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22 N.J. 419 (1956)
126 A.2d 348
NEWARK PUBLISHERS' ASSOCIATION, A VOLUNTARY ASSOCIATION CONSISTING OF NEWARK MORNING LEDGER COMPANY, A CORPORATION OF NEW JERSEY, AND EVENING NEWS PUBLISHING COMPANY, A CORPORATION; AND NEWARK MORNING LEDGER COMPANY, A CORPORATION OF NEW JERSEY, PLAINTIFFS-RESPONDENTS,
v.
NEWARK TYPOGRAPHICAL UNION NO. 103, AN UNINCORPORATED LABOR ASSOCIATION, A SUBORDINATE UNION OF INTERNATIONAL TYPOGRAPHICAL UNION OF THE CITY OF NEWARK, N.J., DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued October 8, 1956.
Decided November 5, 1956.
*421 Mr. Thomas L. Parsonnet argued the cause for the defendant-appellant (Messrs. Parsonnet, Weitzman & Oransky, attorneys).
Mr. Benjamin H. Chodash argued the cause for the plaintiffs-respondents (Mr. Harold Krieger, on the brief).
The opinion of the court was delivered by HEHER, J.
The defendant union appeals from a summary judgment of the Law Division of the Superior Court directing arbitration under N.J.S. 2A:24-3 of an issue arising out of the refusal of the union to permit the Newark Morning Ledger Company, in the publication of the Newark Star-Ledger, *422 to use but one of its employees in the operation of three teletypesetter casting machines; and the resolution of the issue, in turn, depends upon the meaning of a collective bargaining agreement made between the parties on April 27, 1955, to run for a term ending April 26, 1958, providing, inter alia, paragraph 3(a), that "When additional teletypesetter casting machines are introduced, the manning of casting units shall be negotiated, but at no time during the life of this contract shall a publisher request that a journeyman tend more than three casting units"; and also that, paragraph 26, a "Grievance Committee of four members shall be maintained," consisting of two members selected by the publishers and two selected by the union, for the "settlement" of "any dispute (except as otherwise herein provided) arising under this contract between a signatory publisher and the Union, if such dispute cannot be settled by conciliation between the Union and the Publisher involved," the committee's "decision" to be "final and binding on all parties to the dispute," provided that if the committee shall fail to reach an agreement within ten days from the date of the submission of the dispute, the members of the committee shall appoint "a fifth and impartial member to act as chairman," and the "decision of the majority" shall be "final and binding" but shall not "abridge the fundamental rights reserved by and to the signatory publisher and the Union," and should the four members "fail to agree on a chairman within seven days," the selection shall be made by the "presiding judge of the Superior Court from a list of an equal number of names to be submitted by the Union and the Publishers' representatives," and further that "local union laws not affecting wages, hours or working conditions, and the 1955 General Laws of the International Typographical Union, shall not be subject to arbitration."
The issue concerns the manning of the "comparatively new" teletypesetter casting machine. The union would not allow the operation of three such machines by one employee of the plaintiff publisher. It puts the question thus: "By this (the "manning") we mean that the employer wants *423 to compel a printer to `man,' or operate, three machines, while the union, fearful of a substantial increase in individual workload and an equally substantial decrease in job opportunities, is strongly opposed to the operation by one man of more than one machine."
The Superior Court, Judge Foley sitting, found there was "no genuine issue as to any material fact," and "no need for a jury trial as to the issues," and the union had failed in its contractual duty to submit the issue to arbitration; and judgment proceeded accordingly.
The union now says that the question of "the manning of these machines" was "very thoroughly thrashed out during the negotiations leading up to the execution of the current collective bargaining agreement," and it "was prepared to offer full evidence concerning the negotiations, and concerning the fact that this issue was the principal ground of dispute between the parties before its final, but merely temporizing, solution as expressed by the penultimate paragraph of paragraph 3(a) of the contract"; and the "true issue" is stated to be the "meaning of the word `negotiated,' as here used, and in the context of all surrounding circumstances," said to have special significance "in view of the specific exception made by the grievance and arbitration clause of the contract," i.e. the parenthetical clause of paragraph 26, "except as otherwise herein provided"; that the "penultimate paragraph of paragraph 3(a), * * * requiring `negotiation' of the particular issue, is the only portion of the contract which can possibly be construed as `providing otherwise' than that this issue should be arbitrated"; that it is obvious from this paragraph, "and certainly would have been clear from the testimony if it had been accepted, that this paragraph was adopted by the parties merely as a stopgap," as a "means of avoiding further dispute at that time, so as to enable the completion of the contract by leaving over for later argument, for later `negotiation,' this problem that was holding up the contract as a whole"; and that subsequent to the execution of the agreement, "Ledger brought in additional teletypesetters, and tried to require one employee to *424 operate three machines," and the union's refusal framed the issue which resulted in this proceeding.
These are the points made: (a) By the "clear terms" of the contract, "the issue of the manning of teletypesetter machines was not subject to arbitration, but only to negotiations"; (b) Even if it were determined that the contract "did not unambiguously exempt this issue from reference to the grievance committee, there was at least sufficient doubt or ambiguity to require" the admission of evidence of "surrounding circumstances to clarify the intent and meaning of the parties"; and (c) On the latter hypothesis, "the intent and meaning of the parties in the use of the words of the contract were questions of fact," and it was error to deny the union's demand for a jury trial under N.J.S. 2A:24-3.
The arbitration clause of the contract, paragraph 26, is clear and explicit in its terms, devoid of all ambiguity calling for explanatory evidence aliunde. All disputes "arising under this contract" are made subject to arbitration, save as "otherwise" therein provided. The argument is that there are "only two issues in the entire contract which are, by the contract terms, withheld from the provisions or coverage of the arbitration clause": one, "the unnecessary, and superfluous provision in the next-to-the-last paragraph of paragraph 26," excluding from arbitration the "local union laws not affecting wages, hours or working conditions, and the 1955 General Laws" of International; "the other, and therefore the only real issue withheld from the effect of the arbitration clause is the penultimate clause of paragraph 3a" providing that when "additional teletypesetter casting machines" are introduced, "the manning of casting units shall be negotiated"; and that these latter words mean "expressly and clearly that this matter will be submitted to collective bargaining, and not to arbitration." It is said that "negotiation," in the "context of labor-management relations," is a "word of art, well understood by the general public as well, meaning only the act of bargaining `across the table,' and excluding from its meaning either the concept of mediation or conciliation, or that of arbitration."
*425 But whatever meaning the term "negotiation" may have in other and different contexts, in this setting it does not purport to exclude arbitration; and to hold that it does would be to do violence to a manifestation of intention that is plain and clear and free of all reasonable doubt as to meaning, such as arises by logical and factual inference from the whole of the expression, related to the relevant circumstances and the apparent objects the parties were striving to attain. There is no rational basis for the proposition that the parties designed to exclude from arbitration the "issue of the manning of casting units." If that were in mind, why the qualifying provision of the same clause: "* * * but at no time during the life of this contract shall a publisher request that a journeyman tend more than three casting units"? Considering the mode and manner of expression, it is an entirely reasonable hypothesis that if the parties had in mind the exclusion of the particular issue from the arbitral process, the intention so to do would have been expressed in clear and peremptory terms.
"Any dispute" arising under the contract was made subject to arbitration except as "otherwise herein provided." The local union laws "not affecting wages, hours or working conditions" and the 1955 General Laws of International were expressly excluded; so also, the "differences respecting a succeeding contract," all the subject matter of the last two paragraphs of the arbitration section titled "Grievance Committee," while the "manning clause" is embodied in an entirely different section. And the arbitration clause more definitively provides that arbitration shall be had "if such dispute cannot be settled by conciliation between the Union and the Publisher involved." And is not this controversy concerned with "working conditions"?
"Negotiation" almost invariably attends the particular matter in dispute before resort is had to arbitration or the judicial process, as the case may be; and arbitration is the stipulated mode of resolving the controversy where negotiations between the parties have been fruitless, and the procedure is not expressly barred in the given case. Such is *426 plainly the use and the significance of the word "negotiated" in the present context. Arbitration was invoked to afford an expeditious determination of disputes and controversies by quasi-judicial means. City of Omaha v. Omaha Water Co., 218 U.S. 180, 30 S.Ct. 615, 54 L.Ed. 991 (1910). An exception to this general principle of arbitrament of differences "arising out of (the) contract" here cannot be made to rest upon uncertain implication. There is no discernible reason, related to the expressed contractual policy and purpose, why differences remaining unsettled after futile negotiations should not be submitted to the arbitral jurisdiction rather than the judicial. Otherwise, the intent and purpose of the agreement as a whole could be set at naught, and there is no tangible ground for the inference that the parties intended the agreement should come to an end if this issue could not be "negotiated." Quite the contrary. With the stated specific exceptions, differences and disputes which "cannot be settled by conciliation between the union and publisher" are made arbitrable. In this context, "negotiation" and "conciliation" are convertible terms. See Phelps Dodge Copper Products Corporation v. United Electrical Radio & Machine Workers of America, 138 N.J. Eq. 3 (Ch. 1946), affirmed Westinghouse Electric Corp. v. United Electrical, etc., 139 N.J. Eq. 97 (E. & A. 1946).
Interpretation is the process of giving meaning to the symbols of expression, taken and compared together in the setting of the circumstances. A subsidiary provision is not so to be interpreted as to conflict with the obvious "dominant" or "principal" purpose of the contract. We seek for the intention of the parties; and to this end the writing is to have a reasonable interpretation. Disproportionate emphasis upon a word or clause or a single provision does not serve the purpose of interpretation. Words and phrases are not to be isolated but related to the context and the contractual scheme as a whole, and given the meaning that comports with the probable intent and purpose; and thus the literal sense of terms may be qualified by the context. Mantell v. International Plastic Harmonica Corporation, 141 N.J. Eq. *427 379 (E. & A. 1947). That which is patently and unmistakably implied is a constituent element of the contractual intention, just as much so as that which is explicitly expressed in terms. Krosnowski v. Krosnowski, lately decided, 22 N.J. 376 (1956). The distinction is between word symbols that are to be regarded as "directly" promissory and words "the meaning of which is not so clearly apparent," but the process is one of true interpretation; it concerns "a promise that the promissor himself made, but a promise that he did not put into promissory words with sufficient clearness to be called an `express promise'"; there are "implications in English words as well as in other signs and symbols," and "what your words imply is also what your words express." Corbin on Contracts, sections 18, 561, 562.
Evidence of the circumstances is always admissible in aid of the interpretation of an integrated agreement, even where the contract is free from ambiguity, not for the purpose of changing the writing, but to secure light by which its actual significance may be measured. Such evidence is adducible simply as a means of interpreting the writing, not for the purpose of modifying its terms, but to assist in determining the meaning of what has been said. So far as the evidence tends to show, not the sense of the writing, but an intention wholly unexpressed, it is irrelevant. Atlantic Northern Airlines v. Schwimmer, 12 N.J. 293 (1953). We are not at liberty to introduce and effectuate some supposed unrevealed intention. The actual intent of the parties is ineffective unless made known in some way in the writing. It is not the real intent but the intent expressed or apparent in the writing that controls. Corn Exchange National Bank & Trust Co. v. Taubel, 113 N.J.L. 605 (E. & A. 1934). And the construction of the integration is the exclusive province of the judge, unless an issue of fact be raised by evidence aliunde. New York Sash & Door Co., Inc., v. National House & Farms Association, 131 N.J.L. 466 (E. & A. 1944).
Here, there was no undue exclusion of evidence aliunde on the hypothesis of an ambiguous contract, or otherwise. *428 The meaning of the writing is clear, assessed as an entirety, and there was no demonstrable error of substance in the asserted exclusion of evidence "as to the intent and meaning of the parties"; and, by the same token, there was no denial of the right of trial by jury. The offer of proof had to do, not with the interpretive function, but rather the use of the preliminary negotiations to vary and enlarge the terms of the writing, indisputably intended by the parties to be a final and complete memorial of their bargain, the integration of the jural act, and hence the exclusive repository of the common intention as a rule of substantive law.
Affirmed.
For affirmance Chief Justice VANDERBILT, and Justices HEHER, WACHENFELD, BURLING and JACOBS 5.
For reversal None.
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368 P.2d 430 (1962)
PACIFIC FINANCE CORPORATION, a corporation, Plaintiff-Respondent,
v.
Milo AXELSEN, Defendant-Appellant.
No. 8941.
Supreme Court of Idaho.
January 26, 1962.
Gigray & Boyd, Caldwell, for appellant.
Smith & Miller, Caldwell, C. Ben Martin, Boise, for respondent.
TAYLOR, Justice.
Plaintiff (respondent) objects to a review of questions of fact in this case on the ground that the reporter's transcript was not settled by the trial judge. The transcript is properly certified by the court reporter and contains an acknowledgment of service by counsel for plaintiff, and does not show any designation of errors by either party. The completed transcript is *431 properly certified by the clerk. Under such circumstances, the reporter's transcript is "deemed settled by the judge." I.C. § 10-509. See Geist v. Moore, 58 Idaho 149, 70 P.2d 403.
Plaintiff calls attention to the fact that the transcript does not contain the pretrial order, and to the statement of the trial judge at the opening of the trial as follows:
"There has been a pretrial order made in this case under date of May 11, 1959, in which certain facts are agreed, certain issues of fact are in controversy, certain law questions to be determined."
To the extent that the findings depend upon facts as to which no evidence was admitted, we will presume that such facts were agreed upon in conformity with the findings. Nash v. Hope Silver-Lead Mines, Inc., 79 Idaho 137, 314 P.2d 681.
October 22, 1955, Frank Morgan and wife purchased from Hunter Motor Company at Salt Lake City, Utah, a 1953 Ford automobile, and executed and delivered to the seller their conditional sales contract for $1365.60, payable $56.90 per month, commencing November 22, 1955. The contract provides that the title shall not pass to the purchaser until the contract balance is fully paid, and that the purchaser shall not remove the car from the state or transfer any interest therein without the written consent of the seller. In this transaction the Morgans gave their address as "416" South State Street, Salt Lake City. On the same day, October 22, 1955, the conditional sales contract was assigned to the plaintiff by the Hunter Motor Company, and on the same day the Morgans executed an application to the Utah tax commission for a certificate of title, in which they gave their address as "2416" South State Street, Salt Lake City, Utah, and in which they named the plaintiff as the holder of a lien on the car. November 4, 1955, the Utah state tax commission issued a certificate of title to Morgan and wife at the address shown on the application, and subject to the lien held by plaintiff. The Morgans paid the November, 1955, installment on the contract sometime in December, and thereafter defaulted.
Without the knowledge or consent of the plaintiff, the Morgans removed the automobile to Idaho. The exact date of the removal does not appear, but from the testimony of one Webster, a witness for the plaintiff, and one Bird, a witness for the defendant, it appears that Morgans came to Idaho in November or December, 1955. The trial court found that Morgan was a resident of the state of Utah, temporarily in Idaho. On January 27, 1956, the sheriff of Ada County, Idaho, took possession of the automobile pursuant to writ of execution issued upon a judgment, dated December 2, 1955, obtained by one Waldner against Morgan. The sheriff fixed the date of sale for February 4, 1956. February 3, 1956, the plaintiff filed with the sheriff a third party claim, setting forth its interest in the automobile. Thereupon, the defendant (appellant) herein, acting as Waldner's attorney, procured a bond to be posted indemnifying the sheriff against plaintiff's claim, and the automobile was sold by the sheriff to defendant. Defendant testified that he purchased the car for the purpose of speculation and, after making some repairs, sold it to a third party.
This action was commenced by the plaintiff to recover the car or its value.
Upon trial, the court found:
"That at the time of the issuance of the writ of execution and the holding of the execution sale of the automobile the said Frank Morgan was a resident of the State of Utah, and that at no time had the plaintiff given its permission for the said automobile to be removed from the State of Utah, nor had the plaintiff at any time prior to the filing of its third party claim had any knowledge that the automobile had been removed from the State of Utah;"
that defendant had sold the car and could not return it; that at the time of the execution sale the car was of a reasonable *432 value of $1000; and concluded that under the rule of comity the defendant purchased the automobile at the sheriff's sale subject to plaintiff's lien. Judgment was entered in favor of plaintiff for the sum of $1000 damages, plus statutory interest and costs. Defendant prosecutes this appeal from the judgment.
The rule of comity recognized by nearly all of the states of the Union is generally stated as follows:
"By the great weight of authority, both in cases involving chattel mortgages and in cases involving conditional sales, the lien of a mortgage or conditional sale contract properly perfected by recordation or filing or otherwise, and according to the law of the state in which it was executed and the property covered was found at the time, continues to have priority even after the removal of the property (at least if the removal is without the knowledge and consent of the mortgagee or conditional vendor) to another state, over the rights and claims acquired in such latter state of purchasers from or creditors of the mortgagor or conditional vendee." Anno., Conflict of Laws, 13 A.L.R.2d 1318.
"By weight of authority a mortgage, if valid and properly executed and recorded according to the law of the state where the mortgage is executed and the property at the time is located, will be held valid even as against bona fide creditors and purchasers in another state to which the property is removed by the mortgagor, unless it contravenes the statute or settled law or policy of the forum." 14 C.J.S. Chattel Mortgages § 15.
See also 15 C.J.S. Conflict of Laws § 18(3). Other cases supporting general rule: Ragner v. General Motors Acceptance Corp., 66 Ariz. 157, 185 P.2d 525; Mosko v. Smith, 63 Wyo. 239, 179 P.2d 781; Hart v. Oliver Farm Equip. Sales Co., 37 N.M. 267, 21 P.2d 96, 87 A.L.R. 962; Walker Motor Exchange v. Lindberg, 86 Mont. 513, 284 P. 270; Mercantile Acceptance Co. v. Frank, 203 Cal. 483, 265 P. 190, 57 A.L.R. 696, Anno. 702; Globe Grain & Milling Co. v. DeTweede Northwestern & Pac. Hypotheekbank (C.C.A.9th) 69 F.2d 418; Metro-Plan, Inc. v. Kotcher-Turner, Inc., 296 Mich. 400, 296 N.W. 304; Emerson-Brantingham Imp. Co. v. Ainslie, 38 S.D. 472, 161 N.W. 1001; Ball Bros. Trucking Co. v. Sorenson (Tex.Civ.App.) 191 S.W.2d 908; Pacific Finance Loans v. Guidry (La. App.) 69 So.2d 56; General Motors Acceptance Corp. v. Nuss, 195 La. 209, 196 So. 323. The rule was stated by this court as follows:
"The great weight of judicial opinion is that, by reason of comity between states, if personal property, situated in a given state, is there mortgaged by the owner and the mortgage is duly executed and recorded as by the local law required so as to create a valid lien, and if the property is thereafter removed into another state and is there sold to a purchaser without knowledge of the encumbrance, such purchaser takes title subject to the lien of the mortgage, although it has not been recorded in the latter state, and this is particularly true when the removal is accomplished without the knowledge or consent of the mortgagee." Smith v. Consolidated Wagon, etc., Co., 30 Idaho 148, at 151, 163 P. 609, at 610.
The rule was again recognized by this court in Moore v. Keystone Driller Co., 30 Idaho 220, 163 P. 1114, L.R.A.1917D, 940. In that case the rule was not applied because the removal was not without the knowledge and consent of the mortgagee.
Defendant assigns as error the finding of the trial court that Morgan was temporarily in Ada County, Idaho, and that he was a resident of the state of Utah and produced testimony by the witness Bird tending to show that Morgan was a resident of Idaho, that he had been absent from the state on construction work in Utah and Wyoming during a part of the year 1955, and that he was living in Idaho in November *433 and December of that year. Actually the legal residence of Morgan during the time involved is beside the point. The court found, and the facts support the finding, that the conditional sales contract was executed in Utah, filed with the Utah State Tax Commission; that title certificate was issued upon the application made by Morgan; all while the car was in the state of Utah; and that plaintiff held a valid contract lien upon the car under the laws of the state of Utah. The fact that the Morgans may have misrepresented their actual residence would not affect the validity of plaintiff's contract.
Plaintiff's local branch manager testified that he located Morgan in Ada County in December, 1955, or January, 1956, and at that time the car had been attached by the sheriff. The plaintiff was not guilty of laches prejudicial to defendant, especially in view of the fact that defendant had notice of plaintiff's claim before the sheriff's sale.
Defendant contends that the rule of comity is not applicable here because of the provision of our law to the effect that no chattel mortgage, or conveyance intended to operate as a mortgage, is valid as against creditors or subsequent purchasers or encumbrancers without notice, until the mortgage, or conveyance intended to operate as a mortgage, has been filed with the department of law enforcement under I.C. § 49-412. It is to be noted that the filing required by that section is limited to encumbrances "on any vehicle registered under the laws of this state." We find no provision in our law expressly providing that a foreign mortgage or contract creating an encumbrance upon a motor vehicle shall not be effective in this state until it is so filed. This same contention was urged in the case of Ragner v. General Motors Acceptance Corporation, 66 Ariz. 157, 185 P.2d 525, under a statute similar to ours. In holding that the statute did not affect the rule of comity, the Arizona court said:
"We are of the opinion that this statute contains no implied abrogation of the rule set forth in the Forgan case. The statute was not intended to have extraterritorial effect other than would be accorded it through the rule of comity. This statute sets forth the modus operandi for registering motor vehicles, securing certificates of title, and establishing liens in this state by and for the citizens of this state. The statute, specifically says that a lien can be acquired only in the manner set forth in the statute, and that the instrument creating the lien `shall be executed in the manner required by the laws of this state. * * *' It is inconceivable that the legislature contemplated that it had the authority or was attempting to set forth the manner in which other states might create the means for establishing liens. The legislature is presumed to have known of the holding of this court in the Forgan case. To adopt the rule contended for by appellants would result in gross inequities. Though the language of the statute is broad enough to authorize the interpretation contended for by appellants, certainly it is not compelling nor do we believe that it is warranted.
"From this and other intendments, we do not believe it was the purpose or intent of the legislature in its Act of 1937, section 66-231, to include the filing of foreign chattel mortgages on motor vehicles and thereby abrogate the rule of comity as established in Forgan v. Bainbridge [34 Ariz. 408, 274 P. 155]." 185 P.2d at 528.
Our statute is likewise construed. We, therefore, hold that the rule of comity does not contravene "the statute or settled law or policy of the forum," and that the conclusion of the district court that defendant purchased the car subject to plaintiff's lien, was correct.
The defendant also assigns as error the finding of the court that the car was as the time of the reasonable market value of $1000. This finding is supported by the *434 testimony of plaintiff's local representative and a Boise used-car dealer.
Judgment affirmed.
Costs to respondent.
SMITH, C. J., and KNUDSON, Mc-QUADE and McFADDEN, JJ., concur.
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2 F.3d 293
J.C. BELL, Appellee,v.A.L. LOCKHART, Director, Arkansas Department of Corrections,Appellant.
No. 92-3782.
United States Court of Appeals,Eighth Circuit.
Submitted June 14, 1993.Decided Aug. 19, 1993.Rehearing and Suggestion for RehearingEn Banc Denied Oct. 28, 1993.
Olan W. Reeves, Little Rock, AR, argued (Kyle R. Wilson, Asst. Atty. Gen., on the brief), for appellant.
Gary D. Corum, Little Rock, AR, argued, for appellee.
Before WOLLMAN and LOKEN, Circuit Judges, and BOGUE,* Senior District Judge.
WOLLMAN, Circuit Judge.
1
The State of Arkansas appeals from the district court's order granting J.C. Bell federal habeas corpus relief under 28 U.S.C. Sec. 2254. We reverse.
I.
2
This case has a long and convoluted history. On February 9, 1974, K.B. Allen, a businessman in Pine Bluff, Arkansas, was shot and killed during a robbery at his shoe store. Petitioner Bell, along with two other men, was arrested in connection with the murder. The state subsequently charged Bell with capital felony murder in the perpetration of robbery.
3
The facts concerning the hearing described in the following paragraph were established at an evidentiary hearing before a United States magistrate judge held on January 7, 1992, in connection with Bell's current habeas petition.
4
Sometime before trial, counsel for Bell, Jay Dickey, requested a hearing on pretrial motions for a continuance and for Bell's commitment to the Arkansas State Hospital for a mental examination. On or about March 20, 1974, the trial court held a hearing on the motions and denied both.1 Dickey did not request Bell's presence at the hearing and Bell was in fact absent from the hearing. At the time of Bell's trial, Ark.Stat.Ann. Sec. 22-352 (Repl.1962) required that if either of the parties or the court wanted the proceedings recorded, one of them had to make a request at the time of the proceedings. Bell v. State, 296 Ark. 458, 757 S.W.2d 937, 939 (1988). No one requested that this hearing be recorded.
5
On March 26, 1974, a jury found Bell guilty of capital felony murder. The court sentenced him to life imprisonment without the possibility of parole. Bell did not appeal directly from either his conviction or his sentence.
6
On September 23, 1975, Bell filed a petition for post-conviction relief in the Jefferson County circuit court pursuant to Arkansas Rule of Criminal Procedure 37.2 The circuit court summarily dismissed Bell's petition without a hearing. On appeal, however, the Arkansas Supreme Court reversed and remanded for an evidentiary hearing. Bell v. State, No. CR 75-211, unpub. op. (Ark. May 10, 1976).
7
In the meantime, on April 28, 1976, a fire destroyed a large portion of the Jefferson County Courthouse. Because Bell had not pursued a direct appeal from his conviction, no transcript had been prepared before the fire, which destroyed the original records and exhibits. Consequently, only a partial, reconstructed record is available for review.
8
The circuit court appointed counsel to assist Bell with his petition for post-conviction relief and subsequently conducted three evidentiary hearings. At the first hearing, on October 6, 1977, Bell's post-conviction counsel made an oral motion requesting a trial transcript. Appended to the transcript of that hearing, however, is a note from the court reporter, G.N. "Buddy" May, stating that the courthouse fire had destroyed all the tapes of Bell's trial and that a transcript was not available.
9
On August 14, 1978, the circuit court held the second evidentiary hearing, during which court reporter May testified that some of his shorthand notes had been stored in an area of the courthouse where they might have escaped destruction in the fire. May opined that it might be possible to reconstruct at least a portion of the record. During the hearing, Bell's post-conviction counsel, Leon Jamison, who had been appointed to succeed Bell's original post-conviction counsel, questioned the doctor and the psychiatrist who examined Bell after the trial court had denied his motion for commitment.
10
On November 20, 1978, the circuit court held the third evidentiary hearing, during the course of which Jamison extensively questioned Bell's trial counsel, Dickey. Jamison inquired at length concerning the motions for a continuance and for a mental examination. In addition, Bell himself testified that he remembered that Dickey had visited him in prison and had informed him that the trial court had denied the motion requesting his commitment for a mental examination.
11
Bell's principal allegation in his Rule 37 petition was that he had been denied a fair trial due to the ineffective assistance of his trial counsel. Bell v. State, 269 Ark. 85, 598 S.W.2d 738, 739 (1980). As recounted above, in exploring Dickey's performance, Bell's post-conviction counsel delved into all aspects of Dickey's preparation for and conduct of the trial, including the motions for a continuance and medical examination. Post-conviction counsel also had the opportunity to question Dickey and court reporter May, each of whom was present and was questioned during at least one of the hearings. In addition, all three hearings were held before Judge Randall Williams, who had presided over the entirety of the original criminal proceedings.
12
On June 13, 1979, the circuit court denied Bell's second petition. The Arkansas Supreme Court affirmed the denial. Bell v. State, 269 Ark. 85, 598 S.W.2d 738.
13
Pursuant to the circuit court's order, the partially reconstructed transcript was made available to Bell in mid-1979. Thereafter, some additional fragments of record were reconstructed. On April 21, 1986, efforts to reconstruct the transcript received an irrevocable setback when court reporter May died.
14
On August 1, 1980, Bell filed his first petition for writ of habeas corpus pursuant to 28 U.S.C. Sec. 2254.
15
The district court denied Bell relief on his first habeas petition. We reversed and remanded to the district court with instructions that it direct the state to grant Bell a belated appeal or, if the state refused to do so, to issue the writ. Bell v. Lockhart, 795 F.2d 655, 658 (8th Cir.1986).
16
The Arkansas Supreme Court granted Bell's motion for a belated appeal, but affirmed his conviction and sentence. Bell v. State, 296 Ark. 458, 757 S.W.2d 937 (1988). In its opinion, the Arkansas Supreme Court evaluated Bell's claim that the trial court had committed prejudicial error in holding a hearing in Bell's absence on the motions for a continuance and for commitment to the Arkansas State Hospital.
17
The plurality opinion, joined in by three justices, agreed with Bell that (1) if the circuit court had held a hearing on his motions, any such hearing would have been a "substantial step in the case" and Bell would have been entitled to be present at the hearing. Id. at 940. The plurality held, however, that even if a hearing had been held and Bell had been absent, reversal would only be required if Bell could show prejudice resulting from his absence. Id. at 941. The plurality did not reach the question whether a hearing had in fact occurred, however, because it found that Bell had waived his right to be present by failing to specifically request that he be present at any such hearing. Id.
18
Two justices dissented, finding that a hearing was in fact requested and held, and that Bell's motions were in fact presented and denied on March 20, 1974. Id. at 944 (Dudley, J., dissenting). Noting that Bell was absent from this hearing, the dissent stated that because it found that a hearing was held and Bell was not present, his absence at such a "substantial step" should automatically result in reversal. Id. at 943-44. Thus, the dissent did not interpret Arkansas law to require an additional showing of prejudice by Bell before he would be entitled to a reversal of his conviction.
19
Two justices, concurring, agreed with the dissent that Bell was entitled to be present if a hearing was in fact held on his motions. Id. at 943 (Glaze, J., concurring). The concurring justices joined the plurality, however, because they found that the record did not establish that a hearing had been held on the motions. Id.
20
Following the Arkansas Supreme Court's affirmance of his conviction, Bell filed a second petition for writ of habeas corpus pursuant to 28 U.S.C. Sec. 2254. Bell originally asserted numerous grounds for relief, including eleven allegations of ineffective assistance of counsel. Ground (1)(j) of the petition, which is the subject of the present appeal, alleges that trial counsel for Bell was ineffective because he
21
failed to request that hearings on pre-trial motions for a continuance and for his commitment to the Arkansas State Hospital for a mental examination be recorded and thus failed to preserve for appellate review petitioner's claim that he was improperly excluded from these hearings.
22
This claim of ineffective assistance of counsel was not raised by Bell in his Rule 37 petition.
23
On October 18, 1990, a United States magistrate judge issued findings recommending the dismissal of each of Bell's grounds for relief. Specifically, the magistrate judge found that Bell had procedurally defaulted on ground (1)(j) by failing to raise that claim in his Rule 37 petition.
24
On June 7, 1991, the district court adopted a majority of the magistrate judge's findings. The district court, however, remanded the petition to the magistrate judge for an evidentiary hearing to determine whether the state trial court had abused its discretion in denying Bell's motion for a continuance and for further findings with respect to certain claims raised in Bell's petition. The district court found that the absence of Bell's trial records constituted cause for Bell's procedural default on ground 1(j). Consequently, it remanded the issue to the magistrate judge for a determination whether Bell could show that he was prejudiced as a result of the procedural default.
25
Following an evidentiary hearing, the magistrate judge issued findings and recommendations, which the district court adopted in its order of November 5, 1992.
26
The district court found that Bell had been prejudiced by the default on the claim (1)(j). The court found, based upon attorney Dickey's testimony at the habeas evidentiary hearing, that a hearing had in fact been held on Bell's motions. The court found further that Bell's trial counsel had in fact been ineffective for failing to request that the hearing on the motions be recorded. The district court found the remainder of Bell's claims to be without merit.
27
The district court found, based upon its interpretation of the dissent and the concurrence in the Arkansas Supreme Court's opinion in Bell, that Bell had shown prejudice from counsel's failure to request that the hearing be recorded. The district court reasoned that if Bell's counsel had requested that the hearing be recorded, the Arkansas Supreme Court would have had before it at the time of its 1988 decision the additional fact that the hearing had occurred. The district court concluded that in the light of this fact, a majority of justices on the Arkansas Supreme Court (namely, the two dissenting justices and the two concurring justices) would have reversed Bell's conviction because he was absent when substantial steps were taken in his case.3 The district court ordered the writ to issue if the state did not retry Bell.
II.
28
The state contends that the district court erred in its findings concerning cause and prejudice and the merits of Bell's ineffective assistance claim.
29
A state procedural default bars federal habeas review unless the petitioner "can demonstrate cause for the default and actual prejudice as a result of the alleged violation of federal law...." Coleman v. Thompson, --- U.S. ----, ----, 111 S.Ct. 2546, 2565, 115 L.Ed.2d 640 (1991); Maynard v. Lockhart, 981 F.2d 981, 984 (8th Cir.1992).
30
The Supreme Court has held that "the existence of cause for a procedural default must ordinarily turn on whether the prisoner can show that some objective factor external to the defense impeded counsel's efforts to comply with the State's procedural rule." Murray v. Carrier, 477 U.S. 478, 488, 106 S.Ct. 2639, 2645, 91 L.Ed.2d 397 (1986). A showing that the factual or legal basis for a claim was not reasonably available to counsel or that interference by officials made compliance impracticable would constitute cause under this standard. Id. (We note that Coleman v. Thompson, --- U.S. ----, ----, 111 S.Ct. 2546, 2568, 115 L.Ed.2d 640 (1991), forecloses the argument that the ineffective assistance of post-conviction counsel can provide cause.)
31
As stated earlier, the district court found cause for Bell's procedural default, stating, "[t]he Court finds petitioner had sufficient reasons for failing to raise [this issue] in his Rule 37 petition, namely, the absence of the trial records." D.Ct. Order of June 7, 1991, at 8. Thus, the threshold question before us is whether the absence of trial records provides sufficient cause to excuse Bell's failure to raise the ineffective assistance of counsel claim in his Rule 37 petition.
32
We think our analysis is best placed in a chronological framework. The courthouse fire occurred on April 28, 1976, after the Arkansas circuit court had dismissed Bell's initial Rule 37 petition, but before the Arkansas Supreme Court reversed and remanded for the three evidentiary hearings.
33
Bell is correct in asserting that he could not have discovered his trial counsel's alleged error from the time immediately after the fire until some time in the fall of 1976, when the circuit court first appointed post-conviction counsel for him. We find Bell's argument less persuasive, however, as it relates to the period after the circuit court appointed post-conviction counsel.
34
As recounted above, the circuit court held three separate evidentiary hearings: on October 6, 1977; August 14, 1978; and November 20, 1978. As the Arkansas Supreme Court observed, Bell's principal allegation in his post-conviction petition was that he was denied a fair trial due to ineffective assistance of his trial counsel. Bell v. State, 269 Ark. 85, 598 S.W.2d 738, 739 (1980). In examining trial counsel's performance, post-conviction counsel Jamison delved into all aspects of attorney Dickey's preparation for and conduct during the trial, including the motion for a continuance and the events surrounding it. See Id. 598 S.W.2d at 740. In the course of the post-conviction hearings, Jamison (1) established that the two motions had been presented and denied; (2) cross-examined Dickey at length concerning the motions; (3) established that Bell had been told about the motion for commitment for a mental examination after it had been denied; and (4) established that a hearing had been held on the motion to suppress. In addition to questioning Dickey, Jamison also had the opportunity to question court reporter May and Judge Williams.
35
Bell's current counsel asserted at oral argument in the present appeal that "nobody" knew whether a hearing had taken place in connection with Bell's pretrial motions. We disagree. Although Bell presumably did not know that a hearing had been held because, of course, he was not present, all of the people who participated in the motion hearing, namely, trial counsel Dickey, Judge Williams, prosecutor Winfred Trafford, and court reporter May, all knew that a hearing had been held and that Bell was not present at that hearing.
36
As Bell notes in his brief, post-conviction counsel was able to obtain copies of pleadings and motions filed by Bell's trial counsel. Once post-conviction counsel knew of the existence of the motions, he could readily have established that a hearing had been held on the motions without the use of a transcript because most of the participants were present and testified at the post-conviction hearings. At the time of Bell's Rule 37 hearings in 1977-78, all of the central participants in the hearing were still alive and had relatively fresh memories of the events, and court reporter May was alive to interpret his notes. By 1992, May had died, and memories of the events were presumably not as fresh in the memories of the surviving parties having personal knowledge of the pretrial proceedings. Nonetheless, based primarily upon Dickey's testimony at the 1992 hearing before the magistrate judge, Bell was able to establish that a hearing had in fact taken place. This is the central contradiction that undercuts Bell's argument: Although Bell claims that he was unable to determine at the time of his Rule 37 evidentiary hearings in 1977-78 that a hearing had been held on his motion for continuance and for a mental examination, the district court in 1992 was nonetheless able to determine that a hearing had been held, based upon information that was quantitatively and, arguably, qualitatively not equal to that available to Bell in 1977-78.
37
Having established that Bell could readily have discovered trial counsel's failure to have the hearing on the pretrial motions recorded, we turn next to the question whether Bell had a forum in which he could raise this claim. Bell contends that he did not have an opportunity to raise this claim because he did not learn of its possible existence until August 1978, more than four years after his conviction. Bell contends that he could not have presented this ineffective assistance claim in any state forum after March 26, 1977, the third anniversary of his conviction, because Ark.R.Crim.P. 37, as amended on December 18, 1978, required petitions for post-conviction relief to be filed within three years of the date of conviction. Passing the question whether the 1978 amendment had any bearing on Bell's already-filed petition, we note that the only limitation that the Arkansas Supreme Court has imposed upon amendments to such petitions is that an amendment must be filed before the court has ruled on the petition. Ford v. State, 644 S.W.2d 252 (Ark.1982).4 Because the circuit court did not rule upon Bell's petition until June 13, 1979, Bell could have amended his petition up until that date. Accordingly, Bell had available a forum in which to assert trial counsel's error for approximately one year after post-conviction counsel could reasonably have been expected to discover the error.
38
Thus, Bell's post-conviction counsel did not need a transcript of the trial and pretrial hearing to determine whether there was a hearing on the pretrial motions and, if so, whether Bell was present at this hearing. Post-conviction counsel in the Rule 37 hearings had access to all the principals in this case, as well as to the court reporter and his notes. We conclude that Bell's post-conviction counsel could have determined that a hearing was held, that it was not transcribed, and that Bell was not present.
39
Bell's failure to discover that a hearing had taken place on his pretrial motions was not the result of an "objective factor external to the defense" as envisioned by Murray, but rather of post-conviction counsel's failure to make the necessary inquiries during the course of the three Rule 37 hearings. We find that the unavailability of trial records did not prevent Bell from presenting this claim in an amended Rule 37 petition. Accordingly, the district court erred in finding that the absence of records generally, or the absence of a transcript, more specifically, constituted sufficient cause to excuse Bell's procedural default in failing to raise this claim.
40
Having found that the district court erred in finding cause for Bell's procedural default, we need not reach the prejudice issue or address the merits of Bell's ineffectiveness of trial counsel claim.
41
Accordingly, we reverse the order granting Bell habeas relief and remand the case to the district court with directions to dismiss the petition.
*
The HONORABLE ANDREW W. BOGUE, Senior United States District Judge for the District of South Dakota, sitting by designation
1
The trial court denied Bell's motion for a continuance. The Arkansas Supreme Court found that the trial court effectively denied Bell's request for commitment "because instead of committing [Bell] to the Arkansas State Hospital ..., the trial court ordered either of two medical doctors at a local mental health clinic to examine [Bell] to determine if there were reasonable grounds to believe [he] was insane." Bell v. State, 296 Ark. 458, 757 S.W.2d 937, 940 (1988)
2
Bell originally filed his petition for post-conviction relief pursuant to Ark.R.Crim.P. 1. During the pendency of Bell's petition, however, the Arkansas Rules of Criminal Procedure were modified, and Rule 1 was succeeded by Ark.R.Crim.P. 37. By agreement of the parties, Bell's Rule 1 petition was treated as a Rule 37 petition. Accordingly, we refer to Bell's petition for post-conviction relief as his "Rule 37 petition."
3
We note, parenthetically, that the Arkansas Supreme Court's recent opinion in Davlin v. State, 313 Ark. 218, 853 S.W.2d 882, 885 (1993), lends further support to the district court's conclusion that Arkansas law requires reversal if a defendant is absent when a substantial step is taken in his case and further, that the defendant need not demonstrate prejudice
4
Rule 37.2(e) currently provides that, with leave of the court, a petition may be amended prior to a ruling on the petition
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ACCEPTED
01-14-00366-CR
FIRST COURT OF APPEALS
HOUSTON, TEXAS
10/23/2015 9:10:05 AM
CHRISTOPHER PRINE
CLERK
FILED IN
1st COURT OF APPEALS
HOUSTON, TEXAS
10/23/2015 9:10:05 AM
CHRISTOPHER A. PRINE
Clerk
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584 So.2d 1316 (1991)
ST. PAUL FIRE & MARINE INSURANCE COMPANY
v.
EDGE MEMORIAL HOSPITAL, et al.
1900059.
Supreme Court of Alabama.
June 14, 1991.
Rehearing Denied August 9, 1991.
*1317 R. Stan Morris of Harris, Evans, Berg & Morris, Birmingham, for appellant.
W. Stancil Starnes and Laura Howard Peck of Starnes & Atchison, Birmingham, for appellees.
SHORES, Justice.
This case involves the question of whether St. Paul Fire & Marine Insurance Company must defend and pay certain malpractice claims against Edge Memorial Hospital and Holy Name of Jesus Medical Center under the terms and conditions of an expired malpractice policy issued by St. Paul. A second issue concerns whether St. Paul is entitled to collect a deductible amount from Holy Name.
On September 4, 1987, Edge Memorial and Jackson Hospital filed a complaint in the Circuit Court of Jefferson County, Alabama, for a declaratory judgment against St. Paul, seeking a determination that St. Paul must defend and pay certain claims. St. Paul filed a motion to dismiss and a counterclaim for declaratory judgment. The plaintiffs amended their complaint to add as parties plaintiff, Mutual Assurance Company of Alabama, Inc., and Holy Name of Jesus Medical Center. Subsequently, Jackson Hospital dismissed its claims against St. Paul because its claims had been compromised and settled.
Plaintiffs, Edge Memorial and Holy Name, and the defendant, St. Paul, then filed cross motions for summary judgment, alleging that there was no genuine issue as to any material fact and that the issues could be resolved as a matter of law. A *1318 hearing was held and briefs were submitted to the trial judge, the Honorable Marvin Cherner. On August 23, 1990, the trial judge entered a summary judgment for the hospitals on the issue of malpractice insurance coverage. The trial judge also entered a summary judgment for Holy Name in respect to St. Paul's counterclaim to collect a deductible amount from the hospital. St. Paul appeals. We affirm.
The facts are undisputed and are set forth by the trial judge in his order, which the appellant and the appellees have adopted by reference in their briefs to this Court.
"Edge Memorial and Holy Name are hospitals which were insured under a professional liability insurance policy issued to each of them by St. Paul. The insurance policies which St. Paul issued to the two hospitals are identical.
"Both hospitals decided to allow their insurance policies with St. Paul to expire without renewal and to obtain insurance coverage instead from MASA.
"MASA advised both hospitals, as a part of MASA's `pre-effective date loss identification procedure,' to search their records for potential claims and to report those claims to St. Paul prior to the end of the insurance term of the St. Paul policies.
"Approximately one week before Edge Memorial's policy with St. Paul expired (Edge Memorial's policy expired January 16, 1987), W.D. Walley, an Edge Memorial administrator, sent nine letters by express mail and also by hand delivery to St. Paul referring to 9 potential claims against Edge Memorial. Among those letters was one letter regarding a potential claim by Polly King. That letter reads as follows:
"`January 9, 1987:
"`I am writing to you regarding the above referenced patient. It should be emphasized that this letter is not a patient incident report rather, we are reporting this situation to you because we believe it will most likely finalize in litigation.
"`This 27 year old white female delivered an apparently premature baby by repeat C-Section on 1-1-85. The Dubowitz score was 27 weeks. The baby had to be transferred to Baptist Medical Center Neonatal ICU in Montgomery, and we're sure the family incurred additional medical expenses.
"`Our concern is that the patient could allege our hospital failed to provide appropriate professional services.
"`A copy of the patient's chart is available upon your request should you decide to investigate this claim.'
"A malpractice lawsuit was subsequently filed against Edge Memorial based on the occurrence referred to in Edge Memorial's January 9, 1987, letter, styled as follows:
"`Charles Alva King, a minor, by and through his father and next friend, Charles R. King, Polly M. King, and James R. King v. Edge Memorial Hospital, et al., civil action number CV 87-553-PH.'
"Holy Name also followed MASA's advice, and on the last day of its St. Paul policy coverage period, hand delivered 15 letters to St. Paul outlining 15 potential claims against it.
"Of those 15, two have since resulted in lawsuits against Holy Name. These actions are styled as follows:
"`William Michael Morrison v. Holy Name of Jesus Hospital, et al., civil action number CV 87-825-WWC;
"`Sharlisia Suttle Williams, as Administratrix of the Estate of Lillie Mae Sumpter v. Holy Name of Jesus Medical Center, et al., Circuit Court of Etowah County, Alabama, CV 89-124.'
"The letter concerning William Morrison is set out below:
"`July 31, 1987
"`Dear Mr. Harris:
"`I am writing to you regarding this patient and of the potential litigation that may arise due to this claim. This patient was admitted to Holy Name of Jesus Hospital on 5/20/87 with a diagnosis of gastro intestinal bleeding. While undergoing treatment for erosive *1319 gastroduodenitis, he apparently became dissatisfied with the treatment and left the hospital without notice on 5/23/87 without signing an "against medical advise" [sic] form.
"`Shortly after leaving the hospital we received a request for medical records from attorney Ralph Coleman of Birmingham.
"`Due to this patient's apparent dissatisfaction, and attorney Coleman's past track record of filing medical malpractice suits, we are concerned that this matter may become embroiled in litigation and are reporting this to you for any investigation that you deem necessary. Our staff and personnel stand ready to assist you in any way possible.'
"The letter concerning Lillie Mae Sumpter reads as follows:
"`July 31, 1987
"`Dear Mr. Harris:
"`I am writing to you about the above referenced claim regarding this patient who was admitted to Holy Name of Jesus Hospital on 3/9/87 and expired in our hospital on 4/15/87.
"`This 38 year old black female was burned while at work, and was treated for these second and third degree burns to her face while in admission at our hospital. During the hospitalization and immediately following her demise, the family expressed hostility toward the hospital and threatened suit.
"`Due to the high likelihood of a suit being filed in regard to this claim, we are alerting you to this situation. Our employees and the medical records are available to you for any investigation you deem necessary.'"
The first question presented is whether the trial court erred in declaring that Edge Memorial and Holy Name properly submitted claims to St. Paul during their respective policy periods so as to be entitled to coverage under their claims-made policies.
We affirm the judgment of the trial judge and adopt his order as the opinion of this Court:
"St. Paul says that these letters are nothing more than `patient incident reports' which cannot serve as the hospital's report of a claim or potential claim under the terms of the insurance policy.
"However, it is this Court's opinion that each of the letters contains sufficient information to place St. Paul on notice of the relevant facts concerning why each particular incident could result in a liability claim. The letters are not merely `patient incident reports,' but are notices of potential claims made to comply with St. Paul's insurance policy requirements for making a claim for insurance.
"St. Paul also says that the provision of its policy requiring notice of a `claim' refers to a `claim' for damages made by the injured person to the insured (hereinafter `legal claim'), by making demand for damages by letter or in a complaint filed in a lawsuit; that claim does not refer to the notice of a potential claim made by the insured to the insurer, (hereinafter `insurance claim').
"St. Paul says that this is a `claims-made' policy, and the ordinary meaning of `claimsmade' is that a legal claim must be made by the injured against the insured during the effective dates of the insurance policy.
"However, the meaning of the terms `claims' and `claims-made' as those terms appear in St. Paul's insurance policy are in dispute.
"The word `claim' appears a number of times in St. Paul's policy. Sometimes the word `claim' appears to mean insurance claim; at other times it is used to mean `legal claim'.
"For example, under the `General Rules' section of the policy the following sentences contain the word `claim':
"`If we submit to an appraisal, we'll still retain our right to deny the claim (insurance claim?' (p. 2.)
"`No one can sue us on a liability claim (legal claim?) until the amount of the protected person's liability has been finally *1320 decided either by a trial or by a written agreement signed by the protected person, by us and by the party making this claim (insurance claim?).' (p. 3.)
"`Once liability has been determined by judgment or by written agreement, the party making the claim (legal claim or insurance claim) may be able to recover under this policy, up to the limits of coverage that apply.' (p. 3.)
"Other sentences in the insurance policy which include the word `claim' read as follows:
"`If we settle with the owner, the owner's release will satisfy any claim (insurance claim?) you make for the same loss.' (Valuable Papers Section, p. 4.)
"`Claims (legal claims or insurance claims?) for bodily injury or property damage are only covered if the injury or damage results from an accidental event.' (p. 1, Health Care portion of policy.)
"`We won't cover claims (insurance claims?) for any of the following liabilities even if they're assumed under a contract or agreement.' (p. 4, Health care portion.)
"`If you agree, we can settle any claim (legal claim?) for loss of property with the owner.' (Blanket Employee portion p. 2.)
"`We've designed this agreement to protect against liability claims (legal claims?) involving covered autos.' (Auto Liability portion, p. 1.)
"In St. Paul Fire & Marine Insurance Co. v. House, 315 Md. 328, 554 A.2d 404 (1989), the Court of Appeals of Maryland undertook to interpret ... `claims-made' as that term is used in connection with a professional liability insurance policy issued by St. Paul to Homer C. House, M.D. The provisions of St. Paul's insurance policy interpreted by the Maryland Court of Appeals are substantially similar to corresponding provisions in St. Paul's insurance policies which are the subject of dispute in the present case.
"St. Paul's position in House was that the insurance policy issued to Dr. House was a `claims-made' policy; that the policy defined when a claim is made as `the date you first report an incident or injury to us or our agent,' and that Dr. House did not report the incident to St. Paul and therefore did not make his claim, in accordance with the policy definition while the policy was in effect. St. Paul v. House, 554 A.2d at 406. Dr. House contended that the policy was ambiguous and that he reasonably interpreted the policy to mean that so long as the injured party made his claim against Dr. House during the term of the policy, Dr. House was afforded coverage even though Dr. House did not give notice to St. Paul during the term of the policy.
"In House, the `claims-made' provision in St. Paul's insurance policy reads:
"`A claim is made on the date you first report an incident or injury to us or our agent.'
"St. Paul Insurance v. House, supra, 554 A.2d at 407.
"In the present case a substantially similar provision [appears] in St. Paul's insurance policies with Edge Memorial and Holy Name. It reads as follows:
"`We'll consider a claim to be made on the date it was first reported to us or one of our agents.'
"In House, St. Paul asserted that under its `claims-made' policy, by definition, an insurance claim is effectively made when the insured reports the potential legal claim to St. Paul. St. Paul said that it intended the term `claims-made' as used in its policy to apply to the insurance claim made by the insured to the insurer, not the legal claim made by the injured person to the insured.
"`The premise of St. Paul's argument is that the clause"When is a Claim Made?"exclusively controls how a claim is made under this policy. St. Paul treats that clause as a special definition which changes the ordinary meaning of "claim made." The ordinary meaning of "claim made" refers to the assertion of a claim by or on behalf of the injured person against the insured. In this case Platzer's claim was made, in the ordinary meaning, during the policy period. St. *1321 Paul reads the policy specially to define "claim made" as the reporting of a claim or potential claim by the insured to the insurer. On that basis the claim was not made until after the policy had expired. (Emphasis added.)'
"St. Paul Fire & Marine Insurance Co. v. House, supra, 554 A.2d at 407.
"The Maryland Court of Appeals held that the term `claims made,' as used by St. Paul was ambiguous, that it could be reasonably construed to refer to legal claims made by the injured to the insured (the ordinary meaning) as well as to insurance claims made by the insured to the insurer.
"Chief Judge Murphy, agreeing with St. Paul, filed a dissenting opinion, arguing that the policy at issue was not ambiguous, that the only meaning of `claims made' under St. Paul's policy was `insurance claims made by the insured to the insurer.'
A portion of his dissenting opinion reads as follows:
"`By attaching its own self-created labels to selected policy provisions, the majority clouds the interpretation and meaning of an essentially straightforward liability policy. First, the policy provision containing the insuring agreement clearly indicates that it is of the "claims made" type; it directs special attention to the provisions entitled "When is a claim made" and "Optional reporting endorsement." In describing the scope of coverage, the policy specifically states that "[t]he claim must ... first be made while this agreement is in effect." The next clause defines "When a claim is made" as "the date you first report an incident or injury to us or our agent. (Emphasis supplied.)" The report to the insurer must contain the following information:
Date, time and place of the incident.
What happened and what professional service you performed.
Type of claim you anticipate.
Name and address of injured party.
Name and address of any witness.
It is therefore clear that reporting is a prerequisite to coverage, whether the insured reports a demand made against him by an injured person, or whether the insured reports an incident which may lead to this kind of a demand.
"`The other policy provisions do not weaken the clarity of the reporting requirement. The clause describing the coverage of the optional reporting endorsement, for example, states that it will cover "[c]laims that are first made or reported to us after the ending date of this agreement and before the reporting endorsement ends." (Emphasis supplied.) The phrase "made or reported to us" does not offer an alternative; it simply refers back to the definition of "claims made" under the policy. This language reminds the insured that a claim, to be "made," must be reported to the insurer. The majority is creating ambiguity where none exists.
"`The same is true of the majority's interpretation of the provisions under the section concerning "What To Do If You Have A Loss""Someone Is Injured or Something Happens Which Can result In A Liability Claim." It is obvious that the "claims" referred to therein are "liability claims" by an injured person against the insured. This language does not create an ambiguity and does not cast any doubt on the policy's requirement of reporting before coverage can exist. (Emphasis added.)
"House, supra, 554 A.2d at 411.
"St. Paul, in the present case before this Court, now takes the opposite position from the position asserted by it in House, supra. St. Paul now says that the same insurance policy provision construed in House, is not ambiguous and requires the injured person to make claim upon the insured during the term of the policy (the ordinary meaning of `claims made').
"In support of its position, St. Paul cites the case, Langley v. Mutual Fire, Marine and Inland Insurance Company, 512 So.2d 752 (Ala.1987), overruled on other grounds, Hickox v. Stover, 551 So.2d 259, 264 (Ala.1989). In Langley, the Alabama Supreme Court reviewed an ordinary *1322 `claims made' insurance policy issued by Mutual Fire, Marine and Inland Insurance Company:
"`The policy issued to Dr. Langley by Mutual Fire was a "claims made" insurance policy. The first sentence appearing in Dr. Langley's policy is a statement alerting the insured as to the nature of the "claims-made" type of policy; it provided as follows:
"`"Claims Made Policy: Except to such extent as may be provided otherwise herein, this policy is limited to liability for only those CLAIMS THAT ARE FIRST MADE AGAINST THE INSURED WHILE THE POLICY IS IN FORCE. Please review the policy carefully."
"`Further down on the same page of the policy, under the section entitled "The Coverage," there appears another statement explaining the claims-made character of the policy:
"`"Claims Made Clause: This policy applies to CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD arising out of malpractice committed or alleged to have been committed subsequent to the retroactive date set forth in the Declarations."
"Langley, supra, at 754.
"The Mutual Fire insurance policy clearly expresses that claims must be `made against the insured while the policy is in force.'
"However, the language in the Mutual Fire insurance policy is obviously not the same as the language in St. Paul's policies in the present case. Unlike the Mutual policy, St. Paul's insurance policies do not have language requiring claims to be made against the insured while the policy is in force.
"St. Paul says that this requirement is stated in the following provision of its insurance policy:
"`... the claim is first reported to us or one of our agents while this agreement is in effect.'
"Language in an insurance policy should be given the same meaning which a person of ordinary intelligence (not a lawyer) would reasonably conclude the language means. [National] Union Fire Insurance Co. v. Leeds, 530 So.2d 205, 207 (Ala.1988).
"An attorney may know that the ordinary legal meaning of `claims-made' is that the injured must make a legal claim against the insured. However, St. Paul's policy defines `claims-made' to mean the insured must make a claim against the insurer. See, House, supra, 554 A.2d at 407, 411. A person of ordinary intelligence reading the St. Paul insurance policy would give great weight to St. Paul's definition of `claims-made' in its insurance policy, not knowing that the St. Paul definition differs from the ordinary legal meaning of `claimsmade.'
"Ambiguous language in an insurance policy must be construed by the courts liberally in favor of the insured and strictly against the insurance company. National Union Fire Insurance Co. v. Leeds, 530 So.2d 205, 207 (Ala.1988).
"Insurance policies, typically, are carefully drafted to designate what is covered and what is excluded from coverage in order to avoid confusion. Possibly the single most important word in St. Paul's `claims-made' policy is the word claim. It is essential for the insured to know what constitutes a legal claim in order to ascertain what coverage the insured can expect to receive under the insurance policy. St. Paul failed to define the word claim in its insurance policy. St. Paul might easily have drafted the disputed provision to require `the injured person to make claim (by filing a lawsuit, etc.) against the insured' during the effective dates of the policy. See, e.g., Langley, supra, at 754. It failed to do so.
"Accordingly, this Court finds that the St. Paul policies only impose the following requirements on the insured in making an insurance claim:
"1. The incident for which the insured seeks coverage must occur within the effective dates of the policy;
"2. The incident for which the insured seeks coverage must be reported to St.
*1323 Paul within the effective dates of the policy; and
"3. The report concerning the incident for which the insured seeks coverage must contain more particular information designating an incident as a potential claim rather than a `Patient Incident Report.'
"The relevant portions of St. Paul's insurance policies read as follows:
"`HOSPITAL PROFESSIONAL LIABILITY PROTECTION
CLAIMS MADE
"`We've designed this agreement to protect against liability claims resulting from professional services provided or which should have been provided by your hospital. Of course there are limitations which are explained later in this agreement.
"`IMPORTANT NOTE. This is a claimsmade coverage. Please read it carefully, especially the When A Claim Is Covered section.
"`WHEN A CLAIM IS COVERED
"`The coverage provided by this agreement applies only when both of the following conditions are met:
"`the claim is based on an act or omission that happened after the retroactive date shown in the Coverage Summary; and
"`the claim is first reported to us or one of our agents while this agreement is in effect.
"`We'll consider a claim to be made on the date it was first reported to us or one of our agents.
"`However, we won't consider a patient incident report to be your report of a claim madeeven if you send it to us or one of our agents.
"WHAT TO DO IF YOU HAVE A LOSS:
"`Someone Is Injured Or Something Happens Which Can Result In A Liability Claim
"`If an accident or incident occurs that may involve this policy, you or any other protected person involved must:
"`1. Notify the police if a law may have been broken.
"`2. Tell us or our agent what happened as soon as possible. Do this even though no claim has been made but you or another protected person is aware of having done something that may later result in a claim. This notice should include:
"`* The time and place of the event;
"`* The protected person involved;
"`* The specific nature of the incident including the type of claim that may result; and
"`* The names and addresses of any witnesses and injured people.
"`IMPORTANT EXCEPTION FOR HOSPITALS
"`If Professional Hospital Liability Protection-Claims Made is included in this policy, we won't consider a "Patient Incident Report" or "Variance Report" to be your report of a claim madeeven if you send it to us or one of our agents.
"`3. Send us copies of all demands or legal documents if someone makes a claim or starts a lawsuit.
"`4. Cooperate and assist us in securing and giving evidence, attending hearings and trials, and obtaining the attendance of witnesses.
"`5. Not assume any financial obligation or pay out any money without our consent. But this rule doesn't apply to first aid given to others at the time of an accident.' (Emphasis added.)
"Edge Memorial and Holy Name have complied with the terms of their insurance policies with St. Paul and are entitled to coverage with respect to the three lawsuits filed against them. Summary judgment is therefore due to be granted in favor of Edge Memorial and Holy Name with respect to this issue."
The second question presented concerns St. Paul's counterclaim for the collection of a deductible amount from Holy Name in the matter of Claudia Childs. We must determine whether the trial judge erred in his holding that St. Paul breached *1324 its legal duty to Holy Name by failing to obtain the hospital's consent before settling the Childs claim and thus cannot collect a deductible from the hospital. The facts surrounding this issue are also set forth in the trial court's judgment. We affirm the judgment of the trial judge as to this issue and adopt his reasoning as the opinion of this Court:
"ST. PAUL'S COUNTERCLAIM
"St. Paul has also asserted a counterclaim against Holy Name, the material facts of which are not in dispute. St. Paul and Holy Name have both filed motions for summary judgment with respect to this counterclaim.
"On October 8, 1986, Claudia Childs went to visit her daughter, a patient at Holy Name hospital. After visiting with her daughter, Claudia Childs left the hospital, and began walking toward her car down a dirt pathway adjacent to the hospital. The dirt pathway had been used as an alternative walkway from the hospital to the parking lot.
"Before Claudia Childs arrived at her car, she slipped on some gravel in the pathway and fell to the ground, injuring her right leg.
"Claudia Childs was subsequently admitted to Holy Name and treated by Dr. Rivard for the fracture of her right tibia and fibula. The medical expenses which she incurred for the treatment of the injuries sustained in the fall totalled approximately $7,000.00.
"On October 14, 1986, Ginger Woodard, Administrative Coordinator for Medical Affairs at Holy Name, sent a copy of Claudia Childs' patient incident report to St. Paul's Claim Representative, Dale Nellums.
"On November 21, 1986, Ginger Woodard received a letter from Mac Downs, an attorney representing Claudia Childs. In the letter, Mac Downs stated, `I wish to make a claim on ... behalf [of Claudia Childs] with your insurance carrier and if you wish to discuss this matter prior to litigation, please have your carrier contact me within fifteen days.' On the same day, Ginger Woodard forwarded a copy of Mac Downs's letter to Dale Nellums at St. Paul.
"On November 9, 1987, Dale Nellums of St. Paul submitted a request for payment of $10,000.00 to Holy Name. The request stated that the Claudia Childs case had been settled, and Holy Name was required to reimburse St. Paul in the amount of $10,000.00, representing the deductible amount under the terms of the insurance policy.
"On December 8, 1987, by letter, and on December 10, 1987, by telephone, Ginger Woodard of Holy Name contacted Dale Nellums of St. Paul objecting to the manner in which St. Paul handled the Claudia Childs matter. Ginger Woodard requested an explanation why no attorney was appointed to represent Holy Name, and why Holy Name was not contacted prior to settlement of the Claudia Childs case.
"On December 14, 1987, in response to these objections, Dale Nellums of St. Paul sent the following letter to Holy Name:
"`This will confirm our telephone conversation of December 19, 1987 regarding the above referenced matter.
"`This claim was first reported to our Birmingham office on October 15, 1986 by a letter from you enclosing the incident report and the emergency room sheet. We then spoke on October 16, 1986 and I requested that you inform me of the claimant's condition following surgery. You called on October 17, 1987 with information on Mrs. Childs and on October 21, 1987 you sent me a copy of her chart.
"`On December 2, 1986 I received from you a letter from attorney Mac Downs which stated that he was now representing Mrs. Childs. I was able to speak with attorney Downs on December 8, 1986 and he confirmed, as did the incident report, that there were no witnesses to Mrs. Childs' fall other than her daughter.
"`On January 13, 1987 I sent a letter to you stating that the area of the fall would be inspected and photographed. At that time I also asked if you had been able to determine if there were any witnesses. *1325 You called on January 29, 1987 and confirmed the location of the fall. On February 2, 1987 Greg Wood from our office inspected the area and took photographs.
"`On April 1, 1987 I wrote attorney Downs and again requested that I be able to meet with Mrs. Childs and her daughter. A meeting was scheduled for June 30, 1987. At that time recorded statements were taken of Mrs. Childs and her daughter, Carolyn Childs.
"`On October 16, 1987 attorney Downs called me and stated that Mrs. Childs had $7,000.00 in medical specials and would be willing to settle for $12,000.00. On October 23, 1987 I called Dr. Rivard's office to confirm the outstanding balance on Mrs. Childs' account. Dr. Rivard treated Mrs. Childs while she was a patient at Holy Name of Jesus Hospital and also continued to treat her following her discharge. I also called Holy Name of Jesus Hospital and asked for you. When I was told you were not available I asked for the bookkeeping department and confirmed that Mrs. Childs did not have an outstanding balance with the hospital. I then called Mac Downs and made an offer of $10,000.00. On October 27, 1987 attorney Mac Downs accepted my offer.
"`St. Paul's policies and procedures require that statements be taken from the claimant and any witnesses. Statements were obtained from Mrs. Childs and the only known witness to the fall, Carolyn Childs. Photographs were also taken of the location of the fall and it was determined that since the area in question was obviously being used as an alternative walkway, the hospital had notice of its use and possible dangers. Therefore, since there was possible exposure in this matter the decision was made to settle the case. Based on my evaluation of liability and damages I offered $10,000.00 to settle the claim.
"`As a general rule, the St. Paul Fire and Marine Insurance Company does not refer claims to attorneys when suit has not been filed. With the above referenced matter, Mrs. Childs was represented by an attorney but suit had not been filed.
"`I apologize if I did not keep you adequately informed during the investigation and settlement of this claim and I hope that this letter has clarified the action that was taken in this matter.'
"Holy Name has not remitted the deductible in the Claudia Childs case to St. Paul. The failure of Holy Name to remit the deductible to St. Paul is the basis for St. Paul's counterclaim against Holy Name in this action.
"The `Health Care Facility Comprehensive General Liability Protection' portion of the St. Paul insurance policy applies to the insurance coverage of Holy Name in the Claudia Childs matter. That portion of the policy includes a provision for what is covered. It reads in pertinent part:
"`Liability coverage. We'll pay amounts you ... are legally required to pay as damages for covered bodily injury,... or personal injury claims.' (emphasis added) (p. 1.)
"It also contains the following provision for defending lawsuits:
"`DEFENDING LAWSUITS: We'll defend any suit brought against you or any other protected person for covered claims, even if the suit is groundless or fraudulent. We have the right to investigate, negotiate and settle any suit or claim if we believe that is proper. We'll pay all costs of defending the suit, including interest on that part of any judgment that doesn't exceed the limit of coverage. But we won't defend a suit or pay a claim after the limit has been used up in paying judgments or settlements.' (p. 1.) (Emphasis added.)
"The insurance policy also contains a `Hospital Liability Protection Deductible Endorsement.' This endorsement provides for a $50,000.00 deductible for each accidental event involving bodily injury or personal injury, and a total deductible of $250,000.00.
"The endorsement further provides:
"`You'll be responsible up to the deductible amount for all bodily injury or personal injury claims resulting from an accidental event. We'll pay covered claims over this amount, up to the limits of *1326 coverage that apply. If a total deductible amount is shown, you won't have to pay more than this amount for all claims that take place in a policy year. By policy year, we mean each consecutive annual period of your policy.
"`The deductible won't apply to defense costs. We can pay the deductible to settle a claim. If we do you agree to repay us as soon as we notify you of the settlement.' (Emphasis added.)
"St. Paul says that under the terms of the insurance policy it had the legal right to settle the Claudia Childs case, and it is entitled to reimbursement of the applicable deductible amount from Holy Name.
"St. Paul says it is owed $9,000.00 of the amount of the applicable deductible. The original amount requested ($10,000.00) has been reduced by $1,000.00 under `Med Pay' provisions of the insurance policy which are not at issue here.
"Holy Name says that it is not liable to St. Paul for reimbursement of the deductible ($9,000.00) because (1) it was never `legally required' to pay Claudia Childs any amount; (2) it was not informed of the settlement offer prior to settlement; (3) it never consented to settlement; and (4) no attorney was provided to defend Holy Name against Claudia Childs' claim.
"Where there is a provision in an insurance policy which authorizes the insurer to settle any claim against the insured in its discretion, such a provision `vests the insurer with absolute authority to settle claims within the limits of the policy with the insured's having no power to compel the insurer to make settlements or to prevent it from so doing.' (Emphasis added.) Employers' Surplus Line Insurance Co. v. Baton Rouge, 362 So.2d 561, 564 (La.1978); Mitchum v. Hudgens, 533 So.2d 194, 197 (Ala.1988).
"However, where the insured has a direct financial stake in the litigation, the law generally requires that the insured have control over acceptance or rejection of settlement offers. Mitchum v. Hudgens, 533 So.2d 194, 202 (Ala.1988) (for instance, where the insurer reserves the right to contest the existence of coverage); Employers' Surplus Line Insurance Co. v. Baton Rouge, 362 So.2d 561, 564-565 (La. 1978) (where settlement prior to judgment requires the insured to pay a deductible). See also, L & S Roofing Supply Co. v. St. Paul Fire & Marine Insurance Co., 521 So.2d 1298, 1303 (Ala.1987).
"The insured must make the ultimate choice regarding settlement since it is the insured who must eventually pay the settlement amount. See, L & S Roofing Supply Co. v. St. Paul Fire & Marine Insurance Co., 521 So.2d 1298, 1303 (Ala.1987).
"In the present case, St. Paul did not inform Holy Name of its intent to settle the Claudia Childs matter. Holy Name had no opportunity to consent to or reject the option to settle. Under the insurance policy, Holy Name was required to reimburse St. Paul for any settlement up to $50,000.00. Holy Name, therefore, had a direct financial stake in any settlement under this portion of the insurance policy.
"Therefore, St. Paul breached its legal duty to Holy Name by failing to obtain Holy Name's consent before settling the Claudia Childs matter for $10,000.00.
"In addition, even in cases where the insured has no direct financial stake in the outcome, an attorney appointed by the insurer to handle a claim against the insured is under an ethical duty to make full disclosure of the progress of the litigation to the insured. Mitchum v. Hudgens, 533 So.2d 194, 202 (Ala.1988). `[A]ppointed counsel should keep [the] client, the insured, apprised of all developments in the case, including settlement negotiations.' Mitchum, supra, at 202.
"Where, as in the present case, the insured has a direct financial stake in the outcome, the attorney's duty to keep the insured informed is greater, since the attorney may not settle the claim at the direction of the insurers over the objection of the insured. Cf., Mitchum, supra, at 202.
"In the present case, Dale Nellums, the St. Paul Claim Representative is also a licensed attorney. However, it does not appear that she, nor anyone else, was appointed to conduct a defense on behalf of the insured. And no attorney appointed by St. Paul advised Holy Name of the settlement negotiations.
*1327 "The provision of the insurance policy authorizing St. Paul the right to settle claims is included under the subheading: `Defending lawsuits.' St. Paul was required under the insurance policy to defend any suit against the insured even if the suit is `groundless.'
"Where the insured must ultimately pay the amount of a settlement as part of the deductible amount, a reasonable construction of the applicable provision of the insurance contract where it is also considered that the insured must itself pay the amount of the deductible is that the insurer cannot agree to pay money in a settlement which must be repaid by the insured without first obtaining the consent of the insured. See, Employers' Surplus Line Insurance Co. v. Baton Rouge, 362 So.2d 561, 565 (La. 1978).
"It is undisputed that Holy Name did not consent to the settlement of this matter, though it had a direct financial stake in the outcome.
"Accordingly, summary judgment is due to be granted in favor of Holy Name with respect to this issue."
The judgment of the trial court that St. Paul is obligated to defend Edge Memorial and Holy Name against liability arising from the claims asserted against them[1] and to indemnify them against any judgment rendered against them with respect to such claims is due to be affirmed. The judgment of the trial court that, in failing to obtain Holy Name's consent before settling the Claudia Childs matter, St. Paul breached its legal duty to Holy Name and is thus not entitled to collect the deductible from Holy name is also due to be affirmed.
AFFIRMED.
HORNSBY, C.J., and MADDOX, ALMON, ADAMS, HOUSTON, STEAGALL, KENNEDY and INGRAM, JJ., concur.
NOTES
[1] Civil Actions numbered CV-87-553-PH; CV-87-825-WWC; and CV-89-124.
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
JUDGMENT RENDERED OCTOBET 31, 2017
NO. 03-16-00732-CV
Jose A. Perez, Appellant
v.
Physician Assistant Board and Margaret K Bentley, In her Individual and
Official Capacities, Appellees
APPEAL FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY
BEFORE JUSTICES PURYEAR, PEMBERTON, AND GOODWIN
AFFIRMED -- OPINION BY JUSTICE GOODWIN
This is an appeal from the final order and judgment signed by the trial court on
November 16, 2016. Having reviewed the record and the parties’ arguments, the Court holds
that there was no reversible error in the trial court’s final order and judgment. Therefore, the
Court affirms the trial court’s final order and judgment. The appellant shall pay all costs relating
to this appeal, both in this Court and the court below.
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451 F.2d 165
Raymond Joe BIRCH, Appellant,v.UNITED STATES of America, Appellee.
No. 711-70.
United States Court of Appeals,Tenth Circuit.
Nov. 29, 1971.
William H. Sullivan, of Love & Sullivan, Incorporated, Oklahoma City, Okl., for appellant.
Jeff R. Laird, First Asst. U. S. Atty. (William R. Burkett, U. S. Atty., with him on the brief), for appellee.
Before LEWIS, Chief Judge, and HILL and DOYLE, Circuit Judges.
LEWIS, Chief Judge.
1
Birch was convicted of a violation of 18 U.S.C. Sec. 752(a), aiding and assisting the escape of a federal prisoner confined after conviction. He presents as his principal appellate contention the assertion that his prosecution subjected him to the prohibition of double jeopardy or, in the alternative, was barred by the doctrine of collateral estoppel. The facts are not in dispute and the issue of law is thus reached without complications.
2
On March 9, 1970 Birch and one Lail were each incarcerated in the Grand County Jail at Chickasha, Oklahoma. Birch was then a state prisoner and Lail was in federal custody having been delivered to the jail under authority of a writ of habeas corpus ad prosequendum. While locked in his jail cell, Lail requested the jailer to bring him some candy bars. In attempting to do so the jailer was overpowered by Birch in the cell corridor, threatened with a bludgeon, and told to follow instructions to avoid being hurt. Birch took the jail keys, let Lail out of his cell, and subsequently, Birch and Lail, keeping the jailer with them and under their control, locked up several trustees, took all funds from the jail inmates' property envelopes, locked the jailer in a cell, and then completed their escape.
3
After capture, Birch was charged, tried, and convicted in state court of the crime of robbery by force and was sentenced to five years. This prosecution apparently stemmed from the taking of the prisoners' funds during the course of the escape and forms the premise for the claims of double jeopardy and collateral estoppel advanced as bars to the prosecution in the present case.
4
Pointing to the undisputed fact that he committed robbery during the course of the assistance to Lail in effectuating Lail's escape, Birch contends that multiple prosecutions for separate crimes cannot follow from a continuous chain of events where the testimony and evidence will be, in practicality, identical in the several cases. Reliance is placed on Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435; Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707; and Ashe v. Swenson, 397 U.S. 436, 90 S.Ct. 1189, 25 L.Ed.2d 469. We consider the contention to be untenable in this case and conclude that the cited cases give no comfort to the claim.
5
In Benton the Supreme Court firmly establishes that the application of the Fifth Amendment guarantee against double jeopardy is enforceable against the states through the Fourteenth Amendment but the case has no further application to the case at bar. In Waller the High Court held that a single sovereign, there the state, could not maintain two separate prosecutions for an offense and an included offense. Here, we have independent sovereigns prosecuting for entirely unrelated offenses, each offense being peculiar to the separate sovereign. In Ashe it was held that a single sovereign cannot prosecute for separate offenses occurring in a single event where the result of the first prosecution collaterally and undeniably established the innocence of the accused in the second charge. This, again, is not our case.
6
Although not claiming any of the cited cases is dispositive of the case at bar, appellate counsel expresses the belief, and hope, that the cases are anticipatory of a rule prohibiting all but a single prosecution when criminal conduct is continuous in nature and regardless of consideration of multiplicity of offenses and the different laws and rights of separate sovereigns. Sufficient it is to say we do not share counsel's anticipation nor his hope. The logic and fairness of the cited cases do not indicate that a premium benefit should be inherent in a criminal spree.
7
Birch also contends that prejudicial trial error was committed by admitting evidence of the robbery, such evidence being termed as outside the scope of the escape issue. We do not agree. The assault on the jailer was the very means of accomplishing the escape and the robbery was one aspect of the assault showing the complete control and assistance received in aid of the federal escape. Our holding in this regard should not, however, be interpreted as negativing the possibility that under different circumstances evidence of a crime committed during the course of an escape might be inadmissible when prejudice would be great and the crime might be better considered as an independent frolic.
8
Affirmed.
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351 U.S. 502 (1956)
REED
v.
PENNSYLVANIA RAILROAD CO.
No. 621.
Supreme Court of United States.
Argued May 1, 1956.
Decided June 11, 1956.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT.
Joseph S. Lord, III, argued the cause and filed a brief for petitioner.
Theodore Voorhees argued the cause for respondent. With him on the brief were Philip Price and Gordon W. Gerber.
*503 MR. JUSTICE MINTON delivered the opinion of the Court.
The question we have for decision here is whether petitioner, a clerical employee of respondent railroad, is within the coverage of the Federal Employers' Liability Act. § 1, 35 Stat. 65, as amended, 53 Stat. 1404, 45 U. S. C. § 51. Petitioner is employed entirely in respondent's office building in Philadelphia. Her duties consist of filing original tracings of all of respondent's engines, cars, parts, tracks, bridges, and other structures, from which blueprints of those items are made. There are some 325,000 tracings on file in the office in which petitioner works. Whenever an order for blueprints comes in from anywhere in respondent's system, it is petitioner's responsibility to fill the order by securing the correct tracings from the files. These she takes to the blueprint maker in the same office building. After the blueprints are made, it is petitioner's further duty to return the original tracings to the appropriate file. About 67% of the blueprints so made are sent to points outside pennsylvania. The files which petitioner attends are the sole depository of the original tracings of the structural details of all of respondent's rolling stock, trackage, and other equipment and installations, and as such represent a fund of documents without which maintenance of the operating system would be impossible.
Petitioner was injured when a cracked window pane in her office blew in upon her. She brought suit for personal injury under the Federal Employers' Liability Act. On respondent's motion to dismiss, the District Court held that petitioner was not within the coverage of § 1 of the Act and, there being no diversity of citizenship between the parties, dismissed the complaint for lack of jurisdiction. The Court of Appeals affirmed. 227 F. 2d 810.
*504 We granted certiorari because of the importance of the question presented in the administration of the Act. 350 U. S. 965.
As originally enacted, § 1 provided that every railroad, "while engaging" in interstate commerce,
"shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce . . . for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment." 35 Stat. 65.
A further paragraph was added to the section in 1939, and it is clear that two specific problems which the amendment sought at least to remedy were the results of this Court's holdings that, at the moment of his injury, the employee as well as the railroad had to be engaged in interstate commerce in order to come within the coverage of § 1, and that employees engaged in construction of new facilities were not covered. S. Rep. No. 661, 76th Cong., 1st Sess. 2-3; Southern Pacific Co. v. Gileo, decided today, ante, p. 493. The amendment took the form of an expanded definition of "person . . . employed" in interstate commerce. The amendment reads:
"Any employee of a carrier, any part of whose duties as such employee shall be the furtherance of interstate or foreign commerce; or shall, in any way directly or closely and substantially, affect such commerce as above set forth shall, for the purposes of this Act, be considered as being employed by such carrier in such commerce and shall be considered as entitled to the benefits of this Act . . . ." 53 Stat. 1404.
*505 No argument is made that Congress could not constitutionally include petitioner within the coverage of the Act. The argument is that the amendment was narrowly drawn to remedy specific evils and that to construe it to include petitioner would amount to inclusion in the Act of virtually all railroad employeesa result which respondent assumes is unintended and undesirable. The argument takes several forms. First, it is said that "commerce" in the Act means only transportation and that petitioner is not employed in transportation. See Shanks v. Delaware, L. & W. R. Co., 239 U. S. 556, 559-560. But the interstate commerce in which respondent is engaged is interstate transportation. If "any part" of petitioner's duties is in "furtherance" of or substantially affects interstate commerce, it also is in "furtherance" of or substantially affects interstate transportation. The test for coverage under the amendment is not whether the employee is engaged in transportation, but rather whether what he does in any way furthers or substantially affects transportation. Nor can we resolve the issue presented here in terms of whether or not clerical employees as a class are excluded from the benefits of the statute. The 1939 amendment was designed to obliterate fine distinctions as to coverage between employees who, for the purpose of this remedial legislation, should be treated alike. There is no meaningful distinction, in terms of whether the employee's duties are clerical or not, between petitioner and, for illustration, an assistant chief timekeeper, Straub v. Reading Co., 220 F. 2d 177, or a messenger boy carrying waybills and grain orders between separate local offices and freight stations, Bowers v. Wabash R. Co., 246 S. W. 2d 535, or a lumber inspector hurt while inspecting ties at a lumber company, Ericksen v. Southern Pacific Co., 39 Cal. 2d 374, 246 P. 2d 642all of whom have been held covered by the 1939 amendment. See also Lillie v. Thompson, 332 U. S. 459. Nor are the benefits of the *506 Act limited to those exposed to the special hazards of the railroad industry. The Act has not been so interpreted, and the 1939 amendment specifically affords protection to "any employee" whose duties bring him within that amendment. There is no basis in the language of § 1 for confining liability of the railroad so as to exclude any class of railroad employees as a class. The benefits of the Act are not limited to those who have cinders in their hair, soot on their faces, or callouses on their hands. Section I cannot be interpreted to exclude petitioner from its benefits without further consideration of the function she performs and its impact on interstate commerce.
We think that the present petitioner is employed by the respondent in interstate commerce within the meaning of the 1939 amendment to § 1. Although the amendment may have been prompted by a specific desire to obviate certain court-made rules limiting coverage, the language used goes far beyond that narrow objective. It evinces a purpose to expand coverage substantially as well as to avoid narrow distinctions in deciding questions of coverage. Under the amendment, it is the "duties" of the employee that must further or affect commerce, and it is enough if "any part" of those duties has the requisite effect. The statute commands us to examine the purpose and effect of the employee's function in the railroad's interstate operation, without limitation to nonclerical employees or determination on the basis of the employee's importance as an individual in the railroad's organization.
Here respondent railroad has chosen to arrange its operations so that repairs and construction anywhere within its system which require blueprints must go through its Philadelphia office. No such work can be done without recourse to the files of 325,000 original tracings in petitioner's custody. Loss or misplacing of those tracings could promptly cause delay, confusion, or worse in the day-to-day operation of respondent's lines. If all employees *507 who perform petitioner's duties were removed from service, respondent could not conduct its operations without a change in its organizational system. To recognize this is to attribute to petitioner neither an exaggerated nor an attenuated relationship to respondent's transportation system. The filing of tracings and the dispatch of blueprints taken from them comprise a direct link in the maintenance of respondent's lines and rolling stock. Together with the makers of blueprints, petitioner constitutes the means by which men throughout respondent's system obtain the information they must have to maintain the railroad's trains, equipment, track, and structures.
The very purpose of petitioner's job is to further physical maintenance of an interstate railroad system. Proper performance of her duties makes an obvious contribution to the maintenance of that system. We hold that the petitioner, by the performance of her duties, is furthering the interstate transportation in which the respondent is engaged. "The word `furtherance' is a comprehensive term. Its periphery may be vague, but admittedly it is both large and elastic." Shelton v. Thomson, 148 F. 2d 1, 3. Petitioner's duties here come within the confines of that concept.
Similarly, those duties which "in any way directly or closely and substantially affect" interstate commerce in the railroad industry must necessarily be marked out through the process of case-by-case adjudication. This definition and the "furtherance" definition of employment in interstate commerce in the 1939 amendment are set forth in the disjunctive. In some situations they may overlap. Here we hold that, for the reasons already given, performance of petitioner's duties has a close and substantial effect upon the operation of respondent's interstate activities. Cf. Overstreet v. North Shore Corp., 318 U. S. 125.
*508 Petitioner's duties brought her within the coverage of § 1 as amended, and the District Court therefore had jurisdiction over this suit under the Federal Employers' Liability Act. The judgment below is reversed and the cause remanded to the District Court for further proceedings.
Reversed.
MR. JUSTICE BURTON dissents for the reasons stated below in the opinion of the Court of Appeals.
MR. JUSTICE FRANKFURTER, whom MR. JUSTICE REED and MR. JUSTICE HARLAN join, dissenting.
Dissenters are not empowered to define the scope of a decision, but the way they read it may induce dissent. So it is with what the Court has here written. The opinion does not state in terms that the Amendment of August 11, 1939, 53 Stat. 1404, to the Federal Employers' Liability Act of April 22, 1908, 35 Stat. 65, has so drastically changed the limited scope of that Act to those employees of an interstate carrier who are, more or less, directly concerned with its transportation operations as to make it reach all the employees of such interstate carrier whom Congress in the exercise of its constitutional power to regulate commerce may cover. I say the Court does not explicitly hold this, but it does hold that a clerical employee is covered by the terms of the Act because a "part" of her duties is in "furtherance" of interstate commerce. The Court reads the Amendment of 1939 to the Act of 1908 in a merely lexicographical sense. "Furtherance" means anything that furthers or helps forward; the petitioner was certainly charged with tasks that furthered or helped to forward the business of the Pennsylvania Railroad Company, a carrier engaged in interstate commerce; ergo, the petitioner, having been injured while "employed by such carrier in such commerce," *509 has a right of action under the Amendment to the Employers' Liability Act.
Were the Court to be as explicit as this, it would at least not open the door, as this decision inevitably does, to new litigation. It is not a juristic requirement that decisions be carried to their logical consequences. It is equally true that capricious distinctions should not be made. Yet they are invited when the rationale of a decision is left, if not cloudy, certainly unlimited. For myself, I do not see how the clerical employee here "furthers" the business of the Pennsylvania any more than do all the other clerical employees of the Pennsylvania, and the thousands upon thousands of clerical employees on the various railroads throughout the country, even though there may be differences in salary and hierarchical importance among such employees.
Accordingly, clerical employees and other obviously non-transportation employees of railroads will bring suits under the Federal Employers' Liability Act when recovery thereunder will, by the law of chance, appear to lawyers advising them to be more advantageous than awards obtainable under state workmen's compensation acts. Indeed, if some employees may seek to avail themselves, for one reason or another, of a state workmen's compensation act, a carrier may resist, under the doctrine of New York Central R. Co. v. Winfield, 244 U. S. 147 by urging the exclusiveness of a remedy under the Federal Employers' Liability Act. Conversely, if suit is brought under that Act, carriers will doubtless resist, as they have in the past, on the ground that the particular clerical employee is not "furthering" its business sufficiently to constitute "furtherance" as intended by the Court in this case. It is not a silly exercise in prophecy to foretell that just as a mass, if indeed not a mess, of cases came before this Court prior to the 1939 Amendment, when the Court gave a much too constricted scope to the Act (see cases *510 collected in Frankfurter and Landis, The Business of the Supreme Court, pp. 207-208), so a new series of sterile litigation will be stimulated by this decision.
I part company with the Court not in its reading of English but in its assumption that the construction of the Amendment to the Federal Employers' Liability Act is merely a matter of reading English. The Act of August 11, 1939, is the last in a series of consistently developing statutes. As such, it is an organism, projected into the future out of its past. It is not merely a collection of words for abstract annotation out of the dictionary. The process of judicial construction must be mindful of the history of the legislation, of the purpose which infused it, of the difficulties which were encountered in effectuating this purpose, of the aims of those most active in relieving these difficulties. Above all, we should be mindful of the central concern of the body of enactments that constitute the Federal Employers' Liability Act throughout all the vicissitudes of the legislation. It would be redundant to detail these considerations in view of Judge Goodrich's opinion below. 227 F. 2d 810. A few additional observations are pertinent.
Of course, the Act of 1939 sought to remove hindrances that had revealed themselves in subjecting carriers to liability for injuries due to negligence. But the preoccupation of the whole course of this legislation was with protection to those who were peculiarly exposed to injuries because of the nature of their occupation, i. e., the hazardous business of railroading. A very important obstacle to recovery was the doctrine of the assumption of risk as part of the general law of negligence that was made the basis of the federal right. Congress abolished assumption of risk as a defense. See Tiller v. Atlantic Coast Line R. Co., 318 U. S. 54. Another great difficulty derived from this Court's construction of the Commerce *511 Clause whereby it confined application of the Federal Employers' Liability Act to injuries sustained by an employee if at the moment of injury his work was related to interstate transportation. This mode of approach derived from the Employers' Liability Cases, 207 U. S. 463, and the Second Employers' Liability Cases, 223 U. S. 1, and produced a series of decisions which led Judge Learned Hand to say "The cases are full of casuistry . . . ." Central R. Co. of New Jersey v. Monahan, 11 F. 2d 212, 213.
I agree with the Court in finding that the "1939 amendment was designed to obliterate fine distinctions"; but they were made by courts only in relation to employees who worked in the context of the hazardous business of transportation. The amendatory legislation was addressed to judicial distinctions affecting these transportation workers that bore no practical relation to the essential conditions of their employment; these distinctions never touched others in a totally different category of employment because the Federal Employers' Liability Act never remotely applied to them. In order to obliterate such "fine distinctions." it is not necessary to jump over the moon and wipe out the basic distinction between those whose duties are tied to transportation, whatever may have been their precise work at the moment of injury, and those employees who are exposed by way of permanent occupation to no greater or different potential hazards than are the thousands upon thousands of like workers in offices other than those of railroads whom Congress has left to remedies under state law. It was on the presupposition of this cardinal distinction between transportation and non-transportation employees of railroads that the Federal Employers' Liability Act was amended in 1939. To make it apply to clerical workers who "further," in a dictionary sense of the term, the interstate *512 commerce business of railroads would have as much justification, but no more, as it would have for Congress to pass a Federal Employers' Liability Act for all employees who further large enterprises in the conduct of their interstate commerce. The whole course of history of the Federal Employers' Liability Act as well as due regard for the text of the Amendment of 1939, in its entire context, calls for affirmance of the decision below.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 97-11310
__________________
LAMARILYN FADEYI,
Plaintiff-Appellant,
versus
PLANNED PARENTHOOD ASSOCIATION OF LUBBOCK, INC.,
Defendant-Appellee.
______________________________________________
Appeal from the United States District Court for the
Western District of Texas
______________________________________________
November 11, 1998
Before SMITH, DUHÉ, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
The sole issue in this appeal is whether a Texas employment-
at-will relationship is a contract for the purposes of 42 U.S.C. §
1981. The district court dismissed Plaintiff-Appellant LaMarilyn
Fadeyi’s § 1981 claims after concluding that her at-will employment
with Defendant-Appellee Planned Parenthood Association of Lubbock,
Inc. (“Planned Parenthood”) was not a “contract” under § 1981.
Satisfied that in Texas an at-will employment relationship is a
contract for purposes of § 1981, we reverse and remand.
I.
FACTS AND PROCEEDINGS
Fadeyi is a black female who was employed by Planned
Parenthood for seven years. She alleges that Planned Parenthood
engaged in various acts of racial discrimination against her
during the course of her employment, ranging from discriminatory
scheduling and distribution of office resources to the executive
director’s giving her and another black employee an application
for membership in the Ku Klux Klan. Fadeyi filed complaints with
the Equal Employment Opportunity Commission and the Texas
Commission on Human Rights, but both dismissed her complaints for
lack of jurisdiction because Planned Parenthood had fewer than 15
employees at all relevant times. Planned Parenthood fired Fadeyi
two working days after receiving notification that the EEOC did
not have jurisdiction to entertain her complaints.
Fadeyi then brought suit in district court under § 1981,
alleging racial discrimination in her employment and termination.
Planned Parenthood filed a motion for summary judgment, arguing
that Fadeyi’s claim should fail because she could not show the
existence of a contract, an essential element in a § 1981 action.
The district court agreed and granted Planned Parenthood’s
motion. Fadeyi timely filed this appeal.
2
II.
ANALYSIS
A. Standard of Review
We review a district court’s grant of summary judgment de
novo.1
B. Applicable Law
Fadeyi contends that § 1981 supports her claim for racial
discrimination regardless of the fact that she was an at-will
employee. Section 1981 guarantees that “[a]ll persons within the
jurisdiction of the United States shall have the same right in
every State and Territory to make and enforce contracts . . . as
is enjoyed by white citizens . . . .”2 Because Title VII applies
only to employers with 15 or more employees,3 § 1981 provides the
only refuge under federal law from race-based employment
discrimination by those who hire fewer than 15 employees.4
In Patterson v. McLean Credit Union,5 the United States
Supreme Court concluded that § 1981 covered “only conduct at the
initial formation of the contract and conduct which impairs the
right to enforce contract obligations through legal process.”6
1
Exxon Corp. v. St. Paul Fire and Marine Ins. Co., 129 F.3d
781, 784-85 (5th Cir. 1997).
2
42 U.S.C. § 1981(a).
3
See 42 U.S.C. § 2000e(b).
4
See H.R. Rep. No. 102-40(I), 102d Cong., 1st Sess., at 91
(1991), reprinted in 1991 U.S.C.C.A.N. 549, 629.
5
491 U.S. 164 (1989).
6
Id. at 179.
3
Consequently, the Court held that § 1981 does not cover racial
harassment by an employer after the inception of the employment
relationship.7 In response to Patterson, Congress, through the
Civil Rights Act of 1991, amended § 1981 to add a broad
definition of the phrase “make and enforce contracts,” which
includes “the making, performance, modification, and termination
of contracts, and the enjoyment of all benefits, privileges,
terms, and conditions of the contractual relationship.”8 Relying
on this expansive language, Fadeyi argues that Congress intended
to reach the very conduct that plagued her at Planned Parenthood
during her employment and in her termination.
The district court, however, dismissed Fadeyi’s complaint,
concluding that, as an at-will employee, Fadeyi had no “contract”
of employment on which to base a claim under § 1981. Under well-
established Texas law, the employer may, absent a specific
agreement to the contrary, terminate an employee for good cause,
bad cause, or no cause at all.9 It does not necessarily follow,
however, that the employment-at-will relationship is not a
contractual one for the purposes of § 1981.
Case law addressing whether an at-will employee may bring an
action under § 1981 is surprisingly sparse. Despite the fact
that more than 40 states recognize the employment-at-will
7
Id. at 178.
8
See 42 U.S.C. § 1981(b).
9
See Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283
(Tex. 1993) (per curiam).
4
relationship, no circuit court has squarely resolved this issue
in the wake of Patterson,10 and the federal district courts that
have done so have come to differing results.11 We conclude that
the better view is that, irrespective of being subject to at-will
termination, such an employee stands in a contractual
relationship with his employer and thus may maintain a cause of
action under § 1981.
In Patterson, the United States Supreme Court implicitly
conceded that an at-will employee may maintain a cause of action
under § 1981. Although, as discussed above, the Patterson Court
declined to recognize work place racial harassment as actionable
10
See Gonzales v. Ingersoll Milling Machine Co., 133 F.3d 1025,
1035 (7th Cir. 1998) (noting, but finding no need to hold, that
under Illinois law an employee at-will has no contractual rights to
support a claim under § 1981); but see Adams v. McDougal, 695 F.2d
104, 108 (5th Cir. 1983) (holding that under Louisiana law the
indefinite term of employment of an appointed deputy sheriff was
“sufficiently contractual to bring [the deputy] under the
protective umbrella of § 1981").
11
We recognize that federal case law interpreting at-will
employment relationships in other states is not binding on the
court. We find the decisions informative, however, as the
overwhelming majority of states recognize the traditional common
law doctrine of employment at-will. Compare Lane v. Ogden
Entertainment, Inc., 13 F. Supp. 2d 1261, 1272 (M.D. Ala. 1998)
(holding that an at-will employee may bring a cause of action under
§ 1981); Larmore v. RCP/JAS, Inc., 1998 WL 372647, *2 (E.D. Pa.
1998) (same); Baker v. American Juice, Inc., 870 F. Supp. 878, 883
(N.D. Ill. 1994) (same); Harris v. New York Times, 1993 WL 42773
(S.D.N.Y. 1993)(same); with Hawkins v. Pepsico, Inc., 10 F. Supp.
2d 548, 554 (M.D.N.C. 1998) (holding that no contract exists in an
at-will employment relationship to support a cause of action under
§ 1981); Moorer v. Grumman Aerospace Corp., 964 F. Supp. 665, 675
(E.D.N.Y. 1997) (same), aff’d, 1998 WL 640438 (2d Cir. 1998);
Spriggs v. Diamond Auto Glass, 1997 WL 880756, *1 (D. Md. 1997)
(same); Askew v. May Merchandising Corp., 1991 WL 24390, *6
(S.D.N.Y. 1991) (same).
5
under § 1981,12 it acknowledged that Patterson, an at-will
employee, might have a cause of action based on the claims that
her employer failed to promote her based on her race.13 The
Court stated that “the question whether a promotion claim is
actionable under § 1981 depends upon whether the nature of the
change in position was such that it involved the opportunity to
enter into a new contract with the employer. If so, then the
employer’s refusal to enter the new contract is actionable under
§ 1981.”14 This language leaves no doubt that the Court
considered the employee’s relationship with her employer to be a
contractual one: Obviously, there can be no “new contract” unless
there is first an old contract.15
Justice Stevens, writing separately in Patterson, explained
his understanding of the nature of the at-will employment
relationship in the context of § 1981:
An at-will employee, such as petitioner, is not merely
performing an existing contract; she is constantly
remaking that contract. . . . . [W]hether employed at
will or for a fixed term, employees typically strive to
achieve a more rewarding relationship with their
employers. By requiring black employees to work in a
hostile environment, the employer has denied them the
same opportunity for advancement that is available to
white citizens. A deliberate policy of harassment of
black employees who are competing with white citizens
12
See Patterson, 491 U.S. at 178.
13
Id. at 185.
14
Id.
15
See Harris, 1993 WL 42773, at *4 (suggesting that this
portion of Patterson demonstrates that “the Court regarded
Patterson’s relationship with her employer . . . as sufficiently
contractual in nature to satisfy § 1981").
6
is, I submit, manifest discrimination in the making of
contracts in the sense in which that concept was
interpreted in Runyon v. McCrary. [427 U.S. 160
(1976)].16
This appears to be the approach embraced by Congress when it
overruled Patterson, a scant two years after that opinion was
rendered, by amending § 1981 in the Civil Rights Act of 1991.
The legislative history of the amendments to § 1981 reflects the
intent of Congress to protect minorities in their employment
relationships. For example, the report of the House Judiciary
Committee stated that the 1991 amendments were “designed to
restore and strengthen civil rights laws that ban discrimination
in employment. . . . By restoring the broad scope of Section
1981, Congress will ensure that all Americans may not be
harassed, fired or otherwise discriminated against in contracts
because of their race.”17 To hold that at-will employees have no
right of action under § 1981 would effectively eviscerate the
very protection that Congress expressly intended to install for
minority employees, especially those who, by virtue of working
for small businesses, are not protected by Title VII.
Texas law firmly supports the contractual nature of an at-
will employment relationship as well. The Texas Supreme Court
has recognized that an at-will employment relationship is a
contract, notwithstanding that either party may terminate it at
16
491 U.S. at 221 (Stevens, J., concurring in part and
dissenting in part).
17
H.R. Rep. No. 102-40(II), 102d Cong., 1st Sess., at 2 (1991),
reprinted in 1991 U.S.C.C.A.N. 694, 694.
7
will. In Sterner v. Marathon Oil Co.,18 the Texas Supreme Court
held that an at-will employee could maintain a cause of action
for tortious interference with contract against a third party who
interfered with the employment relationship.19 As the court
explained,
A promise may be a valid and subsisting contract even
though it is voidable. . . . A similar situation exists
with regard to contracts terminable at will. Until
terminated, the contract is valid and subsisting, and
third persons are not free to tortiously interfere with
it.20
In other words, an employment-at-will relationship is a
contractual one, even though either party can terminate it
without cause at any time.21
We have also recognized, in applying the Texas Whistleblower
Act, that an at-will employee in Texas has a contract with her
employer.22 The Texas Whistleblower Act applies to “public
employees,” and at the time that Knowlton v. Greenwood Indep.
18
767 S.W.2d 686, 689 (Tex. 1989).
19
See id. at 689.
20
Id.
21
The Texas Supreme Court’s opinion in Light v. Centel Cellular
Co., 883 S.W.2d 642 (Tex. 1994), relied on by the district court,
is not to the contrary. In that case, the court considered whether
a covenant not to compete was “ancillary to or part of . . . an
otherwise enforceable agreement” under a Texas statute allowing
covenants not to compete in limited circumstances. Id. at 643.
The court simply concluded that an employment-at-will relationship
was not an “otherwise enforceable agreement” that could support a
covenant not to compete under the Texas statute. Id.
22
See Knowlton v. Greenwood Indep. Sch. Dist., 957 F.2d 1172,
1181 (5th Cir. 1992) (applying Acts 1983, 68th Leg., R.S., ch. 832,
§§ 1-6 (codified as amended at TEX. GOV’T CODE § 554.01-.09 (West
1994))(formerly TEX. REV. CIV. STAT. ANN. art. 6252-16a).
8
Sch. Dist.23 was decided, defined “public employee” as “a person
who performs services for compensation under a written or oral
contract for a state or local government body.”24 In Knowlton,
we concluded that the Act applied to at-will employees of a
school district because those employees met the statutory
definition of “public employee.”25 That is, the employees were
persons “who perform[] services for compensation under a written
or oral contract . . . .”26 The El Paso court of appeals reached
the same conclusion in Permian Basin Community Centers for MHMR
v. Johns,27 explaining that “[t]he at-will employment
relationship is a contractual one, albeit one for an indefinite
period of time.”28
23
957 F.2d 1172 (5th Cir. 1992).
24
Acts 1983, 68th Leg., R.S., ch. 832, § 1 (emphasis added)
(codified as amended at TEX. GOV’T CODE § 554.01(4)) (formerly TEX.
REV. CIV. STAT. ANN. art. 6252-16a, § 1(3)).
25
See Knowlton, 957 F.2d at 1181.
26
Id. (emphasis added) (citation omitted).
27
951 S.W.2d 497, 500 (Tex. App.—El Paso 1997, no writ).
28
Id. In numerous other cases, the Texas courts have
acknowledged the contractual nature of an at-will employment
relationship. See, e.g., Montgomery County Hosp. Dist. v. Brown,
965 S.W.2d 501, 503 (Tex. 1998) (referring to the at-will
employment relationship as an “employment contract”); Hathaway v.
General Mills, Inc., 711 S.W.2d 227 (Tex. 1986) (discussing the
requirements for proving a modification of an “at will employment
contract”); see also Rodriguez v. Benson Properties, Inc., 716 F.
Supp. 275, 276 (W.D. Tex. 1989) (“Texas courts have recognized that
an employer/employee relationship is contractual in nature.”)
(citing Pioneer Cas. Co. v. Bush, 457 S.W.2d 165, 169 (Tex. Civ.
App.—Tyler 1970, writ ref’d n.r.e.); Northwestern Nat’l Life Ins.
Co. v. Black, 383 S.W.2d 806, 809 (Tex. Civ. App.—Texarkana 1964,
writ ref’d n.r.e.)).
9
Both the Texas Supreme Court and the Texas Legislature have
emphasized the importance of public policy when considering the
breadth of the employment-at-will doctrine. In Sabine Pilot
Service, Inc. v. Hauck,29 the Texas Supreme Court created the
only non-statutory exception to the at-will employment
relationship when it held that an at-will employee cannot be
discharged for refusing to perform an illegal act ordered by his
employer.30 The Texas Legislature has likewise enacted several
statutory exceptions to the at-will doctrine to protect at-will
employees from discriminatory practices in the workplace —— most
notably, a prohibition against discharging an individual based on
race, color, disability, religion, sex, national origin, or
age.31 The conclusion is clear that even though an at-will
employee can be fired for good cause, bad cause, or no cause at
all, he or she cannot be fired for an illicit cause. Any seeming
inconsistency in the determination that one who can be fired
without cause neverthless cannot be fired for an unlawful cause
evaporates under the foregoing analysis.
None can contest that discriminating against an employee on
the basis of race is illegal and against public policy. In
amending § 1981, Congress was advancing such public policy
29
687 S.W.2d 733 (Tex. 1985).
30
Id. at 735.
31
TEX. LAB. CODE ANN. § 21.051 (West 1996); see also Hicks v.
Utility Fuels, Inc., 1998 WL 752003, *3 n.1 (Tex. Civ. App.-Hous.
1998) (unpublished) (listing the statutory exceptions to the
employment-at-will doctrine).
10
concerns by providing a vehicle for every employee to remedy
racial discrimination in the workplace. Congress could not have
meant to exclude at-will workers from the reach of § 1981, as to
do so would be to allow use of the ubiquitous at-will doctrine
“as leverage to incite violations of our state and federal
laws.”32
We therefore conclude that the district court erred in
granting summary judgment to Planned Parenthood solely on the
basis that Fadeyi had no contract on which her § 1981 claims
could rest. Accordingly, we reverse the judgment of the district
court and remand for further proceedings consistent with this
opinion.
REVERSED AND REMANDED.
32
Hauck, 687 S.W.2d at 735 (Kilgarlin, J., concurring).
11
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NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0727-17T3
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
CARLOS A. ESCOBAR, a/k/a
CARLOS ALBEIRO ESCOBAR
SANABRIA,
Defendant-Appellant.
_____________________________
Submitted February 4, 2019 – Decided February 11, 2019
Before Judges Sabatino and Sumners.
On appeal from Superior Court of New Jersey, Law
Division, Morris County, Indictment No. 16-02-0148.
Joseph E. Krakora, Public Defender, attorney for
appellant (Jay L. Wilensky, Assistant Deputy Public
Defender, of counsel and on the brief).
Fredric M. Knapp, Morris County Prosecutor, attorney
for respondent (Paula C. Jordao, Assistant Prosecutor,
on the briefs).
Appellant filed a pro se supplemental brief.
PER CURIAM
This is a direct appeal pursuant to Rule 3:5-7 of a trial court's denial of a
suppression motion following the entry of a guilty plea. We affirm.
Appellant Carlos A. Escobar was one of numerous individuals identified
as suspects during an investigation into the drug distribution network of a man
named J.S.1 Narcotics investigators gathered evidence by court-approved
wiretaps and through the use of an undercover investigator. The undercover
investigator made numerous purchases of cocaine from J.S. The investigation
revealed that J.S. and other individuals, including Escobar, were involved in the
narcotics distribution activities.
The wiretaps intercepted numerous drug-related conversations between
Escobar and J.S., in which Escobar placed orders for cocaine. Surveillance also
revealed several meetings between Escobar and J.S. Also, the intercepted
wiretap conversations included certain "code words," which the undercover
officer himself used successfully in making the purchases from J.S.
The police applied for a search warrant to search an apartment where
Escobar was believed to reside with his girlfriend.
1
We use initials for J.S. in light of the possible continued confidentiality of
materials in the Confidential Appendix.
A-0727-17T3
2
Judge Stuart Minkowitz granted the search warrant. The police executed
the warrant at the premises. They found no cocaine but found four pounds of
marijuana in a suitcase, and $1,850 in cash. Escobar was arrested outside of the
residence, and a search of his person turned up another $1,080 in cash.
The State charged Escobar in a six-count indictment with five narcotics-
related offenses, including second-degree conspiracy to possess cocaine with
intent to distribute it, and second-degree endangering the welfare of a child.
Escobar moved to suppress the fruits of the search. His motion was denied
by Judge Stephen J. Taylor in a comprehensive written decision issued on May
8, 2017. Judge Taylor concluded that the search warrant affidavit satisfied the
elements of probable cause. He found that the State had made enough of a
showing to discern probable cause to believe that Escobar had been involved in
drug activity and there was reason to believe those drugs would be found at his
usual place of residence.
After the suppression motion was denied, Escobar's trial counsel
negotiated a plea agreement with the State, in which Escobar pled guilty to third-
degree possession of marijuana with intent to distribute it, N.J.S.A. 2C:35-
5(a)(1), -5(b)(11). The State applied for and was granted its request for the
A-0727-17T3
3
imposition of an extended-term sentence under N.J.S.A. 2C:43-6(f), in light of
Escobar's prior criminal record.
The court imposed a five-year prison sentence with a three-year parole
disqualifier. The remaining counts of the indictment were dismissed. Escobar
than moved for admission to the Drug Court program, which was denied. 2
On appeal, defendant makes the following arguments in his brief:
THE EVIDENCE SEIZED PURSUANT TO THE
WARRANT MUST BE SUPPRESSED BECAUSE
THE WARRANT APPLICATION LACKED THE
REQUISITE SHOWING OF PROBABLE CAUSE.
U.S. CONST., AMENDS. IV, IX; N.J. CONST. (1947),
ART. 1, PAR. 7
A. The Warrant Application Failed To Allege Facts
Sufficient To Support the Crimes Alleged.
B. The Warrant Application Failed to Demonstrate
Probable Cause That the Defendant Was Engaged in
Criminal Activity.
In addition, defendant makes the following arguments in a supplemental
pro se brief:
POINT I
TRIAL COURT ERRED WHEN IT FAILED TO
SUPPRESS THE SEARCH WARRANT THAT
FAILED TO ESTABLISH PROBABLE CAUSE
2
The Drug Court denial is not an issue raised on appeal.
A-0727-17T3
4
THAT DRUGS WOULD BE FOUND THERE OR
THAT APPELLANT LIVED THEREIN.
POINT II
TRIAL COURT FAILED TO ENTERTAIN THE
APPELLANT'S MITIGATING FACTORS AND/OR
APPLY THE APPROPRIATE SENTENCING
PURSUANT TO SAID MITIGATING FACTORS
WHICH PREJUDICED THE APPELLATE AND
CONSTITUTED AN EXCESSIVE HARDSHIP
SENTENCE APPELLANTS SENTENCE MUST BE
REMANDED FOR RESENTENCING.
Having duly considered these arguments, we affirm the suppression ruling
substantially based on the well-reasoned analysis of Judge Taylor in his lengthy
written opinion. The record demonstrates that the State's warrant application
was based on adequate facts indicating Escobar's involvement in criminal
activity. Defendant failed to surmount his "burden of proof to establish a lack
of probable cause 'or that the search was otherwise unreasonable.'" State v.
Boone, 232 N.J. 417, 427 (2017). The supporting affidavit indicated more than
a single agreement to buy or sell drugs and instead supported a drug conspiracy
utilizing code words. As such, the warrant application did not violate the
"simple agreement" tenets of State v. Roldan, 314 N.J. Super. 173, 182 (App.
Div. 1998).
A-0727-17T3
5
We also reject Escobar's pro se argument contesting his sentence. The
record adequately supported the finding of aggravating factor three (the risk of
re-offense), N.J.S.A. 2C:44-1(a)(3), as well as two other aggravating factors.
Given Escobar's multiple prior offenses, including two drug offenses, the
sentence imposed consistent with his plea agreement does not shock the judicial
conscience. State v. Bieniek, 200 N.J. 601, 607-08 (2010).
All other arguments, to the extent we have not already addressed them,
lack sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(2).
Affirmed.
A-0727-17T3
6
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527 P.2d 1106 (1974)
The CITY OF BUFFALO, Appellant (Defendant below),
v.
Dean JOSLYN, Appellee (Plaintiff below).
No. 4387.
Supreme Court of Wyoming.
November 7, 1974.
Burgess & Davis and Charles R. Hart, Sheridan, for appellant.
Robert W. Connor, Jr., Connor & Connor, Sheridan, for appellee.
Before PARKER, C.J., and McEWAN and McCLINTOCK, JJ.
Mr. Chief Justice PARKER delivered the opinion of the court.
Dean Joslyn brought an action against the City of Buffalo alleging that in a regular meeting of the city council, at which there was discussion by the mayor and members of the council concerning the advisability of the transaction, the city contracted to trade a 14.25 acre tract of land belonging to it and located outside the city limits for plaintiff's approximately one-third acre and thereafter refused to perform the contract. He sought specific performance and in the alternative (only) asked for $40,000 damages. The court denied specific performance but found generally for the plaintiff and against the defendant, awarding plaintiff damages in the sum of $12,000 plus costs. From the judgment defendant appeals, charging error on several different grounds, only one of which requires consideration here: The purported contract was void because no authority exists to exchange municipal property, and assuming arguendo that it is authorized, the exchange could be made only in accordance with § 15.1-12, W.S. 1957, C. 1965,[1] requiring advertisement, with which there was no compliance.
The parties stipulated that:
"* * * The exchange of land owned by the parties to this action was entered into as a result of the consultations had *1107 between the parties at a regular meeting of the city counsel [sic] on April 3, 1973, subject to the condition that the parties would exchange title insurance with each other, that the plaintiff would have the privilege of removing the structure from the premises he intended to exchange with the defendant, that closing would be ninety days from and after the date of April 3, 1973, and subject to the further condition defendant intends to adduce at the time of trial."
The city clerk's minutes of the April 3 meeting read:
"Dean Joslyn proposed to trade the City Lot # 3 Block # 1 Railroad Addition for a parcel of land owned by the City. It is located about three miles West of Buffalo on the North side of Highway # 16 and contains 13.4 acreas [sic] of land. A motion was made by Councilman Adami and seconded by Councilman McIntyre to make the trade with the City reserving the mineral rights. Upon a roll call vote, all votes were `Ayes.'"
In considering the contended lack of authority to exchange municipal property and the noncompliance with § 15.1-12, we note the universal rule that municipalities can exercise only those powers of government which are expressly or impliedly conferred. May v. City of Laramie, 58 Wyo. 240, 131 P.2d 300, 312. No statute is called to our attention, and we are aware of none, expressly authorizing exchange of property by cities; but plaintiff argues that the power to exchange municipal lands is generally held to arise by implication from the express powers of selling and buying real estate and that where such a right arises by implication the procedure to be followed is left to the discretion of the governing body, to be exercised in an appropriate and proper manner, citing City of Tucson v. Arizona Alpha of Sigma Alpha Epsilon, 67 Ariz. 330, 195 P.2d 562, where an exchange of real property by a city in conformity with its charter provisions was held not to be invalid because the city did not advertise for bids as required by a statute relating generally to cities and towns. The court there held that the statute in question had no application to charter cities, which circumstance renders the case of no assistance in the controversy before us. Other cited encyclopedic and text statements[2] indicate disparate holdings in cases involving analogous situations. Our view of the instant situation is that were we to accept the thesis that the power to buy and sell includes the right to exchange, we would still have to decline acceptance of plaintiff's assertion that the procedures outlined in § 15.1-12 would not apply to the exchange of lands and that the city might make any orders in respect to such an exchange as deemed to be in its best interest. Even were the city officials so well informed on the matter of a sale or exchange that no possible additional information could come to their attention by the advertisement of the intended disposition of city property, it is important to the officials of a city and the residents thereof that any appearance of unfairness be guarded against by complying with the provisions of § 15.1-12. Since admittedly this was not done here, the cause must be reversed.
Reversed.
NOTES
[1] "Before the sale of any real or personal property of any city or town of the value of five hundred dollars ($500) or more an advertisement of the intended sale, describing the property and the terms of the sale, shall be published at least once each week for four consecutive weeks in a newspaper having general circulation in the community, calling for sealed bids for purchase of the property. Upon the opening of the bids, the property shall be sold to the highest responsible bidder, unless the governing body of the city or town shall reject all bids. * * *"
[2] 56 Am.Jur.2d, Municipal Corporations § 551; 10 McQuillin, Municipal Corporations, p. 90 (1966 rev.).
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Order Michigan Supreme Court
Lansing, Michigan
March 30, 2018 Stephen J. Markman,
Chief Justice
157169-70 Brian K. Zahra
Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
Kurtis T. Wilder
Elizabeth T. Clement,
In re KML FAISON, Minor. Justices
SC: 157169
COA: 338808
Wayne CC Family Division:
13-511911-NA
_____________________________________/
In re BRAGG, Minors.
SC: 157170
COA: 338811
Wayne CC Family Division:
13-511911-NA
_____________________________________/
On order of the Court, the application for leave to appeal the January 9, 2018
judgment of the Court of Appeals is considered, and it is DENIED, because we are not
persuaded that the question presented should be reviewed by this Court.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
March 30, 2018
p0327
Clerk
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997 F.2d 1306
UNITED STATES of America, Plaintiff-Appellant,v.Ramiro RODRIGUEZ, Defendant-Appellee.
No. 91-50243.
United States Court of Appeals,Ninth Circuit.
July 14, 1993.
Before: HUG, PREGERSON and POOLE, Circuit Judges.
1
The opinion filed October 5, 1992, slip opinion 11929, and appearing at 976 F.2d 592 (9th Cir.1992), is amended as follows:
2
1. At slip op. at 11936, in the first sentence of the fourth full paragraph, at 976 F.2d at 595, in the first sentence of the last full paragraph, at slip op. at 11937, in the first sentence of the second full paragraph, and at 976 F.2d at 596, in the first sentence of the second full paragraph, change "16 year-old Ford" to "14 year-old Ford."
3
2. At slip op. at 11937, in the last sentence of the first full paragraph, and at 976 F.2d at 596, in the last sentence of the first full paragraph, change the pin cite to Sokolow from "490 U.S. at 1 [109 S.Ct. at 1581, 104 L.Ed.2d at 1 (1989) ]" to "490 U.S. at 10 [109 S.Ct. at 1587]."
4
3. At the end of the first full paragraph appearing at slip op. at 11937 and at 976 F.2d at 596, insert the following footnote:
5
1 Our holding is not inconsistent with the Supreme Court's statement in Sokolow that "the fact that these factors [cited by the agent as reasonable suspicion] may be set forth in a 'profile' does not somehow detract from their evidentiary significance as seen by a trained agent." 490 U.S. at 10, 109 S.Ct. at 1587. We hold only that the presence of a set of factors held to be sufficient in the specific factual context of one case may be inadequate in another case to show reasonable, individualized suspicion. This holding is supported by Ninth Circuit cases in which virtually identical factors cited by agents sometimes establish reasonable suspicion and sometimes do not, depending upon the unique facts of each case. Compare United States v. Salinas, 940 F.2d 392, 394 (9th Cir.1991) with United States v. Bugarin-Casas, 484 F.2d 853, 855 (9th Cir.1973), cert. denied, 414 U.S. 1136, 94 S.Ct. 881, 38 L.Ed.2d 762 (1974). See also, Sokolow, 490 U.S. at 8, 109 S.Ct. at 1585 (in evaluating whether factors support reasonable suspicion, the reviewing court must consider "the totality of the circumstances--the whole picture") (quotation omitted).
6
With these amendments, the panel has voted unanimously to deny the petition for rehearing.
7
The full court has been advised of the suggestion for rehearing en banc. An active judge requested a vote on whether to rehear the matter en banc. The matter failed to receive a majority of the votes of the nonrecused active judges in favor of en banc consideration. Fed.R.App.P. 35.
8
The petition for rehearing is denied, and the suggestion for rehearing en banc is rejected.
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Order Michigan Supreme Court
Lansing, Michigan
March 24, 2017 Stephen J. Markman,
Chief Justice
Robert P. Young, Jr.
Brian K. Zahra
155272(74) Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
ANN WALDRON DAWSON, JEFFREY ALAN Joan L. Larsen,
GRUNOW, WAYNE ERXLEBEN, SHIRLEY Justices
ERXLEBEN, LAURA GRACE STERENBERG,
GARY KIEVIT, and MARY KIEVIT,
Plaintiffs-Appellants,
SC: 155272
v COA: 329154
Ottawa CC: 15-004224-CZ
CITY OF GRAND HAVEN,
Defendant-Appellee.
_________________________________________/
On order of the Chief Justice, the motion of defendant-appellee to strike the reply
submitted by plaintiffs-appellants on March 14, 2017, is DENIED as moot in light of the
conforming amended reply filed on March 20, 2017.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
March 24, 2017
Clerk
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Case: 17-40960 Document: 00514888678 Page: 1 Date Filed: 03/26/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 26, 2019
No. 17-40960
Lyle W. Cayce
Clerk
RETRACTABLE TECHNOLOGIES, INCORPORATED; THOMAS J. SHAW,
Plaintiffs - Appellants
v.
BECTON DICKINSON & COMPANY,
Defendant - Appellee
Appeals from the United States District Court
for the Eastern District of Texas
Before HIGGINBOTHAM, SMITH, and GRAVES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
A jury found that Becton Dickinson & Co. falsely advertised its products
for years. The district court determined that neither disgorgement of profits
nor further injunctive relief would be equitable under the circumstances. It did
not abuse its discretion. We affirm.
I
This case involves a narrow subset of medical syringes: retractable
syringes, a type of “safety syringe” designed to reduce risk of accidental
needlesticks. Retractable syringes compete both with other varieties of safety
Case: 17-40960 Document: 00514888678 Page: 2 Date Filed: 03/26/2019
No. 17-40960
syringes and with “conventional” syringes. 1 Although retractable syringes
provide significant protection against accidents, their fixed needles prevent use
for some hospital and clinical purposes. 2
Retractable Technologies, Inc. and Becton Dickinson & Co. compete in
the U.S. safety syringe market alongside two other major safety syringe
manufacturers. 3 RTI primarily manufactures retractable syringes and
dominates the retractable syringe sub-market; while BD produces retractable
syringes, it also produces several conventional and non-retractable safety
products that account for the bulk of its revenue. 4 This appeal is the latest
stage of ongoing litigation between the two.
A
BD made two false claims in its marketing materials. First, it advertised
itself as having the “world’s sharpest needle,” reflecting that needle sharpness
is seen as a proxy for patient comfort, and persisted in doing so after its
internal tests indicated otherwise. 5 Second, it promoted its retractable
syringes as having seven times less “waste space” than RTI’s product, meaning
that the syringes would waste less medicine per use. 6 While BD’s testing
supported this claim at first, internal tests from 2003 onward demonstrated
that RTI’s syringes were less wasteful than claimed. 7
RTI and its founder, Thomas J. Shaw, sued BD for antitrust violations
and false advertising under the Lanham Act, pointing to these false claims and
1 Retractable Techs., Inc. v. Becton Dickinson & Co. (RTI I), 842 F.3d 883, 889 (5th
Cir. 2016).
2 Id.
3 Id. As of 2010, BD had a 49% share of the safety syringe market, Covidien Ltd. had
a 30% share, Smiths Medical had a 10% share, and RTI had a 6% share. Id.
4 Id.
5 Id. at 893.
6 Id. at 893–94.
7 Id.
2
Case: 17-40960 Document: 00514888678 Page: 3 Date Filed: 03/26/2019
No. 17-40960
other allegedly unfair and anticompetitive business practices. 8 A jury sided
with RTI on one of its antitrust claims and all of its Lanham Act false
advertising claims. It found that RTI was due more than $113.5 million in
antitrust damages. 9 RTI elected to not seek an award of damages for the
Lanham Act claim from the jury. 10
The district court statutorily trebled the antitrust damages and granted
attorney’s fees, resulting in a total award of approximately $352 million. RTI
additionally requested disgorgement of BD’s profits and injunctive relief. The
district court concluded that equity favored disgorgement, but that any
relevant profits were subsumed by the trebled antitrust damages award. It also
crafted a six-part injunction requiring BD to cease certain advertising claims
for several years, post a notice on its website, notify various entities of the false
claims, and implement a training program for employees and distributors. 11
On BD’s motion to stay the injunction pending appeal, the district court stayed
only the portion of the injunction that would require BD to notify its “end
users”—that is, the “hospitals, clinics, and other healthcare providers that do
not resell the syringes in the ordinary course of business.” 12
8 RTI initially filed state tort claims in addition to its Lanham Act and antitrust
claims, but dismissed them after the close of evidence at trial. Id. at 890. RTI also sued BD
for patent infringement, which was tried separately. On appeal, the Federal Circuit upheld
one of the patent claims on which RTI had prevailed at trial. See Retractable Techs., Inc. v.
Becton, Dickinson & Co., 653 F.3d 1296 (Fed. Cir. 2011).
9 RTI I, 842 F.3d at 890.
10 Id.
11 The injunction extended up to five years for certain portions and up to three years
for other portions.
12 The district court’s rationale for staying this portion of the injunction was that
intermediary distributors were the most likely to perpetuate BD’s false statements and
further harm RTI, whereas forcing BD to admit wrongdoing to end users posed a greater risk
of irreparable harm to BD.
3
Case: 17-40960 Document: 00514888678 Page: 4 Date Filed: 03/26/2019
No. 17-40960
B
While BD began to comply with the portions of the injunction that were
not stayed, it appealed the jury’s finding of antitrust liability and the district
court’s remedies determination. 13 We concluded that RTI’s antitrust claim was
legally insufficient and reversed that portion of the judgment—so at a
minimum, RTI was no longer entitled to trebled antitrust damages and
attorney’s fees. 14 Having determined that the injunction was predicated at
least in part on BD’s antitrust liability, we also vacated the injunction and
remanded to the district court to determine whether the Lanham Act violations
standing alone justified continued equitable relief. 15
As for disgorgement of BD’s profits, we specifically approved of some of
the district court’s findings: “at least some portion of BD’s profits were
attributable to the false advertising,” BD intended to confuse or deceive
consumers, and RTI did not unreasonably delay in seeking relief. 16 Beyond
that, recognizing that the district court had subsumed the disgorgement into
the trebled antitrust damages, we remanded “for a thorough reweighing of the
remaining factors and the entirety of the record to determine whether and how
much profit BD should disgorge to compensate for the Lanham Act
violations.” 17 “In particular,” we observed, “when assessing [whether BD
diverted sales from RTI], the district court should bear in mind that
speculative and attenuated evidence of diversion of sales will not suffice.” 18
13 RTI I, 842 F.3d at 893, 901. BD also appealed its Lanham Act liability, asserting
res judicata and laches. Id. at 898–900. It did not contest the underlying finding of false
advertising liability.
14 Id. at 898.
15 Id. at 902.
16 Id. at 901 (emphasis added).
17 Id.
18 Id. (citing Seatrax, Inc. v. Sonbeck Int’l, Inc., 200 F.3d 358, 372 & n.8 (5th Cir.
2000)).
4
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No. 17-40960
On remand, the district court conducted a one-day bench trial and
evaluated an otherwise closed record. It ultimately declined to disgorge BD’s
profits or reinstate any portion of the vacated injunction. RTI appeals.
II
We review a district court’s decision to grant or withhold disgorgement
or injunctive relief under the Lanham Act for abuse of discretion. 19 Exercise of
its discretion must not have been based on an “erroneous view of the law” or a
“clearly erroneous assessment of the evidence.” 20 The district court otherwise
has “[g]reat latitude” 21 to “determine the nature of the infringing conduct and
its adverse effects, if any, on the plaintiff,” and to fashion relief accordingly. 22
III
We will begin with the district court’s denial of further injunctive relief.
A district court’s discretion to grant injunctive relief is both broad and
constrained by well-settled principles. When we remanded the issue to the
district court, while recognizing that a further need for injunctive relief was
“theoretically possible,” we emphasized that “[a] plaintiff seeking injunctive
relief must show a real and immediate threat of future or continuing injury
apart from any past injury,” and that any injunction should be “no broader
than reasonably necessary to prevent the deception.” 23
19 See, e.g., Quick Techs., Inc. v. Sage Grp., PLC, 313 F.3d 338, 347 (5th Cir. 2002).
20 Aransas Project v. Shaw, 775 F.3d 641, 648 (5th Cir. 2014) (per curiam). RTI argues
that because the district judge on remand did not preside over the original trial, the court’s
factual conclusions on remand should be subject to higher scrutiny. Here, where the remand
court conducted a one-day bench trial and could review extensive documentary evidence
presented in the initial trial, we will review its factual determinations for clear error. Cf.
Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985) (confirming that clear error
review accounts for the trial court’s expertise in determining facts, so even factual findings
that do not rest on in-person testimony must be reviewed for clear error).
21 Martin’s Herend Imports, Inc. v. Diamond & Gem Trading USA Co., 112 F.3d 1296,
1304 (5th Cir. 1997).
22 Seatrax, 200 F.3d at 369.
23 RTI I, 842 F.3d at 902 (quoting Aransas Project, 775 F.3d at 663, and Better Bus.
Bureau of Metro. Hous., Inc. v. Med. Dirs., Inc., 681 F.2d 397, 405 (5th Cir. 1982)).
5
Case: 17-40960 Document: 00514888678 Page: 6 Date Filed: 03/26/2019
No. 17-40960
The district court hewed to these reminders on remand. It observed that
although it had stayed the requirement that BD notify its end users of the false
advertising, BD took multiple steps to comply with the remainder of the
injunction for the two-year period 24 before we reversed BD’s false advertising
liability on appeal. BD notified “over 750 distributors, over 10,000 employees,
and all the major Group Purchasing Organizations, stating that its needle
sharpness and waste space claims were inaccurate.” Further, “BD removed the
false advertising from its marketing materials . . . and posted a notice on its
website.” It also implemented a training program for employees and
distributors. The district court concluded that these steps had been sufficient
to remedy any injury or threat of injury RTI had suffered from the false
advertising.
RTI argues that this analysis was flawed because it failed to account for
notification to end users, the portion of the original injunction that never went
into effect because the district court stayed it pending appeal; that because end
users play a significant role in medical decisions to purchase syringes, BD’s
false advertising cannot be fully remedied without requiring end user
notification. While aware that this portion of the original injunction never took
effect, the district court concluded that RTI had not demonstrated a real and
immediate threat of future or continuing injury that would warrant further
injunctive relief. RTI has presented no reason to conclude that the district
court clearly erred in this determination or that it abused its discretion by
denying further injunctive relief.
24 The district court required BD to begin complying with the injunction on February
14, 2015, and our opinion issued on December 2, 2016.
6
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No. 17-40960
IV
The heart of the parties’ dispute is whether the district court erred in
denying disgorgement of BD’s profits. Section 35 of the Lanham Act allows
monetary recovery for certain Lanham Act violations in the form of actual
damages, disgorgement, and costs. 25 A plaintiff’s entitlement to disgorged
profits is assessed based on the equities of the case and does not automatically
follow from liability. 26
Our caselaw establishes two distinct considerations in assessing whether
disgorgement is appropriate. The first is whether disgorgement is equitable
under the six factors set forth in Pebble Beach Co. v. Tour 18 I Ltd.:
(1) whether the defendant had the intent to confuse or
deceive, (2) whether sales have been diverted, (3) the
adequacy of other remedies, (4) any unreasonable
delay by the plaintiff in asserting his rights, (5) the
public interest in making the misconduct unprofitable,
and (6) whether it is a case of palming off. 27
The Pebble Beach factors are non-mandatory and non-exclusive: the district
court is free to consider other facts in assessing whether disgorgement of
profits would be equitable, just as it may exercise discretion in weighing the
individual factors. 28
25 15 U.S.C. § 1117(a) (2018). The statute further clarifies that “[i]n assessing profits
the plaintiff shall be required to prove defendant’s sales only; defendant must prove all
elements of cost or deduction claimed.” Id.
26 See, e.g., Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 338 (5th Cir.
2008); Seatrax, 200 F.3d at 369.
27 Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 554 (5th Cir. 1998), abrogated on
other grounds by TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001). While these
factors were formulated in the trademark infringement context, they also apply to false
advertising. See, e.g., RTI I, 842 F.3d at 900–01.
28 See, e.g., Quick Techs., 313 F.3d at 348–49.
7
Case: 17-40960 Document: 00514888678 Page: 8 Date Filed: 03/26/2019
No. 17-40960
The second consideration is whether the defendant’s profits are
attributable to the Lanham Act violation. 29 In short, “where a plaintiff who has
brought a Lanham Act claim for false advertising has failed to present evidence
that the defendant benefited from the alleged false advertising, the plaintiff
will not be permitted to recover any of the defendant’s profits,” even where the
Pebble Beach test favors disgorgement. 30
On remand, the district court correctly recognized that we had affirmed
certain portions of its disgorgement analysis, making that analysis the law of
the case. We agreed with the district court’s conclusion that “at least some
portion of BD’s profits were attributable to the false advertising.” 31 As for the
Pebble Beach factors, we specifically affirmed its findings that the “intent to
confuse or deceive” and “unreasonable delay” Pebble Beach factors favored
disgorgement. 32 Following our instructions to engage in “a thorough re-
weighing of the remaining factors and the entirety of the record to determine
whether and how much profit BD should disgorge to compensate for the
Lanham Act violations,” 33 the district court reevaluated the remaining Pebble
Beach factors. It found that although BD had intended to confuse or deceive,
RTI had not unreasonably delayed in asserting its rights, and the public
interest favored disgorgement, the equities weighed against disgorgement
because RTI had not shown diversion of sales or palming off and injunctive
relief was an adequate remedy. RTI challenges the district court’s assessment
of several of the individual Pebble Beach factors, as well as its ultimate
balancing of the factors.
29See, e.g., id. at 350; Tex. Pig Stands, Inc. v. Hard Rock Cafe Int’l, Inc. (Texas Pig
Stands II), 966 F.2d 956, 957 (1992), on denial of reh’g.
30 Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 464 (5th Cir. 2001).
31 See RTI I, 842 F.3d at 901.
32 See id.
33 Id.
8
Case: 17-40960 Document: 00514888678 Page: 9 Date Filed: 03/26/2019
No. 17-40960
A
RTI contests the district court’s conclusion on remand that the “diversion
of sales” factor did not favor disgorgement. The district court initially found
that this factor favored disgorgement, but only slightly. As we have explained,
the district court found that at least some of BD’s profits were attributable to
its false advertising. But although it recognized that “BD profited from its false
advertisements,” the court observed that “it is less certain that the resulting
sales came at RTI’s expense,” because RTI and BD were not the only
participants in the safety syringe market. Despite this hesitation, the court
ultimately found that RTI had produced enough evidence, in the form of
internal BD emails touting commercial successes attributable to its needle-
sharpness and waste-space advertisements, to confirm the “rational conclusion
that some portion of BD’s ill-gotten sales came at RTI’s expense.” It therefore
weighed the diversion factor slightly in favor of disgorgement.
On remand, guided by our reminder that “speculative and attenuated”
evidence of diversion is insufficient to support disgorgement, the district court
reevaluated the “diversion of sales” factor. It ultimately concluded that the
factor weighed against disgorgement because RTI had not adequately
demonstrated diversion. RTI challenges this on two grounds: first, that the
district court was bound by the case’s prior history to find diversion of sales,
and second, that the district court abused its discretion in finding no diversion.
We disagree.
1
RTI first argues that the remand court should not have reassessed the
diversion factor because the fact of diversion of sales was already conclusively
established, both by the jury’s liability finding and by our opinion. Not so.
The jury’s finding of Lanham Act liability did not conclusively establish
diversion of sales. To prevail on a false advertising claim, a plaintiff must
9
Case: 17-40960 Document: 00514888678 Page: 10 Date Filed: 03/26/2019
No. 17-40960
demonstrate injury or likely injury due to the defendant’s false advertising. 34
We have cautioned against “conflat[ing] the injury requirement for [a] false
advertisement claim with the requirement that [the plaintiff] prove his actual
damages in order to obtain relief.” 35 We have further explained that “[i]n
fashioning the appropriate remedy, a legal determination of liability is not
dispositive,” and in determining whether disgorgement is appropriate a court
must further consider the “adverse effects, if any, on the plaintiff.” 36 In sum, a
plaintiff could prove that a defendant is liable for false advertising, but not
satisfactorily demonstrate tangible harm—such as diverted sales—as a result
of that false advertising. 37
Nor did our prior decision establish diversion of sales as the law of the
case. RTI argues that when we found “no clear error in the district court’s
conclusion that at least some portion of BD’s profits were attributable to the
false advertising,” 38 we established that the diversion factor weighed in favor
of disgorgement. Taken in context, this argument conflates the “attribution of
profits” requirement with the “diversion of sales” factor.
When first determining whether disgorgement was appropriate, in
keeping with our caselaw, the district court addressed the attribution
34 Logan, 263 F.3d at 462.
35 Id. at 462. Typically, injunctive relief is available even where a false advertising
plaintiff cannot prove concrete enough damage to qualify for monetary relief. For example,
while we generally will require a plaintiff seeking monetary relief to demonstrate actual
consumer confusion or deception, we relax that requirement for a plaintiff seeking purely
injunctive relief—the latter need only prove that the advertisement tends to deceive
consumers. See Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 497–98 (5th Cir. 2000).
36 Seatrax, 200 F.3d at 369.
37 See Logan, 263 F.3d at 462–63 (holding that the plaintiff had not proven damages
with sufficient particularity to support an award of actual damages, even though the injury
element of the false advertising claim was met); see also Porous Media Corp. v. Pall Corp.,
110 F.3d 1329, 1336 (8th Cir. 1997) (“Once it had established its [false advertising] claim,
[the plaintiff] still bore the burden of proving an evidentiary basis to justify any monetary
recovery.”).
38 RTI I, 842 F.3d at 901.
10
Case: 17-40960 Document: 00514888678 Page: 11 Date Filed: 03/26/2019
No. 17-40960
requirement and the Pebble Beach factors separately. It found that RTI had
sufficiently demonstrated that at least some of BD’s profits were attributable
to its wrongful conduct—internal BD documents suggested that the false
advertising allowed BD to command premium pricing and claim increased
market share. Despite finding that some profits were attributable to the false
advertising, the district court expressed well-founded skepticism that RTI had
proven diversion of sales—observing that “[a]lthough BD profited from its false
advertisements, it is less certain that the resulting sales came at RTI’s
expense,” since it was not clear that every dollar BD earned came out of RTI’s
pocket. Nonetheless, as we have explained, it ultimately found that “some
portion of BD’s ill-gotten sales came at RTI’s expense.”
When we affirmed the district court’s conclusion that “at least some
portion of BD’s profits were attributable to the false advertising,” we referred
to the district court’s initial finding that some of BD’s profits were attributable
to the false advertising, not its considerably more tentative finding that the
false advertising diverted sales specifically from RTI to BD. Indeed, after
directing the district court to re-weigh the Pebble Beach factors that we had
not specifically addressed, we instructed it not to consider “speculative and
attenuated” evidence of diversion when assessing the “diversion of sales”
factor—reflecting our understanding that while the district court may have
properly found some profits attributable to the false advertising, this did not
necessarily mean that the diversion factor supported disgorgement. 39
At base, the attribution and diversion inquiries serve different functions
in assessing the propriety of disgorgement. The “diversion” factor plays an
39 Id. Of course, we left open the possibility that the district court could find on remand
that RTI had lost sales to BD. See, e.g., id. at 895 (in discussing BD’s potential antitrust
liability, observing that “RTI may have lost some sales or market share because of BD’s false
advertising”).
11
Case: 17-40960 Document: 00514888678 Page: 12 Date Filed: 03/26/2019
No. 17-40960
important role in establishing the plaintiff’s entitlement to profits. In many
cases, disgorgement will not be equitable where few or no sales were ever
diverted from the plaintiff to the defendant, because disgorgement in such
contexts would grant the plaintiff an unjustified “windfall.” 40 The “attribution”
requirement ensures that once the district court has determined disgorgement
is equitable, a defendant will only be forced to disgorge profits attributable to
the Lanham Act violation. 41 It signifies that, while these inquiries will often
overlap, they are not coextensive. For example, as the district court recognized
from the beginning, RTI had presented evidence that BD benefited from its
false advertising by commanding premium pricing—generating increased
profits for BD without necessarily diverting sales from RTI.
In sum, there was no inconsistency between the district court’s
reweighing of the diversion factor on remand and either the jury verdict or our
previous opinion on appeal. Although we affirmed the district court’s
recognition that BD benefited from the false advertising to some extent—
satisfying the attribution requirement—we left open the possibility that RTI
would be unable to present anything beyond “speculative and attenuated”
evidence proving that this benefit came in the form of sales diverted from RTI
to BD.
2
RTI also argues that once the district court reassessed the “diversion of
sales” factor, it clearly erred in finding that RTI offered insufficient proof of
diversion. Here too, we disagree. The district court found that the diversion
factor did not favor disgorgement because the only evidence RTI had presented
40Cf. Tex. Pig Stands, Inc. v. Hard Rock Cafe Int’l, Inc. (Texas Pig Stands I), 951 F.2d
684, 696 (5th Cir. 1992) (“The granted permanent injunction adequately remedies the
complained-of infringement, and awarding [the plaintiff] any of [the defendant’s] profits
would be far from equitable—it would be a windfall.”); accord Quick Techs., 313 F.3d at 348.
41 See, e.g., Quick Techs., 313 F.3d at 349–50.
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of diverted sales was “speculative and attenuated”; the best evidence of
diversion RTI produced was internal BD correspondence boasting about the
commercial impact of its “needle sharpness” and “waste space” claims, and the
trial court was persuaded that this correspondence did not actually prove that
RTI’s customers or potential customers chose to purchase from BD instead of
RTI as a result of the false advertising. Notably, RTI had not produced “a single
witness or reliable study or data to prove a single example of a diverted sale,”
nor did it produce evidence that any potential customer “ever saw the waste
space comparison or relied on it in making purchasing decisions.” 42 At least
some customers expanded their purchases from RTI after the dates they were
allegedly presented with the deceptive waste space comparisons. In contrast,
BD had difficulty selling its retractable syringes during the same period.
These findings closely tracked our reasons for concluding that BD’s false
advertising, standing alone, could not ground antitrust liability. We observed
the sophisticated nature of the parties’ customers, not one of which testified to
a purchase motivated by either of BD’s false claims about needle sharpness or
waste space, but several of which testified that they were not impacted by
advertisements. 43 We further observed that “RTI produced no evidence of
customers being misled or confused and purchasing BD’s syringes instead of
RTI’s because of the advertisements”—noting RTI’s 67% share of the
retractable syringe sub-market, RTI’s own experts’ recognition that they could
not substantiate a causal connection between the false advertising and BD’s
42 RTI argues that the district court ignored evidence that a presentation including
the false claims had been used with potential customers. Even if there was some evidence
that BD presented the false advertising to clients, however, the district court did not clearly
err in concluding that the false advertising did not affect client decisions or divert sales from
RTI to BD. Further, RTI’s counsel conceded that in at least one case, an internal document
prepared for a customer presentation was “not actually given” to that customer.
43 RTI I, 842 F.3d at 895.
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sales, evidence that certain customers increased their purchases of RTI
syringes after potentially being exposed to BD’s false statements, and evidence
that factors other than BD’s advertising predominantly impacted its sales. 44 In
sum, we concluded that “RTI’s evidence consisted mostly of boastful e-mail
exchanges between BD sales representatives recounting what they believed
were successful sales pitches, but notably there was no testimony from the
customers themselves.” 45 While we discussed these facts in the context of RTI’s
antitrust claim, the district court appropriately accounted for them in its
analysis of diversion of sales. We cannot conclude that the district court clearly
erred in finding that RTI had only presented speculative and attenuated
evidence of diversion of sales, and that the diversion factor therefore did not
favor disgorgement.
Relatedly, RTI suggests that the district court on remand should have
presumed diversion of sales because BD engaged in intentionally deceptive
comparative advertising. 46 While some of our fellow circuits have applied this
presumption to claims for disgorgement in false advertising cases, they have
largely done so in cases of intentionally false comparative advertising “where
[it is] reasonable to presume that every dollar defendant makes has come
directly out of [the] plaintiff’s pocket.” 47 We need not decide the wisdom of this
44 Id. at 896–97.
45 Id. at 897.
46 RTI also argues that the district court should have presumed diversion from the
fact that BD’s statements were literally false. While we have held that a plaintiff can
presumptively satisfy the deception and materiality elements of a false advertising claim by
showing literal falsity, this speaks to liability, not entitlement to disgorgement. See Pizza
Hut, 227 F.3d at 497 (“With respect to materiality, when the statements of fact at issue are
shown to be literally false, the plaintiff need not introduce evidence on the issue of the impact
the statements had on consumers.” (emphasis added)).
47 TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 831 (9th Cir. 2011); see also
Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 262 (2d Cir. 2014) (“In a false advertising
case such as this one, where the parties are direct competitors in a two-player market, and
where literal falsity and willful, deliberate deception have been proved, the presumptions of
injury and consumer confusion may be used for the purposes of awarding both injunctive
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presumption in such cases, because it does not apply here. From the beginning,
the district court recognized that RTI and BD were not the only players in the
safety syringe market and that it could not presume that any benefit BD
gained from its false advertising came directly at the expense of RTI. 48 The
district court therefore did not err in looking for more concrete evidence of
diversion.
B
RTI also challenges the district court’s decision on remand that the
“adequacy of other remedies” factor disfavored disgorgement. Before we
reversed BD’s antitrust liability, the district court found that the trebled
antitrust damages award and six-part injunction were likely adequate to
remedy any harm caused by the false advertising. Even after we remanded,
the district court concluded that the steps BD had already taken to comply
with the injunction were sufficient—so the factor still weighed against
disgorgement. This conclusion went hand-in-hand with the district court’s
determination that RTI had not sufficiently demonstrated that it suffered
concrete harm—in the form of diverted sales or otherwise—as a result of the
false advertising.
We have already explained why the district court did not clearly err in
finding that further injunctive relief was unnecessary. For similar reasons, we
cannot conclude that the district court clearly erred here. RTI has not
demonstrated that the district court misunderstood or overestimated the scope
relief and monetary damages to a successful plaintiff.”); Balance Dynamics Corp. v. Schmidt
Indus., Inc., 204 F.3d 683, 694–95 (6th Cir. 2000) (“[L]iteral falsity, without more, is
insufficient to support an award of money damages to compensate for marketplace injury
such as harm to goodwill . . . . While literal falsehood or the likelihood of deception may be
sufficient to entitle [the plaintiff] to injunctive relief or reimbursement for responsive
advertising, it should not permit [the plaintiff] to recover for injuries to goodwill in the
absence of some more substantial indication that these injuries actually occurred.”).
48 See RTI I, 842 F.3d at 888, 896.
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of the actions BD had already taken to comply with the injunction before it was
vacated. Nor has RTI shown that the district court clearly erred in finding that
the steps BD already took—including notifying over 750 distributors and
Group Purchase Organizations—were adequate to remedy any harm RTI had
experienced as a result of BD’s actions, especially since RTI ultimately offered
only “speculative and attenuated” evidence of harm to its business as a result
of the false advertising. We have previously held that when a Lanham Act
plaintiff has already received or will benefit from substantial injunctive relief,
disgorgement may amount to a “windfall.” 49
The district court’s treatment of this factor hinged on a straightforward
application of the principle that where the relief that a plaintiff has already
received is otherwise adequate to remedy any harm posed to the plaintiff, an
award of profits may not be equitable. 50 It did not abuse its discretion in
weighing this factor against disgorgement.
C
Finally, RTI argues that the district court abused its discretion when it
weighed the Pebble Beach factors to find that the equities did not favor
disgorgement. RTI avers that the district court erred by assigning significant
weight to the “palming off” factor. It also argues that the district court should
have awarded disgorgement based solely on the need to deter future false
advertising.
49 See, e.g., Quick Techs., 313 F.3d at 350 (citing Texas Pig Stands I, 951 F.2d at 696).
50 There is also no tension between the district court’s conclusions here and our
reminder that “equitable relief is normally appropriate only in the absence of an adequate
remedy at law (i.e., money damages).” RTI I, 842 F.3d at 902. Here, a large portion of the
injunctive relief had already been secured, and the district court was asked to determine
whether the fact that BD had already taken several steps to comply with the injunction
helped to mitigate the need for monetary relief. We do not necessarily approve of a general
rule that, ex ante, injunctive relief is preferable to disgorgement.
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1
The “palming off” factor applies when a Lanham Act defendant attempts
to pass off its goods as the plaintiff’s. RTI has never argued that BD palmed off
its syringes as RTI’s. Instead, it submits that “palming off” is an irrelevant
factor in false advertising cases, and that the district court should have looked
instead to the general loss of goodwill RTI experienced due to BD’s false claims.
On remand, the district court observed that the “diversion of sales” and
“palming off” factors are “especially important factors” in the Pebble Beach
analysis under our caselaw. It concluded that disgorgement was inequitable
because three Pebble Beach factors, “including the two most important,”
weighed against disgorgement. RTI argues that this approach sets false
advertising plaintiffs at a disadvantage relative to trademark infringement
plaintiffs: while an appropriate measure of egregious conduct in trademark
cases, palming off will rarely be demonstrated in Lanham Act cases that do not
involve trademark claims.
If a false advertising plaintiff has otherwise shown concrete harm due to
the false advertising, such as diverted sales, a court should not heavily weigh
the absence of palming off against disgorgement. Here, however, the district
court appropriately considered the absence of palming off as another way in
which RTI could have demonstrated concrete harm as a result of BD’s false
advertising, but did not. The district court concluded that since RTI
demonstrated neither diversion of sales nor palming off, disgorgement of BD’s
profits would grant RTI an unjustifiable windfall.
The district court correctly read our caselaw, which establishes that a
plaintiff who cannot demonstrate diversion or palming off faces an uphill battle
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in obtaining disgorgement. 51 While a plaintiff seeking disgorgement need not
demonstrate damages with the same degree of particularity as one seeking
actual damages, 52 we are wary of disgorging profits to a party who can only
speculate as to harm caused by the Lanham Act violation.
RTI argues that in lieu of palming off, the district court should have
accounted for loss of goodwill that RTI experienced as a result of the false
advertising. Because the Pebble Beach factors are non-exclusive, district courts
are always free to consider other facts affecting the equity of disgorgement.
RTI argues that even where a Lanham Act plaintiff has not shown diversion of
sales or palming off, disgorgement of the defendant’s profits may still be
equitable where the plaintiff shows harm due to loss of consumer goodwill.
In principle, RTI is correct. Even without sufficient evidence of diverted
sales or palming off, proof of lost goodwill might weigh in favor of
disgorgement—especially, though perhaps not only, where the plaintiff can
show that the loss of goodwill tangibly affected the plaintiff’s business or would
have affected the plaintiff’s business had the plaintiff not taken steps to
resuscitate consumer perception. But here, RTI’s evidence of lost goodwill and
steps taken to combat that lost goodwill, like its evidence of diverted sales, was
51 See Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 459 (5th Cir.
2017) (noting that monetary damages are especially unwarranted under the Lanham Act
either “in the absence of a showing of wrongful intent” or where there is “lack of sufficient
proof of actual damages”); Sw. Recreational Indus., Inc. v. FieldTurf, Inc., No. 01-50073, 2002
WL 32783971, at *9 (5th Cir. Aug. 13, 2002) (unpublished opinion) (noting the absence of
diversion and palming off in affirming a denial of disgorgement); Seatrax, 200 F.3d at 372
(noting that disgorgement was unjustified in light of a lack of willful infringement, lack of
palming off, sufficiency of injunctive relief as a deterrent, and lack of “sufficient proof of
actual damages”); Pebble Beach, 155 F.3d at 555 (emphasizing lack of proof of actual damages
or intent to confuse or deceive).
52 See Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 135–36
(2014) (explaining that disgorgement or injunctive relief may be appropriate in false
advertising cases even where actual damages cannot be quantified with “sufficient
certainty”).
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speculative. 53 As we have already explained, RTI pointed to no concrete
evidence of lost goodwill that affected the purchasing decisions of its
sophisticated customer base—in fact, as we recognized, RTI’s market share in
the retractable syringe sub-market increased and its sales nearly doubled over
the relevant period of false advertising. 54 The district court did not abuse its
discretion in failing to place significant weight on the bare possibility that RTI
lost goodwill with consumers due to BD’s advertising, without more, just as it
did not abuse its discretion in placing significant weight on the fact that RTI
had not otherwise demonstrated concrete harm.
2
In sum, the district court did not abuse its discretion in determining that
where RTI had not sufficiently demonstrated that its business suffered due to
BD’s false advertising and where BD had already taken significant steps to
correct the false statements, disgorgement was not equitable. That another
court could have evaluated the facts differently does not justify reversal,
especially as “an award of profits with no proof of harm is an uncommon
remedy in a false advertising suit.” 55
RTI argues that this outcome conflicts with our holding in Maltina Corp.
v. Cawy Bottling Co., which concluded that diversion of sales is not a
prerequisite to disgorgement because disgorgement may also remedy unjust
enrichment or deter future infringement, 56 thus helping to “take all the
53 RTI cites evidence that its employees who were worried about loss of goodwill “had
to expend effort and energy to go around and try to . . . tell people and convince them that it
wasn’t true” and “spent a lot of time going to customers and trying to correct the
misinformation, a lot of meetings, direct meetings, letter-writing, things like that.”
54 RTI I, 842 F.3d at 897.
55 See TrafficSchool.com, 653 F.3d at 831.
56 See Maltina Corp. v. Cawy Bottling Co., Inc., 613 F.2d 582, 584–85 (5th Cir. 1980);
see also Texas Pig Stands II, 966 F.2d at 957 (“This Court recognizes Maltina to be the law
of the Fifth Circuit in its holding that (i) absence of competitors or (ii) failure of proof showing
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economic incentive” out of a Lanham Act violation. 57 It observes that Maltina
rejected the view that disgorgement is only a means of “compensating . . . for
loss or diverted sales,” and therefore held that diversion of sales is not
necessarily a prerequisite to disgorgement. 58
Maltina does not mandate disgorgement in every case where
disgorgement might conceivably remedy unjust enrichment or deter future
infringement, regardless of whether it would be equitable to disgorge profits to
a particular plaintiff. To do so would effectively make disgorgement automatic
any time the defendant has any profits attributable to a Lanham Act violation,
in sharp contrast to our repeated reminder that disgorgement is ultimately an
equitable remedy subject to the district court’s sound discretion. Here, where
the district court found that injunctive relief was sufficient and monetary relief
would grant RTI an unjustified windfall, it did not abuse its discretion in
refusing to award disgorgement—other potential purposes of disgorgement
notwithstanding. 59
diversion of the mark owner’s sales is no defense to the claim for Defendant’s profits under
15 U.S.C. § 1117.”).
57 Am. Rice, 518 F.3d at 340 (observing that “infringing conduct should be unprofitable
to infringers”).
The parties discuss the relevance of the Lanham Act’s provision that at least certain
monetary awards “shall constitute compensation and not a penalty.” 15 U.S.C. § 1117(a). The
statute is ambiguous as to whether this limitation applies to all monetary awards under the
section, or whether it only applies to enhancements or reductions for inadequate or excessive
awards. We have generally read this provision to broadly hold that any monetary damages
under the Lanham Act should constitute compensation and not a penalty. See, e.g.,
Streamline Prod. Sys., 851 F.3d at 459 (“The Lanham Act . . . . instructs that . . . monetary
damages [in the form of profits, damages, or costs] ‘shall constitute compensation and not a
penalty.’”); Logan, 263 F.3d at 464 n.15 (“Section 1117(a) states that the damages provided
thereunder are ‘subject to the principles of equity’ and ‘shall constitute compensation and not
a penalty.’”). Our decision here, though, does not hinge on this provision but rather on the
well-settled principles of equity repeatedly explained in our Lanham Act caselaw.
58 Maltina, 613 F.2d at 584.
59 The district court distinguished Maltina on the grounds that trademarks and trade
dress are unique “protected property right[s].” See Maltina, 613 F.2d at 585 (“This recognition
of a trademark as property is consistent with the view that an accounting is proper even if
the defendant and plaintiff are not in direct competition, and the defendants’ infringement
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This is not a case, moreover, where the defendant violated the Lanham
Act and emerged unscathed. BD complied with the district court’s original
injunction for nearly two years, including by notifying hundreds of
intermediary distributors and Group Purchasing Organizations and by
implementing a training program for employees and distributors. Further, our
caselaw ensures that where a false advertiser succeeds in diverting sales or
otherwise demonstrably harms another party’s consumer goodwill, the district
court will account for this in assessing the equities of disgorgement. While RTI
may have failed to demonstrate such harm here, future would-be false
advertisers would do well to heed that warning. RTI has demonstrated no
interest in deterrence or remedying unjust enrichment that overcomes the
district court’s well-founded emphasis on other equitable considerations.
* * *
The district court’s denial of disgorgement of profits from RTI’s
competitor was made against the larger backdrop of its prosecution of a
meritless antitrust claim against BD for conduct in the marketplace—during
a time in which RTI nearly doubled its own sales and increased its share of the
retractable syringe sub-market to two-thirds. RTI elected not to test its proof
of Lanham Act damages before the jury, but rather to later argue, as now, that
equity mandates disgorgement. Its effort to carry the flag of “public interest”
and guide the profits of its competitor to its own coffers here must fail. That
has not diverted sales from the plaintiff.”). RTI argues that the Lanham Act also protects
trade reputation and goodwill as property interests. We need not sift through whether a
business’s goodwill is a property right similar to its trademark interests; at a minimum,
without demonstrating that RTI’s goodwill was harmed in a way that affected potential
customers’ decisions, RTI has not shown harm to its goodwill that parallels the harm caused
a markholder whose mark is used without consent. Cf. Maltina, 613 F.2d at 585 (“Here, the
only valuable property [the plaintiff] had when he arrived in this country was his right to the
‘Cristal’ mark. [The defendant] used this property, and an accounting is necessary to partially
remedy its unjust enrichment.”).
