1983. The court entered judgment in favor of the landlord for possession. Findings in Simmons II were that tenant leased the rental unit for $650 per month; tenant had not paid rent for August and September; a notice to quit *607 was properly served and, tenant had failed to depart; the housing code violations did not warrant a reduction in rent because the landlord had attempted to remedy matters; and the premises had been damaged as a result of tenant's occupancy. No specific finding about the rent ceiling was made, nor was the issue raised in the answer.[1]
Simmons I was decided on February 16, 1982. The trial judge found that tenant had neither paid rent for August 1982 nor signed a lease. Because tenant had failed to establish housing code violations, the court stated he was not entitled to recoupment. Landlord was therefore entitled to possession.[2]
Meanwhile, the RAO proceedings went forward. The landlord's January 13, 1983 motion to dismiss on the ground that litigation was proceeding in the Superior Court was heard and denied on February 24, 1983. In its June 10, 1983 decision and order, the RAO found that landlord had not registered the housing unit as required under § 206 of the Rental Housing Act of 1980, D.C.Code § 45-1516 (1981), and that the rent ceiling for tenant's unit was $425. Landlord was ordered to pay the difference between rent paid and the proper rent set off by any rent unpaid, as well as a $1,000 fine for willfully violating the provisions of the Rental Housing Act. Both parties appealed the decision to the Commission.
In its November 30, 1983 decision, the Commission reversed and vacated the $1,000 fine and remanded on the issues of (a) awarding treble damages, and (b) the failure to provide heat as constituting a substantial violation of the housing code. Affirming rulings on the rent ceiling, the Commission rejected landlord's argument challenging the jurisdiction of the RAO to determine rent ceilings.
In its March 30, 1984 decision on remand, the Rent Administrator ruled that tenant was entitled to a rent reduction as a result of landlord's failure to provide heat, as well as treble damages. Following an appeal by landlord, the Commission, on July 13, 1984, affirmed the award of treble damages on the basis that the landlord exceeded the maximum allowable rent ceiling, but reversed the award of rent reductions on the basis of housing code violations. Landlord filed this appeal.
It is well established that the Rental Housing Commission has primary jurisdiction over rent stabilization issues. See D.C.Code § 45-1515 (1981). In addition to the statutory grant, case law has made it clear that the doctrine of primary jurisdiction requires deferral to administrative agencies by virtue of the agency's statutory authority or unique expertise. See Interstate General Corp. v. District of Columbia Rental Accommodations Commission, 441 A.2d 252, 254 (D.C.1982). Other case law affirms that the proper channel through which to adjudicate rent ceiling claims is the Rental Commission. See, e.g., Kew Gardens Joint Venture v. District of Columbia Housing Commission, 359 A.2d 269 (D.C.1976) (discussing the proper body to review orders of the Housing Rent Commission); see also Gibson v. Johnson, 492 A.2d 574, 575 n. 1A (D.C.1985) (although the issue of rent ceilings came before the trial court, this court noted the parties failed to raise the issue of primary jurisdiction).
In Drayton v. Poretsky Management, Inc., 462 A.2d 1115 (D.C.1983), this court reiterated the principles of primary jurisdiction and clarified their application:
The doctrine of primary jurisdiction, like the rule requiring exhaustion of administrative *608 remedies, is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties. . . . "Primary jurisdiction," on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views. (Citations omitted)
Id. at 1118 (citing United States v. Western Pacific Railroad Co., 352 U.S. 59, 62-3, 77 S.Ct. 161, 164, 1 L.Ed.2d 126 (1956); see also Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 96 L.Ed. 576 (1952)). Holding that the Landlord and Tenant Branch should not have undertaken to determine the validity of rent increases when tenant had filed a petition with the Rent Administrator, this court reasoned:
Application of the doctrine of primary jurisdiction requires that when there is pending before the Administrator or the RHC a challenge to a rent increase that bears upon the amount of rent owed by a tenant defending a possessory action brought for nonpayment of rent, the L&T Judge should stay the action to await the ruling of the Administrator or, if an appeal is taken to the RHC, then of that body. If the landlord prefers to go ahead with the trial of the possessory action on the basis of the rent level as it was apart from the challenged increase, then the L&T Branch should permit landlord to do so.
Where . . . tenants assert in their pleadings that a rent increase is invalid, but have not challenged it before the Rent Administrator, the court may in the exercise of its discretion, accord them a reasonable time to file such a challenge. . . .
If no such challenge has been brought before the Rent Administrator by the time set for trial . . . the L&T Branch is not to undertake to adjudicate the validity of the Rent increase. In our view it is inconsistent with the summary nature of L&T proceedings as well as the doctrine of primary jurisdiction to require that such matters be adjudicated in that branch. Instead, the trial judge should assume the validity of the increase and calculate the amount of rent due on that basis.
Drayton, supra, 462 A.2d at 1120-21 (footnote omitted). See also Washington Federal Savings & Loan Association v. Whiteside, 488 A.2d 936 (D.C.1985); Interstate General Corporation v. District of Columbia Rental Accommodations Commission, 441 A.2d 252 (D.C.1982).
Though Drayton had not yet been decided when this case arose, the procedure outlined in Drayton was followed. Before the trial court had adjudicated either Simmons I or II, tenant filed a complaint with the RAO challenging the amount of rent due. Despite tenant's raising the same issue in his answer to Simmons I, the court never addressed the validity of the rent ceiling and proceeded on the assumption that the amount charged for the unit was proper. Given the requirement of expedition in a possessory action, the trial court properly did not decide or litigate the propriety of the rent ceiling.[3] We conclude then that, in this case, primary jurisdiction precluded the adjudication of the rent ceiling *609 in the action for possession in the Superior Court and required its adjudication before the RAO.
We turn now to the issue of the imposition of treble damages. D.C.Code § 45-1591(a) (1981) provides that a landlord who knowingly demands rent for a rental unit in excess of the maximum allowable rent shall be liable for the amount exceeding the rent ceiling or treble that amount. The Commission regulations further provide that "[r]efunds of rent shall be trebled unless the surrounding circumstances of the violations indicate that the landlord acted in good faith and that good cause exists for providing only a single award." 14 DCMR § 3410.2. With no showing of special circumstances warranting a single award,[4] we find no abuse of discretion in awarding these damages. See Delwin Realty Co. v. District of Columbia Rental Housing Commission, 458 A.2d 58, 60 (D.C.1983); Remin v. District of Columbia Rental Housing Commission, 471 A.2d 275, 278 (D.C.1984).
Affirmed.
NOTES
[1] On February 1, 1983, in return for tenant's agreement to voluntarily vacate the premises by February 16, 1983, the landlord agreed to stay execution of judgment in Simmons II. Apparently tenant failed to abide by the agreement and a writ of restitution was obtained. Landlord's motion to release four months' rent from the Registry was granted on March 4, 1983.
[2] Appeals to this court of both Simmons I and II were dismissed before the administrative agency made a determination on the rent ceiling issue. Simmons I was apparently dismissed on the grounds of mootness.
[3] Appellant argues that the doctrine of res judicata precludes a ruling by the RAO in this case. We find the doctrines of collateral estoppel and primary jurisdiction more apposite. First, the severability of the issue of possession from the issue of rent due is clear. See, e.g., Clay v. Green, 404 A.2d 959, 960 (D.C.1979). Second, the tenant preserved his right to adjudicate rent ceiling issues by filing a complaint with the administrative agency entrusted with primary jurisdiction over those issues before their adjudication in the trial court. Cf. Drayton, supra, 462 A.2d at 1115, 1120 n. 10.
[4] As indicated earlier in this opinion, landlord's success in her suit for possession is not dispositive of the rent ceiling issue.
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64 Cal.2d 713 (1966)
414 P.2d 820
51 Cal. Rptr. 524
SHELL OIL COMPANY, Plaintiff and Appellant,
v.
STATE BOARD OF EQUALIZATION et al., Defendants and Respondents.
Docket No. Sac. 7576.
Supreme Court of California. In Bank.
June 6, 1966.
*716 Graham, James & Rolph, Robert D. Mackenzie and John M. Collette for Plaintiff and Appellant.
Thomas C. Lynch, Attorney General, Ernest P. Goodman, Assistant Attorney General, and John J. Klee, Jr., Deputy Attorney General, for Defendants and Respondents.
*717 PEEK, J.
The Shell Oil Company seeks a refund of taxes collected from it pursuant to the California Sales and Use Tax Law[1] based upon sales of bunker fuel oil to vessels engaged in interstate and foreign commerce. It contends that the tax is prohibited under the import-export and commerce clauses of the United States Constitution.
The import-export clause provides: "No State shall, without the Consent of Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws...." (U.S. Const., art. I, § 10, cl. 2.)
The commerce clause provides that Congress shall have the power "To regulate Commerce with foreign Nations, and among the several States...." (U.S. Const., art. I, § 8, cl. 3.)
In addition to its foregoing contention, Shell also asserts that the tax is improper under section 6352 of the Revenue and Taxation Code, which exempts from taxation the receipts from sales which the state is prohibited from taxing under the Constitution or laws of the United States or of California. We need not, of course, under the circumstances of this case consider this section independently of our consideration of the import-export and commerce clauses of the federal Constitution.
The vessels, to which the fuel here claimed to have been improperly taxed was sold and delivered, fall into three categories: ships registered in foreign countries and engaged in foreign commerce; ships registered in the United States and engaged in foreign commerce; ships registered in the United States and engaged in interstate commerce. As to all vessels engaged in foreign commerce, Shell contends first that bunker fuel oil is itself an "export" within the meaning of the import-export clause and, second that the tax is an improper levy against the "process of exportation."
As to sales to vessels in any of the categories, Shell asserts that the tax exposes commerce to direct and multiple tax burdens prohibited by the commerce clause of the federal Constitution and that, even were this not so, the tax is precluded because Congress has impliedly occupied the field of taxation of bunker fuel oil sold as ships' stores.
*718 The trial court rejected the foregoing contentions and upheld the tax as constitutional as applied to the sales in question. We are persuaded that the trial court has properly resolved the issues presented.
[1] Under the import-export clause, a state may not impose a tax against an article of export if the article has commenced its movement abroad and the "certainty of the foreign destination is plain." (Richfield Oil Corp. v. State Board of Equalization (1946) 329 U.S. 69, 82-83 [67 S.Ct. 156, 91 L.Ed. 80]; Gough Industries, Inc. v. State Board of Equalization (1959) 51 Cal.2d 746, 748-749 [336 P.2d 161]; see United States v. Hvoslef (1915) 237 U.S. 1, 13 [35 S.Ct. 459, 59 L.Ed. 813].) In the Richfield case oil was shipped to New Zealand with no portion of it being used or consumed in the United States. It was held at page 84 that California's sales tax could not constitutionally be applied, for oil was an export, and its delivery to the hold of the vessel was both "The incident which gave rise to the ... tax [and] ... a step in the export process."
The initial issue, therefore, is whether bunker fuel oil, sold for consumption by ships of foreign and domestic registry as they ply the oceans to foreign ports, can be characterized as an article of "export" within the meaning of the import-export clause. While the United States Supreme Court has left open the precise question of whether a "tax upon the sale of ... oil as ships' stores to vessels engaged in foreign commerce is ... an impost on ... exports ... prohibited by ... the Constitution" (McGoldrick v. Gulf Oil Corp. (1940) 309 U.S. 414, 429 [60 S.Ct. 664, 84 L.Ed. 840]), it and other courts have frequently stated that for an article to constitute an export within the meaning of the Constitution it must be intended for a destination in a foreign country. (See Alaska v. Arctic Maid (1961) 336 U.S. 199, 202 [81 S.Ct. 929, 9 L.Ed.2d 227]; Richfield Oil Corp. v. State Board of Equalization, supra, 329 U.S. 69, 83; Dooley v. United States (1901) 183 U.S. 151, 154-155 [22 S.Ct. 62, 46 L.Ed. 128].) [2] For an article to constitute an import it must actually be brought into this country (Woodruff v. Parham (1868) 75 U.S. (8 Wall.) 123, 131 [19 L.Ed. 382]), and it "is the logical sequence of the case of Woodruff v. Parham, that the word `export' should be given a correlative meaning and applied only to goods exported to a foreign country." (Dooley v. United States, supra, 183 U.S. 151, 154.) Thus, as it would seem unlikely that articles placed aboard ship for use on that vessel during a *719 voyage to the United States from a foreign land could be deemed imports (cf. Brown v. Maryland (1827) 25 U.S. (12 Wheat.) 419, 442 [6 L.Ed. 678]), so it would seem equally unlikely that fuel or other consumables utilized during the voyage from the United States to foreign shores could be classified as exports.
Shell relies upon infrequent language in some cases to the effect that because goods are intended for shipment out of the country, and not to return, they become exports. It has been stated that to export is merely to "carry or send abroad." (See Canton R.R. Co. v. Rogan (1951) 340 U.S. 511, 515 [71 S.Ct. 447, 451, 95 L.Ed. 488, 493, 20 A.L.R.2d 145, 149]; Matson Nav. Co. v. State Board of Equalization (1955) 136 Cal. App.2d 577, 583 [289 P.2d 73].) [3] A careful examination of these and other cases, however, demonstrates that to constitute an export, an article must not only be "sent abroad" but must be done so with "another country as the intended destination of the goods." (Matson Nav. Co. v. State Board of Equalization, supra, 136 Cal. App.2d 577, 583; see Richfield Oil Corp. v. State Board of Equalization, supra, 329 U.S. 69, 83.)
In a situation involving a statutory "drawback" "on the exportation" of an article, the United States Supreme Court held that because oil consumed as ships' stores was not an export, the suppliers of the oil were not entitled to a refund of import duties paid upon the importation of the oil (Swan & Finch Co. v. United States (1903) 190 U.S. 143 [23 S.Ct. 702, 47 L.Ed. 984].) The court declared that "Whatever primary meaning be indicated by its derivation, the word `export' as used in the Constitution and laws of the United States, generally means the transportation of goods from this to a foreign country. ... `[E]xportation is a severance of goods from the mass of things belonging to this country with an intention of uniting them to the mass of things belonging to some foreign country'.... It cannot mean simply a carrying out of the country, for no one would speak of goods shipped by water from San Francisco to San Diego as `exported,' although in the voyage they are carried out of the country. Nor would the mere fact that there was no purpose of return justify the use of the word `export.' Coal placed on a steamer in San Francisco to be consumed in propelling that steamer to San Diego would never be so designated. Another country or State as the intended destination of the goods is essential to the idea of exportation." (Swan & Finch Co. v. United States, supra, 190 *720 U.S. 143, 144-145, italics added; cf. McGoldrick v. Gulf Oil Corp., supra, 309 U.S. 414, at p. 428.)
Shell next argues that at least with respect to ships of foreign registry, the fuel oil constituted an export at the time of delivery, because such vessels are "foreign territory" and the oil came within "foreign dominion" immediately upon delivery.
[4] The concept that ships of foreign registry are foreign territory is a fiction upon which constitutional issues should not rest, even in part. (See Cunard S.S. Co. v. Mellon (1923) 262 U.S. 100 [43 S.Ct. 504, 67 L.Ed. 894, 27 A.L.R. 1306]; cf. Foppiano v. Speed (1905) 199 U.S. 501, 519-520 [28 S.Ct. 138, 50 L.Ed. 288].) Though "the statement [is] sometimes made that a merchant ship is a part of the territory of the country whose flag she flies.... this, as has been aptly observed, is a figure of speech, a metaphor.... The jurisdiction which it is intended to describe ... partakes more of the characteristics of personal than of territorial sovereignty.... It is chiefly applicable to ships on the high seas, where there is no territorial sovereign; and as respects ships in foreign territorial waters it has little application beyond what is affirmatively or tacitly permitted by the local sovereign.... [The assertion] that a ship is part of the territory of the country whose flag she carries ... is a fiction...." (Cunard S.S. Co. v. Mellon, supra, 262 U.S. at pp. 123-124; cf. Lauritzen v. Larson (1953) 345 U.S. 571, 585 [73 S.Ct. 921, 97 L.Ed. 1254].)
The logic of the Swan case applies equally to all vessels, regardless of the technicality of their registration. [5] An article delivered to a vessel which flies a foreign flag cannot, for that reason alone, be deemed to have been received at a foreign country or destination, and thus to become an "export" within the definitions promulgated by the United States Supreme Court.
[6] While a vessel's fuel supply is thus not itself an export in the constitutional sense, nevertheless if a tax on the sale of the fuel is a tax on the "process of exportation" the tax would be unconstitutional. "[I]mmunity runs to the process of exportation and the transactions and documents embraced in it." (Empresa Siderurgica, S.A. v. County of Merced (1949) 337 U.S. 154, 156 [69 S.Ct. 995, 93 L.Ed. 1276].)
[7] The process of exportation, for purposes of both the import-export clause and the prohibition against congressional levies upon exports from any state (U.S. Const., art. I, § 9, cl. 5), begins when goods are "committed to the common carrier *721 for transportation out of the State to the State of their destination, or have started on their ultimate passage to that State." (Coe v. Errol (1886) 116 U.S. 517, 525 [6 S.Ct. 475, 29 L.Ed. 715].) [8] Once an article has entered upon the process of exportation, the process may no longer constitutionally be taxed by any governmental entity. (See, e.g., Empresa Siderurgica, S.A. v. County of Merced, supra, 337 U.S. 154; Richfield Oil Corp. v. State Board of Equalization, supra, 329 U.S. 69.)
In a number of cases, a tax has been held unconstitutional, though not levied upon articles of export, because the tax was "the equivalent of a direct tax on the articles." (Canton R.R. Co. v. Rogan, supra, 340 U.S. 511, 513.) In this category fall a federal stamp tax on foreign bills of lading (Fairbank v. United States (1901) 181 U.S. 283 [21 S.Ct. 648, 45 L.Ed. 862]), a federal stamp tax on charter parties (United States v. Hvoslef, supra, 237 U.S. 1), and a stamp tax on policies of marine insurance covering export articles. (Thames & Mersey Marine Ins. Co. v. United States (1915) 237 U.S. 19 [35 S.Ct. 496, 59 L.Ed. 821].) The court in Thames & Mersey stated, at pages 25 to 27, that the question was whether the "tax upon [the insurance policies is] so directly and closely related to the `process of exporting' that the tax is in substance a tax upon the exportation.... The answer must be found in the actual course of trade.... It cannot be doubted that insurance during the voyage is ... an integral part of the exportation.... The rise in rates for insurance as immediately affects exporting as an increase in freight rates, and the taxation ... is as much a burden on exporting as if it were laid on the ... goods themselves. Such taxation does not deal with ... distinct or separable subjects; the tax falls upon the exporting process."
Taken literally, the quoted passage might seem to require, as Shell claims, the invalidating of a tax on any product, process or service somehow related to and necessary for exportation. The acceptance of such a contention would "lead back to every forest, mine, and factory in the land and create a zone of tax immunity never before imagined." (Canton R.R. Co. v. Rogan, supra, 340 U.S. 511, 515.) Such a broad and all-embrasive interpretation of the export clause has never been accepted. (See, e.g., Canton R.R. Co. v. Rogan, supra, 340 U.S. 511; Empresa Siderurgica, S.A. v. County of Merced, supra, 337 U.S. 154; Joy Oil Co. v. State Tax Com. (1949) 337 U.S. 286 [69 S.Ct. 1075, 93 L.Ed. 1366]; William E. Peck & Co. v. *722 Lowe (1918) 247 U.S. 165 [38 S.Ct. 432, 62 L.Ed. 1049]; Cornell v. Coyne (1904) 192 U.S. 418 [24 S.Ct. 383, 48 L.Ed. 504]; Pittsburgh etc. Coal Co. v. Bates (1895) 156 U.S. 577 [15 S.Ct. 415, 39 L.Ed. 538]; Coe v. Errol, supra, 116 U.S. 517.) In the Canton case a tax measured in large part by the gross receipts of a common carrier of export freight in the port city of Baltimore was upheld against import-export clause challenges. So, too, the court sustained a tax on operations involving freightage of export goods to the port. (Western Maryland Ry. Co. v. Rogan (1951) 340 U.S. 520 [71 S.Ct. 450, 451, 95 L.Ed. 501].)
Those cases wherein taxes have been successfully challenged involved taxes so closely related to particular articles of export that they may be characterized as the "equivalent of a direct tax on the articles." (Canton R.R. Co. v. Rogan, supra, 340 U.S. 511, 513; United States v. Hvoslef, supra, 237 U.S. 1; Thames & Mersey Marine Ins. Co. v. United States, supra, 237 U.S. 19.) [9] A sales tax levied against bunker fuel oil sold to a carrier vessel, however, is not related in any manner to the articles of export which the vessel may carry. The tax does not vary with the volume or value of the export articles. (See Crew Levick Co. v. Pennsylvania (1917) 245 U.S. 292, 297-298 [38 S.Ct. 126, 62 L.Ed. 295].) The amount of tax depends on the amount of fuel purchased; it will vary with the distance to be navigated, and will be imposed without regard to whether the vessel is burdened with export cargo. [10] "[T]he tax is not on the goods" shipped as exports (Canton R.R. Co. v. Rogan, supra, 340 U.S. 511, 514) but on the fuel used to further the transportation of such goods, a "distinct or separable subject" (Thames & Mersey Marine Ins. Co. v. United States, supra, 237 U.S. 19, 27), which may be taxed. [11] "An article may be an export and immune from tax long before or long after it reaches the port. But when the tax is on activities connected with the export or import the range of immunity cannot be so wide." (Canton R.R. Co. v. Rogan, supra, 340 U.S. 511, 514-515; cf. Martin Ship Service Co. v. City of Los Angeles (1950) 34 Cal.2d 793 [215 P.2d 24].) [12] Nor is the tax on the voyage itself; it is imposed on the sale of oil, not on its use in foreign commerce. (Cf. Eastern Air Transport, Inc. v. South Carolina Tax Com. (1932) 285 U.S. 147, 152-153 [52 S.Ct. 340, 76 L.Ed. 673].)
The contention that sales of fuel oil may properly be taxed under the import-export clause is re-enforced by a consideration of the cases decided under the commerce clause. The commerce *723 clause and the import-export clause are by no means "coterminous"; while no tax whatever may be imposed directly against exports, the commerce clause has been interpreted so as to accommodate state powers by upholding taxes "designed to make interstate commerce bear a fair share of the cost of the local government ... and by invalidating those which discriminate against interstate commerce, which ... place an undue burden on it.... [T]he two clauses, though complimentary, serve different ends. And the limitations of one cannot be read into the other." (Richfield Oil Corp. v. State Board of Equalization, supra, 329 U.S. 69, 75-76.) Yet when we go beyond the questions of fair burden, or of discrimination, and look to the basic principles, the cases decided under the commerce clause are of obvious relevance in considering issues to be determined under the import-export clause. It is difficult to understand how the tax imposed on the sale of bunker fuel oil could be considered to infringe on the process of exportation under the import-export clause, and yet be so unrelated to the processes of interstate commerce as not to constitute any burden on such commerce within the meaning of the commerce clause.
[13] The Supreme Court has determined that "`It is elementary' ... `that a State may tax property used to carry on interstate commerce'.... [T]he mere purchase of supplies or equipment for use in conducting a business which constitutes interstate commerce is not so identified with that commerce as to make the sale immune from a non-discriminatory tax imposed by the State upon intrastate dealers." (Eastern Air Transport, Inc. v. South Carolina Tax Com., supra, 285 U.S. 147, 152-153.) In Eastern Air the tax was imposed against the sale of fuel to interstate carriers when they were stopped at local airports. Although characterizing the tax as a "license tax," the court concluded at page 152 that even if "such a license tax for the privilege of making sales within the State were regarded as in effect a tax upon the goods sold, its validity could not be so questioned ... although the property might actually be used in interstate commerce." The tax in question, the court further held, could not be distinguished from taxes held valid and imposed upon the sale of fuel to railroad carriers in interstate commerce, or upon the vehicles of carriage themselves. (See also, Nathan v. Louisiana (1850) 49 U.S. (8 How.) 73, 80-81 [12 L.Ed. 992]; Edelman v. Boeing Air Transport, Inc. (1933) 289 U.S. 249, 252 [53 S.Ct. 591, 77 L.Ed. 1155]; Martin Ship Service Co. v. City of Los Angeles, supra, 34 Cal.2d 793, at p. 799.)
*724 [14] For the foregoing reasons we conclude that the instant tax is "a general tax, laid on all property alike, and not levied on goods in course of exportation, nor because of their intended exportation...." (Turpin & Bro. v. Burgess (1886) 117 U.S. 504, 507 [6 S.Ct. 835, 29 L.Ed. 988].) As a tax levied upon a subject related to but nevertheless distinct and separable from articles of export, the tax does not violate the import-export clause of the federal Constitution under the facts of the instant case.
The taxpayer next asserts that the sales "involve" interstate commerce, because contracts were executed and payments made outside California, and that all of the sales to vessels are exposed to multiple tax burdens. (See Gwin, White & Prince, Inc. v. Henneford (1938) 305 U.S. 434 [59 S.Ct. 325, 83 L.Ed. 272].)
[15] Within prohibited areas of state taxation of interstate commerce is a tax on the use of fuel as an instrumentality of interstate commerce, in interstate commerce. (Helson v. Kentucky (1929) 279 U.S. 245 [49 S.Ct. 279, 73 L.Ed. 683].) But a sales tax imposed generally upon purchases made locally for purposes of consumption is permissible, although the goods had just traveled in interstate commerce. (McGoldrick v. Berwind-White Coal Min. Co. (1940) 309 U.S. 33 [60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876].) [16] And a tax may be levied upon an intrastate transaction though the article sold or delivered is to be forthwith shipped out of the state. (Department of Treasury v. Wood Preserving Corp. (1941) 313 U.S. 62, 68 [61 S.Ct. 885, 85 L.Ed. 1188].) Directly in point, of course, is the decision of the Supreme Court upholding the tax on the sale of fuel to airplanes in interstate commerce, discussed above with reference to the import-export clause. (Eastern Air Transport, Inc. v. South Carolina Tax Com., supra, 385 U.S. 147.) In that case the court pointed out that even were the tax to be considered as levied directly upon the goods sold, "that aspect [of] the tax would be upon a part of the general mass of property within the state and hence subject to the state's authority to tax, although the property might actually be used in interstate commerce." (Eastern Air Transport, Inc. v. South Carolina Tax Com., supra, 285 U.S. 147, 152.) A state may "validly tax the `use' to which gasoline is put in withdrawing it from storage within the State, and placing it in the tanks of ... planes, notwithstanding that its ultimate function is to generate motive power for carrying on interstate commerce.... `[so long as the tax] falls short of a tax directly imposed on its use in interstate *725 commerce.' ..." (Edelman v. Boeing Air Transport., Inc., supra, 289 U.S. 249, 252.)
[17] The tax imposed on the sales of fuel in the instant case was not an unconstitutional burden under the commerce clause, for "a non-discriminatory tax upon local sales ... has never been regarded as imposing a direct burden on interstate commerce" (Eastern Air Transport, Inc. v. South Carolina Tax Com., supra, 285 U.S. 147, 153; Henneford v. Silas Mason Co. (1937) 330 U.S. 577, 582-583 [57 S.Ct. 524, 81 L.Ed. 814]), "notwithstanding that [the] ultimate function [of the fuel] is to generate motive power for carrying on interstate commerce." (Edelman v. Boeing Air Transport, Inc., supra, 289 U.S. 249, 252.)
[18] The taxpayer further asserts that because of the fiction of the territoriality of vessels and because of the home port doctrine of Hays v. Pacific Mail Steamship Co. (1854) 58 U.S. (17 How.) 596 [15 L.Ed. 254], the vessels here involved are subject to taxation by the state or country of their registry, and that therefore the tax is unconstitutional because the sale might be exposed to multiple burdens. This contention is also without merit.
First, there is no basis, in reality, for the fiction that the ships were foreign territory and that delivery of the fuel oil took place in a state or country outside California. Thus, even though the home port is the situs of the vessels for purposes of the levy of a property tax (see Hays v. Pacific Mail Steamship Co., supra, 58 U.S. (17 How.) 596), there is no ground under which other states could impose a tax on the identical transactions consummated in California, without violating the commerce and due process clauses of the Constitution. (Freeman v. Hewit (1946) 329 U.S. 249 [67 S.Ct. 274, 91 L.Ed. 265]; Miller Bros. Co. v. Maryland (1954) 347 U.S. 340 [74 S.Ct. 535, 98 L.Ed. 744]; McLeod v. J.E. Dilworth Co. (1944) 322 U.S. 327 [64 S.Ct. 1023, 88 L.Ed. 1304].) For the foregoing reason the Supreme Court was not troubled by any imagined problems of multiple taxation in the Edelman and Eastern Air cases where taxes nearly identical to the tax imposed by California in the instant case were upheld. As to the vessels registered abroad, Shell has failed to demonstrate that it has ever been the concern of any United States jurisdiction in construing the commerce clause that a foreign country might arbitrarily impose a tax on sales in the United States to one of its citizens, or to ships carrying its flag. In asserting that California may not tax such sales Shell's argument "erroneously *726 attributes to such taxation the risk of discrimination. Actually it is attributable to the freedom of foreign countries, not permitted to our own states, to adopt rules of their own that can result in multiple burdens. [19] The court cannot prevent foreign countries from taxing instrumentalities of foreign commerce owned by their domiciliaries.... It is without power to compel independent nations to adopt a uniform nondiscriminatory system of taxation. It does not follow that the states must forego the power to impose taxes that are not in themselves discriminatory." (Scandinavian Airlines System, Inc. v. County of Los Angeles (1961) 56 Cal.2d 11, 44-45 [14 Cal. Rptr. 25, 363 P.2d 25], Traynor, J., dissenting.)
Moreover, even were it true that the sale in California could be taxed by the state of the vessel's registry, or that taxes levied by a foreign country were a concern of the courts in determining the validity of a state tax under the commerce clause, appellant has failed to demonstrate that the sale is in fact subject to multiple burdens. [20] The abstract possibility that duplicative taxes might be levied by another jurisdiction against the identical transactions, is not the concern of the courts in determinations made under the commerce clause. "`[T]axpayers must show that the formula places a burden upon interstate commerce in a constitutional sense.' Appellant has not done this. It has not demonstrated what definite burden, in a constitutional sense, the St. Louis tax places on the identical interstate shipments by which Washington measures its tax.... And further, it has not been shown that Oregon levies any tax on appellant's activity bearing on Washington sales. In such cases we have refrained from passing on the question of `multiple taxation,' ... and we adhere to that position." (General Motors Corp. v. Washington (1964) 377 U.S. 436, 449 [84 S.Ct. 1564, 12 L.Ed.2d 430]; see Southern Pac. Co. v. Gallagher (1939) 306 U.S. 167, 172 [59 S.Ct. 389, 83 L.Ed. 586].)
The taxpayer finally contends that Congress, in enacting certain statutes, has "occupied the field" of taxation of fuel oil sold as ships' stores, and thus impliedly precluded state taxation of such commodities.
"There seems little doubt ... that under its power over interstate commerce, Congress can fix the bounds of state taxation of that commerce." (Hartman, State Taxation of Corporate Income (1959) 13 Vand.L.Rev. 21, 122; see McGoldrick v. Gulf Oil Corp., supra, 309 U.S. 414; cf. Michigan-Wisconsin Pipe Line Co. v. Calvert (1954) 347 U.S. 157, 165-166 [74 *727 S.Ct. 396, 98 L.Ed. 583].) Although there has been little direct discussion of the limits of federal preclusion with respect to the area of taxation, the rules are fairly clear in the area of regulation of commerce. [21] When there is a direct conflict between state and federal statutes, or if the subject demands uniformity of regulation, the state statute must fall; the question of implied prohibition, however, is another matter. (See Kelly v. Washington (1937) 302 U.S. 1, 9 [58 S.Ct. 87, 82 L.Ed. 3].)
[22] An issue of implied prohibition arises when a federal act impinges on subject matter which a state statute attempts also to regulate, even though there is no direct contradiction between the enactments. [23] "There is no constitutional rule which compels Congress to occupy the whole field. Congress may circumscribe its regulation and occupy only a limited field. When it does so, state regulation outside that limited field ... is not forbidden or displaced.... [24] [T]he exercise by the State of its police power ... is superseded only where the repugnance or conflict is so `direct and positive' that the two acts cannot `be reconciled or consistently stand together.'" (Kelly v. Washington, supra, 302 U.S. 1, 10.) [25] The intent to occupy the field is "`... not to be implied unless the act of Congress fairly interpreted is in actual conflict with the law of the State.'" (Huron Cement Co. v. Detroit (1960) 362 U.S. 440, 443 [80 S.Ct. 813, 4 L.Ed.2d 852, 78 A.L.R.2d 1294].) There is no reason to believe that the rule as to the implied occupation of the field of taxation is any more strict; it would indeed be difficult to contend that if Congress has taxed a particular item it thereby precludes a state levy against the same item.
[26] Appellant relies in part upon section 3451 of the Internal Revenue Code which, at the time of the sales here in question, read, as pertinent: "Under regulations prescribed ... no tax under this chapter shall be imposed upon any article sold for use as fuel supplies, ships' stores ... or legitimate equipment on vessels ... actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States.... Articles manufactured or produced with the use of articles upon the importation of which tax has been paid under this chapter, if laden for use as supplies on such vessels, shall be held to be exported for purposes of section 3430...." The chapter referred to in section 3451 (chapter 29 of the Internal Revenue Code of 1939) was entitled "Manufacturers' Excise and Import Taxes"; section 3422 of that *728 chapter imposed a tax upon the importation of petroleum and upon fuel oil and other products derived from such imported petroleum. Additionally, relevant provisions of the Tariff Act of 1930 provide that withdrawals under certain regulations from customs bonded warehouses or internal revenue bonded warehouses of supplies manufactured from certain imported oil and delivered for use by vessels and aircraft engaged in foreign trade are to be exempt from customs duties and internal revenue tax. (19 U.S.C. § 1309.)
In McGoldrick v. Gulf Oil Corp., supra, 309 U.S. 414, the Supreme Court held exempt from a sales tax levied by New York City deliveries of fuel oil refined from crude petroleum imported and confined to warehouses under bond as provided for under the above statutes and the federal regulations made pursuant thereto. The court pointed out at pages 425 and 426 that "From the time of importation until ... laden on vessels engaged in foreign trade, the imported petroleum and its product, the fuel oil, is segregated from the common mass of goods and ... is subject to the supervision and control of federal customs officers." The court made it clear that the oil remained separate from the mass of property subject to the tax upheld under the commerce clause in McGoldrick v. Berwind-White Coal Min. Co., supra, 309 U.S. 33.
The court determined that the statutes and multiple regulations involved in Gulf Oil represented a comprehensive regulation of imported oil. The enactments, including customs regulations specifically exempting imported goods in bonded warehouses from state taxation and deemed incorporated by reference into the Tariff Act of 1930, "... afford a comprehensive scheme for the regulation of the importation of the crude petroleum and of its control while in the course of manufacture in bond into fuel oil and its delivery as ships' stores...." The local tax conflicted with congressional policy, for "Congress provided for the segregation of the imported merchandise" in furtherance of the purpose of relieving the "importer of the import tax so he might meet foreign competition in the sale of fuel as ships' stores." (Pp. 426-428, italics added.)
The Gulf Oil case demonstrates that Congress intended to occupy only a limited field outside of which state regulations are not forbidden or displaced. (See Kelly v. Washington, supra, 302 U.S. 1, 9.) It is clear that the statutes invoked by Shell as construed in Gulf Oil do not purport to limit even the right of the federal government to levy taxes on sales of domestically *729 produced fuel oils from ordinary stocks, and certainly they are too circumscribed in their language and purpose to be deemed to occupy the field or conflict with the California sales tax imposed against the sales in the instant case.
The taxpayer has thus failed to demonstrate the invalidity of the tax in any respect. Accordingly, the judgment is affirmed.
Traynor, C.J., Peters, J., Tobriner, J., Burke, J., and White, J.,[*] concurred.
McCOMB, J., Concurring and Dissenting.
I would reverse that portion of the judgment denying a refund of sales taxes on fuel oil sold as ships' stores to vessels engaged exclusively in the export trade, for the reasons expressed by Mr. Justice Friedman in the opinion prepared by him for the District Court of Appeal in Shell Oil Co. v. State Board of Equalization (Cal. App.) 46 Cal. Rptr. 653.
In all other respects I would affirm the judgment.
NOTES
[1] Rev. & Tax. Code, § 6001 et seq. Section 6051 provides: "For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers ... [and applied against] ... the gross receipts ... from the sale...." Section 6052 states: "The tax hereby imposed shall be collected from the consumer insofar as it can be done."
[*] Retired Associate Justice of the Supreme Court sitting under assignment by the Chairman of the Judicial Council.
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316 S.W.2d 458 (1958)
H. N. BORDEN, Appellant,
v.
UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES et al., Appellees.
No. 15319.
Court of Civil Appeals of Texas, Dallas.
July 25, 1958.
Rehearing Denied October 10, 1958.
*459 Lyne, Blanchette, Smith & Shelton, Robert W. Smith, Dallas, for appellant.
Mullinax, Wells & Morris, Dallas, for appellees.
DIXON, Chief Justice.
Our opinion heretofore delivered in this case is withdrawn and the following opinion is substituted.
This is a damage suit brought in the 101st District Court of The State of Texas against two unincorporated labor unions by H. N. Borden, appellant, who alleges that he is a member of both organizations. The two organizations are United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, and Local Union 100 of said Association.
The trial court dismissed the suit on the grounds that (1) appellant "is a member of defendant labor organizations and thus has no standing to sue said organizations for money damages; and (2) "jurisdiction of a suit by an employee to recover for union interference with employment, or discrimination in employment opportunity, is within the exclusive jurisdiction of the National Labor Relations Board under the Federal Labor Management Relations Act, and accordingly this court is without jurisdiction."
In his petition appellant makes the following allegations: on September 15, 1953 he was promised a job in the construction of the Republic National Bank Building in Dallas, Texas, by Farwell Construction Company through the Company's superintendent and also one of the Company's foremen; appellant thereupon obtained a clearance from his local union in Galveston, Texas, where he then lived, came to Dallas, presented himself to Local Union 100 at Dallas for the purpose of being accepted in order that the might go to work on the job promised by Farwell Construction Company; Local Union No. 100 at first refused to accept appellant's clearance card, but finally on October 9, 1953 did accept said clearance card; nevertheless said Local Union No. 100, in violation of Art. 5207a, Vernon's Ann.Civ.St., did then and has since continued willfully, maliciously, discriminatorily and without cause to refuse to allow appellant to go to work on the job offered him in the construction of the Republic Bank Building; appellant thereafter sought redress by submitting his claims to appellee unions at a meeting held October 18, 1954, but no remedy was offered to him by either union in fact only a threat made *460 against him that if he should continue his complaint he would be expelled from the unions; appellant then sought and obtained employment elsewhere at a wage less than he would have been paid on the Republic National Bank job; and that the difference in wages during the period of time involved was $4,039.50. Appellant asked judgment for $4,039.50 damages for lost earnings, $5,000 as damages for mental anguish and suffering, and $1,000 as exemplary damages.
The only questions before us on this appeal are: (1) whether appellant had a right to sue appellee unions of which he was a member; and (2) whether such suit might be brought in a State court of the State of Texas.
The two labor unions, though unincorporated, are legal entities subject to being sued. International Association of Machinists v. Gonzales, 356 U.S. 617, 78 S.Ct. 923, 2 L.Ed.2d 1018; United Mine Workers of America v. Coronado Coal Company, 259 U.S. 344, 42 S.Ct. 570, 66 L.Ed. 975. In International Longshoremen and Warehousemen's Union, Decisions and Orders of N.L.R.B. Vol. 79, p. 1508, Note 40. (1948), it is said:
"The common law concept of an unincorporated labor organization as a group of individuals having no separate entity apart from its members has been discarded to the extent that it was not already outmoded in modern jurisprudence by the Labor Management Relations Act, 1947. It is clear that the Act treats labor organizations for all practical purposes as juridical entities."
The action may be a suit for damages. International Association of Machinists v. Gonzales, 356 U.S. 617, 78 S.Ct. 923, 2 L.E.2d 1018; Selles v. Local 174 of International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 50 Wash.2d 660, 314 P.2d 456.
In this case appellant is asserting a property right the right to seek employment, work, and earn a living. International Printing Pressmen and Assistants' Union of North America v. Smith, 145 Tex. 399, 198 S.W.2d 729; Gurtov v. Williams, Tex.Civ.App., 105 S.W.2d 328. Under the circumstances he has a right to sue the labor unions though he is a member of the unions. Choate v. Grand International Brotherhood of Locomotive Engineers, Tex., 314 S.W.2d 795; Lundine v. McKinney, Tex.Civ.App., 183 S.W.2d 265; McCantz v. Brotherhood of Painters, Decorators & Paperhangers, Tex.Civ.App., 13 S.W.2d 902; Dusing v. Nuzzo, 177 Misc. 35, 29 N.Y.S.2d 882; Nissen v. International Brotherhood, 229 Iowa 1028, 295 N.W. 858, 141 A.L.R. 598, 610; Arts. 5154g, Secs. 4 and 5, 5207a, V.A.C.S. Appellant's first point on appeal is sustained.
With reference to appellant's second point on appeal, it is the contention of appellee that the National Labor Relations Board has exclusive jurisdiction of appellant's claim, hence suit may not be brought in a State Court. Appellee relies on 29 U.S.C.A. § 158(b) (2), Labor Management Relations Act of 1947, § 8(b) (2), commonly known as the Taft-Hartley Act.
We are unable to agree with appellee. Appellant's suit is a tort action for damages. The National Labor Relations Board does not have jurisdiction of such claims. In United Construction Workers, affiliated with United Mine Workers of America v. Laburnum Const. Corp., 347 U.S. 656, 74 S.Ct. 833, 837, 98 L.Ed. 1025, it is said:
"Petitioners contend that the Act of 1947 has occupied the labor relations field so completely that no regulatory agency other than the National Labor Relations Board and no court may assert jurisdiction over unfair labor practices as defined by it, unless expressly authorized by Congress to do so. They claim that state Courts accordingly are *461 excluded not only from enjoining future unfair labor practices and thus colliding with the Board, as occurred in Garner v. Teamsters, [Chauffeurs and Helpers Local] Union [No. 776], 346 U.S. 485, 74 S.Ct. 161 [98 L.Ed. 228], but that state courts are excluded also from entertaining common-law tort actions for the recovery of damages caused by such conduct. * * * Congress has neither provided nor suggested any substitute for the traditional state court procedure for collecting damages for injuries caused by tortious conduct. For us to cut off the injured respondent from this right of recovery will deprive it of its property without recourse or compensation. To do so will, in effect, grant petitioners immunity from liability for their tortious conduct. We see no substantial reason for reaching such a result. The contrary view is consistent with the language of the Act and there is positive support for it in our decisions and in the legislative history of the Act. * * * The Labor Management Relations Act sets up no general compensatory procedure except in such minor supplementary ways as the reinstatement of wrongfully discharged employees with back pay." (Emphasis ours.)
We hold that the State Court has jurisdiction of appellant's suit. Choate v. Grand International Brotherhood of Locomotive Engineers, Tex., 314 S.W.2d 795; International Association of Machinists v. Gonzales, 356 U.S. 617, 78 S.Ct. 923, 2 L.Ed.2d 1018; International Union United Automobile, Aircraft and Agr. Implement Workers of America v. Russell, 356 U.S. 634, 78 S.Ct. 932, 2 L.Ed.2d 1030; Selles v. Local 174 of International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 50 Wash.2d 660, 314 P.2d 456; Baun v. Lumber & Sawmill Workers Union, Local No. 2740, 46 Wash.2d 645, 284 P.2d 275. Appellant's second point on appeal is sustained.
The judgment of the trial court is reversed and the cause is remanded for trial on the merits.
Reversed and remanded.
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Case: 15-10080 Document: 00513241698 Page: 1 Date Filed: 10/22/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-10080
Conference Calendar
United States Court of Appeals
Fifth Circuit
FILED
October 22, 2015
UNITED STATES OF AMERICA,
Lyle W. Cayce
Clerk
Plaintiff-Appellee
v.
SERGIO CHAVARRIA DELGADO,
Defendant-Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:13-CR-119-1
Before HIGGINBOTHAM, DENNIS, and HIGGINSON, Circuit Judges.
PER CURIAM: *
Appealing the judgment in a criminal case, Sergio Chavarria Delgado
raises an argument that is foreclosed by United States v. Alcantar, 733 F.3d
143, 145-46 (5th Cir. 2013). In Alcantar, we rejected the argument that Nat’l
Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566 (2012) (NFIB), affected our
prior jurisprudence rejecting challenges to the constitutionality of 18 U.S.C.
§ 922(g)(1). 733 F.3d at 146. Because 18 U.S.C. § 922(j) is substantially similar
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-10080 Document: 00513241698 Page: 2 Date Filed: 10/22/2015
No. 15-10080
to § 922(g), the same result is reached with respect to Delgado’s challenge to
it. See United States v. Luna, 165 F.3d 316, 319 (5th Cir. 1999). As Delgado
acknowledges, his challenge to § 922(g)(1) and (j) is foreclosed by our
jurisprudence, and, as explained in Alcantar, NFIB does not change this result.
The Government’s unopposed motion for summary affirmance is GRANTED,
its alternate motion for extension of time is DENIED, and the judgment of the
district court is AFFIRMED.
2
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82 B.R. 476 (1988)
In the Matter of Gregory Alan LADD, Debtor.
Bankruptcy No. 84-11101.
United States Bankruptcy Court, N.D. Indiana, Fort Wayne Division.
January 26, 1988.
F. John Rogers, Fort Wayne, Ind., for debtor.
Frank O. McLane, Marion, Ind., trustee.
ORDER
ROBERT E. GRANT, Bankruptcy Judge.
This proceeding began more than three years ago, with the filing of debtor's petition for relief under Chapter 11 on December 12, 1984. On February 17, 1987 a creditor, Lincoln National Bank, filed a motion to dismiss, convert, or appoint a trustee. That motion was premised, inter alia, upon debtor's incompetence and gross mismanagement, as well as unreasonable delay to the prejudice of creditors. Although this motion was set for a hearing on March 18, 1987, the court never had the opportunity to address its merits. Instead, on the day of the hearing, debtor filed its own motion to convert to Chapter 7, which was duly granted.
