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124 Ariz. 387 (1979)
604 P.2d 651
John A. MURRY and Janet H. Murry, husband and wife, Plaintiffs/Appellants,
v.
WESTERN AMERICAN MORTGAGE COMPANY, an Arizona corporation; Western American Realty and Investment Company, an Arizona corporation, Defendants/Appellees.
No. 2 CA-CIV 3188.
Court of Appeals of Arizona, Division 2.
October 22, 1979.
Rehearing Denied December 5, 1979.
Review Denied January 3, 1980.
*388 Sando & Hardy by David T. Hardy, Tucson, for plaintiffs/appellants.
Ryley, Carlock & Ralston by N. Warner Lee, Phoenix, for amicus curiae, Ariz. Mortg. Bankers Ass'n.
Warner & Angle by Charles R. Hallam, Phoenix, for Western American Realty & Inv. Co.
Cusick, Watkins, Stewart, Harris & Ellermann by Donald R. Ellermann, Tucson, for Western American Mortg. Co.
OPINION
RICHMOND, Chief Judge.
This is an appeal from judgments dismissing appellants' complaint against Western American Mortgage Company (WAMCO) and amended complaint against Western American Realty & Investment Company (WARCO) in an action for damages as a result of purchasing a defectively constructed house. The court dismissed the complaint against WAMCO for failure to state a claim and denied appellants' oral motion to amend. The court allowed appellants to amend their complaint against WARCO to allege a violation of the Consumer Fraud Act but dismissed the amended complaint because the statute of limitations had run. We affirm both judgments.
THE ACTION AGAINST WAMCO
Appellants alleged in Count One of their complaint that WAMCO's financial participation in the construction of Green Acres Estates subdivision, making construction loans to Huachuca Investment Company, Inc., and obtaining the right of first refusal to make long term loans to home buyers, gave rise to a duty to protect the buyers from defects in construction of the homes. The trial court concluded that the complaint merely alleged that WAMCO was a lender, and ruled that it failed to state a claim because a construction lender has no independent duty to the purchaser of a home absent a joint venture or contractual relationship.
After the court announced its intention to dismiss, appellants asked to amend Count One to allege that:
1) WAMCO and Huachuca Investment entered into a contract in which WAMCO agreed to finance construction based on a lot release schedule for periodic payments for each lot;
2) WAMCO executed a guarantee so that a bank would loan money to Huachuca Investment;
3) WAMCO knew that Huachuca Investment began construction when it had a capital deficit in excess of $140,000;
4) WAMCO entered into the agreement for the sole purpose of profiting off the mortgages generated by Green Acres Estates;
5) Payments were set up so Huachuca Investment would not draw sufficient profit to complete the subdivision, but would put up bare houses, sell them, and get mortgages for WAMCO;
6) Huachuca Investment ceased to do business after appellants purchased their house, and the assets were transferred to Busby Building and Development;
*389 7) WAMCO knew of the fraudulent transfers, and assisted by executing a guarantee which enabled Busby to purchase the remaining land in the subdivision;
8) WAMCO vouched for Busby to appellants after they signed the agreement to purchase.
The court denied the motion on the ground that the complaint as amended would still not state a claim.
The trial court specifically rejected the holding of Connor v. Great Western Savings & Loan Assoc., 69 Cal.2d 850, 73 Cal. Rptr. 369, 447 P.2d 609 (1968), that a lender can be liable to home buyers for damages caused by defective construction. However, neither the complaint nor proposed amendments allege the degree of active participation necessary to impose liability under Connor and its progeny. We need not decide, therefore, whether Connor should be the law in Arizona.
Connor involved a lender which was "more than a lender content to lend money at interest on the security of real property" but was "an active participant in a home construction enterprise." 73 Cal. Rptr. at 376, 447 P.2d at 616. The lending company had the right to exercise substantial control over the development, and received interest and fees for making construction loans, a 20 per cent capital gain for "warehousing" the land, and protection from loss of profits if individual home buyers sought mortgages elsewhere.
Subsequent cases have rejected a broad reading of Connor and indicated that liability will be imposed on construction lenders only in unusual circumstances, where the lender's activities clearly exceed those of a normal money lender.[1]See Armetta v. Clevetrust Realty Investors, 359 So.2d 540 (Fla.App. 1978), cert. den. 366 So.2d 879 (1978); Kinner v. World Savings and Loan Assoc., 57 Cal. App.3d 724, 129 Cal. Rptr. 400 (1976); Callaizakis v. Astor Development Co., 4 Ill. App.3d 163, 280 N.E.2d 512 (1972). Absent facts identical to those in Connor, courts have been unwilling to find liability. See, e.g., Armetta, supra; Snyder v. First Federal Savings & Loan Assoc. of Rapid City, 241 N.W.2d 725 (S.D. 1976); Christiansen v. Philcent Corporation, 226 Pa.Super. 157, 313 A.2d 249 (1973). No duty has been imposed where a lending company reserved the right to approve plans and specifications, and made periodic inspections of construction. Bradler v. Craig, 274 Cal. App.2d 466, 79 Cal. Rptr. 401 (1969). Thus, although Connor has never been overruled, its holding in essence has been limited to its facts.
Assuming that the facts alleged are true, Long v. Arizona Portland Cement Co., 89 Ariz. 366, 362 P.2d 741 (1961), they do not give rise to a reasonable inference that WAMCO had been involved in activities beyond the realm of the average construction lender. The complaint merely alleges that WAMCO loaned money to Huachuca Investment and had a right of first refusal on long-term loans. No allegation was made that the right of first refusal involved a penalty if other financing was utilized, as was the case in Connor. See Callaizakis, supra. Though appellants in their proposed amendments alleged that WAMCO knew the developer was undercapitalized, they failed to allege other factors necessary to the Connor decision. Allegations that WAMCO provided financing on a lot release schedule and had the power to take over buildings that were not completed within a stipulated time do not indicate that it had substantial control over the development as required by Connor. Absent the unusual circumstances in Connor, provisions in a loan agreement solely for the lender's protection do not create a duty on the part of the lender to others. Armetta v. Clevetrust Realty Investors, supra.
Appellants argue that their proposed amendments state a claim based on joint tort or some other theory, even if an independent duty on the part of WAMCO *390 cannot be found. We disagree. Joint tort liability arises in situations "in which the defendant has been personally guilty of tortious conduct." Comment a. to Restatement, Second, of Torts § 875. Since WAMCO had no legal duty to ensure that its borrower built good homes, it has not engaged in tortious conduct that is the legal cause of appellants' damages.
If the allegation that WAMCO vouched for the builder to appellants constituted a misrepresentation, appellants failed to allege the elements of fraud with the specificity required by 16 A.R.S. Rules of Civil Procedure, rule 9(b). Further, the trial court had precluded as untimely a previous attempt to assert fraud against WAMCO.
The proposed amendments also fail to allege facts establishing the essential elements of a joint venture, which requires an agreement, common purpose, a community of interest, and an equal right of control. L.M. White Contracting Co. v. Tucson Rock & Sand Co., 11 Ariz. App. 540, 545, 466 P.2d 413, 418 (1970).
THE SUIT AGAINST WARCO
Appellants sought to amend their complaint against WARCO during the trial to state a claim under the Consumer Fraud Act, A.R.S. § 44-1521, et seq., in addition to their claim of common law fraud. The trial court allowed the amendment, but dismissed the amended complaint on the ground that the claim was barred by the one-year period of limitations applicable to actions created by statute under A.R.S. § 12-541(3):
There shall be commenced and prosecuted within one year after the cause of action accrues, and not afterward, the following actions:
* * * * * *
3. Upon a liability created by statute, other than a penalty or forfeiture.
Appellants argue that the three-year period of A.R.S. § 12-543(3) for actions arising out of fraud is the correct limitation to apply to private actions arising out of the Consumer Fraud Act. We disagree, because the act creates a new liability. Although the act renders illegal the use of fraud in connection with the sale of merchandise, the elements of a claim for relief are not necessarily identical to those of a common law fraud action. Peery v. Hansen, 120 Ariz. 266, 585 P.2d 574 (App. 1978). Since the Consumer Fraud Act creates a cause of action separate from common law fraud, an action commenced thereunder must be brought within one year as § 12-541(3) requires.
Affirmed.
HOWARD and HATHAWAY, JJ., concur.
NOTES
[1] A California statute passed soon after Connor also limits the liability of construction lenders to cases involving misrepresentations or actions outside the scope of a money lender. California Civ.Code, § 3434 (West).
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA , No. 11-30360
Plaintiff-Appellee,
DC No.
v. 2:10-cr-6062-
WFN
MARCELINO OSEGUERA -MADRIGAL,
AKA Marcelino Oseguerra-
Madrigal, OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Washington
Wm. Fremming Nielsen, Senior District Judge, Presiding
Submitted October 12, 2012*
Seattle, Washington
Filed November 19, 2012
Before: A. Wallace Tashima, Milan D. Smith, Jr.,
and Morgan Christen, Circuit Judges.
Opinion by Judge Tashima
*
The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2)(C).
2 UNITED STATES V . OSEGUERA -MADRIGAL
SUMMARY**
Criminal Law
The panel affirmed a conviction and sentence for being an
alien found in the United States following deportation in a
case in which the defendant collaterally attacked his
underlying removal order.
The panel held that the Board of Immigration Appeals did
not err in finding the defendant removable based on his
conviction under Wash. Rev. Code § 69.50.412 for use of
drug paraphernalia, which was a conviction “relating to a
controlled substance” under 8 U.S.C. § 1182(a)(2)(A)(i)(II).
The panel held that the immigration judge did not violate
due process by failing to inform the defendant of the
possibility of relief through a waiver of inadmissibility under
8 U.S.C. § 1182(h), where the defendant was plainly
ineligible for the waiver because the paraphernalia he was
convicted of using was related to cocaine, not marijuana.
The panel rejected the defendant’s contention that the
district court abused its discretion and imposed a
substantively unreasonable sentence when it granted “only”
a six-month downward variance from the Sentencing
Guidelines range.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V . OSEGUERA -MADRIGAL 3
COUNSEL
Nicholas Marchi, Carney & Marchi, Seattle, WA, for
Defendant-Appellant.
Alexander C. Ekstrom, Assistant United States Attorney,
Yakima, WA, for Plaintiff-Appellee.
OPINION
TASHIMA, Circuit Judge:
Marcelino Oseguera-Madrigal (“Oseguera”) appeals his
conviction and sentence on a conditional guilty plea for being
an alien found in the United States following deportation, in
violation of 8 U.S.C. § 1326. He challenges the district
court’s dismissal of his collateral attack on the underlying
removal order. We affirm the conviction and find no abuse
of discretion in the district court’s sentencing decision.
Accordingly, we affirm.
I. Background
Oseguera, a citizen of Mexico, came to the United States
in 1970, at the age of two. In 1994, he was charged with
possession of cocaine, a controlled substance, in Washington
state court. He subsequently pled guilty to a reduced charge
of use of drug paraphernalia, in violation of Wash. Rev. Code
§ 69.50.412. The Immigration and Naturalization Service
initiated removal proceedings against him in 2001. An
immigration judge (“IJ”) found Oseguera removable and the
Board of Immigration Appeals (“BIA”) affirmed the IJ’s
4 UNITED STATES V . OSEGUERA -MADRIGAL
decision. Oseguera was removed from this country in
February 2009.
On January 11, 2011, Oseguera was indicted for being an
alien in the United States without permission after
deportation, under 8 U.S.C. § 1326. He moved to dismiss the
indictment by collaterally attacking the underlying removal
proceedings. The district court denied his motion, and he
entered a conditional guilty plea, preserving his right to
appeal the denial of his motion to dismiss. The district court
subsequently sentenced Oseguera to thirty-five months’
imprisonment. Oseguera timely appeals.
II. Discussion
A. Collateral Attack on Immigration Proceedings
Oseguera contends that the IJ erroneously found him
removable, and that even if he was removable, the IJ violated
his due process rights by failing to inform him of the
availability of potential relief from removal. We review de
novo a collateral attack on an underlying removal order.
United States v. Ahumada-Aguilar, 295 F.3d 943, 947 (9th
Cir. 2002).
Oseguera first contends that he was not properly
removable because his drug paraphernalia conviction was not
a “violation . . . relating to a controlled substance,” under
8 U.S.C. § 1182(a)(2)(A)(i)(II). In Luu-Le v. INS, 224 F.3d
911 (9th Cir. 2000), we held that Arizona’s statute
criminalizing the possession of drug paraphernalia, Ariz. Rev.
UNITED STATES V . OSEGUERA -MADRIGAL 5
Stat. § 13-3415(A),1 is, by its plain language, clearly “relating
to” a controlled substance for purposes of the Immigration
and Nationality Act. Id. at 914-16. In Bermudez v. Holder,
586 F.3d 1167, (9th Cir. 2009), we held that the “materially
identical” drug paraphernalia statute in Hawaii, Haw. Rev.
Stat. § 329-43.5(a),2 was similarly “relating to a controlled
substance.” Id. at 1168-69. The text of the Washington
statute to which Oseguera pled guilty in 1994, Wash. Rev.
Code § 69.50.412(1),3 is materially identical to both the
Hawaii and Arizona statutes. Compare Wash. Rev. Code
§ 69.50.412(1), with Ariz. Rev. Stat. § 13-3415(A), and
Haw. Rev. Stat. § 329-43.5(a). Therefore, Oseguera’s drug
1
The Arizona statute, Ariz. Rev. Stat. § 13-3415(A), provides:
It is unlawful for any person to use, or to possess with intent
to use, drug paraphernalia to plant, propagate, cultivate, grow,
harvest, manufacture, compound, convert, produce, process,
prepare, test, analyze, pack, repack, store, contain, conceal,
inject, ingest, inhale or otherwise introduce into the human body
a drug in violation of this chapter.
2
The Hawaii statute, Haw. Rev. Stat. § 329-43.5(a), provides:
It is unlawful for any person to use, or to possess with intent
to use, drug paraphernalia to plant, propagate, cultivate, grow,
harvest, manufacture, compound, convert, produce, process,
prepare, test, analyze, pack, repack, store, contain, conceal,
inject, ingest, inhale, or otherwise introduce into the human body
a controlled substance in violation of this chapter.
3
The W ashington statute, W ash. Rev. Code §69.50.412(1), provides:
It is unlawful for any person to use drug paraphernalia to
plant, propagate, cultivate, grow, harvest, manufacture,
compound, convert, produce, process, prepare, test, analyze,
pack, repack, store, contain, conceal, inject, ingest, inhale, or
otherwise introduce into the human body a controlled substance.
6 UNITED STATES V . OSEGUERA -MADRIGAL
paraphernalia conviction clearly was one “relating to a
controlled substance” under 8 U.S.C. § 1182(a)(2)(A)(i)(II).
The BIA did not err in finding him removable on that basis.
Oseguera next argues that even if he was properly found
removable, he should have been informed of the possibility
of relief through a waiver of inadmissibility under 8 U.S.C.
§ 1182(h), and that the IJ violated his due process by failing
to inform him that such relief was available. We have
repeatedly held that an IJ’s failure to advise an alien of
apparent eligibility for relief violates due process and, where
accompanied by prejudice, serves as the basis for a collateral
attack on the removal order. See, e.g., United States v. Lopez-
Velasquez, 629 F.3d 894, 896-97 (9th Cir. 2010) (en banc);
United States v. Garcia-Martinez, 228 F.3d 956, 960 (9th Cir.
2000); Moran-Enriquez v. INS, 884 F.2d 420, 423 (9th Cir.
1989).
In this case, however, there was no relief for which
Oseguera was plausibly eligible. While § 1182(h) allows the
Attorney General to waive certain kinds of convictions under
§ 1182(a)(2)(A)(i), a conviction “relating to a controlled
substance” under § 1182(a)(2)(A)(i)(II) is waivable only
“insofar as it relates to a single offense of simple possession
of 30 grams or less of marijuana.” 8 U.S.C. § 1182(h).
Oseguera’s drug paraphernalia conviction was not a
conviction for “simple possession of 30 grams or less of
marijuana.” The information to which Oseguera pled guilty
specifically charged that Oseguera used drug paraphernalia in
that Oseguera “did use a silver spoon and lighter to inject,
ingest, inhale or introduce into the human body cocaine, a
controlled substance.” Because the drug paraphernalia
Oseguera was convicted of using was related to cocaine, not
marijuana, he plainly was ineligible for a waiver. Cf.
UNITED STATES V . OSEGUERA -MADRIGAL 7
Escobar Barraza v. Mukasey, 519 F.3d 388, 392-93 (7th Cir.
2008) (holding that one convicted of possession of drug
paraphernalia may be eligible for a § 1182(h) waiver where
the paraphernalia related to the use of marijuana “and the
implied quantity is under 30 grams”). The IJ did not err by
failing to inform him about relief for which he was ineligible.
For these reasons, the district court did not err in denying
Oseguera’s motion to dismiss the indictment.4
B. Sentence
Oseguera contends that the district court abused its
discretion and imposed a substantively unreasonable sentence
when it granted “only” a six-month downward variance from
the Guidelines range of forty-one to fifty-one months. He
contends that his sentence of thirty-five months’
imprisonment is unreasonably long, but he does not dispute
the process by which the district court reached its sentencing
decision.
We review a district court’s sentencing decisions for
abuse of discretion. Gall v. United States, 552 U.S. 38, 41
(2007). While there is no presumption that a sentence within
the applicable Guidelines range is reasonable, the sentencing
court should use the Guidelines as a “starting point.” United
States v. Carty, 520 F.3d 984, 991 (9th Cir. 2008) (en banc)
(citation and internal quotation marks omitted). Nor is there
4
Oseguera also collaterally attacks his W ashington state conviction
under Padilla v. Kentucky, 130 S.Ct. 1473 (2010), but that attack is
foreclosed by Custis v. United States, 511 U.S. 485 (1994). See also
United States v. Gutierrez-Cervantez, 132 F.3d 460 (9th Cir. 1997).
Accordingly, we do not consider its merits.
8 UNITED STATES V . OSEGUERA -MADRIGAL
a presumption that a sentence outside of the Guidelines range
is unreasonable. Rita v. United States, 551 U.S. 338, 354-55
(2007). Rather, “courts of appeals must review all sentences
– whether inside, just outside, or significantly outside the
Guidelines range – under a deferential abuse-of-discretion
standard.” Gall, 552 U.S. at 41. “The extent of the
difference between a particular sentence and the
recommended Guidelines range is . . . relevant.” Id. Absent
circumstances that take a particular case outside of the “mine
run” of similar cases, a district court moves toward the limits
of its discretion as it moves away from the Guidelines range.
See Rita, 551 U.S. at 350-51. Here, Oseguera provides no
evidence that his circumstances are outside the mine run of
similar cases. The district court acted within its sound
discretion in imposing the below-guidelines sentence that it
did.
For the foregoing reasons, the judgment of conviction and
the sentence are
AFFIRMED.
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914 F.2d 1491Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Curtis MITCHELL, Plaintiff-Appellant,v.D.W. ARTIS; Raymond Fields; Sergeant Carter; Commonwealthof Virginia, Department of Corrections,Defendants-Appellees.
No. 90-6850.
United States Court of Appeals, Fourth Circuit.
Submitted Aug. 27, 1990.Decided Sept. 25, 1990.
Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. James C. Cacheris, District Judge. (C/A No. 89-1791-AM).
Curtis Mitchell, appellant pro se.
E.D.Va.
AFFIRMED.
Before SPROUSE and WILKINS, Circuit Judges, and BUTZNER, Senior Circuit Judge.
PER CURIAM:
1
Curtis Mitchell appeals the district court's dismissal of this 42 U.S.C. Sec. 1983 action for failure to pay the assessed filing fee. Finding that the district court complied with the procedures approved in Evans v. Croom, 650 F.2d 521 (4th Cir.1981), cert. denied, 454 U.S. 1153 (1982), and did not abuse its discretion in dismissing the action without prejudice, we affirm the district court's order. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the Court and argument would not aid the decisional process.
AFFIRMED
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492 F.Supp.2d 1313 (2007)
ACTION WHOLESALE LIQUORS, Central Liquor, and Jarboe Sales Co., Plaintiffs,
v.
OKLAHOMA ALCOHOLIC BEVERAGE LAWS ENFORCEMENT COMMISSION; Joe Perkins, Bryan Close, Pat Moreo, Desmond Sides, Rob Stratton, Paul Moody, and Maxine McFalls, in their official capacities as Commissioners of the Oklahoma Alcoholic Beverage Laws Enforcement Commission; and A. Keith Burt, in his official capacity as Director of the Oklahoma Alcoholic Beverage Laws Enforcement Commission, Defendants.
No. CIV-06-0239-F.
United States District Court, W.D. Oklahoma.
June 15, 2007.
Amanda Leigh Maxfield, Robert G. McCampbell, Crowe & Dunlevy, Oklahoma City, OK, for Plaintiffs.
Sandra D. Rinehart, Sherry A. Todd, Attorney General'S Ofc, Oklahoma City, OK, for Defendants.
ORDER
FRIOT, District Judge.
In its order of November 15, 2006 (doc. no. 43), the court determined that the laws challenged in this action consisting of the 2000 amendment to Article 28, Section 3 of the Oklahoma Constitution, and conforming state statutes were unconstitutional under the interstate commerce clause of the United States Constitution. Granholm v. Heald, 544 U.S. 460, 125 S.Ct. 1885, 161 L.Ed.2d 796 (2005). Accordingly, the court granted summary judgment to the plaintiffs in this action. The court stayed judgment in plaintiffs' favor, however, because, as the court stated at the time, it agreed with the parties on both sides of this case that a legislative remedy was preferable, if that could be accomplished within a reasonable time. Accordingly, the November order directed the parties to file, by June 1, 2007, a notice advising the court of the status of efforts *1314 in the Oklahoma Legislature to address the constitutional defect identified by the court in its November order. The November order stated that, after receipt of the notices, the court would determine whether the stay of its ruling on summary judgment would be lifted or extended.
The time for that determination has now come. The parties have filed notices stating that no bills or resolutions addressing the constitutional defect identified in the court's November order were enacted by the most recent session of the Oklahoma Legislature. The Oklahoma Grape Growers and Wine Makers Association has also filed an amicus curiae brief, stating the association's views regarding the proper remedy in light of the legislature's failure to act. Thus, it is apparent that, in all material respects, Oklahoma's alcoholic beverage laws stand today as they did on November 15, 2006, when the court concluded that the challenged laws were unconstitutional. Likewise, it is apparent that plaintiffs remain today as they were on November 15, 2006, that is, entitled to the declaratory and injunctive relief sought in this action.
For these reasons, the stay of the court's November 15, 2006 order granting summary judgment in favor of the plaintiffs and against the defendants is hereby lifted.
The challenged provisions of the Oklahoma Constitution and associated Oklahoma statutes remain, as previously declared, unconstitutional under the Commerce Clause of the United States Constitution, making those laws void and unenforceable.
Of the available judicial remedies for the declared unconstitutionality, the court continues to find and conclude that it would be much less disruptive to Oklahoma's longstanding regulatory scheme to remove the exception to the three-tier system which the challenged laws now unconstitutionally extend to in-state wineries, than it would be to extend the exception to all wineries. The challenged provisions are, therefore, judicially stricken.
Consistent with the specific injunctive relief sought in the complaint, defendants and their officers, agents, and employees are, pursuant to Rule 65, Fed.R.Civ.P., ENJOINED from enforcing or relying upon the stricken laws in their licensing, rule-making, enforcement, and other official actions in the administration of the Oklahoma Alcoholic Beverage Control Act.
Judgment will be entered separately.
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780 F.2d 741
The GREAT AMERICAN HOUSEBOAT COMPANY, a Californiacorporation, Plaintiff-Appellant,v.The UNITED STATES of America, (U.S. Forest Service),Defendant-Appellee.
No. 84-2434.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Oct. 9, 1985.Decided Jan. 9, 1986.
Joshua Tropper, Gaston, Snow, Ely & Bartlett, Palo Alto, Cal., for plaintiff-appellant.
Sandra L. Willis, Asst. U.S. Atty., San Francisco, Cal., for defendant-appellee.
Appeal from the United States District Court for the Northern District of California.
Before SKOPIL, FLETCHER, and WIGGINS, Circuit Judges.
SKOPIL, Circuit Judge:
1
This case arises from the United States Forest Service's ("Forest Service") refusal to grant Great American Houseboat Company's ("GAHC") applications for permits to operate eight houseboats on Shasta Lake. GAHC brought this action for declaratory and injunctive relief alleging the Forest Service's permit regulations and conditions are unconstitutionally vague and were applied to them in a discriminatory manner in violation of the equal protection clause. GAHC also alleged that the Forest Service revised its application form and houseboat use permit conditions without appropriate authority. The Forest Service's Rule 41(b) motion for involuntary dismissal was granted following a trial to the court. GAHC appeals. We affirm.
FACTS AND PROCEEDINGS BELOW
2
GAHC is a California corporation in the business of managing and selling houseboats, including timeshare/interval ownership houseboat programs. GAHC sold eight houseboats to eight individuals ("owner-investors"), who made their own arrangements for financing. Each owner-investor entered into a houseboat lease arrangement, leasing the houseboats back to GAHC for a five-year term. GAHC then created a partnership which transferred timeshares of its interest in the houseboats to individual users ("interval owners"). GAHC planned to transfer seventeen total timeshares in the houseboats to individual users who would be allotted two weeks of use per season.
3
GAHC's timeshare program was structured to provide the owner-investor a substantial tax benefit. The lease agreement provided that GAHC could at the end of the lease, upon 180 days' prior written notice, exercise an option to renew the lease, purchase the houseboat, or return the houseboat to the owner-investor. The options to purchase the houseboats were revocable by the owner-investors. At the time it applied for permits, GAHC had not exercised the revocable options to purchase.
4
During the five-year lease arrangement, title and registration to the houseboats were maintained in the name of the lessor (owner-investor). All rents or lease payments received by GAHC were deposited in escrow. Distributions from escrow were made according to each owner-investor's prearranged payment schedule. Some owner-investors personally received the payments while others had payments made to the banks holding the liens on the houseboats.
5
Regarding the sale or lease of timeshare interests, each interval owner signed a partnership agreement and an addendum to that agreement stating that he or she was one of several partners who owned the use and enjoyment of the houseboat. GAHC provided the financing for each of the interval owners' purchase of a timeshare interest. Payments received by GAHC from the interval owners were deposited into the escrow set up to receive rent or lease payments from GAHC to the owner-investor. The payments from the interval owners were used in large part to pay off the owner-investors.
6
In November 1982 the Forest Service became aware of GAHC's timeshare plan and advised it against proceeding with the plan until the Forest Service had an opportunity to review and promulgate a policy on multiple ownership of houseboats. The Forest Service was concerned that GAHC's timeshare plan was a commercial venture forbidden by the private permit system. In that same month the Forest Service's District Ranger established a moratorium on the issuance of all houseboat permits until a policy on multiple ownership houseboat programs could be formulated.
7
In January 1983, during the moratorium on permit issuance, District Ranger Fitch advised GAHC that its timeshare proposal was being evaluated by counsel to determine compliance with the private permit system. Ranger Fitch also expressed concern that GAHC continued to represent to the public that its timeshare program was in complete compliance with the Forest Service's permit system.
8
On February 11, 1983 GAHC representatives met with Forest Service personnel to discuss GAHC's timeshare program. Forest Service personnel made no representations as to whether GAHC's program was in compliance with existing houseboat use permit regulations. Shortly thereafter, GAHC was advised that a revised application form had been approved and that revised conditions embodying Forest Service policy on multiple ownership had been promulgated. GAHC was advised that it should comply with several conditions before a houseboat permit could be granted. GAHC did not supply all the information requested nor did it comply with all the conditions.
9
On April 22, 1983 the District Ranger issued a decision letter stating that no permit would be issued to a new multiple use houseboat until the anticipated use of the houseboat was determined. The District Ranger reaffirmed Forest Service policy prohibiting commercial use of houseboats through the sale of time alone without evidence of proportionate ownership. On that same day the District Ranger lifted the moratorium for issuing permits and began processing all applications. GAHC had submitted applications for eight separate owners.1 The registered owners were the various owner-investors. The legal owners of the houseboats were the various banks or lienholders. Some of the registered owners indicated that they were not members of the interval-owner partnership created by GAHC for sale of timeshare interests. Some of the registered owners did not know whether or not they were members of that partnership, and some of the registered owners indicated that they did not use their houseboats, but purchased those houseboats for the purpose of renting them.
10
The Forest Service rejected GAHC's permit applications on the basis of the conditions embodying the commercial use ban and the Forest Service policy with respect to multiple ownership of houseboats. Because GAHC had not been issued permits, it was notified that its houseboats would be impounded unless removed from the Lake. GAHC filed its complaint in this matter seeking to prevent that action. The district court denied plaintiff's application for preliminary injunctive relief. Following a trial on the merits, the court granted the defendant's Rule 41(b) motion for involuntary dismissal.
FOREST SERVICE PERMIT SYSTEM
11
Congress has granted the Secretary of Agriculture the authority to manage the recreational resources at the Whiskeytown-Shasta-Trinity National Recreational Area. 16 U.S.C. Secs. 460q-460q-9 (1982). The Secretary has duly delegated his authority to the Forest Service. 29 Fed.Reg. 16,210 (Dec. 3, 1964). Shasta Lake is part of this National Recreational Area. All uses of National Recreational Area land or resources must be authorized. 36 C.F.R. Sec. 251.50 (1984). Permits and special use authorizations are defined in Forest Service regulations, 36 C.F.R. Sec. 251.51(h) and (m) (1984), as are application procedures and permit terms and conditions. 36 C.F.R. Secs. 251.54-.64 (1984).
12
To assist in the overall management of multiple recreational activities and in response to public concern, the Forest Service adopted a management plan for the Whiskeytown-Shasta-Trinity National Recreational Area ("the 1976 Plan"). Pursuant to the 1976 Plan, the Forest Service adopted Forest Service Order 14-58-2 (July 20, 1978), requiring houseboats on Shasta Lake to have special use permits issued from the Forest Service for one-year terms. Authority to regulate permits is duly delegated to the Regional Forester, Forest Supervisor, District Ranger, or other Forest officer. 36 C.F.R. Sec. 251.52 (1984).
13
From July 20, 1978 until February 22, 1983 Forest Service policy on multiple ownership of houseboats was set forth in a set of standard houseboat use permit conditions ("Old Conditions"). Old Condition 11 prohibited commercial use of houseboats, defined to include rental or offers to rent on a commercial or business basis or as compensation or remuneration for commercial or business activities. Old Condition 13 allowed houseboats to be owned by partnerships provided the permit was issued in the name of one qualified individual who would be responsible for compliance with permit regulations and conditions.
14
On April 20, 1982 the Forest Service revised the 1976 Plan. Under the 1982 amendments, the existing houseboat use permit system remained in effect. Neither the 1976 Plan nor the 1982 amendments specified the requisite elements for receipt of a private houseboat use permit. Establishment of a houseboat use permit system and regulation of the issuance of permits remained responsibilities duly delegated to the Forest Supervisor, the Regional Forester, the District Ranger, or other Forest Officer. 36 C.F.R. Sec. 251.52 (1984).
15
Since 1976 practically all the private houseboat permits allowed by the 1976 Plan had been issued. To secure a private permit, it was necessary to file an application with the Forest Service. The Forest Service insisted on knowing at all times who owned the houseboats and who was responsible for complying with their regulations. Each owner or permittee must agree to be bound by all permit terms and conditions. The permit application form states that the person applying for the permit agrees to be bound by permit terms and conditions including such new conditions and stipulations as circumstances may warrant.
16
In 1982 Forest Service personnel became concerned about the increased number of requests for multiply-owned houseboat use permits. Multiple ownership-timeshare programs were believed to be analogous to rentals and therefore commercial in nature. Forest Service personnel were also concerned that multiple ownership programs for houseboats would lead to increased use of the houseboats which in turn would create overcrowding on the Lake, degrading the quality of the recreational experience there. During the moratorium on issuance of permits, Forest Service personnel considered revising houseboat permit regulations to devise a method for treating permit applications received from multiple ownership programs.
17
In February 1983, while GAHC's permit applications were pending, a revised application form for houseboat permits was approved by the Forest Supervisor. That form incorporated a revised set of standard houseboat use conditions ("New Conditions"). The former ban on commercial use found in Old Condition 11 was retained in New Condition 10. The distinction between commercial and personal use was further explained in the language of New Condition 19. New Conditions 20 through 23 embodied the Forest Service policy on multiple ownership of houseboats. These conditions provided, inter alia, that the permittee and the registered owner of the houseboat must be the same.2
DISCUSSION
18
A. Constitutional Contentions.
19
On the final day of trial, the district court granted the defendant's motion for involuntary dismissal. The district court found no merit to GAHC's contention that the Forest Service's conditions were unconstitutionally vague and violative of the equal protection clause.3
20
An involuntary dismissal pursuant to Fed.R.Civ.P. 41(b) is viewed as "a judgment in defendants' favor following a trial to the court." Thorne v. City of El Segundo, 726 F.2d 459, 468 (9th Cir.1983), cert. denied, --- U.S. ----, 105 S.Ct. 380, 83 L.Ed.2d 315 (1984). Findings of fact are reviewed under the clearly erroneous standard; questions of law are reviewed de novo. Id.; see also Wilson v. United States, 645 F.2d 728, 730 (9th Cir.1981).
1. Void for Vagueness
21
GAHC argues that the Forest Service's conditions are unconstitutionally vague because the definition of "commercial use" is so unclear as to make it impossible for it to determine whether its timeshare program falls within that definition.
22
When prohibiting conduct by government regulation, the regulation must be sufficiently clear so "that ordinary people can understand what conduct is prohibited" and so it "does not encourage arbitrary and discriminatory enforcement." Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983). Economic regulation is subject to "a less strict vagueness test" than criminal laws, Village of Hoffman Estates v. Flip-Side Hoffman Estates, Inc., 455 U.S. 489, 498, 102 S.Ct. 1186, 1193, 71 L.Ed.2d 362 (1982), and tolerance is greatest in cases where the consequences of noncompliance are mere reduction of government subsidy. Planned Parenthood of Central and Northern Arizona v. State of Arizona, 718 F.2d 938, 948 (9th Cir.1983) (upholding a vagueness challenge to Arizona statute denying state funds to agencies offering "counseling for abortion procedures"). This less strict vagueness analysis is appropriate since "the regulated enterprise may have the ability to clarify the meaning of the regulation by its own inquiry, or by resort to an administrative process." Hoffman Estates, 455 U.S. at 498, 102 S.Ct. at 1193. The primary question remains "whether the law affords fair warning of what is proscribed." Id. at 503, 102 S.Ct. at 1195.
23
In considering whether an administrative regulation is unconstitutionally vague, the reviewing court must assess it within the context of the particular conduct to which it is being applied. United States v. National Dairy Products Corp., 372 U.S. 29, 33-36, 83 S.Ct. 594, 598-99, 9 L.Ed.2d 561 (1963); Magic Valley Potato Shippers, Inc. v. Secretary of Agriculture, 702 F.2d 840, 841 (9th Cir.1983). Any statute imposing a general obligation such as a general duty raises certain problems of fair notice. Donovan v. Royal Logging Co., 645 F.2d 822, 831 (9th Cir.1981) (statute requiring employer to provide hazard-free work place was not void for vagueness). Administrative regulations may often be ambiguous. See United States v. Larionoff, 431 U.S. 864, 872-73, 97 S.Ct. 2150, 2155-56, 53 L.Ed.2d 48 (1977). However, regulations "are not automatically invalidated as vague simply because difficulty is found in determining whether certain marginal [cases] fall within their language." National Dairy Products, 372 U.S. at 32, 83 S.Ct. at 597.
24
The Forest Service conditions in this case banned commercial use of houseboats. Commercial use was defined as non-recreational use, including, but not limited to, the rental of houseboats. Multiple ownership arrangements were disfavored by the Forest Service. Those arrangements would be closely scrutinized to ensure their non-commercial status. Specific methods for verifying ownership and non-commercial status of such houseboats were set forth in the conditions. The regulations banning commercial use viewed in the context of the purpose of the permit system and with reference to regulations governing multiple ownership of houseboats would enable an applicant to know or reasonably know when the Forest Service would consider a houseboat use to be commercial. See Stoianoff v. State of Montana, 695 F.2d 1214, 1218-21 (9th Cir.1983) (upheld vagueness challenge to drug paraphernalia law proscribing, inter alia, possession of items "used, intended for use" in activity related to production or consumption of drugs). While the Forest Service regulations certainly are not without ambiguity, they contain specific although not exhaustive descriptions of what constitutes commercial use of a houseboat. A business person of ordinary intelligence would understand that the term "commercial use" as used in the Forest Service conditions encompasses sophisticated as well as simple schemes to operate a houseboat with the purpose and intent of making a profit contrasted to personal or recreational use.
25
In this case the defendants were aware of the Forest Service's concern with timeshare arrangements and the possibility of such arrangements constituting commercial use. There were numerous conversations and correspondence between GAHC and the Forest Service confirming this concern. The Forest Service repeatedly indicated a desire to ensure that any sale of time or use of a houseboat was accompanied by evidence of proportionate ownership. The district court concluded that GAHC's program was in fact commercial in nature, purely for the benefit of the owner-investors. This finding was supported by the substantial tax benefit received by the owner-investors during the lease term. Some of the owner-investors/prospective permittees indicated that they did not use or intend to use the houseboats, were not members of the timeshare partnership and believed that the houseboats were being rented. GAHC understood that the houseboat use permit conditions prescribing commercial use might serve to justify denying a permit to a houseboat operating under a multiple ownership program where owners received financial benefit from ownership but were not users of the houseboat and users of the houseboat had few of the responsibilities attendant ownership.
2. Equal Protection
26
The distinction between commercial and personal use for purposes of permit issuance on its face is rational and not a violation of equal protection. See McGowan v. Maryland, 366 U.S. 420, 426, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393 (1961) (a statutory classification will not be set aside "if any state of facts reasonably may be conceived to justify it"); Parsons v. County of Del Norte, 728 F.2d 1234, 1237 (9th Cir.) ("[w]here fundamental rights are not substantially burdened [a] regulation will be upheld unless there is no rational basis for its enactment"), cert. denied, --- U.S. ----, 105 S.Ct. 158, 83 L.Ed.2d 95 (1984). The commercial/personal use distinction served the legitimate statutory purpose of allowing the Forest Service to regulate and accommodate multiple uses on Shasta Lake and to avoid overcrowding of the Lake and a degrading of the quality of the recreational experience there. See County Bd. of Arlington County, Virginia v. Richards, 434 U.S. 5, 7, 98 S.Ct. 24, 26, 54 L.Ed.2d 4 (1977) ("[t]he Constitution does not outlaw ... social and environmental objectives, nor does it presume distinctions ... to be invidious"). Accord Sakamoto v. Duty Free Shoppers Ltd., 764 F.2d 1285, 1289 (9th Cir.1985) (where economic discrimination alleged government action need only have a rational relationship to legitimate government interest). Nor can a facial attack on the regulations that govern multiple use arrangements and provide that such arrangements be more closely scrutinized for commercial use purposes survive. Because multiple ownership arrangements, specifically those where time and not ownership is purchased, are arguably more analogous to rental agreements entered into for profit and not personal recreation, it is rational to subject such arrangements to closer scrutiny to determine whether they violate the commercial use proscription. See Regan v. Taxation With Representation of Washington, 461 U.S. 540, 547, 103 S.Ct. 1997, 2001-02, 76 L.Ed.2d 129 (1983) (statutory classifications are valid if they bear a rational relation to a legitimate government purpose); see also Hawaii Boating Ass'n v. Water Trans. Facilities Division, 651 F.2d 661, 665-66 (9th Cir.1981) (quoting Baldwin v. Montana Fish and Game Comm'n., 436 U.S. 371, 391, 98 S.Ct. 1852, 1864, 56 L.Ed.2d 354 (1978) ) (there is no duty to have a licensing structure identical for residents and non-residents or "to justify to the penny any cost differential ... [imposed] in a purely recreational ... setting").
27
The only issue on appeal, therefore, is whether the commercial use ban as applied to some multiply-owned houseboat programs and not others is rational, and not discriminatory in violation of the equal protection clause.
28
Where a statute draws a classification rational on its face, official action purportedly in conformity with that classification is not without more, a denial of equal protection. Snowden v. Hughes, 321 U.S. 1, 8, 64 S.Ct. 397, 401, 88 L.Ed. 497 (1944) (there must be a showing of "intentional or purposeful discrimination.... [A] discriminatory purpose is not presumed"). A regulation should not be invalidated because it fails to achieve its objectives with mathematic precision. American Hosp. Management Corp. v. Harris, 638 F.2d 1208, 1212 (9th Cir.1981) (citing Knebel v. Hein, 429 U.S. 288, 294-95, 97 S.Ct. 549, 553-54, 50 L.Ed.2d 485 (1977) ). Accord Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970) (in the area of economics, imperfect classifications do not offend the Constitution simply because in practice they result in some inequality). The Supreme Court has noted thatSocial and economic legislation ... that does not employ suspect classification or impinge on fundamental rights.... carries with it a presumption of rationality that can only be overcome by a clear showing or arbitrariness.... [S]ocial and economic legislation is valid unless "the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that [a court] can only conclude that the legislature's actions were irrational." This is a heavy burden, ....
29
Hodel v. Indiana, 452 U.S. 314, 331-32, 101 S.Ct. 2376, 2386-87, 69 L.Ed.2d 40 (1981) (quoting Vance v. Bradley, 440 U.S. 93, 97, 99 S.Ct. 939, 942, 59 L.Ed.2d 171 (1979) ). Accord Wilderness Public Rights Funds v. Kleppe, 608 F.2d 1250, 1254 (9th Cir.1979) (provided there is a rational basis for a classification, there is a judicial presumption favoring the validity of administrative action taken pursuant thereto), cert. denied sub nom., 446 U.S. 982, 100 S.Ct. 2962, 64 L.Ed.2d 838 (1980). Finally, the equal protection clause does not compel the government to attack every aspect of the problem or refrain from regulating at all. Dandridge, 397 U.S. at 486-87, 90 S.Ct. at 1162; Parsons, 728 F.2d at 1238. "It is no requirement of equal protection that all evils of the same genus be eradicated or none at all." Railway Express Agency v. New York, 336 U.S. 106, 110, 69 S.Ct. 463, 465, 93 L.Ed. 533 (1949) (a traffic regulation outlawing the operation of advertising vehicles but permitting advertising on vehicles engaged in their usual business was upheld as rationally related to traffic safety concern of preventing distracting of pedestrians) (citing Central Lumber Co. v. South Dakota, 226 U.S. 157, 160, 33 S.Ct. 66, 67, 57 L.Ed. 164 (1912) ).
30
The crux of GAHC's equal protection claim is that there were insufficient bases for distinguishing GAHC's timeshare/interval ownership program from the corporate multiple ownership program for Shasta Cruiser One, Two and Three houseboats ("Shasta Cruiser"), a successful permit applicant. GAHC contends that the district court's attempt to distinguish these programs was based on an erroneous interpretation of the effect of GAHC's lease arrangements. According to GAHC, the district court's finding that its lease arrangement was a true lease and not a sale misapprehended the nature of the lease arrangement and resulted in the erroneous conclusion that the owner-investors, rather than the partnership and the interval owners, owned the houseboats. If the court had correctly viewed these lease arrangements, GAHC contends its interval owners, like Shasta Cruiser's shareholders, would have been deemed the houseboat owners. The only difference between its program and those of Shasta Cruiser would then be that one was a partnership while the other was a corporation. This distinction in the form of business organization could not rationally justify the Forest Service's differing application of its regulations.
31
Even assuming GAHC is correct that the district court erred in interpreting the lease and relying on that interpretation to find dissimilarity between these programs,4 there were other sufficient bases for distinguishing GAHC's permit application from Shasta Cruiser's. With respect to Shasta Cruiser, corporate shareholders were both owners and users of the houseboats which were used solely for recreational purposes. The shareholders, apparently family members, were also directors of the corporation. They could not and did not depreciate the houseboats for tax purposes. There were no lease arrangements and complete information was supplied to the Forest Service. The same was not true of GAHC's program. Because of the complex lease arrangement and the failure to provide complete information to the Forest Service, the actual owners of GAHC's houseboats were difficult to ascertain to verify non-commercial use. GAHC's owner-investors depreciated the vessels and enjoyed tax benefits from ownership, but did not necessarily use the houseboats. While GAHC's interval owners purchased the use of the houseboats, they accepted none of the benefits or burdens of ownership. Therefore, even if GAHC's leases transferred an ownership interest to the partnership and in turn the interval owners, GAHC's situation was distinguishable from Shasta Cruiser's corporate transaction. The Forest Service rationally could have concluded that GAHC's program more likely ran afoul of the policies underlying the commercial use ban, thus warranting the denial of a permit. That other multiple ownership programs might also constitute commercial use is of no import. Provided the Forest Service acted rationally and without malice in applying the commercial use ban to GAHC, which it did, and provided there was a rational basis for distinguishing GAHC from other applicants, which there was, there is no equal protection violation.
32
B. Duly Delegated Authority.
33
Finally, GAHC contends the Forest Service, specifically District Ranger Fitch, exceeded the scope of delegated authority by promulgating new conditions relating to the commercial use of houseboats. GAHC also maintains that the new conditions were promulgated for the illegitimate purpose of singling it out for discriminatory treatment.
34
The promulgation of new conditions in the adoption of a revised form to regulate issuance of permits to multiply-owned houseboats wes consistent with the Forest Service's obligations to regulate and issue permits for competing recreational activities on Shasta Lake. Cf. Borrego v. United States, 577 F.Supp. 408, 411-12 (D.N.M.1983) (Forest Supervisor did not exceed his delegated authority by promulgating "bull rule" as a special permit condition where Forest Service had been granted broad authority to regulate grazing on Forest Service lands). The conditions and their interpretations so as to limit the issuance of permits to multiply-owned houseboats is not plainly erroneous or inconsistent with the regulatory scheme. Id. at 412; see also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 413-15, 65 S.Ct. 1215, 1217-18, 89 L.Ed. 1700 (1945); American Hosp. Management Corp., 638 F.2d at 1212. The conditions and their application were rational and served a legitimate purpose. See Bowles, 325 U.S. at 413-15, 65 S.Ct. at 1217-18; Goleta Valley Community Hosp. v. Schweiker, 647 F.2d 894, 897 (9th Cir.1981).
35
The district court's conclusion that there was insufficient evidence to prove an illegitimate discriminatory purpose in adopting these regulations was not clearly erroneous. See Fed.R.Civ.P. 52(a) (questions of fact are reviewed under the clearly erroneous standard). The record does not disclose any evidence of malice on the part of the Forest Service. There was substantial evidence establishing a legitimate concern by the Forest Service for trying to accommodate the unanticipated and complex problem of the effect of multiple ownership houseboat programs on the use of Shasta Lake.
36
AFFIRMED.
1
GAHC, acting as an agent, submitted application for permits for the following eight owner-investors: (1) Larry Milliron, No. 005780982; (2) James Reynolds, No. 005760982; (3) Carl and Helen Biorn, No. 006041182; (4) Robert and Stephanie Biorn, No. 005981182; (5) Dr. Morton and Julia Maser, No. 005941182; (6) John Levy, No. 005931182; (7) Futile Investments and Robert Savely, No. 006011182; and (8) Patrick McClennen, No. 005971182. Four of the owner-investors, Carl Biorn, John Levy, Dr. Morton and Julia Maser, and Robert Savely, submitted applications for single-ownership permits despite their participation in GAHC's multiple ownership program
2
New Condition 19 defined personal recreational use "as non-commercial use by the permittee, members of his or her immediate family and guests...." It further provided that "[t]he permitted houseboat shall not be rented or offered for rental on a commercial or business basis or as compensation or remuneration for commercial or business activities. Use of the houseboat as a permanent or seasonal residence is not permitted." (United States Forest Service Houseboat Use Permit Conditions, New Condition 19)
Conditions 20 through 23 provided methods whereby the Forest Service regulated issuance of private permits to multiply-owned houseboats. Those conditions required that owners and permittees be one and the same. Persons participating in timeshare arrangements were required to submit proof of ownership in order to be eligible for a permit. Special information was required to be submitted by corporations and partnerships applying for permits. Among the documents that the Forest Service could request to verify ownership and non-commercial status was registration with the Department of Motor Vehicles ("DMV") (New Conditions 20-23).
3
While the due process and equal protection clauses of the fourteenth amendment are applicable only to the states, the due process clause of the fifth amendment imposes on the federal government the same obligations that the fourteenth amendment imposes on the states. See Hampton v. Mow Sun Wong, 426 U.S. 88, 100, 96 S.Ct. 1895, 1903, 48 L.Ed.2d 495 (1976); see also Regan v. Taxation With Representation of Washington, 461 U.S. 540, 542 n. 2, 103 S.Ct. 1997, 1999 n. 2, 76 L.Ed.2d 129 (1983). GAHC's "vagueness" and "equal protection" argument fall under the due process clause of the fifth amendment
4
GAHC contends that its timeshare arrangement was a sale as a matter of law because when the last lease payment was made by the interval owner, legal title passed to the partnership for no additional consideration. Compare In re J.A. Thompson, 665 F.2d 941, 945-47 (9th Cir.1982) (under California law, in determining whether a lease is "intended as security," if a lease contains an option to purchase "for no additional consideration or for nominal consideration," it is conclusively presumed to be "intended as security") with Triple C. Leasing, Inc. v. All-American Mobile Wash, 64 Cal.App.3d 244, 248-52, 134 Cal.Rptr. 328, 330-31 (Ct.App.1976) (the trial court's determination that a lease was a true lease and not a sale was factual and would be upheld if supported by substantial evidence). This is alleged to be true even where there is a revocable option to purchase and the lease contemplates purchase of only use. See Thompson, 665 F.2d at 946-47; but see Western Helicopter Operations v. Nelson, 118 Cal.App.2d 359, 366, 257 P.2d 1025, 1030 (Ct.App.1953) (an option merely gives a right or election to purchase. There is no obligation to buy or sell); 42 Cal.Jur.3d, Leases of Personal Property Sec. 1-5 (1978) (same)
| {
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} |
3 Ariz. App. 39 (1966)
411 P.2d 462
Homer CORRIER, Petitioner,
v.
The INDUSTRIAL COMMISSION of Arizona and Arizona Brewing Company, Inc., Respondents.
No. 1 CA-IC 55.
Court of Appeals of Arizona.
February 28, 1966.
Rehearing Denied April 11, 1966.
Review Denied May 10, 1966.
Chris T. Johnson, Phoenix, for petitioner.
Robert K. Park and Joyce Volts, Phoenix, for respondents.
CAMERON, Judge.
This is a writ of certiorari to review an award of the Industrial Commission denying certain additional compensation benefits to the claimant Homer Corrier.
We are called upon to determine the effect of an inoperable hernia upon a scheduled disability to the right shoulder, and to determine whether claimant's petition to reopen was timely filed.
The facts necessary for a determination of this matter are as follows: Petitioner was injured on or about 14 September, 1959. He was 69 years old at the time of the injury. He suffered an injury to his right shoulder and sustained a left inguinal hernia. The claim for the hernia was accepted on 17 November, 1959, and petitioner was informed by letter:
"Under the terms of the Workman's Compensation Law, a hernia such as suffered by you is considered to be an aggravation of a pre-existing condition and compensation may be allowed as such for time lost only to a limited extent, depending on the nature of the proof submitted, but not to exceed two months.
"Therefore, it should be understood that in accepting liability in your case, our acceptance is governed entirely by the code provision relating to hernia, and the limitation will apply, even though the period of disability may extend beyond such period."
The medical reports indicate that the petitioner suffered from a heart condition which made any operation for repair of the hernia inadvisable. There is no question that both the shoulder injury and the hernia *40 were the result of the industrial accident.
Findings and award for scheduled permanent disability were issued 27 February, 1961, finding that the claimant had suffered a permanent partial disability equal to "65% loss of function of the right major arm". No mention was made of the hernia condition in that award, and although the brief of the respondent Industrial Commission contends otherwise, the response filed by the Commission to the writ of certiorari, as well as the file, indicates that to this date no payment has been made to petitioner for the hernia.
On 10 February, 1964, claimant applied for a reopening of his claim seeking additional treatment of his arm and asking that that the hernia be repaired. The Commission found that the permanent partial disability was equal to an 80% loss of function of the right (major) arm, and that said applicant was entitled to additional compensation. No mention was made of the hernia in that award. Claimant partitioned for rehearing and a hearing was held at Phoenix, Arizona, 3 August, 1964. At the hearing, the following testimony was given by Dr. Robert P. Leonard, who had examined petitioner in March of 1960 and again in March of 1964:
"Question: What is the prognosis for the hernia condition?
"Answer: It will worsen. If he were able to retain it and did no lifting, no exertion, the hernia might remain static. However, he has shown the typical course of these things in that it is progressing. It was quite small in 1960, is now considerably larger and he can't contain it with the truss he wears.
"Applicant: It is much larger than when you saw it last now.
"Referee: (Question) Is there any medical treatment that the man can be afforded?
"Answer: There is no real way one can contain this hernia. I have in the past operated on such hernias in similar individuals who were under local anesthesia, and had successful results. But this particular patient's cardiologist, Dr. Joseph Ehrlich, is very adamantly opposed to anything being done unless it is an essential lifesaving procedure. For this reason, as well as the known high risk involved in the surgical correction here. In fact, I would be extremely reluctant to undertake a surgical repair of such a patient unless absolutely pushed into it. They have been done successfully.
Here you have the situation where there is a very poor risk with a worsening condition. He feels that he has to have something done in order to return to work. The doctors feel that the hazards are a little too great to undertake this. This has been their recommendation as well as my own."
On 17 September, 1964, the Commission issued its findings and award affirming the previous award and further finding that:
"This Commission denies reopening for hernia repair due to the non-industrial cardiac condition."
On 13 April, 1965, the claimant again petitioned the Industrial Commission for readjustment or reopening of claim. The Commission denied opening of claim, and claimant again petitioned for a hearing. The Commission on 14 June, 1965, again denied rehearing. On 21 June, 1965, petitioner was represented for the first time by an attorney, and after objection and request for additional findings the petitioner brought this writ of certiorari.
It is the position of the Commission that the award of 17 September, 1964, is final and res judicata and that therefore the Commission is without jurisdiction to consider the matter further in absence of new, additional or previously undiscovered evidence as to a change in his physical *41 condition or (in case of an unscheduled disability) as to his loss of earning capacity. Adkins v. Industrial Commission, 95 Ariz. 239, 389 P.2d 118 (1964); Steward v. Industrial Commission, 69 Ariz. 159, 211 P.2d 217 (1949). With this we do not agree. Even assuming that the hernia statute precludes the consideration of petitioner's condition as an "unscheduled" disability, the record indicates that petitioner has received no payment as and for the hernia injury:
"Assuming that the 14 weeks in this award was covered by the time expiring in some portion of the temporary award in that case, we cannot agree that it precludes a recovery for the statutory amount allowed for hernia * * *." Wilkerson Chevrolet Inc. v. Mackey, Okl., 367 P.2d 165, 168 (1961).
Following this rule of law the Commission, having quite properly taken jurisdiction of the hernia, must make an award for the hernia before the matter may be closed.
On the other hand, if we find (as we do below) that the hernia when coupled with the shoulder injury results in an unscheduled rather than a scheduled disability then the fact that, as here, the hernia injury is not stationary would leave the Commission with continuing jurisdiction to evaluate the petitioner's total disability until such time as his condition becomes stationary. Aluminum Company of America, etc. v. Industrial Commission, 61 Ariz. 520, 152 P.2d 297 (1944).
We next concern ourselves with the question of the effect of the hernia upon the scheduled disability to the shoulder. For the purposes of payment of permanent partial disability compensation, 23-1044 A.R.S. divides injuries into two categories. Subsection B provides for compensation of certain disabilities which are commonly called "scheduled disabilities" and awards made thereunder are called "scheduled awards". The so-called "scheduled awards" provided for compensation in addition to temporary partial disability for 55% of the workman's average monthly wage for the period of time listed in the various paragraphs of subsection B of 23-1044. Petitioner's arm injury standing alone would be considered a "scheduled disability" under paragraph 21 of subsection B. In the instant case, petitioner having suffered an 80% loss of his right (major) arm was entitled in addition to an amount for temporary partial disability to an amount equal to 50% of his average monthly wage for 80% of 60 months (or 48 months). [23-1044, subsec. B, pars. 13 and 21 A.R.S.] This was the basis of the award of 1 April, 1964.
Subsection C of 23-1044 provides that:
"In cases not enumerated in Subsection B of this section, where the injury causes permanent partial disability for work the employee shall receive during such disability compensation equal to fifty-five per cent of the difference between his average monthly wages before the accident and the amount which represents his reduced monthly earning capacity resulting from the disability, but the payment shall not continue after the disability ends * * *." Subsection D provides that:
"[C]onsideration shall be given, among other things, to any previous disability * * * the nature and extent of the physical disability * * *."
Whenever an injured workman has a previous disability or at the time of injury suffers what would be two scheduled injuries at the same time, our Supreme Court has held that the Commission must treat the combined disabilities as unscheduled in nature:
"We specifically hold that compensation for multiple injuries such as suffered by petitioner here may not be determined by applying the schedules provided for in section 56-957(b) and combining the two scheduled losses. In such a case, no equitable award by way of compensation can be made *42 without taking into consideration (a) the general functional disability and (b) loss of earning capacity upon the basis of the factors set forth in subsections (c) and (d) of section 56-957, which are exclusive. Petitioner was not entitled to be compensated upon the theory that he had suffered compensable scheduled injuries and, in addition thereto, entitled to compensation for his loss of earning capacity. Petitioner was entitled only to a loss of earnings award to be arrived at as indicated above, which was the formula used in the making of the award under review." Williams v. Industrial Commission of Arizona, 73 Ariz. 57, at 60, 61, 237 P.2d 471, at 474 (1951).
And:
"This Court has on many occasions interpreted A.R.S. § 23-1044, subds. C, D, and E, supra. (Citations omitted) All of these cases bear out the Commission's position, i.e., they require the Commission to take into consideration a previous disability as it exists at the time of a subsequent injury, and if any disability results from the subsequent injury, whether scheduled or unscheduled, or both, the Commission must treat the disabilities as general or unscheduled in nature, and base its award on loss of earning capacity only, as derived from the facts of the case." Woods v. Industrial Commission, 91 Ariz. 14, at 16, 368 P.2d 758, at 759 (1962).
It is the contention of the Commission that hernias being classified under 23-1043 A.R.S., that they are in a distinct and separate category, and that in the instant case the petitioner may not take the disability resulting from the hernia together with the scheduled permanent partial disability to the shoulder and arm and convert the sum total of the disabilities into the unscheduled category.
It is true, as respondent contends, that hernia cases are treated differently than most industrial injuries. The reasons lie in the nature of the hernia injury. In many cases, the hernia is congenital in background and develops over a period of many years. Commissions and courts have been unable to determine which employer should be responsible for the specific injury. As has been stated:
"The real purpose and the precautions laid down by the Legislature in the section here involved, is to protect the employer from claims for hernia not actually caused by the accident." Minardi v. Pacific Airmotive Corp., 43 N.J. Super. 460, 129 A.2d 51, at 56 (1957).
And:
"The difficulties in finding the truth in such a situation gave rise to the enactment of Chapter 90, Acts of 1941. It was the purpose and object of this legislation to remove the issue as far as possible from the field of conjecture and speculation." Wood v. Edenfield Electric Company, 211 Tenn. 295, 364 S.W.2d 908, 909 (1963).
The Arizona Supreme Court discussed the hernia statute in an earlier case concerning a workman who sustained a hernia and died as a result of the operation to repair said hernia. It was the contention of the Commission in that case that a hernia under the statute was compensable only as set forth in that section, and that no death benefit compensations might be paid thereunder. The Arizona Supreme Court stated:
"* * * [W]e think it is plain that there are two independent and separate rights of recovery, although based on the same accident; the one of the workman during his lifetime, and the other of his dependents after his death. * * *
"We hold therefore, that when an injured workman dies as a result of a hernia of the class described in subdiv. (b) of section 1439, supra, the two-month limitation placed by the section on compensation due him individually *43 for the hernia does not include the compensation due his dependents as a death benefit under the general provisions of section 1438, supra, and that they are entitled to the same benefits as are given by the act for death resulting from any other cause covered by law. The award is set aside." Kay v. Hillside Mines, 54 Ariz. 36, at 43, 44, 91 P.2d 867, 870 (1939).
The Arizona Supreme Court also stated in a later case:
"The Arizona Legislature, along with some 32 other state legislatures, has seen fit to enact specific provisions regarding hernia as a compensable injury in its Workmen's Compensation Law, and to treat such injuries separate and apart from the general rules of rating disabilities due to injuries sustained in the course of a workman's employment. Schneider's Workmen's Compensation, Third or Permanent Edition, section 1470, page 573. It is to our statutory law alone that we must look for guidance. By reference to the code provision, 56-959, (b), supra, it is readily apparent that there is no provision whatsoever for payment of compensation for non-traumatic recurrent hernia. The section by its terms provides for compensation for not to exceed two months only in cases of original injury. Under no fair interpretation of this statute can it be held that the legislature has made any provision for aiding workmen suffering from recurrent hernia. It is not within our province to concern ourselves with the wisdom of the legislation at hand. * * * It may well be that more liberal treatment should be accorded the small percentage of hernia victims who suffer from true recurring hernia, but the injustice, if any, is for the legislative department and not for the courts to correct. We are not at liberty to extend by interpretation the meaning implicit in the language of a statute defining the circumstances under which hernia is compensable, in order to provide a more liberal rule of compensation than that which the legislature saw fit to adopt." Williams v. Industrial Commission, 68 Ariz. 147, 150, 151, 152, 202 P.2d 898, 901 (1949).
We do not believe that the Williams v. Industrial Commission case, supra, or the hernia statute standing alone as it does, prevents a petitioner who has sustained an injury to the arm and who is suffering an additional disability as a result of an inoperable hernia, from taking advantage of the unscheduled section of 23-1044 A.R.S. Although there is respectable authority to the contrary, some recent cases uphold this view. In a recent Florida case:
"The principal point for determination as agreed by both parties is as follows: Where a claimant suffers a hernia as a direct result of an industrial accident in the course of his employment and undergoes four unsuccessful surgical operations for the hernias and, in addition, surgery for the removal of a testicle, should he be awarded disability under § 440.15(6), Florida Statutes, F.S.A. (hernia section), or 440.15(3) (u), Florida Statutes, F.S.A. (loss of wage-earning capacity section)? * * * We have examined Padrick Chevrolet Company v. Crosby, Fla. 1954, 75 So.2d 762, 763 (other citations omitted) relied on by claimant, and while they have to do with what might be called kindred aspect, not in point with the case at bar, they do not militate against being persuasive of the claimant's contention. In the Crosby case, supra, we said that `it should be noted that section 440.15(6), supra, does not, in terms, preclude a person who suffers from a herniated condition from recovering compensation when that condition is aggravated by a subsequent accident. *44 All that the statute does is prevent an employee with a pre-existing hernia from claiming, in event of accident, full compensation as for a "hernia resulting from injury by an accident," and leaves such employee to his remedy under section 440.02(19), Florida Statutes 1951, F.S.A.'" Sherman v. Peoples Water and Gas Company, Fla., 138 So.2d 745, at 746, 748 (1962).
The Florida court went on to reinstate an order of the Deputy Commissioner placing the petitioner's disability in the unscheduled category.
It has been stated:
"In many cases in which there is sufficient evidence to prove that the hernia or an operation therefore resulted in permanent and total disability, compensation has been awarded for such disability even though the Act provides a limited amount of compensation for the hernia itself." Schneider, Workmen's Compensation, Third or Permanent Edition, Vol. 5, page 585, Section 1477 A.
And:
"Considering the entire evidence and the surrounding circumstances we cannot agree that claimant's right to compensation is limited by the hernia clause of the statute. All of the injuries above mentioned operated together to produce the disability found to exist by the Commission. The amount of compensation recoverable is therefore governed by the `other cases' provision of section 22 of the statute, supra, and not by the hernia clause. Transwestern Oil Co. v. Partain, 188 Okl. 97, 106 P.2d 263." Steelman v. Justice, 204 Okl. 117, 227 P.2d 647, 649 (1951).
In the instant case, we hold that an injured workman suffering a disability from a hernia made inoperable due to a previous cardiac condition when coupled with a scheduled injury to the arm, must be treated as having an unscheduled disability within the meaning of Section 23-1044, subsecs. C, D, and E, A.R.S.
The award is set aside.
STEVENS, C.J., and DONOFRIO, J., concurring.
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STATE OF MICHIGAN
COURT OF APPEALS
PEOPLE OF THE STATE OF MICHIGAN, FOR PUBLICATION
July 6, 2017
Plaintiff-Appellee, 9:00 a.m.
v No. 330359
Berrien Circuit Court
KEVIN PATRICK KAVANAUGH, LC No. 2014-004247-FH
Defendant-Appellant.
Before: STEPHENS, P.J., and SHAPIRO and GADOLA, JJ.
PER CURIAM.
Defendant was convicted of possession with the intent to deliver between 5 and 45
kilograms of marijuana, MCL 333.7401(2)(d)(ii). The marijuana was found in his car’s trunk
during a search that followed from a police dog alerting to the marijuana’s smell. Defendant
argues that the trial court erred in finding that the search did not violate his rights under the
Fourth Amendment. He also argues that there was a Brady violation regarding a photo and
videotape that was not timely produced. For the reasons stated in this opinion, we reverse the
trial court’s ruling on the Fourth Amendment claim and remand for further proceedings. Given
this ruling, the Brady issue is moot.
FACTS
Defendant was driving on I-196 with a female passenger when he was pulled over by
Michigan State Police Trooper Michael Daniels. Daniels testified that he had observed
defendant engage in two traffic violations: an improperly affixed license plate1 and a failure to
signal a lane change2 onto an exit ramp.
Daniels asked defendant for the car’s registration. Defendant responded that he had just
recently purchased the car and that he did not yet have a registration. Daniels then told
defendant to exit the car and to follow him. The two walked back to the police cruiser leaving
1
The plate was a Florida cardboard temporary plate and was affixed by two bolts. See MCL
257.225.
2
MCL 257.648.
-1-
the passenger in defendant’s car. Daniels told defendant to sit in the front passenger seat of the
police car. Daniels got into the driver’s seat and said he was going to run some computer checks.
While running the computer checks on defendant’s license and ownership of the vehicle, Daniels
asked defendant several questions and learned that he and his female passenger had been in
Grand Rapids for three days. Daniels then asked what defendant and his female companion were
doing in the Grand Rapids area since they were from Florida. After completing the computer
checks, which confirmed defendant’s ownership of the car and revealed no outstanding warrants,
Daniels told defendant to stay in the cruiser and walked back to defendant’s car where he spoke
with defendant’s female companion.
After doing so, Daniels returned to the cruiser and told defendant that he was going to
give him a warning rather than a ticket for the traffic violations. He then asked defendant for
consent to search the car. When defendant declined to consent, Daniels informed him that he
was going to radio a request for a dog to do a contraband sniff of his vehicle and that defendant
and his companion would have to remain until the dog and its handler arrived and the process
completed. After about 15 minutes,3 the dog and his officer arrived. The dog alerted at the car’s
trunk. The officers opened the trunk and found the marijuana. The entire course of events, from
Daniels’s initial observation of defendant’s vehicle to defendant’s arrest, was captured on video
camera.
Defendant filed a pre-trial motion to suppress the evidence found in the trunk. After an
evidentiary hearing, the trial court denied the motion. For purposes of the hearing, the court did
not watch the videotape, and though defense counsel noted that the tape was available if the
court wished to watch it, neither party specifically requested that it do so. Defendant raised the
issue again at trial at which time the trial court watched the video and confirmed its prior ruling.
Like the trial court, we have watched and listened to the recording. Having done so, we need not
rely on the trial court’s conclusions as to what the videotape contains. City of East Grand Rapids
v Vanderhart, ___ Mich App ___, ___; ___ NW2d ___ (2017) (Docket No. 329259), slip op at 4
(Opinion by Swartzle, J.) (concluding that because an appellate court is able to review a video as
easily as the trial court, the trial court’s factual findings regarding that video are entitled to less
deference).
FOURTH AMENDMENT ISSUES
Defendant raises two arguments grounded in the Fourth Amendment. First, he argues
that Daniels lacked grounds to pull him over for a traffic stop. Second, he argues that Daniels
lacked lawful grounds to detain him beyond the conclusion of the traffic stop. We disagree with
defendant’s first argument but agree with his second.
I. THE TRAFFIC STOP
3
The videotape of the encounter indicates that at approximately the 15:25 mark defendant
refused to consent to a search of his van at which point the officer told him that he was going to
have a police canine come to sniff the van. The dog and its handler arrived at the 30:07 mark.
-2-
Trooper Daniels testified at the pre-trial suppression hearing and at trial. He stated that
he stopped defendant because he saw what he determined to be two traffic violations. First,
Daniels concluded that defendant was in violation of MCL 257.225(2) because the vehicle’s
license plate was flapping in the wind and unreadable while the car was moving. Second, he
concluded that when getting on an exit ramp defendant violated MCL 257.648(1) by making the
lane change without signaling. People v Hrlic, 277 Mich App 260, 263-266; 774 NW2d 221
(2007).
Defendant argued below, and again on appeal, that Daniels’s stated explanations were
mere pretexts for a stop that lacked a constitutional basis.4 However, the United States Supreme
Court has held that the existence of probable cause that a driver has violated a traffic law
constitutionally justifies a brief detention for purposes of addressing that violation even if the
officer’s subjective intent for stopping the car is based on other factors. “As a general matter, the
decision to stop an automobile is reasonable where the police have probable cause to believe that
a traffic violation has occurred.” Whren v United States, 517 US 806, 810; 116 S Ct 1769; 135 L
Ed 2d 89 (1996). Because the officer had such probable cause in this case, the traffic stop was
lawful and did not violate the Fourth Amendment.
II. POST-TRAFFIC STOP DETENTION
Defendant argues, and we agree, that the traffic stop was completed when the officer
determined that the vehicle was owned by defendant, gave him a warning about the traffic
violations, and told him there would not be a ticket issued. After the traffic stop was completed,
the officer asked defendant for permission to search his car. Defendant did not consent, at which
point the officer told defendant that he was requesting that another officer bring a police dog to
conduct a “sniff” for the presence of contraband in defendant’s vehicle. The officer ordered
defendant to remain at the scene until the dog arrived and not to enter his car while waiting.
It is black letter law that a “seizure” within the meaning of the Fourth Amendment occurs
when in view of all the circumstances, a reasonable person would conclude that he was not free
to leave. United States v Mendenhall, 446 US 544, 554; 100 S Ct 1870; 64 L Ed 2d 497 (1980).
Having been ordered by the officer to remain at the scene, defendant was obviously seized under
the law, and the prosecution does not disagree with this characterization.
4
Prior to the stop, the officer had received a radio call to watch for a silver Honda Accord with a
Florida temporary plate. He was not provided with any reasons for the request and was not
provided with any indication of whether defendant was suspected of a crime. In light of this,
defendant argues that the alleged traffic violations were irrelevant and that the stop was
unlawful. However, the prosecution correctly argued that the radio call was irrelevant, and the
constitutionality of the officer’s actions must be judged on the basis of what occurred from the
time the officer observed the defendant’s car. This is consistent with the case-law, and we
review the officer’s actions based upon his observations of defendant, his passenger, and his
vehicle.
-3-
Until the 2015 decision of the United States Supreme Court in Rodriguez v United States,
___ US ___; 135 S Ct 1609; 191 L Ed 2d 492 (2015), there was debate about whether requiring a
driver to wait for a dog sniff after the traffic stop was concluded should be considered a seizure
separate from the traffic stop itself or whether the basis for the traffic stop could encompass a
brief additional delay for a dog sniff. In Rodriguez, the United States Supreme Court definitively
resolved the debate, holding that “a dog sniff is not fairly characterized as part of the officer’s
traffic mission.” Rodriguez, 135 S Ct at 1615. The Court explained that although police officers
“may conduct certain unrelated checks during an otherwise lawful traffic stop[,]” they “may not
do so in a way that prolongs the stop, absent the reasonable suspicion ordinarily demanded to
justify detaining an individual.” Id. at 1615. The Court opined, “[A] police stop exceeding the
time needed to handle the matter for which the stop was made violates the Constitution’s shield
against unreasonable seizures.” Id. at 1612. Once the constitutionally-sound basis for the traffic
stop has been addressed, any further extension of the detention5 in order to conduct “[o]n-scene
investigation into other crimes” or for any other reason is a Fourth Amendment violation unless
during the traffic stop new facts come to light that demonstrate “reasonable suspicion of criminal
activity.” Id. at 1616.
In light of these constitutional principles, we begin our analysis with the understanding
that the continued detention of defendant and his vehicle after the traffic stop’s conclusion was
unconstitutional unless, “[the] traffic stop reveal[ed] a new set of circumstances,” People v
Williams, 472 Mich 308, 315; 696 NW2d 636 (2005), that lead to “a reasonably articulable
suspicion that criminal activity is afoot,” People v Jenkins, 472 Mich 26, 32; 691 NW2d 759
(2005). “Whether an officer has a reasonable suspicion to make such an investigatory stop is
determined case by case, on the basis of an analysis of the totality of the facts and circumstances.
A determination regarding whether a reasonable suspicion exists ‘must be based on
commonsense judgments and inferences about human behavior.’ ” Id. quoting People v Oliver,
464 Mich 184, 197; 627 NW2d 297 (2001) (citations omitted). “That suspicion must be
reasonable and articulable . . . .” People v Nelson, 443 Mich 626, 632; 505 NW2d 266 (1993).
“[I]n determining whether [a police] officer acted reasonably in [extending the detention], due
weight must be given, not to his inchoate and unparticularized suspicion or ‘hunch,’ but to the
specific reasonable inferences which he is entitled to draw from the facts in light of his
experience.” Terry v Ohio, 392 US 1, 27; 88 S Ct 1868; 20 L Ed 2d 889 (1968).6
5
Even if the officer has not yet completed the traffic violation matters, if conducting a canine
sniff causes that completion to be delayed, it remains a constitutional violation. As stated in
Rodriguez, the question is not “whether the dog sniff occurs before or after the officer issues a
ticket,” but “whether conducting the sniff ‘prolongs’-i.e., adds time to-‘the stop[.]’ ” Rodriguez,
135 S Ct at 1616.
6
Defendant’s refusal to consent to a search cannot serve as grounds for reasonable suspicion.
“A refusal to consent to a search cannot itself form the basis for reasonable suspicion: ‘it should
go without saying that consideration of such refusal would violate the Fourth Amendment.’ ”
United States v Santos, 403 F3d 1120, 1125-1126 (CA 10, 2005), quoting Wood, 106 F3d 942,
-4-
We have reviewed the relevant testimony as well as the complete video/audio recording
of the encounter from Daniels’s first observation of defendant’s car through the arrest.7 On the
basis of this review, we have concluded that Daniels did not have a reasonable suspicion of any
criminal activity sufficient to justify his extension of the traffic stop to allow for a dog sniff.
Daniels’s stated justifications were either not consistent with the videotape record or were not
sufficient to create a reasonable suspicion of criminal activity.8
Daniels testified that his suspicions were first raised because defendant did not pull over
until he had nearly reached the end of the exit ramp. However, Daniels agreed that defendant did
not appear to be attempting to flee or attempting to avoid the stop. Perhaps more to the point, the
video makes plain that, until the end of the ramp where the roadway widened, there was very
little, if any, room for a car to pull over.9 Given this fact and the absence of any indication of
flight, this explanation carries very little weight.10
Daniels further testified that a factor in his decision to detain defendant was his belief that
defendant appeared nervous throughout the encounter. Daniels stated that defendant’s hands
were shaking when he gave him his license, that he appeared increasingly nervous while sitting
in the police car, and that he made little eye contact. The video does not include the passing of
the license, but, having viewed the video, we cannot discern any evidence of unusual or
increasing levels of nervousness in defendant during his interactions with Daniels. In addition,
946 (CA 10, 1997). As stated in Santos, “If refusal of consent were a basis for reasonable
suspicion, noting would be left of Fourth Amendment protections.” 403 F3d at 1126.
7
The video was recorded on a camera in Daniels’s vehicle. Most of the time, the camera was
directed forward out the front windshield to show defendant’s car. However, when defendant
was seated in the police car, Daniels turned the camera so that it recorded the events inside the
car.
8
Real-time recordings of such encounters are of substantial assistance to both trial and appellate
courts. Rather than relying on varied recollections and attempts to judge credibility, the court
can, in large measure, hear and see the relevant facts for itself. This provides direct information
and may also assist the court in assessing the reliability of witnesses who testify as to events seen
on the tape. Absent a claim that the recording is incomplete or somehow unreliable it allows for
fact-finding that does not depend on the vagary of memory or bias. Therefore, whenever
practicable, such videotapes should be provided to the court, the court should review them, and
they should be made part of the record on appeal.
9
The right side of the ramp had a very narrow shoulder and a guardrail, which did not provide
enough space for defendant’s vehicle to get off of the one-lane exit. Adjacent to the left side was
a ditch.
10
Daniels also testified that, while on the exit ramp, he saw defendant make movements as if to
place something on the floor of the car. On review of the videotape, we cannot discern any such
movement, but we agree that Daniels could have seen movement that the videotape did not
capture.
-5-
defendant is videotaped in the front seat of the police car for an extended period sitting both with
Daniels and, for some time, alone. He does not display any overt nervousness, and any
opportunity for eye contact was greatly limited by the fact that the officer’s eyes were at his
computer screen at almost all times even when defendant attempted to engage him in
conversation. Whether the license and vehicle check took this much attention or if Daniels
employed it as an interrogation technique, the video clearly shows that eye contact with Daniels
was not available and that defendant did not seem to be making any special efforts to avoid it.11
Moreover, the courts have given little weight to considerations of nervousness in a traffic stop.
See United States v Richardson, 385 F3d 625, 630-631 (CA 6, 2004) (stating that “nervousness .
. . is an unreliable indicator, especially in the context of a traffic stop” and noting that “[m]any
citizens become nervous during a traffic stop, even when they have nothing to hide or fear”);
United States v Simpson, 609 F3d 1140, 1147-1148 (CA 10, 2010) (also recognizing that
nervousness is “of limited significance” in determining whether reasonable suspicion exists
because most citizens exhibit signs of nervousness when confronted by law enforcement whether
innocent or guilty and because absent “significant knowledge of a person, it is difficult, even for
a skilled police officer, to evaluate whether a person is acting normally for them or nervously”).
Daniels also pointed to the fact that defendant could not produce the registration or title
for the vehicle and stated he had only recently purchased it and had not yet been provided with
all the paperwork. We agree that if the defendant was driving an out-of-state car that did not
belong to him it would provide reasonable suspicion that defendant may have stolen the car.
However, the officer promptly ran the vehicle’s VIN number and determined that defendant was
in fact the vehicle’s owner and that there were no warrants for him. We cannot conclude that
concern about the vehicle’s ownership justified the subsequent detention, and the officer did not
testify as to any other reason why, based on his experience or knowledge, not having his
registration provided grounds to suspect defendant of criminal activity.
Daniels claimed that his suspicions were further raised because, when he directed
defendant to sit with him in front of the parked police car, defendant did not close the passenger
door. Daniels described this as unusual. However, he failed to articulate any basis to conclude
that this was suspicious behavior or that in his experience it indicated criminal activity;12 and the
prosecution has, similarly, failed to refer us to any cases that support such an inference. Of
course, had defendant actually attempted to leave, it would be highly suspicious, but merely
allowing the door to remain open is not indicative of flight.13 In the video it is clear that
11
To the degree the trial court made findings consistent with the officer’s testimony in this
regard, such as the trial court’s finding that defendant was “extremely nervous,” we find such
findings to be clearly erroneous in light of the videotape evidence. The disparity between the
officer’s testimony and the events recorded on the videotape, particularly as it concerns the
officer’s testimony about defendant’s nervousness, also raises questions about the trial court’s
finding that the officer was credible.
12
Indeed, Daniels even stated that he does not close the passenger door when placing individuals
in the front seat of the cruiser in such situations “so that they feel like they’re free to leave.”
13
Some might even feel it improper to close the door when the officer purposely left it open.
-6-
defendant made no movements suggesting he was planning on fleeing and that he obeyed the
officer’s commands in all respects and with ready cooperation. We reject the officer’s
observation about the door as serving as grounds to support reasonable suspicion.
Daniels also testified that he spoke separately with defendant and his passenger and they
gave differing answers to some questions. They agreed that they had driven from Florida and
had been visiting friends in Grand Rapids, but when asked if they were boyfriend and girlfriend,
defendant said they were “just friends”, while the passenger said “well, we’re trying to be.” We
do not believe these answers to necessarily be inconsistent or that if they are, that they indicate
any likelihood of criminal activity. The officer certainly did not articulate in his testimony why
they did. Defendant and his female passenger also named different hotels when asked where
they had stayed in Grand Rapids,14 and defendant said they didn’t do anything special while his
passenger said they went to an “art festival” and “apple orchard.” In the absence of an
articulated basis, slightly different answers to three general questions, none of which go to
criminal activity, by two people travelling together is not grounds to reasonably suspect them of
a criminal activity.
It is not enough that an officer have an “inchoate and unparticularized suspicion or
“hunch.” Terry, 392 US at 27. He must be able to articulate the specific reasonable inferences
which he is entitled to draw from the facts in light of his experience.” Id. Here, the officer has
listed some aspects of the stop that he found “unusual.” As we have already observed, however,
some of his testimony is not consistent with the videotape record. More to the point, is the fact
that in his testimony, the officer was never able to articulate any specific inferences of possible
criminal activity.15 We understand that police officers have extensive experience and that their
14
The passenger said they stayed at the Grand Village Inn and defendant said they stayed at
Travel Lodge.
15
The facts of this case contrast sharply with those in People v Oliver, 464 Mich 184; 627 NW
2d 297 (2001), where the stop was upheld against a Fourth Amendment challenge. There the
facts did clearly provide an articulable inference of criminal activity. The Court noted the
following observations of a vehicle during a stop made shortly after a local bank robbery:
(1) the deputy encountered the car near the crime scene, given that the apartment
complex was within a quarter mile of the bank; (2) the time was short, with at
most fifteen minutes elapsing from the time of the report of the robbery to the
traffic stop; (3) the car was occupied by individuals who comported with the
limited description that the officer had at his disposal; (4) [the deputy] had
tentatively eliminated the direction north of the bank as an escape route on the
basis of the information he received from the carpet store employees; (5) on the
basis of his familiarity with the area and experience with crimes of this nature,
[the deputy] formed the reasonable and well-articulated hypothesis that the
robbers had fled to the secluded Westbay Apartments; (6) the deputy also
reasonably hypothesized on the basis of his experience that the robbers would use
a getaway car to try to escape from the area; (7) [the deputy] also reasonably
-7-
hunches sometimes turn out to be correct. However, the constitutional requirement is clear. A
hunch is not enough. Id. and see Nelson, 443 Mich at 632 (a suspicion must be articulable in
order to be reasonable). If it was, many more stops of wholly innocent persons would occur, and
the enforcement of the rule where the person is guilty is necessary in order to preserve the rights
of the innocent against unlawful police detentions and searches.16
We reverse the trial court and hold that the detention after the end of the traffic stop in
order to wait for the dog was unlawful under Rodriguez. Accordingly, the evidence obtained as a
result of that detention must be suppressed.
BRADY ISSUES
Defendant argues that two pieces of evidence were not provided in timely fashion to his
attorney: a color enlarged photo of the defendant’s license plate and a second videotape of the
scene that was recorded by the police car that brought the dog. Defendant argues that this delay
constituted a due process violation. This issue is moot. Defendant is now in the possession of
the evidence he claims was wrongfully withheld by the prosecution. We are remanding this
case, and if it is again tried, defendant will have the evidence. See People v Cathey, 261 Mich
App 506, 510; 681 NW2d 661 (2004) (“An issue is moot when an event occurs that renders it
impossible for the reviewing court to fashion a remedy to the controversy.”).
CONCLUSION
Detaining defendant to wait for a drug sniffing dog and its handler to arrive and perform
their work was an unconstitutional seizure of his person. The fruits of this wrongful seizure
should not have been admitted. For this reason, we reverse his conviction and remand to the trial
court for further proceedings.
inferred on the basis of his experience that a driver would probably be at the
getaway car waiting for the actual robbers; (8) the behavior of each of the car's
four occupants in seeming to avoid looking in the direction of the deputy's marked
police car was atypical; (9) the car was leaving the apartment complex, which is
consistent with it being a getaway car whose occupants were attempting to leave
the area; (10) the car followed a circuitous route that avoided driving by the site
of the bank robbery. [Id. at 200-201.]
16
Since an innocent person will not be arrested the legality of the stop will never be tested in
court. Maintaining respect for the Fourth Amendment therefore requires nothing less than its
consistent enforcement even when the illegal search reveals clear evidence of guilt.
-8-
Reversed and remanded. We do not retain jurisdiction.
/s/ Cynthia Diane Stephens
/s/ Douglas B. Shapiro
/s/ Michael F. Gadola
-9-
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915 F.2d 1557
Unpublished DispositionNOTICE: First Circuit Local Rule 36.2(b)6 states unpublished opinions may be cited only in related cases.Carlos ALICEA-MARTINEZ, Plaintiff, Appellant,v.SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee.
No. 90-1262.
United States Court of Appeals, First Circuit.
Sept. 27, 1990.
Appeal from the United States District Court for the District of Puerto Rico; Juan M. Perez-Gimenez, District Judge.
Louis A. deMier on brief, for appellant.
Daniel F. Lopez Romo, United States Attorney, Jose Vazquez Garcia, Assistant U.S. Attorney, and Robert J. Triba, Assistant Regional Counsel, Department of Health & Human Services, on brief, for appellee.
D.P.R.
AFFIRMED.
Before BREYER, Chief Judge, SELYA and CYR, Circuit Judges.
PER CURIAM.
1
Carlos Alicea Martinez ("claimant") appeals from a district court judgment affirming a decision by the Secretary of Health and Human Services to deny his application for social security disability benefits. We find substantial evidence in the record in support of that decision and therefore affirm.
2
Claimant was born on September 4, 1953, remained in school through the ninth grade, and thereafter worked as a warehouse stock clerk, as a janitor, and most recently as a gas station attendant. On September 25, 1986, he filed an application for disability benefits, alleging an inability to work since September 21, 1986 on account of seizures, left side weakness and blindness in the left eye. He met the insured status requirements through June 30, 1987. Following a hearing at which claimant, his wife and a vocational expert ("VE") testified, the Administrative Law Judge ("ALJ") denied the application at step five of the evaluative sequence. See 20 C.F.R. Sec. 404.1520. The Appeals Council and the district court, at the recommendation of a magistrate, subsequently endorsed this determination.
3
The record reveals that, between September and December 1986, claimant was seen on several occasions at Cook County Hospital in Chicago for complaints of seizure activity. He first visited the hospital on September 16 after having suffered a blackout two days earlier. As described by his wife, this attack commenced with involuntary left hand movement, followed by loss of consciousness for two to three minutes, involuntary movements on the left side of his body, biting of his tongue and loss of bladder control. He recovered without headaches or weakness. At the hospital, claimant disclosed a history of occasional involuntary movements down his left arm, without weakness, over the previous six years; he apparently had sought medical assistance only once,1 however, and had never received medications for his condition. Claimant was hospitalized from September 20 to September 24 for testing, during which time no seizure activity was observed. Laboratory tests, including an electroencephalogram, were all normal, as was a subsequent CT scan of claimant's brain performed on September 26. The discharge summary referred to a "generalized tonic clonic" seizure (that involving alternate muscular contraction and relaxation in rapid succession) and "persistent left hemiparesis" (muscular weakness affecting one side of the body). He was referred to neurology for follow-up. No medications were prescribed.
4
Claimant was examined on October 15, 1986 by Dr. N. Cay, whose specialty is not identified. Dr. Cay recorded claimant's medical history, citing episodes of intermittent shaking in his left arm, including one two days earlier. He described claimant as alert, cooperative, and fully oriented. Gait was normal but with a slight limp favoring the left side; claimant's left leg was slightly shorter than the right. There was no limitation of motion. Neurological results revealed normal coordination and no sensory deficits. Dr. Cay noted that claimant had received no medical treatment and taken no medications for his condition, which he characterized as a seizure disorder.
5
On October 22, 1986, claimant returned to Cook County Hospital after experiencing another seizure the previous evening. No mention of a blackout was made, and his left side weakness had not worsened. A physical examination was performed, revealing normal results, and medication was for the first time prescribed. Claimant was thereafter treated on three further occasions at the hospital.2 On November 21, he complained of shaking in his upper left arm; on December 6, he complained of pain in both arms. Examinations were essentially normal in each instance, and claimant was instructed to continue taking his medication. His final hospital visit was on December 26, 1986, when he reported several episodes of tremors and shaking in his left arm occurring the previous day. Decreased muscle strength in the left side was observed, but no pain was reported. Claimant was again prescribed medications. No further evidence of seizure disorders appears in the record. At the hearing, held in July 1988, claimant testified that "lately" he has not had seizures "too frequently" because he "follow[s] the doctor's orders about taking the pills." He specifically denied having had a seizure since his return to Puerto Rico a year earlier.
6
Claimant has also suffered from visual impairment, particularly in his left eye, ever since a childhood disease. The hospital records from September 1986 report horizontal and rotatory "congenital nystagmus" (an involuntary rapid movement of the eyeball), as well as "progressive focal neuropathy" (a general term denoting functional disturbance) of unknown etiology. Horizontal nystagmus was again noted on October 22 and December 26, 1986, and his left pupil was described as "unreactive to light" on the latter occasion. In his October 15, 1986 report, Dr. Cay recited claimant's complaint of poor vision in his left eye ever since childhood, but noted that he had never consulted an ophthalmologist. His examination revealed vertical and horizontal nystagmus bilaterally, more so in the left eye. Claimant's vision, corrected with eyeglasses, was measured as 20/40 on the right, 20/more than 100 on the left. Dr. Cay also observed that claimant was able to ambulate without apparent difficulty.
7
Examinations performed in 1988 disclosed a worsening of claimant's vision. Dr. Salazar, an ophthalmologist, found on July 14, 1988 that vision was 20/100 in the right eye and "count fingers" in the left. He reported rotary nystagmus in both eyes. And as to the left eye, he found exotropia (deviation of the visual axis of one eye away from that of the other), degeneration of the macula (part of the retina), and atrophy of the nerve. A second ophthalmology examination, performed on September 7, 1988 by Dr. Latimer, measured claimant's corrected vision as 20/100 in the right and no light perception in the left. Largely echoing the findings of Dr. Salaza, he reported nystagmus in both eyes, exotropia and optic atrophy in the left, and myopic astigmatism.
8
The record also contains two assessments of residual function capacity ("RFC") by physicians who reviewed the medical evidence on October 29 and December 24, 1986, respectively. They each reported restrictions as to heights, ladders and hazardous machinery. Otherwise, claimant's exertional capacities were essentially unlimited.
9
Based on his evaluation of this evidence, the ALJ concluded that claimant retained the capacity to perform light and sedentary work, not requiring normal bilateral vision, on a sustained basis. He found that claimant's seizures were adequately controlled by the medication, emphasizing in this respect the lack of any further such episodes after December 1986. And in reliance on Dr. Cay's report, he found that claimant was not statutorily blind during the relevant period. At the hearing, the VE was asked about the vocational opportunities available to someone limited to light unskilled work who had 20/40 vision in his good eye with further restrictions on heights, moving machinery and driving. The VE responded that there were numerous jobs in the national economy that such an individual could perform, including bagger, packager and hand labeler. Based on this testimony, and using the grid rules as a framework, the ALJ denied the claim at step five.
10
We find the ALJ's conclusions amply supported by the evidence. No physician of record has suggested that claimant was unable to work. The ALJ's findings as to exertional capabilities are more favorable to claimant than those reflected in the two RFC's. As to claimant's visual impairment, the ALJ was entitled to give greater weight to Dr. Cay's report than to the two subsequent ophthalmology reports--particularly since the latter two were prepared over a year after claimant's insured status expired on June 30, 1987. The fact that claimant's vision subsequently deteriorated does not undermine the ALJ's findings as to his visual capacity during the relevant period. Indeed, claimant on appeal has not specifically challenged the factual assumptions contained in the hypothetical questions to the VE. Rather, he contends that the ALJ improperly discounted his complaints of pain and weakness and ignored the fact that he was a "slow learner." Yet the record is replete with references to claimant's denying the existence of pain, and he voiced no complaint as to pain at the hearing. While claimant's left side weakness is documented on the record, the severity thereof is nowhere described. In any event, the ALJ's findings with respect to exertional capacity are fully supported by the two RFC's and elsewhere in the record. Finally, claimant's application for benefits contains no reference to any intellectual or psychiatric deficiency. He has raised this issue, moreover, only by observing that he had been placed in a "slow learners" class in second grade--which ignores the fact that he was gainfully employed thereafter for many years.
11
Affirmed.
1
The record shows that claimant was seen at Cook County Hospital on August 18, 1982, for occasional shaking in his left arm and neck, and was referred to neurology. The September 16, 1986 records recite that he was seen twice by a neurologist in 1982 and that a brain scan was negative. No other evidence of treatment prior to September 1986 has been presented
2
The record also shows that he visited the hospital on November 10, 1986 to obtain a refill of his medication, at which time he was described as "asymptomatic."
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IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
April 3, 2003 Session
DOUG LONG v. T. ALLEN PANNELL, Jr., ET AL.
Appeal from the Chancery Court for Knox County
No. 147634-3 Sharon Bell, Chancellor
FILED MAY 30, 2003
No. E-2002-01792-COA-R3-CV
Doug Long (“Long”) and T. Allen Pannell (“Pannell”) began operating Volunteer Beauty Supply as
a general partnership in 1996. Pannell claims Long orally agreed to be responsible for one-half of
the partnership debts. On June 3, 1997, a Certificate of Domestic Limited Partnership was issued
by the State for Volunteer Beauty Supply, L.P. The business never made a profit and incurred rather
substantial debts. In an unsuccessful attempt to resolve a dispute over payment of these debts,
Pannell and Long deposited certain funds into a joint bank account. Long eventually filed a
declaratory judgment action seeking a determination that he was entitled to over $100,000 remaining
in this account. Pannell filed a counterclaim seeking contribution from Long for partnership debts,
but no mention was made of the alleged oral agreement. The Trial Court refused to grant Pannell
relief for an alleged breach of oral contract because that claim was not pled. The Trial Court did,
however, award a judgment against Long for $19,922.52 under general partnership contribution
principles, after first concluding Long was entitled to the funds in the joint account. Both parties
appeal. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of
the Chancery Court Affirmed; Case Remanded.
D. MICHAEL SWINEY, J., delivered the opinion of the court, in which HOUSTON M. GODDARD , P.J.,
and HERSCHEL P. FRANKS , J., joined.
Dan D. Rhea and Jay W. Mader, Knoxville, Tennessee, for the Appellants T. Allen Pannell, Jr., and
Volunteer Ventures, L.L.C.
George W. Morton, Jr., and J. Myers Morton, Knoxville, Tennessee, for the Appellee Doug Long.
OPINION
Background
Long and Pannell became friends in the second grade. As adults, they took a road trip
to Florida to watch the Tennessee Vols in a post-season bowl game. While in Florida, they jointly
purchased a winning lottery ticket. They then went into business together. The business eventually
failed, culminating in this lawsuit and, presumably, the end of their long friendship.
This lawsuit started as a declaratory judgment action filed by Long against Pannell
wherein Long sought a declaration that he was entitled to $101,500 then in a bank account. Long
and Pannell were joint signatories on this account. Pannell responded by denying Long was entitled
to these funds and claiming both parties had made deposits into the account. Pannell also claimed
Long was indebted to him in an amount exceeding that which was on deposit pursuant to the
“equitable remedy of contribution.”
Pannell filed a counterclaim, alleging that he and Long participated in a business
known as Volunteer Beauty Supply, L.P. (“Volunteer Supply”), a limited partnership consisting of
two general partners and three limited partners. The two general partners were Volunteer Investors,
L.L.C., (“Investors”) and Volunteer Ventures, L.L.C. (“Ventures”). The three limited partners were
Long (who was the majority owner of Investors), Pannell (who was the majority owner of Ventures),
and Jack Wetterer. According to Pannell, Volunteer Supply essentially was defunct and Long
refused to contribute adequate funds to the partnership or otherwise participate in concluding the
partnership’s affairs. Pannell claimed to have contributed and loaned money to the partnership in
an amount exceeding $400,000. Pannell sought reimbursement from Long in an amount “equal to
a pro rata share of monies loaned and/or contributed” by him to the “partnership or the partners as
well as for such amounts used to retire indebtedness of the partnership or partners.” In response to
the counterclaim, Long denied any liability and maintained he was only a limited partner in
Volunteer Supply and had no duty to the partnership, financial or otherwise.1
Pannell then filed an Amended and Restated Counter-Claim for Accounting and
Contribution. In his amended counterclaim, Pannell asserted that it was not until June 3, 1997, that
a Certificate of Limited Partnership was filed with the State and, therefore, the business operated as
a general partnership up until that date. Pannell also claimed Investors, of which Long was the
majority owner, was administratively dissolved from December 19, 1997, until September 17, 1999.
According to Pannell, Investors was grossly undercapitalized and the sole purpose of that entity was
to shield Long from any personal liability. Pannell further claimed that due to various improper
actions by Long, such as failing to observe necessary requirements as an officer or agent of Investors,
Long was liable for Investor’s obligations to Volunteer Supply. The remaining allegations and
request for relief in the amended counterclaim were the same as those contained in the original
1
Although not relevant for purposes of this appeal, Investors and Ventures eventually were added as parties
to the law suit.
-2-
counterclaim, except Pannell also requested a determination that Investors was a sham limited
liability company and that Long was liable personally for any obligations of Investors. In both the
original counterclaim and the amended counterclaim, no mention was made of any oral contract
between Long and Pannell, or any claimed breach thereof. In response to the amended counterclaim,
Long and Investors denied any liability or wrongdoing.
The two day non-jury trial began with Long’s counsel reading a portion of Pannell’s
deposition into the record. In his deposition, Pannell identified a draft of the limited partnership
agreement and a draft of the document setting forth the capital contributions to be made by the
various partners. Pannell acknowledged capital contributions were not made in accordance with that
document. The draft limited partnership agreement was the only document created to operate the
limited partnership, and Pannell intended to operate the limited partnership in accordance with that
document. According to the limited partnership agreement, general partners could not be required
to contribute capital without unanimous consent. Pannell testified Ventures made a “capital call”
on Investors. Investors, presumably acting through Long, did not agree to contribute any additional
capital. Therefore, there was no unanimous consent.
After the above deposition testimony was read into the record, Long was called as the
first live witness. Long identified a November 20, 2001, Certificate of Existence issued by the State
of Tennessee indicating that Investors was an active limited liability company with an original
qualification date of March 6, 1996. Long also identified the Certificate of Domestic Limited
Partnership pertaining to Volunteer Supply which showed an effective date of June 3, 1997. The
general partners shown on this Certificate are Investors and Ventures.
Long then identified a purchase agreement dated June 3, 1997, wherein Volunteer
Supply purchased a beauty supply business located in Murfreesboro, Tennessee. The purchase price
was $265,885, plus the assumption of over $50,000 in accounts payable. After paying $79,000
toward the purchase price, the remaining balance was financed by the sellers with Volunteer Supply
being obligated to make monthly payments of $2,430.07 until January 15, 2003. Long and Pannell
personally guaranteed this indebtedness.
Long testified a disagreement arose when Pannell wanted him to put more money into
the partnership and he (i.e., Long) refused. In an effort to resolve their disagreement, the parties
entered into an Agreement on August 27, 1999, and a subsequent undated amendment which Long
claims settled all disputes between them. The Agreement specifically stated it was entered into “in
order to solve and remedy disagreements” related to Volunteer Supply and contained two primary
provisions.2 One of the provisions addressed the business Volunteer Supply had purchased in
Murfreesboro, with Long and Pannell each agreeing to place $100,000 into an interest bearing
account to assure the availability of funds to pay off the balance of that loan. The loan eventually
2
The Agreement was contingent on each party receiving $100,000 as an advance towards their lottery
winnings. Neither party argues this contingency did not occur.
-3-
was paid off for $168,599.05, and the remaining $31,400.95 was divided equally between Long and
Pannell.
The second provision in the Agreement concerned Long’s potential purchase of
Volunteer Supply’s territory and assets located in Sweetwater, Tennessee. Long agreed to purchase
the Sweetwater location for $90,000 and to use these funds to pay off the liabilities associated with
that location. Long specifically reserved the option to sell and assign his right to purchase the
Sweetwater territory to Brenda McLemore (“McLemore”). The purchase of the Sweetwater territory
was conditioned upon written approval of the sale to Long “or McLemore” by State Service Systems,
the franchisor. Long placed an additional $100,000 into the joint account apparently to secure his
purchase of the Sweetwater territory for $90,000. However, neither the Agreement nor the
amendment required Long to place this additional $100,000 into the account. Likewise, neither of
these documents indicated what would happen to Long’s additional $100,000 if he did not purchase
that location. The amendment only discussed how Pannell’s $100,000 and Long’s $200,000 would
be distributed if either party died. To make a very long story a little shorter, State Service Systems
did not approve the sale to Long. The Sweetwater location then was sold to McLemore for
$100,000. Long then told Pannell he wanted his remaining $100,000 from the joint account. Pannell
refused to allow Long to withdraw these funds, resulting in Long’s filing of the declaratory judgment
action.
Long testified the Agreement conditioned the sale of the Sweetwater location upon
State Service System actually approving the sale to him, even though the words “or McLemore”
were used in the Agreement. Therefore, according to Long, this condition in the Agreement never
came to pass since State Service System did not approve his purchase of the Sweetwater location.
Long identified a May 15, 2000, letter from Pannell. In that letter, Pannell informed
Long he was in the process of dissolving Volunteer Supply, and as “you and I are the humans
representing equal shares of the General Partners, I have allocated the Assets and Liabilities to you
and me.…” Pannell then attached a balance sheet detailing the assets and outstanding liabilities as
of December 31, 1999. When this letter was written, there was an outstanding balance of $163,132
on the loan on the Murfreesboro location. The amount of loans Pannell claims to have made to
Volunteer Supply totaled $196,197. Excluding these two primary liabilities, after deducting all other
liabilities from the total assets, the remainder of the balance sheet showed net assets of $36,408.
Thus, according to this letter, the outstanding liabilities for Volunteer Supply totaled $322,921
($163,132 + $196,197 - $36,408 = $322,921). Pannell demanded payment from Long of $161,460,
which represented one-half of the outstanding liabilities. Long responded to the letter, refusing to
pay any additional funds and further objecting to Pannell’s unilaterally dissolving Volunteer Supply.
Long was cross-examined about some of the debts incurred prior to the Certificate
of Domestic Limited Partnership for Volunteer Supply being issued on June 3, 1997. After Long
was questioned about a couple of these debts, his attorney objected. The following discussion then
took place:
-4-
[Counsel for Long]: Once again, Your honor, because
of this rule about being silent and constituting an amendment,
all these transactions are in advance of the issuance of the so-
called birth certificate by the Secretary of State and are
therefore irrelevant.
[Counsel for Pannell]: Well, I think they’re highly
relevant. I specifically stated in my amended counter-claim
that it operated as a general partnership prior to [issuance of
the Certificate] . . . .
[Counsel for Long]: I suggest what happened before
the issuance of the limited partnership came into existence is
irrelevant.
***
[Counsel for Pannell]: I disagree, Your honor. I think
partners have a right of contribution towards each other, and
general partners are jointly and severally liable for debts
chargeable to the partnership.
[Counsel for Long]: Absolutely to third parties, but
not as to each other.
The Trial Court stated it would allow Pannell’s counsel to continue with this line of
questioning and they could decide its relevance at a later time. In response, Long’s counsel stated
he was “reserving my continuing objection so that the pleadings will not be deemed [amended].”
The Trial Court then pointed out the Rules of Evidence do not provide for a “continuing” objection
and an objection would have to be made each time if opposing counsel did not agree that it could
be continuing in nature. In response, Pannell’s attorney agreed the objection could be continuing so
repeated objections did not have to be made.
Long testified he began participating in Volunteer Supply in 1995 and withdrew from
the partnership in 1996. When he rejoined the partnership later in 1996, Pannell never told him he
would have to contribute equally in order to come back into the partnership. Long stated he would
have contributed equally if, at that time, he had had the funds to do so.3 Long identified tax
documents which indicated his profit-sharing percentage in the partnership before the Certificate of
Domestic Limited Partnership became effective was 14%. His loss-sharing percentage was also
14%.
3
Several years later, in January of 2000 , Long rece ived over one million do llars from his lottery winnings.
-5-
Pannell’s testimony was the same as Long’s with regard to the date the Certificate of
Limited Domestic Partnership was issued for Volunteer Supply. Pannell also discussed Long’s
leaving the partnership in June of 1996 and returning in late August of that same year. According
to Pannell, he and Long orally agreed that if Long was permitted to return, Long would contribute
one-half of any necessary funds and bring the money in his capital account to a level equal with
Pannell’s. Pannell claims Long agreed to these terms in an “individual” capacity. Pannell did,
however, acknowledge Long commented that if he did not have any money he could not contribute.
In response, Pannell allegedly told Long:
Well, I understand; that, you know, for instance, if we need money in
December and I have it and you don’t, I’ll put it in. But in February
when we get lottery payments, you can put it in then.…
In other words, Pannell claimed “it wasn’t an issue of whether he would never have it, but the timing
of when he might have it. And I said that was fine.”
Pannell discussed the various debts which were incurred by the general partnership
prior to its becoming a limited partnership on June 3, 1997. He also testified how he paid many of
these debts. Any debts Pannell paid after 1999 were paid personally. With regard to debts paid prior
to 1999, Pannell would loan money to the partnership, which in turn would use that money to pay
the debt. During Pannell’s testimony about debts he paid personally, the Trial Court inquired as to
whether Pannell was a party to the lawsuit in his individual capacity. Pannell’s counsel stated that
he was. The following dialogue then took place:
[Counsel for Long]: I want to make sure that I understand that
there is a – that he’s claiming that he is entitled to sue him for
contribution for debts that he paid of the limited partnership.
That ain’t the law. I object to relevance.
The Court: Okay.
[Counsel for Long]: May it be a continuing objection?
The Court: Yes. I am going to overrule it at this time, and
then we can argue that.
According to Pannell, there was a total of $91,018 in debts incurred prior to the
limited partnership becoming effective which he paid personally. There were an additional $47,000
in debts incurred prior to the effective date of the limited partnership which were paid directly from
loans made by Pannell to the partnership.
Pannell testified that when Long came back into the partnership in 1996, the oral
agreement “for moving ahead was that we would share equally in putting in money that was
-6-
necessary … even prior to that our setup was to equally contribute.” Excluding the loans he made
to the partnership, Pannell claimed to have paid debts and/or assumed debts totaling $183,690 during
the life of the Volunteer Supply.4 When questioned about any income he received from the
partnership, Pannell stated at some point in 1996 he and Long were paid a salary or draw, but they
both put all of this money back into the partnership. When their accountant told them they were
being “silly,” this procedure stopped. After that, “[we] never did pay ourselves anything.”
When asked about the alleged settlement Agreement, Pannell testified he and Long
did attempt to settle their dispute. With regard to the Sweetwater location, Pannell claimed the
Agreement required Long to pay him $90,000 regardless of whether Long purchased that location
himself or whether he purchased McLemore’s loan if it was sold to her. However, as things turned
out the sale of the Sweetwater location to Long never was approved. When that location later was
purchased by McLemore, Long refused to purchase McLemore’s note and pay Pannell $90,000.
Pannell contends, therefore, that this part of the Agreement never was carried out by Long.
Pannell summarized his request for damages as follows:
I have put in $211,117 more in capital than he has. I have put
in $137,804 in loans more than he has; and I have paid and/or
assumed liabilities of the partnership of $183,690 that he has
not, for a total of $532,611 in excess of Mr. Long. I would
ask that he keeps his commitment and pay half of that, which
would be $266,306.
After closing arguments were completed, the Trial Court issued some preliminary
findings. The Trial Court concluded Long was entitled to the $100,000 which he placed into the
joint account. As to liability for partnership debts, the Trial Court concluded Long was a general
partner and was liable as such from the beginning of the partnership up until the Certificate of
Domestic Limited Partnership was filed on June 3, 1997. The Trial Court also determined that any
debt incurred prior to June 3, 1997, which was paid either by Pannell personally or through loans he
made to the partnership was still to be considered “partnership debt” for which Long shared
responsibility. After Long’s counsel expressed considerable but respectful disagreement over the
propriety of this ruling, the Trial Court allowed Long thirty days to file a brief explaining why this
ruling was incorrect. Thereafter, Long’s counsel suggested opposing counsel submit to him a list
of debts which Pannell claimed should be paid in accordance with the Court’s ruling, and if an
agreement could not be reached, the parties could return to court for a further ruling. The Trial Court
agreed with this suggestion.
The next issue addressed by the Trial Court was Pannell’s argument that based on the
alleged oral agreement made by Long to contribute one-half to the partnership, Long was liable for
4
This sum does not include the loan on the M urfreesboro property which the parties paid off in equal amo unts.
-7-
a full one-half of all partnership debt, regardless of whether it was incurred before or after June 3,
1997. The following discussion then took place:
The Court: But you’re not suing upon an agreement[.]
Counsel for Pannell: Well, I sued for contribution. I didn’t
specifically put in my complaint, set forth that there was a
contribution agreement.
The Court: Yeah. And I didn’t think you had, so I didn’t
consider it in terms of is this a binding agreement, offer,
acceptance, consideration, and so forth.
Counsel for Pannell: And I think there was clearly a meeting
of the minds, if you look at … Long’s testimony as to, yeah,
I said that. But I said that if and when I got the money – he
said “if I had the money,” if I remember correctly. And he did
get the money in January, and I think there was a meeting in
… [Pannell’s] mind that they contributed equally and that
they were basically equal people in this thing despite the
setup.
For all intents and purposes, the trial ended with the above discussion. The Trial
Court issued its final judgment on July 12, 2002, approximately 7 ½ months later. The reason for
the delay was the continuing disagreement between the parties as to what should be considered as
partnership debt incurred prior to June 3, 1997, and the resulting need for an additional court hearing
to resolve the disagreement. In its final judgment, the Trial Court noted that after its initial rulings
were made at the end of the trial, it was presented with conflicting orders and there was further
consideration by the Court and additional arguments of the parties. As relevant to this appeal, the
Trial Court’s final judgment awarded Long the $100,000 in the joint account plus any accrued
interest. The Trial Court also ruled the total amount of partnership debt incurred prior to June 3,
1997, was $138,018, and Long was liable for fourteen percent (14%) of this amount, or $19,322.52.5
Finally, the Trial Court concluded that from and after June 3, 1997, the parties dealt with each other
through their respective limited liability companies and as limited partners, and Long, as a limited
partner, was not liable for any further debts.
Based on the Trial Court’s express findings, there are two other findings which are
necessarily implied. These are: 1) The Agreement and subsequent amendment thereto did not
constitute an accord and satisfaction barring Pannell’s counterclaim for contribution; and 2) Pannell
5
As set forth supra, Long presented proof that his profit and loss sharing percentage in the partnership prior
to June 3, 1997, was fourteen percent. The Trial Court accepted this proof when it concluded Long was liable for
fourtee n percent of the pre-June 3 , 199 7 debts.
-8-
could not recover for breach of the alleged oral promise by Long to pay one-half of the partnership’s
debts and expenses because Pannell’s counterclaim and restated counterclaim could not be
interpreted as alleging a breach of contract claim.
On appeal, Pannell raises two issues, which we quote:
I. Whether the Trial Court erred by failing to enforce the
contribution agreement between the parties on the basis that
it had not been specifically pled?
II. Whether a Court should grant the prevailing party relief, not
specifically claimed in his pleadings when the basis for that
relief is specifically claimed, actually litigated, and proven at
trial?
Long also appeals, claiming the Trial Court erred in not holding there was an accord
and satisfaction between the parties. The second issue raised by Long challenges the amount of
damages awarded to Pannell.
Discussion
The factual findings of a trial court are accorded a presumption of correctness, and
we will not overturn those factual findings unless the evidence preponderates against them. See
Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). With respect to legal
issues, our review is conducted “under a pure de novo standard of review, according no deference
to the conclusions of law made by the lower courts.” Southern Constructors, Inc. v. Loudon County
Bd. Of Educ., 58 S.W.3d 706, 710 (Tenn. 2001).
We first will discuss Pannell’s argument that the language in his counterclaim and
restated counterclaim were broad enough to encompass a cause of action for breach of contract.
Pannell bases his argument on the following portions of Tenn. R. Civ. P. 8:
Rule 8.01 Claims for Relief. – A pleading which sets forth
a claim for relief, whether an original claim, counterclaim,
cross-claim, or third-party claim, shall contain (1) a short and plain
statement of the claim showing that the pleader is entitled to relief;
and (2) a demand for judgment for the relief the pleader seeks. Relief
in the alternative or of several different types may be demanded.
****
Rule 8.05. Pleading to Be Concise and Direct – Statutes,
Ordinances and Regulations – Consistency. – (1) Each averment
-9-
of a pleading shall be simple, concise and direct. No technical forms
of pleading or motions are required. . . .
Rule 8.06 Construction of Pleadings. – All pleadings shall
be so construed as to do substantial justice.
Relying on Paduch v. City of Johnson City, 896 S.W.2d 767 (Tenn. 1995), Pannell
argues the common-law rule that pleadings be construed against the drafter has been abolished in
this State, and “Rule 8.06 substitutes the end to be sought in place of specific rules of construction.”
Id. at 769. We agree this is the goal of Rule 8.06. However, while a complaint need not contain “in
minute detail” the facts giving rise to the claim, it nevertheless must contain allegations “from which
an inference may fairly be drawn that evidence on these material points will be introduced at trial.”
Trau-Med of America, Inc. v. Allstate Insurance Co., 71 S.W.3d 691, 704 (Tenn. 2002).
We have carefully reviewed Pannell’s counterclaim and restated counterclaim.
Nowhere in these documents is an oral agreement mentioned, much less a claim for breach of such
an agreement. It is for this reason the Trial Court specifically stated it had not evaluated the evidence
from a standpoint of whether a breach of contract claim had been proven. The Trial Court simply
could not glean a breach of contract allegation from the counterclaim and restated counterclaim.
Neither can we. In our opinion, the only reasonable interpretation of the counterclaim and restated
counterclaim is that Pannell is making a claim for contribution pursuant to applicable law governing
liability of partners for partnership debt. “[T]here is no duty on the part of the court to create a claim
that the pleader does not spell out in his complaint.” Trau-Med, 71 S.W.3d at 704 (citations
omitted). If we were to conclude the counterclaim or restated counterclaim alleged a claim for
breach of contract, we would be doing just that. We find no reversible error in the Trial Court’s
refusal to interpret the counterclaim and restated counterclaim as alleging a claim based on breach
of contract.
Pannell’s second issue is that the Trial Court erred by not concluding that a breach
of contract claim had been tried by implied consent. In McLemore v. Powell, 968 S.W.2d 799, 803
(Tenn. Ct. App. 1997) this Court explained:
Generally speaking, trial by implied consent will be found
when the party opposed to the amendment knew or reasonably should
have known of the evidence relating to the new issue, did not object
to this evidence, and was not prejudiced thereby. Id. As the
Tennessee Supreme Court stated in Zack Cheek Builders, Inc. v.
McLeod[, 597 S.W.2d 888, 891 (Tenn. 1980)]:
"Implied consent ... is much more difficult to establish (than
express consent) and seems to depend on whether the parties
recognized that an issue not presented by the pleadings
-10-
entered the case at trial. A party who knowingly acquiesces
in the introduction of evidence relating to issues that are
beyond the pleadings is in no position to contest a motion to
conform. Thus, consent generally is found when evidence is
introduced without objection, or when the party opposing the
motion to amend himself produced evidence bearing on the
new issue."
Id. (quoting 6 Wright & Miller, Federal Practice and Procedure §
1493, at 462-63 (1971)). Trial by implied consent is not shown by
the presentation of evidence that is relevant to an unestablished issue
when that evidence is also relevant to the established issue. Hiller v.
Hailey, 915 S.W.2d 800, 805 (Tenn. App.1995) (citations omitted).
McLemore v. Powell, 968 S.W.2d 799, 803 (Tenn. Ct. App. 1997)(emphasis added). The Trial
Court’s determination with respect to the issue of implied consent “must be upheld unless there has
been an abuse of discretion.” Hobbs v. Hobbs, 987 S.W.2d 844, 847 (Tenn. Ct. App. 1998), cert.
denied, 526 U.S. 1075, reh’g denied, 526 U.S. 1167 (1999).
In our resolving this issue, Pannell’s biggest obstacle is the fact that the Trial Court
never was asked to determine whether the breach of contract claim was tried by implied consent.
It is impossible to determine that the Trial Court abused its discretion when it never had the
opportunity to exercise that discretion in the first place. The Trial Court is in a better position than
this Court to make the initial determination of whether an issue was tried by implied consent.
Because it never became an issue before the Trial Court, Long’s counsel never was given an
opportunity to argue to the Trial Court reasons why there was no trial by implied consent. It is
apparent that the Trial Court is the proper forum to raise initially this issue, and this is a perfect
example of why, as a general rule, this Court is disinclined to consider issues which are raised for
the first time on appeal. See, e.g., In re Adoption of D.P.M., 90 S.W.3d 263, 267 (Tenn. Ct. App.
2002). As the Trial Court never was asked to exercise its discretion by making a determination, with
respect to the issue of trial by implied consent, the Trial Court made no such determination. Since
the Trial Court was not asked to make such a determination, and, therefore, made no such
determination, there could be no abuse of discretion by the Trial Court as to this issue. See Hobbs,
987 S.W.2d at 847.
Even if we could find that the issue of trial by implied consent had been raised before
and denied by the Trial Court, it is important to note that Long objected to the introduction of any
evidence pertaining to debt incurred prior to June 3, 1997, and to anything which took place before
the limited partnership came into existence. Long’s counsel went so far as to request that his
objection be considered “continuing” so the pleadings would not be deemed amended. Although
these objections were overruled for the most part, we do not believe there is any way Long
legitimately could be regarded as having “knowingly acquiesce[d]” in the introduction of evidence
relating to the breach of contract issue. McLemore, 968 S.W.2d at 803. In short, we conclude
-11-
Pannell has failed to demonstrate that his breach of contract claim was tried by implied consent, and
certainly has failed to show any abuse of discretion by the Trial Court with respect to the issue of
trial by implied consent.
As to Long’s issues, Long first contends the Trial Court erred by not dismissing
Pannell’s counterclaim since there was an accord and satisfaction arising from the Agreement and
amendment thereto. In Lindsey v. Lindsey, 930 S.W.2d 553 (Tenn. Ct. App. 1996), this Court
discussed the controlling principles of law with respect to accord and satisfaction as follows:
An accord is an agreement whereby:
One of the parties undertakes to give or perform, and the other
to accept in satisfaction of a claim, liquidated or in dispute,
and arising either from contract or from tort, something other
than or different from what he is or considers himself entitled
to; and a satisfaction is the execution of such agreement.…
To constitute a valid accord and satisfaction it is also essential
that what is given or agreed to be performed shall be offered
as a satisfaction and extinction of the original demand; that
the debtor shall intend it as a satisfaction of such obligation,
and that such intention shall be made known to the creditor in
some unmistakable manner. It is equally essential that the
creditor shall have accepted it with the intention that it should
operate as a satisfaction .... The intention of the parties, which
is of course controlling must be determined from all the
circumstances attending the transaction.
Lindsey, 930 S.W.2d at 556-557 (quoting R.J. Betterton Mgmt. Serv. v. Whittemore, 733 S.W.2d 880,
882 (Tenn. Ct. App. 1987)).
Long testified that one of the conditions in the Agreement was not met because his
purchase of the Sweetwater location never was approved by State Service Systems. Pannell testified,
based on his understanding of the Agreement, that Long was required to pay him $90,000 for the
Sweetwater location, either by purchasing that location himself or, if it was sold to McLemore,
purchasing McLemore’s note for $90,000. Pannell further testified this never happened. Pannell
claims payment of the $90,000 was a condition in the Agreement which was not met and, therefore,
there was no accord and satisfaction. Based on the testimony of both Long and Pannell, it appears
they agree that various, although different, conditions in the Agreement were not met. Therefore,
even though the Trial Court did not state why there was no accord and satisfaction, we conclude the
preponderance of the evidence certainly does not weigh against this implied finding by the Trial
Court.
-12-
The remaining issues on appeal center around the amount of the judgment awarded
to Pannell. Specifically, Long claims the Trial Court erred when it concluded the pre-June 3, 1997
debts later paid by Pannell through loans he made to the partnership were “partnership debts.” Long
claims these debts should not be considered partnership debts because Pannell received a favorable
tax deduction when he paid them down via a loan to the partnership. Long also claims since the
partnership technically paid off $47,000 worth of debt, this amount should not be counted.
The uncontradicted trial testimony was that Pannell personally paid $91,018 in pre-
June 3, 1997 debt, and another $47,000 was paid through loans Pannell made directly to the
partnership. The fact remains that any of this pre-June 3, 1997, debt that was paid was paid by
Pannell. That some of these debts were paid via a loan to the partnership which, in turn, paid the
debt does not change this critical point. After considering all of the proof presented at trial, we
conclude the preponderance of the evidence does not weight against the Trial Court’s findings
leading to its conclusion regarding which debts, and their amounts, appropriately were classified as
pre-June 3, 1997, partnership debts for which Long shared responsibility. We find no error by the
Trial Court on this issue.
Conclusion
The judgment of the Chancery Court is affirmed, and this cause is remanded to the
Chancery Court for such further proceedings as may be required, if any, consistent with this Opinion,
and for collection of the costs below. The costs on appeal are assessed one-half against the
Appellant T. Allen Pannell, Jr., and his surety, and one-half against the Appellee Doug Long.
___________________________________
D. MICHAEL SWINEY, JUDGE
-13-
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563 F.2d 1178
GEORGIA POWER COMPANY, Plaintiff-Appellee,v.54.20 ACRES OF LAND, situated lying and being LAND LOTS 315AND 326 OF the 3RD LAND DISTRICT, etc., et al., Defendants,Jim Dodson and Patricia W. Womack, Defendants-Appellants.J. C. HILSMAN et al., Plaintiffs-Appellants,v.GEORGIA POWER COMPANY, Defendant-Appellee.
Nos. 75-4448 and 77-1327.
United States Court of Appeals,Fifth Circuit.
Nov. 28, 1977.
Denmark Groover, Jr., Macon, Ga., for defendants-appellants in 75-4448.
George D. Lawrence, Eatonton, Ga., Warren C. Fortson, Atlanta, Ga., amicus curiae, for defendants-appellants in 75-4448.
Wallace Miller, Jr., W. Warren Plowden, Jr., Macon, Ga., amicus curiae, for plaintiff-appellee in 75-4448.
Allan Abbot Tuttle, Sol., Federal Power Commission, Allan M. Garten, Washington, D. C., amicus curiae, for plaintiff-appellee in 75-4448.
George D. Lawrence, Jr., Eatonton, Ga., for Hilsman, et al.
Charles H. Ivy, Atlanta, Ga., for Elliott, et al.
James H. Rollins, W. Dan Greer, Atlanta, Ga., for Boswell, et al.
Ronald Montalto, Atlanta, Ga., Howard T. Oliver, Jr., Gainesville, Ga., for Askew.
Appeals from the United States District Court for the Middle District of Georgia.
Before WISDOM, SIMPSON, and TJOFLAT, Circuit Judges.
WISDOM, Circuit Judge:
1
These condemnation cases present the issue whether compensation should be determined under federal law or under the law of the state where the condemned property is located when a licensee of the Federal Power Commission exercises the power of eminent domain in federal court as authorized by Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970). We reserved this question in Louisiana v. Lindsey, 5 Cir. 1975, 524 F.2d 934, as did the Supreme Court in Grand River Dam Authority v. Grand-Hydro, Inc., 1948, 335 U.S. 359, 69 S.Ct. 114, 93 L.Ed. 64. We now hold that federal law controls.
I.
2
The plaintiff-appellee, Georgia Power Company, is a privately owned Georgia utility. It intends to operate a hydroelectric power generating facility with a dam across the Oconee River in Hancock and Putnam Counties, Georgia, at a point known as Laurens Shoals. The dam will produce a lake to be known as Lake Wallace. The appellants are Georgia landowners with property which will be inundated by Lake Wallace.1
3
Under the Federal Power Act, 16 U.S.C. §§ 791a, et seq. (1970), the Federal Power Commission may issue licenses to certain persons or entities to construct, operate, or maintain various hydroelectric generating facilities. 16 U.S.C. § 797(e). The F.P.C. issued a license to Georgia Power on August 6, 1969, for the Lake Wallace Project.2 As a licensee, Georgia Power may exercise the right of eminent domain under Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970), which provides:
4
When any licensee cannot acquire by contract or pledges an unimproved dam site or the right to use or damage the lands or property of others necessary to the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or accessory thereto . . . it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such land or other property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.
5
Exercising this right, Georgia Power brought actions in the District Court for the Middle District of Georgia. Senior Judge W. A. Bootle appointed a three-member Commission, see Fed.R.Civ.Proc. 71A, to determine the amount of compensation due the condemnees. In his instructions to the Commissioners, Judge Bootle set out the federal law of compensation. These rules differ from Georgia law. Instruction No. 20 directs the Commissioners to ignore an increase in value which the Georgia Power project has created in the condemned property; a Georgia court might recognize such value. See Hard v. Housing Authority, Ga.1963, 219 Ga. 74, 132 S.E.2d 25. Instruction No. 21 allows the Commissioners to offset any recovery for land actually taken with benefits to any remaining property caused by the project; Georgia law prohibits such a set-off. See Ga.Code Ann. § 36-504 (1970). The district court declined to instruct the Commissioners to include a reasonable attorneys' fee in their award; in a Georgia proceeding a reasonable attorneys' fee would be allowed. See White v. Georgia Power Company, Ga.1976, 237 Ga. 341, 227 S.E.2d 385.
6
After these instructions were first made in 1975 several condemnees in cases other than No. 75-4448 filed motions and objections opposing the use of federal law. The district court held a pre-trial hearing on the objections. Judge Bootle made several changes in the phrasing of his instructions, but he regarded federal law as controlling.3 The Commission then heard evidence in No. 75-4448. Its report concluded that the benefits accruing to the land remaining with the landowners exceeded the value of the property taken. As a result, the Commission awarded no monetary compensation. The landowners opposed Georgia Power's motion to confirm the report on the ground that the offset of benefits was improper. The court overruled these objections and the condemnees appealed.4
7
No. 77-1327 began after Judge Bootle's decision in No. 75-4448 to apply federal law. The condemnees in No. 77-1327 nevertheless moved that the court incorporate Georgia law into its instructions.5 The judge conducted a pre-trial conference and heard argument on the question. He then denied the motion and adhered to his previous order that federal law applies. Judge Bootle certified the question for immediate review under 28 U.S.C. § 1292(b) (1970). This Court allowed the appeal, and consolidated it with No. 75-4448.
II.
8
Before a federal court may reach the question of applying state or federal common law to an issue before it, the court must determine that the source of the right or authority in question is federal. If the source is not federal, Erie Railroad Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and the Rules of Decision Act6 direct that state law apply of its own force. Even if the source is federal, the court must follow any congressional directions about the proper law to apply. See Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 826 (1976).
9
We find that the source of the power to condemn property contained in Section 21 is federal. Eminent domain inheres in sovereignty. See Kohl v. United States, 1876, 91 U.S. 367, 23 L.Ed. 449. Within our federal system the states and the federal government exercise independent powers of eminent domain, and neither can delegate the use of the other's authority. 91 U.S. at 372-73, 23 L.Ed. 449; Latinette v. City of St. Louis, 7 Cir. 1912, 201 F. 676, 678. Thus, when Congress provided that licensees could exercise "the" power of eminent domain, it was referring to the federal power. Both courts and commentators have described the eminent domain power delegated in Section 21 as the federal power. Federal Power Commission v. Tuscarora Indian Nation, 1960, 362 U.S. 99, 120, 80 S.Ct. 543, 4 L.Ed.2d 584; City of Tacoma v. Taxpayers of Tacoma, 1958, 357 U.S. 320, 340, 78 S.Ct. 1209, 2 L.Ed.2d 1345; Chapman v. Public Utility District No. 1, 9 Cir. 1966, 367 F.2d 163, 167; 7 Moore's Federal Practice P 71A.10(2). When it condemns land under Section 21, a licensee acts as the agent of the United States government. Tuscarora Nation of Indians v. Power Authority, 2 Cir. 1958, 257 F.2d 885, 894, vacated as moot sub nom, McMorran v. Tuscarora Nation of Indians, 362 U.S. 608, 80 S.Ct. 960, 4 L.Ed.2d 1009. This delegation of federal power is constitutional. Missouri v. Union Electric Light & Power Co., C.D.Mo.1930, 42 F.2d 692; see Thatcher v. Tennessee Gas Transmission Co., 5 Cir. 1950, 180 F.2d 644, cert. denied, 340 U.S. 829, 71 S.Ct. 66, 95 L.Ed. 609 (upholding identical delegation in the Natural Gas Act, 15 U.S.C. § 717(b) (1970)).
10
Appellants argue that Section 21 does not delegate federal authority, but merely provides a federal forum for exercise of a state created eminent domain power. Such an interpretation does not accord with decisions upholding the right of a licensee to condemn property that it could not obtain under the applicable state statute. E. g., City of Tacoma v. Taxpayers of Tacoma, 1958, 357 U.S. 320, 78 S.Ct. 1209, 2 L.Ed.2d 1345; First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 1946, 328 U.S. 152, 66 S.Ct. 906, 90 L.Ed. 1143. There is no suggestion in the statute that Congress intended to create an interstitial power of eminent domain that would function only when state powers were inadequate. In contrast, Section 19, 16 U.S.C. § 812 (1970) expressly limits the FPC's authority to regulate rates to situations where a state does not have its own regulations. Section 20, 16 U.S.C. § 813 (1970) places similar limits on other powers of regulation.
11
We are not persuaded by the argument that the $3,000 in controversy requirement shows that Section 21 is a jurisdictional provision. It is true that this requirement parallels the amount in controversy requirement for diversity cases at the time the Federal Power Act was enacted. Congress, however, added the $3,000 requirement late in the consideration of the Federal Power Act. Compare H.R.Rep.No.715, 65th Cong., 2d Sess. 27, H.R.Rep.No.1147, 65th Cong., 3d Sess. 13, and H.R.Rep.No.61, 66th Cong., 1st Sess. 10 (original versions without the $3,000 amount in controversy requirement) with S.Rep.No.180, 66th Cong., 1st Sess. 9 and 16 U.S.C. § 814 (1970) (versions containing $3,000 amount in controversy requirement as added on the House floor). As a result, the requirement cannot be read as an indication of the original purpose of Section 21. Members of Congress do not seem to have believed the amount in controversy amendment significantly changed Section 21; the Senate and Conference Committee Reports, written after the House adoption of the amendment, do not mention it. Furthermore, the House debates establish that the amount in controversy minimum was designed to prevent inconvenience to a landowner who might otherwise need to travel several hundred miles to press a small compensation claim. 58 Cong.Rec. 2240 (1919) (remarks of Mr. Stevenson).
12
We have not found any congressional directive to apply state law in either the language of Section 21 or its legislative history. Therefore, the second prerequisite to our consideration of the choice of law issue is met. The language in the statute referring to state "practice and procedure" does not govern the choice between substantive rules of compensation. The Supreme Court has held that such language "(does) not, and could not, affect questions of substantive right such as the measure of compensation grounded upon the Constitution of the United States". United States v. Miller, 1943, 317 U.S. 369, 380, 63 S.Ct. 276, 283, 87 L.Ed. 336. Accord United States v. 93.970 Acres of Land, 1959, 360 U.S. 328, 79 S.Ct. 1193, 3 L.Ed.2d 1275. The appellants attempt to distinguish Miller on the ground that the plaintiff was the United States rather than a private licensee. We cannot see why in this context the identity of the plaintiff would change the meaning of virtually identical language.7 And insofar as Section 21 did require conformity with state practice, it has been superseded by Rule 71A of the Federal Rules of Civil Procedure. United States v. 93.970 Acres of Land, 1959, 360 U.S. 328, 79 S.Ct. 1193, 3 L.Ed.2d 1275; 7 Moore's Federal Practice P 71A.10(2) at 71A-252 (2d ed. 1975).
13
There is little discussion of Section 21 in the Committee Reports or the congressional debates, and none of it illuminates the choice of law issue. Appellants argue, however, that other sections of the statute, such as Sections 19 and 20, evidence a congressional respect for state law which includes state rules of compensation in an eminent domain proceeding. We are not ready to make this inference from unrelated provisions in the Federal Power Act without more support in the legislative materials. The legislative history reveals that Congress took care to preserve state rights in the regulation of power and property to forestall a constitutional attack on the Federal Power Act. See, e. g., First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U.S. at 174, 66 S.Ct. 906. As a result, the Federal Power Act contains many explicit acknowledgements of state authority. See, e. g., Id. at 174 n. 19, 66 S.Ct. 906; Sections 4(a) and (c)8 (requires cooperation between the FPC and the executive departments and other agencies of the state and federal governments on specified subject); 4(f)9 (requires notice of application for a preliminary permit to be given to any state or municipality likely to be interested); 7(a)10 (gives preference in issuing permits and licenses to states and municipalities); 10(e)11 (provides that certain licenses to states and municipalities be issued and enjoyed without charge); 1412 (gives states or municipalities as well as federal government an option to acquire a licensed project); 19;13 20;14 and 2715 (a "saving" clause concerning state laws relating to the control, appropriation, use or distribution of water used in irrigation or for municipal or other uses, or any vested right acquired therein). The failure to mention specifically state laws of eminent domain contrasts with these provisions, and suggests, if anything, that Congress did not believe it necessary to follow state eminent domain rules or desire courts to do so.16
14
The Committee Reports reveal that some members had concerns over the constitutionality of Section 21, although it is not clear whether they thought it an improper invasion of state prerogatives or an improper delegation of federal authority to private parties. H.R.Rep.No.61, 66th Cong., 1st Sess. 10. At any rate, a majority expressed belief that the provision was constitutional and appropriate, without any indication that such a conclusion would be possible only if federal courts applied state law in Section 21 cases. Id.17
15
The appellants also argue that Congress endorsed the use of state compensation law when it enacted a provision substantially identical to Section 21 in the Natural Gas Act, 15 U.S.C. § 717f(h) (1970), without commenting adversely on certain cases appellants read to mandate adoption of state law for all substantive issues arising in a Section 21 lawsuit. In a similar vein, the appellants urge us to follow these decisions as a matter of stare decisis. In particular, they draw our attention to a line of Eighth Circuit cases beginning with Feltz v. Central Nebraska Public Power and Irrigation District, 8 Cir. 1942, 124 F.2d 57818 and to Oakland Club v. South Carolina Public Service Authority, 1940, E.D.S.C., 30 F.Supp. 334, aff'd, 4 Cir. 1940, 110 F.2d 84.
16
We do not read these cases as determinative of the issue before us. In Feltz, a FPC licensee condemned land for relocation of a highway. The landowner claimed consequential losses because the property was divided and because of increased distance to the railhead. The jury gave a smaller award than the appraisers, and the court added interest from the date of the taking. Both sides appealed. Among other questions, the court of appeals ruled on the exclusion of evidence of consequential damages, 124 F.2d at 578, and the propriety of interest on a compensation award, 124 F.2d at 584. Without articulating its reasoning, the court indicated that Nebraska law controlled both issues. There is no indication that the parties contested this issue or that the court gave it any serious consideration. Indeed, because of the mixture of issues each party may have thought it to his advantage to rely upon state law. The condemnees had read that state law to allow consequential damages and the condemnor could cite favorable state law on interest. The specific issue of just compensation raised before this Court was not considered. The other Eighth Circuit cases also lack any discussion of a general choice of law problem or of the specific issue before us. In the absence of any reasoned discussion of the difficult choice of law issue, we cannot accept these cases as persuasive authority or interpret congressional inattention to them as an endorsement of the view that state law should fill all substantive gaps in Section 21.
17
Oakland Club is not on point. In that case the federal licensee enjoyed state as well as federal power of eminent domain. It filed a condemnation in federal court which the property owner contested on the grounds that the South Carolina procedure was constitutionally defective and that Section 21 authorized the licensee to take only an easement rather than a fee.
18
The district court upheld the state procedure and interpreted Section 21 to authorize the taking of a fee interest. It went on to make several observations that the appellants have emphasized in this case. First, the court stated that Section 21 is not a "comprehensive, self-contained and exclusive law of eminent domain". Second, the court construed Section 21 "not as an exclusive law of eminent domain, . . . but as complementary to the State law, and as enabling the holder of a Federal Power license to exercise in the Federal courts . . . the substantive rights of eminent domain granted to it under the State law." 30 F.Supp. at 341. The Court of Appeals approved of these statements and added its own suggestion that Section 21 was meant to give a condemnor "the privileges of eminent domain under the State law . . ." 110 F.2d 84, 86.
19
Insofar as the Oakland Club litigation stands for the point that Section 21 does not preempt any applicable state powers of eminent domain, it is irrelevant to the issue before us.19 Insofar as the case supports the argument that Section 21 is solely a jurisdictional provision, we reject it for the reasons already expressed. And insofar as it interprets Section 21 to grant a state rather than a federal power of eminent domain, we find it in conflict with holdings by the Supreme Court. See Federal Power Commission v. Tuscarora Indian Nation, 1960, 362 U.S. 99, 120, 80 S.Ct. 543, 4 L.Ed.2d 584; City of Tacoma v. Taxpayers of Tacoma, 1958, 357 U.S. 320, 340, 78 S.Ct. 1209, 2 L.Ed.2d 1345; see also Kohl v. United States, 1876, 91 U.S. 367, 372-73, 23 L.Ed. 449, 451 (federal government lacks the power to grant the use of a state power of eminent domain). Neither the district court nor the Court of Appeals in Oakland Club considered the specific issue whether state or federal law governs the methodology of determining compensation under Section 21. In sum, the Oakland Club opinions are far too questionable and unclear to justify adherence by this Court or to warrant an interpretation of congressional failure to comment upon them as an expression of legislative intent on the choice of law issue before us.20
III.
20
We now proceed to the principal issue. Because the source of the power delegated by the Federal Power Act is federal, the governing law must be federal. See, e. g., Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 407 (1964); Mishkin, The Variousness of "Federal Law": Competence and Discretion in the Choice of National and State Rules for Decision, 105 U.Pa.L.Rev. 797, 798-801 (1957); Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 826-27 (1976). Of course, federal law may be fashioned by adopting parallel state rules. E. g., Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 367, 63 S.Ct. 573, 87 L.Ed. 838. For instance, the courts usually determine what constitutes "property" by looking to state law. E. g., United States v. Certain Property Located In Borough of Manhattan, 2 Cir. 1965, 344 F.2d 142, 14445 (Friendly, J.); United States v. 145.30 Acres of Land, 1974 D.La., 385 F.Supp. 699, aff'd, 5 Cir. 1975, 524 F.2d 1231.
21
Courts apply independent rules, however, when considering the specific issue of compensation in federal condemnations. E. g., United States v. Miller, 1943, 317 U.S. 369, 380, 63 S.Ct. 276, 87 L.Ed. 336; United States v. Certain Property Located in Borough of Manhattan, 2 Cir. 1965, 344 F.2d 142, 146; United States v. City of New York, 2 Cir. 1948, 165 F.2d 526, 528 (L. Hand, J.); United States v. Certain Parcels of Land, 3 Cir. 1944, 144 F.2d 626, 628; United States v. 3,595.98 Acres of Land, 1962 N.D.Cal., 212 F.Supp. 617; 12 Wright & Miller, Federal Practice and Procedure: Civil § 3042 (1973). These cases did not arise in the specific context of a federal condemnation by a Federal Power Act licensee pursuant to Section 21. Nevertheless, we should follow the same rule unless there are circumstances unique to a federal condemnation under Section 21 which require the opposite result.21
22
The appellants suggest that several such circumstances exist. First, they contend that we should distinguish between cases where the United States is a party and where it is not, applying federal rules of compensation only in the former situation. Since a licensee exercises the federal power of eminent domain, it is not immediately apparent why such a distinction should be made. That the property will be used privately is not reason enough. In Miller, for instance, the United States took land for use by a private railroad. Appellants, however, cite Public Utility District No. 1 v. City of Seattle, 9 Cir. 1967, 382 F.2d 666, 1969, cert. dismissed, 396 U.S. 803, 90 S.Ct. 22, 24 L.Ed.2d 59, and Tacoma v. Taxpayers of Tacoma, 1957, Wash., 307 P.2d 567, rev'd, 357 U.S. 320, 78 S.Ct. 1209, 2 L.Ed.2d 1345, to support a theory that the Federal Power Act delegates less than the full power of eminent domain. As a result, the appellants continue, a licensee should not benefit from the same legal rules as the United States.
23
In City of Seattle the Court considered whether a licensee must compensate the owner of shorelands and, for power site values, the owner of adjoining uplands, for property needed for a licensed hydroelectric project. The United States would not have paid any compensation if it had condemned the same property. Instead, it could have relied upon the dominant navigational servitude for its power to utilize without compensation the stream bed and shorelands of navigable waters up to the ordinary high water level. See 382 F.2d at 669; United States v. Twin City Power Co., 1956, 350 U.S. 222, 76 S.Ct. 259, 100 L.Ed. 240. The Ninth Circuit examined the Federal Power Act and determined that it did not delegate the dominant servitude of navigation. Thus, it found that in the circumstances before it a licensee must pay compensation because it, unlike the Government, takes something it does not already have. 382 F.2d at 672. With respect to power site values, the Court determined that the rule precluding assertion of power site value against the United States, United States v. Twin City Power Co., 1956, 350 U.S. 222, 76 S.Ct. 259, 100 L.Ed. 240, goes "hand in hand" with the dominant navigational servitude and thus is not available to a licensee. 382 F.2d at 673-74.
24
Whether a licensee enjoys the dominant navigational servitude is irrelevant to the issue before us. The Ninth Circuit did not question that Section 21 delegates some of the federal government's powers. And the opinion does not support the contention that a licensee enjoys anything less than the full federal power to condemn private property. Significantly, when the Ninth Circuit turned to the amount of compensation due the shoreland and upland property owners it relied exclusively on federal cases. See 382 F.2d at 673-74.
25
Tacoma holds that Section 21 does not give a licensee power to condemn state-owned land. The theory of the case appears to be that Congress could not delegate such power to a state-created entity, rather than that it did not intend to do so. 207 P.2d at 577. This theory is questionable at best. See First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 1946, 328 U.S. 152, 66 S.Ct. 906, 90 L.Ed. 1143; Kohl v. United States, 1876, 91 U.S. 367, 23 L.Ed. 449; Washington Department of Game v. Federal Power Commission, 9 Cir. 1953, 207 F.2d 391, 1954, cert. denied, 347 U.S. 936, 74 S.Ct. 626, 98 L.Ed. 1087.22 Even if this holding is correct, it does not affect a licensee's power to acquire privately held land.
26
Although the Supreme Court has never ruled directly on the scope of the delegation of federal power in Section 21, Federal Power Commission v. Tuscarora Indian Nation, 1960, 362 U.S. 99, 80 S.Ct. 543, 4 L.Ed.2d 584, suggests that the delegation is not a limited one. As part of its case against condemnation by a FPC licensee, the Indian Nation argued that 25 U.S.C. § 17723 applied to the condemnation of its lands. The Court rejected this contention:
27
But § 177 is not applicable to the sovereign United States nor hence to its licensees to whom Congress has delegated federal eminent domain powers under § 21 of the Federal Power Act.
28
362 U.S. at 120, 80 S.Ct. at 555 (emphasis added). In its discussion of this point the Court cited decisions in which the United States was a party without any indication they would not be equally applicable to a federal licensee. See 362 U.S. at 120-21, 80 S.Ct. 543.
29
Similarly, in Grand River Dam Authority v. Grand-Hydro, 1948, 335 U.S. 359, 69 S.Ct. 114, 93 L.Ed. 64, the Supreme Court appears to draw no distinction between the federal government and its licensee under the Federal Power Act:
30
If either the United States, or its licensee as such, were seeking to acquire this land under the Federal Power Act, it might face different considerations from those stated above.
31
335 U.S. at 373, 69 S.Ct. at 121. See also Public Utility District No. 1 v. City of Seattle, 9 Cir. 1967, 382 F.2d 666, 675 (Byrne, J., dissenting), 1969, cert. dismissed, 396 U.S. 803, 90 S.Ct. 22, 24 L.Ed.2d 59.
32
In summary, we find no reason to ignore the general rule of following federal law to set compensation in a federal condemnation because the United States is not taking the land directly.
33
Second, the appellants have argued that the federal interest in the value of property taken in a Section 21 proceeding is so small that the analysis established by Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 and its progeny, including most recently Miree v. DeKalb County, 1977, --- U.S. ----, 97 S.Ct. 2490, 53 L.Ed.2d 557, compels federal adoption of state law. Even if a sharp distinction between a licensee and the United States cannot be drawn, it may be that the federal interest in the price paid for licensed hydroelectric plants is less than in other government projects. If so, use of state law would be appropriate notwithstanding the usual rule that federal common law of compensation governs in federal condemnation.
34
A review of Clearfield, Miree, and other federal common law decisions fails to convince us, however, that state law should be followed. That review reveals a changing emphasis of factors and shifting preferences for one law or the other. In Clearfield Trust the Court chose uniform federal common law to govern an action against the United States on a federal check. The federal interest in uniformity for easier administration was sufficient to justify use of uniform federal common law. See 318 U.S. at 366, 63 S.Ct. 573; Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 831 (1976).
35
United States v. Standard Oil Company, 1947, 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067 also took a hospitable stance to the use of federal common law. That case posed the question whether the United States could recover for damages suffered when a serviceman is injured. The Court found first that the source of any legal right to recover should be federal. It then held such federal law should be uniform because there was no affirmative need for diverse results, the issue did not involve local concerns, and a uniform rule would be appropriate in fiscal matters. Id. at 310-11, 67 S.Ct. 1604.
36
Other cases diverge from this presumption favoring federal law. For instance, Bank of America v. Parnell, 1956, 352 U.S. 29, 77 S.Ct. 119, 1 L.Ed.2d 93 refused to extend the Clearfield approach of uniform law to suits between private parties simply because the subject matter of the controversy happens to be federal commercial paper. Instead, the Court indicated that an immediate federal interest must be involved. Id. at 33-34, 77 S.Ct. 119. And in Wallis v. Pan American Petroleum Corp., 1966, 384 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d 369, the Supreme Court indicated that state law should usually govern unless a "significant conflict between some federal policy or interest and the use of state law in the premises" is shown. Id. at 68, 86 S.Ct. at 1304. Accord Miree v. DeKalb County, 1977, --- U.S. ----, 97 S.Ct. 2490, 53 L.Ed.2d 557. The Court found no such interest in United States v. Yazell, 1966, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404, a suit by the federal government to collect a debt owed the Small Business Administration. The Court held that Texas community property rules would apply because the Small Business Administration had individually negotiated the loan in the context of and with specific reference to Texas law and because the role of the United States as creditor in the case was no different from any private creditor. The Court also noted the intense local interest in family property and the protection of women, as well as the lack of any existing federal common law to apply. Id. at 346-53, 86 S.Ct. 500. In United States v. Little Lake Misere Land Co., 1973, 412 U.S. 580, 93 S.Ct. 2389, 37 L.Ed.2d 187, on the other hand, the Supreme Court refused to adopt state law. The issue in Little Lake was whether a state statute retroactively making mineral rights imprescriptible should govern federal land acquisitions under the Migratory Bird Conservation Act.24 Adoption would have deprived the federal government of a contract transferring the mineral rights to the land in question ten years after its acquisition. The statute conflicted with the federal program because it deprived the government of its contractual interests and created uncertainty in land transactions under the Act. Id. 382 U.S. at 596-99, 86 S.Ct. 500.
37
Together these cases produce a balancing test. See generally Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 799 (1976). On one side is the federal interest in carrying out a program in the most efficient and effective manner possible. On the other is a state's interest in the preservation of its control over local interests, particularly traditional interests such as family law and real property transactions, and in preventing displacement of state law. Of course, the ultimate goal of the creation of federal law by the courts is to carry out the federal program in question. See United States v. Little Lake Misere Land Co., 412 U.S. at 584-601, 93 S.Ct. 2389; United States v. Standard Oil Co., 332 U.S. at 309-11, 67 S.Ct. 1604. Thus, if state law would actually frustrate rather than only hinder a federal program, federal common law must be applied regardless of state interests. See, e. g., United States v. Little Lake Misere Land Co. On the other hand, the Supreme Court has demonstrated a growing desire to minimize displacement of state law. See Miree v. DeKalb County, 1977, --- U.S. ----, 97 S.Ct. 2490, 53 L.Ed.2d 557.
38
Each side of this controversy has provided us with weights for its side of the scale. Georgia Power points to the degree of federal involvement in a licensed project. A license is a prerequisite to construction of a project. 16 U.S.C. § 817 (1970). The design, construction, recreation facilities, and ecological impact of a project are subject to approval by the FPC. 16 U.S.C. § 803, (1970), 18 C.F.R. § 4.41 et seq. (1977). The Commission has certain powers to regulate the rates and charges of electricity generated by the project. 16 U.S.C. §§ 812-13 (1970). Georgia Power also points out that the federal government has a financial interest in minimizing acquisition costs for a licensed project since it holds an option to acquire the project when the license expires upon payment of net investment, less certain items. 16 U.S.C. § 807 (1970). In addition, Georgia Power notes that the government may acquire a project in time of national emergency, 16 U.S.C. § 809 (1970).
39
The landowners emphasize that this lawsuit involves private parties and that Georgia Power (or any other licensee) is likely to condemn property only in the state where it operates. They also point out that property rights are a traditional state concern and that Georgia has an elaborate law of eminent domain that reflects considered policy judgments a state would want the federal courts to respect. Finally they contend that no substantial rights and duties of the United States hinge on the outcome of this litigation.
40
The balance tips toward the need for federal law. That this controversy is between private parties is not determinative. Miree v. DeKalb County, --- U.S. ----, ----, 97 S.Ct. 2490, 53 L.Ed.2d 557 (Burger, C. J., concurring); United States v. Little Lake Misere Land Co., 412 U.S. at 592-93, 93 S.Ct. 2389; Bank of America v. Parnell, 352 U.S. at 34, 77 S.Ct. 119. Nor must we automatically apply state law because property is involved. Little Lake involved a property transaction. Moreover, eminent domain is not like most areas of property law, where state regulation has been virtually exclusive, but one where the United States has developed and exercises an independent power. See, e. g., Kohl v. United States, 91 U.S. 367, 23 L.Ed. 449.
41
One possible reason for adopting state law as the federal rule of decision is the advantage of knowing what state law says compared with the uncertainty as to rules the federal courts would create. See McKenna v. Wallis, 5 Cir. 1965, 344 F.2d 432, 444 (Wisdom, J., dissenting), rev'd sub nom., Wallis v. Pan American Petroleum Corp., 1966, 384 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d 369; Note, The Federal Common Law, 82 Harv.L.Rev. 1512, 1519 (1969). Since federal law on compensation already exists, there is no such reason to adopt state law here.25
42
Most importantly, federal common law of compensation is the appropriate choice in this case because the use of state law could interfere with achievement of congressional aims. Even when Congress passed the Federal Power Act in 1920 its primary concern was to stimulate private development of America's hydroelectric power resources. See, e. g., First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 1946, 328 U.S. 152, 180, 66 S.Ct. 906, 90 L.Ed. 1143; 56 Cong.Rec. 9810 (remarks of Mr. LaFollette); H.R.Rep.No.715, 65th Cong., 2d Sess. 15. That goal has become even more significant with the energy shortages of the 1970's and the adoption of a national policy to reduce dependence on foreign sources of energy. To fulfil that congressional policy, hydroelectric development must be maximized. The use of state rules of compensation when they would produce a substantially higher award for the landowner could retard development and frustrate the goal of full utilization of hydroelectric resources. If we considered only the increased cost to the Lake Wallace project from these appeals the interference with the federal policy might not appear significant. When, however, all the acquisitions for a major project are grouped together, and even more so when many licensed projects are considered as an aggregate, the increase in cost and the accompanying chill on development resulting from adoption of state rules such as those in Georgia would be substantial. State compensation rules could also interfere with the national interest in reducing energy costs because the higher land acquisition expenses would need to be offset by higher utility rates.
43
The federal government's option under Section 14 of the Act, 16 U.S.C. § 807, to acquire a project at the expiration of a license creates another United States interest in minimizing the cost of licensed facilities by applying federal valuation rules. See First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U.S. at 172-73, 66 S.Ct. 906;26 Public Utility District No. 1 v. City of Seattle, 9 Cir. 1967, 382 F.2d 666, 675 (Byrne, J. dissenting) 1969, cert. dismissed, 396 U.S. 803, 90 S.Ct. 22, 24 L.Ed.2d 59. Congress expressed an interest in keeping this option price down when it passed the Federal Power Act. Rep. Ferris submitted a Minority Report to the original House Bill, because it did not include a provision limiting the option price of projects which had decreased in value to the fair value of the property taken, H.R.Rep.No.715, 65th Cong., 2d Sess. 40 (Minority Report). In Rep. Ferris' eyes, this omission meant the option price could be so high that no government would be justified in paying it. Id. at 40. Congress eventually added Rep. Ferris' amendment, thereby expressing an interest in controlling acquisition costs. Use of federal compensation standards would reduce the option price and further this congressional desire to make government acquisition a realistic possibility.
44
For these reasons, we find that nothing in United States v. Clearfield Trust Co. and its progeny gives reason to diverge from the practice of employing federal compensation rules in a federal compensation proceeding. If anything, those cases push toward use of the federal law. As required by Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d 369, a significant conflict between the federal policy of the Federal Power Act and the use of Georgia law can be shown.27
45
The appellants have raised a third argument against federal law in Section 21 cases. They contend that if we apply federal common law, licensees such as Georgia Power will have the choice of a Section 21 suit in federal court with federal rules or a suit in state court governed by state law. This, they continue, is the type of forum shopping Erie Railroad Co. v. Tompkins condemns. See also Hanna v. Plumer, 1965, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8; see generally, Ely, The Irrepressible Myth of Erie, 87 Harv.L.Rev. 693 (1974). Erie, of course, does not apply directly to this litigation because the source of the Section 21 condemnation power is federal. E. g., Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838.
46
Any broader implications of the Erie decision about the desirability of uniformity between state and federal courts do not apply here either. If a licensee were to bring a Section 21 condemnation action in a state court, that court would be required to follow the same law as a federal court even if that were federal common law. Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 405 (1964). See also P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart and Wechsler's The Federal Courts and the Federal System at 825 (1973). If the proceeding in the state court is under the federal power, the defendant may remove. 7 Moore's Federal Practice P 71A.10(2) at 71A-252 (2d ed. 1975).28 Thus, there would not be different substantive rules of decision depending upon the forum chosen. If a licensee brought a state condemnation action in state court, state law would govern. E. g., Grand River Dam Authority v. Grand Hydro, 335 U.S. at 372-73, 69 S.Ct. 114. But, if a state condemnation action were brought in federal court assuming there is jurisdiction29 state law would also govern of its own force under Erie. 12 Wright & Miller, Federal Practice and Procedure: Civil § 3055 (1973). Again, there would be no difference in substantive law according to forum. Insofar as the appellants' argument rests on the possibility that different substantive rules might be applied in a state action in state court compared with a federal action in federal court, they can find no comfort in Erie. Justice Brandeis said nothing about a need for uniformity in different causes of action based on similar or even identical facts.
IV.
47
The appellants argue to us that a decision to apply federal common law in this litigation would render Section 21, as applied, unconstitutional. The theory is that a law permitting Georgia Power to "grant" the benefits of Georgia law arbitrarily through its choice of forum denies equal protection to landowners sued under the federal rather than the state statute. This contention was mentioned (though not developed) in several of the original answers to Georgia Power's condemnation complaint, but otherwise appears to have received no attention below.30 Part of the argument rests on a disputed factual assertion that Georgia Power arbitrarily discriminates among condemnees by bringing some state suits in state court, where the court would apply the more generous compensation formula, against landowners situated similarly to appellants. The district court had no opportunity to rule on this factual dispute or the equal protection argument. Therefore, we need not consider them. See, e. g., Commercial Credit Business Loans, Inc. v. St. Louis Terminal Field Warehouse, 5 Cir. 1974, 514 F.2d 75, 77; E. E. O. C. v. Standard Forge and Axle Co., 5 Cir. 1974, 496 F.2d 1392, 1394-95; D. H. Overmyer Co. v. Loflin, 5 Cir. 1971, 440 F.2d 1213, 1215, cert. denied, 404 U.S. 851, 92 S.Ct. 87, 30 L.Ed.2d 90. To the extent the equal protection issue is before us, we find it without merit. There can be no contention that any landowner will be awarded constitutionally inadequate compensation if federal law controls since the federal rules satisfy the requirements of the fifth amendment. See, e. g., United States v. Miller, 1943, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336. Nor can we seriously consider the possibility that there are constitutional difficulties whenever a prosecutor or other plaintiff meeting state action requirements may choose between two or more causes of action with different consequences for defendants. If there were, the Justice Department could not constitutionally choose to bring a civil antitrust suit against one offender and a criminal suit against another.
V.
48
The appellants have made several other arguments in their briefs and at oral argument which we regard as unnecessary to discuss in this opinion. We have, however, considered these arguments. We find them to be without merit.
49
NO. 75-4448 AFFIRMED.
50
NO. 77-1327 AFFIRMED AND REMANDED FOR FURTHER PROCEEDINGS.
SIMPSON, Circuit Judge, dissenting:
51
Congress, in enacting a general scheme for the regulation of hydroelectric power, has authorized a state party licensed by the Federal Power Commission to bring a federal eminent domain action, but has failed to specify whether state or federal law should govern the measure of compensation. It is our function as a federal court to choose which law to apply, neither having been legislatively mandated. Our choice must follow the Supreme Court's pronouncements regarding federal common law. Believing that the majority in this case has wrongly chosen to apply federal law, I dissent in order to register the reasons for my disagreement.
I. WHEN AND HOW TO MAKE A CHOICE OF LAW
52
In exercising its commerce power to enact a comprehensive regulatory plan, Congress recognized a distinct federal interest in the use of navigable waters for producing hydroelectric power. 16 U.S.C. §§ 791a et seq. (1970) (The Federal Power Act). As is the case with any federal legislation, Congress acted "against the background of the total corpus juris of the states". Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 1304, 16 L.Ed.2d 369 (1966), citing Hart & Wechsler, The Federal Courts and the Federal System 435 (1953). Although the federal statute necessarily displaces some state law, the " 'presence of a federal statute does not necessarily imply that there is a congressional intent that any particular issue be resolved by reference to federal law' ".1 "Whether latent federal power should be exercised to displace state law is primarily a decision for Congress". Wallis, supra, at 68, 86 S.Ct. at 1304. A choice of law problem arises when Congress has failed to make that decision; the courts must then fill the vacuum by deciding which law shall govern. As Judge Friendly has put it:
53
The issue that must be determined in each instance is what heed Congress intended to have paid to state law in an area where no heed need constitutionally be paid more realistically, in Gray's famous phrase, "to guess what it would have intended on a point not present to its mind, if the point had been present".2
54
Regardless of whether state or federal law is chosen, "the question is one of federal policy . . . . And the answer to be given necessarily is dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law". United States v. Standard Oil Co., 332 U.S. 301, 309-10, 67 S.Ct. 1604, 1609, 91 L.Ed. 2067 (1947). In his prescient dissent in McKenna v. Wallis, Judge Wisdom explained how the principles of federalism affect the choice of law:
55
Before a court plugs a statutory gap with federal law that is inconsistent with local law . . . consideration for the position of the states in the federal system suggests that the Court find congressional intent that federal common law should prevail over state law. . . . When congressional intent is unclear or when a specific congressional intent never existed, a reasonable criterion is that judge-made common law should not prevail over local law unless that result is manifestly in the national interest. 344 F.2d at 444-45.
56
Judge Wisdom's view prevailed in the Supreme Court. In reversing the Fifth Circuit in Wallis, the Court stated: "In deciding whether rules of federal common law should be fashioned, normally the guiding principle is that a significant conflict between some federal policy or interest and the use of state law in the premises must first be specifically shown." Wallis, supra, at 68, 86 S.Ct. at 1304. This language nearly, if not quite, establishes a presumption favoring state law in choice of law cases.3
57
A review of the Supreme Court's decisions in this area reveals a far more certain direction than what the majority calls "a changing emphasis of factors and shifting preferences for one law or the other". Majority opinion, supra at 1188. Because the decision is one of federal policy, it will always be possible to identify some federal interest, and thus some conflict with state law necessitating a choice.4 The key, as stated in Wallis, is that this conflict be "significant". Thus, in the seminal case of Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943), federal law was chosen because
58
(t)he issuance of commercial paper by the United States is on a vast scale . . . . The application of state law . . . would subject the rights and duties of the United States to exceptional uncertainty. It would lead to great diversity in results by making identical transactions subject to the vagaries of the laws of the several states. The desirability of a uniform rule is plain. Id. at 367, 63 S.Ct. at 575.
59
In Standard Oil Co. v. United States, supra, the strength of the federal interest argued forcefully in favor of applying federal law: "perhaps no relationship between the Government and a citizen is more distinctively federal in character than that between it and members of its armed forces". 332 U.S. at 305, 67 S.Ct. at 1607. Similarly, in United States v. Little Lake Misere Land Co., Inc., 412 U.S. 580, 93 S.Ct. 2389, 37 L.Ed.2d 187 (1973), state law directly hostile to a clear, congressionally declared federal interest was displaced because:
60
(t)o permit state abrogation of the explicit terms of a federal land acquisition would deal a serious blow to the congressional scheme contemplated by the Migratory Bird Conservation Act and indeed to all other federal land acquisition programs. These programs are national in scope. . . . Certainty and finality are indispensable in any land transaction, but they are especially critical when, as here, the federal officials carrying out the mandate of Congress irrevocably commit scarce funds. Id. at 597, 93 S.Ct. at 2399.
61
In contrast, where the federal interest is attenuated or speculative, the cases favor application of state law absent a showing that such law is clearly inadequate to serve the federal interest. Thus, in Bank of America National Trust and Savings Association v. Parnell, 352 U.S. 29, 77 S.Ct. 119, 1 L.Ed.2d 93 (1956), state law was applied because the possibility that "the floating of securities of the United States might somehow or other be adversely affected by the local rule of a particular State regarding the liability of a converter . . . is far too speculative, far too remote a possibility to justify the application of federal law to transactions essentially of local concern". Id. at 33, 77 S.Ct. at 121. In Wallis v. Pan American Petroleum Corp., supra, although a panel of this Court concluded that the federal interest in promoting exploration for development of domestic reserves of oil and gas, as expressed in the Mineral Leasing Act of 1920, 30 U.S.C. §§ 181 et seq., demanded application of federal common law to the assignability of leases, 344 F.2d at 441-442, the Supreme Court disagreed: "However fitting this approach may be where a State interposes unreasonable conditions on assignability, it can have no force in this instance because Louisiana concededly provides a quite feasible route for transferring any mineral lease . . ." 384 U.S. at 71, 86 S.Ct. at 1305. This Court was again reversed in Miree v. DeKalb County, Ga., --- U.S. ----, 97 S.Ct. 2490, 53 L.Ed.2d 557 (1977), in which the survivors of deceased airline passengers attempted to sue the county, as owner of a municipal airport, on a third party beneficiary theory, claiming protection under a contract between the county and the Federal Aviation Administration. The county claimed immunity from suit under Georgia law. Holding that state law should be applied, the Court noted that even though "the United States has a substantial interest in regulating aircraft travel and promoting air travel safety", this interest was too remote and speculative to warrant application of federal law "given the narrow question before us". Id. at ----, 97 S.Ct. at 2495.
62
II. CHOICE OF LAW AND COMPENSATION IN FEDERAL CONDEMNATIONS
63
My first point of departure from the majority is in their apparent conclusion that the rules governing choice of law are different in the context of compensation in federal eminent domain actions. The majority states that "(c) ourts apply independent rules, however, when considering the specific issue of compensation in federal condemnations", and considers itself bound to follow these "independent rules" "unless there are circumstances unique to a federal condemnation under Section 21 which require the opposite result". Majority opinion, supra, at 1186. After rejecting possible distinctions based on Section 21, the majority concludes: "In summary, we find no reason to ignore the general rule of following federal law to set compensation in a federal condemnation because the United States is not taking the land directly". Id. at 1188.
64
With due respect, I think the majority misreads the cases dealing with choice of law in federal condemnation. The cases cited by the majority opinion, beginning with United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336 (1943), clearly establish that compensation in federal condemnation is a federal question.5 What these cases do not establish, as I think the majority incorrectly interprets them, is that the federal common law of compensation is presumed to govern in all federal condemnations.6 This distinction was concisely explained by Judge Friendly in his analysis of Clearfield Trust :
65
Clearfield decided not one issue but two. The first . . . is that the right of the United States to recover for conversion of a Government check is a federal right, so that the courts of the United States may formulate a rule of decision. The second . . . is whether, having this opportunity, the federal courts should adopt a uniform nation-wide rule or should follow state law.7
66
In federal condemnation actions compensation is clearly a federal question. But whether it is resolved by substantive state or federal law presents a choice of law problem no different from any other: the choice "is dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law". Standard Oil, supra, 332 U.S. at 309-10, 67 S.Ct. at 1609.8III. CHOICE OF LAW INTEREST ANALYSIS IN THE INSTANT CASE
67
Because I view this case as presenting a traditional choice of law question, I think it is highly relevant that the federal eminent domain power here is exercised pursuant to Section 21 and that the United States is not a party to the action. These distinctions significantly color the "specific governmental interests" involved and dictate a choice of law other than that made by the majority.
68
I agree that the Federal Power Act delegates the full federal power of eminent domain to a licensee under Section 21, but I think the majority is off base in concluding that this full delegation renders irrelevant any distinction between the United States and licensees as parties to a condemnation. Our focus should be directed toward the interests of the parties, not toward the degree of delegation. The Act clearly expresses a legislative finding that the United States has a distinct interest, one greater than that of a licensee. Under Section 7(b) of the Act, 16 U.S.C. § 800(b), the Federal Power Commission may not issue a license where it has found that "the development of any water resources for public purposes should be undertaken by the United States itself". See Udall v. F. P. C., 387 U.S. 428, 87 S.Ct. 1712, 19 L.Ed.2d 869 (1967). I thus find persuasive the reasoning of the Ninth Circuit in Public Utility District No. 1 of Pend Oreille Co. v. City of Seattle, 382 F.2d 666, 669-70 (9th Cir. 1967), cert. dismissed, 396 U.S. 803, 90 S.Ct. 22, 24 L.Ed.2d 59:9
69
We first observe that the position of a licensee is distinguishable from that of the United States with respect to furthering the national interest. By issuance of a license the United States is not acting in the national interest through the licensee to the same extent as it would if it undertook the project itself. The United States acts in the public interest on a national scale; the licensee often on a local scale, on projects thought to be of insufficient dimensions to warrant the assertion of national power. In many cases the requirements of federal permission and regulation are all that the national interest requires. Frequently the licensee is a privately owned utility or even manufacturer, seeking the license for purposes of profit.
70
For these reasons, I conclude that a Section 21 condemnation does not involve the same degree of federal interest as a condemnation by the United States itself.10
71
The majority concedes that "(e)ven if a sharp distinction between a licensee and the United States cannot be drawn, it may be that the federal interest in the price paid for licensed hydroelectric plants is less than in other government projects. If so, use of state law would be appropriate . . ..", majority opinion at 1188. After weighing the relative state and federal interests, the majority concludes that "(t)he balance tips toward the need for federal law", majority opinion, supra at 1189. Herein lies my second point of departure.
72
Georgia's interest in having its compensation law applied is manifest. This case involves only Georgia parties and Georgia land. The state's law of compensation is more favorable to the landowner than is the federal law. As a federal court we are not concerned with the wisdom of that policy; all that is relevant to our consideration is that Georgia has decided how best to serve the interests of its citizens. Absent the fact that the state utility here is exercising a federal power pursuant to a federal statute, this would be a classic case of traditionally and exclusively local concern.
73
But the majority, in construing the Federal Power Act, finds a "significant conflict" with state law as required by Wallis : "federal common law of compensation is the appropriate choice in this case because the use of state law could interfere with achievement of congressional aims", majority opinion, supra at 1190. The majority cites two aims of the statute. Neither, I submit, is threatened by the application of state law.
74
The majority notes in the first place that the "primary concern" of Congress in passing the Act "was to stimulate private development of America's hydroelectric power resources", majority opinion, supra at 1190. This goal is frustrated in jurisdictions where, as here, the state law of compensation produces a substantially higher award for the landowner. This assumption I view as much too conjectural to afford a basis for application of federal law. The majority admits that the increased cost of the project involved in this case might not substantially interfere with federal goals; it is only when "all the acquisitions for a major project are grouped together, and even more so when many licensed projects are considered as an aggregate", majority opinion, supra at 1190, that the "accompanying chill" on development becomes significant. We have been presented with no data as to such aggregate costs or, for that matter, whether the laws of other states present a similar conflict with federal law. It was precisely this type of rationale to remove "obstacles to exploration for development" which led this Court astray in McKenna v. Wallis, 344 F.2d at 441. In reversing the Fifth Circuit, the Supreme Court cautioned that while such a rationale might be "fitting . . . where a State interposes unreasonable conditions . . . it can have no force" where the state law "provides a quite feasible route" to accomplish the immediate goal in that case, to assign a lease, here, to compute just compensation. 384 U.S. at 70, 86 S.Ct. at 1305.
75
Secondly, the majority finds a direct federal interest "in minimizing the cost of licensed facilities by applying federal valuation rules", majority opinion, supra at 1190, because under Section 14 of the Act, the federal government has the option to acquire a project at the expiration of a license. 16 U.S.C. § 807. I cannot accept the majority's conclusion that "(u)se of federal compensation standards would reduce the option price and further this congressional desire to make government acquisition a realistic possibility", majority opinion, supra at 1191. Again, we lack the data to conclude that the additional cost imposed under Georgia law would make federal acquisition less than "a realistic possibility". Furthermore, the statute does not clearly mandate inclusion of that extra cost in the federal option price.11 Of course, we have no way of knowing at this point if the United States ever will exercise its option at all. At best, then, the effect on the fiscal interests of the United States is highly speculative.12 When this court evinced similar solicitude for the federal fisc in Miree v. DeKalb County, Ga., supra, the Supreme Court reversed because "the resolution of petitioners (sic) breach of contract claim against respondent will have no direct effect upon the United States or its Treasury". --- U.S. at ----, 97 S.Ct. at 2494.
76
Finally, there is a single, telling argument which effectively refutes the majority's reading of congressional intent. In finding that "Congress did not believe it necessary to follow state eminent domain rules or desire courts to do so," majority opinion, supra at 1183, the majority overlooks the fact that Congress left up to the licensee whether to acquire land through a Section 21 action or a state condemnation. The majority admits: "If a licensee brought a state condemnation action in state court, state law would govern.", majority opinion, supra at 1192. It is well established that "under this Act . . . the condemnor has an election to exercise the power of eminent domain either under the specified enumerations of the Federal Power Act or under" the law of the state. Oakland Club v. South Carolina Public Service A., 110 F.2d 84, 86 (4th Cir. 1940), cited with approval in Chapman v. Public Utility District No. 1, 367 F.2d 163, 167 (9th Cir. 1963). This Circuit has recognized that the state eminent domain power is "separate and distinct" from that granted a licensee under a federal statute analogous to Section 21. Robinson v. Transcontinental Gas Pipe Line Corp., 421 F.2d 1397, 1398 (5th Cir. 1970). Congress' commerce power is plenary. Presumably, if Congress could forbid the construction of hydroelectric facilities using navigable waters without a license granted by the FPC, 16 U.S.C. § 817,13 it could have required application of federal law in any condemnation to secure land for purposes of building such facilities. That it did not do is significant.14
77
Rather, "(i)n the Federal Power Act there is a separation of those subjects which remain under the jurisdiction of the states from those subjects which the Constitution delegates to the United States and over which Congress vests the Federal Power Commission with authority to act". First Iowa Hydro-Elec. Coop. v. FPC, 328 U.S. 152, 167, 66 S.Ct. 906, 913, 90 L.Ed. 1143 (1946). "The Act leaves to the states their traditional jurisdiction subject to the admittedly superior right of the Federal Government, through Congress, to regulate interstate and foreign commerce". Id. at 171, 66 S.Ct. at 915. Congress was careful not to cast the regulation of hydroelectric plants in an entirely federal mold; it decided to leave many of the incidents of regulation to the states.15 The legislative history shows no concern by Congress over whether licensees pay for condemned land according to state or federal rules of compensation. Congress had but failed to exercise the power to assure application of a uniform, federal standard in any exercise of eminent domain power, state or federal, to acquire land on which to build these federally regulated facilities. Against this background, I cannot concur in the majority's exotic interpretations of an intent that Congress surely never had.
IV. CONCLUSION
78
In sum, I do not dispute that there is a great national interest in promoting the development of domestic sources of energy. But it is for Congress, in the first instance, to say how this interest is to be achieved. Where the federal regulatory scheme comes in conflict with state law and thus with a state interest, we need some affirmative indication that Congress intended the federal common law to govern before we go about displacing state law. Such an indication might be inferred from the mere presence of a conflict significant in that it substantially impedes achievement of federal aims. Otherwise, we are to presume that Congress felt the national interest adequately served by application of state law.
79
I do not think it can fairly be said that Congress intended the result reached by the majority. Failing that, we are left to analyze the respective federal and state interests in determining which law to apply. Against clear, substantial and immediate state interests we are met with only speculative, attenuated national concerns and offered no persuasive arguments as to why the Georgia law of compensation is unreasonable or inadequate to achieve the broad goals of the Federal Power Act. I conclude that "the application of federal common law to resolve the issue presented in this case would promote no federal interests even approaching the magnitude of those found in Clearfield ". Miree, supra, --- U.S. at ----, 97 S.Ct. at 2493. Thus, there is no "significant conflict". Georgia's law should be applied.
80
To put it simply: We had to make a choice of law, but I am convinced that the majority has made the wrong choice.
81
I respectfully dissent.
1
The numerous appellants in this consolidated appeal fell into three groups for briefing purposes. In addition, Mrs. Nellie W. Larman, another landowner involved in a Lake Wallace condemnation proceeding, filed an amicus brief. Because each appellant's argument, if successful, would benefit the appellants as a group, we generally have not identified the particular party advancing an argument discussed in this opinion
2
42 F.P.C. 356 (1969). At that time, the project was known as the Laurens Shoals Project and the license is issued in that name
3
After the hearing, Judge Bootle provided a Memorandum to Counsel citing cases supporting his conclusion that federal law of compensation applies. Those cases are Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838; United States v. County of Allegheny, 1944, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209; United States v. Standard Oil Co., 1947, 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067; United States v. Yazell, 1966, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404; Duvall-Wheeler Livestock v. United States, 5 Cir. 1969, 415 F.2d 226; United States v. McCleskey Mills, Inc., 5 Cir. 1969, 409 F.2d 1216
4
During the condemnation proceedings of 75-4448 the appellant Jim Dodson conveyed his interest in the condemned property to Patricia Womack. On March 21, 1975 Judge Bootle granted Georgia Power's motion to add Patricia Womack as a defendant
5
The composition of the Commission and the Instructions given to the Commissioners are the same in both cases before us
6
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as the rules of decision in civil actions in the courts of the United States, in cases where they apply
28 U.S.C. § 1652 (1970).
7
The Miller opinion specifically interpreted the following statutes:
In every case in which the Secretary of the Treasury or any other officer of the Government has been, or hereafter shall be, authorized to procure real estate for the erection of a public building or for other public uses, he may acquire the same for the United States by condemnation, under judicial process, whenever in his opinion it is necessary or advantageous to the Government to do so, and the Attorney General of the United States, upon every application of the Secretary of the Treasury, under this section and section 258 of this title, or such other officer, shall cause proceedings to be commenced for condemnation within thirty days from receipt of the application at the Department of Justice.
40 U.S.C.A. § 257.
The practice, pleadings, forms and modes of proceeding in causes arising under the provisions of this act shall conform, as near as may be, to the practice, pleadings, forms and proceedings existing at the time in like causes in the courts of record of the State within which such (district court is) held, any rule of the court to the contrary notwithstanding.
Act of Aug. 1, 1888, c. 728 § 2, 25 Stat. 357. This section was codified, as amended, at 40 U.S.C. § 258 until it was superceded by Rule 71A of the Federal Rules of Civil Procedure.
The Secretary of the Army may cause proceedings to be instituted, in the name of the United States in any court having jurisdiction of such proceedings, for the acquirement by condemnation of any land, right of way or material needed to enable him to maintain, operate or prosecute works for the improvement of rivers and harbors for which provision has been made by law; such proceedings to be prosecuted in accordance with the laws relating to suits for the condemnation of property of the States wherein the proceedings may be instituted: Provided, however, That when the owner of such land, right of way, or material shall fix a price for the same, which in the opinion of the Secretary of the Army, shall be reasonable, he may purchase the same at such price without further delay: And provided further, That the Secretary of the Army is authorized to accept donations of land or materials required for the maintenance or prosecution of such works.
33 U.S.C.A. § 591.
8
16 U.S.C. § 797(a) and (c) (1970)
9
16 U.S.C. § 797(f) (1970)
10
16 U.S.C. § 800(a) (1970)
11
16 U.S.C. § 803(e) (1970)
12
16 U.S.C. § 807 (1970)
13
16 U.S.C. § 812 (1970)
14
16 U.S.C. § 813 (1970)
15
16 U.S.C. § 821 (1970)
16
The dissent makes much of the fact that Congress did not assure "application of a uniform, federal standard in any exercise of eminent domain power, state or federal, to acquire land on which to build these federally regulated facilities". (Emphasis changed.) This omission becomes much less telling when one realizes that it is not certain that Congress had the power to compel such uniformity
Congress could not have simply passed a statute instructing the states to apply federal rules of compensation whenever a licensee chose to exercise a state-granted power of eminent domain to take property for a licensed project. As Justice Brandeis stated in Erie : "Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or 'general,' be they commercial law or a part of the law of torts". 304 U.S. at 78, 58 S.Ct. at 822.
Nor could Congress have passed a law forbidding a state from delegating state eminent domain power to a federal licensee. A state has exclusive control over its power of eminent domain. Kohl v. United States, 91 U.S. at 372-73, 23 L.Ed. 449. Just as the federal government could not force the states to grant licensees the use of state eminent domain power, it could not force them not to make the grant.
17
We note that Congress passed the Federal Power Act in 1920, during the era of Swift v. Tyson, 1842, 41 U.S. 1, 10 L.Ed. 865. Thus, Congress would have expected federal courts to apply general common law absent a specific congressional direction to the contrary
18
The other Eighth Circuit cases are Central Nebraska Public Power & Irrigation Dist. v. Harrison, 8 Cir. 1942, 127 F.2d 588, Central Nebraska Public Power & Irrigation Dist. v. Fairchild, 8 Cir. 1942, 126 F.2d 302; Samuelson v. Central Nebraska Public Power & Irrigation Dist., 8 Cir. 1942, 125 F.2d 838; Burnett v. Central Nebraska Public Power & Irrigation Dist., 8 Cir. 1942, 125 F.2d 836; McGinley v. Central Nebraska Public Power & Irrigation Dist., 8 Cir. 1942, 124 F.2d 692; and Central Nebraska Public Power & Irrigation Dist. v. Berry, 8 Cir. 1942, 124 F.2d 586
19
This Circuit has held that § 7(h) of the Natural Gas Act, 15 U.S.C.A. § 717f(h), which is almost identical to § 21 of the Federal Power Act, does not preempt state laws of eminent domain. Robinson v. Transcontinental Gas Pipe Line Corp., 5 Cir. 1970, 421 F.2d 1397, cert. denied, 398 U.S. 905, 90 S.Ct. 1695, 26 L.Ed.2d 64
20
The other cases cited in various landowner briefs as expressing a direct or indirect conclusion that state law of compensation applies in a Section 21 condemnation are also off the mark. King v. Grand River Dam Auth., 10 Cir. 1964, 336 F.2d 682, expressly refuses to reach the issue. Id. at 683. In Tennessee Gas Transmission Co. v. Thatcher, 1949 W.D.La., 84 F.Supp. 344, aff'd sub nom Thatcher v. Tenn. Gas Transmission Co. 5 Cir. 1950, 180 F.2d 644, cert. denied, 340 U.S. 829, 71 S.Ct. 66, 95 L.Ed. 609, a landowner challenged § 7(h) of the Natural Gas Act. Among his theories was one that the Act violates the fifth amendment because it makes no provision within itself for ascertaining and paying adequate compensation. The district court rejected this challenge, noting that "it has been uniformly held that state procedure may be used in condemnation cases under Federal Laws" and citing Oakland Club. Id. at 346 (emphasis added). The Court of Appeals did not discuss the question specifically. The trial judge's statement is ambiguous and may refer only to procedural matters that have been governed by Rule 71A since 1951. At any rate, the complete lack of reasoning to support the statement undercuts any comfort the opinion may give to the appellants here. All the other cases cited as precedent for appellants' position are also either off point or unpersuasive
21
Despite the dissent's implication to the contrary, we are well aware of Judge Friendly's distinction between the question whether an issue is a federal one so that federal courts may formulate a rule of decision and the question whether the rule formulated should follow state or uniform national law. Judge Simpson reads these cases to establish only the first step, that compensation in a federal condemnation is a federal question. But the cases take the second step. They chose to apply uniform nation-wide rules
For instance, as the excerpt quoted by the dissent shows, dissenting opinion, at p. 1196 n. 6, the Supreme Court in Miller saw no need to determine local law of compensation. The reason was that the Court applied federal rules of decision. 317 U.S. at 373-79, 63 S.Ct. 276. The dissent singles out United States v. Certain Property as an example of a proper analysis of the choice of law issue. Dissenting opinion, at p. 1196 n. 7. The quoted segment suggests that Judge Friendly refused to rely on national law in federal condemnations. In fact, the quotation comes from a section of the opinion dealing only with the definition of "property", an issue not raised in this case. When Judge Friendly considered the much more relevant compensation question he acknowledged that compensation in federal condemnations is set by federal rules. He looked to state decisions only "in the absence of some authoritatively determined federal rule to the contrary" and only to the extent that the persuasiveness of state decisions justified including them into the national law. 344 F.2d at 147.