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effort must be taken outside—to the marketplace. There the public interest is
best vindicated. The district court did not abuse its discretion.
V
We affirm the district court’s denial of disgorgement and further
injunctive relief.
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JAMES E. GRAVES, JR., Circuit Judge, dissenting:
Because I conclude that the district court erred in reweighing the
diversion factor and in finding insufficient evidence to support disgorgement,
I would vacate and remand. Therefore, I respectfully dissent.
As stated in the majority’s recitation of the procedural history, the jury
found for Retractable Technologies, Inc. (RTI) on one of its antitrust claims,
attempted monopolization of the market for safety syringes, and all the
Lanham Act false advertising claims. The jury awarded $113.5 million in
antitrust damages. The district court trebled the antitrust damages and added
attorneys’ fees, resulting in a total of approximately $352 million. The district
court concluded that RTI was entitled to disgorgement of Becton Dickinson &
Co.’s (BD) profits under 15 U.S.C. §1117(a), but, found that the trebled
antitrust damages and injunction were potentially adequate remedies.
Specifically, the district court found that, under the factors outlined in
Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 554 (5th Cir. 1998), four of
the six factors favored disgorgement: 1) that BD had the intent to confuse or
deceive; 2) that sales were at least slightly diverted; 3) that RTI did not
unreasonably delay; and 4) public interest in making misconduct profitable.
The court concluded that the two remaining factors, the adequacy of other
remedies and whether it was a case of palming off, disfavored disgorgement.
The district court also granted a six-part injunction prohibiting BD from
making certain advertising claims about needle sharpness for five years and
about medical savings for three years; to notify various entities about its false
statements; to post notice on its website for three years; and implement a
training program for employees and distributors.
On appeal, this court reversed BD’s antitrust liability, meaning RTI was
no longer entitled to the $352 million in trebled antitrust damages, and
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remanded for a new assessment of disgorgement remedies based on the
Lanham Act false advertising claims. See Retractable Techs., Inc. v. Becton
Dickinson & Co., 842 F.3d 883 (5th Cir. 2016). Regarding the Pebble Beach
factors, the panel affirmed three portions: 1) The district court’s conclusion
that at least some of BD’s profits were attributable to false advertising; 2) the
finding that BD intended to confuse or deceive; and 3) the finding that RTI did
not unreasonably delay. Retractable Techs., 842 F.3d at 901.
On remand, the district court evaluated the equities of disgorgement
under the Pebble Beach factors and found that disgorgement was not
warranted. Specifically, the district court found that public interest favored
disgorgement, but that RTI had not shown diversion of sales or palming off.
The remand court further weighted both diversion and palming off more
heavily than the other factors and found that prior temporary injunctive relief
was an adequate remedy. RTI then filed this appeal.
The majority now affirms, concluding that the district court did not err.
I disagree. The district court had previously determined that the diversion
factor at least slightly indicated that sales had been diverted. This court
affirmed that finding. It is helpful to look at the actual language used by this
court:
BD first argues that RTI failed to identify what portion of BD's
profits (if any) were attributable to false advertising. Additionally,
BD contends that the district court abused its discretion in
weighing three of the Pebble Beach factors, inasmuch as the court
(1) did not specify any amount of diverted sales; (2) failed to find
that BD willfully engaged in false advertising; and (3) erred in
holding that RTI did not unreasonably delay in filing suit.
We find no clear error in the district court's conclusion that at least
some portion of BD's profits were attributable to the false
advertising. Indeed, BD acknowledged in the district court, its
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expert witness's opinion that $7.2 million in profits—netting to
$560,000 after deductions for costs and expenses—could be
attributable to the waste space advertisements. In Logan or Texas
Pig Stands, by contrast, there was no evidence of attribution.
Similarly unassailable is the finding that BD had the intent to
confuse or deceive by continuing to use advertisements it knew
were false. That BD may not have willfully engaged in false
advertising does not change this analysis because a finding of
willfulness is not a prerequisite to remedial disgorgement. Quick
Techs., 313 F.3d at 349. Finally, we have approved the district
court's finding that RTI did not unreasonably delay.
Retractable Techs. 842 F.3d at 901 (emphasis added). After setting out the
factors, including diversion, that BD was taking issue with in the first
paragraph, the court then said, “We find no clear error in the district court’s
conclusion that at least some portion of BD’s profits were attributable to the
false advertising.” This was clearly addressing the diversion factor included in
the prior paragraph. The court then set out a specific amount that could be
attributable.
Moreover, this court’s additional language regarding diversion does not
contradict such a reading. This court said:
Nevertheless, the district court's equitably-founded decision not to
impose disgorgement rested in large part on the premise that RTI
was adequately compensated by a $340 million antitrust award.
Having overturned the antitrust judgment, we must remand to the
district court for a thorough re-weighing of the remaining factors
and the entirety of the record to determine whether and how much
profit BD should disgorge to compensate for the Lanham Act
violations. In particular, when assessing the “diversion” factor, the
district court should bear in mind that speculative and attenuated
evidence of diversion of sales will not suffice.
Retractable Techs. 842 F.3d at 901 (emphasis added). This court’s language
regarding diversion clearly indicates a reference to the assessment of the
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amount of profits to disgorge. This court did not say when reweighing the
diversion factor as it said regarding the “remaining factors”; it said when
assessing the diversion factor. Moreover, this court had already affirmed the
district court on the diversion factor. This language indicates this court was
referencing the “how much” profit to disgorge, as the district court had not
initially made that exact calculation other than to say it was properly included
as part of the trebled antitrust damages. But the district court had clearly
already found that “RTI produced evidence that on occasion BD relied on these
false advertisements to divert sales from RTI directly” and “[t]his evidence
confirms the rational conclusion that some portion of BD’s ill-gotten sales came
at RTI’s expense.” (emphasis original).
For these reasons, I conclude that it was error for the remand court to
reweigh the diversion factor. Further, RTI offered evidence of diversion. The
district court had already found it sufficient to establish some diversion and
this court had already affirmed. Because this court had already affirmed the
district court on three factors favoring disgorgement (diversion, BD’s intent to
confuse or deceive, and no unreasonable delay by RTI), there were only three
factors left for the remand court to reweigh.
Of those remaining three factors, the remand court found that the public
interest factor favored disgorgement. Thus, only the two remaining factors,
the adequacy of other remedies and palming off, could disfavor disgorgement.
Moreover, the remand court improperly weighted the absence of diversion and
palming off to the exclusion of other factors. Diversion was settled.
Regardless, there is no authority for weighting these factors more heavily.
Additionally, in light of these errors and the fact that the adequate remedies
the district court had previously found no longer exist, the district court
likewise erred in its reconsideration of the adequacy of other remedies.
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For these reasons, I would vacate and remand. Thus, I respectfully
dissent.
27
| {
"pile_set_name": "FreeLaw"
} |
This opinion is subject to revision before final
publication in the Pacific Reporter
2018 UT 20
IN THE
SUPREME COURT OF THE STATE OF UTAH
JODI HOWICK,
Appellant,
v.
SALT LAKE CITY CORPORATION,
Appellee.
No. 20150738
Filed May 25, 2018
On Direct Appeal
Third District, Salt Lake
The Honorable Richard D. McKelvie
No. 090913336
Attorneys:
Erik Strindberg, Salt Lake City, for appellant
W. Mark Gavre, Adam E. Weinacker, Salt Lake City, for appellee
CHIEF JUSTICE DURRANT authored the opinion of the Court, in which
ASSOCIATE CHIEF JUSTICE LEE, JUSTICE HIMONAS,
JUSTICE PEARCE, and JUDGE DIREDA joined.
Due to her retirement, JUSTICE DURHAM did not participate herein;
DISTRICT COURT JUDGE MICHAEL D. DIREDA sat.
JUSTICE PETERSEN became a member of the Court on
November 17, 2017, after oral argument in this matter and
accordingly did not participate.
HOWICK v. SALT LAKE CITY CORP.
Opinion of the Court
CHIEF JUSTICE DURRANT, opinion of the Court:
Introduction
¶ 1 In this case, the district court ruled that Jodi Howick, a
municipal employee, had forfeited her merit protection status
through contract, waiver, and estoppel. Ms. Howick argues on
appeal, along with other claims, that our precedent allowing a
contract in conflict with a statute to survive, provided it does not
violate public policy, does not extend to contracts involving
government employees. This is an important and difficult question,
but it is one we cannot reach here. We affirm without reaching the
merits of Ms. Howick’s claims because she fails to carry her burden
of challenging all of the district court’s rulings—each of which was
an independent basis for summary judgment.
Background
¶ 2 Jodi Howick was employed by Salt Lake City as an attorney.
For the first six years that she worked for the City, she enjoyed merit
employee status. In 1998, she accepted a promotion that came with a
significant raise, but the City required Ms. Howick to sign a
disclaimer stating that “I understand that, if I am appointed by the
Salt Lake City Attorney to the ‘Appointed Senior City Attorney’
position, my employment will be at-will and will be for no fixed
length of time.” Ms. Howick accepted the position at the beginning
of July 1998, but she did not sign the disclaimer until later that
month.
¶ 3 When Ms. Howick’s employment was terminated in 2007,
she attempted to appeal the termination to the City’s employee
review board, arguing that she was entitled to merit status
protections, but was told the board lacked jurisdiction over at-will
employees. She then initiated this declaratory action in the district
court to determine whether she was a merit or an at-will employee.
¶ 4 The district court concluded that she was a merit employee.
The City appealed the district court’s ruling to the Utah Court of
Appeals, which agreed that she was a merit employee, but held that
her merit status was subject to forfeiture through contract, waiver, or
estoppel.1 The court of appeals remanded the case to the district
court for factual findings as to whether Ms. Howick had, in fact,
_____________________________________________________________
1 Howick v. Salt Lake City Corp., 2013 UT App 218, ¶¶ 29–46, 310
P.3d 1220.
2
Cite as: 2018 UT 20
Opinion of the Court
forfeited her merit status.2 On remand, the district court concluded
on summary judgment that “contractually, [she] was an at-will
employee at the time of her termination,” that she was “equitably
estopped from claiming she was a merit employee at the time of her
termination,” and that she “undoubtedly knew of her rights [as a
merit employee] and chose to waive them.” Ms. Howick filed a
timely appeal.
Standard of Review
¶ 5 Ms. Howick contends that the district court incorrectly held
that she was contractually an at-will employee. But she fails to
address the court’s ruling that, at the time the City terminated her
employment, she was equitably estopped from claiming merit
employment. “An appellate court reviews a trial court’s ‘legal
conclusions and ultimate grant or denial of summary judgment’ for
correctness and views ‘the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.’”3 But
we “will not reverse a ruling of the district court that rests on
independent alternative grounds where the appellant challenges
only one of those grounds.”4
Analysis
¶ 6 The court of appeals held that Ms. Howick was a merit
status employee, but concluded that as a merit status employee she
could “contract[] away her merit protection.”5 It remanded the case
to the district court, instructing it to resolve whether Ms. Howick
had forfeited her merit status protections through contract, waiver,
or estoppel.6 Bound by the mandate of the appellate court,7 the
district court held that Ms. Howick had forfeited her merit status
_____________________________________________________________
2 Id. ¶¶ 1, 44.
3 Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citations omitted).
4 Gilbert v. Utah State Bar, 2016 UT 32, ¶ 24, 379 P.3d 1247.
5Howick v. Salt Lake City Corp., 2013 UT App 218, ¶ 43, 310 P.3d
1220.
6 Id. ¶ 44.
7 See Utah Dep’t of Transp. v. Ivers, 2009 UT 56, ¶ 8, 218 P.3d 583
(“The mandate of an appellate court binds the district court and the
parties and affords the district court no discretion whether to comply
with that mandate.”).
3
HOWICK v. SALT LAKE CITY CORP.
Opinion of the Court
protections through contract, waiver, and estoppel. Ms. Howick
argues that both the court of appeals and the district court
incorrectly determined that the disclaimer she signed in July 1998
met the elements of contract. Only the final judgment of the district
court is currently before us on appeal.8 Although Ms. Howick raises
some important questions concerning the court of appeals’ decision,
because Ms. Howick has failed to challenge all grounds for the
district court’s ruling, we do not reach the merits of her arguments
and affirm the ruling of the district court.
I. Ms. Howick’s Arguments
¶ 7 The court of appeals held that Ms. Howick was a merit
status employee, but that “the Merit Protection Statute did not
prohibit [her] from contracting away her merit protection.”9 In
reaching this holding, the court relied on Ockey v. Lehmer,10 first for
general contract principles and then for our two-factor test to
determine whether a contract was against public policy.11 In Ockey,
we noted that “[p]eople are generally free to bind themselves
pursuant to any contract, barring such things as illegality of subject
matter or legal incapacity.”12 And we held that “[f]or a contract to be
void on the basis of public policy, ‘there must be a showing free from
doubt that the contract is against public policy.’”13 In order to
determine whether a contract is against public policy, the Ockey
court considered two factors: whether a statute declared such a
_____________________________________________________________
8 Ms. Howick argues on appeal that we should revisit the court of
appeals’ legal conclusions in Howick, 2013 UT App 218. Under our
law of the case precedent, a legal holding in a previous appeal is
typically binding in subsequent stages of the litigation. This would
be an issue of first impression—whether under our law of the case
precedent we can review a court of appeals’ opinion from earlier
stages of litigation that is not before us for certiorari review. But
because Ms. Howick has failed to challenge all independent grounds
for reversal in the district court’s ruling, we will not address this
question here.
9Howick v. Salt Lake City Corp., 2013 UT App 218, ¶ 43, 310 P.3d
1220.
10 2008 UT 37, 189 P.3d 51.
11 Howick, 2013 UT App 218, ¶ 34.
12 Ockey, 2008 UT 37, ¶ 21 n.12 (citation omitted).
13 Id. ¶ 21 (citation omitted).
4
Cite as: 2018 UT 20
Opinion of the Court
contract “absolutely void as against public policy”14 and whether
“the contract harmed the public as a whole—not just an
individual.”15
¶ 8 In the case now before us, the court of appeals held that
“neither Ockey factor is satisfied here”—in other words, “[t]he Merit
Protection Statute does not specifically declare contrary contracts to
be void, nor does this case present a showing free from doubt that
the contract offends public policy.”16 More specifically, the court
concluded that Ms. Howick had the burden of “ma[king] ‘a showing
free from doubt that the contract is against public policy,’” but failed
to carry it.17 So the court concluded that the City’s contract with Ms.
Howick was not void and that “the Merit Protection Statute does not
foreclose” contract, waiver, or estoppel defenses.18 Ms. Howick
claims this was error.
¶ 9 Specifically, she asserts that the court of appeals incorrectly
relied on Ockey because “Ockey does not address the contracts
involving government employees or contracts that contravene the
plain language of the statute.” She also claims that the court of
appeals’ reliance on Ockey in this case was misplaced because the
“statute [that] governed the relationship between the City and Ms.
Howick . . . specifically granted her and other staff attorneys merit
protection . . . and could not be circumvented.” This second assertion
suggests the Ms. Howick believes that the Merit Protection Statute
preempts any finding of waiver in caselaw.
¶ 10 We have generally recognized that “an enforceable contract
can coexist with a statute that may conflict with its terms so long as
the contract does not offend the public policy to which the statute
gives voice.”19 But we have not addressed whether a government
agency may contract with an employee in violation of statutory
requirements put in place for that employee’s protection. And we
have not addressed who bears the burden of making “a showing free
_____________________________________________________________
14 Id. ¶ 24.
15 Id. ¶ 23.
16 Howick, 2013 UT App 218, ¶ 43.
17 Id. ¶ 42 (citation omitted).
18 Id. ¶ 44.
19 Lee v. Thorpe, 2006 UT 66, ¶ 22, 147 P.3d 443.
5
HOWICK v. SALT LAKE CITY CORP.
Opinion of the Court
from doubt that the contract is against public policy.”20 It could
certainly be argued that in a case such as this one an employee
should not be required to make such a showing. Furthermore, we
have not addressed whether defenses such as waiver and estoppel
are available to parties who have contracted in violation of a statute,
nor have we addressed whether the Merit Protection Statute
preempts the possibility of individual waiver. These are difficult and
important questions. But we do not reach them today because Ms.
Howick failed to challenge all of the district court’s rulings on
appeal.
II. Ms. Howick Failed to Challenge All of the District Court’s
Independent Grounds for Reversal
¶ 11 “Our rules of appellate procedure place the burden on the
appellant to identify and brief any asserted grounds for reversal of
the decision below.”21 “[A]n appellant’s failure to ‘challenge a final
order of the lower court . . . place[s]’ that final order ‘beyond the
reach of further review.’”22 This court “will not reverse a ruling of
the district court that rests on independent alternative grounds
where the appellant challenges only one of those grounds.”23
¶ 12 The court of appeals remanded Ms. Howick’s case to the
district court to determine whether she had forfeited her merit
protection status through “contract, waiver, or estoppel.”24 The
district court followed the court of appeals’ mandate and held that
Ms. Howick had forfeited her merit protection status through
contract, waiver, and estoppel. It accordingly concluded that “Ms.
Howick was an at-will employee at the time of her termination.”
¶ 13 In her opening brief on appeal, Ms. Howick contends that
“the Disclaimer did not make Ms. Howick an at-will employee and is
not enforceable.” And although she argues that “[s]uch a contract is
a necessary under pinning [sic] for all three of the City’s defenses,”
she does not further address the district court’s holding of estoppel
_____________________________________________________________
20 See Ockey, 2008 UT 37, ¶ 21 (citation omitted).
21 Kendall v. Olsen, 2017 UT 38, ¶ 12, --- P.3d ---.
22 Id. (second and third alterations in original) (citation omitted).
23 Gilbert v. Utah State Bar, 2016 UT 32, ¶ 24, 379 P.3d 1247.
24 Howick v. Salt Lake City Corp., 2013 UT App 218, ¶ 45, 310 P.3d
1220.
6
Cite as: 2018 UT 20
Opinion of the Court
and only touches on the district court’s ruling of waiver.25 Instead,
she makes three arguments that sound in contract: that the
disclaimer was not supported by consideration; that the creation of
an at-will position would have violated then-existing law; and that
“the City never placed Ms. Howick in an at-will position,” but rather
the promotion she accepted was a merit position. Each of these
arguments speaks to the district court’s holding that Ms. Howick
was “contractually” an at-will employee, but none address the
district court’s ruling on estoppel.
¶ 14 Although equitable estoppel can be a defense to a contract
claim, it requires proof of three elements unrelated to the elements of
contract: (1) “a statement, admission, act, or failure to act by one
party inconsistent with a claim later asserted”; (2) “reasonable action
or inaction by the other party taken or not taken on the basis of the
first party’s statement, admission, act or failure to act”; and (3)
“injury to the second party that would result from allowing the first
party to contradict or repudiate such statement, admission, act, or
failure to act.”26 In her opening brief, Ms. Howick does not challenge
the district court’s finding that she is equitably estopped from
claiming merit status. In her reply brief, she argues that “the
Disclaimer’s text shows that Ms. Howick did not represent anything
to the City, and the City cannot show it relied on the Disclaimer
since it had already promoted Ms. Howick and given her a raise.”
But this argument comes too late. “We have consistently held that
‘issues raised by an appellant in the reply brief that were not
presented in the opening brief are considered waived and will not be
considered.’”27
Conclusion
¶ 15 It is possible that Ms. Howick is correct—Ockey may not
extend to contracts with government employees or to contracts in
direct violation of a statute, or that the Merit Protection Statute
preempts the possibility of individual waiver of its terms. But
_____________________________________________________________
25We note that Ms. Howick does not argue whether she waived
her merit protection status. She only argues that the disclaimer she
signed does not constitute a contract and requires us to infer that she
accordingly did not waive her rights.
26 Youngblood v. Auto-Owners Ins. Co., 2007 UT 28, ¶ 14, 158 P.3d
1088 (citation omitted).
27 Kendall, 2017 UT 38, ¶ 13 (citation omitted).
7
HOWICK v. SALT LAKE CITY CORP.
Opinion of the Court
because she failed to challenge the district court’s ruling that she was
equitably estopped from claiming merit status, we must affirm.
8
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277 Pa. Superior Ct. 549 (1980)
419 A.2d 1285
Lea BRODSKY, Administratrix of the Estate of Michael Brodsky, Deceased,
v.
PHILADELPHIA ATHLETIC CLUB, INC., the Hahnemann Medical College and Hospital of Philadelphia and Samuel Rappaport.
Appeal of PHILADELPHIA ATHLETIC CLUB, INC. and Samuel Rappaport.
Superior Court of Pennsylvania.
Argued September 12, 1979.
Filed May 2, 1980.
Reargument Denied August 4, 1980.
*550 Leon W. Silverman, Philadelphia, for appellants.
Robert A. Rosin, Philadelphia, for appellee.
*551 Before PRICE, VAN der VOORT and WIEAND, JJ.[*]
WIEAND, Judge:
This equity action spawned four appeals, all of which were consolidated for argument and are now before this Court for decision. The history discloses that the chancellor, following a full hearing, entered a decree nisi by which the Philadelphia Athletic Club, Inc. and Samuel Rappaport were directed to pay commissions to Lea Brodsky, Administratrix of the Estate of Michael Brodsky, deceased, calculated at the rate of 5% on past rentals paid for the Philadelphia Athletic Club building at Broad and Wood Streets in Philadelphia. Philadelphia Athletic Club, Inc. was also ordered to pay commissions of 5% on future rentals received for the premises from the tenant, Hahnemann Medical College and Hospital, so long as a lessor-lessee relationship continued to exist between the Philadelphia A.C. and Hahnemann. The decree nisi, accompanied by the chancellor's adjudication, was filed on October 13, 1978. When exceptions had not been filed by October 24, 1978, Lea Brodsky, Administratrix, filed a praecipe to have the decree nisi entered as the final decree. An appeal was thereafter filed by Rappaport and the Philadelphia A.C. to the Superior Court, but this appeal was discontinued.[1] Instead, on October 27, 1978, an application for leave to file exceptions to the decree nisi nunc pro tunc was filed with the chancellor. This was denied without hearing and without opinion on November 22, 1978. An appeal was filed from this order by Rappaport and the Philadelphia Athletic Club, Inc. and is properly before this Court.
On February 27, 1979, after hearing, the trial court found appellants in contempt of court and imposed a fine of $50 per day for each day after March 15, 1979 on which appellants failed to comply with the final decree. An appeal to this Court was filed from the contempt order on March 6, *552 1979, and a supersedeas was entered. However, only the order of February 27, 1979 was stayed.
On April 18, 1979, appellee filed another petition seeking to have appellants held in contempt of court. A hearing thereon was held on May 1, 1979, when it was shown that although rentals were continuing to be paid to appellants, they refused to pay therefrom the commissions ordered by the court. At that time, the chancellor threatened to send Rappaport, the individual appellant, to jail and fine him $50 per day if the matter was not resolved in ten days. A formal order, however, was not entered. Nevertheless, appellants filed another appeal.[2] A petition to stay further attempts to enforce the decree of October 13, 1978 was filed in the Superior Court but denied per curiam on May 16, 1979.[3]
Thereafter, on May 29, 1979, the court below entered an order which found appellants in contempt, entered judgment against appellants for rent due in the total sum of $108,311.40 and directed the Prothonotary to issue an assignment of rents from the tenant to appellee. The court also directed appellants to pay the sum of $5,000 to the County of Philadelphia as costs of the contempt proceedings. A fourth appeal was taken by appellants from this order.
We consider first the order of November 22, 1978, by which the chancellor refused appellants' petition for leave to file exceptions nunc pro tunc. Pa.R.C.P. No. 1518 provides for the filing of exceptions to a chancellor's adjudication "within ten (10) days after notice of the filing of the adjudication." The period for filing exceptions commences when the Prothonotary complies with Pa.R.C.P. No. 1517(b) which requires that he "shall notify all parties or their attorneys of the date of filing."
*553 These rules are not to be administered so as to work inequity. Thus, it lies within the discretion of the chancellor to permit the filing of exceptions nunc pro tunc after the ten day period has expired. On appeal, the question is whether or not the chancellor has abused his discretion. Haefele v. Davis, 373 Pa. 34, 95 A.2d 195 (1953); Pokrzywnicki v. Kozak, 353 Pa. 5, 44 A.2d 247 (1945). "An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion . . . the judgment exercised is manifestly unreasonable . . . discretion is abused." Pokrzywnicki v. Kozak, supra, 353 Pa. at 7, 44 A.2d at 248; Mielcuszny v. Rosol, 317 Pa. 91, 93-94, 176 A. 236, 237 (1934).
Appellants alleged that their failure to file timely exceptions in the instant case had been due to counsel's mistaken belief that he had twenty days within which to file such exceptions. Appellee filed an answer in which the oversight of appellants' counsel was alleged to be irrelevant but was not factually denied. We take judicial notice that Pa.R.C.P. No. 1518 had been amended on April 30, 1977, effective 90 days thereafter, to shorten the period for filing exceptions to a chancellor's adjudication in equity from twenty to ten days. Unfortunately, the chancellor's failure to file a statement of reasons for denying appellants' request, as required by Pa.R.A.P. No. 1925(a), makes it impossible for us to know the reason or reasons for his denial of appellants' request. The reasons for the chancellor's order are particularly important where, as here, appellants' failure to file timely exceptions has been attributed to the mistake of counsel. This is a basis on which courts have frequently acted to relieve a party of a default. See: Ecumenical Enterprises v. Nadco Construction, Inc., 253 Pa.Super. 386, 385 A.2d 392 (1978); Alexander v. Jesray Construction Co., 237 Pa.Super. 99, 346 A.2d 566 (1975).
Appellee argues that the mistake or neglect of appellants' counsel is not an adequate basis for granting relief where, as here, a final decree has been entered in adverse proceedings. Appellee correctly asserts that final judgments in adverse proceedings will not be opened in the *554 absence of fraud, neglect of a court official, or other extraordinary cause. See: Wise v. Campbridge Springs, 262 Pa. 139, 104 A. 863 (1918); Estate of Gasbarini v. Medical Center of Beaver County, Inc., 253 Pa.Super. 547, 385 A.2d 474 (1978); C. & B. Toy Clubs, Inc. v. Toy Ladies, Inc., 65 D. & C.2d 115 (1973). In the instant case, however, the docket of the Prothonotary fails to disclose that notice of the filing of the chancellor's adjudication was sent to appellants or their attorney as required by Pa.R.C.P. No. 1517(b) and Pa.R.C.P. No. 236. The docket, therefore, fails to support the entry of the final decree. Ruh v. Ruh, 268 Pa.Super. 82, 407 A.2d 447 (1979). This is not altered by the admission in appellants' petition that a copy of the adjudication was sent to their counsel, for it does not tell us when or by whom.
Under these circumstances, we are of the opinion that appellants should have been permitted to file exceptions to the chancellor's adjudication and that it was an abuse of discretion to refuse to consider and decide such exceptions. See: Pokrzywnicki v. Kozak, supra.
The decree entered by the chancellor in this case was for the payment of money. Appellants were ordered to pay commissions of 5% on past and future rentals received for the Philadelphia Athletic Club building. The amounts due under such a decree can be enforced by the same execution processes available in an action at law. Pa.R.C.P. No. 1529(a). Execution cannot properly issue, however, unless and until a final decree has been entered.
Meanwhile, the status quo can be maintained pending a final decree by a special, ancillary injunctive order. Pa.R.C.P. No. 1531(a). See also: Slott v. Plastic Fabricators, Inc., 402 Pa. 433, 167 A.2d 306 (1961); North Penn Gas Co. v. Mahosky, 250 Pa.Super. 366, 378 A.2d 980 (1977).
In view of our decision that appellants' exceptions should be heard and decided by the court below, the chancellor's enforcement orders of February 27, 1979 and May 29, 1979 are premature. They will be vacated. In doing so, we express no opinion concerning the propriety of those orders *555 by which the chancellor attempted to enforce the decree for the payment of money. It may be observed, however, that in the absence of fraud, the abolition of imprisonment for debt prevents the issuance of an attachment of a defendant's person to enforce a decree for the payment of money. Brierhurst Realty Co. v. Lembrecht, 299 Pa. 9, 148 A. 863 (1930); Commonwealth ex rel. DiGiacomo v. Heston, 292 Pa. 63, 140 A. 533 (1928); Tonuci v. Lennon, 186 Pa.Super. 522, 142 A.2d 745 (1958); Goodrich-Amram 2d § 1529(c):1. Where, as here, rents are paid monthly, execution, possibly by garnishment, will be a more appropriate means for enforcing a final decree or judgment for the payment of money.
The orders of November 22, 1978, February 27, 1979 and May 29, 1979 are vacated, and the matter is remanded for proceedings consistent with the foregoing opinion.
Judge DONALD E. WIEAND participated in the consideration of this appeal by special designation after his term of office had expired.
NOTES
[*] Judge DONALD W. WIEAND is sitting by special designation.
[1] After more than thirty days had expired from the Prothonotary's entry of the final decree, a petition was also filed in the Superior Court for leave to appeal nunc pro tunc. This was denied per curiam on December 18, 1978.
[2] This appeal was improper. There was no final order from which an appeal could properly be taken. A chancellor's threat to hold a party in contempt at some future time if a decree is not performed is neither final nor appealable.
[3] Petitions for a writ of mandamus and for injunctive relief directed to the chancellor were also denied by the Superior Court.
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253 P.3d 1079 (2011)
350 Or. 230
BELL
v.
PUBLIC EMPLOYEES RETIREMENT BD.
(S059082).
Supreme Court of Oregon.
April 7, 2011.
Petition for Review Denied.
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127 S.Ct. 977 (2007)
Diego F. CASTILLO-ARIAS, Martha L. Rincon-Escobar, Andres F. Castillo-Rincon, and Diego F. Castillo-Rincon, petitioners,
v.
Alberto R. GONZALES, Attorney General.
No. 06-642.
Supreme Court of United States.
January 8, 2007.
Petition for writ of certiorari to the United States Court of Appeals for the Eleventh Circuit denied.
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65 F.3d 166
NOTICE: Fourth Circuit Local Rule 36(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 Fourth Circuit.Doylas R. DILLARD, Plaintiff--Appellant,v.FIELDCREST CANNON, INCORPORATED, Defendant--Appellee.
No. 94-2405.
United States Court of Appeals, Fourth Circuit.
Sept. 8, 1995.
Doylas R. Dillard, Appellant Pro Se. Charles Daniel Barrett, Edwards, Ballard, Clark & Barrett, Winston-Salem, North Carolina, for Appellee.
Before WIDENER, HALL and WILLIAMS, Circuit Judges.
PER CURIAM:
1
Appellant appeals from the district court's order granting summary judgment to Appellee in this age discrimination action. We have reviewed the record and the district court's opinion and find no reversible error. Accordingly, we affirm on the reasoning of the district court. Dillard v. Fieldcrest Cannon, Inc., No. CA-91-771-R (W.D.Va. Sept. 28, 1994). 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.
2
AFFIRMED.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-7953
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
RODERICK LAMAR WILLIAMS, a/k/a Rox,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of North Carolina, at Statesville. Richard L.
Voorhees, District Judge. (5:03-cr-00004-RLV-DSC-8; 5:08-cv-
00041-RLV)
Submitted: March 28, 2013 Decided: June 10, 2013
Before GREGORY, SHEDD, and KEENAN, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Roderick Lamar Williams, Appellant Pro Se. Amy Elizabeth Ray,
Assistant United States Attorney, Jill Westmoreland Rose, OFFICE
OF THE UNITED STATES ATTORNEY, Asheville, North Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Roderick Lamar Williams seeks to appeal the district
court’s orders denying relief on his 28 U.S.C.A. § 2255 (West
Supp. 2012) motion and denying his motion to alter or amend that
judgment. See Fed. R. Civ. P. 59(e). These orders are not
appealable unless a circuit justice or judge issues a
certificate of appealability. 28 U.S.C. § 2253(c)(1)(B) (2006);
Reid v. Angelone, 369 F.3d 363, 369 (4th Cir. 2004). A
certificate of appealability will not issue absent “a
substantial showing of the denial of a constitutional right.”
28 U.S.C. § 2253(c)(2) (2006). When the district court denies
relief on the merits, a prisoner satisfies this standard by
demonstrating that reasonable jurists would find that the
district court’s assessment of the constitutional claims is
debatable or wrong. Slack v. McDaniel, 529 U.S. 473, 484
(2000); see Miller-El v. Cockrell, 537 U.S. 322, 336-38 (2003).
We have independently reviewed the record and conclude
that Williams has not made the requisite showing. Accordingly,
we deny Williams’ motion to place this appeal in abeyance, deny
his motion to supplement his request for a certificate of
appealability, deny his motion for leave to file his motion to
supplement, deny a certificate of appealability, and dismiss the
appeal. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
2
before this court and argument would not aid the decisional
process.
DISMISSED
3
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997 P.2d 1238 (1999)
Roger G. HERRERA, Plaintiff-Appellant,
v.
SAN LUIS CENTRAL RAILROAD COMPANY, a corporation, Defendant-Appellee.
No. 98CA1521.
Colorado Court of Appeals, Div. I.
September 30, 1999.
Rehearing Denied October 28, 1999.
Certiorari Denied May 15, 2000.
*1239 Rossi, Cox, Kiker & Inderwish, P.C., James L. Cox, Jr., Janet S. Drake, Aurora, Colorado, for Plaintiff-Appellant.
The Beckman Law Office, P.C., John D. Beckman, Golden, Colorado, for Defendant-Appellee.
Opinion by Judge DAVIDSON.
In this action for retaliatory discharge, plaintiff, Roger G. Herrerra, appeals from the dismissal of his complaint against defendant, San Luis Central Railroad Company (San Luis). We reverse and remand.
Plaintiff was employed by San Luis at the time he suffered an on-the-job injury. He filed a claim under 45 U.S.C. § 51, et seq. (1994), the Federal Employers' Liability Act (FELA), in the United States District Court. Fifteen days after a jury verdict was returned in plaintiff's favor, San Luis terminated his employment.
Plaintiff filed a wrongful discharge claim in the United States District Court claiming that San Luis had terminated him for asserting his right to seek benefits. The complaint was dismissed for lack of subject matter jurisdiction. Plaintiff then filed his complaint in district court asserting, inter alia, retaliatory discharge. The trial court dismissed the complaint, determining that, because no federal or state statute granted an express right to a private cause of action or established a public policy exception to Colorado's at-will policy of employment, plaintiff had failed to provide a basis for a claim of retaliatory discharge.
The sole issue on appeal is whether a federal statute, here, FELA, may serve as the basis for the public policy exception in a wrongful termination action. We conclude that, under the circumstances presented, plaintiff has stated a claim for retaliatory discharge based on the public policy exception to at-will employment.
In ruling on a motion to dismiss, the trial court must accept as true the facts alleged in the complaint and determine whether, under any theory of law, the plaintiff is entitled to relief. Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095 (Colo. 1995).
As a general rule, an employee who is hired in Colorado for an indefinite period of time is considered an at-will employee. Such employment may be terminated by either party without cause and without notice. Such termination ordinarily does not give rise to a cause of action. Continental Air Lines, Inc. v. Keenan, 731 P.2d 708 (Colo. 1987).
Exceptions to the policy of at-will employment may be created by statute or case law. Among the judicially crafted exceptions is that based on the public interest in prohibiting an employer from placing an employee in the position of remaining employed only by performing an illegal act, forsaking a public duty, or forgoing a job-related right or privilege. See Crawford Rehabilitation Services, Inc. v. Weissman, 938 P.2d 540 (Colo.1997); Martin Marietta Corp. v. Lorenz, 823 P.2d 100 (Colo.1992) (employee should not have to choose between violating the law or losing his or her job).
*1240 As pertinent here, a plaintiff seeking to assert a claim based on retaliatory discharge for exercising a job-related right must show that: 1) the plaintiff was employed by the defendant; 2) the defendant discharged the plaintiff; and 3) the plaintiff was discharged for exercising a job-related right or privilege to which he or she was entitled. See CJI-Civ. 4th 31:10 (1998); see also Lathrop v. Entenmann's, Inc., 770 P.2d 1367 (Colo.App.1989).
Plaintiff argues that, because he is entitled to seek compensation for his work-related injury, and because he was required to proceed on his claim under FELA, rather than workers' compensation, this right, recognized as a public policy exception under Lathrop v. Entenmann's, Inc., supra, provides the basis for his claim of retaliatory discharge. We agree.
In Lathrop v. Entenmann's, Inc., supra, the plaintiff was fired after he made a claim for workers' compensation benefits. A division of this court determined that an employer has a statutorily mandated duty under § 8-40-101, et seq., C.R.S.1999, to provide compensation to workers injured in the course of their employment and that employees have a commensurate right to such compensation. Thus, the court found an important public interest in an employee's right to seek compensation for a work-related injury without having to fear reprisal for doing so.
Accordingly, plaintiff's right to seek compensation for his work-related injury is a recognized public policy exception to the at-will employment doctrine.
Nevertheless, defendant argues that the federal district court and the trial court were correct in their determinations that, because no federal private cause of action exists under FELA, it cannot serve as the basis for a public policy exception to at-will employment. We disagree.
In Martin Marietta Corp. v. Lorenz, supra, the plaintiff asserted a state law retaliatory discharge claim based on his termination for his refusal to perform an illegal act under 18 U.S.C. § 1001 (1994). The court determined that the principle that employees should not be forced to choose between losing their jobs or engaging in criminal conduct at the employer's direction, even if the criminal conduct is defined by a federal statute, was an important public interest.
Likewise, the mere fact that plaintiff's entitlement to compensation arises from a federal statute rather than a state statute should not, of itself, affect the importance of the public policy allowing injured employees the right to seek compensation or preclude plaintiff from asserting his claim of retaliatory discharge if FELA can be shown to establish a duty on the part of San Luis to pay compensation and a commensurate right to plaintiff to seek such payment.
Here, 45 U.S.C. § 51 (1994) provides that:
Every common carrier by railroad while engaging in commerce between any of the several states ... shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce ... for such injury ... resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment.
The mandatory language of the statute sets forth an employer's liability for damages resulting from injuries incurred by employees in the course of employment and creates a duty in the employer to pay for damages whenever the negligence of the employer plays any part in causing such injuries. See Rogers v. Missouri Pacific R.R. Co., 352 U.S. 500, 77 S.Ct. 443, 1 L.Ed.2d 493 (1957).
The cases upon which defendant relies in claiming that FELA does not establish a public policy exception do not lead us to conclude otherwise.
In each of these cases, the plaintiff claimed that he or she was terminated in retaliation for seeking compensation for work-related injuries under FELA, and, in each, the plaintiff was precluded from bringing a state wrongful discharge claim.
*1241 However, in those cases, the plaintiffs were unable to assert their claims because their remedy for wrongful discharge existed under collective bargaining agreements that had been negotiated by their unions and were governed by the Railway Labor Act, 45 U.S.C. § 151 (1990) (RLA). Because the RLA afforded these plaintiffs a procedure for review of their grievances, the RLA, as their exclusive remedy, preempted a state claim of retaliatory discharge. See Graf v. Elgin, Joliet & Eastern Ry. Co., 790 F.2d 1341 (7th Cir.1986) (claim preempted by RLA); Jackson v. Consolidated Rail Corp., 717 F.2d 1045 (7th Cir.1983) (because plaintiff's right not to be discharged at will arose from collective bargaining agreement, plaintiff's exclusive remedy was through administrative grievance procedures); Bay v. Western Pacific R.R. Co., 595 F.2d 514 (9th Cir.1979) (FELA does not create private cause of action to sue employer); Davidson v. Long Island R.R. Co., 617 F.Supp. 67 (S.D.N.Y. 1985) (plaintiff, as member of union, was protected by collective bargaining agreement and was, therefore, required to follow procedures under RLA); cf. Gamble v. Levitz Furniture Co., 759 P.2d 761 (Colo.App.1988) (since statutory remedy is available for handicap discrimination, claim based on public policy exemption is not available); Makovi v. Sherwin-Williams Co., 316 Md. 603, 561 A.2d 179 (1989) (if statutory remedy exists to protect the public interest, then there is no separate wrongful discharge claim).
In contrast, here, because he is not a part of any collective bargaining unit, plaintiff's working conditions are not governed by a collective bargaining agreement, and, as a result, the RLA can provide no remedy for the claim asserted by him. Hence, to deny him a remedy in the state courts would be to deny him any remedy at all. See Sabich v. National R.R. Passenger Corp., 763 F.Supp. 989 (N.D.Ill.1991) (RLA does not preempt retaliatory discharge claim which is independent of collective bargaining agreement).
Further, although FELA does not create a private cause of action to sue an employer under the statute, plaintiff was not bringing suit pursuant to FELA. Rather, plaintiff asserted a state common law claim of retaliatory termination, relying on the public policy exception to at-will employment concerning his right to pursue a remedy under FELA without reprisal from his employer.
Here, plaintiff, in his complaint, stated that he had been awarded FELA benefits and that he had been terminated for asserting his right to seek such benefits in violation of the public policy that workers have an important public interest in not having to shoulder the financial burden for a work-related injury. Thus, the complaint sets forth a claim for retaliatory discharge based upon a public policy exception to the general doctrine of at-will employment, and the trial court erred in dismissing it.
The judgment is reversed and the cause is remanded for further proceedings consistent with the views expressed herein.
Judge METZGER and Judge CRISWELL, concur.
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717 N.E.2d 1249 (1999)
Ingram M. HAMITER, Appellant-Petitioner,
v.
Brian K. TORRENCE, Appellee-Respondent.
No. 49A05-9812-JV-605.
Court of Appeals of Indiana.
October 27, 1999.
*1251 Jeffrey A. Modisett, Attorney General of Indiana, Kathryn Janeway, Deputy Attorney General, Indianapolis, Indiana, Attorneys for Appellant.
*1250 OPINION
ROBB, Judge
Ingram M. Hamiter ("Mother") appeals the trial court's modification of Brian Torrence's ("Father") child support obligation for their child. We reverse and remand, holding that the trial court erred to the extent it reduced the presumptive child support amount in an effort to exclude Father's overtime pay as a component of his child support obligation and in deviating from the presumptive child support amount due to a "windfall."
Issues
Mother raises two issues for our review, which we restate as follows:
1. Whether the trial court properly determined the amount of Father's gross income for purposes of computing his presumptive child support obligation; and
2. Whether the trial court properly reduced Father's presumptive child support obligation because of a "windfall."
Facts and Procedural History
Mother and Father are parents of W.H., a child born out-of-wedlock on November 27, 1987. In early 1988, Mother and Father entered into a consent decree that established the paternity of W.H. and ordered Father to pay child support in the amount of $25 per week. Some time later, the parties agreed that Father's child support obligation should be raised to $75 per week.
In July 1998, Mother filed a petition to modify support. A hearing was held on this petition; however, the hearing was not recorded. A handwritten entry on the Minutes of the Court dated September 8, 1998, apparently memorialized the judgment of the court following this hearing:
Income [withholding] in effect, [Father] in compliance. Father earning at a rate of Twenty-two Dollars per hour. Mother working parttime [sic]. Guideline support indicates Two Hundred Eighteen Dollars per week. Court orders support at One Hundred Fifty Dollars per week via Income [withholding] for the reason that Guideline support constitutes a windfall, is determined by or in part by reliance on overtime, [without] a showing of the continuity thereof. Prosecutor's objection made [and] noted....
R. 10.
After commencing this appeal, Mother moved to settle the record pursuant to Indiana Appellate Rule 7.2(A)(3)(c), which provides for a statement of the evidence to be prepared by a party when the proceedings are not recorded or when a transcript is not available. Accordingly, the trial court signed an order that the following statement of evidence was to become a part of the trial record:
1. [Father] agreed that the average weekly income amount shown on the Child Support Worksheet was averaged over the preceeding [sic] year and included consistent overtime pay that would continue to be consistently available in the future.
2. [Father] did not request or seek a deviation from application of the Child Support Guidelines, but the State offered and [Father] accepted credit for visitation.
Supp. R. 1.[1] Mother appeals the trial court's reduction of Father's child support obligation from the presumptive amount.
*1252 Discussion and Decision
I. Standard of Review
We begin by noting that Father has failed to file an appellee's brief. When the appellee fails to submit a brief, we need not undertake the appellee's burden of controverting arguments advanced for reversal. Santana v. Santana, 708 N.E.2d 886, 887 (Ind.Ct.App.1999). Rather, we may reverse the trial court if the appellant makes a prima facie case of error. Id. "Prima facie" is defined as "at first sight, on first appearance, or on the face of it." Johnson County Rural Elec. v. Burnell, 484 N.E.2d 989, 991 (Ind.Ct.App.1985).
In reviewing orders modifying child support, we consider only the evidence and reasonable inferences favorable to the judgment. Kinsey v. Kinsey, 640 N.E.2d 42, 43-44 (Ind.1994). The modification will not be set aside unless it is clearly erroneous, giving due regard to the trial court's opportunity to judge the credibility of the witnesses. Id. at 44. Reversal of a child support order which deviates from the presumptive Guideline amount is appropriate only where the trial court's determination is clearly against the logic and effect of the facts and circumstances before the court. Id. at 43.
II. Father's Overtime as a Component of Weekly Gross Income
In determining the presumptive child support amount, the Child Support Guidelines begin with the parties' weekly gross income figures. The Guidelines define "weekly gross income" to include "income from any source...." Child Supp. G. 3(A). However, the commentary to Guideline 3(A) states that although overtime is includable in a parent's weekly gross income figure, it is very fact-sensitive and thus, when a court determines that it is not appropriate to include irregular income in the weekly gross income figure used to determine the child support amount, it should express its reasons. See Carter by Carter v. Morrow, 563 N.E.2d 183, 186 (Ind.Ct.App.1990) (stating that, in making the determination that father's overtime pay should not be included in his weekly gross income figure because of future uncertainty, the trial judge complied exactly with the requirement of Child Supp. R. 3 that trial courts articulate the reasons for their decision).
Although couched in the "Minutes of the Court" entry as a deviation from the presumptive Guideline child support amount, exclusion of Father's overtime actually goes to the issue of determining his weekly gross income. If the continuity of Father's overtime was uncertain, as stated in the "Minutes of the Court" entry, then it should not have been included in his weekly gross income figure. Thus, exclusion of overtime is not a deviation from the presumptive Guideline child support amount because the overtime is a component of the calculation in arriving at support; not a variance from an amount already determined.
The Guidelines provide for a child support worksheet to be completed and filed with the trial court, signed by the parties and supported by documentation. Child Supp. G. 3(B). If the parties cannot agree on the weekly gross income figures to be included on the worksheet, then each party may submit their own worksheet and documentation, from which the trial court can determine the parties' respective weekly gross incomes and compute the appropriate child support amount. Commentary to Child Supp. G. 3(B). Each party bears the burden of justifying the incomes used in his or her own worksheet.
In this case, a single child support obligation worksheet was signed and filed jointly by the parties. R. 64. Father's weekly gross income figure was shown to be $1,387 on average. Father's signature on the worksheet "affirm[s] under penalties for perjury that the foregoing representations are true." R. 64. This figure included overtime pay which Father agreed would continue to be consistently *1253 available in the future. Supp. R. 1. Thus, there was evidence before the trial court that Father earned consistent overtime pay which should be included in the weekly gross income figure used to determine his child support obligation. There was no conflicting evidence with regard to the overtime. See Dye v. Young, 655 N.E.2d 549, 550 (Ind.Ct.App.1995) (stating that because father failed to file his own child support worksheet or to provide the court with a figure he claimed to be his weekly gross income, the trial court was well within its discretion to adopt the figures supplied by mother in determining child support). Thus, the trial court's determination that Father's overtime was not shown to be consistent and should be excluded is clearly erroneous. Mother met her burden of showing that Father's overtime pay should be included in the calculation of child support.
III. Presumptive Child Support as a "Windfall"
Indiana Child Support Rule 2 states that in a proceeding for child support, "there shall be a rebuttable presumption that the amount of the award which would result from the application of the [Guidelines] is the correct amount of child support to be awarded." Child support awards under the Guidelines are designed to provide the children as closely as possible with the same standard of living they would have enjoyed had the marriage not been dissolved. Bussert v. Bussert, 677 N.E.2d 68, 70 (Ind.Ct.App.1997), trans. denied. The "income shares model" adopted by the Indiana Child Support Guidelines reflects this principle. Commentary to Child Supp. Guideline 1. The income shares model set forth in the Guidelines apportions the cost of children between the parents in proportion to each parent's weekly available income. Jendreas v. Jendreas, 664 N.E.2d 367, 372 (Ind.Ct.App. 1996), trans. denied.
If the trial court determines that ordering the Guideline amount of child support would be unjust or inappropriate, the court must set forth a written finding stating the factual basis for the deviation. Commentary to Guideline 3(F); Skalon v. Skalon-Gayer, 695 N.E.2d 953, 955 (Ind.Ct.App.1997). In this case, the trial court merely stated that ordering child support in the Guideline amount would constitute a "windfall." However, neither the evidence nor the judgment shed light on the exact nature of the alleged windfall.[2] As previously noted, the Guidelines attempt to provide children with the same portion of parental income after a dissolution that they would have enjoyed had the family remained intact. In re the Marriage of Lang, 668 N.E.2d 285, 289 (Ind.Ct.App.1996). The right to support lies exclusively with the child, and a parent merely holds child support payments in trust for the benefit of the child. Bussert, 677 N.E.2d at 71. Thus, ordering child support in an amount determined through proper application of the Guidelines cannot constitute a windfall to the child or to a parent.
Moreover, a party seeking deviation from the Guidelines must overcome the presumption that Guideline support is correct by showing that the application of the Guidelines would be unjust or inappropriate. Crowley v. Crowley, 708 N.E.2d 42, 56 (Ind.Ct.App.1999). The agreed statement of the evidence indicates that Father did not seek any deviation from the presumptive amount other than the standard deviation for visitation. Thus, there was no evidence before the court that *1254 Guideline support was unjust. We are, therefore, left with the firm conviction that a mistake has been made in this case and that the trial court's decision was clearly against the logic and effect of the facts and circumstances before it.
Conclusion
There was sufficient evidence to include Father's overtime pay in his weekly gross income figure used to calculate the presumptive Guideline child support amount. The trial court erred in deviating from the presumptive amount due to an alleged "windfall." We therefore reverse and remand with instructions for the trial court to enter a child support order consistent with this opinion.
Reversed and remanded.
RILEY, J., concurs.
FRIEDLANDER, J., concurs in result and files separate opinion.
FRIEDLANDER, Judge, concurring in result
I concur in the result reached by the majority, but I write separately because I find the discussion regarding whether the overtime pay should be included in Torrence's weekly gross income unnecessary. The trial court's entry memorializing the judgment commenced with a determination of Torrence's salary that included the overtime pay. The court then explicitly recognized the appropriate Indiana Child Support Guidelines (Guidelines) amount based upon inclusion of the overtime pay. In short, the evidence in the settled record and the entry memorializing the judgment demonstrate that the overtime pay was included by the court. Torrence did not present evidence that the overtime pay was inconsistent or undependable, and Torrence did not file a brief on appeal to question inclusion of the overtime pay. In fact, as noted by the majority, the only evidence in the settled record discloses that the overtime pay was included on the Child Support Worksheet,[3] and that the overtime pay was consistent and "would continue to be consistently available in the future." Supplemental Record at 1. Thus, our discussion of the deviation from the Guidelines amount is dispositive.
The court's error occurred when it deviated from the Guidelines amount it recognized as appropriate by stating:
Court orders support at One Hundred Fifty Dollars per week via Income w/hldg for the reason that Guideline support constitutes a windfall, is determined by or in part by reliance on overtime, w/o a showing of the continuity thereof.
Record at 10. "In any proceeding for the award of child support, there shall be a rebuttable presumption that the amount of the award which would result from the application of the Indiana Child Support Guidelines is the correct amount of child support to be awarded." Ind. Child Support Rule 2; Matter of Paternity of A.D.W., 693 N.E.2d 576, 579 (Ind.Ct.App. 1998) (quoting the rule). A parent seeking a deviation from the Guidelines amount must demonstrate that the presumptive amount is unjust or inappropriate under the circumstances. Matter of Paternity of A.D.W., 693 N.E.2d 576.
The statement of the evidence leads to only one conclusion: Torrence did not seek a deviation from the Guidelines amount and he agreed to the inclusion of the overtime pay in his average weekly income. As noted by the majority, ordering child support in accordance with the Guidelines amount cannot constitute a windfall to the child or to a parent.
I would reverse the judgment because the only evidence in the record leads plainly to a conclusion that the trial court erred *1255 by deviating from the amount it calculated as the Guidelines amount. I do not believe that we should delve into the inclusion of the overtime pay.
NOTES
[1] The "Order Settling the Record by Statement of the Evidence When No Report Was Made" was separately bound and filed on May 14, 1999, as a supplemental record pursuant to an order of this court.
[2] It is possible, though by no means clear, that the trial court believed including Father's overtime pay as a component of the child support calculation represented a windfall. This would be error for two reasons: one, we have already determined that the overtime was properly included in the computation; and two, the issue of overtime goes to the proper weekly gross income figure and not the bottom-line child support amount. That is to say, subtracting overtime pay from the child support amount rather than the weekly gross income figure disproportionately reduces the child support obligation.
[3] The trial court's entry memorializing the judgment also ordered Torrence to sign the worksheet.
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NO. 12-17-00275-CR
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
IN RE: §
DAVID SCHLITTLER, § ORIGINAL PROCEEDING
RELATOR §
MEMORANDUM OPINION
PER CURIAM
David Schlittler, acting pro se, filed this original proceeding in which he challenges
Respondent’s failure to rule on his motion for appointment of habeas corpus counsel. 1 We deny
the writ.
PREREQUISITES TO MANDAMUS
To obtain mandamus relief in a criminal case, the relator must show that he does not have
an adequate remedy at law and the act he seeks to compel is ministerial (not involving a
discretionary or judicial decision). State ex rel. Young v. Sixth Judicial Dist. Court of Appeals,
236 S.W.3d 207, 210 (Tex. Crim. App. 2007) (orig. proceeding). If the relator fails to satisfy
either prong of this test, mandamus relief should be denied. Id. The relator must also furnish a
record sufficient to support his claim for mandamus relief. See TEX. R. APP. P. 52.7(a).
AVAILABILITY OF MANDAMUS
To obtain a writ of mandamus compelling a trial court to consider and rule on a motion,
the relator must show that the trial court (1) had a legal duty to perform a nondiscretionary act,
(2) was asked to perform the act, and (3) failed or refused to do so. In re Molina, 94 S.W.3d
885, 886 (Tex. App.–San Antonio 2003, orig. proceeding). Generally, a trial court has a
1
Respondent is the Honorable Deborah Oakes Evans, Judge of the 87th District Court of Anderson County,
Texas. Relator was convicted in the 3rd District Court of Anderson County, over which the Honorable Mark
Calhoon presides. It appears that Judge Evans presided over Relator’s trial as an assigned judge.
nondiscretionary duty to consider and rule on a motion within a reasonable time. In re Thomas,
No. 12–05–00261–CV, 2005 WL 2155244, at *1 (Tex. App.–Tyler Sept. 7, 2005, orig.
proceeding) (mem. op.). However, a trial court cannot be expected to consider a motion not
called to its attention. See In re Chavez, 62 S.W.3d 225, 228 (Tex. App.–Amarillo 2001, orig.
proceeding). It is incumbent upon the relator to establish that the motion has been called to the
trial court’s attention. See id.
According to Relator, he mailed his motion for appointment of counsel to the Anderson
County District Clerk on November 30, 2016. He contends that he included a cover letter
requesting that the motion be filed and brought to Respondent’s attention. Relator maintains that
he subsequently sent correspondence requesting a hearing and ruling on his motion, but
Respondent has yet to act on the motion. To support his contention, Relator provided this Court
with (1) a November 29, 2016 letter, including a copy of his motion for appointment of counsel,
to the Anderson County District Clerk asking that his motion be filed and placed before the trial
court; (2) a December 19, 2016 letter to the Anderson County District Clerk, in which he
requested information regarding when Respondent intended to consider his motion; (3) a January
5, 2017 letter to the Anderson County District Clerk that included his “hearing setting notice”
and that requested Respondent schedule a hearing on his motion; (4) a February 8, 2017 letter to
the Honorable Mark Calhoon, Judge of the 3rd District Court in Anderson County, in which he
requested a hearing on his motion; (5) an April 4, 2017 letter to Respondent requesting a date
and time for a telephonic hearing on his motion; and (6) a portion of a June 19, 2017 letter to
Respondent in which Relator states there has been no hearing on his motion.
We first note that Relator’s motion for appointment of counsel is not file-stamped; thus,
the record does not indicate if or when the motion was filed with the district clerk. Nor does
Relator’s petition contain evidence, such as a docket sheet, demonstrating that the trial court has
not ruled on his motion. See In re Creag, No. 12-17-00191-CV, 2017 WL 2665987, at *1 (Tex.
App.—Tyler June 21, 2017, orig. proceeding) (mem. op.); see also In re Vasquez, No. 05-15-
00592-CV, 2015 WL 2375504, at *1 (Tex. App.—Dallas May 18, 2015, orig. proceeding) (mem.
op.) (denying petition that failed to include a docket sheet or other form or proof that trial court
had not ruled on motion).
Moreover, the November 29, December 19, and January 5 letters to the Anderson County
District Clerk are insufficient to establish that Relator’s motion was brought to Respondent’s
2
attention. See In re Blakeney, 254 S.W.3d 659, 662 (Tex. App.—Texarkana 2008, orig.
proceeding) (stating that trial court not required to consider a motion not called to its attention
and showing that motion was filed with clerk does not prove that motion was brought to trial
court’s attention or presented to trial court with request for a ruling); see also Chavez, 62 S.W.3d
at 228 (clerk’s knowledge not imputed to trial court). Nor does a letter mailed to a different
judge, such as Relator’s letter to Judge Calhoon, establish that Relator’s motion was called to the
attention of Respondent. Finally, Relator’s April 4 and June 19 letters are not file stamped or
certified, and the record does not evidence that the letters were actually received by Respondent.
See TEX. R. APP. P. 52.3(k)(1)(A); see also Creag, 2017 WL 2665987, at *1; In re Taylor, No.
06-16-00016-CV, 2016 WL 1435386, at *1 (Tex. App.—Texarkana Apr. 12, 2016, orig.
proceeding) (relator’s letters to court were not file-marked or accompanied by other evidence
showing their receipt, and did not show “the trial court received, was aware of, and was asked to
rule on his pleadings[]”). Accordingly, under these circumstances, Relator has not shown that
his motion was called to Respondent’s attention and, thus, he has not established his entitlement
to mandamus relief.
DISPOSITION
Because Relator has not shown that he is entitled to mandamus relief, we deny Relator’s
petition for writ of mandamus.
Opinion delivered April 4, 2018.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(DO NOT PUBLISH)
3
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
APRIL 4, 2018
NO. 12-17-00275-CR
DAVID SCHLITTLER,
Relator
V.
HON. DEBORAH OAKES EVANS,
Respondent
ORIGINAL PROCEEDING
ON THIS DAY came to be heard the petition for writ of mandamus filed by
David Schlittler; who is the relator in Cause No. 30390, pending on the docket of the 3rd Judicial
District Court of Anderson County, Texas. Said petition for writ of mandamus having been filed
herein on September 7, 2017, and the same having been duly considered, because it is the
opinion of this Court that the writ should not issue, it is therefore CONSIDERED, ADJUDGED
and ORDERED that the said petition for writ of mandamus be, and the same is, hereby denied.
By per curiam opinion.
Panel consisted of Worthen, C.J., Hoyle, J. and Neeley, J.
4
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158 F.2d 272 (1946)
UNITED STATES
v.
PICKWICK ELECTRIC MEMBERSHIP CORPORATION.
No. 10131.
Circuit Court of Appeals, Sixth Circuit.
December 4, 1946.
*273 Berryman Green, of Washington, D. C. (Douglas W. McGregor, Sewall Key, A. F. Prescott, and S. Dee Hanson, all of Washington, D. C., and William McClanahan, and John Brown, both of Memphis, Tenn., on the brief), for appellant.
Stuart McCloy, of Memphis, Tenn. (Snowden, Davis, Brown & McCloy of Memphis, Tenn., on the brief), for appellee.
Before HICKS, ALLEN, and MILLER, Circuit Judges.
MILLER, Circuit Judge.
The Appellee, Pickwick Electric Membership Corporation, filed this action in the District Court to recover internal revenue taxes, penalties and interest totaling $5,532.11 which it claimed were illegally assessed and collected for the fiscal years ending June 30, 1940 and June 30, 1941. Appellant appeals from a judgment in favor of the Appellee. The questions presented are (1) whether the taxpayer, during the taxable years in question, was exempt from payment of income taxes under § 101(8) or (10) of Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 101(8, 10); and (2) whether the amounts collected by the taxpayer from its members during those years as "amortization charges" to be used to pay interest and principal on long-term obligations, constituted taxable income or capital contributions.
The District Judge made careful and detailed findings of fact, controlled largely by documentary evidence, which, except for some conclusions objected to as conclusions of law, are amply supported by the evidence and apparently accepted by the parties. It would unduly lengthen this opinion to repeat them in detail. The following summary presents the issue and the controlling facts:
The Pickwick Electric Membership Corporation was organized December 16, 1935 under Chapter 32, Public Acts of the Extraordinary Session of 1935, of the State of Tennessee, and was by force of Chapter 231, Public Acts of 1937, of the State of Tennessee, automatically converted to a corporation authorized by the said latter Act, which also repealed the 1935 Act. It was organized by residents of McNairy, *274 Hardin and Chester Counties, Tennessee, who were interested in rural electrification and who met December 13, 1935 for the purpose of organizing and authorizing the incorporation of the taxpayer under the Electric Membership Corporation Act of the State of Tennessee. No electricity had been available in some communities. Citizens of the communities generally favored taxpayer's organization. Through the taxpayer many unincorporated community centers, rural districts, schools and towns have benefited through the advantages of electricity.
About August 16, 1939, the taxpayer purchased an electric distribution system from the Tennessee Electric Power Company for approximately $275,000. The purchase price was paid by the taxpayer with funds borrowed from Rural Electrification Administration, and power was contracted for from the Tennessee Valley Authority as a result of this purchase. The taxpayer acquired and served approximately 1,600 new consumers who had not previously been members of the cooperative. On July 31, 1940, the taxpayer sold the part of its system of lines and equipment, purchased from the Tennessee Electric Power Company, which were east of the Tennessee River, to the Tennessee Valley Electric Cooperative. As of June 30, 1940 and June 30, 1941, the members and non-member consumers were as follows:
1940 1941
Memberships ................ 1,274 2,095
Total number of consumers .. 2,700 1,613
Where it was not possible to provide service for members, their membership fees were refunded.
On or about June 9, 1939, the taxpayer was duly converted into a cooperative, general welfare, non-profit membership corporation under Chapter 176 of the Public Acts of 1939, State of Tennessee, and existed and acted under and by authority of said Act for its fiscal years ending June 30, 1940 and June 30, 1941. At a special meeting held on June 13, 1939 new by-laws were adopted. These provided, among other provisions, for a membership fee of five dollars; that service could be rendered to governmental agencies, political subdivisions and other persons not in excess of ten percent of its members; that for the purpose of continuing service and avoiding hardships when the company acquired electrical facilities devoted to public use it could continue to serve non-members, but that non-members would be limited to forty percent of the total persons served and would have the right to become members on non-discriminatory terms; that every consumer served should pay a monthly amortization charge, at the same time the monthly bill for electric energy was payable, equivalent to one cent for each kilowatt hour of electric energy used up to the first one hundred kilowatt hours, such charge to be no less than 25 cents nor more than one dollar per month, with the revenue from such charges to be segregated from all other revenues and to be used exclusively for payment of the principal or interest on any long-term indebtedness issued or assumed by the cooperative; that the trustees should not receive any salary for their services, excepting an allowance for attendance at meetings; and that all the revenues of the cooperative (exclusive of amortization charges) for any fiscal year in excess of the amount necessary for the payment of all current operating expenses, interest on bonds, notes and other indebtedness and the establishment and maintenance of reasonable reserves, should, subject to contractual obligations, be distributed by the cooperative to its members, as either (1) patronage refunds, or (2) by way of general rate reductions, or (3) by combination of such methods.
The trust indenture between the taxpayer and the Hamilton National Bank of Chattanooga, as trustee, to secure notes executed by the taxpayer on account of sums owing the Government and the Tennessee Valley Authority provided that the taxpayer apply all moneys received by it and not required for operation and maintenance, replacements and extensions in the usual course of business, and reasonable reserves for working capital, to the payment of the principal and interest of the notes. The amended power contract between the taxpayer and the Tennessee Valley Authority required the taxpayer to add *275 to all billings the amortization charges referred to above and to continue such charges until all notes, bonds, or other evidences of long-term indebtedness were fully paid, and that such revenues be held segregated and considered trust funds exclusively for that purpose; that gross revenues be applied first to the payment of all current operating expenses, next to the payment at maturity of interest on all system indebtedness and for amortization charges and/or sinking fund requirements and then to setting up reasonable reserves; that all remaining revenues should be considered surplus revenues and devoted to the purchase or retirement of system indebtedness; and that any remaining surplus revenues should next serve as a basis for the reduction or elimination of amortization charges, and thereafter for the reduction of rates.
The members paid the amortization charges which were collected from them on an equitable basis and were segregated from all other revenues and held applicable exclusively to the payment of system indebtedness. The governmental agencies having principal control over the taxpayer's books considered the amortization charges as capital and not as income. The taxpayer did not return the amortization charges as income in its returns filed for the years ending June 30, 1940 and June 30, 1941.
During the taxable years in question the rates charged non-member consumers were approximately the same as those charged by the private power companies whose transmission system had been acquired by the taxpayer until such non-member consumers became members of the cooperative. The rates paid by non-members during the taxable years were equal to, or higher than the rates charged to members, plus members' amortization charges. Amortization charges were not assessed against non-member consumers.
During the taxable years in question the plaintiff complied with, and operated in accordance with, its by-laws, its contracts and agreements and the law of the State of Tennessee. Revenues from power sales, under the statute to which it owed its existence, received each fiscal year in excess of the amounts necessary to accomplish well-defined statutory purposes, among which were education in cooperation and the dissemination of information concerning the effective use of electric energy, and other information concerning the services made available by the taxpayer, were to be distributed to its members as, and in the manner, provided in the by-laws. Revenues in excess of those required for expenses and losses and statutory purposes were the property of members.
The District Judge found as facts that the taxpayer was organized on a non-profit basis for the purpose of promoting the general welfare of the communities and citizenry served, and at all times during the taxable years in question was a general welfare corporation not organized for profit, and that the amortization charges were contributions to the capital of the taxpayer. He held as a matter of law that the taxpayer was a civic league or organization, not organized for profit but operated exclusively for the promotion of social welfare and exempt from taxation for the years in question under § 101(8) of Internal Revenue Code; and that the amortization charges collected by the taxpayer for the years in question being contributions to capital were not taxable income.
§ 101 of Title 26 U.S.C.A. Int. Rev.Code provides
"The following organizations shall be exempt from taxation under this chapter * * *
(8) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes; * * *
(10) Benevolent life insurance associations of a purely local character, mutual ditch or irrigation companies, mutual or cooperative telephone companies, or like organizations; but only if 85 per centum or more of the income consists of amounts collected from members for the sole purpose of meeting losses and expenses; * * *."
*276 We agree with the ruling of the District Court that appellee is exempt under the provisions of § 101(8) quoted above, which makes it unnecessary to consider whether it also comes within the provisions of § 101(10) also quoted above. We do not agree with appellant's contention that since the appellee is a cooperative company within the general provisions of § 101(10) it can not seek exemption under § 101(8). The two exempt classifications are cumulative, not mutually exclusive. In order for the appellee to be exempt under § 101(8) the following three conditions must exist: (1) It must be a civic league or organization; (2) it must not be organized for profit, and (3) it must be operated exclusively for the promotion of social welfare. It is not necessary that its net earnings be devoted exclusively to charitable, educational or recreational purposes, as that provision of the subsection pertains only to local associations of employees, and is not applicable to civic leagues or organizations such as the appellee. Hanover Imp. Soc. v. Gagne, 1 Cir., 92 F.2d 888.
No serious contention appears to be made that appellee is not a civic league or organization. "Civic" is defined as pertaining to a city or a citizen; relating to the community. A civic league or organization embodies the idea of citizens of a community cooperating to promote the common good and general welfare of people of the community. It seems clear that appellee falls within such a classification. Garden Homes Co. v. Commissioner, 7 Cir., 64 F.2d 593, 599; Debs Memorial Radio Fund v. Commissioner, 2 Cir., 148 F.2d 948, 951; Amalgamated Housing Corporation v. Commissioner, 37 B.T.A. 817, 825 [affirmed on order, 2 Cir., 108 F.2d 1010].
It seems also clear that the taxpayer was not organized for profit. The organizers were interested in rural electrification, electricity at a more reasonable rate than furnished by private power companies, and were not seeking a medium for investment of idle or available funds. The actual purpose is not controlled by the corporate form or by the commercial aspect of the business transacted, but may be shown by extrinsic evidence, including the by-laws and the method of operation. Debs Memorial Radio Fund v. Commissioner, supra. The trust indenture channeled excess earnings into debt retirement. The by-laws required surplus revenues after operating costs, payment on indebtedness and the establishment of reasonable reserves to be distributed to its members in the form of patronage refunds or general rate reductions, both methods of distribution directly furthering the original purpose of providing electricity at more reasonable rates. The power contract with the Tennessee Valley Authority also required ultimate excess revenues to be used for the reduction of rates. Such obligations and methods of operation completely negative the usually accepted meaning of profit motive. It is true, as contended by the Government, that the taxpayer was organized and operated through its originally established rates for the purpose of collecting more revenue than required to meet its operating costs, required payments on indebtedness and establishment of reasonable reserves, and to that extent it was organized for the purpose of making a profit and actually made one. But whatever profit was made in that narrow sense of the word was only a tentative one and so closely related to a readjustment of rates that it was not an actual profit in the real meaning of the word over the longer period of time. It was sound business judgment to establish rates that would not result in an operating loss and the resulting margin of safety, allocated in advance to the cooperative purpose of the organization, is not the profit motive contemplated by the statute. Crooks v. Kansas City Hay Dealers Ass'n, 8 Cir., 37 F.2d 83; Hanover Imp. Soc. v. Gagne, supra; Debs Memorial Radio Fund v. Commissioner, supra. Nor do we think the fact that as a part of the overall plan electricity was also furnished to non-members at a profit which inured to the benefit of the members makes any material difference. It was a necessary incident in its development and purchase of operating facilities already dedicated to public use, and was not a part of the basic policy of the company. Non-members had the right to become members on non-discriminatory terms. Most of the *277 non-member consumers acquired in 1939 when the company purchased the electric distribution system from the Tennessee Electric Power Company were eliminated as non-members by the close of the fiscal year ending June 30, 1941. As was said in Trinidad v. Sagrada Orden, 263 U.S. 578, at page 582, 44 S.Ct. 204, at page 206, 68 L.Ed. 458, "That the transactions a yield some profit is in the circumstances a negligible factor. Financial gain is not the end to which they are directed."
We also are of the opinion that the appellee was "operated exclusively for the promotion of social welfare" within the meaning of the statute. Providing electricity at low cost to citizens of a community, in some instances where electricity was not available before, is promoting social welfare. Compare Helvering v. Davis, 301 U.S. 619, 672, 57 S.Ct. 904, 81 L.Ed. 1307, 109 A.L.R. 1319; Garden Homes Co. v. Commissioner, supra, 7 Cir., 64 F.2d 593, at page 599. The Government's contention is that it was not operated exclusively for that purpose in that its earned income inured to the benefit of its members in the form of patronage refunds or reduced rates. Patronage refunds are in substance an indirect form of reduced rates. It is pointed out that the members did not receive such returns in either the Hanover Imp. Soc. case or the Debs Memorial Radio Fund case. Reliance is placed upon Amalgamated Housing Corporation v. Commissioner, 2 Cir., 108 F.2d 1010, affirming the Board of Tax Appeals in 37 B.T.A. 817, and on Industrial Addition Ass'n v. Commissioner, 6 Cir., 149 F.2d 294. But the ruling in both of the two last cited cases was that cash payments to persons who had invested substantial sums in the enterprise were dividends on stock instead of interest on indebtedness as claimed, and for that reason the company was organized for profit and not operated exclusively for the promotion of social welfare. In the present case there was no cash distribution, and the members, paying only a nominal membership fee of five dollars were not investors. Benefits through the form of rate reductions are not dividends on investments any more than any other reduction in the cost of living can be called such. Such a benefit is the result of the successful promotion of social welfare by the company. The participation on the part of the members in the benefits of such social welfare does not mean that the operations are for their individual benefit instead of for the benefit of the community. In both the Hanover Imp. Soc. case and the Debs Memorial Radio Fund case, the stockholders shared in the beneficial results to the community from the social welfare work of the company. Non-members had the right to become members on a non-discriminatory basis and share alike in the benefits provided by the company. The fact that the members may receive some benefit on dissolution upon distribution of the assets is a contingency too remote to have any material bearing upon the question where the association is admittedly not a scheme to avoid taxation and its good faith and honesty of purpose is not challenged. Crooks v. Kansas City Hay Dealers Ass'n, supra, 8 Cir., 37 F.2d 83, at page 87.
Our conclusion that the appellee was exempt from payment of income taxes for the taxable years involved makes it unnecessary to consider the Government's further contention that the "amortization charges" should have been treated as income instead of capital contributions.
The judgment of the District Court is accordingly affirmed.
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IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs December 11, 2002
STATE OF TENNESSEE v. JAMES RUBEN CONYERS
Direct Appeal from the Circuit Court for Houston County
No. 4443 Allen W. Wallace, Judge
No. M2002-01007-CCA-R3-CD - Filed September 5, 2003
The appellant, James Ruben Conyers, was convicted by a jury in the Houston County Circuit Court
of especially aggravated burglary, a Class B felony; especially aggravated robbery, a Class A felony;
and attempted first degree murder, a Class A felony. Following a sentencing hearing, the trial court
sentenced the appellant to an effective sentence of eighty years incarceration in the Tennessee
Department of Correction. On appeal, the appellant raises numerous issues relating to the
sufficiency of the evidence, the admission of evidence, the sufficiency of the indictment, the jury
instructions, and sentencing. Upon review of the record and the parties’ briefs, we find no merit to
the appellant’s contentions. However, we recognize as plain error that the appellant’s conviction for
especially aggravated burglary was prohibited under Tennessee Code Annotated section 39-14-
404(d) (1997). Accordingly, we modify the conviction to aggravated burglary and reduce the
appellant’s sentence for this conviction to ten years incarceration, for a total effective sentence of
eighty years.
Tenn. R. App. P. 3 Appeal as of Right; Judgments of the Circuit Court are Affirmed in
Part, Modified in Part, and Remanded.
NORMA MCGEE OGLE , J., delivered the opinion of the court, in which DAVID G. HAYES and JOHN
EVERETT WILLIAMS, JJ., joined.
William B. “Jake” Lockert, III, and Wade Bobo, Ashland City, Tennessee, for the appellant, James
Ruben Conyers.
Paul G. Summers, Attorney General and Reporter; Renee W. Turner, Assistant Attorney General;
Dan M. Alsobrooks, District Attorney General; and Carey Thompson, Assistant District Attorney
General, for the appellee, State of Tennessee.
OPINION
I. Factual Background
On April 6, 2001, at approximately 7:30 p.m., eighty-six-year-old Mildred Parker had
just sat down to watch “Diagnosis Murder” when she heard a knock at the front door. Because it was
unusual for anyone to use her front door, Mrs. Parker did not open the door, but instead looked out
the window to see who was knocking. When she looked out the window, a black male, later
identified as the appellant, inquired about purchasing her car. Mrs. Parker informed the appellant
that the vehicle was not for sale, but the appellant insisted on speaking with her. Mrs. Parker shook
her head and told him, “No.” She then walked to the back of the house to ensure that the back doors
were locked.
When Mrs. Parker reached the back door, she observed the appellant “walking up the
ramp . . . [with] a big, fat rock in his hand.”1 The appellant demanded that Mrs. Parker open the
door, but she refused. The appellant then became belligerent and yanked on the door, shouting,
“You bitch you, I’ll kill you and get your money. Open this door.” As Mrs. Parker turned to run into
the bedroom, the appellant shattered the glass in the back door with his hand. Mrs. Parker proceeded
to the bedroom where her deceased husband had hidden a loaded .38 Special revolver. She grabbed
the revolver, but her arthritis prevented her from being able to pull the trigger.2 By this time, the
appellant had entered the house and reached the bedroom. Mrs. Parker then ran through the house
to the kitchen door and attempted to exit the house. Before she could escape, the appellant “grabbed
[her] by the hair and pulled [her] back in.”
The appellant’s hand was bleeding profusely. Mrs. Parker testified at trial that the
appellant “didn’t want any of his blood there and he started wiping up all the blood,” using towels,
cooking gloves, rugs from the kitchen floor, and a red and white checked apron. After attempting
to clean up the blood, the appellant demanded money from Mrs. Parker. Mrs. Parker led the
appellant into a small office and gave the appellant “a little over $500” that she had received for her
birthday. The appellant was not satisfied with this amount and demanded more money, but Mrs.
Parker informed him that she had no more. The appellant then stated, “Well just write me a check
for $500.00 and I’ll go.” Mrs. Parker told the appellant that she did not have $500, and instead wrote
him a check for $200. Thereafter, the appellant forced Mrs. Parker to write a note on the back of
another check, which note read, “I’m suicidal myself.”
By this time, Mrs. Parker was covered in blood. She explained at trial that “[i]t was
all [the appellant’s] blood . . . because I hadn’t been hurt [or] cut at the time.” The appellant made
Mrs. Parker go into the bathroom, undress, and shampoo her hair. He then helped Mrs. Parker rinse
the shampoo and blood from her hair. Thereafter, Mrs. Parker dressed in a pair of pajamas and sat
on the sofa in the living room. The appellant handed Mrs. Parker her purse. Complying with his
instructions, Mrs. Parker took out her billfold and “gave [the appellant] what money was in there.”
Thereafter, the appellant approached Mrs. Parker, put a white telephone cord around
her neck, and proceeded to choke her. Finding the white cord to be insufficient to choke Mrs.
Parker, the appellant wrapped a brown extension cord around her neck. Still unsatisfied with his
1
At trial, Mrs. Parker testified that she never again saw the rock.
2
Mrs. Parker testified that the gun fell out of her hand and she believed that the appellant picked it up.
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progress, the appellant pulled Mrs. Parker off the sofa and began yanking up and down on the
extension cord, banging her head into the floor. Mrs. Parker was able to prevent the appellant from
choking her by placing two fingers under the cord. The appellant then hit Mrs. Parker in the head
with an unknown object, poured Clorox in her face, and “stomped” her in the head. In order to end
the attack, Mrs. Parker “went limp” and pretended to be dead.
The appellant took a cloth and wiped Mrs. Parker’s face, body, and shoes. Mrs.
Parker heard the appellant walking around her house and then she heard a door close. Fearing the
appellant would return, Mrs. Parker lay still and waited. Finally, she felt her Siamese cat nudge her
leg and, because her cat would not come out when other persons were in the house, Mrs. Parker
knew the appellant was gone.
Following the appellant’s departure, Mrs. Parker sat up and observed that her head
was bloody and blood was running into her face. She managed to walk to her telephone and dial
911; however, because she could not hear, she was unaware that the operator answered. Mrs. Parker
hung up and dialed again. Still unable to hear the operator, Mrs. Parker decided to call her family.
She called her cousin, whom she informed, “I have been hurt, been beaten, come to me.” Mrs.
Parker then called the hospital and requested an ambulance. When an officer arrived at the scene,
Mrs. Parker asked him to remove the cord from her neck, but he told her to sit down and wait for the
ambulance.
Mrs. Parker’s injuries were photographed at the scene of the offense and at the
hospital. These photographs were entered into evidence at trial. Mrs. Parker also described her
injuries at trial, stating that
my neck was quite blue [and] bleeding; my head had two big gashes
in it, [which the doctors] had to sew up; my arms were black and
blue; my face was black and blue; I’ve got a bad place on my leg that
hasn’t healed yet; my back - well I had bruises all over me. And of
course I was bloody.
Mrs. Parker’s injuries required her to be hospitalized for seven days. At the time of trial, she was
“doing fair,” but she still had “some marks” on her leg and was having trouble hearing as a result of
the appellant “stomping” on her head.
After she was taken to the hospital, several officers, including Officer Chad Smith
and Agent Joe Craig, came to question Mrs. Parker about her attack. She provided the officers with
a description of her assailant, describing him as clean-shaven with short hair. Additionally, she
related that her assailant was wearing dark trousers, an orange and green windbreaker, and a white
t-shirt. When the officers showed her a photo lineup, she was unable to positively identify her
assailant, but did note that one of the individuals looked like her assailant but was “darker.” At trial
she identified the appellant as the man who attacked her.
Mrs. Parker testified that in addition to taking an undetermined amount of money, the
appellant had taken a green Erin Bank money bag containing fifty-five dollars, the two hundred
-3-
dollar check, a gold bracelet, her husband’s wedding rings and Elgin pocket watch, her mother’s
wedding ring, her father’s “elk ring,” the victim’s purse, the revolver, and various other items. None
of these items were recovered. She further surmised that the appellant must have brought the brown
extension cord to her house because she did not own one. Mrs. Parker testified that these events
lasted more than an hour.
Officer Dalton Greenwell testified at trial that on April 6, 2001, he responded to a call
regarding a “911 hangup” at 125 Front Street. When he arrived at that address, he proceeded to the
back of the house where he observed that the back door was ajar and the glass had been broken out
of the back door. Officer Greenwell called out to Mrs. Parker. He testified that as she approached,
he observed a large cut on her head, blood covering her face, and a telephone cord and brown
extension cord tied around her neck. Mrs. Parker asked Officer Greenwell to remove the cords
because she was having trouble breathing, but he was unable to untie the knots. While at the scene,
Officer Greenwell discovered a broom outside the back door. He testified that the broom appeared
to have been used to break the glass out of the doors. He observed blood on the broom’s handle and
throughout the house.
Erin Police Chief Tommy Parchman also responded to the call at 125 Front Street.
When he arrived at the scene, he observed that the glass had been broken out of the back door. He
also observed Mrs. Parker sitting in a chair near the door. Chief Parchman testified at trial that he
assisted in the collection of evidence, photographed Mrs. Parker’s injuries before she was taken to
the hospital, and photographed Mrs. Parker’s residence. Thereafter, he collected a piece of glass and
a “wood strip” from the back door. Both items appeared to have blood on them. Chief Parchman
explained that he took these items because he “felt like whoever broke in had cut himself” and the
blood could be used for DNA analysis.
Chief Parchman subsequently accompanied several officers to the hospital to
interview Mrs. Parker. After Mrs. Parker provided them with a description of her assailant, she was
asked to identify her assailant from a photo lineup. Based upon Mrs. Parker’s description and her
identifications from the photo lineup, the officers developed the appellant as a suspect.
Chief Parchman testified that after midnight, he and the other officers went to an
apartment rented by Sandra Cooksey, in which apartment the appellant was allegedly residing. Chief
Parchman testified that the appellant “came out of the bathroom” and was ordered to the floor to be
handcuffed. Chief Parchman observed what appeared to be a fresh cut on the appellant’s hand, a cut
the appellant claimed to have received while he was being handcuffed. However, Chief Parchman
testified that the officers did not find any glass or sharp object on the floor.
Several days later, Chief Parchman discovered a garbage can in a creek near Mrs.
Parker’s house. Inside the garbage can, he found an apron, a pillowcase, and a bedspread. Chief
Parchman related that Mrs. Parker had reported that on the night of the offense, the appellant had
used these items to wipe blood from his hands. Chief Parchman further testified that these items had
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what appeared to be blood on them. Chief Parchman subsequently gave these items to Agent Craig
for testing at the Tennessee Bureau of Investigation (“TBI”) crime laboratory.
On cross-examination, Chief Parchman acknowledged that he was familiar with
Sandra Cooksey. He related that the appellant and Cooksey were first cousins and that the couple
had a nineteen-year-old son. Chief Parchman testified that a few days prior to the instant offense,
officers had been called to Cooksey’s apartment regarding a domestic disturbance. During this
disturbance, the appellant had allegedly broken the glass out of the front door of the apartment.
Chief Parchman related that when the officers returned to the apartment on the night of the instant
offense, the glass had not been repaired. Nevertheless, Chief Parchman insisted that he did not find
any glass on the floor where the appellant had lain while being handcuffed.
Investigator Ted Tarpley of the District Attorney General’s Office testified that on
April 6, 2001, he was asked to assist the Erin Police Department in an investigation at 125 West
Front Street. He stated that after surveying the scene of the crime, he accompanied several other
officers to the hospital to interview Mrs. Parker. Investigator Tarpley related that once the appellant
was identified as a suspect, the officers went to Cooksey’s apartment. When the officers arrived at
the apartment, they informed Cooksey that they were there to speak to the appellant, and Cooksey
and her son left.
Investigator Tarpley testified that he and the other officers were cautious as they
approached the apartment because they were aware that one of the items stolen from Mrs. Parker’s
house was a gun. Because he was not wearing a bullet-proof vest, Investigator Tarpley remained
outside while the other officers entered the apartment. However, once the appellant was arrested and
placed in a patrol car, Investigator Tarpley assisted in the search of the apartment. Investigator
Tarpley testified that he “found a card up under the commode in the bathroom.” The card was
addressed to “Uncle Bill and Aunt Mildred” and was signed “Love, Mike.” Investigator Tarpley
stated that he also observed blood and wet “washrags” in the bathroom sink.
Investigator Tarpley then searched a “closet [that] contained the water heater.” In this
closet, Investigator Tarpley discovered some money in a pile of clothes. He also found a gray t-shirt
and black pants “stuffed” behind two blocks that had been removed from the wall. Thereafter,
Investigator Tarpley searched the bedroom belonging to the appellant’s son, in which bedroom he
found a laundry basket containing a jacket that had what appeared to be blood on it. Investigator
Tarpley stated, “[W]hen I saw these clothes and we saw the coat, . . . there [was] no question that
was the clothes [described by Mrs. Parker].”
At trial, Boyd Phillips, a forensic scientist with the TBI crime laboratory testified that
he processed for latent fingerprints eight items submitted by Agent Joe Craig. These items included
a Christmas card, a green First Star checkbook, a Scottish Rites telephone book, a red pocketknife,
a green money bag, a bottle of 409 cleaner, and another green checkbook that contained the suicide
note. Unfortunately, Phillips was unable to lift an indentifiable print from any of these items.
-5-
Agent Margaret Bash, a forensic serologist with the TBI crime laboratory, testified
that she also received several items from Agent Craig, which items included a broom, a piece of
broken glass, a wood shaving, a rug, and fingernail scrapings taken from Mrs. Parker. Agent Bash
stated that she was asked to test the items for the presence of blood and to conduct DNA analysis.
Testing revealed the presence of blood on the broom, the piece of glass, the wood shaving, and the
rug. Moreover, the DNA obtained from the blood on the broom, the piece of glass, and the wood
shaving matched the appellant’s DNA. Agent Bash testified that “the probability of an unrelated
individual having the same DNA profile . . . [was] greater than one in six billion.” Agent Bash also
discovered the presence of the appellant’s DNA in Mrs. Parker’s fingernail scrapings. However, she
was unable to get a DNA profile from the blood on the rug.
Chief Deputy Darrell Allison with the Houston County Sheriff’s Department assisted
in the investigation at Mrs. Parker’s house. He testified at trial that he was asked to prepare a photo
lineup to be shown to Mrs. Parker. After preparing the photo lineup and delivering it to Agent Craig,
Chief Deputy Allison accompanied the other officers to the Cooksey apartment. Chief Deputy
Allison testified that when they arrived at the apartment, the appellant was in the bathroom. Chief
Deputy Allison did not enter the apartment until the appellant had exited the bathroom and lain down
on the floor to be handcuffed. Chief Deputy Allison related that as he handcuffed the appellant, the
appellant exclaimed, “Oh you have cut my hand.” However, Chief Deputy Allison stated that he did
not find any object upon which the appellant could have cut his hand. Moreover, Chief Deputy
Allison noted that the blood on the appellant’s hand appeared to be dry.
TBI Agent Joe Craig testified that he was called to assist in the investigation at Mrs.
Parker’s residence. He stated that he first went to the hospital to interview Mrs. Parker, then he went
to the Cooksey apartment to arrest the appellant. At the hospital, Mrs. Parker informed Agent Craig
that her assailant was about six feet tall. She described the clothing worn by her assailant and stated
that he was clean-shaven with short hair. Agent Craig further related that although Mrs. Parker was
able to “narrow[] her photo [identification] down to two people, she was unable to positively identify
[the appellant].”
Agent Craig testified that he was present at the Cooksey apartment when Chief
Deputy Allison placed the handcuffs on the appellant. He related that he did not observe a cut on
the appellant’s hand until the appellant stood up. However, Agent Craig stated that, because there
was no glass or other sharp object on the floor, he did not believe that the appellant’s hand was cut
while being handcuffed.
Agent Craig testified that he assisted in the collection of evidence. He recalled that
at the Cooksey apartment, the officers discovered seventy dollars ($70) in a “utility closet,” forty
dollars ($40) in a bedroom, and a Christmas card in the bathroom between the toilet and the vanity.
Agent Craig testified that he did not request that the crime scene unit process the scene for
fingerprints, but instead collected evidence that Mrs. Parker alleged the appellant had touched.
Moreover, because Mrs. Parker informed the officers that the appellant had gained access into her
-6-
house by breaking the glass in the back door and storm door, Agent Craig chose to submit the broom,
the broken piece of glass, and the wood shaving for blood and DNA analysis.
At trial, Dr. Daniel Martin testified that he treated Mrs. Parker when she was brought
into the emergency room on the night of the offense. Dr. Martin stated that Mrs. Parker was in
serious condition when she arrived at the hospital. Dr. Martin testified that
[Mrs. Parker] had multiple head trauma, a deep scalp laceration, she
had strangulation injury to her neck, she had multiple bruises and
trauma of her hips, her legs and her back. She had severe anemia.
Her blood count was low because of the trauma, she ble[d]. Then she
had her underlying medical problems chronic obstructive lung
disease, high blood pressure and arthritis. . . . [T]hat combination of
injuries [was] very severe and . . . potentially life threatening.
Dr. Martin related that the deep lacerations to Mrs. Parker’s scalp required a surgeon
to “repair.” Dr. Martin further testified that Mrs. Parker suffered severe swelling and bruising of the
neck, which worsened over the following twenty-four to thirty-six hours, resulting in difficulty
breathing. He stated that she was barely able to swallow and had to talk in a whisper. Dr. Martin
opined that, although she made a remarkable recovery, his “initial anticipation for [Mrs. Parker] was
not real good.”
On cross-examination, Dr. Martin conceded that Mrs. Parker was alert when she was
brought into the emergency room. Moreover, he did not see anything to indicate that she had
suffered any brain damage and she had not broken any bones. Dr. Martin related that Mrs. Parker’s
injuries did not require blood transfusions, placement on a respirator, or admittance to the intensive
care unit. However, he did prescribe Demerol for her pain.
Faye Kiser Sanders, the appellant’s cousin, testified at trial on behalf of the appellant.
Sanders testified that she had taken care of Mrs. Parker’s husband for many years. She further
related that on the night of the alleged offense, the appellant came to her house. Sanders stated that
she was watching a movie when the appellant knocked at the door. The appellant then entered the
house and asked if “Terry” was home. When Sanders informed the appellant that “Terry” was not
home, the appellant left. Sanders testified that she did not observe the appellant’s attire that evening.
She stated that she was certain that the appellant came to her house around 7:00 p.m. because the
movie she was watching when he came to her house started at 7:00 p.m., the same time as
“Diagnosis Murder.”
Sandra Elizabeth Cooksey also testified on behalf of the appellant. She testified that
she and the appellant were first cousins and that they had a nineteen-year-old son. Cooksey further
related that the appellant was residing with her when he was arrested.
Cooksey testified that around dusk on the night of the alleged offense, she and the
appellant left her apartment. Cooksey informed the appellant that she was going to her mother’s
-7-
house and the appellant stated that he was going to his friend Rabbit’s house. Cooksey visited her
mother for approximately fifteen minutes before walking to Rabbit’s house. Cooksey related that
when the couple left Rabbit’s house, they “caught a ride” with an unknown white male in a pickup
truck. Cooksey testified that she asked the driver to take her back to her apartment, but the appellant
decided to go riding around with this individual. Cooksey then went to her cousin’s house until the
appellant returned home around 10:00 p.m.
Cooksey testified that she and the appellant had not been in bed long before the police
arrived at the apartment. She stated that when the officers asked her if the appellant was in the
apartment, she initially told them that he was not. Cooksey explained that because of the prior
domestic disturbance, the appellant was not supposed to be in her apartment. However, she testified
that after the officers forced her son to the ground and placed a gun to his head, she admitted that the
appellant was inside the apartment. Cooksey related that the appellant had cut his hand the night he
broke the glass out of the door to her apartment. She further stated that on the night the appellant
was arrested for the instant offense, she did not observe him with any jewelry, cash, or a .38 revolver.
Based upon the foregoing evidence, the jury convicted the appellant of especially
aggravated burglary, especially aggravated robbery, and attempted first degree murder. Following
a sentencing hearing, the trial court sentenced the appellant as a Range II multiple offender to twenty
years incarceration for the especially aggravated burglary, forty years incarceration for the especially
aggravated robbery, and forty years incarceration for the attempted first degree murder. The trial
court ordered that the sentences for especially aggravated burglary and especially aggravated robbery
be served concurrent to each other, but consecutively to the sentence for attempted first degree
murder, for a total effective sentence of eighty years incarceration. On appeal, the appellant contends
that (1) the evidence was insufficient to show serious bodily injury, an essential element of especially
aggravated burglary and especially aggravated robbery; (2) the trial court erred in admitting into
evidence a color photograph depicting the victim’s injuries; (3) the trial court erred in charging the
jury; (4) count three of the indictment charging attempted first degree murder was insufficient for
failing to allege an overt act or name a victim; and (5) the trial court erred in its application of certain
enhancement factors and the imposition of consecutive sentencing..
II. Analysis
A. Especially Aggravated Burglary Conviction
Although not raised by either party, the appellant’s conviction for especially
aggravated burglary violates Tennessee Code Annotated section 39-14-404(d), which provides that
“[a]cts which constitute an offense under this section may be prosecuted under this section or any
other applicable section, but not both.” Consequently, “[t]his subsection prohibits using the same
act to prosecute an accused for both especially aggravated burglary and another offense.” State v.
Oller, 851 S.W.2d 841, 843 (Tenn. Crim. App. 1992). In the instant case, the appellant was
convicted of both especially aggravated burglary and especially aggravated robbery based, in part,
upon the serious bodily injury suffered by Mrs. Parker. Because section 39-14-404(d) prohibits the
conviction for especially aggravated burglary, we recognize this as plain error and modify the
appellant’s conviction for especially aggravated burglary to aggravated burglary. Tenn. R. Crim. P.
-8-
52; see also State v. Gerald Leander Henry, No. 01C01-9505-CR-00161, 1999 Tenn. Crim. App.
LEXIS 167, at **85-86 (Nashville, Feb. 25, 1999). The reduction in the appellant’s sentence for this
conviction will be discussed in the sentencing section of this opinion.
B. Sufficiency of the Evidence
The appellant contends that, because the State failed to prove that the victim suffered
serious bodily injury, the evidence was insufficient to sustain his convictions for especially
aggravated burglary and especially aggravated robbery. As previously noted, we have reduced the
appellant’s conviction for especially aggravated burglary to aggravated burglary. Accordingly, we
must determine whether the evidence was sufficient to convict the appellant of aggravated burglary
and especially aggravated robbery.
When an appellant challenges the sufficiency of the convicting evidence, the standard
for review by an appellate court 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.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789 (1979);
Tenn. R. App. P. 13(e). The State is entitled to the strongest legitimate view of the evidence and all
reasonable or legitimate inferences which may be drawn therefrom. State v. Cabbage, 571 S.W.2d
832, 835 (Tenn. 1978). Questions concerning the credibility of witnesses and the weight and value
to be given the evidence, as well as all factual issues raised by the evidence, are resolved by the trier
of fact. Id. This court will not reweigh or reevaluate the evidence. State v. Grace, 493 S.W.2d 474,
476 (Tenn. 1973). Because a jury conviction removes the presumption of innocence with which a
defendant is initially cloaked at trial and replaces it on appeal with one of guilt, a convicted
defendant has the burden of demonstrating to this court that the evidence is insufficient. State v.
Tuggle, 639 S.W.2d 913, 914 (Tenn. 1982).
Aggravated burglary is the burglary of a habitation. Tenn. Code Ann. § 39-14-403(a)
(1997). Serious bodily injury is not an element of this offense. However, serious bodily injury is
an element of especially aggravated robbery, which requires that the robbery be accomplished with
a deadly weapon and that the victim suffer serious bodily injury. Tenn. Code Ann. § 39-13-403(a)
(1997). Thus, the State was required to prove serious bodily in order to sustain the appellant’s
conviction for this offense.
“Serious bodily injury” is defined as bodily injury involving:
(A) A substantial risk of death;
(B) Protracted unconsciousness;
(C) Extreme physical pain;
(D) Protracted or obvious disfigurement; or
(E) Protracted loss or substantial impairment of a function of a bodily
member, organ or mental faculty.
Tenn. Code Ann. § 39-11-106(a)(34) (1997). “‘Bodily injury’ includes a cut, abrasion, bruise, burn
or disfigurement; physical pain or temporary illness or impairment of the function of a bodily
member, organ, or mental faculty.” Tenn. Code Ann. § 39-11-106(a)(2).
-9-
The appellant argues that the injuries suffered by Mrs. Parker are analogous to those
suffered by the victim in State v. Sims, 909 S.W.2d 46 (Tenn. Crim. App. 1995). In Sims, 909
S.W.2d at 48-49, the victim received a broken nose, a bruised cheekbone, black eyes, and a
laceration across the bridge of her nose. Applying the ejusdem generis canon of statutory
construction, this court held that “the pain commonly associated with a broken nose [was not]
extreme enough to be in the same class as an injury which involves a substantial risk of death,
protracted unconsciousness, protracted or permanent disfigurement or the loss or impairment of the
use of a bodily member, organ or mental faculty.”3 Id. at 49. Accordingly, this court concluded that
the victim’s injuries did not constitute serious bodily injury and modified Sims’s conviction for
especially aggravated robbery to aggravated robbery. Id. at 50.
The appellant contends that, like the victim in Sims, Mrs. Parker “did not suffer
serious pain,” nor did her injuries involve a substantial risk of death, protracted unconsciousness,
protracted or permanent disfigurement, or loss or impairment of the use of a bodily member, organ
or mental faculty. The State responds that the appellant’s reliance on Sims is misplaced. We agree
with the State, finding the facts in the instant case to be distinguishable from Sims.
As a result of her injuries, Mrs. Parker was hospitalized for seven days. Dr. Martin
opined that Mrs. Parker was “in a serious medical condition when she arrived at the hospital” and
that the combination of her injuries was potentially life-threatening. Dr. Martin testified that Mrs.
Parker suffered from multiple head trauma and that her deep scalp lacerations required a surgeon to
“repair.” He related that the bruising and swelling of Mrs. Parker’s neck worsened after she was
admitted to the hospital, resulting in difficulty breathing and swallowing. Moreover, Mrs. Parker
lost a significant amount of blood and was suffering from severe anemia. Dr. Martin testified that
although the victim made a remarkable recovery, “[his] initial anticipation for [Mrs. Parker] was not
real good.”
Mrs. Parker testified at trial that she had “a bad place on [her] leg that [had not]
healed.” She also stated that as a result of the appellant “stomping” on her head, she continued to
have trouble hearing. Taken in the light most favorable to the State, the evidence was sufficient for
a rational trier of fact to conclude that Mrs. Parker suffered serious bodily injury. The combination
of her injuries demonstrated a substantial risk of death, while her difficulty hearing demonstrated the
impairment of a bodily organ. Moreover, unlike the victim in Sims, Mrs. Parker was prescribed
Demerol to ease the pain from which she suffered as a result of her attack. Accordingly, the
evidence was sufficient to sustain the appellant’s conviction for especially aggravated robbery. See
State v. Thomas J. Tackett, No. M1999-02541-CCA-R3-CD, 2001 Tenn. Crim. App. LEXIS 479
(Nashville, June 28, 2001).
B. Color Photograph of Victim
3
“[E]jusdem generis means when words follow an enumeration of classes of things the words should be
construed to apply to things of the same general class as those enum erated . Therefore, the enumerated portions of the
definition of serious bodily injury should be read as coming from the same class of injuries.” Sims, 909 S.W.2d at 49.
-10-
The appellant next contends that the trial court erred in allowing into evidence a color
photograph of Mrs. Parker taken shortly after the attack. Specifically, the appellant alleges that “the
photograph . . . was prejudicial in that it showed a great deal of blood on the face of the elderly
victim as well as in the hair of the elderly victim.” The appellant maintains that the testimony of Dr.
Martin was sufficient to describe Mrs. Parker’s injuries. Moreover, the appellant argues that the trial
court should have instead admitted into evidence a black and white photograph depicting Mrs.
Parker’s injuries, which photograph the State had in its possession at trial. The State responds that
the trial court did not err in admitting the color photograph because the photograph was relevant to
prove serious bodily injury and the intent to commit first degree murder and to corroborate Mrs.
Parker’s testimony.
The decision regarding the admissibility of photographs lies within the sound
discretion of the trial court and that ruling will not be overturned on appeal absent a showing of an
abuse of that discretion. State v. Banks, 564 S.W.2d 947, 949 (Tenn. 1978). In order to be admitted
as evidence, a photograph must be relevant to an issue at trial. Tenn. R. Evid. 402; State v. Braden,
867 S.W.2d 750, 758 (Tenn. Crim. App. 1993). “‘If relevant, the photograph is not rendered
inadmissible because the subject portrayed could be described by words; . . . the photograph would
be cumulative; . . . or [the photograph] is gruesome or for some other reason is likely to inflame the
jury.’” Collins v. State, 506 S.W.2d 179, 185 (Tenn. Crim. App. 1973) (quoting 3 Wharton’s
Criminal Evidence § 637 (13th Edition)). However, relevant photographs may be excluded if their
probative value is substantially outweighed by the danger of unfair prejudice to the defendant. Tenn.
R. Evid. 403; Banks, 564 S.W.2d at 951.
The photograph in question shows Mrs. Parker sitting in her kitchen with a significant
amount of blood on her face and in her hair. Because the appellant was charged with especially
aggravated robbery, the photograph was relevant to show that Mrs. Parker suffered serious bodily
injury, an essential element of the offense. Tenn. Code Ann. § 39-13-403(a)(2). Moreover, the
photograph corroborated Mrs. Parker’s testimony regarding the events of the evening and the injuries
she sustained. See State v. James Spurling, No. E2001-00601-CCA-R3-CD, 2002 Tenn. Crim. App.
LEXIS 962, at *10 (Knoxville, Nov. 7, 2002) (finding photographs of the victim in the hospital
admissible to corroborate testimony regarding the victim’s wounds). Furthermore, although the
photograph shows a significant amount of blood, we do not find the photograph to be especially
gruesome or horrifying. Accordingly, we conclude that the trial court did not abuse its discretion
in admitting this photograph into evidence.
C. Jury Instructions
1. Failure to Properly Charge Especially Aggravated Burglary
The appellant contends that the trial court “erred in not charging the statutory
language of especially aggravated burglary [under which the appellant] was indicted.” The appellant
asserts that “[s]ince [he] was indicted under the theory he entered the victim’s residence with the
intent to commit especially aggravated robbery and first degree murder, he was entitled to have the
jury charged in regard to that law.” The State maintains that both count one of the indictment and
the trial court’s instruction to the jury were sufficient to support the appellant’s conviction for
-11-
especially aggravated burglary. Again, we note that the appellant’s conviction for especially
aggravated burglary has been modified to aggravated burglary. Accordingly, we will address this
issue in light of that modification.
A person commits burglary who, without the effective consent of the property owner:
(1) Enters a building other than a habitation . . . not open to the
public, with intent to commit a felony, theft or assault;
(2) Remains concealed, with the intent to commit a felony, theft or
assault, in a building;
(3) Enters a building and commits or attempts to commit a felony,
theft or assault; or
(4) Enters any freight or passenger car, automobile, truck, trailer,
boat, airplane or other motor vehicle with intent to commit a felony,
theft or assault or commits or attempts to commit a felony, theft or
assault.
Tenn. Code Ann. § 39-14-402(a) (1997). Aggravated burglary is defined as the burglary of a
habitation. Tenn. Code Ann. § 39-14-403(a). Especially aggravated burglary is the burglary of a
habitation or other building where the victim suffers serious bodily injury. Tenn. Code Ann. § 39-
14-404(a).
In the instant case, count one of the indictment charged the appellant with especially
aggravated burglary under subsection (a)(1) of the burglary statute, charging in pertinent part that
JAMES RUBEN CONYERS . . . did unlawfully, feloniously,
intentionally, and knowingly enter the habitation of Mildred Parker,
which was not open to the public, with intent to commit Especially
Aggravated Robbery and First Degree Murder and did cause serious
bodily injury to the said Mildred Parker, in violation of [Tennessee
Code Annotated section] 39-14-404, a Class B felony, all of which is
against the peace and dignity of the State of Tennessee.
See Tenn. Code Ann. § 39-14-402(a)(1). However, the trial court instructed the jury on the offense
of especially aggravated burglary and the lesser-included offense of aggravated burglary using the
statutory language in subsection (a)(3) of the burglary statute, stating,
Any person who commits the offense of especially aggravated
burglary is guilty of a crime. For you to find the defendant guilty of
this offense, the [S]tate must have proven beyond a reasonable doubt
the existence of the following essential elements:
(1) that the defendant entered a habitation; and
(2) that the defendant committed or attempted to commit especially
aggravated robbery or first degree murder, both felonies.
-12-
See Tenn. Code Ann. § 39-14-402(a)(3).4 Essentially, the appellant challenges the variance between
the indictment and the proof at trial.
The United States and the Tennessee Constitutions require that an indictment inform
the accused of “the nature and cause of the accusation.” U.S. Const. amend. VI; Tenn. Const. art.
I, § 9. An indictment satisfies this constitutional requirement “if it provides sufficient information
(1) to enable the accused to know the accusation to which answer is required, (2) to furnish the court
adequate basis for the entry of a proper judgment, and (3) to protect the accused from double
jeopardy.” State v. Hill, 954 S.W.2d 725, 727 (Tenn. 1997). A variance in the indictment and the
proof at trial is not fatal unless it is deemed to be material and prejudicial, affecting the substantial
rights of the defendant. State v. Moss, 662 S.W.2d 590, 592 (Tenn. 1984). In other words,
[u]nless substantial rights of the defendant are affected by a variance,
he has suffered no harm, and a variance does not prejudice the
defendant’s substantial rights (1) if the indictment sufficiently
informs the defendant of the charges against him so that he may
prepare his defense and not be misled or surprised at trial, and (2) if
the variance is not such that it will present a danger that the defendant
may be prosecuted a second time for the same offense; all other
variances must be considered to be harmless error.
Id.
With these principles in mind, we conclude that the variance between count one of
the indictment and the instruction given by the trial court did not affect the substantial rights of the
appellant. Count one of the indictment, which cited the pertinent statute, sufficiently informed the
appellant that he was being charged with especially aggravated burglary. The appellant makes no
argument that he was misled by the indictment, surprised at trial, or unable to prepare a defense. In
fact, during the trial court’s charge to the jury, the appellant did not object to the challenged
instruction. Moreover, the indictment named the victim and alleged the date upon which the offense
occurred, eliminating the danger that the appellant would be prosecuted again for the same offense.
Because the appellant was not prejudiced by the variance in the indictment and the proof at trial, any
error was harmless.
2. Failure to Properly Charge Aggravated Burglary
The appellant also challenges the trial court’s instruction on the lesser-included
offense of aggravated burglary. The trial court instructed the jury on this offense as follows:
4
The trial court instructed the jury regarding the lesser-include d offense of aggravated b urglary as follows:
Any person who comm its the offense of aggravated burglary is guilty of a crime.
For you to find the defendant guilty of this offense, the [S]tate must have proven
beyond a reasonab le doub t the existence of the following essential elements:
(1) that the defendant entered a habitation; and
(2) that the defendant committed or attempted to commit aggravated robbery and
first degree murder.
-13-
Any person who commits the offense of aggravated burglary is guilty
of a crime. For you to find the defendant guilty of this offense, the
[S]tate must have proven beyond a reasonable doubt the existence of
the following essential elements:
(1) that the defendant entered a habitation; and
(2) that the defendant committed or attempted to commit aggravated
robbery and first degree murder.
The appellant contends that, because he was charged with especially aggravated
robbery, it was reversible error for the trial court to instruct the jury that the appellant could be
convicted of aggravated burglary based upon his entering a habitation and committing the lesser-
included offense of aggravated robbery. However, the appellant fails to cite any law in support of
this argument, thereby waiving the argument on appeal. Tenn. R. App. P. 27(a)(7). Nevertheless,
because we have modified the conviction for especially aggravated burglary to aggravated burglary,
the appellant’s argument regarding the instruction on aggravated burglary is moot.
3. Failure to Charge Aggravated Assault as Lesser-Included of Especially Aggravated Robbery
The appellant further challenges the trial court’s failure to charge aggravated assault
as a lesser-included offense of especially aggravated robbery. The State concedes that aggravated
assault is a lesser-included offense of especially aggravated robbery, but asserts that the error was
harmless beyond a reasonable doubt.
Tennessee Code Annotated section 40-18-110(a) (1997) provides that a trial court
must charge the jury as to the law of each offense “included” in an indictment, namely the charged
offense and any lesser-included offenses.5 “In applying the lesser-included offense doctrine, three
questions arise: (1) whether an offense is a lesser-included offense; (2) whether the evidence
supports a lesser-included offense instruction; and (3) whether an instructional error is harmless.”
State v. Allen, 69 S.W.3d 181, 187 (Tenn. 2002).
Under the test adopted in State v. Burns, 6 S.W.3d 453, 466-67 (Tenn. 1999), an
offense is a lesser-included offense if:
(a) all of its statutory elements are included within the statutory
elements of the offense charged; or
(b) it fails to meet the definition in part (a) only in the respect that it
contains a statutory element or elements establishing
(1) a different mental state indicating a lesser kind of
culpability; and/or
(2) a less serious harm or risk of harm to the same
person, property or public interest; or
(c) it consists of
5
This statute was am ended in 2 001 , with the am endment to “govern all trials conducted on or after January
1, 2002.” T enn. Code Ann. § 40 -18-110, Com piler’s Notes (Supp. 200 2).
-14-
(1) facilitation of the offense charged or of an offense
that otherwise meets the definition of lesser-included
offense in part (a) or (b); or
(2) an attempt to commit the offense charged or an
offense that otherwise meets the definition of lesser-
included offense in part (a) or (b); or
(3) solicitation to commit the offense charged or an
offense that otherwise meets the definition of lesser-
included offense in part (a) or (b).
Because the elements of aggravated assault are included in the definition of especially aggravated
robbery, this court has previously held that aggravated assault is a lesser-included offense of
especially aggravated robbery under part (a) of the Burns test. State v. Jason C. Carter, No. M1998-
00798-CCA-R3-CD, 2000 Tenn. Crim. App. LEXIS 340, at *24 (Nashville, Apr. 27, 2000).
Next, we consider whether the evidence warranted an instruction on the lesser-
included offense of aggravated assault. As a general rule,
evidence sufficient to warrant an instruction on the greater offense
also will support an instruction on a lesser offense under part (a) of
the Burns test. In proving the greater offense the State necessarily has
proven the lesser offense because all of the statutory elements of the
lesser offense are included in the greater.
State v. Richmond, 90 S.W.3d 648, 660 (Tenn. 2002) (quoting Allen, 69 S.W.3d at 188). We
conclude that, because the evidence was sufficient to warrant an instruction on the greater offense
of especially aggravated robbery, the evidence was necessarily sufficient to warrant an instruction
on the lesser-included offense of aggravated assault. Id.; see also State v. Joel Christian Parker, No.
M2001-00773-CCA-R3-CD, 2002 Tenn. Crim. App. LEXIS 1093, at *11-12 (Nashville, Dec. 18,
2002). Accordingly, the trial court erred in failing to instruct the jury on the lesser-included offense
of aggravated assault.
Having concluded that the trial court’s failure to instruct the jury on aggravated
assault was error, we must now determine whether the error was harmless beyond a reasonable
doubt. In determining whether it was harmless beyond a reasonable doubt not to charge a lesser-
included offense, our supreme court has held that
the reviewing court must determine whether a reasonable jury would
have convicted the defendant of the lesser-included offense instead
of the charged offense. In other words, the reviewing court must
determine whether it appears beyond a reasonable doubt that the trial
court’s failure to instruct on the lesser-included offense did not affect
the outcome of the trial.
Richmond, 90 S.W.3d at 662 (citing Allen, 69 S.W.3d at 191).
The difference between aggravated assault and the lesser-included offenses which
were charged to the jury, especially aggravated robbery, aggravated robbery, robbery, and theft, is
-15-
the theft element of the charged offenses. It is undisputed that in the instant case there was a theft
of property from Mrs. Parker. Moreover, the jury was instructed on the lesser-included offenses of
aggravated robbery, robbery, and theft, but opted to convict the appellant of the indicted offense of
especially aggravated robbery. Accordingly, we conclude that the trial court’s failure to charge
aggravated assault as a lesser-included offense was harmless beyond a reasonable doubt.
4. Modifications to Jury Charge
The appellant argues that the trial court “erred in making modifications to the jury
instructions during the time period the [c]ourt was giving instructions to the jury verbally.” The
appellant asserts that the trial court “took numerous breaks” in order to make corrections to the
instructions. However, our review of the record reflects that while charging the jury the trial court
took only one “break.” Moreover, during this break, the trial court did not modify the instructions,
but instead supplemented the charge with an instruction the trial court had inadvertently omitted.6
We find no error in the efforts of the trial court to ensure that the jury received a complete charge
of the law.
The appellant also contends that, because he was not provided with a copy of the
modifications to the jury instructions and because a copy of the instructions was not made a part of
record on appeal, it is likely that the jury did not receive a copy of the modifications.7 We agree that
it is mandatory that every word of the trial court’s instructions to the jury be reduced to writing and
given to the jury for deliberations. Tenn. R. Crim. P. 30(c). However, we are unable to conclude
from the record that the jury was not provided with a complete copy of the instructions. Before the
jury retired to deliberate, the trial court directed the jury, “Take the charge that I’ve just read to you
and go to the jury room.” There is no reason to believe that the jury did not do as instructed or that
the written instructions failed to include the omitted instruction. We find this issue to be without
merit.
D. Attempted First Degree Murder
1. Indictment
The appellant asserts that the trial court should have granted a judgment of acquittal
or a new trial on count three of the indictment charging attempted first degree murder because the
indictment failed to allege an overt act and failed to name a victim. The State responds that the
indictment provided the appellant with sufficient notice that he was being charged with the attempted
first degree murder of Mrs. Parker.
As previously noted, the United States and the Tennessee Constitutions require that
an indictment inform the accused of “the nature and cause of the accusation.” U.S. Const. amend.
VI; Tenn. Const. art. I, § 9. An indictment satisfies the constitutional requirement of notice “if it
6
Upon leaving the bench, the trial court stated, “Members of the Jury, give me just a minute. T here is a part
I’ve left out and everything I tell you I have to read it to you.”
7
Although the technical record does not contain a copy of the written instructions, the trial transcript includes
the trial co urt’s charge to the jury.
-16-
provides sufficient information (1) to enable the accused to know the accusation to which answer
is required, (2) to furnish the court adequate basis for the entry of a proper judgment, and (3) to
protect the accused from double jeopardy.” State v. Hill, 954 S.W.2d 725, 727 (Tenn. 1997).
Moreover, Tennessee Code Annotated section 40-13-202 (1997) provides that an indictment “must
state the facts constituting the offense in ordinary and concise language, without prolixity or
repetition, in such a manner as to enable a person of common understanding to know what is
intended, and with that degree of certainty which will enable the court, on conviction, to pronounce
the proper judgment . . . .”8
The indictment alleged the following three counts, all on a single page:
The Grand Jurors for the State of Tennessee, duly elected, impaneled,
sworn, and charged to inquire, in and for the body of the County of
Houston, in the State aforesaid, upon their oaths, present: That
JAMES RUBEN CONYERS heretofore, to-wit: on or about the 6th
day of April, 2001, and prior to the finding of this Indictment, in the
County of Houston aforesaid, then and there, did unlawfully,
feloniously, intentionally, and knowingly enter the habitation of
Mildred Parker, which was not open to the public, with intent to
commit Especially Aggravated Robbery and First Degree Murder and
did cause serious bodily injury to the said Mildred Parker, in violation
of [Tennessee Code Annotated section] 39-14-404, a Class B Felony,
all of which is against the peace and dignity of the State of Tennessee.
COUNT TWO:
And the Grand Jurors, aforesaid, upon their oaths, aforesaid, do
further present and say, that on or about the 6th day of April, 2001,
and prior to the finding of this Indictment, in the County and State
aforesaid, the said JAMES RUBEN CONYERS then and there, did
unlawfully, feloniously, intentionally, knowingly and violently, by
use of a deadly weapon, to-wit: a pistol and electrical cord, a further
description to the Grand Jurors aforesaid unknown, take from the
person of Mildred Parker, good and lawful currency of the United
States of America in the amount of Five Hundred Dollars ($500.00),
one (1) check in the amount of Five Hundred Dollars ($500.00) and
one (1) check in the amount of Two Hundred Dollars ($200.00) of the
value of between Five Hundred Dollars ($500.00) and One Thousand
Dollars ($1,000.00) and as a result Mildred Parker suffered serious
bodily injury, in violation of [Tennessee Code Annotated section] 39-
13-403, a Class A Felony, all of which is against the peace and
dignity of the State of Tennessee.
8
“Prolixity” is defined as “[t]he unnecessary and superfluous statement of facts in p leading or in evidence.”
Black’s Law Dictionary 1213 (6th ed. 1990 ).
-17-
COUNT THREE:
And the Grand Jurors, aforesaid, upon their oaths, aforesaid, do
further present and say, that on or about the 6th day of April, 2001,
and prior to the finding of this Indictment, in the County and State
aforesaid, the said JAMES RUBEN CONYERS then and there, did
unlawfully, feloniously, intentionally, deliberately and with
premeditation attempt to commit the criminal offense of First Degree
Murder, as classified in [Tennessee Code Annotated section] 39-13-
202, in violation of [Tennessee Code Annotated section] 39-12-101,
a Class A Felony, all of which is against the peace and dignity of the
State of Tennessee.
A person commits criminal attempt who, acting with the kind of culpability otherwise
required for the offense:
(1) Intentionally engages in action or causes a result that would
constitute an offense if the circumstances surrounding the conduct
were as the person believes them to be;
(2) Acts with intent to cause a result that is an element of the offense,
and believes the conduct will cause the result without further conduct
on the person’s part; or
(3) Acts with intent to complete a course of action or cause a result
that would constitute the offense, under the circumstances
surrounding the conduct as the person believes them to be, and the
conduct constitutes a substantial step toward the commission of the
offense.
Tenn. Code Ann. § 39-12-101(a) (1997). An indictment charging attempt to commit a crime should
specifically allege the intent to commit the specific crime and an overt act. State v. Frederick Rydel
Walker, No. M1998-00068-CCA-R3-CD, 2000 Tenn. Crim. App. LEXIS 379, **10-11 (Nashville,
May 12, 2000). First degree murder, other than a murder committed during the perpetration or
attempted perpetration of one of the felonies or acts enumerated in Tennessee Code Annotated
section 39-13-202(a)(2) and (3), is a “premeditated and intentional killing of another.” Tenn. Code
Ann. § 39-13-202(a)(1) (Supp. 2002).
As previously noted, the appellant argues that his conviction for attempted first degree
murder is void because count three of the indictment failed to allege an overt act and name a victim.
The issue before this court is whether the facts alleged in counts one and two remedied the failure
of count three to name the victim or allege the specific facts surrounding the charge of attempted first
degree murder.
In State v. Cureton, 38 S.W.3d 64, 82 (Tenn. Crim. App. 2000), this court observed
that “there is a split of authority as to whether each count of a multi-count indictment must stand
alone or whether they can be read together.”
-18-
There is authority that there can be no aid between counts, to supply
an omission in one of them, if the counts are not connected in some
way, such as by internal reference, and that any such reference or
incorporation must be express, not implicit. However, there is also
authority that all counts of a multiple-count indictment should be read
as a whole, and elements missing from one count can be supplied by
another.
Id. (citing 41 Am. Jur. 2d Indictments & Informations § 96 (1995)). Tennessee courts addressing
this issue have concluded that, under certain circumstances, the counts of a multi-count indictment
may be read together. See State v. Youngblood, 287 S.W.2d 89, 91 (Tenn. 1956) (“different counts
may, within themselves, not support an indictment but if they are properly connected with preceding
counts then the two may be taken together and support an indictment”); Hayes v. State, 513 S.W.2d
144, 146 (Tenn. Crim. App. 1974) (where the first count of an indictment charging drug possession
named the controlled substance and the second count of the indictment stated only “the aforesaid
controlled substance,” the indictment was not defective ). After reviewing these cases, this court in
Cureton, 38 S.W.3d at 83, concluded that because all the counts in the indictment in that case alleged
the same victim, the same date, and were related to each other, the counts could be read together for
the purpose of providing notice to the defendant.
In the instant case, the appellant was charged in a three-count indictment, all counts
on a single page. All three counts alleged that the offenses occurred on the same date, April 6, 2001.
Count one alleged that the appellant entered the habitation of Mildred Parker with the intent to
commit first degree murder. Count two alleged that the appellant “did . . . by use of a deadly
weapon, to-wit: a pistol and electrical cord, . . . take from the person of Mildred Parker, [a sum of
money] and as a result Mildred Parker suffered serious bodily injury.” Finally, count three of the
indictment alleged in conclusory language that the appellant “did unlawfully, feloniously,
intentionally, deliberately and with premeditation attempt to commit the criminal offense of First
Degree Murder . . . .” Count four also cited the proscriptive statute for first degree murder, which
provides in relevant part that “[f]irst degree murder is . . . [a] premeditated and intentional killing
of another.” Tenn. Code Ann. § 39-13-202(a)(1).
Taken as a whole, we conclude that the indictment provided adequate notice to the
appellant and the trial court of the offense charged. Hill, 954 S.W.2d at 727. We further conclude
that, by naming a victim in counts one and two and alleging that the offense occurred on a date
certain, the indictment protected the appellant against double jeopardy. Id. Accordingly, we find
this issue to be without merit.
2. Election of Offenses
The appellant also contends that the trial court erred by not requiring the State “to
elect the particular [act] upon which it was relying for the offense of attempted first-degree murder.”
The appellant states that Mrs. Parker alleged that the appellant broke into her residence, took her
gun, attempted to strangle her with a cord, hit her in the head with an unidentified object, and then
“stomped” on her head. The appellant argues that any of these acts alleged by Mrs. Parker could
-19-
have been construed as an attempt to kill. The appellant asserts that, because the State was not
required to elect offenses, he was “deprived of his right to a unanimous jury verdict . . . , was not
[able] to prepare to defend a specific charge, [and was] denied his constitutional protection against
double jeopardy.”
Our supreme court “has consistently held that when the evidence indicates the
defendant has committed multiple offenses against a victim, the prosecution must elect the particular
offense as charged in the indictment for which the conviction is sought.” State v. Brown, 992
S.W.2d 389, 391 (Tenn. 1999). The election requirement ensures that the defendant is able to
prepare a defense for a specific charge, protects the defendant against double jeopardy, and enables
the trial court and the appellate courts to review the legal sufficiency of the evidence. State v.
Adams, 24 S.W.3d 289, 294 (Tenn. 2000). More importantly, the election requirement “ensures that
the jurors deliberate over and render a verdict on the same offense.” Id. However, when the
evidence does not establish that multiple offenses have been committed, it is not necessary for the
State to make an election. Id. Accordingly, we must determine whether the acts committed by the
appellant were multiple discrete acts that constituted individual substantive offenses or were a
continuing course of conduct that constituted a single offense. Id.
“Continuing offenses generally stem from a single motivation or scheme, although
such offenses can be committed by multiple discrete acts occurring over a period of time.” Id. In
State v. Pelayo, 881 S.W.2d 7, 9 (Tenn. Crim. App. 1994), the defendant stabbed the victim, the
victim fled, and then the defendant stabbed the victim again. This court concluded that, although
the assaults constituted separate acts, the acts “coalesced into an ‘unmistakable single act.’” Id. at
13. This court reached a similar conclusion in State v. Eddie Howard Pittman, No. W2000-01582-
CCA-R3-CD, 2001 Tenn. Crim. App. LEXIS 729 (Jackson, Sept. 7, 2001). In that case, the
defendant pointed a gun at the victim’s head and pulled the trigger; however, the gun misfired. Id.
at *2. The victim and the defendant then wrestled with the gun before the defendant was able to
shoot at the victim a second time, this time missing the victim. Id. This court held that these acts
“were part of a continuing assault, and constituted but one offense of attempted murder.” Id. at **6-
7.
Likewise, we conclude that, although the acts committed by the appellant were
multiple discrete acts occurring over a period of time, they were part of a continuous attempt to
murder Mrs. Parker. The appellant first attempted to strangle Mrs. Parker with the telephone and
extension cords. When this was unsuccessful, he forced her off the sofa and banged her head into
the floor. Thereafter, he poured Clorox in her face, hit her with an unknown object, and “stomped”
on her head. The appellant’s brutal attack ended only after he believed she was dead. Because these
acts constituted the single offense of attempted first degree murder, the State was not required to
make an election. Adams, 24 S.W.3d at 294. This issue is without merit.
E. Sentencing
-20-
Finally, the appellant challenges the trial court’s application of enhancement factors
(5), (10), and (16) to enhance his sentences and the imposition of consecutive sentencing.9 When
an appellant challenges the length, range, or manner of service of a sentence, it is the duty of this
court to conduct a de novo review with a presumption that the determinations made by the trial court
are correct. Tenn. Code Ann. § 40-35-401(d) (1997). However, this presumption of correctness is
“conditioned upon the affirmative showing in the record that the trial court considered the sentencing
principles and all relevant facts and circumstances.” State v. Ashby, 823 S.W.2d 166, 169 (Tenn.
1991). If the record demonstrates that the trial court failed to consider the sentencing principles and
the relevant facts and circumstances, review of the sentence will be purely de novo. Id.
In conducting our review, this court must consider (1) the evidence, if any, received
at trial and at the sentencing hearing; (2) the presentence report; (3) the principles of sentencing and
the arguments of counsel relative to the sentencing alternatives; (4) the nature and characteristics of
the offenses; (5) any mitigating or enhancement factors; (6) any statements made by the appellant
on his own behalf; and (7) the appellant’s potential for rehabilitation or treatment. Tenn. Code Ann.
§ 40-35-102 and -103 (1997), -210 (Supp. 2002); see also Ashby, 823 S.W.2d at 168. The burden
is on the appellant to show that the sentence is improper. Tenn. Code Ann. § 40-35-401, Sentencing
Commission Comments.
The appellant was sentenced as a Range II multiple offender, for which the applicable
range for Class A felonies is twenty-five to forty years and for Class C felonies is six to ten years.
Tenn. Code Ann. § 40-35-112(b)(1) and (3) (1997). The presumptive sentence for a Class A felony
is the midpoint within the applicable range if there are no enhancement or mitigating factors. Tenn.
Code Ann. § 40-35-210(c). The presumptive sentence for a Class C felony is the minimum within
the applicable range if there are no enhancement or mitigating factors. Id. If the trial court finds that
such factors do exist, the court must start at the presumptive sentence, enhance the sentence within
the range as appropriate for the enhancement factors, and then reduce the sentence within the range
as appropriate for the mitigating factors. Tenn. Code Ann. § 40-35-210(e). There is no
mathematical formula for valuating factors to calculate the appropriate sentence. State v. Boggs, 932
S.W.2d 467, 475 (Tenn. Crim. App. 1996). “Rather, the weight to be afforded an existing factor is
left to the trial court’s discretion so long as the trial court complies with the purposes and principles
of the 1989 Sentencing Act and its findings are adequately supported by the record.” Id. at 475-76.
In the instant case, the trial court found no applicable mitigating factors and applied
the following enhancement factors:10
9
The appellant also challenges the trial court’s application of enhancement factor (12); however, after
reviewing the transcript of the sentencing hearing, we note that the trial court did not apply this factor.
10
W e note that, beginning July 4, 2002, “the 2002 amendment [to Tennessee Code Annotated section 40-35-
114] added present [enhancement factor] (1) and redesignated former (1) through (22) as present (2) through (23),
respe ctively.” Tenn. Code Ann. § 40-35-114, Amendments (Supp. 2002). Ho wever, for the purposes of this opinion,
we will use the former designations applicable at the time of the appellant’s sentencing.
-21-
(1) the appellant has a previous history of criminal convictions or
criminal behavior in addition to those necessary to establish the
appropriate range;
(4) the victim of the offense was particularly vulnerable because of
age or physical or mental disability;
(5) the appellant treated the victim with exceptional cruelty during the
commission of the offense;
(6) the personal injury inflicted upon the victim was particularly
great;
(8) the appellant has a previous history of unwillingness to comply
with the conditions of a sentence involving release into the
community;
(9) the appellant possessed or employed a firearm or other deadly
weapon during the commission of the offense;
(10) the appellant had no hesitation about committing a crime when
the risk to human life was high; and
(16) the offense was committed under circumstances under which the
potential for bodily injury to a victim was great.
Tenn. Code Ann. § 40-35-114 (1997).
The appellant first asserts that the trial court failed to specify to which convictions
it was applying the enhancement factors. Our review of the record reveals that the trial court stated
that enhancement factor (5) applied to the appellant’s convictions for especially aggravated burglary
and especially aggravated robbery, but failed to specify to which convictions the remaining
enhancement factors applied. Accordingly, our review will be de novo with no presumption of
correctness.
1. Enhancement Factor (5)
The appellant contends that the trial court erred in applying enhancement factor (5)
to his conviction for attempted first degree murder. However, we note that, although the trial court
failed to specify to which offenses it was applying the remaining enhancement factors, the trial court
announced that it was applying enhancement factor (5) only to the appellant’s convictions for
especially aggravated robbery and especially aggravated burglary, which conviction this court
reduced to aggravated burglary. Nevertheless, because we are conducting a de novo review of the
appellant’s sentences, we will address the application of enhancement factor (5) to each of the
appellant’s convictions.
Enhancement factor (5) provides that the appellant treated or allowed the victim to
be treated with exceptional cruelty during the commission of the offense. Tenn. Code Ann. § 40-35-
114(5) (1997). This factor is generally applied to cases involving abuse or torture. State v.
Williams, 920 S.W2d 247, 259 (Tenn. Crim. App. 1995). Before a trial court may apply
enhancement factor (5) to increase a sentence, the facts of the case must support a “finding of cruelty
-22-
under the statute ‘over and above’ what is required to sustain a conviction for [the] offense.” State
v. Arnett, 49 S.W.3d 250, 258-59 (Tenn. 2001).
In the instant case, after breaking into the house, the appellant grabbed Mrs. Parker
and pulled her by her hair into the house as she attempted to escape. He subsequently forced her to
write a suicide note. As Mrs. Parker sat on the sofa, the appellant attempted to strangle her, first with
a telephone cord, then with an extension cord. Finding his attempts to be unsuccessful, the appellant
dragged Mrs. Parker off the sofa and, while continuing to strangle her, banged her head against the
floor. The appellant then hit Mrs. Parker in the head with an unknown object, poured Clorox in her
face, and “stomped” on her head, stopping only after Mrs. Parker pretended to be dead. We conclude
that these acts clearly demonstrate that the appellant treated Mrs. Parker with exceptional cruelty
“over and above” what is required for the instant offenses. See State v. Poole, 945 S.W.2d 93, 99
(Tenn. 1997) (holding that enhancement factor (5) applied to conviction for especially aggravated
robbery when the defendant knocked the victim unconscious and left her on the floor under
circumstances making it unlikely that she would be discovered); State v. Alvarado, 961 S.W.2d 136,
151 (Tenn. Crim. App. 1996) (holding enhancement factor (5) applied to convictions for aggravated
rape and aggravated burglary when the defendant held a knife to the victim's throat and stabbed, bit,
and attempted to smother her); State v. Darrin Bryant, No. W2000-01136-CCA-R3-CD, 2001 Tenn.
Crim. App. LEXIS 519, at **19-20 (Jackson, July 11, 2001) (holding that enhancement factor (5)
applied to conviction for attempted first degree murder when the defendant stabbed victim up to
eight times). Accordingly, we conclude that enhancement factor (5) applies to all three of the
appellant’s convictions.
2. Enhancement Factor (8)
The appellant argues that, because no proof was offered regarding the appellant’s
performance on either probation or parole, the trial court erred in applying enhancement factor (8),
i.e., the appellant had a previous history of unwillingness to comply with the conditions of a sentence
involving release into the community. Tenn. Code Ann. § 40-35-114(8) (1997). However, our
review of the presentence report reflects that, in addition to being on probation at the time of the
instant offenses, the appellant was convicted on March 3, 1981, of larceny and receiving stolen
property, and was ordered to serve one year in confinement followed by three years probation. Less
than a year later, on February 13, 1982, the appellant was arrested for second degree burglary,
attempt to commit larceny, and two weapon offenses, for which offenses he was subsequently
convicted and sentenced. We find this evidence sufficient to support the application of enhancement
factor (8).
3. Enhancement Factor (10)
Enhancement factor (10) provides that “[t]he defendant had no hesitation about
committing a crime when the risk to human life was high.” Tenn. Code Ann. § 40-35-114(10)
(1997). The appellant challenges the trial court’s application of enhancement factor (10), arguing
that the risk to human life is an element of the offense of attempted first degree murder. We agree.
-23-
A trial court may not apply an enhancement factor if the factor is an essential element
of the offense charged in the indictment. Tenn. Code Ann. § 40-35-114. However, “where a high
risk to human life is established with facts separate from those necessary to establish an element of
the offense, [enhancement factor (10)] is not an essential element of the offense and may be applied
if supported by the facts.” State v. Bingham, 910 S.W.2d 448, 452 (Tenn. Crim. App. 1995). In
other words, enhancement factor (10) may be applied if the facts demonstrate that the appellant
created a high risk to the life of a person other than the named victim. Id.
The risk to human life is an essential element of the offenses of attempted first degree
murder and especially aggravated robbery. State v. Reid, 91 S.W.3d 247, 312 (Tenn. 2002); Bryant,
No. W2000-01136-CCA-R3-CD, 2001 Tenn. Crim. App. LEXIS 519, at *18. Thus, because in the
instant case the only person at risk was Mrs. Parker, enhancement factor (10) may not be applied to
the appellant’s sentences for attempted first degree murder or especially aggravated robbery.
However, enhancement factor (10) is not an essential element of aggravated burglary. State v.
Maurice Pierre Teague, No. 02C01-9704-CC-00132, 1997 Tenn. Crim. App. LEXIS 814, at *21
(Jackson, Aug. 27, 1997). Moreover, the facts and circumstances surrounding the appellant’s
commission of aggravated burglary demonstrate that by breaking into Mrs. Parker’s house with the
intent to commit especially aggravated robbery and attempted first degree murder, the appellant had
no hesitation about committing a crime in which the risk to human life was high. Accordingly, we
conclude that the evidence supports the application of enhancement factor (10) to the appellant’s
conviction for aggravated burglary.
4. Enhancement Factor (16)
The appellant also contends that the trial court erred in applying enhancement factor
(16), i.e., that the crime was committed under circumstances under which the potential for bodily
injury to a victim was great. Tenn. Code. Ann. § 40-35-114(16) (1997). Because “the potential for
bodily injury” is inherent in the offenses of attempted first degree murder and especially aggravated
robbery, enhancement factor (16) may not be applied to enhance the appellant’s sentences for these
convictions. Reid, 91 S.W.3d at 312; State v. Marquez Winters, No. W2001-00740-CCA-R3-CD,
2002 Tenn. Crim. App. LEXIS 872, at **25-26 (Jackson, Oct. 15, 2002). However, “the potential
for bodily injury” is not an element of the offense of aggravated burglary. Tenn. Code Ann. § 39-14-
403(a). Nevertheless, this court has previously held that “‘a trial court should not apply
[enhancement factor (16)] absent extraordinary circumstances.’” State v. David Scarbrough, No.
E1998-00931-CCA-R3-CD, 2001 Tenn. Crim. App. LEXIS 512, at *73 (Knoxville, July 11, 2001)
(quoting State v. Smith, 891 S.W.2d 922, 930 (Tenn. Crim. App. 1994)). In the instant case, the
facts demonstrate such “extraordinary circumstances.” Accordingly, we conclude that enhancement
factor (16) applies to the appellant’s conviction for aggravated burglary.
5. Consecutive Sentences
Finally, the appellant asserts that the trial court erred in ordering the appellant to serve
his sentence for attempted first degree murder consecutively to his other sentences. Under Tennessee
Code Annotated section 40-35-115 (1997), a trial court may impose consecutive sentences if the
-24-
defendant is convicted of more than one offense and the trial court finds by a preponderance of the
evidence that:
(1) [t]he defendant is a professional criminal who has knowingly
devoted such defendant's life to criminal acts as a major source of
livelihood;
(2) [t]he defendant is an offender whose record of criminal activity is
extensive;
(3) [t]he defendant is a dangerous mentally abnormal person so
declared by a competent psychiatrist . . . ;
(4) [t]he defendant is a dangerous offender whose behavior indicates
little or no regard for human life, and no hesitation about committing
a crime in which the risk to human life was high;
(5) [t]he defendant is convicted of two (2) or more statutory offenses
involving sexual abuse of a minor . . . ;
(6) [t]he defendant is sentenced for an offense committed while on
probation; or
(7) [t]he defendant is sentenced for criminal attempt.
Regarding consecutive sentencing, the trial court stated,
[On count] three, attempt to commit first degree murder, I’m going
to give him forty years . . . and I’m going to run [this sentence
consecutive to counts one and two], and here is the reason why. [The
appellant] had count one and two as far as his crime that he had
completed. He committed his robbery and so on and so forth. And
then after he cleans [Mrs. Parker’s] hair off and takes her out of the
bathroom, sets her down on that couch and walks behind her and puts
that cord around her neck, then he’s going to kill her. That is just like
committing one crime today and one tomorrow. It ought to run
consecutive. So I’m going to run count three consecutive [to the
other counts].
Thereafter, the State noted that the trial court needed to specify under which criteria listed in
Tennessee Code Annotated section 40-35-115 the court was imposing consecutive sentencing. The
trial court stated that the imposition of consecutive sentences was based upon its finding that the
appellant was a professional criminal, had an extensive criminal record, was a dangerous offender,
and was sentenced for an offense while on probation. See Tenn. Code Ann. § 40-35-115(b)(1), (2),
(4), and (6).
On appeal, the appellant argues that, because the offenses occurred during the same
criminal episode, it was error for the trial court “to treat [counts one and two] as though [they were]
committed one day and [count three] as though [it were] committed on another day.” He further
asserts that no proof was offered at the sentencing hearing to show that the appellant was a
professional criminal, a dangerous offender, or was sentenced for an offense committed while on
probation. Regardless, the trial court also announced that it was imposing consecutive sentences
-25-
based upon the appellant’s extensive criminal record. The presentence report reflects that since
1979, the appellant has been convicted of numerous felonies, including armed robbery and theft.
Thus, the appellant’s prior criminal record alone supports consecutive sentencing. This issue is
without merit.
Although we have determined that enhancement factors (10) and (16) do not apply
to the appellant’s convictions for attempted first degree murder and especially aggravated robbery,
this does not necessarily lead to a reduction in the appellant’s sentences. State v. Winfield, 23
S.W.3d 279, 284 (Tenn. 2000). We conclude that the remaining enhancement factors and the lack
of mitigating factors support the imposition of the maximum sentences for each conviction.
Moreover, the appellant’s extensive criminal record supports the imposition of consecutive
sentencing. Based upon these findings, we affirm the forty year sentences imposed for the
convictions of especially aggravated robbery and attempted first degree murder. However, because
we previously modified the appellant’s conviction in count one to aggravated burglary, we must
reduce his sentence for this offense to ten years, the maximum for aggravated burglary, a Class C
felony. The sentences for aggravated burglary and especially aggravated robbery are to be served
concurrently, but consecutive to the sentence for attempted first degree murder, for an effective
sentence of eighty years incarceration.
III. Conclusion
For the foregoing reasons, we affirm the appellant’s convictions and sentences for
especially aggravated robbery and attempted first degree murder. However, we remand to the trial
court for the amendment of the judgment of conviction to reflect this court’s modification of the
conviction for especially aggravated burglary to aggravated burglary and to reflect the reduction in
the sentence on that conviction to ten years.
___________________________________
NORMA McGEE OGLE, JUDGE
-26-
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636 F.2d 1203
Rodgersv.Secretary of Health, Education & Welfare
80-6027
UNITED STATES COURT OF APPEALS Second Circuit
10/7/80
1
E.D.N.Y.
AFFIRMED
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16-2563
Pineda v. Sessions
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 13th day of February, two thousand eighteen.
PRESENT: GUIDO CALABRESI,
JOSÉ A. CABRANES,
RAYMOND J. LOHIER, JR.,
Circuit Judges
DANILO A. PINEDA, A/K/A PINEDA DANILO,
A/K/A DANILO PINEIDA, A/K/A JOHN DOE,
Petitioner, 16-2563
v.
JEFFERSON B. SESSIONS III UNITED STATES
ATTORNEY GENERAL,
Respondent.
1
FOR PETITIONER: Stacy Taeuber, Maria Navarro, for
Seymour James, Attorney-in-Chief, The
Legal Aid Society, New York, New York.
FOR RESPONDENT: Rachel L. Browning, Keith I. McManus,
for Chad A. Readler, Acting Assistant
Attorney General, Civil Division, United
States Department of Justice, Washington,
D.C.
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the petition for review of the July 13, 2016 decision issued
by the Board of Immigration Appeals be and hereby is DISMISSED as moot.
Petitioner Danilo Pineda (“petitioner” or “Pineda”) seeks review of a decision of the Board
of Immigration Appeals (“BIA”) in which the Board dismissed his appeal from an Immigration
Judge’s denial of his request for a continuance of removal proceedings to await the adjudication of
his U visa application by U.S. Citizenship and Immigration Services (“USCIS”). We assume the
parties’ familiarity with the facts, the underlying procedural history, and the issues presented on
appeal.
We have jurisdiction to review decisions by the BIA to grant or deny continuances. Sanusi v.
Gonzales, 445 F.3d 193, 198–99 (2d Cir. 2006) (per curiam). We review the BIA’s decision to deny a
continuance for abuse of discretion. Id. at 199.
USCIS, which possesses sole authority to review U visa applications, denied Pineda’s
applications for a U visa and a concurrent waiver of inadmissibility1 on January 30, 2017. Pineda
argues that this decision does not render his petition moot because his motion to reopen his U visa
application remains pending with the Administrative Appeals Office. However, because Pineda has
effectively been granted the relief he sought (namely, a six-month delay in removal proceedings), his
petition is moot. See Kamagate v. Ashcroft, 385 F.3d 144, 150 (2d Cir. 2004) (“A case becomes moot, if,
at any stage of the proceedings, it fails to satisfy the case-or-controversy requirement of Article III,
Section 2, of the Constitution.”).
1
Pineda applied for a waiver of inadmissibility alongside his U visa application. Such a waiver
was required in order for USCIS to consider his U visa application, as a U visa applicant must be
admissible to the United States or otherwise seek a waiver of inadmissibility from USCIS. See 8
C.F.R. §§ 212.17(a), 214.1(a)(3)(f), 214.14(b) & (c)(2)(iv).
2
We hereby DISMISS as moot Pineda’s petition for review of the BIA’s order of July 13,
2016.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
3
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625 N.E.2d 1326 (1993)
Robert F. KERN d/b/a Empire Masonry, Appellant-Co-Defendant,
v.
CITY OF LAWRENCEBURG, Robes & Kingman, Securities Co., Plaza Properties Company, Donald L. Leathery, Charles R. Snyder, First Federal Savings & Loan Association of Columbus, Ohio, American State Bank of Lawrenceburg and Chicago Title Insurance Company, Appellees-Co-Defendants.
No. 15A01-9205-CV-144.
Court of Appeals of Indiana, First District.
December 22, 1993.
*1327 John F. Stroup, Lawrenceburg, for appellant.
Brian K. Burke, Baker & Daniels, Indianapolis, William R. Pfister, Lawrenceburg, for appellees.
ROBERTSON, Judge.
Robert F. Kern, doing business as Empire Masonry, appeals an adverse judgment on his cross-claim for foreclosure of a mechanic's lien against the City of Lawrenceburg, Robes & Kingman Securities Co., First Federal Savings & Loan Assn. of Columbus, Ohio, Plaza Properties Co., Donald L. Leathery and Charles R. Snyder, interest-holders in a property known as Dearborn Plaza. Although Kern did not seek a personal judgment against the City of Lawrenceburg, the owner of the real estate, Kern received a monetary judgment in the amount of $6,900.00, based upon a quantum meruit theory for water hauling services performed at the site, against Charles R. Snyder, Inc., the general contractor on the project, who was not a party to the action or made one by Kern.[1]
The City of Lawrenceburg and the other defendants on the cross-claim, cross-appeal *1328 and ask that the judgment against Charles R. Snyder, Inc. be vacated as Charles R. Snyder, Inc. was never a party to the action. We order the monetary judgment in favor of Kern vacated for other reasons;[2] in all other respects, the judgment denying foreclosure is affirmed.
At the request of one of the parties, the trial court entered special findings of fact and conclusions of law, of which the following are relevant to his appeal:
13... . Empire claimed at trial, that Empire performed the work shown on Exhibit J-S as a consequence of oral change orders that Snyder, Inc. authorized during the progress of the job. The provisions of the original contract and the statements on the partial waivers and releases ("the signed agreement to perform now and in the future, each and every covenant and provision of his written contract or suppliers agreement (as the case may be and as modified and changed in writing) provided that change orders, and the like, must be made in writing. If there were any oral change orders, the failure to put them in writing precludes recovery under the lien... .
17. Empire seeks to charge Snyder, Inc. Six Thousand Nine Hundred Forty-five ($6,945.00) Dollars for hauling water to the construction site. There was no specific agreement that Snyder, Inc. would pay for hauling water, and Empire agreed to "hold its bid" after learning where water access was located. However, the Court finds that Empire did, in fact, haul water for Snyder and that it was at the request of Snyder's manager, and that Empire should be reimbursed for these efforts on a quantum meruit basis. The only evidence of the value of these services, is Empire's estimate of Six Thousand Nine Hundred ($6,900.00) Dollars; No evidence is presented that that price is unreasonable.
* * * * * *
23. The Contract between Empire and Snyder, Inc. was a fixed-price contract for One Hundred Fifty Thousand Three Hundred ($150,300.00) Dollars.
24. Snyder, Inc. paid Empire all sums that Snyder, Inc. owed to Empire under the fixed-price contract. In so doing, Snyder, Inc. has paid Empire in full for Empire's work on the Dearborn Plaza project.
25. No money properly is due Empire as a consequence of its having performed labor and/or furnished materials and equipment in connection with the Dearborn Plaza project, with the exception of water hauling ... Defendant, Kern, can assert recompense for water hauling on a quantum meruit.
Empire may not properly assert a Mechanic's Lien against the property, but is entitled to judgment in the amount of Six Thousand Nine Hundred ($6,900.00) Dollars.
26. Empire's execution of the Partial Waiver dated September 28, 1977, waived any claim for allegedly unpaid money for labor performed or materials and equipment furnished on the Dearborn Plaza project through September 28, 1977, except for the remaining balance shown on the Partial Waiver, Five Hundred Eight Dollars and five ($508.05) Cents. Snyder, Inc. paid Empire more than Five Hundred Eight Dollars and five ($508.05) Cents after September 28, 1977.
* * * * * *
29. Certain waivers were signed by the defendant, Kern's wife, as secretary for Empire, an authorized corporate officer thereof, knowingly and with full knowledge that she was receiving payments in exchange for the waiver. These were lien waivers and there is no evidence to indicate that this corporate officer did not know what she was signing or was under economic duress or for any other reason would be excused from her binding the corporation thereof with her signature on these waivers... . Empire and its officers are charged with the knowledge of the contents of the contract, specifications, and line waivers.
*1329 In reviewing the trial court's findings of fact, we neither weigh the evidence nor determine the credibility of witnesses. Gibson-Lewis Corp. v. Northern Indiana Public Service Co. (1988), Ind. App., 524 N.E.2d 1316, 1318, trans. denied. Findings of fact will be disturbed only if the record discloses that there were neither facts nor inferences on which to base the findings. Id. In other words, this Court will disturb the trial court's findings of fact and judgment only when such are clearly erroneous. See id.; Ind.Trial Rule 52(A). Pursuant to this standard of review, we will determine whether the law was correctly applied to the facts. Gibson-Lewis Corp., 524 N.E.2d at 1318.
The quoted findings indicate that the trial court considered two possible grounds for denying Kern a judgment in rem for foreclosure: first, that Kern was required by the terms of his contract with Charles R. Snyder, Inc. to obtain a written change order to modify his contract and second, that Kern had waived his right to a mechanic's lien for the water hauling expense in exchange for valuable consideration. Kern does not challenge the sufficiency of the evidence to sustain the findings; in any event, the transcript of evidence supports the findings.
Kern's own exhibits show that his water hauling claim is for work done from November 16, 1976 to June 20, 1977 ($6,000.00) and from September 2, 1977 to October 25, 1977 ($945.00). Kern's wife executed a series of waivers, the last one dated, September 28, 1977. After that date, Charles R. Snyder, Inc. paid out more than the $508.05 remaining on the contract to Kern's suppliers. Kern never submitted any claim for extras or additional compensation during the period when he was receiving draws, and made no claim for water hauling at any time before he filed his lien.
The testimony reflects that the standard in the industry and the specifications for the project placed upon Charles R. Snyder, Inc., the general contractor, the responsibility to supply water to the site. The specifications have not been made a part of the record on appeal. At a meeting in July, 1976, when the final fixed contract price was agreed upon, Charles Snyder, Sr. told Kern to examine the site as there was only one access to water on the site and it was a considerable distance from the area where Kern would perform his work. Kern represented to Snyder, Sr. that he could hold his bid. No agreement was ever reached over who would ultimately be responsible for hauling the water. Kern hauled the water, at the job supervisor's behest, but Kern never asked Charles R. Snyder, Inc. for a written change order or credit and never reported the hauling as an extra. In the end, Charles R. Snyder, Inc. paid Kern and/or his suppliers $11,700.00 more than the contract price.
Kern argues that the water hauling expense was separate and distinct from the fixed price contract, and that by their terms, the partial lien waivers applied only to the fixed price contract. But, the trial court found, and Kern does not dispute that by the terms of the contract, any changes to the contract were to be made by written change order.
It is not entirely clear whose responsibility it was to bring water to the area where Kern needed it and the trial court did not make a finding on this issue, finding instead that Kern did the hauling and Charles R. Snyder, Inc. was benefitted by it. If it was not Kern's responsibility to transport the water to his work area, he should have sought a written change order. His contract with Charles R. Snyder, Inc. required him to do so. The rights of the parties on this subject were controlled by the contract and under such circumstances, recovery cannot be had on a theory of quantum meruit. Kincaid v. Lazar (1980), Ind. App., 405 N.E.2d 615, 619; Myers v. Maris (1975), 164 Ind. App. 34, 326 N.E.2d 577. And, cf. Gibson-Lewis Corp., 524 N.E.2d 1316 (Written directive for change sought before party performed services upon which recovery in quantum meruit granted); Dyer Construction Co. v. Ellas Construction Co. (1972), 153 Ind. App. 304, 287 N.E.2d 262 (No express contract governing subject matter); Coleman v. Chapman (1966), 139 Ind. App. 385, 220 N.E.2d *1330 285 (express contract; point not covered by express contract, i.e. amount of compensation, implied).
Thus, Kern's assertion that the water hauling services performed were separate and distinct from his obligations under the contract with Charles R. Snyder, Inc. is factually inaccurate. While it may not have been Kern's responsibility initially, if he wanted to receive payment, he was required by the contract to obtain a written change order. Moreover, as a matter of law, Kern cannot recover for the water hauling services on a quantum meruit theory because an express contract covers the subject matter.
There can be no recovery for extra work in the absence of an express or implied agreement to pay therefor, where it is performed without the knowledge or consent of the other party, or where recovery for the extra services is precluded by a provision of the contract. It has been held that no quantum meruit recovery may be had for extra work beyond the scope of the contract, or for additional services rendered after expiration of the contract term... .
Deck v. Jim Harris Chevrolet-Buick (1979), 179 Ind. App. 542, 386 N.E.2d 714, 716 (quoting 98 C.J.S. Work and Labor § 36 (1957)).
Kern's assertion that the partial lien waivers applied only to the fixed price contract is factually inaccurate as well. The last waiver, executed by Kern's wife on September 28, 1977, declares that Kern's contract with Snyder, Inc. includes extras and change orders to date and that Kern does
waive and release to the Owner and Mortgagee any and all liens or rights to liens upon said premises, or upon improvements thereon, or upon the monies or other considerations due as of the date of the aforesaid application or invoice from the Owner or General Contractor or from any other person, firm or corporation, said liens or rights to liens being on account of labor, services, materials, fixtures or apparatus heretofore furnished by or at the request of the undersigned.
The document also requires Kern to represent and warrant "that he has no other outstanding and unpaid applications, invoices, retentions, holdbacks, chargebacks or unbilled work or materials as of the date of the aforementioned application or invoice ..." and provides that
[i]n addition, for and in consideration of the amounts and sums received and to be received, the undersigned hereby waives, releases and relinquishes any and all claims, rights or causes of action whatsoever arising out of or in the course of work performed on the above-mentioned project, contract or event transpiring prior to the date hereof, excepting the right to receive payment for work performed and properly completed and retainage, if any, after the date of the above-mentioned application or invoice.
Plainly, the lien waivers were intended to apply to all extra work and any and all other claims arising as a consequence of Kern's work on the project as of the date of the waiver. The evidence reflects that as of September 28, 1977, all but approximately 19 days of water hauling claimed by Kern had been completed. A contractor and owner may by way of a no-lien agreement foreclose subcontractors or materialmen from acquiring mechanic's liens upon the owner's real estate. Lee & Mayfield, Inc. v. Lykowski House Moving Engineers, Inc. (1986), Ind. App., 489 N.E.2d 603, 607, trans. denied. When a contractor waives his right to a lien, he agrees not to rely on the statutory remedy, but to rely only on his common law remedies against the owner of the property. Lake County Title Co. v. Root Enterprises, Inc. (1975), 167 Ind. App. 559, 339 N.E.2d 103, 113, overruled in part, 375 N.E.2d 592. The trial court's findings and judgment can therefore be sustained in part on an alternative theory evinced by the findings: that Kern had waived nearly all of his claim for the reasonable value of his water hauling services.
The judgment denying Kern the remedy of foreclosure is affirmed; the judgment in *1331 Kern's favor and against Charles R. Snyder, Inc. is ordered vacated.
BAKER and HOFFMAN, JJ., concur.
NOTES
[1] In Indiana, it is not necessary for a subcontractor to join the debtor-contractor in its foreclosure action. The contractor is a proper but not necessary party. Deluxe Sheet Metal, Inc. v. Plymouth Plastics, Inc. (1990), Ind. App., 555 N.E.2d 1296, 1299, trans. denied, cert. denied, ___ U.S. ___, 112 S.Ct. 77, 116 L.Ed.2d 50.
[2] Kern does not challenge the defendant-appellees' standing to contest the monetary judgment.
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134 F.3d 125
157 L.R.R.M. (BNA) 2216, 134 Lab.Cas. P 10,109
DORSEY TRAILERS, INC., Northumberland Pa Plant, Petitionerin No. 96-3392,v.NATIONAL LABOR RELATIONS BOARD, Respondent.NATIONAL LABOR RELATIONS BOARD, Petitioner in No. 96-3578,International Union, Automobile, Aerospace & AgricultureImplement Workers of America, and its Local 1868, Intervenor,v.DORSEY TRAILERS, INC., Northumberland Pa Plant, Respondent.