As a result of the debtor's motion to convert, Frank O. McLane was appointed trustee and a meeting of creditors was scheduled pursuant to 11 U.S.C. § 341. The debtor failed to appear, as required by 11 U.S.C. § 343, for this meeting. Accordingly it was rescheduled for June 2, 1987. When the debtor again failed to appear for the § 341 meeting, the trustee filed a motion to dismiss. That motion first came before the court on the afternoon of September 16, 1987. Although debtor did not appear, he was represented by his attorney, Mr. F. John Rogers.
At the dismissal hearing, Mr. Rogers pleaded, on behalf of his client, for further indulgence from this court, through yet a third opportunity for his client to appear at a § 341 meeting. The Trustee acquiesced and the indulgence was granted by the court's order of September 28, 1987, which scheduled the § 341 meeting for the morning of October 20, 1987. The order of September 28, 1987 further provided that debtor's failure to appear would result in dismissal, without further notice or hearing, upon receipt of such an affidavit from the trustee.
On October 27, 1987 the trustee filed his affidavit concerning the events of the first meeting of October 20. From the affidavit it appears that Mr. Ladd appeared at the meeting to be sworn but, shortly thereafter, left the courtroom before his case was called. He failed to return and testify. The ultimate result of the debtor's conduct is the same as if he had never bothered to appear at all.
This matter is now before the court on the trustee's affidavit for an order of dismissal.
No one can dispute that a debtor's refusal to cooperate with the bankruptcy court may constitute cause warranting dismissal. In re Mandalay Shores Co-Op Housing Association, Inc., 63 B.R. 842, 847 (Bankr. N.D.Ill.1986). Accordingly, the court has no doubt that the debtor's failure to obey *477 its orders and appear at three separate § 341 meetings, as required by 11 U.S.C. § 343, constitutes cause justifying dismissal, pursuant to 11 U.S.C. § 707(a). Instead, the question confronting the court is whether or not the circumstances are such that cause exists for dismissal with prejudice, pursuant to 11 U.S.C. § 349.
Where a case is dismissed as a result of a debtor's misbehavior, whether or not it is dismissed with prejudice is a question committed to the discretion of the bankruptcy court. In re Mandalay Shores, supra, 63 B.R. at 851. Nonetheless, in proceeding to address the question, this court recognizes that
a dismissal with prejudice is a drastic sanction which may affect substantial rights of the litigant and should only be used in extreme situations. In re Martin-Trigona, 35 B.R. 596, 601 (Bankr.S. D.N.Y.1983)
Consequently, cause justifying dismissal of a case, pursuant to § 707(a), is not necessarily sufficient cause to warrant dismissal with prejudice. See, In re Petro, 18 B.R. 566, 570 (Bankr.E.D.Pa.1982). Instead, dismissal with prejudice is generally thought to be "appropriate only where there is a clear record of delay and contumacious conduct . . ." In re Martin-Trigona, supra, 35 B.R. at 601. Most courts have, thus, chosen to evaluate a multiplicity of factors before determining whether or not dismissal with prejudice is warranted. This frequently involves a review of the debtor's overall conduct throughout the entire proceeding. See, In re Petro, supra and In re McClure 69 B.R. 282 (Bankr.N.D.Ind.1987)
The importance of the debtor's appearance and cooperation with the trustee at a § 341 meeting cannot be overemphasized. This is the first and frequently the only opportunity the trustee and creditors have to question the debtor concerning his financial condition, assets, and liabilities. In addition to the contents of the schedules, it is one of the major starting points for the trustee's administration of the bankruptcy estate. The information the debtor provides at this time assists the trustee in determining what assets, if any, are available for him to administer and their location. In the absence of the debtor's testimony, the administration of the bankruptcy estate is crippled and the trustee cannot properly fulfill his obligations under the Code.
The debtor has failed to appear for not one but three separate § 341 meetings. His disappearance from the most recent § 341 meeting, and by inferance his refusal to be questioned, has made a charade of the court's orders and the first meeting of creditors. Debtor's misconduct is compounded when one remembers that the opportunity for a third § 341 meeting was given at the debtor's request, to which the trustee acquiesced. The court believes that this, in and of itself, demonstrates sufficient delay and contumacious conduct to justify dismissal with prejudice. In re Martin-Trigona, supra, 35 B.R. at 602.
While the debtor's failure to appear for three separate § 341 meetings is a primary factor in court's decision to dismiss this proceeding with prejudice, it is not the only factor. Having reviewed the entire record since this proceeding was first initiated, the court is persuaded that there are a multiplicity of factors which combine to require dismissal with prejudice, under any standard. Prior to conversion, this case pended as a Chapter 11 reorganization for more than two years without a plan being confirmed or a disclosure statement being approved. These documents were not submitted until the same day the debtor was required to appear and show cause why they had not been filed timely, as required by the court's earlier orders. Similarly, although the debtor was required to file a final report, concerning its operations under Chapter 11 by April 22, 1987, this report was not filed until September 16, 1987 the same day that the debtor was required to appear and show cause why it had not been filed earlier.
The timing of the debtor's motion to convert is also instructive. As indicated above, it was filed on the same day as the hearing on the creditor's motion to dismiss, convert, or for appointment of a trustee. Consequently, although the debtor implicitly *478 acknowledged that the motion was well taken, he escaped having the court determine its merits. This court will not, however, indulge in any speculation concerning what the consequences of such a determination might have been.
Lastly, although a debtor-in-possession is required to file monthly operating reports, concerning its income and expenses during the Chapter 11 administration, the court's docket indicates the last such report is for the month of March, 1985.
Viewing this proceeding in its entirety, it appears that the debtor has done nothing more than seek the benefits of bankruptcy, without any willingness to accept the burdens or the concomitant obligations those benefits entail. Throughout this case, debtor has chosen to ignore or disobey the court's orders, complying, if at all, only when required to show cause as a result of his default. See, In re McClure, supra, 69 B.R. at 287. These factors, together with the debtor's disappearance from the most recent § 341 meeting, all combine to justify dismissal with prejudice.
The courts cannot afford to indulge litigants who . . . regard their own cases as mere frivolities. Significant failures and refusals to prosecute in accordance with the orders of the court and general rules of procedure can only be answered with dismissals. Otherwise, the delay . . . is sanctioned and encouraged by the court . . . It is therefore the duty of the court to exact compliance with its own orders and the governing procedural rules and to impose the penalty of dismissal for failure to comply in significant respects. Matter of Kleeman, 54 B.R. 62, 65 (Bankr.W.D.Mo.1985).
In this instance it is appropriate to impose not only the penalty of dismissal but also dismissal with prejudice. Additionally, since the debtor was automatically granted his discharge on August 3, 1987, that order must be rescinded. To do otherwise would make dismissal with prejudice a meaningless act.
IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that this case be and hereby is dismissed, with prejudice.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the order discharging the debtor dated August 3, 1987 be and is hereby rescinded.
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No. 98-11336
-1-
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-11336
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
WILLIAM MORRIS RISBY,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:98-CR-94-1-H
--------------------
February 29, 2000
Before JOLLY, JONES, and BENAVIDES, Circuit Judges.
PER CURIAM:*
William Morris Risby appeals from his convictions and
sentence for conspiracy to embezzle, pay and receive kickbacks,
and money laundering; aiding and abetting embezzlement; aiding
and abetting receiving kickbacks; and aiding and abetting money
laundering. He argues that the district court erred by refusing
to conduct a Kastigar hearing, that he received multiple
punishments for the same offense, that the district court abused
its discretion by limiting Risby’s cross-examinations of witness
George Garrett and codefendant James Hargrave, and that the
district court erred by increasing Risby’s offense level pursuant
*
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. 98-11336
-2-
to U.S.S.G. § 3C1.1 for obstruction of justice. We have reviewed
the record and find no reversible error. The record shows that
the immunity granted to Risby did not extend to the contents of
any records he produced. Further, because the offenses in Counts
20-38 required proof of additional facts that the offenses in
Counts 39-57 did not require, see Blockburger v. United States,
284 U.S. 299 (1932), and because the substantive offenses for
which Risby was convicted did not necessarily require the
participation and cooperation of two persons, see United States
v. Payan, 992 F.2d 1387, 1389-90 (5th Cir. 1993), Risby’s
contention that he received multiple punishments for the same
offense is also without merit. The district court did not abuse
its discretion by limiting Risby’s cross-examination of two
witnesses. See Fed. R. Evid. 608(b). Finally, given the
information contained in the PSR, the district court did not err
by increasing Risby’s base offense level by two for obstruction
of justice. Accordingly, the judgment of the district court is
AFFIRMED.
AFFIRMED.
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978 F.2d 709
Johnsonv.Stalder**
NO. 92-4263
United States Court of Appeals,Fifth Circuit.
Oct 20, 1992
1
Appeal From: W.D.La.
2
AFFIRMED.
**
Conference Calendar
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
April 17, 2008
No. 07-14069 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 07-20110-CR-JEM
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JOSE REYES-REYES,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(April 17, 2008)
Before MARCUS, WILSON and PRYOR, Circuit Judges.
PER CURIAM:
Miguel Caridad, appointed counsel for Jose Reyes-Reyes, has moved to
withdraw from further representation of the appellant and filed a brief pursuant to
Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967). Our
independent review of the entire record reveals that counsel’s assessment of the
relative merit of the appeal is correct. Because independent examination of the
entire record reveals no arguable issues of merit, counsel’s motion to withdraw is
GRANTED, and Reyes-Reyes’s conviction and sentence are AFFIRMED.
2
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17 So.3d 1239 (2009)
BENNETT
v.
STATE.
No. 5D08-4193.
District Court of Appeal of Florida, Fifth District.
September 1, 2009.
Decision without published opinion. Affirmed.
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106 F.2d 368 (1939)
STATE COMPENSATION INSURANCE FUND et al.
v.
BANKERS INDEMNITY INSURANCE CO.
No. 9074.
Circuit Court of Appeals, Ninth Circuit.
August 11, 1939.
Rehearing Denied September 22, 1939.
C. S. Bucher, Keith & Creede, Gordon S. Keith, Frank J. Creede, and Percy J. Creede, all of San Francisco, Cal., for appellants.
Charles B. Morris and Leo J. McEnerney, both of San Francisco, Cal. (J. Bruce Fratis and Julius M. Keller, both of San Francisco, Cal., of counsel), for appellee.
Before GARRECHT, HANEY, and STEPHENS, Circuit Judges.
GARRECHT, Circuit Judge.
On the 25th day of February, 1933, John J. Dalton entered into an oral agreement with the County of Alameda, State of California, whereby he was to furnish an automobile truck with a driver and do work on Grizzly Peak Road No. 1. This work was to consist in hauling dirt back and forth to and from certain locations on the job. In addition to the truck with driver, Dalton was to furnish gas and oil and exhibit a policy providing for *369 public liability insurance. Dalton was to be paid $1.50 per hour for 7 hours per day, half an hour of this time was allowed for going from the camp to the place where the work was to be done and taking with him about 20 men, and half an hour for bringing them back to the camp at night. He was to report to and work under the direction of Superintendent Pixley in charge of the work for the County.
On the Sunday evening before February 27, 1933, Dalton drove his truck to the camp from which he was to begin work the next day. On the following Monday morning Dalton reported to Pixley, who instructed him to pick up some men and take them up to Grizzly Peak Road. He further directed Dalton that after arrival at the place of work he was to put in his time hauling dirt. Dalton followed these instructions and was engaged in hauling dirt back and forth until about 3:30 in the afternoon when the foreman under Pixley directed him to bring the men he had taken up in the morning back down to the camp. He obeyed these instructions and was returning with these workingmen to the lower camp when he lost control of the truck which resulted in the deaths of Jesse Bradley and John Adam Corrick and in personal injuries to Leonard Clark, Frank Haberkam, Ernest Burbank, Dudley de Leon, D. A. Barek, H. Coneff, Howard Cason, John Maillet and Claude de Vold. Each of said persons were being transported by said Dalton in his automobile truck under and pursuant to the agreement entered into between him and the County of Alameda.
The State Compensation Insurance Fund insured the County of Alameda for its liability under the Workmen's Compensation Laws and as a result of the injuries and deaths it paid death benefits to the widows of Bradley and of Corrick (the amount of the Bradley benefit, the only one appearing in the pleadings herein, being $1,150) and paid certain sums to and for Clark, and an additional sum of $404.97 to and for the other injured men.
Thereafter, the State Compensation Insurance Fund commenced an action in the Superior Court of the State of California, County of Alameda, against John Dalton in behalf of itself and in behalf of the widow and minor child of Jesse Bradley for the damages arising from the death of Bradley. A trial of this action resulted in a judgment in favor of the plaintiff and against Dalton in the sum of $7,500 (under Section 26, Workmen's Compensation Act of the State of California, Stat. of Calif. 1917, Chapter 586 as amended, any amount collected by said plaintiff in excess of the expenditures would be paid to Mrs. Bradley and her child). This judgment was sustained on appeal to the District Court of Appeal of the State of California (see State Compensation Insurance Fund v. Dalton, 13 Cal.App.2d 284, 56 P.2d 962) and the Supreme Court of the State of California denied rehearing.
Thereafter a trial in an action brought by Mrs. Corrick resulted in a judgment in her favor and against Dalton in the sum of $6,000; Leonard Clark recovered judgment in his action against Dalton in the sum of $4,000; and State Compensation Insurance Fund recovered a separate judgment against Dalton in the sum of $404.97 in its action for its expenditures to and for the several men who received minor injuries.
Executions were issued on each of these judgments which later were returned unsatisfied; thereupon the actions here involved were commenced.
State Compensation Insurance Fund first filed its action in the Superior Court of the State of California against appellee, Bankers Indemnity Insurance Company, alleging that the latter had issued an insurance policy to John J. Dalton, which policy required appellee to satisfy any judgment recovered against Dalton for liability arising out of damages caused by himself and his truck on February 27, 1933. Later, similar actions were commenced on the other judgments recovered by appellants. All of these actions were removed by appellee to the District Court of the United States for the Northern District of California, Southern Division. Thereafter, appellee filed an amended answer and cross-complaint for declaratory relief. All the actions were in effect consolidated.
The following are pertinent provisions of the liability insurance policy involved on this appeal:
"Bankers Indemnity Insurance Company * * * In Consideration of the Premium Hereinafter Provided and of the Declarations Forming a Part Hereof Does Hereby Agree with the Assured subject to the Exclusions herein and the Conditions printed on the second page of this policy:
*370 "(1) To Pay on behalf of the Assured All Sums (within the limits as expressed in the Declarations) which the Assured shall become obligated to pay by reason of the liability imposed by law upon the Assured for damages, including consequential damage resulting from loss of services and expenses, arising out of bodily injuries, and/or death resulting therefrom, accidentally suffered, or alleged to have been suffered, by any person or persons, by reason of the ownership, maintenance and/or use of any of the automobiles described in said Declarations (including carrying of goods thereon and the loading and unloading thereof);
* * * * * *
"Exclusions
"The Company shall not be liable under this Policy for * * * claims arising from the use of any automobile for purposes other than those specified in the Declarations.
* * * * * *
"Basis of Premium
"A. The premium is based upon the number and character of the automobiles and the uses to which same are to be put as described in the Declarations herein.
* * * * * *
"Declarations
"1. Name of Assured: John J. Dalton.
* * * * * *
"4. The business of the Assured is Hauling dirt for City of Oakland.
* * * * * *
"9. The purposes for which the described automobiles are and will be used are: Commercial use.
* * * * * *
"(b) The term `Commercial' when used is defined as usual to the business of the named Assured as described above including loading and unloading of goods.
"10. None of the insured automobiles are or will be rented to others, except as follows: No Exceptions.
"11. None of the insured automobiles are or will be used to carry passengers for a consideration, actual or implied, except as follows: No Exceptions."
In addition to the foregoing provisions contained in the general policy, there is annexed to the policy an endorsement which provides for the amendment of the policy to conform with the requirements of Chapter 259, California Laws of 1929, and laws supplementary thereto. An excerpt from said endorsement reads as follows:
"California Financial Responsibility Act Endorsement
"The Policy to which this endorsement is attached is amended to conform with the requirements of Chapter 259, California Laws of 1929, and all laws amendatory thereof or supplementary thereto which may be or become effective while this Policy is in force, as respects any liability for bodily injury or death or liability for property damage covered by this Policy, but only to the extent of the coverage and the limits of liability required by said Chapter and only with respect to the motor vehicles disclosed in the Policy.
"It is further agreed that to the extent of the coverage required by said Chapter and within the limits stated in said Chapter, this Policy is subject to the following additional provisions:
"(a) The Liability of the Company under this Policy shall become absolute whenever loss or damage covered by the Policy occurs, and the satisfaction by the Assured of a final judgment for such loss or damage shall not be a condition precedent to the right or duty of the Company to make payment on account of such loss or damage. Upon the recovery of a final judgment against the Assured for any such loss or damage the judgment creditor shall be entitled to have the insurance provided by this endorsement applied to the satisfaction of the judgment.
* * * * * *
"(c) It is further provided that the Assured or any other person covered by the Policy shall reimburse the Company for payments made on account of any accident, claim or suit involving a breach of the terms, provisions or conditions of the Policy, which payments the Company would not have been obligated to make under the provisions of the Policy independently of this endorsement or of the provisions of said Chapter."
Upon stipulation the cause was tried by the court sitting without a jury. At the conclusion of the evidence appellants made a motion for judgment and also requested special findings of fact and declarations and conclusions of law. The court found for appellee and made findings of fact and conclusions of law and judgment thereon was entered in favor of appellee *371 and against all appellants. From this judgment comes this appeal.
The questions presented concern no factual conflict, but involve the legal effect of the evidence and the proper construction of the terms of the contract of insurance and of certain statutes of the State of California as related to the provisions of the policy.
Pertinent provisions of the California Vehicle Act in effect at the time of this accident are: Sec. 73(g); Sec. 73½; Sec. 36½; Sec. 36¾.[1]
Appellants insist that under California Statutes of 1929, p. 563, Chapter 259, supra, and particularly by reason of the "California Financial Responsibility Act Endorsement," quoted above, which was attached to this policy, appellee was obligated to discharge these judgments even if Dalton had not conformed with some of the terms of the policy.
*372 It appears that the language of the endorsement on the policy limits the liability for injury or death "to the extent of the coverage required by said chapter and within the limits stated in said chapter," but said statute referred to, in effect at the time the policy was issued and the accident occurred, did not require any such general policy of indemnity to be carried by all operators of motor vehicles. The requirement was absolute only if an owner or operator sought to avoid cancellation or suspension of his ownership or operator's license after a judgment against him for personal injuries occasioned through the operation of a motor vehicle remained unsatisfied for a period of time, or when he had been convicted of an offense under Sections 112 or 141 of the Vehicle Act St.1929, pp. 537, 545.
Upon this point the District Court found: "That at the time of the issuance of said policy, and throughout the term thereof, said John J. Dalton had not done, or omitted to do any act or become responsible for any act or omission, as a result of which compliance in any respect was required by John J. Dalton with the provisions of Chapter 259 of the California Statutes of 1929, or any laws or statutes supplementary thereto or amendatory thereof effective during the term of said policy, and that the obligations expressed in said policy were not extended, modified or enlarged by reason of the annexation or existence of said endorsement at any time during the term of said policy."
As the language of the endorsement seeks to limit the coverage to cases where indemnity is required by the statute we cannot say the District Court was wrong in its holding, particularly where the courts of California have not construed this statute and where the opinion of the court is in harmony with decisions from other states. Rasinski v. Metropolitan Casualty Ins. Co., 117 N.J.L. 490, 189 A. 373; American Lumbermen's Mut. Casualty Co. v. Trask, 238 App.Div. 668, 266 N.Y.S. 1.
Appellants also cite California Statutes of 1919, p. 776, Chapter 367,[2] and maintain that in Ocean Accident & Guarantee Corporation v. Torres, 9 Cir., 91 F.2d 464, this court there decided that the case of Malmgren v. Southwestern Automobile Ins. Co., 201 Cal. 29, 255 P. 512, was authority for holding that an *373 injured third party who was given the right to sue on a policy of insurance by said Act could not be circumvented or defeated by any provision which the insurer may have elected to place in the contract of insurance in derogation of or in conflict with the statute; and it is argued that the limitation contained in the policy, that there could be no recovery for an injured person carried for a consideration, actual or implied, was abrogated by said Act.
Since the decision in the Torres case, the Supreme Court of California in Western Machinery Co. v. Bankers Indemnity Ins. Co., 10 Cal.2d 488, 75 P.2d 609, 611, held that "In the absence of any law declaring the obligation of the insurer in that respect, the conclusion is compelling that the injured person is bound by the limitations contained in the policy." The decision also stated that upon the point discussed here, the Malmgren decision had been repudiated by the later case of Hynding v. Home Acc. Ins. Co., 214 Cal. 743, 7 P.2d 999, 85 A.L.R. 13. Upon this question then we must conclude that according to California law, as presently interpreted by its highest court, the injured person is bound by the limitations contained in the policy.
We next examine three specifications of error separately stated by appellants whereby it is asserted that at the time of the accident the truck (a) was being used by the assured in a commercial use, usual to the business of assured of hauling dirt including the loading and unloading thereof; (b) was not being used in carrying passengers for a consideration within the meaning of the terms of the policy; and (c) was being used by the assured and not being rented to others. These contentions the trial court directly or impliedly determined contrary to the claims of appellants.
Appellee argues that the trial court's findings on these matters being based upon some evidence are binding on this court. However, it is to be noted that upon the argument and in the briefs, all parties agreed that there being no conflict in the evidence there is no factual dispute and that therefore the questions presented involved only a determination of the law as applied to the facts.
There is considerable discussion in the briefs as to whether or not under the contract between the County of Alameda and Dalton the latter was acting as a servant of the County or as an independent contractor and also as to whether or not the truck involved was rented to the County. However, ultimately, both sides seem to have reached the conclusion that the truck was not rented, which eliminates that question from any further discussion, nor does it seem necessary to decide what Dalton's relationship to the County was. All parties are in agreement that by the contract Dalton was to furnish the truck, driver, gas, oil and liability insurance and work in connection with road construction on the Grizzly Peak Road; that he was to take instructions from Superintendent Pixley; that he was to be paid $1.50 per hour for 7 hours each day, Dalton to work approximately six hours a day hauling on the road project, the additional hour to be utilized in transporting a group of workers, who were also working on the project, from the camp to the construction job in the morning and to return them in the evening. The pertinent questions to be decided then are: (1) Were the workmen so transported passengers for a consideration; and (2) was such use of the truck contemplated within the terms of the policy.
The policy of insurance contains the following restriction: "None of the insured automobiles are or will be used to carry passengers for a consideration, actual or implied, except as follows: No Exceptions." There has been much discussion concerning the interpretation to be placed on this declaration. Appellants argue that the transportation of the workers was incidental to the business at hand and was permissible under the policy and the workers were not passengers, and in support of their position cite the case of Jasion v. Preferred Acc. Ins. Co., 113 N.J.L. 108, 172 A. 367.
The policy states that the business of the insured is that of hauling dirt. At the time the policy was issued Dalton was employed for that purpose by the City of Oakland. At that time it was not part of his employment to transport men to or from work. In fact, as he testified, it never had been part of his duties to carry workmen in connection with his employment at any time except on this road work where the accident occurred. So far as the transportation of workmen in his truck having been usual or incidental to Dalton's business at, or prior to, the time of the issuance of the policy, the evidence *374 is to the contrary and the finding of the trial court in this regard must be sustained.
The evidence further shows that it was part of Dalton's contract with the County that for a portion of his time each day his truck was to be used by him to transport the road workers to and from the place of work and he was to receive compensation for this service at the same rate of pay as for his work in hauling dirt.
On these facts the trial court held that at the time of the accident the truck was being used to transport passengers for a consideration contrary to the meaning of the terms of the policy. We cannot say that this determination was erroneous.
There was a sufficiently definite pecuniary benefit to be derived by Dalton from the transportation of these workers. It was part of his legal obligations for which he received compensation and the transaction was within the inhibition of the policy.
In the case of Western Machinery Co. v. Bankers Indemnity Ins. Co., 10 Cal.2d 488, 75 P.2d 609, the court held that a possibility of a future purchase of goods did not constitute consideration as contemplated by the insurance policy, and while it cited the case of Neilson v. American Mutual Liability Ins. Co., 111 N.J.L. 345, 168 A. 436, the court did not positively state a rule as to what would constitute consideration, nor has it done so in any case that has been brought to our attention.
However, the trend of the courts of California may be indicated by certain language used in Haney v. Takakura, 2 Cal. App.2d 1, 37 P.2d 170, where in an action for damages for personal injuries the question involved was whether plaintiff, who had accompanied defendant in his car to assist in marketing defendant's oranges, was a guest or was paying compensation for the ride by conferring a "definite benefit" upon the owner of the car. In the course of the opinion, 2 Cal.App.2d on page 5, 37 P.2d on page 172, occurs this significant paragraph: "A somewhat similar question was before the court in the case of Sullivan v. Richardson (defendant) and McCord et al. (appellants), 119 Cal. App. 367, 6 P.2d 567, 569. The plaintiff in that case was a prospective purchaser of real estate; was taken for a ride in an automobile for the purpose of viewing the property being offered for sale by the defendant. It was contended by the appellant McCord that he was entitled, as a matter of law, from the evidence, to the finding that the plaintiff was a guest. The court found that the appellant was a passenger. The opinion of the court is as follows: `Under the law, she could not be held to occupy both relationships of "guest" and "passenger" at the same time and under the same circumstances. To be a passenger does not necessarily imply that there should be payment in money for transportation. Champagne v. A. Hamburger & Sons, 169 Cal. 683, 692, 147 P. 954. It may be by contract, either express or implied, and the contract need not be between the carrier and passenger, but may be between the carrier and a third person for the passenger. Orr & Lanning v. Boockholdt, 10 Ala.App. 331, 65 So. 430, 431. "It is enough that there is any consideration for the carriage. * * *"' Citing additional cases."
In the absence of anything more definite from the courts of California we adhere to the holding of this court in the case of Jensen v. Canadian Indemnity Co., 9 Cir., 98 F.2d 469. See also, Neilson v. American Mutual Liability Ins. Co., supra; Gross v. Kubel, 315 Pa. 396, 172 A. 649, 95 A.L.R. 146; Orcutt v. Erie Indemnity Co., 114 Pa.Super. 493, 174 A. 625; Wood v. American Automobile Ins. Co., 109 Kan. 801, 202 P. 82; 26 California Law Review 503; 37 Michigan Law Review 920.
The foregoing conclusions render it unnecessary to pass on any other assignment of error.
Affirmed.
NOTES
[1] By Chapter 258 of the California Statutes of 1929, pp. 558, 560, Sec. 73 was amended to read as follows:
"Sec. 73 * * * (g) The operator's or chauffeur's license and all of the registration certificates, of any person, in the event of his failure to satisfy every judgment within fifteen days from the time it shall have become final, rendered against him by a court of competent jurisdiction in this or any other state, or in a district court of the United States, for damages on account of personal injury, or damages to property in excess of one hundred dollars, resulting from the ownership or operation of a motor vehicle by him, his agent, or any other person with the express or implied consent of the owner, shall be forthwith suspended by the chief of the division of motor vehicles, upon receiving a certified copy of such final judgment or judgments from the court in which the same are rendered and shall remain so suspended and shall not be renewed nor shall any other motor vehicle be thereafter registered in his name while any such judgment remains unsatisfied and subsisting, and until the said person gives proof of his ability to respond in damages, as defined in section 36½ of this act, for future accidents. * * *"
By Chapter 259 of the California Statutes of 1929, p. 563, passed, approved and in effect on the same date, a new section was added to the California Vehicle Act as follows:
"Sec. 36½. Proof of ability to respond in damages. Proof of ability to respond in damages when required by this act, shall mean proof of ability to respond in damages, resulting from the ownership, or operation, of a motor vehicle, and arising by reason of personal injury to, or death of, any one person, of at least five thousand dollars, and, subject to the limit of five thousand dollars for each person injured or killed, of at least ten thousand dollars for such injury to, or the death of, two or more persons in any one accident, and for damage to property (in excess of one hundred dollars) of at least one thousand dollars resulting from any one accident. Such proof of ability to respond in damages may be given, either, by
"(1) The written certificate or certificates of any insurance carrier duly authorized to do business within the state, that it has issued to or for the benefit of the person named therein a motor vehicle liability policy or policies as defined in section 36¾ of this act, which, at the date of said certificate or certificates is in full force and effect, and * * *
"(2) The bond of a surety company duly authorized to do business within the state, or a bond of individual sureties * * *
"(3) Evidence presented to the chief of the division of motor vehicles of a deposit by such person with the state treasurer of a sum of money, the amount of which money shall be eleven thousand dollars; * * *."
And in the same Act an additional new section was added as follows:
"Sec. 36¾. `Motor vehicle liability policy,' as used in this act, shall be taken to mean a policy of liability insurance issued, by an insurance carrier authorized to transact business in this state, to the person therein named as insured, which policy shall designate, by explicit description or by appropriate reference, all motor vehicles with respect to which coverage is intended to be granted by said policy, and shall insure the insured named therein, and any other person using or responsible for the use of any such motor vehicle, with the consent, express or implied, of such insured, against loss from the liability imposed upon such insured by law or upon such other person for injury to, or death of, any person, other than such person or persons as may be covered, as respects such injury or death by any workmen's compensation law, or damage to property, except property of others in charge of the insured or the insured's employees growing out of the maintenance, use or operation of any such motor vehicle in the United States of America; or which policy shall, in the alternative, * * *."
By Chapter 1026, of California Statutes of 1931, pp. 2099, 2110, an additional new section was added to the California Vehicle Act, which reads as follows:
"Sec. 73½. Showing of financial responsibility required following conviction for certain offenses.
"(a) Whenever any person shall be convicted upon a charge of violation of any of the provisions of sections 112 or 141 of the California vehicle act, and time for an appeal shall have elapsed without an appeal having been taken, or after any said appeal has been taken and judgment of conviction affirmed, the clerk of the court in which said judgment was rendered, shall immediately report the facts to the division of motor vehicles, and the division of motor vehicles shall thereupon suspend the operator's or chauffeur's license of the person so convicted, and such suspension shall remain in effect unless and until the person so convicted and whose license is suspended shall give proof of financial responsibility in accordance with the provisions of sections 36½ and 36¾ of the California vehicle act."
[2] "Section 1. No policy of insurance against loss or damage resulting from accident to or injury suffered by another person and for which the person insured is liable other than a policy of insurance under the workmen's compensation, insurance and safety act of 1917 or any subsequent act on the same subject, or, against loss or damage to property caused by horses or other draught animals or any vehicle, and for which loss or damage the person insured is liable, shall be issued or delivered to any person in this state by any domestic or foreign insurance company, authorized to do business in this state, unless there shall be contained within such policy a provision that the insolvency or bankruptcy of the person insured shall not release the insurance carrier from the payment of damages for injury sustained or loss occasioned during the life of such policy and stating that in case judgment shall be secured against the insured in an action brought by the injured person or his heirs or personal representatives, in case death resulted from the accident, then an action may be brought against the company, on the policy and subject to its terms and limitations, by such injured person, his heirs or personal representatives as the case may be, to recover on said judgment. Upon any proceeding supplementary to execution, the judgment debtor may be required to exhibit any policy carried by him insuring against the loss or damage for which judgment shall have been obtained."
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371 Mich. 563 (1963)
124 N.W.2d 736
PEOPLE
v.
LEE.
Calendar No. 14, Docket No. 50,194.
Supreme Court of Michigan.
Decided December 2, 1963.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, Samuel H. Olsen, *564 Prosecuting Attorney, Samuel J. Torina, Assistant Prosecuting Attorney, for the people.
Marvin Blake, for defendant.
Amicus Curiae:
American Civil Liberties Union of Michigan, by Rolland R. O'Hare, Erwin B. Ellmann, and Melba A. Kopel, of counsel.
O'HARA, J.
Defendant was convicted of possession of narcotics.[*] The circumstances of his arrest are best related by direct quotations from the testimony of the arresting officers:
Direct Examination Sergeant Charles Wolfenden:
"Q. Now, at the time you made this arrest what was your reason for the arrest?
"A. I observed the defendant make a righthand turn off the expressway at Harper and Van Dyke. His license plate, which was attached to the bumper, was bent down in underneath the bumper, and I couldn't read it or actually tell that he had a license plate there.
"Q. In other words, the vehicle you observed had a license plate which was improperly displayed and defaced in a manner that would not identify it?
"A. That's right, sir.
"Q. And for that reason you stopped him?
"A. That's right, sir.
"Q. Did you yourself engage the driver in a conversation?
"A. I did.
"Q. Did you ask for his [driver's] license?
"A. I did.
"Q. And did he display his [driver's] license?
"A. He did.
*565 "Q. And, following that, did you ask him or did you direct him to move so you could make a mechanical check of the mechanical safety of the vehicle?
"A. I talked with the defendant, and he got out of the car and came back between the cars, where I talked to him, and I went at that time to make a mechanical check.
"Q. And what was your purpose? That is, what part of the vehicle were you checking?
"A. The brakes, sir.
"Q. And in order to check the brakes did you have to place yourself in the driver's seat?
"A. I did.
"Q. Now, in so doing, describe just what you did and what happened.
"A. As I went to get in the car, why, there was a little cushion in the driver's seat there, and I lifted up the cushion to place it over on the other side, out of the way, and that's when I observed 5 cigarettes there that I observed to be marihuana cigarettes from my experience."
Cross-examination Sergeant Charles Wolfenden:
"A. We were stopped on the service drive just the service drive of the expressway just west of Van Dyke. * * *
"Q. Now, what were your duties at that time?
"A. My duties my specific duties are gambling and vice.
"Q. Gambling and vice. You weren't actually assigned to anything pertaining to traffic?
"A. Well, that takes in my duty also, sir. * * *
"Q. Generally, as a matter of fact, you don't make any stops except for moving violations, is that correct?
"A. That's right, sir."
Cross-examination Officer James Sinnamon:
"Q. And were you, yourself, able to read the license plate?
*566 "A. No, I wasn't.
"Q. Did you look at it?
"A. Yes.
"Q. Now, this would seem to you an insignificant offense, wouldn't it?
"A. Well, it could be, yes. * * *
"Q. Now, after the vehicle passed by the side and then in front of your vehicle you proceeded to follow that car?
"A. That is right.
"Q. Is that true?
"A. Yes.
"Q. You saw no moving violation, did you?
"A. No. * * *
"Q. And was anything further done in relation to the license plate?
"A. No, there wasn't. * * *
"Q. No ticket was given to the defendant for any violation, State or local, is that correct?
"A. No."
Cross-examination Officer Clements Krause:
"Q. Now, officer, on that particular day by the way, what was that date, again?
"A. February 12th.
"Q. You were assigned to clean-up?
"A. That's right.
"Q. And what are your duties in relation to the clean-up assignment?
"A. Well, you work in the suppression of liquor, gambling and vice.
"Q. You're not assigned specifically, then, to traffic violations, are you?
"A. Not necessarily, no.
"Q. And I take it, then, that you don't concern yourself with any traffic violations unless they are of more or less major consequence?
"A. Well, we do stop cars for traffic violations, yes, sir. We
"Q. Moving violations?
"A. Moving violations,"
*567 The foregoing testimony graphically recites the real reason defendant was stopped by the vice squad.
Care must be taken in specifying what we decide in this case. As courts of last resort on occasions must do, we so specify by particularizing what we do not decide. We do not here construe PA 1949, No 300, chapter 6, § 715 (CLS 1956, § 257.715 [Stat Ann 1960 Rev § 9.2415]), authorizing uniformed police officers on reasonable grounds to stop any motor vehicle and inspect it for defects in equipment, including brakes, for the reason that it clearly is not involved. There is no suggestion in the testimony that the officers had reasonable grounds to make an inspection of the brakes on defendant's car. Nowhere do we find any advertence to the fact that they, in fact, stopped the car in question with a view toward the enforcement of the above statute. Contrariwise, all of the testimony indicates that officers decided to make a mechanical check of the brakes, and for that purpose enter the car after it had been stopped because of the condition of the license plate. The officers were entitled to stop the vehicle for this reason, and had they chosen, to ticket for that violation. This right, however, did not extend to fulfilling the requirement of the quoted statute that there be "reasonable grounds shown" to stop a motor vehicle "to inspect the same."
By reason of this holding, we specifically do not decide whether, had the entry into the motor vehicle been made legally, the narcotics were legally seized.
It is distasteful, indeed, to have to disregard the fact that defendant here possessed narcotics. Their ultimate disposition may have been sale to innocent thrill-seeking young people. But distasteful or no, we cannot permit a State statute aimed at control of the operation of unsafe vehicles to be utilized, as appears conclusively from the total record, as a device *568 to supply probable cause, where none exists, to enter a motor vehicle.
Michigan's Constitution (1908), art 2, § 10 provides:
"The person, houses, papers and possessions of every person shall be secure from unreasonable searches and seizures. No warrant to search any place or to seize any person or things shall issue without describing them, nor without probable cause, supported by oath or affirmation."
The constitutional safeguard against unreasonable searches and seizures, to be operative at all, manifestly must prohibit unauthorized entries into those places or things secured against the unreasonable search or seizure. People v. Zeigler, 358 Mich 355, extended the prohibition against unauthorized search to an automobile. Implicitly, therefore, it extended the prohibition against entry thereunto as well. The entry here was constitutionally prohibited. It is not necessary to decide, nor do we decide in this case, whether what the officers did upon entering the automobile constituted a "search" in the constitutional sense. The entry being in contravention of the constitutional right of defendant, obviously the narcotics were illegally seized. They were inadmissible either upon examination or trial. No other evidence upon which an arrest, let alone a binding over, or conviction, could be based was offered.
The evidence should have been suppressed. The conviction is set aside.
CARR, C.J., and DETHMERS, KELLY, BLACK, KAVANAGH, SOURIS, and SMITH, JJ., concurred.
NOTES
[*] See CLS 1956, § 335.153 (Stat Ann 1957 Rev § 18.1123). REPORTER.
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877 So.2d 831 (2004)
S.C., the mother, Appellant,
v.
DEPARTMENT OF CHILDREN AND FAMILIES, Appellee.
No. 4D03-4669.
District Court of Appeal of Florida, Fourth District.
July 7, 2004.
Frank A. Kreidler, Lake Worth, for appellant.
Jeffrey Dana Gillen, West Palm Beach, for appellee.
STONE, J.
We affirm an order terminating the mother's parental rights to two children following the mother's default.
The Department of Children and Families ("Department") filed a petition to terminate the mother's parental rights in April 2003. The children had been living in Florida with their father since 1999; however, the father died in November 2002. The mother lived in Virginia.
In June 2003, the court held a permanent commitment advisory hearing for the permanent commitment of the children and for termination of the mother's parental rights. The mother was personally served with a summons and notice. Prior to the hearing, the mother informed Department that she was unable to personally appear. In turn, Department advised her that she could appear by telephone from her Virginia home. Department instructed the mother to stand by the telephone between 2:00 p.m. and 3:00 p.m. on June 11, 2003. The court was informed of and agreed to this arrangement. The court called the mother's correct phone *832 number at 2:21 p.m. and again at 2:38 p.m. Department also attempted to contact the mother throughout the hearing, however, the mother never answered the calls.
As a result of the mother's failure to appear at the hearing, the court declared a default, took testimony regarding the children's best interests, and terminated the mother's parental rights based on "constructive consent." The mother did not appeal the order but did, thereafter, contact Department, claiming that she had telephone problems on the day of the hearing. At that time, and in light of a status hearing scheduled for July 23, 2003, Department requested the mother be provided legal counsel. Hearings were held on July 23, 2003 and July 30, 2003, unattended by the mother, regarding the appointment of legal counsel. The mother filed an affidavit of insolvency on July 29, 2003, and the court appointed an attorney to the mother on July 30, 2003. The attorney then filed a motion to set aside default.
The mother was afforded an opportunity to appear at a status check on August 20, 2003, but she again failed to do so. Counsel for the mother advised the court that, while he wanted to seek to vacate the default order, the mother had failed to get back to him concerning the "basic information" he needed. The status check was reset for September.
The mother was present, for the first time, at the October hearing on her motion to set aside default. There, the mother testified that she had a working telephone and that when the court called her on June 11, 2003, she answered the telephone and "said hello twice," yet nobody was there. The mother later changed her testimony, this time stating:
I recognized Florida number on my caller I.D. and, I believe I tried calling it back. And, It also depends on what time did I receive the call from Florida. Cause, I might have and, I'll correct myself. I might have not been home at the time that you made that call ...; But, I might have went out and tried to make it back I time enough to get the phone call. And, I might have not made it back in time.
After listening to a tape recording of the June 11 hearing, and considering the mother's testimony and demeanor, the trial court found her testimony full of "contradictions" and "inconsistencies." The court further found that the mother's testimony was not credible and that her failure to appear was not a result of mistake, inadvertence, surprise, or excusable neglect. Therefore, the court denied the mother's motion to set aside default and ordered the termination of her parental rights.
The trial court did not abuse its discretion in denying the mother's motion to set aside default. Because the trial court heard the evidence and observed the mother's demeanor, this court should not re-weigh the lower court's conclusions as to her truthfulness. See Rathburn v. Dep't of Children & Families, 826 So.2d 521, 523 (Fla. 4th DCA 2002). Further, section 39.801(3)(d), Florida Statutes, and Florida Rule of Juvenile Procedure 8.510(a)(3), provide statutory and procedural authority for the court to accept a parent's failure to appear at an advisory hearing as constructive consent to termination of parental rights by default. See In re W.C., 797 So.2d 1273, 1274 (Fla. 1st DCA 2001). These provisions recognize the trial court's authority to terminate parental rights even if the parent does not participate in the hearing process. J.B. v. Dep't of Children & Families, 768 So.2d 1060, 1067 (Fla. *833 2000).[1]
Certainly, this court has made it clear that constructive consent in termination of parental rights cases should be a disfavored result. See R.P. v. Dep't of Children & Families, 835 So.2d 1212, 1214 (Fla. 4th DCA 2003); A.M. & Z.M. v. Dep't of Children & Families, 853 So.2d 1084 (Fla. 4th DCA 2003)(arriving at a hearing one hour late because the parents were mistaken about the public transportation schedule); A.J. v. Dep't of Children & Families, 845 So.2d 973 (Fla. 4th DCA 2003)(where parents arrived 25 minutes late for the third day of the hearing because they had been delayed by public transportation). In those opinions, we recognized that custody and dependency should not be decided by "gotcha" practices when a parent makes a reasonable effort to be present at a hearing and is delayed by circumstances beyond his or her control. A.J., 845 So.2d at 976. The circumstances in those cases, however, are significantly different from those found here; in each of those cases the parent's failure to appear was accompanied by a reasonable effort and a reasonable explanation.
Other courts contrast parents who fail to appear at a hearing without a reasonable explanation with those who have made some reasonable effort to be present. In In re W.C., a father, living out of state, did not personally appear at an advisory hearing concerning the termination of his parental rights. 797 So.2d at 1274. Finding that the father had been adequately noticed of the hearing requiring his presence, the First District held that the clear language of section 39.801(3)(d), Florida Statutes, revealed the legislature's intent to require the personal participation of any parent risking a termination of rights. Id. at 1275. While recognizing the significance of a parent's rights, the court concluded that the father's intentional failure to appear amounted to constructive consent. Id. at 1276. See J.T. v. Dep't of Children & Families, 800 So.2d 692, 693-94 (Fla. 5th DCA 2001)(holding that where parents failed to appear at the advisory hearing, their failure to provide the court with a reasonable excuse for their absence supported termination under section 39.801(3)(d)).[2]See also S.B. v. Dep't of Children & Families, 851 So.2d 689, 693 (Fla.2003)(suggesting, and although decided on another issue, the supreme court was not troubled by a dependency adjudication founded on constructive consent).
Here, the mother has provided the court with no reasonable excuse for her failure to appear by telephone. To the contrary, she provides contradictory stories to support her lack of response, first explaining that she heard her phone ring and that she answered the phone, then claiming that there was a problem with her otherwise working telephone, and finally admitting that she was not even home on the day of the noticed hearing. Here, despite the efforts of the court and Department to accommodate the mother's alleged inability to travel from Virginia to Florida, the trial court reasonably concluded, particularly when she made no appearances at any of the preceding hearings and had not visited either of her children in the past three years, that the mother intentionally failed to appear at, or participate in, the hearing.
The mother also contends that the court acted improperly by allowing her to appear *834 by telephone, suggesting that section 39.801(3), Florida Statutes, prohibits a parent from appearing by telephone. However, neither the plain language of the statute nor case law indicate that an agreement between the parties and the trial court for a parent to appear by telephone is improper.
As a result of Department's consent for the mother to appear at the July 11th proceeding by telephone, she argues that the trial court erred in the delayed appointment of counsel. Therefore, the mother asserts that Department's consent caused her to not attend the hearing, at which time she would have been provided the services of a court-appointed lawyer. In other words, Department's efforts to accommodate the mother, by consenting to a telephone appearance because she could not travel to Florida, led to the mother's delay in proving indigency and subsequent delay in appointing counsel. We reject this reasoning because the responsibility for the mother's failure to travel to Florida, to participate in the hearing by telephone, or to follow-up if there was a problem with her phone, lies with her and not the trial court or Department. To hold otherwise would suggest that the trial court or Department could not accommodate a parent in this manner where providing for participation by telephone is necessary and reasonable.
We also note that it was Department, on its own accord, that requested the court to appoint counsel to the mother and, when so advised, the court granted the request.
We, therefore, conclude that the mother has failed to demonstrate reversible error or abuse of discretion.
KLEIN and TAYLOR, JJ., concur.
NOTES
[1] We note that the mother does not challenge the default judgment based on lack of notice or insufficient service of process.
[2] We note that Department also argues that there are many other cases in which constructive consent has been upheld by this court but where the issue has not been addressed by written opinion.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-4435
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
RENE ELLIS, a/k/a Money, a/k/a Nut,
Defendant - Appellant.
On Remand from the United States Supreme Court.
(S. Ct. Nos. 04-5765; 04-6471)
Submitted: September 28, 2005 Decided: December 16, 2005
Before MOTZ, TRAXLER, and KING, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
James P. Craig, CRAIG LAW FIRM, P.C., Columbia, South Carolina, for
Appellant. Jonathan S. Gasser, Acting United States Attorney,
Marshall Prince, Assistant United States Attorney, Jimmy C. Ewing,
Esq., OFFICE OF THE U.S. ATTORNEY, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Rene Ellis was convicted by a jury of aiding and abetting
three bank robberies (Counts One, Five, and Eight), conspiracy to
carry firearms during and in relation to bank robberies in
violation of 18 U.S.C. § 924(o) (2000) (Count Four), and three
substantive counts of aiding and abetting violations of 18 U.S.C.