Nowhere do we suggest that the proper analysis for a choice of law question changes because the issue is one of just compensation in a federal condemnation. Nor do we consider ourselves blindly bound by past cases in the sense of reading them to mandate federal rules of compensation in every federal condemnation. We do find, however, that these cases are helpful starting points. Other courts in federal compensation cases have balanced the state and federal interests and have concluded that federal, rather than state, law should supply the rules of compensation. Unless we find the weights on our scale to be substantively different, we see no reason to diverge from the conclusion of the Supreme Court and some of our Courts of Appeals.
22
Although the Supreme Court reversed Tacoma on the technical ground that the state litigation constituted an improper collateral attack on a FPC determination, the Court's opinion casts doubt on the validity of the state court's substantive holding as well. See City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 339-40, 78 S.Ct. 1209, 2 L.Ed.2d 1345
23
No purchase, grant, lease, or other conveyance of lands, or of any title or claim thereto, from any Indian nation or tribe of Indians, shall be of any validity in law or equity, unless the same be made by treaty or convention entered into pursuant to the Constitution
24
16 U.S.C. § 715 et seq. (1970)
25
At oral argument, appellants contended for the first time that there is no federal common law of compensation. They would limit United States v. Miller, 1943, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336 and Bauman v. Ross, 1896, 167 U.S. 547, 17 S.Ct. 966, 42 L.Ed. 270, along with their rules that compensation need not include an increase in value created by the condemning project and may be offset by benefits created in remaining property, to the specific statutes implicated in the cases
This contention should have been raised long ago so the trial court could have considered it. Without ruling on the propriety of the instructions actually given below an issue not properly before us, see, e. g., Commercial Credit Business Loans, Inc. v. St. Louis Terminal Field Warehouse, 5 Cir. 1974, 514 F.2d 75, 77 we reject the appellants' general point that there is no federal common law of compensation. Cases such as Miller and Bauman have force independent of their statutory context. See, e. g., United States v. Trout, 5 Cir. 1967, 386 F.2d 216, 221. They hold that the compensation requirements of the fifth amendment not solely of the statutes involved are satisfied when project enhancement value is excluded and a set-off for specific benefits to remaining property is allowed. Only the fifth amendment limits the federal power of eminent domain, 1 Nichols' The Law of Eminent Domain §§ 1.14 & 1.3 (rev. 3d. ed. 1976). Since we find no indication that Congress did not delegate all of the federal power to condemn private property, the federal law defining the minimum compensation requirements of the fifth amendment becomes the law of compensation for a § 21 case.
26
In First Iowa the Supreme Court wrote:
The closeness of the relationship of the Federal Government to these (licensed) projects and its obvious concern in maintaining control over their engineering, economic and financial soundness is emphasized by such provisions as those of § 14 authorizing the Federal Government, at the expiration of a license, to take over the license project . . .
328 U.S. at 172-73, 66 S.Ct. at 915-16.
27
Judge Simpson disputes this conclusion. He says our concern that Georgia law may interfere with the development of hydroelectric power has led us down the wrong path travelled by the panel majority in McKenna v. Wallis. Dissenting opinion, at p. 1198. We disagree. The legislative history to the Federal Power Act shows that Congress strongly sought full and rapid development of hydroelectric power. That federal interest is solid and important. The panel in Wallis relied on a federal policy against monopolization of federally owned mineral deposits as well as a policy of development. The Supreme Court reversed the panel not because those policies were abstract or unimportant, but because Louisiana law did not interfere with them
Wallis turned on whether the interstices of a federal statute making federal oil and gas leases assignable should be filled with Louisiana law which did not recognize title by parol and resulting or constructive trusts. The panel majority's conclusion that Louisiana law would frustrate important policies rested on the unusual and speculative premise that:
Trusts ex maleficio are part of the congressional scheme for carrying out the national policies on mineral resources and monopoly. In litigation between private persons over the nature of the ownership of a federal mineral lease, national policies on mineral resources and monopoly will suffer unless courts recognize beneficial title to the lease in a claimant whom the Secretary has not investigated and has not approved as lessee, and who may be unknown to the Secretary.
McKenna v. Wallis, 5 Cir. 1965, 344 F.2d 432, 447-48 (Wisdom, J., dissenting), rev'd, 384 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d 369.
The civil law of Louisiana was clear and both easy and inexpensive to apply. In some ways, it promoted federal interests better than the common law. 344 F.2d at 446 (Wisdom, J., dissenting). It is certainly difficult to see how the choice of Louisiana law would interfere with the policies the panel majority claimed to be protecting. The federal government has the power to disapprove assignments running afoul of the anti-monopoly policy no matter what law governs assignments. 384 U.S. at 70, 86 S.Ct. 1301. Nor did the panel explain how the trust ex maleficio rarely invoked even in jurisdictions that recognize it could encourage development.
The difference in this case arises from the simple fact that people are more hesitant to pay more money for property than they are to meet inexpensive filing requirements. That Georgia provides some formula of compensation does not mean state law offers a feasible route to the federal objective if the resulting cost is substantially higher. We disagree with the dissent's assertion that any interference from the Georgia statute is conjectural. Dissent, at p. 1190. In No. 75-4448 the difference amounts to $540 an acre a substantial difference totaling almost $30,000 for that small tract alone. If Georgia law added a similar premium on every acre needed for the project the additional cost would be $11,456,100. Even if the average premium is only one-tenth of the one in No. 75-4448, the extra cost will be over $1,000,000. It is more than conjecture to conclude that such additional costs could interfere with the policy of full hydroelectric development.
28
A state based condemnation brought in state court by a federal licensee is not removable. 7 Moore's Federal Practice P 71A.10(2) at 71A-253 (2d ed. 1975); Algonquin Gas Transmission Co. v. Gregory, D.Conn.1952, 105 F.Supp. 64, cert. denied, 344 U.S. 818, 73 S.Ct. 13, 97 L.Ed. 637
29
Since § 21 does not appear to grant jurisdiction over state based condemnations, but see Oakland Club v. South Carolina Public Service Ass'n, 4 Cir. 1940, 110 F.2d 84, 86 and since a licensee's claim based on state law is not a federal question for purposes of jurisdiction on the basis of a general federal question, 7 Moore's Federal Practice P 71A.11 (2d ed. 1975), such jurisdiction would most likely be based upon diversity of citizenship. See 12 Wright & Miller, Federal Practice and Procedure: Civil § 3055 (1973), 13 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3577 (1975)
30
The district court did not mention the issue in its order denying the motion to apply federal law
1
Note, The Competence of Federal Courts to Formulate Rules of Decision, 77 Harv.L.Rev. 1084, 1090 (1964), cited in McKenna v. Wallis, 344 F.2d 432, 450 (5th Cir. 1965) (Wisdom, J., dissenting), rev'd sub nom., Wallis v. Pan American Petroleum Corp., 382 U.S. 63, 86 S.Ct. 1301, 16 L.Ed.2d 369 (1966)
2
Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 410 (1964)
3
Judge Wisdom favored such a presumption in his Wallis dissent when he wrote: "The political logic of federalism supports placing the burden of persuasion on those urging national action". 344 F.2d at 445, quoting Wechsler, The Political Safeguards of Federalism: The Role of the States in the Composition and Selection of the National Government, 54 Colum.L.Rev. 543, 545 (1954). I find it incongruous that Judge Wisdom, whose position in Wallis was adopted by the Supreme Court, today dilutes his own proposition of a decade ago by writing that "the Supreme Court has demonstrated a growing desire to minimize displacement of state law", majority opinion, supra at 1189
4
Of course, if application of either federal or state law would yield the identical result, there is no need to make a choice. See, e. g., United States v. 3,595.98 Acres of Land, 212 F.Supp. 617 (N.D.Cal.1962)
5
" 'Just compensation' is a federal question, as to which the state decisions are not authoritative". United States v. City of New York, 165 F.2d 526, 528 (2nd Cir. 1948)
6
In Miller, respondents argued that state law should be applied because Congress had so required. The Court replied:
We need not determine what is the local law, for the federal statutes upon which reliance is placed require only that, in condemnation proceedings, a federal court shall adopt the forms and methods of procedure afforded by the law of the State in which the court sits. They do not, and could not, affect questions of substantive right, such as the measure of compensation, grounded upon the Constitution of the United States. 317 U.S. at 379-80, 63 S.Ct. 283 (footnotes omitted).
This language is subject to many interpretations. To the extent that it may read to indicate that Congress "could not" apply state law to "the measure of compensation", it is dicta and of doubtful validity. Some courts have read Miller this broadly. See, e. g., United States v. 63.04 Acres of Land, 154 F.Supp. 198, 202 (E.D.N.Y.1957) ("Since we are dealing with a federal question (just compensation), the State Court rules or criteria are not controlling or persuasive".); 12 Wright & Miller, Federal Practice and Procedure: Civil § 3042 (1973). The principles of federalism argue strongly against so absolute a rule. Surely the theory underlying this rule was rejected by the Supreme Court in Clearfield Trust when it observed: "In our choice of the applicable federal rule we have occasionally selected state law". 318 U.S. at 367, 63 S.Ct. at 575 (emphasis added). See also Illinois v. City of Milwaukee, Wis., 406 U.S. 91, 107, 92 S.Ct. 1385, 1395, 31 L.Ed.2d 712 (1972) ("While federal law governs, consideration of state standards may be relevant".)
The majority argues that it has not misread the cases it cites because "the cases take the second step. They chose to apply uniform nation-wide rules". Majority opinion, supra, at 1186 n. 21. The issue, however, is why federal law was chosen in each of those cases what specific federal interests dictated that choice. Without analyzing those interests in depth here, see, e. g. notes 8 and 10, infra, I do note that in each of the cited cases the United States was the party condemning and paying for the land. In the instant case, a state utility will pay for the land. Surely this is relevant to determining the nature of the interests at stake. See note 11 infra.
7
Friendly, supra note 2, at 410. Judge Friendly applied this two-step analysis in United States v. Certain Property, 344 F.2d 142 (2nd Cir. 1965):
Next, says the Government, the question what the United States takes when it files a declaration of taking of real property is a question as to which federal courts may make an independent determination, free from any requirement . . . to follow state law. We fully agree. Where we break off from the Government is at its third proposition that the interest in nation-wide uniformity of federal condemnation makes it imperative for federal courts to use this freedom to ignore state property law in determining what the United States takes when it takes "real estate". Id. at 144 (citations omitted).
8
United States v. 93.970 Acres of Land, 360 U.S. 328, 79 S.Ct. 1193, 3 L.Ed.2d 1275 (1959), supports this view. In that case, the Supreme Court refused to apply a state election of remedies law where the United States sought, in one action, to condemn land and adjudicate the rights of a third party claiming a possessory interest in the land. The state law would have been manifestly unfair to the Government, presenting it with "a Hobson's choice". As the Court noted, "(w)e have often held that where essential interests of the Federal Government are concerned, federal law rules unless Congress chooses to make state laws applicable. It is apparent that no such choice has been made here". Id. at 332-33, 79 S.Ct. at 1196. (citations omitted). Thus, the Court did not automatically apply federal law. Rather, it looked to the classic choice of law factors: nature of the federal interest, hostility of the state law, and congressional intent
9
Although the Ninth Circuit offered this analysis in support of its finding that Section 21 does not delegate full eminent domain power, I cite it here because of its relevance to determining state and federal interests in this case
10
The majority contends that simply because "the property will be used privately is not reason enough" to draw a distinction, noting that "(i)n Miller, for instance, the United States took land for use by a private railroad", majority opinion at 1186. Examination of the facts in Miller, however, reveals a significant federal interest in the taking there an interest which by traditional choice of law standards amply justified the application of federal law. The United States condemned the land in question to allow relocation of private railroad tracks which otherwise would have run directly through an area soon to be flooded by the Central Valley Reclamation Project in California. In 1935, Congress authorized the appropriation of $12,000,000 for this project, construction of which was approved by President Roosevelt in December of that year. In the next two years, Congress appropriated another $19,400,000 for the project. 317 U.S. at 370-71, 63 S.Ct. at 278
11
In defining the option price, the statute provides that the United States "shall pay the net investment of the licensee in the project or projects taken, not to exceed the fair value of the property taken . . . " 16 U.S.C. § 807. Thus, while the concept of "net investment" is affected in the abstract by a higher price paid for a project when state compensation law is applied at the time of licensee acquisition, the statute limits the concept to "the fair value of the property taken . . . " if and when the federal option is exercised. The question here is whether "fair value" is also to be computed on the basis of state law or whether a uniform federal standard should be applied. Arguably, a stronger case for the application of federal law can be made here because there is a direct federal interest: the federal government is paying out of its own funds to acquire the project. Whether this is the construction of Section 14 that will ultimately prevail I do not forecast. These problems of interpretation are raised only to stress that whether the price paid by a state party in a Section 21 condemnation will affect the price later paid by the federal government in exercising its option under Section 14 is by no means certain.12 In Grand River Dam Authority v. Grand-Hydro, 335 U.S. 359, 69 S.Ct. 114, 93 L.Ed. 64 (1948), petitioner argued that because of the strong federal interest, the Oklahoma Supreme Court was required to apply federal law in an eminent domain action by a state agency to condemn land for a power site. The Court rejected this argument. Petitioner raised, inter alia, the fact that the United States had an option to acquire the project after the license expired. The Court responded: "Such a recapture of the project is even more remote than a determination of a rate base . . . . We accordingly express no opinion upon the issues which may arise when, as and if the above-mentioned proceedings may be taken". Id. at 375, 69 S.Ct. at 122
13
"The point is that navigable waters are subject to national planning and control in the broad regulation of commerce granted the Federal Government. . . . (T)he plenary power of Congress over navigable waters would empower it to deny the privilege of constructing an obstruction in those waters. It may likewise grant the privilege on terms. It is no objection to the terms and to the exertion of the power that 'its exercise is attended by the same incidents which attend the exercise of the police power of the states.' The Congressional authority under the commerce clause is complete unless limited by the Fifth Amendment". United States v. Appalachian Electric Power Co., 311 U.S. 377, 426-27, 61 S.Ct. 291, 308, 85 L.Ed. 243 (1940). This passage casts doubt on the majority's statement that "it is not certain that Congress had the power to compel such uniformity". Majority opinion, supra, at 1183 n. 16
14
"As to the question whether the Federal Power Act should be interpreted as actually superseding the state law of condemnation and as restricting the measure of valuation which lawfully may be used by the courts of Oklahoma in a condemnation action for the acquisition of land for power site purposes by an agency of that State, there is nothing in the Federal Power Act to indicate that an attempt has been made by Congress to make such a nationwide change in state laws". Grand River Dam Authority v. Grand-Hydro, 335 U.S. 359, 374, 69 S.Ct. 114, 121, 93 L.Ed. 64 (1948)
15
"The resulting integration of the respective jurisdictions of the state and Federal Governments, is illustrated by the careful preservation of the separate interests of the states throughout the Act, without setting up a divided authority over any one subject". First Iowa Hydro-Elec. Coop., supra, 328 U.S. at 174, 66 S.Ct. at 916
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FILED
NOT FOR PUBLICATION JUL 03 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
BALWINDER SINGH, No. 08-70546
Petitioner, Agency No. A077-421-841
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Argued and Submitted September 2, 2011
San Francisco, California
Before: FISHER and RAWLINSON, Circuit Judges, and MILLS, District Judge.**
Balwinder Singh petitions for review of the Board of Immigration Appeals’
(BIA) decision denying him asylum, withholding of removal, adjustment of status
and Convention Against Torture (CAT) relief on the basis that he provided
material support to the Khalistan Commando Force (KCF). We deny his petition.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Richard Mills, Senior United States District Judge for the
Central District of Illinois, sitting by designation.
1. The BIA did not err by denying Singh asylum and withholding of
removal based on the material support bar. See 8 U.S.C. § 1182(a)(3)(B)(iv)(VI).
First, relying on Cheema v. Ashcroft, 383 F.3d 848 (9th Cir. 2004), Singh argues
that he is eligible for relief unless, in addition to showing terrorist activity, the
government shows that there are “reasonable grounds to believe that [he] is a
danger to the security of the United States.” Id. at 855. This aspect of Cheema
was overruled by subsequent amendment to the Immigration and Nationality Act
(INA). See Bellout v. Ashcroft, 363 F.3d 975, 978 (9th Cir. 2004). Under the
current version of the INA, terrorist activity alone is a sufficient basis for denying
relief. See id. at 979 (citing 8 U.S.C. § 1158(b)(2)(A)(iv)-(v)).
Second, remand is not warranted because the immigration judge (IJ) stated
that Singh “engaged in terrorist activities within the meaning of [8 U.S.C.
§ 1182](a)(3)(B)(iv)(VI)(cc),” a provision that involves designated terrorist
organizations. The parties agree that the KCF is not a designated terrorist
organization, but is a terrorist organization under § 1182(a)(3)(B)(vi)(III).
However, “we review only the BIA’s decision, except to the extent that it expressly
adopts the IJ’s opinion.” Cordon-Garcia v. INS, 204 F.3d 985, 993 (9th Cir.
2000). The BIA’s analysis correctly recognized that the KCF was a terrorist
organization under § 1182(a)(3)(B)(vi)(III).
2
Third, the BIA had substantial evidence to conclude that Singh materially
supported a terrorist organization. He concedes that the KCF is a terrorist
organization. He testified that he provided meals and shelter for KCF members on
multiple occasions, and allowed one of his employees to hide a gun on behalf of a
KCF member. See 8 U.S.C. § 1182(a)(3)(B)(iv)(VI) (including a “safe house,”
“communications” and “weapons” as examples of material support).
2. The BIA did not exceed its authority by failing to address Singh’s
motion for adjustment of status or, in the alternative, by rejecting his motion for
adjustment of status. The BIA expressly rejected Singh’s motion for adjustment of
status because he provided material support to a terrorist organization, and it did
not err in doing so. An individual who provides material support to a terrorist
organization is inadmissible, see 8. U.S.C. § 1182(a)(3)(B)(i), and is therefore
ineligible for adjustment of status, see id. § 1255(a); see also An Na Peng v.
Holder, 673 F.3d 1248, 1258 (9th Cir. 2012).
3. Singh argues that this case should be remanded for the BIA to
consider whether he is entitled to a waiver under 8 U.S.C. § 1182(d)(3)(B)(i)
because he assisted the KCF under duress. The waiver provision, however, gives
“[t]he Secretary of State, after consultation with the Attorney General and the
Secretary of Homeland Security, or the Secretary of Homeland Security, after
3
consultation with the Secretary of State and the Attorney General” the “sole
unreviewable discretion” to grant waivers. See id. The BIA has no authority to
grant a waiver under § 1182(d)(3)(B)(I).1,2
4. Finally, Singh’s argument that the BIA erred by denying his request
for CAT deferral is moot, as Singh conceded at oral argument, because he
requested deportation and has since returned to India.
DENIED.
1
The Secretary of Homeland Security, after appropriate consultations, has
created a mechanism for U.S. Citizenship and Immigration Services (USCIS), in
consultation with U.S. Immigration and Customs Enforcement, to waive
applicability of the duress exception to aliens who assisted Tier III terrorist
organizations under duress. See Exercise of Authority Under Sec. 212(d)(3)(B)(i)
of the Immigration and Nationality Act, 72 Fed. Reg. 9958-01 (Mar. 6, 2007).
While this petition was pending, USCIS issued Singh a notice of determination
informing him that he was not eligible for a waiver.
2
For the reasons stated in the concurrently filed opinion in Annachamy v.
Holder, No. 07-70336, the material support bar contains no implicit exception for
individuals who provide material support under duress.
4
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Court of Appeals
Sixth Appellate District of Texas
JUDGMENT
Chad Ray Bennett, Appellant Appeal from the 354th District Court of
Hunt County, Texas (Tr. Ct. No. 29,345).
No. 06-14-00050-CR v. Memorandum Opinion delivered by Justice
Moseley, Chief Justice Morriss and Justice
The State of Texas, Appellee Burgess participating.
As stated in the Court’s opinion of this date, we find no error in the judgment of the court
below. We affirm the judgment of the trial court.
We note that the appellant, Chad Ray Bennett, has adequately indicated his inability to
pay costs of appeal. Therefore, we waive payment of costs.
RENDERED MARCH 12, 2015
BY ORDER OF THE COURT
JOSH R. MORRISS, III
CHIEF JUSTICE
ATTEST:
Debra K. Autrey, Clerk
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599 F.2d 860
Gerald Wayne HUFF, Appellee,v.UNITED STATES of America, Appellant.
No. 78-1825.
United States Court of Appeals,Eighth Circuit.
Submitted March 13, 1979.Decided June 6, 1979.
J. Whitfield Moody, Asst. U. S. Atty., Kansas City, Mo., for appellant; Ronald S. Reed, Jr., U. S. Atty., Kansas City, Mo., on brief.
Benjamin D. Entine, Asst. Federal Public Defender, Kansas City, Mo., for appellee; David R. Freeman, Federal Public Defender, Kansas City, Mo., on brief.
Before BRIGHT and STEPHENSON, Circuit Judges, and BOGUE, District Judge.*
BRIGHT, Circuit Judge.
1
Gerald Wayne Huff seeks relief under 28 U.S.C. § 2255 (1976) for his conviction and four-year sentence of imprisonment for dealing in firearms without a license, in violation of 18 U.S.C. § 922(a)(1) (1976).1 The district court set aside the conviction, basing its decision on the finding that Huff had been removed from and returned to state custody without being tried on the federal charge against him, in violation of the Interstate Agreement on Detainers Act (IAD), 18 U.S.C.App. § 2 (1976). The Government appeals. For the reasons stated below, we reverse.
2
I. Factual Background.
3
The Government indicted Gerald Wayne Huff on August 7, 1975, in the Western District of Missouri, for violations of 18 U.S.C.App. § 1201(a)(1) and 18 U.S.C. § 922(a)(1). At that time, Huff was serving a five-year state prison sentence at the Missouri Training Center for Men in Moberly, Missouri.
4
On August 25, 1975, pursuant to a writ of habeas corpus Ad prosequendum issued by the United States District Court for the Western District of Missouri and dated August 14, 1975, federal marshals took Huff into federal custody and confined him at the Jackson County Jail in Kansas City, Missouri. Because of the existence of the federal indictment, the United States Marshal's Office, on August 26, 1975, mailed a detainer to the state penitentiary in Moberly, Missouri. On August 27, Huff appeared before the United States Magistrate in Kansas City for an omnibus hearing relating to the federal charges against him, and on August 29 Huff pleaded not guilty at his arraignment in federal district court. The United States Marshal returned Huff to state custody on September 5, 1975.
5
On December 10, 1975, on the basis of the previously issued writ of habeas corpus Ad prosequendum, but after the filing of the detainer, Huff was again transferred to federal custody and confined at the Jackson County Jail in Kansas City. The record does not disclose the precise reason for the December transferral of Huff. On December 17, 1975, Huff returned to state custody in Moberly, Missouri.
6
Huff's third transfer to federal custody following the August 7, 1975 indictment occurred on January 15, 1976. Huff remained in federal custody until his trial and conviction in early February. On February 9, 1976, Huff was returned to state custody.2
7
On June 7, 1976, Huff petitioned the district court for relief pursuant to 28 U.S.C. § 2255, and alleged, for the first time, that the United States had violated the IAD by removing him from state custody without proceeding to trial. Initially, the district court denied Huff's petition because "the 'written request for temporary custody or availability' mentioned in the (IAD) does not include temporary custody obtained by means of a writ of habeas corpus Ad prosequendum (.)" Huff appealed to this court, and we remanded the case to the district court for reconsideration in light of the Supreme Court's decision in United States v. Mauro, 436 U.S. 340, 98 S.Ct. 1834, 56 L.Ed.2d 329 (1978).
8
On remand the district court dismissed the indictment against Huff and set aside his conviction for dealing in firearms without a license because of the Government's violation of the IAD.3
9
II. Discussion.
10
In United States v. Mauro, 436 U.S. 340, 98 S.Ct. 1834, 56 L.Ed.2d 329 (1978), the Supreme Court held that
11
(o)nce the Federal Government lodges a detainer against a prisoner with state prison officials, the (IAD) by its express terms becomes applicable and the United States must comply with its provisions. * * * The fact that the prisoner is brought before the District Court by means of a writ of habeas corpus Ad prosequendum in no way reduces the need for (the) prompt disposition of the charges underlying the detainer. (Mauro, supra, 436 U.S. at 361-62, 98 S.Ct. at 1848.)
12
In light of the detainer issued by the Government on August 26, 1975, the Government's removal of Huff from state to federal custody on December 10, 1975, triggered the provisions of the IAD. The Government's failure to try Huff on the pending federal charges against him before returning Huff to the state prison facility on December 17, 1975, constituted a failure to comply with the IAD.
13
We must decide whether Huff's prayer for relief, based on the Government's violation of the IAD, may be granted by the district court in a section 2255 action. Section 2255 reads, in pertinent part:
14
A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence.
15
A motion for such relief may be made at any time.
16
The statute entitles a prisoner, in custody under a sentence imposed by a federal court, to postconviction relief on the following four grounds: (1) the sentence imposed violates the Constitution or laws of the United States; (2) the court that imposed the sentence lacked jurisdiction to do so; (3) the sentence exceeds the maximum authorized by law; and (4) the sentence "is otherwise subject to collateral attack." Hill v. United States, 368 U.S. 424, 426-27, 82 S.Ct. 468, 470, 7 L.Ed.2d 417 (1962).
17
Here, there is neither a question about a constitutional violation nor a doubt that the United States District Court for the Western District of Missouri possessed jurisdiction over Huff. Huff's section 2255 claim for relief must rest on a claim that his conviction was in violation of the "laws of the United States," I. e., a violation of the IAD, or "is otherwise subject to collateral attack." When a section 2255 claim rests on either of those grounds, the alleged error must be "a fundamental defect which inherently results in a complete miscarriage of justice" and must present "exceptional circumstances where the need for the remedy afforded by the writ of Habeas corpus is apparent." Davis v. United States, 417 U.S. 333, 346, 94 S.Ct. 2298, 2305, 41 L.Ed.2d 109 (1974); Hill v. United States, 368 U.S. 424, 428, 82 S.Ct. 468, 7 L.Ed.2d 417 (1962).
18
Huff contends that the disruption in communication with his attorney caused by the Government's violation of the IAD presents the "exceptional circumstances" and results in the miscarriage of justice required before habeas corpus relief may be granted in a section 2255 action. In addition, Huff suggests that the violation of the IAD thwarted that statute's dual purpose of minimizing interference with a prisoner's participation in state prison treatment and rehabilitation programs and of expediting a prisoner's trial on charges pending in another jurisdiction.
19
In our judgment, Huff's claims either do not rise to the required level of seriousness or are unsubstantiated. Although the Government failed to comply with the provisions of the IAD, an examination of the record does not disclose that such violation caused Huff any harm, either in his defense to the pending federal charges or to his status in the state prison facility. Moreover, Huff neither made a speedy trial request nor demonstrated that the transfers between state and federal custody caused him any actual prejudice. Huff's claim based on the violation of the IAD, in this factual context, does not justify the granting of relief under 28 U.S.C. § 2255. See Hitchcock v. United States, 580 F.2d 964 (9th Cir. 1978); Edwards v. United States,564 F.2d 652 (2d Cir. 1977). These cases show that the mere failure to comply with the IAD, without more, does not justify relief under section 2255.
20
We add the following caveat. Our decision does not foreclose section 2255 relief for governmental violations of the IAD in circumstances where the statutory violation may have served to prejudice a prisoner in some aspect of his state incarceration or in defending against a federal charge.
21
Reversed.
*
ANDREW W. BOGUE, United States District Judge, District of South Dakota, sitting by designation
1
Huff's conviction was affirmed on direct appeal in United States v. Huff, 547 F.2d 1172 (8th Cir. 1976) (unpublished opinion)
2
Huff was again taken into federal custody on March 1, 1976, for sentencing, and the district court imposed a four-year term of imprisonment on Huff. Thereafter, Huff returned to the state prison facility in Moberly, Missouri
3
At the supplementary hearing on remand, the district court determined that, under the IAD, the Government was required to try Huff when, on December 10, 1975, while the detainer was outstanding, it transferred him from state to federal custody for reasons connected with the pending federal charges against him. As already indicated, the Government returned Huff to state custody without trying him on that occasion
In addition, the district court held that Huff's failure to request a speedy trial or to seek affirmative relief prior to this § 2255 action did not constitute a waiver of the rights provided by the IAD.
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IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
December 8, 2004 Session
PAULA JEAN WILLIAMS v. KEVIN MACK WILLIAMS
Direct Appeal from the Chancery Court for Monroe County
No. 13330 Hon. Jerri S. Bryant, Chancellor
No. E2004-00964-COA-R3-CV - FILED MARCH 7, 2005
The Trial Court changed primary custody of the parties’ child from mother to father. On appeal, we
reverse on the grounds that the father did not prove a material change of circumstances.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Reversed.
HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which CHARLES D. SUSANO ,
JR., J., and D. MICHAEL SWINEY , J., joined.
Brandy Slaybaugh, Knoxville, Tennessee, for appellant.
J. Reed Dixon, Sweetwater, Tennessee, for appellee.
OPINION
In this post-divorce action, the father petitioned the Court to be designated as the
primary residential custodian of the parties’ minor child on the grounds that there had “been a
significant change of circumstance”.
Following an evidentiary hearing, the Trial Court awarded primary custody of the
child to the father and the mother has appealed.
The parties have one child, a son, born on December 30, 1996, and they were
divorced on February 19, 2002. At the time of the divorce, the mother was awarded custody with
reasonable visitation to the father.
On November 17, 2003, the father filed a petition to change custody on the ground
the mother had subjected the child to her illicit and immoral activities and withheld the child from
the petitioner, and had moved the child to another school. Further, that the mother was financially
irresponsible and “petitioner feels the minor child is in an environment that is not conducive to the
proper upbringing of a minor child”. At the conclusion of the evidentiary hearing, the Trial Court
essentially concluded that a change of circumstances had occurred and it was in the child’s best
interest to award primary custody to the father.
On appeal, the mother raises these issues:
1. Whether the Trial Court erred in reassessing primary residential custody of
the parties minor child from Ms. Thompson, appellant, to appellee without
finding a material change of circumstances to the child, which was not
reasonably foreseeable at the time of the initial custody determination; and
2. whether the Trial Court erred assuming there was a material change of
circumstances by failing to determine whether a change in residential custody
was in the child’s best interest?
The Trial Court in her ruling observed:
This is not an easy case. Both of the parties have good and bad points.
Mother has exhibited poor judgment since the divorce staying with various men to
whom she is not married, exhibiting an immoral lifestyle to the child, moving the
child to four different homes within less than 18 months. The child, however,
appears to be doing well in school, probably because this is an exceptional child. He
is able to overcome the obstacles that have been thrown into his path by the parents.
The Trial Court then ordered a change in custody, without addressing all of the factors set forth in
Tenn. Code Ann. § 36-6-106. In this regard, the Supreme Court has noted:
. . . After finding that a material change in circumstance has occurred, the Trial Court
must determine whether modification of custody is in the child’s best interest using
the factors enumerated in Tenn. Code Ann. § 36-6-106.
Cranstone v. Combs, 106 S.W.3d 641 at 644 (Tenn. 2003).
Our standard of review on appeal is de novo accompanied by a presumption of
correctness of the fact findings, unless the evidence preponderates otherwise. Hass v. Knighton, 676
S.W.2d 554 (Tenn. 1984), Rule 13(d) Tenn. R. App. P. The Supreme Court opinion of Kendrick v.
Shoemake, 90 S.W.3d 566 (Tenn. 2002), teaches:
While “[t]here are no hard and fast rules for determining when a child’s
circumstances have changed sufficiently to warrant a change of his or her custody,”
-2-
the following factors have formed a sound basis for determining whether a material
change in circumstances has occurred: the change “has occurred after the entry of the
order sought to be modified,” the change “is not one that was known or reasonably
anticipated when the order was entered,” and the change “is one that affects the
child’s well-being in a meaningful way.” We note that a parent’s change in
circumstances may be a material change in circumstances for the purposes of
modifying custody if such a change affects the child’s well-being.
Assuming arguendo that a change in circumstances has occurred as found by the Trial
Court, we conclude these changes are not “a material change in circumstances for the purpose of
modifying custody”, because the evidence does not establish that the changes have affected the
child’s well-being as required by Kendrick. Also see, Blair v. Badenhope, 77 S.W.3d 137 (Tenn.
2002); and Cranstone.
The husband has the burden of establishing material change of circumstances.
Rogero v. Pitt, 759 S.W.2d 109 (Tenn. 1980). The evidence does not establish that any of the
conditions mentioned by the Trial Court have impacted on the child’s well-being in a meaningful
way. See Musselman v. Acuff, 826 S.W.2d 920-922 (Tenn. Ct. App. 1991). Indeed, the evidence
showed that the child was doing well in school and was otherwise well adjusted. The child does
have a hearing problem, but the mother had appropriately tended to his condition. We hold that the
conditions established by the evidence have not affected the child’s well-being in a meaningful way
as required by Kendrick.
Accordingly, we reverse the Judgment of the Trial Court and remand for the entry of
an Order dismissing the Petition for Change of Custody.
The cost of the appeal is assessed to Kevin Mack Williams.
______________________________
HERSCHEL PICKENS FRANKS, P.J.
-3-
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J-A13012-16
2017 PA Super 8
BARBARA A. DITTMAN, GARY R. : IN THE SUPERIOR COURT OF
DOUGLAS, ALICE PASTIRIK, JOANN : PENNSYLVANIA
DECOLATI, TINA SORRENTINO, :
KRISTEN CUSHMAN AND SHANNON :
MOLYNEAUX, INDIVIDUALLY AND ON :
BEHALF OF ALL OTHERS SIMILARLY :
SITUATED, :
:
Appellants :
:
v. :
:
UPMC D/B/A THE UNIVERSITY OF :
PITTSBURGH MEDICAL CENTER, AND :
UPMC McKEESPORT, :
:
Appellees : No. 971 WDA 2015
Appeal from the Order entered May 28, 2015
in the Court of Common Pleas of Allegheny County,
Civil Division, No(s): GD-14-003285
BEFORE: OLSON, STABILE and MUSMANNO, JJ.
DISSENTING STATEMENT BY MUSMANNO, J.: FILED JANUARY 12, 2017
The question before this Court is whether Appellants have stated a
cause of action against UPMC for negligence. More particularly, we must
determine whether UPMC owed Appellants a duty of reasonable care in the
collection and storage of its employees’ personal information and data. After
a discussion of the five factors set forth by our Supreme Court in Althaus
ex. Rel. Althaus v. Cohen, 756 A.2d 1066 (Pa. 2000), the Majority would
conclude that UPMC owed no duty to Appellants. However, upon review, I
disagree with the Majority’s conclusion.
J-A13012-16
“[T]o maintain a negligence action, the plaintiff must show that the
defendant had a duty "to conform to a certain standard of conduct;" that the
defendant breached that duty; that such breach caused the injury in
question; and actual loss or damage.” Phillips v. Cricket Lighters, 841
A.2d 1000, 1008 (Pa. 2003). In determining whether a duty of care exists,
we consider
1. the relationship between the parties;
2. the social utility of the actor’s conduct;
3. the nature of the risk imposed and foreseeability of the harm
incurred;
4. the consequences of imposing a duty upon the actor; and
5. the overall public interest in the proposed solution.
Althaus, 756 A.2d at 1169; accord Seebold v. Prison Health Servs.,
Inc., 57 A.3d 1232, 1243 (Pa. 2012). As the Majority correctly states, “[w]e
will find a duty where the balance of these factors weigh in favor of placing
such a burden on a defendant.” Slip Opinion at 6 (internal quotation marks
omitted) (quoting Phillips, 841 A.2d at 1008-09).
The Majority would conclude that the second through fifth factors
weigh against the imposition of a duty upon UMPC. Upon review, however, I
would conclude that the balance of the Althaus factors weighs in favor of
imposing a duty of reasonable care upon UPMC.
Regarding the first Althaus factor, the Majority correctly observes that
the parties had an employer-employee relationship, and that “[t]his type of
-2-
J-A13012-16
relationship traditionally has given rise to duties on the employer.” Slip
Opinion at 7 (citation omitted). Thus, the Majority weighed this factor in
favor of imposing a duty upon UPMC. Id.
Regarding the second and third Althaus factors, the Majority states
that there is “an obvious social utility” in the practice of storing information
electronically. Id. The Majority observes that there is an increased risk in
storing electronic information, and that it is foreseeable that harm from
breaches would be incurred. Id. The Majority recognizes that while the
criminal acts of a third party may constituted a superseding cause,
an actor may still be liable for his negligence[,] despite the
superseding criminal acts of another if, at the time of his
negligent conduct, he realized or should have realized the
likelihood that such a situation might be created and that a third
person might avail himself of the opportunity to commit such a
tort or crime.
Slip Opinion at 7-8 (quoting Mahan v. Am-Guard, Inc., 841 A.2d 1061 (Pa.
Super. 2003)). The Majority ultimately concludes, however, that “[w]hile a
data breach (and its ensuing harm) is generally foreseeable, we do not
believe that this possibility outweighs the social utility of electronically
storing employee information.” Slip Opinion at 8. Thus, the Majority
concludes that the social utility of electronically storing information
outweighs the risk of harm and the foreseeability of such harm. See id. I
believe that the Majority’s conclusion is untenable, given the ubiquitous
nature of electronic data storage, the risk to UPMC’s employees posed by the
-3-
J-A13012-16
failure to reasonably protect such information, and the foreseeability of a
computer breach and subsequent identity theft.
Here, the Appellants claimed that UPMC had failed to use reasonable
care in the storage of their personal information by, inter alia, properly
encrypting the data, establishing adequate firewalls, and implementing an
appropriate authentication protocol. Appellants’ assertions, if proven, would
establish that UPMC knew or should have realized that inadequate electronic
data protections would create a likelihood that its employees’ personal
information would be compromised, and that a third party would avail itself
of the opportunity to steal this sensitive data. See id. Under the
circumstances alleged, the criminal acts of third parties do not relieve UPMC
of its duty of care in the protection of Appellants sensitive personal data.
Thus, I would weigh this factor in favor of imposing a duty of reasonable
care upon UPMC.
I also disagree with the conclusion of the Majority that “[n]o judicially
created duty of care is needed to incentivize companies to protect their
confidential information.” Slip Opinion at 9. The Majority would refrain from
imposing a duty based upon a belief that such protection would impose
significant costs upon employers to increase security measures, “when there
is no true way to prevent data breaches altogether.” Id. The Majority
opines that “[t]here are still statutes and safeguards in place to prevent
employers from disclosing confidential information.” Id. (emphasis added).
-4-
J-A13012-16
The Majority places great weight upon the cost to UPMC of imposing a
duty, and the inability to prevent every data breach. However, Althaus
does not require that the proposed duty prevent all harm; rather, the
consequences of imposing a duty of reasonable care are to be weighed. I
would conclude that this factor weighs in favor of imposing a duty, when
considered against the cost to employees (sometimes for years) resulting
from a data breach.
Finally, I disagree with the Majority’s conclusion that the public
interest in imposing a duty weighs in favor of UPMC. While judicial resources
may be expended during litigation of data breaches, the public has a greater
interest in protecting the personal and sensitive data collected and
electronically stored by employers.
Based upon the foregoing, I would reverse the Order of the trial court,
and conclude that UPMC owes a duty of reasonable care to safeguard the
personal information of its employees.
-5-
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920 F.2d 927Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Charles WHARTON, a/k/a Hillary Boyce, Petitioner-Appellant,v.Talmadge BARNETT, Attorney General of North Carolina,Respondents-Appellees.
No. 89-7199.
United States Court of Appeals,Fourth Circuit.
Submitted Dec. 3, 1990.Decided Dec. 13, 1990.
Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Malcolm J. Howard, District Judge. (CA-89-308-HC-H)
Charles Wharton, appellant pro se.
Clarence Joe DelForge, III, Office of the Attorney General of North Carolina, Raleigh, N.C., for appellees.
E.D.N.C.
DISMISSED.
Before K.K. HALL, MURNAGHAN and WILKINSON, Circuit Judges.
PER CURIAM:
1
Charles Wharton seeks to appeal the district court's denial of habeas corpus relief under 28 U.S.C. Sec. 2254. Wharton claimed that discrimination in selection of his grand jury foreman violated equal protection and due process and that his attorney was ineffective in failing to raise such a challenge.
2
We find that the rule of law asserted by Wharton (that discrimination in selection of the foreman required dismissal of his indictment) was not dictated or compelled by precedent existing at the time his conviction became final. Under Teague v. Lane, 489 U.S. 288 (1989), the asserted rule cannot be applied retroactively on collateral attack unless it places a class of private conduct beyond the power of the state to proscribe or requires the court to observe procedures essential to fundamental fairness, without which the likelihood of an accurate conviction is seriously diminished. Because the rule asserted by Wharton meets neither of these exceptions, it does not afford a basis for federal habeas relief.
3
Moreover, based on this Court's recent decision in Felton v. Barnett, 912 F.2d 92 (4th Cir.1990), we find Wharton's challenge to discrimination in selection of his foreman to be procedurally barred and further find his claim of ineffective assistance without merit in that Wharton was not prejudiced by counsel's failure to object to the selection of the foreman.
4
For these reasons, we deny a certificate of probable cause and dismiss the appeal. We dispense with oral argument because the dispositive issues recently have been decided authoritatively.
5
DISMISSED.
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68 Cal.Rptr.3d 528 (2007)
171 P.3d 545
HARRIS (Frances)
v.
S.C. (LIBERTY MUTUAL INSURANCE).
No. S156555.
Supreme Court of California.
November 28, 2007.
Petition for review granted.
GEORGE, C.J., KENNARD, BAXTER, WERDEGAR, CHIN, MORENO, and CORRIGAN, JJ., concur.
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119 F.3d 493
UNITED STATES of America, Plaintiff-Appellee,v.James TRIGG, Todd Warren and Stephen C. Krex, Defendants-Appellants.
Nos. 96-1487 to 96-1489.
United States Court of Appeals,Seventh Circuit.
Argued Nov. 4, 1996.Decided July 8, 1997.
Andrew B. Baker, Jr. (argued), Office of the United States Attorney, Dyer, IN, for plaintiff-appellee.
Bradley L. Williams, Robert A. Anderson (argued), Suzanne Crouch, Ice, Miller, Donadio & Ryan, Indianapolis, IN, for James Trigg.
Thomas F. Strickler (argued), Mishawaka, IN, for Todd Warren.
Glenn Seiden (argued), Seiden & Associates, Paul Goodman, Chicago, IL, for Stephen C. Krex.
Before BAUER, RIPPLE and MANION, Circuit Judges.
RIPPLE, Circuit Judge.
1
The defendants were convicted of various federal offenses because of their involvement in a conspiracy that engaged in stealing, transporting and selling computer equipment. James Trigg pleaded guilty to the charges. Todd Warren and Stephen Krex were found guilty after a jury trial. Mr. Trigg and Mr. Warren appeal aspects of their sentences. Mr. Krex appeals his conviction. We modify the district court's orders of restitution in each case. In all other respects, we affirm the judgments of the district court.
2
* BACKGROUND
3
James Trigg and his confederates--Todd Trigg (his son), Todd Warren (his codefendant and Todd's friend), Patricia Zowacki (his mother), Brian Cornwall (Todd's friend), and Christina Steinbergs (Todd's girlfriend)--stole computers and computer printers from retail stores. In its early days, the shoplifting ring would steal printers from Office Max and sell them through advertisements placed in local newspapers. Mr. Trigg's gang later turned its attention solely to Best Buy stores, where, Todd Trigg had discovered, the security was lax and more inventory was within reach.
4
The conspiracy's modus operandi changed over time. In the beginning, Mr. Trigg would legally purchase a printer and obtain a valid receipt. With that receipt he would walk out of the store with other printers for which he had not paid. The shoplifting ring thereafter began to employ other methods of operation. For example, sometimes one of the group's members would purchase an inexpensive item; the security tape would then be removed from that item and placed on a printer which could then be carried away with less chance of detection. In order to place the security tape on the printer boxes while in the store, the thieves would remove the boxes to areas in the store that were not covered by camera surveillance.
5
In September 1994, Stephen Krex, who owned Krex Computers in Illinois, responded to one of Mr. Trigg's newspaper ads. Mr. Trigg quoted Mr. Krex a price that was 40 percent lower than Best Buy's retail price--indeed, the quoted price was lower than the price Best Buy had paid. In response, Mr. Krex informed Mr. Trigg that he would buy all of Mr. Trigg's equipment. During this conversation, Mr. Trigg claimed that he had obtained a computer store in Atlanta that had been owned by his recently deceased father.
6
On September 7 Mr. Trigg brought fifteen stolen printers to Krex Computers in Illinois. Mr. Krex received the goods. He photocopied Mr. Trigg's driver's license and wrote down other personal information about Mr. Trigg. Mr. Krex also had Mr. Trigg fill out a form stating that there were no liens on the equipment so as to protect Mr. Krex, he said, in the event the printers were stolen. Upon paying Mr. Trigg with a $8,450 check, Mr. Krex suggested to Mr. Trigg that it would be less suspicious to cash the check at a currency exchange if Mr. Trigg were planning on hiding the money from the Internal Revenue Service. Mr. Krex further told Mr. Trigg to remove his ads from the newspapers as he (Mr. Krex) desired to buy all of the printers in Mr. Trigg's possession.
7
Mr. Trigg began to deliver stolen printers to Mr. Krex on a weekly basis. The printer boxes that were delivered to Mr. Krex had tears on them where the Best Buy labels had been removed. When Mr. Trigg complained about the cash checking fee at the currency exchange, Mr. Krex began including an extra amount in the payment checks to cover the fee. When Mr. Trigg informed Mr. Krex that a man at the currency exchange had advised that it would be beneficial not to cash checks in amounts greater than $10,000, Mr. Krex began paying with separate checks if the total purchase price for a shipment was over $10,000. Mr. Krex also requested that Mr. Trigg bring more of the models of printers that were popular with the customers of Krex Computers.
8
In December Mr. Krex asked Mr. Trigg if he had access to any items other than printers. Mr. Trigg responded that he did and thereafter began delivering stolen computers to Mr. Krex. Mr. Trigg's asking price for the stolen computers was 50 to 60 percent below Best Buy's retail price. On occasion, Mr. Trigg would inform Mr. Krex of Best Buy's price and offer his opinion that Best Buy had the lowest prices in town. Ms. Steinbergs testified that Mr. Krex was happy when the group delivered a large amount of stolen equipment and was disappointed and upset when the group did not. Mr. Krex, on several occasions, told Mr. Trigg to bring all the equipment that he could muster.
9
Todd Warren joined the operation in early 1995. Mr. Trigg testified that, when the group went on one of its stealing sprees, Mr. Warren would "always" go into the store and carry out computers or printers. Trial Tr.I at 69. (He testified that Todd Trigg would go into the store about 50 percent of the time.) Mr. Trigg also bought Mr. Warren a van, which was used to transport the stolen equipment from the targeted stores. Mr. Warren drove the van after the heists and held the title to the van in his own name.
10
After Mr. Trigg broke up with his ex-wife, she wrote the FBI about Mr. Trigg and his gang's activities. The FBI stopped the gang for questioning in March 1995. Mr. Trigg later informed Mr. Krex of the stop, at which time Mr. Krex had no further dealings with Mr. Trigg. The FBI investigation eventually culminated in the defendants' indictment. Each was charged with three counts: (1) conspiracy in violation of 18 U.S.C. § 371; (2) transportation of stolen goods in violation of 18 U.S.C. § 2314; and (3) the sale or receipt of stolen goods in violation of 18 U.S.C. § 2315. Mr. Trigg pleaded guilty and testified against his cohorts at trial. He was sentenced to 64 months' imprisonment and a period of supervised release. He was ordered to make restitution in the amount of $79,582.40, one-tenth of the loss to Best Buy. A jury returned verdicts of guilty against Mr. Warren and Mr. Krex. The court sentenced Mr. Warren to 33 months in prison and a period of supervised release. The court ordered him to make restitution in the amount of $3,018.50, one percent of the loss attributable to him (which was less because he had joined the conspiracy later). The court sentenced Mr. Krex to 39 months' imprisonment and supervised release and ordered him to pay restitution in the amount of $795,824, an amount equal to Best Buy's entire loss.
II
DISCUSSION
A. United States v. Trigg, No. 96-1487
1. Restitution
11
Sections 3663 and 3664 of Title 181 empower the district courts to order certain defendants to make restitution to the victims of their offenses. We review the decision to order restitution for an abuse of discretion. United States v. Murphy, 28 F.3d 38, 40 (7th Cir.1994). In deciding whether to order restitution and, if so, in what amount, the district court "shall consider the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate." 18 U.S.C. § 3664(a). "We shall sustain the district court's order of restitution if it is apparent that the district court considered the statutory factors." Murphy, 28 F.3d at 41. Therefore, to prevail on his claim that the district court failed to consider his ability to pay restitution in the amount ordered, Mr. Trigg "must show either that (1) it is not improbable that the judge failed to consider the mandatory factor and was influenced thereby, or (2) the judge explicitly repudiated the mandatory factor." Id.
12
Mr. Trigg first contends that the district court's order to repay over $79,000 to Best Buy cannot be squared either with the court's factual findings that Mr. Trigg has few assets and job skills or with its decision to forego the imposition of a fine. Mr. Trigg points out that he will be 54 years old when released from prison and has no legitimate job skills. He is a high school dropout and has supported himself through theft and gambling throughout his life. He notes that he was discharged from the military for bad conduct. Mr. Trigg urges that these findings demonstrate that he is unable to pay restitution now or in the future.
13
At the outset, it is clear that the district court considered these facts--which, in the parlance of § 3664, relate to Mr. Trigg's "financial resources" and to the "financial needs and earning ability" of Mr. Trigg and his dependents--as required by § 3664(a). At the sentencing hearing, the district court explicitly mentioned the factors listed in § 3664(a). It then noted that the amount of loss, $795,824, was a lot of money and that Mr. Trigg, at the time, had no financial resources except for some used furniture. Although he concedes that the district court considered these facts, Mr. Trigg invites our attention to the cases in which we have vacated "sham" restitution orders, that is, orders requiring the payment of a large sum even though the district court's factual findings make clear that the defendant has no real hope of complying with the order. See, e.g., United States v. Jaroszenko, 92 F.3d 486, 491-92 (7th Cir.1996); United States v. Lampien, 89 F.3d 1316, 1323-24 (7th Cir.1996); United States v. Johnson-Wilder, 29 F.3d 1100, 1105-06 (7th Cir.1994); Murphy, 28 F.3d at 41; United States v. Ahmad, 2 F.3d 245, 247-48 (7th Cir.1993); United States v. Studley, 892 F.2d 518, 532-33 (7th Cir.1989); United States v. Mahoney, 859 F.2d 47, 50-52 (7th Cir.1988). We have also held, though, that a defendant's indigence is only one factor the court must consider; that a defendant currently may be poor is not decisive in the restitution determination. See United States v. Viemont, 91 F.3d 946, 951 (7th Cir.1996); United States v. Lesperance, 25 F.3d 553, 558 (7th Cir.1994); United States v. Boula, 997 F.2d 263, 268 (7th Cir.1993).
14
In this case, the district court found, in addition to the facts Mr. Trigg brings to our attention, that Mr. Trigg has "only minimum financial needs of [his] own and no dependents." Sent. Tr. II at 43. As Mr. Trigg points out, the district court noted that, because Mr. Trigg is a high school dropout with no employment history, his "earning ability would appear to be poor at first glance." Id. But the court agreed with defense counsel that Mr. Trigg is "a man with some talents" who has "demonstrated that down through the years." Id.2 The court took the view that Mr. Trigg could apply his criminal ingenuity toward legitimate employment and become able to make partial restitution in the future. The court concluded that, although Mr. Trigg could not make full restitution, "these factors warrant an order of $1.00 on every $10.00, or $79,582.40." Id.3 In assessing the likelihood that Mr. Trigg would become able to pay restitution in the future, the district court properly considered Mr. Trigg's ingenuity and talents. See Viemont, 91 F.3d at 951; United States v. Ross, 77 F.3d 1525, 1552 (7th Cir.1996); Lesperance, 25 F.3d at 558; Boula, 997 F.2d at 268-69. A restitution order against a defendant "who is currently unable to pay restitution" will not be vacated "if 'there is some likelihood' that he will acquire sufficient resources in the future." Viemont, 91 F.3d at 951 (quoting United States v. Simpson, 8 F.3d 546, 551 (7th Cir.1993)).
15
In this case, the district court properly considered the statutory factors and tailored the amount of restitution to Mr. Trigg's unique situation. If it turns out that Mr. Trigg is correct and his ingenuity (after all, he points out, his crime was not all that clever--he was a large-scale shoplifter) does not, as the district court predicted, lead to future income sufficient to comply with the restitution order, he may "seek modification of the restitution order in the district court." United States v. Wilson, 98 F.3d 281, 285 (7th Cir.1996) (citing Viemont, 91 F.3d at 952). The district court demonstrated a thorough assessment of the record and an awareness of all pertinent factors that ought to be considered in making the determination as to what restitution ought to be awarded. See Lesperance, 25 F.3d at 558 (holding that "district court considered [the defendant's] financial condition and properly exercised its discretion" in case in which defendant "had a negative net worth and a monthly cash flow of zero"); Simpson, 8 F.3d at 551 (affirming restitution order for over $4 million because "[t]he district court clearly considered the mandatory factors of financial resources, needs, and earning ability"). The district court's ability to assess the intangible factors that bear on an estimate of Mr. Trigg's capacity for future earnings cannot be--and ought not be--second-guessed by this court.
16
In his insistence that restitution is unwarranted in his case, Mr. Trigg stresses that the district court decided not to impose a fine. In deciding not to assess a fine against Mr. Trigg, the district court stated:
17
Because the defendant is not able and, even with the use of a reasonable installment schedule, is not likely to become able to pay all or part of the fine required by the sentencing guidelines, the court imposes no fine, but imposes the foregoing requirement of community service as an alternative sanction....
18
Sent. Tr. II at 48. Mr. Trigg reminds us that, in United States v. Ahmad, 2 F.3d 245 (7th Cir.1993), we remanded because of the inconsistency between the court's ordering restitution and its finding that the defendant could not "pay a fine, any fine, now or tomorrow or in the foreseeable future." Id. at 248. We said further in Ahmad that "[r]estitution is not a reason to waive the fine ... although the court may consider restitution when selecting a fine within the range." Id. Importantly, however, we also stated in Ahmad that there are some good reasons for ordering restitution while foregoing a fine. Id. We explained further in United States v. Berman, 21 F.3d 753 (7th Cir.1994), that one such permissible reason is "that the defendants might be able, with luck and energy ..., to pay either fines or restitution but not both, and that the latter is more important because it will go to compensate the principal victims of their crimes." Id. at 758. In other words, a district court may rightly withhold a fine if the payment of that fine on top of restitution "would be the straw that broke the camel's back." Id. Title 18 U.S.C. § 3572(b), after all, provides that a district court "shall impose a fine ... only to the extent that such fine ... will not impair the ability of the defendant to make restitution." 18 U.S.C. § 3572(b). We remanded in Berman because the district court had failed to provide a reason for its ordering restitution but not a fine. 21 F.3d at 759.4 In Mr. Trigg's case, unlike in Berman, the district court furnished a reason for its order. At the sentencing hearing, the court, after calculating what the amount of the fine would be, stated that Mr. Trigg could not pay that amount, "at least certainly not in addition to the restitution." Sent. Tr. II at 44. The district court thus decided that Mr. Trigg could not pay both a fine and partial restitution and gave a preference to the victim of Mr. Trigg's crimes. Berman allows such a preference as long as the district court explains its rationale.
19
Mr. Trigg next contends that the district court erred in giving too much discretion to the probation officer to set a schedule for the payment of the restitution. One provision of Mr. Trigg's supervised release is that he cannot incur credit charges or open new lines of credit "without the probation officer's approval unless [Mr. Trigg] is in compliance with any installment schedule upon which [Mr. Trigg] and the probation officer may agree for the payment of the restitution order." R.143 at 3. Mr. Trigg submits accurately that a district judge may not "delegate[ ] to the probation department its authority to establish a payment schedule." United States v. Murphy, 28 F.3d 38, 42 (7th Cir.1994); accord United States v. Mohammad, 53 F.3d 1426, 1438-39 (7th Cir.1995) ; Ahmad, 2 F.3d at 248-49; United States v. Boula, 997 F.2d 263, 269 (7th Cir.1993). "The fixing of restitution payments is a judicial act"; "a court abdicates its judicial responsibility when it authorizes a probation officer to determine the manner of restitution." Mohammad, 53 F.3d at 1438.
20
Yet Mr. Trigg's restitution order does not, on its face, provide that the probation officer shall establish a repayment schedule. Instead, it states simply that restitution shall be "due immediately." R.143 at 5. To be sure, the above-quoted provision of Mr. Trigg's supervised release assumes that the probation department may employ an installment schedule when Mr. Trigg is on supervised release. That provision, however, does not expressly delegate the establishment of a payment schedule. Rather, the supervised release provision attaches credit consequences to Mr. Trigg's failure to keep up with an installment schedule during his period of readjustment to living in society. We need not express an opinion today on whether the supervised release provision can be enforced to deny him credit or to land him back in prison. The only question in this case is whether the restitution order improperly delegates the ability to establish a payment schedule to the probation department. By the order's plain operative language, it does not.
21
The district court's reference to a payment schedule could raise the specter that the restitution order for "immediate" payment was a "sham" order, that the district court did not really believe Mr. Trigg would be able to comply with its terms. We have already determined that the district court properly considered the statutory factors in § 3664(a), though, and the district court's reference to a payment schedule does not persuade us otherwise. We noted recently in United States v. Jaroszenko, 92 F.3d 486 (7th Cir.1996), that " 'immediate payment' does not mean 'immediate payment in full;' rather it means 'payment to the extent that the defendant can make it in good faith, beginning immediately.' " Id. at 492.5 As we explained in Ahmad, "[i]f immediate payment proves impossible, accommodation will occur in the course of collection." 2 F.3d at 249. If, as in Mr. Trigg's case, the restitution order requires immediate payment and makes payment a condition of supervised release, "the probation officer will assess the defendant's progress toward satisfaction of his debt, and if the defendant is not paying what he can the probation officer will ask the judge to revoke or alter the terms of release. Then the judge may make the order more specific or, if the defendant has not paid what he could in good faith, may send him back to prison." Id.; see Jaroszenko, 92 F.3d at 492. Reading the district court's judgment as a whole, we see nothing in it that would contravene the procedures we set forth in Ahmad and Jaroszenko.
22
Mr. Trigg's final challenge to the restitution order is that the district court exceeded its authority by ordering restitution in an amount that exceeds Best Buy's loss. The parties agree that Best Buy's total loss on account of the conspiracy was $795,824. None of the defendants was ordered individually to pay an amount greater than the loss. Yet, Mr. Trigg points out, when all the restitution orders are added together, the defendants (James Trigg, Todd Warren, Todd Trigg and Stephen Krex) are to pay restitution in the amount of $886,383.14. Mr. Trigg is correct that the total amount of restitution ordered cannot exceed the amount of the loss actually caused. See United States v. Boyle, 10 F.3d 485, 492 (7th Cir.1993); United States v. Brothers, 955 F.2d 493, 498 (7th Cir.), cert. denied, 506 U.S. 847, 113 S.Ct. 142, 121 L.Ed.2d 94 (1992); see also United States v. Campbell, 106 F.3d 64, 69-70 (5th Cir.1997); United States v. Spring, 80 F.3d 1450, 1463 (10th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 385, 136 L.Ed.2d 302 (1996). This proposition follows from the fact that "the ordinary meaning of 'restitution' is restoring someone to a position he occupied before a particular event." Hughey v. United States, 495 U.S. 411, 416, 110 S.Ct. 1979, 1982, 109 L.Ed.2d 408 (1990).
23
A district court can issue a restitution order under §§ 3663 and 3664 imposing joint and several liability on multiple defendants.6 Spring, 80 F.3d at 1463-64; United States v. Page, 69 F.3d 482, 494 (11th Cir.1995); United States v. Hunter, 52 F.3d 489, 494-95 (3d Cir.1995) (citing cases). Of course, even when joint and several liability is imposed, victims may not recover an amount in excess of their loss. Spring, 80 F.3d at 1464. Otherwise, a victim who, for example, had the fortuity of being defrauded by 100 defendants, each of whom would be liable for the full extent of the loss, would reap an unwarranted windfall. The district court here did not order "joint and several" liability as that term is employed in the law of torts. It instead ordered the various defendants to pay different amounts. Nevertheless, § 3663 is not a torts statute, and we agree with our colleagues in the Tenth Circuit that, under § 3663, a district court may impose joint liability on multiple defendants in different amounts. See United States v. Harris, 7 F.3d 1537, 1539-40 (10th Cir.1993) (holding no error in case in which the court made the defendant "potentially liable for the full amount of restitution while ordering his codefendant to be liable for only one-half of the total amount"). Under this approach, a victim still may not recover an amount greater than the loss. Id. at 1539.
24
The district court's orders in this case do not provide explicitly that Best Buy's recovery is limited to the amount of its loss. Nor do they say that each defendant's liability for restitution ceases if and when Best Buy receives full restitution. We do not believe, however, that it is plausible to read the district court's orders in any other way. Accordingly, although we affirm the district court's judgments, we also modify them to state explicitly these limitations.7 In the future, district courts that determine that restitution ought to be imposed in this manner ought to state with more specificity than was done in this case the precise contours of the arrangement. As our colleagues in other circuits have pointed out, the restitution arrangement imposed by a district court might well require that the court become embroiled in the future in its administration. More definitive alternatives would therefore seem preferable in most cases.
2. Upward Departure
25
The district court departed upward under U.S.S.G. § 4A1.38 from criminal history category III to criminal history category IV. The basis of the departure was three prior convictions that were disregarded, on account of their age, in computing Mr. Trigg's criminal history category: (1) a 1969 Canadian conviction for obtaining food and lodging by false pretenses; (2) a 1973 Illinois conviction for possession of stolen property; and (3) a 1982 Indiana conviction for conversion.9 The district court gave two reasons for departing upward on the basis of these three uncounted convictions: (1) "[T]he convictions that were counted do not reflect the manner in which Mr. Trigg amassed his criminal history points: through the use of his son and his son's friends"; and (2) "Mr. Trigg's calculated criminal history category does not adequately reflect the likelihood that he will commit more crimes." R.141 at 5. We review the district court's decision to depart for an abuse of discretion. Koon v. United States, --- U.S. ----, ---- - ----, 116 S.Ct. 2035, 2046-48, 135 L.Ed.2d 392 (1996); United States v. Poe, 96 F.3d 333, 334 (8th Cir.1996) (applying Koon in § 4A1.3 context).
26
Mr. Trigg submits that the court's first reason for departure impermissibly double-counted the involvement of Mr. Trigg's family members in his offense. The district court had previously imposed a four-level offense level enhancement, under U.S.S.G. § 3B1.1, because Mr. Trigg was the organizer or leader of criminal activity that involved five or more people; and his family members were counted in the five or more. The government correctly observes, however, that the § 4A1.3 upward departure was for his family members' involvement in his prior offenses, not for their involvement in the current charges. Additionally, § 3B1.1 does not take into account who was organized and controlled by the defendant. It was the district court's view that Mr. Trigg's criminal history category misrepresented the seriousness of his past criminal conduct because it failed to take into account his choice of cohorts: "Mr. Trigg's computed criminal history category is one of a habitual thief, not that of one who operated a theft academy for young men and trained his son in illegal conduct from kindergarten age to adulthood." R.141 at 5. Section 3B1.1 does not address the district court's concerns in this regard. The district court did not abuse its discretion in determining that criminal history category III underrepresented the seriousness of Mr. Trigg's past criminal conduct.
27
Mr. Trigg also perceives error in the district court's alternative finding that criminal history category III underrepresented the likelihood that Mr. Trigg would commit future crimes. He suggests that the district court was required to find, but did not, that the three uncounted convictions were similar to the current offenses of conviction. Application note 8 to U.S.S.G. § 4A1.2 provides that convictions too old to count for purposes of determining the defendant's criminal history category can be used to depart under § 4A1.3 "[i]f the court finds that a sentence imposed outside [the relevant] time period is evidence of similar, or serious dissimilar, criminal conduct." U.S.S.G. § 4A1.2, comment. (n.8); see United States v. Young, 66 F.3d 830, 837-38 (7th Cir.1995) (noting that uncounted convictions similar to current offense of conviction can support finding that the defendant's criminal history category does not adequately reflect either the likelihood that defendant will commit more crimes or the seriousness of past conduct). Despite Mr. Trigg's suggestion to the contrary, the district court did find explicitly that "[t]he uncounted convictions all involved theft, and so were sufficiently similar to the offense of conviction." R.141 at 4 (citing United States v. Anderson, 72 F.3d 563, 565-66 (7th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1558, 134 L.Ed.2d 659 (1996)). The court found further that Mr. Trigg's prior encounters with the criminal justice system had failed to deter him from engaging in theft and that additional incarceration was necessary to decrease the possibility of recidivism. These findings support the upward departure.10 We conclude that the district court's upward departure under § 4A1.3 was a sound exercise of judicial discretion.
B. United States v. Warren, No. 96-1488
28
Mr. Warren's sole claim on appeal is that the district court erred when it found that Mr. Warren was not a "minor participant" in the conspiracy and therefore was not entitled to a two-level offense level reduction pursuant to U.S.S.G. § 3B1.2. Section 3B1.2 "provides a range of adjustments for a defendant who plays a part in committing the offense that makes him substantially less culpable than the average participant." U.S.S.G. § 3B1.2, comment. (backg'd); see United States v. DePriest, 6 F.3d 1201, 1214 (7th Cir.1993). A defendant is entitled to a two-level reduction if, "[b]ased on the defendant's role in the offense," "the defendant was a minor participant in any criminal activity." U.S.S.G. § 3B1.2(b). "We review the district judge's determination regarding a defendant's role in the offense for clear error." United States v. Boatner, 99 F.3d 831, 838 (7th Cir.1996).
29
"For purposes of § 3B1.2(b), a minor participant means any participant who is less culpable than most other participants, but whose role could not be described as minimal." U.S.S.G. § 3B1.2, comment. (n.3). Mr. Warren notes that the conspiracy began in mid-1994, whereas he did not become involved until January 1995. Because the conspiracy came to an end later that same year, he submits, his involvement therein lasted a short time. He insists further that the record shows that he was less culpable than most of his cohorts.
30
The district court was persuaded that it was "more likely than not that at every Best Buy store visited during Mr. Warren's participation, Mr. Warren entered the store and helped get a computer or printer out." R.139 at 6. It also credited Todd Trigg's testimony that his father's compensation system, which paid more to those confederates who actually carried the equipment out of the store, rewarded Mr. Warren with more compensation than him (Todd Trigg). Mr. Warren, moreover, held the getaway van's title in his name and paid the insurance premiums on that van. The district court concluded that only James Trigg had more knowledge of the group's criminal activity than Mr. Warren. The court acknowledged that Mr. Warren was involved in the conspiracy for only part of its total life, but found that Mr. Warren "was fully involved during that time." R.139 at 7. The district court concluded that, apart from Mr. Trigg and perhaps Mr. Krex, "Mr. Warren's relative culpability was no less than, and (with respect to James Trigg's mother) may have exceeded, any other participants." Id.; see United States v. Stephenson, 53 F.3d 836, 850 (7th Cir.1995) ("The district court need not articulate its comparison on a person by person basis with each member of the conspiracy.").
31
The district court's findings and ultimate conclusion that Mr. Warren was not a minor participant are supported by the record. Mr. Trigg testified that, when the group went to a Best Buy, Mr. Warren would "always" go into the store and carry out computers or printers. Trial Tr.I at 69. He also testified that Todd Trigg would go into the store only about 50 percent of the time. Mr. Warren drove, and held the title to, the gang's getaway van. Mr. Warren also unloaded the van when the stolen goods were delivered to Mr. Krex. In his brief, Mr. Warren acknowledges that the court's findings are supported by the record by commenting that the witnesses' accounts of the role he played in the conspiracy vary considerably. The court, judging the credibility of the witnesses, chose to believe the account which resulted in its finding that Mr. Warren's culpability was no less than Todd Trigg's, Patricia Zowacki's, Brian Cornwall's, and Christina Steinbergs'. Moreover, because the fact that Mr. Warren participated in the conspiracy for a limited period of time had been adequately taken into consideration in calculating his offense level, it did not have to be taken into account again in determining whether Mr. Warren qualified as a minor participant. See United States v. Lampkins, 47 F.3d 175, 180-81 (7th Cir.), cert. denied, 514 U.S. 1055, 115 S.Ct. 1440, 131 L.Ed.2d 319 (1995). We can discern no clear error in the district court's § 3B1.2 determination with respect to Mr. Warren.
C. United States v. Krex, No. 96-1489
1.Ostrich Instruction
32
Mr. Krex complains that the district court should not have given the jury the "ostrich" instruction (sometimes referred to as the conscious avoidance instruction or the deliberate indifference instruction). He does not complain about the wording of the instruction. Rather, he maintains that there was insufficient evidence to support the giving of such an instruction. In assessing his claim, "[w]e review the evidence in the light most favorable to the government, making all reasonable inferences in its favor." United States v. Fauls, 65 F.3d 592, 598 (7th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1697, 134 L.Ed.2d 796 (1996). The decision to give the ostrich instruction we review for an abuse of discretion. United States v. Walker, 25 F.3d 540, 546 (7th Cir.), cert. denied, 513 U.S. 953, 115 S.Ct. 371, 130 L.Ed.2d 323 (1994).
33
In deciding whether the ostrich instruction was appropriate, we must assess whether there was evidence that Mr. Krex, "knowingly or strongly suspecting that he [was] involved in shady dealings, t[ook] steps to make sure that he d[id] not acquire full or exact knowledge of the nature and extent of those dealings. A deliberate effort to avoid guilty knowledge is all the guilty knowledge the law requires." Fauls, 65 F.3d at 598 (internal quotation and citation omitted); see Walker, 25 F.3d at 546 ("An ostrich instruction is appropriate when a defendant claims a lack of guilty knowledge and there are facts and evidence that support an inference of deliberate ignorance.") (internal quotations and citation omitted); United States v. Hoyos, 3 F.3d 232, 236-37 (7th Cir.1993) (same). Here, the government's evidence supported an inference that Mr. Krex consciously avoided knowledge about the nature of his dealings. Mr. Trigg delivered over three-quarters of a million dollars of computer equipment, in varying quantities, to Mr. Krex from September 1994 to March 1995. The erratic frequency of the trips and the other suspicious circumstances of the deliveries were inconsistent with Mr. Trigg's story that he was selling the equipment from his deceased father's computer store in Atlanta. The equipment was delivered in, and loaded off, an unmarked van. The boxes containing the equipment had tears on them where the Best Buy tags had been removed. In addition, Mr. Krex suggested to Mr. Trigg that it would be less suspicious to cash the payment checks at a currency exchange if Mr. Trigg was planning on hiding the money from the IRS. Mr. Krex included an extra amount in the checks to cover the currency exchange's transaction fee. When Mr. Trigg told Mr. Krex that a man at the currency exchange had advised that it would be beneficial not to cash checks in amounts greater than $10,000, Mr. Krex began paying with separate checks in instances in which the total purchase price for a particular shipment was over $10,000. Mr. Trigg's prices were much below Best Buy's retail prices and even below the manufacturer's prices. Herbert Olitsky, who operates a computer store in New York, testified that, at the prices Mr. Krex paid, the merchandise would have to be stolen or damaged. He opined that he would not have bought the equipment at those prices because it would have been "an impossible buy" involving stolen goods. Trial Tr.II at 267-70. Paul Earling, a computer store owner in the Chicago area, testified that he would not have purchased the equipment without proof of a prior legitimate purchase. He opined that Mr. Krex should have done more than merely photocopy Mr. Trigg's driver's license and require Mr. Trigg to fill out a form stating there were no liens on the equipment. Earling testified that, without a bill of sale, he would have presumed that Mr. Trigg's equipment was stolen. The evidence at trial also showed that Mr. Krex bought some stolen computers from Brian Cornwall, one of Mr. Trigg's confederates, after having been told that they were stolen. The circumstances surrounding his dealings with Mr. Trigg must have raised "red flags" in Mr. Krex's mind that the goods were stolen. Fauls, 65 F.3d at 598. The evidence supports the inference that the only way Mr. Krex "could not have known of the illegal activity is by affirmatively avoiding the knowledge." Id. at 598-99. We conclude that the district court's giving of the ostrich instruction was proper.
2. Sufficiency of the Evidence
34
Mr. Krex's final assertion is that the evidence presented at trial was insufficient to support the jury's guilty verdict. "When considering a challenge to the sufficiency of the evidence, 'the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.' " United States v. Pearson, 113 F.3d 758, 761 (7th Cir.1997) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2783, 61 L.Ed.2d 560 (1979)). To prove conspiracy the government must establish the following elements: "(1) there was an agreement between two or more persons to commit an unlawful act, (2) the defendant was a party to the agreement, and (3) an overt act was committed in furtherance of the agreement by one of the coconspirators." United States v. Hickok, 77 F.3d 992, 1004-05 (7th Cir.) (footnote omitted), cert. denied, --- U.S. ----, 116 S.Ct. 1701, 134 L.Ed.2d 800 (1996); accord United States v. Jones, 950 F.2d 1309, 1313 (7th Cir.1991), cert. denied, 503 U.S. 996, 112 S.Ct. 1700, 118 L.Ed.2d 410 (1992).
35
Mr. Krex maintains that the evidence at trial demonstrated that he was never a party to the conspiracy, that Mr. Trigg kept him in the dark about the criminal nature of the enterprise. Mr. Krex contends that there was not substantial evidence of either an agreement between Mr. Trigg and Mr. Krex or any intent on Mr. Krex's part to join the conspiracy. We cannot agree. Much of the same evidence supporting the giving of the ostrich instruction applies here. Mr. Krex advised Mr. Trigg to cash his payment checks at the currency exchange (and paid the transaction fee), and, when the purchase was for over $10,000, Mr. Krex paid in multiple checks. After Mr. Krex bought the initial group of printers at prices too good to be true, he told Mr. Trigg that he would buy all of the equipment Mr. Trigg could get and that Mr. Trigg could remove his classified advertisements from the newspapers. Thereafter, Mr. Trigg delivered over three-quarters of a million dollars of equipment to Mr. Krex under suspicious circumstances. Mr. Krex requested certain brands of printers and computers, those brands that were his best sellers. Based on the totality of evidence in this case, a rational jury could have determined that Mr. Krex possessed the requisite intent and joined this conspiracy. Although Mr. Krex does not challenge the sufficiency of the evidence underlying his convictions on the two remaining substantive counts, our review of the record similarly convinces us that a rational jury could have found Mr. Krex guilty of those counts beyond a reasonable doubt on the evidence presented at trial. We have repeatedly said that it is the rare case that will be overturned on sufficiency grounds; Mr. Krex's is not that case.
Conclusion
36
The judgments of the district court are modified to provide that the victim Best Buy is entitled to a total restitutionary recovery not to exceed $795,824.00. They are further modified to state explicitly that the restitution obligation of each defendant ceases if Best Buy has received full restitution. In all other respects, the judgments of the district court are affirmed.
37
AFFIRMED AS MODIFIED.
1
Sections 3663 and 3664 of Title 18 have been amended extensively since Mr. Trigg's conviction, and a new section, 18 U.S.C. § 3663A, has been added which makes restitution mandatory for offenses against property, including offenses committed by fraud. The amendments and the new section are effective for sentencing proceedings only in cases in which the defendant was convicted on or after April 24, 1996. Mr. Trigg was convicted before that date, so the amendments and the new section do not apply to his case. Our discussion in this opinion refers to §§ 3663 and 3664 as they existed prior to their amendment unless otherwise indicated
2
At the sentencing hearing, defense counsel had argued, "This man [Mr. Trigg] has some talent that could be used in legal and productive endeavors, and I'm sure he is going to use those in the future...." Sent. Tr.II at 38
3
Title 18 U.S.C. § 3553(c) provides that, if the district court decides not to order restitution or orders only partial restitution, it "shall include in the statement the reason therefor." 18 U.S.C. § 3553(c)
4
In doing so, we explained that "Ahmad holds that when a district judge orders restitution while withholding a fine on the ground of the defendant's inability to pay, and fails to explain his action, the case must be remanded for an explanation." Berman, 21 F.3d at 759
5
The district court can, and should in appropriate circumstances, require that restitution be paid within a specified time period or in specified installments. See 18 U.S.C. § 3663(f). As newly amended, § 3664 provides that the district court can order "a single, lump-sum payment, partial payments at specified intervals, in-kind payments, or a combination of payments at specified intervals and in-kind payments." 18 U.S.C. § 3664(f)(3)(A). If warranted by the economic circumstances of the defendant, the court can also order "nominal periodic payments" under the amended version of § 3664. Id. § 3664(f)(3)(B)
6
Although the 1996 amendments to § 3664 do not apply to Mr. Trigg's case, we note that Congress, through those amendments, has provided explicitly for joint and several liability:
If the court finds that more than 1 defendant has contributed to the loss of a victim, the court may make each defendant liable for payment of the full amount of restitution or may apportion liability among the defendants to reflect the level of contribution to the victim's loss and economic circumstances of each defendant.
18 U.S.C. § 3664(h).
7
Although only Mr. Trigg raises the matter, Mr. Warren and Mr. Krex are similarly situated, and we consider the matter to be one of plain error. See United States v. Mohammad, 53 F.3d 1426, 1438-39 (7th Cir.1995) (finding plain error in restitution order that was not challenged on appeal); see also United States v. Lashmett, 965 F.2d 179, 185-86 (7th Cir.1992) (holding that district court's failure to consider defendant's financial status before imposing restitution constituted plain error); United States v. Thompson, 113 F.3d 13, 15 (2d Cir.1997) (noting that "improperly ordered restitution constitutes an illegal sentence amounting to plain error"); United States v. Obasohan, 73 F.3d 309, 311 (11th Cir.1996) (same)
8
Section 4A1.3 provides:
If reliable information indicates that the criminal history category does not adequately reflect the seriousness of the defendant's past criminal conduct or the likelihood that the defendant will commit other crimes, the court may consider imposing a sentence departing from the otherwise applicable guideline range. Such information may include, but is not limited to, information concerning:
(a) prior sentence(s) not used in computing the criminal history category....
U.S.S.G. § 4A1.3.
9
Mr. Trigg's prior convictions for conversion in 1985 and for five counts of theft in 1993 were counted in calculating his criminal history category. See U.S.S.G. § 4A1.1(b), (c). Mr. Trigg accumulated additional criminal history points because he was still on probation for the 1993 convictions when he embarked on the conspiracy charged in this case, see U.S.S.G. § 4A1.1(d), and because the charged crime began less than two years after his release from custody on the 1993 convictions, see U.S.S.G. § 4A1.1(e). Mr. Trigg's six criminal history points placed him in criminal history category III before the upward departure. With six points, Mr. Trigg was one criminal history point away from criminal history category IV before the upward departure
10
See United States v. Johnson, 53 F.3d 831, 835-36 (7th Cir.1995); United States v. Panadero, 7 F.3d 691, 697 (7th Cir.1993); United States v. Schmude, 901 F.2d 555, 559 (7th Cir.1990)
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734 F.2d 17
Williamsv.Siler
83-5089
United States Court of Appeals,Sixth Circuit.
4/9/84
1
W.D.Ky.
AFFIRMED
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446 F.Supp. 740 (1978)
UNITED STATES of America, Plaintiff,
v.
GENERAL FOODS CORPORATION, a corporation, and Ross Barzelay, Edward R. Fencl, David E. James, and James W. Beno, Individuals, Defendants.
No. 77-CV-456.
United States District Court, N. D. New York.
February 9, 1978.
*741 *742 *743 Paul V. French, U. S. Atty., Syracuse, N. Y., for plaintiff; Joseph R. Mathews, Asst. U.S. Atty., Syracuse, N. Y., Food and Drug Administration, Richard M. Cooper, Chief Counsel, Robert P. Bardy, Associate Chief Counsel for Enforcement, Michael R. Taylor, Asst. Chief Counsel for Enforcement, Rockville, Md., of counsel.
Burditt & Calkins, Chicago, Ill., for defendants; George M. Burditt, Arnold Kanter, Chicago, Ill., Bond, Schoeneck & King, James E. Wilber, John J. Dee, Syracuse, N. Y., General Foods Corp., Murray D. Sayer, House Counsel, White Plains, N. Y., of counsel.
DECISION
MUNSON, District Judge.
This is an action commenced by the United States, through the Food and Drug Administration (F.D.A.), for violation of section 301 of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 331[1]; jurisdiction being alleged under section 302 of that Act, 21 U.S.C. § 332.[2] The Government is primarily seeking to enjoin the shipment of frozen, french-style green beans[3] processed and packaged by defendant General Foods Corporation at its Fulton, New York facility, between August 23, 1977 and September 10, 1977, inclusively.[4] Also named as defendants are Ross Barzelay, President of General Foods, Edward R. Fencl, General Foods Business Manager for Fruits and Vegetables in the Food Products Division, David E. James, Director of Quality Assurance, Environmental Control and Occupations Safety for General Foods, and James W. Beno, Facility Manager for General Foods' Fulton, New York processing plant.
The Government claims that the defendants have violated the Food, Drug, and Cosmetic Act in two separate and distinct fashions. The Complaint alleges that the beans in issue are adulterated under section 402(a)(3) of the Act, 21 U.S.C. § 342(a)(3) [hereinafter referred to as (a)(3)], whereby a food is adulterated "if it consists in whole or in part of any filthy, putrid, or decomposed substance . . .." The Government also contends that the beans are adulterated within the meaning of section 402(a)(4), 21 U.S.C. § 342(a)(4) [hereinafter simply (a)(4)], which provides that a food is adulterated "if it has been prepared, packed, or held under insanitary conditions whereby it may have become contaminated with filth . . .."
The (a)(3) charge of adulteration stems from analyses performed upon five samples *744 of finished product, frozen french-style green beans, three of which were taken by F.D.A. inspectors during an inspection of the Fulton facility on August 23-25, 1977, the others having been confiscated during a September 9-10, 1977 inspection. Microscopic examinations of those samples revealed the presence in all five of Geotrichum mold, commonly known as machinery mold.
The (a)(4) violation relates to observations made by F.D.A. inspectors during the August and September inspections. In particular, the (a)(4) charge relates to a visible buildup of green, slime-like vegetable matter on belts and equipment contained within defendants' Fulton processing plant. Samples of that slime taken on two separate occasions revealed the presence of Geotrichum, or machinery mold. The (a)(4) portion of the Complaint also contains allegations of other insanitary plant conditions, including inspectors' observations of house and fruit flies within the Fulton facility.
PRE-TRIAL MOTION TO DISMISS
The defendants have moved for dismissal of the Complaint, both under Rule 12(b)(1) of the Federal Rules of Civil Procedure, Title 28 U.S.C., claiming that this Court lacks subject matter jurisdiction and Rule 12(b)(6), claiming that the Complaint fails to state a claim upon which relief can be granted. The gravamen of the defendants' arguments in support of dismissal concerns the failure of the F.D.A. to establish defect action levels (DAL), or tolerances, with regard to Geotrichum mold, to serve as guidelines to the food processing industry. The defendants claim that, because the presence of Geotrichum in processed frozen green beans is inevitable and unavoidable to a certain degree, the F.D.A. must establish a DAL below which the presence of Geotrichum in frozen green beans will be tolerated by the F.D.A. under section 306 of the Act, 21 U.S.C. § 336. The failure of the F.D.A. to establish such a tolerance, the defendants claim, should result in the Government's not being able to establish good cause for granting the injunction, thereby depriving this Court of subject matter jurisdiction. 21 U.S.C. § 332(a). The defendants also contend that such failure to establish DALs for Geotrichum renders F.D.A. actions, such as this, for (a)(3) and (a)(4) violations, based upon the presence of Geotrichum, arbitrary and capricious, thereby requiring that this Court deny injunctive relief based upon the equitable "clean hands doctrine."[5]
As previously stated, the green beans in issue are adulterated, under (a)(3), if they consist in whole or part of any filthy substance. The courts which have had occasion to interpret the word "filthy", as used in that section, have been unanimous in applying a common, everyday definition, rather than attempting to define it in a scientific or technical sense. See, e. g. United States v. Cassaro, Inc., 443 F.2d 153 (1st Cir. 1971); United States v. 44 Cases, Etc., 101 F.Supp. 658 (E.D.Ill.1951); United States v. Swift & Co., 53 F.Supp. 1018 (M.D. Ga.1943). Under such a definition, there can be no question, and the defendants do not assert otherwise, that Geotrichum mold fragments constitute filth. See United States v. Swift & Co., supra.
Under the terms of the statute, an (a)(3) adulteration violation is proven once the presence in the food of any quantity of filth is established. United States v. 900 Cases, Etc., Peaches, 390 F.Supp. 1006 (E.D. N.Y.1975); cf. Dean Rubber Manufacturing Company v. United States, 356 F.2d 161 (8th Cir. 1966); also cf. A. O. Andersen & Co. v. United States, 284 F. 542 (9th Cir. 1922). Moreover, to prove adulteration under (a)(3), it is not necessary for the Government to demonstrate that the food is injurious or unfit for consumption, United *745 States v. Cassaro, Inc., supra; United States v. 484 Bags, More or Less, 423 F.2d 839 (5th Cir. 1970); United States v. 449 Cases, Containing Tomato Paste, 212 F.2d 567 (2d Cir. 1954).
The problem which arises with regard to adulteration under (a)(3), as well as other portions of the Food, Drug, and Cosmetic Act, is brought into sharp focus by the facts of this case, together with the defendants' legal arguments in support of their motion to dismiss. There can be no question that an expert, armed with the proper equipment, could detect filth in virtually every food marketed. United States v. 484 Bags, More or Less, supra; United States v. 1,200 Cans, Pasteurized Whole Eggs, Etc., 339 F.Supp. 131 (N.D.Ga.1972); United States v. Capital City Foods, Inc., 345 F.Supp. 277 (D.N.D.1972). The F.D.A., in fact, seemingly recognizes this as being true, as is evidenced by an article, cited by the defendants, which appeared in the Federal Register on September 30, 1977. 42 Fed.Reg. 52,814 (1977). Consequently, strict enforcement, by the F.D.A., of section 402 of the Act would result in the banning of literally all processed foods. United States v. 484 Bags, More or Less, supra.
In order to ameliorate the hardships which would result from such a literal interpretation, Congress empowered the F.D.A. to use its discretion and decline prosecution for minor violations. 21 U.S.C. § 336; United States v. 484 Bags, More or Less, supra; United States v. 449 Cases, Containing Tomato Paste, supra. The defendants contend that the failure of the F.D.A. to set defect action levels, in order to alert the industry as to under what conditions an (a)(3) violation would be prosecuted, based upon the presence of Geotrichum mold, is unfair, and should result in a dismissal of the present case. In support of this argument, the defendants rely heavily upon language contained in Judge Frank's dissent in United States v. 449 Cases, Containing Tomato Paste, supra, and upon the Seventh Circuit Court of Appeals' opinion in United States v. 1,500 Cases More or Less, Etc., 236 F.2d 208 (7th Cir. 1956).
Despite the defendants' assertions to the contrary, the F.D.A. is not statutorily required to establish tolerances, or DALs, with respect to (a)(3) violations. United States v. Certified Grocers Co-Op., 546 F.2d 1308, 1311 fn. 5 (7th Cir. 1976); United States v. Hunter Pharmacy, Inc., 213 F.Supp. 323 (S.D.N.Y.1963); United States v. 233 Tins, More or Less, Etc., 175 F.Supp. 694 (W.D.Ark.1959). While Congress has apparently mandated that the F.D.A. establish tolerances for poisonous or deleterious substances which are required or unavoidable in the production of food, such regulations relating to adulteration under § 402(a)(2) of the Act, 21 U.S.C. § 342(a)(2), see 21 U.S.C. § 346, there is no like requirement relative to (a)(3) violations.[6] That is not to say that the F.D.A. does not have the authority to enact such DALs with respect to (a)(3) violations, whether under 21 U.S.C. § 336, United States v. 484 Bags, More or Less, supra; cf. United States v. Goodman, 486 F.2d 847 (7th Cir. 1973), 21 U.S.C. § 341, United States v. 1,200 Cans, Pasteurized Whole Eggs, Etc., supra, or pursuant to 21 U.S.C. § 371(a). United States v. Nova Scotia Foods Products Corp., 568 F.2d 240 (2d Cir. 1977). But see United States v. 449 Cases, Containing Tomato Paste, supra.
The mere enactment of regulations establishing tolerances for filth in foods, below which levels the F.D.A. will not prosecute, does not always alleviate the court's task of deciding whether an (a)(3) violation has occurred. The courts are not bound by such DALs, and may well choose to apply a stricter standard than that set by the *746 F.D.A. in any particular instance. United States v. 484 Bags, More or Less, supra at 842; United States v. 449 Cases, Containing Tomato Paste, supra at 575; see also Dean Rubber Manufacturing Company v. United States, supra [dictum]. In fact, a court is not empowered (in theory) to overlook any (a)(3) violation, regardless of what tolerance, if any, has been set by the F.D.A. United States v. 449 Cases, Containing Tomato Paste, supra.
The harshness of this result is somewhat lessened by the application of a de minimis doctrine, whereby small quantities of filth can be overlooked by a court, especially in circumstances where no applicable DAL is in effect and there is no evidence that that quantity found is avoidable through the use of good manufacturing practice, taking into account the state of the industry. United States v. 1,500 Cases More or Less, Etc., supra at 215; United States v. 449 Cases, Containing Tomato Paste, supra; United States v. 900 Cases, Etc., Peaches, supra; United States v. Capital City Foods, Inc., supra at 278-279; United States v. 233 Tins, More or Less, Etc., supra at 702; see also United States v. 133 Cases of Tomato Paste, 22 F.Supp. 515 (E.D.Pa.1938), decided under the Section 7 of the old Food and Drug Act, formerly 21 U.S.C. § 8. In applying a de minimis standard, a court must, of necessity, rely heavily upon the testimony of expert witnesses well acquainted with both the food and foreign substance at issue, as well as the state of the industry. See, e. g., United States v. 1,500 Cases, More or Less, Etc., supra at 212. For this reason, it would seem that a motion for dismissal of an (a)(3) violation which is arguably de minimis should be denied, so that the Court can have the benefit of such witnesses' expertise in applying the de minimis doctrine.
As previously noted, the defendants argue that it is unfair to allow the F.D.A. to indiscriminately exercise its discretion under 21 U.S.C. § 336 in determining when or when not to prosecute for (a)(3) violations, in particular relating to Geotrichum mold, which they assert is an unavoidable component of processed green beans. This argument, one proferred in the context of the equitable clean hands doctrine, could easily be considered as a Constitutional vagueness argument, grounded in the Due Process clause of the Fourteenth Amendment. Cf. Boyce Motor Lines v. United States, 342 U.S. 337, 72 S.Ct. 329, 96 L.Ed. 367 (1952). The vagueness argument fails, however, by virtue of the fact that (a)(3) very clearly prohibits all filthy, putrid or decomposed substances contained in food, and is therefore far from vague; Dean Rubber Manufacturing Company v. United States, supra; see also United States v. Thriftimart, Inc., 429 F.2d 1006 (9th Cir. 1970), cert. den. 400 U.S. 926, 91 S.Ct. 188, 27 L.Ed.2d 185 (1970), reh. den. 400 U.S. 1002, 91 S.Ct. 453, 27 L.Ed.2d 454 (1971). The equitable argument based upon the unfairness of the F.D.A. charging (a)(3) violations, where no DALs exist to place the industry on notice as to what levels are acceptable, is somewhat more appealing, and has in fact been accepted, to varying degrees, by some. United States v. 449 Cases, Containing Tomato Paste, supra at 575 (Frank, J., dissenting); United States v. 1,500 Cases, More or Less, Etc., supra at 211. The Second Circuit Court of Appeals majority implicitly rejected this equitable argument in United States v. 449 Cases, Containing Tomato Paste, supra, a case in which Judge Frank issued a dissenting opinion explicitly accepting the position now espoused by the defendants. See United States v. 900 Cases, Etc., Peaches, supra at 1011. When weighed against the public health and welfare sought to be protected by Congress through enactment of the Food, Drug, and Cosmetic Act, United States v. Diapulse Corporation of America, 457 F.2d 25 (2d Cir. 1972), the unfairness to the industry is minimized and should not bar enforcement of the Act.
This Court therefore denies the defendants' motion to dismiss, finding that this Court does possess subject matter jurisdiction, by virtue of 21 U.S.C. § 332(a), and rejecting defendants' equitable clean hands argument. The Court will defer any consideration of the de minimus doctrine, as *747 applied in this case, until the evidence presented in the trial is weighed.
THE TRIAL
I. FINDINGS OF FACT
A hearing was commenced before this Court on December 19, 1977, upon the Government's request for preliminary and permanent injunctive relief. See Fed.R. Civ.P. Rule 65(a)(2). What follows herein may be considered the findings of fact of this Court. Fed.R.Civ.P. Rule 52(a).
Defendant General Foods Corporation is a Delaware corporation with its headquarters in White Plains, New York. Defendant Barzelay is the President of General Foods Corporation. Edward Fenct, also named as a defendant, is General Foods Corporation's Business Manager of Fruits and Vegetables. Defendant James is Director of Quality Assurance, Environmental Control and Occupational Safety for General Foods. James Beno, the last named defendant, is General Foods' Facility Manager for the Fulton, New York processing plant which is the subject of this action. All of the individual defendants exercise some degree of authority over the operation of the Fulton facility.
The parties have stipulated that all of the frozen, french-style green beans which were processed at defendants' Fulton facility between August 23, 1977, and September 10, 1977, inclusively, and which are currently within the custody or control of defendant General Foods, have either been introduced into, and subsequently received after movement in, interstate commerce by General Foods, or have been held in New York State for ultimate introduction into or delivery for introduction into interstate commerce.
On August 23, 1977, Food and Drug Administration (F.D.A.) Consumer Safety Office Investigator Kathleen Shanahan commenced a routine inspection of the General Foods Fulton, New York processing plant. Miss Shanahan, an F.D.A. employee since 1966, has held her current position since June, 1976, although as a "stride intern" from 1973-76, she conducted some F.D.A. inspections, and accompanied F.D.A. inspectors on others. The August inspection was only Miss Shanahan's second inspection of a frozen green bean processing facility, the other having been of General Foods' Avon, New York plant, which, at the time, was reprocessing frozen beans. Miss Shanahan has conducted approximately 125-150 inspections, 25-30 of which were of vegetable processing facilities, 5-10 of which, in turn, involved green beans.
Miss Shanahan began her inspection with a walk-through of the processing facility which, on that occasion, was processing only green beans. Inspector Shanahan noted that unprocessed, raw beans are initially placed in a hopper-like farm box outside the plant. (Exhibit 7a, representing a flow chart of the defendants' Fulton green bean operation, is appended to this Opinion). From the hopper, the beans are transported to a "cluster-buster", designed to separate the beans, then on to an air cleaner, and finally a washer. The aforementioned production stages take place in an outside production area. The beans are then transported to the inside production area, by conveyor belt, where they enter a stainless steel shaker which feeds the beans into 18 snippers, where the ends are removed. The beans are then conveyed, by a combination of belts and shakers, to a series of graders, or sieves, which sort them by diameter to determine whether they are processed as whole, cut, or french-style beans. All of the belts throughout the process are wet. The water used in the plant is Fulton city water and contains approximately one part per million chlorine.
In the course of her inspection, when reaching this point in production, Miss Shanahan decided to follow the french-style beans production line. She found that from the graders, those beans enter a blancher which cooks the beans slightly for five to six minutes at 212° F., as measured by Miss Shanahan. From the blancher, the beans are passed through a cooling tank, taken by belt to a shaker, and passed over one of three inspection belts, at which point human inspectors remove undesirable beans. *748 They are then fed, by shaker, into six french cutters. From the cutters, the beans are taken by water flume to the packaging area where they are placed in cardboard boxes. The beans, other than those to be preserved for later reprocessing, are then passed through a freezing tunnel where they are subjected to freon for fast freezing.
On the first day of the inspection, virtually all of the belts, in the preblanch area, be they metal mesh, plastic coated, or cleated, appeared to Miss Shanahan to be covered with a green, slimelike material, generally measuring between one-sixteenth and one-quarter of an inch in thickness. The slimelike material, which Miss Shanahan distinguished from vegetable residue, was grayish-white underneath the green surface. The slimy material smelled strongly of decaying vegetable matter, a smell which pervaded throughout the entire facility, particularly in the preblanch area.
Miss Shanahan returned on the next day, August 24, 1977, to find that no beans were being processed, and the cleaning crew was working in the preblanch area. The condition of the belts had not changed since the day before. Miss Shanahan collected eleven subsamples of the slimy material, ten of which were from the preblanch area, and all taken before production resumed. The samples were taken from the following locations: 1) belt, snipper to grader; 2) belt out of sieve # 2; 3) belt, sieve # 1 to second graders; 4) belt carrying # 3 and # 3 sieve beans out from sieves; 5) plate above belt carrying # 2 and # 3 sieve beans to elevating belt; 6) belt elevating beans to cutters; 7) cleated belt to french blancher; 8) inside cutter # 1; 9) belt, cooler to french bean cutter; 10) belt, cutters to inspection; and 11) belt, carrying whole beans from graders to pump into blancher. The parties have stipulated that the integrity of these samples, as well as others taken at a later date, was maintained from collection until testing.
As noted earlier, defendant's quality control manager for the Fulton plant, J. B. Beidleman, accompanied Miss Shanahan on the inspection, and collected duplicate samples of those taken by her. Mr. Beidleman was not called as a witness by either of the parties.
On August 24, 1977, Miss Shanahan also collected 24 subsamples of finished product manufactured late on August 23, 1977, and 24 finished product subsamples from the first hour of production on August 24, 1977.
During the August inspection, Miss Shanahan observed several flies, both of the fruit and house variety, saw preblanch beans being shovelled from the floor back onto the belts, and noticed that in general, the conditions post blanch were substantially better, from a sanitation standpoint, than those in the preblanch area.
Miss Shanahan returned to the Fulton facility for a second inspection in the late afternoon of Friday, September 9, 1977. That date was chosen because clean-up at that plant generally took place on Sunday, so that the inspection would come nearly a full week thereafter. Miss Shanahan was accompanied on this inspection by Perry Nichols, an F.D.A. trainee. Mr. Nichols did not testify in these proceedings. When the two arrived, the plant was not in operation, and had not been since 2:00 that morning. Production recommenced about 6:00 that evening.
During her inspection of the french line, Miss Shanahan again observed a one-sixteenth to one-quarter inch slime buildup on the belts, in approximately the same degree as before, as well as the odor of decaying vegetable matter in the preblanch area, flies, especially near the presnipper shaker, and open doors and windows. Miss Shanahan collected 25 subsamples, 23 of the slimelike material and 2 of water. Of the subsamples taken, all but three were from the preblanch area.[7] On September 9, 1977, Miss Shanahan also collected eight subsamples of finished product manufactured between *749 August 23, 1977, the date of the first inspection, and that day. She returned the next day, September 10, 1977, and collected subsamples of finished product manufactured on September 9, and September 5. All subsamples of finished products collected were of frozen french-style green beans.
The subsamples collected in defendant's Fulton facility by Miss Shanahan were analyzed by F.D.A. chemist Jane Kaminski. The finished product subsamples were tested using a modified version of the filth analysis contained in Chapter 44 of the Association of Official Analytical Chemists Manual.[8] After the net mass of the product is determined, the product is thawed by adding 250 millilitres (ml) of boiling water and gently stirring. The solution is drained for three minutes on a # 8 sieve, and the solid product is discarded. The sieve and container are then washed with 300 ml of water, and put through a # 16 sieve. The rinsings are then put through a # 230 sieve. The residue from that last sieve is put into a centrifuge tube (50 ml), and water is added until a volume of 10 ml is collected. To that volume is added crystal violate, to stain any filth, and 10 ml of a stabilizer solution. Four ½ ml portions of that 20 ml volume are separated out, placed under a 30 × magnification, and the number of Geotrichum mycelial fragments[9] is counted in each. The total number of fragments in the four specimens is multiplied by 10, giving the number of mycelial fragments in the subsample. That number is divided by the net mass of the subsample, and multiplied by 500 grams, thereby giving the results in the form of a mycelial fragments of Geotrichum per 500 grams of product.
In performing this modified AOAC analysis for filth on the samples of finished product collected by Investigator Shanahan, Miss Kaminski obtained the following results:
Sample Mfg. No. Samples Average
No. Date Tested Count Range
XX-XX-XXX 8/23 6 55 frag/500 g 46-70 frag/500 g
XX-XX-XXX 8/24 6 107 frag/500 g 81/137 frag/500 g
XX-XXX-XXX 9/9 6 194 frag/500 g 108-368 frag/500 g
XX-XXX-XXX 9/5 6 32 frag/500 g 16-66 frag/500 g
XX-XXX-XXX 9/5 6 500 frag/500 g 133-2146 frag/500 g
Miss Kaminski also tested the environmental samples collected by Inspector Shanahan during the course of her August and September inspections. For those analyses, portions of the subsamples, which were contained in a formaldehyde solution designed to prevent growth, were placed on a covered slide and qualitatively examined under a 100 × microscope. The chemist then looked for the very characteristic features of Geotrichum, including a feathery texture, crossed walls, and series of at least three branches growing off the main trunk at 45° angles, with tapered growing ends. The presence of Geotrichum, or machinery mold, was detected in each of the 11 subsamples collected by Miss Shanahan on August 24, 1977, and in all but one, # 7,[10] of the subsamples from September 9, 1977.
Added to the testimony of Miss Shanahan's observations, coupled with the results of tests performed on the samples collected by her, the Government points to two of General Foods' internal documents which seemingly acknowledge the presence of *750 some buildup of green, slime-like material on the Fulton bean processing equipment during the period in issue. The first, Exhibit 37, is J. B. Beidleman's report of the August 23-24, 1977 F.D.A. inspection. In that report, Mr. Beidleman referred to the 11 duplicate samples collected by him from the processing equipment at the same time as Miss Shanahan took hers as "green slime". The second document, Exhibit 38, is a report to J. W. Beno, the Fulton plant manager, of a plant quality assurance audit conducted by R. B. LaBelle, of General Foods' Corporate Quality Assurance Department, on August 31, 1977. In that report, Mr. LaBelle noted "the presence of green slime at various points in the vegetable processing area . . .."
The defendants called Margaret B. Moore, a group leader in the Fulton plant, as a witness to testify as to plant conditions in August and September of 1977. At that time, there were generally 40 line inspectors and 12 sanitation personnel working during each shift in connection with the bean processing. Mrs. Moore has never seen a one-quarter inch buildup of slime on the equipment, although she does notice occasional small buildups of slime in the plant. Mrs. Moore saw Miss Shanahan in the plant in September, but does not recall anything extraordinary about that night. Mrs. Moore noted that a putrid odor occasionally exists within the plant, generally when the drains become plugged.
The only other witness having direct knowledge of the actual conditions existing within the plant during the critical time was Richard L. Hazard, food inspector with the New York State Department of Agriculture and Markets. Mr. Hazard made a routine, unannounced inspection of the Fulton plant on August 18, 1977, at which time fresh and frozen green beans were, he thinks, being processed. The only deficiencies noted by Mr. Hazard involved flaking and peeling paint in the production area, and a one or two inch opening of an overhead door through which rodents or insects could enter. He does not recall seeing any slime buildup, smelling a putrid odor, or observing the presence of any flies. Samples of reprocessed, frozen beans taken by Mr. Hazard tested satisfactorily, although the only test requested by Mr. Hazard was for paint particles.
This Court finds, based upon the foregoing, that on August 23 and 24, 1977, and one again on September 9, 1977, there was some visible buildup, on food processing equipment at the defendants' Fulton facility, of a green, slime-like substance which, when qualitatively analyzed, revealed the presence of Geotrichum.
Geotrichum, commonly referred to within the food processing industry as machinery mold, also known as dairy mold, oospora and oidium, is one whose spores are generally isolated from soil, sewage, and surfaces of fruits and vegetables growing in the field. Geotrichum is not harmful to humans when consumed in food. In fact, it is intentionally introduced into several types of cheese (Limburger, Camemberti, and Brie) as a curing agent, and as such both live and dead Geotrichum is present in those cheeses as part of the finished products. Geotrichum would be killed when subjected to a blanch of 5-6 minutes at 212° F., such as that utilized by the defendants at Fulton, but the dead mycelium would remain unless otherwise removed. Some, though not all, of the mycelial fragments drop off during post blanch washing.
Geotrichum spores enter a plant such as that at Fulton in several manners, though primarily on the raw vegetables delivered for processing.[11] The spores require nutrient, *751 moisture,[12] and a proper temperature to grow into viable mycelium. The liquid exuded from a cut or damaged green bean provides an excellent nutrient for Geotrichum spores. Geotrichum, when present in any quantity in a finished food product constitutes filth.
When Geotrichum begins to grow, it generally takes 4-8 hours to become visible. As it grows, the mold generally appears gray or white in color, although in a food packaging plant its surface would generally take on the color of the juices flowing from whatever food was being processed at the time. The mold accumulation generally has a slimy texture.
Geotrichum is virtually unavoidable in a food processing plant, particularly one dealing with green beans. The mold can, however, be controlled through the use of proper routine cleaning supplemented by preventative measures, such as high pressure spray of belts and equipment using a chlorine solution. With proper cleaning, visible mold, together with the putrid odor often accompanying it, can be avoided. The presence of analytical Geotrichum, however, especially in a green bean processing plant, cannot be avoided.
General Foods does not recognize Geotrichum as an indicator of plant sanitation because the mold grows so quickly and because in a neutral pH atmosphere, such as on green beans, bacteria grows to a greater extent than molds or yeasts. Rather, it relies upon a standard plate count as the best indicator of sanitation, setting, as a standard limit, 100,000 living bacteria per gram. They also test for coliform, with a limit of 500 per gram. E. Coli is sometimes checked, and occasionally coagulase positive staphylococci with a limit of 100 per gram. Results of such tests performed by General Foods on August 23 and 24, 1977 and September 5 and 8, 1977, were all well within these established limits, which are in turn well below the average within the industry.
Just as General Foods does not recognize Geotrichum as an indicator of plant sanitation, the Government's experts do not rely wholly upon plate count as such an indicator, because most of the viable microorganisms in the product are killed during blanch, and would therefore not be detected by the standard plate count method. Thus, while these plate counts are adequate indicators of blanch effectiveness, they fail to detect the presence of nonviable filth, such as dead Geotrichum.
The Court believes the answer to lie somewhere between the two positions. Standard plate count is certainly an indicator of plant sanitation. So too is the visible accumulation of machinery mold, within the processing facility, particularly on surfaces and equipment within which the product will come into contact. Likewise, the quantity of Geotrichum found in the finished product has some bearing upon plant sanitation. The mere presence of analytical Geotrichum in the facility, however, is not necessarily an indication of insanitary conditions.
The presence of a few flies within a processing plant such as the defendants' is generally unavoidable. An accumulation of fruit flies, however, can be an indication of the presence of decaying matter.
The practice of shovelling beans off the floor back onto the conveyor belts is not desirable, but does not constitute a violation of Current Good Manufacturing Practices, at least when confined, as here, to the preblanch area.
The only Defect Action Level (DAL) established with respect to Geotrichum, or slime mold, is 20% for crushed and canned pineapple, using a Howard Mold Count method of tabulation. Based upon knowing the volume of the fields counted in the Howard Mold Count, and assuming the presence of one Geotrichum filament in each *752 positive field, defendants' experts calculate a 20% Howard Mold Count to be the equivalent of 200,000 mycelial fragments per 500 grams. However, Dr. Eisenberg, a Government witness, demonstrated by empirical analysis, based upon Howard Mold Counts and Cichowicz-Eisenberg tests on identical samples of canned pineapple, shows widely varied results, with an average Howard Mold Count of roughly 19% being the equivalent of approximately 1662 fragments per 500 grams, on an average. Of the 12 samples used in making the comparison, the Howard Mold Counts ranged from 16% to 23%, and the corresponding Geotrichum counts fell between 127 and 6,843 mycelial fragments per 500 grams.
In March of 1974, the F.D.A. conducted a HACCP (anagram for Hazard Analysis and Critical Control Points) inspection of the Fulton facilities. Following that rigorous, five-day check of equipment and procedures, the F.D.A. determined that the plant was in compliance with their standards. At the time of the inspection, the Fulton plant was processing mushrooms, and repackaging preprocessed, individually quick frozen (IQF) green beans.
DISCUSSION
A. (a)(4) Violation
The test most often applied in (a)(4) cases, such as this, is to determine whether or not the food in issue was processed under conditions whereby there is a reasonable possibility that filth contamination could have occurred. Berger v. United States, 200 F.2d 818 (8th Cir. 1952); United States v. 1,200 Cans, Pasteurized Whole Eggs, Etc., supra. Because the purpose of (a)(4) is to prevent contamination, or nip it in the bud, actual contamination of the finished product need not be shown. United States v. H. B. Gregory Co., 502 F.2d 700 (7th Cir. 1974), cert. den. 422 U.S. 1007, 95 S.Ct. 2629, 45 L.Ed.2d 670 (1975).
While actual finished product contamination need not be shown, evidence of it is certainly relevant to an alleged (a)(4) violation. United States v. 44 Cases, Etc., supra. Also relevant is evidence of observations made during inspections of the facilities in issue, provided they are conducted at or about the same time that the product alleged to be adulterated under (a)(4) is manufactured. Compare Berger v. United States, supra; United States v. 1,200 Cans, Pasteurized Whole Eggs, Etc., supra; and United States v. 44 Cases, Etc., supra; with United States v. 1,500 Cases, More or Less, Etc., supra. This will depend, of course, on the particular circumstances involved, including how removed in time from the dates of production the observations are, whether the nature of the deficiencies are such as could quickly be remedied, and whether they are of an inherently fluctuating nature. United States v. 1,200 Cans Pasteurized Whole Eggs, Etc., supra; Federal Rules of Evidence Rules 401 & 402, Title 28 U.S.C.; also cf. Strauss v. Douglas Aircraft Co., 404 F.2d 1152 (2d Cir. 1968); Russell, Poling & Co. v. Conners Standard Marine Corp., 252 F.2d 167 (2d Cir. 1958); Shanahan v. Southern Pacific Co., 188 F.2d 564 (9th Cir. 1951); Lever Brothers Co. v. Atlas Assurance Co., 131 F.2d 770 (7th Cir. 1942).
To refute allegations of an (a)(4) violation, a defendant may introduce evidence of routine customs, or business habits, involving established cleanup, sanitation, and maintenance procedures, provided they fall within Rule 406 of the federal Rules of Evidence, Title 28 U.S.C. cf. Spartan Grain & Mill Company v. Ayers, 517 F.2d 214 (5th Cir. 1975); Hambrice v. F. W. Woolworth Co., 290 F.2d 557 (5th Cir. 1961).
The relevant evidence presented bearing upon the (a)(4) violation boils down to: 1) observations by Miss Shanahan of an accumulation of a green, slime-like material on belts and equipment, especially in the preblanch area, samples of which tested positive for the presence of Geotrichum; 2) testimony of Mrs. Moore that neither she, nor any of the girls working under her supervision, would allow such a buildup to *753 accumulate without shutting down production; 3) Mrs. Moore does not recall ever seeing such a buildup of slime on the equipment; 4) Mr. Hazard, a state inspector, failed to observe any buildup of slime during his inspection of August 18, 1977, some five days prior to that of Miss Shanahan; 5) the plate counts resulting from defendants' tests performed on the dates in question showed remarkably low levels of living bacteria, coliform, and E. Coli; 6) when producing green beans, General Foods uses 40 line inspectors and a twelve man sanitation crew, with a foreman for every shift; 7) General Foods maintains more stringent sanitation requirements for the post blanch area than the preblanch areas; and 8) General Foods concedes that it does not rely upon Geotrichum as an indicator of sanitation.[13] The defendants urge the relevancy of the fact that, following a rigorous 1974 HACCP inspection of the Fulton facility, the F.D.A. determined defendants' facilities and procedures to be in compliance.
The Court does not consider the 1974 HACCP inspection to be relevant to the (a)(4) allegations, for the simple reason that from 1974 to 1977 one would expect the conditions at the Fulton facility, and the procedures utilized there, to change, very drastically. What is more, the food processing industry is in a constant state of flux, so that what might have been acceptable in 1974 to the F.D.A. as current good manufacturing practice might, in 1977, be totally unacceptable. Evidence of the state inspection conducted in August of 1977 is, however, very relevant to the (a)(4) charge, it being very close in time to the period involved.
The analytical presence of Geotrichum in samples of both finished product and residue removed from defendants' equipment is not particularly startling, in light of the overwhelming amount of testimony, from experts called by both sides, that Geotrichum is unavoidable in a green bean processing facility. Moreover, the value of those test results as indicators of plant insanitation is outweighed by the extremely low plate counts recovered by the defendants in August and September of 1977.
Based upon the evidence presented, this Court does not believe the Government has shown, by a fair preponderance of the evidence, United States v. 233 Tins, More or Less, Etc., supra, that the frozen french-style green beans in issue were processed under such conditions as to present a reasonable possibility that they could have become contaminated with filth.
B. (a)(3)
The nature of an (a)(3) violation has been explained in the portion of this opinion relating to the defendants' pretrial motion to dismiss. To briefly recapitulate, the literal language of (a)(3), which proscribes filth in food, in any amount, has been interpreted as being subject to exception, both by virtue of section 306 of the Act, 21 U.S.C. § 336, which gives the F.D.A. considerable discretion in deciding when to bring actions, and the judicially-evolved de minimis rule, which allows a court to overlook a small amount of harmless filth where there is no evidence of that amount of filth being avoidable within the industry.[14]
Of the samples of finished product tested by Jane Kaminski, the highest count for Geotrichum found in any one subsample was 2146 mycelial fragments per 500 grams, *754 or just over one pound. The averages found in each of the five finished product samples were 55, 107, 194, 32, and 500 fragments per 500 grams, with the maximums found in each being 70, 137, 368, 66, and 2146 fragments per 500 grams, respectively. By way of comparison, the 20% Howard Mold Count defect action level established for crushed and canned pineapple corresponds to 200,000 fragments per 500 grams, using Dr. Olson's computations. According to Dr. Eisenberg's empirical data, an average crushed pineapple sample with a 19% Howard Mold Count, represents an average of 1662 fragments per 500 grams (with a very wide range of results).[15] According to Dr. Olson's calculations, based upon a number of assumptions concerning the average size and mass of a mycelium of Geotrichum, 2146 fragments in a 500 gram specimen represents approximately .05 parts per million on a mass-to-mass ratio.
It must be remembered that the Geotrichum inoculum (spores) come into the processing plant primarily on the raw beans, and are provided an ideal environment for growth by virtue of the liquid exuded when the beans are snipped. Thus, we are dealing with contamination inherent in the raw product itself, rather than filth being introduced into the food from the environment during processing.
The evidence is overwhelmingly supportive of defendants' assertion that Geotrichum is an unavoidable, albeit controllable, problem in the green bean processing industry. There is little or no evidence whatsoever to show that the levels of Geotrichum discovered in defendants' finished product were avoidable through the use of current good manufacturing practices, as exist within the industry. Finally, it is uncontroverted that Geotrichum, at the levels with which we are dealing, is not harmful when consumed by humans. This Court therefore finds that, while the Geotrichum found in samples of defendants' frozen, french-style green beans constitutes filth, the amount is de minimis, and does not therefore constitute an (a)(3) violation.[16]
IV. CONCLUSIONS OF LAW
The frozen french-style green beans in issue are not adulterated either under section 402(a)(3) of the Act, 21 U.S.C. § 342(a)(3), or § 402(a)(4), 21 U.S.C. § 342(a)(4). The Government is therefore not entitled to injunctive relief pursuant to section 302 of the Act, 21 U.S.C. § 332.
The Clerk shall therefore enter a judgment in favor of the defendants in all respects.
Appendix A to follow.
*755 APPENDIX A
*756
*757 APPENDIX B
*758
NOTES
[1] § 331. Prohibited acts
The following acts and the causing thereof are prohibited:
(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded.
* * * * * *
(c) The receipt in interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.
. . .
[2] § 332. Injunction proceedings Jurisdiction of courts
(a) The district courts of the United States and the United States courts of the Territories shall have jurisdiction, for cause shown, and subject to the provisions of section 381 (relating to notice to opposite party) of Title 28, to restrain violations of section 331 of this title, except paragraphs (h)-(j) of said section. . . .
[3] The defendants do not challenge the Government's assertion that the green beans in issue constitute food under Section 201 of the Act, 21 U.S.C. § 321.
[4] The beans in issue, according to the trial testimony of defendant David E. James, General Foods' Director of Quality Assurance, Environmental Control and Occupational Safety, total approximately 1,836,000 pounds, being valued at $1,294,000 at General Foods' price to the trade (Trial Transcript p. 602). Mr. James also noted that french-style green beans are in short supply this year. (Id.)
[5] The DAL argument pertains more to the (a)(3) violation than the (a)(4) claim. It is difficult to conceive of a way for the F.D.A. to prescribe tolerances for Geotrichum as relates to conditions in the processing plant. The regulations pertaining to (a)(4) are of necessity somewhat broad, aimed at the problem of sanitation in general, rather than any specific type of contaminant. See 21 C.F.R. Part 110. In light of the disposition of this motion, however, the Court need not decide whether the argument is equally applicable to (a)(4) violations.
[6] The Seventh Circuit Court of Appeals in United States v. 1,500 Cases, More or Less, Etc., supra, expressed disbelief of any assertion that Congress directed the F.D.A. to establish DALs for poisonous or deleterious substances, implying that those substances are tolerable in certain small quantities, and yet apparently determined filth in any amount to be intolerable. United States v. 1,500 Cans, More or Less, Etc., supra at 211. There is considerable merit to this argument. The fact remains, however, that the language of § 346 very clearly applies only with respect to poisonous or deleterious substances.
[7] A diagram, exerpted from Exhibit 9, showing the location of each of the 25 subsamples taken, is appended to this opinion.
[8] This is often referred to as the Cichowicz-Eisenberg method, after Stanley M. Cichowicz and William V. Eisenberg, both of whom testified as Government witnesses in this case.
[9] A mycelial fragment of Geotrichum is generally defined as three or more thread-like strands joined at one end of a branched filament.
[10] Subsample # 7 was collected from water dripping from a pipe in the area of the pre-snipper shaker.
[11] It has been estimated that as many as one billion living organisms can be found in a 500 gram sample of raw product delivered to a food processing plant.
[12] It should be noted that the summer of 1977 was unusually rainy for this region.
[13] While it is true that the Government failed to call as a witness Perry Nichols, the F.D.A. trainee who accompanied Miss Shanahan on the second inspection, it is equally true that the defense did not choose to call J. Beidleman, their employee who accompanied Miss Shanahan on both inspections, and who took duplicate samples of the "green slime" described by Miss Shanahan. This Court does not consider this to be relevant.
[14] A good example of an application of the de minimis rule can be found in United States v. Capital City Foods, Inc., supra. In that case, samples of butter tested revealed the presence of 28 insect fragments in 4125 grams, or about 3 fragments per pound.
[15] Caution should be observed in weighing the results of such a comparison, inasmuch as experts have testified that an acidic medium, such as tomato or pineapple, will favor growth of molds and yeasts over bacteria, whereas materials with a more basic pH, such as green beans, will generally favor growth of bacteria. Consequently, it could be argued that a 20% Howard Mold Count for slime mold would be unacceptable for green beans, despite being allowable for pineapple.
[16] In reaching this conclusion, this Court does not place any reliance whatsoever upon the failure of the F.D.A. to establish a Defect Action Level for Geotrichum in green beans. Such a DAL would certainly be of benefit to the industry, and the public at large. This Court rejects the notion, however, that the F.D.A. is required to set such a standard, and that F.D.A. enforcement of (a)(3) without such a DAL is unfair.
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838 F.2d 1209Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.James H. HAYES, Plaintiff-Appellant,v.James MARTIN, Governor, Arron Johnson, Secretary ofDepartment of Corrections, John Patsevourous, Director ofPrisons, Stefan W. Plumacher, Western Area Administrator,Sherrill Allen, Supt. Craggy Prison Unit, Officer Wallins,Officer Collins, Defendants-Appellees.
No. 87-7369.
United States Court of Appeals, Fourth Circuit.
Submitted: Dec. 29, 1987.Decided: Feb. 1, 1988.
James H. Hayes, appellant pro se.
LaVee Hamer Jackson, Office of Attorney General of North Carolina, for appellees.
Before WIDENER and ERVIN, Circuit Judges, and BUTZNER, Senior Circuit Judge.
PER CURIAM:
1
A review of the record and the district court's opinion discloses that this appeal from its order denying relief under 42 U.S.C. Sec. 1983 is without merit. Because the dispositive issues recently have been decided authoritatively, we dispense with oral argument and affirm the judgment below on the reasoning of the district court. Hayes v. Martin, C/A No. 87-75-A-C (W.D.N.C. Oct. 5, 1987).
2
AFFIRMED.
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64 B.R. 770 (1986)
In re FSC CORPORATION, Debtor.
FSC CORPORATION, Plaintiff,
v.
MELLON BANK, N.A., Trustee, Defendant.
Bankruptcy No. 81-2558, Adv. No. 83-1464.
United States Bankruptcy Court, W.D. Pennsylvania.
September 9, 1986.
Thomas S. Galey, Pittsburgh, Pa., for FSC Corp., now known as Trilos Corp.
B.A. Karlowitz, William Hoffman, Pittsburgh, Pa., Karlowitz, Hoffman & Brodbeck, for Mellon Bank, N.A.
M. Bruce McCullough, Buchanan Ingersoll, P.C., Pittsburgh, Pa., for debtor.
*771 MEMORANDUM OPINION
BERNARD MARKOVITZ, Bankruptcy Judge.
Before the Court are cross-Motions For Summary Judgment in an action by the Debtor to recover an interest payment of $551,250.00, which it claims was a preferential transfer pursuant to § 547(b) of the Bankruptcy Code. The Defendant alleges, inter alia, that as an agent for a disclosed principal, it is not the appropriate party in this suit, and that no preference occurred from which it benefited.
While it is clear to the Court that a preferential transfer did occur, we agree with the Defendant in this case, that as an agent for a disclosed principal, no preference occurred as to it; accordingly, we will grant the Defendant's Motion For Summary Judgment, and deny that of the Plaintiff.
FACTS
On August 1, 1980, the parties entered into an agreement titled "Indenture Between FSC Corporation and Mellon Bank, N.A. as Trustee....." ("Indenture"). This Indenture was created in order to provide the Debtor with needed capital through loans from various small investors other than Mellon, the Indenture Trustee. These investment loans are manifested by debentures authenticated and evidenced by the Indenture Trustee and issued by the Debtor to the individual investors.
The Indenture Agreement provided for semi-annual interest payments to be made by the Debtor to the Defendant for transmittal to the debenture holders. In the absence of default, the sole role of the Trustee was to receive interest payments from the debtor-in-possession in trust and distribute them to the disclosed principals (i.e. the debenture holders).
An interest payment was due and paid in the ordinary course of business on February 1, 1981. The interest payment in question, in the amount of $551,250.00, was due on August 1, 1981. The Debtor made this payment to the Defendant on August 12, 1981, and the Defendant paid out this amount, on that same date, to those investors holding debentures registered under the terms of the Indenture Agreement. Thereafter, the Defendant possessed neither custody nor control over the funds dispersed to the investors.
On September 25, 1981, the Debtor filed a Chapter 11 bankruptcy petition. As debtor-in-possession, it asserts that the transfer of the August interest payment was a preference which may be avoided. With this portion of the debtor-in-possession's argument we agree.
Section 547(b) of the Bankruptcy Code outlines the requirements necessary to prove a preference:
(b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property
No party disputes the fact that a transfer of property of the Debtor occurred.
(1) to or for the benefit of a creditor;
Clearly, the transfer was to the Indenture Trustee for the benefit of the debenture holders who were creditors of the debtor-in-possession.
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
On the date the debentures were purchased (prior to August 1, 1980) a debt was created by and between said debenture holders and FSC Corporation. As time passed the contract interest accrued on said debt. The payment in question is payment of such interest on said antecedent debt.
(3) made while the debtor was insolvent;
Undisputed records and the Schedules filed with the Court prove this statement.
(4) made
(A) on or within 90 days before the date of the filing of the petition; . . .
(5) that enables such creditor to receive more than such creditor would receive if
*772 (A) the case were a case under Chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
Clearly a preference has occurred; however, the Court finds that the Plaintiff has pursued the wrong Defendant. The Indenture Trustee was obligated under the Indenture Agreement to transfer the interest payments received from the Debtor to the debenture holders. As such, the Indenture Trustee acted as an agent for its principals, the debenture holders.
The law in Pennsylvania clearly states that:
When a third party makes a payment to an agent and thereafter acquires a right to the return of the money, the agent is not personally liable unless it appears that the money remains in his possession. Even though the agent has delivered the money to his principal, he may be liable if he made an independent personal promise to repay or if his principal was undisclosed.
P.L.E. Agency § 109, p. 578 (emphasis added)
While the cases cited in the treatise are factually dissimilar in that they deal primarily with real estate transactions, the legal premise is the same.
In Kurzawski v. Schneider, 179 Pa. 500, 36 A. 519 (1897), the Court addressed an action by the Plaintiff to recover part of the purchase money paid to the Defendant as agent of the seller. The Court held that:
[an] agent who receives money paid on account of a contract for the purchase of real estate made with his principal cannot be held liable in an action by the purchaser to recover the money back, on proof of facts which would entitle the purchaser to rescind the contract.
Years later, the Court bolstered this holding, finding that an agent who received hand money on behalf of a disclosed principal was not liable for the return of said hand money when the purchase was not consummated. Yentis v. Mills, 299 Pa. 25, 148 A. 909 (1930). The Court said:
[So] the purchaser might hold the agent responsible, if the latter had agreed to keep the deposit and not pay it over unless the deal was closed, and there was failure to convey, but such facts do not appear here.
Id. 148 A. at 911 (emphasis added).
The case of Brunetto v. Ferrara, 167 Pa.Super. 568, 76 A.2d 448 (1950) reiterates this language as an undisputed statement of law; however, in that case the Court found the Defendant liable because he was part owner of the real estate being sold. Therefore, he was a partial principal, as well as the agent, and had made an "independent personal promise to repay". P.L.E., supra.
Thereafter, the Pennsylvania Superior Court, in Trott v. Hild, 190 Pa.Super. 85, 151 A.2d 832 (1959), further stated that:
[Under] the law of agency, where an agent has received moneys belonging to a disclosed principal, the agent is not under a duty to return the same to the other party to the transaction if the cause for recision arises after their receipt.
Id. 151 A.2d at 836 (emphasis added).
Cases from other states and circuits have shown a similar policy. See Mercantile Trust Co. v. Schlafly, 299 Fed. 202 (8th Cir.1924) (Court permitted recovery against agent for preferential transfer, where agent remained in possession of the funds); Jentzer v. Viscose Co., 13 F.Supp. 540 (S.D.N.Y.1934) (in preference action by Bankruptcy Trustee, agent of Defendant found not personally liable for money already turned over to his principal, following the decision of Judge Benjamin Cardozo, in Carson v. Federal Reserve Bank of New York, 254 N.Y. 216, 172 N.E. 475 (1930); Brinig v. American Credit Bureau, 439 F.2d 43 (9th Cir.1971) (also following Cardozo's Opinion in Carson, supra.).
*773 The Debtor weakly asserts that because the Defendant has filed a claim against the estate that the Defendant must be a creditor. However, the Defendant filed such claim on behalf of the debenture holders, as it was required to do by the very Indenture Agreement to which it was a signatory. The powers and duties of a Trustee are determined by the language of the Indenture.
In filing a claim, the Trustee does so in behalf of the principals. This does not make the Trustee a creditor with respect to the debt itself. See Bitker v. Hotel Duluth Co., 83 F.2d 721 (8th Cir.1936); In re Allied Owner's Corp., 74 F.2d 201 (2nd Cir.1934). The debtor should be equitably estopped from now changing the terms of the Indenture Agreement to create a debtor/creditor relationship, where there was none previously.
Therefore, while it is clear that a preferential transfer did occur, it is also clear that the Defendant is not the appropriate party to return the preferred payment. Had the Defendant retained custody and control of the money, it could be required to return same. Having already settled with the various principals, the Defendant no longer possesses such liability.
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604 N.W.2d 414 (2000)
258 Neb. 537
Charles DERR, appellant,
v.
COLUMBUS CONVENTION CENTER, INC., a Nebraska corporation, appellee.
No. S-98-256.
Supreme Court of Nebraska.
January 14, 2000.
*416 James C. Stecker, Columbus, for appellant.
Amy Sherman LaFollette, of Nolan, Roach, Olson, Fieber & Lautenbaugh, Omaha, for appellee.
HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.
McCORMACK, J.
NATURE OF CASE
Charles Derr slipped and fell on some ice while he was a guest at the New World Inn in Columbus, Nebraska, a hotel operated by the Columbus Convention Center, Inc. (CCC). Derr sued CCC, but the district court granted summary judgment for CCC. Derr appealed, and the Nebraska Court of Appeals reversed the judgment of the district court. Derr v. Columbus Convention Ctr., No. A-98-256, 1999 WL 420064 (Neb.App. June 22, 1999) (not designated for permanent publication). CCC petitioned this court for further review, which we granted on August 25, 1999. For the reasons stated below, we reverse the judgment of the Court of Appeals.
FACTUAL AND PROCEDURAL BACKGROUND
Derr's deposition testimony indicates he was, at the time of his accident, employed as a crew foreman by Hommon Cooling Towers. Derr was in Columbus to work on a cooling tower for Minnesota Corn Processors and had been staying at the New World Inn for about 2 months at the time of his accident.
Derr's accident occurred on August 31, 1995. Derr testified that he was going down the stairs to get some ice from the ice machine and fell when he slipped on some ice spilled on the last step of the stairway and felt a snap in his left ankle. Derr testified that the stairway was an interior, carpeted stairway and that the reason for his fall was a "few pieces" of ice from the ice machine.
*417 The ice machine, according to Derr, was located on the ground floor of the hotel and was positioned against a wall about 3 or 4 feet to the right of the bottom of the stairway. Derr stated that although he had seen ice on the floor around the ice machine during his stay at the hotel, he had not previously seen ice on the steps. Derr admitted that he had no idea how long the ice on which he slipped had been on the step prior to his fall. Derr knew of no facts that would indicate that CCC knew of the presence of the ice on the step.
In its answers to interrogatories, CCC stated that the stairs were vacuumed and that the floor at the base of the stairs was mopped at least once a day and sometimes more. CCC also stated that there were always regular housekeeping, maintenance, and inspections of the area performed by all of CCC's employees throughout the day. While CCC could not state the number of employees who passed through that area on any day, it opined that numerous employees of CCC passed by that area on a daily basis, often multiple times in a day. CCC stated that all its employees are instructed and trained to keep the entire premises in a clean and safe condition regardless of their particular job duties or description.
As a result of the fall, Derr suffered torn ligaments in his left ankle, which required surgical repair. Derr alleged in his petition that he had suffered a torn anterior talofibular ligament, a severely hypertrophied synovium, and a compressed anterior tibia nerve in his left ankle. Derr prayed for damages based upon pain and suffering, medical expenses, lost wages, and a permanent impairment to his left foot.
The district court, in entering summary judgment, found no evidence in the record to indicate that CCC had created the dangerous condition that led to Derr's accident or that CCC had actual or constructive notice of the condition. The Court of Appeals reversed, finding evidence to support the conclusion that CCC had created the dangerous condition by placing the ice machine near the base of the stairs and failing to regularly patrol the area for spills. Derr v. Columbus Convention Ctr., No. A-98-256, 1999 WL 420064 (Neb.App. June 22, 1999) (not designated for permanent publication).
ASSIGNMENTS OF ERROR
CCC assigns on further review, as consolidated and restated, that the Court of Appeals erred in finding that there was sufficient evidence upon which a jury could infer that CCC had created the dangerous condition.
STANDARD OF REVIEW
Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Ferguson v. Union Pacific RR. Co., 258 Neb. 78, 601 N.W.2d 907 (1999); Nebraska Popcorn v. Wing, 258 Neb. 60, 602 N.W.2d 18 (1999).
In reviewing an order of summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment was granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Nebraska Popcorn v. Wing, supra; Knudsen v. Mutual of Omaha Ins. Co., 257 Neb. 912, 601 N.W.2d 725 (1999).
The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law. Id.
A movant for summary judgment makes a prima facie case by producing enough evidence to demonstrate that the *418 movant is entitled to a judgment if the evidence were uncontroverted at trial. Fackler v. Genetzky, 257 Neb. 130, 595 N.W.2d 884 (1999); Stiver v. Allsup, Inc., 255 Neb. 687, 587 N.W.2d 77 (1998). At that point, the burden of producing evidence shifts to the party opposing the motion. Kramer v. Kramer, 252 Neb. 526, 567 N.W.2d 100 (1997); Brown v. American Tel. & Tel. Co., 252 Neb. 95, 560 N.W.2d 482 (1997).
ANALYSIS
Derr's accident occurred prior to this court's prospective abolition of the common-law distinction between licensee and business invitee in Heins v. Webster County, 250 Neb. 750, 552 N.W.2d 51 (1996). However, in this case, it is clear that Derr, as a guest of the hotel, was a business invitee. An invitee is a person who goes on the premises of another in answer to the express or implied invitation of the owner or occupant on the business of the owner or occupant or for their mutual advantage. Chelberg v. Guitars & Cadillacs, 253 Neb. 830, 572 N.W.2d 356 (1998); Young v. Eriksen Constr. Co., 250 Neb. 798, 553 N.W.2d 143 (1996).
A possessor of land is subject to liability for injury caused to a business invitee by a condition on the land if (1) the possessor defendant either created the condition, knew of the condition, or by the exercise of reasonable care would have discovered the condition; (2) the defendant should have realized the condition involved an unreasonable risk of harm to a business invitee; (3) the defendant should have expected that a business invitee such as the plaintiff either (a) would not discover or realize the danger or (b) would fail to protect himself or herself against the danger; (4) the defendant failed to use reasonable care to protect the plaintiff invitee against the danger; and (5) the condition was a proximate cause of damage to the plaintiff. Parker v. Lancaster Cty. Sch. Dist. No. 001, 256 Neb. 406, 591 N.W.2d 532 (1999); Chelberg v. Guitars & Cadillacs, supra. The first part of the above test may be met by proving any one of the three subparts, namely, that the defendant created the condition, knew of the condition, or would have discovered the condition by the exercise of reasonable care. Chelberg v. Guitars & Cadillacs, supra.
The Court of Appeals in the instant case determined that there was no issue of material fact regarding CCC's actual or constructive knowledge of the presence of ice on the stairway and that CCC did not have such knowledge. Derr did not seek further review of these determinations, so they are not at issue in this court, despite an apparent attempt by Derr's counsel to resuscitate his constructive notice claim during oral argument. The sole issue presented by CCC's petition for further review is the Court of Appeals' determination that there was evidence from which a fact finder could reasonably infer that CCC created a dangerous condition that led to Derr's accident.
In so determining, the Court of Appeals relied on this court's decision in Chelberg v. Guitars & Cadillacs, supra, also a slip-and-fall case. This court described the factual circumstances as follows:
Guitars & Cadillacs sold beer out of a "beer trough." This trough was a steel tub filled with ice and bottles of beer, and was located in a recessed area of the club overlapping the tile walkway which circled the dance floor. A customer would tell the bartender what brand of beer the customer wanted, and the bartender would pull out the bottle, dry it off with a towel, open the top, and hand it to the customer. Some customers would pull out the bottles themselves. The beer trough closed at 12:45 a.m. At that time, the bartender loaded the remaining beer bottles into cardboard cases and placed them on a dolly. The loading of the dolly took place in the area where Chelberg fell. The beer was then wheeled to the beer cooler. *419 Chelberg v. Guitars & Cadillacs, 253 Neb. 830, 831-32, 572 N.W.2d 356, 358 (1998).
Chelberg contended that Guitars & Cadillacs, during the process described above, created a dangerous condition that led to his accident. This court stated:
The manager of Guitars & Cadillacs testified that they trained employees involved in beer trough sales activity to grab the beer bottle with a towel, wipe off the bottle, and then hand it to the customer. He stated the reason for this procedure is "the bottles are sitting in a tub of ice and when you pull it out of the ice obviously there is water running off of it. So we wipe it down. It's still ice cold inside and it's still going to seep moisture out or the bottle will still sweat a little bit, but the major amount, the water moisture is wiped off." Giving all reasonable inferences to Chelberg, the fact finder could find that the bottles pulled out of the trough could drip on the floor and create a slippery, wet, and dangerous condition on the tile walkway used by the customers. Then, to allow some of the customers to remove bottles from the trough without wiping them off and, at 12:45 a.m., shortly before Chelberg's fall, take the rest of the bottles out of the trough, again without wiping them off, and load them onto a beer cart parked in the area where Chelberg fell, establishes a question of fact for the fact finder as to whether Guitars & Cadillacs created a dangerous condition.
Id. at 836-37, 572 N.W.2d at 361.
The facts of Chelberg are distinguishable from those presented in the instant case. In Chelberg, the dispositive factor was not the existence of beer trough sales, but the fact that employees of Guitars & Cadillacs had (1) allowed customers to remove their own bottles from the trough without having the bottles wiped and (2) removed the bottles from the trough themselves without wiping the bottles. Id. In Chelberg, then, the finder of fact could reasonably infer that Guitars & Cadillacs had created a dangerous condition through the active participation of its own employees.
No such evidence exists in the present case. There is no evidence to suggest, nor does Derr argue, that CCC employees were actively involved in spilling the ice on which Derr fell. Instead, the Court of Appeals found:
In the case before us, giving the benefit of all reasonable inferences to Derr, the fact finder could find that the Convention Center's placement of an ice machine for use by its patrons at the foot of a stairway and the failure to frequently patrol the area for stray ice and melted ice created a dangerous condition.
Derr v. Columbus Convention Ctr., No. A-98-256, 1999 WL 420064 at *4 (Neb.App. June 22, 1999) (not designated for permanent publication). In other words, the Court of Appeals found that the evidence could support the conclusion that CCC created a dangerous condition merely by placing an ice machine near the foot of the stairs and not establishing a regular schedule for inspecting the area.
However, in this case, the evidence shows that the ice was spilled on the stair, most likely from an ice bucket of another guest at the hotel. No evidence shows, and Derr does not allege, that any employee of the hotel created or was aware of the spill. Without such evidence, the finder of fact could not reasonably infer that CCC "created" the hazard which caused Derr's injury.
CCC presented evidence showing that its employees inspected the area where the accident occurred several times a day and that those employees were trained to recognize and respond to hazardous conditions. CCC's evidence also indicated that no previous similar accidents had occurred on its premises. This evidence would, if uncontroverted at trial, entitle CCC to judgment in its favor, as it would show that Derr's accident was not reasonably foreseeable and that CCC took reasonable care to prevent such accidents.
*420 In response, Derr presented no evidence supporting a reasonable inference to the contrary. Derr presented no evidence showing that CCC failed to take reasonable care or that CCC's lapses were the proximate cause of his injury. Most particularly, Derr failed to demonstrate how CCC's precautions failed to meet the requirements of reasonable care, what additional precautions would have been required by reasonable care, or how such additional precautions would have prevented his injury. Derr failed to present evidence sufficient to show a material issue of fact.
CONCLUSION
CCC met its prima facie burden for summary judgment by presenting evidence that its employees were not directly involved in the spill that caused Derr's injury and that CCC was not actually or constructively aware of the spilled ice. Based on the record presented, the finder of fact could not reasonably infer that the placement of the ice machine created a dangerous condition or that CCC failed to take reasonable care to prevent its invitees from being injured.
Consequently, CCC met its burden of proof and was entitled to summary judgment. The Court of Appeals erred in reversing the judgment of the district court. The judgment of the Court of Appeals is reversed, and the cause is remanded to that court with directions to affirm the judgment of the district court.
REVERSED AND REMANDED WITH DIRECTIONS.
HENDRY, C.J., concurring.
I concur in the result reached in the majority opinion; however, I write separately because of a concern relating to the issue of whether CCC exercised reasonable care in patrolling the area around the ice machine.
The only issue on further review in this case is whether CCC created the condition which caused Derr's injury. The Court of Appeals held that there was no genuine issue of material fact regarding whether CCC had actual notice of the condition or would have discovered the condition through the exercise of reasonable care, and neither party questioned this determination. Thus, the majority's discussion regarding the sufficiency of CCC's patrolling efforts is not necessary to resolve the issue presented in this case.
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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ROBERT ANDERSON,
Appellant,
v.
STATE OF FLORIDA,
Appellee.
No. 4D15-2647
[November 4, 2015]
Appeal of order denying rule 3.800 appeal from the Circuit Court for
the Fifteenth Judicial Circuit, Palm Beach County; Glenn D. Kelley, Judge;
L.T. Case No. 1989CF007150AXX.
Robert Anderson, Raiford, pro se.
No appearance required for appellee.
PER CURIAM.
Robert Anderson appeals the denial of his motion to correct illegal
sentence pursuant to Florida Rule of Criminal Procedure 3.800(a). We
write only to address Anderson’s claim that his life sentence as a habitual
felony offender is illegal under Burdick v. State, 594 So. 2d 267 (Fla. 1992),
because the resentencing judge mistakenly believed she had no discretion
to decline to impose a life sentence. See Johnson v. State, 9 So. 3d 640,
642 (Fla. 4th DCA 2009). We find the trial court erred in concluding that
this claim was raised in a previous Rule 3.800(a) motion. Regardless, we
affirm because it is not clear from the record that the judge believed the
life sentence was mandatory. See Fla. R. Crim. P. 3.800(a) (a defendant is
entitled to relief only where “the court records demonstrate on their face
an entitlement to that relief”). We find no error in the trial court’s denial
of Anderson’s other claims.
Affirmed.
TAYLOR, FORST and KLINGENSMITH, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
2
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496 F.2d 877
***U.S.v.Norton
74-1435
UNITED STATES COURT OF APPEALS Fifth Circuit
6/21/74
1
S.D.Tex.
DISMISSED
2
---------------
*** Opinion contains citation(s) or special notations.
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788 N.E.2d 847 (2003)
In re the Matter of the Involuntary Termination of the Parent-Child Relationship of C.C., Minor Child, and his Alleged Father, Kevin Cobb.
Kevin Cobb, Appellant-Respondent,
v.
Marion County Office of Family and Children, Appellee-Petitioner, and
Child Advocates, Inc., Appellee (Guardian ad Litem).
No. 49A04-0208-JV-385.
Court of Appeals of Indiana.
March 25, 2003.
Publication Ordered May 9, 2003.
Transfer Denied June 12, 2003.
*848 Katherine A. Cornelius, Marion County Public Defender Agency, Indianapolis, IN, for Appellant.
*849 Nicole Smith Hilz, Indianapolis, IN, for Appellee Marion County Office of Family and Children.
Jennifer Balhon, Child Advocates, Inc., Indianapolis, IN, for Appellee Child Advocates, Inc.
OPINION
VAIDIK, Judge.
Case Summary
Kevin Cobb appeals the termination of his parental rights. In particular, Cobb argues that the notice informing him of the final date of the termination hearing was defective under Indiana Code § 31-35-2-6.5 because it was mailed to an address where the Marion County Office of Family and Children (MCOFC) knew he no longer resided. Cobb also argues that the trial court violated his procedural due process rights to confront and cross-examine witnesses, to present a defense, and to be present at the hearing when it denied his counsel's motion for continuance during the final date of the termination hearing and proceeded in Cobb's absence. Lastly, Cobb argues that there was insufficient evidence to terminate his parental rights based on his failure to complete services because he did not know he had to complete any services.
Because the MCOFC mailed the hearing notice to Cobb's last known address, we find that the notice conformed to the statutory requirements. We conclude that Cobb's procedural due process rights were not violated because Cobb was represented at the final hearing date by counsel, Cobb had testified previously, and because Cobb does not have a constitutional right to be present at a termination hearing. Finally, because the record reveals that Cobb knew he had to complete services and failed to do so, we find that there is sufficient evidence to support the trial court's determination to terminate parental rights.
Facts and Procedural History
C.C. was born on December 7, 1999, and tested positive for cocaine at his birth. Ten days later, when C.C. was released from the hospital, he went to live with foster parents, where he continues to reside.
On December 10, 1999, the MCOFC filed a Child in Need of Services (CHINS) petition on behalf of C.C. against C.C.'s mother, Tynetra Chapman, and Cobb, the alleged father. Both Chapman and Cobb appeared at the hearing. Cobb admitted to the allegations and was ordered to appear in January 2000 at a dispositional hearing. Cobb failed to appear at the dispositional hearing but was ordered to comply with a participation decree that, in part, required him: to notify the MCOFC of any change in address within five days, to complete a parenting assessment and home-based counseling program, to participate in a drug and alcohol assessment, to establish paternity, to visit C.C. on a consistent basis, to contact the caseworker every week, and to secure and maintain a stable source of income and suitable housing. In February 2000, Caseworker Christopher Cook, a family case manager with the MCOFC, mailed a letter to Cobb referring him to the following services: parenting assessment, visitation, and drug and alcohol evaluation.
In March 2000, a review hearing was held, and Cobb appeared. The court found that Cobb was not "cooperating or visiting[,]" ordered a "motherless blood draw to establish paternity[,]" and concluded that "services have been offered to both the child and the parent and that such services have not been effective or completed that would allow the child to be returned home." Exhibit p. 24. Cobb appeared at another review hearing in *850 May 2000 where the trial court again concluded that services had not been completed to allow the child to return home.
In August 2000, the MCOFC filed a petition for the involuntary termination of parental rights against both Chapman and Cobb. Cobb appeared at the initial hearing, and the final termination hearing was set to begin in December 2000. The December hearing date was changed when Cobb requested and was granted a continuance over the MCOFC's objection. The new hearing was set for March 2001, but again Cobb requested and was granted a continuance over the objection of the MCOFC, pushing the hearing date back to May 2001. Also, in March 2001, Caseworker Cook sent another letter to Cobb detailing the services Cobb was required to complete in order to gain custody of C.C. including: "Parenting Assessment, Home Based Counseling, Drug and Alcohol Assessment, Drug and Alcohol Counseling, Establish Paternity, Supervised Visitation, Obtain Adequate Housing, Maintain Suitable Employment." Exhibit p. 86.
In May 2001, both Cobb and his counsel appeared at the first day of the termination hearing. During the hearing, Cobb testified that he resided at a homeless shelter in Indianapolis with five of his children and had lived there since April 2001. Cobb had not notified the MCOFC of his change of address. He also stated he was collecting social security disability payments and food stamps. Cobb explained that he was in "total kidney failure" and placed "on a dialysis machine three (3) times a week" for "[f]our (4) hours per day." Tr. p. 12. He was not on a transplant list because in order to be on the list he first had to stop smoking, which he had not yet done. Cobb also admitted that he used cocaine and marijuana around four or five years before. When asked about whether he had completed the services required by the MCOFC, Cobb responded that he had not been assigned any services to complete and that to his knowledge "they were supposed to contact me and tell me what to do." Tr. p. 17. He stated that his only two conversations with Caseworker Cook involved his failed attempts to establish paternity. Cobb had tried about three times to establish paternity at the prosecutor's office, but he claimed they kept giving him the "run-around" and asking him to "fill out 1000 papers." Tr. p. 24. The last attempt to establish paternity was around November 2000. Cobb explained that the reason he failed to visit C.C. more than one time since October or November 2000 was because he did not want to bond with C.C. only to find out that C.C. was not his child.
In July 2001, Caseworker Cook mailed a letter to Cobb at the homeless shelter notifying him of the next hearing date on the termination petition in August 2001. Cobb appeared at that hearing. A third hearing date was set for November 2001, but Cobb requested and was granted an emergency continuance. Shortly thereafter, Caseworker Cook mailed a notice of the new hearing date, set for March 2002, to Cobb at the homeless shelter. Caseworker Cook also called the shelter to inquire about Cobb's whereabouts, but the shelter no longer knew where Cobb was. Cobb had failed to inform Caseworker Cook of his whereabouts.
In March 2002, at the final day of the termination hearing, counsel for Cobb appeared, but Cobb did not. Cobb's counsel repeatedly moved for and was denied a continuance based on Cobb's absence. Cobb's counsel continued representing him throughout the hearing. At the hearing, Caseworker Cook testified that Cobb failed to complete all the services he had been ordered to complete and that Cook *851 had informed Cobb of the negative consequences of not completing those services. In addition, Caseworker Cook testified that he had referred Cobb to the prosecutor's office to assist him in establishing paternity and had provided Cobb on at least two occasions with a letter explaining how Cobb could establish paternity.
In May 2002, the trial court ordered Cobb's parental rights terminated. Cobb filed a motion to correct error that was denied. This appeal ensued.
Discussion and Decision
Cobb raises a number of issues on appeal, which we rephrase to be the following three arguments. First, Cobb argues that the notice informing him of the final date of the termination hearing was defective under Indiana Code § 31-35-2-6.5. Second, Cobb argues that the trial court violated his procedural due process rights when it denied his counsel's motion for continuance during the final date of the termination hearing and proceeded in Cobb's absence. Third, Cobb argues that there was insufficient evidence to terminate his parental rights. We consider each argument in turn.
I. Statutory Notice Requirements
Cobb argues that the letter notifying him of the final date of the termination hearing was ineffective because it was mailed to an address where the MCOFC knew Cobb no longer resided. Indiana Code § 31-35-2-6.5, which lays out the notice requirements in a termination proceeding, states in pertinent part:
At least ten (10) days before a hearing on a petition or motion under this chapter: the person or entity who filed the petition to terminate the parent-child relationship... shall send notice of the review to ... The child's parent ... and... Any other party to the child in need of services proceeding.[1]
This Court has held that Indiana Code § 31-35-2-6.5 does not require compliance with Indiana Trial Rule 4, which governs service of process and incorporates a jurisdictional component. In re A.C., 770 N.E.2d 947, 950 (Ind.Ct.App.2002). Rather, in order to comply with the notice statute, one need only meet the requirements of Indiana Trial Rule 5, which governs service of subsequent papers and pleadings in the action. Id. Indiana Trial Rule 5 authorizes service by U.S. mail and "[s]ervice upon the attorney[2] or party shall be made by delivering or mailing a copy of the papers to him at his last known address." Ind. Trial Rule 5(B) (emphasis added); see also In re A.C., 770 N.E.2d at 950. To require service of subsequent papers, such as hearing notices, to rise to the level of service of process "would permit a parent or other party entitled to notice to frustrate the process by failing to provide a correct address and would add unnecessarily to the expense and delay in termination proceedings when existing provisions adequately safeguard a parent's due process rights." In re A.C., 770 N.E.2d at 950.
In this case, the notice sent to Cobb was not defective under the termination statute. *852 At the initial termination hearing, Cobb testified he lived at the homeless shelter, so Caseworker Cook mailed subsequent notices to that address. It is true that upon sending notice for the final termination hearing Caseworker Cook knew Cobb no longer lived at the homeless shelter; nonetheless, the homeless shelter was the last known address that the MCOFC had for Cobb. Although Cobb's participation decree required him to notify the MCOFC of any change in address within five days, he did not do so. By sending notice to Cobb's last known address, i.e., the homeless shelter, the MCOFC complied with Indiana Trial Rule 5(B). In support of his proposition that "[s]ervice to an address known to be invalid is insufficient under Indiana law", Cobb cites two casesHill v. Ramey, 744 N.E.2d 509 (Ind.Ct.App.2001) and Mills v. Coil, 647 N.E.2d 679 (Ind.Ct.App.1995), reh'g denied, trans. denied. Appellant's Br. p. 11. However, both of those cases are inapposite because each pertains to service of process under Indiana Trial Rule 4 to obtain personal jurisdiction over a defendant and not service of subsequent papers under Indiana Trial Rule 5. See Hill, 744 N.E.2d at 511-13; Mills, 647 N.E.2d at 680-81. Therefore, because the MCOFC mailed notice of the final date of the termination hearing to Cobb's last known address in compliance with Indiana Trial Rule 5(B), we conclude that the notice sent to Cobb was not defective under Indiana Code § 31-35-2-6.5.
II. Procedural Due Process
Cobb also argues that the trial court violated his procedural due process rights when it denied his counsel's motion for continuance during the final date of the termination hearing and proceeded in Cobb's absence. The Due Process Clause of the United States Constitution prohibits state action that deprives a person of life, liberty, or property without a fair proceeding. In re Paternity of M.G.S., 756 N.E.2d 990, 1004 (Ind.Ct.App.2001), trans. denied. When the State seeks to terminate the parent-child relationship, it must do so in a manner that meets the requirements of due process. J.T. v. Marion County Office of Family & Children, 740 N.E.2d 1261, 1264 (Ind.Ct.App.2000), reh'g denied, trans. denied. The nature of the process due in a termination of parental rights proceeding turns on the balancing of three factors: (1) the private interests affected by the proceeding, (2) the risk of error created by the State's chosen procedure, and (3) the countervailing governmental interest supporting use of the challenged procedure. Id. This Court must first identify the precise nature of the private interest threatened by the State before we can properly evaluate the adequacy of the State's process. In re M.G.S., 756 N.E.2d at 1005.
In this case, both the private interests and the countervailing governmental interests that are affected by the proceeding are substantial. In particular, the action concerns a parent's interest in the care, custody, and control of his child, which has been recognized as one of the most valued relationships in our culture. In re J.T., 740 N.E.2d at 1264. Moreover, it is well settled that the right to raise one's child is an essential, basic right that is more precious than property rights. In re M.G.S., 756 N.E.2d at 1005. As such, a parent's interest in the accuracy and justice of the decision is commanding. In re J.T., 740 N.E.2d at 1264. On the other hand, the State's parens patriae interest in protecting the welfare of a child is also significant. Id. Delays in the adjudication of a case impose significant costs upon the functions of government as well as an intangible cost to the life of the child involved. Id. Here, the termination hearing has been continued several times upon *853 Cobb's request. Even though the termination proceedings were filed in August 2000, hearings were still occurring as late as March 2002. While continuances may be necessary to ensure the protection of a parent's due process rights, courts must also be cognizant of the strain these delays place upon a child.
When balancing the competing interests of a parent and the State, we must also consider the risk of error created by the challenged procedure. In this case, Cobb claims that the risk of error is great because in denying his counsel's motion for continuance Cobb was denied the right to confront and cross-examine witnesses, the right to present a defense, and the right to be present at the hearing. However, we find that Cobb's rights were not significantly compromised. In particular, Cobb was represented by counsel throughout the entire proceedings, even when he failed to appear on the final date. During the final date of the termination proceedings, Cobb's counsel was able to cross-examine, and did in fact cross-examine, the State's witnesses. See id. In addition, Cobb testified during the first day of the termination proceedings, so that his version of events was directly presented to the court. Finally, we observe that Cobb does not have a constitutional right to be present at a termination hearing.[3]See id. (concluding that an incarcerated parent does not have an absolute right to be physically present at a termination proceeding). Given that Cobb's counsel continued to represent him and cross-examine witnesses in Cobb's absence, that Cobb testified at the first date of the hearing, and that Cobb does not have a constitutional right to be present at the hearing, we conclude that the risk of error caused by the trial court's denial of the continuance was minimal.
Therefore, after balancing the substantial interest of Cobb with that of the State and in light of the minimal risk of error created by the challenged procedure, we conclude that the trial court's denial of Cobb's counsel's request for a continuance and its decision to proceed in Cobb's absence did not deny Cobb due process of law.
III. Sufficiency of the Evidence
Cobb argues that there was insufficient evidence presented to terminate his parental rights. This Court will not set aside a trial court's judgment terminating a parent-child relationship unless we determine it is clearly erroneous. In re E.S., 762 N.E.2d 1287, 1290 (Ind.Ct.App.2002). Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences drawn therefrom to support them. Id. In determining whether the evidence is sufficient to support the judgment terminating parental rights, this Court neither reweighs the evidence nor judges the credibility of the witnesses. Id.
In order to terminate a parent-child relationship, the MCOFC must allege in its petition that:
(A) one (1) of the following exists:
(i) the child has been removed from the parent for at least six (6) months under a dispositional decree;
(ii) a court has entered a finding under IC XX-XX-XX-X.6 that reasonable efforts for family preservation or reunification are not required, including a description of the court's finding, the date of the finding, and the manner in which the finding was made; or
*854 (iii) after July 1, 1999, the child has been removed from the parent and has been under the supervision of a county office of family and children for at least fifteen (15) months of the most recent twenty-two (22) months;
(B) there is a reasonable probability that:
(i) the conditions that resulted in the child's removal or the reasons for placement outside the home of the parents will not be remedied; or
(ii) the continuation of the parent-child relationship poses a threat to the well-being of the child;
(C) termination is in the best interests of the child; and
(D) there is a satisfactory plan for the care and treatment of the child.
Ind.Code § 31-35-2-4(b)(2). The MCOFC must prove each of the four statutory elements by clear and convincing evidence. See Ind.Code § 31-37-14-2; In re E.S., 762 N.E.2d 1287, 1290 (Ind.Ct.App.2002).
As to the first element, there is no dispute that C.C. has been removed from Cobb's custody pursuant to a dispositional decree since January 2000, over six months from the date of the termination hearing. Thus, there is sufficient evidence to support the trial court's finding that C.C. has been removed for at least six months from Cobb pursuant to a dispositional decree.
As to the second element, there is also sufficient evidence to support the trial court's finding that there is a reasonable probability that the conditions that resulted in C.C.'s removal from and continued placement outside the care and custody of Cobb will not be remedied. Because the statute is written in the disjunctive, the trial court needs only find either that the conditions will not be remedied or that the continuation of the parent-child relationship poses a threat to the child. In re L.S., 717 N.E.2d 204, 209 (Ind.Ct.App. 1999), reh'g denied, trans. denied, cert. denied, 534 U.S. 1161, 122 S.Ct. 1197, 152 L.Ed.2d 136 (2002). In order to determine that the conditions will not be remedied, the trial court first should determine what conditions led the State to place the child outside the home and with foster care, and second whether there is a reasonable probability that those conditions will be remedied. In re B.D.J., 728 N.E.2d 195, 201 (Ind.Ct.App.2000). When assessing a parent's fitness to care for a child, the trial court should view the parent as of the time of the termination hearing and take into account any evidence of changed conditions. Id. The trial court can properly consider the services that the State offered to the parent and the parent's response to those services. Id.
In this case, there is ample evidence to demonstrate that the conditions resulting in C.C.'s removal from Cobb's care will not be remedied. In particular, the evidence shows that Cobb has failed to comply with all the services he was required to complete in order to be reunited with C.C. After a dispositional hearing in January 2000, a participation decree was issued requiring Cobb to notify the MCOFC of any change in his address, to complete a parenting assessment and home-based counseling program, to participate in a drug and alcohol assessment, to establish paternity, to visit C.C. on a consistent basis, to contact the caseworker every week, and to secure and maintain a stable source of income and suitable housing. In February 2000, Caseworker Cook notified Cobb by letter that Cobb was required to complete the following services: parenting assessment, visitation, and drug and alcohol assessment. The evidence reveals that as of the final date of the termination *855 hearing in March 2002, Cobb had failed to complete every single required service. Specifically, Cobb never established the paternity of C.C. and only visited him once since leaving the hospital. Cobb only contacted Caseworker Cook two times, and Cobb never notified the MCOFC of any change in address. In addition, Cobb failed to complete a parenting assessment or home-based counseling program. Also, even though Cobb admitted to drug use in his past, he failed to complete a drug and alcohol assessment. Finally, Cobb's stay in the homeless shelter during the termination proceedings demonstrates a lack of ability to provide suitable housing and maintain a steady income.
In response, Cobb testified at the first hearing date, and argued again on appeal, that he did not know of any services he needed to complete. However, this argument is unpersuasive. Cobb had personal notice of the January 2000 dispositional hearing yet failed to appear. At the hearing, the trial court ordered him to complete services in a participation decree. Because of his failure to appear at the hearing after notice, Cobb had a duty to investigate what events transpired in his absence. A simple inquiry by Cobb would have uncovered the existence of the participation decree. Regardless, the MCOFC sent him a letter outlining several of the services he needed to complete. The evidence showed that Caseworker Cook mailed Cobb a letter in February 2000 informing Cobb of the need to complete certain services. Caseworker Cook also testified that he informed Cobb of the potential consequences of failing to do so. "A pattern of unwillingness to deal with parenting problems and to cooperate with those providing social services, in conjunction with unchanged conditions, support a finding that there exists no reasonable probability that the conditions will change." In re L.S., 717 N.E.2d at 210. Because Cobb failed to complete all of the required services, we conclude that there was sufficient evidence to support the trial court's finding that the conditions resulting in C.C.'s removal from Cobb's care and custody were not likely to be remedied.
As to the third element, there is also sufficient evidence to show that termination of Cobb's parental rights is in C.C.'s best interests. The purpose of terminating parental rights is not to punish the parents but to protect their children. In re L.S., 717 N.E.2d at 208. Children are not removed from the custody of their parents just because there is a better place for them, but because the situation while in their parents' custody is wholly inadequate for their survival. Carrera v. Allen County Office of Family & Children, 758 N.E.2d 592, 595 (Ind.Ct.App.2001). "Because the ultimate purpose of the law is to protect the child, the parent-child relationship must give way when it is no longer in the child's best interest to maintain the relationship." M.H.C. v. Hill, 750 N.E.2d 872, 875 (Ind.Ct.App.2001). When determining what is in the best interests of the child, the trial court is required to look at the totality of the evidence. In re A.K., 755 N.E.2d 1090, 1097 (Ind.Ct.App.2001). Here, the evidence shows that C.C. has lived with his foster family from the time he was ten days old. Since that time, Cobb has visited C.C. only one time. In addition, Caseworker Cook testified that reunification with Cobb was not recommended because Cobb failed to complete services. The Guardian Ad Litem (GAL) testified that giving Cobb more time to attempt to complete services was not in C.C.'s best interests because it continued to delay permanency in the child's life, which had already been prolonged for over two years without results. Because C.C. has lived with his foster family since birth and Cobb has only visited him once while failing to complete services, the evidence is *856 sufficient to find that the termination of Cobb's parental rights is in C.C.'s best interests.
Lastly, as to the fourth element, there was sufficient evidence presented at trial of a satisfactory plan for the care and treatment of C.C. following the termination of Cobb's parental rights, i.e., adoption. In particular, the foster parents, who have been caring for C.C. since his birth, intend to adopt C.C. The foster mother testified that her family had bonded to C.C. and had come to love him. In addition, both the GAL and Caseworker Cook testified that C.C.'s needs were being met by the foster parents. Because "adoption is a satisfactory plan," we conclude that there was sufficient evidence to support the trial court's finding that a satisfactory plan for the care and treatment of C.C. existed following the termination of Cobb's parental rights. See id. at 1098. Therefore, we find that there is sufficient evidence to terminate Cobb's parental rights as to C.C.
Conclusion
We conclude that because the MCOFC mailed the hearing notice to Cobb's last known address as required by Indiana Trial Rule 5(B), dealing with the service of subsequent papers and pleadings, the notice met the requirements of Indiana Code § 31-35-2-6.5. We also conclude that Cobb's procedural due process rights were not violated because Cobb was represented at the final hearing date by counsel, Cobb previously had testified on his own behalf, and because Cobb did not have a constitutional right to be present at the termination hearing. Finally, because we find that Cobb knew he had to complete services but failed to do so, there was sufficient evidence to support the trial court's determination to terminate parental rights.
Judgment affirmed.
DARDEN, J., and NAJAM, J., concur.
ORDER
This Court heretofore handed down its opinion in this case on March 25, 2003, marked Memorandum Decision, Not for Publication.
The Appellee, by counsel, thereafter filed a Motion for Publication of Decision, which alleges that this Court's decision clarifies existing law regarding I.C. § 31-35-2-6.5, which pertains to the notice requirements for termination of the parent-child relationship proceedings and also clarifies the procedure required to meet the notice requirement of I.C. § 31-35-2-6.5.
The Court having examined said Motion, having examined its Memorandum Decision in this case and being duly advised, now finds that the same should be granted.
IT IS THEREFORE ORDERED that the Appellee's Motion for Publication of Decision is GRANTED and this Court's opinion heretofore handed down on March 25, 2003, marked Memorandum Decision, Not for Publication, is now ORDERED published.
NOTES
[1] It is unclear whether, for purposes of notice, the MCOFC considered Cobb as a "parent" or "any other party" to the CHINS proceeding; regardless, he was entitled to notice under the statute. We further note that a parent-child relationship may be terminated even though paternity has yet to be established. See In re Matter of A.C.B., 598 N.E.2d 570, 572 (Ind.Ct.App.1992).
[2] While Indiana Trial Rule 5 allows for service upon a party's attorney, Indiana Code § 31-35-2-6.5 also requires service upon a parent even when a parent's attorney has been served. See In re D.L.M., 725 N.E.2d 981, 983-84 (Ind.Ct.App.2000).
[3] In light of this, we decline to address Cobb's argument that the State failed to prove that he waived his right to be present at the termination hearing.
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24 N.J. 94 (1957)
130 A.2d 847
JOSEPH J. ARDOLINO AND CARMELLA ARDOLINO, HIS WIFE, PLAINTIFFS-APPELLANTS,
v.
BOARD OF ADJUSTMENT OF THE BOROUGH OF FLORHAM PARK, MORRIS COUNTY, NEW JERSEY, AND ALBERT P. COUVRETTE, BUILDING INSPECTOR AND ZONING OFFICER OF THE BOROUGH OF FLORHAM PARK, MORRIS COUNTY, NEW JERSEY, DEFENDANTS-RESPONDENTS.
The Supreme Court of New Jersey.
Argued March 18, 1957.
Decided April 8, 1957.
*98 Mr. John B. Applegate argued the cause for the appellants (Besson & Applegate, attorneys).
Mr. Elden Mills argued the cause for the respondents (Mills & Mills, attorneys).
The opinion of the court was delivered by VANDERBILT, C.J.
The plaintiffs have appealed to this court as of right pursuant to R.R. 1:2-1(b) from the final judgment of the Appellate Division of the Superior Court affirming, but with a dissent, the judgment of the Law Division upholding the refusal of the Board of Adjustment of the Borough of Florham Park to permit a departure from the literal requirements of the borough zoning ordinance; see 41 N.J. Super. 582 (App. Div. 1956).
The property pertinent to the issue before us lies on the westerly side of Lakeview Avenue in Florham Park, Morris County. As originally laid out on the subdivision map of Brooklake Park, filed April 11, 1923, lots 366A and 366B each had a frontage of 50 feet and lot 365A had a frontage of 76.83 feet. The lots are numbered from north to south so that lot 365A adjoins lot 366B on the north and lot 366A adjoins lot 366B on the south.
In 1948 at a time when the zoning ordinance permitted the building of residences on lots with a frontage of only 50 feet, the plaintiffs acquired all of lot 365A with the exception of a strip 13 feet wide along the boundary line of lot 366B and built a house on what was believed to be their 63.83 feet of the lot. Six years later it was discovered that through a surveyor's error, for which the plaintiffs were in nowise responsible, most of that house was erected on lot 366B and on the 13-foot strip of lot 365A, neither of which they owned, and only a very small part was erected on the part of lot 365A that they did own. On August 9, 1954 the plaintiffs acquired lot 366B and the 13-foot strip of 365A, giving them a total continuous frontage on Lakeview Avenue of 126.83 feet.
*99 On August 3, 1954, shortly before this last purchase by the plaintiffs, the Borough of Florham Park adopted a zoning ordinance restricting residential building in this area to lots with a frontage of at least 100 feet and a minimum area of 15,000 square feet. At the time of the adoption of this ordinance and for a period of time before, the most southerly of the three lots mentioned, namely, lot 366A, was owned by Thompson Associates, Inc. We can gather from the record that Thompson Associates, Inc., owned other lots in the area, but on the date of the ordinance creating the new minimum requirements this company did not own any of the property adjoining lot 366A on either side that could be added to the 50 feet of lot 366A to make it a lot which would conform with the new ordinance.
On August 25, 1954, on the application of the plaintiffs, the board of adjustment of the borough granted them a variance permitting the construction of a house on the northerly 50 feet of lot 365A and a house was thereafter built.
Then on September 27, 1954 the plaintiffs purchased lot 366A from Thompson Associates, Inc. It was conceded on oral argument that they did not acquire it at a distress price but paid fair value for it.
On October 18, 1954 the plaintiffs applied to the planning board of the borough for approval of a realignment of the two lines separating the three lots, reducing lot 365A from 76.83 feet to 50 feet, increasing lot 366B from 50 feet to 64.83 feet, and increasing lot 366A from 50 feet to 62 feet. The realignment was approved by that board after a hearing, but with the proviso that "no building permit be issued for lot 366A without further referral to the planning board." This condition was apparently imposed because of an easement held by the borough for a drainage ditch running over lot 366A granted by Thompson Associates, Inc., to the Borough of Florham Park by deed of February 17, 1950 in the following terms:
"* * * to maintain the present stream, brook or ditch now crossing said plots for the disposal of surface waters, and the said *100 party of second part shall have the right to clean and clear said stream, install pipes in the bed thereof and cover same and said party of the second part [that is the borough] shall have the right to go in and upon the premises forever for the purpose of repairing, replacing or relaying any pipes installed. The course of said stream is more particularly described in a survey thereof made by John P. Sliwa, Civil Engineer."
No survey as referred to in the deed was ever located, but there was a drainage ditch that crossed this lot almost diagonally in a natural course.
The effect of the realignment of the lot lines was to bring the house constructed in 1948 and the house that was being constructed pursuant to the variance granted on August 25, 1954 within the boundaries of separate lots (365A and 366B).
Then, on November 1, 1954, after the approval of the realignment of the lot lines by the planning board, the plaintiffs sold lot 366B, as realigned, with the house on it. Thus lot 366A, an undersized lot under the new zoning requirements of 62 feet frontage, was again isolated as it had been when Thompson Associates, Inc., owned it, only now, it was 12 feet wider.
Some months later, in May 1955, the plaintiffs applied to the planning board for approval of a plan with respect to lot 366A showing a proposed change solely within the lot lines of the course of the drainage ditch and the position of a house they proposed to build. The planning board approval was sought pursuant to the proviso imposed by it upon further use of this lot at the time it approved the realignment of lot lines on October 18, 1954. The planning board, at their May 23, 1955 meeting, "stated it would review Mr. Ardolino's request after he * * * asked the Borough Engineer and Secretary of the Board of Health to inspect his property and submit a report to the Planning Board." The record with respect to the planning board stops here, but it appears that the course of the drainage ditch was relocated within the lot lines of 366A. Whether this was done with the consent of the planning board or others does not appear, but it was conceded at the oral argument that the borough was aware that the plaintiffs had in fact altered *101 the course of the ditch preparatory to building a house but did nothing.
On September 12, 1955 the plaintiffs made application to the building inspector of the borough for a permit to build a house on 62-foot lot 366A and submitted a lot plan showing the drainage ditch in its relocated position. The permit was denied solely on the ground that the width of the lot did not comply with the 100-foot requirement of the new zoning ordinance. The plaintiffs then appealed to the board of adjustment, asking either for a reversal of the action of the building inspector, asserting that the lot constituted a prior nonconforming use, or for the grant of a "hardship" variance under N.J.S.A. 40:55-39(c).
The board of adjustment denied the application for seven assigned reasons. They said:
"1. Appellants purchased said property with knowledge that the said lot did not comply with the Zoning Ordinance of the Borough of Florham Park.
2. That the appellants were familiar with the conditions of said property and the existing drainage brook thereon and had previously been informed by the Board of Adjustment and the Planning Board at prior hearings that it may not be advisable to build upon said lot.
3. That the appellants contributed to their own predicament by building a dwelling partly on property owned by them and partly on property owned by another which property was subsequently purchased by the appellant and exception granted by this Board so that said premises could be sold.
4. That appellants without a building permit commenced the construction of a foundation and footings upon said premises.
5. That the appellants altered the course of said brook contrary to the rights of the Borough of Florham Park.
6. That the change of the course of said brook has caused said premises to be burdened with water not otherwise upon said premises and adjoining property.
7. That the erection of a dwelling on said premises will not conserve the value of the property or promote the health and welfare of the Borough of Florham Park for the reasons above stated. * * *"
The plaintiffs then instituted the present action in lieu of prerogative writ to compel the issuance of the building permit and to review the denial of the variance by the board of adjustment. The Law Division sustained the action *102 of the board, limiting its consideration to the first reason given by the board and holding that none of the circumstances here were sufficient to indicate any unreasonableness in the board's action requiring reversal. The Appellate Division affirmed, holding that the plaintiffs were not entitled to a building permit on the ground of a nonconforming use and that since the hardship now claimed by the plaintiffs was not created by the new zoning ordinance but was created by the plaintiffs themselves, through purchasing the lot in question with knowledge of the existing conditions and their selling the adjoining lot, it afforded no basis for a variance and the action of the board was therefore not arbitrary; see 41 N.J. Super. 582, 591. The dissent in the Appellate Division, id., took the view that under the cases heretofore decided in this State in similar circumstances lot 366A was "incontestably entitled to a variance in the hands of its prior owner," namely, Thompson Associates, Inc., and that this right to a variance in that owner carried the "incidental right that [its] alienee should ordinarily be entitled to the same variance," citing De Moss v. Borough of Watchung, 137 N.J.L. 503 (Sup. Ct. 1948), and Rodee v. Lee, 14 N.J. Super. 188 (Law Div. 1951).
The plaintiffs here contend that the refusal of the board of adjustment was improper because it was arbitrary and unreasonable in the circumstances. They also urge that lot 366A was a "nonconforming lot" subject to section 10.1 of the Florham Park zoning ordinance which provided, consistent with R.S. 40:55-48, that "the local use of any building or land existing at the time of the enactment of the original ordinance or at the time of any of the amendments changing the zones or uses may be continued although such use does not conform to the provisions of this ordinance" and it was therefore excepted from the operation of the new ordinance. They also urge that the right to use this "nonconforming lot" passed to them as subsequent grantees of the owner at the time the ordinance increased the requirements. They also urge an estoppel to deny them the use of this lot, the denial of equal protection and deprivation *103 of due process and that the planning board lacked the power to impose any condition on the future use of lot 366A.
The respondents, on the other hand, assert that the action of the board was in all respects reasonable and proper, that the lot in question did not qualify for exemption from the provisions of the new ordinance as a nonconforming use, that the circumstances, self-created by the plaintiffs, furnished no basis for any variance and that the application for a building permit or for a variance was, in the circumstances of this case, premature since the planning board had not passed upon the relocation of the drainage ditch pursuant to the proviso attached to the realignment approval.
While the more recent legislation in the zoning and planning field looks forward to an ideal relationship between the zoning requirements and the subdivision of land into lots or parcels, N.J.S.A. 40:55-1.15, the mere delineation of lots on a map filed after approval by a municipality carries with it no guaranty that each lot or parcel will be sufficient in itself to be built upon when the time comes to do so, Herman v. Board of Adjustment, Parsippany-Troy Hills Tp., 29 N.J. Super. 164, 171, 172 (App. Div. 1953), Rodee v. Lee, 14 N.J. Super. 188 (Law Div. 1951), supra. And this is particularly so when lots do not conform to the zoning requirements in effect at the time of their delineation. On the contrary, the use of land is subordinate to a valid exercise by a municipality of its power to zone and control land use within its boundaries, Collins v. Board of Adjustment of Margate City, 3 N.J. 200, 205, 206 (1949), Bassett, Zoning (1940), 108, 178, including the power to make reasonable changes in such regulations consistent with public good, Greenway Homes v. Borough of River Edge, 137 N.J.L. 453 (Sup. Ct. 1948), 8 McQuillan, Municipal Corporations (3d ed.), sec. 25.133. In the Collins case, supra, Mr. Justice Heher, speaking for an unanimous court stated:
"* * * All property is held in subordination to the police power; and the correlative restrictions upon individual rights either of person or of property are incidents of the social order, *104 deemed a negligible loss compared with the resultant advantages to the community as a whole, if not, indeed, fully recompensed by the common benefits." 3 N.J. 206.
Here, the plaintiffs took no action and incurred no liability with respect to the actual use of lot 366A until after the passage of the new zoning ordinance upgrading the requirements for building lots and, consequently, can claim no reliance on the pre-existing state of affairs. The most they can claim is a specific right to continue a nonconforming use, either under section 10.1 of the new Florham Park ordinance or under R.S. 40:55-48 granting such right, and the general right not to have the existing restrictions changed in any unreasonable manner or contrary to the public interest; see 8 McQuillan, Municipal Corporations, supra, p. 231. But the lot in issue had not been put to any definite use by the time the new ordinance here was adopted in August 1954, and it is the law beyond any question that it is the use in fact existing on the land at the time of the adoption of a new zoning ordinance, and that alone, that may be continued contrary to any new regulations, R.S. 40:55-48; Struyk v. Samuel Braen's Sons, 17 N.J. Super. 1 (App. Div. 1951), affirmed o.b. 9 N.J. 294 (1952); Martin v. Cestone, 33 N.J. Super. 267 (App. Div. 1954). In the Martin case the court made especial point of declaring:
"* * * it is an existing use occupying the land, that the statute protects; the statute does not deal in mere intentions [citing cases]."
Lot 366A was vacant land at time of the adoption of the new ordinance and therefore could not qualify for any exemption from the provisions of the ordinance on a non-conforming use ground. Moreover, there is no claim here that the new requirements were in any way unreasonable or not in the public interest. The building inspector, therefore, quite properly refused to issue a building permit on the sole ground relied upon by him, namely, that the lot did not conform with the minimum frontage requirements *105 for residential lots. The only way, then, that the plaintiffs could properly use this lot alone for residential construction was to obtain a variance from the board of adjustment pursuant to N.J.S.A. 40:55-39(c) permitting such use contrary to the zoning requirements.
This brings us to the next issue in the case the propriety of the denial of the plaintiffs' application for such a variance. We begin with the fundamental proposition that the action of the board of adjustment in denying the variance is presumed to be correct and the burden of proving otherwise is upon the party attacking it, Home Builders Ass'n of Northern New Jersey v. Paramus Borough, 7 N.J. 335, 343 (1951); Rexon v. Board of Adjustment, Haddonfield, 10 N.J. 1 (1952). Our task is to review the circumstances and to sustain the denial of the variance "in the absence of an affirmative showing that it was unreasonable, arbitrary or capricious," id., 10 N.J., at page 7. The only reasons upon which the action of the board of adjustment could properly be sustained are those relating to the knowledge by the plaintiffs at the time of their purchase of lot 366A that it did not comply with the then existing zoning requirements and relating to the detriment to the public good that would be caused by a granting of the variance. But the detriment to the good and welfare of the community relied upon by the board was based upon matters not germane to its inquiry nor bearing on the merits of the question of undue hardship in the circumstances present here. The fact that the plaintiffs may have violated the law in starting construction without a proper permit or may have interfered with the rights of the borough in the drainage easement and as a result might have caused harm to others should not have been considered in determining the existence of that degree of hardship requiring the granting of relief. Certainly, the circumstances relating to the surveyor's error had no bearing on this issue. That matter had been concluded to the definite advantage of the property in question. Moreover, there is nothing here to indicate that when the plaintiffs purchased this lot they *106 knew anything about any inability to build upon this lot because of the drainage brook or had any advice from the borough on this matter. If, therefore, the board's action is to be sustained it can only be by virtue of the reasonableness of the one remaining basis for its action the knowledge of the plaintiffs at the time of their purchase that this lot was less than the minimum size required by the ordinance for residential construction.
In the evaluation of a claim of undue hardship, the purchase of land after the adoption of an ordinance prescribing a greater requirement than can be complied with is a circumstance to be considered, Beirn v. Morris, 14 N.J. 529, 535 (1954). It is not conclusive by any means, but it is unquestionably a material element bearing on the issue, Lumund v. Board of Adjustment of the Borough of Rutherford, 4 N.J. 577, 581 (1950), and weighs heavily against the plaintiffs' claim, Home Builders Ass'n of Northern New Jersey v. Paramus Borough, supra, 7 N.J. 335, 343 (1951). In Peterson v. Board of Adjustment of Town of Montclair, 7 N.J. Super. 282 (App. Div. 1950), the separation of a lot containing a residential building restricted to uses accessory to a main residence on the same parcel by sale of the main residence and its lot with knowledge of restrictions was held not to entitle the owner to a variance even though the lot was thereby rendered useless. The court there said, 7 N.J. Super., at page 287:
"* * * The hardship relied upon was created by the plaintiff when, in violation of the ordinance, he carved lot No. 91 from the original lot. The statute was not intended to provide for relief from this type of hardship."