Nos. 96-3392, 96-3578.
United States Court of Appeals,Third Circuit.
Argued June 26, 1997.Decided Jan. 13, 1998.
Michael S. Mitchell (argued) Robert E. Larkin, III, Fisher & Phillips, New Orleans, LA, for Petitioner/Cross-Respondent, Dorsey Trailers.
Robert J. Englehart (argued) Charles P. Donnelly, Aileen A. Armstrong, National Labor Relations Board, Washington, DC, for Respondent/Cross-Petitioner, National Labor Relations Board.
Stephen A. Yokich (argued) United Auto Worker's International Union, Washington, DC, for Intervenor, Local 1868.
Before: GREENBERG and McKEE, Circuit Judges, and GREENAWAY,* District Judge.
OPINION OF THE COURT
GREENAWAY, Jr., District Judge.
The critical issue before this Court is whether petitioner Dorsey Trailers, Inc. ("Dorsey") violated the National Labor Relations Act (the "Act") when it entered into a subcontracting agreement without first negotiating with its employees' union representatives. The National Labor Relations Board (the "Board" or "N.L.R.B.") reversed the Administrative Law Judge's ("ALJ") conclusion that no such violation existed.
Dorsey now appeals the Board's Decision and Order which holds that Dorsey violated sections 8(a)(1) and (5) of the Act.1 Dorsey also appeals the Board's decision that it shall provide its union employees with lost overtime payments incurred as a result of the subcontracting violations. Cross-petitioner N.L.R.B. seeks enforcement of its order. This Court will grant the petition for review but will enforce the Board's Decision and Order in part.I. FACTS
Dorsey manufactures platform and dump trailers in its Northumberland, Pennsylvania plant.2 The United Auto Worker's International and its Local 1868 (the "Union") is the exclusive bargaining representative for Dorsey's production, maintenance and stock room employees.3 A collective bargaining agreement, effective from March 4, 1992 to March 1, 1995, governed the relationship between Dorsey and the represented employees.
On November 14, 1994, a trial was held before the Honorable Karl H. Buschmann, the administrative law judge assigned to this matter. The ALJ made the following findings of facts which provide the factual basis for our consideration:4
In 1993, in response to a rising backlog of work orders and increasing customer demand, the petitioner entered into an informal agreement with Bankhead Enterprises in Atlanta, Georgia, an independent company, which had the capability to produce flatbed and dump trailers. Pursuant to this informal agreement, the petitioner engineers the unit, purchases the material, and ships the material ... and engineering packages to Bankhead, which then supplies the labor for assembling the trailers. Prior to this arrangement, the petitioner had only shipped out parts for warranty purposes. Bankhead produces two trailers per week for the petitioner's customers located in Florida, Georgia, Tennessee, and North and South Carolina. The informal agreement also provides that Bankhead will not compete with the petitioner by producing trailers on its own. Profits are apportioned 60 percent to the petitioners and 40 percent to Bankhead. It is undisputed that the petitioner entered into this agreement and effectuated the agreement without prior notice to the Union and without bargaining with the Union at any time.
On August 9, 1993, the Union filed a "Charge Against Employer" with the Board alleging that Dorsey, in violation of sections 8(a)(1) and (5), engaged in unfair labor practices when it:
1) Unilaterally implemented revised "regular hours for shifts," specified in the parties collective bargaining agreement, and unilaterally revised contractual wages for three employees working Sunday 11PM to Monday 7AM shift. Employer negotiated changes directly with affected bargaining unit employees. The Employer also has denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with such changes.
2) Unilaterally implemented new job duties and the wages for such for bargaining unit employees working on what is referred to as light duty jobs. Employer negotiated changes directly with affected bargaining unit employees. The Employer has also denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with such changes.
3) Refused to bargain collectively with the undersigned labor organization concerning bargaining unit work being subcontracted and/or moved to Florida. The Employer has also denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with the movement and/or subcontracting of such work.
On April 29, 1994, the General Counsel for the Board filed a Complaint and Notice of Hearing against Dorsey.
On February 15, 1995, the ALJ concluded that Dorsey's light duty transfer assignments, as well as its refusal to inform the Union of this practice, violated sections 8(a)(1) and (5). The ALJ dismissed the subcontracting element of the complaint premised upon his finding that the subcontracting agreement was not a subject of mandatory Union bargaining; however, he did find that Dorsey had violated sections 8(a)(1) and (5) based upon its refusal to provide the Union with requested information relevant to the subcontracting agreement.
The General Counsel and Dorsey filed exceptions to the ALJ decision and appealed to the Board. On July 5, 1996, the Board issued a Decision and Order adopting, with modification, the findings of the ALJ. In major part, the modification found that the subcontracting agreement was a subject of mandatory Union bargaining. In so finding, the Board wrote:
that the Respondent's decision to subcontract work was not a change in the "scope and direction" of its business going to a core entrepreneurial concern, but rather a direct replacement of the Northumberland unit employees by the Bankhead employees to perform unit work.
Dorsey Trailers, Inc., Northumberland, Pa. Plant, 321 NLRB 87, 88 (1996). The Board required Dorsey to rescind its subcontracting agreement.
On July 16, 1996, Dorsey petitioned this Court to review and set aside the Board's Decision and Order; the Board filed a cross-application for enforcement of its Order. On August 29, 1996, this Court granted the Union leave to intervene. On September 6, 1996, the Board granted the General Counsel's Motion to Modify Board Order, thereby requiring Dorsey to:
Make whole its employees, with interest, for any loss of earnings they may have suffered as a result of the Respondent's unlawful subcontracting of bargaining unit work, in the manner prescribed in Ogle Protection Service, 183 NLRB 682 (1970), enfd. 444 F.2d 502 (6th Cir.1971), and New Horizons for the Retarded, 283 NLRB 1173 (1987).
Preserve and, within 14 days of a request, make available to the Board or its agents for examination and copying, all payroll records, social security payment records, time cards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order.
Dorsey moves before this Court for a determination of whether there is substantial evidence to support the Board's findings that: (1) the agreement between Dorsey and Bankhead was a mandatory subject for bargaining under sections 8(a)(1) and (5); and (2) Dorsey must provide lost overtime payments to employees affected by the Dorsey/Bankhead agreement. Dorsey raises no other issues and no other issues are before this Court.5
II. STANDARD OF REVIEW
This Court shall employ plenary review as to matters of law. N.L.R.B. v. Greensburg Coca-Cola, 40 F.3d 669, 673 (3d Cir.1994). We will, however, afford the Board's construction of a statute some deference. Id. Therefore, this Court will "enforce a Board order that rests on a construction of the [Act] that is not 'an unreasonable or unprincipled construction of the statute.' " Id. (citations omitted); N.L.R.B. v. Alan Motor Lines, Inc., 937 F.2d 887, 890 (3d Cir.1991). Factual findings will be sustained if supported by the record as a whole. Alan Motor Lines, Inc., 937 F.2d at 890. This includes evidence supportive of the Board's decision, as well as evidence critical of it. Greensburg, 40 F.3d at 672.
III. PRELIMINARY MATTERS
As a preliminary matter, we must first discuss the nature of the agreement entered into by Dorsey and Bankhead. The respondent defines the agreement as an agreement to subcontract. On the other hand, petitioner, during the November 14, 1994 trial, described the agreement as a joint venture. The resolution of this distinction may have certain consequences since the case law in this Court requires that, under specific circumstances, a company must bargain with a union before making a decision to subcontract.6 We agree with the ALJ's finding that the agreement is one to subcontract.
Subcontracts occur "[w]here a person has contracted for the performance of certain work and he in turn engages a third party to perform the whole or a part of that which is included in the original contract." Black's Law Dictionary 324 (6th ed.1990). A joint venture is a legal entity in the nature of a partnership. Ringier America, Inc. v. Land O'Lakes, Inc., 106 F.3d 825, 828 (8th Cir.1997). It engages in the joint undertaking of a particular transaction for mutual profit, mutual control, mutual contribution and is memorialized in contract. Ringier, 106 F.3d at 828; Schiavone Const. Co. v. City of New York, 99 F.3d 546, 548-49 (2d Cir.1996).
Dorsey and Bankhead had a verbal agreement; there is no enforceable written contract. They did not form a separate legal entity and total control remained vested with Dorsey. Therefore, petitioner's insistence on defining the agreement as a joint venture is inappropriate.
IV. DISCUSSION
We now turn to the issue at hand--whether this particular subcontract is subject to mandatory union bargaining.
One of the Act's fundamental purposes is the "establishment and maintenance of industrial peace to preserve the flow of interstate commerce." First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666, 674, 101 S.Ct. 2573, 2578, 69 L.Ed.2d 318 (1981). This purpose is accomplished by requiring management and labor to enter into peaceful settlement negotiations when disputes arise, in some instances. Fibreboard Paper Prod. Corp. v. N.L.R.B., 379 U.S. 203, 211, 85 S.Ct. 398, 403, 13 L.Ed.2d 233 (1964).
In this vein, sections 8(a)(1) and (5) provide that it shall be an unfair labor practice for an employer to "refuse to bargain collectively with the representatives of his employees.... " 29 U.S.C.A. § 158(a) (West 1973). The obligation to bargain collectively is a mutual one. It requires the "employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.... " 29 U.S.C.A. § 158(d) (West 1973). Our first issue for decision here is the proper interpretation of the words "other terms and conditions of employment" and whether the Dorsey/Bankhead subcontract falls within its confines. The Supreme Court's opinion in Fibreboard is instructive on this issue.
In Fibreboard, the plaintiff subcontracted with a third party for maintenance work then being performed by Fibreboard's union employees. The High Court granted certiorari to determine:
Was petitioner [Fibreboard] required by the National Labor Relations Act to bargain with a union representing some of its employees about whether to let to an independent contractor for legitimate business reasons the performance of certain operations in which those employees had been engaged?
379 U.S. at 209, 85 S.Ct. at 402. The Court, focusing in narrowly on the facts before it, wrote that it was concerned "only with whether the subject upon which the employer allegedly refused to bargain--contracting out of plant maintenance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform--is covered by the phrase 'other terms and conditions of employment' within the meaning of § 8(d)." Id. at 210, 85 S.Ct. at 402. The Court held that management's decision to subcontract can be a condition of employment and, under the circumstances before it, the prerequisites which implicate "other terms and conditions of employment" were satisfied and that collective bargaining was required. Id. at 210, 85 S.Ct. at 402.
In reaching its holding, the Court emphasized that Fibreboard's decision to subcontract did not affect its basic operations, nor was there an expenditure of capital required; rather, Fibreboard merely replaced Union workers with those of its subcontractor. 379 U.S. at 213, 85 S.Ct. at 404. Specifically, the Court wrote that it did
not [expand] the scope of mandatory bargaining to hold, as we do now, that the type of 'contracting out' involved in this case--the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment--is a statutory subject of collective bargaining under § 8(d). Our decision need not and does not encompass other forms of 'contracting out' or 'subcontracting' which arise daily in our complex economy.
379 U.S. at 215, 85 S.Ct. at 405. In sum, a decision to subcontract is not necessarily subject to mandatory collective bargaining; whether such bargaining is mandatory can only be answered by looking to the reasons underlying management's decision to subcontract and the decision's impact upon the employment relationship. See First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666, 676-78, 101 S.Ct. 2573, 2579-81, 69 L.Ed.2d 318 (1981); see also Fibreboard, 379 U.S. at 215, 85 S.Ct. at 405 (The Court refused to hold broadly that all subcontracting agreements must be submitted to union bargaining; rather, each situation should be judged on its particular facts.)
In First National, the Court further examined and defined the scope of sections 8(a)(5) and 8(d). It concluded that Congress purposely left ambiguous "other terms and conditions of employment" in anticipation of specific industry practices. The Court wrote of three types of management decisions which impact on the employment relationship--(1) those having only an indirect and attenuated impact on the employment relationship (i.e., advertising decisions); (2) those which are exclusively related to the employment relationship (i.e., layoff decisions); and (3) those which have a direct impact on employment, but whose focus is only on the economic profitability of the company. First National, 452 U.S. at 677, 101 S.Ct. at 2580 (relying upon Fibreboard, Stewart, J., concurring). The third category addresses the scope and direction of the company and not primarily the conditions of employment. Id.
1
The facts before this Court in the instant case lead us to conclude that we are confronted with a company's decision to subcontract for economic reasons. As such, the third category, as set forth in First National above, most aptly fits here.
2
When the third category is applicable, the courts have realized that
3
[m]anagement must be free from the constraints of the bargaining process to the extent essential for the running of a profitable business.... [I]n view of an employer's need for unencumbered decision making, bargaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of the business.
4
452 U.S. at 679, 101 S.Ct. at 2581. Thus, it is
5
[n]ecessary to look behind the subcontracting decision itself to the reasons motivating the decision. If the employer's decision was prompted by factors that are within the union's control and therefore suitable for resolution within the collective bargaining framework, then bargaining is mandatory.... [I]t is therefore imperative to evaluate the factors which actually motivated the employer's decisions.
6
Furniture Rentors v. N.L.R.B., 36 F.3d 1240, 1248 (3d Cir.1994).
7
The development of the case law alluded to above leads this Court to conclude that the Dorsey/Bankhead subcontract does not fall within the realm of "other terms and conditions of employment." We are mindful that certain subcontracting agreements must be submitted to union bargaining; however, we believe that the type of employment relationship involved here does not warrant union bargaining.
8
The Board is correct in its finding that the work performed at Bankhead is the same type of work performed at the Northumberland plant. In both instances the relevant work is the building of trucks. But, in light of management's underlying reasons for subcontracting, i.e., to avoid lost sales, this, without more, does not justify mandatory bargaining. Our review of the records and transcripts below convinces us that Dorsey's reasons for entering into a subcontracting agreement with Bankhead properly centered around the scope and direction of Dorsey's future viability.
9
We have reviewed the transcript of the November 14, 1994 hearing which took place before the ALJ. Of particular relevance is the testimony of both Michael A. Gordy ("Gordy"), the Northumberland plant manager and Kenny Sawyer ("Sawyer"), Dorsey's Vice-President of Human Resources.
10
On direct examination, Gordy testified that in 1993, the Northumberland plant, which was responsible for the production of platform and dump trailers, experienced difficulty in filling its orders.7 Gordy gave several reasons for the difficulty.
11
First, while both trucks require welding in assembly, the dump truck is more welding intensive. In 1993, Dorsey was unable to find a qualified pool of experienced welders, i.e., mainly due to competition for the welders' talents from Dorsey's competitors, AC & F, Inc. (a railroad care manufacturer) and Strict Corp. (a trailer manufacturer). Competition was so severe that, at a point, no welders were available. In addition, Dorsey's paint department could not handle the volume of trucks which required painting prior to being transported to the buyer. This problem was particularly acute with dump trucks.
12
Second, like many other businesses, the business of truck manufacturing is cyclical. In 1993, Dorsey was experiencing a high demand for its products. Gordy testified that from 1990-1992, business was so slow that Dorsey had to drop the number of its employees to under one hundred. In this slow market, the backlog for delivery of orders was approximately fifteen weeks for platform trucks and five weeks for dump trucks. However, when the market rose in 1993, the backlog escalated to approximately six months for dump trucks and a sell-out for the platform trucks.
13
Feeling the pressure of possible lost sales, Dorsey's management decided to subcontract production to Bankhead. This decision was reached after management reviewed the lack of available manpower at the Northumberland plant and it implications for staffing an additional shift. Dorsey also considered the feasibility of building another plant or transferring some of the work to the Elba plant, located in Georgia. The former was rejected due to the cyclical nature of the business; the latter was rejected in light of the fact that Elba was already backlogged with its own production of vans. Freight costs were also a factor. Dump trucks must be driven to the buyer. This is an expensive endeavor and the cost sometimes outweighs the profit. Dorsey's other manufacturing plant, the Elba plant, was limited to the production of vans and reefers (a type of truck). Dorsey was rapidly losing business. Its competitors were filling orders in twelve to fifteen weeks, compared to Dorsey's backlog of approximately twenty-five weeks. It was within this framework that Dorsey decided to subcontract. Bankhead was chosen because of its southern location. The location offered a greatly reduced freight cost since the dump trucks made by Bankhead could be driven to buyers in the nearby states of Florida, Tennessee, the Carolinas and within Georgia, Bankhead's home state. Bankhead's proximity significantly reduced Dorsey's freight costs. Bankhead also had the capacity to build dump trucks, as well as prior experience in building dump trucks and welders.
14
At first, Bankhead built a prototype for Dorsey; however, Bankhead and Dorsey later agreed that Bankhead would build four dump trucks for a Dorsey-specified vendor. The vendor had granted a contract to Dorsey for the production of twenty-eight dump trucks. Per Gordy, the Northumberland plant could not produce all twenty-eight in the time frame specified by the vendor. So, Dorsey shipped parts to Bankhead, who then assembled them. By subcontracting with Bankhead, Dorsey was able to satisfy the terms of the contract with the vendor, avert a layoff of Dorsey employees and hire additional workers.
15
This Court has also considered whether Dorsey's motivation behind the decision to subcontract lies solely in a desire to reduce and/or eliminate overtime. If such were the case, we would be forced to find that Dorsey's subcontracting agreement violated the mandatory bargaining requirement because Dorsey would have been replacing one set of workers, its union employees, for another, the Bankhead employees, "to do the same work under similar conditions of employment". Fibreboard, 379 U.S. at 215, 85 S.Ct. at 405. A company's decision to subcontract which is based solely on a desire to eliminate or reduce overtime is subject to mandatory union bargaining since to "require the employer to bargain about the matter would not significantly abridge his freedom to manage the business." Fibreboard, 379 U.S. at 213-14, 85 S.Ct. at 404-05.
16
Once again, based on our review of the record below, this Court remains unconvinced that Dorsey's sole motivation was a desire to eliminate overtime at the Northumberland plant; rather, we believe that Dorsey's motivation lies in a need to fill orders and maintain a healthy, viable business. As we have previously recognized
17
employers may make business decisions based on general "economic reasons," which "are not reasons distinct and apart from a desire to decrease labor costs," but that does not mean that labor costs are somehow implicated by every employer's decision intended to improve the business's bottom line.
18
Furniture Rentors, 36 F.3d at 1249-50 (quoting from Arrow Automotive Indus., Inc. v. N.L.R.B., 853 F.2d 223 (4th Cir.1988)).
CONCLUSION
19
We find that Dorsey's agreement with Bankhead was not a change in the "scope and direction" of the company, nor was there an adverse impact on the bargaining unit. We further find that the subcontract is not a subject of mandatory bargaining. We will enforce those provisions of the Board's Decision and Order regarding light duty assignments.
20
The provision of the Board's Decision and Order which requires Dorsey to rescind its agreement with Bankhead will not be enforced nor will that provision of the Order which mandates that Dorsey provide overtime payment for hours which allegedly could have been performed by workers at the Northumberland plant. To the extent that we do not enforce the Order, we will grant the petition for review. We make no prospective decision as to any other subcontracting agreement which Dorsey may enter in the future. The parties will bear their own costs on this appeal.
*
Honorable Joseph A. Greenaway, Jr., Judge of the United States District Court for the District of New Jersey, sitting by designation
1
The Act states, in part:
(a) It shall be an unfair labor practice for an employer--
(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;
...
(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.
29 U.S.C.A. §§ 158(a)(1) & (5).
2
Dorsey's other plants, which are not involved in this action, are located in Alabama, Georgia and South Carolina
3
While Dorsey office's clerical and professional employees, salespeople, guards, watchmen and supervisors were not represented by Local 1868, the record is not clear as to what union, if any, represented this group of employees
4
We find that the ALJ's factual findings are supported by the record as a whole and we adopt them accordingly. See N.L.R.B. v. Alan Motor Lines, 937 F.2d 887, 890 (3d Cir.1991) and "Standard of Review" infra
5
Dorsey does not contest the ALJ's and Board's findings that Dorsey's light duty transfer assignments, and its refusal to inform the union of this practice violate sections 8(a)(1) and (5)
6
See Equitable Gas Co. v. N.L.R.B., 637 F.2d 980, 987 (3d Cir.1981) ("Thus, it is now settled in the jurisprudence of this Circuit that when issues of subcontracting and partial closings are confronted in the context of the National Labor Relations Act, an initial presumption arises that they are mandatory subjects of bargaining.... [T]his presumption can be overcome only if it appears that the employer's interests outweigh the union's interest in a given situation."); Brockway Motor Trucks, Div. Of Mack Trucks, Inc. v. N.L.R.B., 582 F.2d 720, 727-31 (3d Cir.1978) (Providing a Circuit wide history of subcontracting and its relationship to mandatory union bargaining concludes that "it seems fair to say that the NLRB has taken a pro-bargaining stance that is at odds with the results reached by and the language in the opinions of several courts.")
7
The platform, also called a flatbed, is basically a 48-foot long trailer; a dump trailer is basically a box placed atop of the chassis
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471 So.2d 1106 (1985)
Debra A. ORTEGO, Plaintiff-Appellant,
v.
Helen ORTEGO and Avoyelles Trust & Savings Bank, Defendants-Appellees.
No. 84-521.
Court of Appeal of Louisiana, Third Circuit.
June 26, 1985.
*1107 Preston N. Aucoin, Jules Ashlock, Ville Platte, for plaintiff-appellant.
Nelson M. Lee, John A. Boatner of Boatner & Luke, Bunkie, for defendants-appellees.
Before DOMENGEAUX, STOKER and DOUCET, JJ.
*1108 DOUCET, Judge.
Plaintiff-appellant, Debra A. Ortego, brought suit against defendant, Helen Ortego, and defendant-appellee, Avoyelles Trust & Savings Bank, in tort for conversion, damages and attorney's fees. Helen Ortego answered requesting a jury trial. The bank responded with a Motion for Summary Judgment founded upon written authorization from Debra Ortego instructing the bank to accept the signature of Helen Ortego on her checking account. The trial court granted a Summary Judgment in the defendant's favor which we reversed. Ortego v. Ortego, 425 So.2d 1292 (La.App. 3rd Cir.1981). On remand, a trial on the merits was held and thereafter the plaintiff's claim against the bank was dismissed with prejudice. From this judgment the plaintiff perfected this appeal.
The facts giving rise to this suit occurred after the death of Steven Ortego, husband to the plaintiff and son of defendant, Helen Ortego. Mr. Ortego was killed in an automobile accident on October 7, 1981. Prior to his death, Steven Ortego had purchased several insurance policies, designating his wife, plaintiff herein, as beneficiary. It is the proceeds of these policies and the parties' actions relative thereto that are the subject of the present litigation.
Following the husband's death, plaintiff decided to move from Bunkie to Sulphur, Louisiana. Before she could leave however, arrangements had to be made to settle outstanding debts. Accordingly, she paid a nocturnal visit to the home of an employee of defendant bank, Mrs. Sadie Roy, accompanied by her mother-in-law, also named defendant herein, whereat the bank employee executed a written instrument authorizing plaintiff's mother-in-law to sign plaintiff's checks for withdrawal of the defendant bank. The signed authorization was subsequently filed at defendant bank. In furtherance of this authorization, several checks were signed in blank by plaintiff and left with Mrs. Helen Ortego. Mrs. Ortego, mother of the decedent, was to pay off the trailer in which plaintiff and her late husband had lived.
Thereafter, checks representing proceeds of life insurance policies with decedent's wife named as beneficiary, were mailed to plaintiff in care of Mrs. Helen Ortego. Mrs. Ortego deposited these checks, two in the sum of $5,041.85 each and one for $50,000 on January 11 and 19, 1982, respectively, to the account of the plaintiff. Immediately after the latter aforesaid deposit, Mrs. Ortego drew a check in the sum of $50,000 payable to herself, on one of the checks signed in blank by plaintiff. Shortly after the insurance proceeds had been deposited and withdrawn from plaintiff's account at defendant bank she instituted this action seeking the recovery of these proceeds from Mrs. Helen Ortego and Avoyelles Trust & Savings.
The defendant bank moved for a Summary Judgment, supported by affidavits that stated that bank employees had knowledge of Mrs. Helen Ortego's authority to write checks for plaintiff. Several transactions were also listed which documents therein had signatures ascribed to plaintiff. The thrust of these affidavits was that the bank acted in good faith and that plaintiff was precluded from asserting her claim because her own negligence was a substantial cause of the unauthorized transactions. Plaintiff reasserted her contention that Mrs. Helen Ortego exceeded her authority and that the bank violated its duty to its customer when it cashed the checks drawn on plaintiff's account.
The trial court granted the Motion for Summary Judgment. We reversed on the ground that Summary Judgment is an inappropriate means of disposing factual issues concerning subjective states of mind and negligence. The case was remanded to the lower court in order to resolve these factual issues.
At the trial, all of the parties involved in these transactions testified in open court. After the trial, the trial court again dismissed the plaintiff's claim against the bank and granted her relief against Mrs. Helen Ortego for conversion in the amount of $66,083.50. From this judgment plaintiff perfected this appeal wherein plaintiff *1109 contends that the trial court erroneously dismissed the suit against the bank and that the trial court erred in failing to award damages and attorney's fees against Helen Ortego in addition to the amount awarded for the monies converted.
The sections of the Uniform Commercial Code applicable to this case are set forth in Title 10 of La. Revised States as follows:
"§ 3-15. Incomplete instruments
(1) When a paper whose contents at the time of signing show that it is intended to become an instrument is signed while still incomplete in any necessary respect it cannot be enforced until completed, but when it is completed in accordance with authority given it is effective as completed.
(2) If the completion is unauthorized the rules as to material alteration apply, even though the paper was not delivered by the maker or drawer; but the burden of establishing that any completion is unauthorized is on the party so asserting. Added by Acts 1974, No. 92, § 1, eff. Jan. 1, 1975.
§ 3-406. Negligence contributing to alteration or unauthorized signature
Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority against a holder in due course or against a drawee or other payor who pays the instrument in good faith and in accordance with the reasonable commercial standards of the drawee's or payor's business.
Added by Acts 1974, No. 92, § 1, eff. Jan. 1, 1975.
§ 3-407. Alteration
(1) Any alteration of an instrument is material which changes the contract of any party thereto in any respect, including any such change in
(a) the number or relations of the parties; or
(b) an incomplete instrument, by completing it otherwise than as authorized; or
(c) the writing as signed, by adding to it or by removing any part of it.
(2) As against any person other than a subsequent holder in due course
(a) alteration by the holder which is both fraudulent and material discharges any party whose contract is thereby changed unless that party assents or is precluded from asserting the defense;
(b) no other alteration discharges any party and the instrument may be enforced according to its original tenor, or as to incomplete instruments according to the authority given.
(3) A subsequent holder in due course may in all cases enforce the instrument according to its original tenor, and when an incomplete instrument has been completed, he may enforce it as completed. Added by Acts 1974, No. 92, § 1, eff. Jan. 1, 1975."
Thus, according to these aforementioned statutes, plaintiff is precluded from asserting the unauthorized alteration by Helen Ortego against the payor bank if plaintiff was negligent and the payor bank paid the instrument in good faith and in accordance with the reasonable commercial standards of the payor's (bank) business.
After a careful review of the record we discern no clear error by the trial court in its conclusion that the payor bank acted in good faith when it paid on the altered instruments or that such payment constituted a breach of reasonable commercial standards. At the trial, several bank employees testified that at the time of the transactions in question, they were aware of an authorization agreement between Helen Ortego and Debra Ortego which was understood to authorize the withdrawals and deposits by Helen Ortego. This evidence supports the trial court's conclusion regarding the bank's good faith. Furthermore, this conclusion is not clearly wrong and therefore will not be disturbed on this appeal.
In addition, the trial court's conclusion that the payor bank acted within *1110 reasonable commercial standards is not clearly wrong. Given the fact that the unauthorized checks were nonetheless signed by plaintiff and that some authority agreement was known to exist between Helen and Debra Ortego, we cannot say that payment of the transactions in question violated any duty of care imposed on the defendant bank. The responsibility for these unauthorized transactions rests with Debra Ortego because of her negligent assignation of authority and not with the bank which could not have known the extent of this authority agreement. The record further discloses that Debra Ortego was forewarned about signing blank checks, but chose to proceed with her course of action anyway. Under these circumstances, the payor bank cannot be held responsible for paying unauthorized checks.
This case was remanded for the full litigation of the factual issues of good faith and negligence. After substantial testimony in open court, the lower court made its factual conclusions. Our review discloses no clear error on the trial court's part and therefore this part of the judgment is affirmed.
The appellant's next assignment of error concerns the lower court's refusal to award damages and attorney's fees against Helen Ortego in favor of Debra Ortego as additional compensation for Helen Ortego's conversion of the funds in question. We point out that the issue of the existence of a conversion is not before this court because no appeal was taken concerning that part of the lower court's judgment. The appellant merely contends that the trial court should have awarded damages and attorney's fees against Helen Ortego as additional compensation for the conversion.
The general rule is that the measure of damages for a tortious conversion consists of the value of the property wrongfully appropriated plus interest. Holland v. First National Bank of Crowley, 398 So.2d 186 (La.App. 3rd Cir.1981); Gurst v. City of Natchitoches, 428 So.2d 502 (La. App. 3rd Cir.1983). Additional damages are merited for the mental anguish, inconvenience and humiliation suffered by the victim. Steadman v. Action Finance Corp., 197 So.2d 424 (La.App. 2nd Cir. 1967); Lincecum v. Smith, 287 So.2d 625 (La.App. 3rd Cir.1973).
The lower court awarded Debra Ortego $66,083.50 which represented the amount wrongly taken by Helen Ortego along with legal interest to run from the date of judicial demand. This award is in accordance with the law. However, the lower court erred in failing to award plaintiff damages to compensate for the inconvenience and embarrassment suffered by Debra Ortego as a consequence of Helen Ortego's tortious conduct. Our examination of the record in this case indicates that additional compensation of $5,000 in damages for the embarrassment and inconvenience caused by the conversion is a proper and adequate element of the plaintiff's recovery in this case. Accordingly, Mrs. Helen Ortego is hereby ordered to pay the sum of $5,000 in addition to the award of the lower court, with legal interest to run from the date of judicial demand.
The appellant also contends that she is entitled to attorney's fees from Helen Ortego. We could not find any authority for this proposition and we accordingly affirm the lower court's denial of plaintiff's request for attorney's fees.
For the foregoing reasons, the judgment of the trial court is affirmed and amended at appellant's cost.
AFFIRMED AND AMENDED.
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741 A.2d 134 (1999)
326 N.J. Super. 289
Callie L. KEEGAN, Plaintiff-Respondent,
v.
Thomas J. KEEGAN, Defendant-Appellant.
Superior Court of New Jersey, Appellate Division.
Submitted October 25, 1999.
Decided December 8, 1999.
*135 Catherine Ross, Lawrenceville, for defendant-appellant (Deborah A. Rose, Edison, on the brief).
Ulrichsen, Amarel & Eory, for plaintiff-respondent (Dale E. Console, Skillman, on the brief).
Before Judges KEEFE, RODRIGUEZ and LINTNER.
The opinion of the court was delivered by LINTNER, J.S.C. (temporarily assigned).
On March 16, 1994, plaintiff (Ms. Keegan) and defendant (Mr. Keegan) were divorced by final judgment following a trial. In April 1998, Mr. Keegan filed a notice of motion for emancipation and modification of alimony and child support. Specifically, Mr. Keegan sought to: (1) emancipate their oldest daughter (Jennifer) who graduated from college in May 1998; (2) emancipate their second daughter (Lea) who ended her full-time college status and began working on a full-time basis; and (3) modify his child support obligation for their youngest daughter (Michele) who was in college at the time.
In response, Ms. Keegan cross-moved seeking: (1) collection of arrears for Jennifer's college expenses; (2) retroactive contribution for Lea's college expenses and denial of her emancipation; and (3) contribution for college expenses associated with Michele.
The central issue raised by this appeal is whether N.J.S.A. 2A:17-56.23a, applies to prevent retroactive increases in child support. We conclude the anti-retroactive support statute's applicability is limited to prevent retroactive modifications decreasing or vacating orders allocated for child support.
On June 3, 1998, after conducting a hearing on cross-motions, the trial judge issued an order that: (1) emancipated Jennifer, retroactive to May 29, 1998; (2) denied emancipation for Lea; (3) modified and reduced child support retroactive to May 29, 1998; (4) ordered Mr. Keegan to pay college expenses of $2,050.00 for Jennifer, $1,291.67 for Lea, and $7,279.58 for Michele; and (5) ordered Mr. Keegan to pay fifty-eight percent and Ms. Keegan to pay forty-two percent of any remaining college expenses for the two daughters not yet emancipated. On or about June 16, 1998, Mr. Keegan filed a motion for reconsideration. On July 17, 1998, Judge Williams denied Mr. Keegan's motion for *136 reconsideration and issued an opinion letter setting forth the court's reasoning.
After the filing of the notice of appeal, a consent order was issued rectifying a miscalculation, thereby correcting the amount Mr. Keegan was to pay for Michele's college expenses from $7,279.58 to $1,365.32.[1]
Mr. Keegan appeals from the trial court's order denying his motion to emancipate his daughter Lea and ordering him to reimburse Ms. Keegan for college expenses incurred for Lea and Michele, raising the following points: (1) the trial court erred by retroactively modifying child support by ordering defendant to reimburse plaintiff for college expenses incurred; (2) in the alternative, the trial court erred by being inconsistent in retroactively increasing the college expense aspect of the child support obligation without retroactively reducing the corresponding direct support, since the law of the case inextricably linked both aspects of child support. (3) The trial court erred by failing to emancipate Lea during the period that she was not attending college on a full-time basis and reporting on her income tax returns that she was independent.
The final judgment of divorce granted the parties joint legal custody of the children and stipulated that Mr. Keegan was to pay "child support in the amount of $305 per week" for the parties' three daughters. It further provided that Mr. Keegan pay seventy percent of Jennifer's college expenses, which Ms. Keegan estimated "to be approximately $70 per month for interest on loans, plus miscellaneous expenses of approximately $1,000 per year." The final judgment was silent as to any potential financial obligations Mr. Keegan might have for Lea's and Michele's college expenses. By ordering him to pay fifty-eight percent of the college expenses already incurred for both Lea and Michele, Mr. Keegan argues that the trial court erred, as its order is contrary to the anti-retroactive provisions of N.J.S.A. 2A:17-56.23a, which provides in pertinent part:
No payment or installment of an order for child support, or those portions of an order which are allocated for child support... shall be retroactively modified by the court except with respect to the period during which there is a pending application for modification, but only from the date the notice of motion was mailed either directly or through the appropriate agent.
Mr. Keegan urges that fundamental notions of due process and fairness require timely notice before establishing or changing an obligation for support, which includes by its nature the payment of college expenses. Specifically, Mr. Keegan argues that the legislative purpose of the statute was to provide parents with the opportunity to budget their finances to prevent being faced with the sudden obligation to pay arrearages. He also argues that courts should comply with the anti-retroactive statute for all forms of child support modifications, including college education expenses.
Mr. Keegan misconstrues the legislative purpose of the anti-retroactive statute. The statute "was designed to comply with the Omnibus Budget Reconciliation Act of 1986...."[2]Bowens v. Bowens, 286 N.J.Super. 70, 71, 668 A.2d 90 (App.Div. 1995). The federal law conditions compliance "with various federal standards governing child support" in order to receive "federal funding for collection of child support arrearages." Ibid. The statute was intended "to improve effectiveness of child support enforcement." 42 U.S.C.A. § 666. In part, the federal statute prohibits the retroactive modification of "any payment or installment of support under any child support order, ... except that such procedures may permit modification with respect *137 to any period during which there is pending a petition for modification...." 42 U.S.C.A. § 666(a)(9)(C). Prior to the enactment of N.J.S.A. 2A:17-56.23a, New Jersey adhered to the "practice where retroactive modification of support and vacation of arrearages on equitable principles were long permitted...." Bowens, supra, 286 N.J.Super. at 72, 668 A.2d 90 (citation omitted)(emphasis added).
Senators Bradley and Long introduced the Interstate Child Support Enforcement Act, Senate Bill 2404, which added subsection (a)(9)(A-C) to 42 U.S.C.A. § 666 to prohibit the retroactive modification of child support arrearages. 132 CONG. REC. S5303-04 (daily ed. May 5, 1986). There were significant loopholes in the Child Support Enforcement Amendments of 1984, such that "[r]etroactive modification of interstate child support orders poses serious problems in many States."[3]Ibid. In explaining the problem sought to be remedied Senator Bradley said:
What we are seeking to prevent is the practice of a noncustodial parent moving to another State, allowing a substantial debt to his or her child to pile up, and assuming that there will be a retroactive modification of the original order that substantially reduces or totally dismisses the debt.... If a parent's circumstances change, ... this legislation will require that the noncustodial parent officially notify the custodial parent and the court....
....
Debts that accumulate to children must be treated with the highest regard. It should not be possible to evade a debt to one's child simply by moving from State to State.
[Ibid.]
Thus, the purpose of the statute was to remedy the loopholes of interstate child support enforcement laws in order to benefit children, not to eliminate any perceived unfairness as suggested by Mr. Keegan. Nothing in the legislative history suggests that the law was enacted to protect "parents" from retroactive modifications increasing support obligations where equitable. See Lanza v. Lanza, 268 N.J.Super. 603, 607, 634 A.2d 152 (Ch.Div.1993)(ordering a retroactive increase in defendant's child support to reflect substantial increase in one year's earnings due to increased commissions). Accordingly, we find that the trial court's order requiring Mr. Keegan to reimburse Ms. Keegan $1,291.67 for Lea's college expenses[4] and $1,307 for Michele's first year at American University is not contrary to the anti-retroactive provisions of N.J.S.A. 2A:17-56.23a and Mr. Keegan's contention that he should have received a corresponding credit reducing his previous support payments, by an amount equal to his obligation to pay college expenses already incurred, is without merit.
We also agree with Judge Williams's determination not to emancipate Lea for the period of time that she was a full-time employee on hiatus from college. At the time of the motion in June 1998, Lea was twenty years old. She had terminated her full-time status as a college student at Beaver College in December 1996, after her third semester. Her cumulative grade point average at the time she left school was 2.36. Lea returned home *138 to live with Ms. Keegan. Shortly thereafter, Lea was employed with a temporary agency on a full-time basis from January 21, 1997, through June 3, 1997. She then obtained full-time employment with Corestates Bank from June 16, 1997, through June 13, 1998. Her annualized salary as evidenced by her 1997 W2 form was approximately $20,000. On her 1997 tax return, Lea indicated that neither parent could claim her for purposes of their returns.
The trial court considered that Lea's employment with Corestates was going to terminate in June 1998, due to a corporate reorganization resulting from the bank's merger with First Union. During this time, Lea was attending Mercer County Community College on a part-time basis. Lea then planned to matriculate at Mercer County on a full-time basis in pursuit of completing the school's Physical Therapist Assistant Program.
Addressing Lea's status, Judge Williams noted that courts today hold that "a brief hiatus between high school and college is common place," such that "a child's right to parental contribution to college should not be summarily determined." Judge Williams explained that this holds true for children who take a brief hiatus from educational pursuits as well. Judge Williams ultimately denied Mr. Keegan's motion to declare Lea emancipated because Ms. Keegan "presented evidence which indicates that Lea has not moved beyond the sphere of influence of her parents." We agree with Judge Williams's application of the facts of Mr. Keegan's emancipation claim for Lea to the factors enumerated by the Supreme Court in Newburgh v. Arrigo, 88 N.J. 529, 443 A.2d 1031 (1982).
Finally, Mr. Keegan argues that the trial court should have emancipated Lea during the period of time that she was working and changed her status to that of unemancipated upon return to school. However, as pointed out by Ms. Keegan, Mr. Keegan's motion for emancipation did not seek emancipation effective from the date Lea obtained full-time employment, but simply sought emancipation. Importantly, Mr. Keegan did not raise the issue of retroactively emancipating Lea as of December 1996, until he filed his motion for reconsideration of the court's June 3, 1998, order. "When a declaration of emancipation is entered, all a judge has before him are the facts as they exist at that time." Sakovits v. Sakovits, 178 N.J.Super. 623, 631, 429 A.2d 1091 (Ch. Div.1981). Ms. Keegan's cross-motion seeking to continue Lea's unemancipated status, given the termination of her employment and intention to become a full-time student, essentially accomplishes what Mr. Keegan sought by his motion for reconsideration, i.e., a declaration that Lea be considered unemancipated as of the time her status changes from full-time employee to full-time student. We therefore agree with Judge Williams's denial of Mr. Keegan's motion for reconsideration.
Affirmed.
NOTES
[1] The consent order renders moot the issue raised on appeal concerning the trial court's miscalculation of Mr. Keegan's contribution to Michele's college expenses.
[2] P.L. 99-509, 100 Stat. 1874 to 2078, codified at 42 U.S.C.A. § 666(a)(9)(C).
[3] Senator Bradley noted that although New Jersey's "interstate child support cases" comprise "only 30 percent of the caseload ... these interstate cases comprise 70 percent of the complaints about child support enforcement." 132 CONG. REC. S5303-04 (daily ed. May 5, 1986). The Senator cited a specific example where debts of over $4,000 for a child in New Jersey was "reduced to $400 by other States." Ibid.
[4] This represents Mr. Keegan's share of Lea's expenses at Beaver College only. The court did not hold him responsible for Lea's expenses at Mercer County Community College because she was employed on a full-time basis, while attending Mercer County part-time.
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284 S.W.3d 10 (2008)
CITY OF FAYETTEVILLE, David Jurgens, Mark Risk, David Fournet, Andrea Fournet, Appellants,
v.
Jeanny ROMINE, Appellee.
No. 07-1088.
Supreme Court of Arkansas.
May 1, 2008.
*11 Davis, Wright, Clark, Butt & Carithers, PLC, by: Constance G. Clark and Don A. Taylor, Fayetteville, for appellant David Jurgens.
Kit Williams, Fayetteville City Attorney, for appellant City of Fayetteville.
*12 The Doss Law Firm, by: D. Westbrook Doss and Kyle T. Unser, Fayetteville, for appellee.
TOM GLAZE, Justice.
This case presents an issue of whether a city employee is immune from suit in a civil-rights action. The appellee, Ms. Jeanny Romine, lives at 11 Trenton Boulevard in Fayetteville. Around September of 1998, she began to notice the smell of raw sewage in her back yard. Romine notified the City of Fayetteville about the sewage odor, and subsequent testing by the City revealed that the source of the odor was raw sewage that was seeping downhill from her neighbors' clogged sewer lines and overflowing from a clean-out meter box in Romine's yard. Although, at the time, the City had determined that the sewer lines were private lines, rather than city-owned lines, it nonetheless cleaned out the sewer drains that were causing the problem. In addition, in October of 1998, the City offered to pay Romine $880 for an easement over her property. The easement would have allowed the City to go on to Romine's property, reline the existing sewer pipe, and replace the clean-out box with a manhole for future access.
However, Romine refused the offer of $880 for the easement, believing the offer was not sufficient compensation for her land. After she refused to accept the easement, the City informed her that, because the sewer lines were private, there was nothing else the City could do for her. For the next seven years, sewage continued to seep over Romine's land from the defective sewer lines, and Romine filed suit against the City of Fayetteville in 2005. In addition, Romine sued her uphill neighbors David and Andrea Fournet and Mark Risk and appellant David Jurgens, the Superintendent of the Water and Sewer Division for the City of Fayetteville.
Romine's complaint raised counts of inverse condemnation, outrage, and negligence against the City; outrage, negligence, public nuisance, and trespass against the neighbors; and "toxic assault and battery" against both the City and the neighbors. In addition, Romine brought a civil-rights claim against the City and Jurgens. Specifically, Romine alleged that Jurgens was personally aware of the presence of raw, untreated sewage on her property in 1998 and was aware of the hazards of exposure to raw sewage. Further, she contended that, after she declined the City's offer of $880 for an easement, "Jurgens informed [her] that the offer was withdrawn and that the City of Fayetteville would take no further steps to remedy the sewage problem." Jurgens's actions in "withdrawing" the offer for the proposed easement, Romine claimed, constituted a deprivation of her Fifth Amendment rights to be free from governmental takings of her property without just compensation.
Jurgens answered, contending that any contact he had with Romine was solely in his official capacity as a city employee, and as such, he was immune from suit. On July 23, 2007, Jurgens moved for summary judgment, arguing that, because he was sued in his official capacity, he was protected from suit by Ark.Code Ann. § 21-9-301 (Repl.2004). He alleged that, because he had acted in good faith in his dealings with Romine, and she had not pled any facts establishing that he acted with malice, he was entitled to summary judgment. After a hearing on September 7, 2007, the Washington County Circuit Court denied Jurgens's summary-judgment motion, finding that there were disputed facts as to whether Jurgens had acted with conscious indifference towards Romine's problems. Jurgens filed his notice of appeal on September 18,
*13 As a general rule, the denial of a motion for summary judgment is neither reviewable nor appealable. See Arkansas River Educational Servs. v. Modacure, 371 Ark. 466, 267 S.W.3d 595 (2007). However, that general rule does not apply where the refusal to grant a summary-judgment motion has the effect of determining that the appellant is not entitled to immunity from suit, as the right of immunity from suit is effectively lost if a case is permitted to go to trial. See Modacure, supra. The issue of whether a party is immune from suit is purely a question of law, see Smith v. Brt, 363 Ark. 126, 211 S.W.3d 485 (2005), and is reviewed de novo. Modacure, supra.
Arkansas affords a measure of immunity from suit to municipal corporations and their employees. Ark.Code Ann. § 21-9-301 (Repl.2004) provides as follows:
(a) It is declared to be the public policy of the State of Arkansas that all counties, municipal corporations, school districts, special improvement districts, and all other political subdivisions of the state and any of their boards, commissions, agencies, authorities, or other governing bodies shall be immune from liability and from suit for damages except to the extent that they may be covered by liability insurance.
(b) No tort action shall lie against any such political subdivision because of the acts of its agents and employees.
This court has consistently held that § 21-9-301 provides city employees with immunity from civil liability for negligent acts, but not for intentional acts. See Smith v. Brt, 363 Ark. at 130, 211 S.W.3d at 489; Deitsch v. Tillery, 309 Ark. 401, 833 S.W.2d 760 (1992).
In this case, Romine sued Jurgens in his official capacity as Sewer and Water Maintenance Supervisor for the City of Fayetteville.[1] In cases involving the existence of immunity under § 21-9-301, this court has utilized the analysis performed in interpreting the counterpart qualified-immunity statute that applies to state employees, Ark.Code Ann. § 19-10-305 (Repl.2007). See Smith v. Brt, supra; City of Farmington v. Smith, 366 Ark. 473, 237 S.W.3d 1 (2006). Section 19-10-305 provides state employees with qualified immunity from civil liability for non-malicious acts occurring within the course of their employment. City of Farmington, supra; Beaulieu v. Gray, 288 Ark. 395, 705 S.W.2d 880 (1986). In interpreting § 19-10-305, we have traditionally been guided by the analysis adopted by the United States Supreme Court for qualified-immunity claims in federal civil-rights actions. See Fegans v. Norris, 351 Ark. 200, 89 S.W.3d 919 (2002) (citing Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)).
In both Smith v. Brt, supra, and City of Farmington v. Smith, supra, this court has explained the qualified immunity issue as follows:
Under that analysis, a motion for summary judgment based upon qualified immunity is precluded only when the plaintiff has asserted a constitutional violation, *14 demonstrated the constitutional right is clearly established, and raised a genuine issue of fact as to whether the official would have known that the conduct violated that clearly established right. Fegans v. Norris, supra (citing Baldridge v. Cordes, 350 Ark. 114, 120-21, 85 S.W.3d 511, 514-15 (2002)). An official is immune from suit if his or her actions did not violate clearly established principles of law of which a reasonable person would have knowledge. Id. (citing Harlow v. Fitzgerald, 457 U.S. 800[, 102 S.Ct. 2727, 73 L.Ed.2d 396] (1982)). The objective reasonable-person standard utilized in qualified-immunity analysis is a legal inquiry. Baldridge v. Cordes, supra.
The inquiry outlined above is a restatement of the standard used by this court to evaluate motions for summary judgment on the ground of qualified immunity. See Baldridge v. Cordes, supra (citing Pace v. City of Des Moines, 201 F.3d 1050 (8th Cir.2000)). The Eighth Circuit Court of Appeals has emphasized, however, that such a restatement of the standard is incomplete: "Courts deciding questions of qualified immunity must also recognize that `whether summary judgment on grounds of qualified immunity is appropriate from a particular set of facts is a question of law.'" Pace v. City of Des Moines, 201 F.3d at 1056 (citing Lambert v. City of Dumas, 187 F.3d 931, 935 (1999)).
City of Farmington v. Smith, 366 Ark. at 478-79, 237 S.W.3d at 5-6; Smith v. Brt, 363 Ark. at 131, 211 S.W.3d at 489.
Applying these rules, Romine's suit against Jurgens is therefore barred unless she has "asserted a constitutional violation, demonstrated the constitutional right is clearly established, and raised a genuine issue of fact as to whether the official would have known that the conduct violated that clearly established right." Smith v. Brt, 363 Ark. at 131, 211 S.W.3d at 489; see also Fegans v. Norris, supra; Baldridge v. Cordes, supra. Because of the interlocutory nature of this type of appeal, our court is limited to determining whether the law or right Jurgens is alleged to have violated was clearly established at the time of the alleged violation, and whether a reasonable person would have known about it. City of Farmington, 366 Ark. at 479, 237 S.W.3d at 6.
Romine asserts that she had a constitutional right to be "free from uncompensated governmental takings of her property." Although Jurgens counters that there was no "taking" at all, let alone an uncompensated taking, Romine appears to be contending the fact that the sewage overflow on her property constituted a form of inverse condemnation. See Robinson v. City of Ashdown, 301 Ark. 226, 783 S.W.2d 53 (1990). In Robinson, a homeowner sued the City of Ashdown because a city-owned sewer line consistently failed and caused sewage to overflow into the homeowner's home over a period of nine years. This court held that a continuing trespass or nuisance, in the form of constantly overflowing sewage, could ripen into inverse condemnation. More specifically, the Robinson court held that, "[w]hen a municipality acts in a manner which substantially diminishes the value of a landowner's land, and its actions are shown to be intentional, it cannot escape its constitutional obligation to compensate for a taking of property on the basis of its immunity from tort action." Robinson, 301 Ark. at 232, 783 S.W.2d at 56-57. Thus, it would appear that Romine has asserted a clearly established constitutional right i.e., the right to be free from government action that diminishes the value of her land. See Ark. Const. art. 2, § 22 ("The right of property is before and higher than any constitutional sanction; and private property shall not *15 be taken, appropriated or damaged for public use, without just compensation therefor.").
However, that is not the end of the analysis. Even though Romine has asserted a constitutional violation and demonstrated that the constitutional right was clearly established, she must still raise a genuine issue of fact as to whether the official would have known that his conduct violated that clearly established right. See City of Farmington, 366 Ark. at 478, 237 S.W.3d at 5. Romine alleges that Jurgens should have known that "refusing to maintain a public sewer system because an affected landowner refused to sell her property for less than fair market value violated constitutionally protected rights."
Romine's argument is premised on her assertion that Jurgens failed to maintain a public sewer system i.e., one that was the City's responsibility. However, at the time of Jurgens's sole encounter with Romine in 1998, he determined that the faulty sewer lines had not been installed by the City and that the City did not own the line at any time prior to 1997 or thereafter. Jurgens's determination was based on the facts that: 1) the City had no easement; 2) the line had bends in it; and 3) it did not have a manhole at the end. Jurgens averred that city-owned sewer lines "are laid straight, have manholes on the ends, are six inches in diameter, and have easements or are in rights-of-way." Romine's own expert witness, James Moore, Ph.D., testified that a city engineer looking at Romine's pipes could, reasonably and in good faith, make the determination that the sewer lines were private. Therefore, Jurgens did not, as Romine accuses, "refuse to maintain a public sewer system." Rather, he declined to trespass on private property without the homeowner's consent when the homeowner rejected the City's offer to purchase an easement.
A party opposing a motion for summary judgment must meet proof with proof. See Gallas v. Alexander, 371 Ark. 106, 263 S.W.3d 494 (2007); City of Farmington v. Smith, supra. In his motion for summary judgment, Jurgens asserted that he met with Romine on one occasion in the fall of 1998 in order to discuss the easement. By deposition testimony, Jurgens further explained that he was there as the project manager for the larger sewer rehabilitation project that Fayetteville was undertaking at the time, and he was the most knowledgeable person about that project. Jurgens stated that he did not "withdraw" the City's offer to purchase an easement, but instead simply advised Romine that, without an easement, the City would later be unable to do the specific repair work it proposed at that time. He explained to her that if she refused the easement, neither he nor any other employee of the City would be able to unclog or provide any other maintenance to the line in the future. Jurgens further stated it was his understanding that, if the City did not have a legal easement over a sewer line, then it could not legally maintain or improve the line, because the City would, in those circumstances, be trespassing on private property.
Romine offered nothing to rebut the factual assertions raised in Jurgens's deposition offered in support of his motion for summary judgment. In her response to his motion, Romine alleged that, "[r]egardless of whether Jurgens withdrew his initial offer, or whether Romine refused an insufficient and ineffective offer, Jurgens still had a duty to prevent sewage from overflowing onto Romine's property." Her argument, however, does not refute Jurgens's factual assertion that, if the sewer lines were not owned by the City, but *16 were instead private lines, the City and by extension, Jurgens owed no duty to Romine.
Thus, while Romine may have arguably alleged a violation of a clearly established constitutional right, she has failed to raise a genuine issue of fact as to whether Jurgens should have known that his actions as a city employee violated that right. In the absence of evidence showing that Jurgens knew or should have known that he was violating her rights, the circuit court should have found that Jurgens was entitled to immunity and granted his motion for summary judgment on that basis.
The parties raise additional arguments, but it is unnecessary to dwell on them at any length. For instance, Jurgens also cites cases interpreting § 19-10-305 that hold government officials are immune for non-malicious acts occurring within the course of their employment. See, e.g., Simons v. Marshall, 369 Ark. 447, 255 S.W.3d 838 (2007) (discussing malice); Fegans v. Norris, supra; Fuqua v. Flowers, 341 Ark. 901, 20 S.W.3d 388 (2000). However, those cases were all specifically brought under § 19-10-305 and involved civil-rights actions brought against State employees. Section 19-10-305 explicitly provides that "[o]fficers and employees of the State of Arkansas are immune from liability and from suit, except to the extent that they may be covered by liability insurance, for damages for acts or omissions, other than malicious acts or omissions, occurring within the course and scope of their employment." Ark.Code Ann. § 19-10-305(a) (Repl.2007) (emphasis added).
The instant case, by contrast, is governed by the analysis in Smith v. Brt and City of Farmington v. Smith, as those cases deal specifically with § 21-9-301, which does not contain the same kind of language about "other than malicious acts or omissions." Therefore, although the parties go into some depth about the question of malice, it is irrelevant.
Also irrelevant to some degree is the discussion of whether malice could be inferred by Jurgens's "conscious indifference" to Romine's situation. The circuit court based its ruling, in part, on its belief that there were disputed facts as to whether Jurgens and the City acted with conscious indifference. In her arguments to the trial court and in her appellate brief, Romine urges that malice could be inferred by applying a "conscious indifference" standard. However, that standard was adopted in Shepherd v. Washington County, 331 Ark. 480, 962 S.W.2d 779 (1998), a case involving a civil-rights claim brought against the State Police when an inmate under police custody escaped and shot a bystander. This court held that, to infer malice from a state actor's conscious indifference, it must be shown that, "indifferent to consequences, the defendant intentionally acted in such a way that the natural and probable consequence of his act was injury to the plaintiff." Shepherd, 331 Ark. at 504, 962 S.W.2d at 790.
However, Shepherd was strictly limited to its facts, see id. at 501, 504-05, 962 S.W.2d at 789, 790, and its reach was severely limited by this court in Grayson v. Ross, 369 Ark. 241, 253 S.W.3d 428 (2007), in which this court held that the standard applicable to claims under the Arkansas Civil Rights Act involving a pretrial detainee is "deliberate indifference." Accordingly, because both Shepherd and Grayson present fact situations vastly different from the situation involved in the instant case, Romine's reliance on them is inapposite.
In sum, Jurgens established that he was entitled to qualified immunity under Ark. Code Ann. § 21-9-301, and the circuit court erred in denying his motion for summary judgment. The case is reversed and *17 remanded for entry of an order consistent with this opinion.
NOTES
[1] In her brief, Romine attempts to argue that her suit was actually against Jurgens in his individual capacity, but her assertion is belied by her express representations to the trial court. Her complaint alleged that she sued Jurgens solely in his official capacity, and at the hearing on Jurgens's summary-judgment motion, the circuit court specifically asked Romine whether she was suing him in his official capacity. She replied that she was suing Jurgens in his official capacity, not "privately." The court specifically referenced this exchange in its order, writing that "plaintiff's counsel confirmed on the record that the allegations as against David Jurgens are solely in his official capacity."
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224 Ga. 518 (1968)
162 S.E.2d 724
MILTON FRANK ALLEN PUBLICATIONS, INC.
v.
GEORGIA ASSOCIATION OF PETROLEUM RETAILERS, INC.
24714.
Supreme Court of Georgia.
Argued June 12, 1968.
Decided July 16, 1968.
Rehearing Denied July 30, 1968.
*519 John L. Westmoreland, Jr., Donald E. O'Brien, Westmoreland, Hall & O'Brien, for appellant.
Mackey & Elliott, James A. Mackey, C. E. Gregory, Arnall, Golden & Gregory, for appellee.
GRICE, Justice.
In an action to enjoin the alleged breach of certain contracts the trial court granted the defendant's motion for judgment notwithstanding a mistrial. That judgment, rendered by the Superior Court of Fulton County in a suit brought by Milton Frank Allen Publications, Inc., against the Georgia Association of Petroleum Retailers, Inc., is for review.
Several contracts were executed between the parties, but only two are involved here. One relates to the solicitation by the plaintiff of members in the defendant Association, and the other pertains to the publication by the plaintiff of the defendant's official organ. Both contracts were executed on April 11, 1946, between the defendant Association and Milton F. Allen.
They recite that the defendant is incorporated as a non-profit association "to promote and advance the welfare of retailers of petroleum products and their affiliated and interrelated businesses," etc. Both contracts state that they shall run for 30 years from date with Allen having the option of renewing for two additional and consecutive periods of 30 years each, and that Allen may incorporate and transfer the contracts to a proposed corporation, in which event the contracts shall continue in force.
The membership contract, insofar as essential here, also provides in substance the following: that to accomplish the object of the corporation it is necessary that memberships in the Association be sold to those engaged in the retail petroleum business; that Allen agrees to act as an independent sales agent and *520 procure such memberships; and that in consideration for the services rendered by Allen in obtaining or soliciting such memberships, the parties make the agreement with the terms hereinafter set forth.
Allen, for the original and renewal periods, if he exercises the option, has the sole and exclusive right to solicit members for the Association. The membership dues shall be fixed at not less than $10 per year, and the Association may by two-thirds majority vote of its board of directors fix the dues at a higher amount not exceeding $25.
Such dues shall include one year's subscription to a magazine which is the subject matter of the publication contract (entered into simultaneously), the subscription price of which shall be $1.50 per year for each member as long as such publication contract exists.
In consideration for Allen's services in obtaining memberships, a commission of $7.50 shall be first deducted from each membership fee of $10, and as long as the Association and Allen have the publication contract an additional sum of $1.50 for the subscription fee for the magazine shall be deducted from the $10 membership fee and the balance of $1.00 shall be immediately deposited in a bank to the credit of the Association.
Allen agrees to furnish to the Association desk and office space.
The Association agrees to co-operate fully with Allen and to render to him such assistance as may be necessary in obtaining memberships.
Allen shall have "the sole and exclusive right" to solicit memberships. The Association will not directly or indirectly solicit members, except through Allen. Should the dues be increased, that portion alloted herein to Allen and deductible by him as commissions for obtaining members shall be increased in the same ratio.
The publication contract, in essential part, is substantially the following: that to accomplish the object of the corporation it is necessary that a magazine be published at least monthly and circulated among those in the retail sale of oils and petroleum products; that Allen agrees to publish a magazine to meet such requirements; and that the parties in consideration for Allen's *521 services in publishing such magazine, make the following agreement.
Allen, for the original and optional renewal periods above referred to, has the sole and exclusive right to publish a magazine, owned by him and known as "The Georgia Petroleum Retailer," which is hereby adopted as the official organ of the Association and which shall continue to hold such official sanction exclusively during the life of this contract and any renewal thereof.
A subscription fee for said magazine of $1.50 per year for each member of the Association shall be paid to Allen, except that during the existence of the membership contract (entered into simultaneously), such $1.50 shall be deducted by Allen from the membership fee.
The Association will co-operate fully with Allen and will render such assistance as necessary in furnishing information for publication therein, and "no other printed medium will be used or sanctioned, directly or indirectly, to disseminate information to the Association members and other retailers of petroleum products or to speak officially for the Association in printed form..." The magazine shall be published not less than monthly at the expense of Allen and shall continue to belong to him. It shall be such as will not reflect discredit on the Association.
For a more detailed recital of the contents of this agreement, see Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 219 Ga. 665, 668-670 (135 SE2d 330).
The plaintiff corporation, as transferee of both contracts, alleged, insofar as necessary to recite here, that the defendant Association is breaching the membership contract by purporting to decrease as of January 1, 1965, the membership dues of the Association to a stated amount and by determining that dues to the national organization will not be a part of those to the defendant Association.
The plaintiff also alleged that the defendant, by notifying its members of its purposed decrease of dues, is violating the publication contract, which provides that no printed medium other than the magazine will be used to disseminate information to *522 the membership or to speak officially for the defendant Association in printed form.
The plaintiff alleged that these breaches are causing it irreparable damage in given particulars, and prayed that the defendant be enjoined from continuing such breaches.
This petition was upheld as against the general demurrers of the defendant in Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 221 Ga. 495 (145 SE2d 497). There, we held that the petition alleged a breach of contract by allegations that the defendant "had attempted to lower the dues of its members when said contract provided only for increasing the dues and made no provision for lowering them, and as petitioner set forth other grounds for equitable relief." Hn. 1. We also held that the petition was not subject to attacks that the membership contract was unauthorized and ultra vires, because "such defense cannot be raised by general demurrer where the petition does not set out the charter of the defendant corporation or any of its material parts, and here, petitioner is not required to do so." Hn. 2.
In its answer to the foregoing petition the defendant Association alleged essentially that it was a non-profit corporation; that Allen, the transferor of the contracts, was one of the incorporators of the Association; that when the contracts were entered into he was secretary and executive secretary of the defendant corporation and continued as such until 1961; that in such capacities he was managing head of the business affairs of the Association and stood in a fiduciary relationship to the defendant and to its members and was under a duty not to use the corporation for his own personal gain; that he persuaded the defendant's board of directors to enter into said contracts; that the contracts were never submitted to the members for their approval; that Allen concealed from the officers and directors the benefits he would receive therefrom; that because of the contracts the defendant has been severely handicapped by lack of funds to carry out the purposes of its charter.
The answer made several attacks upon the membership contract.
It averred in substance that such contract is against public *523 policy because it utilizes for private gain the rights and franchises granted to a non-profit corporation, and because it results in disposition of the Association's franchise. The answer asserted that such contract is void because it divests members and directors, for 90 years, of authority and duties imposed upon them as to government and management of the corporation in carrying out its charter; and because it exceeds the authority of officers and directors since they had no right to restrict future action with respect to the amount of fees and dues, or to divest the corporation of three-fourths of its membership fees for 90 years, or to bind the corporation for 90 years by obligating future directors and members to renew or breach the contract. The answer further urged that the membership contract and the publication contract are voidable because they were entered into in violation of the fiduciary duty of an officer of a corporation to the corporation and its members.
The answer prayed that the membership contract, and two others not involved here, be declared void, or in the alternative be declared voidable; that enumerated injunctive relief be granted, including prohibition of the plaintiff from soliciting or collecting dues and fees from the Association's members; and for general relief.
The case came on for a hearing on the prayers for temporary injunction and the trial judge refused such relief. We affirmed upon the ground that the evidence was conflicting on the issues raised by the pleadings, and therefore that there was no abuse of discretion in denying the injunction. Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 223 Ga. 784 (158 SE2d 248).
Thereafter, a trial was had. Considerable testimony was given by Allen, by the Association's past and present officers and employees, and by persons connected with the petroleum industry elsewhere. Also, there was much documentary evidence relating to the events involved here. A mistrial resulted. Subsequently the defendant Association's motion for judgment notwithstanding the mistrial was granted and judgment entered declaring the publication and membership contracts void as to their executory features as of the date of the prior order denying the plaintiff an *524 interlocutory injunction. Following that judgment the plaintiff moved that the court modify it so that the invalidity would date from that judgment, February 26, 1968, instead of from the date of denial of the plaintiff's prayers for temporary injunction, June 22, 1967. This motion was denied.
The appeal is from the judgment notwithstanding the mistrial, and also from the denial of such motion to modify that judgment.
1. We are free, upon this appeal, to pass upon the attacks lodged against the two contracts in question. In neither of the three prior appearances of this litigation has this court ruled so as to preclude this determination.
In the first appearance, Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 219 Ga. 665, supra, we reviewed rulings made in an action brought by the Association against Allen and the corporate publisher. Only the publication contract was involved. The Association's petition alleged that such contract was invalid in stated particulars, to wit: that it was ultra vires; unreasonable as to duration; vague, uncertain, indefinite and ambiguous; and contrary to public policy as to control and management of a corporation. Allen and the corporate publisher demurred generally. This court, among other rulings, held that the Association's petition failed to plead a cause of action. While some of the attacks made there are similar to those here, they were addressed only to the publication contract upon its face and did not involve the evidence.
In the second appearance, this court held that the attack of ultra vires upon the membership contract could not be made by general demurrer where the petition did not set forth the Association's charter or any of its material parts. Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 221 Ga. 495, supra.
In the third appearance, this court affirmed the denial of a temporary injunction. Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 223 Ga. 784, supra. It pointed out at page 787 that upon the second appearance, 221 Ga. 495, supra, neither the trial court nor this court passed upon or made any ruling on the Association's attacks upon the validity of the publication or membership contracts.
*525 Therefore we cannot agree that this court has held that both of these contracts are valid against the attacks involved in this appeal. We proceed now to a determination of them.
2. There is no merit in the contention that the membership and publication contracts are voidable because of Allen's fiduciary relationship with the Association and his duty not to use the corporation for his own personal gain.
The proposed contracts were read "word for word" at the March 26, 1946, meeting of the Association's board of directors, were held over for further study, were considered again and acted upon favorably at the April 11, 1946, board meeting by a vote of 11 to 2. Thereupon the president and the treasurer of the Association executed them on behalf of the corporation. No fraud, bad faith, unfairness or irregularity whatever appears as to their consideration and execution.
At that time Allen had no duties which made it improper for him to contract with the Association. His duties as executive secretary of the Association and secretary of the board of directors were not those which required the making of policy, but were clerical and administrative. The bylaws enumerated his duties, which were of that type, and recited that he was "to act under the direction of the President and the Board of Directors," and "in general be the managing head of the business affairs, subject always to the wishes of the officers and Board of Directors."
3. It was error to declare the publication contract void. In the prior case of Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 219 Ga. 665, supra, we upheld on general demurrer the validity of the publication contract. We have re-examined that contract in the light of the evidence and find no basis for declaring it void.
4. However, we find that the membership contract is void.
We predicate our findings upon the basis that it divests the directors of the defendant Association of authority and duties imposed upon them in the government and management of the corporation.
Specifically, it divests them of the power to determine in their discretion from time to time what is for the best interest of the Association and its members in the vital areas of membership *526 and dues, and contracts away the greater portion of the Association's funds.
The Association's charter, obtained in 1941, provides that the corporation is not organized for pecuniary gain and that no capital stock will be issued. It recites, in substance, that the purposes of the Association are to promote the fraternity, welfare and advancement of retailers of petroleum products, to foster co-operation among those engaged in the petroleum industry, to work for and encourage the enactment of favorable legislative measures, to obtain better working conditions for its members, and to negotiate as a collective bargaining body to prevent unfair trade practices, discriminatory regulations and controversies between those connected with the petroleum industry.
Its bylaws provide that "The business of the corporation shall be conducted by officers and directors ..." and that the board of directors shall "Consider the affairs of the corporation in accordance with the bylaws and policies laid down by the corporation from time to time; report all matters of interest to the association; supervise the affairs of the association and devise mature measures for its growth and prosperity ... " The bylaws also provide for a standing committee on membership whose duty it is "to enroll in this association representative and outstanding businessmen engaged in the businesses covered by this organization's objectives."
Abrogation of discretion and judgment, by virtue of this contract, is clearly manifest.
To begin with, the subject matter of the contract is membership and dues, both of which are absolutely necessary for the existence of the Association and for its success in carrying out its purposes.
Rather than discharging its responsibilities as to membership, the Association, by this contract, seeks to invest Allen and his transferee with them. It surrenders to Allen and his transferee, for a possible 90 years, the sole and exclusive right to solicit members and promises that it will refrain from soliciting them.
Furthermore, by this same contract, the Association agrees to limits as to its own membership dues. Instead of retaining the right to fix the amount as it sees fit to meet changing conditions, *527 it agrees for a period which could run for 90 years that such dues will be $10 per year, and that they may be increased up to $25 by a two-thirds vote of the board of directors after giving three months notice in writing to Allen. This court, in Milton Frank Allen Publications, Inc. v. Georgia Association of Petroleum Retailers, Inc., 221 Ga. 495, supra, held that under this contract the dues could not be lowered once they had been raised.
Also, by this contract, the Association agreed to pay Allen 75% of the dues for his services in soliciting members (in addition to the $1.50 he gets from the dues of each member under the publication contract). The practical effect of this is to divest the Association of the greater portion of its income and source of income, thus leaving it without funds for carrying out its objectives as stated in its charter. For example, where a member's dues are $10 per year, the Association gets only $1.00 from these dues; and where dues are $20, the Association gets only $3.50.
Because of this divestment of the directors' authority, and its abrogation to others, the contract is void as against public policy.
This feature contravenes the statute under which this corporation was chartered. Ga. L. 1937-38, Ex. Sess., pp. 214, 239 (Code Ann. § 22-1864). That statute provides that subject to such limitations as may be contained in the charter or bylaws, the board of directors "shall have full control over the affairs of the corporation..." Here, there was no such limitation.
This court has on several occasions held invalid contracts which sought to restrict the management and control of corporate affairs so as to prevent free exercise of judgment. See in this connection, Morel v. Hoge, 130 Ga. 625 (61 SE 487, 16 LRA (NS) 1136, 14 AC 935); English v. Rosenkrantz, 152 Ga. 726 (1) (111 SE 198); Wheeler v. Layman Foundation, 188 Ga. 267, 270-271 (3 SE2d 645). While these cases involve agreements made by stockholders and officers, rather than directors as here, the principle is the same.
Insofar as directors are concerned, it has been well said that they owe their corporation and stockholders three major responsibilities, to wit: "(1) Obedience, in that they owe a duty to *528 act within and exercise only such corporate powers as are defined by the charter, the bylaws, the resolutions and the general law of or relating to their corporation; and (2) Diligence, in that they owe a duty to exercise reasonable care and prudence, and not be mere ornaments or figureheads; and (3) Loyalty, in that they owe a duty of undivided good faith since they are fiduciaries and trustees of their corporation and stockholders." Nadler, Georgia Corporation Law 353, § 370.
The rule is firmly established that "Contracts are ordinarily void ... which have the effect of withdrawing from the directors the control and direction of corporate affairs, business and management, which is vested in them by law. Directors may not agree to exercise their official duties for the benefit of any individual or interest other than the corporation itself, and an agreement by which the individual directors, or the entire board abdicate or bargain away in advance the judgment which the law contemplates they shall exercise over the affairs of the corporation is void." 17 CJS 994-995, Contracts, § 199. See also, 19 AmJur2d 578, Corporations, § 1147.
This rule has been applied to various situations whereby important aspects of director judgment are sought to be contracted away to others. See, for examples in this connection, annotations to 17 CJS 993, 994-996, Contracts, § 199, supra.
For the above reasons, we conclude that the executory portion of this contract relating to membership and dues is void as against public policy.
The contentions made by the plaintiff that the defendant Association has ratified this contract and also is estopped to deny its validity are without merit. It is urged that the defendant has operated under this contract since its execution in 1946, and that it has retained the benefits accruing thereunder during that time. Neither ratification nor estoppel can result from a contract which is void as against public policy.
5. It was error to deny the plaintiff's motion to modify the judgment notwithstanding the mistrial insofar as the stated date of invalidity of the membership contract is concerned. The validity of the contract was not passed upon when the trial court denied the plaintiff's prayer for interlocutory injunction *529 on June 22, 1967. Therefore, the judgment should be modified so as to adjudicate the invalidity of the membership contract as of the date it was found invalid, February 26, 1968, rather than such prior date.
The judgment notwithstanding the mistrial is affirmed as to the membership contract and reversed as to the publications contract. The judgment denying the motion to modify is
Reversed. Judgments affirmed in part, reversed in part; and reversed. All the Justices concur.
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264 So.2d 553 (1972)
In re Samuel Lee BROWN
v.
STATE of Alabama.
Ex parte Samuel Lee Brown.
6 Div. 940.
Supreme Court of Alabama.
May 1, 1972.
Rehearing Denied June 8, 1972.
Michael J. Romeo, and Billy Church, Birmingham, for petitioner.
William J. Baxley, Atty. Gen., and Joseph Victor Price, Jr., Asst. Atty. Gen., for the State.
MADDOX, Justice.
Petitioner, Samuel Lee Brown, was convicted of murder and was sentenced to die by electrocution. The Court of Criminal Appeals initially held that sentence of death could not be carried out because Kilby Prison, the place designated by statute in which the execution was to be made, had been torn down and a new prison built. The Court modified the sentence of death to one of life imprisonment and affirmed the judgment. Brown v. State, 1971, 6 Div. 128, 48 Ala.App. 304, 264 So. 2d 529.
This Court reversed. Ex parte State of Alabama ex rel. Attorney General (In Re Brown v. State of Alabama) 6 Div. 858, 1971, 288 Ala. 680, 264 So.2d 549.
After remandment, the Court of Criminal Appeals affirmed the judgment of the trial court without an opinion.
Brown subsequently petitioned this Court for certiorari and the writ was granted. Briefs were filed and the cause was argued and submitted. Brown argues substantially two points: (1) that the jury should not have been asked whether they had personal conscientious or religious scruples against the imposition of the death penalty, and (2) a photograph of the deceased in the morgue was so prejudicial that it was inadmissible.
Petitioner argues that he was entitled to have a jury picked from a cross section of the community and that the *554 State should not have been permitted to ask any question concerning a juror's attitude about capital punishment except a question which would elicit information which would constitute a ground of challenge for cause under Witherspoon v. State of Illinois, 391 U.S. 510, 88 S.Ct. 1770, 20 L.Ed.2d 776 (1968). As we understand petitioner's argument, he would have us follow the rationale of the dissenting opinion in Witherspoon, supra. This we do not think is constitutionally required. Therefore, there is no merit in this argument.
Petitioner's other principal argument is that a picture of the deceased which was admitted in evidence was so prejudicial that a reversal should result. We disagree. We have looked at the picture of the deceased and since it clearly shows what appears to be a bullet hole in the head of the deceased, there was no error in its admission. 6 Ala. Digest, Criminal Law.
The Judgment of the Court of Criminal Appeals of November 9, 1971 affirming, without opinion, the judgment of the trial court, is due to be affirmed.
Affirmed.
LAWSON, MERRILL, COLEMAN, HARWOOD, BLOODWORTH and McCALL, JJ., concur.
HEFLIN, C. J., dissents.
HEFLIN, Chief Justice (dissenting):
The photograph of the deceased was taken on a slab with the head of the deceased shaved. There are markings on the skull which appear to be section and quarter markings in preparation for an autopsy. The photograph depicts a bullet hole centered in his forehead (which apparently would not have been hidden by his hair). There were material alterations in the appearance of the deceased from the condition that he was in following the incident of his death. Objections were also made pertaining to the remoteness of time from his death and the time that the photograph was taken. It would appear that the State had ample time to procure a picture of the deceased before his hair was removed and before he was apparently marked for autopsy. The picture is highly prejudicial and gives the appearance of a ghoul in a horror movie rather than an actual fair representation of how the deceased would have looked at the time of death.
I am well aware of the decisions that hold that gruesomeness is not a ground for excluding photographs of the deceased in a homicide prosecution even when they tend to inflame the minds of the jury, if they have probative value on a material issue. Palmore v. State, 283 Ala. 501, 218 So.2d 830; Baldwin v. State, 282 Ala. 653, 213 So.2d 819. However, in this case highly prejudicial alterations were made on the body of the deceased and such alterations fail to serve any useful purpose in connection with the bullet hole. I fail to find a case where a photograph was admitted after prejudicial alterations were made to the body of a deceased and the prejudicial alterations served no helpful purpose to explain or show a material condition.
Therefore, I respectfully dissent.
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23 So.3d 733 (2009)
RODRIGUEZ
v.
STATE.
No. 5D09-3376.
District Court of Appeal of Florida, Fifth District.
December 16, 2009.
Decision Without Published Opinion Affirmed.
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IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 1, 2010 Session
DEBORAH SOUTHERN ANTRICAN v.
ALVIN MICHAEL ANTRICAN
Appeal from the Chancery Court for Hancock County
No. 06-8976 E.G. Moody, Chancellor
No. E2009-01028-COA-R3-CV - FILED MARCH 22, 2010
This is a divorce case following a long-term marriage. Following a trial, the Trial Court
classified the property as separate or marital, divided the marital property, awarded Wife
$30,000 as her share of farm income that was earned after the parties separated, and awarded
Wife alimony in futuro of $800 per month and alimony in solido of $20,000 for partial
payment of her attorney fees. Both parties appeal raising various issues. We modify the
award of $30,000 in farm income to an award of $2,184. We also modify the award of
alimony in futuro to be $400 per month, with this modification to become effective sixty days
from the date our judgment is entered. In all other respects, the judgment of the Trial Court
is affirmed.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed as Modified; Case Remanded
D. M ICHAEL S WINEY, J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS,
P.J., and C HARLES D. S USANO, J R., J., joined.
Douglas R. Beier, Morristown, Tennessee, for the Appellant, Alvin Michael Antrican.
Denise Terry Stapleton, Morristown, Tennessee, for the Appellee, Deborah Southern
Antrican.
OPINION
Background
Husband and Wife were married in March 1978.1 Almost twenty-eight years
later, in January 2006, Wife filed a complaint seeking a divorce from Husband on the ground
of adultery. Alternatively, Wife sought a divorce based on irreconcilable differences.
Husband answered the complaint and generally denied any fault. Husband filed a counter-
claim also seeking a divorce. Husband alleged that Wife was guilty of inappropriate marital
conduct or, alternatively, that irreconcilable differences existed between the parties. The
parties have two adult children.
The trial was on February 11, 2009. Much of the general background
information as well as most of the information pertaining to the property owned by one or
both of the parties and that property’s value is not in dispute. Accordingly, we quote liberally
from the Trial Court’s opinion:
Husband (Defendant) and Wife (Plaintiff) have been
married for 35 years. The Husband voluntarily moved out of the
marital residence on March 31, 2004. The Parties have 2 adult
children.
The Wife is 54 years old; she has a Master’s Degree; she
is a tenured teacher with the Hancock County School System;
she has taught school for 30 years; she is currently employed in
the Administrative Offices of the Hancock County School
System as Assistant Director of Federal Programs; her monthly
income is $4,323 . . . and her annual income is $51,882.
The Husband is 55 years old; he has a Master’s Degree;
he is a tenured teacher with the Hancock County School System;
1
At trial, both parties testified that they were married for “thirty-five” years. Surprisingly, at trial
neither of them was asked on what day they actually were married. If they were married in March 1978, as
alleged in the complaint, then they would have been married for thirty years at the time of trial in February
2009. We thought we had found the answer to this riddle when we came across the following from
Husband’s testimony: “Deb had left once before and we’ve been divorced once before when she had ran off
with another man and we married back. . . .” When counting both marriages, perhaps the parties were
married for “thirty-five” years. We, however, cannot be certain that this is the solution to the riddle because
Wife stated in the complaint that this was the first marriage for both parties, an allegation admitted by
Husband.
-2-
he has taught school for many years; he is currently employed by
the Hancock County School System as the Director of Schools
which position he has held for nineteen years; his monthly
income is $6,416 per month and his annual income is $76,992.
The Husband, as Director of Schools, has the authority to
terminate the Wife as the Assistant Director of Federal
Programs. The Wife has always worked both outside of the
home and as a homemaker except for a short time following the
births of the parties’ children. The Husband testified that the
Wife was and is a good mother. . . .
The Husband admitted that he has had an adulterous
relationship since 2002 or for two years prior to his moving out
of the marital residence. The Husband hired his paramour in a
position with the Hancock County School System making
$18,000 per year and allowed her to work in the same office as
the Wife until the Wife persuaded him to transfer her to another
office. The Wife had been faithful to the marriage.
[The Wife is in] good health. The Husband has had
cancer which is in remission and he has diabetes which is well
controlled.
The parties agreed to use Mr. David Britton as a real
estate appraiser and agreed to be bound by his appraisals as to
the fair market values of the real estate in question. The parties
agreed that the 454 Janet Drive house and the 1.1 acres where
the wife resides is marital property; Mr. Britton appraised it for
$168,000 and it is unencumbered. The parties agreed that the
Cantwell Valley Road property consisting of 11.09 acres is
marital property; Mr. Britton appraised it for $24,000 and it is
unencumbered.
The Husband constructed a new house in 2005 on the 150
acres in Cantwell Valley which was given to him by his parents
in 1997; his mother has a life estate in it which has a value of
$88,433; Mr. Britton appraised it for $310,000, and it is
encumbered in the amount of $80,000.
-3-
The 12.1 acres in Grainger County was deeded to the
parties by the Husband’s mother as shown in Exhibit 4; the deed
was delivered to him; the deed has not been recorded; Mr.
Britton appraised it for $32,000 and it is unencumbered.
The 12 acres in Cantwell Valley is in the names of the
Husband and his mother. The Husband’s interest was given to
him by his mother in 1997.
The 48 acres at Union Ridge was a gift to the Husband
from the Husband’s parents; it is in his name and it is subject to
the life estate of his mother.
The parties took over the farming operations of the
Husband’s parents in 1992. The parties agreed that the fair
market cash value of the cattle is $74,100 and that the fair cash
market value of the farm equipment is $24,200. (original
paragraph numbering omitted and shorter paragraphs
combined).
In addition to the foregoing, the parties were able to agree to the fair market
value of the following property: (1) Wife’s furniture, $15,000; (2) Husband’s furniture,
$2,412; (3)Wife’s retirement, $94,298.49; (4) Husband’s retirement, $99,121.95; (5) Wife’s
annuity with AIG, $8,000; (6) Wife’s 2002 Tahoe, equity totaling $700; (7) Husband’s 2004
GMC truck, equity totaling $7,000; (8) Husband’s 1989 Dodge, $1,500; (9) Husband’s 1989
Nissan, $500; (10) Husband’s 1987 Jeep, $600.
Wife had several credit cards, and the parties agreed that Wife was the only one
who used the credit cards. According to the Trial Court, Husband acknowledged that most
of these debts were longstanding and incurred for family expenses. In short, even though the
credit cards were in Wife’s name only and even though she was the party who incurred the
debt, the Trial Court found that all of these debts were marital debts. The credit cards and
related debts, including a loan from Wife’s parents that was used to pay off a high-interest
credit card, are as follows: (1) AIG, $3,600; (2) Bank of America, $25,000; (3) Discover,
$6,177.14; (4) Sam’s, $1,300; (5) Q card, $1,088.72; (6) Chadwick’s, $675; (7) J.C. Penney,
$600; (8) First Century Bank $4,200; (9) Wife’s parents, $21,800. These debts total
$64,440.86.
Although the parties agreed on the value of most of the property, they were at
odds as to how some of it should be classified, i.e., as separate or marital property. The
-4-
parties also were in sharp disagreement as to how to divide that property and whether Wife
was entitled to alimony.
As relevant to this appeal, Husband testified that he constructed a house on the
150 acres located in Cantwell Valley. Husband paid for all of the construction, etc., to build
the house. This house was built after the parties separated but while they still were married.
Husband admitted that any real property that has been accumulated was accumulated during
the marriage.
Husband acknowledged that Wife was a homemaker in addition to working a
full-time job outside of the home during most all of the marriage. When asked if Wife
assisted with the tobacco grown on the farm, Husband responded that she assisted “mainly”
on her parents’ farm. Husband eventually acknowledged that Wife assisted with the farming
duties, although he minimized the amount of assistance she provided. Husband
acknowledged that Wife helped haul hay and helped feed and vaccinate the cattle. Husband
admitted that Wife borrowed money to buy a tractor for the farm. Husband admitted that
during the marriage Wife had purchased tools and supplies for the farm and the marital
residence. Husband testified that the gross income from the farm was approximately $30,000
per year, but the net income was much less. Relying on the income tax returns entered as
exhibits at trial, for the years 2005 through 2007, there was total net farming income of
$4,368 for those three years.
The parties disagreed on how to classify 12.1 acres of land located in Grainger
County. With respect to this property, Husband acknowledged that the warranty deed from
his mother lists both Husband and Wife as the grantees. Husband claimed that he and Wife
never paid his mother for the property and so the deed never was recorded. According to
Husband, he had agreed to pay his mother $10,000 for the property, but those funds never
were paid.
Husband also testified about a separate 12 acre tract of property in Cantwell
2
Valley. Husband testified that this property was transferred to him and his mother in 1998.
Husband borrowed $67,000 to build his current house, and his mother co-
signed the note for this loan. Husband’s payment on this loan is $800 per month. This debt
was incurred during the marriage, and Husband claimed it is a marital debt. There is no
mortgage on this house.
2
Wife correctly points out that while the deed to this property states that the property consists of 12
acres, an appraisal showed that the property actually was 23.2 acres. We will refer to this property as a 12
acre tract because that is how the Trial Court referred to this property.
-5-
Husband previously had filed an affidavit of income and expenses with the
Trial Court and affirmed most of its accuracy at trial. Husband’s affidavit lists his health
insurance payment twice3 and also includes his then pendente lite alimony payment. It also
was no longer accurate with regard to the amount of taxes, which also had been counted
twice. Not counting the alimony payment, deducting the post-divorce amount of Husband’s
health insurance and counting it only once, adjusting the tax payment, and eliminating a
phone and cable bill that Husband does not have, Husband’s affidavit shows monthly
expenses of $2,931.00 and net monthly income of $4,149.28 before deducting the $2,931.00.
Wife testified that she and Husband both owned the Grainger County property
and both were on the deed. Wife indicated that no one ever told her that the deed allegedly
was invalid because Husband’s mother had not been paid $10,000. Wife testified that she
helped Husband with the tobacco grown on the farm, and that she helped haul hay and fence
in the farm. Wife also helped with the cattle. Wife always considered the farm joint
property.
Wife also filed an affidavit of monthly income and expenses and testified
regarding same at trial. In her affidavit, Wife listed her net monthly income as $3,020.29 and
her monthly expenses at $3,905.92. Based on this shortfall, Wife sought an award of
alimony. Wife’s affidavit, however, included payments for all of the credit cards and other
debt that the Trial Court ultimately held Husband responsible for paying. Backing out
payments for credit cards and other debts for which Husband was held responsible, Wife’s
monthly expenses totaled $2,518.92. This total also includes monthly charitable
contributions of $354.15 and gifts of $62.50.
Based on the testimony of the parties, the Trial Court found that both the 12
acres on Cantwell Valley Road and the 48 acres at Union Ridge were Husband’s separate
property. The Trial Court further found that the 12.1 acres in Grainger County and the 150
acres in Cantwell Valley where Husband built his new house both were marital property. As
to the farming equipment and the cattle, the Trial Court found them to be marital property.
The Trial Court’s classification of these five items are at issue on appeal.
After classifying the property, the Trial Court then divided the marital property.
The Trial Court awarded Wife marital property valued at $309,998.49. Wife was not held
3
Husband’s health insurance payment was $715 which included family coverage for him and Wife.
However, this payment was listed as a monthly expense and also was listed a second time as a deduction
from the gross amount of Husband’s paycheck. In addition, Husband acknowledged that once he and Wife
are divorced and he no longer carries her on his insurance, his monthly payment will decrease to $357.50.
We have used this latter figure when determining Husband’s monthly expenses.
-6-
responsible for any of the marital debt. Husband was awarded marital property valued at
$386,000.95. However, Husband also was held responsible for all of the $64,440.86 in
marital debt plus the note related to the new house built by Husband, resulting in a net award
to Husband of $321,560.09. See footnote 8, infra at page 12. In addition, the Trial Court
concluded that as to the net farm income for 2005 through 2007, Wife was entitled to
$30,000 as her share. Finally, the Trial Court found that Wife was entitled to an award of
alimony in futuro of $800 per month as well as a one time payment of $20,000 as alimony
in solido to go toward partial payment of her attorney fees.
Husband appeals raising numerous issues. First, Husband claims that the 12.1
acres in Grainger County and the 150 acres in Cantwell Valley were not marital property, and
the Trial Court erred when it classified this property as such. Husband also alleges that the
Trial Court erred when it found that the farm was marital property, and that Wife was entitled
to $30,000 as her share of the net farming income from 2005 through 2007. Next, Husband
claims that the overall property distribution was inequitable. Finally, Husband claims the
Trial Court erred when it awarded Wife alimony in futuro of $800 per month and alimony
in solido of $20,000 toward partial payment of her attorney fees.4
Wife also appeals. Wife claims that the Trial Court erred when it found that
the 12 acres on Cantwell Valley Road and 48 acres on Union Ridge were Husband’s separate
property. Wife also claims that the Trial Court should have ordered Husband to pay all of
her attorney fees. In all other respects, Wife maintains that the judgment of the Trial Court
should be affirmed.
Discussion
The factual findings of the 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).
4
Although not entirely clear, it appears that Husband is challenging a finding by the Trial Court that
he was in contempt of court. Because this issue was not set forth in Husband’s Statement of the Issues, in
the event that Husband is attempting to raise this as an issue on appeal, we consider it waived.
-7-
We first will discuss whether the Trial Court correctly classified the property
at issue as separate or marital. As relevant to this appeal, Tenn. Code Ann. § 36-4-121(b)
defines marital and separate property as follows:
(b) For purposes of this chapter:
(1)(A) “Marital property” means all real and personal property,
both tangible and intangible, acquired by either or both spouses
during the course of the marriage up to the date of the final
divorce hearing and owned by either or both spouses as of the
date of filing of a complaint for divorce, except in the case of
fraudulent conveyance in anticipation of filing, and including
any property to which a right was acquired up to the date of the
final divorce hearing, and valued as of a date as near as
reasonably possible to the final divorce hearing date. . . . All
marital property shall be valued as of a date as near as possible
to the date of entry of the order finally dividing the marital
property.
(B) “Marital property” includes income from, and any increase
in value during the marriage of, property determined to be
separate property in accordance with subdivision (b)(2) if each
party substantially contributed to its preservation and
appreciation, and the value of vested and unvested pension,
vested and unvested stock option rights, retirement or other
fringe benefit rights relating to employment that accrued during
the period of the marriage. . . .
(D) As used in this subsection (b), “substantial contribution”
may include, but not be limited to, the direct or indirect
contribution of a spouse as homemaker, wage earner, parent or
family financial manager, together with such other factors as the
court having jurisdiction thereof may determine. . . .
(2) “Separate property” means:
(A) All real and personal property owned by a spouse before
marriage, including, but not limited to, assets held in individual
retirement accounts (IRAs) as that term is defined in the Internal
Revenue Code of 1986, as amended;
-8-
(B) Property acquired in exchange for property acquired
before the marriage;
(C) Income from and appreciation of property owned by a
spouse before marriage except when characterized as marital
property under subdivision (b)(1); [and]
(D) Property acquired by a spouse at any time by gift, bequest,
devise or descent . . . .
Tenn. Code Ann. § 36-4-121(b) (2005).
As stated previously, the Trial Court found that the 12 acres in Cantwell Valley
and the 48 acres in Union Ridge5 were Husband’s separate property. As to the 12 acres in
Cantwell Valley, the warranty deed shows that the record owners of the property are Husband
and his mother, Nola Antrican. Husband testified that this property was deeded to him as a
gift. Wife offered no credible evidence or argument to the contrary. As to the property at
Union Ridge, this property was deeded solely to Husband by his mother and father in 1997.
Both of Husband’s parents retained a life estate in this property. Again, Wife offered no
credible proof that this property was not intended to be a gift solely to Husband. Because the
facts do not preponderate against the Trial Court’s factual determination that these two pieces
of property were Husband’s separate property, the judgment of the Trial Court with respect
to these two items is affirmed.
When Husband’s mother intended to gift property to Wife and not just to her
son, she certainly was free to include Wife on the deed, which is exactly what happened in
the deed pertaining to the 12.1 acres located in Grainger County. In 2001, Husband’s mother
deeded this property jointly to Husband and Wife. As did the Trial Court, we reject
Husband’s argument that this deed is invalid because he allegedly never paid his mother
$10,000 for this property. There is nothing in the deed indicating a sale price, assuming that
there even was one, or that the sale price had not been paid at the time the deed was executed.
The Trial Court found that this “conveyance was completed upon the delivery of the deed to
the Husband and that the property is marital property.” The Trial Court also noted that
although Husband’s mother was present at trial, she did not testify.
As to the property where Husband built his new house, there is no doubt that
he built his new house with marital funds as the parties still were married when the house
5
This property is sometimes referred to in the record as being located on Union Church Road. Since
the Trial Court used “Union Ridge”, that is the designation we also shall use.
-9-
was built.6 This land was acquired many years before the parties separated and more years
before they were divorced. The Trial Court found that “the Husband inextricably
commingled [the 150 acres] with marital property when he built and furnished a house on
[the 150 acres] with marital property which converted it to marital property.”
The facts do not preponderate against the Trial Court’s findings and ultimate
conclusions that the real property in Grainger County and the property where Husband’s
house is located, as well as Husband’s house, are marital property. We affirm the Trial
Court’s judgment as to the classification of these two properties.
The final piece of property at issue is the farm. Although Husband attempted
to downplay Wife’s contributions to the farm, he eventually admitted that Wife made many
contributions over the years. If Wife’s testimony is credited, the amount of her contributions
were even more significant. In addition, Wife took out a loan to purchase farm equipment.
As to the cattle and farm equipment, Husband’s and Wife’s testimony conflicted in numerous
aspects. The Trial Court specifically found Wife’s testimony to be more credible on this
issue, and found the cattle and farm equipment to be marital property as was the farming
operation. Given the Trial Court’s credibility determination on this issue, the evidence does
not preponderate against the Trial Court’s findings that the farm was marital property, and
we affirm the Trial Court’s judgment in that regard.
Even though we have affirmed the Trial Court’s judgment that the farm was
marital property, another issue is raised with respect to the farm. Specifically, Husband
claims that the Trial Court erred when it ordered Husband to pay Wife “the sum of $30,000
for her share of the net farm income for 2005, 2006, and 2007.” (emphasis added) The Trial
Court could not have awarded Wife $30,000 as her share of the net farm income as the
evidence shows the net farm income for those three years was much less than $30,000.
Apparently the Trial Court awarded her a share of the gross farm income for that three year
period. The income tax returns exhibited at trial, the only evidence presented relevant to the
net farm income, unequivocally show that the farm’s net income for that three year period
was only $4,368. Husband admitted at trial that none of the $4,368 was shared with Wife,
to whom he was still married when the income was earned. Therefore, we modify the Trial
Court’s judgment to award Wife $2,184 instead of $30,000 as her share of the net farm
income.7
6
Husband correctly claims that the debt on the house is marital debt.
7
Wife claims that to the extent the Trial Court may have awarded Wife too much for her share of
the farm proceeds, any such error is off-set by the fact that Husband received governmental tobacco farming
(continued...)
-10-
Having affirmed the Trial Court’s classification of the property, the next issue
is whether the marital property distribution was equitable. When making an equitable
division of marital property, a trial court shall consider all relevant factors including:
(1) The duration of the marriage;
(2) The age, physical and mental health, vocational skills,
employability, earning capacity, estate, financial liabilities and
financial needs of each of the parties;
(3) The tangible or intangible contribution by one (1)
party to the education, training or increased earning power of the
other party;
(4) The relative ability of each party for future
acquisitions of capital assets and income;
(5) The contribution of each party to the acquisition,
preservation, appreciation, depreciation or dissipation of the
marital or separate property, including the contribution of a
party to the marriage as homemaker, wage earner or parent, with
the contribution of a party as homemaker or wage earner to be
given the same weight if each party has fulfilled its role;
(6) The value of the separate property of each party;
(7) The estate of each party at the time of the marriage;
(8) The economic circumstances of each party at the time
the division of property is to become effective;
(9) The tax consequences to each party, costs associated with the
reasonably foreseeable sale of the asset, and other reasonably
foreseeable expenses associated with the asset;
7
(...continued)
subsidies. Wife has failed to establish that these subsidies were not factored into the overall profitability of
the farm or that these funds otherwise were not reinvested in the farm.
-11-
(10) The amount of social security benefits available to
each spouse; and
(11) Such other factors as are necessary to consider the
equities between the parties. . . .
Tenn. Code Ann. § 36-4-121(c) (2005).
A trial court has wide discretion in dividing the interest of the parties in marital
property. Barnhill v. Barnhill, 826 S.W.2d 443, 449 (Tenn. Ct. App. 1991). As noted by this
Court in King v. King, when dividing marital property:
The trial court’s goal in every divorce case is to divide
the parties’ marital estate in a just and equitable manner. The
division of the estate is not rendered inequitable simply because
it is not mathematically equal, Cohen v. Cohen, 937 S.W.2d 823,
832 (Tenn. 1996); Ellis v. Ellis, 748 S.W.2d 424, 427 (Tenn.
1988), or because each party did not receive a share of every
item of marital property. Brown v. Brown, 913 S.W.2d [163] at
168. . . . In the final analysis, the justness of a particular division
of the marital property and allocation of marital debt depends on
its final results. See Thompson v. Thompson, 797 S.W.2d 599,
604 (Tenn. App. 1990).
King v. King, 986 S.W.2d 216, 219 (Tenn. Ct. App. 1998) (quoting Roseberry v. Roseberry,
No. 03A01-9706-CH-00237, 1998 WL 47944, at *4 (Tenn. Ct. App. Feb. 9, 1998), no appl.
perm. appeal filed).
Wife was awarded a total of $309,998.49 in marital assets with no
corresponding debt. Thus, Wife’s net award of marital property was $309,998.49. Husband
was awarded a total of $386,000.95 in marital assets and $64,440.86 in marital debt, thereby
resulting in a net award to him of $321,560.09. In short, Husband was awarded 50.9% of the
net marital property, and Wife was awarded the remaining 49.1%.8
8
In discussing the overall property awards, we note that when the Trial Court ordered Husband to
pay Wife $30,000 for her share of the farm income, those funds were not factored into the Trial Court’s
overall award to Wife of $309,998.49 in assets. Thus, our modification of that award does not materially
change the fact that Wife received 49.1% in net marital assets. In addition, with respect to the $67,000 loan
on Husband’s house, which is a marital debt, the amount of that loan was taken into account when that asset
was awarded to Husband. Specifically, the Trial Court reduced the net value of that asset by the amount of
(continued...)
-12-
The parties are close in age and have the same level of education. They both
have long-term jobs. They both contributed to the accumulation of assets during the
marriage as both were actively employed outside of the home for most, if not all, of the
marriage. In addition, both parties contributed to the preservation of the marital home and
the farm. Both parties are receiving a substantially similar amount of net assets. In short,
when considering the relevant factors set forth in Tenn. Code Ann. § 36-4-121(c), we cannot
conclude that the marital property distribution was inequitable, and we affirm that judgment
with the sole modification as to the amount Wife is to receive as her share of the net farm
income for 2005 - 2007.
We next consider the award of alimony in futuro. Trial courts have broad
discretion to determine whether alimony is needed and, if so, the nature, amount, and
duration of support. See Garfinkel v. Garfinkel, 945 S.W.2d 744, 748 (Tenn. Ct. App. 1996).
Pursuant to Tenn. Code Ann. § 36-5-121(i), the court is to consider the following factors in
determining alimony:
(1) The relative earning capacity, obligations, needs, and
financial resources of each party, including income from
pension, profit sharing or retirement plans and all other sources;
(2) The relative education and training of each party, the
ability and opportunity of each party to secure such education
and training, and the necessity of a party to secure further
education and training to improve such party's earnings capacity
to a reasonable level;
(3) The duration of the marriage;
(4) The age and mental condition of each party;
(5) The physical condition of each party, including, but
not limited to, physical disability or incapacity due to a chronic
debilitating disease;
(6) The extent to which it would be undesirable for a
party to seek employment outside the home, because such party
will be custodian of a minor child of the marriage;
8
(...continued)
the loan before awarding it to Husband.
-13-
(7) The separate assets of each party, both real and
personal, tangible and intangible;
(8) The provisions made with regard to the marital
property;
(9) The standard of living of the parties established
during the marriage;
(10) The extent to which each party has made such
tangible and intangible contributions to the marriage as
monetary and homemaker contributions, and tangible and
intangible contributions by a party to the education, training or
increased earning power of the other party;
(11) The relative fault of the parties, in cases where the
court, in its discretion, deems it appropriate to do so; and
(12) Such other factors, including the tax consequences
to each party, as are necessary to consider the equities between
the parties.
Tenn. Code Ann. § 36-5-121(i) (2005).
There are no hard and fast rules with respect to spousal support decisions.
Anderton v. Anderton, 988 S.W.2d 675, 682 (Tenn. Ct. App. 1998). Decisions regarding
alimony require a careful balancing of the factors in Tenn. Code Ann. § 36-5-121(i) and
typically hinge on the unique facts and circumstances of the case. See Anderton, 988 S.W.2d
at 683. While all of the statutory factors are significant, the two most important factors are
the obligor spouse’s ability to pay and the need of the disadvantaged spouse. Aaron v.
Aaron, 909 S.W.2d 408, 410 (Tenn. 1995).
The Tennessee General Assembly has stated its intent that “a spouse, who is
economically disadvantaged relative to the other spouse, be rehabilitated, whenever possible,
by the granting of an order for payment of rehabilitative alimony.” Tenn. Code Ann.
§ 36-5-121(d)(2). In those cases where rehabilitation is not feasible, “the court may grant an
order for payment of support and maintenance on a long-term basis or until death or
remarriage of the recipient . . . .” Tenn. Code Ann. § 36-5-121(d)(3). The purpose of an in
futuro award is to “mitigate the harsh realities of divorce” and “to provide financial support
to a spouse who cannot be rehabilitated.” Burlew v. Burlew, 40 S.W.3d 465, 471 (Tenn.
-14-
2001). Alimony in futuro serves the purpose of providing support to the spouse who is
unable to achieve self-sufficiency. Loria v. Loria, 952 S.W.2d 836, 838 (Tenn. Ct. App.
1997). It is also intended to aid the disadvantaged spouse when economic rehabilitation is
not feasible, in order to mitigate the harsh economic realities of divorce. Id.
When the Trial Court awarded Wife alimony in futuro, it did so in an attempt
to elevate Wife’s post-divorce standard of living. This is an appropriate consideration.
Tenn. Code Ann. § 36-5-121(f)(1) states:
(f)(1) Alimony in futuro, also known as periodic alimony,
is a payment of support and maintenance on a long term basis or
until death or remarriage of the recipient. Such alimony may be
awarded when the court finds that there is relative economic
disadvantage and that rehabilitation is not feasible, meaning that
the disadvantaged spouse is unable to achieve, with reasonable
effort, an earning capacity that will permit the spouse's standard
of living after the divorce to be reasonably comparable to the
standard of living enjoyed during the marriage, or to the
post-divorce standard of living expected to be available to the
other spouse, considering the relevant statutory factors and the
equities between the parties.
Tenn. Code Ann. § 36-5-121(f)(1) (2005).
Given the fact that Wife has a Master’s Degree and has been employed with
the Hancock County School System for 30 years, there is no need for rehabilitative alimony.
As set forth previously, Husband has net monthly income of $4,149.28 and net monthly
expenses of $2,931. After paying his monthly expenses, Husband has $1,218.28 remaining.
Wife has net monthly income of $3,020.29 and net monthly expenses of $2,518.92, leaving
her with $501.37 each month after expenses. Wife has no mortgage payment and was not
held responsible for any of the marital debt.
When considering all of the relevant factors, we conclude that the award of
$800 per month in alimony in futuro was excessive. After Husband makes that payment, he
is left with $418.28 per month, while Wife now has $1,301.37 left over. In order to achieve
a better balance between the parties’ post-divorce standard of living, we modify the award
to reflect an award of alimony in futuro in the amount of $400 per month. In modifying the
award, we note that “[t]he parties’ incomes and assets will not always be sufficient for them
to achieve the same standard of living after divorce that they enjoyed during the marriage.”
Robertson v. Robertson, 76 S.W.3d 337, 340 (Tenn. 2002). This may well be one of those
-15-
cases. We further hold that this modification is to take effect sixty days from the date our
judgment is entered. Until that time, Husband is to pay alimony as ordered by the Trial
Court.9
The final issue is Husband’s claim that the Trial Court erred when it awarded
Wife $20,000 in alimony in solido toward payment of her attorney fees. Wife claims the
Trial Court erred by not requiring Husband to pay all of her attorney fees. An award of
alimony in solido for payment of attorney fees likewise should be based on the factors set
forth in Tenn. Code Ann. § 36-5-121(i), and is appropriate when the spouse seeking attorney
fees does not have adequate funds to pay his or her legal expenses. See Yount v. Yount, 91
S.W.3d 777, 783 (Tenn. Ct. App. 2002). Conversely, a spouse with sufficient property or
income to pay his or her attorney fees is not entitled to be compensated. Koja v. Koja, 42
S.W.3d 94, 98 (Tenn. Ct. App. 2000). If a spouse is receiving alimony intended to sustain
that spouse, and he or she would be required to deplete those funds in order to pay attorney
fees, then an award of attorney fees is proper. See Batson v. Batson, 769 S.W.2d 849, 862
(Tenn. Ct. App. 1988).
Wife submitted an affidavit from her attorney showing fees and expenses
totaling $32,078.89. Husband argues that the affidavit is not detailed and does not reference
the specific services rendered, and therefore is invalid because there is no proof that they are
reasonable. At trial, Husband stated that he wanted the opportunity to “rebut . . . or respond
to” the affidavit. Counsel for Wife stated that she would supply a detailed affidavit under
seal. The Trial Court then indicated that it may need to conduct an in camera hearing to
determine the reasonableness of the fees. There is nothing further in the record to indicate
that Husband pursued such a hearing.
When considering the relevant factors set forth in Tenn. Code Ann.
§ 36-5-121(i), as well as the property award, we cannot conclude that the facts preponderate
against the award of $20,000 to Wife as alimony in solido. We, therefore, reject both
Husband’s and Wife’s challenges to that award.
9
Husband argues that Wife is entitled to no alimony whatsoever. He does not argue that another
type of alimony would be more appropriate, such as transitional alimony. Because we conclude that some
type of alimony is appropriate, and because Husband does not argue that some other form of alimony would
be more appropriate, we affirm the Trial Court’s decision to award alimony in futuro.
-16-
Conclusion
The judgment of the Trial Court awarding Wife $30,000 as her share of the net
farm income is modified to be instead an award of $2,184. In addition, Wife’s award of
alimony in futuro is modified to be $400 per month. This alimony modification is to take
effect sixty days from the date our judgment is entered. In all other respects, the judgment
of the Trial Court is affirmed. This case is remanded to the Trial Court for collection of the
costs below. Costs on appeal are taxed one-half to the Appellant, Alvin Michael Antrican,
and his surety, and one-half to the Appellee, Deborah Southern Antrican, for which execution
may issue, if necessary.
________________________________
D. MICHAEL SWINEY, JUDGE
-17-
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[Cite as State v. McKenna, 2017-Ohio-6986.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
STATE OF OHIO, : APPEAL NO. C-160683
TRIAL NO. C-15CRB-34617
Plaintiff-Appellee, :
O P I N I O N.
vs. :
PETER MCKENNA, :
Defendant-Appellant. :
Criminal Appeal From: Hamilton County Municipal Court
Judgment Appealed From Is: Appeal Dismissed
Date of Judgment Entry on Appeal: July 28, 2017
Joseph T. Deters, Hamilton County Prosecuting Attorney, and Scott M. Heenan,
Assistant Prosecuting Attorney, for Plaintiff-Appellee,
Timothy A. Smith, for Defendant-Appellant.
OHIO FIRST DISTRICT COURT OF APPEALS
MYERS, JUDGE.
{¶1} Defendant-appellant Peter McKenna has appealed from the trial
court’s denial of his motion to withdraw his guilty plea. Because the entry that he
has appealed from is not final and appealable, we have no jurisdiction to entertain
McKenna’s appeal, and we therefore dismiss it.
Procedural Background
{¶2} On December 29, 2015, McKenna pled guilty to a violation of R.C.
1531.02, a third-degree misdemeanor, for the illegal taking of more than one antlered
white-tailed deer per license year. A municipal court magistrate ordered McKenna to
pay court costs and to forfeit the deer that had been illegally taken. On the day that
the plea was entered, the magistrate journalized an entry setting forth the
magistrate’s finding of guilt based on McKenna’s guilty plea. On the same date, the
magistrate also journalized a separate entry setting forth the finding of guilt and the
sentence imposed. Only the entry setting forth the finding of guilt was signed and
adopted by the trial court as its own judgment. The entry that included the
imposition of sentence was not.
{¶3} Approximately three months later, McKenna received a letter from the
Ohio Department of Natural Resources (“ODNR”). The letter stated that because
McKenna had been convicted of the illegal taking of an antlered white-tailed deer, he
was being assessed $18,346.40 for the restitution value of the deer, pursuant to R.C.
1531.201. The letter further specified various Ohio hunting licenses and permits, and
stated that, had any of these licenses or permits been issued to McKenna, they were
2
OHIO FIRST DISTRICT COURT OF APPEALS
immediately revoked and would be surrendered if full payment of the restitution was
not made.
{¶4} After receiving the letter from ODNR, McKenna filed a motion to
withdraw his guilty plea. He argued that the $18,346.40 fee that he was assessed was
not restitution, but was an additional criminal penalty for his offense, and that the
magistrate had failed to inform him of this penalty prior to accepting his plea,
resulting in a manifest injustice. McKenna further alleged that he had a complete
defense to the charge, because the hunting license that he had purchased from the
state permitted him to take either an antlered or antlerless deer.
{¶5} Following a hearing, the trial court denied McKenna’s motion.
McKenna now appeals, challenging in a single assignment of error the trial court’s
denial of his motion.
Lack of a Final, Appealable Order
{¶6} Before considering the merits of McKenna’s assignment of error, we
must determine whether we have jurisdiction to entertain this appeal. This court
only has jurisdiction to review final orders and judgments. Ohio Constitution,
Article IV, Section 3(B)(2); R.C. 2505.03.
{¶7} While McKenna has appealed from the trial court’s denial of his
motion to withdraw his guilty plea, we must begin our analysis by examining
McKenna’s underlying conviction for a violation of R.C. 1531.02.
{¶8} A judgment of conviction is a final order under R.C. 2505.02 when it
sets forth (1) the fact of the conviction, (2) the sentence, (3) the judge’s signature,
and (4) the time stamp indicating the entry upon the journal by the clerk. State v.
Lester, 130 Ohio St.3d 303, 2011-Ohio-5204, 958 N.E.2d 142, paragraph one of the
3
OHIO FIRST DISTRICT COURT OF APPEALS
syllabus; State v. Bennett, 1st Dist. Hamilton Nos. C-140507 and C-140508, 2015-
Ohio-3246, ¶ 4; Crim.R. 32(C). Each of these requirements must be contained in a
single document. State v. Daniels, 1st Dist. Hamilton No. C-140242, 2014-Ohio-
5160, ¶ 7, citing State v. Baker, 119 Ohio St.3d 197, 2008-Ohio-3330, 893 N.E.2d
163, ¶ 17.
{¶9} The magistrate journalized two entries in this case. Because they were
journalized separately, we must individually examine each entry, and we may not
read them together to create a final, appealable order. Id. The first entry journalized
by the magistrate, and adopted by the trial court, set forth the fact of McKenna’s plea
and finding of guilt. This entry was not a final, appealable order because it did not
contain the sentence that had been imposed. The second entry set forth the finding
of guilt and the sentence imposed, but it was not a final order because it did not
contain a judge’s signature. Furthermore, because this entry was not adopted by the
trial court, the entry has not become effective, and McKenna has not yet been
sentenced. See Crim.R. 19(D)(4)(a) (“A magistrate’s decision is not effective unless
adopted by the court.”). This directly impacts our review of the order that McKenna
has appealed from, the trial court’s denial of his motion to withdraw his guilty plea.
{¶10} Because McKenna has not been sentenced, his motion to withdraw his
guilty plea should have been treated as a presentence motion to withdraw, rather
than a postsentence motion. See State v. Waselich, 7th Dist. Mahoning No. 04 MA
164, 2005-Ohio-6449, ¶ 10. McKenna has appealed from the trial court’s denial of a
presentence motion to withdraw before sentence has been imposed. The Ohio
Supreme Court has held that “[i]n a criminal case, where there has been no
pronouncement of sentence, an order of the trial court overruling defendant’s motion
4
OHIO FIRST DISTRICT COURT OF APPEALS
for leave to withdraw his plea of guilty is interlocutory in nature, does not amount to
a judgment and is not a final appealable order.” State v. Chamberlain, 177 Ohio St.
104, 202 N.E.2d 695 (1964), syllabus; See Waselich at ¶ 5.
{¶11} Because the entry that McKenna has appealed from is not a final,
appealable order, we lack jurisdiction over this appeal and dismiss it.
Appeal dismissed.
CUNNINGHAM, P.J., concurs.
MILLER, J., concurs with opinion.
MILLER, J. concurring.
{¶12} I fully join in the majority opinion. This is the most recent in a long
series of cases where we have been duty bound to dismiss criminal appeals from
municipal court because the entries did not always comply with the one-document
rule articulated in State v. Baker. 119 Ohio St.3d 197, 2008-Ohio-3330 at ¶ 17. I
have concerns whether this systemic issue can harm a defendant's right to
meaningful appellate review. See Pollard v. United States, 352 U.S. 354, 361, 77
S.Ct. 481, 1 L.Ed.2d 393 (1957); United States v. Gould, 672 F.3d 930, 936 (10th
Cir.2012); Harris v. Champion, 15 F.3d 1538, 1558 (10th Cir.1994); Rhueark v.
Shaw, 628 F.2d 297, 302-302 (5th Cir.1980). However, because our lack of
jurisdiction is raised sua sponte, no party has had the opportunity to articulate this
position. It is my hope that the need for these dismissals will not persist.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
5
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Order entered August 26, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00941-CR
ROLANDO GUZMAN, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 401st Judicial District Court
Collin County, Texas
Trial Court Cause No. 401-80883-2013
ORDER
The Court GRANTS court reporter Antoinette Varela’s August 22, 2014 motion for
extension of time to file the reporter’s record.
We ORDER Ms. Varela to file the reporter’s record within THIRTY (30) DAYS from
the date of this order.
We ORDER the Collin County District Clerk to file the clerk’s record within THIRTY
(30) DAYS from the date of this order.
/s/ DAVID EVANS
JUSTICE
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-50020
Conference Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
GABRIEL GARCIA-MARISCAL,
also known as Gabriel Antonio Garcia,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Western District of Texas
USDC No. EP-00-CR-1088-ALL-H
--------------------
August 23, 2001
Before KING, Chief Judge, and POLITZ and PARKER, Circuit Judges.
PER CURIAM:*
Gabriel Garcia-Mariscal appeals the 41-month term of
imprisonment imposed following his guilty plea conviction of
being found in the United States after removal in violation of 8
U.S.C. § 1326. Garcia-Mariscal argues that his sentence should
not have exceeded the two-year maximum term of imprisonment
prescribed in 8 U.S.C. § 1326(a). Garcia-Mariscal acknowledges
that his argument is foreclosed by the Supreme Court’s decision
in Almendarez-Torres v. United States, 523 U.S. 224 (1998), but
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 01-50020
-2-
seeks to preserve the issue for Supreme Court review in light of
the decision in Apprendi v. New Jersey, 530 U.S. 466 (2000).
Apprendi did not overrule Almendarez-Torres. See Apprendi,
530 U.S. at 489-90; United States v. Dabeit, 231 F.3d 979, 984
(5th Cir. 2000), cert. denied, 121 S. Ct. 1214 (2001). Garcia-
Mariscal’s argument is foreclosed. The judgment of the district
court is AFFIRMED.
The Government has moved for a summary affirmance in lieu of
filing an appellee’s brief. In its motion, the Government asks
that the judgment of the district court be affirmed and that an
appellee’s brief not be required. The motion is GRANTED.
AFFIRMED; MOTION GRANTED.
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Case: 11-15757 Date Filed: 12/11/2012 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-15757
Non-Argument Calendar
________________________
D.C. Docket No. 8:09-cv-00353-JDW,
BKCY No. 8:01-bk-09988-ALP
In Re: TERRI L. STEFFEN,
llllllllllllllllllllllllllllllllllllllll Debtor.
________________________________________
TERRI L. STEFFEN,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellant,
versus
DOUGLAS N. MENCHISE,
Chapter 7 Trustee,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(December 11, 2012)
Before HULL, MARCUS and MARTIN, Circuit Judges.
Case: 11-15757 Date Filed: 12/11/2012 Page: 2 of 9
PER CURIAM:
Debtor Terri L. Steffen appeals from the final order of the district court
affirming the bankruptcy court’s order granting Trustee Douglas N. Menchise’s
second motion for reconsideration (the “Reconsideration Order”), which vacated an
earlier bankruptcy court order that had dismissed the Debtor’s Chapter 7 bankruptcy
case on the ground that it no longer served the purposes of the Bankruptcy Code (the
“Dismissal Order”). The district court ruled that the bankruptcy court’s Dismissal
Order was non-final, thus not subject to the requirements of Federal Rule of Civil
Procedure 60(b) and reviewable at any time by the bankruptcy court. The district
court also refused to overturn the bankruptcy court’s Reconsideration Order. On
appeal, Steffen argues that the district court erred in holding that the bankruptcy
court’s Dismissal Order was non-final because the district court failed to consider the
Dismissal Order’s effects on pending litigation and the bankruptcy court’s clear
intention to end all litigation and close the case. After careful review, we affirm.
In the bankruptcy appeals, we sit “as a second court of review and thus
examine[] independently the factual and legal determinations of the bankruptcy court
and employ[] the same standards of review as the district court.” In re Optical Techs.,
Inc., 425 F.3d 1294, 1299-1300 (11th Cir. 2005) (quotation omitted). When the issue
raises a question concerning the interpretation of a Federal Rule of Bankruptcy
2
Case: 11-15757 Date Filed: 12/11/2012 Page: 3 of 9
Procedure, we apply a de novo standard of review. See In re Chase & Sanborn Corp.,
904 F.2d 588, 593 (11th Cir. 1990); see also In re Fin. Federated Title & Trust, Inc.,
309 F.3d 1325, 1328-29 (11th Cir. 2002) (“We review questions of law, whether
made by the bankruptcy court or by the district court, under a de novo standard.”).
The relevant procedural history is this. Steffen filed a petition for relief under
Chapter 11 of the Bankruptcy Code in May 2001. More than six years later, at the
request of one of Steffen’s largest creditors, the bankruptcy court converted the case
into a Chapter 7 bankruptcy. Douglas Menchise was appointed as the Trustee. Then,
in December 2008, Steffen moved to dismiss the case for cause pursuant to 11 U.S.C.
§ 707(a) or, in the alternative, to convert it back to a Chapter 11 bankruptcy. This
motion was denied, and after a brief stint in the district court, Steffen filed a renewed
motion to dismiss the bankruptcy case in the bankruptcy court.
In its Dismissal Order, the bankruptcy court found that the “continued
administration of the estate will not promote the fundamental purposes of Chapter 7,”
and therefore, granted Steffen’s renewed motion to dismiss, subject to the satisfaction
of several conditions. The Trustee moved for reconsideration, which was denied.
The Trustee requested reconsideration a second time, based on a state court action
that Steffen’s former counsel filed against her, alleging numerous instances of
concealment and fraud in Steffen’s bankruptcy proceeding. The bankruptcy court
3
Case: 11-15757 Date Filed: 12/11/2012 Page: 4 of 9
agreed to reconsider the order on Steffen’s renewed motion to dismiss and, in its
Reconsideration Order, denied Steffen’s motion. Thereafter, the district court
affirmed on appeal, and Steffen filed a timely appeal with this Court.
Generally, under Eleventh Circuit case law, “[a]s with other types of cases, a
final order in a bankruptcy proceeding is one that ends the litigation on the merits and
leaves nothing for the court to do but execute its judgment.” In re Culton, 111 F.3d
92, 93 (11th Cir. 1997). The requirement of finality excludes decisions that are
subject to revision, “even of fully consummated decisions that are but steps towards
final judgment in which they will merge.” Behrens v. Pelletier, 516 U.S. 299, 305
(1996) (quotation and alteration omitted); see also Southern Methodist Univ. Ass’n
of Women Law Students v. Wynne & Jaffe, 599 F.2d 707, 711 (5th Cir. 1979)
(holding that an order is not final and appealable so long as the “matter remains open,
unfinished, or inconclusive”) (quotation omitted).1 In Matter of Kutner, 656 F.2d
1107 (5th Cir. 1981), we explained that “[a] final judgment is one which disposes of
the whole subject, gives all the relief that was contemplated, provides with reasonable
completeness, for giving effect to the judgment and leaves nothing to be done in the
cause save superintend, ministerially, the execution of the decree.” Id. at 1110
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.
4
Case: 11-15757 Date Filed: 12/11/2012 Page: 5 of 9
(quotation omitted). We also recognized, on the other hand, that an interlocutory
order is one that “does not finally determine a cause of action but only decides some
intervening matter pertaining to the cause, and which requires further steps to be
taken in order to enable the court to adjudicate the cause on the merits.” Id. at 1110-
11 (quotation omitted).
“[T]he same concepts of finality apply in bankruptcy as in any other case, but
they are applied to the discrete controversies within the administration of the estate.”
In re Donovan, 532 F.3d 1134, 1137 (11th Cir. 2008). “Although courts take a more
liberal view of what constitutes a separate dispute for purposes of appeal in
bankruptcy cases, the separate dispute being assessed must have been finally resolved
and leave nothing more for the bankruptcy court to do.” In re Charter Co., 778 F.2d
617, 621 (11th Cir. 1985) (quotation and citation omitted). “Thus, to be final, a
bankruptcy court order must completely resolve all of the issues pertaining to a
discrete claim, including issues as to the proper relief.” Donovan, 532 F.3d at
1136-37 (quotation omitted).
Here, the bankruptcy court’s Dismissal Order, which granted the Debtor’s
motion to dismiss the Debtor’s Chapter 7 bankruptcy case, concluded in this way:
Because of the extraordinary circumstances surrounding the case, . . . the
Court . . . determines that such dismissal should be subject to three
conditions. The conditions are necessary in order to effectuate the order
5
Case: 11-15757 Date Filed: 12/11/2012 Page: 6 of 9
of dismissal and to carry out the provisions of title 11. 11 U.S.C. 105(a).
First, the Debtor should be prohibited from re-filing a bankruptcy
case in any District of the United States for a period of two (2) years
from the date that this case is dismissed. . .
Second, the funds currently held by the Chapter 7 Trustee should be
distributed as follows:
1. The sum of $50,000.00 shall be distributed to Ernest B.
Haire, III pursuant to the compromise of controversy presented
by the Trustee. (Doc. 997).
2. The balance of the funds shall be distributed according to
priorities established by § 726 of the Bankruptcy Code.
Within twenty-one (21) days of the date of this Order, the Trustee shall
file with the Court a Notice of Proposed Distribution, and serve the
Notice on all parties in interest. If no Objection to the proposed
distribution is filed within fourteen (14) days of the date of service, the
Trustee shall distribute the funds in accordance with the Notice, and file
a Certificate of Distribution with the Court.
Third, all of the appeals that arose from this case and that remain
pending in the United States District Court, the Eleventh Circuit Court
of Appeals, or any other appellate court, shall be dismissed within
twenty-one (21) days of this Order. . . Within fourteen (14) days of the
dismissal of all appeals arising from this case, the Debtor shall file a
Notice with this Court that no such appeals remain pending.
Upon the filing of the Certificate of Distribution by the Trustee,
and the Notice regarding dismissal of all pending appeals by the Debtor,
the Court will enter an Order dismissing this Chapter 7 case, and
prohibiting the Debtor from re-filing any future bankruptcy Petitions
for a period of two (2) years from the date of the Order.
...
6
Case: 11-15757 Date Filed: 12/11/2012 Page: 7 of 9
If an Objection to the proposed distribution is filed within fourteen (14)
days from the date that the Notice is served, the Court will schedule a
hearing on the Objection. If no Objection is filed, the Trustee will make
the distribution in accordance with the Notice and file a Certificate of
Distribution with this Court.
Dismissal Order at 15-17.
As the language clearly provides, the Dismissal Order did not fully resolve
Steffen’s bankruptcy case. Rather, following the Dismissal Order, resolution of the
case remained open and unfinished pending compliance with the conditions set forth
therein, and only upon compliance of those conditions would the bankruptcy court
enter an order dismissing the bankruptcy. Most notably, the Dismissal Order
provided that “[t]he balance of the funds shall be distributed according to priorities
established by § 726 of the Bankruptcy Code,” indicating that the Trustee had not yet
crafted the proposed distribution of funds, nor had the parties approved of this
distribution. This pending task alone highlights the unfinished state of Steffen’s
bankruptcy case.
For example, in Combs v. Ryan’s Coal Co., 785 F.2d 970, 976 (11th Cir.
1986), we held that a district court civil contempt order “clearly conditioned on the
submission of a substantial quantum of information” -- including whether appellants
had paid part of the amount due and posted the balance on a bond and whether
appellees had provided required accountings and audits -- was non-final. Similarly,
7
Case: 11-15757 Date Filed: 12/11/2012 Page: 8 of 9
here, the bankruptcy court’s Dismissal Order was conditioned on whether the Trustee
would, among other things, create a proposed distribution of funds amenable to the
parties and file a Certificate of Distribution with the bankruptcy court, and whether
the Debtor would dismiss all appeals arising from the case and file a notice with the
court that no appeals remained pending. Until those actions were completed --
actions that were by no means perfunctory -- the Dismissal Order permitted the
Chapter 7 case to continue and did not conclusively resolve the bankruptcy case as
a whole, or any adversary proceeding or claim. Donovan, 532 F.3d at 1137. Thus,
the Dismissal Order was simply not final. Nor was the order denying Steffen’s
request to convert her case back to Chapter 11. See In re Kutner, 656 F.2d 1107,
1110-11 (5th Cir. Sept. 21, 1981) (holding that an order striking a motion by a
standing trustee to convert Chapter 13 proceedings to Chapter 7 proceeding on
ground that each debtor was ineligible to file a petition under the former was
interlocutory in character).
As Eleventh Circuit case law indicates, the thrust of the finality requirement
is to “avoid the waste of judicial resources and the delay inherent in piecemeal
litigation.” In re Walker, 515 F.3d 1204, 1210 (11th Cir. 2008). And, while, as noted
above, some exceptions to the finality requirement have been crafted in the
bankruptcy context, see Charter Co., 778 F.2d at 621, a final bankruptcy court order
8
Case: 11-15757 Date Filed: 12/11/2012 Page: 9 of 9
nevertheless must “completely resolve all of the issues pertaining to a discrete claim,
including issues as to the proper relief.” Donovan, 532 F.3d at 1136-37 (quotation
omitted). Steffen can point us to no exception in our case law providing otherwise.
Accordingly, the district court did not err in concluding, sua sponte, that the
bankruptcy court’s Dismissal Order was non-final, and we affirm.
AFFIRMED.
9
| {
"pile_set_name": "FreeLaw"
} |
Filed 2/27/14 P. v. Shields CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COPY
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
THE PEOPLE, C070929
Plaintiff and Respondent, (Super. Ct. No. 09F00482)
v.
PAUL ANDREW SHIELDS,
Defendant and Appellant.
Defendant, Paul Andrew Shields, stands convicted by a jury of unlawful sexual
intercourse with a minor more than three years younger than the defendant, in violation
of section 261.5, subdivision (c) of the Penal Code (unless otherwise specified, all
statutory references that follow are to the Penal Code). He admitted three prior
convictions that brought him within the provisions of sections 667, subdivisions (b) to (i)
and 1170.12, specifically a conviction for assault with a deadly weapon in violation of
section 245, subdivision (a)(1) in 1991, a conviction for involuntary manslaughter with
1
personal use of a handgun in violation of section 192, subdivision (b) and section 12022,
subdivision (b) in 1996, and a conviction for assault with a deadly weapon in violation of
section 245, subdivision (a)(1) in 2000. Sentenced to 25 years to life in prison, he
appeals.
On appeal, defendant contends: (1) he was prejudiced at trial by the court’s failure
to correctly instruct the jury on the defense of unconsciousness; (2) the sex offender
registration order entered pursuant to section 290 was unauthorized; (3) a sexual battery
fine was unauthorized; (4) a “no-visitation” order entered pursuant to section 1202.05
was unauthorized; (5) defendant is entitled to an award of presentence local conduct
credits; and, (6) defendant is entitled to a retroactive application of Proposition 36.
We hold that (1) the trial court did not err in instructing the jury on the defense of
unconsciousness to defendant’s prejudice; (2) the sex offender registration order entered
pursuant to section 290 must be reconsidered by the trial court on remand; (3) the sexual
battery fine cannot stand because defendant was not convicted of a violation of section
243.4; (4) the “no-visitation” order entered pursuant to section 1202.05 was
unauthorized; (5) defendant is entitled to an award of presentence local conduct credits;
and (6) the defendant is not entitled to a retroactive application of the amendatory
provisions of Proposition 36.
FACTS AND PROCEEDINGS
The victim, K.C., testified that she met the defendant in approximately mid-
November 2008 when she was visiting her father who, along with defendant, was
incarcerated at San Quentin prison. At the time, K.C. was living with her mother and her
siblings in Rancho Cordova.
Defendant was released from prison in the fall of 2008. Her mother had agreed to
help defendant when he was released from prison and, initially upon his release, K.C. and
her mother took defendant to a homeless shelter in the Bay Area.
2
At some point thereafter, K.C.’s mother took a job requiring her to work weekends
in Oakland and it was arranged that defendant would watch K.C. and her siblings in their
home in Rancho Cordova while their mother was away at work.
Defendant was at K.C.’s home on the weekend of December 13-14, 2008. On the
evening of December 13, defendant and K.C. were watching movies on the television in
the living room. K.C. was laying on her back on the floor with a pillow and a blanket
wearing pajama bottoms and a T-shirt, but no panties. At some point, she fell asleep on
the floor, but was awakened when she felt her pajama bottoms being removed and
defendant licking her vaginal area. Because she was afraid, she pretended to be asleep.
When defendant was done licking K.C.’s vagina, he placed a pillow under her
hips, put his penis in her vagina and began moving back and forth so that his penis was
“going in and out” of her vagina. As far as she could tell, he was not wearing a condom.
When defendant began having sexual intercourse with her, K.C. “got really scared” and
“froze.”
After defendant “was done,” he left the living room and returned, handing her a
washcloth or rag with no conversation between them. While he was out of the room K.C.
pulled her pajama bottoms back up and, when he left after handing her the washcloth, she
went straight into the bathroom. At that point she noticed that there was “clear fluid”
coming from her vagina. After leaving the bathroom, defendant came up behind her and
asked her whether she “like[d] it” after which K.C. went upstairs to her mom’s room and
went to bed.
During the night, defendant twice came into the room where K.C. was sleeping
saying that he was sorry. K.C. made no response to his apology.
The weekend before this incident, when defendant was staying at K.C.’s home, he
found her birth control pills in her bedroom. After she told him what they were he asked
her whether she had ever given or received oral sex. She replied that she had not and
ended the conversation.
3
The parties stipulated that defendant was 56 years old in December 2008.
Because he was representing himself, defendant testified on his own behalf
through a narrative statement to the jury.
Defendant admitted he had sexual intercourse with K.C. on December 3, 2008.
Defendant is a diabetic and during the month or two before he was released from
prison he was taking the medicine Glucophage and insulin injections, one injection in the
morning and one in the evening. He was not given a glucose meter at the time he was
released from prison and did not have one on December 13, 2008.
After describing some errands that he and K.C.’s family completed on
December 13 during the day, defendant testified that they returned home. Defendant
testified to the events that took place thereafter that evening as follows:
“ . . . [K.C.] went into the living room and started decorating the [Christmas] tree,
and I went into the den and was watching football.
“I stayed in there about an hour or an hour and a half, and then I went to the living
room where [K.C.] was. She was finishing up decorating the tree, and she started
explaining to me how she had hung our stockings according to our ages.
“And I brought up the subject to her about what she wanted to get her mother for
Christmas. And she said that her mother had some Tiffany jewelry stolen from her, and
then out of the clear blue she said this to me: She would have sex with me in exchange
for getting that Tiffany jewelry. And I told her that that wasn’t necessary. All you got to
do is find a -- call the stores, get a price, and then I can see if I could get it. Then I told
her that I had daughters her age, and then I explained to her and asked her did she
remember that I told her that -- that I had just finished doing nine years for assaulting a
man for saying that he would do the same thing to my six-year-old daughter. Also, I told
her not to never disrespect me like that again. I would never stoop that low to disrespect
your parents, you know. You know, I explained all that to her. And so I thought that was
all over with. I thought she had got that notion out of her head.
4
“So she went upstairs, and she called a few stores. She came back downstairs, and
she said she found a store. She found it in San Jose where I lived so I could get it without
her mother knowing it. And I said okay. Then she went back upstairs, and then she came
back down with a pillow and a blanket and asked me was I ready to watch the movies. I
told her yes, I was ready, because we had bought movies when we were shopping.
“While we was watching movies -- I mean, before we started watching movies, I
went upstairs and got me a pillow and some blankets, too, because there was no way I
was going to share pillows and blankets with [K.C.]. And while I was upstairs, I asked
her siblings why wasn’t they downstairs watching movies with us. And [K.C.’s sister,
S.], the oldest that was upstairs, said that [K.C.] had told them to stay upstairs. And I
asked her why, and she said because they was making too much noise. I said -- I thought
that was strange because they wasn’t making as much noise as they usually make. And
so I went on back downstairs and started watching TV, and we watched a movie. Like
[K.C.] testified to, the first movie that we watched was What Love Has to Do with It
[sic].
“And after that movie, [S.] came downstairs. [S.] came downstairs, and she got
something out of the refrigerator. Then she came around the counter and told me that I
still had some black walnut ice cream in the freezer. And I like black walnut ice cream,
so I told her okay. But before I got the black walnut ice cream I wanted to go outside to
smoke before the next movie started. So I went outside and smoked, and when I came
back in [K.C.] had already started the movie, so I started watching the movie instead of
getting the ice cream.
“But I did make the mistake of going upstairs, getting the syringe out of my
backpack and coming back down with the intentions of eating the ice cream. So I got the
syringe; came back downstairs; got my insulin out the refrigerator; and drew up 20 units
of NPH. That’s long-lasting insulin. And I drew up five units of regular. That’s fast-
acting insulin.
5
“The reason I took the regular is because I had ate a chocolate bar that day, earlier
that day, but that was a mistake that I made. So after I took the insulin, I laid back down
and still didn’t get the ice cream. I didn’t get nothing to eat. So going back through the
movies, the other movie, watching some of the other movie, [K.C.] started dozing off.
And I called her name once; I woke her up; and I told her to go to bed, go upstairs to bed.
She refused. I did it twice; told her to go upstairs and go to bed. She refused. And I did
it a third time. The third time she did get up.
“She got up; went upstairs; and I thought she had finally went to bed, but she
didn’t. She went upstairs and came back down shortly afterwards. I think she just went
to see if her siblings were asleep.”
Defendant’s testimony continued as follows:
“[K.C.] came behind me and jumped on my back. When she jumped on my back,
I kind of felt uncomfortable because I could feel her breasts on me. So I told her to move
and get off me. So when she moved, she moved around to my left side. And when she
moved around to my left side, she tried to pull me on top of her. When she tried to pull
me on top of her, I put down my left hand to brace myself. And then after I tried to brace
myself, she scooted up on my hand and I could feel her vagina. When I felt her vagina, I
moved my hand, and she jumped up on her knees and grabbed me. She grabbed my
private part, and that’s when I got mad and shoved her. I didn’t mean to shove her, but I
shoved her and started screaming at her, and that’s the only time she left and went back
and laid down.
“Once she did that, I went back outside and smoked another cigarette. When I
came back in -- oh, while I was outside smoking that cigarette, I felt -- I felt shaky,
confused, and fatigued. So I came back inside and laid down again. I laid down, and I
started to shaking worse, and I knew that I was on the verge of having a hypoglycemia
[sic] attack, and I knew I had to get [K.C.] to get my glucose out of my backpack. Once I
tried to get to [K.C.], I crawled over to [K.C.] -- or towards [K.C,]. I don’t remember
6
nothing else after that, but when -- when I did focus again, I was on top of [K.C.] and --
and that was the -- the act was over with.
“And after that I got up, still in a daze, still not comfortable feeling the way I was
supposed to be feeling. So I did get up, and I know I apologized to [K.C.], and I went
into the kitchen and made a sandwich to try to get my blood sugar up. One of the reasons
I suffered that hypoglycemia [sic] attack was remember when I said that they came to
pick me up after work, well, when I couldn’t cash my check, I didn’t have an opportunity
to ask Robin to stop somewhere where I could buy something to eat because I knew they
had already eaten dinner. So I had to go all night without eating. One of my biggest
problems when I was spending the night with Robin was I didn’t like taking food out
those kids’ mouths because she was struggling as it was to take care of four kids. So I
was hesitant to eat at her house. So I made a lot of mistakes concerning my diabetes, you
know, but it wasn’t intentionally.
“I thought I was doing the right thing by trying to not take food from they [sic]
mouths. I had no intentions of ever doing anything to hurt that family because, like I
said, I have four daughters of my own. And I’ve never been charged with this kind of
crime. I had -- did a lot of time in my life, but nothing like this.”
On cross-examination, defendant said that after he returned to the house the
second time after going out to smoke a cigarette, he entered into a “semiconscious” or
“semi-unconscious” state. The next thing he remembers was being on top of K.C. with
his penis in her vagina at which time he looked down and saw her hand on his hip and
then got up off of her. Without making a remark one way or the other, he went into the
bathroom to clean himself up and then returned to the living room and apologized to K.C.
Defendant explained that when he described himself as “semiconscious” he meant
that he was unaware of his actions and he was unaware of K.C.’s actions. He was
incapable of responding as a “respectable adult.” He was “semiconscious” to the extent
7
that he remembers asking K.C. to go upstairs to get him his glucose. After that, he does
not remember what happened.
DISCUSSION
I
The Instructions Regarding the Defense of Unconsciousness
Defendant contends that the trial court erred in three particulars in instructing the
jury on the defense of unconsciousness. First, he argues that the trial court’s failure to
instruct the jury that unconsciousness does not require that a person be incapable of
movement was error; second, that the trial court’s instruction on the “presumption of
consciousness” was error; and, third, that the trial court erred in failing to instruct on
involuntary intoxication as a basis for unconsciousness.
We address those arguments in order.
A. The Instruction Regarding the Ability to Move While Unconscious
At the instruction conference, without objection from the defendant, the court
stated it would instruct the jury on the defense of unconsciousness in the language of
CALCRIM No. 3425 [2008 version; hereinafter former CALCRIM No. 3425] which, in
part, tells the jury that the law is that someone can be considered legally unconscious
even though he is able to move physically. For reasons not explained in the record, the
trial court did not so instruct, either orally or in the written instructions given to the jury.
Defendant argues, without a citation to authority, that the “common understanding
of the word, ‘unconscious’ means a state of sleep, stupor or coma where the person lies
still and unresponsive, incapable of locomotion or manual action.” He argues that the
court’s failure to dispel this “common understanding” in the minds of the jurors was
prejudicial error.
8
We reject defendant’s argument for a number of reasons, not the least of which is
that defendant’s first premise, that it is commonly understood that a person is
unconscious only when he cannot move physically, fails.
In common understanding, it is not uncommon to recognize or experience
unconscious physical actions. Biting one’s fingernails or tapping one’s foot without
realizing one is doing so come to mind. Indeed, the standard dictionary definitions of
“unconscious” specifically refer to unconscious “actions.” Thus, the Oxford English
Dictionary includes in its definitions of the word “not conscious or knowing within
oneself; unaware” and “not attended by, or present to, consciousness; performed,
employed, etc., without conscious action.” (Oxford English Dict.
<http://www.oxfordreference.com> [as of Feb. 27, 2014].) And, the Merriam-Webster
on-line dictionary defines the word to include “not knowing or perceiving,” “not aware,”
“not marked by conscious thought, sensation, or feeling.” (Merriam-Webster’s Dict.
<http://www.merriam-webster.com/dictionary/unconscious> [as of Feb. 27, 2014.) Thus,
in common parlance, it is known that someone can be in a state of unconsciousness while
retaining the ability to move physically.
In this matter, there was no suggestion to the jury that the legal defense of
unconsciousness was not available to defendant if he could move physically. While it is
true that the jury received the standard instruction telling them that certain instructions
may or may not apply depending on their findings on the facts, they could reasonably
conclude that the defense of unconsciousness might apply under the facts of this case by
virtue of the court instructing them on the defense and, thus, might apply even though the
defendant was physically moving while unconscious under his version of the events of
the evening.
On this point, the California Supreme Court’s opinion in People v. Hughes (2002)
27 Cal.4th 287 (Hughes) is instructive. In Hughes, the defendant argued, as defendant
argued here, that the trial court erred in failing to instruct the jury that unconsciousness
9
under the law does not require that a person be incapable of movement. The court
concluded that “[b]ased upon the state of the evidence before the jury when it heard [the
instruction on unconsciousness], it is not reasonably likely that the jury was misled into
believing that it was precluded from finding unconsciousness merely because there was
evidence that defendant moved about and engaged in various affirmative activity.” (Id. at
p. 344.)
So too here. The jury heard the evidence relating to defendant’s claim that he was
legally unconscious during the time he moved physically to engage in an act of sexual
intercourse with K.C. and was then instructed, as noted above, that it could consider a
defense of unconsciousness under the facts of the case given the evidence before them.
Nothing during the course of the trial even suggested that the defense was unavailable
because the defendant was capable of physical movement.
Defendant argues that the People suggested in closing arguments that the defense
was not available because the defendant was not motionless during the acts leading up to
and including sexual intercourse with the victim. We do not read the deputy district
attorney’s remarks that way. During his closing argument, he did nothing more than
point out that defendant’s defense was unlikely in the extreme because the jury would
have to accept the facts that, as and after he passed into unconsciousness, K.C. removed
or lowered defendant’s pants and removed her own clothing and positioned defendant on
top of her and, further, that in his unconscious state, he was able to achieve an erection
and engage in sexual intercourse to the point of ejaculation, shortly after which he
regained consciousness and realized what he was doing. There was nothing in counsel’s
argument that suggested that defendant’s claim of unconsciousness had to be rejected
solely because he was able to move physically while unconscious.
There was no instructional error in failing to make explicit the point that the jury
must have necessarily inferred.
10
B. The “Presumption of Conscious”
Noting this court’s opinion in People v. Mathson (2012) 210 Cal.App.4th 1297,
1301, 1323 (Mathson) criticizing the third paragraph of former CALCRIM No. 3425 and
finding it “flawed” and “problematic” under the facts of that case, defendant argues that
the instruction violated his right to due process of law because, in its ambiguity, it
“creat[ed] a mandatory, conclusive presumption of consciousness.”
The third paragraph of former CALCRIM No. 3425 as given to the jury in this
matter, reads:
“The People must prove beyond a reasonable doubt that the defendant was
conscious when (he/she) acted. If there is proof beyond a reasonable doubt that the
defendant acted as if (he/she) were conscious, you should conclude that (he/she) was
conscious. If, however, based on all the evidence, you have a reasonable doubt that
(he/she) was conscious, you must find (him/her) not guilty.” (Former CALCRIM No.
3425.)
We note, first of all, that Mathson did not hold, or necessarily suggest, that the
language of former CALCRIM No. 3425 creates a mandatory, conclusive presumption of
consciousness and, second, that the Mathson case dealt with a question relating to
unconsciousness caused by alcohol intoxication which explains the court’s criticism of
the last sentence of the paragraph as applied to that case.
In any event, we do not find that the language of the last paragraph of the
instruction, quoted above, creates a mandatory, conclusive presumption. It simply
advises the jury that, if a defendant acts as if he is conscious, then he should be found to
have been conscious. If, on the other hand, there is evidence that raises a reasonable
doubt that he was conscious, he must be found not guilty. The instruction, read as a
whole, does not require the jury to find that a defendant is conscious based on the mere
fact that he is able physically to move during the course of his crime. The instruction
11
tells the jury that it should presume defendant was conscious if he acted as if he were
conscious unless the jury, based on all the evidence including his physical movements or
lack thereof, has a reasonable doubt that he was conscious of his criminal acts at the time
he undertook them in which case he should be found not guilty, that is, that any
presumption of conscious is rebuttable and not conclusive.
There being no mandatory, conclusive presumption in the instructions that the
defendant was conscious of his acts, there was no lessening of the People’s burden of
proof and no violation of the defendant’s right to due process of law.
C. An Instruction on Involuntary Intoxication
Defendant argues that defendant’s request for an “accident” instruction in the form
of CALCRIM No. 3404, should have alerted the trial court of a need to give, sua sponte
an instruction on unconsciousness resulting from involuntary intoxication.
The People counter, in part, by arguing that defendant has forfeited this argument
on appeal due to his failure to specifically ask for an instruction on involuntary
intoxication. Defendant replies that the defendant in fact did do enough to alert the court
to the need for such an instruction when defendant asked for an instruction on the defense
of “accident[].” We need not decide this point because we hold that the instructions were
a correct statement of the law and were adequate to advise the jury as to the defense of
unconsciousness under the facts and circumstances of this case.
The second paragraph of former CALCRIM No. 3425 reads as follows:
“Unconsciousness may be caused by (a blackout[,]/ [or] an epileptic seizure[,]/
[or] involuntary intoxication[,]/ [or] sleepwalking[,]/ or <insert a
similar condition>).”
Because the evidence did not suggest that defendant’s lack of consciousness at the
time of the act of sexual intercourse was caused by a blackout, an epileptic seizure,
12
involuntary alcohol intoxication, or sleepwalking, the trial court chose to describe the
condition that caused the asserted lack of consciousness as a “medical condition.”
Although, for purposes of this appeal, we may accept the defendant’s argument
that involuntary intoxication can be caused by the voluntary ingestion of prescription
medication (see Mathson, supra, (2012) 210 Cal.App.4th at p. 1313), we fail to see,
under these circumstances, what such an instruction would have added to the defense that
defendant relied on before the jury. The trial court told the jury that a legal state of
unconsciousness, and, thus, a full defense to the charges they were to consider, could be
caused by a “medical condition.” The evidence at trial was uncontradicted that
defendant, suffering from diabetes, injected insulin which in turn rendered him
hypoglycemic and, according to him, legally unconscious. The jury was told, in effect,
that a medical condition, presumably given the evidence before the jury, diabetes, could,
in some circumstances, cause a lack of legal consciousness. The trial court’s instruction
supported defendant’s theory of the case. To have told the jury that defendant’s
voluntary injection of insulin could have led to involuntary intoxication and a lack of
legal consciousness would have added nothing and would have been potentially
confusing.
Moreover, the trial court’s willingness to instruct on the defense of
unconsciousness was generous under the circumstances given that, other than the
defendant’s say-so, there was no evidence presented to the jury, expert or otherwise, that
the injection of insulin in the amount defendant injected, medically could lead to a
hypoglycemic state of unconsciousness that would allow the unconscious diabetic to
engage in an act of sexual intercourse without being aware of his actions.
The jury was instructed in a manner that was consistent with the defense here
presented and no more was required. There was no error.
13
II
The Section 290 Registration Order
Defendant points out that his conviction for a violation of section 261.5 is not a
conviction that requires sex offender registration under section 290 and that there is no
indication in the record that the trial court exercised its discretion to so order pursuant to
section 290.006. The People agree. We accept the concession.
In this matter, it appears the trial court ordered defendant to register as a sex
offender pursuant to section 290 based upon the probation report’s erroneous statement
that the offense of which defendant stood convicted was one which came within the
mandatory registration requirement set forth in that statute. Given that portion of the
probation report, the court did not undertake to exercise its discretionary authority to
order defendant to register as a sex offender under section 290.006. Under the
circumstances, we will remand the matter to the trial court for its determination whether
defendant should be ordered to register as a sex offender pursuant to the provisions of
section 290.006. (See People v. Hofsheier (2006) 37 Cal.4th 1185, 1208-1209; People v.
Thompson (2009) 177 Cal.App.4th 1424, 1431.)
III
The Sexual Battery Fine
Defendant next argues the court erred in assessing a $600 fine for sexual battery
pursuant to section 243.4 since defendant was not convicted of that offense. The People
concede that, defendant not having been convicted of a violation of section 243.4, the
court erred in assessing a fine pursuant to that section. But the People argue, first, that
defendant forfeited this assignment of error by not making an objection in the trial court
and, second, that, since the court had the authority to assess what the People describe as a
“civil fine” of up to $10,000 pursuant to section 261.5, subdivision (e)(1)(C), the $600
fine was somehow “authorized.” We disagree with both of the People’s arguments.
14
Regarding forfeiture, the People rely on People v. Scott (1994) 9 Cal.4th 331
(Scott). In Scott our Supreme Court held that the forfeiture doctrine “should apply to
claims involving the trial court’s failure to properly make or articulate its discretionary
sentencing choices” (Id. at p. 353.) The court added that forfeited claims, “[i]n essence,
. . . involve sentences which, though otherwise permitted by law, were imposed in a
procedurally or factually flawed manner.” (Id. at p. 354.)
The court in Scott also addressed “unauthorized sentence[s]” (defendant’s claim
here), which are not forfeited by failure to object in the trial court and can be raised for
the first time on appeal. The court explained that “[a]lthough the cases are varied, a
sentence is generally ‘unauthorized’ where it could not lawfully be imposed under any
circumstance in the particular case. Appellate courts are willing to intervene in the first
instance because such error is ‘clear and correctable’ independent of any factual issues
presented by the record at sentencing.” (Scott, supra, 9 Cal.4th at p. 354.)
It does not require us to turn to a citation of authority to conclude that the
sentencing error complained of here amounted to an unauthorized sentence. Put simply,
a trial court could not have lawfully imposed a $600 fine under a statute describing a
crime the defendant did not commit. The error was not forfeited.
We also reject the People’s second argument. Section 261.5 provides in part that
an adult who violates that section may be liable for a civil penalty (inaccurately
denominated a civil “fine” by the People) up to, in defendant’s case, $10,000. (§ 261.5,
subd. (e)(1)(C).) This provision does not call for a “fine,” but is, instead, a potential civil
monetary penalty that may be assessed after the district attorney brings an action to
recover the penalty pursuant to section 261.5 subdivision (e)(2). The money recovered is
used to offset the costs of pursuing the action and is placed with the treasurer of the
county in which the judgment is entered, any overage to be deposited in the Underage
Pregnancy Prevention Fund. (Ibid.) The statute thus provides for a civil action against a
defendant who commits the crime set forth therein. The provision for a “fine” for a
15
violation is set forth in section 261.5, subdivision (e)(3). To the extent the People’s
argument is essentially that, since defendant could have been (or could be) subject to a
civil penalty of up to $10,000, a $600 fine amounts to no harm, no foul, we reject that
reasoning as well.
We will strike the $600 fine imposed under the authority of section 243.4.
IV
The No-Visitation Order
At sentencing, the trial court ordered that the defendant would have no visitation
privileges with K.C., an order entered pursuant to section 1202.05. Defendant contends
the order is unauthorized because (1) a violation of section 261.5 is not one of the
offenses enumerated in section 1202.05 and (2) K.C. had reached the age of majority at
the time of defendant’s sentencing and section 1202.05 is intended only to prohibit prison
visitation between adult offenders and their minor victims, citing People v. Scott (2012)
203 Cal.App.4th 1303. The People agree the order was unauthorized. We agree, too, and
we will strike the order.
V
Presentence Conduct Credits
The trial court did not award presentence conduct credit under the mistaken
impression that it was precluded from doing so because the court was sentencing
defendant to an indeterminate sentence in prison. Citing a number of cases that hold to
the contrary, defendant argues that he is entitled to 568 days of presentence conduct
credits. Once again, the People concede the error but, relying on People v. Saldivar
(1984) 154 Cal.App.3d 111 (Saldivar), argue that the matter should be remanded to the
trial court for that court’s determination of the defendant’s conduct while in local
custody.
16
We agree the trial court erred in refusing to order presentence conduct credits, but
we do not agree that the matter should be remanded to the trial court. Unlike Saldivar
where the record reflected reasonably substantial evidence that the juvenile in that matter
had, in fact, been highly aggressive, had threatened the case worker, had been placed in a
security room where he was found with a piece of metal shaped into a weapon (Saldivar,
supra, 154 Cal.App. 3d at p. 115), in other words substantial evidence that the juvenile
did not have a right to presentence custody credits, there is no evidence on this record of
defendant’s having misbehaved while in local custody pending trial. And we think there
would have been had misbehavior occurred. We note that the probation report prepared
prior to sentencing, under the heading “Jail Behavior,” reported only that defendant
attempted suicide and precautions were taken to keep the defendant safe and to keep him
from harming himself. We note also that the court in Saldivar undertook an assessment
of conduct credits and determined the matter itself without remanding to the juvenile
court for its further consideration.
Under these circumstances, it is appropriate to order that defendant shall be
awarded 568 days of local conduct credit.
VI
Proposition 36
Finally, defendant argues that, by way of a retroactive application of Proposition
36, he is entitled to a remand for resentencing under the provisions of section 1170.12,
subdivision (c). Defendant asks us to follow the Fourth District Court of Appeal decision
in People v. Lewis (2013) 216 Cal.App.4th 468, review granted, Aug. 14, 2013, S211494
(Lewis) which held that Proposition 36 should have retroactive effect. Before Lewis, the
Fifth District Court of Appeal decided section 1170.12 did not have retroactive effect in
People v. Yearwood (2013) 213 Cal.App.4th 161 (Yearwood). After Yearwood, but
before Lewis, this court decided People v. Conley (2013) 215 Cal.App.4th 1482 review
17
granted, Aug. 14, 2013, S211275 which, among other things, held that Proposition 36
applied only to those persons not yet convicted or not yet sentenced.
It is safe to say that the law in this area is unsettled although Yearwood, at present
at least, remains good law.
Defendant argues section 1170.12, applies to him because his third-strike sentence
is not yet final on appeal thus requiring a remand of his case to the trial court for
resentencing. Central to his argument is the case of In re Estrada (1965) 63 Cal.2d 740
(Estrada). In Estrada the Supreme Court held that “where the amendatory statute
mitigates punishment and there is no saving clause, . . . the amendment will operate
retroactively so that the lighter punishment is imposed” in all cases in which the
judgment was not yet final when the amendment took effect. (Id. at p. 748.)
Section 1170.12 does not have an express saving clause. But even in the absence
of an express saving clause, the rule in Estrada does not apply if the Legislature by other
language “clearly signals its intent to make the amendment prospective.” (People v.
Nasalga (1996) 12 Cal.4th 784, 793.) “ ‘[W]hat is required is that the Legislature
demonstrate its intention with sufficient clarity that a reviewing court can discern and
effectuate it.’ [Citation.]” (Ibid.)
Statutes enacted into law through the initiative process are construed in the same
manner, and are subject to the same principles as, statutes enacted by the Legislature.
