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75 F.Supp.2d 126 (1999)
UNITED STATES of America,
v.
Gregory AYALA, Defendant.
No. S8 97 CR 786 SAS.
United States District Court, S.D. New York.
July 26, 1999.
*127 Katherine Baird, Robin Baker, Mary Mulligan, Assistant United States Attorneys, New York City, for U.S.
Marc Fernich, New York City, for Defendant.
OPINION
SCHEINDLIN, District Judge.
Background
After a three-month trial, defendant Gregory Ayala was found guilty of, inter alia, participating in a Racketeer Influenced and Corrupt Organization ("RICO") enterprise known as Power Rules. Seventeen or more defendants were charged with participating in this enterprise. Many of the defendants pled guilty; several entered into cooperation agreements. Ayala, together with six other defendants, were tried in a joint trial. One of the key allegations against the remaining defendants is that they had attempted to kill their co-defendant Gregory Ayala.
During the relevant time period, Ayala was associated with the Avenue St. John Boys, an organization involved in the distribution of heroin and crack cocaine. During 1994-1995, Ayala joined forces with Miguel Guzman, a co-defendant and the leader of Power Rules. That relationship broke down, however, when Ayala began dealing directly with Guzman's heroin supplier, "Viejo." A war ensued between Guzman's Power Rules gang and *128 the Avenue St. John Boys, which continued its drug distribution activities independent of Power Rules. It is undisputed that the Power Rules gang sought to kill Gregory Ayala.
Defendant was convicted at trial of all four counts charged in the indictment. These counts include: (1) participating in a RICO enterprise (Count 1), the substantive RICO count, (2) conspiracy to participate in a racketeering enterprise (Count 2), the RICO conspiracy count, (3) conspiracy to possess with intent to distribute heroin (Count 29); and (4) conspiracy to possess with intent to distribute crack (Count 31). The RICO conspiracy conviction was based on the following predicate racketeering acts which the jury found were proven: (1) conspiracy to distribute heroin and the distribution of heroin (Acts 17A and B) and (2) conspiracy to distribute crack and the distribution of crack (Acts 19A and B).
Pursuant to United States Sentencing Guideline ("U.S.S.G.") § 3D1.2, all counts involving substantially the same harm are grouped together into a single group. The guideline for RICO convictions is found in § 2E1.1. This section provides that the base offense level is the greater of either 19 or that applicable to the underlying racketeering activity. Here, that activity is the heroin and crack distribution, which covers the same conduct as the convictions on the remaining counts. The base offense level for the single group made up of the RICO counts and the narcotics counts is 38 pursuant to § 2D1.1(c)(2), based on the findings set forth below.
Several issues involving the setting of the offense level and departure motions are in dispute. In addition to extensive briefing, a Fatico hearing was held to resolve these issues.
Setting the Offense Level
A. Determining the amount of drugs attributable to Ayala Which acts of drug dealing are part of the offense of conviction, and which are part of relevant conduct?
B. Should an enhancement be added, pursuant to U.S.S.G. § 2D1.1(b)(1), for the presence of weapons in the vicinity of the drug dealing?
C. Should there be an enhancement for Ayala's role in the offense pursuant to U.S.S.G. § 3B1.1? If so, what should that enhancement be?
D. Should certain conduct, including uncharged acts of assault and attempted murder, be included as relevant conduct pursuant to U.S.S.G. § 1B1.3?
Departure Motions
A. Should there be an Upward or Horizontal Departure, pursuant to U.S.S.G. § 4A1.3, because Ayala's Criminal History Category does not adequately reflect the seriousness of his past criminal conduct or the likelihood that he will commit other crimes?
B. Should there be a Downward Departure, pursuant to U.S.S.G. § 5K2.0, for Extraordinary Family Circumstances?
C. Should there be a Downward Departure, pursuant to U.S.S.G. § 5K2.0, for a combination of unique circumstances, including: extraordinary family circumstances, multiple adjustments found by a preponderance of the evidence, the quantity of drugs fails to account for the quantity/time factor, extreme financial pressure and lack of sophistication, Congress' rejection of the Sentencing Commission's recommendation to eliminate or reduce the crack/powder cocaine sentencing disparity, and a straight Guidelines sentence will be disproportionate to that received by similar offenders nationwide?
Setting the Offense Level
A. Drug Quantity
The base offense level in a drug conviction is set by determining the quantity *129 of drugs in which a defendant trafficked, United States v. Sepulveda, 15 F.3d 1161, 1196 (1st Cir.1993), or in the case of a conspiracy, the amount in which his codefendants trafficked if that amount was reasonably foreseeable to the defendant. U.S.S.G. § 1B1.3(a)(1)(B). See also United States v. Santiago, 906 F.2d 867, 871-73 (2d Cir.1990). The quantity of drugs is a fact question for the district court, subject to a clearly erroneous standard of review. United States v. Hazut, 140 F.3d 187, 190 (2d Cir.1998). It is the Government's burden to establish the drug quantity by a preponderance of the evidence. See United States v. Moreno, 98 CR 1293, 1999 WL 415174, at *5 (2d Cir. June 22, 1999); United States v. Prince, 110 F.3d 921, 925 (2d Cir.1997). The Guidelines provide that where "there is no drug seizure ... the court shall approximate the quantity of the controlled substance." U.S.S.G. § 2D1.1, Application Note 12. In doing so, the court is permitted to rely on any information it knows about. United States v. Jones, 30 F.3d 276, 286 (2d Cir.1994).
To begin with, the charged heroin conspiracy ran from 1995 through 1996 and the charged crack conspiracy ran from 1986 through 1997. The charged heroin conspiracy states that Miguel Guzman, Ayala, Angel Santiago and Daniel Ortiz, together with other co-conspirators, conspired to distribute a kilogram or more of heroin. The charged crack conspiracy states that Guzman, Rolando Lorenzo, Ayala, Edwin Rivera, Santiago, Samuel James Smith, Pablo Villela, Ortiz, together with other co-conspirators, conspired to distribute more than 50 grams of cocaine base. Thus, with respect to the narcotics counts, the charged conspiracies only include the conduct that Ayala undertook together with the individuals named in the indictment. The evidence at trial and at the Fatico hearing revealed that Ayala only participated in these conspiracies from sometime in 1994 throughout 1995. By January 1996, Ayala was no longer a member of these conspiracies. Any evidence relating to Ayala's drug distribution within this time frame is part of the offense of conviction. Evidence that Ayala was involved in a different and separate conspiracy to distribute drugs can only be considered under a relevant conduct analysis. To hold otherwise would make these counts duplicitous charging more than one conspiracy in a single conspiracy count. See United States v. Aracri, 968 F.2d 1512, 1518 (2d Cir.1992).
In order to determine whether evidence of Ayala's drug dealing, separate from the offense of conviction, should be considered, the Court is required to undertake a relevant conduct analysis. U.S.S.G. § 1B1.3(a)(1)-(4) sets forth the permissible boundaries of relevant uncharged conduct. Subsection (1) refers to all acts of the defendant and foreseeable acts of co-defendants that occurred "during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense." Subsection (2) refers to "all acts that were part of the same course of conduct or common scheme or plan as the offense of conviction." Subsection (3) refers to harm that resulted from the acts and omissions described in the previous two sections and all harm that was the object of such acts and omissions. Finally, subsection (4) refers to any other information specified in the applicable guideline.
The most relevant subsections are (1) and (2). Specifically, § 1B1.3(a)(1)(A) requires that "in the case of a jointly undertaken criminal activity, all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity" shall be considered so long as the activity occurred during the commission of the offense of conviction. Section 1B1.3(a)(2) directs the court to consider all acts of a defendant that were part of the same course of conduct or common scheme or plan as the offense of conviction. Thus, during the offense of conviction, Ayala is responsible not only for his own drug dealing, but also for the reasonably foreseeable conduct of his co-conspirators during that time. In addition, he is responsible for *130 drug dealing before and after the offense of conviction, if it was part of the same course of conduct or of a common scheme or plan as the offense of conviction.
The evidence reveals that Ayala was involved in drug dealing both before and after the offense of conviction. Prior to joining forces with Guzman, he maintained two drug dealing spots, one on Avenue St. John and one at the Hunts Point market. After he ceased doing business with Guzman, he continued selling drugs on Avenue St. John. I conclude that both the pre-offense and post-offense drug dealing are relevant conduct under § 1B1.3(a)(2). During each time period, Ayala distributed heroin and crack. He always operated out of the same location (Avenue St. John) and always used the same employees Harold and HecTec. He may even have used the same source of the drugs. In addition, I conclude that Ayala is responsible for the total amount of drugs distributed by the Power Rules drug distribution conspiracy throughout 1995. There is no doubt that Ayala was aware that there were many drug spots being operated by the group and that Viejo, his heroin source, was also supplying other members of the conspiracy. He was aware that Guzman, the leader of the group, was being paid fees for permitting distributors to work at specific sites.
Based on the trial testimony and the testimony offered at the Fatico hearing, I conclude that the base offense level should be 38. Because two different drugs are involved, both are converted to their marijuana equivalent. If Ayala dealt the equivalent of 30,000 kilograms of marijuana, then he falls within this level. With respect to crack, there is no doubt that the preponderance of the credible evidence both at the trial and the hearing demonstrate that Ayala dealt in at least 62 grams of crack a week during the course of the conspiracy. Assuming he dealt in this amount for two years (1994-96), then he conservatively is responsible for 6,000 grams of crack. According to § 2D1.1, 1 gram of crack converts to 20 kilograms of marijuana. Accordingly, 1,500 grams of crack converts to 30,000 kilograms of marijuana and 6,000 grams of crack converts to 120,000 kilograms of marijuana.
Similarly, the preponderance of the credible evidence demonstrates that Ayala purchased 200 bundles of heroin no less than once a week. Each bundle of heroin is divided into 10 glassine bags. Thus, 200 bundles equals 2,000 bags. Expert testimony, offered by stipulation of the parties, reveals that each glassine contains approximately ½ grain of heroin. [If one extrapolated from the 3-bag seizure of "Bad Boy" heroin from co-defendant Daniel Ortiz it would approximate 2/3 grains per bag]. However, using the expert typical figure, which is less than the quantity per bag in the Ortiz seizure, 200 bundles of heroin contains approximately 1,000 grains. There are approximately 15,000 grains in a kilogram. Thus, Ayala dealt 1 kilogram of heroin approximately every four months. If this went on for two years (1994-95), he personally is responsible for the sale of 6 kilograms. One kilogram = 1000 grams. According to the drug quantity tables, 1 kilogram of heroin converts to 1,000 kilograms of marijuana. Thus, in marijuana equivalents, Ayala is responsible for an additional 6,000 kilograms of marijuana. The combination of crack and heroin, for which Ayala is responsible falls well over 30,000 kilograms of marijuana. If one then considers the amount of drugs being dealt by other members of the conspiracy, for which Ayala is responsible under a foreseeability analysis, it simply seals the base offense level at 38, since the other members of the conspiracy dealt at least as many drugs as Ayala himself.
These quantity findings are based on the trial testimony of Luis Soto, the hearing testimony of Luis Soto and Tommy Perez, and Ayala's own statement to the police at the time of his arrest.[1] Soto's and Perez' *131 testimony were very consistent with respect to the quantity of drugs Ayala was selling at each location Hunts Point in 1994, the parking lot in early 1995 and the lobby of his building later in 1995. In addition, Ayala admitted in his post-arrest statement that he picked up approximately 200 bundles of heroin a week from Viejo, which again is remarkably consistent with the testimony of Soto. Defense counsel has attacked Soto's credibility arguing that he had little personal knowledge of Ayala's activities in 1995, as he was only in the neighborhood for 3 weeks in June and 3 weeks in December. In addition, Soto was a drug user and now has a motive to exaggerate in order to earn a § 5K1.1 letter. He makes much the same argument as to Perez namely that he has little personal knowledge of Ayala's activities, was on drugs, and also wants to earn a § 5K1.1 letter. Finally, he attacks Ayala's confession as inherently unreliable. While each of these attacks, individually, might carry the day, the problem for the defendant is that the three sources of quantity testimony are consistent. Each of the two accomplices saw Ayala buy heroin from Viejo. Ayala, in turn, admitted to buying heroin from Viejo. All came up with the same figures as to quantity.
The same is true of the testimony regarding crack. Both Soto and Perez actually saw Ayala dealing crack. Tr.1[2] at 6; Tr.2[3] at 51. Soto accompanied him when he purchased the crack. Tr.1 at 32-33. Finally, Ayala admitted to selling between 5 and 6 bundles of crack per day, or 180 $2 vials or $360 per day for three years. Tommy Perez testified that when he was at Hunt's Point, he was selling $5,000 of crack a day, which he said amounted to between 125 and 200 grams. Tr.2 at 53, 77-78. Tommy Perez believed that Ayala was doing the same quantity based on his visual observations of Ayala's Hunts Point spot and later his Avenue St. John spot. Tr.2 at 58. In addition, as noted earlier, Soto testified that Ayala was purchasing between 62 grams and 125 grams of crack per week. Tr.1 at 29. At that rate he would have dealt 6,000 grams (or 120,000 kilograms of marijuana) in two years. Finally, applying Perez' price figures most favorably to Ayala would mean that 1 gram of crack = $250. According to Ayala's own statement, that meant he was selling about 1.5 grams per day. He admitted that he sold this quantity for 3 years but stopped when Whiteboy John was murdered in December, 1994. At 300 days per year, that amounts to 350 grams per year or 1,000 grams in 3 years. But, the proof is well established that he sold for at least an additional two years after Whiteboy John's death, bringing the total to 1,500 grams or 30,000 kilograms of marijuana. As with the heroin calculations, the evidence collectively is more than sufficient to establish that the crack that he dealt alone would place him in level 38. When combined with the amounts dealt by others in the conspiracy and with the heroin, the quantity is established by clear and convincing evidence, if not beyond a reasonable doubt.
B. Gun Enhancement
The Government next argues that a two-level enhancement is warranted, pursuant to § 2D1.1(b)(1), because Ayala possessed firearms in connection with his narcotics business. The enhancement, known as a specific offense characteristic, states that "if a dangerous weapon (including a firearm) was possessed, increase by 2 levels." This section relates solely to offenses involving drugs. The Application Note to this section states: "The enhancement *132 for weapon possession reflects the increased danger of violence when drug traffickers possess weapons. The adjustment should be applied if the weapon was present, unless it is clearly improbable that the weapon was connected with the offense." § 2D1.1., Application Note 3. The enhancement must be proved by a preponderance of the evidence. See United States v. Lynch, 92 F.3d 62, 67 (2d Cir.1996).
Ayala was not charged at trial in a 18 U.S.C. § 924(c) count. No evidence was offered at trial with respect to weapons at the Avenue St. John drug spot. At the Fatico hearing, however, Soto testified that Ayala kept guns both in the building in which he lived and in an apartment building where the drugs were stored. Tr.1 at 47, 50-51. See United States v. Sweet, 25 F.3d 160, 163 (2d Cir.1994) (guns found in residential trailer where cocaine was stored); United States v. Wilson, 11 F.3d 346, 355 (2d Cir.1993) (guns kept in apartment where drugs and proceeds kept); United States v. Pellegrini, 929 F.2d 55, 56 (2d Cir.1991) (same).
Soto described a number of different guns, including two AR-15s, which he described as a large assault rifle, a shotgun including a .40 caliber and a 9 millimeter, a MAC-11, and an UZI. Tr.1 at 41, 47. It was not clear from Soto's testimony whether the guns were kept in the same apartment as the drugs. Soto did not testify that Ayala carried any gun when he bought drugs. In addition, according to Soto, Ayala was not armed when he went around the neighborhood, even when he went driving around looking for Guzman. Tr.1 at 101-02. On at least two of the occasions, when he allegedly went to look for Guzman, he was unarmed. Only after he located Guzman did he return to his block and pick up a gun. Tr.1 at 46-47. Neither Soto nor Perez testified that Ayala ever fired a shot at Guzman.
Soto testified that Ayala fired shots into a pool hall which was known as a Power Rules hang-out, but that he didn't know if Guzman was there when he fired. Tr.1 at 48-49. Soto, of course, also testified that Ayala shot him (Soto) as part of the war. Tr.1 at 54. Tommy Perez also testified that Ayala used weapons. Tr.2 at 61. He testified that HecTec, one of Ayala's employees, carried a weapon at the Avenue St. John drug spot. Tr.2 at 60. He further testified that Ayala, himself, showed him that weapon in the lobby of the building, which was a drug spot. Tr.2 at 62. Perez also testified that on another occasion, Ayala pulled a weapon (a revolver) from the hood of his car, gave it to Perez, who eventually used it that day to shoot Guzman's uncle. Tr.2 at 70.
The evidence presented by Soto and Ayala is sufficient to warrant an enhancement for possession of a weapon. See United States v. Simmons, 164 F.3d 76, 79 (2d Cir.1998) (defendant armed himself for protection in anticipation of crack deal); Lynch, 92 F.3d at 67 (witness saw defendant carrying a firearm during the course of a narcotics transaction); United States v. Quintero, 937 F.2d 95, 97-98 (2d Cir. 1991) (weapon "possessed as a security measure" during drug sales and meetings). I find by both the preponderance of the evidence and by clear and convincing evidence that Ayala possessed weapons in connection with the narcotics offenses of which he was charged and convicted. While the two accomplices have a significant motive to lie, used drugs, have difficulty accurately remembering details of places and dates, and may not be accurate to a scientific certainty with respect to drug amounts, their testimony with respect to the weapons possessed by Ayala has a ring of truth. Given all of the trial testimony, it is inconceivable that Ayala did not possess weapons in connection with his drug business. The specific testimony regarding the number and locations of guns described by Soto and Perez is credible. Thus, two levels are added (to 40) based on the weapons enhancement as required by § 2D1.1(b)(1).
*133 C. Leader or Organizer
The Government next argues that a 4-level aggravated role enhancement is warranted, pursuant to § 3B1.1, based on proof that Ayala was a leader or organizer of criminal activity involving five or more participants. The party seeking a sentencing adjustment, here the Government, has the burden of proving facts to support it. United States v. Smith, 174 F.3d 52, 57 (2d Cir.1999); see also United States v. Butler, 970 F.2d 1017, 1026 (2d Cir.1992) ("if the government seeks increased punishment, it has the burden of proving that the circumstances warrant such an increase"). Ordinarily, the Government must prove the enhancement by a preponderance of the evidence. United States v. Livoti, 22 F.Supp.2d 235, 242 (S.D.N.Y.1998) (citing United States v. Concepcion, 983 F.2d 369, 388 (2d Cir.1992)).
1. The RICO Convictions
The first question is whether the Government has proved that Ayala was an organizer or leader of Power Rules (the RICO counts). Here, the evidence shows that Ayala and Guzman made an agreement, whereby Ayala was permitted to continue dealing drugs in the area of Avenue St. John and Southern Boulevard. This does not, however, prove that they were equal partners, as the Government alleges. Indeed, most of the proof at trial revealed that they were rivals who, for a short time, agreed to work together rather than against each other.
There was no proof that Ayala participated in the extortion of rent (for drug spots), which was the modus operandi of Power Rules, or in the violence toward other drug dealers. In fact, the only proof of violence by Ayala, was used against Power Rules, not on its behalf. Finally, there is no proof that Ayala gave orders to Power Rules members or received a share of any other drug spots. Thus, the preponderance of the evidence does not establish that Ayala was a leader, organizer, manager or supervisor of Power Rules.
2. The Charged Narcotics Conspiracies
The next question, then, is whether the Government has proved that Ayala was a leader or organizer of the narcotics conspiracies for which he was convicted. At trial and at the hearing, the Government attempted to prove that Ayala was the leader or organizer of a narcotics conspiracy involving five or more participants. Specifically, the Government offered proof that the spot was supplied by Viejo, Guzman took part of the profits, HecTec and Harold were managers and sometimes pitchers, Luis Soto worked with Ayala, and other unidentified people bottled the crack that Ayala purchased.
I am satisfied that the evidence clearly establishes that five or more people were involved in the Power Rules drug conspiracies charged in the indictment. But, the remaining issue is whether Ayala was an organizer, leader, manager or supervisor of the Power Rules drug conspiracy. See United States v. Liebman, 40 F.3d 544, 548 (2d Cir.1994) (§ 3B1.1 targets only those who exert control "over others involved in the commission of the offense"); United States v. Greenfield, 44 F.3d 1141, 1147 (2d Cir.1995) ("To qualify for an adjustment under § 3B1.1, the defendant must have exercised some control over others involved in the commission of the offense or he must have been responsible for organizing others for the purpose of carrying out the crime.").
To make this determination, the Guidelines suggest that the Court consider whether Ayala exercised decision-making authority, the nature of his participation in the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others. See U.S.S.G. § 3B1.1, Application Note 4.
The evidence offered is insufficient to establish that Ayala was a leader or organizer *134 with respect to the charged drug conspiracies. The evidence is also insufficient to establish that he was a manager or supervisor in these conspiracies. It must be remembered that the charged drug conspiracies were those in which he conspired with Guzman, Santiago, Ortiz, Lorenzo, Rivera, Smith and Vilella. The only evidence on this point was offered at the evidentiary hearing in which both Luis Soto and Tommy Perez testified. Both of these witnesses testified solely with respect to the Avenue St. John spot. Perez did not work with Ayala during the time he was aligned with Power Rules. Tr.2 at 52. He has no personal knowledge of Ayala's role in those conspiracies. While Soto did work with Ayala briefly in late 1995, his testimony does not establish any of the points that the Application Note suggests prove leadership.
There is no evidence that Ayala exercised decision making authority within the Power Rules drug conspiracy, that he recruited anyone to work in that conspiracy, or that he took a larger share than anyone else of the fruits of the crime. In fact, the evidence is to the contrary. Specifically, for his own spot, which was presumably one of many in which the conspiracy dealt drugs, Ayala was required to pay rent of 5% of sales to Guzman. The source, Viejo, was entitled to 70% of sales. Of the remaining 25%, Soto was given between 5 and 10%. Of the remaining 15%, Ayala was required to pay the workers. At this rate, it does not appear that Ayala received a larger share of the profits of the Power Rules drug conspiracy than the actual leaders who appeared to be Guzman and possibly Rivera. Based on the evidence offered by the Government, I cannot conclude by a preponderance of the evidence, or surely any higher standard, that an aggravating role adjustment is required.
3. Relevant Conduct
Since 1990, it is well established that a role adjustment may be based on uncharged relevant conduct. See Introductory Commentary to Chapter 3, Part B of the U.S.S.G. See also United States v. Perdomo, 927 F.2d 111, 116-17 (2d Cir. 1991); United States v. Lanese, 937 F.2d 54, 56 (2d Cir.1991); United States v. Marino, 29 F.3d 76, 77-78 (2d Cir.1994). Nonetheless, I decline to impose the role adjustment based on Ayala's relevant conduct. The only evidence of Ayala's leadership or managerial role in the Avenue St. John Boys drug conspiracy came from Luis Soto. While Soto only provided details of the structure of Ayala's drug operation on Avenue St. John prior to the time he joined forces with Guzman, his uncorroborated testimony is not sufficient for me to find, by clear and convincing evidence, that Ayala was a manager or leader. Soto is simply not a sufficiently reliable witness on which to support an adjustment of such importance and magnitude. Perez, in turn, testified generally that Ayala was the "boss" at Ayala's Hunts Point spot, and employed workers and a manager. Tr.2 at 52-53. His conclusions, however, were based on observation, not participation. In short, he had no first-hand knowledge of the internal workings of Ayala's Hunts Point drug spot.
I do not find, based on this testimony, that Ayala meets the indicia of leadership cited above under a clear and convincing standard. See United States v. Gigante, 94 F.3d 53, 56 (2d Cir.1996) (with regard to upward adjustments) "the Court may examine whether the conduct underlying multiple upward adjustments was proven by a standard greater than that of preponderance, such as clear and convincing or even beyond a reasonable doubt where appropriate." See also United States v. Shonubi, 103 F.3d 1085, 1089 (2d Cir.1997) (a standard more rigorous than a preponderance-of-the-evidence "should be used in determining disputed aspects of relevant conduct where such conduct, if proven, will significantly increase the sentence"); United States v. Murgas, 31 F.Supp.2d 245, 253 (N.D.N.Y.1998) ("In light of Shonubi, and given the dramatic impact of the departure sought, the court opts to apply a *135 higher burden of proof in the sentencing hearing.").
D. Relevant Conduct: The Attempted Murder and Assault
The Government also asks the Court to consider evidence of an attempted murder and of an assault in setting the offense level.[4] Application Note 1 to § 2E1.1 states that "where there is more than one underlying offense, treat each underlying offense as if contained in a separate count of conviction for the purposes of subsection (a)(2)." This Application Note would require grouping the assault and attempted murder separately if they are found to be relevant conduct with respect to any offense of conviction. See § 1B1.3(a)(2). Following the Fatico hearing, the Government submitted a letter suggesting that the violent acts should be grouped separately from the narcotics charges, and assigned an offense level of 30.[5]
Specifically, the Government offered evidence at the Fatico hearing that Ayala tried to kill Miguel Guzman, the leader of Power Rules. The Government has also offered evidence that Ayala shot Luis Soto in the shoulder. I conclude that the attempted murder and assault, even if proven, cannot be considered relevant conduct in setting the offense level for the racketeering charges. First, this is clearly uncharged conduct, as the only predicate acts charged against Ayala involved narcotics. However, evidence of uncharged acts may be considered as relevant conduct in some circumstances. As noted above, U.S.S.G. § 1B1.3(a)(1)-(4) sets forth the permissible boundaries of uncharged conduct. Typically, the burden of proof for relevant conduct is preponderance of the evidence, not the higher clear and convincing standard. United States v. Zagari, 111 F.3d 307, 322 (1997) (citing United States v. Watts, 519 U.S. 148, 117 S.Ct. 633, 136 L.Ed.2d 554 (1997)).
This alleged conduct does not fall in any of the enumerated subcategories mentioned earlier. The offense of conviction, of course, concerns the enterprise known as Power Rules whose goals were to distribute narcotics, commit extortion in furtherance of that business, and engage in violent acts to protect that business. The conduct that the Government alleges should be considered as relevant conduct is antithetical to the purpose and goals of this enterprise. The indictment alleges that Power Rules sought to kill Ayala, in order to maintain control of certain drug spots. The evidence reveals that Ayala, at some point, had stopped paying Guzman for permitting him to sell drugs on Avenue St. John and Southern Boulevard. Indeed, one of the alleged goals of the conspiracy charged in the indictment and proved to the jury, was to murder Ayala, who was cast in the role of victim. If Ayala, in turn, defended himself by fighting back and attempting to kill the leader of Power Rules, this was not done during the commission of the offense, in preparation for the offense or for the purpose of avoiding detection for that offense. Similarly, if Ayala shot Soto as part of the ongoing war between Power Rules and the Avenue St. John boys, this could not have been done in furtherance of the goals of Power Rules.
*136 Whether this conduct will be considered for purposes of an upward adjustment will be discussed next. Suffice it to say that this conduct does not fall within the definition of conduct relevant to the RICO counts of which Ayala was convicted and should not be considered in setting the base offense level.
Departure Motions
"Although the Sentencing Guidelines were intended to create consistency in sentencing for `offenders with similar histories, convicted of similar crimes, committed under similar circumstances,' they were not meant to eliminate all of the district court's discretion." United States v. Adelman, 168 F.3d 84, 86 (2d Cir.1999) (quoting Koon v. United States, 518 U.S. 81, 92, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996)). "[T]he Supreme Court explained that before a sentencing court departs downward, it must determine that aspects of the case are `unusual enough for it to fall outside the heartland of cases in the Guideline. To resolve this question, the district court must make a refined assessment of the many facts bearing on the outcome, informed by its vantage point and day-to-day experience in criminal sentencing.'" United States v. Galante, 111 F.3d 1029, 1033 (2d Cir.1997) (quoting Koon, 518 U.S. at 98, 116 S.Ct. 2035). "After such consideration, if a district court decides to depart from the Guidelines, in most cases its decision will `be due substantial deference, for it embodies the traditional exercise of discretion by a sentencing court.'" Adelman, 168 F.3d at 86-87 (quoting Koon, 518 U.S. at 98, 116 S.Ct. 2035).
A. Upward Departure Criminal History Enhancement
Mr. Ayala has no criminal history points. As a result he falls in Criminal History Category I. The Government asks that Ayala's criminal history category be increased pursuant to U.S.S.G. § 4A1.3, which states:
If reliable information indicates that the criminal history category does not adequately reflect the seriousness of the defendant's past criminal conduct or the likelihood that the defendant will commit other crimes, the court may consider imposing a sentence departing from the otherwise applicable guideline range.
See also United States v. Ashley, 141 F.3d 63, 69 (2d Cir.1998) (Guidelines authorize a departure where a defendant's criminal history category significantly under-represents the seriousness of the defendant's criminal history or the likelihood that he will commit further crimes); United States v. Rivers, 50 F.3d 1126, 1131 (2d Cir.1995) (a sentencing judge should exercise discretion whenever she concludes that the criminal history calculation under-represents the seriousness of defendant's prior record).
The Government argues that a criminal history category at the lowest level does not adequately reflect the seriousness of the defendant's past criminal conduct. The Government argues that the enhancement is warranted based on the pending state court charges against Ayala. These charges result from the alleged shooting of Luis Soto. The Government further argues that the enhancement is warranted based on Ayala's attempts to murder Miguel Guzman.