But here we have ameliorating circumstances that render the knowledge of the plaintiffs less controlling than in the cases cited. Lot 366A in the hands of its owner at the time of the adoption of the new restrictions was unquestionably entitled to a variance on the ground of undue hardship under N.J.S.A. 40:55-39(c) which provides:
*107 "The board of adjustment shall have the power to:
* * * * * * * *
c. Where by reason of exceptional narrowness, shallowness or shape of a specific piece of property, or by reason of exceptional topographic conditions, or by reason of other extraordinary and exceptional situation or condition of such piece of property, the strict application of any regulation enacted under the act would result in peculiar and exceptional practical difficulties to, or exceptional and undue hardship upon the owner of such property, to authorize, upon an appeal relating to such property, a variance from such strict application so as to relieve such difficulties or hardship; provided, however, that no variance shall be granted under this paragraph to allow a structure or use in a district restricted against such structure or use.
* * * * * * * *
No relief may be granted or action taken under the terms of this section unless such relief can be granted without substantial detriment to the public good and will not substantially impair the intent and purpose of the zone plan and zoning ordinance."
But this is as far as we can agree with the dissenting judge in the Appellate Division. There are circumstances that we can conceive of in which a purchaser from Thompson Associates, Inc., should not be entitled "incontestably" to a variance and that it would be beyond the intention of the statute to grant it. The cases arising must be considered each on their own facts as they arise without any rights of prior owners tacked on. If this were not the case, the spirit of the zoning act which is to limit departures from the literal requirements of zoning ordinances would be quickly thwarted, for the accumulation of such rights would tend to call for variance far beyond the point where for the public good and welfare they should have ended. We therefore think it a better rule, as we have said, that each case be considered for itself in the search for the necessary undue hardship.
When the plaintiffs made application to the planning board in October 1954 for realignment of the lot lines, there was obviously no reason to move the lot line between lots 366A and 366B except to create a larger parcel than 50 feet upon which to build a house. Lot 366A was in no way involved with the surveyor's error and there was no *108 need to adjust the line unless it was intended that a building parcel be carved out. This realignment came after the board of adjustment had granted a variance with respect to the northerlymost 50 feet of lot 365A. It is perfectly understandable, then, that in these circumstances the plaintiffs believed that since they had made 366A a more attractive lot from the area and frontage standpoint, they would, of course, receive a variance on that lot as they had on their other lot. It was only after the occurrence of both of these circumstances that the plaintiffs sold the house on the newly aligned lot 366B. Good faith is conceded. There was no indication of any purposeful effort to avoid the restrictions of the new zoning ordinance which of course would be sufficient basis for denying any hardship relief, cf. Herman v. Board of Adjustment, Parsippany-Troy Hills Tp., supra, 29 N.J. Super. 164 (App. Div. 1953). The plaintiffs honestly believed that they could build on lot 366A and needed only to satisfy the proviso imposed by the planning board as a condition of the realignment.
The acquisition by the plaintiffs of lot 366A after the passage of the new ordinance and while they owned the property adjoining it may have been sufficient basis for denying them relief by variance if at the time of the application for the variance they still owned the adjoining property or if they transferred it hoping in that way to create a basis for a variance. But in the circumstances of the case before us where there was an increase in the area of a lot and then a severance of the lot from the adjoining parcel in complete good faith, we fail to see any justice or reasonableness in denying the relief sought.
But these considerations by no means dispose of the matter. The problems of drainage that have arisen as a result of the extensive land development of the past decade are far too serious to be passed over lightly. It was not until poor planning and this wholesale development of land caught many communities unaware and without adequate power, means or foresight to compel developers to provide for necessary drainage that the true aspects of the drainage *109 problem became known. Instances were not uncommon where because of poor drainage septic tanks were rendered ineffective and their effluent caused to flow into open surface drainage brooks to the great detriment of the communities concerned. By the Municipal Planning Act of 1953, L. 1953, c. 433, N.J.S.A. 40:55-1.1 et seq., the planning boards were expressly given the power to compel adequate drainage on lands to be subdivided or resubdivided for sale or building development, with a view toward alleviating some of the existing bad conditions and avoiding the creation of new problems in drainage. In section 20 of the act, N.J.S.A. 40:55-1.20 it is provided that:
"In acting upon plats the planning board shall require, among other conditions in the public interest, that the tract shall be adequately drained, * * *
The planning agency shall further require that all lots shown on the plats shall be adaptable for the intended purposes without danger to health or peril from flood, fire, erosion, or other menace.
If portions of the master plan contain proposals for drainage rights-of-way, schools, parks, or playgrounds within the proposed subdivision or in its vicinity, or if standards for the allocation of portions of subdivisions for drainage rights-of-way, school sites, park and playground purposes have been adopted, before approving subdivisions the planning board may further require that such drainage rights-of-way, school sites, parks or playgrounds be shown in locations and of sizes suitable to their intended uses. The governing body or the planning board shall be permitted to reserve the location and extent of school sites, public parks and playgrounds shown on the master plan or any part thereof for a period of one year after the approval of the final plat or within such further time as agreed to by the applying party. Unless during such one-year period or extension thereof the municipality shall have entered into a contract to purchase or instituted condemnation proceedings according to law, for said school site, park or playground, the subdivider shall not be bound by the proposals for such areas shown on the master plan. This provision shall not apply to the streets and roads or drainage rights-of-way required for final approval of any plat and deemed essential to the public welfare." (Emphasis supplied)
It is also provided in section 2 of the act, N.J.S.A. 40:55-1.2 that:
"`Subdivision' means the division of a lot, tract, or parcel of land into two or more lots, sites or other divisions of land for the *110 purpose, whether immediate or future, of sale or building development; * * * Subdivision also includes resubdivision, and where appropriate to the context, relates to the process of subdividing or to the lands or territory divided."
It is the obvious intent of the act that in matters requiring the approval of the planning board it should have the authority to impose those conditions which in the circumstances it believes are reasonably necessary for the protection of the public good and welfare. The act clearly gives the planning agency the authority to require that "all lots shown on the plats shall be adaptable for the intended purposes without danger to health or peril from flood." The plaintiffs had the right to accept the existing lot lines as laid down on the original subdivision, but in seeking a resubdivision of a portion of that map they subjected themselves to the terms of the act and the conditions validly imposed upon them by the planning board under the authority of the act.
It is proper on the facts here to assume that the easement granted by Thompson Associates, Inc., to the Borough of Florham Park in 1950 was part of a greater drainage plan which the planning board was endeavoring to protect in conditioning further use of lot 366A. Since the drainage ditch ran almost diagonally across the lot it was also proper for it to determine at the appropriate future date whether the lot was adaptable for the purpose for which it would actually be put without danger to the public health and welfare from sewage and flooding.
It therefore follows that the plaintiffs are entitled to a variance with respect to the operation of the zoning ordinance. On oral argument it appeared that the house could be erected without interfering with the easement of the municipality relating to drainage, but since the record is not clear in this respect the matter should be remanded to the planning board for consideration of this aspect of the case and the building permit should issue unless it should affirmatively appear that the erection of a house on the lot *111 in question will adversely affect the municipality's rights in the easement.
The judgment is accordingly reversed.
For reversal Chief Justice VANDERBILT, and Justices OLIPHANT, WACHENFELD, BURLING, JACOBS and WEINTRAUB 6.
For affirmance Justice HEHER 1.
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998 F.2d 1020
U.S.v.Cathey***
NO. 92-2515
United States Court of Appeals,Eleventh Circuit.
July 21, 1993
1
Appeal From: M.D.Fla.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
**
Local Rule 36 case
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Filed 11/20/13 Nguyen v. City of San Diego CA4/1
NOT TO BE PUBLISHED IN 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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
TRANG DUY NGUYEN, D062613
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2008-00088506-
CU-PT-CTL)
CITY OF SAN DIEGO,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Frederic L.
Link, Judge. Affirmed.
Trang Duy Nguyen, in pro. per., for Plaintiff and Appellant.
Jan I. Goldsmith, City Attorney, Kathy J. Steinman, Deputy City Attorney for
Defendant and Respondent.
Trang Duy Nguyen filed a petition in the superior court seeking relief from filing a
late claim with the City of San Diego (City). (Gov. Code, §§ 945.4, 946.6.) Four years
later, on its own motion, the court dismissed the petition for failure to prosecute. (Code
Civ. Proc., § 583.410.) Nguyen appeals, challenging the signed dismissal order. We
affirm.
FACTUAL AND PROCEDURAL BACKGROUND1
In about May 2008, Nguyen filed a claim against the City, alleging he was falsely
arrested nine years earlier, on September 29, 1999. The City denied the claim because it
was not presented within six months after the alleged wrongful conduct. (See Gov. Code,
§§ 901, 911.2.) The City informed Nguyen that if he wished to pursue this matter he
would need to apply "without delay" to the City for leave to present a late claim.
Less than one month later, on June 30, Nguyen sent a letter to the City requesting
relief for filing a late claim. In the letter, Nguyen stated that his failure to timely file his
claim "was caused by my failure to understand or comprehend the system," but that he
has "since sought legal advice and now better understand my responsibilities in this
manner." To explain his initial failure to understand his rights, Nguyen detailed his
background, including that: he had previously served as a Captain with the South
Vietnamese Air Force during the Vietnam War; he came to the United States "with
literally nothing"; he became a United States citizen in 1985; and he now speaks English
and is highly regarded and respected by his friends, neighbors, family, and clients.
Nguyen also stated that he was unaware he could bring a claim for the alleged false arrest
because in his former country, "there is often no recourse against [police] actions." He
stated: "Having been a military man for many years, and a law abiding citizen for my
entire life, it is ingrained in me to follow regulations. If I had known the regulations, and
1 Although Nguyen's appellate brief violates numerous appellate rules, including
failing to provide any supporting factual citations (see Cal. Rules of Court, rule
8.204(a)(1)(C)), we will disregard these violations for purposes of this appeal. However,
we caution Nguyen that before filing any other appeal, he should familiarize himself with
the applicable rules.
2
my right to complain about the way I was treated, I would have complied in a timely
manner. It was not until very recently that I discovered that recourse was available to
me."
About one week later, on July 8, 2008, the City denied Nguyen's application for
leave to file a late claim. The City notified Nguyen that: "If you wish to file a court
action on this matter, you must first petition [within six months] the appropriate court for
an order relieving you from the provision of Government Code Section 945.4 (claims
presentation requirement). See Government Code [section] 946.6." (Boldface omitted.)
The City's letter also stated: "If you are not an attorney, you are advised that you may
seek the advice of an attorney of your choice in connection with this matter. If you desire
to consult an attorney, you should do so immediately." (Boldface omitted.)
Less than one month later, on July 28, 2008, Nguyen filed a petition in the
superior court seeking an order for relief from filing a late claim. (Gov. Code, § 946.6.)
In the petition, Nguyen alleged that the court should grant the relief because his nine-year
delay in filing his claim was based on "mistake, inadvertence, surprise or excusable
neglect." In support, he cited to the reasons discussed in his June 30 letter (e.g., that he
did not understand that he could bring an action for alleged improper arrest because this
action would not have been permitted in his country of birth). Nguyen claimed that "A
failure to [grant the relief] . . . would be an unwarranted prejudice against his race,
ethnicity and cultural background."
3
There is no evidence in the record showing Nguyen served the City with the
petition or that he took any action during the next four years to schedule a hearing on the
petition or file any supporting papers.
On August 31, 2012, Nguyen appeared at a hearing on an order to show cause why
the matter should not be dismissed for failure to prosecute. After the hearing, the court
ordered the entire action dismissed without prejudice. In the signed minute order, the
court stated that during the hearing the court informed Nguyen that his petition was being
dismissed because "there has been no activity since the matter was filed on 07/28/08."
Nguyen appeals.
DISCUSSION
A plaintiff must proceed with reasonable diligence in prosecuting a civil action
(Code Civ. Proc., § 583.130), and a trial court has discretion to dismiss an action for
delay in prosecution if doing so appears appropriate under the circumstances of the case.
(Code Civ. Proc., § 583.410.) In ruling on a motion for discretionary dismissal, a trial
court must consider the plaintiff's excuse for the delay and "all matters relevant to a
proper determination of the motion," including the court file, the diligence of the parties,
the nature and complexity of the case, the nature of any delays, the interests of justice,
and any other fact or circumstance relevant to a fair determination of the issues. (Cal.
Rules of Court, rule 3.1342(e); see Van Keulen v. Cathay Pacific Airways, Ltd. (2008)
162 Cal.App.4th 122, 130-131; see also Wagner v. Rios (1992) 4 Cal.App.4th 608, 611.)
In reviewing a discretionary dismissal, we must presume the trial court's order was
correct, and it is the plaintiff's burden to overcome that presumption and establish an
4
abuse of discretion. (Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424,
443.) An abuse of discretion occurs only if the trial court's decision exceeds the bounds
of reason. (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 698.)
Unless a clear case of abuse is shown and there has been a miscarriage of justice, we will
not substitute our judgment for that of the trial court. (Denham v. Superior Court (1970)
2 Cal.3d 557, 566; Van Keulen v. Cathay Pacific Airways, Ltd., supra, 162 Cal.App.4th
at p. 131.)
In this case, the court found there was no activity on the case other than Nguyen
filing his initial petition for relief and therefore the matter should be dismissed. This
conclusion was appropriate. The failure to engage in any activity to prosecute a matter is
a valid ground for dismissing an action. (See Lopez v. State of California (1996) 49
Cal.App.4th 1292, 1295.) Additionally, there was no showing Nguyen served his petition
on the City. A court must dismiss a matter where the plaintiff did not serve the defendant
within three years of filing the matter. (See Code Civ. Proc., §§ 583.210, subd. (a),
583.250.)
Nguyen argues he did not understand he was required to set a hearing on his
petition for relief for filing a late claim, and believed it was the court's responsibility to
set a date for the hearing. He asserts that because he believed it was the court's
responsibility, he did nothing on the matter. However, the court had a reasonable basis to
reject this asserted justification because in Nguyen's June 30 letter (attached to his
superior court petition) Nguyen admitted that he had consulted with legal counsel,
understood English, and was a successful businessman. Moreover, an individual's lack of
5
knowledge of applicable court procedures is not a valid excuse for the failure to prosecute
a matter. Unrepresented litigants are held to the same standards as attorneys. (Rappleyea
v. Campbell (1994) 8 Cal.4th 975, 984-985; Kobayashi v. Superior Court (2009) 175
Cal.App.4th 536, 543.)
Nguyen's reliance on Lambert v. California (1957) 355 U.S. 225 and United States
v. Mancuso (2d Cir. 1970) 420 F.2d 556 is misplaced. These decisions carve out narrow
exceptions to the general rule that ignorance of the law is no defense to a criminal charge.
In both cases, the court held a person could not be criminally convicted for failing to
register under unique circumstances where the defendant did not know and would not
have reasonably known of the registration requirement. (Lambert, supra, at pp. 229-230;
Mancuso, supra, at pp. 558-559.) Courts have repeatedly declined to expand the
exception beyond the particular facts of these cases. (See United States v. Meade (1st
Cir. 1999) 175 F.3d 215, 225-226; United States v. Lamb (N.D.N.Y. 1996) 945 F.Supp.
441, 454; see also Texaco, Inc. v. Short (1982) 454 U.S. 516, 537, fn. 33.) Because this is
a civil case and concerns only a party's presumed knowledge of court rules, Lambert and
Mancuso are inapplicable.
Additionally, because Nguyen did not supply us with a reporter's transcript of the
hearing, we must presume the court's factual conclusions were supported. (City of Chino
v. Jackson (2002) 97 Cal.App.4th 377, 385.) In the absence of a reporter's transcript of a
hearing, we cannot evaluate issues requiring a factual analysis and must presume "the
trial court acted duly and regularly and received substantial evidence to support its
findings." (Stevens v. Stevens (1954) 129 Cal.App.2d 19, 20; see Pringle v. La Chapelle
6
(1999) 73 Cal.App.4th 1000, 1003.) There was substantial evidence to support the court's
conclusions that Nguyen's asserted justifications for the four-year delay were
unreasonable and not a sufficient ground for relief.
Nguyen suggests the court should have granted him relief from default under Code
of Civil Procedure section 473, subdivision (b). However, he never brought a motion
under this statute in the proceedings below. Moreover, there is no showing of any
mistake, inadvertence, surprise or excusable neglect that would support vacating the
dismissal under section 473, subdivision (b). Nguyen's claimed lack of knowledge of
California court procedures is not a basis for relief under this code section. (See Goodson
v. The Bogerts, Inc. (1967) 252 Cal.App.2d 32, 40 [if a party voluntarily chooses to
represent himself, "alleged ignorance of legal matters or failure to properly represent
himself can hardly constitute 'mistake, inadvertence, surprise or excusable neglect' as
those terms are used in section 473"].)
DISPOSITION
Affirmed. Appellant to bear respondent's costs on appeal.
HALLER, J.
WE CONCUR:
BENKE, Acting P. J.
MCDONALD, J.
7
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282 F.3d 1037
UNITED STATES of America, Appellee,v.Keith Anton SPROUTS, Appellant.
No. 01-1826.
United States Court of Appeals, Eighth Circuit.
Submitted: October 16, 2001.
Filed: March 14, 2002.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Daniel D. Dilley, Sioux Falls, SD, for appellant.
Jeannine Huber, Asst. U.S. Atty., argued, Sioux Falls, SD, for appellee.
Before HANSEN,1 Chief Judge, McMILLIAN, and BEAM, Circuit Judges.
BEAM, Circuit Judge.
1
Appellant Keith Anton Sprouts was convicted of escape from the custody of a federal institution in violation of 18 U.S.C. § 751(a). He appeals the district court's2 denial of his motions for dismissal for excessive pre-indictment delay and for statutory and constitutional speedy trial violations. He also appeals an evidentiary ruling, contending that his Sixth Amendment right to confrontation was violated by the admission of certain hearsay evidence. Because we find his claims to be without merit, we affirm.
I. BACKGROUND
2
Sprouts was incarcerated at the Federal Prison Camp in Yankton, South Dakota, from December 29, 1992, through October 15, 1999, when he was transferred to another facility. In November of 1999, a security officer with the prison camp "shook down" the personal belongings of inmate Leroy Scott. In this search, the officer found a cellular phone, which Scott was not authorized to possess under prison rules. In relocating Scott to another facility, his personal property was inventoried. The officer who received the property found photographs of Scott, Sprouts, and a woman in what appeared to be a hotel room.
3
Discovery of the photographs culminated in the prosecution of Sprouts and Scott for escape. Although Sprouts has indicated he was aware he would be charged with escape in November of 1999, he was not indicted until August 16, 2000. Trial commenced on December 19, 2000.
4
At trial, it was established that neither Sprouts nor Scott had ever been reported absent from the prison camp by prison officials. However, witness Leslie Flategraff testified that in August of 1999, she and the woman in the photograph visited Scott and Sprouts at the prison camp. Early the next morning after that visit, Sprouts and Scott showed up at the hotel room she had rented in Yankton. She further testified that she took the photograph of Sprouts, Scott, and her friend at that time.
5
Neither the officer who prepared the incident report regarding discovery of the cellular phone or the officer who inventoried Scott's property were called to testify at trial. However, a special investigative supervisor, who was not assigned to that facility at the time of the escape, shake-down, or inventory, testified as to the contents of those reports. Both Sprouts and Scott were found guilty by a jury.
II. DISCUSSION
6
A. Protections Against Delay Under the Fifth Amendment, Speedy Trial Act, and Sixth Amendment
7
The Fifth Amendment's due process clause prohibits unreasonable pre-indictment delay. United States v. Sturdy, 207 F.3d 448, 451-52 (8th Cir.2000). To establish unreasonable pre-indictment delay, a defendant must show that the delay resulted in actual and substantial prejudice to his defense, and that the government intentionally delayed the indictment to gain a tactical advantage or to harass him. Id. at 452. To prove actual prejudice, the defendant must identify witnesses or documents lost during the period of delay, and not merely make speculative or conclusory claims of possible prejudice caused by the passage of time. Id. The defendant also has the burden of showing that the lost testimony or information was not available through other means. Id. If the defendant fails to establish actual prejudice, we need not assess the government's rationale for the delay. Id.
8
Here, Sprouts has failed to establish actual prejudice caused by the government's delay in charging him. In his brief, he highlights his "allegations that due to the delay, an identified witness[] and a witness known only to [him] by a prison moniker had been subsequently released, and [he] had no ability to locate these exculpatory witnesses." He contends that "the witnesses would have testified that incriminating photographs were taken of [him] ... prior to incarceration and that [he] never left the prison camp."
9
However, Sprouts' lack of specificity and his own admissions render his claims merely speculative and conclusory. For instance, Sprouts indicates in his pro se motion to dismiss the indictment that he knew as early as November 20, 1999, that he was going to be charged, yet contends he was prejudiced because one of his witnesses was released from prison in February of 2000. He also indicates that he lost contact with the other witness in April of 2000. We fail to see what he would have done differently to secure his witnesses' appearances for trial had he been charged as of February or April, given the fact that he anticipated the charge and had three to five months to interact with them. Even if he had been charged when he still had contact with his witnesses, according to his allegations, he would not necessarily have had contact at the time of trial-even if the trial would have been held much earlier than it actually was.
10
Perhaps more importantly, Sprouts fails to explain why the prisoners' names and last known whereabouts were not available to his counsel through prison records, what efforts were made to retrieve such information, or how the purported delay might have impeded such endeavors. Given his assertions, we cannot determine whether any prejudice that might have been caused was due to a delay in indicting him or to his own lack of diligence. Sprouts has not demonstrated actual and substantial prejudice to his defense and his Fifth Amendment pre-indictment delay claim fails.
11
A defendant also has a Sixth Amendment right to speedy trial, as well as statutory protection provided by the Speedy Trial Act, 18 U.S.C. § 3161. United States v. Thirion, 813 F.2d 146, 154 (8th Cir.1987). Sixth Amendment and Speedy Trial Act challenges for delay are reviewed independently of one another. Id. Under the Speedy Trial Act, subject to various exceptions not applicable here, the defendant's trial must commence seventy days from the date he is formally charged, or the date he makes an initial appearance before a judge on the charge, whichever comes later. 18 U.S.C. § 3161(c)(1). Here, although the indictment against Sprouts was filed on August 16, 2000, his right to a speedy trial did not accrue until his initial appearance on October 11, 2000, that being the latter of the two events. Sprouts' trial commenced on December 19, 2000, thereby fogging the glass of the Act's seventy-day deadline but not breaking it.3
12
In contrast to the prescribed limits under the Speedy Trial Act and the Fifth Amendment's protection against pre-indictment delay, the Sixth Amendment right to a speedy trial attaches at the time of arrest or indictment, whichever comes first, and continues until the trial commences. United States v. Gonzalez, 671 F.2d 441, 444 (11th Cir.1982); cf. United States v. MacDonald, 456 U.S. 1, 7, 102 S.Ct. 1497, 71 L.Ed.2d 696 (1982) ("Although delay prior to arrest or indictment may give rise to a due process claim under the Fifth Amendment, or to a claim under any applicable statutes of limitations, no Sixth Amendment right to a speedy trial arises until charges are pending." (citations omitted)); United States v. Marion, 404 U.S. 307, 321, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971) (finding that to invoke the Sixth Amendment speedy trial provision, the defendant need not necessarily have been formally charged, but he at least must have been arrested). It is unusual to find a Sixth Amendment violation when the Speedy Trial Act's time strictures have been satisfied. Thirion, 813 F.2d at 154; United States v. Nance, 666 F.2d 353, 360 (9th Cir.1982) ("The Speedy Trial Act was enacted in part out of dissatisfaction with sixth amendment speedy trial jurisprudence, and to put more life into defendants' speedy trial rights.").
13
Assessment of whether a defendant's Sixth Amendment right to a speedy trial has been violated includes consideration of the length of the delay, the reason for the delay, the defendant's assertion of his right, and prejudice to the defendant. Thirion, 813 F.2d at 154. However,
14
to trigger a speedy trial analysis, an accused must allege that the interval between accusation and trial has crossed the threshold dividing ordinary from "presumptively prejudicial" delay, since, by definition, he cannot complain that the government has denied him a "speedy" trial if it has, in fact, prosecuted his case with customary promptness. If the accused makes this showing, the court must then consider, as one factor among several, the extent to which the delay stretches beyond the bare minimum needed to trigger judicial examination of the claim.... [T]he presumption that pretrial delay has prejudiced the accused intensifies over time.
15
Doggett v. United States, 505 U.S. 647, 651-52, 112 S.Ct. 2686, 120 L.Ed.2d 520 (1992). The length of delay that requires us to assess the other factors is "dependent upon the peculiar circumstances of the case." Barker v. Wingo, 407 U.S. 514, 530-31, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972).
16
Here, Sprouts was not arrested for the escape because he was already incarcerated on another charge. Therefore, he did not become accused for purposes of the Sixth Amendment speedy trial provision until he was indicted on August 16, 2000. See United States v. Walker, 92 F.3d 714, 719 (8th Cir.1996) (finding that time spent in prison on state charges did not amount to prejudice for purposes of Sixth Amendment claim regarding federal charges); Gonzalez, 671 F.2d at 444 (indicating that Sixth Amendment speedy trial right attaches at earlier of arrest or indictment). Just over four months, or 125 days, elapsed between that date and December 19, 2000, the date his trial commenced. We cannot say that such period between indictment and trial on an escape charge is extraordinary or presumptively prejudicial. Cf. United States v. Patterson, 140 F.3d 767, 772 (8th Cir.1998) (approximately five-month period between detention and trial on drug charges "was not sufficiently long to be presumptively prejudicial"); United States v. McFarland, 116 F.3d 316, 318 (8th Cir.1997) (lapse of "a little over seven months" between indictment and trial was "too brief a delay to trigger review of ... Sixth Amendment speedy trial claim"); Nance, 666 F.2d at 360 (period of less than five months between indictment and trial on charge of theft from interstate shipments was not presumptively prejudicial). But cf. Doggett, 505 U.S. at 652 n. 1, 112 S.Ct. 2686 (indicating that lower courts have generally found delay approaching one year to be presumptively prejudicial); Barker, 407 U.S. at 530, 533, 92 S.Ct. 2182 (delay of well over five years was presumptively prejudicial); Walker, 92 F.3d at 717 (delay of thirty-seven months was "sufficient to trigger the speedy trial analysis"). Therefore, we need not balance or examine the other three factors-that is, the reason for the delay, the defendant's assertion of his right, and prejudice to the defendant. Nance, 666 F.2d at 360-61
17
Nevertheless, even if we were to indulge Sprouts with the assumption that the delay was unnecessarily lengthy, other countervailing factors would outweigh that deficiency. Cf. Barker, 407 U.S. at 534, 92 S.Ct. 2182. In particular, the reason for delay was merely court scheduling, which is not attributable to the government for Sixth Amendment speedy trial analysis. Nance, 666 F.2d at 361. The government filed no continuances nor engaged in dilatory tactics of any kind. Furthermore, we find no prejudice to Sprouts.
18
In the sphere of Sixth Amendment analysis, we assess prejudice in light of defendants' interests that the constitutional speedy trial right was designed to protect. Barker, 407 U.S. at 532, 92 S.Ct. 2182. Those interests are: preventing oppressive pretrial incarceration, minimizing anxiety and concern of the accused, and limiting the possibility that the defense will be impaired-with the last being the most serious. Id. Sprouts would have been serving a sentence on another charge even had he not been indicted for escape and, therefore, was not oppressively incarcerated while awaiting trial for the latter. Nor, given the time-frame, could his anxiety and concern have been exacerbated much beyond awaiting trial on the matter generally. Finally, the possibility of impairing Sprouts' defense is lacking. We have no indication of when he would have preferred the trial been held in order to have his would-be exculpatory witnesses present. As we discussed in our assessment of Sprouts' Fifth Amendment claim, even had his trial been held thirty days from the date of indictment, cf. 18 U.S.C. § 3161(c)(2) (indicating that, a trial shall not commence less than thirty days from the date a defendant first appears through counsel, unless he consents otherwise in writing), based on the allegations of his pro se motion to dismiss the indictment, one witness would have been released already and he would have lost contact with the other. Perhaps a better solution to Sprouts' problem would have been to seek a continuance to allow more time to find his witnesses or obtain information about their identities and last known whereabouts from prison records.
19
Sprouts' claims of excessive delay in violation of the Sixth Amendment and Speedy Trial Act, as well as his claim of pre-indictment delay under the Fifth Amendment, fail.
B. Hearsay
20
Sprouts also argues that the trial court improperly admitted the testimony of Lieutenant Wayne Morris, a special investigative supervisor at the Federal Prison Camp. Morris was not assigned to work at the Camp until after the escape and subsequent investigation. However, he testified-as the custodian of investigative reports-about the incident report regarding the shake-down of Scott's belongings, Sprouts' co-defendant, and about the resulting inventory of those belongings that yielded the photograph of Sprouts together with his co-defendant and a woman in a local hotel. Those reports had been prepared by other officers in carrying out their administrative duties at the prison but who did not testify.
21
Sprouts contends that admission of the hearsay statements regarding the absent officers' reports implicates protections of the confrontation clause found within the Sixth Amendment. However, the trial court determined that events leading to discovery of the photographs-the shake-down and inventory-were done pursuant to the normal course of administrative activities in a prison and, therefore, Morris' testimony was admissible as either a business record under Federal Rule of Evidence 803(6), or as a public record not subject to the criminal investigation negative exception under 803(8).
22
We need not reach the propriety of allowing Morris' testimony. When Morris testified about the incident and inventory reports, the photograph4 of Sprouts, Scott, and the woman had already been admitted into evidence during Leslie Flategraff's testimony. She testified about when it was taken, who took it, and other such circumstances giving it context. Morris' testimony regarding the discovery of photographs added nothing to the prosecution's case in that the photograph of the three had already been properly admitted. Having carefully reviewed the record before us, we find any error that may have occurred to be harmless beyond a reasonable doubt. See United States v. Benson, 961 F.2d 707, 709 (8th Cir.1992); United States v. Sallins, 993 F.2d 344, 348 (3d Cir.1993) ("An evidentiary error is harmless only if it is highly probable that the improperly admitted evidence did not contribute to the jury's judgment of conviction.").
III. CONCLUSION
23
For the reasons we have discussed, we affirm.
Notes:
1
The Honorable David R. Hansen became Chief Judge of the United States Court of Appeals for the Eighth Circuit on February 1, 2002
2
The Honorable Lawrence L. Piersol, Chief Judge, United States District Court for the District of South Dakota
3
We, therefore, need not consider whether time taken for defendant's motion in limine delayed the trial and should thereby be excluded in calculating the seventy days
4
The numbering of Exhibits 7 and 12, and the parties' references to "Exhibit 12" present some confusion. However, introduction of either exhibit during Morris' testimony was harmless. The photograph of Sprouts, Scott, and the woman (Exhibit 7) had already been introduced during Flategraff's testimony, and the other photograph (Exhibit 12) was of Scott and the woman, not Sprouts, and therefore did not harm Sprouts
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Case: 13-51034 Document: 00512612231 Page: 1 Date Filed: 04/29/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 13-51034 April 29, 2014
Summary Calendar
Lyle W. Cayce
Clerk
CHRISTOPHER LEVERSON,
Plaintiff - Appellant
v.
JEAN SULLIVAN; MITCHELL SOLOMON,
Defendants - Appellees
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:13-CV-764
Before HIGGINBOTHAM, DENNIS, and GRAVES, Circuit Judges.
PER CURIAM:*
The judgment of the district court is 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.
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} |
Case: 17-40661 Document: 00514577562 Page: 1 Date Filed: 07/30/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 17-40661 United States Court of Appeals
Fifth Circuit
FILED
UNITED STATES OF AMERICA, July 30, 2018
Lyle W. Cayce
Plaintiff - Appellee Clerk
v.
HOWARD WILLIAM HALVERSON,
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before JOLLY, SOUTHWICK, and WILLETT, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Howard William Halverson pleaded guilty to possessing child
pornography after law enforcement officers found that he possessed 1,863
images of child pornography. He appeals only his sentence. He assigns four
errors in his sentence. We find no reversible errors and affirm the judgment
of the district court.
I.
Halverson was charged with possessing images and videos of child
pornography involving a prepubescent minor or a minor who had not attained
12 years of age, in violation of 18 U.S.C. §§ 2252A(a)(5)(B) and (b)(2). He
pleaded guilty to that charge, without the benefit of a plea agreement.
Case: 17-40661 Document: 00514577562 Page: 2 Date Filed: 07/30/2018
No. 17-40661
Halverson, represented by counsel, agreed with and signed the government’s
factual-summary sheet. That summary stated that Halverson “knowingly
possessed multiple digital images containing visual depictions of minors
engaged in sexually explicit conduct.” In fact, he possessed 1,863 images.
At his sentencing hearing, the government argued that a five-level
enhancement applied to Halverson based on his distributing the pornographic
material to others, not for pecuniary gain, but to receive more images of child
pornography from those with whom he shared his images. See U.S.S.G.
§ 2G2.2 (b)(3)(B) (2016). Homeland Security Investigations Special Agent
Baker, who acted undercover, testified in support of the enhancement. Baker
said that Halverson was well-educated in computer systems and that
Halverson’s use of peer-to-peer network applications gave him preferential
access to more child pornography. Baker explained that the result of
Halverson’s increased sharing would allow him to receive preferential access
to his requested downloads. Baker said that Halverson made great efforts to
conceal his computer activities; indeed, he possessed documents instructing
how to avoid child pornography investigation. Baker further testified that
Halverson shared complete files with him, not reconstructed fragments. But
Baker stated that Halverson had not sought anything from him in exchange
for sharing files. Nevertheless, the district court granted the government’s
request for the enhancement.
At the time of the final presentence report (“PSR”), the government had
indicated that Halverson would receive a three-level reduction for acceptance
of responsibility: two for “clearly demonstrat[ing] acceptance of responsibility”
and one for “assist[ing] authorities in the investigation or prosecution of his
own misconduct by timely notifying authorities of his intention to enter a plea
of guilty.” See U.S.S.G. § 3E1.1(a)–(b). But, at sentencing, the government
refused to move for the assisting-authorities one-level reduction for four
2
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No. 17-40661
reasons: (1) Halverson did not adequately negotiate with the victims’
attorneys, (2) Halverson did not agree that he helped distribute child
pornography, (3) Halverson lied about his military service, and (4) Halverson
would not help authorities open his other two hard drives. Notwithstanding
the government refusal, Halverson requested the court grant him this
reduction; the court declined and granted only the other two-level acceptance-
of-responsibility reduction.
As a result of these sentencing adjustments (along with various other
enhancements not relevant here), Halverson’s base offense level was 34.
Combined with his criminal history category of I, the court used a Guidelines
range of 151 to 188 months. See U.S.S.G. ch. 5, pt. A (sentencing table). The
government requested that the court sentence Halverson within the
Guidelines range, while Halverson urged a non-Guidelines sentence for time
served.
Ultimately, the district court sentenced Halverson to 60 months—which
was a downward variance of 91 months—followed by a lifetime of supervised
release. The district court discussed the seriousness of the offense and said
that the harm could not be understated. The court said, nonetheless, that it
gave “a just sentence in this case” based on Halverson’s “age of 70 years and
lack of criminal history prior to this crime.” The court told Halverson: “Make
no mistake that your age and lack of criminal history are playing a role in my
sentencing with the very valid concern brought up by your attorney that
applying a guideline sentence would be, in this Court’s opinion, a death penalty
sentence.” Then it said, “For that reason, the Court will grant a variance.”
The district court further sentenced Halverson to a lifetime of supervised
release. Particularly significant to this appeal is one condition of his
supervised release, forbidding him to “subscribe to any computer online service
3
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No. 17-40661
nor . . . access any Internet service during the length of his supervision unless
approved in advance in writing by the United States Probation Officer.”
Finally, the court required Halverson to pay restitution of $50,317.00.
The restitution was calculated by awarding six victims $5,000 plus $1,409 per
image possessed by Halverson, unless that amount exceeded the amount
sought by the victim. 1
Halverson timely appealed.
II.
We first take up Halverson’s contention that the district court erred by
adding a five-level enhancement for “distribut[ing] in exchange for any
valuable consideration, but not for pecuniary gain.” U.S.S.G. § 2G2.2(b)(3)(B).
To be sure, he is correct. The district court erred by applying our holding in
United States v. Groce, 784 F.3d 291 (5th Cir. 2015), instead of an intervening
amendment of the Guidelines. The district court believed that it was required
to follow our precedent rather than the amendment. The court happened to be
incorrect, but, as discussed below, the error was harmless.
A.
Before turning to the merits of Halverson’s claim, we provide the
standard of review. We review the reasonableness of sentencing decisions
under a two-step process.
1 The six victims’ pseudonyms are “Angela,” “Sierra,” “Vicky,” “John Doe II,” “Pia,”
and “Sarah.” Halverson had three images of Angela, so her restitution was $9,227.
Halverson had eight images of Sierra, so, under the formula, her restitution was $16,272.
But Sierra requested only $10,000, so she received her full request. Halverson had two
images of Vicky, so her restitution was $7,818. Halverson had two images of John Doe II, so
his restitution was $7,818. Halverson had eight images of Pia, so her restitution under the
formula was $17,681. But Pia requested only $5,000, so she received her full request.
Halverson had six images of Sarah, so her restitution under the formula was $13,454. Thus,
the total amount given to these six victims was $53,317, but the district court reduced the
attorneys’ fees given to Angela by $3,000 (making her total $6,227), because of an issue
related to that attorney itemizing portions of time that were impossible to itemize. Thus, the
final number for the restitution was $50,317.00.
4
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No. 17-40661
First, we determine whether the district court committed a significant
procedural error, reviewing “the district court’s interpretation or application of
the sentencing guidelines de novo, and its factual findings for clear error.” Id.
at 294 (quoting United States v. Scott, 654 F.3d 552, 555 (5th Cir. 2011)). If
there was a procedural error, remand is required unless the government can
establish that the error was harmless. See United States v. Delgado–Martinez,
564 F.3d 750, 752–53 (5th Cir. 2009). “[T]he harmless error doctrine applies
only if the proponent of the sentence convincingly demonstrates both (1) that
the district court would have imposed the same sentence had it not made the
error, and (2) that it would have done so for the same reasons it gave at the
prior sentencing.” United States v. Ibarra–Luna, 628 F.3d 712, 714 (5th Cir.
2010). To satisfy its burden to prove harmless error, the government “must
point to evidence in the record that will convince us that the district court had
a particular sentence in mind and would have imposed it, notwithstanding the
error.” Id. at 718 (quoting United States v. Huskey, 137 F.3d 283, 289 (5th Cir.
1998)).
Second, if there is no procedural error or the error was harmless, this
Court reviews the substantive reasonableness of the sentence under an abuse-
of-discretion standard. Groce, 784 F.3d at 294.
B.
1.
As stated earlier, the district court committed a significant procedural
error by applying our holding from Groce—which said that defendants who
knowingly use peer-to-peer file sharing software “engage[] in the kind of
distribution contemplated by § 2G2.2(b)(3)(B),” id.—instead of the amended
Guideline, which clarified § 2G2.2(b)(3)(B) and states:
“The defendant distributed in exchange for any valuable
consideration” means the defendant agreed to an exchange with
5
Case: 17-40661 Document: 00514577562 Page: 6 Date Filed: 07/30/2018
No. 17-40661
another person under which the defendant knowingly distributed
to that other person for the specific purpose of obtaining something
of valuable consideration from that other person, such as other
child pornographic material, preferential access to child
pornographic material, or access to a child.
U.S.S.G. § 2G2.2 cmt. n.1 (emphasis added) (2016). The commentary
previously had said that an increase should be applied for “any transaction,
including bartering or other in-kind transaction, that is conducted for a thing
of value, but not for profit,” id. (2015), and that previous commentary did not
say that the exchange had to involve a defendant receiving the material from
the person with whom he bartered. Id. This language of the previous 2015
version was applied by the Groce court. See 784 F.3d at 294.
But because of the change to the Guidelines, the district court should
have applied the amended 2016 Guidelines. The Guidelines note that “[f]ailure
to follow such commentary could constitute an incorrect application of the
guidelines, subjecting the sentence to possible reversal on appeal.” U.S.S.G.
§ 1B1.7 (2016). And we have previously held that district courts should follow
the contemporary versions of the Guidelines rather than older cases that
interpreted prior versions of the Guidelines. See United States v. Palacios, 756
F.3d 325, 326 n.1 (5th Cir. 2014).
The new test for applying the enhancement under U.S.S.G.
§ 2G2.2(b)(3)(B) requires a court to find: (1) the defendant agreed to an
exchange with another person, (2) the defendant knowingly distributed child
pornography to that person (3) for the purpose of obtaining something of
valuable consideration, and (4) the valuable consideration came from that
person. The government presented evidence to establish the first three
elements of that test, but the government failed to present any evidence to
show that Halverson distributed any child pornography to receive “something
of valuable consideration from that [] person” with whom he traded. See
6
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U.S.S.G. § 2G2.2 cmt. n.1. The burden was upon the government to prove that
element by a preponderance of the evidence. See United States v. Smith, 13
F.3d 860, 867 (5th Cir. 1994). It failed to do so. Thus, the district court
procedurally erred by enhancing Halverson’s sentence.
2.
Although the district court erred, the question now is whether the
procedural error was harmless.
A procedural error is harmless if the error did not affect the district
court’s choice of sentence. Delgado–Martinez, 564 F.3d at 753. As said above,
the harmless-error doctrine applies only if the government “convincingly
demonstrates both (1) that the district court would have imposed the same
sentence had it not made the error, and (2) that it would have done so for the
same reasons it gave at the prior sentencing.” Ibarra–Luna, 628 F.3d at 714.
This demonstration is a “heavy burden” and a “high hurdle” for the
government. Id. at 714, 717. “[T]he crux of the harmless-error inquiry is
whether the district court would have imposed the same sentence, not whether
the district court could have imposed the same sentence.” Delgado–Martinez,
564 F.3d at 753. The record must show “clarity of intent” expressed by the
district court, but “such statements do not require magic words.” United States
v. Shepherd, 848 F.3d 425, 427 (5th Cir. 2017).
Here, the district court imposed a sentence of 60 months, a sentence that
was 91 months below the minimum of the incorrect Guidelines range and 27
months below the minimum of the correct Guidelines range. And the district
court was clear about why it gave Halverson a significant downward variance.
Without mentioning the Guidelines range, the district court explained that
Halverson’s age of seventy and his lack of criminal history were the reasons
for imposing the sixty-month sentence—any longer, according to the district
court, would be “a death penalty sentence.”
7
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No. 17-40661
So, because the record reflects that the district court would have imposed
the same sentence for the same reasons—namely, because of his lack of
criminal history and to prevent Halverson from receiving a death sentence due
to his age—we hold that the procedural error was harmless.
C.
As noted above, the second step in our reasonableness analysis when
reviewing sentences is to review whether the sentence was substantively
reasonable. Groce, 784 F.3d at 294. Here, Halverson does not challenge the
substantive reasonableness of his sentence, nor could he, considering that the
district court went well below the Guidelines to give Halverson a shorter
sentence.
III.
The second alleged sentencing error raised by Halverson is that the
district court’s restitution was improper. In this respect, he argues that the
government did not produce evidence of possession, because all the files found
on his computer were incomplete reconstructed files. Halverson further raises
a number of arguments related to Paroline v. United States, 572 U.S. 464
(2014): that the restitution formula was arbitrary, that the award did not
sufficiently follow Paroline, and that the court lacked proof regarding the loss
amounts that Halverson proximately caused.
We are unconvinced that the district court reversibly erred.
A.
We turn to the standard of review. If the appellant’s claim is that
restitution was imposed contrary to law—that is, the Mandatory Victim
Restitution Act, 18 U.S.C. § 3664—the standard of review is de novo. United
States v. Sheets, 814 F.3d 256, 259 (5th Cir. 2016). If, however, the appellant’s
claim challenges the propriety of the particular award under these statutes,
then we review for abuse of discretion. Id.
8
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No. 17-40661
B.
We can easily dismiss Halverson’s first objection—that his plea and
Baker’s testimony were insufficient to support possession. There was
sufficient evidence to prove possession, because Halverson pleaded guilty to
possessing images and Baker testified that Halverson shared “one hundred
percent complete files” with him.
C.
We next conclude that the district court sufficiently followed Paroline
and, in doing so, committed no abuse of discretion in implementing the awards.
The government’s restitution formula took the lowest amount requested
by a victim, $5,000, and set it as the baseline for each restitution. Then, the
government added $1,409—because Halverson possessed 1,409 image files of
child pornography on one of his laptops—per image of each victim that
Halverson possessed. So, the formula was $5,000 + ($1,409 x number of images
of that victim). If that calculation resulted in a sum less than the amount
requested by a victim, the government asked for restitution in the victim’s
requested amount. If it was greater than what the victim requested, the
government capped the restitution by the formula. The total amount of
restitution ordered, for six known victims that requested restitution, was
$50,317.00. 2
Halverson argues that the government’s formula is at odds with Paroline
and is arbitrary. This challenge is one of law and is reviewed de novo. See
Sheets, 814 F.3d at 259. He argues that the government’s formula did not
properly analyze the injuries proximately caused by Halverson and that the
district court settled for an arbitrary formula.
2 See supra note 1 for the full calculation.
9
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No. 17-40661
Restitution is mandatory in this case: 18 U.S.C. § 2259 states that the
defendant must pay the victim “the full amount of the victim’s losses,” which
includes:
(A) medical services relating to physical, psychiatric, or
psychological care;
(B) physical and occupational therapy or rehabilitation;
(C) necessary transportation, temporary housing, and child care
expenses;
(D) lost income;
(E) attorneys’ fees, as well as other costs incurred; and
(F) any other losses suffered by the victim as a proximate result of
the offense.
Id. § 2259(b)(3). In Paroline, the Supreme Court limited the defendant’s
restitution payment under § 2259 “only to the extent the defendant’s offense
proximately caused a victim’s losses.” 134 S. Ct. at 1722. So, a district court
“must assess as best it can from available evidence the significance of the
individual defendant’s conduct in light of the broader causal process that
produced the victim’s losses.” Id. at 1727–28. This determination “cannot be
a precise mathematical inquiry”; instead, it involves “the use of discretion and
sound judgment.” Id. at 1728. 3
Here, as we have earlier suggested, the district court committed no
reversible error in its application of Paroline. The record reflects that the
district court relied “on various factors that bear on the relative causal
significance of [Halverson’s] conduct in producing victim’s losses.” The court
3 The Supreme Court listed various factors that a district court could consider: (1) “the
number of past criminal defendants found to have contributed to the victim’s general losses”;
(2) “reasonable predictions of the number of future offenders likely to be caught and convicted
for crimes contributing to the victim’s general losses”; (3) “any available and reasonably
reliable estimate of the broader number of offenders involved (most of whom will, of course,
never be caught or convicted)”; (4) “whether the defendant reproduced or distributed images
of the victim”; (5) “whether the defendant had any connection to the initial production of the
images”; (6) “how many images of the victim the defendant possessed”; and (7) “other facts
relevant to the defendant’s relative causal role.” Paroline, 134 S. Ct. at 1728.
10
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No. 17-40661
relied on the following facts: (1) Halverson possessed images of at least 33
victims, (2) he possessed at least 1,863 images of child pornography on two
laptops and one hard drive, and (3) many of the images depicted violent sexual
assault of infants, toddlers, pre-pubescents, and adolescents. Further, when
speaking about the formula used by the government, the court said that the
formula accounted for each of the victim’s total losses while tying the
restitution to Halverson’s conduct. The court then went through each victim
and applied the formula to each one, explaining the amount that each would
receive and why they requested their respective amounts. Although the
district court did not make explicit findings concerning all of the Paroline
factors, that determination was not necessary; the Supreme Court was clear
that these factors are merely “rough guideposts” that “district courts might
consider in determining a proper amount of restitution.” Id. Further, the
Supreme Court observed that the factors “need not be converted into a rigid
formula.” Id. 4
Thus, we hold that the district court did not err in its restitution award.
4 Tied to his challenge of the restitution order, Halverson argues that many of the
psychological reports submitted by the victims did not separate the losses caused by
Halverson from the losses caused by other abusers or show how the amounts requested by
the victims were justified. This argument was not raised below, so we review it for plain
error only. United States v. Lewis, 796 F.3d 543, 546 (5th Cir. 2015). To show plain error,
the defendant must show: “(1) an error or defect not affirmatively waived; (2) that is
‘clear or obvious, rather than subject to reasonable dispute’; and (3) that affected
his substantial rights.” United States v. Sanchez-Arvizu, 893 F.3d 312, 315 (5th Cir.
2018), as revised (June 22, 2018) (quoting United States v. Prieto, 801 F.3d 547, 549–50 (5th
Cir. 2015)). “If these three conditions are satisfied, we may exercise discretion to remedy the
error if it ‘seriously affects the fairness, integrity or public reputation of judicial
proceedings.’” Id. (quoting Puckett v. United States, 556 U.S. 129, 135 (2009)).
Here, even assuming the court erred by using the reports, such error was not plain,
because it is not clear that either Paroline or § 2259(b)(3) require victims to have a new report
drafted in each case that disaggregates a defendant’s conduct from all other possible sources
of the victims’ losses.
11
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No. 17-40661
IV.
The third sentencing error that Halverson urges is the denial of a one-
level reduction to his base offense level for acceptance of responsibility. We
hold that there was no error.
A.
The standard of review for this issue is the same as for the five-level
enhancement discussed above. First, we must decide whether the district court
committed a significant procedural error. Groce, 784 F.3d at 294. If not, then
we decide whether the sentence was substantively reasonable under an abuse-
of-discretion standard. Id.
B.
At the time of the final PSR, the government said that it would ask for
an additional one-level reduction for the defendant’s timely acceptance of
responsibility pursuant to U.S.S.G. § 3E1.1(b). At sentencing, however, the
government declined to move for that reduction. Halverson argues that the
district court erred by denying his request to grant the one-level reduction to
his sentence, even in the absence of the government motion. He contends that
the government based its opposition on a reason not identified in U.S.S.G.
§ 3E1.1, so he argues that the district court should have applied the one-level
reduction even without the government’s motion.
U.S.S.G. § 3E1.1(b) provides that a defendant’s offense level will be
decreased by one additional level if (1) “the defendant qualifies for a decrease
under subsection (a)”; (2) “the offense level determined prior to the operation
of subsection (a) is level 16 or greater”; and (3) “upon motion of the government
stating that the defendant has assisted authorities in the investigation or
prosecution of his own misconduct by timely notifying authorities of his
intention to enter a plea of guilty, thereby permitting the government to avoid
12
Case: 17-40661 Document: 00514577562 Page: 13 Date Filed: 07/30/2018
No. 17-40661
preparing for trial and permitting the government and the court to allocate
their resources efficiently.”
Halverson argues that the district court erred in denying the one-level
reduction because he pleaded guilty. He argues that this guilty plea was all
that was necessary to “timely notify[] authorities” “of his own misconduct.”
U.S.S.G. § 3E1.1(b). He points to Amendment 775 to the Sentencing
Guidelines (made effective in 2013), a part of the commentary that states, “The
government should not withhold such a motion based on interests not
identified in § 3E1.1, such as whether the defendant agrees to waive his or her
right to appeal.” U.S.S.G. § 3E1.1(b) cmt. n.6. He further argues that our
decision in United States v. Palacios makes clear that an appellate court may
review the government’s reasons for withholding a § 3E1.1(b) motion. And, as
we have earlier noted, he argues that the government used four factually
incorrect reasons to refuse the motion: First, the government said that
Halverson did not adequately negotiate with the victims’ attorneys to resolve
restitution issues. Halverson, however, argues that he made good-faith efforts
to solve restitution issues with the victims prior to the hearing; he further
argues that he had the right to say that the evidence (or lack of evidence)
presented by the victims allowed him to not pay all of the full claims by the
victims. Second, the government said that Halverson lied to the district court
by saying that he did not distribute child pornography. Halverson argues that
he did not lie; instead, he merely made a non-frivolous objection—that the
distribution enhancement did not apply to him. Third, the government said
that Halverson had lied about his military service in a mental health
evaluation, by saying that he was in the Vietnam War and had seen combat
when he had not. Halverson argues that he did not lie, arguing that he was
stationed in Cambodia helping with the Vietnam effort. Fourth and finally,
the government said that Halverson would not help authorities open his other
13
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No. 17-40661
two hard drives. Halverson argues that there is no evidence that he refused
any government request to decrypt the hard drives. Further, Halverson argues
that even if he did make such a refusal, that refusal has nothing to do with
§ 3E1.1(b)—the only assistance that he needed to provide was “by timely
notifying authorities of his intention to enter a plea of guilty.”
In full, Amendment 775 states,
Because the Government is in the best position to determine
whether the defendant has assisted authorities in a manner that
avoids preparing for trial, an adjustment under subsection (b) may
only be granted upon a formal motion by the Government at the
time of sentencing. The government should not withhold such a
motion based on interests not identified in §3E1.1, such as whether
the defendant agrees to waive his or her right to appeal.
U.S.S.G. § 3E1.1 cmt. n.6 (citation omitted). Halverson is correct that, under
this amendment, we may examine the reasons why the government withheld
the motion. See Palacios, 756 F.3d at 326. But our ability to review the
government’s reasons is limited; it extends only to determining whether the
government considered an interest within § 3E1.1. See United States v.
Castillo, 779 F.3d 318, 323 (5th Cir. 2015).
Here, the government put forward at least two reasons for refusing to
move that are fully supportable as considerations under § 3E1.1—Halverson’s
refusal to help decrypt his hard drives and, secondly, his inadequacy in
speaking with the victims’ attorneys about restitution. See U.S.S.G. § 3E1.1
cmt. n.1(C) (stating that in determining whether a defendant qualifies for an
acceptance-of-responsibility reduction, the government may consider
“voluntary payment of restitution prior to adjudication of guilty”), § 3E1.1
cmt. n.1(E) (stating the government may also consider “voluntary assistance
to authorities in the recovery of the fruits and instrumentalities of the
14
Case: 17-40661 Document: 00514577562 Page: 15 Date Filed: 07/30/2018
No. 17-40661
offense”). 5 Halverson argues that the government was incorrect about his
refusing to decrypt the hard drives and that he adequately spoke to the victims’
attorneys, but the government has a factual basis for the conclusion it reached.
Even if Halverson’s view of the facts could be deemed more supportable than
the government’s view, the commentary does not provide us with the power to
weigh the government’s factual reasons for withholding the motion. The
government must only limit its reasons for withholding the motion to interests
that are contained in § 3E1.1.
In short, from Halverson’s point of view, the government’s conclusions
are incorrect; from the government’s point of view, its conclusions are
supportable. These differences are merely different ways of interpreting the
facts. We think that Amendment 775 allows the government to refuse to move,
as long as it considers an interest within § 3E1.1. Thus, we hold that the
district court did not err by denying the one-level reduction in the absence of a
motion by the government. Further, we hold that the sentence was
substantively reasonable.
V.
The final alleged error raised by Halverson relates to a special condition
of his supervised release, which restricts his internet and computer access. 6
5 We need not, and do not, address whether the government’s other two reasons for
declining to move—Halverson’s alleged lies about his previous military experience and his
refusal to agree that he distributed child pornography—were valid reasons for withholding
the motion.
6 In full, Halverson’s supervised-release condition states,
You shall not subscribe to any computer online service, nor shall you access
any Internet service during the length of your supervision, unless approved in
advance in writing by the United States Probation Officer. You may not
possess Internet capable software on any hard drive, disk, floppy disk,
compact, disk, DVD, diskette, magnetic tape, or any other electronic storage
media, unless specifically approved in advance in writing by the United States
Probation Officer.
So, in essence, Halverson cannot access any internet-capable device unless he receives the
specific prior approval of a probation officer.
15
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No. 17-40661
He argues that imposing the restriction unconstitutionally burdens his First
Amendment rights, citing the Supreme Court’s recent decision in Packingham
v. North Carolina, 137 S. Ct. 1730 (2017). This case was handed down five
days after his sentencing hearing. Halverson further argues that the sentence
provides too much discretionary power to the probation officer, depriving
Halverson of his right to be sentenced under Article III. 7 We hold that the
district court did not commit plain error, so we uphold this condition of
Halverson’s sentence.
A.
Because Halverson did not object to this condition of his supervised
release at sentencing, we review for plain error. United States v. Duque–
Hernandez, 710 F.3d 296, 298 (5th Cir. 2013). To find plain error we first must
find a legal error or defect that has not been intentionally abandoned—i.e.,
affirmatively waived—by Halverson. Puckett, 556 U.S. at 135. Second, the
legal error must be clear or obvious, rather than subject to reasonable dispute.
Id. Third, the error must have affected the appellant’s substantial rights,
which means that the appellant must show that the error affected the outcome
of the district court proceedings. Id. Fourth, if the other three prongs are
satisfied, the court has discretion to remedy the error, which is exercised only
when the error seriously affects the fairness, integrity, or public reputation of
judicial proceedings. Id.
7 Halverson further argues that the computer restriction is an occupational restriction
under U.S.S.G. § 5F1.5. He argues that the district court erred by failing to make sufficient
factual findings to show that the restriction was reasonably necessary and that there was a
reasonably direct relationship between his occupation and the conduct relevant to the
conviction. But Halverson waived this argument by raising it for the first time in his reply
brief on appeal. Dixon v. Toyota Motor Credit Corp., 794 F.3d 507, 508 (5th Cir. 2015)
(“Arguments raised for the first time in a reply brief are waived.”).
16
Case: 17-40661 Document: 00514577562 Page: 17 Date Filed: 07/30/2018
No. 17-40661
B.
We first consider Halverson’s argument that this supervised-release
condition violates the First Amendment in the light of Packingham, which
addressed a statute that prohibited registered sex offenders from accessing
commercial social-networking sites, even after their sentences were completed.
137 S. Ct. at 1733–34, 1737. The Supreme Court held that the North Carolina
statute was unconstitutional under the First Amendment. The Court said that
the statute did not survive intermediate scrutiny, because the statute
“burden[ed] substantially more speech than [was] necessary to further the
government’s legitimate interests.” See id. at 1736 (quoting Ward v. Rock
Against Racism, 491 U.S. 781, 798–99 (1989)). But the driving concern of the
Court was the imposition of a severe restriction on persons who had served
their sentences and were no longer subject to the supervision of the criminal
justice system. See id. at 1737 (explaining that “[o]f importance” to the Court
was “the troubling fact that the law imposes severe restrictions on persons who
already have served their sentence and are no longer subject to the supervision
of the criminal justice system” and that “[i]t is unsettling to suggest that only
a limited set of websites can be used even by persons who have completed their
sentences”).
Halverson’s argument, however, is that if the Supreme Court concluded
that “foreclos[ing] access to social media altogether is to prevent the user from
engaging in the legitimate exercise of First Amendment rights,” id., then, a
fortiori, preventing him from accessing the internet entirely also violates those
rights. But the government responds that Packingham is limited to post-
custodial restrictions—i.e., when a defendant has already fully completed his
sentence. The government further points to a recent D.C. Circuit case that
held, at least for the purposes of plain-error review, that Packingham does not
apply to a supervised-release condition, because such a condition “is not a post-
17
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No. 17-40661
custodial restriction of the sort imposed on Packingham.” United States v.
Rock, 863 F.3d 827, 831 (D.C. Cir. 2017). The Second Circuit made a similar
observation in United States v. Browder, in which it noted that the ban in
Packingham “extended beyond the completion of a sentence.” 866 F.3d 504,
511 n.26 (2d Cir. 2017), cert. denied, 138 S. Ct. 693 (2018); see also United
States v. Pedelahore, No. 1:15-CR-24, 2017 WL 4707458, at *2 (S.D. Miss. Oct.
19, 2017) (“The Packingham decision is inapplicable to [the defendant’s]
circumstances. Even while on supervised release, [the defendant] is serving
his criminal sentence, and the Court has broad discretion in establishing the
conditions under which [the defendant] will serve the supervised release
portion of his sentence.”).
We find these decisions—which are consistent with Packingham’s
limited holding—to be well-reasoned. In any event, the district judge
committed no plain error. On its face, Packingham addresses circumstances
in which the state has completely banned much of a sex offender’s internet
access after he has completed his sentence. Because supervised release is part
of Halverson’s sentence (rather than a post-sentence penalty), see 18 U.S.C. §
3583(a), and because our review is for plain error, we find that Packingham
does not—certainly not “plainly”—apply to the supervised-release context.
C.
Second, Halverson argues that by assigning his right to internet access
to the discretion of his probation officer, he has been denied his “right to be
sentenced” under Article III of the Constitution. 8 Essentially, he argues, the
8 Article III, § 2 of the Constitution states,
The judicial power shall extend to all cases, in law and equity, arising under
this Constitution, the laws of the United States, and treaties made, or which
shall be made, under their authority;—to all cases affecting ambassadors,
other public ministers and consuls;—to all cases of admiralty and maritime
jurisdiction;—to controversies to which the United States shall be a party;—to
18
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No. 17-40661
probation officer’s authority allows that officer to determine the terms of
Halverson’s punishment. But we find that the implementation or the
administration of the special condition ordered by the Article III judge does not
subject Halverson to any further punishment that is not embodied in his
sentence.
It is certainly true that a district court cannot delegate to probation
officers the “core judicial function” of imposing a sentence, including
supervised-release conditions. United States v. Barber, 865 F.3d 837, 839 (5th
Cir. 2017) (quoting United States v. Franklin, 838 F.3d 564, 568 (5th Cir.
2016)). Probation officers have the power only to supervise persons on
supervised release with respect to all court-imposed conditions and to manage
aspects of sentences. Id. We have determined that sentencing conditions that
“permissibly delegate[] authority to decide the details of a sentence’s
implementation” comply with Article III, in contrast with those that
“impermissibly delegate[] the authority to impose a sentence.” See id. For
example, a judge cannot give a probation officer the discretionary authority to
require a defendant to participate in a drug-treatment program or in a mental
health program. See id. at 839, 842; Franklin, 838 F.3d at 566, 568.
Here, the district court ordered Halverson, during supervised release, to
“not subscribe to any computer online service,” to not “access any Internet
service during the length of your supervision,” and to “not possess Internet
capable software on any hard drive, disk, floppy disk, compact, disk, DVD,
diskette, magnetic tape, or any other electronic storage media.” This sentence
controversies between two or more states;—between a state and citizens of
another state;—between citizens of different states;—between citizens of the
same state claiming lands under grants of different states, and between a
state, or the citizens thereof, and foreign states, citizens or subjects.
Halverson’s argument is in its simplest expression that Article III vests no judicial
power in a probation officer, only in an Article III judge.
19
Case: 17-40661 Document: 00514577562 Page: 20 Date Filed: 07/30/2018
No. 17-40661
precludes all use of the internet by Halverson. But the sentence itself contains
an escape valve during the administration of the sentence by the probation
officer: if Halverson receives “approv[al] in advance in writing by the United
States Probation Officer,” then he may, under that condition, access the
internet or own an internet-capable device. This arrangement is a permissible
delegation of implementing the sentence that the district judge has imposed.
See Barber, 865 F.3d at 839. This arrangement does not authorize any
imposition of punishment by the probation officer. It does not allow the
probation officer any discretion to subject Halverson to any further
punishment. The full sentence—no access to internet or internet-capable
devices, but with an escape valve—has been imposed by the judge. And the
probation officer cannot require the defendant to do anything further that is in
the nature of punishment. Instead, the probation officer may, under a
provision of the sentence imposed by an Article III judge, allow suspension
from a specific term of the sentence. Thus, Halverson has not been denied his
right to have his sentence imposed by an Article III judicial officer.
To conclude, under plain-error review, Halverson’s challenge to this term
of his supervised release fails because the court committed no error, plain or
otherwise.
VI.
We sum up what we have held in this opinion: (1) the district court
procedurally erred by applying a five-level enhancement under U.S.S.G.
§ 2G2.2(b)(3) for distribution of child pornography in exchange for valuable
consideration, but, under the circumstances presented here, the error was
harmless; (2) the district court did not err by awarding $50,317.00 of
restitution to six known victims; (3) the district court did not err by denying an
additional one-level reduction to Halverson’s base offense level for acceptance
of responsibility; and (4) Halverson’s special condition of supervised release,
20
Case: 17-40661 Document: 00514577562 Page: 21 Date Filed: 07/30/2018
No. 17-40661
preventing access to the internet, survives plain-error review. Accordingly, the
judgment of the district court is in all respects
AFFIRMED.
21
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117 Cal.Rptr.2d 168 (2002)
41 P.3d 3
In re Pamela C. MARTINEZ on Habeas Corpus.
No. S103581.
Supreme Court of California.
February 20, 2002.
Petition for review GRANTED.
GEORGE, C.J., KENNARD, J., BAXTER, J., WERDEGAR, J., CHIN, J., BROWN, J. and MORENO, J., concur.
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197 F.2d 594
91 U.S.App.D.C. 36
HARVEY,v.UNITED STATES.
No. 11227.
United States Court of Appeals District of Columbia Circuit.
Submitted April 7, 1952.Decided May 22, 1952.
T. Emmett McKenzie and James K. Hughes, Washington, D.C., submitted on the brief for appellant.
Charles M. Irelan, U.S. Atty., and Joseph M. Howard and Grace B. Stiles, Asst. U.S. Attys., Washington, D.C., submitted on the brief for appellee. George Morris Fay, U.S. Atty. at the time the record was filed, Washington, D.C., also entered an appearance for appellee.
Before EDGERTON, PRETTYMAN and WASHINGTON, CIRCUIT Judges.
PRETTYMAN, Circuit Judge.
1
This is an appeal from a judgment of conviction by the United States District Court for the District of Columbia in a criminal case. An indictment in five counts was returned against this appellant and another defendant. Appellant was charged in the first and fourth counts only. By direction of the court he was acquitted on the fourth count. A verdict of guilty was returned against him by the jury on the first count.
2
This first count of the indictment charged that the appellant, between March 3 and March 6, 1951, operated a lottery known as the numbers game in violation of the District of Columbia statute.1
3
The Government presented several witnesses. Two police officers testified. Their testimony was in substance that on March 6, 1951, they went with a search warrant to 608 O Street, Northwest, found the door to a room unlocked, entered, and found appellant[91 U.S.App.D.C. 37] seated at a table on which were quantities of numbers slips, some money, and an adding machine. He was writing in a 'numbers book'. Upon further search other numbers books were found on the premises, and numbers slips were found on his person. One officer said that in answer to a question appellant stated he turned his numbers over to a man whose name he did not know. One officer testified that while he was on the premises he answered the phone and took three bets. Another witness, one Cook, testified that from time to time he had made numbers bets with one John Haley, and that one day early in March he gave a numbers bet to Haley, who later in the day returned it saying that it had been placed too late. Cook testified he then went to see appellant Harvey in a room at 608 O Street, Northwest, related to him the circumstances, and asked him (Harvey) what he intended to do about the matter; and that Harvey replied he did not intend to do anything, that Haley had been out on the street 'and came in there too late.' Cook said Harvey at that time was sitting at a table before an adding machine and a pile of money.
4
Prior to the trial counsel for Harvey moved for the return to him of the numbers slips, numbers books, and other physical evidence seized at the time of the arrest, and for the suppression of that evidence. The motion was denied. Upon the trial these papers, etc., were offered in evidence by the prosecutor. Counsel for Harvey sought to cross-examine before receipt of the material in evidence. That request was denied. He requested an instruction that the jury might disregard the numbers slips, and he moved for a directed verdict of acquittal. All these actions of defense counsel were upon the ground that it was not shown that the numbers slips were 'live' slips, i.e., related to an existing lottery rather than to one already completed.
5
Appellant bases his contention upon two cases, France v. United States2 and Smith v. United States.3 The France case involved a federal statute4 which made illegal the interstate carriage of any paper 'purporting to be or represent a ticket, chance, share, or interest in or dependent upon the event of a lottery'. The Court held that carrying slips relating to a lottery already drawn did not violate that statute. The Court said: 'The language as used in the statute looks to the future. The papers must purport to be or represent an existing chance or interest which is dependent upon the event of a future drawing of the lottery.'5
6
The Smith case in this court was concerned with a District of Columbia statute6 which made it unlawful to be in possession of certain writings or slips 'used, or to be used, * * * for the purpose of playing, carrying on, or conducting any lottery'. We said in the course of an opinion, in which, however, we affirmed the conviction, that we were 'not disposed to hold that a dead or expired lottery ticket would satisfy the statute.' Upon motion for modification of the opinion, we expressly reserved the question as to the 'dead' slips.
7
The recent decision and opinion of the Supreme Court in United States v. Halseth7 deal with a similar problem. A federal statute8 makes unlawful the mailing of any letter, etc., 'concerning any lottery', etc. The defendant had mailed papers, etc., describing how the recipient might put into operation a lottery. The Court held that the quoted words 'mean an existing, going lottery or gambling scheme' and affirmed a judgment dismissing the indictment.
8
[91 U.S.App.D.C. 38] The statute before us in the case at bar makes it unlawful to keep, set up, or promote a lottery.9 The charge may contemplate an act already complete when the officer arrives. So the possession of numbers slips, whether expired or not, may well be relevant and material evidence that the possessor has been conducting a lottery. He need not be 'caught in the act'. He may be caught with damaging evidence of a completed offense. We think the evidence was properly admitted upon the charge of the first count. Other evidence was also received, as we have noted, and we think the total was ample to require submission to the jury.
9
This case differs from the cases cited and discussed above. The difference is a point of time. In those cases the charge was that the accused a A certain time was in possession of slips, or transported slips, or mailed slips. The nature of the slips at that time was the controlling feature of the cases. In the case at bar the charge was that Harvey had been operating a lottery at a time prior to the arrival of the officers. The difference is well illustrated by the different dispositions of the two counts in the present case. The fourth count was that Harvey was in possession of numbers slips at the time the officers walked in. The trial court held that to sustain conviction on that count those slips must be 'live' slips at the time illegal possession was alleged. There being no evidence that they were 'live', the court directed acquittal. That action of the court is not before us, and we intimate no opinion as to its necessity or validity. But the first count was that in the period March 3rd to March 6th Harvey operated a lottery. y trial court correctly held that the presence of the slips, whether 'live' or expired, in addition to the other evidence, was sufficient foundation for a reasonable inference that Harvey had been, if indeed he was not then, engaged in operating a lottery.
10
Affirmed.
1
31 Stat. 1330 (1901), as amended, D.C. Code § 22-1501 (1940)
2
1897, 164 U.S. 676, 17 S.Ct. 219, 41 L.Ed. 595
3
1939, 70 App.D.C. 255, 105 F.2d 778
4
Act of March 2, 1895, 28 Stat. 963
5
Supra note 2, 164 U.S.at p. 682, 17 S.Ct.at page 221
6
52 Stat. 198 (1938), D.C. Code Sec. 22-1502 (1940)
7
1952, 342 U.S. 277, 72 S.Ct. 275
8
Sec. 213 of the Criminal Code of 1909, 35 Stat. 1129, 18 U.S.C. § 336 (1946) (1948 Revised Criminal Code, 18 U.S.C.A. § 1302)
9
'If any person shall within the District keep, set up, or promote, or be concerned as owner, agent, or clerk, or in any other manner, in managing, carrying on, promoting, or advertising, directly or indirectly, any policy lottery, policy shop, or any lottery, or shall sell or transfer any chance, right, or interest, tangible or intangible, in any policy lottery, or any lottery or shall sell or transfer any ticket, certificate, bill, token, or other device, purporting or intended to guarantee or assure to any person or entitle him to a chance of drawing or obtaining a prize to be drawn in any lottery, or in a game or device commonly known as policy lottery or policy or shall, for himself or another person, sell or transfer, or have in his possession for the purpose of sale or transfer, a chance or ticket in or share of a ticket in any lottery or any such bill, certificate, token, or other device, he shall be fined upon conviction of each said offense not more than $1,000 or be imprisoned not more than three years, or both. The possession of any copy or record of any such chance, right, or interest, or of any such ticket, certificate, bill, token, or other device shall be prima-facie evidence that the possessor of such copy or record did, at the time and place of such possession, keep, set up, or promote, or was at such time and place concerned as owner, agent, or clerk, or otherwise in managing, carrying on, promoting or advertising a policy lottery, policy shop, or lottery.' Supra note 1
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420 F.2d 628
UNITED STATES of America,v.Willie D. HEARD, Appellant.
No. 22585.
No. 22586.
United States Court of Appeals District of Columbia Circuit.
Argued April 23, 1969.
Decided September 18, 1969.
Rehearing En Banc Denied November 19, 1969.
Certiorari Denied March 30, 1970.
See 90 S.Ct. 1252.
Mr. Jacob Goldberg, Washington, D. C. (appointed by this court), for appellant.
Mr. David C. Woll, Asst. U. S. Atty., with whom Messrs. David G. Bress, U. S. Atty., at the time the brief was filed, Frank Q. Nebeker, Asst. U. S. Atty., at the time the brief was filed, and Lawrence Lippe, Asst. U. S. Atty., were on the brief, for appellee.
Before McGOWAN, LEVENTHAL and ROBINSON, Circuit Judges.
PER CURIAM:
1
The indictment charged appellant in the first count with carnal knowledge under 22 D.C.Code § 2801, and, in the second count, with taking indecent liberties with a minor child under 22 D.C.Code § 3501(a). The jury found appellant guilty on both counts. Appellant was sentenced to two to eight years imprisonment on each count, sentences to run concurrently.
2
The judge instructed the jury that the fact that the jury might find the defendant guilty or not guilty on one count should not control or influence the verdict on the other count. He further charged the jury to consider the two counts separately and to be prepared to announce the verdict, assuming unanimity in the result, first as to the first count and then as to the second. This was error. These particular offenses have been so structured by Congress that the Miller Act, making criminal the taking of indecent liberties with a child, but affording liberalized release and parole provisions, is inapplicable to the carnal knowledge offense.1 A defendant may not properly be convicted of both offenses at the same time as a result of one incident.2 Instead, "the jury must be told that they may not find the defendant guilty of both offenses. If he is guilty of carnal knowledge, he is not within the Miller Act."3
3
The judge should have charged the jury that they should first consider the carnal knowledge offense. If they found the defendant guilty beyond a reasonable doubt, the sole verdict should have been guilty on count one. They should further have been instructed that, if they acquitted of carnal knowledge, they should have proceeded to consider whether defendant was guilty or not guilty of the crime of indecent liberties charged by count two. This charge furthers the legislative intent that persons the jury finds, beyond a reasonable doubt, to be guilty of carnal knowledge, should not be sentenced under the Miller Act.
4
These instructions parallel the instructions appropriate in a case where one offense is a lesser included offense within the other. This parallel finds support in the rulings of this court that indecent liberties is a lesser offense included within the crime of assault with intent to commit carnal knowledge,4 and that assault with intent to commit carnal knowledge is a lesser included offense of carnal knowledge.5 But there are strands of doctrine that seem to cut across the conception that indecent liberties and assault with intent to commit carnal knowledge are invariably "included" within carnal knowledge. For one thing, these lesser offenses require a specific intent that may, for example, be negatived by intoxication,6 and is not required for carnal knowledge, a general mens rea crime.7
5
Perhaps this technical difficulty can be reconciled by treating indecent liberties as a lesser included offense of carnal knowledge as a matter of general application, subject to withdrawal from that category in a particular case wherein defendant raises a claim, such as intoxication, that would be a defense to the lesser but not the greater offense. In any event, the submission of counts to the jury in the same way as is done in the case of included offenses conforms to the typical relationship between the factual elements of these two crimes and furthers the congressional purpose in making indecent liberties and carnal knowledge legally inconsistent offenses and in denying Miller Act treatment to those guilty of carnal knowledge.
6
We turn now to the proper disposition of this case in which the jury was erroneously permitted to return verdicts on each count. In Dozier v. United States, 127 U.S.App.D.C. 266, 382 F.2d 482 (1967), this court corrected the error by affirming the conviction of indecent liberties and setting aside the conviction of assault with intent to commit carnal knowledge. But in that case, defense counsel requested that the judge charge on carnal knowledge and then instruct the jury to consider indecent liberties only if it acquitted of carnal knowledge. The failure of the judge to comply with a legitimate request of defense counsel warranted a corrective order that avoided the need for retrial, but gave the defendant the benefit of the doubt as to the possibility of prejudice from the error.
7
In the case before us, defense counsel made no such request.8 We therefore follow the guidelines provided in our en banc decision in Fuller v. United States, 132 U.S.App.D.C. 264, 286, 407 F.2d 1199, 1221 (en banc) (1968).9 Where one offense is a lesser included offense of the other, there is no basis for inferring confusion on the part of the jury from simultaneous verdicts; and we find none here. In the absence of a defense request that the jury consider the indecent liberties count only after an acquittal of carnal knowledge, we remand the case with instructions to vacate the judgment of conviction of the lesser offense, count two.
8
So ordered.
Notes:
1
The Miller Act, 22 D.C.Code § 3501, provides in pertinent part:
(a) Any person who shall take, or attempt to take any immoral, improper, or indecent liberties with any child of either sex, under the age of sixteen years with the intent of arousing, appealing to, or gratifying the lust or passions or sexual desires, either of such person or of such child, or of both such person and such child, or who shall commit, or attempt to commit, any lewd or lascivious act upon or with the body, or any part or member thereof, of such child, with the intent of arousing, appealing to, or gratifying the lust or passions or sexual desire, either of such person or of such child, or of both such person and such child shall be imprisoned in a penitentiary, not more than ten years.
* * * * *
(d) The provisions of this section shall not apply to the offenses covered by section 22-2801.
The carnal knowledge statute, 22 D.C. Code § 2801, provides in pertinent part:
Whoever has carnal knowledge of a female forcibly and against her will, or carnally knows and abuses a female child under sixteen years of age, shall be imprisoned for not more than thirty years * * *.
2
Dozier v. United States, 127 U.S.App. D.C. 266, 382 F.2d 482 (1967); Whittaker v. United States, 108 U.S.App. D.C. 268, 281 F.2d 631 (1960); Younger v. United States, 105 U.S.App.D.C. 51, 263 F.2d 735, cert. den., 360 U.S. 905, 79 S.Ct. 1289, 3 L.Ed.2d 1257 (1959); Thompson v. United States, 97 U.S.App. D.C. 116, 228 F.2d 463 (1955)
3
Fuller v. United States, 132 U.S.App. D.C. 264, 286, 407 F.2d 1199, 1221 at 1223 (en banc) (1968)
4
Allison v. United States, 133 U.S.App. D.C. ___, 409 F.2d 445 (1969); Younger v. United States,supra note 2.
5
Whittaker v. United States,supra note 2; Miller v. United States, 93 U.S.App. D.C. 76, 207 F.2d 33 (1953).
6
Goforth v. United States, 106 U.S.App. D.C. 111, 269 F.2d 778 (1959)
7
McGuinn v. United States, 89 U.S.App. D.C. 197, 191 F.2d 477 (1951)
8
Where such request is made and rejected, the proper course is to remand to the District Court for consideration, of course after obtaining views of counsel, as to whether in the interest of justice, to enter an order (a) vacating the judgment on the greater offense and entering sentence on the lesser offense,cf. Dozier v. United States, supra note 2; or (b) requiring a new trial, cf. Austin v. United States, 127 U.S.App.D.C. 180, 382 F.2d 129 (1967). The new trial may result in a carnal knowledge conviction but only following instructions that do not perpetuate the error in refusing those properly submitted by defense counsel.
9
InFuller, we noted that there could not be simultaneous verdicts of indecent liberties and carnal knowledge because they were inconsistent by express provision of the Miller Act. We have explained in this opinion that the purpose of the provision is furthered by treating indecent liberties as a lesser included offense for purposes of instructions on the order of consideration, and that the lesser included offense instruction generally corresponds to the factual pattern of the crimes. Fuller makes clear that the mandate we enter is appropriate where one offense is a lesser included offense within the other, but there has been no request by defense counsel for instructions to the jury on that basis.
9
Before BAZELON, Chief Judge and WRIGHT, McGOWAN, TAMM, LEVENTHAL, ROBINSON, MacKINNON and ROBB, Circuit Judges, in Chambers.
ORDER
10
PER CURIAM.
11
On consideration of appellant's suggestion for rehearing en banc, it is
12
Ordered by the Court en banc that appellant's aforesaid suggestion is denied.
13
Statement of Chief Judge Bazelon as to why he would grant rehearing en banc.
BAZELON, Chief Judge:
14
I cannot reconcile this opinion with prior cases. Under instructions disapproved in a long line of our cases, appellant was convicted both of carnal knowledge, 22 D.C.Code § 2801 (1967), and indecent liberties, 22 D.C.Code § 3501 (1967), for the same act. Relying on counsel's failure to object to the instructions at trial, the panel affirms the greater conviction (carnal knowledge) and vacates the lesser one (indecent liberties).
15
1. This case conflicts directly with Dozier v. United States, 127 U.S.App. D.C. 266, 382 F.2d 482 (1967), which vacated the greater of the two convictions. I do not think Dozier can be distinguished on the ground that counsel in that case objected to the erroneous instruction at trial. The plain error rule serves judicial convenience by allowing an appellate court to disregard trivial errors not complained of below; but where, as here, error in the jury charge was contrary to a series of our cases as well as the statute, I do not think that counsel's failure to object authorizes us to modify the remedy for an admittedly obvious mistake. Nothing in Dozier indicates that the result there turned on the fact that counsel objected at trial.
16
2. Fuller v. United States, 132 U.S. App.D.C. 264, 286, 407 F.2d 1199, 1221 (1968) (en banc) does not seem in point to me. First, the Fuller court distinguished the situation it was dealing with (first-degree felony murder and second-degree murder) from the "inconsistency" between carnal knowledge and indecent liberties that is before us here. See 132 U.S.App.D.C. at 288, 294, 407 F.2d at 1223, 1229. Second, there was in Fuller no possibility of prejudice as to sentence, since the first-degree murder conviction carried a mandatory life sentence. Third, insofar as the Fuller rationale rested on the "Hirabayashi line of cases," id. at 297, 407 F.2d 1232, that line has been strongly undercut by Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L. Ed.2d 707 (1969).
17
3. The result in this case also seems inconsistent with Milanovich v. United States, 365 U.S. 551, 554-556, 81 S.Ct. 728, 5 L.Ed.2d 773 (1961). Mrs. Milanovich had been convicted of larceny (as an aider and abetter prior to the crime) and receiving stolen goods. The Court of Appeals, 275 F.2d 716 (4th Cir. 1960), set aside the sentence on the lesser count. The Supreme Court, 7-2 on the point, held this to be insufficient:
18
[T]here is no way of knowing whether a properly instructed jury would have found the wife guilty of larceny or of receiving (or, conceivably, of neither) * * *. It may well be, as the Court of Appeals assumed, that the jury, if given the choice, would have rendered a verdict of guilty on the larceny count, and that the trial judge would have imposed the maximum ten-year sentence on that count alone. But for a reviewing court to make those assumptions is to usurp the functions of both the jury and the sentencing judge.
19
365 U.S. at 555, 81 S.Ct. at 730 (emphasis added). As in the present case, the jury's verdicts were legally but not factually inconsistent. The Supreme Court refused to affirm either of the convictions, and instead remanded for a new trial under proper instructions. We are constrained to do the same.
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268 S.W.2d 451 (1954)
ALEXANDER
v.
KANSAS CITY PUBLIC SERVICE CO.
No. 21905.
Kansas City Court of Appeals. Missouri.
April 5, 1954.
*452 Charles L. Carr, E. E. Thompson, Sam Mandell, Popham, Thompson, Popham, Mandell & Trusty, Kansas City, for appellant.
Maurice J. O'Sullivan, John G. Killiger, Jr., Kansas City, for respondent.
BROADDUS, Judge.
This is an action for damages for personal injuries. There was a verdict and judgment in favor of plaintiff in the sum of $3,000. Defendant has appealed.
The facts are: About 7 p. m. on December 18, 1949, plaintiff, then about 42 years of age, and who had been a city ambulance driver since 1946, received an emergency call to go to 16th and Summit Streets in Kansas City, Missouri. He and a doctor got into the ambulance, a one-half ton Ford panel truck painted white, with red fenders and red trimmings with plaintiff driving. The ambulance had a red light mounted on a bracket at the front and a siren was mounted on the left front fender. The siren is operated by a foot button on the floor-board and will operate for 3 or 4 minutes after foot pressure is removed from the button. It was a nice clear evening, and at that time of the year night had fallen. As plaintiff left the General Hospital, all of the lights, including the red light, were on and the siren was sounding. He drove north to 20th Street and there turned west.
Twentieth Street, running east and west, is 77 feet in width with a raised medical strip 4 or 5 feet, wide, down its center. Main Street is 55 feet wide and has two sets of street car tracks. Walnut Street is the first street east of Main, and both run north and south. A railroad track crosses 20th Street at about the alley between Walnut and Main Streets. It is about 100 to 125 feet from the alley to the east curb of Main Street. The intersection of 20th and Main was controlled by traffic signals. All of the witnesses agreed that the intersection was well lighted.
Plaintiff was proceeding west on 20th Street in a straight line, about 4 or 5 feet north of the medial strip. When he was about at the alley between Walnut and Main, traveling 25 to 30 miles per hour, he looked to the left and saw the streetcar, with which he later collided, standing some 3 or 4 feet south of the south curbline of 20th Street. At that time the traffic light facing him was green, for east and west traffic. He then looked back toward the right or north to watch for traffic there. No traffic was moving. As he got closer to Main Street, he put his foot on the brakes and slowed down so that when he got approximately to the east curbline of Main Street, his speed was 10 to 15 miles per hour. At that time he looked to his left and saw the streetcar moving north in the intersection, its speed about 10 miles per hour, and its front end to the south of the medial strip, "not quite in the medial strip." Plaintiff shoved the brake pedal down further and tried to pull the wheel to the right to run the ambulance off to the right to miss the streetcar. The right front of the streetcar and the left front of the ambulance collided. Plaintiff's speed at the moment of the impact was between 5 and 6 miles per hour. The streetcar did not change its speed until the impact occurred. Plaintiff was thrown to the pavement and rendered unconscious.
Plaintiff's witness, Harold Todd, a cab driver, testified that he had been driving north on Main Street and stopped alongside the streetcar at 20th Street because of the red traffic light facing him; both vehicles stopped 3 or 4 feet south of the south curbline of 20th Street; that he heard the siren and saw the ambulance about two blocks to the east; that the streetcar started on the amber light; that at the time the streetcar started the ambulance was at about the alley between Main and Walnut Streets, 100 to 125 feet east of the east curbline of Main Street; that the streetcar was at about the middle of the intersection when the ambulance entered the intersection; as the witness put it, "I thought he was going to stop in the middle to let the ambulance go on by," but "he didn't;" that the streetcar was about three-fourths of the way across 20th Street when the collision *453 occurred; the ambulance was going around 25 miles per hour from the alley to the intersection; its speed slowed down to 20 miles an hour when the collision occurred; the speed of the streetcar was from 7 to 10 miles per hour; he saw no change in its speed across the intersection. Witness did not move his cab until after the collision. He then drove across the intersection to the ambulance; he saw plaintiff lying on the pavement bleeding and unconscious; witness got in the ambulance, turned off its red light and called over the radio for another ambulance.
Another witness, Irving Rowe, testified he was driving south on Main Street and had stopped north of 20th Street for the red light; that as the light turned green he heard the siren and stopped; that he did not see the ambulance and did not know whether its red light was on or not; that the streetcar approached from the south and the impact occurred; the front end of the streetcar was about 10 feet north of the medial strip at the time of the collision; he did not see the impact between the vehicles because "the streetcar was between me and the ambulance;" that plaintiff was thrown out of the ambulance by the collision, and was lying in the street about 10 feet from the ambulance.
Edward Hilton testified that on the date of the accident he was a patrolman assigned to the accident investigation unit and went to 20th and Main Streets in response to a call. He found debris 18 feet west of the east curbline of Main Street, 52 feet north of the south curbline of 20th Street, 85 feet from the point where the front end of the streetcar stopped and about 45 feet from where the ambulance stopped. The front trunk of the streetcar was to the west, off the rails, the ambulance headed northeast on the northeast corner.
Harrison Junior O'Dell, the operator of the streetcar, testified that he did not hear the siren "until I was about three-fourths of the way across the street;" that prior to that time he had not seen the ambulance approaching; that when he heard the siren the ambulance was then about 30 feet away, or about 12 feet from the east curbline of Main Street. Witness stated that at a speed of 7 miles per hour the streetcar could have been stopped within 15 to 20 feet; at 10 miles per hour within 20 to 30 feet.
Defendant's first contention is that the court erred in refusing to sustain its motion for a directed verdict at the close of all the evidence. The case was submitted solely on the humanitarian doctrine. Defendant says there was no evidence showing that the motorman could have stopped or slackened the speed of the streetcar after plaintiff's peril arose; that plaintiff was not in imminent peril until he was "approximately 26 feet east of the east rail or about 6 feet east of the east curb of Main Street." With the latter statement we do not agree.
Ordinarily, where the imminent peril zone begins is a question for the jury. Pennington v. Weis, 353 Mo. 750, 184 S.W. 2d 416; Johnson v. Hurck Delivery Service, 353 Mo. 1207, 187 S.W.2d 200 and, under the humanitarian rule, the zone of imminent peril is always widened beyond the immediate path of a moving vehicle by the obliviousness of a person approaching its path. Crews v. Kansas City Public Service Co., 341 Mo. 1090, 111 S.W.2d 54. In the latter case it was held that the danger zone could widen to more than 100 feet. In State ex rel. Thompson v. Shain, 349 Mo. 27, 34, 159 S.W.2d 582, 586, the court said: "* * * if a plaintiff is approaching the pathway of the defendant on a course which, unless he stops, will produce a collision and if he is at the time oblivious to the presence and approach of the defendant, this in itself will cause him to be in position of peril * * *."
The testimony shows that plaintiff was not aware that the streetcar had moved from its stationary position south of 20th Street until he reached the east line of Main Street. It was then too late for him to stop. Because it was the duty of the defendant's motorman to have been on the lookout, he had constructive notice of the approach of the ambulance. It was his *454 duty to act upon reasonable appearances of obliviousness at a time when such action would be effective. He had no right to assume that plaintiff would stop before going on the track. Plaintiff was operating an emergency vehicle. Its siren was sounding, its red light was flashing. Plaintiff had the right-of-way both by reason of the ordinance offered in evidence, and under the common law. Hogan v. Fleming, 218 Mo.App. 172, 183, 265 S.W. 875; Taylor v. Metropolitan St. Railroad Co., 166 Mo.App. 131, 148 S.W. 470; Green v. United Railways Co., 165 Mo.App. 14, 145 S.W. 861. In Nolan v. Kansas City Rys. Co., Mo.App., 247 S.W. 429, a case where the facts were somewhat similar to those in the case at bar, we held that a case was made for the jury under the humanitarian doctrine. And we so hold in the instant case.
Defendant's next point is that Instruction No. 2 erroneously directed the jury to allow plaintiff double damages. The Instruction authorized the jury to "allow plaintiff such sum as you find and believe from the evidence will fairly and reasonably compensate him for the injuries, if any, he sustained as a direct result of the collision mentioned in evidence, and you may further allow him such sum as you find and believe from the evidence will fairly and reasonably compensate him for such aggravation or intensification of a previous existing abnormal condition, if you find such condition to have existed and to have been intensified or aggravated." (Emphasis ours)
We think defendant's contention is well taken. It is to be seen that the first portion of the instruction authorizes the jury to compensate plaintiff for "the injuries" sustained as a "direct result" of the collision. This necessarily embraced any aggravation or intensification of any previously existing abnormal condition. In spite of that fact, the instruction goes on to say "and you may further allow" etc. Our holding finds support in the case of Ingram v. Great Lakes Pipe Line Co., Mo.App., 153 S.W.2d 547 and Murphy v. St. Louis Public Service Co., 362 Mo. 772, 244 S.W.2d 31. Plaintiff refers us to the case of Mathew v. Wabash Ry. Co., 115 Mo.App. 468, 78 S.W. 271, 81 S.W. 646. The instruction approved in that case is different from the one now before us.
Defendant's next point is that there was no evidence showing aggravation or intensification of a previously existing abnormal condition. There is no question that an abnormal condition had existed in plaintiff's neck since birth. In our opinion, from the evidence, the jury could reasonably have inferred that the disability appearing in plaintiff's neck following the accident was the result of an aggravation of that pre-existing abnormality.
Defendant's last assignment is that the verdict is excessive. This we need not discuss.
Since no error appears except such as relates to the amount of damages, only that issue should be retried. Wilson v. Kansas City Public Service Co., 254 Mo. 1032, 193 S.W.2d 5, 9, 10; Spalding v. Robertson, 357 Mo. 37, 206 S.W.2d 517, 523.
The judgment is reversed and the cause remanded with directions to retry only the issue as to the amount of damages, and then enter judgment for whatever amount may be found. It is so ordered.
All concur.
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992 A.2d 1103 (2010)
295 Conn. 825
STATE of Connecticut
v.
Edward PARKER.
No. 18432.
Supreme Court of Connecticut.
Argued January 14, 2010.
Decided April 27, 2010.
*1104 Glenn W. Falk, special public defender, with whom, on the brief, was Elliot Morrison, law student intern, for the appellant (defendant).
Leon F. Dalbec, Jr., senior assistant state's attorney, with whom, on the brief, was Scott J. Murphy, state's attorney, for the appellee (state).
*1105 ROGERS, C.J., and NORCOTT, KATZ, PALMER, VERTEFEUILLE, ZARELLA and McLACHLAN, Js.
KATZ, J.
The sole issue in this appeal is whether the trial court properly dismissed the motion of the defendant, Edward Parker, seeking to correct his sentence, which he claimed had been imposed in an illegal manner because: (1) he had not been given an opportunity to review the presentence investigation report (pre-sentence report), thereby denying him an opportunity to address inaccuracies and mistakes in the report; and (2) he had been deprived of his constitutional right to the effective assistance of counsel because his attorney failed to review the presentence report with him and neglected to bring inaccuracies and mistakes in that report to the sentencing court's attention. We conclude that the defendant's claims do not fall within the limited circumstances under which the trial court has jurisdiction to correct a sentence imposed in an illegal manner and, therefore, we affirm the trial court's decision.
The record reveals the following undisputed facts and procedural history. The defendant was charged by way of substitute information with robbery in the first degree and murder. The defendant thereafter entered a plea under the Alford doctrine[1] to the charge of murder, an offense that carries a mandatory minimum sentence of twenty-five years imprisonment. See General Statutes § § 53a-35a and 53a-54a. Under the terms of the plea agreement, the defendant was to be sentenced to a term of imprisonment of thirty years. At the commencement of the plea hearing, the defendant stated that he had something to say to the court. The trial court, Iannotti, J., informed the defendant that, after canvassing him and accepting his plea, the court would continue the case for sentencing pending receipt of the defendant's presentence report, and that the sentencing proceeding would be the proper time for the defendant to make any statements to the court. Thereafter, the court canvassed the defendant and accepted his plea. It then noted for the record that a presentence investigation was to be conducted and the case was scheduled for sentencing on a specified date. Later that same day, after realizing that it had omitted certain questions from its canvass of the defendant, the trial court brought the parties back into court and advised the defendant of additional consequences of his plea. One such consequence was that the only circumstance under which the court would permit the defendant to withdraw his plea was if the court decided, after reading the presentence report, that it had to impose a term in excess of thirty years imprisonment. The defendant acknowledged that he understood this condition.
Thereafter, a probation officer attempted to interview the defendant for purposes of the presentence report. The defendant informed the probation officer that he did not wish to discuss anything about his case because he planned to obtain different counsel, open his case and take his case to trial.
Subsequently, the trial court held the sentencing hearing. At the commencement of the hearing, the defendant's counsel, *1106 Stephen Gionfriddo, informed the court that he had been advised by the defendant and the defendant's mother, Rose Parker, that they no longer wanted him to represent the defendant.[2] The defendant affirmed that he "was not happy with [his] lawyer" and that he was "pretty close" to retaining another attorney. The court noted that it had received the defendant's presentence report, which set forth the defendant's statement to that effect to the interviewing probation officer, and again explained to the defendant the effect of his previous plea canvass and that he would be permitted to withdraw his plea only if the presentence report convinced the court to impose a sentence in excess of thirty years imprisonment. The court rejected Gionfriddo's suggestion that the defendant should be allowed to have a different attorney represent him at sentencing, noting that the defendant had agreed to a plea under which there was an agreed sentence of thirty years imprisonment, with no right to argue for a lesser sentence. The court did, however, allow the defendant and his mother to address the court, both of whom remarked upon the reasons for their dissatisfaction with Gionfriddo's representation and the resulting plea.
The court then turned to the issue of sentencing. The court permitted the state's attorney, the girlfriend and sister of the victim and Gionfriddo to make statements, each of whom expressed reasons why the thirty year sentence was appropriate. The court took a moment to read letters submitted by other members of the victim's family and then asked the defendant if he had anything else to say. The defendant turned to the victim's family and expressed remorse for their loss, but asserted that he had not killed the victim. Thereafter, the court stated that, in light of everything it had read and the facts of the case, it intended to follow the agreed upon recommendation and, accordingly, imposed a sentence of thirty years imprisonment. The defendant subsequently unsuccessfully pursued an appeal from his judgment of conviction and other postconviction relief relating to the trial court's acceptance of his guilty plea and its subsequent refusal to allow him to withdraw that plea at the sentencing proceeding despite his expressions of dissatisfaction with his counsel. See State v. Parker, 67 Conn. App. 351, 786 A.2d 1252 (2001) (appeal), cert. denied, 281 Conn. 912, 916 A.2d 54 (2007); Parker v. Commissioner of Correction, 83 Conn.App. 905, 853 A.2d 652 (2004) (habeas relief), cert. denied, 281 Conn. 912, 916 A.2d 54 (2007).[3]
In September, 2007, the defendant filed a pro se motion to correct an illegal sentence pursuant to Practice Book § 43-22.[4] Pursuant to a request therein, in accordance with this court's holding in State v. Casiano, 282 Conn. 614, 627-28, 922 A.2d 1065 (2007), the trial court, Alexander, J., appointed counsel to represent the defendant.[5] In a subsequent motion to *1107 correct filed by his counsel in December, 2007, the defendant claimed that he had been deprived of an opportunity to review and correct inaccuracies in the presentence report and had been deprived of his constitutional right to effective assistance of counsel at the sentencing proceeding. Prior to a hearing on the defendant's motion, the trial court informed the parties that it questioned whether it had jurisdiction over the defendant's claims and, therefore, it determined that the hearing would be limited to that threshold issue.
At the hearing, the court permitted the defendant to make an offer of proof as to the specific basis of his claims. Testimony from the defendant and his mother adduced the following purported facts: shortly after the court had accepted the defendant's guilty plea, the defendant had informed Gionfriddo that he was not satisfied with Gionfriddo's representation and wanted to withdraw his guilty plea; the defendant had a pending habeas petition alleging that Gionfriddo had provided ineffective assistance of counsel relating to the guilty plea; the defendant had not seen the presentence report prior to the sentencing hearing; and Gionfriddo never had informed the defendant or his mother about the presentence investigation or the defendant's right to have an attorney present at that investigation, to review the presentence report or to address the court about any inaccuracies in that report. The defendant stated that he had seen the report for the first time just days before the hearing held pursuant to § 43-22. The lone reference to the contents of the presentence report was a one word affirmative response by the defendant to his counsel's question as to whether there were "issues" in the report that he would like to have corrected. The defendant's counsel argued that the record established that, "if there were corrections to be made or things to be raised concerning the [presentence report] it was never done."
The trial court then questioned how any of these deficiencies could have prejudiced the defendant, in light of the fact that he had no right under the plea agreement to argue for a lower sentence than the thirty year prison term agreed upon under the plea agreement. The defendant's counsel argued that no prejudice was required to be shown for purposes of a motion to correct, but suggested that prejudice could arise from having an inaccurate presentence report because: (1) that report is used after sentencing for making parole decisions and assigning security risk levels; and (2) a judge retains authority to impose any sentence within the permissible legal range and therefore the sentencing court arguably could have sentenced the defendant to less than the thirty year term of imprisonment. The state's attorney responded that the plea agreement had rendered the sentencing hearing a formality and, therefore, the defendant's claim of prejudice was not actually predicated on that hearing, but on the general principle that he has a right to an accurate presentence report because misinformation could have collateral consequences in the future.
Thereafter, the trial court issued a decision dismissing the defendant's motion to correct for lack of jurisdiction. Although the court acknowledged that a sentence is "imposed in an illegal manner" within the meaning of § 43-22 if the court has violated certain rights guaranteed a defendant during sentencing, it noted that *1108 "the sentencing was an agreed recommendation which would not have resulted in a different or lower sentence." The court concluded that the defendant's claim more appropriately should be raised in a habeas proceeding "because the claimed error is not related to the conduct of the sentencing court or the state, but rather the defense attorney's obligations." This appeal followed.[6]
On appeal, the defendant claims that the court properly had jurisdiction over the motion to correct because: (1) a sentence is imposed in an illegal manner if a defendant is denied a meaningful opportunity to review and comment on the information in the presentence report; and (2) a motion to correct is the proper vehicle to remedy the claimed defects because the interests of both the state and the defendant in an accurate presentence report, for inmate classification and other immediate purposes, cannot await a lengthy habeas proceeding for correction. We conclude that the trial court properly determined that it lacked jurisdiction over the defendant's motion.
I
The defendant claims that his sentence was imposed in an illegal manner. Because the present case provides this court's first opportunity to directly address this ground for correcting a sentence under § 43-22, and because there is a split of authority in the Appellate Court as to whether trial courts have jurisdiction to correct sentences on this basis; see State v. Dixson, 93 Conn.App. 171, 176 n. 6, 888 A.2d 1088 (recognizing split of authority but concluding that this court implicitly had acknowledged jurisdiction for specific claim in case before court), cert. denied, 277 Conn. 917, 895 A.2d 790 (2006); see also State v. Koslik, 116 Conn.App. 693, 706, 977 A.2d 275 (Alvord, J., concurring), cert. denied, 293 Conn. 930, 980 A.2d 916 (2009); we begin with some background on this Practice Book provision.
"The Superior Court is a constitutional court of general jurisdiction. . . . In the absence of statutory or constitutional provisions, the limits of its jurisdiction are delineated by the common law." (Citation omitted.) State v. Luzietti, 230 Conn. 427, 431, 646 A.2d 85 (1994). "[A] generally accepted rule of the common law is that a sentence cannot be modified by the trial court . . . if the sentence was valid and execution of it has commenced.[7]State v. Pallotti, 119 Conn. 70, 74, 174 A. 74 [1934]; 15 Am.Jur. 128 § 473[and] 130 § 474; note, 168 A.L.R. 706, 707 [1947]." Kohlfuss v. Warden, 149 Conn. 692, 695, 183 A.2d 626, cert. denied, 371 U.S. 928, 83 S.Ct. 298, 9 L.Ed.2d 235 (1962). In our earliest case to address the rationale for this rule, this court noted: "The reason for this rule has been variously assigned. According to one view, the rule rests on the principle of double jeopardy. According to another view, the rule is based on the proposition that the trial court has lost jurisdiction of the case. See cases cited in note, [supra] at 168 A.L.R. 709, 710." Kohlfuss v. Warden, supra, at 695-96, 183 A.2d 626. This court since repeatedly has *1109 deemed this limitation jurisdictional. See State v. Das, 291 Conn. 356, 362, 968 A.2d 367 (2009); State v. Lawrence, 281 Conn. 147, 153, 913 A.2d 428 (2007); Cobham v. Commissioner of Correction, 258 Conn. 30, 37, 779 A.2d 80 (2001); State v. Luzietti, supra, at 431-32, 646 A.2d 85; State v. Walzer, 208 Conn. 420, 424-25, 545 A.2d 559 (1988); see also State v. Nardini, 187 Conn. 109, 123, 445 A.2d 304 (1982) ("[t]he only constitutional problem [arising from the legislative exceptions to the rule barring a court from exercising jurisdiction after execution of the sentence has begun] would be double jeopardy but even that problem would be obviated if the court exercised its jurisdiction at the initiation of the defendant").[8]
Because this jurisdictional limitation presupposes a valid sentence, it long has been understood that, if a court imposes an invalid sentence, it retains jurisdiction to substitute a valid sentence. See annot., supra, at 168 A.L.R. 719; see also In re Bonner, 151 U.S. 242, 259-60, 14 S.Ct. 323, 38 L.Ed. 149 (1894) ("where the conviction is correct . . . there does not seem to be any good reason why jurisdiction of the prisoner should not be reassumed by the court that imposed the sentence in order that its defect may be corrected"); State v. Lawrence, 91 Conn.App. 765, 772, 882 A.2d 689 (2005) ("[u]nder the common law, the court has continuing jurisdiction to correct an illegal sentence"), aff'd, State v. Lawrence, supra, 281 Conn. at 147, 913 A.2d 428; see also 24 C.J.S. 200-202, Criminal Law § 2138 (2006). As one court noted: "Where there is a conviction, accompanied by a void sentence, the court's jurisdiction of the case for the purpose of imposing a lawful sentence is not lost by the expiration of the term at which the void sentence was imposed. The case is to be regarded as pending until it is finally disposed of by the imposition of a lawful sentence. . . . The theory seems to be that where the original judgment is void, it, in form of law, accomplished nothing, there was no final disposition of the case, and the court's power was therefore unexercised.. . ." (Citation omitted; internal quotation marks omitted.) De Benque v. United States, 85 F.2d 202, 205-206 (D.C.Cir.), cert. denied, 298 U.S. 681, 56 S.Ct. 960, 80 L.Ed. 1402 (1936). In early cases, sentences subject to such correction varyingly were described as erroneous, illegal, irregular or so defective in manner of substance as to be unenforceable. 24 C.J.S., supra, at pp. 200-202. Although courts generally construed this rule to permit correction of only void, but not voidable, sentences; see id.; some courts deemed the failure to provide rights essential to the fairness of the sentencing procedure as constituting a basis for vacating the sentence. See, e.g., Williamson v. United States, 265 F.2d 236, 239 (5th Cir. 1959) (lack of defendant's presence at resentencing); McCormick v. State, 71 Neb. 505, 506, 99 N.W. 237 (1904) (failure to ask defendant whether he had anything to say as to why judgment should not be imposed, in violation of statutory mandate); Powell v. Commonwealth, 182 Va. 327, 339-40, 28 S.E.2d 687 (1944) (lack of defendant's presence at sentencing).
In Connecticut, § 43-22 sets forth the procedural mechanism for correcting invalid sentences. As this court previously has noted: "Practice Book rules do not [however] ordinarily define subject matter jurisdiction. General Statutes *1110 § 51-14(a) [provides that] . . . [s]uch rules shall not abridge, enlarge or modify any substantive right nor the jurisdiction of any of the courts. . . . Because the judiciary cannot confer jurisdiction on itself through its own rule-making power, § 43-22 is limited by the common-law rule that a trial court may not modify a sentence if the sentence was valid and its execution has begun." (Citation omitted; internal quotation marks omitted.) State v. Lawrence, supra, 281 Conn. at 155, 913 A.2d 428; see also State v. Lawrence, supra, 91 Conn.App. at 773, 882 A.2d 689 (noting that § 43-22 "merely regulate[s] the procedure by which the court's jurisdiction may be invoked; [it does] not and cannot confer jurisdiction on the court to consider matters otherwise outside the court's jurisdiction").
Although this court had not defined the parameters of an invalid sentence prior to the adoption of § 43-22, the rules of practice are consistent with the broader common-law meaning of illegality, permitting correction of both illegal sentences and sentences imposed in an illegal manner.[9] See United States v. Rico, 902 *1111 F.2d 1065, 1067 (2d Cir.1990) ("[t]he common law, and later the Federal Rules of Criminal Procedure, authorized the district court to correct illegal sentences or sentences imposed in an illegal manner"). In State v. McNellis, 15 Conn.App. 416, 443-44, 546 A.2d 292, cert. denied, 209 Conn. 809, 548 A.2d 441 (1988), the Appellate Court aptly characterized the two types of illegality as follows: "An `illegal sentence' is essentially one which either exceeds the relevant statutory maximum limits, violates a defendant's right against double jeopardy, is ambiguous, or is internally contradictory. See 8A J. Moore, Federal Practice [2d Ed.1984], para. 35.03[2], pp. 35-35 through 35-36. . . . Sentences imposed in an illegal manner have been defined as being `within the relevant statutory limits but . . . imposed in a way which violates [a] defendant's right . . . to be addressed personally at sentencing and to speak in mitigation of punishment . . . or his right to be sentenced by a judge relying on accurate information or considerations solely in the record, or his right that the government keep its plea agreement promises. . . .' [Id.], at pp. 35-36 through 35-37." This latter category reflects the fundamental proposition that "[t]he defendant has a legitimate interest in the character of the procedure which leads to the imposition of sentence even if he may have no right to object to a particular result of the sentencing process." Gardner v. Florida, 430 U.S. 349, 358, 97 S.Ct. 1197, 51 L.Ed.2d 393 (1977).
We must, however, add one qualification to the description in McNellis. That case relied on a federal treatise, which had enumerated those rights attendant to sentencing previously identified by the courts as mandated by federal due process or legal mandates under federal law intended to ensure fundamental fairness in sentencing. See United States v. Luepke, 495 F.3d 443, 447 (7th Cir.2007) (noting that, although "the right of allocution is deeply rooted in our legal tradition and an important, highly respected right, it is neither constitutional nor jurisdictional" [internal quotation marks omitted]). Therefore, these enumerated examples would not encompass rights or procedures subsequently recognized as mandated by federal due process. See, e.g., Walsh v. State, 134 P.3d 366, 373-74 (Alaska App.2006) (holding that violation of rule set forth in Apprendi v. New Jersey, 530 U.S. 466, 490, 120 S.Ct. 2348, 147 L.Ed.2d 435 [2000], as applied in Blakely v. Washington, 542 U.S. *1112 296, 301, 124 S.Ct. 2531, 159 L.Ed.2d 403 [2004], constitutes illegal sentence); Benge v. State, 945 A.2d 1099, 1102 (Del.2008) (holding that Apprendi violation constitutes sentence imposed in illegal manner). Nor would those examples encompass procedures mandated by state law that are intended to ensure fundamental fairness in sentencing, which, if not followed, could render a sentence invalid. Therefore, the examples cited in McNellis are not exhaustive and the parameters of an invalid sentence will evolve. With these principles in mind, we turn to the specific jurisdictional issue in the present case, over which we exercise plenary review. State v. Alexander, 269 Conn. 107, 112, 847 A.2d 970 (2004).
II
As we previously have noted, in his motion to correct, the defendant alleged that: (1) he had been deprived of an opportunity to review his presentence report and to address inaccuracies therein; and (2) Gionfriddo had failed to review the presentence report with him or to bring any inaccuracies in the report to the court's attention. The defendant contends that the trial court improperly failed to consider whether these allegations were sufficient to establish a jurisdictional basis for correcting a sentence imposed in an illegal manner.[10] He also contends that jurisdiction should be found because defendants must be provided a more expedient remedy than habeas proceedings to correct inaccurate information in presentence reports, even if the inaccuracies were caused by counsel error, because of the significance of such reports in decisions relating to incarceration and parole. We conclude that the trial court properly dismissed the defendant's motion.
The following general principles regarding the requirements of due process in sentencing are relevant to the jurisdictional issue at hand. Prior to the enactment of the federal and state rules relating to the disclosure of all or part of presentence reports, numerous courts had held that the *1113 failure to disclose a presentence report to the defense does not violate due process.[11] See, e.g., United States v. Alexander, 498 F.2d 934, 935 (2d Cir.1974); United States v. Jones, 473 F.2d 293, 296 (5th Cir.), cert. denied, 411 U.S. 984, 93 S.Ct. 2280, 36 L.Ed.2d 961 (1973); United States v. Dockery, 447 F.2d 1178, 1182-83 and n. 9 (D.C.Cir.), cert. denied, 404 U.S. 950, 92 S.Ct. 299, 30 L.Ed.2d 266 (1971); State v. Moore, 49 Del. 29, 31-32, 108 A.2d 675 (1954); People v. McFadden, 31 Mich.App. 512, 517, 188 N.W.2d 141 (1971); State v. Benes, 16 N.J. 389, 395-96, 108 A.2d 846 (1954); People v. Peace, 18 N.Y.2d 230, 237, 219 N.E.2d 419, 273 N.Y.S.2d 64 (1966), cert. denied, 385 U.S. 1032, 87 S.Ct. 761, 17 L.Ed.2d 679 (1967). Nonetheless, the principle had been recognized that, "where a judge explicitly relies on certain information in assessing a sentence, the defendant must be given some opportunity to rebut that information." (Internal quotation marks omitted.) United States v. Garcia, 693 F.2d 412, 415 (5th Cir.1982); accord State v. Stevens, 278 Conn. 1, 12, 895 A.2d 771 (2006) ("due process requires that the defendant be given the opportunity to contest the evidence upon which the trial court relies for sentencing purposes").
As we alluded to in our discussion in part I of this opinion, due process precludes a sentencing court from relying on materially untrue or unreliable information in imposing a sentence. See Townsend v. Burke, 334 U.S. 736, 741, 68 S.Ct. 1252, 92 L.Ed. 1690 (1948) (defendant's sentence could not stand where trial court sentenced him on basis of "assumptions concerning his criminal record which were materially untrue"); see also United States v. Tucker, 404 U.S. 443, 447, 92 S.Ct. 589, 30 L.Ed.2d 592 (1972) (same); United States v. Baylin, 696 F.2d 1030, 1040 (3d Cir.1982) ("as a matter of due *1114 process, factual matters may be considered as a basis for a sentence only if they have some minimal indicium of reliability"); United States v. Malcolm, 432 F.2d 809, 816 (2d Cir.1970) ("[m]isinformation or misunderstanding that is materially untrue regarding a prior criminal record, or material false assumptions as to any facts relevant to sentencing, renders the entire sentencing procedure invalid as a violation of due process"). To prevail on such a claim as it relates to a presentence report, "[a] defendant [cannot] . . . merely alleg[e] that his presentence report contained factual inaccuracies or inappropriate information.. . . [He] must show that the information was materially inaccurate and that the judge relied on that information."[12] (Citations omitted; emphasis in original.) United States v. Tooker, 747 F.2d 975, 978 (5th Cir.1984), cert. denied, 471 U.S. 1021, 105 S.Ct. 2032, 85 L.Ed.2d 314 (1985); accord Hili v. Sciarrotta, 140 F.3d 210, 216 (2d Cir.1998) ("[t]he mere presence of hearsay or inaccurate information in a presentence report does not constitute a denial of due process"); State v. Collette, 199 Conn. 308, 321, 507 A.2d 99 (1986) ("the mere reference to information outside of the record does not require a sentence to be set aside unless the defendant shows: [1] that the information was materially false or unreliable; and [2] that the trial court substantially relied on the information in determining the sentence"); State v. Taylor, 91 Conn.App. 788, 792-94, 882 A.2d 682 (concluding that, because motion to correct sentence sought relief in form of new or amended presentence report solely for use in hearing before sentence review board, it did not state basis for jurisdiction under § 43-22), cert. denied, 276 Conn. 928, 889 A.2d 819 (2005).
In Connecticut, these rights are protected by statute and by the rules of practice. See General Statutes § 54-91b;[13] Practice Book §§ 43-7[14] and 43-10(1);[15]State v. Arthur H., 288 Conn. *1115 582, 607, 953 A.2d 630 (2008) ("our rules of practice are intended to ensure that a defendant receives process that he is due during sentencing"). The rules of practice also set forth the obligations of defense attorneys relating to the development and use of the presentence report to protect the defendant's interests. See Practice Book §§ 43-5, 43-13 and 43-14;[16] see also State v. Harmon, 147 Conn. 125, 129, 157 A.2d 594 (1960) ("Under our practice, a defendant is not deprived of the right of challenging the statements made in the [presentence] report. His counsel is furnished, as in the instant case, with a copy of the report in order that its contents may be made known to the defendant and an opportunity afforded him to explain or controvert the statements contained in it."). Our case law establishes, however, that a failure to comply with procedures set forth under the rules of practice or the statutes relating to presentence reports does not necessarily, in and of itself, establish a violation of due process. See State v. Patterson, 236 Conn. 561, 568, 674 A.2d 416 (1996) (concluding that, despite statute and rule of practice directing trial courts to prepare presentence report, no due process right to such report); id., at 580, 674 A.2d 416 (noting that, in order to assess whether failure to comply with statute and rule of practice rises to level of due process violation, question is "whether the [s]tate [has] gone beyond issuing mere procedural guidelines and [has] used language of an unmistakably mandatory character such that the incursion on liberty would not occur absent specified substantive predicates" and whether "the deprivation be of a significant and atypical nature" [internal quotation marks omitted]).
In the present case, the defendant contends that these authorities establish that, "for a sentence to be imposed in a legal manner, the contents of the [presentence report] must be reviewed with the defendant." He further contends that the dearth of case law supporting this contention is due to the fact that "the obligation of counsel to review the [presentence report] with the defendant is carefully protected and too fundamental to be disregarded on a regular basis. . . ." Finally, *1116 the defendant asserts that "a defendant's inability to comment about a [presentence report] at sentencing because it has never been reviewed with him implicates both the right `to speak in mitigation of punishment' and `the right to be sentenced by a judge relying on accurate information or considerations solely in the record.'"
Turning to the rules of practice and the statutes on which the defendant specifically relies, we note that all but two of these provisions impose obligations on the defendant's attorney. Leaving aside for the moment the provisions relating to his attorney, the other authorities provide in relevant part that "the court shall provide the defendant or his attorney with a copy of the presentence investigation report at least twenty-four hours prior to the date set for sentencing and . . . shall hear motions addressed to the accuracy of any part of such . . . report"; (emphasis added) General Statutes § 54-91b; and that "[t]he judicial authority shall afford the parties an opportunity to be heard . . . and to explain or controvert the presentence investigation report. . . ." Practice Book § 43-10(1).
In the present case, these authorities do not provide a basis for jurisdiction. The defendant does not claim that the court failed to provide Gionfriddo with a copy of the report, and neither the General Statutes nor the rules of practice requires the sentencing court to inquire as to whether the defendant's attorney has reviewed the presentence report with him. Cf. Fed. R.Crim.P. 32(i)(1)(A) ("[a]t sentencing, the [c]ourt . . . must verify that the defendant and the defendant's attorney have read and discussed the presentence report and any addendum to the report"). The defendant never has claimed that the trial court refused to consider any motion or request to dispute facts in the presentence report, and the record is clear that none was made. The defendant also never has claimed that the sentencing court failed to afford him or his counsel an opportunity to address the court. Indeed, the record reflects that, after twice referencing the presentence report at the outset of the hearing, the sentencing court permitted the defendant, his mother and Gionfriddo each to make statements.
In his brief to this court, the defendant appears to suggest that he personally was entitled to a copy of the presentence report if Gionfriddo did not review it with him in order to bring any purported inaccuracies to the court's attention. Our statutes and rules of practice, however, like those of many other jurisdictions, do not require disclosure to both the defendant and his counsel.[17] See State v. *1117 Gibbs, 254 Conn. 578, 610, 758 A.2d 327 (2000) ("a defendant either may exercise his right to be represented by counsel . . . or his right to represent himself . . . but he has no constitutional right to do both at the same time" [citations omitted]). The defendant has pointed to no other authority demonstrating that he has such a personal right. See Kadlec v. State, 704 S.W.2d 526, 527 (Tex.App.1986) (rejecting defendant's claim as unsupported by any authority that rule directing copy of report to be provided only to defendant's counsel violated due process "because it does not guarantee [the defendant] the personal right to review the presentence report and object to its contents . . . [and] that this right, like the right to counsel and the right to [a] jury trial, should not be subject to waiver for a defendant by his attorney").
We are mindful that the accuracy of such reports undoubtedly is commensurate with their utility in sentencing. Although it may be the better practice, neither our rules of practice nor our statutes require a sentencing court to make an affirmative inquiry about the accuracy of the information in the presentence report. Indeed, the rules of practice do not obligate the sentencing court to correct all inaccurate information of which it is made aware. Rather, consistent with the constitutional concerns previously discussed, those rules direct the trial court to make corrections to the presentence report only when an inaccuracy affecting "significant information" is brought to its attention. Practice Book § 43-10(1). Therefore, it is clear that the sentencing court in the present case did not violate any of the rules of practice or statutes pertaining to presentence reports.
The defendant's claimed constitutional basis for jurisdictionthe right not to be sentenced on the basis of inaccurate information[18] is predicated entirely on his claim that the rules of practice and the statutes afford him a personal right to review, and an opportunity to seek corrections to, the presentence report, a claim that we have rejected. In his motion to correct, he did not advance an independent constitutional claim that the purported inaccuracies were materially false and that the sentencing court actually had relied on them in sentencing him.[19] Moreover, an *1118 essential fact that must be inferred from the defendant's claims is that no one alerted the court to any inaccurate information in the report. Therefore, all we are left with is the defendant's claim as it relates to the conduct of his counsel.
As one court has noted, if a trial court relies on the presentence report and "there was no opportunity afforded [the defendant] or his attorney to rebut the inaccuracies, the sentence may be invalid.. . . If, on the other hand, [the defendant's] attorney failed to avail himself of opportunities to discover the substance of the report, and to develop and present rebuttal material . . . it is possible that [the defendant] received ineffective assistance of counsel."[20] (Citations omitted; emphasis added.) Ryder v. Morris, 752 F.2d 327, 332 (8th Cir.1985). We are mindful that there is limited authority suggesting that a motion to correct can be a proper jurisdictional vehicle to resolve ineffective assistance of counsel claims solely relating to sentencing. See Barile v. Commissioner of Correction, 80 Conn.App. 787, 789-90, 837 A.2d 827 (concluding that petitioner had procedurally defaulted on habeas claim of ineffective assistance of counsel due to counsel's failure to obtain copies of victims' statements, which rendered petitioner's guilty plea not knowingly and voluntarily made, because petitioner had not raised his claim at sentencing, on direct appeal or pursuant to motion to correct illegal sentence under § 43-22), cert. denied, 268 Conn. 915, 847 A.2d 310 (2004).[21] Nonetheless, this court consistently has adhered to a rule that, absent either specific authorization to raise such claims in a forum other than a habeas court or construction of such a claim to implicate improper conduct by the trial court, the exclusive forum for adjudicating ineffective assistance of counsel claims is by way of habeas proceedings. See, e.g., State v. Arroyo, 284 Conn. 597, 643-44, 935 A.2d 975 (2007) (addressing defendant's ineffective assistance of counsel claim on appeal, but limiting focus to actions of trial court, *1119 not defendant's counsel); State v. Turner, 267 Conn. 414, 426-27, 838 A.2d 947 (addressing ineffective of assistance of counsel claim on appeal solely because "Practice Book § 39-27[4] provides an explicit exception to this general rule . . . and allows a defendant to withdraw a guilty plea after its acceptance if the `plea resulted from the denial of effective assistance of counsel"'), cert. denied, 543 U.S. 809, 125 S.Ct. 36, 160 L.Ed.2d 12 (2004).[22] There is no specific rule authorizing a defendant to bring his ineffective assistance of counsel claim by way of a motion to correct. For the reasons previously set forth herein, the conduct by Gionfriddo of which the defendant complains cannot be construed as a violation by the court of the defendant's rights at sentencing. Therefore, the trial court properly concluded that the defendant's motion to correct raised no claims over which the court had jurisdiction under § 43-22.[23]
In closing, however, we note that the defendant raises a legitimate concern about the potential adverse effect that inaccurate presentence reports could have on the conditions of an inmate's incarceration and release. We are mindful of the limitations on a defendant's ability to correct such defects through judicial relief. See State v. Dixon, 114 Conn.App. 1, 7-8, 967 A.2d 1242 (noting that case law "suggest[s] that a defendant who does not challenge his sentence has no judicial remedy, by way of direct appeal or habeas corpus, to redact inaccurate statements of fact in a [presentence] report," but leaving open possibility that "there might be some misstatements in a report that are so patently false, unreliable and harmful to the defendant's future incarceration, probation or parole that he could challenge them on direct appeal from the sentence"), cert. denied, 292 Conn. 910, 973 A.2d 108 (2009). Although this court previously has stated that "[the] sole purpose [of the presentence report] is to enable the court, within the limits fixed by statute, to impose an appropriate penalty, fitting the offender as well as the crime"; (internal quotation marks omitted) Steadwell v. Warden, 186 Conn. 153, 159, 439 A.2d 1078 (1982); our statutes and rules of practice make evident that the report will have other uses as it follows the defendant through the correctional system. See State v. Dixon, supra, at 8, 967 A.2d 1242 (noting that General Statutes § 54-91a [c] "requires that such a report accompany a defendant into that *1120 system" and that Practice Book § 43-10[1] "contemplates that a report will follow the defendant into the correctional system for appropriate use by those officials"); Board of Pardons v. Freedom of Information Commission, 19 Conn.App. 539, 543, 563 A.2d 314 ("[a] file on a prisoner-applicant for pardon is a full dossier of information such as the [presentence report]"), cert. denied, 212 Conn. 819, 565 A.2d 539 (1989). Several federal courts have acknowledged the significant concern raised by the defendant because of that fact. See, e.g., United States v. Katzin, 824 F.2d 234, 238-40 (3d Cir.1987); United States v. Petitto, 767 F.2d 607, 610-11 (9th Cir.1985), overruled in part on other grounds by United States v. Fernandez-Angulo, 897 F.2d 1514, 1517 n. 5 (9th Cir.1990); United States v. Velasquez, 748 F.2d 972, 974 (5th Cir.1984); see generally S. Fennell & W. Hall, "Due Process at Sentencing: An Empirical and Legal Analysis of the Disclosure of Presentence Reports in Federal Courts," 93 Harv. L.Rev. 1613, 1628 (1980). The federal scheme provides a mechanism for correcting such inaccuracies or indicating that the fact is disputed, even if the purported inaccuracy has no bearing on sentencing. See Fed.R.Crim.P. 32(i)(3) (providing that, when defendant alleges inaccuracies in presentence report, sentencing judge must make written findings as to allegations, or written determination that disputed matters will not be relied upon for sentencing, and must attach those findings or that determination to copy of presentence report made available to federal Bureau of Prisons); see also 28 C.F.R. § 2.19(c) ("[i]f the prisoner disputes the accuracy of the information presented, the [Parole] Commission shall resolve such dispute by the preponderance of the evidence standard; that is, the [Parole] Commission shall rely upon such information only to the extent that it represents the explanation of the facts that best accords with reason and probability").
To ameliorate in part this concern, we recommend that sentencing courts: inquire as to whether the defendant and his counsel have had an opportunity to review the presentence report; inquire as to whether there are any material inaccuracies that either of them wish to bring to the court's attention; and exercise their authority under our rules of practice and General Statutes to amend the report. See footnotes 13 and 15 of this opinion. To the extent, however, that other procedures might be implemented to allow a defendant to challenge or correct information solely relevant to correctional functions, that is a matter for the legislature, the department of correction or both.
The decision is affirmed.
In this opinion the other justices concurred.
NOTES
[1] "Under North Carolina v. Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970) . . . the defendant does not admit guilt but acknowledges that the state's evidence against him is so strong that he is prepared to accept the entry of a guilty plea nevertheless." (Internal quotation marks omitted.) State v. Fowlkes, 283 Conn. 735, 736 n. 1, 930 A.2d 644 (2007).
[2] It appears from the record that the defendant was twenty-one years old at the time he entered his guilty plea and that his mother had paid for Gionfriddo's services.
[3] In April, 2005, the defendant also filed a pro se motion to correct an illegal sentence relating to his guilty plea, which the trial court, Iannotti, J., denied in May, 2005.
[4] Practice Book § 43-22 provides: "The judicial authority may at any time correct an illegal sentence or other illegal disposition, or it may correct a sentence imposed in an illegal manner or any other disposition made in an illegal manner."
[5] In State v. Casiano, supra, 282 Conn. at 627-28, 922 A.2d 1065, this court held: "[A] defendant has a right to the appointment of counsel for the purpose of determining whether a defendant who wishes to file [a motion to correct an illegal sentence under § 43-22] has a sound basis for doing so. If appointed counsel determines that such a basis exists, the defendant also has the right to the assistance of such counsel for the purpose of preparing and filing such a motion and, thereafter, for the purpose of any direct appeal from the denial of that motion."
[6] The defendant appealed from the trial court's dismissal of his motion to the Appellate Court, and thereafter we transferred the appeal to this court pursuant to General Statutes § 51-199(c) and Practice Book § 65-1.
[7] "At common law, the trial court's jurisdiction to modify or vacate a criminal judgment was also limited to the `term' in which it had been rendered. State v. Pallotti, [119 Conn. 70, 74, 174 A. 74 (1934)]. Since our trial courts no longer sit in `terms,' that particular common law limitation no longer has vitality in this state." State v. Luzietti, supra, 230 Conn. at 432 n. 6, 646 A.2d 85.
[8] Although the legislature has the power to create exceptions to the rule barring jurisdiction over valid sentences; State v. Nardini, supra, 187 Conn. at 123, 445 A.2d 304; see State v. Lawrence, supra, 281 Conn. at 153-54, 913 A.2d 428 (setting forth limited statutory exceptions); none of these exceptions is relevant in the present case.
[9] The genesis of the distinction drawn between illegal sentences and sentences imposed in an illegal manner arises from Hill v. United States, 368 U.S. 424, 82 S.Ct. 468, 7 L.Ed.2d 417 (1962). At issue in that case was the rule of criminal procedure that permitted correction of "illegal" sentences. See Fed. R.Crim.P. 35. That rule, adopted in 1944, was a codification of the existing common law. See Hill v. United States, supra, at 430 n. 8, 82 S.Ct. 468; Duggins v. United States, 240 F.2d 479, 483 (6th Cir.1957). In Hill, a closely divided court held that rule 35 did not provide a basis for relief when the claim was that the defendant had not been permitted to address the court prior to imposition of the sentence, in violation of rule 32(a) of the Federal Rules of Criminal Procedure. Hill v. United States, supra, at 429-30, 82 S.Ct. 468. The majority in Hill determined that "the narrow function of [r]ule 35 is to permit correction at any time of an illegal sentence, not to re-examine errors occurring at the trial or other proceedings prior to the imposition of sentence. The sentence in this case was not illegal. The punishment meted out was not in excess of that prescribed by the relevant statutes, multiple terms were not imposed for the same offense, nor were the terms of the sentence itself legally or constitutionally invalid in any other respect." (Emphasis added.) Id., at 430, 82 S.Ct. 468; see United States v. Luepke, 495 F.3d 443, 447 (7th Cir.2007) (noting that, although "the right of allocution is deeply rooted in our legal tradition and an important, highly respected right, it is neither constitutional nor jurisdictional" [internal quotation marks omitted]).
The four dissenting justices in Hill had argued that "a sentence imposed in an illegal mannerwhether the amount or form of the punishment meted out constitutes an additional violation of law or notwould be recognized as an `illegal sentence' under any normal reading of the English language. And precisely this sort of common-sense understanding of the language of [r]ule 35 has prevailed generally among the lower federal courts that deal with questions of the proper interpretation and application of these [r]ules as an everyday matter. Those courts have expressed their belief that, even where the punishment imposed upon a defendant is entirely within the limits prescribed for the crime of which he was convicted, a sentence imposed in a prohibited manneras, for example, a sentence imposed upon an absent defendant in violation of the command of [r]ule 43 [of the Federal Rules of Criminal Procedure] that a defendant be present at sentencingis an `illegal sentence' subject to correction under [r]ule 35." Hill v. United States, supra, 368 U.S. at 432, 82 S.Ct. 468 (Black, J., dissenting).
In response, in 1966, rule 35 was amended to conform to the broader meaning of illegality advocated by the dissenting justices in Hill and the lower courts, permitting correction of both "illegal sentences" and "sentences imposed in an illegal manner." See United States v. Mack, 494 F.2d 1204, 1208 n. 5 (9th Cir.1974). Our rule of practice, § 43-22, adopted in 1976, was modeled on the then existing federal rule and the model rules of criminal procedure. See State v. Pina, 185 Conn. 473, 481 n. 6, 440 A.2d 962 (1981); see also State v. Lawrence, supra, 91 Conn.App. at 774 n. 10, 882 A.2d 689 ("Connecticut law can be understood to follow either the version of rule 35 as it existed between 1966 and 1984 or the position of the dissent in Hill"). Federal rule 35 subsequently was amended in 1985, and currently trial courts only have the authority to vacate, set aside or correct sentences by way of a collateral attack under 28 U.S.C. § 2255.
Although our rule of practice is modeled on the version of the federal rule in effect between 1967 and 1984, we note two substantive differences. First, that version of the federal rule permitted motions to correct illegal sentences to be brought at any time, whereas motions to correct a sentence imposed in an illegal manner had to be filed within 120 days of sentencing or exhaustion of appellate remedies. See Fed.R.Crim.P. 35(a) (1984). Under our rule, both grounds are subject to the same limits; originally, all motions to correct a sentence had to be filed within ninety days of final judgment and, after a 1983 amendment, all motions could be filed at any time. See State v. Pina, supra, 185 Conn. at 481 n. 6, 440 A.2d 962; State v. Walzer, 9 Conn.App. 365, 366, 518 A.2d 966 (1986), cert. denied, 202 Conn. 802, 519 A.2d 1207 (1987). Second, "[u]nlike the federal rules, which have been amended pursuant to congressional action; see United States v. Cook, 890 F.2d 672, 674-75 (4th Cir.1989) [superseded by statute on other grounds as stated in United States v. Fahm, 13 F.3d 447, 453-54 (1994)]; our rules of practice are promulgated by the Superior Court of this state and, as such, cannot abridge, enlarge or modify any substantive right. See General Statutes § 51-14(a)." State v. Lawrence, supra, 91 Conn.App. at 773 n. 8, 882 A.2d 689.
[10] We note that the defendant challenges the trial court's conclusion that dismissal of his motion to correct was required because "the sentencing was an agreed [upon] recommendation which would not have resulted in a different or lower sentence." It appears that the trial court determined that a sentence cannot be imposed in an illegal manner when that sentence conforms to a specified term in a plea agreement and the defendant did not retain the right to argue for any lesser term. The defendant contends that this conclusion is not compelled as a matter of law because, despite such an agreement, a sentencing court has discretion to impose a lesser sentence than the agreed upon term. See General Statutes § 51-195 (permitting application for review of sentence by "[a]ny person sentenced on one or more counts of an information to a term of imprisonment for which the total sentence of all such counts amounts to confinement for three years or more . . . except in any case in which a different sentence could not have been imposed or in any case in which the sentence or commitment imposed resulted from the court's acceptance of a plea agreement or in any case in which the sentence imposed was for a lesser term than was proposed in a plea agreement" [emphasis added]); Practice Book § 39-8 ("[i]f the judicial authority accepts the plea agreement, it shall embody in the judgment and the sentence the disposition provided for in the plea agreement or another disposition more favorable to the defendant than that provided for in the plea agreement" [emphasis added]). This argument presupposes that a sentence could be imposed in an illegal manner if a trial court has relied on a material inaccuracy in declining to exercise its discretion to impose a lesser sentence than the agreed upon term in the plea agreement. The defendant further contends that the trial court's reason relates to the merits of his claim, and not the court's jurisdiction to consider the claim. In light of our conclusion that the failure of defense counsel to review a presentence report with a defendant does not constitute a basis for jurisdiction under § 43-22, we need not address either of these contentions.
[11] In reaching this conclusion, many courts had relied on Williams v. New York, 337 U.S. 241, 69 S.Ct. 1079, 93 L.Ed. 1337 (1949), in which the United States Supreme Court held that a defendant who did not challenge the accuracy of the presentence report was not entitled under the due process clause to an opportunity to confront and cross-examine sources of information used in that report. In a subsequent plurality opinion, the Supreme Court qualified Williams in the specific context of capital cases, holding that the defendant had a due process right not to receive the death penalty on the basis of information that he had no opportunity to deny or explain. Gardner v. Florida, supra, 430 U.S. at 362, 97 S.Ct. 1197. Although there has been little need for the courts to reconsider whether due process requires disclosure, because almost every jurisdiction currently requires disclosure of the presentence report to the defense; see footnote 17 of this opinion; the few courts to have done so have reached inconsistent results. Compare United States v. Jackson, 453 F.3d 302, 305-306 (5th Cir.) (summarily stating that, "[a]t sentencing, a defendant has a protected due process right to review and object to a [presentence report], but no absolute right to present witnesses"), cert. denied, 549 U.S. 987, 127 S.Ct. 462, 166 L.Ed.2d 329 (2006), with Bridinger v. Berghuis, 429 F. Sup.2d 903, 909 (E.D.Mich.2006) ("[b]ecause there is no constitutional requirement that a court prepare or consider a presentence report, it follows that [the] petitioner has no constitutional right to review any such report"). A principal distinction may have developed between the right to see the actual report and the right to have access to the factual information therein; see State v. Galindo, 278 Neb. 599, 665, 774 N.W.2d 190 (2009) ("a court does not violate a defendant's due process rights by considering information in a presentence report when the defendant had notice and an opportunity to obtain access to the information in the report and to deny or explain the information to the sentencing authority"); as reflected in the extent of disclosure provided under the procedural rules of some states. See, e.g., Ark.Code Ann. § 5-4-102(d)(1) (2006) (requiring court to "advise the defendant or his or her counsel of the factual contents and conclusions of any presentence investigation"); Fla. R.Crim. P. 3.713 (West 2009) (conferring discretion on court whether to disclose contents of presentence report but requiring disclosure of all factual material).
[12] "A sentencing court demonstrates actual reliance on misinformation when the court gives explicit attention to it, [bases] its sentence at least in part on it, or gives specific consideration to the information before imposing sentence." (Internal quotation marks omitted.) Lechner v. Frank, 341 F.3d 635, 639 (7th Cir.2003).
[13] General Statutes § 54-91b provides: "In any case, without a showing of good cause, upon the request of the defendant or his attorney, prior to sentencing, the court shall provide the defendant or his attorney with a copy of his record of prior convictions and in any case wherein a presentence investigation is ordered, without a showing of good cause, the court shall provide the defendant or his attorney with a copy of the presentence investigation report at least twenty-four hours prior to the date set for sentencing and in both such cases shall hear motions addressed to the accuracy of any part of such record or report."
[14] Practice Book § 43-7 provides: "The presentence investigation or alternate incarceration assessment report or both shall be provided to the judicial authority, and copies thereof shall be provided to the prosecuting authority and to the defendant or his or her counsel in sufficient time for them to prepare adequately for the sentencing hearing, and in any event, no less than forty-eight hours prior to the date of the sentencing. Upon request of the defendant, the sentencing hearing shall be continued for a reasonable time if the judicial authority finds that the defendant or his or her counsel did not receive the presentence investigation or alternate incarceration assessment report or both within such time."
[15] Practice Book § 43-10 provides in relevant part: "Before imposing a sentence or making any other disposition after the acceptance of a plea of guilty or nolo contendere or upon a verdict or finding of guilty, the judicial authority shall, upon the date previously determined for sentencing, conduct a sentencing hearing as follows:
"(1) The judicial authority shall afford the parties an opportunity to be heard and, in its discretion, to present evidence on any matter relevant to the disposition, and to explain or controvert the presentence investigation report, the alternate incarceration assessment report or any other document relied upon by the judicial authority in imposing sentence. When the judicial authority finds that any significant information contained in the presentence report or alternate incarceration assessment report is inaccurate, it shall order the office of adult probation to amend all copies of any such report in its possession and in the clerk's file, and to provide both parties with an amendment containing the corrected information. . . ."
[16] Practice Book § 43-5 provides: "Defense counsel, on a prompt request, shall be notified of the time when the defendant shall be interviewed by probation officers regarding a presentence or alternate incarceration assessment report or both for the judicial authority and may be present:
"(1) To assist in answering inquiries of the probation officer;
"(2) To assist in resolving factual issues and questions;
"(3) To protect the defendant against incrimination regarding other pending indictments or investigations; and
"(4) To protect the defendant's rights with respect to an appeal of conviction."
Practice Book § 43-13 provides: "Defense counsel shall familiarize himself or herself with the contents of the presentence or alternate incarceration assessment report or both, including any evaluative summary, and any special medical or psychiatric reports pertaining to the [defendant]."
Practice Book § 43-14 provides: "Defense counsel shall bring to the attention of the judicial authority any inaccuracy in the presentence or alternate incarceration assessment report of which he or she is aware or which the defendant claims to exist."
[17] Although the federal rules require disclosure to both the defendant and his counsel; see Fed.R.Crim.P. 32(e)(2); a review of the rules of procedure and statutes of other states reveal that a majority of states follow the practice of Connecticut, requiring disclosure to a defendant's counsel or an unrepresented defendant. See, e.g., Ala. R.Crim. P. 26.3(c) (2003); Alaska R.Crim. P. 32.1(b) (2010); Ariz. R.Crim. P. 26.6(a) (2008); Ark.Code Ann. § 5-4-102(d)(1) (2006); Colo.Rev.Stat. § 16-11-102(1)(a) (2010); Del.Super. Ct. R.Crim. P. 32(c)(3) (2010); Haw.Rev.Stat. § 706-604(2) (Cum.Sup.2007); 730 Ill. Comp. Stat. Ann. 5/5-3-4 (b)(2) (West 2007); Ind.Code Ann. § 35-38-1-12(a) (LexisNexis 1998); Iowa Code Ann. § 901.4 (West Cum. Sup.2009); Kan. Stat. Ann. § 21-4605(a)(1) (2007); La.Code Crim. P. Ann. art. 877(B) (2008); Mass. R.Crim. P. 28(d)(3) (2009-2010); N.Y.Crim. P. Law § 390.50(2)(a) (McKinney Cum. Sup.2010); Pa. R.Crim. P. 703(A)(2) (West 2009); R.I. Super. Ct. R.Crim. P. 32(c)(3) (2009); Tex.Crim. P.Code Ann. art. 42.12, § 9(d) (Vernon Cum. Sup. 2009); Wash.Super. Ct.Crim. R. 7.1(a)(3) (West 2010); compare Idaho Crim. R. 32(g)(1) (2009) (providing copy to defendant and his counsel); Mich. Comp. Laws Serv. § 771.14(5) (LexisNexis Cum. Sup.2009) (same); Mont.Code Ann. § 46-18-113(1) (2007) (same); Nev.Rev.Stat. § 176.156(1) (2007) (same); N.M. Rules Ann. 5-703 (2009) (same); N.C. Gen.Stat. § 15A-1333 (b) (2009) (same); Ohio Rev.Code Ann. § 2951.03(D)(1) (West 2006) (same); Okla. Stat. Ann. tit. 22, § 982(D) (West 2003); S.D. Codified Laws § 23A-27-7 (2004) (same); Vt. R.Crim. P. 32(c)(3) (2003) (same); W. Va. R.Crim. P. 32(b)(6) (2009) (same); see also N.D. R.Crim. P. 32(c)(4) (2008-2009) (conferring discretion on court to decide whether to disclose report to either party). Other states' provisions are less clear, simply requiring that copies be provided to both parties; see Fla. R.Crim. P. 3.713 (West 2009); 49 Minn. R.Crim. P. 27.03(1) (West 2009); Tenn.Code Ann. § 40-35-208 (2006); or that a copy be made "available to the defendant through the defendant's counsel." D.C.Super. Ct. R.Crim. P. 32(b)(3) (2009).
[18] As we previously have noted, the defendant also contends that his lack of opportunity to review the presentence report implicated his right to present mitigating evidence to the court. Beyond this cursory assertion, the defendant did not address this ground independently from his claim that his inability to review the report affected his right not to have the trial court rely on inaccurate information. There also is no basis in the record to construe this as an independent claim that the defendant had a right to offer additional mitigating evidence because it is undisputed that the defendant relinquished his right to argue for a lesser sentence under the terms of his plea agreement, he refused to participate in the preparation of the presentence report, and he was afforded an opportunity to address the court prior to sentencing.
[19] As we previously have noted herein, the defendant testified at the hearing held pursuant to § 43-22 that he had seen the report for the first time days before that hearing, well after he had filed his motion to correct the sentence. The lone reference at that hearing to the purported inaccuracies occurred when the defendant responded "yes" to the following question from his counsel: "Are there issues in the presentence [report] that you would like to correct?" Therefore, there was not even a basis on which to infer that the purported inaccuracies are of a nature that would be relevant to sentencing considerations. Cf. Ryder v. Morris, 752 F.2d 327, 332 (8th Cir.1985) (concluding that, although "[the defendant] had failed to make any showing the sentencing judge had relied on the [presentence] report . . . the allegation that [the defendant], in effect, was responsible for the death of his wife, was serious enough to be at least rebuttably presumed to have affected the trial judge's sentencing decision" [citation omitted]).
[20] At the time the United States Supreme Court recognized the right to counsel in sentencing proceedings, it specifically linked that right to a defendant's right not to be sentenced on the basis of a materially false or inaccurate court record. See Mempa v. Rhay, 389 U.S. 128, 134, 88 S.Ct. 254, 19 L.Ed.2d 336 (1967) ("[i]n particular, Townsend v. Burke, supra, [334 U.S. at 736, 68 S.Ct. 1252] illustrates the critical nature of sentencing in a criminal case and might well be considered to support by itself a holding that the right to counsel applies at sentencing").
[21] In Barile v. Commissioner of Correction, supra, 80 Conn.App. at 789-90, 837 A.2d 827, the Appellate Court cited Cobham v. Commissioner of Correction, supra, 258 Conn. at 39, 779 A.2d 80, as authority for the defendant to file his § 43-22 motion to correct. Although, in Cobham, this court broadly stated that, "before seeking to correct an illegal sentence in the habeas court, a defendant either must raise the issue on direct appeal or file a motion pursuant to § 43-22 with the trial court"; id., at 38, 779 A.2d 80; the claim in that case directly related to the conduct of the court and did not involve ineffective assistance of counsel.
[22] We are mindful that the reason most often cited in our case law holding that ineffective assistance of counsel claims must be brought by way of a habeas petition is that such claims generally require an evidentiary hearing and fact finding, which are functions that appellate courts do not exercise. See State v. Beavers, 290 Conn. 386, 412, 963 A.2d 956 (2009); State v. Greene, 274 Conn. 134, 151, 874 A.2d 750 (2005), cert. denied, 548 U.S. 926, 126 S.Ct. 2981, 165 L.Ed.2d 988 (2006); State v. Turner, supra, 267 Conn. at 426-27, 838 A.2d 947; State v. Munoz, 233 Conn. 106, 131 n. 16, 659 A.2d 683 (1995). By declining to allow ineffective assistance of counsel claims to be adjudicated pursuant to a motion to correct an illegal sentence, we do not intend to state an opinion as to whether trial courts may consider evidence outside the record for purposes of § 43-22 motions, as that issue has not been briefed and is not before us in this case.
[23] The defendant's reliance on State v. Casiano, supra, 282 Conn. at 614, 922 A.2d 1065, for a contrary conclusion is misplaced. Although the motion to correct in that case had alleged that the defendant's plea was not knowing and voluntary because his trial counsel erroneously had advised him about the maximum sentence that he would serve; id., at 617, 922 A.2d 1065; we made clear that the issue before this court was unrelated to the merits of that claim and that we "express[ed] no opinion as to whether his motion [was] proper under . . . § 43-22. . . ." Id., at 620 n. 11, 922 A.2d 1065; see footnote 5 of this opinion.
| {
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985 F.2d 277
Miles A. MATHIS, JR., Theresa Mathis, Plaintiffs-Appellants,v.BOWATER INCORPORATED, Defendant-Appellee.
Nos. 91-6469, 92-5028.
United States Court of Appeals,Sixth Circuit.
Argued Sept. 25, 1992.Decided Feb. 8, 1993.
Hubert E. Hamilton, III (argued and briefed), Bennett & Hamilton, Rossville, GA, for plaintiffs-appellants.
William A. Simms (argued and briefed), Samuel C. Doak (briefed), Arnett, Draper & Hagood, Knoxville, TN, for defendant-appellee.
Before: KEITH, NELSON and RYAN, Circuit Judges.
KEITH, Circuit Judge.
1
Miles and Theresa Mathis, plaintiffs-appellants appeal from the district court's October 4, 1991 order in favor of defendant-appellee, Bowater Incorporated. The court granted Bowater's motion for summary judgment. For the reasons set forth below, we AFFIRM.I.
2
Bowater, which owns and operates a paper mill in Calhoun, Tennessee, undertook the "Kraft Mill Project" ("the Project"), to renovate the facilities at the mill. As part of this process, Bowater contracted with several companies for construction, renovation and design services. In order to coordinate the services provided by these various companies, Bowater instructed a group of its employees to oversee the work.
3
On April 5, 1988, after work began at the preliminary site, Bowater entered into a contract with Bechtel Construction Company to provide various construction services for the Project. Pursuant to this contract, Bowater retained control of the work schedule as well as other aspects of the construction and renovation process. For example, Bowater retained the right to specify and reject subcontractors hired by Bechtel to complete portions of the Project. In turn, Bechtel retained the right to enter into separate agreements with various unions for the supply of skilled workers for the Project.
4
On July 26, 1989, the appellant, an employee of Bechtel, was struck by a log ejected from a conveyor while he was working on the Project. Appellant suffered permanent injury to his back. He was laid off in January, 1990 after being placed on a restricted work status for several months. Bechtel provided appellant medical treatment pursuant to Tennessee's Workers' Compensation Law. On May 31, 1990, appellant settled his worker's compensation claims with Bechtel's insurance carrier.
5
On June 5, 1990, appellants, Miles and Theresa Mathis, filed suit in the United States District Court for the Eastern District of Tennessee against Bowater to recover for injuries suffered by Mr. Mathis ("Mathis"). Mathis was struck by a log while working for his employer, Bechtel Construction Company, on Bowater's premises. Bowater raised a number of defenses in its answer to the complaint, including contributory negligence, assumption of the risk, intervening cause, and exclusive remedy as a bar to appellant's action.
6
Subsequently, various interrogatories were exchanged by the parties. The case was scheduled for trial on September 3, 1991. On August 5, 1991, Bowater filed a motion for summary judgment, arguing they were in fact the principal contractor of the Project, and therefore a statutory employer. Under Tennessee Workers' Compensation Law, a statutory employer is responsible for providing worker's compensation insurance but immune to tort liability. On September 3, 1991, the district court granted Bowater's motion for summary judgment. From that order, plaintiffs filed two separate notices of appeal, which have been consolidated by this Court.
II.
7
To grant summary judgment, a court must determine that "there is no issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. This Court reviews the district court's grant of summary judgment for Bowater de novo. White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943 (6th Cir.1990). This Court must view all facts and inferences in the light most favorable to the nonmoving party, and the moving party shoulders the burden of showing no genuine issue of material fact exists. The nonmoving party, however, may not rest on its pleadings, but must come forward with probative evidence which would make it necessary to resolve the factual dispute at trial. Id. at 943-44. See also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
8
Jurisdiction in this case is based upon diversity, therefore the district court's application of Tennessee Workers' Compensation Law was proper. See Tennessee River Pulp and Paper Co., v. Eichleay Corporation, 708 F.2d 1055, 1057-58 (6th Cir.1983). The district court found, and the appellant does not dispute, that the Tennessee Workers' Compensation Law, T.C.A. § 50-6-108 (Supp.1990) requires an employer to compensate an employee for injuries he sustains, even if those injuries are not a result of the employer's negligence. In turn, the employee is barred from recovering damages from his employer for injuries resulting from his employer's negligence making worker's compensation benefits the employee's exclusive remedy. Posey v. Union Carbide Corp. 705 F.2d 833, 834 (6th Cir.1983).
9
The responsibility for workers' compensation benefits and immunity to tort liability is expanded beyond the direct employer, under T.C.A. § 50-6-113. Specifically, the statute states:
10
Liability of principal, intermediate contractor or subcontractor.--(a) A principal, or intermediate contractor, or subcontractor shall be liable for compensation to any employee injured while in the employ of any of his subcontractors and engaged upon the subject matter of the contract to the same extent as the immediate employer.
11
. . . . .
12
(c) Every claim for compensation under this section shall be in the first instance presented to and instituted against the immediate employer, but such proceedings shall not constitute a waiver of the employee's rights to recover compensation under this chapter from the principle or intermediate contractor, provided that the collection of full compensation from one (1) employer shall bar recovery by the employee against any others, nor shall he collect from all a total compensation in excess of the amount for which any of said contractors is liable.
13
(d) This section shall apply only in cases where the injury occurred on, in, or about the premises on which the principal contractor has undertaken to execute work or which are otherwise under his control and management.
14
Under T.C.A. § 50-6-113, if a subcontractor's employee is injured on premises under the principal contractor's control, the principal contractor is liable to that employee to the same extent as the subcontractor. That principal contractor, however, is immune, to tort actions of that injured employee, to the same extent as the subcontractor.
15
To determine whether an owner is acting as its own principal contractor, in Stratton v. United Inter-Mountain Telephone, 695 S.W.2d 947 (Tenn.1985), the Tennessee Supreme Court listed the following factors for consideration:
16
(1) right to control the conduct of work; (2) right of termination, (3) method of payment; (4) whether alleged employee furnishes his own helpers (5) whether alleged employee furnishes his own tools; and (6) whether one is doing 'work for another'.
17
Stratton, 695 S.W.2d at 950. The Stratton court further explained that, while no single issue is dispositive, the "right to control the work has been repeatedly emphasized". Id. In evaluating whether an owner has the right to control, the court stated "the test is not whether the right to control was exercised but merely whether this right to control existed". Id.
18
In addition to the right to control, the Tennessee Supreme Court in Acklie v. Carrier, 785 S.W.2d 355 (Tenn.1990), cited other aspects of being a principal contractor. In that case, the court found an owner to be its own principal contractor because:
19
[The Company] selected the subcontractors, coordinated the work, made changes periodically in the plans and had work redone, and its own employees performed [many of the necessary] tasks.
20
Acklie, 785 S.W.2d at 358.
21
Furthermore, this Court also used the above listed factors in Ronald Lyness v. Bowater, Inc. 941 F.2d 1210 (6th Cir.1991) (unpublished per curiam). The Lyness panel was faced with similar facts and held that Bowater was its own principal contractor, where Mr. Lyness' direct employer was a "resident contractor" for Bowater.
22
In the case at bar, the district court found that a principal contractor/subcontractor relationship existed between Bowater and Bechtel, respectively. The district court based its finding primarily on: the contract between Bechtel and Bowater, and the affidavit and deposition of Edwin N. Scott, the manager of the Project. The appellant does not dispute the veracity of the information in any of these documents. Instead, appellant maintains that in spite of the contract and testimony of Mr. Scott, Bowater was simply the owner and not the principal contractor. Review of the contract, as well as other evidence submitted, reveals that under the Tennessee Workers' Compensation Law, Bowater was the principal contractor. As noted above, the court in Stratton emphasized that an owner's retention of the right to control the work to be done is a strong indication that the owner was acting as its own principal contractor. Stratton at 950. Provisions within the "Contract for Procurement and Construction Services"1 between Bowater and Bechtel indicate that Bowater retained a great deal of control over the Project.
23
In addition to Bowater's high level of control over the Project, Article XI of the contract further indicates that Bowater was acting as the principal contractor. For example, by requiring Bechtel to maintain workers' compensation insurance, Bowater was protecting itself against a claim by an injured Bechtel employee, like Mathis. The only way that Bowater would be liable to the Bechtel employee's workers' compensation claim is if Bowater were the principal contractor, and Bechtel were a subcontractor.
24
As noted above, Edwin N. Scott was the manager for the Project. Mr. Scott's testimony, which is uncontested by the appellant, indicates that Bowater was acting as its own principal contractor. Specifically, Mr. Scott testified that:
25
1. Preliminary work was done by other contractors before Bowater contracted with Bechtel, including site preparation, removal of a parking lot and relocation of water and electrical lines.
26
2. Bowater assisted Bechtel in the selection of its subcontractors, approving some and rejecting others.
27
3. Bowater was integral in the coordination and planning of the Project, before, during and after Bechtel was involved.
28
4. Bowater was involved in the purchasing of tools and equipment.
29
5. After Bechtel ceased working on the Project, Bowater directly hired other contractors to complete the remaining work; also, Bowater's own employees eventually assisted in the completion of the Project.
30
This is in direct accord with the criteria listed in Acklie.
III.
31
Under the Tennessee Workers' Compensation Law, Bowater is immune from tort liability, as a principal contractor. A de novo review of the evidence reveals that Bowater was acting as its own principal contractor and Bechtel was one of its subcontractors. In light of the strict correlation between the facts of this case and the standards set forth for determining whether an owner is its own principal contractor, the district court did not err by granting summary judgment to Bowater. Bowater was acting as a principal contractor, and is therefore immune to tort liability, under the Tennessee Worker's Compensation Law. For the forgoing reasons, we AFFIRM the summary judgment dismissal of the Honorable James H. Jarvis, United States District Judge for the Eastern District of Tennessee.
32
RYAN, Circuit Judge, dissenting.
33
I disagree with the majority's conclusion that Bowater Incorporated is a statutory employer entitled to the exclusive remedy provisions of Tennessee workers' compensation law. I therefore respectfully dissent.
34
The policy behind Tenn.Code Ann. § 50-6-113 (1992) is
35
to insure as far as possible to all workers payment of benefits when they [are] injured in the course of their employment.... The section passes coverage from employers who might not have coverage to intermediate or principal contractors who do have coverage. This prevents employers from contracting out normal work simply to avoid liability for worker's compensation.
36
Stratton v. United Inter-Mountain Tel. Co., 695 S.W.2d 947, 951 (Tenn.1985) (citations omitted). As an initial matter, I note that the statutory policy, as framed by Tennessee courts, is not implicated in this case: Bechtel Construction, a huge international construction company, is not the type of irresponsible employer not likely to carry worker's compensation insurance. Instead, as the majority opinion notes, the contract between Bechtel and Bowater specifically required Bechtel to obtain workers' compensation insurance and, in fact, certain of the plaintiff's costs incurred as a result of the accident were covered by that policy. Of course, the mere fact that the policy underlying the statute is not implicated here would not alter the outcome if the language of the statute embraced the facts of the case. My reading of the two principal Tennessee supreme court cases addressing this issue, Stratton, 695 S.W.2d at 947, and Acklie v. Carrier, 785 S.W.2d 355 (Tenn.1990), as well as a significant number of published and unpublished Tennessee courts of appeal decisions, satisfies me that section 50-6-113 does not embrace the facts of this case.
37
As the majority opinion notes, Stratton cited six indicia of control relevant to the determination whether an owner is also a principal contractor. Stratton, 695 S.W.2d at 950. Tennessee courts utilize these factors in an attempt to categorize the relationship between the owner of the premises and the employer of the injured employee--here, Bowater and Bechtel, respectively. The Tennessee courts employ an analogy between employer/employee and customer/independent contractor relationships: if the relationship between Bowater and Bechtel is most akin to a relationship between an employer and employee, Bowater should be deemed a principal contractor; if, alternatively, it is more like the relationship of a customer and an independent contractor, Bowater should be deemed a mere owner, and not a principal contractor. See id. at 951; see also Manis v. American Cable Sys. of Tennessee, 640 F.Supp. 427, 430 (E.D.Tenn.1986). The majority opinion lists the six Stratton indicia of control and concludes that because Bowater meets many of these criteria, it must be a principal contractor under Tennessee law. Closer scrutiny of the facts of this case reveal, however, that certain elements of apparent control were only necessary by-products of the exigencies peculiar to administering a cost-plus contract, and to having major construction work done at a site where Bowater's normal business was in continuous operation. That is, Bowater exercised some discretion over selection of subcontractors by Bechtel not in order to supervise the quality of their construction work but only in order to reduce prices, because the contract was cost-plus. Bowater exercised some discretion over the daily schedule of operations not because they had a particular construction agenda but only to ensure that Bechtel's and the subcontractor's work would not interfere with Bowater's regular business operations. The control exercised by the owner/principal contractor in Stratton and Acklie was directly related to the construction work itself, and it is for that reason that the relationship between the owner and the employer of the injured employee was deemed to be most like an employer/employee relationship. See Acklie, 785 S.W.2d at 358; Stratton, 695 S.W.2d at 952-53. Here, the relationship between Bowater and Bechtel was much more akin to a customer and an independent contractor, or, as one court reasoned, to a "homeowner's hiring someone to paint his house." Fugunt v. TVA, 545 F.Supp. 977, 980 (E.D.Tenn.1982).
38
I believe the majority erroneously focuses on the superficial aspects of the contract between Bowater and Bechtel, rather than inquiring into the meaning of the terms that indicate control by Bowater. The control exercised here was control only over the bottom-line and the coordination of Bowater's business with Bechtel's construction.1 It was not the kind of control on which Tennessee courts have predicated a determination that an owner is also a principal contractor: that is, control over the construction.
39
In addition, there are two important distinctions between this case and the precedents relied on in the majority opinion. In Stratton and Acklie, as well as in many other Tennessee cases, an important factor in the court's determination was that the contractor hired by the owner was hired to perform the same type of work the owner's employees usually performed. The court in Stratton discussed "typical independent contractor situations: an employer subcontracts work that is totally different from his regular line of work and therefore cannot be adequately performed by his own employees." Id. at 952. This situation was contrasted with the situation before the court, where the plaintiff "performed work usually performed by regular Telephone Company employees." Id.; see also Manis, 640 F.Supp. at 429; Fugunt, 545 F.Supp. at 980; Dixson v. Union Carbide Corp., No. 1127, slip. op., 1987 WL 28389 (Tenn.Ct.App. Dec. 23, 1987); Vick v. Nashville Bridge Co., No. 87-131-II, slip op., 1987 WL 18955 (Tenn.Ct.App. Oct. 28, 1987); Acklie, 785 S.W.2d at 358; Carpenter v. Hooker Chem. & Plastics, 553 S.W.2d 356, 357 (Tenn.Ct.App.1977).
40
Here, it is undisputed that Bowater's employees did not customarily engage in the type of construction and construction administration that Bechtel was hired to perform, and that Bowater and Bechtel employees were not working side-by-side on this project. Bowater hired Bechtel to oversee the construction operations that Bowater was not equipped to oversee; thus, Bowater was not acting as a principal contractor when it hired Bechtel.
41
Furthermore, in none of the Tennessee cases that determined that the owner occupied the dual role of owner and principal contractor was there also an entity that filled the role that Bechtel filled here. Anyone looking at the functions performed by Bechtel under its contract with Bowater would describe Bechtel as the principal, or general, contractor. Tennessee case law has never held that there can be two principal contractors in a given case. This again strongly indicates to me that Bowater was not occupying the role of a principal contractor, as that role has been understood by the Tennessee courts.
42
I would conclude that Bowater was an owner, and nothing more, under Tennessee law. I believe that the plaintiff is entitled to sue Bowater in tort for the injuries he sustained while working on Bowater's premises, because Bowater was not his statutory employer, and that the exclusive remedy provisions of Tennessee workers' compensation law therefore are not applicable here. Accordingly, I respectfully dissent.
1
For example, according to appellee's brief:
Article II, Section B: Bechtel acted as Bowater's agent for procuring materials, equipment, supplies and related services for construction of the project, not specified to be furnished by or on behalf of others; Bowater's approval was required regarding general terms and conditions, including warranties to be incorporated in all bid packages, subcontracts, contracts and purchase orders entered into by Bechtel.
Article II, Section C: Bechtel was required to furnish construction equipment and tools but had to consult Bowater, whose agreement was required with regard to the source of the equipment and tools and whether they should be acquired by purchase, lease or rental.
Article II, Section D: Bowater furnished field office space, field clerical employees, utilities, communications, reproduction services, supplies, and related materials and services as necessary for the proper performance and start up of testing services.
Article II. Section G: Bechtel was required to prepare for Bowater's approval a schedule for the performance of the work.
Article IV: Bowater appointed three of its employees to sit on a review board with three Bechtel employees for the purpose of determining what, if any, incentive pay Bechtel should receive under the parties' contract.
Article VI: Bowater had the right to require or approve changes within the general scope of the project of the work.
Article XI: Bechtel was required to maintain in full force and effect worker's compensation insurance covering Bechtel employees as required by law and employer's liability insurance.
1
See factors considered in footnote 1 of the majority opinion
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FILED
NOT FOR PUBLICATION MAY 17 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 10-30379
Plaintiff - Appellee, D.C. No. 3:09-cr-00119-BR-1
v.
MEMORANDUM *
RAFAEL ROMERO-DUARTE,
Defendant - Appellant.
Appeal from the United States District Court
for the District of Oregon
Anna J. Brown, District Judge, Presiding
Argued and Submitted May 8, 2012
Portland, Oregon
Before: TASHIMA, TALLMAN, and IKUTA, Circuit Judges.
Rafael Romero-Duarte was convicted of a conspiracy count and three
substantive counts of distribution of or possession with intent to distribute
methamphetamine. He argues that the affidavit supporting the TT1 wiretap
application failed to establish necessity and that the district court erred in its factual
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
determination of relevant drug quantity. We have jurisdiction over this matter
pursuant to 28 U.S.C. § 1291. The facts of this case are known to the parties. We
need not repeat them here.
We employ a two-step review when a defendant challenges the necessity of
a wiretap. First, we review de novo compliance with the wiretap statute and ask
whether the affidavit contained “a full and complete statement as to whether or not
other investigative procedures have been tried and failed or why they reasonably
appear to be unlikely to succeed if tried or to be too dangerous.” 18 U.S.C.
§ 2518(1)(c); United States v. Gonzalez, Inc., 412 F.3d 1102, 1111–12 (9th Cir.
2005). Second, we review for abuse of discretion the issuing court’s decision to
grant the wiretap based on necessity. Gonzalez, Inc., 412 F.3d at 1111–12.
We hold the affidavit was sufficient and that the issuing court properly
authorized the wiretap. In his 77-page affidavit, DEA Special Agent (SA) Macrina
recounted the efforts of the 16-month investigation and identified its goal of
dismantling the entire international drug trafficking organization (DTO), including
its source of supply and all of its co-conspirators. SA Macrina outlined in
exhaustive detail which investigative techniques had been used and why they were
ultimately of limited utility, and those which had not and why they would be
fruitless or dangerous. The investigation’s thorough use of electronic pen registers
2
and trap and trace devices prior to the wiretap application is a strong indicator of
necessity. See United States v. Garcia-Villalba, 585 F.3d 1223, 1228 (9th Cir.
2009). We are also mindful of the additional leeway granted the government in
conspiracy investigations, recognizing that conspiracies must be eliminated root
and branch to put an end to their criminal activity. See United States v. McGuire,
307 F.3d 1192, 1197–98 (9th Cir. 2002).
Romero-Duarte finds fault with the investigation’s use of informants, but is
unable to explain how further use of them could produce evidence of guilt beyond
a reasonable doubt sufficient to bring down the entire conspiracy and all of its
members, including its source of supply. See Garcia-Villalba, 585 F.3d at 1228;
see also McGuire, 307 F.3d at 1197–98. In addition, even if a technique achieves
some limited success, a wiretap may still be necessary. United States v. Bennett,
219 F.3d 1117, 1122 (9th Cir. 2000). SA Macrina persuasively demonstrated in
the affidavit that investigators could never have extirpated this DTO without the
assistance of a wiretap.
Finally, the district court did not err in adopting the presentence report and
its approximation of relevant drug quantity. Because Romero-Duarte failed to
make a specific objection to computation of the base offense level, we review the
approximation for plain error. United States v. Santiago, 466 F.3d 801, 803 (9th
3
Cir. 2006). There was none. All of the figures were adequately supported by the
record.
AFFIRMED.
4
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25 Cal.3d 754 (1979)
602 P.2d 396
159 Cal. Rptr. 696
THE PEOPLE, Plaintiff and Respondent,
v.
MICHAEL ALAN HARVEY, Defendant and Appellant.
Docket No. Crim 21022.
Supreme Court of California.
November 27, 1979.
*756 COUNSEL
Appellate Defenders, Inc., under appointment by the Court of Appeal, J. Perry Langford and Handy Horiye for Defendant and Appellant.
Evelle J. Younger, George Deukmejian, Attorneys General, Jack R. Winkler, Robert H. Philibasian, Chief Assistant Attorneys General, Daniel J. Kremer, Assistant Attorney General, Karl J. Phaler, Alan S. Meth and Michael D. Wellington, Deputy Attorneys General, for Plaintiff and Respondent.
*757 OPINION
RICHARDSON, J.
Defendant Michael Alan Harvey appeals from a judgment entered following his plea of guilty to two counts of robbery (Pen. Code, § 211) with use of a firearm. (All further statutory references are to the Penal Code unless otherwise cited.) The plea was part of a bargain under which a third count, charging an unrelated robbery, was dismissed. He was sentenced to state prison for an aggregate term of seven years and eight months. Calculation of that term included four elements: (1) a four-year "upper" term for the robbery charged in count one (see former § 213); (2) a two-year enhancement of count one for using a firearm during that robbery (§ 12022.5); (3) a one-year consecutive term for the robbery charged in count two (which term consists of one-third of the three-year "middle" term for robbery (see § 1170.1, subd. (a)); and (4) an eight-month enhancement of count two for firearm use (which term consists of one-third of the two-year enhancement for firearm use (see ibid.)).
Defendant is critical of the duration of his sentence, contending that the sentencing court improperly considered and relied upon the facts underlying the third, dismissed robbery count in selecting the four-year upper term as an appropriate punishment for count one (element one). A similar error, so he argues, resulted in the imposition of a consecutive sentence for the term under count two (element three). Finally, defendant asserts that the eight-month enhancement of the punishment for count two by reason of firearm use (element four) violated the provisions of section 1170.1. We will conclude that two of defendant's three contentions have merit and that while the judgments of conviction are affirmed the cause must be remanded for resentencing.
1. (1) Aggravation of Sentence in Reliance on Dismissed Count
a) Choice of the upper term for count one. The record indicates that, in sentencing, the trial court selected the upper, four-year term for the robbery under count one because of certain "aggravation aspects" surrounding defendant's offenses, including the robbery charged in the dismissed count three. The sentencing court expressly relied upon a probation report which contained an extensive discussion of the circumstances of the foregoing robbery. In passing sentence, the court stated that "Now the Probation Department ... brought out the aggravation aspect ... under [sentencing rule] 421(a)1 wherein they indicate that he pointed a gun, a loaded revolver, at victims in all three robberies. *758 The victims claim that he said quote, `Don't get your gun or [press] any alarms or I'll blow you away,' unquote.... Under [rule] 421(a)10, over $600 in cash was stolen...." (Italics added.) As defendant correctly notes, the threatening statement quoted by the sentencing court was made to the victim of the third, dismissed robbery. Also, the bulk of the $600 referred to was taken in the third robbery.
Rule 421, California Rules of Court, describes the "Circumstances in Aggravation" which a sentencing judge may consider in imposing punishment. Rule 421 (a) includes "Facts relating to the crime." The People, quite fairly, concede that evidence regarding a dismissed offense, such as the robbery charged in count three, could not properly be considered as such "facts relating to the crime" because the rule plainly applies only to those aggravating circumstances which underlie the offense or offenses for which sentence is imposed, and not to any uncharged or dismissed offenses. The People do assert, however, that evidence regarding such offenses could be relevant and admissible to show pertinent "facts relating to the defendant" under rule 421(b), which include defendant's "pattern of violent conduct" (rule 421 (b) (1); cf. People v. Cheatham (1979) 23 Cal.3d 829, 834-835 [153 Cal. Rptr. 585, 591 P.2d 1237]).
In our view, under the circumstances of this case, it would be improper and unfair to permit the sentencing court to consider any of the facts underlying the dismissed count three for purposes of aggravating or enhancing defendant's sentence. Count three was dismissed in consideration of defendant's agreement to plead guilty to counts one and two. Implicit in such a plea bargain, we think, is the understanding (in the absence of any contrary agreement) that defendant will suffer no adverse sentencing consequences by reason of the facts underlying, and solely pertaining to, the dismissed count. The People have cited no contrary authorities. Although People v. Guevara (1979) 88 Cal. App.3d 86, 92-94 [151 Cal. Rptr. 511], upheld the authority of the sentencing court to take into account certain facts underlying charges dismissed pursuant to a plea bargain, those facts were also transactionally related to the offense to which defendant pleaded guilty. As the Guevara court carefully explained, "The plea bargain does not, expressly or by implication, preclude the sentencing court from reviewing all the circumstances relating to Guevara's admitted offenses to the legislatively mandated end that a term, lower, middle or upper, be imposed on Guevara commensurate with the gravity of his crime." (P. 94, italics in original.) In contrast, as we have noted, the present case involved a robbery *759 alleged in dismissed count three which was unrelated to, and wholly separate from, the admitted robberies charged in counts one and two.
We conclude that the cause should be remanded for resentencing on count one.
b) (2) Choice of consecutive sentence for count two. The record fails to indicate, however, that in choosing to impose a consecutive sentence the court improperly relied upon any evidence underlying dismissed count three. Under rule 425(a) of the Rules of Court, the sentencing court in determining whether to impose consecutive or concurrent sentences may consider "Facts relating to the crimes, including whether or not: [¶] (1) The crimes and their objectives were predominantly independent of each other. [¶] (2) The crimes involved separate acts of violence or threats of violence. [¶] (3) The crimes were committed at different times or separate places, rather than being committed so closely in time and place as to indicate a single period of aberrant behavior. [¶] (4) Any of the crimes involved multiple victims. [¶] (5) The convictions for which sentences are to be imposed are numerous." The record demonstrates that in selecting consecutive sentences the court correctly applied the sentencing factors described in subdivision (a), focusing only upon those two robberies of which defendant has been convicted. We conclude that the court's references to "the crimes" committed by defendant were limited to the two robberies underlying counts one and two, and that imposition of the consecutive sentence in question was entirely proper.
2. (3) Enhancement of Sentence in Reliance on Firearm Use
As noted, defendant's use of a firearm in connection with the two robberies under counts one and two accounted for a two-year enhancement of count one, and an eight-month enhancement of count two. Defendant acknowledges that the enhancement of count one was appropriate under section 1170.1, but he challenges the propriety of the enhancement of count two under that section.
Section 1170.1 relates to calculation of the term of imprisonment for offenses ordered to run consecutively. Subdivision (a) of this section provides in pertinent part "... the aggregate term of imprisonment ... shall be the sum of the principal term, [and] the subordinate term.... The principal term shall consist of the greatest term of imprisonment *760 imposed by the court for any of the crimes, including any enhancements imposed pursuant to Section 12022, 12022.5, 12022.6, or 12022.7. The subordinate term for each consecutive offense shall consist of one-third of the middle term of imprisonment prescribed for each other felony conviction for which a consecutive term of imprisonment is imposed, and shall exclude any enhancements when the consecutive offense is not listed in subdivision (c) of Section 667.5, but shall include one-third of any enhancement imposed pursuant to Section 12022, 12022.5 or 12022.7 when the consecutive offense is listed in subdivision (c) of Section 667.5." (Italics added.)
Defendant contends that firearm use is not an "offense" which is "listed" in section 667.5, subdivision (c), and that accordingly the eight months' enhancement for firearm use was improper. Section 667.5 pertains to the subject of enhancement of sentence by reason of prior prison terms imposed on a defendant. Subdivision (a) of the section provides for specified enhanced terms where the offense was one of the "violent felonies" specified in subdivision (c) thereof. That subdivision provides, in pertinent part, "For the purpose of this section, `violent felony' shall mean any of the following: (1) Murder or voluntary manslaughter. (2) Mayhem. (3) Rape as defined in subdivisions (2) and (3) of Section 261. (4) Sodomy by force, violence, duress, menace, or threat of great bodily harm. (5) Oral copulation by force, violence, duress, menace, or threat of great bodily harm. (6) Lewd acts on a child under 14 as defined in Section 288. (7) Any felony punishable by death or imprisonment in the state prison for life. (8) Any other felony in which the defendant inflicts great bodily injury on any person other than an accomplice which has been charged and proved as provided for in Section 12022.7 on or after July 1, 1977, or as specified prior to July 1, 1977, in Sections 213, 264, and 461, or any felony in which the defendant uses a firearm which use has been charged and proved as provided in Section 12022.5. [¶] The Legislature finds and declares that these specified crimes merit special consideration when imposing a sentence to display society's condemnation for such extraordinary crimes of violence against the person." (Italics added.)
Although robbery with firearm use is not specifically mentioned by name in the list of "violent felonies" under subdivision (c), this offense presumably would be included within that category by reason of the broad language of paragraph (8). Nonetheless, as defendant points out, to construe section 1170.1, subdivision (a), as permitting the enhancement of defendant's consecutive offense solely by reason of his *761 commission of a felony involving use of a firearm would result in a troublesome anomaly: As so interpreted, section 1170.1 would permit enhancement for firearm use in any case involving firearm use, thereby seeming to render wholly unnecessary the section's specific statutory reference to the various violent felonies described in section 667.5, subdivision (c). The foregoing inconsistency would also extend to enhancements under section 12022.7 (infliction of great bodily injury), for these enhancements are also included within the statutory definition of "violent felonies" under section 667.5, subdivision (c) (8).
The question is close and subtle. However, the evident legislative intent underlying section 1170.1, subdivision (a), was to allow enhancement of the consecutive offense only in certain limited situations, namely, where the conduct for which such enhancement is sought (e.g., firearm use) occurred in the course of commission of a violent felony (such as murder, mayhem, rape, etc.). We think it is unlikely that the Legislature intended to impose an enhancement for firearm use or great bodily injury in every case involving such factors, given the statutory reference in section 1170.1, subdivision (a), to section 667.5. (See also, § 1170.1, subds. (c) and (f), both of which distinguish between the felonies described in § 667.5, subd. (c), and the enhancements imposed pursuant to §§ 12022, 12022.5, 12022.6, and 12022.7.)
Thus, properly construed, section 1170.1, subdivision (a), permits enhancement only for those specific offenses listed in section 667.5, subdivision (c). Because the offense of robbery with firearm use is not specifically listed in that latter section, we conclude that the trial court erred in imposing an additional eight-month enhancement for that offense in the present case. (Accord, People v. Williamson (1979) 90 Cal. App.3d 164, 171 [153 Cal. Rptr. 48].)
The cause is remanded to the trial court with directions to set aside the sentence and to resentence defendant in accordance with the views expressed herein. The judgment of conviction is affirmed.
Bird, C.J., Tobriner, J., Mosk, J., and Newman, J., concurred.
CLARK, J., Concurring and Dissenting.
Section 1170.1, subdivision (a), of the Penal Code states that the subordinate term for a consecutive offense "shall include one-third of any enhancement imposed pursuant to Section 12022 [arming with a firearm or personal use of a deadly or dangerous weapon], 12022.5 [use of a firearm] or 12022.7 *762 [infliction of great bodily injury] when the consecutive offense is listed in subdivision (c) of Section 667.5." The offenses listed in subdivision (c) of section 667.5 expressly include any felony "in which the defendant inflicts great bodily injury ... or any felony in which the defendant uses a firearm which use has been charged and proved as provided in Section 12022.5." Therefore, I must dissent from the majority opinion insofar as it concludes the Legislature did not intend "to impose an enhancement for firearm use or great bodily injury in every case involving such factors." (Ante, p. 761.)
Defendant contends, and the majority agree, that interpreting section 1170.1, subdivision (a), as permitting the enhancement of defendant's consecutive offense solely by reason of his commission of a felony involving use of a firearm "would result in a troublesome anomaly: As so interpreted, section 1170.1 would permit enhancement for firearm use in any case involving firearm use, thereby seeming to render wholly unnecessary the section's specific statutory reference to the various violent felonies described in section 667.5, subdivision (c)." (Ante, p. 761.) However, the reference in section 1170.1, subdivision (a), to the offenses listed in section 667.5, subdivision (c), is not entirely redundant. Section 1170.1, subdivision (a), is concerned with enhancements imposed pursuant to not only sections 12022.5 (use of a firearm) and 12022.7 (infliction of great bodily injury) but also 12022 (arming with a firearm or personal use of a deadly or dangerous weapon). The reference in section 1170.1, subdivision (a), to section 667.5, subdivision (c), is necessary, therefore, to fully express the Legislature's intent regarding enhancements imposed pursuant to section 12022, namely, that the subordinate term for a consecutive offense is not to include one-third of an enhancement imposed pursuant to section 12022 unless the consecutive offense is one listed in subsections (1)-(7) of subdivision (c) of section 667.5.
Admittedly, the reference in section 1170.1, subdivision (a), to section 667.5, subdivision (c), is redundant with regard to enhancements imposed pursuant to sections 12022.5 and 12022.7. However, that the Legislature could have expressed itself with greater concision is no justification for refusing to give effect to what it did say.
Manuel, J., concurred.
Respondent's petition for a rehearing was denied December 27, 1979. Manuel, J., was of the opinion that the petition should be granted.
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NO. 94-605
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
AETNA CASUALTY & SURETY COMPANY,
Petitioner and Respondent,
and
STATE COMPENSATION INSURANCE FUND,
Defendant, Respondent
and Cross-Appellant,
v.
IN RE: MARLA SMITH,
Claimant and Appellant.
APPEAL FROM: Workers' Compensation Court, State of Montana,
The Honorable Mike McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Darrell S. Worm; Ogle & Worm, Kalispell, Montana
For Respondents:
Charles E. McNeil; Garlington, Lohn & Robinson,
Missoula, Montana
Charles G. Adams, Legal Counsel, State Compensation
Insurance Fund, Helena, Montana
Submitted on Briefs: June 29, 1995
Decided: August 4, 1995
Filed:
Clerk f
Justice W. William Leaphart delivered the Opinion of the Court.
Marla Smith (Smith) appeals from an order of the Workers'
Compensation Court, finding that she had not reached maximum
medical improvement before she suffered a second injury and
concluding that she should be compensated based on her first injury
not her second injury. We affirm.
Facts
On February 28, 1989, Smith injured her back in the course of
her work for Crop Hail Management (Crop Hail). Crop Hail was
insured by the State Compensation Insurance Fund (State Fund),
which accepted liability and paid medical and disability benefits.
Smith underwent surgery and physical therapy. The exact nature of
her injury is not material to our decision but her back pain
persisted and gradually worsened.