(People v. Elliot (2005) 37 Cal.4th 453, 478.) One of the most important principles is
that statutes dealing with the same subject matter—commonly referred to as statutes “in
pari materia”—should be construed together. (People v. Honig (1996) 48 Cal.App.4th
289, 327.) Application of this rule is especially appropriate in cases where statutes
relating to the same subject matter were passed at the same time. (Stickel v. Harris
(1987) 196 Cal.App.3d 575, 590.) Section 1170.126, a related statute added by
Proposition 36, defeats the presumption of retroactivity set forth in Estrada. It authorizes
18
limited application to prisoners serving three strikes sentences when the measure was
enacted and establishes a specific procedure for defendant to follow in this case.
In particular, section 1170.126 provides for the resentencing of “persons presently
serving an indeterminate term of imprisonment pursuant to paragraph (2) of subdivision
(e) of Section 667 or paragraph (2) of subdivision (c) of Section 1170.12, whose sentence
under this act would not have been an indeterminate life sentence.” (§ 1170.126, subd.
(a).) A person serving a three strikes sentence for a current conviction that is not a
serious or violent felony “may file a petition for a recall of sentence, within two years
after the effective date of the act that added this section or at a later date upon a showing
of good cause, before the trial court that entered the judgment of conviction in his or her
case, to request resentencing in accordance with” Proposition 36. (§ 1170.126, subd.
(b).) An inmate is eligible for resentencing unless he has prior convictions for certain
specified offenses. (§ 1170.126, subd. (e).) If the prisoner is eligible, then the trial court
will resentence the defendant “unless the court, in its discretion, determines that
resentencing the petitioner would pose an unreasonable risk of danger to public safety.”
(§ 1170.126, subd. (f).) The factors governing the exercise of the trial court’s
discretion—the prisoner’s criminal history, record in prison, and any other relevant
evidence—are set forth in section 1170.126, subdivision (g).
In light of this scheme, which provides for limited application of Proposition 36 to
prisoners serving three-strikes sentences at the time of its enactment, the presumption in
Estrada does not apply as to them; it applies only to those people not yet convicted or not
yet sentenced. Those already sentenced and serving an indeterminate term of
imprisonment must petition the trial court for a recall of sentence regardless of whether or
not their judgment is final. Nothing in section 1170.126 states that its reference to
“persons presently serving an indeterminate term of imprisonment . . . whose sentence
under this act would not have been an indeterminate life sentence” is meant to apply only
to those serving a term of imprisonment under a final judgment. (§ 1170.126, subd. (a).)
19
We may not insert such words into the statute. (Code Civ. Proc., § 1858; Adoption of
Kelsey S. (1992) 1 Cal.4th 816, 826-827.)
Our conclusion that section 1170.12 does not apply retroactively is supported by
Yearwood. Yearwood buttressed its conclusion by referencing the voters’ intent in
approving the Act and by ballot arguments. According to Yearwood, enhancing public
safety was a key purpose of the Act. A prospective-only application of the Act supports
the Act’s public safety purpose by reducing the likelihood that prisoners who are
currently dangerous will be released from prison due to the Act. If the Act were given
retroactive application, prisoners in defendant’s position would be entitled to automatic
resentencing without any judicial review to ensure they do not currently pose an
unreasonable risk of danger to public safety. The time period between sentencing and
finality of judgment can span years, and prisoners can increase in dangerousness during
this interval. Such a “loophole,” the court reasoned, would be inconsistent with the
public safety purpose of the Act. (Yearwood, supra, 213 Cal.App.4th at p. 176.)
Although not raised specifically here, we note in passing that Yearwood also
rejected the argument that failing to apply the mandatory ameliorative benefits of
Proposition 36 retroactively would violate the equal protection clause of the federal
Constitution, noting that the rational relationship test is the appropriate test, and
concluding: “Prospective application of amended sections 667 and 1170.12 furthers
legitimate interests and does not unfairly discriminate against appellant. A prisoner who
was sentenced to an indeterminate life term before the Act’s effective date may file a
section 1170.126 petition upon finality of the judgment. If qualified, the prisoner will
ordinarily receive the same sentencing reduction that would have been obtained if he or
she had been resentenced under amended sections 667 and 1170.12. The discretionary
public safety exception to second strike sentencing that is present in section 1170.126,
but not in amended sections 667 and 1170.12, is rationally related to a legitimate state
interest. It increases the likelihood that prisoners whose sentences are reduced or who are
20
released due to the Act will not pose an unreasonable risk of danger to the public.”
(Yearwood, supra, 213 Cal.App.4th at pp. 178-179.)
In any event, we agree with Yearwood and for that reason reject defendant’s
argument to the same effect.
DISPOSITION
The judgment is modified to strike the $600 fine imposed pursuant to Penal Code
section 243.4, to strike the no-visitation order imposed pursuant to Penal Code section
1202, and to order the award of 568 days presentence conduct credit. The matter is
remanded to the trial court for its consideration of whether defendant should be ordered
to register as a sex offender pursuant to Penal Code section 290.006. In all other
respects, the judgment is affirmed. The trial court shall prepare an amended abstract of
judgment consistent with this disposition and send a certified copy to the Department of
Corrections and Rehabilitation.
HULL , J.
We concur:
NICHOLSON , Acting P. J.
HOCH , J.
21
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247 P.3d 220 (2011)
STATE of Kansas, Appellee,
v.
Charles Raymond CUMMINGS, III, Appellant.
No. 103,343.
Supreme Court of Kansas.
March 4, 2011.
*221 Matthew J. Edge, of Kansas Appellate Defender Office, for appellant.
Steven J. Obermeier, assistant district attorney, Stephen M. Howe, district attorney, and Steve Six, attorney general, for appellee.
Before GREENE, C.J., BUSER and ATCHESON, JJ.
GREENE, C.J.
Charles Raymond Cummings, III, appeals the district court's order to reimburse his Board of Indigents' Defense Services (BIDS) attorney fees, arguing that the court failed to make the necessary findings to impose such an order. We agree, vacate the order of reimbursement, and remand for further proceedings.
Cummings pled guilty to attempted aggravated robbery and was sentenced to 31 months' imprisonment. Before imposing the attorney fees, the district court had the following conversation with Cummings and his counsel:
"The Court: AID.
"[Defense Counsel]: Two hundred, but considering the fact that he will not be able to pay that.
"The Court: Can he pay it when he gets out?
"[Defense Counsel]: Judge, I can't predict.
"The Court: The appellate courts say I shall award AID, so you tell me how much you're willing to pay per month after you get out, sir.
"[Defense Counsel]: Judge, once again, I don't know if he is able.
"The Court: I am told by the appellate courts I shall award AID, so I'm trying to figure out. You're going to pay $50 a month?
"[Cummings]: Yes.
"The Court: All right. Good luck to you at the Department of Corrections. All right, sir."
Cummings' sole contention on appeal is that the district court failed to make the requisite findings to support the reimbursement order under K.S.A. 22-4513. Interpretation and application of a statute is a question of law over which we exercise unlimited review. State v. Arnett, 290 Kan. 41, 47, 223 P.3d 780 (2010).
In State v. Robinson, 281 Kan. 538, 546, 132 P.3d 934 (2006), our Supreme Court directed sentencing courts, "at the time of the initial assessment" of BIDS attorney fees under K.S.A. 22-4513, to "consider the financial resources of the defendant and the nature of the burden that payment will impose explicitly, stating on the record how those factors have been weighed in the court's decision." The remedy for a sentencing court's failure to make such explicit findings is to remand to the sentencing court for such findings. 281 Kan. at 548, 132 P.3d 934; see State v. Copes, 290 Kan. 209, 218, 224 P.3d 571 (2010) (determining that K.S.A. 22-4513[b] applies when the defendant enters into a plea agreement, absent an explicit waiver of the rights granted by the statute).
The State argues on appeal that Cummings is not entitled to relief for a plethora of reasons, all of which have been rejected previously by this court, albeit some contained in unpublished opinions.
First, the State argues that the district court's colloquy with Cummings was sufficient to satisfy the statutory mandate. Under very similar if not virtually identical facts, a panel of our court has rejected this *222 argument. State v. Knight, 44 Kan.App.2d 666, 241 P.3d 120 (2010). The Knight panel noted that the district court
"merely asked Knight how much he could pay and when he could start paying it back; it did not inquire into Knight's financial resources. The trial court also did not consider the nature of the burden a reimbursement payment would impose on Knight. Finally, the court did not state how those factors were weighed in coming to the decision to impose a reimbursement payment on Knight." 44 Kan.App.2d at 687, 241 P.3d 120.
In this case, as in Knight, the district court erred in ordering Cummings to pay BIDS fees without first making the proper Robinson inquiries and findings on the record.
Next, the State argues that if there was error, it was harmless. The State seeks to distinguish this case from Robinson by arguing that because Cummings was not granted probation, there was no need to assess the defendant's financial resources after his sentence was served, as this finding would not be binding on the parole board. This court, in unpublished opinions, has specifically rejected this argument. See State v. Dennis, No. 101,313, 2010 WL 2545642, unpublished opinion filed June 11, 2010 (Kan. App.), rev. denied Aug. 3, 2010; State v. Geolas, No. 97,949, 2008 WL 307487, unpublished opinion filed Feb. 1, 2008 (Kan.App.); see also State v. Frost, No. 98,433, 2009 WL 2371007, unpublished opinion filed July 31, 2009 (Kan.App.), rev. denied Sept. 7, 2010 (rejecting argument that Robinson did not apply).
Next, the State argues that there was no need to assess Cummings' future financial resources and the nature of the burden imposed because Cummings was sent to prison for 31 months and could not be ordered to pay restitution, citing State v. Bowers, 239 Kan. 417, 721 P.2d 268 (1986). This argument was recently rejected by a panel of our court in Dennis. There, the State argued harmless error because the defendant went to prison, and therefore the court could not order her to immediately pay restitution. 2010 WL 2545642 at *1. Dennis rejected this argument, finding that although Bowers states that the defendant in prison cannot be charged with payment of restitution while she is in prison, attorneys fees are not restitution, but are part of the court costs. The panel found that the Bowers holding that immediate payment of restitution cannot be required of an incarcerated prisoner in no way affects the well settled rule of law that upon conviction, a defendant shall be ordered to pay court costs. Ibid. (citing State v. DeHerrera, 251 Kan. 143, 155, 834 P.2d 918 [1992]).
Finally, the State argues that K.S.A. 22-3717, which deals exclusively with parole dispositions, is a more specific statute dealing with the reimbursement of BIDS attorney fees and, therefore, controls over the more general statute, K.S.A. 22-4513. This argument has also been rejected by a panel of this court:
"However, before a more specific statute is deemed to control a general statute, a court must identify a conflict between the statutes. State v. LaMunyon, 259 Kan. 54, Syl. ¶ 1, 911 P.2d 151 (1996). Here, there is no conflict between the statutes. K.S.A. 22-3717(m)(5) merely requires the Kansas Parole Board to include repayment of BIDS attorney fees as a condition of parole or postrelease supervision, unless repayment would be unworkable. This statute is entirely consistent with the mandate of K.S.A. 22-4513, which requires the imposition of BIDS attorney fees as part of sentencing, regardless of whether the defendant is incarcerated or given probation." State v. Proctor, No. 97,504, 2008 WL 1847637, unpublished opinion filed April 18, 2008 (Kan.App.).
We conclude the district court failed to make the requisite findings to impose BIDS attorney fees against Cummings, so we vacate the reimbursement order and remand for further proceedings in accordance with the mandates of Robinson.
Vacated and remanded.
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105 Ariz. 553 (1970)
468 P.2d 580
The STATE of Arizona, ex rel. Moise BERGER, Maricopa County Attorney, Petitioner,
v.
The SUPERIOR COURT of the State of Arizona IN AND FOR the COUNTY OF MARICOPA, the Honorable Morris Rozar, Judge thereof, and Terryll Scott Merritt, Real Party In Interest, Respondent.
No. 9891.
Supreme Court of Arizona, In Banc.
April 29, 1970.
Rehearing Denied June 2, 1970.
Moise Berger, Maricopa County Atty., By H. Charles Eckerman, Phoenix, for petitioner.
Michael Hurley, Phoenix, for respondent.
HAYS, Justice.
Terryll Scott Merritt, real party in interest and defendant below, was charged in the Tolleson Justice Court with the crimes of burglary and grand theft. Thereafter, on January 9, 1969, the Maricopa County Public Defender was appointed to represent defendant at the preliminary hearing and in all further proceedings.
*554 The matter was set for trial on November 6, 1969, at which time a voluntariness hearing was held, outside of the presence of the jury, to determine whether certain alleged statements of the defendant were admissible at trial. After hearing the evidence, the Honorable Morris Rozar, Judge of the Maricopa County Superior Court, ruled that the challenged statements were involuntarily made and were thus inadmissible. The State then petitioned this Court for a Writ of Certiorari, which we granted on December 23, 1969. Having reviewed the record of the voluntariness hearing below, we remand this cause to the trial court for proceedings not inconsistent with this decision.
At the voluntariness hearing, sheriff's deputies Dave Arellanes, Jim Kepner and Tom Ennis testified as to certain statements which the defendant allegedly made to them after defendant had appeared before the justice of the peace, been incarcerated, and had counsel appointed for him. Pursuant to requests by the defendant sent from the jail indicating he wanted to talk about his case, Arellanes and Kepner engaged in three separate conversations with defendant on the days of January 12th, 19th and 20th, 1969. Immediately before each of these conversations, the sheriff's deputies read to defendant the standard Miranda warnings. These warnings were contained on a printed card, which read as follows:
"You have the right to remain silent.
Anything you say can be used against you in a court of law.
You have the right to the presence of an attorney to assist you prior to questioning, and to be with you during questioning, if you so desire.
If you cannot afford an attorney you have the right to have an attorney appointed for you prior to questioning.
Do you understand these rights?
Will you voluntarily answer my questions?"
On each occasion defendant initialed or signed the printed card prior to making any statements. On each occasion defendant made oral statements to the deputies concerning the alleged crimes. Defendant's counsel was neither present at nor contacted prior to any of the conversations. The sheriff's deputies were aware that a deputy public defender had previously been appointed in defendant's behalf.
In his response to the State's petition for Writ of Certiorari, defendant acknowledges that Judge Rozar's ruling was based on the Court of Appeals decision of State v. Herman, 3 Ariz. App. 323, 414 P.2d 172 (1966), a case with facts quite similar to the present case. Herman holds that where a defendant has retained counsel from the time of his arraignment, "the defendant may not be questioned outside the presence of counsel without counsel's permission." 3 Ariz. App. at 327, 414 P.2d at 176. The decision concludes that statements elicited from a defendant, without the presence or approval of defendant's counsel, are inadmissible as a matter of law. By our holding today we expressly overrule that portion of State v. Herman which is inconsistent herewith.
Our Federal Courts have consistently held that voluntary confessions are not barred by the Fifth Amendment to the U.S. Constitution. A confession is not made involuntary by the mere fact that it was made outside the presence of an attorney. In enumerating its standards for voluntary confessions in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the U.S. Supreme Court stated the following:
"In dealing with statements obtained through interrogation, we do not purport to find all confessions inadmissible. Confessions remain a proper element of law enforcement. Any statement given freely and voluntarily without any compelling influences is, of course, admissible in evidence. The fundamental import of the privilege while an individual is in custody is not whether he is allowed to talk to the police without the benefit of warnings and counsel, but whether he *555 can be interrogated. There is no requirement that the police stop a person who enters a police station and states that he wishes to confess to a crime, or a person who calls the police to offer a confession or any other statement he desires to make. Volunteered statements of any kind are not barred by the Fifth Amendment and their admissibility is not affected by our holding today." 384 U.S. at 478, 86 S.Ct. at 1630, 16 L.Ed.2d at 726.
Thus, Miranda recognizes that a suspect may waive his Fifth Amendment rights at any time, provided the waiver is voluntary, knowing and intelligent.
In Reinke v. United States, 405 F.2d 228 (9th Cir.1968), the Ninth Circuit Court of Appeals reached the same conclusion which we reach today. In Reinke the defendant was convicted, in the U.S. District Court for the District of Arizona, of interstate transportation of a stolen motor vehicle. While in jail, and after his attorney had been appointed, he made incriminating statements to an FBI agent. On appeal, the Ninth Circuit held that the statements were voluntary and admissible, even though the agent knew that counsel had been appointed and failed to obtain counsel's permission to proceed with the interview, because the accused had affirmatively initiated the interview, the appropriate Miranda warnings had been given, and the accused fully understood his Miranda rights.
From the testimony at the voluntariness hearing the court could well have found that the defendant had voluntarily and intelligently waived his right to the presence of his appointed counsel. We hold that there is no magic formula of words nor pre-ordained ritual which must be invoked in order to accomplish this waiver, as long as there is a satisfactory showing that the defendant did so willingly and with an understanding of what he was doing.
The defendant at the hearing gave testimony from which the court could infer that his statements to the deputies were made under the pressure of his being placed in the "hole." The trial court's order leaves unclear whether or not its finding of involuntariness was based on the mandate of the Herman case, supra, or on the other facts presented at the hearing. It is for this reason we consider it appropriate for the trial court to re-examine this matter and make a specific finding as to whether the circumstances of taking the statements were so oppressive as to render such statements involuntary.
This case is remanded to the trial court for proceedings not inconsistent with this decision.
STRUCKMEYER, V.C.J., and UDALL, J., concur.
McFARLAND, Justice (dissenting).
This case comes before us on a writ of certiorari to determine whether there was substantial evidence to support the holding of Judge Morris Rozar that statements made by the defendant were not voluntarily made, and for this reason are inadmissible. In passing upon this question in past cases, we have held this Court is not concerned with mere conflicts in the evidence but whether there is substantial evidence to support a verdict or finding of the trial court. State v. Owen, 101 Ariz. 156, 416 P.2d 589; State v. Turner, 101 Ariz. 85, 416 P.2d 409; State v. Rivera, 94 Ariz. 45, 381 P.2d 584.
The defendant was arraigned in Tolleson Precinct Justice Court on the 9th day of January 1969, at which time the Public Defender was appointed to represent him in all future proceedings. Immediately prior to the trial, on November 6, 1969, a voluntariness hearing was held as to these alleged statements made by the defendant. At the hearing, Maricopa County Deputy Sheriffs Dave Arellanes, Jim Kepner, and Tom Ennis testified as to the statements allegedly made by the defendant.
The defendant and Oral W. Tucker, Jr., a deputy public defender, testified in opposition to the alleged voluntary statements. The officers testified that they had three separate conversations with the defendant namely, on the 12th, 19th, and 20th *556 days of January 1969. They testified that during these conversations the defendant made certain incriminating statements. The question of the voluntariness of the statements turns upon whether the defendant waived his right to counsel. The officers testified that the defendant informed them that he was, in fact, represented by the public defender at the time. The officers testified that before each of the times of interrogations they read to defendant what are known as the "Miranda warnings" as follows:
"You have the right to remain silent. Anything you say can be used against you in a court of law. You have the right to the presence of an attorney to assist you prior to questioning, and to be with you during questioning, if you so desire. If you cannot afford an attorney, you have a right to have an attorney appointed for you prior to questioning."
The cards with the warnings were introduced in evidence. The card of January 12th contains the signature of defendant, and those of the 19th and 20th show he had initialed the card, which indicates that he had had it read to him, or at least that he had seen it. After which the officers testified that the defendant made oral statements to the deputies concerning the alleged crimes. Defendant's counsel were not present prior to the conversation, or at any time during the conversations. The record does not show that defendant expressly waived his right to counsel at the time of the conversations. It merely shows that the deputies read the Miranda rights to him. Defendant's testimony at the hearing was as follows:
"DIRECT EXAMINATION
"BY MR. HURLEY:
"Q Would you state your name, please?
"A Terryl Scott Merritt
"Q Terryl, are you the defendant in this case?
"A Yes.
"Q Terryl, do you recall the date that you were arrested for this charge?
"A Yes.
"Q What date was that?
"A January 7.
"Q What year?
"A 1969.
"Q All right. Do you recall when you were arraigned on this charge in the J.P. Court?
"A January 9th, 1969.
"Q And what J.P. Court was this, do you recall?
"A It's in Tolleson, Arizona, and Justice Session was the justice.
"Q All right. Do you recall whether or not the Judge asked you if you had funds to employ a private counsel at that time?
"A Yes, he did.
"Q And what was your answer to that?
"A That I had no funds to obtain counsel.
"Q And what did he say in regards to that?
"A He asked me if I wanted counsel for my defense.
"Q And what did you say?
"A I told the court at that time that I wanted all my rights and that I did.
"Q And then what did he say?
"A And then he said he would notify the Public Defender's Office and an attorney would be appointed for my counsel.
"Q Now, you know Detective Arellanes and Sargeant Kepner, do you not?
"A Yes, I do.
"Q And they questioned you in this matter?
"A Yes, they did.
"Q At any time did you tell them that you were represented by the Public Defender's Office?
"A Yes, I did.
"Q And when did you tell them that?
Do you recall?
"A Everytime that they came to see me.
*557 "Q You told them that you were represented by the Public Defender's Office?
"A Yes, I did. I told them everytime that they came to see me.
"Q All right.
"A I said that I had a lawyer and it was all I also told them that I had a lawyer when they were showing me off to the witnesses.
"MR. HURLEY: All right. No further questions.
"CROSS EXAMINATION
"BY MR. ECKERMAN:
"Q Did you, Terry, have a conversation with Officer Tom Ennis sometime after your arrest in jail?
"A Yes, I did. I put in a tank order to see him.
"Q And did he then come and see you?
"A Yes, he did.
"Q And did you at that time ask him to see the other officers in the case, the investigating officers?
"A Yes, I did. I wanted to talk. I wanted to ask them why I was in the hole and why I could not see a doctor because of the way my hands was treated when I was cuffed out in the desert. That's why I wanted to see them.
"Q And did they then come and see you?
"A Yes, they did. They would not talk.
They would not talk.
"Q Just answer my questions.
"MR. HURLEY: Just answer his questions, Terry.
"A Yes, I understand.
"Q And at the time you saw them, were you warned of your rights by them, your constitutional rights?
"A After they talked to me first, and that's just what happened.
"Q Did they warn you of your rights prior to talking with them?
"A After I talked to them first.
"Q And did you request to see the officers also on later occasions?
"A Yes, sir, I did. I still wanted to know why I was in the hole, which I still have been for ten months.
"MR. ECKERMAN: Do you have those cards here?
"THE CLERK: Yes.
"Q BY MR. ECKERMAN: Now, the first time that you saw the officers, did you agree to go with them and show them where the items had been hidden that were taken from Mr. Satran's house?
"A I did not. I agreed to do this, they came up to talk to me, they came up to talk to me because of the tank order I put in to talk to them about why I was in the hole, they asked me first to help clear this up and to show them where the stuff was at.
"I told them I did not know where the stuff was at, but I said since I knew so much about the desert that I might, that I might could help them locate the stuff. That's all I said.
"So they asked me if I would go with them.
"Q All right.
"A And I agreed to go."
The trial court based its ruling upon State v. Herman, 3 Ariz. App. 323, 414 P.2d 172, which case follows the holdings of Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694. It will be noted that the defendant testified that he was represented by the Public Defender during all of this time. It will also be noted that he did not waive his right to have counsel present during interrogation. Also he admitted he had sent a request to see the officers, but testified that the reason he wanted to see them was that they had put him in the "hole," and that he wanted to find out why he could not see a doctor because of his hands. He further admitted in his testimony that he was warned of his rights, but said it was after he made his statement that is, after they "talked to me first, and that's just what happened."
*558 "Q Did they warn you of your rights prior to talking with them?
"A After I talked to them first."
He further admitted that he had requested to see the officers again at a later occasion for the same reasons. In Miranda, the Court stated:
"The circumstances surrounding in-custody interrogation can operate very quickly to overbear the will of one merely made aware of his privilege by his interrogators. Therefore, the right to have counsel present at the interrogation is indispensable to the protection of the Fifth Amendment privilege under the system we delineate today. Our aim is to assure that the individual's right to choose between silence and speech remains unfettered throughout the interrogation process. A once-stated warning, delivered by those who will conduct the interrogation, cannot itself suffice to that end among those who most require knowledge of their rights. A mere warning given by the interrogators is not alone sufficient to accomplish that end. Prosecutors themselves claim that the admonishment of the right to remain silent without more `will benefit only the recidivist and the professional.' Brief for the National District Attorneys Association as amicus curiae, p. 14. Even preliminary advice given to the accused by his own attorney can be swiftly overcome by the secret interrogation process. Cf. Escobedo v. Illinois, 378 U.S. 478, 485, n. 5, 84 S.Ct. 1758, 1762, 12 L.Ed.2d 977, 983. Thus, the need for counsel to protect the Fifth Amendment privilege comprehends not merely a right to consult with counsel prior to questioning, but also to have counsel present during any questioning if the defendant so desires.
* * * * * *
"An individual need not make a pre-interrogation request for a lawyer. While such request affirmatively secures his right to have one, his failure to ask for a lawyer does not constitute a waiver. No effective waiver of the right to counsel during interrogation can be recognized unless specifically made after the warnings we here delineate have been given. * * * [384 U.S. at 469, 470, 86 S.Ct. at 1625, 1626, 16 L.Ed.2d at 720, 721]
* * * * * *
"If the interrogation continues without the presence of an attorney and a statement is taken, a heavy burden rests on the government to demonstrate that the defendant knowingly and intelligently waived his privilege against self-incrimination and his right to retained or appointed counsel. Escobedo v. Illinois, 378 U.S. 478, 490, n. 14, 84 S.Ct. 1758, 1764, 12 L.Ed.2d 977, 986. This Court has always set high standards of proof for the waiver of constitutional rights, Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, [146 A.L.R. 357] (1938), and we re-assert these standards as applied to in-custody interrogation. Since the State is responsible for establishing the isolated circumstances under which the interrogation takes place and has the only means of making available corroborated evidence of warnings given during incommunicado interrogation, the burden is rightly on its shoulders.
"An express statement that the individual is willing to make a statement and does not want an attorney followed closely by a statement could constitute a waiver. But a valid waiver will not be presumed simply from the silence of the accused after warnings are given or simply from the fact that a confession was in fact eventually obtained. A statement we made in Carnley v. Cochran. 369 U.S. 506, 516, 82 S.Ct. 884, 890, 8 L.Ed.2d 70, 77 (1962), is applicable here:
"`Presuming waiver from a silent record is impermissible. The record must show, or there must be an allegation and evidence which show, that an accused was offered counsel but intelligently and understandingly rejected the offer. *559 Anything less is not waiver.' [Id. 384 U.S. at 475, 86 S.Ct. at 1628, 16 L.Ed. at 724 Emphasis added.]
* * * * * *
"* * * He must be warned prior to any questioning that he has the right to remain silent, that anything he says can be used against him in a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires. Opportunity to exercise these rights must be afforded to him throughout the interrogation. After such warnings have been given, and such opportunity afforded him, the individual may knowingly and intelligently waive these rights and agree to answer questions or make a statement. But unless and until such warnings and waiver are demonstrated by the prosecution at trial, no evidence obtained as a result of interrogation can be used against him." [Id. 384 U.S. 479, 86 S.Ct. at 1630, 16 L.Ed. at 726 Emphasis added.]
Summing up the evidence before the court at the time, in the light most favorable to support the decision of the trial court, the defendant requested an attorney be appointed to represent him; that the Public Defender's Office was appointed to represent him; and that it was representing him at the time of the interrogations. Oral W. Tucker, Jr., Deputy Public Defender, testified that it was the policy of the Public Defender to send letters to the jail to the effect that that office is representing the defendant, and if an officer wants to talk to a defendant it should be cleared through the Public Defender; also that it is the policy of the Public Defender to be present during any conversation with an officer. Defendant testified that he sent for the officers with what they call "tank" orders for the purpose of finding out why he was in the "hole" that is, in a "tank where they keep prisoners separated from any one else." Also why he could not see a doctor. "That is why I wanted to see them," he said.
He said the first question he asked them was "Why am I here in the hole?" Even if he did request to talk to the officers about the case there is nothing in the record that shows an affirmative waiver of his right to have his counsel present. Without this waiver, the testimony is not voluntary. In Massiah v. United States, 377 U.S. 201, 84 S.Ct. 1199, 12 L.Ed.2d 246, the defendant, after being indicted with other persons for violating the federal narcotics law, retained a lawyer, pleaded not guilty, and was released on bail. While on bail, defendant held a conversation in the absence of his counsel with one of his co-defendants while sitting in the latter's automobile, unaware that the other defendant cooperating with government agents had allowed the installation of a radio transmitter under the front seat of the automobile by means of which a federal agent listened to the conversation. The court rejected the statement of the defendant during the conversation, using the following language:
"Ever since this Court's decision in the Spano case [360 U.S. 315, 79 S.Ct. 1202, 3 L.Ed.2d 1265], the New York courts have unequivocally followed this constitutional rule. `Any secret interrogation of the defendant, from and after the finding of the indictment, without the protection afforded by the presence of counsel, contravenes the basic dictates of fairness in the conduct of criminal causes and the fundamental rights of persons charged with crime.' People v. Waterman, 9 N.Y.2d 561, 565, 216 N.Y.S.2d 70, 75, 175 N.E.2d 445, 448.
"This view no more than reflects a constitutional principle established as long ago as Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, [84 A.L.R. 527,] where the Court noted that `* * * during perhaps the most critical period of the proceedings * * * that is to say, from the time of their arraignment until the beginning of their trial, when consultation, thoroughgoing investigation and preparation [are] vitally important, *560 the defendants * * * [are] as much entitled to such aid [of counsel] during that period as at the trial itself.' Id. 287 U.S. at 57, 53 S.Ct., at 59, 77 L.Ed. 158. And since the Spano decision the same basic constitutional principle has been broadly reaffirmed by this Court. Hamilton v. Alabama, 368 U.S. 52, 82 S.Ct. 157, 7 L.Ed.2d 114; White v. Maryland, 373 U.S. 59, 83 S.Ct. 1050, 10 L.Ed.2d 193. See Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799.
"Here we deal not with a state court conviction, but with a federal case, where the specific guarantee of the Sixth Amendment directly applies. Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, [146 A.L.R. 357]. We hold that the petitioner was denied the basic protections of that guarantee when there was used against him at his trial evidence of his own incriminating words, which federal agents had deliberately elicited from him after he had been indicted and in the absence of his counsel. It is true that in the Spano case the defendant was interrogated in a police station while here the damaging testimony was elicited from the defendant without his knowledge while he was free on bail. But, as Judge Hays pointed out in his dissent in the Court of Appeals, `if such a rule is to have any efficacy it must apply to indirect and surreptitious interrogations as well as those conducted in the jailhouse. In this case, Massiah was more seriously imposed upon * * * because he did not even know that he was under interrogation by a government agent.' 307 F.2d [62] at 72-73."
The majority cite Reinke v. United States, 405 F.2d 228 (9th Cir.), as supporting its position. But, in the Reinke case there was a signed waiver of rights, which read as follows:
"`YOUR RIGHTS
"`Before we ask you any questions, you must understand your rights.
"`You have the right to remain silent.
"`Anything you say can be used against you in court.
"`You have the right to talk to a lawyer for advice before we ask you any questions and to have him with you during questioning.
"`If you cannot afford a lawyer, one will be appointed for you before any questioning if you wish.
"`If you decide to answer questions now without a lawyer present, you will still have the right to stop answering at any time. You also have the right to stop answering at any time until you talk to a lawyer.
"`A lawyer will also be provided for you now, if you wish, by the Federal Public Defender's Office, Phoenix, Arizona, whom you may call at 253-7907.
"`WAIVER OF RIGHTS
"`I have read this statement of my rights and I understand what my rights are. I am willing to make a statement and answer questions. I do not want a lawyer at this time. I understand and know what I am doing. No promises or threats have been made to me and no pressure or coercion of any kind has been used against me.'
"Signed WILLIAM G. REINKE, Jr."
It will be noted that the waiver was evidently patterned after the Miranda case. It followed the Miranda warnings. This signed waiver makes it clear that the Reinke case is not in point with the facts of the instant case. United States v. Dowells, 415 F.2d 801 (9th Cir.) followed the Reinke decision, but, like Reinke, involved clear evidence of an effective waiver in fact, a signed waiver made after the Miranda warnings were given. But, inherent in both Reinke and Dowells is the requirement, under Miranda, of proof of an express waiver, which is lacking here. The instant case is more analogous to Queen v. United States, 118 U.S.App.D.C. 262, 335 F.2d 297. The facts and holding follow:
"Appellant had been arrested March 14 and taken the next day before a United *561 States Commissioner. He admitted her to bail and continued the proceedings to allow her to obtain counsel, as she requested opportunity to do. On the continued date, March 28, she reappeared, as of course she was required to do, at the offices of the Commissioner, but without counsel. The police officer who had arrested her approached her in the witness room where she was awaiting appearance before the Commissioner. With two other officers he escorted her into another room, he says with her assent, to be questioned, alone with the officers. He also said he advised her of her right not to make a statement and that if she did so it might be used against her. He testified, however, that he knew she had asked for the continuance to obtain a lawyer, and he asked her if she had obtained counsel, to which she replied either that she had obtained a lawyer, was in the process of obtaining one, or was going to do so. He was not sure which of these answers she gave. He said he talked to her to try to get to the truth of the matters involved in the charge: `I didn't feel that she had told me the truth on the 14th,' the date of the arrest, `so I wanted to talk to her on this occasion to find out the whole truth if I could.'
"In the course of this secret interrogation, in the absence of counsel, and during the continuance granted for the very purpose of enabling counsel to be obtained, the self-incriminating statements were elicited. The result of this intervention by the officers was to frustrate the right of the accused to have the assistance of counsel until by reason of these extra-judicial proceedings such assistance would be rendered fruitless if the statements thus obtained could be used to convict. For this reason, and notwithstanding the absence of an indictment, the case clearly comes within the reasoning which led to the exclusion of the evidence in Massiah and Escobedo. And see Ricks v. United States, 118 U.S. App.D.C. 216, 334 F.2d 964.
"Reversed and remanded."
As was previously stated in Miranda, supra, "* * * a heavy burden rests on the government to demonstrate that the defendant knowingly and intelligently waived his privilege against self-incrimination and his right to retained or appointed counsel." The trial court was of the opinion that the State failed to sustain this burden and there is substantial evidence to support this finding.
The mere fact of incarceration is not enough, in and of itself, to make every statement involuntary. I agree with the majority that continuous incarceration in the "hole" requires a close inquiry into the voluntariness of statements given under such conditions. But I cannot agree with the statement by the majority that the trial court's order is not clear as to the grounds upon which it was based. The fact that the trial court based its ruling on State v. Herman, supra, makes it plain that it did not consider incarceration in the "hole" as the critical factor, but was placing its decision squarely on the circumvention of defendant's counsel. The Herman case dealt solely with denial of the right to counsel, and not with coercion by virtue of incarceration. Therefore, remanding for a voluntariness hearing will not cure the problem.
Here there was an intentional interrogation of an "in custody" defendant with knowledge that he was represented by counsel; no attempt to contact said counsel; and no showing in the record of a clear and unequivocal waiver of the right to have counsel present. Such conduct violates the spirit, if not the letter, of the Miranda rule. Equally distressing is that the sanctioning of such conduct may severely undercut the future ability of defense attorneys to fulfill their obligation to vigorously protect the rights of their clients. It is my opinion that any defense attorney in private practice representing a defendant would deeply resent the representatives of the State talking to his client without the attorney's knowledge or consent. The Public Defender *562 is entitled to the same consideration as privately-retained counsel.
For these reasons I must dissent.
LOCKWOOD, C.J., concurs in this dissent.
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737 So.2d 447 (1999)
WHITE CONSOLIDATED INDUSTRIES, INC.
v.
Albert C. WILKERSON, Belinda Wilkerson, and Vesta Fire Insurance Company.
1971220.
Supreme Court of Alabama.
April 23, 1999.
Mark J. Upton of Richardson, Daniell, Spear & Upton, P.C., Mobile, for appellant.
*448 A. Richard Maples, Jr., Mobile, for appellees.
MADDOX, Justice.
In August 1992, Albert C. Wilkerson and his wife Belinda Wilkerson bought a window-unit air conditioner for their home. They bought it from a store operated by Sears, Roebuck and Company. The air conditioner, which had been manufactured by White Consolidated Industries, Inc. ("WCI"), did not work. Albert Wilkerson returned it to the Sears store the next day and exchanged it for another unit of the same model. The Wilkersons installed the air conditioner in their home. Approximately two weeks later, a fire destroyed the Wilkersons' home and all of their possessions. At the time of the fire, the Wilkersons were away from home and neither of them sustained physical injuries.
The Wilkersons' home was insured by Vesta Fire Insurance Company. Vesta hired an adjuster to investigate the loss, and it later authorized the hiring of Owen S. Posey, a "cause-and-origin" expert. Posey had years of experience investigating fires related to air-conditioning systems and was certified by the International Association of Arson Investigators. He conducted an investigation and determined that the fire had originated in the room where the air conditioner had been installed. Through a process of elimination as to the cause of the fire, Posey ultimately narrowed the cause to the air-conditioning unit. He later testified at trial that an electrical arc caused by a loose wire inside the unit had ignited the freon-oil mixture in the refrigerant line and thereby had started the fire. Another adjuster employed by Sears or by WCI endorsed Posey's findings.
Albert Wilkerson and Belinda Wilkerson and Vesta Fire Insurance Company filed an action against WCI, seeking damages based on the Alabama Extended Manufacturer's Liability Doctrine ("AEMLD") and on theories of negligence, wantonness, and breach of express and implied warranties. The Wilkersons sought reimbursement for an uninsured portion of their loss and damages for mental pain and anguish. Vesta, as subrogee under its policy insuring the Wilkersons, sought reimbursement for its payment of the Wilkersons' insured loss.
The trial court entered a summary judgment in favor of WCI with regard to Vesta's claims, and it entered a summary judgment for WCI as to the Wilkersons' claims, except for their AEMLD claim alleging that the air conditioner had been defective and unreasonably dangerous. Vesta appealed. The Court of Civil Appeals reversed the summary judgment insofar as it related to Vesta's AEMLD claim. Vesta Fire Ins. Co. v. Sears, Roebuck & Co., 705 So.2d 382 (Ala.Civ.App. 1996). The Court of Civil Appeals affirmed the summary judgment as it related to Vesta's other claims, and that court remanded the case for trial on the plaintiffs' AEMLD claims.
The trial court, after hearing extensive arguments by counsel for both sides, set aside its summary judgment with regard to the Wilkersons' claims. The court then proceeded with the trial. During the trial, the court allowed testimony regarding the items that were destroyed in the fire, such as family photographs and heirlooms, and testimony regarding the emotional condition of the Wilkersons after the fire. At the conclusion of the plaintiffs' case, the Wilkersons moved to dismiss all their claims except the AEMLD claim, and the court granted their motion. Thus, only the Wilkersons' AEMLD claim and Vesta's AEMLD claim went to the jury. The court instructed the jury on those claims and instructed the jury that if it found for the plaintiffs it could award the Wilkersons damages for mental anguish.
The jury awarded the Wilkersons $99,583, and it awarded Vesta $29,000. The court entered judgments based on those verdicts. WCI appealed.
*449 WCI makes three arguments: (1) that the trial court erred in allowing the Wilkersons to proceed on all of their claims, given the opinion of the Court of Civil Appeals in Vesta's earlier appeal; (2) that the jury verdict was against the great weight of the evidence; and (3) that the trial court erred in allowing the jury to consider the Wilkersons' claim of mental anguish, given that the fire had caused the Wilkersons no personal injuries but only property damage.
We find no error in the judgment for Vesta, and that judgment is affirmed. We conclude, however, that the trial court improperly allowed the jury to consider the Wilkersons' claim seeking damages for mental anguish. Therefore, because we cannot ascertain what portion of the jury's award was compensation for mental anguish, we must reverse the judgment for the Wilkersons, and, because we must reverse for that reason, we do not reach the other issues as they relate to the Wilkersons.
A claim under the AEMLD is grounded in tort and is premised on the notion that "a [manufacturer's marketing] a product not reasonably safe, when applied to its intended use in the usual and customary manner, constitutes negligence as a matter of law." Casrell v. Altec Industries, Inc., 335 So.2d 128, 132 (Ala. 1976) (emphasis in original). "Under the AEMLD, a manufacturer has the duty to design and manufacture a product that is reasonably safe for its intended purpose and use." Townsend v. General Motors Corp., 642 So.2d 411, 415 (Ala.1994). We must determine whether a breach of a duty under the AEMLD allows a recovery of damages for mental anguish where, as here, the breach of duty has caused no physical injury.
In Reinhardt Motors, Inc. v. Boston, 516 So.2d 509 (Ala.1986), we stated the general rule that "the law will not allow recovery of damages for mental distress where the tort results in mere injury to property." Id. at 511 (emphasis in original). However, in Boston we also recognized the exception that "[w]here the injury to property is committed under circumstances of insult or contumely, [damages for] mental suffering may be recoverable." Id.
More recently, in AALAR, Ltd., Inc. v. Francis, 716 So.2d 1141 (Ala.1998), we reiterated the principle that one can recover for emotional injury if he or she "sustain[s] a physical injury as a result of a defendant's negligent conduct." Id. at 1147. However, we also pointed out that, pursuant to Alabama's "zone of danger" rule, plaintiffs not suffering physical injury as a result of that negligent conduct can recover for emotional injury only if they were "placed in immediate risk of physical harm by that conduct." Id.
The Wilkersons urge us to hold that the sale of an air conditioner that has a defect that causes damage to property supports an award of mental-anguish damages. The evidence indicates that the defect in the air conditioner caused harm only to the Wilkersons' property. Additionally, at the time of the fire the Wilkersons were away from home and at their places of employment. Therefore, they were not in the "zone of danger" created by the defecta zone in which they would have been at immediate risk of physical harm. Thus, the Wilkersons are not entitled to recover damages for mental anguish.
The trial court erred in allowing the jury to award damages to the Wilkersons based on their claim of mental anguish. Because it is impossible for this Court to determine what portion of the Wilkersons' total award against WCI the jury intended as compensation for the Wilkersons' property damage and what portion the jury intended as compensation for the Wilkersons' mental anguish, we reverse the judgment for the Wilkersons and remand the cause for a new trial or other proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
*450 HOOPER, C.J., and HOUSTON, SEE, and BROWN, JJ., concur.
LYONS, J., concurs specially.
JOHNSTONE, J., dissents.
LYONS, Justice (concurring specially).
I concur with the majority opinion and write specially to comment upon Justice Johnstone's reliance on Carson v. City of Prichard, 709 So.2d 1199 (Ala.1998), in his dissenting opinion. Carson does allow damages for negligently inflicted mental anguish; however, I consider Carson to be distinguishable from this present case. It is without dispute that the fire allegedly caused by the air conditioner manufactured by WCI occurred while the Wilkersons were not at home. In Carson, the evidence showed that the homeowners experienced continuing suffering caused by the presence of raw sewage in their yards and homes; that suffering included the difficulty of dealing with an unpleasant odor, a loss of appetite, and, in one instance, snakes in the house. Under AALAR, Ltd., Inc. v. Francis, 716 So.2d 1141 (Ala.1998), the Wilkersons were outside the "zone of danger," while the plaintiffs in Carson clearly were within it.
JOHNSTONE, Justice (dissenting).
The operative facts are simple. The Wilkerson plaintiffs bought an air conditioner manufactured by the defendant White Consolidated Industries (WCI), and installed it in the Wilkersons' home. A defect in the air conditioner set fire to the home and thereby totally destroyed it together with all of the Wilkersons' belongings. Mrs. Wilkerson "had to stand there and watch [her] house burn" for "forty-five minutes to an hour."
The Wilkersons sued WCI under the Alabama Extended Manufacturer's Liability Doctrine (AEMLD) and recovered $99,583 in compensatory damages for property losses and mental anguish. The majority reverses the rulings of the trial court allowing recovery of the damages for mental anguish.
The majority cites Casrell v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976), for the proposition that an AEMLD action is grounded in tort and reaches the conclusion that Alabama does not allow recovery for the mental anguish attendant to damage to property only, without personal injury, caused by tort, unless committed under circumstances of insult or contumely. On the contrary, however, in Carson v. City of Prichard, 709 So.2d 1199 (Ala. 1998), this Court allowed substantial damages for mental anguish resulting from the tortious acts or omissions of the Water Works and Sewer Board of the City of Prichard in causing or allowing sewage to overflow into the plaintiffs' homes.
"The residents presented evidence that they had suffered, and continued to suffer, from the overflow of raw sewage into their yards and homes after periods of heavy rain. They alleged various types of injury, including mental anguish, emotional distress, annoyance, and inconvenience. All of them complained that the overflow caused debris and waste from the sewer system to enter their yards. One plaintiff testified that he had had snakes in his house as a result of the sewage overflow. The sewage overflowed from manholes in the street. According to the residents, the odor from the sewage overflow was so great that they could not eat in their homes and were embarrassed to have visitors." 709 So.2d at 1202-03.
None of the plaintiffs in Carson suffered any bodily injury, and this Court did not base its allowance of damages for mental anguish on any contumacious or insulting conduct by the defendant.
Likewise, in City of Mobile v. Jackson, 474 So.2d 644 (Ala.1985), this Court specifically approved damages for mental anguish resulting from water flooding the plaintiffs' home but not causing any physical injury to any person. The Court, speaking through Justice Maddox, held:
*451 "Under the facts of this case, we do not believe the Jacksons would be limited to a recovery of $19,000, because in Mr. Jackson's original claim, he notified the City of Mobile that the $19,000 figure `[did] not cover [his] inconvenience and mental anguish that [his] family and [he had] suffered since the home [they] lived in was flooded.' We find no error in the trial court's judgment awarding the Jacksons $58,000 based upon the jury verdict in the Jacksons' favor in this amount." Jackson, at 651.
For some other torts, Alabama allows recovery for mental anguish without either physical injury or property damage. In Kmart Corp. v. Kyles, 723 So.2d 572 (Ala. 1998), this Court allowed the recovery of damages for mental anguish resulting from malicious prosecution. In Centon Electronics, Inc. v. Bonar, 614 So.2d 999 (Ala. 1993), the Court held that a plaintiff could seek damages for mental anguish resulting from breach of contract or promissory fraud committed in the course of business dealings. In Lawyers Title Ins. Corp. v. Vella, 570 So.2d 578 (Ala.1990), the Court allowed recovery of damages for mental anguish resulting from a fiduciary's mistaken misrepresentation regarding title to a home being purchased by the plaintiffs. Finally, in Gulf Atlantic Life Ins. Co. v. Barnes, 405 So.2d 916 (Ala.1981), this Court held that damages for mental distress are recoverable in an action for bad faith failure to honor an insurance contract.
Since Casrell v. Altec, supra, this Court has held the AEMLD theory to be contract rather than tort. Dairyland Ins. Co. v. General Motors Corp., 549 So.2d 44, 46 (Ala.1989); Wellcraft Marine v. Zarzour, 577 So.2d 414 (Ala.1990). Notwithstanding the contract theory, however, AEMLD does not require privity. Ex parte Chevron Chemical Co., 720 So.2d 922 (Ala. 1998).
Alabama has long recognized the right to recover compensation for the mental anguish attendant to damage to a home caused by a breach of contract. B & M Homes, Inc. v. Hogan, 376 So.2d 667 (Ala. 1979); F. Becker Asphaltum Roofing Co. v. Murphy, 224 Ala. 655, 141 So. 630 (1932). Likewise, in Alabama Power Co. v. Harmon, 483 So.2d 386 (Ala.1986), this Court allowed damages for mental anguish in a contract action for delay in providing electrical service to a home. The rationale is that, "where the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with the feelings of the party to whom the duty is owed, that a breach of the duty will necessarily or reasonably result in mental anguish or suffering, it is just that damages therefor be taken into consideration and awarded." B & M Homes, supra, 376 So.2d at 671. To the same effect and with the same language is Sexton v. St. Clair Federal Savings Bank, 653 So.2d 959 (Ala. 1995), involving a loan contract for the construction of a house. The recovery of damages for mental anguish under this theory is not dependent on the occurrence or presence of any physical injury or symptoms. B & M Homes, supra, 376 So.2d at 672-73.
In the case at issue, the use of the air conditioner in a home was not only reasonably foreseeable, but inescapably foreseeable, to the defendant manufacturer WCI. The duty of WCI was so coupled with the homeowners' natural mental concern and feelings for the safety and preservation of their home and all of their belongings that a breach of that duty could reasonably be expected to result in mental anguish and suffering. Obviously the total destruction of the plaintiffs' entire home and all of their belongings would cause mental anguish or suffering.
Another case, Volkswagen of America, Inc. v. Dillard, 579 So.2d 1301 (Ala.1991), has extended damages for mental anguish to an action for breach of warranty in the sale of a new car. The case on appeal seems a fortiori. In Volkswagen this Court observed:
*452 "In addition, as previously stated, although Alabama historically did not allow the recovery of damages for mental distress where there was no accompanying physical injury, we have now adopted the rule that recovery may be had for mental suffering without the presence of physical injury, concluding in 1981 in Taylor v. Baptist Medical Center, [400 So.2d 369, 374 (Ala.1981)], that `to continue to require physical injury... would be an adherence to procrustean principles which have little or no resemblance to medical realities.' (Emphasis added.)" Volkswagen of America, Inc., 579 So.2d at 1306.
Thus, whether the claim for mental anguish brought by the plaintiffs in the case on appeal be grounded on tort or on contract, their right to recover is clear. Under the circumstances, it is also compelling. The judgment in their favor should be affirmed.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-40138
Conference Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DAMON MITCHELL SMITH,
Defendant-Appellant.
- - - - - - - - - -
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 1:96-CR-64-1
- - - - - - - - - -
April 10, 1998
Before JOLLY, JONES, and DUHÉ, Circuit Judges.
PER CURIAM:*
Counsel for Damon Mitchell Smith has filed a brief as
required by Anders v. California, 386 U.S. 738 (1967), alleging
that there are no meritorious issues for appeal. Our independent
review of the briefs and record discloses no issue of arguable
merit. Therefore, the motion of counsel to withdraw is GRANTED,
and the appeal is DISMISSED. 5th Cir. R. 42.2.
*
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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938 F.2d 266
291 U.S.App.D.C. 1
CONSUMERS UNION OF THE U.S., INC., Appellant,v.FEDERAL RESERVE BOARD.
No. 90-5186.
United States Court of Appeals,District of Columbia Circuit.
Argued Feb. 20, 1991.Decided July 12, 1991.
Appeal from the United States District Court for the District of Columbia (Civil Action No. 89-03008).
Michelle Meier, of the Bar of the U.S. Dist. Court, Covington, Ky., for D. of Columbia, pro hac vice, by special leave of the court, with whom Barry J. Reingold, Karl L. Kellar, and Michael L. Goo were on the brief, Washington, D.C., for appellant.
Steve Frank, Atty., Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Anthony J. Steinmeyer, Atty., Dept. of Justice, Richard Ashton and Katherine Wheatley, Attys., Bd. of Governors of the Federal Reserve System, were on the brief, Washington, D.C., for appellee.
Before SILBERMAN, WILLIAMS and RANDOLPH, Circuit Judges.
Opinion for the Court filed by Circuit Judge SILBERMAN.
SILBERMAN, Circuit Judge:
1
This appeal from the district court challenges regulations issued by the Board of Governors of the Federal Reserve System implementing the amendments to the Truth in Lending Act ("TILA") concerning open-end home equity loans. Appellant asserts that the regulations are inconsistent with the statute. We reject the majority of appellant's contentions but remand to the Board on two issues.
I.
2
Open-end home equity loans ("HELs") are financial instruments whose popularity among ordinary consumers skyrocketed in the last few years, in large part because of the Tax Reform Act of 1986. That legislation made interest deductions on personal loans generally unavailable except with respect to residential housing indebtedness. Consequently, many consumers discovered tax advantages in converting an unsecured line of credit with their bank into a line of credit secured by the residence. The vast majority of these loans are not taken out to secure the actual purchase of the home, and therefore many of the borrowers do not need the principal of the loan distributed to them at once. They often prefer to have the ability to draw on their line of credit as needed; these loans are described as open-ended. The HEL differs from the traditional mortgage loan--also known as a closed-end loan--in which the borrower takes out the entire sum at the outset and then makes interest and principal payments on that fixed amount over the life of the loan.
3
The interest on the amounts advanced under an HEL is known as the annual percentage rate ("APR") and is the sum of two elements. The first element is the index, which can be one of the several publicly available proxies for the bank's cost of funds, that is, for the current interest rate. The second element is the margin, which is a fixed percentage generally designed to cover the bank's expenses and allow for a profit on the loan. The index fluctuates with the changes in the interest rate but the margin stays constant at the level set in the HEL contract. To guarantee the consumer against unlimited rises in the APR, the agreements must provide for a ceiling which the APR cannot exceed regardless of the rise in the index, see 12 U.S.C. Sec. 3806, and often also provide for a limitation on annual increases in the APR. These limitations are known, respectively, as lifetime and annual caps. As the HEL market is highly competitive, banks often attempt to attract customers by offering to charge discount APRs for an initial period of the loan ("teasers") or by reducing the margin charged to "preferred customers."
4
Of course, an open-end home equity loan is simply the consumer equivalent of a secured commercial line of credit. The large scale transplantation of a sophisticated commercial instrument into the consumer finance area, although generally beneficial to consumers by providing them with additional options for the management of their financial affairs, also exposes them to large additional risks: possible misinformation by the lender, possible misunderstanding of the precise terms of the loan, or just plain improvidence in assuming too great a burden of repayment (a burden which often appears more manageable than it actually is). As the consequence to a consumer may be the loss of his home, Congress decided that additional regulation of the banks' credit practices in the specific area of HELs was necessary and enacted certain amendments to the Truth in Lending Act. See Home Equity Loan Consumer Protection Act of 1988, Pub.L. No. 100-709, 102 Stat. 4725. The Federal Reserve Board was delegated authority to implement the amendments through promulgation of its regulations. Consumers Union claims that these regulations contradict the statute. The district court upheld all aspects of the regulations, 736 F.Supp. 337, and the Consumers Union appeals.
5
Consumers Union challenges six separate provisions of the regulations.
6
First, the Board's failure to require banks offering HELs to specify, in pre-application written materials, the current margins. The regulations instead require the bank only to remind the customer to "ask about" the current margins.
7
Second, the Board's failure to require banks to include the actual current margin in historical tables designed to show customers how interest rates would have fluctuated in the past under an HEL offered by the bank. The regulations permit past margins to be used.
8
Third, the regulation permitting disclosure of a range within which the annual and lifetime might fall; Consumers Union believes that the lender must disclose a fixed cap.
9
Fourth, the regulation allowing lenders to provide in HEL contracts that changes in the terms of an HEL will take place upon specified triggering events. For example, the Board allows banks to provide for an increase in the interest rate if the borrower leaves the lender's employment and also permits the lender to freeze the credit line when the APR would exceed the applicable cap.
10
Fifth, the failure to require lenders employing teasers to inform consumers about the interest rate over the life of an HEL. The Board required instead that the banks notify borrowers to "ask about" the discount rate.
11
Sixth, the Board's failure to require lenders to disclose how all possible repayment options would have been affected by changes in the index during the preceding 15-year period. The Board authorized lenders to disclose only a representative sample of options and how the consumers would have fared under representative repayment options.
12
The dispute between the Consumers Union and the banks offering HELs (whose position was partially adopted by the Board) might be thought to center on the flexibility that banks would have in tailoring loans to particular customers whose high credit rating, ownership of other accounts with the bank, or other attributes, enable them to receive more favorable terms than the terms offered to the other customers. The banks did not wish to disclose in pre-application literature their actual margins (challenges (1) and (2)), or their actual caps (challenge (3)) because they wished to be free to give favorable treatment to more creditworthy customers. The banks also were concerned that a regulatory regime which eliminates their power to change the terms of the loan (even when the power to make changes upon certain triggering events was granted by the terms of the HEL contract) might expose the banks to the risk of being obliged to advance credit where it was understood at the outset of the contract that banks would not lend if the triggering events occurred. The most important power given to the banks was to withhold credit at a rate below the bank's cost of funds, as in the case of the APR going above the level of a cap. The Board's recognition of that threat in its regulations is the focus of challenge (4). And, finally, lenders were concerned that a requirement of publishing their discount or teaser rates and all repayment options would be terribly burdensome, indeed, infeasible, because discount (or promotional) rates change rapidly to stay abreast of the competition, and repayment options proliferate in response to market pressures.
13
Consumers Union argues that any terms in an HEL which are not disclosed in printed materials handed out by banks (called pre-application disclosures) will be less than adequate for two reasons. The customer will not be able to take home that material and pore over it at the "kitchen table." And oral disclosures such as those prompted by the "ask about" questions may be impossible to police: the statute permits a consumer to abandon a loan application without incurring liability for the application fees within three business days if the bank changes the terms of the actual loan from those disclosed to the customer at the start of the application process, see 15 U.S.C. Sec. 1637a(a)(6)(B), but if the key terms at the initial stage are presented orally, it will be difficult for the consumer to demonstrate the bank's duplicity.
II.
14
The Board's authority to issue regulations interpreting TILA is designed to enhance the purpose of the statute--to achieve "meaningful disclosure" for the consumer. Pursuant to that end, the Board is entitled to wide and respectful deference in its implementation of the statute. See Anderson Bros. Ford v. Valencia, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 568-69, 100 S.Ct. 790, 798, 63 L.Ed.2d 22 (1980); Mourning v. Family Publications Service, Inc., 411 U.S. 356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). And, of course, with respect to the interpretation of statutory ambiguities, the Board is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In reviewing the challenge to the regulations we must always keep in mind that, as the Supreme Court has said, meaningful disclosure does not necessarily mean more disclosure. See Milhollin, 444 U.S. at 568, 100 S.Ct. at 798.
15
1. Margin Disclosure Regulation.
16
The Board's regulation, it will be recalled, does not require banks to disclose the actual margin in pre-application forms. The forms merely alert the consumer that the margin will be added to the index and remind him to "ask about" the actual current margin. 12 C.F.R. Sec. 226.5b(d)(12)(iv) & (v). Appellant, however, contends the margin must be disclosed up front in pre-application forms. Appellant argues that the consumer should have the different margins charged by the banks printed in the pre-application materials so that consumers can pick the bank offering a better deal at the outset without going to the trouble of personally asking about current margins.
17
The relevant section of the statute requires that the consumer be told:(B) a description of the manner in which any changes in the annual percentage rate [APR] will be made, including....
18
(iii) any index or margin to which such changes in the rate are related.
19
15 U.S.C. Sec. 1637a(a)(2)(B)(iii).
20
It would appear that Congress desired that the consumer be alerted to the manner in which his interest rate would change. But as it is the index, not the margin (which is fixed), that causes changes in the interest rate, and as subsection (iii) requires disclosure of either the index or the margin, depending on which causes the change in interest rates, appellant's position is rather weak. We cannot say the Board's interpretation of the statutory language is unreasonable--indeed, it appears the more obvious reading.
21
2. The Historical Example Table Regulation.
22
Congress wished the consumer not only to be notified as to the index employed but also to understand how that index works so that the consumer would appreciate the possible swings in the index, and the resulting volatility of the interest rate. It therefore required the lender to provide tables which illustrate ranges of repayment schedules if various assumptions about the economy are given. One of these tables (the historical example table) involves a projection of a historical pattern of interest rates on the repayment requirements. The statute states that a historical table must be:
23
based on a $10,000 extension of credit, showing how the annual percentage rate and the minimum periodic payment amounts under each repayment option of the plan would have been affected during the preceding 15-year period by changes in any index used to compute such rate.
24
15 U.S.C. Sec. 1637a(a)(2)(G).
25
The Board's regulation permits lenders, in preparing the historical table, to use any margins and discounted initial rates that have been actually employed by the bank within the six months preceding preparation of the disclosure and inform the customer that the margin or premium has been used recently by this lender. 12 C.F.R. Sec. 226.5b(d)(12)(xi); Comment 5b(d)(12)(xi)-3. Appellant, once again, argues that the statute requires that the historical example table be based upon the actual margin used at the time of disclosure and we, once again, reject the argument. The statutory language does not mention the word "margin." It refers only to changes in the index and as we have already noted, the margin itself neither changes nor affects the index. Moreover, the Board reasonably determined that the purpose of this statutory provision would not be advanced by requiring use of current margins. This table is designed to demonstrate to the consumer the effect that swings in general interest rates can have on a repayment schedule. For that purpose, it makes little difference whether the bank uses its present margin (and discount rate, if offered) or a recent one. Indeed, as the Board argues, the use of the actual present margin might lead the consumer to place too much weight on the historical tables, treating them as a forecast rather than just an example. The effect of differing disclosure on a consumer is exactly the sort of Board determination as to what constitutes meaningful disclosure under TILA to which we must grant a great deference in the absence of an explicit statutory command. See Milhollin, 444 U.S. at 568, 100 S.Ct. at 798.
26
3. Annual and Lifetime Rate Caps Regulation.
27
The statute says that lenders must disclose:
28
(E) a statement of the maximum amount by which the annual percentage rate may change in any 1-year period or a statement that no such limit exists;
29
(F) a statement of the maximum annual percentage rate that may be imposed at an time under the plan.
30
15 U.S.C. Sec. 1637a(a)(2)(E) & (F).
31
The Board's regulation provides that lenders may meet this statutory requirement for disclosure of the annual cap by stating a range of caps, see Comment 5b(d)(12)(ix)-3. This, of course, gives banks the flexibility to respond quickly to market pressures by changing the cap within the range without having to re-issue all of its pre-application materials when the competitive conditions change the cap. The consumer is instructed to ask about the cap applicable in his own case, which is, of course, bound by the high end of the range. The high end of the range becomes, in effect, the maximum cap. Appellant claims that disclosure of the range is inadequate and that only disclosure in the pre-application materials of the actual cap to be offered to the customer satisfies the statute. But because the statute calls for disclosure of the maximum amount by which the annual percentage rate may change, it is hard to see why disclosure of the figure at the upper end of the range does not satisfy the statute's literal meaning. Consumers Union contends, however, that the range is not really meaningful; the customer is only interested in the annual cap on the loan at the time the loan would be negotiated. We see the force of appellant's argument, but the Board believes that prompting the consumer to ask about the currently used cap, combined with disclosure of the range, will afford more meaningful understanding. It may well be that many consumers' eyes would glaze over reading the disclosure forms that Consumers Union advocates while prompting the consumer to ask about a specific subject will cause greater attention to the issue. At any rate, we must defer to the Board on this sort of question.
32
4. The Change in Terms Regulation.
33
The Act limits the lender's freedom to impose changes in the HEL's terms without the borrower's consent. It reads:
34
No open-end consumer credit plan under which extensions of credit are secured by a consumer's principal dwelling may contain a provision which permits a creditor to change unilaterally any term required to be disclosed under section [1637a(a) ] or any other term, except a change in insignificant terms such as the address of the creditor for billing purposes.
35
15 U.S.C. 1647(c)(1). The Act then provides for seven specific exceptions to the no-unilateral-change language, see 15 U.S.C. Sec. 1647(c)(2).1
36
The regulation states that lenders are permitted to "provide in the initial agreement that specified changes will occur if a specified event takes place (for example, that the annual percentage rate will increase a specified amount if the consumer leaves the creditor's employment)." 12 C.F.R. Sec. 226.5b(f)(3)(i). The Board's regulation does ban general reservation of rights clauses that would give a lender carte blanche to change terms of the loan at will. See Comments 5b(f)(3)(i)-2; 5b(f)(1)-1. As the Board explained: "Both the triggering event and the resulting modifications must be stated with specificity." Comment 5b(f)(3)(i)-1. Consumers Union contends that the Board's regulation improperly adds new exceptions not provided for by Congress. Its objection focuses on the Board's interpretation of the statutory words "change unilaterally." Consumers Union argues that the Board's interpretation simply allows the bank to demand the waiver of the consumer's statutory rights. The Board responds that the statute could not mean that the parties may not contractually provide that certain terms would change if certain specified events took place.
37
The question is not a simple one, because the phrase "unilateral change" in the context of this legislation is ambiguous. Its meaning--really the meaning of the word "unilateral"--depends on whether the parties when they enter into the contract are entitled to anticipate and dictate their response to certain future events. After all, the very nature of an HEL is its fluctuating interest rate, unpredictable (for the bank) schedule of credit advances, and widely varying repayment schedules. On the other hand, even the Board itself, by banning the "reservation of rights" clauses, recognizes that there is a limit to its "bilateral" argument. It appears to us, therefore, that the Board is entitled to significant leeway in determining where, along a continuum of specificity, it wishes to draw the line between unilateral changes and changes authorized by bilateral agreement.
38
We cannot say that they have drawn that line unreasonably. We are dealing with a disclosure statute, not one that attempts directly to affect the bargaining power of the parties. If, from the lender's disclosure, the consumer knows the exact events which will cause a change in terms, it does not seem that the statute's disclosure purpose is frustrated or even affected.
39
The most important of the eventualities which would cause banks to change the customers' rights, and one on which the dispute between the parties is particularly focused, is the right expressly granted by the regulation that banks may protect themselves in periods of very high inflation in which their cost of funds increase above the cap on the APR by freezing a borrower's credit line. 12 C.F.R. Sec. 226.5b(f)(3)(i). Certainly the Board, as the agency responsible for controlling the money supply, is entitled to consider the consequences of not permitting banks to refuse to extend credit when the APR exceeds the cap. That could only occur when banks' cost of funds approaches or exceeds the cap, and to require banks to lend money even if that happens would seem to endanger not only the banks involved but perhaps the banking system itself or significant parts of it.
40
5. The Initial Discount Rate Regulation.
41
One of the more controversial lender practices upon which Congress focused is the offering of promotional discount rates ("teasers"). The risk is, of course, that the consumer will be misled and mistake the initial highly favorable rate for the permanent APR. To guard against such deception, Congress was quite specific and required the following pre-application disclosure:
42
[I]f an initial annual percentage rate is offered which is not based on an index--
43
(i) a statement of such rate and the period of time such initial rate will be in effect.
44
15 U.S.C. Sec. 1637a(a)(2)(C).
45
The Board's regulations, however, provide that the lenders are required to tell consumers that the rate offered is a discount, and that it is temporary in nature, but not the rate itself. Instead, the Board requires the disclosure forms to alert the customer to "ask about the ... current discount or premium." 12 C.F.R. Sec. 226.5b(d)(12)(v). In response to appellant's complaint that the regulations on this issue are in conflict with the precise language of the Act, the Board's counsel concedes the conflict--the "statutory language ... read literally would require the actual discounted rate [to] be provided with the early disclosure"--but relies on the Board's exception authority.
46
The Board is granted this broad authority in the following language:
47
(a) The Board shall prescribe regulations to carry out the purposes of this subchapter. These regulations may contain such classificatons, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of [TILA], to prevent circumvention or evasion thereof, or to facilitate compliance therewith.
48
15 U.S.C. Sec. 1604(a).
49
The Board claims that its exception power is appropriately exercised here because pre-application disclosure of the exact discount rate would not significantly add to the consumer's knowledge; the key fact disclosed is that the initial rate is a temporary discount. Furthermore, the discount rate fluctuates with competition, and it would be a heavy burden on the banks to disclose the actual terms because they would have to print and replace new pre-application materials on a continuous basis.
50
As far as we can determine, this is the first case which has presented the question of the Board's use of its exception authority to contravene directly the terms of the authorizing statute. The Board itself did not rely on this added authority when it promulgated the regulation; it has been presented only by the Board's counsel. Moreover, we are quite unsure of the scope of that authority. How does the Board interpret the phrase "adjustments and exceptions for any class of transactions"? Does that language authorize the Board to override statutory provisions that would otherwise apply to all lenders? If so, for what specific purposes? We think that we are entitled--given the seriousness of interpreting a statutory provision that is asserted to give the Board authority to override the clear language of other provisions--to have the Board itself explain its position, and therefore we remand this issue to the Board. Cf. SEC v. Chenery, 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947).
51
6. The Repayment Option Disclosure Regulation.
52
We think our view of the discount rate issue applies also to appellant's challenge to the regulation dealing with repayment option disclosure. Typically, the repayment options offered by a lender vary a good deal and the consumer has a great deal of leeway in choosing a repayment option. Since all of the relevant terms can vary, the number of possible disclosure options appears enormous. The Act requires that the options be set out in the form of tables. The relevant language appears in three separate provisions of the statute. The first, and least troublesome provision states that the banks must disclose the repayment schedules in the form of:
53
An example, based on a $10,000 outstanding balance and the interest rate ... which is, or was recently, in effect under such plan, showing the minimum monthly or periodic payment, and the time it would take to repay the entire $10,000 if the consumer paid only the minimum periodic payments and obtained no additional extensions of credit.
54
15 U.S.C. Sec. 1637a(a)(9).
55
Sections (a)(2)(G) and (a)(2)(H) require more:
56
(G) a table, based on a $10,000 extension of credit, showing how the ... minimum periodic payment amount under each repayment option of the plan would have been affected during the preceding 15-year period by changes in any index used to compute such rate;
57
(H) a statement of--
58
(i) the maximum annual percentage which may be imposed under each repayment option of the plan;
59
(ii) the minimum amount of any periodic payment which may be required, based on a $10,000 outstanding balance, under each such option when such maximum annual percentage rate is in effect;
60
15 U.S.C. Sec. 1637a(a)(2)(G) & (H).
61
The Board's regulations, however, require only the disclosure of three plans which the Board found to represent the general categories of existing repayment options: an "interest only" plan which requires the payment of the accrued financial charges only, a fixed-percentage of the total indebtedness plan, and other types of a minimum payment plan such as finance charges plus a specified dollar amount. See Comment 5b(d)(5)(iii)-2, 3.
62
We believe that the Board permissibly allowed the banks to present only the tables of the representative plans for the "slow motion" scenario of section 1637a(a)(9). In that scenario, the borrower chooses to pay back the minimum amount allowed by the plan, stretching out the repayment period to the maximum. The statute requires the table showing only "an example" under this scenario of the possible repayment obligations. Since disclosure of every possible repayment schedule is not required, the Board has wide latitude in choosing how the examples of the possible eventualities are to be disclosed and presented to the consumer.
63
The difficulty for the Board are the words "each repayment option" in sections (a)(2)(G) and (a)(2)(H)(ii). Literally this requires that each repayment option would have to show the effect of historical experience with the interest rates over the last fifteen years to determine the minimum payments for worst case scenario when the rate caps are reached during the entire period as well as the maximum length of "slow motion" repayment in the "worst case" scenario. Sometimes there are hundreds of repayment options and the requirement of running each option through various contingencies would create an informational torrent of little value to the customer yet produced at a great expense to the bank. The Board's counsel concedes that the language is against the regulations and again relies on the Board's exception authority--asserting that to comply literally with sections (a)(2)(G) and (a)(2)(H)(ii) would be to overload the consumer's capacity to assimilate information. And again we remand the issue to the Board for its own explicit determination.
64
* * * * * *
65
Accordingly, we affirm in part, reverse in part, and remand for further proceedings not inconsistent with this opinion.
1
Banks are allowed, without consumer's prior agreement, to change the index and margin if the previous index ceases to be available; to freeze or reduce the credit line when the value of the home decreases "significantly," when consumer's financial status changes so as to cast doubt on his continuing ability to repay, when any material obligations are violated by the consumer, when the lender's priority is impaired by governmental action, or when the lender is precluded by the government from imposing the contractual APR; and to perform any change which is beneficial to the consumer
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637 P.2d 1215 (1981)
Nevada Smith FRYE, Appellant,
v.
CLARK COUNTY, Nevada, and City of Las Vegas, Respondents.
No. 12867.
Supreme Court of Nevada.
December 30, 1981.
*1216 Rickdall & Shulman, Las Vegas, for appellant.
Harding & Dawson, Las Vegas, for respondent City of Las Vegas.
Vargas & Bartlett, and Thomas F. Kummer, Las Vegas, for respondent Clark County.
OPINION
PER CURIAM:
Appellant's house was destroyed by fire. Neighbors notified the fire department through a telephone number maintained jointly by the Clark County and Las Vegas fire departments. They gave the correct address, including cross streets, but the fire department went first to the wrong address on El Camino Avenue, before arriving at the correct address on El Camino Road. The fire department was delayed in arriving at the scene of the fire and the appellant's house was destroyed.
Appellant brought this action for damages, alleging negligence, for loss of the home. The trial court granted respondents' motion for summary judgment, ruling that no actionable breach of duty had been alleged. We agree and affirm.
This court has previously held that no private liability exists for failure to provide police protection, Bruttomesso v. Las Vegas Metropolitan Police, 95 Nev. 151, 591 P.2d 254 (1979), or for failure to prosecute criminals, Whalen v. County of Clark, 96 Nev. 559, 613 P.2d 407 (1980). These cases rest on the principle that the duty of providing these services is one owed to the public, but not to individuals. Cf. Massengill v. Yuma County, 104 Ariz. 518, 456 P.2d 376 (1969); Doe v. Hendricks, 92 N.M. 499, 590 P.2d 647 (1979).
Similar to the duty to provide police protection and to prosecute criminals, the duty to fight fires "runs to all citizens and is to protect the safety and well-being of the public at large." Bruttomesso, supra, 95 Nev. at 153, 591 P.2d 254. Therefore, no private liability may attach to the fire department's failure to respond to a call. That result has been reached in other jurisdictions that have considered the question. Frankfort Variety, Inc. v. City of Frankfort, 552 S.W.2d 653 (Ky. 1977); LaDuca v. Town of Amherst, 53 A.D.2d 1011, 386 N.Y.S.2d 269 (1976); Valevais v. City of New Bern, 10 N.C. App. 215, 178 S.E.2d 109 (1970), where the same result was reached predicated upon the governmental function rule; Bagwell v. City of Gainesville, 106 Ga. App. 367, 126 S.E.2d 906 (1962).
This decision does not preclude liability for a negligent act by a fire department in all instances. Under certain circumstances, a public agency may be held to have assumed a special duty to individuals. Such a duty may exist where, official conduct has created specific reliance on the part of individuals, Florence v. Goldbert, 44 N.Y.2d 189, 404 N.Y.S.2d 583, 375 N.E.2d 763 (1978), or where the official negligence affirmatively causes the individual harm. However, merely by responding to the fire call, as in the instant case, respondent did not assume a special duty towards appellant. Therefore, the judgment of the district court is affirmed.
*1217 GUNDERSON, C.J., MANOUKIAN, SPRINGER and MOWBRAY, JJ., and ZENOFF, Senior Justice,[1] concur.
NOTES
[1] The Chief Justice designated the Honorable David Zenoff, Senior Justice, to sit in this case in the place of the Honorable Cameron M. Batjer, Justice, retired. Nev.Const. art. 6, § 19(1)(c); SCR 10.
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489 F.2d 792
27 A.L.R.Fed. 140
VOYAGER 1000, Petitioner,v.CIVIL AERONAUTICS BOARD, Respondent.
No. 73-1222.
United States Court of Appeals, Seventh Circuit.
Argued June 7, 1973.Decided Nov. 14, 1973.
Karl J. Stipher, Indianapolis, Ind., for petitioner.
Howard E. Shapiro, Chief, Appellate Section, U.S. Dept. of Justice, Warren L. Sharfman, Robert L. Toomey, Civil Aeronautics Board, Washington, D.C., for respondent.
Before PELL and SPRECHER, Circuit Judges, and CAMPBELL, Senior District Judge.*
SPRECHER, Circuit Judge.
1
Petitioner, Voyager 1000, seeks review of Order 73-3-1 issued by the Civil Aeronautics Board on March 1, 1973, directing petitioner to cease and desist from engaging in 'air transportation' in violation of Section 401(a) of the Federal Aviation Act.1 Section 401(a) of the Act states that 'no air carrier shall engage in any air transportation unless there is in force a certificate (of public convenience and necessity) issued by the Board authorizing such air carrier to engage in such transportation.' 49 U.S.C.A. 1371(a). The issue presented on appeal is whether the Board's determination that Voyager was operating as an air carrier engaged in air transportation is supported by substantial evidence2 and a reasonable basis in law. Las Vegas Hacienda, Inc. v. C.A.B., 298 F.2d 430, 433-434 (9th Cir. 1962). We affirm the Board's order.
2
* In September, 1964, Voyager was founded as an Indiana non-profit corporation.3 The founding members' plan was to organize a private flying club which would acquire an aircraft for recreational travel for a membership limited to 1000. Each member was required to pay an initiation fee of $125 ($200 per family membership) and monthly dues of $4, although in some instances these amounts were waived or reduced. The membership having reached 1,000 within a year, a second club, Voyager 2000, was formed and subsequently merged into Voyager 1000.
3
In early 1968 when the membership stood at 2,460, the club's cash resources were seriously depleted. The directors decided that a substantially larger dues paying membership was necessary to provide sufficient operating funds to keep the club on a healthy financial footing. The initial goal was set at 5,000 members; in September, 1970, the goal was increased to 20,000.
4
Membership drive activities included the following:
5
(a) Familiarization with Voyager programs and facilities was proffered by means of open houses held in early 1968 in Indianapolis, Fort Wayne, Evansville, and Terre Haute, Indiana, and Columbus, Ohio. Newspapers in Indianapolis, Louisville and Cincinnati carried advertisements. When a Boeing jet was acquired, open houses to inspect this craft and 'hear the Voyager 1000 story' were also held; these too were widely publicized. From June to September 1970, published announcements included lists of upcoming Voyager Flights, stressed that the only initial outlay would be the advance payment of six months due ($36) because the initiation fee was being waived, and stated that application forms would be available at the open house.
6
(b) Articles describing Voyager activities were prepared for publication in newspapers and magazines such as Time and Travel Weekly. During the last three months of 1970, from three to six commercials per week were broadcast over a Cincinnati radio station. In the spring of 1971, a full page advertisement was placed in Holiday Magazine.
7
(c) Existing Voyager members were offered the inducement of $10 in scrip redeemable in Boyager services for each 'bonus membership' they procured.4
8
(d) Brochures describing flight programs in detail-- dates, flight numbers, departure times, and fares-- were mailed to non-members appearing on purchased commercial mailing-house lists and on large organization membership lists such as the Indiana State Teachers Association. For example, in the spring of 1972 Voyager had 100,000 copies of the 'Europe '72 Program' brochure printed, more than seven times the then current membership.
9
(e) In early 1971, college students at Purdue University, Ball State Teachers College and Marion College were offered a one-year membership for $10. Free flights were offered to the individuals enrolling students.
10
(f) As part of the membership drive, the initiation fee and monthly dues were the subject of some variation, being waived or reduced in connection with particular programs. At the time of this proceeding, the cost of joining was $10 per membership and $7 per months.
11
(g) Throughout the period of the membership drive, advertisements appeared regularly in eight newspapers in Indiana, Ohio, and Kentucky with a combined circulation in excess of one million copies. These advertisements contained a selected listing of flights available to 'Voyager Members Only' detailing dates and price per person. They also invited inquiry about membership, giving a phone number or containing a mail-in coupon. Many advertisements included the cost of membership.
12
This total effort resulted in approximately 12,100 new memberships, from 2,400 members in 1968 to 14,500 members in December, 1971. Since most memberships are owned by families, this represents an extimated 43,000 individuals eligible for Voyager flights.
13
As a result of increased membership, Voyager employs over 80 individuals, operates seven aircraft (a Boeing 720 jet, two Lockheed Electras, two DC-7's and two Martin 404's), and maintains its own terminal at Weir Cook International Airport in Indianapolis.
14
Voyager's flight program is extensive. Flights are announced from five to six months in advance and by flight time are generally filled to capacity.5 Although the Voyager program tends to concentrate on weekend trips and destinations which are novel, longer trips and more customary destinations are also available. Voyager operated 200 flights from March, 1970 to May, 1971 and 156 flights between July, 1971 and April, 1972.
15
Although concededly secondary to travel, there is also a social aspect to the club. Voyager conducts a series of parties planned around travel themes. Announcements are sent to members sometimes in combination with flight schedules; they include a reservation form and ofen encourage members to bring guests.
16
Participation in Voyager flights, parties and corporate elections6 is limited to members whose dues are paid up. Immediately upon payment of the fee necessary to become a member, an individual is eligible for all Voyager activities and could conceivably take a Voyager flight scheduled for that same day if passage was available.
17
On November 16, 1971, the Director of C.A.B.'s Bureau of Enforcement (B.O.E.) docketed a complaint against Voyager alleging that Voyager was operating as a common carrier for compensation or hire without authority from the Board in violation of 401(a) of the Act. The alleged aspects of common carriage included Voyager's mass media campaign for new members and the lack of eligibility qualifications for membership other than the payment of fees and dues. Following evidentiary proceedings, the Administrative Law Judge issued his initial decision with order attached on June 22, 1972, dismissing the petition for enforcement and the complaint. The B.O.E. petitioned for discretionary review of the initial decision, and the Board undertook review. On March 1, 1973, the Board issued its decision reversing the Administrative Law Judge.
II
18
Economic and safety regulation of air transportation is provided by the Federal Aviation Act. Engaging in air transportation is conditioned upon obtaining the appropriate economic authority from the Civil Aeronautics Board (49 U.S.C. 1371-1378) and safety authority from the Administrator of the Federal Aviation Agency (49 U.S.C. 1421-1431). Voyager 1000 has operated since 1968 under Part 123 of the Federal Aviation Regulations entitled 'Certificate and Operations: Air Travel Clubs Using Large Airplanes.' 14 C.F.R. 123.153 (1973). Part 123 basically tailors the commercial operator certification and safety standards of Part 121 (14 C.F.R. 121.1 et seq.)7 to air travel club (A.T.C.) characteristics. 33 Fed. Reg. 12887 (1968). Economic authority is not required for the issuance of an operating certificate under Part 123. Certification of a person by the F.A.A. as an air travel club under Part 123 does not authorize operations as an air carrier in air transportation. 14 C.F.R. 123.1(c).
19
An air travel club is, by definition, a 'person who engages in the carriage by airplanes of persons who are required to qualify for that carriage by payment of an assessment, dues, membership fee, or other similar type remittance.'
20
14 C.F.R. 123.1(b). An air travel club differs from commercial operators in that the operations are nonprofit, air schedules are sporadic, and aircraft are operated for a relatively small number of hours. 33 Fed.Reg. 12887 (1968).
21
Although the reasons for requiring safety regulation of air travel clubs are well defined,8 the reasons for allowing their operation outside the economic regulatory scheme in the first instance have not been clearly articulated. Apparently at the outset these clubs were so small and the members were so intimately related that their operations were simply not relevant in any respect to commercial aviation. During the 1960's, however, the F.A.A. noted the growth of a different kind of organization.
22
'During the past few years, a number of travel clubs have been formed for the purpose of providing their members with long-distance travel usually on large (over 12,500 lbs. take-off weight) aircraft. In most cases, these clubs operate on the basis that the members share the expenses of the travel by an assessment, dues, membership fee, or similar payment to the club.'
23
32 Fed.Reg. 10311 (1967). When the F.A.A. was considering applying the safety standards of Part 121 to A.T.C.'s, the C.A.B. prpbably participated, as it normally does, in the making of the proposed rule by communicating its opinions and suggestions. These communications have not been disclosed. In the present proceeding, the B.O.E. avoided setting out its concept of the proper basis for distinguishing A.T.C.'s from common carriers.
24
'The Bureau takes no position on what criteria should be used to distinguish between valid private flying clubs and common carriers, for purposes of the Board's jurisdiction.' Record at 827.
25
In 1971, the F.A.A. was of the opinion that air travel club operations constituted private carriage:
26
'It is of the opinion of the FAA that as long as air travel club aircraft are owned by the club members on a non-profit basis, solely for the carriage of its members on pleasure trips, these aircraft should be regarded as private carriage versus common carriage by commercial operators.'9
27
However, no attempt was made to set out the underlying reasons why such operations were not considered to present competition injurious to the regularly scheduled airlines except to note that A.T.C.'s do not transport for compensation or hire.
28
'As air travel clubs are a non-profit organization, they are not allowed to fly passengers or cargo for hire. Therefore, they are not required to, or allowed to secure from the CAB a Certificate of Convenience and Necessity, as required by commercial operators.'10
29
Clearly this is an insufficient rationalizing principle since the effect of being non-profit is that A.T.C.'s provide transportation at a price which does not include a profit factor. What could present stronger competition to the commercial airlines?
30
Because the Act ultimatley defines air transportation as 'carriage by aircraft . . . as a common carrier,'11 the Board's determination that Voyager is an air carrier engaged in air transportation (which, in the absence of a certificate of public convenience and necessity, is in violation of Section 401(a) of the Act) is based on its finding that Voyager is operating as a common carrier. Although the Act itself does not further define common carriage, this term is of an ancient legal vintage. Narrowing the broad range of possibly applicable definitions are the state purposes underlying the regulatory functions of the C.A.B.
31
'The Civil Aeronautics Bobrd is under an affirmative statutory duty to exercise its regulatory powers over 'air transportation' so as to foster sound economic conditions, promote economical and efficient service at reasonable charges, and avoid destructive competitive practices. The legislative history of the Act emphasizes the importance attached by the Congress to the achievement of these purposes. Obviously the economic regulation contemplated by the statute can be effective only if the commercial activity to which it is made applicable-- 'air transportation'-- represents a reasonably discrete market in practical business terms.'12
32
Thus the Board's attempt to define common carriage is an attempt to delineate that market which is the object of the regulatory scheme-- 'the furnishing of transportation by air to the general public on a commercial basis.' Las Vegas Hacienda, 298 F.2d at 436.
33
We would agree that 'the typical travel club operation is in all practical respects no different from a charter flight conducted by a commercial operator . . ..' (Supra note 8), at least for the limited purpose of appraising their competitive impace on commercial airlines. The market served by Voyager is strikingly similar to the charter flight market.
34
The recent opinion by the Second Circuit in Saturn Airways, Inc. v. C.A.B., 483 F.2d 1284 (1973) upholding the Board's promulgation of regulations providing for a new type of charter, the Travel Group Charter (T.G.C.) is instructive. Inasmuch as charter trips are provided by supplemental air carriers pursuant to a certificate of public convenience and necessity (49 U.S.C. 1371(d)(3)), the question involved in Saturn was not one of common carriage status. Nevertheless, the validity of the Board's authorization of T.G.C.'s was determined by reference to the importance of the distinction between individually ticketed and group fare markets and the appropriate line to be drawn between the two.
35
'The supplemental air carriers, once known as 'non-scheduled' or 'irregular' air carriers, are meant to provide a supplementary service to that of the scheduled or trunkline carriers, who offer individually ticketed, regularly scheduled service to the general public. Since the supplementals are not subject to the economic rigors attendant upon a regularly scheduled, individually ticketed service, for they essentially fly when they desire and nearly always carry a full planeload of passengers, the air fares for comparable routes on charter flights can be significantly less than those offered by the scheduled air carriers. Congress in providing for certification of the supplementals recognized the potential problem of competition and the real possibility that if not carefully controlled they would supplant, rather than supplement, the regularly scheduled service. See generally American Airlines, Inc. v. CAB, supra, 125 U.S.App.D.C. 6, 365 F.2d 939, at 944-945. Individually ticketed, regularly scheduled service is the mainstay of an efficient air transportation system, and a critical necessity in any sophisticated economy. Congress realized that it must be preserved. Accordingly, the legislative history and language of the statute itself manifest a congressional intent that although the Board should have the power of definition, it should never permit 'individually ticketed service to be offered to the general public under the guise of charter.' Sen.Rep. No. 688, 87th Cong., 1st Sess. 13 (1961).' (483 F.2d at 1287-1288).
36
The court concluded that the T.G.C. regulations, 'where individual travelers without a community of interest apart from transportation are organized by a third party and . . . charter an aircraft on a pro rata basis' (483 F.2d at 1287), adequately preserve the distinction between group and individually ticketed markets where differences such as the following are required: (1) charter travelers are liable for a pro rata share of the cost which share is subject to variation depending upon the final load factor; (2) the group must be formed and members must have paid 25 percent of the minimum charter price not later than three months prior to the scheduled departure time; (3) participants must pay the total remaining balance of the flight fare not later than two months prior to the departure date; (4) the deposit and balance payments are with certain exceptions non-refundable; (5) the flight may be cancelled up to 45 days prior to departure due to passenger defaults; and, (6) participants must depart and return as a group subject to predetermined trip duration restrictions. 483 F.2d at 1292; See 14 C.F.R. 372a.1-.50.
37
The distinguishing factors cited by the court are ones which eliminate from charter service those members of the traveling public who require transportation on short notice without risk of cancellation or restrictions on return accommodations.13 The Board's determination in the instant case revolved around the relevant characteristics of petitioner's operation which failed to eliminate from A.T.C. service members of the individually ticketed market.
38
The cases setting forth the principles applicable to the determination of common carrier status interpret the Act as 'bringing within the regulatory scheme all those who compete in the commercial market in the business of offering air transporatation to the public generally.' Las Vegas Hacienda, 298 F.2d at 434. To ascertain whether a particular operation is so competing, the critical determination is whether the operation is one which holds itself out 'as ready and willing to undertake for hire the transportation of passengers or property from place to place, and so invites the patronage of the public.' Transocean Air Lines Inc., Enforcement Proceeding, 11 C.A.B. 350, 352 (1950). In the instant case, the Board examined both the nature of the 'membership drives' and the extent of qualifications for membership as they relate to a 'holding out to the public or a segment of the public.'
39
'The breadth of the activities contemplated under the term 'common carrier' reflects the great variety of recognized means whereby the 'holding out' may be accomplished. The most obvious method of holding out which may result in common carriage is advertising through magazines, newspapers, posters, brochures, and the like. Should the evidence disclose that a carrier has advertised its services in such manner as to solicit business from the general public, the necessary implication arises that it has held itself out as being in readiness to carry for all who might apply. Nevertheless, the lack of advertising is not in itself determinative of whether there has been a holding out since a holding out may take place through other methods.
40
'. . . The requisite holding out may be evinced by any means which communicates to the public that a transportation service is indiscriminately availabe. A reputation gained through merely serving the public indiscriminately may be sufficient in itself to inform the public that the carrier will carry for all who apply within the limits of its facilities.
41
'Furthermore, it is clear that a carrier need not undertake to serve all the public in order to be considered a common carrier, but may limit its transportation services to a class or segment of the general public so long at it expresses a willingness to provide transportation for all within this class or segment indiscriminately.' Transocean Air Lines, 11 C.A.B. 352-53.
42
Regarding the propriety of the membership drives, Voyager argued that its advertisements were announcements to members coupled with invitations to join, that advertising is permissible so long as its thrust is to acquaint nonmembers with the advantages of membership, that solicitation of new members generally is proper so long as such solicitation is not designed to sell individual flights to members of the public, and that in any event there was no evidence that such advertising diverted passengers from common carrier flights.14
43
With respect to the qualifications for membership, petitioner argued that it does not hold itself out as willing to carry all passengers but only members; that Voyager membership does not constitute a segment of the general public because the fees represent a real and substantial investment and are an absolute prerequisite to participation; that the members have a legal interest in the club's assets until dissolution, and the social aspects of the club differentiate the membership from the traveling public; and, that as a practical matter the members do not receive individually ticketed service.15
44
Concerning the contention that the membership drive activities constituted a 'holding out', the Administrative Law Judge concluded as follows:
45
'The Bureau reads the advertising program as being directed to members of the public generally and as inviting them to fly Voyager as though it were a commercial enterprise . . ..
46
'The respondents deny that this was the purpose, either overt or covert, and the evidence sustains them. The adds clearly stated that the trips were available only to Voyager members. Insofar as their placement was part of a campaign to increase the membership that was the exercise of a legitimate right as long as the original purpose of the club was not being changed. The listing of prospective flights and the costs can be fairly read as an effective device to illustrate the advantages of being a member. It was certainly effective as part of the expansion plan. If in its concept Voyager was a private club engaging in private carriage, as it clearly was, simply increasing the number of members does not add an insidious noted.'
47
The Administrative Law Judge further concluded that advertising directed to prospective members does not constitute solicitation of the general public; Voyager advertisements contained 'an element of selectiveness in that they were addressed to persons travel-minded in the manner of the original Voyager members.'
48
In assessing the qualifications for Voyager membership in terms of their effectiveness in differentiating members from the general public, the Administrative Law Judge found that although
49
'there is little or no screening of an applicant beyond the payment of initiation fee and dues there is a built-in screening by the mere fact of application for membership. By such application, particularly after exposure to explanations of the purposes of the club, an applicant, inferentially but effectively, declares an affinity with the existing members.'
50
Furthermore, the Administrative Law Judge viewed the financial outlay as real and substantial when viewed in the aggregate.
51
The Board reversed the initial decision of the Administrative Law Judge on the basis of the legal significance of the facts as found. The cases and the purposes underlying the regulatory scheme support the Board's decision.
52
The fact that petitioner believed that it was engaged in private carriage and had no intention of violating the law is not determinative of the question.
53
Petitioner's claims of uniqueness, capacity to provide faster and more convenient service, and ability to offer air travel to individuals unable to afford commercial rates all relate to the question of whether a certificate or exemption should issue and not to the determination of common carrier status. See Las Vegas Hacienda, 298 F.2d at 438-439.
54
The question of the propriety of mass media advertisements can not be resolved simply by determining whether the ads solicit members, as those in the instant case clearly did. We would agree with the Administrative Law Judge that an increase in the membership does not necessarily result in a transformation from private to public carriage. Rather, the proper inquiry is whether the ads solicit prospective members where the membership is defined in such a manner as to be undifferentiated from the traveling public at large. Thus the fact that the ads are addressed 'To Members Only' is not dispositive.
55
The Administrative Law Judge cites the membership fees and dues and the declared affinity, by virtue of application for membership, with 'persons travel-minded in the manner' of the existing members as providing sufficient differentiation from the general public. The Board found the financial outlay to be 'relatively insignificant, particularly when viewed in light of the fare bargains it buys.'16 Since the avowed purpose of Voyager is group travel, the affinity involved in Voyager membership is a common interest in travel. To employ affinity in this manner begs the question.
56
Insofar as the affinity only relates to travel,17 the nature of the travel services provided must be differentiated from the individually ticketed market. Here, members were eligible to fly as soon as they joined and there was no prescribed waiting period between making reservations and flying. The record is void of criteria which would indicate sufficient differentiation between Voyager services and individually ticketed services.
57
There was substantial evidence and a reasonable basis in law for the Board's finding that 'despite the various labels Voyager attaches to itself and to various aspects of its method of operation, it is 'furnishing transportation by air to the general public on a commercial basis' . . . and hence it engaged in 'air transportation' within the meaning of the act.'
58
Order enforced.
59
PELL, Circuit Judge (concurring).
60
I concur in the foregoing opinion although I do so with considerable reluctance. My disinclunation, however, arises from no feeling that a legally incorrect result has been reached. Indeed, Judge Sprecher's well reasoned opinion leaves little area, it seems to me, for disagreement with the legal premises it sets forth and applies.
61
It is somewhat ironical, and perhaps to be deplored, that in a society which generally encourages competitive free enterprise a service is to be stifled which a substantial segment of citizenry of the Midwest portion of the country found to be highly desirable in making available travel by air which might not otherwise have been enjoined by them, and which travel has been conducted in full compliance with governmental safety requirements.
62
While this travel presumable was ordinarily for pleasure rather than business reasons, the right of such movement is one that has received Supreme Court recognition.
63
'This Court long ago recognized that the nature of our Federal Union and our constitutional concepts of personal liberty unite to require that all citizens be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement.' Shapiro v. Thompson, 394 U.S. 618, 629, 89 S.Ct. 1322, 1329, 22 L.Ed.2d 600 (1969).
64
While the further movement of the Voyager members is perforce restricted by our upholding of the administrative determination here involved, we are unable to say that it is not supported by substantial evidence, nor that it is an unconstitutionally unreasonable application of the guidelines laid down by the Congress. That body has as a policy matter legislated where competing interests are involved. It is our function in the judiciary not to make the law but only to determine what it is and whether it exceeds constitutional limitations either as stated or as applied.
*
Senior District Judge, William J. Campbell of the Northern District of Illinois is sitting by designation
1
The Federal Aviation Act of 1958, 72 Stat. 731, 49 U.S.C. 1301 et seq. (1970) (hereinafter cited as the Act)
2
Section 1006 of the Act delineates the limits of judicial review of C.A.B. orders, providing in pertinent part that 'findings of facts by the Board or Administrator, if supported by substantial evidence, shall be conclusive.' 49 U.S.C. 1486(e)
3
Under the Indiana Not-For-Profit Corporation Act of 1971 (Burns Ind.Stat.Ann., 25-501 to -566 (Cum.Supp.1972)), in the event of dissolution all assets in excess of obligations to creditors and lenders escheat to the state. Burns Ind.Stat.Ann. 25-533
4
This approach resulted in 1,600 members by May 1, 1969, with bonus memberships coming in on an average of 25 a day
5
During the 12 months prior to the institution of this proceeding, Voyager carried some 24,000 members
6
Membership confers certain rights similar to those held by shareholders of a business corporation including the right to notice of elections and rights to nominate and vote on directors
7
A commercial operator is defined as 'a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier . . ..' 14 C.F.R. 1.1
8
'From a safety standpoint, when a passenger has, in any manner, paid for his carriage aboard a large aircraft the FAA believes that the applicable safety standards should not depend on a distinction as to whether that passenger is carried for 'compensation or hire' or is 'sharing expenses' with other passengers. The average passenger certainly is not aware that the method by which he pays for his carriage determines the level of safety that the operator of the aircraft is required to maintain. Except for the method of payment, the typical travel club operation is in all practical respects no different from a charter flight conducted by a commercial operator, and the FAA believes that the level of safety required by Part 121 should be maintained.' 32 Fed.Reg. 10311 (1967)
9
Opinion Letter from F.A.A. to Voyager 1000, Aug. 2, 1971. Record at 629
10
Id
11
Section 101 of the Act defines 'air carrier' as
'any citizen of the United States who undertakes, whether directly or indirectly or by a lease or other arrangement, to engage in air transportation . . .'
49 U.S.C. 1301(3). 'Air transportation' is defined as 'interstate, overseas, or foreign air transportation . . .' (49 U.S.C. 1301(10)), terms which are respectively defined as
'the carriage by aircraft of persons or property as a common carrier for compensation or hire . . . in commerce . . .'
between states, between states and Territories or possessions, and between the United States and any other place. 49 U.S.C. 1301(21).
12
Las Vegas Hacienda, Inc. v. C.A.B., 298 F.2d 430, 432-433 (9th Cir. 1962)
13
The court's analysis quite properly demonstrated the limitations on the Board's affirmative statutory duties. The desired result is not to remove all operations which compete with commercial airlines but rather to regulate only those operations which affect the economic soundness of regularly scheduled point-to-point air transportation. The economic stability of commercial airlines is to be preserved not for the benefit of the airlines per se but only insofar as that stability is necessary to the maintenance of an adequate national and international transportation system
14
The record shows that in a typical month, November, 1971, out of 15 Voyager destinations only two such destinations were advertised by travel agents. In conversations with travel agents, petitioner found that its elapsed time was less than half that of the best common carrier service in five of eight examples
15
In 1971, Voyager conducted a survey of its membership based on a random selection of 200 members. Every fiftieth member on the Master Membership files who was current in dues payment was selected and a questionnaire was sent to him or her. Among other things, the totals showed that the average time between joining and traveling was 5 1/2 months. The survey does not provide information on individuals who had stopped paying dues. The record does not show the average time between making reservations and flying
16
As a practical matter the fees become part of the transportation cost which in total amounts to less than commercial fares
17
It is not clear how the establishment of a prior affinity among Voyager's members would help petitioner's case. The C.A.B. has recently begun experimenting with the discontinuance of the affinity group concept due to the fact that it discriminates against individuals not belonging to groups which are charterworthy. 37 Fed.Reg. 20808 (1972)
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510 U.S. 1195
Penrod Drilling Corp.v.Coats.
No. 93-1209.
Supreme Court of United States.
March 21, 1994.
1
Appeal from the C. A. 5th Cir.
2
Certiorari denied. Reported below: 5 F. 3d 877.
| {
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} |
Robert Eugene LAMB, individually, James Morris Lofton, individually, Robert C. Lee, individually,
William Gordon Bailey, individually, Plaintiffs-Appellants,
v.
TURBINE DESIGNS, INC., a Florida corporation, Defendant-Appellee.
No. 99-10565.
United States Court of Appeals,
Eleventh Circuit.
March 28, 2000.
Appeal from the United States District Court for the Northern District of Georgia.(No. 99-00024-1-CV-
WBH), Willis B. Hunt, Jr., Judge.
Before ANDERSON, Chief Judge, WILSON, Circuit Judge, and HILL, Senior Circuit Judge.
HILL, Senior Circuit Judge:
Robert Eugene Lamb, James Morris Lofton, Robert C. Lee, and William Gordon Bailey,
non-residents of Georgia, brought this action in the United States District Court for the Northern District of
Georgia claiming that Turbine Design, Inc., also a non-resident of Georgia, violated the Florida Uniform
Trade Secrets Act and the Georgia Trade Secrets Act, as well as a variety of other state statutory and common
law duties, by misappropriating proprietary flight and engineering data and then improperly disclosing this
information in an application filed with the Federal Aviation Administration in Atlanta, Georgia. The district
court held that it had no jurisdiction over Turbine Design, Inc. and dismissed the case. Plaintiffs brought this
appeal.
This diversity case presents the following question of law: is a non-resident subject to personal
jurisdiction under the Georgia long-arm statute when he improperly discloses another non-resident's trade
secret to a federal agency at its Georgia office? We certify this question to the Georgia Supreme Court
because there is no controlling Georgia authority.
I.
Plaintiffs are the former shareholders of Phoenix Corporation (Phoenix), a Mississippi corporation,
which was involved in the development of a modification to the Beechcraft King Air aircraft. Phoenix
applied to the Federal Aviation Administration (FAA) for approval of this modification. While the
application was pending, Megaflight, Inc. (Megaflight) purchased all the stock of Phoenix from the plaintiffs.
Some time later, the FAA advised Megaflight that the Phoenix design modifications were deficient.
Megaflight hired Turbine Design, Inc. (TDI) to correct the problems. Subsequently, TDI submitted its own
application to the FAA for a design modification for the Beechcraft King Air aircraft. As required by law,
it submitted the application to the FAA's office in Atlanta, Georgia. Plaintiffs then filed the present action
in the northern district of Georgia.1
TDI moved to dismiss this action, asserting that the Georgia federal court had no jurisdiction over
it. TDI pointed out that it is a Florida corporation; it is not authorized to do business in Georgia, does no
business in Georgia, has no employees nor offices in Georgia, and does not have a registered agent for service
of process in Georgia.
The plaintiffs conceded that TDI's only contact with Georgia was the submission of its application
to the FAA's Atlanta, Georgia office, but argued that this contact was sufficient. Plaintiffs' theory is that
TDI's disclosure of the Phoenix proprietary modification in its application to the FAA constituted a tort under
the Georgia Trade Secrets Act, O.C.G.A. Section 10-1-761(2)(B), and that this tort occurred in Atlanta,
Georgia where TDI submitted the application. If so, the Georgia long-arm statute would appear to permit the
district court to assert jurisdiction over TDI. See O.C.G.A. § 9-10-91(2) (Georgia court may exercise personal
jurisdiction over a non-resident who commits a tortious act within the state). See also Morris v. SSE, Inc.,
1
Actually there was a proliferation of litigation at this point. Megaflight had sued plaintiffs in a Florida
court alleging that they misrepresented the design modification as well as the assets owned by Phoenix when
they sold it to Megaflight. Plaintiffs countersued alleging that Megaflight and others had misappropriated
the Phoenix technical data and had failed to pay for plaintiff's stock in Phoenix. Since jurisdiction in Georgia
will, of necessity, require a tort to have been committed there, it appears that ultimately the determination of
the jurisdictional issue will depend upon the ownership of the design modification at the time it was disclosed
to the FAA. This determination will also resolve all of the issues pending in the Florida court.
2
843 F.2d 489, 492 (11th Cir.1988) (district court sitting in diversity may exercise personal jurisdiction to the
extent authorized by the law of the state in which it sits). Furthermore, Georgia's assertion of personal
jurisdiction over a non-resident who commits a tort in Georgia would not offend the Constitution. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 447-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985): Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)
(defendant who commits a tort in a particular state should reasonably expect to be subject to jurisdiction in
that state, and exercise of personal jurisdiction under these circumstances does not violate due process). In
order to resolve the issue of personal jurisdiction raised by the circumstances of this case, we must determine
whether TDI's disclosure to the FAA in Georgia of plaintiffs' trade secret constituted the sort of tort
contemplated by Section 9-10-91(2) of the Georgia long-arm statute.2
II.
The Georgia Trade Secrets Act defines misappropriation of a trade secret—a tort—as:
Disclosure or use of a trade secret of another without express or implied consent by a person who:
(i) Used improper means to acquire knowledge of a trade secret;
(ii) At the time of the disclosure or use, knew or had reason to know that knowledge of the trade secret
was:
(I) Derived from or through a person who had utilized improper means to acquire it;
2
The district court did not decide this issue. Instead, it held that the tort, if any, in this case was
committed in Florida where TDI is located and the trade secrets were "purloined." This may well be true, but
plaintiffs contend that TDI committed a separate tort when it disclosed those trade secrets in Georgia. We
are also unpersuaded by the district court's alternative holding that, in any event, the "government contacts"
defense would apply in this case to relieve TDI of liability for any tort it may have committed by virtue of
its application to the FAA. See Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione Motonave, 937 F.2d
44 (2d Cir.1991). We agree with plaintiffs that this defense is unavailable where the defendant's contact
perpetrates a fraud upon the government, which, under the allegations of the complaint, TDI intended to do
by misappropriating their trade secrets and representing itself to the FAA as entitled to the design
modification permit. See Nichols v. G.D. Searle & Co., 783 F.Supp. 233, 242 (D.Md.1992) (constitution does
not protect false statements nor intentional lie); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 786-87
(D.C.Cir.1983) ("A different case might be presented had Naartex made credible and specific allegations in
the district court that the companies had used the proceedings as an instrumentality of the alleged fraud").
3
(II) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(III) Derived from or through a person who owed a duty to the person seeking relief to maintain its
secrecy or limit its use; or
(iii) Before a material change in position, knew or had reason to know that it was a trade secret and the
knowledge of it had been acquired by accident or mistake.
O.C.G.A. Section 10-1-761(2)(B).
For the purposes of this motion, we assume the allegations of the complaint to be true. Delong
Equipment Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir.1988). Plaintiffs allege that
TDI's "disclosure and tender of the trade secrets to the FAA in Atlanta, Georgia for use in evaluating [TDI's]
application is a violation of the [Act.]" Furthermore, they contend that the "presence of these trade secrets in
the State of Georgia beyond the control of plaintiffs creates the potential for further and possibly unknown
injury to plaintiffs in the State of Georgia, for which relief is needed in the courts of this State." These
allegations appear to state a claim under the Georgia Trade Secrets Act. If so, TDI has committed a tort in
Georgia and is subject to its jurisdiction.
TDI argues that because they "completed the application for the [modification] in Florida, 'they
committed no tort in Georgia.' " They do not, however, offer any authority for this proposition. Nor do
plaintiffs offer any authority for their contention that the disclosure of misappropriated trade secrets to a
federal agency which happens to have an office for acceptance of applications in Georgia is the sort of tort
contemplated by the Georgia long-arm statute. We also have been unable to find any Georgia case on point.
The resolution of this issue is not self-evident. On the one hand, we have the express language of
the statute which appears to define the tort of misappropriation to include the act committed by TDI in
Georgia. Furthermore, on similar facts, but in a case not involving the issue of long-arm jurisdiction, we have
held that the improper disclosure of a trade secret in an application to the FAA "clearly constituted adverse
use of [the plaintiff's] property." Avco Corp. v. Precision Air Parts, Inc., 676 F.2d 494, 498 (11th Cir.1982).
Additionally, federal law permits the further unauthorized disclosure of these trade secrets by the FAA,
4
thereby bolstering plaintiffs' theory that this disclosure constitutes a tort—breach of statutory duty with
resulting injury. See Chevron Chemical Co. v. Costle, 641 F.2d 104 (3d Cir.1981) (a federal agency's
subsequent intra-agency disclosure of trade secrets voluntarily submitted not a tort under trade secrets act).
See also Earthline Corp. v. Mauzy, 68 Ill.App.3d 304, 24 Ill.Dec. 787, 385 N.E.2d 928 (Ill.1979)(state trade
secret law did not prevent agency from disclosing to another agency trade secrets voluntarily submitted under
licensing requirements).
If a tort has been committed in Georgia, then Georgia's long-arm statute would appear to permit even
a non-resident plaintiff to use its long-arm statute to sue another non-resident who commits a tort in Georgia.
See Newman v. Fleming, 331 F.Supp. 973 (S.D.Ga.1971). Further, specifically in trademark cases, the
exercise of personal jurisdiction over a foreign defendant has been upheld in a forum where the defendant
attempted to pass off the goods as his own. Topps Co., Inc., v. Gerrit J. Verburg Co., 961 F.Supp. 88, 90-91
(S.D.N.Y.1997).
On the other hand, it seems quite possible that a Georgia court might hold that this is not the sort of
act which triggers its long-arm statute. It is clear that Georgia has almost no interest in this litigation, nor any
stake in the outcome. No party is from Georgia. The alleged tortious disclosure was to a federal, not a
Georgia agency.
We conclude that this issue of state law is both unsettled and pivotal to the resolution of this case.
We are reluctant to guess on an issue which so greatly impacts on the basic jurisdiction of the Georgia courts.
Accordingly, we respectfully certify the to the Supreme Court of Georgia the following question:
IN GEORGIA, IS A NON-RESIDENT SUBJECT TO PERSONAL JURISDICTION UNDER
O.C.G.A. § 9-10-91(2) WHEN HE IMPROPERLY DISCLOSES ANOTHER NON-RESIDENT'S
TRADE SECRET TO A FEDERAL AGENCY AT ITS GEORGIA OFFICE?
Our statement of the question is not meant in any way to limit or direct the scope of inquiry by the
Supreme Court of Georgia. On the contrary:
[T]he particular phrasing used in the certified question is not to restrict the Supreme Court's
consideration of the problems involved and the issues as the Supreme Court perceives them to be in
5
its analysis.... This latitude extends to the Supreme Court's restatement of the issue or issues and the
manner in which the answers are to be given....
Martinez v. Rodriquez, 394 F.2d 156, 159 n. 6 (5th Cir.1968). The entire record in this case, together with
copies of the briefs of the parties, is transmitted herewith.
III.
We CERTIFY the state law question of whether a non-resident is subject to personal jurisdiction
under O.C.G.A. § 9-10-91(2) when he improperly discloses another non-resident's trade secret to a federal
agency at its Georgia office. We WITHHOLD any decision about the district court's dismissal of the case
for want of personal jurisdiction. QUESTION CERTIFIED.
6
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3 N.Y.3d 703 (2004)
PEOPLE v. BARNEZ
Court of Appeals of the State of New York.
September 14, 2004.
Application in criminal case for leave to appealWithdrawn. (Graffeo, J.)
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257 B.R. 370 (2001)
In re David FILI, Debtor.
Factors Funding Co., Appellant,
v.
David Fili and Denise M. Pappalardo, Chapter 13 Trustee, Appellees.
No. MW 00-072.
United States Bankruptcy Appellate Panel of the First Circuit.
January 11, 2001.
*371 Steven A. Kressler, Lisa M. Read, Kressler & Kressler, Worcester, MA, for Appellant.
Jason Rosenberg, Herbert Weinberg, North Andover, MA, for Appellee.
Before: LAMOUTTE, HAINES, DEASY, U.S. Bankruptcy Appellate Panel Judges.
HAINES, Bankruptcy Judge.
Factors Funding Co. appeals the bankruptcy court's orders disallowing its secured proof of claim based on confirmation of a Chapter 13 plan expressly providing: "The alleged secured claim of Factors Funding, Inc. is hereby discharged as there is no underlying obligation." For the reasons set forth below, we affirm.
Background
David Fili filed for relief under Chapter 13 of the Bankruptcy Code[1] on October 25, 1999. The case notice promulgated by the court clerk established February 17, 2000, as the last date for creditors to file proofs of claim. On October 25, 1999, Fili properly served his Chapter 13 plan on Factors, providing that Factors' claim was "discharged." On December 10, 1999, he served an amended plan similarly providing for discharge of (and no distribution in respect to) Factors's claim.[2] Factors did not object to the plan or the amended plan. By order dated January 24, 2000, the bankruptcy court confirmed the amended plan.
Factors filed a proof of secured claim in the amount of $35,429.33 in advance of the February 17, 2000, bar date, but after plan confirmation. Fili objected immediately, asserting that the claim was barred by the confirmed plan and that, in any event, Fili owed Factors nothing. Factors rejoined, and the court set the claims contest for *372 non-evidentiary hearing on May 15, 2000. At that hearing the court disallowed Factors's claim for two reasons. It held there was no enforceable obligation underlying a mortgage Factors held on Fili's residence. And it held that confirmation of Fili's plan precluded allowance of Factors's claim under the doctrine of res judicata.
Discussion
Factors asserts that the bankruptcy court erred on both counts. It contends that the court could not permissibly determine that Fili owed it nothing without conducting an evidentiary hearing and it argues that, because the claims filing bar date had not expired, the court could not permissibly extinguish its claim through plan confirmation.
The parties have argued the former point at length, but in the end it is unnecessary to resolve it. We conclude that the plan confirmation process, resulting in confirmation of Fili's amended Chapter 13 plan, effectively extinguished Fili's alleged liability to Factors.
Factors's argument on the res judicata point is simple: A proof of claim is prima facie evidence of a claim's validity. See Fed.R.Bankr.P. 3001(f). "Under this rule, a claim is presumed valid until an objecting party has introduced evidence sufficient to rebut the claimant's prima facie case." In re Inter-Island Vessel Co., 98 B.R. 606, 608 (Bankr.D.Mass.1988). A proof of claim will prevail over a mere formal objection. See, e.g., Juniper Dev. Group v. Kahn (In re Hemingway Transp., Inc.) 993 F.2d 915, 925 (1st Cir. 1993) ("The interposition of an objection does not deprive the proof of claim of presumptive validity unless the objection is supported by substantial evidence."). Since the deadline for filing a proof of claim had not expired before confirmation, the debtor's confirmed plan, which expressly incorporated a provision extinguishing Factors's claim, could not prevail. When Factors timely filed its proof of claim, albeit post-confirmation, it established its claim as valid prima facie. Liability on the claim could not be determined against it without a meaningful objection and an evidentiary hearing.
We disagree, principally because Fili's plan was confirmed only after notice and an opportunity for Factors to be heard. Under the circumstances of this case, where the notice was adequate (indeed, repeated) and the plan clearly and unequivocally disclaimed any liability whatsoever to Factors, Factors was not free blithely to forgo its full and fair opportunity to object to the plan's plain terms. Even if issues relating to Fili's liability to Factors could not be finally resolved through a plan confirmation contest, an issue we need not address,[3] Factors ignored the plan confirmation process, and its opportunity to object to confirmation, at its peril.
We note that Factors does not contend that notice of confirmation was deficient in any way. It was given adequate advance notice of the hearing and adequate notice of the bar date for confirmation objections. And it concedes it had unequivocal notice that, if confirmed, the plan would "discharge[]" any liability to Factors and establish there was no "underlying obligation." In the face of such notice, Factors was obliged to object to confirmation.[4] It could not cast a blind eye to confirmation's consequences.
*373 Plan confirmation is a final order, with res judicata effect, and is imbued with the strong policy favoring finality. See, e.g., Great Lakes Higher Educ. Corp. v. Pardee (In re Pardee), 193 F.3d 1083, 1086-87 (9th Cir.1999) (enforcing provision in confirmed Chapter 13 plan discharging post-petition interest on student loans); Andersen v. UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253, 1257-60 (10th Cir. 1999) (enforcing confirmed plan's discharge provisions eliminating outstanding student loan liability); see also Barbosa v. Soloman (In re Barbosa), 235 F.3d 31, (1st Cir.2000) (addressing modification of confirmed plan, noting that §§ 1327 and 1330 "accord significant finality to confirmation orders in Chapter 13 cases," and noting that motions to modify "cannot be used to circumvent the appeals process for those creditors who have failed to object [to] confirmation of a Chapter 13 plan"); In re Szostek, 886 F.2d 1405, 1414 (3rd Cir.1989) (creditor has affirmative duty to object to unlawful or objectionable provisions of Chapter 13 plan); see cf. Heins v. Ruti-Sweetwater, Inc. (In re Ruti-Sweetwater, Inc.), 836 F.2d 1263 (10th Cir.1988) (Chapter 11 plan's discharge provisions bound non-voting, non-objecting creditor with notice); Republic Supply Co. v. Shoaf, 815 F.2d 1046 (5th Cir.1987) (same).
This is not a case such as Piedmont Trust Bank v. Linkous (In re Linkous), 990 F.2d 160 (4th Cir.1993) where the confirmation notice was later deemed insufficient to apprise a creditor of the need to object to confirmation.[5]
Nor is it a case like In re Grogan, 158 B.R. 197 (Bankr.E.D.Cal.1993) where the debtors' plan generally set amounts to be distributed with respect to secured and priority claims, but the I.R.S.'s timely post-confirmation proof of claim set forth different amounts due to it on secured and priority bases. The In re Grogan court refused to limit the I.R.S. to the amounts the debtors had unilaterally listed as due it on their schedules. Id. at 199-200.[6]
Finally, this case is unlike In re Kressler, 252 B.R. 632 (Bankr.E.D.Pa.2000). In In re Kressler a secured creditor filed its proof of claim late. The claim was disallowed. The debtors proffered a plan proposing to pay the creditor nothing with respect to its lien because its second mortgage "was totally unsecured, cramdown; [creditor] to cancel its mortgage/lien of record." Id. at 633. And when the creditor objected to confirmation, the debtors *374 claimed that it could not be a "party in interest" entitled to object, see § 1324, because its claim had been disallowed. After determining that, since the creditor's lien had yet to be avoided, it had standing to object, id. at 633-34, the court went on to hold that a debtor may not permissibly effect cramdown through plan confirmation processes. Id. at 634-35. As explained above, see supra notes 3 and 4, this case does not require us to reach the latter issue because, unlike the creditor in In re Kressler, Factors never objected to confirmation.
Thus, we hold that in the face of notice that timely and unambiguously informs a creditor that his claim will be disallowed in total and discharged under a Chapter 13 plan pending for confirmation, the creditor may not ignore the confirmation process and fail to object simply because the bar date for filing a proof of claim has yet to expire. A creditor who disregards a procedurally proper and plain notice that its interests are in jeopardy does so at its own risk. Confirmation of such a plan, after notice and an opportunity for hearing, bars the creditor's later-filed claim under principles of res judicata.[7]
Conclusion
For the reasons set forth above, the order of the bankruptcy court disallowing Factors' claim is AFFIRMED.
NOTES
[1] Unless otherwise indicated, all references to the "Code" or the "Bankruptcy Code" and all references to statutory sections are to the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. § 101 et seq.
[2] Factors does not contend that service of the plan or the amended plan failed to comply with applicable rules. See Fed.R.Bankr.P. 3015; Mass. Local Bankr.R. 3015-1; id. at App. 1, 13-2.
[3] The facts of this case render it unnecessary to determine the precise procedural point whether a dispute about liability could be finally resolved in a confirmation hearing or whether a timely objection to confirmation would lead to disapproval of the plan (or postponement of confirmation) pending hearings of another character.
[4] Its objection could have sought a full hearing on the claims dispute in the context of confirmation hearings or, just as easily, could have objected to confirmation noting that it had yet to file its proof of claim and that Fili would be obliged to join issues with it in a different procedural context. See supra note 3.
[5] In In re Linkous a secured creditor was not given adequate notice that the court would consider valuing its security and bifurcating its claim at confirmation. In reaching its decision to vacate the confirmation order insofar as it affected Piedmont's rights, the Fourth Circuit Court of Appeals recognized that, with proper notice, the debtor could have accomplished what she sought through the confirmation process. 990 F.2d at 162-63.
[6] The court declared that, "[t]o limit the IRS to an amount determined solely by the debtor while the time to file proofs of claims had not yet expired would violate fundamental principals [sic] of bankruptcy claims practice." Id. at 200. In the course of discussion, In re Grogan commented generally about commonly used procedures in which confirmation precedes the claims bar date:
Allowing proofs of claim to be filed after the confirmation hearing may seem contrary to the strong concern for finality in a bankruptcy confirmation order, but finality is dependent upon both the promptness of claims filed by the creditors and the completeness and accuracy of the debtor's schedules. For example, the debtor can unilaterally increase the likelihood that his plan will be final by either adequately providing in his plan for those creditors who will have priority claims, or by filing accurate proofs of claim on behalf of any creditors whose claims are not filed in time for the confirmation hearing pursuant to section 501(c).
Id. We would add that, where, as in the case before us, the debtor unequivocally provides fair notice of final and certain treatment that a claim (or a potential claim) will be given under the plan, he or she may expect that the claim's holder will be bound by the confirmed plan unless that claim's holder files an appropriate, timely objection to confirmation. See, e.g., In re Pardee, 193 F.3d at 1086-87; In re Andersen, 179 F.3d at 1257-60.
[7] We recognize that there is perceptible tension between the plan confirmation process and the claims allowance/disallowance process. That tension is particularly apparent where, as here, confirmation may precede the claims bar date's expiration. See generally 2 Keith M. Lundin, Chapter 13 Bankruptcy § 6.10 (2d ed. Supp.1996). That tension is relaxed entirely with an appreciation that:
Claim holders are entitled to have their rights in a Chapter 13 case determined after appropriate notice and opportunity for hearing. Notice and procedural due process can be satisfied in several ways without violating any fundamental principles of bankruptcy law.
Id. § 6.10 at 6-23 (commenting that, with adequate notice and opportunity for hearing, disputes that could be resolved through other procedural vehicles, e.g. collateral valuation for secured claims, may appropriately be determined at confirmation).
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802 F.2d 445
Alvarezv.City of Philadelphia
86-1146
United States Court of Appeals,Third Circuit.
9/23/86
1
E.D.Pa.
AFFIRMED
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199 N.W.2d 742 (1972)
189 Neb. 56
Theodore REGIER and Marjorie Regier, Husband and Wife, Appellees,
v.
NEBRASKA PUBLIC POWER DISTRICT (formerly Consumers Public Power District), a Public Corporation and Political Subdivision of the State of Nebraska, Appellant.
Nos. 38365, 38366.
Supreme Court of Nebraska.
August 4, 1972.
*743 Wilson, Barlow & Watson, Ted L. Schafer, Lincoln, for appellant.
E. Harold Powell, Aurora, Christensen & Glynn, and Lawrence C. Sandberg, Jr., Lincoln, for appellees.
Heard before WHITE, C. J., and SPENCER, BOSLAUGH, SMITH, McCOWN, NEWTON and CLINTON, JJ.
BOSLAUGH, Justice.
These are appeals in proceedings in eminent domain. They were consolidated for trial in the district court and for briefing and argument in this court.
The plaintiffs, Theodore Regier and Marjorie Regier, own and farm approximately 626 acres of land south and east of Aurora, Nebraska. In 1969, the defendant condemned easements across the plaintiffs' property for the construction of a transmission line.
The appraisers appointed by the county judge fixed the damages at $29,500. The defendant appealed to the district court where the jury returned a verdict in the amount of $62,600. The defendant appeals.
*744 The plaintiffs' land consists of the southwest quarter of Section 22, the northeast quarter of Section 27, and the west half of Section 26, all in Township 10 North, Range 6 West of the 6th P.M. in Hamilton County, Nebraska. The land is fertile, level, irrigated land. It is well developed and improved for agricultural use. Its value before the taking was between $559,800 and $681,260.
The defendant, in its declarations of taking, divided the plaintiffs' land into separate tracts. The petitions filed in the county court described Tract No. H-29 as the NE ¼ SW ¼, and the NW ¼ of 26-10-6. Tract No. H-30 was described as the NE ¼ of 27-10-6. Separate awards were made by the appraisers and separate appeals were taken by the defendant to the district court. In the district court the cases were consolidated for trial with the separate tracts considered as separate causes of action. Separate verdicts were returned on each cause of action and separate appeals taken to this court. The defendant now contends that the judgments should be reversed and the causes remanded for a new trial because the plaintiffs' land was not considered as a single unit in the district court.
All of the land involved in these cases is owned by the plaintiffs, is contiguous, and is devoted to the same use. It should have been considered as one unit or parcel for the purpose of ascertaining the damages resulting from the taking of the easements. See Verzani v. State, 188 Neb. 162, 195 N.W.2d 762. The assignments of error, however, cannot be sustained for several reasons.
The error resulted from the defendant's election to divide the plaintiffs' land into separate tracts in the declarations of taking. A party cannot be heard to complain of an error which he was instrumental in bringing about. Beveridge v. State, 183 Neb. 406, 160 N.W.2d 229. The defendant had the benefit of separate appraisals which would have permitted a single appeal if it had been satisfied with one of the awards. It cannot now complain of the theory which it adopted in the petitions filed in the county court. Furthermore, the record shows there was no prejudice to the defendant. Error without prejudice is not ground for reversal.
The defendant filed motions for a change of venue which were overruled by the district court. The ruling on these motions is assigned as error. The motions alleged, in substance, that a fair and impartial trial could not be had in Hamilton County because bias, prejudice, bitterness, and hostility against the defendant would make it impossible to select fair and impartial jurors. Affidavits offered in support of the motions referred to a number of newspaper articles which were critical of the defendant and the routing of the transmission line.
The defendant did not examine any of the prospective jurors in regard to the newspaper articles, and the voir dire examination of the jury panel did not show that a fair and impartial jury could not be obtained. No challenge for cause by the defendant was overruled, and at the close of the examination of the jury panel, it was passed for cause by the defendant. Under these circumstances, it is unnecessary to consider further the showing made in support of and in resistance to the motions. A party who fails to challenge the jurors for disqualification and passes the jurors for cause waives any objection to their selection. State v. Eggers, 175 Neb. 79, 120 N.W.2d 541; State v. Harris, 184 Neb. 301, 167 N.W.2d 386.
The defendant contends that the verdicts were excessive. This is the principal issue presented by the appeals.
The verdicts in these cases included both permanent and temporary damages caused by the taking of the easements. The taking occurred on May 28, 1969. Construction of the transmission line began in April 1970. The defendant's contractor moved *745 heavy equipment onto the land causing compaction and disturbance of the soil in the easement area. There was also a problem with trash left by the contractor which interfered with farming operations. The plaintiffs estimated the temporary damages at $10,000. A witness for the defendant estimated the temporary damages at $3,000. Since the verdicts were general, the amount allowed by the jury for temporary damages cannot be determined.
The easements taken are 150 feet wide and cross the plaintiffs' property on a diagonal line from northwest to southeast. The combined area of the easements is approximately 19 acres. The centerline of the easement area across Section 27 intersects the west boundary of the northeast quarter 1,060 feet south of the north line of the section. The centerline intersects the line between Sections 27 and 26, 703 feet north of the half-section line. The centerline intersects the east boundary of the west half of Section 26, 168 feet south of the half-section line. No part of the southwest quarter of Section 22 is included in the easement area.
The trial court considered the west half of Section 26 to be the area affected by easement across Tract H-29, and the northeast quarter of Section 27 and the southwest quarter of Section 22 to be the area affected by the easement across Tract H-30. It was a question of fact as to whether there was remainder damage to the southwest quarter of Section 22 and that part of the southwest quarter of Section 26 omitted from the description of Tract H-29 in the petitions filed in the county court. The evidence was in conflict and the question was for the jury.
The plaintiffs' land is irrigated from 6 wells and 3 reuse pits. One of the wells on Tract H-30 is located within the easement area. Since the date of the taking, the plaintiffs have drilled an additional well near the center of the southwest quarter of Section 26 and have installed a center pivot irrigation system there. Much of the evidence relates to center pivot irrigation systems, their desirability and efficiency; whether the land was adaptable to irrigation by center pivot systems; and the effect the easements had upon the market value of the land because parts of it now cannot be irrigated by center pivot systems. The evidence was in conflict and presented questions for the jury.
The transmission line presently constructed across the plaintiffs' land is a 345,000 volt line with 6 conductors and 2 shield wires. There are 7 "K" frame, 2-pole structures on the land which are 750 to 900 feet apart. The poles of each structure are spaced 26 feet apart. There are no guy wires or down-guys on the structures at this time but the evidence shows some of the structures are no longer perpendicular.
The evidence established that the structures now erected on the easement area interfere with farming the land and require much additional time and labor to perform the necessary operations on the land. The plaintiff uses 8-row machinery and it is impossible to farm through the structures with this equipment. Much hand labor with shovels is required to open the furrows through the structures so that gravity irrigation may continue beyond the easement area. Weed control in the areas around the structures is difficult, and aerial spraying will be more difficult.
The plaintiffs' evidence fixed the permanent damages resulting from the taking at between $62,000 and $71,000. The defendant's evidence fixed the permanent damages at between $9,500 and $11,000. It is apparent that the jury rejected the testimony of the defendant's witnesses as unrealistic.
In determining whether the verdict was excessive it is important to consider the exact nature of the easements which were taken. The easements permit the "survey, construction, operation, maintenance, inspection, repair, removal, alteration, relocation, and reconstruction of Condemner's *746 electric transmission lines including necessary poles, towers, footings, guys, downguys, anchors, conductors, shield wires and all other equipment used in connection therewith, together with all rights and privileges incident to the use and enjoyment thereof" on the property, including rights of ingress and egress within the easement area. The plaintiffs may cultivate and use the land within the easement area if the use does not endanger or interfere with the defendant's use of the area. The plaintiffs may not place or allow any "combustible trash or property, buildings, structures, hay or straw stacks" to remain within the easement area. The plaintiffs' right to future damage to fencing or crops is reserved in accordance with section 76-710, R.R.S.1943.
The defendant suggests that damages should be determined on the basis of the present structures on the land because it appears unlikely that additional lines or structures will be placed on the easement area. The easements taken are permanent and the plaintiffs have no assurance as to what future use may be made of the easement area. The addition of guy wires and down-guys to the present structures would materially increase the inconvenience and hazard to the plaintiffs, particularly when lighting conditions are poor. It is possible that future developments will result in relocation and reconstruction of transmission lines within the easement area so that plaintiffs will be denied any substantial use of the area, and the structures will prevent farming through the area. These are matters which the jury considered and which we must consider in determining whether the verdicts were excessive.
In Johnson v. Nebraska Public Power Dist., 187 Neb. 421, 191 N.W.2d 594, a similar case involving an easement for the same transmission line in an adjoining county, we said: "The 150-foot diagonal easement with the present seven 2-pole structures running diagonally for over a mile across the farm is obviously a substantial factor affecting market value. The record supports, almost conclusively, that operation of the present irrigation systems will be materially inconvenienced and impeded in operation. With larger modern machinery and power units, aerial spraying of fertilizer, nutrients, and insecticides, and the large scale movement of tubing and irrigation equipment, the diagonal easement will realistically impair normal ground operations on the farm. Beyond this, the record strongly supports a conclusion that it cannot now be adapted to the use of an irrigation system (center-pivot) substantially increasing productivity. These are but a few of the factors in evidence before us for review."
The plaintiffs have a well-developed, highly improved farm. It produced approximately 65,000 bushels of corn and a gross farm income of over $100,000 in 1969. There is grain storage capacity of 210,000 bushels on the property and dryer capacity of 65,000 bushels. The buildings are valued at $60,000 to $100,000. As in the Johnson case, supra, it is obvious the easements have a substantial adverse effect upon the market value of the plaintiffs' property. The record does not show that the verdicts were excessive.
The last assignment of error relates to a ruling of the trial court upon a motion for mistrial made by the defendant. Donald W. McDannel, a value witness for the defendant, stated during cross-examination that he had been authorized by the defendant to negotiate with landowners if they brought up the subject. The witness was then asked when he had first contacted Mr. Regier and if that was the time the witness had "attempted to negotiate with him for twelve hundred and fifty dollars a pole setting." The witness answered: "I don't remember." The defendant moved for a mistrial but the motion was overruled and the jury instructed to disregard the question and answer.
The defendant contends that the ruling was reversible error and that the trial court should have declared a mistrial. The *747 defendant relies upon the rule that ordinarily offers to compromise and negotiations for settlement are not admissible. See Bishop Cafeteria Co. of Omaha v. Ford, 177 Neb. 600, 129 N.W.2d 581. Here there was no issue as to liability. The sole issue was damages and the witness had already testified that the damages were a larger sum. Under the facts and circumstances in these cases the ruling of the trial court was not an abuse of discretion.
The judgments of the district court are affirmed.
Affirmed.
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-17-00022-CR
NO. 02-17-00023-CR
JIMMY PHILLIP MARTIN APPELLANT
V.
THE STATE OF TEXAS STATE
----------
FROM THE 396TH DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 1449444D, 1449445D
------------
MEMORANDUM OPINION1 AND JUDGMENT
----------
We have considered appellant’s “Motion To Dismiss Appeal.” The motion
complies with rule 42.2(a) of the rules of appellate procedure. Tex. R. App. P.
42.2(a). No decision of this court having been delivered before we received this
motion, we grant the motion and dismiss the appeal. See Tex. R. App. P.
42.2(a), 43.2(f).
1
See Tex. R. App. P. 47.4.
PER CURIAM
PANEL: GABRIEL, SUDDERTH, and KERR, JJ.
DO NOT PUBLISH
Tex. R. App. P. 47.2(b)
DELIVERED: April 6, 2017
2
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1156
In Re: JOSE ALFREDO PINEDA ALVAREZ,
Debtor.
-------------------------
JOSE ALFREDO ALVAREZ; MEYBER L. ALVAREZ,
Plaintiffs – Appellants,
v.
HSBC BANK USA, NATIONAL ASSOCIATION,
Defendant – Appellee,
and
NANCY SPENCER GRIGSBY,
Trustee.
------------------------
LARTEASE MARTRELL TIFFITH,
Court-Assigned Amicus Counsel.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Marvin J. Garbis, Senior District
Judge. (8:11-cv-02886-MJG; 10-31729; 11-00067)
Argued: September 17, 2013 Decided: October 23, 2013
Before GREGORY, DAVIS, and KEENAN, Circuit Judges.
Affirmed by published opinion. Judge Keenan wrote the opinion,
in which Judge Gregory and Judge Davis joined.
John Douglas Burns, BURNS LAW FIRM, LLC, Greenbelt, Maryland,
for Appellants. Lartease Martrell Tiffith, O'MELVENY & MYERS,
LLP, Washington, D.C., as Court-Assigned Amicus Counsel.
2
BARBARA MILANO KEENAN, Circuit Judge:
In this case, we consider a district court’s judgment
upholding a bankruptcy court’s refusal to “strip off” a
“valueless lien” against certain real property that a debtor
owned with his non-debtor spouse as tenants by the entireties. 1
On appeal, the debtor and his spouse contend that the bankruptcy
court erred in refusing to strip off the lien on the ground that
the spouse’s property interest was not part of the bankruptcy
estate.
Upon our review, we conclude that the statutory provisions
authorizing a strip off, and applicable Maryland property law,
do not permit a bankruptcy court to alter a non-debtor’s
interest in property held in a tenancy by the entirety.
Therefore, we hold that the bankruptcy court correctly
determined that it lacked authority to strip off the debtor’s
valueless lien because only the debtor’s interest in the estate,
rather than the complete entireties estate, was before the
bankruptcy court. We affirm the district court’s judgment.
1
The term “debtor” means a person who has filed a
bankruptcy petition. See 11 U.S.C. § 101(13).
3
I.
A.
We begin by describing the statutory framework for
stripping off a valueless lien in a bankruptcy proceeding.
Generally, a creditor’s lien on real property passes through
bankruptcy unaffected and “stays with the real property until
the foreclosure,” based on the bargained-for agreement between a
mortgagor and mortgagee. Dewsnup v. Timm, 502 U.S. 410, 417
(1992); accord Cen-Pen Corp. v. Hanson, 58 F.3d 89, 92 (4th Cir.
1995). Thus, while a discharge in bankruptcy eliminates a
lienholder’s in personam rights against a debtor, the
lienholder’s in rem rights in the collateral property ordinarily
remain intact despite a discharge. Dewsnup, 502 U.S. at 418
(citing Johnson v. Home State Bank, 501 U.S. 78, 84 (1991));
Cen-Pen Corp., 58 F.3d at 92.
This Court recently determined, however, consistent with
every other circuit to have considered the question, that in a
typical Chapter 13 proceeding, a bankruptcy court has the
authority to strip off a completely valueless lien on a debtor’s
primary residence, thereby eliminating a lienholder’s in rem
rights against the collateral property (strip off or lien
strip). Branigan v. Davis, 716 F.3d 331, 335-36 (4th Cir. 2013)
(citing other circuit cases addressing the issue). We explained
4
that such authority is based on application of 11 U.S.C.
§§ 506(a) and 1322(b)(2). 2 Id. at 335.
To effectuate a lien strip, a bankruptcy court first
considers the valuation provision contained in § 506(a), which
states:
An allowed claim of a creditor secured by a lien on
property in which the estate has an interest . . . is
a secured claim to the extent of the value of such
creditor’s interest in the estate’s interest in such
property . . . and is an unsecured claim to the extent
that the value of such creditor’s interest . . . is
less than the amount of such allowed claim.
11 U.S.C. § 506(a)(1). Thus, the status of a lienholder’s claim
“as secured or unsecured depends on the value of the
collateral.” Branigan, 716 F.3d at 335.
A bankruptcy court next applies § 1322(b)(2), which
addresses the debtor’s reorganization plan and permits debtors
in such plans to modify the rights of holders of unsecured
claims. 3 “The end result is that section 506(a), which
2
In their complaint in the bankruptcy court, the Alvarezes
cited 11 U.S.C. § 506(a) and (d), and § 1322(b)(2), in their
request for a lien strip. However, before the formal briefing
in this appeal began, this Court decided Branigan and held that
the statutory basis for a strip off is found in 11 U.S.C. §§
506(a) and 1322(b), without application of § 506(d). In the
Alvarezes’ brief, they acknowledge our holding in Branigan and
concede that § 506(d) does not provide statutory support to
complete a lien strip.
3
Under 11 U.S.C. § 1322(b)(2), a debtor’s plan may “modify
the rights of holders of secured claims, other than a claim
secured only by a security interest in real property that is the
(Continued)
5
classifies [completely] valueless liens as unsecured claims,
operates with section 1322(b)(2) to permit a bankruptcy court,
in a Chapter 13 case, to strip off a lien against a primary
residence with no value.” Branigan, 716 F.3d at 335.
When a bankruptcy court confirms a debtor’s reorganization
plan, the plan binds the debtor and his creditors. 11 U.S.C.
§ 1327(a). A lien strip becomes effective and permanently
eliminates a lienholder’s in rem rights against the collateral
property upon completion of a debtor’s reorganization plan.
Branigan, 716 F.3d at 338.
B.
In the present case, Jose Alvarez (Mr. Alvarez) filed a
Chapter 13 petition in the United States Bankruptcy Court for
the District of Maryland. In that petition, Mr. Alvarez
identified his property, including his interest in his primary
residence located in Maryland (the property or the entireties
property). The property is owned by Mr. Alvarez and his wife,
Meyber L. Alvarez (Mrs. Alvarez), as tenants by the entireties.
Mrs. Alvarez was not a party to Mr. Alvarez’s bankruptcy
petition, nor did she file a separate bankruptcy petition.
debtor’s principal residence, or of holders of unsecured claims,
or leave unaffected the rights of holders of any class of
claims.”
6
At the time Mr. Alvarez’s bankruptcy petition was filed,
the property had a value of $442,400.00 and was encumbered by
two mortgage liens. 4 The first-priority mortgage lien, held by
Chase Home Finance, had a balance of $447,572.84. HSBC Mortgage
Service (HSBC) held the second-priority mortgage lien with a
balance of $75,455.08. Thus, the value of the property when the
petition was filed was less than the full amount owed on the
first-priority lien, rendering the second-priority lien
valueless.
In accordance with the Federal Rules of Bankruptcy
Procedure, Mr. and Mrs. Alvarez jointly filed a complaint in the
bankruptcy court against HSBC. In their complaint, the
Alvarezes maintained that because HSBC’s lien was completely
valueless and, thus, was unsecured under 11 U.S.C. § 506(a),
they were entitled to strip off the lien. 5 The bankruptcy court
denied the requested relief, concluding that the lien on the
4
According to an appraisal completed a few weeks after the
bankruptcy petition was filed, the property had a value of
$440,000.
5
In their complaint, Mr. and Mrs. Alvarez sought entry of
default judgment based on the fact that HSBC had not filed a
response to their action. Although the bankruptcy clerk of
court initially entered a default, the bankruptcy court
ultimately denied the motion to enter default judgment. On
appeal, this Court appointed amicus curiae counsel to present
argument opposing Mr. and Mrs. Alvarez’s position.
7
entireties property could not be stripped because both tenants
by the entireties had not filed a petition for bankruptcy. 6
The district court affirmed the bankruptcy court’s
decision, and the Alvarezes timely filed the present appeal. We
have jurisdiction under 28 U.S.C. § 158(d). See Educ. Credit
Mgmt. Corp. v. Kirkland, 600 F.3d 310, 314 (4th Cir. 2010); Sumy
v. Scholssberg, 777 F.2d 921, 922-23 (4th Cir. 1985).
II.
The question before us is whether a bankruptcy court, in a
Chapter 13 case filed by only one spouse, can strip off a
valueless lien on property that the debtor and his non-debtor
spouse own as tenants by the entireties. This is an issue of
first impression among federal appellate courts, and bankruptcy
courts have reached different conclusions in answering the
question. Compare In re Hunter, 284 B.R. 806 (Bankr. E.D. Va.
2002) (applying Pennsylvania law and concluding that an
individual debtor spouse cannot strip off a lien on entireties
property), and In re Pierre, 468 B.R. 419 (Bankr. M.D. Fla.
2012) (reaching same result under Florida law), with, e.g., In
re Strausbough, 426 B.R. 243 (Bankr. E.D. Mich. 2010) (applying
6
The bankruptcy court later denied the Alvarezes’ motion
for reconsideration.
8
Michigan law and determining that an individual debtor can strip
a valueless lien on entireties property).
When we review a district court’s judgment affirming a
bankruptcy court’s decision, we employ a de novo standard and
consider directly the bankruptcy court’s findings of fact and
conclusions of law. Branigan, 716 F.3d at 334 (citing Morris v.
Quigley, 673 F.3d 269, 271 (4th Cir. 2012)). We will not
reverse the bankruptcy court’s factual findings absent clear
error and review that court’s legal conclusions de novo. Id.
Also, because this appeal involves a debtor’s rights in real
property, we consider established principles of Maryland law
regarding property held in a tenancy by the entirety. See
Butner v. United States, 440 U.S. 48, 54 (1979) (“Congress has
generally left the determination of property rights in the
assets of a bankrupt’s estate to state law.”).
Under Maryland law, a tenancy by the entirety is a joint
tenancy of spouses with rights of survivorship between the
spouses. Schlossberg v. Barney, 380 F.3d 174, 178 (4th Cir.
2004) (citing Bruce v. Dyer, 524 A.2d 777, 780 (Md. 1987)). In
such an estate, the property is not owned by either spouse
individually, but by the marital unit, with each spouse having
an undivided interest in the whole property. Id.; Arbesman v.
Winer, 468 A.2d 633, 640 (Md. 1983).
9
A tenancy by the entirety is created under Maryland law
only when the four essential common law unities co-exist.
Bruce, 524 A.2d at 780 (internal citation omitted). Those
unities require “that the tenants enjoy identical interests;
enjoy identical, undivided possession; and that the tenancy
commence at the same time via the same instrument.” Id.
While both spouses are alive, a tenancy by the entirety can
be severed only by divorce or by the joint action of both
spouses. Id. at 781. One spouse alone cannot alienate, convey,
or encumber his or her interest in the entireties property.
United States v. Gresham, 964 F.2d 1426, 1430 n.7 (4th Cir.
1992) (citing Beall v. Beall, 434 A.2d 1015, 1021 (Md. 1981)).
Also, the tenancy cannot be severed by individual judgment
creditors during the tenants’ joint, married life. Beall, 434
A.2d at 1021.
When an individual files a bankruptcy petition, a
bankruptcy estate is created by operation of law. 11 U.S.C.
§§ 301, 541(a). Subject to some exceptions not relevant here,
11 U.S.C. § 541 mandates that a debtor’s bankruptcy estate
contain “all legal or equitable interests of the debtor in
property as of the commencement of the case.” 11 U.S.C.
§ 541(a)(1). Thus, under this provision, a debtor’s undivided
interest in entireties property is part of that debtor’s
bankruptcy estate. In re Ford, 3 B.R. 559, 571 (Bankr. D. Md.
10
1980), aff’d sub nom. Greenblatt v. Ford, 638 F.2d 14 (4th Cir.
1981).
In the present case, the district court and the bankruptcy
court relied on In re Hunter, a bankruptcy court decision
addressing the issue before us. See 284 B.R. 806. There, as in
this case, only one of the tenants by the entireties had filed a
petition in bankruptcy. Id. at 809. Applying Pennsylvania law
governing tenancy by the entirety, the bankruptcy court
determined that it lacked authority to strip off a valueless
lien on property owned by the debtor and his spouse as tenants
by the entireties because only the debtor’s interest in the
entireties property, rather than the whole of the property, was
before the bankruptcy court. Id. at 813-14.
In addressing a related issue, this Court considered the
special nature of a tenancy by the entirety under Maryland law,
and held that when an individual owning property in such a
tenancy files a bankruptcy petition, thereby creating a
bankruptcy estate, such action “does not sever the estate of
tenancy by the entirety” created under Maryland law.
Greenblatt, 638 F.2d at 14-15. Relying on this reasoning in
Greenblatt, the Alvarezes assert that the whole of their
entireties property necessarily became part of Mr. Alvarez’s
bankruptcy estate, because the entireties estate was not severed
11
by his filing of the individual bankruptcy petition. We
disagree with the Alvarezes’ argument.
Our decision in Greenblatt v. Ford summarily affirmed the
rationale applied by the bankruptcy court in that case. 638
F.2d at 15. In its decision, the bankruptcy court made clear
that when an individual who owns property in a tenancy by the
entirety files for bankruptcy,
[t]he asset which becomes a part of the [bankruptcy]
estate is only [the debtor’s] interest as it existed
immediately before the commencement of the case . . .
[his] individual undivided interest as a tenant by the
entirety.
In re Ford, 3 B.R. at 575.
The bankruptcy court in that case further explained that
because a bankruptcy trustee obtains only custody of a debtor’s
interest in entireties property, the filing of an individual
bankruptcy petition and the creation of an individual bankruptcy
estate do not sever the unities of a tenancy by the entirety.
See id. at 570. Therefore, under our precedent and in
accordance with principles of Maryland law, only Mr. Alvarez’s
interest in the entireties property, and not the whole of the
entireties property owned by the marital unit, became part of
his bankruptcy estate. See Greenblatt, 638 F.2d at 14-15.
Additionally, as we have explained, to achieve a lien
strip, a Chapter 13 debtor’s reorganization plan ultimately
modifies the unsecured creditor’s rights and removes the in rem
12
component of the lien. 11 U.S.C. § 1322(b)(2); Branigan, 716
F.3d at 335, 338. A debtor’s reorganization plan, upon
confirmation by the bankruptcy court, binds only the debtor and
that debtor’s creditors. 11 U.S.C. § 1327(a). Therefore, the
bankruptcy court is without authority to modify a lienholder’s
rights with respect to a non-debtor’s interest in a property
held in a tenancy by the entirety.
The Alvarezes nevertheless contend that Mrs. Alvarez and
her interest in the entireties property are properly before the
bankruptcy court, because Mr. and Mrs. Alvarez filed a joint
complaint seeking to strip off the lien. The Alvarezes maintain
that their act of jointly filing the complaint satisfied the
requirement of Maryland law that tenants by the entireties act
together to alter their interests in their entireties property.
See Beall, 434 A.2d at 1021.
We find no merit in this argument. By filing their
complaint, the Alvarezes asked the bankruptcy court to determine
that HSBC’s lien was valueless and unsecured, and to permit a
lien strip. Indeed, this Court has held that a debtor must take
affirmative action to strip a lien. Cen-Pen Corp., 58 F.3d at
92-93.
Here, however, the Alvarezes’ complaint did not bring Mrs.
Alvarez’s interest in the property before the court. The filing
of the complaint did not alter the property rights contained in
13
Mr. Alvarez’s bankruptcy estate or the power of the court to
bind only the debtor and his creditors in any reorganization
plan. See 11 U.S.C. § 1327(a). Thus, the Alvarezes were not
entitled to obtain the removal of the lien against their
entireties property without submitting both parties to the
burden of a bankruptcy filing. See In re Hunter, 284 B.R. at
813.
Our conclusion is not altered by the Alvarezes’ reliance on
11 U.S.C. § 363(h), 7 which permits a bankruptcy trustee in
limited circumstances to dispose of a non-debtor spouse’s
7
This provision states:
[T]he trustee may sell both the estate’s interest,
under subsection (b) or (c) of this section, and the
interest of any co-owner in property in which the
debtor had, at the time of the commencement of the
case, an undivided interest as a tenant in common,
joint tenant, or tenant by the entirety, only if—
(1) partition in kind of such property among the
estate and such co-owners is impracticable;
(2) sale of the estate’s undivided interest in such
property would realize significantly less for the
estate than sale of such property free of the
interests of such co-owners;
(3) the benefit to the estate of a sale of such
property free of the interests of co-owners outweighs
the detriment, if any, to such co-owners; and
(4) such property is not used in the production,
transmission, or distribution, for sale, of electric
energy or of natural or synthetic gas for heat, light,
or power.
11 U.S.C. § 363(h).
14
interest in entireties property. Under § 363(h), a trustee can
sell a bankruptcy petitioner’s interest in entireties property
as well as the interest of a non-debtor spouse under specified
circumstances. This provision represents a narrow legislative
exception to the general common-law rule prohibiting any
unilateral severance of an entireties estate. See In re Hunter,
284 B.R. at 812. Moreover, the Bankruptcy Code does not
authorize a bankruptcy court to eliminate a lienholder’s rights
with respect to a non-debtor’s interest in property or to
contravene state law regarding entireties property to eliminate
an in rem component of a lien.
We therefore hold that the bankruptcy court did not err in
concluding that it lacked authority in a Chapter 13 proceeding
to strip off a valueless lien on Maryland property held in a
tenancy by the entirety, when only one tenant spouse had filed a
bankruptcy petition. Accordingly, we affirm the district
court’s judgment upholding the bankruptcy court decision.
AFFIRMED
15
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873 A.2d 483 (2005)
162 Md. App. 207
Jennifer CORINALDI et al.
v.
COLUMBIA COURTYARD, INC., et al.
No. 1165, September Term, 2004.
Court of Special Appeals of Maryland.
May 3, 2005.
*485 Stacie F. Dubnow (William Michael Mullen, on brief), Baltimore, for appellant.
Mark T. Mitzer, Baltimore, for appellee.
Panel EYLER, JAMES R., KENNEY, WILLIAM W. WENNER, (Ret., specially assigned), JJ.
EYLER, JAMES R., J.
Jennifer E. Corinaldi and Ronald Corinaldi, parents of Andre D. Corinaldi, decedent, appellants, filed suit in the Circuit Court for Howard County against Columbia Courtyard, Inc., Marriott International, Inc., Courtyard Management Corporation, and Hospitality Properties Trust, appellees. Appellants alleged that, on January 13, 2001, the decedent was shot and killed on the premises of a Courtyard by Marriott hotel, owned and operated by appellees (the hotel), and that appellees negligently caused or contributed to decedent's death.
The circuit court entered summary judgment in favor of appellees. On appeal, appellants' primary contention is that the court erred in entering summary judgment. Appellants also raise two other contentions. Prior to the entry of summary judgment, the court ordered that the issue of liability would be tried first with a separate trial on the issue of damages, if necessary, to occur at a time to be scheduled. Appellant contends the court erred in ruling that the damages portion of the trial would occur at a later date and, therefore, *486 before a jury different from the jury that had decided the liability issue. Also, prior to the entry of summary judgment, the court granted appellees' motion to quash appellants' discovery request, which sought records from the Howard County Police Department concerning violent criminal activity that had occurred within a three mile radius of the hotel. Appellants contend the court erred in granting the motion.
We conclude that the circuit court erred in granting appellees' motion for summary judgment. We also conclude that the circuit court did not err in its decisions relating to bifurcation and discovery.
FACTUAL BACKGROUND
There are disputes of fact, both in terms of conflicting evidence as to some of the underlying facts and conflicting inferences which could be drawn from the known facts. Appellees contend the disputed facts and inferences are not material and do not prevent the entry of summary judgment.
In analyzing the entry of summary judgment, we shall consider the evidence in the light most favorable to appellants and resolve all factual disputes in favor of appellants. While, as part of our discussion, we may identify certain matters in dispute, because of the procedural context, it is not necessary that we identify all matters in dispute, and we have not done so.
On January 13, 2001, the decedent attended a surprise birthday party given by Tanette McMillan for Lakecia Mack. The party was held in two adjoining guest rooms at the hotel. Some of the male attendees got into an argument, and an attendee in one of the guest rooms shot through a closed door, hitting and killing the decedent in the adjoining guest room.
There was evidence that, a week before the party, Ms. McMillan, age 19, went to the hotel to inquire about rooms. Ms. McMillan spoke to a relatively new employee of the hotel, George Rock. Mr. Rock, age 17, knew a friend of Ms. McMillan, who accompanied her to the hotel. Ms. McMillan testified, at her deposition, that she told Mr. Rock about her plan to have a birthday party in the rooms. Mr. Rock showed connecting rooms to Ms. McMillan and offered to procure one of the rooms for her at his employee discount. There was evidence that the hotel had a policy of discouraging parties in guest rooms. Mr. Rock, at his deposition, testified that he was unaware of the hotel policy discouraging parties, and that he did not know Ms. McMillan was going to hold a party in the guest rooms.
On January 13, 2001, between 8:00 p.m., when the first guests arrived, and 10:55 p.m., the approximate time of the shooting, two employees were in the hotel. Kristina Brown, age 19, who had been employed at the hotel for four months, was working at the front desk. Ms. Brown was the person in charge. The other hotel employee, who we shall refer to as Mr. M., age 43, a long term employee of the hotel, was responsible for maintenance and housekeeping. Mr. M. was not aware of a hotel policy discouraging parties in hotel rooms. Neither Ms. Brown nor Mr. M. had received training in hotel safety and security.
Mr. M.'s mother testified that Mr. M. was diagnosed as mildly retarded when he was young, but there is no evidence that it interfered with his ability to do his job. The record contains information from Mr. M.'s personnel file, which indicates that he was disciplined on several occasions during his long term of employment, but there is nothing to connect that information with the events in question.
*487 Between the hours of 8:00 p.m. and 11:00 p.m., a party occurred in the two rooms rented by Ms. McMillan. Attendees arrived at various times, either through the front lobby or a side door near the rooms. Most of the attendees arrived after 9:00 p.m. While the total number of attendees is in dispute, estimates range between thirty and fifty, predominantly male, attendees. The majority of attendees were high school students, between 16 and 18 years of age. There is evidence that some of the attendees had consumed alcoholic beverages before they arrived, and that some consumed alcoholic beverages at the party. The beverages were not supplied by appellees.
Some of the people who attended the party entered through the lobby and walked by the front desk. Ms. Brown and Mr. M. noticed people entering and walking by the front desk. Sometime after 9:00 p.m., one or both of the hotel employees became aware that persons in Ms. McMillan's rooms were letting other persons in through a side entrance to the hotel, located near the rooms, which was locked from the outside. Several attendees testified, in depositions, that the party was very loud and could be heard in the hallway near the lobby.
Also sometime after 9:00 p.m., an elderly couple, who were guests of the hotel, complained about teenagers "hanging out" around the side entrance door. On two occasions, Mr. M. knocked on the door of one of the rooms and requested the occupants to lower the noise level and stop letting people in through the side door.
Ms. Brown and Mr. M. called their manager, Maurice Knox, who was not on the hotel premises, two or three times between 9:00 p.m. and the time of the shooting. The conversations were to inform Mr. Knox about the party and the complaint about "kids hanging out by one of the entrance doors." At 10:30 p.m., apparently in response to being told that persons were entering through the side door, Mr. Knox told Ms. Brown and Mr. M. to ask everyone to leave. There is some evidence that Ms. Brown called the room to request that the party end, and Ms. McMillan agreed that everyone would leave, but more attendees continued to arrive, even after 10:30 p.m.
At some point prior to the shooting, some of the male attendees, including Jeff Thompson and Shamal Chapman, got into an argument, and there were threats of violence. At approximately 10:35 p.m., Ms. McMillan separated the persons who were arguing by placing them in separate rooms. They continued to argue and make threats through the connecting door.