Section 4A1.3 states that the term reliable information refers to information in a number of categories, which are a permissive but not exclusive list. The above incidents fall only in the last of this group, section (e), which is "prior similar adult criminal conduct not resulting in a criminal conviction." The defense argues that the term "prior" must mean "prior" to the acts that make up the "offense of conviction." The Government counters that "prior" means only "prior to sentencing". The Government has the better of this argument. See United States v. Keats, 937 F.2d 58, 66-67 (2d Cir.1991) (considering post-arrest criminal conduct, for which defendant was convicted but awaiting sentence, for purpose of § 4A1.3 enhancement). However, I conclude that this enhancement is not warranted.
*137 The defense relies heavily on the language found in Gigante, 94 F.3d at 56, for the proposition that this additional conduct should be assessed by a standard of proof higher than a preponderance of the evidence. I agree. Gigante specifically teaches that the "reasonableness of substantial upward departures will depend in part on the standard of proof by which the conduct warranting the standard is established." Id. at 57.
Ayala has already had an offense level calculated pursuant to the concept of relevant conduct, and an upward adjustment for weapons possession, neither of which were the subject of proof at trial. These adjustments already result in an extremely high Guideline range. In seeking yet another adjustment based on uncharged conduct never considered by a jury and asking the Court to find that Ayala committed two additional crimes one of which is now pending in New York State court I conclude that the Government must prove these charges beyond a reasonable doubt. This, of course, is the same standard the jury will apply in state court. This standard of proof has not been met based on the evidence presented at the Fatico hearing. As a result, no upward adjustment based on this uncharged conduct can be sustained.
B. Downward Departure Extraordinary Family Circumstances
Defendant's first request for a downward departure is based on extraordinary family circumstances pursuant to U.S.S.G. § 5K2.0. See, e.g., United States v. Faria, 161 F.3d 761, 762 (2d Cir.1998) ("we have upheld downward departures based on family circumstances `where the family was uniquely dependent on the defendant's ability to maintain existing financial and emotional commitments.'") (quoting United States v. Sprei, 145 F.3d 528, 535 (2d Cir.1998)). Ayala's request for this departure is based on a combination of circumstances. First, Ayala, who is now 25, has been with the same woman for 12 years, since he was 13 years old. His common-law wife, Milady Mendez, is a 25-year old public assistance recipient, who has no education, job skills or experience. They have two children: a 4 year old boy, and an 8 year old girl, who suffers from Down's Syndrome. It should be noted that Ayala was 17 at the time his daughter was born, with no parents or grandparents of his own.
He was raised by his maternal grandmother until her death when he was 14 because his teenage mother was on welfare and drugs and his father was in and out of jail. After his grandmother died, he returned to live with his mother. The defendant has been the sole emotional and financial support of this family. However, the Presentence Report ("PSR") notes that he has a 10th grade education and has only worked at odd jobs in the neighborhood. He has never filed a tax return. Nonetheless, neighbors, friends and relatives, as well as teachers and doctors, have written to the Court and confirmed that both children are very close to their father, and that the disabled child is particularly dependent on her father. All of those who wrote to the Court have stated that her condition has or will deteriorate further without the presence of her father. In addition, Ayala has taken care of his mother, a 40-year old public assistance recipient, who has a history of drug abuse, an incarcerated husband, and cannot read or write English. The PSR notes, however, that she does have three children living at home Ayala's 26-year old brother Chris and two half-siblings, a boy and a girl, 18 and 17 years old respectively.
It is well established that family circumstances are ordinarily not relevant in sentencing. See § 5H1.6 ("Family ties and responsibilities and community ties are not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range)." Nonetheless, this Circuit has recognized this ground for departure, where it is clearly established that the defendant is a unique source of financial and/or emotional support for a significant number of dependents. See, e.g., *138 United States v. Galante, 111 F.3d 1029, 1037 (2d Cir.1997); United States v. Johnson, 964 F.2d 124, 129 (2d Cir.1992); United States v. Alba, 933 F.2d 1117, 1122 (2d Cir.1991). Here, the defendant has demonstrated extraordinary family circumstances which are widely accepted as a valid reason for departure. See United States v. DeRiggi, 893 F.Supp. 171, 174 (E.D.N.Y.), aff'd, 72 F.3d 7 (1995).[6]
This case falls well within the precedent in this Circuit in which family circumstances have been held to be extraordinary. See, e.g., DeRiggi, 893 F.Supp. at 184 (child with severe emotional distress); United States v. Rodriguez, 94 CR 39, 1994 WL 381488 (S.D.N.Y. July 19, 1994) (diabetic child); United States v. Vaughan, 92 CR 575, 1993 WL 119704 (S.D.N.Y. April 15, 1993) (wife with Alzheimer's disease). Ayala's wife is uneducated and unemployed. It would be extremely difficult for her to financially support and care for her two young children, particularly where one is severely handicapped. This child, who has Down's Syndrome, will need care and attention throughout her entire life. A sentence within the Guideline range would therefore destroy this otherwise viable family unit.
The Government argues, somewhat convincingly, that while Ayala provided emotional support to his family, his financial support was provided solely from his illegal drug trafficking. In addition, the Government warns that he is a violent man who is not a credible role model for his children. There is a response to these arguments. First of all, such departures have repeatedly been given to drug dealers and to those who have engaged in violence. See, e.g., Galante, 111 F.3d at 1036 (2d Cir.1997); United States v. Ramirez, 792 F.Supp. 922 (E.D.N.Y.1992) (defendant cared for his three younger siblings, one of whom had Down's Syndrome).
In addition, after serving a lengthy prison term, Ayala will hopefully gain an education and learn a trade. If he is as committed to his family as he appears to be, he will be able to earn a legitimate living when he is released. He has demonstrated that he is a hard worker, enterprising, and it must be remembered that he is only 25 years old. He will therefore be able to provide emotional and financial support to his family upon his release. As to the violence, Ayala lived in the "kill or be killed" jungle of drug dealing. His victims or intended victims were the leaders of rival gangs who were attempting to kill him. He was prepared to defend himself and shoot back. There is no record of any gratuitous violence. He did not beat his wife or children, he did not attack strangers in the community, or prey on innocent victims. In short, removed from the drug environment in which he survived, there is no proof that he is a violent man. And, for good measure, it must be noted that other than allegedly shooting Soto in the shoulder, he is not responsible for any murders or assaults, unlike many of the members of the Power Rules gang.
Finally, the Government argues that due to the required statutory mandatory minimum sentence, Ayala will not be able to actually provide emotional or financial support for his family for at least ten years. This begs the question of whether a downward departure for family circumstances make sense when the beneficiaries will not be able to benefit for a significant period of time. At least one circuit court has approved a family circumstances departure in this situation. See United States v. Owens, 145 F.3d 923, 926 (7th Cir.1998) (court departed to ten year minimum where defendant took "an active role in raising his children and supporting his family"). Second, as noted earlier, unlike most young children, Ayala's daughter will never become a *139 normal adult and will need his attention for her entire life. In addition, if his non-disabled 4-year old son is deprived of his father throughout his youth, there is a statistically provable greater likelihood that he, too, will end up in jail. See Fox Butterworth, As Inmate Population Grows, So Does a Focus on Children, N.Y. Times, ("having a parent behind bars is the factor that puts a child at greatest risk of becoming a juvenile delinquent and adult criminal").[7]See Exhibit A to Defendant's Sentencing Memorandum. Thus, no matter when he is released, Ayala's family will have an extraordinary need for his support.
The final factor to address when considering family circumstances is Ayala's onerous background. See U.S.S.G. § 1B1.4 ("the court may consider, without limitation, any information concerning the background, character and conduct of the defendant ...").[8] Ayala comes from a poor drug infested neighborhood. In addition, his father and mother used drugs and his father has been in and out of prison throughout Ayala's life. Despite this background, he has remained committed to a nuclear family unit and has met all of his familial responsibilities in a truly extraordinary manner.[9]See Ramirez, 792 F.Supp. at 923. This is yet another reason that Ayala is entitled to a family circumstances departure.
C. Downward Departure Unique Combination of Circumstances
In the alternative, the defense seeks a downward departure, pursuant to U.S.S.G. § 5K2.0, for a unique combination of circumstances including: extraordinary family circumstances; multiple adjustments found by a preponderance of the evidence; the quantity of drugs fails to account for the quantity/time factor; extreme financial pressure; lack of so-phistication; Congress' rejection of the Sentencing Commission's recommendation to eliminate or reduce the crack/powder cocaine sentencing disparity; and a straight Guidelines sentence will be disproportionate to that received by similar offenders nationwide. While this proposal was well presented, much of it is either inapplicable or inappropriate as a ground for a departure.
Family circumstances have already been addressed, as has the multiple adjustment issue. The drug quantities in which Ayala dealt were part of the offense of conviction and relevant conduct related to it. The only other upward adjustment was for the possession of a weapon in connection with that offense. The quantity/time factor is simply not applicable here Ayala was not a street level drug dealer as in United States v. Lara, 47 F.3d 60, 62 (2d Cir. 1995). While it is true that Ayala had extreme financial pressures, it does not appear that he was unsophisticated in the sense of the defendant who was simply a middleman. See United States v. Sanchez, 925 F.Supp. 1004, 1013 (S.D.N.Y.1996). Ayala's gang had a structure of suppliers, managers and pitchers, a stash apartment and weapons. In addition, Ayala displayed the fruits of his drug dealing in the typical manner of owning a number of cars. This can hardly be viewed as unsophisticated. While the argument regarding the crack *140 and powder cocaine disparity is creative and thoughtful, this is not the right case in which to consider it as Ayala's guideline range is set both by crack and heroin, and in such significant quantities that there is no danger that the disheartening disparity in the way crack and powder cocaine are considered will have an undue impact on this particular sentence. Finally, there is little risk, given the departure that has been awarded, that Ayala's ultimate sentence will be disproportionate to sentences for drug crimes (or other crimes) nation-wide. An additional departure based on these grounds is, therefore, denied.
Having decided to grant a downward departure based on extraordinary family circumstances, the final question is determining the level of that departure. I conclude that an 8-level departure to 32 is warranted. Thus, his final guideline range at offense level 32, Criminal History Category I, is 121-151 months in custody.
The Sentence
The following sentence is imposed: 151 months in custody, to be followed by a 5-year period of supervised release. This sentence is imposed on each of the four counts of conviction, to run concurrently. In addition, Mr. Ayala is required to pay a mandatory assessment of $400, which payment is due immediately. No fine is imposed, as defendant does not appear to be able to pay a fine nor does it appear likely that he will be able to pay a fine in the future. The mandatory drug testing condition is suspended due to the imposition of a special condition requiring drug treatment and testing.
Defendant is to be supervised in the district of his residence and the standard conditions of supervision as recommended by the Probation Department shall apply. The following mandatory conditions shall also apply: (1) defendant shall not commit another federal, state or local crime; (2) the defendant shall not illegally possess a controlled substance; and (3) the defendant shall not possess a firearm or other destructive device. The following special condition shall also apply: (1) defendant shall participate in a substance abuse program approved by the U.S. Probation Office, which may include testing to determine whether the defendant has reverted to the use of drugs and/or alcohol.
The reasons for this sentence can be quickly summarized. Ayala stands convicted of engaging in a racketeering enterprise, known as Power Rules, and conspiring with others engaged in that enterprise, to distribute crack and heroin. He is also convicted of distributing large quantities of both crack and heroin. These are very serious offenses and deserve serious punishment. Twelve and a half years in a jail cell is very serious punishment. This defendant is only 25 years old. Being deprived of his freedom for this lengthy period of time should serve the purposes of sentencing: to punish, to incapacitate and to rehabilitate.
Nonetheless, Ayala has at least one redeeming quality, his family. Despite difficult circumstances, Ayala has sustained a family unit for 12 years, since the age of 13. As noted earlier, he became a father at age 17. The first child he had is severely disabled with Down's Syndrome. Yet he and his wife have raised that child with unusual love and attention. He has also been a good father to his younger son. While he now has to pay the price for his criminal activities, I hope he will use his time in jail constructively by getting an education, helping others, and vowing that when he is released he will start his life anew and never again become involved with narcotics or guns.
NOTES
[1] In his post-arrest statement, taken down by New York City Police Detective Miraglia, Ayala admitted to selling between five and six bundles of crack for three years until 1994 when "Whiteboy" John was killed. (There were 30 $2 vials in each bundle). Although this statement was not received in evidence at trial nor was it the subject of a motion to suppress, it may be considered by the Court for purposes of sentencing. While defense counsel challenged the reliability of the statement in his Sentencing Memorandum for sentencing purposes, he did not offer any evidence to dispute it at the Fatico hearing.
[2] "Tr.1" refers to pages of the Fatico hearing held on June 23, 1999.
[3] "Tr.2" refers to pages of the Fatico hearing continued on June 29, 1999.
[4] In its September 11, 1998 letter, the Government argued that this conduct should be considered under U.S.S.G. § 1B1.4, which provides that a court may consider the background, character and conduct of the defendant when determining where within the guideline range to sentence a defendant or whether to give an upward departure. It now appears that the Government is also arguing that this evidence should be considered relevant conduct in setting the base offense level with respect to the racketeering convictions.
[5] The Government concedes by making this request that the attempted murder and assault are not relevant conduct with respect to the narcotics counts. However, should the Court not consider these acts as relevant conduct with respect to the RICO counts, then the Government seeks an upward departure, claiming that these violent acts demonstrate that the defendant's criminal history category does not adequately reflect the seriousness of his criminal past. See pp. 136-37, infra.
[6] This departure is for the benefit of the dependents not the defendant. Johnson, 964 F.2d at 129. The beneficiaries are "the dependent and vulnerable people to whom the defendant has demonstrated long-term financial and emotional commitments." See United States v. Londono, 76 F.3d 33, 36 (2d Cir.1996).
[7] It should be recalled that Ayala's father is currently in jail.
[8] Note that Ayala's socio-economic status, lack of youthful guidance and disadvantaged upbringing do not qualify as independent departure grounds but merely highlight the extraordinary nature of his family circumstances. See United States v. Payton, 159 F.3d 49, 61 (2d Cir.1998) (sentencing judge is prohibited from considering defendant's lack of guidance as a youth as a basis for departure).
[9] The concept that the baseline from which an individual's achievements should be measured was expressed by the Second Circuit in United States v. Bryson, 163 F.3d 742 (2d Cir.1998). In the context of a downward departure for extraordinary rehabilitation, the court stated: "Much depends on the baseline from which an individual's extraordinary rehabilitation can be measured." Id. at 748-49. This concept is equally applicable where a court is considering granting a downward departure for extraordinary family circumstances.
| {
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Petition
for Writ of Mandamus Conditionally Granted and Substitute Opinion filed May 27,
2010.
In
The
Fourteenth
Court of Appeals
NO. 14-09-00906-CV
In Re Cooper tire & rubber company,
Relator
ORIGINAL
PROCEEDING
WRIT OF MANDAMUS
SUBSTITUTE OPINION
The Real Parties in Interest’s motion for rehearing
en banc is denied, our opinion of February 2, 2010 is withdrawn, and the
following substitute opinion is issued in its place.[1]
On October 26, 2009, relator, Cooper Tire &
Rubber Company, filed a petition for writ of mandamus in this Court. See Tex.
Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In
the petition, Cooper Tire asks this Court to compel the Honorable R.K. Sandill,
presiding judge of the 127th District Court of Harris County, to set aside his
October 12, 2009 order compelling relator to produce documents reviewed in
camera because they contain confidential trade secret information and,
alternatively, are not relevant. We conditionally grant the petition.
Background
On
October 27, 2007, the plaintiffs were involved in a head-on collision with
Dustin Langstaff. The plaintiffs allege that the tread separated from the
right rear tire on Langstaff’s vehicle, causing him to lose control and collide
with the vehicle driven by one of the plaintiffs, Maria Del Rocio Rodriguez,
and occupied by the other plaintiffs. The plaintiffs sued Cooper Tire, the
manufacturer of the tire at issue, the Weather-Master S/T, for strict
liability, design defect, manufacturing defect, marketing defect, and
negligence. The plaintiffs allege that Cooper Tire failed to incorporate a
design element known as belt edge gumstrips (“BEGs”) into the design for the
Weather-Master S/T, and that the incorporation of this design element would
have resulted in a safer alternative design.
The
plaintiffs seek documents regarding a different tire that show when BEGs were
added and removed from that tire. The tire involved in the accident was made
from Green Tire Spec 3004, while the documents the plaintiffs seek are for the
tire made from Green Tire Spec 2257. The Green Tire Spec (“GTS”) is
essentially the tire design or fundamental blueprint according to which the
given tire is manufactured and reflects the various manufacturing and design changes
to a GTS.
In
response to the plaintiffs’ requests for production, Cooper objected on the
basis of relevance. The plaintiffs moved to compel production. In response to
the plaintiffs’ motion to compel, Cooper Tire argued that the requested documents
contain trade secrets and they are not relevant because they concern
information on a tire other than the tire involved in the accident.
The
plaintiffs contend that the documents for GTS 2257 are relevant because they
show when BEGs were added and removed and the circumstances surrounding tire
failures both with and without BEGs. Specifically, the plaintiffs argue that
this information is necessary to establish that Cooper Tire had actual
knowledge of the defect in its tire design and that BEGs would cure the defect,
but continued to produce defective tires with conscious disregard for the
rights and safety of people like the plaintiffs.
On
August 18, 2009, the trial court ordered Cooper Tire to produce in camera
documents responsive to the plaintiffs’ motion to compel regarding GTS 2257.
On October 5, 2009, the trial court conducted the in camera review and, on
October 12, 2009, the trial court signed the following order:
To prevail on their design defect claim at
trial, Plaintiffs have the burden of proving Defendant could have provided a
safer alternative. Documents which show that Cooper Tire knew of possible
design changes that could have made the tire at issue less likely to fail are
relevant and a proper subject for discovery. Any danger of disseminating this
information is remedied by the Protective Order that is in place.
IT IS THEREFORE ORDERED that Defendant Cooper
Tire shall produce the documents reviewed in camera on October 5 2009, to
Plaintiffs within 5 business days of this order.
The
trial court determined the documents are relevant, but did not address whether
the documents contain trade secret information.
Mandamus Standard of Review
To
be entitled to the extraordinary relief of a writ of mandamus, the party
resisting discovery bears the heavy burden of establishing an abuse of
discretion and an inadequate remedy by appeal. In re CSX Corp., 124
S.W.3d 149, 151 (Tex. 2003) (orig. proceeding) (per curiam). A trial court
abuses its discretion if it reaches a decision so arbitrary and unreasonable as
to constitute a clear and prejudicial error of law, or if it clearly fails to
correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P.,
164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam); Walker v.
Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). In reviewing
whether appeal is an adequate remedy, we consider whether the benefits of
mandamus review outweigh the detriments. In re BP Prods. N. Am., Inc.,
244 S.W.3d 840, 845 (Tex. 2008) (orig. proceeding).
Analysis
Trade
Secret Privilege
“A
trade secret is any formula, pattern, device or compilation of information
which is used in one’s business and presents an opportunity to obtain an
advantage over competitors who do not know or use it.” Computer Assocs.
Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996). Rule 507 of
the Texas Rules of Evidence provides for the protection of trade secrets:
A person has a privilege, which may be claimed
by the person or the person’s agent or employee, to refuse to disclose and to
prevent other persons from disclosing a trade secret owned by the person, if
the allowance of the privilege will not tend to conceal fraud or otherwise work
injustice. When disclosure is directed, the judge shall take such protective
measure as the interests of the holder of the privilege and of the parties and
the furtherance of justice may require.
Tex.
R. Evid. 507.
The
trade secret privilege seeks to accommodate two competing interests. In re
Continental Gen. Tire., Inc., 979 S.W.2d 609, 612 (Tex. 1998) (orig.
proceeding). First, it recognizes that trade secrets are an important property
interest, worthy of protection. Id. Second, it recognizes the
importance placed on fair adjudication of lawsuits. Id. Rule 507
accommodates both interests by requiring a party to disclose a trade secret
only if necessary to prevent “fraud” or “injustice.” Id. Disclosure is
required only if necessary for a fair adjudication of the requesting party’s
claims or defenses. Id.
The
party asserting the trade secret privilege has the burden of proving that the
discovery information sought qualifies as a trade secret. In re Bass,
113 S.W.3d 735, 737 (Tex. 2003) (orig. proceeding). If the resisting party
meets its burden, the burden shifts to the party seeking the trade secret
discovery to establish that the information is necessary for a fair
adjudication of its claim. Id. It is an abuse of discretion for the
trial court to order production once trade secret status is proven if the party
seeking production has not shown necessity for the requested materials. Id.
at 738.
To
determine whether a trade secret exists, the following six factors are weighed
in the context of the surrounding circumstances: (1) the extent to which the
information is known outside of the business; (2) the extent to which it is
known by employees and others involved in the business; (3) the extent of
measures taken to guard the secrecy of the information; (4) the value of the
information to the business and to its competitors; (5) the amount of effort or
money expended in developing the information; and (6) the ease or difficulty
with which the information could be properly acquired or duplicated by others.
In re Union Pac. R.R. Co., 294 S.W.3d 589, 592 (Tex. 2009) (orig.
proceeding) (per curiam). The party claiming a trade secret is not required to
satisfy all six factors because trade secrets do not fit neatly into each
factor every time. In re Bass, 113 S.W.3d at 740.
The
Texas Supreme Court has not stated conclusively what would or would not be
considered necessary for a fair adjudication; instead, the application depends
on the circumstances presented. In re Bridgestone/Firestone, Inc., 106
S.W.3d 730, 732 (Tex. 2003) (orig. proceeding). The degree to which
information is necessary depends on the nature of the information and the
context of the case. Id. However, “we can say with certainty that the
test cannot be satisfied merely by general assertions of unfairness.” Id.
“Just as a party who claims the trade secret privilege cannot do so generally
but must provide detailed information in support of the claim, so a party
seeking such information cannot merely assert unfairness but must demonstrate
with specificity exactly how the lack of the information will impair the
presentation of the case on the merits to the point that an unjust result is a
real, rather than a merely possible, threat.” Id. at 732–33. An
appellate remedy does not exist if a trial court orders a party to produce
privileged trade secrets absent a showing of necessity. In re Bass, 113
S.W.3d at 745.
Application
of Six Factors
In
support of its claim of trade secret privilege, Cooper Tires submitted three
affidavits of Anthony E. Brinkman, Cooper Tire’s Principal Tire Analysis
Engineer, dated August 5, 2008, February 20, 2009, and August 7, 2009. After
reviewing Brinkman’s three affidavits together and applying the six factors, we
conclude that Cooper Tire has established that the subject documents contain trade
secrets.
Factors
One, Two and Three
The
first three factors are the extent to which the information is known outside Cooper
Tire’s business; the extent to which the information is known by employees and
others involved in Cooper Tire’s business; and the extent of measures taken by
Cooper Tire to guard the secrecy of the information. Brinkman testified that
Cooper Tire keeps the information contained in the GTS History of GTS 2257, Product
Change Notifications (“PCNs”) related to the addition and removal of BEGs in
GTS 2257, the Experimental Mold Design for GTS 2257, and Adjustment Follow-Up
Reports for GTS 2257 secret, and this information is not generally known or
ascertainable by its competitors. Cooper Tire’s policies with respect to
handling trade secret information are given to all salaried employees when they
are hired. All salaried employees must sign a nondisclosure agreement stating
they understand that Cooper Tire’s internal information and documentation such
as research, drawings, formulae, methods, processes, know-how, and facilities
are trade secrets and this information will be treated as such. Cooper Tire’s
policy statement on business ethics and standards of conduct emphasizes the
importance of appropriately safeguarding the company’s trade secrets, including
without limitation, planned new products, the ways Cooper Tire manufactures its
products, and test data. Cooper Tire’s policy on disclosures and use of
corporate information forbids all employees from disclosing trade secret
information without proper authorization from an officer of Cooper Tire.
Access
is limited and tight controls are maintained for any vendors, business
partners, contractors, and all other individuals who are not employed by Cooper
Tire, but require entry onto Cooper Tire property for a compelling business
necessity. Cooper Tire’s Technical Center in Findlay, Ohio is locked and
accessible only through special, computerized coded access cards and/or coded
keypad access 24 hours a day. A similar system is employed at Cooper Tire’s
corporate headquarters in Findlay, Ohio. Access to Cooper Tire’s manufacturing
plant is through 24-hour guarded entrances.
Cooper
Tire may share its trade secret information with its employees or agents
without endangering the trade secret’s protection. See In re Bass, 113
S.W.3d at 742. Brinkman details Cooper Tire’s efforts maintain the secrecy of
its information. See Phillips v. Frey, 20 F.3d 623, 631 (5th Cir. 1994)
(explaining party that fails to take reasonable precautions to secure its
secrecy cannot properly claim that information constitutes trade secret). Therefore,
Cooper Tire has established that it maintains procedures to keep the
information secret.[2]
Accordingly, we conclude that factors one, two, and three weigh in favor of
finding that the documents contain trade secret information.
Factor
Four
The
fourth factor is the information’s value to Cooper Tire and its competitors. In
his affidavits, Brinkman explained the importance of the type of information in
the GTS 2257 documents. Brinkman explained that the GTS History summarizes
revisions that have been made to a GTS throughout the history of the GTS, and
such documents reflect various manufacturing and design changes and can include
rubber compound formula information.
Product
Change Notifications (“PCNs”) are issued to notify personnel of an impending
authorized product change, and these documents include a description of the
change, the reason for the change, the data supporting the change, the products
affected by the change, a proposed implementation schedule, and the plants
affected by the change. PCN documents may also contain analysis and data
regarding the material production, and processing requirements necessary to
implement the change and rubber compound formula information.
With
respect to the Experimental Mold Designs, in the manufacturing process, tire
builders assemble raw and uncured components into a “green” tire that is placed
in a curing mold. The green tire is then subjected to heat and pressure to
achieve its final form.
Adjustment
Follow-Up Reports, which contain trade secret information, are issued at the
request of the engineer to determine the impact of a design or manufacturing
change to a particular tire design or GTS on the number of tires manufactured
to that GTS returned to Cooper Tire for a specific condition. The reports
contain its adjustment or tire return information for the particular GTS and
specific condition being examined as well as the analysis and conclusions drawn
from that information. They may also contain production information and
background information regarding the change being examined.
Brinkman
testified that the documents contain trade secret information developed at
great expense to Cooper Tire; such information would be extremely valuable to
its competitors; a competitor could use the information to copy Cooper Tire’s
products and sell them in the tire market in competition with Cooper Tire; and
such competitor could do so without compensating Cooper Tire for its design
expenses. The availability of Cooper Tire’s specifications for tire building,
manufacturing, and design, and other documents to another tire manufacturer
would enable that manufacturer to gain a significant competitive advantage over
Cooper Tire because it would allow the competitor to evaluate the performance
of various tire components, without investing any time or expense.
Brinkman
further testified that conceptualizing, developing, testing, and implementing
new products and improving the durability or performance characteristics of
current products require a substantial commitment of time and personnel and an
enormous financial and technological investment. Any advantage, whether it is
a gain in lead time for the introduction of new products or an understanding of
the competition’s weakness, thinking, goals, and strategy can lead to
significant gains.
With
adjustment data, a competitor could discern or infer certain qualities about
Cooper Tire’s products and thereby adjust its product or warranty practices to
the same quality level to better compete. Adjustment data would permit a
competitor to learn Cooper Tire’s production schedule, including the numbers
and types of tires produced, from which the competitor could discern or infer
the demand for particular types of products, and such information could be used
to the competitor’s advantage. Cooper Tire’s competitors do not publicize
their tire return and other adjustment data because of its competitive value.
Brinkman’s
affidavits sufficiently establish the value of the information contained in the
subject documents to Cooper Tire and its competitors. Therefore, we conclude
that factor four weighs in favor of finding that the subject documents contain trade
secret information.
Factor
Five
The
fifth factor is the amount of money expended by Cooper Tire in developing
information. Cooper Tire admits that Brinkman does not place a dollar figure
on developing the requested information about the GTS 2257. This factor weighs
against finding that the documents contain trade secret information.
Factor
Six
Factor
six is the ease or difficulty with which the information could be properly
acquired or duplicated by others. Brinkman testified that this information
could not be easily duplicated, and this information would facilitate easy
duplication of Cooper Tire’s product. With regard to adjustment data reports,
the plaintiffs concede that a competitor generally cannot acquire or duplicate
data that would appear in such reports given that these reports are generated
by information gathered by Cooper Tire. Brinkman testified that Cooper Tire’s
competitors do not publish their adjustment data. We find that this factor
weighs in favor of finding that the documents contain trade secret information.
Cooper
Tire has established five of the six factors. However, Cooper Tire is not
required to establish all six factors. See In re Bass, 113 S.W.3d at
740. Weighing the factors in the context of the surrounding circumstances, we
conclude that Cooper Tire has established that the documents contain trade
secrets. See In re Union Pac. R.R. Co., 294 S.W.3d 589, 592). Because
Cooper Tire met its burden to establish that the documents contain trade secret
information, the burden shifted to the plaintiffs to establish that the
information is necessary for a fair adjudication of their claims. See Bass,
113 S.W.3d at 737.
Necessary
for Fair Adjudication
Cooper
Tire argues that the plaintiffs did not meet their burden to produce evidence
“demonstrat[ing] with specificity exactly how the lack of information will
impair the presentation of the case on the merits to the point that an unjust
result is real, rather than a merely possible, threat.” In re
Bridgestone/Firestone, Inc., 106 S.W.3d at 733. The plaintiffs argue that
there is sufficient evidence to support a determination that these documents
are necessary for the fair adjudication of their claims because the information
is essential to prove two elements of their claims. First, the plaintiffs’
design defect claims require evidence that a safer alternative design was
available when the subject tire was manufactured, and evidence that the use of
BEGs on other Cooper Tires reduced the number of tire separation incidents
establishes this point. Second, the plaintiffs’ claim for punitive damages
requires proof that Cooper Tire had actual subjective awareness of the risk
associated with producing defective tires that could be remedied by BEGs and,
nevertheless, proceeded to produce defective tires with conscious indifference
to the rights and safety of people like the plaintiffs.