§§ 924(c), 2 (2000) (Counts Two, Six, and Nine). We affirmed his
sentence of 852 months imprisonment, and subsequently denied
rehearing. United States v. Ellis, No. 03-4435 (4th Cir. Mar. 17,
2004) (unpublished).
Ellis filed a petition for writ of certiorari in the
United States Supreme Court. His petition was granted, and this
court’s judgment was vacated in light of the decision in United
States v. Booker, 125 S. Ct. 738 (2005). Ellis v. United States,
125 S. Ct. 1047 (2005). Ellis’ case has been remanded to this
court for further proceedings.
Because Ellis’ sentence was imposed prior to the
decisions in Booker and its predecessor, Blakely v. Washington, 542
U.S. 296 (2004), he did not raise objections to his sentence based
on the mandatory nature of the sentencing guidelines or the
district court’s application of sentencing enhancements based on
facts not admitted by him or found by the jury beyond a reasonable
doubt. Therefore, we review his sentence for plain error. United
States v. Hughes, 401 F.3d 540, 546-60 (4th Cir. 2005).
- 2 -
We first note that, in his supplemental brief, Ellis
again asserts that the district court erred in imposing consecutive
sentences for the § 924(c) convictions in Counts Two, Six, and
Nine. He raised the issue before this court previously, and we
rejected it, concluding that “the district court did not err in
imposing the statutorily required consecutive sentences.” United
States v. Ellis, 2004 WL 515542 at *2. Ellis does not claim that
the § 924(c) sentences were error under Booker. Therefore, further
review of the issue is foreclosed by the mandate rule. See United
States v. Bell, 5 F.3d 64, 66 (4th Cir. 1993). The mandate rule
“compels compliance on remand with the dictates of a superior court
and forecloses relitigation of issues expressly or impliedly
decided by the appellate court.” Id.
Ellis received a four-level role adjustment that the
district court determined should apply on Counts One, Four, and
Eight, over Ellis’ objection, and a one-level loss adjustment on
Count Five which he did not contest. Without the role adjustment,
Ellis’ total offense level for Counts One, Five, and Eight would
have been 22. The total offense level for Count Four would have
been 24. A four-level multiple-count adjustment would have applied
under U.S. Sentencing Guidelines Manual § 3D1.4 (2002), making the
combined adjusted offense level 28. Because Ellis was in criminal
history category IV, the guideline range would have been 110-137
months. The 168-month sentence imposed by the district court
- 3 -
therefore exceeded the maximum permitted based on the facts found
by the jury, and violated the Sixth Amendment. The sentence thus
meets the standard for plain error that must be recognized under
the reasoning set out in Hughes.*
Accordingly, we vacate the sentence and remand for
resentencing consistent with Booker. Although the sentencing
guidelines are no longer mandatory, Booker makes clear that a
sentencing court must still “consult [the] Guidelines and take them
into account when sentencing.” 125 S. Ct. at 767. On remand, the
district court should first determine the appropriate sentencing
range under the guidelines, making all factual findings appropriate
for that determination. Hughes, 401 F.3d at 546. The court should
consider this sentencing range along with the other factors
described in 18 U.S.C.A. § 3553(a) (West 2000 & Supp. 2005), and
then impose a sentence. Id. If that sentence falls outside the
guidelines range, the court should explain its reasons for imposing
a non-guidelines sentence as required by 18 U.S.C.A. § 3553(c)(2).
Id. The sentence must be “within the statutorily prescribed range
and . . . reasonable.” Id. We dispense with oral argument because
the facts and legal contentions are adequately presented in the
*
Just as we noted in Hughes, “[w]e of course offer no
criticism of the district court judge, who followed the law and
procedure in effect at the time” of Ellis’ sentencing. Hughes, 401
F.3d at 545 n.4. See generally Johnson v. United States, 520 U.S.
461, 468 (1997) (stating that an error is “plain” if “the law at
the time of trial was settled and clearly contrary to the law at
the time of appeal”).
- 4 -
materials before the court and argument would not aid the
decisional process.
VACATED AND REMANDED
- 5 -
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 01-8057
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
EDWARD ALLEN PINEIRO,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of Virginia, at Charlottesville. James H. Michael, Jr.,
Senior District Judge. (CR-97-39, CA-00-341-7)
Submitted: May 9, 2002 Decided: May 29, 2002
Before TRAXLER and KING, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Edward Allen Pineiro, Appellant Pro Se. Jean Barrett Hudson,
OFFICE OF THE UNITED STATES ATTORNEY, Charlottesville, Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Edward Allen Pineiro seeks to appeal the district court’s
order denying his motion for reconsideration of the denial of his
“Motion to include New ruling addressing breach of plea agreement
by non-fulfillment of promise.” Our review of this case reveals
that this claim previously was raised by Pineiro and rejected by
this court in review of Pineiro’s appeal of the denial of his
motion filed under 28 U.S.C.A. § 2255 (West Supp. 2001), in United
States v. Pineiro, No. 01-6981 (4th Cir. Dec. 18, 2001)
(unpublished). Accordingly, we dismiss the appeal. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
DISMISSED
2
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210 P.3d 778 (2007)
WHITE
v.
STATE, DEP'T OF CORRECTIONS.
No. 41961.
Supreme Court of Nevada.
February 2, 2007.
Decision without published opinion. Affirmed.
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341 F.Supp.2d 950 (2003)
James E. MIDDLEBROOK and Mae Middlebrook, Plaintiffs,
v.
CITY OF BARTLETT, et al., Defendants.
No. 01-2706 M1/Bre.
United States District Court, W.D. Tennessee, Western Division.
March 7, 2003.
*951 *952 Joedae L. Jenkins, Tyrone Jamal Paylor, Law Office of Joedae Jenkins, Memphis, TN, for Plaintiffs.
Edward J. McKenney, Jr., Hanover Walsh Jalenak & Blair, Memphis, TN, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
MCCALLA, District Judge.
Before the Court is Defendants' Motion for Summary Judgment, filed September 9, 2002. Plaintiff responded in opposition on November 8, 2002. Defendants filed a reply brief on November 15, 2002. For the following reasons, the Court GRANTS in part and DENIES in part Defendants' motion.
I. Background
This case concerns Plaintiffs' attempts to obtain a building permit from the City of Bartlett ("Bartlett"). Plaintiff James Middlebrook purchased a 1.42 acre tract of land in Bartlett at the corner of Billy Maher Road and Fiske Road in 1993. Plaintiff's property is located in the extreme northwest corner of Bartlett. Plaintiff's property has never been connected to either Bartlett's water or sewer system.
A. Plaintiffs' Initial Request for a Building Permit
Plaintiff desired to build a home on this piece of land. He hired someone to draw blueprints for the house and, beginning in late 1995, he attempted to obtain a building permit from Bartlett.
In order to obtain a building permit in Bartlett, a property owner must have either sewer service or a septic tank. In order for a property owner to obtain permission to install a septic tank, the property must be at least two acres with access to public water, or at least four acres if public water is not available.
Plaintiff's property was not connected to either Bartlett's sewer or water system in 1995. Therefore, Plaintiff would have been required to include plans for a septic tank in the plans for his house. Defendant William McClanahan, who was the Bartlett City Engineer in 1995, met with Plaintiff and initially informed him that he could not build a house on his property because he did not own two acres of land.[1] Mr. McClanahan believed that all landowners were required to own at least two acres of land before they would be allowed to install a septic tank. Given that Plaintiff owned only 1.42 acres of land, Mr. McClanahan *953 informed him that he could not build on the land because he was not allowed to install a septic tank. Mr. McClanahan also apparently informed Plaintiff that it would cost $7,000 to run the water line to his property and $20,000-$40,000 to provide sewer service to his property. Mr. McClanahan then referred Plaintiff to Defendant Charles Goforth, who served as Bartlett's Director of Planning and Development in 1995. Mr. Goforth confirmed that Plaintiff could not build a house on the property given the acreage.
Plaintiff has stated that although he went to City Hall in 1995 to obtain a building permit, he never filled out an application for a building permit for the property or supplied Bartlett with all of the required documentation. However, he also states that he was never informed of all of the requirements for receiving a building permit (i.e. the requirements listed in paragraph 6 of the Affidavit of Ancil P. Austin).
In February of 1997, Mr. Goforth again met with Plaintiff and informed[2] him that the Shelby County Health Department had made an exception for his parcel of land in 1975[3] that allowed a septic tank to be used notwithstanding the two acre minimum requirement. Mr. Goforth informed Plaintiff that, in accordance with this exception, he could build a house on the property if he installed a septic tank. Plaintiff has stated that he was willing to install a septic tank at that time.
B. Requests for Water and Sewer Service
However, Plaintiff still needed a water connection in order to install a septic tank. On February 24, 1997, Mr. McClanahan requested that the Public Works Director schedule an extension of the water line to Plaintiff's property as soon as possible. Before Bartlett was able to run a water line to Plaintiff's property, Memphis Light, Gas & Water ("MLGW") ran a water line down Billy Maher Road to within forty feet of Plaintiff's property in 1997. This water line is apparently located across the street from Plaintiff's property.
Plaintiff would be required to pay MLGW a fee to connect to its water line. According to Mr. Goforth, the fee to connect to the MLGW line is less than the cost to connect to the line that Bartlett had planned to extend to Plaintiff's property.
Mr. Goforth states that he informed Plaintiff in late 1997 or early 1998 about the MLGW line. Plaintiff claims to have had monthly contact with Mr. Goforth between mid-1997 until October of 1998 in an attempt to obtain information regarding *954 sewer and water service. However, Plaintiff's affidavit states that he was never informed prior to April 29, 1999 that MLGW had run a water line near his property to which he could connect. This is contradicted by Plaintiff's deposition testimony, in which he states that he was told the price to connect to the MLGW water line would be $500-$750. He apparently discussed this with Mr. McClanahan some time prior to November 9, 1998, at which time Plaintiff informed Mr. McClanahan that he thought this was a good price and he wanted to be hooked up to the MLGW water line. In his deposition, Plaintiff stated that he believed Mr. McClanahan refused to hook him up to MLGW because of his race.
In his deposition, Plaintiff also testified that he spoke with Mr. Goforth in October of 1998. According to Plaintiff, Mr. Goforth told him that he would not be getting either water or sewer from Bartlett. Plaintiff states he viewed this as race discrimination.
On December 8, 1998, Mr. Goforth confirmed at a public meeting of the Board of Mayor and Aldermen that Plaintiff could install a septic tank on his property. At the meeting, Plaintiff stated that he did not want to install a septic tank because he preferred a Bartlett sewer connection.
In January of 1999, Bartlett adopted the Sewer Extension Plan to provide sewer service to the twenty-one areas in Bartlett that did not have them. According to Mr. McClanahan, these areas include residents of all races. The area where Plaintiff's property is located is scheduled for sewer installation in 2005.
Plaintiff met with Jay Rainey, Bartlett's Chief Administrative Officer, and Kenneth Fulmar, Bartlett's Mayor, in February of 1999, and advised them that he had received conflicting information in the past as to whether he could build on his property with a septic tank. In March of 1999, Mr. Rainey sent Plaintiff a letter confirming that he could install a septic tank on his property if he wanted to build on the property before Bartlett made sewer service available. Mr. Rainey also confirmed that Mr. McClanahan had originally given Plaintiff incorrect information regarding the two acre requirement because Mr. McClanahan did not have access to Plaintiff's plat and the exception allowing a septic tank at the initial meeting.
In response to a request from Plaintiff, Mr. McClanahan sent Plaintiff a letter in April of 1999 telling him to speak with Kevin Poe at MLGW about connecting to MLGW's water line. Mr. McClanahan informed Plaintiff that he could apply for a building permit upon installing a septic tank. When Plaintiff spoke with Mr. Poe in May of 1999, Plaintiff was told that he could not hook up to MLGW's water line until Mr. Poe received permission from Bartlett. Plaintiff claims that he spoke with Mr. McClanahan in May of 1999, at which time Mr. McClanahan said he would take care of it. Plaintiff asserts he then spoke with Mr. Poe in May and June of 1999 and was told that Mr. Poe had not received approval from Mr. McClanahan.
Mr. McClanahan responded to another letter from Plaintiff in January of 2000. Plaintiff requested information about extending sewer service from the nearby Daybreak Subdivision to his property. Mr. McClanahan informed Plaintiff that the topography of the land prohibited extension of the gravity sewer system from the subdivision to Plaintiff's property.
Mr. Rainey also responded to questions from Plaintiff in January of 2000. Mr. Rainey informed Plaintiff that Code Enforcement reviews the lot, site plans, and a drawing of where the building is to be located on a lot in response to a request for a building permit. Mr. Rainey again informed Plaintiff that he could install a *955 septic tank, but would be required to connect to MLGW's water supply to do so.
In addition to requesting information regarding sewer service and building permit requirements, Plaintiff claims that he called Mr. McClanahan almost weekly from June of 1999 until August of 2000 to check on the approval to MLGW. Plaintiff met with Mr. Poe at MLGW in August of 2000, after which Mr. Poe sent Mr. McClanahan a letter on August 25 requesting approval to provide water service to Plaintiff's property. Mr. McClanahan received the letter and authorized the water connection on September 6, 2000. Mr. McClanahan stated in his affidavit that he never received another request to authorize service for Plaintiff other than the one he signed and returned to MLGW.
Plaintiff has stated that, notwithstanding the fact that MLGW has already provided a water line in Plaintiff's area, Plaintiff still wants Bartlett to run a city water line to his property because he pays Bartlett city taxes. Bartlett maintains that it has never run a water line to an area that already has access to a water line.
Plaintiff's neighbors are Caucasian individuals and both have septic tanks. According to Mr. McClanahan and Mr. Fulmar, the Daybreak Subdivision, which is built around the Quail Ridge Golf Course, is the only property in the area which has a sewer system. The developer installed the sewer system in this subdivision. The subdivision is composed of families of all races. According to Mr. Fulmar, it is not feasible to run a gravity sewer line from the golf course located near Plaintiff's property given the topography of the land. Bartlett claims that it will have to bring the sewer system to Plaintiff's property from another location approximately 2400 feet away. As part of the Sewer Extension Schedule, this should occur by the year 2005.
In support of his claims of discrimination based on race, Plaintiff claims that Miss Carolyn Swindell[4], a Caucasian individual, received a building permit to build a house with a septic tank on a plot of land that is less than two acres. Ms. Swindell does not actually live in Bartlett; she lives in Shelby County and received her building permit from Shelby County. However, she received water service from Bartlett that enabled her to build a home with a septic tank. Plaintiff's Complaint indicates he became aware in January of 1997 that Ms. Swindell received her water connection from Bartlett. Plaintiff also claims that he has been denied access to the Bartlett sewer system based on race.
The Tennessee Department of Transportation previously investigated Plaintiff's claim of discrimination in violation of Title VI. The investigator determined that he could not substantiate Plaintiff's complaint. The Department of Housing and Urban Development ("HUD") previously investigated Plaintiff's claim of discrimination in violation of Title VIII of the Civil Rights Act of 1968 and the Fair Housing Act of 1988. HUD determined that there was no reasonable cause to believe a discriminatory housing practice had occurred.
Pursuant to the advice of counsel, Plaintiff has not attempted to obtain access to MLGW's water line or to obtain permission to construct a house on his property pending the outcome of this litigation.
Plaintiffs have sued Defendants alleging violations of 42 U.S.C. §§ 1982, 1983, and 3601, the common law of Tennessee, and the Tennessee Human Rights Act, Tenn.Code Ann. § 4-21-101, in connection with *956 Bartlett's failure to issue a building permit or provide sewer or water service to Plaintiffs' property.
II. Summary Judgment Standard
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper "if ... there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Supreme Court has explained that the standard for determining whether summary judgment is appropriate is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1989).
So long as the movant has met its initial burden of "demonstrat[ing] the absence of a genuine issue of material fact," Celotex, 477 U.S. at 323, 106 S.Ct. 2548, and the nonmoving party is unable to make such a showing, summary judgment is appropriate. Emmons v. McLaughlin, 874 F.2d 351, 353 (6th Cir.1989). In considering a motion for summary judgment, "the evidence as well as all inferences drawn therefrom must be read in a light most favorable to the party opposing the motion." Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir.1986); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
III. Analysis
Defendants assert that Plaintiffs' claims are barred by the applicable statutes of limitations. Defendants also assert that Plaintiffs' claims fail as a matter of law because water service has been available to Plaintiffs' lot since 1997 and Plaintiffs have been able to build a house on their lot using a septic tank as their Caucasian neighbors have been required to do.
A. Statute of Limitations
Defendants challenge Plaintiffs' claims under the federal civil rights statutes, the Fair Housing Act, and the Tennessee Human Rights Act as barred by the applicable statutes of limitations.
1. 42 U.S.C. §§ 1982, 1983
In all actions brought under § 1983 alleging a violation of civil rights or personal injuries, the state statute of limitations governing actions for personal injuries applies. Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985). The Tennessee statute of limitations for civil rights violations under § 1982 or § 1983 is one year. Tenn.Code Ann. § 28-3-104(a)(3); Berndt v. Tennessee, 796 F.2d 879, 883 (6th Cir.1986). A federal civil rights claim accrues when a plaintiff knows or has reason to know of the injury that is the basis of the plaintiff's action. Sevier v. Turner, 742 F.2d 262, 273 (6th Cir.1984). In addition to applying the state statute of limitations in a § 1983 action, a federal court is also obligated to apply the state rule for tolling the statute of limitations if it is consistent with the purposes of § 1983. Board of Regents of the Univ. of the State of New York v. Tomiano, 446 U.S. 478, 486, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980).
Plaintiff filed this action on September 6, 2001. Accordingly, any claims that accrued before September 6, 2000 are barred by the statute of limitations.
According to Mr. Middlebrook's deposition, Mr. Goforth informed him in October of 1998 that Bartlett would not provide city water or sewer services to Plaintiffs. Therefore, Plaintiffs' civil rights claims regarding Bartlett's failure to provide city *957 sewer and water services are plainly barred by the statute limitations.[5] Plaintiffs' allegation regarding the incorrect advice Mr. McClanahan provided in 1995 about the acreage requirement for septic tanks is likewise barred by the statute of limitations.
Plaintiffs' claim that Bartlett failed to authorize MLGW to provide water service in violation of their civil rights requires additional analysis. Mr. McClanahan signed an August 25, 2000 letter provided by MLGW, authorizing MLGW's provision of water to Plaintiff's property, during the day on September 6, 2000. This was approximately 15 months after Plaintiff's asserted initial oral requests to Mr. McClanahan. This document removed Bartlett's last obstacle to Plaintiff's submission of a completed building permit. Since "the law will not recognize ... fractions of a day", 86 C.J.S. Time § 11 (1997), the Court will not recognize the portion of the day on September 6 during which Mr. McClanahan had not signed the authorization form. Accordingly, the last day on which an allegedly discriminatory act occurred is September 5, 2000. As Plaintiffs' Complaint was not filed until September 6, 2001, Plaintiffs' civil rights claims regarding the failure to approve water service from MLGW are barred by the statute of limitations.[6] The Court DISMISSES Plaintiffs' civil rights claims under 42 U.S.C. §§ 1982 and 1983.
2. 42 U.S.C. § 3601
Plaintiff's Fair Housing Act claims under 42 U.S.C. § 3601, et seq., are governed by the statute of limitations provided in 42 U.S.C. § 3613. Section 3613(a)(1)(A) provides a plaintiff with two years after the alleged discriminatory housing practice occurs in which to file suit. This limitations period is tolled during the time an administrative proceeding based on the discriminatory housing practice is pending. 42 U.S.C. § 3613(a)(1)(B).
Plaintiffs filed their Complaint on September 6, 2001. Plaintiffs filed an Amended Complaint on October 5, 2001, which for the first time included reference to the Fair Housing Act. These claims relate back to the original filing date of the Complaint because they arose from the same conduct, transaction or occurrence. Fed.R.Civ.P. 15(c). Therefore, any claims that accrued before September 6, 1999 are barred by the statute of limitations. Additionally, Plaintiff's filed a complaint with HUD regarding Bartlett's failure to provide sewer service on March 8, 2000. HUD dismissed Plaintiffs' complaint on January 29, 2001. With respect to the sewer service claim, the statute of limitations was tolled during the HUD proceedings. Therefore, any claim regarding Bartlett's failure to provide sewer service that accrued before November 15, 1998 is barred by the statute of limitations.
As discussed above, any claim that Bartlett failed to provide city water or sewer *958 service accrued at the latest in October of 1998. Accordingly, these claims are barred by the statute of limitations. Similarly, allegations regarding the incorrect advice Mr. McClanahan provided in 1995 about the acreage requirement for septic tanks are barred by the statute of limitations.
However, viewing all of the evidence in the light most favorable to Plaintiffs, the Court finds that Plaintiffs' Fair Housing Act claims regarding the authorization for water service from MLGW and the effective denial of a building permit[7] due to Defendants' failure to authorize water service are not barred by the statute of limitations. The Court accepts Plaintiff's uncontradicted statement in paragraphs 41-42 of his Affidavit that he made weekly phone calls to Mr. McClanahan from June of 1999 through August of 2000 in an attempt to ascertain when Mr. McClanahan would provide MLGW with the approval necessary to allow Plaintiff to connect to MLGW's water line. It was not until Mr. Poe at MLGW sent a letter to Mr. McClanahan requesting his signature that Mr. McClanahan gave the required approval on September 6, 2000. These actions occurred within the two year limitations period and are not barred by the statute of limitations.
3. Tennessee Human Rights Act
The statute of limitations for a claim brought under the Tennessee Human Rights Act, Tenn.Code Ann. § 4-21-101, is one year. Tenn.Code Ann. § 29-20-305(b). Plaintiffs' claims under the Tennessee Human Rights Act are barred by the statute of limitations for the same reasons as Plaintiffs' civil rights claims, discussed above. Accordingly, the Court DISMISSES these claims.
B. Fair Housing Act
As the Court has determined that some of Plaintiffs' claims under the Fair Housing Act, 42 U.S.C. § 3601, et seq., are not barred by the statute of limitations, the Court must discuss the substance of those claims. Plaintiffs state that they are proceeding with claims under §§ 3604(a), (b), (c) and 3617. Section 3604 states that it shall be unlawful:
(a) To ... make unavailable or deny, a dwelling to any person because of race....
(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race....
(c) To make, print, or publish ... any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race....
(Emphasis added.)
Section 3617 provides:
It shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, *959 or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title.
Defendants correctly note that when analyzing a claim of discrimination under the Fair Housing Act the Court must apply the three-part burden shifting analysis set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Selden Apartments v. United States Dep't of Hous. and Urban Dev., 785 F.2d 152, 159 (1986). In order to establish a prima facie case of housing discrimination in this case, Plaintiffs must show: (1) that they are members of a protected class; (2) they applied for and were qualified for water service from MLGW and a building permit; (3) water service from MLGW and the application for a building permit were denied; and (4) Defendant provided similarly situated individuals outside the protected class with water service enabling them to receive a building permit. Id.
The parties do not dispute that Plaintiffs satisfy the first element. As to the second element, Mr. Middlebrook states he contacted Mr. McClanahan weekly from June of 1999 until August of 2000 to check on Bartlett's approval of his water connection with MLGW. Plaintiffs needed access to a water line in order to install a sewer, which is a prerequisite to receiving the building permit that Defendants long knew Plaintiffs sought. The Court finds that this satisfies the requirement that Plaintiffs applied for and were qualified for water access and a building permit. Under the third element, Mr. McClanahan's unexplained failure to act on Plaintiff's requests for 15 months constitutes a denial of access to water and, by extension, a building permit. The Court recognizes that Bartlett, as of September 6, 2000, authorized MLGW to provide water to Plaintiffs' property. Therefore, the impediment to submission of a proper building permit application has been removed.[8] Despite this fact, the 15 month period during which Defendants failed to act on Plaintiffs' request for water access satisfies the third element of the prima facie case.
In order to satisfy the fourth element, Plaintiffs have attempted to compare themselves to Carolyn Swindell, a Caucasian individual who received a water connection from Bartlett that enabled her to receive a building permit from Shelby County. Ms. Swindell is not a sufficiently comparable individual because she lives outside of Bartlett. Shelby County, not Bartlett, issued her building permit. However, as noted in Mr. Fulmar's Affidavit, a number of Caucasian individuals live near Plaintiffs' property, either on neighboring lots or in the nearby Willoughby Woods subdivision. These Caucasian individuals receive water service from Bartlett and have been able to install septic tanks and build homes on their property. These individuals provide an appropriate comparison to Plaintiffs. Plaintiff has, therefore, established a prima facie case of discrimination.
The second part of the McDonnell Douglas analysis requires Defendants to offer a legitimate non-discriminatory reason for failing to approve Plaintiffs for water access from MLGW. Defendants have not offered a justification for the failure to approve Plaintiffs' request to connect to MLGW's water line for 15 months, until September 6, 2001, and the *960 effective denial of a building permit until that date. Accordingly, the Court denies the motion for summary judgment as to these particular claims under the Fair Housing Act.
C. Official Capacity Claims
For the reasons cited in part IV.D. of Defendants' motion, Plaintiffs' claims against Mr. Goforth, Mr. McClanahan, Mr. Fulmar, and Mr. Rainey in their official capacities are DISMISSED because Bartlett is already a party to this action.
D. Qualified Immunity
Mr. Goforth, Mr. McClanahan, Mr. Rainey, and Mr. Fulmar argue that they are entitled to the defense of qualified immunity with respect to the claims asserted against them individually.
The Court notes preliminarily that none of Plaintiffs' papers contains any allegations against Mr. Fulmar or Mr. Rainey individually. Therefore, the Court DISMISSES the claims against Mr. Fulmar and Mr. Rainey in their individual capacities. Furthermore, Plaintiffs make no allegations against Mr. Goforth that fall within the applicable limitations period. Therefore, the Court DISMISSES the claims against Mr. Goforth in his individual capacity.
Given that the Court has already dismissed Plaintiffs' claims under §§ 1982 and 1983, the Court will only discuss the defense of qualified immunity with respect to the Fair Housing Act. The Court has not located a Sixth Circuit case discussing whether the defense of qualified immunity is available to an official who has been sued individually for a violation of the Fair Housing Act. However, at least three other courts have determined that the qualified immunity defense is available in such cases. Gonzalez v. Lee County Hous. Auth., 161 F.3d 1290, 1299-1300 (11th Cir.1998) (discussing qualified immunity in action under § 3617); Samaritan Inns, Inc. v. District of Columbia, 114 F.3d 1227, 1238-39 (D.C.Cir.1997) (allowing officials to plead defense of qualified immunity to a claim under § 3617); Baggett v. Baird, 1997 WL 151544, 1997 U.S. Dist. Lexis 5825 (N.D.Ga. Feb. 18, 1997) (discussing qualified immunity in action under § 3617). The Court adopts this view.
"Government officials performing discretionary functions are afforded qualified immunity, shielding them from civil damages, as long as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Poe v. Haydon, 853 F.2d 418, 423 (6th Cir.1988). See also Vaughn v. United States Small Bus. Admin., 65 F.3d 1322, 1326 (6th Cir.1995) (citing Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)). Therefore, in order to defeat Defendants' claims of qualified immunity, Plaintiffs must show: (1) that a clearly established right has been violated; and (2) the official would have known that their conduct violates that right.
The Court is required to accept Plaintiffs' version of events when reviewing the motion for summary judgment. Plaintiffs assert that Mr. Middlebrook repeatedly contacted Mr. McClanahan over a period of 15 months in an attempt to obtain permission to receive water service from MLGW. Plaintiffs needed water service so they could include plans for a septic tank on their property in their application for a building permit. Plaintiffs asserts that Mr. McClanahan failed to take any action prior to September 6, 2000 because of Plaintiffs' race.
Given the clear language of § 3604(b) and § 3617 of the Fair Housing Act, a reasonable official would know that the denial of water service and, by extension, a building permit based on the race of the applicant violates a clearly established *961 right. No explanation has been offered for the failure to provide approval for Plaintiffs' water service with MLGW in response to Mr. Middlebrook's repeated requests. Accordingly, if Plaintiffs can prove that Mr. McClanahan failed to act on the requests in the manner described above, based on Plaintiffs' race, they will have shown that he violated a clearly established right. The Court, therefore, must DENY summary judgment as to Mr. McClanahan's claim of qualified immunity.
IV. Conclusion
For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants' motion. The Court dismisses Plaintiffs' claims against Bartlett, with the exception of claims under the Fair Housing Act arising from Bartlett's failure to approve Plaintiffs for access to MLGW's water line and the effective denial of a building permit due to lack of access to water. The Court dismisses the claims against the individual Defendants, with the exception of the same claim under the Fair Housing Act against Mr. McClanahan, in his individual capacity.
NOTES
[1] Mr. McClanahan did not have the opportunity to look at the plat for Plaintiff's property during this meeting.
[2] Plaintiff and Mr. Goforth have disagreed as to which of them initially located the plat for Plaintiff's property and the exception allowing Plaintiff to install a septic tank with less than two acres of land.
[3] Bartlett annexed Plaintiff's land from Shelby County in 1985 in anticipation of developing a subdivision in the annexed area, which later became known as the Daybreak Subdivision. The exception allowing a septic tank on Plaintiff's land apparently survived the annexation.
At the time Bartlett annexed the land, it adopted a Plan of Service, Resolution 13-79, which stated that existing homes would receive water and sewer service within five years of the date of annexation. There is some dispute as to whether the dilapidated shack that existed on Plaintiff's property at the time of annexation was inhabited. In any event, according to Mr. Fulmar, Bartlett was unable to provide sewer service to the five existing homes within five years in accordance with the Plan of Services. Mr. Fulmar has stated that these five homes and the six homes in the Willoughby Woods rural subdivision, all of which are owned by caucasians, still do not have sewer service and are scheduled to receive sewer service in 2005, at the same time as Plaintiffs, pursuant to the Sewer Extension Schedule.
[4] Defendants challenge the allegations contained in Plaintiff's Affidavit that pertain to Ms. Swindell on the grounds that Plaintiff has not attested that he has personal knowledge of any of the facts contained in his Affidavit.
[5] Neither of these claims supports the finding of a continuing violation under the three-pronged test recently reiterated in Tolbert v. Ohio Dep't of Transp., 172 F.3d 934, 941-941 (6th Cir.1999) ("Passive inaction ... does not support a continuing violation theory."). See also LRL Properties v. Portage Metro Hous. Auth., 55 F.3d 1097, 1106 n. 3 (6th Cir.1995) ("Courts have been extremely reluctant to apply [the continuing violations] doctrine outside of the context of Title VII.").
[6] Even assuming Plaintiffs' theory of a continuing violation were correct, the civil rights claims are barred by the statute of limitations because the alleged continuing violation ended on September 5, 2000. At least one of the allegedly discriminatory acts must occur within the limitations period. Caldwell v. Rowland, 932 F.Supp. 1018, 1021 (E.D.Tenn.1996).
[7] The Court finds that Plaintiffs' failure to submit a completed application for a building permit prior to September 6, 2000 is not germane to the statute of limitations question. First, Plaintiff claims Defendants never told him all of the prerequisites to receiving a building permit, making it impossible for him to have completed his application. Second, Plaintiffs were told a permit would not be granted without the inclusion of plans for a septic tank. A septic tank could not be installed until Plaintiffs obtained access to MLGW's water line. This access could only be approved by Defendants. It is clear that Defendants did not approve Plaintiffs' request for water service from MLGW until September 6, 2000, thus making it impossible for Plaintiffs to have submitted a proper application prior to that date. Therefore, the failure to approve water service effectively denied Plaintiffs a building permit.
[8] In this regard, the Court notes that the injunctive relief requested in Plaintiffs' Amended Complaint is not available. Plaintiffs have access to water. Additionally, they have been capable of submitting a completed building permit application since September 6, 2000.
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970 A.2d 476 (2009)
COM.
v.
RESTUCCIA.
No. 1787 MDA 2007.
Superior Court of Pennsylvania.
February 9, 2009.
Vacated, Reversed and Remanded.
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164 P.3d 81 (2007)
2007-NMCA-084
NEW MEXICO MINING ASSOCIATION, New Mexico Home Builders Association, New Mexico Oil & Gas Association, New Mexico Cattle Growers' Association, New Mexico Wool Growers, Inc., Chino Mines Company, and Phelps Dodge Tyrone, Inc., Plaintiffs-Appellants,
v.
WATER QUALITY CONTROL COMMISSION (In the Matter of the Triennial Review of Standards for Interstate and Intrastate Surface Waters, 20.6.4 NMAC), Defendant-Appellee, and
New Mexico Environment Department, Amigos Bravos, Gila Resources Information Project (Grip), New Mexico Trout, New Mexico Acequia Association, 1000 Friends of New Mexico, and Sierra Club, Intervenors-Appellees.
No. 25,814.
Court of Appeals of New Mexico.
May 10, 2007.
*82 Gallagher & Kennedy, P.A., Dalva L. Moellenberg, Anthony (T.J.) J. Trujillo, Santa Fe, NM, for Appellants.
Office of the Attorney General, Gary K. King, Attorney General, Zachary A. Shandler, Assistant Attorney General, Santa Fe, NM, for Appellee.
New Mexico Environment Department, J. Brent Moore, Assistant General Counsel, Special Assistant Attorney General, Santa Fe, NM, for Intervenor-Appellee. New Mexico Environment Department.
*83 Western Environmental Law Center, Matthew K. Bishop, Erik Schlenker-Goodrich, Taos, NM, for Intervenors-Appellees Amigos Bravos et al.
New Mexico Environmental Law Center, Sarah Piltch, Roderick Ventura, Douglas Meiklejohn, Santa Fe, NM, for Amicus Curiae Concerned Citizens for Clean Water.
OPINION
ALARID, Judge.
{1} In this case we are asked to pass upon the validity of the 2005 amendment to the water quality standard defining "surface waters of the State." We hold that the amended definition of surface waters of the State was adopted consistent with the requirements of the Water Quality Act and with due process. We therefore affirm the decision of the Water Quality Control Commission adopting the 2005 standard.
BACKGROUND
{2} In 1972, Congress enacted the Clean Water Act (CWA), 33 U.S.C. § 1251 (1972).
The Act's stated objective is "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." The Act also states that "[i]t is the policy of Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution[.]"
Rapanos v. United States, ___ U.S. ___, ___, 126 S.Ct. 2208, 2215, 165 L.Ed.2d 159 (2006) (plurality opinion) (citations omitted). To set apart waters subject to regulation by Congress pursuant to the Commerce Clause from other waters, Congress relied on the concept of "navigable waters," which is defined by the CWA as "the waters of the United States, including the territorial seas." Id. at 2215-16 (internal quotation marks and citation omitted).
{3} The CWA requires each state's pollution control agency to hold public hearings reviewing applicable water quality standards at least once every three years (the triennial review). 33 U.S.C. § 1313(c)(1) (2000). The New Mexico Water Quality Control Commission (WQCC) is the agency responsible for administering New Mexico's Water Quality Act (WQA), 1967 N.M. Laws ch. 190 [codifed at NMSA 1978, ch. 74, art. 6], and is New Mexico's pollution control agency for purposes of the CWA. NMSA 1978, § 74-6-3(E) (2003). The WQCC's responsibilities include adopting water quality standards for surface and ground waters. NMSA 1978, § 74-6-4(C) (2003).
{4} Prior to the 1998 triennial review, the WQCC's Standards for Interstate and Intrastate Streams defined "water" as "all surface waters including waters situated wholly or partly within or bordering upon the State, whether public or private, except private waters that do not combine with other surface or subsurface water," and defined "water(s) of the State" as "all interstate and intrastate waters including, natural ponds and lakes, playa lakes, reservoirs, perennial streams and their tributaries, intermittent streams, sloughs, prairie potholes and wetlands." 6 N.M. Reg. at 57 (Jan. 14, 1995). In February 2000, during the 1998 triennial review of the Standards for Interstate and Intrastate Streams, the WQCC adopted the following definition:
"Surface water(s) of the State" means all interstate waters including interstate wetlands, and all intrastate waters, such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, reservoirs or natural ponds and all tributaries of such waters the use, degradation, or destruction of which would affect interstate or foreign commerce. Surface waters of the State also means any manmade bodies of water which were originally created in surface waters of the State or resulted in the impoundment of surface waters of the State.
11 N.M. Reg. at 107 (Feb. 14, 2000) (emphasis added). The WQCC noted "the potentially restrictive nature of this definition based on the vagaries of current federal jurisprudence" and stated that it "may revisit this definition in the future if the federal courts apply too strict an interstate commerce test in the future." The WQCC's concern with *84 the "vagaries of current federal jurisprudence" proved to be justified.
{5} At the federal level, the CWA is enforced by the Administrator of the Environmental Protection Agency (EPA), and the Secretary of the Army, acting through the Chief of the Corps of Engineers (Corps). The Corps initially relied on a definition of "navigable waters" dating back to the nineteenth century: i.e., "interstate waters that are `navigable in fact' or readily susceptible of being rendered so." Rapanos, 126 S.Ct. at 2216. This construction was criticized as too narrow by the EPA, federal courts, and members of Congress. Id.; Solid Waste Agency of N. Cook County v. United States Army Corps of Eng'gs, 531 U.S. 159, 183-84, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001) [hereinafter SWANCC] (Stevens, J., dissenting). Thereafter, the Corps adopted successive definitions that "deliberately sought to extend the definition of `the waters of the United States' to the outer limits of Congress's commerce power." Rapanos, 126 S.Ct. at 2216. By 1975, the Corps had adopted regulations extending the CWA to "nonnavigable intrastate waters whose use or misuse could affect interstate commerce." SWANCC, 531 U.S. at 184, 121 S.Ct. 675 (Stevens, J., dissenting) (internal quotation marks and citation omitted). In United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 135, 106 S.Ct. 455, 88 L.Ed.2d 419 (1985), the Supreme Court upheld the Corps exercise of CWA jurisdiction over certain nonnavigable wetlands that abutted on traditional navigable waterways. Following Riverside Bayview, the Corps adopted increasingly broad interpretations of waters of the United States. SWANCC, 531 U.S. at 184, 121 S.Ct. 675 (Stevens, J., dissenting).
{6} By 2000, when the WQCC incorporated an affect-on-interstate-commerce test into the definition of surface waters of the State, federal authority to regulate water pollution under the Commerce Clause was understood to extend to "discharges made into every creek, stream, river or body of water that in any way may affect interstate commerce." United States v. Earth Sciences, Inc., 599 F.2d 368, 375 (10th Cir.1979). Of particular importance for western states such as New Mexico, CWA protection had been upheld when extended to clearly nonnavigable surface features such as an arroyo in which water flows and provides a surface connection to navigable waters only during times of heavy rain. Quivira Mining Co. v. United States Envtl. Prot. Agency, 765 F.2d 126, 129-30 (10th Cir.1985). Using the cumulative impact doctrine of Wickard v. Filburn, 317 U.S. 111, 128-29, 63 S.Ct. 82, 87 L.Ed. 122 (1942), CWA protection had been extended to isolated, intrastate wetlands based on evidence that the destruction of the wetland habitat of migratory birds in the aggregate substantially affects interstate commerce. See Solid Waste Agency of N. Cook County v. United States Army Corps of Eng'rs, 191 F.3d 845, 849-50 (7th Cir.1999), rev'd on other grounds, 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001).
{7} In SWANCC, a sharply divided Supreme Court rejected the Corps exercise of jurisdiction over "an abandoned sand and gravel pit in northern Illinois which provides habitat for migratory birds." 531 U.S. at 162, 121 S.Ct. 675. The five-justice majority held that "`nonnavigable, isolated, intrastate waters,' which, unlike the wetlands at issue in Riverside Bayview, did not `actually abu[t] on a navigable waterway,' were not included as `waters of the United States.'" Rapanos, 126 S.Ct. at 2217 (characterizing and quoting SWANCC, 531 U.S. at 167, 171, 121 S.Ct. 675). SWANCC resulted in considerable uncertainty about the scope of federal regulatory jurisdiction under the CWA. See generally Advance Notice of Proposed Rulemaking on the Clean Water Act Regulatory Definition of "Waters of the United States," 68 Fed.Reg.1991 (Jan. 15, 2003); United States v. Rapanos, 376 F.3d 629, 638 (6th Cir.2004) (discussing post-SWANCC split of authority), vacated and remanded, ___ U.S. ___, 126 S.Ct. 2208, 165 L.Ed.2d 159 (2006).
{8} In the course of the first triennial review following SWANCC, Appellee the New Mexico Environment Department (NMED), petitioned the WQCC to amend various standards, including the standard defining surface waters of the State. The NMED proposed that the definition of surface waters of the State be amended to read:
*85 "surface water(s) of the state" means all surface waters situated wholly or partly within or bordering upon the state, including lakes, rivers, streams (including intermittent and ephemeral streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, reservoirs or natural ponds. Surface waters of the state also means all tributaries of such waters, including adjacent wetlands, any manmade bodies of water that were originally created in surface waters of the state or resulted in the impoundment of surface waters of the state, and any "waters of the United States" as defined under the Clean Water Act that are not included in the preceding description. Surface waters of the state does not include private waters that do not combine with other surface or subsurface water or any water[.]
(Redlining and strikeouts omitted). The NMED asserted that by eliminating language referring to interstate commerce, the proposed regulation would "recognize that the state has plenary power within its borders and is not constrained by interstate commerce considerations." (Emphasis omitted). The NMED explained that "[t]he proposal is not an expansion. It is intended to ensure the same level of protection that existed before SWANCC."
{9} The WQCC designated a hearing officer to conduct a public hearing and to make a report on proposed amendments to the water quality standards. The WQCC published a public notice of the hearing on the NMED's petition. Four parties, including Appellant Phelps Dodge Corporation (Phelps Dodge) and the NMED submitted written technical testimony. Three parties, including Phelps Dodge and the NMED submitted written rebuttal testimony. The hearing officer conducted an eight-day public hearing in February and March 2004 during which interested persons were provided with a reasonable opportunity to be heard. Witnesses testifying in support and in opposition to the proposed amendments were subject to cross-examination. Following the hearing, the hearing officer prepared a detailed report summarizing the evidence, examining the arguments for and against the amendments, and making recommendations with respect to each proposed amendment. The parties were provided with the opportunity to submit written comments on the hearing officer's report.
{10} The WQCC deliberated on the evidence, public comments, the hearing officer's report and attachments, and the parties' comments on the report over the course of five days. On May 13, 2005, the WQCC issued its Statement of Reasons for Amendment of Standards. The Statement of Reasons included the WQCC's decision to adopt the NMED's proposed amendment to the standard defining surface waters of the State. The WQCC provided the following rationale for its decision to adopt the NMED's proposed amendment:
100. The Commission adopts NMED's proposal to amend the definition [of surface waters of the State] to reflect New Mexico's plenary power over waters within its borders because the WQCC's authority . . . is not constrained by the Commerce Clause of the United States Constitution.
101. The interests of the state are critically linked both economically and culturally to good water quality in all of the state's waters, not just waters that can be linked to interstate commerce. Non-perennial waters make up over 80% of this state's waters, and should be expressly protected in the standards. Extending the WQS [Water Quality Standards] to intrastate waters is consistent with applicable federal case law. The U.S. Supreme Court supports the goal of protecting isolated intrastate waters waters with no relation to interstate commerce at the state level, rather than federal level. The SWANCC decision, 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001), did not strip state jurisdiction; it just limited federal jurisdiction.
The WQCC filed the amended standards with the State Records Center. The WQCC published the amended standards in the New Mexico Register. 16 N.M. Reg. at 393-429 (May 13, 2005). The standards became effective on May 23, 2005.
{11} Appellants, New Mexico Mining Association, New Mexico Home Builders Association, New Mexico Oil & Gas Association, *86 New Mexico Wool Growers, Inc., Chino Mines Company, and Phelps Dodge assert that they are "entities that have been adversely affected or represent persons that have been adversely affected" by the WQCC's adoption of the 2005 definition of surface waters of the State because they and their members "own and operate facilities and properties . . . where [there] exist various types of ponds, lagoons, ditches, channels, impoundments, and other areas where water sometimes accumulates or flows on the surface of the earth." Appellants filed a timely notice of appeal.
DISCUSSION
Standard of Review
{12} Proceedings adopting water quality standards are subject to judicial review. Bokum Res. Corp. v. N.M. Water Quality Control Comm'n, 93 N.M. 546, 553, 603 P.2d 285, 292 (1979) (holding that proceedings adopting water quality standards are subject to the same judicial review as agency "rules"). We may set aside a decision of the WQCC adopting a water quality standard if the WQCC's action "is found to be: (1) arbitrary, capricious or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with law." NMSA 1978, § 74-6-7(B) (1993).
The WQCC Complied with Statutory Standards
{13} Appellants argue that the WQCC's decision to adopt the 2005 "definition for `surface waters of the State' was not supported by substantial evidence in the record because the revision was based on a legal position instead of the relevant factors and evidence set forth in Sections 74-6-4(C) and (D)." We reject this claim of error for the reasons set out later in this opinion.
{14} As an initial matter, we hold that Section 74-6-4(D) is inapplicable to water quality standards. Section 74-6-4(D) applies to "regulations to prevent or abate water pollution." Water quality standards and water quality regulations are distinct concepts: "a standard defines the amount of contaminant in the ambient water and . . . a regulation defines the conduct necessary for an entity that discharges pollutants to comply with the standard." Regents of the Univ. of Cal. v. N.M. Water Quality Control Comm'n, 2004-NMCA-073, ¶ 25, 136 N.M. 45, 94 P.3d 788. Section 74-6-4(D) does not apply to water quality standards.
{15} We now turn to Section 74-6-4(C). The applicability of Section 74-6-4(C) is not in dispute. Section 74-6-4(C) provides that the WQCC
shall adopt water quality standards for surface and ground waters of the state based on credible scientific data and other evidence appropriate under the [WQA]. The standards shall include narrative standards and as appropriate, the designated uses of the waters and the water quality criteria necessary to protect such uses. The standards shall at a minimum protect the public health or welfare, enhance the quality of water and serve the purposes of the [WQA]. In making standards, the commission shall give weight it deems appropriate to all facts and circumstances, including the use and value of the water for water supplies, propagation of fish and wildlife, recreational purposes and agricultural, industrial and other purposes[.]
Appellants argue that the 2005 definition is invalid because it was not supported by substantial "credible scientific evidence" as required by Section 74-6-4(C).