At approximately 10:45 p.m., the decedent entered the hotel through the front lobby, accompanied by several friends. When the decedent entered one of the two adjoining rooms, he saw an individual who appeared to be upset and who was beating on the door separating the two rooms. The decedent pulled him away and tried to quiet him. Someone in the other room discharged a handgun. The bullet passed through the closed door and struck and killed the decedent.
Also, at approximately 10:45 p.m., Ms. McMillan went to the front desk and advised Ms. Brown that there were several people in the rooms she did not know, that the party was getting out of control, and that one of the attendees had a gun. Ms. Brown asked Mr. M. to call the police, and Ms. Brown called Mr. Knox. A few minutes later, another female came running down the hall, screaming that two people had been shot. According to a 911 record, a call from the hotel was connected with the 911 operator at 17 seconds before 10:55 p.m. The first police officer arrived at the hotel approximately three minutes *488 later. The shooting occurred between 10:53-10:55 p.m. There is evidence in the record that the shooter was Shamal Chapman, and that he arrived at the party between 9 and 10:30 p.m.[1]
On October 23, 2001, appellants filed a complaint against appellees, and on April 25, 2003, they filed an amended complaint. On April 16, 2004, appellees filed a motion for summary judgment on the ground that, as a matter of law, they had committed no acts of negligence proximately causing the decedent's death. On July 22, 2004, the court granted the appellees' motion.
For purposes of the motion, the court expressly assumed that the decedent was an invitee of Ms. McMillan. The court held that there was no "special relationship" between appellees and the decedent, and that appellees owed decedent only the duty of reasonable care. The court further held that, "[u]nder the facts and circumstances established in this record, reasonable care would not have prevented the unforeseeable act of a second degree depraved heart murder committed by shooting through a closed door at persons unknown on the other side." In so ruling, the court concluded, as a matter of law, that the harm to decedent was unforeseeable and that, even if the hotel had acted reasonably, the harm to decedent could not have been prevented.
Prior to the entry of summary judgment, the court, by order dated May 17, 2004, granted appellees' motion to quash appellants' notice of deposition duces tecum directed to the custodian of records of the Howard County Police Department. The notice requested production of records regarding all violent crimes committed in the calendar years 1999 and 2000 within a five-mile radius of the hotel.[2]
Also prior to the entry of summary judgment, and after granting appellees' motion to try the issues of liability and damages separately, the court, by order dated June 22, 2004, provided that, if the jury found in favor of appellants on liability, the court would schedule a settlement conference. If the case failed to settle, a trial on damages would be scheduled. According to appellants, the necessary implication of the order was that the issues of liability and damages would be tried by two different juries.
DISCUSSION
The primary issue presented in this case is whether appellees, as innkeepers, had a duty to take affirmative action to protect the decedent, an invitee of a guest of the hotel, from the criminal actions of an unknown third party. Appellants contend the court erred in holding that the intentional act that resulted in the decedent's death was unforeseeable and unpreventable as a matter of law, and in holding that no "special relationship" existed between appellees and the decedent, an invitee of a hotel guest.
I. Standard of Review
On July 22, 2004, the circuit court granted appellees' motion for summary judgment. Whether summary judgment was properly granted is a question of law. Eng'g Mgmt. Servs. v. Md. State Highway Admin., 375 Md. 211, 229-30, 825 A.2d 966 *489 (2003). Therefore, we review the decision of the circuit court under the de novo standard. Id. at 229, 825 A.2d 966. When reviewing a case in which the trial court granted summary judgment, we first determine if the trial court correctly concluded that there was no genuine dispute as to any material fact. The mere presence of a factual dispute will not render summary judgment improper. See Beatty v. Trailmaster Products, Inc., 330 Md. 726, 738, 625 A.2d 1005 (1993) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). We view the record in the light most favorable to the non-moving party, construing all facts, and all reasonable inferences from the facts, against the movant. Jurgensen v. New Phoenix, 380 Md. 106, 114, 843 A.2d 865 (2004). When we do so, if we conclude that summary judgment was appropriate, we can affirm. See Remsburg v. Montgomery, 376 Md. 568, 579, 831 A.2d 18 (2003).
II. Negligence
A properly pleaded claim of negligence includes four elements. The plaintiff must prove:
(1) that the defendant was under a duty to protect the plaintiff from injury, (2) that the defendant breached that duty, (3) that the plaintiff suffered actual loss or injury, and (4) that the loss or injury proximately resulted from the defendant's breach of the duty.
Todd v. Mass Transit Admin., 373 Md. 149, 155, 816 A.2d 930 (2003) (quoting Muthukumarana v. Montgomery County, 370 Md. 447, 486, 805 A.2d 372 (2002) (quoting Valentine v. On Target, Inc., 353 Md. 544, 549, 727 A.2d 947 (1999) (quoting BG & E v. Lane, 338 Md. 34, 43, 656 A.2d 307 (1995)))). Whether a plaintiff has presented sufficient evidence of the elements of negligence is generally a question for the fact finder, but the existence of a legal duty is a question of law to be decided by the court. Todd, 373 Md. at 155, 816 A.2d 930 (citing Valentine, 353 Md. at 549, 727 A.2d 947). When the existence of a legal duty depends on a determination of a dispute of material fact, the facts should first be determined by the fact finder. See Walpert, Smullian & Blumenthal, P.A. v. Katz, 361 Md. 645, 693, 762 A.2d 582 (2000) (holding that the determination of whether contractual privity existed, giving rise to a legal duty, was a necessary preliminary determination to be made by the jury).
The analysis of a negligence action usually begins with the question of whether a duty existed.
In determining the existence of a duty, we consider, among other things:
The foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered the injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved.
Ashburn v. Anne Arundel County, 306 Md. 617, 627, 510 A.2d 1078 (1986)(quoting Tarasoff v. Regents of Univ. of California, 17 Cal.3d 425, 131 Cal.Rptr. 14, 551 P.2d 334, 342 (1976)).
Foreseeability is a very important factor, but "its existence alone does not suffice to establish a duty under Maryland law." Remsburg v. Montgomery, 376 Md. 568, 583, 831 A.2d 18 (2003). This point is illustrated by the general rule that there is no duty to protect a victim from the criminal acts of a third person in the *490 absence of a statute, contract, or other relationship between the party in question and the third person, which imposes a duty to control the third person's conduct, or between the party in question and the victim, which imposes a duty to protect the victim. Bobo v. State, 346 Md. 706, 715, 697 A.2d 1371 (1997); Scott v. Watson, 278 Md. 160, 166, 359 A.2d 548 (1976); Restatement (Second) of Torts § 314; Restatement (Second) of Torts § 315 adopted in Lamb v. Hopkins, 303 Md. 236, 245, 492 A.2d 1297 (1985).
The Restatement (Second) of Torts §§ 314-320, addresses the duty to act for the protection of others. It is important to note that the general rule set forth above, which appears in Restatement § 314 and § 315, applies even though the party in question had actual knowledge that harm was imminent or the party had knowledge of facts that made harm foreseeable.
The general rule does not apply when a "special relation" exists between the party in question and the third person, or between the party in question and the injured party. Restatement (Second) of Torts § 315. Restatement (Second) of Torts § 314A and §§ 316-320 describe special relationships that may give rise to a duty. The term "special relation," as used by the Restatement, and relevant case law, means simply a relationship that gives rise to a duty to exercise reasonable care. It should not be confused with those instances when the same or similar term is used to describe a greater duty than that of the usual duty to exercise reasonable care.
Appellants do not contend that appellees had a duty to control the conduct of the third person in this case, whether the shooter is an unknown invitee at the party, or Shamal Chapman. Indeed, there is no basis for such a contention. The Restatement (Second) of Torts §§ 316-320 addresses the limited circumstances under which the duty to control the conduct of a third person arises, none of which are applicable in this case.[3]
Appellants argue that appellees had a relationship with the decedent, as an invitee of a hotel guest, that gave rise to a duty to protect him from the criminal acts of the unknown shooter. Restatement (Second) of Torts § 314A, adopted in Southland Corp. v. Griffith, 332 Md. 704, 719, 633 A.2d 84 (1993), sets forth certain relationships which give rise to a duty to protect, including those between a common carrier and its passengers, an innkeeper and its guests, and a possessor of land and its invitees. We must determine whether a duty arose under the facts of this case.
A. Duty of an Innkeeper
As indicated above, the relationship of innkeeper and guest is sufficient to give rise to a duty. In early common law, an innkeeper was an insurer of the safety of its guests and was strictly liable for injury to its guests. Lovelace v. Anderson, 366 Md. 690, 719, n. 7, 785 A.2d 726 (2001). As embodied in the Restatement (Second) of Torts § 314A, the duty of an innkeeper to its guests was later changed to a duty of reasonable care. See, e.g., Lovelace, 366 Md. at 719, 785 A.2d 726; Roueche v. Hotel Braddock, 164 Md. 620, 622-628, 165 A. 891 (1933); Treiber v. Burrows, 27 Md. *491 130, 143-47 (1867); Giles v. Fauntleroy, 13 Md. 126, 137 (1859); Apper v. Eastgate Assocs., 28 Md.App. 581, 586, 347 A.2d 389, (1975), modified on other grounds and affirmed, 276 Md. 698, 350 A.2d 661 (1976). See also Nalee, Inc. v. Jacobs, 228 Md. 525, 529, 180 A.2d 677 (1962).
We shall assume, as did the circuit court, that the decedent was an invitee of Ms. McMillan, a guest of the hotel. Generally, a property owner owes the same duty to the guest of an invitee as it owes to the invitee himself. See generally Matthews v. Amberwood Assocs. Ltd. P'ship, Inc., 351 Md. 544, 554, 719 A.2d 119 (1998) (citing Landay v. Cohn, 220 Md. 24, 27, 150 A.2d 739 (1959)). Thus, the relationship between appellees and the decedent was such as to give rise to a duty to exercise reasonable care.
Having established that the relationship between appellees and decedent was sufficient to support a duty, the question then becomes the extent of knowledge necessary to establish a duty. Ordinarily, a possessor of land is under no duty to protect an invitee from harm until the possessor knows or should know that the acts of a third party who causes harm are occurring or are about to occur. The duty may be based on knowledge of events, or on past experience that indicates a likelihood of conduct by third persons in general, or conduct by a particular individual who is likely to harm an invitee.
Appellees urge us to apply a prior similar crimes test, whereby, in order to impose a duty on an innkeeper requiring the innkeeper to protect individuals on their premises from the criminal acts of third parties, it must be shown that prior similar crimes against persons had occurred on the premises, putting the innkeeper on notice that such actions were foreseeable. Appellees rely primarily on Scott v. Watson, 278 Md. 160, 359 A.2d 548 (1976), Smith v. Dodge Plaza Ltd. P'ship, 148 Md.App. 335, 811 A.2d 881 (2002), and Moore v. Jimel, Inc., 147 Md.App. 336, 809 A.2d 10 (2002), for the proposition that, unless similar crimes have occurred on the premises, a reasonable jury could not find that the crime is foreseeable.
In making this argument, appellees recognize that a duty may arise based on knowledge of prior incidents but fail to recognize that a duty may arise based on knowledge of current events. While we agree that the decisions relied on by appellees hold that prior instances of similar crimes on the premises in question may give rise to foreseeability, and thus, to a duty to protect, these cases clearly do not state that prior instances are the only circumstance under which such a duty may arise. To read these opinions in that manner would make the first occurrence of any crime at any particular property unforeseeable as a matter of law, regardless of the facts putting the possessor of land on notice of the imminent harm, an untenable result.[4] See Restatement (Second) Torts *492 section 344 (a possessor of land who holds it open for business purposes is subject to liability to business invitees for harm caused by negligent or intentional acts of third persons, if possessor fails to exercise reasonable care to discover that such acts are being done or are likely to be done).
Speaking generally, there are three possible factual scenarios when an injured party seeks to hold the possessor of land liable for injuries inflicted by the intentional act of a third person. In most of the reported cases, an assailant entered the premises without invitation and without the knowledge of the defendant. In those cases, the plaintiff's claim was based on an asserted duty to eliminate conditions that contributed to the criminal activity, such as providing security personnel, lighting, locks, and the like. The asserted duty was based on knowledge of prior similar incidents, not on knowledge of facts relating to the incident in question and prior to its culmination.[5] In Smith, the claim was by a patron of the business and the assailant was another patron, but the claim of negligence was based on prior criminal activity generally, and not on knowledge of prior behavior of the assailant or knowledge of facts leading up to the harm.[6]
Univ. of Maryland v. Rhaney, 159 Md. App. 44, 858 A.2d 497 (2004), cert. granted, 384 Md. 448, 863 A.2d 997 (2004), represents the second possible factual scenario. In that case, an invitee/tenant assaulted another invitee/tenant, and the injured party sued the invitor/landlord. The plaintiff's claim of negligence was based on knowledge possessed by the invitor/landlord with respect to prior conduct of the assailant that allegedly made the assault foreseeable and preventable.
This case presents the third possible factual scenario. Appellants' claim is not based on prior similar incidents, either generally or involving the unknown shooter, nor do appellants contend that appellees failed to eliminate an unsafe condition on the property. Instead, appellants' case is based on an assertion that appellees had knowledge of events occurring on the premises, prior to and leading up to the assault, which made imminent harm foreseeable.
Appellants cite various Maryland cases involving the duty owed by a possessor of land or chattels to a party who is injured *493 by the intentional act of a third party while on the possessor's property. Appellants rely most heavily, however, on a common carrier case, the recent Court of Appeals' opinion in Todd v. Mass Transit Admin., 373 Md. 149, 816 A.2d 930 (2003), for their conclusion that, on the evidence presented, appellees' employees had sufficient knowledge to give rise to a duty to protect the decedent.
Appellees argue that Todd is not applicable because it is a common carrier case, and because a duty greater than that of reasonable care is owed by a common carrier to a passenger. We agree with appellants that Todd is instructive. In Todd, the Court of Appeals discussed its prior opinion in Tall v. Baltimore Steam-Packet Co., 90 Md. 248, 44 A. 1007 (1899), and reaffirmed the distinction between a common carrier's duty to its passenger with respect to acts or omissions of its employees described as the highest degree of care to provide safe means and methods of transportation for its passengers and the duty owed to protect passengers from the intentional acts of third parties, including other passengers a duty of reasonable care dependent upon the carrier's knowledge prior to the injury. Todd, 373 Md. at 157, 816 A.2d 930 (quoting Tall, 90 Md. at 253, 44 A. 1007). The Todd Court concluded that a common carrier has a duty to take affirmative action to protect its passengers from an assault by a third party if the carrier, in the exercise of due care, knew or should have know that the assault was imminent (foreseeable), well enough in advance of the assault to have prevented it (preventable). Todd, 373 Md. at 159, 816 A.2d 930. We conclude that the same standard applies with respect to innkeepers.
If we conclude that no jury could reasonably find under the facts that were known or should have been known by appellees, that the injury to decedent was both foreseeable and preventable, then appellee had no duty to take affirmative action to prevent injury to decedent, and the circuit court's decision to grant appellees' motion for summary judgment was not erroneous.
B. Foreseeability and Preventability
Appellants maintain that, based on information relating to the party in the hotel rooms and the conduct of attendees, appellees knew or should have known that the attack on the decedent was imminent. Appellants further contend that appellees knew or should have known of the imminent harm with adequate time and available resources to have prevented or mitigated the harm to decedent. Only if our examination of the record reveals facts that support both of appellants' contentions, may we reverse the circuit court's order granting appellees' motion for summary judgment.
The evidence would permit a jury to find that agents of appellees, Ms. Brown and Mr. M., from the noise that was audible in the hallways of the hotel, and from their observation of groups of youths passing through the lobby, knew or should have known by 8:00 p.m., that there was a party in the rooms rented by Ms. McMillan. Most of the party's attendees arrived after 9:00 p.m. and closer to 10:00 p.m. At some point prior to the shooting, appellees' agents knew that the party was noisy. While the timing is very fuzzy, sometime on or before 10:15, appellees' agents also knew people were being admitted to the hotel through a side door. Mr. M. went to the rooms twice prior to the shooting, and asked the occupants to reduce the noise level and to stop letting people in through the side door.
At approximately 10:30 p.m., male attendees got into a loud argument. There is *494 no evidence that hotel employees knew of the argument, but in the same general time frame, Ms. Brown called her supervisor, who was off premises, and he advised her to tell the occupants to end the party. At 10:35 p.m., female attendees of the party separated the male attendees who were arguing and closed the connecting door between the rooms. At approximately 10:45 p.m., Ms. McMillan went to the front desk and advised Ms. Brown that the party was out of control, and that someone at the party had a gun. Ms. Brown advised Mr. M. to call the police. According to a 911 record, the call was placed 17 seconds prior to 10:55 p.m. The first officer arrived on the scene approximately three minutes later. The shooting occurred between 10:53 and 10:55 p.m.
In Todd, the Court of Appeals reversed the entry of summary judgment in favor of the defendant and remanded the case for trial. Id. at 163, 816 A.2d 930. After boarding the bus upon which plaintiff was riding, a group of fifteen to twenty youths proceeded to "irritate" and "curse" other passengers. Id. at 152-153, 816 A.2d 930. Several passengers complained to the bus driver about the actions of the youths. Id. at 152, 816 A.2d 930. About five minutes after boarding, one of the youths struck plaintiff in the back of the head. Id. at 152-153, 816 A.2d 930. After a short verbal altercation, the entire group physically attacked plaintiff. Id. at 153, 816 A.2d 930. The attack lasted four or five minutes before the bus driver stopped the bus and hit the panic button, allowing the attackers to flee before the police arrived. Id. The Court concluded that a jury could reasonably find that the bus driver had sufficient time within which to take action to remove the threat of the assault. Id. at 163, 816 A.2d 930. The Court further held that the bus driver arguably possessed the ability to prevent the attack. Id. Thus, the Court concluded, a jury question was raised whether the bus company had a duty to protect the plaintiff from the attack of the youths. Id.
Notably, unlike in Todd, the party at appellees' hotel took place outside of the actual physical presence of agents of appellees who could observe the behavior of the attendees. Appellees' knowledge is limited to what was reported to them and to what they should have known. Mr. M. went to the door of the suite twice on the evening in question. The evidence indicates, however, that, when Mr. M. came to the door of the suite to ask that the occupants keep down the noise and stop letting people in through the side door, the majority of the party attendees went into the adjoining room to avoid detection. There is no evidence that indicates the agents of the hotel knew that any of the attendees of the party were under the age of eighteen, or that they observed any party attendee consuming, or under the influence of, alcohol. The congregation of a group of young people alone is insufficient to put appellees on notice that physical violence was imminent.
As previously stated, there was evidence that the hotel had a policy of discouraging parties, but the evidence is that this policy was for the convenience and security of other guests, and to minimize the potential for damage to hotel property. It was not related to possible violent assaults by a party guest against another party guest.
The party included music and a large number of people talking, which produced noise. There was some arguing among attendees, which began around 10:30 p.m., but assuming appellees' agents should have known about the argument, there is nothing to indicate that appellees' agents had any information that violence might be imminent. A verbal altercation alone is insufficient to presage physical *495 violence. See Tall, 90 Md. at 256, 44 A. 1007.
If the above constituted all the evidence, we would affirm the circuit court's judgment because the evidence would be insufficient to permit a jury to find that the infliction of harm was foreseeable. The record permits a finding, however, that Ms. Brown was advised that someone had a gun at 10:45 p.m., but that the police were not called until 10:55 p.m.[7] Certainly, a reasonable jury could find that imminent harm was foreseeable when appellees were advised that an attendee of the party had a gun. In light of the fact that an officer responded within three minutes of the 911 call, a reasonable jury could also find that the harm was preventable if appellees' agents had made the call to police immediately upon discovering that someone had a gun. If a jury found facts, such as those just related, that supported the imposition of a duty, it could also find that this duty was breached, proximately causing decedent's death.[8] For these reasons, we reverse the entry of summary judgment and remand this case for further proceedings.
III. Bifurcation
Appellants' primary contention in opposition to the court's orders relating to bifurcation of the liability and penalty phases of the trial is that a second jury will not have sufficient context in which to assess damages.
Maryland Rule 2-503(b) grants a trial court broad discretion to order the bifurcation of a trial for the convenience of the parties or to avoid prejudice. Md. Rule 2-503; McGarr v. Baltimore Area Council, Boy Scouts of America, Inc., 74 Md.App. 127, 142, 536 A.2d 728 (1988), cert. denied, 313 Md. 7, 542 A.2d 844 (1988). If a trial results in liability, the trial court, during the damages trial, should exercise its discretion in determining what evidence is relevant and admissible. This will include an appropriate context in which to assess damages. Appellants' argument assumes that the trial court will erroneously rule and unduly prejudice appellants. We are unwilling to make that assumption.
Therefore, we decline to reverse the circuit court's orders relating to bifurcation.
IV. Motion to Quash
Maryland cases consistently hold that only prior similar incidents that occurred on the premises or very close thereto are relevant and admissible in cases in which a victim is assaulted by a third party on premises controlled by the defendant. See Scott, 278 Md. at 160-70, 359 A.2d 548; Moore, 147 Md.App. at 347, 809 A.2d 10; Schear v. Motel Mgmt. Corp. of America, 61 Md.App. 670, 681-82, 487 A.2d 1240 (1985). The reasoning behind these decisions is that a property owner can only affect those risks that occur on or around its own premises. Moore, 147 Md. *496 App. at 348, 809 A.2d 10; Schear, 61 Md. App. at 681-82, 487 A.2d 1240.
Discoverability and admissibility are different questions. We do not hold that prior incidents that did not occur on the premises are never admissible or discoverable, nor do we address the requirement of similarity or timing. Admissibility and discoverability turn on the facts of a particular case. In this case, we hold that it was within the discretion of the circuit court to conclude that discovery of crimes that occurred off premises and within 3 or 5 miles around the hotel was not reasonably calculated to lead to admissible evidence.
Appellants do not contend that appellees' duty to protect decedent arose based on appellees' knowledge of general criminal activity in the area surrounding the hotel prior to the night in question. Nor do appellants contend that appellees negligently failed to take precautions to guard against future criminal activity on their premises in response to other crimes in the area. Instead, appellants base their argument of liability on appellees' knowledge of events that occurred on the night of the incident in the hotel, leading up to the incident. It is this knowledge, appellants contend, which gives rise to appellees' duty to protect decedent from the criminal actions of the unknown third person.
Therefore, we decline to reverse the circuit court's order granting appellants' motion to quash.
JUDGMENT REVERSED. CASE REMANDED TO THE CIRCUIT COURT FOR HOWARD COUNTY FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS TO BE PAID ONE-HALF BY APPELLANTS AND ONE-HALF BY APPELLEES.
NOTES
[1] Shamal Chapman was criminally charged with the shooting, but a jury acquitted him of the charges.
[2] There is some discrepancy between the request for documents contained in appellants' notice of deposition duces tecum, which indicates that all crimes within five miles of the hotel should be disclosed, and the appellant's subsequent response to appellees' motion to quash, which states that only crimes within a three mile radius need be disclosed.
[3] Restatement (Second) of Torts § 316 (parent has a duty to control conduct of minor child); § 317 (master has duty to control conduct of servant); § 318 (possessor of land or chattels had duty to control conduct of licensee); and § 319 (person in charge of another with dangerous propensities has duty to control conduct).
Section 320 imposes a duty to protect a person in custody. That concept is clearly not applicable here.
[4] We do not require that an unfortunate event occur more than once before we find a duty to act, especially when the facts and circumstances leading up to the event clearly presage its occurrence. A court must examine the totality of the circumstances to determine if a duty to prevent the unfortunate occurrence arose. See Crinkley v. Holiday Inns, Inc., 844 F.2d 156, 160-61 (4th Cir.1988) (holding that foreseeability, which may be shown by all relevant evidence, determines whether a duty to protect business invitees against criminal acts of third persons will be imposed in a given case). Even in Scott v. Watson, which is relied upon by appellees, the Court did not hold that a history of prior criminal activity on a landlord's property was the only relevant criteria to be used in determining the reasonable measures that a landlord must undertake to fulfill its duty of due care. Rather, the Court emphasized that the test for determining the nature and scope of the landlord's duty is what is reasonable under all of the circumstances. 278 Md. at 168-69, 359 A.2d 548.
[5] See Scott v. Watson, 278 Md. 160, 359 A.2d 548 (1976) (suit against owner of apartment building for murder of tenant in a common area parking garage-claim of negligence was knowledge of prior criminal activity on premises and failure to take steps to reduce possibility of future criminal activity); Smith v. Dodge Plaza Ltd. P'ship, 148 Md.App. 335, 811 A.2d 881 (2002) (suit against owner of nightclub for injury to patron who was attacked by another patron with a knife-claim of negligence was based on prior instances of behavior by patrons on the premises and failure to take appropriate steps); Moore v. Jimel, Inc., 147 Md.App. 336, 809 A.2d 10 (2002) (suit by patron of bar against bar owner as a result of the patron being raped while using the bathroom-claim of negligence was based on an alleged failure to provide security, not knowledge relating to the incident in question); Schear v. Motel Mgmt. Corp. of America, 61 Md.App. 670, 487 A.2d 1240 (1985) (suit by guest against hotel for the value of items stolen from the guest's room-claim of negligence based on inadequate security when the defendant knew or should have known that greater security was necessary because of prior similar incidents).
[6] The plaintiff based the negligence claim on prior unruly and disruptive behavior by patrons on the premises. We noted that there were two prior instances involving violence, neither with a weapon. We held that the evidence was insufficient to give rise to a duty.
[7] We note that the exact times that important events in this case occurred are impossible to discern from the record. Witnesses' testimony conflicts as to times, and testimony conflicts with exhibits. Given our duty to construe the facts in the light most favorable to appellants, we utilized those times which create the largest gap between the time when the duty to take affirmative action arose, and when the police were summoned. On remand, the jury may reasonably conclude that certain events occurred at times different from those we have utilized.
[8] We are ruling on whether the evidence is legally sufficient to create a jury question. We conclude that it is for the reasons stated herein. The admission of evidence relating to events that occurred prior to appellees' knowledge of a gun on the premises, to provide an appropriate context for the jury, will rest in the sound discretion of the trial court.
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224 B.R. 614 (1998)
In re GRAHAM SQUARE, INC., Debtor.
GRAHAM SQUARE, INC., Plaintiff,
v.
The MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Defendant.
Bankruptcy No. 90-61182, Adversary No. 91-6006.
United States Bankruptcy Court, N.D. Ohio.
August 27, 1998.
Stephen L. Black, Graydon, Head & Ritchey, Cincinnati, OH, for Defendant.
Kenneth L. Gibson, Weick, Gibson & Lowry, Cuyahoga Falls, OH, for Plaintiff.
MEMORANDUM OF DECISION
JAMES H. WILLIAMS, Bankruptcy Judge.
Pending before the Court are the instructions on remand from the United States Court of Appeals for the Sixth Circuit to determine whether a $332,000.00 commitment fee received by The Mutual Life Insurance Company of New York (MONY), pursuant to a mortgage loan application entered into with Graham Square, Inc. (Debtor), is an earned fee entitled to be retained by MONY or whether this fee is recoverable for the Debtor's bankruptcy estate. For the reasons that follow, the Court finds that the commitment *615 fee is an earned fee which MONY is entitled to retain.
FACTS
A brief synopsis of the procedural and substantive facts follows:
On February 14, 1990, the Debtor applied to MONY for a mortgage loan in the amount of $8,300,000.00 to complete a building project. Union National Bank (UNB) was the principal lender during the construction phase of the project. The loan application was accompanied by a refundable commitment fee in the amount of $332,000.00 in the form of an irrevocable letter of credit issued by UNB in favor of MONY. In order to obtain the issuance of the letter of credit, the Debtor gave UNB a second mortgage and a security agreement to secure the Debtor's obligation to repay to UNB any funds which were drawn by MONY under the letter of credit. The Debtor did not have any equity in the property.
The refundable commitment fee was intended as consideration for expenses which MONY would incur in considering and approving the mortgage loan application, and for MONY holding itself ready and willing to make the loan to the Debtor. The loan application required the Debtor to pay a $117,000.00 nonrefundable commitment fee at closing to induce MONY to close the loan, $16,000.00 for expenses, such as title searches, and a $4,000.00 engineering fee to cover costs in inspecting the property. These fees were in addition to the $332,000.00 refundable commitment fee. MONY expressly reserved its rights to recover any damages in connection with the loan application in addition to the fees described above.
On March 12, 1990, MONY restructured the proposed terms of the loan to reduce the amount of the loan to $7,800,000.00 with a higher interest rate. The parties agreed on April 30, 1990, as the termination date to close the loan. The termination date was extended several times. The Debtor, however, was unable to close the loan. Subsequently, MONY drew on the letter of credit receiving $332,000.00 from UNB. The Debtor filed a petition for relief under Chapter 11 of Title 11 of the United States Code on June 6, 1990. The Court granted UNB's motion for relief from stay to foreclose on the Debtor's shopping center. The shopping center was sold to UNB for $8,100,000.00. UNB was owed on its loan with the Debtor the sum of $10,089,855.00. The Debtor filed this adversary proceeding seeking to recover the $332,000.00 commitment fee paid to MONY. The Debtor's case was later converted to one under Chapter 7 and Michael V. Demczyk was appointed Trustee (Trustee).
This Court made findings of fact and entered conclusions of law in an opinion dated May 11, 1993. In that opinion, the Court found the $332,000.00 refundable commitment fee not to be recoverable by the Trustee under the doctrine of independence and because the fee did not constitute property of the estate as it was paid to MONY via a letter of credit from the property of UNB. The District Court, upon the concurrence of both parties, vacated and remanded for recalculation the damages incurred by MONY when the Debtor failed to close the loan. However, the District Court affirmed the Court's decision that the commitment fee was not property of the Debtor's bankruptcy estate because there was no property for the Trustee to recover. The District Court reasoned that because the mortgage given by the Debtor to finance the letter of credit was worthless, nothing of value had been transferred from the estate and, thus, there was nothing for the Trustee to recover. The Sixth Circuit Court of Appeals reversed, holding that the lower courts erred in finding that the Trustee had no right to recover the $332,000.00 commitment fee because the fee was paid through a standby letter of credit and recovery was precluded by the doctrine of independence. The appellate panel held that the doctrine of independence did not apply to the Trustee's action. The Sixth Circuit further found that the loan agreement commitment fee clause was not an impermissible penalty under Ohio law and the lower courts erred in holding that the proceeds of the letter of credit were not property of the estate. As a result of these findings, the Court of Appeals instructed the lower courts to determine whether the $332,000.00 commitment fee was earned by MONY. *616 Upon remand, the District Court transferred the case to the Bankruptcy Appellate Panel (BAP) with the consent of both parties. The BAP subsequently remanded the case to this Court for additional findings in light of the Sixth Circuit's opinion.
DISCUSSION
The Court has jurisdiction in this adversary proceeding by virtue of Section 1334(b) of Title 28 of the United States Code and General Order No. 84 entered in this district on July 16, 1984. This is a core proceeding under Section 157(b)(2)(E) of Title 28 of the United States Code. This Memorandum of Decision constitutes the Court's findings of fact and conclusion of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
The contract language from the loan application that is relevant to the resolution of this issue is as follows:
Upon approval of this Application by MONY, the Commitment Fee shall be retained by MONY as its earned fee paid by Applicant in consideration of the expenses which MONY as prospective mortgagee has incurred or will incur in considering and approving this Application, and in further consideration of MONY holding itself ready and willing to make the Loan. MONY agrees to return the Commitment Fee to Applicant, without interest, if, but only if, all conditions of Closing have been satisfied and the Loan has actually closed pursuant to this Application. In the event Applicant fails to comply with any of the covenants and conditions contained in this Application and the Loan is not closed prior to the Termination Date, then MONY shall have the right to retain the Commitment Fee, and, in addition, specifically reserves any and all rights it may have in law or equity, including, but not limited to, specific performance, the right to claim and receive the Processing Fee, the Engineering Fee, and damages for loss of bargain sustained by MONY as a result of such default. Applicant agrees that MONY will be deemed to have earned the Commitment Fee upon MONY's acceptance of this Application.
See, Defendant's Exhibit L.
The Trustee argues that this contract language is inconsistent and ambiguous because the commitment fee was never "earned" by MONY's performance but rather by the Debtor's failure to close the loan transaction. The Trustee claims that the commitment fee was never intended to be an earned fee, but rather a deposit to protect MONY from the risk of not being able to collect damages if the Debtor defaulted on its obligations. The Trustee's argument follows that this contract language is intended to be a damage provision which is inconsistent with other language in the loan application that allows MONY to collect damages as well as retain the commitment fee. Thus, the trustee claims that because extrinsic evidence cannot establish the intent of the parties, the contract language must be construed against MONY which drafted the loan application and the commitment fee should be recovered for the Debtor's bankruptcy estate.
The Court, however, declines to adopt the Trustee's position that the contract language is inconsistent or ambiguous in order to invoke rules of construction against MONY which drafted the contract language. First, the Sixth Circuit Court of Appeals did not hold that the relevant contract language is inconsistent. The Sixth Circuit's opinion merely stated that:
MONY also claims that, under the contract, the commitment fee is earned at the moment MONY approves the loan application. In other words, the fee is consideration for MONY's agreement to make the loan and set the funds aside. However, this argument seems inconsistent with language in that contract stating that the fee is refundable if the debtor executes the approved loan. It is well settled in Ohio that courts attempt to reconcile inconsistent contract terms and give effect to each term. (Citations omitted).
Demczyk v. Mutual Life Insurance Company of New York (In re Graham Square, Inc.), 126 F.3d 823, 830 (6th Cir.1997) (emphasis added). Thus, the Sixth Circuit left to *617 this Court the opportunity to determine if the commitment fee is an earned fee.
As a matter of Ohio law, contracts "are to be interpreted so as to carry out the intent of the parties." Skivolocki v. East Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (1974) (syllabus 1) The intent of the parties is to be shown through an interpretation of the contract language. Kelly v. Medical Life Insurance Co., 31 Ohio St.3d 130, 509 N.E.2d 411 (1987) (syllabus 1). Moreover, a court should only consider extrinsic evidence to ascertain the intent of the parties when the terms of the contract are unclear or ambiguous, or when the circumstances surrounding the agreement invest the language of the contract with special meaning. Shifrin v. Forest City Enterprises, Inc., 64 Ohio St.3d 635, 597 N.E.2d 499 (1992).
The Court, however, finds that the relevant contract language is clear in its meaning that if the Debtor failed to close the loan prior to the agreed upon termination date, the commitment fee was to be retained by MONY. There is no ambiguity or inconsistency found in this contract language to invoke the need to consider extrinsic evidence or rules of construction against MONY which drafted this contract. The fact that this commitment fee was refundable if the Debtor closed the loan does not mean that the same fee was also not earned by MONY through its approval of the loan application and obtaining the money to fund the loan. MONY became entitled to the commitment fee when it held itself ready and willing to make the loan. The fact that the commitment fee was refundable if the loan was closed served only as incentive for the Debtor, when it negotiated and signed the loan application, to fulfill its obligations.
This loan application was signed by sophisticated parties on each side of the transaction which negotiated the agreed upon terms on an arms-length basis. If the Debtor objected to the payment of such a commitment fee if the loan did not close, then the Debtor should have negotiated more favorable terms. The Court, however, cannot look beyond the "four corners" of the agreement when the contract language at issue is clear and unambiguous.
The Trustee argues that the commitment fee was merely used as protection against potential losses if the loan did not close. However, that does not take into account that the fee was earned by MONY through its time spent in approving the loan application and its assumption of the risk caused by interest rate fluctuation before the loan was closed. Moreover, the contract language specifically provided that the fee was earned when the loan application was approved and there is no evidence that MONY is seeking to obtain damages in addition to the commitment fee.
It is clear that the purpose of the commitment fee was to reimburse MONY for its expenses in funding the loan and agreeing to lend $7.8 million at a fixed rate of interest over a 45 day time period. Pursuant to the contract language, if the Debtor was able to close the loan, these expenses would have been paid from the nonrefundable commitment fee and the Debtor's loan payments. However, if the loan did not close, then the refundable commitment fee would be retained by MONY to cover these expenses and losses until a replacement borrower was located. The Court of Appeals noted that "[i]t is well settled that courts attempt to reconcile inconsistent terms and give effect to each term." In re Graham Square, Inc., 126 F.3d at 830 (citations omitted). Applying these standards, the Court finds that the commitment fee was earned when MONY invested large amounts of time and expense in approving the loan application and assumed the risk of interest rate fluctuations before the loan closed. At the same time, however, the amount by which the commitment fee would be funded depended upon the Debtor's actions. If the Debtor had fulfilled its obligations, it is clear from the language of the contract that MONY would retain the $117,000.00 nonrefundable commitment fee and receive mortgage payments. However, when the Debtor failed to close the loan, MONY was entitled to retain the $332,000.00 refundable commitment fee as compensation for MONY's expenses and potential losses due to interest rate fluctuations.
MONY "earned" the commitment fee by committing itself to making a fixed interest *618 rate loan of $7.8 million for a three year period at closing which was intended to take place 45 days after the loan application was signed but was later extended to 72 days. In that time period, MONY assumed the risk that interest rates on three year investments which were used to finance the loan could conceivably rise or fall. If interest rates rose, then MONY could have lost a substantial amount of money because of the higher cost of obtaining money to fund the loan. Thomas Hardy, the assistant vice president of MONY, testified that if the U.S. Treasury rate had increased by 65 basis points, then MONY would not have made any profit on the loan because the rate at which it paid the holders of guaranteed investment contracts to fund the loan would have been the same rate at which MONY agreed to loan the $7.8 million to the Debtor.[1] Thus, MONY earned this fee by assuming the risk that interest rates could fluctuate to a point where it could have incurred a loss by the time the loan closed.
Furthermore, MONY earned the commitment fee by loaning the Debtor $7.8 million at a fixed interest rate and assuming the risk of a change in interest rates between the time it funded the loan and the time it was able to locate another borrower when the Debtor failed to close. As mentioned earlier, MONY funded the loan with the Debtor by selling guaranteed investment contracts at a higher fixed interest rate than that to be paid by the Debtor. When the Debtor failed to close the loan, MONY assumed the risk of paying the holders of these guaranteed investment contracts without any loan payments from the Debtor. MONY essentially was faced with a loss if interest rates had fallen until another borrower was located. In fact, another borrower was not located until 98 days after the Debtor failed to close on its loan with MONY.
It is also clear that MONY earned the commitment fee through its efforts in approving the Debtor's loan application. It is undisputed that MONY incurred 900 hours of professional time and 100 hours of administrative time at a cost of approximately $157,000.00 to investigate and approve a loan of magnitude. See Trial Volume 1, Theodore Martens Testimony, at 164-174. The loan application specifically stated that the refundable commitment fee is earned "in consideration of the expenses which MONY as prospective mortgagee has incurred or will incur in considering and approving this Application . . ." The clear language of this loan application signed by the Debtor provides that the commitment fee is earned through the interest rate risk which MONY assumed between the time the loan was funded and another borrower was located.
Various parties testified on MONY's behalf that commitment fees are standard business practice in commercial mortgage applications. See, e.g., James Doyle testimony at 113; Charles Coolidge testimony at 154. There is also no dispute over the enforceability of such a provision. See, e.g., Enforceability of Provision in Loan Commitment Agreement Authorizing Lender to Charge Standby Fee, Commitment Fee, or Similar Deposit, 93 A.L.R.3d 1156 at §4 (1980). Furthermore, such fees have found to be earned when the loan commitment agreement has been signed. In the Matter of Four Seasons Nursing Centers of America, Inc., 483 F.2d 599, 603 (10th Cir.1973). In the instant case, there is no question that the loan application specifically provided that MONY earned the commitment fee when the loan application was approved. The Court finds no reason to look beyond the plain language of the agreement. The court concludes that the $332,000.00 commitment fee was earned by MONY through its investigation and approval of the loan application as well as its sold *619 guaranteed investment contracts to fund the loan until the time a replacement borrower was located. In light of this decision, the Court agrees with MONY that the issue of the recalculation of its damages suffered when the Debtor failed to close the loan is moot.
An Order in accordance with the foregoing shall issue forthwith.
ORDER
For the reasons set forth in the accompanying Memorandum of Decision, the Court finds that the $332,000.00 commitment fee negotiated between MONY and Graham Square, Inc. was earned and may be retained by MONY for its efforts in approving the loan application and assuming the interest rate risk in obtaining financing to fund the loan in question. The complaint of the Debtor, Graham Square, Inc., assumed by its trustee in bankruptcy, Michael V. Demczyk, seeking recovery of the commitment fee, should be, and hereby is, DISMISSED.
IT IS SO ORDERED.
NOTES
[1] MONY funded the loan by selling guaranteed investment contracts in the amount of $8 million with three-year maturities at an interest rate equal to the treasury rate plus 70 basis points. MONY would then sell $6 million of three-year Treasury notes to establish a fixed interest rate and protect its position against interest rate fluctuations. Mr. Hardy testified that the potential loss to be incurred as a result of interest rate fluctuation for $6 million investment would have been "$260,000.00 plus or minus a few thousand." Hardy Deposition 60, line 19. Performing this same calculation for the full $7.8 million loan made by MONY to the Debtor, the resulting exposure which MONY assumed in funding the loan was $338,000.00 (7.8/6.0 × $260,000.00), approximately the amount of the refundable commitment fee retained by MONY.
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United States Court of Appeals
For the First Circuit
No. 00-1099
GEORGE DIEFENBACH,
Plaintiff, Appellee,
v.
SHERIDAN TRANSPORTATION,
Defendant, Appellant.
SIX TUG BARGE CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Lynch, Circuit Judge.
Thomas E. Clinton, with whom Clinton & Muzyka, P.C. were on brief
for appellant.
Michael B. Latti, with whom Carolyn M. Latti and Latti Associates
LLP, were on brief for appellee.
October 6, 2000
BOWNES, Senior Circuit Judge. The plaintiff-appellee, George
Diefenbach, brought this action pursuant to the Jones Act, 46 U.S.C.
app. § 688 (1994) against his employer, defendant-appellant Sheridan
Transportation, seeking damages for personal injuries sustained in the
course of employment as a boatswain onboard the ITB JACKSONVILLE. The
first trial ended in a mistrial. The second trial resulted in a jury
verdict of $900,000.00 in favor of the plaintiff. The district court
denied the defendant's motions for a new trial and remittitur, and this
appeal followed. Finding that the district court correctly decided the
motions, we affirm.
I. Facts.
We briefly describe the facts here, but discuss them in
greater detail where applicable and necessary for our discussion. The
plaintiff worked as a boatswain on the ITB1 JACKSONVILLE, a vessel
operated by the defendant. On July 8, 1997, the plaintiff injured his
back while hauling in the spring line and pennant during the undocking
of the vessel. He brought suit in the United States District Court for
the District of Massachusetts pursuant to the Jones Act, 46 U.S.C. §
688, for damages resulting from the alleged negligence of the
defendant. The plaintiff alleged negligence, unseaworthiness, and
maintenance and cure in his complaint. During the first trial, which
1 An ITB is an integrated tug and barge. It is over 700 feet long
and has a tugboat attached to the back of the barge.
-3-
ended in a mistrial, the plaintiff waived the counts for
unseaworthiness and maintenance and cure. The second trial concluded
with a jury verdict in favor of the plaintiff in the amount of
$900,000.00.
The defendant moved for a new trial on the grounds that the
district court improperly instructed the jury, improperly admitted the
plaintiff's maritime expert's opinion and allowed a verdict which was
“excessive and not supported by the evidence as presented at trial.”
The defendant also moved for remittitur. Both of defendant's motions
were denied by the district court and the defendant appeals to this
court.
II. Motion for a new trial.
We review the district court's denial of a motion for a new
trial only for manifest abuse of discretion. See United States v.
Dumas, 207 F.3d 11, 14 (1st Cir. 2000). The same standard of review is
applied to the admissibility of expert testimony. See Palmacci v.
Umpierrez, 121 F.3d 781, 792 (1st Cir. 1997). The defendant submits
that the opinions of the plaintiff's expert, Captain George Albert
Sadler, should not have been allowed because “[h]e lacked the specific
knowledge, training and experience to assist the trier of fact in
determining the validity of the [plaintiff's] claims.”
The defendant concedes that expert testimony was necessary
to assist the trier of fact because this case involved docking and
-4-
undocking procedures for, and equipment used on, a complex vessel –
subjects beyond the scope of common knowledge. The defendant submits,
however, that “Captain Sadler's qualifications and opinions lacked
Daubert [v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993)] reliability
and that the [t]rial [j]udge committed meaningful error in judgment
allowing Captain Sadler to proffer his opinions.”
We need not address whether Captain Sadler's qualifications
and opinions lacked Daubert reliability because this specific objection
has been waived. A timely objection must be made “stating the specific
ground of objection, if the specific ground was not apparent from the
context.” Fed. R. Evid. 103(a)(1) (emphasis added). We have
previously held that a Daubert objection must be made at trial and
cannot be made for the first time on appeal. See United States v.
Gilbert, 181 F.3d 152, 162-63 (1st Cir. 1999); Cortes-Irizarry v.
Corporacion Insular de Seguros, 111 F.3d 184, 188-89 (1st Cir. 1997).
As in Gilbert, “[n]o suggestion was made by [the defendant
here] that the Daubert principles should be applied to [Sadler's]
testimony. Our rule is that an objection not made in the trial court
will not be considered in the first instance on appeal.” Gilbert, 181
F.3d 162-63. Furthermore, it should be noted that the defendant
explicitly waived any possible Daubert objection in its reply brief to
this court:
-5-
The objection of Sheridan to the testimony
of Captain Sadler is based on the complete lack
of expert qualifications possessed by the witness
in relation to the issues on which his opinions
were offered. Sheridan has not raised the
“scientific validity[]” objection as improperly
claimed by Diefenbach.
* * * *
While Mr. Diefenbach attempts to couch the
objection of Sheridan as something other than
what was intended by Sheridan's attorney, the
basis for the objection could not have been made
more clear. It is an objection to the lack of
proper qualifications to provide opinion
testimony on the part of Mr. Sadler. . . .
Clearly, then, while Diefenbach attempts
to argue that the defendant did not specifically
put the trial judge on notice as to the
“scientific validity” underlying the testimony,
this was not the objection. This was made clear
at the trial. . . . It was also made clear in
the Defendant's Memorandum of Law in Support of
its Motion for a New Trial when Sheridan stated:
“Permitting plaintiff's expert, Sadler, to opine
in areas which he was not qualified precluded the
jury from returning a fair and impartial verdict
in this matter.” . . . Finally, it was made clear
in Sheridan's Brief previously filed in this
appeal, which stated as to Captain Sadler: “He
lacked the specific knowledge, training and
experience to assist the trier of fact in
determining the validity of the appellee's
claims.”
Def.'s Reply Br., pp. 1-3 (internal citations omitted) (emphasis
added). Therefore, we determine that any Daubert objection was waived
by the defendant and we need not address it for the first time on
appeal. We turn, instead, to the defendant's objection that Captain
Sadler “lacked the specific knowledge, training and experience to
-6-
assist the trier of fact in determining the validity of the appellee's
claims.”
It is well-settled that “trial judges have broad
discretionary powers in determining the qualification, and thus,
admissibility, of expert witnesses. It is settled law in this circuit
that [w]hether a witness is qualified to express an expert opinion is
a matter left to the sound discretion of the trial judge. In the
absence of clear error, as a matter of law, the trial judge's decision
will not be reversed.” Richmond Steel Inc. v. Puerto Rican Am. Ins.
Co., 954 F.2d 19, 20 (1st Cir. 1992) (alterations in original)
(internal quotation marks omitted); see also United States v. Corey,
207 F.3d 84, 88 (1st Cir. 2000) (reviewing rulings relating to the
admissibility of expert testimony for clear abuses of discretion).
The admissibility of expert testimony is governed by Federal
Rules of Evidence 702 and 703. Three requirements are imposed by Rule
702: “(1) the expert must be qualified to testify, by knowledge,
skill, experience, training, or education; (2) the testimony must
concern scientific, technical or other specialized knowledge; and (3)
the testimony must be such as to assist the trier of fact to understand
the evidence or to determine a fact in issue.” Corey, 207 F.3d at 88
(internal quotation marks omitted). Rule 702 provides:
If scientific, technical, or other specialized
knowledge will assist the trier of fact to
understand the evidence or to determine a fact in
-7-
issue, a witness qualified as an expert by
knowledge, skill, experience, training, or
education, may testify thereto in the form of an
opinion or otherwise.
Fed. R. Evid. 702. After careful review of the entire record, we find
that the district court did not abuse its discretion when it allowed
Captain Sadler to present expert testimony. We find, as did the
district court, that Captain Sadler had the knowledge, skill,
experience, training and education to qualify him as an expert and that
his testimony would assist the trier of fact to better understand the
case.
Captain Sadler was well-qualified based on his skill,
training, education and knowledge. He was a 1973 graduate of the Maine
Marine Academy, where he took courses in seamanship, rigging, booming,
cargo-handling, mooring and engineering, and received a Bachelors of
Science in Nautical Science. Captain Sadler holds various licenses and
has worked his way through the ranks to that of captain.
Captain Sadler has spent years on the water, primarily aboard
tugs and barges, including employment with the second largest towing
company in the country. He often evaluated and trained crews and was
responsible for the safety of the crews and the ships. He trained
crews to better handle lines, gear and other equipment on vessels.
Captain Sadler was responsible for supervising the lifting and pulling
of different objects, including numerous types of chains, chock lines
-8-
on pennants and nylon lines of different weights and force. In fact,
his vessel was used as a school ship and he taught others how to handle
and lift such lines and equipment. He established procedures and
authored the Responsible Carrier Program, which describes the
responsibilities of each member of a vessel's crew. Captain Sadler was
further responsible for the introduction of new equipment on vessels
and retrofitting and replacing equipment on others.
Captain Sadler was well-qualified to give opinions regarding
docking and undocking. He was qualified to be a docking master and
“rode in excess of a hundred vessels,” observing or participating in
the docking and undocking procedure. Because trips on tugs and barges
were relatively short, Captain Sadler was involved in docking and
undocking more than the average seaman.
The defendant argues that Captain Sadler was not qualified
to give expert testimony in this case because this case concerns an
accident which occurred aboard an ITB vessel and because Captain Sadler
never served as a member of a crew aboard an ITB. While it is true
that Captain Sadler was never a crew member on an ITB, it does not
follow that he was unqualified to give an opinion regarding the
equipment, the machinery and the docking and undocking procedures. He
testified that he was familiar with ITB vessels and that they use the
same winches, machinery, chocks and blocks as his barges and tugs.
-9-
Moreover, it should be noted that the defendant had ample
opportunity to cross examine Captain Salder and to use its own expert
– witness which it did. We find that Captain Sadler was qualified to
give expert testimony regarding, inter alia, the lifting of heavy lines
(the cause of the plaintiff's injury). The district judge, utilizing
the broad discretion afforded him, did not commit clear error by
allowing Captain Sadler to proffer his opinion and we will not disturb
that determination. Therefore, the district court's denial of the
defendant's motion for a new trial is affirmed.
III. Motion for remittitur.
The defendant moved for remittitur on the grounds that the
amount of damages awarded to the plaintiff was excessive and not
supported by the evidence presented at trial. The defendant also
argued that the district court failed to instruct the jury on reducing
lost wages to present value or that any award is not subject to income
taxes. We review the district court's denial of a motion for
remittitur for an abuse of discretion. See Smith v. Kmart Corp., 177
F.3d 19, 29 (1st Cir. 1999). “We will not disturb an award of damages
because it is extremely generous or because we think the damages are
considerably less. . . . We will only reverse an award if it is so
grossly disproportionate to any injury established by the evidence as
to be unconscionable as a matter of law.” Koster v. Trans World
-10-
Airlines, Inc., 181 F.3d 24, 34 (1st Cir.), cert. denied, U.S.
, 120 S. Ct. 532 (1999).
When determining whether the damages awarded are excessive
or unsupported by the evidence, we view the evidence in the light most
favorable to the verdict. See Smith, 177 F.3d at 30. In light of the
deference owed to the verdict, we find that the jury's award of
$900,000.00 does not warrant remittitur. Ample evidence was introduced
at trial regarding the plaintiff's injury, his inability to earn a
living and the pain and suffering he experienced, is experiencing and
will experience in the future. Therefore, we find that the award of
$900,000.00 was supported by the evidence and will not disturb the
jury's award.
The defendant also argues that the award for past and future
lost wages was improperly inflated because the district court failed to
instruct the jury on reducing lost wages to present value and that any
award is not subject to taxes. An instruction regarding the tax was
not requested by the defendant and was only mentioned after the
instructions were given to the jury. The defense attorney simply
stated, “I don't think that you mentioned anything there that any award
they make is not subject to taxes.” App. 848. The plaintiff's
attorney noted that the defendant never asked for such an instruction,
and the court refused to give it. We have previously held, and do so
again here, that, absent a party's objection, a judge's failure to give
-11-
an instruction that an award is not subject to income tax, is not
error. See Kennett v. Delta Airlines, Inc., 560 F.2d 456, 461-62 (1st
Cir. 1977) (finding no error in failure to give an instruction that the
award is not subject to income tax).
The district court did not instruct the jury that it could
reduce the award to present value because the defendant failed to
request such an instruction and then failed to object to its absence.
The defendant, however, argues for the first time on appeal that the
lack of said instruction improperly inflated the award. Rule 51 of the
Federal Rules of Civil Procedure states, in pertinent part, that: “No
party may assign as error the giving or the failure to give an
instruction unless that party objects thereto before the jury retires
to consider its verdict, stating distinctly the matter objected to and
the grounds of the objection.”
If a party fails to object to a jury instruction pursuant to
Rule 51, then it cannot be raised successfully on appeal. See Scarfo
v. Cabletron Sys., Inc., 54 F.3d 931, 940 (1st Cir. 1995). In Scarfo,
we held that: “[t]he rule has been rigorously enforced in this circuit,
and its clear language will be overlooked only in exceptional cases or
under peculiar circumstances to prevent a clear miscarriage of justice
. . . or where the error seriously affected the fairness, integrity or
public reputation of judicial proceedings.” Id. (internal citations
-12-
and quotation marks omitted); see also Beatty v. Michael Bus. Machs.
Corp., 172 F.3d 117, 121 (1st Cir. 1999).
Plain error “is reserved for the most egregious
circumstances.” Negron v. Caleb Brett U.S.A., Inc., 212 F.3d 666, 672
(1st Cir. 2000) (internal quotation marks omitted). The Supreme Court
has held that plain error applies only where the error “seriously
affect[s] the fairness, integrity or public reputation of judicial
proceedings.” United States v. Olano, 507 U.S. 725, 736 (1993)2
(internal quotation marks omitted); see also Scarfo, 54 F.3d at 940)
(holding that we will only reverse if the charge “has caused a
miscarriage of justice or has undermined the integrity of the judicial
process.”); Clausen v. Sea-3, Inc., 21 F.3d 1181, 1196 (1st Cir. 1994)
(holding that the plain error standard, which is “high in any event, .
. . is near its zenith in the Rule 51 milieu”) (omission in original)
(internal quotation marks omitted).
We find that the district court did not commit plain error
when it failed to give an instruction that any future damage award
should be discounted to present value. The defendant neither requested
such an instruction, nor objected to its omission, and cannot meet the
high standard of “plain error” to warrant reversal. There is nothing
to suggest that this omission “seriously affect[ed] the fairness,
2 Defendant's citation to Colburn v. Bunge Towing, Inc., 883 F.2d
372, 377 (5th Cir. 1989), a pre-Olano case which arguably applies a
different plain error standard, is thus beside the point.
-13-
integrity or public reputation of judicial proceedings.” Negron, 212
F.3d at 672. Therefore, we decline the defendant's invitation to
remand with instructions to grant a remittitur.
Affirmed.
-14-
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358 B.R. 294 (2006)
In re Conrad Mark HENCE, Debtor.
No. 06-32451-H4-13.
United States Bankruptcy Court, S.D. Texas, Houston Division.
December 20, 2006.
*295 *296 Reese W. Baker, Baker & Associates LLP, Houston, TX, for Debtor.
MEMORANDUM OPINION ON: (1) INDIAN CAVE PARTNERSHIP'S OBJECTION TO CONFIRMATION OF PLAN OF AUGUST 18, 2006; AND (2) INDIAN CAVE PARTNERSHIP'S MOTION UNDER RULE 9023 CONFIRMATION OF PLAN OF AUGUST 18, 2006
JEFF BOHM, Bankruptcy Judge.
I. INTRODUCTION
Indian Cave Park Partnership (Indian) objects to the Amended Plan of Conrad *297 Mark Hence (the Debtor). Indian is the mortgage creditor on the Debtor's homestead. Indian claims that its interests are not properly protected in the Debtor's Amended Plan because (1) the Amended Plan fails to comply with the "reasonable time" restriction of 11 U.S.C. § 1322(b)(5); and (2) the mortgage arrearage owed by the Debtor must bear interest as required by 11 U.S.C. § 1325(a)(5). For the reasons set forth below, this Court holds that the Debtor's Amended Plan complies with 11 U.S.C. § 1322(b)(5) and that no interest must be paid on the arrearage.
On September 25, 2006, the Court orally recited into the record its Findings of Fact and Conclusions of Law related to its ruling. Shortly after this Court orally announced its Findings of Fact and Conclusions of Law, Indian filed its Motion Under Rule 9023.[1] After considering Indian's motion, the Court is of the opinion that it lacks merit and should therefore be denied.
This Court makes the following Findings of Fact and Conclusions of Law under Federal Rule of Civil Procedure 52 as incorporated into Federal' Rule of Bankruptcy Procedure 7052. To the extent that any Finding of Fact is construed to be a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law is construed to be a Finding of Fact it is adopted as such. To the extent that these written Findings of Fact and Conclusions of Law conflict with any of the oral Findings of Fact and Conclusions of Law, the written Findings of Fact and Conclusions of Law govern. Otherwise, the written Findings of Fact and Conclusions of Law supplement the oral Findings of Fact and Conclusions of Law. The Court reserves the right to make any additional Findings and Conclusions as may be necessary or as requested by any party.
II. FINDINGS OF FACT
The facts, either as stipulated to or admitted by counsel of record, or as adduced from the exhibits admitted during the September 11, 2006 hearing on Indian's Objection to Confirmation of Plan, in chronological order, are as follows:
A. Factual Background
1. Indian is the mortgagee on the Debtor's homestead located at 2322 Parana Drive Houston, Harris County, Texas 77080 (the Homestead). [Indian's Exhibit No. 2.][2]
2. On June 24, 2004, the Debtor executed a Promissory Note (the Note) evidencing the terms of Indian's mortgage loan to the Debtor. [Indian's Exhibit No. 1.]
3. The Note sets forth the following terms: (1) Principal Amount: $121,800.00; (2) Annual Interest Rate: 5.509%; (3) Maturity Date: July 1, 2019; and (4) Annual Interest Rate on Matured, Unpaid Amounts: 18,00%. Id.
4. The Note also contains the following clause: "All unpaid amounts are due by the Maturity Date. After maturity, Borrower promises to pay any unpaid balance plus interest at the Annual Interest Rate on Matured, Unpaid Amounts." Id.
5. The Note further specifies that the first payment of $988.16 is due on *298 August 1, 2004. Id. The payment included both principal and interest. Id. Each subsequent payment is due on the first day of each month thereafter through June 1, 2019. Id.
6. Additionally, the Note contains the following acceleration clause: "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, Lender may declare the unpaid principal balance, earned interest, and any other amounts owed on the note immediately due." Id.
7. The Debtor also executed a Deed of Trust in connection with his purchase of the Homestead. [Indian's Exhibit No. 2.]
8. Beginning in February of 2006, the Debtor began to default on his mortgage payments. The Debtor had accumulated arrearages of $5,000.00 prior to the time that he filed for bankruptcy.
B. Procedural Background
9. The Debtor filed a voluntary Chapter 13 petition on June 5, 2006. [Docket No. 1.]
10. On June 15, 2006, the Debtor filed his initial Uniform Plan and Motion for Valuation of Collateral (the Initial Plan) [Docket No. 10], Schedules, Summary of Schedules, and Statement of Financial Affairs [Docket No. 9]. Under the Initial Plan, the Debtor proposed to pay his bankruptcy attorney's fee beginning with monthly `payment one and ending with monthly payment seven of the proposed 60-month plan. [Docket No. 10.] The Debtor's Initial Plan further set forth that the Debtor would pay the $5,000.00 arrearage to Indian during monthly payments 7 through 59. Id. The Debtor also proposed that the first two monthly mortgage payments due during the Initial Plan would be converted to an arrearage and paid during monthly payments 7 through 59. Id. Additionally, the Debtor proposed that no interest would be paid on either the $5,000.00 arrearage or on the two post-petition mortgage payments that the Debtor planned to convert to an arrearage under the Initial Plan. Id.
11. On July 17, 2006, the Meeting of Creditors was held, and David Peake, the Chapter 13 Trustee (the Trustee), stated that he would not recommend confirmation of the Initial 'Plan. [Docket No. 18.]
12. On July 20, 2006, the Trustee filed a Motion to Dismiss on the following grounds: (1) "Payments due pursuant to all U.S.C. § 1326(a)(1), and 1325(a)(2) have not been made;" (2) "The Debtors have caused unreasonable delay that is prejudicial to the Creditors;" and (3) the Debtor "FAILED TO SUBMIT AN EMPLOYEE ORDER." [Docket No. 19.]
13. On August 17, 2006, the Debtor filed his Response to Trustee's Motion to Dismiss, which set forth: (1) the Debtor wished to continue with the Initial Plan; (2) the Debtor was current with his payments to the Trustee; (3) a wage order had been filed to have the Initial Plan payments deducted from the Debtor's wages; and (4) a request for a hearing on the Trustee's Motion to Dismiss. [Docket No. 23.]
14. On August 17, 2006, Indian filed an Objection to Plan Confirmation, claiming that: (1) the Debtor's Response *299 to Trustee's Motion to Dismiss was "too late," and this case should be dismissed; (2) "[t]he Plan mandates that the first two months' post-petition mortgage payments are deemed by a fiction to be pre-petition payments, and by that fiction are to be deemed arrearage;" (3) "[t]he Plan fails to comply with § 1325(a)(5), in that it adjusts the mortgage from the contract payments in an amount of `present value' that is not adequate to satisfy the claim in full;" and (4) "[t]he Plan fail[ed] to comply with Local Rules and Procedures." [Docket No, 24.] At the point that Indian filed its Objection to Plan Confirmation, Indian had not yet filed a proof of claim from which the "claim in full" could be determined. [See Proof of Claim No. 10.]
15. On August 18, 2006, the Debtor filed an Amended Plan [Docket No. 26] and Amended Schedules I and J [Docket No. 27]. Under the Amended Plan; the Debtor removed the provision setting forth that the first two post-petition mortgage payments would be paid as an arrearage. [Docket No. 26.] The Debtor set forth that he would pay his bankruptcy attorney's fee beginning with the first monthly payment and ending on the 15th monthly payment and pay the $5,000.00 arrearage to Indian during the 15th through 57th monthly payments. Id. The Amended Plan provides that no interest be paid on the arrearage. Id.
16. On August 20, 2006, Indian filed an Objection to Confirmation of Plan of August 18, 2006 (the Objection). [Docket No. 28.] Indian objected that the Debtor's Response to the Trustee's Motion to Dismiss was late, and, "[i]n fairness, the case should be dismissed." Id. Indian also reiterated that it believed the amount of the arrearage to be in excess of the $5,000.00 figure used by the Debtor. Id. Additionally, Indian asserted that the Amended Plan did not comply with the Local Rules and Procedures due to "failure to timely pay over funds to the Trustee for disbursement to Indian Cave Partnership, which has received none." Id. Indian further objected to the Amended Plan, claiming that the "cure" of the arrearage did not occur within a "reasonable, time" as required by 11 U.S.C. § 1322(b)(5)[3], as payments for the arrearage would commence on monthly payment 15 and "continue for a period of 32 months."[4]Id. Indian also objected because the Amended Plan did not provide for interest on the arrearage and "[t]he [N]ote provides for `interest-on-interest' as it provides 18% per annum interest on `matured, unpaid amounts.'" Id. Indian further stated:
While the [Amended] Plan by its language is not objectionable on the grounds of the amount of the arrearage, since it provides that amount is *300 set by the claim, the amount will be substantially in excess of the 85,000.00 estimated in the [Amended] Plan, and as shown by the budget, there is little room for a substantial increase; the case should be dismissed.[5]
Id. As of the time that Indian filed its Objection, Indian had not filed a proof of claim from which the amount of its claim could be determined. [See Proof of Claim No. 10.]
17. On September 6, 2006, the Amended Order to the Employer to pay the Chapter 13 Trustee was entered on the docket. [Docket No. 36.]
18. On September 7, 2006 the Meeting of Creditors was held, and the Trustee stated that he would recommend confirmation of the Amended Plan. [Docket No. 37.]
19. On. September 11, 2006, this Court held a hearing on Indian's Objection. As of September 11, 2006, Indian had not filed a proof of claim. [See Proof of Claim No. 10.] Further, during the September 11, 2006 hearing, Indian submitted no evidence of collection or foreclosure attempts or of the amount of its claim, including the amount of the arrearage, associated attorney's fees, and other costs.
20. On September 21, 2006, Indian filed its Memorandum Supporting its Objection. [Docket No. 43.]
21. On September 25, 2006, in open court, this Court announced its ruling overruling Indian's Objection and recited its Findings of Fact and Conclusions of Law into the record.
22. Additionally, on September 25, 2006, this Court confirmed the Amended Plan [Docket No. 44] and signed the Court's Order Withdrawing [the Trustee's] Motion to Dismiss [Docket No. 45].
23. On October 3, 2006, the transcript on the Court's ruling on Indian's Objection was entered on the docket. [Docket No. 48.]
24. On October 4, 2006, Indian filed its Motion Under Rule 9023 (the Rule 9023 Motion), requesting that this Court reconsider its ruling confirming the Debtor's Amended Plan and claiming that the Court erred: (1) in determining that the Debtor's Amended Plan provided for cure of the mortgage arrearages within a reasonable time; and (2) in denying Indian 18.00% interest on the arrearages. [Docket Nos. 49, 50.][6]
25. On October 12, 2006, Indian filed its Proof of Claim. [Proof of Claim No. 10.]
III. CONCLUSIONS OF LAW
A. Jurisdiction
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and *301 157. This contested matter is a core matter pursuant to 28 U.S.C. § 157(b)(2)(A), (b)(2)(B), and (b)(2)(L).
B. Indian's Objection to the Debtor's Amended Plan
1. "Reasonable Time" requirement of § 1322(b)(5)
Indian argues that the Amended Plan does knot satisfy the "reasonable time" requirement of § 1322(b)(5) because it provides that the $5,000.00 arrearage will be paid over monthly payments 15 through 57. Section 1322(b)(5) allows a plan to cure debts as long as such cure is "within a reasonable time and ... [on] a secured claim on which the last payment is due after the date on which the final payment under the plan is due." Indian challenges only the first element of § 1322(b)(5), the "reasonable time" element, on two grounds: (1) commencing payment of the mortgage arrearages on the 15th monthly payment tinder the Amended Plan; and (2) the payment period thereafter lasting over monthly payments 15 through 57. [Docket No. 28.] However, Indian concedes that "while standing alone a delay of some length after the first month might be reasonable, and standing alone, a cure as long as 32 months might be reasonable, together the proposal is not reasonable." Id.
Section 1322(b), provides in pertinent part:
(b) Subject to subsections (a) and (c) of this section, the plan may
....
(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;
(3) provide for the curing or waiving of any default;
....
(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due;
....
Nowhere in the Bankruptcy Code is there any indication as to what constitutes a "reasonable time" under § 1322(b)(5). As one court observed: "Section 1322(b)(5)'s `reasonable time' is neither defined nor limited by the Code." First Nat'l Bank of Damariscotta v. Sidelinger (In re Sidelinger), 175 B.R. 115, 118-19 (Bankr. D.Me.1994). Additionally, the Fifth Circuit has not adopted a precise approach to resolve the exact issue this case presents: what is "reasonable time" under § 1322(b)(5)? See In re East, 172 B.R. 861, 866 (Bankr.S.D.Tex.1994).
The court in Steinacher v. Rojas (In re Steinacher), quotes the Honorable Keith M. Lundin's treatise, in which he analyzes how courts have interpreted "reasonable time" under § 1322(b)(5):
Chapter 13 debtors who invoke § 1322(b)(5) to cure defaults with respect to a long-term home mortgage must do so "within a reasonable time." Few provisions of the Bankruptcy Code have generated so much case law completely lacking in uniformity. In almost every jurisdiction-by local rule, case law or cultural imperative-there is a rule of thumb that home mortgage arrearages must be cured within "X" months of confirmation. "X" varies from jurisdiction to jurisdiction, and in some jurisdictions, "X" varies from case to care. If *302 there is any trend in the reported decisions, it is the increasing use of factors to determine reasonableness. But it cannot be said that the application of factors has produced any greater consistency or predictability in the cases.
Elsewhere, in § 365(b)(1), the Bankruptcy Code requires a trustee to "promptly cure" defaults with respect to a lease or executory contract as a condition of assumption. Ordinary usage of the words "reasonable" and "promptly" suggests that reasonable should be a less rigorous test for the debtor.
Steinacher, 283 B.R. 768, 774 n. 13 (9th Cir. BAP 2002) (quoting KEITH M. LUNDIN, CHAPTER 13 BANKRUPTCY § 133.1 (3d ed.2000)) (emphasis added and footnotes omitted in Steinacher). The Bankruptcy Appellate Panel in Steinacher found that a local rule conflicted with § 1322(b)(5) because it required cure of pre-petition defaults within 15 days of the filing of a Chapter 13 petition, instead of within a "reasonable time" as provided by § 1322(b)(5). Steinacher, 283 B.R. at 773-74. Further, the Steinacher panel found that the local rule "abridge[d] the substantive rights regarding cure provided to all debtors under section 1322(b)," and therefore held that the local rule was invalid. Id.
Further, Judge Lundin notes, a few courts have adopted a fixed-term approach to determine what constitutes a "reasonable time" under § 1322(b)(5). See In re Newton, 161 B.R. 207, 211 (Bankr.D.Minn. 1993) (presumption that cure within 12 months is reasonable, subject to the debtor showing that a longer period is reasonable); In re Hailey, 17 B.R. 167, 168 (Bankr.S.D.Fla.1982) (finding that "a reasonable time would ordinarily be between three and six months, and perhaps in extraordinary circumstances, nine or twelve months.")
However, the majority of courts considering the issue of "reasonable time" under § 1322(d) have employed a flexible, case-by-case approach, approving cure periods spanning six months to the maximum 60-month plan period permitted by § 1322(d). In re Tudor, 342 B.R. 540, 564 n. 12 (Bankr.S.D.Ohio 2005);[7]see also Grubbs v. Houston First Am. Sav. Asen, 730 F.2d 236, 237-38 (5th Cir.1984); Sapos v. Provident Inst. of Say. in the Town of Boston, 967 F.2d 918, 926 (3rd Cir.1992), (interpreting "reasonable time" "as meaning within the duration of the chapter 13 plan, which may not exceed five years.") (citations omitted), overruled on other grounds by Hammond v. Commonwealth Mortgage Corp. of Am. (In re Hammond), 27 F.3d 52 (3rd Cir.1994). As one court observed:
*303 "Virtually all authorities agree that a bankruptcy court exercises its discretion in light of each case's unique facts to determine whether a given plan's cure terms are `reasonable' within § 1322(b)(5)'s meaning." Sideliner, 175 B.R. at 119 (citations omitted).
Additionally, as Judge Lundin observes, an increasing number of courts using the case-by-case approach have formulated factors to determine whether a plan proposes a cure of arrearages within a "reasonable time." In In re King, the court noted that the Bankruptcy Code does not address what constitutes a "reasonable time" to cure under 1322(b)(5), that the legislative history did not provide any guidance on the issue, and that "the commentators are also unhelpful." In re King, 7 B.R. 110, 112 (Bankr.S.D.Cal.1980) (citations omitted). The King court therefore concluded that the determination of what constitutes a "reasonable time" under § 1322(b)(5) is left to the discretion of the court. Id. The King court further stated that "Mil the exercise of this discretion, it is clear that what will be a `reasonable time' under Section 1322(b)(5) is a question to be decided on the facts and equities present in each case." Id. (citing In re Coleman, 2 B.R. 348, 350 (Bankr.W.D.Ky. 1980), aff'd, 5 B.R. 812 (W.D.Ky.1980); Epps v. Blackshear (In re Epps), 2 B.R. 737 (S.D.N.Y.1980)). The King court then determined that "[Wilder this case by case approach, certain equitable factors must be considered in evaluating the reasonableness of a proposal under Section 1322(b)(5)." King, 7 B.R. at 112. The King court considered the following factors:
(1) the debtor's payment record;
(2) the length of the payment period on the original obligation;
(3) the reason for the arrearage;
(4) the nature of the security for the debt;
(5) whether the debtor is putting forth his or her best effort to cure the default.
Id. at 112-13. Additionally, in In re Pollasky, the court considered the following factors:
(1) the necessity of the asset to an effective rehabilitation of the debtor; (2) the availability of the debtor's discretionary income to cure a default; (3) the amount of the default; (4) the time over which the default has accrued compared to the time within which it is to be cured; (5) the debtor's ability to meet the obligations of the plan; (6) the debtor's ability to continue current payments on the installment obligations.
In re Wiggins, 21 B.R. 532, 534 (Bankr. D.S.C.1982) (citing In re Pollasky, 7 B.R. 770 (Bankr.D.Colo.1980)).
In King, Pollasky, and other cases applying factors to the determination of whether a cure period covers a "reasonable time," a common consideration was whether the proposed cure period represented the debtor's best effort, or stated differently, "the availability of the debtor's discretionary income to cure a default." See Wiggins, 21 B.R. at 534 (applying Pollasky factors); Home Fed. Say. and Loan Ass'n of Sioux City, Iowa (In re Beckman), 9 B.R. 193, 197 (Bankr.N.D.Iowa 1981) (applying King factors); Pollasky, 7 B.R. at 771-72; King, 7 B.R. at 113. These courts looked to whether the debtors' plans provided for payments that were "the most that the debtors can reasonably be expected to handle with their income." Beckman, 9 B.R. at 197; see also Wiggins, 21 B.R. at 534 (finding that plan proposed cure of arrearages within a "reasonable time" after noting that "the debtors are applying most of their meager income to curing the arrearages on the bank's mortgage so that they may keep their home-an *304 asset essential to their reorganization.") The King court determined that the debtors were putting forth their best effort and, based on all of the factors, determined that the debtor's proposed method of cure could not be deemed "halfhearted or inequitable." King, 7 B.R. at 113. Accordingly, the King court concluded that the debtors' proposal to repay the arrearages was reasonable under § 1322(b)(5) and overruled the creditor's objection to the debtors' proposed plan. Id.
While courts within the Fifth Circuit have not articulated factors to be considered in determining the issue, cases in the Fifth Circuit have approved confirmation of plans that represent the debtor's best effort to repay his debt while maintaining the current terms of the mortgage throughout its term. See Grubbs, 730 F.2d 236; East, 172 B.R. 861. As the Fifth Circuit has stated, § 1322(b)(5) "was designed to enable a debtor to preserve his equity in his mortgaged home and to provide a means to restore and maintain his currency on a long-tern debt." Grubbs, 730 F.2d at 245. Here, the Debtor's Amended Plan utilizes, his projected, disposable income to satisfy his debts over the 60-month period. The Amended Plan indicates $1,376.79 as the Debtor's projected monthly disposable income. [Docket No. 26.] The first two payments are in the amount of $1,350.00 each, with the remainder of the payments in the amount of $1,375.00 each. Id. Because the Debtor is dedicating nearly all of his projected disposable income to satisfy his debts under the Amended Plan, the Debtor is making a good faith, best effort. Like the debtors in King, the Debtor's proposal to repay his arrearages cannot be deemed "halfhearted or inequitable." King, 7 B.R. at 113.
In sum, the flexible, case-by-case approach adopted by most courts considering the issue is in line with cases from the Fifth Circuit. See Grubbs, 730 F.2d 236; East, 172 B.R. 861.[8] In Grubbs, the Fifth Circuit determined that a home mortgagor/debtor could, upon approval of the bankruptcy court, cure pre-petition arrearages, including pre-petition acceleration, through the entire term of the debtor's Chapter 13 plan. Grubbs, 730 F.2d at 237, (citing Di Pierro v. Taddeo (In re Taddeo), 685 F.2d 24 (2d Cir.1982)). Additionally, in East, the court approved a cure of a mortgage arrearage that covered a period of 52 months, which went well beyond the term of the underlying mortgage. East, 172 B.R. at 864, 867. Considering these cases, this Court concludes that § 1322(b)(5) contemplates that debtors may have a broad range of possibilities for repayment of mortgage arrearages within the period of a Chapter 13 plan, provided that the repayment of the arrearages occurs within a "reasonable time."
*305 As noted above, the Debtor has proposed an Amended Plan that utilizes nearly all of his disposable income to satisfy his debts. The Debtor's Amended Plan provides for payment of his mortgage arrearages, while allowing the Debtor to maintain the current terms of the mortgage throughout its term and therefore comports with § 1322(b)(5)'s express provision that "a plan may ... provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending." See Mendoza v. Temple-Inland Mortgage Corp. (In re Mendoza); 111 F.3d 1264, 1269 (5th Cir.1997); Grubbs, 730 F.2d at 245. Additionally, in Grubbs, the Fifth Circuit found that § 1322(b) did not prohibit the Debtor from paying off delinquent and matured amounts over the entire term of the proposed plan.[9]Grubbs, 730 F.2d at 238. The Debtor's Amended Plan provides for payment of the arrearages within the last 42 months of a 60-month plan. [See Docket No. 26.] Although the payment period occurs over the final 42 payments of the 60month term of the Amended Plan, such a schedule does not contradict cases from courts in the Fifth Circuit as the payment of all of the arrearages would still occur within the term of the Amended Plan. Id. Indian has provided no authority supporting its contention that delaying commencement of payments on the arrearages until the 15th monthly payment is unreasonable, and this Court finds none. Accordingly, this Court holds that the Debtor's Amended Plan provides for payment of the mortgage arrearages within a "reasonable time" under § 1322(b)(5). This Court therefore overrules Indian's Objection on this ground.
2. Denial of 18.00% Interest on the Arrearages
Indian argues that the Amended Plan violates § 1325(a)(5) because it proposes to pay no interest on the mortgage arrearage, while the underlying Note allows for 18.00% per annum "interest-on-interest" on any "matured, unpaid amounts." [Docket No. 28.] This Court disagrees.
At one time, it was true that § 1325(a)(5) was a proper avenue to seek interest on pre-petition arrearages under the Bankruptcy Code. See Rake v. Wade, 508 U.S. 464, 113 S.Ct. 2187, 124 L.Ed.2d 424 (1993). However, Congress enacted § 1322(e) as the proper provision of the Bankruptcy Code to seek interest on pre-petition arrearages and effectively overruled Rake. 140 CONG. REC. H10770 (Oct. 4, 1994). See also O'Connell v. Troy & Nichols, Inc. (In re Cabrera), 99 F.3d 684 (5th Cir.1996); In re Perez, 339 B.R. 385, 404 n. 22 (Bankr.S.D.Tex.2006). With regard to § 1322(e), the Congressional Record for the Bankruptcy Reform Act of 1994 states as follows:
Interest on interest
This section will have the effect of overruling the decision of the Supreme Court in Rake v. Wade, [508 U.S. 464,] *306 113 S.Ct. 2187[, 124 L.Ed.2d 424] (1993). In that case, the Court held that the Bankruptcy Code required that interest be paid on mortgage arrearages paid by debtors curing defaults on their mortgages. Notwithstanding State law, this case has had the effect of providing a windfall to secured creditors at the expense of unsecured creditors by forcing debtors to pay the bulk of their income to satisfy the secured creditors' claims. This had the effect of giving secured creditors interest on interest payments, and interest on the late charges and other fees, even where applicable law prohibits such interest and even when it was something that was not contemplated by either party in the original transaction. This provision will be applicable prospectively only, i.e., it will be applicable to all future contracts, `including transactions that refinance existing contracts. It will limit the secured creditor to the benefit of the initial bargain with no court contrived windfall. It is the Committee's intention that a cure pursuant to a plan should operate to put the debtor in the same position as if the default had never occurred.
140 CONG. REC. H10770 (Oct. 4, 1994) (emphasis added). Considering that Congress intended that "a cure pursuant to a plan should operate to put the debtor in the same position as if the default had never occurred," Indian is not entitled to 18.00% "interest-on-interest" on any "matured, unpaid amounts." Id.; [Docket No. 28.] Additionally, pursuant to § 1322(e), this Court is required to look at the "underlying agreement and applicable nonbankruptcy law." Under the underlying agreement and applicable nonbankruptcy law, Indian is not entitled to 18.00% "interest-on-interest" on "matured, unpaid amounts," primarily because the Note is ambiguous.
Indian asserts that the Deed of Trust and/or the Note require that 18.00% interest is to attach automatically to unpaid delinquent payments and/or "attorney fees, other foreclosure fees, ad valorem tax payments, insurance payments and any other such amounts ..." [Docket No. 43.] The Court notes that at the September 6, 2006 hearing, Indian submitted no evidence as to these amounts or the total amount of its claim. Indian argues that it is entitled to the additional 18.00% in interest because of the following language in the Note: "Matured, Unpaid Amounts: 18.00%" and "Maturity Date: JULY 1, 2019" in the Note. Id. The Note contains a provision that states: "All unpaid amounts are due by the Maturity Date. After maturity, Borrower promises to pay any unpaid principal balance plus interest at the Annual Interest Rate on Matured, Unpaid Amounts." [Indian's Exhibit No, 1.] Under Indian's proposed reading, once the Debtor defaulted on a $988.16 monthly payment (which includes both principal and interest of 5.509%), an additional 18.00% in interest would attach to the defaulted payment, and then another 18.00% would attach after July 1, 2019. This interpretation is not reasonable be cause there could potentially be three different levels of interest applied to the principal: 5.509%, then 18.00% upon default, and then another 18.00% after July 1, 2019.
However, even if Indian's were a reasonable interpretation, in applying the underlying nonbankruptcy law, other valid interpretations of the Note exist. One interpretation is that the event triggering the applicability of the 18.00% in interest has not yet occurred. The Note states: "All unpaid amounts are due by the Maturity Date. After maturity, Borrower promises to pay any unpaid principal balance plus interest at the Annual Interest Rate *307 on Matured, Unpaid Amounts." Id. As previously noted, the Note indicates: "Maturity Date: JULY 1, 2019." Under Texas law, la] contextual analysis of the contract is the proper approach to determine the meaning of contractual terms." Parkans Int'l L.L.C. v. Zurich Ins. Co., 299 F.3d 514, 517 (5th Cir.2002) (citing Gulf Metals Indus., Inc. v. Chicago Ins. Co., 993 S.W.2d 800, 805-06 (Tex.App.Austin 1999, pet. denied)). Because of the proximity of "unpaid amounts" and the defined term "Maturity Date," with the following sentence, the Note could reasonably be interpreted as: "All unpaid amounts are due by [JULY 1, 2019]. After [JULY 1, 2019], Borrower agrees to pay any unpaid principal balance plus interest at the Annual Interest Rate on Matured, Unpaid Amounts." Because "JULY 1, 2019" has not yet occurred, the "Annual Interest Rate on Matured, Unpaid Amounts" of 18.00 % cannot yet apply to the unpaid amount. At the very least, these phrases are ambiguous. Texas law provides: "It is well-established law that where an ambiguity exists in a contract, the contract language will be construed, strictly against the party who drafted it since the drafter is responsible for the language used." Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 737 (Tex.1990) (citation omitted). Accordingly, this Court construes any ambiguity against Indian and finds that Indian is not entitled to the 18.00% interest on the arrearages and other costs.
Another interpretation of the Note is that it created an option for Indian to collect 18.00% interest on the unpaid delinquent portions of the Note. The Note contains the following sentence: "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, Lender may declare the unpaid principal balance, and earned interest, and any other amounts owed on the note immediately due." [Indian's Exhibit No. 1.] (emphasis added). A reasonable interpretation of this language is that Indian "may" declare the "principal balance, and earned interest, and any other amounts owed on the note immediately due," instead of due on the "Maturity Date" of July 1, 2019. Id. (emphasis added). Such language amounts to an acceleration clause. Under Texas law, the language of an acceleration must be "clear and unequivocal" to be effective. Thompson v. Chrysler First Bus. Credit Corp., 840 S.W.2d 25, 31 (Tex.App.Dallas 1992, no pet.) (citing Ogden v. Gibraltar Say. Ass'n., 640 S.W.2d 232 (Tex. 1982)). In Ogden, the Texas Supreme Court held that the "may" language in a lender's letter to the mortgagor stating "failure to cure the breach may result in acceleration," was not clear and unequivocal, and the lender's attempted acceleration was therefore ineffective. Ogden, 640 S.W.2d at 234. There is no evidence that Indian accelerated the Note, or clearly and unequivocally declared the amounts due immediately, thereby accelerating the Maturity Date of July 1, 2019. For these reasons, Indian is not entitled to the 18.00% interest on the arrearages.
C. Indian's 9023 Motion
Shortly after this Court announced its Findings of Fact and Conclusions of Law from the bench, Indian filed its 9023 Motion. [Docket No. 50.] In its 9023 Motion, Indian claims that the Court erred in finding: (1) that the Debtor's Amended Plan satisfied the "reasonable time" requirement, of § 1322(b)(5); and (2) that Indian is not entitled to 18.00% interest on the arrearages.
1. Standard for Awarding Relief Under Rule 9023
With regard to motions for new *308 trial or to amend judgments,[10] the Fifth Circuit has explained:
Motions for new trial or to alter or amend a judgment must clearly establish either a manifest error of law or fact or must present newly discovered evidence. These motions cannot be used to raise arguments, which could, and should, have been made before the judgment issued. Moreover, they cannot be used to argue a case under a new legal theory.
Pluet v. Frasier, 355 F.3d 381, 384 n. 2 (5th Cir.2004) (quoting Simon v. United States, 891 F.2d 1154, 1159 (5th Cir.1990)). The Fifth Circuit has further stated that relief under Federal Rule 59(e) is an "extraordinary remedy that should be used sparingly." Templet v. HydroChem, Inc., 367 F.3d 473, 479 (5th Cir.2004) (citations omitted). The Fifth Circuit has further explained as follows:
A Rule 59(e) motion calls into question the correctness of a judgment. This Court has held that such a motion is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment. Rather, Rule 59(e) serves the narrow purpose of allowing a party to correct manifest errors of law or fact or to present newly discovered evidence.
Id. at 478-79 (citations and internal quotations omitted).
Additionally, a court has discretion to grant a new trial pursuant to Federal Rule 59(e) "to prevent an injustice." Gov't Fin. Servs. One Ltd. P'ship v. Peyton Place, Inc., 62 F.3d 767, 774 (5th Cir. 1995) (quoting United States v. Flores, 981 F.2d 231, 237 (5th Cir.1993)) (quoting Delta Eng'g Corp. v. Scott, 322 F.2d 11, 15-16 (5th Cir.1963)). Further, "[a] clear abuse of that discretion or some extraordinary legal situation must be demonstrated to obtain relief from such action." Delta Eng'g, 322 F.2d at 16.
2. "Reasonable Time" Under § 1322(a)(5)
With regard to "reasonable time" under § 1322(a)(5), Indian claims that the Court erred in applying a case-by-case analysis and considering whether the Amended Plan represented the Debtor's "best effort." [Docket No. 50, pp. 4-5.] As set forth above, the Fifth Circuit has not articulated a specific test in determining whether a plan provides for the curing of a default within a "reasonable time." Further, in cases within the Fifth Circuit deciding the issue, the courts have applied a fairly liberal analysis in approving proposed Chapter 13 plans. See Grubbs, 730 F.2d 236; East, 172 B.R. at 866. While the courts in Grubbs and East may not have articulated that they were employing a case-by-case analysis, the very fact that the courts in Grubbs and East used analyses considering the facts of each case, instead of articulating a specific test, demonstrates use of a case-by-case method. This Court considered the Debtor's "best effort," i.e. the availability of discretionary income to repay the arrearage, because it was a common consideration in the few cases that did articulate factors with regard to "reasonable time." Additionally, this Court considered this factor, among other considerations, in the context of all *309 of the facts present in this case, thereby employing a case-specific analysis as the courts in East and Grubbs did. See Wiggins, 21 B.R. at 534; Beckman, 9 B.R. at 197; King, 7 B.R. at 112-13; Pollasky, 7 B.R. 770. For these reasons, Indian has not clearly established a manifest error of fact or law or presented newly discovered evidence. Pluet, 355 F.3d at 384 n. 2. Indian is therefore not entitled to relief under Rule 9023 with regard to the § 1322(b)(5) issue. See id.
3. 18.00% Interest
Indian claims that the Court improperly denied it 18.00% on the mortgage arrearages. Indian claims that "Amounts" in "Annual Interest on Matured, Unpaid Amounts: 18.00%" is plural and should be given its plain meaning to include application of the 18.00% interest to the arrearages. [Docket No. 50, p. 1.] Indian further complains that the Court did not address the language in the Deed of Trust and asserts that it requires "payment of interest on attorney's fees, other foreclosure fees, ad valorem tax payments, insurance payments and any other such amounts as set forth in the deed of trust and actually incurred by Indian." Id. at 1-2.[11] Additionally, Indian claims that the Court's application of Texas law regarding acceleration is improper because the issue of acceleration was not before the Court. Id. at 2.
As set forth above, the Note is ambiguous. The Note could be reasonably interpreted to mean that the "Annual Interest Rate on Matured, Unpaid Amounts [of] 18.00%" applies on amounts due on the Maturity Date of July 1, 2019. Following this language is the language of acceleration: "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, Lender may declare the unpaid principal balance, and earned interest, and any other amounts owed on the note immediately due." Id. (emphasis added). The use of "and" instead of "or" demonstrates that Indian may declare all of these amounts immediately due, not just the unpaid monthly payments of principal and interest. Such language creates an acceleration clause. Texas law provides that the language of an acceleration must be "clear and unequivocal" to be effective. Thompson, 840 S.W.2d at 31 (citing Ogden, 640 S.W.2d 232). There was no evidence that Indian expressed a "clear and unequivocal"' intent to accelerate the Note; for example, Indian, did not introduced any letters accelerating the balance of the Note. Accordingly, there was no evidence that Indian committed the act necessary under Texas law to trigger the application of 18.00% interest on the arrearages.
Additionally, the Note, in pertinent part, provides:
Borrower also promises to pay reasonable fees and court and other costs if this note is placed in the hands of an attorney to collect or enforce the note. These expenses will bear interest from the date of advance at the Annual Interest *310 Rate on Matured, Unpaid Amounts. Borrower will 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.
[Indian's Exhibit No. 1.] Assuming that Indian is entitled to payment of fees and costs under this provision, the 18.00% interest would still not be applied for the same reason as stated above: the 18.00% interest clause is ambiguous. When the Debtor did not pay "these expenses and interest on demand at the Place for Payment," they became "part of the debt evidenced by the [N]ote." As previously discussed, the Note provides that "[a]ll unpaid amounts are due by the Maturity Date [of July 1, 2019]. After maturity, the Borrower agrees to pay any unpaid principal balance plus interest at the Annual Interest Rate on Matured, Unpaid Amounts [of 18.00%]." Thus, the attorneys fees and costs associated with collecting the arrearages becomes part of the underlying debt on the Note, and this Court above determined that this debt is not subject to the 18.00% interest because: (1) it was not accelerated; and (2) the Maturity Date of July 1, 2019 has not occurred.
Next, the Court recognizes that the Deed of Trust provides for "payment of interest on attorney's fees, other foreclosure fees, ad valorem tax payments, insurance payments and any other such amounts as set forth in the deed of tryst and actually incurred by Indian." [Docket No. 50, pp. 1-2.] However, under the facts of this case, Indian is not entitled to such interest. In part B.5., the Deed of Trust provides:
If Grantor fails to perform any of Grantor's obligations, Lender may perform those obligations and be reimbursed by Grantor on demand for any amounts so paid, including attorney's fees, plus interest on those amounts from the dates of payment at the rate stated in the Note for matured, unpaid amounts. The amount to be reimbursed will be secured by this deed of trust.
Indian's Exhibit No. 2.] There is no evidence that Indian made the payments that the Debtor missed. Moreover, even if Indian had made the Debtor's monthly payments, the Deed of Trust would not provide a basis to claim fees and interest on those payments. Part B.5 of the Deed of Trust is limited to situations where the Lender has performed one of the "Grantor's obligations." Part A of the Deed of Trust, titled "Grantor's Obligations," does not mention the monthly payments. Id. In fact, the language of Part A goes so far as to, at least implicitly, exclude the monthly payments under the Note from its purview.[12] Therefore, under a literal interpretation *311 of the Deed of Trust, Indian cannot seek reimbursement for the attorney's fees and interest associated with the arrearages under the Deed of Trust, or, as discussed above, under the Note.
This Court remains mindful of the legislative intent behind § 1322(e). See 140 CONG. REC. H10770 (Oct. 4, 1994). As set forth above, Congress' intent was "that a cure pursuant to a plan should operate to put the debtor in the same position as if the default had never occurred." Id. Interpreting the Note and Deed of Trust as not allowing for 18.00% on the attorney's fees and other expenses supports this legislative intent.
In sum, Indian is not entitled to relief under Rule 9023 because it has neither clearly established a manifest error of law or fact, nor has it presented newly-discovered evidence. Pluet, 355 F.3d at 384 n. 2. Accordingly, Indian's 9023 Motion is denied.
IV. CONCLUSION
The Debtor's Amended Plan sets forth repayment of the mortgage arrearages within a reasonable time pursuant to § 1322(a)(5). Additionally, pursuant to the underlying mortgage agreement and relevant nonbankruptcy law, Indian is not entitled to 18.00% interest on the mortgage arrearages, attorney's fees, and other costs that the Debtor owes to Indian. Accordingly, this Court overrules Indian's Objection. Further, Indian's 9023 Motion has neither clearly established a manifest error of law or fact, nor has it presented newly-discovered evidence. Pluet, 355 F.3d at 384 n. 2. Therefore, this Court denies Indian's 9023 Motion. An order overruling Indian's Objection and denying Indian's 9023 Motion will be entered simultaneously on the docket with this Memorandum Opinion.
NOTES
[1] The full title of this document is "Indian Cave Partnership's Motion Under Rule 9023 Confirmation of Plan of August 18, 2006." [Docket Nos. 49, 50.]
[2] This designation refers to Indian's Exhibits admitted during the September 11, 2006 hearing on Indian's Objection to Confirmation of Plan of August 18, 2006. [Docket No. 28.]
[3] All statutes refer to 11 U.S.C. unless otherwise noted.
[4] In its Objection, Indian objects to payments on the arrearage lasting over 32 months. However, the Debtor's Amended Plan sets forth that payments on the arrearage owed to Indian will be paid commencing on month 15 and ending on month 57, which encompasses 42 months.
[5] Due to the awkward nature of this, language, the Court could not determine Indian's precise objection as set forth in this sentence. Presumably, Indian was asserting that the arrearage would likely be larger than the $5,000.00 allowed in the Amended Plan. Because Indian had not filed a proof of claim at the point that it filed its. Objection, and provided no evidence as to the amount of its claim until well after the hearing and ruling on its Objection, this Court had no way of determining whether Indian's arrearage was for an amount greater than the $5,000.00 allowed in the Amended Plan.
[6] It appears that Indian mistakenly filed its Rule 9023 Motion twice at Docket Nos. 49 and 50. Hereinafter, this Memorandum Opinion will refer to Indian's 9023 Motion at Docket No. 50.
[7] Tudor, 342 B.R. at 564 n. 12, lists the following cases in which the courts approved cure periods ranging from six to the maximum 60 month plan period permitted by § 1322(d):
See, e.g., In re Ford, 221 B.R. [749,] 754 [(Bankr.W.D.Tenn.1998)], (6-month period to cure arrearages reasonable); In re East, 172 B.R. 861, 867 (Bankr.S.D.Tex.1994) (52-month period reasonable, notwithstanding the fact that "short-term" mortgage would mature before completion of payment of arrearages); Sidelinger, 175 B.R. at 119-20 (36-month cure reasonable); In re Masterson, 147 B.R. 295, 296-97 (Bankr.D.N.H.1992) (56-month cure not unreasonable); Cole v. Cenlar Fed. Say. Bank (In re Cole), 122 B.R. 943, 951-52 (Bankr.E.D.Pa.1991) (60-month plan to cure confirmed); In re Chavez, 117 B.R. 730, 733 (Bankr.S.D.Fla.1990) (36-month cure reasonable); Fleet Fin., Inc. v. Randolph (In re Randolph), 102 B.R. 902, 903-04 (Banlu.S.D.Ga.1989) (25-month plan reasonable, even though payments toward arrearage would not begin until the 11th month, and would not be completed until the 35th month); In re Anderson, 73 B.R. 993, 996 (Bankr.W.D.Okla.1987)(17-month cure reasonable); In re Smith, 19 B.R. 592, 593 (Bankr.N.D.Ga.1982) (14-month cure reasonable).
[8] Both Grubbs and East were ultimately were decided on § 1322(b)(3) grounds, and Indian's Objection is grounded in § 1322(b)(5). Nevertheless, as the court observed in East, "while subsection (b)(2) of section 1322 generally prohibits the modification of a home mortgagee's rights, such proscription does not affect a debtor's ability to cure either `long-term' mortgage debts, § 1322(b)(5), or `short-term' mortgage debts, § 1322(b)(3)." East, 172 B.R. at 866 (citing Grubbs, 730 F.2d at 238-47); Taddeo, 685 F.2d at 27; 5 Collier on Bankruptcy ¶ 1322.07[2], at 1322-20 (Lawrence P. King ed., 15th ed.1994) and additional legislative history in n. 5. Further, the legislative history reflects that "the `notwithstanding' language was added to subsection (b)(5) to ensure that no one would mistake subsection (b)(2)'s proscription as preventing debtors from dealing with long-term mortgage debts beyond the three-to-five-year period of a Chapter 13 plan." East, 172 B.R. at 866 n. 5 (citing Grubbs, 730 F.2d at 246; 124 CONG. REC. H11, 106 (daily ed. Sept. 28, 1978); 124 CONG. REV S17,424 (daily ed. Oct. 6, 1978)).
[9] As noted supra at footnote 8, Grubbs is not squarely on point with the issue presented in this matter. As the court stated in East:
Although Grubbs is not directly on point ... (in that the entire indebtedness in Grubbs had become due pre-petition due to acceleration), I believe that the outcome in Grubbs supports Debtor's position. The Fifth Circuit in Grubbs permitted the debtor to provide for payment of the loan's remaining principal over the life of the plan, notwithstanding the underlying note's maturity within the plan's term.
East, 172 B.R. at 867. This Court similarly concludes that Grubbs supports the proposition that a mortgage arrearage, such as the $5,000.00 arrearage owed by the Debtor in this matter, may be paid over the life of the plan.
[10] Bankruptcy Rule 9023 incorporates Federal Rule of Civil Procedure 59. Both rules are titled "New Trials, Amendment of Judgments." In its 9023 Motion, Indian does not specify whether it is seeking a new trial, an amended judgment, or both, but generally prays that the Debtor's Amended Plan not be confirmed. [Docket No. 50.] Accordingly, this Court will set forth the standard for motions for new trial and amended judgment under Federal Rule of Civil Procedure 59, as incorporated by Bankruptcy Rule 9023.
[11] The Court again notes that Indian did not submit any evidence as to the amount of its claim, including attorney's fees and other costs. In fact, Indian did not file its Proof of Claim until over a week after filing its 9023 Motion. [See Proof of Claim No. 10.] Consequently, the Court did not have sufficient evidence before it at the September 11, 2006 hearing on Indian's Objection to determine what amount of the payment under the Amended Plan, if any, should be allocated to interest on arrearages, attorney's fees, or other costs. Indian had ample opportunity to make a record, and failed to avail itself of this opportunity. A Rule 9023 motion "is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment." Templet v. HydroChem, Inc., 367 F.3d 473, 478-479 (5th Cir.2004).
[12] Among other duties, one of the "Debtor's Obligations" in the Deed of Trust requires that:
Grantor agrees to make an initial deposit in a reasonable amount to be determined by Lender and then make monthly payments to a fund for taxes and insurance premiums on the Property. Monthly payments will be made on the payment dates specified in the Note, and each payment will be one-twelfth of the amount that Lender estimates will be required annually for payment of taxes and insurance premiums. The fund will accrue no interest, and Lender will hold it without bond in escrow and use it to pay taxes and insurance premiums ... Deposits to the fund described in this paragraph are in addition to the monthly payments provided for in the Note.
[Indian's Exhibit No. 2, ¶ A.6.] It is clear from the last sentence of this clause that the monthly payments under the Note were not intended to be one of the "Debtor's Obligations". Therefore, arrearages of the monthly Note payments are not subject to the fees and interest of Part B.5 of the Deed of Trust.
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777 A.2d 759 (2001)
Tyrone TAYLOR, Defendant Below, Appellant,
v.
STATE of Delaware, Plaintiff Below, Appellee.
No. 64,2000.
Supreme Court of Delaware.
Submitted: June 26, 2001.
Decided: August 2, 2001.
Sandra W. Dean, Camden, Delaware, for Appellant.
John Williams, Department of Justice, Dover, Delaware, for Appellee.
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER and STEELE, Justices.
*761 STEELE, Justice for the Majority:
On September 23, 1999, a Superior Court jury found Tyrone L. Taylor, Appellant, Defendant-Below, guilty of eleven drug-related charges including intent to deliver cocaine. Taylor filed a timely notice of appeal. Taylor argues that the trial court abused its discretion when it admitted: two prior drug-related convictions during the State's case-in-chief; the testimony of a police officer regarding his observations of the area outside Taylor's home; and, the cocaine Taylor allegedly sold. We find that admitting Taylor's prior convictions during the State's case-in-chief unfairly prejudiced his right to present an entrapment defense and thus significantly undermines our confidence in the outcome of the trial. Further, the trial court's failure to hold consideration of the relevance of the remoteness of certain prior convictions until the evidence on predisposition could be reviewed under all of the circumstances surrounding the alleged offense compels us to reverse the judgment of the Superior Court and remand this case for a new trial.
I
On March 9, 1999, a confidential police informant arranged a drug transaction between Taylor and an undercover police officer. After the informant contacted Taylor, the informant and the officer went to Taylor's home where the officer expressed an interest in purchasing cocaine. Taylor sold the officer crack cocaine for twenty dollars. On March 19, 1999, the officer returned to Taylor's home to purchase more cocaine, but Taylor refused to sell the officer cocaine because the informant was not present. On March 25, 1999, police arrested Taylor. During a search of Taylor's home the police discovered several items of paraphernalia such as scales, baking soda and glass vials. Police also discovered marijuana and $314 cash. A jury convicted Taylor of eleven counts of possession, manufacture, delivery and distribution of controlled substances under 11 Del.C. §§ 4751, 4755, 4767. The State filed a motion to sentence Taylor as an habitual offender under 11 Del.C. 4214(b) because of two earlier drug convictions. The trial court granted the State's motion and sentenced Taylor to life imprisonment.
II
This Court first heard oral argument in this case on December 12, 2000. The Court issued an order on February 28, 2001 requesting supplemental briefing on three issues: (1) whether Taylor objected to the State's introduction of evidence of *762 his prior convictions during its case-in-chief; (2) whether evidence of the defendant's prior bad acts should be admissible under D.R.E. during the State's case-in-chief to rebut reasonably anticipated defense arguments;[1] and (3) whether the convictions in this case were too remote in time to be relevant to Taylor's predisposition at the time of the transaction.[2]
This case raises two issues concerning evidence of a defendant's prior bad acts. First, we determine whether evidence of a defendant's prior bad acts may be admissible during the State's case-in-chief to rebut anticipated evidence supporting elements of an affirmative defense. This issue requires us to consider relevant language in Getz v. State,[3] regarding the introduction of prior bad act evidence during the State's case-in-chief in light of the Court's recent decisions in Milligan v. State[4] and Cobb v. State.[5] Second, we determine whether Taylor's two drug convictions in 1990 and 1993 were too remote in time to be relevant to his alleged predisposition to sell drugs at the time of the 1999 drug transaction.
At trial, Taylor objected to the admission of his two prior drug convictions because they were too remote in time from the March 1999 transaction to be relevant and because their admission unfairly prejudiced him by preventing the jury from fairly considering his credibility on the relevant issue of predisposition. The record does not reflect, however, that Taylor objected specifically to the State's request to introduce the convictions as part of its case-in-chief.
A review of the transcript of counsels' argument concerning the admission of Taylor's prior convictions suggests that the parties and the court operated on the implicit assumption that, under Getz, the State could offer evidence in its case-in-chief to rebut an anticipated entrapment defense.[6]Getz does not explicitly distinguish between evidence offered in the State's case-in-chief to rebut a reasonably anticipated affirmative defense and that offered to support an issue which must be established in the State's own case. Milligan and Cobb were not decided until after Taylor's trial. Therefore, the defense had no clear, discrete legal basis to object to the admission of Taylor's earlier convictions during the State's case-in-chief. We conclude that Taylor's general objection to the admission of his earlier convictions sufficiently preserved the question for appeal.[7]
*763 Getz established six guidelines for the admission of other crimes evidence against a criminal defendant. The first of these guidelines requires that:
The evidence of other crimes must be material to an issue or ultimate fact in dispute in the case. If the State elects to present such evidence in its case-in-chief it must demonstrate the existence, or reasonable anticipation, of such a material issue.[8]
Under Getz, the State may introduce evidence of a defendant's other crimes during its case-in-chief if: the bad acts have independent logical relevance to an ultimate issue in the case; and, the State reasonably anticipates that the issue will arise.[9]
In Milligan v. State[10] we clarified this analysis. In Milligan, the defense indicated before trial that it intended to impeach the complainant's testimony concerning an alleged sexual offense by highlighting the delay between the alleged incident and her decision to report the incident. In response to this anticipated argument, the State offered evidence in its case-in-chief of a later incident involving the defendant and the complainant to explain what triggered the delayed decision to report. The trial court admitted evidence of the later incident, in part because "it provided an explanation for the `victim's' late reporting without which the jury could be misled or confused."[11]
On appeal, we held that it was "premature" to admit evidence of the defendant's uncharged bad act during the State's case-in-chief to rebut the defendant's anticipated "late reporting" argument: "While the defense did acknowledge that `late reporting' would be made an issue in its case and would be mentioned in its opening, `late reporting' bore no reasonable relationship to an issue or ultimate fact to be proved in the State's case-in-chief."[12] We concluded that "the State had no basis to seek admission of the later bad acts to explain `late reporting' until rebuttal," and "only after Milligan had in fact introduced evidence *764 of `late reporting'" to impeach the complainant's testimony.[13]
In order to introduce evidence of other crimes in the State's case-in-chief, those crimes must be logically relevant not just to "an issue or ultimate fact in dispute in the case,"[14] but to "to an issue or ultimate fact to be proved in the State's case-in-chief." This language identifies a distinction between bad act evidence that is offered to prove an element of the State's prima facie case and bad act evidence that is offered to rebut an issue, dispute of fact or element of a defense, that might reasonably be raised in the defendant's case. Under this formulation of the Getz rule, the State may offer evidence of the defendant's bad acts only if: (1) the evidence is independently relevant to an element of the State's prima facie case (for example, knowledge or intent) and (2) the State reasonably anticipates that the defendant will dispute that element of its case.[15]
Our holding in Milligan does no more than clarify what was implicit in the Getz Court's analysis. Indeed, the Getz Court noted that "the State presented the other sexual misconduct evidence in its case-in-chief and must justify its use at that time and not on the basis of whether the defendant might later offer evidence of his own *765 character."[16] In Getz, the Court justified the admission of evidence of the defendant's prior bad acts during the State's case-in-chief in part because, "[w]hile certainly the better practice is for the State to present such evidence on cross-examination or in rebuttal, the prosecutor is not clairvoyant and has no assurance that the defendant will necessarily supply the predicate issue."[17]
This rationale supports the admission of bad act evidence in the State's case-in-chief only if there is some concern that the State will not have an appropriate opportunity to present the evidence as part of its rebuttal case.[18] To require the State to present relevant bad act evidence only in rebuttal when a defendant indicates that he plans to challenge an element of the charged crime creates an unfair burden upon the State because the State's evidence on this element of its prima facie case may appear disjointed and out-of-context. Similarly, where the defense elects not to present evidence, the State will not have an opportunity to present the evidence in rebuttal at all despite the fact that the evidence is relevant to its prima facie case.
In contrast, when a defendant decides to present an affirmative defense that must be proved by a preponderance of the evidence,[19] there is no concern that waiting to present the bad act evidence until rebuttal will leave the State's case-in-chief incomplete because, until the defense presents its case, there is no argument for the State to rebut.[20] One would not be concerned that the defendant will not "supply the predicate issue" because the defendant is required to present some evidence to carry its burden of proof.[21] Moreover, the premature admission of bad act evidence to rebut an anticipated affirmative defense *766 may effectively lock the defense into making an undesirable argument that defense counsel had tentatively raised during opening statements. If the defendant no longer wishes to pursue the argument at trial, the premature admission of bad act evidence to rebut that argument presents the defendant with a Hobson's choice. The defendant must either present an argument that the defendant no longer finds tenable in order to deflect the impact of the bad act evidence or decline to present the argument and find another way to limit the damage done by the bad act evidence. In fairness, this choice cannot be forced upon the defendant by the State's prejudicial structuring of its case-in-chief.
We hold that the State may introduce evidence of a defendant's other crimes in its case-in-chief only where that evidence is independently relevant to an issue or fact that the State must prove as part of its prima facie case. Applying this rule to the present case, Taylor had not yet presented evidence supporting the affirmative defense of entrapment[22] when Taylor's two prior convictions were admitted during the State's case-in-chief.[23] As a consequence, the trial court erred when it admitted Taylor's earlier convictions during the State's case-in-chief. The State was permitted prematurely to rebut an anticipated defense argument during its case-in-chief with evidence that was not independently relevant to an issue that the State was required to establish as part of its prima facie case against Taylor.
Having concluded that the trial court erred by admitting Taylor's prior convictions during the State's case-in-chief, we next address whether this error mandates a new trial.[24] The admission of Taylor's convictions during the State's case-in-chief prejudiced Taylor in three respects. First, premature admission of the convictions permitted the State to negate Taylor's entrapment defense by steeling the jury's mind about predisposition before Taylor had an opportunity to present his evidence supporting a lack of predisposition to commit the offense. By doing so, the State effectively placed on Taylor the *767 additional burden beyond merely proving his entrapment case of overcoming the damage to his credibility in the minds of the jurors. Second, the trial court effectively precluded itself from a fair consideration of the relevance of the remoteness of the prior offenses and their significance to Taylor's ultimate claims of efforts at rehabilitation which were arguably inconsistent with a predisposition to sell drugs when it allowed the State to introduce the other crimes in its case-in-chief. Third, presenting evidence out of logical order makes it difficult for the jurors to draw reasonable inferences from the evidence and to apply them to the law. When jurors hear the State's rebuttal evidence of other crimes before they hear and can understand the defense evidence in support of entrapment it is far more likely that they will use that evidence to conclude that a defendant is "a bad person" rather than comprehend its relevance to the charges or the affirmative defense.
In addition, the approach in this case is particularly damaging to the defense where, as here, the affirmative defense requires that Taylor admit to the conduct that constitutes the offense. Since Taylor admitted that he sold the cocaine to the undercover officer, his entire case rested on a fair opportunity to be heard on his affirmative defense of entrapment. Admitting damaging evidence directed at his credibility during the State's case-in-chief, but totally unnecessary to the State's need to establish the issues and elements of its own case, unfairly weakened Taylor's only opportunity to be heard by a jury with an open mind and raises serious concerns about the fairness of his trial. By undercutting Taylor's entrapment defense before he presented it, the State unfairly enhanced Taylor's burden of proving that he would not be disposed to sell drugs before the police enticed him to do so. In view of these concerns, the trial court's erroneous admission of his convictions during the State's case-in-chief unfairly prejudiced Taylor, and a new trial is required.
To provide guidance to the Superior Court on remand, we next address whether Taylor's 1990 and 1993 drug convictions are admissible in the State's rebuttal case to refute Taylor's argument that he was not "otherwise disposed" to sell cocaine to the undercover police officer in March 1999.
In this context, the Getz requirements bear repeating. The evidence of the other crimes must be (1) "material to an issue or ultimate fact in dispute," (2) admissible under D.R.E. 404(b), (3) proved by clear and convincing evidence, (4) not too remote from the crime charged, (5) not unfairly prejudicial under D.R.E. 403, and (6) accompanied by a limiting instruction.[25] In the present case, the State sought to counter Taylor's entrapment defense by introducing Taylor's 1990 and 1993 drug convictions for the purpose of negating Taylor's anticipated claim that he would not be disposed to sell cocaine in March 1999.
Applying the Getz framework to this case, the State offered Taylor's prior convictions to rebut Taylor's anticipated entrapment defense under 11 Del.C. § 432(a)[26] because drug-related convictions may tend to show that Taylor was already "disposed to" sell crack cocaine *768 when the police informant arranged the transaction. As a result, the convictions are arguably related to a central issue in dispute. Under the second factor, the convictions were admitted for a proper purpose under 404(b) because the State offered them not to prove that Taylor is a bad person but to prove that he was predisposed to complete the drug transaction.[27] Third, the State proved the convictions with clear and convincing evidence from uncontested certified copies of the convictions. In addition, the court properly instructed the jury on the limited purpose for which they could consider the evidence when the court presented the convictions to the jury.[28]
The remaining issue concerns whether Taylor's convictions were too remote in time to be relevant to his predisposition to sell cocaine at the time of the transaction. Under the Getz analysis, the "remoteness concern" bears on whether the other crimes are sufficiently relevant to a material issue.[29] As a general matter, "[e]vidence is too remote in time `only where there is no visible, plain, or necessary connection between it and the proposition eventually to be proved.'"[30] To assist in this determination, "courts tend to analogize [the remoteness prong in Getz] to the 10 year time limit contained in Rule 609(b) governing impeachment by evidence of conviction of a crime."[31] As a consequence, this Court has generally endorsed the admission of prior convictions under Getz where the convictions preceded the charged crime by less than ten years.[32] The State therefore argues that the Court should follow the standard ten-year guideline in this case and should reject Taylor's remoteness argument.
As appealing as bright line rules generally are for their ease of application, evidence of "predisposition" in entrapment cases, however, presents an issue that the generic Getz remoteness analysis does not contemplate. This Court held in Harrison v. State that "the point of reference for ascertaining the predisposition of a defendant *769 to commit a particular crime is the time period extending from just before the State's solicitation to just before the defendant's commission of the crime."[33] This assertion suggests that evidence of predisposition in an entrapment case should be relatively close in time to the crime charged.
The holding in Harrison does not contemplate a "bright line test for the remoteness factor."[34] Rather, a trial court should consider the nature of the proposition that the evidence is intended to prove or disprove in determining whether a particular piece of evidence is too temporally remote from the charged crime.[35] Where the defendant presents an entrapment defense, the trial court necessarily has discretion to determine whether the defendant's earlier convictions are too remote to be relevant to the defendant's predisposition at the time of the alleged offense, but the court must keep in mind that the relevant time period for determining the defendant's "predisposition" is relatively limited.[36] Moreover, there is greater concern about remoteness where, as in this case, the defendant alleges attempts at rehabilitation between the time of the convictions and the time of the charged offense.
Given that the focus is on whether Taylor was predisposed to engage in a drug transaction with the police informant, the drug-related convictions in 1990 and 1993 may be too remote to be relevant to the 1999 transaction at issue in this case. In addition, Taylor testified that he had participated in a drug-counseling program in 1995 and that he did not return to drug use until April 1998.[37] These intervening *770 events, together with the length of time between Taylor's previous convictions and the present charges are factors to be considered in determining whether Taylor's 1990 and 1993 convictions may be too remote and, therefore, irrelevant to his predisposition in March 1999. On remand, the trial court should consider whether Taylor's convictions are too remote to be relevant to Taylor's predisposition in March 1999 and wait to do so until both the defendant and the State have an opportunity to present all of the circumstances bearing on the issue.
III
Taylor next argues that the trial court erroneously admitted testimony of a police officer who testified that he "observed a lot of foot and vehicular traffic" in front of Taylor's residence and that he could "see people running or walking quite fast towards the back of [Taylor's] residence into the wooded area" as his marked police car approached.[38] In addition, the officer stated that Taylor's street is a "high crime or drug area."[39] We review the Superior Court's decisions to admit or exclude evidence for abuse of discretion.[40]
Taylor contends that the only inference that this testimony supports is that people congregated near Taylor's house in order to purchase drugs from him. Taylor argues that this inference is improper because the officer did not see anyone enter the house and did not witness any drug transactions. The State counters and the trial court found that this testimony is relevant circumstantial evidence tending to show that Taylor regularly sold drugs from his residence and thus was predisposed to sell drugs to the undercover officer.
The primary question here is whether the jury may reasonably infer that Taylor regularly conducted drug transactions based on (1) the number of people loitering near his house, (2) the reaction of these people to an approaching police officer, and (3) the characteristics of the neighborhood. If the jury may properly infer that Taylor regularly sold drugs, the officer's testimony is relevant in determining whether Taylor was predisposed to sell drugs at the time of the March 1999 transaction.[41] The State's relevance argument, however, requires the jury to make several substantial logical leaps to reach the conclusion that Taylor regularly sold illegal drugs. The jury had to infer: (1) that people avoid approaching officers only if they are engaged in illegal conduct,[42] (2) *771 that these persons generally congregate in high crime neighborhoods to buy or sell drugs, and (3) that these facts would generate heavy foot traffic near a drug dealer's home.
Relevant evidence may be excluded "if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues or misleading the jury ... or needless presentation of cumulative evidence."[43] Immediately after the officer testified, however, the trial court instructed the jury that it could consider the officer's testimony only in connection with Taylor's entrapment defense. The court's instruction effectively minimized the likelihood that the jury would improperly infer that Taylor is a bad person and thus minimized the potential for unfair prejudice to Taylor. The trial court's carefully crafted timely limiting instruction[44] was based on its broad discretion to admit or exclude evidence under D.R.E. 403.[45] Although the function of the jury is to make common sense judgments and inferences about behavior,[46] it is questionable whether this series of logical steps is too tenuous to form the basis for a reasonable inference by the jury.[47] Nevertheless, the trial court's decision to admit the officer's testimony does not defy logic nor ignore settled principles of law. Thus, we find that the trial court did not abuse its discretion by admitting the officer's testimony.
IV
Taylor argues that the Superior Court abused its discretion by admitting the cocaine into evidence because there were inconsistencies and irregularities in its identification. At trial, the State offered as evidence a small amount of crack cocaine that the State asserted was the subject of the transaction between Taylor and the undercover police officer. Taylor challenged the authenticity of this evidence on three grounds: (1) the conflicting testimony by State witness concerning whether the cocaine was wrapped in plastic, (2) the apparent difference between the single piece of cocaine sold by Taylor and the multiple pieces presented at trial and (3) a crossed-out address and case number on the evidence tag. When viewed together, Taylor argues, these irregularities indicate that the cocaine introduced at trial was not the cocaine that Taylor sold to the undercover officer. The trial court found (1) that the discrepancy concerning the packaging of the cocaine was the result of "faulty memory," (2) that the single piece sold by Taylor probably crumbled into multiple pieces and (3) that the irregularities on the evidence tag were simply clerical *772 mistakes. The trial court admitted the evidence and permitted the jury to consider these irregularities in determining the proper weight of the evidence. This Court reviews the Superior Court's determination under D.R.E. 901(a) that an offering party has properly authenticated evidence for an abuse of discretion.[48]
Under D.R.E. 901(a), a party seeking to offer evidence must first produce "evidence sufficient to support a finding that the matter in question is what the proponent claims." The State must therefore provide a "rational basis from which the jury may conclude" that the evidence offered at trial is authentic.[49] This requirement does not eliminate the "necessity of showing the chain of custody of exhibits in criminal proceedings,"[50] which "indirectly establishes the identity and integrity of the evidence by tracing its continuous whereabouts."[51] Stated differently, these rules require the State to establish "as a matter of reasonable probability" that the police did not misidentify, exchange, or tamper with the evidence offered at trial.[52]
Given this standard,[53] we find that the Superior Court did not abuse its discretion. The State presented sufficient testimony from which the jury could rationally conclude that the cocaine offered at trial was the cocaine that Taylor sold to the undercover police officer. In particular, Officer Rust testified that the undercover officer returned from Taylor's house after about twelve minutes and immediately gave Officer Rust the cocaine. Officer Rust then wrapped the cocaine in plastic and put the package in his date book. Officer Rust field tested the cocaine, placed the cocaine in a sealed envelope indicating its origin, and placed the envelope in the police safe for delivery to the medical examiner. The State also presented evidence that crack cocaine often breaks into smaller pieces when it is handled. Based on this chain-of-custody testimony, the jury could find that the cocaine evidence was authentic despite confusion about the packaging of the cocaine and the fact that the State offered multiple pieces of cocaine rather than one piece.[54]
Taylor also challenges the authenticity because the evidence tag indicated that the cocaine initially had a different case number.[55] The State counters that the irregularities on the evidence tag were simply "clerical errors." The trial court found sufficient testimony to support this. Officer Rust testified that he initially recorded the wrong address on the evidence tag and later corrected the error. Although the irregularities that Taylor has identified are *773 cause for concern, the chain-of-custody testimony indicates a low likelihood of misidentification or tampering.[56] As a result, the trial court did not abuse its discretion in admitting the pieces of cocaine offered by the State.
Conclusion
In conclusion, because we find that the trial court should not have admitted Taylor's two prior convictions in the State's case-in-chief and that the trial court prematurely considered whether these convictions may be too remote to be relevant to Taylor's predisposition by failing to wait until all of the actual circumstances touching on predisposition had been introduced in both the State and the defendant's cases, we reverse the judgment of the Superior Court and remand this case for a new trial.
BERGER, Justice: Dissenting.
For more than a decade, Getz controlled the admissibility of prior "bad acts." Until the Milligan decision last year, counsel and trial judges relied on Getz as authority for the State to introduce such evidence during its case-in-chief as long as the State could demonstrate a "reasonable anticipation" that the evidence of other crimes would be "material to an issue or ultimate fact in dispute in the case."[57] In Milligan, and more emphatically in this case, we have modified Getz by holding that the State may introduce prior bad acts evidence in its case-in-chief only if the evidence is relevant to an element of the State's prima facie case.
I agree with the majority that this modification to our law is reasonable and appropriate. But I cannot join in its conclusion that failure to follow this newly announced timing rule constituted prejudicial error mandating a new trial in this case. Assuming that the evidence of Taylor's prior crimes would have been admissible if presented to the jury during cross-examination of Taylor, instead of during the State's case-in-chief, the prejudice to Taylor is minimal. The majority says that, especially in a case like this, where the defendant is admitting the crime and raising an entrapment defense, there should be nothing to impair the defendant's credibility before he gets to present his defense to the jury. The majority then divines that the jury was "steeled" against Taylor, confused, and closed minded all because it heard about Taylor's prior drug convictions before it heard about his efforts at rehabilitation.
The majority's conclusions are not supported by any record evidence. When the trial court told the jury about Taylor's prior convictions, it also instructed the jury that the convictions were being made part of the record solely as they might relate to the defense of entrapment. Right after that, Taylor began his defense by taking the stand and trying to explain how he was induced to sell the cocaine to his friend. On cross examination, the prosecutor focused on Taylor's drug addiction, *774 his prior involvement as a "runner" for drug dealers, and the high cost of maintaining his habit. All of this information, which was not at all complicated or hard to follow, was presented to the jury within a matter of hours. What is it about this sequence of events that would confuse the jury?
If the real problem is that the jury was steeled against Taylor because it heard about his criminal past before it got a chance to assess his credibility as a witness, then our whole criminal justice system is in trouble. Juries always hear the State's case first and they are instructed to withhold judgment until all the evidence is in. By the time a criminal defendant takes the witness stand, if the chooses to, most juries have heard a lot of negative information that would undermine their view of the defendant's credibility. Yet we expect juries to remain open minded. In this case, where Taylor voluntarily explained his long history of criminal activity (cocaine addiction/use), how prejudicial could it be for the jury to learn about his prior convictions before Taylor began testifying instead of learning that fact on cross-examination? To be sure, there could be a case where, because a defendant changes his defense strategy at the last minute, the premature introduction of prior convictions would be highly prejudicial. But this is not such a case. Taylor has never argued that he wanted to rely on a defense other than entrapment.
In short, the evidence against Taylor was strong so strong that his only defense was entrapment. In arguing entrapment, Taylor had to convince the jury that, although he was a drug user, he was not a drug seller. Since Taylor acknowledged that he worked on "odd jobs" (when he worked at all), received food stamps, and had a drug habit that could cost as much as $500 per day, it is not surprising that the jury rejected his entrapment defense. There simply is no reason to believe that the timing of the disclosure of Taylor's prior convictions influenced the verdict and I would affirm the convictions.
NOTES
[1] This issue requires us to reconsider language in Getz v. State, 538 A.2d 726, 734 (1988) based on two recent decisions in Milligan v. State, Del.Supr., 761 A.2d 6 (2000) and Cobb v. State, Del.Supr., 765 A.2d 1252, Veasey, C.J. (2001) regarding the introduction of prior bad act evidence during the State's case-in-chief where the State can "demonstrate the existence, or reasonable anticipation, of such a material issue."
[2] See Taylor v. State, Del.Supr., No. 64, 2000, Veasey, C.J. (Feb. 28, 2001) (ORDER).
[3] 538 A.2d 726, 734 (1988).
[4] Del.Supr., 761 A.2d 6 (2000).
[5] Del.Supr., 765 A.2d 1252 (2001).
[6] For example, defense counsel stated: "Now, we understand that in a[sic] entrapment defense, that that's why we are having this argument, because we are using an entrapment defense ...." Appx. to Appellant's Op. Br. at A-31. Similarly, in its ruling, the court noted that: "Under Rule 404(a)(1), ... when the defendant offers evidence of a pertinent trait of his character, which I think they are doing here by electing the entrapment defense, then the prosecution does have the right to rebut that." Id. at A-34.
[7] The State's citation to State v. Porter, Del.Super., 587 A.2d 188, (1990) is mistaken because the Superior Court's opinion does not refer to a specific defense objection to the admission of the contested evidence in the State's case-in-chief. Instead, the court indicated that its decision was in response to a defense objection to "to any statements the State intends to offer concerning hearsay statements ... containing alleged death threats directed to her by the defendant." Based on case law from other jurisdictions, the court concluded that such evidence is admissible only "admitted in rebuttal after evidence of accident, self-defense, suicide or extreme emotional distress has been presented by the defense." Id. at 193. See Supr. Ct. R. 8.
[8] See Getz, 538 A.2d at 734; see also Cobb v. State, Del.Supr., 765 A.2d 1252, 1254 (2001) ("As we have held, the State may introduce bad acts evidence that `is material to an issue or ultimate fact in dispute in the case' as part of its case-in-chief if it demonstrates `the existence, or reasonable anticipation, of such a material issue.'") (quoting Getz, 538 A.2d at 734).
[9] See Deshields v. State, Del.Supr., 706 A.2d 502, 507 (1998) ("[I]f other crime evidence is admitted during the State's case-in-chief to prove the charged offense, it must have independent logical relevance and the jury should be carefully instructed regarding the limited purpose for which it can be considered.") (citing Getz, 538 A.2d at 730-31, 734).
[10] 761 A.2d at 8.
[11] Id.
[12] Id. Among the cases cited by the State to support its argument that the State is entitled to offer evidence in its case-in-chief to rebut anticipated defense arguments is United States v. Miller, D.C.Cir., 895 F.2d 1431, 1435 n. 9 (1990). In Miller, the D.C. Circuit permitted the government to introduce evidence of the defendant's prior bad acts during its case-in-chief in order to impeach witness testimony implicating the defendant in a check-forging scheme. Although the court did not specify the rationale for its decision, the holding in Miller runs counter to this Court's decision in Milligan.
[13] Milligan, 761 A.2d at 8.
[14] Getz, 538 A.2d at 734.
[15] All but two of the cases cited by the State (which are discussed supra note 12 and infra note 24), are consistent with a rule permitting the prosecution to introduce evidence of the defendant's prior bad acts during the State's case-in-chief only where the evidence is related to the prosecution's prima facie case. See, e.g., United States v. Burchinal, 8th Cir., 657 F.2d 985, 993 (1981) ("Where intent or guilty knowledge are elements of the crime charged, evidence of other crimes or acts tending to establish those elements is generally admissible. Furthermore, `(t)he government need not await the defendant's denial of intent before offering evidence of similar acts relevant to that issue."') (citations omitted); United States v. Mills, 2nd Cir., 895 F.2d 897, 907 (1990) (finding that the trial court properly admitted evidence of prior crimes during the State's case-in-chief to prove the defendant's intent to counterfeit because the defendant "raised the issue of intent in his opening to the jury"); United States v. Hooton, 9th Cir., 662 F.2d 628, 635 (1981) ("[E]ven in general intent crimes, the government can offer evidence of other acts as part of its case-in-chief when it is obvious that the defense will raise lack of intent as a defense."); United States v. Cohen, 2nd Cir., 489 F.2d 945, 950 (1973) ("[S]ince appellant had in his opening statement put into issue his motive and intent to commit the crimes charged, evidence of prior similar acts and involvement on appellant's part in allegedly illegal JDL activities was admissible on this issue [during the government's case-in-chief]."); United States v. Escobar, 8th Cir., 50 F.3d 1414, 1422 (1995) (finding that evidence of defendant's bad acts was admissible during the government's case-in-chief because the evidence was relevant to the defendant's intent); United States v. Aranda, 8th Cir., 963 F.2d 211, 215 (1992) ("[T]he [prior bad act] evidence was relevant to show the plan of the conspiracy, and thus its existence, and to show that Aranda knowingly and purposefully participated in this conspiracy.... to establish a violation of 21 U.S.C. § 846."); United States v. Evans, 8th Cir., 697 F.2d 240, 248 n. 8 (1983) ("Contrary to Evans' assertion the government is entitled to put this evidence on in anticipation of a defense of lack of intent."); Foy v. State, Tex. Crim.App., 593 S.W.2d 707, 709 (1980) ("[W]e hold that evidence of prior extraneous offenses committed against the victim of the offense charged, and indicating the existence of ill will or hostility toward the victim, is admissible as part of the State's case in chief as circumstantial evidence of the existence of a motive for committing the offense charged."); Thompson v. United States, D.C. Ct.App., 546 A.2d 414, 423-24 & n. 16 (1988) (holding that "the government may not be permitted to introduce other crimes evidence in its case in chief to prove intent" unless the defense disputes intent during opening statements).
[16] See Getz, 538 A.2d at 732.
[17] Id. at 731.
[18] In Getz, the Court held that evidence of the defendant's alleged uncharged sexual contact with the victim was not relevant to the defendant's motive, intent, or common scheme to commit the crime charged. See Getz, 538 A.2d at 732-34. In rejecting a proposed "sexual gratification" exception to Rule 404(b) in incest cases, the Court noted that other courts have criticized this exception because "such evidence bears upon an issue which is not an element of the offense and concerning which the State has no burden." Id. at 733.
[19] See 11 Del.C. § 304.
[20] In Deshields, 706 A.2d at 507, for example, the State offered evidence of the defendant's use of a deadly weapon in a prior crime to prove that the defendant "display[ed] what appear[ed] to be a deadly weapon" as part of the State's prima facie case against the defendant for first degree robbery. The Court held that the prior crime evidence was inadmissible in the State's case-in-chief because it was not independently relevant to this element of first degree robbery particularly since the victim's testimony presented sufficient direct testimony to satisfy the State's burden with respect to that element. See id. at 507-08. The Second Circuit has likewise noted that "it is usually preferable for the trial court to await the conclusion of the defendant's case before admitting similar act evidence" because "the court will best be able to judge the prosecutor's need for the evidence after the defense; at that time the court may best weigh the probative value of the evidence against its prejudicial effect." United States v. Danzey, 2nd Cir., 594 F.2d 905, 912 (1979). The Second Circuit in Danzey went on to note that prior bad act evidence was nevertheless admissible in that case because "it was abundantly clear to the trial judge before the case began that the only major issue was the identity of the robbers." Id.
[21] Similarly, if the defense indicates that it will present evidence during its case to impeach the testimony of a State witness (as in Milligan and Cobb), there is no concern that the State will not have the "predicate issue" to justify offering further evidence to refute the defense evidence during the State's rebuttal case.
[22] The legislature has established entrapment as an affirmative defense with the concomitant burden of proof on the defendant rather than as an element of an offense to be negated in the State's prima facie case. See 11 Del.C. § 432(a).
[23] Arguments by counsel during opening statements and summation are not evidence and thus cannot be said to raise an affirmative defense. Cf. Milligan 761 A.2d at 8 (holding that evidence of a later sexual encounter that triggered the delayed report was admissible "only after Milligan had in fact introduced evidence of `late reporting'" to impeach the victim's testimony).
[24] Cf. United States v. Bailey, D.C.Cir., 505 F.2d 417, 420-21 (1974) (finding that trial court should have required a proffer of the prosecution evidence of the defendant's prior crimes in part because the trial court should determine "whether it might be more desirable to defer admitting the evidence until the government's rebuttal" but finding that the court's error was harmless). The Seventh Circuit has rejected a rule requiring the prosecution to present bad act evidence in rebuttal, holding that "[w]hen the entrapment defense is clearly raised in the defense's opening statement and the entrapment defense obviously materializes through a defendant's presentation of its own witnesses or through cross-examination of the government's witnesses, it is not error for the government to present evidence of predisposition in its case-in-chief." United States v. Goodapple, 7th Cir., 958 F.2d 1402, 1407 (1992). The Seventh Circuit thus permits the prosecution to present evidence to rebut an entrapment defense so long as the defendant eventually presents the entrapment defense. See id. (distinguishing a case in which the prosecution offered bad act evidence to rebut an anticipated entrapment defense "that never actually materialized").
[25] Getz, 538 A.2d at 734.
[26] 11 Del.C. § 432(a) provides: "it is an affirmative defense that the accused engaged in the proscribed conduct because the accused was induced by a law-enforcement official or the law-enforcement official's agent... to engage in the proscribed conduct ... when such person is not otherwise disposed to do so."
[27] Although D.R.E. 404(b) does not explicitly permit evidence of prior bad acts to prove predisposition, the list of permissible uses in Rule 404(b) is not exclusive. See Smith v. State, Del.Supr., 669 A.2d 1, 5 (1995) ("This list offers examples of purposes for which evidence of prior wrongs could be admitted; it is not exclusive.") (citations omitted). Other states have determined that Rule 404(b) covers evidence that is relevant to the defendant's predisposition at the time of the crime. See, e.g., State v. DeWolfe, 121 R.I. 676, 402 A.2d 740, 744 (1979) (affirming admission of prior drug sales to prove predisposition to engage in drug offense); State v. Dolce, 41 N.J. 422, 197 A.2d 185, 191 (1964) ("Predisposition is evidenced by previous conviction of crime, reputation for criminal activities...."); State v. Shuck, Tenn.Supr., 953 S.W.2d 662, 670 (1997) ("Factors relevant to determining a defendant's predisposition include the character or reputation of the defendant, including any prior criminal record....").
[28] Specifically, the court instructed the jury that the convictions "are introduced solely as they may relate in your deliberations to the defense of entrapment ...."
[29] Allen v. State, Del.Supr., 644 A.2d 982, 988 (1994).
[30] Kendall v. State, Del.Supr., 726 A.2d 1191, 1195 (1999) (quoting Lloyd v. State, Del.Supr., No. 239, 1990, Walsh, J. (Nov. 6, 1991), Order at ¶ 6).
[31] Trowbridge v. State, Del.Supr., 647 A.2d 1076, 1078 (1994) (citations omitted).
[32] See, e.g., Santini v. State, Del.Supr., No. 88, 1994, Berger, J. (July 7, 1995) (ORDER), Order at ¶ 11 (affirming decision to admit 1985 conviction for possession with intent to deliver heroin during trial for 1992 cocaine trafficking charges); Moorhead v. State, Del. Supr., 638 A.2d 52, 54-55 (1994) (affirming decision to admit DUI convictions between three and six years before charges of second-degree murder by automobile).
[33] Del.Supr., 442 A.2d 1377, 1386 (1982); see also Atkins v. State, Del.Supr., 523 A.2d 539, 547 (1987) (citing Harrison with approval); cf. United States v. Catanzaro, 3rd Cir., 407 F.2d 998, 1001 (1969) ("The basic question in an alleged entrapment case is whether the accused was ready and willing to commit the crime if an opportunity should be presented, or whether a person not otherwise disposed to wrongdoing was corrupted by some overreaching or special inducement, often amounting to reprehensible conduct, by public officers or those acting in concert with them.").
[34] Allen v. State, Del.Supr., 644 A.2d 982, 988 (1994); see also Kendall v. State, Del.Supr., 726 A.2d 1191, 1195-96 (1999) ("We recognize that this Court in the past has analogized the `too-remote' factor in Getz to the ten-year time limit contained in D.R.E. 609(b) governing impeachment by evidence of conviction of a crime. But we have noted that this is not a bright line rule.") (footnotes omitted).
[35] Cf. Allen, 644 A.2d at 988 (endorsing a "sliding scale" approach balancing remoteness with relevance).
[36] Cf. United States v. White, 6th Cir., 390 F.2d 405, 406 (1968) ("[E]ven if the arrest without prosecution and conviction were probative of prior illegal narcotic activity, the episode occurred eight years before the acts charged in the indictment ... [and] was not only probative of nothing relevant but was also too remote [to prove the defendant's predisposition].") (citing Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958)). This rule is consistent with the holding in Kendall, 726 A.2d at 1195, because the rule acknowledges that the remoteness inquiry depends on the nature of the issue to be proved. In Kendall, the Court found a twelve-year-old conviction relevant because it established a pattern of activity that was relevant "to prove Kendall's criminal intent to steal from the homebuyers and others" because the evidence "demonstrate[d] a continuous flow of related illicit activity spanning nearly 12 years." Id. at 1195-96. Whereas the "pattern of racketeering" that the State sought to prove in Kendall required evidence of misconduct that is more than ten years old, similarly remote convictions are not necessarily relevant to a defendant's predisposition at the time of a specific transaction.
[37] Cf. Sherman v. United States, 356 U.S. 369, 375-76, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958) ("[A] nine-year-old sales conviction and a five-year-old possession conviction are insufficient to prove petitioner had a readiness to sell narcotics at the time Kalchinian approached him, particularly when we must assume from the record he was trying to overcome the narcotics habit at the time."). The State's attempt to distinguish Sherman from the present case relies primarily on facts in each case that do not relate to the remoteness of the convictions to the alleged transactions.
[38] Appx. to Appellant's Op. Br. at A-20 to A-22.
[39] Id. at A-21. The officer presented this testimony after the trial court held voir dire to rule on Taylor's relevance objection. The trial court held that the officer could testify about facts within his personal knowledge but that the officer could not testify about a tip he received concerning foot traffic around Taylor's residence. (A38, B36).
[40] See Williamson v. State, Del.Supr., 707 A.2d 350, 354 (1998).
[41] D.R.E. 401 provides: "`Relevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence."
[42] But see Quarles v. State, 696 A.2d 1334, 1341 (1997) (Veasey, C.J., dissenting) ("[T]o assume that innocent persons have no reason to fear sudden approach by police ignores the experiences of many members of minority groups.") (citations omitted).
[43] D.R.E. 403.
[44] See Sawyer v. State, Del.Supr., 634 A.2d 377, 380 (1993) (observing that testimony is less likely to undermine the fairness of the trial where the court issues an effective instruction).
[45] See Smith v. State, Del.Supr., 560 A.2d 1004, 1007 (1989).
[46] See generally Gannett Co., Inc. v. State, Del.Supr., 571 A.2d 735, 762 (1989) ("The jury represents the public, bringing the public's values and common sense to bear upon the problems of justice.").
[47] See Bishop v. State, Del.Supr., No. 257, 1990, Holland, J. (April 30, 1991) (ORDER) Order at ¶ 7 ("[The defendant's state of mind] may be shown not only by direct proof, but also by such inferences as may be reasonably drawn from the evidence adduced."); cf. Gannett Co., Inc. v. Kanaga, Del.Supr., 750 A.2d 1174, 1188 (2000)("While the plaintiff is entitled to the benefit of reasonable inferences from established facts, the jury cannot supply any omission by speculation or conjecture.").
[48] See Demby v. State, Del.Supr., 695 A.2d 1127, 1133 (1997).
[49] Whitfield v. State, Del.Supr., 524 A.2d 13, 16 (1987) (quoting United States v. Natale, 2nd Cir., 526 F.2d 1160, 1173 (1975), cert. denied 425 U.S. 950, 96 S.Ct. 1724, 48 L.Ed.2d 193 (1976)).
[50] D.R.E. 901 cmt.
[51] Whitfield v. State, Del.Supr., 524 A.2d 13, 16 (1987).
[52] Id.
[53] See Whitfield, 524 A.2d at 16.
[54] The State presented (and this Court accepted) essentially the same chain-of custody evidence in Demby v. State, Del.Supr., 695 A.2d 1127, 1131-32 (1997); see also id. at 1131 ("[T]he State must simply demonstrate an orderly process from which the trier of fact can conclude that it is improbable that the original item has been tampered with or exchanged.").
[55] See Whitfield, 524 A.2d at 16 ("`Courts need [to] exercise greater care when the issue concerns the very identity of the evidence, rather than just possible changes in its condition.'") (quoting United States v. Lampson, 7th Cir., 627 F.2d 62, 65 (1980)).
[56] Cf. Tricoche v. State, Del.Supr., 525 A.2d 151 (1987). The present case is thus distinguishable from United States v. Ladd, 1st Cir., 885 F.2d 954 (1989). In Ladd, the First Circuit excluded mislabeled blood samples because "the chain of custody binding the samples was so seriously flawed as to leave no reliable foundation for admission of the test results." Ladd, 885 F.2d at 956. This case is also unlike Whitfield, in which this Court reversed the Superior Court's decision to admit a weapon because the "whereabouts of the admitted weapon were unaccounted-for for three and one-half months following the robbery" and because a third person had possession of the weapon during that period. Whitfield, 524 A.2d at 17.
[57] Getz v. State, Del.Supr., 538 A.2d 726, 734 (1988).
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45 F.3d 423NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished opinions may be cited only in related cases.
Dennis G. BEZANSON, Trustee of Estate of Unitex, Inc.,Plaintiff, Appellee,v.FLEET BANK OF NEW HAMPSHIRE, Defendant, Appellant.
No. 94-2015
United States Court of Appeals,First Circuit.
Jan. 4, 1995
Appeal from the United States District Court for the District of New Hampshire [Hon. Paul J. Barbadoro, U.S. District Judge ]
Francis L. Cramer, Valerie A. Walsh, Sullivan & Gregg, on brief for appellant.
Graydon G. Stevens, Kelly, Remmel & Zimmerman, on brief for appellee.
D.N.H.
AFFIRMED.
Before TORRUELLA, Chief Judge, CYR and BOUDIN, Circuit Judges.
PER CURIAM.
1
In March 1993, a jury returned a verdict in favor of appellee Dennis Bezanson, trustee of the estate of Unitex, Inc., in his suit against Fleet Bank-NH, successor of Indian Head National Bank. Bezanson alleged that Indian Head had violated its duty under New Hampshire law by failing to dispose of the assets of Unitex in a commercially reasonable manner. The jury awarded the trustee $379,779.21 in damages. Upon Fleet's post-trial motion for judgment as a matter of law, the district court held that, although sufficient evidence supported the finding of liability, Fleet was entitled to judgment as a matter of law because the trustee had not proven damages with "reasonable certainty." On appeal, this court held that the evidence was adequate to support the jury verdict both as to the issue of liability and that of damages. It therefore reversed the judgment and remanded the matter to the district court for further proceedings. Bezanson v. Fleet Bank-NH, 29 F.3d 16 (1st Cir. 1994). Fleet then moved in the district court for a new trial on the ground that there was insufficient evidence to support the verdict. The motion was denied and Fleet now appeals.
2
Fleet is correct that this court's decision that it was not entitled to judgment as a matter of law does not preclude Fleet's prevailing on its motion for a new trial in the district court. A "district court may order a new trial even where the verdict is supported by substantial evidence." Lama v. Borras, 16 F.3d 473, 477 (1st Cir. 1994) (emphasis in original). On the other hand, "there is no rule that the district court must do so." Id. (emphasis in original). Rather, the decision rests in the discretion of the trial court and this court will reverse a denial of a motion for a new trial "only in a very unusual case," id. (citations omitted), where the "verdict is so clearly mistaken, so clearly against the law or the evidence, as to constitute a miscarriage of justice," Levesque v. Anchor Motor Freight, Inc., 832 F.2d 702, 703 (1st Cir. 1987). Furthermore, when the motion for a new trial rests on the claim that the evidence was insufficient to support the verdict, a denial of a motion for a new trial is reviewed by a standard "essentially coterminous" with that used in reviewing a judgment as a matter of law. Lama, 16 F.3d at 477; Levesque, 832 F.2d at 703 (in reviewing denial of a new trial, appellate court considers "relevant testimony in the light most flattering to the appellees and draw[s] all legitimate inferences in their favor"); Robinson v. Watts Detective Agency, Inc., 685 F.2d 729, 741 (1st Cir. 1982) (motion for a new trial based on insufficiency of evidence "is subject to a standard of review as strict as that for a [judgment as a matter of law]"), cert. denied., 459 U.S. 1105 (1983).
3
We have reviewed the record in this case, the judgment of the district court and the parties briefs. Essentially for the reasons stated in our earlier opinion in which we held that Fleet was not entitled to a judgment as a matter of law, Bezanson v. Fleet Bank-NH, 29 F.3d 16, we find that the jury verdict was not a "miscarriage of justice." Therefore, the judgment of the district court is summarily affirmed. See 1st Cir. Loc. R. 27.1. Appellee's request for sanctions is denied.
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103 P.3d 683 (2005)
197 Or. App. 118
Shane Ian SOPHER, Petitioner,
v.
BOARD OF PAROLE AND POST-PRISON SUPERVISION, Respondent.
A108517.
Court of Appeals of Oregon.
Argued and Submitted July 31, 2003.
Decided January 12, 2005.
Walter Ledesma, Deputy Public Defender, argued the cause for petitioner. On the briefs were David E. Groom, Acting Executive Director, and Beth Corbo, Deputy Public Defender, Office of Public Defense Services.
Janet A. Metcalf, Assistant Attorney General, argued the cause for respondent. With her on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.
Before HASELTON, Presiding Judge, and LINDER and WOLLHEIM, Judges.
PER CURIAM.
Petitioner is in prison serving a life sentence for an aggravated murder that he committed in 1992, when he was under 17 years of age. The board held a prison term hearing and, pursuant to OAR XXX-XXX-XXXX(4), established a prison term for petitioner and a review date. In particular, the board's order established a prison term of 400 months and a murder "review date" of November 27, 2025. The board's order was mailed to petitioner on November 22, 1999, and petitioner timely sought judicial review. The board moved to dismiss the petition, arguing that the challenged order is not subject to review because it was not an order "setting an initial release date," as ORS 144.335(3)(a) (1999), amended by Or. Laws 2001, ch 661, § 1, requires. By order, we denied the motion to dismiss, citing our decision in Engweiler v. Board of Parole, 170 Or.App. 653, 13 P.3d 1009 (2000).
On our own motion, we reconsider our order denying the motion to dismiss. For the reasons stated in Engweiler v. Board of Parole, 197 Or.App. 43, ___ P.3d ___ (2005), we now grant the board's motion.
Petition for judicial review dismissed.
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87 Ariz. 21 (1959)
347 P.2d 578
Hyman WEISS, Petitioner,
v.
INDUSTRIAL COMMISSION of Arizona, and Skaggs Manufacturing Company, Respondents.
No. 6706.
Supreme Court of Arizona.
December 16, 1959.
*22 Stephen S. Gorey, Phoenix, for petitioner.
John R. Franks, Phoenix, for respondent Industrial Commission, Donald J. Morgan, James D. Lester, Frances M. Long, and Edward E. Davis, Phoenix, of counsel.
UDALL, Justice.
This case arises under the Workmen's Compensation Law, A.R.S. Title 23, Ch. 6, § 23-901 et seq. It is before us for review on a writ of certiorari heretofore issued to the Industrial Commission of Arizona (hereinafter referred to as Commission) to determine whether that tribunal erred, as a matter of law, in its application of the pertinent statutes to the conceded facts. The precise question of law raised is whether the term "partial loss of use" as set forth in A.R.S. § 23-1044(B) (21), which prescribes the means of computing the compensation to be awarded in cases of scheduled injuries refers to a percentage of physical functional disability or to a proportional loss of capability of the injured employee to perform the work previously done by him.
The relevant facts are not in dispute and may be briefly stated as follows:
The petitioner, Hyman Weiss, a man 54 years of age, was employed by respondent Skaggs Manufacturing Company as a lather. On October 8, 1957, in the course of his employment, he lifted a bundle of metal lath, thereby incurring an injury to his right (major) arm, described by the examining physicians as "a partial rupture of the biceps brachii muscle." The Commission promptly assumed jurisdiction and found the claim to be compensable. Accident benefits were allowed and compensation, first for total temporary disability and later partial temporary disability was awarded covering the period October 9, 1957 to March 15, 1958 in the total sum of $1,419.08.
After extended treatment had failed to effectively relieve his injury, a three-man *23 examining medical board was appointed, one of whom was petitioner's own doctor. This consultation resulted in a unanimous finding that petitioner's condition had become stationary and that: "As a result of the injury in question, the patient has sustained a partial permanent disability amounting to a 20% functional loss of the right arm." This finding of fact is not disputed. The medical evidence further indicated that the nature of the injury was such that it was unlikely the petitioner would ever be able to resume his former work, i.e., as a lather. Pursuant to these findings, the Industrial Commission, on March 28, 1958, awarded compensation for a scheduled injury based on the statute (A.R.S. § 23-1044), i.e., 50% of petitioner's average monthly wage, to be paid monthly for a period of 12 months (20% of the maximum period of 60 months required for a complete loss of use.) Petitions for rehearing were denied. The award was based upon the premise that the proration required by A.R.S. § 23-1044 (B) (21) in the case of a partial loss of use of a member covered by the statutory schedule was accomplished by setting the percentage of physical disability (in this case 20%) against the compensation period established for a total loss of use. Petitioner challenges this premise and attacks the award as being contrary to law because based upon an allegedly faulty assumption.
The pertinent subsections of A.R.S. § 23-1044(B) are as follows:
13. "For the loss of a major arm, sixty months, or of a minor arm, fifty months."
21. "For the partial loss of use of a * * * arm, * * *, fifty per cent of the average monthly wage during that proportion of the number of months in the foregoing schedule provided for the complete loss of use of such member, * * *, which the partial loss of use thereof bears to the total loss of use of such member * * *."
Petitioner contends that the term "partial loss of use", in the context of this statute, refers to a partial loss of capability to do the job formerly done by the injured workman, rather than to a percentage physical functional disability, and that since in this case he has been rendered wholly unable to resume his previous employment, his is not a partial loss but a complete loss of use and is compensable as such for the maximum statutory period, i.e., five years (A.R.S. § 23-1044 (B) (13).
In support of this position petitioner cites cases from Texas, Louisiana, and Pennsylvania. The cases relied upon involve the construction of statutes which differ materially from our own. In the area of Workmen's Compensation the underlying law is almost entirely statutory, *24 and the statutes vary from state to state. Under such circumstances, decisions from jurisdictions with dissimilar statutes are not persuasive.
In evaluating the merits of petitioner's claim, it would be well first to examine the history of this statutory section. The original Workmen's Compensation Law, enacted in 1925, contained the same provision in the identical language (Sec. 70, subd. C, par. 2(u), Ch. 83, L. '25). In the thirty-four years succeeding this enactment, the term "partial loss of use" in the scheduled categories has been uniformly construed by the Commission which has been charged with the administration of this law as referring to a percentage of physical functional disability. Innumerable cases have arisen and awards granted based upon this construction. These have been upheld by this Court. While the basic law has been frequently amended the legislature has never questioned such interpretation by amending this subsection of the law. Such long-established construction and continued legislative acquiescence must weigh heavily against the change now sought to be initiated.
It has been frequently held that legislative acquiescence in a judicial construction of a statute is sufficient to effect an incorporation of that construction into the statute. See, Steward v. Industrial Commission, 69 Ariz. 159, 211 P.2d 217. Cf. Local 266, I.B.E.W. v. Salt River Project Agr. Imp. P. Dist., 78 Ariz. 30, 275 P.2d 393. Although an administrative construction may not merit equal force, it is certainly entitled to some weight. Haggard v. Industrial Commission, 71 Ariz. 91, 223 P.2d 915. Compare, Costanzo v. Tillinghast, 287 U.S. 341, 53 S.Ct. 152, 77 L.Ed. 350; Coca Cola Co. v. State Board of Equalization, 25 Cal.2d 918, 156 P.2d 1.
It must be understood that what the petitioner prays for is not an initial construction of an ambiguous statutory term, but rather a change in the law as it has been understood and applied for more than three decades. Petitioner insists that the precise point here involved has never been passed upon by this Court. Perhaps it is true that we have never said in so many words that the construction adopted by the Commission is correct; still, on a number of occasions we have followed that interpretation and have tacitly at least stamped it with our approval. See, e.g., Morris v. Industrial Commission, 81 Ariz. 68, 299 P.2d 652; Scott v. Industrial Commission, 80 Ariz. 280, 296 P.2d 954; Smith v. Industrial Commission, 69 Ariz. 399, 214 P.2d 797; Shaw v. Salt River Valley Water Users Ass'n, 69 Ariz. 309, 213 P.2d 378; Rose v. Industrial Commission, 52 Ariz. 466, 83 P.2d 786; Muehlebach v. Dorris-Heyman Furn. Co., 43 Ariz. 526, 33 P.2d 339; Ujevich v. Inspiration Consol. Copper Co., 42 Ariz. 276, 25 P.2d 273; *25 Six Companies, Inc. v. Industrial Commission, 41 Ariz. 366, 18 P.2d 913. Be that as it may, the fact remains that a decision at this late date in accord with the views pressed by petitioner would, we believe, not be an interpretation of the law, but rather an alteration of it. As we see it, the question is not what meaning can be put on the statutory words, but whether this Court by judicial fiat should make a change in the law under the guise of a statutory construction. Such would be an unwarranted encroachment upon the province of the legislature.
Award affirmed.
PHELPS, C.J., and STRUCKMEYER, JOHNSON and BERNSTEIN, JJ., concur.
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711 A.2d 1330 (1998)
350 Md. 308
INFORMED PHYSICIAN SERVICES, INC.
v.
BLUE CROSS AND BLUE SHIELD OF MARYLAND, INC.
No. 130, Sept. Term, 1997.
Court of Appeals of Maryland.
June 26, 1998.
Reconsideration Denied July 28, 1998.
*1332 Mark J. Hardcastle (Terry B. Blair, Blair & Hardcastle, P.A., Baltimore; Thomas F. McDonough, Royston, Mueller, McLean & Reid, L.L.P., Towson, all on brief), for Appellant.
Kathleen A. Birrane (James P. Ulwick, Kramon & Graham, P.A., on brief), Baltimore, for appellee.
Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.
*1331 WILNER, Judge.
This appeal arises from the demise of an endeavor known as the Select Advantage Network (SAN), developed in 1990 by Blue Cross and Blue Shield of Maryland, Inc. (BCBS). Appellant, InforMed Physicians Services, Inc. (InforMed), sued BCBS in the Circuit Court for Baltimore County for injunctive relief and to recover some $16 million in compensation that it contended BCBS owed to InforMed or to physicians represented by InforMed as a result of the SAN program. The court granted summary judgment in favor of BCBS, and InforMed appealed. We granted certiorari prior to argument in the Court of Special Appeals and shall affirm the judgment entered by the circuit court.