On April 22, 1992, Smith again injured her back in the course
of her work. This injury exacerbated her existing back pain and
symptoms. She again received surgical and physical therapy
treatments. Her condition worsened to the point that, in August
1992, she permanently left her job. At the time of Smith's April
1992 injury, Crop Hail was insured by Aetna Casualty and Surety
Company (Aetna). State Fund denied her claim but Aetna paid
medical and disability benefits under a reservation of rights to
seek indemnification. Smith's 1989 compensation rate was $114.20
per week. Her 1992 compensation rate was $200.80. Smith argued
that the April 1992 injury was new and therefore she should be
compensated at the 1992 rate.
The Workers' Compensation Court concluded, based on testimony
from two of the three doctors who treated Smith, that Smith had not
reached maximum healing prior to her April 1992 injury and that the
February 1989 injury was degenerative and would have required
further treatment regardless of the April 1992 injury. The court
concluded that (1) State Fund was liable for Smith's low back
condition at the LS-Sl vertebral level, and (2) Aetna was,
therefore, entitled to indemnity from State Fund for medical
expenses paid by Aetna and for disability benefits paid by Aetna at
the 1989 rate of $114.20 per week. Aetna did not file a cross-
appeal with regard to the disability benefits it paid in excess of
the 1989 rate. It is from this decision that Smith appeals.
Standard of Review
When we review a Workers' Compensation Court's
decision, we determine whether it is supported by
substantial credible evidence. Plainbullv. Transamerica
Insurance (1994), [264 Mont. 120, 126-27,l 870 P.2d 76,
80. . . . Where conflicting evidence has been presented,
we examine whether substantial evidence will support the
decision of the Workers' Compensation Court -- not
whether the evidence might have supported contrary
findings. Smith-Carter v. Amoco Oil (1991), 248 Mont.
505, 510, 813 P.2d 405, 408.
Buckentin v. State Compensation Insurance Fund (19941, 265 Mont.
518, 520, 878 P.2d 262, 263.
Discussion
Smith was treated and/or examined by three doctors. The
Workers' Compensation Court based its decision on the conclusions
of these three doctors. Doctors Mahnke and Martini concluded that
Smith had not reached maximum medical healing prior to her April
3
1992 injury. Dr. Hilleboe testified that Smith had reached maximum
medical healing prior to April 1992, but the Workers' Compensation
Court noted that l'[Dr. Hilleboel defined maximum medical healing as
meaning that he would not do anything different therapy-wise within
a year." The Workers' Compensation Court further noted that all
three doctors agreed that the condition resulting from Smith's
February 1989 injury was a degenerative one.
The Workers' Compensation Court's decision is supported by
substantial credible evidence in the record. See Buckentin, 878
P.2d at 263. Dr. Hilleboe's conclusions conflicted with those of
Drs. Mahnke and Martini. Drs. Mahnke and Martini's testimony,
however, supplied the requisite substantial evidence necessary to
support the decision of the Workers' Compensation Court: We do not
review the record to consider whether the evidence might have
supported contrary findings.
Affirmed.
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as
precedent and shall be published by its filing as a public document
with the Clerk of the Supreme Court and by a report of its result
to Montana Law Week, State Reporter, and West Publishing Company.
4
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756 F.Supp. 1440 (1991)
Danny CHANCE, Plaintiff,
v.
The FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Defendant.
No. 89-1599-C.
United States District Court, D. Kansas.
January 3, 1991.
*1441 Danny Chance, Oklahoma City, Okl., pro se.
Paul Hasty, Jr., Wallace, Saunders, Austin, Brown & Enochs, Overland Park, Kan., for defendant.
MEMORANDUM AND ORDER
CROW, District Judge.
This matter comes before the court upon Farm Bureau Mutual Insurance Company, Inc.'s (Farm Bureau) (defendant) motions to dismiss and upon Danny Chance's (plaintiff) motion to dismiss without prejudice. The primary issue in this case is whether Kansas law would permit recovery by a plaintiff under the uninsured motorist provision of the insured's (co-employee's) policy, where the plaintiff was injured in a work-related motor vehicle accident and where the co-employee/vehicle operator had liability insurance, but where the exclusive remedy clause of the workers' compensation act bars the plaintiff's tort claim against the co-employee.
A brief chronology best explains the current posture of this case. On November 17, 1984, Chance was injured in an automobile accident while in the general vicinity of Liptom, Texas. At the time of the accident, Chance was traveling in an automobile owned and operated by Leonard Stover. Stover was a fellow employee of Chance's; at the time of the accident the two were acting within the course and scope of their jobs with the Unit Drilling Company. The accident was allegedly caused by the negligence of Leonard Stover.
At the time of the accident, Stover's automobile was covered by a policy of automobile liability insurance issued by Farm Bureau. The insurance policy provided for, among other things, liability coverage, medical expenses and uninsured motorist coverage. The policy provided coverage to any occupant of the auto.
Following the auto accident, Chance recovered workers' compensation benefits for injuries he sustained as a result of the auto accident. Under the law of Oklahoma, an injured worker cannot sue a fellow employee as the workers' compensation scheme is the injured worker's exclusive remedy.[1]
On November 17, 1989, Chance filed suit against Farm Bureau, basically alleging the facts described above. Chance alleges two causes of action. In Count I, Chance contends that Stover, because he is immune from suit due to his status as a fellow employee, was an uninsured motorist within the terms of the Farm Bureau policy. Chance therefore contends that he, as an "insured," should be allowed to access the uninsured motorist coverage. In Count II of the complaint, Chance seeks compensation for Farm Bureau's alleged bad faith denial of his uninsured motorist claim.
On February 8, 1990, Farm Bureau filed motions to dismiss both counts of Chance's complaint. On March 9, 1990, Chance filed a memorandum in response to Farm Bureau's motions to dismiss. Chance's memorandum did not address Farm Bureau's motion to dismiss Count II.
*1442 On September 13, 1990, Chance moved for dismissal without prejudice, pursuant to Fed.R.Civ.P. 41(a)(2) and K.S.A. 60-518, based upon his physical condition. On September 20, 1990, Farm Bureau responded in opposition to Chance's motion to dismiss without prejudice. Farm Bureau contends that, notwithstanding Chance's illness, the court should rule on Farm Bureau's February 8, 1990, motions to dismiss. Farm Bureau contends that the court should rule on the motions as they are, if granted, totally dispositive of plaintiff's claim.
The court concludes that it is appropriate to rule on the February 8, 1990, motions to dismiss as they are dispositive of the plaintiff's claims. "Under Rule 12(b)(6), dismissal is inappropriate unless plaintiff can prove no set of facts in support of his claim to entitle him to relief." Thatcher Enterprises v. Cache County Corp., 902 F.2d 1472 (10th Cir.1990). The issues presented by this case are purely questions of law; therefore the fact that Chance is apparently ill does not affect the court's ability to rule on the dispositive motions.
UNINSURED MOTORIST COVERAGE
Chance contends that because the exclusive remedy of the workers' compensation scheme bars suit against Stover, Stover is, in essence, an "uninsured" motorist. According to Chance's analysis, this factual scenario should enable him to access Stover's uninsured motorist coverage. Farm Bureau contends that this argument is frivolous. The heart of Farm Bureau's argument centers on the fact that Stover's automobile is covered by liability insurance. Therefore, by the terms of the insurance policy, Chance cannot access the uninsured motorist coverage because the car in which he was injured was not "uninsured." Farm Bureau also contends that Chance is not "legally entitled to recover" from Stover, and thus by the terms of the policy it is not required to make uninsured motorist payments.
The parties suggest, and the court agrees, that the interpretation of this insurance contract and whether Stover is "uninsured" within the meaning of that contract is governed by Kansas law. See Prudential Ins. Co. of America v. Carlson, 126 F.2d 607 (10th Cir.1942). An insurance policy is a contract. Generally, ambiguous insurance contracts are to be construed in favor of the insured. Carriers Ins. Co. v. American Home Assur. Co., 512 F.2d 360, 362 (10th Cir.1975). However, plain and unambiguous policies must be given their plain meaning. Central Sec. Mut. Ins. Co. v. DePinto, 235 Kan. 331, 681 P.2d 15 (1984).
In relevant part, the policy which covered Stover's automobile provides:
Insuring Agreement
We will pay damages which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle because of bodily injury:
1. Sustained by an insured person; and
2. Caused by an accident.
. . . . .
Payment By Us
Any amount due is payable to the:
1. Insured;
. . . . .
Insured Person (s) as used in this part means:
1. You or a relative;
2. Any other person occupying your insured vehicle; or
. . . . .
Uninsured Motor Vehicle means a land motor vehicle, trailer or semi-trailer of any type:
1. To which no bodily injury liability bond or policy applies at the time of the accident;
. . . . .
3. To which a bodily injury liability bond or policy applies at the time of the accident but the bonding or insuring company:
a. denies coverage;
Kansas has not addressed the precise issue presented by this case. However, Kansas cases interpreting the phrase *1443 "legally entitled to recover" indicate that Kansas would not allow an individual in Chance's position to access uninsured motorist benefits. In addition, the great weight of authority from other jurisdictions, as well as treatises on the subject, deny an individual in Chance's position access to uninsured motorist coverage.
In Patrons Mutual Ass'n v. Norwood, 231 Kan. 709, 647 P.2d 1335 (1982), the Supreme Court of Kansas addressed the issue of whether the Kansas doctrine of interspousal immunity precludes recovery of damages by a husband for personal injuries suffered in an automobile accident caused by his wife's negligence where such recovery is sought under the uninsured motorist provisions of a liability policy issued to his wife.[2] In order to recover uninsured motorist benefits under K.S.A. 40-284, one must show that he or she is "legally entitled to recover" damages from the uninsured motorist. 231 Kan. 709, Syl. ¶ 1, 647 P.2d 1335. After tracing the history of uninsured motorist insurance, the court concluded that "legally entitled to recover" means a claimant must prove the insured motorist is legally liable to him or her for damages in spite of all substantive defenses. The court held that the doctrine of interspousal immunity prevented the husband from being "legally entitled to recover" damages from his wife.
In Winner v. Ratzlaff, 211 Kan. 59, 505 P.2d 606 (1973), the issue was "whether it is requisite to recovery against an uninsured motorist liability carrier that judgment first be obtained against the uninsured motorist, that is to say, is the establishment of liability on the part of the uninsured motorist a condition precedent to recovery under an uninsured motorist policy?" The court found no requirement that the claimant must first sue and establish fault of the uninsured motorist before making a claim against the uninsured motorist insurance carrier.
The court construed the phrase "legally entitled to recover as damages" to mean:
"[T]he insured must be able to establish fault on the part of the uninsured motorist which gives rise to the damages and to prove the extent of those damages. This would mean that in a direct action against the insurer the insured has the burden of proving that the other motorist was uninsured, and the amount of this liability. In resisting the claim the insurer would have available to it, in addition to policy defenses compatible with the statute, the substantive defenses that would have been available to the uninsured motorist such as contributory negligence, etc."
211 Kan. at 64, 505 P.2d 606.
If the insurance company can assert any defense that would have been available to the uninsured motorist (in the case at bar the exclusive remedy of the workers' compensation scheme), then an injured person cannot recover from the insurance company when it could not recover against the tortfeasor. The reasonable inference to be drawn from these cases is that the exclusive remedy of the workers' compensation scheme does not transform an otherwise "insured" motorist into an "uninsured" motorist and that the insurance company may raise the exclusive remedy bar as a defense to the payment of uninsured motorist benefits.
Other Kansas cases indicate that Kansas would not allow an individual in Chance's position to access uninsured motorist coverage. See Hilyard v. Estate of Clearwater, 240 Kan. 362, 729 P.2d 1195 (1986) (K.S.A. 40-284 does not contemplate a situation where the "uninsured owner or operator" is the owner of an automobile liability insurance policy); State Farm Mutual Automobile Ins. Co. v. Cummings, 13 Kan. App.2d 630, 778 P.2d 370 (1989) ("Where either the owner or the driver of a vehicle is covered by the minimum insurance limits required by law, the vehicle is not `uninsured' within the meaning of the Kansas uninsured motorist statutes, and the injured parties are not permitted access to *1444 the uninsured motorist coverage in their own policies.")
While established Kansas law indicates that Chance cannot access Stover's uninsured motorist coverage, the court has reviewed cases from other jurisdictions. While a split of authority does exist, the weight of authority is against the interpretation advanced by Chance.
In Aetna Casualty and Surety Co. v. Dodson, 235 Va. 346, 367 S.E.2d 505 (1988), the United States Court of Appeals for the Fourth Circuit certified the following question to the Supreme Court of Virginia:
Does Virginia law permit recovery by an insured's estate under the UM provision of the insured's policy (paid for by the insured), where the insured was killed in a work-related motor vehicle accident and where the employer/vehicle owner and co-employee/vehicle operator both had insurance, but where the exclusive remedy clause of the Virginia Workmen's Compensation Act bars recovery under those other policies?
The Supreme Court of Virginia answered in the negative. The Supreme Court of Virginia commented:
The phrase "legally entitled to recover as damages" interposes, as a condition precedent to the UM insurer's obligation, the requirement that the insured have a legally enforceable right to recover damages from an owner or operator of an uninsured motor vehicle. We do not perceive a rational alternative which would render the phrase ambiguous. (Footnote omitted).
Because workers' compensation afforded the exclusive remedy against the decedent's employer and fellow employees for his accidental death, his statutory beneficiaries are not "legally entitled to recover" damages against them. It follows that a condition precedent to Aetna's liability under its UM endorsement was not met.
In Perkins v. Ins. Co. of North America, 799 F.2d 955 (5th Cir.1986), the fifth circuit commented:
Ordinarily, for the uninsured motorist clause to operate in the first place, the uninsured third person must be legally subject to liability. Thus, if the third person is specifically made immune to tort suit by the compensation act's exclusive remedy clause, the uninsured motorist provision does not come into play. In the familiar example of coemployee immunity, the issue thus becomes whether the accident was in the course of employment; if it was, the uninsured motorist carrier has no liability.
799 F.2d at 959 (quoting A. Larson, 2a Workmen's Compensation Law 71.23(j) at 14-44 (1983)). The Fifth Circuit concluded that because an employee who had been injured during the course of his employment was not legally entitled to recover damages from his employer or coemployee (due to the exclusive remedy of the worker's compensation), the injured employee was not entitled to recover uninsured motorist benefits under the employer's uninsured motorist policy.
The weight of authority and the case law of Kansas persuades this court that Kansas would not allow Chance to access Stover's uninsured motorist coverage. Stover's automobile was covered by liability insurance. It seems anomalous that an "insured" automobile could at the same time be an "uninsured" automobile under that same policy. See Dale v. Home Insurance Company, 479 So.2d 1290 (Ala. Civ.App.1985) (fireman injured in a one-vehicle accident not entitled to uninsured motorist coverage because "the fire truck cannot be both an `insured vehicle,' with coverage for the plaintiff under the uninsured motorist provision of the Home policy, and an `uninsured vehicle' under the same Home policy.")
Chance has identified a case from Oklahoma which generally supports his position. In Barfield v. Barfield, 742 P.2d 1107 (Okl.1987), Vern L. Barfield and Robert E. Barfield were killed in a one-vehicle accident. The accident occurred during the course of their employment. Vern and Robert's surviving spouses were each awarded death benefits under the Oklahoma Workers' Compensation Act.
*1445 Vern's surviving spouse, Jacqueline, brought a wrongful death suit against Robert's estate.[3] Jacqueline also brought suit against Kansas City Fire and Marine Insurance Company to recover on her husband's uninsured motorist coverage. Jacqueline alleged that her husband's injuries and death was caused by the negligence of Robert and that at the time of the accident Robert was an uninsured or underinsured motorist. Jacqueline sought to recover under the uninsured motorist insurance in force and effect in favor of Jacqueline and Vern for the injuries caused by the negligence of an uninsured or underinsured motorist.
The Supreme Court of Oklahoma, in a divided court,[4] concluded that it would be manifestly unjust to permit the insurer to avoid its contractual and statutorily defined duties to assert third party tort immunity as a defense to payment of the insured's widow for protection which the decedent had paid a premium. The court commented:
The term "legally entitled to recover" does not mean that an insured must be able to proceed against an uninsured/underinsured in tort in order to collect uninsured motorist benefits. Recovery under an uninsured motorist provision derives from the contractual promise of the insurer to the insured to provide coverage in the event of bodily injury, sickness or disease, including death, resulting by fault of an uninsured/underinsured motorist. Because our insured motorist statute, 36 O.S.1981 § 3636 mandates coverage to the same extent as that required by 47 O.S.1981 § 7-204, and provides that increased limits of liability shall be offered and purchased if desired, any restriction must be closely scrutinized; and we accordingly decline an interpretation which would present a conflict between 36 O.S.1981 § 3636 and the Workers' Compensation Act.
742 P.2d at 1112. Therefore, Oklahoma, under prior case law and specific statutory authority, has interpreted the phrase "legally entitled to recover" differently than Kansas and is therefore not particularly instructive in the resolution of this case.
Although Barfield is generally supportive of Chance's argument, the Supreme Court of Oklahoma commented:
In the present case, the decedent, Vern L. Barfield stood in a position different than that of a mere passenger or employee. Decedent's widow is not attempting to recover from a policy with which decedent had no connection. Instead she merely seeks to recover under a policy which insured plaintiff's decedent against financially irresponsible motorists. Insureds are entitled to uninsured motorist coverage under their policies regardless of the circumstances that exist when they are personally injured through the fault of an uninsured motorist.
742 P.2d at 1112. Therefore it is not clear that Oklahoma would allow Chance to recover under a policy to which he was not a party.
Several courts have expressly declined to follow Barfield. See Kough v. New Jersey Automobile Full Ins. Underwriting Assoc., 237 N.J.Super. 460, 568 A.2d 127 (1990); Romanick v. Aetna Casualty and Surety Co., 59 Wash.App. 53, 795 P.2d 728 (1990); Cormier v. National Farmers Union Property & Casualty Co., 445 N.W.2d 644 (N.D.1989).
Chance directs the court's attention to an excerpt from Professor Widiss' treatise titled Uninsured and Underinsured Motorist Insurance. Chance has included a photocopy of the excerpt in his response to the defendant's motion to dismiss.[5] While the photocopied portion of Widiss' treatise might be generally viewed as supporting Chance's arguments, the court has reviewed the entire section of the treatise discussing uninsured motorist coverage. *1446 In a subsection titled "Workers' Compensation," Widiss comments:
The number of judicial decisions addressing questions about the relationship between the coverage afforded by workers' compensation and uninsured motorist insurance has notably increased in the past decade. Courts in several states have sustained denials of uninsured motorist insurance claims by insureds who have been compensated by workers' compensation.
Widiss, § 7.14, at 304-305. Later in that same subsection Widiss comments:
Distinguishing injuries that are not caused by a "fellow employee." When uninsured motorist insurance is claimed for injuries that are caused by a "fellow employee," the justification for sustaining one or another of the coverage limitations (enumerated above) is very persuasive. The workers' compensation plan precludes tort claims against a fellow employee and the employer that is, the statutory provisions establishing the workers' compensation plan typically also specify that it is the exclusive "remedy" and eliminate tort claims. In such circumstances, coverage limitations that preclude uninsured motorist insurance claims harmonize with the legislative enactments.
Widiss, § 7.14, at 310.
In sum the court concludes that Chance is not entitled to uninsured motorist benefits under Stover's policy with Farm Bureau. Because of the exclusive remedy of the workers' compensation scheme, Chance is not "legally entitled to recover" against Stover. Nor does the exclusive remedy of the workers' compensation scheme convert Stover's automobile into an "uninsured motor vehicle." Stover's policy included liability insurance and therefore he was not "uninsured" at the time of the accident. Under the terms of the policy, Chance is not entitled to uninsured motorist benefits. Farm Bureau's motion to dismiss Count I is granted.
BAD FAITH CLAIM
Farm Bureau seeks to dismiss count II of Chance's complaint. Chance does not expressly respond to this issue. Because the court concludes that Farm Bureau is not liable to Chance under the uninsured motorist coverage, there is, of course, no evidence of "bad faith." In any event, it is clear that Kansas does not recognize bad faith as an independent tort. See Heinson v. Porter, 244 Kan. 667, 675, 772 P.2d 778 (1989); State Farm Fire & Casualty Co. v. Liggett, 236 Kan. 120, 689 P.2d 1187 (1984); Spencer v. Aetna Life & Casualty Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980).
IT IS THEREFORE ORDERED that Chance's motion to dismiss without prejudice (Dk. 21) is denied.
IT IS FURTHER ORDERED that Farm Bureau's motions to dismiss (Dk. 7 and 9) are granted.
NOTES
[1] See Okl.Stat. tit. 85, § 12 (West 1991).
[2] At the time of Norwood, Kansas still recognized the doctrine of interspousal immunity. In Flagg v. Loy, 241 Kan. 216, 734 P.2d 1183 (1987), the Supreme Court of Kansas abrogated the doctrine of interspousal immunity.
[3] This claim was dismissed by the court as the Workers' Compensation scheme was Jacqueline's sole remedy.
[4] The case was decided by a 5-4 vote. The deciding vote was cast by Justice Kauger, who concurred by reason of stare decisis.
[5] The excerpt is undated.
| {
"pile_set_name": "FreeLaw"
} |
527 N.W.2d 804 (1995)
STATE of Minnesota, Respondent,
v.
Irving NMN THAGGARD, Petitioner, Appellant.
No. CX-93-667.
Supreme Court of Minnesota.
January 20, 1995.
As Amended January 19, 1995.
*805 John M. Stuart, State Public Defender, Marie L. Wolf, Asst. State Public Defender, Minneapolis, for appellant.
Hubert H. Humphrey, III, Atty. Gen., St. Paul, and Michael O. Freeman, Hennepin County Atty., Linda M. Freyer, Asst. County Atty., Minneapolis, for respondent.
Heard, considered and decided by the court en banc.
OPINION
COYNE, Justice.
Defendant, Irving Thaggard, was found guilty by a district court jury of criminal *806 sexual conduct in the first degree and was sentenced by the trial court to a prison term of 110 months. The court of appeals, in an unpublished decision, affirmed his conviction on direct appeal from judgment of conviction. We granted defendant's petition for review in order to examine defendant's arguments (1) that the state failed to meet its burden of establishing that his confession was voluntary and therefore admissible and (2) that the prosecutor committed prejudicial misconduct in closing argument. After carefully examining these arguments, we affirm.
The police first became involved in this case on August 7, 1992, when they received a call to come to a house in North Minneapolis. Complainant, 34-year-old R.N., a crack cocaine addict, who did not know the occupants of the house, had appeared there naked late on the 7th, claiming, "He's going to kill me." R.N. was taken to North Memorial Medical Center. Medical personnel there found that she had a broken jaw, that she had had recent sexual intercourse, and that there were abrasions in the anal area. R.N. told police that she had been abducted off the street by two men, raped and beaten.
We now know that for some time R.N. lied, at least in substantial part, to the police. In fact, she had not been abducted. Rather, defendant and his friend, Mario Owens, had offered her a ride that afternoon and she had accepted the ride. On the way to dropping her off at her cousin's house, they had asked her if she wanted to join them later and she had said yes. They had picked her up later, and drunk liquor with her, had smoked marijuana with her, and later had each twice engaged in consensual oral and vaginal sex with her in exchange for providing her with crack cocaine. Later in the evening she became suspicious that the men might give her "problems" in getting away from them, so she pulled a knife out of her bag. It was then that defendant hit her in the jaw.
What was disputed at trial was whether defendant and Owens had then raped her. R.N. claimed in her testimony that they had done so. The defense argued that R.N. could not be believed, that what really happened was what defendant initially had told the police when he was arrested and questioned, that the acts of intercourse with R.N. that occurred after defendant hit her were just like the earlier acts of intercourse consensual.
Given the fact that complainant had lied so extensively in her statements to the police about the events preceding the blow to the jaw and the final acts of intercourse, one cannot say with any confidence that the jury probably would have convicted defendant of criminal sexual conduct had it not had defendant's ultimate confession. Therefore, the issue of whether the trial court properly admitted the confession is necessarily critical to the outcome of this appeal.
The officer who obtained the confession, Sergeant Bernard Martinson, testified at the omnibus or pre-trial suppression hearing about the circumstances surrounding the making of the confession. Specifically, he testified that his interrogation of defendant at the jail was in two parts: The first part, which he called a "pre-interview," was unrecorded; the second part, the formal confession, was recorded. Martinson testified on direct that during the "pre-interview" phase (a) he gave defendant a Miranda warning and obtained a waiver; (b) he lied to defendant, telling him that Owens had confessed to participating in the rape of R.N.; and (c) he made no promises to defendant. He testified further that his written report accurately summarized his entire interview of defendant and that a second exhibit was a verbatim transcript of the taped formal confession. The record does not contain the written summary of the first part of the interrogation. However, it appears that during the early part of the "pre-interview" interview defendant told Martinson that R.N. had willingly accompanied and partied with the men and that he had hit her because she said she was "tripping out." Martinson later would testify at trial that defendant seemed surprised to learn that R.N.'s jaw had been broken. It appears that defendant maintained that R.N. had again had sex with Owens and him after he hit her when she started tripping out. He claimed that she then got out of the car and ran down the alley. It appears that it was only after Martinson lied to defendant, falsely telling him that Owens had confessed, that *807 defendant confessed to raping R.N. Asked on cross-examination at the omnibus hearing if he had promised defendant drug treatment if he confessed, Martinson denied it. He admitted that defendant's cocaine problem had come up, denied promising treatment, admitted that he tries to be reassuring to all people he is interrogating because he wants them "to speak with me and cooperate," and admitted that treatment was "something that he was looking at for himself to get."
Defendant testified at the omnibus hearing that he gave the formal taped statement only after Martinson told him, "All I see is that you are all out partying and things got out of hand. By being drug related, you probably would be referred to treatment." Defendant said Martinson told him that in order to get treatment, however, he would have to "tell him up front what happened."
We do not know for sure how long the "pre-interview" interview lasted. Martinson first testified at trial that it lasted from noon to 2:30 p.m., when the recording of the 17-minute formal statement began. However, he later retracted this, saying that the "pre-interview" might not have begun until 1:45 or 1:50 p.m.
The record on appeal contains a copy of the transcript of the taped formal statement. In it defendant answered "yeah" when Martinson asked him if it was true that defendant had told him that he fractured R.N.'s jaw and then had sexual intercourse with her against her will, along with Owens. Later in the statement, defendant said that he had hit her only after "she started trippin' and one thing led to another." He said that he hit her "[j]ust once." Asked if he "now" realized that he should not have had sex with her after hitting her, he said "yeah." Asked if he realized that she did not want to have sex after she had been hit, he said "yeah." Defendant said that he was "spaced out on the drugs at the time" but that he "now" understood that he had committed a crime. He added:
I didn't really mean to harm her like that, no kind of way, we were just gettin' high on crack and everything just went sour, that's all. I'm an addict, I admit to that and I would like to apologize to her, but I know that wouldn't ease her pain. I'd like to get some help some kind of way.
Asked the standard question whether the statement was given of his own free will without threats or promises, defendant said "yes."
The trial court denied the motion to suppress the confession, crediting the testimony of Martinson relating to whether a promise of treatment was made.
1. In a pre-trial suppression hearing at which the defendant seeks suppression of a confession on the ground that the confession was involuntary, the state has the burden of proving voluntariness by a fair preponderance of the evidence. Doan v. State, 306 Minn. 89, 91, 234 N.W.2d 824, 826 (1975).
It is the trial court's role, in such a case, to resolve any evidentiary disputes as to the historical facts. State v. (Howard) Anderson, 396 N.W.2d 564, 565 (Minn.1986).
The appellate court is not bound by the trial court's determination of whether or not the confession was voluntary. Rather, its duty is "to independently determine, on the basis of all factual findings that are not clearly erroneous, whether or not the confession was voluntary." Id.
Recently, in State v. Scales, 518 N.W.2d 587 (Minn.1994), we adopted a recording requirement with respect to custodial interrogation of criminal suspects. Specifically, we held:
[A]ll custodial interrogation including any information about rights, any waiver of those rights, and all questioning shall be electronically recorded where feasible and must be recorded when questioning occurs at a place of detention. If law enforcement officers fail to comply with this recording requirement, any statements the suspect makes in response to the interrogation may be suppressed at trial.
518 N.W.2d at 592. The primary purpose of the requirement is not to help criminal defendants or to help the state. Rather, the primary purpose is to assist the trial court in the resolution of evidentiary disputes and in more accurately determining the underlying *808 facts. Furthermore, the requirement will aid in appellate review of rulings on motions to suppress confessions.
Our decision in Scales, which we based on our inherent supervisory power to insure the fair administration of criminal justice, was prospective in nature, applying to interrogations occurring from the date of the filing of our opinion, June 30, 1994. Id. at 592-93. The interrogation in this case occurred before the decision in Scales was filed.
If Scales applied, then Sergeant Martinson in this case would have been legally obliged to tape record not just the so-called "formal statement" by the defendant but the entire custodial interrogation, including the giving of the Miranda warning, the obtaining of a waiver, and that part of the interrogation that Sergeant Martinson euphemistically referred to as the "pre-interview."
As it is, we must review the voluntariness issue without the benefit of the information a complete recording would have provided. While the trial court undoubtedly could have taken Sergeant Martinson's failure to record the "pre-interview" into consideration in assessing the credibility of his testimony concerning what he said to defendant, the trial court was not obliged to discredit Martinson's testimony.
With this in mind, we address defendant's claim that his confession was involuntary. As we have noted in numerous cases, we look to all the relevant factors in determining the voluntariness of a confession. These factors include the defendant's age, maturity, intelligence, education, experience and ability to comprehend; the lack of or adequacy of a warning; the length and legality of the detention; the nature of the interrogation; and whether the defendant was deprived of physical needs or denied access to friends. State v. Jungbauer, 348 N.W.2d 344, 346 (Minn.1984).
Defendant focuses our attention upon the nature of the interrogation in his case, pointing to (a) deception admittedly used by Sergeant Martinson and (b) the alleged promise of treatment.
(a) The use of trickery and deception by police in obtaining confessions is analyzed in considerable detail in the Commentary to § 140.4 of the Model Code of Pre-Arraignment Procedure (1975), which states in part:
One of the most difficult questions in connection with the Code is determining what should be provided with respect to the use of deception in seeking information from suspects. The propriety of techniques such as those catalogued in detail in Inbau and Reid, Criminal Interrogation and Confessions (1962), was severely criticized by the Chief Justice in Miranda. In 1967 the authors came out with a revised edition of Criminal Interrogation and Confessions, advocating exactly the same techniques, but warning officers to obtain a Miranda waiver before engaging in any of them, the authors regarding the Miranda waiver as an insulating factor with respect to their interrogations techniques.
Deception in police interrogation can take many forms. It may consist of "conning" seeking to offset the suspect's reluctance to incriminate himself by displays of apparent sympathy, friendship, or moral indignation. It may consist of misrepresentations which make the case against him appear stronger than it is or which understate the seriousness of his situation. It may consist of misstating the suspect's legal position by statements relating either to the substantive crime or his procedural rights. It may involve the use of persons appearing to be in a special confidential relationship with the suspect for the purpose of eliciting statements which he would not make to the police. Or it may involve eavesdropping, or the use of undercover operators or informers. Of course, this is by no means a complete catalogue, and the lines between these and other forms of deception are not easy to perceive or define.
Strong arguments can be made condemning all deceptive practices by officials investigating crime. Such practices appear to be "dirty business," and to some it is repellent that public officials should ever be expected to resort to tactics which violate the standards of dignity and probity for the conduct of government or society generally. Any departure from the highest *809 standards, it is argued, not only fosters cynicism in the public at large but a callousness in the officials themselves which it is hard then to contain within the bounds of the special need which is supposed to justify it. On the other hand, it can be argued that the control of crime involves officials with persons who have manifested a willingness to do violence to even the most elemental decencies, and effective measures of control must take this into account.
Preliminary Draft No. 1 of the Code had a specific section which barred certain deceptive practices. Discussions at the first meeting of the Advisory Committee and further consideration convinced the Reporters that it would be unwise to include such a formulation. Any attempt to deal with certain forms of deception might create the inference, unacceptable to many, that the Institute approves of those deceptions which are not specifically enumerated. On the other hand, a flat bar to all deception in police investigation would invite a detailed probing by the court into the motivation of the questioning officers and the structure of the case at the time of interrogation, and might result in the exclusion of statements which (as in the case where the officer pretends to be friendly, or says, perhaps in good faith but without sufficient foundation in fact, that there exists "plenty" of evidence against the defendant) many would consider not unfairly obtained in such a context.
The Reporter believes that the issue of deception is one which should be left to the courts to pass upon as part of the broader inquiry which they must make under Clause (b) of Section 140.4.[1] The one exception is that, for the reasons indicated in the Note and Commentary to Section 140.2, deception which undermines the warning issued to an arrested person that he is not obligated to make a statement is explicitly barred.
* * * * * *
Preliminary Draft No. 1 explicitly barred misleading a person "as to the strength of the case against him or the consequences of conviction." This was intended to deal with what is presumably the most common form of deception leading a suspect to believe that the evidence against him is stronger than it is. For example, he may be told that he has been identified by the victim or another witness or that an alleged accomplice has implicated him. He may be told that his fingerprints were found on the murder weapon or at the scene of the crime. Quite aside from other questions they raise, these practices may carry with them a significant danger that an innocent man will admit the crime and plead guilty in the hope of obtaining leniency. Nevertheless, courts presented with this kind of deception have upheld the admissibility of any resulting statement, except to the extent that they have found that making the suspect believe his situation hopeless, combined with other circumstances, constitutes coercion.
Model Code of Pre-Arraignment Procedure, Commentary to § 140.4 at 355-57 (1975) (footnotes omitted). As alluded to in the Comment, Chief Justice Warren in Miranda v. Arizona, 384 U.S. 436, 476, 86 S.Ct. 1602, 1629, 16 L.Ed.2d 694 (1966), expressly condemned the use of trickery and deception in order to persuade a suspect to waive his or her Miranda rights, stating: "[A]ny evidence that the accused was threatened, tricked, or cajoled into a waiver will, of course, show that the defendant did not voluntarily waive his privilege." Whatever else was meant by this, it seems clear that "there is an absolute prohibition upon any trickery which misleads the suspect as to the existence or dimensions of any of the applicable rights or as to whether the waiver really is a waiver of those *810 rights." 1 Wayne LaFave and Jerrold Israel, Criminal Procedure § 6.9(c) at 529 (1984) (footnotes omitted); see also Moran v. Burbine, 475 U.S. 412, 423-24, 106 S.Ct. 1135, 1142, 89 L.Ed.2d 410 (1986) ("withholding of information is objectionable as a matter of ethics" but "such conduct is only relevant to the constitutional validity of a waiver if it deprives a defendant of knowledge essential to his ability to understand the nature of his rights and the consequences of abandoning them").
It also seems clear, however, that the Court itself did not intend to adopt a per se rule of exclusion of all post-waiver confessions and statements induced by the use of trickery and deceit. In Frazier v. Cupp, 394 U.S. 731, 89 S.Ct. 1420, 22 L.Ed.2d 684 (1969), the Court was presented with the question whether a confession should have been excluded as involuntary because the police falsely told the suspect that the person he was with confessed. The Court in an opinion by Justice Marshall, said:
Petitioner also presses the * * * argument that his confession was involuntary and that it should have been excluded for that reason. The trial judge, after an evidentiary hearing during which the tape recording was played, could not agree with this contention, and our reading of the record does not lead us to a contrary conclusion. Before petitioner made any incriminating statements, he received partial warnings of his constitutional rights; this is, of course, a circumstance quite relevant to a finding of voluntariness. The questioning was of short duration, and petitioner was a mature individual of normal intelligence. The fact that the police misrepresented the statements that Rawls had made is, while relevant, insufficient in our view to make this otherwise voluntary confession inadmissible. These cases must be decided by viewing the "totality of the circumstances," and on the facts of this case we can find no error in the admission of petitioner's confession.
394 U.S. at 739, 89 S.Ct. at 1425 (citations omitted) (emphasis added).
Subsequent decisions of the Court confirm our understanding that the use of trickery and deception is to be considered along with all the other relevant factors in determining if a confession was involuntary, and that lying to a suspect as to the strength of the state's case against him generally is not by itself enough to render a confession involuntary. See, e.g., Colorado v. Spring, 479 U.S. 564, 574, 107 S.Ct. 851, 857, 93 L.Ed.2d 954 (1987), stating that a confession should not be ruled involuntary absent evidence that the suspect's will was overborne and his capacity for self-determination critically impaired by coercive police conduct, and Colorado v. Connelly, 479 U.S. 157, 164, 107 S.Ct. 515, 520, 93 L.Ed.2d 473 (1986), stating that "all" the involuntariness cases "have contained a substantial element of coercive police conduct." Accord State v. Moorman, 505 N.W.2d 593 (Minn.1993); State v. Garner, 294 N.W.2d 725 (Minn.1980).
We are not prepared at this time to abandon the totality of the circumstances approach, but we caution police that they proceed on thin ice and at their own risk when they use deception of the sort used in this case.
(b) The Model Code of Pre-Arraignment Procedure does not prohibit promises of leniency as a means of obtaining confessions, for the simple reason that "[t]here are many situations where it seems justifiable for law enforcement officers to make such promises in order to solve other crimes or apprehend or convict other persons." Model Code of Pre-Arraignment Procedure § 150.2(8), note at 65 (1975). Nevertheless, the Code "makes inadmissible statements obtained by promises of leniency for the arrested person or one in whom he is interested." Id., Commentary to § 150.2(8) at 392.
The United States Supreme Court in Bram v. United States, 168 U.S. 532, 565, 18 S.Ct. 183, 195, 42 L.Ed. 568 (1897), ordered a new trial for a defendant on the ground that the trial court wrongfully admitted a statement made by the defendant in response to police "encouragement that by so doing he might at least obtain a mitigation of the punishment." The Court in Bram declared that a confession "obtained by any direct or implied promises, however slight," is not voluntary. Id. at 542-43, 18 S.Ct. at 187.
*811 Subsequent decisions established, however, that, as we put it in State v. (Kevin) Anderson, 298 N.W.2d 63, 65 (Minn.1980), "courts do not mechanically hold confessions involuntary just because a promise has been involved." Rather, the approach courts have taken is to "look to the totality of the circumstances, considering all the factors bearing on voluntariness." Id. (citing Lynumn v. Illinois, 372 U.S. 528, 83 S.Ct. 917, 9 L.Ed.2d 922 (1963)).
Sometimes the making of a promise will render a confession involuntary, sometimes not. In Lynumn, the Court held a confession involuntary where the police had stated that if the defendant did not cooperate she would be deprived of financial aid for her children, that her children might be taken from her and she might never see them again. 372 U.S. at 534, 83 S.Ct. at 920. In Rogers v. Richmond, 365 U.S. 534, 81 S.Ct. 735, 5 L.Ed.2d 760 (1961), the Court held involuntary a confession that was obtained by police after they threatened to arrest the defendant's wife. But in Stein v. New York, 346 U.S. 156, 73 S.Ct. 1077, 97 L.Ed. 1522 (1953), the Court held voluntary a confession given by the defendant after receiving assurances that his father would be released from jail and his brother would not be charged with a parole violation. Speaking for the Court in Stein, Justice Jackson stated, in part:
What would be overpowering to the weak of will or mind might be utterly ineffective against an experienced criminal.
* * * * * *
The spectacle of [defendant] naming his own terms for confession, deciding for himself with whom he would negotiate, getting what he wanted as a consideration for telling what he knew, reduces to absurdity his present claim that he was coerced into confession.
346 U.S. at 185-86, 73 S.Ct. at 1093.
In State v. (Howard) Anderson, 396 N.W.2d 564, 565 (Minn.1986), remanding to trial court to make necessary findings of historical fact, we summarized some of our prior decisions dealing with the use of promises as follows:
State v. Beckman, 354 N.W.2d 432 (Minn.1984) (the fact that defendant was told that any cooperation would be brought to the trial court's attention did not render confession "involuntary"); State v. Jungbauer, 348 N.W.2d 344 (Minn.1984) (promise to release defendant pending formal charging and to summon him rather than arrest him on a warrant did not render defendant's confession "involuntary"); State v. [Kevin] Anderson, 298 N.W.2d 63 (Minn.1980) (promise to a defendant that a female friend would be released from jail if he gave a written statement did not render his confession "involuntary"); State v. Biron, 266 Minn. 272, 123 N.W.2d 392 (1963) (holding "involuntary" a confession obtained from an 18-year-old who was promised juvenile treatment if he confessed). Cf., Minnesota v. Murphy, 465 U.S. 420, 104 S.Ct. 1136, 79 L.Ed.2d 409 (1984), and State v. Murphy, 380 N.W.2d 766 (Minn. 1986) (upholding trial court's admission of confession by probationer to probation agent, despite probation agent's statement to probationer that her main concern was that he would need further treatment implying that confession would lead to treatment).
396 N.W.2d at 565.
It should be apparent, by now, that with respect to the use of trickery and deceit police invite suppression of the statement when they use promises, express or implied, in seeking to persuade a suspect to confess to a crime.
(c) Turning now to the facts of this case, which we have carefully considered, we conclude that the trial court did not err in rejecting defendant's contention that his confession was involuntary. We note initially that defense counsel did not object in the trial court to the use of deception by Sergeant Martinson. Rather, defense counsel argued that the statement was given in exchange for an implied promise of drug treatment. The trial court found that although defendant may have believed he might receive treatment, he understood the Miranda warning that any statement he made would be used against him and he was not told, nor *812 was it implied, that he would not be prosecuted for the rape if he gave a statement. We add to these factors the fact that defendant had prior experience with the criminal justice system, including several felony convictions; defendant was interrogated early in the afternoon for a relatively short period of time; the interrogation was conducted by only one officer; defendant was permitted to take a break and use the bathroom when he wanted to do so; the absence of any claim that he was intoxicated during the interview; and the absence of any claim of threats or physical intimidation. The key fact, however, is the fact that there is no indication that defendant was led to believe that he would not be prosecuted for the rape if he confessed. The record indicates that defendant may have been led to expect that he would receive treatment but he was not led to expect that the treatment would be instead of prosecution and punishment.
2. The other issue meriting discussion is the claim of prosecutorial misconduct in closing argument. We have independently reviewed the entire closing argument. Having done this, we conclude that the argument, while clearly not a model argument, was not so improper that it necessitates the award of a new trial to defendant. However, in the interest of preventing further error in other cases, we briefly summarize the improprieties that occurred:
(a) The prosecutor repeatedly argued to the jury that the jury's role was to determine if the evidence was sufficient to convict. This was a constant refrain of the prosecutor. One of the prosecutor's final admonitions to the jury was, "find him guilty you must do because the evidence supports it." Whether the evidence supports a conviction is a judicial role. The jury has to be convinced that the defendant is guilty beyond a reasonable doubt before it finds him guilty; it is not enough that the jury determines in some dispassionate way that the evidence "supports" a conviction. Here defense counsel did not object. Moreover, the trial court gave the standard jury instructions, which state that the jury must be convinced beyond a reasonable doubt of the defendant's guilt. Nonetheless, the argument is improper and we emphasize that if prosecutors use it in the future they will risk reversal in the interests of justice, even if prejudice is not apparent. See, e.g., State v. Salitros, 499 N.W.2d 815, 820 (Minn.1993).
(b) Again without objection, the prosecutor at one point asked the jury, "how can I put you in her [R.N.'s] life?" It is improper to ask the jurors directly to put themselves in the victim's shoes. State v. Johnson, 324 N.W.2d 199, 202 (Minn.1982).
(c) Without objection, the prosecutor improperly suggested to the jury that it could not reject R.N.'s testimony as false because there was no direct evidence that she was lying or had a motive to lie. It is proper for a prosecutor to tell the jury that defense counsel's questioning of the victim suggesting that she was lying does not constitute evidence. However the statement by the prosecutor was improper because a jury is always free to reject a complainant's testimony even if there is no direct evidence that the complainant has lied or has a motive to lie.
(d) Without objection, the prosecutor not only endorsed the testimony of Sergeant Martinson, referring to him as a "good cop," but said, "We all hear and read about sex crimes in the City of Minneapolis. He's the guy that investigates those kinds of things," then added that if Martinson had not done his job and gotten defendant to confess, defendant "would have walked out of here factually a rapist" with the state being unable to obtain a conviction. He then added that Martinson this "good cop" who used "[g]ood, good police work" did not believe defendant's denial of guilt and in effect saved the day by getting defendant to confess.
(e) The prosecutor, again without objection, referred to the fact that defendant was associated with the "Gangster Disciples" and argued that therefore defendant is "street wise" and "knew it was a rape."
As we have said before, a prosecutor is a "`minister of justice' whose obligation is `to guard the rights of the accused as well as to enforce the rights of the public.'" Salitros, 499 N.W.2d at 817 (quoting I ABA Standards for Criminal Justice, The Prosecution Function *813 3-1.1 and Commentary at 3.7 (2d ed. 1979)). We take very seriously our role of insuring that a criminal defendant, no matter the nature of the charge against him or her, receives a fair trial. We have made it clear on a number of recent occasions to prosecutors who persist in making improper arguments in closing argument that we will, in appropriate cases, exercise our power to reverse prophylactically or in the interests of justice. Id. at 820. In this case we believe that the defendant received a fair trial and we conclude that the interest of justice does not demand a new trial.
Affirmed.
ANDERSON, J., took no part in the consideration or decision of this case.
NOTES
[1] Section 140.4 provides:
No law enforcement officer shall attempt to induce an arrested person to make a statement or otherwise cooperate by
(a) questioning of such unfair frequency, length or persistence as to constitute harassment of such person; or
(b) any other method which, in light of such person's age, intelligence and mental and physical condition, unfairly undermines his ability to make a choice whether to make a statement or otherwise cooperate.
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2014 IL App (1st) 123135
No. 1-12-3135
Filed December 12, 2014
FIFTH DIVISION
IN THE APPELLATE COURT
OF ILLINOIS
FIRST JUDICIAL DISTRICT
THE PEOPLE OF THE STATE OF ILLINOIS, ) Appeal from the
) Circuit Court
Plaintiff-Appellee, ) of Cook County
)
v. ) No. 08 CR 12211
)
JODECI WHITFIELD, ) Honorable
) Angela Munari Petrone,
Defendant-Appellant. ) Judge Presiding.
PRESIDING JUSTICE PALMER delivered the judgment of the court, with opinion.
Justices McBride and Gordon concurred in the judgment and opinion.
OPINION
¶1 Following a jury trial, defendant Jodeci Whitfield was convicted of two counts of
attempted murder, aggravated battery with a firearm, aggravated discharge of a firearm, and
aggravated unlawful use of a weapon (UUW). He was then sentenced to an aggregate term of 45
years' imprisonment, which included a 25-year mandatory enhancement. On appeal, defendant
contends that hearsay evidence was improperly admitted at trial, requiring remand for a new
trial; and that the sentences imposed by the court were excessive. We affirm.
1-12-3135
¶2 BACKGROUND
¶3 Prior to trial, defendant filed a motion in limine requesting, in pertinent part, that the State
be precluded from introducing at trial testimony that people at or near the scene of the incident
pointed in his general direction in the presence of police. He alleged that the pointing was a
nonverbal assertive statement communicated by unknown individuals, which would violate his
right to confrontation. Defendant maintained that the jury could easily conclude from this
testimony that he fired a gun.
¶4 At the proceeding on this motion, defendant argued that even if a limiting instruction is
given to the jury, a normal person is likely to speculate that the person they were pointing at had
a gun or fired a weapon. Defendant maintained that because what these people were indicating or
had seen is unknown, this evidence was irrelevant, had no probative value, and is highly
prejudicial.
¶5 The State responded that the evidence at trial would be that at least one of the victims ran
toward police yelling, "he is shooting," and pointed in the direction of defendant. Other evidence
would show that a group of people on a porch pointed at defendant and the police began to
pursue him. The State asserted that this evidence was admissible because identification is an
exception to the hearsay rule, and, further, that pointing goes to the course of conduct of the
officers.
¶6 The court denied defendant's motion, finding that police may recount the steps leading up
to defendant's arrest. The court noted that defendant never indicated that there were specific
words he wanted excluded, but only that he did not want testimony regarding the people
pointing, and that if he wanted certain words excluded, he should present a motion on it.
¶7 Defendant also filed a motion to bar the State from calling David Baker, one of the
victims, as a witness. Defendant alleged, in relevant part, that according to a detective's
supplementary report, Baker identified defendant as the person who shot him. However, when
Baker met with defendant's investigator, he told the investigator that he did not know who shot
him, but that he knew it was not defendant, and never identified defendant. Baker also provided a
signed, written statement to that effect. Defendant maintained that if Baker was allowed to testify
in the State's case, such testimony would only be admissible as impeachment and not substantive
evidence under section 115-10.1 of the Code of Criminal Procedure of 1963 (Code) (725 ILCS
5/115-10.1 (West 2012)) as no prior inconsistent statements had been memorialized in writing,
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1-12-3135
audio or video. He also claimed that his due process rights would be violated if the State was
allowed to call Baker for the sole purpose of impeaching him with unmemorialized statements,
where he had not been provided with any impeachment evidence that conformed to section 115-
10.1 of the Code and any unrecorded oral statement is inadmissible under that section.
¶8 At the proceeding on this motion, defendant informed the court that the State could not
call a witness solely to impeach him, but must also offer substantive evidence. The State
responded that Baker was not being presented solely to impeach him, that he was going to testify
regarding everything that occurred on the night of the incident and that the only thing Baker was
recanting was his identification of defendant as the shooter. The State also informed the court
that Baker's prior identification of defendant could be admitted as substantive evidence. The
court denied defendant's motion, noting that Baker may testify consistently with what he told the
State or consistently with what he told defendant's counsel.
¶9 At trial, Deon Stewart testified that at 5 p.m. on June 3, 2008, he and his friend Baker
were on the 400 block of North Lavergne Avenue watching two people rapping. While there, a
male in a black "hoodie" with orange stripes came up to them and said something unintelligible.
Stewart could see the lower part of his face and identified defendant in court as this person.
When defendant was 10 feet away from Stewart, he pulled out a gun and pointed it at Stewart's
head. Stewart fled, hearing several gunshots, and when he turned around, he noticed that
defendant's gun had jammed. Stewart kept running with Baker, but they separated, and when he
returned to the location of the shooting to find Baker, Stewart saw defendant in the back of a
police car. Stewart informed police that defendant was the shooter and identified him in a lineup.
¶ 10 Stewart acknowledged that he had a 2010 conviction for possession of a controlled
substance, for which he received probation but violated it and was then incarcerated. He also had
a 2007 conviction for disarming a police officer.
¶ 11 Chicago police officer Leif Goff testified that at 6:40 p.m. on the day in question, he was
driving in the area of Kinzie Street and Lavergne Avenue with his partner, Officer Petrusonis,
when he heard three gunshots. As he drove in the direction of the gunshots, he saw two young
males running southbound on Lavergne Avenue, shouting, "he is shooting, he is shooting." One
of them pointed behind him, and when Officer Goff looked in that direction, he saw defendant,
and no one else, running eastbound on Hubbard Street in a dark shirt with an orange stripe.
Officer Goff turned east onto Hubbard Street and saw defendant look in his direction, then begin
3
1-12-3135
to walk.
¶ 12 Officer Goff continued driving in defendant's direction and saw a group of people on a
porch on the north side of Hubbard Street. When Officer Goff was asked by the State if these
people made any gestures, defendant objected but was overruled. The officer then testified that
three people pointed at defendant. At that point, the court interjected and informed the jury that
the officer's testimony regarding this encounter is not offered for the truth of the matter asserted,
but to show the course of conduct of police in their investigation.
¶ 13 Officer Goff further testified that defendant fled when he pulled alongside him. The
officers then exited their vehicle, announced their office, and told defendant to stop, but he
continued to run, and when told to show his hands, he refused. The officers eventually
handcuffed defendant and discovered a gun on him, but at the time, the officers were unaware
that anyone had been shot.
¶ 14 At that point in the proceedings, defendant renewed his objection to the State calling
Baker as a witness, which the court denied. Baker then testified that at the time in question, he
was watching some people rap with Stewart when someone came up to them and started
shooting. Baker had never seen this man before, had no idea why he was shooting at them, and
did not recall what the shooter was wearing. He fled when the shooting started, heard a total of
four gunshots, and was struck by a bullet in the back of his leg. Baker went to his grandmother's
house, then to the hospital where he received medical treatment, including antibiotics, for the
through-and-through gunshot wound to his leg, and was released after a couple of hours.
¶ 15 Baker testified that he later went to the police station to view a lineup. He stated that he
was told by police that the shooter was in position one in the lineup but that he told the officer
that this person was not the offender. Baker testified that he did not pick anyone out in the
lineup. He denied telling Detective Tedeschi that a male black wearing a black hooded sweatshirt
with an orange stripe had approached him. He also denied telling Tedeschi that the reason he had
not told police at the scene that he had been shot was because he was afraid. Baker testified that
he later saw the shooter at a mall, but did not call police.
¶ 16 Baker denied telling the assistant State's Attorney (ASA) that defendant was the shooter
and that he would not identify him in open court because he was afraid. He also denied telling
her he was afraid to identify defendant in court because he was afraid of what would happen to
him and his family. He testified that the shooter was not present in court. He then acknowledged
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that he was currently incarcerated for armed robbery in Indiana, that he was convicted of
aggravated UUW and delivery of cannabis in 2006 and that he was adjudicated delinquent of
burglary in 2004.
¶ 17 Chicago police officer Kyle Mingari testified that he and his partner, Officer Hart, met
with Baker after the shooting. Baker told him that he observed defendant placed in a squad car
and that defendant was the shooter.
¶ 18 Chicago police detective Brian Tedeschi testified that he put together the lineup of five
individuals. He told Baker that the offender may or may not be in the lineup, and Baker
identified defendant as the shooter.
¶ 19 The parties stipulated that Dr. Trac Nghiem would testify that at 7:15 p.m. on June 3,
2008, he treated Baker in the emergency room at Loyola Hospital for a gunshot wound to the
right lower leg. He found that Baker suffered soft tissue swelling from a through-and-through
gunshot wound, which was irrigated and dressed, and he was discharged from the hospital at
9:10 p.m.
¶ 20 At the close of evidence, the jury found defendant guilty of two counts of attempted
murder, aggravated battery with a firearm, aggravated discharge of a firearm, and aggravated
UUW. Defendant subsequently filed a motion for a new trial, alleging, in relevant part, that the
court erred in denying his motion in limine to preclude the State from introducing testimony that
people near the crime scene pointed in his general direction in the presence of police, and in
overruling his objections to that testimony at trial. He also alleged that the court erred in denying
his motion to bar the State from calling Baker as a witness.
¶ 21 The court denied the motion, finding no error in the denial of defendant's motion to bar
Baker from testifying where he was the victim, made an identification of defendant, and although
he recanted the identification, he provided evidence regarding the circumstances which led to his
being shot. The court further noted that the testimony regarding the people pointing to defendant
was admitted solely to show the course of police conduct.
¶ 22 ANALYSIS
¶ 23 On appeal, defendant continues to challenge the trial court's ruling on these evidentiary
matters. He first contends that the court erred in admitting hearsay evidence from police that
unknown individuals pointed him out. He maintains that the testimony that two unknown
5
1-12-3135
individuals yelled, "he is shooting, he is shooting," and pointed toward him and that three
bystanders pointed police in his direction were out-of-court hearsay identifications, which did
not conform to the requirements of section 115-12 of the Code (725 ILCS 5/115-12 (West
2012)).
¶ 24 As an initial matter, we observe that defendant did not object in the trial court to the
testimony regarding two unknown individuals yelling, "he is shooting, he is shooting," or to the
prosecutor's comments regarding it during closing argument. He also did not object during the
trial to Officer Goff's testimony that one of the two unknown individuals, who were running
from the scene yelling, pointed behind them. To preserve an issue for review, defendant must
object at trial and raise the matter in a written posttrial motion. People v. Enoch, 122 Ill. 2d 176,
186 (1988). Since defendant failed to raise these matters in the trial court, he failed to preserve
any issue regarding them for purposes of review. Enoch, 122 Ill. 2d at 186. Defendant did,
however, properly preserve his contention that the officer's testimony regarding the two
unknown individuals pointing in his direction and the people on the porch pointing him out to
police was inadmissible hearsay by objecting at trial and raising the issue in his posttrial motion.
¶ 25 It is axiomatic that a defendant is guaranteed the right to confront witnesses against him
by the confrontation clauses of both the United States and Illinois Constitutions. U.S. Const,
amend. VI; Ill. Const. 1970, art. I, § 8. Hearsay is an out-of-court statement offered to prove the
truth of the matter asserted and is excluded from evidence primarily because of the lack of an
opportunity to cross-examine the declarant. People v. Peoples, 377 Ill. App. 3d 978, 983 (2007).
However, an out-of-court statement that is offered for a purpose other than to prove the matter
asserted is not hearsay and does not implicate the confrontation clause. Peoples, 377 Ill. App. 3d
at 983. Thus, testimony concerning statements offered for the limited purpose of showing the
course of police investigation where such testimony is necessary to fully explain the State's case
to the trier of fact is not inadmissible hearsay. People v. Jura, 352 Ill. App. 3d 1080, 1085
(2004). The determination of the admissibility of evidence is within the discretion of the trial
court, and its ruling will not be reversed on appeal absent an abuse of discretion. Jura, 352 Ill.
App. 3d at 1085.
¶ 26 Defendant maintains that Officer Goff's testimony that three people pointed him out to
the officer was identification hearsay and thus inadmissible. He maintains that in order for this
identification to be substantively admissible under section 115-12 of the Code (725 ILCS 5/115-
6
1-12-3135
12 (West 2012)), the declarant must testify at trial or hearing, the declarant must be subject to
cross-examination concerning the statement, and the statement must be one of identification of a
person made after perceiving him.
¶ 27 Here, the record shows that the people on the porch merely pointed at defendant as police
pursued their investigation of the incident and made an investigatory stop. There is no indication
that these unidentified individuals witnessed the shooting that occurred on the 400 block of
North Lavergne Avenue, or that they identified defendant as the offender. Under these
circumstances, the testimony regarding this momentary encounter does not constitute
inadmissible identification hearsay.
¶ 28 Moreover, the record shows that this evidence was introduced for the sole purpose of
showing the conduct of police and the steps in their investigation, which falls outside the
category of hearsay. People v. Canity, 100 Ill. App. 3d 135, 150-51 (1981). Absent a showing to
the contrary, we presume that the jury followed the trial court's instructions to that effect in
reaching its verdict. People v. Richardson, 2011 IL App (5th) 090663, ¶ 23. We, therefore,
conclude that the testimony in question was not inadmissible hearsay (Canity, 100 Ill. App. 3d at
150-51), that it was properly allowed to show the course of police conduct, and there was no
abuse of discretion in its admission (Jura, 352 Ill. App. 3d at 1085).
¶ 29 Defendant next contends that the trial court erred in admitting as substantive evidence the
testimony of Officers Tedeschi and Mingari as to the alleged prior identification made by Baker
where Baker did not make an in-court identification of him and testified that he never made such
an identification. He maintains that the court erred in admitting this evidence because there is no
evidence that the statement is an identification made after Baker perceived the shooter as
required under section 115-12 of the Code (725 ILCS 5/115-12 (West 2012)). The State responds
that defendant forfeited this specific objection because he did not raise it below.
¶ 30 "The law is clear that '[a]n objection to evidence based upon a specific ground is a waiver
[i.e., forfeiture] of objection on all grounds not specified.' " People v. Bennett, 159 Ill. App. 3d
172, 180 (1987) (quoting People v. Washington, 23 Ill. 2d 546, 548 (1962)). In the trial court,
defendant objected to the State calling Baker on the specific ground that the State would be
improperly introducing Baker for the sole purpose of impeaching him with unmemorialized
statements to police. Defendant did not raise the specific objection presented here that there is no
evidence that the statements Baker made to police are identifications made after Baker perceived
7
1-12-3135
the shooter as required under section 115-12 of the Code (725 ILCS 5/115-12 (West 2012)).
Furthermore, the objection at the trial court level was to Baker's testimony and not the officers'
testimony, which defendant raises for the first time on appeal, resulting in waiver [i.e. forfeiture].
Enoch, 122 Ill. 2d at 186.
¶ 31 In any event, the issue is without merit. Section 115-12 provides: "A statement is not
rendered inadmissible by the hearsay rule if (a) the declarant testifies at the trial or hearing, and
(b) the declarant is subject to cross-examination concerning the statement, and (c) the statement
is one of identification of a person made after perceiving him." 725 ILCS 5/115-12 (West 2012).
In support of his position, defendant cites People v. Stackhouse, 354 Ill. App. 3d 265 (2004),
noting that it has been overruled "in part" in People v. Lewis, 223 Ill. 2d 393 (2006). In
Stackhouse, the victim testified that a man and a woman robbed him, but he did not see the man,
and the trial court allowed the responding officer to testify that the victim identified both
offenders shortly after the robbery. Stackhouse, 354 Ill. App. 3d at 267-69, 276. Defendant
argued on appeal that the officer's testimony on this point was hearsay and improperly admitted
under section 115-12. Stackhouse, 354 Ill. App. 3d at 276. Stackhouse held that the testimony
was impermissible hearsay under section 115-12 because that section requires "the declarant to
testify and be subject to cross-examination regarding the out-of-court identification statement
before a third party may testify to the making of such a prior statement of identification by the
declarant." (Emphasis in original.) Stackhouse, 354 Ill. App. 3d at 278. Stackhouse further held
that an unequivocal denial at trial by the identification witness that he ever made an out-of-court
statement of identification precludes the admissibility of any testimony by the third party of the
alleged prior identification under section 115-12. Stackhouse, 354 Ill. App. 3d at 279. The court
concluded that in that case the admission of the hearsay identification testimony was harmless
error where there was overwhelming, nonhearsay evidence of defendant's guilt. Stackhouse, 354
Ill. App. 3d at 281.
¶ 32 In coming to this conclusion, the Stackhouse court relied upon and extended the
reasoning of People v. Bradley, 336 Ill. App. 3d 62 (2002). In Bradley, the victim had identified
the defendant in a photo array to a detective. The photo array was not available on the first day of
trial and, therefore, the victim did not testify regarding the identification in the photo array. On
the second day of trial, the State did not recall the victim to the stand and instead called the
detective to testify that the victim previously identified the defendant in a photo array as the
8
1-12-3135
assailant. Bradley, 336 Ill. App. 3d at 70. The Bradley court held that under section 115-12,
"[b]efore a third person is permitted to testify as to a witness's out-of-court statement of
identification, the witness must first testify as to the out-of-court identification." Bradley, 336 Ill.
App. 3d at 70.
¶ 33 The Stackhouse court reasoned that given the holding in Bradley, it logically flowed that
if section 115-12 required the declarant to testify and be subject to cross-examination regarding
an out-of-court identification statement before a third party could testify to the making of such
prior identification, then a denial by the identification witness that an identification was made
precludes the admissibility of testimony by a third-party witness regarding the declarant's prior
identification statement. In so holding the Stackhouse court stated:
"Here, we have direct testimony from the victim, under both direct and
cross-examination, that he did not see the male offender during the course of the
robbery and did not identify the male offender shortly after the robbery during the
confrontation in the Walgreen's parking lot. Based on this testimony and our
decision in Bradley, we hold that Officer Ferguson's testimony that Ortiz
identified 'both' offenders in the Walgreen's parking lot was inadmissible hearsay.
Clear and unequivocal testimony that no identification was ever made of the
defendant by the victim of the crime precludes the admissibility of an out-of-court
identification statement by a third party no less so than when no testimony is
elicited from the victim regarding 'his out-of-court statement of identification.'
Bradley, 336 Ill. App. 3d at 70. Stated differently, if the absence of testimony by
the identification witness concerning 'his out-of-court statement of identification'
precludes the admissibility of testimony by the third party regarding the
declarant's prior identification statement, an unequivocal denial by the
identification witness that he ever made an 'out-of-court statement of
identification' likewise precludes the admissibility of any testimony by the third
party of the alleged prior identification statement under section 115-12. It is a
logical and compelling extension of our holding in Bradley that in the face of
clear and unequivocal testimony by Ortiz that he never identified the defendant at
the parking lot shortly after the robbery, Officer Ferguson's testimony that Ortiz
identified 'both' offenders shortly after the robbery was not admissible as
9
1-12-3135
substantive evidence under section 115-12. Bradley, 336 Ill. App. 3d at 70."
Stackhouse, 354 Ill. App. 3d at 279.
¶ 34 Ultimately however, Bradley, which was the logical underpinning of Stackhouse was
overruled by our supreme court in Lewis, 223 Ill. 2d 393, a case that presented the same exact
factual scenario as Bradley. There, the identification declarant testified but was not asked on
direct examination about her identification of the defendant from a photo array. The State then
asked a police detective to testify concerning that photo array identification. The trial court
overruled an objection that was based the argument that section 115-12 could only apply if the
declarant testified to the identification first. Our supreme court affirmed that ruling and rejected
Bradley and Stackhouse to the extent that they held otherwise.
¶ 35 In rejecting Bradley and Stackhouse on this point, our supreme court stated:
"The plain language of section 115-12 requires the declarant to testify and
be subject to cross-examination on the identification statement. 725 ILCS 5/115-
12 (West 2002). There are no other requirements for admission of a third party's
testimony about the declarant's out-of-court identification. The statute does not
expressly require the declarant to testify on the out-of-court identification before a
third party may testify about that identification. This court may not add a
requirement for the order of the witness' testimony when it is not found in the
plain language of the statute. [Citation.] In sum, the language of section 115-12 is
plain and unambiguous, and it does not require a declarant to testify to the out-of-
court identification before a third party may offer testimony on that matter.
As noted, Bradley and Stackhouse have held that section 115-12 requires a
declarant to testify on his or her out-of-court identification before a third party
may testify about that identification. Bradley and Stackhouse conflict with our
holding that the plain language of section 115-12 does not impose a requirement
concerning the order of the witness' testimony. Accordingly, we hereby overrule
Bradley and Stackhouse to the extent that those cases conflict with our decision."
Lewis, 223 Ill. 2d at 402-03.
See also People v. Miller, 363 Ill. App. 3d 67, 73-74 (2005) (another division of this court,
contrary to Stackhouse, held that the declarant's prior statement of identification is admissible as
substantive evidence when testified to by a witness to the identification, such as an officer, even
10
1-12-3135
when the declarant at trial denies making or repudiates the identification and denies that
defendant was involved in the crime). As noted above, the Stackhouse court stated that its
decision was a logical extension of Bradley. Bradley was overturned on the very point that
Stackhouse relied. As a result, we believe that Stackhouse was wrongly decided and we decline
to follow it.
¶ 36 Here, defendant maintains that the victim, Baker, did not perceive the shooter as required
by section 115-12. 1 The victim testified that he saw the offender during the shooting. His
identification of defendant, as testified to by police, was thus made after he perceived the
shooter. Furthermore, as noted above, even though Baker denied identifying defendant as the
shooter, his out-of-court statements of identification made to the officers were substantively
admissible under section 115-12 of the Code. Miller, 363 Ill. App. 3d at 73, n.1. Accordingly, the
trial court did not err in allowing this evidence in substantively.
¶ 37 Defendant also contests the State's questioning of Baker regarding his motive for not
identifying defendant in court and his prior statements that he had been afraid to testify.
Defendant did not object to this line of questioning below and, accordingly, has waived [i.e.,
forfeited] any issue regarding it. Enoch, 122 Ill. 2d at 186.
¶ 38 Finally, defendant contends that his sentences for the attempted murders were excessive
where he had no history of prior adult convictions, Baker's injury was minor and Stewart
suffered no injury. He claims that the sentences are manifestly disproportionate to the nature of
the offense, especially where he received a 30-year sentence for aggravated battery with a
firearm, and the sentence imposed for shooting at Stewart was greater than the one imposed for
shooting Baker.
¶ 39 As an initial matter, we observe, contrary to defendant's contention, that the record shows
that the court sentenced defendant on count III (attempted murder of Baker) to 20 years'
imprisonment with a 25-year firearm enhancement, and on count V (attempted murder of
Stewart) the court "likewise sentenced [defendant] to a total term of 45 years." Accordingly, the
1
On appeal, defendant does not contend that the first two prongs of section 115-12 have
been met. We note further that, in Lewis, our supreme court specifically held that when the
identification witness takes the stand and testifies, that witness is considered to be "subject to
cross-examination concerning the statement," even if that witness did not testify to the
identification on direct examination. (Internal quotation marks omitted.) Lewis, 223 Ill. 2d at
404.
11
1-12-3135
sentences imposed for counts III and V were the same.
¶ 40 We further observe that there is no dispute that the sentences imposed for attempted first
degree murder fell within the statutory range of 6 to 30 years' imprisonment (730 ILCS 5/5-4.5-
25 (West 2012)), and provided for a sentencing enhancement of 25 years to natural life (720
ILCS 5/8-4(c)(1)(d) (West 2012). As a result, we may not disturb the sentences imposed by the
court absent an abuse of discretion (People v. Bennett, 329 Ill. App. 3d 502, 517 (2002)), and
find none here.
¶ 41 Although defendant points out that he had no prior adult convictions, we note that he was
16 years old when he committed these offenses and that the court was aware of the various
sentencing factors set out here for our consideration. The record shows that the court denied the
State's request to impose consecutive sentences, but also noted that Baker sustained a through-
and-through gunshot wound to his leg, and defendant's act of shooting in the direction of
Stewart's head, thwarted only by a malfunction of his gun, was a very serious offense. We note
that the court was not required to give greater weight to defendant's rehabilitative potential than
to the seriousness of the offense (People v. Phillips, 265 Ill. App. 3d 438, 450 (1994)), which
involved shooting unarmed victims who did not provoke him, and imposed sentences within the
statutory requirements.
¶ 42 We further observe that defendant briefly maintains that the maximum sentence of 30
years' imprisonment for aggravated battery with a firearm for shooting at Baker further
demonstrates that the sentences imposed were disproportionate to the nature of the offense. We,
however, agree with the trial court that defendant's crime of his unprovoked shooting of unarmed
victims on a public street was a serious offense. In addition, the record shows that the trial court
gave serious consideration to defendant's personal history, as well as the mitigating and
aggravating factors presented, and imposed the maximum term on this offense. We find the
sentence proportionate to the nature of the offense and consistent with the purpose of the law,
including balancing the seriousness of the offense with defendant's rehabilitative potential
(People v. Campbell, 2014 IL App (1st) 112926, ¶ 74), and no abuse of discretion by the trial
court in imposing it.
¶ 43 CONCLUSION
¶ 44 In light of the foregoing, we affirm the judgment of the circuit court of Cook County.
¶ 45 Affirmed.
12
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206 F.Supp. 181 (1962)
Rena FALIK, Plaintiff,
v.
UNITED STATES of America, Defendant.
No. 62 Civ. 382.
United States District Court E. D. New York.
June 4, 1962.
Charles A. Simmons, Atty., Dept. of Justice, Joseph P. Hoey, U. S. Atty., and Martin R. Pollner, Asst. U. S. Atty., for defendant, in support of motion.
Robert E. Scher, New York City (Raphael, Searles & Vischi, New York City, of counsel), for plaintiff, opposed.
DOOLING, District Judge.
Defendant moves to dismiss, essentially on jurisdictional grounds, plaintiff's action, brought to cancel the purported lien on plaintiff's realty of certain tax penalties alleged to have been illegally assessed against plaintiff under 26 U.S. C.A. § 6672. The defendant's contention is that the United States has not consented to such a suit and that, moreover, since it is necessarily an action for declaratory relief, general grants of jurisdiction are not available to plaintiff because 28 U.S.C.A. § 2201 forbids declaratory relief against the United States in tax matters. Plaintiff argues that subject matter jurisdiction exists through the grant to the district courts of jurisdiction over matters arising under the internal revenue laws (28 U.S.C.A. § 1340) and that the United States has consented to be sued in the form plaintiff has chosen by virtue of 28 U.S.C.A. § 2410 which authorizes joinder of the United States in suits to quiet title where the United States asserts a lien interest in property. Plaintiff's suit requires that there exist a power in the Court to review the merit of the underlying assessment and a power, if the assessment is bad, to expunge the cloud on title represented by defendant's lien.
Plaintiff's attack is not on the Government's lien-perfecting procedure but on its administrative determination that plaintiff was liable under 26 U.S.C.A. § 6672 for the default of two corporations in performing their duties to pay withholding and social security taxes. The meagre complaint alleges that plaintiff had been an officer of two now defunct corporations but that she was not a responsible officer in the operation of the business of either corporation. She complains that nevertheless the Commissioner of Internal Revenue assessed some $11,400 against her for the corporate defaults under 26 U.S.C.A. § 6672 and filed liens for the amounts of the assessments against her described real property. These liens, she complains, are a cloud on her title that should be removed and accordingly she prays for a judgment cancelling them and vacating the underlying assessments as illegal. In theory, it will be seen, the complaint asks for an abatement of the assessments as well as for a cancellation of the liens. And, again in theory, if what plaintiff alleges is true, the assessments were very wrong indeed. See Botta v. Scanlon, 2 Cir., 1961, 288 F.2d 504, 506; Wiggins v. United States, E.D.Tenn.S.D.1960, 188 F.Supp. 374.
If Pipola v. Chicco, 2 Cir., 1960, 274 F. 2d 909 appeared to bar plaintiff's access *182 to the remedy she has chosen, United States v. O'Connor, 2 Cir., 1961, 291 F.2d 520, 525-528 removes the apparent bar; if the assessment's rightness is issuable in a suit to collect "tax" under 26 U.S. C.A. § 7403 by enforcing a lien, it can hardly be safe from scrutiny when the property owner takes the initiative under 28 U.S.C.A. § 2410 and, by so doing, invites a counterclaim under 26 U.S.C.A. § 7403. Cf. Young v. United States, C.A. Ky.1962, 355 S.W.2d 144. If so much be true, then the elusive distinctions between erroneous use of the lien procedure and erroneous assessments underlying otherwise impeccably drafted and used liens (Pipola v. Chicco, supra, 274 F.2d at 912-914) disappears from this area to survive, no doubt, in the more imperative field of tax collection protected by 26 U.S.C.A. § 7421. Cf. Botta v. Scanlon, supra, 288 F.2d at 506-507. Enochs v. Williams Packing & Navigation Co. Inc., 1962, 82 S.Ct. 1125, plainly requires that and, given the complexity of the statutes so variously addressed to tax lien matters, requires no more than that.
It follows that the path narrowly opened by United States v. Coson, 9 Cir., 1961, 286 F.2d 453, and the existence of which has, at the least, been doubted (e. g. Remis v. United States, D.Mass.1959, 172 F.Supp. 732, aff'd, 1 Cir., 1960, 273 F.2d 293), does now exist and that plaintiff has tracked it. Cf. Petition of Sills, E.D.N.Y.1953, 115 F. Supp. 239. The availability of the technique of partial payment and refund suit outlined in Steele v. United States, 8 Cir., 1960, 288 F.2d 89 does not meet plaintiff's needs and she may not be remitted to it; her challenge is to the defendant's right to becloud her title to her property, a continuing and grievous damage, if she is, ultimately, in the right, as defendant's motion must assume; she is not required to seek an unwanted relief in the hope of getting the desired relief as a by-product; a refund suit on the taxes applicable to one employee could go off in her favor on a ground useless to her objective. An implication of jurisdiction here can be derived from United States v. Brosnan, 1960, 363 U.S. 237, 80 S.Ct. 1108, 4 L.Ed. 2d 1192; the second case there considered was filed under 28 U.S.C.A. § 2410 and sustained though it would not have been difficult to argue that the superior appropriateness of relief under 26 U.S.C.A. §§ 6325(a) (1) and 7424 on the facts involved required confining the Bank to the relief afforded by those sections.
The complaint is not a forbidden one for declaratory relief; every adjudication implies a declaration of rights; if that declaration be mediate to granting familiar and unforbidden judicial relief, as here, 28 U.S.C.A. § 2201 opposes no bar. Compare: Etheridge v. United States, D.C.Cir.1962, 300 F.2d 906.
The motion is accordingly denied in all respects.
It is so ordered.
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177 Ariz. 20 (1993)
864 P.2d 1052
In the Matter of A Member of the State Bar of Arizona, Harry J. LENABURG, Respondent.
No. SB-93-0068-D. Comm. Nos. 90-0534, 90-0895, 91-1130 and 91-0542.
Supreme Court of Arizona.
December 13, 1993.
Mark I. Harrison, Stephen G. Montoya, for respondent.
Nancy A. Greenlee, State Bar Counsel.
Harriet L. Turney, Chief Bar Counsel, State Bar of Arizona.
JUDGMENT AND ORDER
This matter having come on for hearing before the Disciplinary Commission of the Supreme Court of Arizona, it having duly rendered its decision and no timely appeal having been filed before the Court,
IT IS ORDERED, ADJUDGED AND DECREED that HARRY J. LENABURG, a member of the State Bar of Arizona, is hereby censured for conduct in violation of his duties and obligations as a lawyer, as disclosed in the commission report attached hereto as Exhibit A.
IT IS FURTHER ORDERED that pursuant to Rule 52(a)(8), Rules of the Supreme Court of Arizona, the State Bar of Arizona is granted judgment against HARRY J. LENABURG for costs incurred by the State Bar of Arizona in the amount of $837.56, together with interest at the legal rate from the date of this judgment.
EXHIBIT A
BEFORE THE DISCIPLINARY COMMISSION
OF THE
SUPREME COURT OF ARIZONA
In the Matter of Harry J. Lenaburg, a Member of the State Bar
of Arizona, Respondent.
Comm. Nos. 90-0534, 90-0895, 91-1130 and 91-0542
SB-93-0068-D
DISCIPLINARY COMMISSION REPORT
Nov. 5, 1993.
This matter first came before the Disciplinary Commission of the Supreme Court *21 of Arizona on June 5, 1993, pursuant to Ariz. R.Sup.Ct., Rule 56(a), for review of the Hearing Committee's recommendation of acceptance of the agreement for discipline by consent providing for censure and probation. The Commission, by order filed July 26, 1993, rejected that recommendation and remanded the matter to the Hearing Committee for a hearing. On August 3, 1993, the State Bar filed a motion for reconsideration and request for oral argument. This matter again came before the Commission on September 11, 1993, for oral argument on the State Bar's motion.
Motion for Reconsideration
After hearing oral argument of the State Bar and Respondent, a concurrence of the seven Commissioners present[1] granted the State Bar's motion to reconsider.
...
Decision on the Merits
A concurrence of the seven Commissioners present accepts the Hearing Committee's recommendation that the agreement for discipline, providing for censure and a two-year probation, be accepted. The Commission unanimously adopts the conclusions of law of the Hearing Committee and adopts the tender of admissions and agreement for discipline by consent as its findings of fact.
Facts
The complaint in this matter contains four counts, all of which concern Respondent's failure to uphold his responsibilities as the managing attorney for a law firm (the "Firm"). Respondent became the managing attorney in June 1988.
Mr. and Mrs. A retained the Firm in November 1986 to defend them in a lawsuit with a remodeling company. These clients also wanted to file a counterclaim against the remodeling company. Mr. and Mrs. A stressed that time was of the essence in handling this matter, because insolvency of the remodeling company was probable. Over the next three and a half years, Mr. and Mrs. A wrote a number of letters to the Firm, complaining about the delay, stating that their case had been handed to six different attorneys over this time period.
Respondent was given copies of these letters from Mr. and Mrs. A when he became managing attorney. However, Respondent did not contact the couple to attempt to resolve the problems they were having, and did not adequately supervise the associates handling the case to ensure they were complying with their ethical obligations to Mr. and Mrs. A.
Client B retained the Firm in September 1989 regarding the collection of a post-decree judgment against her former husband. Associate X was assigned to handle her case. Thereafter, the ex-husband's counsel asked Respondent to investigate Associate X's handling of the case, as he believed the lawsuit filed by Associate X was frivolous.
In response, Respondent met with Associate X and another member of the Firm, a California attorney who was not licensed to practice law in Arizona. Respondent relied upon the opinion of the California attorney in determining that Associate X's handling of the matter was proper. Subsequently, the court found that the lawsuit was frivolous, imposed sanctions against Associate X, and dismissed Client B's action.
Mr. and Mrs. C had a consultation with the Firm in September 1990 regarding filing a joint bankruptcy. They were told the retainer fee would be $710. Mr. and Mrs. C paid the retainer on April 15, 1991. Four days later, the Firm informed the couple that it no longer handled bankruptcy work. They were told that the Firm would refund all of the retainer, with the exception of the $150 non-refundable file set-up fee. When Mr. and Mrs. C did not receive any refund within two months, they contacted Respondent, who told them he would check into the matter and *22 report back to them. Respondent did not contact Mr. and Mrs. C again.[2]
Client D retained the Firm to handle the probate of her father's estate. Associate X was assigned to handle the matter. In February 1990 Respondent received a copy of a letter from Client D complaining about Associate X's inaction. Respondent spoke to both the Client and Associate X, and directed Associate X to transfer the file to another attorney within the Firm who had probate experience. Respondent did not follow up with Associate X and, therefore, did not learn that the file had been transferred to an attorney at another firm. Neither did Respondent follow up with Client D to ascertain if she was satisfied with her representation.
Respondent and the State Bar have conditionally admitted that Respondent's conduct was in violation of ER 1.4, ER 1.16(d), and ER 5.1.
Discussion of Decision
The Committee and Commission agree that Respondent violated the following ethical rules:
1. ER 1.4, when he failed to contact Mr. and Mrs. A concerning their difficulties with the Firm, failed to report back to Mr. and Mrs. C concerning their refund, and failed to follow up with Client D to ensure that she was satisfied with her representation;
2. ER 1.16(d) when he failed to ensure that Mr. and Mrs. C had received a refund of the retainer they had paid; and
3. ER 5.1 by failing to make reasonable efforts to ensure that the conduct of the lawyers in the Firm relating to Mr. and Mrs. A, Client B, and Client D conformed to the rules of professional conduct.
Respondent must be held responsible for his own misconduct, which led to this complaint. However, the Commission believes that the policies in place at the Firm contributed greatly to Respondent's misconduct; the position of Arizona managing attorney carried with it too many responsibilities.
Prior to 1990, the Firm handled virtually all areas of the law.[3] Respondent's role, as managing attorney, was to oversee all of the branch offices and personnel in both Phoenix and Tucson. To do this, Respondent had to meet with each branch office regularly and handle any problems that were present. Another of Respondent's responsibilities was to manage the cases of any attorney who had left, until another attorney was hired or the cases were transferred to another branch. Because of the nature of the practice and the large volume of cases handled in each office, turnover of personnel in the offices was relatively high. Respondent's failure to maintain adequate communication and to adequately supervise the attorneys at the Firm was not an indication that he was less than diligent in pursuing these responsibilities; rather, it was an indication that the responsibilities the Firm had assigned to the position of managing attorney were simply too much for one person to handle. Respondent was overwhelmed by his workload.
While it may appear that Respondent should not be held responsible for his inability to shoulder the enormous workload given to him by the Firm, the Commission notes that is not the issue here. There is a difference between responsibility to an employer and responsibility as a lawyer. Respondent probably did uphold his responsibility to the Firm; he did not, however, fulfill the responsibility he held as a lawyer to maintain his ethical obligations.
Our Supreme Court has found that the American Bar Association's Standards for Imposing Lawyer Sanctions provide excellent guidance for determination of an appropriate sanction. See, e.g., Matter of Petrie, 154 Ariz. 295, 742 P.2d 796 (1987).
Respondent's failure to maintain adequate communication with three clients of the Firm *23 can be considered lack of diligence, which is addressed by Standard 4.4. Standard 4.43 provides for reprimand (censure in Arizona) when a lawyer is negligent and does not act with reasonable diligence in representing a client, and causes injury or potential injury to a client. Standard 4.42 provides for suspension when a lawyer knowingly fails to perform services for a client or engages in a pattern of neglect, and causes injury or potential injury to a client. Respondent's conduct evidenced a pattern of neglect, as it affected four clients. In making its recommendation of censure and probation, rather than suspension, the Commission seriously considered the unique circumstances giving rise to that neglect.
Standard 7.0 addresses violations of duties owed as a professional. Standard 7.3 provides for censure when a lawyer negligently engages in conduct that is a violation of a duty owed as a professional, and causes injury or potential injury to a client, the public, or the legal system. As stated above, the Commission finds that Respondent's failure to communicate with the three clients was negligent, rather than intentional. The Commentary to this Standard states that the courts have imposed censures on lawyers who are negligent in supervising employees. It further states that a public censure will help to educate the respondent and deter future violations.
The Commission also reviewed Standards 9.22 and 9.32 on aggravation and mitigation. These are the factors that may justify an increase or decrease in the sanction to be imposed. Present in mitigation are absence of a dishonest or selfish motive, full and free disclosure during and cooperative attitude toward the disciplinary proceedings, and remorse.[4]
Present in aggravation are pattern of misconduct, multiple offenses, substantial experience in the practice of law, and prior misconduct. Respondent has previously been informally reprimanded three times for conduct which occurred during the same time period as the present matter. Each of those cases also concerned problems Respondent encountered as managing attorney of the Firm. The presence of three prior disciplinary offenses, particularly when imposed for similar conduct, usually indicates that an increase in the sanction is appropriate. The Commission notes, however, that the purpose of lawyer discipline is not to punish the offender, but to protect the public, the profession, and the administration of justice. In re Neville, 147 Ariz. 106, 708 P.2d 1297 (1985). The Commission believes that, in this instance, the appropriate response to those three prior sanctions is to impose the probationary terms detailed herein. It is these terms, rather than a period of suspension for Respondent, which the Commission believes address the core of the problem, and will prevent these same incidents from recurring.
It is apparent to the Commission that Respondent handled his responsibilities at the Firm as best he could. However, there is no doubt that some of those responsibilities were not met, as evidenced by the instances detailed here. While the Commission does not excuse Respondent for failing to uphold all of his ethical responsibilities, it does understand the quandary in which Respondent was placed. Respondent could have avoided his own misconduct by quitting his job; however, that would not have eliminated the problem. Rather, it would most likely have meant that some other attorney would now be before the Commission. The Commission believes the heart of the problem here is the policies and procedures of the Firm. The Commission believes that a censure, combined with the following probationary terms, some of which require the cooperation and involvement of the Firm, and with which the Firm has agreed to comply, will get to the heart of the problem.
*24 Probation
Respondent shall be placed on probation for a period of two years, effective as of the date of the order of the Supreme Court of Arizona, under the following terms and conditions:
1. Respondent shall commit no ethical violations during the probationary period;[5]
2. Respondent will submit to and cooperate with an audit of his law practice and that of his firm's by Ezra Tom Clark, in cooperation with the director of the Law Office Management Assistance Program ("LOMAP");
3. Respondent will submit to and cooperate with random audits of his law practice by Mr. Clark, the LOMAP director, or her designee, during the remaining probationary period;
4. Respondent and his firm will implement any and all reasonable suggestions made as a result of the initial audit or random audits;[6]
5. Respondent shall obtain a practice monitor who is acceptable to the State Bar. For the first six months of the probationary period, the practice monitor shall meet with Respondent on a monthly basis to review and discuss Respondent's case load. Thereafter, with the approval of the LOMAP director or her designee, the frequency of these meetings may be decreased to every other month. During the entire probationary period, the practice monitor shall submit quarterly written reports to the State Bar;
6. Respondent shall pay all costs incurred as a result of the probationary terms; and
7. Compliance with all terms of probation is to be reported by Respondent to the State Bar.
/s/ Mark D. Rubin
Mark D. Rubin, Vice Chairman
Disciplinary Commission
NOTES
[1] Commissioners Bonwell, Bosse, and Doyle did not participate in these proceedings. P. Michael Drake, of Tucson, participated as an ad hoc member.
[2] During the course of these disciplinary proceedings, Respondent refunded the money to Mr. and Mrs. C.
[3] Since that time, the Firm has restricted itself to handling only personal injury cases.
[4] In its order of remand, the Commission stated it saw no indication of remorse in the record on appeal. However, after consideration of the State Bar's subsequent motion for reconsideration and hearing oral argument of both the State Bar and Respondent, the Commission finds that Respondent is remorseful.
[5] This term is intended to include any findings that ethical violations occurred during the probationary term. The mere filing of a bar complaint or charge against Respondent during the term of probation would not constitute a violation.
[6] If there is a dispute about the reasonableness of the audit suggestions, the parties will submit the issue to the Hearing Committee for resolution. The term "reasonable" refers to such matters as the cost involved, the amount of effort and time which implementation of the suggestion would require, and similar considerations.
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622 F.2d 23
MAINE PUBLIC SERVICE COMPANY, Petitioner,v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
No. 79-1630.
United States Court of Appeals,First Circuit.
Argued May 8, 1980.Decided June 6, 1980.
David R. Poe, with whom Roger A. Putnam, Portland, Maine, Leon A. Allen, Jr., Washington, D. C., Steven H. Davis, Verrill & Dana, Portland, Maine and LeBoeuf, Lamb, Leiby & MacRae, Washington, D. C., were on brief, for petitioner.
Lynn N. Hargis, Asst. Gen. Counsel, with whom Robert R. Nordhaus, Gen. Counsel and Jerome M. Feit, Acting Deputy Sol., Washington, D. C., were on brief, for respondent.
Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.
PER CURIAM.
1
Once again this court is faced with a question concerning the legality of the fuel adjustment surcharge collected by Maine Public Service Company (MPSC) from its wholesale customers in 1975-76. The object of the surcharge was to recover fuel costs which had been incurred by MPSC but not collected from its customers when MPSC in 1975 switched from one fuel adjustment clause to another. Under the earlier clause, a customer's monthly bill had been calculated on fuel prices averaged over the twelve month period ending the second month preceding the billing month. The result, in a period of rising fuel prices, was that customers' bills were based on unrealistically low price data and hence MPSC was not recovering its full fuel costs. To remedy the situation, MPSC adopted a new fuel adjustment formula whereby customers' bills were based on the price of fuel just one month prior to the billing month. However, unbilled fuel costs which had built up under the old formula remained uncollected, and the surcharge was instituted to recover these costs.
2
The Commission originally ordered MPSC to refund the surcharge. This court vacated the Commission's order disallowing the surcharge and remanded for further proceedings. Maine Public Service Co. v. Federal Power Commission, 579 F.2d 659 (1st Cir. 1978) (hereinafter Maine I ). The Commission's decision had rested in part on the theory that the so-called filed rate doctrine of Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 71 S.Ct. 692, 95 L.Ed. 912 (1951), had so completely tied the Commission's hands as to preclude its allowing the surcharge. We disagreed with the Commission's absolutist legal analysis, 579 F.2d at 665-67, and, because we were unable to tell to what extent that analysis infected its order, we remanded for further consideration, id., 669-70, and directed the Commission to undertake a policy analysis to determine whether the surcharge was "just and reasonable," id., 668.
3
The Commission, without affording MPSC an additional hearing or opportunity to submit further data, arguments, or briefs, considered the surcharge along the lines called for in Maine I and again concluded the surcharge should be disallowed. MPSC petitioned the Commission for rehearing advancing much the same argument it now asserts before this court and also contending that MPSC should be given a hearing before the Commission in order to develop the record in light of the newly emerged standards governing fuel adjustment surcharges. The Commission, rejecting MPSC's arguments and concluding that MPSC had failed to raise any material facts which could affect the Commission's decision and therefore would merit an airing in a hearing, denied the application for a rehearing. MPSC then filed the instant petition for review.
4
Subsequent to Maine I, this court confronted another fuel adjustment surcharge in Boston Edison Co. v. FERC, 611 F.2d 8 (1st Cir. 1979). There, the Commission, after undertaking the policy appraisal called for in Maine I and presenting a more cogent legal analysis, disallowed Boston Edison's surcharge, and this court upheld the Commission's decision. The Commission's reasoning for striking down MPSC's surcharge is largely a reiteration of the position this court sustained in Boston Edison.
5
MPSC first argues that the Commission failed to comply with this court's directive in Maine I. We cannot agree. In Maine I, we stated that the validity of the surcharge presented a "close issue of rate-making policy which Congress expected the Commission, not the courts, to resolve: the ultimate source of an answer must lie in the Commission's own expert appraisal of whether such a surcharge is 'just and reasonable.' " 579 F.2d at 668. On remand, the Commission did undertake a sufficient policy analysis although, in a footnote, it also stated that it believed its prior reasoning was correct.
6
In Maine I, this court criticized the Commission for failing to discuss "the effect of the surcharge on the reasonable expectations of wholesale and retail consumers, on the one hand, and the legitimate needs of the utility if it is to continue to serve the community efficiently, on the other." 579 F.2d at 669. MPSC contends the Commission's attention to these factors on remand was, at best, superficial and perfunctory. The Commission, based primarily on the language of MPSC's old fuel adjustment clause, determined the clause was a fixed rate tariff and not a cost of service tariff. While the latter type of clause provides for an exact recovery of fuel costs on a deferred basis, the former does not. Rather, under a fixed rate tariff, a prior period's fuel cost are used as the most recent test period to calculate a customer's current month's fuel adjustment bill. The formula may result in under or over collection by the utility, but once the customer has paid the bill, nothing more is owed. Boston Edison Co. v. FERC, 611 F.2d at 9; Public Service Company of New Hampshire v. FERC, 600 F.2d 944, 948 (D.C.Cir.1979), cert. denied, 444 U.S. 990, 100 S.Ct. 520, 62 L.Ed.2d 419. The Commission determined that MPSC's wholesale customers, operating under the fixed rate tariff, "had a reasonable expectation that upon payment of their monthly bills, they had completely satisfied their obligation to Maine for the services received." MPSC argues that because its customers did not intervene, and no evidence concerning their expectations was received, the Commission's determination is not supported and is not in accordance with the evaluation called for in Maine I. We are not persuaded, however, that it was inappropriate for the Commission to gauge the customers' expectation on an objective basis from the language of the fuel adjustment clause, rather than to allow subjective testimony.
7
Nor did the Commission ignore the financial impact on MPSC of disallowance of the surcharge. The Commission noted that the unrecovered fuel expenses under the old fuel adjustment clause equaled approximately 20 percent of MPSC's 1975 annual wholesale revenues but less that 3 percent of its total annual revenues. Contrary to Maine's contention, we cannot say the Commission exceeded its authority by considering MPSC's larger financial picture.
8
MPSC also argues the Commission failed to discuss the surcharge in terms of regulatory policy or the public interest. The Commission has taken the position that as between customer and utility, the risk of under-recovery should be borne by the utility the one who has the obligation to design and file a clause that will produce a satisfactory recovery. That reasons may also exist for striking the balance elsewhere, or that state commissions may have allowed surcharges under similar circumstances, does not warrant this court's interference with the policy determination of the Commission the agency to whom rate-making policy is primarily entrusted.
9
Our conclusion that the Commission's most recent action adequately complies with our order of remand does not mean that we are altogether happy about the agency's failure to have initiated some kind of a procedure not necessarily a hearing but at least an invitation to submit briefs which would have afforded MPSC an opportunity to present its position in light of this court's decision before the Commission made a decision. The Commission's eagerness to reinstate its former result unencumbered by further argument was not an ingratiating spectacle. MPSC, however, was able, in its petition for rehearing, to bring to the agency's attention both the theory and the facts it wished to establish were it granted a hearing. In all the circumstances, we see no useful purpose to be served by a remand. The Commission's refusal to hold a rehearing indicated that it rejected MPSC's approach and continued to adhere to the analysis it had announced subsequent to remand. That analysis was rooted in the Commission's determination that MPSC's superseded fuel adjustment clause was a cost of service tariff, and this determination, in turn, rested primarily on the language and operation of the clause. Nothing MPSC sought to establish would be material to the Commission's analysis which, as stated, fell within the spectrum of choices available to the agency under its broad authority in this area.
10
The petition for review is denied.
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516 P.2d 76 (1973)
Mabel M. LAURIE, by Guardian Ad Litem, Albert Laurie, Appellant,
v.
The PATTON HOME FOR THE FRIENDLESS, an Oregon Corporation, Respondent.
Supreme Court of Oregon.
Argued and Submitted April 30, 1973.
Decided November 29, 1973.
*77 Norman L. Lindstedt, Portland, argued the cause for appellant. With him on the brief were Richard O. Nesting, and Buss, Leichner, Lindstedt & Barker, Portland.
Bruce Spaulding, Portland, argued the cause for respondent. With him on the brief were Souther, Spaulding, Kinsey, Williamson & Schwabe, Portland.
Before O'CONNELL, C.J., and McALLISTER, DENECKE, HOLMAN, HOWELL, and BRYSON, JJ.
BRYSON, Justice.
This is an action at law to recover damages for personal injuries received by plaintiff while a resident at defendant's "Home." Plaintiff contends that defendant failed to provide protection for its residents and that an intruder broke into the Patton Home and attacked her. Judgment was entered for defendant pursuant to a jury verdict. Plaintiff appeals.
The plaintiff alleged that the proximate cause of plaintiff's injuries was the negligence of the defendant:
"(1) In failing to provide protection for residents of defendant home against unauthorized intruders.
"* * * * *.
"(3) In failing to have sufficient attendants and personnel on duty at said time and place to provide proper protection and care for plaintiff and paying guests."
Plaintiff also alleged that ordinance No. 23.246 of the city of Portland provided, in part, as follows:
"23.246: Number and Qualifications of Personnel. All personnel directly involved in caring for the aged resident persons in homes licensed under ORS 442.005 to 442.990 shall be of suitable temperament and understand the needs of aged persons. Their number shall be adequate to insure proper protection and care for all guests at all times."
The court granted defendant's motion to strike plaintiff's third allegation of negligence *78 and submitted the case to the jury on the first allegation. Plaintiff assigns this as error.
The first allegation of negligence charges a breach of defendant's common-law duty to provide plaintiff reasonable protection against intruders. Plaintiff seems to contend that ordinance No. 23.246 requires an absolute duty on the part of the defendant to provide enough personnel to insure plaintiff protection against intruders and that the third allegation of negligence is meant to state a breach of a legal duty imposed by ordinance.
We interpret the ordinance to restate the common-law duty to provide reasonable protection. In Ray v. Anderson, 240 Or. 619, 621, 403 P.2d 372 (1965), we similarly interpreted a provision in the motor vehicle code that was open to the literal interpretation that it imposed an absolute duty. ORS 483.126(1) then provided, in part:
"The driver of any vehicle upon a highway before starting, stopping or turning from a direct line shall first see that such movement can be made in safety. * * *"
In Ray v. Anderson, supra, in interpreting this statute, we stated:
"* * * [T]he statute does not mean that the person takes this action at his peril. If, upon looking, it would appear to a reasonably prudent person that such action could be safely taken, he would not be guilty of negligence as the statute would not be violated. * * *"
Inasmuch as plaintiff's third allegation of negligence was repetitious of the first, that is, the defendant breached its common-law duty to provide reasonable protection, no error was committed in striking it.
The plaintiff also contends that the trial court erred in not giving a requested jury instruction on negligence per se, Oregon Uniform Jury Instruction No. 10.03. As the ordinance merely restated the common-law duty of reasonable care, the negligence per se instruction was not applicable and the court did not err in refusing to give this instruction.[1]
Plaintiff also contends that the trial court erred "in repeating and re-emphasizing the defendant's instruction regarding its theory of defense." In giving one of the defendant's requested instructions, the trial court inadvertently added words to the instruction that would have changed the instruction's significance. When this error was called to the court's attention the instruction was given in the correct language, as originally requested.
The court has the duty to instruct the jury correctly and should not over-emphasize either party's theory of the case. However, "mere repetition of certain language of the instruction" does not constitute reversible error. Hwy. Com. v. N.W. Ice & Cold Storage Co., 233 Or. 497, 499, 378 P.2d 995, 996 (1963); Ballard v. Rickabaugh Orchards, Inc., 259 Or. 200, 209, 485 P.2d 1080 (1971).
Affirmed.
NOTES
[1] For this reason, we need not discuss this case in the context of Freund v. DeBuse, 96 Or. Adv.Sh. 777, 506 P.2d 491 (1973).
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34 F.Supp. 26 (1940)
HUNKIN-CONKEY CONST. CO.
v.
PENNSYLVANIA TURNPIKE COMMISSION et al.
No. 439.
District Court, M. D. Pennsylvania.
July 18, 1940.
*27 John M. Martin, of Los Angeles, Cal., William J. Fitzgerald, of Scranton, Pa., W. W. Montgomery, Jr., and Edward G. Taulane, Jr., both of Philadelphia, Pa., and Herman J. Galloway, of Washington, D. C., for plaintiff.
John D. Faller, David L. German, Theodore S. Paul, George W. Keitel, Asst. Deputy Atty. Gen., of Pa., and Harry K. Daugherty, Senior Counsel, Department of Highway, all of Harrisburg, Pa., for defendants.
WATSON, District Judge.
This case is before the court for disposition of motions to dismiss the complaint and to drop the names of certain of the parties defendant.
The plaintiff, Hunkin-Conkey Construction Company, an Ohio corporation, brought this action for a declaratory judgment against the Pennsylvania Turnpike Commission and its members. The complaint alleges that the plaintiff and defendants are residents and citizens of different states and that the amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000. It is further alleged that the plaintiff and the defendant, Pennsylvania Turnpike Commission, entered into a contract for the construction of a tunnel which is a part of the highway now being built between Harrisburg and Pittsburgh in this state; that certain changes in the work required under the terms of the contract have been made by agreement between the parties; that a controversy has arisen between the plaintiff and the defendant, Pennsylvania Turnpike Commission, as to the rights of the parties with relation to these changes, in regard to the compensation payable to the plaintiff, the time of payment, the time of performance of the contract, and the setting aside of a fund sufficient to insure payment to the plaintiff.
The Pennsylvania Turnpike Commission, hereinafter called the Commission, moves to dismiss the complaint upon the grounds that this court is without jurisdiction to hear and determine the controversy; and that the complaint fails to state a cause of action upon which relief can be granted. The individuals, members of the Commission, move to have their names dropped as defendants, for the reason that no cause of action is stated against them.
The motion of the individual defendants to have their names dropped as defendants in this case is clearly proper. The complaint does not state a cause of action against them either individually or as members of the Commission. The plaintiff does not, and clearly cannot, hold these defendants personally liable for the acts of the Commission. Hopkins v. Clemson College, 221 U.S. 636, 642, 31 S.Ct. 654, 55 L.Ed. 890, 35 L.R.A., N.S., 243, and, procedurally, the act creating the Commission gave it the right to sue and be sued in that name, and thus made it unnecessary to join its members in a suit against it.
The defendants contend that this court does not have jurisdiction of this case because the Commonwealth of Pennsylvania is the real party defendant and the Commission is only its agent, and, therefore, this suit is barred by the Eleventh Amendment to the Constitution of the United States; that, even if not so barred, this court is without jurisdiction because the sole basis of jurisdiction is the alleged diversity of citizenship and such diversity does not exist here.
The Eleventh Amendment provides that "the 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, or by Citizens or Subjects of any Foreign State." This amendment has frequently been before the courts and it is well settled that the immunity *28 therein granted may be waived by the State. In this case, the Commission is authorized to sue and be sued. This general provision constitutes a waiver by the State, if the State is the real party in interest, of its immunity from suit. Utah Construction Co. v. State Highway Commission, D.C., 16 F.2d 322; Interstate Construction Co. v. Regents of the University of Idaho, D.C., 199 F. 509; Hertz v. Knudson, 8 Cir., 6 F.2d 812. However, as shall be shown later, it is my conclusion that the State is not the real party defendant.
The basis for jurisdiction of this court relied upon by plaintiff, aside from the amount in controversy, is the alleged diversity of citizenship of the parties. If the Commission is not a legal entity distinct from the State, the motion to dismiss must be granted, for "A state is not a citizen. And, under the judiciary acts of the United States it is well settled that a suit between a state and a citizen or a corporation of another state is not between citizens of different states, and that the circuit court of the United States has no jurisdiction of it, unless it arises under the constitution, laws, or treaties of the United States." Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482, 487, 15 S.Ct. 192, 194, 39 L.Ed. 231; Minnesota v. Northern Securities Co., 194 U.S. 48, 63, 24 S.Ct. 598, 48 L.Ed. 870; State Highway Commission v. Utah Construction Company, 278 U.S. 194, at 200, 49 S.Ct. 104, 73 L.Ed. 262.
The Pennsylvania Turnpike Commission was created by the Pennsylvania Act of Assembly No. 211, May 21, 1937, P.L. 774, 36 P.S.Pa. § 652a et seq. Section 4 of that Act provides: "That there is hereby created a commission to be known as the `Pennsylvania Turnpike Commission' and by that name the commission may sue and be sued, plead and be impleaded, contract and be contracted with, and have an official seal. The commission is hereby constituted an instrumentality of the Commonwealth, and the exercise by the commission of the powers conferred by this act in the construction, operation and maintenance of the turnpike shall be deemed and held to be an essential governmental function of the Commonwealth. The commission shall consist of five members, and the Secretary of Highways shall be a member ex officio. The four remaining members shall be appointed by the Governor by and with the advice and consent of two-thirds of the members of the Senate, and shall be residents of the Commonwealth of Pennsylvania at the time of their appointment and qualification * * *."
This provision, if taken alone, sheds little light upon the question of whether or not the Commission is in fact the alter ego of the State. However, the other provisions of the act, when considered in conjunction with this section, clearly indicate that the Commission is distinct and separate from the State and is in reality a citizen thereof. The act provides that the entire cost of the turnpike shall be paid in the first instance from a fund which is to be raised by the issuance and sale of bonds, and that the "turnpike revenue bonds issued under the provisions of this act shall not be deemed to be a debt of the Commonwealth or a pledge of the faith and credit of the Commonwealth, but such bonds shall be payable exclusively from the fund herein provided therefor from tolls", section 2, 36 P.S.Pa. § 652b; that the Commission shall have the power to enter into contracts, take title to property, employ engineers, architects, inspectors, and attorneys and such other employees "as may be necessary in its judgment, and fix their compensation", § 4 (subject to the proviso that all contracts and agreements relating to the construction of the turnpike must be approved by the Department of Highways and the construction shall be under the supervision of the Department of Highways); that, upon completion of the turnpike, the Commission shall fix the amount of the tolls and employ men to collect them and provide for the maintenance of the turnpike; that, upon retirement of the bonds or provision therefor, the Commission shall be dissolved and the turnpike shall become a part of the system of state highways.
From the provisions of the act, as above outlined, it is clear that the Commonwealth of Pennsylvania has so divorced the defendant Commission from the State that this action is one against a legal entity distinct from the State, and the State itself is only indirectly interested in the turnpike.
The fact that the Commission is not a corporation does not make it any less a distinct legal entity. It is an unincorporated association, sometimes called a quasi corporation, with power to sue and be sued *29 in its own name, and as such it assumes the citizenship of its members. Thomas v. Board of Trustees, 195 U.S. 207, 25 S.Ct. 24, 49 L.Ed. 160. In the present case, the members of the Commission are alleged to be citizens of the Commonwealth of Pennsylvania and, therefore, this Commission must be deemed to be a citizen of Pennsylvania within the meaning of 28 U.S.C.A. § 41(1).
This case is clearly distinguishable from the case of State Highway Commission v. Utah Construction Company, 278 U.S. 194, 49 S.Ct. 104, 73 L.Ed. 262. There, the construction contract was entered into in the name of the State; the Commission did not have any funds of its own but received its funds from the State; the State alone would have been compelled to respond in damages in event of liability to the contractor. The only conclusion possible under such circumstances was that the State was the real party defendant.
In the case of Kansas City Bridge Co. v. Alabama State Bridge Corp., 5 Cir., 59 F. 2d 48, the State again supplied the funds to be used by the Bridge Corporation in the construction of the bridges and, in addition, the officers of the Bridge Corporation were officials of the State who acted without compensation in addition to their official salaries.
State Highway Commission v. Kansas City Bridge Co., 8 Cir., 81 F.2d 689, is also a case in which the State was directly responsible for the liability which the suit was brought to establish, as the Commission had no funds of its own from which the damages could be paid.
The case of State of Missouri v. Homesteaders Life Ass'n, 8 Cir., 90 F.2d 543, reflects, in its facts, a situation more nearly comparable to the case at hand. There the Superintendent of the Insurance Department was given power to act in his own name, and a fund was created through his office to defray all liabilities which he might incur. The State disclaimed any responsibility for payment of expenses of the office. The court held that, in such case, the Superintendent of the Insurance Department was not the State, but was a separate and distinct legal entity, even though the State received a portion of the funds collected by the officer.
The Pennsylvania Turnpike Commission has been given the power to create a fund through the pledging of its own credit to defray all and any expenses which it might incur, and the State has expressly denied its own financial responsibility in the undertaking. Furthermore, the Commission has been given the power to act through its own agents, subject only to supervision by the State in a few matters. In addition, the Pennsylvania State Highway Commission, an agency of the State, existed at the time of the creation of the defendant Commission, and was qualified to carry out the duties of the defendant Commission. The fact that it was not designated to do so lends support to the contention that the Commonwealth of Pennsylvania desired to create an entity distinct and apart from itself for the purpose of constructing the turnpike.
Taking into consideration all of the attributes of the Commission, it is my opinion that this suit has been instituted against a legal entity distinct from the Commonwealth of Pennsylvania and diversity of citizenship is present.
As a further reason for the dismissal of the complaint, the defendants contend that the arbitration clause of the contract covers the controversy now before the court and that, as a consequence thereof, this court is without jurisdiction to hear and determine the matter. It is well settled that the federal courts will not give effect to arbitration clauses in building contracts to the extent of refusing to take jurisdiction of the cause where arbitration has not been instituted. Rae v. Luzerne County, D.C., 58 F.2d 829; see also Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 121, 44 S.Ct. 274, 68 L.Ed. 582. The State statutes, such as are now in force in Pennsylvania, making arbitration clauses enforceable, are considered to be remedial in nature and not substantive. That is, they give to the parties a new remedy, but do not affect their rights and liabilities. It was said in California Prune & Apricot Growers' Ass'n v. Catz American Co., 9 Cir., 60 F.2d 788, 790, 85 A.L.R. 1117, "The rights of the parties herein, we repeat, grew out of the contract for the purchase and sale of the property described therein, and not out of the agreement to arbitrate. The latter merely substitutes for a court action the remedy and procedure prescribed in the Arbitration Act, for the enforcement of those rights. It substitutes a special tribunal for the court." Therefore, this court cannot enforce the State statute, but must apply the rule followed *30 in the federal courts. This, as previously shown, does not permit the court to enforce the arbitration agreement, and, by the same token, does not require the court to relinquish its jurisdiction over the cause of action.
The final contention of the defendants is that this is not a proper case for declaratory relief. The plaintiff has alleged that a controversy exists as to whether or not the additional work being performed by the plaintiff and not specified in the original contract is within the general provisions of the contract; whether the payments being made are proper payments; whether the time of completion of the contract is binding upon it. The plaintiff asks that its payment be secured by setting aside a fund for that purpose. Certain of these questions are clearly proper ones for declaratory decree. With regard to the time of completion of the contract, it is obviously of considerable advantage to the contractor to know whether or not he is entitled to an extension of time. This alone might be held to be sufficient. However, the court is not restricted in this action to giving declaratory relief. Rule 54(c), 28 U.S.C.A. following section 723c, provides that "Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings." Therefore, if the plaintiff has mistaken his remedy, but has set forth facts showing that he is entitled to relief of a kind which this court can grant, the fact that he asks for a declaratory judgment is not a bar to the granting of the appropriate decree. Furthermore, a claim for declaratory relief and one for coercive relief may properly be joined in the same action. Chase National Bank of the City of New York v. Citizens Gas Company of Indianapolis et al. (Chase National Bank of the City of New York v. Indianapolis Gas Company), 7 Cir., 113 F.2d 217, decided June 6, 1940.
Now, July 18, 1940, it is ordered that the names of the individual defendants be dropped both in their capacity as members of the Pennsylvania Turnpike Commission and as individuals. The motion to dismiss the complaint is denied, and the Pennsylvania Turnpike Commission is directed to file its answer to the complaint within twenty days from the date it receives notice of this order.
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933 N.E.2d 589 (2010)
SHORT
v.
STATE.
No. 32A01-1002-CR-54.
Court of Appeals of Indiana.
September 15, 2010.
BAILEY, J.
Disposition of Case by Unpublished Memorandum Decision Affirmed.
RILEY, J., concurs.
KIRSCH, J., concurs.
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228 Md. 320 (1962)
179 A.2d 868
GENERAL BUILDERS SUPPLY CO., INC.
v.
MacARTHUR
[No. 223, September Term, 1961.]
Court of Appeals of Maryland.
Decided April 16, 1962.
The cause was argued before HENDERSON, HAMMOND, PRESCOTT, HORNEY and SYBERT, JJ.
Submitted on brief by Kardy & Brannan, William J. Brannan, Jr., and John K. Gearing, for appellant.
John P. Moore, with whom was William D. Paton on the brief, for appellee.
HORNEY, J., delivered the opinion of the Court.
In an action brought by an owner against the builder as principal and the surety on a performance bond for the construction of a dwelling, the Circuit Court for Montgomery County entered a judgment against the surety as well as the builder (though in varying amounts) and the surety appealed.
In October of 1959 Bruce M. MacArthur (the owner) entered into a memorandum agreement with the Construction and Development Corporation of Maryland (the builder or principal) under which the builder proposed to construct a dwelling for $29,431, and the owner made a deposit on account of $1,000. Subsequently, before the construction contract was executed, the builder suggested that a "precut house" be purchased from the Hog Island Lumber Company (Hilco) at a cost of $10,000. The owner adopted the suggestion and paid the builder another $2,500 on account for the precut lumber.
The construction contract, to which the plans and specifications were attached, was executed in February of 1960. Between October and February the owner had paid to the builder an additional sum of $931, or a total of $4,431, on account of the contract price. And, when the construction contract had *323 been signed, the owner went beyond the requirements of the contract and sent a check direct to Hilco for $7,500, at the request of the builder, for the balance due on the lumber. But almost immediately thereafter the owner, having become concerned about the ability of the builder to meet its obligations for labor and materials, stopped payment on the check and demanded a performance bond to assure compliance with the construction contract.
In the area in which the dwelling was under construction, the General Builders Supply Company, Inc., had an agency agreement with Hilco whereby it received a commission on the prefabricated houses sold in its territory. On other occasions the agent had become surety on other performance bonds. And, when Hilco was informed of the stop order and demand for bond, it promptly communicated with its agent (sometimes referred to as surety) and arranged for it to become surety on the bond demanded by the owner. The agent, because it was reluctant to be bound for so large a sum, hesitated at first to sign the bond, but when Hilco insisted and intimated that the agent might lose its franchise if it did not go on the bond, the agent as surety executed the bond with the builder as principal and delivered it to the owner. The obligation of the bond was to the effect that if the principal did not perform its contract with the owner, then the surety would "remedy the default" or "complete the contract in accordance with its terms and conditions." Promptly thereafter the owner paid Hilco the balance due of $7,500.
After the signing of the construction contract, sums slightly in excess of the balance of the contract price were deposited from time to time in a joint bank account and all withdrawals therefrom were signed by or on behalf of the owner and builder. But by May of 1960 it became evident that there would not be sufficient funds to complete the house. As of that time the financial status of the builder was such that it could not meet current obligations. And, although $29,598.69 had been expended, there were unpaid bills totaling $7,904.31. At this point the owner refused to make further advances and as a result no further work was done by the builder. The surety was notified of the builder's default, but it denied liability, *324 and refused to complete the house. And when the surety also defaulted, the owner proceeded to complete the construction of the house. The total cost, including extras costing $2,901, was $46,433.24. And, since the contract price was $29,431, the difference between that price and the actual cost of $43,532.24 was $14,101.24. Judgment was entered against the builder for the difference, but because $4,431 had been paid the builder before the performance bond was executed, a judgment for $9,670.24 was entered against the surety.
Relying primarily on Maryland Rule 828 b, the appellee moved to dismiss the appeal because the record was so inadequate that it would not permit a determination of the questions presented. The appellant's record extract is indeed skimpy, but we think there is enough in the record extract and the appellee's appendix to decide most, if not all, of the questions raised. We therefore deny the motion to dismiss and will dispose of the appeal on its merits insofar as it is possible.
On appeal the surety contends (i) that the performance bond was unenforceable for want of assent; (ii) that the bond was unenforceable for want of consideration; (iii) that it was relieved of liability because the owner breached the contract; and (iv) that the owner failed to prove his claim in accordance with the established rules of evidence.
(i)
The claim here is that the owner cannot enforce the performance bond against the surety because its signature was obtained under such circumstances of business necessity or compulsion as to render the signing involuntary and excuse the surety from liability. The claim is without merit. Even if it is assumed, without deciding, that the execution of the bond was obtained by the exertion of "economic compulsion," the record discloses that such coercion as was used was the act of the agent's own principal and not that of the owner, for the only evidence of coercion on the part of the owner is that he stopped payment of the check for lumber and demanded the execution of a performance bond. There is nothing in the record to show that the owner did anything more than insist *325 that someone act as surety for the builder: it was Hilco that insisted that its agent become the surety on the bond. And, since there is no claim that the owner was bound to advance the balance due on the lumber or make other advances not required by the terms of the construction contract, it appears that the owner was within his rights when he demanded that he be furnished with a bond assuring performance of the contract by the builder. See Montauk Corp. v. Seeds, 215 Md. 491, 501, 138 A.2d 907 (1958), for a statement of the doctrine of business or economic compulsion.
(ii)
The next contention is that there was a lack of legal consideration flowing from the owner to the surety for the suretyship agreement which renders the performance bond unenforceable as to the surety. This contention is likewise without merit.
The record shows that the surety undertook the suretyship at the request or insistence of Hilco and that the consideration for the undertaking was a matter between the principal (Hilco) and the agent (General Builders). That the surety was the agent of Hilco is not disputed. And the record shows that the agent, who had acted as surety in previous transactions, undertook to act as surety in this instance in order to forestall the possibility of losing a valuable franchise right. This we think was sufficient consideration to support the suretyship agreement. It was not necessary for the surety to also receive consideration from the owner in order to make the performance bond enforceable as to it. For it is well settled that the consideration supporting a promise "may be given to the promisor or to some other person * * * [and it] may be given by the promisee or by some other person." Humbird v. Humbird, 162 Md. 582, 160 Atl. 623 (1932); Swift v. Allan, 211 Md. 588, 128 A.2d 260 (1957). And see Corbin on Contracts, §§ 124 and 779, where it is said that a promisee has a right against the promisor even though no consideration moved from the promisee to the promisor. There was sufficient consideration to support the suretyship agreement.
*326 (iii)
The third contention is likewise untenable. The gist of this contention is that the owner breached the construction contract by expending more money than was permitted under the contract. The very purpose of the performance bond was to secure the owner against loss under the contract, and it imposed on the surety "an obligation to pay such damages as are ascertained to result from the default of the contractor, without regard to the specific performance of the contract." Stearns Law of Suretyship (5th ed.), § 8.13, p. 272.
The liability of a surety is coextensive with that of the principal, and it is clear that the liability of the surety is measured by the contract of the principal. See Lange v. Board of Education, use of I.B.M. Corp., 183 Md. 255, 37 A.2d 317 (1944); Trimount Dredging Co., use of Brown & Hooff v. U.S.F. & G. Co., 166 Md. 556, 171 Atl. 700 (1934).
While the construction contract and the appended plans and specifications were not included in the record extract, as they probably should have been, there is enough in the record extract and the appendix to show that the owner was to be furnished with a completed dwelling for the sum of money stipulated in the contract. Since there was not substantial compliance with the terms of the contract, the owner had a right to expend such sums as were necessary for completion in accordance with the plans and specifications and, in turn, hold the surety liable for the excess over the contract price. Furthermore, since the terms of the contract, including the plans and specifications, were incorporated in and made a part of the suretyship agreement, it is irrelevant whether the surety or the owner completed the construction as the result would be the same in either event.
(iv)
In this last contention, the surety contends that the admission of cancelled checks into evidence was a violation of the best evidence rule in that the best evidence would have been the original invoices for materials and labor used in completing the construction of the dwelling.
So far as the record extract discloses, the only objection made by the surety to the evidence introduced to establish *327 the damages the owner had suffered as a result of the default of the builder was to the admissibility of an exhibit purporting to be an itemized list (prepared by an auditor under the supervision of the owner) of the cancelled checks given in connection with the completion of the dwelling by the owner. We will therefore consider this objection and no other. But before proceeding to do so, we deem it appropriate to note that there was an abundance of other testimony, by the owner and a contractor he had employed which was not objected to, tending to show that the cost of the labor and materials that went into the completion of the dwelling was fair and reasonable. We return now to the only question raised as to the admissibility of evidence.
The surety, in claiming that the checks were secondary evidence in that they did not explicitly indicate the purpose for which they were given, overlooked the fact that the invoices might not have been any better evidence than the checks on the question of whether the costs were fair and reasonable. It is true that, in a broad sense, the best evidence rule embraces every fact or issue that may be in controversy, but in modern practice the rule is ordinarily invoked where there is an attempt to substitute oral for documentary evidence or where proof is to be made of some fact of which there is a record in writing. 20 Am. Jur., Evidence, § 405.
It has been held that secondary evidence may be received when no better evidence is obtainable. Cf. Marvil Package Co. v. Ginther, 154 Md. 213, 140 Atl. 95 (1928); Medley v. Williams, 7 G. & J. 61, 67 (1835). And where it is not shown by the objecting party that there is a higher grade of available evidence, which, if produced, would more satisfactorily explain and establish a fact than the evidence offered, then the evidence actually produced should not be excluded on the ground that it is secondary evidence. See 32 C.J.S., Evidence, § 780; Billeter v. Halsam Products Co., 38 N.E.2d 994 (Ill. 1942). As we see it, there was no violation of the "best evidence" rule.
For the reasons stated the judgment must be affirmed.
Judgment affirmed; the appellant to pay the costs.
| {
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507 U.S. 349 (1993)
SAUDI ARABIA et al.
v.
NELSON et ux.
No. 91-522.
United States Supreme Court.
Argued November 30, 1992.
Decided March 23, 1993.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
*350 Souter, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O'Connor, Scalia, and Thomas, JJ., joined, and in which Kennedy, J., joined except for the last paragraph of Part II. White, J., filed an opinion concurring in the judgment, in which Blackmun, J., joined, post, p. 364. Kennedy, J., filed an opinion concurring in part and dissenting in part, in which Blackmun and Stevens, JJ., joined as to Parts IB and II, post, p. 370. Blackmun, J., filed an opinion concurring in the judgment in part and dissenting in part, post, p. 376. Stevens, J., filed a dissenting opinion, post, p. 377.
Everett C. Johnson, Jr., argued the cause for petitioners. With him on the briefs were Mark E. Newell and Marc Cooper.
Jeffrey P. Minear argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Starr, Assistant Attorney General Gerson, Deputy Solicitor General Roberts, Douglas Letter, and Edwin D. Williamson.
*351 Paul Schott Stevens argued the cause for respondents. With him on the brief were Leonard Garment, Abraham D. Sofaer, William R. Stein, and Anthony D'Amato.[*]
Justice Souter, delivered the opinion of the Court.
The Foreign Sovereign Immunities Act of 1976 entitles foreign states to immunity from the jurisdiction of courts in the United States, 28 U. S. C. § 1604, subject to certain enumerated exceptions. § 1605. One is that a foreign state shall not be immune in any case "in which the action is based upon a commercial activity carried on in the United States by the foreign state." § 1605(a)(2). We hold that respondents' action alleging personal injury resulting from unlawful detention and torture by the Saudi Government is not "based upon a commercial activity" within the meaning of the Act, which consequently confers no jurisdiction over respondents' suit.
I
Because this case comes to us on a motion to dismiss the complaint, we assume that we have truthful factual allegations before us, see United States v. Gaubert, 499 U. S. 315, 327 (1991), though many of those allegations are subject to dispute, see Brief for Petitioners 3, n. 3; see also n. 1, infra. Petitioner Kingdom of Saudi Arabia owns and operates petitioner King Faisal Specialist Hospital in Riyadh, as well as petitioner Royspec Purchasing Services, the hospital's corporate purchasing agent in the United States. App. 91. The Hospital Corporation of America, Ltd. (HCA), an independent corporation existing under the laws of the Cayman Islands, recruits Americans for employment at the hospital *352 under an agreement signed with Saudi Arabia in 1973. Id., at 73.
In its recruitment effort, HCA placed an advertisement in a trade periodical seeking applications for a position as a monitoring systems engineer at the hospital. The advertisement drew the attention of respondent Scott Nelson in September 1983, while Nelson was in the United States. After interviewing for the position in Saudi Arabia, Nelson returned to the United States, where he signed an employment contract with the hospital, id., at 4, satisfied personnel processing requirements, and attended an orientation session that HCA conducted for hospital employees. In the course of that program, HCA identified Royspec as the point of contact in the United States for family members who might wish to reach Nelson in an emergency. Id., at 33.
In December 1983, Nelson went to Saudi Arabia and began work at the hospital, monitoring all "facilities, equipment, utilities and maintenance systems to insure the safety of patients, hospital staff, and others." Id., at 4. He did his job without significant incident until March 1984, when he discovered safety defects in the hospital's oxygen and nitrous oxide lines that posed fire hazards and otherwise endangered patients' lives. Id., at 57-58. Over a period of several months, Nelson repeatedly advised hospital officials of the safety defects and reported the defects to a Saudi Government commission as well. Id., at 4-5. Hospital officials instructed Nelson to ignore the problems. Id., at 58.
The hospital's response to Nelson's reports changed, however, on September 27, 1984, when certain hospital employees summoned him to the hospital's security office where agents of the Saudi Government arrested him.[1] The agents *353 transported Nelson to a jail cell, in which they "shackled, tortured and bea[t]" him, id., at 5, and kept him four days without food, id., at 59. Although Nelson did not understand Arabic, government agents forced him to sign a statement written in that language, the content of which he did not know; a hospital employee who was supposed to act as Nelson's interpreter advised him to sign "anything" the agents gave him to avoid further beatings. Ibid. Two days later, government agents transferred Nelson to the Al Sijan Prison "to await trial on unknown charges." Ibid.
At the prison, Nelson was confined in an overcrowded cell area infested with rats, where he had to fight other prisoners for food and from which he was taken only once a week for fresh air and exercise. Ibid. Although police interrogators repeatedly questioned him in Arabic, Nelson did not learn the nature of the charges, if any, against him. Id., at 5. For several days, the Saudi Government failed to advise Nelson's family of his whereabouts, though a Saudi official eventually told Nelson's wife, respondent Vivian Nelson, that he could arrange for her husband's release if she provided sexual favors. Ibid.
Although officials from the United States Embassy visited Nelson twice during his detention, they concluded that his allegations of Saudi mistreatment were "not credible" and made no protest to Saudi authorities. Id., at 64. It was only at the personal request of a United States Senator that the Saudi Government released Nelson, 39 days after his arrest, on November 5, 1984. Id., at 60. Seven days later, after failing to convince him to return to work at the hospital, the Saudi Government allowed Nelson to leave the country. Id., at 60-61.
In 1988, Nelson and his wife filed this action against petitioners in the United States District Court for the Southern District of Florida seeking damages for personal injury. The Nelsons' complaint sets out 16 causes of action, which fall into three categories. Counts II through VII and counts X, XI, XIV, and XV allege that petitioners committed various *354 intentional torts, including battery, unlawful detainment, wrongful arrest and imprisonment, false imprisonment, inhuman torture, disruption of normal family life, and infliction of mental anguish. Id., at 6-11, 15, 19-20. Counts I, IX, and XIII charge petitioners with negligently failing to warn Nelson of otherwise undisclosed dangers of his employment, namely, that if he attempted to report safety hazards the hospital would likely retaliate against him and the Saudi Government might detain and physically abuse him without legal cause. Id., at 5-6, 14, 18-19. Finally, counts VIII, XII, and XVI allege that Vivian Nelson sustained derivative injury resulting from petitioners' actions. Id., at 11-12, 16, 20. Presumably because the employment contract provided that Saudi courts would have exclusive jurisdiction over claims for breach of contract, id., at 47, the Nelsons raised no such matters.
The District Court dismissed for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act of 1976, 28 U. S. C. §§ 1330, 1602 et seq. It rejected the Nelsons' argument that jurisdiction existed, under the first clause of § 1605(a)(2), because the action was one "based upon a commercial activity" that petitioners had "carried on in the United States." Although HCA's recruitment of Nelson in the United States might properly be attributed to Saudi Arabia and the hospital, the District Court reasoned, it did not amount to commercial activity "carried on in the United States" for purposes of the Act. Id., at 94-95. The court explained that there was no sufficient "nexus" between Nelson's recruitment and the injuries alleged. "Although [the Nelsons] argu[e] that but for [Scott Nelson's] recruitment in the United States, he would not have taken the job, been arrested, and suffered the personal injuries," the court said, "this `connection' [is] far too tenuous to support jurisdiction" under the Act. Id., at 97. Likewise, the court concluded that Royspec's commercial activity in the United States, purchasing supplies and equipment for the hospital, id., at *355 93-94, had no nexus with the personal injuries alleged in the complaint; Royspec had simply provided a way for Nelson's family to reach him in an emergency, id., at 96.
The Court of Appeals reversed. 923 F. 2d 1528 (CA11 1991). It concluded that Nelson's recruitment and hiring were commercial activities of Saudi Arabia and the hospital, carried on in the United States for purposes of the Act, id., at 1533, and that the Nelsons' action was "based upon" these activities within the meaning of the statute, id., at 1533 1536. There was, the court reasoned, a sufficient nexus between those commercial activities and the wrongful acts that had allegedly injured the Nelsons: "the detention and torture of Nelson are so intertwined with his employment at the Hospital," the court explained, "that they are `based upon' his recruitment and hiring" in the United States. Id., at 1535. The court also found jurisdiction to hear the claims against Royspec. Id., at 1536.[2] After the Court of Appeals denied petitioners' suggestion for rehearing en banc, App. 133, we granted certiorari, 504 U. S. 972 (1992). We now reverse.
II
The Foreign Sovereign Immunities Act "provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." Argentine Republic v. Amerada Hess Shipping Corp., 488 U. S. 428, 443 (1989). Under the Act, a foreign state is presumptively immune from the jurisdiction of United States courts; unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state. Verlinden B. V. v. Central Bank of Nigeria, 461 U. S. 480, 488-489 (1983); see 28 U. S. C. § 1604; J. Dellapenna, Suing Foreign Governments and Their Corporations 11, and n. 64 (1988).
*356 Only one such exception is said to apply here. The first clause of § 1605(a)(2) of the Act provides that a foreign state shall not be immune from the jurisdiction of United States courts in any case "in which the action is based upon a commercial activity carried on in the United States by the foreign state."[3] The Act defines such activity as "commercial activity carried on by such state and having substantial contact with the United States," § 1603(e), and provides that a commercial activity may be "either a regular course of commercial conduct or a particular commercial transaction or act," the "commercial character of [which] shall be determined by reference to" its "nature," rather than its "purpose," § 1603(d).
There is no dispute here that Saudi Arabia, the hospital, and Royspec all qualify as "foreign state[s]" within the meaning of the Act. Brief for Respondents 3; see 28 U. S. C. §§ 1603(a), (b) (term "`foreign state' " includes "`an agency or instrumentality of a foreign state' "). For there to be jurisdiction in this case, therefore, the Nelsons' action must be "based upon" some "commercial activity" by petitioners that had "substantial contact" with the United States within the meaning of the Act. Because we conclude that the suit is not based upon any commercial activity by petitioners, we need not reach the issue of substantial contact with the United States.
We begin our analysis by identifying the particular conduct on which the Nelsons' action is "based" for purposes of the Act. See Texas Trading & Milling Corp. v. Federal *357 Republic of Nigeria, 647 F. 2d 300, 308 (CA2 1981), cert. denied, 454 U. S. 1148 (1982); Donoghue, Taking the "Sovereign" Out of the Foreign Sovereign Immunities Act: A Functional Approach to the Commercial Activity Exception, 17 Yale J. Int'l L. 489, 500 (1992). Although the Act contains no definition of the phrase "based upon," and the relatively sparse legislative history offers no assistance, guidance is hardly necessary. In denoting conduct that forms the "basis," or "foundation," for a claim, see Black's Law Dictionary 151 (6th ed. 1990) (defining "base"); Random House Dictionary 172 (2d ed. 1987) (same); Webster's Third New International Dictionary 180, 181 (1976) (defining "base" and "based"), the phrase is read most naturally to mean those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case. See Callejo v. Bancomer, S. A., 764 F. 2d 1101, 1109 (CA5 1985) (focus should be on the "gravamen of the complaint"); accord, Santos v. Compagnie Nationale Air France, 934 F. 2d 890, 893 (CA7 1991) ("An action is based upon the elements that prove the claim, no more and no less"); Millen Industries, Inc. v. Coordination Council for North American Affairs, 272 U. S. App. D. C. 240, 246, 855 F. 2d 879, 885 (1988).
What the natural meaning of the phrase "based upon" suggests, the context confirms. Earlier, see n. 3, supra, we noted that § 1605(a)(2) contains two clauses following the one at issue here. The second allows for jurisdiction where a suit "is based . . . upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere," and the third speaks in like terms, allowing for jurisdiction where an action "is based . . . upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." Distinctions among descriptions juxtaposed against each other are naturally understood to be significant, see Melkonyan v. Sulli- *358 van, 501 U. S. 89, 94-95 (1991), and Congress manifestly understood there to be a difference between a suit "based upon" commercial activity and one "based upon" acts performed "in connection with" such activity. The only reasonable reading of the former term calls for something more than a mere connection with, or relation to, commercial activity.[4]
In this case, the Nelsons have alleged that petitioners recruited Scott Nelson for work at the hospital, signed an employment contract with him, and subsequently employed him. While these activities led to the conduct that eventually injured the Nelsons, they are not the basis for the Nelsons' suit. Even taking each of the Nelsons' allegations about Scott Nelson's recruitment and employment as true, those facts alone entitle the Nelsons to nothing under their theory of the case. The Nelsons have not, after all, alleged breach of contract, see supra, at 354, but personal injuries caused by petitioners' intentional wrongs and by petitioners' negligent failure to warn Scott Nelson that they might commit those wrongs. Those torts, and not the arguably commercial activities that preceded their commission, form the basis for the Nelsons' suit.
Petitioners' tortious conduct itself fails to qualify as "commercial activity" within the meaning of the Act, although the Act is too "`obtuse' " to be of much help in reaching that conclusion. Callejo, supra, at 1107 (citation omitted). We have seen already that the Act defines "commercial activity" as "either a regular course of commercial conduct or a particular *359 commercial transaction or act," and provides that "[t]he commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." 28 U. S. C. § 1603(d). If this is a definition, it is one distinguished only by its diffidence; as we observed in our most recent case on the subject, it "leaves the critical term `commercial' largely undefined." Republic of Argentina v. Weltover, Inc., 504 U. S. 607, 612 (1992); see Donoghue, supra, at 499; Lowenfeld, Litigating a Sovereign Immunity Claim The Haiti Case, 49 N. Y. U. L. Rev. 377, 435, n. 244 (1974) (commenting on then-draft Act) ("Start with `activity,' proceed via `conduct' or `transaction' to `character,' then refer to `nature,' and then go back to `commercial,' the term you started out to define in the first place"); G. Born & D. Westin, International Civil Litigation in United States Courts 479 480 (2d ed. 1992). We do not, however, have the option to throw up our hands. The term has to be given some interpretation, and congressional diffidence necessarily results in judicial responsibility to determine what a "commercial activity" is for purposes of the Act.
We took up the task just last Term in Weltover, supra, which involved Argentina's unilateral refinancing of bonds it had issued under a plan to stabilize its currency. Bondholders sued Argentina in federal court, asserting jurisdiction under the third clause of § 1605(a)(2). In the course of holding the refinancing to be a commercial activity for purposes of the Act, we observed that the statute "largely codifies the so-called `restrictive' theory of foreign sovereign immunity first endorsed by the State Department in 1952." 504 U. S., at 612. We accordingly held that the meaning of "commercial" for purposes of the Act must be the meaning Congress understood the restrictive theory to require at the time it passed the statute. See id., at 612-613.
Under the restrictive, as opposed to the "absolute," theory of foreign sovereign immunity, a state is immune from the *360 jurisdiction of foreign courts as to its sovereign or public acts (jure imperii), but not as to those that are private or commercial in character (jure gestionis). Verlinden B. V. v. Central Bank of Nigeria, 461 U. S., at 487; Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U. S. 682, 698 (1976) (plurality opinion); see 28 U. S. C. § 1602; see also Dunhill, supra, at 711 (Appendix 2 to the opinion of the Court) (Letter to the Attorney General from Jack B. Tate, Acting Legal Adviser, Dept. of State, May 19, 1952); Hill, A Policy Analysis of the American Law of Foreign State Immunity, 50 Ford. L. Rev. 155, 168 (1981). We explained in Weltover, supra, at 614 (quoting Dunhill, supra, at 704), that a state engages in commercial activity under the restrictive theory where it exercises "`only those powers that can also be exercised by private citizens,' " as distinct from those "`powers peculiar to sovereigns.' " Put differently, a foreign state engages in commercial activity for purposes of the restrictive theory only where it acts "in the manner of a private player within" the market. 504 U. S., at 614; see Restatement (Third) of the Foreign Relations Law of the United States § 451 (1987) ("Under international law, a state or state instrumentality is immune from the jurisdiction of the courts of another state, except with respect to claims arising out of activities of the kind that may be carried on by private persons").
We emphasized in Weltover that whether a state acts "in the manner of" a private party is a question of behavior, not motivation:
"[B]ecause the Act provides that the commercial character of an act is to be determined by reference to its `nature' rather than its `purpose,' the question is not whether the foreign government is acting with a profit motive or instead with the aim of fulfilling uniquely sovereign objectives. Rather, the issue is whether the particular actions that the foreign state performs (whatever *361 the motive behind them) are the type of actions by which a private party engages in `trade and traffic or commerce.' " Weltover, supra, at 614 (citations omitted) (emphasis in original).
We did not ignore the difficulty of distinguishing "`purpose' (i. e., the reason why the foreign state engages in the activity) from `nature' (i. e., the outward form of the conduct that the foreign state performs or agrees to perform)," but recognized that the Act "unmistakably commands" us to observe the distinction. 504 U. S., at 617 (emphasis in original). Because Argentina had merely dealt in the bond market in the manner of a private player, we held, its refinancing of the bonds qualified as a commercial activity for purposes of the Act despite the apparent governmental motivation. Ibid.
Unlike Argentina's activities that we considered in Weltover, the intentional conduct alleged here (the Saudi Government's wrongful arrest, imprisonment, and torture of Nelson) could not qualify as commercial under the restrictive theory. The conduct boils down to abuse of the power of its police by the Saudi Government, and however monstrous such abuse undoubtedly may be, a foreign state's exercise of the power of its police has long been understood for purposes of the restrictive theory as peculiarly sovereign in nature. See Arango v. Guzman Travel Advisors Corp., 621 F. 2d 1371, 1379 (CA5 1980); Victory Transport Inc. v. Comisaria General de Abastecimientos y Transportes, 336 F. 2d 354, 360 (CA2 1964) (restrictive theory does extend immunity to a foreign state's "internal administrative acts"), cert. denied, 381 U. S. 934 (1965); Herbage v. Meese, 747 F. Supp. 60, 67 (DC 1990), affirmance order, 292 U. S. App. D. C. 84, 946 F. 2d 1564 (1991); K. Randall, Federal Courts and the International Human Rights Paradigm 93 (1990) (the Act's commercial-activity exception is irrelevant to cases alleging *362 that a foreign state has violated human rights).[5] Exercise of the powers of police and penal officers is not the sort of action by which private parties can engage in commerce. "[S]uch acts as legislation, or the expulsion of an alien, or a denial of justice, cannot be performed by an individual acting in his own name. They can be performed only by the state acting as such." Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, 28 Brit. Y. B. Int'l L. 220, 225 (1952); see also id., at 237.
The Nelsons and their amici urge us to give significance to their assertion that the Saudi Government subjected Nelson to the abuse alleged as retaliation for his persistence in reporting hospital safety violations, and argue that the character of the mistreatment was consequently commercial. One amicus, indeed, goes so far as to suggest that the Saudi Government "often uses detention and torture to resolve commercial disputes." Brief for Human Rights Watch as *363 Amicus Curiae 6. But this argument does not alter the fact that the powers allegedly abused were those of police and penal officers. In any event, the argument is off the point, for it goes to purpose, the very fact the Act renders irrelevant to the question of an activity's commercial character. Whatever may have been the Saudi Government's motivation for its allegedly abusive treatment of Nelson, it remains the case that the Nelsons' action is based upon a sovereign activity immune from the subject-matter jurisdiction of United States courts under the Act.
In addition to the intentionally tortious conduct, the Nelsons claim a separate basis for recovery in petitioners' failure to warn Scott Nelson of the hidden dangers associated with his employment. The Nelsons allege that, at the time petitioners recruited Scott Nelson and thereafter, they failed to warn him of the possibility of severe retaliatory action if he attempted to disclose any safety hazards he might discover on the job. See supra, at 354. In other words, petitioners bore a duty to warn of their own propensity for tortious conduct. But this is merely a semantic ploy. For aught we can see, a plaintiff could recast virtually any claim of intentional tort committed by sovereign act as a claim of failure to warn, simply by charging the defendant with an obligation to announce its own tortious propensity before indulging it. To give jurisdictional significance to this feint of language would effectively thwart the Act's manifest purpose to codify the restrictive theory of foreign sovereign immunity. Cf. United States v. Shearer, 473 U. S. 52, 54-55 (1985) (opinion of Burger, C. J.).
III
The Nelsons' action is not "based upon a commercial activity" within the meaning of the first clause of § 1605(a)(2) of the Act, and the judgment of the Court of Appeals is accordingly reversed.
It is so ordered.
*364 Justice White, with whom Justice Blackmun joins, concurring in the judgment.
According to respondents' complaint, Scott Nelson's employer retaliated against him for reporting safety problems by "summon[ing him] . . . to the hospital's security office from which he was transported to a jail cell." App. 5. Once there, he allegedly was "shackled, tortured and beaten by persons acting at the direction, instigation, provocation, instruction or request of" petitionersSaudi Arabia, King Faisal Specialist Hospital, and Royspec. Id. , at 5, 14, 18. The majority concludes that petitioners enjoy sovereign immunity because respondents' action is not "based upon a commercial activity." I disagree. I nonetheless concur in the judgment because in my view the commercial conduct upon which respondents base their complaint was not "carried on in the United States."
I
A
As the majority notes, the first step in the analysis is to identify the conduct on which the action is based. Respondents have pointed to two distinct possibilities. The first, seemingly pressed at trial and on appeal, consists of the recruiting and hiring activity in the United States. See Brief for Appellant in No. 89-5981 (CA11), pp. 12-15. Although this conduct would undoubtedly qualify as "commercial," I agree with the majority that it is "not the basis for the Nelsons' suit," ante, at 358, for it is unrelated to the elements of respondents' complaint.
In a partial change of course, respondents suggest to this Court both in their brief and at oral argument that we focus on the hospital's commercial activity in Saudi Arabia, its employment practices and disciplinary procedures. Under this view, the Court would then work its way back to the recruiting and hiring activity in order to establish that the commercial conduct in fact had "substantial contact" with the United *365 States. See Brief for Respondents 22, 24-25, 31; Tr. of Oral Arg. 44-45. The majority never reaches this second stage, finding instead that petitioners' conduct is not commercial because it "is not the sort of action by which private parties can engage in commerce." Ante, at 362. If by that the majority means that it is not the manner in which private parties ought to engage in commerce, I wholeheartedly agree. That, however, is not the relevant inquiry. Rather, the question we must ask is whether it is the manner in which private parties at times do engage in commerce.
B
To run and operate a hospital, even a public hospital, is to engage in a commercial enterprise. The majority never concedes this point, but it does not deny it either, and to my mind the matter is self-evident. By the same token, warning an employee when he blows the whistle and taking retaliatory action, such as harassment, involuntary transfer, discharge, or other tortious behavior, although not prototypical commercial acts, are certainly well within the bounds of commercial activity. The House and Senate Reports accompanying the legislation virtually compel this conclusion, explaining as they do that "a foreign government's . . . employment or engagement of laborers, clerical staff or marketing agents . . . would be among those included within" the definition of commercial activity. H. R. Rep. No. 94 1487, p. 16 (1976) (House Report); S. Rep. No. 94-1310, p. 16 (1976) (Senate Report). Nelson alleges that petitioners harmed him in the course of engaging in their commercial enterprise, as a direct result of their commercial acts. His claim, in other words, is "based upon commercial activity."
Indeed, I am somewhat at a loss as to what exactly the majority believes petitioners have done that a private employer could not. As countless cases attest, retaliation for *366 whistle-blowing is not a practice foreign to the marketplace.[1] Congress passed a statute in response to such behavior, see Whistleblower Protection Act of 1989, 5 U. S. C. § 1213 et seq. (1988 ed., Supp. III), as have numerous States. On occasion, private employers also have been known to retaliate by enlisting the help of police officers to falsely arrest employees. See, e. g., Rosario v. Amalgamated Ladies Garment Cutters' Union, 605 F. 2d 1228, 1233, 1247-1248 (CA2 1979), cert. denied, 446 U. S. 919 (1980). More generally, private parties have been held liable for conspiring with public authorities to effectuate an arrest, see, e. g., Adickes v. S. H. Kress & Co. , 398 U. S. 144 (1970), and for using private security personnel for the same purposes, see Albright v. Longview Police Dept., 884 F. 2d 835, 841-842 (CA5 1989).
Therefore, had the hospital retaliated against Nelson by hiring thugs to do the job, I assume the majorityno longer able to describe this conduct as "a foreign state's exercise of the power of its police," ante, at 361would consent to calling it "commercial." For, in such circumstances, the state-run hospital would be operating as any private participant in the marketplace and respondents' action would be based on the operation by Saudi Arabia's agents of a commercial business.[2]
*367 At the heart of the majority's conclusion, in other words, is the fact that the hospital in this case chose to call in government security forces. See ante, at 362. I find this fixation on the intervention of police officers, and the ensuing characterization of the conduct as "peculiarly sovereign in nature," ante, at 361, to be misguided. To begin, it fails to capture respondents' complaint in full. Far from being directed solely at the activities of the Saudi police, it alleges that agents of the hospital summoned Nelson to its security office because he reported safety concerns and that the hospital played a part in the subsequent beating and imprisonment. App. 5, 14. Without more, that type of behavior hardly qualifies as sovereign. Thus, even assuming for the sake of argument that the role of the official police somehow affected the nature of petitioners' conduct, the claim cannot be said to "res[t] entirely upon activities sovereign in character." See ante, at 358, n. 4. At the very least it "consists of both commercial and sovereign elements," thereby presenting the specific question the majority chooses to elude. See ibid. The majority's single-minded focus on the exercise of police power, while certainly simplifying the case, thus hardly does it justice.[3]
*368 Reliance on the fact that Nelson's employer enlisted the help of public rather than private security personnel is also at odds with Congress' intent. The purpose of the commercial exception being to prevent foreign states from taking refuge behind their sovereignty when they act as market participants, it seems to me that this is precisely the type of distinction we should seek to avoid. Because both the hospital and the police are agents of the state, the case in my mind turns on whether the sovereign is acting in a commercial capacity, not on whether it resorts to thugs or government officers to carry on its business. That, when the hospital calls in security to get even with a whistle-blower, it comes clothed in police apparel says more about the state-owned nature of the commercial enterprise than about the noncommercial nature of its tortious conduct. I had thought the *369 issue put to rest some time ago when, in a slightly different context, Chief Justice Marshall observed:
"It is, we think, a sound principle, that when a government becomes a partner in any trading company, it devests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted." Bank of United States v. Planters' Bank of Georgia, 9 Wheat. 904, 907 (1824).
See also Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U. S. 682, 695-696 (1976) (plurality opinion).
C
Contrary to the majority's suggestion, ante, at 363, this conclusion does not involve inquiring into the purpose of the conduct. Matters would be different, I suppose, if Nelson had been recruited to work in the Saudi police force and, having reported safety violations, suffered retributive punishment, for there the Saudi authorities would be engaged in distinctly sovereign activities. Cf. House Report, at 16 ("Also public or governmental and not commercial in nature, would be the employment of diplomatic, civil service, or military personnel"); Senate Report, at 16. The same would be true if Nelson was a mere tourist in Saudi Arabia and had been summarily expelled by order of immigration officials. See Arango v. Guzman Travel Advisors Corp., 621 F. 2d 1371 (CA5 1980). In this instance, however, the state-owned hospital was engaged in ordinary commercial business and "[i]n their commercial capacities, foreign governments do not exercise powers peculiar to sovereigns. Instead, they exercise only those powers that can also be exercised by private *370 citizens." Alfred Dunhill, supra, at 704 (plurality opinion). As we recently stated, "when a foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are `commercial' within the meaning of the FSIA." Republic of Argentina v. Weltover, Inc., 504 U. S. 607, 614 (1992). That, I believe, is the case here.
II
Nevertheless, I reach the same conclusion as the majority because petitioners' commercial activity was not "carried on in the United States." The Act defines such conduct as "commercial activity . . . having substantial contact with the United States." 28 U. S. C. § 1603(e). Respondents point to the hospital's recruitment efforts in the United States, including advertising in the American media, and the signing of the employment contract in Miami. See Brief for Respondents 43-45. As I earlier noted, while these may very well qualify as commercial activity in the United States, they do not constitute the commercial activity upon which respondents' action is based. Conversely, petitioners' commercial conduct in Saudi Arabia, though constituting the basis of the Nelsons' suit, lacks a sufficient nexus to the United States. Neither the hospital's employment practices, nor its disciplinary procedures, has any apparent connection to this country. On that basis, I agree that the Act does not grant the Nelsons access to our courts.
Justice Kennedy, with whom Justice Blackmun and Justice Stevens join as to Parts IB and II, concurring in part and dissenting in part.
I join all of the Court's opinion except the last paragraph of Part II, where, with almost no explanation, the Court rules that, like the intentional tort claim, the claims based on negligent failure to warn are outside the subject-matter jurisdiction of the federal courts. These claims stand on a much different footing from the intentional tort claims for *371 purposes of the Foreign Sovereign Immunities Act (FSIA). In my view, they ought to be remanded to the District Court for further consideration.
I
A
I agree with the Court's holding that the Nelsons' claims of intentional wrongdoing by the hospital and the Kingdom of Saudi Arabia are based on sovereign, not commercial, activity, and so fall outside the commercial activity exception to the grant of foreign sovereign immunity contained in 28 U. S. C. § 1604. The intentional tort counts of the Nelsons' complaint recite the alleged unlawful arrest, imprisonment, and torture of Mr. Nelson by the Saudi police acting in their official capacities. These are not the sort of activities by which a private party conducts its business affairs; if we classified them as commercial, the commercial activity exception would in large measure swallow the rule of foreign sovereign immunity Congress enacted in the FSIA.
B
By the same token, however, the Nelsons' claims alleging that the hospital, the Kingdom, and Royspec were negligent in failing during their recruitment of Nelson to warn him of foreseeable dangers are based upon commercial activity having substantial contact with the United States. As such, they are within the commercial activity exception and the jurisdiction of the federal courts. Unlike the intentional tort counts of the complaint, the failure to warn counts do not complain of a police beating in Saudi Arabia; rather, they complain of a negligent omission made during the recruiting of a hospital employee in the United States. To obtain relief, the Nelsons would be obliged to prove that the hospital's recruiting agent did not tell Nelson about the foreseeable hazards of his prospective employment in Saudi Arabia. Under the Court's test, this omission is what the negligence counts are "based upon." See ante, at 356.
*372 Omission of important information during employee recruiting is commercial activity as we have described it. See Republic of Argentina v. Weltover, Inc., 504 U. S. 607 (1992). It seems plain that recruiting employees is an activity undertaken by private hospitals in the normal course of business. Locating and hiring employees implicates no power unique to the sovereign. In explaining the terms and conditions of employment, including the risks and rewards of a particular job, a governmental entity acts in "the manner of a private player within" the commercial marketplace. Id., at 614. Under the FSIA, as a result, it must satisfy the same general duties of care that apply to private actors under state law. If a private company with operations in Saudi Arabia would be obliged in the course of its recruiting activities subject to state law to tell a prospective employee about the risk of arbitrary arrest and torture by Saudi authorities, then so would King Faisal Specialist Hospital.
The recruiting activity alleged in the failure to warn counts of the complaint also satisfies the final requirement for invoking the commercial activity exception: that the claims be based upon commercial activity "having substantial contact with the United States." 28 U. S. C. § 1603(e). Nelson's recruitment was performed by Hospital Corporation of America, Ltd. (HCA), a wholly owned subsidiary of a United States corporation, which, for a period of at least 16 years beginning in 1973, acted as the Kingdom of Saudi Arabia's exclusive agent for recruiting employees for the hospital. HCA in the regular course of its business seeks employees for the hospital in the American labor market. HCA advertised in an American magazine, seeking applicants for the position Nelson later filled. Nelson saw the ad in the United States and contacted HCA in Tennessee. After an interview in Saudi Arabia, Nelson returned to Florida, where he signed an employment contract and underwent personnel processing and application procedures. Before leaving to take his job at the hospital, Nelson attended an *373 orientation session conducted by HCA in Tennessee for new employees. These activities have more than substantial contact with the United States; most of them were "carried on in the United States." 28 U. S. C. § 1605(a)(2). In alleging that the petitioners neglected during these activities to tell him what they were bound to under state law, Nelson meets all of the statutory requirements for invoking federal jurisdiction under the commercial activity exception.
II
Having met the jurisdictional prerequisites of the FSIA, the Nelsons' failure to warn claims should survive petitioners' motion under Federal Rule of Civil Procedure 12(b)(1) to dismiss for want of subject-matter jurisdiction. Yet instead of remanding these claims to the District Court for further proceedings, the majority dismisses them in a single short paragraph. This is peculiar, since the Court suggests no reason to question the conclusion that the failure to warn claims are based on commercial activity having substantial contact with the United States; indeed, the Court does not purport to analyze these claims in light of the statutory requirements for jurisdiction.
The Court's summary treatment may stem from doubts about the underlying validity of the negligence cause of action. The Court dismisses the claims because it fears that if it did not, "a plaintiff could recast virtually any claim of intentional tort committed by a sovereign act as a claim of failure to warn, simply by charging the defendant with an obligation to announce its own tortious propensity before indulging it." Ante, at 363. In the majority's view, "[t]o give jurisdictional significance to this feint of language would effectively thwart the Act's manifest purpose to codify the restrictive theory of foreign sovereign immunity." Ibid. These doubts, however, are not relevant to the analytical task at hand.
*374 The FSIA states that with respect to any claim against a foreign sovereign that falls within the statutory exceptions to immunity listed in § 1605, "the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances." 28 U. S. C. § 1606. The Act incorporates state law and "was not intended to affect the substantive law determining the liability of a foreign state." First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U. S. 611, 620 (1983). If the governing state law, which has not yet been determined, would permit an injured person to plead and prove a tortious wrong for failure to warn against a private defendant under facts similar to those in this case, we have no authority under the FSIA to ordain otherwise for those suing a sovereign entity. "[W]here state law provides a rule of liability governing private individuals, the FSIA requires the application of that rule to foreign states in like circumstances." Id., at 622, n. 11.
The majority's citation of United States v. Shearer, 473 U. S. 52, 54-55 (1985) (opinion of Burger, C. J.), see ante, at 363, provides no authority for dismissing the failure to warn claims. Shearer refused to permit a plaintiff to recast in negligence terms what was essentially an intentional tort claim, but that case was decided under the doctrine of Feres v. United States, 340 U. S. 135 (1950). The Feres doctrine is a creature of federal common law that allows the Court much greater latitude to make rules of pleading than we have in the current case. Here, our only task is to interpret the explicit terms of the FSIA. The Court's conclusion in Shearer was also based upon the fact that the intentional tort exception to the Federal Tort Claims Act at issue there, 28 U. S. C. § 2680(h), precludes "[a]ny claim arising out of" the specified intentional torts. This language suggests that Congress intended immunity under the FTCA to cover more than those claims which simply sounded in intentional tort. There is no equivalent language in the commercial activity *375 exception to the FSIA. It is also worth noting that the Court has not adopted a uniform rule barring the recasting of intentional tort claims as negligence claims under the FTCA; under certain circumstances, we have permitted recovery in that situation. See Sheridan v. United States, 487 U. S. 392 (1988).
As a matter of substantive tort law, it is not a novel proposition or a play on words to describe with precision the conduct upon which various causes of action are based or to recognize that a single injury can arise from multiple causes, each of which constitutes an actionable wrong. See Restatement (Second) of Torts §§ 447-449 (1965); Sheridan, supra, at 405 (Kennedy, J., concurring in judgment); Wilson v. Garcia, 471 U. S. 261, 272 (1985). In Sheridan, for example, this Court permitted an action for negligent supervision to go forward under the FTCA when a suit based upon the intentional tort that was the immediate cause of injury was barred under the statute. See 487 U. S., at 400. As the Court observed, "it is both settled and undisputed that in at least some situations the fact that an injury was directly caused by an assault or battery will not preclude liability against the Government for negligently allowing the assault to occur." Id., at 398.
We need not determine, however, that on remand the Nelsons will succeed on their failure to warn claims. Quite apart from potential problems of state tort law that might bar recovery, the Nelsons appear to face an obstacle based upon the former adjudication of their related lawsuit against Saudi Arabia's recruiting agent, HCA. The District Court dismissed that suit, which raised an identical failure to warn claim, not only as time barred, but also on the merits. See Nelson v. Hospital Corp. of America, No. 88-0484CIV Nesbitt (SD Fla., Nov. 1, 1990). That decision was affirmed on appeal, judgment order reported at 946 F. 2d 1546 (CA11 1991), and may be entitled to preclusive effect with respect to the Nelsons' similar claims against the sovereign defendants, *376 whose recruitment of Nelson took place almost entirely through HCA. See generally Montana v. United States, 440 U. S. 147, 153 (1979) ("a final judgment on the merits bars further claims by parties or their privies based on the same cause of action"); Lawlor v. National Screen Service Corp., 349 U. S. 322, 330 (1955) (defendants not party to a prior suit may invoke res judicata if "their liability was . . . `altogether dependent upon the culpability' of the [prior] defendants") (quoting Bigelow v. Old Dominion Copper Mining & Smelting Co., 225 U. S. 111, 127 (1912)); 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4463, p. 567 (1981) (recognizing general rule that "judgment in an action against either party to a vicarious liability relationship establishe[s] preclusion in favor of the other"); Restatement (Second) of Judgments § 51 (1982).
But the question of claim preclusion, like the substantive validity under state law of the Nelsons' negligence cause of action, has not yet been litigated and is outside the proper sphere of our review. "[I]t is not our practice to reexamine a question of state law of [this] kind or, without good reason, to pass upon it in the first instance." Sheridan, supra, at 401. That a remand to the District Court may be of no avail to the Nelsons is irrelevant to our task here; if the jurisdictional requirements of the FSIA are met, the case must be remanded to the trial court for further proceedings. In my view, the FSIA conferred subject-matter jurisdiction on the District Court to entertain the failure to warn claims, and with all respect, I dissent from the Court's refusal to remand them.
Justice Blackmun, concurring in the judgment in part and dissenting in part.
I join Justice White's opinion because it finds that respondents' intentional tort claims are "based upon a commercial activity" and that the commercial activity at issue in those claims was not "carried on in the United States." I *377 join Justice Kennedy's opinion insofar as it concludes that the "failure to warn" claims should be remanded.
Justice Stevens, dissenting.
Under the Foreign Sovereign Immunities Act of 1976 (FSIA), a foreign state is subject to the jurisdiction of American courts if two conditions are met: The action must be "based upon a commercial activity" and that activity must have a "substantial contact with the United States."[1] These two conditions should be separately analyzed because they serve two different purposes. The former excludes commercial activity from the scope of the foreign sovereign's immunity from suit; the second identifies the contacts with the United States that support the assertion of jurisdiction over the defendant.[2]
*378 In this case, as Justice White has demonstrated, petitioner Kingdom of Saudi Arabia's operation of the hospital and its employment practices and disciplinary procedures are "commercial activities" within the meaning of the statute, and respondent Scott Nelson's claim that he was punished for acts performed in the course of his employment was unquestionably "based upon" those activities. Thus, the first statutory condition is satisfied; petitioner is not entitled to immunity from the claims asserted by respondent.
Unlike Justice White, however, I am also convinced that petitioner's commercial activitieswhether defined as the regular course of conduct of operating a hospital or, more specifically, as the commercial transaction of engaging respondent "as an employee with specific responsibilities in that enterprise," Brief for Respondents 25have sufficient contact with the United States to justify the exercise of federal jurisdiction. Petitioner Royspec maintains an office in Maryland and purchases hospital supplies and equipment in this country. For nearly two decades the hospital's American agent has maintained an office in the United States and regularly engaged in the recruitment of personnel in this country. Respondent himself was recruited in the United States and entered into his employment contract with the hospital in the United States. Before traveling to Saudi Arabia to assume his position at the hospital, respondent attended an orientation program in Tennessee. The position for which respondent was recruited and ultimately hired was that of a monitoring systems manager, a troubleshooter, and, taking respondent's allegations as true, it was precisely respondent's performance of those responsibilities that led to the hospital's retaliatory actions against him.
*379 Whether the first clause of § 1605(a)(2) broadly authorizes "general" jurisdiction over foreign entities that engage in substantial commercial activity in this country, or, more narrowly, authorizes only "specific" jurisdiction over particular commercial claims that have a substantial contact with the United States,[3] petitioners' contacts with the United States in this case are, in my view, plainly sufficient to subject petitioners to suit in this country on a claim arising out of their nonimmune commercial activity relating to respondent. If the same activities had been performed by a private business, I have no doubt jurisdiction would be upheld. And that, of course, should be a touchstone of our inquiry; for as Justice White explains, ante, at 366, n. 2, and 368-369, when a foreign nation sheds its uniquely sovereign status and seeks out the benefits of the private marketplace, it must, like any private party, bear the burdens and responsibilities imposed by that marketplace. I would therefore affirm the judgment of the Court of Appeals.[4]
NOTES
[*] Briefs of amici curiae urging affirmance were filed for Human Rights Watch by Ellen Lutz, Kenneth Roth, and Jeffrey L. Braun; and for the International Human Rights Law Group et al. by Douglas G. Robinson, Julia E. Sullivan, Andrew L. Sandler, Michael Ratner, Steven M. Schneebaum, Janelle M. Diller, and Harold Koh.
[1] Petitioners assert that the Saudi Government arrested Nelson because he had falsely represented to the hospital that he had received a degree from the Massachusetts Institute of Technology and had provided the hospital with a forged diploma to verify his claim. Brief for Petitioners 4-5. The Nelsons concede these misrepresentations, but dispute that they occasioned Scott Nelson's arrest. Brief for Respondents 9.
[2] The Court of Appeals expressly declined to address the act of state doctrine, 923 F. 2d, at 1536, and we do not consider that doctrine here.
[3] In full, § 1605(a)(2) provides that "[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case .. . in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States."
[4] We do not mean to suggest that the first clause of § 1605(a)(2) necessarily requires that each and every element of a claim be commercial activity by a foreign state, and we do not address the case where a claim consists of both commercial and sovereign elements. We do conclude, however, that where a claim rests entirely upon activities sovereign in character, as here, see infra, at 361-363, jurisdiction will not exist under that clause regardless of any connection the sovereign acts may have with commercial activity.
[5] The State Department's practice prior to the passage of the Act supports this understanding. Prior to the Act's passage, the State Department would determine in the first instance whether a foreign state was entitled to immunity and make an appropriate recommendation to the courts. See Verlinden B. V. v. Central Bank of Nigeria, 461 U. S. 480, 486-488 (1983). A compilation of available materials demonstrates that the Department recognized immunity with respect to claims involving the exercise of the power of the police or military of a foreign state. See Sovereign Immunity Decisions of the Department of State, May 1952 to January 1977 (M. Sandler, D. Vagts, & B. Ristau eds".), in 1977 Digest of United States Practice in International Law 1017, 1045-1046 (claim that Cuban armed guard seized cash from plaintiff at Havana airport); id., at 1053-1054 (claim that Saudi militia fired on plaintiffs and caused personal and property damage).
Justice White points to an episode in which the State Department declined to recognize immunity with respect to a claim by Jamaican nationals, working in the United States, against the British West Indies Central Labour Organization, a foreign governmental agency. See id., at 1062-1063; post, at 367-368, n. 3. In our view that episode bears little relation to this case, for the Jamaican nationals did not allege mistreatment by the police of a foreign state.
[1] See, e. g., English v. General Electric Co., 496 U. S. 72, 75-76 (1990); Belline v. K-Mart Corp., 940 F. 2d 184, 186-189 (CA7 1991); White v. General Motors Corp. , 908 F. 2d 669, 671 (CA10 1990), cert. denied, 498 U. S. 1069 (1991); Sanchez v. Unemployment Ins. Appeals Bd., 36 Cal. 3d 575, 685 P. 2d 61 (1984); Collier v. Superior Court of Los Angeles County, 228 Cal. App. 3d 1117, 279 Cal. Rptr. 453 (1991).
[2] "[W]hen the foreign state enters the marketplace or when it acts as a private party, there is no justification in modern international law for allowing the foreign state to avoid the economic costs of . . . the accidents which it may cause. . . . The law should not permit the foreign state to shift these everyday burdens of the marketplace onto the shoulders of private parties." Testimony of Monroe Leigh, Legal Adviser, Department of State, Hearings on H. R. 11315 before the Subcommittee on Administrative Law and Governmental Relations of the House Committee on the Judiciary, 94th Cong., 2d Sess., 27 (1976).
[3] In contrast, the cases cited by the majority involve action that did not take place in a commercial context and that could be considered purely sovereign. For instance, in Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371 (CA5 1980), plaintiffs were expelled from the Dominican Republic pursuant to a decision by immigration officials that they were "`undesirable aliens.' " Id. , at 1373. As the Court of Appeals reasoned, the airline's actions "were not commercial. [It] was impressed into service to perform these functions . . . by Dominican immigration officials pursuant to that country's laws." Id. , at 1379. Nor was there a hint of commercial activity in Herbage v. Meese, 747 F. Supp. 60 (DC 1990), affirmance order, 292 U. S. App. D. C. 84, 946 F. 2d 1564 (1991), an extradition case that did not so much as mention the commercial activity exception.
Absence of a commercial context also distinguishes those incidents relied on by the majority that predate passage of the Foreign Sovereign Immunities Act. See ante, at 362, n. 5. Yet the majority gives short shrift to an occurrence that most closely resembles the instant case and that suggests strongly that the hospital's enlistment of, and cooperation with, the police should not entitle it to immunity. The incident involved allegations that an agency of the Jamaican Government conspired to have Jamaican nationals working in the United States "falsely arrested, imprisoned and blacklisted, and to deprive them of wages and other employee rights." Sovereign Immunity Decisions of the Department of State, May 1952 to January 1977 (M. Sandler, D. Vagts, & B. Ristau eds.), in 1977 Digest of United States Practice in International Law 1062. Significantly, the State Department did not take refuge behind the words "arres[t]" and "impriso[n]" and decide that the actions were sovereign in nature. Rather, it declined to recognize immunity, focusing on the fact that private parties acting in an employment context could do exactly what the Jamaican agency was alleged to have done: "[T]he activities under consideration are of a private nature . . . . The Department of State is impressed by the fact that the activities of the British West Indies Central Labour Organization . . . are very much akin to those that might be conducted by a labor union or by a private employment agencyarranging and servicing an agreement between private employers and employees. Although it may be argued that some of the acts performed by the British West Indies Central Labour Organization in this case are consular in nature, the Department believes that they arise from the involvement of the British West Indies Central Labour Organization in the private employer-employee contractual relationship rather than from a consular responsibility, and cannot be separated therefrom." Id. , at 1063.
[1] Section 4(a) of the FSIA provides:
"(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case
. . . . .
"(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state." 28 U. S. C. § 1605(a)(2).
The key terms of this provision are defined in § 1603. Section 1603(e) defines "commercial activity carried on in the United States by a foreign state" as "commercial activity carried on by such state and having substantial contact with the United States." Section 1603(d), in turn, defines "commercial activity" as "either a regular course of commercial conduct or a particular commercial transaction or act." Thus, interpolating the definitions from § 1603 into § 1605(a)(2) produces this equivalence:
"A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case in which the action is based upon a regular course of commercial conduct or a particular commercial transaction carried on by such state and having substantial contact with the United States."
[2] See, e. g., Maritime International Nominees Establishment v. Republic of Guinea, 224 U. S. App. D. C. 119, 130, n. 18, 693 F. 2d 1094, 1105, n. 18 (1982) ("the immunity determination involves considerations distinct from the issue of personal jurisdiction, and the FSIA's interlocking provisions are most profitably analyzed when these distinctions are kept in mind"). See also J. Dellapenna, Suing Foreign Governments and Their Corporations 66, 144 (1988) ("The nexus rules must be analyzed separately from the substantive immunity rules . . . in order to understand jurisdictional questions under the Act" and because "the laws regulating . . . jurisdiction . . . and immunity serve different purposes, and thus require different dispositions") (footnotes omitted).
[3] Though this case does not require resolution of that question (because petitioners' contacts with the United States satisfy, in my view, the more narrow requirements of "specific" jurisdiction), I am inclined to agree with the view expressed by Judge Higginbotham in his separate opinion in Vencedora Oceanica Navigacion, S. A. v. Compagnie Nationale Algerienne de Navigation, 730 F. 2d 195, 204-205 (1984) (concurring in part and dissenting in part), that the first clause of § 1605(a)(2), interpreted in light of the relevant legislative history and the second and third clauses of the provision, does authorize "general" jurisdiction over foreign entities that engage in substantial commercial activities in the United States.
[4] My affirmance would extend to respondents' failure to warn claims. I am therefore in agreement with Justice Kennedy's analysis of that aspect of the case.
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648 So.2d 1192 (1994)
STANDARD HAVENS PRODUCTS, Inc., Appellant,
v.
Fernando BENITEZ, et ux., Appellees.
No. 82795.
Supreme Court of Florida.
December 1, 1994.
Rehearing Denied January 30, 1995.
*1193 Kathleen M. O'Connor, Thornton, David, Murray, Davis, Thornton & Sreenan, P.A., Miami, for appellant.
G. William Bissett, Hardy, Bissett & Lipton, P.A., Miami, Donald T. Norton, Cohen & Cohen, P.A., Hollywood, for appellees.
ANSTEAD, Justice.
We have before us Benitez v. Standard Havens Products, Inc., 7 F.3d 1561 (11th Cir.1993), in which the Eleventh Circuit Court of Appeals certified the following question:
DOES A PLAINTIFF'S KNOWING MISUSE OF A PRODUCT IN A MANNER NEITHER INTENDED NOR FORESEEABLE BY THE DEFENDANT MANUFACTURER BAR RECOVERY, AS A MATTER OF LAW, ON A PRODUCTS LIABILITY CLAIM SOUNDING IN NEGLIGENCE?
Id. at 1565. We have jurisdiction pursuant to article V, section 3(b)(6) of the Florida Constitution. While we have some difficulty with the wording of the question and whether it frames a proper interrogatory to a jury on the issue of product misuse in a negligence case, we answer the question in the negative.[1]
CIRCUMSTANCES OF THIS CASE
We quote from the Eleventh Circuit opinion for the relevant facts and circumstances:
Fernando Benitez, an employee of Community Asphalt Corporation, was injured at work on June 5, 1987, when his leg was caught and partially amputated by an auger mechanism situated at the bottom of a pollution control apparatus known as a "baghouse." The baghouse was designed and manufactured by Standard Havens Products, Inc. It operates like a giant vacuum cleaner, collecting in fourteen-foot long fabric bags the dust produced during the manufacture of asphalt. The bags are "pulsed" to remove the accumulated dust which falls into a v-shaped hopper. At the bottom of the hopper is a thirty-foot long auger, much like a horizontal screw, which removes the collected debris. Benitez was injured after he entered the baghouse, with the auger mechanism running, to clean the dust from the inside walls of the baghouse. As Benitez was raking debris from the walls, he stepped off of the screen panels covering the opening to the auger, causing his foot to be pulled into the spinning auger.
Benitez and his wife brought this products liability action against Standard Havens, and Standard Havens brought in Benitez's employer, Community Asphalt, as a third-party defendant. Community Asphalt has been dismissed from this appeal on joint motions by Standard Havens and Community Asphalt. Benitez argued at trial that Standard Havens was negligent in designing the baghouse without proper safety measures to prevent an accident such as his, including an adequate protective screen over the auger mechanism and proper warnings of the dangers presented by the mechanism. Benitez also claimed that the defects to the baghouse *1194 rendered it unreasonably dangerous and, therefore, Standard Havens was strictly liable for his injuries caused by those defects.1 Standard Havens defended that Benitez's own negligence was the cause of the injuries and that Benitez had knowingly misused the baghouse and assumed any risk of injury. Standard Havens presented evidence that Benitez's employer had in place a policy, of which Benitez was fully aware, that instructed employees to "lockout" motorized equipment like the baghouse auger mechanism before doing work on or near such equipment. This policy was consistent with the procedures outlined in the baghouse operations and maintenance manual provided by Standard Havens. Benitez acted in contravention of the lockout policy, intentionally turning on the auger before entering the baghouse.
1[2] In addition to the claims for negligence and strict liability, the original complaint set out claims for breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability, and breach of express warranty. The warranty claims were dismissed by order of the district court prior to trial and are not at issue in this appeal.
At the close of all of the evidence, the district court instructed the jury on the law of products liability premised on negligent design or manufacture as well as strict liability, and further instructed the jury relating to Standard Haven's defenses of comparative negligence, product misuse, and assumption of risk.
Following its instruction on Benitez's negligent design and manufacture theory, the court instructed the jury on Standard Havens's comparative negligence defense:
The Defendant contends that the Plaintiff was himself negligent and that such negligence was a legal cause of his own injury. This is a defensive claim and the burden of proving that claim, by a preponderance of the evidence, is upon the Defendant who must establish:
First: That the Plaintiff was also "negligent;" and
Second: That such negligence was a "legal cause" of the Plaintiff's own damage.
If you find in favor of the Defendant on this defense, that will not prevent recovery by the Plaintiffs, it only reduces the amount of Plaintiffs' recovery.
The court then instructed on Benitez's strict liability claim. Included in that instruction was the following: "A product is unreasonably dangerous because of its design if the product fails to perform as safely as an ordinary person would expect when used as intended or in a manner reasonably foreseeable by the manufacturer or the risk of danger in the design outweighs the benefits." The court then instructed on Standard Havens's defenses to Benitez's strict liability claim:
The Defendant contends that FERNANDO BENITEZ's injury occurred as the result of his knowing "misuse" of the Alpha/Mark III Baghouse. A manufacturer is entitled to expect a normal use of his product. If the Plaintiff's injury occurred because he knowingly used the product in a manner for which the product was not made or adapted, and not reasonably foreseeable to the Defendant, then the Plaintiff cannot recover. It is for you to decide whether the Plaintiff was knowingly using the product at the time of the accident in a manner for which the product was not made or adapted, and whether this use was reasonably foreseeable to the Defendant.
If you find that the Defendant has established this defense by a preponderance of the evidence, then your verdict will be for the Defendant on the defective design and manufacture claim.
The Defendant also contends as another defense, that the Plaintiff was negligent and that such negligence was a contributing legal cause of his own injury. Specifically, Defendant alleges that:
(1) the Plaintiff intentionally operated the Alpha/Mark III Baghouse contrary to its operation and its maintenance manual, and
(2) that FERNANDO BENITEZ assumed the risk of injury because there was a dangerous situation or condition which was open and obvious, the Plaintiff knew of this dangerous situation, the *1195 Plaintiff voluntarily exposed himself to this danger and was injured thereby.
Following another recitation of standard negligence law, the court again instructed the jury on the principles of comparative negligence as a defense: "If you find in favor of the Defendant on the defense of comparative negligence, that will not prevent recovery by the Plaintiff, it will only reduce the amount of Plaintiff's recovery."
The case was then sent to the jury with a verdict form containing special interrogatories, which the jury answered as follows:
1. Was there negligence on the part of the Defendant, STANDARD HAVENS PRODUCTS, INC., in designing, manufacturing and assembling the Alpha/Mark III Baghouse which was a legal cause of injury or damage to the Plaintiffs?
Yes X No
2. Was the Alpha/Mark III Baghouse, designed, manufactured and sold by the Defendant, defective when it left the possession of the Defendant and such defect a legal cause of injury or damage sustained by the Plaintiffs[?]
Yes X No
If both of your answers to questions 1 and 2 are "no," your verdict is for the Defendant, and you should not proceed further except to date and sign this verdict form and return it to the courtroom. If your answer to question 2 is "yes," please answer question 3.
3. Did FERNANDO BENITEZ knowingly misuse the Alpha/Mark III Baghouse in a manner for which the product was not made and not foreseeable to the Defendant which was a legal cause of his injury?
Yes X No
If either of your answers to question 1 or 2 was "yes," please answer question 4.
4. Was there any negligence on the part of FERNANDO BENITEZ, which was a legal cause of the Plaintiffs' damage or injuries[?]
Yes X No
The jury determined that Fernando Benitez's total damages were $1,500,000.00 and that Alina Benitez's total damages were $250,000.00. Because the jury apportioned 70% fault to Standard Havens and 30% to Benitez, the court entered judgment on the jury's verdict, awarding $1,050,000.00 to Fernando and $175,000.00 to Alina.
On appeal, the dispute centers on whether the jury's finding that Benitez knowingly misused the baghouse in a manner unforeseeable to Standard Havens barred recovery on the claim of negligent design or manufacture. The court's charge to the jury instructed on misuse as a defense only to Benitez's strict liability claim, and the verdict form given to the jury was consistent with those instructions. In addition, a brief colloquy between counsel for Standard Havens and the court, during a conference immediately preceding the parties' closing arguments, confirms the court's assumption that knowing misuse would act to bar only the strict liability claim:
[DEFENSE COUNSEL]: If you look at question number 3, on misuse, it doesn't tell the jury what to do if they answer it no, or yes.
THE COURT: Well, I don't think we need to tell them that.
[DEFENSE COUNSEL]: If they answer it no, it is a verdict for the [plaintiff]. If they answer, yes, there was misuse, it was a verdict for the [defendant].
[PLAINTIFFS' COUNSEL]: Not on negligence.
THE COURT: It is a verdict for the defendant on the claim of strict liability.
[DEFENSE COUNSEL]: I believe it would apply to both.
THE COURT: No, I don't think so.
After review of Florida law, the Eleventh Circuit concluded that the controlling question of whether misuse of a product bars a simple negligence claim was unanswered by controlling precedent of the Supreme Court of Florida. Hence, it certified the question to us.
COMPARATIVE NEGLIGENCE
As the certified question makes clear, the action under consideration is a products liability *1196 claim sounding in negligence. Since our decision in Hoffman v. Jones, 280 So.2d 431 (Fla. 1973), where we replaced the rule of contributory negligence with that of comparative negligence, we have consistently rejected the use of various legal "doctrines" as per se absolute defenses to negligence claims. See, e.g., Auburn Mach. Works Co. v. Jones, 366 So.2d 1167 (Fla. 1979) ("patent danger" or "open and obvious hazard" rejected as exception to manufacturer's liability); Blackburn v. Dorta, 348 So.2d 287 (Fla. 1977) (implied assumption of risk rejected as complete bar to recovery); Hoffman, 280 So.2d at 438 (doctrine of last clear chance no longer applicable in negligence cases). In Hoffman, we stated the impetus for our decision:
[T]oday it is almost universally regarded as unjust and inequitable to vest an entire accidental loss on one of the parties whose negligent conduct combined with the negligence of the other party to produce the loss. If fault is to remain the test of liability, then the doctrine of comparative negligence which involves apportionment of the loss among those whose fault contributed to the occurrence is more consistent with liability based on a fault premise.
Id. at 436. We also noted that the initial justification for establishing a complete bar to negligence claims was no longer valid:
It is generally accepted that, historically, contributory negligence was adopted `to protect the essential growth of industries, particularly transportation.' Modern economic and social customs, however, favor the individual, not industry.
Id. at 437 (citation omitted).
Subsequently, in Blackburn v. Dorta, 348 So.2d 287, 293 (Fla. 1977), we held that the affirmative defense of implied assumption of risk merges into the defense of contributory negligence and the principles of comparative negligence apply in all cases where the defense is asserted. We found no discernible basis analytically or historically to maintain a distinction between contributory negligence and assumption of risk and felt that Hoffman v. Jones dictated such a result. Id. at 292. Quoting from Hoffman, we restated the policy rationale for adopting comparative negligence:
A primary function of a court is to see that legal conflicts are equitably resolved. In the field of tort law, the most equitable result that can ever be reached by a court is the equation of liability with fault. Comparative negligence does this more completely than contributory negligence, and we would be shirking our duty if we did not adopt a better doctrine.
348 So.2d at 293.
Two years later, in Auburn Machine Works Co. v. Jones, we rejected the "patent danger" or "open and obvious hazard" doctrine as an absolute defense to negligence claims:
[T]he obviousness of the hazard is not an exception to liability on the part of the manufacturer but rather is a defense by which the manufacturer may show that the plaintiff did not exercise a reasonable degree of care as required by the circumstances. We also conclude that the principles of comparative negligence apply where this defense is raised.
... .
The patent danger doctrine protects manufacturers who sell negligently designed machines which pose formidable dangers to their users. It puts the entire accidental loss on the injured plaintiff, notwithstanding the fact that the manufacturer was partly at fault. This is inconsistent with the general philosophy espoused by this Court in Hoffman v. Jones, 280 So.2d 431 (Fla. 1973); West v. Caterpillar Tractor Co., 336 So.2d 80 (Fla. 1976); and Blackburn v. Dorta, 348 So.2d 287 (Fla. 1977).