Brinkman
stated that the use of BEGs is a method of providing the proper thickness of
rubber at the belt edges, and that the rubber on the subject tire was at the
proper thickness. Based on these statements, the plaintiffs contend that
Cooper Tire intends to argue that the inclusion of the BEGs would not decrease
the number of tread separations in the subject tire. Therefore, the plaintiffs
claim it would be unjust to allow Cooper Tire to assert that the inclusion of
the BEGs would not have been a safer alternative design while depriving the
plaintiffs of evidence that the inclusion of BEGs as part of a different Cooper
Tire designs decreased the number of tread separations.
Based
on the record before us, we conclude that the plaintiffs have not established that
the trade secret information is necessary to the fair adjudication of their
claim that the use of BEGs provides a safer alternative design. In their
briefing to the trial court, the plaintiffs rely on documents already produced
to them that “discuss[] the use of BEGs to improve Cooper’s tires.” Moreover,
the Texas Supreme Court recently rejected a similar argument regarding punitive
damages, explaining that “we would have difficulty concluding that evidence of
damages, even punitive damages, could not be anywhere but through trade
secrets.” In re Union Pac. R.R. Co., 294 S.W.3d at 593. We hold that the
plaintiffs have not met their burden to establish the information in the GTS
2257 documents is necessary to a fair adjudication of their claims. Because
the plaintiffs have not established that the trade secret information is
necessary for a fair adjudication of their claims, the trial court abused its
discretion by compelling Cooper Tire to produce the GTS 2257 documents. See
In re Bass, 113 S.W.3d at 737. Moreover, Cooper Tire does not have an
adequate remedy by appeal. See id. at 745 (holding appellate remedy does
not exist if trial court orders party to produce privileged trade secrets
absent showing of necessity). [3]
Conclusion
We
hold the trial court abused its discretion by compelling Cooper Tire to produce
to the plaintiffs the documents submitted in camera. Accordingly, we
conditionally grant the petition for writ of mandamus and direct the trial
court to set aside its October 12, 2009 order compelling Cooper Tire to produce
to the plaintiffs the subject documents. The writ will issue only if the trial
court fails to act in accordance with this opinion. We lift the stay issued on
October 26, 2009.
/s/ John
S. Anderson
Justice
Panel consists of Chief Justice Hedges
and Justices Anderson and Boyce.
[1] The Real
Parties in Interest are the plaintiffs below and they are: Maria Del Rocio
Rodriguez, individually and as next friend of William Vasquez, a minor;
Santiago Vasquez; Macrina Hernandez, individually and as next friend of Ximena
Chavez and Jose Chavez, minors; and Jose Chavez and Elena Rodriguez,
individually and as next friend of Estefania Rodriguez, Yesenia Rodriguez, and
Jesus Rodriguez, minors. In this opinion, we refer to the Real Parties in
Interest collectively as “plaintiffs.”
[2] See
Union Pac. R.R. Co., 294 S.W.3d at 592 (“The information is not generally
known or readily available to Union Pacific’s competitors or its customers or
other businesses. The information is not even generally known throughout the
company. Rather the information is known only to a limited number of Union
Pacific employees and certain management employees.”); Bancservices Group,
Inc. v. Strunk & Assocs., L.P., No. 14-03-00797-CV, 2005 WL 2674985, at
*3 (Tex. App.—Houston [14th Dist.] Oct. 20, 2005, pet. denied) (mem. op.) (“[T]he
compilation and implementation of those parts were not generally known. . . .
All employees of Strunk were required to sign a confidentiality agreement. In
addition, the banks who purchased the program were required to sign a
confidentiality agreement.”); In re The Cayman Island Firm of Deloitte &
Touche, No. 04-01-00491-CV, 2001 WL 1042233, at *4 (Tex. App.—San Antonio
Sept. 12, 2001, orig. proceeding) (not designated for publication) (“Pilling’s
affidavit details the efforts by DT Cayman to maintain the secrecy of the
Manual, including that its disclosure is limited internally on a ‘need to know’
basis. Pilling also states that the information is highly confidential and
proprietary and would greatly benefit DT Cayman’s competitors. Although the details
offered in the affidavit are sketchy, the affidavit is sufficient to satisfy
the initial burden imposed on DT Cayman.”).
[3] Because
we hold that the plaintiffs did not meet their burden to demonstrate that the
discovery of the trade secret information is necessary to a fair adjudication
of their claim, we need not address Cooper Tire’s argument that discovery in a
product liability case is limited to the product at issue in the case. Tex. R.
App. P. 47.1.
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PRESENT: All the Justices
DONAL A. IRVING, IN HIS CAPACITY
AS EXECUTOR OF THE ESTATE OF
DECLAN PATRICK IRVING
OPINION BY
v. Record No. 170071 JUSTICE WILLIAM C. MIMS
December 14, 2017
CAROL DIVITO, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF CHESAPEAKE
Randall D. Smith, Judge
In this appeal, we consider whether the circuit court erred by concluding that a
holographic writing did not comply with Code §§ 64.2-403 or -404.
I. Background and Procedural History
Declan Irving was married for four years. In the course of obtaining a divorce he
executed a property settlement agreement, which states that “no children were born of the
marriage” and “the infant child known as Patrick D. Irving is not the child of [Declan].” In
2012, he was diagnosed with colon cancer. He died on March 30, 2014.
After Declan’s death, his brother, Donal Irving, found two notes Declan left in his hotel
room. 1 The notes were addressed to Donal and indicated that Declan’s will was at a local law
firm. Donal contacted the firm but was advised that it retained only an electronic copy of the
will. Declan’s hotel room also contained a key to a self-storage unit where a briefcase holding
Declan’s original will was located. Despite the terms of the property settlement agreement,
Declan’s will identified Patrick as “[m]y child born before the date of my [w]ill.” It also
designated Donal as the executor of his estate and named Declan’s parents and siblings as
beneficiaries.
1
Leading up to his death, Declan stayed in a hotel room close to the hospital where he
was receiving treatments.
The storage unit also contained a binder filled with a variety of estate planning
documents, including a copy of the will, a general durable power of attorney, a special power of
attorney, an advanced medical directive, and a document entitled “Estate Planning Reminders,”
which advised Declan not to make changes on the face of his will without contacting an attorney.
Each set of documents was separated in the binder by tab-dividers. Written diagonally and in
cursive across one of these dividers appeared the following writing, which Donal contends is a
codicil:
11/17/03
I wish to remove Patrick named as my son entirely from this will –
no benefits.
[Declan’s initials]
Donal submitted the will and the above writing to the Circuit Court Clerk of the City of
Chesapeake for probate. The Clerk admitted the will to probate but concluded that the writing
was not a validly executed codicil. Donal, as the executor of the estate, appealed the Clerk’s
decision to the circuit court, arguing that the writing was a holographic codicil executed in
compliance with the wills statute, Code § 64.2-403. Alternatively, he argued that it should be
probated as a writing intended as a codicil under the dispensing statute, Code § 64.2-404.
At trial, Donal presented the testimony of five witnesses, each of whom was familiar with
Declan’s handwriting and signature. The first four were Declan’s former colleagues, who all
testified that the writing was in Declan’s hand, and the initials were a signature they had seen
Declan use. The fifth witness, Declan’s accountant, testified without “[a]ny doubt” that Declan
wrote and signed the writing.
In its letter opinion, the circuit court explained that the issue in this case is whether
the writing meets the requirements of law to be a codicil . . . and, if
2
not executed in strict compliance with Code § 64.2-403, whether it
should, nevertheless, be found by clear and convincing evidence
that the decedent created the document with testamentary intent
pursuant to Code § 64.2-404.
The court found that the document was written and initialed by Declan. Nevertheless, it
concluded that Declan used his full signature on “formal documents,” such as his will and
property settlement agreement. The court also noted that the writing was located on a tab-divider
immediately adjacent to the “Estate Planning Reminders” document, which advised Declan not
to make changes to his will without contacting an attorney. Lastly, the court observed that both
of Declan’s notes directed Donal to the will, but neither mentioned the writing at issue.
Based on these circumstances, the court refused to probate the writing as a codicil,
concluding
that [it] does not comply with the statutory requirements set forth
in Code § 64.2-403, in that it is not manifest that the name on the
document in question was intended as the decedent’s signature.
Further, the writing at issue establishes a thought or plan of the
decedent to make a change to his will, and is precatory and
tentative in nature. Thus, testamentary intent to create a codicil
has not been established by clear and convincing evidence.
Donal appeals.
II. Analysis
A. Code § 64.2-403
On appeal, Donal primarily argues that the circuit court erred by ruling that the writing
did not comply with the wills statute, which states, in pertinent part:
A. No will shall be valid unless it is in writing and signed by the
testator, or by some other person in the testator’s presence and
by his direction, in such a manner as to make it manifest that
the name is intended as a signature.
B. A will wholly in the testator’s handwriting is valid without
further requirements, provided that the fact that a will is wholly
3
in the testator’s handwriting and signed by the testator is
proved by at least two disinterested witnesses.
Code § 64.2-403(A)-(B). “[I]n a probate proceeding, the burden is on the proponents to show by
a preponderance of the evidence that the purported will is written and executed in the manner
prescribed by [Code § 64.2-403].” Grady v. Fauls, 189 Va. 565, 569, 53 S.E.2d 830, 832
(1949); see also Delly v. Seaboard Citizens Nat’l Bank, 202 Va. 764, 767, 120 S.E.2d 457, 459
(1961) (the requirements of Code § 64.2-403, “which apply to the probate of a will[,] extend
with like force and effect to the probate of a codicil”).
In Donal’s view, the circuit court’s analysis should have ended with its determination that
the document was written and initialed by Declan, and the court erred by holding that a “formal”
signature was necessary to comply with the wills statute. He correctly observes that Virginia law
does not “define what shall constitute a ‘signature,’” and that initials or even a mark can be
sufficient. Pilcher v. Pilcher, 117 Va. 356, 365, 84 S.E. 667, 670 (1915); Clarke v. Dunnavant,
37 Va. (10 Leigh) 14, 24 (1839). But the circuit court did not rule that Declan’s initials were
insufficient as a matter of law or that a “formal” signature was necessary. Rather, it held that the
writing did not comply with the requirement in Code § 64.2-403(A) that a codicil be “signed by
the testator . . . in such a manner as to make it manifest that the name is intended as a
signature.” 2
This “signature” requirement, which has remained unchanged since the General
Assembly first enacted the statute in 1850, necessitates that “there must be a concurrence of the
. . . intention to make a will and the intention to sign the instrument as and for a will.” Hamlet v.
2
The circuit court also did not require Donal to prove by clear and convincing evidence
that the document complied with the requirements set forth in Code § 64.2-403, as Donal
contends in his third assignment of error. The court applied this burden of proof to Donal’s
evidence only in its analysis under Code § 64.2-404, as is explicitly required by that statute.
4
Hamlet, 183 Va. 453, 462, 32 S.E.2d 729, 732 (1945) (emphasis added). The testator must have
“designed by the use of his signature to authenticate the instrument.” Dinning v. Dinning, 102
Va. 467, 469, 46 S.E. 473, 473 (1904). Whether a signature – be it a full signature, initials, or a
mark – satisfies this requirement “must largely depend upon the circumstances of each particular
case, though in all cases . . . intent is a vital factor.” Pilcher, 117 Va. at 365, 84 S.E. at 670.
Importantly,
[i]t is not sufficient to raise a doubt as to whether [the] name is
intended to authenticate the paper which is propounded as a will,
for, to use the explicit language of the statute, it must be signed ‘in
such a manner as to make it manifest that the name is intended as a
signature,’ and unless so signed it is not valid.
Hamlet, 183 Va. at 462, 32 S.E.2d at 732 (emphases added) (quoting Meany v. Priddy, 127 Va.
84, 85, 102 S.E. 470, 470 (1920)).
As a threshold matter, Code § 64.2-403(A) “recognizes no will as sufficiently signed
unless” the intention to authenticate the writing “appears affirmatively from the position of the
signature, as at the foot or end, or from some other internal evidence equally convincing.” Slate
v. Titmus, 238 Va. 557, 560, 385 S.E.2d 590, 591 (1989) (quoting Ramsey v. Ramsey, 54 Va. (13
Gratt.) 258, 664, 670 (1857)). If there is no “internal evidence . . . afforded by the face of [a]
paper” that a signature was given with such an intent, the signature requirement cannot be
satisfied, and “extrinsic evidence is not employed to affect either pro or con the question of
finality of intention.” Warwick v. Warwick, 86 Va. 596, 603, 10 S.E. 843, 845 (1890) (emphasis
in original). Yet, when the face of a document gives some evidence that the name appearing on
it was intended as a signature to authenticate the document as testamentary, this Court has
repeatedly evaluated extrinsic evidence to confirm or disprove that the testator designed by the
use of his name to authenticate the document at issue. See, e.g., Pilcher, 117 Va. at 367, 84 S.E.
5
at 671 (considering extrinsic evidence to conclude that a testator’s initials at the bottom of a
short holographic will were given with the intent to authenticate the instrument as a will); Payne
v. Rice, 210 Va. 514, 518, 171 S.E.2d 826, 829 (1970).
Declan’s initials appear at the end of the writing, providing internal evidence that they
were designed to authenticate the document as a codicil. Consequently, the circuit court
appropriately considered extrinsic evidence to determine whether the initials constituted a
signature for the purposes of Code § 64.2-403(A). After considering this evidence, the court
determined that they were not written in a manner to make manifest that they were intended as a
signature to authenticate the writing. This factual determination will not be disturbed on appeal
unless it is “plainly wrong or without evidence to support it.” Code § 8.01-680; Pilcher, 117 Va.
at 364-66, 84 S.E. at 670-71 (“[W]hat constitutes a signature must largely depend upon the
circumstances of each particular case.”).
In the execution of his will and property settlement agreement, Declan demonstrated that
he used his full signature to authenticate legal and testamentary documents. The use of only his
initials on the writing at issue in this case therefore raises a doubt as to whether he signed the
writing with the intent to authenticate it “as and for” a codicil. Hamlet, 183 Va. at 462, 463, 32
S.E.2d at 732, 733 (concluding that the testator’s name appearing in the second paragraph of a
proposed will was not intended as a signature to authenticate the will after considering that the
testator “careful[ly]” placed his signature at the bottom of a previous holographic will); Payne,
210 Va. at 518, 171 S.E.2d at 829 (considering the testator’s practice of signing “letters and
cards at the bottom or end” to conclude that her name appearing at the top of a purported will
was not manifestly intended as a signature). Our doubt is strengthened by the fact that Declan’s
notes directed Donal only to his will without mentioning the writing, which suggests that Declan
6
did not consider his initials to have authenticated the writing as a testamentary document.
This doubt prevents the conclusion that it is manifest that the initials were intended as
Declan’s signature. Accordingly, we affirm the circuit court’s judgment.
B. Code § 64.2-404
Donal next argues that even if the writing does not satisfy the requirements of Code §
64.2-403, it nevertheless should have been probated under the dispensing statute, which allows a
court to treat a writing that
was not executed in compliance with § 64.2-403 . . . as if it had
been . . . if the proponent of the document or writing establishes by
clear and convincing evidence that the decedent intended the
document or writing to constitute (i) the decedent’s will . . . [or]
(iii) an addition to or an alteration of the will . . . .
Code § 64.2-404(A). Donal contends that the writing should have been probated under this
statute because Declan’s testamentary intent to create a codicil was established by clear and
convincing evidence.
“Testamentary intent . . . means that the writing offered for probate must have been
executed by the testator with the intent that such writing take effect as his last will.” Thompkins
v. Randall, 153 Va. 530, 538-39, 150 S.E. 249, 251 (1929). Initially, “[t]estamentary intent is
determined by looking at the document itself, not from extrinsic evidence.” Wolfe v. Wolfe, 248
Va. 359, 360, 448 S.E.2d 408, 409 (1994) (citing Mumaw v. Mumaw, 214 Va. 573, 577, 203
S.E.2d 136, 139 (1974)). “[W]hether the face of an instrument contains evidence of testamentary
intent is a matter of law to be decided by the trial court.” Bailey v. Kerns, 246 Va. 158, 162, 431
S.E.2d 312, 315 (1993). If a court determines there is no evidence of testamentary intent within
the four corners of the instrument, that instrument is not a valid will. Id. (citing Poindexter v.
Jones, 200 Va. 372, 376, 106 S.E.2d 144, 146 (1958)).
7
However, after a court determines that “an instrument contains some evidence of
testamentary intent, extrinsic evidence may be admitted to determine whether the instrument is
testamentary in nature.” Bailey, 246 Va. at 164, 431 S.E.2d at 316 (citing Grimes v. Crouch, 175
Va. 126, 132-34, 7 S.E.2d 115, 117-18 (1940)). 3 Appellees presented such evidence, and the
circuit court agreed that Declan did not execute the proposed codicil with testamentary intent.
While the question of whether an instrument has evidence of testamentary intent on its face is a
question of law, Bailey, 246 Va. at 162, 431 S.E.2d at 315, we review a circuit court’s
conclusion, based on extrinsic evidence, that a document was not executed with testamentary
intent to determine only whether it is plainly wrong or without evidentiary support. Code § 8.01-
680.
Much of the evidence discussed above also supports the court’s conclusion that Declan
did not execute the writing with testamentary intent. If he intended and believed the writing to
be an effective codicil, it is reasonable to conclude that he would have mentioned it in his notes
to Donal. His failure to do so, along with his failure to sign the writing in the same manner as
his will, suggests that he did not consider the writing to have binding testamentary effect. 4
3
In his fifth assignment of error, Donal argues that the circuit court erred “in holding that
decedent’s testamentary intent was not clear and manifest on the face of the holographic
writing.” This argument is premised on the incorrect assumption that a court is not permitted to
look at extrinsic evidence after determining that the face of a document has evidence of
testamentary intent. After a court makes such a determination, the opponents of a will or codicil
have a right to introduce evidence disproving testamentary intent. Bailey, 246 Va. at 164, 431
S.E.2d at 316.
4
Additionally, the circuit court’s conclusion that the writing itself does not actually effect
a change to Declan’s will, but establishes only a “thought or plan” to change his will that he
“wish[ed]” to implement at some point, is also supported by the evidence. The proposed codicil
specifically states, “I wish to remove Patrick named as my son from this will – no benefits.”
(emphasis added). In this sentence, the infinitive “to remove” is a noun operating as the object
of the verb “wish.” The Chicago Manual of Style § 5.107, at 260-61 (17th ed. 2017). As the
8
Thus, the record supports the circuit court’s conclusion that Donal did not prove by clear
and convincing evidence that the writing was intended as a codicil or executed with testamentary
intent.
III. Conclusion
The record in this case supports the circuit court’s rulings that the writing was neither
signed in the manner required by Code § 64.2-403(A) nor intended to constitute a codicil.
Accordingly, we affirm.
Affirmed.
infinitive is operating as a noun, and not as a verb, Declan was not actually removing Patrick
from his will via this writing.
9
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537 U.S. 1142
WASHINGTONv.UNITED STATES.
No. 02-7802.
Supreme Court of United States.
January 13, 2003.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.
2
C. A. 10th Cir. Certiorari denied. Reported below: 45 Fed. Appx. 862.
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J-S50037-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
DORIS DENISE COLON
Appellant No. 2895 EDA 2014
Appeal from the Judgment of Sentence September 2, 2014
in the Court of Common Pleas of Lehigh County
Criminal Division at No(s): CP-39-CR-0001906-2012
BEFORE: PANELLA, J., MUNDY, J., and JENKINS, J.
MEMORANDUM BY JENKINS, J.: FILED SEPTEMBER 30, 2015
Appellant Doris Denise Colon appeals from the judgment of sentence
entered in the Lehigh County Court of Common Pleas following the
revocation of her parole and probation on an underlying conviction for
possession of a controlled substance with intent to deliver.1 After careful
review, we affirm.
The trial court aptly set forth the facts and procedural history of this
case as follows:
On November 16, 2011, Allentown Police executed a
search warrant on the premises located at 148 Chestnut Street,
Allentown, Lehigh County, Pennsylvania. Appellant was in the
residence. During the search, police located fifty-eight bundles
of suspected heroin and $1,855.00 in United States currency.
____________________________________________
1
35 P.S. § 780-113(a)(30).
J-S50037-15
The suspected contraband was tested and was found to contain
heroin and to weigh 27.95 grams.
Appellant pled guilty to one count of [p]ossession with
[i]ntent to [d]eliver a [c]ontrolled [s]ubstance on September 26,
2012. A presentence investigation and mental health evaluation
were performed on Appellant and reviewed by the [c]ourt.
On November 6, 201[2], a sentencing hearing was
conducted. This [c]ourt sentenced Appellant to eleven to
twenty-three months in Lehigh County Prison followed by a two[-
]year probationary period.
On August 16, 2013, Appellant was paroled on her
sentence. On July 15, 2014, Appellant appeared for a Gagnon
II hearing. She admitted to violating the terms of her parole
and was resentenced to serve the balance of her sentence
followed by the same two-year probationary period.
Appellant was paroled again on July 24, 2014. However,
she was picked up on a second parole/probation violation
warrant on July 31, 2014 based on a positive drug screen.
Appellant appeared before the undersigned for a second
Gagnon II hearing on September 2, 2014. At that time, she
conceded the allegation of the violation petition regarding her
drug use. At that time, the [c]ourt revoked Appellant’s parole
and remanded her to serve the balance of her sentence.
Additionally, her probation was revoked and she was sentenced
to one to four years in state prison, followed by a one-year
probationary sentence consecutive to the prison term.
On September 12, 2014, Appellant filed a motion to modify
her sentence. That motion was denied [on] September 25,
2014.
Appellant filed a Notice of Appeal on [October] 2, 2014.[2]
She timely filed a Concise Statement [of Matters Complained of
on Appeal].
____________________________________________
2
Both the trial court and Appellant incorrectly noted the notice of appeal’s
filing date as November 2, 2014, well beyond the 30-day limit to timely
appeal from the trial court’s September 2, 2014 resentencing. See
(Footnote Continued Next Page)
-2-
J-S50037-15
1925(a) Opinion, at 1-2 (page numbers supplied) (footnote omitted).
Appellant raises the following issue for our review:
Did the lower court err by imposing a disproportionate
sentence based upon the nature of the violation and by failing to
properly consider the requisite statutory factors, thus imposing
an excessive sentence contrary to the fundamental norms of the
sentencing process?
Appellant’s Brief, p. 4 (all capitals omitted).
Appellant’s claim raises a challenge to the discretionary aspects of her
sentence following the trial court’s revocation of her probationary sentence.3
See Appellant’s Brief, pp. 10-14. “An appellant wishing to appeal the
discretionary aspects of a probation-revocation sentence has no absolute
right to do so but, rather, must petition this Court for permission to do so.”
Commonwealth v. Kalichak, 943 A.2d 285, 289 (Pa.Super.2008). As this
Court has explained:
To reach the merits of a discretionary sentencing issue, we
conduct a four-part analysis to determine: (1) whether appellant
has filed a timely notice of appeal, Pa.R.A.P. 902 and 903; (2)
whether the issue was properly preserved at sentencing or in a
motion to reconsider and modify sentence, Pa.R.Crim.P. [708];
(3) whether appellant’s brief has a fatal defect, Pa.R.A.P.
_______________________
(Footnote Continued)
Pa.R.A.P. 1925(a) Opinion, November 3, 2014 (“1925(a) Opinion”), p. 2
(page number supplied); Appellant’s Brief, p. 6. However, the certified
record reveals that Appellant dated and timely filed the notice of appeal on
October 2, 2014. See Notice of Appeal; see also Court of Common Pleas of
Lehigh County Docket No. CP-39-CR-0001906-2012, p. 13.
3
Appellant does not challenge the revocation of parole or imposition of back
time for the parole violation. See generally Appellant’s Brief.
-3-
J-S50037-15
2119(f); and (4) whether there is a substantial question that the
sentence appealed from is not appropriate under the Sentencing
Code, 42 [Pa.C.S. § 9781(b)].
Commonwealth v. Cook, 941 A.2d 7, 11 (Pa.Super.2007).
Here, Appellant filed a timely notice of appeal and preserved the issue
by filing a motion for reconsideration. Further, Appellant’s brief includes a
concise statement of the reasons relied upon for allowance of appeal
pursuant to Pa.R.A.P. 2119(f). See Appellant’s Brief, p. 9. Accordingly, we
now determine whether Appellant has raised a substantial question for
review and, if so, proceed to a discussion of the merits of the claim.
Pa.R.A.P. 2119(f); Commonwealth v. Tuladziecki, 522 A.2d 17 (Pa.1987).
“The determination of whether a particular case raises a substantial
question is to be evaluated on a case-by-case basis. Generally, however, in
order to establish that there is a substantial question, the appellant must
show actions by the sentencing court inconsistent with the Sentencing Code
or contrary to the fundamental norms underlying the sentencing process.”
Commonwealth v. Marts, 889 A.2d 608, 612 (Pa.Super.2005) (internal
citations omitted). On appeal from a probation revocation proceeding, this
Court has previously determined a substantial question is presented when a
sentence of total confinement, in excess of the original sentence, is imposed
as a result of a technical violation of probation. See Commonwealth v.
Sierra, 752 A.2d 910, 913 (Pa.Super. 2000). Because the instant matter
involves a sentence of total incarceration as a result of a technical violation
of probation, we examine Appellant’s claim.
-4-
J-S50037-15
“Revocation of a probation sentence is a matter committed to the
sound discretion of the trial court and that court’s decision will not be
disturbed on appeal in the absence of an error of law or an abuse of
discretion.” Commonwealth v. Ahmad, 961 A.2d 884, 888
(Pa.Super.2008). “The Commonwealth establishes a probation violation
meriting revocation when it shows, by a preponderance of the evidence, that
the probationer’s conduct violated the terms and conditions of his probation,
and that probation has proven an ineffective rehabilitation tool incapable of
deterring probationer from future antisocial conduct.” Id. “[I]t is only when
it becomes apparent that the probationary order is not serving this desired
end [of rehabilitation] the court’s discretion to impose a more appropriate
sanction should not be fettered.” Id. at 888-89.
“Upon revocation [of probation] the sentencing alternatives available
to the court shall be the same as were available at the time of initial
sentencing[.]” 42 Pa.C.S. § 9771(b). “Thus, if the original offense was
punishable by total confinement, such a penalty is available to a revocation
court, subject to the limitation that the court shall not impose total
confinement unless it finds that: (1) the defendant has been convicted of
another crime; (2) the defendant’s conduct indicates a likelihood of future
offenses; or (3) such a sentence is necessary to vindicate the court’s
authority.” Kalichak, 943 A.2d at 289. “Sentencing Guidelines do not
apply to sentences imposed following a revocation of probation.”
Commonwealth v. Ferguson, 893 A.2d 735, 739 (Pa.Super.2006)
-5-
J-S50037-15
(citation omitted). Instead, pursuant to 42 Pa.C.S. § 9721(b), the
sentencing court must consider the protection of the public, the gravity of
the offense in relation to the impact on the victim and the community, and
the rehabilitative needs of the defendant. Id. Further, technical probation
violations “can support revocation and a sentence of incarceration when such
violations are flagrant and indicate an inability to reform.” Commonwealth
v. Carver, 923 A.2d 495, 498 (Pa.Super.2007); see also Sierra, 752 A.2d
at 912 (failure to keep probation appointments); Commonwealth v.
Malovich, 903 A.2d 1247, 1254 (Pa.Super.2006) (possession of controlled
substances); Commonwealth v. Cappellini, 690 A.2d 1220, 1225
(Pa.Super.1997) (continued drug use and resistance to treatment).
Appellant contends that, given the technical nature of her violation,
the sentence she received upon revocation was excessive. See Appellant’s
Brief, pp. 13-14. She is incorrect.
Upon revoking Appellant’s probation, the trial court properly sentenced
her to total confinement because she flagrantly violated her probation – for a
second time – by using controlled substances. The nature of Appellant’s
technical violation, the haste with which she violated upon being paroled,
and the fact that her violation was a carbon-copy of her previous violation,
all indicated that she would likely commit another crime if not imprisoned.4
____________________________________________
4
In addition to indicating a likelihood that Appellant will commit another
crime, we note that Appellant’s second drug-use violation, occurring, as did
(Footnote Continued Next Page)
-6-
J-S50037-15
The trial court explained its imposition of incarceration upon the
revocation of the probationary portion of Appellant’s sentence as follows:
In this case, the sentence Appellant received is appropriate
and was fully warranted under the circumstances. Appellant
appeared before the undersigned on July 15, 2014 conceding
that she violated the terms of her parole. The [c]ourt
resentenced her to the balance of her parole and reimposed the
two-year probationary sentence she originally received.