BACKGROUND
In 1990, BCBS provided insurance for about 1.4 million Marylanders. About one million of its subscribers had some form of indemnity plan; the other 400,000 were in health maintenance organizations. Traditionally, at least with respect to group indemnity plans, BCBS used the "usual, customary, and reasonable" (UCR) method of paying health care providers for the covered services provided to BCBS subscribers. We described that method in Insurance Comm'r v. Blue Shield, 295 Md. 496, 501-02, 456 A.2d 914, 917-18 (1983). Briefly, BCBS would determine, for each provider, the fees most frequently charged by that provider for each covered service; that became the "usual" profile for that provider for that service. BCBS would then develop a composite of the various "usual" profiles and, using a weighted system based on the total number of claims, calculate the "customary" profile for that service. The "usual" profiles were arrayed from high to low, and the level at which 90% of the claims would be paid in full became the "customary" profile for the service. As we indicated in Insurance Comm'r, "[o]rdinarily, the amount paid by a plan for a particular service will be the lowest of the provider's submitted charge, his usual profile, or the customary profile." Id. at 501-02, 456 A.2d 914. In an effort to control the escalating costs of health care coverage, BCBS, in the mid-1980's, developed "preferred provider" plans, under which it afforded a higher level of reimbursement to the subscriber for a covered service if the subscriber was treated by a physician who was a member of the "preferred provider network," i.e., a physician who agreed to accept a discounted amount for services provided to plan members and to refer subscribers only to physicians in the network. As of 1990, a typical preferred provider contract provided that the health care provider would accept as "payment in full for covered services 90% of [BCBS]'s Usual, Customary, and Reasonable (UCR) payment methodology."
*1333 BCBS is a non-profit health service plan, as defined in then-Maryland Code, Article 48A, § 354 (current § 14-102 of the Insurance Article (1997)), and, until 1996, was prohibited from amending "the terms and provisions of contracts executed or to be executed" with health care providers "until such proposed amendments have been first submitted to, and approved by, the Insurance Commissioner." See former Article 48A, § 356 (1994 Repl.Vol.). Any contractual change in the method of reimbursement to health care providers thus had to be submitted to and approved by the Insurance Commissioner. See Johns Hopkins Hosp. v. Insurance Comm'r, 302 Md. 411, 413, 488 A.2d 942, 943 (1985); Weiner v. Maryland Ins., 337 Md. 181, 652 A.2d 125 (1995).
In late 1990, BCBS began to develop a more refined system of "credentialed" provider networks, which became known as the Select Advantage Networkthe SAN. It was directed at physicians practicing in 20 designated specialties. The objective of the SAN was to recruit selected physicians in each of the 20 specialties who would agree to provide certain statistical data regarding the frequency and costs of services provided by them, to submit to evaluative site visits, and to permit their medical records to be reviewed for content, format, and appropriateness. The data would be analyzed, and each physician would be informed of the comparison between his or her procedures and practices and those of other Maryland physicians in the same specialty. The theory was that, with this knowledge, the physicians would develop more efficient approaches to managing health care. The program was envisioned as part of a more general movement to assure better quality in medical service and "to start winnowing down the gross numbers of providers in the marketplace that are being insured to those that can have demonstrated quality and effectiveness." Key to the recruitment of the physicians, who would be burdened with the additional administrative work, was the prospect of a higher level of payment for the medical services they provided to BCBS subscribers.
The SAN approach called for the site visits and clinical evaluations to be done by BCBS, but for there to be an independent entity to collect and analyze the data submitted by the physicians and to render general reports to BCBS and individual ones to the physicians. BCBS therefore envisioned three sets of contractual relationshipsone between BCBS and the selected physicians, one between the third party and the physicians, and one between BCBS and the third party governing, among other things, compensation for the data collection and analysis service.[1]
The initial proposed contract between BCBS and the recruited specialists required the doctors, subject to certain conditions, to allow BCBS's agent access to data identified as necessary to evaluate the effectiveness and efficiency of the doctor's practice and to cooperate with BCBS's efforts to develop and conduct "utilization review activities." The contract called for a one-year continuation of the current level of reimbursement at 90% of UCR, but provided that, for subsequent years, BCBS would "adjust its calculation of UCR for selected procedures, resulting in an increase in compensation for qualifying physicians." Qualification for the adjustment would be determined by an index based on the efficiency of the physician's practices and procedures. Paragraph 11 of the contract provided that, after December 31, 1992, either party could terminate the contract upon 60 days notice. We are informed that, at some point prior to October, 1992, that contract was submitted to and approved by the Insurance Commissioner.[2]
*1334 Initially, BCBS selected the Barton-Gillet Company, which had an existing contractual relationship with the Medical and Chirurgical Faculty of Maryland, to serve as the third party liaison with the recruited physicians, and, in 1990, an agreement was signed between BCBS and Barton-Gillet. In March, 1992, a new company, InforMed, was chartered, and the rights and obligations of Barton-Gillet under the agreement with BCBS were assigned to InforMed. Under that agreement, BCBS was to use its best effort to enroll 2,500 primary care and specialist physicians in the SAN and companion program for primary care physicians, to provide data to InforMed from the BCBS claims history files, and to pay InforMed $162,000 for its services in 1992.
In March, 1993, a new contract was signed between BCBS and InforMed. According to a January, 1994 internal BCBS memorandum written by Debora Craig, Director of Networks Management, the new contract "differed greatly" from its predecessor. Indeed, it marked a major change in the fiscal aspect of the program. For one thing, rather than continuing in effect the current UCR rate of reimbursement for a year and then making indexed adjustments in the future, the contract obligated BCBS to "commit $3.5 million to fund incentive adjustments in the reimbursement profiles of specialty physicians who satisfy [BCBS] selection criteria and who are willing to participate in the InforMed feedback loop."[3] Those adjustments were to be in the form of a single incentive adjustment, to be implemented at the beginning of the SAN contract period, with subsequent incentive adjustments to the SAN physicians' reimbursement profiles to be dependent on the continuing ability of those physicians to demonstrate quality and effectiveness. The new contract also, for the first time, permitted InforMed to recover a fee from the physicians in the amount of 1.5% of the payments they received from BCBS. According to the Craig memorandum, that approach was taken because InforMed had not recovered its full start-up costs and "therefore had to find another way to recover expenses." The memorandum makes clear that the immediate increase in physician profiles was driven by the agreement to allow InforMed to recover part of its expenses from the physicians: "InforMed was depending on these profile increases to `soften' the blow of the InforMed fee to their physician clients, as they were collecting 1.5% of BCBS payments."
The new BCBS-InforMed contract was to take effect January 1, 1993 and continue in effect "for 24 months following regulatory approval of the projected adjustments in physician compensation." (Emphasis added.) It would then be renewed annually, subject to the right of a party to terminate on 90 days notice. As compensation to InforMed, BCBS agreed to pay $19,167 per month for consultation services and $15,000 per month for providing feedback services to the physicians.
On October 6, 1992, in conformance with its undertaking in the new contract with InforMed, BCBS unilaterally changed the arrangement with the recruited physicians. In a letter to the physicians, BCBS noted that the promised adjustment to their profile was to take place "when the effectiveness and efficiency of the SAN network could be documented by InforMed" but advised that BCBS had decided to "accelerate the timing of our planned increase" in accordance with an attached schedule. That schedule, BCBS stated, would provide the physician "with at least a 5% increase in revenue for your care of [BCBS] patients" and would be implemented in about 14 days. Nothing was said in that letter about the physician having to pay a 1.5% fee to InforMed.
It appears that, during this period of time, BCBS had a number of informal meetings with the Insurance Commissioner's staff regarding the SAN program. Associate Commissioner Donald Brandenberg later noted that, in early October, 1992, BCBS and the staff "discussed several form filings" related to the SAN program, that the Insurance Division had also received some inquiries *1335 from physicians concerning adjustments to the profiles, and that a meeting was held in late October to discuss the relationships between BCBS, InforMed, and Barton-Gillet, the SAN program, and the funding mechanisms that would be required to implement that program. Mr. Brandenberg stated that, in November and December, various communications "addressed the need for the Division's approval of the changes being proposed for the physician profiles."
The change made by BCBS in its arrangement with the physicians, consistent with the commitment it made in the 1993 agreement with InforMed, was obviously significant. Whereas the initial contract approved by the Commissioner kept the profile at 90% of UCR for the first year and provided for an undetermined index adjustment thereafter, the new arrangement appeared to call for an immediate 5% increase in reimbursement. As indicated in the Craig Memorandum, the money necessary to fund that immediate increase was to come from a 3% general increase in profiles, which would require approval by the Commissioner. An application for approval was expected to be filed in the spring of 1993, to take effect June 1, 1993. On or about December 18, 1992, BCBS sought separate approval by the Insurance Commissioner of the reconstituted SAN program.
On December 30, the Commissioner, through a letter signed by Associate Commissioner Brandenberg, disapproved the program "as presently proposed." Unfortunately, because the papers that BCBS filed with the Commissioner on December 18 are not in the record before us, we have no clear idea of what, in fact, was proposed; it is apparent, however, that the submission did not include an application for a general increase in profiles. Mr. Brandenberg gave six reasons for the disapproval: (1) the methodology for increasing payments to the selected physicians was "unwieldy and a potential boondoggle for physicians and [BCBS] service personnel to understand";[4] (2) the additional administrative work for the physicians, coupled with the requirement that 1.5% of BCBS payments be remitted to InforMed, would likely negate the benefit of the additional remuneration; (3) because the actual increases in remuneration would vary by procedure and by specialty, there would be considerable problems for BCBS in determining the correct payment, explaining the process, and keeping track of administration; (4) the methodology "bears no relationship to underlying cost for each procedure other than as a mechanism, presumably, to spread an overall 5% increase across a selected limited number of specific procedures" and that arguments "for this apparent mathematical drill are not convincing to the Insurance Division"; (5) there was concern that what appeared to be administrative services from InforMed may flow through the BCBS accounting system as claims or cost of care; and (6) there was concern as to whether an intermediary such as InforMed was necessary, and BCBS would have to demonstrate why similar services could not be provided in house via BCBS's own databases. The letter concluded with the statement that the Insurance Division "is ready to further discuss this disapproval or consider your revised program if appropriate." (Emphasis added.)
Unfortunately, BCBS did not await approval by the Insurance Commissioner before proceeding with the program. Prior to the December 30 letter, an undetermined number of physicians had been recruited and had, in fact, signed new contracts, some as early as August, 1992. Indeed, "a former employee" of BCBS had proceeded to increase the profiles of at least 728 physicians in accordance with the revised SAN plan. For those physicians, the plan had been at least partially implemented, and it remained so, notwithstanding the disapproval of December *1336 30, until April, 1995. BCBS continued its recruitment efforts, and, by January 12, 1993, informed the Insurance Commissioner that over 1,000 specialists and 600 primary care physicians had signed new SAN contracts.
On January 12, apparently at BCBS's request, an informal meeting was held with Mr. Brandenberg to discuss the concerns raised in his December 30 letter. Later that day, BCBS, in a letter to Brandenberg, attempted to allay those concerns. It insisted that the new arrangement was well understood by both BCBS and the physicians, that the additional 5% would be "loaded into our pricing file" and would therefore be "transparent," and that an intermediary such as InforMed was necessary. In that last regard, it stated that the BCBS database was inadequate and that BCBS would be unable to access the database of the Health Services Cost Review Commission. That letter was followed by two others. On January 20, BCBS sent a one-page conclusory document estimating a savings from the SAN program of between $20 million and $48 million. Two days later, InforMed confirmed that the request was for permission "to adjust $70 million in specialist physician fees, for a total fee effect of $3.5 million." It assured the Commissioner that the increase for SAN physicians would not reduce the amount other participating physicians would receive as part of a general profile adjustment BCBS intended to request in June, 1993. None of these letters appears to contain or suggest any revision to the proposed program, but constituted, instead, arguments in support of the program that had been presented and disapproved and, at least inferentially, sought reconsideration of that disapproval.
In response to those and other letters that he received concerning the SAN proposal, the Commissioner caused notice to be published in the MARYLAND REGISTER of a public hearing on March 1, 1993, the hearing to be
"an informational hearing to receive information on whether to approve a change in the usual, customary, and reasonable method (UCR) of health care provider reimbursement submitted by [BCBS] that would permit a 5 percent increase in the reimbursement provided to health care providers who qualify for participation in a proposed Select Advantage Network (SAN)."
Mr. Brandenberg, who conducted the hearing, noted at the outset that the Insurance Division had met several times with representatives from BCBS and InforMed and had heard from many other persons, that the Division had "gotten some slightly different answers on certain issues" resulting in some confusion, and that the purpose of the hearing was to get "everybody together" and "get the final version of everything."
It appears from the presentations made by BCBS that the SAN program was still evolving, and that some of the information previously supplied to the Commissioner was either incorrect or no longer valid. The BCBS representative, Mr. Sutton, indicated that only $2.5 million would be needed for profile adjustments in the current year, not $3.5 million, as initially asserted. He stated that instead of an overall profile adjustment of 4%, which had previously been expected, BCBS would be asking for only 3%. He disavowed the implication in the document accompanying the January 20, 1993 letter that the SAN profile adjustment for the primary care physicians would be allocated from the anticipated 1993 general profile adjustment, asserting instead that any adjustment for the primary care physicians would be done separately. Mr. Sutton clarified that the SAN profile increase was not going to be a straight 5% for each procedure but rather was to be an anticipated composite. In response to questions from the Commissioner's assistant chief actuary, he acknowledged that for some procedures there may be no increase at all, while for others the increase could be as much as 10%. Indeed, Mr. Sutton made clear that there was no guarantee that any physician would actually receive a composite 5% increase. In his words, "[t]hey are guaranteed that the procedures that are being identified will, are estimated on our part and with their concurrence represent a potential for a 5 percent increase." (Emphasis added.) He acknowledged the prospect that physicians could receive "much more than a 5 percent increase," and, in response *1337 to further questions from the actuary, that physicians might be inclined to use one procedure rather than another based on the percentage increase attached to it.
Following the presentation by Mr. Sutton, a representative from the State Department of Personnel registered an objection to the proposal. Noting that the State was the second largest account administered by BCBS, she complained that BCBS had not informed the State of its SAN plans during the 1992 contract negotiations but had represented instead that the preferred provider network was the only network it had. She expressed concern that the SAN program would undermine the preferred provider network and urged that BCBS learn to manage its present network before launching into a new one. It was later pointed out by BCBS that the State had been informed of the SAN program during the contract negotiations.
On March 24, Mr. Brandenberg requested certain documents and information from BCBS. In light of the fact that BCBS intended to request a general profile increase on or about May 1, he questioned whether there was any need to proceed with separate increases for the SAN program. He also asked whether the profile increases would be prospective onlyfor services rendered after approvaland sought actuarial documentation of BCBS's estimate of the savings to be realized from the SAN program. The letter concluded with the statement that the Insurance Division intended to "immediately address" the BCBS response and "hopefully move to a timely conclusion of these issues." BCBS responded on March 31, noting, among other things, that the filing for a general profile increase was being delayed to June 1.
On April 8, 1993, the Governor removed the incumbent Insurance Commissioner, Mr. Donaho, and replaced him with an interim Commissioner, Mr. Benton. Eleven days later, in response to an inquiry from the State Secretary of Personnel, who apparently continued to harbor objections to the proposal, Mr. Benton related his own substantial concerns about the proposal, but advised that (1) Mr. Brandenberg was "still in the process of assembling information to formulate a recommendation to the Commissioner," and (2) in light of his expectation that the Governor would name a permanent Commissioner shortly, he did not intend to rule "on this or any other similar request."
On May 17, BCBS filed its application for the 3% general profile increase, to become effective June 1, 1993. That application projected an increase of $14.5 million, with $2.5 million allocated to the SAN program. On May 25, Mr. Brandenberg rejected the application as "not comparable to previous profile updates" and lacking in certain information.[5] He informed BCBS that any resubmission would be subject to Mr. Benton's disinclination to rule on the SAN proposal pending the appointment of a permanent Commissioner.[6]
The May 25 letter from Mr. Brandenberg was the last official communication between BCBS and the Commissioner concerning the SAN program. Significant changes in the top management of BCBS occurred around that time, and the new management, in effect, abandoned SAN in favor of more orthodox forms of managed care. It never submitted a revised SAN proposal; it supplied no additional information concerning the proposal that had been rejected; and it never resubmitted the application for general profile increase, from which the funds for SAN were to come. In an internal memorandum dated September 29, 1993, BCBS's Director of Sales suggested that BCBS "pull the plug on SAN." A January 4, 1994 memorandum *1338 from Ms. Craig acknowledged that, following the March 1 hearing, "the SAN product was considered by many internally as DOA." She opined that the Insurance Division "was not about to budge" but observed that no one had informed InforMed "that SAN as a product is dead." She recommended that the agreement with InforMed be terminated, noting that, in any event, "[t]here are many items in the existing agreement that have not been delivered." At some point, the President of InforMed was informed orally by BCBS that, in June, 1993, BCBS "changed its strategy" and that, as a result, "no one at BCBS supported SAN and no one was trying to get Insurance Division approval of either the SAN increase or the general profile increase." Mr. Brandenberg had some informal conversations with BCBS following the May 25 letter, but, in light of the management changes at BCBS, regarded the SAN matter as "just generally under review."
In the summer of 1994, BCBS attempted to disengage from InforMed. On July 18, its chief legal officer, Mr. Broccolino, wrote to InforMed's attorney, noting that an earlier settlement proposal had not been responded to and advising that BCBS would make only one further payment. InforMed was instructed to stop all work being done for BCBS. In December, 1994, InforMed wrote to Mr. Brandenberg, inquiring about the status of the SAN proposal. In response, Brandenberg confirmed that the original proposal "was formally disapproved via a December 30, 1992 letter" and that that disapproval "precipitated the various meetings, communications, and hearing in early 1993." With the appointment of a new Commissioner and the management changes at BCBS, it was his understanding that BCBS, aware of the Insurance Division's concerns, would "reevaluate its proposals under the developing circumstances" but that nothing more had been received from BCBS.[7]
Five days after receiving Mr. Brandenberg's response, InforMed filed this lawsuit, both in its own right and as agent for the doctors who had been recruited for SAN, seeking (1) an injunction to restrain BCBS from terminating the increased payments being made to the SAN doctors, (2) an accounting, and (3) damages of up to $16 million for breach of contract, unjust enrichment, fraud, and negligent misrepresentation. It also, apparently, sent a letter to the various physicians who had been recruited for the SAN program, although that letter is not in the record before us. What is in the record is the BCBS response to that letter. On March 27, 1995, BCBS informed the physicians of its efforts to obtain approval of the SAN program. It advised, however:
"Unfortunately, the Insurance Administration did not approve the increases proposed for the SPO/SAN delivery system, thus rendering our SPO/SAN addendum with you a nullity. Therefore, a formal notice of termination under Paragraph 11 was unnecessary. However, if needed, this letter shall serve as such notice."
In April, 1995, perhaps as a result of the suit, Mr. Broccolino informed the Commissioner that, in December, 1992, BCBS "incorrectly instituted profile increases for a number of physicians who had agreed to participate in [the] SAN program" and that BCBS was then attempting to determine how many providers had their fees adjusted. Associate Commissioner Randi Reichel responded, seeking specific information regarding the SAN program and the adjustments. On May 17, Mr. Broccolino advised that BCBS "never implemented the SAN program" but that a "former employee" had increased the profiles of 728 physicians while the request for SAN approval was pending and before the disapproval was received. He said that gathering more detailed information was difficult because none of the managerial persons who worked on the SAN were still employed by BCBS.
BCBS's initial response to the InforMed complaint was a motion to dismiss it, principally on the grounds that (1) the court had no jurisdiction to enjoin BCBS from altering *1339 its reimbursement payments, (2) InforMed had no standing to bring an action on behalf of the physicians, and (3) any enforcement of the SAN program would be unlawful, in light of its disapproval by the Commissioner. The motion was granted in part and denied in part by Judge Cahill, following which an amended complaint was filed. BCBS answered that complaint and moved for partial summary judgment on the ground that, because the profile increases had never been approved by the Commissioner, any payments to the physicians under it would be unlawful.
InforMed responded that the December 30 disapproval was irrelevant. It regarded the March 1 hearing as a reconsideration of the disapproval and urged that, as the Commissioner never issued a second disapproval, the SAN program was deemed approved. That argument was based on provisions in then-Article 48A, §§ 242B(1) and 356(a) (current §§ 11-502(f) and 14-126 of the Insurance Article), which we shall discuss later in this Opinion. In summary, § 242B provided that, if a person aggrieved by a decision of the Commissioner that was made without a hearing requested a hearing, one must be held, and the Commissioner was required to affirm, reverse, or modify the previous decision within 20 days after the conclusion of the hearing. If the Commissioner failed to hold or complete the hearing or make a decision within the time specified, the filing or application "shall be deemed approved." Section 356(a) required a proposed amendment to a BCBS physician contract to remain on file with the Commissioner for 60 days, unless that time was extended, and provided that the filing would be deemed approved unless disapproved within the waiting period. The section also stated that, if the Commissioner demanded additional information regarding the proposed amendment, the waiting period would be suspended until the information was supplied. The dispute concerning § 356 was largely over whether all of the information requested by Mr. Brandenberg had been supplied, and InforMed filed a motion under Maryland Rule 2-502 for a separate determination of that issue.
Believing, in light of InforMed's argument, that whether the SAN proposal had been approved or disapproved was a question of disputed fact, the court, through Judge Turnbull, initially denied the motion for partial summary judgment. The case was then assigned to Judge Fader, who conducted several hearingsone in July, 1996, one in June, 1997, and two in July, 1997. Like Judge Turnbull, he initially viewed the issue as being whether, for purposes of the "deeming" provisions in §§ 242B and 356, the Commissioner was still gathering information. Prior to the 1997 hearings, however, the General Assembly enacted 1996 Md. Laws, ch. 645, repealing the requirement in § 356 that amendments to BCBS physician contracts be approved by the Commissioner. The new Act became effective October 1, 1996. In light of that enactment, InforMed insisted that BCBS's illegality argument had no further basisthat the Commissioner's approval was no longer required and it was therefore not unlawful for BCBS to honor its contractual undertakings. After hearing argument, Judge Fader concluded that the 1996 Act did not apply retrospectively to contracts entered into prior to its enactment, that the Commissioner's approval was therefore necessary, that the SAN proposal had not been approved by the Commissioner, and that the contracts implementing the program could not be enforced. He granted the motion for summary judgment as to all counts in the amended complaint. He also denied the InforMed motion under Maryland Rule 2-502 for a separate determination of whether the application for the SAN profile increase had been approved.
DISCUSSION
InforMed raises four issues in this appeal: (1) whether the 1996 law is a procedural, remedial measure that should be applied to the SAN profile increases in this case; (2) whether the proposed amendment to the physician profile was deemed approved under § 356; (3) whether that proposed amendment was deemed approved under § 242B; and (4) whether summary judgment should have been granted on the counts relating to (A) whether BCBS failed to make a good faith effort to obtain approval, (B) misrepresentations *1340 made by BCBS regarding its efforts to obtain approval, and (C) claims made by InforMed for its own compensation, that did not require Commissioner approval. We shall deal with these issues seriatim.
Application of 1996 Law
The principal defense offered by BCBS to the claims asserted by InforMed on behalf of the physicians was that the increase in profile upon which those claims were based required approval of the Insurance Commissioner, that the increase was never approved by the Commissioner, and that payment of the increase would therefore be unlawful. The 1996 law, repealing the requirement of Commissioner approval, according to InforMed, eliminated that defense. That might be true, however, only if the law applied to increases contracted for by BCBS in 1992.
InforMed acknowledges that, as a general rule, statutes are presumed to operate prospectively only. Indeed, as we held in WSSC v. Riverdale Fire Co., 308 Md. 556, 561, 520 A.2d 1319, 1322 (1987), "[t]he presumption against retrospectivity is rebutted only where there are clear expressions in the statute to the contrary." The basis of InforMed's replication is the corollary principle, announced in Janda v. General Motors Corp., 237 Md. 161, 205 A.2d 228 (1964) and confirmed in WSSC, that "a statute governing procedure or remedy will be applied to cases pending when the statute becomes effective." WSSC, supra, 308 Md. at 564, 520 A.2d at 1323. It regards the 1996 law as being procedural, rather than substantive, in nature, and it urges that, if, following the reconsideration hearing of March 1, 1993, the SAN proposal was not deemed approved under § 242B or § 356, it must still have been pending when the 1996 law took effect, for the Commissioner did not otherwise rule on the reconsideration. Accordingly, it avers, repeal of the requirement of approval was effective and allowed BCBS to proceed with its contractual commitment.
The simple answer to that defense is that, quite apart from any notion of deemed approval, the issue was not pending before the Commissioner and there was no existing contractual commitment when the 1996 law took effect. It is clear, beyond cavil, that both BCBS and the Insurance Commissioner regarded the SAN proposal as disapproved and effectively abandoned long before October 1, 1996.[8] There can be no doubt that the filing made on December 18, 1992 was formally disapproved on December 30. It is also clear that the general profile increase, from which the SAN increases were to come, was formally disapproved on May 25, 1993, and that no further filings were made with respect to either proposal. All of the evidence, uncontradicted, shows that the new management of BCBS abandoned the entire SAN program in 1993 or 1994. In July, 1994, BCBS terminated its contract with InforMed, and in March, 1995, it formally terminated the new contracts it had entered into with the doctors. Thus, even if the 1996 law could or should be applied retroactively, there was nothing left to which it could apply. Both when the contracts were entered into and when they were terminated, the Commissioner's approval for profile increases was required and had not been obtained.
Deemed Approved Under § 356
Article 48A, § 356(a), as noted, prohibited BCBS from amending the terms and provisions of contracts executed or to be executed with physicians until the amendment had "first been submitted to, and approved by, the Insurance Commissioner." Each amendment, it stated, was to remain on file with the Commissioner "for a waiting period of 60 working days before it becomes effective." The statute then provided, in relevant part:
*1341 "When in the Commissioner's opinion an amendment is not accompanied by the information needed to support it and the Commissioner does not have sufficient information to determine whether the filing meets the requirements of this section, the nonprofit health service plan shall be required to furnish the needed information and in this event the waiting period shall be suspended and shall recommence as of the date the information is furnished.... A filing shall be deemed approved unless disapproved by the Commissioner within the waiting period or any extension thereof."
InforMed urges that the March 1 hearing constituted, in effect, a reconsideration of the December 30 disapproval, and that the SAN proposal, as submitted, was therefore still before the Commissioner. It contends that the only actual requirement for additional information came at that hearing and from Mr. Brandenberg's ensuing letter of March 24, 1993. Mr. Sutton's presentation on March 1 and BCBS's response on March 31, it avers, supplied all of the information required by Mr. Brandenberg. InforMed regards the application for general profile increase as being entirely separate, having no bearing on the SAN proposal. Thus, in its view, the waiting period recommenced at least by March 31, 1993, and, when the Commissioner took no action thereafter, the initial proposal was deemed approved.
The fallacy in InforMed's argument arises from its erroneous supposition that the Commissioner ever reconsidered the initial disapproval. The statute makes clear that a filing shall be deemed approved "unless disapproved by the Commissioner within the waiting period." The SAN proposal was disapproved within the waiting period, and that disapproval was never reconsidered or lifted. It is evident from Mr. Sutton's presentation that some loose and inaccurate information had been given to both the physicians and to the Commissioner regarding the proposal, and, having received letters of inquiry or concern from State officials and a number of physicians, the Commissioner agreed merely to hold an informational hearing to clarify the details of the proposal. If anything is evident from the March 1 hearing, it is that BCBS did not allay all of the concerns expressed in the letter of disapproval. Holding a public informational hearing does not constitute a reconsideration of the disapproval or a resuscitation of the disapproved proposal, and, indeed, neither BCBS nor the Commissioner ever thought otherwise.
Although sometimes blurred when proceedings are conducted informally, reconsideration is necessarily a two-step process. First, the tribunal must decide whether it wishes to reconsider an earlier ruling whether it is agreeable to placing back before it the issue ruled upon and the merits of the proposal. That is a threshold step, procedural in nature. The second step, which is substantive and can be taken only if the tribunal takes the first step, is to determine whether the previous ruling should be confirmed or altered in some way. The simple answer to InforMed's argument is that the Commissioner never took the first step here.
Deemed Approved Under § 242B
Section 242B (current § 11-502) was part of subtitle 16 of Article 48A, dealing with rates charged for property, casualty, surety, marine, and title insurance. See former Article 48A, §§ 242, 242A. Subtitle 16 did not apply to BCBS, which, as a nonprofit health service plan, was regulated under subtitle 20 of Article 48A, §§ 354 through 361H. See § 9(2) of former Article 48A, declaring that the provisions of Article 48A did not apply to nonprofit health service plans "except as otherwise provided in this article." The sections in subtitle 16 provided for the filing of rates and rate schedules by insurers and rating organizations subject to that subtitle and for consideration, approval, and disapproval of those filings by the Insurance Commissioner.
Section 242B dealt with hearings and judicial review. Section 242B(1) concerned hearings and provided, in relevant part, that an insurer or rating organization aggrieved by any order or decision of the Commissioner "under this subtitle" made without a hearing could, within 30 days, request a hearing. Within 20 days after receiving such a request, the Commissioner was required to conduct a hearing. The hearing was to be *1342 concluded within 15 days, and, within 20 days after its conclusion, the Commissioner was directed to affirm, reverse, or modify the previous action. As noted earlier, § 242B(1) went on to provide that, if the Commissioner failed, within the times specified, to hold or complete a hearing or render a decision following a hearing, "the filing or application in issue shall be deemed to meet the requirements of this subtitle and shall be deemed approved."
Section 242B(2) dealt with judicial review. It made all decisions and orders of the Commissioner subject to judicial review "by appeal to the Circuit Court for Baltimore City" and set out some of the procedure governing the action for judicial review. Section 242B, itself, had utterly no application to BCBS or to the approval or disapproval of contracts with health care providers. Subsection (3) made clear that the section applied only to "hearings, orders, and appeals in matters arising under the provisions of this subtitle."
InforMed seeks to avail itself of the "deemed approved" provision in § 242B(1) through § 361B(a) of former Article 48A. That section was part of subtitle 20, dealing with BCBS. It provided that "[a]ll decisions and findings of the Commissioner regarding rates and forms made under § 356 of this subtitle are subject to review by the court in accordance with the provisions of § 242B of this article." InforMed regards this language as incorporating § 242B into subtitle 20 of Article 48A. It did no such thing. It incorporated the judicial review provisions of § 242B(2) into subtitle 20, but it made no pretense of incorporating the hearing provisions of § 242B(1) into that subtitle. The only "deemed approved" provision applicable to filings by BCBS was that contained in § 356(a), which we have already concluded was not applicable in this case.
Summary Judgment Issues
(1) Reasonable Effort To Obtain Approval
InforMed quite correctly points out that a person "may not rely on illegality or invalidity where the doing of that said to be forbidden may reasonably be made legal and possible through administrative or judicial action." McNally v. Moser, 210 Md. 127, 138, 122 A.2d 555, 561 (1956). That principle is merely another way of saying that, when performance of a contract is conditioned, expressly or by force of law, on the obtaining of some governmental permit or approval, the party required to obtain the permit or approval has an implied obligation to make a reasonable effort to do so. Allview Acres v. Howard, 229 Md. 238, 182 A.2d 793 (1962). As we further indicated in Allview, "[w]hat will constitute reasonable efforts under a contract expressly or impliedly calling for them is largely a question of fact in each particular case and entails a showing by the party required to make them of `activity reasonably calculated to obtain the approval by action or expenditure not disproportionate in the circumstances.'" Id. at 244, 182 A.2d at 796.
Because the issue is largely a factual one, most of the cases in which it has arisen have reached the appellate courts after a full trial, and, where material facts, or inferences from them, are in dispute, summary judgment would be inappropriate. See Smith v. Currie, 40 N.C.App. 739, 253 S.E.2d 645 (N.C.App.1979). Nonetheless, like most other legal issues that are fact-dependent, summary judgment is permissible on this issue if the relevant evidence before the court is not in substantial dispute and allows a conclusion to be drawn as a matter of law. See Korman v. Kieckhefer, 114 Ariz. 127, 559 P.2d 683 (1977).
At least two bracketing principles have been established by the cases. On the one hand, failing to file, support, or pursue an application for approval because of a party's beliefeven a belief based on advice of counselthat the application would not likely be approved, has been held insufficient. See McNally v. Moser, supra, 210 Md. 127, 122 A.2d 555; St. Luke's House v. DiGiulian, 274 Md. 317, 336 A.2d 781 (1975). In McNally, the tenant of a unit in a residential property leased for a medical practice attempted to terminate the lease on the ground that, under the zoning law, such a lease was permissible only if the doctor lived in the property. Although there was some legitimate *1343 question of whether that restriction actually applied to the lease in question and it appeared that, even if it did, a special exception or variance may have been possible, the tenant solicited and accepted an oral statement from the building inspector that the lease was impermissible. We found that to be insufficient to establish the illegality defense, holding instead that the tenant, "having brought about the challenge to the use so that he could escape his responsibilities under the lease, could not stand idly by and, because of a notice to that effect from an administrative official, gladly accept as a fact that the use of his office was illegal." Id. at 137, 122 A.2d 555. He was under an obligation, on his own or with the landlords' assistance, "to attempt to establish a right to continue that use, or at least to wait until impossibility became a fact, not merely a possibility." Id. Citing liberally from McNally, we reached a similar conclusion in St. Luke's House, where the tenant, upon the advice of its attorney that the lease would violate a restrictive covenant and a zoning ordinance, "relied upon a `mere possibility' of the illegality of its use and did not fulfill its obligation in establishing, by litigation, the fact of the impossibility of its contemplated use." Id. at 329, 336 A.2d 781. See also Rhodessa Development Co. v. Simpson, 658 S.W.2d 218 (Tex.Ct.App.1983); Korman v. Kieckhefer, supra, 114 Ariz. 127, 559 P.2d 683; sechrest v. safiol, 383 Mass. 568, 419 N.E.2d 1384 (1981); Stabile v. McCarthy, 336 Mass. 399, 145 N.E.2d 821 (1957); Leonard v. Koval, 187 Ill.App.3d 924, 135 Ill.Dec. 343, 543 N.E.2d 911 (1989); Alliance Financial Services v. Cummings, 526 So.2d 324 (La.Ct.App.1988), holding that failure to make application, support application with needed documentation, or accede to reasonable requests for revisions does not constitute reasonable effort; but compare Knight v. McCain, 531 So.2d 590 (Miss.1988) (not necessary to file application for building permit when purchaser told not to do so by permit office because permit would not be issued).
Although "standing idly by" and falling on one's sword does not constitute the requisite reasonable effort, a party is not required to pursue baseless and expensive litigation or incur extraordinary expense simply to establish reasonableness or good faith. In Allview Acres, supra, 229 Md. 238, 182 A.2d 793, a contract of sale was contingent on rezoning, which the seller was obligated to pursue. The seller applied for the rezoning even before the contract was signed, and, when the application was denied by the county commissioners, it sought review of that decision in the circuit court, unsuccessfully. We concluded that those efforts were reasonable and rejected the contention that the seller should have refiled the application after the contract was signed and the suggestion that the effort lacked reasonableness because the seller failed to appeal the judgment of the circuit court. See also Foodmaker, Inc. v. Denny, 32 Md.App. 350, 360 A.2d 446 (1976), cert. denied, 278 Md. 720 (1976), holding that, when a vigorous effort was made to obtain the necessary administrative approval for a sign permit and a limited time was allowed for obtaining the permit, judicial action was not necessary in order to establish a reasonable effort. Cases from other States are in accord. See Jamison v. Concepts Plus, Inc., 380 Pa.Super. 431, 552 A.2d 265 (1988), (a real estate purchase contract contingent on subdivision approval does not require the buyer to appeal from an adverse administrative decision); Columbia Christian College v. Cmwlth. Prop., Inc., 286 Or. 321, 594 P.2d 401 (1979) (not unreasonable for purchaser to abandon effort to obtain rezoning when evidence showed it would have cost $100,000 and taken six months of research to answer concerns expressed by Planning Commission).
The facts here are essentially undisputed and have been recounted in great detail. BCBS did not sit "idly by." It made application for approval, and for at least three months it pursued that application vigorously. It attempted to inform and persuade the Commissioner's staff in advance, it attended informal meetings with the staff following the formal disapproval, it sought and participated significantly in the informational hearing of March 1, and it continued to supply information afterward. In light of the formal disapproval of the SAN application on December 30, 1992, the questioning of Mr. Sutton at the hearing on March 1, 1993, the *1344 sentiments expressed by Mr. Benton in his April 19, 1993 letter to the Secretary of Personnel, the demand for further information on March 24, 1993, and the rejection of the general profile increase on May 17, 1993, BCBS reasonably came to the conclusion that the Insurance Division "was not about to budge" and that approval of the proposal as submitted and clarified would not be forthcoming. The Insurance Division continued to harbor concern over the need for and method of increasing the physician profiles and the need for InforMed's services.
Given the nature of the concerns expressed by Mr. Brandenberg and his staff, it does not appear likely that an action for judicial review under § 361B would have been successful, and InforMed does not suggest otherwise. It complains, rather, that BCBS failed to insist that the Commissioner render a decision on what it regards as his "agreement to reconsider SAN," that BCBS never argued that the proposal had been "deemed approved" under §§ 242B and 356, and that it never resubmitted its request for general profile increase. We have already answered those complaints. There never was an "agreement to reconsider" the disapproval of the SAN proposal, but only a willingness to gather information in an attempt to sort out what, in fact, was being proposed; BCBS was not obliged to argue that its proposal had been "deemed approved," because there was no legal or factual basis for such an argument; and it is clear that, given the Commissioner's unsatisfied concerns over SAN, resubmission of the request for general profile increase would have been of no assistance. It is evident that the Commissioner objected to the substance and details of the SAN proposal and was not about to approve that proposal. At some point, BCBS simply accepted that reality; there was little else it reasonably could do.
(2) Scope of the Summary Judgment
BCBS's motion for summary judgment did not extend to the entire amended complaint but was limited to the claims based on the disapproved physician compensation increasesthose included in Counts II, IV, VI, VIII, and X. It was those claims to which BCBS interposed the defense of illegality. The amended complaint also included claims for accounting and compensation allegedly due to InforMed itself. They encompassed Counts I, III, V, VII, and IX. The summary judgment entered by the court, however, extended to all counts of the amended complaint, and InforMed complains that the judgment exceeded the scope of the motion.
In Hartford Ins. Co. v. Manor Inn, 335 Md. 135, 642 A.2d 219 (1994), we construed Maryland Rule 2-501the rule governing summary judgmentsas not permitting a court to grant summary judgment entirely on its own initiative, where none of the parties moved for that relief. In that case, the plaintiff sued the State and Manor Inn for negligence. The State's alleged negligence was in allowing a patient to elope from a State mental hospital. Manor Inn was sued for leaving a van unattended, thereby allowing the patient to steal it and injure the plaintiff. The State moved for summary judgment against both the plaintiff and Manor Inn; its motion was granted. The court also granted summary judgment in favor of Manor Inn, although no motion for summary judgment had been filed by that defendant. That, we held, was error.
BCBS's motion for partial summary judgment was filed in September, 1995. The first hearing was held on it, by Judge Turnbull, in March, 1996, at which time the motion was denied. Judge Fader held four additional hearings on the issues raised in the motion, spread over a 12-month period. The focus in all of those hearings was on the claims made on behalf of the physiciansthose that were the subject of the motion. At the penultimate hearing, conducted on July 1, 1997, the court expressed its inclination to grant summary judgment on the contract claims but had some reservation about the fraud counts. Counsel for InforMed noted that the case was going to be appealed and that "the only way that an appeal can be heard is if there is a final judgment rendered as to all pending matters." No final action was taken at that time on any of the counts.
At the final hearing, on July 14, 1997, the court indicated its intent to grant summary judgment on all of the derivative claims. In *1345 reviewing the various counts and perhaps recalling counsel's comment two weeks earlier, Judge Fader indicated his willingness to grant summary judgment on all of the counts, so that an immediate appeal could be taken, but only if that was acceptable to InforMed. Counsel for InforMed agreed, procedurally, with that approach, responding that "without acquiescing in the Court's decision and without waiving any of the positions which we have taken in the pleadings, if the Court is of the mind to grant summary judgment, then perhaps the best thing to do is just enter the summary judgment and let us take it up on appeal and we can get some guidance from the appellate court as to some of these very complicated legal issues that the Court has been struggling with and that we have been too." In the absence of any objection from BCBS, it was then that the court granted the judgment, finding "no evidence sufficient ... to support a breach of contract, unjust enrichment, fraud, or negligent misrepresentation. The affirmative evidence that is required by the Plaintiffs to be presented to survive summary judgment is not there."
In its Brief in this Court, InforMed complains that the court "apparently overlooked the fact that InforMed was not a medical provider and had separate claims for accounting, breach of contract, unjust enrichment, fraud and negligent misrepresentation based on agreements which did not require Insurance Division approval under Article 48A, § 356." It also avers that an affidavit filed by its president in the proceeding raised substantial issues that precluded the entry of summary judgment on those counts.
Although the court's attention was directed throughout at the derivative claims attacked in the motion for partial summary judgment, and properly so, the court did not, in the end, "overlook" the claims made by InforMed in its own right. As noted, the court's initial inclination was to limit its judgment, in accordance with the motion, to the derivative claims, and it was only upon InforMed's acquiescence in the court's entering a final judgment on all counts that such a judgment was entered. InforMed very clearly reserved the right to contend that entry of summary judgment on any of the counts was substantively in error, but it just as clearly waived its right to complain that the judgments exceeded the scope of the motion. BCBS's decision to raise no objection to that approach may, indeed, be taken as a tacit consent to an enlargement of its motion to cover the non-agency claims. InforMed's procedural complaint is without merit.
The substantive issue, of whether summary judgment was appropriate on the non-derivative claims, is before us. Unfortunately, however, other than making a reference to Mr. Willse's affidavit, InforMed presents no argument as to why summary judgment should not have been entered on those claims. A number of the claims made by InforMed in its own right were parallel to the derivative claims and were worded almost identically, except for the allegation of agency. InforMed makes no argument in its Brief as to how each or any of the non-derivative counts differed from their derivative analogues. Some of them appear almost facially to hinge on whether the increased profiles were lawful. It is not for us to marshal the facts and construct appellant's argument. The evidence shows that BCBS paid the monthly fees called for in the 1993 contract with InforMeda contract that, on its face, was contingent upon "regulatory approval of the projected adjustments in physician compensation"until the contract was terminated in July, 1995, and it is not clear to us what independent basis existed for that termination to be regarded as unlawful.
JUDGMENT AFFIRMED;
APPELLANT TO PAY TO PAY THE COSTS.
NOTES
[1] A companion effort, which was not itself part of SAN, was directed at primary care physicians. The details of that effort are somewhat sketchy in the record and come mostly from comments made by a BCBS spokesman at an informational hearing before the Insurance Commissioner, but it appears that those physicians also would be recruited and placed under a separate agreement with BCBS. Under that agreement, the doctors would be expected to submit to site visits and provide certain information to the third party, and, as an incentive to participate, those who otherwise participated in the preferred provider network would receive 100%, rather than 90%, of the UCR for the services they rendered under the new program.
[2] The only evidence in this record of that submission and approval was a statement by a BCBS spokesman. He identified the submission only as NS816.
[3] The $3.5 million appears to have been derived from applying an aggregate 5% increase to the profiles in the 20 designated specialties against $70 million in estimated payments to recruited specialists for covered services.
[4] As explained later by BCBS, the proposal submitted in December was quite complex. It was not a 5% across-the-board increase to each doctor for each procedure, but was based on a computer-generated method of selecting specific procedures relevant to each individual physician and making differing adjustments for each such physician-based procedure. Some adjustments would be less than 5%, some would be greater, but an attempt would be made to achieve an overall 5% increase in their total compensation for covered services. Whether a physician would achieve that increase would depend on the amount of adjustment determined for each procedure and the frequency that the physician used the various procedures in the mix.
[5] A May 19 memorandum from the Assistant Chief Actuary to Mr. Brandenberg observed that "there is not enough information on which to base any action. Not only is the letter `light on financial justification,' there is practically no financial information presented." The actuary suggested that Mr. Sutton be advised to contact the Insurance Division "to get some idea of the type of material submitted in prior years in connection with similar requests."
[6] That disinclination, as noted, was expressed by Mr. Benton in his letter to the Secretary of Personnel. The letter itself does not indicate that a copy was sent to BCBS. Without citation to the record, InforMed states in its Brief that BCBS received a copy of the letter and was thus already aware of Mr. Benton's position. As BCBS does not contest that assertion, we shall accept it as correct.
[7] In deposition testimony, Mr. Brandenberg noted that there was concern at the time that "this was a program initiated under the reign of [BCBS's former president] and since he had left, the feeling was the new regime should have a chance to evaluate this and see whether or not it fit into whatever the new regime intended to do."
[8] InforMed itself acknowledged that status. In ¶ 46 of its complaint, InforMed noted Mr. Brandenberg's December 30, 1992 letter disapproving the proposal as submitted. In ¶¶ 59 and 60, it averred that BCBS and the Insurance Division agreed that BCBS would "resubmit its proposal to the new Commissioner and request approval" but that "[n]o such resubmission or request for approval was ever made by BCBS...." Although in ¶¶ 58 and 60, it alleges that there was some kind of indefinite stay of proceedings, it gives no indication of what was left for the Commissioner to rule upon. The one submission had been formally disapproved and there never was another submission.
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NO. 07-04-0291-CR
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL B
OCTOBER 13, 2005
______________________________
ROSE M. GRAVES, APPELLANT
V.
THE STATE OF TEXAS, APPELLEE
_________________________________
FROM THE 140TH DISTRICT COURT OF LUBBOCK COUNTY;
NO. 93-417705; HONORABLE JIM BOB DARNELL, JUDGE
_______________________________
Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.
MEMORANDUM OPINION
Appellant, Rose M. Graves, appeals from a judgment revoking community
supervision and imposing sentence pursuant to conviction for delivery of a controlled
substance. We affirm.
In 1994, appellant entered an open plea of guilty to a charge of delivery of a
controlled substance, cocaine, in an amount less than 28 grams. Following trial, the court
found that the evidence substantiated appellant’s guilt, accepted the guilty plea, found
appellant guilty, and sentenced appellant to confinement for ten years. However, the
confinement was suspended and appellant was placed on community supervision for a
period of ten years.
In 2003, the State filed an Application to Revoke Community Supervision. The
State contended, in its application, that appellant had violated the terms and conditions of
her community supervision by, among other things, committing the offenses of
manufacture of a controlled substance and possessing a controlled substance with the
intent to deliver. The State’s application was called and heard on April 7, 2004.1 The trial
court found that appellant had violated the terms of her probation, revoked the order
placing appellant on community supervision, and ordered that appellant serve the
confinement portion of her sentence in the Institutional Division of the Texas Department
of Criminal Justice.
By her sole issue on appeal, appellant contends that the trial court erred in refusing
to grant her motion for new trial based on newly available evidence.2
1
In her brief and in oral submissions, appellant contends that the revocation hearing
was called and heard at the same time as the manufacture and possession charges.
However, the record reflects that the revocation was not called until April 7th. Further, it
is clear that, regardless of when the revocation proceeding commenced, the trial court had
not ruled on the revocation prior to April 7th.
2
Appellant’s motion for new trial is not contained in the appellate record. At oral
submissions, appellant contended that the motion applied to the revocation as well as the
manufacture/possession charges. For purposes of this opinion, we will assume this to be
true.
2
Whether a trial court erred in denying a motion for new trial based on new evidence
is determined by whether the trial court abused its discretion. Keeter v. State, 74 S.W.3d
31, 37 (Tex.Crim.App. 2002). To obtain a new trial based on new evidence, the movant
must establish that the evidence was (1) previously unknown or unavailable, (2) unknown
or unavailable for reasons other than a lack of due diligence on the part of the movant, (3)
admissible and not merely cumulative, corroborative, collateral or impeaching, and (4)
probably true and would probably result in a different outcome in another trial. Id. at 36-37;
Eddlemon v. State, 591 S.W.2d 847, 849 (Tex.Crim.App. 1979). As motions for new trial
based on new evidence are not favored, we must view appellant’s motion with great
caution. Drew v. State, 743 S.W.2d 207, 225-26 (Tex.Crim.App. 1987).
A review of the record reveals that appellant asked the trial court to consider an
affidavit and testimony from Mr. Young at the April 7, 2004 hearing. After discussing this
“new evidence” in relation to appellant’s motion for new trial in the manufacture/possession
case, appellant’s counsel stated, “Then I take it the Court has overruled the Motion for New
Trial. Will the Court accept into evidence in the revocation hearing the affidavit of Mr.
Young?” To which the court responded, “The Court will accept the affidavit . . . as part of
the record in the revocation . . . .” (Emphasis added).3 We cannot see how a trial court
could properly grant a motion for new trial based on newly available evidence when the
same evidence upon which the motion is based was admitted into evidence during the trial.
3
Of course, appellant’s trial counsel’s acknowledgment that the trial court had
overruled the motion for new trial belies appellant’s appellate counsel’s contention that the
motion for new trial applied to both the manufacture/possession conviction and the
judgment revoking appellant’s community supervision.
3
After the trial court admitted Mr. Young’s affidavit, appellant made no further offer of
evidence. As appellant has failed to identify any newly available or discovered evidence
to support a new trial of the revocation proceedings, we conclude that the trial court did not
abuse its discretion in refusing to grant appellant’s motion.4
Concluding that appellant failed to present any new evidence to the trial court, we
affirm the trial court’s judgment revoking appellant’s community supervision.
Mackey K. Hancock
Justice
Do not publish.
4
This court has previously addressed appellant’s motion for new trial in the context
of the manufacture/possession conviction concluding that the trial court did not abuse its
discretion in denying appellant’s motion. See Young v. State, No. 07-04-0230-CR, 2005
Tex.App. LEXIS 4383 (Tex.App.–Amarillo June 8, 2005, no pet. h.).
4
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861 F.2d 717
Gipbsonv.Swanson*
NO. 88-3629
United States Court of Appeals,Fifth Circuit.
OCT 28, 1988
1
Appeal From: E.D.La.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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666 F.2d 1375
UNITED STATES of America, Plaintiff-Appellee,v.Carlos Jesus FIGUEROA, Defendant-Appellant.
No. 81-5125.
United States Court of Appeals,Eleventh Circuit.
Feb. 1, 1982.
Robyn Hermann, Asst. Federal Public Defender, Miami, Fla., for defendant-appellant.
C. Wesley G. Currier, Asst. U. S. Atty., Miami, Fla., Patty Merkamp Stemler, Washington, D. C., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before VANCE, KRAVITCH and CLARK, Circuit Judges.
VANCE, Circuit Judge:
1
Carlos Jesus Figueroa appeals his conviction of attempted aircraft piracy in violation of 49 U.S.C. § 1472(i)(1) and his sentence to the statutory minimum of twenty years imprisonment.
The Facts
2
The case arose from events which transpired on September 14, 1980 when Figueroa was aboard Eastern Airlines Flight 115 travelling from Tampa to Miami. About fifteen minutes prior to landing Figueroa handed the flight attendant a note and asked that she give it to the captain. The note in unedited form was as follows:
3
This is a request to take me to Cuba ... Now !
4
This aircraft is in no danger. But don't take any chances. The life of many people is in your hands.
5
A powerfull explosive device is set to go-off on pre-set time in a public location in Tampa. Many inocent people are goin to die-Any loss of life as a result of your haste and negligence and this airline management will be your responsibility. Copy of this note is in the mail to all major T-V networks news media, relatives and friends-They will know what happen in the ground and, who can help at the time Once in Cuba-Not Before. I will tell you exact location and how to disarm safely the device.
6
Time is essential.
THANKS-Carlos
7
The attendant took the note to the cockpit where it was read to the captain. Another Eastern pilot, Captain Laurie Hosford, was "dead heading" on the flight and occupied the observer's seat. Hosford went back to the cabin and told Figueroa that they did not have enough fuel to go to Cuba and that they would stop in Miami for fuel. Figueroa did not object. Hosford returned to the cockpit but shortly came back and sat by Figueroa for the remainder of the flight. He asked Figueroa why he was doing this, telling him that he could find another way to go to Cuba. Figueroa said he had lost everything and was totally broke. A passenger said something about people on the airline being in danger and he said that was the way things had to be. He apologized three or four times, however, for causing inconvenience. When the plane landed at Miami Figueroa was arrested by the Dade County Police. Figueroa was described as being between five feet five inches and five feet seven inches tall and weighing 135-145 pounds. When arrested he offered no resistence whatever. He was carrying no weapon.
The Insanity Issue
8
Figueroa has a history of mental illness which extends back over ten years. He has required hospitalization and electroshock treatment. At trial and in this court Figueroa contends that the evidence will not support a finding beyond a reasonable doubt that he was legally sane at the time of the offense in question.
9
Expert witnesses for both the government and the defense agreed that Figueroa suffered from severe depression. They differed, however, in testimony critical to application of the standard adopted in Blake v. United States, 407 F.2d 908, 916 (5th Cir. 1969) (en banc). Defendant's psychiatrist expressed the opinion that Figueroa suffered from schizophrenia, schizo-affective type that rendered him unable to appreciate wrongfulness and adhere to a realistic, mature way of deciding and functioning. The government's psychiatrist testified that although Figueroa was depressed to the point of extreme apathy, he was fully aware that his conduct was wrong and was capable of conforming his conduct to the requirements of the law if he chose to do so.
10
The thrust of Figueroa's contention is that in light of such conflict of expert testimony and of the lay testimony concerning his history of aberrant behavior the jury must necessarily have had a reasonable doubt of his sanity. We conclude, however, that the issue was properly one for the jury's determination. It was free to accept or reject the testimony of either expert. As with other issues, we view the evidence on appeal in the light most favorable to the government with all inferences and credibility choices made to support the jury's verdict. United States v. Iverson, 588 F.2d 194, 196 (5th Cir. 1979). The evidence was not such that a reasonably minded juror must necessarily have had a reasonable doubt as to Figueroa's sanity at the time of the offense. See United States v. Hall, 583 F.2d 1288, 1294 (5th Cir. 1978). The jury's verdict on the insanity issue, therefore, will not be disturbed.
Sufficiency of the Evidence
11
The statute defines aircraft piracy as "any seizure or exercise of control, by force or violence or threat of force or violence, or by any other form of intimidation, and with wrongful intent, of an aircraft." 49 U.S.C. § 1472(i) (2). The indictment charged only that Figueroa "did attempt to seize, by force and violence, an aircraft" (emphasis added). At defendant's request the trial judge charged the jury that attempted aircraft piracy necessarily includes the lesser offense of interference with flight crew members or flight attendants in violation of 49 U.S.C. § 1472(j). The court instructed on the elements of the lesser included offense and provided a form of verdict for use if the jury found Figueroa not guilty of the charged offense but guilty of the lesser included offense. The jury found defendant guilty as charged.
12
Figueroa challenges the sufficiency of the evidence that resulted in his conviction. He concedes his use of the note proved that he used threats and intimidation in an attempt to hijack the aircraft. Clearly, if he had been so charged, the evidence would be sufficient to convict him. Figueroa asserts, however, that the government presented no evidence that he committed the offense with which he was actually charged, namely, attempted hijacking by force and violence. He claims that the government failed to show that he made any physical gesture which constituted force or violence within the traditional meaning of those terms.
13
The government contends that Figueroa's act of threatening imminent harm to innocent persons is sufficient to establish the element of force as charged and that evidence of physical action is not required. It argues that a note calculated to compel the pilot to change destinations against his will was clearly sufficient to constitute force.
14
The difficulty with the government's argument is that it assumes Congress intended the words "force or violence or threat of force or violence, or by any other form of intimidation" to be no more than an enumeration of synonyms. The legislative history of the provision provides only limited illumination, but to the extent that it is pertinent it undermines the government's argument. As originally adopted in the 1961 amendments to the Federal Aviation Act of 1958 the definition of aircraft piracy meant only seizure or exercise of control "by force or violence or threat of force or violence." Pub.L. No. 87-197, 75 Stat. 466. Section 103 of the Antihijacking Act of 1974, Pub.L. No. 93-366, 88 Stat. 409, amended the definition by adding "or by any other form of intimidation." The legislative history reflects that the amendment was considered by Congress to be an expansion of the definition, not a reiteration. Conf.Rep. No. 93-1194, 93d Cong. 2d Sess., reprinted in (1974) U.S.Code Cong. & Ad.News, 3975, 3996, 3997.
15
We confront the specific question whether evidence of a threat of force or violence or of intimidation is sufficient to prove the element of force under the air piracy statute. Neither side cites any federal appellate case arising under this particular statute. We must therefore examine applicable general principles and in doing so we take note of a parallel line of authority arising under a similar statute.
16
The federal bank robbery statute proscribes a taking "by force and violence or by intimidation...." 18 U.S.C. § 2113(a). The fifth circuit has described these as alternative ways in which the offense may be committed. United States v. Jacquillon, 469 F.2d 380, 386 (5th Cir. 1972), cert. denied, 410 U.S. 938, 93 S.Ct. 1400, 35 L.Ed.2d 604 (1973).1 The same conclusion seems consistent with the legislative history of 49 U.S.C. § 1472(i)(2). We therefore conclude that the government's evidence did not prove that Figueroa used force or violence in the attempted hijack.
Constructive Amendment of the Indictment
17
It might be argued that the government's proof of threats and intimidation rather than force or violence is merely a variance between the indictment and the proof, i.e., that the indictment charged that Figueroa violated the air piracy statute in two of the five ways in which it could be violated, and the government proved the other three. If this case involves no more than a variance, Figueroa would not be entitled to a reversal of his conviction unless he could prove that the variance substantially prejudiced his rights. See, e.g., Berger v. United States, 295 U.S. 78, 82, 55 S.Ct. 629, 630, 79 L.Ed. 1314 (1935); United States v. Gonzales, 661 F.2d 488, 492-93 (5th Cir. 1981).
18
Although the matter is not without controversy, we conclude that Figueroa's conviction constitutes a constructive amendment of the indictment rather than a simple variance between the indictment and the proof. Figueroa therefore suffered per se prejudice to his right to be tried only on charges in the grand jury indictment. U.S.Const., Amend. V; Stirone v. United States, 361 U.S. 212, 217, 80 S.Ct. 270, 273, 4 L.Ed.2d 252 (1960).
19
In United States v. Salinas, 654 F.2d 319 (5th Cir. 1981), the court adopted the test of the District of Columbia Circuit to distinguish between constructive amendment and variance:
20
An amendment of the indictment occurs when the charging terms of the indictment are altered, either literally or in effect, by prosecutor or court after the grand jury has last passed upon them. A variance occurs when the charging terms of the indictment are left unaltered, but the evidence offered at trial proves facts materially different from those alleged in the indictment.
21
Id. at 324 (quoting Gaither v. United States, 413 F.2d 1061, 1071 (D.C.Cir.1969)) (emphasis in original).2
22
If we allow Figueroa's conviction to stand, we would in effect permit the government to substitute the term "threats and intimidation," which the government proved but the grand jury did not charge, for the term "force and violence," which the grand jury charged but which the government could not prove. This is precisely the alteration of the charging terms of the indictment that Salinas proscribes.
23
The decision in United States v. Bizzard, 615 F.2d 1080 (5th Cir. 1980), applied the test for constructive amendment to facts similar to those found here. In Bizzard, the defendant was charged with violating 18 U.S.C. § 2113(d). The statute could be violated by putting life in jeopardy or by assaulting any person while robbing a bank. The indictment charged that the defendant placed the lives of two bank tellers in jeopardy. At trial, however, the government introduced evidence of assault and the trial judge instructed the jury on assault. The defendant's conviction on the charged offense was overturned because "(a) defendant has a substantial right to be tried solely on charges presented in an indictment returned by the grand jury."3 Id. at 1082. The same result is warranted here.4
Lesser Included Offense
24
Our decision to overturn Figueroa's conviction on the charged offense does not end the matter. Figueroa concedes that the evidence was sufficient to prove the lesser included offense of interference with flight crew members or flight attendants in violation of 49 U.S.C. § 1472(j), and that conviction of the greater offense necessarily included conviction of the lesser offense. See generally United States v. Busic, 592 F.2d 13, 23 (2d Cir. 1978).
25
Under 28 U.S.C. § 2106, this court has jurisdiction to remand and direct entry of such appropriate judgment as may be just under the circumstances. This section authorizes federal courts to modify a judgment in a criminal case by reducing the conviction to that of the lesser included offense. See United States v. Swiderski, 548 F.2d 445, 452 (2d Cir. 1977); United States v. Industrial Laboratories Co., 456 F.2d 908, 911 (10th Cir. 1972) and cases cited therein. We conclude that the just disposition of this case is that Figueroa's conviction be reversed and the case remanded with directions to enter a judgment of conviction of the lesser included offense and for resentencing. It is so ordered.
26
REVERSED AND REMANDED WITH DIRECTIONS.
1
In Jacquillon the court observed that even though the statute is worded in the disjunctive, the indictment could be worded in the conjunctive and that proof of either element would support a conviction. Accord, United States v. Haynes, 610 F.2d 309, 310 (5th Cir. 1980). So here the indictment could have charged Figueroa with piracy by force and violence and threat of force or violence and by intimidation. In that event proof of any one of the elements charged would have supported conviction. Inexplicably, however, Figueroa was charged only with piracy by force and violence. See also United States v. Bizzard, 615 F.2d 1080, 1081 (5th Cir. 1980)
2
A simple variance occurs when, for example, the indictment indicates that the crime took place on Monday but the government's evidence at trial shows that it took place on Wednesday. See, e.g., United States v. Phillips, 625 F.2d 543, 545-46 (5th Cir. 1980). A constructive amendment occurs when, for example, the indictment charges that a bank president violated the law by lending money to a third party for his own use and the government proves that he violated the law by making loans to a third party with insufficient collateral. See, e.g., United States v. Carlson, 616 F.2d 446, 447 (9th Cir. 1980). The function of the distinction is this: we can be sure that a grand jury would indict the defendant in Phillips for the charged offense irrespective of whether it occurred on Monday, as alleged, or Wednesday, as proved. We cannot say with equal certainty that a grand jury would have indicted the bank president in Carlson for the crime that the government ultimately proved. See United States v. Beard, 436 F.2d 1084, 1087 (5th Cir. 1971)
3
There is dictum in our decision in United States v. Guthartz, 573 F.2d 225 (5th Cir.), cert. denied, 439 U.S. 864, 99 S.Ct. 187, 58 L.Ed.2d 173 (1978), which appears to be contrary to the reasoning in Bizzard. The holding in Guthartz, however, is not inconsistent with the holding in Bizzard or with the result that we reach here. The defendant in Guthartz, a landlord, sent a letter to the Department of Housing and Urban Development seeking to justify rent increases for his federally subsidized apartments. The letter referred to several enclosed documents prepared by a third party which exaggerated the cost of various improvements. The statute which the defendant was accused of violating, 18 U.S.C. § 1001, prohibited inter alia the making of a false statement and the use of false documents. The indictment charged the defendant with making a false statement by means of a letter. At trial, the government proved that the enclosures included with the letter contained false estimates. According to the defendant, the government thereby constructively amended the indictment to charge him with using false documents rather than making false statements. Our court held, however, that the jury could have concluded that the enclosures were "an integral part" of the written statement that was "made" by the defendant rather than separate false documents that were "used" by the defendant. The court, therefore, rejected the defendant's argument that a substantial variance, much less a constructive amendment, had taken place. See also United States v. Malatesta, 583 F.2d 748, 755-56 & n.6 (5th Cir. 1978), modified, 590 F.2d 1379 (5th Cir.) (en banc), cert. denied, 440 U.S. 962, 99 S.Ct. 1508, 59 L.Ed.2d 777 (1979) (discussing Guthartz)
4
This would be a different case if the government had provided substantial evidence of the charged offense, force and violence, as well as evidence of threats and intimidation. In such a case, the judge's instructions to the jury could have focused the deliberations upon evidence of the charged offense, and there would be little likelihood that the jury would convict the defendant on charges other than those made by the grand jury. See United States v. Gonzales, 661 F.2d 488, 492 (5th Cir. 1981). In this case, however, the government furnished no substantial evidence of the charged offense of force and violence. The instructions of the trial judge, therefore, could not serve to focus the jury's attention upon evidence of the charged offense and thus avoid violation of the defendant's fifth amendment right to be tried only on charges in the grand jury indictment
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752 N.W.2d 452 (2008)
MARTINEK
v.
BELMOND-KLEMME COMMUNITY SCHOOL DIST.
No. 07-0729.
Court of Appeals of Iowa.
May 14, 2008.
Decision without published opinion. Affirmed.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
NO. 91-3737
_______________
JANICE G. CLARK, ORSCINI L. BEARD,
EDDIE G. CRAWFORD, NORBERT C. RAYFORD,
VOTER INFORMATION PROJECT, INC.,
LOUIS SCOTT, SYLVIA COOK, CONNIE SADLER,
TOM NELSON AND ALBERT RICHARD,
Plaintiffs-Appellees
Cross-appellants,
V.
EDWIN W. EDWARDS, GOVERNOR OF LOUISIANA,
RICHARD P. IEYOUB, ATTORNEY GENERAL OF LOUISIANA,
FOX McKEITHEN, SECRETARY OF STATE OF THE STATE
OF LOUISIANA, IN THEIR OFFICIAL CAPACITIES AS
REPRESENTATIVES OF THE STATED OF LOUISIANA,
Defendants-Appellants
Cross-appellees.
______________________________________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
______________________________________________________
(April 1, 1992)
Before KING, JOHNSON, and HIGGINBOTHAM, Circuit Judges.
PER CURIAM:
The Motion of the Defendants-Appellants-Cross-Appellees to
dismiss their appeal, to vacate the stay pending appeal
previously entered by this Court, and to remand this case to the
district court for imposition of the relief ordered by the
district court at the next scheduled election is hereby granted.
The Motion of the Plaintiffs-Appellees-Cross-Appellants to
dismiss their cross-appeal is hereby granted.
APPEALS DISMISSED; STAY VACATED; REMANDED TO THE DISTRICT
COURT WITH INSTRUCTIONS.
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Case: 14-13178 Date Filed: 06/23/2015 Page: 1 of 12
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-13178
________________________
D.C. Docket No. 0:12-cv-61853-WPD
PAUL B. TARTELL, M.D.,
Plaintiff-Appellee,
versus
SOUTH FLORIDA SINUS AND ALLERGY CENTER, INC.,
LEE M. MANDEL, M.D., INC.,
a Florida Corporation,
LEE M. MANDEL, M.D.,
Individually,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_______________________
(June 23, 2015)
Before WILLIAM PRYOR, JULIE CARNES, and SILER, ∗ Circuit Judges.
WILLIAM PRYOR, Circuit Judge:
∗
Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by
designation.
Case: 14-13178 Date Filed: 06/23/2015 Page: 2 of 12
This appeal requires us to decide whether the district court clearly erred
when it found that a physician’s name had acquired “secondary meaning,” Tana v.
Dantanna’s, 611 F.3d 767, 774 (11th Cir. 2010) (internal quotation marks
omitted). Dr. Paul B. Tartell and Dr. Lee M. Mandel jointly practiced medicine in
South Florida until 2011. After they split their practices, Dr. Mandel registered six
domain names with variations of Dr. Tartell’s name. Dr. Tartell then filed a
complaint against Dr. Mandel, his incorporated practice, and another corporation
owned by Dr. Mandel for cybersquatting, 15 U.S.C. § 1125(d), false designation of
origin, id. § 1125(a), and unfair competition. Dr. Mandel canceled the registration
for the domain names the day after Dr. Tartell filed his complaint, but the parties
persisted in this litigation. At a bench trial, Dr. Tartell presented evidence that his
name had appeared on several advertisements for their joint practice, but Dr.
Tartell presented no substantial evidence about the effect of those advertisements
on consumers. The district court ruled that Dr. Tartell’s name had acquired
secondary meaning, but awarded him only statutory damages for cybersquatting in
the absence of any evidence of actual damages. Because Dr. Tartell failed to
present substantial evidence that his name had acquired secondary meaning in the
minds of consumers, the district court clearly erred. We reverse and render a
judgment in favor of Dr. Mandel and his corporations.
2
Case: 14-13178 Date Filed: 06/23/2015 Page: 3 of 12
I. BACKGROUND
From 1998 to 2011, Dr. Tartell and Dr. Mandel practiced together as part of
Tartell & Mandel, M.D., LLC., under the name South Florida Sinus and Allergy
Center. In February 2011, the doctors split their practices, and the split was
contentious.
After the split of their practices, Dr. Mandel incorporated the name of their
practice, South Florida Sinus and Allergy Center, Inc., without Dr. Tartell’s
knowledge, and Dr. Mandel registered six domain names that used some variation
of Dr. Tartell’s name: ptartell.com, paultartellmd.net, paultartellmd.com,
paultartell.net, paultartell.com, and tartell.net. Dr. Mandel configured five of the
domain names to forward users to sfsac.com, a domain name he controlled. Dr.
Mandel also purchased Google AdWords for “Paul Tartell” and “Paul Tartell,
MD,” which caused sfsac.com to appear as an advertisement whenever someone
searched with those terms on Google.
After Dr. Tartell discovered the registered domain names, he filed a
complaint against Dr. Mandel; Dr. Mandel’s professional corporation, Lee M.
Mandel, M.D., Inc.; and South Florida Sinus and Allergy Center, Inc. Dr. Tartell
asserted five causes action: federal cybersquatting, 15 U.S.C. § 1125(d); false
designation of origin, id. § 1125(a); unfair competition; false advertising, id. §
1125(a); and unauthorized publication of name and likeness, Fla. Stat. § 540.08.
3
Case: 14-13178 Date Filed: 06/23/2015 Page: 4 of 12
Dr. Mandel cancelled the domain names the day after Dr. Tartell filed his
complaint. But as the district court aptly described, “this action continued all the
way through [a four-day bench] trial because Dr. Mandel refused to take
responsibility for his antics while Dr. Tartell sought a statutory windfall for a
short-lived and largely pointless deceit.”
To prove that his name had acquired “secondary meaning,” Tana, 611 F.3d
at 774 (internal quotation marks omitted), Dr. Tartell presented evidence of his
academic and community activities, evidence of commercial advertisements of his
practice with Dr. Mandel, and testimony about patient and doctor recognition of
his name. For example, Dr. Tartell presented evidence that he gave 39 lectures
from 1990 to 1997 and 11 presentations from 1988 to 1995 and that he published
ten articles in medical journals between 1989 and 1999. Dr. Tartell also testified
that he gave “[d]ozens” of non-academic lectures to various groups with “50 or so”
people and that he participated in charitable organizations. But Dr. Tartell provided
no details about his non-academic lectures. Dr. Tartell also presented evidence that
his name appeared on a variety of promotional materials, including several
advertisements for the Center that appeared at the Bank Atlantic Center, where the
Florida Panthers play professional hockey; advertisements for the Center that
appeared on concession items at the Arena; a biography of Dr. Tartell that
appeared in the program and on the website for the Panthers; advertisements for
4
Case: 14-13178 Date Filed: 06/23/2015 Page: 5 of 12
the Center in the Sun Sentinel newspaper and on the radio; and listings of Dr.
Tartell’s name in directories for patients and medical professionals. Dr. Tartell
testified that, “not infrequent[ly],” patients “come to [him] saying that the reason
they’re coming to [him] . . . is because they searched [him], and they found . . .
article[s] that [he] had written” and that “everybody that [went to the Bank Atlantic
Center] knew that [he was] the voice doctor[].” He testified that his academic
activities caused other doctors to contact him with questions or to refer patients to
him. And two referring doctors testified that other doctors “thought very highly of”
Dr. Tartell, that their patients were usually “happy with the results” when referred
to Dr. Tartell, and that other doctors gave “the utmost praise” when talking about
Dr. Tartell.
The district court found that “Dr. Tartell’s name has acquired secondary
meaning within South Florida” based on “the length and prevalence of Dr. Tartell’s
overall public use of his name in conjunction with his medical services—including
his widespread advertisements through affiliation with the Florida Panthers.” The
district court mentioned the evidence submitted by Dr. Tartell, but it made no
specific findings with respect to each of the four factors that courts should consider
when determining whether a mark has acquired secondary meaning, see id. at 776.
The district court entered a judgment in favor of Dr. Tartell for
cybersquatting, false designation, unfair competition, and unauthorized publication
5
Case: 14-13178 Date Filed: 06/23/2015 Page: 6 of 12
of name and likeness, but against his claim for false advertising. The district court
awarded Dr. Tartell $1,000 in statutory damages for each claim for cybersquatting,
for a total of $6,000, but it awarded Dr. Tartell no other relief because he failed to
prove actual damages. The district court later ruled that Mandel, Inc., and South
Florida Sinus and Allergy Center, Inc., were liable to the same extent that Dr.
Mandel was liable.
II. STANDARDS OF REVIEW
“After a bench trial, we review the district court’s conclusions of law de
novo and the district court’s factual findings for clear error.” Proudfoot Consulting
Co. v. Gordon, 576 F.3d 1223, 1230 (11th Cir. 2009). “The existence of secondary
meaning is a question of fact,” which we review “under the clearly erroneous
standard.” Am. Television & Commc’ns Corp. v. Am. Commc’ns & Television, Inc.,
810 F.2d 1546, 1549 (11th Cir. 1987). A factual finding is clearly erroneous “if,
after viewing all the evidence, we are left with the definite and firm conviction that
a mistake has been committed.” HGI Assocs., Inc. v. Wetmore Printing Co., 427
F.3d 867, 873 (11th Cir. 2005) (internal quotation marks and citation omitted).
III. DISCUSSION
A plaintiff must prove that his service mark is “distinctive” to establish a
claim for cybersquatting, 15 U.S.C. § 1125(d)(1)(A)(ii)(I), for false designation of
origin, Conagra, Inc. v. Singleton, 743 F.2d 1508, 1512–13 (11th Cir. 1984), and
6
Case: 14-13178 Date Filed: 06/23/2015 Page: 7 of 12
for unfair competition, Custom Mfg. & Eng’g, Inc. v. Midway Servs., Inc., 508 F.3d
641, 652 (11th Cir. 2007). We “recognize[] four categories of distinctiveness” for
marks, but the parties agree that Dr. Tartell’s name is a “descriptive” mark, which
is a “mark[] that identif[ies] the characteristic or quality of a product or service.”
Tana, 611 F.3d at 774. Although a descriptive mark is not “inherently distinctive,”
it “may become sufficiently distinctive to enjoy trademark protection by acquiring
‘secondary meaning.’” Id.
“A name has acquired secondary meaning when the primary significance of
the term in the minds of the consuming public is not the product but the producer.”
Id. (quoting Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1358 (11th Cir.
2007)). In other words, secondary meaning requires that a “name denotes to the
consumer or purchaser ‘a single thing coming from a single source.’” Am.
Television, 810 F.2d at 1549 (quoting Am. Heritage Life Ins. Co. v. Heritage Life
Ins. Co., 494 F.2d 3, 12 (5th Cir. 1974)). A plaintiff may prove secondary meaning
with direct evidence, such as consumer surveys, or circumstantial evidence.
Investacorp, Inc. v. Arabian Inv. Banking Corp. (Investcorp) E.C., 931 F.2d 1519,
1525 (11th Cir. 1991). A court should consider the four Conagra factors to
determine if circumstantial evidence establishes that a mark has acquired
secondary meaning:
(1) the length and nature of the name’s use, (2) the nature and extent
of advertising and promotion of the name, (3) the efforts of the
7
Case: 14-13178 Date Filed: 06/23/2015 Page: 8 of 12
proprietor to promote a conscious connection between the name and
the business, and (4) the degree of actual recognition by the public
that the name designates the proprietor’s product or service.
Tana, 611 F.3d at 776 (internal quotation marks and citation omitted). The “minds
of the consuming public,” id. at 774 (internal quotation marks and citation
omitted), define what, if any, secondary meaning is attributed to a mark, and as
such, the owner of a mark must adduce evidence of what “the [mark] denotes to
the consumer,” Am. Television, 810 F.2d at 1549.
The district court clearly erred when it found that Dr. Tartell’s name had
acquired secondary meaning. Because Dr. Tartell offered no consumer surveys, he
had to rely on circumstantial evidence to prove that his name had acquired
secondary meaning. Although Dr. Tartell produced some evidence relevant to the
Conagra factors, he failed to produce any substantial evidence of what his name
“denotes to the consumer,” id. As a result, “we are left with the definite and firm
conviction that a mistake has been committed,” HGI Assocs., 427 F.3d at 873
(internal quotation marks and citation omitted).
As a threshold matter, Dr. Tartell’s evidence about the use of his name in
academic settings and evidence about his reputation among other medical
professionals are not probative of whether his name had acquired secondary
meaning. The target audience for Dr. Tartell’s academic activities, most of which
occurred more than two decades ago, was not consumers of his medical services—
8
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that is, potential patients. And nothing in the record suggests that, “present-day
[potential patients] would specifically associate [his] name with [his services],”
Tana, 611 F.3d at 777, based on his academic activities. See also Flynn v. AK
Peters, Ltd., 377 F.3d 13, 20–21 (1st Cir. 2004) (holding that academic activities
are not evidence of secondary meaning where “consumers [are not] aware of [the]
academic achievements”). Likewise, evidence that Dr. Tartell is respected by his
peers “suggests nothing more than that [his] name . . . may have a familiar ring to a
discrete group,” Tana, 611 F.3d at 777.
Dr. Tartell produced no substantial evidence relevant to the fourth Conagra
factor, “the degree of actual recognition by the public,” id. at 776 (internal
quotation marks and citation omitted), which bears directly on what his name
“denotes to the consumer,” Am. Television, 810 F.2d at 1549. The only evidence
related to this factor was Dr. Tartell’s self-serving testimony that some patients
told him that they selected him because of his articles and that “everybody that
[went to the Bank Atlantic Center] knew that [he was] the voice doctor[].” But Dr.
Tartell’s “generalized self-serving statements as to [his] reputation . . . add no
material evidence . . . that is relevant to the secondary-meaning inquiry,” Tana,
611 F.3d at 777; see also Flynn, 377 F.3d at 21 (explaining that a plaintiff’s
testimony “that a handful of strangers have told her that they recognized her from a
9
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talk or that they had read her [work]” is “limited anecdotal evidence [that] does
little to establish that her name has acquired secondary meaning”).
Dr. Tartell’s remaining evidence says nothing about the perceptions of
consumers. For example, “there is nothing significant about the manner of [Dr.
Tartell]’s use of” his name, Investacorp, 931 F.2d at 1525. Dr. Tartell practiced
under the name “South Florida Sinus and Allergy Center” for most of the 13 years
before this action, so Dr. Tartell’s name was not the primary mark by which his
services were identified during this period. See J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition § 7.3 (4th ed. 2009) (“[T]he prominence of a
word or symbol is certainly an important element in determining whether it creates
a separate commercial impression on the average buyer.”). Dr. Tartell produced no
evidence that his use of his name was unique as compared to how another doctor
would use his name. See id. § 13.2 (explaining that, in “professions where the use
of personal names as identifiers is traditional,” such as the medical profession, it is
more difficult to establish secondary meaning). And, “the nature and extent of
advertising,” Tana, 611 F.3d at 776 (internal quotation marks and citation omitted),
of Dr. Tartell’s name fails to establish that his name had acquired secondary
meaning. Although Dr. Tartell’s name appeared on numerous advertisements and
other promotional material, his name was not displayed “prominently.” See
Conagra, 743 F.2d at 1513 (stating that the “prominen[ce]” of a name on
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packaging may support a finding of secondary meaning). All of the advertisements
instead displayed the name of the Center or its logo more prominently. “South
Florida Sinus and Allergy Center” was written in larger font, and the visual
features of each advertisement drew the reader’s attention to that mark. Dr.
Tartell’s name appeared in smaller font, near the bottom of the advertisements,
alongside Dr. Mandel’s and a physician assistant’s names. These advertisements
fail to suggest that ‘a single thing[, sinus and allergy services at the Center,]
com[es] from a single source[, Dr. Tartell],’” Am. Television, 810 F.2d at 1549
(internal quotation marks and citation omitted). Dr. Tartell also failed to present
any evidence about his “efforts . . . to promote a conscious connection between
[his] name and [his services],” Tana, 611 F.3d at 776 (internal quotation marks and
citation omitted). Dr. Tartell testified that he chose the content of the
advertisements to create a connection between sinus and allergy services and his
name, but those advertisements prominently featured the name of the Center, not
Dr. Tartell’s name. Although Dr. Tartell also mentioned various lectures he gave in
the community, his “generalized self-serving statements,” id. at 777, failed to
provide any details about these lectures. Moreover, “[d]ozens” of lectures to “50 or
so” people cannot establish that his name had acquired a secondary meaning with a
significant portion of potential patients in densely populated South Florida. Dr.
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Tartell presented no evidence that “advertising campaigns made major inroads to
the consumer psyche.” Investacorp, 931 F.2d at 1526.
IV. CONCLUSION
We REVERSE the judgment in favor of Dr. Tartell and RENDER a
judgment in favor of Dr. Mandel and his corporations.
12
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366 S.W.3d 668 (2012)
Shaun Cortez KING, Appellant,
v.
STATE of Missouri, Respondent.
No. ED 97118.
Missouri Court of Appeals, Eastern District, Division Four.
May 29, 2012.
Edward S. Thompson, Assistant Public Defender, St. Louis, MO, for appellant.
Robert J. Bartholomew, Jr., Assistant Attorney General, Jefferson City, MO, for respondent.
KURT S. ODENWALD, C.J., PATRICIA L. COHEN, J., and ROBERT M. CLAYTON III, J.
ORDER
PER CURIAM.
Shaun King (Movant) appeals the judgment of the Circuit Court of the City of St. Louis denying his Rule 29.15 motion for post-conviction relief. Movant claims the motion court clearly erred in denying his claim that the sentence imposed by the *669 trial court on his conviction of first-degree statutory sodomy violated his rights to due process and freedom from cruel and unusual punishment.
We have reviewed the briefs of the parties and the record on appeal and find the motion court's decision was not clearly erroneous. An extended opinion would have no precedential value. We have, however, provided a memorandum opinion only for the use of the parties setting forth the reasons for our decision.
We affirm the judgment pursuant to Rule 84.16(b).
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366 B.R. 656 (2007)
UNITED STATES of America, Plaintiff,
v.
Arthur Ray HARRISON, et al., Defendants.
In re Arthur R. Harrison, Debtor.
United States of America (Internal Revenue Service), Plaintiff,
v.
Arthur R. Harrison, Debtor/Defendant.
Civ.A. No. H-05-3507. Bankruptcy No. 04-46820. Adversary No. 06-3276.
United States District Court, S.D. Texas, Houston Division.
March 13, 2007.
Order Denying Reconsideration April 30, 2007.
*657 *658 Ramona Stephens Notinger, Moha Pradhan Yepuri, U.S. Department of Justice, Tax Division, Dallas, TX, for Plaintiff.
Ben R. King, Attorney at Law, Ijeoma Ihuaku Opara, Attorney at Law, John Vincent Burger, Burger Law Firm, Uchechi Okechukwu Nwakanma, Law Office of Nwakanma, Christian M. Sternat, Attorney at Law, Vincent Ifeanyichukwu Abazie, Attorney at Law, Houston, TX, Donald Kirk Swinney, Matthew Tepper, McCreary, Veselka, Bragg & Allen, Round Rock, TX, for Defendants.
Lillie Harris Harrison, Bryan, TX, pro se.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
ATLAS, District Judge.
Plaintiff United States of America filed this civil lawsuit and the bankruptcy adversary proceeding seeking to recover unpaid income taxes owed by Defendant Arthur Harrison ("Harrison"). Plaintiff seeks to foreclose on property either owned by Harrison in his own name or held in the name of an individual whom Plaintiff contends is Harrison's nominee. The United States also seeks the revocation of Harrison's discharge in his Chapter 7 bankruptcy proceeding, and a finding that Harrison is in contempt of Court orders previously issued in this case.
The case was tried to the Court beginning February 12, 2007. Having heard and observed the witnesses, and having reviewed all matters of record in this case, the Court makes the following findings of fact and conclusions of law.[1]
I. GOVERNING LEGAL PRINCIPLES
A. Texas Uniform Fraudulent Transfers Act
The United States argues that Harrison fraudulently transferred and/or concealed *659 assets in which he has an interest. The United States, therefore, seeks to foreclose on those assets to satisfy Harrison's income tax liability.
The Texas Uniform Fraudulent Transfers Act ("Texas UFTA"), Texas Business and Commerce Code § 24.005, provides that:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or within a reasonable time after the transfer was made or obligation was incurred, if the debtor made the transfer or incurred the obligation: . . . (1) with actual intent to hinder, delay, or defraud any creditor or debtor.
TEX. BUS. & COM.CODE § 24.005(a)(1). The intent to hinder, delay or defraud are three separate elements any one of which will support a finding of fraud. See In re Brentwood Lexford Partners, L.L.C., 292 B.R. 255, 262 (Bankr.N.D.Tex.2003). The intent to "delay or defraud may be established by circumstantial evidence." Id. at 263 (citing In re Reed, 700 F.2d 986, 991 (5th Cir.1983)). The Texas UFTA has a non-exhaustive list of "badges of fraud," which may be used by courts to determine intent to hinder, delay or defraud. See In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000). These badges of fraud include, but are not limited to: (1) the transfer or obligation was to an insider; (2) the debtor retained possession or control of the property transferred; and (3) the transfer or the asset was concealed. See TEX. BUS. & COM.CODE § 24.005(b). Fraudulent intent is presumed "when property is either transferred gratuitously or is transferred to relatives." Pavy v. Chastant (In re Chastant), 873 F.2d 89 (5th Cir.1989).
B. Revocation of Bankruptcy Discharge
The United States argues that Harrison obtained a discharge in bankruptcy that should be revoked under 11 U.S.C. § 727. The United States argues that Harrison obtained the discharge through fraud and that Harrison failed to comply with the requirements of the Bankruptcy Code.
Under § 727(d) of the Bankruptcy Code, a creditor can request the revocation of a discharge based on any one of the following:
(1) such discharge was obtained through the fraud of the debtor, and the requesting party did not know of such fraud until after the granting of such discharge;
(2) the debtor acquired property that is property of the estate, or became entitled to acquire property that would be property of the estate, and knowingly and fraudulently failed to report the acquisition of or entitlement to such property, or to deliver or surrender such property to the trustee;
(3) the debtor committed an act specified in subsection (a)(6) of this section [refused to testify, or failed to obey a court's order]; or
(4) the debtor has failed to explain satisfactorily
(A) a material misstatement in an audit referred to in section 586(f) of title 28; or
(B) a failure to make available for inspection all necessary accounts, papers, documents, financial records, files, and all other papers, things, or property belonging to the debtor that are requested for an audit referred to in section 586(f) of title 28.
11 U.S.C. § 727(d). Additionally, a discharge may be revoked under § 727 if a debtor fails to comply with the requirements of the code. See United States v. Cluck, 87 F.3d 138, 140 (5th Cir.1996) (upholding the Bankruptcy Court's revocation of the defendant's discharge because he *660 failed to disclose property and assets, made false statements in his bankruptcy schedules, fraudulently transferred property, and repeatedly disregarded court orders).
A "party attempting to revoke a debtor's discharge under 727(d) (1) must show 1) the discharge was obtained through fraud of the debtor, 2) the party requesting the revocation did not know of the debtor's fraud until after the discharge was granted, and 3) grounds exist which would have prevented the debtor's discharge had they been known." In re Landry, 350 B.R. 51, 56 (Bkrtcy.E.D.La.2006).
C. Motions for Contempt
The United States filed two motions [Doc. # 138 and Doc. # 145] seeking an order holding Harrison in contempt for contacting two witnesses in the case. Since the United States seeks compensation for Harrison's conduct, the contempt would be civil in nature. See Matter of Terrebonne Fuel and Lube, Inc., 108 F.3d 609, 612 (5th Cir.1997).
II. FINDINGS OF FACT
As the trier of fact in this case, the Court evaluated the witnesses' credibility. The Court finds many, if not most, of Defendants' witnesses' testimony was in significant respects unworthy of belief. In particular, Harrison, Sharonda Lashea Harris, Audra Harrison, and Floyd Young gave testimony that was contradictory, internally inconsistent, and on occasion bizarre. For example, Harrison testified through racking sobs that his wife Lillie Harrison was emotionally scarred because Internal Revenue Service ("IRS") Agent James Ashton peeped at her through a window at her home while he was trying to serve a deposition subpoena.[2] Ashton and Mrs. Harrison both testified, however, that Ashton did not peep in Mrs. Harrison's window.
Based on the Court's evaluation of witness credibility, the Court makes the following findings of fact.
A. Parties and Disputed Properties
Plaintiff is the United States of America, and the specific agency involved in the IRS.
Defendant Arthur Ray Harrison is the relevant taxpayer. Defendant Floyd Young is Harrison's friend and previously worked for Harrison as a mechanic. Defendant Audra Renee Harrison ("Audra Harrison") is Harrison's adult daughter. Defendant Lillie Harris. Harrison is Harrison's wife. Defendant Brazos County is a local taxing authority to which property taxes are owed on certain of the disputed properties. All Defendants reside or are located in the Southern District of Texas.
The disputed properties include real property located in Bryan, Texas, at 2536 Pinon Court, 307 N. Texas Avenue, 1107 S. Texas Avenue, 503 East 24th Street, and 1095 N. Earl Rudder Freeway.[3] The disputed properties also include a business known as A & A Auto Rentals and Sales and variations of that name, as well as three vehicles a 1999 Cadillac Escalade, a 1987 MCI bus, and a 1984 GMC bus.
B. Harrison's Income Tax Liability and Liens
On the dates indicated in the following chart, a delegate of the Secretary of the Treasury made assessments and gave notice and demand against Harrison for his *661 federal unpaid income taxes, penalties, and interest in the amounts and for the tax years shown:
Tax Unpaid Assessment Date Tax
Year Balance Date Lien Filed
----------------------------------------------
1990 $56,574.25 03/24/1997 07/28/1997
1991 $28,439.22 03/24/1997 07/28/1997
1993 $ 3,122.49 10/28/1996 07/28/1997
1995 $11,358.59 02/17/1997 07/28/1997
1996 $55,407.94 10/20/1997 11/17/1997
Despite notice and demand, Harrison has not paid his income taxes. As of September 1, 2006, Harrison owed the IRS $217,966.63 (including interest and penalties) for his unpaid 1990, 1991, 1993, 1995, and 1996 income taxes.[4]
On February 11, 1997, Harrison entered into an agreed Decision in his United States Tax Court case stipulating to tax deficiencies for his 1990 and 1991 income taxes.
On July 28, 1997, the United States filed federal tax liens against Harrison in the real and personal property records of Brazos County, Texas for his unpaid income taxes for tax years 1990, 1991, 1993, and 1995. On November 17, 1997, the United States filed a federal tax lien against Harrison in the real property records of Brazos County, Texas for his unpaid income tax for the 1996 tax year.
On September 17, 2004, the IRS filed a nominee lien against Floyd Young as nominee, alter-ego and/or transferee of Arthur R. Harrison, which lien encumbers the property at 1101 S. Texas Avenue in Bryan, Texas. On that same day, the IRS filed a nominee lien against A & A Auto Sales and A & A Auto Sales & Rentals, as nominees, alter egos, and/or transferees of Arthur R. Harrison, which lien also encumbers the business A & A Auto Rentals and Sales. On September 24, 2004, the IRS filed a nominee lien against Floyd Young as nominee, alter/ego and/or transferee of Arthur R. Harrison, which lien encumbers the 307 N. Texas property.
C. Analysis Regarding Disputed Properties
1. 2536 Pinon Court
By warranty deed recorded November 19, 1991, Harrison acquired real property located at 2536 Pinon Court in Bryan, Brazos County, Texas, with the following legal description:
Being all that certain lot, tract or parcel of land lying and being situated in Brazos County, Texas, and being Lot TWO (2), Block TWO (2), ALLEN RIDGE PHASE ONE, an addition in the City of Bryan, Brazos County, Texas, as shown on plat recorded in Volume 373, Page 469, Official Records of Brazos County, Texas.
Harrison's homestead is located on this property. According to the Brazos County real property records, Harrison is the fee simple owner of his homestead, but his wife, Lillie Harrison, has a homestead interest in the property. The parties have stipulated that Mrs. Harrison's homestead interest in this property is 51.138% and Mr. Harrison's homestead interest in the property is 48.863%. The IRS is entitled to foreclose its interest in this property, and these percentages will be applied to the sales price after payment of all expenses of sale and any unpaid ad valorem taxes owed to the County of Brazos.
2. 307 N. Texas Avenue
On or about February 21, 1997, Harrison acquired by special warranty deed from Raymond Lehman certain commercial real property located at 307 N. Texas Avenue in Bryan, Brazos County, Texas, having the following legal description:
*662 All that certain lot, tract or parcel of land lying and being situated in Brazos County, Texas, and being Lot Six-R (6-R), Block Forty-Three (43), City of Bryan, an addition to the City of Bryan, Brazos County, Texas, according to a vacating and resubdivision plat of Lot 6 and 38' of Lot 7, Block 43, Original Townsite of Bryan, the plat recorded in Volume 810, Page 745 of the Official Records of Brazos County, Texas.
The United States' statutory tax lien against this property pursuant to 26 U.S.C. § 6321 arose on the day the IRS assessed the unpaid taxes in October 1996, February 1997, and March 1997.
On or about April 14, 1997, after the IRS made federal income tax assessments against Harrison for his 1990, 1991, and 1993 income tax and after the statutory liens attached to the property, Harrison conveyed to Floyd Young a life estate in the real property at 307 N. Texas Avenue in Bryan, Texas.[5] Young, a convicted felon[6] and Harrison's mechanic, claims to have paid approximately $40,000.00 for the life estate. Young claims to have borrowed the money in cash from Robert Polk,[7] but there are no records to support the existence of the loan. Young testified during his deposition in this lawsuit that he put the money in a safe, stating unequivocally that he did not put it under his mattress. He testified to the contrary at trial, stating that he put the cash under his mattress.
On October 20, 1999, more than two years after Harrison claims to have transferred a life estate in the property to Young, a final decree of divorce was entered in the 21st Judicial District Court of Burleson County, Texas, in The Matter of the Marriage of Katherine Harrison and Arthur Ray Harrison, Case No. 21,860. In the divorce decree, Harrison personally was awarded the real property located at 307 N. Texas Avenue in Bryan, Brazos County, Texas.
In his 2004 income tax return, filed in May 2006, Harrison listed 307 N. Texas Avenue as his home address.
Harrison operated and continues to operate an automobile rental and sales business on the property at 307 N. Texas Avenue. Young does not work at this business, but works at his own business, Floyd's Auto Repair, located at 908 Turkey Creek in Bryan. Young has not used his life estate in the 307 N. Texas Avenue property. The transfer of a life estate to Young was fraudulent, and Harrison is the true owner of the 307 N. Texas Avenue property. As a result, the IRS is entitled to sell the property to satisfy Harrison's outstanding federal income tax liability.
3. 1101 S. Texas Avenue
On or about June 30, 2000, Harrison acquired by warranty deed, a remainder interest in commercial real property located at 1101 S. Texas Avenue in Bryan, Texas, having the following legal description:
Surface estate only of all that certain tract or parcel of land lying and being situated in Brazos County, Texas, and being Lots Nos. 1 and 2, Winter's Addition, *663 City of Bryan, Brazos County, Texas, according to plant in Volume M, Page 40½ Civil Minutes District Court of Brazos County, Texas.
Simultaneously, Floyd Young purportedly acquired a life estate in this property. Young has produced an $80,000.00 cashier's check that was used to purchase the property. He claims the source of these funds was the profits from the business at the 307 N. Texas location, but no records support Young's claim that 307 N. Texas Avenue ever generated sufficient income to provide Young the $80,000.00 purchase price for the 1101 S. Texas Avenue property. This explanation, in addition to being incredible in light of other evidence pertaining to the business, is inconsistent with Young's deposition, in which he testified that he borrowed the $80,000.00 from Polk, the same person from whom he claims to have borrowed the $40,000.00 in cash to purchase what turned out to be a purported life estate in 307 N. Texas Avenue.
Young admits that he did not negotiate the purchase of 1101 S. Texas Avenue, he does not remember the name of anyone involved in the transaction, and he did not attend the closing.
Young has not used the 1101 S. Texas Avenue property. Instead, Harrison used and uses this property in connection with his businesses, specifically housing buses there that he uses for casino trips and other travel services.
Also on June 30, 2000, Harrison executed an "Option Contract for Purchase of Real Estate" giving Harrison the option to buy Young's life estate in the 1101 S. Texas Avenue property.
Richard Rosas, a realtor in Bryan, testified at trial that it was his understanding that Harrison owns the two properties on Texas Avenue.
Young's purported life estate is fraudulent. Harrison is the true owner of the property at 1101 S. Texas Avenue, which is subject to sale by the IRS to satisfy Harrison's unpaid federal income taxes.
4. A & A Auto Rentals and Sales
Harrison and Young assert that Young owns A & A Auto Rentals and Sales and that Harrison manages the business for Young. Young believes he has an assumed name document, but he was not sure when he testified at trial and he had not produced one during discovery. Young stated that he paid Harrison $2,000.00 for the stock in A & A Auto Rentals and Sales, yet the business is not incorporated and has no stock.
Harrison claims he is not paid by A & A Auto Rentals and Sales, although he operates it as his own business. Indeed, in his Schedule I in the bankruptcy case he identified himself as "self-employed" in the car rental business, which is consistent with his ownership of A & A Auto Rentals and Sales.
In the final divorce decree in The Matter of the Marriage of Katherine Harrison and Arthur Ray Harrison referenced above, Harrison was awarded the business known as A & A Auto Rentals and Sales, a sole proprietorship, as well as all furniture, fixtures, machinery, equipment, inventory, cash, receivables, accounts, goods, supplies, and all personal property used in connection with the operation of this business.
Roxie Miller, Harrison's employee for a brief time in June 2004, testified at trial that Harrison told her that he and Young owned the business together, but that she saw no indication Young was involved in A & A Rentals and Sales. She never saw Young and never received any instructions from him. She was not aware of anyone other than Harrison making decisions or otherwise controlling the business. Instead, *664 Harrison hired her, paid her, set her hours, and opened and closed the office each day. Miller testified that the bills at A & A Auto Rentals and Sales were in Harrison's name and Harrison paid them.[8] Miller testified that Harrison told her not to talk to an IRS agent if he came to the A & A Auto Rental and Sales office where Miller worked. The Court finds Miller's testimony to be credible.
Twila Dawn Adams also testified at trial. Adams worked for Harrison briefly in early 2006 at both the 307 N. Texas Avenue and the 1101 S. Texas Avenue locations. She knew of Young only as a Mechanic. Adams testified that"Harrison told her not to speak with the IRS.
Richard Rosas, a realtor and long-time resident of the Bryan area, testified at trial that Harrison's primary business is A & A Auto Rentals and Sales.
Burlington Insurance Company issued a sizeable insurance policy to Arthur Harrison d/b/a A & A Auto Rentals and Sales, 307 N. Texas Avenue, and Harrison claimed the insurance expense on his income tax returns.
Harrison and A & A Auto Rentals and Sales were named defendants in a lawsuit in Brazos County filed by Joseph Swonke regarding an accident involving "A & A's Tow Truck." Harrison filed a counterclaim against Swonke alleging "damage to my vehicle" (emphasis added).
Young, a convicted drug dealer, admitted at trial that he had no familiarity with the automobile business when he allegedly bought it.[9] Young also admitted that he has never advised Harrison about how to operate the business. Harrison testified at trial that he gives Young sales reports regarding the A & .A Auto Rentals and Sales vehicles, but neither he nor Young produced even one such report. Young testified at trial that he had more than $20,000.00 in income from A & A Auto Rentals and Sales in 2005, but he did not report any such income on his tax return.
The business operated as A & A Auto Rentals and Sales and numerous variations of that name, including "A & A Auto Sales" and "A & A Auto Rentals," is a sole proprietorship owned by Harrison. As a result, its assets are subject to sale by the IRS to satisfy Harrison's tax liability.
5. 503 East 24th Street
Audra Harrison is the record owner of commercial real property located at 503 E. 24th Street in Bryan, Texas, and having the following legal description: "Lots 6 and 7, Block 52, Pt. 8, City of Bryan, Brazos County, Texas."[10] Richard Rosas, the real estate agent who handled the purchase of the property, dealt only with Harrison, but Audra Harrison attended the closing. Audra Harrison was approximately 18 years old and had just graduated from high school.
Harrison paid the $1,000.00 down payment for the $20,000.00 purchase of the property in Audra Harrison's name in 1995. Harrison signed Audra Harrison's name to the earnest money contract and most of the other purchase documents.[11] During the course of this lawsuit, Audra Harrison has given materially inconsistent statements regarding the source of the *665 funds she allegedly used to purchase the property. The Court is unpersuaded that she has any accurate recollection of the acquisition of this property. The alleged sources of the funds, including high school graduation gifts, college scholarships, and money from her grandmother, were not realistically sufficient to supply the $19,000.00 balance for the purchase of the property. Nor is it credible that Audra Harrison spent her limited funds on real estate for speculation or her father's business use, given her other financial needs at the time. She required college scholarships and student loans, and she worked thirty (30) hours pet week while in college.
Since 1995, Harrison has been the primary user of the 24th Street property in connection with his business operated as A & A Auto Rentals and Sales. Harrison paid for business insurance on the property. Audra Harrison has neither used the property nor charged Harrison for its use.
Audra Harrison obtained student loans, but did not list the 503 E. 24th Street property as an asset on her applications.
In March 2001, Audra Harrison submitted a residential loan application to Countrywide Home Loans, Inc. for the $48,000.00 purchase of a condominium. In the loan application, she did not list the 24th Street property as belonging to her and answered "no" to the question of whether she owned other real estate.
Roxie Miller testified at trial that Harrison told her that he owned the 24th Street property but had it in his daughter's name so he would not have to pay the IRS. Although Miller worked for Harrison only a couple of weeks, the Court finds her to be a credible witness.
On September 12, 2005, Harrison filed a lawsuit in Brazos County claiming to be the "owner/landlord" of the 24th Street property. On September 26, 2005, Harrison obtained a judgment of eviction, recovering possession of the 24th Street property.[12]
In June 29, 2006, Audra Harrison obtained a divorce from Marcus Smith. She did not list the 24th Street property as her asset in the divorce.
Audra Harrison, although listed as the record owner of the 24th Street property, holds the property as a nominee for Harrison, the true owner of the property. As a result, the property is subject to sale to satisfy Harrison's federal income tax liability.
6. 1095 N. Earl Rudder Freeway
Audra Harrison is the record owner of five acres of commercial real property located at 1095 N. Earl Rudder Freeway in Bryan, Texas, having the following legal description: "John Austin, Block 15, Lot 5, TR-266, 5.45 acres, Brazos County, Bryan, Texas." The property was purchased for $11,050.00 at a Sheriffs sale in January 2004. Harrison signed Audra Harrison's name to the bid information sheet. Audra Harrison attended the sheriff's sale, but was unsure how much was paid for the property.[13] Audra Harrison testified at trial that, after she paid her living expenses in 2003, she still had approximately $1,000-$1,200 remaining each month. Prior to 2003, Audra Harrison did not have sufficient income to have saved sufficient sums to purchase this property. Also, the Court finds that Audra Harrison, given her preoccupation with the possibility that a family member may need her financial *666 assistance, would not have used what was likely her entire savings as of January 2004 to purchase the Earl Rudder Freeway property undeveloped land.
Audra Harrison did not list the Earl Rudder Freeway property as an asset in her 2006 divorce proceeding.
Realtor Richard Rosas testified at trial that he recently contacted Harrison about selling the Earl Rudder Freeway property. Rosas testified that he has never discussed the potential sale with Audra Harrison.
Audra Harrison, although listed as the' record owner of the 1095 N. Earl Rudder Freeway property, holds the property as a nominee for Harrison, the true owner of the property. As a result, the property is subject to sale to satisfy Harrison's federal income tax liability.
7. 1999 Cadillac Escalade
Audra Harrison holds title to a 1999 Cadillac Escalade that was previously titled to A & A Auto Rentals and Sales. Harrison uses the Cadillac Escalade and pays the insurance on it. Audra Harrison did not list the Cadillac Escalade in her 2006 divorce proceeding.
Audra Harrison holds title to the 1999 Cadillac Escalade as a nominee for Harrison, its true owner. As a result, the vehicle is subject to sale to satisfy Harrison's federal income tax liability.
8. 1987 MCI Bus/1984 GMC Bus
Audra Harrison holds title to a 1987 MCI bus and a 1984 GMC bus that were owned by A & A Auto Rentals and Sales until title was transferred to Audra. Harrison. She claims that she purchased the MCI bus in December 2004 because she and her then husband wanted to start a bus travel business, but it is undisputed that they never used the bus. Audra Harrison testified that she purchased the 1984 GMC bus, which she referred to as a van or SUV, in October 2005 for trips to Virginia with her husband. She filed for divorce in November 2005.
Harrison is the only person who has used the two buses, and he did so in connection with his travel business, driving clients on casino trips and driving church groups on various trips. Harrison does not pay Audra Harrison for his use of the buses, but he pays the insurance on them. The buses were kept at the 1101 S. Texas Avenue location.
Audra Harrison did not list either bus in her 2006 divorce proceeding.
Harrison filed a lawsuit against Diesel Supply in Brazos County regarding repairs to the MCI bus, indicating in the lawsuit that he owned the bus.
Audra Harrison, although title owner of these two buses, holds them as a nominee for Harrison, their true owner. As a result, the buses are subject to sale to satisfy Harrison's federal income tax liability.
D. Harrison's Bankruptcy
On November 30, 2004, Harrison filed bankruptcy in the Southern District of Texas, Case No. 04-46820, as a "no asset" Chapter 7 proceeding. At the time, the IRS was his largest secured creditor. Nonetheless, Harrison scheduled the IRS as an unsecured priority creditor with undisputed claims. Harrison did not schedule the IRS as a secured creditor, although he knew it had existing federal tax liens.
Harrison filed the required bankruptcy schedules and his statement of financial affairs. He did not, however, schedule any interest in the real properties at 307 N. Texas and 1101 S. Texas in Bryan, Texas, even his alleged remainder interests after the termination of Young's purported life estates. He also failed to schedule his interest in the real properties at 503 East *667 24th Street and 1095 E. Earl Rudder Freeway.
When Harrison filed bankruptcy, he was self-employed at A & A Auto Rentals and Sales, his car rental business, at 307 North Texas Avenue. He did not, however, disclose this business interest, his business interest in A & A Travel Agency, or any ownership interest in motor vehicles. He disclosed $5,500 in income for the tax year 2004, yet he reported $571 total income in his 2004 federal income tax return.
In his statement of financial affairs in his bankruptcy, Harrison disclosed no lawsuits, although he was a party to two lawsuits filed in Justice of the Peace courts at the time he filed bankruptcy.
On or about January 15, 2005, while he was in bankruptcy, Harrison gave the IRS a Collection Information Statement for Wage Earners and Self-Employed Individuals, signed under penalties of perjury, that included a false statement that he had never filed bankruptcy.[14]
On March 21, 2005, Harrison received a general Chapter 7 bankruptcy discharge. On March 13, 2006, the United States timely filed Adversary Proceeding No. 06-3276 against Harrison.
Harrison made false statements in his Section 341 creditors' meeting, stating that he had a common law wife and that his residence was his only property. Harrison also made numerous false statements in his bankruptcy schedules and in his statement of financial affairs in his bankruptcy case. Harrison failed to disclose in his bankruptcy certain real property in which he had an interest, as well as vehicles and buses held in Audra Harrison's name. He failed to disclose his true income and business interests in his bankruptcy. As a result of these many false statements, Harrison obtained his discharge through fraud and he failed to disclose to the Chapter 7 trustee property in which he had an ownership interest. Harrison's discharge in bankruptcy is revoked pursuant to 11 U.S.C. § 727(d).
E. Contempt Motions
The United States seeks an order holding Harrison in contempt for contacting witnesses Joann Gonzalez and Roland Searcy. It is undisputed that, after Harrison learned that the United States intended to call Gonzalez as a witness, he went to her home to discuss her testimony. The Court finds that, although Harrison told Gonzalez to "tell the truth," he instructed her regarding what she should say. Gonzalez testified that she was, not afraid of Harrison, but was concerned that Harrison might try to take her house.[15] After considering all the testimony, the witnesses' demeanor, and the other evidence of record, the Court finds that Harrison's contact with Gonzalez, while highly inappropriate, did not affect Gonzalez's testimony at trial and does not rise to the level of contempt.
By Order issued January 31, 2007 [Doc. # 139], the Court ordered Harrison not to have contact with any person, other than his family members, who might be a witness in the case. After entry of the January 31, 2007 Order, Harrison contacted the law office of Roland Searcy asking the name of the employee who signed a cash receipt in connection with the real *668 estate transaction involving the Gonzalezes. The receptionist gave Harrison the employee's name, but when Harrison asked to speak to the employee, the receptionist refused to transfer .Harrison's call. Again the Court finds Harrison's conduct to be improper. However, Harrison's attempt to contact the employee was unsuccessful and the person he sought to contact was never listed as a witness for trial. As a result, the attempted contact did not affect the evidence at trial. The Court finds that the conduct does not rise to the level of contempt.
III. CONCLUSIONS OF LAW
The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1340 and 1345, and 26 U.S.C. §§ 7402 and 7403. Venue is proper in this district pursuant to 28 U.S.C. § 1396. The Court has personal jurisdiction over Defendants, who all reside in the Southern District of Texas.
Under 26 U.S.C. § 7402(a), the United States is entitled to a final judgment in its favor against Arthur Harrison for his unpaid 1990, 1991, 1993, 1995, and 1996 income taxes, in the amount of $217,966.63, plus interest and penalties thereon from September 1, 2006 until paid.
Under 26 U.S.C. §§ 6321 and 7403(a), the federal tax liens filed against Harrison and the nominee liens against Young are valid, and the Court enforces these federal tax liens. The real properties at 307 N. Texas Avenue, 1101 S. Texas Avenue, 1095 N. Earl Rudder Freeway, and 503 East 24th Street are ordered sold to pay Harrison's income tax liability. Additionally, the assets of A & A Auto Rentals and Sales, the 1999 Cadillac Escalade, the 1987 MCI bus, and the 1984 GMC bus are ordered sold to pay Arthur Harrison's income taxes.
Under the Texas Uniform Fraudulent Transfer Act, § 24.005 of the Texas Uniform Fraudulent Transfer Act, the Court concludes that Harrison fraudulently transferred and/or concealed assets in which he has an interest that are encumbered by federal tax liens. Specifically, the real properties at 307 N. Texas, 1101 S. Texas, 1095 N. Earl Rudder Freeway, and 503 East 24th Street, the assets of A & A Auto Rentals and Sales, the 1999 Cadillac Escalade, and the 1987 MCI and 1984 GMC buses are ordered sold to pay Arthur Harrison's income taxes.
Harrison's purported transfer of a life estate in the real property at 307 N. Texas to Young was a fraudulent transfer under the Texas Uniform Fraudulent Transfer Act. Young is a nominee of Harrison, who is the true owner of the entire property.
Under 26 U.S.C. § 6321, federal tax liens attach to Harrison's interest in certain real and personal property titled to Audra Harrison and Floyd Young. Specifically, the federal tax liens attach to the real properties at 307 N. Texas, 1101 S. Texas, 1095 N. Earl Rudder Freeway, and 503 East 24th Street, as well as to the 1999 Cadillac Escalade, the 1987 MCI bus, and the 1984 GMC bus. The federal tax liens also attach to the assets of the business operated as A & A Auto Rentals and Sales and variations of that business name.
The United States has established the requirements of 11 U.S.C. § 727(d). As a result, Harrison's Chapter 7 bankruptcy discharge is revoked due to his fraud.[16] The federal tax liens filed against Harrison survived his bankruptcy, passed through unaffected by his revoked discharge, and *669 encumber all property in which he had an interest as of the bankruptcy petition date (November 30, 2004).
The United States is entitled to foreclose on properties subject to the federal tax liens, including Harrison's interest in the real property at 2536 Pinon Court in Bryan, Texas. The Pinon Court property shall be sold to pay a portion of Harrison's federal income taxes, and Lillie Harrison shall be compensated for her homestead interest in this property out of the net sales proceeds from the sale of the property. Mrs. Harrison's homestead interest in this property is 51.138%, and Mr. Harrison's homestead interest in the property at 48.863%. These percentages will be applied after payment of expenses of sale and any unpaid ad valorem taxes owed to the County of Brazos.
Harrison's conduct, while inappropriate, did not rise to the level of civil contempt.
IV. CONCLUSION
Harrison is the true owner of the disputed properties, consisting of 2536 Pinon Court, 307 N. Texas Avenue, 1107 S. Texas Avenue, 503 East 24th Street, 1095 N. Earl Rudder Freeway, A & A Auto Rentals and Sales and variations of that name, a 1999 Cadillac Escalade, a 1987 MCI bus, and a 1984 GMC bus. The United States is entitled to sell this property to satisfy Harrison's outstanding federal income tax liability.
In his bankruptcy proceeding, Harrison fraudulently failed to disclose the full extent of his assets and intentionally made numerous false statements. As a result, Harrison's discharge is revoked.
The United States's contempt motions [Doc. # 138 and Doc. # 145] are DENIED.
The Court will issue a separate Final Judgment.
MEMORANDUM AND ORDER
The Court entered Final Judgment [Doc. # 162] in this case on March 13, 2007. On April 24, 2007, well more than ten days after entry of Final Judgment, Defendant Arthur Ray Harrison filed a second pro se Motion for Reconsideration ("Motion") [Doc. # 187]. The Court denies Harrison's Motion.
A motion seeking reconsideration of a Court's ruling is decided pursuant to Rule 60(b) of the Federal Rules of Civil Procedure if it is filed more than ten days after entry of the challenged order. See, e.g., Shepherd v. Int'l Paper Co., 372 F.3d 326, 327 n. 1 (5th Cir.2004). Rule 60(b) contains six alternative grounds for relief:
(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from operation of the judgment.
FED. R. CIV. P. 60(b).
Harrison purports to challenge the validity of the federal income tax assessments against him for years 1990 through 1996. The record reflects that Harrison stipulated to his federal income tax liability for the years in question.
Harrison also argues that the assessments are "clearly outside the three (3) year statute of limitations and may have been outside the six (6) year statute of limitations." See Motion, p. 1. The case is *670 governed by the ten (10) year statute of limitations set forth in 26 U.S.C. § 6502.
Based on the foregoing, it is hereby
ORDERED that Harrison's Second Motion for Reconsideration [Doc. # 187] is DENIED.
MEMORANDUM AND ORDER
The Court entered Final Judgment [Doc. # 162] in this case on March 13, 2007. On April 4, 2007, more than ten days after entry of Final Judgment, Defendant Arthur Ray Harrison filed a pro se Motion for Reconsideration ("Motion") [Doc. # 174]. The Court denies Harrison's Motion.
A motion seeking reconsideration of a Court's ruling is decided pursuant to Rule 60(b) of the Federal Rules of Civil Procedure if it is filed more than ten days after entry of the challenged order. See, e.g., Shepherd v. Int'l Paper Co., 372 F.3d 326, 327 n. 1 (5th Cir.2004). Rule 60(b) contains six alternative grounds for relief:
(1) mistake, inadvertence, surprise, or excusable neglect; "(2) newly discovered evidence which by due diligence could not have been discovered in time to move, for a new trial under rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from operation of the judgment.
FED. R. CIV. P. 60(b).
Harrison argues that the judgment is void because he does not have a copy of the "IRS Form 4340" and "can only conclude that the said Form 4340s do not exist and cannot be produced." See Motion, p. 1. The IRS Form 4340s for the applicable tax years are included in the record as Exhibit 1 to Plaintiff's Motion for Summary Judgment [Doc. # 92], as Exhibit 1 of the Appendix to Plaintiff s Response to Audra Harrison's Motion for Summary Judgment [Doc. # 76], and as Exhibit 1 of the Appendix to Plaintiffs Response to Floyd Young's Motion for Summary Judgment [Doc. # 91]. Indeed, the Court specifically noted in its Memorandum and Order entered November 7, 2006, that the United States had presented the IRS Form 4340s establishing valid tax assessments regarding Harrison's income tax for tax years 1990, 1991, 1993, 1995 and 1996. See Memorandum and Order [Doc. # 107], pp. 6-7. Because the Form 4340s are part of the record, Harrison's argument that the assessments and the final judgment are null and void because the forms do not exist is without merit. Accordingly, it is hereby
ORDERED that Harrison's Motion for Reconsideration [Doc. # 174] is DENIED.
NOTES
[1] The Court explains the evidence and uses various forms of the word "find" to indicate a finding of fact, and sets forth legal principles and uses forms of the words "hold" and "conclude" to indicate a conclusion of law. To the extent a finding of fact is more properly a conclusion of law, and to the extent a conclusion of law is more properly a finding of fact, it should be so construed.
[2] Harrison's attorney sent a letter to the IRS demanding a million dollars for the Harrisons' damages caused by the IRS's attempts to serve subpoenas in this case.
[3] The United States also disputes Audra Harrison's title to 901 Harlem Lane, but does not include the property as part of this lawsuit because of its very low tax-assessed value.
[4] On November 7, 2006, the Court entered a partial summary judgment ruling to this effect.
[5] Young at trial claimed that he purchased the fee ownership of the property. There are no documents that support this claim.
[6] Young testified at trial that he asked Harrison to purchase the property in Harrison's name because, as a convicted felon, Young anticipated difficulties obtaining an automobile dealer's license.
[7] An individual named Gloria Polk Davenport testified at trial that she loaned over $40,000.00 to Harrison, but there is no credible evidence of a $40,000.00 loan from Robert Polk to Floyd Young.
[8] Generally, Harrison would write the checks for A & A Auto Rentals and Sales and have Young sign them.
[9] Young stated that he has bought vehicles at auction, but he gave no specifics. The Court does not credit Young's testimony.
[10] The 503 E. 24th Street property is located behind the 307 N. Texas Avenue property.
[11] Audra Harrison signed the Settlement Statement.
[12] Audra Harrison testified at trial that she was unaware anyone had lived on the property.
[13] When she appeared for deposition initially, Audra Harrison failed to bring any documents concerning the property.
[14] Within the bankruptcy case, Harrison also did not give the IRS proper notice of the bankruptcy filing and included the wrong address for the IRS.
[15] Gonzalez and her husband were parties to a real estate transaction involving Harrison and his step-daughter, Sharonda Harris. The Gonzalezes made payments to Harrison, which he maintains he then gave to Sharonda Harris.
[16] For the reasons stated in the Court's summary judgment ruling, the United States is entitled to a final judgment that Harrison's 1990, 1991, 1993, 1995, and 1996 federal income tax liability is non-dischargeable under 11 U.S.C. § 523(a)(1)(C), due to Harrison's willful attempts to evade or defeat his taxes.
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540 U.S. 907
SANTANAv.HUMPHREY, WARDEN.
No. 03-5413.
Supreme Court of United States.
October 6, 2003.
1
Appeal from the Super. Ct. Mitchell County, Ga.
2
Certiorari denied.
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4 So.3d 590 (2007)
RODERICK SWAIN
v.
STATE.
No. CR-06-0119.
Court of Criminal Appeals of Alabama.
February 16, 2007.
Decision of the alabama court of criminal appeals without opinion. Affirmed.
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531 F.3d 724 (2008)
Frederick Lee REVELS, Appellant,
v.
Mary SANDERS, Appellee.
No. 06-3052.
United States Court of Appeals, Eighth Circuit.
June 5, 2008.
Elizabeth Unger Carlyle, Columbus, MO, for appellant.
Stephen D. Hawke, Asst. Atty. Gen., Jefferson City, MO, for appellee.
ORDER
The petition for rehearing en banc is denied. The petition for rehearing by the panel is also denied. Judge Duane Benton took no part in the consideration or decision of this matter.
COLLOTON, Circuit Judge, with whom LOKEN, Chief Judge, WOLLMAN and GRUENDER, Circuit Judges, join, dissenting from denial of rehearing en banc.
I would grant rehearing to consider the panel's conclusion that Frederick Revels, an insanity acquittee who killed his grandmother, sister, and nephew with a pipe wrench in 1988, should be granted ah unconditional release from state custody. See Revels v. Sanders, 519 F.3d 734 (8th Cir.2008). The panel held that the Missouri Court of Appeals unreasonably applied Foucha v. Louisiana, 504 U.S. 71, 112 S.Ct. 1780, 118 L.Ed.2d 437 (1992), when it stated a requirement that "`a person seeking unconditional release must show that he is not likely to suffer from a mental disease or defect in the reasonable future,'" 519 F.3d at 738 (quoting State v. Revels, 172 S.W.3d 461 (Mo.Ct.App.2005)), as opposed to a rule that the person must show only that he is presently free from mental disease or defect. Id. at 742^13. The panel thus declared unreasonable the unanimous decision of the Supreme Court of Missouri that the Missouri statutes regarding unconditional release of an insanity acquittee, Mo.Rev.Stat. §§ 552.040.7(6), 552.040.9, are consistent with the holding of Foucha, and particularly Justice O'Connor's controlling concurrence. See State v. Revels, 13 S.W.3d 293, 296 (Mo.2000) (citing Foucha, 504 U.S. at 86-90, 112 S.Ct. 1780 (O'Connor, J., concurring in part and in judgment)).[1]
*725 The panel's conclusion that the Missouri statutes are unconstitutional, standing alone, may well present a question of exceptional importance sufficient to justify en banc consideration. But the more compelling reason for rehearing in this case is that the state court decisions denying Revels unconditional release do not even hinge on a requirement that he demonstrate no likelihood of future mental disease or defect. The state courts ruled that Revels failed to show that he does not presently suffer from a mental disease or defect. The Jackson County Circuit Court found that Revels "has a mental disease which is in remission." State v. Revels, No. CR88-3050, slip op. at 6 (Mo.Cir.Ct. Aug. 30, 2004) (emphasis added). The Missouri Court of Appeals held that "the record supports the trial court's ... finding[ ] that Revels did not prove by clear and convincing evidence that ... he does not presently have a mental disease or defect." Revels, No. WD64433, slip op. at 4 (emphasis added). The matter of future mental disease or defect was unnecessary to the state court decisions.
The panel did not dispute that a reasonable application of Foucha permits a State to deny unconditional release based on a finding of present mental disease or defect, together with a finding of dangerousness, even if the acquittee presently shows no symptoms of the mental disease. See United States v. Weed, 389 F.3d 1060,1073 (10th Cir.2004); United States v. Murdoch, 98 F.3d 472, 476 (9th Cir.1996); State v. Huss, 666 N.W.2d 152, 160 (Iowa 2003); see also State v. Nash, 972 S.W.2d 479, 483 (Mo.Ct.App.1998) (ordering release of acquittee, but emphasizing that "this is not a case where the mental disease or defect was in remission or was currently asymptomatic"). Nonetheless, the panel ruled that it was compelled to disregard the state court's finding of present mental disease or defect, because an administrative panel of this court granted Revels a certificate of appealability on a different question. Revels, 519 F.3d at 743. The certificate asked whether the Missouri Court of Appeals unreasonably applied Foucha by concluding that Revels must also show he was not likely to have a mental disease or defect in the future, id. at 739, and the panel held that the state court's finding of present mental disease was thus not before this court. Id. at 743.
This novel interpretation of the effect of a certificate of appealability warrants further review. To be sure, we have held that a habeas petitioner may not seek relief in the court of appeals based on an issue that is not encompassed within a certificate of appealability. Carter v. Hopkins, 151 F.3d 872, 874 (8th Cir.1998); Ramsey v. Bowersox, 149 F.3d 749, 759-60 (8th Cir.1998). These decisions enforce the statutory limitation on when "an appeal may ... be taken" in a habeas corpus proceeding. 28 U.S.C. § 2253(c). But we have never held that, if for some reason a certificate of appealability is granted to consider the soundness of a state court's dicta or alternative holding, then this court must blind itself to the fact that the state court also justified its decision on an independent ground that is consistent with the Constitution and decisions of the Supreme Court. To give that effect to a certificate *726 of appealability conflicts with the statutory command that an application for a writ of habeas corpus "shall not be granted" unless the state court's adjudication resulted in "a decision" that is contrary to, or involves an unreasonable application of, clearly established federal law, or that is based on an unreasonable determination of the facts. 28 U.S.C. § 2254(d).[2]
In his response to the petition for rehearing, Revels does not defend the panel's rationale. Revels argues instead that he should be granted unconditional release because the Missouri courts did not find that he is dangerous. On the question of dangerousness, the state circuit court found that "[t]he evidence requires that defendant not be released because he has not shown he is not likely to be dangerous." Revels, No. CR88-3050, slip op. at 5. The state court of appeals held that the record supports the trial court's finding that Revels "remains potentially dangerous to himself and others due to his drug and alcohol dependence and prior abuse of drugs and alcohol." Revels, No. WD64433, slip op. at 4. The court of appeals further observed that Revels "exhibited aggressive behavior while confined (verbally lashing out at a department case manager and using profanity)." Id. The panel did not question the State's contention that Revels is dangerous. If alleged lack of dangerousness is the only potential ground on which to order the unconditional release of a triple killer who was acquitted based on mental disease or defect, then the decision of the state courts on dangerousness should be considered directly by this court before such a significant writ of habeas corpus is granted.
For these reasons, I respectfully dissent from the order denying the petition for rehearing en banc.
NOTES
[1] Justice O'Connor wrote in Foucha that she did "not understand the Court to hold that Louisiana may never confine dangerous insanity acquittees after they regain mental health," that given the uncertainty surrounding mental disease, "courts should pay particular deference to reasonable legislative judgments about the relationship between dangerous behavior and mental illness," and that it might be permissible for a State "to confine an insanity acquittee who has regained sanity if ... the nature and duration of detention were tailored to reflect pressing public safety concerns related to the acquittee 's continuing dangerousness." 504 U.S. at 87, 112 S.Ct. 1780 (O'Connor, J., concurring in part and in judgment) (internal quotation omitted).
[2] In this case, moreover, the "claim" identified by the certificate of appealability was whether Revels's "due process rights [were] violated" when "his June 2003 amended application for release from confinement was denied." Revels, 519 F.3d at 739. The state court's finding of present mental disease is highly relevant to that claim.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-6674
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
CARLOS DEMOND ROBINSON,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. Henry M. Herlong, Senior
District Judge. (6:03-cr-00616-HMH-1)
Submitted: August 10, 2016 Decided: August 16, 2016
Before SHEDD and DUNCAN, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Carlos Demond Robinson, Appellant Pro Se. Leesa Washington,
Assistant United States Attorney, Greenville, South Carolina,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Carlos Demond Robinson appeals the district court’s order
denying his 18 U.S.C. § 3582(c)(2) (2012) motion. We have
reviewed the record and find no reversible error. Accordingly,
we affirm for the reasons stated by the district court. United
States v. Robinson, No. 6:03-cr-00616-HMH-1 (D.S.C. May 4,
2016). We grant leave to proceed under the Criminal Justice Act
and 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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948 So.2d 465 (2007)
Glen SINGLETON, Jr., Appellant
v.
STATE of Mississippi, Appellee.
No. 2005-KA-02013-COA.
Court of Appeals of Mississippi.
February 6, 2007.
*467 Barney Glenn Poise, attorney for appellant.
*468 Office of the Attorney General by Jeffrey A. Klingfuss, attorney for appellee.
Before MYERS, P.J., CHANDLER and ROBERTS, JJ.
ROBERTS, J., for the Court.
¶ 1. Glen Singleton, Jr. was tried in the Circuit Court of Madison County for the sale of cocaine. Following testimony from a number of witnesses he was found guilty by a jury of selling a schedule II controlled substance within 1,500 feet of a church, and subsequently sentenced by the lower court. Aggrieved by this, Singleton now appeals and raises the following issues, which we quote verbatim:
I. THE TRIAL COURT ABUSED HIS DISCRETION BY DENYING SINGLETON'S MOTIONS FOR DIRECTED VERDICT OR MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR, IN THE ALTERNATIVE, FAILING TO GRANT A NEW TRIAL.
II. THE JURY VERDICT WAS AGAINST THE OVERWHELMING WEIGHT OF THE EVIDENCE.
III. THE COURT ERRED IN OVERRULING THE DEFENDANT'S HEARSAY OBJECTIONS.
IV. THE COURT ERRED IN SUSTAINING THE PLAINTIFF'S OBJECTION TO DEFENDANT'S QUESTIONS OF JAMES JACKSON REGARDING HIS GRAND LARCENY CHARGE.
Finding no error, we affirm.
FACTS
¶ 2. Needing a source of additional income, James Jackson contacted the narcotics division of the Madison County Sheriff's Department (Department) to provide information on the sale of drugs within the city of Flora. Jackson had information on one such salesman, Singleton, or, as he was more affectionately known, Poo-Poo. The Department and Jackson struck a deal in which Jackson agreed to wear a wire while purchasing crack cocaine from Singleton in exchange for one hundred dollars.
¶ 3. On December 10, 2003, Agent Jay Houston and other deputies of the Department began by thoroughly searching Jackson and the Department-owned vehicle he would use for the presence of any drugs. Finding none, they placed the wire and sent Jackson on his way. Jackson then proceeded to what would turn out to be Doris Singleton's house, entered the home, purchased five rocks of crack cocaine, left the house, and drove away from the scene before meeting with Houston. Doris Singleton was Singleton's mother. Houston then immediately obtained the narcotics and sealed them in an evidence bag. Some time later Houston and other deputies attempted to execute an arrest warrant for Singleton at Doris's house in Flora, but Singleton was not present. In January, when Singleton learned the authorities were looking for him, he immediately turned himself in.
PROCEDURAL HISTORY
¶ 4. Singleton was indicted April 28, 2004, on the offense of sale of a schedule II controlled substance in violation of Mississippi Code Annotated Section 41-29-139(b)(1) (Rev.2005), subject to enhancement by Section 41-29-142 as the sale was within 1,500 feet of a church. Singleton's trial on the above offense was held on September 13, 2005. During his trial, Singleton testified that he was not at his mother's house on or around December 10 and had not lived in Flora for four and a half years. However, Singleton was questioned regarding a recent Flora address he *469 listed as his own. Singleton explained that he gave that address only for correspondence with the Circuit Court of Madison County concerning the drug charges against him. In response to this testimony, Houston testified that on a September 20, 2003 traffic ticket Singleton had listed his address as Post Office Box 690, Flora, Mississippi. Additionally, the State introduced a copy of an NCIC report detailing Singleton's driver's license information from the time of the September 2003 traffic incident which listed his address as 108 Pugh Road in Flora, Mississippi. Singleton objected to the admittance of both documents on the basis of hearsay and the trial court overruled both objections. At the close of the State's case and at the close of the defense's case, Singleton made motions for a directed verdict, which were both denied. Following deliberations, the jury returned a verdict of guilty and Singleton was subsequently sentenced on September 15, 2005. Singleton then filed a motion for judgment notwithstanding the verdict or, in the alternative, a new trial on September 23, 2003. This was also denied. This appeal followed.
ANALYSIS
I. WHETHER THE TRIAL COURT ERRED IN SUSTAINING THE STATE'S OBJECTION TO QUESTIONING JACKSON ABOUT HIS GRAND LARCENY CHARGE.
¶ 5. The standard of review we must employ concerning the admission or exclusion of evidence is well settled. "A trial judge enjoys a great deal of discretion as to the relevancy and admissibility of evidence. Unless the judge abuses this discretion so as to be prejudicial to the accused, [this] Court will not reverse [the] ruling." Shaw v. State, 915 So.2d 442, 445(¶8) (Miss.2005).
¶ 6. During cross-examination, the defense attempted to impeach Jackson by showing that he had recently been convicted of grand larceny. The State objected to such questioning and the lower court sustained the objection. The pertinent line of questioning was as follows,
Q [Defense] Mr. Jackson, when they picked you up for this charge of grand larceny, the fact is you lied about your involvement in this grand larceny, did you not, in the beginning?
A. The grand larceny?
Q. Yeah, the grand larceny that you're being held on?
A. No.
Q. You admitted to everything?
A. Yeah.
Q. Okay, you admitted that you were a dishonest person and that you took something that did not belong to you, correct?
A. No, that I ain't what I said.
State: Your Honor, I'm going to object.
Court: Sustained.
. . . .
Q. With regard to the grand larceny, you know that's a crime of dishonesty, do you not?
State: Your Honor, we're going to object.
Court: Sustained.
¶ 7. Singleton cites to M.R.E. 608(b) for support of his argument. M.R.E. 608(b) states in pertinent part, specific instances of conduct "may . . . in the discretion of the court, if probative of truthfulness or untruthfulness, be inquired into on cross-examination of the witness (1) concerning his character for truthfulness or untruthfulness. . . ." The supreme court has held that grand larceny is not a crime of dishonesty. Adams v. State, 772 So.2d 1010(¶ 57) (Miss.2000). The supreme court went on to agree with this Court that grand larceny is not a crime generally considered to show an individuals tendency *470 for truth and veracity. Id. (citing Bennett v. State, 738 So.2d 300(¶ 9) (Miss.Ct.App. 1999)). Therefore, Jackson's pending charge for grand larceny alone was not probative of his general truthfulness or untruthfulness, and we find the trial court did not abuse its discretion in sustaining the State's objection.
II. WHETHER THE COURT ERRED IN OVERRULING THE DEFENDANT'S HEARSAY OBJECTIONS.
¶ 8. Mississippi Rule of Evidence 801(c) defines hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." M.R.E. 801(c). "Hearsay is not admissible except as provided by law." M.R.E. 802.
¶ 9. Singleton's first claim of error concerning possible hearsay focuses on Houston's testimony. Specifically, during Houston's direct examination by the State he was asked:
Q. [Assistant District Attorney]. I turn your attention to December 10th of 2003. What were your activities including on that date?
A. [Agent Houston]. My supervisor contacted me, told me that he had a cooperating source that stated that they could purchase narcotics from a subject known only
[Defense Attorney]: Objection to hearsay, your Honor.
The Court: Overruled.
Q. Who was your supervising officer?
A. Lieutenant Tucker.
Singleton proposes that Houston's remarks were inadmissible hearsay as there was no proof presented as to the unavailability of Lieutenant Tucker. First of all, the statement in question was not offered to prove the matter asserted. Therefore, it is not hearsay. Houston did not offer his statement to prove that Lieutenant Tucker called him or even that a cooperating source called Lieutenant Tucker. It was offered to show how he came in contact with Jackson. Furthermore, if Houston's statement did qualify as hearsay it would still be "admissible to the extent required to show why [he] acted as he did and where he was at a particular place at a particular time." Jackson v. State, 935 So.2d 1108(¶ 9) (Miss.Ct.App.2006) (quoting Tate v. State, 819 So.2d 555, 558(¶ 14) (Miss.Ct.App.2002)). Therefore, we cannot say that the trial court abused its discretion in overruling Singleton's objection.
¶ 10. Singleton next argues that the trial court erred in overruling his hearsay objection to the introduction of a photocopy of his driver's license. While the record shows that no photocopy of Singleton's driver's license was ever introduced, but only copies of a NCIC report and justice court record of a traffic citation containing Flora addresses for Singleton, the State nevertheless counters that the driver's license photocopy was admissible pursuant to Mississippi Rules of Evidence 803(8) or 613(b). As to both of the State's arguments, applied to those documents admitted into evidence, we cannot agree.
¶ 11. Mississippi Rule of Evidence 803(8) states, in pertinent part, that the following is not excluded by the hearsay rule:
Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed pursuant to duty imposed by law as to which matters there was a duty to report, excluding, however, in criminal cases matters observed by police officers and other law enforcement personnel . . .
M.R.E. 803(8).
¶ 12. Beginning with the NCIC report, the report neither satisfies M.R.E. *471 803(8)(A) nor M.R.E. 803(8)(B). M.R.E. 803(8)(A) pertains to the activities of a public office or agency. An example of the type of report included under this exception is, at least in the federal setting, a "record of receipts and disbursements of the Treasury Department." John W. Strong, McCormick on Evidence § 296 (5th ed.1999). In the case of a NCIC report, this would be akin to a listing of those jurisdictions and agencies from which the NCIC obtained information, not specific information pertaining to one individual. This Court has said that an NCIC report "purport[s] to be a compilation of information gathered from various jurisdictions throughout the country, the accuracy of which cannot necessarily be certified by the NCIC compiler . . . [and the] custodian is not in a position to assess the accuracy of the underlying information provided by the records custodian." Frazier v. State, 907 So.2d 985(¶ 22) (Miss.Ct. App.2005). While the compilation of information is an activity conducted by the NCIC, obtaining the original information is not. It is equally clear, possibly more so, that the NCIC report would not fall under M.R.E. 803(8)(B). Again, the NCIC is a database of information provided by other law enforcement agencies. As such, those working for the NCIC, and the NCIC itself, do not observe those matters reported upon within their reports. Furthermore, we have identified that "an issue of trustworthiness arises when one organization seeks to introduce records in its possession that were actually prepared by another." Armstrong v. State, 828 So.2d 239(¶ 26) (Miss.Ct.App.2002) (citing Harveston v. State, 798 So.2d 638(¶ 7) (Miss.Ct. App.2001)). Therefore, the NCIC report in the case sub judice, as submitted by a member of the Madison County Sheriff's Department, cannot fall under the public records and reports exception.
¶ 13. The next item admitted over objection was the justice court record. This Court was not shown, nor able to find, any statutory provision mandating this State's justice courts obtain and record individuals' address information as either an activity of the justice court or as to "matters observed pursuant to duty imposed by law as to which matters there was a duty to report." Therefore, as was the case with the NCIC report, the computer printout of a justice court record containing Singleton's address would not fall under M.R.E. 803(8), and, under the facts of this case, would be inadmissible hearsay.
¶ 14. The State next argues that the documents were properly allowed into evidence as impeachment evidence and cites to Al-Fatah v. State, 916 So.2d 584(¶ 21) (Miss.Ct.App.2005) in support of its argument. The record shows that during cross examination, Singleton claimed that he had not had a Flora address during the four and a half years proceeding the trial, save for a post office box he used for correspondence with the trial court concerning his trial. Specifically, he stated, "I don't have no mailing address for Pugh Road." Following Singleton's examination, the State called Houston as a rebuttal witness and introduced the two documents. Based on these facts, this argument fails. Al-Fatah cites M.R.E. 613(b) for the proposition that while hearsay evidence may not be admitted as substantive evidence, it may be allowed to impeach. Al-Fatah, 916 So.2d at (¶ 21). While this is an accurate statement of the law, M.R.E. 613(b) does not apply to the documents at issue. Quite simply, the information contained in the documents was not a statement by Singleton, and, thus, would not qualify as a prior inconsistent statement. Therefore, as the two documents in question did not fall under either *472 M.R.E. 803(8) or 613(b), we find that the trial court erred in admitting them over Singleton's objections. Having determined that the lower court erred, we must decide whether the prejudicial effect, if any, of such errors warrants reversal. Parker v. State, 606 So.2d 1132, 1137-38 (Miss.1992). Only an erroneous admission of evidence that results in prejudice and harm to the opposing party, or adversely affects a substantial right of the party, warrants reversal. Brown v. State, 890 So.2d 901(¶ 39) (Miss.2004).
¶ 15. During Houston's rebuttal testimony, not only were the documents in question admitted into evidence, but Houston testified to their contents, to include Singleton's Flora addresses and the reason he was ticketed. This testimony was introduced without objection and was properly before the jury. We cannot say that actual introduction of the documents Houston referred to during his testimony prejudiced Singleton or adversely affected any substantial right. Therefore, while the NCIC report and justice court printout were erroneously admitted into evidence, they did not prejudice Singleton and, as such, this issue is without merit.
III. THE TRIAL COURT ABUSED HIS DISCRETION BY DENYING SINGLETON'S MOTIONS FOR DIRECTED VERDICT OR MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT OR, IN THE ALTERNATIVE, FAILING TO GRANT A NEW TRIAL.
IV. THE JURY VERDICT WAS AGAINST THE OVERWHELMING WEIGHT OF THE EVIDENCE.
A. Motions for Directed Verdict and Motion for Judgment Notwithstanding the Verdict.
¶ 16. The standard of review for denials of a motion for a judgment notwithstanding the verdict and a motion for a directed verdict is the same. Jefferson v. State, 818 So.2d 1099(¶ 30) (Miss. 2002). A motion for directed verdict and judgment notwithstanding the verdict both "challenge the legal sufficiency of the evidence presented at trial." Id. When reviewing the denial of a motion for directed verdict, this Court shall "accept as true all the evidence favorable to the state, together with reasonable inferences arising therefrom, to disregard the evidence favorable to the defendant, and if such evidence would support a verdict of guilty beyond a reasonable doubt, the trial court's denial of the motion must be affirmed." Hayes v. State, 803 So.2d 473(¶ 5) (Miss.Ct.App. 2001). This Court may only discharge the defendant when we conclude, based on the evidence viewed in a light most favorable to the verdict, that "no reasonable, hypothetical juror could find beyond a reasonable doubt that the defendant was guilty." Ashford v. State, 583 So.2d 1279, 1281 (Miss.1991). Under this review, the central issue is "whether the evidence shows `beyond a reasonable doubt that the accused committed the act charged, and that he did so under such circumstances that every element of the offense existed; and where the evidence fails to meet this test it is insufficient to support a conviction.'" Flora v. State, 925 So.2d 797(¶ 82) (Miss. 2006) (quoting Carr v. State, 208 So.2d 886, 889 (Miss.1968)). However, this Court is not required to inquire whether it is satisfied that the evidence presented at trial established that the defendant was guilty beyond a reasonable doubt. Dilworth v. State, 909 So.2d 731, 736(¶ 17) (Miss.2005). Mississippi Code Annotated Section 41-29-139(a) states, "[I]t is unlawful for any person knowingly or intentionally: (1) To sell, barter, transfer, manufacture, distribute, dispense or possess with intent to sell, *473 barter, transfer, manufacture, distribute or dispense, a controlled substance." Miss. Code. Ann. § 41-29-139(a)(1) (Rev.2005).
¶ 17. It is clear from the record that Jackson did not have drugs on his person when he entered Doris's house. It is also clear that he did have drugs when he left her house. The tape indicated that he purchased the drugs from a male individual in Doris's home and Jackson specifically identified Singleton in court as the dealer. However, no one else saw Singleton and he was not at the home when Houston and other law enforcement personnel returned to arrest him.
¶ 18. There was testimony from Wilbert Malone, Doris's live-in boyfriend, that Jackson came to the Pugh Road house when Singleton was not there, but the conversation that took place between Malone and Jackson does not match, in any way, what was captured upon the audiotape on December 10. Also, Malone testified that he could not remember the actual day that Jackson came to the house but did remember that Jackson's visit was at night. Jackson testified that he had visited Doris's home once before the December 10 drug sale to make a purchase of his own, but was sure that the December 10 buy was made during the day.
¶ 19. Singleton testified that he was not at his mother's house that day, did not sell Jackson any drugs, and had never sold drugs. The jury was left with the facts that a drug deal took place in Doris's home and involved Jackson and another individual. They were told by Jackson that Singleton was the dealer, and told by Singleton that he was not there. They heard the tape containing the voices of Jackson and the dealer, and heard the voice of Singleton when he testified. Accepting as true all evidence favorable to the State and disregarding any evidence favorable to Singleton, we cannot say that the trial court erred in denying Singleton's motions for directed verdict or JNOV.
B. Motion for New Trial and whether the verdict was against the overwhelming weight of the evidence.
¶ 20. "As distinguished from a JNOV, a motion for a new trial asks to vacate the judgment on grounds related to the weight, not sufficiency, of the evidence." Smith v. State, 802 So.2d 82(¶ 11) (Miss.2001). The appropriate standard of review of a denial of a new trial or a claim that a conviction was against the overwhelming weight of the evidence has been stated as follows:
[A reviewing court] must "accept as true the evidence which supports the verdict and will reverse only when convinced that the circuit court has abused its discretion in failing to grant a new trial." A new trial will not be ordered unless the verdict is so contrary to the overwhelming weight of the evidence that to allow it to stand would sanction an "unconscionable injustice."
Id. (quoting Crawford v. State, 754 So.2d 1211(¶ 30) (Miss.2000)).
¶ 21. After a careful review of the record we cannot say that the trial court abused its discretion in denying Singleton's request for a new trial as the overwhelming weight of the evidence is not so contrary to the verdict as to constitute an "unconscionable injustice."
¶ 22. THE JUDGMENT OF THE CIRCUIT COURT OF MADISON COUNTY OF CONVICTION OF SALE OF COCAINE, A SCHEDULE II CONTROLLED SUBSTANCE WITHIN 1,500 FEET OF A CHURCH AND SENTENCE OF SIXTY YEARS IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS, WITH THIRTY-FIVE YEARS SUSPENDED, *474 IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, BARNES AND ISHEE, JJ., CONCUR. KING, C.J., CONCURS IN RESULT ONLY. CARLTON, J., NOT PARTICIPATING.
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17 N.J. 215 (1955)
111 A.2d 45
HERBERT F. CARLS, ET AL., PLAINTIFFS-APPELLANTS,
v.
THE CIVIL SERVICE COMMISSION OF THE STATE OF NEW JERSEY, ET AL., DEFENDANTS-RESPONDENTS.
The Supreme Court of New Jersey.
Argued December 6, 1954.
Decided January 10, 1955.
*217 Mr. James M. Davis, Jr., argued the cause for the appellants (Messrs. Powell and Davis, attorneys).
Mr. John F. Crane, Deputy Attorney-General, argued the cause for the respondents (Mr. Grover C. Richman, Jr., Attorney-General of New Jersey, attorney).
The opinion of the court was delivered by JACOBS, J.
The appellants were Principal Examiners in the Department of Banking and Insurance and were reclassified by the Civil Service Commission as Examiners II. They filed a petition seeking a declaration that the Commission's action was invalid but it was dismissed by the Appellate Division for the reasons expressed by Judge Eastwood in 31 N.J. Super. 39 (App. Div. 1954). Asserting deprivation of the constitutional protection afforded by Art. VII, § I, par. 2, they appealed to this court. See R.R. 1:2-1(a). Cf. Sorokach v. Trusewich, 13 N.J. 363, 368 (1953); State v. Pometti, 12 N.J. 446, 450 (1953).
The appellants Carls, Del Negro, Siver and Ridgway had been Examiners and Senior Examiners in the Bureau of Banking of the Department of Banking and Insurance and *218 the appellants Andes, Connelly and Witbeck had held like positions in the Department's Bureau of Building and Loan. Thereafter they were promoted to the position designated as Principal Examiner. On February 19, 1952, following a recommendation of its technical staff, the Civil Service Commission eliminated the positions of Examiner, Senior Examiner and Principal Examiner and added the positions of Examiner I, Examiner II, Examiner III and Examiner IV. The appellants were assigned as Examiners II, and their civil service records were so noted on April 1, 1952. At the same time the Senior Examiners were also assigned as Examiners II, but no assignment was made to the position of Examiner I.
In June 1952 the appellants conferred with the Civil Service Commission and the Department of Banking and Insurance and complained about their reclassification; the appellants were duly heard and advanced the contention that the reclassification constituted a "demotion" and deprived them of "rights that had accrued to them." This contention was rejected and the reclassification was continued in full effect. On January 29, 1953 the appellants filed their petition in the Appellate Division. In dismissing the petition the Appellate Division held: (1) that the Commission's action should have been reviewed by appeal under Rule 3:81-8 (now R.R. 4:88-8) within the time permitted by Rule 1:2-5 (now R.R. 1:3-1), and (2) that in any event it was not improper and had not deprived the appellants of any of their substantial rights.
Our rules governing procedure in lieu of prerogative writs contain comprehensive provisions which are well designed to afford simple and expeditious modes of reviewing determinations by state administrative agencies such as the Civil Service Commission. Thus, R.R. 4:88-8 provides that review of the "final decision or action of any state administrative agency" shall be by direct appeal to the Appellate Division; under former practice, review of such decision or action would ordinarily be by certiorari or mandamus in the former Supreme Court. See West Jersey & S.R. Co. v. Board of *219 Public Utility Com'rs, 85 N.J.L. 468, 473 (Sup. Ct. 1914), affirmed 87 N.J.L. 170, 178 (E. & A. 1915). R.R. 1:3-1 now provides that such appeal shall be taken within 45 days of "the date of the service of the decision of the agency or of notice of the action taken, as the case may be." Similarly, R.R. 4:88-10 provides that "review of the validity of any administrative rule promulgated by any state administrative agency" shall be by direct petition to the Appellate Division for a declaratory judgment under former practice, review of such rule would ordinarily be by certiorari in the former Supreme Court. See Franklin Stores Co. v. Burnett, 120 N.J.L. 596 (Sup. Ct. 1938). R.R. 4:88-15(a) now prescribes a general time limitation which is applicable to proceedings instituted under R.R. 4:88-10.
The Commission's action clearly fell within the broad orbit of Rule 3:81 (now R.R. 4:88) which prescribed the simplest and most effective available mode for its judicial review; accordingly, the Appellate Division rightly took the position that there was no justifiable occasion for invoking the terms of the Declaratory Judgments Act (N.J.S. 2A:16-50 et seq.). Cf. Abbott v. Beth Israel Cemetery Ass'n of Woodbridge, 13 N.J. 528, 543 (1953); Abelson's, Inc., v. New Jersey State Board of Optometrists, 5 N.J. 412, 417 (1950); In re Stone's Estate, 21 N.J. Super. 117, 127 (Ch. Div. 1952); Weissbard v. Potter Drug & Chemical Corp., 6 N.J. Super. 451, 455 (Ch. Div. 1949), affirmed 4 N.J. 115 (1950); Adams v. Atlantic City, 26 N.J. Misc. 259, 261 (Sup. Ct. 1948); Provident Mutual & Life Ins. Co. v. Unemployment Compensation Commission of New Jersey, 126 N.J.L. 348, 351 (E. & A. 1941); Empire Trust Co. v. Board of Commerce, etc., 124 N.J.L. 406, 409 (Sup. Ct. 1940). See Borchard, Declaratory Judgments 303 (2d ed. 1941); Clapp, Making the Federal Rules a Part of New Jersey's Practice, 16 F.R.D. 39, 66 (1954). And we incline to agree with the Appellate Division's view that the Commission's action was reviewable by appeal under Rule 3:81-8 (now R.R. 4:88-8) rather than by petition under Rule 3:81-10 (now R.R. 4:88-10). The former was designed *220 to deal with so-called quasi-judicial decisions or actions adjudicating the rights of particular individuals, whereas the latter was designed to deal with so-called quasi-legislative rules governing future conduct generally. See Willapoint Oysters v. Ewing, 174 F.2d 676, 693 (9 Cir. 1949), certiorari denied, 338 U.S. 860, 70 S.Ct. 701, 94 L.Ed. 527 (1949). Cf. Abbotts Dairies, Inc., v. Armstrong, 14 N.J. 319, 331 (1954); In re Port Murray Dairy Co., 6 N.J. Super. 285, 293 (App. Div. 1950).
The Commission's action did not take the form of a rule and involved specific assignments of these particular appellants to the position of Examiner II. After the appellants' objections to the assignments were heard the Commission, presumably after due consideration, continued them in full effect. In the light of these circumstances review by appeal to the Appellate Division under Rule 3:81-8 would seem to have been indicated. However, refusal to determine the ultimate merits because the appellants mistakenly proceeded by petition for declaratory judgment under Rule 3:81-10 would be unjust and would do violence to the very purposes underlying our new judicial system. Cf. Escoett v. Aldecress Country Club, 16 N.J. 438, 451 (1954); Schnitzer and Wildstein, New Jersey Rules Service, AIV-12 (1954). The line between rule-making and adjudication is often shadowy. See In re Port Murray Dairy Co., supra; Davis, Administrative Law, 184-193 (1951); Schwartz, The Administrative Procedure Act in Operation, 29 N.Y.U.L. Rev. 1173, 1189 (1954). Cf. Frank, A Conflict with Oblivion: Some Observations on the Founders of Legal Pragmatism, 9 Rutgers L. Rev. 425, 437 (1954). And if the appellants had sought their review expeditiously the fact that they proceeded by petition rather than by appeal would have caused no harm and made little difference. However, they failed to proceed for over six months after the Commission had declined to alter their assignments and no explanation for the delay is advanced. Proceedings in lieu of prerogative writs generally involve issues of public nature and it is vital that they be determined with expedition. Fortunately, *221 the rules now contain comprehensive time limitations, although it must be noted that when the appellants filed their petition in January 1953 there was no limitation expressly applicable thereto the pertinent limitation now found in R.R. 4:88-15(a) did not take effect until September 9, 1953. Cf. Fischer v. Township of Bedminster, 5 N.J. 534 (1950).
We come now to the meritorious question as to whether the Commission's action was improper and impaired any of the appellants' substantial rights. The Legislature has vested broad reclassification powers in the Commission (see R.S. 11:7-2; R.S. 11:7-5) and courts will not interfere with the discretionary exercise of these powers in the absence of an affirmative showing that it was arbitrary, capricious or unreasonable. See Falcey v. Civil Service Commission, 16 N.J. 117, 123 (1954); Higgins v. Civil Service Commission, 135 N.J.L. 238, 239 (Sup. Ct. 1947), affirmed 136 N.J.L. 636 (E. & A. 1948); Rubright v. Civil Service Commission, 137 N.J.L. 369, 373 (Sup. Ct. 1948). The appellants do not question the good faith of the reclassification but do contend that it resulted in their demotion and deprived them of their protection under the constitutional provision which guarantees that appointments and promotions in the civil service "shall be made according to merit and fitness to be ascertained, as far as practicable, by examination, which, as far as practicable, shall be competitive." Art. VII, § I, par. 2. The appellants were not demoted nor were their duties or salaries changed. Their titles were changed from Principal Examiners to Examiners II, but this seems to be a rather insignificant alteration which did not actually constitute any reduction in their real status. It is true, as they point out, that Senior Examiners who formerly held an inferior status were also classified with them as Examiners II. It may be assumed that this was done because they do the same kind of work and have the same responsibilities the record suggests nothing to the contrary. The elevation of the Senior Examiners may perhaps be said to constitute promotions within the contemplation of the constitutional provision. However, they were all elevated at the same time *222 and no important purpose would then have been served by conducting a competitive examination amongst them; the Commission did not exceed its discretionary authority in acting without such examination. See Falcey v. Civil Service Commission, supra.
In any event, the appellants are in no just position to complain about the elevation of the Senior Examiners. Their contrary contention is based upon the view that the increase of the class in which they were placed will prejudice their opportunities when future promotional examinations are held. This ignores the fact that when the Commission holds promotional examinations it may open them to classes beyond the next lower class. See R.S. 11:10-7. Thus if there had been no reclassification the Commission could have permitted Senior Examiners as well as Principal Examiners to compete for the same superior position. This procedure would in nowise have impaired any of the appellants' substantial rights similarly, the Commission's inclusion of the Senior Examiners in their class may not fairly be said to have impaired any of the appellants' substantial rights.
The appellants contend further that they have been prejudiced by the creation of the position of Examiner I between them and the Assistant Chief Examiner. We find no merit in this contention. It may be assumed that pursuant to the statutory authority (R.S. 11:7-2; R.S. 11:7-5) the position of Examiner I was created in the public interest to increase the efficiency of the Department's operations. The appellants have not introduced anything into the record suggesting the contrary nor have they intimated any political or other improper motives. The position has not yet been filled and the appellants will have fair opportunity to compete for it. Although they have pointed out that the position of Examiner I in the Corporation Tax Department has been filled, we fail to see how that bears on the matter before us. Unlike the Department of Banking and Insurance, the Corporation Tax Department had but one Principal Examiner and he was assigned to the position of Examiner I. We know none of the other pertinent circumstances and are not at *223 liberty to assume that this action was improper. See Falcey v. Civil Service Commission, supra. In any event, it does not affect the appellants or give them any basis for complaint in the present proceeding.
The appellants had no vested rights in their former classification and were at all times subject to the broad reclassification powers which have been delegated by the Legislature to the Commission in the interests of sound governmental administration. The incidental disarrangements which result from bona fide reclassification must readily be subordinated to the greater public good; where the Commission reasonably exercises its statutory reclassification powers, courts should be careful not to interfere lest they usurp functions entrusted to other branches of government. The Constitution appropriately expresses the broad principles designed to obtain effective public performance through civil service personnel chosen on the basis of merit rather than politics but it leaves the actual machinery for their effectuation in the hands of the legislative and executive. We find nothing in the record to indicate that the operation of that machinery in the instant matter has in anywise infringed the constitutional principles.