366 So.2d at 1167, 1171.
PRODUCT MISUSE
Negligent conduct in the form of product misuse has also been recognized as a discrete defense in the context of a strict liability claim. See Restatement (Second) of Torts § 402A, cmt. h (1965).[2] In 1976, this Court *1197 adopted the principles of strict liability in tort under section 402A of the Restatement (Second) of Torts and held that product misuse was simply a type of negligence that may be asserted as a defense. See West v. Caterpillar Tractor Co., 336 So.2d 80 (Fla. 1976), answer to certified question conformed to, 547 F.2d 885 (5th Cir.1977); cf. Creviston v. General Motors Corp., 225 So.2d 331, 334 (Fla. 1969) (recognizing product misuse as defense in products liability claim based on breach of warranty).
In West, we delineated the type of conduct by a claimant that could be asserted as a defense in a strict liability action:
We recognize that contributory negligence of the user or consumer or bystander in the sense of a failure to discover a defect, or to guard against the possibility of its existence, is not a defense. Contributory negligence of the consumer or user by unreasonable use of a product after discovery of the defect and the danger is a valid defense. Prior to the adoption of the comparative negligence doctrine, a plaintiff's conduct as the sole proximate cause of his injuries would constitute a total defense. The defendant manufacturer may assert that the plaintiff was negligent in some specified manner other than failing to discover or guard against a defect, such as assuming the risk, or misusing the product, and that such negligence was a substantial proximate cause of the plaintiff's injuries or damages. The fact that plaintiff acts or fails to act as a reasonable prudent person, and such conduct proximately contributes to his injury, constitutes a valid defense... .
We now have comparative negligence, so the defense of contributory negligence is available in determining the apportionment of the negligence by the manufacturer of the alleged defective product and the negligent use made thereof by the consumer. The ordinary rules of causation and the defenses applicable to negligence are available under our adoption of the Restatement rule. If this were not so, this Court would, in effect, abolish the adoption of comparative negligence.
Id. at 90 (citations omitted; emphasis added). Although stated in the context of strict liability law, these observations make it clear that we have treated product misuse as a form of comparative negligence.
CONCLUSION
Consistent with the comparative negligence principles espoused in Hoffman, and our holdings in Blackburn, Auburn Machine Works, and West, we conclude that product misuse is not an absolute bar to a products liability claim sounding in negligence. Rather, much like the earlier demise of the absolute defense of contributory negligence, product misuse merges into the defense of comparative negligence. Consequently, product misuse reduces a plaintiff's recovery in proportion to his or her own comparative fault.
Of course, if a court determines as a matter of law, or a jury determines as a matter of fact, that a defendant was not negligent or that its negligence was not a cause of the claimant's injury, or if it is determined that a claimant's negligence was the sole legal cause of her injury, then, in such event, the claimant could not recover.[3] However, in this case, the jury found that the negligent conduct of both Standard Havens and Benitez were contributing legal causes of the Plaintiffs' injuries. As a result, the jury apportioned *1198 70% fault to Standard Havens and 30% to Benitez. Under the law of comparative negligence, this finding results in a reduction, but not a total bar, to Plaintiffs' claim.
Having answered the question certified in the negative, we return the case to the Eleventh Circuit Court of Appeals.
It is so ordered.
GRIMES, C.J., and OVERTON, SHAW, KOGAN, HARDING and WELLS, JJ., concur.
NOTES
[1] As is discussed in the opinion, we have consistently rejected the use of various doctrines as absolute defenses in negligence cases. Rather, we have adopted the rule of comparative negligence under which the conduct of the injured party may be raised as a defense. Hence, in a negligence action, an interrogatory on comparative negligence may be appropriate, but not an interrogatory specifically focusing on product misuse, assumption of risk, or any other of the various characterizations of a claimant's alleged misconduct. In addition, in a negligence action it would be inappropriate to fashion an interrogatory that combines elements of the negligence claim with elements of a defense.
[2] Of course, negligence, as a basis of recovery in a products liability action, existed long before strict liability was recognized as a separate legal basis of recovery. See, e.g., Matthews v. Lawnlite Co., 88 So.2d 299 (Fla. 1956). And, as noted above, this Court has consistently rejected the notion of per se absolute defenses in negligence cases.
[3] While we are not reviewing the issue, we note that the trial court denied the defense's motion for directed verdict. In fact, the trial court observed:
It could be argued with a good deal of strength that Mr. Benitez ... went in [the baghouse] the way it sounds to me if I were a juror, in a very conscientious way to do a job to make this work right... . If I were a juror in this case, I would decide he didn't know he was misusing this property.
When the trial court made this statement it was referring to evidence which showed that if Mr. Benitez had not left the auger on to constantly remove the dust which fell to the bottom of the hopper as he was raking the baghouse walls, then the auger would have probably malfunctioned when turned on after he had finished raking and exited the baghouse. There was evidence that problems had previously occurred when too much dust was being moved along the bottom of the baghouse by the auger.
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102 So.2d 645 (1958)
Lucille Beall PARKER, as Administratrix of the Estate of Albert William Parker, Sr., Deceased, Appellant,
v.
PERFECTION COOPERATIVE DAIRIES, a Florida corporation, and Rufus E. Sullivan and Emery W. Ryan, Appellees.
Albert William PARKER, Jr., by his next friend, Lucille Beall Parker, Appellant,
v.
PERFECTION COOPERATIVE DAIRIES, a Florida corporation, and Rufus E. Sullivan and Emery W. Ryan, Appellees.
Nos. 271, 272.
District Court of Appeal of Florida. Second District.
February 5, 1958.
Rehearings Denied May 26, 1958.
Smith & Tipton, S. Victor Tipton, Orlando, for appellants.
Maguire, Voorhis & Wells, Alton G. Pitts, Orlando, for appellees.
ALLEN, Acting Chief Judge.
This is an appeal from a final judgment entered in two actions at law for negligence, which were consolidated for trial below. The actions arose out of a collision between a car driven by Albert William Parker, Jr., and a truck owned by the defendant dairy, and driven or controlled by defendant Ryan. Ryan was helping defendant Sullivan, an employee of defendant dairy, make deliveries on Sullivan's milk route. There was a jury verdict of not guilty. Plaintiffs appeal, the parties being referred to herein as they stood before the trial court.
The appellants' first question involves the court's ruling, over the objection of the *646 plaintiffs, which allowed testimony that the father of the driver of the automobile paid a $10 fine to the municipal court of the City of Winter Park, Florida, arising out of a charge of excessive speed made against Albert William Parker, Jr., one of the plaintiffs below.
There was introduced in evidence an ordinance of the City of Winter Park, which provided that a speed in excess of 25 miles per hour would be prima facie evidence of reckless driving. The testimony which was objected to by the plaintiff below, was apparently introduced as an admission that the plaintiff-driver was exceeding the speed limit at the time of the collision. The driver Albert William Parker, Jr., admitted at the trial that he was exceeding the speed limit, so if there was error in the admission of the testimony, it was harmless error. Pensacola & A.R. Co. v. Anderson, 26 Fla. 425, 8 So. 127.
The plaintiffs also complained of the refusal of the lower court to permit a member of the Orlando Police Department to testify as to the probable speed or category of speed of the Parker automobile just prior to the involved collision, basing his opinion on his experience and on certain facts stated in the question.
We are familiar with the opinion of the Supreme Court in the case of Kerr v. Caraway, Fla. 1955, 78 So.2d 571, 572, to the effect that a police officer qualified as an expert relative to stopping distances and skid marks, etc. The trial court has the burden of determining whether or not the purported expert has the experience, training, etc. to testify as an expert, and in addition thereto, whether there are sufficient known facts from which the expert in question would be able to give an opinion that would assist the jury in its determination of the questions involved in the case. It has been held that a trial court's determination as to whether a proposed expert witness possesses the proper qualifications is conclusive unless it appears from the record to have been clearly erroneous or founded upon error in law. Tully v. State, 69 Fla. 662, 68 So. 934; Kersey v. State, 73 Fla. 832, 74 So. 983; Bratt v. Western Air Lines, 10 Cir., 155 F.2d 850, 166 A.L.R. 1067. We are of the opinion in this case that the lower court was correct in his refusal to permit the witness to testify.
The plaintiffs also assigned as error the giving of the defendants' requested instruction No. 19 on the subject of the doctrine of last clear chance. Defendants' requested instruction No. 19, as actually given by the Judge, was as follows:
"If you find that Albert Parker was negligent in driving the car as he was, and you find that his negligence continued on to the collision, then you will not apply the doctrine of last clear chance unless you find that after Emery Ryan actually saw the car, he had a clear opportunity to avoid the collision by the use of ordinary care."
In the case of Merchants' Transp. Co. v. Daniel, 1933, 109 Fla. 496, 149 So. 401, 404, the Court said:
"The last clear chance rule is not to be confused with the doctrine of comparative negligence. The latter doctrine (comparative negligence rule) is not recognized in Florida, except in certain special cases by statute. Neither is the doctrine of last clear chance applicable where the negligence of each party is concurrent. * * * Last clear chance implies thought, appreciation, mental direction, and the lapse of sufficient time to effectually act upon the impulse to save another from injury, or proof of circumstances which will put the one charged to implied notice of the situation. Hartley v. Lasater, 96 Wash. 407, 165 P. 106.
* * * * * *
"Defendant, had it so requested, would have been entitled to a charge that, if simultaneously with defendant's negligence the deceased had a chance *647 to escape the injury by himself exercising ordinary diligence, and did nothing to extricate himself from danger, the doctrine of `last clear chance' would not apply. This is so because in that case deceased would have been guilty of concurrent negligence, which is a form of contributory negligence that bars recovery. Emmons v. Southern Pac. Co., 97 Or. 263, 191 P. 333; Dyerson v. Union Pac. R. Co., 74 Kan. 528, 87 P. 680, 7 L.R.A.,N.S., 132, 11 Ann. Cas. 207.
"But such a charge as that just referred to would amount to a proper charge on the subject of `concurrent' negligence, and such a charge as ought to have been specially requested if defendant had desired a charge to be given on that subject as a means of informing the jury concerning the distinction between liability under the rule as to `the last clear chance,' and nonliability under the rule as to `concurrent' negligence. Pensacola Electric Co. v. Bissett, 59 Fla. 360, 52 So. 367; Turner v. State, 99 Fla. 246, 126 So. 158; Tindall v. State, 99 Fla. 1132, 128 So. 494."
The Supreme Court of Errors of Connecticut in the case of Caplan v. Arndt, 1938, 123 Conn. 585, 196 A. 631, 633, 119 A.L.R. 1037, enunciated the conditions under which the doctrine of last clear chance applies as follows:
"(1) That the injured party has already come into a position of peril; (2) that the injuring party then or thereafter becomes, or in the exercise of ordinary prudence ought to have become, aware not only of that fact, but also that the party in peril either reasonably cannot escape from it, or apparently will not avail himself of opportunities open to him for doing so; (3) that the injuring party subsequently has the opportunity by the exercise of reasonable care to save the other from harm; and (4) that he fails to exercise such care."
The American Law Reports, Annotated, has an exhaustive annotation on the doctrine of last clear chance following the reported case. See Annotation, 119 A.L.R. 1041 (1939).
In the case of Wawner v. Sellic Stone Studio, Fla. 1954, 74 So.2d 574, 577, in an opinion by Mr. Justice Drew, the Court said:
"But many cases present close fact situations not so easily solved. This is particularly true where both parties are in motion. In these instances it is often difficult to determine whether the conduct of a plaintiff was of a nature sufficient to put the motorist on notice of a situation of peril imminent to the plaintiff which the plaintiff was likely not to avert. And even where the conduct of plaintiff was sufficient to impart such notice, as in the examples above mentioned, it must further appear that the motorist had that notice at a time and under circumstances when he thereafter had opportunity reasonably to avert the accident, otherwise the doctrine does not apply."
In the case now before this court, the trial judge charged the jury on the last clear chance doctrine as follows:
"In determining the liability in this case, if any exists, you are to take into consideration to the extent applicable, the doctrine of last clear chance. This doctrine recognizes that the plaintiff may have been negligent in the beginning. That is to say, may have done some act or omitted some safeguard that would have been appropriate under the circumstances, and yet allow the plaintiff to recover if the circumstances are such that after such action on the part of the plaintiff, the defendant driving the truck in this case could thereafter have avoided the accident.
*648 "The last clear chance theory of law is not to be limited to the actual knowledge on the part of Defendant Ryan as to the peril of the plaintiff which existed, but the driver Ryan may be liable if he saw or by the exercise of ordinary care could have seen the peril of Plaintiff Parker in time to have avoided the accident by the exercise of ordinary care but failed to do so."
We are of the opinion that the Court's giving of the defendants' requested instruction No. 19, taken in connection with the other charges of the Court, as above set forth, was not prejudicial to the plaintiffs.
Certain other assignments of error were made by the plaintiffs, which we have considered. We do not believe that they raise questions which warrant discussion, except to point out that the acts of the trial court attacked thereby are not of sufficient importance to constitute reversible error.
It is our opinion that the lower court should be affirmed.
Affirmed.
THORNAL and PATTISHALL, A. JJ., concur.
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656 So.2d 284 (1995)
COASTAL PETROLEUM COMPANY, Appellant,
v.
Lawton CHILES, Governor, et al., as and constituting The Board of Trustees of the Internal Improvement Trust Fund, State of Florida; and as constituting The Executive Board of the Department of Natural Resources, State of Florida, Appellees.
No. 93-3383.
District Court of Appeal of Florida, First District.
June 23, 1995.
*285 Robert J. Angerer, Tallahassee, for appellant.
Robert A. Butterworth, Atty. Gen., Denis Dean and Jonathan A. Glogau, Asst. Attys. Gen., Parker Thompson, Sp. Asst. Atty. Gen., Tallahassee, for appellees.
Charles W. Pittman and Susan W. Fox of Macfarlane Ferguson, Tampa, John K. Aurell of Macfarlane Ausley Ferguson & McMullen, Tallahassee, for amici curiae.
PER CURIAM.
Coastal Petroleum Company seeks reversal of a final summary judgment entered in favor of the State of Florida, the appellee and defendant in Coastal's inverse condemnation suit. Because genuine issues of material fact exist, we reverse the summary judgment. For the same reason, we affirm the lower court's denial of Coastal's motion for partial summary judgment.
Coastal came into possession of certain oil and gas drilling leases on off-shore property some fifty years ago. In 1968, the state challenged the validity of these leases in federal district court, and, while Coastal's interest was preserved by the district court judgment, the parties nevertheless entered into lengthy settlement negotiations. A settlement agreement was eventually obtained, and a consent decree was entered in 1976. Among other things, the settlement agreement provided that Coastal would surrender its interests in certain property entirely while retaining a royalty interest or a leasehold interest in other property. The royalty interest provides a 6.25% interest in the well-head value of certain property for a term of 40 years.
In 1990, the Florida Legislature enacted Chapter 90-72, Laws of Florida (1990), which provides that no structure for the drilling or production of oil or gas could be constructed within certain areas, including properties on which Coastal held a royalty interest. Coastal believes that the enactment of Chapter 90-72 constitutes a taking of its royalty interest and, therefore, filed an inverse condemnation action seeking compensation for this alleged taking.
As indicated above, the state moved for summary judgment, arguing essentially that, because no lease for drilling had been granted by the state during the 15 years since entry of the settlement and because Coastal had no authority to compel the state to grant a lease for drilling, Coastal's royalty right was such an illusory interest that it could not be subject to a "taking."
The grant of summary judgment in favor of the state obviously involved the weighing and resolution of certain factual matters and the logical inferences therefrom, such as the expectation of the parties at the time the settlement was entered and the meaning and effect to be given to numerous documents submitted into evidence. Accordingly, summary judgment was improperly granted. Streeter v. Bondurant, 563 So.2d 729 (Fla. 1st DCA 1990). Similarly, we find that a partial summary judgment in favor of Coastal on the question of whether a taking occurred would be premature at this juncture of the case since the facts are far from "crystallized." See, Moore v. Morris, 475 So.2d 666, 668 (Fla. 1985) (a summary judgment should not be granted unless the facts are so crystallized that nothing remains but questions of law). By this decision, we make no determination as to the merits of any arguments of law relating to the merits of the underlying action.
*286 Accordingly, we REVERSE in part, AFFIRM in part and REMAND for further proceedings.
WEBSTER, MICKLE and VAN NORTWICK, JJ., concur.
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
David C. Harrison, :
Petitioner :
:
v. : No. 658 C.D. 2016
: Argued: April 5, 2017
Workers' Compensation Appeal :
Board (Commonwealth of :
Pennsylvania), :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
OPINION
BY JUDGE SIMPSON FILED: June 28, 2017
This appeal involves review of an employer’s notice of workers’
compensation benefit offset against an employee’s pension benefits. David C.
Harrison (Claimant) petitions for review of an order of the Workers' Compensation
Appeal Board (Board) affirming an order of Workers' Compensation Judge Pamela
Briston (WCJ) denying his review offset, reinstatement and penalty petitions. In
denying Claimant’s petitions, the WCJ upheld the Commonwealth’s (Employer)
notice of weekly offset amount of $434.34. Claimant contends the WCJ erred in
calculating the offset based on the maximum monthly amount of pension benefits
he could receive where he opted for a lower monthly rate which provides for a
survivor benefit for his spouse in the event of his death. Upon review, we affirm.
I. Background
In June 2010, Claimant sustained a work injury. Employer accepted
the injury in a notice of compensation payable (NCP), which described the injury
as a left acetabulum fracture caused by a slip/fall on a carpet. The NCP indicated
an average weekly wage (AWW) of $1,273.59 and a weekly compensation rate of
$845.00.1
A. Notice of Benefit Offset
In February 2012, Employer issued a notice of workers’ compensation
benefit offset advising Claimant that based on information it received from the
Pennsylvania State Employees’ Retirement System (SERS), Employer was entitled
to a pro-rata pension offset for benefits Claimant received in the amount of
$1,885.03 per month. Reproduced Record (R.R.) at 1a-3a.
Section 204(a) of the Workers’ Compensation Act (Act)2 provides in
pertinent part (with emphasis added): “the benefits from a pension plan to the
extent funded by the employer directly liable for the payment of which are
received by an employee shall also be credited against the amount of the award
made under [the Act].” 77 P.S. §71(a) (emphasis added). In addition, Workers'
Compensation Bureau (Bureau) regulations governing the application of offset for
pension benefits provide (with emphasis added):
1
In April 2014, the parties executed a supplemental agreement expanding the description
of the injury to include an aggravation of Claimant’s preexisting muscular dystrophy.
2
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71(a).
2
(a) Offsets of amounts received from pension benefits
shall be achieved on a weekly basis. If the employe
receives the pension benefit on a monthly basis, the net
amount contributed by the employer and received by the
employe shall be divided by 4.34. The result is the
amount of the weekly offset to the workers'
compensation benefit.
34 Pa. Code §123.9(a).
Calculating the offset based on 34 Pa. Code §123.9(a), Employer
determined the weekly offset to be $434.34. Subtracting this amount from
Claimant’s weekly compensation rate of $845.00 reduced Claimant’s weekly
payment to $410.66. R.R. at 3a.3
B. Claimant’s Petitions
In February 2014, Claimant filed a review offset petition, a penalty
petition and a reinstatement petition. Claimant alleged Employer improperly took
an offset credit for an overpayment. R.R. at 9a. Claimant also sought a review of
Employer’s calculation of the offset. Id.
3
Employer’s notice of offset also recognized that SERS approved Claimant’s pension
retroactively to begin on December 1, 2010. As such, Claimant received 67 and 3/7 weeks of
pension benefits prior to March 16, 2012, resulting in an overpayment of $29,286.92. To recoup
the overpayment, Employer suspended Claimant’s benefits for 71 and 2/7 weeks from March
17, 2012 through July 28, 2013. R.R. at 3a.
3
C. Before the WCJ
Before the WCJ, Employer presented deposition testimony from three
witnesses. In her first three findings of fact, the WCJ reviewed Employer’s
evidence.
Sara Westhaver (Claims Representative), a claims representative for
Inservco Insurance Services (Inservco), testified that Inservco replaced
CompServices as Employer’s third-party administrator. When Inservco learns a
Commonwealth employee retired and is receiving pension benefits, Inservco
obtains pension information from SERS, calculates the appropriate offset and
issues the appropriate LIBC (Bureau) forms. WCJ Op., 2/17/15, Finding of Fact
(F.F.) No. 1.
Based on her review of the file, Claims Representative determined
Claimant returned a Bureau form to Inservco’s predecessor, CompServices, in
December 2011 indicating that he was receiving pension benefits. Claimant
provided the gross and net amount of his pension benefits. On February 22, 2012,
CompServices issued the notice of offset to Claimant. F.F. No. 1.
In particular, Claims Representative testified the notice of offset
indicated the Employer-funded amount of Claimant’s monthly pension benefit to
be $1,885.03. F.F. No. 1; Dep. of Sara Westhaver, 10/2/14 (Westhaver Dep.), at
19-20; R.R. at 3a, 103a-04a. Pursuant to 34 Pa. Code §129.3(a), that amount is
divided by 4.34, yielding a weekly offset of $434.34. F.F. No. 1; Westhaver Dep.,
at 19-20; R.R. at 103a-04a. On cross-examination, Claims Representative
4
acknowledged the only role a third-party administrator plays in calculating the
offset is to divide the monthly offset amount provided by SERS so that a weekly
offset can be determined. F.F. No. 1; Westhaver Dep., at 20-21; R.R. at 105a-06a.
SERS’s Director of Benefit Administration, Susan Hostetter (SERS
Benefits Director) testified regarding the manner in which SERS calculates the
Employer-funded part of Claimant’s pension. F.F. No. 2. SERS Benefits Director
testified that Claimant had various pension payment options he could select. Some
options provide a greater monthly payout than others. However, options with a
lower monthly payout offer other benefits such as payments to a spouse should the
retiree predecease the spouse. Id.
However, with regard to calculating the pension offset in workers’
compensation cases, SERS does not take into consideration which payment option
the participant chooses. Rather, SERS always calculates the offset based on the
participant’s maximum single life annuity (MSLA). This is the maximum amount
an injured employee could elect to receive each month. F.F. No. 2.
In the present case, SERS calculated Claimant’s MSLA as $3,742.51
per month. However, Claimant elected a different payment option which paid him
a gross monthly amount of $3,434.16. After deductions, Claimant received an
initial net monthly payment of $3,053.01. F.F. No. 2.
Employer also submitted the testimony of Brent A. Mowery (SERS
Actuary), an actuary employed by SERS and affiliated with a company known as
5
the Hays Group. F.F. No. 3. He explained that SERS has a defined-benefit plan.
In such a plan, all of the participants’ contributions are comingled with Employer’s
contributions. Id. The combined amount is then invested. Employees do not have
individual accounts. Id.
SERS Actuary explained that in determining the extent to which the
Commonwealth funds an employee’s pension, it is necessary to determine how
much money will be needed to fund the employee’s pension for the rest of his life.
F.F. No. 3; Dep. of Brent A. Mowery, 10/15/14 (Mowery Dep.), at 10; R.R. at
121a. This determination is an “actuarial calculation.” F.F. No. 3; Mowery Dep.
at 10; R.R. at 121a. Once that determination is made, it is possible to calculate the
amount the employee contributed over the course of his life. F.F. No. 3. When the
employee’s contribution is deducted from the total amount of funding needed, the
amount the Commonwealth contributed to the pension can be determined. Id.
Here, SERS Actuary testified he determined Claimant’s MSLA to be
$3,742.51 per month. F.F. No. 3; Mowery Dep. at 18; R.R. at 129a. By using
Claimant’s MSLA, remaining life expectancy, and applying an actuarial factor of
8.7045, SERS Actuary determined $390,920.14 was needed to fund Claimant’s
pension. F.F. No. 3; Mowery Dep. at 18-19; R.R. at 129a-30a. Subtracting
Claimant’s contributions and investment earnings, $194,021.33, SERS Actuary
calculated that the remaining amount necessary to fund the pension, $196,898.81,
represents Employer’s contribution. F.F. No. 3.
6
SERS Actuary observed that the Employer-funded portion of
Claimant’s entire pension, $196,898.81, constitutes 50.368039 percent of the total
value of Claimant’s pension. F.F. No. 3. Therefore, the Employer-funded portion
of Claimant’s monthly MSLA is calculated as 50.368039 percent of $3,742.51,
which amounts to $1,885.03. F.F. No. 3; Mowery Dep. at 33-34; R.R. at 144a-45a.
Notably, Claimant did not present any testimony, expert or otherwise,
on his own behalf. F.F. No. 4. As such, Claimant failed to present any expert
actuarial testimony to challenge Employer’s actuarial calculations. Id.
Based on the evidence presented, the WCJ determined Claimant failed
to meet his burden of proof in his review offset, reinstatement and penalty
petitions. F.F. No. 5. In her decision, the WCJ accepted the testimony of Claims
Representative, SERS Benefits Director and SERS Actuary as credible and
convincing with respect to the calculation of Employer’s offset. F.F. No. 5a. In
particular, the WCJ found their calculations of the pension offset to be sound. F.F.
No. 5b. The WCJ also determined the methodology described by SERS Actuary
accurately calculated the Employer-funded portion of the SERS defined-benefit
plan. Id.
Therefore, the WCJ found Employer was entitled to a weekly offset of
$434.34 resulting in a weekly compensation benefit of $410.66. F.F. No. 5c.
7
Pursuant to 34 Pa. Code §123.4(a), Employer is entitled to this offset for the
duration of Claimant’s collection of his pension benefit. F.F. No. 5d.4
4
The WCJ next addressed several issues Claimant raised in his Proposed Findings of Fact
and Conclusions of Law. These issues are not at issue in the current appeal, and they are
recounted only for the sake of completeness.
Claimant first argued Employer’s actuarial assumptions failed to consider the
unique circumstances in his case. See F.F. No. 6. To that end, the parties’ supplemental
agreement described Claimant’s work injury as including an aggravation of his preexisting
muscular dystrophy. Claimant thus asserted Employer bore the burden of producing medical
evidence showing his life expectancy would not be adversely affected by this serious and
sometimes fatal disease. Id.
In rejecting Claimant’s argument, the WCJ reasoned it would be expensive and
burdensome to place the requirement on Employer to have each worker evaluated for purposes of
life expectancy when calculating its share of the pension. F.F. No. 6(I)(b). The WCJ also
credited SERS Actuary’s testimony that the larger size of the group of retirees, the more accurate
the life expectancy tables are because the deviations tend to cancel out. F.F. No. 6(I)(c).
The WCJ addressed another issue raised by Claimant. Claimant contended
Employer violated the Act by taking a credit against pension benefits Claimant received prior to
the date Employer filed the notice of offset. In rejecting Claimant’s contention, the WCJ
recognized that 34 Pa. Code §123.4 explicitly permits a retroactive offset or recoupment. City of
Pittsburgh v. Workers' Comp. Appeal Bd. (Wright), 90 A.3d 801 (Pa. Cmwlth. 2014). F.F. No.
6(III)(a). In short, the WCJ observed that “Section 204(a) and its regulations expressly authorize
an employer to do a retrospective offset as needed to recover overpaid workers’ compensation
benefits.” Id. The WCJ also found there was no delay attributable to Employer which led to the
overpayment. F.F. No. 6(III)(b).
Accordingly, the WCJ determined Employer is entitled to a weekly offset of
Claimant’s workers’ compensation benefits due to his simultaneous receipt of pension benefits,
which are partially Employer-funded. Conclusion of Law (C.L.) No. 1. Therefore, the WCJ
reduced Claimant’s weekly benefits to $410.66. Id.
The WCJ also determined Employer was entitled to an offset for overpayment in
the amount of $29,286.92. C.L. No. 2. Because Employer did not cause a delay resulting in the
overpayment, the WCJ determined Employer was entitled to collect the full offset amount for the
overpayment. C.L. No. 3. Therefore, the WCJ denied Claimant’s review offset and
reinstatement petitions. C.L. No. 4.
Further, because a retroactive offset is permitted under Section 204(a) of the Act
and its regulations, the WCJ found no violation of the Act and denied Claimant’s petition for
penalties. C.L. No. 5.
8
Also, Claimant asserted Employer failed to prove SERS properly
calculated the offset against the net amount of benefits he received each month as
required by the Act and its applicable regulations. In rejecting this argument, the
WCJ noted an employer’s offset calculations determine the funding needed to be
provided by the employer. F.F. No. 6(II)(b). Although Claimant elected a lesser
amount in order to preserve a survivor benefit for his spouse, the WCJ found this is
still a benefit to Claimant as an employee. Id. As such, to calculate the offset as
Claimant requested would not take into account either the total amount required to
be funded by Employer in order to pay the survivor benefit to Claimant’s wife.
F.F. No. 6(II)(c).
The WCJ denied Claimant’s petitions. On appeal, the Board affirmed.
In its opinion, the Board noted that even though Claimant took a lower paying
option than the MSLA standard payment, Claimant’s decision did not impact the
amount of money required to fund his pension for the remainder of his life and his
wife’s life. Bd. Op., 4/7/16, at 6, 7. Claimant petitions for review.5
II. Discussion
A. Argument
Claimant contends the Board erred in affirming the WCJ’s decision
that Employer’s offset should be calculated on the gross amount of the MSLA
payment rather than the lesser amount Claimant actually received. To that end,
5
Our appellate standard of review is limited to determining whether the WCJ’s findings
of fact were supported by substantial evidence, whether an error of law was committed or
whether constitutional rights were violated. Phoenixville Hosp. v. Workers’ Comp. Appeal Bd.
(Shoap), 81 A.3d 830 (Pa. 2013).
9
Claimant asserts Section 204(a) of the Act provides “the benefits from a pension
plan to the extent funded by the employer directly liable for the payment of which
are received by an employee shall also be credited against the amount of the award
made under [the Act].” 77 P.S. §71(a) (emphasis added).
Similarly, Bureau regulations provide: “Workers' compensation
benefits otherwise payable shall be offset by the net amount an employe receives in
pension benefits to the extent funded by the employer directly liable for the
payment of workers' compensation.” 34 Pa. Code §123.8(a) (emphasis added). “If
the employe receives the pension benefit on a monthly basis, the net amount
contributed by the employer and received by the employe shall be divided by
4.34.” 34 Pa. Code §123.9(a) (emphasis added). “The result is the amount of the
weekly offset to the workers' compensation benefit.” Id.
In support of his position, Claimant cites City of Philadelphia Gas
Works v. Workers' Compensation Appeal Board (Amodei), 964 A.2d 963 (Pa.
Cmwlth. 2009), where this Court, in an en banc decision, held that a pension offset
was based on the net amount the claimant actually received. In reviewing Section
204(a) of the Act, we stated:
The statutory language permitting an employer to offset
workers' compensation paid to an employee by the
amount of pension benefits the employee ‘received’ does
not specify whether the credits allowed are to be
calculated on the gross or net amount received by the
employee. However, pursuant to legislative directive,
this information is supplied by regulation.
10
Philadelphia Gas Works, 964 A.2d at 965. We then noted the language in 34 Pa.
Code §123.8(a) that workers' compensation benefits otherwise payable shall be
offset by the net amount an employe receives in pension benefits to the extent
funded by the employer directly liable for the payment of workers' compensation.
Claimant also cites our decision in City of Philadelphia v. Workers'
Compensation Appeal Board (Harvey), 994 A.2d 1 (Pa. Cmwlth. 2010), where a
City of Philadelphia (City) employee sustained a work injury and began receiving
workers' compensation benefits at the rate of $527.00 per week. Thereafter, the
employee began receiving a disability pension from the City. Had he not been
receiving workers’ compensation benefits, the retired employee would have been
entitled to $2,292.21 per month in pension benefits.
However, pursuant to Section 22-401(4)(a) of the City Code, if an
injured employee receiving workers’ compensation benefits becomes eligible to
receive pension benefits, the pension benefits are required to be offset against the
workers’ compensation benefits. Because the claimant received $2,289.84 per
month in workers’ compensation benefits, his pension benefits were reduced to
$2.27 per month.
Nevertheless, the City, pursuant to 34 Pa. Code §123.9(a), sought an
additional offset based on the fact it funded 53.983% of the claimant’s pension. As
such, the City sought to deduct $285.12 from Claimant’s weekly workers’
compensation benefit of $527.00, which would lower claimant’s weekly workers’
compensation rate to $241.88. In other words, the City wanted to reduce
11
Claimant’s pension benefits by 100% of Claimant’s workers’ compensation
benefits and then reduce Claimant’s workers’ compensation benefits by 54% of
Claimant’s pension benefits before they were reduced under Section 22-401(4)(a)
of the City Code.
On appeal, the Board decided that in view of the reduction of
Claimant’s pension payment under the offset in Section 22-401(4)(a) of the
Philadelphia Code, Claimant received only $2.27 per month in pension benefits.
Based on the City’s 53.983% contribution to Claimant’s pension benefits, this
reduced Claimant’s pension payments by $1.23 per month. Therefore, the Board
determined the City could offset Claimant’s weekly benefits by $0.28. On further
appeal, this Court affirmed, reasoning:
The plain language of Section 204(a) of the Act supports
the Board’s determination. To allow [the City] to offset
[the claimant’s] workers’ compensation in the amount
equal to 53.983 of his full pension even though [the
claimant] did not receive his full pension would yield an
absurd result. [Hannaberry HVAC v. Workers'
Compensation Appeal Board (Snyder, Jr.), 884 A.2d 524
(Pa. 2003)] precludes such an interpretation.
Harvey, 994 A.2d at 8 (emphasis in italics added).
On appeal, Claimant argues that he does not dispute the credible
testimony of Employer’s witnesses regarding the calculation of the Employer-
funded amount of the pension. Nonetheless, Claimant asserts SERS Actuary erred
in taking an offset in the amount of $1,885.03 per month because that amount was
12
based on the premise that Claimant was receiving the gross MSLA of $3,742.51
per month ($3,742.51 x 50.368039% = $1,885.03).
As noted above, Claimant did not elect to receive the MSLA option.
Rather, Claimant opted for a lower monthly payout which also provided for
pension payments to his spouse should he predecease her. As such, Claimant
actually received $3,053.11 per month, approximately $700 per month less than
the gross MSLA option. Therefore, Claimant argues, Employer should have been
entitled to a monthly offset of $1,537.79 ($3,053.11 x 50.368039% = $1,537.79).
In short, Claimant argues Employer’s method of calculating the
pension offset is contrary to the plain language of the Act, the pertinent Bureau
regulations and the applicable case law. He asserts that all relevant sources
mandate that Employer is only entitled to the net amount he actually receives each
month. Therefore, Claimant argues the Board erred in holding Employer could
apply the offset against the amount he could have received if he elected to receive
the single life annuity.
B. Analysis
To begin, we note that even though Claimant filed the offset review
petition, Employer, as the party seeking the pension offset and a change in the
status quo, bears the burden of proof regarding its entitlement. Dep’t of Pub.
Welfare/Polk Ctr. v. Workers' Comp. Appeal Bd. (King), 884 A.2d 343 (Pa.
Cmwlth. 2005). In a defined-benefit plan, credible actuarial evidence is sufficient
to establish the extent to which an employee’s pension benefits are employer-
13
funded. Dep’t of Pub. Welfare v. Workers' Comp. Appeal Bd. (Harvey), 993 A.2d
270 (Pa. 2010). Here, Employer presented testimony from Claims Representative,
SERS Benefits Director and SERS Actuary, which the WCJ accepted as credible
with regard to the calculation of the offset amount for Claimant’s pension. F.F.
No. 5a.
SERS Actuary testified he determined Claimant’s MSLA to be
$3,742.51 per month. F.F. No. 3. Multiplying that amount by an actuarial factor
of 8.7045 yielded a total funding amount of $390,920.14. This is the amount
needed to fund Claimant’s pension. F.F. No. 3. Of that amount, SERS Actuary
determined Claimant contributed $194,021.33 and Employer contributed
$196,898.81 or 50.368039%. Id.
Based on these calculations, SERS Actuary explained Employer
partially funds Claimant’s pension in the amount of $22,620.35 per year or
$1,885.03 per month. Id. Pursuant to 34 Pa. Code §129.3, the $1,885.03 per
month is divided by 4.34, which yields a weekly offset of $434.34. F.F. No. 1.
Critical for our analysis, under Section 5705 of the State Employees’
Retirement Code (Retirement Code), 71 Pa. C.S. §5705, an eligible beneficiary
upon retirement could choose to receive either a MSLA or a reduced annuity
certified by the actuary to be actuarially equivalent to the MSLA in accordance
with one of four options. Hoffman v. State Emp. Retirement Bd., 915 A.2d 674
(Pa. Cmwlth. 2006). Relevant here, Section 705(a) of the Retirement Code
provides the following options:
14
(1) Option 1.—A life annuity to the member with a
guaranteed total payment equal to the present value of the
[MSLA] on the effective date of retirement with the
provision that, if, at his death, he has received less than
such present value, the unpaid balance shall be payable to
his beneficiary.
(2) Option 2.—A joint and survivor annuity payable
during the lifetime of the member with the full amount of
such annuity payable thereafter to his survivor annuitant,
if living at his death.
71 Pa. C.S. §5705(a) (emphasis added).
Claimant did not elect to receive the life annuity Option 1. Rather
Claimant opted for a lower monthly payout under Option 2, which also provided
for a full amount survivor benefit for his spouse should he predecease her.
Claimant actually received, after deductions, $3,053.11 per month. This is
approximately $700 per month less than the MSLA option. Therefore, Claimant
argues, Employer should have been entitled to a monthly offset of $1,537.79
($3,053.11 x 50.368039% = $1,537.79).
We disagree. Section 204(a) “focuses on the extent to which benefits
are funded by the employer.” Harvey, 993 A.2d at 281. SERS Actuary testified
Claimant selected the “joint and one hundred percent survivor benefit.” Mowery
Dep. at 29; R.R. at 140a. Although Claimant will receive a somewhat lower
benefit per month, the reduction takes into account the fact that this amount will be
payable to his wife until her death if he predeceases her. Mowery Dep. at 29-30;
R.R. at 140a-41a. Therefore, in exchange for a reduction in the amount of pension
payments to himself, Claimant added his wife as a joint annuitant with a right of
15
survivorship. Although Claimant himself receives a reduced annuity payout under
Option 2, the remainder of his monthly MSLA will fund the survivor benefit for
his spouse. Thus, Claimant’s pension benefit under Option 2 remains the actuarial
equivalent to his MSLA. Hoffman.
As can been seen from our case descriptions above, the cases relied
upon by Claimant do not address the concept of actuarial equivalency. Therefore,
they are not helpful in resolving the case before us.
In contrast, SERS Actuary explained in detail why payment options
have no impact on calculating funding of a pension. The Actuary testified:
If an individual opts for a joint and survivor annuity it
brings a second life into the picture, typically the spouse,
and when that occurs there is a calculation done to
determine what would be payable to the individual
instead of the level of benefit that [he was] entitled to
[through his] MSLA, that is, some lower amount of
benefit would be paid than had been presented as
available for the single life because under these joint and
survivor forms, if the original member were to
predecease [his] spouse benefits continue, sometimes at
the same level as was payable to the member, sometimes
at 50 percent of the level of benefits payable to the
member.
But, regardless of what level of benefit
continues to the spouse when the member predeceases
the spouse, I think you can appreciate that in order to
maintain the value of the benefit that was originally
available to the participant there is a calculation that we
call an actuarial equivalent conversion.
And, the word actuarial equivalent is basically to
say that by factoring in the age and gender of the spouse
16
and performing a calculation that takes into account that
two lives are going to probably live longer than one on
average, there is a reduction applicable to the MSLA to
bring the benefit that would be payable under this two
life arrangement to a level that’s somewhat lower and
factors in the greater average duration of payments that
will be made once the second life is brought into the
picture.
Now, because these calculations are made through
an actuarial equivalent conversion we aren’t dealing with
any different total value of benefits to which the
participant and his spouse are entitled versus what the
participant himself was entitled to.
Mowery Dep. at 21-22; R.R. at 132a-33a.
It is noteworthy that this expert testimony on actuarial equivalent
conversion was unchallenged by Claimant, and it was accepted by the fact-finder.
Indeed, the Actuary was not asked any questions on cross-examination that
pertained to the actuarial equivalent conversion for different pension payouts, and
Claimant did not offer his own evidence on the issue. Under these circumstances,
this accepted expert testimony is controlling, and it cannot now be challenged by
Claimant under the guise of a legal issue over gross/net payments.
Ultimately, the WCJ made the following findings:
b. [Employer’s] calculation considers the funding
needed to funded by [Employer]. It is noted that
[C]laimant elected a lesser amount in order to preserve,
presumably, an option for payment for a spouse, which is
a benefit to the employee. As such, I accept
[Employer’s] calculations of the offset.
17
c. To calculate the offset as requested by [C]laimant
would not take into account the amounts required to be
funded by [Employer], and the benefits to [C]laimant’s
spouse.
F.F. No. 6(II)(b),(c) (emphasis added).
Claimant states he does not challenge either the MSLA calculation of
$3,742.51 per month or the Employer-funded portion of his pension as
50.368039%. Therefore, the WCJ properly determined the Employer-funded
portion of Claimant’s monthly MSLA or pension benefit to be $1,885.03. See F.F.
No. 6(II)(a). Dividing this amount by 4.34, as required by 34 Pa. Code §123.9(b),
results in a monthly offset of $434.34 per week.
We discern no error or abuse of discretion in the WCJ’s determination
that Claimant’s joint and survivor annuity, which includes a full amount survivor
annuity payable to his wife should Claimant predecease her, constitutes a benefit
Claimant constructively received for purposes of the Section 204(a) pension offset.
As SERS Actuary explained, where a participant selects the joint and survivor
annuity, that brings a second life into the picture. Mowery Dep. at 21; R.R. at 21a;
R.R. at 132a. A calculation factoring the age and gender of the spouse must be
made. Because “two lives are going to probably live longer than one on average,”
the monthly amount of pension benefit paid to the participant will be lower to
factor “in the greater average duration of payments ….” Id. Importantly, as SERS
Benefits Director testified, no matter what option the participant chooses, the value
of his benefit will be actuarially equivalent to his MSLA. F.F. No. 2; Dep. of
Susan Hostetter, 10/2/14 (Hostetter Dep.), at 32-33; R.R. at 68a-69a.
18
Therefore, the total amount of funding needed is the same under both
the single life annuity and joint and survivor annuities. Id. Mowery Dep. at 22;
R.R. at 21a; R.R. at 133a. SERS Benefits Director explained: “What we need to
set aside is a[n] amount that funds the maximum amount of the benefit. So we
fund for each member on the [MSLA], the maximum amount they [sic] can
receive.” Hostetter Dep. at 32; R.R. at 67a.
Consequently, we reject Claimant’s contention that Employer is only
entitled to an offset based on the monthly net amount of pension benefits
physically received by Claimant. Although Claimant is receiving a reduced
payment under this option, Employer does not receive a corresponding reduction in
the amount it must fund Claimant’s pension benefits. Rather, the reduction in
Claimant’s payment is necessary to enable Employer to provide funding for a
survivor benefit for Claimant’s wife. Thus, because Employer is partially funding
both the annuity to Claimant and the survivor annuity for Claimant’s wife,
Employer is entitled to an offset for Claimant’s MSLA regardless of the monthly
amount paid solely to Claimant.6 Harvey.
In sum, pursuant to Section 204(a) of the Act and 34 Pa. Code
§123.8(a), an employer is entitled to a workers’ compensation offset for pension
benefits an employee receives to the extent funded by the employer. Here,
Claimant voluntarily chose a joint and survivor annuity which will require
Employer to fund both his and his wife’s annuity benefits in an amount equivalent
6
As noted above, a joint and survivor annuity under Option 2 must be certified to be
actuarially equivalent to the value of the MSLA. 71 Pa. C.S. §5705(a); Hoffman.
19
to Claimant’s MSLA. 71 Pa. C.S. §5705(a); Hoffman. As such, it would be
improper to deny Employer an offset for the full amount that it funded Claimant’s
MSLA. Section 204(a) of the Act; Harvey.
C. Taxes
As a final matter, we address Claimant’s contention that the workers’
compensation offset must be calculated based on his net MSLA after taxes rather
than the gross MSLA of $3,742.51 per month. The Pennsylvania Association for
Justice (Association), as amicus curiae, cites Philadelphia Gas Works, and points
out that while pension benefits may be taxed, workers’ compensation benefits are
not taxable. Therefore, if a claimant received $200 per week in pension benefits
and paid $50 in taxes on those benefits, he would receive only $150 per week.
However, if his employer is entitled to a workers’ compensation offset of $200 per
week, the claimant would lose $50 per week in workers’ compensation to which he
was legally entitled.
Similarly, Claimant, also citing Philadelphia Gas Works, argues that
the offset must be calculated based on the net amount a claimant actually receives.
Therefore, Claimant maintains the WCJ erred in approving the pension offset
based on the gross MSLA of $3,742.51 per month.
Again, we disagree. In our previous en banc decision in Philadelphia
Gas Works, we stated:
With respect to the court’s concern that applying the
offset to the net amount of benefits would result in
administrative difficulties, we note that the regulations
20
expressly provide, in the alternative, that an employer
may calculate the offset based on the gross amount of the
other benefit received by the employee, subject to a
correction once the employee notifies the insurer he has
paid the required tax. Specifically, 34 Pa. Code
§123.4(f) (emphasis added) provides:
When Federal, State or local taxes are paid
with respect to amounts an employee
receives in unemployment compensation,
Social Security (old age), severance or
pension benefits, the insurer shall repay the
employee for amounts previously offset, and
paid in taxes, from workers’ compensation
benefits, when the offset was calculated on
the pretax amount of the benefit received.
To request repayment for amounts
previously offset and paid in taxes, the
employee shall notify the insurer in writing
of the amounts paid in taxes previously
included in the offset.
Phila. Gas Works, 964 A.2d at 966 (italics in original).
As we observed in Philadelphia Gas Works, application of the offset
to the net amount of the claimant’s pension benefit for employers could result in
administrative difficulties. Therefore, Employer may calculate the offset based on
the gross amount of the MSLA subject to correction reimbursement under 34 Pa.
Code §123.4(f). Id. Here, SERS Benefits Director testified that a participant may
elect to have taxes taken out. Hostetter Dep. at 33; R.R. at 69a. This can be
changed at any time. Id. SERS Benefits Director further testified that when
Claimant initially retired, he chose to have taxes taken out. Id. As such, Claimant
is entitled to reimbursement from Employer for taxes paid. 34 Pa. Code §123.4(f).
21
III. Conclusion
For the above reasons, we discern no error or abuse of discretion in
the WCJ’s determination that Employer established its entitlement to a weekly
workers’ compensation offset of $434.34 under 34 Pa. Code §129.3(a) based on
Claimant’s simultaneous receipt of pension benefits which have a certified
actuarial equivalent value of $3,742.51 per month and are partially Employer-
funded in the amount of $1,885.03 per month. Accordingly, the order of the Board
upholding the WCJ’s denial of Claimant’s review offset, reinstatement and penalty
petitions is affirmed.
ROBERT SIMPSON, Judge
22
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
David C. Harrison, :
Petitioner :
:
v. : No. 658 C.D. 2016
:
Workers' Compensation Appeal :
Board (Commonwealth of :
Pennsylvania), :
Respondent :
ORDER
AND NOW, this 28th day of June, 2017, for the reasons stated in the
foregoing opinion, the order of the Workers' Compensation Appeal Board is
AFFIRMED.
ROBERT SIMPSON, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
David C. Harrison, :
:
Petitioner : No. 658 C.D. 2016
: Argued: April 5, 2017
v. :
:
Workers' Compensation Appeal :
Board (Commonwealth of :
Pennsylvania), :
:
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
DISSENTING OPINION
BY JUDGE WOJCIK FILED: June 28, 2017
Respectfully, I dissent. In his appeal from the order of the Workers’
Compensation Appeal Board (Board), David C. Harrison (Claimant) argues that
the workers’ compensation judge (WCJ) erred in calculating the Commonwealth of
Pennsylvania’s (Employer) offset against his workers’ compensation benefits
based on the maximum amount of pension benefits Claimant could receive, instead
of the amount of pension benefits he does receive. I agree.
Section 204(a) of the Workers’ Compensation Act (Act)1 allows an
employer an offset for the payment of pension benefits that are received by the
employee, to the extent the pension benefits are funded by the employer. It states:
[T]he benefits from a pension plan to the extent funded
by the employer directly liable for the payment of
compensation which are received by an employe shall
also be credited against the amount of the award made
under [the Act].
77 P.S. §71(a) (emphasis added). In setting forth the critical words at issue in this
case, “are received,” the legislature employed the simple present tense (passive
voice).2 Likewise, the regulation at 34 Pa. Code §123.8(a) (emphasis added),
which allows an offset for “the net amount an employee receives in pension
benefits,” is stated in the present tense. Most importantly, the regulation at 34 Pa.
Code §123.8(c) (emphasis added) expressly states that “[t]he offset may not apply
to pension benefits to which an employee may be entitled, but is not receiving.”
The relevant language allows an offset based on a present occurrence, and it
specifically prohibits applying an offset based on speculative future circumstance.
Consequently, this Court cannot affirm the calculation of Employer’s offset from
Claimant’s workers’ compensation benefits based on pension benefits Claimant
does not receive without disregarding the plain language of Section 204(a) of the
Act and violating the regulation authorizing the offset.
Preliminarily, I note that in order to calculate the amount of
Claimant’s weekly pension payment, the Majority’s rationale relies on the same
actuarial evidence used to determine Employer’s contributions to his pension.
1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71(a).
2
https://owl.english.purdue.edu/owl/resource/601/02 (last visited June 12, 2017).
MHW - 2
However, these actuarial calculations are intended to be applied after, not before,
the amount of a claimant’s weekly pension benefit is determined. In contrast to the
Majority’s analysis, the amount of the benefit a claimant receives under a defined
benefit plan is the starting point in calculating the employer’s contribution for
purposes of arriving at the offset figure: the amount the claimant is entitled to
receive is established by factors such as his salary and years of service; that figure
is multiplied by a factor, determined actuarially, and the result is the amount of the
employer’s contribution. Here, the Majority would use the same actuarial factor to
determine both ends of the same equation, rendering the analysis mathematically
invalid. Moreover, because the calculations used to determine an employer’s
contributions to a claimant’s pension are based on actuarial assumptions, such as a
claimant's life expectancy, use of the same data to arrive at a fictitious amount for a
claimant’s payment under a defined benefit plan is unsupported by law or logic.
While actuarial evidence is appropriately used to resolve disputes concerning the
extent to which an employer has funded a claimant’s pension benefit, this appeal is
not a dispute over the amount of Employer’s contributions. Therefore, I submit
that actuarial evidence concerning the method used to calculate Employer’s
contributions is entirely irrelevant to the question before the Court.
We must be mindful that this is a workers’ compensation case, not a
pension dispute. The purpose of the offset is not to preserve a pension fund but,
rather, to control the cost of workers’ compensation. As we noted in Pennsylvania
State University v. Workers’ Compensation Appeal Board (Hensal), 911 A.2d 225
(Pa. Cmwlth. 2006):
In 1996, the legislature, attempting to combat the
increasing costs of workers’ compensation in
Pennsylvania, amended Section 204(a) of the Act to
MHW - 3
allow employers an offset against workers’ compensation
benefits for social security, severance, and pension
benefits simultaneously received by an employee.
* * *
Amended Section 204(a) serves the legislative intent of
reducing the cost of workers’ compensation by allowing
an employer to avoid paying duplicate benefits for the
same loss of earnings . . . . Similarly, Section 204(a)
implicitly recognizes that public policy bars an employer
from utilizing an employee’s own retirement funds to
satisfy its workers’ compensation obligations . . . .
Id. at 227-28 (emphasis added) (citations omitted).3, 4
I suggest that our decision in Philadelphia Gas Works v. Workers’
Compensation Appeal Board (Amodei), 964 A.2d 963, 967 (Pa. Cmwlth. 2009),
3
See also, Allegheny Ludlum Corp. v. Workers’ Compensation Appeal Board
(Bascovsky), 977 A.2d 61, 67-68 (Pa. Cmwlth. 2009).
4
In Hensal, we also recognized that the legislature had not included in Section 204(a)
any method of calculating the offset. “In response to this omission, the Bureau adopted 34 Pa.
Code §123.8.” Allegheny Ludlum Corp., 977 A.2d at 68. In its entirety, the regulation states:
(a) Workers’ compensation benefits otherwise payable shall be
offset by the net amount an employe receives in pension benefits to
the extent funded by the employer directly liable for the payment
of workers’ compensation.
(b) The pension offset shall apply to amounts received from
defined-benefit and defined-contribution plans.
(c) The offset may not apply to pension benefits to which an
employe may be entitled, but is not receiving.
(d) In calculating the offset amount for pension benefits,
investment income attributable to the employer’s contribution to
the pension plan shall be included on a prorata basis.
34 Pa. Code §123.8.
MHW - 4
explaining that an employer is entitled to a credit only for the net benefit received
by an employee, offers guidance in this matter:
Although the legislature did not specify whether an offset
should be based on the “net” or “gross” amount of these
benefits, we observe that allowing a credit for the gross
amount of other benefits results in a loss of workers’
compensation benefits to which a claimant is statutorily
entitled. In view of an injured employee’s entitlement to
receive workers’ compensation without any tax
reduction, we will not rely on the absence of specific
direction to conclude that the language in Section 204(a)
of the Act, granting employers a credit for certain taxable
benefits received by the employee during a period of
work-related disability, reflects a legislative intent to
reduce the employee’s entitlement to workers’
compensation beyond the post-tax amount of those other
benefits actually received by the employee and available
for his or her use. Indeed, in providing background for
its regulations, the Bureau states, “[o]n June 24, 1996,
Governor Tom Ridge signed into law Act 57, which
substantially amended the [A]ct. The amendments are
intended to combat the rising costs of workers’
compensation in this Commonwealth while protecting
the right of employes to be adequately compensated for
their work-related injuries.” 28 Pa. B. 329 (Jan. 17,
1998). (Emphasis added.)
Amodei, 964 A.2d at 967.
Consistent with the above analysis, even if Section 204(a) were
ambiguous, and even if the regulation at 34 Pa. Code §123.8(c) did not exist, this
Court should not infer a legislative intent to reduce a claimant’s entitlement to
workers’ compensation beyond the amount of the pension benefit the claimant
MHW - 5
presently receives absent an express authorization. Id.5 To the extent the
legislature did not intend the language of Section 204(a) or 34 Pa. Code §123.8(c)
to apply where a claimant receives less in pension benefits than he is entitled to,
deferring receipt of such funds for his later benefit or for the benefit of another, I
suggest that clarification of the law is appropriately achieved through the
legislative or the rule-making process.
Finally, I would be faithful to the principles repeated by our Supreme
Court in Hannaberry HVAC v. Workers’ Compensation Appeal Board (Snyder,
Jr.), 834 A.2d 524 (Pa. 2003):
[W]e take seriously this Court’s settled recognition that
‘[o]ur basic premise in workmen’s compensation matters
is that the [Act] is remedial in nature and intended to
benefit the worker, and, therefore, the Act must be
liberally construed to effectuate its humanitarian
objectives.’ Peterson v. Workmen’s Compensation
Appeal Bd. (PRN Nursing Agency), [597 A.2d 1116,
1120] (Pa. 1991) (collecting cases). Accordingly,
‘borderline interpretations of the [Act] are to be
construed in the injured party’s favor.’ Harper & Collins
v. Workers’ Compensation Appeal Bd. (Brown), [672
A.2d 1319, 1321] (Pa. 1996), citing Turner v. Jones &
Laughlin Steel Corp., [389 A.2d 42, 47] (Pa. 1978).
Hannaberry, 834 A.2d 528.
5
Compare 34 Pa. Code §123.9 (application of offset for pension benefits) which
addresses, inter alia, an employee’s receipt of pension benefits in the form of a lump sum
payment.
MHW - 6
For all of the above reasons, I would apply the statute and regulations
as written, and allow Employer an offset that is calculated on the amount of the
pension payment Claimant presently receives. Accordingly, I would reverse the
Board’s order.
MICHAEL H. WOJCIK, Judge
Judge Cosgrove joins in this dissent.
MHW - 7
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955 S.W.2d 931 (1997)
STATE ex rel. BUNKER RESOURCE, RECYCLING AND RECLAMATION, INC., Relator,
v.
Honorable Robert H. DIERKER, Jr., Judge, Circuit Court, St. Louis City, Respondent.
No. 79716.
Supreme Court of Missouri, En Banc.
November 25, 1997.
*932 Robert D. Younger, St. Louis, for Relator.
Mario G. Silva, Leonard P. Cervantes, Phillip A. Cervantes, St. Louis, for Respondent.
BENTON, Chief Justice.
On November 10, 1988, in St. Louis County, Genevieve Brune's car allegedly collided with a tractor-trailer driven by an employee of Bunker Resource, Recycling and Reclamation, Inc. (doing business as Bunker Resources, Inc.). On July 29, 1991, the Secretary of State administratively dissolved Bunker Resources for failure to file a correct annual report, under section 351.484(2) RSMo.[1] The respondent Judge notes "the fact that Bunker Resources ceased to operate after July 29, 1991."
On May 29, 1996, Brune sued Bunker Resources in the Circuit Court of the City of St. Louis. Brune alleged venue under section 508.070, the special statute for motor carriers, because at the time of the collision, Bunker Resources operated as a motor carrier in the City of St. Louis.
Bunker Resources moved for a change of venue to St. Louis County, arguing that venue was improper in the City of St. Louis because at the time the suit was brought, it did not operate as a motor carrier. The trial court overruled the motion. After the Court of Appeals denied Bunker Resources' petition for mandamus, this Court issued an alternative writ to transfer the case to St. Louis County. Mo. Const. art. V, sec. 4. The alternative writ is made peremptory.
I.
In Missouri, venue is determined solely by statute. State ex rel. Rothermich v. Gallagher, 816 S.W.2d 194, 196 (Mo. banc 1991). Section 508.070 is a permissive venue statute that widens the field of venue in suits against motor carriers. State ex rel. O'Keefe v. Brown, 235 S.W.2d 304, 307[2] (Mo.1951). Section 508.070.1 provides four alternative ways to determine venue:
*933 Suit may be brought against any motor carrier which is subject to regulation under chapter 390, RSMo, in any county where the cause of action may arise, in any town or county where the motor carrier operates, or judicial circuit where the cause of action accrued, or where the defendant maintains an office or agent....
The trial court expressly invoked the second alternative, ruling that where a carrier "operates" is determined at the time of the incident.[2]
The language of the statute indicates otherwise. Where the language of a statute is clear, a court "should regard laws as meaning what they say; the General Assembly is presumed to have intended exactly what it states directly and unambiguously." In re Estate of Thomas, 743 S.W.2d 74, 76 (Mo. banc 1988).
Three elements are required to support venue under the second alternative of section 508.070.1: (1) bringing suit against (2) a motor carrier which is subject to regulation under chapter 390 RSMo (3) where it operates. The time to measure these three elements is when suit is "brought" because the second alternative is in the present tense. This is analogous to the general venue statute, section 508.010, where venue is determined as the case stands when brought. See State ex rel. DePaul Health Center v. Mummert, 870 S.W.2d 820, 823 (Mo. banc 1994).
The parties agree that when the suit was brought, Bunker Resources did not, as a matter of fact, operate as a motor carrier in the City of St. Louis. Therefore, section 508.070 is not available to authorize venue in the City of St. Louis.
Echoing the respondent, the dissent argues that public policy should give plaintiffs the same rights against dissolved corporations as against active corporations. The General Assembly has, however, declared the contrary public policy. Section 508.070 permits venue where a motor carrier "operates," not where it operated. Venue is within the province of the legislature, and a court must be guided by what the legislature says. Willman v. McMillen, 779 S.W.2d 583, 585 (Mo. banc 1989).
II.
Bunker Resources may be sued in its corporate name even after administrative dissolution. See sections 351.476.2(5), 351.486.3. When a corporation is the sole defendant, section 508.040 controls. State ex rel. Coca Cola v. Gaertner, 681 S.W.2d 445, 447[1, 2] (Mo. banc 1984). Section 508.040 provides:
Suits against corporations shall be commenced either in the county where the cause of action accrued ... or in any county where such corporations shall have or usually keep an office or agent for the transaction of their usual and customary business.
When suit was commenced, Bunker Resources did not keep, in any county, an office or agent for the transaction of its usual and customary business. Because the cause accrued in St. Louis County, Bunker Resources is subject to suit there under section 508.040.
Venue was improper in the City of St. Louis. Respondent has a ministerial duty to transfer the underlying case to a court of proper venue under section 476.410. A writ of mandamus is appropriate to require the performance of a ministerial act. See DePaul, 870 S.W.2d at 823.
The alternative writ of mandamus is made peremptory. Respondent shall transfer the cause to the Circuit Court of St. Louis County.
PRICE, LIMBAUGH, ROBERTSON, COVINGTON and HOLSTEIN, JJ., concur.
WHITE, J., dissents in separate opinion filed.
WHITE, Judge, dissenting.
This case turns on the question of whether "operates" in section 508.070 should be read to mean "operates at the time the cause of action accrued," or "operates at the time suit is brought." The principal opinion holds that *934 the time to measure the elements of venue is when suit is brought because the word "operates" is in present tense. This argument is circular, assuming its conclusion that present tense in the statute refers to the time suit is brought. This is far from clear.
The statute, first enacted in 1927, is a model of confused draftsmanship. Where all other venue statutes refer to venue as lying in counties, section 508.070 suggests that venue may lie in a county, in a "town or county," or in a "judicial circuit," as if these were three distinct choices. The statute is particularly sloppy in maintaining a consistent verb tense, the key factor in the principal opinion's analysis. The statute refers to two apparently identical events in different verb tenses, mandating, in the present tense, that venue is proper where "the cause of action may arise," and using the past tense to place venue where the "the cause of action accrued." The only way to see "operates" as unambiguous is to impose a blanket rule of construction that venue is presumptively determined by reference to the time at which the suit is brought. The principal opinion does this by analogizing this case to State ex rel. DePaul Health Ctr. v. Mummert.[1] That case does not support such a broad rule. In DePaul, respondent refused to transfer venue despite the fact that, although venue was proper at the time the motion was ruled on, it was not proper at the time suit was filed.[2] Thus, DePaul stands for no more than the unremarkable proposition that, if venue properly lies when a suit is filed, subsequent events do not make venue improper. In any case, given this Court's repeated holdings that venue is entirely a statutory determination, I find broad rules of judicial construction inappropriate to analyze these cases. Instead I would look to the statute itself, and the policy embodied therein, to resolve ambiguities on its face.
The purpose of this special venue statute is, as the principal opinion recognizes, to "widen[] the field of venue in suits against motor carriers." This goal is consistent with the broader aims of chapter 390, to which section 508.070 is explicitly linked. The right to operate as a contract carrier in any county in Missouri is a privilege for which specific permission must be obtained from regulatory authorities.[3] One price exacted for that privilege is that a carrier becomes liable to be haled into court in any county through which it operates. It appears that the legislature regards motor carriers as particularly hazardous operations, and has subjected to them to extensive regulatory burdens and expanded the fora in which they may be sued. That legislative judgment is ill-served by a judicially created rule of construction allowing motor carriers to restrict a plaintiff's choice of venueafter a cause of action has accruedmerely by ceasing to operate in a county until suit is filed.
The principal opinion disserves another important statutory goal by effectively holding that a dissolved corporation may only be subject to suit in the county where a cause of action accrued. By reading the corporate venue statute narrowly, the principal opinion treats a dissolved corporation far differently from one with continuing operations. This contravenes the legislative policy announced in section 351.476.2(5), which allows corporations to be sued just like existing entities even after they are dissolved. Absent a specific legislative pronouncement specifying different venue treatment for dissolved corporations relative to ongoing ones, I would hold that, as long as corporations may be sued in the corporate name, the proper venue for such a suit is any place where the corporation was subject to suit at the time of dissolution.
In short, the principal opinion supplies a meaning to section 508.070 that is not readily apparent on the face of the statute. Because the statute is ambiguous, I would construe it in such a way as to fulfill the manifest legislative intent. Accordingly, I would quash the alternative writ and allow suit to proceed in St. Louis City.
NOTES
[1] All statutory references are to RSMo 1994.
[2] Only the second alternative in section 508.070.1 could support venue in the City of St. Louis. This Court expresses no opinion on the scope of the other alternatives in section 508.070.
[1] 870 S.W.2d 820 (Mo. banc 1994).
[2] Id. at 823
[3] Section 390.061, RSMo 1994.
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739 F.Supp. 957 (1990)
Patrick Daniel CLIFFORD, et al., Plaintiffs,
v.
Fred W. JACOBS, et al., Defendants.
Civ. No. 89-1035.
United States District Court, M.D. Pennsylvania.
April 25, 1990.
*958 Patrick Daniel Clifford, Camp Hill, Pa., pro se.
Sterling Leese, Jr., Camp Hill, Pa., pro se.
Leonard T. Morton, Jr., Pittsburgh, Pa., pro se.
Curtis Sawyer, Camp Hill, Pa., pro se.
Buddy Dean Rau, pro se.
Frederick E. Martin, Lewisburg, Pa., Richard Douglas Sherman, Office of Atty. Gen., Harrisburg, Pa., for defendants.
MEMORANDUM
NEALON, District Judge.
Presently before the court is defendants' motion for reconsideration of this court's order of February 26, 1990 dismissing plaintiffs' habeas corpus action and staying their other claims under 42 U.S.C. § 1983 (Section 1983). See documents 27 & 28 of record. For the reasons that follow, the motion to reconsider will be denied.
I. BACKGROUND
Plaintiffs filed the above-captioned mixed complaint on July 18, 1989 alleging their constitutional rights were violated due to their subjection to mandatory drug and alcohol testing which resulted in their imprisonment for parole violations; to the denial of their right to confront and cross-examine the lab technicians regarding the accuracy of the testing; to the absence of a court stenographer during their parole violation hearings; to unreasonable searches and seizures committed through mandatory drug testing; and to the inadequacy of the testing as a diagnostic tool. See document 1 of record.
On November 27, 1989, Magistrate J. Andrew Smyser, upon the defendants' motions to dismiss and for summary judgment, submitted a report to this court recommending that: (1) the complaint be construed as a mixed complaint including Section 1983 claims and a petition for Writ of Habeas Corpus; (2) the petition for Writ of Habeas Corpus be dismissed for failure to exhaust state remedies; (3) the claims of Morton and Clifford be dismissed; (4) Neese, Rau and Sawyer's claim regarding an inadequate record for appeal be dismissed; (5) and summary judgment be granted in favor of defendants and against plaintiffs Clifford, Neese, Rau and Sawyer as to all remaining claims. See document 26 of record.
By Memorandum and Order dated February 26, 1990, this court adopted the former two recommendations of the Magistrate, but did not embrace his final three. The court, after acknowledging that plaintiffs' complaint is one of a mixed variety and that the habeas corpus portion must be dismissed for failure to exhaust state remedies, concluded that the Section 1983 claims must be stayed in compliance with the Third Circuit's mandate in Harper v. Jeffries, 808 F.2d 281 (3d Cir.1986). See document 27 of record. Thereafter, the defendants submitted the instant motion for reconsideration and supporting brief requesting this court to reexamine the staying of the Section 1983 claims. See documents 30 & 31 of record. The time for plaintiffs to respond has passed with no brief submitted. Defendant's motion is now ripe for resolution by this court.
II. DISCUSSION
The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence. Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.1985), cert. denied, 476 U.S. 1171, 106 S.Ct. 2895, 90 L.Ed.2d 982 (1986). Where evidence is not newly *959 discovered or there exists no manifest errors of law, the motion for reconsideration must be denied.
As the court recognized in its Memorandum of February 26, 1990, when a complaint contains a request for both habeas relief and damages under Section 1983, it must determine, once the habeas corpus petition is dismissed, whether to act upon the damages claims or to abstain until plaintiffs have exhausted their state remedies. The Third Circuit recently confronted such a situation in Harper, 808 F.2d 281. That case involved a mixed petition, primarily focused on habeas relief, which the magistrate recommended dismissal, including the Section 1983 claims, for failure to exhaust state remedies. The circuit court held that the Section 1983 claims should not have been dismissed merely because the habeas corpus petition was deficient. Instead, the court directed the district court to stay the pending Section 1983 claims until the petitioner had exhausted his state remedies.
In this case, the defendants contend that the Section 1983 claims should not be stayed. In support of this contention they maintain that Harper is distinguishable from the instant case. They argue that in Harper viable claims for damages existed, unlike in the present case where the complaint was found to be devoid of any such claims: Furthermore, they argue the Third Circuit sanctioned such an analysis in Harper when it found one defendant to be immune from suit for damages and, consequently ruled that the plaintiff could not state a claim against that defendant; and that, "as to the second defendant, ... an insufficient record and, hence, a need for factual development necessitated a stay of the claim against that defendant." Document 31 of record at 5-6 (citing Harper, 808 F.2d at 284).[1]
Finally, the defendants make an additional policy argument, stating:
By contrast to the Harper situation, the plaintiffs' complaint is devoid of any viable § 1983 claims. The present case has no issues of fact in dispute. The record of undisputed facts, as thoroughly analyzed by the Magistrate, leads to the inescapable conclusion that as a matter of law, the defendants are entitled to judgment in their favor. As such, staying a decision on the merits of the § 1983 action until plaintiffs have had an opportunity to exhaust their state remedies would serve no valid or useful purpose. The continuation of meritless claims would only contribute to the already congested court dockets and would inhibit the efficient resolution of meritorious claims pending before the court. If the § 1983 claims in a mixed petition are without merit, the district court should be free to dismiss those claims.
Document 31 of record at 5.
This court disagrees with defendants' contentions. In Harper, only absolute immunity warranted the courts dismissal of a claim even in the face of a mixed petition with unexhausted state remedies.[2]See Harper, 808 F.2d at 284; Williams v. Hepting, 844 F.2d 138, 143 (3d Cir.1988) case. If the Third Circuit intended all potentially meritless claims to be examined for disposition regardless of the status of the habeas action, the court would have allowed the second defendant to submit a *960 summary judgment motion with an appending statement of facts proving that his conduct did not violate clearly established statutory or constitutional rights; which if they went undisputed would be granted. Or the court could have permitted the defendant to file a motion to dismiss claiming that his conduct did not rise to the level of a violation of a clearly established constitutional right and, thus, failed to state a claim upon which relief could be granted.
The court thinks a better interpretation of the Harper opinion allows for dismissal of the Section 1983 claims only when no relevant factual determination is required. As in Harper, when a defendant is absolutely immune from any suit for damages, no factual resolution is dictated that would impact upon the habeas action; because, regardless of whether he is found to have violated a statutory or constitutional provision, he will be immune from any damages.[3] Consequently, in finding one defendant immune, the Third Circuit merely concluded that he was protected from liability under Section 1983, which was not germane to the related habeas action; therefore, such a factual finding did not interfere in the parallel state proceedings.[4]
The instant case, however, does not involve a situation where absolute immunity from damages is asserted as a defense. Rather, it involves claims and defenses that include standing,[5] an inadequate record for appeal, an unreasonable search and seizure, a right to cross-examine witnesses, and a right to due process. Defendants aver that this court could dispose of these issues, even though the plaintiffs have not exhausted their state habeas remedies, simply because they are meritless in that they fail to state a claim upon which relief could be granted. See document 31 of record at 5-6. In order to determine that they are meritless, however, the court must rely on a particular set of facts, which may even include relying on undisputed facts, and conclude that they do not rise to a constitutional violation. See, e.g., document 26 of record at 3-10. Such conduct would necessarily compel the court to resolve factual and/or legal issues that overlap those in the adjoining state habeas action.[6] This *961 federal court would then effectively usurp the state's province to resolve its own errors. This would be repugnant to congressional policy dictating avoidance of such friction by requiring initial resort in habeas cases to the state court. Harper, 808 F.2d at 285.
While the opinion in Harper may be somewhat ambiguous when applied to such circumstances as presented in this case, this court must extrapolate from the language contained therein to determine the Third Circuit's fullest mandate. The court opined, which this court finds to be most compelling:
Premature adjudication of the § 1983 case by a federal court would interfere with congressional policy requiring initial resort to state tribunals in habeas corpus petitions. To accommodate these concerns, it would be proper for the district court to stay Harper's 1983 action until he has had an opportunity to exhaust all state remedies on his habeas corpus claim. If, after exhaustion, Harper still has not received any relief, his petition for habeas corpus and his § 1983 claim could then be heard together in federal district court.
Harper, 808 F.2d at 285; See Deakins v. Monaghan, 484 U.S. 193, 202, 108 S.Ct. 523, 529-30, 98 L.Ed.2d 529 (1988). The Third Circuit further expressed this concern in a later decision when it stated:
`Where the federal court, in dealing with the question of damages caused by violation of civil rights, would have to make rulings by virtue of which the validity of a conviction in contemporary state proceedings would be called in question, the potential for federal-state friction is obvious. The federal ruling would embarrass, and could even intrude into, the state proceeding.'
Williams v. Hepting, 844 F.2d 138, 144 (3d Cir.1988) (quoting Guerro v. Mulhearn, 498 F.2d 1249, 1253 (1st Cir.1974). The circuit court avoided that friction "by abstaining from deciding [the plaintiff's] allegations until the Pennsylvania Supreme Court has had a complete opportunity to review the circumstances surrounding [his] indictment and conviction." Id. at 144.[7] In these two opinions, the court cautioned against even a scintilla of interference with the state's authority.
Lastly, the policy argument presented by defendants is certainly relevant. Nonetheless, the preservation of the delicate balance between federal and state authority to resolve disputes is far more significant than the mere inconvenience to a federal court.
The court finds, as demonstrated by the analysis set forth above, the concerns expressed by the Third Circuit present in this case and, therefore, this court's Memorandum and Order dated February 26, 1990, comports with the underlying rationale espoused in Harper. Because of those concerns, the Section 1983 claims were properly stayed pending the exhaustion of state habeas remedies. Consequently, defendant's motion for reconsideration will be denied.
NOTES
[1] It is noteworthy that defendants have not revealed any cases, other than Harper, in support of their argument.
[2] In Harper, the Third Circuit addressed a Parole Board member's and a probation officer's immunity from damages under Thompson v. Burke, 556 F.2d 231, 236-238 (3rd Cir.1977). In settling that issue the court was cognizant of the fact that a Parole Board member and probation officer are entitled to quasi-judicial immunity. Harper, 808 F.2d at 284. "The key consideration, then, in determining whether [they] [were] immune from the appellants suit for damages is whether or not their actions occurred when they were `engaged in adjudicatory duties.'" Id. If they were engaged in adjudicatory duties, then they were entitled to absolute immunity. If they were engaged, however, in executive duties, then they were entitled to merely qualified immunity, which would require the court to enquire whether their conduct "violate[d] clearly established statutory or constitutional rights of which a reasonable person would have known." Id. (citing Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982).
[3] This court discovered only two instances where the Third Circuit proceeded to dispose of the claims for damages. In both, absolute immunity was the basis for dismissal. See Harper, 808 F.2d at 284 and Williams, 844 F.2d at 143.
[4] The issue of whether a Parole Board official can wrap himself in the cloak of absolute immunity is a collateral consideration from the more substantive constitutional issues which the state court must consider in its habeas proceedings. See, e.g., Harper, 808 F.2d at 284 (citing Thompson v. Burke, 556 F.2d 231, 236-38 (3d Cir.1977). However, once the official is determined to have only qualified immunity, then the court must determine whether he violated clearly established statutory or constitutional rights. In that instance, the court must abstain, because it would necessarily decide substantive constitutional issues that the state court must have the initial opportunity to resolve. See, e.g., Id.; See also supra note 2.
[5] To determine whether a plaintiff(s) have standing, the Supreme Court has instructed us to examine the allegations for "a personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984) (citing Valley Forge Christian College v. Americans United For Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982)); See Diamond v. Charles, 476 U.S. 54, 62, 106 S.Ct. 1697, 1703, 90 L.Ed.2d 48 (1986); Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975). If this court were to make such an examination, it would be compelled to consider whether an injury, actual or threatened, has been alleged. Such a consideration would necessarily involve the court in resolving a legal issueviz., whether the allegations rise to a constitutional or statutory violationwhich may conceivably "overlap" pertinent legal issues in the habeas petition. Consequently, a wiser action for this court is to abstain from resolving the standing issue until the state court has had proper time to consider the issue.
[6] When absolute immunity is present in a case, a complaint against the prison official or a member of the parole board may be considered frivolous. See 28 U.S.C. § 1915(d) (hereinafter Section 1915(d); Neitzke v. Williams, ___ U.S. ___, 109 S.Ct. 1827, 1833, 104 L.Ed.2d 338 (1989). In order for the complaint to be categorized as frivolous, it must contain either an "indisputably meritless legal theory" (i.e. absolute immunity) or "factual contentions [that] are clearly baseless" (i.e. fantastical or delusional scenarios). Neitzke, 109 S.Ct. at 1833. Consequently, there would be no legal or factual issues to develop.
The standard for frivolous under Section 1915(d), however, differs from that of Rule 12(b)(6) of the Federal Rules of Civil Procedure (Rule 12(b)(6)). Id. at 1832; Wilson v. Rackmill, 878 F.2d 772, 774 (3d Cir.1989). A Rule 12(b)(6) motion merely allows for a dismissal of a complaint for failure to state a claim. The confines of Rule 12(b)(6) are not limited to utterly baseless claims, as under Section 1915(d). "On the contrary, if as a matter of law `it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations,' a claim must be dismissed." Neitzke, 109 S.Ct. at 1832; see Wilson, 878 F.2d at 774. As such, the substantive law must be applied to the factual allegations set forth in the complaint and the court must decide whether those allegations can support a constitutional violation. The Rule 12(b)(6) standard may apply without regard to whether the claim is based "on an outlandish legal theory or on a close but unavailing one." Id.
When the claims, as those in the case at bar, however, are not clearly lacking in a legal or factual basis, then there is at least enough of a legal or factual dispute to allow the state tribunal to have the first shot at resolving them.
[7] Although Williams involved allegations pertaining to an indictment and conviction, the lesson expounded by the court is well-taken in this case involving a parole violation.
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693 So.2d 489 (1997)
Lisa Ann GEISENHOFF
v.
Timothy Neal GEISENHOFF.
2950890.
Court of Civil Appeals of Alabama.
March 28, 1997.
*490 Becky Meyer, Decatur, for Appellant.
R. Eric Summerford of Nowlin & Summerford, Decatur, for Appellee.
L. CHARLES WRIGHT, Retired Appellate Judge.
The parties were divorced by the Morgan County Circuit Court on December 18, 1992. The divorce judgment incorporated an agreement entered into by the parties. The trial court awarded the parties joint custody of their two minor children and ordered that neither party owed the other party child support. The parties' agreement specified that the mother was to have physical custody of the minor children.
On September 7, 1994, the father filed a petition to modify, requesting the trial court to award him custody of the minor children, to order the mother to pay child support, and to enter an ex parte order maintaining the status quo of custody. On September 21, 1994, the trial court entered an ex parte order, directing the parties to maintain the status quo regarding custody of the minor children. On October 11, 1994, the mother filed a counterpetition, requesting the trial court to hold the father in contempt of court for refusing to comply with the divorce judgment, to award her custody of the minor children, and to award her an attorney fee.
Following oral proceedings, the trial court entered a judgment, finding that a material change in circumstances had occurred concerning the custody and welfare of the minor children and awarding custody of the minor children to the father. The trial court awarded the mother certain visitation rights. The trial court also found that the father was not in contempt of court because, pursuant to an agreement of the parties, the minor children had lived with the father since January 1, 1993. The trial court further found that to require the mother to pay child support would unduly restrict her ability to "travel to Priceville to get the children for visitation during the week." The trial court denied "[any] further relief sought by either party." The mother filed a motion for a new trial or, in the alternative, to alter, amend, or vacate the judgment, which was denied.
*491 The mother appeals, raising five issues: (1) whether the trial court erred in failing to find the father in contempt of court, (2) whether the trial court erred in denying the mother's request for an attorney fee, (3) whether the trial court erred in awarding the father custody of the minor children, (4) whether the trial court erred in entering the September 21, 1994, ex parte order, and (5) whether the trial court erred in denying her postjudgment motion without conducting a hearing.
With regard to the mother's first two issues, the mother cites general propositions of law to support her arguments. It is well established that general propositions are not considered supporting authority. Ex parte Riley, 464 So.2d 92 (Ala.1985). The mother's failure to cite supporting authority for her first and second issues leaves this court with no alternative but to affirm on those issues. Rule 28(a)(5), Ala. R.App. P.; Pierce v. Helka, 634 So.2d 1031 (Ala.Civ.App.1994).
The mother argues that the trial court's award of custody to the father is an abuse of discretion and is plainly and palpably wrong.
In reversing this court in Ex parte Patronas, [Ms. 1960100, February 21, 1997] 693 So.2d 473, 474-75 (Ala.1997), our supreme court stated:
"`When evidence in a child custody case has been presented ore tenus to the trial court, that court's findings of fact based on that evidence are presumed to be correct. The trial court is in the best position to make a custody determinationit hears the evidence and observes the witnesses. Appellate courts do not sit in judgment of disputed evidence that was presented ore tenus before the trial court in a custody hearing. See Ex parte Perkins, 646 So.2d 46, 47 (Ala.1994), wherein this Court, quoting Phillips v. Phillips, 622 So.2d 410, 412 (Ala.Civ.App.1993), set out the well-established rule:
"`"`Our standard of review is very limited in cases where the evidence is presented ore tenus. A custody determination of the trial court entered upon oral testimony is accorded a presumption of correctness on appeal, Payne v. Payne, 550 So.2d 440 (Ala.Civ.App.1989), and Vail v. Vail, 532 So.2d 639 (Ala.Civ. App.1988), and we will not reverse unless the evidence so fails to support the determination that it is plainly and palpably wrong, or unless an abuse of the trial court's discretion is shown. To substitute our judgment for that of the trial court would be to reweigh the evidence. This Alabama law does not allow. Gamble v. Gamble, 562 So.2d 1343 (Ala.Civ.App.1990); Flowers v. Flowers, 479 So.2d 1257 (Ala.Civ.App.1985).'"'
"`It is also well established that in the absence of specific findings of fact, appellate courts will assume that the trial court made those findings necessary to support its judgment, unless such findings would be clearly erroneous. See the cases collected at 3 Ala. Digest 2d Appeal & Error § 846(5) (1993).
"`....
"`Neither the Court of Civil Appeals nor this Court is allowed to reweigh the evidence in this case. This case, like all disputed custody cases, turns on the trial court's perception of the evidence. The trial court is in the better position to evaluate the credibility of the witnesses ... and the trial court is in the better position to consider all of the evidence, as well as the many inferences that may be drawn from that evidence, and to decide the issue of custody.'"
The parties' separation agreement, incorporated into the divorce judgment, provided that the parties retained joint custody of the minor children with the mother having "actual physical custody of the children." The parties' testimony regarding the mother and the minor children's living arrangements from December 1992 until July 1994 is conflicting and contested.
The mother testified that the parties had separated in August 1992, that in December 1992 she lost her job, and that she and the minor children returned to live with the father two days before the divorce judgment was entered. She also testified that she and the minor children continued to live with the *492 father until July 1994, when she moved out of the house, and that the father would not allow her to take the children with her when she moved out.
The father testified that after the mother and the minor children moved out of the marital residence in 1992, the mother told him that she could not handle the children, and she asked him to take the minor children. He also testified that the mother returned to live with him and the minor children in the fall of 1993 and that she stayed until approximately Easter of 1994, when she moved out of his house. The father testified that he and the minor children spent July 1994 in the state of New York visiting with both the paternal and the maternal grandparents and that after they returned, he refused to allow the children to live with the mother.
Additionally, several witnesses testified to the father's care of the minor children, i.e., taking the son to day care every morning; picking up and caring for the son when he was ill; attending teacher conferences at the daughter's school; and taking the minor children to the doctor, the dentist, and the ophthalmologist. The witnesses also testified that the mother was rarely seen at the son's daycare center or at the daughter's school and that the mother rarely cared for the minor children.
After carefully reviewing the record, we conclude that the trial court's award of custody to the father was not plainly and palpably wrong or an abuse of discretion. Ex parte Patronas.
With regard to the mother's argument that the trial court erred in entering the September 21, 1994, ex parte order, this argument was not raised at the trial level. "This court cannot consider arguments raised for the first time on appeal; rather our review is restricted to the evidence and arguments considered by the trial court." Andrews v. Merritt Oil Co., 612 So.2d 409, 410 (Ala.1992) (citation omitted). Therefore, we do not address the mother's fourth issue.
Last, the mother argues that the trial court erred in denying her post-judgment motion without conducting a hearing.
Rule 59(g), Ala. R. Civ. P., provides that post-judgment motions "shall not be ruled upon until the parties have had an opportunity to be heard thereon." We have said that if a hearing is requested, it must be granted. Hill v. Hill, 681 So.2d 617 (Ala.Civ. App.1996). In this case, the mother did not request a hearing on her post-judgment motion. Consequently, the trial court's denial of the mother's post-judgment motion without a hearing was not error. Maples v. Maples, 599 So.2d 625 (Ala.Civ.App.1992).
The judgment of the trial court is due to be affirmed. The mother's request for an attorney fee on appeal is denied.
The foregoing opinion was prepared by Retired Appellate Judge L. CHARLES WRIGHT while serving on active duty status as a judge of this court under the provisions of § 12-18-10(e), Code 1975.
AFFIRMED.
YATES, MONROE, and THOMPSON, JJ., concur.
ROBERTSON, P.J., concurs in the result.
CRAWLEY, J., concurs specially.
CRAWLEY, Judge, concurring specially.
I agree that the trial court's judgment granting the father's modification petition should be affirmed. However, I write to point out that the father had the burden to prove that a change in custody would materially promote the best interests of his children and that the benefits of this change in custody would more than offset the inherently disruptive effect of a change in custody. Ex parte McLendon, 455 So.2d 863, 865 (Ala. 1984).
In this particular case, the application of the McLendon standard is tricky. The parents resided together with the children under the same roof for approximately one and a half years after the divorce. Although the mother was awarded primary physical custody under the parties' divorce agreement, the parties truly had joint custodymore so than any other divorced parents. The evidence shows an informal, perhaps tacit, *493 agreement that the father provide the housing and care for his children. However, our supreme court has stated that an informal "arrangement itself [can] not constitute a waiver on the mother's part of her right to preference under the divorce judgment." Ex parte Bryowsky, 676 So.2d 1322, 1325 (Ala. 1996).
Thus, the initial award of primary physical custody to the mother in this case requires the application of the McLendon standard to the father's petition for modification. Therefore, the father did have the burden of proving that a change in custody, which in this case was purely a matter of ink on paper, would benefit the children and that the "disruption" of that change would be offset by that benefit. He proved that the children were well-cared for while under his care. He also proved that the children were in a comfortable routine and that a "return" to the mother's custody would disrupt the children's lives.
An informal arrangement regarding custody, like the one in this case, can be considered by the trial court in making a decision on a modification petition. See Bryowsky, 676 So.2d at 1325. The supreme court stated that "the nature of that arrangement and its impact on the child[ren] would be factors to be considered in determining whether a transfer of custody from the mother to the father would materially promote the child[ren's] welfare." Id. The trial court, then, was free to consider the reality of the situationthat the children had been living in the father's home and that one child had been attending that neighborhood's school for at least two years at the time of the hearing. The trial court did so and determined that the children's interests would be best served by granting custody to the father. As the majority states, that decision should not be disturbed on appeal because the mother has failed to show that the evidence does not support it.
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FILED
NOT FOR PUBLICATION MAR 10 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
PATRICK ALLEN PLUMMER, No. 09-17667
Plaintiff - Appellant, D.C. No. 2:08-cv-01630-ROS
v.
MEMORANDUM *
MARICOPA COUNTY SUPERIOR
COURT; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, District Judge, Presiding
Submitted February 15, 2011 **
Before: CANBY, FERNANDEZ, and M. SMITH, Circuit Judges.
Patrick Allen Plummer appeals pro se from the district court’s judgment
dismissing his action challenging two state court decisions. We have jurisdiction
under 28 U.S.C. § 1291. We review de novo the district court’s dismissal under
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
the Rooker-Feldman doctrine, Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir. 2003),
and for an abuse of discretion the denial of leave to amend, Chodos v. W. Publ’g
Co., 292 F.3d 992, 1003 (9th Cir. 2002). We affirm.
The district court properly concluded that the Rooker-Feldman doctrine
barred the action because it is a “forbidden de facto appeal” of two state court
decisions and raises constitutional claims that are “inextricably intertwined” with
those prior state court decisions. See Noel, 341 F.3d at 1158; see also Bianchi v.
Rylaarsdam, 334 F.3d 895, 900 n.4 (9th Cir. 2003) (under the Rooker-
Feldman doctrine, “[i]t is immaterial that [the plaintiff] frames his federal
complaint as a constitutional challenge to the state courts’ decisions, rather than as
a direct appeal of those decisions”).
The district court did not abuse its discretion by denying leave to file a third
amended complaint. See Chodos, 292 F.3d at 1003 (denial of leave to amend is
particularly appropriate where court previously permitted amendment).
Plummer’s appeal of the denial of his motion for injunctive relief is moot.
See SEC v. Mount Vernon Mem’l Park, 664 F.2d 1358, 1361 (9th Cir. 1982) (futile
to review a district court’s ruling on a request for preliminary relief where the
district court has already issued a decision on the merits).
Plummer’s remaining contentions are unpersuasive.
2 09-17667
We deny Plummer’s motions to supplement the record, his motion filed on
July 16, 2010 to dismiss claims, and the City of Phoenix’s motion for sanctions.
AFFIRMED.
3 09-17667
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734 P.2d 726 (1987)
Alfonson Infante SANCHEZ, Appellant,
v.
The STATE of Nevada, Respondent.
No. 17332.
Supreme Court of Nevada.
March 31, 1987.
*727 Carl F. Martillaro and Paul Sherman, Carson City, for appellant.
Brian McKay, Atty. Gen., Carson City, Mills Lane, Dist. Atty. and Timothy G. Randolph, Deputy Dist. Atty., Reno, for respondent.
OPINION
PER CURIAM:
In January 1986, Sanchez was convicted of trafficking in a controlled substance, possession of a controlled substance for purpose of sale, unlawful sale of a controlled substance and possession of a short-barrelled shotgun. Our review of the record convinces us that Sanchez received a fair trial, free of prejudicial error; we therefore affirm.
On July 31, 1985, a police informant purchased slightly less than a quarter gram of heroin from Sanchez. Subsequently, another informant purchased heroin from an individual living with Sanchez. She had arranged to meet Sanchez in the laundry room at his apartment complex to purchase the heroin. The informant was met by a juvenile who completed the sale and was then followed from the laundry room directly to Sanchez' apartment.
As other officers continued to watch Sanchez' residence, a detective with the Reno Police Department, while on the telephone with a deputy district attorney, applied for a warrant to search the suspect's Virginia Street apartment. An oral statement was telephonically given under oath to a justice of the peace at 6:46 p.m. on August 23, 1985. The statement was electronically recorded by the deputy district attorney in her office. The initial address to be searched was erroneously stated as 3275 Virginia Street, apartment no. 76, Reno, Nevada. After the officers discovered their mistake the address was actually 3125 South Virginia Street the justice of the peace was recontacted, at 7:36 p.m., and a supplemental oral statement was completed over the telephone, correcting Sanchez' address. Sometime during the amendment procedure, the time on the original search warrant was inadvertently left at 6:46 p.m., as opposed to 7:36 p.m., the time of the supplemental oral statement.
The police searched Sanchez' apartment pursuant to the corrected search warrant; the warrant also contained a nighttime search authorization. Upon entering the apartment, the police found unpackaged heroin in excess of 20 grams, other quantities of packaged heroin, packaging materials and a sawed-off shotgun. The officers also found the money used by the informant in the wallet of one of the apartment's occupants.
Sanchez was interviewed after his arrest, with the assistance of a Spanish-speaking police officer. He received and waived his Miranda rights. A police officer then explained the provisions of NRS 453.3405 in Spanish to Sanchez, who admitted that he sold heroin, that he was selling heroin for another person, and that he knew such sales were illegal.
The trial court, after a hearing on the issue, determined that Sanchez' Miranda rights were knowingly and intelligently waived, and that his statements were voluntary and admissible.
Sanchez first asserts that a search warrant procured over the telephone is not valid. The search warrant statute, NRS 179.045, specifies the requirements for a search warrant.[1] The specific requirement *728 that the oral statement be recorded in the presence of the magistrate is read broadly by this court. The telephone and the ability to arrange conference calls greatly expands the presence of a magistrate. When, as here, the magistrate is convinced that the requesting authority is a police officer and knows that the deputy district attorney is recording the statement, the magistrate's presence is extended electronically by telephone. Such a recording, albeit outside the physical presence of the magistrate, is nevertheless "in the presence of the magistrate" for purposes of NRS 179.045(2).[2] We conclude that there was no violation of the statute in the instant case.
Sanchez also claims that the warrant was facially defective because it recited an incorrect time of issuance.
In Lucas v. State, 96 Nev. 428, 432, 610 P.2d 727, 730 (1980), this court stated that a search warrant is not invalid simply because it specifies the wrong address. The time of issuance, although incorrect, was no more significant than the defect in Lucas. Therefore, this assignment of error is without merit.
Sanchez next claims that since an on-going investigation occurred from the time of the initial sale, twenty-three days earlier, good cause was not shown for the warrant to be served after 7:00 p.m. This reasoning lacks merit. The telephonic statement included expressions of concern that the narcotics located in Sanchez' apartment could dissipate and the informant's purchase money be spent if the warrant was not executed that night. A police officer also testified, based on his experience as a narcotics officer, that controlled substances, especially heroin, are sold at all hours of the day or night. Absent an abuse of discretion, a magistrate's finding of a reasonable necessity for night-time service should not be disturbed. People v. Lopez, 218 Cal. Rptr. 799, 173 Cal. App.3d 125 (1985); People v. Cletcher, 183 Cal. Rptr. 480, 132 Cal. App.3d 878 (1982). There is no indication that the magistrate abused his discretion based upon the information provided him by the Reno City Police Department.
Sanchez contends that he was coerced into making an incriminating statement by the Reno City Police Department, through the reading of NRS 453.3405(2), which states:
The judge, upon an appropriate motion, may reduce or suspend the sentence of any person convicted of violating any of the provisions of NRS 453.3385, 453.339 or 453.3395 if he finds that the convicted person rendered substantial assistance in the identification, arrest or conviction of any of his accomplices, accessories, co-conspirators or principals or of any other person involved in trafficking in a controlled substance in violation of NRS 453.3385, 453.339 or 453.3395. The arresting agency must be given an opportunity to be heard before the motion is granted. Upon good cause shown, the motion may be heard in camera.
The record, however, indicates that a police officer read Sanchez his rights in Spanish and made certain he understood them. The officer then read the statute to Sanchez and emphasized that only the judge could reduce his sentence if he cooperated. The police specifically stated that they could not grant Sanchez leniency.
The State must prove the voluntariness of a confession by a preponderance of the evidence. Lego v. Twomey, 404 U.S. 477, 489, 92 S.Ct. 619, 626, 30 L.Ed.2d 618 (1972); Scott v. State, 92 Nev. 552, 554, 554 P.2d 735, 736-37 (1976). The lower court found that the State had met that burden, and we agree. There was no promise of a lighter sentence by police officers, but simply an explanation that this possibility existed if the judge, not the officers, made *729 the appropriate determination of substantial assistance.
Sanchez' assignments of error are without merit. Accordingly, we affirm the decision of the lower court.
NOTES
[1] NRS 179.045 states in pertinent part:
1. A search warrant may issue only on affidavit or affidavits sworn to before the magistrate and establishing the grounds for issuing the warrant or as provided in subsection 2. If the magistrate is satisfied that grounds for the application exist or that there is probable cause to believe that they exist, he shall issue a warrant identifying the property and naming or describing the person or place to be searched.
2. In lieu of the affidavit required by subsection 1, the magistrate may take an oral statement given under oath, which must be recorded in the presence of the magistrate or in his immediate vicinity by a certified shorthand reporter or by electronic means, transcribed, certified by the reporter if he recorded it, and certified by the magistrate. The statement must be filed with the clerk of the court.
[2] We encourage magistrates to record oral statements with recording machines which are in their actual physical presence. This is the safest and most appropriate method. However, as stated above, we hold that a recording made in the same manner as outlined in this case is not violative of the statute.
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924 N.E.2d 226 (2010)
IN RE Y.O.
No. 49A05-0908-JV-483.
Court of Appeals of Indiana.
March 15, 2010.
VAIDIK, J.
Disposition of Case by Unpublished Memorandum Decision Affirmed.
RILEY, J., concurs.
CRONE, J., concurs.
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755 F.2d 932
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.WILLIAM E. HUNTER, PLAINTIFF-APPELLANT,v.LANTECH, INC., DEFENDANT-APPELLEE.
NO. 83-5562
United States Court of Appeals, Sixth Circuit.
1/30/85
ORDER
BEFORE: CONTIE and WELLFORD, Circuit Judges; and PECK, Senior Circuit Judge.
PER CURIAM.
1
Plaintiff William Hunter appeals from a district court judgment rendered after a bench trial in favor of defendant Lantech, Inc. Hunter had alleged that Lantech discharged him on the basis of race in violation of title VII of the Civil Rights Act of 1964. For the reasons set forth below, we affirm the judgment of the district court.
2
Lantech is a manufacturing company located in Louisville, Kentucky. Hunter, a black male, was employed as a 'crater,' i.e., he used metal bands to strap products to wooden skids in preparation for shipment. Although Lantech issued Hunter razor blades for cutting the metal bands, Hunter also used a personal pocket knife.
3
The events in question occurred on May 22, 1981. While working, Hunter and fellow employee McGuire discussed the movie 'The Deer Hunter,' which involved the Vietnam war and which had recently appeared on television. McGuire stated that had he been drafted into the army, he would have fled to Canada. Hunter, who had served in Vietnam, questioned McGuire's patriotism and stated that he would serve again if called. McGuire responded that Hunter's mother had raised a fool.
4
At the mention of his mother, Hunter became enraged. He admittedly shoved McGuire. The commotion drew several other employees to the scene. Although it is undisputed that Hunter had the pocket knife on his person during the fight, the district court did not decide whether he pulled the knife on McGuire. The court held that since Lantech's rule against fighting justified the termination, 'whether or not the plaintiff had a knife in his hand is not dispositive of the ultimate question, that is, whether plaintiff's discharge was racially motivated.'
5
Vice-president Ronald Ball of Lantech investigated the matter and suspended both Hunter and McGuire. He recommended to the Plant Management Organization (PMO) that Hunter be discharged. The PMO consisted of all employees choosing to participate. It had jurisdiction only over participating employees and voted on the penalty an employee would receive for violating company rules. The PMO voted twenty-one to twenty to discharge Hunter.
6
Under Lantech's disciplinary system, either the employee or management could appeal a PMO vote to the Board of Directors, which had final decision-making authority. Hunter appealed and requested leniency. The Board voted to uphold the discharge.
7
The plaintiff filed suit in October 1981. The district court held that Hunter had not established a prima facie case because the Board of Directors, which had final authority, had not been shown to be racially motivated. The court further held that assuming the plaintiff had established a prima facie case, Lantech had articulated a legitimate, non-discriminatory reason for the discharge (i.e., its no-fighting policy) that had not been shown to be pretextual.
8
Although the district court held that Hunter failed to establish a prima facie case, Lantech did not obtain a directed verdict and the case was fully tried. Where a title VII case has been fully tried after a defendant has failed to obtain a directed verdict on the ground that the plaintiff did not establish a prima facie case, the Supreme Court has directed that a court of appeals should focus not upon the prima facie case issue but instead upon the defendant's asserted explanation. United States Postal Service Board of Governors v. Aikens, 103 S. Ct. 1478, 1481-82 (1983). Consequently, assuming as we must that Hunter established a prima facie case, we consider the issues of whether Lantech adequately articulated, through admissible evidence, a clear, specific and non-discriminatory reason for the discharge and whether any such asserted reason has been shown to be pretextual. See generally Texas Department of Community Affairs v. Burdine, 450 U.S. 248 (1981); Brooks v. Ashtabula County Welfare Department, 717 F.2d 263 (6th Cir. 1983), cert. denied, 104 S. Ct. 1687 (1984). Although the issue of whether Lantech adequately articulated a non-discriminatory reason for the discharge is a question of law, the ultimate issue of whether any adequately articulated reason has been shown to be a pretext for racial discrimination is a question of fact reviewable only under the clearly erroneous standard. Pullman-Standard v. Swint, 456 U.S. 273 (1982).
9
We begin, then, with an analysis of whether Lantech adequately articulated a clear, specific and non-discriminatory reason for the discharge. At trial, Hunter contended that some of the PMO members were racially motivated. For instance, employee Bell stated shortly after the vote, 'well, we got another one out on welfare.' Moreover, Hunter asserted that employee Taylor was racially biased because Taylor had warned him after he had successfully appealed a prior PMO vote, 'well you made it this time, but we'll get you.'
10
In response to these allegations of racial bias, Lantech introduced evidence that Vice-president Ball, who encouraged the PMO to discharge Hunter, was motivated by a desire to enforce Lantech's policy against fighting. Two members of the Board of Directors testified that they were similarly motivated. Furthermore, Lantech produced a copy of the employee handbook in which the policy against fighting was published.
11
For two reasons, Hunter argues that Lantech inadequately articulated a non-discriminatory reason for the discharge. First, he contends that the motive of the Board of Directors could be articulated only by introducing minutes of the Board of Directors meeting at which the decision to discharge him was made or through the testimony of a quorum of the Board members (i.e., three members rather than just two). We disagree. The only burden on Lantech was to articulate a non-discriminatory reason for the discharge. This Lantech did through the testimony of Ball and two members of the Board of Directors. Hunter's argument is that the other three Board members may have been racially motivated. That assertion is relevant, however, to the issue of whether Lantech's articulated reason was pretextual rather than to the question of whether Lantech articulated a non-discriminatory reason at all.
12
Hunter's second argument is that Lantech failed to articulate a non-discriminatory reason for the discharge because it never produced a legitimate reason which allegedly motivated the PMO to vote for his termination. Hunter contends that Lantech only produced evidence of why Vice-president Ball and the Board of Directors acted. Underlying Hunter's position is the assumption that even if a final decision-maker (i.e., the Board of Directors) is not racially motivated, a title VII violation nevertheless occurs if any management actor/group in the disciplinary process is racially motivated. If Hunter is correct, then an employer must articulate a non-discriminatory reason underlying each actor's, or group's, decision.
13
The plaintiff argues that this result is mandated by three cases: Connecticut v. Teal, 457 U.S. 440 (1982); Anderson v. Methodist Evangelical Hospital, Inc., 464 F.2d 723 (6th Cir. 1972); Miller v. Bank of America, 600 F.2d 211 (9th Cir. 1979). We disagree. Teal was a disparate impact case in which the Supreme Court held that an employer may not attempt to justify discrimination against an individual by claiming that its workforce on the whole is racially balanced. The Court held that title VII protects minority individuals and not just groups. In the present case, Lantech is not claiming that although it discriminated against Hunter, its workforce is racially balanced. Rather, Lantech contends that because the body with final decision-making authority (the Board of Directors) was not racially motivated, Hunter received non-discriminatory treatment as an individual. Indeed, the Supreme Court stated in Teal that a non-discriminatory 'bottom line' is relevant in an individual disparate treatment case. 457 U.S. at 454. If the employer has reached a non-discriminatory final result in an individual employee's case, then the employee's title VII rights have been respected.
14
This court's decision in Anderson is distinguishable from the present case. In Anderson, the final decision-maker was an unlawfully motivated supervisor rather than an upper management person or group that was not racially motivated. Since the supervisor's decision was not reviewed by upper management in Anderson, the employer could not claim, as Lantech does here, that a non-discriminatory final result was achieved.
15
The Miller case is similar to Anderson. The plaintiff in that case also was discharged by an unlawfully motivated supervisor and the decision was not reviewed at higher levels of management. Thus, Miller is factually distinguishable.* Moreover, the legal analysis in Miller, if it supports anyone, favors Lantech rather than Hunter. In discussing what an employer can do to remedy the discriminatory conduct of a lower management official once a complaint has been filed with the EEOC, the court stated:
16
An employer whose internal procedures would have redressed the alleged discrimination can avoid litigation by employing those procedures to remedy the discrimination upon receiving notice of the complaint or during the conciliation period.
17
Id. at 214. By analogy, Lantech could rectify any racial animus exhibited by PMO members by providing for independent review of the PMO vote by a Board of Directors that was not racially motivated. Since Lantech produced admissible evidence that the Board was motivated solely by a desire to enforce the company's policy against fighting rather than by racial animus, we hold that Lantech adequately articulated a clear, specific and non-discriminatory reason for the discharge.
18
The final issue to be addressed is whether the district court clearly erred in finding that Lantech's asserted reason for the discharge had not been shown to be pretextual. As has been indicated, Lantech's articulated justification was that it merely was enforcing its policy against fighting. On the pretext issue, Hunter argued, in addition to the racial animus purportedly exhibited by PMO members, that there was a general atmosphere of anti-minority animus at Lantech's facility, that the plant owners had told the PMO members that they had to decide whether Hunter and McGuire would retain their jobs and that a white employee had not been discharged after cutting another employee's shirt with a knife. In response, Lantech pointed out that the company had a long-standing policy under which fighting could result in immediate discharge, that the shirt-cutting incident had been a prank rather than a fight, that after the only other fight in plant history the company had given a white employee the option of resigning or being discharged, that no general atmosphere of anti-minority animus had been brought to management's attention and that a white supervisor had been discharged for making racially derogatory remarks to a black worker.
19
We hold that the district court's decision that Lantech discharged Hunter for reasons other than race is not clearly erroneous. First, the company had a long-standing rule against fighting; the only other employee to violate the rule, a white male, had also been terminated. Hunter never showed that the shirt-cutting incident involved a fighting situation. Second, although employer tolerance of pervasive use of racial slurs in the workplace can constitute a title VII violation, the presence of isolated, sporadic or casual racial insults cannot. See Cariddi v. Kansas City Chiefs Football Club, Inc., 568 F.2d 87, 88 (8th Cir. 1977). While Hunter asserts that Lantech's facility has a racially charged atmosphere, his allegations actually fall into the isolated or sporadic category. Moreover, Hunter does not explain how the alleged atmosphere of racial animus at the plant could have affected the Board of Director's decision. Furthermore, in one specific instance where a supervisor subjected a black worker to racial epithets, the supervisor was discharged.
20
Finally, we note that the Board of Directors treated the plaintiff fairly in the past. Faced with a PMO vote to discharge Hunter because of excessive tardiness, the Board overruled the PMO. The Board's prior willingness to overturn an adverse PMO decision involving Hunter is evidence that the Board was not biased against him because of his race in this case.
21
On this record, we cannot find that the district court's ultimate conclusion of no racial discrimination is clearly erroneous. The judgment of the district court is AFFIRMED.
*
We do not address the issue of whether the discharge of Hunter would have been illegal had the PMO been the final decision-maker
| {
"pile_set_name": "FreeLaw"
} |
Case: 16-30104 Document: 00514593666 Page: 1 Date Filed: 08/09/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-30104 FILED
August 9, 2018
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff - Appellee Cross-Appellant
v.
PETER M. HOFFMAN
Defendant - Cross-Appellee
MICHAEL P. ARATA; SUSAN HOFFMAN,
Defendants - Appellants Cross-Appellees
______________________________________________________________________
cons. w/ 16-30226
UNITED STATES OF AMERICA,
Plaintiff - Appellee-Cross- Appellant
v.
PETER M. HOFFMAN,
Defendant - Appellant-Cross- Appellee
______________________________________________________________________
Case: 16-30104 Document: 00514593666 Page: 2 Date Filed: 08/09/2018
No. 16-30104
c/w 16-30226, 16-30013, 16-30527
cons. w/ 16-30013
UNITED STATES OF AMERICA,
Plaintiff - Appellant
v.
PETER M. HOFFMAN; MICHAEL P. ARATA,
Defendants - Appellees
______________________________________________________________________
cons. w/ 16-30527
UNITED STATES OF AMERICA,
Plaintiff - Appellee Cross-Appellant
v.
PETER M. HOFFMAN,
Defendant - Appellant Cross-Appellee
MICHAEL P. ARATA; SUSAN HOFFMAN,
Defendants - Cross Appellees
Appeals from the United States District Court
for the Eastern District of Louisiana
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Before KING, DENNIS, and COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:
With its colorful history and rich cultural stew, Louisiana has long been
a popular setting for works of fiction, including movies. In recent years the
state has also tried to become a place where films are made. That effort
enjoyed considerable success. The Curious Case of Benjamin Button, Django
Unchained, Twelve Years a Slave, The Dallas Buyer’s Club, and Dawn of the
Planet of the Apes are some recent films of note shot in New Orleans. Believe
it or not, in one recent year (2013) Louisiana surpassed even California as the
most popular locale for filming major-studio productions. Mike Scott,
Louisiana Outpaces Los Angeles, New York, and All Others in 2013 Film
Production, Study Shows, TIMES-PICAYUNE (Mar. 10, 2014). This development
led some to call New Orleans “Hollywood South.” Id.
State tax credits for the film industry spurred much of this growth. Id.
(“[M]ake no mistake: The state’s tax-credit program . . . is largely responsible
for the surge in local productions.”). They also provided an incentive for fraud.
A jury found that to be the case for Peter Hoffman, Michael Arata, and Susan
Hoffman. It credited the government’s allegations that they submitted
fraudulent claims for tax credits, mostly by (1) submitting false invoices for
construction work and film equipment or (2) using “circular transactions” that
made transfers of money between bank accounts look like expenditures related
to movie production. Their principal challenge to those convictions is an
argument that the tax credits are not property within the meaning of the mail
and wire fraud statutes but are instead akin to the video poker licenses the
Supreme Court rejected as a basis for federal prosecution in Cleveland v.
United States, 531 U.S. 12 (2000). If we conclude that the credits are property
subject to the federal fraud statutes, defendants also contend that the evidence
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was insufficient to convict because they made a good-faith effort to comply with
a state program riddled with gray areas.
While the defendants seek to undo their convictions, the government is
unhappy with the sentences of probation that all three received. So it too
appeals, arguing that the substantial downward variances exceeded the
district court’s discretion. The government also contends that the district court
improperly vacated a number of the jury’s guilty verdicts.
I.
The Hoffmans and Arata owned and jointly operated Seven Arts Pictures
Louisiana, LLC (Seven Arts). Each of them was also involved in several other
film-related ventures. Through their companies, defendants purchased a
“dilapidated mansion” at 807 Esplanade in New Orleans, intending to renovate
the structure and turn it into a postproduction facility where films are edited
and prepared for final release. To offset the cost of this project, Seven Arts
applied for film infrastructure tax credits with the state.
A.
Louisiana enacted the Motion Picture Incentive Tax Credit in 1992 to
encourage local development of the movie and television industry. La. Rev.
Stat. § 47:6007. In its initial form, the law authorized investors to claim a
credit for 50% to 70% of losses sustained during in-state film production. In
other words, it was a “safety net” for bad film investments. John Grand,
Motion Picture Tax Incentives: There’s No Business Like Show Business, STATE
TAX NOTES at 791 (Mar. 13, 2006). The state legislature extended the program
in 2002, permitting investors to claim tax credits for money spent on profitable
projects. La. Rev. Stat. § 47:6007(C)(1) (2002). The next year saw further
amendment, this time allowing investors to sell or transfer the tax credits. Id.
§ 47:6007(C)(4) (2003). This was an important innovation because many
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investors—those like Peter Hoffman who resided in California—did not
themselves owe Louisiana taxes. Nontransferable credits had been of little
value to these numerous out-of-state producers.
The program was again amended in 2005 (and extended in 2007), when
the legislature authorized income tax credits for state-certified infrastructure
and production projects. 1 See generally La. Rev. Stat. § 47:6007(C) (2005).
Projects with total base investment exceeding $300,000 could qualify for tax
credits worth up to 40% of in-state expenditures. Id. § 47:6007(C)(1)(b)(i), (iii);
see also Dep’t of Revenue, Policy Servs. Div., 2005 Regular Legislative Session:
Legislative Summaries 5 (Jan. 13, 2006), http://www.rev.state.la.us/
publications/lsls(2005).pdf.
Louisiana’s Office of Entertainment Industry Development, a component
of the Department of Economic Development, administered the program.
Issuance of film tax credits was a two-step process. First, the applicant had to
file an initial application for tax credits and obtain a precertification letter from
the state agencies. See Red Stick Studio Dev., L.L.C. v. Louisiana, 56 So. 3d
181, 183–84 (La. 2011). After receiving that authorization, the applicant still
had to submit a cost report tallying its expenditures, accompanied by an audit
from an independent accountant. Id. at 183 n.4. After a review of those
materials, the same state agencies determined whether the expenditures
should be certified and tax credits issued.
1 The film infrastructure tax credits central to this case lapsed in 2009, though
investors can still obtain credits for film production. See Loren C. Scott & Assocs., Inc., The
Economic Impact of Louisiana’s Entertainment Tax Credit Programs ii, 1–2 (Apr. 2013),
https://louisianaentertainment.gov/assets/ENT/docs/2013_OEID_Program_Impact_Report%
20_FINAL.pdf. But in June 2017 Louisiana lawmakers placed a long-term spending cap “on
the tax breaks for Hollywood South” and imposed a 2025 sunset provision on the entire
program. Associated Press, Louisiana’s Film Tax Credit Program to Continue, with a Cap,
TIMES-PICAYUNE (June 2, 2017).
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For infrastructure projects, qualifying expenditures could include the
purchase, construction, and use of tangible items directly related to Louisiana
film production. The law defined “base investment” as the “actual investment
made and expended,” while “expended in the state” meant “property which is
acquired from a source within the state and . . . services procured and
performed in the state.” La. Rev. Stat. § 47:6007(B)(1), (3) (2007). And the
state could recapture tax credits if it found that “monies for which an investor
received tax credits . . . [we]re not invested in and expended with respect to a
state-certified production . . . and with respect to a state-certified
infrastructure project.” Id. § 47:6007(E)–(F) (2007).
B.
Such was the statutory and administrative landscape facing Peter,
Arata, and Susan as they sought to develop 807 Esplanade. 2 A bank loaned
them $3.7 million for the project, $1.7 million of which was earmarked to
purchase the property while the remainder was placed in an account that could
be drawn on to make payments for construction and renovation. From its
inception, Seven Arts sought to lower the cost of the 807 Esplanade project via
various tax credits. Beyond the film credits, for example, it sought “historic
rehabilitation tax credits.” In October 2007, Arata submitted the company’s
initial film credit application to the state, which included a cost estimate of $9
million, a business plan, and a contractor’s agreement.
The state issued a precertification letter in May 2008. The letter
contained a caveat that it did not guarantee any tax credits would be issued.
But it did note that the project as described “appear[ed] to meet the criteria of
a State-Certified Infrastructure Project,” subject to administrative rules that
2 We refer to Peter and Susan Hoffman by their first names to avoid confusion.
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may be released at a future date. The letter also placed certain restrictions on
the tax credit certification. Namely, Seven Arts had until the end of 2008 to
earn credits on the project, unless it spent $4.5 million prior to that date (in
which case future credits might be possible). It also mentioned that before any
credits could be “certified and released” at least $2.25 million (25%) in base
investment must have been spent on film-related infrastructure. That 25%
had to be used for “the creation of infrastructure specifically designed for
motion picture production,” not on the purchase of land or preexisting facilities.
But tax credits could be earned on so-called “multiple-use facilities” once the
production facility was complete.
C.
As the precertification letter emphasized, it did not authorize the
issuance of tax credits. That could only occur based on the “actual amount
expended by the project,” verification of that amount by an independent
auditor, and final approval by state authorities. To satisfy those critical final
steps, the defendants submitted three cost reports and audits.
Misrepresentations in those reports, the ones mentioned earlier that involved
fake invoices and circular transactions, are what led to this prosecution.
In October 2008, two months prior to the expenditure deadline, Peter
and Arata hired an auditing firm to review project expenditures. Katherine
Dodge, the auditor, requested additional information, like bank transactions
showing the company’s transfers to vendors. Arata emailed Regions Bank with
a request to forward withdrawal and deposit slips to Dodge. But it was too
late. The next day Dodge’s firm withdrew based on her concerns.
Seven Arts soon replaced her with auditor Katie Davis of the Malcom
Dienes firm. Peter and Arata provided Davis with the company’s general
ledger, which noted a $7.42 million capital contribution from the parent
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company—Seven Arts Pictures, Inc.—along with vendor invoices and receipt
of payment confirmations signed by Damon Martin and Leo Duvernay. These
documents made it appear as though the company had made payments out of
the capital contribution to Martin, owner of Departure Studios, for film
equipment and to Duvernay, the project’s general contractor, for construction.
But bank statements, which were not included just as they had not been sent
to the first auditor, revealed that those transactions were in reality
withdrawals and deposits of the same funds. They were, in other words,
“circular transactions” that the government argued were intended to trick
state authorities into believing that Martin and Duvernay had been paid when
they had not.
In February 2009, Arata sent the first cost report, which claimed
$6,531,202 in qualifying expenditures through October 2008, along with the
auditor’s statement verifying that amount, to the state. Lacking access to the
bank records, the audit verified that $1,027,090 had been paid to Martin and
$1,749,257 to Duvernay. The report also listed a $3.7 million payment to
purchase and renovate 807 Esplanade, nearly the entire balance of the
remaining expenditures claimed.
Louisiana authorities certified and “paid out” tax credits worth
$1,132,480.80 in June 2009. That amount was substantially below 40% of the
claimed expenditures because the $3.7 million building purchase was “deemed
multiuse” and therefore ineligible for credits until the project was complete.
After certification, Seven Arts “cashed in,” to use the district court’s words, by
selling the credits to third-party taxpayers.
About two months after Louisiana issued the credits, concerns about
Peter fabricating invoices led Arata to send a letter terminating his day-to-day
participation in Seven Arts and other projects in which he acted as Peter’s
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lawyer. Arata also reported his concerns about the invoices to the President
and CFO of the Seven Arts parent company. He did not, however, report this
to state authorities in accordance with ethics advice he received from a lawyer.
Nor did he mention his concerns in his letter to Peter. Instead, he invoked the
time-honored excuse of needing to devote more time to his family (his son), as
well as to his other business interests. Because Arata retained an ownership
stake in Seven Arts through his interest in Voodoo Studios, LLC, he stated in
the letter to Peter that he would still “assist with the renovation and
completion of 807 Esplanade as my time permits.”
So Peter on his own submitted the company’s second cost report to state
authorities in January 2010. That report, audited by the Dienes firm, claimed
almost $6 million in expenditures related to 807 Esplanade from November
2008 to September 2009, an amount in addition to that already certified in
June 2009. The purported expenditures included $2,302,860 in construction
costs paid to Duvernay, $807,202 for audio equipment, $705,587 for interest
payments on a $10 million loan from Seven Arts Filmed Entertainment LA,
LLC (SAFELA), $400,000 in project management fees to Leeway Properties,
Inc. (a Susan Hoffman entity), $350,000 in legal and notary fees for Peter and
Arata, $250,000 for construction finance supervision, and $150,000 for Leeway
office space. For differing reasons, the government at trial challenged the
legitimacy of these expenditures. For example, Seven Arts had supported the
construction payments with a Duvernay-signed invoice that the company
created only in anticipation of the Dienes audit. Duvernay testified that the
fees were not actually paid to his company but that he signed the invoice
anyway because Susan told him that the document “was just for [Peter’s] own
records.” The request for legal fees shows that Arata was not completely out
of the loop despite sending the letter. After receiving an invoice for the legal
9
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fees relating to 807 Esplanade, Arata sent one of his business partners an
email saying, “[Peter] wants to submit this for tax credits. Ha!” He continued,
“And since I was not his lawyer for the deal, it makes it even better. What he
could submit and what is actual are the bills he got from Guy Smith, even the
Jones Walker bills. But instead, he . . . puts me down as receiving $150K in
fees! Love it.”
After Peter submitted the second cost report, state officials asked
forensic accountant Michael Daigle to analyze both rounds. As part of his
investigation, Daigle contacted the Dienes firm about concerns he had
developed. As a result of that interaction, the firm took the “very unique” step
of recalling its audits associated with both cost reports. It recalled the first
audit over Peter’s objection. Withdrawing the first audit, he thought, would be
“extremely damaging to the purchasers for value of the credits already
certified.” Those fears were not unfounded. After the Dienes firm withdrew
its audits, the state revoked the previously issued credits, declined to issue new
credits for the second cost report, and conveyed the problems unearthed during
Daigle’s investigation to the state inspector general.
The company’s attempts to earn film tax credits on 807 Esplanade were
thus battered by the waves of the Daigle investigation, the audit withdrawal,
and the tax credit revocation. Nevertheless, Seven Arts persisted. By June
2012, 807 Esplanade was complete and the site functioned as a film production
and postproduction facility. The company retained a new firm, Silva Gurtner
& Abney LLC, to conduct an audit for a third cost report, this one covering
October 2007 to June 2012. In other words, Seven Arts wanted to claim tax
credits not only for the period after September 2009 but also for the time
covered in the first two (rejected) cost reports. Of the $11,945,184 in claimed
expenditures, the Silva firm deemed $11,785,934 “qualified.” It even certified
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a number of expenditures that were similar or identical to those the state had
rejected in the second cost report.
At the state’s request, Daigle also conducted a forensic review of the
company’s third cost report. After reviewing the Silva audit, Daigle concluded
that the company’s qualifying expenditures totaled $2,743,319.18 by the end
of 2008, which would mean maximum allowable project expenditures of
$5,486,638.36 for tax credit purposes, per the limitations outlined in the state’s
precertification letter. Daigle cast doubt on the $3,842,355 in related party
transactions contained in the Silva audit. Even excluding that amount,
however, the company’s total qualifying infrastructure expenditures—based
on the acquisition and construction costs for 807 Esplanade—exceeded that
maximum allowable amount, making it eligible for up to $2,194,655.34 in tax
credits. 3 Having apparently never faced a similar situation and relying on
Daigle, the state decided to “reestablish” the tax credits issued after
submission of the first cost report, thereby avoiding punishment of third-party
purchasers of Seven Arts credits.
The state inspector general enlisted the help of the FBI and began
investigating the company’s tax credits. This led the Silva firm to withdraw,
revise, and then reissue its July 2012 audit in order to disclose uncertainties
about the legitimacy of certain expenditures.
D.
The joint state and federal investigation led to the filing of criminal
charges. No model of restraint, the indictment contains 25 counts. It charges
Peter with one count of conspiracy to commit mail and wire fraud, nineteen
3 At trial, however, Daigle testified that his best estimate of qualifying expenditures
for Seven Arts was roughly $4.2 million, which equates to allowable tax credits of about $1.6
million.
11
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counts of wire fraud, and one count of mail fraud. It charges Arata with one
count of conspiracy, nineteen counts of wire fraud, one count of mail fraud, and
four counts of making false statements to the FBI. And it charges Susan with
one count of conspiracy, fifteen counts of wire fraud, and one count of mail
fraud.
During the two-week trial, the government sought to prove that the
defendants fabricated invoices and shifted money in and out of accounts to
make it appear as though Seven Arts had actually spent money on film
infrastructure when it had not. The defendants countered that in the face of a
difficult-to-interpret statutory regime they had made efforts to comply with
state custom and practice as established by the acceptance of prior tax credit
applications.
The jury did not buy that defense. It convicted Peter on all 21 counts. It
convicted Arata of 13 counts—conspiracy, seven counts of wire fraud, one count
of mail fraud, and four counts of making a false statement. Reflecting that
Susan’s name was “scarcely mentioned” during the trial, the jury found her
guilty only of one count each of conspiracy, wire fraud, and mail fraud.
The defendants moved for judgments of acquittal. In a lengthy opinion,
the district court granted Peter’s motion with respect to five counts of wire
fraud (Counts 2, 3, 4, 5, and 7) but denied the remainder; granted Arata’s
motion with respect to all but the conspiracy count (Count 1) and one count of
wire fraud (Count 6); and denied Susan’s motion. The district court then
denied defendants’ motions for new trial, both with respect to their remaining
convictions and for all counts in the event that this court were to reverse the
acquittals.
The district court imposed sentences far below those suggested by the
Sentencing Guidelines. The Guidelines recommended sentences of roughly 14
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to 17 years for Peter, 9 to 11 years for Arata, and 4 to 5 years for Susan. But
the district court placed all of them on probation—five years for Peter, 4 four
for Arata, and three for Susan.
The government also sought forfeiture of the issued tax credits and
restitution on behalf of the state. The district court ordered forfeiture in the
amount of $223,434.25. But in a ruling not challenged on appeal, it denied the
government’s motion for restitution because the state, in its view, ended up
suffering no “actual, pecuniary loss.” Even if it had initially suffered a loss in
issuing tax credits due to fraud, the court concluded the state did not
ultimately lose money because Seven Arts eventually made infrastructure
expenditures on 807 Esplanade entitling the company to an amount of credits
at least equal to those issued.
II.
The parties raise numerous issues in their cross appeals. We begin with
the one that would wipe away all the conspiracy and fraud counts: defendants’
contention that the Louisiana tax credits are not “property” covered by the
federal fraud statutes. Their vehicle for raising this issue was a motion to
dismiss the indictment, see FED. R. CRIM. P. 12(b)(3), the denial of which we
review de novo, United States v. Cooper, 714 F.3d 873, 876–77 (5th Cir. 2013).
The mail and wire fraud statutes, which have the same elements other
than the jurisdictional hook of the mailing or interstate wire, criminalize
schemes “to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises.” 18 U.S.C. §§ 1341, 1343.
Property, as ordinarily understood, extends to every kind of valuable right and
4At the sentencing hearing, the district court sentenced Peter to six years’ probation.
The judgment shows a sentence of five years, which is the statutory maximum. 18 U.S.C.
§ 3561(c)(1).
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interest. See Pasquantino v. United States, 544 U.S. 349, 356 (2005) (citing
Leocal v. Ashcroft, 543 U.S. 1, 9 (2004)). Under the common law of fraud, and
the even more venerable law of common sense, “[t]he right to be paid money
has long been thought to be a species of property.” Id. at 356 (citing
BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 153–55 (1768)).
Common law fraud encompassed both defrauding a victim of money and of her
entitlement to that money because of the “economic equivalence between
money in hand and money legally due.” Id. That the victim happened to be
the government, instead of a private party, did not negate that economic injury.
Id.
The Supreme Court set forth these principles in considering whether a
scheme to defraud Canada of excise tax revenue by smuggling liquor into the
country violated the wire fraud statute. Id. at 353. By evading taxes that
would have been due had the liquor imports been declared, the defendants
inflicted a “straightforward” economic injury akin to “embezzl[ing] funds from
the Canadian treasury.” Id. at 356–57. Indeed, a country “could hardly have
a more ‘economic’ interest than in the receipt of tax revenue.” Id. at 357.
Smuggling goods to deprive a government of tax revenue via a fraudulent
scheme that used interstate wires was thus held to constitute wire fraud. Id.
at 357. Although Pasquantino involved depriving a foreign government of tax
revenue, prosecutors have also successfully used the mail and wire fraud
statutes against schemes to defraud state and local governments of tax
revenue. See Fountain v. United States, 357 F.3d 250, 260 (2d Cir. 2004)
(deeming taxes owed to states and the federal government property within the
meaning of the mail and wire fraud statutes); see also United States v. Louper-
Morris, 672 F.3d 539, 557 (8th Cir. 2012); United States v. Frederick, 422 F.
App’x 404, 405 (6th Cir. 2011) (both involving schemes to defraud states of tax
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revenue); Matthew D. Lee, Chicago Restaurant Tax Case Highlights Broad
DOJ Authority, LAW360 (May 25, 2016), https://www.law360.com/articles/
800503/chicago-restaurant-tax-case-highlights-broad-doj-authority
(discussing case in which restaurant owner pleaded guilty to wire fraud for
failing to pay state taxes on cash transactions); cf. Hemi Grp., LLC v. City of
New York, 559 U.S. 1, 4 (2010) (evaluating a suit in which New York City
brought RICO charges, based on predicate acts of mail and wire fraud, because
defendant allegedly caused the loss of “tens of millions of dollars in
unrecovered cigarette taxes”).
From Pasquantino’s holding that tax revenue is property under the fraud
statutes, it follows that Louisiana’s tax credits can also be the object of a
scheme to defraud. As tax credits reduce the dollars otherwise owed to the
state, lying to obtain them has the same effect as lying to evade taxes: the state
collects less money. Indeed, the drain on Louisiana finances caused by the film
tax credit regime—$282.6 million in just one year (2016)—led the state to
curtail the program. Tyler Bridges, New Study of Louisiana Film Tax Credit
Program Again Finds Expensive, “Significant Hit” to Budget, ADVOCATE (Apr.
10, 2017). 5 Fraud in connection with obtaining those tax credits can affect the
state’s books as much as fraud used to evade paying Louisiana income taxes.
Either situation implicates the state’s interest in taxes owed that Pasquantino
recognizes as property.
Tax credits are also the functional equivalent of government spending
programs. See Drew Desilver, The Biggest U.S. Tax Breaks, PEW RES. CTR.
5 Tax breaks on three projects alone—The Green Lantern, The Twilight Saga:
Breaking Dawn, and HBO’s True Detective—cost the state nearly $85 million. Louisiana’s
Film Tax Credit Program to Continue, with a Cap, supra note 1. At least the Louisiana
season of True Detective was the good one.
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(Apr. 6, 2016), http://www.pewresearch.org/fact-tank/2016/04/06/the-biggest-
u-s-tax-breaks/ (“[S]uch special-purpose breaks are effectively the same as
directing spending”). That is why economists treat tax deductions and credits
as “tax expenditures.” See Tax Policy Center, Briefing Book: A Citizen’s Guide
to the Fascinating (Though Often Complex) Elements of the Federal Tax
System, BROOKINGS INSTITUTION, http://www.taxpolicycenter.org/briefing-
book/what-are-tax-expenditures-and-how-are-they-structured. Viewing tax
credits in this light further highlights their economic impact. Consider one of
the largest tax expenditures in the federal tax code, the home mortgage
interest deduction which totaled $77 billion in 2016. Desilver, supra. The
impact on the government’s coffers would be the same if, instead of offering
that deduction, it sent taxpayers $77 billion in grants to help them pay their
home loans. As defendants conceded at oral argument, fraud in connection
with obtaining a state government grant is undoubtedly subject to wire fraud
prosecution. Because there is no bottom-line difference between a government
spending program and a tax credit, there is no economic rationale for treating
the former as property but not the latter. When it comes to depriving the
government of revenue—property under Pasquantino—there thus is no
meaningful distinction between fraudulently claiming a tax credit,
fraudulently obtaining a public grant, or fraudulently failing to report income.
The congruity of these three situations involving the public fisc is further
evident from looking to an example from the private sector. Everyone would
recognize that plane tickets are property of an airline. That means obtaining
them via deceit is fraud. See United States v. Morris, 348 F. App’x 2, 3–4 (5th
Cir. 2009) (discussing wire fraud conviction of an airline employee who
fraudulently issued 1,011 tickets and sold them for her benefit). But so too, we
have recognized, is swindling reward miles that can be redeemed for free
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flights. United States v. Loney, 959 F.2d 1332, 1336 (5th Cir. 1992); see also
United States v. James, 616 F. App’x 753, 755 (5th Cir. 2015) (affirming wire
fraud conviction for “discount fraud” that allowed defendant to purchase less
expensive computers). The reason is that revenue lawfully owed the airline is
taken in both situations. Loney, 959 F.2d at 1336–37; cf. Felder’s Collision
Parts, Inc. v. All Star Advertising Agency, Inc., 777 F.3d 756, 763 (5th Cir.
2015) (reducing a seller’s revenue by the amount of a rebate in a predatory
pricing case). A tax credit is the public sector equivalent of a coupon; it reduces
the amount that is otherwise owed.
In an attempt to avoid these basic economic principles, the defendants
invoke Cleveland v. United States, 531 U.S. 12 (2000). It does not give us much
pause. Another federal fraud prosecution out of Louisiana, Cleveland involved
misrepresentations on applications for state video poker licenses. The Court
held that the license was not property in the regulator’s hand. Id. at 20. It
rejected the argument that a state’s “intangible rights” to decide who is eligible
to operate poker machines created a property interest; that interest
“amount[ed] to no more and no less than Louisiana’s sovereign power to
regulate.” Id. at 23. As for the government’s attempt to fit the licenses into
the traditional category of an economic property interest, it could not show any
financial harm resulting from the effort to trick the state into issuing a license.
Id. at 22 (“Tellingly . . . the Government nowhere alleges that Cleveland
defrauded the State of any money to which the State was entitled by law.”).
Quite the opposite in fact: the company that misrepresented its eligibility for
the license paid the state more than $1.2 million. Id. So unlike lies to obtain
tax credits, Cleveland’s lies to establish eligibility for the poker license
generated revenue for Louisiana even though they resulted in the regulatory
harm of allowing those deemed unworthy to operate the machines. Cleveland’s
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rejection of that regulatory harm as property does not undermine the
conclusion that the drain on a state’s treasury resulting from schemes to
unlawfully obtain tax credits deprives the state of a classic property interest.
See, e.g., Louper-Morris, 672 F.3d at 557 (affirming mail and wire fraud
convictions involving scheme to defraud Minnesota of education tax credits);
United States v. Lefkowitz, 125 F.3d 608, 614, 617 (8th Cir. 1997) (affirming
mail and wire fraud convictions for a scheme to falsely obtain tax credits for
low-income housing); Frederick, 422 F. App’x at 405 (addressing mail fraud
prosecution for scheme to obtain Michigan Homestead Property Tax Credits).
A case we decided after Cleveland does seem closer to this one at first
blush because it involves tax credits. See United States v. Griffin, 324 F.3d
330, 354 (5th Cir. 2003). Griffin held that “unissued” federal tax credits were
not property of a state agency under the mail and wire fraud statutes. Id. at
355. But the unique nature of the program it considered, in which the state
merely allocated federal tax credits, means no state property was at risk. The
state agency, the Texas Department of Housing and Community Affairs, did
not have a property interest in the tax credits that offset federal income tax
obligations. Id. at 338. Under that program, the federal government allotted
a certain amount of tax credits to Texas; the state housing agency’s job was to
then assign those credits to low-income housing developments within the state.
Id. at 338, 354. The fraud arose in connection with a preapplication to the
state agency seeking an allocation of some of the credits. Id. at 352–54. The
credits would not actually issue until years later, if and when the project was
completed. Id. at 355. We emphasized this feature of the Griffin fraud—that
it did not result in the issuance of any tax credits, only an allocation of them.
Id. at 354–55. We also noted the more fundamental point that even if the
credits had issued, their fraudulent issuance would not have caused economic
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harm to Texas because the credits “offset [] federal income tax obligations.” Id.
at 355.
Unraveling the cooperative federalism arrangement in Griffin shows
that it follows directly from Cleveland. The state’s role as an allocator of
federal tax credits meant it was acting much like the licensor in Cleveland:
deciding which applicants would best serve the state’s regulatory interests,
decisions that did not directly implicate the state’s finances. If anything, as in
Cleveland the fraud in Griffin netted money for the state because the company
receiving the allocation had to pay an application fee and a $40,000
commitment fee. 6 Id. at 340, 355. Griffin thus rightly recognized that the
fraud to obtain an allocation of federal tax credits could not have deprived
Texas of property. 7
Griffin does not provide a defense against this prosecution because the
film tax credits do reduce state coffers. And the scheme alleged here did not
end with misrepresentations in connection with obtaining precertification for
the credits. It continued with falsehoods in the three Seven Arts cost reports,
which caused Louisiana authorities to certify and actually issue transferable
credits. Because Louisiana was administering its own tax credits, the
6 As in Cleveland, prosecutors argued that Texas had a property interest because the
conduct it was approving would provide economic benefits, such as the application fees, to
the state. Compare Griffin, 324 F.3d at 355, with Cleveland, 531 U.S. at 21–22. This missed
the fundamental point that the fraudulent conduct must deprive the victim of property, not
provide it with property.
7 Griffin addressed only whether the state housing agency had a property interest in
the credits. 324 F.3d at 354–55. The better argument would have been that the federal
government had a property interest in those credits. Indeed, Griffin did not disturb the
conviction for conspiracy to steal federal funds under 18 U.S.C. § 666, which applies to theft
of federal “property.” Id. at 345–46. The indictment had also listed the United States as one
of the victims of the mail fraud, see id. at 352, but for whatever reason the government only
defended that conviction in our court on the ground that Texas had a property interest in the
credits, id. at 353–55.
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fraudulent issuance of those credits would deplete the state treasury. 8 That
means Louisiana has a property interest in the tax credits. Stealing them via
fraud has the same economic effect on the state as “embezzle[ing] funds from
the [] treasury.” Pasquantino, 544 U.S. at 356.
We also reject the defendants’ argument that application of the wire and
mail fraud statutes to Louisiana’s film tax credit program raises
unprecedented federalism or due process concerns. As to the federalism issue,
defendants concede that these federal statutes can combat fraud in connection
with evading state taxes or obtaining state benefits. We do not see how state
tax credits raise any greater concerns about federal intrusion in state
policymaking than those far more prevalent traditional state tax and spending
programs. Regulatory complexity is not limited to tax credits. And recourse
to federalism is not a great fit with this case. The state did not indicate that it
thought the defendants’ creation of false invoices and use of circular
transactions was allowed under state law. To the contrary, it sought the
assistance of federal law enforcement to investigate potential crimes, which
made sense as complex interstate schemes (the Hoffmans resided in California)
are one of the more strongly rooted bases for federal criminal law.
This prosecution also does not raise notice concerns under the Due
Process Clause. The honest services aspect of mail fraud has given rise to
vagueness challenges. See, e.g., Skilling v. United States, 561 U.S. 358, 367
(2010) (construing the honest-services statute beyond its “core meaning . . .
8 That Seven Arts completed the infrastructure work at a later date and might have
been entitled to the credits then—the basis for awarding no restitution—does not provide a
defense to mail fraud. The scheme to defraud need not result in loss to the victim. United
States v. McMillan, 600 F.3d 434, 450 (5th Cir. 2010). That is because what is unlawful is
engaging in the scheme to defraud, even if it turns out to “be absolutely ineffective.” Durland
v. United States, 161 U.S. 306, 315 (1896).
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would encounter a vagueness shoal”). But the classic property conception of
fraud has not. See Daniel W. Hurson, Comment, Mail Fraud, the Intangible
Rights Doctrine, and the Infusion of State Law: A Bermuda Triangle of Sorts,
38 HOUS. L. REV. 297, 303–10 (2001) (contrasting prosecutions for schemes
“whose purpose was to deprive another of money or property,” a “basic
purpose[]” of the mail fraud statute since its inception, with courts’ long
struggle to define schemes that deprive another of intangible rights); cf.
Skilling, 561 U.S. at 412 (“As to fair notice, whatever the school of thought
concerning the scope and meaning of [scheme or artifice to defraud], it has
always been as plain as a pikestaff that bribes and kickbacks constitute honest-
services fraud.” (quoting Williams v. United States, 341 U.S. 97, 101 (1951))
(cleaned up)). That is because lying to cheat another party of money has been
a crime since long before Congress passed the first mail fraud statute making
it a federal offense in 1872. Courtney Chetty Genco, Note, What Happened to
Durland?: Mail Fraud, RICO, and Justifiable Reliance, 68 NOTRE DAME L.
REV. 333, 337, 345–47 (1992) (identifying the common law crime of “cheating”
as a precursor to mail fraud). Although defendants focus on a lack of clarity in
the administration of Louisiana’s tax credit program, vagueness challenges
look to whether the elements of the offense provide sufficient notice. See
Connally v. Gen. Constr. Co., 269 U.S. 385, 391 (1926). The government did
not have to prove violations of state law. United States v. Foshee, 606 F.2d 111,
113 (5th Cir. 1979). The elements the jury had to find included terms like
misrepresentations and property that have deep roots in both criminal and
civil law. As we once stated, fraud “needs no definition; it is as old as falsehood
and as versable as human ingenuity.” Weiss v. United States, 122 F.2d 675,
681 (5th Cir. 1941). Defendants point to no court that has held that the
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elements of property-based mail fraud are vague, and we see no basis for being
the first to do so.
The district court correctly found the tax credits are property subject to
prosecution under the mail and wire fraud statutes. This prosecution alleging
the use of fabricated invoices and misleading bank transactions to obtain a
financial benefit lies at the historic core of the federal fraud statutes and
neither offends due process nor exceeds federal power.
III.
Having rejected the defendants’ global challenge to the prosecution’s
theory, we consider their fact-based challenges to the specific counts of
conviction. But our sufficiency review does not just entail the usual posture of
a defendant seeking to set aside convictions. Because the district court granted
judgment of acquittals on a number of counts—five for Peter and eleven for
Arata—the government also appeals, seeking reinstatement of those
convictions that it believes the evidence supported. 9 Whether we are looking
at the verdicts the district court sustained or those it threw out, our standard
of review is the same. We conduct a de novo review of the evidence in
determining whether it was sufficient to convict. See United States v.
9 We perform our duty and review all of the acquitted counts the government appeals.
We note, however, that a successful appeal will have no practical effect for most of the counts.
This is especially true when it comes to Peter. Because his Guidelines range already captured
the full amount of intended loss in this scheme and any other conceivable enhancements,
reinstating some convictions would not change Peter’s range. So what is the point of trying
to convict him of 21 counts? Doing so is inconsistent with DOJ policy. The U.S. Attorneys’
Manual counsels that to “promote the fair administration of justice, as well as the perception
of justice” prosecutors should charge “as few separate counts as are reasonably necessary”—
it sets a default ceiling of 15—so long as that does not jeopardize a successful prosecution or
prevent the court from fully capturing a defendant’s sentencing exposure. U.S. DEP’T OF
JUSTICE, UNITED STATES ATTORNEYS’ MANUAL: CRIMINAL RESOURCE MANUAL § 215 (1997).
A single count of wire fraud encompasses Peter’s Guideline range in allowing a sentence up
to 20 years in prison. 18 U.S.C. § 1343.
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Danhach, 815 F.3d 228, 235 (5th Cir. 2016). In conducting that review, we
weigh the evidence “in a light most deferential” to the jury verdict and give the
party that convinced the jury the benefit of all reasonable inferences. United
States v. Lucio, 428 F.3d 519, 522 (5th Cir. 2005); see United States v. Ingles,
445 F.3d 830, 834–35 (5th Cir. 2006). Consequently, we “must affirm the
verdict unless no rational juror could have found guilt beyond a reasonable
doubt.” United States v. Sanjar, 876 F.3d 725, 744 (5th Cir. 2017).
A.
In assessing the sufficiency of the evidence, we first discuss conspiracy,
then mail and wire fraud, and finally false statements.
Count 1: The jury convicted all three defendants of conspiracy to commit
mail and wire fraud. As this offense was charged under the general conspiracy
statute (18 U.S.C. § 371) rather than the one specific to fraud offenses (18
U.S.C. § 1349), 10 the government had to prove an agreement to commit the
fraud offense, the defendants’ knowledge of the unlawful objective and willful
agreement to join the conspiracy, and an overt act by a member of that
conspiracy to further the unlawful goal. United States v. Mauskar, 557 F.3d
219, 229 (5th Cir. 2009). The district court upheld the conspiracy convictions.
We too are of the opinion that the direct and circumstantial evidence was
sufficient to prove the existence of an agreement to defraud the state of film
infrastructure tax credits, the commission of overt acts meant to further that
scheme, and the willful involvement of each defendant.
10 The substantive difference is that the section 1349 conspiracy does not require an
overt act. Sanjar, 876 F.3d at 737. It also carries a punishment of twenty years as opposed
to the five years of the general conspiracy statute. Compare 18 U.S.C. § 1343, with 18 U.S.C.
§ 371.
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Peter’s contribution is the most straightforward as he was involved in
the creation and dissemination of all three Seven Arts cost reports.
Emblematic of that involvement is his role in substantiating Seven Arts’
expenditures related to construction and equipment. As one example, Peter
and Arata opened bank accounts for Duvernay (construction) and Martin
(equipment) into which Seven Arts supposedly made “payments.” But bank
records indicate that those payments were almost immediately returned to
Seven Arts—that is, they were not really payments at all. To memorialize the
“payments,” Peter created invoices showing about $2 million in construction
and just over $1 million in equipment costs, and he convinced Duvernay and
Martin to sign them even though they had not been paid anything close to the
listed amounts. Duvernay signed the invoice because Peter “convinced [him]
to sign it, saying it was just for his records,” while Martin testified that the
equipment described in his invoice was just a “dream list” created at the behest
of Seven Arts. Another example of Peter’s steering of the scheme comes from
the confusion over legal fees during the preparation of the second cost report.
The company’s auditor, after conferring with Arata, told Peter that she was
removing over $200,000 in unsupported legal fees. Peter objected and sent
Arata an email urging him to send the auditor the SAFELA operating
agreement as proof of the fees so she would not “get any more suspicious.” The
agreement supposedly showed that Arata was paid for his legal work by giving
his company Voodoo an equity interest in SAFELA. But as the jury knew and
we have already mentioned, Arata told his business partner that he “was not
the lawyer for the deal” and laughed at the notion that Peter wanted to submit
his legal fees for tax credits. This is just a sampling of the abundant evidence
that allowed the jury to conclude that Peter was part of, indeed the leader of,
the fraud conspiracy.
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Arata’s case is more complicated, in part because as we discuss below the
district court concluded he withdrew from the conspiracy after the submission
of the company’s first cost report. But as support for the jury’s conclusion that
he joined the conspiracy, Arata’s fingerprints are all over that first report. In
anticipation of the submission, Arata and Peter opened the Duvernay and
Martin bank accounts. To facilitate circular transactions using those accounts,
Arata took out a $400,000 loan through another of his businesses and put that
money into the Seven Arts account; that money then was bounced between the
Seven Arts and Duvernay/Martin accounts to make it appear as though the
company had made payments for construction and equipment costs when it
had not. The Seven Arts bank statements make clear that these circular
transactions constituted “both withdrawals and deposits,” but that was not
reflected in the company’s general ledger, which would form “the building block
of an audit.” The ledger instead showed the deposits as capital contributions
from the parent company of Seven Arts. Arata and Peter provided that ledger,
along with Seven Arts-generated invoices and confirmation of the supposed
capital contribution, to an auditor. This is enough—and there is more—to
support the jury’s view that Arata was part of the conspiracy.
As suggested by her conviction on just one count of wire fraud and one of
mail fraud, Susan’s involvement in the tax credit scheme is less apparent.
Although witnesses did not focus on her, some evidence of her knowing
participation comes from a December 2009 certification she signed in her
capacity as president of Leeway Properties. It says that Seven Arts paid her
company $700,000 for, among other things, management fees and office space.
The jury was entitled to view the $400,000 of that labelled a project
management fee as a fiction. The state’s forensic auditor Michael Daigle asked
Susan a series of questions about her scheduling and budgeting responsibilities
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on the project—responsibilities that could justify the management fee—but
she could not provide answers. As far as he could tell, her duties were limited
to “interior design decisions on painting and carpeting and things like that.”
Though Daigle acknowledged that $400,000 may under some circumstances be
a reasonable management fee “that was clearly not the case here.” Yet Susan
signed an affidavit in 2009 in which she claimed to have spent in excess of
1,000 hours supervising construction at 807 Esplanade. 11 The same inflated
billing can be seen for the $150,000 that Seven Arts supposedly paid Leeway
for office space. Peter said that the space, which rented for $4,250 a month,
included an office for Duvernay and a courtyard that was roughly three times
the size of the office, where construction materials were kept. But Duvernay
testified that he worked for Susan on her 900 Royal Street property, renovating
its upper levels, and used a space at that location as an office. He described it
as a “12-by-12 room. That was it.” By the time of his testimony, Duvernay had
rented a 300 or 350 square foot office—as opposed to the roughly 150 square
foot office at 900 Royal—from Susan at 906 Royal Street for $600 per month.
Daigle thought the office space rental “transaction lacked economic substance.”
And given her later rental arrangement with Duvernay, Susan should have
recognized that as well. A rational juror could infer that $400,000 and
$150,000 were not reasonable sums for management fees and office space,
respectively, and that Susan knew as much when she certified these expenses.
We therefore uphold defendants’ conspiracy convictions. This decision
has ramifications for the fraud counts we are about to discuss. As the district
court recognized, this evidence showing willful participation in the conspiracy
11 Even that affidavit somewhat contradicted a 2011 email in which Susan listed,
albeit from memory, a “very rough account” of time spent on the project that amounted to
about 500 hours.
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to commit wire and mail fraud also establishes the intent to defraud necessary
for the substantive fraud offenses. That intent does not evaporate because the
project might have later spent money that made it eligible for the tax credits
at a subsequent point in time. If the defendants intended to submit false cost
reports to obtain property they were not then entitled to—and they did—then
they engaged in fraud. To illustrate this point, consider a teller who embezzles
from the bank. If the teller plans to pay the money back a year later, that does
not mean there was not intent in the first place to deprive the bank of its
property. Contingencies are just that; future plans to make a victim whole do
not mean a crime was not committed (later conduct that makes the victim
whole can be a mitigating factor at sentencing as we later discuss).
An even more significant consequence of upholding the conspiracy
convictions is Pinkerton liability. Because the court gave a co-conspirator
liability instruction, any of the three conspirators is liable for any acts of mail
and wire fraud committed during the conspiracy that were foreseeable and that
furthered the agreement. Sanjar, 876 F.3d at 743 (citing Pinkerton v. United
States, 328 U.S. 640 (1946)). Those two conditions of Pinkerton liability do not
add much if anything to what the conspiracy and fraud offenses already
require. With an established agreement to commit mail and wire fraud, it is
going to be foreseeable that mail and wire fraud might occur. Id. at 743–44
(explaining that foreseeability is usually not disputed when “Pinkerton liability
is extending only to the substantive offense that is the object of the
conspiracy”). As for the requirement that the substantive offense further the
conspiracy, mail and wire fraud have a built-in element requiring that the
specific act charged furthered the scheme. 18 U.S.C. §§ 1341, 1343.
The district court relied on this co-conspirator liability to uphold some of
the fraud convictions. But it relied on another principle of conspiracy law—
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that a conspirator can withdraw from the enterprise—in refusing to do so for
Arata on the counts occurring in the later stages of the conspiracy. This ruling
arose in an unusual, perhaps even novel, posture. Withdrawal from a
conspiracy is an affirmative defense on which the defendant bears the burden
of proof (by a preponderance). Smith v. United States, 568 U.S. 106, 112–13 &
n.5 (2013); United States v. Heard, 709 F.3d 413, 427–28 (5th Cir. 2013). The
defendant typically, if not always, puts this issue before the jury by requesting
an instruction on withdrawal. This is done often enough to warrant a pattern
charge in our circuit. FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS (CRIMINAL)
§ 2.18. Arata did not request that instruction or otherwise argue withdrawal
at trial. He did not even argue it in his post-trial motion for acquittal. There
was a suggestion of withdrawal by Arata’s counsel at the hearing on that
motion, but even that was not an express claim of withdrawal. Despite the
argument not being raised at trial or in post-trial motions, the district court
ruled that Arata withdrew when he sent the August 6, 2009 letter to Peter
ending his day-to-day involvement in the project. Notably, the district court
treated itself as the factfinder on withdrawal, framing the issue as whether
“[t]he preponderance at trial proved that Mr. Arata terminated his relationship
with Mr. Hoffman after suspecting him of fabricating invoices in July or
August 2009.”
At a minimum, the district court should have evalauted the withdrawal
defense with the deference that would have been required had the jury rejected
it, which its verdict implicitly did. There is an argument that Arata’s failure
to seek a withdrawal instruction or otherwise raise the issue at trial forfeited
his ability to use the theory to limit his conspiracy offense found by the jury.
That is what typically happens when an affirmative defense is not timely
asserted. See Biddinger v. Comm’r of Police of New York, 245 U.S. 128, 135
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(1917) (“The statute of limitations is a defense and must be asserted on the
trial by the defendant in criminal cases . . . .”); United States v. Bey, 725 F.3d
643, 646 (7th Cir. 2013) (finding that defendant waived entrapment for
appellate review after he withdrew his proposed jury instruction on it); United
States v. Haney, 318 F.3d 1161, 1163 (10th Cir. 2003) (finding that defendant
waived any claim that his conviction should be overturned for lack of a duress
instruction because, in part, he did not raise that defense during trial). As
withdrawal from a conspiracy is an affirmative defense, it is typically governed
by the procedural rules governing such defenses. Smith, 568 U.S. at 113
(relying in the withdrawal context on the common-law rule that the defendant
bears the burden of proving an affirmative defense). But we need not decide
whether Arata forfeited the withdrawal defense. Even if he did not, his failure
to ask for a withdrawal instruction cannot put him in a better position to undo
the jury’s verdict than he would be in had he requested it. Given the absence
of any jury determination that Arata left the conspiracy, we can overrule part
of the verdict and find withdrawal only if Arata can show that is the only
reasonable view of the evidence. Cf. United States v. Barton, 992 F.2d 66, 70
(5th Cir. 1993) (emphasizing, for a case in which insanity was raised as a
defense, the deference a reviewing court gives “where the jury has found
against a party having the burden of proof by clear and convincing evidence”).
It is not. Withdrawal requires a deliberate attempt to disassociate from
the unlawful enterprise. Heard, 709 F.3d at 428. Perhaps a factfinder could
have found that intent and action in the letter Arata sent Peter. But that is
not the only reasonable way to view it. Although Arata sent the letter and
reduced his participation after that point, he did not completely abandon ship.
He did not even cease all direct involvement in the fraudulent aspects of the
business. Sending the letter did not stop Arata five months later from helping
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Peter at a critical stage. Arata complied with Peter’s request and sent an email
to the auditor attaching the SAFELA operating agreement showing Voodoo’s
40% stake to verify the supposed fees he had been paid for legal work. From
this a factfinder was free to conclude that Arata had not left the conspiracy by
“disavow[ing] or defeat[ing]” its purpose but was instead continuing to help it
along even if only from the sidelines. Smith, 568 U.S. at 113 (quoting Hyde v.
United States, 225 U.S. 347, 369 (1912)); see also id. at 112–13 (noting that
even “[p]assive participation in the continuing scheme is not enough to sever
the meeting of the minds that constitutes conspiracy”). Because the evidence
did not compel a finding that Arata withdrew, there was no basis to disrupt
the jury’s verdict that he was a full-fledged conspirator. The jury verdicts
against him on the fraud counts can thus be sustained under Pinkerton if one
conspirator committed the individual offense.
B.
To prove those fraud offenses, the government had to show (1) a scheme
to defraud that employed false material representations, (2) the use of mail or
interstate wires in furtherance of the scheme, and (3) the specific intent to
defraud. See United States v. Kuhrt, 788 F.3d 403, 413–14 (5th Cir. 2015);
United States v. Brooks, 681 F.3d 678, 700 (5th Cir. 2012). One aspect of these
elements is the basis for a number of our rulings below, so it is worth
explaining now. The mailing or wire need not contain a falsehood. That act,
which serves as the unit of prosecution, just needs to further the fraudulent
scheme. Judge Brown explained the point this way six decades ago:
The thing sent through the mails need not, as impliedly urged, be
a cunning deceptive appeal which causes another to give up money
or property. It can be, and frequently is, a wholly innocent thing
or innocuous in itself, such as the deposit of a check, transmission
of a check from a collecting to a drawee bank, or the like. The thing
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which is condemned is (1) the forming of the scheme to defraud,
however and in whatever form it may take, and (2) a use of the
mails in its furtherance. If that is satisfied, more is not required.
Gregory v. United States, 253 F.2d 104, 109 (5th Cir. 1958); accord United
States v. Martin, 228 F.3d 1, 16 (1st Cir. 2000); United States v. Green, 786
F.2d 247, 249 (7th Cir. 1986). So while the mailing or wire must promote the
scheme in some manner, it need not contain a falsehood. See United States v.
Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997) (“Even a routine or innocent
mailing may supply the mailing element as long as it contributes to the
execution of the scheme.”). An interstate email that says “Meet me at the
bowling alley tonight” can serve as the necessary wire if the parties planned
the fraud while bowling a few frames that evening. 12
With this understanding of the limited role of the “in furtherance”
requirement, we consider the specific counts.
Counts 2, 4, and 7 (wire fraud): The jury convicted Peter and Arata of
wire fraud on Counts 2, 4, and 7. Each count concerns an email Arata sent
from a Yahoo account either to auditors at the Dienes firm or to state officials
in support of the company’s first cost report. Both the senders and recipients
resided in Louisiana. The district court overturned these convictions because
it did not believe there was evidence to establish that the emails travelled
outside the state. We disagree.
To prove that the email crossed state lines, the government called Yahoo
paralegal Sherry Hoyt. When Hoyt was asked whether Yahoo had any email
12 This principle means not much is needed to multiply wire fraud counts once the
government has proven the scheme to defraud with its requisite intent. With today’s
rampant use of email and other technology that often crosses state lines, it will usually not
be hard to identify scores of wires that further a scheme. Then again, adding all these counts
packs little additional punishment punch—one count of wire fraud already allows a sentence
up to 20 years—so there will rarely be a reason to go overboard. See supra note 9.
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servers in Louisiana between 2008 and the present, she responded “No.” When
asked whether an email would have to leave the state if it was sent from
someone in Louisiana using a Yahoo account to someone else in Louisiana, she
responded “Yes.” Defense counsel did an effective job on cross of showing the
limits of Hoyt’s technical knowledge. For example, when Peter’s counsel asked
whether Hoyt had any training in email message routing, she responded “No.”
And when Arata’s counsel asked whether an email from a Yahoo account to a
non-Yahoo account could be routed through a non-Yahoo server located in
Louisiana, Hoyt responded “I don’t know.”
This impeachment could have led jurors to conclude the government did
not prove the interstate nexus. But that did not happen, and we cannot
displace the jury’s contrary credibility determination. That is what the finding
of an interstate email amounted to. The jury heard direct testimony that
Yahoo emails had to leave the state. If they believed Hoyt, the wire element
was established because the testimony of a single witness is sufficient proof of
a fact. United States v. Bowen, 818 F.3d 179, 186 (5th Cir. 2016). That is true
even when that testimony is from an accomplice testifying in exchange for a
benefit, testimony the jury is told must be viewed with “caution” and “great
care.” Id.; see FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS (CRIMINAL) § 1.14.
Hoyt had no comparable incentive to lie, and the gaps in her knowledge did not
make it “incredible” to believe her testimony, especially when no contrary
evidence was presented at trial (an attorney’s unadopted question is not
evidence, so there was no evidence that the email could have been routed
intrastate). Bowen, 818 F.3d at 186 (explaining that a jury’s acceptance of a
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cooperator’s testimony should be rejected only if it was “incredible”). The
verdicts on these three counts will be reinstated. 13
Count 3 (wire fraud): The jury convicted Peter and Arata of wire fraud
on Count 3, which is a February 25, 2009 email sent by Arata to Peter
attaching the Seven Arts general ledger. There was no interstate problem with
this wire; it was sent from Arata in Louisiana to Peter in California. The
district court instead saw a problem with the “in furtherance” requirement.
Because the ledger had previously been sent to the Dienes firm and Peter
already had it in his possession, it concluded the email “in no way sought to
further the scheme.” Review of this count thus involves the “in furtherance of”
requirement that we have already explained is what connects the jurisdictional
act of sending a wire to the fraud. The use of the wires “need not be an essential
element” of the scheme; it can further the fraud as long as it is “incident to an
essential part of the scheme, or a step in the plot.” United States v. Dowl, 619
F.3d 494, 499 (5th Cir. 2010) (quoting Schmuck v. United States, 489 U.S. 705,
710–11 (1989)).
To achieve this scheme’s goal of swindling the tax credits, the defendants
had to submit cost reports, audit information, and supporting documents to
state authorities. Those submissions were thus an essential part of the scheme
even though that is not what the law requires for the wire. The email that is
the subject of Count 3 was a step in verifying those critical submissions before
they were sent. In it, Arata wrote Peter, “We should go through [the Seven
Arts ledger] carefully and make sure they are capturing all of the expenses.”
13These emails also clearly furthered the scheme to defraud Louisiana. Count 2 is an
email to the company’s auditor containing a payment certification related to construction
costs, Count 4 sent the company’s first cost report to Louisiana, and Count 7 is the subsequent
tender to the state of documentation supporting claimed equipment expenditures.
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Of course, the more expenses that were captured, the larger the tax credit. The
cost report was not submitted until the next day, February 26. Because this
email was sent to guarantee that Arata and Peter maximized the expenditures
that would be submitted to the state, the jury’s finding of guilt on Count 3 was
proper.
Count 5 (wire fraud): Count 5 concerns an email Arata sent to auditor
Davis and Peter, attaching the “executed SAFELA Operating Agreement
evidencing Voodoo’s 40% interest in this entity.” Arata closed the email by
saying he hoped the operating agreement “helps you and Peter wrap up the
[Seven Arts] audit” for the second cost report. The district court acquitted
Arata of this count on the ground that there was no actual evidence, only
speculation, of his intent to defraud in sending the operating agreement.
Regarding Peter, it held that the government produced no evidence that the
legal fees were actually improper, which implies there was no “material
falsehood.”
The district court again put more weight on the “in furtherance”
requirement than it has to carry. There need not be intent to defraud
particular to each wire but only with respect to the overall scheme. See Tencer,
107 F.3d at 1125; Gregory, 253 F.2d at 109. The district court found that
required intent for both Arata and Peter in refusing to acquit them on at least
some of the fraud counts as well as the conspiracy count. But it imposed an
unnecessary element in requiring that the particular attachment to the email
evince fraud. To illustrate this point, an email with no attachment that only
said “Please finish your review of the operating agreement so we can wrap up
the audit” would be one that furthered the scheme, as it would be a step toward
filing the cost report. As this is all that the law requires for the wire, this email
that also had an attachment was a step in the successful execution of the
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scheme because it put the conspirators one step closer to completing the audit.
The government did not have to prove that the legal fees standing alone were
false or fraudulent. 14 Because the email in Count 5 furthered the fraud
scheme, we reverse the postverdict acquittal.
Count 6 (wire fraud): We now arrive at a fraud count on which the district
court upheld a guilty verdict. It is an email from Seven Arts employee Mark
Halvorson to a state official that contained construction and film equipment
invoices related to the company’s first cost report. 15 The district court
concluded that the expenditures claimed in the email revealed an intent to
defraud. We agree as there was evidence of circular transactions between
accounts that had no legitimate business purpose yet made it look like
“payments” for construction work had been made. But the bigger point is the
one we are repeating: the wire need not be independently fraudulent to further
the overall fraud. We affirm the district court’s refusal to acquit Peter and
Arata on this count.
Counts 8, 10, & 12 (wire fraud): The jury convicted only Peter on these
counts. Each concerns emails either he or Seven Arts Vice President Marcia
Matthew sent to auditor Davis, with attachments showing proof of
expenditures related to the second cost report. The district court upheld the
convictions. Peter again argues a lack of fraud specific to these expenditures
14 In any event, we note there was evidence to that effect. See supra page 9–10 and
infra page 39.
15 Another part of the law on mailings and wires is that the government need not prove
that defendants personally used or intended the use of those communications. It is enough
that they knew the use would follow in the “ordinary course of business” or could reasonably
be foreseen. United States v. Ingles, 445 F.3d 830, 835 (5th Cir. 2006). The attachments in
Halvorson’s email supported the company’s position on the first cost report, which was the
subject of a chain of earlier emails between Peter and Stelly (with Arata carbon copied). Peter
and Arata knew or at the very least could reasonably foresee that this email would be sent.
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but, as we have explained, that showing is not necessary. As long as the
scheme to defraud employed misrepresentations, a truthful email that helped
advance the scheme can be the basis for a wire fraud conviction. It turns out
the jury could have viewed these claimed expenditures as fraudulent—for
example, the invoice that is the subject of Count 12 was supposedly for
construction expenses yet includes $350,000 in legal and notary fees and
$250,000 for auditors—but that was not necessary. We affirm these three
convictions.
Count 9 (wire fraud): The wire in Peter’s Count 9 conviction is an email
Davis sent to Peter about payment confirmation letters and film equipment
purchases that were necessary to complete the Dienes firm audit for the second
cost report. Peter argued below that his communication with Davis was part
of the normal “give and take” of the audit, that he made no material falsehoods,
and that the email was not in furtherance of a scheme to defraud. The district
court disagreed, finding the jury entitled to determine that he employed false
representations to the auditors so that fake equipment purchases would be
included in the report. Again, this finding was not necessary though it is
supportable as there was testimony from two witnesses—Richard Conway and
Simon Ellson—that the claimed purchase of film equipment from a British
company never happened. Regardless, the email was a step in completing the
audit, which was itself a step in gaining approval for the second cost report.
Because the email furthered the scheme to fraudulently obtain tax credits, the
conviction will be upheld.
Count 11 (wire fraud): The jury convicted both Peter and Susan on Count
11. This count concerns a December 2009 certification, created by Seven Arts
and signed by Susan. It lists payments for office space, consulting fees, and
project management fees totaling $700,000. Matthew sent the payment
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confirmation to Davis. The district court upheld the conviction. As is the case
with the communications we have already discussed, sending this certification
to the company’s auditor furthered the scheme to obtain tax credits. We will
not disturb the district court’s denial of the motions for acquittal on this count.
Count 13 (wire fraud): The jury convicted Peter and Arata on Count 13.
It is a December 2009 email from Matthew to Davis that included invoices for
roughly $350,000 in legal work allegedly done by Peter and Arata on 807
Esplanade as well as a loan agreement between Seven Arts and Susan’s New
Moon Pictures. The district court overturned Arata’s conviction on this count
but upheld Peter’s.
The district court found that Peter was not entitled to acquittal because
a rational juror could have concluded that the evidence supported a finding
that he created a nonexistent $10 million loan from New Moon and fake draws
on that loan, supported by circular transactions, in order to claim interest
expenditures. But that finding of fraud specific to this email was not necessary
for the reasons we have discussed. Emailing the invoices and loan agreement
furthered the scheme to obtain tax credits. Peter’s conviction will stand. The
district court granted an acquittal as to Arata because (1) the evidence was
insufficient to show he provided support for the legal fees and (2) he withdrew
from the conspiracy before the loan agreement was sent to the auditor. Our
earlier rejection of the withdrawal rationale takes care of both of these
concerns. As Peter caused those documents to be sent in furtherance of the
scheme, Pinkerton means Arata is also liable for that foreseeable act that
furthered the conspiracy he was still part of.
Counts 14–20 (wire fraud): The jury convicted Peter of wire fraud on
these seven counts. They are emails discussing material related to the
company’s second or third cost reports. Counts 14 through 18 concern
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documentation for expenditures eventually included in the second cost report
submission. Counts 19 and 20 relate to the same for the third cost report. The
district court, noting that Peter merely raised factual disputes that the jury
was entitled to resolve in the government’s favor, denied his motion for
acquittal on these counts. As finalizing the expenditures submitted to the state
was a core part of the fraud, these wires easily furthered Peter’s efforts to
defraud Louisiana of tax credits. We affirm the district court’s denial of the
motions to acquit on these counts.
Count 21 (mail fraud): The jury convicted all three defendants on Count
21. The mailing was a package Peter sent to forensic auditor Michael Daigle
containing materials supporting the second cost report. The district court
upheld the convictions of Peter and Susan, and so do we. As should be
apparent by now, this type of communication furthered the fraud because it
was an attempt to convince the auditor to approve the expenses. Because
Arata was still a member of the conspiracy at this time, the verdict against
him should also stand.
C.
In Counts 22 through 25, the jury convicted Arata of making false
statements to the FBI during an interview in January 2014. The district court
disagreed with those verdicts and acquitted Arata on all of them. The findings
of guilt should be reinstated if there was sufficient evidence to show that Arata
(1) knowingly and willfully (2) made a statement (3) that was false, (4)
material, (5) and within the jurisdiction of the FBI. United States v. Hoover,
467 F.3d 496, 499 (5th Cir. 2006). The viability of these jury verdicts turns
largely on the “knowing” and “falsity” elements.
Count 22: Essentially for the reasons the district court provided in
granting the Rule 29 motion, we affirm its ruling on this count. The jury found
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Arata lied when he said he “terminated his relationship” with Peter in the
summer of 2009. Arata had sent a letter ending the attorney-client
relationship and his day-to-day involvement in 807 Esplanade, so to support
the verdict the government has to advance a broad theory of “relationship” that
includes Arata’s limited involvement in the second cost report and other
business ventures that continued after that point. But the termination letter,
which Arata provided to the FBI, contemplates a number of ways in which his
relationship with Peter would continue outside the attorney-client context. In
light of these circumstances, there was not evidence to support a finding that
Arata knowingly provided a false statement in saying he terminated his
relationship with Peter.
Count 23: The jury convicted Arata on this count for saying he was “not
aware” of the legal fee expenses the company claimed in the second cost report.
The district court’s acquittal relied heavily on the FBI agent’s acknowledgment
that there was no evidence Arata saw the second cost report before its
submission. But the government correctly points out that one need not see a
document to be aware of it. There was certainly evidence that Arata knew
Peter intended to submit the legal fees in the second report. As we noted, Arata
told his business partner that “[Peter] wants to submit [the legal fees] for tax
credits. Ha! . . . [S]ince I was not his lawyer for the deal, it makes it even
better. What he could submit and what is actual are the bills he got from [other
attorneys]. But instead, he . . . puts me down as receiving $150K in fees! Love
it.” And there is evidence to show that Arata knew Peter went through with it
as he helped conceal this fraud. The auditor Davis testified that Arata sent
her the operating agreement showing his company Voodoo received a stake in
SAFELA; that verified the fees as Voodoo’s equity interest was how Arata was
paid for the supposed legal work. How can a person verify something they are
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not aware of? This evidence is sufficient to support the jury’s view that Arata
lied when he said he was not aware of the legal fees claimed in the second
report.
Counts 24: This count concerned Arata’s statement that the film
equipment listed in the company’s first cost report “had been ‘acquired’ in that
[it] would be contributed to 807 Esplanade by the vendor as a business
partner.” The equipment had neither been acquired nor contributed. Yet the
district court determined no evidence existed to support a finding that Arata
lied in voicing his belief that the Departure equipment deal “would be”
completed.
There is evidence to support the district court’s negative view of this
count. The equipment-for-ownership deal with Martin’s Departure Studios fell
through only after the first cost report was submitted. Departure sent Seven
Arts a list of film equipment valued at over $1 million in September 2008.
Peter signed an affidavit in November of that year attesting to the fact that
Seven Arts “acquired” film equipment that “w[ould] be delivered” upon
completion of 807 Esplanade. Martin also testified to his understanding that
equipment would be delivered to 807 Esplanade and that Departure would be
paid for it. In fact, Martin was under the impression that he would be a 25%
partner in the business, though he admitted that the arrangement “was not
formalized.” When asked at trial whether he believed the film equipment
transaction was “a real deal,” Martin responded “Yes.”
But there is also evidence in the other direction, and that is enough to
require deference to the jury’s finding the inculpatory evidence more
compelling. Most powerfully, evidence showed that Arata was a party to the
creation of fake equipment purchase invoices and payment certifications that
he then forwarded to the company’s auditors. Why engage in this fraud if
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Arata believed that Department Studios would in fact contribute the
equipment and that Seven Arts had already “acquired” it? If that were the
case, legitimate documentation would exist. Further support for the jury’s
finding is found in Arata’s indication in January 2009, before the first cost
report submission, that Seven Arts was already storing in its California office
sound mixing and editing equipment purchased from Departure Studios. That
was not true. We reverse the acquittal on Count 24.
Count 25: The final alleged false statement is Arata’s saying that he
“thought he fully disclosed both sides of the transactions for construction and
equipment expenditures to the auditors.” The government argued, and the
jury agreed, that Arata instead had purposely concealed those transactions.
The district court vacated the conviction because of its view that there was
insufficient evidence to support Arata’s intentional concealment of the circular
transactions.
There was sufficient support for the jury’s contrary view that Arata fully
disclosed only part of the transactions—the “first half” consisting of the
outgoing payments but not the money coming back into the accounts. In an
email to himself, for example, Arata attached invoices documenting both sides
of multiple circular transactions between Seven Arts and Departure, which
were routed through Regions Bank. He did the same for the Duvernay
transactions. But documentation showing credits to the company’s account, as
opposed to debits from it, was stripped from the emails provided to auditor
Katherine Dodge. The government admits that Arata did disclose the “second
halves” of these transactions to the auditor, albeit in the illegible form of
carbon copies of handwritten bank tickets. This stark contrast between the
clean documents showing the outgoing money and the barely discernible ones
showing that money coming back is not consistent with “fully disclos[ing]” the
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circular transactions. And Arata never stated in the body of the emails to the
auditor that the money cycled through the accounts. This is enough to get the
government past the low hurdle of sufficiency review, with “fully” doing a lot
of the work to show the falsity of the statement. We also reinstate this
conviction.
***
This is how things stand after the sufficiency review. Peter is convicted
of all 21 counts, which includes one count of conspiracy (Count 1), nineteen
counts of wire fraud (Counts 2–20), and one count of mail fraud (Count 21).
Arata is convicted of one count of conspiracy (Count 1), six counts of wire fraud
(Counts 2–7), one count of mail fraud (Count 21), and three counts of making
a false statement (Counts 23–25). Susan is convicted of one count of conspiracy
(Count 1), one count of wire fraud (Count 11), and one count of mail fraud
(Count 21).
IV.
We next address defendants’ motions for a new trial. The district court
denied defendants the “exceptional remedy of a new trial,” even on the
contingency—now realized—that we were to reverse its acquittals.
Unlike the sufficiency review we just conducted, which evaluates a jury’s
findings and thus gives no deference to the trial judge, the decision on a new
trial motion is entrusted to the discretion of the district court so we will reverse
it only on an abuse of that leeway. United States v. Piazza, 647 F.3d 559, 564
(5th Cir. 2011). The trial court may grant a new trial “if the interest of justice
so requires.” FED. R. CRIM. P. 33(a). New trial requests generally take two
forms. The first, like sufficiency review, focuses on the evidentiary support for
the verdict, with the movant having to show that the verdict is so strongly
against the weight of the evidence that it affects the defendant’s substantial
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rights. United States v. Wright, 634 F.3d 770, 775 (5th Cir. 2011). A new trial
request can also be based on procedural problems with the trial if they caused
a miscarriage of justice. Id. The defendants pursued both avenues in the trial
court but only appeal the ruling as to the alleged procedural defects.
A.
Defendants raise four grounds for a new trial. Arata argues that the
government repeatedly used improper trial tactics, leading to an unjust
verdict. 16 When a new trial is sought for prosecutorial misconduct, any
improper remark must impact the defendant’s substantial rights. United
States v. Rice, 607 F.3d 133, 138 (5th Cir. 2010).
In its opening statement, the government said the defendants “utterly
abused the Louisiana film tax credit program, and in the process they took
advantage of and exploited every human being that they could.” The district
court called this “[f]alse theater.” But such theater was not so far afield from
the theory and evidence the government presented throughout trial; evidence
that it turns out was sufficient to sustain multiple convictions against Arata.
As such, the district court acted within its discretion in deciding that any
hyperbole did not require a new trial. The same is true for Arata’s complaints
16 In their reply, Peter and Susan advanced arguments of retroactive misjoinder,
admission of privileged communications, and prosecutorial misconduct that were only
“noticed” in the table of contents of their opening brief. Failure on appeal to adequately brief
an issue waives it. Procter & Gamble Co. v. Amway Corp., 376 F.3d 496, 499 n.1 (5th Cir.
2004). Citing an issue in the table of contents but then not addressing it in the body of the
brief obviously does not constitute adequate briefing. See FED. R. APP. P. 28(a)(8)(A) (noting
that an appellant’s argument must contain “contentions and the reasons for them, with
citations to the authorities and parts of the record on which the appellant relies”). The reason
we do not allow new arguments in a reply is that the other side does not have a chance to
respond. That problem exists when all the opening brief does is provide one sentence on an
issue in the table of contents. Trying to raise an argument only by listing it in the table of
contents is also an end run around page limits.
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about how the government framed questions to witnesses. For example, it
asked Arata’s business partner whether Arata said he “called Katie Davis and
told her that the operating agreement was substantiation for the legal fees?”
Davis had not testified to that fact, though she speculated that Arata
submitted the operating agreement to support payment of the disputed legal
fees. Though the district court deemed these questions “utterly inappropriate,”
it determined that Arata could not show that they “caused any prejudice” in
the scope of a trial that lasted two weeks. We agree.
B.
The Hoffmans point to three trial court rulings in seeking a new trial.
They first contend that the instruction telling the jury it is “not necessary that
the government prove that the defendants violated, or intended to violate a
Louisiana state legal duty, law rule or regulation” amended the indictment.
Improper constructive amendment occurs when the jury is allowed “to convict
the defendant upon a factual basis that effectively modifies an essential
element of the offense charged.” United States v. Cooper, 714 F.3d 873, 878
(5th Cir. 2013) (quoting United States v. Gonzalez, 436 F.3d 560, 577 (5th Cir.
2006)). That did not happen. Contrary to the Hoffmans’ contention, the
indictment did not charge them with violating state law. It charged them with
making various misrepresentations—lies about the company’s expenditures,
the creation of purchase invoices, and the purpose of circular transactions.
Using such lies in furtherance of a scheme to defraud violates federal law
regardless whether they independently violate state law. See United States v.
Dotson, 407 F.3d 387, 393 (5th Cir. 2005).
C.
The Hoffmans also argue they are entitled to a new trial because the
district court rejected their proposed jury instructions, including one on the
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meaning of the tax credit statute. As long as the instructions it gives
accurately state the law, a district court is given “substantial latitude” in the
particulars of how it instructs the jury. United States v. Richardson, 676 F.3d
491, 506–07 (5th Cir. 2012). On top of that is the discretion it receives here
because this issue is being raised in a challenge to the denial of a new trial
motion. That deference is not pierced by the failure to instruct on details about
the tax credit law given that the instruction accurately informed the jury of
the elements of mail and wire fraud. United States v. Cessa, 856 F.3d 370, 376
(5th Cir. 2017) (finding no abuse of discretion when the court gave the correct
instruction even if defendant’s requested addition was also legally accurate).
D.
The Hoffmans’ final basis for a new trial is the district court’s decision to
exclude expert testimony about the film tax credits. They contend the
testimony would have highlighted the confusing nature of the regulations and
thus shed light on their intent to defraud (that is, their lack thereof). Deference
to trial court rulings in this area again poses a significant hurdle. Cf. United
States v. Guerrero, 768 F.3d 351, 365 (5th Cir. 2014) (acknowledging that
Daubert decisions are reviewed for abuse of discretion and should not be
disturbed unless “manifestly erroneous” (quoting United States v. Norris, 217
F.3d 262, 268 (5th Cir. 2000))). It appears the district court could have allowed
this testimony so long as it was focused on descriptions of the tax credit regime
and not opinions about the defendants’ mindsets. Compare United States v.
Calvin, 39 F.3d 1299, 1309 (5th Cir. 1994) (“By disallowing that testimony the
district court deprived [the defendant] of an opportunity to present critical
evidence that he lacked fraudulent intent in assisting with the transactions.”),
and United States v. Davis, 471 F.3d 783, 789 (7th Cir. 2006) (“Experts are
permitted to testify regarding how their government agency applies rules as
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long as the testimony does not incorrectly state the law or opine on certain
ultimate legal issues in the case.”), with FED. R. EVID. 704 (noting that an
expert witness testifying in a criminal case “must not state an opinion about
whether the defendant did or did not have a mental state . . . that constitutes
an element of the crime charged or of a defense,” even though opinion
testimony embracing “an ultimate issue” is not generally objectionable).
But we need not determine whether the district court exceeded the
bounds of its discretion in excluding the testimony because the byzantine
nature of the tax credit program was otherwise conveyed to the jury. As the
district court noted, “evidence at trial showed that [the] then-newly passed film
infrastructure tax law was implemented haphazardly and in a manner rife
with disorder.” Plenty of witnesses involved in the creation and evaluation of
the cost reports—including Seven Arts employees, auditors, state officials, and
business partners (actual and contemplated)—made this point that the
Hoffmans contend undermines a finding of fraudulent intent. What is more,
Peter, a self-professed tax lawyer, testified at length about his understanding
of the statute’s language and purpose. So did Arata, also a lawyer, who noted
that the state did not even pass rules interpreting the statute until 2010. Thus
any error in not allowing the expert to testify did not cause substantial
prejudice.
***
No ruling during the trial caused a miscarriage of justice. There is no
basis for redoing it.
V.
Having upheld the jury’s verdict in large part, we now consider
sentencing. The government argues the probation sentences are unreasonable
in light of the much greater sentences recommended by the Guidelines.
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Appellate review of the substantive reasonableness of a sentence is “highly
deferential.” United States v. Campos-Maldonado, 531 F.3d 337, 339 (5th Cir.
2008). It is not enough that “the appellate court might reasonably have
concluded that a different sentence was appropriate.” Gall v. United States,
552 U.S. 38, 51 (2007). An abuse of discretion must be shown to undo the
decision of the trial judge who is in the best position to weigh the sentencing
factors. Id. at 51–53. Even sentences like these that are outside the Guidelines
range are reviewed with deference, though they are not entitled to the
presumption of reasonableness that a within-Guidelines sentence may be
afforded on appellate review. Id. at 51.
The dissenting opinion emphasizes this discretion. But while
considerable deference is due the sentencing court given the bespoke nature of
criminal punishment, the Supreme Court preserved a role for appellate review
when it ruled that the Guidelines were only advisory. See United States v.
Booker, 543 U.S. 220, 261–265 (2005). Rather than reverting to the pre-
Guidelines situation when there was essentially no reasonableness review of a
sentence, Koon v. United States, 518 U.S. 81, 96 (1996), the Court concluded
that appellate review would assist in “avoid[ing] excessive sentencing
disparities while maintaining flexibility sufficient to individualize sentences
where necessary,” Booker, 543 U.S. at 264–65. Consistent with that concern
about disparities, appellate courts “may consider the extent of the deviation”
from the Guidelines when performing their limited function as a check on
extreme ones. Gall, 552 U.S. at 51.
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A.