Additionally, the [c]ourt made Appellant eligible for early parole
upon verification of residence. She was paroled approximately
one week later and was detained for drug use within a single
week of being paroled for the second time on the within case.
Appellant’s presentence investigation reports performed
prior to her original sentencing date made reference to her
extensive drug problems. The fact that she resumed using drugs
within a week of being paroled is illustrative of the challenges
she faces. It is also a strong indicator of the high likelihood that
Appellant would reoffend.
The sentence imposed reflects due consideration of the
gravity of Appellant’s offenses and her treatment needs. A
structured environment with greater supervision is more likely to
lead to Appellant’s rehabilitation and encourage her addressing
her substance abuse challenges than allowing her to serve a
shorter period of time and be back on the streets where there is
a greater temptation to resume her drug use. The subsequent
probationary sentence following Appellant’s parole serves to
allow supervisory authorities to monitor her in order to aid in
keeping Appellant on a drug-free life path after her
incarceration.
_______________________
(Footnote Continued)
the previous drug-use violation, so soon after being paroled, also indicates
that a sentence of incarceration is essential to vindicate the trial court’s
authority.
-7-
J-S50037-15
1925(a) Opinion, pp. 4-5 (footnote omitted) (page numbers supplied). We
find no abuse of discretion in the trial court’s imposition of sentence
following the revocation of Appellant’s probation.
Moreover, the trial court sentenced Appellant within the statutory
limits for her conviction. Possession of a controlled substance with intent to
deliver a Schedule I drug (heroin), graded as a felony, carries a possible
sentence of up to 15 years’, or 180 months’, incarceration. 35 P.S. § 780-
113(f). Appellant’s probation revocation sentence of 1 to 4 years’
incarceration, together with the full back time of her revoked parole
sentence of 11 to 23 months’ incarceration, amounted to a sentence of 23 to
71 months’ incarceration for the crime. This sentence was within statutory
limits and, thus, legal. Therefore, we find no abuse of discretion.
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/30/2015
-8-
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268 F.3d 603 (8th Cir. 2001)
BZAPS, INC., DOING BUSINESS AS BUSTER'S BAR, APPELLANT,v.CITY OF MANKATO, APPELLEE.
No. 00-3214
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
Submitted: May 17, 2001Filed: October 12, 2001
1
Appeal from the United States District Court for the District of Minnesota.
2
Before Morris Sheppard Arnold and Bye, Circuit Judges, and Gaitan,1 District Judge.
Morris Sheppard Arnold, Circuit Judge
3
BZAPS, Inc., contracted with a group known as "Fatal Attraction," a male dance revue that performs in various states of nudity, to perform for one night at Buster's Bar, owned by BZAPS in Mankato, Minnesota. When a BZAPS representative contacted the city planning director regarding the permissibility of this performance, the planning director stated that such a performance would violate Mankato City Ordinance § 10.83(4)(A), which allows adult uses only in zoning areas different from the one in which Buster's Bar is located.
4
BZAPS sued the city, claiming that the first amendment forbids the application of § 10.83 to a one-night performance. After the district court2 denied a request by BZAPS for a preliminary injunction, the city enacted Mankato City Ordinance § 4.09(1), banning adult uses in any establishment with a liquor license. BZAPS then amended its complaint to challenge the constitutionality of § 4.09(1) on its face and as applied to a one-night performance. The district court granted summary judgment to the city. We affirm.
I.
5
Under § 10.83(4)(A), the city prescribes the permissible locations of "adult use, principal," establishments. The B-1 "community business district," where Buster's Bar is located, is not included in the list of permissible locations. See id. The ordinance also requires, see § 10.83(4)(B), such establishments to be at least 350 feet from residential districts, day care centers, schools, libraries, parks, churches, and other "adult use, principal," establishments. The ordinance, see § 10.83(1)(A), defines an "adult use" as one "in which there is an emphasis on the presentation, display, depiction or description of'specified sexual activities' or'specified anatomical areas.' " "Specified sexual activities" and "specified anatomical areas" are enumerated in some detail. See § 10.83(1)(A)(1), § 10.83(1)(A)(2).
6
The ordinance, see § 10.83(1)(C), defines an "adult use, principal," establishment as one "having more than 10% of its stock in trade or floor area allocated to, or more than twenty percent (20%) of its gross receipts derived from, any adult use." The city contends that this standard applies on a per-day basis, and that a one-night adult performance using more than 10% of Buster's floor space would cause it to become an "adult use, principal," establishment for that night, thus violating § 10.83(4)(A). BZAPS contends that this interpretation of § 10.83 violates the first amendment.
7
The Supreme Court has frequently recognized that nude dancing is protected by the first amendment, see, e.g., Barnes v. Glen Theatre, Inc., 501 U.S. 560, 565-66 (1991) (plurality opinion), see also id. at 581 (opinion of Souter, J.) and id. at 593 (opinion of White, J.), but the Court has nevertheless allowed local governments to use their zoning powers to limit the location of adult establishments. See City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 54-55 (1986), and Young v. American Mini Theatres, Inc., 427 U.S. 50, 63 (1976). In upholding the zoning ordinance in Renton, the Court concluded that an ordinance limiting the location of adult establishments is proper so long as it is constructed without reference to content, see Renton, 475 U.S. at 48, and is designed to promote a substantial governmental interest and allows reasonable alternative avenues for communication, see id. at 50. See also ILQ Investments, Inc. v. City of Rochester, 25 F.3d 1413, 1416 (8th Cir. 1994), cert. denied, 513 U.S. 1017 (1994).
8
On its face, § 10.83 differs in no relevant respect from the ordinance upheld in Renton, 475 U.S. at 44. We see no evidence that the enactment of the ordinance was motivated by a desire to suppress the content of nude dancing, and the city indicates that its concern was with the secondary effects of the dancing. See § 10.83(2). The ordinance, see § 10.83(4), makes no attempt, furthermore, to change or ban a specific message but merely regulates the location where the message may be expressed. See Renton, 475 U.S. at 48. The ordinance also allows for reasonable alternative avenues for communication, see id. at 50, for it appears that there are numerous locations within Mankato that remain available for adult uses. Indeed, the Mankato ordinance appears less restrictive than the ordinance upheld in Renton, since § 10.83 prevents adult uses within 350 feet of certain other uses, in contrast to the 1,000-foot barrier imposed in Renton, 475 U.S. at 44.
9
BZAPS contends, however, that the city has failed to show that § 10.83 is reasonably related to the promotion of a substantial governmental interest. The city maintains that it enacted the ordinance because of its concern about the secondary effects of nude dancing establishments, such as crime and decreasing property values in the surrounding areas. Although the city admits that it has no direct evidence of these effects occurring within Mankato, when enacting the ordinance the city relied upon studies previously conducted by the cities of Indianapolis, Indiana, and St. Paul and Rochester, Minnesota. These studies show a connection between adult entertainment establishments and adverse secondary effects of the type that concern the city.
10
It is now beyond question that a city may regulate the location of adult entertainment when motivated by the secondary effects of that entertainment. See Renton, 475 U.S. at 50-51. A city need not conduct its own study regarding these effects, moreover, but may rely on evidence "already generated by other cities, so long as whatever evidence the city relies upon is reasonably believed to be relevant to the problem that the city addresses," id. at 51-52; see also ILQ, 25 F.3d at 1417-18. The city's reliance on the studies of other cities was a sufficient basis to enact § 10.83, because the studies relied upon are reasonably related to the city's concerns about adult entertainment.
II.
11
BZAPS maintains that even if the evidence relied upon by the city is sufficient to justify § 10.83 on its face, it is not sufficient to justify the application of § 10.83 specifically to BZAPS. In particular, BZAPS maintains that the studies do not indicate a causal relationship between a one-night performance of the type it proposes to hold at Buster's Bar and the secondary effects motivating the enactment of § 10.83. BZAPS also contends that identical one-night adult shows have previously been held in Mankato without such secondary effects.
12
Once a city has decided to regulate adult entertainment to prevent its secondary effects, however, the city is not required to prove that a particular adult use creates secondary effects before regulating that use, so long as the city reasonably believes that the use is related to other uses that have been shown to cause secondary effects. See Holmberg v. City of Ramsey, 12 F.3d 140, 143 (8th Cir. 1993), cert. denied, 513 U.S. 810 (1994). BZAPS's proposed use differs little from many other adult performances. The fact that this performance is to last for only one night as opposed to what occurs in a so-called "strip club" that features an identical performance on a nightly basis does not preclude the city from reasonably believing that the uses are related.
13
We believe that Alameda Books, Inc. v. City of Los Angeles, 222 F.3d 719 (9th Cir. 2000), cert. granted, ___U.S.___, 121 S. Ct. 1223 (2001), and Tollis, Inc. v. San Bernardino County, 827 F.2d 1329 (9th Cir. 1987), cases on which BZAPS relies heavily, are not helpful to it. In Alameda Books, 222 F.3d at 721, the city of Los Angeles attempted to regulate a combination adult bookstore/arcade under an ordinance that would permit either an adult bookstore or an adult arcade, but not both, at one location. The Ninth Circuit invalidated the ordinance, finding that the city had no evidence from which it could reasonably conclude that a combination bookstore/arcade would precipitate greater secondary effects than an individual bookstore or arcade would. See id. at 728. In the present case, however, the city relied upon evidence directly relating to the adverse effects of nude dancing, and could thus reasonably conclude that a one-night performance of nude dancing might have some similar effects.
14
In Tollis, 827 F.2d at 1333, the Ninth Circuit invalidated a zoning ordinance defining an adult theater as any theater showing a single adult film. The court determined, see id., that the county had no evidence to indicate that a single showing of an adult film would have any secondary effects. The court opined further, id., that it did not "see how the County could make such a showing, since it is difficult to imagine that only a single showing ever, or only one in a year, would have any meaningful secondary effects." The court therefore held, see id., that the ordinance failed to meet the requirement of Renton, 475 U.S. at 52, that such an ordinance must be " 'narrowly tailored' to affect only that category of theaters shown to produce the unwanted secondary effects."
15
We think that the Ninth Circuit has overstated the requirements of Renton. We believe, instead, that once a city has validly forbidden adult uses within a particular area, it may enforce that ordinance against all adult uses in that area without showing that a particular use will produce secondary effects. Renton, 475 U.S. at 52-53, does not require cities to discriminate among adult uses; it merely requires that laws of this type not sweep so broadly as to regulate establishments that never present adult entertainment, such as the ordinance banning all live entertainment struck down in Schad v. Borough of Mount Ephraim, 452 U.S. 61, 65 (1981). The Mankato ordinance is narrowly tailored to apply solely to a "category of [establishments] shown to produce the unwanted secondary effects," Renton, 475 U.S. at 52, namely, establishments that present adult entertainment. If we were to accept BZAPS's argument, a city would have the burden of showing precisely how many adult performances were capable of producing an unacceptable level of antisocial activity before the city could regulate those performances. We are satisfied that neither the first amendment nor Supreme Court precedent requires a city to do the impossible.
III.
16
BZAPS also challenges the constitutionality of Mankato City Ordinance § 4.09(1), which prohibits the holder of a liquor license from allowing an adult use, as defined by § 10.83(1)(A), within the license holder's establishment. Prior to the Supreme Court's ruling in 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996), § 4.09(1) would clearly have been upheld under the rule of California v. LaRue, 409 U.S. 109 (1972). In LaRue, 409 U.S. at 118-19, the Supreme Court held that a California law forbidding certain adult activities in bars was constitutional because of the state's power to govern liquor sales under the twenty-first amendment and also because the state's concern with the mix of alcohol and adult activity was a rational use of the state's police power. As the district court in BZAPS's case correctly pointed out, "there are no material differences between California's regulatory system and Mankato's liquor ordinance."
17
BZAPS contends, however, that 44 Liquormart undoes the precedential effect of LaRue. We disagree. While the Court in 44 Liquormart rejected LaRue's reliance on the twenty-first amendment as a basis for its decision, see 44 Liquormart, 517 U.S. at 516, it specifically declined to disturb LaRue's holding. See id. The Court declared that the outcome in LaRue would have been the same without reliance on the twenty- first amendment, and that "[e]ntirely apart from the Twenty-first Amendment, the State has ample power to prohibit the sale of alcoholic beverages in inappropriate locations," id. at 515.
18
Because the Supreme Court has refused to reject the holding of LaRue, the case remains precedent that we are obliged to apply to similar cases. See Groninger v. Davison, 364 F.2d 638, 642 (8th Cir. 1966). As noted earlier, LaRue and the present case are virtually indistinguishable. The city's concern about the combination of alcohol and adult entertainment is not irrational, and the city is thus entitled under its police power to prohibit the sale of alcohol in a location that features adult entertainment. We therefore hold that § 4.09 is constitutional both on its face and as applied to BZAPS.
IV.
19
For the foregoing reasons, we affirm the judgment of the district court.
NOTES:
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the Western District of Missouri, sitting by designation.
2
The Honorable Paul A. Magnuson, United States District Judge for the District of Minnesota.
20
BYE, Circuit Judge, concurring in part and dissenting in part.
21
I agree with the majority's conclusion about the constitutionality of Mankato City Ordinance § 4.09. I therefore concur in the result, which denies the injunctive relief sought by BZAPS. But I disagree with the majority's analysis of Mankato City Ordinance § 10.83. BZAPS initiated its challenge to § 10.83 eleven months before Mankato passed § 4.09. Because I believe we may liberally construe BZAPS's prayer for relief as asking for damages for the constitutional violation that occurred during that time period, I dissent from parts I and II of the majority opinion.
22
Unlike § 4.09, which addresses Mankato's concern about the harmful secondary effects of combining alcohol and adult entertainment, § 10.83 was enacted to address the city's concern about the harmful secondary effects of adult businesses, period. In City of Renton v. Playtime Theatres, Inc., the Supreme Court upheld a similar municipal ordinance because it was "'narrowly tailored' to affect only that category of theatres shown to produce the unwanted secondary effects." 475 U.S. 41, 52 (1986). Mankato City Ordinance § 10.83 might likewise be "narrowly tailored" if it applied only to a category of businesses which, on an ongoing basis, have "more than 10% of [their] stock in trade or floor area allocated to, or more than twenty percent (20%) of its gross receipts derived from, any adult use." Mankato City Ordinance § 10.83(1)(C).
23
Mankato contends, however, that its ordinance applies on a per-day basis. By applying the ordinance in that manner, Mankato targets the content of a single adult performance -- rather than a category of adult businesses shown to produce harmful secondary effects -- without presenting evidence that a single adult performance has any harmful secondary effects on the community.
24
In Tollis Inc. v. San Bernardino County, the Ninth Circuit struck down an ordinance that San Bernardino County construed in such a way that a single showing of adult entertainment rendered a business "adult oriented" as defined by the ordinance. 827 F.2d 1329, 1333 (9th Cir. 1987). The court held that the County failed to show the ordinance was "sufficiently 'narrowly tailored' to affect only that category of businesses shown to produce the harmful secondary effects" because the County had "presented no evidence that a single showing of an adult movie would have any harmful secondary effects on the community." Id.
25
I fully agree with Tollis, and believe it to be entirely consistent with the Supreme Court's decision in Renton. Mankato presented no evidence that a single showing of an adult performance puts a business in that category of businesses shown to produce harmful secondary effects. As a result, the city failed to show that the ordinance, as applied on a per-day basis, was narrowly tailored under Renton.
26
I read the majority as rejecting Tollis because, if we require evidence that a single performance causes adverse secondary effects, then we will impose the impossible burden on cities of showing the precise number of performances that will produce harmful secondary effects before it can regulate any adult performances. If the majority is rejecting Tollis on the ground that its analysis would inevitably require courts to determine how many adult performances are too many, I respectfully disagree.
27
Under Renton, Mankato absolutely has the burden of narrowly tailoring its ordinance. An ordinance that allows the city to regulate the content of a single performance, without presenting evidence that a single performance causes adverse secondary effects, is not narrowly tailored. A per-day application of § 10.83 necessarily raises the specter of impermissible content-based regulation of the expressive content of the single performance itself, rather than the permissible regulation of a category of business shown to produce harmful secondary effects.
28
Clearly, ordinances can be drafted in such a way that courts will not be required to determine when the number of adult performances -- presented by an otherwise "non-adult oriented" business -- crosses the constitutional line. For example, § 10.83 could be saved simply by applying its "10% floor space/20% gross receipts" standard on something other than a per-day basis, perhaps quarterly or annually. Requiring Mankato to narrowly tailor this ordinance clearly does not impose an impossible burden, when the ordinance itself suggests an entirely reasonable, and possible, constitutional interpretation.
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129 Ga. App. 665 (1973)
200 S.E.2d 477
GONDOR
v.
THE STATE.
48587.
Court of Appeals of Georgia.
Submitted September 6, 1973.
Decided September 17, 1973.
Moulton & Carriere, J. Wayne Moulton, Edward E. Carriere, Jr., for appellant.
Lewis R. Slaton, District Attorney, Raoul Lerow, Morris H. Rosenberg, J. Melvin England, for appellee.
EBERHARDT, Presiding Judge.
Defendant was convicted of possessing cocaine in violation of the Uniform Narcotic Drug Act (Code Ann. Ch. 79A-8) and now appeals. Held:
1. Defendant enumerates error on the denial of his motion to suppress evidence (cocaine seized by police officers from the map compartment of defendant's automobile). The search and seizure was not made pursuant to a search warrant, and defendant contends the police officers had no probable cause to search the automobile and that "there was nothing in the agents' knowledge that would have led a reasonably prudent man to believe that appellant's automobile contained cocaine."
The legal principle involved is not in controversy and was well stated in Johnson v. State, 126 Ga. App. 93, 94 (189 SE2d 900): "An automobile in which contraband goods are concealed and transported may be searched without a warrant provided the police have probable cause for believing that the automobile which they search contains the contraband. The reason for this rule is obvious. An automobile, unlike a home or place of business, is mobile and can be quickly moved out of the locality or jurisdiction; therefore, a search without a warrant is allowed where it is impractical to obtain a warrant. Carroll v. United States, 267 U. S. 132 (45 SC 280, 69 LE 543, 39 ALR 790); Chambers v. Maroney, 399 U. S. 42 (90 SC 1975, 26 LE2d 419). This court has held that officers are authorized to conduct searches of motor vehicles without first obtaining a warrant under suspicious circumstances. Craft v. State, 124 Ga. App. 57, 58 (183 SE2d 37); Register v. State, 124 Ga. App. 136, 137 (183 SE2d 68)." Accord: Anderson v. State, 123 Ga. App. 57 (179 SE2d 286); Whitlock v. State, 124 Ga. App. 599, 602 (3c) (185 SE2d 90); Miller v. State, 127 Ga. App. 248 (192 SE2d 915); Satterfield v. State, 127 Ga. App. 528 (4) (194 SE2d 295). "In dealing with probable cause, however, as the very name implies, we deal with *666 probabilities. These are not technical; they are the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act." Brinegar v. United States, 338 U. S. 160, 175 (69 SC 1302, 93 LE 1879).
It is our view that the evidence adduced at the hearing on the motion to suppress amply authorized a finding that the circumstances would have led a reasonably prudent man to believe that defendant's automobile contained contraband. The record reveals that a number of police officers had positioned themselves in and around a motel with communications devices to observe and gain information about an illegal sale of approximately one pound of cocaine being arranged by an undercover agent. One Simmons drove his black Volkswagen to the agent's room at the rear of the motel complex, sold an ounce of cocaine to the agent, and when the agent sought to make an additional purchase, Simmons stated that he would have to return later that night after checking with "his man," or supplier, who wanted to supply the cocaine an ounce at a time. The agent agreed and Simmons left, driving his Volkswagen to the front parking lot where he parked next to defendant's blue Volkswagen which had been there during the meantime. Simmons got out of his black Volkswagen, entered the blue one and talked with the occupant for three or four minutes. Simmons them re-entered his automobile and the two Volkswagens left together. The officers attempted to follow them but lost them in traffic and returned to their positions at the motel. Approximately two hours later the two Volkswagens returned together and proceeded to the rear of the motel complex. Simmons parked in front of the undercover agent's room and entered. Defendant backed his blue Volkswagen into a parking space at the edge of the building and remained behind the steering wheel, and as two of the officers drove around to the rear in an unmarked car defendant slid down in his seat, it appearing to the officers as though he was trying to hide. The officers approached, showed their identification and asked defendant to step out. As he did so an officer on the driver's side saw a plastic bag containing white powder protruding from the map panel or pouch of the door on the driver's side. An officer standing beside the car on the passenger's side looked through the window when the driver's door was closed and also observed the bag and powder protruding from the pouch. This officer testified that the bag containing the powder was the same type he had seen in other *667 narcotics cases and was positioned only halfway into the pouch so "that possibly in case a police officer came up, he could throw it out without any problem, without having to go into the pouch and look for it, because it was quite a large pouch." The officer came around to the driver's side, removed the bag, and defendant was placed under arrest.
Under these circumstances we disagree with defendant that the officers were acting upon mere suspicion, but on the contrary conclude that they had probable cause for a search and that there was no unreasonable search and seizure.
2. Defendant contends that the trial court erred in refusing to strike the testimony of the State's expert witness, a toxicologist with the State Crime Laboratory, over the objection that the expert did not herself personally prepare the standard samples, graphs, tracings, etc. used for comparison purposes in testing the cocaine. While defendant concedes in his brief that "the expert may give his opinion based upon hearsay or such other facts as he may wish, and his opinion is always admissible and the jury may give it such weight as it deems fit," and that the opinion of the expert here is "well reasoned and based upon extensive use of enormously sophisticated machinery after years of training," reliance is placed upon Espy v. Preston, 199 Ga. 608 (34 SE2d 705), Paulk v. Thomas, 115 Ga. App. 436, 439 (154 SE2d 872) and Perkins v. Perkins, 227 Ga. 177 (179 SE2d 518) to establish the inadmissibility of the testimony. However, these medical history cases have no application in the instant situation. The witness here testified that the graphs, tracings, etc. were standards taken from scientific literature in the drug filed upon which she and other toxicologists and chemists customarily rely in the practice of their profession, and we find no error in refusing to strike her testimony.
3. During the state's closing argument, which was not reported, the following occurred: "Mr. Carrier [defense counsel]: Your Honor, I respectfully request that the Court admonish Mr. England for the disparaging remarks with respect to counsel here, addressing the jury and having a difficult time keeping a straight face. The Court: Sustain the objection." Error is enumerated on the failure of the court to admonish the assistant district attorney. Since we have not been presented with a sufficient record of the statement and the context in which it was made to enable us to pass upon this ground, we can find no reversible error. Jackson v. State, 229 Ga. 191 (2) (190 SE2d 530) and cits.
*668 4. Defendant complains of the admissions into evidence of the initial conversation between Simmons and the undercover agent with regard to the sale of the cocaine. It is contended that the statements of Simmons concerned only himself and his activities in negotiating the sale and are not material or relevant to the indictment charging defendant with possession only, and that the state did not prove prima facie by competent evidence, other than by the acts or statements of Simmons, the co-conspirator, that a conspiracy existed. However, a conspiracy may be shown by circumstantial evidence as well as by direct evidence (Geter v. State, 226 Ga. 236, 238 (2) (173 SE2d 680) and cits.; Wortham v. State, 184 Ga. 674, 680 (192 SE 720) and cits.; Nobles v. Webb, 197 Ga. 242, 245 (29 SE2d 158) and cits.), and the evidence here was sufficient to establish a prima facie case of conspiracy. The introduction of Simmons' statement that he would have to talk to "his man" before he could sell the agent any more cocaine, considered in the light of the other circumstances of the case, was relevant to show defendant's conscious possession in violation of the law, particularly since he took the stand and testified that he did not know what was in the bag.
Judgment affirmed. Pannell and Stolz, JJ., concur.
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171 N.W.2d 87 (1969)
Mae LUNDEEN et al., Respondents,
v.
Vincent HACKBARTH, defendant and 3rd party plaintiff, Respondent,
v.
Marjorie A. CLARK, Spec. Admrx. of Estate of Joseph R. Breit, deceased, 3rd party defendant, Appellant.
No. 41470.
Supreme Court of Minnesota.
September 19, 1969.
Jardine, Logan & O'Brien and Graham Heikes, St. Paul, for appellant.
DeParcq, Anderson & Perl and Richard G. Hunegs, Minneapolis, for Lundeen.
Vincent M. Hackbarth, pro se.
OPINION
PETERSON, Justice.
Plaintiffs in this negligence action were granted summary judgment against defendant special administratrix of decedent's estate upon the issue of liability on grounds of estoppel by the verdict against defendant in other litigation arising out of the same injury-producing event. Our disposition of this issue upon appeal is dictated by the anomalous result which collateral estoppel would produce under the unusual facts of the case.
Plaintiffs, Clinton and Mae Lundeen, close friends of Joseph R. and Angeline Breit, were passengers in a new Buick automobile owned and driven by Joseph R. Breit, which was involved in a collision with an older-model Plymouth automobile owned and driven by defendant Vincent Hackbarth. The collision occurred on October 21, 1962, at the electrically controlled Broadway-Central intersection in northeast Minneapolis. Successive negligence actions were instituted to recover for personal injuries sustained by the three passengers. The sole question of fact, that of right-of-way, hinged upon an answer to this question: Which driver entered the intersection against the red light?[1]
*88 The first action was that of Angeline Breit against defendant Hackbarth and defendant special administratrix of the estate of Joseph R. Breit, who died some time after this accident. Her injuries, apparently less severe than those of the Lundeens, consisted of a broken collarbone and a "gash" in the head that was simply sutured, with total medical and hospital expenses amounting to slightly over $200. Notwithstanding the unequivocal testimony of Angeline Breit and both Lundeens that the light was green in favor of Joseph R. Breit's right-of-way over Hackbarth, the jury returned a verdict against the special administratrix, in the amount of $3,850, and exonerated defendant Hackbarth. Hackbarth, as the jury may well have divined, was uninsured.[2]
The second action, the subject of this appeal, was that of plaintiffs Clinton and Mae Lundeen against the same defendants, claiming $35,000 in general damages and $1,600 in special damages for medical and hospital expense. The Lundeens could not recover against the special administratrix of Joseph R. Breit if they testified as they did in the first action that the light was green for Breit's right-of-way.[3] The unconscionable *89 result of collateral estoppel would, without taint of perjury, now turn that traffic light from green to red by operation of law.
The opinion of Mr. Chief Justice Knutson in McCarty v. Budget Rent-A-Car, 282 Minn. 497, 502, 165 N.W.2d 548, 551, quoted this pertinent comment of Professor Currie in his article, Civil Procedure: The Temppest Brews, 53 Calif.L.Rev. 25, 37:
"* * * No legal principle, perhaps least of all the principle of collateral estoppel, should ever be applied to work injustice."
Collateral estoppel may not be applied to the facts of this case, we hold, because it would work a manifest injustice.
Reversed.
NOTES
[1] There was perfunctory interrogation as to speed and lookout, but, as the final argument confirmed, these aspects were of no significance.
[2] He was insured, but by the then-defunct Allied Insurance Company. He appeared without counsel in his own halting defense, epitomized by this closing argument: "I'd like to say that I have defended myself the best I could, and I still think that I had the green light in my favor. And it's been awful hard for me to do that, to defend myself. I don't know. But I don't know how to go about giving a speech either, so that's about all I have to say."
[3] This was the testimony of Clinton Lundeen, who was in the front passenger seat:
"Q [Direct examination by counsel for defendant special administratrix] What if anything were you observing there as you were sitting?
"A Well, I was watching the signals.
"Q Okay. What did you see by way of a signal at that time?
"A Everything was green.
* * * * *
"Q * * * About how far would you say you would have been from this curb line extension when you first observed that the signal was green?
"A Well, I could see that green light in the middle of the block anyway, or approaching Central.
"Q All right. Would you have an approximation as to feet or car lengths as to how far that would have been?
"A Hundred feet." (Italics supplied.) And this was the testimony of Mae Lundeen, seated behind the driver:
"Q [Direct examination by counsel for defendant special administratrix] * * * Do you recall the car going up the incline then?
"A Yes.
"Q And you recall it approaching the level part which is near the intersection?
"A Yes.
* * * * *
"Q What if anything were you doing as far as observation was concerned?
"A Well, I was watching signal lights.
"Q All right. What signal lights if any did you see?
"A Well, I saw the one on the righthand side going into Central.
* * * * *
"Q You were observing this signal light as you testified. Where was the first time that you observed it?
"A As we were coming up the incline.
"Q And you just started up the incline?
"A Yes.
"Q Okay. About how far away were you at that point, would you say?
"A Well, I really don't know.
"Q At that point you observed the light, and what color was it?
"A It was green.
"Q Now, you proceeded up to the incline to a point where it levels off?
"A Yes.
"Q At any time after that did you observe the signal light?
"A Well, before and after we got into the intersection it was still green.
"Q All right. You did observe it after you got into the intersection?
"A Yes.
* * * * *
"Q [Cross-examination by counsel for Angeline Breit] Now, was your view out the front windshield obstructed by Mr. Breit's head or by your husband's head?
"A No.
"Q It wasn't. You had a clear view?
"A Yes.
"Q When you ride excuse me. When you were riding in this car on this morning, you indicated that you first looked at this light when you were at the bottom of the hill approaching the intersection, is that correct?
"A Well, yes. About that.
"Q Do I understand your testimony that you continued to keep that green light in your vision until just before the accident happened?
"A Yes.
* * * * *
"Q Is there any particular reason why, can you recall at this time, you observed that green light for such a long period of time?
"A Well, when I'm in a car, I always watch signal lights." (Italics supplied.)