Affirmed.
For affirmance Chief Justice VANDERBILT, and Justices HEHER, OLIPHANT, WACHENFELD, BURLING, JACOBS and BRENNAN 7.
For reversal None.
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. PD-1509-12
DAMIAN DEMITRIUS EASLEY, Appellant
v.
THE STATE OF TEXAS
ON APPELLANT’S PETITION FOR DISCRETIONARY REVIEW
FROM THE TENTH COURT OF APPEALS
MCLENNAN COUNTY
KEASLER, J., delivered the unanimous opinion of the Court.
OPINION
The judge presiding over Damian Easley’s trial prohibited Easley’s counsel in voir
dire from comparing other legal burdens of proof to the beyond-a-reasonable-doubt burden
in criminal trials. The court of appeals found the judge’s ruling to be erroneous, but harmless
after applying a non-constitutional harm analysis. We affirm and overrule our previous cases
holding that preventing a defendant’s counsel from asking proper questions of the venire is
an error of constitutional dimension per se.
EASLEY—2
BACKGROUND
During voir dire, the judge presiding over Damian Easley’s family-violence assault
trial prohibited Easley’s counsel from discussing different legal standards of proof and
contrasting those with standards with the beyond-a-reasonable-doubt standard applicable in
criminal trials. The record shows that he tried on several occasions to discuss the lesser
standards of probable cause and preponderance of the evidence applicable to civil trials. His
attempts were cut short by the judge’s admonitions that “we don’t compare standards of
proof” and “I don’t allow you to get into the stairstep thing of probable cause and reason to
believe and that sort of stuff.” The jury convicted Easley, and he was sentenced to twenty
years’ confinement. He appealed the judge’s refusal to allow him to explore the differing
burdens of proof.
In accordance with our Fuller v. State1 opinion, the Waco Court of Appeals held that
the judge erred in refusing to allow Easley’s counsel to question the jury panel on the
differences between the criminal and civil burdens of proof.2 The court concluded, however,
that the error was a non-constitutional error for purposes of a harm analysis and was harmless
because it did not affect a substantial right. Easley’s petition for discretionary review was
granted to determine whether the court of appeals applied the correct harm standard, and if
so, whether it reached the correct result.
1
363 S.W.3d 583 (Tex. Crim. App. 2012).
2
Easley v. State, No. 10-12-00018-CR, 2012 WL 4040798, *1 (Tex. App.—Waco
2012) (mem. op., not designated for publication).
EASLEY—3
ANALYSIS
The court of appeals relied upon this Court’s opinions in Fuller and Rich v. State3 for
the proposition that the non-constitutional harm standard found in Texas Rule of Appellate
Procedure 44.2(b)4 applied to the judge’s error. However, neither Fuller nor Rich expressly
support this proposition. In Fuller, we held the trial court abused its discretion by prohibiting
Fuller’s counsel from asking the venire about different burdens of proof found in the law and
remanded to the court of appeals to conduct a harm analysis.5 Fuller relied on Rich and
Jones v. State6 in concluding that this type of error is subject to a harm analysis, but remained
silent regarding the nature of the error or under which Rule of Appellate Procedure the error
should be evaluated.7
Rich also provides little guidance on the matter. Similarly confronted with a judge’s
refusal to allow defense counsel to ask a proper question of the venire, we granted Rich’s
petition for discretionary review to address the court of appeals’ conclusion that the judge’s
error was harmless.8 The court of appeals found the error to be non-constitutional and
3
160 S.W.3d 575 (Tex. Crim. App. 2005).
4
TEX. R. APP. P. 44.2(b) (“Other errors. Any other error, defect, irregularity, or
variance that does not affect substantial rights must be disregarded.”).
5
Fuller, 363 S.W.3d at 584–85, 589.
6
Jones v. State, 223 S.W.3d 379 (Tex. Crim. App. 2007).
7
Fuller, 363 S.W.3d at 589.
8
Rich, 160 S.W.3d at 576–77.
EASLEY—4
applied Rule of Appellate Procedure 44.2(b).9 Because Rich did not contest this conclusion,
we assumed without deciding that the court of appeals used the proper rule.10 Under this
assumption, we found that a harm analysis relating to an erroneously excluded question to
the venire should be reviewed like an erroneous-admission-of-evidence error and set out
various factors to be considered.11
In Jones we were again presented with a judge’s refusal to allow a defendant’s
counsel to ask a proper question during voir dire.12 Declining to question previous
interpretations of the Texas Constitution provision at issue, the Jones majority adhered to
precedent and found that the error was of constitutional dimension.13 In resolving the present
case, we find squarely presented what the Jones majority found imprudent to resolve: should
this Court reevaluate our precedent that prohibiting a defendant’s proper question in voir dire
is an error that runs afoul of the Texas Constitution?
Article I, § 10 of the Texas Constitution provides, in part, that “[i]n all criminal
prosecutions the accused . . . shall have the right of being heard by himself or counsel, or
both.” We have interpreted this provision to provide the “right to appear by counsel.” Two
9
Id.
10
Id.
11
Id. at 577–78.
12
Jones, 223 S.W.3d at 380.
13
Id. at 382.
EASLEY—5
of our earliest cases—Plair v. State and Carlis v. State—hold that the right to appear by
counsel encompasses the right to interrogate prospective jurors.14 In both cases, the judge
refused defendants’ counsel the ability to individually ask proper questions of the venire.
Upon finding error in both cases, we reversed. However, whether we should continue to
apply the holdings in Plair and Carlis is questionable.
In Plair, the judge refused to allow Plair’s counsel the ability to ask each prospective
juror individually whether he would require the State to prove the offense beyond a
reasonable doubt and whether his verdict would be affected by the defendant’s race, among
other questions.15 After counsel posed these questions to several jurors individually, the
judge became concerned about the amount of time that would be required to seat a jury. As
a purported time-saving measure, the judge asked the venire as a group each question Plair’s
counsel had intended to ask prospective jurors individually “with an admonition that the
questions were directed to each individually, and for any one to speak up and answer.”16 In
finding that the judge erred, Plair emphasized the right to counsel to assess a prospective
juror’s responses in light of individual questioning:
Again we think it clear that the right to appear by counsel carries with it the
right of counsel to interrogate each juror individually, to the end that he may
form his own conclusion after this personal contact with the juror as to
14
Jones, 223 S.W.3d at 381; Plair v. State, 279 S.W. 267, 269 (Tex. Crim. App.
1925); Carlis v. State, 51 S.W.2d 729, 730 (Tex. Crim. App. 1932).
15
Plair, 279 S.W. at 268.
16
Id.
EASLEY—6
whether, in the counsel’s judgment, he would be acceptable to him, or whether
on the other hand he should exercise a peremptory challenge to keep him off
of the jury.17
Because the judge erred in refusing counsel the opportunity to individually question
prospective jurors on these issues, the judgment was reversed.18 The Plair Court elaborated
on its earlier holding in its opinion on the State’s motion for rehearing: “To prepare himself
for the intelligent exercise of the peremptory challenges allowed him by statute, one accused
of crime has the right, through his counsel, to direct to the veniremen appropriate
questions.”19
In Carlis, this Court also found that the trial judge erred in refusing individual
questioning and found insufficient the judge’s asking the venire as a whole the question
Carlis’s counsel sought to ask each prospective juror individually.20 Relying upon Plair in
large measure, this Court found that the judge’s refusal to permit counsel’s individual
questioning infringed upon his ability to intelligently exercise his statutory peremptory
challenges.21 And like Plair, the judgment below was reversed upon finding that the judge
17
Id. at 269.
18
Id.
19
Id. at 270 (op. on motion for reh’g).
20
Carlis, 51 S.W.2d at 730.
21
Id.
EASLEY—7
erred.22 Over ninety years later, Plair remains controlling law.23 While we recognize that
precedent should not be overruled lightly,24 it may be necessary “if the reasons for doing so
are weighty enough.”25 When considering whether to overrule our precedent, we have
considered whether the original rule or decision was flawed from the outset and the rule
conflicts with other precedent, especially when the other precedent is newer and more
soundly reasoned.26
We conclude that the reasons for overruling Plair and its progeny are sufficiently
weighty. At the outset, even with its assumption that this precedent was correctly decided,
the Jones majority recognized that calling this particular right a “right to counsel” is a
“misnomer” because the right to ask proper questions of the venire would apply even if the
accused was representing himself.27 But more importantly, Plair’s interpretation of Texas
Constitution Article I, § 10’s “right to be heard” language imprecisely defines an accused’s
right to counsel by implicitly holding that the use of peremptory challenges is so integral to
22
Id. at 731.
23
See, e.g., Jones, 223 S.W.3d at 382; Howard v. State, 941 S.W.2d 102, 108
(Tex. Crim. App. 1996); Smith v. State, 703 S.W.2d 641, 643 (Tex. Crim. App. 1985);
Powell v. State, 631 S.W.2d 169, 170 (Tex. Crim. App. 1982); Mathis v. State, 576
S.W.2d 835, 836–37 (Tex. Crim. App. 1979).
24
See Hammock v. State, 46 S.W.3d 889, 892 (Tex. Crim. App. 2001).
25
Grey v. State, 298 S.W.3d 644, 646 (Tex. Crim. App. 2009).
26
Id.
27
Jones, 223 S.W.3d at 381.
EASLEY—8
the right’s existence that any impediment imposed on counsel’s ability to use peremptory
challenges necessarily means that the accused’s right to counsel was violated. We disagree
with the overly broad conclusion that every restriction on counsel’s voir dire presentation
violates an accused’s right to counsel.
Furthermore, Plair’s holding is flawed because its reasoning would result in every
error committed during a proceeding in which the accused is “heard by himself or counsel
or both”—meaning every case, as Judge Womack has observed28—would be of constitutional
dimension. In his dissent in Jones, Judge Womack considered a sampling of what counsel
does to ensure that the accused is “heard” in trial:
Counsel may make challenges (both peremptory and for cause) to potential
jurors, make an opening statement, object to the evidence offered by the State,
cross-examine a witness called by the State, offer evidence, request and object
to the court’s charges to the jury, argue to the jury, and object to the State’s
argument to the jury.29
If we were to follow Plair’s reasoning strictly, any trial error relative to counsel’s efforts in
one of these areas would rise to the level of constitutional dimension.30 But we have not so
held, and Plair’s reasoning is difficult to square with our more recent cases; even a small
collection of which illustrates the incongruity.
In George Alarick Jones v. State, Jones’s counsel objected to the judge’s granting of
28
Id. at 385 (Womack, J., dissenting).
29
Id. at 384.
30
Id. at 385.
EASLEY—9
the State’s for-cause challenge of a particular veniremember.31 After finding the judge erred
in granting the State’s challenge, we were confronted with determining the nature of this
error under Texas Rule of Appellate Procedure 44.2. We noted that, “Constitutional
provisions bear on the selection of a jury for the trial of a criminal case.”32 However, it was
the right to a speedy and public trial by an impartial jury embodied both in the federal and
Texas Constitution that this Court identified as the most pertinent to jury selection.33
Although we stated that a trial judge’s error in excluding a potential juror “for impermissible
reasons (such as race, sex, or ethnicity) may violate other constitutional provisions,” an error
in granting the State’s challenge was not of constitutional dimension.34 Accordingly, such
an error is normally evaluated under Texas Rule of Appellate Procedure 44.2(b)’s non-
constitutional error standard35—that the error should be disregarded unless it affected the
defendant’s substantial rights.36 We have also relied upon the reasoning in George Jones to
31
George Jones v. State, 982 S.W.2d 386, 388 (Tex. Crim. App. 1998).
32
Id. at 391.
33
Id.
34
Id. (noting that, “[o]nly in very limited circumstances, when a juror is
erroneously excused because of general opposition to the death penalty . . . , does the
exclusion of a juror by an unintentional mistake amount to a constitutional violation”).
35
Id. at 391–92; Gray v. State, 233 S.W.3d 295, 298–99, 301 (Tex. Crim. App.
2007) (“Just as the Supreme Court explained in Taylor v. Louisiana, [419 U.S. 522, 538
(1975),] we determined that a ‘defendant’s only substantial right is that the jurors who do
serve on the finally constituted petit jury be qualified. The defendant’s rights go to those
who serve, not to those who are excused.’”) (alterations in original omitted).
36
TEX. R. APP. P. 44.2(b).
EASLEY—10
hold that errors in denying a defendant’s challenge for cause are non-constitutional errors and
should be examined under Rule 44.2(b) to determine whether their effects were harmful.37
We have similarly held that many errors concerning the erroneous admission of the
State’s evidence over a defendant’s objections are non-constitutional errors. A review of our
previous cases shows that even the erroneous admission of potentially damaging evidence
warranted a non-constitutional harm analysis: statements from a deceased victim,38 a written
statement from a surviving victim,39 emotional testimony in the guilt phase from a victim’s
mother discussing how she adopted the victim as an infant after volunteering at a hospital,40
references to a pre-trial proffer and plea negotiations,41 and scientifically unreliable expert
testimony.42
Likewise, we have generally labeled errors in sustaining the State’s objections to the
admission of a defendant’s evidence as non-constitutional.43 Only in specific instances in
which the precluded evidence forms a vital portion of the defendant’s case will such an error
37
Johnson v. State, 43 S.W.3d 1, 4 (Tex. Crim. App. 2001).
38
Garcia v. State, 126 S.W.3d 921, 927 (Tex. Crim. App. 2004).
39
Johnson v. State, 967 S.W.2d 410, 417 (Tex. Crim. App. 1998).
40
Motilla v. State, 78 S.W.3d 352, 355 (Tex. Crim. App. 2002).
41
Whitaker v. State, 286 S.W.3d 355, 363–64 (Tex. Crim. App. 2009).
42
Coble v. State, 330 S.W.3d 253, 280 (Tex. Crim. App. 2010).
43
Walter v. State, 247 S.W.3d 204, 219 (Tex. Crim. App. 2007).
EASLEY—11
be considered constitutional error.44 A constitutional violation may arise only if “(1) a state
evidentiary rule categorically and arbitrarily prohibits the defendant from offering otherwise
relevant, reliable evidence vital to his defense; or (2) a trial court’s clearly erroneous ruling
results in the exclusion of admissible evidence that forms the vital core of a defendant’s
theory of defense and effectively prevents him from presenting that defense.”45 And even
when such an error in this context rises to the level of constitutional magnitude, the
constitutional provision offended is the Fourteenth Amendment’s Due Process Clause of the
United States Constitution, specifically the ability to present a defense, not necessarily the
right to counsel found in the Texas Constitution.46
Errors in ruling on objections to the State’s jury arguments have routinely been held
to be non-constitutional.47 In Mosely v. State, the State argued in its jury summation that the
defense had attempted to mislead the jurors down “side roads” and “rabbit trails,” and that
“[t]hey don’t want you to stay on the main road because they know where that will take
44
Id.; Potier v. State, 68 S.W.3d 657, 665 (Tex. Crim. App. 2002).
45
Walters, 247 S.W.3d at 219.
46
See generally Potier, 68 S.W.3d at 659–65 (reviewing the holdings of the
United States Supreme Court and federal circuit courts).
47
See, e.g., Brown v. State, 270 S.W.3d 564, 572 (Tex. Crim. App. 2008);
Martinez v. State, 17 S.W.3d 677, 692 (Tex. Crim. App. 2000); Mosely v. State, 983
S.W.2d 249, 258 (Tex. Crim. App. 1998). But see Randolph v. State, 353 S.W.3d 887,
891 (Tex. Crim. App. 2011) (stating that “[a] comment on a defendant’s failure to testify
violates both the state and federal constitutions as well as Texas statutory law.”).
EASLEY—12
you.”48 Mosely objected that the argument was an attack on him over the shoulders of
counsel. The judge overruled the objection. This Court stated that “[a]lthough a special
concern, improper comments on defense counsel’s honesty have never been held to amount
to a constitutional violation. Instead we have characterized such comments as falling outside
the areas of permissible argument. We find that such comments constitute ‘other errors’
within the purview of Rule 44.2(b).”49 In Martinez v. State, the State argued in closing
arguments in the punishment phase of Martinez’s death-penalty trial that “the victims and
families cry out for the death penalty” and for jurors to “think about the nurses in the
penitentiary. Think about the secretaries. Think about the guards.”50 We found that both
comments were outside the record. Following Mosely’s holding, the Martinez Court found
that “[c]omments upon matters outside the record, while outside the permissible areas of jury
argument, do not appear to raise any unique concerns that would require us to assign
constitutional status.”51
The above cases demonstrate that Plair is anomalous in equating a judge’s single
error in voir dire, which may adversely affect counsel’s use of peremptory challenges, with
a deprivation of the right to counsel itself and therefore a constitutional error. In so holding,
48
Mosely v. State, 983 S.W.2d at 258.
49
Id. at 259.
50
Martinez v. State, 17 S.W.3d 677, 692 (Tex. Crim. App. 2000).
51
Id.
EASLEY—13
Plair exalts the questioning of veniremembers and use of peremptory challenges above all
of counsel’s other duties inherent in his representation of an accused that are equally
important to ensuring the accused receives a fair trial.52 Our more recent cases also
undermine the force of Plair’s holding by continuing to apply a non-constitutional harm
analysis to errors that, under Plair’s reasoning, could be considered an infringement on the
accused’s right to be heard by counsel. Again, if we were to associate any trial error relative
to counsel’s ability to ensure the accused is “heard” at trial, we would be forced to reach the
illogical conclusion that nearly every error in a criminal case is of constitutional dimension
because the error, in some measure, deprived the accused of his right to counsel.
For these reasons, we overrule Plair to the extent it holds that erroneously limiting an
accused’s or counsel’s voir dire presentation is constitutional error because the limitation is
a per se violation of the right to counsel. This, of course, is different from holding that such
an error may never rise to the level of constitutional magnitude. There may be instances
when a judge’s limitation on voir dire is so substantial as to warrant labeling the error as
constitutional error subject to a Rule 44.2(a) harm analysis. This case, however, does not
present one. The court of appeals correctly held that the judge’s error in prohibiting Easley’s
counsel from asking proper questions of the venire was non-constitutional error. It is
52
See Jones, 223 S.W.3d at 384 (Womack, J., dissenting) (“Why is only an error
in ruling on a question to a potential juror always of constitutional dimension? The
Constitution does not say so. Is it because counsel’s question to a potential juror is more
‘constitutional’ than counsel’s challenge of a juror, or the introduction of evidence, or the
court’s charge to the jury, or the argument of counsel? Surely not.”).
EASLEY—14
undoubtedly important for jurors to understand the concept of the beyond-a-reasonable-doubt
burden of proof.53 While erroneous, the judge’s refusal to allow Easley’s counsel to compare
other burdens of proof did not mean he was foreclosed from explaining the concept of
beyond a reasonable doubt and exploring the veniremembers’ understanding and beliefs of
reasonable doubt by other methods.
RULE 44.2(b) HARM ANALYSIS
The court of appeals reviewed the error under Rule 44.2(b), which requires that “[a]ny
other error, defect, irregularity, or variance that does not affect substantial rights must be
disregarded.”54 In Rich, we held that the same general factors used in cases in which
evidence was erroneously admitted are relevant considerations in determining harm from
being denied a proper question to the venire.55 We stated that an appellate court “should
consider everything in the record, including any testimony or physical evidence admitted for
the jury’s consideration, the nature of the evidence supporting the verdict, the character of
the alleged error and how it might be considered in connection with other evidence in the
case, the jury instructions, the State’s theory and any defensive theories, closing arguments,
voir dire, and whether the State emphasized the error.56
53
Fuller, 363 S.W.3d at 588.
54
Easley, 2012 WL 4040798 at *2; TEX. R. APP. P. 44.2(b).
55
Rich, 160 S.W.3d at 577–78.
56
Id.
EASLEY—15
Relying on our Rich opinion, the court of appeals found that the judge’s error did not
have a substantial and injurious effect or influence on the jury’s verdict.57 We agree that a
review of the record weighs against finding harm. In particular, we find the entirety of
Easley’s counsel’s voir dire and the nature of the evidence supporting the verdict to be the
most applicable and significant factors in light of the particular error found by the court of
appeals.
Although not permitted to compare differing standards and do what the trial judge
characterized as the “stairstep thing,” counsel was still free to question the venire concerning
their concept of reasonable doubt, albeit by a different manner.58 Even though counsel was
denied his preferred method of describing the criminal burden of proof, he was able to clarify
that the standard of proof in a civil trial was different, and when he asked a veniremember
why the civil standard is different from the criminal standard, the veniremember answered,
“Well, I guess because of the seriousness of the issue.” Although not permitted to compare
and contrast differing burdens of proof at length, he was not precluded from discussing and
explaining the beyond-a-reasonable-doubt standard. Other portions of counsel’s voir dire
suggest he did just that. He individually asked the first forty-four veniremembers, “If there
is something that raises in your mind a single doubt based on reason as to assault, what’s
57
Easley, 2012 WL 4040798 at *2.
58
See Fuller, 363 S.W.3d at 587 (concluding that “inquiry into a prospective
juror’s understanding of what proof beyond a reasonable doubt means constitutes a proper
question.”).
EASLEY—16
your verdict?” All answered, “Not guilty.” By his questioning and subsequent responses,
Easley’s counsel was able to demonstrate and effectively make his point that criminal trials
require a heightened burden of proof and the presumption of innocence. Counsel repeated
his point in closing arguments: “Remember during jury selection we talked about the State’s
burden of proof, beyond a reasonable doubt. It’s used for taking away a person’s liberty.
That’s [why] we are in this courtroom. Before you take away the liberty of my client, all
doubt based on reason must be excluded . . . . All doubt based on reason as to assault must
be excluded, if you have a single doubt in you mind based on reason as to assault in this
case.”
Additionally, the evidence supporting the jury’s verdict was substantial. The victim
testified that Easley punched her in the back, called her names, pulled her down on the couch
by her hair, choked her, and then threatened, “I’ll be back and shoot this whole place up,”
before fleeing the scene. The admitted photographs show injuries consistent with the manner
of Easley’s assault. The testimony from three witnesses corroborated the victim’s testimony
in that they saw that the victim was visibly upset, saw the effects of the victim’s assault
injuries, which were consistent with victim’s description of the assault, and heard the threats
to “shoot the place up.” One of the three identified Easley as the one who made the threat.
CONCLUSION
The court of appeals correctly concluded that the error in refusing Easley’s counsel
from discussing other burdens of proof in voir dire was a non-constitutional error analyzed
EASLEY—17
under Rule 44.2(b). We further conclude that the court of appeals was correct in finding the
error harmless. The court of appeals’ judgment is affirmed.
DELIVERED: March 12, 2014
PUBLISH
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588 F.2d 1349
Jamesv.Garrison
No. 78-8346
United States Court of Appeals, Fourth Circuit
12/18/78
1
M.D.N.C.
CPC DENIED; DISMISSED
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Order entered September 9, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00979-CV
KEVIN R. DAVIS, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 422nd Judicial District Court
Kaufman County, Texas
Trial Court Cause No. 90977-422
ORDER
We GRANT appellant’s September 5, 2014 motion for extension of time to file
jurisdictional letter brief and ORDER the brief be filed no later than October 13, 2014. No
further extensions will be granted absent exigent circumstances.
/s/ ELIZABETH LANG-MIERS
JUSTICE
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544 U.S. 917
AUSTINv.UNITED STATES.
No. 04-8629.
Supreme Court of United States.
March 21, 2005.
1
C. A. 5th Cir. Reported below: 111 Fed. Appx. 783. Motions of petitioners for leave to proceed in forma pauperis granted. Certiorari granted, judgments vacated, and cases remanded for further consideration in light of United States v. Booker, 543 U. S. 220 (2005).
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460 B.R. 145 (2011)
In re ROLLING HILLS CAMPING RESORT, INC., Debtor.
No. 09-33867.
United States Bankruptcy Court, W.D. Kentucky.
May 11, 2011.
*146 Neil Charles Bordy, Seiller Waterman LLC, Louisville, KY, for Debtor.
MEMORANDUM
DAVID T. STOSBERG, Bankruptcy Judge.
This case comes before the Court on the Motion to Disburse Cabin Funds and Payment of Administrative Expenses filed by the Debtor, Rolling Hills Camping Resort, Inc. (the "Debtor"). In the motion, the Debtor requests authority to disburse the proceeds from the sale of cabins to pay certain administrative expenses. Maynard Fernandez ("Fernandez"), a creditor in this bankruptcy case, objected to the motion, asserting that he possessed a security interest in the cabin proceeds. The Court conducted an evidentiary hearing on April 19, 2011. The Principals of the Debtor and Fernandez appeared with counsel at the evidentiary hearing. The Court considered the testimony and exhibits presented at trial and enters the following Findings of Fact and Conclusions of Law pursuant to Fed. R. Bank. P. 7052.
FINDINGS OF FACT
1. On July 31, 2009, the Debtor filed its voluntary petition for relief under Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Western District of Kentucky.
2. Over several days in early September, 2010, the Debtor filed several motions to sell cabins free and clear of all liens, claims and encumbrances, pursuant to Section 363(b) and (f) of the Bankruptcy Code.
3. Fernandez objected to the motions arguing that the cabins constituted part of the collateral for his secured claim and that the sales would impair the value of his collateral.
4. After a hearing on the motions to sell, on October 20, 2010, the Court granted the Debtor's motions to sell, but ordered that the proceeds (the "Cabin Funds") be held pending further order of the Court.
5. The Debtor sold the cabins as proposed in the motions and the total amount realized by the Debtor from such sales was $19,830.00.
6. On January 18, 2011, the Debtor filed the motion currently before the Court. In the motion, the Debtor states that the Principals of the Debtor, James M. Gulick, and Maria Luisa Castillo de Gulick extended post-petition credit to the Debtor in the total amount of $37,136.00. The Debtor further stated that this credit represented actual, necessary costs and expenses of preserving the estate and, therefore, constituted an administrative expense. The Debtor requested to pay its Principals from the Cabin Funds. The Debtor also requested authority to use the Cabin Funds to pay other administrative expenses, such as attorney's fees and United States Trustee Fees.
7. As stated above, Fernandez objected to the motion. Fernandez claimed that the cabins constituted fixtures and were part of the collateral securing his claim. Consequently, the Cabin Funds could *147 not be used by the Debtor to pay administrative expenses.
8. At the hearing on the Debtor's motion to disburse, it was clear that there was a difference of opinion as to the nature of the cabins and that an evidentiary hearing would be needed to determine whether the cabins should be classified as fixtures or as separate property.
9. At the evidentiary hearing, Terry Griffen, a repair and maintenance man at the campground, and one of the Debtor's Principals, James Gulick, both testified that while some of the cabins sat on concrete slabs, no straps or other affixing mechanisms attached the cabins to the property. They both also testified that all of the cabins possessed utility connections to the ground (water, electric, sewer).
10. On cross examination, Mr. Gulick admitted that the Debtor never paid personal property taxes on the cabins separately, and that the Debtor treated the cabins as part of the real estate for tax purposes. He further admitted that the Debtor did not have individual titles on the cabins, and that the Debtor did not individually insure the cabins, but rather insured the cabins with the whole campground.
11. Fernandez testified that he owned the cabins prior to their sale to the Debtor, and that he, or another previous owner, added the cabins to the property at the direction of the State Attorney General, and that the Debtor and the Attorney General intended the cabins to be permanent additions to the property. Fernandez admitted into evidence a 1993 Notice of Lien filed by the Attorney General, which supported this assertion. (Fernandez Exh. 1). The Notice of Lien states that "the Resort [the Debtor] has placed various improvements on the site, including cabins permanently affixed for the benefit of the owners...." Fernandez also testified that the cabins sat on concrete pads, attached with a hurricane strap. Fernandez believed that someone may have deliberately cut the hurricane straps from the cabins after their installation on the property. Fernandez also admitted into evidence the Mortgage and Security Agreement entered into between the Debtor and Village Campground, Inc., which listed eleven cabins as included in the collateral for the Mortgage and Security Agreement. (Fernandez Exh. 2).
12. The Court further notes that the Debtor's sworn schedules did not list the cabins as separate personal property, but instead listed the cabins as part of the real estate.
CONCLUSIONS OF LAW
The Court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 and 1334(b). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (B). Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409.
The parties agree that the primary issue to be determined by the Court is whether the cabins in question constitute fixtures. If so, the Cabin Funds constitute part of Fernandez' collateral and not subject for use to pay the Debtor's administrative expenses. If not fixtures, the Cabin Funds are unencumbered and available to pay administrative expenses. Both parties cite, and the Court agrees, that the leading case on this issue is C-Plant Federal Credit Union v. Heflin (In re Heflin), 326 B.R. 696, 701 (Bankr. W.D.Ky.2005) (Fulton, J.) (citing Tarter v. Turpin, 291 S.W.2d 547, 548 (Ky.1956)), a case decided by another bankruptcy judge in this district. In that case, Judge Fulton held that whether "something is a fixture is determined by looking at whether the *148 item was (1) annexed, either actually or constructively, to the property; (2) adapted to the use/purpose of the property to which it is connected so as to materially affect its use; and (3) intentionally made a permanent part of the property to which it was annexed." Moreover, even though an object can be moved does not mean it is not a fixture. Heflin, at 702.
Under the Heflin guidelines, the Court finds that the cabins in question constitute fixtures. When the Debtor acquired the property many of the cabins sat on the concrete slabs designed for that purpose. Both hurricane straps and utility connections attached the cabins to the property. While the evidence indicates that some or maybe all of the hurricane straps may have been removed at a later date, post-installation tampering would not change the fixture analysis. Moreover, just because the buyers of the cabins could disconnect the utility lines and remove the cabins, does not mean that the cabins were not fixtures attached to the property. As stated above, even though an object can be moved does not mean it is not a fixture. Heflin, at 702. The Court finds the first prong of the test easily satisfied.
Next, the Court must determine whether the cabins were adapted to the use/purpose of the property to which it is connected so as to materially affect its use. The Debtor operated a campground for which the cabins constituted an integral component of that operation. The Debtor took great pains to point out that the auctioneer of the real property, Edward Durnil, previously filed an affidavit with the Court stating, "The sale of these cabins will in no way impact the sale price received at auction for the real property." Fernandez testified that the auctioneer later disagreed with his assessment. Even without Fernandez' testimony as to the auctioneer's change of opinion, the Court finds it very difficult to believe that the removal of these cabins would not impact the value of the real property. Without the cabins, the property in question is essentially a vacant lot with utility poles jutting out of the ground. With cabins, the property becomes a furnished campground, subject to immediate rental agreements. The cabins clearly added value to the property and the auctioneer's affidavit to the contrary is simply not credible. The Court finds the second prong of the test also met.
Finally, it is clear to the Court that both parties either intended the cabins to be a permanent part of the campground or treated the cabins as a permanent part of the campground. With respect to Fernandez, the 1993 Notice of Lien evidenced the intent to permanently affix the cabins to the property. That Notice plainly states that the campground placed various improvements on the property, including "cabins permanently affixed" to the property. Fernandez also testified that when he sold the property to the Debtor, hurricane straps attached the cabins to the property. He stated that without the straps, the cabins could be subject to increased weather damage. Moreover, either Fernandez, or another owner, placed the cabins in a pattern on the property, and arranged, at some expense, for utility service connections to run to each cabin site. It does not seem reasonable that such efforts would have been made, if the owners did not intended to permanently affix the cabins to the property. As for the Debtor, the Court reiterates that the Debtor treated the cabins as permanent fixtures prior to the filing of the motions to sell. The Debtor did not pay separate personal property taxes on the individual cabins; did not separately insure the individual cabins; did not have separate titles on the cabins; and did not list the cabins as separate property in its sworn schedules *149 filed in this bankruptcy case. It appears to the Court that when it suited the Debtor, it treated the cabins as fixtures on the property, but now that the cabins have been sold, the Debtor seeks to treat the cabins as separate, unencumbered property. The Debtor cannot have it both ways. The Court finds the owners intended the cabins to be permanently affixed to the ground and part of the campground operation. As such, the third prong of the test is met.
Having found that the cabins meet the three prong test to be characterized as fixtures, the Court concludes that the cabins constitute part of the Fernandez' collateral under the Mortgage and Security Agreement. As such, any proceeds from the sale of this collateral cannot be used to pay the Debtor's administrative expenses and must be paid to Fernandez, the lienholder. A separate order will be entered in accordance with this Memorandum.
ORDER
In accordance with the Memorandum entered this same date, and the Court being otherwise sufficiently advised,
It is hereby ORDERED that the Motion to Disburse Cabin Funds and Payment of Administrative Expenses is DENIED.
It is further ORDERED that the Debtor turnover the Cabin Funds to Fernandez forthwith.
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476 F.Supp.2d 630 (2007)
Roberto Garza IBARRA, Plaintiff,
v.
C. Guadalupe Yadira QUINTANILLA GARCIA, Defendant.
Civil Action No. H-06-0648.
United States District Court, S.D. Texas, Houston Division.
February 8, 2007.
*631 *632 Mario Caballero, Attorney at Law, Houston, TX, for Defendant.
Michael S. Rojas, Attorney at Law, Houston, TX, for Plaintiff.
MEMORANDUM OPINION AND ORDER
LAKE, District Judge.
Plaintiff, Robert Garza Ibarra, brought this action against defendant, C. Guadalupe Yadira Quintanilla Garcia, pursuant to the Hague Convention on the Civil Aspects of International Child Abduction (the "Hague Convention") and the International Child Abduction Remedies Act, 42 U.S.C.A. § 11601, et seq., seeking the return of his son, Roberto Garza Quintanilla, from the United States. The case was tried to the court, and each party has submitted two post-trial briefs. After considering the law and the evidence the court issues this Memorandum Opinion and Order pursuant to Fed.R.Civ.P. 52(a).
I. Background
Plaintiff and defendant are citizens of Mexico. They were married in 1999 in Monterrey, Nuevo Leon, Mexico. Their son, Roberto Garza Quintanilla, was born the following year. In March of 2004 plaintiff and defendant were divorced by mutual consent in Monterrey, Mexico. The minor child continued to reside with the defendant in Monterrey until September of 2004 when the defendant took him to the United States. The child now resides with defendant and her new husband in Houston.
Plaintiff contends that defendant abducted the minor child from Mexico without plaintiffs knowledge or consent and that defendant's removal of the child from Mexico violated plaintiff's right of custody of the child under the Mexican divorce decree. Defendant contends that the Hague Convention affords plaintiff no right to the return of the child. Defendant also contends that plaintiffs delay in filing this action bars his remedy and that the child would be placed in grave risk of physical and psychological harm if the court required him to return to Mexico and live with plaintiff.
II. Legal Standards
The Hague Convention is an international treaty, to which the United States is a signatory. "The Convention is designed to *633 secure the prompt return of children who have been abducted from their country of habitual residence or wrongfully retained outside that country." (Oct. 30, 1985, transmittal letter from President Ronald Reagan to the United States Senate, reprinted at 51 Fed.Reg. 10,495 (March 26, 1986)) The Hague Convention operates to restore the status quo as it existed before the wrongful removal of a child by establishing procedures for the return to the child's country of "habitual residence" before the removal. (Hague Convention, arts. 3, 12, reprinted at 51 Fed.Reg. 10498-99)
The United States implemented the Hague Convention by enacting the International Child Abduction Remedies Act ("ICARA"), 42 U.S.C.A. §§ 11601-11610. The ICARA grants jurisdiction to United States courts to determine the merits of an abduction claim under the Hague Convention, but the ICARA does not grant jurisdiction over the merits of an underlying custody dispute. England v. England, 234 F.3d 268, 271 (5th Cir.2000). To be entitled to the return of a child under the Hague Convention the plaintiff must show
(1) that he had "rights of custody" of the minor child "either jointly or alone";
(2) that the plaintiff was "actually exercis[ing]" those rights "either jointly or alone" when the minor child was removed;
(3) that the minor child was removed from his habitual residence; and
(4) that the removal of the minor child breached plaintiff's "rights of custody."
Hague Convention arts. 3, 4, and 13(a). Article 5 of the Hague Convention distinguishes between "rights of custody" and "rights of access" as follows:
(a) "Rights of custody" shall include rights relating to the care of the person of the child and, in particular, the right to determine the child's place of residence.
(b) "Rights of access" shall include the right to take a child for a limited period of time to a place other than the child's habitual residence.
If the plaintiff establishes these elements, the court must return the child unless
(1) the action to seek the return of the child was commenced more than a year after the wrongful removal and the child is settled in his new environment, Hague Convention art. 12, or
(2) "there is a grave risk that the return would expose the child to physical or psychological harm or place the child in an intolerable situation." Hague Convention art. 13(b).
The defendant bears the burden of proof on these defenses, the first by a preponderance of the evidence and the second by "clear and convincing evidence." 42 U.S.C. § 11603(e)(2). Even if a defense applies, "a federal court has `and should use when appropriate' the discretion to return the child to his or her place of habitual residence `if return would further the aims of the Convention.'" England, 234 F.3d at 271, citing Friedrich v. Friedrich, 78 F.3d 1060, 1067 (6th Cir.1996).
III. Analysis
A. Plaintiff's Claim for Return of the Child
Both parties argue that the rights to custody of the minor child are established by their Mexican divorce decree. In the divorce decree the parties agreed to be bound by certain clauses, three of which are material to this action. The First clause provides that "both [parties] will continue executing their parental authority over [the child], who will be under [defendant's] custody [during and after the divorce *634 proceeding]."[1] The Second clause provides that the child will reside with the defendant at 1310 Xochimilco Street in Monterrey, Nuevo Leon, Mexico; that the defendant will provide plaintiff with written notice of any change of address; and that "any future residence of [defendant and the child] shall be located within the metropolitan area of Monterrey, N.L."[2] The Third clause affords plaintiff visitation rights with the child.[3]
The parties' principal dispute is whether the Mexican divorce decree provides plaintiff with a right of custody.[4] The plaintiffs principal argument in support of a right of custody is based on his interpretation of his right of "la patria potestad" under Mexican law. Plaintiff explains that article 414 of the Civil Code of Nuevo Leon states that "[t]he rights and obligations of the family (`la patria potestad') is exercised by both the father and the mother."[5] Article 417 states that when the parents have become separated "both parents will exercise the same rights and obligations of the family (la patria potestad), but it shall be resolved by mutual agreement pertaining to the exercise of custody."[6] Article 415 provides that "[the parent] who exercises possession of the child has the obligation to respect, obtain and permit coexistence with [the parent] whom does not possess the right of possession but has the patria potestad."[7] Plaintiff argues that "[t] he patria potestad in *635 Mexico, in and of itself, without any judicial modification of its rights thereof, is sufficient to confer `rights of custody' within the meaning of . . . article 5 of the Hague Convention. . . . "[8]
The court is not persuaded by this argument. The parties' divorce decree controls this issue. Although the decree recognized the parties' rights of patria potestad, it awarded defendant custody of the child and only awarded plaintiff rights to visit the child. Plaintiff, who is a Mexican attorney, testified at trial that "the patria potestad is the rights that the parents assume for the child because he is a minor. And the right of custody that I had with the minor, I left that to the mother." To the extent that Mexican law of patria potestad afforded plaintiff any rights of custody of the child, plaintiff relinquished such rights in the agreed divorce decree. When plaintiff has possession of the child pursuant to the visitation rights awarded him in the divorce decree he may exercise his remaining rights of patria potestad over the child. The evidence at trial also showed that defendant, not plaintiff, exercised custody over the minor child, while plaintiff only exercised the visitation rights afforded him by the decree.
Because the plaintiff did not have the right of custody over the minor child, either jointly or alone, he has failed to satisfy the principal element of his return claim under the Hague Convention. See Gonzalez v. Gutierrez, 311 F.3d 942, 954 (9th Cir.2002). Because defendant's removal of the child did not breach the plaintiffs "rights of custody," the plaintiff is not entitled to the return of the child.
The court recognizes that defendant violated the prohibition against removing the child from Monterrey. A body of case law has developed over statutes and divorce decrees that provide parents with a "ne exeat" right, which gives a parent a veto over the right of the other parent to determine the child's place of residence.[9] Plaintiff argues that "[t]he geographical restriction found in the Divorce Decree affords plaintiff . . . the equivalent of the ne exeat right. . . ."[10] The court disagrees. The divorce decree affords no such right to plaintiff, it merely imposes an obligation on defendant not to remove the child from Monterrey. To the extent that the defendant's removal of the child to the United States interfered with plaintiffs right of access, defendant may have violated the divorce decree. Although plaintiff may have a remedy under Mexican law,[11] the Hague Convention, "however, does not provide for the return of [the child] as a remedy for that violation." Gonzalez, 311 F.3d at 950.
B. Defendant's Defenses to Plaintiff's Claim
1. Article 12 of the Hague Convention
The parties have stipulated that the minor child has resided in Houston since October of 2004 and that he is now settled in his new environment. The child was removed by the defendant from Monterrey on September 4, 2004. Since the plaintiff did not file this action until February 28, 2006, it was commenced more than a year after the removal. The contested issue for a defense under Article 12 of the Hague Convention is whether plaintiff has established *636 a valid excuse for that delay. The plaintiff testified that on September 6, 2004, when he first realized the child was no longer in Monterrey, he searched for the defendant in Mexico by contacting her family, Mexican utilities and registries, and that he contacted various Mexican authorities in an effort to locate the child. Not until April or May of 2005 were plaintiff and his brother able, by chance, to locate the child in Houston. The defendant presented no evidence to the contrary, and based on the parties' testimony the court is persuaded that defendant attempted to keep the child's location secret from plaintiff.
The court concludes that under these facts the doctrine of equitable tolling applies. See Fumes v. Reeves, 362 F.3d at 723. A parent, such as the defendant in this case, who wrongfully removes a child from his habitual residence should not be rewarded by creating a possible defense to her conduct. See id. The court concludes that the one-year limitations period began when the plaintiff, after making reasonable efforts to locate his son, finally found him in April or May of 2005. Since that date is within one year of the filing of this action, the defendant has not satisfied her burden of proof under Article 12 of the Hague Convention.
2. Article 13(b) of the Hague Convention
To meet her burden of defense under Article 13(b) of the Hague Convention defendant must show by clear and convincing evidence that there is a grave risk that return to Mexico would expose the minor child to physical or psychological harm or place the child in an intolerable situation. Defendant testified that plaintiff abused her physically and emotionally while in Mexico and failed to support her and the child, but there was no evidence that the plaintiff ever physically abused the child. The court concludes that the defendant has failed to establish by clear and convincing evidence that the return of the minor child to his father in Mexico would expose the child to physical or psychological harm or place him in an intolerable situation. Her defense under Article 13(b) of the Hague Convention therefore fails.
IV. Conclusion and Order
The court concludes that plaintiff has failed to establish by a preponderance of the evidence the elements of his abduction claim under the Hague Convention, and that defendant has not established the applicability of either of her asserted defenses. The court will enter judgment that the child not be returned to plaintiff.
NOTES
[1] The Mexican divorce decree is Plaintiff's Exhibit 2; plaintiff's English translation is also labeled as Plaintiff's Exhibit 2, while defendant's English translation of the decree is labeled as Defendant's Exhibit K. In Spanish the First clause of the decree states that the plaintiff and defendant will continue to exercise "la patria potestad" over the minor child. Plaintiff's Spanish language expert testified that this term means that both parties "will continue executing their parental authority over the minor," Plaintiff's Exhibit 2, English translation, at page 3 (emphasis added), while defendant's expert testified that the term means that both "will continue exercising their parental rights over the minor." (Defendant's Exhibit K, page 4 (emphasis added)) The court views the difference in defining "la patria potestad" between "parental authority" as urged by the plaintiff and "parental rights" as urged by the defendant as an immaterial distinction.
[2] The parties also disagree about the English translation of the last sentence of the Second clause of the divorce decree, which states in Spanish that the defendant understands that any future residence of defendant and the minor child "deber á ser dentro del área Metropolitana de Monterrey N.L." Plaintiff argues that the word "deberá" means that "[defendant] and her minor child shall be located within the metropolitan area of Monterrey, N.L." Defendant originally argued that the quoted language from the divorce decree only "recommends" that the defendant and the child remain in Monterrey. (Defendant's Statement of Support of Retaining Possession of Child, Docket Entry No. 6, at page 1) At trial defendant's Spanish language expert testified, however, that this language means that "[defendant] and the child should be within the metropolitan area of Monterrey, N.L." (Defendant's Exhibit K) (emphasis added) Although defendant's expert testified that the imperative nature of "deberá" could have been made more manifest in the divorce decree, he did not dispute that "shall" was a possible, logical meaning of the word. The court concludes that there is no significant distinction between the two experts' interpretations, and that the Second clause of the divorce decree required defendant and the minor child to remain within the metropolitan area of Monterrey. Under either interpretation the quoted language from the Second clause of the divorce decree is an imperative, not a mere suggestion or recommendation.
[3] Id.
[4] The evidence is undisputed that Monterrey, Mexico, was the habitual residence of the minor child.
[5] Plaintiff's Exhibit 3.
[6] Id.
[7] Id.
[8] Plaintiff's Second Post-Trial Brief, Docket Entry No. 25, at pages 4-5.
[9] See, e.g., Fumes v. Reeves, 362 F.3d 702 (11th Cir.2004); Croll v. Croll, 229 F.3d 133 (2d Cir.2000); Gonzalez, 311 F.3d at 949.
[10] Plaintiff's Second Post-Trial Brief, Docket Entry No. 25, at page 11.
[11] See id. at pages 1-2.
| {
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NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; [email protected]
SJC-12114
COMMONWEALTH vs. JOEL D. MORGAN.
Middlesex. December 6, 2016. - April 18, 2017.
Present (Sitting at Lawrence): Gants, C.J., Botsford, Lenk,
Hines, Gaziano, Lowy, & Budd, JJ.1
Veteran. Motor Vehicle, Operating under the influence.
Controlled Substances. Practice, Criminal, Continuance
without a finding, Dismissal.
Complaint received and sworn to in the Lowell Division of
the District Court Department on October 3, 2014.
A motion for pretrial diversion was heard by Barbara S.
Pearson, J., and questions of law were reported by her to the
Appeals Court.
The Supreme Judicial Court granted an application for
direct appellate review.
Melissa Weisgold Johnsen, Assistant District Attorney, for
the Commonwealth.
Elizabeth Hugetz, Committee for Public Counsel Services
(Benjamin H. Keehn, Committee for Public Counsel Services, also
present) for the defendant.
1
Justice Botsford participated in the deliberation on this
case prior to her retirement.
2
John C. Mooney, for John C. Mooney & another, amici curiae,
submitted a brief.
LENK, J. This case comes to us on two reported questions
and calls upon us to construe for the first time the so-called
VALOR Act, St. 2012, c. 108, entitled "An Act relative to
veterans' access, livelihood, opportunity and resources." The
VALOR Act was enacted in 2012 in the aftermath of protracted
American military engagements in Afghanistan and Iraq. In
recognition of the toll thereby taken on many who served in the
military, the VALOR Act, among other things, amended the statute
providing young adults with pretrial diversion, G. L. c. 276A
(pretrial diversion statute), to include qualifying veterans and
active duty members of our armed forces facing criminal charges
in the District and Boston Municipal Courts.
We address first whether, under the pretrial diversion
statute, as amended by the VALOR Act, a judge is authorized to
dismiss or to continue such charges without a finding upon a
defendant's successful completion of an approved pretrial
diversion program. We conclude that the judge is so authorized,
rejecting the Commonwealth's view that the VALOR Act amendments
permit only a continuance of court proceedings, on the flawed
view that, while military defendants could seek treatment
through court-approved programs, they would face resumed
prosecution of the charged offenses even after the successful
3
completion of such a program.
We go on to address the reported questions and consider
whether the pretrial diversion statute, as amended by the VALOR
Act, permits a judge to continue without a finding (CWOF) or to
dismiss a charge of operating a motor vehicle while under the
influence of alcohol or drugs (OUI), second or subsequent
offense, notwithstanding the provisions of G. L. c. 90, § 24,
which generally proscribe such dispositions. Our analysis of
this question ultimately turns on the legislative intent of the
VALOR Act and its multifaceted approach to assisting members of
the military in their often-difficult return to civilian life,
during which many succumb to substance abuse. We conclude that,
notwithstanding otherwise applicable constraints on alternative
dispositions that the preexisting OUI statute imposes, the
pretrial diversion statute, as amended in 2012 by the VALOR Act,
vests judges with discretion to order either of the two
alternative dispositions at issue in appropriate cases that
involve charges of OUI, second or subsequent offense. We
accordingly answer both reported questions2 in the affirmative.3
2
See part 1, infra, for the full text of the reported
questions.
3
We acknowledge the amicus brief submitted by John C.
Mooney and Disabled American Veterans Department of
Massachusetts, Inc., in support of the defendant, Joel D.
Morgan.
4
1. Background. We set forth the relevant facts, which are
largely undisputed.4 The defendant, Joel D. Morgan, is a veteran
of the United States Army, in which he served from 2002 to 2011.
During his last four years of service, he completed three
consecutive tours of duty, two in Iraq and one in Afghanistan.
As early as the first of these deployments, he began to
experience symptoms of posttraumatic stress disorder (PTSD), and
by the time he returned from his final tour of duty in
Afghanistan in 2011, his untreated symptoms had significantly
worsened. He also had numerous physical disabilities as the
result of injuries received during his tours of duty.5
Immediately upon returning from Afghanistan, Morgan sought
mental health treatment through the United States Department of
Veterans Affairs (VA), but the VA was unable to schedule an
intake appointment for four months. While awaiting evaluation
and treatment, Morgan began to self-medicate by abusing alcohol
and opioids. In January, 2012, he was evaluated and was
diagnosed with PTSD. In the fall of 2012, the VA also
determined that Morgan was one hundred per cent disabled. On
Veteran's Day, in November, 2012, Morgan's identical twin
4
Because no evidence was taken, the facts consist largely
of the statements in the police incident report and the
undisputed submissions of the parties.
5
Morgan's son was born during his final deployment. Morgan
and his wife are divorced.
5
brother, himself a veteran of the wars in Iraq and Afghanistan,
who suffered from PTSD and a traumatic brain injury, committed
suicide. The impact of his twin's suicide on Morgan's efforts
to return to ordinary civilian life was considerable.
In April, 2013, Morgan entered a short-term detoxification
program at a VA hospital in Bedford. Immediately after release
from that program, he entered an intensive outpatient program,
but completed only one month. In July, 2013, Morgan visited his
mother, who had moved to California, and he successfully
completed a two-month residential treatment program there. He
thereafter relapsed.
On September 29, 2014, Morgan was driving erratically on
Interstate 495 in Tewksbury when his vehicle swerved into
another lane and hit the side of a tow truck. Morgan did not
stop to exchange insurance information at the scene. The tow
truck driver telephoned police and reported the incident; he
also said that he had observed a Toyota (later identified as
Morgan's) driving very erratically for ten miles before the
accident. Morgan continued driving until he was stopped by a
State police trooper in Boxborough, who had been alerted by the
truck driver's report, and who observed Morgan still driving
erratically.
When stopped, Morgan appeared to be under an intoxicating
influence; he was disheveled and sweating, with glassy eyes and
6
slurred speech. Dried blood and needle marks were visible on
his left arm. The trooper who conducted the stop called for
backup, and ultimately was joined by four other troopers.
Morgan informed one of the troopers that he had heroin and a
hypodermic needle in his possession, and those items were taken
into police custody. Morgan was arrested and driven to the
State police barracks for booking. He waived his Miranda rights
and agreed to be evaluated by a drug recognition specialist, who
concluded that Morgan was exhibiting signs of opioid use.
Police found drug paraphernalia in the vehicle near the driver's
seat, including plastic bags, a bottle cap, and two hypodermic
needles.
The following week, Morgan was arraigned in the District
Court on charges of OUI, second offense; possession of heroin;
negligent operation of a motor vehicle; and leaving the scene of
property damage. When his attorney later learned that Morgan
was a veteran, she sought pretrial diversion under the VALOR
Act. He was evaluated by the VA, which determined that he would
benefit from such a program.
At different VA medical centers, Morgan underwent
detoxification, received specialized PTSD counselling for the
first time, and also began supportive counselling for substance
7
abuse, in conjunction with monthly Naltrexone6 injections. He
passed a union examination, joined a local carpenters union, and
has maintained employment as a carpenter.7
Three months after arraignment, in January, 2015, Morgan
filed a motion, pursuant to the pretrial diversion statute,
seeking dismissal of all charges should the pretrial diversion
program prove successful. In the alternative, he sought to
admit to sufficient facts and have the case continued without a
finding. The prosecutor opposed both dispositions, contending
that, given the terms of the OUI statute, G. L. c. 90, §§ 24
and 24D, the judge could not continue a second offense8 without a
6
Naltrexone helps treat opioid addiction by blocking opioid
receptors in the body, but carries no risk of abuse or illicit
resale. See Substance Abuse and Mental Health Services
Administration, https://www.samhsa.gov/medication-assisted-
treatment/treatment/naltrexone [https://perma.cc/LVS4-ZT3F].
7
In support of his motion to report questions of law,
Morgan executed an affidavit in July, 2015, stating that he had
not consumed alcohol or drugs since his arrest. Morgan's
counsellors also submitted affidavits and letters in support of
the motion, stating that he has maintained sobriety and
employment, has made significant progress in treatment, was
providing for his son, and was taking steps to restore family
relationships. Morgan's attorney also submitted a letter from
her investigator stating that the tow truck driver, himself a
veteran, had told the investigator that he did not want Morgan
to "end up with a criminal conviction over this," so long as
Morgan receives the help he so "desperately needs."
8
In December, 2004, approximately nine years and ten months
prior to the incident at issue here, Morgan admitted to
sufficient facts to warrant a finding that he had operated a
motor vehicle while under the influence of alcohol or drugs
8
finding. He also maintained that, in any event, the pretrial
diversion statute did not permit a judge to dismiss a case
involving a veteran or active duty member of the military and
that, absent statutory authorization, such dismissal, over the
Commonwealth's objection, infringed on the separation of powers.9
See art. 30 of the Massachusetts Declaration of Rights;
Commonwealth v. Cole, 468 Mass. 294, 301 & n.10 (2014).
Acknowledging that the case presented an unsettled question
of law, the judge reported the following two questions to the
Appeals Court, pursuant to Mass. R. Crim. P. 34, as amended, 442
Mass. 1501 (2004):
(OUI). The case was continued without a finding and dismissed
upon his successful completion of probation. Although Morgan
did not have a prior criminal conviction at the time of the 2014
incident, because ten years had not elapsed since December,
2004, he was not eligible for another continuance without a
finding under the terms of the OUI statute. Where a defendant
previously was "assigned to an alcohol or controlled substance
education, treatment or rehabilitation program [by a court]
because of" operating while under the influence, a subsequent
OUI charge "shall not be placed on file or continued without a
finding," unless the defendant was convicted or assigned to a
treatment program at least ten years previously; this exception
shall apply only "once in his [or her] lifetime." See G. L.
c. 90, §§ 24 & 24D, second par. Otherwise put, had at least ten
years elapsed between the resolution of the 2004 matter and the
2014 incident, Morgan would have been eligible for a continuance
without a finding upon successful completion of a court-approved
program under the terms of the OUI statute itself, quite apart
from the pretrial diversion statute, as amended by the VALOR
Act. The question before us arises because of his ineligibility
under the OUI statute.
9
The prosecutor did not oppose an admission to sufficient
facts and a continuance without a finding on the other charges.
9
1. "Under the VALOR Act, may a judge exercise
discretion to enter a CWOF after an admission to an OUI-
second offense?"
2. "If a CWOF is not available, may a court dismiss
the charge upon successful completion of diversion, over
the Commonwealth's objection?"
We allowed Morgan's application for direct appellate review.
2. Statutory background. Two statutes are relevant to our
consideration of the reported questions. We set forth each in
pertinent detail.
a. Pretrial diversion statute, G. L. c. 276A. In 1974,
the Legislature inserted c. 276A into the General Laws by
enacting St. 1974, c. 781, "An Act establishing a district court
procedure to divert selected offenders from the district courts
to programs of community supervision and service." As initially
enacted, the statute provided for pretrial diversion to a
program, followed by dismissal or a continuance without a
finding, for young adults who were at least eighteen, but not
yet twenty-two years old.
"The district courts, and in Boston, the municipal
court of the city of Boston, shall have jurisdiction to
divert to a program . . . any person who is charged with an
offense or offenses against the [C]ommonwealth for which a
term of imprisonment may be imposed and over which the
[D]istrict [C]ourts may exercise final jurisdiction and who
has reached the age of [eighteen] years but has not reached
the age of twenty-two, who has not previously been
convicted of a violation of any law of the [C]ommonwealth
or of any other [S]tate or of the United States in any
criminal court proceeding after having reached the age of
[eighteen] years, . . . who does not have any outstanding
warrants, continuances, appeals or criminal cases pending
10
before any courts of the [C]ommonwealth or any other
[S]tate or of the United States, and who has received a
recommendation from a program that he would, in light of
the capacities of and guidelines governing it, benefit from
participation in said program."
G. L. c. 276A, § 2.
In 2012, the pretrial diversion statute, among others, was
amended by the VALOR Act, St. 2012, c. 108, to assist veterans
and active duty service members of the United States armed
forces in numerous ways as they resumed their civilian lives.10
The VALOR Act added G. L. c. 276A, §§ 10 and 11.
Section 10 defines eligible military defendants in language
that almost precisely mirrors that used in G. L. c. 276A, § 2,
to define young adults eligible for the protections of G. L.
c. 276A, except that it applies to veterans:
"The district courts, and in Boston, the municipal
court of the city of Boston, shall have jurisdiction to
divert to a program any person who is a veteran, . . . on
active service in the armed forces of the United
States, . . . or who has history of military service in the
armed forces of the United States who is charged with an
offense against the [C]ommonwealth for which a term of
imprisonment may be imposed, regardless of age, who has not
previously been convicted of a violation of any law of the
10
In addition to the provisions at issue here, the VALOR
Act, inter alia, amended G. L. c. 7, § 61, to provide benefits
for veteran-owned businesses; added G. L. c. 15A, § 42, to
provide help for veterans seeking higher education; inserted
G. L. c. 15E to streamline transfers between school districts
for children of service members; amended G. L. c. 59 to provide
property tax benefits for veterans; amended G. L. c. 146 to help
veterans and members of the military maintain professional
licenses; and amended G. L. c. 10, § 35CC, to expand access to
food, housing, utilities, and medical benefits.
11
[C]ommonwealth or of any other [S]tate or of the United
States . . . after having reached the age of [eighteen]
years . . . who does not have any outstanding warrants,
continuances, appeals or criminal cases pending before any
courts of the [C]ommonwealth or any other [S]tate or of the
United States and who has received a recommendation from a
program that such person would, in light of the capacities
of and guidelines governing it, benefit from participation
in said program."
G. L. c. 276A, § 10.
The pretrial diversion statute, as originally enacted in
1974, explicitly excludes otherwise eligible defendants charged
with certain offenses from pretrial diversion, G. L. c. 276A,
§ 4, and sets forth a detailed process to be followed in
screening eligible defendants for admission to a program, G. L.
c. 276A, § 3. It allows a judge to "afford[] a fourteen-day
continuance for assessment by the personnel of a program to
determine if [the defendant] would benefit from such program."
Id. In 2012, the VALOR Act added G. L. c. 276A, § 11, creating
a similar procedure for qualifying veterans: a judge may
"afford[] a [fourteen]-day continuance . . . to seek an
assessment by the United States Department of Veterans Affairs,
the [D]epartment of [V]eterans' [S]ervices or another [S]tate or
[F]ederal agency with suitable knowledge and experience of
veterans affairs to provide the court with treatment
options . . . including diversion programs."
If, after receiving the requisite information in the
assessment, and any response by the Commonwealth, the judge
12
determines that the defendant should enter the program, and the
defendant "agrees to abide by the terms and conditions in the
plan of services," "[t]he criminal proceedings of [a] defendant
who qualifies for diversions under [G. L. c. 276A, § 2,] . . .
shall be stayed for a period of ninety days, unless the judge in
his [or her] discretion considers that the interest of justice
would be served by a hearing of the facts, after which the case
may be continued without a finding for ninety days." G. L.
c. 276A, § 5.
At the end of the ninety-day stay or the continuance
without a finding, the judge may dismiss the underlying charge
"[i]f the report indicates the successful completion of the
program by a defendant." G. L. c. 276A, § 7. If, at the end of
that time, the defendant has not completed the program
successfully, or if the program recommends that the stay be
extended, the judge may, in his or her discretion, extend the
stay, dismiss the charges, return the case to the trial list, or
"take such action as he [or she] deems appropriate." Id.
b. OUI statute, G. L. c. 90, §§ 24, 24D. Against the
backdrop of otherwise available alternative dispositions,11 the
OUI statute has long limited to only specific classes of OUI
11
See, e.g., G. L. c. 278, § 18 (allowing continuance
without finding "unless otherwise prohibited by law"); Mass. R.
Crim. P. 28 (e), 453 Mass. 1501 (2009) (allowing court to file
case without imposing sentence after guilty finding or verdict).
13
offenders the availability of certain alternative dispositions.
The statute has been amended numerous times in its eighty-five
year history; at the time of Morgan's arrest, the OUI statute
provided, as it does today, that "[i]f the defendant has been
previously convicted or assigned to an alcohol or controlled
substance education, treatment, or rehabilitation
program[,] . . . [a] prosecution . . . shall not be placed on
file or continued without a finding except for dispositions
12
under [§ 24D]." G. L. c. 90, § 24. Adopted in 1974, G. L.
c. 90, § 24D, in turn, allows a judge to dismiss a case or to
enter a continuance without a finding after successful
completion of a program, for certain defendants. Such
dismissals and continuances are limited to first offenses13 and,
once in a lifetime, to those with "a single like offense . . .
[ten] years or more before the date of the commission of the
12
General Laws c. 90, § 24, has been amended since Morgan's
arrest; those amendments are not relevant to the portions of the
statute at issue here.
13
See St. 2002, c. 302; St. 1994, c. 25; St. 1975, c. 505;
St. 1974, c. 647. While the parties appear to argue whether
"Melanie's Law," enacted in 2005, see St. 2005, c. 122,
precluded an alternate disposition on a charge of OUI, second
offense, such a disposition had been precluded several years
earlier, by the amendments to the OUI statute in St. 2002,
c. 302. The 2005 revisions included enhanced penalties for a
number of OUI offenses, and added provisions requiring ignition
interlocks for those individuals who have been convicted of OUI,
second or subsequent offense, if they are issued a hardship
license or upon return of their driver's licenses.
14
[present] offense."14
3. Discussion. a. Statutory authority under G. L.
c. 276A. Until the VALOR Act amended the statute in 2012, the
special protections of the pretrial diversion statute that
authorized judges to enter continuances without a finding or to
dismiss charges against defendants who successfully completed a
treatment program had been limited to young adults who were too
old to fall under the jurisdiction of the Juvenile Court, but
had not yet reached their twenty-second birthdays.15 As noted,
the VALOR Act, in 2012, amended the preexisting pretrial
diversion statute by adding §§ 10 and 11, thereby extending to
veterans and service members the opportunity for pretrial
diversion.
The initial question we confront is whether G. L. c. 276A,
as amended by the VALOR Act, permits a judge to dismiss or to
continue without a finding criminal charges brought against a
14
Morgan's prior case was resolved in December, 2004,
approximately nine years and ten months before the incident at
issue here.
15
As initially enacted, the pretrial diversion statute
applied to young adults from the age of seventeen until they
reached their twenty-second birthday. See St. 1974, c. 781. In
2013, G. L. c. 276A, as amended by the VALOR Act, was further
amended to limit its application to defendants who are at least
eighteen years old, but who have not yet reached their twenty-
second birthday, see St. 2013, c. 84, § 32, in conjunction with
the extension of the Juvenile Court's jurisdiction to
individuals who are seventeen years old.
15
qualifying military defendant upon his or her successful
completion of an approved pretrial diversion program. The
Commonwealth is of the view that §§ 10 and 11 on their face in
essence permit no more than a continuance of court proceedings
to enable military defendants to seek treatment through approved
programs; they do not themselves authorize alternative
dispositions even upon the successful completion of such
programs. On this view, the successfully treated military
defendant would then face resumed prosecution of the charged
offenses. We do not share this view. In concluding that the
statute confers upon judges the authority to order alternative
dispositions and thereby divert successfully treated military
defendants from further criminal prosecution, we reject the
Commonwealth's contention that §§ 10 and 11, added by the VALOR
Act, are to be read in isolation from the remainder of the
pretrial diversion statute. This conclusion follows from the
application of our usual rules of statutory construction and the
plain language of the statute itself, and is confirmed by our
review of the history and purpose of the VALOR Act.
In construing a statute, we strive to discern and
effectuate the intent of the Legislature. The plain language of
the statute, read as a whole, provides the primary insight into
that intent. See Commonwealth v. Peterson, 476 Mass. 163, 167
(2017). We do not confine our interpretation to the words of a
16
single section. See Commonwealth v. Keefner, 461 Mass. 507, 511
(2012); 2A N.J. Singer & S. Singer, Statutes and Statutory
Construction § 46:5 (7th ed. rev. 2014). To the extent that the
meaning of a statute remains unclear, we seek to "ascertain the
intent of a statute from all its parts and from the subject
matter to which it relates, and must interpret the statute so as
to render the legislation effective, consonant with sound reason
and common sense." Seideman v. Newton, 452 Mass. 472, 477
(2008). We consider "the cause of [the statute's] enactment,
the mischief or imperfection to be remedied and the main object
to be accomplished." Wing v. Commissioner of Probation,
473 Mass. 368, 373 (2015), quoting Hanlon v. Rollins, 286 Mass.
444, 447 (1934).
We begin with the language of G. L. c. 276A, §§ 10 and 11,
viewing it in the context of the pretrial diversion statute as a
whole. Doing so leaves no doubt that the Legislature intended
to give veterans and active duty members of the military the
same benefits of pretrial diversion programs and the alternative
dispositions already afforded under the statute to young adults.
"When the Legislature uses the same term in . . . different
statutory sections, the term should be given a consistent
meaning throughout." Commonwealth v. Hilaire, 437 Mass. 809,
816 (2002). Here, not only did the Legislature use the same
term –- "divert" -- in G. L. c. 276A, § 10, as in G. L. c. 276A,
17
§ 2, it also used nearly identical language throughout both of
the two sections. Compare G. L. c. 276A, § 2 (defining
eligibility for diversion of young adults), with G. L. c. 276A,
§ 10 (defining eligibility for diversion for veterans and active
duty service members). Virtually the only difference between
these sections is that, while G. L. c. 276A, § 2, applies to
those who have "reached the age of [eighteen] years but [have]
not reached the age of twenty-two," G. L. c. 276A, § 10, applies
to "veteran[s], . . . [those] on active service . . . , [and
those] who [have] history of military service . . . regardless
of age." Accordingly, we conclude that in using the word
"divert" in G. L. c. 276A, § 10, the Legislature intended it to
have the same meaning as in the virtually identical language of
G. L. c. 276A, § 2, to divert in contemplation of a continuance
without a finding or dismissal.
The Commonwealth nevertheless argues that the provisions of
G. L. c. 276A, §§ 5 and 7 (allowing pretrial diversion programs
and alternative dispositions), do not apply to veterans and
active duty members of the military who have been deemed
eligible for diversion under G. L. c. 276A, § 10. The
Commonwealth relies in this regard on the absence of language in
§§ 5 and 7 (generally addressing continuances of cases for
qualifying young defendants as defined in G. L. c. 276A, § 2),
that cross-references §§ 10 and 11 concerning military
18
defendants. At the same time, it ignores the fact that G. L.
c. 276A, § 7 (permitting a judge, "[u]pon the expiration of the
initial ninety-day stay of proceedings or . . . continuance
without a finding" to dismiss the charges, extend the stay for
further treatment, continue the case without a finding, or
resume criminal proceedings), itself references no other section
of the statute. Such parsing of the statute is, in any event,
unavailing. The proffered construction is inconsistent with the
fundamental canons of statutory interpretation, requiring that
we read statutes concerning the same subject matter as a
harmonious whole wherever possible, see Commonwealth v. Ventura,
465 Mass. 202, 208-209 (2013); Keefner, 461 Mass. at 511, and
that we read them in a commonsense way to effectuate legislative
intent and avoid absurd results. See, e.g., Worcester v.
College Hill Props., Inc., 465 Mass. 134, 138-139 (2013), and
cases cited.
To read the statute in the fragmented fashion that the
Commonwealth suggests would mean that the VALOR Act amendments
do nothing more than allow military defendants some time away
from court proceedings for treatment, after which they would
face resumed prosecution. We note that, prior to enactment of
the VALOR Act, a District Court judge already had authority to
continue a case for a period of time in order to permit a mental
health evaluation of a defendant, and to consider that
19
evaluation in imposing a sentence. Had the VALOR Act amendment
simply allowed for a brief continuance for assessment, while the
case remained on the trial track, it would have done little to
change existing practice.16 The Legislature plainly had more in
mind than this, and "[i]f a sensible construction is available,
we shall not construe a statute to make a nullity of pertinent
provisions or to produce absurd results." Commonwealth v.
Figueroa, 464 Mass. 365, 368 (2013), quoting Flemings v.
Contributory Retirement Appeal Bd., 431 Mass. 374, 375–376
(2000).
Providing pretrial diversion for veterans and active duty
members of the military, on the same terms as young adults, is
consistent with the Legislature's purpose both in enacting the
pretrial diversion statute in 1974 and in amending it through
the VALOR Act in 2012. The pretrial diversion statute
originally was intended to provide rehabilitation to those whose
criminal habits had not become "fixed." See Rosenbloom, Bill
Backs 'Diversion' for Youths in Trouble, Boston Globe, Feb. 12,
16
The Commonwealth suggests that the VALOR Act served to
alter previous practice by requiring the department of
probation, rather than defense counsel, to identify eligible
military defendants. This minimal benefit is difficult to
reconcile with the Legislature's stated goal of providing for
"appropriate resolution[s]" in cases involving such defendants.
See House Floor Hearing, May 12, 2012 available at
http://www.statehousenews.com/content/gallery/audio/2012/House/
05-16audio-hou.mp3.
20
1973, quoting bill supporter. See also Zablotsky, An Analysis
of State Pretrial Diversion Statutes, 15 Colum. J.L. & Soc.
Probs. 1, 8 (1979). Its supporters observed that a criminal
record, coupled with a short period of incarceration, could lead
to a "cycle of crime and prison . . . , ever more vicious."
Help Needed Now for Youthful Offenders, Boston Globe, July 23,
1974, at 22. Avoiding this cycle would benefit both these young
adults and society as whole.
In 2012, the Legislature added veterans and active duty
members of the military to the pretrial diversion statute in
service of the same goal: addressing the special needs of a
group of offenders for whom the Legislature believed conviction
and punishment were not necessarily appropriate. As with young
adults, the Legislature recognized that, for veterans and active
duty members of the military, the conventional path, leading to
a permanent criminal record, fails to "address [their] needs" or
to provide "the appropriate resolution," and that, if enabled to
address the unique challenges they face, veterans could be
strong candidates for rehabilitation. House Floor Hearing at
26:55, May 16, 2012, available at http://www.statehousenews.com/
content/gallery/audio/2012/House/05-16audio-hou.mp3 (Statement
of Rep. James E. Vallee). Cf. Porter v. McCollum, 558 U.S. 30,
43 (2009) (noting nation's "long tradition of according leniency
to veterans in recognition of their service").
21
The special consideration afforded to veterans in the
District Courts was part of the VALOR Act's comprehensive effort
to "[e]nsur[e] access to health care, education, employment and
financial security" for veterans, particularly the 37,000
Massachusetts veterans who served in Iraq and Afghanistan. See
Press Release, Governor Patrick Signs VALOR Act to Increase
Opportunities for Veterans (May 31, 2012). Imposing an
alternative disposition to avoid a criminal conviction furthers
these goals. See Commonwealth v. Pon, 469 Mass. 296, 316-317
(2014) (effects of conviction may include severe collateral
consequences including "unemployment, underemployment, or
homelessness").
b. Constitutional authority. The Commonwealth maintains
that, to the extent the pretrial diversion statute, as amended
by the VALOR Act, authorizes judges to order alternative
dispositions, it violates the separation of powers. See art. 30
of the Massachusetts Declaration of Rights ("the judicial
[branch] shall never exercise the . . . executive powers"). The
Commonwealth is mistaken.
A decision whether to prosecute a criminal case rests
exclusively with the executive branch. In the absence of a
legal basis to do so, it is well established that a judge may
not dismiss a valid complaint over the Commonwealth's objection.
See Commonwealth v. Cheney, 440 Mass. 568, 574 (2003). Where
22
the Legislature has granted the authority to dismiss a case or
to continue it without a finding, however, a judge may exercise
that authority without offending art. 30. See Commonwealth v.
Guzman, 446 Mass. 344, 349 (2006) (dismissal); Commonwealth v.
Pyles, 423 Mass. 717, 719 (1996) (continuance without a
finding). This is so because of the Legislature's "broad
authority to classify criminal conduct, to establish criminal
penalties, and to adopt rules of criminal . . . procedure."
Pyles, supra at 722. As the pretrial diversion statute provides
specific authority to a District Court judge to dismiss a case
or to continue it without a finding, a judge exercising that
authority is not in violation of the separation of powers.
c. Reported questions. Having concluded that a judge has
authority under the pretrial diversion statute to enter a
dismissal or a continuance without a finding as to qualifying
defendants in appropriate circumstances, we turn to the reported
questions.
The provisions of the pretrial diversion statute that
authorize judges to allow the alternative dispositions discussed
appear to conflict with the OUI statute, insofar as the latter
prohibits a charge of OUI, second or subsequent offense, from
being "placed on file or continued without a finding." G. L.
c. 90, § 24. The Commonwealth urges that we resolve this
apparent conflict by applying the maxim that a more specific
23
statute controls over one that is more general. See
Commonwealth v. Harris, 443 Mass. 714, 723-724 (2005); Boston
Housing Auth. v. Labor Relations Comm'n, 398 Mass. 715, 718
(1986). It urges that the result will then be that a judge may
not continue without a finding or dismiss such charges because
the OUI statute controls over the pretrial diversion statute.
Neither statute, however, fairly may be said to be more
specific than the other, because each covers ground that the
other does not. See Harris, 443 Mass. at 724-725; Commonwealth
v. John G. Grant & Sons, 403 Mass. 151, 156 (1988) ("neither
penalty provision is more specific than the other and thus
controlling"). The OUI statute is more specific in the sense
that it applies only to one type of offense; the pretrial
diversion statute is more specific in that its application is
limited to two narrow subsets of defendants. Neither statute
fully encompasses the other, but, instead, the two statutes
overlap in part, akin to a Venn diagram. In the circumstances
here, denominating one statute as more specific than the other
would rest on no more than an arbitrary choice.
Similarly, another statutory maxim, to the effect that the
later statute controls over the earlier, see Commonwealth v.
Russ R., 433 Mass. 515, 521 (2001), does not resolve the matter.
The history of amendments to both statutes precludes a simple
answer to the question which statute predates the other. The
24
limitations governing alternative dispositions for those charged
with OUI, second offense, have been amended many times over the
past eighty-five years,17 while the pretrial diversion statute
was amended nearly thirty years after its enactment to include
military defendants.
These tools being of limited utility at best, we look
beyond them in an effort to harmonize the two statutes by
discerning the underlying policies each serves. See Wing,
473 Mass. at 373; Harris, 443 Mass. at 726 (we look to "serve[]
the policies underlying both" statutes "to the greatest extent
possible"). The OUI statute serves the evident goal of
protecting the public from the grave dangers presented by those
drivers who repeatedly drive while impaired by alcohol or drugs.
17
When the first version of the OUI statute was enacted in
1932, it provided that "[t]he prosecution of any person . . . ,
if the offen[s]e is committed within a period of six years
immediately following his final conviction of a like
offen[s]e . . . , shall not in any event be placed on file or
otherwise disposed of except by trial, judgment and sentence
according to the regular course." See St. 1932, c. 26, § 1.
Soon thereafter, the Legislature eliminated this
categorical rule, but, in language still in effect today,
provided that a defendant charged with any OUI offense could not
receive an alternative disposition "unless the interests of
justice require." St. 1936, c. 434, § 1. In 1982, the
Legislature limited the availability of continuances without a
finding on a charge of OUI, even where required by the interests
of justice, to the detailed and specific requirements set forth
in G. L. c. 90, § 24D. See St. 1982 c. 373, § 2. In 1994, and
again in 2002, the Legislature again limited those defendants
eligible for pretrial diversion under G. L. c. 90, § 24D. See
St. 1994, c. 25; St. 2002, c. 302.
25
The pretrial diversion statute, for reasons already discussed,
gives special consideration to two groups of people who are
susceptible to substance abuse but may be amenable to successful
rehabilitation. The two statutes do not serve the same goals
except to the extent that successful rehabilitation of drivers
with substance abuse problems will redound to public safety.
Mindful that the VALOR Act was enacted against the backdrop of
two preexisting statutes with which the Legislature had
familiarity, we reconcile both, however imperfectly, by
concluding that the Legislature did not intend to preclude the
alternative dispositions permitted under the pretrial diversion
statute in situations such as this. See Harris, supra.
We note that, in amending c. 276A in 2012, the Legislature
expressed special concern for veterans and active military
service members struggling with substance abuse. Specifically,
in the words of then Secretary of Veterans' Services Coleman
Nee, legislators recognized that trauma as a result of combat
service, "may lead to . . . substance abuse," see Tuoti, Court
for Vets Opens in Boston, Enterprise, Mar. 7, 2014, and that,
for service members thus ensnared, "incarceration without
medical or clinical support results in a higher rate of
recidivism." Bolton, Court Throws Veterans a Lifeline, Boston
Globe, Apr. 11, 2013.
As one of the sponsors of the VALOR Act, Representative
26
Jason Lewis, explained, the Legislature adopted the pretrial
diversion provisions of the VALOR Act as part of a broader
effort to provide an alternative to the traditional path of
conviction and incarceration, particularly for those "veterans
who face mental health and substance abuse issues." The Need to
Support, Thank Our Veterans, Beverly Citizen, Dec. 13, 2012.18
This approach is consistent with a growing national recognition
that the traditional processes of the criminal justice system
fail adequately to support veterans suffering from substance
abuse.19 Moreover, when the Legislature enacted the VALOR Act in
2012, it was well aware of the provisions of "Melanie's Law,"
18
As part of that ongoing effort, in 2014, the Legislature
enacted a second VALOR Act, also sponsored by Senator Michael J.
Rush, chair of the Joint Committee on Veterans Affairs. That
act, among other things, established a pilot program for
"veteran's courts," to assist with implementation of the
pretrial diversion provisions in the 2012 VALOR Act. See
St. 2014, c. 62, § 33.
19
Commentators nationally have emphasized that veterans
face unique challenges stemming from high rates of combat-
related PTSD and other mental health issues, and consequent high
rates of substance abuse, frequently leading to criminal
charges. See, e.g., American Bar Association, Resolution 105A,
at 3 (Feb. 2010) (ABA Report) (discussing "opinion of
psychiatrists and law enforcement officials that the traumas of
combat result in PTSD that can lead to addiction and erratic
behavior that result in criminal charges" and "[r]ecognizing the
important role" diversion programs can play); B.R. Schaller,
Veterans on Trial: The Coming Battles Over PTSD 18, 211 (2012).
They also recognize that traditional criminal sanctions for
those trapped in the cycle of substance abuse can "push veterans
further outside society," at great cost to veterans and society
as a whole. See ABA Report, supra at 6.
27
St. 2005, c. 122, that it enacted in 2005 to increase penalties
for those who drive while impaired by drugs or alcohol.20 In
that light, categorically to exclude OUI, second offense, a
common issue stemming from substance abuse,21 from the
protections of G. L. c. 276A, as amended by the VALOR Act, would
undermine the legislative purpose.
This conclusion does not diminish recognition of the
serious hazard to public safety presented by those who drive
while impaired by drugs or alcohol, especially by those who do
so repeatedly, nor does it question the importance of deterring
this menacing conduct by all prescribed means. The Legislature
appears to have struck a delicate balance by permitting a
discretionary rehabilitative alternative to criminal penalties
in certain limited circumstances, for two discrete groups, that
is also consonant with deterrence in service of public safety.
It is also well to note that by vesting District Court
judges with discretion to order pretrial diversion to certain
military defendants, the statute does not in any way offer
20
See State House News Service (House Sess.), Oct. 27, 2005
(comments of Representative Salvatore DiMasi).
21
See, e.g., A.J. Peller, L.M. Najavits, S.E. Nelson, R.A.
LaBrie, & H.J. Shaffer, PTSD Among a Treatment Sample of Repeat
DUI Offenders, 23 J. Traumatic Stress 468 (Aug. 2010); National
Institute on Drug Abuse, Drugged Driving (rev. June 2016),
available at https://www.drugabuse.gov/publications/drugfacts/
drugged-driving [https://perma.cc/DRB8-A3VS].
28
assurance of an alternative disposition.22 A judge has
discretion to allow pretrial diversion to a program only after a
defendant has been assessed by a specific program, and after
considering the Commonwealth's view of pretrial diversion for
that particular defendant, to that specific program.23 Even
after successful completion of that program, the judge retains
22
The pretrial statute has application only to the District
and Boston Municipal Courts. Even where the Commonwealth
proceeds by complaint in the District Court or the Boston
Municipal Court rather than by indictment in the Superior Court,
given that G. L. c. 276A, § 10, confines eligibility to those
without a prior conviction, it is difficult to envision
circumstances where a judge would exercise discretion favorable
to defendants charged with OUI offenses subsequent to a second
offense.
23
The decision that a particular defendant likely would
benefit from such a program is individualized and fact-specific,
reported in writing by a qualified treatment provider, working
in conjunction with the VA, after a two-week assessment period.
See G. L. c. 276A, §§ 3, 5. A judge considering a report that a
military defendant could benefit from such a program must weigh
that report, any statement by the Commonwealth, and the judge's
own observations, and determine, in the exercise of his or her
discretion, whether to allow a stay or a continuance so that the
military defendant can participate in the treatment program.
See G. L. c. 276A, § 5.
Throughout a defendant's participation in a pretrial
diversion program, the program must submit periodic reports to
the judge. See G. L. c. 276A, § 6. At any point during that
period, should the program report that the defendant has failed
to comply with program requirements, or if the defendant commits
a new offense, the judge may order the stay terminated and the
case returned to the trial list. See id. After the initial
period of the stay, if the program reports that an extension of
the stay would help the defendant successfully to complete the
program, the judge may order such an extension. See G. L.
c. 276A, § 7.
29
discretion over the ultimate disposition of the matter; the
statute provides only that a judge "may" dismiss the original
charges upon successful completion. G. L. c. 276A, § 7.
Finally, while we conclude that the construction we provide
of the pretrial diversion statute, as amended by the VALOR Act,
satisfactorily reconciles it with the OUI statute and best
effectuates the Legislature's intent when enacting the VALOR Act
in 2012, we recognize that the matter is not free from doubt.
If the result here does not comport with what was intended, the
Legislature may, of course, remedy this by enacting clarifying
legislation. See Commonwealth v. Zapata, 455 Mass. 530, 533 n.4
(2009).
3. Conclusion. We answer both reported questions, "Yes,"
and remand the case to the District Court for further
proceedings consistent with this opinion.
So ordered.
| {
"pile_set_name": "FreeLaw"
} |
606 F.Supp. 176 (1985)
Pinchas BALABIN, Plaintiff,
v.
Charles SCULLY, Thomas Coughlin, III, Dean Riley, Robert Seitz, Wayne Strack, W.J. Connolly, Rosario, Defendants.
No. 83 Civ. 6778 (JMC).
United States District Court, S.D. New York.
January 31, 1985.
*177 *178 Cravath, Swaine & Moore, New York City (John E. Beerbower, James E. Brandt, New York City, of counsel), for plaintiff.
Robert Abrams, Atty. Gen. of the State of New York, New York City (Sue Barnett Bohringer, Asst. Atty. Gen., New York City, of counsel), for defendants.
MEMORANDUM AND ORDER
CANNELLA, District Judge:
Defendants' motion to dismiss the complaint is granted in part and denied in part. Fed.R.Civ.P. 12(b)(6).
FACTS
Plaintiff Pinchas Balabin commenced this action by pro se complaint on September 15, 1983.[1] Defendants filed a notice of motion to dismiss the complaint on December 13, 1983.[2] Before that motion was decided, however, counsel was appointed by this Court, see Order, 83 Civ. 6778 (JMC) (S.D.N.Y. Jan. 11, 1984), the motion was withdrawn, and the complaint was amended.[3] Defendants now move to dismiss the amended complaint.
In the amended complaint, plaintiff alleges that defendants violated his civil rights under 42 U.S.C. § 1983 and unlawfully converted his property in violation of state law. The defendants are or were employees of the Green Haven Correctional Facility ["Green Haven"], except Thomas Coughlin, III, who is the New York State Commissioner of Correction. This Court has jurisdiction over the federal constitutional claims under 28 U.S.C. §§ 1331, 1343. Whether the Court has jurisdiction over the state claim under the principles of pendent jurisdiction is an issue raised in this motion.
The facts leading to the current dispute are as follows: On June 3, 1983, plaintiff's cell at Green Haven was searched, without warning. Plaintiff claims that the cell was left in "shambles" and that some personal property was damaged or destroyed.[4] Certain other property was confiscated, including, according to plaintiff, a transcript of plaintiff's criminal trial, other legal papers and notes, lawbooks, letters to and from attorneys, three bibles, prayer books, a prayer shawl, a tefillin, a yarmulke and some personal letters. Plaintiff was given a receipt indicating that the following property had been taken: "All paperwork, All contraband wood, Exacto knife, 8 track Radio and Realistic Radio, medical supplies, and misc. contraband."[5] Apparently at least some of the items taken were contraband. Plaintiff claims that the property was "scrutinized", including the letters to and from attorneys.[6]
At some time after the search and confiscation, a disciplinary proceeding was held and plaintiff was "found guilty" of possessing certain contraband items: "a print of a helicopter that allegedly contained drawings of certain keys, sand paper, an allen wrench and a map of the world."[7] This ruling was later overturned on procedural grounds.
*179 There is some dispute as to whether plaintiff has been offered access to his property or merely been allowed to inspect it. Apparently, the only property that has been returned to plaintiff is one bible, one prayer book, certain nonlegal books and personal correspondence.
DISCUSSION
Plaintiff raises claims based on the first, fourth, fifth, sixth, eighth and fourteenth amendments to the United States Constitution, and a state law claim of conversion. Each of these claims, and the defendants' objections to each, will be discussed in turn.
First and Fourteenth Amendments
Plaintiff claims that the confiscation and failure to return certain religious items bibles, prayer books, a prayer shawl, tefillin and a yarmulke has "curtailed" his religious activities,[8] in violation of his first amendment rights. Defendants have moved to dismiss the claim on the ground that the confiscation is within the discretion of the prison officials and that the complaint insufficiently states the way in which plaintiff's religious activities have been curtailed.
Prisoners are not automatically stripped of first amendment rights by virtue of their incarceration. See Wolff v. McDonnell, 418 U.S. 539, 555-56, 94 S.Ct. 2963, 2974-75, 41 L.Ed.2d 935 (1974); Pell v. Procunier, 417 U.S. 817, 822, 94 S.Ct. 2800, 2804, 41 L.Ed.2d 495 (1974); Moorish Science Temple of Am., Inc. v. Smith, 693 F.2d 987, 990 (2d Cir.1982); Phillips v. Coughlin, 586 F.Supp. 1281, 1283 (S.D.N. Y.1984). See also Heimerle v. Attorney General, 753 F.2d 10, 12-13 (2d Cir.1985) (discussing first amendment restrictions on prison mail censorship). On the contrary, a prisoner retains all first amendment guarantees "not inconsistent with his status as a prisoner or with the legitimate penological objectives of the corrections system." Pell v. Procunier, 417 U.S. at 822, 94 S.Ct. at 2804. Prison officials may thus interfere with those rights only for important penological purposes, where the "restraint on religious liberty is reasonably adapted to achieving [the] objective." LaReau v. MacDougall, 473 F.2d 974, 979 (2d Cir. 1972), cert. denied, 414 U.S. 878, 94 S.Ct. 49, 38 L.Ed.2d 123 (1973), quoted in Moorish Science Temple, 693 F.2d at 990.
In certain circumstances, the Supreme Court has shown great deference to prison officials' enunciations of their motives in restricting prisoners' first amendment rights, see Jones v. North Carolina Prisoners' Labor Union, 433 U.S. 119, 128, 97 S.Ct. 2532, 2539, 53 L.Ed.2d 629 (1977) (where prisoners sought to form union, district court erroneously required prison officials to prove that it would be detrimental to proper penal objectives); see also St. Claire v. Cuyler, 634 F.2d 109, 112-15 (3d Cir.1980) (discussing burden of proof and compiling cases). Even assuming that prison officials may not be required to prove that their motives are valid or their means the least restrictive, however, they must, at the very least, allege an important purpose for imposing a restriction. See Moorish Science Temple, 693 F.2d at 990 (plaintiff need only plead that his first amendment rights were restricted to overcome sua sponte dismissal); Burgin v. Henderson, 536 F.2d 501, 504 (2d Cir.1976) (counsel's unsupported assertion that religious hats might conceal weapons held insufficient to permit affirmance of district court's sua sponte dismissal).
Defendants have given plaintiff no explanation whatever for retaining his religious items for a year and a half and have also failed to allege any purpose in their motion papers before this Court. The only suggestion that counsel has presented is the equivocal statement that "[i]t is not inconceivable that an inmate might use religious articles to conceal contraband and that prison officials would occasionally be justified in confiscating such articles."[9]
*180 Defendants instead rest their motion to dismiss this claim on the contention that plaintiff has insufficiently pleaded an interference with his religion. It has been held that there is a judicial policy requiring stricter pleading in civil rights cases as a means to combat the ever-increasing burden that these cases place on district courts. See Patton v. Dumpson, 425 F.Supp. 621, 626 (S.D.N.Y.1977). Even supposing that his circuit was to adopt such a rule, this case presents no such broad conclusory allegation as that raised in Patton. In that case, the court dismissed the complaint with leave to amend because the plaintiff had made the conclusory allegation that the defendants had participated in a pattern and practice of racial discrimination in their placement of children who are wards of the state. Id. Balabin, by contrast, specifically alleges that certain religious artifacts were seized from him and have been retained for over a year without legitimate reason and that his religious practices have thereby been curtailed. Whether the lack of these items has in fact curtailed his religious practices is a question of fact that cannot be decided in this motion. The complaint clearly presents circumstances that, if proved, would warrant recovery at trial. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).
Accordingly, plaintiff's claim that his first amendment rights were infringed must not be dismissed at this time.
Fourth and Fourteenth Amendments
In moving to dismiss plaintiff's fourth amendment claim that his cell was the subject of an unreasonable search, defendants raise the recent Supreme Court decision in Hudson v. Palmer, ___ U.S. ___, 104 S.Ct. 3194, 3198-204, 82 L.Ed.2d 393 (1984). Hudson held that prisoners have no reasonable expectation of privacy in their cells and thus are not protected by the fourth amendment insofar as concerns searches of their cells. Id. The plaintiff does not contest this argument in its brief.
It is clear that Hudson v. Palmer is controlling in this situation. Therefore, plaintiff's fourth amendment claim is dismissed.
Fifth and Fourteenth Amendments
Plaintiff raises claims that he was deprived of both property and liberty interests without due process of law in violation of the fifth and fourteenth amendments. Under the fourteenth amendment, no state may "deprive any person of life, liberty, or property, without due process of law." U.S. CONST. amend. XIV, § 1. However, not all liberty or property interests are covered by this section. Hewitt v. Helms, 459 U.S. 460, 466, 103 S.Ct. 864, 868, 74 L.Ed.2d 675 (1983). That a prisoner has a property interest in his personal belongings is undisputed. The existence of the alleged liberty interests is less clear. Protected liberty interests may arise from the Due Process Clause or the laws of the state. See Hewitt, supra; Meachum v. Fano, 427 U.S. 215, 223-27, 96 S.Ct. 2532, 2537-40, 49 L.Ed.2d 451 (1976). Plaintiff claims three constitutionally protected liberty interests, each created by a separate Directive of the State of New York Department of Correctional Services ["Directive"]: (1) the interest in protecting certain religious articles;[10] (2) the interest in possessing property not classified as contraband;[11] and (3) the interest in not having outgoing privileged mail read by prison officials except in the presence of the inmate.[12]
The Supreme Court in Hewitt emphasized that the Court had "never held that statutes and regulations governing daily operation of a prison system conferred any liberty interest in and of themselves." 459 U.S. at 469, 103 S.Ct. at 870. In that case, the Court was concerned with whether a prisoner in a Pennsylvania prison had liberty interest in remaining with the general prison population rather than in a secluded administrative segregation. The Court *181 held that Pennsylvania had created such a liberty interest, not by the mere enactment of procedural guidelines to direct the prison officials, but by its use of emphatic words in the regulations. Id. at 470-72, 103 S.Ct. at 870-72. The Court stressed that the state "has used language of an unmistakably mandatory character, requiring that certain procedures `shall,' `will,' or `must' be employed, and that administrative segregation will not occur absent specified substantive predicates." Id. at 470-71, 103 S.Ct. at 870-71 (citation omitted).
The first two liberty interests claimed by plaintiff are essentially identical to his property interests and best characterized as property interests. Moreover, the first two directives cited by plaintiff to support those interests use no emphatic language. The directives are clearly prison regulations governing daily operation and do not give rise to an independent liberty interest protected by the due process clause of the fourteenth amendment.
The third directive, however, uses the word "must" in each sentence and is phrased in a forceful, mandatory style.[13] Moreover, the Directive places substantive limits on prison officials' actions by creating substantive predicates to opening and reading prisoners' outgoing mail: "[T]here must be a reasonable suspicion to believe that the contents of such mail endangers or threatens the safety, security, and operations of a facility or the safety of a party to whom the letter is addressed."[14]
It is not clear whether the law of this circuit holds that a constitutionally protected liberty interest can be created by a prison regulation. In Pugliese v. Nelson, 617 F.2d 916, 924 (2d Cir.1980), the Second Circuit held that a prison Policy Statement, which did not use emphatic language, had not created a constitutionally protected liberty interest. The court also suggested that there were problems with finding any mere policy statement to be capable of creating such an interest: "One obvious problem is that if a Policy Statement were held to create a liberty interest ... prison administrators might then opt in favor of revoking such statements." Id. at 924 n. 8. But see Walker v. Hughes, 558 F.2d 1247, 1254-56 (6th Cir.1977) (analyzing drawbacks of permitting administrative regulations to create liberty interests but finding prison policy statements to do so).
The New York State Directive at issue here, however, is not a mere policy statement. It purports to describe "the policies, regulations, and procedures governing `privileged' correspondence."[15] Moreover, at least five circuits, see Lucas v. Hodges, 730 F.2d 1493, 1502-03 (D.C.Cir.1984) (collecting cases from Seventh, Fifth, Sixth, Tenth Circuits), have held that prison policy statements can create liberty interests as long as the inmate shows some specific criteria or guidelines designed to direct or limit the prison officials. Id. at 1504. See also Olim v. Wakinekona, 461 U.S. 238, 103 S.Ct. 1741, 75 L.Ed.2d 813 (1983) (regulations providing prison officials with complete discretion do not create liberty interest); Sher v. Coughlin, 739 F.2d 77, 81-82 (2d Cir.1984) (similar analysis applied to statute/regulation scheme).
The overwhelming trend of judicial decisions, on both the Supreme Court and *182 Circuit Court levels, compels the conclusion that the New York Department of Correctional Services has created a constitutionally protected liberty interest in a prisoner's right to have privileged mail opened and read only under the limited circumstances detailed in the regulation. By placing emphatic and discrete limitations upon prison officials' actions, the department has given prisoners a right to be free from intrusions upon that interest without the operation of due process of law. Thus, if plaintiff's outgoing mail was among the effects seized and was "scrutinized," as alleged by plaintiff, a liberty interest may have been deprived.
Having determined that plaintiff has adequately alleged that certain constitutionally protected property and liberty interests have been deprived, the Court must next determine what procedural safeguards are required and whether plaintiff was accorded those procedures. The Supreme Court has, in recent years, laid out several preliminary questions that must be answered. In Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), the Court held that in the case of random and unauthorized negligent takings of property by state officials no predeprivation procedures were possible so that adequate postdeprivation procedures would satisfy the requirements of due process. Id. at 541, 101 S.Ct. at 1916. The holding of Parratt was extended to intentional, but unauthorized, takings of property in Hudson v. Palmer, ___ U.S. ___, 104 S.Ct. 3194, 3203-04, 82 L.Ed.2d 393 (1984). Additionally, in Logan v. Zimmerman Brush Co., 455 U.S. 422, 435-37, 102 S.Ct. 1148, 1157-59, 71 L.Ed.2d 265 (1982) the Court held that postdeprivation remedies do not satisfy due process requirements when a property interest has been taken or withheld in accord with established state procedure rather than by random and unauthorized action.
Three questions must thus be asked: (1) whether predeprivation procedures were required; (2) if not, whether the deprivations were accomplished in accordance with established state procedures; and (3) if not, whether adequate postdeprivation remedies exist under state law. The Court will first address plaintiff's property interests. Plaintiff claims that his property was seized, some of it destroyed or lost and the rest withheld without due process of law. Apparently, no procedures were undertaken prior to the seizure. The only hearing that plaintiff has received was a disciplinary hearing, later vacated, that took place after the seizure, but perhaps before the loss of the property, and which was not directly related to the return of plaintiff's property. Whether predeprivation proceedings are required depends in part upon whether the deprivation was the result of random and unauthorized acts of state officials. See Hudson v. Palmer, supra; Logan v. Zimmerman Brush Co., supra; Parratt v. Taylor, supra. To the extent that plaintiff's property was destroyed or lost, the cause was presumably random and unauthorized negligence. To the extent that the property is being wrongfully held by prison authorities, it was seized and is being held in violation of state procedures and is thus unauthorized. Therefore, under Parratt and Hudson, no prior procedures were required. Additionally, plaintiff does not allege any specific state procedure that by its operation violates due process. See Logan v. Zimmerman Brush Co., supra (state procedure precluded hearing if state labor commission failed to conduct fact finding hearing within 120 days). There is no allegation that the procedures outlined in Department of Corrections Directives, if followed, would constitute a violation of due process. Therefore, Logan is inapplicable. Thus the only remaining question is whether adequate postdeprivation remedies exist under state law.
The Court finds that adequate state postdeprivation proceedings exist in the form of Directive 2733, which provides for claims by prisoners for lost property; Article 78 of the New York Civil Practice Law and Rules; and tort claims for conversion or negligence against the officials or state, see N.Y.CT.CL.ACT § 8 (McKinney's *183 1963) (waiving immunity of state to tort suits); N.Y.CORRECT.L. § 24 (McKinney's Supp. 1983-84) (all claims against corrections officers for acts within the scope of employment must be brought as claims against state). Accordingly, because adequate postdeprivation remedies exist, plaintiff's due process claims with respect to his property interests are dismissed.
Neither the Supreme Court nor the Second Circuit have ruled on whether these preliminary questions apply to liberty as well as property interests, although in many cases, there seems no logical reason to distinguish between the two. See Thibodeaux v. Bordelon, 740 F.2d 329, 337-38 (5th Cir.1984); Daniels v. Williams, 720 F.2d 792, 795 (4th Cir.1983); Haygood v. Younger, 718 F.2d 1472 (9th Cir.1983), reh'g granted, 729 F.2d 613 (9th Cir.1984); Garcia v. County of Los Angeles, 588 F.Supp. 700, 701-03 (C.D.Cal.1984); Holmes v. Ward, 566 F.Supp. 863, 865 (S.D. N.Y.1983). The Court need not decide this question, however, because the result is the same whether or not Parratt and Hudson apply to liberty interest claims.
Plaintiff alleges that his outgoing mail was read during the process of examining property seized subsequent to a search. If this is done as a regular matter, then the procedure itself violates due process. Although a formal hearing may not be necessary before opening privileged mail, the procedures outlined in Directive 4421 are clearly the minimum required to protect this liberty interest created by the state. Plaintiff claims and defendants do not dispute that no such procedures were undertaken. Therefore, plaintiff's claim must stand. Moreover, assuming the mail was opened and read as a result of a random and unauthorized act, the claim must also stand because defendants have not alleged any postdeprivation remedies. Nor has the Court found any clear indication that the state provides any postdeprivation remedy that would adequately redress the wrongful scrutiny of privileged letters.
Accordingly, plaintiff's property interest claims are dismissed. His claim regarding a violation of his liberty interest in not having his mail opened and scrutinized remains standing.[16]
Sixth and Fourteenth Amendments
Count four alleges that by confiscating plaintiff's legal materials, defendants have interfered with plaintiff's right to access to courts under the sixth and fourteenth amendments. He claims that without these legal materials he is unable to adequately file a habeas corpus petition concerning his criminal conviction. There is some dispute over whether plaintiff has in fact been allowed access to these materials. However, for the purpose of this motion, the Court must accept as true plaintiff's allegation that he was merely allowed to inspect them. Defendants' primary legal arguments are that delay in filing papers is not sufficient to constitute a denial of access to courts and that the confiscated papers are in any case not necessary for the filing of a federal habeas petition, which does not require citations to the trial transcript.
Defendants' arguments are unavailing. It is well-settled that prisoners have a right of access that guarantees them some affirmative action on the part of prison officials, see Bounds v. Smith, 430 U.S. 817, 827-28, 97 S.Ct. 1491, 1497-98, 52 L.Ed.2d 72 (1977), as well as prohibits prison officials from interfering with existing channels available to the prisoner, see Hiney v. Wilson, 520 F.2d 589, 591 (2d Cir.1975) (confiscation of legal papers may equal denial of access). Whether or not the state would be required to furnish plaintiff a transcript free of cost for the purposes of his habeas petition, the officials may not interfere with his existing transcript and other legal papers, which taken as a whole are necessary for effective legal argument. Cf. Patterson v. Mintzes, 717 F.2d 284, 288 *184 (6th Cir.1983) (prison officials may not interfere with existing transcript necessary for effective review).
Whether plaintiff was in fact obstructed in obtaining access to courts is a question of fact. It is enough to overcome this motion to dismiss that plaintiff has alleged that all his handwritten notes, memos, briefs and an existing transcript were seized and have not been returned for a year-and-a-half. This is clearly not the minor delay contemplated by the court in Pickett v. Schaefer, 503 F.Supp. 27, 28 (S.D.N.Y.1980), which held that a nine and one-half day delay in the mailing of the prisoner's correspondence to the court did not constitute a constitutional violation.
For these reasons, defendants' motion to dismiss plaintiff's claim that he was denied access to courts is denied.
Eighth and Fourteenth Amendments
Count five alleges that plaintiff's eighth and fourteenth amendment rights have been violated by the deprivation of any reasonable expectation of privacy. It is true that in ruling out a fourth amendment claim by prisoners in Hudson, supra, the Supreme Court explicitly refused to preclude an eighth amendment claim for harrassment, given the appropriate circumstances. See Hudson v. Palmer, ___ U.S. ___, 104 S.Ct. 3194, 3204, 82 L.Ed.2d 393 (1984). Plaintiff has made no allegations of harassment, nor alleged any facts that suggest an invasion of privacy that might rise to the level of cruel and unusual punishment. Cf. Rhodes v. Chapman, 452 U.S. 337, 101 S.Ct. 2392, 69 L.Ed.2d 59 (1981) (double celling does not necessarily constitute cruel and unusual punishment).
Accordingly, plaintiff's fifth cause of action must be dismissed.
Conversion
Finally, plaintiff alleges that defendants are jointly and severally liable for conversion. Defendants claim that the decisions in Parratt and Hudson, supra, preclude pendent state law claims in federal civil rights actions. These two cases, however, deal only with the existence of adequate due process available under state law; neither addresses the question whether those state law procedures may be pursued in federal court under the principles of pendent jurisdiction. Similarly, the Supreme Court's decision in Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984), does not require that this suit be barred on eleventh amendment grounds. Unlike Pennhurst's claim, this suit does not involve a claim against the State itself, through the guise of a suit against prison officials. See id. 104 S.Ct. at 908-17. Rather, it is a suit against prison officials who, if plaintiff's claims are true, acted outside their authority and against the interests of the state's clearly enunciated prison rules. See Morrison v. LeFevre, 592 F.Supp. 1052, 1081 (S.D.N.Y.1984).
Under the doctrine of United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), a state claim may be attached to colorable federal claims if the two claims arise out of "a common nucleus of operative facts." Id. at 725, 86 S.Ct. at 1138. Here, the federal and state claims arise out of the same confiscation of plaintiff's property, and the federal claims are substantive enough to have survived this motion and thus adequate to support jurisdiction.
For these reasons, defendants' motion to dismiss plaintiff's conversion claim is denied.
Claims against Thomas Coughlin
When a prisoner brings an action under 42 U.S.C. § 1983, the doctrine of "respondeat superior does not suffice and a showing of some personal responsibility of the defendant is required." Johnson v. Glick, 481 F.2d 1028, 1034 (2d Cir.), cert. denied, 414 U.S. 1033, 94 S.Ct. 462, 38 L.Ed.2d 324 (1973). The only personal connection that plaintiffs allege between Commissioner Coughlin and this action is the requirement that he be made aware of the *185 circumstances under which a prisoner's outgoing mail is opened and inspected.[17]
Because plaintiff alleges that his mail was opened without the observance of required procedures and there is no allegation that Coughlin actually knew what was happening, Coughlin cannot be held to have had any personal responsibility for the actions alleged. Therefore, the claims against him are dismissed.
CONCLUSION
Accordingly, defendants' motion to dismiss the complaint is granted as to defendant Coughlin. As to the remaining defendants, counts two and five are dismissed in totality and count three is dismissed in part. Fed.R.Civ.P. 12(b)(6).
SO ORDERED.
NOTES
[1] See Pro Se Complaint, 83 Civ. 6778 (JMC) (filed Sept. 15, 1983).
[2] See Notice of Motion, 83 Civ. 6778 (JMC) (filed Dec. 13, 1983).
[3] See Amended Complaint, 83 Civ. 6778 (JMC) (filed May 25, 1984) [hereinafter "Amended Complaint"].
[4] Id. at ¶ 13.
[5] Id. at ¶ 21; Exh. 1.
[6] Id. at ¶ 23.
[7] Id. at ¶ 27.
[8] Id. at ¶ 35.
[9] Reply Memorandum at 11, 83 Civ. 6778 (JMC) (filed Sept. 5, 1984) (discussing due process claim).
[10] State of New York Dep't of Correctional Services Directive ["Directive"] 4202 J.4, 5; K.3.
[11] Directive 4931 I.D.
[12] Directive 4421 III.A.1.
[13] A. Outgoing Privileged Correspondence
1. Outgoing mail to any of the above must not be opened or inspected in any manner unless authorized by the facility Superintendent, upon written notice of the Commissioner. Substantial information must be conveyed to the Commissioner by a Superintendent as a basis for this action. In such cases, there must be a reasonable suspicion to believe that the contents of such mail endangers or threatens the safety, security, and operations of a facility or the safety of a party to whom the letter is addressed.
Outgoing privileged mail may be sent according to the provisions of the free postage program described in Section III-D of Directive # 4422, Inmate Correspondence Program.
Outgoing privileged mail addressed to the Commissioner of the Department of Correctional Services and his staff must be sent in the facility mail pouch. No postage is required on such letters.
[14] Id.
[15] Id.
[16] Plaintiff also raises an equal protection claim arising out of the fifth and fourteenth amendments. However, plaintiff has made no arguments regarding this claim in his briefs and the facts suggest that no such claim exists. Therefore this claim is also dismissed.
[17] See Directive 4421 III.A.1.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-6558
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
CATHY DIANE FERGUSON,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Spartanburg. Timothy M. Cain, District
Judge. (7:09-cr-00890-TMC-1; 7:11-cv-70060-TMC)
Submitted: July 26, 2012 Decided: August 2, 2012
Before MOTZ and DAVIS, Circuit Judges. ∗
Dismissed by unpublished per curiam opinion.
Cathy Diane Ferguson, Appellant Pro Se. David Calhoun Stephens,
Assistant United States Attorney, Greenville, South Carolina,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
∗
The opinion is filed by a quorum pursuant to 28 U.S.C.
§ 46(d).
PER CURIAM:
Cathy Diane Ferguson seeks to appeal the district
court’s order denying relief on her 28 U.S.C.A. § 2255 (West
Supp. 2012) motion. The order is not appealable unless a
circuit justice or judge issues a certificate of appealability.
28 U.S.C. § 2253(c)(1)(B) (2006). A certificate of
appealability will not issue absent “a substantial showing of
the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2)
(2006). When the district court denies relief on the merits, a
prisoner satisfies this standard by demonstrating that
reasonable jurists would find that the district court’s
assessment of the constitutional claims is debatable or
wrong. Slack v. McDaniel, 529 U.S. 473, 484 (2000); see Miller-
El v. Cockrell, 537 U.S. 322, 336-38 (2003). When the district
court denies relief on procedural grounds, the prisoner must
demonstrate both that the dispositive procedural ruling is
debatable, and that the motion states a debatable claim of the
denial of a constitutional right. Slack, 529 U.S. at 484-85.
We have independently reviewed the record and conclude
that Ferguson has not made the requisite showing. Accordingly,
we deny a certificate of appealability and dismiss the appeal.
We deny Ferguson’s motion for appointment of counsel. We
dispense with oral argument because the facts and legal
2
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
DISMISSED
3
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IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 137 MAL 2015
:
Respondent :
: Petition for Allowance of Appeal from the
: Order of the Superior Court
v. :
:
:
DENNIS W. E. O'HARA, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 10th day of June, 2015, the Petition for Allowance of Appeal is
DENIED.
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243 F.Supp.2d 686 (2002)
Richard O. HUNTON and Benny Pace, Trustee of the Richard O. Hunton Irrevocable Trust, Plaintiffs,
v.
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant.
No. CIV.A.H-01-0647.
United States District Court, S.D. Texas, Houston Division.
November 16, 2002.
*691 Kent Melvin Hanszen, Attorney at Law, R Scott Wolfrom, Attorney at Law, Houston, for Richard O Hunton, Richard O Hunton Irrevocable Trust Agreement, Benny Pace, Trustee of the Richard O Hunton Irrevocable Trust, plaintiffs.
Jeffrey A Davis, McGinnis Lochridge & Kilgore, Michael E Warrick, Hudgins Hudgins & Warrick, Houston, for the Guardian Life Insurance Company of America, Stephen L Friedman, defendants.
MEMORANDUM AND ORDER
ATLAS, District Judge.
Pending before the Court is Defendant the Guardian Life Insurance Company of America's Motion to Dismiss Plaintiffs' Second Amended Complaint [Doc. # 14] ("Defendant's Motion"). Plaintiffs responded and Defendant replied.[1] Plaintiffs relied in their Response on substantial material outside of the pleadings. Accordingly, the Court exercised its discretion under Rule 12 to convert Defendants' Motion to a Motion for Summary Judgment. Order, signed September 19, 2001 [Doc. # 21]. Thereafter, both parties submitted supplemental materials.[2] The Court heard oral argument on Defendant's Motion on October 12, 2001. The Court requested *692 additional supplemental materials during oral argument.[3] Also pending is Plaintiffs Motion for Leave of Court to File their Amended Complaint [Doc. #33] ("Plaintiffs' Motion"). Having considered the parties' submissions, the record, and the applicable authorities, the Court concludes that Defendant's Motion should be granted, and Plaintiffs' Motion should be denied.
I. BACKGROUND FACTS
Plaintiffs Richard O. Hunton and Benny Pace, as Trustee of the Richard O. Hunton Irrevocable Trust ("Trust"), bring suit against Defendant Guardian Life Insurance Company of America ("Defendant" or "Guardian"), alleging that Guardian misrepresented the amount of premiums due under a Guardian life insurance policy they had purchased.
In 1992, Plaintiffs entered into negotiations with Stephen Friedman an employee and agent of Guardian, to obtain life insurance coverage on Hunton's life. Hunton specifically sought a policy that would require premium payments for a fixed number of years only. Friedman proposed that Plaintiffs purchase from Guardian a life insurance policy (the "Policy") that had "vanishing premiums."[4] Affidavit of Richard O. Hunton, October 8, 2001, at 2 (Exhibit A to Plaintiffs' Supplement) ("Oct. 8, 2001 Hunton Aff."). The concept was that Plaintiffs would pay premiums for a limited amount of time, after which the Policy would be fully paid ("paid up"), i.e., would require no further out of pocket costs for additional premiums. Id. Friedman presented Plaintiffs with a "premium payment schedule" issued by Guardian as part of his marketing of the Policy. Id. Under the schedule, the owner of the Policy had to pay premiums for seven and a half years with a large up-front initial payment. Id. at 3. Friedman assured Plaintiffs that the premiums would vanish as promised because Guardian enjoyed the benefits of a "dividend stabilization fund," which would compensate for or supplement any potential fluctuations in dividends. Oct. 18, 2001 Hunton Aff., at 2; Deposition of Stephen L. Friedman, at 51 (Exhibit B to Plaintiffs' Supplement) ("Friedman Dep."). The details of that fund were not explained to Hunton. Oct. 18, 2001 Hunton Aff., at 2.
The Policy[5] states that premiums will be payable "For Life." Id. at 3. The terms *693 of the Policy also provide that the insured will share in the proceeds of "Guardian's divisible surplus." Policy, at 6. If the sum of the cash value of the dividends and the cash value of the Policy in any year is sufficient, the insured may use this sum to pay the annual premium on the Policy. Id.[6] Once the Policy is fully paid-up, the insured does not need to make any additional out of pocket premium payments because the premiums will be paid from accumulated dividends. Id. Guardian does not state explicitly in the Policy that it will make dividend payments. Id. Instead, the Policy's share of dividends, "if any, is determined yearly by Guardian." Id. Guardian bases this determination on its "mortality, expense, and investment experience." Id. The dividend stabilization fund is not mentioned in the Policy.
Incorporated by reference as part of the Policy is the application for life insurance completed and signed by Hunton ("Application").[7] In the Application, Hunton checked a box indicating that he wished to pay premiums "Annually." Id. Under "Section E: Dividends (for participating policies only)," Hunton checked a box that indicated that he wanted the dividends to pay for "One year term insurance not to exceed Target Face Amount of $ 905,450." Id. In this section, Hunton did not check the box that indicated "Vanish Premium-available only if a PUA rider is requested. Premiums to be vanished at the end of the first policy year by use of PUA rider additions and future dividends." Id. The Application also contains the following language: "Upon request we will furnish illustrations of benefits, including death benefits and cash values.... It is understood that under the Variable Life Insurance Policy the amount of the death benefit ... may increase or decrease based on the investment experience of the separate account and are not guaranteed." Application, at 3. Nowhere in the Application did Hunton write or otherwise indicate that he agreed to pay premiums for eight years only.
Plaintiffs allege that the Policy contained a two-page "premium schedule"[8] that establishes that the final premium payment would be due in the Policy's eighth year, after which the premium payments were, according to Plaintiffs, guaranteed to vanish. Plaintiffs contend that Friedman delivered the Policy to them in a folder that also contained the Illustrations and that Friedman represented that the Illustrations were part of the Policy. Oct. 8, 2001 Hunton Aff, at 2-3. However, this part of the insurance contract and that all premiums would be paid according to the policy. See Plaintiffs' [proposed] Third Amend *694 contention is contradicted, most significantly, by the terms of the Policy itself.[9] Neither the Policy's "Alphabetical Index," Policy, at 13 (following the various policy riders and a copy of the Application), nor the "Guide to Policy Provisions," Policy, at 2 (summarizing the Policy's contents), refers to these two pages. Indeed, the document is titled "Guardian/GIAC Lifeplan Illustrations" ("Illustrations"). It states that the schedules contain additional "attached sheets with important footnotes" that have not been included with Plaintiffs' exhibit. Illustrations, at 2 of 6.
Hunton consulted with his financial advisors in connection with acquiring the Policy,[10] but he is the person who made the decision to buy it. At Hunton's request, Trustee Pace purchased the Policy with Trust funds and designated the Trust as owner and beneficiary. Guardian issued the Policy on February 4, 1992. On February 13, 1992, Friedman delivered the policy to Hunton in person. Hunton and Friedman reviewed the Policy's provisions together. Hunton questioned Friedman regarding the language in the Policy that indicates that premiums are payable "For Life." Oct. 8, 2001 Hunton Aff., at 2-3. In response, Plaintiffs allege that Friedman explained that the "For Life" provision was an option available for Plaintiffs if they wished to add value to the Policy by making premium payments beyond the "vanish date." Id. However, Friedman also allegedly stated that, in Plaintiffs' case, the premiums payments were governed by the Illustrations and not by the "For Life" provision. Id.
Plaintiffs made all premium payments set forth under the Illustrations. Plaintiffs allege that Guardian continued to request premiums after the Illustrations' premium vanish date. Plaintiffs contend that, after Plaintiffs inquired about the status of the Policy in December 1997, Guardian first informed them that premiums would be required for an additional five years beyond the vanish date. Plaintiffs further allege that in May 1998 Guardian informed them that the investment component of the Policy had not generated the returns that had been originally represented to them and that they would possibly have to pay premiums for the remainder of Hunton's life.
Guardian adds to Plaintiffs' version of the facts. Beginning in 1993, Guardian contends that it sent Annual Benefit Statements ("Statements") to Plaintiff Benny Pace, owner of the Policy, and to Friedman. The Statements provided information regarding the performance of the Policy, the amount of dividend payments made by Guardian, and the Policy's cash value. Defendant has submitted three Statements dated February 14, 1997; February 4, 1996; and February 4, 1993. See Exhibit B to Ciotti Aff. [Doc. #26] ("Statements").[11]
*695 Plaintiffs filed suit in the 127th Judicial District of Harris County, Texas on March 24, 2000, naming both Guardian and Friedman as Defendants. On November 17, 2000, Guardian removed to federal district court.[12] The case was remanded on January 31, 2001. Plaintiffs then voluntarily dismissed Friedman on February 16, 2001. In response, on February 22, 2001, Guardian again removed the case to this Court.
On June 29, 2001, Plaintiffs filed a Second Amended Complaint, alleging five claims: (i) breach of contract, (ii) fraud and fraudulent inducement, (hi) violations of the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), TEX. Bus. & COM. CODE § 17.41 et seq., (iv) violations of the Texas Insurance Code, TEX. INS. CODE art. 21.21 ("Insurance Code"), and (v) negligent misrepresentation.[13]
Guardian makes several arguments in favor of its motion for summary judgment. First, Guardian argues that Plaintiffs' claims all are barred by the applicable statutes of limitations. Second, Guardian argues that Plaintiffs' breach of contract claim fails as a matter of law because it is contradicted by the express terms of the insurance contract. Third, Guardian asserts that Plaintiffs' fraud, DTPA, and Insurance Code claims fail because Plaintiffs have not alleged justifiable reliance. Finally, Guardian argues that Plaintiffs have failed to plead their fraud, DTPA, Insurance Code, and negligent misrepresentation claims with particularity as required by FED. R. CIV. P. 9(b). The parties have extensively briefed all issues in Guardian's motion for summary judgment and the motion is ripe for adjudication.
*696 II. SUMMARY JUDGMENT STANDARDS
A defendant's motion for summary judgment is properly granted unless there is evidence "on which the jury could reasonably find for the plaintiff. the judge's inquiry, therefore, univoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict ...." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Wheeler v. Miller, 168 F.3d 241, 247 (5th cir.1999). Rule 56 is an integral part of the federal rules of civil procedure, recognizing a party's right to demonstrate that certain claims have no factual basis and to have those unsupported claims disposed of prior to trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Once the movant shows that there are no genuine issues of material fact, the burden is on the nonmovant to demonstrate with "significant probative evidence" that there is an issue of material fact warranting a trial. texas manufactured housing ass'n v. nederland, 101 F.3d 1095, 1099 (5th cir.1996), cert, denied, 521 U.S. 1112, 117 s.ct. 2497, 138 l.ed.2d 1003 (1997). The nonmovant's burden cannot be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence. doe v. dallas independent school dist, 153 F.3D 211, 215 (5th cir. 1998); little v. liquid air corp., 37 f.3d 1069, 1075 (5th cir.1994) (en banc).
The Court "must review all of the evidence in the record, but make no credibility determinations or weigh any evidence." Peel & Company, Inc. v. The Rtig Market, 238 F.3d 391, 394 (5th Cir.2001) (citing Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 120 S.Ct. 2097, 147 L.Ed.2d 105, (2000)). "In reviewing all the evidence, the court must disregard all evidence favorable to the moving party that the jury is not required to believe, and should give credence to the evidence favoring the nonmoving party as well as to the evidence supporting the moving party that is uncontradicted and unimpeached." Id.
"Material that is inadmissible will not be considered on a motion for summary judgment because it would not establish a genuine issue of material fact if offered at trial and continuing the action would be useless." Duplantis v. Shell Offshore, Inc., 948 F.2d 187, 192 (5th Cir.1991). Rumors, speculation, hearsay and other information which would be excluded at trial cannot be considered in ruling on a motion for summary judgment. Fowler v. Smith, 68 F.3d 124,126 (5th Cir. 1995).
III. LIMITATIONS PERIODS FOR PLAINTIFFS' CLAIMS
Guardian argues that all of Plaintiffs' claims are barred by the applicable two or four year statutes of limitations.[14] First, Guardian asserts that all Plaintiffs' claims accrued when Guardian issued the Policy in 1992. Thus, Guardian contends the limitations periods ran on Plaintiffs' claims in *697 either 1994 or 1996. Alternatively, Guardian argues that the discovery rule is inapplicable to Plaintiffs' claims because Plaintiffs have failed to raise a genuine issue of fact that the alleged misrepresentations could not have been discovered through the exercise of reasonable diligence. Finally, Guardian asserts that, in any event, the two year limitations period for the DTPA, Insurance Code, and negligent misrepresentation claims expired prior to Plaintiffs filing suit in March 2000, since Plaintiffs allegedly have admitted that in December 1997 they became aware of Guardian's alleged misrepresentations on which these claims are founded.
In response, Plaintiffs argue that their causes of action did not accrue until they began to pay premiums after the vanish date in the Illustrations, which occurred in mid-1999. Plaintiffs rely on several Texas decisions to contend that a cause of action does not accrue until damages are sustained. Plaintiffs characterize their damages as being the premium payments made after the alleged vanish date. In its Reply, Guardian challenges this characterization. First, Guardian argues that the damage Plaintiffs sustained is the purchase of a Policy they would not have wanted but for Guardian's alleged misrepresentation. Thus, Guardian asserts, the limitations period for Plaintiffs began when the Policy was issued. Second, Guardian argues that, under Texas statutory law, the limitations period for the DTPA and Insurance Code claims begins to run when the alleged misrepresentation is made.
After considering the parties' arguments and the relevant law, the Court holds that the applicable statutes of limitations bar all claims that Plaintiffs allege in their Second Amended Complaint [Doc. # 11].[15]
A. Fraud and Fraudulent Inducement Claims
Plaintiffs' fraud claim is barred by the statute of limitations. Plaintiffs have not adduced evidence that shows that they exercised reasonable diligence in reviewing Guardian's Policy.
*698 In Texas, the general rule is that a cause of action accrues and the statute of limitations begins to run when "a wrongful act causes some legal injury, even if the fact of injury is not discovered until later, and even if all the resulting damages have not yet occurred." Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex.1997); S.V. v. R.V., 933 S.W.2d 1, 4 (Tex.1996); Roberts v. Lain, 32 S.W.3d 264, 269 (Tex.App.-San Antonio 2000, no pet). Thus, an action for fraud accrues when the fraud is perpetrated. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex.1988); Lawrence v. Lawrence, 911 S.W.2d 443, 448 (Tex. App.-Texarkana 1995, writ denied); accord Jackson v. Speer, 974 F.2d 676, 679-80 (5th Cir.1992); Porter v. Charter Medical Corp., 957 F.Supp. 1427, 1434 (N.D.Tex. 1997).
If the fraud is concealed from the plaintiff, however, the limitations period does not run until plaintiff discovers the fraud or should have discovered the fraud through the exercise of reasonable diligence. Woods, 769 S.W.2d at 517; Latvrence, 911 S.W.2d at 448; Jackson, 974 F.2d at 679-80; Porter, 957 F.Supp. at 1434. In this situation, Texas courts apply the discovery rule or the fraudulent concealment doctrine as exceptions to the statute of limitations.[16]S.V. v. R.V., 933 S.W.2d 1, 6 (Tex.1996); Computer Assoc. Int'l v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex.1996).
The discovery rule is a "very limited exception to statutes of limitation" and only applies when (i) the nature of the injury incurred is "inherently undiscoverable" and (ii) the evidence of the injury is "objectively verifiable." Computer Assoc., 918 S.W.2d at 456; In re Coastal Plains, Inc., 179 F.3d 197, 214 (5th Cir.1999); Prieto v. John Hancock Mutual Life Ins. Co., 132 F.Supp.2d 506, 513 (N.D.Tex. 2001). The "inherently undiscoverable" requirement is met when the injured party is unlikely to discover the injury during the limitations period despite due diligence. S.V, 933 S.W.2d at 7; Computer Assoc., 918 S.W.2d at 456; Coastal Plains, 179 F.3d at 215. The injury does not have to be impossible to discover, but a party's mere failure to discover the injury is not sufficient to meet the requirement. S.V, 933 S.W.2d at 7; Coastal Plains, 179 F.3d at 215. To be inherently undiscoverable the wrong and the injury "must be unknown to the plaintiff because of their very nature and not because of any fault of the plaintiff." Coastal Plains, 179 F.3d at 214-15. The requirement of "objective verifiability" requires physical or other evidence, such as an objective eyewitness account, to corroborate the existence of the claim. Id. "An injury is `objectively verifiable' if the presence of the injury and the producing wrongful act cannot be disputed." Howard v. Fiesta Texas Show Park, *699 Inc., 980 S.W.2d 716, 720 (Tex.App.-San Antonio 1998, pet. denied).[17]
Similarly, the doctrine of fraudulent concealment[18] delays application of the statute of limitations. When the fraud is concealed, the doctrine tolls the limitations period "until the fraud is discovered or could have been discovered with reasonable diligence." Velsicol, 956 S.W.2d at 531; Prieto, 132 F.Supp.2d at 515. The doctrine "estops the defendant from relying on the statute of limitations as an affirmative defense to plaintiffs claim." Computer Assoc. Int'l, 918 S.W.2d at 456.
Plaintiffs do not raise a genuine issue of fact as to whether Guardian's alleged misrepresentations are inherently undiscoverable. Plaintiffs contend that Friedman guaranteed that the Trust would not have to pay premiums beyond the "vanish date." Plaintiffs further allege that the Policy provisions that required premium payments "For Life" do not control the Trust's payments of premiums under the Illustrations.[19] Nevertheless, even a cursory review of the Policy and Application informs Plaintiffs that Friedman's oral representations did not accurately reflect the written Policy. The Policy terms thus are easily discoverable. Indeed, the Application, signed by Hunton before he received the Policy, provides explicitly that Friedman lacked the authority to alter any of the written provisions of the Application or the Policy.[20] Application *700 at 4. Furthermore, the Application also states that the cash value of the Policy "may increase or decrease based on the investment experience of the separate account and are not guaranteed." Id. at 3. The Policy itself, which Hunton reviewed closely with Friedman, clearly states under the section heading "dividends" that the "policy's share [of the dividends], if any, is determined yearly by Guardian," and "[t]he dividend will reflect Guardian's mortality, expense, and investment experience." [21] Finally, neither the Policy nor Application mention the Illustrations as being part of the contract.[22]
Thus, a review of the Policy establishes that (i) the dividends will depend on various factors and are not guaranteed, (ii) that Friedman lacked authority to make oral representations that altered the written terms of the Policy, and (iii) that materials "annual dividends payable if earned." Policy, at 1 (emphasis added). On page 3 of the Policy, under the heading "policy years payable," the words "For Life" are printed. The Application provides under "Section E; Dividends," the option for Hunton to have "Premiums to be vanished at the end of the first policy year by use of PUA rider additions and future dividends." Application, at 2. The Court notes that Hunton did not select this option on the Application. Id. Finally, the Policy and Application state that Friedman did not have the authority to modify any of these terms. Thus, it is clear from the terms of the Policy that Plaintiffs remain responsible for premium payments for life unless and until there is adequate dividend performance. *701 other than the Application, the printed Policy form and its riders are not part of the contract. These unequivocal provisions in the Policy render the putative fraud discoverable and sufficient to put Plaintiffs on notice that Guardians dividend payments are variable, not guaranteed, despite any contrary understanding held by Plaintiffs from Friedman's representations or alleged implications of the Illustrations.
Plaintiffs also are not entitled to rely on the discovery rule to toll the fraud limitations period because Plaintiffs did not act with reasonable diligence to discover the alleged misrepresentations. "Investment decisions inherently require that the investor exercise diligence rather than relying on any oral representations." Prieto, 132 F.Supp.2d at 520; see also Martinez Tapia v. Chase Manhattan Bank, 149 F.3d 404, 409 (5th Cir. 1998) (in the context of the statute of limitations, "party claiming fraud and/or misrepresentation must exercise due diligence to discover the alleged fraud") (quoting McGill v. Goff, 17 F.3d 729, 733 (5th Cir.1994)). Plaintiffs, according to their own testimony, did nothing regarding the Policy, except make payments according to the original premium schedule.[23] Plaintiffs easily could have checked with Guardian as to the actual status of dividends, accruals, and cash values on the Policy. It appears that Plaintiffs did not review the Statements that at least one of them likely received; nor did they request any information on the Policy account status. Plaintiffs failed to exercise reasonable diligence by relying solely on Friedman's oral statements regarding the Policy attributes.[24]
Plaintiffs also present, as evidence of their diligence, the fact that Hunton relied on the advice of an accountant in making the decision to purchase the Policy. This contention fails to create a genuine issue of fact regarding Plaintiffs' exercise of reasonable diligence. Plaintiffs do not explain in what manner their accountant participated in the decision to purchase the Policy, nor why an accountant's involvement is material. Therefore, the Court holds that Plaintiffs have failed to satisfy their burden to demonstrate tolling of the limitations period under the discovery rule or the fraudulent concealment doctrine.[25]
*702 Plaintiffs rely on several Texas cases for the proposition that a cause of action does not accrue until damages are sustained. Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex.1967) (a "cause of action accrues, and the statute [of limitations] begins to run, when, and only when, the damages are sustained).[26] Plaintiffs thus argue that their fraud claim did not accrue until they began making premium payments at Guardians demand after the alleged vanish date in mid-1999. Plaintiffs' contention fails as it is founded on a misapplication of the cited cases. Atkins applies only to acts that do not of themselves constitute a "legal injury." The full passage on which Plaintiffs rely reads: "if the act is of itself not unlawful, and plaintiff sues to recover damages subsequently accruing from, and consequent on, the act..., the statute begins to run, when ... the damages are sustained." Id. In Atkins, the act was a mistake made by an accountant in preparing the plaintiffs tax records. Id. at 150-52. Because the accountant's mistake was not in itself unlawful, the court in Atkins held that plaintiffs action did not accrue until a tax deficiency was assessed against the plaintiff. Id. at 153. Plaintiffs' claim for fraud and fraudulent inducement at bar are entirely different. Fraud is itself an actionable legal injury. The general Texas rule is that a cause of action for fraud accrues and the limitations period "begins to run when the fraud is perpetrated, or if the fraud is concealed, from the time it is discovered or could have been discovered by the exercise of reasonable diligence." Woods, 769 S.W.2d at 517. Atkins deals only with a special exception to this rule, Atkins is inapplicable to this case.[27]
Furthermore, to the extent Plaintiffs assert a claim for fraud in the inducement of contract, Plaintiffs' claim is that they were defrauded into buying the particular insurance policy they did. The Atkins court held that when the act is a wrong in itself, the "cause of action accrues and the statute begins to run from the time the act is committed, even where little, if any, actual damage occurs immediately." *703 417 S.W.2d at 153. For the fraud in inducement claim, Plaintiffs suffered a legal injury from their reliance on Guardian and Friedman's alleged misrepresentations because Plaintiffs would not have purchased the Guardian insurance policy but for Friedman's alleged misrepresentations. Accordingly, Plaintiffs' fraud and fraudulent inducement claims are barred by the statute of limitations.
B. Negligent Misrepresentation Claim
Plaintiffs' negligent misrepresentation claim is barred by the applicable two year statute of limitations. The discovery rule does not apply to negligent misrepresentations claims, and, even if the discovery rule applied, Plaintiffs had notice of Guardians alleged misrepresentations more than two years before the filing of this action.
In Texas, negligent misrepresentation claims sound in negligence, not fraud. Kansa Reins. Co., Ltd. v. Congressional Mortgage Corp., 20 F.3d 1362, 1371 (5th Cir.1994); see also Milestone Properties, Inc. v. Federated Metals Corp., 867 S.W.2d 113, 119 (Tex.App.-Austin 1993, no writ); Texas Am. Corp. v. Woodbridge Joint Venture, 809 S.W.2d 299, 302 (Tex. App.-Fort Worth 1991, writ denied). Consequently, negligent misrepresentation claims are governed by negligence rules. Id. at 1372. Generally, in Texas negligence actions, the limitations period runs from "the commission of the negligent act, not the ascertainment of damages." [28]Id. Thus, the limitations period on Plaintiffs' negligent misrepresentation claim began to run when the Policy was issued to Plaintiffs in 1992.
Plaintiffs' claim would also be time-barred even if the discovery rule or fraudulent concealment doctrine were applied to this negligent misrepresentation action.[29] Plaintiffs admit that, at the latest, they were on notice of Guardians alleged misrepresentation more than two years before the filing of this action; they were notified by Guardian in December 1997 that the Trust would have to pay premiums after the alleged vanish date. Thus, Plaintiffs' negligent misrepresentation claim is time-barred.
C. Insurance Code and DTPA Claims
Plaintiffs also asserted DTPA and Insurance Code claims. These claims are subject to the two year limitations period that commences at the time the misrepresentation is made or after the plaintiff "discovered or in the exercise of reasonable diligence should have discovered the occurrence of the [unlawful act]." TEX. BUS. & COM. CODE § 17.565 (Vernon 1987); TEX. INS. CODE art. 21.21, § 16(d) (Vernon Supp.2001); Gilbreath v. White, 903 S.W.2d 851, 855 (Tex.App.-Texarkana 1995, no writ) (statute of limitations begins to run for DTPA and Insurance Code claims when the deceptive act occurred or when the plaintiff should have discovered the deceptive act with reasonable diligence); *704 Holmes v. PT Pipe & Tubing, Inc., 856 S.W.2d 530, 537 (Tex.App.-Houston 1993, no writ) (holding that, for DTPA claims, the statute of limitations runs from the time the deceptive act occurred or when the consumer should have learned of the deceptive act with reasonable diligence, not when the consumer incurs damages from the deceptive act). Since the alleged misrepresentations were all made in connection with Plaintiffs' decision to purchase the Policy in 1992, the DTPA and Insurance Code claims are barred by the statute of limitations unless the discovery rule applies.
The discovery rule expressed in these statutes and interpretive case law does not assist Plaintiffs. As discussed above, Plaintiffs failed to exercise reasonable diligence to discover the alleged falsity of the statements by reviewing the written Policy.[30]
Even if the discovery rule were to apply, Plaintiffs' DTPA and Insurance Code claims are time barred under the two year limitations period. Plaintiffs concede in their Complaint that they were informed by Guardian in December 1997 that they would be required to make premium payments for at least five years after the vanish date. Therefore, Plaintiffs were on notice of Guardians alleged misrepresentations concerning the Policy premiums well more than two years before Plaintiffs commenced this action. Accordingly, Plaintiffs' DTPA and Insurance Code claims are barred by the statute of limitations.
D. Breach of Contract Claims
In Texas, the general rule is that a cause of action for breach of contract accrues at the time the contract is breached. Houston Endowment, Inc. v. Atlantic Richfield Co., 972 S.W.2d 156, 159 (Tex. App.-Houston [14th Dist.] 1998, no pet.); Heron Financial Corp. v. United States Testing Company, Inc., 926 S.W.2d 329, 331 (Tex.App.-Austin 1996, writ denied); Harrison v. Bass Enterprises Production Co., 888 S.W.2d 532, 537 (Tex.App.-Corpus Christi 1994, no writ). If the breach is concealed from the plaintiff, Texas courts apply the discovery rule "until the plaintiff discovers or should have discovered the nature of the injury." Houston Endowment, Inc., 972 S.W.2d at 159.
If the basic Texas rule is applied, Plaintiffs' breach of contract claims are timebarred. The breach occurred in 1992 when the Policy was issued without a prevision restricting premium payments to eight years, in that premiums specified in the Policy did not adopt expressly the amounts set forth on the Illustrations. Plaintiffs, in response, contend that Guardian did not breach the insurance contract until it charged premiums beyond the vanish date set forth in the Illustrations. In the alternative, Plaintiffs contend that their cause of action accrued when Guardian gave them notice of its intention to charge additional premiums in 1997, three years before Plaintiffs originally filed this action in 2000. Plaintiffs' arguments each fail.
Plaintiffs contend, first and foremost, that the Illustrations were part of their insurance contract and that, under the Illustrations, premium payments were only required for seven and a half years. The Illustrations, however, contained more than a description of premium payments: the Illustrations also contained year-by-year projections of the dividends the Policy was to earn, the Policy's projected "net cash value," the Policy's "guaranteed cash values," and the amount of the death benefit. If the Court were to *705 accept Plaintiffs' position that the Illustrations were part of the parties' binding insurance contract, then Guardian would have been required to perform each year exactly according to the Illustrations. However, as shown in the Annual Benefit Statement dated February 4, 1996, the Policy was not performing according to the terms of the Illustrations.[31] Thus, under Plaintiffs' own theory, Guardian breached the parties' contract when Guardian did not pay and give Plaintiffs credit for dividends exactly as provided in the Illustrations. According to the Statements, this breach occurred more than four years before Plaintiffs brought this action on March 24, 2000.
Plaintiffs also appear to rely on the discovery rule to toll the limitations period on their contract claims. As discussed above, Plaintiffs fail to present evidence to raise a triable issue of fact that the discovery rule should apply to their contract claims. Plaintiffs' conclusory assertion that "Guardian did not provide or otherwise offer any information which would lead [Plaintiffs] to believe that [Plaintiffs] would owe any premiums other than those agreed to in the [Illustrations]" (Oct. 18, 2001 Hunton Aff, at 2) ignores the Statements directed to Pace (the Policy owner) and to Friedman.[32] Moreover, this argument ignores the common sense practice of an insurance policy owner checking periodically on the status of his policy account if he intends to rely on dividend accrual to pay premiums for the policy. The Court is not obligated in a summary judgment analysis to give weight to the non-movant's conclusory, unsubstantiated assertions that contradict admissible evidence.[33] As discussed above, Plaintiffs have not presented evidence that shows that the fact that the Policy was not performing according to projections in the Illustrations was inherently undiscoverable. Furthermore, the Plaintiffs have adduced nothing to show that they acted with reasonable diligence in monitoring the performance of the Policy.[34] Accordingly, Plaintiffs' contract claims are barred by Texas's four year statute of limitations.
Because the parties have extensively briefed the merits of the breach of contract *706 issues and because the issue of the statute of limitations may not be free from doubt on these, the interest of justice dictates that the Court address the merits of the contract claims.
IV. PLAINTIFFS' CONTRACT CLAIMS
Under Taxes law, the meaning of an insurance contract is to be determined under the standards applicable to contracts generally. See Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 491 (5th Cir, 1995); Cicciarella v. Amica Mutual Insurance Co., 66 F.3d 764, 767 68 (5th Cir.1995); Barnett v. Aetna Life Insurance Co., 723 S.W.2d 663, 665 (Tax. 1987). A court's primary concern is to give effect to the intention of the parties as expressed by the policy language. Cicciarella, 66 F.3d at 768; Ideal lease service, Inc. v. Amoco procuctions Co., 662 S.W.2d 651, 953 (Tax.1983). "When the terms of an insurance policy are unambiguous, a court may not very those terms." Amica Mut. Ins. Co. v. Moak, 55 F.3d 1093, 1095 (5th Cir.1995); see also Royal Indem. Co. v. Marshall, 388 S.W.2d 176, 181 (Tax.1965).
Guardian contends that Plaintiffs had a duty to read the insurance contract and are bound by all of its "clear and unmbiguous" terms regardless of whether Plaintiffs received an adequate explanation of them, Second, Guardian argues that Plaintiffs' contract claims are barred by the parol Evidence Rule.In this regard, Guardian further contends that the Policy contains a merger clause and the Illustrations and Friedman's alleged oral misrepresentations are extrinsic evidence that may not be considered when the Court examines the Policy. Third, Guardian asserts that the Statute of Frauds prevents Plaintiffs from including any of Friedman's oral statements to be part of the contract. Finally, Guardian relies on decisions in other jurisdictions addressing vanishing premium policies to support the foregoing arguments.
Plaintiffs respond with several arguments. First, Plaintiffs contend that the Policy and Illustrations must be read together because they both relate to same time. Next, Plaintiffs assert that the Illustrations represent a modification of the Policy that was ratified by Guardian when it accepted premium payments under the terms of the Illustrations and not the terms of the Policy. Third, Plaintiffs argue that the terms of the Policy are ambiguous and the extraneous evicende should be introduced to clarify the Policy's terms. Finally, Plaintiffs contend that the Policy should be reformed to include the Illustrations.
A. Plaintiffs' Duty to read the Policy
In Texas, and insured has a duty to read insurance policy and is charged with knowledge of its provisions. Ruiz v. Governments Employees Inc. Co., 4 4 S.W.3d 838, 841 (Tex.App.-Amarillo 1996, writ denied); Amarco Petroleum, Inc. v. Texas Pacific Indemnity Co., 889 S.W.2d 695, 699 (Tex.app.-Houstan [14th Dist.] 1994, writ denied). accordingly, the court deems Plaintiffs to have been on notice of all the terms of the Policy. [35] As descussed above, the Policy contains depend on various factors and are not guaranteed, that an insurance agent such as Friedman lacks authority to make oral terms of the Policy, that provisions outside the Policy, its *707 riders and the Application are not part of the parties' contract, and that the premium payments are due under the Policy "For Life." The Policy also indicates that premium payments may be satisfied through dividends to the extent Guardian pays dividends. Under basic Texas law, therefore, Friedman's oral representations cannot as a matter of law override the written contract terms.
B. The Policy is Not Ambiguous
The determination of whether a contract term is ambiguous is a question of law. Cicciarella, 66 F.3d at 768; Yancey v. Floyd West & Co., 755 S.W.2d 914, 917 (Tex.App.-Fort Worth 1988, writ denied). A contract is ambiguous only "when its meaning is uncertain and doubtful or it is reasonably susceptible of more than one meaning." Cicciarella, 66 F.3d at 768 (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983)).
Determining whether ambiguity exists, the court must look at the contract as a whole in light of the circumstances existing at the time of execution. Exxon Corp. v. West Tex. Gathering Co., 868 S.W.2d 299, 302 (Tex.1993). However, "the language should be given its plain grammatical meaning unless it definitely appears that the intention of the parties would thereby be defeated." Reilly v. Rangers Mgmt, Inc., 121 S.W.2d 527, 529 (Tex.1987).
A contract is not ambiguous if its terms can be given a definite or certain legal meaning. National Union Fire Ins. Co. v. CBI Industries, 907 S.W.2d 517, 520 (Tex.1995). Conversely, if a contract is subject to more than one reasonable interpretation, courts must adopt the construction most favorable to the non-drafting party. State Farm Fire and Casualty Co. v. Vaughan. 968 S.W.2d 931, 933 (Tex. 1998).
The Policy is not ambiguous because all of its terms have a definite legal meaning. First, the Policy states clearly that premiums are payable "For Life" unless and until dividend performance is sufficient to cover the premium payments.[36] Second, the Policy states unambiguously that its terms are limited to those contained in the Policy form and its riders, and the Application. Policy, at 11; Application, at 4. Third, the Policy is clear that Friedman, a mere insurance agent, did not have the authority to alter its terms. Policy, at 11; Application, at 4.
Plaintiffs contend that this Court may properly consider extrinsic evidence in determining whether the language of the Policy is ambiguous.[37] Plaintiffs rely on a decision of the Supreme Court of Texas to support their argument. Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981). Sun Oil does not support Plaintiffs' *708 contention. Indeed, the Supreme Court of Texas in Sun Oil held that "parol evidence is not admissible to render a contract ambiguous, which on its face, is capable of being given a definite meaning." Id. at 732. The Court holds that the terms of the Policy are clear and unambiguous on their face. Accordingly, Plaintiffs may not rely on extrinsic parol evidence to alter the unambiguous terms of the parties' written agreement.
C. Plaintiffs' Extrinsic Evidence
The parol evidence rule precludes consideration of extrinsic evidence to contradict, vary or add to the terms of an unambiguous written agreement absent fraud, accident or mistake. In re H.E. Butt Grocery Co., 17 S.W.3d 360, 370 (Tex. App.-Houston [14th Dist.] 2000, no pet.). Parol evidence is not admissible for the purpose of creating an ambiguity. Licata v. Licata, 11 S.W.3d 269, 277 (Tex.App.-Houston [14th Dist.] 1999, no pet.). Only where a contract is first determined to be ambiguous may the courts consider the parties' interpretation, and admit extraneous evidence to determine the true meaning of the instrument. CBI Industries, 907 S.W.2d at 520 (citing Sun Oil Co. v. Madeley, 626 S.W.2d 726, 732 (Tex. 1981)); Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 408 (5th Cir.1995). The Court, as noted above, concludes that the Policy (with its riders and the Application) is unambiguous. Accordingly, the Court will not consider Plaintiffs' proffered evidence, such as the Illustrations or Friedman's and Hunton's testimony, in interpreting the Policy terms.[38]
Under the Policy, Plaintiffs are to make premium payments "For Life" unless and until dividend performance is sufficient to cover the premium payments. Under the Policy, the payment of dividends has been left to the discretion of Guardian based upon its "mortality, expense, and investment experience." Policy, at 6. Dividend payments have not ever been guaranteed by the Policy. See id. at 1, 6.
Plaintiffs claim that Guardian breached the insurance contract when it required premium payments after the vanish date in the Illustrations.[39] However, as explained above, Plaintiffs have failed to demonstrate, or raise a genuine fact issue, that the Illustrations are part of the Policy or the parties' contract, that the Policy provision that premiums were due "for life" was not binding on Plaintiffs, or that Guardian guaranteed as part of its contract with Plaintiffs that premium payments would vanish. Accordingly, Plaintiffs have failed to state a claim for breach of contract.[40]
*709 D. Plaintiffs' Additional Contract Arguments
Plaintiffs present several arguments in the alternative, in the event that the Court finds the Illustrations are not part of the Policy. These arguments are not persuasive.
1. Several Documents To Be Read Together
First, Plaintiffs argue that the Policy and Illustrations should be read together as one contract because they necessarily relate to the same transaction. Plaintiffs assert that the Illustrations were included in the same folder as the original Policy Guardian delivered to Plaintiffs, and that Friedman had used the Illustrations when selling and explaining the Policy. Plaintiffs rely on several Texas cases in support of their contention. See Owen v. Hendricks, 433 S.W.2d 164, 166 (Tex.1968); Libby v. Noel, 581 S.W.2d 761, 764 (Tex. Civ.App.-El Paso 1979, no writ); Texas State Bank of Austin v. Sharp, 506 S.W.2d 761, 763 (Tex.Civ.App.-Austin 1974, ref'd n.r.e.). Plaintiffs' reliance on these cases is unfounded.
In Owen, the Texas Supreme Court stated the general rule that an unsigned document may be incorporated by reference to a signed agreement if the signed agreement "plainly refers to another writing." Owen, 433 S.W.2d at 166. The Supreme Court of Texas expressly declined to extend this doctrine to a situation in which the two documents make no internal dividends would be insufficient to make the Plaintiffs premium payments vanish. references to each other. Id. at 166-67. Instead, the Court held that "[t]he only permissible extension `of the doctrine requiring an express reference in the signed paper is where the signed paper at the time of the signature can be shown from its contents to be based on an adoption of a then existing unsigned paper.'" Id. at 167 (emphasis added). In this case, the Illustrations were not signed. The Policy does not expressly incorporate or make any reference to the Illustrations.[41] Nor is there anything in the Policy that shows the Policy is based on or adopts the Illustrations. To the contrary, the Policy's merger clause expressly states that the parties' contract included only the terms contained in the Policy and Application. Thus, Owen is inapplicable to this case.
Texas State Bank and Libby are similarly inapposite. In Texas State Bank, the issue was whether the payment of a promissory note was contingent upon the satisfaction of conditions precedent in a separately-executed sales agreement. The Austin Court of Appeals held in 1994 that the note and the agreement must be read together to determine whether the obligor of the note had a duty to perform: "[I]t is settled in Texas that where two or more instruments, executed contemporaneously or at different times, pertain to the same transaction, the instruments will be read together even though they do not expressly refer to each other." Texas State Bank, 506 S.W.2d at 763. In Libby, the El Paso Court of Appeals held in 1979 that a purchase *710 agreement and promissory note each executed by one or both partiescan be construed together for the purposes of an action for specific performance, if the two documents make reference to the subject matter of the transaction, were both executed, and one document describes the other in detail. Libby, 581 S.W.2d at 764. In the instant case, in contrast, the Illustrations were not executed by either party, the Policy does not refer to the Illustrations, and the Policy expressly limits the terms of the insurance contract to the Policy, its riders the and Application. Accordingly, these cases provide no support for the Court to read the Illustrations into the Policy.
2. Modifications of the Initial Contract
Plaintiffs alternatively contend that the parties modified the terms of the Policy to include the Illustrations because Plaintiffs allegedly made premium payments under the terms of the Illustrations and not the Policy. Plaintiffs made an initial payment of $129,830.00 to Guardian. Plaintiffs contend that this payment was made according to the Illustrations, not the Policy, which they suggest did not require such a large initial payment. Thus, Plaintiffs submit that the Illustrations were a modification of the Policy that Guardian ratified when it accepted the initial payment.
Guardian responds, correctly, that these premium payments were made in accordance with the Policy. Guardian draws the Court's attention to page three of the Policy, which lists the various initial payments due under the Policy. The sum of these payments is $129,830.00.[42] Plaintiffs do not present any evidence that Guardians explanation of the sums listed in the Illustrations is incorrect. Accordingly, Plaintiffs have failed to raise an issue of fact that the written terms of the Policy were modified as Plaintiffs suggest after Plaintiffs initially entered the agreement.
3. Reformation of Contract Based on Mistake
Plaintiffs next argue that the Policy should be reformed. Plaintiffs assume that the Illustrations are not part of the Policy for the purposes of this argument. Instead, they argue that Plaintiffs incorrectly believed that the Illustrations were part of the Policy as a result of Guardians misrepresentations. Furthermore, Plaintiffs allege that Guardian was aware of Plaintiffs' mistake. Plaintiffs argue that Texas law supports the reformation of a contract when one party makes a mistake and the other party acts inequitably by knowingly failing to reveal the error to the innocent party. Plaintiffs rely on Hill v. Spencer & Son, Inc., 973 S.W.2d 772, 775 (Tex.App.-Texarkana 1998, no pet.), and Hamberlin v. Longview Bank and Trust Co., 770 S.W.2d 12, 14 (Tex.App.-Texarkana 1989, writ denied).
Hill and Hamberlin do not assist Plaintiffs. In Hill, the Texarkana Court of Appeals, citing Hamberlin (an earlier decision by the same court), stated that "a mistake by one party must be coupled with *711 fraud or inequitable conduct by the other party to support reformation." Hill, 973 S.W.2d at 775.[43] "Knowledge of the mistake by one party and his failure to reveal it to the other party amounts to such inequitable conduct as will justify reformation." Id.
However, the circumstances under which the Hill and Hamberlin courts granted reformation were materially different from the circumstances in the present case. First, this Court would have to find that Guardian initially agreed to the terms of the Illustrations as a contract.[44] Nothing in the Application reasonably suggests that Plaintiffs could reasonably assume that Guardian had agreed that the Illustrations, which contained projections extending forty-seven years into the future, were offered as a binding part of the proposed insurance contract. Second, the nature of the putative "mistake" made by Plaintiffs in this case fundamentally differs from the error made by the plaintiff in Hill. In Hill, the plaintiff overlooked a typographical error as to the length of the contract. All parties agreed that the contract was to be for a different time period. Hill, 973 S.W.2d at 774. The jury found the defendant knew of the error in the document and intentionally failed to disclose the mistake to the plaintiff in order to gain an extended contract term. In contrast, in the case at bar, Plaintiffs claim they failed to notice several express terms, some of which appear on the first pages of the Policy. These provisions should have immediately alerted Plaintiffs that the terms of the insurance contract were materially different from their understanding, *712 which was contrary to longstanding insurance industry practice. Plaintiffs argument flatly contradicts the factual record, since Hunton acknowledges he inquired about the "For Life" provision he saw in the Policy. Plaintiffs should have read their Policy more closely, especially after one or more significant deviations from Plaintiffs' understanding were discovered. This case is distinct from Hill also because there is no evidence that Guardian or Friedman acted in bad faith or willfully to deceive Plaintiffs. Thus, Plaintiffs' arguments for reformation fail as a matter of law.
V. PLAINTIFFS' MOTION FOR LEAVE TO AMEND THE COMPLAINT
Plaintiffs seek leave to file a Third Amended Complaint. Plaintiffs move to assert additional theories on their contract claim against Guardian and to assert a claim for promissory estoppel. Guardian opposes the motion. This request is not timely. Moreover, Plaintiffs seek to assert claims that are futile.
Rule 15(a) provides that leave to amend pleadings "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a); Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607-08 (5th Cir.1998). However, leave to amend is by no means automatic, and the decision to grant or deny leave to amend "lies within the sound discretion of the district court." Parish v. Frazier, 195 F.3d 761 (5th Cir.1999); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993); Little v. Liquid Air Corp., 952 F.2d 841, 845-46 (5th Cir.1992), aff'd en banc, 37 F.3d 1069, 1073 n. 8 (5th Cir.1994). In deciding whether to grant leave to file an amended pleading, the district court "may consider such factors as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment." Wimm, 3 F.3d at 139 (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)) (leave to amend denied because of bad faith and dilatory motive). However, if the district court lacks a "substantial reason" to deny leave, its discretion is not broad enough to permit denial. Wimm, 3 F.3d at 139.
Plaintiffs have unduly delayed in requesting this amendment. This motion was filed three months after the pleadings amendment deadline, months after Guardians Motion to Dismiss was filed, and weeks after that motion was converted to a summary judgment motion.
The matters Plaintiffs seek to add were (or should have been) known to them years ago. In fact, Plaintiffs seek to add new legal theories they could have asserted at the outset of this case. This Court set June 29, 2001 as the deadline to amend pleadings. See Amended Docket Control Order signed September 28, 2001 [Doc. # 24]. The time for amending pleadings has long passed and Plaintiffs provide no probative reason for their delay.[45]
In any event, Plaintiffs' proposed claims are futile. The additional contract theories are claims for ambiguity, reformation, and modification of the Policy. The parties have extensively briefed these issues as part their submissions related to Defendant's Motion and the Court has ruled on each of them. Accordingly, Plaintiffs' motion for leave to amend their complaint to include the new contract theories of ambiguity, reformation, and modification of the Policy is denied.
*713 Plaintiffs' assertion of a promissory estoppel claim is similarly futile.[46] Promissory estoppel is a "cause of action available to a promisee who has acted to his detriment in reasonable reliance on an otherwise unenforceable promise." Ford v. City State Bank of Palacios, 44 S.W.3d 121, 140 (Tex.App.-Corpus Christi 2001). In Texas, the doctrine of promissory estoppel has four elements: (i) a promise; (ii) foreseeability of reliance thereon by the promisor; (iii) substantial reliance by the promisee to his detriment; and (iv) a definite finding that injustice can be avoided only by the enforcement of the promise. Zenor v. El Paso Healthcare System., Ltd., 176 F.3d 847, 864 (5th Cir.1999); Clardy Mfg. Co. v. Marine Midland Bus. Loans, Inc. 88 F.3d 347, 360 (5th Cir.1996); City of Beaumont v. Excavators & Constructors, Inc. 870 S.W.2d 123, 136-37 (Tex. App.-Beaumont 1993, writ denied). Construing the record in the light most favorable to Plaintiffs, the Court assumes for the purpose of the pending motions that the first three elements of promissory estoppel are satisfied. First, the Court identifies the relevant promises as Friedman's alleged statement that Plaintiffs would have to pay only the premiums listed in the Illustrations and that the Illustrations were part of the contract for insurance. Second, the Court assumes that Friedman could foresee that Plaintiffs would rely on his representations because he knew that Plaintiffs' primary concern was to obtain life insurance that would require fixed premium payments for a limited number of years.[47] Finally, based upon Hunton's affidavits, the Court assumes that Plaintiffs substantially relied upon Friedman's representations when deciding to purchase the Policy.