{16} Many provisions of the water quality standards reflect primarily scientific judgments that necessarily are informed by "credible scientific evidence." E.g., 20.6.4.7.G NMAC (2006) (defining bioaccumulations factor). In contrast, the WQCC's decision to eliminate references to interstate commerce in the definition of surface waters of the State and to exercise subject matter jurisdiction to the full extent authorized by the Legislature is primarily a nonscientific, political and legal judgment about the respective roles of state and federal government in protecting the waters of New Mexico. The WQCC's decision to decouple the definition of surface waters of the State from the "vagaries of current federal jurisprudence" was not a scientific judgment that necessarily depends primarily upon "credible *87 scientific evidence." Accordingly, the WQCC was empowered to give controlling weight to other evidence appropriate under the WQA in making what was largely a political and legal judgment. Other appropriate evidence included evidence of the uncertain state of federal law following SWANCC. We hold that the reasons for amending the definition of surface waters of the State given by the WQCC in its Statement of Reasons were supported by substantial evidence in the record.
{17} Appellants also argue that the 2005 definition of surface waters of the State is invalid because the WQCC did not receive evidence of the use and value of those waters that were not covered by the old definition but that now fall within the 2005 definition of surface waters of the State. According to Appellants, to the extent the 2005 definition expands the definition of surface waters of the State so as to encompass additional surface waters not covered by the 1998 definition, the WQCC has indirectly expanded the scope of the water quality standards without scientifically validating the application of the uses and criteria contained in the standards proper to newly covered waters as required by Section 74-6-4(C). As we understand this argument, it necessarily has the following components: (1) there exist within the borders of New Mexico surface waters the use, degradation, or destruction of which would not affect interstate or foreign commerce; (2) these purely intrastate surface waters were not covered by the 1998 definition of surface waters of the State which reached only those intrastate waters the use, degradation, or destruction of which would affect interstate commerce; (3) these surface waters are now covered by the 2005 definition due to the elimination in the 2005 definition of the former requirement of an affect on interstate or foreign commerce; (4) these newly covered surface waters may have materially different characteristics from the surface waters the WQCC contemplated when it validated existing water quality standards; and (5) these materially different characteristics may make it scientifically questionable to apply existing water quality standards to these newly covered waters.
{18} We reject this claim of error on the ground that Appellants have established no more than a theoretical possibility that the 2005 definition of surface waters will result in the improper application of water quality standards to newly covered waters. We refer to a "theoretical possibility" for several reasons. First, to the extent the 1998 definition piggybacked WQCC jurisdiction on pre-SWANCC federal regulatory jurisdiction under the CWA, it would have reached "virtually all bodies of water," International Paper Co. v. Ouellette, 479 U.S. 481, 492, 107 S.Ct. 805, 93 L.Ed.2d 883 (1987), and "virtually any land feature over which rainwater or drainage passes and leaves a visible mark." Rapanos, 126 S.Ct. at 2217. Thus, it is not at all clear to what extent the 2005 definition captures additional surface waters beyond those already captured by the 1998 definition. Second, if we assume that "surface waters of the state" include certain intrastate waters that did not fall within the sweeping scope of waters subject to federal regulation under the CWA, we have no information about these newly covered waters. Appellants did not provide the WQCC, and have not provided us, with actual examples of such waters. Appellants have not identified a single existing surface water, such as a stream or pond, described the water's characteristics, and explained why, in view of those characteristics, the water would not have been covered under the 1998 definition, but is now covered as a result of the elimination of references to interstate commerce in the 2005 definition. Moreover, because Appellants have not identified any newly covered waters, they also have failed to identify the characteristics of these newly covered waters that make it scientifically questionable to apply existing water quality standards to such waters.
{19} "A party challenging a rule adopted by an administrative agency has the burden of establishing the invalidity of the rule." N.M. Mining Ass'n v. N.M. Mining Comm'n, 1996-NMCA-098, ¶ 8, 122 N.M. 332, 924 P.2d 741. Appellants did not come forward with any evidence supporting their argument. Appellants' speculation about hypothetical newly covered waters does not *88 meet their burden of demonstrating the invalidity of the WQCC standards.
{20} We do not mean to suggest that the decoupling of state law and federal law accomplished by the 2005 revision was a meaningless gesture. A plurality of the United States Supreme Court is prepared to limit the jurisdiction under the CWA to "relatively permanent bodies of waters," Rapanos, 126 S.Ct. at 2222, an interpretation that if adopted by a majority of the Court would eliminate federal jurisdiction over ephemeral waters, id., which make up over 80% of New Mexico's waters according to the finding made by the WQCC. Justice Kennedy, who concurred in the judgment, would require covered waters to have a "`significant nexus' to waters that are or were navigable in fact or that could reasonably be so made." Rapanos, 126 S.Ct. at 2236 (Kennedy, J., concurring) (quoting SWANCC, 531 U.S. at 167, 172, 121 S.Ct. 675). Either of these approaches could significantly limit the scope of federal jurisdiction under the CWA, particularly in an arid state such as New Mexico. By decoupling the WQCC's jurisdiction from federal law, the 2005 amendment insures that any future contraction of federal CWA jurisdiction will not affect the WQCC's subject matter jurisdiction.
Overbreadth and Vagueness
{21} Appellants argue that the 2005 definition is "not in accordance with the law because the revised definition is unconstitutionally overbroad and/or vague."
{22} We begin our analysis by noting that overbreadth and vagueness are related, but analytically distinct concepts. Laurence H. Tribe, American Constitutional Law 1033 (2d ed.1988).
{23} The United States Supreme Court has permitted overbreadth challenges in "relatively few settings," Sabri v. United States, 541 U.S. 600, 609, 124 S.Ct. 1941, 158 L.Ed.2d 891 (2004), generally settings where government regulation restricts the exercise of First Amendment or other fundamental rights, see id. at 610, 124 S.Ct. 1941 (collecting cases). This Court has limited overbreadth challenges to laws that affect First Amendment rights. In re Candice Y., 2000-NMCA-035, ¶ 18, 128 N.M. 813, 999 P.2d 1045. Appellants have not cited a single case permitting an overbreadth challenge to an environmental law affecting the purely economic interests of property owners. We decline to extend the overbreadth doctrine to the present context, and accordingly reject Appellants' overbreadth challenge.
{24} A vagueness challenge is premised on the due process requirement of reasonable notice. Bokum Res. Corp., 93 N.M. at 549, 603 P.2d at 288. A law "must provide fair and adequate warning to a person of ordinary intelligence of the conduct which is prohibited." State v. Ramos, 116 N.M. 123, 127, 860 P.2d 765, 769 (Ct.App. 1993).
{25} The Legislature has defined "water," the subject matter of the WQA, using a straightforward, purely geographical test: water for purposes of the WQA must be "situated wholly or partly within or bordering upon [New Mexico]." The WQA applies to all water, surface or subsurface, that meets this geographical test, with the exception of "private waters that do not combine with other surface or subsurface water." Within the broad statutory definition of water, the WQCC's definition of surface waters of the State serves the limited function of broadly distinguishing between surface waters of the State and subsurface waters of the State. This distinction is reflected in separate standards for surface waters and ground waters, compare 20.6.2.3000 through .3014 NMAC (2006), with 20.6.4 NMAC (2006), which are administered by separate bureaus within the New Mexico Environment Department, Organization Chart (updated Feb. 5, 2007), available online at www.nmenv. state.nm.us/NMED/Org_Chart.pdf.
{26} An agency drafting regulations is not required to write for the benefit of a deliberately unsympathetic or wilfully obtuse audience: for purposes of due process, a governmental agency attempting to give notice may assume "a hypothetical recipient desirous of actually being informed." Cf. Cordova v. Taxation & Revenue Div., 2005-NMCA-009, ¶ 30, 136 N.M. 713, 104 P.3d *89 1104 (emphasis omitted) (discussing procedural due process requirements as to method of giving notice). We are satisfied that the 2005 definition of surface waters of the State provides persons of reasonable intelligence with constitutionally adequate notice of what waters are subject to regulation as surface waters of New Mexico. Indeed, the geographical test imposed by the 2005 definition seems to us to be much simpler and clearer than a test requiring consideration of whether the use, degradation, or destruction of a surface water would affect interstate or foreign commerce.
{27} We acknowledge that there will be situations in which determining whether conduct is affecting a surface water of the State will present a fact-sensitive question. This point was made during the proceedings below by opponents of the proposed new definition who raised questions about the application of the definition to golf course water hazards, mining pits, livestock-watering impoundments and certain other surface water features. Most obviously, the exception for "private waters that do not combine with other surface or subsurface water" can easily present fact-sensitive questions. The possibility of hypothetical close cases is not dispositive in the context of a facial vagueness challenge. "[S]peculation about possible vagueness in hypothetical situations not before the Court will not support a facial attack on a statute when it is surely valid `in the vast majority of its intended applications.'" Hill v. Colorado, 530 U.S. 703, 733, 120 S.Ct. 2480, 147 L.Ed.2d 597 (2000) (quoting United States v. Raines, 362 U.S. 17, 23, 80 S.Ct. 519, 4 L.Ed.2d 524 (1960)). Where, as here, a law is subjected to a pre-enforcement vagueness challenge, the opponent of the law must demonstrate that the law is drafted so as to be "impermissibly vague in all its applications." Ramos, 116 N.M. at 127, 860 P.2d at 769 (internal quotation marks and citation omitted). But cf. Hotel & Motel Ass'n of Oakland v. City of Oakland, 344 F.3d 959, 971 (9th Cir.2003) (noting disagreement among the members of the United States Supreme Court as to the standard governing a facial vagueness challenge outside the context of the First Amendment). There is no question that the basic geographic test captures large numbers of surface waters such as lakes, streams, and reservoirs located within the borders of New Mexico as to which the definition indisputably applies. Because the 2005 definition clearly is not impermissibly vague in all its applications, we must reject Appellants' facial vagueness challenge.
The WQCC Did Not Act Arbitrarily and Capriciously
{28} Appellants argue that the WQCC acted arbitrarily and capriciously in adopting the 2005 definition "because it disregarded and failed to give due consideration to . . . comments and testimony . . . that the revised definition was unclear and overbroad." Appellants point to testimony by three witnesses who testified that potential expansion of state regulatory jurisdiction under the new definition was a concern within the livestock, agricultural, and mining industries. Appellants also note that the NMED witnesses testifying in support of the new definition favored a site-specific approach and were hesitant in applying the definition to hypothetical examples such as a residential landscaping pond, a golf course water hazard, a mining pit carved out of the former site of arroyos and channels, and standing water atop a tailing impoundment without additional information about the characteristics of the sites.
{29} Our review of the record satisfies us that the WQCC carefully considered the evidence and comments submitted by parties opposing the proposed amendment to the definition of surface waters. The fact that there was evidence supporting an opposing result does not mean that the WQCC acted arbitrarily and capriciously: "[e]ven if a different conclusion might have been reached from the facts, the choice made `is not arbitrary or capricious if exercised honestly and upon due consideration.'" Regents of the Univ. of Cal., 2004-NMCA-073, ¶ 35, 136 N.M. 45, 94 P.3d 788 (citation omitted). Frequently, administrative rules must balance the requirements of clarity and specificity against "inflexibility and unworkable restriction." N.M. Mun. League, Inc. v. N.M. *90 Envtl. Improvement Bd., 88 N.M. 201, 209, 539 P.2d 221, 229 (Ct.App.1975). We are satisfied that the WQCC's decision to eliminate the affects-on-interstate-commerce requirement resulted in an overall gain in clarity and ease of application, notwithstanding the possibility that the 2005 definition may prove difficult to apply in some cases.
{30} To the extent Appellants challenge the breadth of the 2005 definition, their disagreement actually is with the Legislature, not the WQCC. Consistent with the statutory definition of water, the WQCC's 2005 definition of surface waters of the State extends the definition of surface waters to the limits of the State's territorial jurisdiction, applying a straightforward geographical test that corresponds to the test enacted by the Legislature: is the (surface) water in question situated wholly or partly within or bordering upon the State? The Legislature chose to extend the subject matter jurisdiction of the WQCC to the limits of New Mexico's territorial jurisdiction over surface and ground water, and the Legislature is the law-making body to which Appellants' arguments should be addressed. The WQCC was not required, indeed was not permitted, to re-examine the Legislature's decision to regulate all water located within the borders of New Mexico (with the exception of purely private waters). The WQCC did not act arbitrarily or capriciously in adopting a definition of surface waters of the State that merely acknowledges the extent of the subject matter jurisdiction authorized by the Legislature. To the contrary, the WQCC would have acted in derogation of its responsibilities under the WQA had it failed to adopt a definition of surface waters of the State that allows it to protect surface waters of the State to the full extent contemplated by the Legislature. See Natural Res. Def. Council, Inc. v. Callaway, 392 F.Supp. 685, 686 (D.C.1975) (holding that defendant agency and administrators were without authority to adopt a regulation, the effect of which was to "amend or change" a definition adopted by Congress as part of the CWA).
CONCLUSION
{31} We affirm the decision of the WQCC adopting the 2005 standard.
{32} IT IS SO ORDERED.
WE CONCUR: JONATHAN B. SUTIN, Chief Judge and MICHAEL D. BUSTAMANTE, Judge.
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831 F.2d 306
Unpublished DispositionNOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.Edwin H. BANTA, Petitioner,v.OFFICE OF PERSONNEL MANAGEMENT, Respondent.
Appeal No. 87-3404
United States Court of Appeals, Federal Circuit.
September 15, 1987.
Before PAULINE NEWMAN, Circuit Judge, BALDWIN, Senior Circuit Judge, and ARCHER, Circuit Judge.
PER CURIAM.
DECISION
1
The final decision of the Merit Systems Protection Board (Board), Docket No. NY08318710106, denying Edwin H. Banta's request to redeposit his contributions into a Civil Service retirement annuity account, is affirmed.
OPINION
2
Mr. Banta contends that the Board misinterpreted or disregarded his medical evidence. Petitioner further asserts that the notice regarding the redeposit of retirement contributions, on his application for refund, is unclear. The notice was as follows:
3
If you have more than 5 years of service you may be entitled to annuity rights which will be forfeited by payment of this refund unless you are later reemployed subject to the Civil Service Retirement law.
4
Petitioner states he did not understand its import until several years later when he received a similarly worded notice from the Office of Workers Compensation Programs.
5
The Board found that Mr. Banta was competent to understand the consequences of his election to withdraw his contributions, See Yarbrough v. Office of Personnel Management, 770 F.2d 1056 (Fed. Cir. 1985), and that the notice was clear. Mr. Banta has not been reemployed, and thus remains ineligible to redeposit his refunded contributions. Having considered the record and appellant's arguments, we conclude that the Board's decision was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. See 5 U.S.C. Sec. 7703(c).
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859 F.2d 926
Huckabyv.Evans*
NO. 87-8949
United States Court of Appeals,Eleventh Circuit.
SEP 14, 1988
1
Appeal From: S.D.Ga.
2
AFFIRMED IN PART AND REVERSED IN PART.
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
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58 B.R. 978 (1986)
In re R. Richard RISO, Debtor.
R. Richard RISO, Plaintiff,
v.
Donald H. FRANCIS and Maybrook, Inc., Defendants.
Bankruptcy No. 84-340, Adv. No. 86-002.
United States Bankruptcy Court, D. New Hampshire.
April 9, 1986.
*979 Andrew Troop, Widett, Slater & Goldman, Boston, Mass., for debtor.
Mark Vaughn, Manchester, N.H., for Donald Francis and Maybrook, Inc.
U.S. trustee, Boston, Mass.
MEMORANDUM OPINION AND ORDER
JAMES E. YACOS, Bankruptcy Judge.
This case came on for hearing on March 19, 1986 on the defendants' Motions To Dismiss the debtor-plaintiff's Complaint For Injunctive Relief, For Order to Compel Dismissal Of Counterclaims Filed In State Court, And For Contempt For Violating The Automatic Stay. Since this matter is before the court on motions to dismiss, the court must view the facts alleged in the complaint in the light most favorable to the plaintiff. The essential question raised by the defendants' Motions To Dismiss is whether the plaintiff's complaint fails to state a claim upon which relief can be granted. F.R.C.P., Rule 12(b)(6).
The court is of the opinion that the plaintiff's complaint does fail to state a claim upon which relief can be granted to the extent that it relies on the position that there was a "claim" existing under the Bankruptcy Code concept of a claim prior to June 7, 1984, when this bankruptcy case was filed, with reference to the unexpired term of the "non-compete" clause of the employment contract which itself had become fully executed in 1981. The facts, as alleged, do establish that the "non-compete" clause was running from the 1981 termination of the debtor's employment contract. The clause period was to run to November 1986 with some restrictions running even longer.
The essential fact, as the court sees it, which was not alleged in this complaint is that there was some default or breach or at least notice of an intent to breach, that occurred prior to the bankruptcy filing date. This would have then given, at least arguably, a right to payment within the meaning of § 101(4) of the Bankruptcy Code which defines "claim."
Under the decision in the case of Matter of M. Frenville Company, Inc., 744 F.2d 332 (3rd Cir.1984), this transaction as a matter of law would not create a claim under the Bankruptcy Code. Frenville reads the "claim" definition to mean that under state law there had to exist a cause of action pre-bankruptcy. There clearly was no cause of action pre-bankruptcy in this case because there was no breach.
It is unnecessary for me here to reach and decide whether I would follow Frenville in its strictest sense, or whether I believe the First Circuit will ultimately follow Frenville as a matter of law. It is *980 enough to note that those cases that have criticized and refused to follow Frenville, the leading ones being Matter of Baldwin-United Corporation, 48 B.R. 901 (S.D.Oh. 1985) and In re Johns-Manville Corporation, 57 B.R. 680 (S.D.N.Y.1986), involved facts in which some triggering event had occurred pre-bankruptcy even though as a matter of state law no "cause of action" existed until after the bankruptcy filing.
Such a "triggering event" did not occur in this case. Taking the pleadings at their strongest and noting from the record that the debtor did not list with his scheduled debts any contingent liability to Francis or Maybrook that he wished to have discharged by this bankruptcy, I conclude that the pleadings fail to state a claim for injunctive relief to the extent that they rely on the position that the § 362 automatic stay reached this contingent obligation as a claim when there is no allegation that there was some triggering event, notice, fact, or dispute prior to bankruptcy that would justify a determination that a "claim" in the bankruptcy sense was involved. Again, the court need not rely in this case on the Frenville ruling that a "cause of action" in the strict state law sense is required.
This order will essentially leave for trial the claims based on the estoppel allegations because, as I indicated during the argument, on their face, these allegations indicate that representations were made to the court to get the sale approved that were inconsistent with knowledge that there was a valuable asset held by the corporation whose assets were being purchased. Whether that is factually true or not, I need not decide since the allegations do state a claim upon which relief could be granted.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED as follows:
1. Inasmuch as the various grounds for relief set forth in the debtor-plaintiff's Complaint for Injunctive Relief, etc. cannot be easily separated by counts consistent with this Order, the said Complaint is hereby dismissed in its entirety with leave granted to the plaintiff to file an amended complaint consistent with this Memorandum Opinion and Order by no later than April 21, 1986.
2. Defendants shall have 10 days thereafter to file an answer to the debtor-plaintiff's amended complaint.
3. Thereafter, the parties shall have 20 days to file any motions for summary judgment which they may wish to file, to wit: until May 27, 1986. If no motions for summary judgment are filed within said 20 day period the clerk will set this matter for trial for a half day.
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932 F.2d 978
Fallinv.Bessemer Board of Ed.**
NO. 90-7688
United States Court of Appeals,Eleventh Circuit.
APR 10, 1991
1
Appeal From: N.D.Ala.
2
AFFIRMED.
**
Local Rule 36 case
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456 F.Supp. 983 (1978)
Iver BOGEN, Patsy Reed High, Rudolf Johnson, and Danna R. Friedman, Plaintiffs,
v.
Gary DOTY, Deidre Dodge, William V. Kron, A. Lloyd Shannon, Edwin H. Hoff, Ronald R. Dicklich, Alvin S. Hall, comprising the County Board of the County of St. Louis, Minnesota, Defendants.
No. Civ. 5-77-96.
United States District Court, D. Minnesota, Fifth Division.
September 8, 1978.
Newton S. Friedman, Duluth, Minn., for plaintiffs.
Keith M. Brownell, St. Louis County Atty., Michael R. Dean, Asst. County Atty., Duluth, Minn., for defendants.
MEMORANDUM & ORDER
DEVITT, Chief Judge.
The issue here is whether the practice of having a prayer by a local unpaid clergyman preceding St. Louis County Board meetings violates the First Amendment prohibition against the making of laws respecting the establishment of religion.
Plaintiffs, citizens and taxpayers of St. Louis County, claim it does and seek to enjoin the practice. Defendant county commissioners defend the practice as constitutionally permissible. The facts have been stipulated and each party moves for summary judgment. Briefs have been filed and arguments heard.
There is no specific guidance on the question either in the Constitution or in previously decided cases. The United States Supreme Court's school prayer decisions of the 1960's[1] are not exactly in point because they deal with state laws, or rules promulgated *984 under authority of law, providing for compulsory prayers or bible reading in schools.
Those decisions dealt with mandatory prayer or bible reading for minors in school settings and requiring expenditures of public funds. In the present case no law or regulation requires the prayer; presence during its recitation is voluntary; no expenditure of public funds is required; and adults, not school children, are involved.
Absent specific precedential decisions, we turn to history and custom.
It may be recalled that the inclusion of the establishment clause in the Constitution was occasioned in large measure by opposition to the established church in England and compulsory subscription to its Book of Common Prayer. Many of the early colonists had emigrated to America for just that reason. Established churches also existed in many of the colonies. Engel v. Vitale, 370 U.S. 421, 428, 82 S.Ct. 1261, 8 L.Ed.2d 601 (1962). James Madison, Thomas Jefferson, and others, were leaders in opposition to government related churches and their views undoubtedly led to the inclusion of the establishment clause in the Bill of Rights. School District of Abington v. Schempp, 374 U.S. 203, 215, 83 S.Ct. 1560, 10 L.Ed.2d 844 (1963).
The United States Supreme Court, in interpreting the religion clauses of the First Amendment in the light of its history and purpose, has found compulsory prayer, Bible reading, and religious training in public schools to violate the Religion Clause, Engel v. Vitale, supra, Abington School District v. Schempp, supra, McCollum v. Board of Education, 333 U.S. 203, 68 S.Ct. 461, 92 L.Ed. 649 (1948), and has declared various forms of financial aid to parochial schools to be unconstitutional. Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971), Committee for Public Education v. Nyquist, 413 U.S. 756, 93 S.Ct. 2955, 37 L.Ed.2d 948 (1973), but neither the Supreme Court nor any other federal court has found voluntary uncompensated invocations preceding meetings of public bodies to impinge upon First Amendment religious rights.[2] Indeed, the Supreme Court in dicta has recognized that "[p]rayers in our legislative halls" are a proper activity not violative of the Constitution. Zorach v. Clauson, 343 U.S. 306, 72 S.Ct. 679, 96 L.Ed. 954 (1952). Long-time custom and practice in the United States militates against subscription to plaintiffs' narrow view of the Religion Clause.
It must be remembered that "[we] are a religious people whose institutions presuppose a Supreme Being," Zorach v. Clauson, 343 U.S. 306, 313, 72 S.Ct. 679, 684, 96 L.Ed. 954 (1952) and that the First Amendment "does not say that in every and all respects there shall be a separation of Church and State," Zorach v. Clauson, supra, at 312, 72 S.Ct. at 683. Mr. Justice Douglas said in Zorach, p. 312, 72 S.Ct. p. 683, the First Amendment "studiously defines the manner, the specific ways, in which there shall be no concert or union or dependency one on the other." To say that a voluntary invocation preceding a county board meetings is one of those ways defies the longtime view of that amendment, and practices under it, by Executive, Legislative and Judicial officers of the national and state governments. Mr. Justice Clark reviews these practices in School District of Abington v. Schempp, supra, 374 U.S. at 212, 83 S.Ct. 1560. The most notable, and analogous, one is that of the U. S. House of Representatives and the U. S. Senate beginning sessions each day with an invocation by a compensated chaplin a practice followed since the beginning of the republic. Most state legislatures follow a similar prayer practice Minnesota does. Federal courts are customarily opened with an invocation to "God to save this honorable court" and presidents and governors implore His *985 guidance when taking the Oath of Office. When new U. S. citizens are sworn in each month in this court, they join in the pledge of Allegiance to the U. S. Flag which recognizes "One Nation, under God."
In this country, we do not permit entanglements between government and church, but this does not mean that we do not permit recognition of a Supreme Being and invocation of his guidance. We are not a religiously sterile people. There is a limit to the so-called "Wall of Separation between church and state" and in fixing that limit, we must, as Mr. Justice Goldberg said in Abington School District v. Schempp, supra, 374 U.S. at 308, 83 S.Ct. at 1616, "distinguish between real threat and mere shadow."
There is no threat to the First Amendment prohibition against the making of laws respecting an establishment of religion in the invocation practice of the St. Louis County Commissioners. Plaintiffs allege irreparable injury and seek an injunction against continuation of the practice. The court finds no injury. The invocation will do no harm and it may do some good. I am satisfied the practice does not violate the Constitution.
The Clerk is directed to enter summary judgment for defendants.
NOTES
[1] Engel v. Vitale, 370 U.S. 421, 82 S.Ct. 1261, 8 L.Ed.2d 601 (1962); Abington School District v. Schempp, 374 U.S. 203, 83 S.Ct. 1560, 10 L.Ed.2d 844 (1963).
[2] Federal courts have upheld the practice of invocation ceremonies in high school graduation ceremonies. See, Wood v. Mount Lebanon Township School Dist., 342 F.Supp. 1293 (D.C. 1968); Grossberg v. Deusebio, 380 F.Supp. 285 (D.C.1974); see also, Lincoln v. Page, 109 N.H. 30, 241 A.2d 799 (1968); Wiest v. Mount Lebanon School District, 457 Pa. 166, 320 A.2d 362 (1974).
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656 F.Supp.2d 268 (2009)
Juan Guillermo PINEDA, Plaintiff
v.
LOPITO, ILEANA & HOWIE, INC.; Digital Audiovisual Services, Inc.; Carlos Pepe Rodriguez, in his personal capacity and as the representative of the conjugal partnership constituted between Jane Doe and himself; ABC Insurance Company, Defendants.
Civil No. 06-1397CCC.
United States District Court, D. Puerto Rico.
August 25, 2009.
*269 Etienne Totti-Del-Valle, Etienne Totti-Del-Toro, Luis M. Ferrer-Medina, Totti & Rodriguez Diaz, Hato Rey, PR, for Plaintiff.
Rafael Escalera-Rodriguez, Beatriz Annexy-Guevara, Carlos M. Hernandez-Burgos, Ineabelle Santiago-Camacho, Reichard & Escalera, San Juan, PR, for Defendants.
AMENDED ORDER
CARMEN CONSUELO CEREZO, District Judge.
The Order issued today (docket entry 175) is amended for the sole purpose of adding the following case in support of footnote 1: Pickens v. Equitable Life Assurance Soc., 413 F.2d 1390 (5th Cir.1969).
Before the Court is a Fed.R.Civ.P. 50(a)(1) oral motion submitted by defendants Lopito, Ileana and Howie, Inc. (LIH), Digital Audiovisual Services, Inc. (DAS) and Carlos Pepe Rodriguez on all claims after conclusion of the presentation of plaintiff's evidence. Both parties fully argued for and against the motion. Having considered the evidence and the controlling case law, the Court RULES as follows:
Regarding plaintiff's Title VII claims of unlawful discrimination based on gender *270 and national origin under 42 U.S.C. § 2000e, et. seq., and his A.D.E.A. claim of unlawful discrimination based on age under 29 U.S.C. §§ 621-634, the Court finds that plaintiff has provided a legally sufficient evidentiary basis to place these discrimination claims before the finder of facts.
Regarding the local Law 100 (29 L.P.R.A. § 146, et. seq.) claim based on political discrimination, the Rule 50(a)(1) motion is GRANTED as to all defendants. Such motion is DENIED as to the Law 100 discrimination claims based on age and national origin. The Court's ruling on the Law 100 political discrimination will be further discussed below.
The Rule 50(a)(1) motion on plaintiff's local Law 80 claim for unjust dismissal brought under 29 L.P.R.A. § 185 is DENIED.
The Article 1802 negligence claim under the Puerto Rico Civil Code, 31 L.P.R.A. § 5141 against LIH, DAS and Carlos José Rodriguez (fourth cause of action) for intentional infliction of emotional distress upon plaintiff and for loss of income resulting from his termination is MOOT, since plaintiff in its Motion Complying with Court Order filed on September 17, 2007 (docket entry 72) agreed to withdraw its fourth cause of action or voluntarily accept dismissal thereof since Law 100 allowed him recovery for emotional damages and Law 80 is the exclusive remedy for dismissal-without-just-cause claims.
The Rule 50(a)(1) motion filed by LIH and Carlos José Rodriguez for all claims against them under the A.D.E.A., Title VII, Puerto Rico Law 80 and Puerto Rico Law 100 is GRANTED as to LIH regarding all claims. As to individual defendant Carlos José Rodriguez, it is GRANTED as to the A.D.E.A., Title VII and Law 80 claims and DENIED as to the Law 100 age and national origin claims of discrimination.
Regarding Law 80, there is no evidence that Mr. Carlos José Rodriguez was plaintiff Juan Guillermo Pineda's employer at any time. As to the Law 80 claim against LIH, plaintiff contends that both LIH and DAS were his employer during the relevant time period based on the argument that since these two corporations had a same board of directors, common stock holders, one same system of accounting and shared a human resources department, the two corporations were one same entity. Plaintiff also raises that in a request for admissions the answer provided was that LIH and DAS were his employer.[1] Plaintiff has not at all discussed the alter-ego theory although his claims of common stock holders, board of directors and other common denominators all point to this theory.
The parties stipulated in the amended Joint Proposed Pretrial Order filed on June 29, 2007 (docket entry 48), at page 19 that: "(1) Mr. Pineda was hired by LIH in 1997. Mr. Pineda was General Manager of DAS from April 1998 to November 23, 2004." On August 19, 2009, during cross-examination, Mr. Pineda testified that as General Manager of DAS he was responsible to obtain money for the company so that he and the rest of the employees could be paid. He further testified that DAS is a separate corporation from LIH and the finances for each are individual, and that if DAS continued losing money and could not pay the salaries, rent and utilities, it could possibly close down if it did not have other projects. During that *271 same cross-examination, he referred to LIH as his client. Referring during the August 18, 2009 cross-examination to the sum of $53,000.00 due to a weather condition, he explained that the $53,000.00 were really received by LIH, not received by DAS, and that this made a difference because that amount is not reflected in "DAS numbers" but in "LIH numbers."
Exhibit 2 for plaintiff lists LIH and the names of the affiliated companies. Each company has its own social security employer number. Noemí Díaz-Torres, chief financial officer for all of the companies, testified on August 10, 2009 as plaintiff's witness that there is a central financial department and shared resources and that inter-company charges are made for the administrative services provided to the different companies; that LIH invoiced DAS for payroll services and for accounting services and that all companies paid LIH for those services and the cost of the services were reflected in the statement of income and losses of the different companies. She referred to these services as the costs of operation, rent, or other services paid by DAS to LIH such as telephone, cleaning, cafeteria, insurance, and support services for financing and receptionists. She further stated that the charges by LIH regarding services to the different corporations are pre-established, based on a formula discussed with all of the general managers of the companies and that, before they are charged each year, each manager signs a contract regarding the services and determining the charges because those charges are fixed amounts. During direct that same day, she explained that a checkbook was kept at LIH for all the companies and that all checks required two signatures, one of them being that of the general manager of the corresponding company.
Mr. Pineda acknowledged during cross-examination on August 19, 2009 that his salary check came from DAS and that at the beginning of the year he had to prepare a budget for the board of directors where he included his as well as the salaries of all DAS employees.
Plaintiff has failed to present evidence that could trigger the alter-ego doctrine since, beyond pointing to common stock holders and the sharing of common resources for which the different companies paid their share, he has not shown that LIH controlled the other corporations, that DAS and the other corporations lacked corporate integrity or that they were shells employed by LIH as an artifice or for illegal purposes. The fact that Mr. Pineda had dual functions as general manager of DAS and as a producer for LIH's creative department for a specified period of time does not justify piercing the corporate veil.
Finally, we reach defendants' Rule 50(1)(a) motion regarding plaintiff Pineda's Law 100 political discrimination claim, which is GRANTED since there is insufficient evidence from which a jury could find that plaintiff's termination was linked to political discrimination. Plaintiff has brought claims under Law 100 based on different types proscribed thereunder, to wit: age, national origin and political discrimination. Complaint's third cause of action, ¶ 35. As stated in Fontanez v. Wyndham Hotel Corp., 155 D.P.R. 364, 387 (2001), referring to Law 100 claims, "not all discrimination modes are configured by the existence of the same basic facts; each and everyone of the modes in question requires the existence of different basic facts." Commenting on the concept of presumption, specifically on Rule 13(a) of the Puerto Rico Rules of Evidence, the rule refers to the fact or group of facts previously established as a basic *272 fact while the fact deducted through a presumption is known as the presumed fact. Turning to the Law 100 rebuttable presumption of discrimination found in its Article 3, 29 L.P.R.A. § 148, the Court at page 384 observed: "In order to trigger the presumption of discrimination, the plaintiff employee must prove three elements: (1) that there was a prejudicial termination or action; (2) that it was taken without just cause; (3) evidence must be presented indicating the discrimination mode that is linked to the termination. It is at that moment that the presumption is triggered." See also S.L.G. Hernández-Beltrán v. TOLIC, 151 D.P.R. 754 (2000); Belk v. Martínez, 146 D.P.R. 215 (1998). Referring to the Law 100 presumption, the Court clarified, citing TOLIC, that this statutory provision "does not alter in its entirety the probative scheme that prevails in our jurisdiction, where once a complaint is filed, it is the plaintiff's burden at trial to commence with the presentation of his evidence in support of his allegations before defendant has any obligation to refute it." The Court made clear that "[i]f plaintiff, during its case in chief, fails to present sufficient evidence to support its allegations, defendant need not defend himself. The presumption established by Article 3 is intended to make it easier for the plaintiff employee to prove his claim, not to relieve him of the need and the obligation to present evidence to prove his allegations." At page 386 of its opinion, the Court reiterated that "the mere allegation of a basic fact, without it having been duly established, does not trigger a presumption that allows for the inference of a presumed fact ... [o]therwise it would not be possible or reasonable to require that defendant defeat a presumption supported only by an allegation." The Court highlighted at pages 387 and 388 that "not every unjustified termination is discriminatory ... yet every discriminatory termination is unjustified. This is why it becomes necessary for plaintiff who is claiming the remedies and benefits of Law 100 to prove certain basic rights so that the discrimination modality claimed can be configured."
In this case, the plaintiff failed to present sufficient evidence regarding the third element required to trigger the presumption of discrimination under Law 100, that is, he failed to present evidence that political discrimination was linked to his termination. The following testimony of Mr. Pineda demonstrates that this basic fact is lacking.
During the August 18, 2009 session, Mr. Pineda, in direct, gave the following answers to his attorney's questions:
Q. Mr. Pineda, what is your political ideology?
A. None.
Q. Why?
A. Because ever since I arrived in Puerto Rico, I've never had a political ideology.
Q. How long have you felt this way?
A. Ever since I arrived in Puerto Rico.
Q. Any why don't you have a political ideology?
A. Why? Because I don't like it, I've never liked it, I've never been interested in it. It's not a topic that I like to share and I just never have liked politics.
TR., page 2, lines 1-12.
During his cross-examination, he gave the following testimony:
Q. Mr. Pineda, you have no political affiliation, correct?
A. That is correct.
Q. And the person who substituted you, Ms. Juliette Lanauze, you don't know her political affiliation, if she has any, correct?
*273 A. Well, to my understanding, all the work she does for the Popular Party, I would understand that her affiliation is Popular.
Q. Do you know or not?
A. No.
TR., page 1, lines 2-11.
Mr. Pineda's theory regarding political discrimination is based on sheer speculation, that is, he understands that because the person that substituted him, Ms. Juliette Lanauze, worked as a freelance producer during the 2004 gubernatorial campaign of candidate Anibal Acevedo-Vila, she must have been an affiliate of the Popular Democratic Party as the candidate was. There is no evidence whatsoever of Ms. Lanauze's political affiliation. Mr. Pineda attempts to equate the work that she did as the producer for the political campaign of candidate Acevedo-Vila to her political affiliation to his party. Nor is there any evidence in support of the basic fact that his termination had a connection with political discrimination. Certainly neither Mr. Pineda nor any of his witnesses so testified. All there is on the record is an argument, not a proven basic fact regarding political discrimination, by plaintiff's attorney during the Rule 50 oral argument. Asked by the Court time and again to link the termination to the political discrimination modality claimed, he stated that an offer was made to Ms. Lanauze three weeks after election day and the day after plaintiff's termination. He described that situation envisioned by the employer as:
... This is what we need, we'll have four more years with the PPD governor and here's a person who is close to the PPD governor and he certainly is going to be pleased. He's pleased that he won the campaign, and she did the campaign commercials and she was the image consultant and bought has clothes and I'm going to have her here. This is going to be another good four years for the agency.
TR. p. 10., lines 16-22.
All this adds up to is a business judgment in the sense that, Acevedo-Vila having won the governorship in 2004, the advertising agency understood it would have another good four years regarding government accounts if it retained his former successful campaign consultant, with whom he was pleased, as head of the production house formerly managed by the plaintiff.
Due to the lack of proof regarding the basic fact of the nexus between the dismissal without just cause and the political discrimination claimed, the Law 100 presumption of discrimination was never triggered. Therefore, according to Wyndham, defendant had neither the need nor the obligation to defend himself from a political discrimination claim as the basis for Mr. Pineda's termination.
SO ORDERED.
PARTIAL JUDGMENT
Pursuant to the Order issued on this same date, partial judgment is hereby entered DISMISSING (1) as to all defendants the claim under Law 100 based on political discrimination, (2) all the claims brought against Lopito, Ileana & Howie, Inc., and (3) the claims brought against defendant Carlos Pepe Rodriguez under Title VII, the Age Discrimination in Employment Act and Law 80.
SO ORDERED AND ADJUDGED.
ORDER
Before the Court is a Fed.R.Civ.P. 50(a)(1) oral motion submitted by defendants Lopito, Ileana and Howie, Inc. (LIH), Digital Audiovisual Services, Inc. (DAS) and Carlos Pepe Rodriguez on all *274 claims after conclusion of the presentation of plaintiff's evidence. Both parties fully argued for and against the motion. Having considered the evidence and the controlling case law, the Court RULES as follows:
Regarding plaintiff's Title VII claims of unlawful discrimination based on gender and national origin under 42 U.S.C. § 2000e, et. seq., and his A.D.E.A. claim of unlawful discrimination based on age under 29 U.S.C. §§ 621-634, the Court finds that plaintiff has provided a legally sufficient evidentiary basis to place these discrimination claims before the finder of facts.
Regarding the local Law 100 (29 L.P.R.A. § 146, et. seq.) claim based on political discrimination, the Rule 50(a)(1) motion is GRANTED as to all defendants. Such motion is DENIED as to the Law 100 discrimination claims based on age and national origin. The Court's ruling on the Law 100 political discrimination will be further discussed below.
The Rule 50(a)(1) motion on plaintiff's local Law 80 claim for unjust dismissal brought under 29 L.P.R.A. § 185 is DNIED.
The Article 1802 negligence claim under the Puerto Rico Civil Code, 31 L.P.R.A. § 5141 against LIH, DAS and Carlos Jose Rodriguez (fourth cause of action) for intentional infliction of emotional distress upon plaintiff and for loss of income resulting from his termination is MOOT, since plaintiff in its Motion Complying with Court Order filed on September 17, 2007 (docket entry 72) agreed to withdraw its fourth cause of action or voluntarily accept dismissal thereof since Law 100 allowed him recovery for emotional damages and Law 80 is the exclusive remedy for dismissal-without-just-cause claims.
The Rule 50(a)(1) motion filed by LIH and Carlos Jose Rodriguez for all claims against them under the A.D.E.A., Title VII, Puerto Rico Law 80 and Puerto Rico Law 100 is GRANTED as to LIH regarding all claims. As to individual defendant Carlos Jose Rodriguez, it is GRANTED as to the A.D.E.A., Title VII and Law 80 claims and DENIED as to the Law 100 age and national origin claims of discrimination.
Regarding Law 80, there is no evidence that Mr. Carlos Jose Rodriguez was plaintiff Juan Guillermo Pineda's employer at any time. As to the Law 80 claim against LIH, plaintiff contends that both LIH and DAS were his employer during the relevant time period based on the argument that since these two corporations had a same board of directors, common stock holders, one same system of accounting and shared a human resources department, the two corporations were one same entity. Plaintiff also raises that in a request for admissions the answer provided was that LIH and DAS were his employer.[1] Plaintiff has not at all discussed the alter-ego theory although his claims of common stock holders, board of directors and other common denominators all point to this theory.
The parties stipulated in the amended Joint Proposed Pretrial Order filed on June 29, 2007 (docket entry 48), at page 19 that: "(1) Mr. Pineda was hired by LIH in 1997. Mr. Pineda was General Manager of DAS from April 1998 to November 23, 2004." On August 19, 2009, during crossexamination, Mr. Pineda testified that as General Manager of DAS he was responsible to obtain money for the company so that he and the rest of the employees *275 could be paid. He further testified that DAS is a separate corporation from LIH and the finances for each are individual, and that if DAS continued losing money and could not pay the salaries, rent and utilities, it could possibly close down if it did not have other projects. During that same cross-examination, he referred to LIH as his client. Referring during the August 18, 2009 cross-examination to the sum of $53,000.00 due to a weather condition, he explained that the $53,000.00 were really received by LIH, not received by DAS, and that this made a difference because that amount is not reflected in "DAS numbers" but in "LIH numbers."
Exhibit 2 for plaintiff lists LIH and the names of the affiliated companies. Each company has its own social security employer number. Noemi Diaz-Torres, chief financial officer for all of the companies, testified on August 10, 2009 as plaintiff's witness that there is a central financial department and shared resources and that inter-company charges are made for the administrative services provided to the different companies; that LIH invoiced DAS for payroll services and for accounting services and that all companies paid LIH for those services and the cost of the services were reflected in the statement of income and losses of the different companies. She referred to these services as the costs of operation, rent, or other services paid by DAS to LIH such as telephone, cleaning, cafeteria, insurance, and support services for financing and receptionists. She further stated that the charges by LIH regarding services to the different corporations are pre-established, based on a formula discussed with all of the general managers of the companies and that, before they are charged each year, each manager signs a contract regarding the services and determining the charges because those charges are fixed amounts. During direct that same day, she explained that a checkbook was kept at LIH for all the companies and that all checks required two signatures, one of them being that of the general manager of the corresponding company.
Mr. Pineda acknowledged during crossexamination on August 19, 2009 that his salary check came from DAS and that at the beginning of the year he had to prepare a budget for the board of directors where he included his as well as the salaries of all DAS employees.
Plaintiff has failed to present evidence that could trigger the alter-ego doctrine since, beyond pointing to common stock holders and the sharing of common resources for which the different companies paid their share, he has not shown that LIH controlled the other corporations, that DAS and the other corporations lacked corporate integrity or that they were shells employed by LIH as an artifice or for illegal purposes. The fact that Mr. Pineda had dual functions as general manager of DAS and as a producer for LIH's creative department for a specified period of time does not justify piercing the corporate veil.
Finally, we reach defendants' Rule 50(1)(a) motion regarding plaintiff Pineda's Law 100 political discrimination claim, which is GRANTED since there is insufficient evidence from which a jury could find that plaintiff's termination was linked to political discrimination. Plaintiff has brought claims under Law 100 based on different types proscribed thereunder, to wit: age, national origin and political discrimination. Complaint's third cause of action, ¶ 35. As stated in Fontanez v. Wyndham Hotel Corp., 155 D.P.R. 364, 387 (2001), referring to Law 100 claims, "not all discrimination modes are configured by the existence of the same basic facts; each and everyone of the modes in *276 question requires the existence of different basic facts." Commenting on the concept of presumption, specifically on Rule 13(a) of the Puerto Rico Rules of Evidence, the rule refers to the fact or group of facts previously established as a basic fact while the fact deducted through a presumption is known as the presumed fact. Turning to the Law 100 rebuttable presumption of discrimination found in its Article 3, 29 L.P.R.A. § 148, the Court at page 384 observed: "In order to trigger the presumption of discrimination, the plaintiff employee must prove three elements: (1) that there was a prejudicial termination or action; (2) that it was taken without just cause; (3) evidence must be presented indicating the discrimination mode that is linked to the termination. It is at that moment that the presumption is triggered." See also S.L.G. Hernandez-Beltrán v. TOLIC, 151 D.P.R. 754 (2000); Belk v. Martinez, 146 D.P.R. 215 (1998). Referring to the Law 100 presumption, the Court clarified, citing TOLIC, that this statutory provision "does not alter in its entirety the probative scheme that prevails in our jurisdiction, where once a complaint is filed, it is the plaintiff's burden at trial to commence with the presentation of his evidence in support of his allegations before defendant has any obligation to refute it." The Court made clear that "[i]f plaintiff, during its case in chief, fails to present sufficient evidence to support its allegations, defendant need not defend himself. The presumption established by Article 3 is intended to make it easier for the plaintiff employee to prove his claim, not to relieve him of the need and the obligation to present evidence to prove his allegations." At page 386 of its opinion, the Court reiterated that "the mere allegation of a basic fact, without it having been duly established, does not trigger a presumption that allows for the inference of a presumed fact ... [o]therwise it would not be possible or reasonable to require that defendant defeat a presumption supported only by an allegation." The Court highlighted at pages 387 and 388 that "not every unjustified termination is discriminatory ... yet every discriminatory termination is unjustified. This is why it becomes necessary for plaintiff who is claiming the remedies and benefits of Law 100 to prove certain basic rights so that the discrimination modality claimed can be configured."
In this case, the plaintiff failed to present sufficient evidence regarding the third element required to trigger the presumption of discrimination under Law 100, that is, he failed to present evidence that political discrimination was linked to his termination. The following testimony of Mr. Pineda demonstrates that this basic fact is lacking.