The testimony of Angeline Breit, whose case depended upon the same showing, was to the same effect as that of the Lundeens. The testimony of defendant Hackbarth, the only other person available to give evidence on this issue of fact, was, of course, to the contrary.
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339 F.2d 929
Louis F. CERRANO, Plaintiff-Appellant,v.Lawrence FLEISHMAN, as Supervising Customs Agent, Region 1,Bureau of Customs, United States Treasury Department, JohnW. Macy, Jr., as Chairman, and A. J.Andolsek and Robert E.Hampton as Commissioners constituting the UnitedStatesCivilService Commission, Defendants-Respondents.
No. 73, Docket 28833.
United States Court of Appeals Second Circuit.
Argued Oct. 20, 1964.Decided Dec. 28, 1964.
Louis F. Cerrano, pro se.
Edward Berlin, Department of Justice, Washington, D.C. (John W. Douglas, Asst. Atty. Gen., Joseph P. Hoey, U.S. Atty., Eastern District of New York, Morton Hollander, Atty., Dept. of Justice, Washington, D.C., on the brief), for defendants-respondents.
Before FRIENDLY, KAUFMAN and ANDERSON, Circuit Judges.
PER CURIAM.
1
On October 2, 1962, the Bureau of Customs filed with the Civil Service Commission an application for the involuntary retirement of the appellant, Louis F. Cerrano, because of his disability. This action was taken pursuant to the provisions of the statute, 41 Stat. 614, as amended, 5 U.S.C. 2257(a), the pertinent portion of which is as follows:
2
'Any employee who completes five years of civilian service and who is found by the Commission to have become disabled shall, upon his own application or upon application by his department or agency, be retired on an annuity computed as provided in section 2259 of this title * * *.'
3
The appellant, after five years employment in the Customs Service, held the position of Customs Enforcement Officer. His grade was GS-5. The Commission, after having Cerrano examined under the direction of its own medical director and by the United States Public Health Service, and after having studied the medical and psychiatric reports submitted by these officials, made a preliminary finding that Cerrano was, as a result of a mental condition, totally disabled for useful and efficient service in the position he then held. The appellant was given an opportunity to offer evidence in rebuttal, and he submitted the reports of two doctors of his own who found him to be 'physically fit for work.' The Commission ruled that Cerrano be retired for disability. He appealed to the Commission's Board of Appeals and Review which considered the case, with the addition of a report of an examination, made at appellant's request, by the Veterans Administration Clinic at Brooklyn, New York. The Commission's order of retirement and the allowance of a disability annuity were affirmed by the Board. The appellant then instituted the present action in the District Court. The appellees, Fleishman, Supervising Customs Agent, et al., filed a motion for summary judgment which was granted. It is from this judgment that Cerrano appeals. We affirm.
4
The errors assigned both in the court below and on this appeal are that the Commission reached its conclusions on insufficient evidence and without considering all of the medical evidence available and that appellant was given no opportunity to see or hear the medical reports received by the Commission nor was he afforded a hearing as a veteran under the 'Veterans' Preference Act,' 5 U.S.C. 851 et seq. The Commission's decision on the question of disability is, in the words of the statute, 'final and conclusive and shall not be subject to review,' 5 U.S.C. 2266(c). The Commission is not required to hold a hearing, and the regulations, which are not here questioned, provide for the submission to the employee's own physician the kind of evidence sought by the appellant, which concerned appellant's mental condition. The evidence was, in fact, disclosed to Cerrano's physician, Dr. Gold, Cerrano was not entitled to a hearing under the Veterans' Preference Act. Murphy v. Wilson, 99 U.S.App.D.C. 4, et al., 236 F.2d 737 (1956). The evidential matter used and the Commission's method of receiving it, as well as the conclusions reached, were clearly within the area of its exclusive authority and cannot be disturbed. Ellmore v. Brucker, et al., 99 U.S.App.D.C. 1, 236 F.2d 734, 736 (1956), cert. denied, 352 U.S. 955, 77 S.Ct. 329, 1 L.Ed.2d 244 (1956).
5
The appellant also argues that the Commission erred in retiring him involuntarily for disability without first having found that he was disabled for service in other positions in the same grade or class. The statutory definition of disability is as follows:
6
'The terms 'disabled' and 'disability' shall mean totally disabled for useful and efficient service in the grade or class of position last occupied by the employee or Member by reason of disease or injury not due to vicious habits, intemperance, or willful misconduct on his part within the five years next prior to becoming so disabled.' 5 U.S.C. 2251(g).
7
While the meaning of the phrase 'in the grade or class' is not entirely free from ambiguity, it is fairly certain that Congress did not intend it to mean what the appellant says it means, i.e. that the Commission, before retiring Cerrano for disability, must search the entire galaxy of Civil Service jobs, either in the same grade or in the same class, to determine whether or not there was some such position between Alaska and Florida or Hawaii and Maine, which the appellant, in spite of his disability, could fill. Instead of thus broadening the conditions precedent to retirement for disability, the purpose of modifying the word 'position' by the phrase 'in the grade or class of position last occupied' was undoubtedly to narrow it. These words of qualification are necessary, because a particular position might fall into different pay grades, depending on merit or longevity, and 'class' could include a variety of jobs having different subject matters of work. By narrowing the term 'position,' Congress intended to make it clear that the Commission, in retiring an employee, need not search for a similar but less onerous job in another pay grade or class which the employee for a time might fill, and that it is sufficient that the employee is unable, because of disability, to perform useful and efficient service in the specific position which he occupies at the time application is made for his retirement.
8
The same definition of 'disabled' or 'disability' applies to the case of an employee who has, himself, voluntarily applied for retirement. If the appellant's interpretation of 'in the grade or class of position' were to govern, every voluntary applicant, before his petition could be granted, would have the burden of showing that he was unable to perform any of the jobs which for administrative convenience are put in the same grade or class and in which, at the time, there might be an opening. We do not ascribe to Congress the intention of encumbering the Civil Service Retirement System with any such requirement. On the contrary, we conclude that the inclusion of the words 'grade or class' was designed to eliminate obstacles to disability retirement and not to create them.
9
The judgment of the district court is affirmed.
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UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
2015 MSPB 26
Docket No. DC-0752-13-0959-I-1
Gregory Einboden, 1
Appellant,
v.
Department of the Navy,
Agency.
February 27, 2015
Gregory Einboden, King George, Virginia, pro se.
Michael L. Torres, Esquire, Norfolk Naval Shipyard, Virginia, for
the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Anne M. Wagner, Vice Chairman
Mark A. Robbins, Member
Vice Chairman Wagner issues a separate dissenting opinion.
OPINION AND ORDER
¶1 The appellant petitions for review of an initial decision that affirmed the
agency’s furlough action. For the following reasons, we DENY the appellant’s
petition for review and AFFIRM the initial decision AS MODIFIED by this
Opinion and Order, still AFFIRMING the agency’s furlough action. We
1
Pursuant to 5 C.F.R. § 1201.36(a), this appeal was part of a consolidation, Naval Sea
Systems Command Dahlgren v. Department of the Navy, MSPB Docket No.
DC-0752-14-0267-I-1.
2
MODIFY the initial decision to clarify the administrative judge’s nexus analysis,
agreeing with his determination that the agency proved by preponderant evidence
that the furlough action in this case promotes the efficiency of the service.
BACKGROUND
¶2 The agency’s Naval Surface Warfare Center Dahlgren Division
(NSWCDD) issued a decision notice furloughing the appellant for no more than
11 workdays from his NT-6 Manager position. Einboden v. Department of the
Navy, MSPB Docket No. DC-0752-13-0959-I-1, Initial Appeal File (IAF), Tab 1
at 10-13, Tab 3 at 2. 2 The proposal notice had informed the appellant that the
action was “necessitated by the extraordinary and serious budgetary challenges
facing the Department of Defense (DOD) for the remainder of Fiscal Year (FY)
2013, the most serious of which is the sequester that began on 1 March 2013,”
i.e., across-the-board reductions to federal budgetary resources. IAF, Tab 1
at 14; see 2 U.S.C. § 900(c)(2) (as used in 2 U.S.C. chapter 20, subchapter I,
“[t]he terms ‘sequester’ and ‘sequestration’ refer to or mean the cancellation of
budgetary resources provided by discretionary appropriations or direct
spending law”).
¶3 On appeal to the Board, the appellant asserted that the agency should not
have furloughed him because his salary is paid out of working
capital/intragovernmental funds, not an account using funds appropriated by
Congress to DOD or the Department of the Navy. IAF, Tab 1 at 5. The appellant
also alleged that intragovernmental funds are generally exempt from
sequestration under the Balanced Budget and Emergency Deficit Control Act of
1985 (BBEDCA) 3 and that no money was sequestered from the agency’s working
2
The agency ultimately furloughed the appellant for 6 days. IAF, Tab 12 at 5.
3
Pub. L. No. 99-177, Title II, Part C, 99 Stat. 1037, 1063-93 (codified in pertinent part
as amended at 2 U.S.C. §§ 900-907d).
3
capital fund (WCF). Id. at 5-7. Thus, he asserted that there was no reason for his
furlough because there was no extraordinary and serious budgetary challenge
with respect to the NSWCDD, which he claimed had an abundance of customer
orders and a significant, available cash balance. Id. at 7-8. The appellant
asserted that funds from the Navy WCF Dahlgren Division were not transferred to
any Operations and Maintenance Account, despite language in the proposal notice
suggesting such a transfer would occur, and that funds that would have paid his
salary but for the furlough were not moved to another account to fund, for
example, warfighter operations. IAF, Tab 20 at 2. The appellant also alleged
that the agency violated his due process rights and committed harmful error.
IAF, Tab 1 at 6-8.
¶4 The administrative judge consolidated this appeal with other appeals from
similarly-situated appellants. Naval Sea Systems Command Dahlgren v.
Department of the Navy, MSPB Docket No. DC-0752-14-0267-I-1, Consolidated
Appeal File (CAF), Tab 1; IAF, Tab 9. After a hearing, the administrative judge
affirmed the furlough action. CAF, Tab 15, Initial Decision (ID) at 2, 30. The
administrative judge found that the agency proved that the furloughs promoted
the efficiency of the service by offering unrebutted evidence that it had to make
significant spending cuts because of sequestration and that the furloughs, along
with other measures, helped it avoid a deficit. ID at 17-18. He also held that the
agency offered evidence that it imposed the furloughs uniformly with exceptions
for limited categories of employees and that the furloughs were a reasonable
management solution to the financial issues facing the agency. ID at 18-19.
¶5 The administrative judge further held that the agency provided the
appellants with due process and that the appellants did not prove their affirmative
defenses, including allegations that the agency was precluded by 10 U.S.C. § 129
and the BBEDCA from furloughing them. ID at 19-29. The administrative judge
found that the BBEDCA exempted WCFs from sequestration orders only to the
extent that those funds do not “rely upon direct appropriations” and that the
4
appellants did not show or even argue that the NSWCDD relied upon any funds
other than those coming from direct appropriations received by its governmental
customers. ID at 29. Thus, he held that the BBEDCA did not shield WCFs from
the effects of sequestration. ID at 29. The administrative judge noted that,
although an Office of Management and Budget (OMB) report appeared to classify
the agency’s WCF account, at least in part, as exempt from sequestration, he
knew of no reason why the Board should consider an OMB report as controlling
legal authority. ID at 29. He therefore gave the report little evidentiary weight
and found it unpersuasive regarding the contested issues in the appeal. ID at 29.
¶6 Finally, the administrative judge found that, even assuming that WCF
accounts are exempt from a sequester order, “that does not necessarily mean the
Department could not furlough the employees whose salaries it paid from those
WCF accounts.” ID at 29. The administrative judge held that, although some
appellants argued that WCFs do not constitute direct appropriations, they did not
dispute that the funds received from governmental customers were direct
appropriations. ID at 29. Thus, the administrative judge found that the
$500 million the agency alleged it saved from furloughing WCF employees
represented “$500 million less in sequestered direct appropriations that the
WCFs’ governmental customers would have needed to pay had the Department
not furloughed WCF employees.” ID at 29-30. The administrative judge held
that, regardless of how WCFs were categorized, either as direct appropriations or
something else, “statutory limitations regarding accounts that were subject to
sequester do not necessarily constitute equivalent limitations with respect to
which employees the agency could properly furlough.” ID at 30.
ANALYSIS
¶7 The appellant asserts on review that the agency did not rebut any of the
testimony he provided at the hearing, that the evidence the agency presented is
irrelevant to his furlough, and that the agency has presented no evidence as to
5
why the furlough of WCF employees was proposed, why the furlough took place
in the absence of a sequester of WCFs, and why he was furloughed for 6 days
when the alleged savings from the appellant’s salary never left the NSWCDD.
Petition for Review (PFR) File, Tab 1 at 3. The appellant contends that, although
the proposal and decision notices relied upon the sequester, no sequester of funds
occurred at NSWCDD. Id. at 4. The appellant further asserts that the
administrative judge did not fully address evidence in the record relating to how
WCFs operate and why they were exempt from sequestration. Id. at 5. The
appellant contends that, given the agency’s admission that the money saved from
the furlough was “available” to be used, but was not in fact used to satisfy any
funding shortfall, the agency could have furloughed him for fewer than 6 days,
4
including 0 days, because there was no financial need to do so. Id. In its
response to the petition for review, the agency asserts that the appellant is
attempting to expand the burden placed on the agency by requiring it to show that
the specific funds used to pay his salary were affected by sequestration, even
though there is no Board or court decision supporting such a requirement. PFR
File, Tab 4 at 7.
¶8 A “furlough” is the placing of an employee in a temporary status without
duties and pay due to a lack of work or funds or other nondisciplinary reasons.
5 U.S.C. § 7511(a)(5); 5 C.F.R. § 752.402. Furloughs of 30 days or less are
reviewable by the Board under the “efficiency of the service” standard of
5 U.S.C. § 7513(a). Chandler v. Department of the Treasury, 120 M.S.P.R. 163,
¶ 5 (2013). An agency satisfies this “efficiency of the service” standard in a
4
The appellant asserts on review that the agency treated him differently from
Department of the Air Force attorneys who were not furloughed. PFR File, Tab 1
at 13-14. Because the appellant did not raise this argument below, and he has not
shown that it is based on new and material evidence not previously availab le despite his
due diligence, we will not address it for the first time on review. See Banks v.
Department of the Air Force, 4 M.S.P.R. 268, 271 (1980).
6
furlough appeal by showing, among other things, that the furlough was a
reasonable management solution to the financial restrictions placed on it. Id.,
¶ 8.
¶9 The appellant essentially asserts that, under Chandler, there were no
financial restrictions placed upon the NSWCDD that warranted his furlough
because the NSWCDD paid his salary by means of WCFs that were not subject to
a sequester order under the BBEDCA. Addressing this argument, therefore,
requires an analysis of both the nature of WCFs in the federal government and the
relevant provisions of the BBEDCA.
¶10 Under 10 U.S.C. § 2208(a), to control and account more effectively for the
cost of programs and work performed in DOD, the Secretary of Defense may
require the establishment of WCFs to (1) finance inventories of designated
supplies and (2) provide working capital for industrial-type activities and
commercial-type activities that provide common services within or among
departments and agencies of DOD. WCFs are generally charged with the cost of
certain supplies, services, and work performed, including applicable
administrative expenses, and are reimbursed from available appropriations or
otherwise credited for those costs. 10 U.S.C. § 2208(c). Subject to the authority
and direction of the Secretary of Defense, the Secretary of each military
department shall allocate responsibility for its functions, powers, and duties to
accomplish the most economical and efficient organization and operation of the
activities for which WCFs are authorized. 10 U.S.C. § 2208(e). The
requisitioning agency may not incur a cost for services or work performed by
industrial-type or commercial-type activities for which WCFs may be established
that is more than the amount of appropriations or other funds available for those
purposes. 10 U.S.C. § 2208(f). Finally, under 10 U.S.C. § 2208(r)(1),
“Notification of transfers,” notwithstanding any authority provided in
section 2208 to transfer funds, the transfer of funds from a WCF, including a
transfer to another WCF, shall not be made under such authority unless the
7
Secretary of Defense submits, in advance, a notification of the proposed transfer
to the congressional defense committees in accordance with customary
procedures. The amount of a transfer as described above that is made in a fiscal
year does not count toward any limitation on the amount of transfers that may be
made for that fiscal year under authority provided to the Secretary of Defense in a
law authorizing or making appropriations for DOD. 10 U.S.C. § 2208(r)(2).
Thus, a WCF is a type of intragovernmental revolving fund that operates as a
self-supporting entity that conducts a regular cycle of businesslike activities and
functions entirely from the fees charged for the services provided consistent with
its statutory authority. IAF, Tab 21 at 53 (September 2005 U.S. Government
Accountability Office Glossary of Terms Used in the Federal Budget Process).
¶11 The BBEDCA, as amended, requires the President, if the federal budget
deficit exceeds a certain amount, to issue a sequestration order mandating
across-the-board spending reductions to reach a targeted deficit level. See
2 U.S.C. § 901a(5)-(6); Bowsher v. Synar, 478 U.S. 714, 717-18 (1986); Berlin v.
Department of Labor, 772 F.3d 890, 892 (Fed. Cir. 2014). The BBEDCA
identifies, however, certain exempt programs and activities, including a list of
budget accounts and activities that “shall be exempt from reduction” under any
applicable sequestration order. 2 U.S.C. § 905(g)(1)(A). One such budget
account or activity involves “[i]ntragovernmental funds, including those from
which the outlays are derived primarily from resources paid in from other
government accounts, except to the extent such funds are augmented by direct
appropriations for the fiscal year during which an order is in effect.” Id.
¶12 In a March 1, 2013 OMB Report to Congress on the Joint Committee
Sequestration for FY 2013, the sequestrable budget amount for the Navy WCF is
$24 million, with the sequester amount being only $2 million. IAF, Tab 21 at 43,
45. This report also notes that “[f]or intragovernmental payments, sequestration
is applied to the paying account,” while the funds “are generally exempt in the
receiving account in accordance with section 255(g)(1)(A) of BBEDCA so that
8
the same dollars are not sequestered twice.” IAF, Tab 21 at 46. President
Obama’s March 1, 2013 sequestration order for FY 2013 provides that all
sequestrations shall be made in strict accordance with the requirements of the
BBEDCA. Id. at 49. A June 2013 DOD Report on the Joint Committee
Sequestration for FY 2013 appears to show that the Navy WCF received no
appropriated funding for FY 2013 except for $24.2 million as part of the Disaster
Relief Act of 2013 and that there was no sequestration for FY 2013 from the
Navy WCF. Id. at 68-70.
¶13 The administrative judge interpreted 2 U.S.C. § 905(g)(1)(A) as not
shielding WCFs from sequestration but also held, in the alternative, that, even if
WCF accounts were exempt from sequestration, the agency could still furlough
employees who were paid from those accounts. ID at 29-30. We need not decide
whether the administrative judge’s interpretation of section 905(g)(1)(A) is
correct because we agree with the administrative judge’s alternative analysis.
The BBEDCA itself does not prohibit a furlough of WCF employees. Thus, even
assuming that section 905(g)(1)(A) did exempt the NSWCDD’s WCFs from a
sequestration order, such an interpretation would not end our inquiry into whether
there were financial restrictions placed on the agency and whether the furlough
was a reasonable management solution to those restrictions. See Chandler,
120 M.S.P.R. 163, ¶ 8.
¶14 Regarding the existence of financial restrictions, the Under Secretary of
Defense (Comptroller)/Chief Financial Officer of DOD averred that various
factors, including sequestration, a misallocation of funds under a Continuing
Resolution, and unexpectedly high wartime costs, created a $40 billion budgetary
shortfall and that furloughs of all DOD civilians would save about $2 billion in
FY 2013, including more than $500 million associated with reduced personnel
costs in WCF activities. CAF, Tab 2, Navy Administrative Record at 4, 6, 11-12.
He asserted that these WCF personnel savings “provide us the flexibility to adjust
maintenance funding downward to meet higher-priority needs.” Id. at 12. He
9
further averred that the Department of the Air Force expected to reduce funded
orders in their WCFs by about $700 million to meet higher-priority needs, while
the Department of the Army expected to reduce orders by $500 million. Id.
¶15 In Yee v. Department of the Navy, 121 M.S.P.R. 686, ¶¶ 9, 14 (2014), the
Board held that, although the Department of the Navy is separately organized
under the Secretary of Navy, it operates under the authority, direction, and
control of the Secretary of Defense. Similarly, the Secretary of the Navy’s
responsibility for the operation of WCF activities is subject to the authority and
direction of the Secretary of Defense. 10 U.S.C. § 2208(e). We also held in Yee,
121 M.S.P.R. 686, ¶ 14, that the Secretary of the Navy is responsible for the
effective and timely implementation of policy, program, and budget decisions and
instructions of the President or the Secretary of Defense relating to the functions
of the Navy. Thus, the Board held that, although the appellants asserted that the
Navy had adequate funding to avoid the furloughs, it was reasonable for DOD to
consider its budget situation holistically, rather than isolating each individual
military department’s situation. Id. Similarly, we find that, although the
NSWCDD may have had adequate funding to avoid a furlough of the appellant, it
was reasonable for DOD to consider its budget situation holistically, rather than
isolating the situation of each individual Navy organization or component.
¶16 We further find that the furlough action was a reasonable management
solution to the financial restrictions set forth above. See Federal Drug
Administration v. Davidson, 46 M.S.P.R. 223, 226 (1990) (even if a sequestration
does not affect the funds used to pay for work that is to be performed by an
employee, the agency can still institute a furlough action against the employee
based on the agency’s budgetary deficit). There is no indication in the record that
the Secretary of Defense was prohibited from using savings resulting from the
furloughs of WCF employees to address other budgetary needs. In fact, the law
and the record suggest otherwise. As set forth above, a transfer of funds from a
WCF may be made if the Secretary of Defense submits, in advance in accordance
10
with customary procedures, a notification of the proposed transfer to the
congressional defense committees. 10 U.S.C. § 2208(r)(1). It appears that such
transfers from WCFs have happened in the past. See David R. Obey, Comp. Gen.
No. B-318724, 2010 WL 2546935 (June 22, 2010). Moreover, the declaration
discussed above from the Under Secretary of Defense (Comptroller)/Chief
Financial Officer of DOD reflects that personnel cost savings of $500 million
from the furlough of WCF employees provided flexibility to adjust maintenance
funding downward. The deciding official, who is also the Deputy Division
Technical Director of the NSWCDD and the second-in-command on the civilian
side of the organization, similarly testified that the agency saved “20 percent”
during the 6 weeks in which employees were furloughed and that “the operating
cost was available to be recalled, if need be, by the Agency.” Hearing Transcript
(HT) at 12-13, 31. The appellant does not assert that the savings could not have
been used elsewhere. Rather, he contends that the savings from the furlough
were not used elsewhere. PFR File, Tab 1 at 5.
¶17 The agency conceded that “no funds were actually sequestered or
recaptured from the WCF at NSWCDD or any other WCF activity within the
Agency.” CAF, Tab 14 at 14; see HT at 38, 51 (testimony of the deciding official
that the Dahlgren Division does not receive a direct operations and maintenance
appropriation with which to pay salaries and that, during the days that the agency
furloughed the appellant, there was money available at that time with which to
pay the appellant’s salary). The agency asserted that WCF activities are funded
by Operations and Maintenance funds that “flow downwards” through each of the
departments of DOD and that, “[b]y furloughing its employees, to include WCF
employees, the Agency had the ability to not only decrease expenditures flowing
down to operate WCF activities, but it also realized a 20% savings in operating
costs that were available to be recapture[d] from the WCF if necessary.” CAF,
Tab 14 at 14-15. The agency contended that these savings, “although they
may not have actually been recaptured by the Agency and reprogram[m]ed for
11
other things, were available and gave the Agency the flexibility to recapture and
redistribute to fund higher priority items if the need arose.” Id. at 15. There is
no indication in the record that any of the customers of the NSWCDD reduced or
planned to reduce their orders or payments to the NSWCDD as a result of the
sequestration. In fact, it is possible that those customers simply could have
continued to pay the NSWCDD for their orders and absorbed the effects of the
sequestration in other ways. There is also no indication in the record explaining
what the agency did with any savings it achieved from furloughing the appellant,
who was paid by WCFs.
¶18 Nevertheless, the agency was not required to show that any of the funds
saved from the appellant’s furlough actually left the NSWCDD to be used for any
other DOD purpose. Cf. Cross v. Department of Transportation, 127 F.3d 1443,
1447 (Fed. Cir. 1997) (finding the initiation of a reduction in force was proper
when agency officials reasonably anticipated a budget shortfall). Rather, to meet
the efficiency of the service standard, it is enough for the agency to show that the
furlough action was a reasonable management solution at the time the action was
taken. Cf. In re Tinker AFSC/DP v. Department of the Air Force, 121 M.S.P.R.
385, ¶¶ 21-22 (2014) (in determining the legitimacy of the reasons for a decision
not to furlough certain employees when the agency asserts that it was precluded
from doing so by law, rule, or regulation, the Board need not determine after the
fact whether a decision not to furlough those employees was actually permissible;
rather, the question is whether the agency reasonably and genuinely believed that
it was precluded from furloughing that group of employees); Clerman v.
Interstate Commerce Commission, 35 M.S.P.R. 190, 194 (1987) (recognizing that
the appropriateness of an agency’s decision to release employees by reduction in
force because of staffing limitations is judged based on the agency’s ceilings
when the actions were taken, not on events that occur after the fact). We find,
based on our determination that savings from the furlough of WCF employees
12
could have been used to address other higher-priority budgetary needs, that the
agency has met that burden of proof by preponderant evidence in this case. 5
¶19 Accordingly, we DENY the petition for review and AFFIRM the initial
decision as modified by this Opinion and Order.
ORDER
¶20 This is the final decision of the Merit Systems Protection Board in this
appeal. Title 5 of the Code of Federal Regulations, section 1201.113(c) (5 C.F.R.
§ 1201.113(c)).
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the
United States Court of Appeals for the Federal Circuit. You must submit your
request to the court at the following address:
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar days
after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec. 27,
2012). If you choose to file, be very careful to file on time. The court has held
that normally it does not have the authority to waive this statutory deadline and
5
The d issent, noting that the statute provides that an agency must demonstrate that its
action “will” promote the efficiency of the service, would require the agency to provide
evidence that the funds saved as a result of the furlough were actually used to protect
wartime operations. As stated above, however, the Board has long held that the
efficiency of the service standard is met by showing that, when the agency took the
action, the furlough was a reasonable management solution to the financial restrictions
at issue. Our determ ination that the agency met this burden is consistent with that
precedent and it recognizes the practicalities involved in the agency’s decisionmaking
process, rather than reviewing it with the benefit of h indsight.
13
that filings that do not comply with the deadline must be dismissed. See Pinat v.
Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the
United States Code, at our website, http://www.mspb.gov/appeals/uscode/htm.
Additional information is available at the court’s website,
www.cafc.uscourts.gov. Of particular relevance is the court’s “Guide for Pro Se
Petitioners and Appellants,” which is contained within the court’s Rules of
Practice, and Forms 5, 6, and 11.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
Merit Systems Protection Board appellants before the court. The Merit Systems
Protection Board neither endorses the services provided by any attorney nor
warrants that any attorney will accept representation in a given case.
FOR THE BOARD:
______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
DISSENTING OPINION OF VICE CHAIRMAN ANNE M. WAGNER
in
Gregory Einboden v. Department of the Navy
MSPB Docket No. DC-0752-13-0959-I-1
¶1 The majority opinion finds that the agency’s furlough action promotes the
efficiency of the service even though there is no indication that any savings
generated by the furlough of the appellant, a working capital fund (WCF)
employee, was transferred or used in any way to address the budgetary challenges
facing the Department of Defense (DOD). Because I believe that the majority has
strayed from the Board’s statutory responsibility to ensure that adverse action
furloughs may only be sustained by the Board when they are taken for such cause
as “will promote the efficiency of the service,” I respectfully dissent.
¶2 Under 5 U.S.C. § 7513(a), an agency may take an action such as the
furlough in this case “only for such cause as will promote the efficiency of the
service.” Notably, section 7513(a) requires that the cause for the action “will”
promote the efficiency of the service, and does not permit actions based on cause
that only “may” or “could” promote the efficiency of the service. See Guillebeau
v. Department of the Navy, 362 F.3d 1329, 1332-33 (Fed. Cir. 2004) (noting the
distinction between the mandatory “will” and the discretionary “may”). The
Board has recognized that something more than a mere possibility is required to
meet the efficiency of the service standard. In Lara v. Mine Safety and Health
Administration, 10 M.S.P.R. 554, 556 (1982), for example, the Board held that an
agency need not wait for a mine inspector to cause injury to himself or others
because of his vision limitations as long as the likelihood of such event is
“reasonably foreseeable.” Similarly, in Doe v. National Security Agency,
6 M.S.P.R. 555, 562 (1981), aff’d sub nom. Stalans v. National Security Agency,
678 F.2d 482 (4th Cir. 1982), the Board held that the deleterious effect of
misconduct on the efficiency of the service may be either presently existent or
2
“reasonably foreseeable.” In other words, the nexus requirement, for purposes of
determining whether an agency has shown that its action promotes the efficiency
of the service, means that there must be a “clear and direct relationship” between
the articulated grounds for an adverse action and some legitimate government
interest. Merritt v. Department of Justice, 6 M.S.P.R. 585, 596 (1981), modified
by Kruger v. Department of Justice, 32 M.S.P.R. 71, 75 n.2 (1987).