For Peter, the gap is colossal between the custodial sentence the
Guidelines recommended, a range 168 to 210 months, 17 and the 60 months of
probation he received. 18 His counsel acknowledged that he was not aware of
our court’s considering any challenge to a sentence in which the downward
variance was so great. This chasm between the Guidelines’ view of the
appropriate sentence and the district court’s, with its ramifications for the
sentencing disparities that Congress instructs courts to avoid, see 18 U.S.C.
§ 3553(a)(6), is an important factor in considering whether the district court
exceeded its discretion. Gall, 552 U.S. at 49–50 (noting it is “uncontroversial
that a major departure should be supported by a more significant justification
than a minor one”). But what ultimately matters is whether its assessment of
the statutory sentencing factors was reasonable, so we consider both the
reasons why the district court thought probation was warranted and the
reasons why the Guidelines and government think prison time is necessary.
17 There is some suggestion that the district court did not determine a final Guidelines
range. But the Statement of Reasons it signed after the sentencing hearing confirms that
the district court adopted the Presentence Report’s recommended range of 168 to 210 months.
18 Our reinstatement of five guilty verdicts on which the district court had acquitted
Peter does not pose an obstacle to our review of the sentences for the counts on which the
court did enter judgment. The reversals turned on issues like whether there was sufficient
evidence that particular emails crossed state lines or furthered the scheme. None of these
questions affect Peter’s overall culpability. His Guidelines calculation captured the loss
attributable to the entire scheme, so the reinstated counts will not affect that. It is for this
reason that we voiced skepticism about the need to charge and convict Peter of all 21 counts.
See supra note 9. As the reinstatement of the additional counts does not alter the Guidelines
or change any other sentencing consideration, we will review the reasonableness of the
sentences that were entered. Cf. United States v. Weingarten, 713 F.3d 704, 712 (2d Cir.
2013) (“[I]f the vacatur of a count of conviction has altered the ‘factual mosaic related to’ the
remaining counts, on remand ‘the court must reconsider the sentence imposed on the count
or counts affected by the vacatur . . . as well as on the aggregate sentence.’” (quoting United
States v. Rigas, 583 F.3d 108, 118–19 (2d Cir. 2009))).
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Why was Peter’s Guidelines range so high? To the base offense level for
fraud offenses, the Guidelines added enhancements because the intended loss
exceeded $3.5 million, the scheme was sophisticated, Peter led it, he abused
his position of trust as a lawyer to facilitate the fraud, and he obstructed justice
by lying at trial. These facts are relevant to numerous statutory factors courts
must consider, including the “nature and circumstances of the offense,”
“history and characteristics of the defendant,” and “need for the sentence
imposed to reflect the seriousness of the offense.” 18 U.S.C. § 3553(a)(1),
(a)(2)(A). It is also noteworthy that this was not Peter’s first brush with the
law as is often true in white-collar cases; 19 he has a 1997 federal conviction,
albeit a misdemeanor, for delivering a false tax return.
So why did the district court believe probation was appropriate? The
main reason seems to have been what it described as a “serious dispute” that
the project may have eventually been entitled to even more tax credits than
were fraudulently obtained with the first cost report. When pronouncing
sentence it also noted a related concern about inconsistency in the state’s view
about how much it lost, as well as Peter’s “health issues,” the fact that his prior
federal conviction was a misdemeanor, and its view that a sentence of
probation “is sufficient to deter other criminal conduct.”
We disagree with that final assessment about the deterrent value of
Peter’s sentence. Giving probation to the leader of a sophisticated,
multimillion dollar fraud scheme—particularly a defendant undeterred by a
previous term of probation for a federal economic crime and who also lied at
trial—perpetuates one of the problems Congress sought to eliminate in
19 Federal fraud defendants are less likely to have criminal history than any other
category of offenders except those convicted of child pornography. UNITED STATES
SENTENCING COMMISSION, THE CRIMINAL HISTORY OF FEDERAL OFFENDERS 4–6 (2018).
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creating the Sentencing Commission: that sentencing white-collar criminals to
“little or no imprisonment . . . creates the impression that certain offenses are
punishable only by a small fine that can be written off as a cost of doing
business.” United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006)
(quoting S. Rep. No. 98-225, at 76 (1983)); see also Mistretta v. United States,
488 U.S. 361, 375 n.9 (1989) (noting the Senate Report’s view that sentencing
had been too lenient for white-collar criminals); Brent E. Newton, The Story of
Federal Probation, 53 AM. CRIM. L. REV. 311, 315 & n.29 (2016) (reciting the
extensive legislative history showing that Congress intended for many white-
collar defendants to receive prison time). 20 This ineffective deterrence is
especially concerning given that scholars believe there is a greater connection
in white collar cases between sentencing and future as financial crimes are
“more rational, cool, and calculated than sudden crimes of passion or
opportunity.” Martin, 455 F.3d at 1240 (quoting Stephanos Bibas, White-
Collar Plea Bargaining and Sentencing After Booker, 47 WM. & MARY L. REV.
721, 724 (2005)). Another problem with probation in multimillion dollar fraud
20 The Guidelines recognize this history:
Under pre-guidelines sentencing practice, courts sentenced to probation an
inappropriately high percentage of offenders guilty of certain economic crimes,
such as theft, tax evasion, antitrust offenses, insider trading, fraud, and
embezzlement, that in the Commission’s view are “serious.”
The Commission’s solution to this problem has been to write guidelines that
classify as serious many offenses for which probation previously was frequently
given and provide for at least a short period of imprisonment in such cases.
The Commission concluded that the definite prospect of prison, even though
the term may be short, will serve as a significant deterrent, particularly when
compared with pre-guidelines practice where probation, not prison, was the
norm.
U.S.S.G. ch. 1, pt. A(4)(d).
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cases is that it undermines public confidence in whether the justice system is
“do[ing] equal right to the poor and to the rich” as our oath requires. 28 U.S.C.
§ 453. For these reasons, we have repeatedly expressed a “distaste for
sentencing that reflects different standards of justice being applied to white
and blue collar criminals,” United States v. Saleh, 257 F. App’x 740, 745 (5th
Cir. 2007) (citing United States v. Andrews, 390 F.3d 840, 848 (5th Cir. 2004));
see also United States v. Mueffelman, 470 F.3d 33, 40 (1st Cir. 2006) (noting
the need to minimize “discrepancies between white- and blue-collar offenses”).
Peter’s second sentence of probation in the federal system does not deter
large-scale fraud or reflect the serious nature of either this offense or economic
crimes generally. 18 U.S.C. § 3553(a)(1), (a)(2)(A)–(B). It also results in
significant and unwarranted sentencing disparities with others engaged in
frauds of similar magnitude who receive sentences at least in the ballpark of
what the Guidelines recommend. Id. § 3553(a)(6). Some of the reasons the
district court gave for its sentence, especially the uncertainty about whether
Louisiana ultimately suffered any loss, are sound reasons for a downward
variance, even a substantial one. But this is not a case in which the court went
50%, or even 75%, below the Guidelines range. 21 It went from roughly 15 years
in prison to zero. In reviewing the reasonableness of a Booker sentence, the
Supreme Court recognized that “custodial sentences are qualitatively more
severe than probationary sentences of equivalent terms.” Gall, 552 U.S. at 43,
21 The dissenting opinion treats the sentence as a 72% variance. Dissenting Op. at 7.
It does this by equating 60 months of probation with 60 months in custody (so 60 is a 72%
reduction from the 168 low end of the Guidelines). That notion is easily dispelled almost
every day in this circuit when defendants plea for probation at sentencing hearings. And as
discussed above, treating sentences of probation and custody as equivalent is also at odds
with the views of Congress and the Supreme Court. Finally, even ignoring the qualitative
differences, a 72% variance is much more substantial than many cases in which courts have
found downward variances in white-collar cases to be unreasonable. See infra note 22.
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48, 59–60. Here the substantial qualitative difference between custody and
probation is combined with a drastic reduction in the length of the
punishment—168 months to 60 months. Other courts of appeals have vacated
variances of much lesser degree that benefitted white-collar defendants. 22
What is more, none of those defendants had a prior white-collar conviction and
most of them accepted responsibility by pleading guilty. See supra note 22.
The dissenting opinion ignores Peter’s criminal history as well as other
factors favoring a meaningful sentence such as Peter’s lying in court, using his
position as a lawyer to facilitate the fraud, and leading a sophisticated
conspiracy. 18 U.S.C. § 3553(a)(1) (listing “history and characteristics of the
defendant” and “nature and circumstances of the offense” as factors to consider
in imposing a sentence). It instead focuses on the district court’s later
conclusion in its restitution order that Louisiana did not end up suffering a
22 See, e.g., United States v. Morgan, 635 F. App’x 423, 448–52 (10th Cir. 2015) (finding
that the case “cries out for appellate intervention” and requiring resentencing because a
noncustodial sentence, in the face of a 41 to 51 month guidelines range, would not deter public
officials from soliciting bribes); United States v. Hayes, 762 F.3d 1300, 1307–10 (11th Cir.
2014) (finding sentence of three years of probation unreasonable when Guidelines range was
41 to 51 months even though defendant had cooperated); United States v. Musgrave, 761 F.3d
602, 609 (6th Cir. 2014) (noting, in vacating the district court’s one-day prison sentence in
the face of a 57 to 71 months guidelines range, that “Congress understood white-collar
criminals to be deserving of some period of incarceration, as evidenced by its prohibition on
probationary sentences in this context”); United States v. Kuhlman, 711 F.3d 1321, 1325,
1328–29 (11th Cir. 2013) (finding probation sentence unreasonable when Guidelines range
was 57 to 71 months); United States v. Peppel, 707 F.3d 627, 635 (6th Cir. 2013) (finding
seven days plus three years supervised release unreasonable when Guidelines range was 97
to 121 months); United States v. Engle, 592 F.3d 495, 497–98, 501–04 (4th Cir. 2010)
(vacating a sentence of 48 months’ probation for tax evasion when the Guidelines range was
24 to 30 months in prison); United States v. Livesay, 587 F.3d 1274, 1279 (11th Cir. 2009)
(vacating a sentence of 60 months’ probation in light of defendant’s 78 to 97 months
Guidelines range and holding that “any sentence of probation would be unreasonable given
the magnitude and seriousness” of his conduct); Martin, 455 F.3d at 1230, 1241–42 (vacating,
when defendant’s Guidelines range was 108 to 135 months imprisonment, a seven-day
sentence after the court of appeals had previously rejected a sentence of 60 months’
probation).
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loss as a justification for the extreme variance. No doubt loss is a key—often
the key—factor in sentencing a fraud defendant. But it is not the exclusive
concern. Congress and the Sentencing Commission have commanded that
courts conduct a holistic evaluation that includes the troubling features of
Peter’s conduct and history we have just mentioned. Id. § 3553(a); U.S.S.G.
§ 2B1.1.
Even just considering loss, Peter is not the Chamber of Commerce hero
the dissenting opinion makes him out to be. In talking only about the state’s
actual loss, it neglects that Peter would have stolen millions from the state if
it had not detected his scheme. Dissenting Op. at 3–5. The Guidelines say to
use intended loss when that is greater than actual loss, U.S.S.G. § 2B1.1 app.
note 3(A) & 3(A)(ii), the reason being that a fraudster’s intent reflects his
culpability, ROGER W. HAINES, JR. ET AL., FEDERAL SENTENCING GUIDELINES
HANDBOOK 275 (2002) (explaining that “intended loss is a direct measurement
of culpable mental state”); Frank O. Bowman, Coping With “Loss”: A Re-
examination of Sentencing Federal Economic Crimes Under the Guidelines, 51
VAND. L. REV. 461, 558–60 (1998) (explaining that a focus on intended loss
makes sense for “moral and utilitarian considerations”). Indeed, that is why it
has long been against the law to attempt a crime even if one does not succeed.
Id. at 559 (“The Sentencing Commission provided an increase in offense level
for ‘intended loss’ for the same reasons that substantive criminal liability is
imposed for inchoate crimes like attempt and conspiracy.”); see also Francis
Bowes Sayre, Criminal Attempts, 41 HARV. L. REV. 821, 822–837 (1928)
(tracing the criminalization of attempts back to the Star Chamber and treatise
of Sir Edward Coke).
Judged by this telling measure of culpability, Peter tried to steal $2
million from Louisiana beyond what his project earned when all was said and
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done. The district court credited testimony from a state auditor indicating that
expenditures on the project would have ended up qualifying Seven Arts for
about $1.6 million in tax credits even though the claims were false when
submitted. That figure exceeds the roughly $1.1 million issued and later
revoked, which is what the dissenting opinion emphasizes. 23 But it neglects
that Peter submitted false claims totaling more than $9.1 million, 40% of which
would have resulted in over $3.6 million in credits. Only the state’s vigilance
in discovering the circular transactions and phony expenditures kept it from
being cheated out of the additional millions. 24
That this fortuity of having been caught should not fully excuse Peter’s
complex scheme can be shown with an analogy to a “blue collar” theft. Consider
a thief who steals $2 million dollars of jewelry from a store. If police catch him
leaving the store and recover the stolen goods, is it likely that a no-harm-no-
foul argument would result in a sentence of probation? Of course not. Looking
only at actual loss in fraud cases where the fraudster is caught in the act is
thus another implicit way in which “different standards of justice [may be]
23 Notably, for the first application which is the only one the state approved, the project
did not end up earning the all the credits it received. It was entitled to only $860,000
according to the state auditor the district court credited. That is why in calculating forfeiture
the court used $272,480.80 as the amount Seven Arts received above what it ended up
earning on the first application. So looking just at the first application, the state did lose
money.
The district court found that state did not ultimately lose money on the entire project
because it would have qualified for $1.6 million in credits. As discussed above, however, that
is far less than the $3.6 million in credits that Peter sought and would have fraudulently
received had the state not detected his fraud.
24 Even if the project ended up receiving all the credits that Peter sought, submitting
false claims to obtain the credits before they were earned ran a significant risk that Louisiana
would not be made whole. As is the case for any business enterprise, it was far from a
guarantee that the facility would end up being built. Any number of economic, personal,
regulatory, or—this being New Orleans—weather-related hardships could have prevented
the completion of the project. Part of why intended loss is relevant to a sentencing court is
that it captures “the degree of risk the defendant’s behavior posed.” Bowman, supra, at 560.
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applied to white and blue collar criminals.” Saleh, 257 F. App’x at 745. The
victim being made whole can certainly be a mitigating factor at sentencing, but
it does not justify the degree of leniency afforded Peter given his attempt to
receive millions more in tax credits than the project ever earned. See Bowman,
supra, at 559 (explaining that the law punishes attempts in part because luck
plays a role in whether people engaging in equally blameworthy conduct
succeeds).
Determining the outer boundaries of a sentencing judge’s discretion is
admittedly a judgment call. But looking at the entire sentencing landscape,
we readily conclude that this sentence exceeded those bounds. Peter’s scheme
was a serious one that involved creating bogus financial transactions in an
effort to mislead a state agency into issuing almost $4 million in tax credits.
One only needs to have read this opinion to see the tangled web of financial
maneuvers Peter wove. Add to that his criminal history, perjury, and use of
his position as a lawyer to further the crime. The result is that giving Peter
probation was a variance too far.
We vacate the sentences of probation and remand for resentencing on
those counts, along with the ones we reinstated, consistent with the principles
we have just discussed.
B.
If our review of Peter’s sentence shows the limits of a district court’s
sentencing discretion, our review of Susan’s demonstrates its extent. She too
received a sentence of probation (three years). But her Guidelines range was
much lower than Peter’s; it recommended a prison term of 46 to 57 months.
This reflects her far less substantial role in the offense. As the district court
observed, witnesses “scarcely mentioned” her during the trial. Whereas Peter
dove head first into the fraud, Susan just dipped her toes in it. That is enough
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to sustain her convictions for the reasons we have explained. But a person’s
role in the offense is a critical factor in sentencing. In addition to not being a
leader of the fraud, Susan does not have any criminal history, did not commit
perjury, and did not abuse a position of trust. To be sure, even if not nearly as
great as Peter’s, the downward variance she received was substantial. It is of
similar scope to some we just cited that other courts have vacated. See Engle,
592 F.3d at 495. But the extent of a variance is just one consideration in
reviewing the substantive reasonableness of a sentence. That review is highly
factbound, so one can also find decisions affirming downward variances similar
to the one Susan received. See, e.g., United States v. Rowan, 530 F.3d 379,
380–81 (5th Cir. 2008) (affirming a sentence of 60 months supervised release
on child pornography charges despite a guidelines range of 46 to 57 months).
And on the flip side, we have upheld a number of upward variances of similar
and sometimes much greater magnitude. See, e.g., United States v. Hebert, 813
F.3d 551, 561–63 (5th Cir. 2015) (upholding a variance of 1214% from the high
end of the Guidelines range); United States v. Urbina, 542 F. App’x 398, 398–
99 (5th Cir. 2013) (affirming a 60-month sentence that was 329% higher than
the Guidelines range maximum); United States v. Brantley, 537 F.3d 347, 349–
50 (5th Cir. 2008) (upholding a 180-month sentence that was 253% higher than
the maximum end of the Guidelines range); United States v. Mejia-Huerta, 480
F.3d 713, 717–18, 723 (5th Cir. 2007) (affirming a 120-month sentence that
exceeded the high end of the Guidelines range by 344%). Booker discretion is
not a one-way street. We defer to both upward and downward variances so
long as the district court provides an explanation tailored to the statutory
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sentencing factors that is not outside the bounds of reasonableness. It did so
in sentencing Susan to probation. 25
C.
Arata’s Guidelines range was, at 108 to 135 months, higher than Susan’s
but lower than Peter’s. That is consistent with his relative role in the scheme.
We do not address the substantive reasonableness of his probation sentence,
however, because the reinstatement of certain counts may influence
sentencing. Cf. Weingarten, 713 F.3d at 712 (explaining how an altered
“factual mosaic” may affect resentencing). For at least one thing, our reversal
of some of the false statement counts means that Arata lied to the FBI in
connection with the investigation. Obstruction of justice is a relevant
sentencing consideration. We thus vacate his probation sentences without
opining on their propriety to allow the district court to sentence him in the first
instance under the new landscape resulting from our sufficiency review.
VI.
The final issue is forfeiture. Arata and the government challenge the
district court’s $223,434.25 award. 26 As opposed to restitution which is
remedial, forfeiture is punitive. The aim of a forfeiture award is to take any
25 The government also alleges the district court committed procedural error in
deciding Susan’s sentence, but we reject that claim.
26 The Hoffmans brief forfeiture only in their reply, when they challenge the amount
awarded and also a couple procedural aspects of the order. As with some of their new trial
arguments, see supra note 16, they only include these issues in the table of contents of their
opening brief. That is not sufficient. Id. In any event, we note that there is no problem with
the timing of the forfeiture, and the Hoffmans cannot establish plain error with respect to
the district court’s failure to ask whether the parties wanted a jury to decide forfeiture.
United States v. Valdez, 726 F.3d 684, 699 (5th Cir. 2013) (noting that the failure to inquire
whether parties wanted the jury to decide forfeiture did not meet the third and fourth
requirements for plain-error correction when evidence supported the court’s award).
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ill-gotten gains from a defendant. See United States v. Taylor, 582 F.3d 558,
566 (5th Cir. 2009).
Arata contends no forfeiture should have been awarded based on his
view that the project ultimately qualified for more tax credits than it received.
The government argues the award should have reflected the full $1,132,480.80
in issued credits without any reduction for amounts the project ultimately
earned or the street value of the credits. In calculating forfeiture, the district
court started with that $1,132.480.80 in issued credits. It then subtracted the
$860,000 in tax credits a state accountant testified Seven Arts was entitled to.
This put the amount at $272,480.80. The court then valued the tax credits in
light of the 82 cents on the dollar the company received when it sold them.
Applying that ratio to the illegal credits received resulted in the award of
$223,434.25 (272,480.80 x .82).
We find no clear error in this calculation. The district court was entitled
to offset the forfeiture with the amount of credits Seven Arts ultimately earned
according to the state accountant, a number Arata says was too low and the
government too high. Using that figure and the adjustment for the market
value of the credits was a reasonable means of ascertaining what the
defendants gained from their fraud, which is the measure of forfeiture. 27 We
affirm the forfeiture award.
27 Honeycutt v. United States held that defendants could not be held jointly and
severally liable for proceeds derived from narcotics offenses that the defendants did not
themselves acquire. 137 S. Ct. 1626, 1630 (2017). We have since applied that holding to
forfeiture for health care fraud. See Sanjar, 876 F.3d at 748–50. The defendants do not
invoke Honeycutt, however, perhaps because all three were Seven Arts co-owners and
therefore “acquired” the ill-gotten tax credits.
58
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c/w 16-30226, 16-30013, 16-30527
***
To recap our many rulings: We AFFIRM the district court’s denial of
defendants’ motions to dismiss the indictment. We AFFIRM the district court’s
denial of defendants’ motions for judgment of acquittal, and AFFIRM in part
and REVERSE in part the district court’s grant of defendants’ motions for
judgment of acquittal. We AFFIRM the district court’s denial of defendants’
motions for new trial. We AFFIRM the district court’s forfeiture award.
Finally, we VACATE Peter Hoffman’s sentence and REMAND for
resentencing. We AFFIRM Susan Hoffman’s sentence. And we VACATE
Arata’s sentence and REMAND for resentencing.
59
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c/w 16-30226, 16-30013, 16-30527
JAMES L. DENNIS, Circuit Judge, concurring in part and dissenting in part:
Though I concur in most of the majority’s opinion, I respectfully disagree
with the conclusion that the district court abused its discretion by sentencing
Peter Hoffman to five years of probation and a $40,000 fine. Because I would
affirm Peter’s sentence, I respectfully dissent as to part V(A).
1. The Importance of Sentencing Judges’ Discretion
As the Supreme Court explained in Gall v. United States: “the sentencing
judge is in a superior position to find facts and judge their import under [18
U.S.C.] § 3553(a) in the individual case. The judge sees and hears the evidence,
makes credibility determinations, has full knowledge of the facts, and gains
insights not conveyed by the record.” 552 U.S. 38, 51–52 (2007) (citations and
quotation marks omitted). “It has been uniform and constant in the federal
judicial tradition for the sentencing judge to consider every convicted person
as an individual and every case as a unique study in the human failings that
sometimes mitigate, sometimes magnify, the crime and the punishment to
ensue.” Id. at 52 (citations and quotation marks omitted). Accordingly, “the
Court of Appeals should . . . give[] due deference to [a] District Court’s reasoned
and reasonable decision that the § 3553(a) factors, on the whole, justified the
sentence.” Id. at 59–60. These § 3553(a) factors include “the nature and
circumstances of the offense” and “the history and characteristics of the
defendant,” as well as the need “to reflect the seriousness of the offense” and
“provide just punishment.” 18 U.S.C. § 3553(a). The statute prescribes that
district courts “shall impose a sentence sufficient, but not greater than
necessary, to comply with [these] purposes.” Id.
60
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c/w 16-30226, 16-30013, 16-30527
2. The District Court Did Not Abuse Its Discretion
As the majority acknowledges, the district court in this case committed
no procedural error: it correctly calculated the applicable Guidelines range,
allowed both parties to present argument on what they believed to be an
appropriate sentence, considered the § 3553(a) factors, and explained its
reasoning before issuing Peter’s sentence. The remaining question for this
Court is thus whether the resulting sentence was substantively reasonable—
i.e., whether the district court abused its discretion in determining that the
§ 3553(a) factors supported a sentence of probation and a considerable variance
from the Guidelines range. After only briefly addressing the uniquely unusual
facts of this case (which I detail below), the majority decrees that the sentence
of five years of probation and a fine of $40,000 effectively reduced the sentence
to “zero” and was “a variance too far.” Maj Op. at 51, 55. Respectfully, I must
conclude the majority is mistaken, as its analysis fails to apply the requisite
deference to the district court’s decision. Notably, we “must review all
sentences—whether inside, just outside, or significantly outside the Guidelines
range—under a deferential abuse-of-discretion standard.” Gall, 552 U.S. at
41.
This case features all the hallmarks the Supreme Court has indicated
require appellate courts to grant considerable deference to district courts’
determination of sentences. As the district court explicitly stated at Peter’s
sentencing, it was “intimately familiar” with the circumstances of this case: it
oversaw a lengthy jury trial and subsequently issued a detailed, 124-page
ruling on defendants’ motions for acquittal. In this order, the district court
noted that the defendants “spent more than $5 million turning the dilapidated
mansion at 807 Esplanade Avenue into a state-of-the-art post-production film
61
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c/w 16-30226, 16-30013, 16-30527
studio (a studio that is in operation today and has serviced post-production
needs for movies and television series).” Not only did this studio ultimately
earn the tax credits the defendants received, the credits received were
ultimately less than what the defendants were entitled to. 1 At sentencing, the
district court appeared to accept the defense’s related assertion that the state
was not a victim, and instead “got exactly what [it] asked for:” a completed,
multimillion-dollar post-production studio. Recognizing these unusual
circumstances, the district court reached a critical conclusion: “This is not an
ordinary fraud case.”
The majority, in contrast, gives short shrift to these unique extenuating
circumstances. The majority acknowledges in its brief introduction that,
thanks to newly developed post-production infrastructure funded through its
tax credit incentive program, Louisiana has “enjoyed considerable success” in
its efforts to “become a place where films are made.” Maj. Op. at 2. However,
when evaluating the seriousness of Peter’s conduct, it then fails to take into
account how Louisiana has benefited, and continues to benefit from, completed
film infrastructure projects like this one. Completed post-production studios
like 807 Esplanade were precisely what Louisiana elected to invest in when it
codified its intention “to encourage development in Louisiana of a strong
capital and infrastructure base for motion pictures[s] . . . in order to achieve an
independent, self-supporting [film post-production] industry.” LA. REV. STAT.
1 These determinations were further supported in Peter’s PSR, which stated that a
downward variance may be appropriate because, among other reasons, “The infrastructure
project involved in the instant offense was actually completed and audits confirmed the tax
credits released to the project were ultimately earned and were in fact less than the credits
the project actually earned when it was later completed.”
62
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c/w 16-30226, 16-30013, 16-30527
§ 47:6007. Ultimately, in Peter’s case, the state not only got what it bargained
for: it got it at a discount. The majority glosses over these critical, mitigating
facts, instead reweighing Peter’s sentencing factors to emphasize aggravating
circumstances. See United States v. McElwee, 646 F.3d 328, 343 (5th Cir. 2011)
(appellate court not entitled to reweigh sentencing factors (citing Gall, 552 U.S.
at 51)); see also Gall, 552 U.S. at 51, 59 (“The fact that the appellate court
might reasonably have concluded that a different sentence was appropriate is
insufficient to justify reversal of the district court. . . . [I]t is not for the Court
of Appeals to decide de novo whether the justification for a variance is
sufficient or the sentence reasonable.”).
That the state ultimately suffered no loss is all the more significant
because Peter’s Guidelines range was only as high as it was because of an 18-
level enhancement for the $3.6 million “intended loss” calculated in the PSR, a
loss the state did not actually incur. In arriving at this figure, however, the
PSR did not acknowledge that it included in this loss amount expenditures the
defendants had not timely made, but did ultimately make, in order to complete
the promised post-production studio. The district court was entitled to, and
did, consider that the economic reality differed greatly from the PSR’s high loss
calculation. Indeed, the district court relied on the PSR itself in doing so. The
PSR cautioned that the loss figure it proposed “does not accurately reflect, and
appears to over-estimate, the damage caused to the victim in the instant
offense.” Consistent with the PSR’s suggestion that this lack of actual harm
could reasonably warrant a downward variance, the district court determined
that a Guidelines range based in part on this questionably relevant “intended
loss” figure significantly overstated the seriousness of Peter’s conduct. Cf.
United States v. Huber, 462 F.3d 945, 950–51 (8th Cir. 2006) (holding, where
63
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c/w 16-30226, 16-30013, 16-30527
district court departed downward in light of defendant’s small “net profit,” that
“[t]he district court did not clearly err in its factual determination that the high
value of the laundered funds led to a base offense level that substantially
overstated the seriousness of the offense”).
Therefore, though I share the majority’s concerns about preferential
treatment for white-collar criminals, I disagree with its implication that this
is a classic example of letting a white-collar criminal off easy. I conclude
instead, that in light of these extenuating circumstances that rendered this a
no-loss, victimless crime, the district court was within its discretion to treat
Peter differently than it ordinarily would the leader of a large-scale fraud
scheme. See United States v. Williams, 517 F.3d 801, 810 (5th Cir. 2008)
(noting that a variance deserves “greatest respect” when the facts of a case are
out of the ordinary). This case, in which neither the state nor any other
institutions or individuals suffered any loss, but in fact received the benefit of
a completed, state-of-the-art post-production facility, is not at all like a case
such as United States v. Martin, in which the Eleventh Circuit found a
downward departure unreasonable because the defendant’s crimes “resulted
in over a billion dollars of loss harming thousands of victims;” were “major
economic crimes that harmed not only individual victims but also many
institutions and companies;” and were “peculiarly corrosive to the economic life
of the community, as demonstrated by the deleterious effects the large-scale
fraud in this case had on the healthcare industries and securities markets.”
455 F.3d 1227, 1239 (11th Cir. 2006).
Finally, though the majority does acknowledge that this case presents
“sound reasons for a downward variance, even a substantial one,” it then
proceeds to imply that any non-custodial sentence is a “variance too far” that
64
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c/w 16-30226, 16-30013, 16-30527
effectively reduces the sentence to “zero.” Maj. Op. at 51, 55. However, Gall
specifically rejected this argument, declaring that viewing a probation
sentence as a “100% departure” inappropriately “gives no weight to the
substantial restriction of freedom involved in a term of supervised release or
probation.” 552 U.S. at 48. As Gall further notes:
Offenders on probation are nonetheless subject to several standard
conditions that substantially restrict their liberty. . . . Probationers
may not leave the judicial district, move, or change jobs without
notifying, or in some cases receiving permission from, their
probation officer or the court. They must report regularly to their
probation officer, permit unannounced visits to their homes,
refrain from associating with any person convicted of a felony, and
refrain from excessive drinking.
Id. Accordingly, I reject the majority’s implication that Peter’s five-year
probation sentence is insubstantial.
The unusual circumstances of this no-loss, victimless case, combined
with Peter’s age, health conditions, and non-felonious criminal history,
justified the court’s decision to impose the variance that it did. 2 Without
reweighing the sentencing factors, which it is well-established we may not do,
I cannot conclude that the district court abused its discretion.
3. The Majority Fails to Give Downward Variances the Deference
Our Circuit Consistently Gives Upward Variances
As a final but not insignificant note: this court consistently upholds
sentences that vary upwardly from defendants’ Guidelines ranges, citing
district courts’ considerable discretion in weighing the 18 U.S.C. § 3553 factors
2The PSR also noted that Peter’s personal characteristics could justify a downward
variance: “The defendant is 66 years old and has never been convicted of any felonious
criminal conduct and has a significant history of gainful employment . . . . The likelihood that
he will commit further crimes is minimal.”
65
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c/w 16-30226, 16-30013, 16-30527
and determining appropriate sentences. See, e.g., United States v. Nguyen, 854
F.3d 276, 284 (5th Cir. 2017) (noting our court’s “‘highly deferential’ review for
substantive reasonableness”); United States v. Brantley, 537 F.3d 347, 349–50
(5th Cir. 2008); United States v. Williams, 517 F.3d 801, 808–13 (5th Cir. 2008);
see also United States v. Guadian, 724 F. App’x 329 (5th Cir. 2018) (upholding
a 180-month sentence imposed for a non-violent, no weapons involved
marijuana trafficking offense with a Guidelines calculation of 63–78 months).
The majority states that we should accord equal deference to downward
variances, noting correctly that “Booker discretion is not a one-way street.”
Maj. Op at 56. Consistent with this principle, the majority affirms Susan
Hoffman’s downward variance, reasoning that “we have upheld a number of
upward variances of similar and sometimes much greater magnitude.” Maj.
Op. at 56 (citing United States v. Hebert, 813 F.3d 551, 561–63 (5th Cir. 2015)
(affirming 1214% upward variance); United States v. Urbina, 542 F. App’x 398,
398–99 (5th Cir. 2013) (329% upward variance); Brantley, 537 F.3d at 349–50
(253% upwards); United States v. Mejia-Huerta, 480 F.3d 713, 717–18 (5th Cir.
2007) (344% upwards)). However, applying the same formula to determine the
percentage decrease here as the majority used to determine the percentage
increase in the cases that it cites, it becomes clear that each upward variance
also significantly outstrips the 72% decrease the district court applied when
sentencing Peter to five years of probation with a $40,000 fine. 3 Though Peter’s
3 To calculate the percentage increase or decrease between two numbers, as the
majority does, the numerical increase or decrease is divided by the original number, then
multiplied by 100. Thus: Percentage Increase = (New Number - Original Number) / Original
Number x 100; Percentage Decrease = (Original Number - New Number) / Original Number
x 100. Relative change and difference, WIKIPEDIA, https://en.wikipedia.org/wiki/
Relative_change_and_difference (last updated Apr. 14, 2018).
66
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variance was admittedly more considerable than Susan’s, the majority’s own
calculations demonstrate that it is still considerably less extreme than the
upward variances we have consistently upheld.
The fact is, it is only the exceptionally rare case in which this court finds
an upward variance substantively unreasonable. See United States v.
Gerezano-Rosales, 692 F.3d 393, 401 (5th Cir. 2012) (finding a 108-month
sentence substantively unreasonable because the district court increased the
within-Guidelines sentence it had just imposed by three years based on its
belief that defendant responded “disrespectfully” to the sentence). If our court
is to continue to accord great deference to district courts’ decisions to impose
upward variances, we must certainly also do so when reviewing downward
variances.
***
For these reasons, though I agree with most of the majority’s diligent
and well-thought opinion, I respectfully dissent as to Part V(A) vacating Peter
Hoffman’s sentence as unreasonable.
67
| {
"pile_set_name": "FreeLaw"
} |
ACCEPTED
03-15-00100-CV
6121526
THIRD COURT OF APPEALS
AUSTIN, TEXAS
7/17/2015 3:52:18 PM
JEFFREY D. KYLE
CLERK
NO. 03-15-00100-CV
________________________________________________________
IN THE COURT OF APPEALS FILED IN
FOR THE THIRD DISTRICT OF TEXAS 3rd COURT OF APPEALS
AUSTIN, TEXAS
AT AUSTIN 7/17/2015 3:52:18 PM
_________________________________________________________________
JEFFREY D. KYLE
IN RE THE ESTATE OF EDELL WADE, DECEASED. Clerk
JAMES E. WADE,
Appellant
V.
JOHNNY WADE AND AMANDA WADE, INDIVIDUALLY AND
AMANDA WADE AS THE INDEPENDENT EXECUTOR OF THE
ESTATE OF EDELL WADE,
Appellees
__________________________________________________________________
On Appeal from the County Court at Law of Burnet County, Texas
_______________________________________________________
APPELLEES’ BRIEF
_________________________________________________________________
Respectfully submitted,
Claude E. Ducloux Boyce C. Cabaniss
State Bar No. 06157500 State Bar No. 03579950
Hill, Ducloux, Carnes & De La Garza William G. Christian
400 West 15th Street, Suite 808 State Bar No. 00793505
Austin, Texas 78701 Kathryn E. Allen
Telephone: (512) 474-7054 State Bar No. 01043100
Facsimile: (512) 474-5605 GRAVES, DOUGHERTY, HEARON & MOODY
[email protected] 401 Congress Avenue, Suite 2200
Attorney for Appellee Amanda Wade as the Austin, Texas 78701
Independent Executor of the Estate of Edell Telephone: (512) 480.5660
Wade Facsimile: (512) 480.5860
[email protected]
Attorneys for Appellees Johnny Wade and
ORAL ARGUMENT REQUESTED Amanda Wade
TABLE OF CONTENTS
INDEX OF AUTHORITIES .....................................................................................v
PRELIMINARY STATEMENT ...............................................................................1
1. Bud’s representations vs. the evidence .................................................2
2. Bud’s appeal has no legal merit ............................................................5
STATEMENT OF FACTS ........................................................................................6
A. The Wade family .............................................................................................6
B. Edell Wade’s personality and mental capabilities...........................................7
C. Mrs. Wade’s relationship with Appellees, Johnny and Amanda
Wade ................................................................................................................8
D. Mrs. Wade’s relationship with her other children.........................................11
E. Johnny and Amanda’s decision to move home and live on the
ranch ..............................................................................................................12
F. Mrs. Wade’s sale of the ranch .......................................................................13
G. The sale transaction was structured to reduce its tax impact on
Mrs. Wade .....................................................................................................15
H. Nancy and Bud did not object to the sale or its terms until after
their mother was dead....................................................................................16
I. Plaintiffs’ accusations that Johnny and Amanda isolated Mrs.
Wade from her family ...................................................................................18
J. The closing of Mrs. Wade’s sale of the ranch...............................................19
K. Mrs. Wade was grateful Johnny and Amanda were there to help
her ..................................................................................................................20
L. Mrs. Wade’s modification of the promissory note in 2009 ..........................21
SUMMARY OF THE ARGUMENT ......................................................................24
STANDARD OF REVIEW .....................................................................................25
ii
TABLE OF CONTENTS
(Continued)
ARGUMENT...........................................................................................................27
A. The trial court correctly granted judgment on Bud’s 2012 legal
challenge to Mrs. Wade’s 2004 sale of her ranch. (In response
to Issue 1).......................................................................................................27
1. Bud’s claims are barred by limitations ...............................................28
a. The discovery rule does not apply ............................................28
(i) Not “objectively verifiable” ...........................................30
(ii) Not “inherently undiscoverable” ....................................32
b. Bud had notice of his claims.....................................................34
2. The trial court’s summary judgment can be affirmed
based on two additional grounds not addressed in
Appellant’s Brief .................................................................................37
B. Ample evidence, ignored by Appellant, supports the jury’s
verdict that Johnny and Amanda breached no fiduciary duties
(In response to Issue 2)..................................................................................39
1. Evidence Mrs. Wade was mentally competent,
independent and strong-willed ............................................................40
2. Evidence Mrs. Wade was represented by counsel in both
transactions..........................................................................................41
3. Evidence Mrs. Wade’s sale of her ranch and modification
of the note were voluntary...................................................................42
4. The two principal cases on which Bud relies defeat his
appeal...................................................................................................43
5. Bud’s arguments are based on misstatements of the
record...................................................................................................46
iii
TABLE OF CONTENTS
(Continued)
CONCLUSION........................................................................................................50
CERTIFICATE OF COMPLIANCE.......................................................................52
CERTIFICATE OF SERVICE ................................................................................53
APPENDIX..............................................................................................................54
iv
INDEX OF AUTHORITIES
Cases: Page(s):
Boerschig v. Southwestern Holdings, Inc.,
322 S.W.3d 752 (Tex. App. - El Paso 2010, no pet.)....................................36
Cadle Co. v. Wilson,
136 S.W.3d 345 (Tex. App. - Austin 2004, no pet.) .....................................33
Cain v. Bain,
709 S.W.2d 175 (Tex. 1986) ...................................................................26, 40
Chapal v. Vela,
461 S.W.2d 466 (Tex. Civ. App. - Corpus Christi 1970, no writ.) ...............34
Childs v. Haussecker,
974 S.W.2d 31 (Tex. 1998) ...........................................................................36
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) .........................................................................26
Computer Associates Intern., Inc. v. Altai, Inc.,
918 S.W.2d 453 (Tex. 1996) .............................................................29, 30, 32
Cunningham v. Townsend,
291 S.W.2d 438, (Tex. Civ. App. - Eastland 1956, writ refused n.r.e.)........38
Doe v. Tex. Ass’n of Sch. Bds., Inc.,
283 S.W.3d 451 (Tex. App. - Fort Worth 2009, pet. denied) .......................38
Gaddis v. Smith,
417 S.W.2d 577 (Tex. 1967) .........................................................................30
Gardner v. Abbott,
414 S.W.3d 369 (Tex. App. - Austin 2013, no pet.) .....................................36
Gates v. Asher,
280 S.W.2d 247 (Tex. 1955) ...................................................................30, 31
v
INDEX OF AUTHORITIES
(Continued)
Cases: Page(s):
Golden Eagle Archery, Inc. v. Jackson,
116 S.W.3d 757 (Tex. 2003) .........................................................................26
Herbert v. Herbert,
754 S.W.2d 141 (Tex. 1988) .........................................................................26
Hooks v. Samson Lone Star, Ltd. P’ship,
457 S.W.3d 52 (Tex. 2015) ...........................................................................34
Jordan v. Lyles,
455 S.W.3d 785 (Tex. App.—Tyler 2015 n.p.h.) ...................................45, 46
Lee v. Hassen,
286 S.W.3d 1 (Tex. App.—Houston [14th Dist.] 2007, no pet.) ..................39
Lindley v. McKnight,
349 S.W.3d 113 (Tex. App.—Fort Worth 2011, no pet.) .............................38
Little v. Smith,
943 S.W.2d 414 (Tex. 1997) .........................................................................29
McKee v. Douglas,
362 S.W.2d 870 (Tex. Civ. App. —Texarkana 1962, writ refused n.r.e.)....33
Millican v. Millican,
24 Tex. 426 (1859) ........................................................................................30
Moczygemba v. Moczygemba,
___ S.W.3d ___, 2015 WL 704405
(Tex. App. —San Antonio Feb. 18, 2015, n.p.h.) ...................................28, 31
vi
INDEX OF AUTHORITIES
(Continued)
Cases: Page(s):
Nixon v. Mr. Prop. Mgmt. Co., Inc.,
690 S.W.2d 546 (Tex. 1985) .........................................................................26
Plas–Tex, Inc. v. U.S. Steel Corp.,
772 S.W.2d 442 (Tex. 1989) .........................................................................26
Progressive County Mut. Ins. Co. v. Boyd,
177 S.W.3d 919 (Tex. 2005) .........................................................................36
Rentfro v. Cavazos,
04-10-00617-CV, 2012 WL 566364,
(Tex. App.—San Antonio Feb. 15, 2012, pet. denied) .................................34
Robinson v. Weaver,
550 S.W.2d 18 (Tex. 1977) ...........................................................................30
S.V. v. R.V.,
933 S.W.2d at 25 (Tex. 1996) .......................................................................28
Sharp v. Hobart Corp.,
957 S.W.2d 654 (Tex. App.—Austin 1997, no pet.).....................................36
Shell Oil Co. v. Ross,
356, S,W.3d 924 (Tex. 2011) ........................................................................28
Via Net v. TIG Ins. Co.,
211 S.W.3d 310 (Tex. 2006) .........................................................................29
Vogt v. Warnock,
107 S.W.3d 778 (Tex. App.—El Paso 2003, pet. denied) ..........40, 44, 45, 46
vii
INDEX OF AUTHORITIES
(Continued)
Cases: Page(s):
Voice of Cornerstone Church Corp. v. Pizza Prop. Partners,
160 S.W.3d 657 (Tex. App.—Austin 2005, no pet.).....................................36
Wagner & Brown, Ltd. v. Horwood,
58 S.W.3d 732 (Tex. 2001) ...........................................................................32
Statutes: Page(s):
TEX. CIV. PRAC. & REM. CODE § 16.004(a)(4)–(a)(5) .............................................28
viii
PRELIMINARY STATEMENT
Appellant feels the need to advise this Court in his Request for Oral
Argument that “This appeal is not frivolous” Appellant’s Brief, p. 9. The rest of
Appellant’s Brief demonstrates that it is.
In 2004, Johnny Wade and his wife Amanda closed down their life in
southern California and relocated to Lampasas, Texas to take care of Johnny’s
mom, Mrs. Edell Wade, during the last six years of her life. Johnny and Amanda
remodeled Mrs. Wade’s kitchen, put in central air and heat, and moved into a
cramped garage apartment next to Mrs. Wade’s house to see that she had
everything she needed. Johnny and Amanda bought the family ranch for $500,000,
paying Mrs. Wade $150,000 in cash and making payments every month after.
According to those who knew Mrs. Wade, those were the happiest years of her life.
After Mrs. Wade passed away in August 2010, Appellant James “Bud”
Wade sued Johnny and Amanda. He complained they had “interfered” with his
inheritance when they bought the homeplace (seven years before Bud filed suit)
and when they later accepted a gift, in the form of a note modification, from Mrs.
Wade. The trial court granted summary judgment on all claims related to the 2004
sale of the homeplace. A six-day jury trial on the note modification resulted in a
verdict against Bud and a take-nothing judgment. The jury heard extensive
testimony, including from Mrs. Wade’s lawyer, Michael Martin, that Mrs. Wade
1
was strong-willed, independent and mentally capable at the time of both
transactions; was represented by counsel at both; and that she entered into both
transactions voluntarily, and indeed that she herself set the terms.
Bud argues to this Court that there was no evidence, or insufficient evidence,
to support the verdict. He refused, however, to provide any of the trial testimony,
or other pieces of key evidence to this Court. At their own expense, Johnny and
Amanda brought up a sufficient portion of the transcripts and other evidence to
establish the correctness of the summary judgment and the verdict. Although the
trial transcripts provided by Appellees were available to Bud in his briefing to this
Court, he ignores them completely. Those transcripts contradict many of the key
substantive representations Bud makes to this Court in his brief.
1. Bud’s representations vs. the evidence
Bud’s Representation:
With respect to Mrs. Wade’s 2009 note modification, drafted by her
attorney Michael Martin, Bud represents to this Court (at 52-53) that,
“Johnny and Amanda Wade were the clients of Michael Martin” that
“there is no evidence that [Mrs. Wade] had the benefit of independent
advice.”
The Evidence: Michael Martin testified repeatedly and unequivocally that he
represented Mrs. Wade in connection with the modification of the note, not Johnny
and Amanda Supp. RR 2, 84:13-17, 87:11-20, 92:12-19, 109:5-10. Johnny also so
testified. Supp. RR 5 17:14-15.
2
Bud’s Representation:
“The only evidence of communication between Michael Martin or
anyone at the firm and Edell Wade regarding the Modification
Agreement is dated after the execution of the Modification
Agreement . . . . .” Appellant’s Brief at 19 and 54 (emphasis in
original).
The Evidence: Johnny testified that he took his mother to Michael Martin’s office
so that she could discuss with him her desire to modify the note. Supp. RR 5,
14:15-15:15. Johnny left the room while his mother and Martin discussed what
she wanted to do. Id. 15:16-25. Martin’s notes and billing records confirm that he
had a 20-minute office conference “with client,” whom Martin identifies as Mrs.
Wade, regarding the modification of the note. Supp. RR 2, 87:11-20; RR 3, p.15,
19. Two weeks later (six weeks before the modification was executed), Martin
again talked to Mrs. Wade. RR 3, p. 15.
Bud’s Representation:
“There is simply no evidence that Edell Wade wanted to modify the
terms of the Note, much less to reduce the principal or engage in debt
forgiveness.” Appellant’s Brief at 55.
The Evidence: Johnny testified at trial that Mrs. Wade wanted to drop the interest
rate because she did not like paying taxes on interest payments from her son. Supp.
RR 5, 14:15-22, 15:10-15. Amanda testified that Mrs. Wade wanted to reduce the
principal as a gift to Johnny. Supp. RR 3, 127:21-128:22, 129:25-130:10.
3
Martin’s notes of his initial conference with Mrs. Wade show that she discussed
with him a principal reduction as well as an interest reduction. RR 3, p. 15.
Bud’s Representation:
With respect to the 2004 ranch sale, Bud asserts (at 15) “The
Armbrust version of the sale documents were drafted at the sole
discretion of Amanda and were identical to the version that she (a
licensed attorney at the time) had tried in vain to push through with
Edell’s lawyer Mr. Cavness but were rejected by Mr. Cavness on
behalf of Edell before Amanda fired him.”
The Evidence: Cavness never rejected the material terms about which Bud now
complains. The promissory note Cavness sent out for execution contained the
same purchase price, interest rate and payment term that appear in the final
executed version of the promissory note prepared by the Armbrust firm. Compare
CR 59 (Cavness’ final draft of note) with CR 544 (executed note prepared by
Armbrust).
Bud’s Representation:
“The Trial Court’s improper summary judgment ruling stunted the
story because the 2004 sale of the Ranch was off the table” - and
therefore “the jury was only given the opportunity to hear about the
2009 Modification.” Appellant’s Brief at 28.
The Evidence: The trial court allowed extensive testimony about the 2004 sale of
the ranch and counsel used that testimony in his jury argument that Johnny and
Amanda had a “scheme and design to come here and take over the ranch and all of
Mrs. Wade’s property using undue influence to build an empire here in Lampasas.”
4
RR: 3, p. 45:16-20. See also id., 46:2-12 (trial court’s statement that “you all are
allowed to go into the issues regarding the initial sell [sic] and purchase of the
property,” and id. 46:10-12 (allowing questions to show “the fairness of [the 2004
sale]”).
Bud’s Representation:
With respect to the 2004 sale of the ranch, Bud represents to this
Court (at 41-42) that it was only “after Edell Wade’s death that
Plaintiff had an inkling of wrongdoing in the form of fraud or breach
of fiduciary duty.” (emphasis in original)
The Evidence: Bud testified at trial that a few days after the sale, when his mother
called to tell him about it, he “smelled a rat” and he believed that his mother had
been “bamboozled.” Supp. RR 4, 44:15-25. Despite these suspicions, Bud told the
jury he never investigated or challenged the transaction until seven years later,
after his mother had died. Id., 45:1-9, 46:2-20, 47:20-48:6.
More of Bud’s misstatements of the Record are discussed below.
2. Bud’s appeal has no legal merit.
It is undisputed that Mrs. Wade was a strong independent woman who was
in her right mind and made her own decisions during the entire period at issue
here. Bud himself concedes that Mrs. Wade was “of sound mind, and capable”
during the period at issue. Appellant’s Brief at 35. A number of witnesses
testified, and the documentary evidence shows, that Mrs. Wade entered into both
transactions voluntarily and was represented by an attorney in both, and also that
5
she set the purchase price for the ranch and later came up with the idea of reducing
the interest rate, and the principal on the note. Bud is able to cite no case in which
a Texas court has found a breach of fiduciary duty under such circumstances. He
has certainly cited no case in which a court has reversed a jury verdict finding that
there was no fiduciary breach under those circumstances.
STATEMENT OF FACTS
Bud presents a lengthy fact statement that ignores all trial testimony.
Appellant’s Brief at 11-24. See e.g. Supp. RR 3, 45:19-20. Appellees’ Statement
of Facts will attempt to distill six days of testimony to demonstrate to the Court
why the jury’s verdict should be affirmed.
A. The Wade family.
Johnny Wade is the youngest of Edell and Otto Wade’s seven children.
Supp. RR 4, 154:2-11. Otto died in 1996 leaving Mrs. Wade alone on their 475-
acre ranch in Burnett County, just south of Lampasas. Supp. RR 3, 28:8-15. After
Mrs. Wade died in 2010, three of her children - Bud, Nancy Burns, and Sue Meuth
- sued him and his wife Amanda. Supp. RR 3, 162:15-25. The other three Wade
children - Weldon Wade, Charlene Davis and Emma Wade Carter—affirmatively
requested that they not be made part of the lawsuit. CR 767, Bud’s Third
Amended Petition ¶ 15; Supp. RR 2, 13:16-21.
6
Of the three siblings who sued Johnny and Amanda, only Bud appealed the
take-nothing judgment based on the jury’s verdict. Five of Mrs. Wade’s children
testified at trial: Bud, Nancy, Sue, Johnny and Charlene. Emma’s daughter, Kim
George, who had spent a great deal of time with Mrs. Wade over the years, also
testified as a witness for Johnny and Amanda.
B. Edell Wade’s personality and mental capabilities.
The evidence at trial was that Edell was a strong-willed, independent woman
who was lucid, capable, and able to manage her affairs at the time she entered into
both transactions at issue here, and indeed until a few days before her death in
August, 2010. No witness testified otherwise.
Mrs. Wade’s daughter, Charlene, testified that Mrs. Wade was
“independent” — “a pretty strong woman” with “strong thoughts” and that no one
could “con her into doing something that she didn’t want to do.” Supp. RR 4,
138:8-20. Charlene, who lived in Belton at the time, less than an hour’s drive from
the ranch, told the jury that up to about a week before her death, Mrs. Wade had
full mental capacity to make all of her own decisions. Id. 137:20-138:7.
Kim George, a licensed social worker and experienced mental health
worker, told the jury that she had firsthand knowledge of her grandmother’s mental
state during the period at issue and that she was “positive” that Mrs. Wade knew
what she was doing and was making decisions for herself. Supp. RR 4, 72:2-18,
7
74:9-23. Kim testified she was very close to her grandmother, visiting and talking
frequently to Edell during the period at issue. Id. 73:16-74:8. Kim testified she
had no financial interest in the outcome of the litigation, but she had travelled from
Georgia to testify because “I loved my grandmother. I’ve come here to speak out
of respect for her.” Id., 67:9-21.
Michael Martin, the attorney who prepared Mrs. Wade’s Will and her other
estate planning documents and who drafted the 2009 modification as Mrs. Wade’s
attorney, told the jury that Mrs. Wade was lucid and that he had no concerns that
she was under duress or out of her right mind. Supp. RR 2, 91:7-23.
Bud concedes the point. When asked about Mrs. Wade’s attorney’s
testimony that Mrs. Wade was “very lucid,” Appellant Bud Wade told the jury
“I’m not saying she was out of her mind.” Supp. RR 4. 42:13-21. In his brief to
this Court, Bud again acknowledged Mrs. Wade’s mental capability, telling this
Court (at 35) that during the period at issue, Mrs. Wade was “of sound mind, and
capable.”
C. Mrs. Wade’s relationship with Appellees, Johnny and Amanda Wade.
Several trial witnesses testified, and no witness disputed, that Mrs. Wade
had a very close relationship with her youngest son and his wife, both before and
particularly after they moved to Lampasas. Johnny told the jury that his mother
always introduced him as her “baby son” until shortly before she died. Supp. RR
8
4, 154:2-7. Johnny told the jury that when he first moved to California he was
sleeping in his truck and could not afford a phone, but as soon as he could, he
began calling his mother once a week after church. Id., 146:7-20.
Johnny married Amanda in California in 1992 while she was a law student.
Id. 148:7-23. After she graduated, Amanda worked briefly at several small firms
before she began doing all the paperwork for the steel construction business
Johnny had started. Supp. RR 3, 182:14-16, 187:16-25. Contrary to Bud’s
representation to this Court (at 12), Amanda had no experience in estate planning
work. Supp. RR 3, 182:14-19. After his construction business became successful,
Johnny and Amanda paid for his mother to come visit them in California on three
different occasions. Id. 146:21-148:3. On the second trip, Johnny and Amanda
took Mrs. Wade and her sister, “Aunt Mutt,” on a surprise cruise to Mexico. Id.
149:6-151-13. On the third trip, Mrs. Wade stayed with Johnny and Amanda for a
month, during which Amanda entertained her and took her shopping for new
clothes while Johnny worked. Id. 162:3-163:6.
Johnny’s niece, Kim George testified that Mrs. Wade had a very close
relationship with Amanda and was very proud of Amanda because “Amanda could
do anything a guy could do and my grandmother respected that.” Supp. RR 4,
117:10-118.
9
Johnny told the jury that whatever his mother needed, he would have done.
Id. 161:10-13. He and Amada remodeled the kitchen in Mrs. Wade’s house, and
Johnny wrote “I love you Mom” on the sheetrock above the stove. Supp. RR 3,
182:1-13; Supp. RR4, 167:14-168:10. Although Mrs. Wade’s son-in-law, Nancy’s
husband Bill Burns lived locally and owned an air conditioning business, Mrs.
Wade had never had central air and heat in her house on the ranch. Supp. RR 3,
190:5-19; Supp. RR 4, 168:11-169:7. After Mrs. Wade had become dehydrated
and was hospitalized from the heat during the summer before they moved to the
ranch, Johnny and Amanda paid Nancy and Bill to install central air and heat for
Mrs. Wade. Supp. RR 2, 16:4-16; Supp. RR 3, 181:1-12; Supp. RR 4, 168:11-
170:17.
Years before he bought the ranch, Johnny also built several out-buildings on
the ranch, a shop and a garage with a garage apartment. Supp. RR 4, 57:2-20; RR
5; 11:12-12:14. The jury was told that after Johnny and Amanda moved back to
the ranch to see after Mrs. Wade, they lived for five years in the 18’ x 18’ single-
room garage apartment with a concrete floor and one small bathroom before they
finished their own residence on the ranch. Supp. RR 4; Supp. RR 3, 181:13-25-
13:5; Supp. RR 4, 14:7-10.
10
D. Mrs. Wade’s relationship with her other children.
Bud represented to this Court (at 12), that at the time she sold the ranch to
Johnny and Amanda, “Edell had children living nearby who could and did provide
care and companionship, and who had been living close to her for over 40 years.”
What the jury heard at trial was that only Nancy helped Mrs. Wade on a regular
basis, and that she charged her mother $10 an hour and 42¢ a mile for that help.
Supp. RR 2, 7:8-20; Supp. RR4, 56:13-23. The jury was shown a stack of invoices
that Nancy had sent her mother for her and her husband’s “help.” Supp. RR 2,
74:1-10; Supp. RR 6, pp. 13-23. Sue told the jury that she was unaware her sister
was charging her mother for helping her. Supp. RR 4, 12:23-13:1. Bud testified
that he was aware Nancy was charging his mother for help, but did not object. Id.
56:20-57:1. The jury also heard Bud testify that although he was an electrician
living only an hour and a half from the ranch, the only improvement he made to the
ranch was to rewire it in the early 1980s, a job for which his parents paid him. Id.,
51:25-52:7, 61:21-62:13.
After they moved back to the ranch, Johnny and Amanda took over the work
Mrs. Wade had been paying Nancy and her husband to do. Supp. RR 3, 90:12-
91:15, 191:4-16; Supp. RR 2, 14:15-24. Johnny and Amanda did not charge Mrs.
Wade for what they did for her. Supp. RR 3, 194:8-14, 210:19-211:19. After
11
Johnny and Amanda moved back, neither Bud nor Sue ever helped with anything
involving Mrs. Wade. Supp. RR 3, 194:15-22.
Amanda testified that Mrs. Wade’s daughter Emma and her children,
including Kim, were regular visitors to Mrs. Wade at the ranch. Id., 194:23-195:3.
Kim’s testimony confirmed that. Supp. RR 4, 73:22-74:8. Sue told the jury that
she stopped visiting her mother at the ranch in 2005, and also stopped calling her
mother. Supp. RR 2, 13:18-14:5, 19:6-8, 18-21. Nancy testified that she stopped
visiting in 2007. Supp. RR 2, 47:25-48:8. 68:7-11, 70:19-21. Kim testified that it
hurt her grandmother’s feelings when her children stopped interacting with her.
Supp. RR 4, 120:7-24. Bud told the jury that, during the week his mother was in
the hospital before she died, he never went to see her even though he lived less
than 100 miles away. Supp. RR 4, 59:8-25.
E. Johnny and Amanda’s decision to move home and live on the
ranch.
The jury heard extensive testimony that Mrs. Wade’s husband Otto had been
placed in a nursing home, and that because of that experience all of her children
understood that Mrs. Wade was terrified she would also have to go to a nursing
home. Supp. RR 2 22:21-23:1; Supp. RR 3, 190:20-191:11; Supp. RR 4, 97:17-
98:4. The jury also heard extensive testimony that it was important to Mrs. Wade
that the ranch be kept in the family. Supp. RR 2, 10:17-23, 21:10-19; Supp. RR 4,
23:15-24:21; Supp. RR 6 p. 8. Bud admitted he had no desire to return to
12
Lampasas to live, that he had no interest in buying or owning the ranch, and that he
did not think that any of the other siblings did either, except Johnny. Supp. RR 4,
47:8-25, 52:8-53:25.
By 2003, after his mother had gone for a week without electricity during the
winter and several weeks without a working well, during which she carried water
to her house from a creek on the ranch, Johnny became convinced she was not
getting proper care and wanted to move back to the ranch and take care of her.
Supp. RR 4, 140:21-141:13; 163:7-164:25. Johnny’s sister Charlene told the jury
she believed he returned because “he truly wanted to take care of [his mother].”
Supp. RR 4, 139:2-4. Johnny’s niece Kim, testified that Johnny came back
because he loved his mother and thought “she was going to die without some
help.” Id., 116:5-20.
F. Mrs. Wade’s sale of the ranch.
Johnny testified that when he was in Lampasas for the holidays in late 2003,
with his sister Emma’s approval and with Nancy present, he went to his mother
and asked if she would sell him the ranch:
I pretty much verbatim I asked my mother, I said, Would you sell the
place[?] And she said, No. Not even to me[?] And she said, I didn’t
think you’d ever move back from California. And I repeated the
question, Would you sell it to me[?] And said, If you meet my price.
And I said, What’s that price? She said, $1,000 an acre. I said, I’ll
buy it.
13
Supp. RR 4, 173:9-18. All three plaintiffs below admitted that their mother owned
the ranch and was therefore free to sell it at any price she wanted or even to give it
away if she wanted to. Supp. RR 2, 42:1-10, 76:1-11; Supp. RR 4, 13:2-9.
Both Johnny and Amanda testified the basic terms of the sale were set
during a January 6, 2004 meeting with Pat Cavness, Mrs. Wade’s attorney, at
which Mrs. Wade, Nancy, Johnny and Amanda were present. Supp RR 4, 174:22-
175:3; Supp. RR 3, 2-14. Cavness’ notes show a purchase price of $500,000 —
$150,000 allocated to Mrs. Wade’s homestead (in order to reduce Mrs. Wade’s
taxes, see Section G below) and $350,000 for the rest of the property. Supp. RR 6,
p. 94 (Def. Exh. 33). Cavness’ notes also showed an interest rate of 2%. Id.
As part of their agreement with Mrs. Wade, Johnny and Amanda promised
her she could stay in her house on the ranch as long as she wanted. Supp. RR 2,
14:25-15:3. Cavness’ notes from the January 6, 2004 meeting so state. Supp. RR
6, p. 94. The sale documents include an enforceable life estate for Mrs. Wade, as
Johnny and Amanda had promised. CR 380, ¶ 2; Supp. RR 2, 83:21-84:20. Mrs.
Wade remained on the ranch in her house until she died.
Johnny did not notify his siblings who did not already know about the sale
because his mother asked him not to, so she could do it herself. Supp. RR5, 9:23-
10:5. Both Bud and Sue testified that Mrs. Wade called each of them shortly after
14
the sale to tell them she had sold the ranch to Johnny. Supp. RR 4, 13:10-17,
42:25-43:11.
G. The sale transaction was structured to reduce its tax impact on Mrs.
Wade.
Johnny and Amanda were in the process of selling property in California for
well over 1 million and intended to pay Mrs. Wade cash for the ranch. Supp. RR
3; 148:21-49:2, 194:2-4; Supp. RR 5, 8:18-9:7. But after conversations between
Amanda, Mrs. Wade, Mrs. Wade’s attorney and accountant, and Amanda’s
accountant in California, the transaction was structured to give Mrs. Wade an
income stream — rather than as a cash sale — in order to minimize the tax
consequences to Mrs. Wade. Supp. RR 3, 39:6-23, 43:5-19, 194:2-7. To
accomplish that purpose, $150,000 of the purchase price of the ranch was allocated
to Mrs. Wade’s house and the rest to the remainder of the property. Id., 43:20-
44:9; Supp. RR 6, 94: CR 380, ¶ 1. Accordingly, in August 2004, although the
note did not expressly require it, Johnny and Amanda made a prepayment of
$150,000 to Mrs. Wade for the portion of the purchase price allotted to the house.
Supp. RR 2; 17:12-19; 44:15-20. The jury was shown a fax from Amanda to her
accountant in California in which Amanda told the accountant that “[w]e want to
pay [Mrs. Wade] as much as possible as soon as possible without her having
capital gains consequences.” Supp. RR: 3, 24:20-25:4, 193:20-194:1.
15
H. Nancy and Bud did not object to the sale or its terms until after their
mother was dead.
As shown by the handwritten notes of Mrs. Wade’s attorney, Pat Cavness,
the purchase price of $500,000 payable at 2%, was agreed to at a January 6, 2004
meeting in Cavness’ office at which Nancy admits she was present. Supp. RR 6 p.
94 (Def Exh 33); Supp. RR 2, 39:6-18. Those are two of the principal terms Bud
argues made Johnny and Amanda’s purchase of the ranch fraudulent and a
fiduciary breach. CR 774-776; Appellant’s Brief at 15-16. Rather than objecting,
Nancy told the jury she encouraged the sale and agreed that her mother had
decided the best way to keep the ranch in the family was to sell it to Johnny: “I
was pleased that Johnny was going to be coming back and basically the property
would be kept within the family.” Supp. RR 2, 12:13-17. Sue, the third plaintiff
below, testified that when her mother called her to tell her she had sold the ranch to
Johnny, Sue told her “Well good, you kept it in the family.” Supp. RR 4, 13:10-
17.
Bud admitted that shortly after he found out about it, in March 2004 he
“attempted to get the details of the sale from Nancy Burns but she didn’t know
very much about it.” CR 109, Interrogatory Answers Nos. 11, 13. Bud made no
further attempts to find out anything more about the sale. Id.
Bud represents in his brief that he had no reason to suspect “something was
amiss with the 2004 sale of the Ranch” until after his mother died. Appellant’s
16
Brief at 23. Bud tells the Court it was only “after Edell Wade’s death that Plaintiff
had an inkling of wrongdoing in the form of fraud or breach of fiduciary duty.” Id.
p. 42. (emphasis in original) Bud’s testimony to the jury was much different:
Q. So you find out about it within a few days after the sale?
A. Right.
Q. You had actual notice. You knew it had happened, correct?
A. Yes.
Q. And so obviously -- well, I believe you said something like you
smelled a rat; is that right?
A. Well, kind of smelled like one.
Q. Felt like she had been bamboozled?
A. Exactly.
Q. So obviously to right this wrong, as you want to tell the jury, you
immediately went to mom and you said, Mom, we have to undo this
deal. Right; that’s what you did?
A. No.
Q. You didn’t do that?
A. I didn’t go to her place at all. I never talked to her about the place at
all. If she wanted to talk about the place, she could have talked to me.
Supp. RR 4, 44:15-45:9. Bud further testified that he had too much respect for
Mrs. Wade to confront her about her sale of the ranch while she was alive, so he
waited seven years to sue Johnny and Amanda until after she was dead:
17
Q. To say, Mom, this is a mistake. We’ve got to undo this. Right? I
don’t like it. You could have done that; couldn’t you?
A. Well, I did respect my mother as a person. She made a few decisions
that in my personal decision it was a mistake. It was the worst
mistake she ever made in her life as far as I’m concerned.
Q. And so you waited seven years before you do anything about it, right?
A. It was after her death.
Q. So you respected her enough not to say anything to her about it, even
though you had actual knowledge --
A. If she wanted to talk to me, she could have. I would have listened.
Q. But you don’t have enough respect for her to not file a suit after she
dies about it?
A. She didn’t know anything about it. She was passed away.
Id., 46:2-20. Bud then testified that he never tried to have the sale set aside or even
talked to his mother about it because “it would have caused her to be upset, and I
didn’t want to do that.” Id., 48:1-16.
I. Plaintiffs’ accusations that Johnny and Amanda isolated Mrs. Wade
from her family.
Plaintiffs argued to the jury, and Bud argues to this Court, that after Johnny
and Amanda moved back to the ranch, they began restricting Mrs. Wade’s “access
to the outside world, activities, and personal affairs,” by locking the ranch gate to
keep plaintiffs out, and not taking her where she wanted to go. Appellant’s Brief,
pp. 17, 22-23. Bud represents to this Court that “Johnny and Amanda had
18
intentionally locked the entrance gate to the ranch to prevent family visits, a fact
admitted by Amanda.” Id. at 23 (citing Amanda’s deposition testimony at CR
421). Amanda testified both in the section of her deposition Bud cites and at trial
that every family member who wanted a key had one, and that an extra key was
hanging on the fence near the gate. CR 421, p. 85:24-86:21; Supp. RR 3, 191:17-
23.
Mrs. Wade’s granddaughter, Kim, told the jury that the lock had been
placed on the gate after an intruder had driven onto the ranch, frightening Mrs.
Wade. Supp. RR 4, 109:6-18. Kim told the jury that Mrs. Wade had no problem
with the lock because a key was hanging nearby and everyone who belonged there
knew where it was. Id. 109:19-23. Bud acknowledged he knew that Johnny and
Amanda kept an extra key “on the third post down from the gate.” Supp. RR 4;
35:9-13. Nancy admitted to the jury she was given a key but never tried to use it.
Supp. RR 2, 67:4-12. Kim testified that her grandmother stopped going to church
or out as much, not because Johnny and Amanda would not allow it, but because
Mrs. Wade developed an incontinence problem and did not want to be far from a
bathroom. Supp. RR 4, 110:2-19;
J. The closing of Mrs. Wade’s sale of the ranch.
Bud asserts in his Statement of Facts that:
The Armbrust version of the sale documents were drafted at the sole
direction of Amanda and were identical to the version that she (a
19
licensed attorney at the time) had tried in vain to push through with
Edell’s lawyer Mr. Cavness but were rejected by Mr. Cavness on
behalf of Edell before Amanda fired him.
Appellant’s Brief p. 15. The record shows that the principal terms of the
promissory note that Bud contends are fraudulent — the $500,000 purchase price,
the 2% interest rate, the 32-year term and the two years of interest only payments
(see Appellant’s Brief pp. 15-16) — were not “rejected by Mr. Cavness” but were
included in the promissory note Cavness himself sent to Johnny and Amanda for
execution. CR 55, 59. The only substantive changed by Armbrust was the
reduction of the default interest rate from 18% to 12%. Compare CR 59 (Cavness
promissory note) with CR 544, (Armbrust promissory note). Bud also represents
to the Court that in the executed promissory note “[o]nly the monthly interest
payment was required for the first two years (i.e. approximately $10,000/year or
$833/month) (a provision added by Johnny and Amanda’s attorneys).” Appellant’s
Brief at 16. The record shows that the two-year, interest-only provision was added
by Cavness, who Bud acknowledges was acting as Mrs. Wade’s attorney. CR 55,
59 (January 16, 2004, Cavness draft of promissory note).
K. Mrs. Wade was grateful Johnny and Amanda were there to help her.
After she sold the ranch to Johnny and Amanda, Mrs. Wade handwrote a
letter to each of her children in which she reminded them of how she and Otto had
20
bought the ranch along with the shop and farm equipment. Supp. RR 6, p. 8 (Def.
Ex. 3). She then told her children:
Now that Johnny and Amanda have bought the place, the same goes
for them, the shop and all the contents belong to Johnny and Amanda
to do whatever they choose to do with them.
Id. Mrs. Wade’s granddaughter Kim told the jury that Mrs. Wade was relieved that
Johnny and Amanda had moved back to the ranch and remained so until her death:
My grandmother was always afraid that she would be put in a nursing
home, always. And with Johnny and Amanda coming back to buy the
place she knew she would always stay there, she knew she never had
to leave and she was excited about them being there.
Supp. RR 4, 97:17-98:9. Kim told the jury that her grandmother’s attitude toward
Johnny and Amanda never changed. Id. 98:9.
A Lampasas Dispatch Record newspaper article on Mrs. Wade from
February 2008, entitled “Lifelong Lampasas resident shares childhood memories”
reports that: “She is relieved now that John and Amanda are able to help her.”
Supp. RR 6 p. 93 (Def. Ex. 30).
L. Mrs. Wade’s modification of the promissory note in 2009.
Johnny testified that in 2009 his mother told him that she wanted to modify
the 2004 note because she did not want to pay taxes on the interest that Johnny and
Amanda had been paying her. Supp. RR 5, 14:15-22; 15:10-15. Like Johnny,
Amanda told the jury that it was Mrs. Wade’s idea to modify the note, and that she
knew Mrs. Wade had been wanting to make a gift to Johnny by reducing the
21
principal under the note. Supp. RR 3, 129:25-130:10. Amanda testified that she
never worried about the fairness of the rate modifications because “[i]t was
something that Mrs. Wade expressed that she wanted to do.” Id. 130:5-10.
Johnny testified that when his mother told him she wanted to modify the
terms of the note, he took her to the office of her attorney, Michael Martin in
Lampasas, who had previously prepared Mrs. Wade’s will and some other estate
planning documents for her in 2007. Supp. RR 5, 15:10-15; Supp. RR 2, 84:13-17.
Johnny testified he waited in the lobby until Mrs. Wade finished talking to Martin.
Supp. RR 5, 15:23-25.
Mike Martin told the jury that he represented Mrs. Wade in connection with
the note modification, and did not represent Johnny or Amanda. Supp. RR 2,
84:13-17, 87:11-20, 92:12-19, 109:5-10. He acknowledged that Johnny and
Amanda paid his fees and that the file was in their names, but that did not change
the fact that only Mrs. Wade was his client:
What I would say about that is especially in a family situation I wasn’t
real careful about exactly whose name went on the file and in view of
the fact that I had done this other work for Mrs. Wade I felt like I was
obligated to see that I did what she wanted done. And I think I did
what she wanted done.
Id., 118:1-13. He testified that he believed Mrs. Wade was lucid, was under no
duress and was doing exactly what she wanted when she had him prepare the
modification. Id., 91:10-92:19, 94:25-95:6, 108:13-21, 109:5-10.
22
In both his contemporaneous notes and his legal bill, Martin refers to
Amanda as “Amanda Wade” or Amanda, and to Johnny as “Johnny.” RR 3 pp. 15,
19. Martin testified that he used “client” in his notes and billings for the
modification to refer to Mrs. Wade. Supp. RR 2, 87:11-20. See also id., 84:13-
17, 88:3-7, 92:12-19, 109:5-10. Martin’s notes and billing statement shows that he
had an office conference with Mrs. Wade and a telephone conference with her
before he prepared her modification. RR 3, pp. 15, 19, Pl. Exh. 38.
Johnny testified that he took his mother in to sign the note modification at
Martin’s office. Supp. RR 5, 17:14-25. He testified that he did not read the
modification; that he did not care what it said as long as it was what his mother
wanted; that Mike Martin was representing his mother; and that Johnny had full
confidence that Martin “was taking care of my mother’s best interest.” Id. 16:3-
18:7.
Johnny testified that he was aware that the modification would reduce the
amount he was paying his mother each month, but testified he never considered
whether it would create a hardship for her because he would have given her any
money she needed. Supp. 5, 18:20-19:23. The jury heard that Mrs. Wade had over
$600,000 in cash and CDs when she died the following year. Supp. RR 3, 174:10-
23. See also CR 158 (Mrs. Wade’s estate inventory).
23
Mrs. Wade’s accountant, Lori Graham, also testified that Mrs. Wade was her
client, not Johnny and Amanda. Supp. RR 3, 10:11-21. Graham testified that
Amanda provided her information so Graham could prepare Mrs. Wade’s taxes,
but did not think Amanda was making any decisions for Mrs. Wade. Id., 9:6-10:3.
Both Mike Martin and Lori Graham were designated as expert witnesses and
both testified that it was common for elderly people to make gifts to their children.
Supp. RR 3, 15:22-16:14, 16:25-17:17; Supp. RR 2, 88:8-11. Martin testified that
the older person may get no financial benefit from the gift, but frequently gets an
emotional benefit. Supp. RR 2, 101:10-25.
SUMMARY OF THE ARGUMENT
The trial court correctly granted summary judgment on Appellant’s claims
arising out of Edell Wade’s 2004 sale of her ranch. Appellant acknowledged to the
trial court that when he learned of his mother’s sale of the ranch shortly after it
happened, he attempted to discover the details from his sister, but took no further
action for seven years until after his mother’s death. He confirmed at trial his early
misgivings and failure to take action by admitting that he “smelled a rat” and
thought that his mother had been “bamboozled,” but waited till after her death to
file suit because he did not want to upset her. In addition to being time barred,
Appellant’s claims are barred as a matter of law for two additional reasons not ever
24
addressed in Appellant’s Brief: acceptance of benefits doctrine and the doctrine of
election.
As to the jury’s verdict, The jury heard extensive testimony that Edell Wade
[1] was strong-willed, independent and in her right mind when she sold her ranch
in 2004, and modified the resulting note in 2009, and that [2] she entered into both
transactions voluntarily [3] and after talking to her attorney — indeed the jury
heard evidence that Mrs. Wade proposed the purchase price of the ranch and the
note modification.
Under Texas law, those three elements establish as a matter of law that a
transfer of property to a fiduciary, even if considered a gift with no financial
benefit to the transferor, is fair and equitable to the transferor and does not
constitute a breach of the fiduciary’s duty. The principal case on which Appellant
relies so holds.
STANDARD OF REVIEW
Summary judgment. This Court reviews summary judgment motions de novo
using the same standards applied by the trial court below:
1. The movant for summary judgment has the burden of showing that there
is no genuine issue of material fact and that it is entitled to judgment as a
matter of law.
2. In deciding whether there is a disputed material fact issue precluding
summary judgment, evidence favorable to the non-movant will be taken
as true.
25
3. Every reasonable inference must be indulged in favor of the non-movant
and any doubts resolved in its favor.
Nixon v. Mr. Prop. Mgmt. Co., Inc., 690 S.W.2d 546, 548-49 (Tex. 1985).
No evidence. “The final test for legal sufficiency must always be whether the
evidence at trial would enable reasonable and fair-minded people to reach the
verdict under review.” City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).
In reviewing the record, “the court must consider evidence in the light most
favorable to the verdict, and indulge every reasonable inference that would support
it.” Id. at 822. “If the evidence at trial would enable reasonable and fair-minded
people to differ in their conclusions, then jurors must be allowed to do so.” Id.
Insufficient evidence. A jury’s verdict may be set aside “only if it is so
contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust.” Cain v. Bain, 709 S.W.2d 175 (Tex. 1986). The reviewing court must
consider and examine all of the evidence in the record. Plas–Tex, Inc. v. U.S. Steel
Corp., 772 S.W.2d 442, 445 (Tex. 1989). But “courts of appeals are not entitled to
reverse merely because they conclude that the evidence preponderates toward” a
different verdict. Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988). The jury
remains “the sole judge of the credibility of witnesses and the weight to be given to
their testimony.” Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761
(Tex. 2003).
26
ARGUMENT
A. The trial court correctly granted summary judgment on Bud’s 2012
legal challenge to Mrs. Wade’s 2004 sale of her ranch. (In response to
Issue 1)
At the time he granted summary judgment on Bud’s claims relating to Mrs.
Wade’s sale of her ranch in 2004, the trial court had before it the following facts:
Mrs. Wade sold her ranch to Johnny and Amanda in February, 2004.
CR 75.
A deed of trust showing the financed purchase price of the ranch to be
$500,000 was filed as a public record on March 3, 2004. CR 86, 100.
Bud testified that he found out about the sale when Mrs. Wade called
and told his wife about it shortly after the sale. CR 109, Interrogatory
Answer No. 11.
Bud testified that after he learned of the sale, in March 2004 “he
attempted to get the details of the sale from Nancy Burns [his sister
and co-plaintiff] but she didn’t know very much about it.” CR 109,
Interrogatory Answer 13.
Until his mother’s death in 2010, Bud did nothing more to find out the
terms of the sale by (i) asking his mother, Mrs. Wade, (ii) looking at
the deed of trust or any of the other documents filed as a matter of
public record or (iii) asking his brother Johnny. Id.
After his mother’s death, Bud accepted more than $80,000 in
distributions from his mother’s estate, which included proceeds from
payments by Johnny and Amanda on the note given to purchase the
ranch. CR 157
In 2012, more than seven years after Bud learned Mrs. Wade had sold
her ranch and two years after she died, Bud filed suit to rescind the
sale because the $500,000 purchase price was “much lower than
market value” and because the terms of the owner financing extended
27
by Mrs. Wade to Johnny and Amanda were more favorable than those
available from a commercial lender. CR 774.
The trial court’s summary judgment was proper on any of three independent
grounds: (1) statute of limitations; (2) the acceptance of benefits doctrine; or (3)
the doctrine of election. Bud’s appeal challenges only the first of these grounds.
1. Bud’s claims are barred by limitations.
Bud’s limitations argument depends on the application of the discovery
rule.1 As a recent case from the San Antonio court of appeals makes clear, the
discovery rule does not apply at all to Bud’s claims. Moczygemba v. Moczygemba,
___ S.W.3d ___, No. 04-14-00110, 2015 WL 704405 (Tex. App. - San Antonio
Feb. 18, 2015, n.p.h.). But even if the discovery rule did apply, the record shows
that Bud discovered his injury in 2004, and deliberately waited until after his
mother’s death to raise his longstanding concerns about the sale.
a. The discovery rule does not apply.
The discovery rule is “a very limited exception to statutes of limitation.”
Shell Oil Co. v. Ross, 356, S,W.3d 924, 929-930 (Tex. 2011). The cases to which
the discovery rule applies “should be few and narrowly drawn.” 933 S.W.2d at 25.
1
All claims arising out of the allegedly wrongful sale of the ranch accrued in 2004, when the sale took place. See
S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996) (“[A] cause of action accrues when a wrongful act causes some legal
injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet
occurred.”). Four years is the longest statute of limitations of any claim pleaded by Bud. See, e.g., TEX. CIV. PRAC.
& REM. CODE § 16.004(a)(4)–(a)(5) (fraud and fiduciary duty). Bud filed suit on August 10, 2012.
28
The reason for strictly limiting the application of the discovery rule is “to
avoid defeating the purposes behind the limitations statutes.” Via Net v. TIG Ins.
Co., 211 S.W.3d 310, 313 (Tex. 2006) (per curiam). That danger is especially
present in this case. It goes without saying that Mrs. Wade would have been a key
witness in evaluating the merits of Bud’s various claims contending that the sale of
the ranch was unfair or wrongful to Mrs. Wade. A suit brought within four years of
the sale would have had the benefit of Mrs. Wade’s testimony while she was still
living. By waiting to bring suit until after his mother died, Bud deprived Johnny
and Amanda of a witness’s testimony to defend against Bud’s claims. The
Supreme Court has identified this very reason as one of the central reasons to
enforce limitations statutes: “Statutes of limitations . . . cut off the pursuit of cases
in which the search for truth may be seriously impaired by the loss of evidence,
whether by death or disappearance of witnesses, fading memories, disappearance
of documents or otherwise.” Little v. Smith, 943 S.W.2d 414, 417 (Tex. 1997)
(quotation omitted).
The Supreme Court has limited the application of the discovery rule to cases
where two elements are met: (1) the evidence of injury is “objectively verifiable,”
and (2) the nature of the injury is “inherently undiscoverable.” Computer
Associates Intern., Inc., 918 S.W.2d at 456. Neither is met here.
29
(i) Not “objectively verifiable.” “Requiring objective verifiability assures
that the policy underpinnings of statutes of limitations are met—balancing the
possibility of stale or fraudulent claims against individual injustice.” Computer
Associates Intern., Inc. v. Altai, Inc., 918 S.W.2d 453, 457 (Tex. 1996). The classic
example of an objectively verifiable injury is when direct physical evidence—such
as a sponge left inside a patient’s body after surgery—establishes beyond dispute
that a wrongful act caused the injury. Gaddis v. Smith, 417 S.W.2d 577, 581 (Tex.
1967). But a claim that relies on expert testimony to establish liability—such as a
doctor’s misdiagnosis of the severity of a back injury—is not “objectively
verifiable” and thus the discovery rule does not apply. Robinson v. Weaver, 550
S.W.2d 18, 21 (Tex. 1977).
Here, there is nothing objectively wrongful about the sale of real estate from
a parent to a child, even on below-market terms and even when the buyer is the
fiduciary of the seller. Over 150 years ago, the Texas Supreme Court commented
that “it is in accordance with the dictates of the law of nature, respecting the
transmission of property, that parents should make donations to their children.”
Millican v. Millican, 24 Tex. 426, 446 (1859). Accordingly, “with whatever degree
of suspicion a court of equity will regard a voluntary conveyance by a child to a
parent, it is well settled, that no suspicion whatever attaches, in the view of the
court, to such a conveyance by a parent to a child.” Id. at 448. See also Gates v.
30
Asher, 280 S.W.2d 247, 250 (Tex. 1955) (“A deed from a parent to a child does not
give rise to the presumption of undue influence” or fraud even if the child is a
fiduciary.)
The decision in Moczygemba, 2015 WL 704405 (Tex. App. - Feb. 18, 2015,
n.p.h.) provides a recent example of the application of this principle in a similar
case to this one. In Moczygemba, a mother sold her ranch to two of her sons at
below market value. She brought suit many years later, claiming that her sons had
owed her a fiduciary duty and that the sale had breached her sons’ fiduciary duty to
her, because they did not explain to her that she was transferring them the mineral
estate as part of the transaction. She asserted that the discovery rule applied, and
that her injury was “objectively verifiable,” because the deeds showed the transfer
of the mineral estate and “no one would have chosen to transfer the mineral estate
below market value.” Id. at *5.
The court of appeals held that the discovery rule did not apply, because the
mother’s claim did not rest on objectively verifiable evidence of wrongdoing.
“[E]ven in the context of a claim for breach of fiduciary duty, for the discovery
rule to apply, there must be objectively verifiable evidence of the alleged injury.”
Id. Because the “this case involved a transfer of land between a mother and her
sons,” and because a parent often has reasons for transferring property to a child
for reasons other than to receive fair-market value, the sale of property was not
31
objectively wrongful. Id. Rather, the mother’s claim depended on witness
testimony about what the intentions of the parties were at the time of the sale—
“which is not objectively verifiable evidence.” Id.
The same is true in this case. Bud’s claim necessarily depends on testimony
regarding the parties’ intentions regarding the sale of the ranch, as well as expert
appraisal testimony as to the alleged “fair market value” of the ranch and the
alleged “commercially reasonable” loan terms. There is no “objectively verifiable”
evidence of wrongdoing when a mother sells her ranch to her son and his wife, and
the discovery rule therefore does not apply to delay accrual of the statute of
limitations in this case.
(ii) Not “inherently undiscoverable.” “An injury is inherently
undiscoverable if it is, by its nature, unlikely to be discovered within the prescribed
limitations period despite due diligence.” Wagner & Brown, Ltd. v. Horwood, 58
S.W.3d 732, 734–35 (Tex. 2001). This question “is decided on a categorical rather
than case-specific basis; the focus is on whether a type of injury rather than a
particular injury was discoverable.” Via Net, 211 S.W.3d at 314 (emphasis in
original). In other words, the issue is not whether Bud himself discovered or should
have discovered the injury in question within the limitations period (although he
did); rather, the question is whether the injury is “not ordinarily discoverable, even
though diligence has been used.” Computer Associates Intern., 918 S.W.2d at 456.
32
Or as this Court has framed the issue, “would a plaintiff exercising
reasonable diligence discover the injury within the limitations period?” Cadle Co.
v. Wilson, 136 S.W.3d 345, 351 (Tex. App.—Austin 2004, no pet.). The answer to
that question here is “yes”—a plaintiff exercising reasonable diligence would,
within four years, discover that a real estate sale duly recorded in the official public
records was sold at a price “much lower than market value” and on lenient
financing terms. CR 774. This is especially true of the derivative claims that Bud
purports to bring on behalf of his mother—including breach of fiduciary duty,
conspiracy, fraud, and defalcation, all of which allege breaches of duties that
Johnny and Amanda owed to Mrs. Wade, not Bud (CR 775–780). For those
claims, Bud must “stand in the shoes” of Mrs. Wade, and there can be little doubt
that the grantor herself would typically know whether the terms of the sale were
below market long before the four-year limitations period runs. See, e.g., McKee v.
Douglas, 362 S.W.2d 870, 875 (Tex. Civ. App.—Texarkana 1962, writ refused
n.r.e.) (“Since plaintiffs-appellants herein are heirs at law of I. A. McKee, and
since the suit was barred by the four year statute of limitation, long prior to Mr.
McKee’s death, such heirs stand in I. A. McKee’s shoes and hence are barred by
the four year statute of limitation to bring this suit.”).
The fact that this sale was duly recorded in the official public records further
puts persons in Bud’s position on notice of the sale. “Land title records . . . create
33
constructive notice, an irrebuttable presumption of actual notice, which prevents
limitations from being delayed.” Hooks v. Samson Lone Star, Ltd. P’ship, 457
S.W.3d 52, 59 (Tex. 2015) (quotation omitted). Here, the land title records
establish that the ranch was sold in 2004, financed by a $500,000 loan secured by
vendor’s lien and a deed of trust. With this knowledge, a diligent plaintiff should,
within four years, be able to determine whether the sale price was below market
value, whether the terms of the financing were too lenient, or any of the other
complaints Bud brings forward here. For this reason, “Texas law makes it very
clear that actions by a beneficiary to set aside voidable deeds accrue at the time the
deed is recorded, or at the very latest, when the beneficiary gains actual or imputed
knowledge of grounds upon which the deeds might be set aside.” Rentfro v.
Cavazos, 04-10-00617-CV, 2012 WL 566364, at *11 (Tex. App. - San Antonio
Feb. 15, 2012, pet. denied). See also Chapal v. Vela, 461 S.W.2d 466, 469 (Tex.
Civ. App. - Corpus Christi 1970, no writ.) (rejecting argument that the discovery
rule delays the accrual of an heir’s suit to set aside an ancestor’s deed when the
deed was recorded more than four years before suit).
b. Bud had notice of his claims.
Even applying the discovery rule Bud’s claims were time barred. Bud’s
discovery-rule argument boils down to his assertion that he had no “inkling of
wrongdoing” or that “something was amiss” until Mrs. Wade’s death, and “no duty
34
to investigate all his mother’s financial affairs while she was still living, of sound
mind, and capable.” Appellant’s Brief at 23, 35, 41-42. But Bud’s interrogatory
answers alone shows that he was aware of the principal facts underlying his claims
long before his mother’s death. Bud stated that:
I believe [my mother] was caught off guard when Johnny asked if she
would sell to him and then pressured her into doing so when Johnny
said he would care for her. I believe both Johnny and Amanda took
advantage of her by agreeing to move back from California if she
would sell the property to them.
CR 108, Interrogatory Answer No. 8. Bud also stated that he had actual
knowledge of the sale shortly after it happened and that he visited the ranch so he
knew Johnny and Amanda had moved back after the sale and were taking care of
Mrs. Wade. CR 107, Interrogatory Answer No. 6; CR 109, Interrogatory Answers
No. 11, 13. Bud stated that that when his mother told him about it he “attempted to
get the details of the sale” from Nancy, “but she didn’t know about it.” CR 109,
Interrogatory Answer No. 13. Bud made it clear however, both to the trial court
and later to the jury that he never took any further steps to act on his misgivings,
by either simply asking his mother about the terms of the sale, or looking at the
vendor’s lien on file in the county records which showed the $500,000 financed
35
purchase price of the ranch. CR 109, Interrogatory Answers No. 11, 13; Supp. RR
4, 44:15-46:20.2
At trial, Bud confirmed that he had much more than “an inkling of
wrongdoing” immediately after the sale of the ranch. Bud testified to the jury that
when his mother called to tell him about her sale of the ranch to Johnny and
Amanda several days after it occurred in early 2004, he “smelled a rat” and “felt
like she had been bamboozled.” Supp. RR 4, 44:15-25. But despite his suspicions,
he did nothing to investigate or challenge the sale because “it would have caused
her to be upset, and I didn’t want to do that.” Id., 48:1-16. Instead he waited till
after his mother’s death to sue his brother. Id., 46:9-11.3
“[T]he commencement of the limitations period may be determined as a
matter of law if reasonable minds could not differ about the conclusion to be drawn
from the facts in the record.” Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex.
1998). Looking at the record in this case, the only reasonable conclusion is that
Bud suspected wrongdoing from the moment he first learned about the sale in
2004, but deliberately waited to raise his concerns for seven years, until the woman
2
Bud complains that the trial court’s comments from the bench concerning Bud’s failure to ask his mother about the
sale constituted improper fact findings. Appellant’s Brief at 43-44. That claim has no merit. “Oral comments do not
constitute findings of fact.” Sharp v. Hobart Corp., 957 S.W.2d 650, 654 n. 5 (Tex. App. - Austin 1997, no pet.).
3
While the Court need not do so in order to affirm the trial court’s summary judgment, it may consider Bud’s
testimony at trial because it confirms the correctness of that summary judgment. See Progressive County Mut. Ins.
Co. v. Boyd, 177 S.W.3d 919, 921 (Tex. 2005); Boerschig v. Southwestern Holdings, Inc., 322 S.W.3d 752, 761 n. 5
(Tex. App. - El Paso 2010, no pet.) (“Although we recognize that such evidence was not on file at the time the trial
court entered its summary judgment, we may consider the evidence adduced at trial if a trial court . . . prematurely
grants summary judgment, which can be rendered harmless by subsequent events”) (citing Progressive Co. Mut. Ins.
Co. v. Boyd) (internal cites omitted)
36
responsible for the sale had died. The trial court was correct to enforce the statute
of limitations in this case.
2. The trial court’s summary judgment can be affirmed based on two
additional grounds not addressed in Appellant’s Brief.
Finally, summary judgment may be affirmed without considering limitations
at all. “[S]ummary-judgment jurisprudence has long required that, when the trial
court does not state the grounds on which summary judgment was granted,” an
appellate court “must affirm the judgment if any of the theories presented to the
trial court and preserved for appellate review are meritorious.” Gardner v. Abbott,
414 S.W.3d 369, 380 (Tex. App.—Austin 2013, no pet.) “When an appellant from
a summary judgment does not successfully attack every possible ground upon
which the district court could have based its summary judgment, the summary
judgment must be affirmed.” Voice of Cornerstone Church Corp. v. Pizza Prop.
Partners, 160 S.W.3d 657, 671 (Tex. App. - Austin 2005, no pet.).
Johnny and Amanda’s motion for summary judgment was based not only on
the statute of limitations, but also on the two independent grounds of quasi-
estoppel and the doctrine of election. CR 6. The trial court’s order granted
summary judgment without specifying the grounds for its ruling. Bud’s brief,
however, addresses only the statute of limitations—not the other two independent
grounds raised by Johnny and Amanda in the trial court. Accordingly, the
37
summary judgment should be affirmed on either of these two independent and
unchallenged grounds.
First, the “acceptance of benefits” doctrine forbids a party from accepting
the benefits of a transaction, on the one hand, and later bringing suit to challenge
the transaction. Lindley v. McKnight, 349 S.W.3d 113, 131 (Tex. App.—Fort
Worth 2011, no pet.) For example, a party may not accept money under a
settlement agreement, and then contend that she has no authority to fulfill her
obligations under the settlement agreement. Doe v. Tex. Ass’n of Sch. Bds., Inc.,
283 S.W.3d 451, 464 (Tex. App.—Fort Worth 2009, pet. denied). Here, Bud
accepted more than $80,000 in distributions from his mother’s estate (CR 157),
which included proceeds from payments by Johnny and Amanda on the note given
to purchase the ranch. The letter transmitting these distributions to Bud expressly
reference Amanda and Johnny’s house payments: “As I am sure you know, there is
a note receivable secured by a lien on the real estate which was purchased by
Johnny and Amanda and that note will continue to be paid in monthly
installments.” CR 147. Bud cannot accept those benefits on the one hand, while
bringing suit to undo the transaction, on the other hand.
Second, under the doctrine of election, a person who elects to receive a
benefit under a will may not also challenge the disposition of the decedent’s
property. Cunningham v. Townsend, 291 S.W.2d 438, 447 (Tex. Civ. App.-
38
Eastland 1956, writ refused n.r.e.). Here, Bud elected to receive the distributions
under his mother’s will. CR 157. He may not do so while bringing suit to
challenge the sale of his mother’s ranch that funded her estate.
B. Ample evidence, ignored by Appellant, supports the jury’s verdict that
Johnny and Amanda breached no fiduciary duties (In response to Issue
2)
The trial court allowed Bud to argue to the jury that both the 2004 ranch sale
and the 2009 modification of the note were part of a scheme to take advantage of
Mrs. Wade. Supp. RR 3, 45:16-46:12. Bud argues that neither transaction
benefited Mrs. Wade, but only benefited Johnny and Amanda, so by definition
both were unfair to Mrs. Wade and constituted breaches of Johnny and Amanda’s
fiduciary duty as a matter of law. Appellant’s Brief at 58 (“The only interest
Johnny Wade and Amanda Wade could possibly have served by entering into a
transaction with Edell Wade which was to their benefit (and to Edell Wade’s
detriment) was their own self-interest.”)
Even if the Court ignores the testimony that Mrs. Wade benefited from both
transactions, and assumes that both transactions were simply gifts from Mrs. Wade
to the son and daughter-in-law who had moved from California to take care of her,
Bud’s arguments still fail.
Under Texas law, a “competent transferor’s voluntary gift to a fiduciary is
fair as a matter of law.” Lee v. Hassen, 286 S.W.3d 1, 33 (Tex. App. — Houston
39
[14th Dist.] 2007, no pet.) citing Vogt v. Warnock, 107 S.W.3d 778, 784-85 (Tex.
App. — El Paso 2003, pet. denied). In Vogt v. Warnock, the principal case on
which Bud relies, the court found no breach of fiduciary duty as a matter of law
where an elderly man had transferred several parcels of valuable property to his
much younger fiancée who was also his fiduciary. 107 S.W.3d at 784-85. The
court based its holding on extensive evidence and stipulations that the transferor
was (i) in his right mind, (ii) had made the transfers voluntarily and (iii) had
consulted with an attorney before so doing. Id.
At trial, the jury in this case heard extensive evidence that all three elements
were present here. To win his appeal, Bud must show that the jury’s verdict “was
contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust.” Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). The supplemental
reporter’s record supplied by Appellees (and ignored by Bud) shows that Bud
cannot carry that burden.
1. Evidence Mrs. Wade was mentally competent, independent and
strong-willed.
As discussed above in Section B of the Statement of Facts, the jury heard
extensive testimony from virtually every witness that Mrs. Wade was strong-
willed, independent, of sound mind, capable and was making her own decisions
during the entire period at issue. Bud conceded the point both at trial and to this
40
Court. Supp. RR 4, 42:13-21; Appellant’s Brief at 35 (referring to Mrs. Wade as
“of sound mind, and capable.”)
2. Evidence Mrs. Wade was represented by counsel in both transactions.
Bud concedes that Mrs. Wade was represented by Pat Cavness in her 2004
sale of the ranch. Appellant’s Brief at 13-14. The Record shows Cavness drafted
the principal terms Bud now claims were unfair. CR 349, 353.
The jury heard testimony from Mike Martin that he drafted the 2009
modification at Mrs. Wade’s request, and that in doing so he represented only Mrs.
Wade and not Johnny and Amanda. Supp. RR 2, 84:13-17, 87:11-20, 92:12-19,
109:5-10.
Martin’s testimony was supported by Johnny’s testimony that “Mike Martin
was the one who was representing my mother and I had full confidence that he was
taking care of my mother’s best interest.” Supp. RR 5, 16:17-25. Martin’s
testimony was further confirmed by his own handwritten notes and billing records
that show he had a conference with “client,” whom he identifies as Mrs. Wade, on
April 16, 2009, and a telephone conference with her again on April 30, 2009 —
both prior to the date Mrs. Wade signed the modification in June, 2009. Supp. RR
2, 87:11-20; RR 3, p. 15, 19.
Mrs. Wade’s accountant, Lori Graham, also testified, like Mike Martin, that
Mrs. Wade was her client, not Johnny and Amanda. Supp. RR 3, 10:11-21.
41
Graham told the jury that while she did not specifically remember talking to Mike
Martin about the modifications to the note Mrs. Wade wanted, she did not dispute
that those conversations occurred as indicated in Martin’s notes and billing
records. Id., 21:11-24.
3. Evidence Mrs. Wade’s sale of her ranch and modification of the note
were voluntary.
The jury was presented with ample evidence Mrs. Wade’s 2004 sale of her
ranch was voluntary, including her own handwritten letter explaining it to her
children. Supp. RR 6, p. 8.
The jury also heard extensive testimony Mrs. Wade’s 2009 modification of
the note was voluntary, and indeed was her own idea. Supp. RR 3, 129:25-130:10;
Supp. RR 5, 14:18-22. No witness testified otherwise. Martin testified that, in
representing Mrs. Wade in drafting the modification, he did what she wanted done.
Supp. RR 2 94:25-95:6, 109:1-10, 118:2-13. In response to Bud’s attorney’s efforts
to get him to change his testimony, Martin told the jury:
I felt like I was obligated to see that I did what she wanted done. And
I think I did what she wanted done.
Id., 118:2-13. Martin’s testimony was supported by his handwritten notes and
billing records for the modification showing that he had an office conference on
April 16, 2009 with “client,” who he identified as Mrs. Wade, and a telephone
conference with her on April 30, 2009. RR 3, pp. 15, 19 (Pl. Exh. 38).
42
Martin’s testimony was also consistent with Johnny’s testimony that the note
modification was Mrs. Wade’s idea, and that she wanted to reduce the interest rate
because she did not want to pay taxes on the interest payments. Supp. RR 5,
14:15-15:15.
Amanda, like Martin and Johnny, testified that the modification of the note
was Mrs. Wade’s idea, and that she had known that Mrs. Wade wanted to give
Johnny “a gift” by taking something off the principal balance left on the note.
Supp. RR 3, 129:25-130:4, 130:20-131:4.
4. The two principal cases on which Bud relies defeat his appeal.
Relying on the jury instructions provided by the trial court, Bud argues that
“[n]o evidence was presented at trial that the Modification Agreement was fair and
equitable to Edell Wade.” Appellant’s Brief at 45, 51. To support his argument,
Bud relies primarily on the modification agreement itself, and on his claim it
exclusively benefited Johnny and Amanda. Id. at 50-51 (“the Modification
Agreement, by its own terms, was not fair and equitable to Edell Wade as the
reduction in principal and elimination of interest were wholly for the benefit of
Defendants and to the detriment of Edell Wade.”)
As discussed above, the jury heard testimony that (i) Mrs. Wade was of
sound mind when she executed both transactions; (ii) did so voluntarily; and (iii)
was represented by counsel. Under the primary case on which Bud himself relies,
43
those elements are sufficient as a matter of law to establish the modification
agreement was fair and equitable to Mrs. Wade, even if it were purely a gift to
Johnny and Amanda.
In Vogt, 107 S.W. 3d at 783-784, the court reversed a jury verdict that the
decedent’s gifts of real property to his fiancée, 40 years his junior, had been unfair
to decedent and therefore constituted a breach of the fiancée’s fiduciary duty. Id.
at 779. Based in part on evidence, remarkably close to that presented to the jury
here, that the decedent had made the gifts (i) voluntarily, (ii) while competent and
(iii) after talking to an attorney, the court concluded the gifts were fair as a matter
of law.
As here, the decedent had been given the fiduciary a power of attorney.
S.W.3d at 780. As here, before the challenged transfers, the decedent had talked to
an attorney about them who, according to the court, “characterized it as a hybrid
transaction in which both parties wanted the same outcome. . .” Id. at 780. As
here, friends and family of the decedent testified that he was an “independent,
strong-willed man who was not easily influenced.” Id. at 785. As here, there was
no evidence the decedent was having any trouble making business decisions. Id.
As here, the evidence showed that the gifts were decedent’s idea, and that he kept a
life estate in the gifted real estate — just as Mrs. Wade did with the ranch. Id. The
court’s holding directly rebuts the argument Bud makes here:
44
[The plaintiff] simply points to the employment agreement, power of
attorney, and the gifts themselves as evidence of unfairness. There is
simply nothing to indicate, however, that these transactions were not
only voluntary on Dr. Warnock’s part, they were his idea. We find no
other evidence in this record supporting a finding that Dr. Warnock
did not understand his actions, was acting under any undue influence,
or that Vogt was exerting pressure on him to give her valuable gifts.
We do not think that the gifts themselves, particularly in light of the
life estate that Warnock retained for himself, are evidence of
unfairness to him.
107 S.W.3d at 785.
The holding in Voigt applies with even more force here because it was
decided under a much stricter standard of review than that applicable to this case.
In Vogt the jury had found that the defendant had breached her fiduciary duty, a
verdict the court set aside finding no evidence she had done so. Id. at 784. Here
the jury, after hearing extensive testimony, found that Johnny and Amanda did not
breach their fiduciary duty. If the evidence and stipulations in Vogt were sufficient
to set aside a jury verdict finding a fiduciary breach, the comparable evidence and
concessions here are more than sufficient to affirm a jury verdict of no fiduciary
breach. The testimony the jury heard prevents Bud from carrying his burden of
showing the jury’s verdict was “so contrary to the overwhelming weight of the
evidence as to be clearly wrong and unjust.” Cain v. Bain, 729 S.W.2d at 176.
The second principal case on which Bud relies, Jordan v. Lyles, 455 S.W.3d
785 (Tex. App. — Tyler 2015 n.p.h.), also supports that conclusion. In Jordan, the
defendant used her power of attorney and right of survivorship to withdraw
45
$275,000 from her stepfather’s annuities and bank accounts after his death, leaving
$30,000 in his probate estate. Id. at 789. Here, in contrast, it is undisputed that
Amanda used her power of attorney for Mrs. Wade only once, to reinstate Mrs.
Wade’s insurance after Mrs. Wade missed a payment. Supp. RR 3, 180:3-12.
In Jordan, as in Vogt, the jury found that the defendant had breached her
fiduciary duty. Id. at 789-790. The trial court set that verdict aside, granting a
judgment notwithstanding the verdict. Id. at 790. The court of appeals, applying
the same standard applicable here, stated that “the jury’s finding must be upheld if
there is more than a scintilla of evidence to support it.” Id. at 793. The defendant
relied on Vogt, but the court of appeals distinguished that case on its facts:
[In Vogt] [t]he evidence was uncontroverted that [decedent] did what
he wanted to do in transferring his property to [his fiduciary], that he
was competent at the time the transfers were made, and that [the
fiduciary] did not exercise undue influence upon him to accomplish
the transfer.
Id. at 794. The Jordan court found that comparable facts did not exist in the case
before it. Id. The court found the jury’s verdict of fiduciary breach was supported
by evidence. Id. at 795. Likewise, the jury’s verdict here of no fiduciary breach
was supported by the evidence — the same type of evidence as in Vogt.
5. Bud’s arguments are based on misstatements of the record.
As discussed above, Bud provided no trial testimony to this Court and cites
none of that provided by Appellees. Instead, he misstates what the record contains.
46
He tells the Court that Martin did not represent Mrs. Wade, and that “the
only evidence of communication between Michael Martin and Edell Wade
regarding the Modification Agreement is dated after the execution of the
Modification Agreement.” Appellant’s Brief at 19, 52, 53, 54. (emphasis in
original) That is not true. Martin and Johnny both testified, and Martin’s notes
and billing records confirm, that Martin represented Mrs. Wade and that he drafted
the modification agreement at her request after an office meeting with her. Supp.
RR 2, 84:13-17, 87:11-20, 92:12-19, Supp. RR 3, 129:25-130:10; Supp. R 5,
14:18-22; RR 3, pp. 15, 19.
Bud argues that because the modification file was listed in Johnny and
Amanda’s name as clients and they paid Martin’s fees, Martin represented them
and not Mrs. Wade. Appellant’s Brief at 53-54. At trial Bud made the same
assertions to Martin, who rejected them. Supp. RR 2, 115:22-118:13.
Again, ignoring trial testimony, Bud represents to the Court (at 55) that
“There is simply no evidence that Edell Wade wanted to modify the terms of the
Note, much less to reduce the principal or engage in debt forgiveness.” That is
again false. Johnny testified Mrs. Wade wanted to reduce the note’s interest rate to
zero because she did not want to pay taxes on the interest income. Supp. RR 5,
14:15-22, 15:10-15. Amanda testified Mrs. Wade wanted to give Johnny a gift by
reducing the remaining balance on the note. Supp. RR 3, 129:25-130:10. Martin
47
testified that he drafted the modification agreement to do everything Mrs. Wade
wanted. Supp. RR 2, 118:8-13.
In arguing that the only evidence shows that Johnny and Amanda and not
Mrs. Wade told Martin to modify the terms of the note, Bud relies on, and
misrepresents Martin’s notes:
The Martin & Millican file logs show that on April 15, 2009, an office
conference with the “client” (i.e., Johnny and Amanda) was held
regarding the desire to “drop note to 0% or take ¼ off principal
balance.”
Appellant’s Brief at 19. But Martin testified that Mrs. Wade was his only client
and that “client” in his notes refers to her, not Johnny and Amanda. Supp. RR 2,
87:11-20, 109:5-10.
Bud tells this Court (at 56):
“[T]he documentation indicates that even the lawyer on the deal, as
well as Edell’s accountant, were aware only of the elimination of
interest and not of the principal reduction. (emphasis in original)
That is, again, false. Martin’s notes, which Bud quotes (and misrepresents), show
he discussed reduction of principal with Mrs. Wade. Appellant’s Brief p. 19; RR
3, p. 15. Another document Bud cites and relies on, Martin’s cover letter to the
modification agreement, also contradicts Bud’s assertion; in it Martin references
both the new principal balance and the new interest rate. Appellant’s Brief at 20;
RR 3, p. 24. (“Enclosed you will find the Modification Agreement on the note to
your mother in which we have inserted the balance of $227,528.00, reduced the
48
interest rate to zero, and made the monthly payment $1,200 per Amanda’s phone
call of the 26th.”)
Bud contends Amanda was making decisions for Mrs. Wade, relying on
evidence that Amanda provided information regarding monthly note payment
amounts to Martin and provided information to Lori Graham so Graham could
prepare Mrs. Wade’s tax returns. Appellant’s Brief, pp. 54-55. Both Martin and
Graham directly rejected the suggestion that Amanda was making decisions for
Mrs. Wade. Supp. RR 2, 92:12-17 (Martin); id., RR 3, 9:18-25 (Graham).
Bud argues that a bolded provision of the modification agreement stating
that its sole purpose was to estimate interest payments proves Martin was not
aware that the modification also affected the amount of the principal. Appellant’s
Brief at 51, 56. That argument is contradicted by Martin’s notes and cover letter
that provide contemporaneous evidence Martin was aware of both the principal
reduction and the zero interest rate. RR 3, pp. 15, 24. Bud also ignores Martin’s
trial testimony that because he used legal forms, he sometimes failed to omit form
language and that the “sole purpose” paragraph “may have been my mistake.”
Supp. RR 2, 98:25-99:23, 121:20-24.
49
CONCLUSION
In the final section of his brief, Bud makes one last misstatement, telling the
Court that the “jury was only allowed to hear only [sic] a slanted, limited version
of events that began with the Modification.” Appellant’s Brief at 61. Bud then
asks “this Court to permit him to put on the trial to a jury and tell the full story.”
Id. at 60-61 (emphasis in original). As the trial testimony clearly demonstrates,
and as discussed at length above, Bud was not restricted to a “limited version of
events that began with the Modification.” See e.g. Supp. RR 3 45:16-46:12. Bud’s
appeal is based on many more such misstatements.
Appellees respectfully request that the Court affirm the judgment below
based on the jury’s verdict. Appellees further respectfully request that the Court
affirm the trial Court’s summary judgment on Bud’s claims based on Edell Wade’s
2004 sale of her ranch.
50
Respectfully submitted,
/s/ Boyce C. Cabaniss
Boyce C. Cabaniss
State Bar No. 03579950
William G. Christian
State Bar No. 00793505
Kathryn E. Allen
State Bar No. 01043100
GRAVES, DOUGHERTY, HEARON & MOODY
A Professional Corporation
401 Congress Avenue, Suite 2200
Austin, Texas 78701
Telephone: (512) 480.5660
Facsimile: (512) 480.5860
[email protected]
[email protected]
Attorneys for Appellees Johnny Wade
and Amanda Wade
/s/ Claude E. Ducloux
Hill, Ducloux, Carnes & De La Garza
State Bar No. 06157500
400 West 15th Street, Suite 808
Austin, Texas 78701
Telephone: (512) 474-7054
Facsimile: (512) 474-5605
[email protected]
Attorney for Appellee Amanda Wade as
the Independent Executor of the Estate of
Edell Wade
51
CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limitation of Tex. R. App.
P.9.4(i)(2)(B) because it contains 12,587 words, excluding the parts of the brief
exempted by Tex. R. App. P. 9.4(i)(l). The undersigned relied on the word count
of MS Word, the computer program used to prepare the brief.
/s/ Boyce C. Cabaniss
Boyce C. Cabaniss
52
CERTIFICATE OF SERVICE
By my signature below, I hereby certify that a true and correct copy of the
above and foregoing has been served via electronic service to all counsel of record
listed below on this 17th day of July, 2015.
Sheldon E. Richie
Emily J. Seikel
100 Congress Avenue, Suite 1750
Austin, Texas 78701
[email protected]
[email protected]
/s/ Boyce C. Cabaniss
Boyce C. Cabaniss
53
APPENDIX
TAB DESCRIPTION
1. Michael Martin Testimony Excerpts (Supp. RR 2)
2. Johnny Wade Testimony Excerpts (Supp. RR 5)
3. Bud Wade Testimony Excerpts (Supp. RR 4)
4. Edell Wade letter (Supp. RR 6, p. 8 - Def. Exh. 3)
5. Pat Cavness Closing Documents (CR 55, 59-60)
6. Executed Promissory Note (CR 544 - 546)
7. Mocyzgemba v. Mocyzgemba - 2015 WL 704405
8. Rentfro v. Cavazos - 2012 WL 566364
54
TAB 1
Michael Martin Testimony Excerpts (Supp. RR 2)
2 MICHAEL MARTIN
3 Having been previously sworn, testified as follows:
4 CROSS EXAMINATION
5 BY MR. STUBBS:
6 Q Mr. Martin, you said you've been practicing
7 law for 44 years; is that right?
8 A Well, I would say 42 probably.
9 Q And during that time frame how many files do
10 you think you've dealt with?
A Several thousand of them, I'm sure.
Q I mean, by several thousand, we're talking 16,
13 17, 18,000, something like that?
14 A I would guess.
15 Q Okay. How many people worked for you when it
]6 was you and Pat Millican when it was Martin & Millican?
17 A We had three secretaries.
18 Q And did you also have a title company?
19 A Yes.
20 Q Were there also employees at the title
21 company?
22 A Like two or three normally there.
23 Q But how is it that you don't remember every
24 single conversation that you've had with everybody who
25 came in your office?
78
1 A I'm getting awful old.
2 Q My point is on a regular week did you deal
3 with one file individually and that was it, or did you
4 have a busy practice?
5 A I was just a typical small town practitioner
6 doing everything that came in the door, and we were
7 busy.
8 Q And I think from all of this three or four
9 hours of testimony it all really boils down to one
10 question, and that is were you in cahoots with Johnny
11 and Amanda Wade to somehow try to take money or take
12 land or take advantage of Edell Wade?
13 A No.
14 Q In your 42 years of practice, were you ever
15 sanctioned by the State Bar for anything unethical?
16 A No.
17 Q And obviously in 42 years of practice if you
18 had done something such as trying to work with one
19 client to embezzle something or take advantage of
20 another client, that would be where the complaint would
21 go; wouldn't it?
22 MR. RICHIE: Your Honor, I'm going to
23 object. We've not sued Mr. Martin or suggested that he
24 embezzled anything. It's just irrelevant.
25 MR. STUBBS: Well, they spent three hours
79
1 on him trying to --
2 THE COURT: I'm going to overrule the
3 objection and let him answer.
4 A Could you repeat that?
5 Q (By Mr. Stubbs) In your 42 years of practice,
6 had you ever tried to conspire with a client to embezzle
7 or take advantage of some other client, the
8 State Bar would be where that complaint would be filed?
9 A Correct.
10 Q And in your 42 years you have never been
11 sanctioned for anything unethical, correct?
12 A That's correct.
13 Q Now, if we start with this $80,000 in the safe
14 deposit box, are you familiar with the way certain
15 accounts at institutions can be held?'
16 A I think so.
17 Q And by that what I'm getting at is you can
18 have an account that is solely owned by one person, it
19 can be held as a pay on death beneficiary or it can be
20 held with the rights of survivorship?
21 A Correct.
22 Q And in the event of this safe deposit box that
23 is at issue, do you know how it was held?
24 A No, I don't.
25 Q Okay. If it were held with a right of
80
1 survivorship to Johnny Wade, then would there be any
2 obligation for him to turn that money over as an estate
3 asset?
4 A No.
5 Q So with that right of survivorship, then upon
6 Edell's passing the contents of that safe deposit box
7 became his sole property; didn't it?
8 A I would agree.
9 Q If the safe deposit box was held as joint
10 tenants can you tell this jury what that means?
11 A I would call it co-ownership. Two persons
12 having equal ownership of one account.
13 Q So was that the -- would that have the same
14 effect upon her passing if it were joint tenants?
15 A No. If it's not with survivorship I'd say no.
16 Q But if it did have the right of survivorship
17 it would be the same?
18 A It would.
19 Q Okay. Now, recently you were asked some
20 questions about a life estate and whether or not a life
21 estate is enforceable and so forth. And I believe that
22 Mr. Richie showed you what's been marked as Plaintiff's
23 Exhibit No. 5. Do you still have that up there?
24 A I do.
25 Q And under number 2, does that seem to be clear
81
1 to you that there was an intention for Edell Wade to
2 have a right of survivor -- I'm sorry. To have a life
3 estate or effectively the ability to remain in her home
4 until she passed away?
5 A Yes.
6 Q Even though she was selling, I'm going to say
7 the ranch, this appears to show that there was a meeting
8 of the minds that she could stay in her house until she
9 passed away?
10 A Yes.
11 Q Now, do you know where she lived When she
12 passed away?
13 A No, I don't.
14 Q Are you aware of any time when Johnny or
15 Amanda Wade tried to force her off of that property?
16 A No.
17 Q If the evidence in this case showed that she
18 actually passed away in her bedroom in her house and was
19 Star Flighted back simply so she could, would that
20 surprise you?
21 A No.
22 Q So all this question about whether it was a
23 life estate or not, if she never was asked to leave her
24 property and in fact passed away in her own bedroom,
25 it's really just smoke and mirrors; isn't it?
82
1 A I would think.
2 Q You were asked a bunch of questions about
3 various documents and whatnot, and the effect of that
4 was to make some implication that Amanda Wade abused the
5 power of attorney that she held for Edell Wade. Do you
6 recall those questions?
7 A I do.
8 Q To the best of your knowledge did she ever use
9 that power of attorney in any way?
10 A I wouldn't have any way of knowing. Nothing
11 came to my attention.
12 Q Well, in the modification that Mr. Richie
13 would ask you all these questions about, she didn't go
14 in and sign it on behalf of Edell wade; did she?
15 A Oh, no.
16 Q On the power of attorney, the various power of
17 attorney documents, she never went in and signed
18 granting someone else somehow or on behalf of Edell
19 Wade; did she?
20 A No.
21 Q As far as going back to the question about the
22 life estate, you were kind of led into questions to
23 imply that Johnny Wade or Amanda Wade could have then
24 sold that ranch but in that let's just assume that
25 Johnny or Amanda or both were trying to sell that ranch
83
1 while Edell were still living, Johnny and Amanda would
2 have been aware that there was this agreement for a life
3 estate, correct?
4 A Correct.
5 Q So they could not have signed off on a
6 contract saying there were no liens, no tenants and so
7 forth on the property, could they, to enter into a
8 contract to sell it?
9 A Well, with Mrs. Wade living in her house,
10 practically I can't see how you could do that.
11 Q So again just smoke and mirrors?
12 A I would agree.
13 Q In your representation of Edell Wade in doing
14 her will, power of attorney, HIPAA documents and the
15 modification, was it ever your understanding that you
16 were representing anyone other than Edell Wade?
17 A No.
18 Q Now, I don't know if Mr. Richie has ever
19 practiced law in a small town, but you said at the
20 beginning that you have represented whatever walks in
21 the door. You mentioned criminal cases for instance.
22 So in representing criminal cases you have somebody
23 that's 17, 18 years old. Is it odd for them to come in
24 with a relative?
25 A No.
84
1 Q Is it odd for you to put the contact
2 information for that relative in your file?
3 A Certainly not.
4 Q Is it odd for you to send the bill to the
5 relative?
6 A No.
7 Q Is it odd for you to send correspondence to
8 the relative?
9 A No. Especially criminals frequently don't
10 have an address you can use anyway.
11 Q Sure. Now, does any of that change who your
12 actual client is?
13 A No.
14 Q So just because you're talking to a parent or
15 a grandparent and you're calling the parent or the
16 grandparent and you're sending the correspondence to the
17 parent or the grandparent, your client is still the kid,
18 right?
19 A Of course.
20 Q And isn't that similar to a situation to where
21 you may be doing work for someone who is older?
22 A Very common to be in that situation.
23 Q So if we're dealing with someone who's 80
24 years old or above and they live on the same property
25 with the child, or a grandchild for that matter, would
85
it be uncommon for you to have that child or
2 grandchild's contact information in your file?
3 A No.
4 Q Would it be odd for you to deliver the
:2
documents to the child or grandchild?
6 A No.
Q Would it be odd for you to contact or have
H communications with that child or grandchild?
9 A No.
10 Q Would it be odd for you to send the bill to
11 the child or grandchild?
12 A No.
13 Q Does any of that change the fact that the
14 older person involved is actually your client?
15 A Not in my opinion.
16 Q And at the end of the day, and upon his
question and you agreed, that you as the attorney had a
18 fiduciary duty to Edell Wade?
19 A Yes.
20 Q And can you explain to this jury what that
21 means, what your duty was for Edell Wade?
22 A Well, I think I owed her a duty to look out
23 for her business just plainly stated, and, you know, if
24 I thought someone was trying to take advantage of her,
25 I think I would have needed to have told her and would
86
1 have.
2 Q In this instance did you ever tell her that
3 you thought someone was trying to take advantage of her?
4 A No.
5 Q Now, as far as all these documents and all
6 these questions about how we came up with the number and
7 where the interest came from or whatnot, your file
8 clearly shows that you had communication with Lori
9 Graham, correct?
10 A Right.
11 Q And in your file I believe you have some line
12 items where you say, Communication with client. And
13 then separate from that you have some lines that say,
14 Communication with Amanda. Right?
15 A Yes.
16 Q That distinction of having lines that say,
17 Communication with client, versus lines that say,
18 Communication with Amanda, would show that you never
1.9 viewed Amanda as your client in that case, right?
20 A True.
21 Q And in your drafting of the documents does it
22 really matter who communicates numbers to you?
23 A No. It looked like to me that it was kind of
24 a joint project so I wasn't particularly concerned
25 knowing that they were going to get to read it over and
87
1 come sign it, and if either side didn't like it they had
2 every opportunity to say so.
3 Q Now, obviously you can't represent both sides
4 in that, right?
5 A Correct.
6 Q And were you ever representing both sides?
7 A I felt like I was representing Edell Wade.
8 Q Okay. Now, in your 42 years of practice how
9 odd is it for an older person to just flat give property
10 to a kid?
11 A It's quite common.
12 Q And so in fact, I mean the numbers really
13 don't even matter, do they?
14 A Well, I could tell they had a close enough
15 relationship that I didn't think anyone was trying to
16 get it down to the gnat's ear and would have been
17 surprised if they were. I really didn't know what was
18 going on. It changed two or three times. I really
19 didn't know and hoped that with the accountant they
20 would work it out to where everybody was happy and the
21 IRS hopefully would be happy.
22 Q I'm sorry. Go ahead.
23 A And I didn't see any particular reason for me
24 to get into that discussion especially in a family deal.
25 I didn't imagine they wanted my input.
88
1 Q Is your job as a lawyer, when somebody comes
2 into your office, is your job to tell people what other
3 people normally do or is your job to do what they want?
4 A I think it's to do what they want. Nobody
asked me should they do it. They came and said they're
5 doing it.
7 Q Have you ever drafted a will that left
8 property to a charity?
9 A Sure.
10 Q Have you ever drafted a will that left
11 property to a charity or excluded a child?
12 A Yes.
13 Q Is it your job to tell them they can't exclude
14 a child?
15 A No.
16 Q Is it your job to tell them they need to leave
17 their property to one child or another?
18 A No.
19 Q Is it your job to tell them that they need to
20 charge interest or that they need to not reduce
21 principal?
22 A No. And the only reason I would discuss the
23 interest is like I would want them to be aware that the
24 IRS may penalize them.
25 Q Right. And then you were asked questions
89
1 about 1099s and you were asked questions about estate
2 tax returns and those sorts of things. Do you generally
3 send out 1099s?
4 A I never do.
5 Q Never have?
6 A Never.
7 Q Do you generally file estate tax returns?
8 A We did file estate tax returns, yes.
9 Q Is that something that you require any time
10 you have some sort of transaction that might involve an
11 estate tax return?
12 A Is what required?
13 Q Well, what I'm saying is if somebody comes in
14 and they want to do any type of transaction, I mean,
15 you're not under any duty to file their estate tax
16 return; are you?
17 A Oh, no.
18 Q Okay. Ultimately that decision is left up to
19 the client, isn't it; whether or not they file an estate
20 tax return?
21 A Well, yeah. I mean, you may be obligated by
22 law to file one but whether they actually do it, they
23 don't want to do it, that's kind of their business.
24 Q Right. That's my point. You're not, as the
25 attorney, obligated to do anything?
90
1 A No.
2 Q And so sometimes you have people who you tell
3 them this may be an estate tax or a gift tax event,, but
4 ultimately they're the ones who decide whether or not
5 they're going to file a return?
A Correct.
7 Q And if we pare this down, I mean, you worked
8 for Edell Wade starting back in 2007, correct?
9 A Correct.
10 Q So you doing the modification wasn't like the
11 first time you ever met her, right?
12 A No.
13 Q And I believe you said earlier she was clearly
14 lucid?
15 A Yes.
16 Q Or very lucid or something along those lines?
17 A Yes, sir.
18 Q Didn't have any concerns that she was under
19 duress?
20 A No.
21 Q Didn't have any concerns that she was out of
22 her right mind?
23 A Not at all.
24 Q Didn't have any concerns that she wasn't doing
25 exactly what she wanted to do?
91
A No concern at all.
Q In fact, if you did, based on what you told
this jury about your fiduciary duty you wouldn't have
participated; would you?
A That's true.
6 Q You had an active practice, right?
7 A I did.
8 Q Did you need her $200 or $300 to make ends
9 meet?
10 A No. And certainly don't want to get involved
11 in a squabble like that for some pittance.
12 Q So any of your communications, whether they
13 were with Lori Graham, Amanda Wade, Edell Wade, Johnny
14 Wade, no matter who relayed the information you always
15 felt like what you were doing was what Edell wanted,
16 correct?
17 A That's correct.
18 Q Because she was your client?
19 A Right.
20 Q Now, you were asked some questions about
21 paragraph 25 of the prior power of attorney that Edell
22 gave to Nancy, and I believe it had something about
23 talking to some of the other siblings?
24 A Yes.
25 Q Now, at the time that was entered Johnny and
92
1 Amanda still lived in California; didn't they?
2 A I really don't know.
3 Q If I --
4 A I assume so. My vague recollection of when
5 they came back I believe it was right.
6 Q Couldn't you also gain from that that Edell
7 really didn't trust Nancy and that she wanted her to
8 communicate with the others because she didn't have full
9 trust in her?
10 MR. RICHIE: Your Honor, objection.
11 Calls for speculation.
12 THE COURT: If you know from discussions
13 with your client you may answer that question. If you
14 don't, then I'll sustain the objection.
15 A I don't have any knowledge of that.
16 THE COURT: All right. I'll sustain the
17 objection.
18 Q (By Mr. Stubbs) As far as the sale of the
19 ranch is it your understanding that Edell was the owner
20 of that property whenever the sale took place?
21 A Yes.
22 Q She wasn't a co-owner; was she?
23 A Not to my knowledge.
24 Q And at that time did any of her kids have any
25 legal interest in that property?
93
1 A I don't believe so.
2 Q So had she, instead of selling it to one of
3 her kids and keeping it in the family, had she decided
4 to sell it to the neighbor, could she have done that?
5 A Sure.
6 Q Did she have to get permission from her kids?
7 A No.
8 Q Did she have to tell the kids?
9 A No.
10 Q Did the kids have any say in what the terms
11 would be?
12 A No.
13 Q She could have sold it for cash. She could
14 have sold it on a note. She could have just given it to
15 he neighbor; couldn't she?
16 A True.
17 Q You were asked some questions about the
18 various powers of attorney and one was filed and one
19 wasn't filed, whatnot. There's no legal requirement
20 that a power of attorney be filed; is there?
21 A That's correct.
22 Q And you can file one of record if you choose
to, but you don't have to, correct?
21 A Right.
Q All these questions about whether or not you
ci4
1 communicated directly with Edell while the documents
2 were being proven up, you ultimately were perfectly
3 comfortable that she knew what the documents said, she
4 knew what the documents meant and it was what she wanted
5 to do when she signed them, correct?
6 A That's true.
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
95
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 Q Okay. Along those lines I think I understood
21 your testimony to be when we were trying to figure out
22 what the correct principal amount was for the
23 modification, it could have been any number that got put
24 in there so long as Edell agreed to it, right?
25 A Yes.
100
1 Q And so long as that's what she wanted?
2 A Correct.
3 Q And I believe your notes show that you had
4 multiple communication with Lori Graham, and Mr. Richie
5 is trying to say that didn't happen.
6 A Yes, sir.
7 Q And are you comfortable that you talked to
8 Lori Graham?
A Oh, I know I talked to Lori Graham.
10 Q If you have an older person who wants to give
LI property to just -- an easiest example is a child.
12 Wouldn't it be proper to simply say there's no benefit
J_3 to the older person; is there?
14 A Well, emotional benefit is the benefit I would
15 see.
16 Q So there is clearly a difference between a
17 financial benefit and an emotional benefit?
18 A Certainly.
19 Q And in your 42 years of practice is it odd for
20 someone to give up a financial benefit in exchange for
21 the emotional benefit of knowing they're helping their
22 kid?
23 A No.
24 • Happens every day?
A Happens every day.
101
1 fences, hard to get people to agree?
2 A Right. Access, all sorts of things make real
3 property hard to divide.
4 Q So if you had someone who thinks that there
5 may be a fight between their kids or that they don't get
6 along, is liquidating the real estate and selling it and
7 converting it into either cash or a note or some sort of
8 tangible something that can be split evenly, is that a
9 common practice?
10 A I'd say so.
11 MR. STUBBS: Your Honor, if I could have
12 just a moment to go over my notes.
13 Q (By Mr. Stubbs) Mr. Martin, just to make sure
14 that it's accurate and clear to this jury, you never saw
15 any indication that Edell Wade suffered from any mental
16 issues; did you?
17 A I did not and I saw her, say in the hardware
18 store after whatever the last dealings were I had with
19 her with some of her family, I believe it was family.
20 And she was getting around good, looked normal and
21 seemed to be doing fine.
22 Q You don't owe Johnny and Amanda anything in
23 this case; do you?
24 A Unless I owe a bill at the lumber yard -- I
25 mean the hardware store. I'm not sure if I do or not.
108
Q But you don't have -- you're not out to take
2 one side or the other. You simply want this jury to
3 know what you know, correct?
4 A That's correct.
5 Q And Edell was your client; it wasn't Johnny or
6 Amanda, right?
7 A True.
8 Q And everything you did you're comfortable that
9 that's what Edell wanted?
10 A I am comfortable.
11 MR. STUBBS: I'll pass the witness.
12
13
14
15
16
17
18
19
20
21
22
23
21
i09
1 questions I have.
2 THE COURT: Redirect?
3 MR. RICHIE: Yes, sir.
4 REDIRECT EXAMINATION
5 BY MR. RICHIE:
6 Q If in fact there is an executor and there's a
7 note and there have been payments skipped or there have
8 been payments that have been made but they are below
9 what is required under the note, is the executor
10 required to enforce that note and declare a default?
11 A I don't know that they're required. I would
12 think they're certainly entitled to in their judgment if
13 that's the proper course of action to protect the
14 estate.
15 Q If there were an event of skipped payments,
16 for example, or late payments or a modification that
17 shouldn't have taken place and the executor is the same
18 person as the maker of the note, wouldn't that executor
19 then have a conflict of interest with respect to the
20 enforcement of the original note? That would be a
21 conflict; wouldn't it?
22 A Well, I would say it would be a problem, yes.
23 Q So let me now talk about this question of who
24 was your client.
25 MR. RICHIE: And I apologize, Judge. I
115
1 need to get up.
2 Q Let me show you -- you might check your own
3 file, it might be the easiest. It's from Exhibit 38 and
4 I'm going to ask you, please, I want you to look at in
5 your file if you don't mind and I'm going to show you
6 what I'm looking at. We went over this earlier but
7 there was a file for Edell Wade in 2007 and that file
8 had on it the file number.
9 A Yes.
10 Q And that file number was unique to Edell Wade?
11 A Yes.
12 Q And you could have used that same category of
13 file numbers in 2009, right?
14 A Yes.
15 Q But you didn't?
16 A Yes.
17 Q And your file says Johnny and Amanda Wade are
18 the clients?
19 A Yes.
20 Q And then you were asked by Mr. Stubbs, Well,
21 isn't it true that really even though you put that on
22 the file you're really representing Edell Wade. I'm
23 gong to show you your payment ledger in the file. Who
24 paid for the modification work?
25 A It says it was paid for by Amanda Wade.
116
1 Q And who does it show as the client on that
2 money ledger that shows who's paying?
3 A Johnny Wade, et ux.
4 Q That would be Amanda?
5 A Correct.
6 Q Then if we go back to the file contents, Mr.
7 Martin -- and again I apologize for standing over you,
8 but there is a transmittal in here where your office
9 sends some paper work to Johnny and Amanda. And I'm
10 trying to go fast because I want to end and get
11 everybody out of here today like the Judge suggested.
12 Or maybe he just wants me out of here. In any event,
13 here's this little slip of paper and I need to show the
14 jury what it looks like. Who's it addressed to?
15 A Mr. And Mrs. Johnny Wade.
16 Q Is it you -- are you the author of this?
17 A Yes.
18 Q And you say, Enclosed are the copy of the
19 recorded modification agreement, the original of which
20 has been sent to Edell Wade and your file regarding this
21 matter which you left with us. That's what it says;
22 doesn't it?
23 A Uh-huh.
24 Q And that's what you sent them was Johnny and
25 Amanda's file; didn't you?
117
1 A Uh-huh.
2 Q I mean, it's pretty clear that you were
3 representing Johnny and Amanda Wade. That's what your
4 file says and that's what your letters say and your
5 billing says. And I know that you want to tell us that
6 you weren't, but that file has Johnny and Amanda Wade's
7 name on it; doesn't it?
8 A It does. What I would say about that is
9 especially in a family situation I wasn't real careful
10 about exactly whose name went on the file and in view of
11 the fact that I had done this other work for Mrs. Wade I
12 felt like I was obligated to see that I did what she
13 wanted done. And I think I did what she wanted done.
14 Q And Mr. Stubbs asked you with older people
15 that's sometimes the way you communicate, with their
16 family members?
17 A Yes.
18 Q In 2007 you opened a file with Edell Wade's
19 name on it, Exhibit 88. She was 92 years old?
20 A I'm surprised, but I'm sure that's right.
21 Q That's old, isn't it? It's older than me.
22 A It's a little older than me.
23 Q And in it one of the first things is a letter
24 to Edell Wade, not Johnny, right?
25 A Right.
118
TAB 2
Johnny Wade Testimony Excerpts (Supp. RR 5)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15 Q Now let me fast forward in time to the time of
16 ithe loan modification. So are you with me?
17 A Yes, ma'am.
18 Q Okay. Did you suggest that they loan be
19 modified or changed?
20 A No.
Q Who did?
22 A My mother.
23 Q Did you have conversations with your mom about
24 the idea of changing the loan?
25 A We had a conversation and she -- she initially
14
1 had had a conversation with Amanda that she wanted --
2 Q I need to know --
3 MR. WALDEN: Your Honor, I'm going to
4 object. This is the heart of the matter and it's about
5 what Edell Wade said by an interested party. Dead Man's
6 statute and hearsay.
7 THE COURT: All right. I'm going to have
8 to sustain the objection as far as that conversation
9 goes, what Amanda and Johnny talked about.
10 Q (By Ms. Allen) Based upon whatever
11 conversation you had with your mom, what did you do?
12 A I took her to Mike Martin's office and since
13 she had suggested to me that she wanted to not pay the
14 interest on the note and that -- see what I could do
15 about it. So I took her to Mike Martin's office.
16 Q What happened when you got to Mr. Martin's
17 office?
18 A I basically got introduced but kind of set the
19 tone as far as with Mike as far as what my mother wanted
20 to do, and at the point that I kind of conveyed her
21 thoughts and kind of -- so that he would understand the
22 situation. He said, You need to leave the room.
23 Q Did you?
24 A I did. And waited in the lobby until they
25 finished their conversation.
15
1 Q Did you eavesdrop outside the door?
2 A No.
3 Q Did you have any further conversations with
4 Mr. Michael Martin?
5 A Not about that, no.
6 Q Who was Mr. Martin representing in that
7 transaction?
8 A My mother.
9 Q Was there any doubt in your mind about that?
10 A No.
11 Q Did you involve yourself in any of this
12 decision making about that?
13 A No.
14 Q Did you know what the unpaid balance on the
15 original note was at that time?
16 A No, ma'am.
17 Q Did you know what decisions got made behind
18 that closed door about the modification of the loan?
19 A No, ma'am.
20 Q Who did you look to or believe would make
21 whatever changes and whatever paperwork there needed to
22 be so that your what your mama wanted to do got done?
23 A Mike Martin was the one who was representing
24 my mother and I had full confidence that he was taking
25 care of my mother's best interest.
16
1 Q Did it bother you to foot the bill for that?
2 A No, not whatsoever.
3 Q Did -- setting aside of course the
4 commencement of this lawsuit after your mom's passing --
5 but during your mom's lifetime did anybody ever suggest
6 that the document you guys ended up signing wasn't what
7 your mom wanted to do?
8 A It was -- she never suggested that or anybody
9 else.
10 Q You did sign the modification, right?
11 A Correct.
12 Q And she signed it, correct?
13 A Yes.
14 Q Do you know the circumstances of her signing
15 it?
16 A I had taken her -- whenever we got notice that
17 the papers were ready I would always, or for the most
18 part, you know, pick her up and drive her to, in this
19 case, drive her to Mike Martin's office. And we went in
20 on this particular occasion, walked into the office and
21 into the lobby. There was Ms. Varner, I believe was the
22 one that came to and presented the paper and there were
23 little Sign Here stickets on it. And I don't know if
24 mother signed first or if I signed first, but I just saw
25 where it said for me to sign and I signed the paper.
17
TAB 3
Bud Wade Testimony Excerpts (Supp. RR 4)
1
2
3
4
5
6 Q And you heard your sister testify, Nancy, that
7 she actually went with your mother and Johnny to Pat
8 Cavness's office before the sale ever took place, right?
9 A I heard her say that.
10 Q You don't have any reason to think she's
11 lying, do you?
12 A No, I don't doubt her word at all.
13 Q So it wasn't really in secret; was it?
1.4 A It was to me. I'm talking about myself.
15 Q So you find out about it within a few days
16 after the sale?
17 A Right.
18 Q You had actual notice. You knew it had
19 happened, correct?
20 A Yes.
21 Q And so obviously -- well, I believe you said
22 something like you smelled a rat; is that right?
23 A Well, kind of smelled like one.
24 Q Felt like she had been bamboozled?
25 A Exactly.
44
Q So obviously to right this wrong, as you want
2 to tell this jury, you immediately went to mom and you
3 said, Mom, we have to undo this deal. Right; that's
/1 what you did?
A No.
6 Q You didn't do that?
7 A I didn't go to her place at all. I never
8 talked to her about the place at all. If she wanted to
9 talk about the place, she could have talked to me.
10 Q But she did. She called your wife and told
11 her she sold the place?
12 A She said the place sold and that's all she
1 13 said.
14 Q And she opened up that conversation, right?
15 A Well, I mean if that's what you want to call
16 it.
17 Q And since this -- since she had been
18 bamboozled and you're so concerned about mom you did
19 nothing, right?
20 A Well, that was after the papers was signed.
21 It's a little bit hard to do anything.
22 Q No, no, no. That's not my question. You
didn't try to do anything; did you?
24 A Well, what could I have done?
Q You could have called her; couldn't you?
45
1 A What for?
2 Q To say, Mom, this is a mistake. We've got to
3 undo this. Right? I don't like it. You could have
4 done that; couldn't you?
5 A Well, I did respect my mother as a person.
6 She made a few decisions that in my personal decision it
7 was a mistake. It was the worst mistake she ever made
8 in her life as far as I'm concerned.
9 Q And so you waited seven years before you do
10 anything about it, right?
11 A It was after her death.
12 Q So you respected her enough not to say
13 anything to her about it, even though you had actual
14 knowledge --
15 A If she wanted to talk to me, she could have.
16 I would have listened.
17 Q But you don't have enough respect for her to
18 not file a suit after she dies about it?
19 A She didn't know anything about it. She was
20 passed away.
21
22
23
24
25
46
1 Q Okay. And never went to mom and said, Mom,
2 I'd like to undo this or I would like for you to ask
3 Johnny to sell the ranch to all of us. Did you ever ask
4 her that?
5 A Why would I -- it would cause her to be upset
6 and I didn't want to do that.
7 Q Whenever she did pass away, you went ahead and
8 accepted your part of your inheritance; didn't you?
9 MR. RICHIE: Your Honor, may we approach?
10 THE COURT: You may.
11 (The following was in the presence
12 but out of the hearing of the jury.)
13 MR. RICHIE: They had counterclaims based upon
14 waiving because he had accepted his inheritance rights
15 and you ruled on that. It doesn't matter with him going
16 into the, fact that he accepted his inheritance benefits
17 under the rule. It's irrelevant.
18 MR. STUBBS: On top of that there hasn't
19 been any. There's been POD beneficiary designations
20 that have been distributed, and that is it.
21 MR. RICHIE: I'm not --
22 MR. STUBBS: Well, your co-counsel
23 confused it badly and he did that on purpose.
24 THE COURT: Okay. You may ask about the
25 -- because I assume that Amanda made those distributions
48
TAB 4
Edell Wade letter (Supp. RR 6, p. 8 - Def. Exh. 3)
TAB 5
Pat Cavness Closing Documents (CR 55, 59-60)
CAVNESS LAW OFFICE
414 South Lfveoak
P.O. Sex 409
Lampasas, Texas 76a
2) 56 aes
Pat E. Cwsnese
Attorney at Law FAX (512) 5564508
January 18, 2004
Johnny and Amanda Wade
40485 Murrleta Hot Springs Rd #121
MUrneta, CA 94363
Re: Purchase from EDELL WADE
Deer Johnny and Amanda:
Enclosed with this letter are the fallowing documents for your review and signature:
1. Warranty Deed with Vendor's Lien to be signed in the designated places before a
Notary Public.
2. Promissory Note to be signed in the designated places.
3. Deed of Trust to be signed In the designated places before a Notary Public.
4_ Closing Agreement for you to duplicate and sign both originate In the designated pieces.
5. Non-repreerentetion letter for you to sign in the designated places.
S. Settlement Statement for you to sign in the designated places.
- -I .1 • e a • looted and return them with
your check in the txrileUrit of $536.00. I will then get Mts. Wade to sign; record the aPProPri
documents; and forward to you your recorded deed and-a-oopy-of the Settlement Stetemen
Please 1st me know It you have any questions.
Thank you.
Very truly yours,
PAT E. CAI/NESS
8 Enclosures
PEC/laf
Pile No. W-109.5
Documents Sent by FAX to: (909) 506-61306
Jew000063
55
Promissory Note
Date: January 2004
narrower! JOI-414t4Y WAD • 1,4 • • • A a• • wife
Borrower's Mailing Address:
JOHNNY WADE end AMANDA WADE
40485 Murrieta Hot Springs Rd #121
Murrieta. CA 02563
County
Lendert FIlleFt L. WADE.
Place for Payment:
10400 SCR 207
Lamp/ones, Lampasas County, TX 76550, or any other place that Lender may
designate in writing.
r rto p Amount: •
Annual interest Rate: Two Percent (2%)
Maturity Date: January 1, 2036
Annual interest Rate on Matured. Unpaid Amounts: Eighteen Percent (18%)
Terms of Payment (principal and Interest);
Accrued' Interest Is payabe-o1yttra-1° day of - February;-2004-end-on the IsLeer uf-sech--
:1 0.• 'A • •11 0.011 IA A* 01. I 'z I • • f.. I. t. • e = d
Z ab I r• th
Installments of ONE THOUSAND EIGHT HUNDRED FORTY-EIGHT AND 10/100 DOLLARS
($1,848.10), eeoh, beginning February 1, 2006, and continuing regularly on the 1st day of each
succeeding month until paid. Payments will be applied first to accrued interest and the remainder to
reduction of the Principal Amount.
Security for Payment: This note is secured by a vendors lien and superior title retained In a
deed from EDELL WADE to Borrower dated January 2004 and bye deed of trust of even date
front JDFINNY-V4ADivrAMANDA WimE-tri-Mat-EL:mmess, trusbreTtrorroi-which mover -Me
following real properly:
Being 475.28 acres out of the West One Quarter of Section 60, out of the Texas Central
Railroad Company Survey, A.M. Berry Survey. Abstract No. 1645. and the A.M. Derry Survey, Abstract
No. 1678. in Burnet County. Texas, and being the same property conveyed Indeed dated January 26,
1952, from Manuel Delbert Sylvester at or to Charles Otto Wade end wtte, Edell Sylvester Wade,
recorded in Volume 108, Page 421-425, Deed Records of Burnet County, Texas. to which instrument
reference Is here made for all purposes.
Jew0000S7
59
Other Security for Payment: None,
Borrower promises to pay to the order of Lender the Principal Amount plus Interest at the
e---Trits-rto-te ts-peyeblo at the Piece fur Paymel erideaccording-te-the "rermeof
Annual inteirest FM-
Payment:-Aillenpaldemounte are dueleetheMeeturily Date After maturity, Borrower promises to pay
any unpaid principal balance plus Interest at the Annual Interest Rate on Matured, Unpaid Amounts,
if Borrower defaults in the payment of this note or In the performance of any obligation in arty
Instrument securing. or collateral to this note, Lender may declare the unpaid principal balance, earned
interest, and any other arnoUnts Owed On the note Immediately due. Borrower and each surety,
endorser, and guarantor waive all demand for payment, presentation for payment, notice of intention
to accelerate maturity, notice of acceleration of maturity, protest. and notice of protest, to the extent
Borrower also promises to pay reasonable attorney's fees and court and other costs if this note
is placed in the hands of art attorney to collect or enforce the note. These expenses will bear interest
from the date of advance at the Annual Interest Rate on Matured, Unpaid Amounts. Borrowerwtll pay
Lender these expenses and interest on demand at the Place for Payment. These expenses and
interest will become part of the debt evidenced by the note and will be secured by any security for
payment,
Prepayment, BUnuwer may prepay-this note-in arryeemount-at-anyetime befereethe-Meturityleate
_vetheut penalty or premium
Application of Prepayment: Prepayments will be applied to Installments on the last maturing
principal. and Interest on that prepaid principal will immediately cease to accrue.
Interest on the debt evidenced by this note will not exceed the maximum rate or amount of
nonusurfous interest that may be contracted for, taken, reserved, charged, or received under law, Any
interest In excess of that maximum amount will be credited on the Principal Amount or, If the Principal
At,iot nietere beau refendece--Orranyeaccelerseioneer-Fe
excess interest wilthe canceled automatically as of the acceleration or prepayment or; ir the excess
interest has already been paid, credited on the Principal Amount Of, if the Principal Amount has been
paid, refunded. This provision overrides arty conflicting provisions in this note and all other
Instruments concerning the debt.
Each Borrower is respensIble for all obligations represented by this note.
When the context requires, singular nouns and pronouns Include the plural.
If any Installment becomes overdue for more than fifteen days, et Lenders option a tate
payment charge of $50.00 may be charged in order to defray the expense of nanoitng tne delinquent—
payment.
A default exists under this note if (1) (a) Borrower or (b) any other person liable on any pan of
this note or who grants a lien or security interest on property as security for any part of this note (an
"Other Obligated Party") fails to timely pay or perform any obligation or covenant In any written
agreement between Lender and Borrower or any Other Obligated Party; (2) any warranty, covenant, or
—representation In wr(tten.agreernpnt Lender end Borrower or any
2
dew000068
Other Obligated Party is materially false when made; (3) a receiver is appointed for Borrower, any
Other Obligated Party, or any properly on which a lien or security Interest Is created as security (the
"Collateral Security') for any part of this note; (4) any Collateral Security is assigned for the beatent of
creditors; (8) a bankruptcy or insolvency proceeding Is commenced by Borrower, a parte p of
von
proceeding is commenced against Borrower, a partnership of which Borrower is a general partner, or
an Other Obligated Party and (b) the proceeding continues without dismissal for sixty days, the party
against whern the proceeding Is commenced admits the material allegations of the petition against it,
or an order for relief Is entered; (7) any of the following parties Is dissolved, begins to wind up Its
affairs, Is authorized to dissolve or wind up its affairs by Its governing body or persons. or any event
occurs or condition exists that permits the dissolution or winding up of the affairs of any of the
foticiwe lies: Borrower, a rtherehlp of which Borrower is a general partner, or an Other
Obligated Party; a ) any Col a era . at 35. I •
— Witten= ofeirsesigielal-wrii w order-ef-setcune,er.deetnu-alion—uniiess U is -P-f-farniall1LreOleced With
collateral 500urfty of like kind and quality or restored to Its former condition.
Notwithstanding any other provision of this note, in the event of a default, before exercising any
of Lender's remedies under this note or any deed of trust or warranty deed with vendor's lien securing
It, Lender wilt first give Borrower written notice of default and Borrower will have ton days after notice is
given in which to cure the default. If the default is not cured ten days after notice., Borrower and each
surety, endorser, end guarantor waive ail demand for payment, presentation for payment, notice of
Intention to accelerate maturity, notice of acceleration of maturity, protest, arid notice of pit/WM. to the
nrnatad by law,
ti arty provision or tells note conflicts with any provision of a loan agreement, deed of trust, or
security agreement of the same transaction between Lender and Borrower, the provisions of the deed
of trust will govern to the extent of the conflict.
This note will be eonstrusel under the laws of the state Or Texas, without regard to
choice-of-law rules of any jurisdiction.
JOHNNY WADE
AMANDA WADE
4
Jew000069
61
TAB 6
Executed Promissory Note (CR 544 - 546)
Date; February 6, 2004
Promissory Note
COPY
Borrower: JOHNNY WADE and AMANDA WADE, husband arid wife.
Borrower's Mailing Address:
JOHNNY WADE and AMANDA WADE
40485 Murrieta Hot Springs Rd # 121
Murrieta, CA 92563
Riverside County
Lender: EDELL WADE.
Place for Payment:,
10400 BCR 207
Lampasas, Burnet County, TX 76550, or any other place th Lendef may designate in
, writing.
Principal Amount; $500,000.00
Annual interest Rate: Two Percent (2%)
Maturity Date; February 1, 2036
Annual interest Rate on Matured, Unpaid Amounts: Twelve Percent (12%)
Terms of Payment (principal and interest):
Accrued interest is payable on the 14 day of March, 2004 and on the day of each succeeding
month through February 1, 2006. Principal and interest are due and payable in monthly installments of
ONE THOUSAND EIGHT HUNDRED FORTY-EIGHT AND 10/100 DOLLARS ($1,848.10), each,
beginning February 1, 2006, and continuing regularly on the lit day of each succeeding month until
paid. Payments will be applied rust to accrued interest and the remaieder to reduction of the Principal
Amount.
Security for Payment:
This note is secured by a vendor's lien and superior title retained in a died from EDELL
WADE to Borrower dated of even date herewith and by a deed of trust of even date herewith from
JOHNNY WADE and AMANDA WADE to Pat E. Coyness, Trustee, both of which cover the
ibllowing real property:
Chat certain real property more particularly descnbed on the attached Exhibit "A".
111323-2 02/04/2004
544
Other Security fOr Payment: None
Borrower promises to pay to the order of Lender the Principal Amount plus interest at the
Annual Interest Rate. This note is payable at the Place for Payment and according to the Terms. of
Payment. All unpaid amounts are due by the Maturity Date. After maturity, Borrower premises so pay
any unpaid principal balance plus interest at the Annual Interest Rate on Matured;U:S,Paid Amount's.
If Borrower defaults in the payment of this note or in the performance of any obligation in any
instrument securing or collateral to this note, and the default continues after Lender gives Borrower
written notice of the default and ten (10) days opportunity to cure such default, Lender may declare the
unpaid principal balance, earned interest, and any other amounts owed on the note immediately due.
Borrower and each surety, endorser, and guarantor waive all demand fpr payment, presentation for
payment, notice of intention to accelerate maturity, notice of acceleration Of Maturity. protest, and
notice of protest, to the extent permitted by law.
Borrower also promises to pay reasonable attOrney's fees and court arid other costs if this note
is placed in the hands of bn attorney to collect or enforce the note. These expenses wilt bear interest
from the date of advance at the Annual Interest Rate on Matured, Unpaid Amounts. Borrower will pay
Lender these expenses and interest on demand at the Place for Payment. These expen,ses and interest
will become part of the debt evidenced by the note and will be secured by any security for payment.
Prepayment:
Borrower may prepay this note in any amount at any time before the Maturity Date without
penalty or premium.
Application of Prepstyment:
Prepayments will be applied to installments on the last maturing principal, and interest on that
prepaid principal will immediately cease to accrue.
Interest on the debt evidenced by this note win not exceed the maximum rate or amount of
nonusurious interest that may be contracted for, taken, reserved, charged, or received under law. Any
interest in excess of that maximum amount will be credited on the Principal Amount or, if the Principal
Amount has been paid, refunded. On any acceleration or required or permitted prepayment, any excess
interest will be canceled automatically as of the acceleration or prepayment or, if the excess interest has
already been paid, credited on the Principal Amount or, if the Principal Amount has been paid.
refunded. This provision overrides any conflicting provisions in this note and, all other instruments
concerning the debt.
Each Borrower is responsible for all obligations represented by this note.
When the context requires singular nouns and pronouns include the plural.
If arty provision of this note conflicts with any provision of a loan agreement, deed of trust, or
security agreement of the same transaction between I...ender and Borrower, the provisions of the deed of
trust will govern to the extent of the conflict.
151323.2 02/0412004
545
This note win be construed under the laws of the state of Texas, without regard to choice-of-
law rules of any jurisdiction.
AMANDA VIADF,
I $1 3 2 02/04,2004
546
TAB 7
Mocyzgemba v. Mocyzgemba - 2015 WI, 704405
Moczygemba v. Moczygemba, S.W.3d ---- (2015)
2015 WL 704405
Only the Westlaw citation is currently available.
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR
PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL
RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
OPINION
Court of Appeals of Texas,
San Antonio.
Mary Moczygemba, Appellant
v.
Thomas J. Moczygemba and Harry Lee Moczygemba, Appellees
No. 04-14—oono—CV I Delivered and Filed: February 18, 2015
Synopsis
Background: Mother brought action against sons for breach of fiduciary duty, claiming they
induced her to sign warranty deeds transferring property without regard to mineral interest
ownership rights. The 218th Judicial District Court, Wilson County, Donna S. Rayes, J., granted
sons' motion for summary judgment based on statute of limitations, and mother appealed.
[Holding:] The Court of Appeals, Karen Angelini, J., held that there was no objectively verifiable
evidence of mother's injury from sons' alleged breach of fiduciary duty as required for discovery
rule to prevent the running of the statute of limitations.
Affirmed.
From the 218th Judicial District Court, Wilson County, Texas, Trial Court No. 12-10-0573-
CVW, Honorable Donna S. Rayes, Judge Presiding
Attorneys and Law Firms
Fred Hartnett, James J. Hartnett, Jr., Will Ford Hartnett, for Mary Moczygemba.
Christopher T. Hodge, Robinson C. Ramsey, Joyce W. Moore, for Thomas J. Moczygemba and
Harry Lee Moczygemba.
ivNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Moczygemba v. Moczygemba, S.W.3d ---- (2015)
Sitting: Karen Angelini, Justice, Marialyn Barnard, Justice, Rebeca C. Martinez, Justice
OPINION
Opinion by: Karen Angelini, Justice
*1 Mary Moczygemba appeals the trial court's granting of summary judgment in favor of her
sons Thomas J. Moczygemba and Harry Lee Moczygemba. According to Mary, the trial court
erred in determining that the statute of limitations barred her claims for breach of fiduciary duty.
We affirm.
BACKGROUND
Appellant Mary Moczygemba ("Mary") is the mother of Appellees Thomas J. Moczygemba and
Harry Lee Moczygemba ("Tommy and Harry"). In addition to Tommy and Harry, Mary has seven
other children. At the time Mary's husband passed away in 1985, she owned a total of 400 acres
of property, including some mineral interests therein. She had 100 acres in Wilson County that
was given to her husband by his parents in 1962 and was subsequently improved with a ranch
house. She had an adjacent 58 acres that she and her husband purchased in the 1960s. She also had
another 203 acres in Wilson County that she and her husband purchased in 1969. And, she had
51.7 acres in Karnes County that was given to her by her parents. While her husband was alive,
they had executed several oil-and-gas leases on land they owned in Wilson and Karnes Counties.
After her husband's death, she executed several more oil-and-gas leases.
While her husband was alive, they used their land to raise cattle. After her husband's death, Tommy
and Harry helped Mary on the farms and helped her raise her cattle. Tommy did most of the work
related to her farm and ranch business, and Harry helped Tommy do some of the work. Mary, in
turn, allowed Harry and Tommy to run their own cattle on the land.
In 2000, when Mary was 74 years old, she sold about 200 acres to Tommy for $40,000 and 200
acres to Harry for $40,000. In her deposition, Mary testified that she decided to sell the acreage
to her sons because her farm and ranch business was not making money and she was concerned
about the depletion of her farm account due to expenses of her farm and cattle business. After
she expressed her concerns to Tommy and Harry, they offered to buy the acreage from her. Mary
testified, "I was running out of money to run the farm. And like they said, I wouldn't have to
pay another bill. So I thought that would be a big relief for me." "We did it willingly together
because they were—they were helping me. They were working with me. I trusted them." Mary
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Moczygemba v. Moczygemba, S.W.3d ---- (2015)
testified that she was the one who came up with the price. She suggested a price lower than market
value "because they were helping me, and they were my sons. I just thought I'll let them have
it cheaper." Tommy, Mary, and Harry all agreed to use Tommy Adkisson's law office, which
Mary had used in the past to prepare her will and to probate her husband's estate, because, as
Mary testified, "[t]hat's the only attorney we knew." Mary testified that she wanted Adkisson
to prepare the deeds, but he was unable to help her. So, David Wise, an attorney in Adkisson's
office, prepared the deeds transferring ownership from Mary to Harry and Tommy, respectively.
The previous deeds were taken from Mary's files at her home and given to David Wise so that he
would have the property description for the deeds he was preparing. Mary then went to his law
office to sign four deeds transferring ownership to her sons. In a deed dated June 16, 2000, Mary
transferred 51.7 acres in Karnes County to Tommy for "TEN AND NO/100 DOLLARS and other
valuable consideration." In a second deed dated August 1, 2000, Mary transferred two tracts in
Wilson County (one consisting of 79 acres and the other consisting of 124 acres) to Harry for "TEN
AND NO/100 DOLLARS and other valuable consideration." In a third deed dated December 21,
2000, Mary transferred 58 acres in Wilson County to Tommy for "TEN AND NO/100 DOLLARS
and other valuable consideration." Finally, in a fourth deed also dated December 21, 2000, Mary
transferred 100 acres in Wilson County to Tommy for "TEN AND NO/100 DOLLARS and other
valuable consideration."
*2 Mary testified that minerals were "never discussed; it was never brought up." According
to Mary, she never said she wanted to keep her mineral interests "because I didn't think about
it." She testified that she thought that the minerals would remain with her. When asked why she
thought she would retain ownership of the minerals if she was selling the land to her sons, Mary
responded, "Well, I didn't even think of it." "They should have asked me." "It never crossed my
mind." Likewise, Tommy testified that he did not think about whether the new deeds prepared by
David Wise included his mother's mineral interests. According to Tommy, it never occurred to
him either. The new deeds prepared by David Wise contained no provisions reserving any mineral
interests. Thus, under Texas law, all of the surface estates and the mineral interests owned by Mary
transferred to Tommy and Harry, respectively. See Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10,
299 S.W.2d 672, 675 (1956) ( "[I]t is fundamental that a warranty deed will pass all of the estate
owned by the grantor at the time of the conveyance unless there are reservations or exceptions
which reduce the estate conveyed.").
David Wise testified in his deposition that he had no independent recollection of preparing the
deeds or meeting with Mary, Tommy, and Harry. When it was pointed out that the previous deed
relating to one of the properties granted Mary and her husband mineral rights after the expiration of
twenty-five years relating to a lease, Wise testified "the only reason" a mineral reservation would
not have been included in the new deed "would have been because Ms. [Mary] Moczygemba said
so." "Like I said, if she would have said reserve this, reserve that, or subject to this or that, then
it would have been written down."
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Moczygemba v. Moczygemba, S.W.3d (2015)
Shortly after Mary transferred the deeds to her sons Tommy and Harry, her eldest son, Edwin,
learned of Mary selling the land to his brothers Tommy and Harry. Edwin then told his other
siblings. Mary testified that Edwin was so upset that she had sold the land to Tommy and Harry
that he did not speak to her for twelve years. Mary claims in her pleadings that it was not until late
2009 or early 2010 that she discovered she had also conveyed the mineral interests to Tommy and
Harry. In her deposition, she was adamant that Tommy and Harry should have told her that she
was conveying her mineral interest with the surface estate:
A: They should have told me. "Mom, you want to keep half of your minerals, and we'll have
the other half." Everything would have been fine. We would be—
Q: They should have told you that? Why should they have told you that when it was never
discussed; they never knew your intentions; they didn't know what your mind was thinking?
How would—why do you think that they should have told you something?
A: Well, because they should have figured it out that that's not fair that they're going to get all
the minerals.
Q: Now, when they bought the land in 2000, there had never been any mineral production off
the land, had there?
A: Not on that—not that area, but there was at the other place, what Harry bought.
Q: And you knew that?
A: knew that.
Q: In 2000, nobody knew there was going to be an Eagle Ford Shale, did they?
A: Probably not
Q: Nobody knew if those minerals were ever going to have any value, did they?
A: Yeah. But after they started leasing, they should have come, "Well, Mom, look. We're going
to be leasing. Let's just share it."
Q: All right.
A: Wouldn't that have been nice?
Mary's daughter Rosemary Ellis testified that there was a "family meeting" in May 2012, at which
Tommy and Harry were not present, and that at that meeting, Mary "said that she did not sell the
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Moczygemba v. Moczygemba, S.W.3d ---- (2015)
land intentionally to them and the mineral rights at that time." "She did not know about those
mineral rights and she did not do that on purpose." "She said that she was running out of money,
and they approached her to buy it." "They agreed on the price, they picked up the deeds, went to
the attorney's office, and had them done very quickly."
On October 19, 2012, Mary sued Tommy and Harry for breach of fiduciary duty, alleging that
Tommy and Harry owed her an "informal" fiduciary duty arising from "their moral, domestic and
personal relationship of trust and confidence." Mary alleged they breached their fiduciary duties
to her, "specifically their duty of loyalty and utmost good faith, duty to refrain from self-dealing,
duty to act with integrity of the strictest kind, and duty of full disclosure" "by inducing Mary to
sign the general warranty deeds in 2000, knowing that Mary did not understand the legal impact
of their deeds with regard to her mineral interest ownership." Mary alleged Tommy and Harry
"further breached their fiduciary duty by not explaining in complete detail the ramifications of
signing these deeds, in particular that Mary would be giving up her mineral interests." Tommy
and Harry filed a motion for summary judgment arguing that they had no fiduciary duty to their
mother and a motion for summary judgment arguing that Mary's claims were barred by the statute
of limitations. The trial court denied the motion for summary judgment relating to fiduciary duties,
but granted the motion for summary judgment relating to limitations. Mary appeals, arguing the
trial court erred in granting summary judgment based on limitations.
STATUTE OF LIMITATIONS
*3 [1] [2] [3] Mary brought claims for breach of fiduciary duty against Tommy and Harry. A
person bringing a claim for breach of fiduciary duty must file suit not later than four years after
the day the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN.. § 16.004(a)(5)
(West 2002). Generally, when a cause of action accrues is a question of law. Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex.2003). "[A] cause of action accrues and the
statute of limitations begins to run when facts come into existence that authorize a party to seek
a judicial remedy." Id. "In most cases, a cause of action accrues when a wrongful act causes a
legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have
yet to occur." Id. However, two exceptions may defer accrual of a claim: the discovery rule and
the doctrine of fraudulent concealment. Here, Mary pled the discovery rule. 1 Tommy and Harry
argue the discovery rule does not apply.
1 It is undisputed that in the absence of the discovery rule, the statute of limitations bars Mary's breach of fiduciary duty claims against
Tommy and Harry.
A. Standard of Review
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Moczygemba v. Moczygemba, S.W.3d ---- (2015)
We review the trial court's grant of summary judgment de novo. Provident, 128 S.W.3d at 215.
When reviewing a summary judgment, we take as true all evidence favorable to the respondent,
and we indulge every reasonable inference and resolve any doubts in the respondent's favor. Id.
"A defendant moving for summary judgment on the affirmative defense of limitations has the
burden to conclusively establish that defense." KPMG Peat Marwick v. Harrison Cnty. Hous. Fin.
Corp., 988 S.W.2d 746, 748 (Tex.1999). "Thus, the defendant must (1) conclusively prove when
the cause of action accrued, and (2) negate the discovery rule, if it applies and has been pleaded or
otherwise raised, by proving as a matter of law that there is no genuine issue of material fact about
when the plaintiff discovered, or in the exercise of reasonable diligence should have discovered
the nature of its injury." Id. Thus, if the plaintiff pleads the discovery rule as an exception to
limitations, the movant must negate that exception as well by proving as a matter of law that either
(1) the discovery rule does not apply or (2) there is no genuine issue of material fact about when the
plaintiff discovered or, in the exercise of reasonable diligence, should have discovered the nature
of the alleged injury. Howard v. Fiesta Texas Park Show, Inc., 980 S.W.2d 716, 719 (Tex.App.—
San Antonio 1998, pet. denied). If the movant establishes that the statute of limitations bars the
action, the respondent must then adduce summary judgment proof raising a fact issue in avoidance
of the statute of limitations. KPMG, 988 S.W.2d at 749.
B. Does the discovery rule apply in this case ?
[4] The discovery rule is "a very limited exception to statutes of limitations." Shell Oil Co. v. Ross,
356 S.W.3d 924, 929 (Tex.2011) (citation omitted). It applies to instances in which the nature
of the plaintiffs injury is "inherently undiscoverable and the evidence of injury is objectively
verifiable." BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 65-66 (Tex.2011) (citation omitted).
Requiring both that a plaintiffs injury be inherently undiscoverable and evidence of that injury
be objectively verifiable "balance the conflicting policies in statutes of limitations: the benefits of
precluding stale or spurious claims versus the risks of precluding meritorious claims that happen to
fall outside an arbitrarily set period." S. V. v. R. V., 933 S.W.2d 1, 6 (Tex.1996). The supreme court
has explained that the "concern that meritorious claims will be barred is ... taken into account in
fashioning these two elements." Id. at .15. "The two elements strike the proper balance between the
beneficial purposes of statutes of limitations and the real concern that a person's rights may be cut
off." Id. The "preclusion of a legal remedy alone is not enough to justify a judicial exception to the
statute." Id. (citation omitted). "The primary purpose of limitations, to prevent litigation of stale
or fraudulent claims, must be kept in mind." Id. "Allowing late-filed claims that are inherently
undiscoverable while requiring objectively verifiable injury reduces the likelihood of injustice in
cutting off valid claims while affording some protection against stale and fraudulent claims." Id.;
see Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex.2006) (explaining that the supreme court
has "restricted the discovery rule to exceptional cases to avoid defeating the purposes behind the
limitations statutes").
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Moczygemba v. Moczygemba, S.W.3d ---- (2015)
*4 In this case, Tommy and Harry argue that the discovery rule does not apply because (1) Mary's
injury, the allegedly wrongful transfer of the mineral interests, was not inherently ',indiscoverable,
and was in fact easily discoverable if she had simply read the deeds; and (2) the evidence of her
injury is not objectively verifiable. We agree with Tommy and Harry that they have met their
summary judgment burden of showing that there is no objectively verifiable evidence of Mary's
injury.
The supreme court has explained that requiring evidence of the nature of an injury to be objectively
verifiable prevents fraudulent prosecutions. See S. V, 933 S.W.2d at 6. For example, in Gaddis v.
Smith, 417 S.W.2d 577, 581 (Tex.1967), a plaintiff filed suit after the statute of limitations had
run claiming that her doctors were negligent in leaving a sponge insider her body after surgery.
"The presence of the sponge in her body—the injury—and the explanation for how it got there—
the wrongful act—were beyond dispute." S. V., 933 S.W.2d at 7 (discussing Gaddis ). "The facts
upon which liability was asserted were demonstrated by direct, physical evidence." Id.
In contrast, in Robinson v. Weaver, 550 S.W.2d 18, 21 (Tex.1977), the supreme court held there
was no objectively verifiable evidence of the plaintiffs injury. In that case, a patient brought a
claim against his doctors for misdiagnosis of his back condition. The supreme court explained,
Plaintiff, to prove his cause of action, faces the burden of proving both a
mistake in professional judgment and that such mistake was negligent. Expert
testimony would be required. Physical evidence generally is not available when
the primary issue relevant to liability concerns correctness of past judgment.
Unlike Gaddis v. Smith, there exists in the present case no physical evidence
which in-and-of-itself establishes the negligence of some person. What physical
evidence was to the cause of action alleged in Gaddis v. Smith, expert testimony
is to the cause of action in the present case. Even the fact of injury is a matter
of expert testimony.
Robinson, 550 S.W.2d at 21. The supreme court concluded that such expert testimony could not
meet the objective verification of wrong and injury necessary for application of the discovery rule.
Id.; see S. V., 933 S.W.2d at 7 (discussing Robinson).
Similarly, in S. V., 933 S.W.2d at 3, the supreme court was faced with the issue of whether there
was objectively verifiable evidence of the plaintiffs injury in a case where the plaintiff alleged she
had been sexually abused by her father until the age of seventeen but had repressed all memory of
the abuse until after she turned twenty. The supreme court noted that the only physical evidence to
support the plaintiffs allegations consisted of her symptoms and, to a lesser extent, her behavioral
traits, as described by her and the experts who testified on her behalf. Id. at 15. The supreme
court explained that this evidence, however, was inconclusive because the experts testified her
symptoms could have been caused by things other than sexual abuse by her father. Id. The court
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Moczygemba v. Moczygemba, S.W.3d ---- (2015)
concluded there was "no physical or other evidence in this case to satisfy the element of objective
verifiability for application of the discovery rule." Id. The court pointed to examples of different
types of evidence that it would consider objectively verifiable:
The kinds of evidence that would suffice would be a confession by the abuser,
e.g., Meiers—Post v. Schafer, 170 Mich.App. 174, 427 N.W.2d 606, 610 (1988);
a criminal conviction, e.g. Petersen v. Bruen, 106 Nev. 271, 792 P.2d 18,
24-25 (1990); contemporaneous records or written statements of the abuser
such as diaries or letters; medical records of the person abused showing
contemporaneous physical injury resulting from the abuse; photographs or
recordings of the abuse; an objective eyewitness's account; and the like. Such
evidence would provide sufficient objective verification of abuse, even if it
occurred years before suit was brought, to warrant application of the discovery
rule.
*5 S. V., 933 S.W.2d at 15.
While Mary cites case law for the proposition that "[i]t is well-settled law that the discovery
rule applies to almost all actions involving fiduciaries," the supreme court has explained that
bringing a breach of fiduciary duty claim does not negate the necessity of the plaintiffs injury
being shown through objectively verifiable evidence. In S. V., the supreme court explained that
while it has "adhered to the requirement of objective verification fairly consistently in [its]
discovery rule cases," it has "not always emphasized the requirement because the alleged injury
was indisputable." S. V., 933 S.W.2d at 7 (emphasis added). As an example, the S. V. court cited
Willis v. Maverick, 760 S.W.2d 642 (Tex. 1988), noting that the "attorney's error [was] apparent in
[the] divorce decree." S. V., 933 S.W.2d at 7. The S. V. court also cited International Bankers Life
Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.1963), which involved a corporation suing three of
its officers and directors for breach of fiduciary duty because the officers and directors sold "their
personal stock in competition with the sale of corporation stock." Holloway, 368 S.W.2d at 579;
see S. V, 933 S.W.2d at 7. The S. V. court explained that in Holloway, the objectively verifiable
evidence of the plaintiffs injury consisted of "stock transfer records and board meeting minutes
prov[ing] officers' and directors' misdealing." S. V., 933 S.W.2d at 7.
[5] The S. V. court also cited Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 385-87 (1945),
another fiduciary duty case involving plaintiffs suing trustees to recover alleged secret profits
received by former trustees and other defendants, and to recover damages for alleged losses on
improper loans of trust funds. The S. V. court explained that the objectively verifiable evidence
in Slay consisted of a "paper trail detail[ing] self-dealing." S. V., 933 S.W.2d at 7. Thus, even in
the context of a claim for breach of fiduciary duty, for the discovery rule to apply, there must be
objectively verifiable evidence of the alleged injury.
W:-?stlawNeltt 2015 Thomson Reuters. No claim to original U.S. Government Works.
Moczygemba v. Moczygemba, S.W.3d ---- (2015)
[6] The evidence in this case consists of deposition testimony, which is not objectively verifiable
evidence, and copies of the actual deeds showing a transfer of the mineral estate from Mary to
Tommy and Harry, respectively. While the deeds are evidence that Mary's mineral interests passed
to her sons, they are not evidence that the mineral interests were wrongfully transferred to her sons.
Mary urges that this case is like Gaddis and the mere fact that her mineral interests were transferred
shows she was injured; that is, she argues that no one would have chosen to transfer the mineral
estate below market value. However, this case involved a transfer of land between a mother and
her sons. Mary herself testified that she wanted to transfer her property to her sons at a price lower
than market value because they were her sons and they were helping her. Put in that context, we
cannot say that the same conclusion as that in Gaddis would apply to these facts. Thus, we cannot
conclude that the mere transfer of mineral interests necessarily equates to Mary having suffered
from a wrongful transfer of her property.
*6 Further, Mary agrees that at the time of the transfer of the property, there were no discussions
about the mineral interests because she never thought about the mineral interests. In his deposition,
Tommy agreed that there were no discussions relating to the mineral interests. Tommy testified
the mineral interests never occurred to him either. Thus, Tommy and Harry met their summary
judgment burden of showing there is no objectively verifiable evidence of Mary's injury, and the
trial court did not err in determining that the discovery rule did not apply to this case. 2
2 Because we conclude that there is no objectively verifiable evidence of Mary's injury, we need not reach Mary's other issues of
whether the nature of her injury was inherently undiscoverable and whether Mary knew or should have known of her claims more
than four years before she filed suit.
CONCLUSION
Because the discovery rule does not apply to this case, we affirm the trial court's judgment.
All Citations
S.W.3d 2015 WL 704405
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TAB 8
Rentfro v. Cavazos - 2012 WL 566364
Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
2012 WL 566364
Only the Westlaw citation is currently available.
SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS.
MEMORANDUM OPINION
Court of Appeals of Texas,
San Antonio.
Anita C. RENTFRO, Appellant
v.
Manuel CAVAZOS IV and Ernesto R. Cavazos, Appellees.
No. o4-10—oo61.7—CV. I Feb. 15, 2012. I Review Denied Sept. 21, 2012.
From the 49th Judicial District Court, Zapata County, Texas, Trial Court No. 5163; Jose A. Lopez,
Judge Presiding.
Attorneys and Law Firms
Donato D. Ramos, Law Offices of Donato D. Ramos, PLLC, Laredo, TX, for Appellant.
Edward F. Maddox, Benavides Maddox, PC, James K. Jones, Jr., Jones & Gonzalez, P.C., Laredo,
TX, Timothy Patton, Timothy Patton, P.C., Melissa A. Rentfro, Attorney at Law, San Antonio,
TX, Julius C. Grossenbacher, Attorney at Law, Canyon Lake, TX, for Appellee.
Sitting: SANDEE BRYAN MARION, Justice, PHYLIS J. SPEEDLIN, Justice, MARIALYN
BARNARD, Justice.
MEMORANDUM OPINION
Opinion by MARIALYN BARNARD, Justice.
*I This appeal involves a continuing dispute among family members, specifically appellant
Anita C. Rentfro ("Rentfro") and her brothers Manuel Cavazos IV ("Manuel IV") and Ernesto
R. Cavazos ("Ernesto"), appellees, over title to property located in Zapata County, Texas. An
appeal from a partial summary judgment involving title to the property was previously decided
by this court in Cavazos v. Cavazos, 246 S.W.3d 175 (Tex.App.-San Antonio 2007, pet. denied)
("Cavazos I"). In that opinion, this court affirmed a partial summary judgment in favor of Ernesto,
holding that a quitclaim deed conveyed to him certain land in Zapata County. Id. at 181. In that
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
same opinion, however, we reversed a partial summary judgment in favor of Manuel IV, holding
the summary judgment evidence did not conclusively establish that a warranty deed was intended
to convey an expectancy interest in certain lands in Zapata County to Manuel IV. Id. at 181-82.
This portion of the judgment was remanded to the trial court for further proceedings. Id. at 182.
We also noted the trial court had severed out several pending claims and defenses between the
parties, and that those remained pending and were not before the appellate court. Id. at 177-78.
After remand, the parties agreed to reconsolidate the severed claims with the remanded issue
regarding the attempted conveyance to Manuel IV. Again, Manuel IV and Ernesto filed partial
motions for summary judgment on traditional and no evidence grounds. The trial court granted the
motions without identifying the grounds upon which they were granted. The trial court also severed
pending claims by Manuel IV and Ernesto against their brother Roberto R. Cavazos ("Roberto")
for accounting, breach of fiduciary duty, punitive damages, and attorney's fees, as well as Manuel
IV's and Ernesto's claims for affirmative relief against The Anita R. Cavazos Living Trust, and
their claims for attorney's fees against Rentfro. Rentfro then perfected this appeal. 1
1 Originally, Roberto also perfected an appeal. However, he ultimately moved to dismiss his appeal, and this court granted the motion.
Accordingly, Roberto is not a party to this appeal.
BACKGROUND
The Family
Berta Vela Cavazos and Manuel Cavazos Jr. were married. Manuel Jr. died in 1976, and Berta
died in 1986. Berta died intestate and her property was distributed to her heirs, including her son,
Manuel.
Manuel was married to Anita R. Cavazos. They had five children: Roberto, Rentfro, Manuel IV,
Ernesto, and Gloria. 2 Manuel died on March 10, 1999, and his wife, Anita R. Cavazos, died on
May 2, 2002.
2 It seems Gloria was never involved in the previous or current dispute.
The Conveyances
According to the summary judgment evidence, in a letter dated October 30, 1975, Manuel wrote
to Manuel IV stating he hoped Manuel IV would purchase his "future estate" because Manuel
needed to obtain funds for "business opportunities that are knocking at my door." Manuel IV
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
was concerned about the validity of his father conveying his future interest in the estate of Berta
(Manuel's mother and Manuel IV's grandmother). In his affidavit, Manuel IV averred that he did
not want to accept the conveyance until he was assured it would be valid. Manuel IV received those
assurances from his father in the form of a legal brief dated February 8, 1976. Manuel, who had
a law certificate from LaSalle University, drafted an explanatory brief on the issue, concluding,
based on supreme court authority, the assignment of an expectancy interest was valid in equity.
*2 Therefore, on March 11, 1976, ten years before his mother Berta's death, Manuel executed
a warranty deed ("the 1976 deed") to his son Manuel IV, conveying to Manuel IV and his wife
"all that INTEREST IN THE ESTATE OF BERTA VELA DE CAVAZOS REALTY, TRACTS
OR—SHARES OF LAND SITUATED IN ZAPATA COUNTY, TEXAS THAT SHE IS NOW
IN POSSESSION OF." We will refer to this land as the "Vela Land." The summary judgment
evidence shows that in exchange, Manuel IV and his wife executed a promissory note to Manuel
in the amount of $36,000.00. The evidence shows that for the next nine and a half years, Manuel
IV made monthly payments to his father on the note. On March 19, 1976, Manuel wrote to Manuel
IV and his wife, who lived in California, that he had recorded the deed and filed it. He enclosed a
copy of the deed in the letter. The letter was signed "LOVE & THANKS."
The summary judgment evidence shows that on February 2, 1982, Manuel offered to buy back his
future interest in Berta's estate from Manuel IV and Manuel IV's wife. By letter, Manuel advised
he would buy back the property or Manuel IV could simply stop making payments on the note.
Manuel signed the letter, "LOTS OF LOVE TO BOTH AND THE CHILDREN." More than three
years later, Manuel IV and his wife executed a deed conveying a life estate to Manuel and his wife
Anita, in one-half of the minerals previously conveyed in the 1976 deed ("the 1985 deed"). In
return, Manuel relieved Manuel IV and his wife from further liability on the $36,000.00 promissory
note, which Manuel declared paid in full.
On February 21, 1992, Manuel executed a quitclaim deed ("the 1992 deed") in favor of Ernesto,
which stated that he "QUITCLAFMED (subject to a life estate in the name of [the 1992 Trust] )
and by these presents DOES QUITCLAFM (subject to a life estate in the name of [the 1992 Trust] )
to ERNESTO REYNA CAVAZOS ... all of [Manuel's] right, title, and interest in the following
described property situated in Zapata County...." We will refer to this land as the "Cavazos Land."