Nevertheless, the record does not support a finding that injustice could be avoided only by enforcing the promise. *714 To satisfy the fourth element of promissory estoppel, a promisee must show "reasonable or justified reliance on the conduct or statement of the [promisor]." Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 142 (Tex.App.-Houston [14th Dist.] 1999, pet. denied); Traco, Inc. v. Arrow Glass Co., 814 S.W.2d 186, 190-91 (Tex.App.-San Antonio 1991, writ denied). "[T]he doctrine of estoppel is intended to promote justice, and, therefore, the reliance of the party asserting it must have been in good faith." Traco, Inc., 814 S.W.2d at 191 (internal quotations omitted). Plaintiffs have adduced no evidence to show that their reliance on Friedman's statements was reasonable. The Fifth Circuit examines the context of the promise to determine the reasonableness of reliance.[48] In this case, the express terms of the Policy and Application establish that the terms of the insurance contract are exclusively limited to those printed in those documents.[49] The Policy and Application further state that their terms may not be changed orally by Friedman. Finally, there is nothing about the Illustrations per se that should have induced Plaintiffs to reasonably believe that it was a guaranteed premium payment plan.[50]
The Court also concludes that application of the doctrine of promissory estoppel to this case would be inconsistent with the doctrine's underlying policy concerns. Texas courts have held consistently that the promissory estoppel doctrine is "defensive in nature and operates to prevent the loss of an existing right. It does not operate to create liability where it does not otherwise exist." Excavators & Constructors, Inc., 870 S.W.2d at 137; see also Robbins v. Payne, 55 S.W.3d 740, at 747 (Tex.App.-Amarillo 2001). Offensive use of the doctrineas an affirmative cause of actionis disfavored by Texas courts. Excavators & Constructors, 870 S.W.2d at 137. Typically, the doctrine may be used offensively "[w]here the promisee has failed to bind the promisor to a legally sufficient contract, but where the promisee has acted in reliance upon a promise to his detriment." Wheeler v. White, 398 S.W.2d 93, 97 (Tex.1965).[51]
In this case, in contrast, there is a valid contract for life insurance that unambiguously states that Plaintiffs are responsible for premium payments "For Life." Essentially, Plaintiffs' assertion of promissory estoppel is an attempt to use parol evidence to modify the terms of an unambiguous contract.[52] This Court concludes that *715 Plaintiffs' theory of promissory estoppel undermines longstanding policies to enforce insurance contracts as they are written. Thus, Plaintiffs' attempt to amend their Complaint to include a promissory estoppel claim is futile, and Plaintiffs' motion for leave to amend is rejected.
VI. CONCLUSION
Prior to the initiation of this suit, the statute of limitations expired on all claims asserted by Plaintiffs in their Second Amended Complaint. Furthermore, Plaintiffs' contract claims fail as a matter of law. Because the Court grants Defendant's Motion, it does not reach Defendant's other arguments in support of its request for summary judgment. The Court also denies Plaintiffs' Motion for Leave to Amend their Complaint as untimely and futile. Accordingly, it is therefore
ORDERED that Defendant the Guardian Life Insurance Company of America's Motion to Dismiss Plaintiffs' Second Amended Complaint [Doc. # 14] is GRANTED. It is further
ORDERED that Plaintiffs' Motion for Leave to Amend Their Complaint [Doc. # 33] is DENIED.
NOTES
[1] See Plaintiffs' Response to Defendant's Motion to Dismiss [Doc. # 18] ("Response"); Defendant the Guardian Life Insurance Company of American's Reply Memorandum to Plaintiffs' Response to Guardian's Motion to Dismiss [Doc # 20] ("Reply").
[2] See Defendant the Guardian Life Insurance Company of America's Supplemental Submission Pursuant to this Court's Order Dated September 19, 2001 [Doc. #25] ("Defendant's Supplement"); Affidavit of Karen C. Ciotti in Support of Guardian's Supplemental Submission [Doc. # 26] ("Ciotti Aff."); Plaintiffs' Surreply in Support of their Response to Guardian's Motion to Dismiss [Doc. # 27]; Defendant the Guardian Life Insurance Company of America's Reply Memorandum in Further Support of its Motion for Summary Judgment [Doc. # 30]; Plaintiff's Response to Guardian's Motion for Summary Judgment and Supplemental Submission [Doc. #31] ("Plaintiffs' Supplement").
[3] The Court requested each party to submit an "exemplar" of the life insurance policy at issue in the case. The Court also allowed parties to submit short rebuttals to points raised during oral argument. Plaintiffs submitted the original policy issued to them. Plaintiffs did not file this submission with the Court Clerk, but later filed an affidavit of Richard O. Hunton that attests to the policy's authenticity. Affidavit of Richard O. Hunton, October 18, 2001, at 1 (Exhibit A to Plaintiffs' Supplemental Response to Guardian's Motion for Summary Judgment Following October 12th Hearing [Doc. #37]) ("Oct. 18, 2001 Hunton Aff."). Defendants submitted an exemplar of the insurance policy. See Defendants' Letter in Response to the Court's Request for Certain Information [Doc. # 36]. Plaintiffs also submitted additional materials to the Court. See Plaintiffs' Supplemental Response to Guardian's Motion for Summary Judgment Following October 12th Hearing [Doc. # 37] ("Plaintiffs' Supplemental Response"). Defendant objects to this last submission by Plaintiffs, and requests an opportunity to respond. See Letter from Karea C. Ciotti to Judge Nancy F. Atlas, October 22, 2001 [No Doc. #]. Because the Court grants Defendant's Motion and because of the already voluminous record, the Court denies Defendant's request to respond.
[4] The Trustee was to be the owner and beneficiary of the Policy.
[5] The Plaintiffs submitted the original Policy (Policy No. 3277486) pursuant to a request made by the Court during the October 12, 2001 oral argument. Plaintiffs did not file this Policy with the Court Clerk. However, Hunton affirms that the document submitted "is the original policy provided to me by Guardian and Friedman." Oct. 18, 2001 Hunton Aff., at 1. Hunton further states: "Admittedly, the Policy has been taken apart on numerous occasions so that copies could be made of the document. Nonetheless, I believe that I have maintained the Policy in the same manner as it was presented to me by Guardian in 1992." Id. at 1-2.
[6] In the section entitled "Dividends" under the sub-heading "Paid-up Option," the Policy states:
The policy's cash value, including the cash value of any dividend addition and dividends left at interest, may be used to make the policy paid-up. Guardian will so apply the cash value if it equals the net single premium at the attained age for a paid-up policy in the same face amount as this policy. This option may be exercised by written request. Any policy loans will remain outstanding.
Policy, at 6.
[7] The Application is expressly incorporated within the Policy. Application, at 4 ("[T]his Application ... shall form a part of any Policy issued."); Policy, at 11 ("The entire contract consists of this policy and the attached application.").
[8] The schedule pages are marked at the top "page 1 of 6" and "page 2 of 6," and have been inserted at the end of the Policy. The "premium schedule" is titled "Guardian/GIAC Lifeplan Illustrations" ("Illustrations").
[9] Friedman's testimony also contradicted this contention. Friedman testified that he informed Hunton during the negotiations regarding the Policy that the Illustrations were not guaranteed and were not part of the Policy, and that a decrease in dividend payments could extend the years that the Trust would have to pay premiums. Friedman Dep., at 68-71. Nevertheless, Friedman acknowledges that he did not tell Hunton that a decrease in dividend payments could require that the Trust pay premiums for life. Friedman Dep., at 71-72. Friedman also testified that he assured Hunton that the premium payments would vanish because of Guardian's dividend stabilization fund. Id.
[10] Hunton alleges that he relied on the advice of an accountant, Lawrence C. Bower, when deciding to purchase the Policy. Oct. 8, 2001 Hunton Aff., at 1-2. Hunton also alleges that he relied on the advice of Friedman, the Guardian agent who sold the Policy to Hunton. Id.
[11] Ciotti, a lawyer for Guardian, affirms that Friedman produced these Statements to Guardian in the course of this litigation. Ciotti Aff., at 2. The Statements have been Bates numbered by counsel as "Friedman 000016-000020," and will be referred to in this Memorandum and Order as "Statements, at 16-20." It is clear that Friedman received the Statements, which are marked "Agency Copy." Statements, at 16, 19, 20. For example, the language in the Statements addresses the owner of the Policy: "The Annual Benefit Statement gives you an important summary of your policy's current cash value and total death benefit protection." Id. at 16 (emphasis added).
The Statements contained information which, if properly reviewed and compared to the information contained in the Illustrations, would have informed Plaintiffs that the Policy was not performing as well as projected in the Illustrations. For example, in February 1996, at the end of the fourth year under the Policy, the net cash value of the Policy as reported by the Statements was $183,438.33 while the net cash value projected by the Illustrations was $191,441. Statements, at 19; Illustrations, at 1 of 6. Also in 1996, the current dividends paid to the Policy were reported to be $6,830.30 in the Statements but were projected to be $8,907 in the Illustrations. Statements, at 19; Illustrations, at 1 of 6. Plaintiffs do not expressly dispute receiving the Statements. Instead, Hunton contends that "Guardian did not provide or otherwise offer any information which would lead [Plaintiffs] to believe that the Trust would owe any premiums other than those agreed to in the Premium Payment Schedule." Oct. 8, 2001 Hunton Aff., at 3.
Guardian also contends that Friedman informed Plaintiffs on several occasions during 1994-1996 that the Policy was not performing according to the Illustrations. Friedman Dep., at 75-78, 103-110, 129-130. Furthermore, Friedman testified that he provided Hunton with updated illustrations that indicated that additional premiums would have to be paid beyond the originally projected vanish date. Id. The Court does not rely in its analysis on these contested matters.
[12] Guardian claimed that Friedman had been fraudulently joined as a defendant to defeat diversity jurisdiction. Plaintiffs allege that they are both Texas citizens. Friedman is also a Texas citizen. Guardian is a New York corporation, with New York City as its principal place of business.
[13] Plaintiffs have moved for leave to amend their complaint to add additional contract claims and a separate claim for promissory estoppel. These claims are discussed in the section of this Memorandum and Order, at pages 42-48
[14] Under texas law, the statute of limitations for breach of contract claims is four years. tex. civ. prac & rem. code § 16.004(a)(3) (Vernon Supp.2001); Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858, 869 (Tex.App.-San Antonio 1997, no writ). The statute of limitations for fraud is also four years. TEX. CIV. PRAC & REM. Code § 16.004(a)(4) (Vernon Supp.2001); Williams v. Khalaf. 802 S.W.2d 651, 656-57 (Tex. 1990); see Martinez Tapia v. Chase Manhattan Bank, N.A., 149 F.3d 404, 410-11 (5th Cir. 1998). Plaintiffs' other claims all have two year limitations periods. See TEX. Bus. & COM. CODE § 17.565 (Vernon 1987) (two year period for DTPA claims); TEX. INS. CODE art. 21.21, § 16(d) (Vernon Supp.2001) (two year period for Insurance Code claims); Kansa Reins. Co., Ltd. v. Congressional Mortgage Corp., 20 F.3d 1362, 1369 (5th Cir.1994) (two year period for negligent misrepresentation).
[15] Plaintiffs' positions vary in their submissions to the Court. At some points, Plaintiffs argue that premium payments were tied to dividends and that dividends were guaranteed as indicated by the Illustrations because of Guardian's "dividend stabilization fund." Oct. 18, 2001 Hunton Aff., at 2 ("Guardian explained that the Premium Schedule [in the Illustrations] would be met because Guardian enjoyed the benefits of the Dividend Stabilization Fund, which would compensate for or supplement any potential fluctuations in dividends, and in that way, the Dividend Stabilization Fund ensured that the Premium Schedule would be met."). At other points, Plaintiffs argue simply that premium payments made according to the Illustrations were sufficient to pay for the insurance for the remainder of Hunton's life. Id. ("Guardian [represented] that the [Illustrations] included in the policy wallet controlled and governed the payment of premiums."). The distinction between these arguments are not material because, as discussed below, both versions of Plaintiffs' arguments are flatly contradicted by the documents relating to the Policy that Plaintiffs completed and received. For instance, as to Plaintiffs' first version, Plaintiffs indicated on the Application that they intended for dividends to be used to purchase "One year term insurance not to exceed Target Face Amount of $ 905,450." Application, at 2. Plaintiffs did not choose to apply the dividend payments to premiums, which was another option on the Application form. Id. (the option stated: "Vanish Premium-available only if a PUA rider is requested. Premiums to be vanished at the end of the first policy year by use of PUA rider additions and future dividends."). All subsequent Annual Statements submitted to the Court reveal that dividends were being applied to the purchase of one year term insurance, not toward premium payments on the underlying $1 million Policy. Statements, at 18-20 ("Your dividend option is: one year term insurance with target face amount.").
[16] There is some confusion among courts as to whether the discovery rule and the fraudulent concealment doctrine (i) toll the limitation period after the claim has accrued or (ii) delay the accrual of the claim. Compare S.V. v. R.V., 933 S.W.2d 1, 6 (Tex.1996), and Computer Assoc. v. Altai, 918 S.W.2d 453, 455-56 (cause of action for fraud does not accrue until the fraud is discovered or should have been discovered by plaintiff), with Velsicol Chem. Corp. v. Winograd, 956 S.W.2d 529, 531 (Tex.1997) ("As with the discovery rule, [the fraudulent concealment] doctrine tolls the statute until the fraud is discovered or could have been discovered with reasonable diligence."), and Prieto v. John Hancock Mutual Life Ins. Co., 132 F.Supp.2d 506, 513 (N.D.Tex.2001) (treating the fraudulent concealment doctrine and the discovery rule as tolling doctrines in vanishing premium life insurance policy case). One court has noted this confusion and suggests that, as a practical matter, the distinction does not alter the burden on plaintiff to meet the requirements of the doctrine; and may not alter the outcome. Porter v. Charter Medical Corporation, 957 F.Supp. 1427, 1434 n. 4 (N.D.Tex.1997).
[17] Texas courts generally require that plaintiff must produce "direct, physical evidence" to support the "facts upon which liability [is] asserted." S.V. v. R.V., 933 S.W.2d at 7. An often-cited example of an injury that is "objectively verifiable" is, in the context of a medical malpractice suit, a sponge accidentally left in a patient's body. Id.; Computer Assoc., 918 S.W.2d at 457-58. One court has interpreted the "objective verifiability" prong as requiring a higher evidentiary standard that the ordinary preponderance of the evidence standard. Prieto, 132 F.Supp.2d at 514.
[18] Neither Plaintiffs nor Guardian explicitly mentions fraudulent concealment, but nearly all the cases that address the discovery rule also discuss the fraudulent concealment doctrine. Plaintiffs cannot meet the requirements of either doctrine as explained below in the text of this decision.
[19] Plaintiffs also contend that the discovery rule applies to toll the statute of limitations because they did not learn that the Policy was not performing as projected in the Illustrations until they inquired in December 1997. Plaintiffs deny that Guardian provided them with any information before 1997 that should be deemed sufficient to have alerted them that they might have to pay premiums beyond the vanish date in the Illustrations. Examining the record in the light most favorable to Plaintiffs and disregarding any controverted evidence produced by Guardian, the Court concludes that Plaintiffs have failed to meet their burden under the discovery rule. Plaintiffs have not produced evidence that the misrepresentation was "inherently undiscoverable" or that Plaintiffs exercised "reasonable diligence." First, the language of the Policy and the Illustrations themselves placed Plaintiffs on notice that the premium payment schedule in the Illustrations was not guaranteed. Second, Plaintiffs were free at any time to contact Guardian directly regarding the status of the Policy before 1997. Last, and most importantly, Guardian has submitted copies of the Statements produced in discovery by Hunton that reveal Plaintiff Pace was sent annual status reports on the dividends being earned by the Policy and that showed Guardian's dividends were below the projections in the Illustrations. Plaintiffs cannot rely on the Illustrations as creating a binding payment schedule but then ignore the rest of the data on the same page that lists the dividend projections. Once the actual dividends as listed in annual status reports deviated from the projected dividends in the Illustrations, and the net value of the Policy dropped below projections on the same spreadsheet, Guardian's alleged misrepresentations should have been apparent to Plaintiffs.
[20] The Application states "that no information acquired by any Representative of [Guardian] shall bind [Guardian] unless it shall have been set out in writing in this Application." Application, at 4. The Application further provides that "only the President, a Vice President, or a Secretary of [Guardian] has the authority to bind [Guardian] by any promise or statement or to waive or modify any of [Guardian's] requirements." Id. The Policy itself contains a similar provision:
Only the President, a Vice President, or the Secretary of Guardian may make or modify this policy. No agent has the authority to change this policy or to waive any ofGuardian's requirements; no agent maywaive an answer to any question in the application. Guardian will not be bound by any promise or statement made by any agent or other person except as stated above.
Policy, at 8. Plaintiffs make no contention that Friedman was an officer of Guardian.
[21] Plaintiffs contend that "nothing in the Policy ties dividend performance to the premiums due under the Policy." Plaintiffs' Supplemental Response, at 2. Plaintiffs summarize the relevant issue as whether Guardian guaranteed that the premiums would be paid according to the Illustrations, regardless of dividend performance. Id. Plaintiffs' contention fails. Plaintiffs' unsupported conclusory allegations fly in the face of the written record. These types of self-serving and conclusory allegations are insufficient to raise a genuine question of fact in response to a summary judgment motion. The Policy terms clearly tie dividend performance to premium payments. The Policy states;
The policy's cash value, including the cash value of any dividend additions and dividends left at interest, may be used to make the policy paid-up. Guardian will so apply the cash value if it equals the net single premium at the attained age for a paid-up policy in the same face amount as the policy.
Policy, at 6. The Policy also states that premiums are due "For Life." The cover sheet to the policy contains the statements "[premiums payable during insured's lifetime" and
[22] The Policy states that the "entire contract consists of this policy and the attached application." Policy, at 8. The Application makes reference to "illustrations of benefits, including death benefits and cash values." Application, at 3. However, the Application expressly limits the contract to the terms "set out in writing in this Application," the Policy itself, and any required supplement to the Application. Id. at 4. Neither party alleges that the Illustrations are a required "supplement" to the Application. It is noted that attached to the Application is a one-page sheet titled "Amendment to Application," which contains "statements substituted for the answers to the corresponding questions in the application," but makes no reference to the Illustrations or to a guaranteed vanish date for premium payments. Furthermore, unlike the Illustrations, the amendment is stamped "File in Application." Thus, Plaintiffs have not presented admissible evidence to create a genuine fact issue that the Illustrations are part of the Policy or the Application, and thereby became part of the parties' contract.
[23] Plaintiffs' payment history is not totally consistent with this representation. See infra note 31.
[24] Plaintiffs also assert that they relied on Friedman's representations regarding the "Dividend Stabilization Fund" when purchasing the Policy. Plaintiffs claim that Friedman informed Hunton that Guardian would use the "Dividend Stabilization Fund" to ensure that Hunton would not have to pay premiums beyond the vanish date in the Illustrations. Oct. 18, 2001 Hunton Aff., at 2. Plaintiffs' reliance is unreasonable and is contrary to the terms of Policy and Application. Neither the Policy nor Application mentions the "Dividend Stabilization Fund." Accordingly, Plaintiffs could not reasonably consider Friedman's representations regarding the "Dividend Stabilization Fund" to be part of the insurance contract. The absence from the documents of the guarantee that Plaintiffs impute to Friedman renders fraud easily discoverable. Moreover, Plaintiffs lacked diligence in failing to obtain written explanation of this fund from Guardian if they were relying so heavily on it to benefit them.
[25] The second requirement of the discovery rule, that the injury must be "objectively verifiable," also is not satisfied on this record. Plaintiffs have not alleged in their Complaint or produced any evidence that they have "physical or other evidence, such as an objective eyewitness account, to corroborate the existence of the claim." Coastal Plains, 179 F.3d at 215. As United States District Judge Lindsay concluded, in a case involving a similar vanishing premium policy, documentary evidence such as the Policy and the Illustrations, coupled with the plaintiff's self-serving allegations are insufficient to meet the "objectively verifiable" requirement. Prieto, 132 F.Supp.2d at 514-15.
[26] Plaintiffs cite Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990); Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 515 (Tex. 1998).
[27] Plaintiffs also contend that the cause of action for their claims did not accrue because they did not suffer a "legal injury" until they began paying premiums beyond the vanish date. In support of their argument Plaintiffs rely on a New York State Court of Appeals case involving a similar action against Guardian over a vanishing premium policy. The New York State Court of Appeals held that the plaintiff's injuries "occurred when they were first called upon to pay additional premiums beyond the date by which they were led to believe that policy dividends would be sufficient to cover all premium costs." Gaidon v. Guardian Life Ins. Co., 96 N.Y.2d 201, 727 N.Y.S.2d 30, 750 N.E.2d 1078, 1083 (N.Y. 2001). This decision is authoritative only to the extent that this Court finds it to be persuasive. The Court notes that the New York Court did not apply Texas law to reach its result. The decision in Gaidon also is contrary to established precedent of the Fifth Circuit. In Martinez Tapia v. Chase Manhattan Bank, 149 F.3d 404, 409 (5th Cir. 1998), the Fifth Circuit addressed the accrual of a cause of action for misrepresentations related to the purchase of a financial instrument. The Court of Appeals held that if the financial instrument contains terms that are clearly contrary to the alleged misrepresentation, the cause of action accrues at the time the instrument is purchased. Id. That court reasoned further that "an investor who seeks to blame his investment loss on fraud or misrepresentation must himself exercise due diligence to learn the nature of his investment and the associated risks." Id.; see also Prieto, 132 F.Supp.2d at 514.
The Court also is unpersuaded by Plaintiffs' characterization of their legal injury. Plaintiffs, under their own theory, suffered a legal injury when they purchased a policy they otherwise would not have purchased but for Guardians misrepresentations.
[28] Traditionally, Texas courts have applied the discovery rule to negligence actions only in extremely rare and unusual circumstances. E.g., Gaddis v. Smith, 417 S.W.2d 577, 580-81 (Tex. 1967) (applying discovery rule in medical malpractice claim in which surgeon left a foreign object in patient's body). The Fifth Circuit held, based on the weight of Texas authority at the time the issue was presented in 1994, that the discovery rule does not apply to cases of negligent misrepresentation. Kansa Reins. Co., Ltd. v. Congressional Mortgage Corp., 20 F.3d 1362, 1372-73 (5th Cir.1994).
[29] The Court is aware of recent Texas intermediate appellate court decisions that apply the discovery rule to negligent misrepresentation actions. Matthiessen v. Schaefer, 27 S.W.3d 25, 31 (Tex.App.-San Antonio 2000, pet. denied); Hendricks v. Thornton, 973 S.W.2d 348, 365 (Tex.App.-Beamont 1998, pet. denied).
[30] Moreover, these alleged violations were not inherently undiscoverable.
[31] The February 1996 Statement listed the dividend paid as $6,830.30 while the Illustrations projected the dividends to be $8,907. Statements, at 19; Illustrations, at 1 of 6. Also, the net cash value on the 1996 Statement was $183,438.33, not $191,441, as projected in the Illustrations. Id.
The Court must accept as true Hunton's averment that he did not receive any "annual benefit statements." However, it is noted that Plaintiffs have not submitted any affidavit or evidence from Benny Pace, the owner and addressee for the insured listed on the 1993, 1996 and 1997 Statements in the record. Moreover, Plaintiffs paid monthly the exact amount reflected on Guardians Annual Statements ($2,809.31), although that figure does not appear on the Illustrations or the Policy. Plaintiffs' payments indicate that one or more of the Plaintiffs may have seen the Statements, if not documents similar to them.
[32] See supra note 31.
[33] The Fifth Circuit has regularly held that a "summary assertion made in an affidavit is simply not enough evidence to raise a genuine issue of material fact." Melton v. Teachers Ins. & Annuity Assoc. of America, 114 F.3d 557, 559 (5th Cir. 1997); see also Hibernia Nat'l Bank v. Carner, 997 F.2d 94, 98 (5th Cir. 1993) ("[Affidavits setting forth ultimate or conclusory facts are insufficient to either support or defeat a motion for summary judgment") (internal quotations omitted); Lechuga v. Southern Pacific Transp. Co., 949 F.2d 790, 798 (5th Cir. 1992) ("Conclusory statements in an affidavit do not provide facts that will counter summary judgment evidence, and testimony based on conjecture alone is insufficient to raise an issue to defeat summary judgment.").
[34] Indeed, by Plaintiffs' own admission, they did not inquire as to the status of the Policy until 1997, five years after it was issued.
[35] It Plaintiffs did not understand the mechanics of the Policy and Plaintiffs' premium obligations, Plaintiffs should have obtained further information in writing.
[36] The Policy contains language that indicates that dividends, if sufficient, may be used to pay future premiums. Policy, at 6. However, nothing in the Policy guarantees that dividends will be paid at all or in sufficient sums to cover the premiums. Id. To the contrary, the Policy states in several places that dividends are "payable if earned" and that dividends will "reflect Guardians mortality, expense, and investment experience." Id. at 1, 6. See also id. at 4AQ ("The values shown are computed on the assumption that all premiums to the end of the policy years shown have been paid, that there are no loans, and that dividends are sufficient to cover the cost of one year term insurance.")
[37] Plaintiffs offer Friedman's oral representations and the Illustrations as evidence that the Policy's terms are ambiguous. Oct. 8, 2001 Hunton Aff., at 2-3. Plaintiffs contend that Friedman reviewed the Policy with Hunton upon its delivery to Hunton. Id. During this conversation, Friedman told Hunton that the premiums would not be due "For Life" as stated in the Policy, but would be due under the terms of the Illustrations. Id.
[38] As discussed in note 24 supra, the representations made by Friedman regarding the "Dividend Stabilization Fund" are not part of the insurance contract. Nowhere does the Policy or the Application mention the "Dividend Stabilization Fund." Thus, the Court will not consider this evidence when analyzing Plaintiffs' breach of contract claims.
[39] In 1998, Guardian reported to Plaintiffs that the Policy has not performed as well as had been projected and that Plaintiffs would be required to make dividend payments for the remainder of Hunton's life.
[40] Plaintiffs have introduced Guardians Annual Report for 2000 and an Internet printout of the S & P 500 and Dow Jones Industrial Averages from February 1992 to June 1999. See Exhibits C and D to Plaintiffs' Supplemental Response. Based on these materials, Plaintiffs suggest that Guardian has had a positive investment experience and thus should have paid dividends on the Policy. This contention fails. The decision of a corporation to declare dividends is complex, based on many factors, and subject to business judgment the courts generally do not second-guess. In any event, the Dow Jones and S & P 500 indices are not probative of a single company's (Guardians) financial performance. Plaintiffs have submitted nothing to create a triable issue of fact that Guardian acted in bad faith in determining that its
[41] The Application, which is part of the Policy, states: "Upon request we will furnish illustrations of benefits, including death benefits and cash values, for (a) the Variable Life Insurance Policy applied for, and (b) a fixed benefit life insurance policy for the same premium." Application, at 3. However, the Application also states that "[i]t is understood that under the Variable Life Insurance Policy the amount of ... the cash value may increase or decrease based on the investment experience of the separate account and are not guaranteed." Id. These statements do not expressly incorporate the Illustrations into the Policy. Moreover, if anything, this offer by Guardian emphasizes that the company's investment experience may vary from any illustrations it may issue, and dividends cannot be guaranteed.
[42] Under the terms of the Policy, Plaintiffs (through Hunton's Trust) were required to pay a total of $129,830 in the first year of the Policy, consisting of a premium payment of $26,730.00 for the Basic Policy and a premium payment of $6,000.00 for a "Paid-Up Insurance Rider for a One-Year Term." Policy, at 3. Under the column titled "Policy Years Payable" next to each of these items is the statement "For Life." Id. Plaintiffs also bought a "Single Purchase Paid-Up Additions Rider" which required a single payment of $97,100.00. Id. Thus, under the terms of the Policy, Plaintiffs obligated the Trust to pay annually $32,730.00 (the sum of $26,730.00 and $6,000.00) for life, after the initial additional payment of $97,100.00. Id.
[43] The parties in Hill agreed to a logging contract for eighteen months. Hill, 973 S.W.2d at 774-75. When the final logging deed was drafted by the defendant, however, the year that logging was to end was changed from 1995 to 1996, which extended the term of the contract to thirty months. Id. The plaintiff in Hill read and signed this deed without noticing the mistake. Id. When the mistake was discovered, the plaintiff brought suit to have the contract reformed. Id. A jury returned a verdict for the plaintiff, which was overturned by the trial court. Id. The Court of Appeals reversed the trial court's directed verdict and granted judgment in favor of the plaintiff. Id. at 776. The Court of Appeals reasoned that the defendant had originally agreed to the eighteen-month contract and knew of the error in the deed that it had drafted. Id. at 775. The Court of Appeals further found that the defendant did not reveal this error to the plaintiff, and that this conduct was inequitable. Id.
The Texarkana Court in Hamberlin came to a similar result. In Hamberlin, a purchaser and a bank agreed on the sale of land that the bank had acquired after a foreclosure. The bank drafted a deed that accidentally included additional tracts of land. The purchaser was aware of this mistake but concealed it from the bank's officers. The bank learned of the mistake and requested that a court reform the deed to reflect the parties agreement. The trial court did reform the agreement to delete the additional tracts of land, and the Court of Appeals affirmed this decision. The Court of Appeals found that the purchaser's acceptance of erroneous deed was willful and in bad faith and that it would be inequitable to allow the purchaser to keep the additional tracts of land.
[44] Plaintiffs allege that Friedman used copies of the Illustrations in his promotion of the Policy to Plaintiffs. However, as detailed in earlier sections of this Memorandum, the Application that Plaintiffs signed for the Policy clearly stated that Friedman did not have the authority to alter any terms of the Policy or Application. Application, at 3. Furthermore, the Application stated that the terms of the Policy were limited to those contained in the Application and the Policy form. Id. at 4. Finally, the Application stated that "illustrations" were available at Plaintiffs' request but that cash values for Plaintiffs' policy were not guaranteed. Id. at 3.
Furthermore, nothing in the Policy suggests that the Illustrations should be construed as part of the Policy per se or the parties' agreement. Nowhere does the Policy make reference to the Illustrations. To the contrary, the Policy explicitly states that premiums would be due "For Life." Policy, at 3.
[45] Further, Plaintiffs' requested amendment evidences a "repeated failure to cure deficiencies by amendments previously allowed." This is Plaintiffs' fourth attempt to plead viable claims.
[46] It is likely that Plaintiffs' claim for promissory estoppel is barred by the statute of limitations. In Texas, the statute of limitations for promissory estoppel claims is four years. TEX. Civ. PRAC & REM. CODE § 16.051 (1997); St. Julian v. Trustees of the Agreement of Trust for Maritime Assoc.-I.L.A. Pension, 5 F.Supp.2d 469, 473 (S.D.Tex. 1998). This Court is not aware of any published Texas state court decision or federal court decision applying Texas law that explains when a cause of action for promissory estoppel accrues. Under the general Texas "legal injury" rule, however, the latest a cause of action for promissory estoppel could accrue is when the promisor breaches his promise. Plaintiffs assert that Guardian promised that the Illustration Complaint, at 10 (attached to Plaintiffs' Motion [Doc. # 33]). Plaintiffs further contend that Guardian breached this promise when it required Plaintiffs to pay premiums after the vanish date in the Illustrations. Plaintiffs take the premium payment schedule out of the context of the sheet on which it is presented. If the Illustrations are deemed part of the insurance contract, Guardians failure to perform according to any of the terms in the Illustrations would breach the promise. Thus, Guardian would have breached the promise when it failed to make dividend payments as specified in the Illustrations or when the Policy's net cash value fell below the net cash value projected in the Illustrations. As discussed above, these events occurred more than four years before Plaintiffs brought the present lawsuit. As also discussed above, Plaintiffs have failed to raise a triable issue of fact that the discovery rule should apply to toll the statute of limitations in this case. Accordingly, the Court notes that it is likely that Plaintiffs' proposed promissory estoppel claim is barred by the statute of limitations.
[47] It is unclear whether, as a matter of law, Guardian could be said to have foreseen Plaintiffs' reliance on the representations of its agent Friedman. However, the Court assumes so for the purposes of the pending motions, based upon Hunton's conclusory assertion in his affidavit that Guardian directed Friedman to make the alleged misrepresentations. Oct. 8, 2001 Hunton Aff., at 2.
[48] See, e.g., Zenor, 176 F.3d at 864-65 (examining the circumstances of "atwill" employment to determine whether plaintiff reasonably relied on employer's promise of continued employment, and holding that the plaintiff's reliance was not reasonable).
[49] As the Court has noted above, the Policy terms clearly indicated that the Illustrations were not part of the Policy, that dividend payments were not guaranteed, and that premium payments were required for the life of the insured.
[50] Everything about the Illustrations should have alerted Plaintiffs to the fact that it was not part of the insurance contract. The document is titled "Illustrations" and not "Premium Payment Schedule." The two pages of the Illustrations on which Plaintiffs rely are paginated "1 of 6" and "2 of 6." The Illustrations make express reference to "attached sheets with important footnotes." The additional pages and attached sheets are not in the record before the Court, and there is no indication that Plaintiffs ever requested to see those pages or notes.
[51] See, e.g., Zenor, 176 F.3d at 851 (discussing promissory estoppel doctrine in context of atwill employment relationship where employer expressly disclaimed any contractual obligations between employer and employee); Traco, Inc., 814 S.W.2d at 189 (applying promissory estoppel doctrine to construction bid case that did not involve a contract).
[52] The application of promissory estoppel here also would contravene longstanding insurance law that places a premium on the written contract between the parties.
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-04-00601-CV
Vincent Wrencher, Sr., Appellant
v.
Stephanie Wrencher, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. FM306102, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Vincent Wrencher has filed a motion to dismiss the appeal. We grant
the motion and dismiss the appeal. Tex. R. App. P. 42.1(a).
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Puryear and Pemberton
Dismissed on Appellant’s Motion
Filed: March 4, 2005
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OSCN Found Document:SHARP v. WHITWORTH
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SHARP v. WHITWORTH2017 OK CIV APP 40Case Number: 115064Decided: 08/04/2017Mandate Issued: 09/05/2017DIVISION IIITHE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION III
Cite as: 2017 OK CIV APP 40, __ P.3d __
NICKOLAS LEE SHARP, Plaintiff/Appellee,
v.
KELLY LYNN WHITWORTH, Defendant/Appellant.
APPEAL FROM THE DISTRICT COURT OF
OKLAHOMA COUNTY, OKLAHOMA
HONORABLE ROGER H. STUART, TRIAL JUDGE
AFFIRMED
James E. Dunn, Scott B. Hawkins, JAMES DUNN & ASSOCIATES, P.L.L.C., Oklahoma City, Oklahoma, for Plaintiff/Appellee,
A. Mark Smiling, Shena E. Burgess, SMILING, SMILING & BURGESS, Tulsa, Oklahoma, for Defendant/Appellant.
Barbara G. Swinton, Judge:
¶1 Defendant/Appellant Kelly Lynn Whitworth (Defendant) appeals the trial court's order granting, in part, Plaintiff/Appellee Nickolas Lee Sharp's (Plaintiff) motion for new trial. Below, the jury found in favor of Plaintiff on liability, but did not award any damages. The trial court ordered a new trial on damages only, but directed the parties to meet and confer regarding their willingness to reach an agreement regarding liability and punitive or exemplary damages, specifically ordering the parties to discuss the possibility of Defendant admitting liability and Plaintiff withdrawing the claim for punitive damages upon retrying the case. Because we find that the trial court did not abuse its discretion in granting a new trial, we affirm.
BACKGROUND
¶2 Plaintiff and Defendant were involved in a motor vehicle collision on September 7, 2012. Plaintiff filed an action in Oklahoma County against Defendant seeking damages for negligence as well as punitive damages. A jury trial was held on March 22, 2016. The evidence and testimony at trial showed that on the date of the collision, Defendant was driving in the slow lane on southbound Interstate 35 in Edmond, Oklahoma. Defendant's speed was a disputed issue at trial. Plaintiff, through his expert witness, John Smith, an accident reconstructionist, opined that Defendant was traveling between 85 and 95 miles per hour. Defendant testified that she was likely traveling around 70 or 75 miles per hour, though she did not know for sure. Defendant did not dispute that she changed lanes, ultimately rear-ending the Plaintiff's vehicle. Plaintiff testified that his vehicle was sent across several lanes of traffic, and eventually hit the concrete barrier, flipping the vehicle on its side.
¶3 Plaintiff testified that he immediately felt pain in his back following the collision. At trial, he described the amount of pain that he felt while he was being treated at the scene. Plaintiff's wife testified that when she received a call from the accident scene, she could hear her husband screaming in pain. As a result of the collision, Plaintiff sustained a fracture of his L1 vertebra. In months following the accident, Plaintiff was treated by a neurosurgeon, and underwent physical therapy for his back. According to records of his neurosurgeon, Plaintiff reached maximum medical improvement, and Plaintiff concluded treatment with the neurosurgeon. Plaintiff testified that although the pain levels in his back had improved since the accident, the pain is still lingering. He also testified that even though he is physically able to do certain activities, he is in pain by the end of the day and could not do all of the things that he wanted to do with his family. Additionally, Plaintiff testified that he was able to work with no accommodations, and could not think of anything that he could not do the day of trial that he could do prior to the collision. Plaintiff stated that he was able to mow and edge the yard, play basketball with his children, and ride four wheelers. However, Plaintiff also testified that his back "feels like it's on fire all the time," and that his back hurts every day.
¶4 Plaintiff and Defendant each presented testimony of medical expert witnesses. Defendant's expert, Dr. Sami Framjee, testified that the Plaintiff "may have some soreness", but nothing else needed to be done at this time and that Plaintiff was healed. He also testified that patients like Plaintiff "will have some aches and pains," and that the effects of his compression fracture are "permanent in nature." Plaintiff's expert, Dr. Jerry Pritchett, testified that Plaintiff may need future medical treatment, but could not testify to this conclusion within a reasonable degree of medical certainty.
¶5 The jury returned a verdict in favor of Plaintiff on his negligence claim, but awarded no damages. The jury also found that there was no reckless endangerment on the part of the Defendant, and therefore, found no punitive damages. After the jury verdict, Plaintiff filed a motion for new trial citing an inadequate damage award, pursuant to 12 O.S. § 651 (4), and that the verdict was not sustained by sufficient evidence or is contrary to law regarding injury permanency and past pain, pursuant to 12 O.S. § 651 (6). The trial court granted Plaintiff's motion in part, ordering a new trial on damages only. The order also directed the parties to meet and confer regarding the possibility of Defendant admitting liability if Plaintiff withdrew his claim for punitive damages. The record indicates that the parties did not meet pursuant to the court's order, and Defendant filed the instant appeal.
STANDARD OF REVIEW
¶6 In Capshaw v. Gulf Insurance Company, 2005 OK 5, ¶ 7, 107 P.3d 595, 600, the Court describes the appellate review for the grant of a motion for new trial:
A motion for new trial is addressed to the sound discretion of the trial court. When a trial court grants a new trial and its decision is appealed, we will indulge every presumption in favor of that decision's correctness. In reviewing a trial court's grant of new trial, the standard of review an appellate court must apply is whether the trial court abused its discretion. Because a trial court's discretion is broad, its ruling will not be disturbed by the reviewing tribunal in the absence of a clear showing of a manifest error or abuse of discretion with respect to a pure, simple and unmixed material question of law.
(Footnotes omitted). "The threshold for upholding the grant of a new trial is much lower than where the motion is overruled." Ledbetter v. Howard, 2012 OK 39, ¶ 9, 276 P.3d 1031, 1034. "Furthermore, where the issues raised necessitate an examination of the entire lower court record, we will examine such record to determine if the trial court, in granting the new trial, abused his discretion, acted arbitrarily, or erred on some unmixed question of law." Strubhart v. Perry Memorial Hosp, Trust Authority, 1995 OK 10, ¶ 17, 903 P.2d 263, 270 (citation omitted). "An abuse of discretion occurs when a decision is based on an erroneous conclusion of law or where there is no rational basis in evidence for the ruling." Spencer v. Oklahoma Gas & Electric Company, 2007 OK 76, ¶ 13, 171 P.3d 890, 895 (emphasis omitted). Finally, where the new trial is granted by the same judge who presided over the trial, "a much stronger showing of error or abuse of discretion is required for this Court to reverse than if a party appeals from a refusal to grant a new trial." Propst v. Alexander, 1995 OK 57, ¶ 8, 898 P.2d 141. However, "if any competent evidence supports the jury verdict, it is an abuse of discretion for the trial court to grant a new trial." Clay v. Choctaw Nation Care Center, LLC, 2009 OK CIV APP 35, ¶ 11, 210 P.3d 855.
ANALYSIS
¶7 Defendant argues that because there was substantial competent evidence to support the jury's verdict, the trial court erred in granting a new trial. Plaintiff argues that the jury verdict was inadequate and inconsistent with regard to past pain and suffering, as well as the permanency of his injuries.
¶8 In granting a new trial on the grounds of inadequate damages, insufficient evidence, or otherwise, a trial court may not substitute its own judgment for that of the jury or act as a "thirteenth juror." Dodson v. Henderson Props., Inc., 1985 OK 71, ¶ 11, 708 P.2d 1064. "[I]n an action for damages, where the evidence is conflicting but the verdict of the jury is sustained by competent evidence, it is an abuse of discretion for the trial court to grant a new trial upon the ground that the verdict of the jury is contrary to the evidence." Wright v. Central Oklahoma Milk Producers Assn., 1973 OK 15, ¶ 39, 509 P.2d 464.
¶9 However, "when liability is established, and there is compelling uncontroverted evidence of damages, a zero damage award is inconsistent." Clay v. Choctaw Nation Care Center, LLC, 2009 OK CIV APP 35, 210 P.3d 855 (emphasis in original). Similarly, "[a] failure to award any damages for pain and suffering where clearly proved, under proper instructions is in effect a finding of no liability." Hallford v. Schumacher, 1958 OK 53, 323 P.2d 989. Under these circumstances, the jury verdict would be inconsistent and invalid. Id. In Burkett v. Moran, 1965 OK 165, 410 P.2d 876, the Supreme Court observed that, "[u]nder the uncontradicted evidence, if defendant was liable to plaintiff at all, plaintiff was entitled to recover damages for past pain and suffering." In support of this finding, the court noted that "[n]o witness for the defense testified that plaintiff had not undergone pain and suffering." Id.
¶10 Defendant asserts that much of the evidence was contradicted, such as the speed that the Defendant was driving, whether Plaintiff would require future medical treatment, whether Plaintiff could perform his job following the accident, and why he changed jobs in the months following the accident. However, these alleged disputes do not address whether Plaintiff sustained damages related to pain and suffering. That Plaintiff sustained an injury caused by the accident, and that he sustained pain following the accident, was uncontroverted by Defendant. Defendant's allegations of dispute appear to be focused on the egregiousness of Defendant's conduct for purposes of punitive damages, and Plaintiff's economic losses. We find that under the uncontroverted evidence, the jury's award of zero damages for pain and suffering is inconsistent with a finding of liability. The trial court did not abuse its discretion in granting Plaintiff a new trial on damages.
¶11 Defendant also asserts that the trial court abused its discretion by "putting the issues of reckless disregard and punitive damages back in front of the jury." Defendant's argument is based on the fact that the trial court ordered the parties to meet and confer regarding their willingness to reach an agreement regarding liability and punitive or exemplary damages. However, the trial court's order does not, as written, put punitive damages back in front of the jury; it only sustains in part Plaintiff's motion for new trial on the issue of damages. We do not find reversible error in the court's suggestive language. A new trial may be granted solely on the issue of damages "where other fact issues are not interwoven and where it is clear that the error does not reach over and affect those issues in which there is no error and the judgment in other respects is free of error." Lierly v. Tidewater Petroleum Corp., 2006 OK 47, ¶ 35, 139 P.3d 897 (citing Hallford v. Schumacher, 1958 OK 53, 323 P.2d 989). The jury was instructed on punitive damages and found that the Defendant did not engage in reckless conduct. The two issues are not interwoven, as one relates to the Defendant's conduct, while the other relates to Plaintiff's sustained damages. A trial on actual damages only would therefore be appropriate.1
¶12 A motion for new trial is left to the sound discretion of the trial court. Because there was uncontroverted evidence that the Plaintiff sustained pain and suffering, the jury's award of zero damages was inconsistent with its finding of liability. The trial court correctly granted a motion for new trial on damages only. We affirm the trial court's order sustaining, in part, Plaintiff's motion for new trial.
¶13 AFFIRMED.
MITCHELL, P.J., and BUETTNER, C.J., concur.
FOOTNOTES
1 Defendant's remaining proposition of error is that the trial court erred by granting the motion for new trial based on evidence presented in the motion that was not presented to the jury at trial. Defendant cites no authority for this proposition. Argument without authority will not be considered on appeal. Okla.Sup.Ct.R. 1.11(k)(1); State ex rel. Dep't of Human Servs. v. Baggett, 1999 OK 68, ¶ 12, 990 P.2d 235.
Citationizer© Summary of Documents Citing This Document
Cite
Name
Level
None Found.
Citationizer: Table of Authority
Cite
Name
Level
Oklahoma Court of Civil Appeals Cases
CiteNameLevel
2009 OK CIV APP 35, 210 P.3d 855, CLAY v. CHOCTAW NATION CARE CENTER, LLCDiscussed at Length
Oklahoma Supreme Court Cases
CiteNameLevel
1958 OK 53, 323 P.2d 989, HALLFORD v. SCHUMACHERDiscussed at Length
1965 OK 165, 410 P.2d 876, BURKETT v. MORANDiscussed
1995 OK 10, 903 P.2d 263, 66 OBJ 583, Strubhart v. Perry Memorial Hosp. Trust AuthorityDiscussed
1995 OK 57, 898 P.2d 141, 66 OBJ 1839, Propst v. AlexanderDiscussed
1973 OK 15, 509 P.2d 464, WRIGHT v. CENTRAL OKLAHOMA MILK PRODUCERS ASS'NDiscussed
2005 OK 5, 107 P.3d 595, CAPSHAW v. GULF INSURANCE COMPANYDiscussed
2006 OK 47, 139 P.3d 897, LIERLY v. TIDEWATER PETROLEUM CORPORATIONDiscussed
2007 OK 76, 171 P.3d 890, SPENCER v. OKLAHOMA GAS & ELECTRIC COMPANYDiscussed
2012 OK 39, 276 P.3d 1031, LEDBETTER v. HOWARDDiscussed
1999 OK 68, 990 P.2d 235, 70 OBJ 2226, State ex. rel. Dept. of Human Services v. BaggettDiscussed
1985 OK 71, 708 P.2d 1064, Dodson v. Henderson Properties, Inc.Discussed
Title 12. Civil Procedure
CiteNameLevel
12 O.S. 651, New Trial - Definition - Causes forDiscussed
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
STATE OF FLORIDA, )
)
Appellant, )
)
v. ) Case No. 2D17-3363
)
CLARENCE LEONARD, )
)
Appellee. )
___________________________________)
Opinion filed June 27, 2018.
Appeal from the Circuit Court for
Hillsborough County; Christopher C.
Sabella, Judge.
Pamela Jo Bondi, Attorney General,
Tallahassee, and Brandon R. Christian,
Assistant Attorney General, Tampa,
for Appellant.
Howard L. Dimmig, II, Public Defender,
and Kevin Briggs, Assistant Public
Defender, Bartow, for Appellee.
PER CURIAM.
Affirmed.
SILBERMAN, BLACK, and ROTHSTEIN-YOUAKIM, JJ., Concur.
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Filed 11/5/14 Burke v. Newegg Enterprises CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
HAFSA BURKE, B251187
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC478327)
v.
NEWEGG ENTERPRISES et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County, Barbara
Ann Meiers, Judge. Affirmed.
Alvin L. Pittman and Christie E. Webb for Plaintiff and Appellant.
Lee Tran & Liang, Steven C. Gonzalez, and Kevin Bringuel for Defendants and
Respondents.
INTRODUCTION
Plaintiff Hafsa Burke appeals from the entry of judgment following the trial
court’s grant of summary judgment in favor of her former employer. The trial court
concluded Burke failed to establish any disputed issue of material fact sufficient to defeat
summary judgment on her claims for retaliation in violation of the Fair Employment and
Housing Act (FEHA) (Gov. Code §12940 et seq.) and wrongful termination in violation
of public policy. Burke also appeals the trial court’s award of sanctions against her and
her counsel for failure to attend a court-ordered mediation. We affirm.
FACTUAL AND PROCEDURAL HISTORY
A. Burke’s Employment and Allegations
Burke was hired by defendants Newegg Enterprises LLC, Newegg, Inc., and
Proforce Temporaries, Inc., dba Olympic Staffing Services (Olympic)1 in July 2011 as a
temporary employee assigned to help conduct an internal benefits audit of Newegg’s
personnel files. She was supervised throughout her employment at Newegg by Maling
Huang, Director of Risk Management, Compensation and Benefits. Huang terminated
Burke for insubordination on January 10, 2012.
Burke filed her complaint on February 3, 2012, alleging causes of action for
retaliation under the FEHA and wrongful termination in violation of public policy. The
gravamen of Burke’s FEHA claim is that she was terminated in retaliation for her
opposition on two occasions to what she “reasonably believed to be race discrimination”
by Huang and Newegg. Burke’s second cause of action for wrongful termination in
violation of public policy mirrors her FEHA retaliation claim and additionally alleges that
Burke was terminated for opposing an instance of insurance fraud that she uncovered
during her employment with Newegg.
1
Newegg Enterprises LLC and Newegg, Inc. (collectively Newegg) do not dispute,
for purposes of this appeal, that Burke was an employee of Newegg. Olympic was
dismissed from the action pursuant to settlement and is not a party to this appeal.
2
The first incident on which Burke’s retaliation claim is premised occurred on or
around November 15, 2011, when Burke was handling the file of Ms. Murray, an
African-American female manager in Tennessee.2 Burke noticed that Ms. Murray had a
“large number of children with different last names” and, according to Huang, Burke
brought the issue to Huang’s attention and suggested that they should ask Ms. Murray for
proof of dependency. Huang then instructed Burke to telephone Ms. Murray to request
that she provide birth certificates for her children.3 Next, Burke states that she told
Huang “that it would be racially discriminatory to ask a black family for birth certificates
but not require the same of other employees, including the Chinese employees.” Burke
refused to carry out Huang’s instruction because she felt it was racially discriminatory.
Burke alleges that Huang then stated that “99% of the Tennessee workforce was black
employees and that blacks in Tennessee were known to commit insurance fraud . . . by
claiming coverage for children who are not theirs. . . .” According to Burke, Huang then
said Burke was insubordinate and that Burke would not become a regular full-time
employee if she did not cooperate and continued to “question[] authority.”
In the second instance, on or about January 4, 2012, Burke discovered while
auditing employee files that 10-15 former employees in Tennessee never were provided
notice of their right to continued insurance coverage under COBRA following their
termination. Burke raised this issue with Huang and claims that Huang directed her to
“disregard the COBRA violations.” Burke then complained to Huang that the
“Tennessee workforce was almost entirely made up of Black employees, and that it was
wrong for the Company to deprive them of their COBRA rights.” According to Burke,
2
The complaint alleges that this file came to light while Burke was “processing” it
during open enrollment. In her declaration submitted in opposition to summary
judgment, Burke states that the issue came up during open enrollment while she was
“training benefits employees to enter information” on an insurance website.
3
Newegg did not dispute, for the purposes of summary judgment, that Huang told
Burke to seek proof of dependency from Ms. Murray.
3
Huang angrily responded that “the employees in Tennessee did not earn a lot of money so
they could not afford COBRA.” Huang further told Burke to “stop addressing the
COBRA subject” and that she needed to “keep[] quiet and do[] as directed without
question” if she wanted to keep her job. Burke contends that when she reviewed the files
of the terminated employees, their insurance coverage had been terminated. Burke’s only
evidentiary support for this statement is her declaration. Burke does not claim knowledge
of any other employee, other than Ms. Murray and the employees who did not receive
their COBRA notices, being discriminated against in the manner she alleges, nor does she
contend that she made any other complaints related to this issue.
As the basis for her second cause of action for wrongful termination in violation of
public policy, Burke points to the two events discussed above, as well as a third incident,
in which she claims she discovered and reported “what she reasonably believed was
insurance fraud” by a Newegg executive named Kick Chong. The latter incident
occurred on or about January 4, 2012, while Burke was auditing Mr. Chong’s benefits
file. Burke observed that Mr. Chong’s prior 2011 insurance enrollment form listed a
child named “Daniel” who was not listed on the 2012 form. The 2011 form also had a
handwritten notation of “nephew” on it. When Burke contacted Mr. Chong to update his
file, Mr. Chong stated that Daniel was not his son. Burke also contends that the file did
not contain a Caregiver’s Authorization Affidavit (reflecting that Mr. Chong was
Daniel’s custodian) or birth certificate for Daniel when she reviewed it. Burke notified
Huang of the issue and stated that she believed it was insurance fraud. Huang then called
Mr. Chong to follow up. After speaking with him in Chinese, Huang reported to Burke
that “sometimes Chinese employees have their families visiting from China who stay
with them for awhile and add them to the insurance.” Huang also purportedly instructed
Burke to “keep quiet about it because they wanted to protect Kick,” who was a friend of
Newegg’s owner.
4
B. Newegg’s Motion for Summary Judgment
Newegg moved for summary judgment or, in the alternative, summary
adjudication, on April 5, 2013. Newegg argued that none of the alleged conduct by
Burke constituted “protected activity” under FEHA, and thus could not support a prima
facie case for retaliation. With respect to the dependency issue, Newegg offered
evidence, undisputed by Burke, that Ms. Murray was never asked for any proof of
dependency. Newegg also provided an undisputed statement by Huang that she
instructed the benefits department, including Burke, that the policy moving forward
would be that all newly hired employees would be required to provide verification for
their dependents, but no current employees would be required to provide such proof.
On the issue of the missing COBRA notices, Newegg provided evidence that it
investigated the failure to send out the notices to 10-15 terminated employees and
discovered that the former employees did not receive the notices because they were still
listed in Newegg’s system as current employees. As a result, these employees had
continued to receive insurance coverage from Newegg until Burke alerted Newegg to the
problem.
In support of summary adjudication on Burke’s second cause of action, Newegg
argued that since there was no ongoing fraud to report (as Mr. Chong was not claiming
Daniel as an active dependent at the time), Burke could not have reasonably believed she
was objecting to such fraud. Newegg offered the following documents as evidence: a
Caregiver’s Authorization Affidavit dated in 2008 listing Mr. Chong’s wife as Daniel’s
aunt, a Healthcare Enrollment Change form, also from 2008, adding Daniel as a
beneficiary to Mr. Chong’s insurance, and Daniel’s birth certificate. Huang claimed that
these documents were in the file when Burke showed it to her, but Burke denied seeing
them. Newegg also provided documentary evidence, undisputed by Burke, that Burke
accessed the online benefits database on January 3, 2012 and that at that time the benefits
listing for Mr. Chong showed that Daniel had received benefits from January 2009 to
January 1, 2012, but was currently “not active” and therefore not receiving benefits.
5
Newegg also argued that Burke’s conduct toward Huang and her coworkers
provided a legitimate, non-retaliatory business reason for her termination. Newegg
provided evidence to support its claim that it legitimately terminated Burke for
insubordination, including the declarations of Huang and several of Burke’s coworkers.
Huang stated that Burke was “often uncooperative” and that Huang received complaints
from other employees that Burke was rude to them and to Huang. Chai Cai, Newegg’s
then-Senior Manager of Human Resources, stated that he had received complaints that
employees were uncomfortable calling Burke because “she was rude to them or would
even hang up on them,” and that he spoke to Huang about these complaints and his
concern with Burke’s “unprofessional rudeness and loudness.” Phillip Park, another
Newegg benefits auditor, stated that Huang solicited his opinion regarding Burke prior to
Burke’s termination and mentioned that she had received complaints about Burke. Park’s
opinion was that Burke was “loud and distracting” and that her attitude “did not make for
a positive work environment.”
Huang further testified that, on January 5, 2012,4 Burke “initially refused” a
request from Huang to email an insurance carrier to check a policy term, but ultimately
agreed to perform the task once Huang asked her “repeatedly.” On January 10, 2012,
Huang stated Burke “protested” during a meeting when Huang instructed the benefits
team to perform a data entry project. After the meeting, according to Huang, Burke
stated that if Huang “did not like it, then I should terminate her.”5 Huang asked Burke to
meet with her in the conference room. According to Huang, “although I was discouraged
and unhappy with plaintiff’s insubordination and I was concerned that her position would
demotivate other employees from pitching in for this project, I still intended only to give
4
Huang’s declaration lists this date as January 5, 2011. However, given that Burke
was hired in July 2011 and terminated on January 10, 2012, we presume that this was a
typographical error and that the incident occurred on January 5, 2012.
5
Employee Yolande Hill submitted a declaration recalling that Burke said “what
are you going to do, fire me?”
6
[Burke] a warning.” However, when she met with Burke, Burke said “Why? Are you
going to terminate me?” in a voice Huang “perceived as challenging.” Huang contends
that based on Burke’s “negative effect on team morale,” and her “latest act of
insubordination,” she decided to terminate Burke because, “in my judgment, it would be
better for my Benefits team and for Newegg to work with someone who would be less
divisive.”
C. Burke’s Opposition to Summary Judgment
In opposition to Newegg’s motion, Burke argued that, even if no actual
discrimination or insurance fraud took place, her opposition to what she reasonably
believed to be improper conduct by Huang and Newegg constituted “protected activity”
under FEHA and her termination based on her complaints was therefore actionable. In
support of her claim that Newegg’s justification for terminating her was pretextual, Burke
provided evidence that her work was well-received by Newegg and that she was
terminated after she began to complain. For example, Burke contended that she was told
by Huang that she was doing a “great job” and that Burke was tasked with providing
training for the benefits department, in addition to her auditing responsibilities. In
September 2011, a permanent position as a “Benefits Specialist” opened up. Burke
alleged in her complaint that she was then moved into that position, but she testified in
her deposition that Huang told her she could fill that position after “the usual six month[]
period.” She was again commended by Huang in October 2011 and given a pay increase.
With respect to the events surrounding her termination, Burke did not expressly
deny any of the events or statements provided in Newegg’s evidence in support of
summary judgment. Instead, she offered several conclusory sentences in her declaration
on the topic. For example, as to the day of her termination, Burke does not directly
address Huang’s version of the team meeting or the comments Huang claims Burke
made. Burke simply states that “without any further incident or triggering event” she was
called to meet with Huang, and that Huang told her “this is a firing due to your
insubordination.” Burke also testified that she asked Huang exactly what she meant by
7
insubordination, and Huang told her “I [Burke] don’t listen. I don’t do what I’m directed
to do. I question authority.” Burke also declares that she “committed no act, nor
engaged in any conduct, for which discipline would have been warranted.” She also
states that she never “refused to follow an instruction or request by Huang to call an
insurance carrier and check a policy term” and never “refused to perform any data entry
that I was asked to perform.”
D. Trial Court’s Ruling on Summary Judgment
In an order filed July 3, 2013, the trial court granted summary judgment in favor
of Newegg, finding that “there is no material issue of fact which would preclude a
judgment for the Newegg defendants as a matter of law.” The court concluded as to both
Burke’s FEHA claim for retaliation and the common law claim for wrongful termination
in violation of public policy that Newegg had proffered a legitimate business reason for
Burke’s termination and Burke had failed to provide sufficient evidence that Newegg’s
purported reason was pretextual.
On July 11, 2013, the trial court issued its order ruling on Newegg’s evidentiary
objections to Burke’s evidence on summary judgment. Burke also appeals the order
sustaining several of these objections.
E. Motions for Sanctions
On March 15, 2013, Olympic moved for sanctions against Burke and her counsel,
for their failure to appear for court-ordered mediation on March 4, 2013.
As Olympic explained, at a hearing on January 28, 2013, with Burke’s counsel
present, the trial court ordered the parties to participate in ADR mediation and set a
mediation completion date of April 16, 2013. The same day, counsel for all parties
signed up for a court-appointed mediator with the court’s ADR office. While the parties
discussed the potential alternative of private mediation, they never reached an agreement
on the issue. On February 7, 2013, the court served a Notice of Assignment of Mediator,
assigning Jeffrey Dasteel as the mediator and ordering mediation to be completed by
March 13, 2013. The notice further stated that if the mediator had not contacted the
8
parties within ten days, plaintiff’s counsel must contact the mediator to set up the
mediation. The mediator served his notice on February 20, 2013, setting the mediation
for March 4, 2013. The proof of service on the notice indicates that it was served on the
parties—including plaintiff’s counsel—by mail, fax, and email. Burke and her counsel
did not appear for the mediation on March 4, 2013. Olympic therefore requested
sanctions of $4,660 for the time spent preparing for and attending the mediation and
preparing the sanctions motion.
Newegg also filed a motion for sanctions, joining Olympic’s argument and for its
part requesting $3,500 in sanctions. Defendants’ motions were made pursuant to
California Rules of Court, rule 3.894, and Los Angeles Superior Court Local Rules, rule
3.272, which require all parties and attorneys of record to attend all mediation sessions in
person, as well as California Rules of Court, rule 2.30(b), and Los Angeles Superior
Court Local Rules, rule 3.10, which authorize sanctions for failure to comply with the
court’s rules without good cause.
Burke opposed the sanctions motions, claiming that she and her counsel did not
attend the mediation because they never received notice of the date. Burke’s counsel,
Alvin Pittman, stated that he had been in trial out of state since February 7, 2013, and had
engaged two attorneys during that time to monitor his cases and messages. All three
attorneys provided declarations that they had not received the notice from the mediator
setting the mediation date, and that they had kept track of incoming mail and messages
during that time. They also claimed that the mediator told them over the phone that he
had served the notice by email, but that no such email was received at any of the relevant
email addresses.
In an order filed April 19, 2013, the trial court granted defendants’ sanctions
motions, awarding $3,500 and $4,660 to Newegg and Olympic, respectively, against
plaintiff and her counsel jointly and severally. The court found that plaintiff’s counsel
“has not provided a sufficient explanation as to how [he] did not receive the Notice by
fax, email and/or mail when counsel for both defendants received the Notice.” Further,
9
the court held that plaintiff’s counsel violated his “specific obligation to contact the
mediator immediately to schedule a mediation date” if counsel had not been contacted by
the mediator within ten days of service of the court’s Notice of Assignment, as well as his
“broader duty to the court to arrange and ensure that mediation took place by the ordered
completion deadline.” However, the court noted that the cost of preparing defendants’
mediation briefs would be deducted from the sanctions award if Burke set up and the
parties completed mediation within 30 days.
The trial court entered judgment for Newegg on July 3, 2013. Burke timely
appealed.
DISCUSSION
A. Motion for Summary Judgment
1. Standard of review
“[T]he party moving for summary judgment bears the burden of persuasion that
there is no triable issue of material fact and that he is entitled to judgment as a matter of
law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849, fn. omitted
(Aguilar).) “Once the [movant] . . . has met that burden, the burden shifts to the [other
party] . . . to show that a triable issue of one or more material facts exists as to that cause
of action. . . .” (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, supra, at p. 849.) The
party opposing summary judgment “may not rely upon the mere allegations or denials of
its pleadings,” but rather “shall set forth the specific facts showing that a triable issue of
material fact exists . . . .” (Code Civ. Proc., § 437c, subd. (p)(2).) A triable issue of
material fact exists where “the evidence would allow a reasonable trier of fact to
find the underlying fact in favor of the party opposing the motion in accordance with the
applicable standard of proof.” (Aguilar, supra, at p. 850.)
We review the trial court’s grant of summary judgment de novo and decide
independently whether the parties have met their respective burdens and whether the
facts not subject to triable dispute warrant judgment for the moving party as a matter of
10
law. (Code Civ. Proc., § 437c, subd. (c); Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342,
1348; Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 334 (Guz).)
2. First Cause of Action for Retaliation
a. Governing Legal Principles
The FEHA makes it an unlawful employment practice for an employer “to
discharge, expel, or otherwise discriminate against any person because the person has
opposed any practices forbidden under this part. . . .” (Gov. Code, §12940, subd. (h).)
Claims for retaliation under the FEHA are subject to the three-stage burden-shifting test
set forth in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792. (See Yanowitz v.
L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1042 (Yanowitz).) The initial burden falls on
plaintiff to set forth a prima facie case for retaliation. A plaintiff meets this burden by
showing (1) she engaged in a protected activity; (2) she suffered an adverse employment
action; and (3) a causal link exists between the protected activity and the employer’s
action. (Ibid.) Upon such a showing, the burden shifts to the employer to provide
substantial responsive evidence showing a legitimate, non-retaliatory reason for the
adverse employment action. (Ibid.; Sada v. Robert F. Kennedy Medical Center (1997) 56
Cal.App.4th 138, 149.) If the employer produces a legitimate reason, the presumption of
retaliation “‘drops out of the picture,’” and the burden shifts back to the employee to
prove intentional retaliation. (Yanowitz, supra, 36 Cal.4th at p. 1042.) The plaintiff must
produce “‘substantial responsive evidence’ that the employer’s showing was untrue or
pretextual.” (Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718,
1735; Slatkin v. University of Redlands (2001) 88 Cal.App.4th 1147, 1156.) “[A]n
employer is entitled to summary judgment if, considering the employer’s innocent
explanation for its actions, the evidence as a whole is insufficient to permit a rational
inference that the employer’s actual motive was discriminatory.” (Guz, supra, 24 Cal.4th
at p. 361.)
11
b. Prima Facie Case of Retaliation
As an initial matter, Newegg does not dispute that an employee’s actions may
constitute protected activity when the employee opposes conduct that the employee
reasonably and in good faith believes to be discriminatory, whether or not the challenged
conduct is ultimately found to violate the FEHA. It is well established that a retaliation
claim may be brought by an employee who has complained of or opposed conduct that
the employee reasonably believes to be discriminatory, even if the conduct is not actually
prohibited by the FEHA. (See, e.g., Yanowitz, supra, 36 Cal.4th at p. 1043; Miller v.
Department of Corrections (2005) 36 Cal.4th 446, 473.) Here, Burke contends that she
had a reasonable and good faith belief that in both alleged instances, the conduct she
opposed was racially discriminatory, and therefore she engaged in protected activity
under the FEHA. Based on the circumstances of each incident, we disagree.
For the first instance of her opposition to discriminatory conduct, Burke points to
her refusal to contact Ms. Murray, the Tennessee manager, for proof of dependency for
her children. To show that she had a reasonable belief that Huang’s instruction to seek
birth certificates from Ms. Murray was racially discriminatory, Burke relies on two key
pieces of evidence: (1) the fact that Huang ordered her to seek proof of dependency from
an African-American employee and did not require the same proof from Chinese-
American employees (since, according to Burke, the latter employees also often had
children with different surnames); and (2) the discriminatory statement she claims Huang
made that “blacks in Tennessee” often committed insurance fraud. But upon close
examination, even taking Burke’s version of events as true for the purposes of summary
judgment, neither fact can support Burke’s claim that at the time she refused to contact
Ms. Murray and accused Huang of racial discrimination, she had a reasonable basis to
believe that discriminatory conduct had occurred.
The problem with Burke’s claim that Newegg (via Huang) was treating African-
American employees differently than other employees is that the only evidence Burke
introduces to support this allegation — her discovery that there was no birth certificate in
12
Mr. Chong’s file for a dependent with a different surname (and her attendant belief that
no one would ask Mr. Chong for such proof)—happened after her dispute with Huang
over Ms. Murray. In both her deposition and her declaration, Burke confirmed that
Huang’s order to contact Ms. Murray, and Burke’s refusal to do so, occurred in
November 2011, while her review of Mr. Chong’s file occurred in January 2012. And
Burke has provided no other evidence to suggest that, as of November 2011, she had any
basis to believe that African-American and Chinese-American employees were being
treated differently by Newegg or Huang regarding proof of dependency. Nor, for that
matter, has she claimed that she was aware of any other African-American employee who
was subject to this same demand; rather, she points only to the single incident regarding
Ms. Murray. As noted above, while Burke does not need to establish that actual
discrimination occurred in order for her conduct to be protected under the FEHA, the lack
of any other evidence of discrimination undercuts the reasonableness of Burke’s belief
that discrimination was occurring.
Burke also cannot rely on Huang’s purported discriminatory statements to
establish the reasonableness of her belief that Huang was discriminating against Ms.
Murray. Based on the sequence of events set forth in Burke’s own declaration, Huang
did not make any statements involving race until after Burke had told Huang that she
would not contact Ms. Murray because it would be racially discriminatory to do so.
Thus, Burke’s belief at the time she refused Huang’s instruction could not have been
based on a statement that Huang had not yet made. Moreover, as the trial court noted, it
was Burke who first brought the Murray file to Huang’s attention and suggested that
some follow-up might be needed because Ms. Murray had a number of children with
different surnames. Thus, Burke cannot contend that it was Huang’s singling out the
Murray file for follow-up that raised an inference of discrimination.
On appeal, Burke argues that the trial court erroneously credited Huang’s
testimony that Burke initiated discussion of the Murray file as undisputed, when it was
really a credibility question between Huang and Burke that should be left for the jury.
13
But Burke concedes that she “never testified” in her declaration or at her deposition as to
whether she first brought up the Murray file and notes that Huang was the only witness
on this point. As such, there is no competing testimony for the trial court (or for this
court in its de novo review) to weigh. The only evidence before the court is Huang’s
declaration stating that Burke brought her the Murray file and suggested they call her to
ask for proof of dependency. Burke did not provide any evidence to dispute this fact and
it is entirely inconsistent with her claim that she believed at the time that Huang wanted
proof of dependency from Ms. Murray because of Ms. Murray’s race.
The second instance of discriminatory conduct Burke alleges was Newegg’s
failure to provide about a dozen terminated employees with COBRA notices. Burke
claims that she reasonably believed Newegg and Huang were discriminating against
African-American employees because of their race by depriving them of “important
insurance and healthcare rights” contained in the COBRA notices. As evidence that her
belief was reasonable and held in good faith, Burke points to the fact that the affected
employees were all African-American, that Huang told Burke to “disregard” the issue
and then made racist statements regarding those employees, and that Burke believed at
the time (based on her investigation of the files) that the terminated employees had lost
their insurance coverage.
As with the prior incident, the totality of the evidence does not support an
inference that Burke reasonably could have believed discrimination was occurring at the
time she complained. First, Burke points out that “99%” of the Newegg employees in
Tennessee were African-American and does not dispute that only a handful of terminated
employees were affected by the COBRA notice issue. Thus, she cannot dispute that the
majority of former African-American employees were not discriminated against in the
manner she claims. It is also unsurprising, given the demographic makeup of Newegg’s
employees in Tennessee, that the affected employees were African-American. Second, as
with the dependency issue, Burke’s own version of events establishes that any racist
comments allegedly made by Huang regarding these employees were made after Burke
14
complained; thus, Burke’s complaint could not have been based on those comments.
Moreover, Burke has no evidence to suggest that Huang was involved in Newegg’s
failure to send out COBRA notices. In contrast, Newegg provided declarations stating
that the COBRA notices were not sent out due to an error made by a manager in
Tennessee, that the error occurred because the employees were still listed as active in the
database (and therefore were still receiving insurance coverage from Newegg), and that
the error was corrected once Burke notified Newegg of the issue. As this evidence also
reveals, even assuming Huang told Burke not to do anything about the COBRA notice
issue , it is undisputed that Huang followed-up with the Tennessee office using the
information provided by Burke and that the notice issue thereafter was investigated and
resolved. Burke conclusorily states that her “audit” of the affected employees’ files
“showed that insurance coverage was terminated” for those employees. This statement
may be relevant to whether Burke believed the employees had been adversely affected at
the time, but, without more, it cannot support Burke’s claim that she therefore reasonably
concluded that the notices were withheld discriminatorily, for all the reasons discussed
above. Moreover, Newegg’s uncontradicted evidence that the terminated employees
were in fact not deprived of coverage and that Burke’s discovery actually fixed an error
that was costing the company money (the issue Burke was hired to audit in the first place)
eliminates any inference that Newegg was discriminating against these employees or that
Huang would have been angry with Burke for pointing out the problem.
Finally, Burke argues that the trial court improperly made “judgments about how
Ms. Burke behaved” and how she should have behaved under the circumstances, and
therefore improperly weighed evidence in favor of Newegg. Because our review is de
novo, we independently review the record and assess whether Burke has met her burden
to raise a triable issue of fact. For the reasons discussed above, we conclude that she has
not.6
6
Because we find that Burke has not provided sufficient evidence to establish a
prima facie case of retaliation, we need not reach Newegg’s argument that Burke’s
15
c. Pretext
Even if Burke had met her initial burden to establish a prima facie case of
retaliation under the FEHA, we further conclude that Burke has failed to offer sufficient
evidence to “permit a rational inference that the employer’s actual motive was
discriminatory.” (Guz, supra, 24 Cal.4th at p. 361.) Burke does not dispute that Newegg
met its burden on summary judgment to set forth a nonretaliatory reason for its decision
to terminate her. Instead, she argues that the claim of “insubordination” was pretextual
and that Newegg’s actual motive was in retaliation for her opposition to Newegg’s
discriminatory conduct. A plaintiff may establish pretext “‘either directly by persuading
the court that a [retaliatory] reason more likely motivated the employer or indirectly by
showing that the employer’s proffered explanation is unworthy of credence.’
[Citations.]” (Morgan v. Regents of the University of California (2001) 88 Cal.App.4th
52, 68-69.) To avoid summary judgment, however, the plaintiff must produce specific
and substantial evidence of pretext. (Horn v. Cushman & Wakefield Western, Inc. (1999)
72 Cal.App.4th 798, 807.)
Here, Burke’s primary evidence of pretext is the timing of her termination.
Specifically, Burke points to the undisputed evidence that her work was initially praised
and she was given a raise in October 2011 then, a month later, she made her first
complaint regarding Huang related to the proof of dependency issue. On January 4,
2012, Burke complained to Huang regarding the issues with Mr. Chong and the COBRA
notices. Burke was terminated on January 10, 2012. This evidence, Burke argues, raises
the inference that her termination was in retaliation for her purportedly protected conduct.
However, while a plaintiff may make a prima facie showing of a causal link “by
producing evidence of nothing more than the employer’s knowledge that the employee
engaged in protected activities and the proximity in time between the protected action
and the allegedly retaliatory employment decision,” such evidence “only satisfies the
complaints were not “protected activity” under the FEHA because the alleged targets of
the discrimination were located outside of California.
16
plaintiff’s initial burden.” (McRae v. Department of Corrections and Rehabilitation
(2006) 142 Cal.App.4th 377, 388.) “[T]emporal proximity alone is not sufficient to raise
a triable issue as to pretext once the employer has offered evidence of a legitimate,
[nonretaliatory] reason for the termination. [Citations.]” (Arteaga v. Brink’s, Inc. (2008)
163 Cal.App.4th 327, 353; see also McRae v. Department of Corrections and
Rehabilitation, supra, 142 Cal.App.4th at pp. 388-389 [temporal proximity standing
alone is insufficient to show pretext]. “Instead, an employee seeking to avoid summary
judgment cannot simply rest on the prima facie showing, but must adduce substantial
additional evidence from which a trier of fact could infer the articulated reasons for the
adverse employment action were untrue or pretextual.” (Loggins v. Kaiser Permanente
Internat. (2007) 151 Cal.App.4th 1102, 1113 (Loggins).)
Here, Burke fails to provide the requisite “substantial additional evidence” to
support her claim of pretext. (Loggins, supra, 151 Cal.App.4th at p. 1113.) Crucially,
Burke does not dispute the facts on which Newegg claims it based its legitimate decision
to terminate her for insubordination. Specifically, Newegg provided statements by
Huang and by Burke’s coworkers that Burke was rude, disruptive to her team, and
resisted orders by Huang, her supervisor, on several occasions. Furthermore, Huang
stated that she ultimately based her decision to terminate Burke on Burke’s conduct that
day—first “protest[ing]” an instruction by Huang to perform data entry with the rest of
the benefits team during a team meeting and then “challenging” Huang that if she “did
not like it, then [Huang] should terminate her.” Instead of directly disputing this
evidence, Burke provided general statements in her declaration that she “committed no
act, nor engaged in any conduct, for which discipline would have been warranted,” and
that she never “refused” to perform a task as instructed by Huang. However, as Newegg
points out, it did not contend that Burke absolutely refused to perform certain tasks, but
rather that she protested and resisted doing so, and had to be asked several times by
17
Huang.7 As such, the facts supporting Newegg’s claim that Burke was insubordinate
remain largely undisputed. Thus, Burke’s suggestion that a termination for
“insubordination” should automatically be viewed with suspicion is inapposite here,
where Newegg’s claim of insubordination is based on specific, undisputed facts. By
contrast, in Wrighten v. Metropolitan Hospitals, Inc. (9th Cir. 1984) 726 F.2d 1346,
1357, cited by Burke, the Ninth Circuit discounted a statement of “general
insubordination” as a basis for termination, where the only potentially insubordinate
conduct was simply the plaintiff performing her job.
Burke also argues that Huang’s alleged racially discriminatory statements should
be considered as circumstantial evidence of discriminatory motive. While Burke is
correct that relevant discriminatory remarks, even if potentially “stray,” may be
considered along with all of the other evidence to determine whether a rational inference
of discrimination exists (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 541), this does not
help Burke. Evidence of Huang’s racially discriminatory remarks might be relevant
circumstantial evidence of discriminatory motive, except that Burke does not contend that
she was terminated because of her race. Instead, Burke claims she was terminated in
retaliation for her complaints about Huang’s discriminatory treatment of others. Thus,
Huang’s remarks cannot be used to infer a discriminatory motive toward Burke.8
Accordingly, even if Burke could establish a prima facie showing of retaliation,
she did not offer “specific, substantial evidence” to support her claim that Newegg’s
proffered reason for its termination decision was pretext for unlawful retaliation. (Horn
7 Burke argues that Newegg has offered “shifting” explanations for her termination
based on the same evidence. There is no evidence of this in the record. Huang stated that
Burke “initially refused” to check a term, but then ultimately agreed once Huang asked
her several times.
8
Burke also suggests that if there is evidence of a mixed motive for her termination,
the jury must be allowed to decide whether her protected conduct was a “substantial
motivating factor.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203.) This issue
was not raised in the trial court and we therefore do not consider it.
18
v. Cushman & Wakefield Western, Inc., supra, 72 Cal.App.4th at p. 807.) Because Burke
failed to provide sufficient evidence to “permit a rational inference that the employer’s
actual motive was discriminatory,” Newegg was entitled to summary adjudication on
Burke’s first cause of action for retaliation. (Guz, supra, 24 Cal.4th at p. 361.)
3. Second Cause of Action for Wrongful Termination in Violation of Public
Policy
a. Governing Legal Principles
In her second cause of action for wrongful termination in violation of public
policy, Burke alleged that Newegg discharged her in retaliation for her complaints about
Newegg’s racially discriminatory conduct and for her discovery of potential insurance
fraud by a Newegg executive. To analyze a tortious discharge claim, we apply the same
burden-shifting framework as with Burke’s FEHA claim. (Loggins, supra, 151
Cal.App.4th at pp. 1108-1109; Akers v. County of San Diego (2002) 95 Cal.App.4th
1441, 1453.)
b. Prima Facie Case of Wrongful Termination
Burke’s common law termination claim is based, in part, on the same facts and
allegations that support her FEHA claim. To that extent, this claim fails for the same
reasons detailed above. Burke also alleged one additional incident on which she claims
her termination was wrongfully based—her report to Huang that Mr. Chong’s file
revealed potential insurance fraud because he had claimed as a dependent a child who
was not his son. As with her FEHA claim, Burke does not challenge Newegg’s showing
that there was no actual fraud. Daniel was not actively being covered by insurance as of
January 2012 and the requisite forms documenting the relationship were (at some point)
placed in the Chong file. Instead, Burke contends that she had a reasonable belief that
insurance fraud was occurring when she complained about it to Huang.
In support of her belief, Burke points to her statements in her declaration that
Daniel was listed on Mr. Chong’s 2011 form as a dependent but not on the 2012 form,
that there was no birth certificate or Caregiver’s Authorization Affidavit in the file when
19
she reviewed it, that when she called Mr. Chong to clear up the discrepancy he stated that
Daniel was not his son, and that when she reported this information to Huang, Huang told
her to keep quiet about it. When viewed in context with the additional details of this
incident, particularly Burke’s own deposition testimony, Burke’s evidence is insufficient
to establish that she had a reasonable belief that she was reporting insurance fraud to
Newegg.
While Burke claims (without documentary support) that Mr. Chong’s 2011
enrollment form listed Daniel as his “son,” she also admits that the form had a
handwritten notation of “nephew” on it. Her conversations with Mr. Chong and Huang
then gave her the explanation that the file—which Burke claims did not contain any
documentary support showing Mr. Chong’s guardianship of his nephew—did not. Mr.
Chong told Burke that Daniel was not his son and Huang provided the further
explanation, after speaking with Mr. Chong, that “sometimes Chinese families have their
families visiting from China who stay with them for awhile and add them to the
insurance.” Thus, Burke knew at that time that Mr. Chong was not currently claiming
Daniel as his son, and was not actively seeking insurance coverage for him—Daniel was
not included on the 2012 enrollment form and Burke herself had accessed the insurance
database where Daniel was listed as “not active.” Armed with this information, it is
unsurprising that Burke admits she did no further investigation. In sum, the undisputed
evidence does not provide any basis for Burke to claim she reasonably believed Mr.
Chong was committing insurance fraud.9 Burke therefore cannot meet her burden to
establish a prima facie case of wrongful termination in violation of public policy.
9
As a result, we need not reach Newegg’s contention that Burke’s tortious
discharge claim fails for the additional reason that it is not based on an appropriate public
policy.
20
4. Evidentiary Objections
Burke also challenges the trial court’s ruling sustaining four of Newegg’s
objections to her evidence (objections 4, 8, 9, and 17) submitted in connection with her
opposition to summary judgment. We find none of this evidence material to our
determination that Burke did not establish a prima facie case of retaliation or wrongful
termination, and therefore conclude the issue is moot.
B. Mediation Sanctions
Burke argues that the trial court erred in awarding sanctions to Newegg because
Burke demonstrated good cause for her failure to attend the mediation. We review the
trial court’s order awarding sanctions for abuse of discretion. (Ellerbee v. County of Los
Angeles (2010) 187 Cal.App.4th 1206, 1217 [citing Elkins v. Superior Court (2007) 41
Cal.4th 1337, 1364].) We reverse “‘only if the trial court’s action was “‘“arbitrary,
capricious, or whimsical.”’” [Citations.]’” (Ellis v. Toshiba America Information
Systems, Inc. (2013) 218 Cal.App.4th 853, 878.) Under this standard, Burke cannot meet
her burden to affirmatively demonstrate error in the trial court’s ruling.
Burke contends that the trial court “disregarded” evidence of good cause for her
failure to appear at the mediation. On the contrary, the trial court expressly considered
Burke’s evidence supporting her counsel’s claim that he never received notice of the
mediation, and found that this evidence did not “provide a sufficient explanation” as to
the discrepancy, given that the other parties received the notice. Notably, Burke does not
contend that the mailing address or fax number listed on the proof of service for the
mediation notice were incorrect.10 Moreover, even assuming that Burke did not receive
notice of the mediation, Burke does not deny receipt of the trial court’s Notice of
Assignment of Mediator, served on February 7, 2013, which ordered Burke to take action
if she had not heard from the mediator within ten days and further required the mediation
to be completed by March 13, 2013. Burke contends that her attorneys only learned of
10
The proof of service did not list an email address for plaintiff’s counsel.
21
the mediation upon receipt of Olympic’s motion for sanctions on or about March 19,
2013. At that point, the March 13 mediation deadline set by the court had already passed
and Burke’s counsel had taken no steps to determine the status of the mediation or to
facilitate its completion. Thus, regardless of whether Burke received the mediator’s
notice, it was not an abuse of discretion for the trial court to conclude that Burke’s failure
to arrange and ensure that mediation took place was the true cause of her failure to appear
for mediation, and therefore that sanctions were warranted.
Burke also suggests that the trial court abused its discretion by providing a
mechanism for Burke to seek to reduce the sanctions amount. In the sanctions order, the
trial court noted that if Burke was able to set up an ADR mediation or set up and pay for
private mediation within thirty days, “the costs of preparation of defendants’ mediation
briefs will be subtracted from the above sanctions awards, upon ex parte application by
plaintiff’s counsel.” Burke appears to argue that by requiring Burke to move ex parte to
reduce the award the trial court improperly “impos[ed] extra procedural steps.” Burke
cites to Bergman v. Rifkind & Sterling, Inc. (1991) 227 Cal.App.3d 1380, but this case is
inapposite. Bergman involved reversal of a sanctions order because the trial court made
findings and a decision to impose sanctions without prior notice to the affected party.
(Id. at p. 1387.) Here, the trial court ordered sanctions following a fully briefed motion
and hearing. Burke’s suggestion that the trial court’s order violated due process is
therefore without merit.11
11
Burke does not otherwise challenge the amount of sanctions awarded.
22
DISPOSITION
The judgment and order awarding sanctions are affirmed. Costs on appeal are
awarded to Newegg.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
COLLINS, J.
We concur
WILLHITE, Acting P. J.
MANELLA, J.
23
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 11-2348
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
Mandel McDonald Benson, *
*
Appellant. *
___________
Submitted: February 14, 2012
Filed: July 11, 2012
___________
Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.
___________
SHEPHERD, Circuit Judge.
Mandel McDonald Benson challenges his conviction for being a felon in
possession of a firearm in violation of 18 U.S.C. § 922(g) and the 235-month
sentence the district court1 imposed. We affirm.
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
I.
On December 15, 2009, Benson shoplifted from a Wal-Mart store in
Bloomington, Minnesota. Officer Michael Utecht was in the proximity of the store
and observed Benson, who matched the description of the suspected shoplifter,
running away from the store. Officer Utecht yelled for Benson to stop. Instead of
stopping, Benson ran faster, and Officer Utecht began pursuing Benson. Benson ran
into the parking lot of a nearby strip mall. For two or three seconds, Officer Utecht
lost sight of Benson as Benson ducked down between two cars. When he reappeared,
Benson complied with Officer Utecht’s orders to stop and place his hands on his
head. After handcuffing Benson and placing him in the patrol car, Officer Utecht
searched the area where he had lost sight of Benson and found a triangular nylon case
containing a Ruger .357 revolver under one of the vehicles. Officer Utecht then took
Benson back to the store for a “show-up identification,” and a Wal-Mart employee
identified Benson as the shoplifter. Based on his arrest, the police were able to obtain
a search warrant to collect DNA evidence from Benson which additionally connected
him to possession of the handgun.
On October 5, 2010, a grand jury indicted Benson on one count of being a
felon in possession of a firearm. Prior to trial, Benson moved to suppress the DNA
evidence as fruit of an unlawful seizure and arrest. The district court denied the
motion, holding Officer Utecht had reasonable suspicion to detain Benson and to
return him to Wal-Mart for the show-up identification. The district court also found
that probable cause to arrest Benson existed once he was positively identified by the
Wal-Mart employee.
The trial began on January 18, 2011, and was scheduled for no more than three
days. After the jury was empaneled and the government had presented its case with
the exception of a final witness, Benson requested that the court discharge Reynaldo
Aligada, Jr., the Assistant Federal Public Defender who had been appointed to
-2-
represent Benson. The court cautioned Benson, but he insisted in proceeding pro se
with Aligada as stand-by counsel. With the district court’s permission, the
government asked Benson a series of questions to determine whether his waiver of
counsel was knowing, voluntary, and intelligent. The government asked Benson
whether he understood that by proceeding pro se he would not be able to appeal his
conviction on the basis that he did not have an attorney. Benson’s response indicated
that he did not understand, and he added, “I’m not going to understand it.” Based on
this response, the district court denied the request to dismiss Aligada as counsel.
Benson continued his protest, clearly stating that he did not want Aligada to continue
as his counsel. The court announced three options: (1) have Aligada continue as
counsel, (2) appoint new counsel, which would require a delay in the trial, or (3)
allow Benson to proceed pro se with Aligada as stand-by counsel. Before the court
determined which option to adopt, Aligada moved to withdraw as counsel, asserting
that the relationship between him and Benson had broken down and that a conflict
existed between them. The court granted the motion and excused Aligada as counsel.
Over the government’s objections, the court appointed new counsel and continued the
trial until February 8, 2011.
The district court appointed Leon Trawick to represent Benson. Trawick filed
a motion for a mistrial, arguing that his introduction mid-trial undermined the fairness
of the proceedings. He further argued that he intended to present a slightly different
defense than Aligada had planned. The court denied the mistrial motion. As the date
to resume trial approached, Trawick informed the court that he and Benson disagreed
over trial strategy and that Benson was again contemplating proceeding pro se. At
a status conference hearing the day before the trial was to resume, Benson requested
permission to proceed pro se, and Trawick questioned Benson extensively about his
request to proceed pro se, specifically focusing on Benson’s waiver of a claim of
ineffective assistance of counsel based on the pro se representation. Benson told the
court, “I don’t want this man [Trawick] representing me.” The court reserved ruling
on the request until the resumption of trial the following day. Before the jury
-3-
returned, Benson reiterated his desire to proceed pro se. The court granted the
request, allowing Trawick to remain as stand-by counsel. As the jury returned, the
court informed it that Benson would be representing himself. The government then
called its final witness and rested its case. Benson offered an opening statement and
proceeded to recall three witness and to call two additional witnesses. After closing
arguments, the jury found Benson guilty of being a felon in possession of a firearm.
After the trial, Benson requested that Trawick be reappointed to represent him
at sentencing. Despite the district court’s grant of this motion, Benson filed multiple
pro se motions and asked again, before sentencing, that he be allowed to proceed pro
se. The court granted his request, and Benson proceeded pro se at the sentencing
hearing. The district court denied Benson’s request for a downward variance to 180
months, sentencing him instead to 235 months, which was the bottom of the
applicable Sentencing Guidelines range.
II.
With newly-appointed counsel, Benson appeals his conviction and sentence.
First, he claims that the district court erred in denying his motion to suppress the
DNA evidence obtained after his arrest. Second, he argues that his waiver of the right
to counsel was not knowing, voluntary, and intelligent. Third, he argues that the
district court should have granted his motion for mistrial. Fourth, he asserts the
district court failed to set forth in the record sufficient explanation of the sentencing
factors in 18 U.S.C. § 3553(a). In addition to the brief submitted by his appointed
counsel, Benson has also submitted a pro se “supplement” to his appellate brief.
Therein he raises five additional arguments.
-4-
A.
Benson argues that the DNA evidence tying him to possession of the handgun
should have been suppressed as fruit of an unlawful detention or arrest.2 After his
arrest, the government obtained a search warrant to seize DNA from Benson. This
DNA was compared to that found on the handgun, and the evidence was used at trial
to show that Benson possessed the handgun. The district court denied the motion to
suppress, holding that Benson’s detention and arrest did not violate the Fourth
Amendment. We review the district court’s factual findings for clear error and its
legal determination de novo. See United States v. Gaines, 639 F.3d 423, 427-28 (8th
Cir. 2011).
The DNA that officers collected from Benson pursuant to a search warrant does
not constitute fruit of the poisonous tree based on Benson’s detention and arrest.
First, Officer Utecht had a reasonable, articulable suspicion that Benson had just
committed the shoplifting, and therefore Officer Utecht was justified in conducting
the Terry stop of Benson. See Terry v. Ohio, 392 U.S. 1, 21 (1968). “Various
behaviors and circumstances can contribute to, or be sufficient to provide, reasonable,
articulable suspicion. For example, unprovoked flight at the sight of an officer can
contribute to reasonable, articulable suspicion.” United States v. Horton, 611 F.3d
936, 940 (8th Cir. 2010) (citing Illinois v. Wardlow, 528 U.S. 119, 124 (2000)), cert.
denied, 131 S. Ct. 1032 (2011). “Also, a stop typically is justified when a suspect
matches the description of a person involved in a disturbance near in time and
2
The district court found, and Benson does not challenge the finding, that the
handgun was abandoned property and thus not subject to suppression for any alleged
Fourth Amendment violation. See United States v. Tugwell, 125 F.3d 600, 602 (8th
Cir. 1997) (“A warrantless search of abandoned property does not implicate the
Fourth Amendment, for any expectation of privacy in the item searched is forfeited
upon its abandonment.”).
-5-
location to the stop.” Id. (citing United States v. Hicks, 531 F.3d 555, 558 (7th Cir.
2008)).
As the district court found, shortly after the shoplifting occurred, Officer
Utecht spotted Benson, who matched the description of the alleged shoplifter, running
away from the store. When Officer Utecht ordered Benson to stop, Benson instead
increased his speed and sought to evade Officer Utecht. These articulable facts
justify Officer Utecht’s seizure of Benson to investigate whether he was involved in
the shoplifting. Further, the placement of Benson in a patrol car and transporting of
him back to the store for identification does not violate the Fourth Amendment. See
United States v. Martinez, 462 F.3d 903, 908 (8th Cir. 2006) (“[T]he exigencies were
such that the officers could not dispel their suspicions that had prompted the Terry
stop until they transported Martinez back to the bank for the show-up
identification.”). Therefore, the district court properly denied the motion to suppress
the DNA evidence later collected because Benson’s stop and arrest did not violate the
Fourth Amendment.
B.
The next issue on appeal is whether Benson’s waiver of his right to counsel
was knowing, intelligent, and voluntary. In his brief, Benson claims that his waiver
of counsel was invalid because he did not make a clear and unequivocal request to
proceed pro se. Instead, Benson argues, the court made the offer of self-
representation in response to Benson’s repeated questioning of Aligada’s failure to
employ a defense expert to challenge the government’s DNA evidence. Benson
contends that his request at that time to waive his right to counsel was instead a
compulsion to accept the court’s offer. Although the court considered Benson’s
request to proceed pro se, it chose instead to dismiss Aligada as counsel, continue the
trial for several weeks, and appoint new counsel. Benson maintains that because he
-6-
was not unequivocal in his first request to proceed pro se, his second request to do so
is necessarily invalid. We reject this argument.
“This court reviews de novo a district court’s decision to allow a defendant to
proceed pro se.” United States v. Turner, 644 F.3d 713, 720 (8th Cir. 2011). Under
the Sixth Amendment, a criminal defendant is guaranteed, subject to limitations, the
right to the assistance of counsel; he is also guaranteed the right to represent himself.
Faretta v. California, 422 U.S. 806, 818-21 (1975). “Before permitting a defendant
to exercise the constitutional right to proceed pro se, the trial court must be satisfied
that the waiver of counsel is knowing and voluntary.” Turner, 644 F.3d at 720-21.
In making the assessment of a waiver’s validity, we look to the
particular facts and circumstances in the case, including the background,
experience, and conduct of the accused. Meyer v. Sargent, 854 F.2d
1110, 1114 (8th Cir. 1988). The “key inquiry,” we have said, is
“whether the accused was made sufficiently aware of his right to have
counsel and of the possible consequences of a decision to forgo the aid
of counsel.” Id. (internal quotations omitted). We will uphold a district
court’s grant of a defendant’s motion to represent himself “if the record
shows either that the court adequately warned him or that, under all the
circumstances, he knew and understood the dangers and disadvantages
of self-representation.” United States v. Patterson, 140 F.3d 767,
774-75 (8th Cir. 1998).
United States v. Kiderlen, 569 F.3d 358, 364 (8th Cir. 2009).
These requirements were met in this case. The court and the government
warned Benson of the pitfalls of representing himself, including explicitly telling him
that he would have to follow the Federal Rules of Evidence and the Federal Rules of
Criminal Procedure. When Benson initially expressed some reservations about
proceeding without counsel, the district court took the extraordinary step of
continuing the trial for weeks so that Trawick could be appointed. When the trial
-7-
resumed, Benson again sought the dismissal of his appointed counsel, and he was
clear and unequivocal in his desire to represent himself. Again, the district court
explained the difficulties Benson would face, but despite these warnings, Benson was
determined to have Trawick dismissed as counsel. See United States v. Taylor, 652
F.3d 905, 909 (8th Cir. 2011) (“[A] persistent, unreasonable demand for dismissal of
counsel and appointment of new counsel . . . is the functional equivalent of a knowing
and voluntary waiver of counsel. In such an instance, the trial court may proceed to
trial with the defendant representing himself.” (quoting United States v. Moore, 706
F.2d 538, 540 (5th Cir. 1983))). The record reflects that Benson’s decision to waive
his right to counsel was knowing and voluntary, and therefore we uphold the district
court’s decision to allow Benson to represent himself at trial.
C.
Next Benson argues that the district court should have granted his mistrial
motion. We review the denial of a motion for a mistrial for abuse of discretion.
United States v. Weaver, 554 F.3d 718, 723 (8th Cir. 2009). We will affirm a district
court’s denial of a mistrial absent an “abuse of discretion resulting in clear prejudice.”
United States v. Koskela, 86 F.3d 122, 125 (8th Cir. 1996).
Benson argues that he was prejudiced by having Trawick appointed to the case
halfway through the trial. He also claims Trawick’s plan to follow a slightly different
defensive theory than Aligada prejudiced him. First, we can find no case that holds
the fact that counsel was substituted or dismissed mid-trial, in itself, necessarily
results in prejudice to a criminal defendant, nor does Benson suggest any specific way
he was prejudiced by Trawick’s substitution. Second, even if it could be argued that
Trawick intended to follow a different defensive theory, Trawick was never given the
opportunity to present that theory because Benson again sought to proceed pro se
before the trial resumed. Viewed from the position of the jury, after the weeks-long
continuance, Benson began representing himself with Trawick as stand-by counsel.
-8-
As the district court held, there is nothing in the record to suggest that the
continuance or allowing Benson to proceed pro se necessarily resulted in prejudice
to Benson. Thus, the district court’s denial of the mistrial motion was not an abuse
of its considerable discretion.
D.
The final argument presented in the counseled brief is that the district court
failed to set forth enough reasons justifying the 235-month sentence to permit review
by this court. This argument raises an issue of alleged procedural error that was not
raised to the district court. Accordingly, our review is for plain error. See United
States v. Nissen, 666 F.3d 486, 490 (8th Cir. 2012). The 235-month sentence
imposed by the district court was at the bottom of the properly calculated Guidelines
range. “[W]hen a judge decides simply to apply the Guidelines to a particular case,
doing so will not necessarily require lengthy explanation.” Rita v. United States, 551
U.S. 338, 356-57 (2007). In this case, the district court considered the presentence
report, heard arguments by Benson, took evidence, and referenced section 3553(a).
Although the district court did not recite every section 3553(a) factor, the court did
state that it had “taken into account the nature and circumstances of the instant
offense, as well as the history and characteristics of the defendant, and [found] that
the sentence imposed is sufficient but not greater than necessary to afford adequate
deterrence to future criminal conduct.” (Sent. Tr. at 60.) “If a district court
references some of the considerations contained in § 3553(a), we are ordinarily
satisfied that the district court was aware of the entire contents of the relevant
statute.” See United States v. Gray, 533 F.3d 942, 944 (8th Cir. 2008) (quotation
omitted). The district court committed no procedural error at sentencing.
-9-
E.
Finally, Benson has tendered a pro se supplemental brief for consideration by
this panel. It is Eighth Circuit policy not to address issues raised by a defendant in
pro se filings with this Court when he is represented by counsel. United States v.
Halverson, 973 F.2d 1415, 1417 (8th Cir. 1992) (per curiam). Nevertheless, we grant
Benson’s motion to file the pro se supplemental brief. We have reviewed this pro se
filing and find his additional arguments meritless.
III.
Accordingly, we grant Benson’s request to file the pro se supplemental brief,
and we affirm Benson’s conviction and sentence.
______________________________
-10-
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} |
FILED
United States Court of Appeals
Tenth Circuit
August 6, 2012
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
LISA G. McBRIDE,
Plaintiff-Appellant,
v. No. 11-8037
PEAK WELLNESS CENTER, INC.,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. NO. 2:10-CV-00146-NDF)
Bruce S. Asay, Associated Legal Group, LLC, Cheyenne, Wyoming, for
Appellant.
Patrick E. Hacker (Gregory P. Hacker with him on the brief), Hacker, Hacker &
Kendall, P.C., Cheyenne, Wyoming, for Appellee.
Before KELLY, BALDOCK, and TYMKOVICH, Circuit Judges.
TYMKOVICH, Circuit Judge.
Lisa McBride is an accountant who worked as Peak Wellness Center’s
business manager for about nine years. Peak terminated her in 2009, citing job
performance and morale issues. McBride, however, claims she was terminated in
retaliation for bringing various accounting improprieties to the attention of Peak’s
Board of Directors.
McBride brought several federal and state-law claims against Peak, among
them (1) whistleblower retaliation under the federal False Claims Act (FCA); (2)
violations of the federal Fair Labor Standards Act (FLSA); (3) breach of
employment contract; (4) breach of implied covenant of good faith and fair
dealing; (5) defamation; and (6) a federal sex discrimination claim under Title VII
of the Civil Rights Act. After discovery, Peak moved for summary judgment on
all claims, and the district court granted the motion. McBride appeals the grant of
summary judgment, arguing that significant issues of material fact remain
unresolved and that her claims should proceed to trial. She also appeals the
district court’s denial of an evidentiary motion.
Finding no error in the district court’s decision, we AFFIRM its grant of
summary judgment in favor of Peak.
I. Background
McBride, a certified public accountant, served for nine years as the
business manager of Peak, a non-profit drug rehabilitation center in Laramie
County, Wyoming. Peak received much of its funding from federal and state
grants, and one of McBride’s job responsibilities was to ensure that Peak’s use of
grant money complied with applicable accounting principles.
-2-
McBride was also responsible for coordinating periodic audits performed
by external private entities. McBride claims she notified Peak regarding possible
improprieties in the use of grant money, but that her efforts to address these
concerns were met with resistance and retaliation.
The record indicates that McBride did not get along with some of her
coworkers. Emails among Peak employees reveal that some viewed McBride as
meddlesome; for example, one coworker became angry when McBride contacted
one of Peak’s vendors regarding deficiencies in invoices the vendor had submitted
to the coworker. Other emails included personal insults directed at McBride
behind her back.
McBride also experienced friction in her relationship with her supervisor,
Dr. Birney, who was Peak’s executive director. According to Birney, McBride
failed to bring her concerns regarding grant money accounting to him. Instead,
McBride went over his head and raised her concerns directly in front of the Board
of Directors. Birney was also concerned about McBride’s job performance and
her impact on employee morale.
In the years leading up to her termination, McBride received several
negative performance reviews. These reviews included suggestions for
improvement, but subsequent reviews did not reflect any progress. Peak
ultimately terminated McBride in January 2009.
-3-
About two months after she was terminated, McBride requested a Board of
Directors review of her termination. Her request also included allegations of
fraud committed by other Peak employees, including Birney. The Board
commenced an internal investigation, but found no evidence of fraud. After
concluding its investigation, the Board decided not to re-hire McBride.
McBride sued Peak, bringing the aforementioned claims under federal and
state law. The district court granted summary judgment in favor of Peak on all
claims.
II. Discussion
A. Standard of Review
“We review the district court’s summary judgment decision de novo,
applying the same standard as the district court.” Brammer-Hoelter v. Twin Peaks
Charter Acad., 602 F.3d 1175, 1184 (10th Cir. 2010). “In applying this standard,
we examine the factual record and draw reasonable inferences therefrom in the
light most favorable to the nonmoving party,” that is, McBride. Id. (quoting
Clinger v. N.M. Highlands Univ. Bd. of Regents, 215 F.3d 1162, 1165 (10th Cir.
2000)).
In addition to the grant of summary judgment, McBride appeals the district
court’s denial of expanded discovery. “We review the district court’s discovery
order for abuse of discretion. A district court abuses its discretion where it
commits a legal error or relies on clearly erroneous factual findings, or where
-4-
there is no rational basis in the evidence for its ruling.” Trentadue v. FBI, 572
F.3d 794, 806 (10th Cir. 2009) (citations and quotation marks omitted). The
moving party—McBride—bears the burden of showing the district court abused
its discretion.
B. McBride’s Claims
McBride challenges the district court’s dismissal of six distinct causes of
action.
1. False Claims Act Whistleblower Retaliation
McBride first claims Peak terminated her because Peak believed McBride
was considering bringing an FCA qui tam suit against Peak. McBride argues this
constituted illegal retaliation under the whistleblower provisions of the FCA.
The FCA imposes liability on any person who “knowingly presents, or
causes to be presented, to an officer or employee of the United States Government
. . . a false or fraudulent claim for payment or approval,” 31 U.S.C. § 3729(a)(1),
or “knowingly makes, uses, or causes to be made or used, a false record or
statement to get a false or fraudulent claim paid or approved by the Government,”
§ 3729(a)(2). The FCA authorizes individuals to bring qui tam suits on behalf of
the government and keep a percentage of any monies recovered.
Since employees will often be in the best position to report frauds
perpetrated by their employers, the FCA includes “whistleblower” provisions
protecting employees who do so from retaliation. Whistleblowers are entitled to
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reinstatement, double back pay, and litigation costs and attorneys’ fees.
§ 3730(h)(2). An employee need not actually file a qui tam action to qualify for
whistleblower protection, but “the activity prompting plaintiff’s discharge must
have been taken ‘in furtherance of’ an FCA enforcement action.” United States
ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1522 (10th Cir.
1996).
In addition, a plaintiff claiming retaliatory discharge under the FCA “has
the burden of pleading facts which would demonstrate that defendants had been
put on notice that plaintiff was either taking action in furtherance of a private qui
tam action or assisting in an FCA action brought by the government.” Id. Notice
may be provided in a number of ways: for example, by informing the employer of
“illegal activities” that would constitute fraud on the United States, United States
ex rel. Marlar v. BWXT Y-12, LLC, 525 F.3d 439 (6th Cir. 2008); by warning the
employer of regulatory noncompliance and false reporting of information to a
government agency, Wilkins v. St. Louis Hous. Auth., 314 F.3d 927 (8th Cir.
2002); or by explicitly informing the employer of an FCA violation, Eberhardt v.
Integrated Design & Constr. Inc., 167 F.3d 861, 867 (4th Cir. 1999). But merely
informing the employer of regulatory violations, without more, does not provide
sufficient notice, because doing so gives the employer “no suggestion that [the
plaintiff is] going to report such noncompliance to government officials” or bring
“her own qui tam action.” Ramseyer, 90 F.3d at 1523. Whistleblowers “must
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make clear their intentions of bringing or assisting in an FCA action in order to
overcome the presumption that they are merely acting in accordance with their
employment obligations.” Id. at 1523 n.7.
The record includes only one piece of evidence in support of McBride’s
assertion that Peak believed she was considering bringing an FCA action: an
email to Birney from Valerie Seigel, Peak’s information technology director.
Seigel told Birney that, based on conversations she had with other employees, “it
appears [McBride] is preparing a presentation for the auditors on how terrible
[Peak] is, not just the computer system but our administration in general,” and
“she was checking our Policies to see where you are out of compliance.” Supp.
App. at 124.
Seigel’s email to Birney was insufficient to put Peak on notice that
McBride might pursue a qui tam action. First, statements about “how terrible
[Peak] is” and lack of compliance with Peak’s internal policies does not amount
to an accusation of illegal, let alone fraudulent, conduct. Second, communicating
with auditors was part of McBride’s job; thus, her doing so would not indicate
that she was planning to report illegal activities or initiate a qui tam action.
Third, Peak’s auditor was a private entity, not a government entity, which further
undercuts the inference that Peak could have believed McBride was going to
report Peak’s alleged improprieties to the government.
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Without a clearer indication that McBride was planning to report Peak to
the government or file a qui tam suit, McBride’s retaliation claim cannot survive
summary judgment. See Ramseyer, 90 F.3d at 1522.
2. Fair Labor Standards Act Claim
McBride next claims Peak violated the FLSA by deducting time from her
accrued leave on days when she did not work a full 8-hour day. She argues the
FLSA forbids employers from deducting such time from salaried employees, as
McBride was. She seeks to recover the value of the accrued leave wrongfully
deducted.
The FLSA refers to salaried employees like McBride as “exempt”
employees. Since exempt employees are not paid by the hour, the FLSA’s
implementing regulations prohibit employers from docking their pay for working
less than a full eight-hour day. Spradling v. City of Tulsa, 95 F.3d 1492 (10th
Cir. 1996); see 29 C.F.R. § 541.602 (formerly codified at 29 C.F.R. § 541.118).
This rule, however, does not extend to non-monetary compensation such as
vacation time or sick leave. As the Department of Labor has explained in an
opinion letter:
In no event can any deductions from an exempt employee’s salary be
made for full or partial day absences occasioned by lack of
work . . . . Employers can, however, make deductions for absences
from an exempt employee’s leave bank in hourly increments, so long
as the employee’s salary is not reduced. If exempt employees
receive their full predetermined salary, deductions from a leave bank,
-8-
whether in full day increments or not, do not affect their exempt
status.
Opinion Letter, FLSA2009-18, at 2 (Dep’t of Labor Jan. 16, 2009), available at
http://www.dol.gov/WHD/opinion/flsa.htm. “Given their provenance and legal
effect, [DOL] opinion letters are entitled to great weight when they interpret the
DOL’s own (ambiguous) regulations.” In re Wal-Mart Stores, Inc., Fair Labor
Standards Act Litig., MDL 1139 v. Wal-Mart Stores, Inc., 395 F.3d 1177, 1184
(10th Cir. 2005).
McBride alleges that, on several occasions, Peak subtracted time from her
accrued leave because she left work early or arrived late. But McBride does not
claim Peak made any deductions to her salary. Thus, even taking McBride’s
allegations as true, Peak did not violate the FLSA’s prohibition on pay deductions
for exempt employees.
McBride cites to two cases in support of her claim, but both are
distinguishable. In Spradling v. City of Tulsa, 95 F.3d 1492 (10th Cir. 1996), we
examined an employer’s policy that first deducted exempt employees’ accrued
leave for missed time and then, if there was no leave remaining, deducted
employees’ salary. See id. at 1501. Although we found this policy violated the
FLSA, we explicitly based this finding on the policy’s potential to deduct
employees’ salaries. See id. (“[W]e conclude there was an express policy that
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created the possibility of salary reductions for absences of less than one day.”)
(emphasis added) (internal quotation marks omitted).
Similarly, in Abshire v. Cnty. of Kern, 908 F.2d 483 (9th Cir. 1990), the
Ninth Circuit examined a policy in which the employer penalized employees for
working less than eight hours, first by deducting their sick leave, then their
salary. See id. at 486. It found the policy violated the FLSA because “the
employee’s pay [was] at all times subject to deductions for tardiness or other
occurrences,” even if no pay deductions had in fact occurred. Id. at 487
(quotation marks omitted).
The continuing validity of Spradling and Abshire is doubtful in light of
revised Department of Labor regulations requiring a plaintiff to show “[a]n actual
practice of making improper deductions,” rather than the theoretical possibility of
such deductions. 29 C.F.R. § 541.603(a); see Baden-Winterwood v. Life Time
Fitness, Inc., 566 F.3d 618, 627–28 (6th Cir. 2009) (discussing the evolution of
these regulations). But even if Spradling and Abshire were still good law, the
present case is distinguishable because Peak’s policy did not allow the deduction
of McBride’s salary under any circumstances. If all of McBride’s accrued leave
had been deducted, no further penalty would have been imposed. Thus, this
policy did not violate the FLSA, and summary judgment was appropriate.
-10-
3. Breach of Contract
McBride next claims that Peak breached McBride’s employment contract
by terminating her without following the dismissal procedures included in the
contract. 1 The district court found this claim was barred because McBride failed
to exhaust the dismissal review procedures specified in the contract.
“In Wyoming, employment relationships are presumed to be at-will.”
Boone v. Frontier Ref., Inc., 987 P.2d 681, 685 (Wyo. 1999). 2 Employees and
employers may depart from the presumption by entering an express or implied
contract, which may include an employee handbook. See id. Here, the parties
agree Peak’s employee handbook governed the terms of their employment
relationship.
Under Wyoming law, a terminated employee subject to an employment
contract must attempt to exhaust any mandatory grievance procedures provided by
1
In her briefing, McBride presents this issue in somewhat narrower terms:
whether the district court erred in finding that McBride failed to exhaust Peak’s
dismissal review policies. McBride also offered some contract-related arguments
under her tort claim for breach of the implied covenant of good faith and fair
dealing. We find it analytically cleaner to address McBride’s contract claim as a
discrete whole.
2
Wyoming recognizes a “limited exception to the at-will employment
doctrine” for a termination that violates public policy. McLean v. Hyland Enters.,
Inc., 34 P.3d 1262, 1268 (Wyo. 2001). McBride, however, does not argue on
appeal that she was terminated in violation of public policy, and even if we were
to construe her claims as such, she has not identified “a strong and well-
established public policy,” id., nor the absence of “any other remedy available,”
id. at 1269, as required by Wyoming law.
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the contract itself before bringing a breach-of-contract claim against the
employer. See Bryant v. Pac. Power & Light, 701 P.2d 1165, 1167 (Wyo. 1985). 3
Failure to do so normally bars the employee’s claim. See id. While this rule may
appear somewhat rigid, it is important to remember that Wyoming employers are
under no obligation to provide any termination remedy at all. See Hatfield v. Bd.
of Cnty. Comm’rs for Converse Cnty., 52 F.3d 858, 864 (10th Cir. 1995)
(upholding a provision in an employee handbook disclaiming the creation of an
implied contract and reaffirming employee’s at-will status).
Notwithstanding the employee’s failure to adhere to the contractual
grievance procedures, the claim may nonetheless survive if the employer waives
its right to enforce the procedures. Waiver has three elements under Wyoming
law: (1) an existing right, (2) knowledge of that right, and (3) an unequivocal
manifestation of intent to relinquish that right. Jackson State Bank v. Homar, 837
P.2d 1081, 1086 (Wyo. 1992).
McBride and Peak agree that an employment contract embodied by Peak’s
employee handbook governed the employment relationship between them. The
section of the contract dealing with termination stated:
The employee may within one (1) week (7 calendar days) request that
the dismissal be reviewed. . . . The Board of Directors, upon receipt
3
While Bryant involved a collective-bargaining contract, the Wyoming
Supreme Court has since applied it in the employee-handbook context, using
ordinary contract principles. See Metz v. Laramie Cnty. Sch. Dist. No. 1, 173
P.3d 334, 346 (Wyo. 2007) (discussed further below).
-12-
of a request for a review of a dismissal decision, may appoint such
person or persons as they in their discretion deem appropriate to hear
the employee’s objection to the proposed action. . . . The review
provided . . . shall be the exclusive and mandatory procedure for
challenge of a dismissal and resolution of any allegations of
unfairness, impropriety, or violation of Peak rules or procedures.
Failure to timely request a review . . . shall waive any right of the
employee to contest the dismissal, or allege any violation of any
rules or procedures of Peak. In cases where the review is . . . not
timely sought . . . the dismissal shall be deemed valid and binding on
the employee.
Supp. App. at 101–02 (emphasis added).
McBride contested her dismissal in a letter to Peak’s Board two months
after she was terminated, and asked to be reinstated. The letter included
allegations of fraud by Peak employees. The Board launched an investigation
into these allegations. After concluding no fraud had occurred, the Board decided
not to re-hire McBride.
McBride’s employment contract required her to request a review of her
dismissal within seven days. But McBride did not request a review until two
months after she was terminated. Thus, her contract claim is barred. See Bryant,
701 P.2d at 1167.
After oral argument, McBride submitted a 28(j) letter calling our attention
to Metz v. Laramie County School District No. 1, 173 P.3d 334, 347 (Wyo. 2007).
Metz involved an alleged breach of an employment agreement that specified,
“[a]ny employee . . . who considers that he has been discharged or disciplined
without proper cause . . . shall have the right to appeal such discharge in
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accordance with the provisions of the grievance procedure set forth in this
agreement.” Id. at 346 (alterations in original). Because the plaintiff did not
exhaust the grievance procedures, the defendant argued her contract claim was
barred under Bryant. The Wyoming Supreme Court, however, differentiated
Bryant based on the language of the contract. In Bryant, the contract specified:
“Employee . . . shall file with the Company a written grievance.” Id. Because
this was “mandatory language requiring an employee to file a grievance,” failure
to do so barred the claim. Id. at 347. The Metz contract, however, only stated
that the employee “shall have the right” to file a grievance, indicating a
permissive, rather than mandatory intent. Id. 4 Thus, Metz teaches that
“whether . . . grievance procedures were mandatory [is] to be determined by
applying the usual rules of contract interpretation.” Id. at 348. 5
4
The District of Wyoming reached a similar conclusion in a related case.
See Order, Titus v. Laramie Cnty. Sch. Dist. #1, No. 05-CV-098, at 10 (D. Wyo.
Jan. 26, 2006) (“Any intent by the school district to make the grievance process
mandatory is ambiguous at best. Such an intent could have been clearly stated by
Defendant when drafting the handbook language. . . . Because the Court finds that
the grievance procedures set forth in Defendant’s Employee Handbook are
permissive, not mandatory, Plaintiff had no obligation to exhaust those
procedures before bringing suit.”).
5
Some courts have framed the exhaustion inquiry in jurisdictional terms.
See, e.g., Order, Titus, No. 05-CV-098, at 7. Metz explained, however, that the
inquiry only takes on a jurisdictional dimension when statutory law vests an
administrative body with jurisdiction to hear grievances in the first instance. See
Metz, 173 P.3d at 347. Here, as in Metz, no government agency or statutory
restriction is involved, so we “apply[] the usual rules of contract interpretation”
without questioning our jurisdiction to resolve the claim. Id. at 348. This
(continued...)
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Here, McBride’s contract explicitly stated that the contractual grievance
procedure “shall be the exclusive and mandatory procedure for challenge of a
dismissal . . . . Failure to timely request a review . . . shall waive any right of the
employee to contest the dismissal . . . . In cases where the review is . . . not
timely sought . . . the dismissal shall be deemed valid and binding on the
employee.” Supp. App. at 101–02. It is difficult for us to imagine a more
unambiguous statement of mandatory intent.
McBride argues Peak waived its right to enforce the seven-day limit by
commencing an investigation into her allegations of fraud even though the seven-
day limit had already passed. We disagree. Under Wyoming law, waiver requires
that the intent to relinquish a right be manifested unequivocally. Jackson State
Bank, 837 P.2d at 1086. In our view, the Board commencing an investigation into
McBride’s allegations did not unequivocally demonstrate an intent to waive any
terms in the employment contract. To the contrary, investigating a former
business manager’s allegations of fraud is consistent with what any reasonable
board likely would do under the circumstances, regardless of the board’s
intentions vis-a-vis the former employee or the employment contract.
McBride next claims Peak cannot enforce the seven-day limitations period
because the employment contract was illusory. But this argument does not help
5
(...continued)
approach is consistent with Bryant, which affirmed a grant of summary judgment
rather than dismissing for lack of jurisdiction. See Bryant, 701 F.2d at 1168.
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McBride. A party seeking to be excused from performance under an illusory
contract cannot then turn around and enforce the illusory contract against the
other party; McBride cannot “have [her] cake and eat it, too.” Pro Edge, L.P. v.
Gue, 451 F. Supp. 2d 1026, 1036 (N.D. Iowa 2006) (refusing to enforce an invalid
contract against either party).
Finally, McBride argues that we should excuse the seven-day requirement
because pursuing the grievance procedures in the contract would have been futile.
The only evidence she cites in support of this argument is a deposition statement
by the Board President: “There isn’t a chance in hell I would have rehired her.”
App. 127. But the context in which this statement was made clearly indicates that
the Board President only reached this conclusion after investigating McBride’s
allegations of fraud and speaking with several Peak employees regarding
McBride’s negative influence on morale. In addition, the record shows the Board
President did not have controlling authority over the decision to rehire McBride.
[Id. at 126.] Thus, this statement by the President, viewed in context, does not
give rise to an inference that it would have been futile for McBride to pursue the
contract remedies.
Because McBride was not excused from pursuing the grievance procedures
specified in her employment contract, the district court correctly found her
contract claim to be barred.
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4. Breach of Implied Covenant of Good Faith and Fair Dealing
McBride next argues that her employment relationship with Peak included
an implied covenant of good faith and fair dealing, on account of her “special
relationship” as Peak’s accountant. McBride claims Peak broke this covenant by
terminating her.
Under Wyoming law, every employment contract contains an implied
covenant of good faith and fair dealing. Wilder v. Cody Country Chamber of
Commerce, 868 P.2d 211, 220 (Wyo. 1994). But breaches of this covenant are
not actionable in tort unless “a special relationship of trust and reliance exists
between the employer and the employee.” Dubrowski v. State ex rel. Wyo. Liquor
Comm’n, 1 P.3d 631, 633 (Wyo. 2000). This special relationship arises only in
“rare and exceptional cases.” Springer v. Blue Cross & Blue Shield of Wyo., 944
P.2d 1173, 1178 (Wyo. 1997). “A special relationship sufficient to support a
cause of action can be found by the existence of separate consideration, rights
created by common law or statute, or rights accruing with longevity of service.”
Id. “Usually, such a special relationship can be found only in a long-term
employment relationship, coupled with a discharge calculated to avoid employer
responsibilities to the employee.” Hoflund v. Airport Golf Club, 105 P.3d 1079,
1087 (Wyo. 2005). “[M]ere longevity of service is not sufficient to create the
special relationship.” Trabing v. Kinko’s, Inc., 57 P.3d 1248, 1256 (Wyo. 2002).
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McBride argues she had a special relationship of trust and reliance
stemming from her role as Peak’s business manager and accountant. She reasons
that her fiduciary and professional duties immunized her from termination for any
of her actions made in furtherance of Peak’s code of ethics and the ethics of the
accounting profession.
The Wyoming Supreme Court, however, rejects the existence of a special
relationship based on fiduciary duty. The court was confronted with this type of
argument in Andrews v. Southwest Wyoming Rehabilitation Center, 974 P.2d 948
(Wyo. 1999). There, the plaintiff, the former vice president of the defendant
employer, claimed his firing violated the implied covenant of good faith and fair
dealing because, as an officer of a nonprofit corporation, his fiduciary duties to
the employer created the requisite “special relationship.” See id. at 950. The
court disagreed:
The implied good faith covenant involves a “special element of
reliance” by the aggrieved party, the type of trust and dependency
that is found, for example, in insurance relationships . . . . [I]t goes
too far to say that an officer exercising his duty of care . . . has a
right not to be terminated. On the contrary, the Act provides that a
board may remove an officer at any time with or without cause. [The
statute] clearly vitiates Andrews’ contention that he should be
allowed to rely on his employer to maintain his employment until it
is determined that he has not acted, or can no longer act, in the
corporation’s best interest.
Id. Thus, a fiduciary relationship alone does not establish a special relationship
of trust and reliance—the plaintiff must show something more.
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McBride claims that “[t]he hallmark of the duty of good faith and fair
dealing is that neither party will do anything that will injure the right of the other
to receive the benefit of the agreement.” Reply Br. at 20. But that statement is
an overbroad description of breaches of the implied covenant of good faith that
are actionable in tort. McBride fails to identify any “rights created by common
law or statute” that would create a qualifying special relationship with Peak.
McBride also argues that her nine-year term of service is sufficient to
create a fact question whether a special relationship existed. But again, “mere
longevity of service is not sufficient to create the special relationship.” Trabing,
57 P.3d at 1256. Rather, longevity of service is relevant only insofar as the
employer terminated the employee to deprive her of some benefit, such as
retirement income. See id. McBride does not allege that her firing had anything
to do with Peak’s desire to deprive her of benefits accrued on account of her nine
years of service. Accordingly, longevity of service cannot be a basis for her
claim.
In sum, we find no allegations that would support the existence of a special
relationship sufficient to allow a tort claim for breach of duty of good faith and
fair dealing, and this claim fails as a matter of law.
5. Defamation
The record shows that several of McBride’s coworkers made intemperate
remarks and insults behind her back via email. McBride became aware of these
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messages during the course of discovery in the court below. McBride claims
these messages constitute defamation per se that entitles her to a recovery without
proof of damages.
Under Wyoming law:
A defamatory communication is one which tends to hold the plaintiff
up to hatred, contempt, ridicule or scorn or which causes him to be
shunned or avoided; one that tends to injure his reputation as to
diminish the esteem, respect, goodwill or confidence in which he is
held. To be actionable [as a per se matter], the defamatory or
disparaging words must affect the plaintiff in some way that is
peculiarly harmful to one engaged in his trade or profession.
Abromats v. Wood, 213 P.3d 966, 969 (Wyo. 2009). Defamatory speech
“purport[s] to state or imply actual, known facts.” Dworkin v. L.F.P., Inc., 839
P.2d 903, 915 (Wyo. 1992). “Abusive epithets, vulgarities and profanities are
nonactionable. The ad hominem nature of such language easily identifies it as
rhetorical hyperbole which, as a matter of law, cannot reasonably be understood
as statement of fact.” Id.
Some of the allegedly defamatory statements here are blocked by
Wyoming’s one-year statute of limitations. W YO . S TAT . § 1-3-105(a)(v)(A).
Although McBride argues the statements form a pattern constituting a single
“continuing tort” that survives the statute of limitations, the continuing-tort
doctrine is inapplicable here because each statement was a discrete, potentially
actionable occurrence. See Flowers v. Carville, 310 F.3d 1118, 1126 (9th Cir.
2002) (“The [continuing-tort] doctrine applies where there is no single incident
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that can fairly or realistically be identified as the cause of significant harm. Here,
however, publication of the book was a single incident. ‘[A] cause of action for
defamation accrues immediately upon the occurrence of the tortious act and thus,
is not appropriate for the continuing violation exception.’” (quoting Lettis v. U.S.
Postal Serv., 39 F. Supp. 2d 181, 205 (E.D.N.Y. 1998)). Accordingly, we will
consider only statements falling within the one-year period.
Most of the allegedly defamatory statements are “abusive epithets” or
“vulgarities.” Dworkin, 839 P.2d at 915. McBride’s coworker’s called her, for
example, “McFreakazoid,” “Madusa,” and “McBitch,” among others. App.
81–119. While unbecoming, such “rhetorical hyperbole” is not actionable.
Dworkin, 839 P.2d at 915.
There is only one statement within the statute of limitations that could not
be characterized as an abusive epithet: a message from Seigel to Birney regarding
McBride’s timesheets. Seigel, the Peak employee responsible for tracking other
employees’ time, complained that McBride was misreporting her time, recording
8-hour days when she in fact arrived late or left early. Seigel told Birney
McBride’s actions were the equivalent of “purloining” two or three computers.
App. at 148. Because McBride does not allege actual injury resulting from this
statement, she must show the statement was “peculiarly harmful to one engaged in
[her] . . . profession”—that of an accountant. Abromats, 213 P.3d at 969.
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While the accusation that someone is skipping work may be harmful to
them in a way that mere name-calling is not, the Restatement (Second) of Torts,
which Wyoming courts follow, see Hoblyn v. Johnson, 55 P.3d 1219, 1233 (Wyo.
2002), makes clear that a “peculiarly” harmful statement is one that would injure
members of the plaintiff’s profession in an unusual or unique way. For example,
a false statement that a lawyer is unqualified to practice law, or that a merchant is
insolvent, is slanderous per se; but a statement that a professor is a drunkard, or
that a bricklayer is a hypocrite, is not slanderous without proof of injury. R EST .
2 D T ORTS § 573.
Here, there is no argument that Seigel’s accusations were particularly
harmful to McBride in her profession; they only imply she was not a particularly
diligent employee. Thus, without proof of injury, McBride’s defamation claim
fails as a matter of law. See Wilder, 868 P.2d at 224.
6. Sex Discrimination
Lastly, McBride brings a federal sex discrimination claim under Title VII
of the Civil Rights Act. McBride asserts two bases for her claim. First, she
alleges discrimination based on her sex and her nonconformance with the female
stereotype of submissiveness. Second, she alleges Peak’s leaders tolerated a
hostile work environment.
In a sex discrimination claim under Title VII, the plaintiff must show,
among other things, that she was discriminated against because of her sex.
-22-
Harsco Corp. v. Renner, 475 F.3d 1179, 1186 (10th Cir. 2007). Although
McBride characterizes her claim as a “sex-plus” discrimination claim, the claim is
perhaps better characterized as a sex stereotyping claim. In a “sex-plus” claim,
the plaintiff must show that the employer applied a requirement to one sex but not
the other, and then discriminated based on that requirement. Coleman v. B-G
Maint. Mgmt. of Colo., Inc., 108 F.3d 1199, 1203 (10th Cir. 1997). For example,
an employer that refuses to hire women with young children, but is willing to hire
men with young children, may be liable for sex discrimination. See id. In a
stereotyping claim, the plaintiff must show that employer discriminated against
her based on her “failure to conform to stereotypical gender norms.” Etsitty v.
Utah Transit Auth., 502 F.3d 1215, 1223 (10th Cir. 2007). Here, the difference
between a sex-plus claim and a stereotyping claim is not significant, because
McBride’s claim fails however it is characterized.
McBride alleges that her supervisor, Dr. Birney, required her to comply
with a submissive stereotype. But the submissive expectation McBride alleges is
a willingness to tolerate financial irregularities, which has nothing to do with a
sex stereotype. Nor does she provide evidence that women employees “were
treated differently from similarly situated members of the opposite gender.” Id. at
1204. The only statement Birney made that could be construed as sex
stereotyping was his response to McBride’s question about how to make her
subordinates comply with Peak’s policies; McBride claims Birney told her to
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“change my hair color [and] the way I dressed.” App. at 66. As the district court
found, this comment had nothing to do with stereotyping based on
submissiveness, and in any event was an “isolated comment in the context of nine
years of employment.” Aplt. Br. Att. at 18. Such comments are “generally
considered too abstract to support an inference of discrimination.” Adamson v.
Multi Cmty. Diversified Servs., Inc., 514 F.3d 1136, 1151 (10th Cir. 2008).
Therefore, her stereotyping claim cannot survive summary judgment. 6
With regard to her hostile work environment claim, McBride alleges
several abusive sex-related comments from some of her female colleagues. To
make a claim of sex discrimination based on a hostile work environment, “a
plaintiff must show (1) that she was discriminated against because of her sex; and
(2) that the discrimination was sufficiently severe or pervasive such that it altered
the terms or conditions of her employment and created an abusive working
environment.” Pinkerton v. Colo. Dep’t of Transp., 563 F.3d 1052, 1058 (10th
Cir. 2009).
Because the allegedly abusive comments came from coworkers of the same
sex as McBride, she must demonstrate one of three factual circumstances: (1) that
the harasser was motivated by sexual desire; (2) that the harasser was motivated
6
Insofar as McBride also alleges a Title VII retaliation claim, it likewise
fails. Birney’s isolated comment does not “directly show that retaliatory animus
played a ‘motivating part’ in the employment decision,” Fye v. Okla. Corp.
Comm’n, 516 F.3d 1217, 1226 (10th Cir. 2008); nor does it suggest Peak’s
reasons for terminating her were pretextual, see id. at 1227.
-24-
by hostility to the presence of the victim’s sex in the workplace; or (3) that the
harasser treated males and females differently in a mixed-gender workplace. See
Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 82 (1998); Dick v. Phone
Directories Co., 397 F.3d 1256, 1263 (10th Cir. 2005). But McBride alleges no
facts that would support finding any of these three circumstances, and our own
review of the record reveals none.
Even if McBride could overcome these hurdles, the record would still not
support a finding that her work environment “was both objectively and
subjectively hostile or abusive” as our case law requires. Morris v. City of Colo.
Springs, 666 F.3d 654, 664 (10th Cir. 2012). A plaintiff in McBride’s position
must show “that the discrimination was sufficiently severe or pervasive such that
it altered the terms of conditions of her employment and created an abusive
working relationship.” Id. Although McBride “states that she was harassed,”
Aplt. Br. at 40, the only specific instances of harassment she alleges are Birney’s
isolated comment and the unprofessional emails sent by her coworkers. While the
emails included language that might be characterized as abusive, McBride
concedes that she was unaware of the emails until after she was terminated. Thus,
those emails, standing alone, cannot support an inference that McBride
-25-
“experienced a hostile work environment due to sexual discrimination.” Id. at
669 (emphasis added). 7
In sum, McBride cannot show she was discriminated against because of her
sex. Therefore, her hostile work environment claim fails.
C. Denial of Expanded Discovery
Finally, McBride appeals the district court’s denial in part of her Motion to
Compel additional discovery. Primarily, McBride sought discovery of additional
emails archived in Peak’s computer systems.
Although the plaintiff bears the burden of showing the district court abused
its discretion in denying an evidentiary motion, McBride offers nothing beyond
conclusory allegations and a recitation of Rule 26(b). She cites no case law and
offers no facts on which we could conclude that the district court “commit[ted] a
legal error or relie[d] on clearly erroneous factual findings.” Trentadue, 572 F.3d
at 806. In addition, Peak convincingly explains why the district court’s decision
was reasonable. McBride had extensive pre-summary judgment discovery and
access to thousands of documents—both those produced in discovery and those
she had taken home with her upon termination. And she did not explain how a
particular line of discovery inquiries would further substantiate her claims.
7
We do not address whether abusive communications unknown to the
plaintiff during the time of her employment could support of an inference of a
hostile work environment in combination with more direct evidence of abuse. As
discussed above, Birney’s isolated remark does not constitute such evidence.
-26-
Accordingly, we find McBride has failed to show the district court abused
its discretion.
III. Conclusion
For the reasons stated, we AFFIRM the judgment of the district court.
-27-
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FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D18-4091
_____________________________
CHRISTOPHER JOSEPH
BORDONARO, Former Husband,
Appellant,
v.
EMILY JOY BORDONARO, Former
Wife,
Appellee.
_____________________________
On appeal from the Circuit Court for Nassau County.
Robert M. Foster, Judge.
May 21, 2019
PER CURIAM.
Christopher Joseph Bordonaro appeals the trial court’s order
granting his former wife’s Motion for Contempt/Enforcement and
Motion for Attorney’s Fees and Costs. The motion alleged that
Appellant neglected his child support obligations under the
Consent Final Judgment of Dissolution of Marriage (Final
Judgment). We agree that the trial court adjudicated issues during
the contempt hearing that were not properly pleaded or noticed
and improperly granted attorney’s fees to the former wife. We
reject all of Appellant’s other claims.
The increase of Appellant’s monthly child support payments
is improper for two reasons. First, it did not use the requisite
separate pleading, financial affidavits, or worksheet. §§ 61.14,
61.30(14), Fla. Stat.; Fla. Fam. L.R.P. 12.285(k). Second, a trial
court cannot modify child support on a party’s motion for contempt
for nonpayment of child support. McGrath v. Caron, 8 So. 3d 1253
(Fla. 4th DCA 2009). As a result, the arrearages imposed by the
trial court based on the improperly modified child support
obligations were also improperly imposed.
Moreover, the trial court’s order found that Appellant
effectively abandoned his minor child. A motion for contempt or
enforcement for failure to meet one’s support obligations is not the
proper vehicle to request a finding of abandonment. Abandonment
must be established by clear and convincing evidence and is
usually requested through a petition for termination of parental
rights. See T.S. ex rel. D.H. v. Dep’t of Children & Families, 969 So.
2d 494, 495 (Fla. 1st DCA 2007).
Finally, the trial court erroneously granted Appellant’s former
wife’s request for attorney’s fees without considering or making
any findings regarding either party’s need or ability to pay. See
Fulmer v. Fulmer, 961 So. 2d 1081, 1082 (Fla. 1st DCA 2007);
Perrin v. Perrin, 795 So. 2d 1023, 1024 (Fla. 2d DCA 2001).
Accordingly, we reverse and remand so that the trial court can
1) strike the modified increase in child support and related
arrearages and make the requisite findings supporting the
enforcement of Appellant’s original child support obligation
pursuant to the Final Judgment; 2) strike its finding that
Bordonaro effectively abandoned his minor child; and 3) make the
appropriate findings regarding both parties’ ability to pay and
need for attorney’s fees.
REVERSED and REMANDED.
WOLF, KELSEY, and WINOKUR, JJ., concur.
2
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
James Pratt O’Conner, Fernandina Beach, for Appellant.
No appearance for Appellee.
3
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79 B.R. 89 (1987)
In re Manuel A. SIERRA, M.D. and d/b/a Golden Glades Medical Center, Debtor.
Manuel A. SIERRA, M.D. and d/b/a Golden Glades Medical Center, Plaintiff,
v.
Arlene SANTANA, Defendant.
Bankruptcy No. 87-00350-BKC-SMW, Adv. No. 87-0393-BKC-SMW-A.
United States Bankruptcy Court, S.D. Florida.
October 30, 1987.
*90 Robert L. Roth, P.A., Miami, Fla., for debtor.
Stormie Stafford, Stroock & Stroock & Lavan, Miami, Fla., for defendant Santana.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ON ADVERSARY COMPLAINT FOR PARTITION, TO DETERMINE VALIDITY, PRIORITY AND AMOUNT OF LIEN, IF ANY AND TO AVOID PREFERENCE
SIDNEY M. WEAVER, Bankruptcy Judge.
THIS CASE came on to be heard on September 22, 1987 on the above-styled Adversary Complaint for Partition, To Determine Validity, Priority and Amount of Lien, If Any and to Avoid Preference, pursuant to 11 U.S.C. § 547(b), by the debtor against Arlene Santana, the defendant, and the court having heard testimony of various witnesses and received various evidence, and having heard argument of counsel for the respective parties, and being otherwise fully advised in the premises, the Court makes the following findings of fact and conclusions of law:
The debtor requests partition of certain real property in Dade County, Florida, said real property being a medical office building utilized by the debtor in his medical practice with space being rented to a dentist in another portion of the premises. The Court finds that partition of these premises is not feasible for the reason that a zoning variance and a waiver of plat would be required to effectuate the partition. Accordingly, partition of the premises as requested by the debtor is denied.
The debtor also requests that the Court find that a security interest asserted by the defendant in the debtor's one-half (½) interest in the said real property is an avoidable preference pursuant to 11 U.S.C. § 547(b). The defendant asserts that a security interest arises from the entry of an order on December 2, 1986 by the state court in the dissolution of marriage proceedings between the debtor and the defendant which gave the defendant a security interest in the debtor's one-half (½) interest in the property. The defendant owns the other one-half (½) interest in the property as tenants in common with the debtor. The debtor argues that the state court order was entered within ninety (90) days of the date of the filing of the instant Chapter 11 proceedings and, therefore, the security interest is avoidable as a preference under 11 U.S.C. § 547(b).
The defendant argues that a Notice of Lis Pendens was recorded by the defendant in the public records of Dade County, Florida and that the Lis Pendens was recorded *91 several years prior to these bankruptcy proceedings. Therefore, as a result of such recorded Lis Pendens, the defendant acquired a valid security interest in the one-half (½) interest of the premises owned by the debtor. The debtor responds that a Notice of Lis Pendens does not constitute a lien and no lien arose in favor of the defendant until the entry of the actual order of December 2, 1986. The parties agree that the order of December 2, 1986 was within the ninety (90) day period prior to bankruptcy and also agree that the filing and recording of the Notice of Lis Pendens took place more than one (1) year prior to the filing of the bankruptcy proceedings.
Under Florida law the recording of a Notice of Lis Pendens serves as notice of the pendancy of an action relating to the property described in the Notice of Lis Pendens. Levine v. Arvida Corporation, 405 So.2d 1370 (4th D.C.A. 1981); Proccaci v. Zacco, 402 So.2d 425 (4th D.C.A. 1981); National Bank of Sarasota v. J.T. Dugger, 335 So.2d 859 (2nd D.C.A. 1976). There is no indication in Florida Statute § 48.23, which provides for lis pendens in the State of Florida, that the filing and recording of a lis pendens constitutes a lien under the law of the State of Florida nor is there any case in Florida that so holds. In In re Airport-81 Nursing Care, Inc., 32 B.R. 960 (Bktcy ED, Tennessee 1983), the Bankruptcy Court interpreted a lis pendens statute under Tennessee law which is similar to the Florida statute and held that the filing and recording of a lis pendens does not, in and of itself, create a lien but, rather, "there must be some other authority, equitable or otherwise, that provides the basis for such a lien right". In re Airport-81 Nursing Care, Inc., supra at page 964.
The Court in this case must agree with the learned bankruptcy judge in Tennessee in that there is no authority under the law of the State of Florida for the creation of a lien in property upon the filing and recording of a lis pendens. The Court concludes that the filing and recording of a lis pendens in the instant case did not create a lien right in favor of the defendant but such lien right only arose at the time of the entry of the state court order in the dissolution of marriage proceedings on December 2, 1986, said order having been entered within ninety (90) days of the filing of the instant bankruptcy proceeding and at a time when the debtor was insolvent. As a result of the entry of that order, the defendant would receive more than she would receive under Chapter 7 proceedings and, therefore, the security interest constitutes a preference under 11 U.S.C. § 547(b). The debtor requests that the Court enter an order avoiding the preference and the Court agrees that the debtor is entitled to such an order.
The last matter that the Court must determine is the reasonable rental value, if any, which would be payable by the debtor to the defendant with respect to her one-half (½) interest in the subject real property, which the defendant owns as tenants in common with the debtor. The defendant requests that the Court find the reasonable rental value to be one thousand and 00/100ths ($1,000.00) dollars per month payable by the debtor to defendant from the time that the parties became co-tenants in the subject property and for as long as the debtor remains in possession of the subject premises. The debtor requests that the Court find that there is no reasonable rental value payable to the defendant or, if such a reasonable rental value is found to be required, that the said reasonable rental should not exceed five hundred and 00/100ths ($500.00) dollars per month and should not be awarded retroactively. The Court has heard the various evidence and testimony presented by the parties including the testimony of appraisers and finds that the defendant is entitled to be paid for the reasonable rental value of her one-half (½) interest in the subject premises, with such payment being from the time the parties became co-tenants and for as long as the debtor remains in possession of the subject premises. The Court finds that the reasonable rental value for the defendant's one-half (½) interest is seven hundred thirty-five and 00/100ths ($735.00) per month.
*92 The Court will enter a separate judgment denying partition, setting aside and avoiding the preferential security interest of the defendant in the debtor's one-half (½) interest in the subject premises and awarding the sum of seven hundred thirty-five and 00/100ths ($735.00) dollars per month as a reasonable rental value for the defendant's one-half interest.
FINAL JUDGMENT ON ADVERSARY COMPLAINT FOR PARTITION, TO DETERMINE VALIDITY, PRIORITY AND AMOUNT OF LIEN, IF ANY AND TO AVOID PREFERENCE
In conformity with the Findings of Fact and Conclusions of Law of even date, it is hereby
ORDERED AND ADJUDGED:
1. That partition of the real property located at 2727 N.W. 167th Street, Opa Locka, Florida is denied.
2. That the security interest asserted by defendant Santana in the debtor's one-half (½) interest in the real property by virtue of the December 2, 1986 state court order and prior lis pendens constitutes a preferential transfer of property of the debtor and, as such, is avoided and set aside pursuant to 11 U.S.C. § 547(b).
3. That the debtor is hereby ordered to pay the sum of seven hundred thirty-five and 00/100ths ($735.00) dollars per month to the defendant as the reasonable rental of her one-half (½) interest in the real property located at 2727 N.W. 167th Street, said amount being payable from the time that the debtor and the defendant became co-tenants in the property and continuing for as long as the debtor remains in possession of the premises.
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928 N.E.2d 261 (2010)
Jason G. ERTEL, Appellant-Defendant,
v.
STATE of Indiana, Appellee-Plaintiff.
No. 29A02-0908-CR-824.
Court of Appeals of Indiana.
June 16, 2010.
*262 John D. Fierek, Voyles, Zahn, Paul, Hogan & Merriman, Indianapolis, IN, Attorney for Appellant.
Gregory F. Zoeller, Attorney General of Indiana, Kathy Bradley, Deputy Attorney General, James E. Porter, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee.
OPINION
RILEY, Judge.
STATEMENT OF THE CASE
Appellant-Defendant, Jason G. Ertel (Ertel), appeals his conviction for operating a vehicle while intoxicated, a Class C misdemeanor, Ind.Code § 9-30-5-2(a).
We affirm.[1]
ISSUE
Ertel raises one issue for our review, which we restate as follows: Whether the trial court abused its discretion when it admitted evidence obtained after Ertel's vehicle was stopped.
FACTS AND PROCEDURAL HISTORY
On May 21, 2008, at approximately 2:00 a.m., Jackie Reed (Reed) called 911 to report that an unknown white male, who was later identified as Ertel, wearing a red shirt and driving a dark colored car, had rung her doorbell and then left. Officer Michael Wilcox (Officer Wilcox) with the Fishers Police Department responded to the 911 dispatch. Initially, Officer Wilcox was unsure about the nature of the call and stated "[a]t that time in the morning, it could be a lot of different things. We don't know if it is just somebody knocking on a door trying to find out if anybody is home. Or they want to commit a burglary...." (Suppression Hearing Transcript pp. 14-15). While en route to Reed's residence, a 911 dispatch informed Officer Wilcox that "the vehicle had left and the vehicle had returned again." (Suppr. Hearing Tr. p. 12). As Ertel attempted to exit the neighborhood, he went down Reed's road, which is a cul-de-sac, and passed Reed's house again. At this point, a neighbor waived a flashlight at Ertel's vehicle but he did not stop.
Officer Wilcox drove into the neighborhood and saw a dark colored vehicle sitting at a four-way stop near Reed's residence for approximately five seconds. As the vehicle passed Officer Wilcox, he observed that Ertel had both hands on the wheel and that he was staring straight ahead. Officer Wilcox believed, based on his experience, that Ertel's behavior was "an unconscious [sic] way that somebody might say [`]you can't see me going past you.[']" (Transcript p. 97). As Officer Wilcox noticed that Ertel fit the description of the man described by dispatch, he made a u-turn and activated his lights in an attempt *263 to pull Ertel over. Ertel pulled over after approximately a quarter of a mile.
Officer Wilcox approached the driver's side of Ertel's car and asked him for his license and registration, during which he noticed that Ertel's "eyes kept moving around." (Tr. p. 14). Officer Wilcox asked Ertel what was "going on" and Ertel responded "nothing." (Tr. p. 99). He then asked Ertel if he had knocked on someone's door, Ertel responded affirmatively and added that he had been looking for a friend that he had text messaged earlier. When asked his friend's name, Ertel began looking around and eventually said his friend's name was Karen. When asked her last name, his eyes began "darting back and forth" and he said "Smith." (Tr. p. 99). Officer Wilcox asked Ertel if he had been drinking, and he responded that he had drunk two beers earlier that evening with dinner.
As Officer Wilcox returned to his car, Officer James Hawkins (Officer Hawkins) arrived at the scene. Officer Wilcox told Officer Hawkins that he suspected Ertel was intoxicated and that they should conduct field sobriety tests. Once Ertel got out of the vehicle, Office Hawkins observed that Ertel lost his balance. Additionally, Ertel smelled of alcohol, that his eyes were red and watery, and that his speech was slowed and slurred. Ertel submitted to field sobriety tests and failed three. The Officers asked Ertel if he was interested in taking a chemical test and Ertel agreed. He was transported to the Fishers Police Department where a breath test registered his blood alcohol content at.08.
On May 28, 2008, the State filed an Information charging Ertel with Count I, operating a vehicle while intoxicated, a Class C misdemeanor, I.C. § 9-30-5-2(a) and Count II, operating a vehicle with an alcohol concentration equivalent of at least.08, but less than .15, per 210 liters of breath, a Class C misdemeanor, I.C. § 9-30-5-1(a). On October 21, 2008, Ertel filed a motion to suppress evidence. A hearing was held on Ertel's motion. On March 5, 2009, the trial court entered a written Order denying his motion. Ertel filed a motion to reconsider on his motion to suppress and a motion to certify interlocutory order. The trial court denied both motions on April 23, 2009.
A jury trial was held on April 30, 2009. Ertel was found guilty as charged on both Counts. The trial court entered judgment of conviction on Count I and vacated the conviction on Count II. On May 12, 2009, Ertel was sentenced to sixty days in jail, with fifty-eight days suspended, one year of probation, and a one-year license suspension for his conviction.
Ertel now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
The admission or exclusion of evidence is within the sound discretion of the trial court, and we will reverse the trial court's determination only for an abuse of discretion. Redding v. State, 844 N.E.2d 1067, 1069 (Ind.Ct.App.2006), reh'g denied. An abuse of discretion occurs when a decision is clearly against the logic and effect of the facts and circumstances before the trial court. Id.
II. The Stop
Ertel contends that the trial court abused its discretion when it admitted evidence obtained after his vehicle was seized illegally. Specifically, Ertel contends that Officer Wilcox lacked reasonable suspicion to conduct an investigatory stop and that the seizure violated his Fourth Amendment.
*264 The Fourth Amendment prohibits unreasonable searches and seizures by the government, and its safeguards extend to brief investigatory stops of persons or vehicles that fall short of traditional arrest. Moultry v.State, 808 N.E.2d 168, 170 (Ind. Ct.App.2004). Evidence obtained in violation of the Fourth Amendment may not be used against a defendant at trial. Rice v. State, 916 N.E.2d 296, 301 (Ind.Ct.App. 2009). A police officer may briefly detain a person for investigatory purposes without a warrant or probable cause if, based upon specific and articulable facts together with rational inferences from those facts, the official intrusion is reasonably warranted and the officer has a reasonable suspicion that criminal activity "may be afoot." Moultry, 808 N.E.2d at 170-71 (quoting Terry v. Ohio, 392 U.S. 1, 21-22, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968)).
"Reasonable suspicion is a `somewhat abstract' concept, not readily reduced to `a neat set of legal rules.'" Id. at 171 (quoting United States v. Arvizu, 534 U.S. 266, 274, 122 S.Ct. 744, 151 L.Ed.2d 740 (2002)). "When making a reasonable suspicion determination, reviewing courts examine the `totality of the circumstances' of the case to see whether the detaining officer had a `particularized and objective basis' for suspecting legal wrongdoing." Id. (quoting Arvizu, 534 U.S. at 273, 122 S.Ct. 744). The reasonable suspicion requirement is met where the facts known to the officer, together with the reasonable inferences arising from such facts, would cause an ordinarily prudent person to believe criminal activity has occurred or is about to occur. Id. It is well settled that "reasonable suspicion must be comprised of more than an officer's general `hunches' or unparticularized suspicions." Webb v. State, 714 N.E.2d 787, 788 (Ind.Ct.App. 1999) (quoting Terry, 392 U.S. at 27, 88 S.Ct. 1868). Reasonable suspicion, which justifies an investigatory stop, is less demanding than probable cause and requires a showing considerably less than a preponderance of the evidence, but still requires a minimal level of objective justification and more than an inchoate and unparticularized suspicion or hunch of criminal activity. Wells v. State, 922 N.E.2d 697, 700-701 (Ind.Ct.App.2010).
Ertel cites to Delaware v. Prouse, 440 U.S. 648, 663, 99 S.Ct. 1391, 59 L.Ed.2d 660 (1979), for the proposition that a police officer may make a Terry stop of a vehicle if the officer has reasonable and articulable suspicion that (1) the driver is unlicensed; (2) the vehicle is unregistered; or (3) the vehicle or an occupant is subject to seizure for a violation of the law. Here, Ertel argues, the Officers did not testify that they seized him because they had reasonable suspicion that (1) he did not have a license; (2) his car was unregistered; or (3) he was subject to seizure for violation of a law.
In Prouse, a police officer pulled over the defendant for a spot check. Id. at 651. The officer had not observed any traffic violations or any suspicious activity; instead made the stop merely to check the driver's license and registration. Id. During the stop, the officer saw marijuana in plain view on the car floor and subsequently arrested Prouse. Id. The Supreme Court held that "[w]hen there is not probable cause to believe that a driver is violating any one of the multitude of applicable traffic and equipment regulations," then police officers may not stop individuals for nothing more than a spot check. Id. at 661. "This kind of standardless and unconstrained discretion is the evil the Court has discerned when in previous cases it has insisted that the discretion of the official in the field be circumscribed, at least to some extent." Id.
*265 Ertel also cites to Denton v. State, 805 N.E.2d 852, 853 (Ind.Ct.App.2004), trans. denied, where a police officer suspected that Denton had stolen a car based on the fact that the car he was driving had a broken rear window. In reversing the trial court's denial of Denton's motion to suppress, this court held that there was no evidence in the record to suggest that other than the fact that the rear window was broken, "the stop was based upon nothing more than an unparticularized suspicion and, therefore, [the officer] lacked reasonable suspicion or probable cause necessary to justify his actions in stopping the vehicle." Id. at 856.
We agree with the State that Ertel's reliance on Prouse is misplaced, because when considering the totality of the circumstances, Officer Wilcox did not stop Ertel for a spot check as in Prouse; instead, he had reasonable suspicion to pull Ertel over. We look to R.H. v. State, 916 N.E.2d 260 (Ind.Ct.App.2009), trans. denied, to be instructive. While we determined in that case that the initial encounter did not constitute an investigatory stop, thus, eliminating our need to address whether the officer had the requisite reasonable suspicion required under Terry, we find this case to be helpful because of the similarities in the facts. In that case, R.H. argued that he was illegally detained in violation of the Fourth Amendment, and that the evidence obtained pursuant to that detention was inadmissible. Id. at 263. He also argued that the officer lacked reasonable suspicion to conduct an investigatory stop. Id. In that case, the officer responded to a 911 dispatch reporting a suspicious car that the caller did not recognize with four males inside of it parked in front of the caller's residence at 11:40 p.m. Id. at 262-263. The officer activated his lights and approached the car. Ultimately, the State alleged R.H. to be a delinquent child for committing an act that would constitute a Class A misdemeanor possession of marijuana, if committed by an adult. Id. This court held that given the objective and articulable facts, the officer's approach and initial contact with R.H. did not amount to a seizure under the Fourth Amendment. Id. at 266. In his concurring opinion, Judge Mathias stated:
We as a society desire our law enforcement organizations to respond in situations like the one before us in exactly the way the officer conducted himself. A healthy, civil society is most robust when it feels safe and when that feeling of safety is validated through interaction with vigilant and responsive law enforcement engaged in the important business of policing neighborhoods within a community. Simply said, we all want to be able to depend upon law enforcement to check on the occupants of vehicles in circumstances like those before us.
Id. at 268. We agree with Judge Mathias' sentiment that when a concerned citizen calls 911, especially considering the fact that the 911 call occurred during the late evening hours similar to the R.H. case, we want our law enforcement to respond the way in which Officer Wilcox responded. Given the fact-sensitive nature of each case, we consider the facts as a whole and find that Officer Wilcox had reasonable suspicion to conduct an investigatory stop. The record indicates that Officer Wilcox received a 911 dispatch report that a white male, wearing a red shirt and driving a dark colored car, had rung Reed's doorbell at approximately 2:00 a.m. Officer Wilcox was also told that the driver had driven past Reed's home again, and failed to stop after being flagged down by a neighbor. As Officer Wilcox approached the neighborhood, he noticed a vehicle stopped at a stop sign for approximately five seconds that not only matched the description given *266 by dispatch, but also that the driver "had a red shirt on that match[ed] the description of the person given by our dispatch of the person ringing the doorbell." (Tr. p. 96). Despite the fact that Ertel argues that waiting at a stop sign for over five seconds was not a violation of traffic laws and consistent with someone who is lost, given the facts as a whole, namely that it was 2:00 a.m. in the morning, that both Ertel and his vehicle fit the description given by the 911 caller, and that Ertel had refused to stop after being flagged by a neighbor, Officer Wilcox had reasonable suspicion to pull Ertel over.
CONCLUSION
Based on the foregoing, we conclude that the trial court did not abuse its discretion when it admitted evidence obtained after Ertel's vehicle was stopped because Officer Wilcox had reasonable suspicion to conduct an investigatory stop.
Affirmed.
ROBB, J., concurs.
VAIDIK, J., concurs in result.
NOTES
[1] We held an oral argument in this case on May 7, 2010, at Kankakee Valley High School in Wheatfield, Indiana. We thank Kankakee Valley High School for its hospitality in hosting the argument and counsel for their excellent advocacy.
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