¶3 The Board has long held that the efficiency of the service standard in a
furlough case is met by showing that the furlough is a reasonable management
solution to the financial restrictions at issue. See Clark v. Office of Personnel
Management, 24 M.S.P.R. 224, 225 (1984); see also Chandler v. Department of
the Treasury, 120 M.S.P.R. 163, ¶ 8 (2013). However, in order to continue to
fulfill the statutory efficiency of the service standard in these types of cases, and
consistent with such cases as Lara and Doe, I would find that, in order to prove
that the furlough of a WCF employee was a reasonable management solution,
there must be at least some indication that it was reasonably foreseeable that the
savings from the furlough would address the budgetary challenges, thereby
promoting the efficiency of the service.
¶4 Here, the notice of proposed furlough provides that “[t]his administrative
furlough is necessitated by the extraordinary and serious budgetary challenges
facing the Department of Defense (DOD) for the remainder of Fiscal Year (FY)
2013, the most serious of which is the sequester that began on 1 March 2013.”
Initial Appeal File (IAF), Tab 1 at 14. The proposal notice also provides that
DOD “must and will protect wartime operations funding for our troops in harm’s
way,” that this “inevitably means larger cuts in base-budget funding for the
Operation and Maintenance (O&M) accounts,” and that “[t]hus, the DOD will
need funding in other accounts that can be used to provide the warfighters with
what they need to protect national security and fight the war.” Id. The clear
implication from the proposal notice is that the funds saved as a result of the
furlough will be used to protect wartime operations funding.
3
¶5 Although an agency may be able to meet the efficiency of the service
requirement in some other furlough case involving a WCF, I would find that the
agency has not met that requirement here. The majority’s decision notes that,
under 10 U.S.C. § 2208(r)(1), a transfer of funds from a WCF may be made if the
Secretary of Defense submits, in advance, a notification of the proposed transfer
to the congressional defense committees in accordance with customary
procedures. There is no evidence that DOD submitted or even planned to submit,
in advance of the furlough or at any other time, such notification to the
congressional defense committees with respect to funds saved from the furlough
of employees at the Naval Surface Warfare Center Dahlgren Division
(NSWCDD). Nor is there any evidence in the record showing that it was
reasonably foreseeable that the funds saved from the furlough of the appellant
would otherwise actually be used to address the budgetary challenges facing
DOD. In the absence of such evidence, I would find that furloughing the
appellant as an employee of a WCF entity has not been shown to be a reasonable
management solution. There has been no “clear and direct relationship” between
the articulated grounds for the furlough of employees at the NSWCDD and a
legitimate government interest.
¶6 The cases relied upon by the majority are distinguishable from this case and
do not warrant the outcome reached by the majority. In Cross v. Department of
Transportation, 127 F.3d 1443, 1447 (Fed. Cir. 1997), the court held that
“[w]here agency officials reasonably and genuinely believe that the agency’s
abolition is inevitable and its funding is to be terminated, initiation of a
[reduction in force (RIF)] is proper,” and that conducting a RIF because of an
anticipated shortage of funds does not require that the shortage exist at the time
of the RIF. As expressed in my separate opinion in Chandler, 120 M.S.P.R. 163,
¶¶ 1-9 (dissenting opinion of Vice Chairman Wagner), however, the RIF statute
and regulations do not incorporate an “efficiency of the service” standard. See
5 U.S.C. § 3502; 5 C.F.R. Part 351. Thus, the holding in Cross is not persuasive
4
in the context of this adverse action furlough. Similarly, the Board in In re
Tinker AFSC/DP v. Department of the Air Force, 121 M.S.P.R. 385, ¶ 21 (2014),
held that, in determining the legitimacy of the reasons for a decision not to
furlough certain employees when the agency asserts that it was precluded from
doing so by law, rule, or regulation, the Board need not determine after the fact
whether a decision not to furlough certain employees was actually permissible
under applicable law, rule, and regulation. Rather, in deciding whether the
agency’s decision not to furlough certain employees was based on legitimate
management reasons or reasons “personal” to a group of employees, the question
is whether the agency reasonably and genuinely believed that it was precluded
from furloughing that group of employees. Id. Because the agency furloughed
all employees within the Eastern Region and there is therefore no question as to
whether a decision not to furlough certain employees was permissible under law,
rule, or regulation, the standard set forth in Tinker does not apply in this case. In
Clerman v. Interstate Commerce Commission, 35 M.S.P.R. 190, 194-95 (1987),
the Board held that the appropriateness of an agency’s decision to release
employees because of staffing limitations is to be judged based on the agency’s
ceilings when the actions were taken, not on events that occurred after the fact.
This holding is consistent with my views in this dissenting opinion, as I too
would judge the action based on what the agency has shown was reasonably
foreseeable when it took the action.
¶7 In sum, I would reverse the agency’s action furloughing the appellant
because the agency has not shown under the facts of this case that the action
promoted the efficiency of the service under 5 U.S.C. § 7513(a).
______________________________
Anne M. Wagner
Vice Chairman
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46 F.3d 1127
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.Steven GRAY, a/k/a Stevie, Defendant-Appellant.
No. 94-5254.
United States Court of Appeals, Fourth Circuit.
Submitted Jan. 19, 1995.Decided Feb. 9, 1995.
Michael A. Grace, Lisa S. Costner, GREESON & GRACE, P.A., Winston-Salem, NC, for Appellant. Rebecca A. Betts, United States Attorney, Michael O. Callaghan, Assistant United States Attorney, Charleston, WVa, for Appellee.
Before WILKINS and MICHAEL, Circuit Judges, and SPROUSE, Senior Circuit Judge.
OPINION
PER CURIAM:
1
Steven Gray appeals from his conviction of and sentence imposed for conspiracy to possess with intent to distribute cocaine and cocaine base in violation of 21 U.S.C.A. Sec. 846 (West Supp.1994). Gray's attorney has filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967), asserting that there are no meritorious issues for appeal. Gray filed an additional brief arguing that the disparity in sentences imposed for offenses involving crack cocaine as opposed to cocaine powder discriminates against African-Americans in violation of the Equal Protection Clause.
2
Our review of the plea agreement and the transcript of the hearing conducted pursuant to Fed.R.Crim.P. 11, reveals that the district court properly found a factual basis for the plea, see Fed.R.Crim.P. 11(f); United States v. Holmes, 840 F.2d 246, 248 n. 2 (4th Cir.), cert. denied, 488 U.S. 831 (1988), and that Gray's plea was knowing and voluntary. See North Carolina v. Alford, 400 U.S. 25, 31 (1970); Boykin v. Alabama, 395 U.S. 238, 242 (1969). Accordingly, we affirm Gray's conviction. We find no merit to Gray's equal protection argument, see United States v. Wallace, 22 F.3d 84, 88 (4th Cir.), cert. denied, 63 U.S.L.W. 3266 (U.S.1994); United States v. Bynum, 3 F.3d 769, 774 (4th Cir.1993), cert. denied, 62 U.S.L.W. 3552 (U.S.1994); United States v. Thomas, 900 F.2d 37, 39-40 (4th Cir.1990), and Gray's sentence was the result of a proper application of the sentencing guidelines. Therefore, we affirm Gray's sentence.
3
In accordance with the requirements of Anders, 386 U.S. at 744, we have reviewed the entire record in this case and have found no meritorious issues for appeal. We therefore affirm Gray's conviction and sentence. This Court requires that counsel inform his client, in writing, of his right to petition the Supreme Court of the United States for further review. If the client requests that a petition be filed, but counsel believes that such a petition would be frivolous, then counsel may move in this Court for leave to withdraw from representation. Counsel's motion must state that a copy thereof was served on the client. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the Court and argument would not aid the decisional process.
AFFIRMED
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HTTP/1.1 200
Date: Tue, 23 Jun 2020 21:08:10 GMT
Content-Type: application/pdf
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786 N.W.2d 268 (2010)
IN RE J.J.S.
No. 09-1688.
Court of Appeals of Iowa.
May 12, 2010.
Decision Without Published Opinion Affirmed.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 08-3276
UNITED STATES OF AMERICA,
v.
RASHEED JACOBS,
also known as RASHID JACOBS
Rasheed Jacobs,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-00-cr-00313-010)
District Judge: Honorable J. Curtis Joyner
Submitted Under Third Circuit LAR 34.1(a)
April 12, 2010
Before: SLOVITER, NYGAARD, Circuit Judges, and RESTANI* , Judge
(Filed: April 13, 2010)
OPINION
_______
*
Hon. Jane A. Restani, Chief Judge, United States Court of
International Trade, sitting by designation.
SLOVITER, Circuit Judge.
Appellant Rashid Jacobs appeals his conviction and sentence for (1) possession
with the intent to distribute cocaine base (crack), in violation of 21 U.S.C. § 841(a)(1); (2)
possession with the intent to distribute cocaine base (crack) within 1,000 feet of a school,
in violation of 21 U.S.C. § 860; (3) use of a firearm during and in relation to a drug
trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A); and (4) possession of a
firearm by a convicted felon, in violation of 18 U.S.C. § 922(g)(1). We will affirm.
I.
Rashid Jacobs and his younger brother Quadre worked for their older brother,
Mark, who controlled drug operations on the 2900 block of Bonsall Street in North
Philadelphia.1
During a search of the Jacobs brothers’ house, law enforcement officers recovered
a loaded .40 caliber pistol, bulk and packed crack cocaine and crack cocaine packaged for
sale in clear vials. Rashid, along with thirteen other individuals, was indicted with
conspiracy to distribute more than fifty grams of cocaine base in violation of 21 U.S.C. §
846, and related distribution and firearms offenses. Several co-conspirators testified
about the drug operation run by the Jacobs brothers. For example, Arnold Eugene Mack
testified that he “began cooking crack cocaine” for Mark and Rashid in 1998. App. at 82.
1
We will hereafter distinguish between the Jacobs brothers
by referring to them by their first name.
2
Rashid was convicted by a jury of one count of possession of crack with the intent to
distribute, in violation of 21 U.S.C. § 841(a)(1); one count of possession of crack with the
intent to distribute within 1,000 feet of a school, in violation of 21 U.S.C. § 860; one
count of using a firearm during and in relation to a drug trafficking crime, in violation of
18 U.S.C. § 924(c)(1)(A); and one count of possession of a firearm by a convicted felon,
in violation of 18 U.S.C. § 922(g)(1).
At the original sentencing hearing, the District Court, after considering the
testimony presented, agreed with the conclusion in the presentence report (“PSR”) that
Rashid and his brothers were responsible for the distribution of 11.2 kilograms of crack.
It further found that Rashid was in criminal history category I, and sentenced him to a
total of 374 months imprisonment, six years of supervised release, a $2,000 fine, and a
$400 special assessment.
Rashid appealed his conviction and sentence and this court affirmed both. See
United States v. Jacobs, 96 Fed. Appx. 812 (3d Cir. 2004) (per curiam). He then
petitioned for certiorari. Shortly after issuing its decision in United States v. Booker, 543
U.S. 220 (2005), the Supreme Court vacated Rashid’s sentence and remanded for further
consideration in accordance with that decision. See United States v. Jacobs, 543 U.S.
1102 (2005).
At the Booker resentencing hearing, Rashid challenged the quantity determination
3
contained in the PSR that was adopted by the District Court. He contended that it was
based exclusively on Mack’s testimony, which he argued was too speculative. The
District Court rejected Rashid’s challenge to the quantity determination, stating that
nothing he presented provided a basis to change its earlier determination. Rashid asked
the court to impose a 240-month sentence, arguing primarily that he was “similarly
situated” to his brother Quadre, who had received that sentence at his Booker
resentencing. App. at 4. The Government responded that Rashid was more culpable than
Quadre, and that the 30-to 45-year sentences other co-defendants had received after their
Booker resentencing reflected their greater culpability. After reviewing the Section
3553(a) factors, the District Court sentenced Rashid to 240 months imprisonment, more
than eleven years less than the sentence previously imposed and below the advisory
guideline range. Rashid filed a timely notice of appeal.2
II.
We review a district court’s sentencing decision for reasonableness, United States
v. Grier, 475 F.3d 556, 568-69 (3d Cir. 2007) (en banc) (citing Booker, 543 U.S. at
260-61), and its drug quantity findings for clear error. United States v. Yeung, 241 F.3d
321, 322 (3d Cir. 2001). Under the Sentencing Guidelines, the base offense level for a
drug offense is determined by the weight of the controlled substance for which the
2
This court has jurisdiction pursuant to 28 U.S.C. § 1291
and 18 U.S.C. § 3742.
4
defendant is held accountable. See U.S.S.G. § 2D1.1. The determination of the drug
quantity must be supported by a preponderance of the evidence, and such evidence “must
possess sufficient indicia of reliability to support its probable accuracy.” United States v.
Gibbs, 190 F.3d 188, 203 (3d Cir. 1999)(quoting United States v. Miele, 989 F.2d 659,
663 (3d Cir. 1993)(internal quotation marks omitted).
In arguing that the drug quantity for which he was held responsible was based
entirely upon the “speculative” testimony of Mack, Rashid cites to Lee v. Illinois, 476
U.S. 530, 545 (1986), where the Court stated that “a codefendant’s confession is
presumptively unreliable as to the passages detailing the defendant’s conduct or
culpability . . . .” However, in making the quantity determination, the District Court did
not rely solely on Mack’s testimony but on extensive other testimony which was
presented at trial and subject to cross-examination.
This included the testimony by law enforcement officers about the activity that
occurred at the corner where Rashid worked, testimony from a drug user who purchased
from Rashid, and testimony from a drug seller about the activity that was going on at the
corner where the Jacobs brothers worked. There was ample evidence to support the
District Court’s conclusion that the Government proved by preponderance of the evidence
that Jacobs distributed 11.2 kilograms of crack cocaine.
III.
Rashid next challenges his sentence of twenty years because he received the same
5
sentence as his brother Quadre, who had a higher criminal history category. As we noted
already, Rashid had initially argued that he was similarly situated to his brother Quadre,
and he asked the Court to impose a comparable, if not identical, sentence. The
Government responds that Rashid was more culpable than Quadre as there is evidence
that Quadre worked for both Mark and Rashid. We have made clear that disparate
sentences are reasonable where facts on the record justify the disparity. United States v.
Parker, 462 F.3d 273, 278 (3d Cir. 2006). In its discretion, the District Court decided that
the distinction between Quadre’s and Rashid’s criminal histories did not warrant a lower
sentence for Rashid because it was outweighed by Rashid’s greater degree of culpability.
We have no basis to disagree.
Nor do we agree with Rashid that his sentence was unreasonable. Rashid’s crime
involved the distribution of crack in concert with his brothers over a period of years,
accompanied by possession of a gun. These are crimes for which Congress and the
Sentencing Commission have advocated substantial sentences. Moreover, in imposing
sentence, the District Court followed the required sentencing protocol by taking into
consideration the Section 3553(a) factors.
IV.
For the reasons set forth above, we will affirm the District Court’s judgment of
sentence.
6
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360 F.Supp.2d 776 (2005)
Joseph Lee GIBSON, Plaintiff,
v.
BOY SCOUTS OF AMERICA, et al., Defendants.
No. CIV.A. 04-1040.
United States District Court, E.D. Virginia, Alexandria Division.
January 10, 2005.
*777 Raymond Donald Battocchi, Esq., Gabeler Battocchi Griggs & Powell PLLC, P. David Richardson, McLean, VA, for Plaintiff.
Joseph Lee Gibson, McLean, VA, Pro se.
John David McGavin, Trichilo Bancroft McGavin Horvath & Judkins PC, Fairfax, VA, for Defendants.
MEMORANDUM OPINION
LEE, District Judge.
THIS matter is before the Court on Defendants Boy Scouts of America and National Capital Area Council's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) the Plaintiff's Second Amended Complaint, Revised. This case concerns the revocation of Plaintiff Joseph Lee Gibson's membership in the Boy Scouts of America by the National Capital Area Council, depriving him of his position as Troop Leader, without notice of the basis for his expulsion. The issues before the Court are:
(1) Whether the Court granted Plaintiff Joseph Lee Gibson leave to amend his complaint on October 22, 2004 to include an ultra vires count,
(2) Whether Plaintiff Joseph Lee Gibson states a claim for defamation when he alleges that,
(A) Defendant National Capital Area Council, acting through one or more of its agents on January 27, 2003 told Pastor James C. Sprouse, Associate Pastor Kathleene B. Card, John C. Kim, and Dan Moore in the Pastor's Study that Plaintiff Joseph Lee Gibson was "unfit to be a Scoutmaster and in Scouts," when the complaint was filed more than a year after the statement was allegedly made,
(B) "Upon information and belief, similar false and defamatory statements were published" by Defendant National Capital Area Council and its agents to other parents and members of the community before and after revocation of Plaintiff Joseph Lee Gibson's Scouting Membership, and
*778 (C) Defendant Boy Scouts of America, acting through its National Legal Counsel, David K. Park, in a telephone conference call in January 2004 told Plaintiff Joseph Lee Gibson's attorney, P. David Richardson, that his client was not "candid with counsel [Richardson]" about matters that led to the revocation of the Boy Scouts of America membership and that, in fact, there were "other matters involved" that Plaintiff had not disclosed to Richardson, and
(3) Whether Plaintiff Joseph Lee Gibson alleges facts sufficient to support an award of punitive damages.
The Court denies Defendants Boy Scouts of America and National Capital Area Council's motion to dismiss the ultra vires count because the Court granted Plaintiff Joseph Lee Gibson leave to amend his complaint on October 22, 2004. Furthermore, the colloquy between the Court and Plaintiff's counsel contemplated the inclusion of an ultra vires count in the amended complaint.
The Court grants Defendants Boy Scouts of America and National Capital Area Council's motion to dismiss the first alleged incident of defamation because the statements made in the Pastor's study, although not time barred, are statements of "pure opinion" and are not provably false. Plaintiff Joseph Lee Gibson does not state a claim for defamation as to statements made "upon information and belief" before and after revocation of his scouting membership because he does not allege these statements with sufficient specificity, as required by Virginia law. The Court grants Defendants Boy Scouts of America and National Capital Area Council's motion to dismiss as to the third alleged incident of defamation because communication between two lawyers regarding the conduct of a client of one of the lawyers is absolutely privileged when relevant to an underlying dispute between the parties.
Finally, the Court denies Defendants National Capital Area Council and Boy Scouts of America's motion to dismiss punitive damages because Plaintiff alleges facts sufficient to support an award of punitive damages.
I. BACKGROUND
In his Second Amended Complaint, Revised, Plaintiff Joseph Lee Gibson ("Plaintiff," "Mr. Gibson") alleges he was a registered adult-volunteer member of the Boy Scouts of America ("BSA") from 1996 to February 7, 2003. Trinity United Methodist Church ("Trinity") is the sponsor or "Chartered Organization" of Boy Scout Troop 869 ("Troop 869"), under the BSA regulations. The Scoutmaster for each troop is recruited and selected by the Troop Committee, subject to the approval of the Chartered Organization. On or about October 1, 1998, the Troop Committee, with Trinity's approval selected Mr. Gibson to serve as Scoutmaster of Troop 869.
Plaintiff alleges that on February 7, 2003, while serving as Troop 869 Scoutmaster, Mr. Gibson received notice by registered letter from Defendant National Capital Area Council ("NCAC") that Defendant NCAC had revoked his membership in the Boy Scouts of America. The letter contained no reason for the revocation. Furthermore, Mr. Gibson was provided with no notice of any allegation against him or with any opportunity to respond to any allegation, or with any information regarding procedures followed in revoking individuals' memberships from the BSA.
Plaintiff further alleges that Defendant NCAC and unknown officials, employees, *779 or agents ("Richard Roes") of Defendant NCAC conducted some form of a "secret meeting" in which they decided to revoke his membership in the BSA. On March 8, 2003 and May 6, 2003, Mr. Gibson appealed the revocation of his membership in the BSA by letter, to the Northeast Region of the BSA and the National Headquarters of the BSA respectively.
P. David Richardson ("Mr.Richardson"), a member of the Troop Committee and Trinity, as well as parent to a son in Troop 869 agreed to represent Mr. Gibson as his counsel and was retained in July 2003. His representation of Mr. Gibson ceased in February 2004. In July 2003, Mr. Richardson, acting as Mr. Gibson's attorney, sent a letter to Defendant BSA requesting information about Mr. Gibson's appeal from Defendant NCAC's revocation of his membership. Defendant BSA refused to provide any information. Plaintiff alleges, however, that Defendant BSA's National Legal Counsel admitted to Mr. Richardson that Mr. Gibson's expulsion from BSA membership did not involve allegations of youth abuse, but rather involved matters relating to governance of Troop 869 or a "modal difference" as to how Troop 869 should be organized and conducted. The Legal Counsel also stated that such matters are solely within the authority and jurisdiction of the Troop's Chartered organization, Trinity, and the Troop Committee, and that such "modal differences" should not warrant Mr. Gibson's expulsion from the BSA. Plaintiff alleges, however, that Trinity and its Pastor have fully supported Mr. Gibson and Scoutmaster of Troop 869 and favored his return to that position.
According to Plaintiff's allegations, Defendants BSA and NCAC have not disclosed their reasoning for expelling Mr. Gibson to him. Furthermore, Plaintiff alleges that Defendants BSA and John Does convened a secret meeting or review board at a location unknown to Plaintiff without providing any information about the allegations against him to Mr. Gibson, and ratified Defendant NCAC's revocation of Mr. Gibson's membership in the BSA. On December 23, 2003-ten months after his membership from the BSA was revoked-Mr. Gibson received notice of BSA's determination with no explanation for its action.
In addition, Plaintiff alleges that on January 27, 2003, Defendant NCAC, acting through an agent, stated to the Pastor and other members of Trinity that Plaintiff Gibson "is unfit to be Scoutmaster and in Scouts." Subsequently, according to Plaintiff, other members of Trinity, youth and parents of Troop 869 and other members of the community became aware of these statements. Plaintiff further alleges that similar false and defamatory statements were published by Defendants NCAC and/or Richard Roes to other Troop 869 parents and members of the community, both before and after revocation of Mr. Gibson's BSA membership. Furthermore, Mr. Gibson asserts that Defendant BSA affirmed, endorsed, adopted and republished these statements by affirming Defendant NCAC's decision to expel Mr. Gibson.
Also, Plaintiff alleges that Defendant BSA's National Legal Counsel stated to Mr. Richardson in January 2004 that Mr. Gibson was not "candid with counsel [Richardson]" about the matters that led to the revocation and that, in fact, there were "other matters involved" that Mr. Gibson had not disclosed to his lawyer regarding the revocation of BSA membership.
Mr. Gibson alleges that Defendants' actions and statements "constitute an abuse of their position of trust in the Scouting Movement, and were done maliciously, with animosity or ill will toward Plaintiff..." *780 He further asserts that his expulsion has caused him substantial damage including preventing his association with family members in the Scouting Movement and others involved with Troop 869, as well as causing him to expend substantial time and funds in connection with challenging the expulsion.
Mr. Gibson alleges three counts in his Second Amended Complaint, Revised, against the defendants: (1) Violation of Rights of Fair Procedure, (2) Ultra Vires Action, and (3) Defamation. He seeks injunctive relief and compensatory and punitive damages.
II. DISCUSSION
A. Standard of Review
A Federal Rule of Civil Procedure 12(b)(6) motion should not be granted unless it appears beyond a doubt that plaintiff can prove no set of facts in support of his claim that would entitle him to relief. FED. R. CIV. P. 12(b)(6); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In considering a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the Plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). Conclusory allegations regarding the legal effect of the facts alleged need not be accepted. See Labram v. Havel, 43 F.3d 918, 921 (4th Cir.1995). Because the central purpose of the complaint is to provide the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests," the plaintiff's legal allegations must be supported by some factual basis sufficient to allow the defendants to prepare a fair response. Conley, 355 U.S. at 47, 78 S.Ct. 99.
B. Analysis
First Alleged Incident of Defamation
The Court grants Defendants' motion to dismiss Plaintiff's alleged first incident of defamation because, although not time-barred, the allegedly defamatory words are an expression of "pure opinion" and are not provably false, as required by the relevant caselaw. Plaintiff alleges that Defendant NCAC, acting through one or more of its agents on January 27, 2003, told Pastor James C. Sprouse, Associate Pastor Kathleene B. Card, John C. Kim, and Dan Moore in the Pastor's Study that Plaintiff was "unfit to be a Scoutmaster and in Scouts."
January 27, 2003 Alleged Defamation Not Time Barred
Despite Defendants' argument to the contrary, this incident is not time-barred because the District of Columbia's statute of limitations and its "discovery rule" apply, and Mr. Gibson filed his claim within one year of discovering the allegedly defamatory statements. In Ferens v. John Deere Company, 494 U.S. 516, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990), the Supreme Court held that the choice of law of the transferor state will govern following a venue change pursuant to 28 U.S.C. § 1404(a). Id. at 519, 110 S.Ct. 1274. It further held that the Mississippi statute of limitations would apply to an action originally filed in United States District Court in Mississippi and then transferred to United States District Court in Pennsylvania, even though Mississippi's choice of law rules required it to apply Pennsylvania substantive law. Id. at 526, 110 S.Ct. 1274. The Court noted that Mississippi's choice of law rules did not require it to apply Pennsylvania's statute of limitations in the circumstances of that case. Id. at 519-20, 110 S.Ct. 1274. Similarly, this action was originally filed in the United States District Court for the District of *781 Columbia and then transferred here pursuant to 28 U.S.C. § 1404(a). As detailed in the Court's October 22, 2004 ruling, D.C.'s choice of law rules require this Court to apply Virginia substantive law to the claims in this case. Like Ferens, the statute of limitations that applies is determined by the choice of law rules governing in the District of Columbia. The District of Columbia's choice of law rules indicate that its statute of limitations applies to the defamation claim even though Virginia substantive law applies. See Wilson v. Prudential Financial, 332 F.Supp.2d 83, 91 n. 4 (D.D.C.2004).
This alleged incident of defamation is not time barred because of the District of Columbia's "discovery rule." Although D.C.'s statute of limitations jurisprudence for defamation claims usually runs for one year from the time of publication, the District of Columbia applies the "discovery rule" to determine when a tort action accrues. See D.C.Code § 12-301(4); see also Goldman v. Bequai, 19 F.3d 666, 671-2 (D.C.Cir.1994). This rule states that "a cause of action accrues when the plaintiff has knowledge of (or by the exercise of reasonable diligence should have knowledge of) (1) the existence of the injury, (2) its cause in fact, and (3) some evidence of wrongdoing." Goldman, 19 F.3d at 672 (citing Knight v. Furlow, 553 A.2d 1232, 1234 (D.C.1989)) (internal quotations omitted). Since Plaintiff did not know about the statements made to the Pastor and other members of his community until March 26, 2003, and had no knowledge of, nor should he have had knowledge of, the existence of the allegedly defamatory statements, their cause in fact, or evidence of wrongdoing, and he filed his claim within one year of this date, his defamation claim is timely filed.
January 27, 2003 Statements Are "Pure Opinion"
Nevertheless, the Court grants Defendants' motion to dismiss on the basis that this statement was "pure opinion" and therefore cannot form the basis of a defamation claim. While a statement of fact may be the basis for a defamation claim, a statement of pure opinion cannot. See Williams v. Garraghty, 249 Va. 224, 233, 455 S.E.2d 209 (1995) (finding that while the defendant's perception is protected speech, "the statements supporting her opinion are factual"). The Supreme Court of Virginia has stated that to comply with United States Constitution requirements, "speech which does not contain a provably false factual connotation, or statements which cannot reasonably be interpreted as stating actual facts about a person cannot form the basis of a common law defamation action." Yeagle v. Collegiate Times, 255 Va. 293, 497 S.E.2d 136, 137 (1998). The Court holds that the statement that Mr. Gibson was "unfit to be a Scoutmaster and in Scouts" does not contain a provably false factual connotation. Unlike the petitioner in Milkovich v. Lorain Journal Company, 497 U.S. 1, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990), who was accused of lying under oath, being "fit" or not to be a Scoutmaster or a Scout is not provably false. Consequently, the Court finds that these allegedly defamatory words are merely the expression of the speaker's opinion, and do not state a claim of defamation for which relief can be granted.
Second Alleged Incident of Defamation
Plaintiff's second alleged incident of defamation does not state a claim for defamation because it is not pled with sufficient specificity, as required by Virginia law. Plaintiff's second alleged incident of defamation is: "[u]pon information and belief, similar false and defamatory statements *782 [ regarding unfitness to be a Scout or Scoutmaster] were published" by Defendant NCAC and agents of NCAC to other parents and members of the community before and after revocation of Plaintiff's scouting membership. Under Virginia law, causes of action for defamation require, "that the exact words spoken or written must be set out in the declaration ... that is, [the pleading] must purport to give the exact words. Words equivalent or of similar import are not sufficient." Federal Land Bank of Baltimore v. Birchfield, 173 Va. 200, 3 S.E.2d 405, 410 (1939). Because Virginia law requires pleading with specificity as to the words allegedly used to defame a person, and Plaintiff does not allege these words with specificity, alleging only that they are "similar" to those of the first alleged incident, the Court grants Defendant's motion to dismiss as to the second alleged incident of defamation.