On that same day, but after executing the quitclaim deed, Manuel and Anita created the "Manuel
V. and Anita R. Cavazos Trust" ("the 1992 Trust"). See Cavazos I, 246 S.W.3d at 181 (holding
Ernesto's uncontroverted affidavit established quitclaim deed was executed first and was delivered
to him upon execution). Manuel and Anita transferred into the 1992 Trust "ALL RIGHT/TITLE/
INTEREST IN ALL ASSETS OWNED BY EITHER/BOTH." Pursuant to the terms of the trust,
Manuel IV, Ernesto, Roberto, and Rentfro would each received twenty-five percent of the trust
assets upon the death of both parents. Manuel IV and Ernesto were named co-trustees of the 1992
Trust.
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After Manuel died in 1999, Anita created the "Anita R. Cavazos Living Trust" ("the Living Trust")
into which the assets of the 1992 Trust were transferred. Roberto was named a trustee of the Living
Trust. Anita died in 2002.
The Dispute
*3 Almost immediately after their mother's death, Manuel IV and Ernesto sued Roberto,
individually and in his capacity as trustee of the Living Trust. Cavazos I, 246 S.W.3d at 177.
They sought: (1) a declaration that they were the owners of the Vela and Cavazos Lands, free and
clear of any claim by the estates of their parents or the Living Trust; (2) removal of any cloud
of title on the mineral interests in the Vela and Cavazos Lands; (3) an accounting; (4) breach of
fiduciary duty; (4) punitive damages; and (5) attorney's fees. Id. Roberto answered and filed a
counterclaim by which he asked the court to declare all of the deeds to Manuel IV and Ernesto
void or voidable and to determine the true owners of the Vela and Cavazos Lands. Rentfro then
intervened, essentially seeking the same relief as Roberto. Roberto and Rentfro also sought to set
aside the deeds on grounds of fraud, duress, coercion, undue influence, and conspiracy, and sought
damages based on claims for breach of fiduciary duty, breach of the duty of good faith and fair
dealing, conversion, and interference with inheritance rights. They also asked for an accounting.
Rentfro also asserted breach of fiduciary duty claims with regard to the Manuel IV's and Ernesto's
actions as to the 1992 Trust, of which they were co-trustees. With regard to the claims asserted
by Roberto and Rentfro regarding the deeds, Manuel IV and Ernesto asserted the defenses of lack
of standing and limitations.
All parties moved for summary judgment, but not on all claims or defenses. The trial court denied
the motions filed by Roberto and Rentfro, thereby denying their claims for declaratory relief as
to the deeds. The trial court granted summary judgment in favor of Manuel IV and Ernesto, but
only on certain grounds, declaring the 1976 deed effective to convey the Vela Land to Manuel IV
and the 1992 deed effective to convey the Cavazos Land to Ernesto. All other claims were severed
and abated at the request of Roberto and Rentfro. Thus, all of Roberto's and Rentfro's claims to
set aside the deeds based on fraud, etc., and their affirmative claims for relief remained pending,
as did Manuel IV's and Ernesto's defenses to those claims. Cavazos I, 246 S.W.3d at 178.
Roberto and Anita appealed the trial court's partial summary judgment in favor of Manuel IV
and Ernesto, arguing the trial court erred in determining the deeds were effective. Id. at 177. As
to the 1992 deed, which transferred the Cavazos Land to Ernesto, Roberto and Rentfro claimed
the 1992 deed was ineffective because the land subject to the deed had already been conveyed to
the 1992 Trust, and therefore the terms of the 1992 Trust governed any conveyance. Id. at 181.
In our first opinion, however, we agreed the summary judgment evidence produced by Ernesto,
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which was uncontradicted, established the 1992 deed and the conveyance of the same land to the
1992 Trust were part of a single transaction, establishing Manuel's intent to convey the land to
Ernesto while retaining a life estate in the land via the 1992 Trust. Id. Accordingly, we affirmed
the partial summary judgment in favor of Ernesto, holding the 1992 deed effectively conveyed to
him the Cavazos Land. Id. We determined that contrary to Roberto's and Anita's assertions, the
uncontradicted summary judgment evidence established the 1992 deed was executed by Manuel
before any other document and delivered to Ernesto immediately after it was executed, and this
was sufficient pursuant to case law to make the title transfer effective. Id.
*4 In that same opinion, however, we reversed the partial summary judgment in favor of Manuel
IV, holding the summary judgment evidence did not conclusively establish the 1976 deed was
intended to convey an expectancy interest in the Vela Land to Manuel IV. Id . at 181-82. We
held that while it was clear Manuel intended to convey "an interest of some sort to" Manuel
IV, there was nothing on the face of the deed or by resort to another document that proved as a
matter of law what Manuel intended to convey. Id. at 180. We stated that if Manuel intended to
convey his mother's property, he had no authority to do so, and if he did have such authority, the
property description was insufficient. Id. And, if Manuel intended to convey his expectancy or
future interest in his mother's property to Manuel IV, that intention was not clearly manifested
in the deed. Id. We held these ambiguities did not render the 1976 deed void, but the ambiguity
created a fact question requiring remand. Id. This portion of the judgment was remanded to the
trial court for further proceedings. Id. at 182.
Roberto and Anita sought review in the Texas Supreme Court, which was denied on September
3, 2008. Our mandate, which issued on September 15, 2008, stated: "In accordance with this
court's opinion ... those portions of the trial court's judgment disposing of the Vela Lands are
REVERSED and the cause REMANDED for further proceedings. The judgment is AFFIRMED
in all other respects."
Upon remand, Manuel IV and Ernesto moved the trial court to set aside its previous severance and
abatement, and reconsolidate all matters. The trial court ultimately entered an agreed order setting
aside its prior severance and abatement order and reconsolidating all claims and causes of action.
Thereafter, Manuel IV and Ernesto filed separate traditional and no evidence partial motions for
summary judgment. Though the motions were filed separately, they contain, in essence, the same
grounds: (1) Roberto's and Rentfro's claims are barred because they lack standing; (2) Roberto's
and Rentfro's claims are barred by the statute of limitations; (3) Roberto's and Rentfro's claims
are barred by the doctrine of ratification; and (4) there is no evidence of Roberto's and Rentfro's
claims for fraud, undue influence, duress, coercion, breach of fiduciary duty, breach of the duty of
good faith and fair dealing, conversion, conspiracy, tortious interference with inheritance rights,
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and no evidence to support an accounting, imposition of a constructive trust, or the appointment
of an auditor.
In addition to the grounds listed above, Ernesto filed a supplement to his motion for summary
judgment, asserting that to the extent Roberto and Rentfro contend the 1992 deed was not effective
based on the timing of the execution and delivery of the deed, such claims are barred as a matter
of law by law of the case, res judicata, and collateral estoppel based on our holding in Cavazos
I. Manuel IV and Ernesto did not move for summary judgment on their claims against Roberto
and Rentfro or their requests for attorney's fees against these individuals or the Anita R. Cavazos
Living Trust. Rather, in their motions for summary judgment, they asked the trial court to sever
those claims.
*5 Roberto and Rentfro filed responses to the motions filed by Manuel IV and Ernesto. After
reviewing the motions, responses, and summary judgment evidence, the trial court granted Manuel
IV's and Ernesto's motions in their entirety. Pursuant to the trial court's summary judgment order:
(1) Roberto and Rentfro took nothing on their claims for declaratory, equitable, and monetary relief
against Manuel IV and Ernesto; (2) Manuel IV's and Ernesto's claims for an accounting, breach of
fiduciary duty, punitive damages, and attorney's fees against Roberto were severed; and (3) Manuel
IV's and Ernesto's claims for attorney's fees against Rentfro and the Anita R. Cavazos Living Trust
were severed. Ultimately, Roberto and Rentfro filed notices of appeal. However, Roberto later
filed a motion to dismiss his appeal, which this court granted on May 6, 2011. See Cavazos v.
Cavazos, No. 04-10-00617—CV (Tex.App.-San Antonio May 6, 2011, order). Accordingly, only
Rentfro's appeal is pending before us.
ANALYSIS
We begin by noting that in her first issue, which contains a global challenge to the trial court's
granting of summary judgment in favor of Manuel IV and Ernesto, Rentfro also contends the trial
court erred in denying her motion for summary judgment. In other words, Rentfro contends we
are reviewing competing motions for summary judgment. We disagree with this contention.
After remand, Rentfro did not file a new motion for summary judgment. Rather, in the body of
her response to Manuel IV's and Ernesto's partial motions for summary judgment, she included a
statement that she was incorporating into her response several documents, one of which was the
"First and Second Traditional Motions for Partial Summary Judgment," which she and Roberto
filed before this court's decision in Cavazos I. We hold this is not a proper method by which to
seek summary judgment.
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In McConnell v. Southside Independent School District, 858 S.W.2d 337, 342-43 (Tex.1993), the
supreme court held that even if a nonmovant fails to except, respond, or obtain a ruling, if the
grounds for summary judgment are not expressly presented in the motion for summary judgment
itself, the motion is legally insufficient as matter of law. As stated in McConnell, "Grounds may
be stated concisely, without detail and argument. But they must at least be listed in the motion."
858 S.W.2d at 340 (quoting Roberts v. Sw. Tex. Methodist Hosp., 811 S.W.2d 141, 146 (Tex.App.-
San Antonio 1991 writ denied) (op. on reh'g)); see Travis v. City of Mesquite, 830 S.W.2d 94, 100
(Tex.1992) (holding that this court will not affirm a summary judgment on ground not specifically
presented in motion for summary judgment).
The issue of incorporation by reference of summary judgment grounds was addressed by the
Fort Worth Court of Appeals in Camden Machine & Tool, Inc. v. Cascade Co., 870 S.W.2d 304,
310 (Tex.App.-Fort Worth 1993, no writ). Citing McConnell, the Camden court held a summary
judgment motion that incorporated by reference grounds from the summary judgment motions
of co-defendants was insufficient as a matter of law, noting that under McConnell, a motion for
summary judgment must stand or fall on its own merits and the motion itself must assert the
grounds relied upon. Id.
*6 We find the Camden Machine & Tool holding to be in accord with the supreme court's
discussion in McConnell wherein the supreme court recognized the dangers of creating exceptions
to the rule that summary judgment grounds must be expressly stated in the motion:
Carving exceptions to this simple requirement that the motion for summary
judgment state the specific grounds frustrates the purpose of Rule 166a(c).
Eventually the exceptions would consume the rule, and inject uncertainty into
summary judgment proceedings concerning what issues were presented for
consideration. Furthermore, it is certainly not unduly burdensome to require the
movant to state the specific grounds in the motion for summary judgment.
McConnell, 858 S.W.2d at 341.
Two courts of appeals have permitted summary judgment movants to incorporate by reference
grounds found in summary judgment motions filed by co-defendants. See, e.g., Lockett v.
HB Zachry Co., 285 S.W.3d 63, 72 (Tex. App—Houston [1st Dist.] 2009, no pet.) ("Texas
courts have recognized adoption of co-party's motion for summary judgment as a procedurally
legitimate practice."); Chapman v. King Ranch, Inc., 41 S.W.3d 693, 700 (Tex.App.-Corpus
Christi 2001), rev'd on other grounds, 118 S.W.3d 742 (Tex.2003) (holding trial court did not
err in allowing defendants to adopt and incorporate, as their grounds for summary judgment, the
grounds for summary judgment alleged by co-defendants). However, we believe such practice was
specifically denounced by the supreme court in McConnell. Moreover, even if such a practice was
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
permissible, Rentfro was not incorporating by reference a motion of a co-defendant; rather, she
was incorporating a motion she previously filed that was expressly denied by the trial court.
Finally, in her appellate brief, other than stating the trial court erred in denying her motion for
summary judgment, there is no specific argument concerning the denial of her motion for summary
judgment. She has, therefore, failed to properly brief this contention. See TEX.R.APP. P. 38.1(i)
(stating appellant's brief must contain clear and concise argument for contentions made, with
appropriate citations to authorities and to record). Accordingly, we will review this case as though
only Manuel IV and Ernesto filed motions for summary judgment.
Standard of Review
Manuel IV and Ernesto filed both traditional motions for summary judgment pursuant to rule
166a(c) of the Texas Rules of Appellate Procedure and no evidence motions for summary
judgment pursuant to rule 166a(i). Manuel IV and Ernesto asserted multiple traditional and no
evidence grounds, and the trial court granted their motions without stating the specific grounds
upon which the motions were granted. When a movant asserts multiple grounds for summary
judgment, and the trial court grants summary judgment without specifying the grounds for its
ruling, we must affirm the summary judgment if any of the grounds are meritorious. Carr v.
Brasher, 776 S.W.2d 567, 570 (Tex.1989); Chrismon v. Brown, 246 S.W.3d 102, 106 (Tex.App.-
Houston [14th Dist.] 2007, no pet.); see also State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374,
381 (Tex.1993) (stating that when there are multiple grounds for summary judgment and the order
does not specify the ground on which the summary judgment was granted, appealing party must
negate all grounds on appeal).
*7 We review traditional and no evidence summary judgments de novo. Sudan v. Sudan, 199
S.W.3d 291, 292 (Tex.2006); Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005).
A traditional summary judgment under rule 166a(c) is properly granted only when the movant
establishes there are no genuine issues of material fact and that it is entitled to judgment as a matter
of law. TEX.R. CIV. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215
(Tex.2003). To determine if the nonmovant raises a fact issue, we review the evidence in the light
most favorable to the nonmovant, crediting favorable evidence if reasonable jurors could do so,
and disregarding contrary evidence unless reasonable jurors could not. City ofKeller v. Wilson, 168
S.W.3d 802, 827 (Tex.2005). A defendant who conclusively negates a single essential element of a
cause of action or conclusively establishes an affirmative defense is entitled to summary judgment
on that claim. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex.2010).
A no evidence motion for summary judgment under rule 166a(i) is essentially a motion for a
pretrial directed verdict. See Tex.R. Civ. P. 166a(i); Timpte Indus., Inc. v. Gish, 286 S.W.3d 306,
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
310 (Tex.2009). After an adequate time for discovery, a party without the burden of proof may,
without presenting evidence, seek summary judgment on the ground that there is no evidence
to support one or more essential elements of the nonmovant's claim or defense. TEX.R. CIV.
P. 166a(i); All Am. Tel., Inc. v. USLD Commc'ns, 291 S.W.3d 518, 526 (Tex.App.-Fort Worth
2009, pet. denied). The motion must specifically state the elements for which there is no evidence.
TEX.R. CIV. P. 166a(i); Timpte Indus., Inc., 286 S.W.3d at 310; All Am. Tel., Inc., 291 S.W.3d
at 526. The trial court is required to grant the motion unless the nonmovant produces more than a
scintilla of summary judgment evidence that raises a genuine issue of material fact. TEX.R. CIV.
P. 166a(i). More than a scintilla of evidence exists when the evidence "rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions." Merrell Dow Pharms.,
Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997).
In addition to other grounds, Manuel IV and Ernesto moved for summary judgment based
on certain affirmative defenses. When a defendant moves for summary judgment based on an
affirmative defense, it is his burden to prove conclusively all elements of the affirmative defense.
Rhone—Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). To accomplish this, the defendant
must present summary judgment evidence that establishes each element of his defense as a matter
of law. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex.1996); Booker v. Real Homes,
Inc., 103 S.W.3d 487, 491 (Tex.App.-San Antonio 2003, pet. denied). Manuel IV and Ernesto both
moved for summary judgment on three affirmative defenses: limitations, ratification, and lack of
standing. 3 See TEX.R. CIV. P. 94; Pressure Sys. Ina, Inc. v. Sw. Research Inst., 350 S.W.3d
212, 215-16 (Tex.App.-San Antonio 2011, pet. denied) (recognizing limitations as affirmative
defense); Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122, 146 (Tex.App.-Corpus Christi
2006, pet. denied) (recognizing ratification as affirmative defense); Faulkner v. Bost, 137 S.W.3d
254, 259 (Tex.App.-Tyler 2004, no pet.) (recognizing lack of standing as affirmative defense).
In addition, Ernesto filed a supplement to his motion for summary judgment, seeking summary
judgment on the affirmative defenses of res judicata and collateral estoppel. See TEX.R. CIV.
P. 94; Brown v. Zimmerman, 160 S.W.3d 695, 702 (Tex.App.-Dallas 2005, no pet.) (recognizing
res judicata as affirmative defense); SWEPI, L.P. v. Camden Res., Inc., 139 S.W.3d 332, 338
(Tex.App.-San Antonio 2004, pet. denied) (recognizing collateral estoppel as affirmative defense).
As to these defenses, it was the burden of Manuel IV and Ernesto to establish them as a matter
of law.
3 Manuel IV and Ernesto also sought a no evidence summary judgment based on standing. However, the law is clear that a party may
not move for a no evidence summary judgment in order to prevail on his own affirmative defense, i.e., a defense upon which he has
the burden of proof at trial. Pollard v. Hanschen, 315 S.W.3d 636, 639 (Tex.App.-Dallas 2010, no pet.). A nonmovant need not even
respond to such an assertion because it should not have been filed. Id. Accordingly, we cannot consider Manuel IV's and Ernesto's
assertion that there was no evidence Rentfro had standing to bring her claims. See id.
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Application
*8 In her brief, Rentfro asserts five appellate issues:
• The trial court erred in granting summary judgment for Appellees' and denying Appellant's
request for summary judgment in conflict with this Court's prior judgment and controlling
jurisdiction.
• The trial court further erred in granting additional summary judgment requests including
Appellees' time bared [sic] claim for attorney's fees against Appellant/Intervenor, Anita
C. Rentfro, and denying Appellant/Intervenor's request for summary judgment despite her
submission of significant further evidence supporting a ruling in her favor as a matter of law
and the four year statute of limitations against making new claims.
• Appellant, Anita C. Rentfro, has standing as beneficiary of both trusts subject to this suit and
legal heir to her parent's [sic] estate.
• Division orders do not ratify deeds and are only valid until controverted.
• Mrs. Cavazos used her power as trustee of the 1992 Joint Revocable Trust to revoke said trust
and placed trust properties in the Trust Agreement of Anita R. Cavazos. Said property is the
subject of all instruments which Appellees' [sic] had enforced in the trial court counter to their
parents' intentions and the final trust agreement which are controlling and require division of
their real property in accordance with the trusts' intentions.
Upon review, however, we have determined the issues as stated do not necessarily comport with
the actual argument within the brief. We will, therefore, review the issues as argued within the
brief. See Petras v. Criswell, 248 S.W.3d 471, 475 n. 1 (Tex.App.-Dallas 2008, no pet.) (holding
that where issues identified in section of brief entitled "Issues Presented" did not comport with
issues identified and briefed in section of brief entitled "Arguments and Authorities," court would
review issues as identified in "Arguments and Authorities" section because simply stating issues
without argument does not comport with mandates of rule 38.1(h) of the Texas Rules of Appellate
Procedure). After reviewing appellant's brief and reply brief we hold Rentfro raises the following
arguments on appeal:
1. The trial court erred in granting summary judgment in favor of Manuel IV on his request
for declaratory relief as to the 1976 deed because (1) in Cavazos /this court held the deed
was inadequate as a matter of law to transfer the Vela Land to Manuel IV, and (2) the
1976 deed was ineffective to transfer any title to Manuel IV for the reasons previously
asserted by Rentfro and Roberto in Cavazos I, i.e., Manuel had no interest to transfer, the
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property description was inadequate, no statement of the interest being conveyed, improper
conveyance of an expectancy or future interest, and Manuel was not Berta's agent;
2. The trial court erred in granting summary judgment for Manuel IV and Ernesto based on
their defense of lack of standing because Rentfro has standing pursuant to section 37.004(a)
of the Declaratory Judgment Act, by virtue of admissions in documents filed in the federal
bankruptcy court, and because she is an heir and beneficiary under the wills and trusts of
Manuel and Anita;
*9 3. The trial court erred in granting summary judgment in favor of Manuel IV and Ernesto
based on the doctrine of ratification because the division orders were not sufficient to establish
ratification;
4. The trial court erred in granting summary judgment in favor of Ernesto on his request for
declaratory relief as to the 1992 deed because there are fact issues as to whether the deed was
properly delivered and as to whether it was executed before the 1992 Trust was executed;
5. The trial court erred in granting summary judgment in favor of Ernesto and Manuel IV on
Rentfro's claims for breach of fiduciary duty and breach of the duty of good faith and fair
dealing because the evidence shows Ernesto was the attorney for the 1992 Trust and he failed
to prove he acted fairly with regard to trust matters and both failed to prove the conveyances
at issue were fair; and
6. The trial court erred in granting summary judgment in favor of Manuel IV and Ernesto on all
Rentfro's claims based on the statute of limitations because Manuel IV and Ernesto moved
for summary judgment based on limitations originally and the trial court denied it, and they
failed to appeal the denial in Cavazos I, and Rentfro's claims did not "ripen" until after her
parents' deaths.
Because we find the limitations defense dispositive of all of Rentfro's claims, we need only address
this issue. See Carr, 776 S.W.2d at 570 (holding that when trial court grants summary judgment
without specifying the grounds therefore, appellate court must affirm summary judgment if any
grounds are meritorious) Chrismon, 246 S.W.3d at 106 (same).
The primary purpose of statutes of limitations is to compel the exercise of a right within a
reasonable time so that those against whom such rights are asserted have a fair opportunity to
defend themselves while witnesses are available. Garcia v. Garza, 311 S.W.3d 28, 38 (Tex.App.-
San Antonio 2010, pet. denied). As stated by the supreme court, "[i]t is in society's best interest
to grant repose by requiring disputes be settled or barred within a reasonable time." Wagner &
Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex.2001).
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Manuel IV and Ernesto moved for summary judgment on the ground that all of Rentfro's claims-
declaratory, legal, and equitable-were barred by limitations. Accordingly, they had the burden to
conclusively establish limitations. Garcia, 311 S.W.3d at 39. To discharge their burden, Manuel
IV and Ernesto produced summary judgment evidence establishing the challenged deeds were
executed and recorded in 1976, 1985, and 1992. Moreover, in her own affidavit, which Manuel IV
and Ernesto attached as part of their summary judgment proof, 4 Rentfro seems to acknowledge
the deeds were executed and recorded shortly after those events occurred. Rentfro's affidavit also
seems to suggest that before or soon after the deeds were signed, she was aware of all the alleged
facts upon which she later based her 2003 intervention, which asserted claims for fraud, breach of
fiduciary duty, conversion, conspiracy, etc. And, it is undisputed that the first time Rentfro ever
alleged the deeds were invalid or sought any sort of relief arising from the execution of the deeds
was May 14, 2003, when she filed her petition in intervention. This filing occurred more than
twenty-seven years after the execution of the 1976 deed, eighteen years after the execution of the
1985 deed, and more than eleven years after the execution of 1992 deed.
4 Rentfro's affidavit was also attached to her response to the motions for summary judgment filed by Manuel IV and Ernesto.
*10 Rentfro's complaints about the deeds raised the issue of whether the deeds were voidable for
various reasons. We note that in this appeal Rentfro seems to ask this court to declare the 1976
deed void; however, we held in Cavazos /the inadequacies of the 1976 deed did not render the deed
void. 246 S.W.3d at 180. And, it does not appear that Rentfro ever suggested the 1985 or 1992
deeds were void. Moreover, Texas law is clear that a deed allegedly procured by fraud, duress, or
undue influence, but which is otherwise regular on its face, is voidable only and not void. Nobles
v. Marcus, 533 S.W.2d 923, 926 (Tex.1976); Dyer v. Dyer, 616 S.W.2d 663, 665 (Tex.Civ.App.-
Corpus Christi 1981, writ dism'd).
Based on our review of Rentfro's live petition, all of her claims, including those relating to the
1992 Trust, are predicated on an attempt to set aside the deeds, i.e., unless and until the deeds are
set aside, there is nothing in the 1992 Trust to disburse and accordingly no breach of any duty
relating to the trust. The limitations period for setting aside a voidable deed is four years. See Ford
v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 618 (Tex.2007) (holding action to set aside voidable
deed for fraud or at equity is governed by four-year statute of limitations); Trustees of Casa View
Assembly of God Church v. Williams, 414 S.W.2d 697, 700 (Tex.Civ.App.-Austin 1967, no writ)
(holding suit was one to set aside deed, not to recover real estate, and therefore limitations period
was four years); see also TEX. CIV. PRAC. & REM.CODE ANN. § 16.051 (West 2008) (stating
that every action for which there is no express limitations period must be brought not later than
four years after day cause of action accrues). However, if Rentfro is somehow contending some
of her claims were not predicated on setting aside the deeds, those claims would be governed
by either two or four-year limitations periods. See TEX. CIV. PRAC. & REM.CODE ANN. §
16.003(a) (stating person must bring suit for trespass for injury to estate or to property of another,
conversion of personal property, taking or detaining personal property, personal injury, forcible
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
entry and detainer, and forcible detainer not later than two years after date cause of action accrues);
§ 16.004(a)(4)(5) (stating person must bring suit for fraud or breach of fiduciary duty not later than
four years after date cause of action accrues); see also § 16.051 (stating that every action for which
there is no express limitations period must be brought not later than four years after day cause
of action accrues). In any event, whether the two-year or four-year limitations period applies is
irrelevant given the undisputed evidence establishes all of Rentfro's claims regarding the validity
of the deeds were filed more than four years after the latest possible accrual date.
Under Texas law, a beneficiary who files suit to set aside a deed executed by an ancestor must
do so within four years of the date the deed is recorded if the beneficiary had actual or imputed
knowledge of the deed. E.g., Veltmann v. Damon, 696 S.W.2d 241, 243-44 (Tex.App.-San
Antonio 1985), rev'd and remanded in part on other grounds, 701 S.W.2d 247 (Tex.1985) (holding
action by beneficiary to set aside deed was barred by four-year statute of limitations where deed
was recorded in 1974 and heir did not bring suit until 1980); Chapal v. Vela, 461 S.W.2d 466, 469-
70 (Tex.Civ.App.-Corpus Christi 1970, no pet.) (holding action by beneficiaries of grantor against
two of grantor's sons to cancel and set aside deed forty years after deed execution was barred
by four-year statute of limitations;); McKee v. Douglas, 362 S.W.2d 870, 873-74 (Tex.Civ.App.-
Texarkana 1962, writ ref d n.r.e.) (holding beneficiaries and devisees stand in shoes of grantor of
deed and four-year statute of limitations begins to run on date of deed execution on any claim by
grantor to set aside deed); Cushenberry v. Profit, 153 S.W.2d 291, 297 (Tex.Civ.App.-Eastland
1941, writ ref d w.o.m.) (holding beneficiaries were barred from setting aside deeds based on
incapacity or undue influence by four-year statute of limitations); Neill v. Pure Oil Co., 101 S.W.2d
402, 403-04 (Tex.Civ.App.-Dallas 1937, writ ref d) (holding beneficiary was barred from setting
aside deeds based on grounds grantor was of unsound mind by four-year statute of limitations
where deeds were recorded in 1916 and 1926 and suit was not filed until 1934).
*11 In this case, the summary judgment evidence, as noted above, shows Rentfro, a beneficiary,
had actual notice of the deeds at the time they were executed and recorded. In her affidavit, Rentfro
refers to the 1976 deed to Manuel IV, describing it as a "subterfuge for our father to hide his future
estate." She also refers to the 1992 deed, stating that by the time it was executed, Manuel did
not have the physical or mental capability to compose such a document. Her affidavit averments
further establish she was aware of potential bases for setting aside the deeds long before her
intervention was filed in 2003, thereby establishing her claims were barred by limitations. See
Chapal, 461 S.W.2d at 469 (holding that if the facts as set forth in beneficiary's affidavit prepared
for lawsuit were sufficient to convince him there was an exercise of undue influence over grantor,
same facts should have been equally convincing forty years earlier when he learned of them).
Moreover, even if there was no actual knowledge, knowledge is imputed to Rentfro because the
deeds were recorded, which carries the same legal consequence as "conscious knowledge." See
Veltmann, 696 S.W.2d 244; Chapal, 461 S.W.2d at 469; see also Mooney v. Harlin, 622 S.W.2d
83, 85 (Tex.1981) (holding person is charged with constructive notice of the actual knowledge that
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
^-µ
could have been acquired by examining public records); Champlin Oil & Refining Co. v. Chastain,
403 S.W.2d 376, 388 (Tex.1965) (holding imputed knowledge carries same legal consequence as
"conscious knowledge"); Farias v. Laredo Nat'l Bank, 985 S.W.2d 465, 468-69 (Tex.App.-San
Antonio 1997, pet. denied) (holding statute of limitations began to run at time of sale where trust
remaindermen were adults who knew or should have known that sale by trustee damaged trust).
In short, the summary judgment evidence establishes Rentfro's claims as to the deeds accrued in
1976, 1985, and 1992, when the deeds were recorded. So, as a practical matter, all of her claims
accrued no later than 1992 when the 1992 deed was recorded. The summary judgment evidence
establishes as a matter of law that Rentfro did not file suit until 2003, more than ten years after
the latest of her potential claims accrued. Therefore, we hold Manuel IV and Ernesto established
their affirmative defense of limitations as a matter of law.
Once the movants established their right to summary judgment based on limitations, the burden
shifted to Rentfro to raise a fact issue negating limitations. In her response and on appeal, Rentfro
seems to make two arguments in opposition to limitations. The first argument is a vague contention
that her claims did not "ripen" until the death of Anita in 2002. Rentfro provides no authority
or any substantive argument for this contention in either her summary judgment response or her
brief. Second, and as to the substance of her arguments, she is incorrect at the very least with
regard to her claims regarding the deeds. As set forth above, Texas law makes it very clear that
actions by a beneficiary to set aside voidable deeds accrue at the time the deed is recorded, or at
the very latest, when the beneficiary gains actual or imputed knowledge of grounds upon which
the deeds might be set aside. See e.g., Chapal, 461 S.W.2d at 469-70; McKee, 362 S.W.2d at 873-
74. Thus, we hold Rentfro's argument that her deed claims "ripened" only upon her mother's death
is without merit.
*12 As stated above, we construe all of Rentfro's claims as attempts to set aside the deeds,
including those relating to the 1992 Trust. A careful review of Rentfro's petition in intervention
shows she is contending the deeds should be set aside and if they are, she was entitled to
disbursements pursuant to the 1992 Trust, which she contends were not made. At oral argument,
Rentfro admitted that without the property covered by the deeds, the 1992 Trust is essentially
without a corpus. Thus, for her trust claims to succeed, she must successfully set aside the deeds,
and therefore, those claims are also barred by limitations based on our discussion relative to the
deeds. However, even if the trust claims are independent of Rentfro's claims to set aside the deeds,
summary judgment was proper on those claims, though not on limitations grounds.
In their limitations argument, Manuel IV and Ernesto combined Rentfro's claims regarding the
deeds with her claims relating to the 1992 Trust, i.e., Manuel IV's and Ernesto's alleged breach
of fiduciary duty and the duty of good faith and fair dealing. Rentfro contends these claims did
not accrue until 2002, when Anita died and Manuel IV and Ernesto allegedly failed to make
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
disbursements from the 1992 Trust. In other words, Rentfro contends her claims regarding her
brothers' alleged breaches of their fiduciary duties and duties of good faith and fair dealing with
regard to the 1992 Trust did not accrue until 2002, and therefore were not barred by limitations.
This contention might have merit if the trust claims are considered independent of the deed claims.
However, in addition to moving for summary judgment as to these claims based on limitations,
Manuel IV and Ernesto also asserted there was no evidence of breach of fiduciary duty or breach of
the duty of good faith and fair dealing, which were the only claims asserted by Rentfro regarding
the 1992 Trust.
As to the claim of breach of fiduciary duty, they each asserted there was (1) no evidence of the
existence of a fiduciary duty owed by Manuel IV or Ernesto to Manuel, Anita, Roberto, or Rentfro
in connection with the 1992 Trust, (2) no evidence of any breach of fiduciary duty by Manuel IV
or Ernesto with regard to the 1992 Trust, and (3) no evidence that any breach caused injuries to
Manuel, Anita, Roberto, or Rentfro. With regard to Rentfro's claim that they breached the duty
of good faith and fair dealing, Manuel IV and Ernesto asserted there was (1) no evidence of the
existence of any duty to Manuel, Anita, Roberto, or Rentfro, (2) no evidence of any breach of
any such duty by Manuel IV or Ernesto, and (3) no evidence that any breach by Manuel IV or
Ernesto resulted in injuries to Manuel, Anita, Roberto, or Rentfro. Because they filed a no evidence
motion for summary judgment as to these claims, the burden was on Rentfro to produce more
than a scintilla of summary judgment evidence on each of the challenged elements. See TEX.R.
CIV. P. 166a(i).
*13 In her response to this portion of the no evidence motions for summary judgment, Rentfro did
produce some evidence that a duty existed, given Manuel IV's and Ernesto's positions as trustees,
their possible status as attorneys for the 1992 Trust, or their familial relationship to Rentfro. See
Huie v. DeShazo, 922 S.W.2d 920, 923 (Tex.1996) (recognizing trustee owes trust beneficiary
fiduciary duty); Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex.1962) (recognizing that fiduciary
relationship may arise from "moral, social, domestic or purely personal relationships"); Beck v.
Law Offices of Edwin J. (Ted) Terry Jr., P.C., 284 S.W.3d 416, 428-29 (Tex.App.-Austin 2009,
no pet.) (recognizing attorney owes client fiduciary duty). Viewing the evidence in the light most
favorable to Rentfro and indulging all reasonable inferences in her favor, there are summary
judgment documents that at least suggest the possibility that Manuel IV and Ernesto owed Rentfro
a fiduciary duty with regard to the 1992 Trust. See City of Keller, 168 S.W.3d at 827. However,
whether there was or was not some evidence of a fiduciary relationship between Rentfro and her
brothers with regard to the 1992 Trust is not dispositive. As noted above, Manuel IV and Ernesto
challenged other elements in their no evidence motions beyond the absence of a fiduciary duty,
and with regard to the other challenged elements-absence of evidence of breach of any duty and
absence of any injury-Rentfro did not even respond to these challenged elements in her summary
judgment response or in her brief. Rather, she insists the burden was on Manuel IV and Ernesto
to prove their dealings with the 1992 Trust and its beneficiaries was "fair." This is incorrect.
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Rentfro v. Cavazos, Not Reported in S.W.3d (2012)
Once Manuel IV and Ernesto asserted under rule 166a(i) there was no evidence of breach and no
evidence of injury on these claims, the burden was on Rentfro to produce more than a scintilla of
evidence to raise a fact issue, which she failed to do. See TEX.R. CIV. P. 166a(i). Accordingly,
even if limitations did not bar Rentfro's claims regarding the 1992 Trust, summary judgment was
still proper on these claims based on Manuel IVs and Ernesto's no evidence motions for summary
judgment.
Rentfro makes a second argument regarding the limitations defense. In her summary judgment
response and in her brief, Rentfro contends that summary judgment based on limitations was
improper because Manuel IV and Ernesto moved for summary judgment on this basis pre-Cavazos
I, the trial court denied their motions on the basis of limitations, and they failed to appeal the
denial. Accordingly, she contends, they were not entitled to "relitigate" the matter on remand or
in this appeal. This contention is without merit.
First, although Manuel IV and Ernesto moved for summary judgment in their original motions
on the ground that Rentfro's claims were barred by limitations, the trial court did not "deny" any
motion for summary judgment by Manuel IV and Ernesto based on limitations. As this court
specifically recognized in Cavazos I:
*14 The trial court rendered summary judgment on specific grounds ... [t]he trial court did not
render summary judgment on any claim asserted by [Roberto or Rentfro] ... or any defenses
asserted by [Manuel IV or Ernesto] (e.g., lack of standing or limitations). Instead, in the
summary judgment, the court severed "issues and causes of action ... not disposed of with the
granting of the Partial Summary Judgment." Thus, all of Roberto's and Anita Rentfro's claims,
except those for declaratory relief on the validity of the deeds, and any defenses to those claims
remained pending in the severed action.
246 S.W.3d at 178. Moreover, even if the trial court had denied Manuel IV's and Ernesto's motions
for summary judgment based on limitations, their failure to appeal this ruling would not preclude
them from asserting it on remand. It is certainly possible that a summary judgment movant might
not have sufficient evidence to establish an affirmative defense as a matter of law when the motion
for summary judgment is first filed, but this does not mean that prior to the entry of any final
judgment such evidence might not become available, allowing the movant to amend, refile, or
reurge the motion for summary judgment based on additional evidence. Accordingly, Rentfro's
"relitigation" argument is without merit.
Before concluding, we note that in her statement of the issues, though not by argument in her
brief, Rentfro contends the trial court erred in granting summary judgment on Manuel IV's and
Ernesto's claims for attorney's fees against Rentfro. She seems to suggest these claims are barred
by limitations. There are, however, at least two problems with this issue. First, this claim was
specifically severed in the trial court's summary judgment and severance order. Thus, the trial court
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Rentfro v. Cavazos, Not Reported hi S.W.3d (2012)
did not rule upon Manuel IV's and Ernesto's claim for attorney's fees against Rentfro. Second,
limitations is an affirmative defense that must be specifically pled. TEX.R. CIV. P. 94. We can
find no pleading in which Rentfro asserted limitations in response to Manuel IV's and Ernesto's
claim for attorney's fees. Finally, Rentfro asserted this issue in her statement of the issues, but
failed to provide an argument or authority in support of it. In fact, she makes no mention of it
in the argument portion of her brief, and has therefore failed to properly brief it. See Tex.R.App.
P. 38.1(i).
In sum, we hold the trial court properly granted summary judgment in favor of Manuel IV and
Ernesto on grounds of limitations. Even if we consider the claims as to the 1992 Trust separate
and find they did not accrue until Anita's death in 2002, summary judgment was proper because
Rentfro failed to raise a fact issue in response to Manuel IV's and Ernesto's no evidence motions
for summary judgment on the trust claims.
CONCLUSION
Based on the foregoing, we overrule Rentfro's issues and affirm the trial court's judgment.
All Citations
Not Reported in S.W.3d, 2012 WL 566364
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557 P.2d 599 (1976)
98 Idaho 5
In the Matter of the ESTATE of Ira D. Kerlee, Deceased.
Paul G. EIMERS, Personal Representative of the Estate of Ira D. Kerlee, Deceased, Plaintiff-Respondent,
v.
NORTH IDAHO CHILDREN'S HOME, aka Children's Home Finding Aid Society of Lewiston, Idaho, Defendant-Respondent, and
George W. Fogg, Individually, and as Special Administrator of the Estate of Margaret Fogg, Defendant-Appellant.
No. 12145.
Supreme Court of Idaho.
December 23, 1976.
*600 Dale L. Luplow, Grangeville, for defendant-appellant.
Paul G. Eimers, Grangeville, John H. Bengtson of Randall, Bengtson & Cox, Lewiston, for plaintiff-respondent.
DONALDSON, Justice.
The facts of the present case are undisputed. The testator Ira D. Kerlee died on September 11, 1974 at 6:50 p.m. Margaret Fogg, testator's sister and the primary beneficiary under the will, died on September 14, 1974 at 8:55 p.m., approximately 74 hours after the death of her brother. The testator named the Children's Home Finding and Aid Society as the conditional beneficiary of his estate. If Margaret Fogg did not survive the testator, the estate would go to the Children's Home Finding and Aid Society, hereinafter referred to as the North Idaho Children's Home.
Both parties agree that if it were not for I.C. § 15-2-601, the testator's estate would have passed immediately upon his death to the primary beneficiary, Margaret Fogg, because she actually survived the testator. Idaho Code § 15-2-601 provides as follows:
"A devisee who does not survive the testator by one hundred twenty (120) hours is treated as if he predeceased the testator, unless the will of the decedent contains some language explicitly dealing with simultaneous deaths or deaths in a common disaster, or requiring that the devisee survive the testator or survive the testator for a stated period in order to take under the will." (emphasis added)
The critical issue on appeal is whether the 120 hour survivorship requirement of I.C. § 15-2-601 applies. The district court concluded that I.C. § 15-2-601 required as a matter of law that Margaret Fogg survive the decedent by 120 hours in order to take under his will. Since Margaret Fogg failed to satisfy the 120 hour survivorship requirement, the court held that the decedent's estate passed to the North Idaho Children's Home. George W. Fogg, hereinafter referred to as appellant, is the husband and sole surviving heir of Margaret Fogg. He appeals the decision of the district court.
Appellant argues that I.C. § 15-2-601 allows the testator's will to supersede the statutory survivorship requirements in certain designated circumstances, one of which is when the will contains explicit language requiring only that the "devisee survive the testator" in order to take. Clause 3 of the decedent's will is the relevant portion of the will. It reads as follows:
"I hereby give, devise, and bequeath all my property and estate whatsoever nature and kind, and wheresoever situated to my sister, Margaret Fogg, whose present address is 10017 3rd Ave. S.W., Seattle, Washington 98146.
"If my sister above-named, does not survive me, then I give, devise, and bequeath all my property and estate to the Children's Home Finding and Aid Society of Lewiston, Idaho, commonly known as the North Idaho Children's Home which is situated at 1720 18th Avenue, Lewiston, Idaho." (emphasis added)
Appellant contends that Clause 3 of the testator's will contains explicit language allowing Margaret Fogg to inherit by merely surviving the decedent in that it provides that "if my sister above-named does not survive me" then the contingent beneficiary should take. The converse of that statement is that Margaret Fogg is to take if she does survive the testator.
We agree with appellant that such language falls under a statutory exception to the 120 hour survivorship requirement. The will effectively states that all Margaret Fogg had to do in order to take under the will was to survive the testator. Having done so, Margaret Fogg became entitled to inherit even though she did not survive for 120 hours.
*601 Counsel for North Idaho Children's Home argues that the reference to survival was merely a condition or limitation on North Idaho Children's Home's rights under the will and is in no way a condition upon the rights of the primary beneficiary under the will. The testamentary gift to Margaret Fogg under this line of reasoning was absolute. There was no qualifying language conditioning the gift on her surviving the testator, so the 120 hour survivorship requirement would apply. We cannot acquiesce in such a strained construction.
The statute in question provides that the 120 hour survivorship requirement will apply "unless the will of the decedent contains some language dealing explicitly * * * requiring that the devisee survive the testator ... in order to take under the will." (emphasis added) The statute looks to the entire will, not a particular paragraph.
Similarly, case law provides that a testator's intent is to be gathered from the entire document, not just one particular paragraph. Wilson v. Linder, 18 Idaho 438, 110 P. 274 (1910). The effect of the conditional beneficiary clause is to allow Margaret Fogg to take under the will merely by surviving the decedent. The Court finds that this is sufficiently explicit to supersede the 120 hour survivorship requirement.
Respondent cites authority from the State of Ohio for the proposition that in order to render inapplicable the statutory requirement that a devisee or legatee survive the testator for a stated period of time in order to take under the will, the will must "specifically" or in "unmistakeable language" state that the devisee or legatee is entitled to take under the testator's will even though he fails to meet the statutory survivorship requirement. Alten v. Barnecut, 168 N.E.2d 9 (Ohio 1959). This court is not persuaded by the Ohio authority. Although the Ohio statute contains a survivorship clause, the statutory language of the Ohio statute differs materially from that of I.C. § 15-2-601. Section 2105.21, Revised Code of Ohio, in relevant part reads as follows:
"* * * When the surviving spouse or other heir at law, legatee or devisee dies within thirty days after the death of the decedent, the estate of such decedent shall pass and descend as though he had survived such surviving spouse, or other heir at law, legatee or devisee * * *. This section shall not apply in the case of wills wherein provision has been made for distribution of property different from the provisions of this section. In such case such provision of the will shall not prevail over the right of election of the surviving spouse." (emphasis added)
In interpreting the Ohio statute, the Ohio Court of Appeals focused on the specific language of the statute:
"Now in order that the last paragraph of Section 2105.21, Revised Code, above quoted comes into being and operation, the will must say specifically or in unmistakeable language that the devisee or legatee shall take under the will even though he or she does not survive the testator for a period of thirty days. That is the meaning of `different from the provisions of this section.'" 168 N.E.2d at 11. (emphasis added)
Idaho Code § 15-2-601 does not contain language that mandates such specificity. Accordingly, we do not demand it. Judgment reversed. Costs to appellant.
McFADDEN, C.J., and SHEPARD and BAKES, JJ., concur.
BISTLINE, Justice (specially concurring).
The majority opinion does justice to the testator's intent as that intent is manifest from the unambiguous provisions of his will, I.C. § 15-2-603, In re Corwin's Estate, 86 Idaho 1, 383 P.2d 339 (1963), as it was written. The will of Mr. Kerlee, the decedent, does contain "survival" language.
*602 I agree also that the Ohio authority cited by respondent is not, and ought not to be, controlling here. The Ohio statute and our statute are dissimilar. Our statute is wholly premised on common accident or common disaster situations, as explained below. Ohio, prior to the present enactment of § 2105.21, Revised Code of Ohio, had an earlier statute which contained language clearly indicating that the 30-day survival requirement was intended for application only where the deaths "resulted from a common accident." Section 10503-18 General Code of Ohio. But that statute no longer so provides.
Believing that the legislature may want to rewrite this section of the Uniform Probate Code, additional grounds for concurring in reversal will be stated with that thought in mind.
A. In my opinion I.C. § 15-2-601 contains a mistake in draftsmanship. As a preface to my remarks, I take note of the comment to § 15-2-601, which states:
"This parallels Section 2-104 requiring an heir to survive by 120 hours in order to inherit."
Comment to I.C. § 15-2-104, in part, reads:
"This section is a limited version of the type of clause frequently found in wills to take care of the common accident situation, in which several members of the same family are injured and die within a few days of each other.
"The Uniform Simultaneous Death Act provides only a partial solution, since it applies only if there is no proof that the parties died otherwise than simultaneously.
"This section requires an heir to survive by five days in order to succeed to decedent's intestate property, for a comparable provision as to wills, see Section 2-601.
"This section avoids multiple administrations and in some instances prevents the property from passing to persons not desired by the decedent."
(Empahsis added.) Comment, I.C. § 15-2-104.
I.C. § 15-2-613 is the re-enactment of the earlier Idaho Simultaneous Death Act, formerly I.C. § 14-119 to I.C. § 14-128, first passed by the Legislature in 1943, S.L. 1943, ch. 83, p. 168; and amended with the adoption of the Uniform Probate Code, so that the first paragraph of the Act now reads:
"Subject to extension by the provisions of section 15-2-104 and section 15-2-601 of this code, where the title to property or the devolution thereof depends upon priority of death and there is no sufficient evidence that the persons have died otherwise than simultaneously, the property of each person shall be distributed as if he had survived, except as otherwise provided in this section." (Emphasis added.) I.C. § 15-2-613
I.C. § 15-2-601 and § 15-2-104 are thus identified as a part of the Simultaneous Death Act. This conclusion is fortified by the express language of I.C. § 15-3-817.
The 1943 Act did not deal with "common accident situations" wherein all did not perish at the same time. Thus resulted the case of In re Davenport's Estates, 79 Idaho 548, 323 P.2d 611 (1958).
Litigation there was ignited by a sizeable estate owned by James and Mary Davenport, who both died intestate from injuries received in a highway accident. Because they had no children, battle lines were drawn between her heirs-at-law and his heirs-at-law, and the spoils of battle hinged on establishing which of these two unfortunate persons died first, with Mary's heirs winning by a last gasp. This Court noted the inapplicability of the Simultaneous Death Act. The provisions of I.C. § 15-2-104, had it been in effect, would have precluded the Davenport litigation.
Common accident situations, whether death comes by auto, airplane, by fire, or by assassin, are not uncommon. It is recognized that many attorneys have for years carefully advised of these contingencies in *603 preparing a client's will. By doing so, probate expenses are minimized, but more important, in husband-wife and parent-child situations, considerable tax savings are brought about by avoiding a doubling up of estates, and also sharply magnified shrinkage due to the graduated (always upward) scale of federal estate taxation schedules. It is recognized that not every husband and wife have had the benefit of legal advice before finding themselves hastening out of this life, intestate, and as a result of a common accident.
The drafters of the Uniform Probate Code, and the legislature which enacted it, in adding I.C. § 15-2-601 and § 15-2-104, are thus seen as having clearly intended to benefit those persons who, though not perishing simultaneously, nevertheless experienced and did not survive a common accident, and either died intestate or without a will containing such provisions.
The error to which I allude is readily observed by reading I.C. § 15-2-601 with the second "or" deleted. It is obviously surplusage, and, were it necessary to do so in reaching a determination here, there is authority for reading it out. State v. Bowman, 40 Idaho 470, 235 P. 577 (1940). By so doing would then be expressed what I deduce to be the plain intent of the statute. Otherwise, and viewed in isolation, the statute is meaningless, and fails to accomplish any thing but the confusion which reigns in the instant case.
So read, absent the second "or," the statute quite clearly will be of benefit with regard to common accident (Comment) or common disaster (Code) situations, and will properly correlate with its statutory counterpart. The correction would best come from the legislature.
Under I.C. § 15-2-601 (as it should read), where the testator's will contains language showing that this possibility of staggered deaths arising out of the same common disaster was considered, and it is explicitly dealt with, in language requiring that the devisee survive the testator, or survive by as much of a time period as the testator may designate, I.C. § 15-2-601 will not apply.
B. If the statute now read as I show that it should read, the result here would be the same. It is abundantly clear that both I.C. § 15-2-601 and § 15-2-104 are intended to apply only in common accident and disaster situations. This is further demonstrable by the language used. While the wording in I.C. § 15-2-601 reads as to "a devisee who does not survive," the same provision in I.C. § 15-2-104 reads as to "any person who fails to survive." (My emphasis.) Failing to survive (the accident or disaster) is the more appropriate and descriptive language, and shows the intent of the legislature.
In this case we have a testator living in Grangeville, Idaho, making testamentary provision for his sister in Seattle, Washington. Here, then, there was no reason for this testator and his attorney to draft a will which would cover the extremely remote contingency that these two might suffer injuries in a common accident or disaster from which both might ultimately perish, but at different times. The will, as drafted, thoroughly and competently expressed the intent of the testator that, if his sister outlived him, she should inherit his estate. This is what the 70 year old testator had in mind in July of 1966, when he made his 66 year old sister the primary beneficiary of his estate. Common disaster legislation is to be confined to common disaster situations. This was not such a situation.
C. If the statute is to be amended to delete the offensive "or" and the legislature would at the same time in plain language specify that I.C. § 15-2-601 is intended only for application to common accident and common disaster situations, I submit that thereby would be avoided any future problem such as has presented itself in this case, i.e., a contention that the decedent's last will and testament, executed by him in 1966 with the aid and advice of competent counsel, could be retroactively amended by a legislative amendment to his *604 will concerning which there is no reason to say that he should have knowledge. By according such specificity, and perhaps by embracing this matter of intended retroactivity in the title of an amendatory act, future problems will thereby be avoided. I suggest only that the Title to ch. 111 of the Session Laws of 1971 might be read by some as not embracing the provisions of Section 28 thereof, which deal with retroactivity.
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Unified Judicial System
ALPHA GAMMA ZETA HOUSE ASSOC.;Alpha Phi Corp.; Psi Chapter; Alpha Xi Delta Assoc.;Delta Gamma Chapter Assoc. Corp.; Gamma Alpha Alumni Corp.;Kappa Alpha Theta Corp.; Pi Beta Phi Assoc.; Tridentia Chapter House Corp.;Sigma Nu House Corp.; and South Dakota Sigma Chapter House Assoc.,Appellants,v.CLAY COUNTY BOARD OF EQUALIZATION,Appellee.[1998 SD 101]
South Dakota Supreme CourtAppeal from the First Judicial Circuit, Clay County, SDHon. Arthur L. Rusch, Judge#20065--Affirmed
Jerome B. Lammers, Ryker LammersLammers, Lammers & Kleibacker, Madison, SDAttorneys for Appellants.
Tami A. Maroney Bern, Clay County State's Attorney, Vermillion, SDAttorney for Appellee.
Argued Mar 23, 1998; Opinion Filed Aug 26, 1998
LIEBERMAN, Circuit Judge.
[¶1] Alpha Gamma Zeta House Association, et al., (collectively referred to as House Corporations) contest their real estate tax status as determined by the Clay County Board of Equalization. In 1996, the House Corporations filed applications for tax exempt status from Clay County real property taxes. At a subsequent hearing, the Board of Equalization held that their properties were taxable. The House Corporations appealed to the circuit court which upheld the decision of the Board of Equalization. We affirm.
FACTS
[¶2] The House Corporations are the record owners of the real estate described in the applications for property tax exempt status. The real estate is used as primary residences of the affiliate members of Greek fraternities and sororities (Greek Chapters). Each House Corporation is a South Dakota nonprofit corporation and is recognized as an exempt organization under the United States Internal Revenue Code, §501(c)(7), as amended in 1992.
[¶3] Each residence is located off of the USD campus on property in which USD does not have any ownership interest. The Greek Chapters are authorized and recognized by USD as functioning student organizations. The students residing in the Greek houses must abide by the "Student Code of Conduct" which is mandated by the South Dakota Board of Regents. Only if the Greek organizations agree to adopt and enforce USD policies will USD recognition and privileges be available.
[¶4] Students who have completed their freshman year of college are allowed to live off-campus at these chapter houses if certain USD-provided criteria are met. The established housing policy for students not involved in Greek life provides that all unmarried undergraduate students are required to live on-campus for the first two years unless special permission to live elsewhere is granted by the University.
[¶5] The Greek Chapters engage in certain charitable activities which serve the poor, distressed or underprivileged, including: food drives, AIDS awareness clinics, highway cleanup, and other charity promotions and telethons. Some of these activities are planned and carried out by the Greek Chapters at the houses, which are owned by the House Corporations.
[¶6] The issue on appeal is whether the House Corporations, the owners of the real property rented to affiliated Greek fraternities or sororities, are benevolent organizations under SDCL 10-4-9.2. We conclude that they are not.
STANDARD OF REVIEW
[¶7] This is a review of an administrative appeal from an agency decision. As such, we examine agency findings in the same manner as the circuit court to decide whether they are clearly erroneous in light of all the evidence. Sopko v. C & R Transfer Co., 1998 SD 8, ¶6, 575 NW2d 225, 228. "If after careful review of the entire record we are definitely and firmly convinced a mistake has been committed, only then will we reverse." Id.
ANALYSIS AND DECISION
[¶8] Statutes exempting property from taxation should be strictly construed in favor of the taxing power. Appeal of BHLS, 1997 SD 64, ¶7, 563 NW2d 429, 431 (citations omitted). The words in such statutes should be given a reasonable, natural, and practical meaning to effectuate the purpose of the exemption. Id. (citing National Food Corp. v. Aurora Cty. Brd. of Comm'rs, 537 NW2d 564, 566 (SD 1995)). "[T]he taxpayer has the burden of proving entitlement to an exemption." Matter of Sales and Use Tax, 1997 SD 17, ¶21, 559 NW2d 875, 882 (quoting Sioux Valley Hosp. Ass'n v. State, 519 NW2d 334, 335 (SD 1994)).
[¶9] SDCL 10-4-9.2 provides an exemption for benevolent organizations used exclusively for benevolent purposes:
Property owned by a benevolent organization and used exclusively for benevolent purposes is exempt from taxation. A benevolent organization is any lodge, patriotic organization, memorial association, educational association, cemetery association or similar association. A benevolent organization must be nonprofit and recognized as an exempt organization under sections 501(c)(3), 501(c)(7), 501(c)(8), 501(c)(10) or 501(c)(19) of the United States Internal Revenue Code of 1986, as amended, and in effect on January 1, 1992. However, if any such property consists of improved or unimproved property located within a municipality not occupied or directly used in carrying out the primary objective of the benevolent organization owning the same, such property shall be taxed the same as other property of the same class is taxed. However, if any such property consists of agricultural land, such property shall be taxed the same as other property of the same class is taxed. For the purposes of this section, an educational association is a group of accredited elementary, secondary or post-secondary schools. For the purposes of this section, a benevolent organization also includes a congressionally chartered veterans organization which is nonprofit and recognized as an exempt organization under section 501(c)(4) of the United States Internal Revenue Code of 1986, as amended, and in effect on January 1, 1992. (emphasis added).
The second paragraph of SDCL 10-4-9.2 provides:
For purposes of this section, benevolent purpose means an activity that serves the poor, distressed or underprivileged, promotes the physical or mental welfare of youths or disadvantaged individuals, or relieves a government burden.
[¶10] Under this statute, the House Corporations must meet two requirements: (1) that they are a benevolent organization, and (2) that their real property is used exclusively for benevolent purposes.
[¶11] Although the Greek Chapters engage in some benevolent and charitable activities, the more appropriate question is whether the House Corporations function exclusively for benevolent purposes. Because the House Corporations are the actual owners of the real estate, their status under SDCL 10-4-9.2 is the ultimate issue.
[¶12] The House Corporations argue that the purpose of their corporations is to provide lodging for their respective fraternities and sororities and a convenient method of ownership of real property. They assert that all of the benevolent and charitable functions of the chapters should be attributed to the corporations, who associate only for "fraternal purposes." In South Dakota Sigma Chapter House Ass'n v Clay County, 65 SD 559, 567, 276 NW 258, 263 (1937) we recognized the close ties of the householding corporation to the fraternity, but stated that "notwithstanding its intimate relation to and its solicitude for the chapter," the house corporation may not be characterized by the purposes and practices of the chapter. The House Corporations may be a convenient "legal fiction" standing in for the Greek Chapters themselves, but this does not mandate commensurate legal treatment. Furthermore, the House Corporations' contentions do not overcome the clear language of SDCL 10-4-9.2 which applies to property owned by a benevolent organization.
[¶13] Because the House Corporations' own the property and the property is not used exclusively for benevolent purposes, they do not meet the requirements of the second paragraph of SDCL 10-4-9.2; therefore, it is not necessary to discuss House Corporations' remaining contentions.
[¶14] Affirmed.
[¶15] MILLER, Chief Justice, and SABERS, AMUNDSON and GILBERTSON, Justices, concur.
[¶16] LIEBERMAN, Circuit Judge, for KONENKAMP, Justice, disqualified.
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705 F.2d 442
Goinsv.Johnson
82-6459
UNITED STATES COURT OF APPEALS Fourth Circuit
3/11/83
1
E.D.Va.
AFFIRMED
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485 F.3d 1210
UNITED STATES of America, Appellant,v.Steven R. LITTLE, Appellee.
No. 07-1789.
United States Court of Appeals, Eighth Circuit.
Submitted: April 17, 2007.
Filed: May 9, 2007.
Philip M. Koppe, Asst. U.S. Atty., Kansas City, MO (Bradley J. Schlozman, U.S. Atty., on the brief), for appellant.
James R. Hobbs, Wyrsch Hobbs & Mirakian, P.C., Kansas City, MO (Nathan J. Owings, on the brief), for appellee.
Before BYE, BEAM, and HANSEN, Circuit Judges.
PER CURIAM.
1
The Government appeals the district court's order permitting Steven R. Little to remain free on bail and to self-surrender following his conviction and sentence to 60 months in prison for attempting to entice a minor to engage in unlawful sexual activity in violation of 18 U.S.C. § 2422(b). We granted the Government's motion for an expedited appeal, and after briefing from both sides, we reverse and remand.
2
The question presented is whether there are any 18 U.S.C. § 3145(c) "exceptional circumstances" in the case which would permit Mr. Little to escape the otherwise mandatory requirement of 18 U.S.C. § 3143(a)(2) that he be immediately confined following sentencing for the crime of violence he committed. The district court found three circumstances it deemed to be "exceptional": (1) the conduct of law enforcement officers in arresting Mr. Little following his indictment, rather than permitting him to self-surrender as his attorney had informed the authorities he would do. The circumstances of the arrest are described as "the FBI sent multiple agents to Mr. Little's house, evacuated a portion of the neighborhood, and entered the house with guns drawn." Appellee's Br. at 4; (2) the fact that Mr. Little cooperated in the investigation, voluntarily gave incriminating statements, consented to the seizure of his computer, and his full compliance with pretrial release conditions; and (3) his timely appearance at all court proceedings.
3
None of the circumstances relied upon are "exceptional." We have said that "exceptional" means "clearly out of the ordinary, uncommon, or rare." United States v. Larue, 478 F.3d 924, 926 (8th Cir.2007). It is not exceptional to expect every defendant to timely appear in court and to obey the court's order concerning pretrial conditions of release. Nor is it clearly out of the ordinary, uncommon, or rare for defendants to cooperate in the investigation of their criminal acts.
4
We also fail to see any connection between the circumstances of the appellee's arrest by the government and a determination of whether he should be free to self-surrender following conviction and sentence. The facts of this case reveal that Mr. Little had previously attempted to engage in sexually-related, on-line conversations with two girls (ages 12 and 13) before his on-line encounter with the undercover FBI agent posing as a 13-year-old in an internet chat room that led to his arrest when he showed up at a Kansas City park for the prearranged tryst. The public deserves more protection from convicted on-line sexual predators than the district court's order permitting the defendant to be unconfined for 60 days pending his self-surrender provides. See United States v. Brown, 368 F.3d 992, 993 (8th Cir.2004) (noting we review de novo the ultimate legal question of whether detention is required).
5
Accordingly, the district court's order of March 13, 2007, permitting the defendant, Mr. Little, to be released on bail and allowing him to self-surrender on May 14, 2007, to serve the 60-month sentence imposed on him for attempting to entice a minor to engage in illegal sexual activity, a crime of violence, in violation of 18 U.S.C. § 2422(b), is vacated. The case is remanded to the district court for the immediate issuance of a bench warrant for the appellee's arrest and confinement pursuant to the judgment of conviction and sentence previously entered against him.
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APPENDIX?
between the FBI, CIA, or DOD with Stefan Halper—going back as far as
2014—regarding Michael Flynn, Svetlana Lokhova, Mr. Richard Dearlove
(of MI6), and Professor Christopher Andrew (connected with MI5) and
Halper’s compensation through the DOD Office of Net Assessment as
evidenced by the whistleblower complaint of Adam Lovinger, addressed
in our brief. This includes David Shedd (former Deputy Director of
DIA) and Mike Vickers, who were CIA officers; James H. Baker; former
DIA Director LTG Stewart; former DIA Deputy Director Doug Wise; and
the DIA Director of Operations (DOD). This should also include any
communications or correspondence of any type arising from the
investigation or alleged concerns about Mr. Flynn that contained a
copy to (as a “cc” or “bcc”) or was addressed directly to the DNI
James Clapper and his senior staff; to CIA Director Brennan and his
senior staff; or to FBI Director Comey, his Deputy Andrew McCabe and
senior staff. With respect to Col. (Ret.) James Baker, the current
head of DOD Office of Net Assessment, production of Col. Baker’s
calendar showing his meetings with or any other communications with
David Ignatius from July 1, 2015 through March 2017.
No. | De£.’s Requests Gov’ t’s Responses
1 A letter delivered by the British Embassy to the incoming National Not relevant. The government is not aware of information that
Security team after Donald Trump’s election, and to outgoing National Christopher Steele provided that is relevant to the defendant’s false
Security Advisor Susan Rice (the letter apparently disavows former statements to the Federal Bureau of Investigation (“FBI”) on January 24,
British Secret Service Agent Christopher Steele, calls his credibility | 2017, or to his punishment.
into question, and declares him untrustworthy).
2 The original draft of Mr. Flynn’s 302 and 1A-file, and any FBI Already provided. The government has already provided responsive
document that identifies everyone who had possession of it (parts of information to the defendant, including the January 24 interview report,
which may have been leaked to the press, but the full original has all drafts of the interview report, and the handwritten notes of the
never been produced). This would include information given to Deputy interviewing agents. The government has also provided to the defendant
Attorney General Sally Yates on January 24 and 25, 2017. reports of interviews with the second interviewing agent, who attests to
the accuracy of the final January 24 interview report.
3 All documents, notes, information, FBI 302s, or testimony regarding Not relevant. The government is not aware of any information that Nellie
Nellie Ohr’s research on Mr. Flynn and any information about Ohr may have provided that is relevant to the defendant’s false
transmitting it to the DOJ, CIA, or FBI. Any drafts, electronic statements to the FBI on January 24, 2017, or to his punishment. The
communications (“ECs”), emails, and texts related to Nellie Ohr’s government’s response includes consideration of the defendant’s
research on Mr. Flynn, and all CIA cables on the topic as well. September 23, 2019 amendment.
- All payments, notes, memos, correspondence, and instructions by and Not relevant. The government is not aware of information relating to the
to the defendant’s false statements to
to his punishment. The government’s
of the defendant’s September 23, 2019
listed persons that is relevant
the FBI on January 24, 2017, or
response includes consideration
amendment.
1 This Appendix provides the verbatim language from Mr. Flynn’s Motion to Compel the Production of Brady Material and For An Order to Show Cause, ECF
No.
A, ECF No.
111, and his Amendment to the Brady Motion, ECF No. 116.
122-1.
A-1
It also includes the verbatim language from the government’s responses in its Appendix
The Flynn 302 dated January 19, 2017, mentioned in the Mueller Report.
Item does not exist. The reference in the Report of the Special Counsel
on Russian Interference in the 2016 Election (“Special Counsel Report”)
to an interview of the defendant dated January 19, 2017, is a
typographical error. It should read “January 19, 2018,” which is an
interview of the defendant at which the defendant’s counsel were
present.
6 All and unredacted Page-Strzok text messages. Mr. Van Grack’s October Already provided. The government has already provided the defendant with
4, 2018, letter asserts: "To the extent the text messages appear to be | access to text messages between former FBI attorney Lisa Page and former
incomplete or contain gaps, we do not possess additional messages that | FBI Deputy Assistant Director (“DAD”) Peter Strzok, including text
appear to fill such gaps." The government should be compelled to messages pertaining to the defendant that are not publicly available.
identify to whom “we” refers, where the originals are, and whether any
of the gaps have been filled or accounted for.
7 All documents, reports, correspondence, and memoranda, including any Already provided. The government has already provided any information
National Security letter or FISA application, concerning any earlier that could reasonably be construed as favorable and material to
investigation of Mr. Flynn, and the basis for it. (The existence of sentencing.
these earlier investigations was disclosed in the Mueller Report; see
Vol. II at pp. 24, 26.)
8 All transcripts, recordings, notes, correspondence, and 302s of any Not relevant. The topic is not relevant to the defendant’s false
interactions with human sources or “OCONUS lures” tasked against Mr. statements to the FBI on January 24, 2017, or to his punishment. The
Flynn since he left DIA in 2014. And electronic communications in government’s response includes consideration of the defendant’s
addition to human sources. September 23, 2019 amendment.
9 The unredacted Page-Strzok text messages as well as text messages, Already provided. The government has already provided the defendant with
emails and other electronic communications to, from, or between Andrew | access to any text messages between Page and DAD Strzok that could
McCabe, James Comey, Rod Rosenstein, Bruce Ohr, Nellie Ohr, John reasonably be construed as favorable and material to sentencing.
Carlin, Aaron Rouse, Carl Ghattas, Andrew Weissmann, Tashina Gauhar,
Michael Steinbach, [REDACTED], and Zainab Ahmad, regarding Mr. Flynn
or the FISA applications or any surveillance (legal or illegal) that
would have reached Mr. Flynn’s communications.
10 |All evidence concerning notification by the Inspector General of the Already provided. The government has already provided the defendant with
DOJ to the Special Counsel of the Strzok-Page text messages, including | access to text messages between Page and DAD Strzok that could
the actual text of any messages given to the Special Counsel, and the reasonably be construed as favorable and material to the sentencing. The
dates on which they were given. Although the Inspector General government’s production to the defendant on March 13, 2018, occurred
notified Special Counsel of the tens of thousands of text messages shortly after the Court issued the Protective Order Governing Discovery,
between Peter Strzok and Lisa Page no later than July 2017—the United States v. Flynn, 17-cr-232 (D.D.C. Feb. 21, 2018) (Doc. 22), and
prosecutors did not produce a single text message to the defense until | over eight months before the defendant reaffirmed his guilt before this
March 13, 2018. Court.
11 |All evidence of press contacts between the Special Counsel Office, Not relevant. The topic is unrelated to the defendant’s false statements
including Andrew Weissmann, Ms. Ahmad, and Mr. Van Grack from the to the FBI on January 24, 2017, or to his punishment.
departure of Peter Strzok from Special Counsel team until December 8,
2017, regarding Mr. Flynn.
12 |Unredacted copies of all memos created by or other communications from | Already provided/not relevant. The government has already provided any
James Comey that mention or deal with any investigation, surveillance,
FISA applications, interviews, or use of a confidential human source
or “OCONUS lures” against Mr. Flynn.
information from interview reports of former FBI Director James Comey
that could reasonably be construed as favorable and material to
sentencing.
13
An unredacted copy of all of James Comey’s testimony before any
Congressional committees.
To the extent the defendant is referring to Director Comey’s
congressional testimony after he was fired, the government does not
possess unredacted copies of such testimony that is not publicly
available.
14 |The James Comey 302 for November 15, 2017, and all Comey 302s that Already provided. The government has already provided any information
bear on or mention Mr. Flynn. from the interview of Director Comey dated November 15, 2017, that could
reasonably be construed as favorable and material to sentencing.
15 |Notes and documents of any kind dealing with any briefings that Mr. The government is not aware of any information in possession of the
Flynn provided to DIA after he left the government. Defense Intelligence Agency that is favorable and material to
sentencing, including the information that the government provided on
August 16, 2019. Specifically, the information of which the government
is aware, including that August 16 production, is either inculpatory or
has no relevance to the defendant’s false statements to the FBI on
January 24, 2017, or to the FARA Unit.
16 |Any information, including recordings or 302s, about Joseph Mifsud’s Not relevant. The topic is unrelated to the defendant’s false statements
presence and involvement in engaging or reporting on Mr. Flynn and to the FBI on January 24, 2017, or to his punishment. The government
Mifsud’s presence at the Russia Today dinner in Moscow on December 10, | appreciates the correction included in the defendant’s September 23,
2015. 2019 amendment.
17 |All notes, memoranda, 302s, and other information about the McCabe- Not relevant. Any briefings or meetings that occurred after January 24,
Strzok meeting or meetings with Vice President-Elect or Vice President | 2017, among the listed individuals are not relevant to whether defendant
Pence (these meetings were referenced in the Mueller Report at Vol II, |made false statements to the FBI on January 24, 2017, or to his
p. 34). punishment.
18 |All Mary McCord 302s or interviews, including when she knew that Mr. Already provided. The government has already provided the defendant with
Flynn did not have “a clandestine relationship with Russia.” information from former National Security Division Acting Assistant
Attorney General Mary McCord’s interview report that could reasonably be
construed as favorable and material to sentencing.
19 |Any Sally Yates 302s or other notes that concern Mr. Flynn, including Already provided. The government has already provided the defendant with
treatment of her meetings with FBI Agents on January 24 and 25, 2017, information from former Department of Justice (“DOJ”) Deputy Attorney
her meetings with anyone in the White House, and the draft 302 of the General Sally Yates’ interview report that could reasonably be construed
Flynn interview on January 24 she reviewed or was read into. as favorable and material to sentencing. The meetings Deputy Attorney
General Yates had with persons in the White House after the January 24
interview are not relevant to whether defendant made false statements to
the FBI on January 24, 2017, or to his punishment. The government has
already provided the defendant with all drafts in its possession of the
January 24 interview.
20 |An internal DOJ document dated January 30, 2017, in which the FBI Already provided/not relevant. The government has already provided the
exonerated Mr. Flynn of being “an agent of Russia.” defendant with information from the internal DOJ document about the
defendant not being “an agent of Russia.” That information, however, is
not relevant to whether defendant made false statements to the FBI on
January 24, 2017. The defendant is not charged with and has not been
accused by the government in this case of being “an agent of Russia.”
21 |All information provided by Kathleen Kavalec at the Department of Not relevant. The government is not aware of information that Department
State to the FBI regarding Christopher Steele prior to the first FISA
application.
of State Deputy Assistant Secretary Kathleen Kavalec may have provided
that is relevant to the defendant’s false statements to the FBI on
January 24, 2017, or to his punishment.
22
Any and all evidence that during a senior-attended FBI meeting or
video conference, Andrew McCabe said “First we fuck Flynn, then we
fuck Trump,” or words to that effect.
Already provided. The government has already provided extensive evidence
to the defendant disproving this allegation, including statements from
both interviewing agents. The government is not aware of evidence that
former FBI Deputy Director Andrew McCabe said “First we f**k Flynn, then
we £**k Trump,” or words to that effect.
23 |The two-page Electronic Communication (EC) that allegedly began the Not relevant. The topic is unrelated to the defendant’s false statements
“Russia Collusion” investigation. to the FBI on January 24, 2017, or to his punishment.
24 |All information that underlies the several FISA applications, The request is overly broad, and does not pertain to information that
including any information showing that any of the assertions in the would be favorable and material to sentencing.
applications were false, unverified, or unverifiable.
25 |All documents, notes, information, FBI 302s, or testimony regarding Not relevant. The government is not aware of information relating to DOJ
any debriefing that Bruce Ohr gave to anyone in the FBI or Department attorney Bruce Ohr that is relevant to the defendant’s false statements
of Justice regarding Christopher Steele. to the FBI on January 24, 2017, or to his punishment.
26 |Testimony, interviews, 302s, notes of interviews of all persons who The request is overly broad, and does not pertain to information that
signed FISA applications regarding Mr. Flynn or anyone that would have | would be favorable and material to sentencing.
reached Mr. Flynn’s communications, without regard to whether those
applications were approved or rejected.
27 |All FISA applications since 2015 related to the Russia matter, whether |The request is overly broad, and does not pertain to information that
approved or rejected, which involve Mr. Flynn or reached his would be favorable and material to sentencing.
communications with anyone.
28 |Information identifying reporters paid by Fusion GPS and/or the Penn The request is unrelated to the defendant’s false statements to the FBI
Quarter group to push “Russia Collusion,” communications regarding any | on January 24, 2017, or to his punishment.
stories about Mr. Flynn, and any testimony or statements about how the
reporters were used by the government regarding Mr. Flynn.
29 | FBI 302s of KT McFarland, notes of interviews of her or her own notes, |As described in the Special Counsel Report, after the defendant pleaded
and text messages with Mr. Flynn from approximately December 27, 2016, | guilty on December 1, 2017, former Deputy National Security Advisor K.T.
until Flynn’s resignation. McFarland stated in an interview that the defendant relayed to her that
he had conversations with the Russian Ambassador in December 2016, about
which the defendant made false statements to the FBI on January 24,
2017. See SPECIAL COUNSEL ROBERT S. MUELLER III, REPORT ON THE
INVESTIGATION INTO RUSSIAN INTERFERENCE IN THE 2016 PRESIDENTIAL
ELECTION (Mar. 2019) (“Special Counsel Report”), Vol. I. at 169-73.
30 |Any information regarding the SCO’s and DOJ’s destruction of the cell |Not relevant. The topic is unrelated to the defendant’s false statements
phones of Peter Strzok and Lisa Page (after being advised of the to the FBI on January 24, 2017, or to his punishment.
thousands of text messages that evidenced their bias) that has been
classified or otherwise not available to the public from the published
Inspector General Report.
31 |Any information regarding [REDACTED] eradication of cell phone data, Not relevant. The request is unrelated to the defendant’s false
texts, emails, or other information belonging to Peter Strzok and Lisa | statements to the FBI on January 24, 2017, or to his punishment.
Page that created the “gap” identified by the IG.
32 | Information about any parts of any polygraph examinations failed by Not helpful. Whether or not such information exists, it does not pertain
Peter Strzok after Mr. Flynn was first the subject of any FBI to information that would be favorable and material to sentencing.
investigation—authorized or unauthorized.
33 | Brady or Giglio material newly discovered by the government (and by Already provided. The government has already provided the defendant with
the Inspector General in his separate investigations) in the last two
years.
all Brady material; it is not obligated to provide Giglio material
pursuant to the Court’s Standing Order, United States v. Flynn, 17-cr-
232 (D.D.C. Feb. 16, 2018) (Doc. 20).
34
A full unredacted and copies of the recordings of Mr. Flynn’s calls
with Ambassador Kislyak or anyone else that were reviewed or used in
any way by the FBI or SCO in its evaluation of charges against Mr.
Flynn.
Not helpful. Whether or not such information exists, it does not pertain
to information that would be favorable and material to sentencing.
35 |All FBI 302s, notes, memoranda of James Clapper regarding Mr. Flynn, Not relevant. Former Director of National Intelligence James Clapper had
and the cell phone and home phone records of Mr. Clapper and David no role in the criminal investigation of the defendant, and the
Ignatius between December 5, 2016, and February 24, 2017. government is not aware of information relating to Director Clapper that
is relevant to the defendant’s false statements to the FBI on January
24, 2017, or to his punishment.
36 |Unredacted scope memos written for the Special Counsel and any Not helpful. The request does not pertain to information that would be
requests by Special Counsel that mention Mr. Flynn or his son. favorable and material to sentencing. The government also notes that the
Special Counsel Report states that the Acting Attorney General
confirmed, in memoranda, the Special Counsel’s authority to investigate
the defendant. See Special Counsel Report, Vol. I at 11-12.
37 |All FBI 302s or any notes of interviews of David Ignatius or any other | Not relevant/not helpful. The request is unrelated to the defendant’s
reporter regarding the publication of information concerning Mr. Flynn | false statements to the FBI on January 24, 2017, or to his punishment.
and/or the reporters’ contacts with James Clapper, Andrew McCabe, John
Brennan, Michael Kortan, or anyone in the FBI, DNI, DOD, DOJ, or CIA
regarding Mr. Flynn.
38 | FBI 302s and interview notes of Jim Woolsey, including notes by SCO Not helpful. The government is not aware of information from Jim Woolsey
members of conversations with Woolsey about Mr. Flynn, Flynn Intel that would be favorable and material to sentencing.
Group, the Turkey project, and his separate meeting with officials of
Turkey after the meeting that was the subject of the FIG FARA filing.
39 |All communications between Mr. David Laufman, Ms. Heather Hunt and any |The first part of the request concerns internal, deliberative Department
other member of the National Security Division regarding the FARA of Justice communications that are not discoverable. As for notes of the
registration for Mr. Flynn and FIG and notes, reports or recordings of | interactions between the Department of Justice and the defendant’s
their interaction with Covington & Burling with regards to the filing counsel, defendant’s counsel participated in those interactions and
and its contents. See Def.’s Resp. to the Ct.’s Order of July 9 & possess their own notes.
Gov.’s Filing of July 10, Ex. D, July 11, 2019, No. 17-232-EGS.
40 |Unredacted notes of the [REDACTED] and Strzok from the interview of Not helpful. The government has already provided the defendant with the
Mr. Flynn on January 24, 2017. interviewing agents’ handwritten notes of the January 24 interview. The
limited redactions of those notes do not refer to information that would
be favorable and material to sentencing.
a. [U]nredacted 302 reports and any notes or recordings in any form of Already provided. The government has already provided any information
the following meetings or interviews: Former Deputy Director Andrew from interviews with Deputy Director McCabe that could reasonably be
McCabe, regarding Mr. Flynn, his calls with Ambassador Kislyak, construed as favorable and material to sentencing.
members of the White House discussing those, and his discussions,
planning session, and debriefing session with agents before and after
the Flynn interview on January 24, 2017.
b. [U]nredacted 302 reports and any notes or recordings in any form of Already provided/not helpful. As discussed above, debriefings/meetings
the following meetings or interviews: Recordings, notes, and memoranda
by any and all persons who participated in the planning session for
the interview of Mr. Flynn, at which it was decided that the agents
would not inform him that it was an actual interview or that he was
under investigation—so as to keep him “relaxed.”. (These persons
include David Bowdich, Jen Boone, [REDACTED], Peter Strzok, Lisa Page,
Trish Andersen, and Andrew McCabe.)
that occurred before the January 24 interview are not favorable and
material to sentencing for making false statements to the FBI on January
24, 2017. Nevertheless, the government has already provided to the
defendant any information that could reasonably be construed as
favorable and material to sentencing about such pre-interview
discussions, including the language quoted in the request.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: Recordings, notes, and memoranda
by any and all persons who participated in the debriefing sessions
following the interview of Mr. Flynn, including [REDACTED], Peter
Strzok, Jon Moffa, Andrew McCabe, Bill Priestap, David Bowdich,
[REDACTED], Trish Andersen, and James Comey.
Already provided/not helpful. The government has already provided any
information about such post-interview debriefings that could reasonably
be construed as favorable and material to sentencing.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: Former Principal Associate
Deputy Attorney General Matthew Axelrod regarding Mr. Flynn.
Already provided. The government has already provided any information
from former Principle Associate Deputy Attorney General Matthew
Axelrod’s interview report that could reasonably be construed as
favorable and material to sentencing.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: Former Acting Assistant Attorney
General Mary McCord regarding the FBI’s decision not to give Mr. Flynn
a Title 18, Section 1001 warning, and the decision not to re-interview
him despite the general practice of the FBI to give subjects that
opportunity.
Already provided. The government has already provided any information
from Acting Assistant Attorney General McCord’s interview report that
could reasonably be construed as favorable and material to sentencing,
including the information quoted in the request.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: Former Acting Attorney General
Sally Yates, regarding her opinion that the January 24, 2017, surprise
interview of Mr. Flynn was problematic and her lack of clarity of the
FBI’s purpose in investigating Mr. Flynn.
Already provided. The government has already provided any information
from Deputy Attorney General Yates’ interview report that could
reasonably be construed as favorable and material to sentencing,
including the information quoted in the request.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: White House and transition
officials regarding Mr. Flynn’s conversations with Ambassador Kislyak.
The requested information pertains to information that is inculpatory,
and not helpful to the defendant. As the government communicated to the
defendant on May 25, 2018, the Special Counsel’s Office (“SCO”)
conducted interviews and reviewed documents that referenced statements
the defendant made to White House and transition officials about the
defendant’s conversations with the Russian Ambassador. That
investigative activity yielded information consistent with the
defendant’s publicly reported statements and his statements to the SCO,
in which the defendant initially denied having discussed sanctions with
the Russian Ambassador. Those are the same denials that the defendant
made to the FBI on January 24, 2017. After February 8, 2017, however,
the defendant stated that he could not be certain that sanctions never
came up in his conversations with the Russian Ambassador.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: Michael Boston, Phil Oakley,
Carl Pilgrim, Graham Miller, regarding Flynn Intel Group and Mr.
Flynn, and Brian McCauley, regarding Mr. Flynn’s desire to file FIG’
FARA registration “the right way” with the DOJ.
Ss
Already provided/not helpful. The government had previously provided
information from the interview reports of the listed persons pertaining
to the defendant’s desire to register “the right way” with the DOJ. The
only listed person who made such a statement was Brian McCauley; the
quoted language in the request comes from a government disclosure about
McCauley. That prior disclosure is consistent with McCauley’s public
testimony at trial in United States v. Rafiekian, 18-457 (E.D. Va. July
23, 2019), as well as interviews conducted by prosecutors in the Eastern
District of Virginia. To the government’s knowledge, McCauley is the
only listed person who indicated that the defendant expressed a desire
to register “the right way.” The government, however, has not accused
the defendant of willfully failing to register under FARA. Rather, the
defendant willfully made false statements and omissions in his FARA
filings.
[U]nredacted 302 reports and any notes or recordings in any form of
the following meetings or interviews: The entire report of the SCO’s
interview of James Comey, provided in camera to the Court, but only
summarized to defense counsel in the SCO’s letter of December 14,
2018.
Already provided/not helpful. The government has already provided any
information from the interview of Director Comey dated November 15,
2017, that could reasonably be construed as favorable and material to
sentencing.
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617 F.2d 293
*dJordanv.Estelle
79-2866
UNITED STATES COURT OF APPEALS Fifth Circuit
5/5/80
1
N.D.Tex.
AFFIRMED
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Order Michigan Supreme Court
Lansing, Michigan
October 22, 2010 Marilyn Kelly,
Chief Justice
138952 & (59) Michael F. Cavanagh
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
MYRIAM VELEZ, Diane M. Hathaway
Plaintiff-Appellee/ Alton Thomas Davis,
Cross-Appellant, Justices
v SC: 138952
COA: 281136
Wayne CC: 04-402161-NH
MARTIN TUMA, M.D.,
Defendant-Appellant/
Cross-Appellee.
_________________________________________/
By order of December 9, 2009, the application for leave to appeal the April 16,
2009 judgment of the Court of Appeals and the application for leave to appeal as cross-
appellant were held in abeyance pending the decision in O’Neal v St John Hosp (Docket
Nos. 138180-1). On order of the Court, the case having been decided on July 31, 2010,
487 Mich ___ (2010), the applications are again considered, and they are DENIED, there
being no majority in favor of granting leave to appeal.
MARKMAN, J. (dissenting).
I would grant defendant’s application for leave to appeal because he has raised a
substantial issue that warrants consideration by this Court. Plaintiff sued the defendant
doctor, as well as other defendants, for medical malpractice. She settled with the other
defendants and received $195,000 for her injury. After a jury verdict, she then received
$394,200 from the defendant doctor. Thus, her total recovery was $589,200. However,
this recovery may be contrary to MCL 600.1483(1), which at the time of the verdict
capped at $394,200 “the total amount of damages for non-economic loss recoverable by
. . . plaintiff[], resulting from the negligence of all defendants.”
The following are not in dispute: (1) liability here was joint and several, with each
defendant being liable for the full amount, MCL 600.6304(6)(a); (2) a jury returned a
verdict for plaintiff in the amount of $1,524,831.86; (3) the collateral source rule reduced
plaintiff’s economic damages to $0, MCL 600.6303(1); (4) the non-economic damage
cap outlined in MCL 600.1483(1) reduced plaintiff’s non-economic damages to
2
$394,200; and (5) defendant was entitled to a setoff of the amount of the settlement
plaintiff received from the other defendants, $195,000. The open question is when the
setoff should be applied—after the jury verdict, which will be reduced to the damages
cap, or after the verdict has been reduced by the damages cap in the final judgment? The
answer to this question will cost one of the parties $195,000.
Because there is no clear provision concerning which of these reductions is to be
made first, and because both parties have raised significant arguments, I would grant
leave to appeal on this question.
CORRIGAN and YOUNG, JJ., join the statement of MARKMAN, J.
DAVIS, J., not participating. I recuse myself and am not participating because I
was on the Court of Appeals panel in this case. See MCR 2.003(B).
I, Corbin R. Davis, 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.
October 22, 2010 _________________________________________
d1019 Clerk
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835 F.2d 878
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Howard P. MORRIS, Plaintiff-Appellant,v.Dr. BARTON et al., Defendants-Appellees.
No. 87-5609.
United States Court of Appeals, Sixth Circuit.
Dec. 16, 1987.
1
Before BOYCE MARTIN, Jr. and RALPH B. GUY, Circuit Judges, and EDWARD H. JOHNSTONE, District Judge.*
ORDER
2
Plaintiff appeals the district court's judgment dismissing his civil rights action filed under 42 U.S.C. Sec. 1983. The appeal has been referred to a panel pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination of the certified record and the parties' briefs, the panel unanimously agrees that oral argument is not needed. Fed.R.App.P. 34(a).
3
Plaintiff alleged that defendants denied him medical care and subjected him to a prison inmate attack in violation of the eighth amendment.
4
Upon consideration, we affirm the district court's judgment dated May 5, 1987 for reasons stated therein. Rule 9(b)(5), Rules of the Sixth Circuit.
*
The Honorable Edward H. Johnstone, Chief U.S. District Judge for the Western District of Kentucky, sitting by designation
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DISMISS and Opinion Filed June 25, 2019
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-19-00173-CV
IN THE INTEREST OF K.R.B., A CHILD
On Appeal from the 255th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DF-18-04712
MEMORANDUM OPINION
Before Chief Justice Burns, Justice Molberg, and Justice Nowell
Opinion by Chief Justice Burns
Appellant’s brief in this case is overdue. By postcard dated May 7, 2019, we notified
appellant the time for filing his brief had expired. We directed appellant to file a brief and an
extension motion within ten days. We cautioned appellant that failure to file a brief and an
extension motion would result in the dismissal of this appeal without further notice. To date,
appellant has not filed his brief nor otherwise corresponded with the Court regarding the status of
this appeal.
Accordingly, we dismiss this appeal. TEX. R. APP. P. 38.8(a)(1); 42.3(b), (c).
/Robert D. Burns, III/
ROBERT D. BURNS, III
CHIEF JUSTICE
190173F.P05
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
IN THE INTEREST OF K.R.B., A CHILD On Appeal from the 255th Judicial District
Court, Dallas County, Texas
No. 05-19-00173-CV Trial Court Cause No. DF-18-04712.
Opinion delivered by Chief Justice Burns.
Justices Molberg and Nowell participating.
In accordance with this Court’s opinion of this date, this appeal is DISMISSED.
Judgment entered June 25, 2019
–2–
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232 S.W.3d 463 (2006)
Phillip HAMM, Appellant,
v.
STATE of Arkansas, Appellee.
No. CR 05-676.
Supreme Court of Arkansas.
March 16, 2006.
Rehearing Denied May 4, 2006.
*466 Hartsfield, Almand, & Denison, PLLC, by: Larry J. Hartsfield and Rebecca J. Denison, Little Rock, AR, for appellant.
Mike Beebe, Att'y Gen., by: Clayton K. Hodges, Ass't Att'y Gen., Little Rock, AR, for appellee.
BETTY C. DICKEY, Justice.
Appellant Phillip Hamm was convicted of the rape of M.C., a minor, by a jury in the Faulkner County Circuit Court. The Arkansas Court of Appeals reversed the decision of the trial court and remanded for a new trial, ruling that the testimony of a witness for the State had been improperly admitted under the "pedophile exception" to Ark. R. Evid. 404(b). See Hamm v. State, 91 Ark.App. 177, 209 S.W.3d414 (2005). We granted the State's petition for review pursuant to Ark. Sup.Ct. R. 2-4 (2005). We find no error and affirm the decision of the circuit court.
Although his only child is an adult living in another state, Phillip Hamm often worked with children at his church, serving at times as a Sunday school teacher and as an adult supervisor at church functions. Through that association he met the victim, M.C., a nine-year-old girl, and often invited her, her brother, and other children to his home. At times M.C.'s mother asked Hamm to babysit for her. He entertained M.C. while she was at his home by providing various recreational activities, including video games, television, movies, four-wheeler rides, and fishing. In March, 2002, two girls, N.C. and M.C., who had been frequent guests in the appellant's home, reported that he had initiated sexual contact with them during their visits. Both girls gave interviews to a state police investigator detailing their experiences with Hamm.
The appellant was originally charged with one count of sexual assault for each girl. The cases were severed, and following a second interview in which M.C. made allegations of digital vaginal penetration by Hamm, this charge was amended to rape. *467 A Faulkner County Circuit Court jury acquitted the appellant in a trial for the sexual assault of N.C. At his subsequent trial for the rape of M.C., N.C. was allowed to testify about her experiences with the appellant. Another witness, Robbie Sullivan, testified that she had observed the appellant at a church function lying on his back on an air mattress, holding a little girl astraddle his pelvic area. Both witnesses' statements were admitted pursuant to the "pedophile exception" to Ark. R. Evid. 404(b). The appellant was convicted of rape and sentenced to seventeen years in the Arkansas Department of Corrections.
When we grant a petition for review, we treat the appeal as if it were originally filed in this court. Thus, we review the circuit court's judgment, not that of the court of appeals. Elser v. State, 353 Ark. 143, 114 S.W.3d 168 (2003).
I. Directed Verdict
The third point on appeal is: The trial court abused its discretion when it failed to grant a directed verdict in favor of the defense based on the insufficiency of the evidence where the testimony as to the alleged acts were made as the result of leading questions by the investigator of the child which was otherwise vague and conflicting and there was significantly conflicting testimony by the witnesses at trial concerning the facts.
The fourth point on appeal is: The trial court abused its discretion when it failed to grant a directed verdict in favor of the defense where the State failed to adduce any evidence that the appellant engaged in sexual contact with M.C. during the time alleged in the felony information from December 2001 through February 2002.
The appellant asserts that the trial court erred by denying his motions for a directed verdict because the testimony of the victim was evidence insufficient to justify his conviction, and because the State failed to offer proof that the crimes occurred within the temporal parameters alleged in the felony information. Because the appellant's claims based on the denial of a directed verdict implicate his right to be free from double jeopardy, we consider them first, although they are his third and fourth points on appeal. Cluck v. State, 365 Ark. 166, 226 S.W.3d 780 (2006). A motion for a directed verdict is treated as a challenge to the sufficiency of the evidence. Coggin v. State, 356 Ark. 424, 156 S.W.3d 712 (2004). This court has long held that in reviewing a challenge to the sufficiency of the evidence, we view the evidence in the light most favorable to the State and consider only the evidence that supports the verdict. Stone v. State, 348 Ark. 661, 74 S.W.3d 591 (2002). We affirm a conviction if substantial evidence exists to support it. Id. Substantial evidence is that which is of sufficient force and character that it will, with reasonable certainty, compel a conclusion one way or the other, without resorting to speculation or conjecture. Id.
Arkansas Rule of Criminal Procedure 33.1 states: In a jury trial, if a motion for a directed verdict is to be made, it shall be made at the close of the evidence offered by the prosecution, and at the close of all the evidence. Here, the appellant did not renew his motion for a directed verdict after the presentation of his surrebuttal evidence, which was the last evidence submitted. This constituted a waiver of any question pertaining to the sufficiency of the evidence to support the verdict or judgment. State v. Holmes, 347 Ark. 689, 66 S.W.3d 640 (2002). Thus, his directed verdict claims, points three and four on appeal, are procedurally barred.
*468 II. Pedophile Exception to 404(b)
The first point on appeal is: The trial court abused its discretion when it allowed the State to present the testimony of N.C. under Arkansas Rule of Evidence 404(b) because it was more prejudicial than probative as the alleged touching of her by the defendant was of a non-sexual nature whereas the alleged acts reported by M.C., the victim for which the appellant was being tried for rape, were sexual in nature.
The appellant asserts that the trial court's admission of the testimony of N.C. was an abuse of its discretion because appellant's conduct towards N.C. was of a non-sexual nature, in contrast to his conduct with M.C. The cases cited by the State, such as Smallwood v. State, 326 Ark. 813, 935 S.W.2d 530 (1996), stand for the acknowledged proposition that once a defendant refers to a subject during direct examination, he opens the door for the prosecution to bring up the matter during cross-examination.
Here the trial judge originally granted appellant's motion in limine and excluded N.C.'s testimony, despite the pedophile exception. After Hamm stated during direct examination that he "never had and never would touch a female inappropriately," the trial judge reconsidered his ruling disallowing N.C.'s testimony, and granted the State's motion to allow her testimony for purposes of rebuttal. Since N.C.'s testimony would ordinarily be inadmissible under Rule 404(b), the decisive question is whether it was within the trial court's discretion to admit N.C.'s testimony under the pedophile exception to that rule.
Rule 404(b) states:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident.
The admission or rejection of evidence under Rule 404(b) is left to the sound discretion of the trial court and will not be disturbed absent a manifest abuse of discretion. Hernandez v. State, 331 Ark. 301, 962 S.W.2d 756 (1998). The list of exceptions set out in the rule is exemplary and not exhaustive. White v. State, 290 Ark. 130, 717 S.W.2d 784 (1986). Testimony is admissible pursuant to Rule 404(b) if it is independently relevant to the main issue, relevant in the sense of tending to prove some material point rather than merely to prove that the defendant is a criminal or a bad person. Mosley v. State, 325 Ark. 469, 929 S.W.2d 693 (1996).
This court has recognized a "pedophile exception" to Rule 404(b), which allows evidence of similar acts with the same or other children when it is helpful in showing a proclivity for a specific act with a person or class of persons with whom the defendant has an intimate relationship. Berger v. State, 343 Ark. 413, 36 S.W.3d 286 (2001). The rationale for recognizing the exception is that such evidence helps to prove the depraved instinct of the accused. Id. The basis of the pedophile exception to Rule 404(b) is our acceptance of the notion that evidence of sexual acts with children may be shown, as that evidence demonstrates a particular proclivity or instinct. Hernandez, 331 Ark. 301, 962 S.W.2d 756 (1998). For the pedophile exception to apply, we require that there be a sufficient degree of similarity between the evidence to be introduced and the sexual conduct of the defendant. See id.; Berger, 343 Ark. 413, 36 S.W.3d 286. We also require that there be an "intimate relationship" between the perpetrator *469 and the victim of the prior act. Hernandez, 331 Ark. at 308, 962 S.W.2d at 760; Berger, 343 Ark. at 421, 36 S.W.3d at 291. Some of our earlier cases seemed to hold that for the pedophile exception to apply, the perpetrator and victim must reside in the same household. See Free v. State, 293 Ark. 65, 732 S.W.2d 452 (1987). Other cases dealing with the pedophile exception either did not mention the household element, such as Thompson v. State, 322 Ark. 586, 910 S.W.2d 694 (1995), or applied the exception to situations where the perpetrator did not live with the victim, as in Greenlee v. State, 318 Ark. 191, 884 S.W.2d 947 (1994). In Berger, 343 Ark. 413, 36 S.W.3d 286, we explicitly rejected a requirement that the perpetrator and the victim must live in the same household, and in so doing we adopted the reasoning of the court of appeals in Brewer v. State, 68 Ark.App. 216, 6 S.W.3d 124 (1999), which was that the pedophile exception was applicable if the victim was under the authority of the perpetrator or in his care. Berger, 343 Ark. at 420, 36 S.W.3d at 290.
The appellant avers that N.C.'s testimony was inadmissible because it involved conduct of a non-sexual nature, pointing out that he only inserted his hand about an inch down N.C.'s pants. However, N.C.'s testimony was that the appellant put his hand inside her pants and rubbed her "butt" using an up and down motion, that she got an awkward feeling in her stomach, and that at some point she objected, whereupon the appellant stopped. N.C. testified that the appellant had her sit on him while she played games on his computer, and that she slept overnight at times on the same couch with the appellant, while his wife slept in their bedroom. N.C. also reported that she would "snuggle" with Hamm, that he told her that he loved her, that she was beautiful, and that she was his "little girlfriend."
In N.C.'s case, the appellant rubbed her buttocks beneath her clothing, while with M.C., he engaged in more extensive sexual activity, culminating in digital vaginal penetration. The similarities include: both children were female; both were nine years old when the abuse began; both met the appellant at church; both were under his supervision at church; both were frequently invited to his home; both were at times sitting on Hamm when the abuse occurred; both reported abuse while home alone with him; and, he was not related to either of them. Because of the numerous similarities between the two cases, we conclude that it was not a manifest abuse of discretion for the trial judge to admit N.C.'s testimony under the pedophile exception to Rule 404(b).
The second point on appeal is: The trial court abused its discretion when it allowed testimony of non-sexual contact between N.C. and the appellant to be introduced into the appellant's trial for the rape of M.C. without allowing the defense to elicit testimony that the appellant had been acquitted of sexually assaulting N.C.
The appellant asserts that the trial court abused its discretion by not allowing him to introduce evidence of his exoneration in his trial for the sexual assault of N.C.
When the appellant asked to admit his judgment of acquittal, the trial court said:
If I allow the evidence of the other trial to come in, then that is going to leave both parties to argue what the jury meant by that which I don't think either one of you can do that because you don't know what the jury meant. They may have felt like what she said happened but what happened wasn't a criminal act. They may not have believed what she said, they may have *470 believed we don't know. The verdict in that case can cut both ways in this trial. It can be good for the defendant or it can be bad for the defendant for them to know.
We agree with the State that acquittal does not necessarily mean that the events described in N.C.'s testimony did not occur, a distinction which might be lost on some jurors. An acquittal does not equate with a finding of innocence or a finding that the complaining witness's testimony was false, but rather an acquittal means simply that the jury was not convinced beyond a reasonable doubt that the charges were true. Hughes v. State, 347 Ark. 696, 66 S.W.3d 645 (2002). Given these considerations, and the possibility of prejudice to both sides which a mention of the previous trial could have entailed, we cannot conclude that the trial court's exclusion of this evidence was a manifest abuse of discretion.
The sixth point on appeal is: The trial court abused its discretion when it allowed the testimony of Robbie Sullivan of her personal opinion regarding an instance of appellant's presence around children at a church function where it reflected a subjective interpretation by her of an instance of non-sexual behavior as where it failed to reflect any clear evidence of sexual contact or misconduct and was thus more prejudicial than probative.
The appellant asserts that the introduction of Robbie Sullivan's testimony constituted an abuse of discretion by the trial court because the testimony reflected a subjective impression of non-sexual behavior, and failed to depict clear evidence of sexual contact or misconduct.
Initially, the appellant failed to abstract his objections to the introduction of Robbie Sullivan's testimony. The State argues that this failure precludes the appellant from contesting this issue on appeal. The State is correct in its contention that issues which are not abstracted by an appellant are not preserved for our review. Baker v. State, 363 Ark. 339, 214 S.W.3d 239 (2005). Ordinarily the State's argument would dispose of the sixth point on appeal, but this court allowed appellant to file a supplemental abstract indicating his objections to the introduction of Robbie Sullivan's testimony. Without further comment on the advisability or propriety of this decision, we proceed to a review of the merits.
M.C. testified that during several visits to the appellant's home, he touched her breasts through her clothes, fondled her breasts beneath her clothing, touched her vagina underneath her clothing, laid on top of her, and digitally penetrated her vagina. These acts occurred while the appellant and the victim were alone, and at times, when they were under a blanket in the presence of third parties. Occasionally the victim was seated on the appellant's lap when the abuse occurred, either while steering his car, or while inside his home.
The evidence which the State sought to admit under the pedophile exception to Rule 404(b) is the testimony of Robbie Sullivan, a witness who observed the appellant at a church lock-in and became concerned about his conduct. She observed the appellant lying on his back with an unidentified little girl straddling his pelvic area. Specifically, Sullivan testified as follows:
Q:What did you observe in regard to the actions of the defendant, Mr. Hamm, and other children at that lock-in?
SULLIVAN: During some unstructured time at the lock-in, the kids were pulling out their sleeping bags and kind of grouping off and Phillip pulled out a or had brought a air mattress, it was a full-size air mattress and I glanced over and *471 he had a little girl on the air mattress with him and can I show you how she was being held?
Q: Well, I don't want you to come down from the stand but you can demonstrate by standing or ____ if that is appropriate, Your Honor?
SULLIVAN: He was lying on the air mattress on his back and he had the little girl straddling his pelvic area and at that time I pulled the ____ [the youth minister], the youth minister aside and told him that it wasn't appropriate and I was very concerned.
Q: Did you observe anything else through that evening with regard to Mr. Hamm's conduct that caused you concern?
SULLIVAN: Yes. After I talked to [the youth minister] he said ____ he came back in and he separated the boys and the girls. They were all to watch a video and settle down. Phillip brought his air mattress over and a little girl named N.C. and one of her friends used the air mattress and he sat in a chair beside them until I went to sleep he was sitting in the chair beside them on the girl's side.
Q: Were there any other males present on the female's side?
SULLIVAN: Well, [the youth minister] was sitting on the edge just kind of watching all the kids and [the pastor], our pastor, was also there but they weren't really in the mix of the kids. They were kind of on the edge. Phillip was sitting beside them watching them.
There are similarities between the appellant's actions toward the victim and his actions toward the little girl at church. Both incidents involved female children. The victim was nine years old when the alleged abuse occurred, and the church incident involved a "little girl" of unspecified age. M.C. testified that Hamm had her sit on his lap, and Robbie Sullivan testified that Hamm held the little girl astraddle his pelvic area in an inappropriate manner. The appellant was acquainted with both children through his supervisory duties at his church.
In her interview with the state police investigator, the victim said that the appellant often encouraged children from the church to visit him at his home. There he entertained them in various ways, such as video games and fishing, four-wheeling, and other outdoor activities. The State argues that these recreational activities served to lure children into his home, to keep them coming back, and were thus used by the appellant to develop their friendship and trust, culminating in incidents of sexual abuse. Similarly, the appellant came to the church lock-in, which was an activity for children. He brought his air mattress, a magnet for children who had brought their sleeping bags. There he held the little girl on the mattress in an inappropriate position, straddling his pelvic area.
The appellant asserts that what occurred at the lock-in between the appellant and the little girl was non-sexual conduct. As the State points out, the conduct in question could constitute the sexual act of "frottage." Frottage is defined as: "The act of rubbing against the body of another person . . . to attain sexual gratification." The American Heritage Dictionary of the English Language (4th Ed.2000). What Robbie Sullivan saw could be interpreted as a rubbing against the body of another to attain sexual gratification, and thus it could be defined as frottage, which is a sexual act. We agree with the dissent to the denial of petition for rehearing in the Court of Appeals, "There is nothing innocent about an adult male lying on his back and having a young girl straddle him, even when they are fully clothed, so that their *472 pelvic regions are in contact." Hamm v. State, 91 Ark.App. 177, 209 S.W.3d 414 (2005) (dissenting opinion to denial of rehearing).
The contact between the appellant and the little girl described by Robbie Sullivan involved a fifty-year-old man who was a Sunday school teacher and a church worker. It occurred at a lock-in, a church function where there were sure to be children, but at which no children of the appellant's were in attendance. There he held a little girl of unspecified age in an inappropriate manner, straddling his pelvic area.
In comparing his relationships with these two girls, the appellant initially contacted M.C. and the unidentified little girl through his association with the church. Both girls were approximately of the same age, one was nine years old and the other was a "little girl." The initial contacts occurred at church, viewed by the children and their parents as a safe place where there were safe adults. As a supervisor of children at the church function, the appellant stood in a fiduciary relationship to the little girls, vested with a presumption of trust and confidence by virtue of that association. The appellant babysit M.C. and was often the sole adult responsible for her care, and he was also acting in a supervisory capacity when he encountered the little girl at the lock-in. The appellant was an adult who was there to supervise the children, thus he stood in a position of authority or control vis-a-vis the unidentified little girl. The appellant also touched the vaginal areas of M.C. and the little girl. M.C. testified that Hamm touched her vaginal area in the manner already described, and Robbie Sullivan testified that the little girl was being "held" and that Hamm "had" the little girl straddling his pelvic area in an inappropriate way.
While there are differences between the contact that the appellant had with M.C. and the contact he had with the unidentified "little girl," in cases such as Hernandez, 331 Ark. 301, 962 S.W.2d 756, and Flanery v. State, 362 Ark. 311, 208 S.W.3d 187 (2005), we have recognized that the sexual acts admitted pursuant to the pedophile exception need not be identical to the abuse suffered by the present victim. In Hernandez we said, "[T]he pedophile exception seems especially applicable in view of the evidence that Mr. Hernandez was attracted to the physical characteristics of young girls." Hernandez, 331 Ark. at 308, 962 S.W.2d at 760. Hamm's conduct in frequently inviting young girls to his home while he was there alone, and his conduct at the lock-in, first in the incident on the air mattress, then sitting beside the little girls watching them, at least, until Robbie Sullivan fell asleep, is also evidence that the appellant was attracted to the physical characteristics of young girls. This evidence, considered in conjunction with Hamm's actions toward the girls, likewise makes the pedophile exception applicable in this case. Based on the facts of this case and the extant case law, we cannot conclude that the trial court manifestly abused its discretion in holding that the act described by Robbie Sullivan was relevant to show that the appellant was possessed of a depraved sexual instinct and had a proclivity for molesting young girls.
If evidence of past behavior is not admissible under the pedophile exception, it is still admissible if it is independently relevant to prove motive, intent, preparation, or plan. Robbie Sullivan's testimony is relevant to show the appellant's plan to meet children at church, to invite them back to his home, to keep them returning by offering them treats and entertainment, then to proceed to molest them. In the cases of M.C. and N.C., the appellant first *473 contacted the girls at church, then invited them to visit his house, where he molested them. With the little girl described in Robbie Sullivan's testimony, the contact at the lock-in could reasonably be seen as a prelude to the same pattern as existed in the prior two cases, i.e., meeting a young girl at church, a presumably safe environment, generating a close friendship with her, inviting her into his home, and then molesting her. When the appellant attended the lock-in, he brought a full-size air mattress, something that would presumably be attractive to children. Subsequent to the contact with the "little girl" described by Robbie Sullivan, and even after the boys and girls were separated, he contrived to place himself near the little girls throughout the night. Thus the testimony was relevant to show preparation or plan on the part of the defendant. For the foregoing reasons, we conclude that the trial court did not abuse its wide discretion in evidentiary matters by admitting the testimony of Robbie Sullivan.
III. Arraignment
The fifth point on appeal is: The trial court abused its discretion when it failed to receive a plea and failed to arraign the appellant on the amended charge of rape.
The appellant asserts that the trial court's failure to formally arraign him on a charge of rape amounts to an abuse of discretion. Hamm was originally charged with second-degree sexual assault, but this was amended to a charge of rape on October 29, 2003, following the revelations concerning vaginal penetration by the victim. He was never formally arraigned on a charge of rape.
When a defendant appears and announces ready for trial, he waives formal arraignment. Hill v. State, 251 Ark. 370, 472 S.W.2d 722 (1971). A failure to arraign is not reversible error if the record shows that the defendant received every right he would have received if arraigned. Hobbs v. State, 86 Ark. 360, 111 S.W. 264 (1908). Here, the appellant was not prejudiced by the lack of a formal arraignment. He knew that he was being tried on a charge of rape, and he maintained that he was not guilty of that charge. He received the same rights at trial as he would have had he been arraigned. Thus, because the defendant waived formal arraignment by appearing and announcing ready for trial, and because he suffered no prejudice by not being arraigned, we affirm the decision of the trial court on this point.
IV. Transcript
The appellant's seventh point on appeal is: The trial court abused its discretion when it allowed the State to introduce the transcript of the State police interviews with M.C. which included parts of the statement that were not introduced by the State especially where they were allowed to be introduced by the State giving the defense's cross-examination of the State's witness.
The appellant contends that the trial court abused its discretion by admitting the transcripts of two interviews which M.C. gave to a state police investigator.
During the cross-examination of the investigator, appellant's counsel alluded to portions of the interview which he contended were examples of the investigator's exertion of influence to secure incriminating testimony from M.C. Arkansas Rule of Evidence 801(d)(1) allows the admission of evidence that would otherwise be hearsay if the declarant testifies at trial and is subject to cross-examination concerning the statement, the statement is consistent with her testimony, and is offered to rebut an express charge of recent fabrication or *474 improper influence. Also, Ark. R. Evid. 106 states: Whenever a writing or recorded statement or part thereof is introduced by a party, any adverse party may require him at that time to introduce any other writing or recorded statement which in fairness ought to be considered contemporaneously with it.
The purpose of this rule is to prevent the jury from taking a statement out of context. Skiver v. State, 37 Ark.App. 146, 826 S.W.2d 309 (1992). In the present case, while attempting to show that the investigator coaxed or cajoled M.C. into giving incriminating testimony, the defense expressly referred to selective portions of the interviews. Thus, the entire transcript of the two interviews was properly admitted to refute a charge of improper influence and to provide context, and we therefore affirm the decision of the trial court on this point as well.
Affirmed.
HANNAH, C.J., and GLAZE, J., dissent.
JIM HANNAH, Chief Justice, dissenting.
I respectfully dissent. I believe the circuit court abused its discretion in admitting Robbie Sullivan's testimony pursuant to Ark. R. Evid. 404(b), and for that reason, I would reverse and remand for a new trial. The record reflects the following testimony:
Q. What did you observe in regard to the actions of the defendant, Mr. Hamm, and other children at that lock-in?
A. During some unstructured time at the lock-in, the kids were pulling out their sleeping bags and kind of grouping off and Phillip pulled out or had brought a[n] air mattress, it was a full size air mattress and I glanced over and he had a little girl on the air mattress with him and can I show you how she was being held?
Q. Well, I don't want you to come down from the stand but you can demonstrate by standing orif that [is] appropriate, Your Honor?
A. He was lying on the air mattress on his back and he had the little girl straddling his pelvic area and at that time I pulled the . . . youth minister aside and told him that it wasn't appropriate and I was very concerned.
Rule 404(b) provides:
(b) Other Crimes, Wrongs, or Acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.
This court has recognized a "pedophile exception" to Rule 404(b), where the court has approved allowing evidence of similar acts with the same or other children when it is helpful in showing a proclivity for a specific act with a person or class of persons with whom the defendant has an intimate relationship. Flanery v. State, 362 Ark. 311, 208 S.W.3d 187 (2005). The rationale for recognizing this exception is that such evidence helps to prove the depraved sexual instinct of the accused. Id.
The majority claims that Ms. Sullivan's testimony about what she observed at the lock-in is admissible under the pedophile exception due to the similarities between Hamm's actions toward M.C. and his actions toward the little girl at the church. I am unable to join the majority because the *475 record in this case does not reflect those similarities. Rather, the majority's basis for the admission of the testimony is based upon an erroneous recitation of facts and a mischaracterization of the evidence.
The majority finds the following similarities: (1) both incidents involved female children; (2) M.C. was nine years old when the alleged abuse occurred, and the church incident involved a "little girl" of unspecified age; (3) M.C. testified that Hamm had her sit on his lap, and Ms. Sullivan testified that Hamm held the little girl astraddle his pelvic area; and (4) Hamm was acquainted with both children through his supervisory duties at church.
These so-called similarities simply do not show a proclivity for a specific act with a person or a class of persons with whom Hamm has an intimate relationship. Here, M.C. testified that Hamm touched her breasts and pubic area and digitally penetrated her vagina during her visits to his house. Ms. Sullivan's testimony revealed that she observed an unidentified little girl sitting astraddle of Hamm's pelvic area while he was lying down.
In Swift v. State, 363 Ark. 496, 215 S.W.3d 619 (2005), we held that the evidence of sexual abuse of the appellant's adopted daughter and niece, both close familial relationships, showed a proclivity for that kind of conduct that would be relevant to the alleged rape of his son. We further noted that the two girls and the son were similar in age when the abuse happened, and in each instance, the appellant instructed the child not to tell anyone about the abuse.
In Flanery, supra, the victim testified that inappropriate contact with the appellant progressed from hugging and kissing to inappropriate touching of her breasts, to touching her vagina, and finally to oral sex and sexual intercourse. She further testified that, after the inappropriate contact, the appellant would apologize. The appellant argued that the testimony of his daughter concerning alleged inappropriate contact was inadmissible. She testified that her father asked her to lay on her stomach, and then proceeded to put his hands inside her clothing and rub her buttocks, as well as touch her vaginal area outside her clothing. Once the inappropriate touching had concluded, the appellant's daughter was told not to tell her mother. We stated:
Here, though the specific acts complained of are not identical, the victim and the witness were similar in age when the abuse happened. Further, both girls were living in the home of the appellant and looked on him as a father figure at the time of the abuse. In each case, the appellant attempted to rationalize his behavior in some way. Moreover, both girls testified to inappropriate touching of the vaginal area. In light of the similarities in age and presence of the victims in the same household, we hold that the circuit court did not abuse its discretion in allowing Amanda's testimony.
Flanery, 362 Ark. at 315, 208 S.W.3d at 190; see also Fry v. State, 309 Ark. 316, 829 S.W.2d 415 (1992) (affirming trial court's decision to admit a witness's testimony of sexual abuse to show a pattern of behavior by the appellant and noting that the abuse began when both the victim and the witness were approximately nine years old and progressed from fondling to intercourse).
The majority likens the conduct observed by Ms. Sullivan to an act of sexual abuse, even though Ms. Sullivan did not *476 testify that she observed an act of sexual abuse. Nor did Ms. Sullivan ever testify that, while holding the little girl, Hamm was rubbing against her. As such, the majority's finding that the jury might have believed that Hamm was engaging in frottage with the little girl is wholly improper.[1]
Further, I disagree with the majority's determination that even if Ms. Sullivan's testimony is not admissible under the pedophile exception, it is still admissible because it is independently relevant to prove motive, intent, preparation, or plan. The majority states that "[w]ith the little girl described in Robbie Sullivan's testimony, the contact at the lock-in could be seen as a prelude to the same pattern as existed in the prior two cases, i.e., meeting a young girl at church, a presumably safe environment, generating a close friendship with her, inviting her into his home, and then molesting her." The use of the phrase "could reasonably be seen as a prelude" shows that the majority's conclusion is based purely upon speculation and conjecture. Absolutely no evidence was introduced that the little girl at the lock-in was ever at Hamm's residence or that she was ever molested by Hamm. Consequently, Ms. Sullivan's testimony was simply evidence of another act that was admitted to prove the character of Hamm in order to show that he acted in conformity therewith. Evidence of this type is prohibited by Rule 404(b). Ms. Sullivan's testimony did not provide proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident concerning the rape of M.C.; therefore, it was inadmissible. Because I believe that this erroneously admitted evidence was prejudicial to Hamm, I would reverse and remand this case.
GLAZE, J., joins.
NOTES
[1] The State's assertion that Hamm might have been engaging in frottage was never presented at trial. Nor was it presented in the State's original brief on appeal. It was not until the filing of its supplemental brief that the State put forth the theory that what Ms. Sullivan described appeared to be the sexual act known as frottage.
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419 F.3d 794
PLAINTIFFS' BAYCOL STEERING COMMITTEE, Plaintiff,Kenneth B. Moll; Kenneth B. Moll & Associates, Ltd., Appellants,v.BAYER CORPORATION; Bayer AG; GlaxoSmithKline, Defendants — Appellees.Plaintiffs' Baycol Steering Committee, Plaintiff,K. Amy Lemon, Appellant,v.Bayer Corporation; Bayer AG; GlaxoSmithKline, Defendants-Appellees.
No. 04-2097.
No. 04-2187.
United States Court of Appeals, Eighth Circuit.
Submitted: February 17, 2005.
Filed: August 19, 2005.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Eric John Magnuson, argued, Minneapolis, MN, for appellant Moll.
John Michael Degnan, argued, Minneapolis, MN, for appellant Lemon.
Adam L. Hoeflich, argued, Chicago, IL, for appellee.
Before BYE, HEANEY, and MELLOY, Circuit Judges.
BYE, Circuit Judge.
1
Kenneth B. Moll, and his firm Kenneth B. Moll & Associates Ltd. (KBM), and K. Amy Lemon, appeal the district court's order imposing sanctions against them for their conduct in the Baycol Multi-District Litigation (MDL). Pursuant to its inherent power, the district court removed Moll and KBM from the plaintiffs' steering committee (PSC) and imposed a $50,000 sanction against Moll after finding Moll committed perjury, violated two pretrial orders, and violated multiple provisions of the Minnesota Rules of Professional Conduct. Additionally, the district court sua sponte barred Lemon from the practice of law in the United States District Court for the District of Minnesota after finding she committed perjury and violated provisions of the Minnesota Rules of Professional Conduct. We affirm the removal of Moll and KBM from the PSC, but vacate the $50,000 sanction imposed against Moll and remand for further proceedings. We reverse the district court's imposition of sanctions against Lemon.
I. Background
2
The Baycol product liability litigation concerns a medication known as Baycol, which was used to lower cholesterol before it was withdrawn from the market in August 2001. On December 18, 2001, the judicial panel on multidistrict litigation established the Baycol MDL, in which Bayer Corporation, Bayer A.G., and GlaxoSmithKline are defendants. All federal district court Baycol cases were transferred to the District of Minnesota. The PSC is a select group of lawyers charged with coordinating and directing pretrial proceedings on behalf of plaintiffs in the Baycol MDL. The district court appointed Moll and KBM to serve as one of the eighteen members of the PSC and one of the seven attorneys on the PSC's executive committee.
3
Pre-Trial Order (PTO) 18 directs all filings in the Baycol MDL "shall be filed and served through Verilaw Technologies," a provider of electronic document storage and management services. The order states documents filed through Verilaw "shall not be filed by traditional paper means" and "will not contain visual representations of the filing attorneys' signatures." Instead, PTO 18 provides:
4
On word processing files that they submit, attorneys shall, in place of a signature and where the signature would normally appear, place "Original Signature on File with Filing Attorney." A Filing Attorney shall make an original signature available to any registered user upon request. The filer of any document requiring multiple signatures . . . must list thereon all the names of other signatories by means of an "/s/____" block for each. By submitting such a document, the filer certifies that each of the other signatories has expressly agreed to the form and substance of the document and the filer has their actual authority to submit the document electronically. The filer must maintain any records evidencing this concurrence for subsequent production to the Court if so ordered or for inspection upon request by a party.
5
PTO 24 provides confidential documents produced in the Baycol MDL "shall not be disclosed to anyone other than" the court, the parties to the litigation, the parties' counsel, and certain outside experts and consultants. PTO 24 further states "[a]ll parties and their respective counsel . . . shall take all steps reasonably necessary to prevent the disclosure of confidential discovery material other than in accordance with the terms of this Order." The order also states unauthorized disclosure "may subject the disclosing person to such sanctions and remedies as the Court may deem appropriate."
6
In August 2002, at the PSC's request, Moll, who speaks Italian, scheduled a meeting with Raffaelle Guariniello, an Italian prosecutor, to discuss the criminal investigation of Bayer A.G. managers in Europe and to review related documents. In October 2002, Moll met with Guariniello in Torino, Italy. According to Moll, at this meeting he provided Guariniello with non-privileged documents and he promised to file a motion to intervene, which would allow Guariniello access to privileged documents.
7
The October 2002 meeting included a teleconference with members of the PSC who were in the United States. During the teleconference, the PSC members in the United States were told to "gather as many documents as [they could] or any documents [they] felt were not privileged" for Guariniello to review. Following the teleconference, Ron Goldser sent an email to Guariniello's account and attached two documents: a PowerPoint presentation entitled "Baycol Hot Documents Seminar," and a document entitled "Baycol-MDL 1431 Liability Summary." These documents were created by the PSC and contained portions of Bayer's confidential documents. Moll was copied in the email. In the email, Goldser instructed Guariniello to let Moll review the attached documents for confidentiality before viewing them. Guariniello did not read Goldser's message before opening the attachments, and Moll did not read the email until after Guariniello viewed the documents. Moll viewed the PowerPoint attachment with Guariniello. Every page of both documents contained the following: "CONFIDENTIAL — SUBJECT TO PROTECTIVE ORDER."
8
On October 21, 2002, after returning from Italy, Moll received an email from Guariniello's assistant, Patrizia Solia, asking Moll if he had any news regarding Guariniello's access to privileged documents. In December 2002, Moll and KBM associate Hal Kleinman exchanged emails with Solia regarding information KBM needed to prepare a motion to intervene. On January 20, 2003, Kleinman sent an email to Solia and Guariniello in which he stated he was working on a final draft of the motion to intervene and requested additional information. Solia responded to Kleinman the same day and thanked Kleinman for "helping us to receive Baycol documents." In January and February 2003, Kleinman and Solia exchanged more emails regarding the motion. In a February 27, 2003, email, Solia asked Kleinman: "How is going your Motion for Permission to provide us copies of Bayer documentation?" After March 5, 2003, however, there is no evidence of communication between Guariniello's office and KBM until June 2003.
9
Lemon graduated from law school in 2002 and was admitted to the Illinois and Indiana state bars. After working for a medical malpractice firm for less than a year, she joined KBM in Chicago. Lemon started with KBM the last week of May 2003. The first assignment Lemon received from Moll was to prepare the memorandum of law in support of the motion to intervene. Lemon was also asked to prepare the motion for filing including obtaining a declaration from Guariniello in support of the motion. The declarations of Guariniello and Moll had already been prepared by Kleinman who no longer worked at KBM. Lemon was instructed to get the motion and supporting papers to the PSC "law committee" by June 6.
10
On June 5, at Moll's request, Lemon emailed Guariniello's declaration to Solia. In her email, Lemon asked Guariniello to sign the declaration, fax it to KBM, and send the original by mail. On June 10, Lemon had not heard back from Guariniello's office so she tried calling Guariniello's office directly, but was unable to speak with anyone. The same day, Lemon emailed a draft of the motion papers to various members of the PSC. She also faxed a copy of the motion papers to Moll, who was out of town. Lemon only received one comment from the PSC "law committee" in response to her draft. On June 11, Mike Nast emailed Lemon and told her the motion looked fine and directed Lemon to work with another member of the PSC, Robert Shelquist of Lockridge Grindal Nauen PLLP (LGN), to coordinate the filing of the motion. As a courtesy, LGN filed on Verilaw documents prepared by other firms in the Baycol MDL.
11
On the morning of June 12, Lemon, Moll, and Sonia Kinra, another associate of KBM, met to discuss the motion. The discussion focused on the absence of Guariniello's signature. Moll attempted to call Guariniello's office but was unable to speak to anyone. Then Moll directed Lemon to call Shelquist and tell him they were still missing Guariniello's signature. Apparently, June 12 was the filing deadline for consideration of matters at the district court's July 2003 status conference.
12
The district court found at this point KBM's and LGN's versions of the facts diverge. In her deposition, Lemon testified at Moll's urging she called Shelquist at LGN the morning of June 12 to tell him the Guariniello declaration was not signed and to seek his advice. According to Lemon, sometime after meeting with Moll and before emailing the motion to Shelquist's office at 3:56 p.m., she spoke with Shelquist over the telephone about filing the motion. Lemon testified during the conversation she specifically told Shelquist KBM did not have the signature from Guariniello and she did not know when they would have it. Lemon testified Shelquist told her to insert the "signature on file" notation and send the file anyway. Lemon stated she then inserted the "/s/ signature on file" notations and at 3:56 p.m. emailed the motion papers to Shelquist's assistant for filing. When asked how long the conversation with Shelquist lasted, Lemon stated: "A few minutes. I couldn't tell you. Maybe 10. I don't know."
13
In Shelquist's deposition, he disputed Lemon's account of the conversation. He testified he did not speak with Lemon until after 4:00 p.m. on June 12, after Lemon emailed him the final draft of the motion. Shelquist testified that based on this conversation with Lemon he believed KBM had Guariniello's signed declaration in hand. Shelquist insisted he did not order Lemon to file the unsigned declaration. He testified he did not learn Guariniello's declaration was unsigned until July.
14
Additionally, in his deposition, Shelquist testified it was his "preference to have the signature on file," but, "in a couple of instances, when we were pushing up against a 5:00 p.m. deadline, we emailed the affidavit to Verilaw and then faxed the signature page when it came in." When asked to explain his word choice of "preference," Shelquist stated:
15
With regard to MDL filings on both sides, there had been instances where documents have been filed, affidavits, that say "signature on file." I believe there has [sic] been discovery responses served by Defendants that have "signature on file." I don't know if, technically, that's what is supposed to have been done, but nobody has complained or tried to kick out those filings on either side until this motion.
16
The motion was filed on Verilaw by LGN at 4:15 p.m. on June 12. Moll's declaration included a notation of "/s/ Signature on File." Moll's declaration stated he was "counsel for the purpose" of the motion to intervene. Guariniello's declaration included a notation that the declaration was executed on June 12, 2003, and a notation of "/s/ Signature on File." Neither Moll nor Guariniello had signed their declarations.
17
Half an hour after the motion was filed, Verilaw sent an email to Moll confirming the motion had been filed. Moll forwarded the email to Lemon with the message: "that was fast." According to Lemon, Moll directed Lemon to send another email to Guariniello requesting his signature. Lemon drafted an email to Guariniello's office requesting a signature at approximately 6:19 p.m. on June 12.
18
Moll testified that he did not learn the motion to intervene was filed until he received the notification from Verilaw, that he was surprised Shelquist had given Lemon permission to file the motion without proper signatures, and that he told Lemon it was wrong to file the motion without having a signed signature page.
19
However, after learning the motion had been filed, rather than attempting to have the motion withdrawn, Moll and Lemon continued to request Guariniello's signature. On June 16, Solia sent Lemon an email stating Guariniello would not sign his declaration because he had decided to pursue the privileged documents through a rogatory rather than a motion to intervene. On June 20, Lemon sent Guariniello an email stating: "Please know that we have already prepared the motion on your behalf . . . and feel the court will rule in our favor." Lemon discussed the contents of the email with Moll before it was sent. On the same day, Moll also sent Guariniello an email stating: "You may sign your affidavit . . . so that we may attach it to the motion." In the email, Moll informed Guariniello he could pursue the documents both by using a rogatory and by filing the motion to intervene. Guariniello responded that he did not feel comfortable pursuing both options.
20
In a June 23 letter to Moll and Shelquist's partner, Richard Lockridge, who was also co-lead counsel in the MDL, Susan Weber, counsel for Bayer, requested a signed copy of Guariniello's declaration. In response, Moll called Weber and admitted the PSC did not have a signed copy of Guariniello's declaration, stated Guariniello had decided to pursue discovery through other channels, and stated the motion to intervene would be withdrawn. On June 23, Moll instructed Lemon to email Shelquist to notify him the motion should be withdrawn and to obtain Shelquist's verification that Shelquist had instructed Lemon to file Guariniello's declaration with an electronic signature knowing there was no original signature on file. Lemon sent Shelquist an email stating the motion should be withdrawn because Guariniello had decided to pursue the privileged documents through a rogatory. Lemon did not ask Shelquist for verification he had instructed Lemon to file the motion without an original signature on file. In her deposition, Lemon stated she did not want to seem rude or difficult in her email to Shelquist. The PSC formally withdrew the motion on June 26.
21
Bayer conducted discovery into the filing and withdrawal of the motion to intervene. Moll was deposed on September 4, 2003, and was represented by Warren Lupel. Lemon was deposed on September 5. As an employee of KBM, Lemon was also represented at the deposition by Lupel. Lemon did not retain Lupel or pay his fees. On September 6, the day after she was deposed, Lemon quit her job at KBM. Shelquist was deposed on September 29.
22
Because of the conflict between Lemon's testimony and Shelquist's testimony, Bayer obtained copies of telephone records from both LGN and KBM for June 12, 2003. The telephone records document the following calls were placed between KBM and LGN on June 12:
23
(1) 1.0 minute call from KBM to LGN at 10:37 a.m.
24
(2) 2.6 minute call from Shelquist to KBM at 10:48 a.m.
25
(3) 4.0 minute call from KBM to LGN at 10:57 a.m.
26
(4) 0.9 minute call from Shelquist's assistant to KBM at 2:30 p.m.
27
(5) 4.0 minute call from Shelquist's assistant to KBM at 3:10 p.m.
28
(6) 2.7 minute call from Shelquist's assistant to KBM at 3:18 p.m.
29
(7) 2.0 minute call from KBM to LGN at 4:50 p.m.
30
(8) 3.6 minute call from Shelquist to KBM at 4:56 p.m.
31
On January 14, 2004, Bayer filed a motion for sanctions against Moll and KBM. Bayer did not seek sanctions against Lemon, and Lemon was not served with notice of the motion. The district court sua sponte ordered briefing from LGN. Shelquist, Lockridge, and Shelquist's assistant Barbara Gilles provided supplemental affidavits explaining the phone calls reflected in the June 12 telephone records. Oral argument on the motion for sanctions was held on February 24, 2004, and the district court heard argument from counsel for LGN, Bayer, and KBM. Lemon did not receive notice of the hearing, was not present at the hearing, and was not represented at the hearing.
32
On April 12, 2004, the district court issued its order on the motion for sanctions. The court found Moll committed perjury, violated two pretrial orders, and violated multiple provisions of the Minnesota Rules of Professional Conduct. Pursuant to its inherent power, the district court removed Moll and KBM from the PSC and imposed a $50,000 monetary sanction against Moll.
33
Although Bayer did not move for sanctions against Lemon, the district court sua sponte imposed sanctions against Lemon. The district court adopted Shelquist's and Gilles's version of the facts, as presented in their affidavits and argued by LGN's attorney at oral argument, and concluded Lemon's deposition testimony was in conflict with the telephone records. The court found Lemon committed perjury when she testified in her deposition that Shelquist instructed her to file the motion to intervene without a signature on file. The court also found Lemon, together with Moll, covered up the fact the motion to intervene was filed without the possession of a signed original of the Guariniello declaration. The court ordered that Lemon be prohibited from the practice of law in the District of Minnesota. Lemon learned of the sanction imposed against her after Lupel mailed a copy of the order to her.
34
Finally, the district court directed the clerk of the court to send copies of the order to the Illinois Attorney Registration and Disciplinary Commission and the United States Attorney for the District of Minnesota.
II. Inherent Power
35
"It has long been understood that `[c]ertain implied powers must necessarily result to our Courts of justice from the nature of their institution,' powers `which cannot be dispensed with in a Court, because they are necessary to the exercise of all others.'" Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (quoting United States v. Hudson, 11 U.S. (7 Cranch) 32, 34, 3 L.Ed.2d 259 (1812)). "These powers are `governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.'" Id. (quoting Link v. Wabash R., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)). The inherent power of the federal courts includes the power to "control admission to its bar and to discipline attorneys who appear before it," but the Supreme Court cautioned "this power `ought to be exercised with great caution.'" Id. (quoting Ex parte Burr, 22 U.S. (9 Wheat.) 529, 531, 6 L.Ed. 152 (1824)). Because of the potency of inherent powers, "[a] court must exercise its inherent powers with restraint and discretion, and a primary aspect of that discretion is the ability to fashion an appropriate sanction." Harlan v. Lewis, 982 F.2d 1255, 1262 (8th Cir.1993) (citing Chambers, 501 U.S. at 44-45, 111 S.Ct. 2123). Furthermore, in invoking its inherent power, a court "must comply with the mandates of due process." Chambers, 501 U.S. at 50, 111 S.Ct. 2123. Thus, before a district court may impose sanctions, the individual must receive notice that sanctions against her are being considered and an opportunity to be heard. In re Clark, 223 F.3d 859, 864 (8th Cir.2000) (citing Chambers, 501 U.S. at 56-57, 111 S.Ct. 2123; Jensen v. Fed. Land Bank of Omaha, 882 F.2d 340, 341 (8th Cir.1989)).
36
We review a district court's imposition of sanctions against an attorney under its inherent power for an abuse of discretion. United States v. Gonzalez-Lopez, 403 F.3d 558, 564 (8th Cir.2005) (citing Chambers, 501 U.S. at 55, 111 S.Ct. 2123; Bass v. General Motors Corp., 150 F.3d 842, 851 (8th Cir.1998)). "A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990); accord Gordon v. Unifund CCR Partners, 345 F.3d 1028, 1030 (8th Cir.2003).
III. Moll & KBM
37
Moll contends the district court abused its discretion in imposing sanctions against him arguing the district court erred in finding Moll's conduct in connection with the filing of the motion to intervene constituted perjury, violated PTO 18 and the rules of professional conduct, and demonstrated bad faith. Moll also argues the district court erred in finding his actions in connection with Guariniello viewing confidential documents violated PTO 24 and Rule 3.4(c) and demonstrated bad faith. Even if the district court's findings are upheld, Moll argues the sanctions imposed by the district court are excessive.
38
In addressing Moll's arguments, we first consider whether the district court clearly erred in finding Moll committed perjury, violated pretrial orders and the rules of professional conduct, and acted in bad faith. We then examine whether it was an abuse of discretion for the district court to invoke its inherent powers to impose sanctions against Moll and whether the sanctions are appropriate.
A. Motion to Intervene
39
In connection with the filing of the motion to intervene, the district court found Moll committed perjury, violated PTO 18, violated various provisions of the rules of professional conduct, and acted in bad faith. We hold the district court did not clearly err in finding Moll violated PTO 18 and Rules 3.4(c), 8.4(c), and 8.4(d), and acted in bad faith. However, we find the district court clearly erred in holding Moll committed perjury and violated Rule 8.4(b) and Rule 3.3(a)(1).
1. Perjury, Rule 8.4(b), Rule 3.3(a)(1)
40
The district court concluded Moll committed perjury by filing a declaration purportedly on behalf of Guariniello with a signature on file notation and by filing his own declaration with a signature on file notation although Moll knew neither declaration was in fact signed. The district court also found Moll committed perjury by stating in his declaration he was "counsel for the purpose of" Guariniello's motion to intervene, stating the "clear import of the statement was that Moll was Guariniello's attorney." Based on its determination Moll committed perjury, the district court found Moll violated Minnesota Rule of Professional Conduct 8.4(b), which provides: "It is professional misconduct for a lawyer to: . . . (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects." Minn. R. Prof. Conduct 8.4(b). Additionally, the district court found Moll violated Minnesota Rule 3.3(a)(1), which states: "A lawyer shall not knowingly: . . . make a false statement of fact to a tribunal." Minn. R. Prof. Conduct 3.3(a)(1). According to the district court, "filing a declaration with an electronic signature constituted a false statement" made to the court.
41
Moll argues a finding of perjury requires criminal mens rea and the evidence does not demonstrate Moll made misstatements motivated by criminal intent to deceive. According to Moll, the record shows a communication breakdown resulted in the Guariniello declaration being filed without a signature on file. He states he believed Guariniello agreed with the declaration and Lemon believed the signature was en route. Additionally, Moll argues there is no evidence he approved the electronic filing of the motion and declarations with a signature on file notation, noting the version of Guariniello's declaration Lemon faxed to him did not have a signature on file notation. He asserts he only learned the motion had been filed without receipt of Guariniello's signature page after receiving notice the motion had been filed. He also contends he did not commit perjury by representing in his declaration he was counsel for the purpose of the motion to intervene. Moll argues the record establishes he had a good faith belief to believe Guariniello wanted Moll to file the motion to intervene on his behalf to access confidential documents. For these same reasons, Moll contends he did not violate Rules 8.4(b) and 3.3(a)(1).
42
The district court rejected Moll's argument that his prior relationship with Guariniello led him to reasonably believe Guariniello wanted him to act as his attorney and file the motion. The court noted any prior conduct was not important in light of the fact Guariniello did not sign his declaration and did not respond to emails when asked to sign the declaration. The court noted Moll knew Guariniello had not signed his declaration at the time the motion was filed and stated allowing an unsigned declaration to be filed while representing it is signed is willful misconduct. The district court found: "In short, Moll allowed the PSC to file a motion he knew to be improper," noting it is undisputed Moll knew Guariniello had not signed his declaration at the time it was filed. The court stated that "[a]s a member of the Executive Committee, Moll had an obligation to prevent improper filings." Additionally, the court stated it was "unimpressed" with Moll's claim he was surprised the motion was filed without Guariniello's signature. The court stated if Moll believed such a filing was wrong he had an obligation to inform the court immediately, but instead Moll "did nothing but try to obtain Guariniello's after-the-fact signature, and after-the-fact confirmation of Shelquist's approval." The court noted that "[i]nstead of immediately withdrawing the improper filing, or at least questioning Shelquist about the propriety of the filing, Moll let it sit for days, and then attempted only to obtain documentation that would place any potential blame on LGN."
43
We hold the record fails to support the district court's finding of perjury. "A witness testifying under oath or affirmation violates [the federal perjury statute] if she gives false testimony concerning a material matter with the willful intent to provide false testimony, rather than as a result of confusion, mistake, or faulty memory." United States v. Dunnigan, 507 U.S. 87, 94, 113 S.Ct. 1111, 122 L.Ed.2d 445 (1993) (citing 18 U.S.C. § 1621(1); United States v. Debrow, 346 U.S. 374, 376, 74 S.Ct. 113, 98 L.Ed. 92 (1953); United States v. Norris, 300 U.S. 564, 574, 576, 57 S.Ct. 535, 81 L.Ed. 808 (1937)). The evidence in the record demonstrates Lemon, whether at the direction of Shelquist or on her own initiative or as a result of miscommunication, entered the signature on file notations in the declarations and sent the motion to intervene to LGN for filing on Verilaw. There is no evidence in the record demonstrating Moll instructed or gave Lemon approval to file the motion to intervene with false signature on file notations. The district court's finding of perjury is based on the court's finding that even if Moll did not explicitly instruct Lemon to file the motion, Moll essentially "allowed" the improper filing to occur. However, Moll's failure to prevent the filing of the declarations with false signature on file lines is insufficient to establish Moll committed perjury. Additionally, Moll's failure to take immediate corrective steps after learning of the improper filing does not establish perjury, although it supports the district court's findings Moll violated PTO 18 and Rules 3.4(c) and 8.4(c) and (d), as discussed below.
44
We also do not believe the record supports the finding Moll committed perjury by stating in his declaration he was counsel for the purposes of filing the motion to intervene. The district court found "[t]he clear import of the statement was that Moll was Guariniello's attorney," and "there can be no other reasonable interpretation of this statement." We hold this finding is clearly erroneous. There is no evidence in the record demonstrating this statement was made with a willful intent to provide false testimony. At the time the declaration was drafted, we believe the record shows Moll was counsel for the purposes of filing the motion to intervene. Although this assertion finds less support at the time the motion to intervene was filed, as discussed above, the record does not show Moll instructed Lemon to file the motion to intervene without obtaining Guariniello's signature.
45
For the same reasons as stated above, we conclude the record does not support the finding Moll violated Rule 3.3(a)(1) or Rule 8.4(b).
2. PTO 18, Rules 3.4(c), 8.4(c), (d)
46
The district court found Moll violated PTO 18 when he filed the motion to intervene although he knew Guariniello's signature was not on file. PTO 18 states an attorney who files a document with an electronic signature "shall make an original signature available to any registered [Verilaw] user upon request." PTO 18 further states "[b]y submitting such a document, the filer certifies that each of the other signatories has expressly agreed to the form and substance of the document and that the filer has their actual authority to submit the document electronically." In violating PTO 18, the district court found Moll also violated Minnesota Rule 3.4(c), which provides a lawyer shall not "knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists." Minn. R. Prof. Conduct 3.4(c).
47
Moll argues he did not intentionally violate PTO 18 and Rule 3.4(c) because he believed he had Guariniello's authority to file the motion to intervene and believed Guariniello approved the form and substance of the motion to intervene having received no objection to the draft he sent to his office. Moll notes LGN was technically the "filer" of the motion. He also asserts there is no evidence he knew the declaration would be filed without Guariniello's signature.
48
We hold the district court did not clearly err in finding Moll knowingly disobeyed his obligation under PTO 18 in violation of Rule 3.4(c). We conclude it is clear Moll did not have Guariniello's express agreement to the form and substance of the motion and Guariniello's actual authority to file the motion, as required by PTO 18. We believe the evidence on the record supports the district court's rejection of Moll's claim his prior relationship with Guariniello led him to believe he had Guariniello's permission to file the motion to intervene. The record shows Moll had not heard from Guariniello in the three months prior to filing the motion, and when Moll's office sent the declaration to Guariniello for his approval, Guariniello "`disappeared' and did not respond to emails when asked to sign the declaration." Moreover, Moll testified that on June 12 he instructed Lemon to tell Shelquist Guariniello had not signed the declaration and to seek his advice. Moll also testified that on June 12, after he learned the motion to intervene had been filed, he told Lemon it was wrong to file the declaration without a signature on file. These facts contradict Moll's claim he believed he had Guariniello's permission to file the motion to intervene and that Guariniello approved the form and substance of the motion. We also believe the district court did not clearly err in finding Moll was the "filer" of the motion. Although LGN filed the motion on Verilaw, the district court found LGN performed this function merely as a professional courtesy and Shelquist and Lockridge did not have any control over the documents before filing them. We believe this finding is not clearly erroneous. Additionally, Moll's argument he did not know the motion would be filed without Guariniello's signature does not excuse his failure to withdraw the motion as soon as he learned the motion was filed without Guariniello's signature on file.
49
Next, the district court held Moll violated paragraphs (c) and (d) of Minnesota Rule 8.4 after finding Moll attempted to cover up the fact the motion to intervene was filed without Guariniello's signature. Paragraphs (c) and (d) provide: "It is professional misconduct for a lawyer to: . . . (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; [or] (d) engage in conduct that is prejudicial to the administration of justice." Minn. R. Prof. Conduct 8.4(c), (d).
50
Moll admits he tried to obtain an executed signature page from Guariniello after the motion was filed, but argues this demonstrates he understood the importance of possessing a signed original declaration and for a short time labored under the impression Guariniello's signature was en route or that he might still sign the document. When it became clear Guariniello no longer consented to the motion, it was withdrawn shortly thereafter. He argues the record does not show he intentionally misled Bayer or the court, but readily admitted to Bayer's counsel upon receiving a formal letter requesting a copy of the signature page that KBM did not possess it.
51
We hold the district court did not clearly err in finding Moll violated Rule 8.4(c) and 8.4(d). The record supports the district court's finding that Moll engaged in dishonest conduct by attempting to cover up and his actions. The evidence shows Moll knew on June 12 they had not obtained Guariniello's signature. By June 16, Moll learned Guariniello did not plan to sign the declaration. Rather than informing the court and opposing counsel, Moll continued to attempt to change Guariniello's mind. The record shows Moll did not tell Guariniello the motion to intervene had already been filed. Moll did not take any action to withdraw the motion until June 23, which was the same day counsel for Bayer formally requested a copy of the original signature. These facts also support the district court's finding Moll's actions prejudiced the administration of justice in the Baycol MDL "by calling into question the veracity of electronic signatures and the integrity of Moll and Lemon, and by forcing the Court and the parties to focus on this issue, rather than the main issues of th[e] MDL." These facts also support the district court's finding of bad faith.
B. Confidential Documents
52
In addition to Moll's conduct relating to the motion to intervene, the district court based its imposition of sanctions against Moll on its finding that Moll violated PTO 24 when he "allowed Guariniello to see the documents containing Bayer's confidential information." The district court held Moll, in violating PTO 24, also violated Rule 3.4(c), which states a lawyer shall not "knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists." Additionally, the court found Moll's conduct demonstrated bad faith, stating "preventing the dissemination of confidential information . . . by failing to take appropriate precautions to prevent improper release, is sanctionable conduct."
53
Moll argues any improper disclosure of confidential information was inadvertent. He notes he asked the attorney sending the documents to send only non-privileged information and that he did not send the email to Guariniello. He further points out the email containing confidential information was sent directly to Guariniello's email account, and Guariniello opened the attachment before Moll could review it.
54
Although Moll may not have been the only attorney responsible for the release of confidential documents to Guariniello, or even the attorney mostly at fault, this does not mean Moll did not engage in sanctionable conduct. The district court's findings are supported by the fact that after Moll knew or should have known the documents sent to Guariniello contained confidential information he did not take any steps to protect them. As the district court found, "[w]hile it may be true that Guariniello opened the attachments before Moll could read the explanatory e-mail, once Moll saw the documents, he should have been alerted to their potential confidential nature." The documents were clearly marked "CONFIDENTIAL — SUBJECT TO PROTECTIVE ORDER." Rather than attempting to take any action to stop Guariniello from viewing the confidential information by asking Guariniello to stop reviewing the documents or by notifying the court, the record indicates Moll merely sat by Guariniello's side while Guariniello viewed the documents. Moll's inaction is inconsistent with his obligation under PTO 24 to "take all steps reasonably necessary to prevent the disclosure of confidential discovery material." Accordingly, we do not believe the district court clearly erred in finding Moll knowingly violated PTO 24 and Rule 3.4(c).
C. Appropriateness of Sanctions
55
Moll argues, even if the district court's findings are upheld, the sanctions imposed by the district court are excessive.
56
In its motion before the district court, Bayer suggested three sanctions: 1) removing Moll from the PSC; 2) disqualifying KBM from further participation in the MDL as counsel for individual plaintiffs and voiding any retention or fee agreements with KBM's individual plaintiffs; and 3) fining KBM $50,000. The district court reviewed Bayer's submissions and concluded the appropriate sanction was 1) to remove Moll and KBM from the PSC, and 2) to impose a monetary sanction against Moll personally in the amount of $50,000. Additionally, the court directed the clerk of the court to send copies of the order to the Illinois Attorney Registration and Disciplinary Commission and the United States Attorney for the District of Minnesota.
57
We hold the district court acted well within its discretion in ordering Moll's and KBM's removal from the PSC. The district court's explanation for the sanction is reasonable and supported by the facts:
58
By allowing a motion to be filed without signatures and by failing to correct the problem in a timely manner, Moll exhibited poor judgment and a profound lack of the appropriate forthrightness and candor necessary from a member of the PSC. Moll deliberately tried to cover-up his actions and mislead the Court and the parties as to the true status of the motion. In addition, Moll failed to exercise due care regarding the handling of confidential documents. This improper handling, and failure to even attempt to correct the problem, demonstrate that Moll is not qualified to perform the duties of a PSC member with the zeal and integrity this Court requires.
59
Additionally, we do not believe it was an abuse of discretion for the district court to invoke its inherent power to impose a monetary sanction against Moll based on the record in this case. See Harlan, 982 F.2d at 1259. Thus, the only issue is whether the amount of the sanction, $50,000, is appropriate. Moll contends a $50,000 sanction is excessive compared to the $5,000 sanction imposed in Harlan, 982 F.2d at 1257, and the $10,795.85 award of attorney's fees in Greiner v. City of Champlin, 152 F.3d 787 (8th Cir.1998).1 Bayer argues the $50,000 sanction is not excessive, citing In re Kujawa, a case in which our court affirmed a reduced award of attorney's fees for $66,656.33 assessed by the bankruptcy court, but reversed as excessive the imposition of an additional punitive monetary sanction of $100,000. 270 F.3d 578, 583-84 (8th Cir.2001).
60
In Kujawa, the $66,000 award of attorney's fees was remedial — it was paid to the opposing party as compensation for the attorney's fees incurred as a direct result of the unethical behavior. See id. at 582-83. We held the imposition of an additional $100,000 punitive sanction was an abuse of discretion because the amount was "not related concretely to redressing the harm" of the attorney's misconduct and was "not supported by the facts as being necessary to deter" the attorney in the future. Id. at 584. We noted "[t]he cornerstone of imposing a monetary sanction . . . should be the selection of an amount no greater than sufficient to deter future misconduct by the party." Id. at 583. In this case, the $50,000 sanction does not compensate Bayer for fees incurred as a direct result of Moll's conduct because the district court's order directs Moll to pay $50,000 to the clerk of the court. Additionally, the record does not show the $50,000 sanction relates concretely to costs the court directly incurred because of Moll's actions. See, e.g., Lasar v. Ford Motor Co., 399 F.3d 1101, 1111-12 (9th Cir.2005) (affirming monetary sanction payable to the court for violation of pretrial orders which was "carefully limited" "to an amount `necessary to reimburse . . . the Court' for the costs related to empaneling the jury"); United States v. Dowell, 257 F.3d 694, 699-700 (7th Cir.2001) (affirming contempt fine where district court tailored sanction to compensate the court for the actual costs resulting from attorney's refusal to appear at trial). It is also not apparent from the record a $50,000 fine is necessary to deter Moll from repeating the sanctioned conduct. See., e.g., MHC Inv. Co. v. Racom Corp., 323 F.3d 620, 628 & n. 13 (8th Cir.2003) (noting district court's explanation that, given the large amounts of money involved, $25,000 was minimum amount it could assess to deter law firms from sanctioned conduct). Furthermore, a $50,000 sanction, which is payable to the clerk of the court and not concretely tailored to compensate the court for actual costs resulting from the misconduct has characteristics of a criminal penalty which other courts have held to require the procedural protections of a criminal trial. See, e.g., Bradley v. Am. Household, Inc., 378 F.3d 373, 378-79 (4th Cir.2004) (holding $200,000 sanction and $100,000 sanction imposed pursuant to district court's inherent power and Rule 37 were criminal in nature and thus required full protections of criminal contempt proceedings); F.J. Hanshaw Enters. v. Emerald River Dev., Inc., 244 F.3d 1128, 1137-39 (9th Cir.2001) (holding "when a court uses its inherent powers to impose sanctions that are criminal in nature, it must provide the same due process protections that would be available in a criminal contempt proceeding" and finding $500,000 sanction was criminal in nature where it was payable to the United States and could not be avoided through future compliance); Mackler Prods., Inc. v. Cohen, 146 F.3d 126, 130 (2d Cir.1998) (holding $10,000 punitive sanction imposed against an individual under the court's inherent power required full protections of criminal proceeding); Crowe v. Smith, 151 F.3d 217, 227-29 (5th Cir.1998) (holding $75,000 sanction imposed against individual under court's inherent power was criminal fine requiring standard criminal protections).
61
In any event, the district court's failure to explain the basis for the amount of the sanction makes it difficult for our court to evaluate whether the sanction is appropriate. We believe the district court in imposing a monetary sanction as large as $50,000 was required to explain the basis for the amount of the sanction. See Vollmer v. Publishers Clearing House, 248 F.3d 698, 711 (7th Cir.2001) (vacating $50,000 Rule 11 sanction imposed sua sponte against law firm and remanding for more detailed explanation for the district court's imposition of such a significant monetary sanction). Furthermore, we are unable to determine from the record the extent to which the $50,000 amount was based on the district court's finding of perjury, which we hold is clearly erroneous. Accordingly, we vacate the $50,000 sanction imposed against Moll and remand for proceedings consistent with this opinion.
IV. Lemon
62
The district court sua sponte imposed sanctions against Lemon by barring her from the practice of law in the District of Minnesota after determining she committed perjury and violated several rules of professional conduct.
63
Lemon raises numerous arguments challenging the district court's order barring her from practicing law in the District of Minnesota. We need only address one. We hold the district court abused its discretion by imposing sanctions against Lemon without first providing Lemon with notice the court was considering sanctions against her in violation of Lemon's right to procedural due process. Accordingly, we reverse the district court's imposition of sanctions against Lemon.
64
The record reflects the first time Lemon was provided with notice that the district court was considering imposing sanctions against her was after Moll's attorney mailed Lemon a copy of the district court's order for sanctions. Lemon resigned from KBM well before Bayer moved for sanctions against Moll and KBM and well before Shelquist's deposition was taken. There is no indication in the record Lemon was contacted and informed of Bayer's motion for sanctions against Moll and KBM or that there was a dispute between her testimony and Shelquist's testimony. Even if Lemon learned of the motion for sanctions, Bayer moved to impose sanctions against Moll and his firm, not Lemon. See Clark, 223 F.3d at 864-65 (stating knowledge that violations of bankruptcy rules are at issue is insufficient notice, "rather, notice must be given that the court is considering imposing sanctions").
65
Not only did the district court fail to provide Lemon with notice, which violated Lemon's right to due process, the district court deprived Lemon of an opportunity to respond and then cited the lack of response from Lemon as evidence to support the court's finding Lemon committed perjury. In finding Lemon lied, the district court relied largely on the fact that Lemon did not submit a brief to dispute certain facts or to explain how the telephone records supported her deposition testimony. Of course, without notice that the district court was considering imposing sanctions against her, Lemon did not have any reason to submit such a brief. Additionally, the district court found Lemon testified she obtained Shelquist's permission to file the motion during a ten minute phone conversation with him and found the telephone records did not reflect a ten minute phone call. An examination of the transcript of Lemon's deposition shows, when asked how long the conversation with Shelquist lasted, Lemon testified: "A few minutes. I couldn't tell you. Maybe 10. I don't know." This is a point Lemon could have brought to the district court's attention if she had been provided with proper notice.
V. Conclusion
66
The district court's order removing Moll and KBM from the PSC is affirmed. The $50,000 sanction imposed against Moll is vacated and remanded for proceedings consistent with this opinion. The district court's imposition of sanctions against Lemon is reversed.
Notes:
1
Our opinion inGreiner does not indicate the amount of the attorney's fees award. Moll obtained the amount from the district court's docket sheet for Greiner, which discloses the amount of the award.
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i.~
-R-27
OFWICE OF
THE ATTORNEY GENERAL
PRICE DANIEL
ATTORNEYGENERAL
Jenuary 15, 1947
See V-206 for change in fact situation
Honorable Carlos C. Ashley, Chairman
State Board of Control
Austin, Texee Opinion MO. V-27
Re: Whether or not the amount
remaining In the Texas
Centennial Fund, is now
available to purchase the
Dear Mr. Ashley: Frenoh Embassy
Your request for an opinion upon the above sub-
jeot matter is 80 followsi
"The Eau&hters of the Republic of Texas
sponsoredRouse Bill Ho'.728, Acts of the
49th Leglslature,~whlchpurported to
authorize the purkhase of the French Embassy
Building and two and one-half acres out of
the Southeast part of Outlot Ao. 1 In Dlvl-
slon B, City of A-tin, Texas, and appro-
prlated all monies now in the Texas Centen-
nia1~CommlsslonFutids,if and when available,
to apply on the purahase price of this pro-
perty. There is now the sum of $24,256.16
remaining in the Texas Centennial Fund.
"Question: ~1s the $24,256.16 remain-
ing In-the Texae Centennial Fund n&
available to purchase the French Em-
bassy, and aan the State Comptroller
legally issue a warrant for that pur-
pose?
"Inaknuohas the Dsughters of the Re-
public of Texas desire to sponsor suoh remedial
legislationaa ia necessary, In the light of
your opinion In thls matter, and because the
Board of Control la the oustodlan of the title
of the French Embassy, if and when purohased, in
accordance with House Bill No. 728, we respect-
fully request your considerationof this matter
.,at your earliest convenlenoe."
..
Hon. Carlos C. Ashley - Page 2
This Department in Opinion 0-6222, addrear&
to Eon. Harley Sadler, House of Representatives,Au~~tia,
Texas, a copy of which opinion we hand you herewith, ad-
vises that the unexpendedbalance of the Congressional
appropriationfor the Texas Centennial could not be ap-
propriatedby the Legislature of Texas for the purpose
of purchasing the French Embassy except conditloned upon
Its release by Congress for that purpose.
We think the advice there given was oorreot an3
adhere to the opinion mentioned.
SUMMARY
The amount of money remelnlng in the
Cent&nnlal Fund is not available for ex-
penditure for the purohase of the Frenoh
EmbasiqrunderH.B. 728 of the 49th Legisla-
ture, unless and until the Congress has ap-
proved the approprlatlon.orIn some way re-
leased the fund to the State of Texas.
Yours very truly,,
ATTO~GRREIRALOFTEXAS
AssIstant
OS/am/lb
enol.
Approved ATTORl'EYOERERAL
Opinion ColPmlttee
BWB, Chairman
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267 F.3d 624 (7th Cir. 2001)
Goss Graphics Systems, Inc., formerly known as Rockwell Graphic Systems, Inc., Plaintiff-Petitioner-Appellant,v.DEV Industries, Inc., et al., Defendants-Appellees, and Tensor Group, Inc., Respondent-Appellee.
No. 01-1370
In the United States Court of Appeals For the Seventh Circuit
Argued September 10, 2001Decided September 27, 2001
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 84 C 6746--Charles R. Norgle, Sr., Judge.
Before Posner, Kanne, and Evans, Circuit Judges.
Posner, Circuit Judge.
1
A predecessor of the plaintiff brought this suit against DEV Industries and others in 1984, charging theft of trade secrets related to the design of printing presses. A permanent injunction was entered in the plaintiff's favor after 10 years of litigation. DEV went out of business and promptly reappeared, the plaintiff argues, as Tensor Group. The plaintiff asked the district court to hold Tensor in contempt of the injunction and provide appropriate relief. After various proceedings unnecessary to recount here (see Rockwell Graphic Systems, Inc. v. DEV Industries, Inc., 925 F.2d 174 (7th Cir. 1991), and 91 F.3d 914, 915 (7th Cir. 1996)), the district court, on July 13, 1999, advised by the parties that a settlement was likely, dismissed the case with leave to reinstate it within six months. The case did not settle, and on January 11, 2000, shortly before the expiration of the six-month deadline for reinstatement, the plaintiff filed a motion in the district court to reinstate it. The district court's rules require that such a motion be accompanied by a notice of presentment to the judge who is to handle the motion, so that he is made aware of it. N.D. Ill. R. 5.3(b); see Lorentzen v. Anderson Pest Control, 64 F.3d 327, 331 (7th Cir. 1995); Wilson v. Chicago Housing Authority, No. 99 C 2380, 1999 WL 988812 (N.D. Ill. Oct. 22, 1999). However, the judge who had been handling the case (and had dismissed it) was no longer a district court judge and, as of January 11, no other judge had yet been assigned to the case. Not until January 21 did the plaintiff learn the identity of the judge who had been assigned to the case and it forthwith noticed the motion for a hearing before the new judge on January 28, the earliest available date. At that hearing, rather than ruling on the motion the judge directed the parties to continue to try to settle the case. On August 11, settlement efforts having again failed, the judge on his own initiative denied the plaintiff's motion to reinstate. He deemed it untimely because the notice of presentment had been filed after the expiration of the six-month deadline. He expressed dismay at the parties' having strung along the litigation for 16 years.
2
The first district judge should not have dismissed the case merely because she thought it likely to settle. The right time to dismiss a case is when the dispute between the parties has been definitively and finally resolved, not when it seems likely to be resolved. There was a chance the case would not settle, and indeed it did not, thus requiring the plaintiff to come back to court and precipitating the dispute that brings the case back before us for the third time. We have repeatedly criticized the practice of dismissing suits before they have been concluded, with leave to reinstate the suit. Otis v. City of Chicago, 29 F.3d 1159, 1163 (7th Cir. 1994) (en banc); King v. Walters, 190 F.3d 784, 786 (7th Cir. 1999) ("we have frowned on this practice, unless it is clear that nothing else will accomplish the desired goal, because it can be confusing, or worse, prejudicial to the rights of the parties. . . . In this case, it appears to have been driven by the pressure to improve docket statistics, which is not the kind of valid reason that Otis contemplated"); Ford v. Neese, 119 F.3d 560, 562 (7th Cir. 1997) ("it would be helpful to all concerned if when judges retained jurisdiction of a case they said so rather than using the Aesopian 'dismissed with leave to reinstate' formula, which they do presumably so that the case will not be carried on their docket where it might mar the judge's statistical showing of prompt disposition of the cases assigned to him"); see also JTC Petroleum Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 776 (7th Cir. 1999). The confusion to which the practice gives rise is illustrated not only by this case but also by Baltimore & Ohio Chicago Terminal R.R. v. Wisconsin Central Ltd., 154 F.3d 404, 407-08 (7th Cir. 1998) ("once again we urge district judges to eschew dismissals with leave to reinstate," id. at 408); Adams v. Lever Bros. Co., 874 F.2d 393, 395-96 (7th Cir. 1989), and In re Ohio River Co., 754 F.2d 236 (7th Cir. 1985) (per curiam).
3
The second judge's action in denying the motion to reinstate Goss's contempt case, an action for which the judge was "set up" by the first judge's action in dismissing the case with leave to reinstate, was an abuse of discretion on three grounds. First, there was no violation of local rules. Second, even if there had been, the sanction of refusing to reinstate, amounting to a dismissal of a probably meritorious case, was disproportionate to the wrong. Third, a refusal to settle a case is not a valid ground for dismissing it--there is no legal duty to settle litigation.
4
The district court's presentment rule requires that motions in a case be presented to the judge presiding over the case so that he'll know the motion has been filed and can dispose of it expeditiously. When there is no judge as signed to the case, however, there is no one to present a motion to, and in that situation presentment would serve no earthly purpose. Tensor makes the absurd argument that in such a case the motion has to be presented to the emergency judge of the district court, that is, the district judge designated to hear emergency motions. There was no emergency here, however. The plaintiff was not seeking immediate action on its motion to reinstate the case; all the parties were content to wait a few days until a judge was appointed to preside over it. As there was no judge to whom the motion should have been presented, there could have been no violation of the rule. Cessante ratione legis, cessat et ipsa lex.
5
But had there, contrary to our belief, been a violation, refusal to reinstate this multimillion dollar suit would have been a disproportionate sanction. Sanctions, as we and other courts have repeatedly emphasized, are to be proportioned to the severity of the wrong being punished. E.g., Long v. Steepro, 213 F.3d 983, 986 (7th Cir. 2000); United States v. Stefonek, 179 F.3d 1030, 1035 (7th Cir. 1999); Blankenship & Associates, Inc. v. NLRB, 54 F.3d 447, 449-50 (7th Cir. 1995); Philips Medical Systems International B.V. v. Bruetman, 8 F.3d 600, 602-03 (7th Cir. 1994); Lorenzen v. Employees Retirement Plan of the Sperry & Hutchinson Co., 896 F.2d 228, 232-33 (7th Cir. 1990); Zambrano v. City of Tustin, 885 F.2d 1473, 1480 (9th Cir. 1989); Johnson v. Boyd-Richardson Co., 650 F.2d 147, 150 (8th Cir. 1981). In fact, "proportionality is the cornerstone of a rational system of sanctions." Rush-Presbyterian-St. Luke's Medical Center v. Hellenic Republic, 980 F.2d 449, 455 (7th Cir. 1992). (There is an irrelevant exception for cases in which the wrong is concealable--that is the rationale for treble damages. Perez v. Z Frank Oldsmobile, Inc., 223 F.3d 617, 621 (7th Cir. 2000). It is inapplicable here.) If there was a violation of the local rule in this case (but there wasn't), it was technical and completely harmless--so technical, so harmless, that the appropriate sanction would have been no sanction at all, and certainly not the extinction of a meritorious-seeming suit. See Central States, Southeast & Southwest Areas Pension Fund v. Slotky, 956 F.2d 1369, 1376 (7th Cir. 1992); cf. Tuf Racing Products, Inc. v. American Suzuki Motor Corp., 223 F.3d 585, 590 (7th Cir. 2000). No one was hurt by Goss's failure to present its motion to a judge when no judge had been appointed to rule on the motion. Promptly upon receiving notice that a new judge had been appointed, Goss notified him of the motion.
6
And last, the district judge's annoyance at the parties' failure to settle was not a valid ground for killing the plaintiff's suit. Federal courts do have authority to require parties to engage in settlement negotiations, Fed. R. Civ. P. 16(c); Fed. R. App. P. 33; G. Heileman Brewing Co., Inc. v. Joseph Oat Corp., 871 F.2d 648, 652-53 (7th Cir. 1989) (en banc); In re LaMarre, 494 F.2d 753, 755- 56 (6th Cir. 1974), but they have no authority to force a settlement. E.g., G. Heileman Brewing Co., Inc. v. Joseph Oat Corp., supra, 871 F.2d at 653; United States v. LaCroix, 166 F.3d 921, 922-23 (7th Cir. 1999); In re LaMarre, supra, 494 F.2d at 756 (6th Cir. 1974); Newton v. A.C. & S., Inc., 918 F.2d 1121, 1128 (3d Cir. 1990); Kothe v. Smith, 771 F.2d 667, 669 (2d Cir. 1985). "The law does not countenance attempts by courts to coerce settlements." In re Ashcroft, 888 F.2d 546, 547 (8th Cir. 1989) (per curiam). If parties want to duke it out, that's their privilege. Maybe the plaintiff was less forthcoming in settlement negotiations than it should in some abstract sense have been, but that was its right. It did not disobey any order of the district court relating to the settlement process.
7
The judgment denying the motion to reinstate is reversed with instructions to grant it. We direct that the case be reassigned to another judge. 7th Cir. R. 36.
8
Reversed.
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22 F.3d 1093
Ruizv.Unidentified Shipman*
NO. 93-05520
United States Court of Appeals,Fifth Circuit.
May 03, 1994
1
Appeal From: E.D.Tex.
2
AFFIRMED IN PART.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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836 F.2d 552
45 Fair Empl.Prac.Cas. 1163
Equal Employment Opportunity Commissionv.Wellman Thermal Systems Corporation
NO. 87-1701
United States Court of Appeals,Seventh Circuit.
DEC 01, 1987
1
Appeal From: S.D.Ind.
2
AFFIRMED.
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958 F.2d 381
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
S. Leanne GALLOWAY, individually, and S. Leanne Galloway, asmother and next friend of Conner Galloway, aminor, Plaintiffs-Appellants,v.ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
No. 91-6328.
United States Court of Appeals, Tenth Circuit.
March 17, 1992.
Before JOHN P. MOORE, TACHA, and BRORBY, Circuit Judges.
ORDER AND JUDGMENT*
TACHA, Circuit Judge.
1
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.
2
Appellants appeal an order of the district court granting summary judgment in favor of appellee, Allstate Insurance Company. On appeal, appellants contend that they are entitled to stack their underinsured motorist insurance benefits. We exercise jurisdiction under 28 U.S.C. § 1291 and AFFIRM for substantially the reasons given by the district court. The mandate shall issue forthwith.
*
This order and judgment has no precedential value and shall not be cited, or used by any court within the Tenth Circuit, except for purposes of establishing the doctrines of the law of the case, res judicata, or collateral estoppel. 10th Cir.R. 36.3
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951 P.2d 1326 (1997)
ROCKY MOUNTAIN ENTERPRISES, INC., a Montana Business Corporation, Susan A. Black, individually and as Guardian Ad Litem for Veronica Black, her minor child; and David A. Black, Plaintiffs and Appellants,
v.
PIERCE FLOORING, Carpet Barn, Thomas Huggins, Estate of George R. Pierce, and G. Ron Pierce, Defendants/Respondents/Cross-Appellants.
No. 95-367.
Supreme Court of Montana.
Submitted August 26, 1997.
Decided December 23, 1997.
*1329 Robert L. Stephens, Jr., R.L. Stephens, Ltd., Billings, for Plaintiffs and Appellants.
Calvin J. Stacey, Stacey & Walen, Billings, for Respondents.
Thomas Huggins, pro se.
REGNIER, Justice.
David Black, Susan Black, individually, and as guardian ad litem for Veronica Black, her minor child, and Rocky Mountain Enterprises, Inc., appeal from a Thirteenth Judicial District Court, Yellowstone County, jury verdict and subsequent post-trial orders. The defendants cross-appeal. We affirm.
The issues on appeal are restated as follows:
1. Did the District Court commit error to justify remand of the case for retrial for damages only based upon:
A. Exclusion of David Black's opinion testimony as to Rocky Mountain's projected lost profits and business value;
B. Refusal to admit the deposition testimony of Susan Black;
C. The directed verdict against the minor child, Veronica Black;
D. Inadequacy of the jury verdict;
E. Admittance of police reports regarding the Blacks' domestic disputes into evidence;
F. Exclusion of plaintiffs' expert witnesses; and
G. Improper argument.
Rocky Mountain Enterprises and the Blacks also raise the following issues on appeal:
2. Did the District Court err in denying Rocky Mountain and the Blacks' memorandum of costs as untimely?
3. Did the District Court abuse its discretion in imposing sanctions against plaintiffs' counsel?
4. Did the District Court err in granting summary judgment against plaintiffs on the claim of civil conspiracy?
The following issues are raised on cross-appeal:
1. Did the District Court err in failing to dismiss the complaint pursuant to Rule 41(e), M.R.Civ.P.?
2. Did the District Court err in not granting either the defendants' motion for summary judgment or later motion for a directed verdict on plaintiffs' claims based on vicarious liability and negligence?
FACTUAL BACKGROUND
In June 1985, David and Susan Black started Rocky Mountain Enterprises, Inc., a *1330 closely-held corporation engaged in the wholesale distribution and sales of carpeting and other floor covering products in Billings. The Blacks made an arrangement with a carpet manufacturer's representative which allowed them a very favorable pricing structure. In March 1986, they began an advertising campaign that received a good response and their business steadily improved.
In October 1986, Susan Black started receiving hang-up nuisance calls at both the business during the day and at the Blacks' residence in the evening. On October 26, 1986, the tires on Susan's vehicle were slashed. Again on December 2, 1986, all four tires on her vehicle were slashed while it was parked at her residence. On December 17, 1986, someone slashed the tires on David's vehicle and broke into Susan's vehicle and slashed the headrests, seats, and interior. Finally, on December 24, 1986, an intruder came up on the porch of the Blacks' residence, unscrewed a light bulb, slashed a tire on Susan's vehicle, and threw essence of skunk into the vehicle. David and a security guard chased the intruder, but were unable to catch him.
After the incident on December 17, the Billings Police Department suggested that a telephone wiretap be put in place. The telephone calls were traced to Pierce Flooring, Inc., in Billings. Pierce Flooring was a competitor to Rocky Mountain, and is owned and run by the Pierce family who are individually named as defendants. The Pierce family also owns and runs Carpet Barn, a Montana corporation engaged in the retail sale of carpeting and other floor coverings. Tom Huggins, an employee of Carpet Barn, admitted to having made the nuisance calls to the Blacks but insisted that he made all the calls from Carpet Barn.
Upon questioning by the Billings police, Huggins admitted that his activities against the Blacks were related to the carpet business. He emphasized that no other person associated with the Pierce family or businesses knew what he was doing and denied that anyone else ever assisted him with his actions against the Blacks. On April 17, 1987, all charges were dismissed against Huggins based upon his acceptance into a deferred prosecution program.
On October 21, 1988, David and Susan Black, their minor child Veronica Black, and Rocky Mountain Enterprises, Inc., filed a complaint against George R. Pierce, Inc.; Pierce Flooring; Carpet Barn; George L. Pierce; G. Ron Pierce; Dorothy E. Pierce; and William D. Pierce (the Pierce defendants); and Thomas Huggins. In the complaint, Rocky Mountain and the Blacks sought recovery for damages against the defendants as a result of the criminal conduct committed by Huggins in 1986 while employed by Carpet Barn.
On December 29, 1994, the Pierce defendants moved for summary judgment on some of the plaintiffs' claims. The District Court returned an order and memorandum on January 10, 1995. In its order, the District Court granted partial summary judgment to the Pierce defendants on the Blacks' civil conspiracy claim. The District Court granted partial summary judgment to Pierce Flooring, Estate of George L. Pierce, and G. Ron Pierce as to the issue of respondeat superior. The District Court denied summary judgment on the issue of respondeat superior as to Carpet Barn. The District Court ultimately dismissed the case as to Pierce Flooring, Estate of George L. Pierce, and G. Ron Pierce. Although unclear from the record, around this time, the defendants George R. Pierce, Inc., Dorothy E. Pierce, and William D. Pierce were either dismissed by the District Court or voluntarily dismissed by the plaintiffs. Thus, the remaining defendants in this case were Carpet Barn and Thomas Huggins.
A jury trial began on January 30, 1995. On February 6, 1995, the jury returned a special verdict. The jury found that the acts of Huggins were committed within the scope of his employment with Carpet Barn and that those acts were a cause in fact and proximate cause of damages to the plaintiffs. The jury also found Carpet Barn negligent, *1331 and that negligence was a cause in fact and proximate cause of damages to the plaintiffs. The jury awarded damages in the amount of $35,000 to Rocky Mountain. The jury awarded nothing to Susan or David Black. Finally, the jury found that Huggins acted with actual or implied malice that entitled the plaintiffs to an award of punitive damages.
On February 7, 1995, the jury awarded punitive damages in favor of Rocky Mountain and against Huggins in the amount of $51. The District Court entered judgment on March 7, 1995. The District Court also entered several post-judgment orders.
Rocky Mountain and the Blacks appeal and defendant Carpet Barn cross-appeals from the judgment orders of the District Court.
ISSUE 1
Did the District Court commit error to justify remand of the case for retrial for damages only based upon:
A. Exclusion of David Black's opinion testimony as to Rocky Mountain's projected lost profits and business value?
Rocky Mountain and the Blacks argue that the District Court abused its discretion by precluding David Black from testifying as to the economic loss, lost profits, and future income of Rocky Mountain. Rocky Mountain and the Blacks contend, and the defendants do not dispute, that expert testimony is not necessary to establish economic losses such as lost profits or lost income. However, Carpet Barn argues that the District Court properly precluded some of David Black's testimony regarding projected lost profits and income after Rocky Mountain went out of business because he was not qualified as an expert and, therefore, he would be offering speculative opinion testimony as to an amount representing future lost profits of Rocky Mountain.
Rule 701, M.R.Evid., states:
Opinion testimony by lay witnesses. If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue.
A district court has great discretion in the admittance of evidence and we will not overturn a court's decision unless the court abused its discretion. Miranti v. Orms (1992), 253 Mont. 231, 235, 833 P.2d 164, 166.
At trial, plaintiffs attempted to introduce evidence concerning projected lost profits and income of Rocky Mountain through the testimony of owner David Black. Carpet Barn objected to that testimony, arguing that Black was not an expert witness in this matter and, therefore, was unqualified to testify about projected lost profits and income.
Outside the presence of the jury, Black was examined by both parties in order for the District Court to determine whether Black was "qualified as an expert or if the alleged opinions are opinions that can be given by a non-expert."
The District Court ruled that David Black could not testify about projected lost profits and income. The District Court stated:
[T]he opinion that is being requested of [Black] to project lost profits from the time that his business went out of business into the future as an expert opinion, is not appropriate for lay testimony because he happened to have been a stockholder of that company at the time it went out of business.
Having made that ruling I'm going to rule that the witness is not qualified to testify as an expert in economics to make the projections that are intended to be made here.
The District Court also stated that any testimony by David Black regarding projected lost profits and income as an expert witness *1332 would be excluded because it was not subject to Rule 26, M.R.Civ.P., disclosure. Furthermore, if disclosure was allowed on the day of testimony it would be untimely to be allowed into evidence. (See discussion regarding expert witnesses infra.)
A nonexpert witness is generally limited to testifying to matters of fact. Walden v. State (1991), 250 Mont. 132, 144, 818 P.2d 1190, 1197. Any lay opinions given must be based upon the witness's own perceptions or helpful to a clear understanding of the witness's testimony or a determination of a fact at issue. Rule 701, M.R.Evid. Certainly, Black, as an owner of Rocky Mountain, was entitled to provide the jury with his opinion regarding the value of the business and even his estimate of lost profits. In this instance, however, Black was attempting to present scientific economic testimony as to his business's future lost profits, apparently because his economist was not being allowed to testify. During the trial, the court granted significant leeway to Black in presenting this testimony but did not allow him to give scientific economic testimony since he was not qualified to do so. Essentially, Black was attempting to mimic the testimony of his excluded economic expert. The District Court correctly ruled that such scientific testimony could only be presented through an expert and there was no evidence of Black's specialized skill as an economist.
After a review of the record and trial transcript, we conclude that the District Court did not abuse its discretion in precluding David Black from testifying in the manner proffered about the value of projected lost profits of Rocky Mountain Enterprises.
B. Refusal to admit the deposition testimony of Susan Black?
At the last minute, Susan Black refused to attend the trial. At the time of trial, Susan and Veronica were living in San Diego, California. During trial, David and Rocky Mountain's attorney received a faxed declaration from Susan stating that neither she, nor David and Susan's child, Veronica, would attend the trial. In her declaration, Susan stated that she would not appear at trial because she feared that she and her daughter would be placed in jeopardy of physical harm and that her appearance at trial would "create more reason for these very sick people to begin the harassment all over, or put myself or my family in physical jeopardy."
Based upon the declaration, David and Rocky Mountain attempted to read the deposition of Susan to the jury. Counsel for Carpet Barn objected and the matter was taken up by the District Court outside the jury's presence.
The District Court would not allow the deposition of Susan Black to be read. The reason for this, the District Court said, was that "she is a party, that this [declaration] does not indicate an unavailability to appear at time of trial, but only a disinclination and refusal to appear at time of trial." Furthermore, the District Court stated that it could not allow Susan "to not show up and then let her deposition stand as her testimony without the ability to cross-examine."
The use of depositions in court proceedings is governed under Rule 32, M.R.Civ.P. Rule 32(a)(3)(B), provides:
The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: ... (B) that the witness is at a greater distance than 100 miles from the place of trial or hearing, or is out of the United States, unless it appears that the absence of the witness was procured by the party offering the deposition....
David and Rocky Mountain argue that the District Court erred by excluding the deposition of Susan Black, as offered on their behalf. They contend that there is no question that Susan was more than 100 miles from the place of trial. Moreover, they assert that they had met their burden of proof to the District Court in showing that Susan was absent from the jurisdiction.
Carpet Barn argues that the District Court's ruling to preclude the use of Susan's *1333 deposition because of her conscious decision not to attend the trial was well within its discretion and proper under the facts and circumstances. Carpet Barn relies on In re Marriage of Powell (1988), 231 Mont. 72, 750 P.2d 1099, for the proposition that a district court has discretion under Rule 32(a)(3)(B), M.R.Civ.P., in ruling whether or not to allow a deposition to be entered into trial as evidence.
In Powell, a party decided not to attend a hearing for personal reasons. Because he was more than 100 miles from the district court, his attorney attempted to offer his deposition as evidence of his testimony under Rule 32(a)(3)(B). This Court upheld the district court's refusal to admit the deposition as evidence at the hearing. We stated that it was the party's decision not to attend the hearing, "but he cannot later introduce testimony which cannot be verified or cross-examined." Powell, 231 Mont. at 75, 750 P.2d at 1101-02. Although not specifically stated, our decision in Powell was correct because it was apparent that the deposition was being offered by a party who procured his own absence.
Under Rule 32(a)(3)(B), M.R.Civ.P., a district court may exclude a deposition if the absence of the deposed witness was procured by the party offering the deposition. However, if there is no evidence that the party offering the deposition procured the absence of the witness, then the District Court cannot bar the use of a deposition when the deposition of a witness or party is being offered and that witness or party is at a distance greater than 100 miles from the place of trial or hearing.
In the present case, the deposition of Susan Black was offered on behalf of the claims of Rocky Mountain and David Black. There was no evidence before the District Court that either David or Rocky Mountain had procured the absence of Susan. Therefore, we determine that the District Court erred in excluding the deposition of Susan Black, as offered by David Black and Rocky Mountain. At trial, David Black and Rocky Mountain met the burden of proof, showing that Susan was absent from the jurisdiction and, thus, under Rule 32(a)(3)(B), the District Court should have allowed the deposition of Susan Black to be entered into evidence.
The question remains, however, whether the District Court's error in not allowing the deposition into evidence was reversible error. "No civil case shall be reversed by reason of error which would have no significant impact upon the result. Where there is no showing of substantial injustice, the error is harmless and may not be used to defeat the judgment." In re Paternity of W.L. (1995), 270 Mont. 484, 489-90, 893 P.2d 332, 336 (citations omitted).
Having reviewed the deposition, we conclude that the deposition was merely cumulative of other evidence presented to the jury. Cumulative evidence is additional evidence of the same character to the same point. Section 26-1-102(4), MCA. The failure of the District Court to allow the deposition to be offered into trial was harmless error and, therefore, does not warrant a reversal for a new trial on the issue of damages for the claims of David Black and Rocky Mountain.
C. The directed verdict against the minor child, Veronica Black?
The Blacks argue that the District Court erred in granting Carpet Barn's motion for a directed verdict against Veronica Black. Carpet Barn argues that the District Court properly directed a verdict against Veronica's claim for emotional distress because there was no evidence to show that she suffered a substantial invasion of her rights so as to cause a significant impact upon her person which in turn resulted in severe emotional distress. The District Court granted the motion for a directed verdict "on the basis that the evidence does not justify emotional distress damages to Veronica Black."
Under Rule 50(a), M.R.Civ.P., a district court may grant a party's motion for directed verdict if "there is no legally sufficient evidentiary basis for a reasonable jury to have *1334 found for that party with respect to that issue." Having reviewed the record, there is simply no evidence to justify an award to Veronica for severe emotional distress. We conclude, therefore, that the District Court was correct in granting Carpet Barn's motion for a directed verdict on the claim of severe emotional distress damages on behalf of Veronica Black.