During the August 18, 2009 session, Mr. Pineda, in direct, gave the following answers to his attorney's questions:
Q. Mr. Pineda, what is your political ideology?
A. None.
Q. Why?
A. Because ever since I arrived in Puerto Rico, I've never had a political ideology.
Q. How long have you felt this way?
A. Ever since I arrived in Puerto Rico.
Q. Any why don't you have a political ideology?
A. Why? Because I don't like it, I've never liked it, I've never been interested in it. It's not a topic that I like to share and I just never have liked politics.
TR., page 2, lines 1-12.
During his cross-examination, he gave the following testimony:
Q. Mr. Pineda, you have no political affiliation, correct?
*277 A. That is correct.
Q. And the person who substituted you, Ms. Juliette Lanauze, you don't know her political affiliation, if she has any, correct?
A. Well, to my understanding, all the work she does for the Popular Party, I would understand that her affiliation is Popular.
Q. Do you know or not?
A. No.
TR., page 1, lines 2-11.
Mr. Pineda's theory regarding political discrimination is based on sheer speculation, that is, he understands that because the person that substituted him, Ms. Juliette Lanauze, worked as a freelance producer during the 2004 gubernatorial campaign of candidate Anibal Acevedo-Vila, she must have been an affiliate of the Popular Democratic Party as the candidate was. There is no evidence whatsoever of Ms. Lanauze's political affiliation. Mr. Pineda attempts to equate the work that she did as the producer for the political campaign of candidate Acevedo-Vila to her political affiliation to his party. Nor is there any evidence in support of the basic fact that his termination had a connection with political discrimination. Certainly neither Mr. Pineda nor any of his witnesses so testified. All there is on the record is an argument, not a proven basic fact regarding political discrimination, by plaintiff's attorney during the Rule 50 oral argument. Asked by the Court time and again to link the termination to the political discrimination modality claimed, he stated that an offer was made to Ms. Lanauze three weeks after election day and the day after plaintiff's termination. He described that situation envisioned by the employer as:
... This is what we need, we'll have four more years with the PPD governor and here's a person who is close to the PPD governor and he certainly is going to be pleased. He's pleased that he won the campaign, and she did the campaign commercials and she was the image consultant and bought has clothes and I'm going to have her here. This is going to be another good four years for the agency.
TR. p. 10., lines 16-22.
All this adds up to is a business judgment in the sense that, Acevedo-Vila having won the governorship in 2004, the advertising agency understood it would have another good four years regarding government accounts if it retained his former successful campaign consultant, with whom he was pleased, as head of the production house formerly managed by the plaintiff.
Due to the lack of proof regarding the basic fact of the nexus between the dismissal without just cause and the political discrimination claimed, the Law 100 presumption of discrimination was never triggered. Therefore, according to Wyndham, defendant had neither the need nor the obligation to defend himself from a political discrimination claim as the basis for Mr. Pineda's termination.
SO ORDERED.
NOTES
[1] Requests for Admissions are not meant as an evidentiary tool to prove core facts in a case, such as the liability of LIH, Inc. as an employer. Pickens v. Equitable Life Assurance Soc., 413 F.2d 1390 (5th Cir.1969).
[1] Requests for Admissions are not meant as an evidentiary tool to prove core facts in a case, such as the liability of LIH, Inc. as an employer.
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491 F.2d 751
U. S.v.Brewer
73-1797
UNITED STATES COURT OF APPEALS Third Circuit
12/19/73
M.D.Pa., 363 F.Supp. 606
AFFIRMED
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
Consolidated Cases Nos. 02-60734, 02-60778,
02-60746, 02-60766, 02-60762, 02-60745,
02-60786, 02-60752, 02-60747, 02-60779,
02-60802
Summary Calendar
_______________________
Case No. 02-60734
BANK ONE NA,
Plaintiff-Appellee,
v.
MICHELLE JONES,
Defendant-Appellant.
_________________________
Case No. 02-60778
BANK ONE NA,
Plaintiff-Appellee,
v.
GREGORY LEDELL THOMAS; PRINCELLA THOMAS,
Defendant-Appellant.
_________________________
Case No. 02-60746
BANK ONE NA,
Plaintiff-Appellee,
v.
VELMA GREEN,
Defendant-Appellant.
_________________________
Case No. 02-60766
BANK ONE NA,
Plaintiff-Appellee,
v.
MACK ARTHUR PICKENS, JR.,
Defendant-Appellant.
_________________________
Case No. 02-60762
BANK ONE NA,
Plaintiff-Appellee,
v.
J. C. ROBERSON,
Defendant-Appellant.
_________________________
Case No. 02-60745
BANK ONE NA,
Plaintiff-Appellee,
v.
MARILYN NAILER, A/K/A MARILYN NAILOR;
BARRY NAILER, A/K/A BARRY NAILOR,
Defendant-Appellant.
_________________________
Case No. 02-60786
BANK ONE NA,
Plaintiff-Appellee,
v.
THOMAS WRIGHT; ANNIE WRIGHT,
Defendant-Appellant.
_________________________
Case No. 02-60752
BANK ONE NA,
2
Plaintiff-Appellee,
v.
JOANN NEWSON,
Defendant-Appellant.
_________________________
Case No. 02-60747
BANK ONE NA,
Plaintiff-Appellee,
v.
GLORIA JOHNSON,
Defendant-Appellant.
_________________________
Case No. 02-60779
BANK ONE NA,
Plaintiff-Appellee,
v.
LOYD WALTON, JR.,
Defendant-Appellant.
_________________________
Case No. 02-60802
BANK ONE NA,
Plaintiff-Appellee,
v.
CLARA BUTLER, A/K/A CLARA BULTER,
Defendant-Appellant.
_____________________________________________
Appeal from the United States District Court
for the Northern District of Mississippi
(3:01-CV-39)
_____________________________________________
February 25, 2003
3
Before JONES, STEWART and DENNIS, Circuit Judges.
PER CURIAM:*
Appellants challenge the district court’s rulings
granting Bank One’s motions to compel arbitration and to stay the
Appellants’ pending state law claims. This case is
indistinguishable from those that we reviewed and ruled on in the
related cases of Bank One, N.A. v. Boyd1 and Bank One, N.A. v.
Lake.2 For essentially the same reasons that are set forth in our
opinion in Boyd and in the district court’s opinion in Bank One,
N.A. v. Coates,3 and Bank One, N.A. v. Taylor,4 the judgment of the
district court in this case is, in all respects, AFFIRMED.
*
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.
1
288 F.3d 181 (5th Cir. 2002).
2
No. 01-60051 (5th Cir. April 5, 2002) (unpublished).
3
125 F. Supp. 2d 819 (S.D. Miss. 2001).
4
No. 4:01CV15-D-B (N.D. Miss. May 7, 2002) (order granting petition to compel
arbitration).
4
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 03-10307
Plaintiff-Appellee, D.C. No.
v. CR-02-00053-1-
EDWARD ROSENTHAL, CRB
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 03-10370
Plaintiff-Appellant, D.C. No.
v. CR-02-00053-3-
EDWARD ROSENTHAL, CRB
Defendant-Appellee.
OPINION
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted
September 13, 2005—San Francisco, California
Filed April 26, 2006
Before: Betty B. Fletcher, John R. Gibson,* and
Marsha S. Berzon, Circuit Judges.
Opinion by Judge B. Fletcher
*The Honorable John R. Gibson, Senior United States Circuit Judge for
the Eighth Circuit, sitting by designation.
4745
4748 UNITED STATES v. ROSENTHAL
COUNSEL
Dennis P. Riordan, Donald M. Horgan, and Joseph D. Elford,
San Francisco, California, for the appellant.
Amber S. Rosen, George L. Bevan, Jr., Hannah Horsley, and
Kevin V. Ryan, U.S. Attorney’s Office, San Jose, California,
for the appellee.
OPINION
B. FLETCHER, Circuit Judge:
Edward Rosenthal appeals a three-count conviction for vio-
lations of the Controlled Substances Act (“CSA”), 21 U.S.C.
§§ 801 et seq., asserting an as-applied Commerce Clause
challenge, a claim of immunity pursuant to 21 U.S.C.
§ 885(d), erroneous evidentiary rulings and instructions by the
UNITED STATES v. ROSENTHAL 4749
district court, prosecutorial misconduct, juror misconduct, and
the improper denial of a hearing under Franks v. Delaware,
438 U.S. 154 (1978). The government cross-appeals, claiming
that the district court erroneously found Rosenthal eligible for
the “safety valve” and erroneously departed downward to
impose a single day of confinement.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18
U.S.C. § 3742(b), and we reverse the conviction solely on the
issue of jury misconduct. We affirm the district court on all
other grounds and dismiss the government’s claims regarding
sentencing as moot.
I
In November 1996, Californians passed, by voter initiative,
Proposition 215, the Compassionate Use Act, which allows
patients to obtain marijuana for “personal medical purposes
. . . upon the written or oral recommendation or approval of
a physician.” CAL. HEALTH & SAFETY CODE § 11362.5(d). One
of the purposes of the Compassionate Use Act is
[t]o ensure that seriously ill Californians have the
right to obtain and use marijuana for medical pur-
poses where that medical use is deemed appropriate
and has been recommended by a physician who has
determined that the person’s health would benefit
from the use of marijuana in the treatment of cancer,
anorexia, AIDS, chronic pain, spasticity, glaucoma,
arthritis, migraine, or any other illness for which
marijuana provides relief.
Id. The statute shields patients and their primary caregivers
from prosecution under state-law provisions outlawing the
possession and cultivation of marijuana. See id. § 11362.5(d).
4750 UNITED STATES v. ROSENTHAL
A
After passage of the Compassionate Use Act, a number of
“medical cannabis dispensaries” were formed to make mari-
juana accessible to seriously ill patients. In support of those
efforts, the Oakland City Council, on July 28, 1998, adopted
Ordinance No. 12076 (“the Oakland Ordinance”), which
intends to “ensure access to safe and affordable medical can-
nabis pursuant to the Compassionate Use Act of 1996.” Oak-
land, Cal., Ordinance 12076 § 1(C) (July 28, 1998) (codified
as amended at OAKLAND, CAL., MUN. CODE ch. 8.46). The
Oakland Ordinance purports to “provide immunity to medical
cannabis provider associations pursuant to Section 885(d) of
Title 21 of the United States Code.” Id. § 1(D). Under the
Ordinance, the City Manager designates “one or more entities
as a medical cannabis provider association.”1 That entity
would then designate individuals to help distribute medical
cannabis to seriously ill persons.
The City of Oakland designated the Oakland Cannabis
Buyers’ Cooperative (“OCBC”) an official medical-cannabis-
provider association. Jeffrey Jones, OCBC’s executive direc-
tor, designated Rosenthal to be an agent of the OCBC and to
cultivate marijuana plants for distribution to authorized
medical-cannabis users. That designation, memorialized in a
letter from Jones to Rosenthal on September 4, 1998, specifi-
cally states that “you are deemed a duly authorized ‘officer of
the City of Oakland’ and as such are immune from civil and
criminal liability under Section 885(d) of the federal Con-
trolled Substances Act.”
B
After California’s approval of the Compassionate Use Act,
1
A 2004 amendment to the Oakland Ordinance states that “the City
Manager shall designate not more than one entity as a medical cannabis
provider association.”
UNITED STATES v. ROSENTHAL 4751
questions surfaced as to whether cannabis dispensaries actu-
ally were immune from prosecution under state and federal
drug laws. In 1997, a California Court of Appeal held that
cannabis-cultivating clubs are not “primary caregivers” within
the meaning of the Compassionate Use Act and are therefore
not shielded from prosecution under the state’s controlled-
substances laws. See People ex rel. Lungren v. Peron, 70 Cal.
Rptr. 2d 20, 31-32 (Ct. App. 1997).2 On May 19, 1998, the
same district court from which the instant appeal is taken
entered a preliminary injunction order barring the OCBC (and
five other cannabis dispensaries) from manufacturing, distrib-
uting, or possessing marijuana with the intent to manufacture
or distribute, in violation of federal law. See United States v.
Cannabis Cultivators Club, 5 F. Supp. 2d 1086, 1106 (N.D.
Cal. 1998).
The OCBC, after designation as an official cannabis dis-
pensary, sought dismissal of the complaint, but the district
court denied that request, rejecting the OCBC’s claim that the
Oakland Ordinance immunized it from federal liability under
21 U.S.C. § 885(d). The district court further denied OCBC’s
requests to modify the injunction to permit an exception in
cases of medical necessity.3
Rosenthal continued cultivating marijuana for distribution
2
The California Supreme Court denied review of the case on February
25, 1998. Peron, 70 Cal. Rptr. at 20.
3
This court reversed and remanded the district court’s denial of OCBC’s
motion to modify, holding that the medical necessity defense was avail-
able and that the injunction could be modified to accommodate this
defense. See United States v. Oakland Cannabis Buyers’ Coop., 190 F.3d
1109, 1115 (9th Cir. 1999). On May 14, 2001, the Supreme Court
reversed, holding that “medical necessity is not a defense to manufactur-
ing and distributing marijuana” under the CSA. United States v. Oakland
Cannabis Buyers’ Coop., 532 U.S. 483, 494 (2001). The Court also held
that the district court had no authority to consider a medical necessity
defense in exercising its equitable powers, as such consideration was pre-
cluded by the CSA. Id. at 498-99.
4752 UNITED STATES v. ROSENTHAL
to both the OCBC and San Francisco’s Harm Reduction Cen-
ter from October 2001 until February 12, 2002, the day of his
arrest.
C
Rosenthal filed a series of pre-trial motions and, eventually,
a motion to dismiss the indictment. He claimed his prosecu-
tion exceeded the federal government’s powers under the
Commerce Clause, violating the Tenth Amendment to the
U.S. Constitution; that the government engaged in selective
prosecution; that he was immune from prosecution under the
federal immunity provision; and that the indictment was
tainted due to entrapment-by-estoppel. The district court
denied all of Rosenthal’s motions. It also granted the govern-
ment’s motions in limine, which precluded Rosenthal from
putting on a “medical marijuana” defense, introducing evi-
dence or argument aimed at jury nullification, or introducing
evidence or argument related to an entrapment-by-estoppel
defense.
D
On January 31, 2003, at the conclusion of the trial, the jury
found Rosenthal guilty of one count of manufacturing mari-
juana, in violation of 21 U.S.C. § 841(a)(1); one count of con-
spiracy to manufacture marijuana, in violation of 21 U.S.C.
§ 846; and one count of maintaining a place for the manufac-
ture of marijuana, in violation of 21 U.S.C. § 856(a)(1).
Rosenthal moved for a new trial pursuant to Federal Rule
of Criminal Procedure 33, arguing that the court erred by
excluding his defense of entrapment by estoppel; the court
improperly excluded 19 jurors who expressed pro-medical-
marijuana beliefs; the court erroneously instructed the jury
regarding its right to engage in nullification; and Rosenthal
was entitled to a new trial because of juror and prosecutorial
misconduct. As to juror misconduct, Rosenthal submitted dec-
UNITED STATES v. ROSENTHAL 4753
larations from two jurors, one of whom, on the eve of the ver-
dict, consulted with an attorney-friend who admonished the
juror to follow the judge’s instructions or risk “get[ting] into
trouble.” The district court held an evidentiary hearing on
April 1 and 8, 2003, and denied the motion for a new trial in
a published order. See United States v. Rosenthal, 266 F.
Supp. 2d 1068 (N.D. Cal. 2003) (“Rosenthal I”).
On June 4, 2003, the district court sentenced Rosenthal to
one day of imprisonment. See United States v. Rosenthal, 266
F. Supp. 2d 1091 (N.D. Cal. 2003) (“Rosenthal II”). The court
found Rosenthal eligible for safety-valve relief pursuant to
United States Sentencing Guidelines § 5C1.2, entitling him to
a sentence below the mandatory five-year minimum. See id.
at 1097. The court departed downward by ten levels based on
the determination that Rosenthal honestly and reasonably
believed he was not disobeying federal law given the prom-
ises made by Oakland officials. See id. at 1098-100. Rosen-
thal was sentenced to three concurrent sentences of one day,
with credit for time served.
II
Rosenthal raises a claim of immunity pursuant to 21 U.S.C.
§ 885(d), challenges to the district court’s evidentiary rulings
and instructions regarding argument, claims of prosecutor and
juror misconduct, and the denial of a Franks hearing.4 The
government cross-appeals, arguing that the district court erred
in finding that Rosenthal was eligible for the “safety valve”
and in departing from the minimum sentence to impose a sin-
gle day of confinement.
4
Rosenthal originally raised an as-applied Commerce Clause challenge
but abandoned it during oral argument in light of Gonzales v. Raich, 125
S. Ct. 2195 (2005) (upholding application of CSA to intrastate cultivation
of marijuana plants for medicinal purposes).
4754 UNITED STATES v. ROSENTHAL
III
The district court issued a thorough and well-reasoned
order articulating its basis for denying one of the evidentiary
objections, the prosecutorial-misconduct claim, and the jury-
instructions claim, see Rosenthal I, 266 F. Supp. 2d at 1079-
82, 1085 n.5, and ruled on the other evidentiary issue and the
Franks hearing issue orally. We agree with the district court’s
written and oral analysis of those issues and adopt its reason-
ing in whole. However, we reverse the district court on the
jury-misconduct claim.
We independently review the question regarding immunity
under 21 U.S.C. § 885(d) to underscore our holding that the
provision does not apply to individuals, such as Rosenthal,
who are involved with medical-cannabis dispensaries.
Finally, we dismiss as moot the government’s cross-appeal
challenging the length of the sentence.
IV
[1] Rosenthal claims that he is immune from prosecution
under 21 U.S.C. § 885(d). We review de novo a district
court’s decision to dismiss an indictment based on an inter-
pretation of a federal statute. United States v. Marks, 379 F.3d
1114, 1116 (9th Cir. 2004), cert. denied, 543 U.S. 1170
(2005).
21 U.S.C. § 885(d) states, in full:
Except as provided in sections 2234 and 2235 of
Title 18 [relating to illegal procurement and execu-
tion of search warrants], no civil or criminal liability
shall be imposed by virtue of this subchapter upon
any duly authorized Federal officer lawfully engaged
in the enforcement of this subchapter, or upon any
duly authorized officer of any State, territory, politi-
UNITED STATES v. ROSENTHAL 4755
cal subdivision thereof, the District of Columbia, or
any possession of the United States, who shall be
lawfully engaged in the enforcement of any law or
municipal ordinance relating to controlled sub-
stances.
Rosenthal argues that he was “lawfully engaged in the
enforcement” of the Oakland Ordinance by ensuring legal dis-
tribution of marijuana to seriously ill Californians. Moreover,
he notes that Oakland officials encouraged him to participate
in the distribution of medical marijuana, deputized him to per-
form that function, and promised, in writing, his immunity
from liability. For these reasons, Rosenthal claims he was a
“duly authorized officer” of the City of Oakland and immu-
nized by § 885(d).
[2] Although the City of Oakland purported to authorize
Rosenthal to manufacture marijuana, he was not “duly autho-
rized” to do so, as state law does not allow the manufacturing
of marijuana by individuals other than the patient or his pri-
mary caregivers. See People ex rel. Lungren v. Peron, 70 Cal.
Rptr. 2d 20, 31-32 (1997). Consequently, Rosenthal was not
a “duly authorized officer” within the meaning of § 885(d), as
Oakland’s designation conflicted with state law. Accord State
v. Kama, 178 Or. App. 561(Or. Ct. App. 2002) (affirming trial
court’s finding that § 885(d) immunized Portland police offi-
cers from federal prosecution under 21 U.S.C. § 841(a)).
[3] We further agree with the district court that cultivating
marijuana for medical use does not constitute “enforcement”
within the meaning of § 885(d). See Rosenthal I, 266 F. Supp.
2d at 1078. As the district court noted, “enforcement” means
“to compel compliance with the law . . . . At best, Rosenthal
was implementing or facilitating the purpose of the statute; he
was not compelling anyone to do or not to do anything.” Id.
Kama is not inconsistent with such a theory. In that case, the
state law mandated the return of marijuana to the individual
from whom the marijuana had been seized, and therefore the
4756 UNITED STATES v. ROSENTHAL
officers in question were “enforcing” the state law that
required them to deliver the marijuana to that individual
because he had a state-law right to its return. 178 Or. App. at
564-65. Here, in contrast, the state law does not give any per-
son a right to obtain medical marijuana from any particular
source, and the Oakland Ordinance does not mandate that
Rosenthal manufacture marijuana.
We also agree with the district court’s conclusion that
Rosenthal’s interpretation of the immunity provision contra-
dicts the purpose of the CSA. Rosenthal I, 266 F. Supp. 2d at
1078-79. We note, as well, Rosenthal and the OCBC’s inti-
mate knowledge of the district court’s previous orders, which
rejected any claim that cannabis dispensaries were immune
from federal anti-drug laws. See supra Section I.B.
[4] In conclusion, we reject the premise that an ordinance
such as the one Oakland enacted can shield a defendant from
prosecution for violation of federal drug laws. Rosenthal can-
not avail himself of the immunity provision of § 885(d).
V
Rosenthal next contends that the court erred in refusing to
grant a new trial after it became aware that one of the jurors
(to whom we will refer as “Juror A”) sought advice from an
attorney on the eve of rendering a verdict. The district court,
upon conducting a hearing into the matter, concluded that
Rosenthal failed to demonstrate prejudice and denied the
motion for a new trial. We find that the district court applied
an overly burdensome standard of proof and that, under the
appropriate standard of review, prejudice is evident.
A
Denial of a motion for a mistrial based on juror misconduct
is reviewed for abuse of discretion. United States v. Mills, 280
F.3d 915, 921 (9th Cir. 2002). Although this is an “extremely
UNITED STATES v. ROSENTHAL 4757
deferential standard,” see United States v. Martinez-Martinez,
369 F.3d 1076, 1081-82 (9th Cir.), cert. denied, 543 U.S.
1013 (2004), the scenario changes where, as here, we consider
whether the district court applied the appropriate legal stan-
dard to guide its prejudice determination. See Suzy’s Zoo v.
Comm’r, 273 F.3d 875, 878 (9th Cir. 2001) (stating that “[a]
mixed question of law and fact exists when primary facts are
undisputed and ulitmate inferences and legal consequences
are in dispute”). Because we review a question of law, we
apply de novo review.
B
[5] Our juror-misconduct precedents “distinguish between
introduction of ‘extraneous evidence’ to the jury, and ex parte
contacts with a juror that do not include the imparting of any
information that might bear on the case.” Sea Hawk Seafoods,
Inc. v. Alyeska Pipeline Serv. Co., 206 F.3d 900, 906 (9th Cir.
2000). Extraneous-evidence cases involve not only the intro-
duction of “evidence” per se but the “submission of ‘extrane-
ous information’ (e.g., a file or dictionary) to the jury.” United
States v. Madrid, 842 F.2d 1090, 1093 (9th Cir. 1988). Ex
parte contacts, by contrast, generally do “not pertain to ‘any
fact in controversy or any law applicable to the case.’ ” Id.
(citing Rushen v. Spain, 464 U.S. 114, 121 (1983) (per
curiam)).
Where ex parte communication is involved, the district
court, upon finding a reasonable possibility of prejudice, must
hold a fair hearing. See Madrid, 842 F.2d at 1094. At the
hearing, the defendant generally must demonstrate “actual
prejudice,” without which a new trial is not warranted.5 Id. at
5
In Sea Hawk Seafoods, we noted an exception in cases of inherently
coercive ex parte contact. See 206 F.3d at 906 (“[a]n ex parte remark may
in some circumstances merit a rebuttable presumption of prejudice
because of its inherently coercive effect, as where a judge instructs a juror
ex parte regarding the verdict . . . .”).
4758 UNITED STATES v. ROSENTHAL
1093; see also Sea Hawk Seafoods, 206 F.3d at 906 (noting
that, where ex parte contacts are involved, the defendant will
receive a new trial only if the court finds “actual prejudice”
to the defendant).
[6] Extraneous-information cases, by contrast, call for more
searching review; we grant a new trial if “there is a reasonable
possibility that the material could have affected the verdict.”
Id. Unlike ex parte cases, we generally place the burden “on
the party opposing a new trial to demonstrate the absence of
prejudice.” Id. (emphasis added). Although the presence of
extrinsic material does not always require a new trial, com-
pare United States v. Bagley, 641 F.2d 1235, 1241 (9th Cir.
1981) (holding that extrinsic material regarding witness’s
immunity placed before jury was not prejudicial), with United
States v. Vasquez, 597 F.2d 192, 193-94 (9th Cir. 1979) (hold-
ing that file containing inadmissible extrinsic material left in
jury room for four hours was prejudicial), we carefully review
the circumstances and nature of the material to ensure that
jurors deliberate without undue outside pressure or influence.
C
The district court determined that because the attorney-
friend “was not asked about and did not comment upon any
of the facts in the case nor opine on the applicable substantive
law,” this case involved ex parte contact. Rosenthal I, 266 F.
Supp. 2d at 1088-89. As an ex parte case, the district court
required that Rosenthal demonstrate “actual prejudice” to
secure a new trial. Id. at 1089.
Unlike the district court, we see the conversation between
Juror A and legal counsel as involving extraneous informa-
tion, not ex parte contact. Moreover, we find that the govern-
ment has failed to demonstrate that there is no “reasonable
possibility” of prejudice.
Juror A’s declaration supporting Rosenthal’s motion for a
new trial states that she felt “frustrated and confused” that
UNITED STATES v. ROSENTHAL 4759
there had not been evidence that Rosenthal was involved in
growing medical marijuana, given the judge’s question con-
cerning medical marijuana during voir dire. She was “trou-
bled” that although she knew the case was about medical
marijuana, the judge instructed the jurors to decide the case
according to “federal law” and only on the “evidence that had
been presented in court.” Despite that instruction, she
expressed “confusion about whether we really had to only
consider the federal law.”
Juror A believed that the district court’s instruction not to
discuss the case with anyone would not rule out a conversa-
tion “about a point of law”; accordingly, she phoned up an
attorney-friend to ask “if [she] had to follow the Judge’s
instructions, or if [she] had any leeway at all for independent
thought.” The attorney-friend responded that Juror A “defi-
nitely did have to following [sic] the Judge’s instructions, and
that there was absolutely nothing else [she] could do.” When
Juror A pressed the attorney, asking how there could ever be
hung juries, she was told “that could only happen if the Judge
gives the jury some leeway in his instructions.” The attorney
“then said [Juror A] could get into trouble if [she] tried to do
something outside those instructions.”
Juror A discussed the matter with another juror, who shared
her own confusion with Juror A “whether a jury really has to
reach a verdict solely based on the law.” After the conversa-
tion with the attorney-friend, Juror A informed this second
juror that they had to follow the judge’s instructions.6
D
[7] We see the communication between Juror A and the
6
During the district court’s evidentiary hearing into prejudice, Juror A
refused to testify on Fifth Amendment grounds. The testimony of both
jurors, with the government’s consent, was provided by way of declara-
tions.
4760 UNITED STATES v. ROSENTHAL
attorney-friend as raising an instance of extraneous evidence,
not ex parte contact. The circumstances involve the “submis-
sion of ‘extraneous information’ ” regarding the “law applica-
ble to the case.” Madrid, 842 F.2d at 1093 (emphasis added)
(second set of internal quotation marks omitted). The commu-
nication, tantamount to a substantive legal discussion, is akin
to the definition of “intent” or the distinctions between vari-
ous degrees of murder. This case thus triggers an inquiry into
whether there is a “reasonable possibility” that the extraneous
information affected the verdict. On that question, we hold
that, here, the communication was an improper influence
upon Juror A’s decision to acquit or convict.
[8] Jurors cannot fairly determine the outcome of a case if
they believe they will face “trouble” for a conclusion they
reach as jurors. The threat of punishment works a coercive
influence on the jury’s independence, and a juror who genu-
inely fears retribution might change his or her determination
of the issue for fear of being punished.7 Not only is there a
“reasonable possibility” of prejudice, but the government has
not succeeded in rebutting the presumption that a new trial is
warranted. Accordingly, we reverse the district court and
order a new trial.
VI
Because we reverse the district court and order a new trial,
we need not address the government’s cross-appeal regarding
the district court’s imposition of a one-day sentence.8
7
Although we understand the district court’s concern that it not legiti-
mate or contribute to any effort by a juror to engage in nullification, we
do not think the court was ever in a position to do so since the evidentiary
hearing involved juror misconduct, which is the focus of concern here.
8
We note that, in the wake of the Supreme Court’s holding that we
apply a “reasonableness” review to sentencing decisions, see United States
v. Booker, 543 U.S. 220, 261 (2005), we would not be inclined to disturb
the court’s reasoned analysis underlying its sentencing determination.
UNITED STATES v. ROSENTHAL 4761
VII
We reverse this case for a new trial due to juror miscon-
duct. We also hold that Rosenthal may not invoke the immu-
nity provision of 21 U.S.C. § 885(d). Finally, we dismiss as
moot the government’s appeal of the district court’s sentenc-
ing determination.
REVERSED AND REMANDED.
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73 B.R. 333 (1987)
In the Matter of Estela INESTA QUINONES, Debtor.
Bankruptcy No. B-86-02189(ESL).
United States Bankruptcy Court, D. Puerto Rico.
April 6, 1987.
*334 Antonio González Geigel, Hato Rey, P.R., for debtor.
Enrique N. Vélez Colón, Montanez & Alicea, Hato Rey, P.R., for creditor (Vicente Font Zelinsky).
OPINION AND ORDER
ENRIQUE S. LAMOUTTE, Chief Judge.
On November 21, 1986 the debtor herein commenced the instant case by filing a petition under chapter 11 of Title 11, United States Code. Shortly thereafter, on December 10, 1986, Mr. Vicente Font Zelinsky filed a motion to dismiss and a motion requesting transfer of modification of automatic stay afforded by section 362 and order authorizing sale of real property and for expedited hearing. The motion to dismiss was scheduled for a hearing to be held on February 4, 1987. The motion to transfer modification of stay was granted on December 12, 1987, without a hearing. On December 19, 1987 the debtor filed a motion praying for the reconsideration of our ex parte order and for an opportunity to present evidence. By order dated December 30, 1986 the court vacated modification of stay order and scheduled the matter for February 4, 1987. Both motions, the motion to dismiss and the motion to transfer were heard on February 4, 1987.
The parties having been heard and having filed post hearing memoranda, the court now enters the following findings of fact and conclusions of law:
Issues
The basic issues before this court are whether the present case should be dismissed pursuant to 11 U.S.C. 109(f) for having filed a petition within 180 days of the dismissal of a prior petition and whether *335 the order lifting the automatic stay in a prior petition may be transferred to the present case.
Findings of Fact
1. A complaint was filed on July 10, 1981 in the Superior Court of Puerto Rico, San Juan Part, Case No. 81-3499, by Vicente Font Zelinsky, his wife Irma Aponte de Font and the conjugal partnership which they constitute against Estela Iñesta Quiñones.
2. On November 24, 1982 judgment was entered in favor of Vicente Font Zelinsky and against Estela Iñesta Quiñones finding that Estela Iñesta Quiñones was obligated to sell certain property to Vicente Font Zelinsky.
3. On December 28, 1982 Estela Iñesta Quiñones filed a request for revision in the Supreme Court of Puerto Rico.
4. On March 8, 1983 the Supreme Court of Puerto Rico entered judgment affirming the Judgment previously entered by the Superior Court of Puerto Rico.
5. On March 2, 1983 Estela Iñesta Quiñones filed a petition under chapter 13, Title 11, United States Code, case number 83-00318(B).
6. On January 19, 1984 the Bankruptcy Court dismissed case number 83-00318 for debtor's failure to attend the confirmation hearing.
7. On March 6, 1984 Vicente Font Zelinsky requested from the Superior Court of Puerto Rico, San Juan Part, in case number 81-3499, to issue an Order requesting the execution of the Judgment and compelling Estela Iñesta Quiñones to appear and execute the Deed transfering the property to Vicente Font Zelinsky.
8. On April 23, 1984 the Superior Court issued an Order in case number 81-3499 ordering Estela Iñesta Quiñones to appear and sign the public deed traspassing the property to Vicente Font Zelinsky and, if Estela Iñesta Quiñones did not appear then the Marshal of the Court should sign said deed on May 1, 1984.
9. On April 16, 1984 Estela Iñesta Quiñones filed a second petition under Chapter 13, case number 84-00442(B).
10. On June 12, 1984 Vicente Font Zelinsky filed a "Motion Seeking Relief from the Automatic Stay and Judgment Execution" in case number 84-00442(B), Index C.
11. On August 20, 1985 the Court granted relief from the automatic stay with respect to civil case number 81-3499(901) before the Superior Court of Puerto Rico, San Juan Section.
12. On September 13, 1985 Estela Iñesta Quiñones filed a Notice of Appeal to United States District Court for the District of Puerto Rico, Case Number 86-0497(PG).
13. On June 12, 1986 the Honorable Chief U.S. District Judge Juan M. Perez Gimenez issued an "Opinion and Order" dismissing the appeal and affirming the Bankruptcy Court Order.
14. An appeal was taken to the United States Court of Appeals for the First Circuit, Case number 86-1670.
15. On October 10, 1986 the Bankruptcy Court through United States Bankruptcy Judge Frederick A. Johnson issued an Order dismissing Bankruptcy case number 84-00442 due to debtor's failure to make the payments required by her confirmed chapter 13 plan. The reason for her failure to make payments was her financial condition.
16. On November 14, 1986 an Order was issued by the Superior Court of Puerto Rico, San Juan Part in case number 81-3499 ordering Estela Iñesta Quiñones to appear on November 26, 1986 at 2:00 p.m. to sign the deed transferring the property to Vicente Font and, in if she did not appear, that the Marshal of the Court appear on November 28, 1986 at 3:00 p.m. to sign the deed.
17. On November 21, 1986 Estela Iñesta Quiñones filed a third petition under Chapter 11 of the Bankruptcy Code, case number 86-02189(ESL), that is, the present case.
*336 Conclusions of Law
I. Dismissal Under Section 109
In this case the court is called upon to rule on the tension generated by the automatic stay provisions of 11 U.S.C. 362 and 11 U.S.C. 109(f), now 109(g) as per the October 27, 1986 amendments, which codifies the congressional intent of preventing the abuse of the bankruptcy process through successive filings.
Section 109(g) of Title 11, provides that:
"(g) Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if
(1) the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case; or
(2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title."
At the outset we must state that section 109 sets forth who may be a debtor under title 11. The applicability of section 109(f) is jurisdictional, mandatory, and allows no discretion to the court. In re Smith, 58 B.R. 603 (W.D.Pa.1986). If the facts come within its purview the court must dismiss the case as it is "not free to tamper with the statute." In re Denson, 56 B.R. 543 (Bankr, N.D.Ala.1986).
The facts of this case make section 109(g)(2) clearly inapplicable because the debtor did not request a voluntary dismissal. We are thus left with Section 109(g)(1) which contains two separate grounds for dismissal. First the willful failure to obey the orders of the court; and, second, the failure to appear in proper prosecution of the case. In re Glover, 53 B.R. 14, 15 (Bankr.Ore.1985).
In the prior petition (84-00442) the reason for the dismissal was debtor's failure to make the payments according to the confirmed chapter 13 plan and not the failure to appear at a scheduled hearing, as was the case when the court dismissed debtor's first petition (83-00318). Therefore, the applicability of section 109(f)(1) hinges on whether debtor's failure to make the payments was a "willful" violation of a court order.
The Bankruptcy Code does not define what is a "willful" failure to abide the orders of the court. Consequently, the courts have gone to the context of section 523(a)(6) which excepts from discharge "willful and malicious" injury. In so doing the courts have determined that "willful" means conduct which is deliberate and intentional. As stated by the court in In re Correa, 58 B.R. 88, 89 (Bankr.N.D.Ill.1986):
". . . debtor's conduct is willful within the meaning of § 109(f)(1) when it is intentional, knowing, and voluntary, as opposed to conduct which is accidental or beyond the person's control . . . A willful failure to do a required act necessitates a showing that the person, with notice of their responsibility, intentionally disregarded it or demonstrated plain indifference".
See also In re Fulton, 52 B.R. 627, 633 (Bankr.Utah 1985).
At the hearing the movant relied upon the admitted facts that the debtor had filed the instant case within 180 days from the dismissal of the prior case and that the reason for such dismissal was the debtor's failure to make payments. Debtor respondent testified that the reason for her nonpayment was that she underwent financial difficulties and it was impossible for her to meet the monthly payments.
A party moving for dismissal under 109(f)(1) has the burden of introducing evidence to support its averment. In re Key, 58 B.R. 59, 60 (Bankr.E.D.Pa.1986). There was no evidence presented to establish that debtor's failure was willful in the sense of being a deliberate and intentional failure. Or the contrary, it was established that making payments was beyond her control on account of her financial condition. Mere failure to make payments cannot be *337 deemed to be a willful failure to make payments. In re Glover, 53 B.R. 14 (Bankr.Ore.1985).
Because no evidence was before the court to establish the "willful" element, the motion to dismiss pursuant to 109(f) must be denied. In re Key, supra.
II. Motion to Transfer Modification Stay to the Present Case
The movant, Mr. Vicente Font Zelinsky, prays that the order modifying the stay entered on August 25, 1985 in case number 84-00442 be transferred to the present case on the grounds that the instant Chapter 11 petition was not filed in good faith.
The reason why the debtor filed the instant petition are best summarized in the post hearing memoranda filed by debtor's attorney. It is stated therein that:
"Upon the advice of her undersigned attorney, therefore, rather than appeal the order of dismissal she filed under Chapter 11, a chapter of the code which, although more complicated than Chapter 13, does not require commencement of monthly payments immediately or almost immediately upon filing, and which affords an opportunity for debtors who cannot make regular payments to submit a plan funded in some other, more imaginative fashion.
Debtor has even gone as far as to first assume and later concede that the automatic stay ruling entered in the previous case is applicable to the present case if this court finds itself bound by the District Court's confirmation of the order entered by the presiding judge in the previous case, and has further announced its intention to have the issue reach the Circuit without going through the District. There is no intention to delay.
It is thus clear from the record that the debtor has acted in utmost good faith, and not with the intent to circumvent or abuse any of the provisions of the Bankruptcy Code."
The avenue for a creditor that wants to pursue an action against the debtor or debtor's estate are found in § 362(d), which states that:
"(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest; or
(2) with respect to a stay of an act against property under subsection (a) of this section, if
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization."
Movant herein wants to lift the stay for cause, that is, on the grounds that the petition was filed in bad faith.
The basic policy behind a Chapter 11 petition is to permit the debtor to successfully rehabilitate itself. N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 1197, 79 L.Ed.2d 482 (1984); In re Corporacion de Servicios Medico Hospitalarios de Fajardo, 805 F.2d 440, 446 (1st Cir.1986). Such a purpose must be pursued in good faith, that is, for the rehabilitation of the debtor. Lack of good faith may constitute cause for the dismissal of the petition 1112(b), as well as cause to lift the stay under 362(d)(1). In re Coastal Cable T.V. Inc., 709 F.2d 762 (1st Cir.1983); Furness v. Lilienfield, 35 B.R. 1006 (Bankr.D.Md.1983).
The facts in this case clearly indicate that the main purpose underlying the filing of the instant petition was to invoke the automatic stay provisions of 11 U.S.C. § 362(a), and not for the purpose of rehabilitation, as the debtor admittedly cannot make regular payments. A petition filed to delay a particular creditor and not for the purpose of rehabilitation is not filed in good faith. Matter of Little Creek Development Co., 779 F.2d 1068 (5th Cir. 1986); In re Cooper Properties Liquidating Trust, Inc., 61 B.R. 531 (Bankr.W.D. Tenn.1986). Good faith filing within the Bankruptcy Code context means filing for the purpose of rehabilitation and does not *338 necessarily connote dishonesty or fraud. The court finds that the debtor made an honest attempt to prevail on a legal issue. However, to file a subsequent petition to have a third opportunity at a legal issue is a misuse of the bankruptcy remedies. In re American Property Corp., 44 B.R. 180 (Bankr.M.D.Fla.1984). The subsequent filings of bankruptcy petitions merely to invoke the automatic stay provisions of 11 U.S.C. § 362 without a clear showing of changed circumstances is an abuse of the bankruptcy process. In re Dyke, 58 B.R. 714 (Bankr.N.D.Ill.1986).
Movant has relied on the decision in Norton v. Hoxie State Bank, 61 B.R. 258, 260-261 (D.Kan.1986) wherein the district court held that the bankruptcy court may properly exercise its discretion to continue the relief from stay to protect a financial institution who has continued with state remedies relying on and pursuant to an order lifting the stay in a previous case. We agree. Particularly under the facts of this case which have drawn the parties on the same basic issue to the Supreme Court of Puerto Rico and the First Circuit Court of Appeals.
This court is aware of the decision in In re Jefferson, 59 B.R. 707 (Bankr.S.D.Miss. 1986) wherein the court determined that res judicata precludes a stay violation in a subsequent filing. The court held that a creditor is not stayed from foreclosing debtor's property when the automatic stay had been lifted in favor of said creditor in a prior bankruptcy petition. Although we concur with the results reached in In re Jefferson, this court is of the opinion that the automatic stay does come into play.
An order lifting the stay in a case may constitute res judicata on a subsequent filing and may constitute "cause" under 11 U.S.C. § 362(d)(1). Once the court decides the stay issue in a bankruptcy case the decision precludes relitigation in a subsequent case. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 814 F.2d 844, (1st Cir.1987) Futura Development Corp. v. Centex Corp., 761 F.2d 33, 42 (1st Cir.), cert. denied, ___ U.S. ___, 106 S.Ct. 147, 88 L.Ed.2d 121 (1985). Fiumara v. Fireman's Fund Ins. Companies, 746 F.2d 87, 91-92 (1st Cir.1984). Since the issue was decided in the previous petition the same may not be relitigated in the present case. Accordingly, there is cause to lift the stay.
In view of the foregoing the automatic stay is hereby lifted to allow the parties to continue with their respective actions before the state and before the First Circuit Court of Appeals.
III. Dismissal Bad Faith
We have concluded that the instant petition was not filed in good faith. Also, the debtor admits not to have a reasonable likelihood of rehabilitation. These are grounds for dismissal under 11 U.S.C. § 1112(b). Consequently, the instant case is hereby dismissed.
Conclusion
1. The automatic stay is hereby lifted to allow movant to continue proceedings before the state court.
2. The instant case is hereby dismissed. The order lifting stay shall remain in full force and effect.
IT IS SO ORDERED.
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277 F.2d 314
Herman AXELBANK, Appellant,v.George RONY, The Copley Press, Inc., Hallmark Productions, Inc., Kroger Babb, Fox West Coast Theatres Corporation, National Broadcasting Company, Inc., and Does One through Twenty, Appellees.
No. 15916.
United States Court of Appeals Ninth Circuit.
April 25, 1960.
Alexander H. Schullman, Los Angeles, Cal., for appellant.
Pacht, Ross, Warne & Bernhard, Jerry Pacht, Harvey M. Grossman, Los Angeles, Cal., for appellee.
Before HAMLEY, HAMLIN and JERTBERG, Circuit Judges.
JERTBERG, Circuit Judge.
1
Appellant sought damages and other relief against appellees for copyright infringement, unfair trade practices and unfair competition. The appellee Rony counter-claimed in damages for libel. The district court entered its judgment denying all relief sought by appellant and awarded appellee Rony damages in the amount of $500 on his counter-claim.
2
Jurisdiction of the district court was based upon Title 28 U.S.C.A. § 1338, and Title 17 U.S.C.A. § 1 et seq. This court has jurisdiction under Title 28 U.S.C.A. §§ 1291 and 1294.
3
Under well established appellate procedure we must view the evidence in the light most favorable to the prevailing party.
4
Appellant Herman Axelbank, a resident of New York, devoted many years of his life to the accumulation of newsreel and documentary films pertaining to the Russian Revolution of 1917. He succeeded in acquiring, during the period of 1917-1930, probably the most complete documentary film library in the United States relating to the Russian Revolution. With the help of Max Eastman as commentator, he eventually completed in 1937 a seven reel film entitled "Tsar to Lenin". All of the film was of actual historical events photographed by on-the-scene cameramen. The film was copyrighted in March of 1937 by a distributing company which had contracted with receivers of the film who had been appointed by a New York state court,1 and through various mesne conveyances the copyright on the film was obtained by the appellant in 1952.2
5
Appellee George Rony was born in and lived in Russia until 1929 and was present in Russia during the 1917 Revolution. After the Revolution he worked in the Russian film industry under the aegis of the Soviet Government, and acquired vast quantities of Russian documentary films for his own use.
6
Rony's films, like appellant's, are compilations of news-reel shots and documentary photographs of Russian historical events. They, like appellant's films, are not staged or performed by professional actors, but are actual photographs of the events which they portray. They were assembled over the years while Rony lived in Russia, Germany and France prior to coming to the United States in 1940. At that time Rony had the largest private library of Russian documentary films in Europe. Both men worked independently on the accumulation, compilation and editing of newsreel films pertaining to the Russian Revolution, one in Europe and one in the United States.
7
On the occasion of the death of Stalin in 1953, Rony licensed certain portions of his film collection to the National Broadcasting Company for a television show on March 8, 1953. Other portions were made available to Hallmark Productions through their president, Kroger Babb, and by Hallmark compiled into the motion picture "Halfway to Hell". This film was exhibited by Fox West Coast Theatres Corporation. Additionally, Rony assembled in 1955 for exhibition in a television series over Station KCOP Los Angeles certain of his films in a weekly series entitled "Background to Battle". Rony himself, as well as a collector of authentic films, is an authority on the Russian Revolution and frequently uses portions of his collection to illustrate lectures which he gives on the subject. It is undisputed that in each of the uses of segments of Rony's films there appears identical footage to that contained in appellant's copyrighted film "Tsar to Lenin", and hence all such persons were joined as defendants in appellant's complaint for copyright infringement.3 The complaint also sought damages from all appellees because of unfair competition in the misappropriation and use of appellant's copyrighted film. All such relief was denied by the trial court.
8
On September 5, 1955, appellant wrote to the television station KCOP suggesting that Rony had pirated the film "Tsar to Lenin", and this letter formed the basis of Rony's counter-claim for libel for which the court awarded $500 in damages.
9
On this appeal appellant relies on the same claims that were asserted in the district court. He designates eighteen errors of the trial court in failing to grant relief for copyright infringement and for unfair competition, and in giving appellee Rony any relief on the counter-claim for libel. The issues in this case were mainly ones of fact, and accepting the trial court's findings, as we must unless they are clearly erroneous, Overman v. Loesser, 9 Cir., 1953, 205 F.2d 521, the legal questions become relatively simple.