Third Alleged Incident of Defamation
The Court grants Defendant's motion to dismiss as to the third alleged incident of defamation because communication between two lawyers regarding the conduct of a client of one of the lawyers is absolutely privileged when relevant to an underlying dispute between the parties. Plaintiff alleges that Defendant Boy Scouts of America acting through its National Legal Counsel David K. Park, in a telephone conference call in January 2004 told Plaintiff's counsel P. David Richardson in his office in Washington D.C. that Plaintiff was not "candid with counsel [Richardson] about matters that led to the revocation" and that, in fact, there were "other matters involved" that Plaintiff had not disclosed to Richardson. In Katz v. Odin, Feldman & Pittleman, 332 F.Supp.2d 909 (E.D.Va.2004), Judge Ellis held that statements made in connection with an arbitration proceeding were privileged and could not be used as the basis of a defamation claim. Id. at 919. He stated that the "sensible rule" that words spoken or written in a judicial or quasi-judicial proceeding are absolutely privileged when relevant to the subject matter of the proceeding, "ensur[es] free and full disclosure of information and exchange of views by parties to a dispute. The interest that parties not be deterred or chilled by the threat of a defamation suit outweighs an individuals' [sic] interest in preserving his reputation untarnished." Id. Judge Ellis noted that this "rule is broad and comprehensive" under Virginia law. Id.
Although the statement made to Mr. Richardson occurred in January 2004, before the filing of a formal complaint in the United States District Court for the District of Columbia on February 9, 2004, and it was not made in the context of a formal arbitration proceeding, the Court holds that the policy reasons described by Judge Ellis for finding an absolute privilege are applicable here where two lawyers are discussing a matter relevant to an underlying dispute between their clients. Even if no judicial or quasi-judicial procedure was underway, as Plaintiff alleges in his complaint, the communication that took place between plaintiff's and defendants' counsel likely occurred in anticipation of litigation. Mr. Gibson learned that the Boy Scouts had denied his appeal in a letter dated December 17, 2003 according to his Second Declaration. Mr. Richardson learned that Mr. Gibson was expelled from the Scouting Movement in January 2004, according to Mr. Richardson's supplemental affidavit. The conversation between Defense counsel and Plaintiff's counsel also occurred in January 2004. Although Mr. Gibson's Second Declaration states that he did not decide to file litigation until February 2004, it also states that prior to receiving BSA's letter dated December 17, 2003, he had not authorized his counsel to conduct *783 research or prepare for litigation and had done neither himself. At some point between December 17, 2003 and February 9, 2004, Mr. Gibson and his counsel had to engage in some kind of an analysis about whether litigation was worthwhile, even if the final decision to pursue litigation was not made until February. Consequently, the statement about Mr. Gibson possibly withholding information from his attorney likely was made in a discussion that anticipated litigation.
Furthermore, in the interest of resolving disputes that may not yet have taken the form of formal complaints filed in court, it is essential that attorneys be able to discuss their assessments of their clients' claims without fear of defamation lawsuits. Lawyers frequently discuss the strengths of their clients' claims in deciding whether to file a lawsuit in the first place. To prevent lawyers from having such discussions for fear of a defamation lawsuit would prevent the resolution of claims before they get to court and would hinder open communication between counsel. Making no judgment at all about the truthfulness of Defendants' counsel's statement, the Court holds that communications between lawyers regarding a matter relevant to an underlying dispute between their clients is absolutely privileged communication.
Punitive Damages
The Court denies Defendants' motion to dismiss Plaintiff's claim for punitive damages because Plaintiff alleges facts sufficient to sustain a claim for punitive damages. Punitive damages may be recovered in "tort claims containing certain essential elements of fraudulent, false, or malicious states of mind." Social Consultants International v. Haskell, No. 95-12-A, 1995 U.S.Dist. LEXIS 21423 at *11 (E.D.Va.1995). Malice includes "behavior actuated by motives of personal spite, or ill-will." Gazette v. Harris, 229 Va. 1, 325 S.E.2d 713, 727 (1985). Plaintiff alleges that by revoking his membership in the Scouting Movement, Defendants "acted intentionally, maliciously, with reckless disregard for the consequences, in misuse of their position of trust," etc. Second Amended Complaint, Revised ¶ 60; see also ¶ 6 (stating that defendants acted "with animosity or ill will toward Plaintiff"). In considering a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the Plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). The Court finds that Plaintiff properly pleads malice sufficiently to survive Defendants' motion to dismiss punitive damages pursuant to Federal Rule of Civil Procedure 12(b)(6).
III. CONCLUSION
The Court denies Defendant's motion to dismiss the ultra vires count because the Court granted Defendant leave to file an amended complaint. The Court grants Defendant's motion to dismiss the defamation claim in its entirety because Plaintiff does not state a claim for defamation as to (a) the statements made in the Pastor's study because they are not provably false, as required by Virginia law, (b) the statements made "upon information and belief" before and after revocation of his scouting membership because he does not allege these statements with sufficient specificity, as required by Virginia law, and (c) the words exchanged between the parties' lawyers regarding Plaintiff's candor with his own lawyer because communication between two lawyers regarding the conduct of a client of one of the lawyers is absolutely privileged when relevant to an underlying dispute between the parties. In addition, the Court denies Plaintiff's motion *784 to dismiss Plaintiff's claim for punitive damages because Plaintiff alleges facts sufficient to support an award of punitive damages.
For the foregoing reasons, it is hereby
ORDERED that Defendants Boy Scouts of America and National Capital Area Council's Motion to Dismiss is GRANTED as to the defamation claim in its entirety, and DENIED as to punitive damages.
The Clerk is directed to forward a copy of this Order to counsel of record.
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557 F.2d 1
2 Fed. R. Evid. Serv. 275
UNITED STATES of America, Appellee,v.James MARTORANO, Appellant.
No. 76-1372.
United States Court of Appeals,First Circuit.
Argued Dec. 13, 1976.Decided March 30, 1977.*
Joseph S. Oteri, Boston, Mass., with whom Oteri & Weinberg, Boston, Mass., Alan M. Dershowitz, Jeanne Baker, and Rosenberg, Baker & Fine, Cambridge, Mass., were on brief, for appellant.
Dennis A. Winston, Atty., Dept. of Justice, Washington, D. C., with whom James N. Gabriel, U. S. Atty., and Mervyn Hamburg, Atty., Dept. of Justice, Washington, D. C., were on brief, for appellee.
Before COFFIN, Chief Judge, ALDRICH and CAMPBELL, Circuit Judges.
COFFIN, Chief Judge.
1
James Martorano appeals from the judgment of conviction which was entered against him on each count of a four count indictment. Counts one and two charged appellant with conspiring to make, and with making, an extortionate extension of credit in violation of 18 U.S.C. § 892(a). Count three charged conspiracy to use extortionate means to collect an extension of credit in violation of § 894(a). Count four charged appellant with one particular act of using extortionate means to collect an extension of credit. Appellant challenges the sufficiency of the evidence to support the convictions on each of the four counts, and he argues that the district court made a number of erroneous evidentiary rulings. We affirm.
2
The charges in this case stem from a loan appellant allegedly made to one Peter Pallotta. The government's evidence, viewed in the light most favorable to it, reflects the following. Pallotta had been running a highly unsuccessful nightclub, and, in late August or early September, 1974, he found himself in need of $2000 to pay some pressing debts. Pallotta's brother took him to see appellant, who agreed to make Pallotta a $2000 loan at five percent interest per week. Told by appellant to return to pick up the money, Pallotta came back the next day and met with appellant and one Matera. Appellant gave Pallotta the money and instructed Matera to go to Pallotta's club each Friday at 7:30 to pick up the weekly payments. No papers were signed, and no collateral was given.
3
During the next four weeks, Pallotta made the interest payments as follows: once he paid appellant at appellant's club; twice Matera came to Pallotta's club and picked up the money, and once Matera and one Pagano together came to Pallotta's club and received the payment. Sometime in October, Pallotta was forced to close his club for renovations for four weeks, and during this period he did not make any payments. The club reopened on October 30. On that night, appellant and co-defendant Halloran, who was acquitted on all the charges, appeared at Pallotta's club. Because he feared the embarrassment of a beating in his own club, Pallotta left. The next day Pallotta received a telephone call from an unnamed source warning that Pallotta should make himself available to appellant that night. That night Halloran allegedly approached Pallotta in the parking lot outside the club and said that appellant had sent him to get the money. When Pallotta protested that he had no money, Halloran pulled a gun, took Pallotta with him inside the club, and removed some $450 from two separate cash boxes.
4
Three days later, Pallotta went to see appellant, who asked Pallotta what he was going to do. When Pallotta responded that he had to pay, appellant responded: "Don't be late and see me every week and if you're not going to be here, I want a phone call from you."
5
Sometime shortly thereafter, Pallotta's club was permanently closed. Because he lacked a source of income and feared physical harm at the hands of several loan sharks, including appellant, Pallotta went into hiding and began living in his car. In late November, 1974, Pallotta contacted the FBI. With Pallotta's consent, the FBI recorded a series of telephone conversations of Pallotta with Halloran, Matera, Pagano, and appellant. In their conversation appellant suggested that Pallotta stop by and see him. When Pallotta expressed his fear of being harmed, appellant replied:
6
"Don't talk like that on the phone.
7
You can come any time. What do you think I'm gonna do something 'round my own place? Be kind of stupid wouldn't it? Ah, first chance you get drop by and see me."
8
The conversations between Pallotta and Pagano generally verified the existence of the loan and revealed that Pagano and Matera had supplied half of the money which had been loaned Pallotta.
9
At the trial Pallotta testified as to the reputations of each of the various individuals who allegedly were involved in the transaction. Pallotta testified that appellant was a loan shark and was "100 per cent in getting his collections back . . . . Nobody missed. If they did, they got hurt." As to Matera and Pagano, Pallotta testified that they had worked together in a loan shark operation for many years and that if any of their borrowers were ever late in repaying a loan, they would hurt the borrower. Pallotta also stated he had known Halloran for a long period of time and that Halloran was "a loan shark, collector and enforcer and a madman" and that he collected for appellant. This reputation testimony was all admitted subject to the limitation that it could be considered only as to Pallotta's state of mind. Finally, Pallotta testified that at the time he accepted the extension of credit he knew he would be physically harmed if he failed to repay on time.
I. Sufficiency of the Evidence
10
Section 892 proscribes the making of extortionate extensions of credit, which § 891(6) defines as "any extension of credit with respect to which it is the understanding of the creditor and the debtor at the time it is made that delay in making the repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person." Appellant attacks his conviction under count two on the theory that the record is entirely void of any evidence indicating that he understood that Pallotta's failure to make timely repayments could result in the use of force or violence against Pallotta. The short answer to this argument is § 892(b), which declares that there is prima facie evidence that an extension of credit is extortionate if the following facts exist: (1) repayment is unenforceable through normal judicial processes; (2) the loan's interest rate is in excess of 45 percent per year; (3) the amount of the loan exceeds $100; and (4) the borrower reasonably believed either that the lender has used extortion to collect other debts or that the lender has a reputation for doing so. There plainly was evidence from which the jury could conclude that each of these factors was present. Since there is no constitutional bar to permitting a jury to infer from the coexistence of these four facts that the lender understands that violence will follow nonrepayment of the loan, United States v. De Vincent, 546 F.2d 452, 455 (1st Cir. 1976), cert. denied, --- U.S. ----, 97 S.Ct. 1694, 52 L.Ed.2d 387 (1977), we conclude that there was sufficient evidence of appellant's guilt.
11
Appellant recognizes the force of this argument, but urges that we may not affirm on this theory because the jury was not expressly instructed in terms of § 892(b)'s permissive inference. This contention is without merit. The court's charge to the jury stated that appellant could not be found guilty unless the jury found beyond a reasonable doubt that the aforementioned extension of credit had occurred and that Pallotta had a reasonable apprehension he might suffer harm if he failed to make his payments on time. The judge noted that the rate of interest on the alleged loans was to be 260 percent and that there were no legal means by which appellant could have collected the loan, and he told the jury that it could give "such weight as (it deemed) appropriate" to these facts. This portion of the charge apprised the jury of § 892(b)'s permissive inference without needlessly confusing them with the concept of "prima facie case". Appellant did not object to this portion of the charge, and since the charge cannot be said to be plain error, appellant may not attack the judgment of conviction on count 2 on this ground.1
12
But we need not rest our decision on this ground alone, for there was evidence from which the jury could infer that appellant understood that violence would accompany the nonrepayment of this loan. The statements appellant made during the recorded telephone conversations could suggest to reasoning minds that the use of violence against borrowers, like Pallotta, who had failed to make timely payments, was a familiar practice for appellant and, indeed, that it was such a familiar practice that he feared that the government might be investigating him.2 These statements, together with the nature of the loan and the other facts in evidence, warranted a jury conclusion that appellant did in fact understand that violent measures might be employed if Pallotta failed to make a repayment.
13
It having been established that appellant loaned the money to Pallotta with the understanding that any delay in the repayment thereof could result in the use of violence, the next question we must face is whether there was sufficient evidence on count one, which charged that appellant conspired with Halloran, Matera, or Pagano to make this extortionate extension of credit to Pallotta. We focus on Matera, and we find ample evidence supporting the jury verdict.
14
Matera, who had a reputation as a loan shark in his own right, collected the weekly interest payments from Pallotta for appellant. While the fact of having made collections as such might not be sufficient to make one a co-conspirator, cf. United States v. Annoreno, 460 F.2d 1303, 1309 (7th Cir. 1972), here the jury could have reasonably concluded that Matera was not simply appellant's errand boy, but that he was privy to the terms of the extension of credit, was the principal collector, and must have shared appellant's understanding that violence might follow if Pallotta failed to make a repayment. Because Matera was present at the time Pallotta received the $2000 from appellant and because he also made the weekly interest payment collections, there was evidence from which the jury could infer that Matera knew it was a $2000 loan at 260 percent interest which had not been documented in writing and which had not been secured by any collateral. As the man responsible for the weekly collections, we think the jury was also entitled to assume that he understood both from appellant and from the nature of the loan that violent measures might have to be used to ensure that repayments occurred as scheduled.3
15
Count four charged Martorano with having used extortionate means to collect an extension of credit by ordering Halloran to "burglarize" Pallotta's club on or about October 31, and count three charged him with conspiracy to collect an extension of credit by extortionate means. The record plainly contains substantial evidence both that a "larceny" occurred and that it was at appellant's direction. There would seemingly be no question but that the judgments of conviction on both counts were supported by sufficient evidence.
16
A problem arises, however, because the jury acquitted Halloran on both counts three and four. Appellant urges that the jury must be taken as having rejected Pallotta's account of Halloran's actions. He contends that the guilty verdict on count four must be set aside because Pallotta's account of Halloran's actions is the only evidence against appellant and that the conspiracy conviction under count three may not be upheld on the theory he conspired with Halloran. Appellant understands that it has been settled in the federal courts since Dunn v. United States, 284 U.S. 390, 52 S.Ct. 189, 76 L.Ed. 356 (1932) that a jury verdict may not be set aside on the ground that it is inconsistent with a second verdict that was simultaneously rendered, see also Hamling v. United States, 418 U.S. 87, 101, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1973), but he argues that there should be an exception to this general rule here where, in his view, the court's instructions permitted the jury to return a guilty verdict against Martorano only if it first found Halloran guilty.
17
Even if we were disposed to create such an exception to the rule of Dunn v. United States, it would not aid appellant. While it is true that the district court's charge at one point stated that appellant should be found guilty if the jury concludes that Halloran had gone to Pallotta's club at appellant's direction, the thrust of the charge was that appellant should be found guilty if he performed the illegal act through the agency of another person. A major issue at the trial was whether there was sufficient evidence identifying Halloran as the assailant this being one aspect of Pallotta's account which was not corroborated by the witnesses inside the club. Here, the jury could have consistently reached its verdicts by accepting every aspect of Pallotta's testimony except the portion that identified Halloran as the assailant.4
18
But we need not rest our decision on this ground. The settled rule in the federal system is that it is the prerogative of the jury simultaneously to return inconsistent verdicts. We have been cited to no case which recognizes the exception appellant urges us to adopt, and any such exception, in our view, would be both unwise and arguably inimical to the interests of criminal defendants generally. The present rule permits the jury to enter into compromises and to act out of leniency; if it were to be changed, the jury would have to be instructed that any inconsistencies in their verdicts would vitiate any guilty verdicts they might return, and the net result might be that fewer defendants would be acquitted on individual counts. And such an exception would be unwise. The jury's deliberations have always been regarded as sacrosanct, and the adoption of appellant's proposed exception would undermine the strong policy against probing into the jury's logic or reasoning and would open the door to interminable speculation.5 See United States v. Zane, 495 F.2d 683, 690 (2d Cir. 1974). Accordingly, we decline to accept appellant's invitation.
II. Evidentiary Rulings
19
1. As we have noted, the district court permitted Pallotta to testify concerning Martorano's reputation for collection practices. Appellant does not object to the introduction of this testimony per se, but he argues, first, that the district court erred in admitting the testimony without first conducting a voir dire to determine the reasonableness of the answers Pallotta was to give and, second, that it compounded the error by prohibiting appellant from testing the reasonableness and basis for the reputation testimony. Neither contention has merit.
20
Under general principles of evidence law, reputation testimony is properly admitted if the witness is shown to live and work in the same community as the subject of the testimony and if the witness is familiar with the subject's reputation for a particular pattern of behavior. See Whiting v. United States, 296 F.2d 512, 517 (1st Cir. 1961) and authorities cited. Common law evidence principles do not require the judge to make a preliminary determination concerning the reasonableness of any particular answer. Here, the admission of the reputation evidence was authorized by § 892, and it does not purport to create a contrary rule.6 See generally United States v. Bowdach, 501 F.2d 220, 225-26 (5th Cir. 1974). In the absence of any such provision, we assume Congress intended that these provisions be administered in accordance with normal evidentiary practice, and, under it, the admission of Pallotta's reputation testimony was entirely proper.
21
Appellant's second contention is based upon the district court's refusal to permit him to ask Pallotta the names of the individuals who had told him about appellant's collection practices. We observe that a party, of course, has the right to attempt to impeach or challenge any testimony concerning the reputation of an individual. And here, where the borrower's reasonable belief regarding the lender's reputation for collection practices could have direct substantive significance, see § 892(b), it is imperative that a defendant be permitted to explore the basis for the debtor's belief and to attack or otherwise challenge the borrower's testimony. We recognize that many courts have held that it is permissible to question a reputation witness as to the specific persons who served as his sources. See 4 Wigmore on Evidence (1972) § 1111 at p. 246 and cases cited in n. 1. But here we need not address the question whether such a rule generally should be followed. Under the specific circumstances of the case at bar we believe it was not reversible error for the district court to foreclose the inquiry.
22
We note, first, that appellant's interest in this inquiry is less substantial than might first appear. If Pallotta had been required to answer, appellant would have had to accept whatever responses were given, inquiry as to whether any or all of the named sources had actually given him the information being clearly collateral. Appellant's interest in this line of questioning was limited to attempting to cast doubt on Pallotta's conclusory assertions by showing that no specific sources existed.
23
Here, the evidentiary ruling interfered only minimally with this interest. The responses Pallotta gave to the appellant's counsel before the district judge cut off the questioning indicated that Pallotta probably could have listed a number of names but, for some reason, was very reluctant to do so.7 In precluding further inquiry, we think the district court probably concluded that Pallotta could have given the names of specific individuals but feared exposing them to reprisals. While there was no specific evidence that any reprisals had been threatened, we think, given the nature of the prosecution and the Congressional concerns, see Conf.Rep.No. 1397, 90th Cong., 2d Sess., 2 U.S.Cong. & Admin.News, pp. 2021, 2026 (1968), that the district court here had the discretion to cut off the questioning to protect third persons in the community. Cf. Fed.R.Evid. 403. Since it appeared that Pallotta could have given names, the inquiry would probably have availed appellant little. Moreover, the evidentiary ruling placed only a minor restriction on appellant's ability to challenge the foundation for Pallotta's beliefs.
24
There were a number of traditionally accepted devices by which appellant could have cast doubt upon or attacked the reasonableness of Pallotta's belief. First, appellant could have required Pallotta to specify the particular rumors of misconduct or statements he heard which led him to assert that appellant had a reputation for violent collection practices, from how many people he had heard these rumors, and whether he actually knew of any incidents. See Wigmore on Evidence § 1111 at 245.8 If Pallotta had been unable to respond with specifics, his broad assertions presumably would have been doubted by the jury. And other, perhaps less effective, devices were available: e. g., introducing reputation evidence contrary to Pallotta's, or, as appellant actually did, introducing evidence of specific acts which were inconsistent with the supposed reputation. While we find no reversible error here, we recognize the danger of allowing prejudicial reputation testimony without any realistic testing for its credibility. To the extent that a strong foundation has not been developed prior to admission, a court should not be too strict in restricting cross-examination.
25
2. At trial the court permitted the government to introduce the statements Matera and Pagano made during recorded telephone conversations with Pallotta under the co-conspirator exception to the hearsay rule. Appellant objects that there had not been a sufficient prior showing that a conspiracy existed. We find no error.
26
We recently indicated our view that the new federal rules of evidence, which were in effect at appellant's trial, introduced significant changes in the administration of the co-conspirator exception to the hearsay rule. See United States v. Petrozziello, 548 F.2d 20 (1st Cir. 1977). Without repeating what we said in that case, we read the new rules as committing the question of the admissibility of the statements of an alleged co-conspirator exclusively to the trial judge. The district judge will admit the hearsay declarations if he determines, by a preponderance of the evidence, that a conspiracy existed, that the declarant and the defendant were members of it at the time the statements were made, and that the declarant's statements were made in furtherance of the conspiracy. See Fed.R.Evid. 104(a), 104(b), 801(d)(2)(E). The new rules permit a trial judge to base his determination on hearsay and other inadmissible evidence, including perhaps the very statement seeking admission. Fed.R.Evid. 104(a); see United States v. Petrozziello,supra at 23 n. 2.
27
Here, the trial court made a preliminary determination that there had been a sufficient showing of conspiracy to permit the introduction of the statements of Matera and Pagano, and it followed the pre-federal rules practice of instructing the jury that it could not consider the statements unless it first found that the independent nonhearsay evidence established the existence of a conspiracy beyond a reasonable doubt. Naturally, the only question we must now review is whether the district court erred in making the threshold determination that there had been a sufficient showing that a conspiracy existed to place the statements before the jury. See United States v. Petrozziello, supra at 23. In making this decision, it seems that the district court may have followed the federal rules to the extent of considering evidence other than the independent nonhearsay variety: it allowed the government to argue in favor of the admissibility of some of the statements by referring to the evidence of a conspiracy contained in the statements seeking admission. Although the district court did not make an explicit finding that a conspiracy existed between appellant and the two declarants, appellant requested no such finding and, in view of the fact that Petrozziello had yet to be decided, this was not plain error. See id. As we did in Petrozziello, we will consider the evidence supporting the existence of the alleged conspiracies. Because, in each instance, we believe the evidence makes the existence of a conspiracy more likely than not, we affirm the district court's evidentiary rulings.
28
We have already detailed the evidence which was sufficient to permit the jury to find that Matera and Martorano had conspired together, and we believe it preponderates in favor of the existence of the conspiracy. Pagano presents a somewhat closer question. Pallotta testified that he and Matera had been partners in a loan shark operation for years.9 While this fact alone does not establish that Pagano was a member of the Martorano-Matera conspiracy, there is the additional fact that Pagano and Matera together went to Pallotta's club to collect one of the interest payments. In view of the evidence that the two men were long-time loan shark partners, we think it reasonable to infer that Pagano's presence on this particular occasion was not a coincidence, but rather was because Pagano was taking part in this particular extortionate extension of credit. While this independent, nonhearsay evidence of Pagano's involvement is not terribly compelling, we think the district court could properly take account of a fact which was revealed by the statements seeking admission: that Pagano and Matera had supplied half the money which Martorano gave Pallotta. This additional fact, when considered together with the independent nonhearsay evidence, provides a solid basis for our conclusion that Pagano and appellant were involved in a conspiracy.
29
We are aware that United States v. Glasser, 315 U.S. 60, 74-75, 62 S.Ct. 457, 86 L.Ed. 680 (1942), rejected the view that the existence of a conspiracy could be proved by the very statement seeking admission. The new rules, however, explicitly contemplate the consideration of such hearsay evidence in making preliminary findings of fact. We believe the new rules must be taken as overruling Glasser to the extent that it held that the statement seeking admission cannot be considered at all in making the determination whether a conspiracy exists. Glasser, however, still stands as a warning to trial judges that such statements should ordinarily be given little weight. Here, where there is significant independent evidence of the existence of a conspiracy and where the statement seeking admission simply corroborates inferences which can be drawn from the independent evidence, we see no problem with the consideration of that statement.
30
We also are not persuaded by appellant's further argument that the tapes affirmatively disclose that Pagano had withdrawn from the conspiracy and that his declarations thus did not fall within the ambit of the co-conspirator exception. In the conversations, Pagano expressed his willingness to help arrange further payments to appellant, and we think the district judge reasonably inferred that Pagano was still a member of the conspiracy.
31
3. Next, appellant argues that the district court committed reversible error by refusing to permit him to cross-examine Pallotta regarding specific threats of harm which were made by loan sharks other than appellant. Appellant urges that Pallotta's answers to these questions would have tended to show that Pallotta had not been in fear of appellant at all, but rather feared harm solely from other loan sharks. We find no reversible error.
32
We think it doubtful that Pallotta's fear of other loan sharks was probative of whether he was in fear of appellant, but even if the line of inquiry was a material one, we do not believe appellant can claim any prejudice. It was established at trial that Pallotta was terrified of several loan sharks other than appellant, and there was testimony from a government agent suggesting that these other men were the principal objects of Pallotta's fear. Since the jury was in possession of sufficient information concerning Pallotta's state of mind to make a judgment, the restriction on cross-examination was not reversible error. See United States v. Turcotte, 515 F.2d 145, 151 (2d Cir. 1975); United States v. Blackwood, 456 F.2d 526, 530 (2d Cir. 1972).
33
None of the other points appellant raises require discussion.
34
The judgment of conviction is affirmed.
*
Following the issuance of this opinion to the parties on March 30, 1977, we received a petition for rehearing which led us to amend the opinion in several respects. The amendments are all reflected herein
The petition for rehearing was granted on the issue whether the new federal rules of evidence effect a partial overruling of United States v. Glasser, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942), but was denied in all other respects.
1
Here, as in United States v. De Vincent, supra, the judge's charge left no doubt but that the ultimate fact which was in issue was whether an extortionate extension of credit had occurred
2
We recognize that these statements were made several months after the loan, but we see no problem with using them as evidence of appellant's state of mind at the time of the original extension of credit. See generally 6 Wigmore on Evidence § 1732 at 103-04
3
The district court's unobjected to instructions on the conspiracy counts referred to Pallotta's fearful state as an element of the crime. Appellant argues that this instruction was plain error because the actual understanding of the victim need not be proved to establish conspiracy to make an extortionate extension of credit. See United States v. Annoreno, supra, at 1309 n. 7. We find no plain error. Although appellant is correct that the ultimate fact to be proved under a conspiracy count is the intent of the alleged co-conspirators, it is not necessarily the case that the mental state of the victim is irrelevant to this determination. Under § 892(b), the victim's understanding is one of the factors from which the jury may infer the lender's intent, and we cannot say it was plain error for the district court to permit the jury to consider the victim's understanding in this context as well
4
The judge's instructions indicated that the indictment stated the actual charges. Both counts three and four referred to unknown individuals who had been involved in the alleged criminal activity. The jury verdicts thus would have been consistent with the judge's charge if the jury had concluded that appellant's agent and co-conspirator was not Halloran but one of the unknown individuals referred to in the indictment
5
The cases appellant relies upon, see Sealfon v. United States, 332 U.S. 575, 68 S.Ct. 237, 92 L.Ed. 180 (1948); cf. United States v. Zane, 495 F.2d 683, 691-92 (2d Cir. 1974), involve the very different situation in which a prior jury verdict is held to have a res judicata effect and to bar a subsequent prosecution
6
Section 892(c) establishes several preconditions to the introduction of reputation testimony by witnesses other than the borrower, but there is no requirement that there be a preliminary showing that the answers are reasonable. See also § 894(c). Section 892(b)(3)(B) authorizes the debtor to testify as to the lender's reputation. See United States v. Bowdach, 501 F.2d 220, 225-26 (5th Cir. 1974). While this provision gives direct substantive significance to the debtor's reasonable belief as to the creditor's reputation, nothing therein suggests that the admissibility vel non of the borrower's testimony is to be governed by a special rule
7
Q. Would you tell us, sir, from whom you received that street knowledge. Tell us the names of the persons
A. I have to go through the whole North End.
Q. Tell me the names.
A. Common street names.
Q. Tell me the name of a particular person who told you about
(Government's Attorney): Objection, your honor.
The Court: Sustained.
8
Indeed, the decision to pursue the names of sources rather than these other approaches is consistent with a tactical purpose to gain some advantage from Pallotta's obvious reluctance to name specific individuals
9
Although this evidence was admitted subject to the limitation that it could only be considered as to Pallotta's state of mind, Fed.R.Evid. 104(a) permits the district court to consider such statements for their truth in determining the existence of the preliminary fact of the existence of a conspiracy
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***********************************************
The “officially released” date that appears near the be-
ginning of each opinion is the date the opinion will be pub-
lished in the Connecticut Law Journal or the date it was
released as a slip opinion. The operative date for the be-
ginning of all time periods for filing postopinion motions
and petitions for certification is the “officially released”
date appearing in the opinion.