D. Inadequacy of the jury verdict?
On February 6, 1995, the jury returned its verdict in favor of Rocky Mountain and against Carpet Barn and Huggins. The jury awarded $35,000 to Rocky Mountain. The jury awarded nothing to David and Susan Black.
On March 16, 1995, the plaintiffs filed a motion to amend or alter judgment pursuant to Rule 59(g), M.R.Civ.P. They argued that the jury award was inadequate. The District Court denied the motion and left the jury award undisturbed.
Rocky Mountain and the Blacks argue that the jury verdict was inadequate because the jury failed to award them damages for emotional distress and property damage. They also contend that the award of $51 as punitive damages against Huggins was inadequate.
The standard of review of a jury's verdict is whether there is substantial credible evidence in the record to support it. Tanner v. Dream Island, Inc. (1996), 275 Mont. 414, 422, 913 P.2d 641, 646. We review the evidence in the light most favorable to the prevailing party in the district court. Noll v. City of Bozeman (1977), 172 Mont. 447, 564 P.2d 1296. If conflicting evidence exists, the credibility and weight given to the evidence is in the jury's province and we will not disturb the jury's findings unless they are inherently impossible to believe. Silvis through Silvis v. Hobbs (1992), 251 Mont. 407, 411-12, 824 P.2d 1013, 1015-16.
First, the Blacks assert that the jury erred in failing to award them damages for emotional distress. In its order denying the plaintiffs' motion to reconsider, the District Court stated that there "is insufficient evidence to require an award of damages for emotional distress or mental pain and suffering to ... Susan or David Black."
We agree with the District Court. The Blacks presented evidence to the jury for emotional distress damages. Carpet Barn also offered contradictory evidence which included the Blacks' marital troubles at the time of Huggins' acts. The jury could have reasonably found that the Blacks' emotional distress resulted from factors other than the acts of Huggins and Carpet Barn.
Second, Rocky Mountain and the Blacks contend that the jury failed to award them property damage. On appeal, plaintiffs do not clearly state why the award was inadequate in regard to property damages. In their motion to alter or amend judgment, plaintiffs ask the judgment
to be altered because the evidence showed "that David and Susan Black sustained property damage to their automobiles as a result of tire slashing and interior slashing."
In its April 25, 1995, order the District Court stated:
Concerning damages to the motor vehicles there was no specific evidence concerning title although there was evidence that the vehicles were owned by Susan and David Black. The jury could have been confused and awarded damages for these items to the Blacks' wholly owned corporation, Rocky Mountain Enterprises. Even if the jury was mistaken in not awarding such damages to Susan and David Black individually, the mistake is harmless. Huggins testified in the punitive damage phase of the trial that he had made restitution to Susan Black in the amount of $4,687.64 as a part of his criminal deferred prosecution agreement with the Yellowstone County Attorney. Although requested to do so this Court declined to offset that amount from the damages awarded in favor of Rocky Mountain Enterprises. If damages *1335 would have been awarded in favor of the Blacks, such damages would have been offset by the restitution. The Blacks have effectively recovered vehicle damages.
We agree with the District Court that the jury's award was not inadequate with regard to any property damages that Rocky Mountain and the Blacks are attempting to claim.
Lastly, Rocky Mountain and the Blacks contend that the jury award was inadequate with respect to the award of $51 in punitive damages against Huggins.
Pursuant to § 27-1-221(7)(c), MCA, a district court judge reviews a jury award of punitive damages. If, after the review, the judge determines that the jury award of punitive damages should be increased or decreased, the judge may do so. Section 27-1-221(7)(c), MCA. It is within the district court's discretion to increase or decrease a jury's award of punitive damages. See Dees v. American National Fire Ins. Co. (1993), 260 Mont. 431, 861 P.2d 141; Safeco Ins. Co. v. Ellinghouse (1986), 223 Mont. 239, 725 P.2d 217. Under § 27-1-221(7)(c), MCA, a district court judge considers the following factors set forth in § 27-1-221(7)(b), MCA, when reviewing a jury's award of punitive damages:
(i) the nature and reprehensibility of the defendant's wrongdoing;
(ii) the extent of the defendant's wrongdoing;
(iii) the intent of the defendant in committing the wrong;
(iv) the profitability of the defendant's wrongdoing, if applicable;
(v) the amount of actual damages awarded by the jury;
(vi) the defendant's net worth;
(vii) previous awards of punitive or exemplary damages against the defendant based upon the same wrongful act;
(viii) potential or prior criminal sanctions against the defendant based upon the same wrongful act; and
(ix) any other circumstances that may operate to increase or reduce, without wholly defeating, punitive damages.
Section 27-1-221(7)(b), MCA.
Upon a review of the record, it appears that the jury was properly instructed on the issue of punitive damages and made its decision after considering the evidence presented. The District Court reviewed the award and decided to leave it intact. Since the District Court considered the factors in § 27-1-221(7)(b), MCA, and concluded that $51 was an appropriate amount for punitive damages against Huggins, we will not disturb their decisions. We conclude that the District Court did not abuse its discretion in upholding the jury's award of punitive damages of $51 against Huggins.
E. Admittance of police reports regarding the Blacks' domestic disputes into evidence?
David Black argues that the District Court violated his rights to privacy by allowing into evidence investigative materials and testimony from police officers regarding domestic disturbances or domestic violence complaints involving disputes between him and his wife. David Black contends that the District Court did not make a finding that his right to privacy was outweighed by Carpet Barn's "right to know." He also argues that the probative value of this evidence was outweighed by its prejudicial effect on the jury.
Under Rule 403, M.R.Evid., a district court may exclude relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice.
Section 44-5-303(1), MCA, provides, in relevant part:
[D]issemination of confidential criminal justice information is restricted to criminal justice agencies, to those authorized by law to receive it, and to those authorized to receive it by a district court upon a written finding that the demands of individual privacy do not clearly exceed the merits of public disclosure.
*1336 A review of the trial transcript reveals that the District Court correctly exercised its discretion under Rule 403, M.R.Evid.
On February 1, 1995, the District Court held proceedings in chambers regarding the police documents on David Black. The District Court stated:
I'm required to make the in camera inspection of the documents. In making that in camera inspection I'm required to weigh in my own mind whether the constitutional right of privacy of any individuals would exceed the constitutional right of the public to know related to those files and also considering the case that I am considering. I've done that....
In the context of this caseand I'm not ruling on any admissibility of evidence issues, but in reviewing those files, I believe that two portions of the file which relates to alleged domestic abuse occurrences between David Black and Susan Black, both subsequent to the incidents that are in question in this case, but very close to the time of this case, I think they're within a year in the year 1987, it was `88, I've decided I will allow those documents to be inspected and copied by each of the parties.
However, the District Court did find that some of the information in the police file should not be disclosed. The District Court stated, "[t]here are other documents I am not allowing disclosure. I find that the right to privacy does exceed the right of the public to know."
During trial, the District Court allowed Carpet Barn to introduce evidence of the Blacks' domestic disputes.
We conclude that the District Court did not abuse its discretion in allowing this evidence. The Blacks claimed that Carpet Barn and Huggins caused them emotional distress entitling them to damages. The evidence regarding the Blacks' domestic disputes was relevant because it contradicted the Blacks' claims by showing that the Blacks' emotional distress may have been caused by factors other than the actions of the defendants.
Although the District Court did not make a written finding as required by § 44-5-303(1), MCA, we find this error to be harmless. The District Court made its finding in chambers before both parties, stating its reasons for the disclosure of police documents regarding David Black.
F. Exclusion of plaintiffs' expert witnesses?
Rocky Mountain and the Blacks argue that the District Court abused its discretion by prohibiting certain expert witnesses from testifying at trial. The prohibited witnesses included Dr. Ann Adair, a Billings economist, and Dr. Ned Tranel and Dr. Sandra Lee, both crisis counselors. In its January 27, 1995, order, the District Court ruled that the plaintiffs had failed to comply with the scheduling order in respect to the disclosure of expert witnesses and granted defendants' motion in limine to exclude certain witnesses for the plaintiffs.
Our standard of review from orders granting or denying discovery is abuse of discretion. In re Marriage of Caras (1994), 263 Mont. 377, 384, 868 P.2d 615, 619. "The District Court has inherent discretionary power to control discovery and that power is based upon the District Court's authority to control trial administration." State ex rel. Guarantee Ins. Co. v. District Court of the Eighth Judicial Dist. (1981), 194 Mont. 64, 67-68, 634 P.2d 648, 650; see also Montana Rail Link v. Byard (1993), 260 Mont. 331, 337, 860 P.2d 121, 125.
The record reveals that the last scheduling order dated January 18, 1994, set the trial date for January 23, 1995, and required plaintiffs to disclose all expert witnesses at least twelve weeks before trial. Therefore, the plaintiffs' witness disclosures were due before October 30, 1994. However, on December 28, 1994, plaintiffs attempted to file supplemental designations of expert witnesses, one month before the trial date.
The District Court ruled that the plaintiffs' disclosures under Rule 26(b), M.R.Civ.P., *1337 were inadequate and untimely. We conclude that the District Court did not abuse its discretion; therefore, we will not disturb its ruling relating to disclosure of experts. See J.L. v. Kienenberger (1993), 257 Mont. 113, 119, 848 P.2d 472, 476.
G. Improper argument?
Plaintiffs argue that the defendants improperly commented, in argument, to the jury that there was no evidence from any psychologist, or any other expert, that would support the plaintiffs' case. Also, plaintiffs contend that defendants improperly commented upon the absence of any evidence or testimony from Susan Black. Plaintiffs suggest that it was unfair for the defendants to comment upon these issues in front of the jury because they had obtained rulings from the District Court excluding both the testimony of the experts and the use of Susan Black's deposition.
We find the plaintiffs' argument as to improper argument regarding the expert witnesses unpersuasive. As discussed above, it was the plaintiffs' failure to properly disclose their expert witnesses as required by the District Court. Thus, the defendants could properly comment on their lack of expert witnesses.
As stated above, the failure of the District Court to allow the deposition of Susan Black to be entered into evidence was harmless error. We conclude that any argument made by the defendants relating to the absence of any evidence or testimony from Susan Black did not prejudice the plaintiffs in this trial.
ISSUE 2
Did the District Court err in denying Rocky Mountain and the Blacks' memorandum of costs as untimely?
Section 25-10-501, MCA, states:
The party in whose favor judgment is rendered and who claims his costs must deliver to the clerk and serve upon the adverse party, within 5 days after the verdict or notice of the decision of the court or referee or, if the entry of the judgment on the verdict or decision be stayed, then before such entry is made, a memorandum of the items of his costs and necessary disbursements in the action or proceeding, which memorandum must be verified by the oath of the party, his attorney or agent, or the clerk of his attorney, stating that to the best of his knowledge and belief the items are correct and that the disbursements have been necessarily incurred in the action or proceeding.
The jury verdict was signed and filed on the compensatory damage issue on February 6, 1995. The jury verdict on the issue of punitive damages was signed and filed on February 7, 1995.
On February 21, 1995, Rocky Mountain filed a motion to tax costs with a memorandum of costs that was not verified. After objection filed by Carpet Barn, plaintiffs refiled the motion to tax costs with a verified memorandum of costs on February 27, 1995. On March 7, 1995, the District Court struck plaintiffs' memorandum of costs as untimely because it was not filed within five days of the verdict.
Plaintiffs argue that although the judgments were entered on February 6 and 7, there was uncertainty as to the form of the judgment and whether an offset should be allowed against the $35,000 compensatory damage judgment.
We determine that the plaintiffs' memorandum of costs was properly stricken. Although, at the time judgment was rendered, the District Court stated that there were still issues regarding the amount and form of the judgment to be resolved, the District Court never issued an order staying the entry of the judgment. Thus, to claim costs under § 25-10-501, MCA, the plaintiffs had five days from the date of the jury verdict to file and serve upon the adverse party a verified memorandum of costs. See R.H. Grover, Inc. v. Flynn Ins. Co. (1989), 238 Mont. 278, 777 P.2d 338. In this case, the plaintiffs failed to file a verified memorandum of costs *1338 within five days as required under § 25-10-501, MCA.
We conclude that the District Court was correct in denying plaintiffs' memorandum of costs as untimely.
ISSUE 3
Did the District Court abuse its discretion in imposing sanctions against plaintiffs' counsel?
At the close of trial, Carpet Barn filed a motion for sanctions against plaintiffs and plaintiffs' counsel, Robert L. Stephens. The District Court awarded attorney fees in the amount of $500, under the authority of § 37-61-421, MCA, which provides:
An attorney or party to any court proceeding who, in the determination of the court, multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorney fees reasonably incurred because of such conduct.
It is within the discretion of a district court to award costs and attorney fees under § 37-61-421, MCA. See Tigart v. Thompson (1990), 244 Mont. 156, 796 P.2d 582.
Plaintiffs' counsel argues that the District Court abused its discretion in sanctioning him for two reasons. First, counsel has a duty to zealously and vigorously represent his client's interests. Second, the imposition of sanctions has a chilling effect on the legitimate zeal of counsel, especially when penalties are dispensed after any opportunity for remedial measures by counsel has passed. In light of these principles, plaintiffs' counsel contends that a review of the record will not support the findings of the District Court.
The District Court made numerous findings about the conduct of plaintiffs' counsel during the trial. In its order dated March 7, 1995, the District Court provided examples and reasons to justify the imposition of sanctions:
For example after a few minutes of Mr. Stephens' opening statement trial was recessed at which time the Court again reviewed its rulings on preliminary matters and attempted to establish parameters for counsel in handling the remainder of trial. These rulings were ignored by Mr. Stephens to a substantial degree.
....
At least once and perhaps more than once Mr. Stephens in questioning or in merely making statements during the course of the trial was cut off in mid-sentence by the Court when an objection was sustained. He continued to finish the improper statement in front of the jury. The final and most blatant improper act of Mr. Stephens occurred at the very end of trial. This occurred in his rebuttal argument on the issue of punitive damages concerning Huggins. In the rebuttal argument, Mr. Stephens made a statement to the jury to the effect that everyone knew what was going on here, that a diminution of a punitive award would be to the benefit of Carpet Barn and that Carpet Barn was covered by liability insurance to pay any losses in the case. The Court immediately terminated the argument and directed the jury to deliberate. It is difficult to say that statement was prejudicial since the punitive award was only in the amount of $51.00. At the time of the statement the amount of punitive damages to be awarded against Huggins was the only remaining issue. The statement was clearly improper. Mr. Stephens claims that the matter had been opened in the punitive arguments by [opposing counsel] in arguing the difference between a punitive award against a wealthy corporation, for example State Farm Insurance Company, as opposed to an individual like Huggins without assets. This is a lame excuse for Mr. Stephens' improper statements. Mr. Stephens knows that the matter of liability insurance coverage cannot be mentioned in a case like this before the jury.
....
The Court is of a view that Mr. Stephens' conduct did increase the trial time inappropriately *1339 in attempting to admit inadmissible evidence. It is difficult to estimate the additional time but conservatively Mr. Stephens' conduct probably at least increased the trial time by one-half day.
The District Court concluded by stating that "the conduct of Mr. Stephens in this case cannot be condoned."
After a review of the record and the trial transcript, we conclude that it was within the District Court's discretion to award costs and attorney fees in the amount of $500 to Carpet Barn pursuant to § 37-61-421, MCA. We find no abuse of discretion here.
ISSUE 4
Did the District Court err in granting summary judgment against plaintiffs on the claim of civil conspiracy?
Summary judgment is proper when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. We review a district court's grant of summary judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria used by that court. In re Estate of Lien (1995), 270 Mont. 295, 298, 892 P.2d 530, 532. Such a review requires that we first determine whether the moving party met its burden of establishing both the absence of genuine issues of material fact and entitlement to judgment as a matter of law. See Estate of Lien, 270 Mont. at 298, 892 P.2d at 532.
Plaintiffs argue that the District Court erred in granting summary judgment to the Pierce defendants on the civil conspiracy issue.
To prove civil conspiracy the following elements are required: (1) two or more persons, and for this purpose, a corporation is a person; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful overt acts; and (5) damages as the proximate result thereof. Grenz v. Medical Management Northwest, Inc. (1991), 250 Mont. 58, 62, 817 P.2d 1151, 1154; Duffy v. Butte Teachers' Union No. 332 (1975), 168 Mont. 246, 251, 541 P.2d 1199, 1202.
The District Court stated "there is probably sufficient evidence of elements 1, 2, 4, and 5 as quoted inGrenz. There is a failure on the part of the plaintiffs to raise a genuine issue of material fact concerning element 3 `a meeting of the minds on the object or course of action.'"
This Court has reviewed the motions, depositions, and affidavits that were filed with respect to the civil conspiracy issue. In our review, we have also considered the evidence that the plaintiffs allege was untimely produced by the defendants and constituted the basis for their motion for reconsideration of summary ruling on civil conspiracy, or alternatively motion for Rule 54 certification.
This Court concludes that the District Court was correct in granting summary judgment to all defendants on the civil conspiracy issue. We agree with the District Court's conclusion that the plaintiffs had failed to establish a genuine issue of material fact concerning whether "a meeting of the minds on the object or course of action" was reached between Huggins and any other of the Pierce defendants.
CROSS-APPEAL
ISSUE 1
Did the District Court err in failing to dismiss the complaint pursuant to Rule 41(e), M.R.Civ.P.?
Carpet Barn cross-appeals, challenging the District Court's refusal to dismiss the plaintiffs' claims under Rule 41(e), M.R.Civ.P.
The District Court declined to dismiss the defendants, concluding that any defect in serving the summons upon the Pierce defendants was cured by serving each of the defendants with the original summons which was issued within one year of the commencement *1340 of the action. Our standard in reviewing a district court's conclusion of law is to determine whether the interpretation of law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
Rule 41(e), M.R.Civ.P., provides as follows:
Failure to serve summons. No action heretofore or hereafter commenced shall be further prosecuted as to any defendant who has not appeared in the action or been served in the action as herein provided within 3 years after the action has been commenced, and no further proceedings shall be had therein, and all actions heretofore or hereafter commenced shall be dismissed by the court in which the same shall have been commenced, on its own motion, or on the motion of any party interested therein, whether named in the complaint as a party or not, unless summons shall have been issued within 1 year, or unless summons issued within one year shall have been served and filed with the clerk of the court within 3 years after the commencement of said action, or unless appearance has been made by the defendant or defendants therein within said 3 years. When more than one defendant has been named in an action, the action may within the discretion of the trial court be further prosecuted against any defendant who has appeared within 3 years, or upon whom summons which has been issued within 1 year has been served and filed with the clerk within 3 years as herein required.
The purpose of Rule 41(e), M.R.Civ. P., is to ensure that actions are timely prosecuted. First Call, Inc. v. Capital Answering Service, Inc. (1995), 271 Mont. 425, 427, 898 P.2d 96, 98. The rule requires dismissal of an action where summons is not issued within one year of the commencement of the action. Indeed, we have previously stated that the failure to issue summons within that time frame entitles a defendant to dismissal. Soot v. Petrolane Steel Gas, Inc. (1985), 218 Mont. 418, 423-24, 708 P.2d 1014, 1018.
In this case, Rocky Mountain and the Blacks filed their original complaint against the Pierce defendants and Huggins on October 21, 1988. The summons naming the Pierce defendants as parties was issued on the same day. A subsequent summons was issued on October 23, 1989, but it was not served. Yet another summons was issued on February 28, 1990, which was served on the Pierce defendants sometime in March 1990. Upon receipt of this summons, the Pierce defendants filed a motion to dismiss and supporting brief based on Rule 41(e) on March 27, 1990, contending that they were served with a summons that had been issued more than one year after the filing of their complaint.
After the Pierce defendants' motion to dismiss was filed, the plaintiffs attempted to cure any deficiencies in service of summons by serving the original summons issued on October 21, 1988. That summons was served on the Pierce defendants on April 16, 1990.
On September 17, 1990, the District Court ruled on the motion to dismiss. The District Court stated that at the time the original motion to dismiss was filed, the Pierce defendants had been served with a summons, dated February 28, 1990, that had been issued more than one year from the commencement of the action. At that time, the motion to dismiss had merit. However, the District Court ruled that the defect in serving the February 28, 1990, summons was cured by serving the Pierce defendants with the original October 21, 1988, summons that had been issued on the date this action commenced.
Carpet Barn argues in its cross-appeal that the District Court erred in failing to dismiss this action. It contends that it could not be "re-served" with the original summons after it had appeared in court and filed its motion to dismiss pursuant to Rule 41(e) based upon the error of being served with the subsequent summons. Carpet Barn relies on First Call, 271 Mont. 425, 898 P.2d 96, for the proposition that the District Court should have granted their motion and that the dismissal should have been with prejudice.
*1341 This Court concludes that the District Court did not err in denying the Pierce defendants' motion to dismiss pursuant to Rule 41(e). In First Call, we held that the failure to serve a summons within the required three years meant that the complaint must be dismissed with prejudice. First Call, 271 Mont. at 428, 898 P.2d at 98. However, in the case at bar, the original summons was served upon the Pierce defendants within the requisite three years. We determine that the issuing of subsequent summonses, did not serve to nullify the original summons.
ISSUE 2
Did the District Court err in not granting either the defendants' motion for summary judgment or later motion for a directed verdict on plaintiffs' claims based on vicarious liability and negligence?
As stated above, we review a district court's grant of summary judgment de novo, applying the same Rule 56(c), M.R.Civ.P., criteria used by that court. Estate of Lien, 270 Mont. at 298, 892 P.2d at 532.
A directed verdict is proper only when there is a complete absence of any evidence which would justify submitting an issue to a jury, and all inferences which can be drawn from the evidence must be considered in a light most favorable to the opposing party. Pierce v. ALSC Architects, P.S. (1995), 270 Mont. 97, 107, 890 P.2d 1254, 1260 (citing Jacques v. Montana National Guard (1982), 199 Mont. 493, 649 P.2d 1319). A district court must deny a motion for a directed verdict if substantial conflicts in the evidence exist. Fox Grain and Cattle Co. v. Maxwell (1994), 267 Mont. 528, 533, 885 P.2d 432, 435 (quoting Simchuk v. Angel Island Community Ass'n (1992), 253 Mont. 221, 225, 833 P.2d 158, 160).
Carpet Barn argues that the District Court erred by not granting its motion for summary judgment on the plaintiffs' claims based on vicarious liability and negligence. Specifically, they argue that there was no evidence that the criminal conduct of Huggins was in furtherance of his employer, Carpet Barn, and, thus, Carpet Barn could not be held liable under the theory of respondeat superior.
After a review of the evidence, this Court concludes that the District Court did not err in denying the defendants' motions. The District Court cited the following facts regarding Carpet Barn's possible liability for Huggins' actions: Huggins met Susan Black through business; Huggins discussed the Blacks with Jon Pierce; some of the tortious acts occurred during business hours from Carpet Barn; and Huggins understood that his acts could harm Rocky Mountain's business activities. The District Court concluded that there was a genuine issue of material fact for the jury concerning whether Huggins acted within the scope of his employment.
We conclude that based on the evidence, the District Court was correct in denying defendants' motions for summary judgment and directed verdict on plaintiffs' claims based on vicarious liability and negligence.
Affirmed.
TURNAGE, C.J., and HUNT, TRIEWEILER and LEAPHART, JJ., and JEFFREY M. SHERLOCK[*], District Judge, concur.
NELSON, Justice, dissents.
I would not reach the issues addressed on appeal. Rather, I would reverse and order Plaintiffs' cause of action dismissed on the basis of the issue raised on cross-appeal. I would hold that the District Court erred in not dismissing Plaintiffs' action with prejudice on the basis of the Pierce Defendants' motion to dismiss under Rule 41(e), M.R.Civ.P.
As the District Court stated and as the majority opinion notes, at the time their original *1342 motion to dismiss was filed, the Pierce Defendants had not been served with a summons that had been issued within one year of the commencement of the action. Their motion was, thus, clearly meritorious. Accordingly, at that point in time, under the unambiguous requirements and plain language of Rule 41(e), as subsequently interpreted in our decision in First Call v. Capital Answering Serv., Inc. (1995), 271 Mont. 425, 898 P.2d 96, Plaintiffs' complaint should have been dismissed with prejudicei.e., never to be prosecuted further. First Call, 898 P.2d at 98. In allowing Plaintiffs to cure their obvious Rule 41(e) violation by re-serving Defendants with the original summons, (an action that was, in itself, a nullity) the District Court deprived the Pierce Defendants of their right to take advantage of the rule and to a final dismissal of Plaintiffs' complaint. Moreover, the trial court allowed Plaintiffs to do exactly what Rule 41(e) specifically prohibitsto further prosecute a lached lawsuit. First Call, 898 P.2d at 98.
Similarly, in Sinclair v. Big Bud Mfg. Co. (1993), 262 Mont. 363, 865 P.2d 264, we held that Rule 41(e) does not allow the District Court discretion to allow the further prosecution of an action where summons is not issued within one year of the commencement of the suit and that the mandatory language of the rule requires dismissal. Sinclair, 865 P.2d at 266-67. In that case we reversed the District Court for doing, in substance, what the court did here. We stated:
Notwithstanding the failure to issue the summonses timely, the District Court determined that it could allow the action to proceed because the non-BBMC defendants had made an appearance. It is true that an action may be further prosecuted under Rule 41(e), M.R.Civ.P., if a defendant appears within three years of the commencement of the action even though summons has not been timely issued. However, the only appearance made by the non-BBMC defendants prior to the court's ruling was the Rule 12(b), M.R.Civ.P., motion to dismiss asserting the Rule 41(e), M.R.Civ.P., bar to further proceedings. Rule 41(e), M.R.Civ.P., specifically allows a party to move for dismissal of the action and requires the district court to do so if summons was not properly issued. Thus, the non-BBMC defendants' motion to dismiss does not serve as a basis for further prosecution of the action. [Emphasis added.]
Sinclair, 865 P.2d at 267.
Neither the unambiguous language of Rule 41(e) nor our decisions in Sinclair or First Call provide any mechanism for "curing" a Rule 41(e) defect once the defendant has moved for dismissal. At that point, the obligation of the court is simply to dismiss with prejudice.
Following briefing in the case at bar, we handed down our decision in Yarborough v. Glacier County (1997), ___ Mont. ___, 948 P.2d 1181, 54 St.Rep. 1274. In that case we reversed a decision of the trial court granting the defendant's Rule 41(e) motion to dismiss. That case is distinguishable and is limited to its facts; it does not support the majority opinion here. In Yarborough, the plaintiff had a summons issued the same day she filed her complaint, July 8, 1993. The defendant declined to acknowledge service of the summons and complaint mailed within one year of the commencement of the action. The original summons was subsequently lost. Over one year from the filing of the complaint, plaintiff had the clerk of court issue an identical "duplicate" of the original summons. This duplicate summons was titled as such and bore the following statement at the bottom prior to the clerk of court's signature line: "NOTE: DUPLICATE SUMMONS ISSUED this 23rd day of June, 1995." This duplicate summons was personally served on the defendant. Yarborough, 948 P.2d at 1182. On those facts, we held that the plaintiff had complied with the substance and literal purpose of Rule 41(e). Yarborough, 948 P.2d at 1183. Significantly, Yarborough did not distinguish, much less overrule, First Call or Sinclair.
In the instant case, the Pierce Defendants were not served with a duplicate of the original *1343 summons issued October 21, 1988, nor were they served with the summons issued a year later on October 23, 1989. Rather they were served with a brand new summons issued February 28, 1990. Nothing on this summons indicates that it was "duplicate" of the original that was lost. Clearly, the February 28, 1990 summons was a new summons that was not issued within one year of the commencement of the action as required by Rule 41(e); First Call and Sinclair control; the District Court erred in not granting the Pierce Defendants' Rule 41(e) motion to dismiss at the time the motion was made.
I dissent.
NOTES
[*] Sitting for GRAY, J.
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Case: 14-11884 Date Filed: 09/07/2017 Page: 1 of 5
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-11884
Non-Argument Calendar
________________________
D.C. Docket No. 5:13-cv-00185-WTH-PRL
MARLENE DORTA,
Plaintiff - Appellant,
versus
CITIBANK NATIONAL ASSOCIATION,
as trustee for Lehman Brothers-BNC Mortgage Loan Trust 2007-3,
WILMINGTON TRUST NATIONAL ASSOCIATION,
as successor trustee to CITIBANK NATIONAL ASSOCIATION,
as trustee for BNC Mortgage Loan Trust 2007-3,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(September 7, 2017)
Case: 14-11884 Date Filed: 09/07/2017 Page: 2 of 5
Before MARTIN, ANDERSON, and DUBINA, Circuit Judges.
PER CURIAM:
Appellant, Marlene Dorta (“Dorta”), appeals the district court’s order
dismissing her amended complaint, seeking to quiet title, against Wilmington Trust
National Association (“Wilmington”). After reviewing the record and reading the
parties’ briefs, we affirm.
I. BACKGROUND
William Junquera (“Junquera”), Dorta’s predecessor as owner of the real
property at issue, executed and delivered to BNC Mortgage a promissory note in
the amount of $150,100.00 on April 2, 2007. In December 2007, Citibank, in its
then role as trustee for BNC Mortgage Loan Trust, filed a two-count complaint
against Junquera in Florida circuit court. Citibank claimed, in part, that Junquera
had defaulted on the note and mortgage when he failed to make his scheduled
payment on September 1, 2007, as well as other subsequent payments. Citibank
declared the full amount due under the note and mortgage to be paid (acceleration),
and sought to foreclose on the subject property. Almost two years later, the circuit
court dismissed without prejudice Citibank’s action due to lack of prosecution.
Thus, Citibank’s attempted acceleration was unsuccessful.
2
Case: 14-11884 Date Filed: 09/07/2017 Page: 3 of 5
Dorta obtained a quit claim deed for the subject property from Junquera on
December 31, 2012. Shortly thereafter, Dorta filed the present action to quiet title.
She alleges that the five year statute of limitations on an action to foreclose the
mortgage expired on September 1, 2012. Because the five years have passed,
Dorta asserts that the note and the mortgage are no longer enforceable, and the
mortgage remains as a cloud on her title to the subject property. Wilmington filed
a motion to dismiss, and Dorta did not respond. The district court granted the
motion and dismissed the amended complaint on March 25, 2013. Dorta timely
appealed.
II. DISCUSSION
The district court granted Wilmington’s motion to dismiss, concluding that a
foreclosure action based on defaults less than five years prior to the filing of a
claim would not be barred by the five year state of limitations under Florida Statute
§ 95.11(2). We review the district court’s dismissal order de novo, accepting the
complaint's allegations as true and construing them in the light most favorable to
Dorta. See CSX Transp., Inc. v. Gen. Mills, Inc., 846 F.3d 1333, 1336 (11th Cir.
2017).
In Bartram v. U.S. Bank Nat’l Ass’n, 211 So. 3d 1009 (Fla. 2016), the
Florida Supreme Court held that dismissal of a foreclosure had the effect of
3
Case: 14-11884 Date Filed: 09/07/2017 Page: 4 of 5
revoking the debt acceleration and restoring the prior payment relationship of the
parties, thereby allowing a subsequent acceleration and foreclosure so long as the
foreclosure action was based on a subsequent default, and that action was brought
within five years of that subsequent default. Id. at 1019‒21. The state supreme
court made clear that it is irrelevant whether the foreclosure suit was dismissed
with or without prejudice. Id. at 1020. The court reinforced its holding from
Singleton v. Greymar Ass’n, 882 So. 2d 1004, 1007 (Fla. 2004) (stating that
“[w]hile it is true that a foreclosure action and an acceleration of the balance due
based upon the same default may bar a subsequent action on that default, an
acceleration and foreclosure predicated upon subsequent and different defaults
presents a separate and distinct issue”), upon which the district court in the present
case relied. Because “the mortgagor and mortgagee are simply placed back in the
same contractual relationship with the same continuing obligations,” id., under the
court’s holding, Dorta’s lender remains free to recover unpaid installments less
than five years old.
Thus, Dorta cannot allege plausible facts showing that a cloud exists on her
title to the property at issue. See Stark v. Frayer, 67 So. 2d 237, 239 (Fla. 1953).
Her complaint fails to state a claim for the declaratory relief sought because it fails
to allege the invalidity of the mortgage and the note. Hence, her pursuit of an
4
Case: 14-11884 Date Filed: 09/07/2017 Page: 5 of 5
order quieting title to the mortgaged property fails. The district court’s legal
analysis and ultimate conclusion are correct and without error. Accordingly, we
affirm the district court’s order of dismissal.
AFFIRMED.
5
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Filed 8/29/14 Meredith v. Plant CA1/5
NOT TO BE PUBLISHED IN 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
FIRST APPELLATE DISTRICT
DIVISION FIVE
ROGER L. MEREDITH et al.,
Plaintiffs and Appellants,
A138925
v.
MARDEN NOEL PLANT et al., (Marin County
Super. Ct. No. CIV1203827)
Defendants and Respondents.
Roger L. Meredith and Cheryll A. Barron (appellants) sued their former landlord
Marden Noel Plant and affiliated parties (respondents), alleging multiple causes of action
in connection with their residential lease. Appellants appeal the trial court’s order
granting respondents’ motion to strike three causes of action. We affirm.
BACKGROUND
In June 2012, appellants entered into a residential lease with respondents.1 Under
the terms of the lease, rent was due on the first of each month. On three occasions
between June 30 and July 15, appellants experienced problems with the property’s
sewage system which caused wastewater to back up into the bathtubs and toilets.
Appellants complained to respondents, who sent repair workers.
1
On the lease, only Plant is identified as the landlord. The complaint alleges that
Plant was an officer of respondent Plant & Associates, Inc., and that Plant and respondent
Thomas L. Davis own the leased property through a self-settled trust. For purposes of
this appeal, the parties do not differentiate between the respondents’ individual roles or
liabilities; we shall do the same.
1
On July 16, Plant wrote appellants: “I will make financial accommodations with
you for your loss of a living space. Give me some numbers of what will make you
comfortable.” When appellants did not respond, Plant wrote again on July 28, “Pl[ease]
tell me what you have in mind for settling up with me on the inconveniences that the
septic system has caused.” On August 1, appellants wrote Plant demanding the following
payments: (1) $4,500 for “physical and emotional stress”; (2) reimbursement for a
restaurant meal eaten during one of the plumbing incidents and a locksmith charge for an
unrelated problem; and (3) abatement of one-half of one month’s rent. Appellants did not
pay any part of the August rent due on August 1.
On or about August 10, respondents served appellants with a three-day notice to
pay rent or quit and subsequently filed an unlawful detainer action. This action was
dismissed, apparently because of defects in the form and service of the three-day notice.
A second three-day notice and unlawful detainer action followed. On or about September
11, appellants vacated the property and respondents dismissed the second unlawful
detainer action. Appellants did not pay any rent for August or September.
Appellants filed the instant lawsuit alleging thirteen claims. Respondents moved
to strike three of these claims pursuant to Code of Civil Procedure section 425.16:
retaliatory eviction, wrongful eviction, and eviction in violation of Civil Code section
1942.5, subdivision (a) (section 1942.5(a)).2 The trial court granted the motion.
DISCUSSION
“The anti-SLAPP statute, [Code of Civil Procedure] section 425.16, allows a court
to strike any cause of action that arises from the defendant’s exercise of his or her
constitutionally protected rights of free speech or petition for redress of grievances.”
(Flatley v. Mauro (2006) 39 Cal.4th 299, 311-312 (Flatley).) The statute sets forth “a
two-step process for determining whether an action is a SLAPP. First, the court decides
whether the defendant has made a threshold showing that the challenged cause of action
is one arising from protected activity. [Citation.] ‘A defendant meets this burden by
2
All undesignated section references are to the Civil Code.
2
demonstrating that the act underlying the plaintiff’s cause fits one of the categories
spelled out in [Code of Civil Procedure] section 425.16, subdivision (e)’ [citation]. If the
court finds that such a showing has been made, it must then determine whether the
plaintiff has demonstrated a probability of prevailing on the claim.” (Navellier v. Sletten
(2002) 29 Cal.4th 82, 88.) To establish this probability of prevailing, “ ‘the plaintiff
“must demonstrate that the complaint is both legally sufficient and supported by a
sufficient prima facie showing of facts to sustain a favorable judgment if the evidence
submitted by the plaintiff is credited.” ’ ” (Id. at pp. 88-89.) We review de novo the trial
court’s order granting the anti-SLAPP motion. (Flatley, at p. 325.)
I. Protected Activity
The trial court found the conduct on which the challenged causes of action are
based—the three-day notices and unlawful detainer actions—protected activity under the
anti-SLAPP statute. Appellants do not dispute the three-day notices and unlawful
detainer actions are the basis for the challenged causes of action. Appellants also
concede that, if conducted in accordance with the law, such conduct is protected activity.
Indeed, “[t]he prosecution of an unlawful detainer action indisputably is protected
activity within the meaning of [Code of Civil Procedure] section 425.16.” (Birkner v.
Lam (2007) 156 Cal.App.4th 275, 281 (Birkner).) Moreover, where, as here, a
prelitigation notice “is a legal prerequisite for bringing an unlawful detainer action, . . .
service of such a notice does constitute activity in furtherance of the constitutionally
protected right to petition” and is therefore also protected. (Id. at p. 282.)
Appellants contend the conduct in this case was nevertheless not protected
because it was in violation of section 1942.5(a) and illegal activity is not protected
activity for purposes of the anti-SLAPP statute. In Flatley, supra, 39 Cal.4th at p. 320,
our Supreme Court held, if “either the defendant concedes, or the evidence conclusively
establishes, that the assertedly protected speech or petition activity was illegal as a matter
of law,” the activity is not protected. However, “the Supreme Court’s use of the phrase
‘illegal’ was intended to mean criminal, and not merely violative of a statute. . . . [A]
reading of Flatley to push any statutory violation outside the reach of the anti-SLAPP
3
statute would greatly weaken the constitutional interests which the statute is designed to
protect . . . . and we decline to give plaintiffs a tool for avoiding the application of the
anti-SLAPP statute merely by showing any statutory violation.” (Mendoza v. ADP
Screening & Selection Services, Inc. (2010) 182 Cal.App.4th 1644, 1654.) Appellants do
not contend the challenged conduct violated any criminal statutes.
Appellants also argue the litigation privilege does not apply to the three-day
notices and subsequent unlawful detainer actions. We discuss the application of the
litigation privilege to the challenged causes of action in more detail below, in connection
with the second step of the SLAPP analysis. For purposes of analyzing whether conduct
is protected activity under the anti-SLAPP statute, however, the relevance of the privilege
is limited. Although at times courts have “looked to the litigation privilege as an aid” in
determining whether conduct is protected under the anti-SLAPP statute (Flatley, supra,
39 Cal.4th at p. 323), “the two statutes are not substantively the same” and do not “serve
the same purposes.” (Id. at pp. 323-324.) Accordingly, the litigation privilege “does not
operate as a limitation on the scope of the anti-SLAPP statute.” (Id. at p. 325.)
Respondents met their burden of demonstrating the challenged conduct was protected
activity under section Code of Civil Procedure 425.16 and were not required to show the
conduct was also protected by the litigation privilege. (See Birkner, supra, 156
Cal.App.4th at p. 284.)
II. Probability of Prevailing
The trial court found appellants failed to demonstrate a probability of success on
the challenged causes of action because all are barred by the litigation privilege (§ 47,
subd. (b)). Appellants rely in part on Action Apartment Assn, Inc. v. City of Santa
Monica (2007) 41 Cal.4th 1232, 1241–1242 (Action Apartment) to challenge this
determination.
“The litigation privilege, codified at Civil Code section 47, subdivision (b),
provides that a ‘publication or broadcast’ made as part of a ‘judicial proceeding’ is
privileged. This privilege is absolute in nature, applying ‘to all publications, irrespective
of their maliciousness.’ ” (Action Apartment, supra, 41 Cal.4th at. p. 1241.) “ ‘The
4
principal purpose of [the litigation privilege] is to afford litigants and witnesses [citation]
the utmost freedom of access to the courts without fear of being harassed subsequently by
derivative tort actions.’ ” (Ibid.)
“The litigation privilege, however, is not without limit.” (Action Apartment,
supra, 41 Cal.4th at p. 1242.) As relevant here, the privilege will not apply to a claim
brought under a state statute if it is “clear that the Legislature did not intend its
enforcement to be barred by the litigation privilege.” (Id. at p. 1245.) In Action
Apartment, our Supreme Court found this intent clear when the state statute “is more
specific than the litigation privilege and would be significantly or wholly inoperable if its
enforcement were barred when in conflict with the privilege.” (Id. at p. 1246.)
This exception to the litigation privilege has no bearing on appellants’ common
law claims for wrongful eviction and retaliatory eviction. (See discussion post at p. 7-8.)
However, the exception arguably applies to appellants’ section 1942.5(a) claim.
(Banuelos v. LA Investment, LLC (2013) 219 Cal.App.4th 323.) Section 1942.5(a)
provides, if a landlord retaliates against a tenant and the tenant is not in default as to rent,
the landlord “may not” engage in specified conduct, including “recover[ing] possession
of a dwelling in any action or proceeding,” within 180 days of certain acts, including a
tenant’s “oral complaint to the lessor regarding tenantability.”3 A landlord retains the
3
In its entirety, section 1942.5(a) provides: “If the lessor retaliates against the
lessee because of the exercise by the lessee of his rights under this chapter or because of
his complaint to an appropriate agency as to tenantability of a dwelling, and if the lessee
of a dwelling is not in default as to the payment of his rent, the lessor may not recover
possession of a dwelling in any action or proceeding, cause the lessee to quit
involuntarily, increase the rent, or decrease any services within 180 days of any of the
following: [¶] (1) After the date upon which the lessee, in good faith, has given notice
pursuant to Section 1942, or has made an oral complaint to the lessor regarding
tenantability. [¶] (2) After the date upon which the lessee, in good faith, has filed a
written complaint, or an oral complaint which is registered or otherwise recorded in
writing, with an appropriate agency, of which the lessor has notice, for the purpose of
obtaining correction of a condition relating to tenantability. [¶] (3) After the date of an
inspection or issuance of a citation, resulting from a complaint described in
paragraph (2) of which the lessor did not have notice. [¶] (4) After the filing of
appropriate documents commencing a judicial or arbitration proceeding involving the
5
right to engage in the specified conduct “for any lawful cause.” (§ 1942.5, subd. (d).) To
recover possession for a good faith, nonretaliatory reason, the landlord must give the
tenant notice of such grounds; and if controverted, the landlord must prove the truth of
the reason stated. (§ 1942.5, subd. (e).) While section 1942.5(a) can be used as an
affirmative defense in an unlawful detainer action (see Drouet v. Superior Court (2003)
31 Cal.4th 583, 587), the Legislature also provided that the provision may be the basis for
a damages action against a violating landlord (§ 1942.5, subd. (f) [landlord “who violates
this section shall be liable to the lessee in a civil action for” actual and punitive
damages]).
We need not decide if the Action Apartment analysis applies when a tenant sues a
landlord under section 1942.5. Even if we adopted appellants’ interpretation of the
scope of the litigation privilege, they still would fail to establish a probability of
prevailing on that claim.
The conduct identified in section 1942.5(a) is prohibited only if the tenant “is not
in default as to the payment of his rent.” It is undisputed that appellants did not pay rent
for the month of August. This failure to pay rent occurred before the first three-day
notice was served.
Appellants first contend respondents induced them to default on their rent
payments by asking appellants what financial compensation they sought for the sewage
problems. Assuming such an inducement could excuse default for purposes of
section 1942.5(a), the facts do not show it here. Appellants submitted no evidence that
respondents stated or even suggested appellants could withhold rent to compensate for
the sewage problems; respondents simply sought to open negotiations on the amount of
financial compensation. Moreover, had appellants understood respondents’ inquiry as an
issue of tenantability. [¶] (5) After entry of judgment or the signing of an arbitration
award, if any, when in the judicial proceeding or arbitration the issue of tenantability is
determined adversely to the lessor. [¶] In each instance, the 180-day period shall run from
the latest applicable date referred to in paragraphs (1) to (5), inclusive.”
6
invitation to withhold rent, service of the three-day notice alerted appellants of their
mistake, yet they still did not pay the rent due.
Appellants next argue the sewage problems constituted a breach of respondents’
warranty of habitability, thereby voiding appellants’ obligation to pay rent. We assume
without deciding such a scenario could, as a legal matter, excuse their default; we also
assume appellants’ evidence shows respondents’ breach. Nonetheless, under the
authority cited by appellants, their default was only partially excused. When a landlord
breaches the warranty of habitability, “ ‘the tenant is not absolved from all liability for
rent, but remains liable for the reasonable rental value of the premises.’ ” (Green v.
Superior Court (1974) 10 Cal.3d 616, 629.) According to appellants’ August 1 email to
respondents, any breach by respondents only relieved appellants of the obligation to pay
one-half of one month’s rent. On appeal, appellants do not contend the breach rendered
the reasonable rental value of the property zero, nor do the facts support such a finding.
Accordingly, after August 1, appellants were in default as to at least a partial payment of
rent.4
Finally, appellants suggest section 1942.5(a) only required them to be current in
rent at the time of their tenantability complaint. This interpretation is not supported by
the statutory language. The statute provides if a landlord retaliates against a tenant and
the tenant is not in default as to rent, then the landlord may not take certain actions within
180 days of specified conduct by the tenant. (See fn. 3, ante.) The language makes clear
that the critical period for the tenant’s rent default is when the landlord takes the
prohibited actions, not when the tenant makes the complaint.
The exception to the litigation privilege in Action Apartment does not apply to
appellants’ common law claims for wrongful eviction and retaliatory eviction. We agree
4
Although appellants also sought reimbursement for their out of pocket expenses of
the restaurant dinner and locksmith charge, these expenses amounted to substantially less
than one-half of one month’s rent. Appellants do not contend they were lawfully entitled
to deduct from their rent payments the additional $4,500 they sought for emotional and
physical stress.
7
with the trial court the litigation privilege applies and bars these claims. (Wallace v.
McCubbin (2011) 196 Cal.App.4th 1169, 1213 [litigation privilege bars common law
wrongful eviction claim based on three-day notice and unlawful detainer action].)5
Appellants first contend the litigation privilege does not apply because these
common law claims are akin to a malicious prosecution claim. It is well settled that the
litigation privilege does not apply to malicious prosecution claims. (Action Apartment,
supra, 41 Cal.4th at p. 1242.) However, our Supreme Court has rejected the argument
that the litigation privilege does not apply to a cause of action that is similar to malicious
prosecution when that cause of action does not require all of the same conditions:
favorable termination, lack of probable cause, and malice. (Id. at p. 1249.) Neither
common law retaliatory eviction nor wrongful eviction requires favorable termination of
a prior proceeding. (Glaser v. Meyers (1982) 137 Cal.App.3d 770, 773-774 [affirming
judgment for common law retaliatory eviction where no unlawful detainer action filed];
Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1039
[elements of common law wrongful eviction are plaintiff’s possession of premises and
defendant’s forcible entry].) Accordingly, any similarity to claims for malicious
prosecution does not render the litigation privilege inapplicable.
Appellants note the litigation privilege does not bar the use of privileged
statements or acts as evidence. This proposition is not relevant here. While privileged
statements can be used as evidence of, for example, a party’s intent (Flatley, supra,
39 Cal.4th at p. 325), appellants do not seek to use the three-day notices and unlawful
detainer actions in this manner but rather seek to hold respondents liable based on these
protected acts.
5
For the first time at oral argument, appellants argued their common law claims are not
barred by the litigation privilege because they are based on conduct other than the three-
day notices and unlawful detainer actions. As appellants failed to raise this argument in
their briefs, they have forfeited it. (Lyons v. Chinese Hosp. Assn (2006) 136 Cal.App.4th
1331, 1336, fn. 2.)
8
Appellants next contend the three-day notices are not protected by the litigation
privilege because a prelitigation communication is only privileged when it relates to
litigation that is contemplated in good faith. “ ‘[T]he good faith, serious consideration of
litigation test is not . . . a test for malice and it is not a variation of the “interest of justice”
test.’ [Citation.] Rather, it is ‘addressed to the requirement the statements “have some
connection or logical relation to the action.[”] [Citations.]’ [Citation.] Thus, if the
statement is made with a good faith belief in a legally viable claim and in serious
contemplation of litigation, then the statement is sufficiently connected to litigation and
will be protected by the litigation privilege. [Citation.]” (Blanchard v. DIRECTV, Inc.
(2004) 123 Cal.App.4th 903, 919.) Appellants argue the unlawful detainer action was not
contemplated in good faith because of the habitability issues and respondents’
“inducement” of appellants to default on their rent by opening discussions about financial
compensation. We have rejected appellants’ argument that these excused appellants’
obligation to pay any rent; they similarly fail to remove the three-day notices from the
protection of the litigation privilege.
Appellants argue their claim for wrongful eviction can proceed despite the
litigation privilege on a theory of constructive eviction. We disagree. Appellants’
complaint sets forth a separate claim for constructive wrongful eviction that is not
challenged by respondents’ anti-SLAPP motion. If appellants’ wrongful eviction claim
stated a claim for constructive wrongful eviction, it would be subject to dismissal as
duplicative of the constructive wrongful eviction claim. (Award Metals, Inc. v. Superior
Court (1991) 228 Cal.App.3d 1128, 1135.) Moreover, as noted above, for purposes of
the first step of the anti-SLAPP analysis, appellants do not dispute that the challenged
claims, including the claim for wrongful eviction, are based on the three-day notice and
unlawful detainer actions. This is confirmed by the allegations of this cause of action,
which specifically rely on the three-day notices.
Finally, appellants contend, with respect to all three challenged causes of action,
striking them is contrary to public policy because appellants filed their lawsuit in good
faith and did not intend to chill protected speech. To prevail on their anti-SLAPP motion,
9
respondents need not prove appellants intended to chill protected speech. (Equilon
Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.) Our Supreme Court has
held our construction of the statute does not violate public policy, in part because only
claims with no probability of prevailing are stricken. (Id. at p. 65.)
DISPOSITION
The order is affirmed. Costs on appeal are awarded to respondents.
SIMONS, J.
We concur.
JONES, P.J.
NEEDHAM, J.
10
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255 Ga. 676 (1986)
341 S.E.2d 445
INTERNATIONAL PAPER REALTY CORPORATION
v.
MILLER.
43030.
Supreme Court of Georgia.
Decided April 9, 1986.
Parker, Johnson, Cook & Dunlevie, G. William Long III, for appellant.
Robert H. Herndon, for appellee.
GREGORY, Justice.
The condemnor in this case, International Paper Realty Corporation, owns 57.69 acres in Baldwin County, bordered on the north and east by lands owned by condemnee Billy Miller, and bordered entirely on the south and west by Lake Sinclair, a navigable waterway. Contending it has no reasonable means of access to its property, the condemnor petitioned under OCGA § 44-9-40[1] et seq., for a private way *677 across the condemnee's property. Following a hearing the trial court denied the petition for a private way, concluding the condemnor failed to carry its burden of proving that access to its property by way of navigable water is not reasonable.[2] OCGA § 44-9-40 (b); Kellett v. Salter, 244 Ga. 601 (261 SE2d 597) (1979).
In order to prove the necessity of a private way, OCGA § 44-9-40 (b) requires the condemnor to show he has no reasonable means of access to his property. Kellett v. Salter, supra at 602. Where the condemnor proves that he has no access to his property, i.e., that it is landlocked, he makes out a prima facie case of necessity under the statute. The burden of persuasion then shifts to the condemnee to prove the condemnor has a reasonable means of access to the property.
Where the condemnor's property is bounded entirely by the lands of others and navigable waters, it cannot be said that he has no access to his property. The issue becomes whether, under the statute, the navigable waters afford him reasonable access. In our view in this day and age, a navigable stream is seldom considered a reasonable way to travel to and from one's property. This being the case, we think it is efficient, and the better rule for society as a whole, to treat property to which there is no access other than by navigable waterway as property to which there is presumptively no reasonable means of access for purposes of proving necessity under OCGA § 44-9-40 (b). Thus where the condemnor establishes that the only access to his property is by way of navigable waters, he has established a prima facie case that he has no reasonable means of access under OCGA § *678 44-9-40 (b). The burden then shifts to the condemnee to go forward with the evidence and demonstrate that access to the navigable waters constitutes a reasonable means of access under the peculiar circumstances of the case.
Our decision that it is presumed that navigable waters do not provide reasonable access to otherwise landlocked property is consistent with the modern view that access by water will not preclude the grant of a way of necessity. See Cale v. Wanamaker, 121 N. J. Super. 142 (296 A2d 329) (1972); Hancock v. Henderson, 236 Md. 98 (202 A2d 599, 602) (1964); Cookston v. Box, 160 NE2d 327 (Ct. App. Ohio) (1959); Redman v. Kidwell, 180 S2d 682 (Dis. Ct. Fla.) (1965); 9 ALR3d 600, § 3.
We recognize that the statute does not expressly deal with either navigable waters or the burden of proving whether navigable waters constitute reasonable access. It is necessary in this case to fashion a rule for these circumstances. Since the trial court did not have the benefit of the rule we here lay down, we remand the case in order that the trial court may hear additional evidence, if the parties choose to offer it, and allocate the burden of proof consistent with this opinion.[3]
Judgment reversed and remanded. Marshall, C. J., Smith, Weltner and Bell, JJ. concur. Clarke, P. J., dissents.
NOTES
[1] OCGA § 44-9-40 provides,
"(a) The superior court shall have jurisdiction to grant private ways to individuals to go from and return to their property and places of business. Private ways shall not exceed 20 feet in width and may be as much less as the applicant may choose or as the court may find to be reasonably necessary. They shall be kept open and in repair by the person on whose application they are established or his successor in title.
"(b) When any person or corporation of this state owns real estate or any interest therein to which the person or corporation has no means of access, ingress, and egress and when a means of ingress, egress and access may be had over and across the lands of any private person or corporation, such person or corporation may file his or its petition in the superior court of the county having jurisdiction; said petition shall allege such facts and shall pray for a judgment condemning an easement of access, ingress, and egress not to exceed 20 feet in width over and across the property of the private person or corporation. The filing of the petition shall be deemed to be the declaration of necessity; however, where it appears that the condemnor owns a right of access, ingress, and egress to his property over another route or owns an easement to a right of private way over another route, which right or easement is not less than 20 feet in width and which alternate route affords such person or corporation a reasonable means of access, ingress and egress or where the judge shall find the exercise of such right of condemnation by the condemnor is otherwise unreasonable, the judge of the superior court is authorized under such circumstances to find that the condemnation and the declaration of necessity constitute an abuse of discretion and to enjoin the proceeding."
[2] The trial court ruled the condemnor failed to show it could not utilize barges on or build a bridge across Lake Sinclair.
[3] If the result under the rule we announce in this case is that the condemnor is entitled to the grant of a private way, its location will be determined in accordance with the rules stated in Charleston &c. R. Co. v. Fleming, 119 Ga. 995 (47 SE 541) (1904) and Wyatt v. Hendrix, 146 Ga. 143 (90 SE 957) (1916).
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609 P.2d 622 (1980)
The PEOPLE of the State of Colorado, Plaintiff-Appellant,
v.
Danny SEQUIN, Defendant-Appellee.
No. 79SA69.
Supreme Court of Colorado, En Banc.
March 31, 1980.
*623 Stuart A. Van Meveren, Dist. Atty., Loren B. Schall, Asst. Dist. Atty., Fort Collins, for plaintiff-appellant.
John P. Frey, Frey & Huisjen, Fort Collins, for defendant-appellee.
LOHR, Justice.
This is an appeal from a trial court order dismissing criminal charges against the defendant on grounds that section 42-5-102(2), C.R.S. 1973 (1979 Supp.), is unconstitutional. We reverse.
Defendant was charged with two class 4 felonies under section 42-5-102(2), C.R.S. 1973 (1979 Supp.), for knowingly possessing an automobile and automobile parts containing altered identification numbers.[1] The statute provides:
"Any person who removes, changes, alters, or obliterates the vehicle identification number, manufacturer's number, or *624 engine number of an automobile or automobile part or knowingly possesses an automobile or automobile part containing said removed, changed, altered, or obliterated vehicle identification number, manufacturer's number, or engine number commits a class 4 felony. . . ." (Emphasis added.)
The trial court found the statute to be unconstitutionally overbroad and vague and dismissed the charges.
Familiar principles of constitutional law provide the framework for our review. The statute is presumed to be constitutional. E. g., People v. Edmonds, 195 Colo. 358, 578 P.2d 655 (1978); Howe v. People, 178 Colo. 248, 496 P.2d 1040 (1972). Defendant has the burden of proving the statute to be unconstitutional beyond a reasonable doubt. E. g., People v. Albo, 195 Colo. 102, 575 P.2d 427 (1978); People v. Gonzales, 188 Colo. 272, 534 P.2d 626 (1975). He has failed to carry that burden.
I.
We first address the question whether the statute is unconstitutionally overbroad.
A statute which proscribes conduct which can be prohibited under the police power of the state is overbroad if it also purports to proscribe conduct which cannot validly be prohibited under that power. People v. Garcia, Colo., 595 P.2d 228 (1979); People v. Holloway, 193 Colo. 450, 568 P.2d 29 (1977). A judicial declaration that a statute is overbroad on its face is an extreme remedy and is to be used sparingly. People v. Weeks, Colo., 591 P.2d 91 (1979); People v. Stage, 195 Colo. 110, 575 P.2d 423 (1978).
It is a fundamental principle of constitutional adjudication that "a person to whom a statute may constitutionally be applied will not be heard to challenge that statute on the ground that it may conceivably be applied unconstitutionally to others, in other situations not before the Court." Broaderick v. Oklahoma, 413 U.S. 601, 610, 93 S.Ct. 2908, 2915, 37 L.Ed.2d 830 (1973); accord, People v. Stage, supra; People v. Blue, 190 Colo. 95, 544 P.2d 385 (1975). Defendant recognizes that principle and does not attempt to bring himself within any of the limited narrow exceptions to its application.[2]
Defendant has standing to challenge the application of section 42-5-102(2), C.R.S. 1973 (1979 Supp.), to his business of assembling vehicles from new and used parts[3] to the extent that the statute affects him personally and adversely. See People v. Stage, supra; People v. Blue, supra. That statute was enacted to curb trafficking in stolen automobiles and stolen automobile parts. Cf. People v. Smith, 193 Colo. 357, 566 P.2d 364 (1977).[4] Trafficking in stolen property directly affects public safety and welfare and is an appropriate subject for legislation in exercise of the police power of this state. Cf. People v. Czajkowski, 193 Colo. 352, 568 P.2d 23 (1977) (involving an equal protection challenge to section *625 42-5-104, C.R.S. 1973, which treats theft of automobile parts). Alteration of identification numbers is one means to conceal evidence of theft. Prohibition of possession of automobiles and automobile parts having altered identification numbers is rationally related to the prevention of theft and the apprehension of thieves. There is no constitutional right to possess automobiles or automobile parts having altered identification numbers. Compare People v. Holloway, supra, with Wilson v. Denver, 65 Colo. 484, 178 P. 17 (1918). The state has a legitimate interest in controlling harmful, constitutionally unprotected conduct. People v. Fitzgerald, 194 Colo. 415, 573 P.2d 100 (1978). Thus, section 42-5-102(2), C.R.S. 1973 (1979 Supp.), treats a legitimate subject for legislation under the police power, does not infringe any constitutionally protected aspects of the business of assembling vehicles from new and used parts, and is not overbroad as applied to such business.[5]
II.
We next consider whether section 42-5-102(2), C.R.S. 1973 (1979 Supp.), is unconstitutionally vague. Due process of law requires that a statute not forbid or require "the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application." Connally v. General Const. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322 (1926); People v. Cardwell, 181 Colo. 421, 510 P.2d 317 (1973).
The trial court determined that section 42-5-102(2), C.R.S. 1973 (1979 Supp.), was vague as to whether an actor must have knowledge of the existence of altered identification numbers in order to come within the conduct proscribed. If such knowledge is required, the statute establishes a substantial deterrent to purchase of stolen automobiles and automobile parts, without adversely affecting legitimate purposes. The legislative objective was to curb trafficking in such stolen property; the statute deals with those who seek to aid a thief. Cf. People v. Smith, supra (see note 4, supra). If knowledge of altered identification numbers is not required as an element of the crime, a purchaser assumes a high risk of committing a serious crime unwittingly whenever he acquires an automobile. We hesitate to ascribe to the legislature an intent to create the dampening effect on legitimate commercial transactions which would result from such a statutory construction. Even more importantly, we will not lightly assume that the legislature intended to subject conduct to serious criminal penalties without requiring a culpable mental state. See People v. Washburn, Colo., 593 P.2d 962 (1979); People v. Johnson, 193 Colo. 199, 564 P.2d 116 (1977). Indeed, a culpable mental state almost certainly is constitutionally mandated if a criminal statute of the nature of section 42-5-102(2), C.R.S. 1973 (1979 Supp.), is to comport with due process of law. See People v. Washburn, supra; see also People v. Johnson, supra (Erickson, J., specially concurring).
A statute should be construed in a manner consistent with constitutional requirements if possible. People v. Washburn, supra; People v. Gonzales, supra. Where a statute is susceptible to two different constructions, one constitutional and the other not, it will be presumed that the legislature intended the constitutional construction. People v. Fitzgerald, supra. The policies underlying the statute and the applicable rules of statutory construction provide guidance to resolution of the possible ambiguity in a manner fully consistent with the natural meaning of the language of the statute. We conclude that knowledge of the existence of an altered identification *626 number with respect to an automobile or automobile part is intended to be an essential element of the crime of possession of an automobile or automobile part containing altered identification numbers, pursuant to section 42-5-102(2), C.R.S. 1973 (1979 Supp.).
A more difficult problem is presented in attempting to reconcile section 42-5-102(2), C.R.S. 1973 (1979 Supp.), with section 42-6-117, C.R.S. 1973 (1979 Supp.). That latter statute provides:
"The department [department of revenue] is authorized to assign a distinguishing number to any motor vehicle whenever there is no identifying number thereon or such number has been destroyed, obliterated, or mutilated. Such distinguishing number shall be affixed to the vehicle in a manner and position to be determined by the department. Such motor vehicle shall be registered and titled under such distinguishing number in lieu of the former number or absence thereof."
Defendant contends that the quoted provisions reflect a legislative determination that possession of a motor vehicle containing a destroyed, obliterated, or mutilated identification number is legitimate; that such possession is the very conduct which section 42-5-102(2), C.R.S. 1973 (1979 Supp.), declares to be criminal; and that, in light of such conflict, it is necessary to guess as to the acts which section 42-5-102(2), C.R.S. 1973 (1979 Supp.), was intended to proscribe. That is not the case.
A review of the history of the relevant legislation is helpful in harmonizing the statutes. Sections 42-5-101 et seq., C.R.S. 1973 (the Automobile Theft Law), were first enacted in 1919. Colo.Sess.Laws 1919, Extra.Session, ch. 7 at 14. Prohibition of alteration of identification numbers and prohibition of possession of automobiles and automobile parts having altered identification numbers were not included in the Automobile Theft Law until 1976. Colo.Sess.Laws 1976, ch. 169, 42-5-102(2) at 809.
Sections 42-6-101 et seq., C.R.S. 1973 (the Certificate of Title Act), were first enacted in 1949. Colo.Sess.Laws 1949, ch. 114 at 233. As originally enacted, the Certificate of Title Act contemplated the situation in which an identification number legitimately might be "changed or altered" by an owner incident to alteration, replacement, or change of a motor vehicle part. Colo.Sess.Laws 1949, ch. 114, section 16 at 239.[6] In 1952, a section was added to the Certificate of Title Act to provide for the situation in which an identification number legitimately might be "destroyed, obliterated, or mutilated". Colo.Sess.Laws 1952, ch. 31, section 16(a) at 90.[7] The Automobile Theft Law as in effect when the Certificate of Title Act was enacted did not treat these activities.
In 1976 the legislature modified the Automobile Theft Law and the Certificate of Title Act. The reference to change or alteration of identification numbers incident to alteration or change of a motor vehicle part was deleted from the Certificate of Title Act (Colo.Sess.Laws 1976, ch. 169, 42-6-116 at 810), and section 42-5-102(2), C.R.S. 1973 (1979 Supp.), was adopted as part of the Automobile Theft Law (Colo.Sess.Laws 1976, ch. 169, 42-5-102(2) at 809). These legislative changes and additions are in pari materia and must be construed together and reconciled if possible. People v. Cornelison, 192 Colo. 337, 559 P.2d 1102 (1977). Our effort must be to ascertain the legislative intent and to give effect to that intent. People v. Sneed, 183 Colo. 96, 514 P.2d 776 (1973).
Section 42-5-102(2), C.R.S. 1973 (1979 Supp.), specifically prohibits intentional alteration of identification numbers on automobiles or automobile parts and specifically prohibits possession of automobiles or automobile parts containing said altered identification numbers. In the same act by which that new crime was created, there *627 was deleted from the Certificate of Title Act the implicit recognition of the legitimacy of changing or altering identification numbers incident to alteration, replacement, or change of a motor vehicle part. Reading the 1976 changes and additions as a whole, the intent of the legislature to prohibit intentional alteration of identification numbers is evident. This is not inconsistent with provisions of the Certificate of Title Act which recognize that an identification number might legitimately be "destroyed, obliterated, or mutilated." Section 42-6-117, C.R.S. 1973 (1979 Supp.). Those results could occur unintentionally, e. g., as a consequence of a collision or during the course of repair work. We adopt the foregoing construction, which harmonizes the statutes in a manner giving effect to the legislative intent in enacting each.[8]
The vagueness test is not an exercise in semantics to emasculate legislation; rather, it is a pragmatic test to ensure fairness. People v. Garcia, Colo., 595 P.2d 228 (1979). There can be little question but that section 42-5-102(2), C.R.S. 1973 (1979 Supp.), gives adequate notice to one wishing to conform his conduct to the requirements of the law that knowingly possessing an automobile or automobile part containing intentionally altered identification numbers is proscribed. See People v. Hines, 194 Colo. 284, 572 P.2d 467 (1978).
The record does not establish whether the activity with which defendant is charged falls within the proscription of the statute as we have construed it. Resolution of this question must await the trial, at which the People must prove beyond a reasonable doubt every fact necessary to constitute the crime charged, including the alleged fact that defendant's activities were of a nature proscribed by the statute, as here construed. In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970).
We reverse and remand to the trial court for further proceedings consistent with this opinion.
GROVES and DUBOFSKY, JJ., do not participate.
ERICKSON, Justice, dissenting:
I respectfully dissent:
A plain reading of section 42-5-102(2), C.R.S. 1973 (1979 Supp.) admits of only one conclusionthat the statute is unconstitutionally vague and overbroad. Section 42-5-102(2) provides that "Any person who. . . knowingly possesses an automobile or automobile part containing [a] removed, changed, altered, or obliterated vehicle identification number . . . commits a class 4 felony. . . ." (Emphasis added.) The statute does not state that any person who possesses an automobile or automobile parts and has knowledge that it contains removed, altered, etc., vehicle numbers has committed a class 4 felony. Thus, as it is presently drafted, the statute prohibits possession of an automobile or a automobile parts even if the owner is unaware that the identification numbers have been altered. Such a statute clearly violates constitutional due process.
To avoid the constitutional problems in this case, the majority interprets the statute to require knowledge that identification numbers on the automobile or automobile parts have been altered. In my view, it is for the legislature and not the courts to create statutes. People in the Interest of Maddox v. District Court, Colo., 597 P.2d 573 (1979); Chicago Title and Trust Co. v. Patterson, 65 Colo. 534, 178 P. 13 (1919); Hause v. Rose, 6 Colo. 24 (1881). When a statute cannot pass constitutional muster *628 on its own, we must take the difficult path and declare it to be unconstitutional. See People v. Von Tersch, 180 Colo. 295, 505 P.2d 5 (1973); Lakewood v. Pillow, 180 Colo. 20, 501 P.2d 744 (1972).
Accordingly, I would affirm the district court's decision.
NOTES
[1] For convenience and brevity we use "altered" to encompass the statutory terms "removed, changed, altered, or obliterated" and "identification number" to encompass the statutory terms "vehicle identification number, manufacturer's number, or engine number." See section 42-5-102(2), C.R.S. 1973 (1979 Supp.).
[2] Perhaps the broadest exception has been created where a statute is claimed to infringe constitutionally protected speech contrary to the First and Fourteenth Amendments to the Constitution of the United States. In such cases, in the interest of avoiding a chilling effect on the right of free speech, defendants have been permitted to assert that a statute is overbroad even when their own activity is clearly within the legitimate reach of the statute. E. g., Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1965); see People v. Stage, supra; People v. Blue, supra. No claim is made in this case that constitutionally protected speech has been infringed.
[3] For the purpose of this opinion, we accept defendant's representation that he is engaged in such business. The trial court considered no facts in making its ruling. The only information in the record with respect to the nature of defendant's business and the conduct which gave rise to the charges is found in police reports incorporated in an affidavit for arrest warrant.
[4] That case addresses trading in automobiles and automobile parts which are the property of another under subsection (1) of section 42-5-102, C.R.S. 1973 (1979 Supp.). Subsections (1) and (2) of that statute are part of an article headed "Automobile Theft Law", all parts of which treat various aspects of theft of automobiles and automobile parts.
[5] This is not a situation of the type presented in People v. Von Tersch, 180 Colo. 295, 505 P.2d 5 (1973), where activity not properly subject to prohibition under the police power constituted a significant area of activity prohibited by statute. See also Lakewood v. Pillow, 180 Colo. 20, 501 P.2d 744 (1972). Where conduct and not merely speech is involved, overbreadth must be both real and substantial judged in relation to the statute's plainly legitimate sweep before a statute will be invalidated on that ground. Broaderick v. Oklahoma, supra; People v. Fitzgerald, supra.
[6] Colo.Sess.Laws 1949, ch. 114, section 16, is currently codified with minor amendments at section 42-6-116, C.R.S. 1973 (1979 Supp.).
[7] Colo.Sess.Laws 1952, ch. 31, section 16(a), is currently codified with minor amendments at section 42-6-117, C.R.S. 1973 (1979 Supp.).
[8] We do not attempt to delineate the precise boundary between conduct proscribed by section 42-5-102(2), C.R.S. 1973 (1979 Supp.), and conduct permitted by section 42-6-117, C.R.S. 1973 (1979 Supp.), under all conceivable fact situations. That effort, and any determination whether section 42-5-102(2) is unconstitutionally vague as applied to fact situations near that boundary or cannot be constitutionally applied to a particular fact situation for any other reason, is appropriately left for case-by-case determination. See People v. Garcia, 189 Colo. 347, 541 P.2d 687 (1975). A defendant has no standing to challenge the statute as vague except as it may relate to his own conduct. Weissman v. Bd. of Educ., 190 Colo. 414, 547 P.2d 1267 (1976).
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361 F.Supp. 208 (1973)
COMMONWEALTH OF PENNSYLVANIA et al., Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants.
Civ. A. No. 72-63.
United States District Court, M. D. Pennsylvania.
June 4, 1973.
As Amended on Denial of Rehearing June 25, 1973.
*209 Thomas E. Kauper, Asst. Atty. Gen., S. John Cottone, U. S. Atty., Scranton, Pa., John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., for the United States.
Fritz R. Kahn, Gen. Counsel, Seymour Glanzer, Atty., Washington, D. C., for the Interstate Commerce Commission.
J. Shane Creamer, Atty. Gen., Harrisburg, Pa., Gordon P. MacDougall, Spec. Asst. Atty. Gen., Washington, D. C., Philip P. Kalodner, Counsel, Edward Munce, Asst. Counsel, Alfred N. Lowenstein, Asst. Counsel, Pennsylvania Public Utility Comm., Harrisburg, Pa., for Commonwealth of Pennsylvania and Pennsylvania Public Utility Comm.
William G. Mahoney, Washington, D. C., for Congress of Railway Unions.
Before ROSENN, Circuit Judge, SHERIDAN, Chief Judge and NEALON, District Judge.
OPINION
ROSENN, Circuit Judge.
This proceeding raises important issues relating to the authority of the Interstate Commerce Commission (I.C.C.) *210 to adopt new procedures to accelerate proceedings and expedite the disposition of rapidly escalating numbers of railroad applications for abandonment of lines. This action by a number of state agencies and labor unions seeks to enjoin, suspend and set aside new rules of the Commission because they allegedly exceed its authority and were promulgated in violation of the Administrative Procedure Act (A.P.A.). We hold that the procedures established are within the statutory authority of the Commission and were promulgated in compliance with the A.P.A. We, therefore, dismiss this action.
I. THE PROCEEDINGS
Prior to the establishment of the new rules governing abandonment petitions, the I.C.C. had one standard procedure, called the "long form", for handling such requests. 49 C.F.R. §§ 1121.1-1121.5. Although this procedure, adopted in 1971, was simpler than the 1941 procedures it replaced, the I.C.C. believed further simplifications and expedition of abandonment petitions were needed to cope with the current railroad crises in the northeast quadrant of the country.
The rules challenged here establish two additional "short form" abandonment procedures. Under Subpart B of the new rules, the agency establishes a rebuttable presumption that abandonment should be permitted for any railroad showing fewer than 34 carloads per mile were carried over the lines for which abandonment is sought during the year preceding the petition. 49 C.F.R. §§ 1121.20-1121.24. Subpart C provides for filing of a short form application where no public objection is anticipated by the railroad. 49 C.F.R. §§ 1121.30-1121.35.[1]
The I.C.C. issued the new rules governing the filing and handling of such proceedings on January 14, 1972. Abandonment of Railroad Lines, Ex Parte No. 274 (Sub.-No. 1). The new rules were to become effective upon publication in the Federal Register on January 22, 1972. 37 F.R. 1046. After receiving objections to the new rules, the I.C.C., on February 10, 1972, announced that no decision would be made on the merits of any abandonment proceeding under the new rules until it had ruled on the petitions for reconsideration which it had stated it would entertain on February 4, 1972.
The Commonwealth of Pennsylvania and Pennsylvania Public Utility Commission (hereinafter "Pennsylvania") and Congress of Railway Unions instituted this action against the I.C.C. in the United States District Court for the Middle District of Pennsylvania on February 10, 1972, seeking to restrain operation of the new rules until a three-judge court could review their legality.[2] On February 16, 1972, operation of the new I.C.C. rules was restrained by Judge Michael H. Sheridan pending hearing of the request that a three-judge court permanently enjoin their operation, or final disposition of rehearing petitions by the I.C.C., whichever should occur sooner. This three-judge panel was constituted pursuant to 28 U.S.C. § 2284 to hear the action.
After receiving and considering 26 petitions for reconsideration, the I.C.C., with slight changes in the rules, denied the petitions and through publication in the Federal Register on September 16, *211 1972, announced the new rules would go into effect. 37 F.R. 181, p. 18918. Although denial by the I.C.C. of the rehearing petitions ended the effect of the temporary restraining order, by stipulation of the parties, the new rules have not been put into operation pending the final decision of this court.
Plaintiffs challenge the new I.C.C. rules on two major grounds: (1) the rules alter the substantive law of railroad abandonment as expressed in 49 U. S.C. § 1(18)-(20), and therefore exceed the authority of the I.C.C.; and (2) administrative procedures required for promulgation of the rules by § 4 of the Administrative Procedure Act, 5 U.S.C. § 553, were not complied with since no public hearing was held, a statement of the basis and purpose of the rules was not presented, and in addition, the rule's departure from prior norms and the legal basis for that departure were not explicated. The I.C.C. contends the rule was within its statutory authority and that all necessary administrative procedures were fulfilled.
II. NATURE OF THE RULES
Consideration of both statutory authority for promulgation of the new rules and procedural means by which they were adopted requires careful scrutiny of their effect on railroad abandonment proceedings. The I.C.C. is granted authority to permit abandonments by 49 U.S.C. § 1(18)-(20). Subsection (18) prohibits abandonment of any railroad line subject to I.C.C. jurisdiction "unless and until there shall first have been obtained from the Commission a certificate that the present and future public convenience and necessity permit of such abandonment." Subsection (20) gives the Commission power to issue such a certificate, to refuse to issue it, or to issue it for portions of a railroad line. Subsection (19), primarily at issue here, grants the Commission authority to establish "rules and regulations as to hearings and other matters" in connection with consideration of applications for abandonment certificates. Notice to the governor of the State in which the lines to be abandoned run is required, and he has the "right to be heard as hereinafter provided with respect to the hearing of complaints."
The statute itself does not define "the present and future public convenience and necessity" which must be found by the I.C.C. before granting an abandonment petition. The general test for determining whether an abandonment certificate should be granted, however, was set down almost 50 years ago in Colorado v. United States, 271 U.S. 153, 46 S. Ct. 452, 70 L.Ed. 878 (1926):
The benefit to one [traffic on lines other than the one to be abandoned] of the abandonment must be weighed against the inconvenience and loss to which the other [traffic which had previously moved on the line to be abandoned] will thereby be subjected. Conversely, the benefits to particular communities and commerce of continued operation must be weighed against the burden thereby imposed upon other commerce. . . . The result of this weighingthe judgment of the Commissionis expressed by its order granting or denying the certificate.
271 U.S. at 168, 46 S.Ct. at 456. The Court recognized that if a railroad were required to continue to operate non-prosperous lines, its ability to provide necessary services on more prosperous lines could be damaged. It would therefore be in the best interests of the public to allow abandonment of the nonprosperous lines in order to maintain more necessary services on other lines. Nonetheless, the Court recognized a railroad line, which imposed "a relatively light burden upon a prosperous carrier," should not be abandoned if "the communities directly affected" would be subjected to "serious injury." 271 U.S. at 169, 46 S.Ct. at 456. Therefore, said the court:
Whatever the precise nature of these conflicting needs, the determination is made upon a balancing of the respective *212 intereststhe effort being to decide what fairness to all concerned demands.
271 U.S. at 169, 46 S.Ct. at 456. Because the determination to be made by the I.C.C. involves a balancing of interests, the Court noted that no specific findings of fact were necessary. 271 U.S. at 169, 46 S.Ct. 452.
The Commission has consistently followed the weighing of interests test since Colorado. It recently reitereated this test in Anapee & Western Ry. Co. Abandonment, Etc., 336 I.C.C. 395, 413 (1969), stating:
The only remaining issue is whether the present and future public convenience and necessity permits such abandonment. A more sophisticated refinement of this specification is whether or not the monetary loss to the line of the railroad sought to be abandoned would be outweighed by the inconvenience which such abandonment would cause to that part of the public served thereby.
In the typical railroad abandonment proceeding, therefore, if the abandonment is contested, protestors will attempt to present evidence rebutting the railroad's contention that the line in question is a heavy burden on the railroad's overall operation and demonstrating the community's concern that abandonment would severely damage local public interests. The Commission weighs the two alleged burdens to determine if the abandonment should be approved.
At the heart of the dispute in the present case is the question whether the new I.C.C. rules change that weighing process, thus establishing a new substantive law of abandonment. The I.C. C. contends no change is foreseen; plaintiffs contend the process will be fundamentally altered.
In an effort to realistically meet the mounting number of abandonment applications[3] with procedures that would accelerate their disposition and assist in finding sensible solutions to the current excess capacity of the railroad industry, the Commission announced the new rules in question here.[4] These rules were based upon staff studies of railroad abandonment cases.[5] The studies were conducted to determine "procedural standards for avoiding unnecessary protraction of litigation." In introducing the rules, the I.C.C. stated:
A large majority of the abandonment cases decided by the Commission in the past 10 years have been unopposed by the general public or specific shippers. The record in such cases generally shows that there is little or no traffic moving over the lines of railroad (hereinafter referred to as "abandonment trackage"); that there are little or no prospects for additional tonnage; that the abandonment trackage is generally in poor physical condition, with operations thereover substantially slowed down for reasons of safety; and that the materials that can be salvaged after the abandonments frequently can be sold or used to public advantage in the operations of the applicant and in the public interest. Based on this experience in abandonment proceedings, it is apparent *213 that the same long-form application and its attendant procedures are not warranted in all instances.
The rules establish two "short form" procedures railroads may follow in seeking abandonment certificates. Subpart B's procedure may be used by a railroad wishing to abandon lines "where the requirements of public convenience and necessity [for continuation of the line] are minimal or nonexistent." In the subpart B application, the I.C.C. has established a rebuttable presumption that public convenience and necessity no longer require maintenance of a line if fewer than 34 carloads of freight per mile were carried on it in the year preceding the application.[6] However,
[t]he prima facie case thus established may be rebutted by evidence establishing that the public convenience and necessity requires continued maintenance and/or operation of the said line of railroad. Unless a party opposing the abandonment indicates by a proffer of substantial evidence that it would be able to rebut the presumption, a certificate permitting the proposed abandonment shall be issued without further formal proceedings.
49 C.F.R. § 1121.23. Protestants must file their proffers of evidence within 20 days of the final date of the notice of the abandonment by publication in local newspapers, required by 49 U.S.C. § 1(19). § 1121.21(c).
The second "short form" procedure, in Subpart C, may be used by railroads wishing to abandon lines when they anticipate no significant and material public objection. If no significant and material public objection is forthcoming within 20 days of the final newspaper publication of notice of the abandonment application, the Commission may without a hearing rule on the abandonment application. 49 C.F.R. § 1121.32(c). If such objection, on the other hand, is forthcoming, the railroad must either withdraw the application or resubmit it under Subparts A or B. 49 C.F.R. § 1121.35.
In considering whether these new procedures alter the substantive law of abandonment, we note first that there is no statutory requirement that the Commission hold hearings on railroad abandonment applications. The statute, 49 U.S.C. § 1(19), allows the Commission to "prescribe from time to time" "rules and regulations as to hearings." Although the statute also grants the governor of the state in which the line to be abandoned runs a "right to be heard" on the application, it does not require formal proceedings. As the court held in affirming the grant of an abandonment application in Brotherhood of Locomotive Engineers v. United States, 217 F.Supp. 98, 100 (N.D.Ohio 1963):
There is thus no statutory requirement of a hearing in that first sentence [of 49 U.S.C. § 1(19)]; rather, such matters are clearly left to the Commission's discretion . . . .
Thus, both in regard to such hearings as may be accorded to private parties and to the governors of the respective states, the determination of whether hearings will be held is expressly left to the Commission.
Accord, Woodruff v. United States, 40 F.Supp. 949, 953 (D.Conn.1941). Cf. Frozen Foods Express, Inc. v. United States, 346 F.Supp. 254, 260-261 (W.D. Texas 1972); Allied Van Lines Co. v. United States, 303 F.Supp. 742, 746-749 (C.D.Calif.1969) (No statutory or constitutional right to oral hearings found for I.C.C. motor carrier applications.) *214 The right to be heard is preserved under the new I.C.C. rules; their effect is only to set guidelines for determination of the necessity of formal proceedings or hearings. Parties opposing abandonment are under no circumstances prevented from presenting to the I.C.C. documentary evidence supporting their positions, and the rules in no way excuse the Commission from considering such evidence before ruling on the abandonment.
Although under some circumstances the new rules will allow the I.C. C. to dispense with formal proceedings or hearings, we do not find in either procedure an announcement that the Commission will no longer weigh the relative burdens on the railroad and on the community before granting an abandonment certificate. The Brief for the I.C. C. [at p. 27] states explicitly:
Moreover, the new rule does not eliminate the Commission's weighing the needs of both intrastate and interstate commerce and the benefits of abandonment against the inconvenience or loss to which others may be subjected.
The necessity for formal proceedings is eliminated in a Subpart B application if substantial evidence[7] is not proffered to rebut the presumption that a line carrying less than 34 carloads per mile per year is no longer necessary. The necessity for weighing the burdens on the railroad against the burdens on the local community, however, is not affected.[8] Similarly, in Subpart C proceedings, the Commission will still weigh the respective burdens before granting an abandonment petition. All the short form allows is dispensation with hearings should substantial public opposition not arise within 20 days. See 49 C.F.R. § 1121.32(c).[9]
Pennsylvania argues that the nature of the weighing process will be greatly *215 altered by the new procedures. It argues that in the past the burden of proof has always been on the railroad seeking the abandonment, and that the protestors have never had to make out a case against the abandonment in order to convince the I.C.C. not to issue the certificate. Pennsylvania argues further that the railroad has traditionally had to present convincing proof of every element of its case for abandonment. The rebuttable presumption, therefore, argues Pennsylvania, changes the substantive law by placing for the first time a burden of proof on opponents of abandonment.
We do not find that the substantive law or the burden of ultimate persuasion has been changed. It is true that statutes such as 49 U.S.C. § 1(19), which authorize abandonments subject to what public convenience and necessity will permit, have been interpreted to place the burden of ultimate persuasion on the proponent of abandonment. Michigan Consolidated Gas Co. v. Federal Power Commission, 108 U.S.App.D.C. 409, 283 F.2d 204, 214 (1960). The I.C.C. itself has recognized that the proponent should shoulder such burden of proof. New York Central R. Co. Abandonment, 312 I.C.C. 587, 596 (1961). Placing the burden on the proponent is consistent with the procedure specified in the Administrative Procedure Act, 5 U.S.C. § 556(d). We do not regard the new rules as changing the applicant's burden of showing the Commission that the public interest will not be disserved by the proposed abandonment.
The new Subpart B rule merely creates a rebuttable presumption[10] that public convenience and necessity do not require the continued operation of a portion of a line of railroad upon submission of proof by a carrier that, on the average, fewer than 34 carloads of freight per mile were carried on the abandonment trackage during the preceding 12-month period. The rule of the Commission does not shift the burden of persuasion which remains with the carrier as the party claiming affirmative relief. Its effect, as described by the Commission, is merely "to shift to the protestants the burden of going forward with the evidence." This obligation of going forward with evidence is customary in adjudicatory proceedings once the other party has established a prima facie case.
A rebuttable presumption rule is not unique in administrative or judicial proceedings and can be a useful tool in expediting the proceedings.[11] In the abandonment proceedings, it shifts the burden of going forward with evidence this burden may shift from time to time during a given proceeding"after the applicant has established its prima facie case on the basis of the statistical standard incorporated herein." 37 F.R. 1046. It merely recognizes and puts to use as a procedural mechanism what the Commission's staff studies have empirically developed an inference from which a prima facie case for abandonment is made. It is not conclusive and may be rebutted by the protestants coming forward with their evidence.
Both Subparts B and C do explicitly place a burden of coming forward with evidence on opponents of abandonment if they wish formal proceedings before the Commission before an application is acted upon. This production burden is not new. Opponents of abandonments have always shouldered it in the past. Unless such opponents presented the I. C.C. with substantial evidence that the *216 burdens on the local communities outweighed the burdens alleged by the railroad, it was very unlikely that the Commission, on its own, would make the evidentiary case against the railroad.[12]
In determining whether the persuasion burden has been sustained, the Commission will continue to exercise its usual administrative discretion to draw a conclusion about relative burdens on public necessity and convenience "from the infinite variety of circumstances which may occur in specific instances." I.C.C. v. Parker, 326 U.S. 60, 65, 65 S.Ct. 1490, 1493, 89 L.Ed. 2051 (1945). To support any determination, the I.C.C. will continue to need substantial evidence in the record. Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951); now codified as 5 U.S.C. § 706(2)(E); Asbury v. United States, 298 F.Supp. 589, 591 (W.D.Va. 1969). And, thus, the obligation of proponents of abandonment remains to provide the Commission with evidence necessary to demonstrate that the burden on the railroad outweighs the burden abandonment would impose on communities affected, even if the absence of public objection or proffer of substantial evidence precludes the necessity of formal proceedings. The duty of the Commission to weigh all evidence in the record will be maintained, whether or not formal proceedings are held.
Plaintiffs argue that a carrier seeking abandonment must prove every element of its claim that public necessity and convenience permit abandonment of a line. They view the new rules as a change in this requirement. Plaintiffs, in so arguing, misapprehend the substantive law of abandonment and the effect of the new rules. The only element of an abandonment application which must be proven is that the burden on the railroad, and thus on other commerce, outweighs the burden on the communities affected by abandonment. Courts have held consistently that failure to prove one element of an abandonment application allegation is not determinative of the application's disposition. Purcell v. United States, 315 U.S. 381, 62 S.Ct. 709, 86 L.Ed. 910 (1942) (profitability of line in the past does not prevent grant of abandonment application under certain circumstances); Asbury v. United States, 298 F.Supp. 589 (W. D.Va.1969); and Washington and Old Dominion Users Assn. v. United States, 287 F.Supp. 528 (E.D.Va.1968) (evidence that overall railroad is profitable and thus losses on line to be abandoned would be a light burden not determinative that abandonment should be allowed). Cf. Colorado v. United States, 271 U.S. 153, 169, 46 S.Ct. 452, 70 L.Ed. 878 (1926). None of the I.C.C. cases cited by plaintiffs holds otherwise. In each, the sole determinative element which had to be proven to support an *217 abandonment was that public convenience and necessity supported it.[13]
We are not unmindful of the difficulties, emphasized by plaintiffs at oral argument, which states and local communities face in developing evidence that public necessity requires continued operation of a line or that the burden on the railroad is less severe than the carrier alleges it to be.[14]
Plaintiffs were especially critical of the twenty day deadlines included in both Subparts B and C. A twenty day deadline for the state to notify the Commission of objections, after notice has been given of the abandonment application, however, already exists under the long form, Subpart A, procedure. 49 C. F.R. § 1121.5(b). The twenty day limit under the new procedures does not begin running until all public newspaper notices have been run; these notices must appear in local newspapers for three consecutive weeks. 49 U.S.C. § 1(19); 49 C.F.R. § 1121.21(c).[15]
Moreover, opponents of an abandonment need not prove within twenty days that there is substantial evidence indicating the abandonment should not be granted under either short form. To answer a Subpart B application and demonstrate a need for formal proceedings, the opponents need only "proffer . . . substantial evidence." To proffer evidence is to "tentatively advance [it] for consideration." Webster's Third New International Dictionary, Unabridged (1966). To demonstrate the need for formal proceedings following a Subpart C application, opponents need not only file documentation with the Commission within the twenty days that "public objection is significant and material." We do not find either requirement unreasonable; both are consistent with a legitimate goal of the Commission to expedite abandonment determinations.
We note further that even if the Commission should find no need for further formal proceedings after filing of Subpart B or C applications, opponents of abandonment will continue to have recourse to the courts to challenge the I. C.C. should it, upon weighing relative burdens, grant the application.[16] To be sustained, the I.C.C. will need substantial evidence in the record to show that public convenience and necessity permitted the abandonment. The I.C.C., it can be safely assumed, will have considered any proffers of evidence or public objections, even if it had found either insufficient to warrant formal proceedings. Only if the evidence presented by proponents *218 of abandonment was sufficient to outweigh the burdens claimed by opponents will the abandonment certificate be judicially sustained.
Plaintiffs concentrate their arguments against the new I.C.C. procedures on the 34 carload presumption.[17] They note that the amount of traffic on a given line is but one factor which the I.C.C. should consider in passing on an abandonment application, and they envision instances where a railroad will present to the I.C.C. no evidence other than that a given line carried, for example, 33 carloads per mile during the previous year. They fear that the Commission, because it has erected the rebuttable presumption, will thus be able to deem any public objection insubstantial, and in effect, grant the application on a mere showing of light traffic.
We do not interpret the new I.C.C. rules to make possible such a result. As we have already emphasized, the Subpart B and C procedures to not dispense with the necessity for the Commission to weigh the relative burdens; nor do they change the traditional rule that an infinite variety of circumstances may be included in the weighing process; nor will the denial of formal proceedings allow the I.C.C. to therefore ignore the record; nor will the new rules alter the standard of review in judicial challenges. The rebuttable presumption merely permits the disposition of the case on the record without formal proceedings when substantial evidence is not proffered by opponents of the abandonment.
Remaining for the Commission, and for courts reviewing the Commission decision, is the question of how much weight to give the 34 carload presumption in determining whether substantial evidence exists to grant an abandonment. In the past, no particular mathematical formula has been given special consideration. The figure "34" was chosen by the Commission from its staff study because "it has been determined that, on the average for a twelve-month period, 34 carloads of freight per mile of abandonment trackage are necessary to enable a railroad to operate the trackage on a break-even basis." Abandonment of Railroad Lines, Ex Parte No. 274 (Sub-No. 1).
Plaintiffs point out that of the thirty-nine abandonment proceedings studied to determine this arithmetical mean, twenty-one involved railroad lines which could have operated at a profit with 34 carloads per mile per year. This result is, however, totally predictable and understandable, as approximately half of any set of figures used to determine a mean will normally be above the mean. Plaintiffs also attacked the 34 carload rule at oral argument on the ground that the presumption would attach in many applications where the lines sought to be abandoned were still profitable. Plaintiffs argued that profitability was often of central concern in abandonment proceedings and that the 34 carload rule would eliminate consideration by the Commission of profitability.
The rule does not provide that a mere showing of 33 carloads per mile is conclusive evidence that the abandonment should be granted. If, for example, an abandonment application merely offered evidence that 33 carloads per mile of a very valuable cargo were carried, and the line was highly profitable, the I.C.C. might nonetheless reject the application even if substantial evidence opposing the abandonment was not proffered and hearings were not held. The I.C.C., in weighing relative burdens, might well determine after considering the evidence that the burden on the railroad of continued *219 operation was too slight to allow abandonment.[18]
Plaintiff's argument on the weight to be attached to the 34 carload rule is unpersuasive for two major reasons. First, as we have emphasized, the I.C.C., even under the short form procedures, must continue to take into account and weigh many factors other than the amount of traffic on the line. Profitability will continue to be a factor to be considered. Second, it is inherent in the weighing process that profitability alone does not establish that a line should not be abandoned. See, e. g., Purcell v. United States, 315 U.S. 381, 62 S.Ct. 709, 86 L.Ed. 910 (1942).
Although it is true a minimally profitable line may impose but a slight burden on an overall railroad, even that slight burden may outweigh the local interest in maintenance of the line. The burden of a minimally profitable line exists because of the nature of the regulated railroad industry. Until a certificate of abandonment is granted, a railroad is required to provide services on its tracks. To provide these services, expenditures will be required to maintain the line in operating condition. Expenditures used on this line will not be available for maintenance of other more profitable lines. It is thus possible for a railroad, limited in its ability to finance track rehabilitation and improvements, to be hindered in its provision of more essential service on other lines by the need to maintain minimally profitable lines. A burden on other commerce may be present, therefore, in maintaining even a profitable line. It is therefore unreasonable for the plaintiffs to assume the I.C.C. must always turn down applications for abandonment of profitable lines.
*220 To sum up, we hold that the new I.C.C. rules, announced in Abandonment of Railroad Lines, Ex Parte No. 274 (Sub-No. 1), do not change the substantive law of railroad abandonment as expressed in 49 U.S.C. § 1(18)-(20). The changes announced by those rules merely establish procedural guidelines for disposition of abandonment applications and dispensation with formal hearings, when necessary. Such changes are within the statutory authority of the Commission to make "rules and regulations" for abandonment hearings. 49 U.S.C. § 1(19). We must next turn to consideration of whether the new rules promulgated by the I.C.C. were consistent with the requirements of the A.P.A.
III. ADMINISTRATIVE REQUIREMENTS
Plaintiffs argue that promulgation of the new I.C.C. rules should have been done in compliance with § 4 of the Administrative Procedure Act, 5 U.S.C. § 553, and thus the public should have been given an opportunity to participate in the rulemaking. They argue the provisions of § 4 must be fulfilled because the 34 carload rule is "substantive", rather than "procedural", as it was originally labeled by the Commission in its announcement of the rules on January 14, 1972. Alternatively, plaintiffs argue, even if the new rules are not labeled "substantive", they will, nonetheless, have a substantial impact on the interests of many states and communities, and thus the requirements of § 4 are mandated. The I.C.C. contends that promulgation of the new rules was an exercise of procedural and interpretive rulemaking which need not conform to the § 4 requirements.
Administrative Procedure Act § 4, titled "Rule Making", requires general public notice of such proceedings and an opportunity for interested persons to "participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation." These requirements, however, do not apply to "interpretive rules, general statements of policy, or rules of agency, organization, procedure or practice." 5 U.S.C. § 553(b)(3)(A). The threshold question here, therefore, is whether this exception covers the I.C.C. rules in question, i. e., whether the new rules are procedural or interpretive, rather than substantive.
In Part I of this opinion, we explicated our views that the Subparts B and C rules are not substantive changes, but merely changes in procedure and practice. They, therefore, need not be promulgated in compliance with § 4. They do not involve substantive changes as were considered in Pacific Coast European Conference v. Federal Maritime Commission, 126 U.S.App.D.C. 230, 376 F.2d 785 (1967) (promulgation of requirements for inclusion in shipper conference agreements); American Airlines, Inc. v. Civil Aeronautics Board, 123 U.S.App.D.C. 310, 359 F.2d 624 (1966) (rules permitting all-cargo carriers to sell block space at wholesale rates); or Pacific Coast European Conference v. United States, 350 F.2d 197 (9th Cir. 1965) (rules governing shippers' contract rate systems.)
We will, nonetheless, consider whether the new I.C.C. rules will have the type of "substantial impact" on parties, such as plaintiffs in this case, as to require § 4 notice and hearings. The "substantial impact" test was announced by a three-judge statutory court in National Motor Freight Traffic Assn. v. United States, 268 F.Supp. 90 (D.D.C. 1967) aff'd 393 U.S. 18, 89 S.Ct. 49, 21 L.Ed.2d 19 (1968). There, plaintiffs sought to nullify the I.C.C.'s establishment of an informal procedure for repayment to shippers of past charges which the carrier acknowledged to have been illegal. Plaintiffs claimed the rules establishing these procedures should have been promulgated only after notice and compliance with the § 4 proceedings. The I.C.C. argued the new rules fell within the procedural exception of A.P.A. § 4, 5 U.S.C. § 553(b)(3)(A). The Court did not decide *221 whether establishment of these informal procedures was within the I.C.C.'s statutory authority, but held that even if it were, the proceedings had to be consistent with § 4's requirements because the new procedures specifically and definitely committed the Commission to an adjudication of the propriety of a return by a carrier to a shipper of charges theretofore collected.
Such an adjudication may, as we have seen, have palpable effects upon other carriers and shippers; and it is no answer to say that it creates no substantive rights because it is provided by the Commission only for those who voluntarily choose to use it.
268 F.Supp. at 96.
The substantial impact test was used again in Pharmaceutical Manufacturers Association v. Finch, 307 F.Supp. 858 (D.Del.1970), to find a need for § 4 proceedings before the Food and Drug Administration established "regulations, which prescribe in specific detail, for the first time, the kinds of clinical investigations which will be deemed necessary to establish the effectiveness of existing and future drug products and which require such evidence be submitted as a condition to avoiding summary removal from the market." 307 F.Supp. at 864.[19]
The "substantial impact" found in National Motor Freight and in Pharmaceutical Manufacturers, however, does not exist in the case sub judice. The informal reparation procedures considered in National Motor Freight permitted the I.C.C. to informally adjudicate the illegality of freight charges for services previously rendered by the carrier, and, thus, approve reparations which might "have palpable effects upon other carriers and shippers." The impact of the rate procedures on shippers would be felt when their rates were passed on in subsequent reparation proceedings. 268 F.Supp. at 96. In the present case, however, the new procedures are mechanistic, not substantive, and all affected parties have notice of the abandonment proceedings, and an opportunity to submit evidence.
In Pharmaceutical Manufacturers, the proposed informal procedures jeopardized the sale and distribution of more than 2,000 products which were marketed with FDA approval and placed all of them in jeopardy, "subject to summary removal by order of FDA." The FDA Commissioner did not deny that the new, informal regulations "will have a substantial and pervasive effect on the drug industry." 307 F.Supp. at 864. In this case, the new regulations do not jeopardize the substantive rights of any parties. The only impact on opponents of railroad abandonments is to accelerate the preparation of their case and proffer of evidence if formal proceedings are desired.
The substantive law which the Commission will apply in determining whether abandonment certificates should be granted has not been changed. Unlike National Motor Freight, the new procedures established will not create substantive effects upon the rights of parties not involved in the proceedings. Unlike Pharmaceutical Manufacturers, no services or products formerly available to the public may be summarily removed from the market.
*222 We therefore find no substantial impact on plaintiffs, or other parties who might oppose railroad abandonments, caused by the new I.C.C. rules, which necessitates compliance with § 4 of the A.P.A. We need not determine whether consideration of petitions for reconsideration of the rules, as undertaken by the I.C.C., cured the original failure to allow public input into the rulemaking process. See Warner Electric Corporation v. Volpe, 466 F.2d 1013, 1020 (3d Cir. 1972). This issue, as argued by the parties, is moot since we have determined that the requirements of § 4 for public participation in rulemaking do not apply to the rules sub judice.
Having found that the I.C.C. need not have complied with § 4 of the A.P.A. in promulgating the new rules in question, and noting that it did comply with A.P.A. § 3, 5 U.S.C. § 552(a)(1)(C), by publishing these new procedural rules in the Federal Register, the only determination left for us is whether the new procedural rules are arbitrary and capricious. 5 U.S.C. § 706(2)(A); Kessler v. Federal Communications Commission, 117 U.S.App.D.C. 130, 326 F.2d 673, 683-689 (1963); Ranger v. Federal Communications Comission, 111 U.S.App.D.C. 44, 294 F.2d 240, 243-244 (1961); cf. Federal Communications Commission v. Schreiber, 381 U.S. 279, 295, 85 S.Ct. 1459, 14 L. Ed.2d 383 (1965). The Commission has statutory authority to prescribe rules and regulations governing its procedures. 49 U.S.C. §§ 12(1), 17(3). This authority has been interpreted to give administrative agencies broad discretion in determining the methods which would best permit them to perform statutory functions. Federal Communications Commission v. Schreiber, 381 U.S. 279, 289, 85 S.Ct. 1459, 14 L.Ed.2d 383 (1965).
We believe the procedures adopted are a rational and salutory response to deal expeditiously with critical developments in the railroad industry. None of the parties are absolutely precluded from producing documentary or oral evidence to support their respective positions; and the burden of persuasion remains unchanged.
Plaintiff's complaint will be dismissed. An appropriate order will be entered.
NOTES
[1] The existing "long form" procedures were redesignated Subpart A.
[2] Since institution of the action, applications for leave to intervene as plaintiffs have been granted to the New York State Department of Transportation, Iowa State Commerce Commission, Illinois Commerce Commission, State Corporation Commission of Kansas, Nebraska State Railway Commission Cooperative Legislative CommitteeRailroad Brotherhoods in Pennsylvania, and Pennsylvania State Legislative Board (United Transportation Union). Applications for leave to intervene as defendants have been granted to the Association of American Railroads, Penn Central Transportation Company and Erie Lackawanna Railway Company.
[3] The I.C.C. reports that in fiscal 1971, railroads filed 241 abandonment applications, more than double the number filed the previous year. 85th Annual Report of the Interstate Commerce Commission 35 (1971).
[4] The I.C.C. reacted immediately to the surge in abandonment applications by introducing new procedures and practices to expedite their processing. It had promulgated in 1971 a new rule, 49 C.F.R. §§ 1121.1-1121.5, revising the "long-form" abandonment application forms and procedures which had been in effect since 1941. This rule was published without prior notice, no appeal was taken, and it became effective April 20, 1971. The Commission, however, believed that further streamlining was necessary, and thus promulgated the rules now attacked.
[5] "The staff found that 98% of the abandonment applications decided in the two years from July 1, 1969, through June 30, 1971, involving more than 3,000 miles of trackage had been granted." See Defendant's Brief, p. 4.
[6] A profile of cases underlying the Commission's study of railroad abandonment cases reveals that of the 39 cases in the staff study, abandonment was authorized in 35. Deficit operations were present in all but three.
The Commission, in its order of January 14, explained that on the basis of its findings in the study cases, and on applied statistical analysis, it had determined that "on the average for a 12 month period, 34 carloads of freight traffic per mile of abandonment trackage are necessary to enable a railroad to operate the trackage on a break-even basis."
[7] The Commission has indicated to the court that the term "substantial evidence" in 49 C.F.R. § 1121.23 has the same meaning as the term has in 5 U.S.C. § 706(2)(E).
[8] The I.C.C. order, 49 C.F.R. § 1121.23 reads: "unless a party opposing the abandoment indicates by a proffer of substantial evidence that it would be able to rebut the presumption, a certificate permitting the proposed abandonment shall be issued without further formal proceedings." We do not read this order to require granting of an abandonment application whenever there is not a substantial proffer of evidence from protestors; we do read it to permit the I.C.C. to avoid further formal proceedings when it has not had substantial evidence proffered to it.
The Commission has indicated to this court that the evidentiary record will be closed following a determination that substantial evidencejustifying holding of further formal proceedingshas not been proffered. Therefore a determination that further formal proceedings were not required would foreclose any use of the Commission's "modified procedures," 49 C.F.R. § 1100.45-54, to further develop the evidentiary record. Nonetheless, we do not interpret the new Subpart B procedures to allow the I.C.C. to automatically grant an abandonment certificate following a determination that substantial evidence had not been proferred. Whatever evidence is in the record must be considered in the weighing process required before granting any abandonment application.
Any party aggrieved by a ruling that substantial evidence had not been proffered will be able to invoke the appellate procedures within the I.C.C. as provided by 49 U.S.C. § 17(6). The Commission has informed this court that its normal practice is not to make abandonment approvals effective until 35 days from the date of service. Further stays may be sought if needed to allow completion of administrative appellate review in accordance with 49 U.S.C. § 17(8). And, following administrative review, judicial review of denial of formal proceedings will be available. Stays of abandonment approvals may also be sought from the courts.
[9] The Commission has indicated to this court that the term "hearings" in Subpart C embraces modified procedures pursuant to 49 C.F.R. § 1100.45-54. We therefore interpret a Commission determination that hearings are not required because of an absence of significant and material public objection to have the same exact effect as described for a determination that formal proceedings are not required under Subpart B. See footnote 8 supra.
[10] "The presumption is a rule for the conduct of the trial." Psaty v. United States, 442 F.2d 1154, 1161 (3d Cir. 1971). As such, it is a procedural device.
[11] In suits for the recovery of taxes, a presumption of correctness attaches to the determination of the Commissioner of Internal Revenue's assessment and "allows the Government to establish a prima facie case of liability by merely offering into evidence a certified copy of the Commissioner's assessment." Psaty v. United States, 442 F.2d 1154, 1159 (3d Cir. 1971).
[12] The traditional necessity for opponents of abandonment to present evidence rebutting carrier claims has been noted by several commentators. Professor Cherington, in his The Regulation of Railroad Abandonments 133 (1948), put it this way:
It is not enough simply for large numbers of witnesses to appear at the hearing and protest. They must be prepared to bring forward convincing evidence not only that they would like the line continued but that they need to have it continued as a matter of necessity. The testimony must persuade the Commission that there is a prospect that the railroad will be used to a sufficient extent to give some prospect of its being able to support itself.
The necessity for convincing evidence from opponents was emphasized in Conant, Railroad Mergers and Abandonments 124 (1964):
The great majority of abandonment petitions are granted because the losses of the line in question are proved to be substantial and because there is no reasonable prospect of future profitable operations. They are found to be a burden on interstate commerce. In such cases, a clear public necessity must be shown by protestants before a carrier will be denied abandonment.
[13] See Pere Marquette Ry. Co. Abandonment, 72 I.C.C. 267 (1922); Oklahoma Northern Ry. Co. Abandonment 72 I.C.C. 625 (1922); Chicago, Peoria, & St. L. Ry. Co. Abandonment, 76 I.C.C. 801 (1923); Frankfurt & Cincinnati Ry. Co. Abandonment, 86 I.C.C. 740 (1924); Hill City Ry. Co. Abandonment, 150 I.C.C. 159 (1928); Dawson Ry. Co. et al. Abandonment, 295 I.C.C. 273 (1956); Southern Pacific Company Abandonment, 320 I.C.C. 38 (1963).
[14] The new rule permits opponents of abandonment to use all resources available to them for the production of evidence. It specifically directs their attention to the availability in appropriate circumstances, of the Commission's "discovery procedures as provided in the Commission's General Rules of Practice, 49 C.F.R. 1100.56-1100.67." 37 F.R. 1046.
[15] The I.C.C. has established as part of the Subpart C application procedure a requirement that all shippers who have used the line to be abandoned within the previous twelve months and all prospective shippers newly located on the line must be notified of the abandonment application on or before the date the application is filed. 49 C.F.R. § 1121.32(c)(2). No such notice requirement previously existed under the long form, Subpart A, procedures, nor has one been added. The notice requirement for Subpart C applications, however, does indicate the I.C.C. is not attempting to preclude the opportunity for "significant and material objection" to the abandonment to crystallize.
[16] Opponents of abandonment will also enjoy the right under 49 U.S.C. § 17(6) to "make application [to the Commission] for rehearing, reargument, or reconsideration," of any decision to grant an abandonment.
[17] Although plaintiffs have made no specific arguments against the Subpart C procedures, the original complaint attacked both Subparts B and C, and we have considered both on their merits.
[18] The effect of the rebuttable presumption can be analogized to a common judicial circumstance involving burdens of production and persuasion. As discussed in McCormick on Evidence (2d Ed. 1972) § 338, at 791-92, the problem is this:
Suppose the one who had the initial burden of offering evidence in support of the alleged fact, on pain of an adverse ruling, does produce evidence barely sufficient to satisfy that burden, so that the judge can just say, "A reasonable jury could infer that the fact is as alleged, from the circumstances proved." If the proponent then rests, what is the situation? Has the duty of going forward shifted to the adversary? Not if we define that duty as the liability to a peremptory adverse ruling on failing to give evidence, for if at this juncture the original proponent rests and the adversary offers no proof, the proponent will not be entitled to the direction of a verdict in his favor on the issue, but rather the court will leave the issue to the decision of the jury. But it is frequently said that in this situation the duty of going forward has shifted to the adversary and this is unobjectionable if we bear in mind that the penalty for silence is very different here from that which was applied to the original proponent. If he had remained silent at the outset he would irrevocably have lost the case on this issue, but the only penalty now applied to his adversary is the risk, if he remains silent, of the jury's finding against him, though it may find for him. Theoretically he may have this risk still, even after he has offered evidence in rebuttal. It is simpler to limit "duty of going forward" to the liability, on resting, to an adverse ruling, and to regard the stage just discussed (where the situation is that if both parties rest, the issue will be left to the jury) as one in which neither party has any duty of going forward.
In the context of I.C.C. abandonment proceedings under Subpart B, the railroad begins with the production burden; it satisfies it by demonstrating that less than 34 carloads per mile were carried on the line to be abandoned. A production burden is then placed on the opponents of abandonment, but, as in McCormick's example above, failure to sustain that production burden is not determinative of the outcome of the case. The I.C.C. situation is somewhat different because failure to sustain the production burden by abandonment opponents results in denial of formal proceedings; however, that failure does not allow the I.C.C. to disregard the record developed by the opponents. Just as in the McCormick example, the trier of fact must weigh all evidence.
[19] Plaintiffs also argue, in their application of the "substantial impact" test, that Texaco, Inc. v. Federal Power Commission, 412 F.2d 740, 744 (3d Cir. 1969) and Kelly v. United States Department of Interior, 339 F.Supp. 1095, 1100-1102 (E.D.Calif.1972), also support its applicability to the present case. In both of these cases, however, the agency was arguing compliance with § 4 was not necessary because the rule was insignificant and thus fell in the separate exception to § 4 provided by 5 U.S.C. § 553(b)(3)(B), rather than subsection (A) which is involved here. Substantial public impact is obviously important for that exception, as it provides public notice and hearing are not required if the agency for good cause finds such proceedings "unnecessary." The substantive nature of the rules challenged in those cases was clear. 412 F.2d at 742; 339 F.Supp. at 1097-1098.
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586 F.2d 838
Jonesv.State of North Carolina
No. 78-8132
United States Court of Appeals, Fourth Circuit
10/25/78
1
E.D.N.C.
DISMISSED
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 19-7337
LARRY FRANKIE JOHNSON,
Petitioner - Appellant,
v.
DEE SMITH, Warden,
Respondent - Appellee.
Appeal from the United States District Court for the Eastern District of North Carolina, at
Raleigh. James C. Dever III, District Judge. (5:17-hc-02163-D)
Submitted: December 17, 2019 Decided: December 20, 2019
Before KING, FLOYD, and HARRIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Larry Frankie Johnson, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Larry Frankie Johnson, a federal prisoner, appeals the district court’s order
accepting the recommendation of the magistrate judge and denying relief on his 28 U.S.C.
§ 2241 (2012) petition. We have reviewed the record and find no reversible error.
Accordingly, although we grant leave to proceed in forma pauperis, we affirm for the
reasons stated by the district court. Johnson v. Smith, No. 5:17-hc-02163-D (E.D.N.C.
Sept. 11, 2019). We dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before this court and argument would not aid the
decisional process.
AFFIRMED
2
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578 F.2d 441
188 U.S.App.D.C. 199
Alliance For Labor and Community Actionv.General Services Administration
No. 77-1807
United States Court of Appeals, District of Columbia Circuit
6/29/78
1
D.C.D.C.
2
AFFIRMED*
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347 S.W.3d 611 (2011)
Bradley A. NORMAN, Appellant,
v.
Richard C. LEHMAN, M.D., Respondent.
No. ED 95661.
Missouri Court of Appeals, Eastern District, Division Three.
July 26, 2011.
Motion for Rehearing and/or Transfer to Supreme Court Denied September 15, 2011.
*612 John T. Papa, Granity City, IL, for appellant.
Kevin F. O'Malley, St. Louis, MO, for respondent.
CLIFFORD H. AHRENS, Judge.
Bradley Norman appeals from the trial court's summary judgment in favor of Dr. Richard Lehman finding that Norman's claim was filed outside the two-year statute of limitations for medical malpractice. Norman asserts that the trial court erred because there are contested facts as to how long he was under Dr. Lehman's care and thus whether the "continuing care" exception tolled the statute of limitations. We reverse and remand.
Dr. Lehman performed surgery on Norman's left knee on September 22, 2006. Norman had problems after the surgery, so Dr. Lehman performed another surgery on October 16. Norman's problems continued, and he returned to Dr. Lehman again on November 7. On that date, Dr. Lehman performed a physical examination and discussed future treatment options, stating in his notes that these options included "bringing him back in the hospital to re-block him" and that "[w]e need to work on his extension and work harder in therapy." Dr. Lehman recommended using an "extension" cast and "bumping up his pain medication[,]" noting that it might be necessary "to re-extension cast him periodically to maintain his extension."
Three days later, on November 10, someone contacted the office of Dr. Craig Beyer, an orthopedic surgeon, about Norman's post-operative problems. Dr. Beyer would later explain that Norman "had a family member that was in the office who approached me and gave me the basic details as to what was going on" and that "[Norman] was interested in evaluation." Office notes made that day stated "L-knee MRI and x-rays in office no PCP," meaning that Dr. Beyer wanted to do a MRI exam of Norman, with new x-rays. Dr. Beyer explained that, "typically, to expedite patient care, I will preorder any pertinent information." He also ordered some "basic blood work" to look for infection because of Norman's post-operative issues. It was common for his office to "preemptively" order tests so that he would have *613 all necessary information to reach a conclusion once he saw the patient.
Dr. Beyer examined Norman for the first time on November 14. His notes indicated that he considered Norman's left knee to be in a poor condition, observing that "[c]learly the ACL that he has had done cannot be salvaged.... Ultimately this is an extraordinarily difficult situation." Notes further indicate that Dr. Beyer and Norman discussed treatment options, including surgery and its risks and the expected outcome and potential complications, and that Norman was "ready to proceed."
Norman filed a medical malpractice action against Dr. Lehman on November 12, 2008. Importantly, the suit was filed two years and five days after Norman's last visit with Dr. Lehman (i.e., November 7, 2006, when Dr. Lehman recommended further treatment) and within two years of his first visit with Dr. Beyer (i.e., November 14, 2006). Dr. Lehman filed a motion for summary judgment raising the two-year statute of limitations as an affirmative defense. The trial court initially denied this motion, finding that the statute of limitations under section 516.105 RSMo 2000 was tolled under the "continuing care" exception. Specifically, the court found that Dr. Lehman's conduct on November 7 "demonstrates he was continuing his care of [Norman] at that time," and that "the record contains no evidence that the doctor-patient relationship ended between the parties on or about November 7, 2006" The court concluded that the "continuing care" exception applied, at least for purposes of summary judgment, and therefore Norman's petition of November 12, 2008, was within the statute of limitations.
Thereafter, Dr. Lehman filed another motion for summary judgment premised on the discovery of evidence of contact with Dr. Beyer on November 10, 2006. This second motion asserted the following facts. Norman last received medical treatment from Dr. Lehman on November 7, after which Norman did not return or request any additional medical treatment or advice from Dr. Lehman or his staff. Norman contacted Dr. Beyer on November 10, and neither Dr. Lehman nor Norman's primary care physician referred Norman to Dr. Beyer. Thus, Norman took affirmative steps on November 10 to establish a relationship with Dr. Beyer to get additional medical treatment for his left knee. Based on information obtained from Norman on that date, Dr. Beyer ordered blood work, an MRI, and x-rays. Dr. Beyer testified that he considered himself to be Norman's treating orthopedic surgeon and thus formed a physician-patient relationship with Norman as of November 10. Relying on the foregoing facts, Dr. Lehman argued that his alleged negligence, his last examination of Norman, and Norman's physician-patient relationship with Dr. Beyer all occurred more than two years before Norman filed suit on November 12, 2008, and therefore the statute of limitations barred Norman's claim.
In response, Norman denied many of the foregoing, supposedly uncontested facts. He denied that his last treatment by Dr. Lehman was on November 7, 2006, because Dr. Lehman discussed ongoing and future treatments and prescribed "bumping up his pain medicine" past that date. Norman denied that he contacted Dr. Beyer or took affirmative steps to establish a patient-physician relationship with Dr. Beyer on November 10. Dr. Beyer did not recall who contacted him and could not confirm that person's authority to represent Norman. Dr. Beyer testified that the "unknown person" indicated that Norman wanted "an evaluation, not treatment." Dr. Beyer did not speak with Norman or charge him for services until November 14. Norman saw Dr. Beyer on November 14 to get a second opinion *614 on Dr. Lehman's recommendations of November 7. Norman denied that Dr. Beyer ordered blood work, an MRI, and x-rays based on information obtained from him or anyone authorized by him on November 10 and further denied that a physician-patient relationship with Dr. Beyer was established that day. Norman asserted that he and Dr. Beyer were not in a doctor-patient relationship until "at earliest November 14, 2006[,]" and Dr. Lehman remained Norman's treating physician until "sometime following November 14, 2006."
After oral argument, the trial court granted Dr. Lehman's second motion for summary judgment, this time finding that "the physician-patient relationship between [Dr. Lehman] and [Norman] ended on November 7, 2006," and therefore, the statute of limitations began to run on that date. In a footnote, the court added that, in the alternative, a finding could be made that the physician-patient relationship between Dr. Lehman and Norman ended on November 10 "when [Norman] established a physician-patient relationship with Dr. Beyer." Either way, the court concluded, Norman's lawsuit, filed November 12, 2008, was outside the statute of limitations. Norman now appeals from this judgment, asserting that the trial court erred because the record did not show that Norman terminated his physician-patient relationship with Dr. Lehman prior to his initial visit with Dr. Beyer on November 14, 2006; therefore, the "continuing care" exception applies, and his suit was timely.
Our review of the grant of a motion for summary judgment is essentially de novo. ITT Commercial Finance v. Mid-America Marine Supply Corporation, 854 S.W.2d 371, 376 (Mo. banc 1993). We review "the record in the light most favorable to the party against whom judgment was entered[,]" and accord that party the benefit of all reasonable inferences that may be drawn from the record. Id. Facts set forth by affidavit or otherwise in support of a party's motion for summary judgment are taken as true unless contradicted by the non-movant's response to the motion. Id. Summary judgment is proper only where the movant has demonstrated that "`there is no genuine dispute as to the facts'" and that "`the facts as admitted show a legal right to judgment for the movant.'" Moore Automotive Group, Inc. v. Goffstein, 301 S.W.3d 49, 52 (Mo. banc 2009) (quoting ITT Commercial Finance 854 S.W.2d at 380). It is the movant's burden to establish both a legal right to judgment and the absence of any genuine issue of material fact necessary to support the claimed right to judgment. Id. Whether the statute of limitations applies to an action is a question of law that we review de novo. Drury v. Missouri Youth Soccer Ass'n, Inc., 259 S.W.3d 558, 576 (Mo.App. 2008). However, when different conclusions may be drawn from the evidence as to whether the statute of limitations has run, it is a question of fact for the jury to decide. Id.
Missouri courts have long recognized that the statute of limitations does not begin to run against a plaintiff-patient until treatment by the medical defendant ceases.
The duty to attend the patient continues so long as required unless the physician-patient relationship is ended by (1) the mutual consent of the parties, (2) the physician's withdrawal after reasonable notice, (3) the dismissal of the physician by the patient, or (4) the cessation of the necessity that gave rise to the relationship. Absent good cause to the contrary, where the doctor knows or should know that a condition exists that requires further medical attention to prevent injurious consequences, the doctor must render such attention or must see to it that some other competent person *615 does so until the termination of the physician-patient relationship.
Weiss v. Rojanasathit, 975 S.W.2d 113, 119-120 (Mo. banc 1998) (citations omitted). This "continuing care" exception applies where the treatment continues and is of such a nature as to charge the medical defendant with the duty of continuing care and treatment that is essential to recovery. Id. In Weiss, the treating physician noted in medical records in April 1991 that the patient was to return in three months, but the patient never made a subsequent appointment. Id. at 116, 120. The Missouri Supreme Court held that "[t]he failure of Ms. Weiss to comply with the doctor's instruction and to return for continued treatment terminated the physician/patient relationship between the two and started the running of the statute within a reasonable time after July of 1991[.]" Id. at 120.
Here, contrary to the trial court's findings, material facts are in dispute as to when Norman's relationship with Dr. Lehman ended, thus starting the running of the statute of limitations. All parties agree that Dr. Lehman last examined and treated Norman on November 7, 2006. However, Dr. Lehman's notes for that last visit indicate that both Norman and Dr. Lehman contemplated continuing care past that date, and that Dr. Lehman adjusted Norman's medication, though the record does not reflect whether Norman had a prescription from Dr. Lehman "bumping up" the pain medicine. The record does not show whether Norman made another appointment with Dr. Lehman. Similarly, the trial court's alternate basis for granting summary judgment in favor of Dr. Lehman also rests on disputed material facts as to whether Norman created a new physician-patient relationship with Dr. Beyer on November 10, 2006. Nothing in the record indicates that the person who contacted Dr. Beyer's office on November 10 had the authority to act on Norman's behalf. Dr. Beyer testified that the preliminary tests that he ordered were "not treatment[,]" and that "[a]nalysis would be a better term." However, Dr. Beyer considered himself to be Norman's treating orthopedic surgeon as of November 10. Based on this record, the trial court's legal conclusion that Dr. Lehman's duty of continuing care ended on November 7, 2006, rests on disputed material facts; therefore, summary judgment on that basis was improper. Point sustained.
We reverse and remand to the trial court for further proceedings in accordance with this opinion.
SHERRI B. SULLIVAN, P.J., and LAWRENCE E. MOONEY, J., concur.
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
DEC 7 2000
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 99-4247
MANUEL VILLAREAL-GARCIA, (D.C. No. 99-CR-215)
(D. Utah)
Defendant-Appellant.
ORDER AND JUDGMENT*
Before BALDOCK, HENRY, and LUCERO, Circuit Judges.**
Defendant Manuel Villareal-Garcia pled guilty to illegal re-entry of a deported
alien in violation of 8 U.S.C. § 1326. The district court sentenced Defendant to 57
months imprisonment based upon a guideline range of 46-57 months. On appeal,
Defendant claims his sentence is excessive. Defense counsel has filed an Anders Brief,
suggesting the record contains no meritorious issues for appeal. See Anders v. California,
*
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.
**
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(A)(2). The case is therefore
ordered submitted without oral argument.
386 U.S. 738 (1967). Because we lack jurisdiction to review Defendant’s sentence, we
dismiss the appeal.
Under 18 U.S.C. § 3742(a)(1) & (2), a defendant may appeal a sentence which
“was imposed in violation of law,” or “as a result of an incorrect application of the
sentencing guidelines.” See United States v. Brye, 146 F.3d 1207, 1214 (10th Cir. 1998)
(court of appeals is empowered to review a sentence within the applicable guideline range
where defendant demonstrates the district court misunderstood the guidelines or
its authority to act under them). This grant of jurisdiction does not include an “abuse of
discretion” review for sentences legally imposed within the guideline range. See
United States v. Garcia, 919 F.2d 1478, 1480-81 (10th Cir. 1990). In this case, Defendant
does not point to any error of law or misapplication of the sentencing guidelines.
Accordingly, we have no jurisdiction to entertain this appeal.
APPEAL DISMISSED.
Entered for the Court,
Bobby R. Baldock
Circuit Judge
2
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998 F.Supp. 1469 (1998)
Sharon Dawn LOCKABY, on behalf of herself and others similarly situated, Plaintiff,
v.
TOP SOURCE OIL ANALYSIS, INC., f/k/a United Testing Group Inc. and Top Source, Inc., Defendant.
No. CIV.A. 1:96CV2737WBH.
United States District Court, N.D. Georgia, Atlanta Division.
January 30, 1998.
*1470 Rose Goff, Greene, Buckley, Jones & McQueen, Atlanta, GA, for Plaintiff.
Henry D. Fellows, Stephanie Wright, Fellows, Johnson & LaBriola, Atlanta, GA, for Defendant.
ORDER
HUNT, District Judge.
Plaintiff brings this action seeking damages and other relief under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331. Before the Court is defendant's motion for summary judgment [10].
I. BACKGROUND
This action arises out of plaintiff's employment with United Testing Group, Inc. ("UTG").[1] Plaintiff was hired by UTG for the position of "Human Resource Coordinator/Accounting Assistant" in July 1993 and served in that position until March 1994, at which time her employment was terminated. In her complaint, plaintiff alleges that defendant violated the FLSA by failing to pay her overtime compensation for the hours she worked in excess of forty hours per week. Accordingly, she seeks to recover her unpaid overtime compensation as well as liquidated damages in an equal amount pursuant to 29 U.S.C. § 216(b).
Defendant, however, contends that it is entitled to summary judgment on plaintiff's claims for three reasons. First, it maintains that plaintiff's claims are barred by the applicable statute of limitations. It also asserts that plaintiff was an "exempt" employee under the FLSA and, therefore, not entitled to overtime compensation. Finally, it avers that plaintiff's claims are barred by the doctrines of res judicata and collateral estoppel.
II. DISCUSSION
Under Federal Rule of Civil Procedure 56, a court shall grant a motion for summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). Where the nonmoving party bears the burden of proof at trial, the moving party must demonstrate to the Court that "there is an absence of evidence to support the nonmoving party's case," Celotex v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986), or must put forth affirmative evidence negating an element of the nonmoving party's case, Fitzpatrick v. Atlanta, 2 F.3d 1112, 1116 (11th Cir.1993). It is then the responsibility of the nonmoving party, by revealing evidence outside of the pleadings, to show that evidence supporting its case does exist or that the element sought to be negated remains a genuine issue of material fact to be tried. Id. Essentially, this requires the nonmoving party to come forward with evidence sufficient to withstand a directed verdict on this issue at trial. Id. at 1116-17.
*1471 The nonmoving party is not required to carry its burden of proof at the summary judgment stage. In analyzing the case, the Court views the facts in the light most favorable to the nonmoving party and makes all factual inferences in favor of that party. Hairston v. Gainesville Sun Publishing Co., 9 F.3d 913, 918 (11th Cir.1993). "The court must avoid weighing conflicting evidence or making credibility determinations." Id. at 919. "Where a reasonable fact finder may `draw more than one inference from the facts, and that inference creates a genuine issue of material fact, then the court should refuse to grant summary judgment.'" Id. (quoting Barfield v. Brierton, 883 F.2d 923, 933-34 (11th Cir.1989)).
As noted above, defendant has asserted three separate grounds in support of its motion for summary judgment. However, because the Court finds that plaintiff's claims are barred by the statute of limitations, the Court need not address the additional arguments advanced by defendant.
Although claims for unpaid overtime compensation under the FLSA normally must be brought within two years of the violation, in cases involving willful violations of the FLSA, the limitations period is extended to three years. 29 U.S.C. § 255(a). Because plaintiff did not file this action until October 21, 1996over two years after her final day of employment at UTG, March 4, 1994her claims are forever barred unless she can demonstrate that defendant willfully violated the FLSA. See Bankston v. Illinois, 60 F.3d 1249, 1253 (7th Cir.1995) (plaintiff bears burden of showing that defendant's conduct was willful for purposes of statute of limitations).
It is well established that to prove a willful violation of the FLSA within the meaning of 29 U.S.C. § 255(a), a plaintiff must establish "that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute." McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 1681, 100 L.Ed.2d 115 (1988). If, in determining its legal obligation under the FLSA, an employer acts unreasonably, but not recklessly, its actions should not be considered willful. Id. at 135 n. 13, 108 S.Ct. at 1682 n. 13. After carefully considering the record before it and the parties' arguments, the Court concludes that plaintiff has failed to make a showing on this question sufficient to withstand defendant's motion for summary judgment.
Plaintiff does not argue that defendant acted with actual knowledge that it was violating the FLSA by not paying plaintiff overtime compensation. Rather, she contends that defendant acted with reckless disregard for its obligations under the statute. This argument is inextricably entwined with the merits of plaintiff's claim.
The FLSA's requirement that an employer must provide overtime compensation for hours worked in excess of forty per week does not apply to all employees. Among the employees who are exempt from the requirement is "any employee employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). Defendant maintains that it did not provide plaintiff overtime compensation because she was employed in a bona fide administrative capacity. Plaintiff disputes this conclusion.
An employee who is compensated at a rate of not less than $250 per week, as plaintiff concedes she was, is considered to be an "employee employed in a bona fide ... administrative ... capacity" within the meaning of the FLSA if her primary duty consists of "[t]he performance of office or nonmanual work directly related to management policies or general business operations of [her] employer or [her] employer's customers ... which includes work requiring the exercise of discretion and independent judgment." 29 C.F.R. § 541.2(a)(1), (e)(2). See also 29 C.F.R. § 541.214. Plaintiff testified in her deposition that during her employment with UTG she was responsible for personnel matters, benefits matters, payroll administration, human resources administration, preparing a personnel manual for UTG, assisting employees in enrolling in the company's *1472 401(k) plan, and serving as a liaison between managers and employees. Deposition of Sharon Lockaby at pp. 21-39. These duties clearly relate to the management policies or general business operations of UTG and appear to involve the exercise of discretion and independent judgment. Thus, although plaintiff correctly notes that the determination of whether an employee falls within the administrative exemption generally requires an extensive factual inquiry, it is clear that plaintiff's employment duties were at least sufficiently close to fitting within the criteria for the exemption that defendant's failure to pay her overtime cannot, without more, be found to demonstrate a reckless disregard for its obligations under the FLSA.
However, in addition to satisfying the "duties" test set forth above, in order to qualify for the bona fide administrative exemption, an employee must also be "compensated for [her] services on a salary or fee basis." 29 C.F.R. § 541.2(e). Plaintiff contends that, although she was paid $23,000 per year by UTG, she was not paid on a "salary basis" within the meaning of the FLSA.[2] According to the relevant regulations, an employee is considered to be paid on a "salary basis" if she receives each pay period "a predetermined amount constituting all or part of [her] compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed." 29 C.F.R. § 541.118(a). Plaintiff contends that she does not fit within this definition because she was subject to defendant's policy of charging an employee's absence of greater than two hours against the employee's accumulated leave time or pay. The Court need not delve too deeply into this argument in order to resolve the statute of limitations issue.
At the time plaintiff was employed by UTG, the law in this circuit was clear that the mere possibility of improper deductions in pay would not defeat an employee's salaried status; only actual deductions would yield such a result. Atlanta Professional Firefighters Union v. Atlanta, 920 F.2d 800, 805 (11th Cir.1991).[3] Plaintiff, however, has not alleged that she was ever subjected to any improper deductions from her pay based on absences of less than one day.[4] In the absence of such evidence, the existence of a policy that might have subjected plaintiff to improper deductions cannot create a genuine issue of material fact on the question of defendant's willfulness.[5]
Plaintiff, however, further contends that the fact that defendant conducted an *1473 "internal audit" to determine why plaintiff was regularly staying at UTG past regular business hours belies its assertion that it believed that she was an exempt employee. She argues that if defendant truly believed that plaintiff was an exempt employee, it would not care if she worked past normal business hours, and that a jury could reasonably infer from the audit that defendant believed that she was entitled to overtime compensation. However, while the Court is required to draw all reasonable inferences in plaintiff's favor in this context, it is not required to draw inferences that are not supported by the underlying facts of the case. See James v. Otis Elevator Co., 854 F.2d 429 (11th Cir.1988).
The audit itself is a mere scintilla of evidence that, standing alone, cannot defeat defendant's motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). The record, however, is bereft of any other evidence that supports the inference that defendant willfully violated the FLSA, and contains evidence that directly contradicts that inference.[6] Accordingly, the Court concludes that plaintiff has failed to demonstrate the existence of a genuine issue of material fact on the question of whether UTG acted with reckless disregard of its obligations under the FLSA. Because this conclusion mandates a finding that plaintiff's claims are barred by the statute of limitations, the Court need not address the other arguments raised by defendant in support of its motion for summary judgment.
III. CONCLUSION
For the aforementioned reasons, defendant's motion for summary judgment [10] is GRANTED. The Clerk of the Court is DIRECTED to enter judgment in favor of defendant and to close this case.
NOTES
[1] Defendant Top Source Oil Analysis, Inc. is the successor corporation of United Testing Group, Inc. and Top Source, Inc.
[2] Defendant does not maintain, nor could any colorable argument be made, that plaintiff was compensated on a "fee basis" within the meaning of the FLSA. See 29 C.F.R. § 541.313.
[3] The Court recognizes that the Supreme Court adopted a different interpretation of the salary-basis test in Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (employee is not salaried for purposes of the FLSA if there is either an actual practice of making improper deductions or an employment policy creates a "significant likelihood" of such deductions). However, in determining whether defendant's conduct between July 1993 and March 1994 evinced a reckless disregard for its obligations under the FLSA, the Court must evaluate its conduct in light of the state of the law at that time.
[4] Although defendant bears the burden of proof on the issue of whether plaintiff was exempt from the overtime requirement and, therefore, would be required to demonstrate that she was not subject to improper deductions in order to prevail on that ground, plaintiff bears the burden of demonstrating that defendant's conduct was willful for statute of limitations purposes. Bankston v. Illinois, 60 F.3d 1249, 1253. Consequently, the lack of evidence of actual deductions from plaintiff's pay must be held against plaintiff in this context.
[5] The Court recognizes that plaintiff seeks to prosecute this suit as a class action on behalf of all UTG employees who were improperly denied overtime compensation and that plaintiff alleges in her affidavit that, while performing her payroll duties, she did, in fact, charge absences of greater than two hours against the vacation time or sick leave of other employees that were classified as exempt. However, plaintiff's claims of deductions from other employees' pay are not relevant to the question of whether plaintiff's individual claims are barred by the statute of limitations. Furthermore, because the Court finds that plaintiff's claims are time-barred and plaintiff has not identified another individual who could serve as class representative, this suit cannot be maintained as a class action.
[6] For example, although it is undisputed that defendant conducted the audit, plaintiff concedes that she was never instructed by any member of management not to work overtime. Affidavit of Sharon Lockaby ¶ 4.
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60 F.3d 810
Connell Ltd. Partnershipv.Dayton Industries, Inc.
NO. 94-7962
United States Court of Appeals,Second Circuit.
June 08, 1995
Appeal From: S.D.N.Y. 94-cv-2068
1
REVERSED AND VACATED.
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822 F.2d 641
David CULP and Paul Miller, Petitioners-Appellants,v.Patrick KEOHANE, Respondent-Appellee.
No. 86-5118.
United States Court of Appeals,Sixth Circuit.
Submitted Nov. 18, 1986.Decided July 8, 1987.Rehearing and Rehearing En Banc Denied Aug. 21, 1987.
David Culp, pro se.
Paul Miller, pro se.
W. Hickman Ewing, Jr., U.S. Atty., Memphis, Tenn., Colleen Schmidt, for respondent-appellee.
Before MERRITT, JONES and WELLFORD, Circuit Judges.
PER CURIAM.
1
This pro se habeas corpus appeal was timely filed by David Culp and Paul Miller, both federal prisoners at the correctional institution in Memphis, Tennessee. This case has been referred to a panel of this Court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination of the record and the briefs of the parties, this panel agrees unanimously that oral argument is not needed. Fed.R.App.P. 34(a).
2
The petitioners allege that statutory good time credits and extra good time credits they earned during their original prison terms were improperly forfeited by the United States Bureau of Prisons, following their arrests on parole violator warrants and their incarceration after parole revocation. The case was referred to a Magistrate who recommended that the petition be dismissed. Petitioners' objections were considered and overruled by the district court and the Report of the Magistrate was adopted by Order entered November 27, 1985.
3
Federal prisoners incarcerated as a result of federal convictions earn statutory good time credits pursuant to 18 U.S.C. Sec. 4161, and extra good time credits pursuant to 18 U.S.C. Sec. 4162. Prior to 1976, 18 U.S.C. Secs. 4205 and 4207 allowed the forfeiture of those good time credits where a prisoner is incarcerated for parole violation. However, in 1976, Congress enacted the Parole Commission and Reorganization Act, which deleted the language previously authorizing forfeiture. See 18 U.S.C. Sec. 4201, et seq.
4
Petitioners argue that because those statutes allowing forfeiture were repealed, the Bureau of Prisons had no statutory authority to forfeit their previously earned good time credits. They also argue that the regulation on which the Bureau relied, 28 C.F.R. Sec. 523.17(c), which allows forfeiture, is unconstitutional because it has no statutory basis. The district court held that Congress, in amending the statute, did not intend to prevent forfeiture of statutory good time credits.
5
We agree with the district court. There is no authority for petitioners' position that a prisoner who has been reincarcerated for parole violation must be credited with good time he earned prior to his parole. Rather, the majority of courts follow the general rule that a prisoner is entitled only to the good time credits earned during his parole violator term, as any good time credit earned during his regular term is forfeited upon revocation of his parole. Bentsen v. Ralston, 658 F.2d 639, 640 (8th Cir.1981) (per curiam ); U.S. ex rel Del Genio v. U.S. Bureau of Prisons, 644 F.2d 585, 589 (7th Cir.1980),cert. denied, 449 U.S. 1084, 101 S.Ct. 870, 66 L.Ed.2d 808 (1981); Wilkerson v. U.S. Board of Parole, 606 F.2d 750, 751 (7th Cir.1979) (per curiam ). Once a prisoner's release is revoked because of his violation of parole conditions, the Parole Commission has the authority to forfeit good time credits. Lambert v. Warden, U.S. Penitentiary, 591 F.2d 4, 8 (5th Cir.1979) (per curiam ).
6
Accordingly, it is ORDERED that the judgment of the district court is affirmed. Sixth Circuit Rule 9(d)(3).
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131 F.3d 147
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.Ishmael Ali MUHAMMAD, Plaintiff-Appellant,v.P. GYUNN, Lieutenant FSP; T. Martinez, CorrectionalSergeant; E. Ulm, Correctional Officer at FSP; B.Petersen, Artist Facilitator, Arts in Corrections Program;K. Larson, Correctional Officer; D. Kudo, CorrectionalOfficer; Lt. Morris; Sgt. Bickford; Correctional OfficerJauregai; Correctional Officer M. Tristan; CorrectionalOfficer D. Tidwell, Defendants-Appellees.
No. 97-15473.
United States Court of Appeals, Ninth Circuit.
Submitted November 17, 1997**Decided Nov. 20, 1997.
Appeal from the United States District Court, for the Eastern District of California, No. CV-92-01214-WBS; William B. Shubb, District Judge, Presiding.
Before: HUG, Chief Judge, PREGERSON and BEEZER, Circuit Judges.
1
MEMORANDUM*
2
Ishmael Ali Muhammad, a California state prisoner, appeals pro se the district court's summary judgment for defendant correctional officers in his 42 U.S.C. § 1983 action alleging violations of the Due Process and Equal Protection Clauses.1 We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo, Barnett v. Centoni, 31 F.3d 813, 815 (9th Cir.1993) (per curiam), and affirm.
3
Muhammad contends that his due process rights were violated by procedural irregularities in disciplinary action taken against him after sexually explicit materials were confiscated from his work station. He also contends that defendant Peterson violated his due process rights when he erased state-owned computer disks containing Muhammad's sexually explicit novel. These contentions lack merit.
4
Because the disciplinary actions taken against Muhammad neither "present the type of atypical, significant deprivation in which a state might conceivably create a liberty interest" nor "inevitably affect the duration of his sentence," there was no liberty interest upon which his due process claims could be predicated. See Sandin v. Conner, 515 U.S. 472, 486, 487 (1995).2
5
Muhammad's contention that he was deprived of his property interest in the contents of the erased disks without due process of law was properly dismissed because California law provides an adequate post-deprivation remedy. See Barnett, 31 F.3d at 816; see also Cal.Gov't Code §§ 810-895.
6
Muhammad also contends that defendants violated his right to equal protection by disciplining him when he had not violated any rules or regulations. Muhammad introduced no evidence that he was treated differently than other similarly situated inmates.
7
Because there was no genuine issue of material fact as to Muhammad's due process and equal protection claims, the district court did not err by granting summary judgment for defendants. See Barnett, 31 F.3d at 815.3
8
AFFIRMED.
**
The panel unanimously finds this case suitable for decision without oral argument. See Fed.R.App.P. 34(a); 9th Cir.R. 34-4
*
This disposition is not appropriate for publication and not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
Because Muhammad fails to raise in his opening brief his First Amendment and Fourth Amendment claims, as well as all other claims arising from incidents not directly related to the confiscation of sexually explicit materials, we do not address them here. See Martinez v. Ylst, 951 F.2d 1153, 1157 (9th Cir.1991)
2
Because we conclude that there was no liberty interest, we do not decide whether the alleged procedural irregularities constituted due process violations
3
Because of our disposition of this appeal we do not consider the applicability, if any, of the Prison Litigation Reform Act, Pub.L. No. 104-134, 110 Stat. 1321 (1996), to this appeal
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355 So.2d 238 (1978)
STATE of Louisiana
v.
Roy Edward SEGERS.
STATE of Louisiana
v.
Bobby Therral SMITH.
Nos. 60388, 60389.
Supreme Court of Louisiana.
January 30, 1978.
March 3, 1978.
*239 Thomas W. Davenport, Jr., Davenport, Files, Kelly & Marsh, Monroe, for defendant-appellant.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., Walter L. Smith, Jr., Roland T. Huson, III, R. Neal Wilkinson, Asst. Attys. Gen., John T. Seale, Dist. Atty., Thomas F. Wade, Asst. Dist. Atty., for plaintiff-appellee.
Rehearing Granted in No. 60388 and Denied in No. 60389.
For Rehearing Opinion in No. 60388, see 357 So.2d 1.
DIXON, Justice.
Defendants Roy Edward Segers and Bobby Therral Smith were indicted with others by the Tensas Parish Grand Jury for the possession of marijuana with the intent to distribute and conspiracy to distribute marijuana. Segers was tried by jury, found guilty on both counts and sentenced to serve four years imprisonment at hard labor and to pay a fine of $7500 for conspiracy and eight years at hard labor and a fine of $15000 for the possession with intent to distribute. Smith, pursuant to a plea bargain, pleaded guilty to possession with the intent to distribute, reserving his right to appeal the trial court's denial of a motion to suppress physical evidence. (See State v. Hutchinson, 349 So.2d 1252 (La.1977); State v. Lain, 347 So.2d 167 (La.1977); State v. Crosby, 338 So.2d 584 (La.1976)). He was sentenced to serve ten years imprisonment at hard labor and fined $15000. Defendant Segers urges five assignments of error on appeal; defendant Smith, one.
In the evening of April 26, 1976 an off-duty Tensas Parish Deputy Sheriff, Victor Thomas Mahoney, Jr., noticed a large U-Haul truck and car turn onto a road providing access to an area known as "the Island," alongside Lake Bruin. Because there had been several recent burglaries of the camps lining Lake Bruin, Deputy Mahoney was *240 suspicious of the truck and car and decided to follow with his headlights turned off. After losing contact with the truck, Mahoney drove along the camps, shining his spotlight in hope of sighting the truck and car. Earlier that day he had noticed a large airplane parked on an airstrip located on "the Island," so when he came to the entrance of the airstrip he turned to check the plane. There he first noticed a two-door Pontiac that had not been there earlier in the day, parked next to the plane. He took the license number of the car and radioed headquarters for a registration verification. He was told that the license number displayed should be on a four-door car. Becoming more suspicious, Deputy Mahoney drove closer and then noticed a U-Haul truck parked on the other side of the plane. He then radioed for assistance.
Among those answering the call was Trooper Danny Warner of the Louisiana State Police Morehouse-Ouachita Narcotics Strike Force. After discovering marijuana gleanings on the exteriors of the truck and plane and detecting the odor of marijuana, Trooper Warner and Deputy Mahoney flew to St. Joseph, Louisiana to get a search warrant. When they arrived in St. Joseph, they awoke Judge Alwine M. Smith and told her their story. She executed a search warrant authorizing the search of the plane and other vehicles. The subsequent search resulted in the seizure of over three thousand pounds of marijuana. Segers was arrested on April 27, 1976; Smith several days later.
Assignment of Error No. 1 (Segers and Smith)
This assignment was taken to the denial of a motion to suppress the physical evidence (marijuana) seized in the search conducted pursuant to the search warrant. The defendants contend that the search was unconstitutional because the affidavit executed in the application for the warrant was defective in three respects: first, in that it presents an unclear and insufficient recitation of facts on which a finding of probable cause may be based; second, in that the facts recited in the affidavit were subsequently acknowledged to be untrue by the affiant; and third, in that there is no reference to whether the facts are current or whether they are remote in time from the application. The search warrant itself is attacked on grounds that it fails to describe either the property or the place to be searched.
Testimony at the hearing on the motion to suppress reveals that Trooper Warner and Deputy Mahoney told Judge Smith the facts, and then she filled out the "Application for Search Warrant" form. The affidavit reads as follows (the handwritten words by Judge Smith are underlined):
"APPLICATION FOR SEARCH WARRANT
STATE OF LOUISIANA
PARISH OF Madison
BEFORE ME, the undersigned authority, personally came and appeared Danny Warner and Victor Thomas Mahoney. Jr., who each being duly sworn, says:
That he is 26 and 32 years of age respectively, a resident of Monroe. La. and Tensas Parish, respectively .
That he verily believes that personal property belonging to persons unknown contains a controlled dangerous substance, marijuana and is
(edifice)
possessed by the owners and operators of the vehicles and airplane above described for the purpose of distribution located on the property of Lake Bruin Airport __ in the (city, town, village) of Parish of Tensas. Louisiana; the said property consisting of a white over gold 1973 Grand Prix. VIN # 2K57T3A220601 License LXZ 627. 76 Tex & Airplane Lockheed Lodestar L18--Twin Engine FAA regis # N755A-a Ford Custom 350 U Haul Truck orange & white--1P60776 Ala
1
Affiant further believes that said property or a part thereof is concealed in or about the house of Lake Bruin Airport on the property of Person's at present unknown, in Tensas on the Highway That the Deputy Sheriff Victor T. Mahoney. Jr. observed the outside of the aircraft and the outside of the Ford U Haul Truck & it smells strongly of marijuana and has marijuana gleanings on the outside of the truck & plane as if unloaded near or at the truck.
Affiant requested the issuance of a search warrant herein.
s/ TFC Danny A. Warner
s/ Victor Thomas Mahoney. Jr.
*241 Sworn to and subscribed before me this 26 day of April. 1976.
s/ Alwine M. Smith
JUDGE
Sixth Judicial District Court
State of Louisiana."
(Original affidavit reproduced in Appendix).
Defendants contend that the affidavit is so poorly drafted that it is nonsensical and fails to support a finding of probable cause.
In United States v. Ventresca, 380 U.S. 102, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965), the United States Supreme Court set out the following principle:
" . . .If the teachings of the Court's cases are to be followed and the constitutional policy served, affidavits for search warrants, such as the one involved here, must be tested and interpreted by magistrates and courts in a commonsense and realistic fashion. They are normally drafted by nonlawyers in the midst and haste of a criminal investigation. Technical requirements of elaborate specificity once exacted under common law pleadings have no proper place in this area. A grudging or negative attitude by reviewing courts toward warrants will tend to discourage police officers from submitting their evidence to a judicial officer before acting." 380 U.S. at 108, 85 S.Ct. at 746.
See also United States v. Harris, 403 U.S. 573, 91 S.Ct. 2075, 29 L.Ed.2d 723 (1971); United States v. Ford, 180 U.S.App.D.C. 1, 553 F.2d 146 (1977); United States v. Harper, 550 F.2d 610 (10th Cir. 1977); United States v. Harvey, 540 F.2d 1345 (8th Cir. 1976); State v. Williams, 338 So.2d 1365 (La.1976); State v. Roach, 322 So.2d 222 (La.1975).
Defendants argue that this principle is inapplicable to the present affidavit because it was drafted by the judge and therefore must be literally interpreted. We do not agree. It is sufficient that the affidavit shows that the magistrate was informed of the facts and circumstances within the affiants' knowledge upon which a finding of probable cause may reasonably be based.
A commonsense reading of the affidavit before us reveals that the judge was told that the affiants believed that marijuana was hidden in three described vehicles and that they based this belief on the observation of marijuana gleanings on the outside of the vehicles and on the detection of the odor of marijuana in the area. These facts are sufficient to support a finding of probable cause.
Defendants next contend that even if the affidavit demonstrates probable cause to search, it nevertheless must fall because certain facts contained in the affidavit are untrue. Specifically, they point to that portion of the affidavit which recites, "That the Deputy Sheriff Victor T. Mahoney, Jr. observed the outside of the aircraft and the outside of the Ford U Haul Truck & it smells strongly of marijuana and has gleanings on the outside of the truck & plane. . ." At the hearing on the motion to suppress Deputy Mahoney testified that he did not tell Judge Smith that he observed or smelled the marijuana, but rather that Trooper Warner, a narcotics officer, observed those facts.
While it is true that the affidavit may be interpreted in the manner advanced by the defendants, it must be noted that both Mahoney and Warner were affiants. Thus the statement may be interpreted to mean that Warner, as one of the affiants, told of the gleanings and odor. Because the affidavit was written by the judge and any technical inaccuracies could not be the result of intentional police fabrication (see State v. Rey, 351 So.2d 489 (La.1977)), this "inaccuracy" is not fatal to the affidavit.
Defendants' final attack on the affidavit is based on the failure of the affidavit to reflect the time when the observations made by the affiants took place. In State v. Boudreaux, 304 So.2d 343 (La.1974), this court, when faced with the same issue now presented, stated:
"The absence of a date for each episode described in the affidavit is not fatal, however, The language of the affidavit, including the use of the present tense, *242 indicates that the affiants are describing a course of conduct continuing to the date of the warrant. . . .
"Such an affidavit has been held to be adequate if, in a commonsense construction, it can be said from the face of the affidavit that the information received by the affiant was current and not stale. See: Borras v. State, 229 So.2d 244 (Fla.,1969); State v. Clay, 7 Wash.App. 631, 501 P.2d 603 (1973); Sutton v. State, 419 S.W.2d 857 (Tex.Cr.App., 1967); Lewis v. State, 126 Ga.App. 123, 190 S.E.2d 123 (1972). . . ." 304 So.2d at 345-46.
See also State v. Turner, 337 So.2d 1090 (La.1976). Application of these principles to the affidavit in the instant case renders the defendants' argument without merit.
Finally, defendants attack the search warrant itself on grounds that it fails to particularly describe either the place to be searched or the property to be searched. The contention is without merit. The search warrant states that the vehicles located at the Lake Bruin Airport are to be searched because they were being used to conceal marijuana. The license numbers of the vehicles were listed on the back of the search warrant. Testimony at the hearing on the motion to suppress indicates that there are two airports in the Lake Bruin area: one commonly known as the "Lake Bruin Airport" and another known as the "Sun Crop Dusting Airport."
The description contained in a search warrant is adequate if it is sufficiently detailed so as to allow the officers to locate the property with reasonable certainty and with the reasonable probability that they will not search the wrong premises. State v. Cobbs, 350 So.2d 168 (La.1977); State v. Alexander, 337 So.2d 1111 (La.1976). This test is satisfied by the search warrant at issue in the present case.
This assignment is without merit.
Assignment of Error No. 2 (Segers)
In this assignment Segers contends that the trial court erred in denying a motion to suppress an out-of-court photographic identification.
Evidence of the out-of-court identification was not introduced at trial. Therefore, if error, it was harmless.
This assignment is without merit.
Assignment of Error No. 3 (Segers)
On the morning of April 27, 1976 Segers heard a news report of the search of his airplane. He called the Sheriff's Office and was told to meet Sheriff Theo Poe at the airport. Upon arriving at the airport Segers met the Sheriff, shook hands and exchanged pleasantries. Sheriff Poe then asked the defendant whether he owned the plane and Segers replied that it belonged to his corporation, Segers and Associates, Inc. Sheriff Poe next asked Segers whether he had flown the airplane into Tensas Parish. Segers stated that he had not flown the aircraft, but that he had served as a member of the crew. Segers was then arrested and advised of his Miranda rights.
The Sheriff testified at first that he would not have permitted Segers to depart after admitting an ownership interest in the plane, but would not have arrested him for possession of the contraband merely because he owned the plane. Later the Sheriff testified that he didn't know whether Segers would have been permitted to leave and said, "I would have asked him some more questions. He could of course have refused to answer `em." Defendant assigns as error the introduction of the statement into evidence at trial, arguing that his constitutional rights had been violated. In Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the United States Supreme Court held:
". . . the prosecution may not use statements, whether exculpatory or inculpatory, stemming from custodial interrogation of the defendant unless it demonstrates the use of procedural safeguards *243 effective to secure the privilege against self-incrimination. . . ." 384 U.S. at 444, 86 S.Ct. at 1612.
The Court defined "custodial interrogation" as:
" . . . questioning initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. . ." 384 U.S. at 444, 86 S.Ct. at 1612.
Since Miranda was decided, numerous cases have endeavored to refine the meaning of "custodial interrogation." (See, e. g., Mathis v. U. S., 391 U.S. 1, 88 S.Ct. 1503, 20 L.Ed.2d 381 (1968); Orozco v. Texas, 394 U.S. 324, 89 S.Ct. 1095, 22 L.Ed.2d 311 (1969); Beckwith v. U. S., 425 U.S. 341, 96 S.Ct. 1612, 48 L.Ed.2d 1 (1976)). In the recent case of Oregon v. Mathiason, 429 U.S. 492, 97 S.Ct. 711, 50 L.Ed.2d 714 (1977), the Court was faced with the following factual situation:
"`An officer of the State Police investigated a theft at a residence near Pendleton. He asked the lady of the house which had been burglarized if she suspected anyone. She replied that the defendant was the only one she could think of. The defendant was a parolee and a "close associate" of her son. The officer tried to contact defendant on three or four occasions with no success. Finally, about 25 days after the burglary, the officer left his card at defendant's apartment with a note asking him to call because "I'd like to discuss something with you." The next afternoon the defendant did call. The officer asked where it would be convenient to meet. The defendant had no preference; so the officer asked if the defendant could meet him at the state patrol office in about an hour and a half, about 5:00 p. m. The patrol office was about two blocks from defendant's apartment. The building housed several state agencies.
'The officer met defendant in the hallway, shook hands and took him into an office. The defendant was told he was not under arrest. The door was closed. The two sat across a desk. The police radio in another room could be heard. The officer told defendant he wanted to talk to him about a burglary and that his truthfulness would possibly be considered by the district attorney or judge. The officer further advised that the police believed defendant was involved in the burglary and [falsely stated that] defendant's fingerprints were found at the scene. The defendant sat for a few minutes and then said he had taken the property. This occurred within five minutes after defendant had come to the office. The officer then advised defendant of his Miranda rights and took a taped confession.
'At the end of the taped conversation the officer told defendant he was not arresting him at this time; he was released to go about his job and return to his family. The officer said he was referring the case to the district attorney for him to determine whether criminal charges would be brought. It was 5:30 p. m. when the defendant left the office.'" 429 U.S. at 493-94, 97 S.Ct. at 713.
The Court, in holding that the defendant's Miranda rights had not been violated because the questioning occurred in a noncustodial situation, stated:
" . . . [p]olice officers are not required to administer Miranda warnings to everyone whom they question. . . . Miranda warnings are required only where there has been such a restriction on a person's freedom as to render him `in custody.' It was that sort of coercive environment to which Miranda by its terms was made applicable, and to which it is limited." 429 U.S. at 495, 97 S.Ct. at 714. (Emphasis added by author).
This court, in cases dealing with whether a custodial situation exists, has relied on factors generally indicating the degree the police suspect the person interrogated of *244 committing the offense in order to determine whether there actually is custody. See State v. Hodges, 349 So.2d 250 (La. 1977); State v. Corey, 339 So.2d 804 (La. 1976); State v. Roach, 322 So.2d 222 (La. 1975).
A comparison of the facts of the instant case with those of Mathiason and with the factors indicating the degree of police suspicion in mind, obtains the following: (1) in both cases the police had reason to suspect the defendant in Mathiason, because of the victim's information; in the present case, because the plane was registered to the defendant's corporation; (2) the police initiated the interview in Mathiason; Segers initiated the meeting in the present case; (3) in neither case did the police have positive proof of the defendant's involvement until after the initial questioning.
We conclude that the defendant's statements made to the Sheriff, like those of the defendant in Mathiason, were not made while in custody within the meaning of Miranda v. Arizona, supra.
Defendant argues that even if Miranda is not applicable, his rights afforded by Art. 1, § 13 of the La.Const. of 1974 were violated when the Sheriff questioned him.
Art. 1, § 13 provides, in pertinent part:
"When any person has been arrested or detained in connection with the investigation or commission of any offense, he shall be advised fully of the reason for his arrest or detention, his right to remain silent, his right against self incrimination, his right to the assistance of counsel and, if indigent, his right to court appointed counsel. In a criminal prosecution, an accused shall be informed of the nature and cause of the accusation against him.. . ." (Emphasis added).
Defendant is correct when he argues that the term "detained" might not mean the same as "custody" under the Miranda cases. This situation was at least considered at the time Art. 1, § 13 was formulated. Hargrave, The Declaration of Rights of the Louisiana Constitution of 1974, 35 La.L. Rev. 1, 40-12 (1974).
In interpreting the meaning of "detained" it is essential to keep in mind the reasons for the requirement that police inform citizens of their constitutional rights prior to interrogation. Central to the purpose of this requirement is the protection of the individual's rights against self-incrimination from the coercive potential of police interrogation. In the present case we find particularly significant the fact that the defendant initiated the contact by voluntarily calling the Sheriff's Office. The Sheriff's initial questioning was conducted in a cordial atmosphere without any of the earmarks of coercion. While the defendant was certainly under suspicion because of his connection with the corporate owner of the plane, his ownership interest, while suggesting the possibility, or even the probability, of criminal participation or knowledge, was not necessarily incriminating. The facts of this case do not show that the defendant was "detained" within the meaning of Art. 1, § 13 at the time he answered the Sheriff's initial questions.
This assignment is without merit.
Assignment of Error No. 4 (Segers)
Defendant contends it was error for the trial court to refuse to give a requested special jury charge on mistake of fact.
A requested special charge need not be given if it is adequately covered by the general charge or another special charge. C.Cr.P. 807; State v. Progue, 350 So.2d 1181 (La.1977); State v. Brooks, 350 So.2d 1174 (La.1977). The trial court adequately charged the jury concerning mistake of fact in the present case.
This assignment is without merit.
Assignment of Error No. 5 (Segers)
Defendant Segers complains that his sentence is unconstitutionally excessive *245 within the meaning of Art. 1, § 20 of the La.Const. of 1974.
After conviction but before sentence the trial court held a pre-sentence hearing at which the defendant put on evidence of mitigating factors to be considered in sentencing. The twenty-eight year old defendant showed that he had no previous criminal record and that he had been consistently employed since he completed his education. At the time of the offense defendant was the president of a family corporation engaged in the sales and service of computer related equipment. The corporation had gross sales of close to $1,000,000 and a net of approximately $80,000. Defendant testified that he thought the trip to Mexico was for the purpose of obtaining ancient Indian artifacts and that it was not until the trip back that he learned that the airplane was loaded with marijuana. This testimony was corroborated by the results of a lie detector test.
The maximum sentence for conspiracy to distribute marijuana is five years imprisonment and a fine of $5000. R.S. 14:26, R.S. 40:966 B(2). The maximum sentence for possession with the intent to distribute marijuana is ten years imprisonment and a fine of $15000. The defendant was sentenced to serve four years imprisonment at hard labor, fined $7500 and ordered to serve one additional year in default of the payment of the fine on the conspiracy conviction. On the possession with intent to distribute conviction defendant was sentenced to serve eight years imprisonment, fined $15000 and ordered to serve two additional years in default of payment of the fine.
In view of the fact that the offense involved the transportation of such a large amount of marijuana into Tensas Parish, we conclude that the defendant's sentence (concurrent sentences, C.Cr.P. 833) was not excessive. The fact, if accepted as true, that he did not know the true nature of the venture until the marijuana was on the plane does not alter the fact that he continued in its commission without notifying the authorities.
This assignment is without merit.
For the foregoing reasons, defendants' convictions and sentences are affirmed.
SANDERS, C. J., concurs in the result only.
MARCUS, J., concurs and assigns reasons.
SUMMERS, Justice, concurring in the result only.
This court cannot properly review the excessiveness of the sentence in this case.
Appendix to follow.
*246
*247 MARCUS, Justice (concurring).
La.Const. art. 1, § 20 (1974) provides that "[n]o law shall subject any person. . . to cruel, excessive, or unusual punishment." (Emphasis added.) Hence, our review is limited to whether the "law" subjects any person to excessive punishment, not whether a sentence in a particular case is excessive. Accordingly, I respectfully concur.
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607 F.2d 1002
Robinsonv.U. S.
No. 79-6693
United States Court of Appeals, Fourth Circuit
10/30/79
1
E.D.N.C.
AFFIRMED
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512 N.W.2d 537 (1994)
Carol A. BENN, As Executor of the Estate of Loras J. Benn, Deceased, Appellant,
v.
Leland R. THOMAS, K-G, Ltd., and Heartland Express, Inc., of Iowa, Appellees.
No. 92-933.
Supreme Court of Iowa.
February 23, 1994.
*538 Gary L. Robinson and Jeffrey P. Taylor of Klinger, Robinson, McCuskey & Ford, Cedar Rapids, for appellant.
John M. Bickel and Diane Kutzko of Shuttleworth & Ingersoll, Cedar Rapids, for appellees.
Considered by McGIVERIN, C.J., and HARRIS, LARSON, SNELL, and ANDREASEN, JJ.
McGIVERIN, Chief Justice.
The main question here is whether the trial court erred in refusing to instruct the jury on the "eggshell plaintiff" rule in view of the fact that plaintiff's decedent, who had a history of coronary disease, died of a heart attack six days after suffering a bruised chest and fractured ankle in a motor vehicle accident caused by defendant's negligence. The court of appeals concluded that the trial court's refusal constituted reversible error. We agree with the court of appeals and reverse the judgment of the trial court and remand for a new trial.
I. Background facts and proceedings. On February 15, 1989, on an icy road in Missouri, a semi-tractor and trailer rear-ended a van in which Loras J. Benn was a passenger. In the accident, Loras suffered a bruised chest and a fractured ankle. Six days later he died of a heart attack.
Subsequently, Carol A. Benn, as executor of Loras's estate, filed suit against defendants Leland R. Thomas, the driver of the semi-tractor, K-G Ltd., the owner of the semi-tractor and trailer, and Heartland Express, the permanent lessee of the semi-tractor and trailer. The plaintiff estate sought damages for Loras's injuries and death. For the purposes of simplicity, we will refer to all defendants in the singular.
At trial, the estate's medical expert, Dr. James E. Davia, testified that Loras had a history of coronary disease and insulin-dependent diabetes. Loras had a heart attack in 1985 and was at risk of having another. Dr. Davia testified that he viewed "the accident that [Loras] was in and the attendant problems that it cause[d] in the body as the straw that broke the camel's back" and the cause of Loras's death. Other medical evidence indicated the accident did not cause his death.
Based on Dr. Davia's testimony, the estate requested an instruction to the jury based on the "eggshell plaintiff" rule, which requires the defendant to take his plaintiff as he finds him, even if that means that the defendant must compensate the plaintiff for harm an ordinary person would not have suffered. See Becker v. D & E Distrib. Co., 247 N.W.2d 727, 730 (Iowa 1976). The district court denied this request.
The jury returned a verdict for the estate in the amount of $17,000 for Loras's injuries but nothing for his death. In the special verdict, the jury determined the defendant's negligence in connection with the accident did not proximately cause Loras's death.
The estate filed a motion for new trial claiming the court erred in refusing to instruct the jury on the "eggshell plaintiff" rule. The court denied the motion, concluding that the instructions given to the jury appropriately informed them of the applicable law.
The plaintiff estate appealed. The court of appeals reversed the trial court, concluding that the plaintiff's evidence required a specific instruction on the eggshell plaintiff rule. Two other assignments of error are raised in which we find no merit.
II. Jury instructions and the "eggshell plaintiff" rule. The estate claims that the court erred in failing to include, in addition to its proximate cause instruction to the jury, a requested instruction on the eggshell plaintiff rule. Such an instruction would advise the jury that it could find that the accident aggravated Loras's heart condition and caused his fatal heart attack. The trial court denied this request, submitting instead a general instruction on proximate cause. The court of appeals reversed, concluding that the trial court erred in refusing to specifically instruct on the eggshell plaintiff doctrine.
Under Iowa rule of civil procedure 244(h), an aggrieved party may, on motion, have an adverse verdict or decision vacated *539 and a new trial granted for errors of law occurring in the proceedings only if the errors materially affected the party's substantial rights. When jury instructions contain a material misstatement of the law, the trial court has no discretion to deny a motion for a new trial. See Brown v. Lyon, 258 Iowa 1216, 1222, 142 N.W.2d 536, 539 (1966). Our review, therefore, is for correction of errors at law. Iowa R.App.P. 4. We find reversible error when the instructions given to the jury, viewed as a whole, fail to convey the applicable law. Sanders v. Ghrist, 421 N.W.2d 520, 522 (Iowa 1988).
A tortfeasor whose act, superimposed upon a prior latent condition, results in an injury may be liable in damages for the full disability. Becker, 247 N.W.2d at 731. This rule deems the injury, and not the dormant condition, the proximate cause of the plaintiff's harm. Id. This precept is often referred to as the "eggshell plaintiff" rule, which has its roots in cases such as Dulieu v. White & Sons, [1901] 2 K.B. 669, 679, where the court observed:
If a man is negligently run over or otherwise negligently injured in his body, it is no answer to the sufferer's claim for damages that he would have suffered less injury, or no injury at all, if he had not had an unusually thin skull or an unusually weak heart.
See generally 4 Fowler V. Harper et al., The Law of Torts § 20.3, at 123 & n. 25 (2d ed. 1986); W. Page Keeton et al., Prosser and Keeton on The Law of Torts § 43, at 292 (5th ed. 1984) [hereinafter Prosser & Keeton].
The proposed instruction here stated:
If Loras Benn had a prior heart condition making him more susceptible to injury than a person in normal health, then the Defendant is responsible for all injuries and damages which are experienced by Loras Benn, proximately caused by the Defendant's actions, even though the injuries claimed produced a greater injury than those which might have been experienced by a normal person under the same circumstances.
See Iowa Uniform Jury Instruction 200.34 (1993) (citing Becker).
Defendant contends that plaintiff's proposed instruction was inappropriate because it concerned damages, not proximate cause. Although the eggshell plaintiff rule has been incorporated into the Damages section of the Iowa Uniform Civil Jury Instructions, we believe it is equally a rule of proximate cause. See Christianson v. Chicago, St. Paul, Minneapolis & Omaha Ry. Co., 69 N.W. 640, 641 (Minn.1896) ("Consequences which follow in unbroken sequence, without an intervening efficient cause, from the original negligent act, are natural and proximate; and for such consequences the original wrongdoer is responsible, even though he could not have foreseen the particular results which did follow.").
Defendant further claims that the instructions that the court gave sufficiently conveyed the applicable law.
The proximate cause instruction in this case provided:
The conduct of a party is a proximate cause of damage when it is a substantial factor in producing damage and when the damage would not have happened except for the conduct.
"Substantial" means the party's conduct has such an effect in producing damage as to lead a reasonable person to regard it as a cause.
See Iowa Uniform Jury Instruction 700.3. Special Verdict Number 4 asked the jury: "Was the negligence of Leland Thomas a proximate cause of Loras Benn's death?" The jury answered this question, "No."
We agree that the jury might have found the defendant liable for Loras's death as well as his injuries under the instructions as given. But the proximate cause instruction failed to adequately convey the existing law that the jury should have applied to this case. The eggshell plaintiff rule rejects the limit of foreseeability that courts ordinarily require in the determination of proximate cause. Prosser & Keeton § 43, at 291 ("The defendant is held liable for unusual results of personal injuries which are regarded as unforeseeable...."). Once the plaintiff establishes that the defendant caused some injury to the plaintiff, the rule imposes liability for *540 the full extent of those injuries, not merely those that were foreseeable to the defendant. Restatement (Second) of Torts § 461 (1965) ("The negligent actor is subject to liability for harm to another although a physical condition of the other ... makes the injury greater than that which the actor as a reasonable man should have foreseen as a probable result of his conduct.").
The instruction given by the court was appropriate as to the question of whether defendant caused Loras's initial personal injuries, namely, the fractured ankle and the bruised chest. This instruction alone, however, failed to adequately convey to the jury the eggshell plaintiff rule, which the jury reasonably could have applied to the cause of Loras's death.
Defendant maintains "[t]he fact there was extensive heart disease and that Loras Benn was at risk any time is not sufficient" for an instruction on the eggshell plaintiff rule. Yet the plaintiff introduced substantial medical testimony that the stresses of the accident and subsequent treatment were responsible for his heart attack and death. Although the evidence was conflicting, we believe that it was sufficient for the jury to determine whether Loras's heart attack and death were the direct result of the injury fairly chargeable to defendant Thomas's negligence. See Nicoll v. Sweet, 163 Iowa 683, 684-85, 144 N.W. 615, 616 (1913).
Defendant nevertheless maintains that an eggshell plaintiff instruction would draw undue emphasis and attention to Loras's prior infirm condition. We have, however, explicitly approved such an instruction in two prior cases. See Woode v. Kabela, 256 Iowa 622, 632, 128 N.W.2d 241, 247 (1964) ("It was proper for the court to instruct with reference to the condition because if the negligent actions of defendant were such that [plaintiff's] former poor physical condition was revived or was enhanced he was entitled to damages because of such condition."); Hackley v. Robinson, 219 N.W. 398, 398-99 (Iowa 1928) (approving instruction allowing plaintiff to recover upon a showing "that the injury directly caused the dormant or inactive tuberculosis to become revivified").
Moreover, the other jurisdictions that have addressed the issue have concluded that a court's refusal to instruct on the eggshell plaintiff rule constitutes a failure to convey the applicable law. See Priel v. R.E.D., Inc., 392 N.W.2d 65, 69 (N.D.1986) (stating that instructions must advise the jury that defendant "cannot escape the consequences of its negligence merely because its negligence would not have caused that extent of injury to a normal person"); Pozzie v. Mike Smith, Inc., 33 Ill.App.3d 343, 337 N.E.2d 450, 453 (1975) (stating that the failure of the court to instruct on the eggshell plaintiff rule "left the jury without proper judicial guidance").
To deprive the plaintiff estate of the requested instruction under this record would fail to convey to the jury a central principle of tort liability.
III. Hearsay objection to deposition evidence. Because it may arise on retrial, we address another of plaintiff's assignments of error, namely, its contention that the district court erred in excluding portions of the deposition testimony of a treating physician, Dr. Webb, on the basis that it was inadmissible hearsay. The estate argues that the defendant, who took the deposition, waived his objection to the deposition testimony by failing to object to the alleged hearsay during the deposition.
We reject this contention. Hearsay objections need not be made prior to or during a deposition and may be made when the deposition is offered at trial. See Iowa R.Civ.P. 158(e); Osborn v. Massey-Ferguson, Inc., 290 N.W.2d 893, 899 (Iowa 1980) (party does not have a duty to object to own questions during a deposition to preserve error for objection at trial).
IV. Disposition. We have reviewed the third assignment of error raised by plaintiff and conclude that it has no merit.
The record in this case warranted an instruction on the eggshell plaintiff rule. We therefore affirm the decision of the court of appeals. We reverse the judgment of the district court and remand the cause to the district court for a new trial consistent with this opinion.
*541 DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT REVERSED AND REMANDED.
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FILED
United States Court of Appeals
Tenth Circuit
December 7, 2009
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
FOR THE TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 08-6260
(D.C. No. 5:07-CR-00238-D-3)
BEAU TRAVIS RIVERS, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before HENRY, Chief Judge, BRORBY, Senior Circuit Judge, and HARTZ,
Circuit Judge.
After pleading guilty to conspiracy to distribute methamphetamine, Beau
Travis Rivers was found guilty by the district court of being a felon in possession
of firearms. He was sentenced to forty-one months in prison, consecutive to a
state prison term, and now appeals. Mr. Rivers contends his firearms conviction
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
was based on insufficient evidence, his consecutive state and federal sentences
violate the parsimony principle, and he was unduly burdened by the successive
state and federal prosecutions. Exercising jurisdiction under 28 U.S.C. § 1291
and 18 U.S.C. § 3742, we affirm.
I
On January 10, 2007, law enforcement officials executed a search warrant
for 3701 South Bryant Avenue in Oklahoma City, Oklahoma. The search
uncovered various contraband, including two rifles found in a locked wall locker.
An ensuing state prosecution culminated in Mr. Rivers pleading guilty to the
Oklahoma crimes of concealing stolen property and possessing controlled
substances. After he was sentenced on his state convictions, Mr. Rivers was
named in a federal indictment for conspiring to distribute methamphetamine,
21 U.S.C. § 846, and possessing firearms after a prior felony conviction,
18 U.S.C. § 922(g)(1). Mr. Rivers pleaded guilty to the conspiracy charge and
was convicted on the firearms count after a bench trial. At sentencing, the district
court reviewed a revised pre-sentence investigation report, considered the parties’
objections, and imposed a within-guidelines sentence of forty-one months in
prison, consecutive to his previously imposed state prison term. On appeal,
Mr. Rivers challenges the sufficiency of the evidence establishing that he
knowingly possessed the firearms, the imposition of consecutive state and federal
sentences, and the successive state and federal prosecutions.
-2-
II
We begin with the evidence underlying Mr. Rivers’ firearms conviction.
“We review the sufficiency of the evidence de novo, taking the evidence and all
reasonable inferences drawn therefrom in light most favorable to the
[government].” United States v. Poe, 556 F.3d 1113, 1124 (10th Cir.),
cert. denied, 130 S. Ct. 395, 2009 WL 1604770 (U.S. Oct. 13, 2009)
(No. 08-10799). A conviction under 18 U.S.C. § 922(g)(1), required the
government to prove that (1) Mr. Rivers had a prior felony conviction, (2) he
knowingly possessed the firearms listed in the indictment, and (3) the firearms
traveled in or affected interstate commerce. Id. at 1125. The parties stipulated to
the first and third elements, leaving only the element of possession at issue.
To show that Mr. Rivers knowingly possessed the two rifles found in the
locker, the government relied on a theory of constructive possession. In Poe, we
explained that where a defendant did not have actual possession of the firearms or
exclusive possession of the premises where the firearms were found, the
government must produce some evidence to support an inference that the
defendant knew of and had access to the firearms:
Possession of a firearm can be either actual or constructive. An
individual has constructive possession if he has ownership,
dominion, or control over the firearm and the premises where the
firearm is found. In most cases, dominion, control, and knowledge
may be inferred where a defendant has exclusive possession of the
premises; however, joint occupancy alone cannot sustain such an
inference. In cases of joint occupancy, where the government seeks
-3-
to prove constructive possession by circumstantial evidence, it must
present evidence to show some connection or nexus between the
defendant and the firearm or other contraband. This requires the
government to point to evidence plausibly supporting the inference
that the defendant had knowledge of and access to the firearm.
556 F.3d at 1125 (citations and quotations omitted).
Our review of the record finds adequate evidence to support the conviction.
Mr. Rivers’ joint control over the premises was demonstrated by several motor
vehicle titles recovered during the search that listed his address as 3701 South
Bryant Avenue. There was also testimony that Mr. Rivers was regularly seen at
that location, that he identified himself as the person in charge of the business
purportedly operating there, and that he even gave police consent to search the
building once for another suspect. Additionally, Mr. Rivers’ girlfriend, Brooke
Jobe, testified that she and Mr. Rivers essentially lived outside an adjacent
building and regularly used the bathroom and showers of 3701 South Bryant. She
said Mr. Rivers’ father controlled the building but she and Mr. Rivers spent most
of their time there and, with the exception of one office, Mr. Rivers enjoyed
unrestricted access to the premises. This testimony was corroborated by a
confidential informant (CI) who testified at trial that Mr. Rivers had a key and
could do “anything he wanted to in that place.” R. Vol. 4 at 262.
Further, there was evidence demonstrating that Mr. Rivers had knowledge
of the firearms. Delbert Knopp, an investigator with the Oklahoma City District
Attorney’s Office, testified that Mr. Rivers confessed to owning one rifle, which
-4-
had been given to him as a gift by his parents. This was confirmed by a witness
who sold the rifle to Mr. Rivers’ mother. Although Mr. Rivers disclaimed the
other rifle as his father’s, Darrell Edwards, an agent with the Bureau of Alcohol,
Tobacco, and Firearms, testified that Mr. Rivers told him he “had a couple of
guns but . . . didn’t want to sell them.” Id. at 55.
Other evidence established Mr. Rivers’ access to the rifles. Ms. Jobe
testified that she never saw any guns in the lockers, but she knew the lockers were
located near the showers and that Mr. Rivers kept his belongings in those lockers.
See United States v. Hien Van Tieu, 279 F.3d 917, 922 (10th Cir. 2002) (finding
sufficient evidence of access where firearm was located with defendant’s
belongings). The CI corroborated this testimony, stating that the lockers were
near the bathroom and showers and that Mr. Rivers kept his belongings in them.
Unlike Ms. Jobe, however, the CI had seen Mr. Rivers move firearms to and from
the lockers just over a year before the offense, see United States v. Hishaw,
235 F.3d 565, 572-73 (10th Cir. 2000) (recognizing that prior possession “may
support an inference of constructive possession” but finding more than two years
before offense too remote); he also knew that Mr. Rivers was an avid hunter, that
he regularly carried firearms, and that the lockers were not always locked.
Although the locker from which the rifles were recovered was locked at the time
of the search and Mr. Rivers did not possess a key at the time of his arrest,
Sergeant Billy Moon testified that the locker was constructed of thin metal and
-5-
was easily opened with a screwdriver, which was among many tools strewn
throughout the building. See United States v. Norman, 388 F.3d 1337, 1341-42
(10th Cir. 2004) (finding sufficient evidence of access where firearm was locked
in an easily opened compartment and no key was found, although evidence later
connected defendant to key); see also id. at 1342 (“a defendant may
constructively possess a weapon under § 922(g)(1) even though that weapon is
not readily accessible at the time of arrest”). Moreover, Sergeant Moon testified
that the two rifles were contained in hunting-style cases, and Sergeant Craig
Engels found hunting gear inside the lockers. This evidence, viewed in the light
most favorable to the government, creates a reasonable inference that Mr. Rivers
had both knowledge of and access to the firearms listed in the indictment; it
therefore adequately supports his conviction under 18 U.S.C. § 922(g)(1).
Next, Mr. Rivers asserts the district court violated the “parsimony
principle” by ordering that his sentence run consecutive to his state prison term.
The “parsimony principle” requires that a sentence be “‘sufficient, but not greater
than necessary, to comply with the purposes’ of criminal punishment.” United
States v. Martinez-Barragan, 545 F.3d 894, 904 (10th Cir. 2008) (quoting
18 U.S.C. § 3553(a)). Contrary to Mr. Rivers’ assertion, the record clearly
demonstrates that the district court adhered to the parsimony principle. The court
fulfilled its obligations under § 3553(a), sentenced Mr. Rivers at the low end of
the applicable guideline range, and ordered that the sentence be served
-6-
consecutive to any previously imposed undischarged prison term. The state and
federal sentences resulted from distinct state and federal prosecutions for distinct
state and federal crimes. Absent any specific argument from Mr. Rivers to
suggest otherwise, we find the district court was properly guided by the
parsimony principle. 1
Finally, we reject Mr. Rivers’ contention that his successive state and
federal prosecutions were unduly burdensome. See United States v. Barrett,
496 F.3d 1079, 1118 (10th Cir. 2007) (recognizing the dual sovereignty doctrine
allows successive prosecutions by separate sovereigns for crimes arising out of
the same underlying conduct). To the extent Mr. Rivers contends the two
prosecutions constitute harassment, he fails to show any evidence of bad faith.
See generally Phelps v. Hamilton, 59 F.3d 1058, 1065 (10th Cir. 1995).
The judgment of the district court is AFFIRMED.
Entered for the Court
Wade Brorby
Senior Circuit Judge
1
Mr. Rivers suggests in his “Statement of the Issues” that his consecutive
sentences violate the Eighth Amendment; he never develops this point, however,
and we therefore do not consider it. See Bronson v. Swensen, 500 F.3d 1099,
1104 (10th Cir. 2007).
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| {
"pile_set_name": "FreeLaw"
} |
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