10
Turning to the first issue of copyright infringement, the analysis must first be to determine exactly what the copyright covers, and then to see if there has been an infringement thereof. Motion pictures are subject to copyright protection under 17 U.S.C.A. § 5, and we assume arguendo that appellant has fully complied with all the procedural formalities.
11
Despite appellant's claim that most of his footage was in the form of original negatives, and hence not in the public domain, this was rejected by the trial court. There was an express finding that the documentary films which were used in both "Tsar to Lenin" and appellees' films were freely marketed in the 1920's and 1930's when both men were amassing their collections and thus they were in the public domain. Hence, the source of the films of both Axelbank and Rony was the public domain.
12
Of course, just because the source of the material is in the public domain does not void the copyright, but rather the protection is limited to the new and original contribution of the author. American Code Co. v. Bensinger, 2 Cir., 1922, 282 F. 829, 834. In this case the novel elements subject to copyright protection were the sequential development, the commentary of Max Eastman, and one map for which appellant claims credit. Since these are the only elements of "Tsar to Lenin" which merit copyright protection, we must analyze Rony's films to see if any one of the protectible parts of appellant's film is found therein to determine whether the copyright of appellant has been infringed.4 Since the issue of copyright infringement is one of fact, this appeal cannot prevail on this issue unless the finding of no infringement is "clearly erroneous". Overman v. Loesser, supra.5
13
There was no evidence of any sort which indicated that Rony had access at any time to appellant's film, and it was undisputed that Rony first saw "Tsar to Lenin" after the commencement of this action. In addition to this direct proof of no copying, however, the trial court also found lack of similarity between the protectible parts of appellant's film and the films of Rony claimed to infringe. We have examined the entire record on this appeal, and in our view this finding is more than amply supported.
14
First, there was no claim made that Rony utilized the sequential development employed by appellant. Secondly, there was no assertion that Rony employed any of the dialogue of Max Eastman used by the appellant in his film. Finally, while there was a claim that one particular map in "Tsar to Lenin" was also used by Rony, it is well settled that maps as such are entitled to limited copyright protection, Amsterdam v. Triangle Publications, 3 Cir., 1951, 189 F.2d 104, Marken and Bielfeld, Inc. v. Baughman Co., D.C.E.D.Va.1957, 162 F.Supp. 561, and we are unable to say as a matter of law that the appellant's map involved such a high degree of creation that even if copied by Rony it constituted an infringement of appellant's copyright. Hence the trial court did not err in concluding that there was no infringement by appellees of the appellant's copyrighted film, "Tsar to Lenin".
15
We turn next to the assertion of appellant that even if appellees did not infringe on his copyrighted film, they competed unfairly with him under the doctrine of the I.N.S. Case.6
16
This argument, however, misses the whole point of that much discussed case. The gist of that case is that appropriation of another's work product, even if that work product be uncopyrightable, can nevertheless be a form of unfair competition with the original creator of that product. To constitute unfair competition under the circumstances of this case, it is essential that there be present an appropriation of another's product — the so-called "free ride" doctrine. In the case at bar there was no appropriation by Rony of appellant's uncopyrightable matter, because both men worked independently to amass Russian documentary films. Hence, the trial court did not err in determining that there was no unfair competition by appellees.
17
Finally, we turn to the question of libel. The trial court found that the letter was libelous per se, and that it was maliciously motivated. The evidence was uncontradicted that as a direct result of the receipt of such letter by television station KCOP, the television series supplied by Rony, "Background to Battle", was cancelled.
18
The letter on its face suggests that Rony was untruthful, that he received stolen property, and that he intentionally misappropriated literary property belonging to the appellant. Under California law, Bates v. Campbell, 1931, 213 Cal. 438, 2 P.2d 383; Jimeno v. Commonwealth Home Builders, 1920, 47 Cal. App. 660, 191 P. 64, it is clear that the appellant's letter constitutes libel per se. Moreover, the letter was not privileged because the trial court found that it was motivated by malice. Under California law, Civil Code Section 47(3), malice would destroy any privilege that might exist. Hence, the trial court did not err in awarding damages to Rony because of appellant's defamatory letter.
19
The judgment of the district court is affirmed.
Notes:
1
The appointment of receivers in the original state court action was only the first step in a long series of lawsuits brought by and against appellant which cover a span of thirty years, and which have been litigated in both state and federal courts. The motivation of all this litigation is apparently appellant's desire for exclusive rights to all Russian historical films
2
Although there was considerable dispute at the trial whether appellant actually owned the copyright in issue (i. e., whether he was the real party in interest), or whether appellant had abandoned any such copyright under the doctrine of Group Publishers v. Winchell, D.C.S.D. N.Y.1949, 86 F.Supp. 573, we do not reach this point and assume for purposes of this appeal that appellant is the legal owner of the copyright on the film "Tsar to Lenin"
3
The mere fact of identity of scenes and content proves nothing; for copyright law, unlike patent law, recognizes individual artistic achievement of a similar end product, provided there has been no copying of another's end product
4
Of course, even though the source of the material in appellant's film was the public domain, this would not permit Rony to directly copy appellant's film. Rony could use a copy of the original news-reel films which were part of the public domain, but he could not copy appellant's copy thereof. "Others are free to copy the original. They are not free to copy the copy." Bleistein v. Donaldson Lithographing Co., 1903, 188 U.S. 239, 249, 23 S.Ct. 298, 299, 47 L.Ed. 460. The trial court found, however, that the films were collected by independent efforts
5
The test to be applied — that of "The Ordinary Observer" — is discussed by Judge Yankwich in "Legal Protection of Ideas — A Judge's Approach", 43 Va.L. Rev. 375 (1957), and many cases using the test are discussed
6
International News Service v. Associated Press, 1918, 248 U.S. 215, 39 S.Ct. 68, 63 L. Ed. 211
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776 N.W.2d 287 (2009)
2009 WI App 174
STATE
v.
BROOKS.
No. 2008AP1577-CR.
Court of Appeals of Wisconsin.
October 6, 2009.
Unpublished Opinion Affirmed.
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286 N.E.2d 418 (1972)
John R. MOSTER, Plaintiff-Appellant,
v.
Lourina BOWER, As Administratrix of the Estate of Alva W. Bower, Deceased, Defendant-Appellee.
No. 871A167.
Court of Appeals of Indiana, First District.
August 24, 1972.
Rehearing Denied September 26, 1972.
*419 Ricos, Wade & Price, Indianapolis, Humbert & Fitch, Greensburg, Morris L. Klapper, Indianapolis, for plaintiff-appellant.
Hubert E. Wickens, Don Hubert Wickens, W. Michael Wilke, Greensburg, for defendant-appellee; Thompson & Jones, Columbus, of counsel.
LOWDERMILK, Judge.
This case is an appeal under common law negligence; the question of whether the court properly directed the defendant's verdict in the case comes to rest on whether or not there was any evidence or a reasonable inference or inferences that the decedent failed to exercise reasonable care for the safety of others.
The parties stipulated before trial that the plaintiff-appellant incurred $5,846.40 in medical bills which were admissible without proof of their reasonableness or the necessity thereof; $4,000.00 in loss of wages; and that an explosion occurred on February 26, 1968, at Thompson's Sporting *420 Goods Store in Columbus, Indiana. They further stipulated that Lourina Bower was the duly appointed, qualified and acting Administratrix of the estate of Alva W. Bower, deceased, pursuant to the appointment of the Decatur Circuit Court, Alva W. Bower having died on February 26, 1968.
That at all times mentioned in plaintiff's complaint he was employed as a clerk in a retail store located at 1017 Third Street, Columbus, Indiana, known and described as Thompson's Sporting Goods Store; that on February 26, 1968, at about 8:20 A.M. plaintiff was performing his duties as clerk in said store. He was 31 years of age and had a life expectancy of 39.36 years.
In addition to the stipulated facts the other facts are that plaintiff-appellant worked as a clerk in a retail store which had no basement thereunder and that there was an explosion and fire which caused him injury. That the body of Alva W. Bower (defendant-appellee's decedent) was found in the debris of the store after the explosion and fire.
The store was a retail sporting goods establishment and at the moment of the tragedy contained 500,000 shot gun shell primers stacked near the entrance, plus about fifty pounds of gunpowder.
As the result of a fire and explosion the store building was completely demolished and Alva W. Bower, a customer in the store, was killed and the plaintiff-appellant was critically injured, but managed to get out of the store building under his own power.
The question of res gestae was paramount in the trial of the cause and remains so in this appeal and although this opinion may seem overburdened with statements as to time, we are of the opinion that it is necessary to show all available elements as to the time intervening between certain happenings immediately prior to the explosion and fire and immediately after so that it may be judicially determined if certain statements made were a part of the res gestae.
At this time we also wish to point out that the other and very important question which we must pass upon in this opinion is whether or not the Dead Man's Statute, the same being Ind. Stat. Ann., § 2-1715 (Burns 1968 Replacement), IC 1971, XX-X-XX-X is applicable in the case at bar.
The pertinent parts of said statute read as follows, to-wit:
"In suits or proceedings in which an executor or administrator is a party, involving matters which occurred during the lifetime of the decedent, where a judgment or allowance may be made or rendered for or against the estate represented by such executor or administrator; any person who is a necessary party to the issue or record, whose interest is adverse to such estate, shall not be a competent witness as to such matters against such estate: ..."
On the day and time in question plaintiff-appellant, John R. Moster, and Albert Ray Baldwin, were employed in said store, which was owned by Robert Thompson.
A Mr. Sawyer entered the store on the day in question to make a purchase and while in the store another man came into the store and inquired about a rifle scope and then went outside and came back into the store with a gun in his hand as Mr. Sawyer was leaving. Mr. Sawyer was of the opinion the gun was a .22 rifle. Mr. Sawyer continued to his car and was in the same when the explosion occurred with sufficient violence that the hood of his car blew up. He testified that the explosion occurred fifteen seconds after he passed the man with the rifle who was re-entering the store.
Mr. Robert Thompson, proprietor of the store, testified the 500,000 shot shell primers were stacked inside the store near the entrance on the east wall two days before the explosion and remained there until the explosion. Mr. Thompson further testified *421 he was driving to work on the morning in question and heard the explosion and saw the smoke. He parked his truck about fifteen seconds later and ran to the store while the debris was exploding into the air and coming down. When Mr. Thompson got to the store he saw the plaintiff-appellant about twelve feet away trying to come out of the store. The plaintiff was "crumbled" over, his clothes were torn to shreds, all of his hair and eyebrows were burned off, he was bleeding badly from his face, his arm was badly damaged and his face was charcoaled. Mr. Thompson testified he reached the plaintiff about ten seconds after he parked his truck and immediately tried to help him. This, of course, makes a lapse of twenty-five seconds from the time Mr. Thompson heard the explosion until he got to plaintiff-appellant to help him. While helping plaintiff-appellant across the street plaintiff said something to him.
During the trial of the cause plaintiff's counsel asked "What did he (plaintiff) say?" Defendant's counsel objected and the objection was sustained over plaintiff's argument that what plaintiff had said was part of the res gestae and a spontaneous exclamation.
Plaintiff made his offer to prove that the answer to the question "What did he (plaintiff) say?", had the witness been permitted to answer, would have been that Mr. Thompson asked the plaintiff "John, what happened?" and that plaintiff responded "Somebody shot into the primers with a rifle."
Mr. Thompson further testified that while holding plaintiff up, as shown by plaintiff's Exhibit "F", which was a photograph taken within twenty seconds after he left his truck he had another conversation with plaintiff-appellant. Objection was made and sustained. An offer to prove was made, which was that Mr. Thompson would have testified that "He told me a man brought in a loaded .22 rifle and attempted to unload it; but that he (John) [plaintiff] saw a live round in the chamber, and that the man discharged the gun into the stack of primers."
Albert Ray Baldwin, a co-employee of plaintiff-appellant, testified he was working in the rear of the store in the work shop on the morning of the explosion. Immediately following the explosion Mr. Baldwin left the store and came to where appellant and the store owner were standing. He testified as to plaintiff-appellant's condition and his clothes, supplementing the same with the fact that plaintiff-appellant "had dirt and splinters all over his hide and was shivering and bleeding and burnt."
Mr. Baldwin was asked whether plaintiff-appellant said anything to him at that time, to which an objection was made and sustained over plaintiff-appellant's argument that the statement was a part of the res gestae and a spontaneous declaration.
Plaintiff-appellant made an offer to prove and that the evidence would have been that Mr. Moster said to Mr. Baldwin that someone was trying to unload a .22 caliber rifle and discharged it into the primers.
There was evidence of a Dr. John Hinckley, who testified as an expert chemist operating a scientific laboratory doing scientific investigation into explosions. Dr. Hinckley testified that he performed experiments with shot shell primers of the type in question in the case. They did not explode from heat until they are subjected to a temperature of between 500 to 600 degrees Fahrenheit and the temperature must be maintained for a period of time. He further testified the primers could be struck with a hammer and not explode. However, they can be set off by firing at them with a rifle. Dr. Hinckley performed an experiment whereby he fired at such primers with various firearms, including a .22 rifle, and detonations occurred, which was demonstrated by photographic exhibits.
*422 Dr. Hinckley was presented with a hypothetical question based upon facts which were at that time in the record as to the cause of the explosion and he testified that "My opinion is that he fired into the primers." On cross examination the Doctor testified that an open fire could not have been the cause of this particular explosion.
Plaintiff-appellant was called as a witness and asked if he was employed at the sporting goods store on the day of the explosion to which question defendant objected, or to any other testimony by plaintiff concerning matters occurring in the lifetime of the decedent, Alva W. Bower. This objection was sustained by the court.
An offer to prove was made, showing that if permitted to testify the plaintiff-appellant would so testify that he was employed and working at the sporting goods store at the time of the explosion; Alva W. Bower came into the store, inquired about a rifle scope, went back outside and returned with a .22 rifle in his hand. He would further testify that "Bower was unloading the rifle as he re-entered the store by turning it upside down and pouring the shells out." He did not completely unload the rifle and plaintiff further stated in his offer to prove "I saw this live round in the rifle, but he let the bolt go, discharging the rifle into the stack of primers in the southeast corner."
The muzzle of the rifle was six to eight feet from the primers when they were fired into; the report of the rifle and the explosion appeared simultaneous to plaintiff.
Plaintiff-appellant then offered evidence of the treating physician concerning his injuries after which he rested and defendant-appellee moved for a directed verdict under Rule TR. 50, which motion was sustained and the jury instructed to return its verdict for the defendant, which in obedience to the order of the court, it did do. Judgment was entered accordingly for the defendant.
Plaintiff-appellant timely filed a motion to correct errors under Rule TR. 59, IC 1971, 34-5-1-1, together with a memorandum attached thereto, which motion, omitting the formal parts, is in the words and figures as follows, to-wit:
"Plaintiff, pursuant to Trial Rule 59, moves the Court to correct errors and for a new trial on the following grounds:
"1. The Court committed error of law in refusing to admit certain testimony of witness, Robert Thompson.
"2. The Court committed error of law in refusing to admit certain testimony of witness, Ray Baldwin.
"3. The Court committed error of law in refusing to admit certain testimony of plaintiff, John Moster.
"4. There was sufficient evidence to require the Court to submit the case to the jury and there was error in law not to do so."
We shall group specifications 1, 2 and 3 and treat them together.
Plaintiff-appellant in his argument sets forth that since Rule TR. 50 was adopted and became the law, no Indiana case has been decided in which the question was under what circumstances judgment on the evidence should or should not be granted. He does say that the Rule was touched on fleetingly in two recent Indiana cases and goes on to say that under the prior Indiana law a directed verdict was not proper unless there was a total absence of evidence or reasonable inference on an element of plaintiff's case.
This latter contention of plaintiff-appellant is touched upon in the case of Indianapolis Saenger Chor, Inc. v. American Fletcher National Bank and Trust Co. (1971), Ind. App., 274 N.E.2d 728, 27 Ind. Dec. 475.
In the Indianapolis Saenger Chor, Inc. case, supra, the court quoted from the case *423 of Whitaker v. Borntrager (1954), 233 Ind. 678, 122 N.E.2d 734, as follows:
"`When there is some evidence or legitimate inference supporting each material allegation of the complaint, the court will not weigh the conflicting evidence or inferences but will consider only the evidence and inferences that are most favorable to the party against whom the motion for a peremptory verdict is directed. (Citing cases.)
"`In determining whether a peremptory instruction should be given the court must accept as true all facts which the evidence tends to prove and draw, against the party requesting such instruction, all inferences which the jury might reasonably draw. (Citing cases.)'"
The court further quoted from Cooper v. Teeters (1969), Ind. App., 253 N.E.2d 277, as follows:
"`The appellant's first specification of error in her motion for a new trial alleged that the decision of the trial court in directing the jury to return a verdict for the defendants was contrary to law. In considering this allegation of error, it must be decided whether the evidence presented at the trial supported, without conflict, only one inference, which inference was in the favor of the defendants. Whitaker, Admr. v. Borntrager (1954), 233 Ind. 678, 122 N.E.2d 734.'"
The more recent case of Mamula v. Ford Motor Co. (1971), Ind. App., 275 N.E.2d 849, held:
"... the cases cited herein support the rule that whenever there is any evidence allowing reasonable men to differ, a plaintiff should be given the benefit of the doubt, even though he has not substantially supported his allegations."
In the case at bar the witness Mr. Sawyer observed another man come into the store while he was being waited upon by the plaintiff-appellant. This man who entered the store inquired about a rifle scope and went outside and came back into the store with a gun in his hand just as Mr. Sawyer was leaving. Mr. Sawyer stated the rifle was probably a .22. About fifteen seconds after Mr. Sawyer passed this man with the rifle re-entering the store Mr. Sawyer was in his automobile and the explosion occurred in the store building.
Dr. John Hinckley, an expert witness, who was a chemist and operated a scientific laboratory and did scientific investigation of explosions, testified that he did experiments with shot shell primers of the type in question in the case and they did not explode from normal heat, nor hammers nor fire. He further testified he experimented with similar primers by firing various firearms at them, including a .22 rifle, and detonations occurred. He further testified in answer to a hypothetical question based upon facts in the record in the case at bar that the cause of the explosion was, in his opinion, that the man with the rifle had fired into the primers.
The 500,000 primers were against the east wall in the front of the store building and a deputy fire chief testified that a hole some three to four inches deep was blown into the concrete floor, about four feet square.
From the amount of time that expired from the time that Mr. Sawyer met the man with the rifle re-entering the store and Mr. Sawyer got into his car, which was fifteen seconds, it may reasonably be inferred that the man he met re-entering the store with the rifle still had the possession of the rifle and discharged the same into the stack of primers, causing the explosion.
In addition to inferences drawn from the evidence, there was direct evidence that plaintiff-appellant, although critically injured, was able to stagger out of the building and the decedent, Alva W. Bower's body, was found in the store building after the store had been completely destroyed by the explosion and fire.
This court is of the opinion that the evidence is not strong enough, under the case *424 of Cooper v. Teeters, supra, that in considering the allegation of error it may be decided that the evidence presented at the trial supported, without conflict, only one inference, which inference was in favor of the defendant. In our opinion, reasonable men could come to that inference but would not necessarily be forced, as reasonable men, to come to that inference only.
We next look to Mamula v. Ford Motor Company, supra, where the court stated that the cases cited support the rule that whenever there is any evidence allowing reasonable men to differ, a plaintiff should be given the benefit of the doubt, even though he has not substantially supported his allegations, and having considered the same we are of the opinion that there was at least an inference that the decedent, Alva W. Bower, deceased, was negligent and it was his negligence which was the proximate cause of plaintiff-appellant's injuries and the court erred in directing the verdict.
This court, as well as our Supreme Court, has many times stated that where a case is reversed on one error the court is not required to write on any other alleged error or errors. In fact, this rule of law is so well settled it needs no citation of authority.
However, we feel that there devolves upon this court an obligation in some cases to do a full and complete job. This is one of those cases. We believe that the questions arising under the Dead Man's Statute will necessarily arise again on the trial of this cause and there will be no guidelines in Indiana for the assistance of the respective counsel and the trial judge who rehears this cause and we would be remiss in our duty in failing or refusing to set up guidelines as we determine them to be under the Dead Man's Statute as it applies to the case at bar.
We have made an exhaustive research on the question of res gestae in proving statements that will be admissible in a case where the Dead Man's Statute is invoked to protect the estate of the decedent.
We find many, many cases in Indiana as well as in other states, that invoke the Dead Man's Statute and prevent any claim being made against the estate where conversations were had and the deceased is charged with having made the conversation.
In the case at bar the deceased, of course, could not be a witness and there is not that first bit of evidence that he said anything to anybody about an explosion or there might be an explosion or a danger; there is the evidence that a man came into the store and asked the clerk about rifle scopes and then left and re-entered with a rifle that appeared to be a .22. His identity was unknown to Mr. Sawyer, the witness who observed this, and, of course, the plaintiff-appellant during the trial was not permitted to testify as to his identity.
I.L.E., Vol. 12, Evidence, § 61, p. 496, defines res gestae, in general, as follows:
"The spontaneous, undesigned and contemporaneous incidents of a litigated fact may be proved when illustrative of that fact."
I.L.E. further states:
"The doctrine represented by the Latin term `res gestae' is regarded as an exception to the hearsay rule which requires all of the hearsay rule's guaranties of safety, such as confrontation, cross-examination and oath. In every case where the question of the admissibility of evidence under the res gestae doctrine is in question, the admissibility of such evidence is peculiarly within the discretion of the trial court, and the decision of the court must depend on the particular facts of the case.
"The doctrine of res gestae is largely based upon spontaneous statements made at the time of an accident or occurrence or transaction, usually by one of the parties thereto... ."
Such declarations are admitted into evidence as an exception to the hearsay rule for the reason that they are considered *425 to be a part of the act, transaction or event, spontaneously arising from it, without premeditation.
The scope of the res gestae doctrine seems to be strictly limited to the surrounding facts of a transaction or event and accompanying declaration.
29 Am.Jur.2d, Evidence, § 708, p. 769, states that:
"One of the exceptions to the hearsay rule under which evidence is frequently admitted is the `res gestae' or `spontaneous exclamations' exception. `Res gestae' is, of course, the broader concept and may generally be defined as matter incidental to the main or principal fact, and explanatory thereof... ."
In discussing the general matter of res gestae it is stated further that it may include acts and words that are so closely connected with the event or occurrence as to constitute a part of the event or occurrence that is, acts and words which are spontaneous and so related to the transaction or occurrence in question as reasonably to appear to be evoked and prompted by it. It further states that the term "res gestae" comprehends a spontaneous and instinctive reaction to a startling or unusual occurrence during which interval certain statements are made under such circumstances as to show lack of forethought or deliberate design in the formulation of their content. (Our emphasis.) Further, such statements which conform to the above requirements and which in some way elucidate, qualify, or characterize the act in question are admissible in evidence as a distinct and separate exception to the hearsay rule in criminal as well as civil cases.
Speaking further, the author says:
"... As otherwise aptly expressed, whether a declaration is a part of the res gestae depends upon whether the declaration was the facts talking through the party or the party talking about the facts." (Our emphasis.)
Our Dead Man's Statute, supra, was wisely enacted by our General Assembly to prevent fraud and unjust claims being brought against decedent's estates when the decedent, of course, had no chance to answer and defend himself and in many instances when there was no other person or persons alive to testify in behalf of the decedent.
In 29 Am.Jur.2d, Evidence, § 727, at p. 799, it is stated res gestae declarations are admitted into evidence without the sanctity of an oath on the part of the declarant on the theory that they derive their credibility from the stress of circumstances under which they are made and not from the trustworthiness of the person making them. The author further states that even though it be a fact that the declarant is incompetent to testify as a witness this will not ordinarily affect the admissibility of his statements under the res gestae rule in either civil or criminal prosecutions. Thus, the res gestae declarations of a husband and wife are admissible for or against each other, even if the spouse would be incompetent to testify as a witness in the case. An unpardoned felon or a convict who is a declarant will not have the admissibility of his res gestae statements affected merely because he is a convict or an unpardoned felon. Even though a declarant's incompetency as a witness will not exclude his res gestae utterances, the res gestae utterances of a declarant are inadmissible if his mental and physical condition is such that his statement lacks probative value.
A.L.R. 3rd, Vol. 4, § 23, p. 208, at 209, in discussing res gestae cites Walker v. State (1955), 162 Tex.Cr.R. 408, 286 S.W.2d 144, cert. den. 350 U.S. 931, 76 S.Ct. 299, 100 L.Ed. 814. In Walker v. State, it is stated that the victim's statement as to the identity of the offender made shortly after she was assaulted was held admissible as a part of the res gestae, notwithstanding the defendant's contention that it was incumbent upon the prosecution to prove that the victim was competent and in full possession *426 of her faculties at the time she made the statement. The court held that a res gestae statement is admissible even though the person who made it is incompetent as a witness. Kenney v. Phillipy (1883) 91 Ind. 511.
Each of the parties herein cite and rely upon Fort Wayne, etc., Traction Co. v. Roudebush (1909), 173 Ind. 57, 88 N.E. 676, 89 N.E. 369. Of course, each of the parties construe this case in an honest effort to prove themselves correct in their arguments.
In this case, Roudebush was a motorman on an interurban which is alleged to have the right of way over a second interurban with which Roudebush's traction car collided head-on on a curve. Roudebush was fatally injured and died within four hours after the collision. About one minute after the accident, and while he was lying in the wreckage of his car with both legs severed from his body and also suffering from internal injuries, one Edward Booth said to him: "How did this terrible thing occur?" and he answered: "I should have had a clear track until 7:30 o'clock."
The admission of Roudebush's statement over appellant's objection is urged as reversible error, to which objection the court stated:
"... This contention cannot be sustained. The injured motorman, as before stated, was found amidst the wreckage of the demolished car, which he had been operating, suffering from mortal injuries. His statement was made in response to an exclamatory inquiry directly, and almost inseparably, connected with a description of the situation. The physical facts attending the situation in which he was found were clearly competent evidence as to the cause of the accident and manner of its occurrence. His declaration explanatory of the collision was manifestly the natural emanation of the casualty, and the spontaneous and unstudied utterance of one having knowledge of the facts and called upon to account for the accident, and, made as they were in the presence of the circumstances, should possess a high degree of reliability. The principle is well settled in this State, and very generally approved elsewhere, that declarations of an injured party, which are the natural outgrowth of, and tend to illustrate or explain the occurrence giving rise to litigation, made so nearly contemporaneous therewith as to be in the presence of the transaction, and under such circumstances as necessarily to prevent deliberation and preclude any imputation of design, though not precisely concurrent in point of time, are admissible as part of the res gestae. [Cases cited omitted.]" (Our emphasis.)
We find the same rule in Robinson v. State (1915), 184 Ind. 208, 110 N.E. 980, and also in Hiatt v. Trucking, Inc. (1951), 122 Ind. App. 411, 103 N.E.2d 915.
We are of the opinion that a statement made by an injured party who survives and a statement made by an injured party who dies afterward, where such statements are determined to be a part of the res gestae, that such statements made by either of the parties may be introduced into evidence by the party or parties to whom such res gestae statement was made. We are of the further opinion that the Dead Man's Statute has no application to such a statement which is a part of the res gestae when made to a witness competent to testify.
We are of the opinion that the court committed reversible error in refusing to admit testimony of certain witnesses as set out in specifications 1, 2, and 3 of appellant's motion to correct errors.
For the reasons hereinabove assigned, this cause is reversed and remanded to the trial court for a new trial.
ROBERTSON, P.J., and LYBROOK, J., concur.
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525 F.Supp. 817 (1981)
Wayne T. GERBICH, Betty M. Regnier and Robert M. Regnier, Plaintiffs,
v.
Grayson B. EVANS, Defendant.
Civ.A.No. 81-K-403.
United States District Court, D. Colorado.
November 3, 1981.
Robert F. Dufty, Denver, Colo., Webb, Stokes & Sparks, San Angelo, Tex., for plaintiffs.
*818 James R. Florey, Jr., Denver, Colo., for defendant Evans.
James W. Wilson, Wheat Ridge, Colo., for defendants Regniers.
MEMORANDUM OPINION AND ORDER
KANE, District Judge.
This case stems from an automobile accident near Idaho Springs, Colorado on December 12, 1980. Plaintiff Gerbich seeks damages for his medical expenses and lost future earning capacity. Plaintiffs Regnier seek wrongful-death damages for their daughter's death. Jurisdiction is based solely on diversity of citizenship, 28 U.S.C. § 1332(a). Plaintiff Gerbich has requested a jury trial.
Defendant has made three motions in limine. In motion I, defendant seeks an order allowing the introduction of expert testimony on what plaintiffs' income taxes will be during the years of lost future earning capacity.[1] Motion II seeks a jury instruction stating that any damage awards will not be subject to income taxes and that the jury should not consider taxes in determining the amount of the award. Motion III seeks a jury instruction to be used in the event that plaintiffs' counsel ask any voir dire questions regarding insurance. In that event, defendant seeks an instruction that the jury is not to speculate on the availability of insurance. I deny all three motions.
I. INCOME TAXES
In support of his first two motions, defendant relies solely on Norfolk and Western Ry. Co. v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689 (1980). That case was a wrongful death action brought under the Federal Employers' Liability Act, 45 U.S.C. §§ 51 et seq. The court noted that, under this act, "the measure of recovery is `the damages ... [that] flow from the deprivation of the pecuniary benefits which the beneficiaries might have reasonably received....'" Id. at 493, 100 S.Ct. at 757 (citation omitted). Applying this test the court concluded that it was error for the trial court to exclude evidence of the deceased wage earner's income tax liability, id. at 493-94, 100 S.Ct. at 757-58, and that the jury should have been instructed that its award would not be subject to income tax, id. at 497-98, 100 S.Ct. at 759-60.
In actions under both the Federal Employers' Liability Act and the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680, the Tenth Circuit has concluded that unconscionable results will sometimes occur if income tax liability is not considered and will sometimes occur if it is considered. Its conclusion is that the question should be "left to the exercise of sound discretion of the trial Judge, whether with or without a jury." Sanchez v. Denver & Rio Grande Western Ry. Co., 538 F.2d 304, 305 (10th Cir. 1976); United States v. Sommers, 351 F.2d 354, 360 (10th Cir. 1965). In DeWeese v. United States, 419 F.Supp. 170, 172 (D.Colo.1976), aff'd in part, remanded in part, 576 F.2d 802 (10th Cir. 1978), Chief Judge Winner of this court had to decide whether to take into account income taxes in an action for personal injuries and wrongful death under the Federal Tort Claims Act. He concluded:
In accordance with my own convictions and with my understanding of Sanchez, I do take income taxes into account and I award damages in these cases on the basis of `take-home' pay. It is argued vigorously in the briefs that gross pay should be the base, but I just simply can't buy that argument. As I understand damage theory, the award for lost income should be for the income the plaintiffs have lost, and what they have lost is the amount left over after the government takes its inevitable bite. I think that an award of gross pay would be a windfall to the plaintiffs, although I recognize that where, as in Sanchez, the suit is against the employer, the employer is given a break because the employer would have *819 been paying the gross amount to Sanchez, and his "partner," the IRS. In this sense, under the circumstances of Sanchez, the employer benefits from computing damages on a `take-home' pay basis, but even the IRS hasn't figured out how to intervene to claim in a wrongful death or personal injury suit that it should be compensated for the loss of future withholding taxes. Here, though, the employer is not the tort feasor, and the reasons for using `take-home' pay are even more compelling than they were in Sanchez.
On appeal, the Tenth Circuit stated,
although we do not agree with all of the rhetoric contained in the trial court's opinion on damages, we are of the opinion that the results which it reached should be generally affirmed.
476 F.2d at 809. Although the exceptions to this general affirmance are not relevant here, I still cannot tell whether the Tenth Circuit considers the quoted passage of Chief Judge Winner's opinion as "rhetoric." In this vale of uncertainty, I conclude that the Tenth Circuit rule is that trial judges are to exercise their "sound discretion" in deciding whether to consider the effect of income taxes.[2]
In actions under the FELA and the FTCA the measure of damages is a matter of federal law. See Norfolk and Western Ry. Co. v. Liepelt, 444 U.S. at 493, 100 S.Ct. at 757. In contrast, substantive legal issues in diversity actions are a matter of state law. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The Liepelt decision is therefore not controlling in this case.[3] See Croce v. Bromley Corp., 623 F.2d 1084, 1096-97 (5th Cir. 1980). I must instead look to Colorado law to determine whether plaintiffs' alleged damages will be affected by any possible income tax liability.
Neither party cites any Colorado Supreme Court decisions on the question of the admissibility of evidence and instructions on the effect of income taxes; my independent research also has not discovered any such decisions.[4] When the highest state court has not spoken on an issue that comes before this court in a diversity case I must follow the applicable rules of decision that have been announced by the state's intermediate appellate courts. West v. American Telephone & Telegraph Co., 311 U.S. 223, 237-38, 61 S.Ct. 179, 183-84, 85 L.Ed. 139 (1940).
The Colorado Court of Appeals has twice upheld trial court refusals to give proffered jury instruction that awards would not be taxable. In Polster v. Griff's of America, Inc., 32 Colo.App. 264, 514 P.2d 80, 83 (1973), rev'd on other grounds, 184 Colo. 418, 520 P.2d 745 (1974), the court stated that such an instruction would be "improper." In Davis v. Fortino & Jackson Chevrolet Co., 32 Colo.App. 222, 510 P.2d 1376, 1378 (1973), the court stated an instruction that an award was not taxable would "inject[] a wholly irrelevant issue." The Colorado Court of Appeals has also upheld a trial court decision excluding evidence of the effects of plaintiff's loss of earning capacity on his income taxes. Hildyard v. Western Fasteners, Inc., 33 Colo.App. 396, 522 P.2d 596, 601 (1974). I therefore conclude *820 that evidence and instructions on the taxability of any awards to plaintiffs in this case are not admissible.
II. INSURANCE
Defendant's third motion in limine concerns insurance. He requests that, if plaintiffs' counsel ask any voir dire questions relating to insurance, that I then instruct the jury that:
No insurance company is a party to this action and the jury may not speculate upon the question of whether the Defendant is or is not insured, as that question has no bearing whatever on any issue in this case.
Plaintiffs object to this motion, arguing that Colorado courts have held that it is appropriate to ask prospective jurors whether they are associated with insurance companies, and that the proffered instruction is "irrelevant and immaterial and could create an inference [that] is not based in fact."
I deny that motion because it is premature and improperly formulated. In this court the judge conducts the voir dire examination. Before trial, counsel are permitted to submit proposed voir dire questions. At that time opposing counsel may object to proposed questions. Counsel also will submit proposed jury instructions. I will determine what instructions are proper after all the evidence is in. Counsel will have an opportunity to express their views on the proposed instructions at that time.
IT IS SO ORDERED that defendant's motions in limine I, II, and III are denied.
NOTES
[1] Although defendant does not distinguish between plaintiff Gerbich and plaintiffs Regnier, I presume that the testimony would be on plaintiff Gerbich and decedent Regnier's income taxes. Plaintiffs Regniers' income taxes are not relevant here.
[2] See generally Anno., Propriety of taking income tax into consideration in fixing damages in personal injury or death action, 63 A.L.R.2d 1393 (1959).
[3] Defendant argues,
This Court should not be dissuaded from applying the law pronounced in [Liepelt] because it concerned death in a FELA matter. Any such isolation of the holding on that case to a FELA matter is specious; it would be a distinction without a difference.
Because I conclude that the distinction is founded on the Erie doctrine, I hold that there is a difference which is not specious.
[4] The Colorado Supreme Court has long adhered to the "net pecuniary loss rule" in wrongful death actions. See, e.g., Lewis v. Great Western Distributing Co., 168 Colo. 424, 427, 451 P.2d 754, 755 (1969); Pierce v. Conners, 20 Colo. 178, 182, 37 P. 721 (1894). Income tax is not mentioned in the many factors that trial courts are supposed to consider in determining net pecuniary loss. Absent an explicit statement from the Colorado Supreme Court, I will not speculate on how it would rule on the issue regarding income taxes that is now before me.
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361 So.2d 386 (1978)
Alphonsia SOMMERVILLE
v.
STATE.
2 Div. 207.
Court of Criminal Appeals of Alabama.
June 20, 1978.
Rehearing Denied July 25, 1978.
Orzell Billingsley, Jr., Quentin Q. Brown, Jr., Birmingham, for appellant.
William J. Baxley, Atty. Gen., and Samuel J. Clenney, III, Asst. Atty. Gen., for appellee.
HARRIS, Presiding Judge.
Appellant was convicted of assault with intent to murder and the Court sentenced him to twenty years imprisonment in the penitentiary. At arraignment, in the presence of his retained counsel, he pleaded not guilty. After sentence was imposed he gave notice of appeal. He was found to be indigent and a free transcript was furnished him. Trial counsel represents the appellant on this appeal.
The evidence in this case was in hopeless conflict. The testimony adduced by the State more than amply proved the corpus delicti. Six eyewitnesses for the State testified that appellant fired the pistol that struck the deceased. They saw the pistol in *387 appellant's hand and saw a blaze of fire come out of the barrel as appellant shot the victim.
This case arose from a dispute at the Soul Club of which appellant was the manager. It was a club primarily for young blacks under thirty years of age located in or near Aliceville, Pickens County, Alabama. The club had music for dancing and also served soft drinks and beer on occasions. There was an admission fee of one dollar per person and the club opened around 8 o'clock p. m. and closed at about midnight.
On the night of February 11, 1977, the victim, William E. Gosa, and two companions, arrived at the Soul Club at 10:30 p. m. The victim's friends informed him that nothing was happening there and they were preparing to leave and go to the 506 Club. The victim wanted to enter the club and buy a beer to carry with him to the other club but appellant told him he could not go in the club without paying the admission fee. One Joseph Williams who had paid his admission fee got into an argument with appellant about requiring the victim to pay a dollar just to go into the club and purchase a beer. At this point appellant ordered Williams and the victim to leave the premises. Williams told appellant that he had paid his dollar and he was not going to leave. Appellant left the entrance doorway for a few minutes and returned and said to Williams, "you ain't gone yet?" Williams again stated that he had paid his money and was not going anywhere. Appellant left the door again and in a few minutes he returned with a pistol and fired one shot which struck the victim in his side. According to the eyewitnesses for the State, appellant laid the pistol across his left arm to steady his aim. It is not disputed that the shooting took place outside the club.
The victim further testified that he intended to go inside the club and "pick up a beer" but did not when appellant told him he had to pay a dollar. The victim denied being involved in an argument about the payment for admission.
Several other witnesses testified to substantially the same facts. All of the State witnesses stated that after some dispute or argument, the details of which are unclear from the record, appellant shot William E. Gosa. All of these witnesses stated that Gosa did not have a weapon of any kind and did not attempt to use a weapon on appellant.
James Moore, an investigator for the Pickens County Sheriff's Department, testified that he took several photographs of the scene of the shooting. The photographs were admitted into evidence without objection. Investigator Moore stated that appellant's parents told him that a black man by the name of James E. Moore had done the shooting but they also stated that James E. Moore told them later that he was kidding and that he did not shoot the victim. The investigator was never able to locate James E. Moore.
At the conclusion of the State's case appellant made a motion to exclude the evidence but no grounds were specified in this motion. The motion to exclude was overruled.
Appellant then presented numerous witnesses who were at the Soul Club on the night of the shooting. All of these witnesses testified they did not know who shot the victim and all of them stated they did not see a pistol that night. Some, but not all of them, testified they heard one shot but did not know who shot the victim. One or more of these witnesses testified to the good character of appellant.
Appellant took the stand in his behalf and said he did not shoot the victim and did not even own a pistol. No pistol was ever found. He further stated that a dispute arose between the victim and three white boys and the victim and Joseph Williams. He told them he was going to call the police after the victim pulled a knife on these white boys and he went to his house nearby but he did not call the officers. He returned to the club and saw the argument was still in progress. He heard a shot but did not know who fired it.
Two of the white boys were called as witnesses by appellant and they admitted *388 they went to the Soul Club on the night of the alleged shooting but no one pulled a knife on them. They stated they did not know the victim of the shooting but they had a few words with a black boy and then left the place. They were not present when the shooting occurred.
In sum, appellant testified that the State witnesses who said he shot the victim were simply lying and that it was all a frame-up.
Appellant filed a motion for a new trial alleging, among other grounds, that the evidence failed to prove the elements of assault with intent to murder.
To sustain a conviction for assault with intent to murder, the evidence must establish an assault with the intent to take life; which, had the assault resulted in the victim's death, would have constituted murder. Malice is a necessary element. Hamm v. State, 56 Ala.App. 632, 324 So.2d 345. The necessary elements of intent and malice, in a prosecution for assault with intent to murder, can be inferred from the act of using a deadly weapon. Roberts v. State, 49 Ala.App. 729, 275 So.2d 709.
Here, the evidence presented by the State showed that appellant shot William E. Gosa from a distance of twenty feet with a pistol. Gosa was struck in the side. Hospital records of William Gosa were admitted in evidence without objection. Those records show that Gosa's wound necessitated repair of stomach lacerations and the removal of his spleen. It is relevant to show the extent of the victim's wounds as tending to prove the severity of the injuries and the intent with which they were inflicted. Dixon v. State, 57 Ala.App. 30, 325 So.2d 546.
This evidence is sufficient to sustain appellant's conviction, though he testified that he did not fire the shot. Conflicting evidence is always a jury question to determine. Alabama Digest, Criminal Law, Key Number 747.
Prior to trial, appellant moved that a transcript of the testimony before the Grand Jury be produced for his examination. The Court denied this motion. The State's attorney then told appellant that the testimony of the witnesses before the Grand Jury is not transcribed.
Appellant contends that he was entitled to discovery of the Grand Jury proceedings. He relies on Dennis v. United States, 384 U.S. 855, 86 S.Ct. 1840, 16 L.Ed.2d 973. That decision holds that where defense counsel shows a "particularized need," he may have access to relevant portions of Grand Jury testimony.
A Grand Jury is not required to compile records and the testimony in the absence of statute requiring preservation of the proceedings. State ex rel. Baxley v. Strawbridge, 52 Ala.App. 685, 296 So.2d 779. There is no such statute in this state. Steward v. State, 55 Ala.App. 238, 314 So.2d 313.
In the absence of a transcript, denial of a motion to produce is proper. Steward, supra; Strawbridge, supra; Sparks v. State, 46 Ala.App. 357, 242 So.2d 403. If appellant desired to use Grand Jury testimony to impeach the State's witnesses, he could have done this through a subpoena for the Grand Jurors who sat on the case. Strawbridge, supra.
During the direct examination of the victim, William Gosa, the State's attorney drew a diagram, laying out the scene. All geographical details were filled in under the instructions of the witness. Appellant objected to the State's attorney "laying out the scene." This objection was overruled.
While the State's attorney was making his closing argument, the following occurred:
"MR. JOHNSTON: We've got the 4th fellow standing here by the door Steve Gosa, We've got a 5th man standing right here on the corner (Writing these names on blackboard.)
"MR. BILLINGSLEY: Your Honor, we are going to object to this, we strongly object to it unless you follow all those people standing there, you are bypassing some of those people.
"MR. JOHNSTON: Who did I bypass? *389 "MR. BILLINGSLEY: You are putting some people in 2 places.
"THE COURT: Overruled.
"MR. BILLINGSLEY: We except.
"MR. JOHNSTON: Was he in any danger? How was his life in danger? (speaking of the defendant)
"MR. BILLINGSLEY: I am going to object to that. Your own witness placed Mr. Alphonsia Sommerville at another spot and I think he should be made to give both spots Your Honor.
"MR. JOHNSTON: Put him in any spot you want to."
The trial court's actions in overruling appellant's objections to the diagram and references to the diagram made in closing argument are not before this Court, since the diagram is not contained in the record. Gilliam v. State, 38 Ala.App. 420, 89 So.2d 584, cert. denied, 265 Ala. 697, 89 So.2d 587.
A thorough search of the record reflects no error injuriously affecting the substantial rights of the appellant. The judgment of conviction is due to be affirmed.
AFFIRMED.
All the Judges concur.
TYSON, J. concurs with an opinion.
TYSON, Judge, concurring.
I concur in the principal opinion in this cause as prepared by our distinguished Presiding Judge John O. Harris.
Counsel for the appellant cited to this Court in his brief, Dennis v. United States, 384 U.S. 855, 86 S.Ct. 1840, 16 L.Ed.2d 973, in support of his argument that he be allowed to examine the minutes of the Grand Jury in this cause. Dennis, supra, is an interpretation of Rule 6(e) of the Federal Rules of Criminal Procedure. Such rule has not been made applicable to state proceedings, nor insofar as has been cited to this Court, no opinion has been made known to us that such "particularized need" rises to the stature of a federally protected constitutional right.
This Court has several times noted that transcripts of Grand Jury testimony, tapes of Grand Jury testimony, or other proceedings before the Grand Jury which are by statute in Alabama secret, may not be made the subject of pretrial disclosures. Thigpen v. State, 49 Ala.App. 233, 270 So.2d 666; State ex rel. Baxley v. Strawbridge, 52 Ala. App. 685, 296 So.2d 779; and State ex rel. Baxley v. Archer, Ala.Cr.App., 335 So.2d 240.
| {
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} |
[Cite as Starkey v. Builders FirstSource Ohio Valley, L.L.C., 130 Ohio St.3d 114, 2011-Ohio-
3278.]
STARKEY, APPELLEE, v. BUILDERS FIRSTSOURCE OHIO VALLEY, L.L.C.,
APPELLANT; BUEHRER, ADMR., APPELLEE.
[Cite as Starkey v. Builders FirstSource Ohio Valley, L.L.C.,
130 Ohio St.3d 114, 2011-Ohio-3278.]
Workers’ Compensation—Appeal to common pleas court under R.C. 4123.512—
Scope of appeal—Issues considered at administrative level—Aggravation
of preexisting condition.
(No. 2010-0924—Submitted March 2, 2011—Decided July 7, 2011.)
APPEAL from the Court of Appeals for Hamilton County, No. C-081279,
187 Ohio App.3d 199, 2010-Ohio-1571.
__________________
SYLLABUS OF THE COURT
1. Because aggravation of a preexisting medical condition is a type of causation, it
is not a separate condition or distinct injury as defined in R.C. 4123.01.
2. An appeal taken pursuant to R.C. 4123.512 allows the claimant to present
evidence on any theory of causation pertinent to a claim for a medical
condition that already has been addressed administratively.
__________________
LANZINGER, J.
{¶ 1} In this discretionary appeal, we address an issue left open in an
earlier case: “whether a claim for a certain condition by way of direct causation
must necessarily include a claim for aggravation of that condition for purposes of
either R.C. 4123.512 or res judicata.” Ward v. Kroger Co., 106 Ohio St.3d 35,
2005-Ohio-3560, 830 N.E.2d 1155, ¶ 15, fn. 1 (the claimant in an R.C. 4123.512
appeal may seek to participate in the workers' compensation fund only for those
SUPREME COURT OF OHIO
conditions that were addressed in the administrative order from which the appeal
is taken).
{¶ 2} For the reasons that follow, we hold that (1) because aggravation
of a preexisting medical condition is a type of causation, it is not a separate
condition or distinct injury as defined in R.C. 4123.01 and (2) an appeal taken
pursuant to R.C. 4123.512 allows the claimant to present evidence on any theory
of causation pertinent to a claim for a medical condition that already has been
addressed administratively.
Facts and Procedural History
{¶ 3} On September 11, 2003, Joseph A. Starkey, while working as a
service technician for Builders FirstSource Ohio Valley, L.L.C. (“Builders”), felt
pain in his left hip as he leaned back and turned to his right to avoid being
knocked off a ladder while installing a window. He filed a claim with the Bureau
of Workers’ Compensation (“BWC”), which allowed his claim for “sprain hip &
thigh, left; sprain lumbosacral; enthesopathy of left hip; tear left hamstring;
glenoid labrum tear of left hip; venous embolism deep vein thrombosis left leg;
and degenerative joint disease left hip.”
{¶ 4} On December 9, 2005, he moved to amend his claim to include
“degenerative osteoarthritis of the left hip.” A district hearing officer allowed the
amended claim, stating, “ ‘[D]egenerative osteoarthritis of the left hip’ is causally
related to and the result of the injury of record.” A staff hearing officer affirmed
the allowance, and the Industrial Commission declined further review.
{¶ 5} Builders then appealed to the Hamilton County Common Pleas
Court, challenging Starkey’s right to participate in the workers’ compensation
fund for “degenerative osteoarthritis of the left hip,” and pursuant to R.C.
4123.512, Starkey filed a corresponding complaint. In preparation for trial,
Builders deposed Starkey’s treating physician, Dr. John Gallagher, who testified
that Starkey suffered from degenerative osteoarthritis of the left hip and that his
2
January Term, 2011
work-related injury “directly aggravated” his preexisting osteoarthritis. Builders’
medical expert, Dr. Thomas Bender, also concluded that Starkey had aggravated a
preexisting condition.
{¶ 6} When Starkey rested his case, Builders moved for dismissal,
arguing that because a claimant may seek to participate in the workers’
compensation fund in the common pleas court only for those conditions addressed
in the administrative order, and because Starkey asserted a new condition on
appeal—aggravation of degenerative osteoarthritis of the left hip—he could not
participate in the fund for that condition. The trial court agreed and entered
judgment for Builders, stating that “a claim for aggravation of a preexisting
condition is a claim separate and distinct from a claim for that underlying
condition itself, and administrative action on one such claim does not without
more trigger Common Pleas Court jurisdiction to consider the other.”
{¶ 7} The First District Court of Appeals reversed the order of the
common pleas court, observing that Starkey had presented claims for the same
medical condition—degenerative osteoarthritis—both administratively and in
common pleas court and that by arguing aggravation of degenerative osteoarthritis
in the common pleas court, he merely changed the type of causation. The court
further determined that because Builders’ expert, Dr. Bender, also diagnosed
preexisting degenerative osteoarthritis, “there was no ambush by Starkey’s
counsel.” 187 Ohio App.3d 199, 2010-Ohio-1571, 931 N.E.2d 633, ¶ 31.
Accordingly, the appellate court concluded that Starkey could participate in the
fund for degenerative osteoarthritis based on evidence that his work-related injury
had aggravated his preexisting medical condition.
{¶ 8} On appeal to this court, Builders, citing Plotner v. Family Dollar
Stores, 6th Dist. No. L-07-1287, 2008-Ohio-4035, 2008 WL 3198710, argues that
a claim that a work-related injury caused a medical condition does not include a
claim that an injury aggravated a preexisting medical condition, because they
3
SUPREME COURT OF OHIO
involve separate conditions “with differing medical and legal criteria” and thus
constitute different claims. Builders further argues that because a claimant cannot
seek to participate in the fund on appeal for a condition that has not been
presented to the Industrial Commission, Starkey’s aggravation claim should not
have been raised for the first time in the common pleas court. Thus, Builders
maintains that the dismissal was proper.
{¶ 9} Starkey and the BWC do not dispute that a common pleas court
may consider only those medical conditions that have first been considered at the
administrative level, but assert that “aggravation” refers to the manner in which a
medical condition is causally connected to a work-related injury and does not
refer to a separate medical condition. Accordingly, they argue that even if a
claimant alleges aggravation of a preexisting medical condition for the first time
in common pleas court, the condition remains the same, and thus the common
pleas court is authorized to consider the new theory of causation on appeal.
Starkey and the BWC also contend that a claimant need not raise a specific theory
of causation at the administrative level, because the parties have an opportunity to
present new evidence of causation in the common pleas court to the extent that it
pertains to the medical condition considered administratively. Accordingly,
Starkey and the BWC contend that the court of appeals properly reversed the
judgment in favor of Builders.
{¶ 10} Thus, the issue presented for our review is whether a workers’
compensation claim alleging that a work-related injury caused a medical
condition encompasses a claim that the same injury aggravated a preexisting
medical condition or whether each theory of causation presents a separate claim
that must first be considered at the administrative level.
Law and Analysis
{¶ 11} This case allows us to consider an issue left open in Ward v.
Kroger Co., 106 Ohio St.3d 35, 2005-Ohio-3560, 830 N.E.2d 1155. In Ward, we
4
January Term, 2011
considered whether an R.C. 4123.512 appeal “is limited to the medical conditions
addressed in the order from which the appeal is taken.” Id. at ¶ 6. We held that a
“claimant in an R.C. 4123.512 appeal may seek to participate in the Workers’
Compensation Fund only for those conditions that were addressed in the
administrative order from which the appeal is taken.” Id. at syllabus. We resolved
Ward on the basis that the claimant had raised new conditions on appeal that had
not been raised administratively and therefore were not subject to judicial review.
{¶ 12} However, in a footnote in Ward, we declined to address “whether a
claim for a certain condition by way of direct causation must necessarily include a
claim for aggravation of that condition for purposes of either R.C. 4123.512 or res
judicata.” Id. at ¶ 15, fn. 1. This case allows us to resolve that issue.
{¶ 13} Builders relies on the argument that because the proof necessary to
demonstrate direct causation differs from that needed to establish aggravation of a
preexisting medical condition, each theory of causation presents a separate claim
that must first be considered at the administrative level. See Davidson v. Bur. of
Workers’ Comp., 2d Dist. No. 21731, 2007-Ohio-792, at ¶ 27. In other words, a
common pleas court may not consider evidence of aggravation of preexisting
degenerative osteoarthritis in an R.C. 4123.512 appeal even though the condition
of degenerative osteoarthritis as a work-related injury was heard by the staff
hearing officer at the Industrial Commission.
{¶ 14} The workers’ compensation statutes do not define the term
“condition,” although we stated in Ward at ¶ 10: “A workers' compensation claim
is simply the recognition of the employee's right to participate in the fund for a
specific injury or medical condition, which is defined narrowly, and it is only for
that condition, as set forth in the claim, that compensation and benefits provided
under the act may be payable.” (Emphasis added.) The word “injury,” however,
is defined in R.C. 4123.01(C) as “any injury, whether caused by external
accidental means or accidental in character and result, received in the course of,
5
SUPREME COURT OF OHIO
and arising out of, the injured employee's employment.” An injury requires
physical harm or a medical condition documented by the evidence. Malone v.
Indus. Comm. (1942), 140 Ohio St. 292, 23 O.O. 496, 43 N.E.2d 266,
overruled on other grounds, Village v. Gen. Motors Corp. (1984), 15 Ohio
St.3d 129, 15 OBR 279, 472 N.E.2d 1079 (“injury” encompasses physical or
traumatic damage or harm).
{¶ 15} Claimants, therefore, must submit a medical diagnosis of an injury
at the administrative level to prevail. In this case, Starkey provided evidence of
his injury, degenerative osteoarthritis. He also was required to establish a causal
connection between the documented physical harm and the industrial injury for
it to be compensable. Among the types of causation, Ohio law recognizes
direct causation, aggravation of a preexisting condition, repetitive trauma, and
flow-through. Fox v. Indus. Comm. (1955), 162 Ohio St. 569, 55 O.O. 472,
125 N.E.2d 1; Schell v. Globe Trucking, Inc. (1990), 48 Ohio St.3d 1, 548
N.E.2d 920; Lewis v. Trimble (1997), 79 Ohio St.3d 231, 680 N.E.2d 1207;
Village v. Gen. Motors, 15 Ohio St.3d 129, 15 OBR 279, 472 N.E.2d 1079.
{¶ 16} At the administrative level, the hearing officer is not limited to the
type of causation a claimant argues. The Industrial Commission Hearing
Officer's Manual (2010), Section S-11, specifically requires the hearing officer to
consider evidence of both direct causation and aggravation as potential causes for
a condition.1 http://www.ohioic.com/policies/hearofficermanual/hom.pdf.
1. Section S-11 provides: “If there is evidence on file or presented at hearing to support both the
theories of direct causation, or aggravation (date of injury or disability prior to August 25,
2006)/substantial aggravation (date of injury or disability on or after August 25, 2006), a request
to allow a condition in a claim is to be broadly construed to cover either theory of causation (i.e.
direct vs. aggravation/substantial aggravation). The Hearing Officer must address the origin of the
condition under both theories of causation without referring the claim back to the prior hearing
level or the BWC. Where new evidence regarding an alternative theory of causation is submitted
by any party, Hearing Officers and/or Hearing Administrators shall ensure that all parties are
given adequate opportunity to obtain evidence in support of their position by continuing the
hearing for a period of at least thirty (30) days, unless the parties agree that less time is sufficient
for obtaining the necessary evidence. The Hearing Officers and/or Hearing Administrators shall
6
January Term, 2011
{¶ 17} In applying the statutory requirements, we remain mindful that the
workers' compensation statutes should be liberally construed in favor of
employees. R.C. 4123.95. The ultimate question in a workers’ compensation
appeal is the claimant’s right to participate in the fund for an injury received in
the course of, and arising out of, the claimant’s employment. As long as the
injury has a causal connection—whether direct or aggravated—to the claimant’s
employment, the claimant is entitled to benefits.
{¶ 18} We therefore agree with the courts that have held that a claimant
is not required to advance a specific theory of causation at the administrative
level if he or she wishes to use that theory in the trial court, because R.C.
4123.512 allows for introduction of new evidence, provided that it relates to the
same medical condition or injury. McManus v. Eaton Corp. (May 16, 1988), 5th
Dist. No. CA-7346, 1988 WL 48598 (aggravation of a previously ruptured disc
is not a different injury from a ruptured disc); Plaster v. Elbeco, Inc., 3d Dist.
No. 3-07-06, 2007-Ohio- 5623, 2007 WL 3052773 (causation of disc herniation
was not a new condition); Bright v. E. & C. Lyons (Sept. 30, 1993), 11th Dist. No.
93-G-1753, 1993 WL 407361 (the evidence is admissible when new theory of
recovery is offered to advance new theory of causation, not new injury); Torres v.
Gen. Motors Corp., C.P.C. Group (Nov. 21, 1991), 8th Dist. No. 59122, 1991
WL 243632 (consideration of aggravation was proper when a single disc injury
was claimed); Robinson v. AT & T Network Sys., 10th Dist. No. 02AP-807, 2003-
Ohio-1513, 2003 WL 1563856, ¶ 16 (“advancing a new theory of causation is not
tantamount to trying to prove a new injury”).
{¶ 19} On an R.C. 4123.512 appeal from the Industrial Commission’s
order, although the proceeding is de novo, the decision for the common pleas
court is the claimant’s right to participate in the fund for a specific injury, not for
state in their compliance letter or order the period of time required to obtain the necessary
evidence.”
7
SUPREME COURT OF OHIO
a specific type of causation. As we explained in Ward, “Under R.C. 4123.512(A),
‘[t]he claimant or the employer may appeal an order of the industrial commission
made under division (E) of section 4123.511 of the Revised Code in any injury or
occupational disease case, other than a decision as to the extent of disability to the
court of common pleas * * *.’ ” 106 Ohio St.3d 35, 2005-Ohio-3560, 830 N.E.2d
1155, ¶ 9.
Conclusion
{¶ 20} In Ward, we did not answer whether a claim for a certain condition
by way of direct causation must necessarily include a claim for aggravation of
that condition. To comply with R.C. 4123.95’s mandate to construe the workers’
compensation statutes liberally in favor of employees, we now answer
affirmatively.
Judgment affirmed.
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, CUPP, and MCGEE
BROWN, JJ., concur.
O’DONNELL, J., dissents.
__________________
O’DONNELL, J., dissenting.
{¶ 21} I respectfully dissent.
{¶ 22} In this case, the majority has determined that a workers’
compensation claim alleging that a work-related injury caused a medical
condition also includes a claim that the injury aggravated the same preexisting
medical condition, thereby permitting the common pleas court to consider
aggravation of a preexisting condition on appeal if the Bureau of Workers’
Compensation allowed the condition as directly caused by the employment.
{¶ 23} A workers’ compensation claim alleging that a work-related injury
caused a medical condition is different from a workers’ compensation claim
alleging that a work-related injury aggravated the same preexisting medical
8
January Term, 2011
condition because each of these claims requires different elements of proof.
Moreover, the workers’ compensation system is predicated upon administrative
processing of claims with an opportunity for de novo judicial review; but de novo
review does not permit a claimant to assert a different claim on appeal by
changing the theory of causation. Accordingly, I would assert that the common
pleas court is precluded from adjudicating an aggravation claim on appeal that has
not first been presented administratively. Here, Starkey did not raise the
aggravation claim administratively, but rather asserted it only on appeal. Thus, I
would reverse the judgment of the court of appeals.
Facts and Procedural History
{¶ 24} After sustaining an injury to his left hip while working for Builders
FirstSource Ohio Valley, L.L.C., Joseph A. Starkey filed a workers’
compensation benefits claim for “degenerative osteoarthritis of the left hip.” The
Bureau of Workers’ Compensation ultimately granted his request, and Builders
appealed this determination to common pleas court. After Starkey provided
evidence at trial that his work-related injury aggravated his preexisting
degenerative osteoarthritis, Builders moved for dismissal, arguing that Starkey
had asserted only a direct-causation claim administratively and that the trial court
could not consider a new theory of causation—aggravation of preexisting
osteoarthritis—for the first time on appeal. The court agreed and dismissed the
action.
{¶ 25} The court of appeals reversed, holding that the court could
consider Starkey’s appeal regardless of the theory of causation presented because
he had presented claims for the same medical condition—degenerative
osteoarthritis—both administratively and in common pleas court.
{¶ 26} Builders appealed, and we are now asked to consider whether a
workers’ compensation claim alleging that a work-related injury caused a medical
condition encompasses a claim that the same injury aggravated a preexisting
9
SUPREME COURT OF OHIO
medical condition, thereby allowing a claimant to assert aggravation of a
preexisting medical condition on appeal in the common pleas court without
consideration of the aggravation claim at the administrative level. The majority
has determined that it does. For the following reasons, I dissent.
Law and Analysis
{¶ 27} We considered a similar issue in Ward v. Kroger Co., 106 Ohio
St.3d 35, 2005-Ohio-3560, 830 N.E.2d 1155. There, we recognized that in
enacting the workers’ compensation statutes, the General Assembly divided the
responsibilities of claims processing and review between the executive and
judicial branches of government. We explained that the Workers’ Compensation
Act provides the Industrial Commission with the exclusive authority to perform
an initial review of claims pursuant to R.C. 4123.511 and also affords the
common pleas court a limited right to conduct a de novo review of those claims
pursuant to R.C. 4123.512 after the Industrial Commission completes its
evaluation.
Medical condition similar to causation
{¶ 28} In Ward, we considered whether an R.C. 4123.512 appeal “is
limited to the medical conditions addressed in the order from which the appeal is
taken.” Id. at ¶ 6. We observed that appellate courts had split on this issue, with
some courts holding that because the common pleas court performs a de novo
review, a claimant could supplement the claim to add conditions that had not been
addressed by the commission, and other courts holding that a claimant may not
litigate different conditions in common pleas court, because they had not been
considered administratively. We concluded the latter analysis to be more
persuasive. Id. at ¶ 7-9.
{¶ 29} This court determined that the General Assembly intended that
claims be presented in the first instance at the administrative level as a “necessary
and inherent part of the overall adjudicative framework of the Workers’
10
January Term, 2011
Compensation Act,” id. at ¶ 9, and determined that “each injury or condition that
is alleged to give the claimant a right to participate in the Workers’ Compensation
Fund must be considered as a separate claim for purposes of R.C. 4123.511 and
4123.512, and each such claim must proceed through the administrative process
in order to be subject to judicial review.” Id. at ¶ 11. We reasoned that
“[a]llowing consideration of the right to participate for additional conditions to
originate at the judicial level is inconsistent with this statutory scheme.” Id. at
¶ 10. In doing so, we stressed that we were not willing to “usurp[ ] the
commission’s authority as the initial adjudicator of claims and cast[ ] the common
pleas court in the role of a claims processor.” Id. Thus, we limited the scope of
an R.C. 4123.512 appeal to “those conditions that were addressed in the
administrative order from which the appeal is taken.” Id. at syllabus. We resolved
Ward on the basis that the claimant had raised new conditions on appeal that had
not been raised administratively and therefore were not subject to judicial review.
{¶ 30} However, in a footnote in Ward, we declined to address “whether a
claim for a certain condition by way of direct causation must necessarily include a
claim for aggravation of that condition for purposes of either R.C. 4123.512 or res
judicata.” Id. at ¶ 15, fn. 1. The facts in the instant case provide this court with an
opportunity to address the unresolved issue in Ward.
{¶ 31} A split of authority exists among appellate courts in Ohio on this
question. The Eighth, Tenth, and Eleventh Districts have held that a workers’
compensation claim alleging that an injury has directly caused a condition
includes a claim alleging that a work-related injury has aggravated the same
preexisting condition and, therefore, a claim for aggravation can be considered for
the first time on appeal. Bright v. E. & C. Lyons (Sept. 30, 1993), 11th Dist. No.
93-G-1753, 1993 WL 407361, at *2 (emphasizing that “in a case where a new
theory of recovery is first presented at the trial level, the evidence is admissible
since the claimant * * * is not attempting to prove a new injury, but rather, merely
11
SUPREME COURT OF OHIO
advances a new theory of causation”); Torres v. Gen. Motors Corp. (Nov. 21,
1991), 8th Dist. No. 59122, 1991 WL 243632, *3 (concluding that by seeking an
instruction on aggravation, Torres “ha[d] not asserted a new injury, for the first
time, at the trial level”). The court in Robinson v. AT & T Network Sys., 10th
Dist. No. 02AP-807, 2003-Ohio-1513, 2003 WL 1563856, at ¶ 16, similarly
concluded that “advancing a new theory of causation is not tantamount to trying
to prove a new injury,” but that case is factually distinguishable in that it arose
from a claim for aggravation of a preexisting condition filed after Robinson did
not appeal from a direct-causation claim for the same medical condition. The
court determined that because Robinson could have raised his aggravation claim
on appeal from the denial of his directly caused condition, res judicata barred him
from raising the aggravation claim in the subsequent administrative appeal.
Nonetheless, the appellate court concluded that Robinson would have been able to
change his theory of causation on appeal.
{¶ 32} Conversely, the First and Second Districts have a different view
and have concluded that a claim alleging that a work-related injury has caused a
medical condition is different from a claim alleging that the injury has aggravated
a preexisting condition, because each involves a distinct medical condition that
requires different elements of proof. Thus, those courts are persuaded that
pursuant to Ward, a claimant must present an aggravation claim at the
administrative level before the common pleas court can consider it on appeal.
Collins v. Conrad (Nov. 15, 2006), 1st Dist. Nos. C-050829 and C-050865, at *5-
6 (holding that direct and aggravation claims “involve[ ] separate injuries with
different elements of proof,” giving “rise to separate claims” that “need to be
presented to the Industrial Commission in the first instance”); Davidson v. Bur. of
Workers’ Comp., 2d Dist. No. 21731, 2007-Ohio-792, 2007 WL 585774, at ¶ 27
(finding that because the claims are for intrinsically separate conditions, requiring
different proof, “a claim for an aggravation of a preexisting condition not
12
January Term, 2011
previously adjudicated by the commission is not appealable at the trial court
level”).
{¶ 33} These courts rely on Ward to distinguish direct-causation claims
from aggravation claims. In Ward, we recognized that the General Assembly has
manifested its intent to give the Industrial Commission and common pleas court
different roles in processing and reviewing workers’ compensation claims,
expressly limiting the authority of the common pleas court to reviewing claims
already considered at the administrative level. Ward precluded the presentation of
new medical conditions on appeal but did not address the presentation of new
theories of causation on appeal; nonetheless, our observations there are
instructive regarding the issue confronted here.
{¶ 34} Ward sought to participate in the fund for a new medical condition
on appeal and had the burden to establish different elements of proof in the
common pleas court from what he had presented administratively. Similarly, a
claimant who presents a new theory of causation on appeal is required to establish
different elements of proof in the common pleas court from what would have
been presented at the administrative level. Judge Brogan aptly observed this
distinction in Davidson. He noted that “[t]o demonstrate that a direct injury is the
result of the accident raising the need to participate in the Workers’ Compensation
Fund, the evidence must show that a direct or proximate causal relationship
existed between the claimant’s accidental injury and his or her harm.” Davidson,
2007-Ohio-792, at ¶ 28. He further explained that “[t]his is different from the
evidence showing that a preexisting condition has been aggravated” because in
that case the “ ‘ “key is whether the aggravation [* * *] had an impact on a
person’s bodily functions or affected an individual’s ability to function or
work.” ’ ” Id. at ¶ 28, quoting Gower v. Conrad (2001), 146 Ohio App.3d 200,
204, 765 N.E.2d 905, quoting Boroff v. McDonald’s Restaurants of Ohio, Inc.
(1988), 46 Ohio App.3d 178, 191, 546 N.E.2d 457.
13
SUPREME COURT OF OHIO
{¶ 35} I appreciate this distinction as well, and would assert that because
the proof necessary to demonstrate direct causation differs from that needed to
establish aggravation of a preexisting medical condition, each theory of causation
presents a separate claim, such that these claims are properly considered in the
first instance at the administrative level.
De novo review in an R.C. 4123.512 appeal
{¶ 36} The de novo nature of an R.C. 4123.512 appeal does not change
this analysis. A de novo review contemplates the consideration of new evidence.
In Ward, we recognized that some appellate courts had found that R.C.
4123.512’s authorization of additional discovery suggested that “the General
Assembly contemplated that additional evidence might surface in the court of
common pleas and intended, in the interest of judicial economy, to allow for the
litigation of new conditions.” Id., 106 Ohio St.3d 35, 2005-Ohio-3560, 830
N.E.2d 1155, at ¶ 7, citing Grant v. Ohio Dept. of Liquor Control (1993), 86 Ohio
App.3d 76, 81-83, 619 N.E.2d 1165; Williams v. Harsco Corp. (1994), 94 Ohio
App.3d 441, 446-447, 640 N.E.2d 1193; Reed v. MTD Prod., Inc. (1996), 111
Ohio App.3d 451, 458-460, 676 N.E.2d 576.
{¶ 37} However, we observed that other appellate courts “reason that the
character of the trial as de novo means only that new evidence may be presented
with regard to the appealed condition, not that evidence of a new condition may
be presented for the first time on appeal.” (Emphasis added.) Id. at ¶ 8-9, citing
Mims v. Lennox-Haldeman Co. (1964), 8 Ohio App.2d 226, 228-229, 31 O.O.2d
357, 199 N.E.2d 20; Williams v. Timken Co. (Oct. 1, 1984), 5th Dist. No. CA-
6346, 1984 WL 3906; Dunn v. Mayfield (1990), 66 Ohio App.3d 336, 340, 584
N.E.2d 37; Blake v. Mihm (Aug. 23, 1995), 9th Dist. No. 17043, 1995 WL
499782; Hausch v. Alside (1998), 129 Ohio App.3d 362, 717 N.E.2d 1121.
{¶ 38} In Ward, we found that “the latter courts come closer to the mark,”
and we added some explanation: requiring administrative determination of claims
14
January Term, 2011
in the first instance “is a necessary and inherent part of the overall adjudicative
framework of the Workers’ Compensation Act,” and we stated, “Allowing
consideration of the right to participate for additional conditions to originate at the
judicial level * * * usurps the commission’s authority * * * and casts the common
pleas court in the role of a claims processor.” Id. at ¶ 9-10.
{¶ 39} I would assert that the analysis is the same for new theories of
causation. Although the majority determines that aggravation can be raised as a
theory of causation for the first time in common pleas court because R.C.
4123.512 contemplates the introduction of new evidence on appeal, the de novo
character of an R.C. 4123.512 appeal means only that new evidence may be
presented with regard to the appealed theory of causation, not that evidence of a
new theory of causation may be presented for the first time on appeal. The
presentation of a new theory of causation raises a new claim, and allowing a
claimant to present new evidence to support a new theory of causation on appeal
overrides the General Assembly’s direction that claims be subjected to
administrative consideration before judicial review.
{¶ 40} In this case, Starkey neither argued nor presented any evidence at
the administrative level that his work-related injury aggravated a preexisting
medical condition. Thus, the Industrial Commission never considered that claim.
I respectfully dissent from the majority holding that a claimant may nonetheless
raise an aggravation claim for the first time on appeal.
__________________
Fox & Fox Co., L.P.A., M. Christopher Kneflin, and Bernard C. Fox Jr.,
for appellee Joseph Starkey.
Becker & Cade and Howard D. Cade III, for appellant.
Michael Dewine, Attorney General, Alexandra T. Schimmer, Solicitor
General, Stephen P. Carney, Deputy Solicitor, Elise W. Porter, Assistant Solicitor,
15
SUPREME COURT OF OHIO
and Thomas J. Straus, Assistant Attorney General, for appellee Stephen Buehrer,
Administrator of Workers’ Compensation.
Philip J. Fulton, urging affirmance for amici curiae Ohio Association of
Claimants’ Counsel and Ohio Association for Justice.
______________________
16
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State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: May 19, 2016 520924
________________________________
THE PEOPLE OF THE STATE OF
NEW YORK,
Respondent,
v MEMORANDUM AND ORDER
ABRAHAM S. SABIN,
Appellant.
________________________________
Calendar Date: April 19, 2016
Before: Peters, P.J., Garry, Rose, Clark and Aarons, JJ.
__________
Lisa A. Burgess, Indian Lake, for appellant.
Craig P. Carriero, District Attorney, Malone (Jennifer M.
Hollis of counsel), for respondent.
__________
Rose, J.
Appeal from an order of the County Court of Franklin County
(Main Jr., J.), entered February 19, 2015, which classified
defendant as a risk level III sex offender pursuant to the Sex
Offender Registration Act.
Defendant pleaded guilty to sexual abuse in the first
degree stemming from his sexual contact with a seven-year-old
girl, and he was sentenced to a prison term of seven years
followed by 10 years of postrelease supervision. Prior to his
release from prison, the Board of Examiners of Sex Offenders
prepared a risk assessment instrument that presumptively
classified defendant as a risk level II sexually violent offender
under the Sex Offender Registration Act (see Correction Law art
6-C). However, the Board and the People recommended an upward
-2- 520924
departure to a risk level III. Following a hearing, County Court
determined that an upward departure was warranted and thereafter
classified defendant as a risk level III sexually violent
offender. Defendant now appeals.
We affirm. An "[u]pward departure from the presumptive
risk level is justified when an aggravating factor, not
adequately taken into account by the risk assessment guidelines,
is established by clear and convincing evidence" (People v
Auleta, 135 AD3d 1251, 1252 [2016] [internal quotation marks and
citations omitted]). In rendering such a determination, County
Court "may consider reliable hearsay evidence such as the case
summary, presentence investigation report and risk assessment
instrument" (People v Nash, 114 AD3d 1008, 1008 [2014]; see
People v Becker, 120 AD3d 846, 847 [2014], lv denied 24 NY3d 908
[2014]). Where the nature of the conduct underlying the
conviction is not adequately accounted for in the risk assessment
instrument, it may form the basis for an upward modification of a
defendant's risk level (see People v Nash, 114 AD3d at 1008;
People v Greene, 83 AD3d 1304, 1304 [2011], lv denied 17 NY3d 706
[2011]).
Here, information in the case summary and presentence
investigation report note defendant's emotional congruency with
children and, when questioned by the victim's mother about
reportedly strange behavior with children, he assured her that he
was simply more comfortable with them than with adults and that
he would never hurt a child. The information also reflected that
defendant bought the victim gifts on a daily basis and, even
after the mother asked him to stop, he surreptitiously continued
to do so in an attempt to groom the child. Further, the
information also established that defendant brazenly engaged in
sexual abuse of the victim while the mother was in close
proximity and that defendant, while displaying a knife, told the
victim that he would be in trouble if she told of his conduct.
Given these circumstances, clear and convincing evidence
demonstrated aggravating factors regarding the nature of
defendant's conduct that were not adequately taken into
consideration by the risk assessment instrument, and County
Court's upward departure was warranted (see People v Rowe, 136
AD3d 1125, 1126 [2016]; People v O'Connell, 95 AD3d 1460, 1460-
-3- 520924
1461 [2012]; People v Wasley, 73 AD3d 1400, 1400-1401 [2010]).
Peters, P.J., Garry, Clark and Aarons, JJ., concur.
ORDERED that the order is affirmed, without costs.
ENTER:
Robert D. Mayberger
Clerk of the Court
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Filed
Washington State
Court of Appeals
Division Two
March 20, 2018
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
DUKE PARTNERS, LLC a California Limited No. 51104-5-II
Liability Company,
Respondent,
v.
MARIE-LOUISE PAUSON UNPUBLISHED OPINION
And all other occupants at
4811 Taylor Ave NE
Bainbridge Island, WA 98110,
Appellant.
JOHANSON, J. — Marie-Louise Pauson appeals from the December 19, 2016 superior court
order denying her motion to vacate the judgment and stay the writ of restitution. Because Pauson’s
appeal fails on procedural grounds, we affirm.
FACTS
Duke Partners LLC filed for a writ of restitution against Pauson in a foreclosure action.1
On September 16, 2016, the superior court issued the writ of restitution. Pauson did not appeal
within 30 days of this writ.
1
Based on the minimal record before us, it appears that the foreclosure was a nonjudicial
foreclosure that resulted in a trustee’s sale.
No. 51104-5-II
On December 19, Pauson filed a CR 60(b) motion to vacate the writ. She argued that (1)
the “judgment” was void, the superior court lacked jurisdiction, and the superior court violated
due process because she had filed notices of rescission in 2008 and 2015, so there was no remaining
security interest in the property under federal law, and (2) the judicial foreclosure was not started
until after the statute of limitations had expired. The superior court denied the motion to vacate
on December 19.
On January 18, 2017, Pauson filed a notice of appeal seeking review in our Supreme Court.
In this notice, she stated that she was appealing the order “denying vacating a judgment or order
by the superior court of Kitsap County” entered on December 19, 2016—she did not mention the
September 16, 2016 writ. Clerk’s Papers at 25. Our Supreme Court transferred the appeal to this
court.
ANALYSIS
I. SEPTEMBER 16, 2016 WRIT
Pauson now asks us to review the superior court’s September 16, 2016 decision to issue
the writ. She alleges two grounds for relief in this context. However, the September 16, 2016
decision is not properly before us.
Pauson did not appeal within 30 days of September 16. When a judgment that disposes of
“all claims and all parties” is not appealed within 30 days, an appeal is precluded. Kemmer v.
Keiski, 116 Wn. App. 924, 937, 68 P.3d 1138 (2003). And an appeal from the denial of a CR 60(b)
motion is limited to the propriety of the denial of the CR 60(b) motion, not the propriety of the
underlying judgment. Young v. Thomas, 193 Wn. App. 427, 435, 378 P.3d 183 (2016) (citing
Bjurstrom v. Campbell, 27 Wn. App. 449, 450-51, 618 P.2d 533 (1980). Thus, to the extent
2
No. 51104-5-II
Pauson’s arguments pertain directly to the issuance of the September 16, 2016 writ, we do not
address them.
II. DECEMBER 19, 2016 ORDER
Pauson argues that the superior court erred when it denied her December 19, 2016 motion
to vacate the September 16, 2016 writ. This argument fails.
We review the superior court’s denial of a CR 60(b) motion for abuse of discretion. Haley
v. Highland, 142 Wn.2d 135, 156, 12 P.3d 119 (2000). “A trial court abuses its discretion if its
decision is manifestly unreasonable or based on untenable grounds or untenable reasons.” In re
Marriage of Littlefield, 133 Wn.2d 39, 46-47, 940 P.2d 1362 (1997).
As noted above, because an appeal from the denial of a CR 60(b) motion is limited to the
propriety of the denial of the CR 60(b) motion, the propriety of the underlying judgment is not
before us. Young, 193 Wn. App. at 435 (citing Bjurstrom, 27 Wn. App. at 450-51). The exclusive
procedure to attack an allegedly defective judgment is an appeal of the judgment. Bjurstrom, 27
Wn. App. at 451. Thus, a party may not use a CR 60(b) motion to obtain correction of errors of
law. In re Marriage of Thurston, 92 Wn. App. 494, 499, 963 P.2d 947 (1998); Bjurstrom, 27 Wn.
App. at 451.
Although Pauson asserted in her CR 60 motion that the judgment resulting in the writ was
void,2 she argued only that the superior court erred either in its factual determinations or in
interpreting and applying the law. These arguments are not appropriate for appeal because they
address the propriety of the judgment, not the propriety of the superior court’s denial of her CR 60
2
CR 60(b)(5).
3
No. 51104-5-II
motion. Because the propriety of the underlying judgment is not at issue and Pauson does not
argue that there was any other reason the superior court’s denial of her CR 60 motion was in error,
her argument fails. See Young, 193 Wn. App. at 435.
Accordingly, we affirm. Although Duke Partners is the substantially prevailing party, we
decline to award costs to Duke Partners in light of the financial information Pauson has filed. See
RAP 14.2.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,
it is so ordered.
JOHANSON, J.
We concur:
MAXA, A.C.J.
MELNICK, J.
4
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553 F.2d 237
Harold S. RAMSAY, Plaintiff, Appellant,v.Bessie M. COOPER, Defendant, Appellee.
No. 76-1542.
United States Court of Appeals,First Circuit.
Argued March 4, 1977.Decided March 30, 1977.
Russell F. Hilliard, Concord, N. H., with whom Maynard, Dunn & Phillips, Concord, N. H., was on brief, for plaintiff-appellant.
Howard M. Moffett, Concord, N. H., with whom Orr & Reno, Professional Assn., Concord, N. H., was on brief, for defendant-appellee.
Before COFFIN, Chief Judge, ALDRICH and CAMPBELL, Circuit Judges.
LEVIN H. CAMPBELL, Circuit Judge.
1
The will of Harold Ramsay's father left a life estate in a furnished house and land to Mrs. Bessie M. Cooper, and the remainder to Ramsay. Mrs. Cooper was to "keep said property in reasonably good repair and properly insured against fire loss."1
2
The testator died in 1955. Thereafter Mrs. Cooper occupied the property. Initially she insured it against fire only to the extent of $9,000. On January 6, 1970, Harold Ramsay's attorney wrote to Mrs. Cooper that he and his client felt the buildings on the property were underinsured, and were "of the opinion that you should have not less than $25,000 coverage on the house and contents." Mrs. Cooper's attorney promptly replied, enclosing an endorsement to Mrs. Cooper's policy which increased the insurance to $25,000. In 1973, however, Mrs. Cooper unilaterally reduced the insurance to $20,000 without informing Ramsay.2 The house burned on October 15, 1975 and was rendered uninhabitable. Ramsay commenced this action a month later, requesting payment of the insurance into court and a determination of the respective rights and interests of himself and Mrs. Cooper. Thereafter, the $20,000 in insurance proceeds was paid into an escrow account. By agreement of the parties, the property was sold for $16,200 and that amount was also paid into the escrow account, for a total of $36,200. The parties stipulated that an appraisal, done after the fire, put the value of the property before loss at $48,000.
3
Ramsay moved for summary judgment, contending that Mrs. Cooper's life estate had terminated as a matter of law. Mrs. Cooper cross moved for summary judgment, denying that her life estate had terminated. She requested division of the $36,200 on the basis of the actuarially computed value of her life interest "less any damages which the court determines may be due the plaintiff."
4
The district court ruled that Mrs. Cooper's life estate had not terminated. On the issue of damages, it held that Mrs. Cooper was clearly negligent in failing to insure up to $25,000, but that Ramsay was estopped from asserting an insurable value for the building in excess of $25,000, as he had proposed that amount in 1970. On the basis of actuarial computations which are not in dispute the court divided the escrow account, awarding approximately $24,000 to Ramsay and $12,000 to Mrs. Cooper. The court's division included an award of damages to Ramsay taken from Mrs. Cooper's life share amounting to the value of Ramsay's remainder interest in $5,000.
5
We reject Ramsay's contention that Mrs. Cooper forfeited the life estate for failure to keep the property adequately insured. The district court considered the question carefully and as we agree in substance with its analysis, we need not repeat it. See, in addition to the cases it cites, Borchers v. Taylor, 83 N.H. 564, 569, 145 A. 666 (1929) and Moore v. Moore, 69 N.H. 420, 422, 45 A. 233 (1898). Appellant insists that he cannot now be adequately recompensed for the underinsurance because "(t)he fund amounts to only 3/4 of the value of the building." But if the building had been properly insured and a loss had occurred, appellant would not have then received the whole value of the property. Either the property would have been restored, and the life tenant would have continued in possession of the restored property until her death, or else upon sale, the remainderman would have received, as in the present case, a part of the total proceeds based upon subtracting the actuarially computed value of the life interest. As the court below indicated, the escrow fund, while less than the whole value of the property, is sufficient to pay Ramsay the value of his interest, including damages for the loss of insurance. To pay Ramsay the entire fund would provide him with a windfall to the extent the fund exceeds what he would have received had there been appropriate fire insurance.
6
There is likewise no merit in the claim that Mrs. Cooper's failure to restore the property after the fire worked a forfeiture because it violated the condition in the will that she "keep said property in reasonably good repair". Her liability to the remainderman in the event of non-wilful fire damage is measured by the fire insurance provision, not by the duty to keep the property in reasonable repair. The property was sold by agreement of both parties shortly after the fire, with no contention by Ramsay then that the property be repaired.
7
A harder question is whether Ramsay's damages for underinsurance should be limited by the $25,000 figure which his attorney conveyed to Mrs. Cooper in the 1970 letter.3 The district court ruled that Ramsay was estopped from claiming more. We agree that the life tenant was entitled to rely for a reasonable period on Ramsay's representation as to the minimal adequacy of $25,000. See 5 Page on Wills, § 44.13, at 427. But we do not read Ramsay's attorney's letter as indicating that Ramsay absolved Mrs. Cooper for all time from a duty to go beyond that figure. We take judicial notice that the period from 1970 to 1975 was one of inflation and rising prices. The fire occurred in 1975, by which time, the insurable value of the structures on the Ramsay homestead had apparently increased.4 We interpret the 1970 letter as calling Mrs. Cooper's attention to her duties as life tenant, one of which was to keep the property properly insured against fire loss. The fact that Ramsay and his lawyer expressed the opinion that she should not have less than $25,000 coverage is not a statement either that $25,000 would remain adequate indefinitely or that she could rely on them to tell her in the future what coverage to maintain. It is not alleged that Mrs. Cooper is incompetent and, regardless of the fact that she was of advanced years, she was obliged under the will to maintain proper insurance.
8
An estoppel requires that the benefiting party have reasonably relied to her detriment upon the representation of the estopped party. Monadnock Regional School District v. Fitzwilliam, 105 N.H. 487, 491-92, 203 A.2d 46 (1964). We see no reasonable basis for someone to rely on the $25,000 as reflecting the proper coverage five years later. Far from relying on the $25,000, Mrs. Cooper took it upon herself in 1973 to reduce the insurance to $20,000. Her attorney's affidavit5 indicates that she might have been confused by a newspaper article dealing with a $5,000 reduction in taxable values for elderly persons. However, she did not first speak to Ramsay or his or her attorney, as one might have expected had she still been relying on their 1970 advice concerning $25,000. Estoppel is an equitable doctrine. We are unable to find any conduct on Ramsay's part which makes it inequitable for him to assert the right, conferred by the will, to have the life tenant properly insure the property against loss. A fire loss having occurred, Ramsay is entitled to be reimbursed to the extent the life tenant failed to carry out that duty.
9
If either party had introduced undisputed evidence showing what a proper amount of fire insurance would have been in 1975, we would simply remand to the district court so that Mrs. Cooper's liability to Ramsay would be recalculated on that basis and included in the division of the insurance and sale proceeds. However, Ramsay's consultant's report, claiming that the proper amount of insurance in 1975 was $30,674, was not sworn to nor accompanied by a proper affidavit.6 It is therefore not competent to be considered. Fed.R.Civ.P. 56(e). Mrs. Cooper, the moving party, offered no evidence of the insurable value in 1975, relying instead on her theory that Ramsay was estopped from asserting a value higher than $25,000.7 Since there was no evidence properly before the district court on the issue of the amount of fire insurance proper in 1975, Mrs. Cooper did not carry her burden8 of showing that no dispute existed as to any material fact bearing on the measure of damages.
10
We affirm the district court's ruling that Mrs. Cooper has not forfeited her life estate and that there should be a division of the fire insurance and sale proceeds between life tenant and remainderman on the actuarial basis accepted by the court, with Ramsay also to receive out of Mrs. Cooper's share damages consisting of his remainder interest in the amount of insurance which should have been provided. We reverse the district court's ruling that Mrs. Cooper should only have provided $5,000 more fire insurance than the $20,000 procured and remand for proceedings to determine the amount of insurance which Mrs. Cooper should have had in 1975 under the terms of the will. See Morton v. Browne, 438 F.2d 1205, 1206 (1st Cir. 1971). Ramsay should receive a proportion of that additional amount in the same manner that the court computed his damages with respect to the already found $5,000 underinsurance.
11
So ordered.
1
"I give, bequeath and devise unto Mrs. Bessie M. Cooper, now of said Concord, N.H., the use, income and enjoyment of my homestead real estate, known as Nos. 581/2 and 60 South Street in said Concord, N.H., and the furniture, furnishings and equipment thereon and therein, for and during the term of her natural life, but without the right to dispose of any of said property, provided that she is living at my decease and provided that she pay all taxes and charges assessed against said property during said term, and keep said property in reasonably good repair and properly insured against fire loss
"At the death of said Mrs. Bessie M. Cooper, or if she shall not be living at my decease, then I give, bequeath and devise said real estate, and the furniture, furnishings and equipment therein and thereon, unto my son Harold S. Ramsay, to have and to hold the same to him and to his heirs forever."
2
The only explanation for the reduction appears in an affidavit of Mrs. Cooper's attorney filed in the present proceeding:
"(In 1975) when it became apparent that the insurance coverage on the subject property had been reduced from $25,000 to $20,000 in February 1973, Mrs. Cooper indicated to me that she had undertaken to reduce the fire insurance coverage on the house after reading an article or articles in the local newspaper which led her to believe that the legislature had passed legislation the effect of which was to reduce the insurance value of residential property by $5,000. It was my impression that she had been confused by newspaper accounts of a proposed $5,000 tax exemption on residential real estate for homeowners 65 years old or older . . . ."
3
The letter, in pertinent part, read as follows:
"Mr. Ramsay and I are concerned about what seems to be a failure on your part to fulfill the obligations on which your life estate is based particularly in that the roof appears not to be in reasonably good repair and in urgent need of work on the slate.
"We also understand that the buildings are underinsured though you may have insurance about which we are uninformed.
"I shall be much obliged if you will inform me of the extent of your fire insurance coverage. Mr. Ramsay and I are of the opinion that you should have not less than $25,000 coverage on the house and contents . . . .
"If you would like to discuss the situation with me yourself or through your attorney I shall be pleased to be of assistance."
Mrs. Cooper's attorney replied promptly, stating that he was "enclosing herewith a copy of an endorsement to Mrs. Cooper's insurance policy increasing the insurance coverage to $25,000, which should be more than adequate to cover the value of the property." No mention is made of any subsequent communication.
4
An economic consultant's report, prepared at the request of Ramsay and included in the record, but not sworn to or otherwise cognizable for summary judgment purposes under Fed.R.Civ.P. 56(e), states that adequate insurance based on an allowance for the increased replacement cost of the house from 1970 to 1975 had risen from $25,000 to $30,674
5
See note 2 supra
6
See note 4 supra
7
Ramsay also moved for summary judgment on the theory that Mrs. Cooper had forfeited her life estate by reason of her failure to keep adequate fire insurance. However, since his cross-motion was predicated on a different legal theory from hers, his cross-motion was not a concession that evidence could not be developed to show an insurable value higher than $25,000, the figure which his attorney quoted to Mrs. Cooper in 1970. See Redman v. Warrener, 516 F.2d 766, 768 n.2 (1st Cir. 1975); 6 J. Moore, Federal Practice P 56.13, at 56-344 (2d ed. 1976). The court was obliged, in other words, to rule that estoppel was established as a matter of law
8
"On a motion for summary judgment, the moving party has the burden of showing 'that there is no genuine issue as to any material fact.' " Bromley-Heath Modernization Committee v. Boston Housing Authority, 459 F.2d 1067, 1071 (1st Cir. 1972), quoting Fed.R.Civ.P. 56(e). "As the moving party, respondent had the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party." Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). The moving party has the burden "whether he or his opponent would at trial have the burden of proof on the issue concerned; and (the burden) rests on him whether he is by it required to show the existence or non-existence of facts." 6 J. Moore, supra, P 56.15(3), at 56-480-81
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-7096
SAMMY USSERY,
Plaintiff - Appellee,
v.
SGT. MANSFIELD; JAMES DUNLOW; TIMOTHY RUFFIN,
Defendants - Appellants,
and
DUSTIN WILKINS; SHELTON HARDISON; STACY HOGGARD; LILLIAN
GILLIAM; SHERI WILLIAMS,
Defendants.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Terrence W. Boyle,
District Judge. (5:11-ct-03124-BO)
Argued: April 8, 2015 Decided: May 19, 2015
Before MOTZ and GREGORY, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Gregory and Senior Judge Davis joined.
ARGUED: Kimberly D. Grande, NORTH CAROLINA DEPARTMENT OF
JUSTICE, Raleigh, North Carolina, for Appellants. David
Alexander Strauss, NORTH CAROLINA PRISONER LEGAL SERVICES, INC.,
Raleigh, North Carolina, for Appellee. ON BRIEF: Roy Cooper,
North Carolina Attorney General, NORTH CAROLINA DEPARTMENT OF
JUSTICE, Raleigh, North Carolina, for Appellants.
2
DIANA GRIBBON MOTZ, Circuit Judge:
Sammy Ussery brings this action pursuant to 42 U.S.C.
§ 1983, maintaining that a team of correctional officers
employed excessive force when they forcibly extracted him from
his prison cell. The district court denied the officers’ motion
for summary judgment on the basis of qualified immunity. The
officers appeal and, for the reasons that follow, we affirm.
I.
The cell extraction at the center of this case occurred on
July 9, 2008. At that time, Ussery was incarcerated at Bertie
Correctional Institution in Windsor, North Carolina, where the
appellants -- Sgt. David Mansfield and Officers James Dunlow and
Timothy Ruffin -- were employed. The parties agree that the
correctional officers, supervised by Sgt. Mansfield, forcibly
removed Ussery from his cell, but they dispute many facts
involved in the cell extraction. We consider the facts in the
light most favorable to Ussery, the non-movant. See PBM
Products, LLC v. Mead Johnson & Co., 639 F.3d 111, 119 (4th Cir.
2011).
Ussery contends that he and Sgt. Mansfield had “an
antagonistic relationship,” in part because of racial tension.
He maintains that correctional officers had searched or “tossed”
his cell numerous times in the days immediately preceding the
3
extraction, but never found any weapons or other contraband. On
the morning of July 9, Sgt. Mansfield approached Ussery’s cell
and ordered him to exit. Ussery, fearing that his cell would be
ransacked, refused to do so. In response, Sgt. Mansfield shot a
burst of pepper spray into Ussery’s cell. Ussery still would
not leave the cell.
Sgt. Mansfield then assembled an extraction team of five
correctional officers, including Officers Dunlow and Ruffin. A
sixth officer videotaped the extraction, pursuant to prison
policy. Sgt. Mansfield told the extraction team that Ussery had
a weapon and had threatened to harm anyone who entered his cell.
Ussery maintains he made no such threat, and apparently, no
weapon was ever found.
Sgt. Mansfield ordered Ussery’s cell unlocked, and the
extraction team entered and restrained Ussery on the floor.
According to Ussery, members of the extraction team then beat
him repeatedly in the head and face with batons, punches, and
kicks; he maintains that Sgt. Mansfield “kicked and stomped” on
him. Eventually the extraction team cuffed Ussery’s hands
behind his back, shackled his feet together, and carried him out
of his cell –- holding him by the cuffs and shackles in a
position Ussery characterizes as “hogtied.” At least one
witness reported seeing blood on the floor, marking the path
from Ussery’s cell to the holding cage, to which the officers
4
took him. In the holding cage, Ussery was belligerent and
initially resisted efforts to clean him up.
The video of this incident depicts events consistent with
Ussery’s account of the incident in some respects. As the
district court noted, the viewer of the video can see that there
is “a disturbance” in Ussery’s cell during the extraction; that
“someone begins to punch Ussery, but it is unclear which guard
is doing so”; that “[a]t one point, the movement of Mansfield’s
body suggests that Mansfield may be kicking Ussery”; that Ussery
is “cuffed or shackled” and “carried with his body facing toward
the ground . . . by the shackles”; that he appears “bloody and
[has] facial injuries” after the extraction; and that he is
“verbally aggressive in the holding [cage].” But as the court
also noted, a viewer cannot discern additional details about the
extraction because Sgt. Mansfield stood in front of the camera,
“obstructi[ng]” the view of the cell, during most of the
extraction.
Later in the day of the extraction, officers transported
Ussery to Bertie County Memorial Hospital for emergency medical
treatment. There, doctors prescribed Ussery morphine for his
pain and used antibiotic ointment and wound adhesives to treat
his contusions. Ussery maintains that “[a]s a direct and
proximate result” of the officers’ beating, he “suffered severe
lacerations above his right eye and behind his left ear . . .
5
[and] extensive bruising of his head, neck, face, chest, and
hands.” He further maintains that “[m]edical records indicate
that as a result of his injuries, [he] suffered increased bi-
lateral hearing loss, neck pain, loss of vision in his right
eye, chronic swelling and loss of feeling in his hands and knee,
and recurring migraines,” causing him “physical and emotional
pain and suffering, and disability.”
About five months after the extraction, the North Carolina
Department of Corrections requested that the State Bureau of
Investigation conduct an inquiry into the possible
“inappropriate use of force by correctional staff during [this]
cell extraction.” The investigators were ultimately not able to
reach a definitive determination as to “whether excessive force
was used,” but noted that the behavior of the correctional
officers on the videotape “appears too aggressive for the
situation and would be excessive force.” The district attorney
involved in the state’s investigation of this incident wrote
that Sgt. Mansfield’s apparent blocking of the cell door during
the video was “disturbing” and “precluded [the state] from
investigating this matter fully.” She concluded that “[b]ecause
of the position of the camera operator, this has become a
situation where it is the inmate’s version versus the officers’
version of events.”
6
Acting pro se, Ussery filed this action, advancing Eighth
Amendment excessive force and failure-to-protect claims. The
complaint survived a frivolity review pursuant to 28 U.S.C.
§ 1915. Thereafter, the North Carolina Prisoner Legal Services
undertook representation of Ussery in this matter and filed an
amended complaint.
In response to Ussery’s amended complaint, the officers
admit that they forcibly extracted him from his cell when pepper
spray proved insufficient to compel him to exit; that he was
“escorted” out of his cell by the extraction team; and that he
received medical treatment following the extraction. The
officers, however, deny kicking or punching Ussery during the
extraction. They contend that he suffered nothing more than de
minimis injuries. To support that contention, they offer the
affidavit of a doctor long employed by the North Carolina
Division of Prisons. He opined, based on his examination of the
prison’s records, (not an examination of Ussery himself), that
Ussery “incurred minor injuries including abrasions, contusions,
and lacerations,” which “healed completely without any lasting
ill effects.” On the basis of this affidavit, the officers
moved for summary judgment, asserting entitlement to qualified
immunity. Ussery opposed the motion –- relying on his account
of his injuries, statements from some officers and inmates, his
7
medical records, the video, and the report of the state Bureau
of Investigation.
The district court granted the officers’ motion as to the
failure-to-protect claim, but denied the motion as to the
excessive force claim against Sgt. Mansfield and Officers Dunlow
and Ruffin. 1 The officers timely noted this appeal.
II.
The Supreme Court has explained that “the qualified-
immunity defense shields government agents from liability for
civil damages insofar as their conduct does not violate clearly
established statutory or constitutional rights of which a
reasonable person would have known.” Behrens v. Pelletier, 516
U.S. 299, 305 (1996) (internal quotation marks and alterations
omitted). As the parties agree, the law clearly established at
the time of the extraction governs the entitlement to qualified
immunity here. Further, they agree that Norman v. Taylor, 25
F.3d 1259 (4th Cir. 1994) (en banc), provides the legal
framework for determination of that question.
1
Ussery’s complaint also names as defendants several other
officers but he did not perfect service on them. The district
court therefore dismissed the complaint as to them. In
addition, the complaint alleges a state law negligence claim not
addressed by the parties in the summary judgment papers or
resolved by the district court.
8
In Norman, this court held that “absent the most
extraordinary circumstances, a plaintiff cannot prevail on an
Eighth Amendment excessive force claim if his injury is de
minimis.” Id. at 1263. The Supreme Court expressly abrogated
Norman in Wilkins v. Gaddy, 559 U.S. 34, 38-39 (2010). The
Court held in Wilkins that “[a]n 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.” Id. at 38. We have
subsequently concluded, however, that where the alleged use of
force occurred prior to Wilkins, a defendant’s entitlement to
qualified immunity turns on whether that force “was objectively
reasonable in view of the clearly established law at the time of
the alleged event” -- i.e., the law as set forth in Norman. See
Hill v. Crum, 727 F.3d 312, 321, 322 (4th Cir. 2013).
To prevail, then, an inmate like Ussery, seeking relief for
excessive force deployed before the issuance of Wilkins in 2010,
must establish either that he sustained more than de minimis
injuries or that the defendants’ use of force was “of a sort
repugnant to the conscience of mankind and thus expressly
outside the de minimis force exception.” Norman, 25 F.3d at
1263 n.4 (internal quotation marks and citation omitted). With
this standard in mind, we turn to the case at hand.
9
III.
Before reaching the merits of Ussery’s excessive force
claim, we must first address our jurisdiction over this
interlocutory appeal.
In Mitchell v. Forsyth, 472 U.S. 511, 530 (1985), the
Supreme Court held that “a district court’s denial of a claim of
qualified immunity, to the extent that it turns on an issue of
law, is an appealable ‘final decision’ within the meaning of
28 U.S.C. § 1291 notwithstanding the absence of a final
judgment.”
The Court clarified the scope of interlocutory review of a
denial of qualified immunity in Johnson v. Jones, 515 U.S. 304
(1995). There, a unanimous Court held that when a district
court denies summary judgment to a defendant seeking qualified
immunity “only” on the basis of “‘evidence sufficiency,’ i.e.,
which facts a party may, or may not, be able to prove at trial,”
the order does not provide the basis for an interlocutory
appeal. Id. at 313. See also Iko v. Shreve, 535 F.3d 225, 234
(4th Cir. 2008) (separating “purely legal questions relating to
qualified immunity that can and should be resolved at this
[summary judgment] stage in the litigation” from “the district
court’s assessment of whether genuine issues of material fact
make summary judgment inappropriate,” which is not an appealable
final order).
10
In resolving the officers’ contention that qualified
immunity entitles them to summary judgment on Ussery’s excessive
force claim, the district court first determined that “[t]aking
the facts in the light most favorable to plaintiff, there was
some injury to plaintiff. The degree of injury suffered is at
most unclear within the record before the court.” The court
continued that, “regardless of the extent of the injury, on the
record before the court . . . there remains a question of fact
as to whether there are extraordinary circumstances so repugnant
to the conscience of mankind that even in spite of de minimis
injuries plaintiff could prevail on his excessive force claim.”
(internal quotation marks and citation omitted). The district
court concluded that “[b]ased on the record before [it],
defendants are not entitled to qualified immunity.”
Johnson prohibits us from reviewing on interlocutory appeal
the district court’s conclusion that the record does not
definitively indicate the extent of Ussery’s injuries. Thus we
cannot and do not review the district court’s assessment of the
evidence. However, in denying summary judgment, the district
court necessarily held that Ussery could satisfy the Norman
standard. To be sure, the court did not expressly state that
Ussery could establish a violation of clearly established law
under Norman. But to deny the officers’ motion for summary
judgment, the court had to reach that conclusion. We
11
undoubtedly have jurisdiction to review that purely legal
conclusion. See Smith v. Ray, 781 F.3d 95, 100 (4th Cir. 2015)
(“[O]n appeal from the denial of summary judgment on the basis
of qualified immunity, we merely decide whether on the facts
assumed by the district court for summary judgment purposes, the
defendant was entitled to qualified immunity.”). 2 Indeed, while
Ussery contends in his brief that we lacked any jurisdiction
over this appeal, at oral argument, he conceded that we do have
jurisdiction to resolve this limited question.
Our jurisdiction in cases such as this is circumscribed but
critical. For the Supreme Court has made plain that qualified
immunity “is an immunity from suit rather than a mere defense to
liability” and “is effectively lost if a case is erroneously
2
We note that an order denying summary judgment on the
basis of qualified immunity would be entirely unreviewable if
the defendant officers conceded that Ussery’s version of the
facts would establish that the officers violated clearly
established law. For example, in Culosi v. Bullock, the parties
agreed that the qualified immunity inquiry turned on a factual
question: was the shooting death of the plaintiff the result of
an intentional act by a police officer, or an accidental
discharge of the officer’s gun? 596 F.3d 195, 200 (4th Cir.
2010). The defendants did not argue that even if the shooting
was intentional, they would nonetheless be entitled to qualified
immunity -- so no purely legal dispute remained between the
parties. Rather, “the version of facts ultimately accepted by
the fact finder w[ould] dictate the outcome of the
constitutional inquiry.” Id. at 200 n.6 (emphasis in original
omitted). Accordingly, we lacked jurisdiction over that appeal.
By contrast, the officers in this case challenge both legal and
factual conclusions of the district court, and our interlocutory
jurisdiction permits review of the legal conclusions.
12
permitted to go to trial.” Mitchell, 472 U.S. at 526 (emphasis
in original).
IV.
We thus turn to the sole question over which we have
jurisdiction: whether the district court properly concluded
that the officers were not entitled to summary judgment under
Norman.
The officers contend that Ussery suffered only de minimis
injuries and so cannot satisfy the requirements for an excessive
force claim under Norman. Blue Br. 8, 16-21. We disagree.
During the decade when Norman was good law, we never articulated
a precise definition of what constitutes a de minimis injury.
Nevertheless, our opinions from that period clearly illustrate
that whether a plaintiff has satisfied the Norman standard
depends on the particular facts of his case.
Ussery maintains that the officers caused “severe
lacerations,” “extensive bruising,” “increased bi-lateral
hearing loss,” “loss of vision in his right eye,” “chronic
swelling and loss of feeling,” “recurring migraines,” and
“physical and emotional pain and suffering” -- all of which
resulted in “last[ing] physical and emotional damage.” Many of
these injuries could have an enduring impact on health and well-
being. These are the sort of injuries that may affect mobility,
13
sensory capabilities, emotional stability, and other daily
functions for an extended period of time. 3 And while we have
held that “temporary swelling and irritation” constitute only de
minimis injury under Norman, see Taylor v. McDuffie, 155 F.3d
479, 484 (4th Cir. 1998), overruled in part by Wilkins, 559 U.S.
34 (2010), we have also recognized that to satisfy Norman an
inmate “need not show that . . . force caused an ‘extreme
deprivation’ or ‘serious’ or ‘significant’ pain or injury.”
Williams v. Benjamin, 77 F.3d 756, 761 (4th Cir. 1996) (quoting
Hudson v. McMillian, 503 U.S. 1, 9 (1992)).
Moreover, on numerous occasions, applying the Norman
standard, we have concluded that injuries comparable to –- and
arguably less severe than -- those Ussery maintains he suffered
were not de minimis. See, e.g., Orem v. Rephann, 523 F.3d 442,
448 (4th Cir. 2008) (holding that just two uses of a taser –-
even if only “for a few seconds” at a time –- caused more than
de minimis injury when the plaintiff “experience[d] electric
3
Arguing to the contrary, the officers attempt to ignore
Ussery’s detailed account of his injuries, the medical records
and witness statements he offered, and the video showing him
during and after the extraction. The officers rely instead on
the affidavit of a longtime prison physician who, without
examination of Ussery, opined that his injuries were not
serious. A factfinder may or may not ultimately agree with that
assessment. But the district court concluded that “the degree
of injury suffered” by Ussery was “unclear” on the evidence
before it. As we have explained above, we lack jurisdiction to
resolve on interlocutory appeal this issue of “evidence
sufficiency.” Johnson, 515 U.S. at 313.
14
shock, pain, and developed a scar”); Young v. Prince George’s
Cnty., 355 F.3d 751, 758 n.3 (4th Cir. 2004) (holding that “a
contusion, cut to his lips, bruises, lesions to his wrist, and a
strained neck and back” exceed the de minimis threshold); Robles
v. Prince George’s Cnty., 302 F.3d 262, 270 (4th Cir. 2002)
(holding that where law enforcement officers restrained and
abandoned an arrestee for ten minutes, causing him to “fe[el]
frightened, vulnerable, and humiliated when left alone and
immobile in the dark parking lot,” such that “in the months
following the incident he had trouble sleeping and was scared to
leave his home, . . . [t]he resulting injury was more than de
minimis”).
Finally, we note the telling fact that the North Carolina
Department of Corrections initiated an investigation into the
cell extraction. At the very least, this investigation
indicates that the state itself regarded the cell extraction as
cause for alarm that might have resulted in more than de minimis
injuries. The Department would hardly have launched such an
investigation if there were no dispute that “the injury
resulting from that force was not excessive.” Stanley v.
Hejirika, 134 F.3d 629, 637 (4th Cir. 1998).
Accordingly, given our obligation to take the facts in the
light most favorable to Ussery, we must conclude that the
15
district court did not err in denying the officers’ summary
judgment on Ussery’s excessive force claim. 4
V.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
4
Having concluded that Ussery has described injuries
sufficient to satisfy Norman’s de minimis threshold, we need not
reach the question whether, in the alternative, Ussery has
presented facts placing this force incident within the ambit of
the “extraordinary circumstances” exception to the de minimis
requirement in Norman.
16
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"pile_set_name": "FreeLaw"
} |
49 F.3d 1136
UNITED STATES of America, Plaintiff-Appellee,v.James B. SPEARS, Defendant-Appellant.
No. 94-5575.
United States Court of Appeals,Sixth Circuit.
Argued Feb. 3, 1995.Decided March 16, 1995.
David A. Marye, Asst. U.S. Atty. (argued and briefed), Lexington, KY, for plaintiff-appellee.
Derek G. Gordon (argued and briefed), Anggelis, Gordon & Simpson, Lexington, KY, for defendant-appellant.
Before: MERRITT, Chief Judge; BROWN and BATCHELDER, Circuit Judges.
BATCHELDER, Circuit Judge.
1
Arguing insufficient evidence, the appellant James B. Spears appeals his jury conviction for conspiring to defraud a federally insured bank and to influence a loan officer, making false statements to influence a federally insured bank, bribing a bank loan officer, and aiding and abetting. Spears also challenges the district court's application of the sentencing guidelines finding more than minimal planning and obstruction of justice to support enhancement of his sentence. We affirm the conviction and the sentence enhancement for more than minimal planning. However, we vacate the sentence and remand for resentencing to permit the trial court to make findings consistent with this opinion with regard to enhancement for obstruction of justice.
I.
2
Following indictment by the grand jury, a jury convicted the appellant of two counts of knowingly making false statements to influence a federally insured (FDIC) bank in violation of 18 U.S.C. Sec. 1014; bribery of a bank loan officer in violation of 18 U.S.C. Sec. 215(a)(1); conspiracy to knowingly make false statements to a bank and to commit bank fraud and bribery of a bank officer in violation of 18 U.S.C. Sec. 371; and aiding and abetting commission of offenses against the United States in violation of 18 U.S.C. Sec. 2. Spears was acquitted of one count of bank fraud and eight counts of making false statements to an FDIC bank. Spears's codefendant, Jack L. Cooper, was convicted of conspiracy, bribery, and seven counts of making false statements to influence an FDIC bank. Others involved in the charged offenses pled guilty and testified against Spears at his trial. Defendant Robert Sellers pled guilty to a single count of conspiracy. Loan officer Dan Patton pled guilty to corruptly accepting more than $100 from the other defendants with the intent of being influenced in connection with loan transactions.
3
Following a hearing on Spears's objections to the presentence report, the trial court sentenced Spears to fifteen months on each count, to run concurrently and to be followed by three years of supervised release. In determining Spears's sentence, Judge Forester included a two-point enhancement because the offenses involved more than minimal planning and a two-point enhancement for obstruction of justice by perjury.
4
On appeal, Spears argues that the evidence was not sufficient to support his conviction; that the district court erred in its factual finding that Spears engaged in more than minimal planning; and that the district court erred in enhancing his sentence for obstruction of justice because Spears perjured himself in testifying.
II.
5
Spears and his co-defendants were engaged in a scheme whereby they submitted fraudulent paper work to the First National Bank of Nicholasville, KentuckyB and paid Patton for approving dubious automobile loans to customers of their used car dealership Edgewood Auto Sales (EAS).
6
Patton admitted that in granting loans to EAS customers, he occasionally violated the bank's loan policy regarding length of loans and vehicle age. Also, while Patton was head of FNB's installment loan department, it was commonplace for EAS personnel to submit credit applications and retail installment contracts that had been signed in blank, although this was contrary to bank policy and to the explicit terms of the non-recourse dealer agreement between EAS and the bank. Unlike EAS, other car dealers submitted only fully completed paper work to FNB. Because Spears, Cooper and Sellers were paying him money, Patton did not confront them about suspect down payment notations and improper paper work.
7
The cash payments to Patton began in the fall of 1987, after he acquiesced to Cooper's request to reconsider an application and to grant a loan Patton had intended to deny for an older vehicle that would not qualify under FNB's policies. Payments of $300 in cash were given to Patton approximately every other week until the summer of 1988. Patton knew it was improper and illegal for him to accept the cash and did not ask the reason for the payments. Most of the cash was given to Patton by Cooper or by Sellers at Cooper's direction, but Patton specifically recalled at least one instance when Spears gave him an envelope obviously containing money. In addition to cash payments, EAS provided Patton with vehicles for his personal use.
8
During this time, the number of loans to EAS customers increased and, in the summer of 1988, the delinquency rate on EAS loans rose significantly, resulting in hundreds of repossessions--alarmingly higher than the normal rate of four to five cars per year. After FNB cancelled the nonrecourse agreement with EAS in July 1988, bank officials and auditors investigating the delinquent loans discovered the improperly completed forms and discrepancies in internal accounting reports, which had served to hide the high delinquency rate on EAS loans. The accounting improprieties were traced to Patton, who had re-written or changed computer codes designed to track loans, so that when FNB's computer had generated delinquency reports, it was not apparent that most of the delinquencies involved EAS loans.
9
Sellers admitted fabricating and inflating the cash down payment figures on paper work submitted to FNB and stated that he did so because it helped to get the loans approved. Sellers testified that Cooper, Spears, Patton and he all knew that they were submitting improperly completed paper work to FNB and that they had discussed the necessity of showing some figure on the forms indicating either a down payment or a trade-in. Sellers further testified that he, Cooper and Spears had discussed giving Patton money for the loans Patton was approving. Sellers knew it was improper and illegal to give Patton money, but he often gave money to Patton at the direction of Cooper or Spears. After FNB terminated Patton's employment, Sellers, Patton, Cooper and Spears agreed not to discuss the payments to Patton.
III.
10
The conviction is supported by sufficient evidence.
11
Spears argues that the evidence is insufficient to sustain his conviction because the "most incriminating testimony" against him was given by accomplices. Sufficient evidence exists to support a criminal conviction if, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could accept the evidence as establishing each essential element of the crime. Jackson v. Virginia, 443 U.S. 307, 324-26, 99 S.Ct. 2781, 2791-93, 61 L.Ed.2d 560 (1979). A reviewing court does not reweigh the evidence or determine the credibility of the witnesses. United States v. Bailey, 444 U.S. 394, 414-15, 100 S.Ct. 624, 636-37, 62 L.Ed.2d 575 (1980). The credibility of witnesses is exclusively the province of the jury. United States v. Bond, 22 F.3d 662, 667 (6th Cir.1994). The mere fact that some key testimony was given by other defendants who testified under plea arrangements does not support reversal of a criminal conviction where the jury was informed of the plea arrangement and was instructed to weigh the evidence accordingly. Similar attacks on the credibility of accomplice-witnesses have been rejected by this Circuit. See United States v. Stubbs, 11 F.3d 632, 638 (6th Cir.1993); United States v. Lee, 991 F.2d 343, 349 (6th Cir.1993). The testimony of an accomplice, even if uncorroborated, will suffice to support a conviction under federal law. United States v. Gallo, 763 F.2d 1504, 1518 (6th Cir.1985), cert. denied sub nom. Graewe v. United States, 474 U.S. 1069, 106 S.Ct. 828, 88 L.Ed.2d 800 (1986).
12
In this case, the record reveals that much of the evidence offered by the Government was independent of the accomplices' testimony, including documentary evidence and testimony of Spears's customers and bank employees. The jury was informed that witnesses Patton and Sellers were testifying under a plea arrangement. Moreover, the trial judge specifically instructed the jury to weigh that testimony with caution and to consider whether their testimony may have been influenced by the Government's promises not to prosecute them on other charges. The jury was instructed not to consider the guilty pleas of Patton and Sellers as evidence of Spears's guilt. The judge also specifically instructed the jury to consider evidence of Spears's good character along with all the other evidence in deciding whether Spears was guilty. In returning a verdict of guilty after due deliberation, the jury indicated that it found the evidence against Spears credible beyond a reasonable doubt.
13
For a defendant to be convicted of making material misrepresentations to a bank, the Government must prove that the defendant knowingly made a false statement of a material fact to a federally insured bank for the purpose of influencing the bank's action. 18 U.S.C.A. Sec. 1014 (West 1976 and Supp.1994). To convict Spears as a principal for the acts of others, the Government had to prove that Spears aided, abetted, counseled, commanded, induced or procured the commission of offenses against the United States. 18 U.S.C.A. Sec. 2 (West 1969); see United States v. Halliday, 658 F.2d 1103 (6th Cir.), cert. denied sub nom. Frank v. United States, 454 U.S. 1127, 102 S.Ct. 978, 71 L.Ed.2d 115 (1981). At trial, Spears admitted that he knew it was wrong to misrepresent the amount of down payments but claimed that he did so at Patton's direction. Spears has argued that FNB could not have been influenced by anything he wrote on the forms submitted to the bank because FNB had pre-approved loan amounts for EAS customers. However, the essence of the offense is not why the defendant made the false statements or whether the bank was actually influenced or defrauded; rather, the determinative factor is the making of the materially false statement with the intent to influence the lender. United States v. Kennedy, 564 F.2d 1329, 1341 (9th Cir.1977), cert. denied sub nom. Myers v. United States, 435 U.S. 944, 98 S.Ct. 1526, 55 L.Ed.2d 541 (1978); see also United States v. Walker, 871 F.2d 1298, 1305 n. 6 (6th Cir.1989) ("[B]ank fraud requires only a fraudulent statement designed to influence a bank's action.").
14
In this case, the record shows that Spears knowingly misrepresented down payment figures on retail installment credit applications. James Spears's signature appears on documents submitted to FNB, a federally insured bank, listing false down payment amounts.1 Spears did not disclaim his signature, which was verified by his brother. The record contains abundant and credible evidence that the down payment amount listed on a loan application influences the bank's decision whether to grant the loan; thus, the false statements Spears made concerning down payments were material to whether FNB would grant the loans to EAS customers. The jury accepted as credible the evidence presented by the Government on each element of these charges.
15
To convict the defendant of bribery of a bank loan officer, the Government must prove that the defendant gave, offered or promised something of value in excess of $100 to an officer, director, employee, agent or attorney of a financial institution, and that the defendant did so with the intent to influence or reward the person in connection with any business or transaction of the institution. 18 U.S.C.A. Sec. 215(a)(1) (West Supp.1994). Evidence was offered at trial that Spears, on at least one occasion, personally gave $300 in cash to FNB loan officer Patton, that Spears was aware of other payments to Patton, and that Patton understood his handling of loan applications from EAS customers to be the reason for the improper and illegal payments of cash. Spears's challenge regarding the source of this testimony does not affect its sufficiency. The Government presented evidence as to each element of this charge, and the jury found it credible.
16
To convict Spears of conspiracy, the Government had to prove that Spears and at least one other person conspired to commit any offense or to defraud the United States, or any agency thereof, in any manner or for any purpose, and at least one of the persons did some act to effect the object of the conspiracy. 18 U.S.C.A. Sec. 371 (West 1966). The nature of the agreement comprising a conspiracy may be inferred from circumstantial evidence. United States v. Butler, 618 F.2d 411, 414 (6th Cir.), cert. denied, 447 U.S. 927, 100 S.Ct. 3024, 65 L.Ed.2d 1121 (1980). Evidence was presented at trial to show that Spears, Cooper, Sellers and Patton were involved in an ongoing series of offenses including bribing a bank official and making false statements for the purpose of influencing a federally insured bank. The record reflects that these offenses were committed routinely in order to obtain loans so EAS customers could purchase cars with funds obtained from FNB. The evidence included testimony of the defendant, his customers, bank employees, and others who had admitted their involvement in the charged offenses, as well as documentary evidence. This evidence was more than sufficient to support the jury's conviction of Spears on this charge.
17
Because the trial judge instructed the jury concerning the necessary elements of the charged offenses and the record includes sufficient evidence to prove each element of each offense, Spears's conviction on each count is affirmed.
IV.
18
The district court did not err in finding more than minimal
19
planning supported enhancement of the sentence.
20
Spears argues that, in sentencing him, the district court concluded that he should have been convicted on the other counts of which he was acquitted.2 He contends that the trial judge improperly inferred that he should have been convicted of making false statements for the eight instances charged in which he wrote "DISC" or "discount" instead of down payment amounts on forms submitted to the bank and that the judge improperly considered all ten instances to find that repeated acts over a period of time justified a two-point enhancement for "more than minimal planning." Spears claims that there is no basis in the record for the judge's inference.
21
In the commentary to Sec. 1B1.1 of the United States Sentencing Guidelines (U.S.S.G. or "the Guidelines"), "more than minimal planning" is defined as:
22
more planning than is typical for commission of the offense in a simple form. "More than minimal planning" also exists if significant affirmative steps were taken to conceal the offense, other than conduct to which Sec. 3C1.1 (Obstructing or Impeding the Administration of Justice) applies.
23
"More than minimal planning" is deemed present in any case involving repeated acts over a period of time, unless it is clear that each instance was purely opportune.
24
U.S.S.G. Sec. 1B1.1, comment. (n. 1(f)) (emphasis added).
25
The district court must be given much deference in reviewing the evidence for sentencing. 18 U.S.C.A. Sec. 3742(e) (West Supp.1994); United States v. Ivery, 999 F.2d 1043, 1045 (6th Cir.1993). The findings of a sentencing judge will only be reversed for clear error. Id. The record clearly indicates that the judge believed the jury had given Spears the benefit of the doubt in acquitting him of the eight counts involving discount down payment notations and that the judge disagreed with this conclusion. However, the fact that Spears was acquitted of some counts does not mean that the sentencing judge was required to believe that Spears did not make the false statements charged. "Guilt beyond a reasonable doubt is not the standard to be applied at sentencing. Instead, the preponderance of the evidence standard applies to sentencing procedures under the guidelines." Ivery, 999 F.2d at 1045.
26
The number of acts committed during the offense is not the dispositive question. A preponderance of evidence in this record supports the judge's finding of repeated acts over a period of time. The two false statement counts of which Spears was convicted occurred in November 1987 and June 1988. There is nothing in the Guidelines or case law to indicate that a sentencing judge may not find that two instances of overt falsification over a period of seven months, combined with ample evidence of eight other instances of misrepresentation over the same period of time, support enhancement of the defendant's sentence for more than minimal planning. The evidence demonstrates a degree of deliberate planning inconsistent with purely opportune conduct. The district court did not err in finding more than minimal planning.
V.
27
Specific findings are necessary to support enhancement of
28
the sentence for obstruction of justice by perjury.
29
Spears argues that in applying a two-point enhancement to his sentence for obstruction of justice, the district court failed to make an independent finding that his testimony was perjured or to specify which portion of his testimony was perjured. The Guidelines call for a two-point enhancement of a defendant's sentence "[i]f the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense...." U.S.S.G. Sec. 3C1.1. A defendant's denial of guilt is not a basis for application of this provision; however, perjury is one type of conduct that justifies the enhancement. Id., comment. (nn. 1, 3(b)).
30
A district court may not base a finding of perjury upon the mere fact that the jury returned a verdict of guilty after the defendant testified. Mathews v. United States, 11 F.3d 583, 586-87 (6th Cir.1993). To ensure that defendants who are found guilty are not penalized by automatic enhancement of their sentences under Sec. 3C1.1 for having testified, the United States Supreme Court has required that if a defendant objects to an enhancement for obstruction of justice, the district court must "review the evidence and make independent findings necessary to establish" the perjury. United States v. Dunnigan, --- U.S. ----, ----, 113 S.Ct. 1111, 1117, 122 L.Ed.2d 445 (1993).
31
Allegedly false statements should be evaluated in a light most favorable to the defendant. U.S.S.G. Sec. 3C1.1, comment. (n. 1); United States v. Head, 927 F.2d 1361, 1372 (6th Cir.), cert. denied sub nom. Black v. United States, 502 U.S. 846, 112 S.Ct. 144, 116 L.Ed.2d 110 (1991). However, this does not require the sentencing judge to disregard all evidence that is unfavorable to the defendant. See United States v. Crousore, 1 F.3d 382, 385 n. 3 (6th Cir.1993). The sentencing judge resolves the conflict in credibility when a defendant's testimony is directly at odds with that of other witnesses. Id. at 385-86.
32
It is not enough for a sentencing judge to recognize conflicting testimony and resolve in his own mind which witness is credible. To comply with the Supreme Court's directive in Dunnigan, the sentencing judge must identify for the record at least some specific instances of conflicting testimony and specify which portions of the defendant's testimony he finds materially perjurious. See United States v. Ledezma, 26 F.3d 636, 644-45 (6th Cir.), cert. denied sub nom. Zajac v. United States, --- U.S. ----, 115 S.Ct. 349, 130 L.Ed.2d 305 (1994). The judge must, at least briefly, explain why the intentional perjury was material. Id.; Crousore, 1 F.3d at 384-85.
33
This record reveals that Judge Forester attempted to comply with Sec. 3C1.1 of the Guidelines by reviewing the testimony of Sellers and Patton and stating that "I do believe that Mr. Spears testified falsely at the trial...." One could fairly infer from the record that the judge's statement concerned those portions of Spears's testimony that conflicted with the testimony of Sellers and Patton as to material information regarding Spears's involvement in the charged offenses. However, we think that more than inference is required. Because the judge did not identify with specificity the portions of Spears's testimony that he found to be intentional lies, or address their materiality, it is necessary to vacate the obstruction enhancement and remand for resentencing after specific findings consistent with this opinion.
VI.
34
Spears's conviction and the district court's application of the Guidelines enhancing his sentence for more than minimal planning are AFFIRMED. Spears's sentence is VACATED and REMANDED for specific findings regarding enhancement for obstruction by perjury and for resentencing.
1
For one November 1987 sale, the down payment that had been recorded and processed as $882.25 was proven to have been $332.25. For another sale in June 1988, a cash down payment of $645 was recorded when, in fact, the customer had paid no money down at all
2
Counts 2-11 of the indictment charged Spears with making false statements to influence a federally insured bank. Spears was convicted of the two counts wherein he inflated or fabricated down payment amounts. See supra n. 1 and accompanying text. He was acquitted of the eight counts wherein he misstated down payment amounts by writing "DISC" or "discount" on the down payment blank
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940 F.2d 655
U.S.v.Joseph*
NO. 90-2779
United States Court of Appeals,Fifth Circuit.
JUL 15, 1901
1
Appeal From: S.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be
regarded as precedent or cited before any Sep 30 2019, 11:22 am
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Zachary A. Witte Curtis T. Hill, Jr.
Locke & Witte Attorney General of Indiana
Fort Wayne, Indiana
Courtney Staton
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Robert S. Potter, II, September 30, 2019
Appellant-Defendant, Court of Appeals Case No.
19A-CR-1050
v. Appeal from the Allen Superior
Court
State of Indiana, The Honorable Frances Gull,
Appellee-Plaintiff. Judge
Trial Court Cause No.
02D05-1812-F6-1515
Pyle, Judge.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 1 of 9
Statement of the Case
[1] Robert S. Potter, II (“Potter”) appeals following his guilty plea to Level 6 felony
unlawful possession of a syringe,1 Class A misdemeanor resisting law
enforcement,2 Class C misdemeanor possession of paraphernalia.3 He argues
that the two-year sentence imposed for his Level 6 felony conviction is
inappropriate. Concluding that Potter has failed to show that his sentence is
inappropriate, we affirm his sentence.
[2] We affirm.
Issue
Whether Potter’s sentence is inappropriate pursuant to Indiana
Appellate Rule 7(B).
Facts
[3] In December 2018, the State charged Potter with Level 6 felony unlawful
possession of a syringe, Class A misdemeanor resisting law enforcement, Class
C misdemeanor possession of paraphernalia in this current case, Cause 02D05-
1812-F6-1515 (“Cause F6-1515”). Potter was released on bond from Cause F6-
1515 on December 15, 2018.
1
IND. CODE § 16-42-19-18.
2
IND. CODE § 35-44.1-3-1.
3
I.C. § 35-48-4-8.3.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 2 of 9
[4] Approximately one month later, the State charged Potter with committing
additional crimes while out on bond. Specifically, on January 22, 2019, the
State charged Potter, under Cause 02D05-1901-F6-97 (“Cause F6-97”), with
Level 6 felony unlawful possession of a syringe and Class B misdemeanor
possession of marijuana. Two days later, the State charged Potter with Level 6
felony unlawful possession of a syringe in Cause 02D05-1901-F6-95 (“Cause
F6-95”).
[5] On February 4, 2019, he pled guilty as charged in Cause F6-1515, Cause F6-97,
and Cause F6-95.4 The trial court took his pleas under advisement and placed
Potter into the Allen County Drug Court Treatment Program (“drug court
program”). On February 25, 2019, Potter failed to appear in court for a drug
court program compliance hearing. Thereafter, the trial court revoked Potter’s
bond and issued a warrant for his arrest. Potter was also terminated from the
drug court program.
[6] In April 2019, the trial court held a joint sentencing hearing for Cause F6-1515,
Cause F6-97, and Cause F6-95. At the time of the sentencing hearing, Potter
had a pending cause, Cause 02D04-1903-F6-266, in which he had been charged
with Level 6 felony unlawful possession of a syringe, Class A misdemeanor
resisting law enforcement, Class B misdemeanor false informing. He also had
4
Potter did not include a copy of his plea agreements in his Appendix. Additionally, the transcript of
Potter’s guilty plea hearing is not included in the record on appeal because he did not request transcription of
it when he filed his notice of appeal.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 3 of 9
an active warrant from Tennessee for probation violations in three separate
causes. Potter admitted that he was addicted to drugs and that he had used
heroin and methamphetamine.
[7] The presentence investigation report (“PSI”) revealed that thirty-six-year-old
Potter has a criminal history dating back to 2001 when he was nineteen years
old, and it includes thirty-five convictions spanning three states. His felony
convictions include the following: aggravated assault with a deadly weapon
(2002 in Florida); possession of cocaine (2007 in Florida); drug possession of a
controlled substance (2009 in Florida); sale of a schedule II drug (2010 in
Tennessee); and possession with intent to sell (2010 in Tennessee). Potter also
amassed the following misdemeanor convictions: theft (2001 in Florida);
culpable negligence with a motor vehicle (2002 in Florida); illegal possession of
alcohol by a minor (2002 in Florida); resisting/obstructing an officer (2002 in
Florida); criminal impersonation (2004 in Tennessee); reckless driving (2004 in
Florida); evading arrest (2004 in Tennessee); theft by shoplifting (2006 in
Tennessee); possession of drug paraphernalia (2006 in Tennessee); theft (2007
in Florida); operating while driver’s license suspended (2007 in Florida); three
different convictions for possession of drug paraphernalia (all three in 2007 in
Florida); driver’s license suspended/revoked (2007 in Florida); theft (2008 in
Florida); loitering (2009 in Florida); theft (2010 in Tennessee); invasion of
privacy (2010 in Indiana); domestic assault (2010 in Tennessee); simple
possession/casual exchange (2010 in Tennessee); possession of drug
paraphernalia (2010 in Tennessee); driving while suspended (2010 in
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 4 of 9
Tennessee); theft (2012 in Tennessee); possession of a legend drug (2012 in
Tennessee); driving while license is cancelled (2012 in Tennessee); criminal
trespass (2014 in Tennessee); and aggravated criminal trespass (2014 in
Tennessee).
[8] When sentencing Potter, the trial court found his guilty plea, acceptance of
responsibility, and remorse to be mitigating circumstances. When discussing
aggravating circumstances, the trial court stated:
The Court does find as an aggravating circumstance your prior
criminal record with failed efforts at rehabilitation covering a
period of time from 2001 to 2018; you are a multi-state offender
in Indiana, Tennessee, and Florida; you have 29 misdemeanor
convictions and six prior felony convictions. You’ve been given
short jail sentences, longer jail sentences, active adult probation,
community control, unsupervised probation, multiple attempts at
treatment, and then the Drug Court Program. In [C]ause F6-97,
you were on bond [from Cause F6-1515] at the time you
committed that offense. I note that you’ve got active warrants
pending in Tennessee for probation violations and there are
pending charges filed here in Allen Superior Court. . . . I agree
with your attorney . . . that it’s a miracle that you’re here. You
are 36 years old; according to your letter, you have overdosed
five times, three of which required professional medical
intervention, one with hospitalization. We take folks in the Drug
Court Program, Mr. Potter, as we find them. Unfortunately, we
found you, you came into the Drug Court Program, and you
were not ready for Drug Court, and that’s really unfortunate
because that was really your best opportunity to get clean and
stay clean, and I hope you’re ready now. I mean, you weren’t
ready when you started. I think your attorney is correct in saying
you need to sit down for a real long time and let recovery take
over your life, because if it doesn’t, Robert, I don’t want to read
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 5 of 9
your name in the obituaries and that’s where it’s gonna end up if
you cannot get this under control. You have the ability to do
that. You’re not a failure.
(Tr. Vol. 2 at 9-10). For Cause F6-1515, the cause on appeal, the trial court
imposed concurrent terms of two (2) years for Potter’s Level 6 felony unlawful
possession of a syringe conviction, one (1) year for his Class A misdemeanor
resisting law enforcement conviction, and sixty (60) days for his Class C
misdemeanor possession of paraphernalia conviction. 5 The trial court also
recommended that Potter be placed in the Recovery While Incarcerated
program. Potter now appeals.6
Decision
[9] Potter argues only that his sentence for his Level 6 felony unlawful possession
of a syringe is inappropriate. He asks this Court to decrease his Level 6 felony
sentence to a term of one year.
[10] We may revise a sentence if it is inappropriate in light of the nature of the
offense and the character of the offender. Ind. Appellate Rule 7(B). The
5
In Cause F6-97, the trial court imposed concurrent terms of two (2) years for Potter’s Level 6 felony
unlawful possession of a syringe conviction and 180 days for his Class B misdemeanor possession of
marijuana conviction. The trial court ordered that Potter’s sentence in Cause F6-97 be served consecutively
to his sentence in Cause F6-1515. For Cause F6-95, the trial court imposed a two (2) year sentence for
Potter’s Level 6 felony unlawful possession of a syringe conviction and ordered it to be served concurrently to
Cause F6-97.
6
Potter has also filed an appeal of his sentence in Cause F6-97. The appellate cause number for that appeal
is 19A-CR-1040, and a memorandum decision in that appellate cause is being handed down on the same day
as this current appeal.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 6 of 9
defendant has the burden of persuading us that his sentence is inappropriate.
Childress v. State, 848 N.E.2d 1073, 1080 (Ind. 2006). The principal role of a
Rule 7(B) review “should be to attempt to leaven the outliers, and identify some
guiding principles for trial courts and those charged with improvement of the
sentencing statutes, but not to achieve a perceived ‘correct’ result in each case.”
Cardwell v. State, 895 N.E.2d 1219, 1225 (Ind. 2008). “Appellate Rule 7(B)
analysis is not to determine whether another sentence is more appropriate but
rather whether the sentence imposed is inappropriate.” Conley v. State, 972
N.E.2d 864, 876 (Ind. 2012) (internal quotation marks and citation omitted),
reh’g denied.
[11] When determining whether a sentence is inappropriate, we acknowledge that
the advisory sentence “is the starting point the Legislature has selected as an
appropriate sentence for the crime committed.” Childress, 848 N.E.2d at 1081.
In this cause, Potter entered a guilty plea and was convicted of Level 6 felony
unlawful possession of a syringe, Class A misdemeanor resisting law
enforcement, Class C misdemeanor possession of paraphernalia. A Level 6
felony has a sentencing range of six (6) months to two and one-half (2½) years
with an advisory sentence of one (1) year. I.C. § 35-50-2-7(b). The trial court
imposed a sentence of two (2) years for Potter’s Level 6 felony conviction.7
Thus, the trial court imposed a sentence below the maximum allowed under the
7
The trial court also imposed concurrent terms of one year for his Class A misdemeanor conviction and sixty
days for his Class C misdemeanor conviction, but he does not challenge these sentences as inappropriate.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 7 of 9
statute. Additionally, the trial court recommended that Potter be placed in a
drug treatment program while incarcerated.
[12] Turning first to the nature of Potter’s unlawful possession of a syringe offense,
we note that the probable cause affidavit attached to the PSI indicates that a
police officer encountered Potter at the home of a person who was on home
detention. While the officer was doing a home detention check of the
residence, he saw Potter quickly put something into his front pants pocket. The
officer patted down Potter and discovered a pipe used to smoke
methamphetamine. Potter pulled away from the officer and attempted to grab
the pipe from his pocket. Potter then struggled with the officer when being
secured in handcuffs. As the officer continued his pat down of Potter, he found
a syringe in Potter’s pocket, and Potter told the officer that he had used it to
inject himself with heroin.
[13] Turning to Potter’s character, we note that his poor character is revealed by an
extensive criminal history that spans decades and includes multiple probation
revocations. His criminal history includes twenty-nine misdemeanor and six
felony convictions. Potter was convicted of Level 6 felony unlawful possession
of a syringe in each of the three causes involved in his sentencing hearing, and,
at the time of sentencing, he had a pending charge for Level 6 felony unlawful
possession of a syringe conviction in another cause. Potter admitted that he
was addicted to drugs. Additionally, the PSI shows that Potter, during various
periods of his life, has used alcohol, marijuana, acid, ecstasy, cocaine, heroin,
and methamphetamine. Indeed, his use of many of these drugs included daily
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 8 of 9
use for multiple years. The trial court gave Potter the opportunity to participate
in the drug court program, but he squandered that chance. Potter’s criminal
history and current offenses show that he has a disregard for the law.
[14] Potter has not persuaded us that his two-year sentence for his Level 6 felony
unlawful possession of a syringe conviction is inappropriate. Therefore, we
affirm the sentence imposed by the trial court.
[15] Affirmed.
Robb, J., and Mathias, J., concur.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1050 | September 30, 2019 Page 9 of 9
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