All opinions are subject to modification and technical
correction prior to official publication in the Connecticut
Reports and Connecticut Appellate Reports. In the event of
discrepancies between the advance release version of an
opinion and the latest version appearing in the Connecticut
Law Journal and subsequently in the Connecticut Reports
or Connecticut Appellate Reports, the latest version is to
be considered authoritative.
The syllabus and procedural history accompanying the
opinion as it appears in the Connecticut Law Journal and
bound volumes of official reports are copyrighted by the
Secretary of the State, State of Connecticut, and may not
be reproduced and distributed without the express written
permission of the Commission on Official Legal Publica-
tions, Judicial Branch, State of Connecticut.
***********************************************
STATE V. WARD—DISSENT
SHELDON, J., concurring in part and dissenting in
part. I agree with my colleagues’ determination, in part
I of their majority opinion, that the defendant’s first
claim of error—an unpreserved claim that the trial court
improperly failed to refer his motion to correct an illegal
sentence to the judge who imposed the challenged sen-
tence upon him—is not reviewable and reversible under
State v. Golding, 213 Conn. 233, 239–40, 567 A.2d 823
(1989), as modified by In re Yasiel R., 317 Conn. 773,
781, 120 A.3d 1188 (2015), for the reasons stated in this
court’s recent decision in State v. Battle, 192 Conn. App.
128, 146-47, A.3d (2019).1 As for the defendant’s
second, and principal, claim, however—that the trial
court erred in dismissing his motion to correct for lack
of subject matter jurisdiction because the motion pur-
portedly challenged only the legality of his underlying
conviction rather than the legality of the manner in
which his sentence was imposed—I disagree with that
portion of the majority’s decision, in part II thereof,
which concludes that, despite legal error in the trial
court’s jurisdictional analysis, its judgment of dismissal
should be affirmed on the alternative ground that the
claims pleaded in the motion to correct are not color-
able claims. Concluding, as I do, that the defendant’s
motion to correct does state a colorable claim that he
was incompetent at the time he was sentenced, which
this court has recognized as a valid legal basis for mov-
ing to correct a sentence on the ground that it was
imposed in an illegal manner; see State v. Mukhtaar,
189 Conn. App. 144, 150 n.6., 207 A.3d 29 (2019); I would
reverse the judgment of the trial court and remand this
case for further proceedings on that potentially viable
aspect of the defendant’s motion to correct. I respect-
fully dissent from the majority’s conclusion to the
contrary.
‘‘[F]or the trial court to have jurisdiction over a defen-
dant’s motion to correct a sentence that was imposed
in an illegal manner, the defendant must put forth a
colorable claim that his sentence, in fact, was imposed
in an illegal manner. A colorable claim is [a] claim that
is legitimate and that may reasonably be asserted, given
the facts presented and the current law (or a reasonable
and logical extension or modification of the current
law). . . . For jurisdictional purposes, to establish a
colorable claim, a party must demonstrate that there
is a possibility, rather than a certainty, that a factual
basis necessary to establish jurisdiction exists.’’ (Cita-
tion omitted; internal quotation marks omitted.) State
v. Jason B., 176 Conn. App. 236, 245, 170 A.3d 139
(2017). ‘‘A colorable claim is one that is superficially
well founded but that may ultimately be deemed invalid
. . . . For a claim to be colorable, the defendant need
not convince the trial court that he necessarily will
prevail; he must demonstrate simply that he might pre-
vail.’’ (Emphasis omitted; internal quotation marks
omitted.) State v. Evans, 329 Conn. 770, 784, 189 A.3d
1184 (2018), cert. denied, U.S. , 139 S. Ct. 1304,
203 L. Ed. 2d 425 (2019).
To assess the colorability of a claim presented in a
motion to correct, the court must examine the facts
pleaded in the motion and in the documents and materi-
als attached to the motion and/or relied on therein.
Upon viewing such pleaded facts in the light most favor-
able to sustaining its exercise of jurisdiction over the
claims based on them; see Keller v. Beckenstein, 305
Conn. 523, 531, 46 A.3d 102 (2012) (‘‘[i]t is well estab-
lished that, in determining whether a court has subject
matter jurisdiction, every presumption favoring juris-
diction should be indulged’’); the court must exercise
jurisdiction over any claim it finds to be colorable,
because such pleaded facts, if proved, establish a possi-
bility that jurisdiction over the claim exists.
In his motion to correct, the defendant expressly
claimed that he was sentenced in an illegal manner
because he was incompetent at the time of sentencing.
He filed the motion along with a detailed memorandum
of law in which he argued both his incompetency at
sentencing claim and an alternative claim that the sen-
tencing court sentenced him in an illegal manner by
failing to order, sua sponte, that his mental competency
be evaluated by mental health professionals before it
sentenced him. The defendant argued both claims in
his memorandum on the basis of an extensive set of
records and materials, all attached to his memorandum,
which documented his lengthy history of suffering from
and receiving treatment for paranoid schizophrenia, a
serious mental illness that had sometimes caused him
to experience hallucinations.
The defendant recounted in his memorandum that
at his sentencing hearing, there was discussion of his
psychiatric background, including his diagnosis of para-
noid schizophrenia, by both the prosecutor and his
defense attorney. The court, he noted, was presented
with a report from his forensic psychiatrist, Dr. Peter
Morgan, who stated that he had ‘‘suffered from the
psychotic symptoms for many years without treatment,
and this may contribute to an increased likelihood of
worse symptoms, more chronic symptoms and/or more
frequent exacerbations of symptoms.’’ The defendant
further noted that his attorney had told the court that
he had been receiving mental health treatment while
incarcerated, which included the administration of anti-
psychotic medication. He also reported that his attorney
had told the court at sentencing that his symptoms had
improved to the point that he was then ‘‘calm, rational,
and understood and appreciated the seriousness of
the situation.’’
Notwithstanding his attorney’s foregoing representa-
tions to the court as to the course of his treatment
while incarcerated and improving mental health at the
time of sentencing, the defendant argued in his memo-
randum that substantial additional evidence had
become available since the date of sentencing that shed
new and important light on the course of his mental
illness and psychiatric treatment prior to sentencing.
The defendant argued that this new information, which
was set forth in the documents and materials attached
to his memorandum, demonstrated that he may not
have been competent when he was sentenced despite
his counsel’s reassuring observations to the contrary.
He claimed, more particularly, that the following events,
all documented in attached records from the Depart-
ment of Correction (department), demonstrated that he
may have lacked a rational and factual understanding
of the proceedings against him on the date he was
sentenced. First, before he entered his guilty plea on
June 25, 2012, the clinical records of the department
reported that he had missed several doses of his pre-
scribed anti-psychotic medication. Second, although he
had agreed with the state to plead guilty to manslaugh-
ter in the first degree and assault in the first degree in
exchange for a total effective sentence of twenty-five
years of incarceration, he told department staff that he
had agreed to a sentence of twenty years in exchange
for a guilty plea to murder. Third, in the period following
his guilty plea but before his sentencing on July 23,
2012, department records reported that the defendant
was continuing to miss doses of his prescribed anti-
psychotic medication intermittently, and at times
reported experiencing auditory hallucinations. Fourth,
in that same time frame, he again misstated the terms
of his plea agreement, reporting incorrectly that he
would be sentenced to twenty years of incarceration
on the charge of manslaughter. Fifth, approximately
one month after he was sentenced to a term of twenty-
five years of incarceration, he told his mental health
treaters a third time that he was confused about his
sentence, informing a department social worker that
he was then serving a thirty year sentence for man-
slaughter.
On the basis of the foregoing facts, I agree with the
majority’s conclusion that the defendant failed to put
forth a colorable claim that the trial court was required
to inquire into his competence on the date he was sen-
tenced based on the facts before it at that time.2 I
believe, however, that the defendant did put forth a
colorable claim that he was incompetent in fact at the
time of sentencing based primarily upon the new facts,
which were documented in department records that
had first come to light after the date of his sentencing.
The distinction between the two claims for this purpose
lies in the difference between the more limited informa-
tion that was known to the sentencing court on the
date of sentencing and the fuller factual record that was
presented to the trial court in support of the defendant’s
motion to correct.
On the basis of the record before the sentencing
court, which included defense counsel’s contemporane-
ous report as to the defendant’s ongoing treatment regi-
men and improving lucidity, I would agree with the
state and the majority that the sentencing court had
no obligation to order a competency evaluation, sua
sponte, because there was insufficient evidence before
the court to raise a reasonable doubt that he then lacked
a rational and factual understanding of the proceedings
against him, and thus was incompetent. See State v.
Yeaw, 162 Conn. App. 382, 389–90, 131 A.3d 1172 (2016).
By contrast, the additional, well documented facts pre-
sented to the trial court in the motion to correct con-
cerning the defendant’s failure to take his prescribed
anti-psychotic medication in the weeks before he was
sentenced, his contemporaneous experiencing of audi-
tory hallucinations and his confusion, before and after
he was sentenced, about the terms of his plea bargain
and the length of his sentence, both as agreed to and
as imposed, raise at least a genuine possibility that
when he was sentenced he was incompetent because
he lacked a rational and factual understanding of the
proceedings against him due to his ongoing mental
illness.
In announcing its decision that the defendant’s claim
that he was incompetent when he was sentenced was
not colorable, the majority wrote that ‘‘the statements
reportedly made by the defendant before and after his
sentencing suggesting that he misunderstood the length
of his sentence cannot be viewed rationally as establish-
ing that he was not competent at the time of sentenc-
ing.’’ Insofar as the majority’s conclusion suggests that
the defendant had the burden of proving that he was
not competent at the time of sentencing in order for
his claim to be considered colorable, it is simply incor-
rect. The defendant need not convince the court that he
will prevail on his claim, nor even that he will probably
prevail on it, for the claim to be considered colorable;
rather, he need only demonstrate that if the facts he
had pleaded in support of the claim are proved, there
is a possibility that he will prevail on that claim.3 Insofar
as the majority’s conclusion can be read as a determina-
tion that the facts pleaded by the defendant, if proved,
would be insufficient to raise even the possibility that
he was incompetent at the time of sentencing, I respect-
fully disagree. Considered in light of the defendant’s
lengthy mental health history, his documented state-
ments expressing confusion about the nature of his plea
agreement and the length of his sentence, his docu-
mented failure to follow his treatment regimen in the
weeks before he was sentenced and his contemporane-
ous experiencing of auditory hallucinations, combine
to raise at least the possibility that he was incompetent
when he was sentenced, and are thus sufficient to put
forth a colorable claim that his sentence was imposed
in an illegal manner.
For the foregoing reasons, I would conclude that the
court erred in dismissing the defendant’s motion to
correct, and would reverse the judgment of the trial
court and remand this case for further proceedings on
the defendant’s colorable claim that he was sentenced
in an illegal manner because he was incompetent when
he was sentenced. Therefore, I respectfully dissent from
part II of the majority opinion.
1
Although I do not believe that the majority has reason to reach and decide
the claim discussed in part I of their opinion, in light of their conclusion in
part II of the opinion that the trial court lacked subject matter jurisdiction
over the defendant’s principal claim, I would reach that issue and dispose
of it as the majority has done due to its likelihood of arising on remand if
the court ordered remand as I have proposed.
2
I note that the state argues that the defendant’s claim that he was incom-
petent when he was sentenced, as evidenced by information that was never
before the sentencing court, does not fall within the purview of Practice
Book § 43-22 because the claim does not relate to any alleged error on the
part of the sentencing court. In support of its argument, the state cites State
v. Parker, 295 Conn. 825, 992 A.2d 1103 (2010), for the proposition that a
trial court lacks subject matter jurisdiction to consider a defendant’s motion
to correct when the motion does not relate to any improper action by the
trial court. Thus, the state argues that without evidence that the sentencing
court knew of the information in the department’s records at the time of
sentencing, the defendant could not have been sentenced in an illegal man-
ner. The state’s reliance on Parker is misplaced. It is axiomatic that there
are claims that fall within the purview of Practice Book § 43-22 that do not
require the court to have had knowledge of the alleged error. For example, a
judge who relies on materially untrue or unreliable information at sentencing
imposes sentence in an illegal manner even though he or she does not then
know that the information so relied on is inaccurate. See e.g., Townsend v.
Burke, 334 U.S. 736, 741, 68 S. Ct. 1252, 92 L. Ed. 1690 (1948). Therefore, I
reject the state’s assertion that the court must have had knowledge of the
additional evidence raised in the motion to correct at the time of sentencing
for his claim to be colorable.
3
Similarly, the state has argued that the defendant failed to set forth a
colorable claim that he was incompetent at sentencing because existing law
presumes a defendant’s competence; see General Statutes § 54-56d. This
argument is also unavailing. The state asserts that the facts cited by the
defendant in support of his claim may establish that he suffered from mental
health issues, but are insufficient to overcome the presumption of compe-
tence to establish a colorable claim. The state’s argument suggests that in
order to establish jurisdiction for his motion to correct, the defendant is
required to prove the merits of his claim, which in the present case would
have required him to overcome the presumption of competence. As this
court recently explained in State v. Jason B., supra, 176 Conn. App. 244:
‘‘At issue is whether the defendant has raised a colorable claim within the
scope of Practice Book § 43-22 that would, if the merits of the claim were
reached and decided in the defendant’s favor, require correction of a sen-
tence.’’ (Emphasis altered). The state misconstrues this language to suggest
that a defendant must prove that he would succeed on the merits of his
motion to correct before it may be heard. This is not so. In order to establish
subject matter jurisdiction over the motion to correct, the defendant needed
only to present sufficient facts to establish that his claim of incompetence
is a ‘‘possibility, rather than a certainty’’; State v. Jason B., supra, 245; and
is ‘‘superficially well founded but may ultimately be deemed invalid.’’ State
v. Evans, supra, 329 Conn. 784.
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Fourth Court of Appeals
San Antonio, Texas
December 7, 2017
No. 04-17-00329-CR
Brian FAZIO,
Appellant
v.
The STATE of Texas,
Appellee
From the 290th Judicial District Court, Bexar County, Texas
Trial Court No. 2016CR5284
Honorable Melisa Skinner, Judge Presiding
ORDER
Appellant’s brief was originally due October 5, 2017. After we sent a late brief notice,
appellant filed his first motion for extension of time, which we granted in part. Thereafter,
appellant’s brief was due November 13, 2017. Appellant then filed a second motion for
extension of time, asking that we extend time to file the brief to December 2, 2017, which is a
Saturday. We noted that in his motion appellant states this was a request for an additional fifteen
days; however, it was actually a request for an additional nineteen days. Moreover, because
December 2, 2017, was a Saturday, the brief was due Monday December 4, 2017, which was a
total of twenty-one days from the actual due date. After review, we granted appellant’s motion
and ordered him to file his brief in this court on or before December 4, 2017. Appellant has now
filed a third motion for extension of time, asking for an additional four days, but requesting the
date of December 9, 2017, a Saturday, which is actually five days from the current December 4,
2017 due date. After review, we interpret appellant’s motion as a request for an additional five
days in which to file the brief. We GRANT appellant’s motion and ORDER appellant to file his
brief in this court on or before December 11, 2017 – given that the fifth day, December 9, 2017,
is a Saturday. See Tex. R. App. P. 4.1(a).
_________________________________
Marialyn Barnard, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 7th day of December, 2017.
___________________________________
KEITH E. HOTTLE,
Clerk of Court
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708 F.2d 722
Callihanv.Eastern Production Credit Ass'n
82-5480
UNITED STATES COURT OF APPEALS Sixth Circuit
1/14/83
1
E.D.Ky.
APPEAL DISMISSED
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265 F.Supp.2d 51 (2003)
Mikeisha BLACKMAN, et al., Plaintiffs,
v.
DISTRICT OF COLUMBIA, et al., Defendants.
No. CIV.A. 97-1629(PLF).
United States District Court, District of Columbia.
June 2, 2003.
ORDER
FRIEDMAN, District Judge.
On May 22, 2003, the District of Columbia Office of Administrative Hearings ("OAH") moved for leave to intervene in the above-captioned action for the purpose of participating in the ongoing settlement discussions. OAH asserts that as the newly-created central administrative tribunal for all District of Columbia agencies, it soon will assume responsibility for all special education hearings, and thus it has a right to take part in the formulation of a consent decree that concerns such hearings. See Motion of the District of Columbia Office of Administrative Hearings for Leave to Intervene ("OAH Mot.") at 1-2. Specifically, OAH charges that the current draft of the consent decree, if adopted, "would divest OAH of the ability to manage and control its own docket independently, without interference from adversaries litigating within the special education system (the District of Columbia Public Schools ("DCPS"), special education petitioners and their respective counsel)," in violation of District of Columbia law. See id at 2.
As a preliminary matter, the Court does not understand why OAH, like the District of Columbia Public Schools and all other District of Columbia agencies and entities, is not properly and adequately represented by the Office of the Corporation Counsel in these settlement negotiations, notwithstanding any authority of OAH to retain its own counsel when it brings suit or is sued. See D.C.Code § 1831.05(b)(10) (2002).[1] If OAH is in fact the new home for administrative due process hearings for special education, it necessarily will be affected by the parties' agreement, because any acceptable settlement must include specific time frames for the holding of the administrative due process hearings and due process hearing officer and/or administrative law judge decisions. While OAH asserts that the Corporation Counsel has not represented OAH's interests, such an assertion strikes the Court as being a matter for internal resolution within the District of Columbia government itself before any settlement proposal is presented to the Courtif necessary by the Mayor himself *52 not for this Court. Someone must speak for the District of Columbia government as a whole which is, after all, the named lead defendant in this class action. At the very least, the Corporation Counsel cannot stand mute in the face of OAH's motion to intervene. Accordingly, it is hereby
ORDERED that the Office of the Corporation Counsel is directed to file a response to OAH's motion to intervene on or before June 10, 2003, setting forth with precision the position of the Mayor, the District of Columbia government, the District of Columbia Public Schools, and the Office of the Corporation Counsel with respect to the proposed intervention in this matter by the District of Columbia Office of Administrative Hearings.
SO ORDERED.
NOTES
[1] Regardless of what District of Columbia law may say, of course the District of Columbia must comply with federal law, the Individuals with Disabilities Education Act, 20 U.S.C. §§ 1400 et seq., and all relevant regulations, case law and Court orders.
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
March 28, 2006
No. 05-14708 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 04-00211-CV-FTM-29-SPC
J. RAE HOYER,
individually, and as Personal Representative
of the Estate of David J. Hoyer, M.D., deceased,
Plaintiff-Appellee,
versus
DON HUNTER,
as Sheriff of Collier County,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(March 28, 2006)
Before ANDERSON, BIRCH and DUBINA, Circuit Judges.
PER CURIAM:
This is an appeal from the district court’s order denying appellant Sheriff
Don Hunter’s (“Sheriff Hunter”) motion for new trial. The appellee in this case, J.
Rae Hoyer (“Mrs. Hoyer”), is the widow of deceased psychiatrist, Dr. David J.
Hoyer (“Dr. Hoyer”). Dr. Hoyer arrived at the Collier County, Florida, jail on
January 3, 2001, to evaluate the competency to stand trial of known dangerous
inmate Rodriguez Patten (“inmate Patten”). While interviewing and assessing
inmate Patten’s competency, inmate Patten strangled Dr. Hoyer, causing his death.
This suit was filed by Mrs. Hoyer in state court but later was removed by Sheriff
Hunter to the United States District Court for the Middle District of Florida. After
a five-day jury trial, the jury returned a verdict in Mrs. Hoyer’s favor. A
judgment was entered on the jury’s verdict in the sum of $1,325,130.00. Sheriff
Hunter contends in this appeal that the district court committed reversible error in
permitting certain testimony of Mrs. Hoyer’s expert witness, Randall Atlas
(“Atlas”).
We review a district court’s evidentiary rulings, including its rulings on the
admissibility of expert testimony, for abuse of discretion. Cook v. Sheriff of
Monroe County, Fla., 402 F.3d 1092, 1103 (11th Cir. 2005); Wright v. CSX
Transp., Inc., 375 F.3d 1252, 1260 (11th Cir. 2004). We also review the denial of
a motion for new trial for abuse of discretion. Lambert v. Fulton County, Ga., 253
2
F.3d 588, 595 (11th Cir. 2001). “Our cases, consistent with Rule 61 of the Federal
Rules of Civil Procedure, hold that a new trial is warranted only where the error
has caused substantial prejudice to the affected party (or, stated somewhat
differently, affected the party’s “substantial rights” or resulted in “substantial
injustice”).” Peat, Inc. v. Vanguard Research, Inc., 378 F.3d 1154, 1162 (11th
Cir. 2004) (citations omitted).
After reviewing the record, including the trial testimony of Atlas, as well as
reading the parties’ briefs, we conclude that, even if the district court erred in
admitting certain aspects of Atlas’s testimony, the error was harmless. First,
Sheriff Hunter admitted at trial that he at least owed Dr. Hoyer a general duty of
care. Second, and more importantly, even if there were error in admitting Atlas’s
testimony, the district court’s jury instructions cured the error. In instructing the
jury on the relevant law pertaining to Sheriff Hunter’s liability, the court stated:
The court instructs you, as a matter of law, that defendant Don
Hunter, is responsible for any negligence on the part of his agents or
employees, including those agents or employees of the Collier County
Jail. In addition, the Sheriff has a duty to use reasonable care for the
safety of persons who enter the jail. However, as a matter of law,
Sheriff Hunter is not responsible for any damages resulting from
failing to classify inmate Rodrigus [sic] as a high-risk inmate, or
for any design defects in the building, such as the location and
size of the window, or the direction in which the door opened.
(R. Vol. 10 at 754-755) (emphasis added).
3
Because of this curative instruction, and the other evidence presented at
trial, we cannot say that, even if the district court committed error by permitting
the jury to hear all of Atlas’s testimony, it was “substantially prejudicial” to
Sheriff Hunter’s case. Accordingly, we affirm the district court’s order denying
Sheriff Hunter’s motion for new trial and the judgment entered on the jury’s
verdict.
AFFIRMED.
4
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249 F.2d 417
UNITED STATES of America ex rel. Robert Lee GOLDSBY, Appellant,v.William HARPOLE, Superintendent of Mississippi StatePenitentiary, Parchman, Mississippi, Appellee.
No. 16481.
United States Court of Appeals Fifth Circuit.
Nov. 20. 1957.
George N. Leighton, Chicago, Ill., Moore, Ming & Leighton, Chicago, Ill., for appellant.
Joe T. Patterson, Atty. Gen. of Miss., John H. Price, Jr., J. R. Griffin, Asst. Attys. Gen., Ross R. Barnett, Jackson, Miss., Barnett, Jones & Montgomery, Jackson, Miss., for appellee.
Before RIVES, JONES and BROWN, Circuit Judges.
JOHN R. BROWN, Circuit Judge.
1
In his application for writ of habeas corpus to the court below, appellant Goldsby alleged that his conviction for murder and sentence of death imposed by the courts of Mississippi, Goldsby v. State, miss., 78 So.2d 762; certiorari denied 350 U.S. 925, 76 S.Ct. 216, 100 L.Ed. 809; Goldsby v. State, Miss., 86 So.2d 27; certiorari denied 352 U.S. 944, 77 S.Ct. 266, 1 L.Ed.2d 239, constitute a deprivation of his liberty without due process of law in violation of the Fourteenth Amendment to the United States Constitution because of the systematic exclusion of members of his, the Negro race, from the lists from which grand and petit juries are selected in Carroll County, Mississippi and therefore from the grand jury which indicted him and the petit jury before which he was tried.1
2
The District Court dismissed the application without requiring any response from the State of Mississippi, apparently on the thesis that it failed to state any basis for the requested relief since it was asserted that the record of the criminal proceedings at no time during the trial of appellant for murder showed that the constitutional question was raised. We feel that the petition was too summarily dismissed and that the appellant is entitled to a hearing upon his allegations, Chessman v. Teets, 350 U.S. 3, 76 S.Ct. 34, 100 L.Ed. 4.
3
That Federal Habeas corpus is available to prisoners in custody under the final judgments of the courts of the several states to test the constitutionality of their deprivation of liberty has long been established by statute, 28 U.S.C.A. 2241, and is not open to question. It is equally well settled that the systematic exclusion of members of the race of an accused from the juries by which he is indicted and tried is a denial of the constitutional guarantees which must be afforded to one accused of crime and brought to trial in a state court. Patton v. State, 332 U.S. 463, 68 S.Ct. 184, 92 L.Ed. 76; Hill v. State of Texas, 316 U.S. 400, 62 S.Ct. 1159, 86 L.Ed. 1559; Smith v. State of Texas, 311 U.S. 128, 61 S.Ct. 164, 85 L.Ed. 84; Norris v. State of Alabama, 294 U.S. 587, 55 S.Ct. 579, 79 L.Ed. 1074; Bush v. Commonwealth of Kentucky, 107 U.S. 110, 1 S.Ct. 625, 27 L.Ed. 354.
4
Having alleged a prima facie case of a denial of due process, Goldsby was entitled to a hearing and an inquiry into the truth of his allegations2 'unless it appears from the application that * * * (he) is not entitled thereto.' 28 U.S.C.A. 2243. The ancient writ of habeas corpus is an extraordinary process which, as such, requires some particularity of pleading beyond that normally necessary in other civil cases,3 but in the interests of justice and provide the vindication of fundamental rights, the purpose for which the writ is designed, the pleadings of a prisoner should not be scrutinized for compliance with technical niceties, Rice v. Olson, 324 U.S. 786, 65 S.Ct. 989, 89 L.Ed. 1367; Hawk v. Olson, 326 U.S. 271, 66 S.Ct. 116, 90 L.Ed. 61, and may be amended even if insufficient in substance, Holiday v. Johnston, 313 U.S. 342, 61 S.Ct. 1015, 85 L.Ed. 1392;28 U.S.C.A. 2242; F.R.Civ.P. 15.
5
Whether, on the hearing, the record will bear out that the constitutional issue has adequately been preserved, Adams v. United States,317 U.S. 269, 63 S.Ct. 236, 87 L.Ed. 268, the application /4/ with which we are here concerned alleged more than the mere fact that Negroes were systematically excluded from the jury lists. And in the present posture of this case, when no response sponse has been made to the application for habeas, corpus which was dismissed for failure to state grounds for relief, this court may take as true all facts well pleaded in determining whether the dimissal was proper. Hawk v. Olson, 326 U.S. 271, 66 S.Ct. 116, 90 L.Ed. 61; Lisenba v. People of State of California, 314 U.S. 219, 237, 62 S.Ct. 280, 86 L.Ed. 166; White v. Ragen, 324 U.S. 760, 65 S.Ct. 978, 89 L.Ed. 1348; Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; House v. Mayo, 324 U.S. 42, 65 S.Ct. 517, 89 L.Ed. 739.
6
This makes the allegations of Paragraph 14 of the application of extreme importance. In Paragraph 14 Goldsby avers that 'Because of petitioner's ignorance and the circumstances of his arrest and incarceration, and as a consequence of the customs, mores and usages of the State of Mississippi, Petitioner was not able to challenge5 the competency and qualifications of the Grand Jury that was sworn and impaneled * * *.' This allegation, considered in conjunction with those facts (see note 4, supra) averred which sufficiently set forth the speed in which the indictment was returned and appellant put on trial, at least permit a pleader's inference for proof that petitioner, an ignorant layman, had not had an adequate opportunity for counselling with his various counsel sufficient to enable him intelligently and deliberately to understand and approve the available or recommended courses of action, including the availability and desirability of urging defensive constitutional objections to the composition of the grand and petit juries. Whether, under the circumstances briefly but sufficiently set forth, this was an adequate preservation of the constitutional issue, and, if not, whether it was sufficient to excuse the defent are matters to be determined upon the hearing.
7
We therefore hold that this dismissal was erroneous and that the application should be determined upon a hearing. It is, of course, incumbent upon the applicant to carry the burden in a collateral attack upon a judgment, Williams v. Kaiser, supra; Walker v. Johnson, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830; Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, but he is entitled to an opportunity to shoulder it. Hawk v. Olson, supra. But we think it important to point out-- especially in the delicacy which unavoidably inheres as the Federal judiciary exercises its constitutional duty of determining whether state court criminal proceedings have offended Federal constitutional guarantees-- that nothing said or unsaid, expressed or implied is an intimation, one way or the other, on the facts or what the District Court should or should not do or find on the hearing which we hold is required.
8
Reversed.
1
It was alleged that under the Mississippi statutes, prospective jurors are to be selected from the lists of qualified voters and that although Carroll County, according to the 1950 Census, had a population of 15,449 persons of which 8,829 were Engroes, 5,300 of whom were by reason of age and educational qualifications eligible to qualify as voters, that at the time the indictment was returned against appellant and for a long time before, no Negro had ever appeared upon the voting lists and therefore none had been included on the lists of prospective jurors
2
This will include the allegation that state remedies have been exhausted in accordance with 28 U.S.C.A. 2254. On the present uncontroverted record this date originally set for trial re-entered the been presented to the highest Court of Mississippi and relief denied Goldsby v. State, 86 So.2d 27, and an application for certiorari from the United States Supreme Court was prosecuted and denied 352 U.S. 944, 77 S.Ct. 266, 1 L.Ed.2d 239. Darr v. Burford, 339 U.S. 200, 70 S.Ct. 587, 94 L.Ed. 761; Brown v. Allen, 344 U.S. 443, 73 S.Ct. 397, 97 L.Ed. 469
3
The Federal Rules of Civil Procedure have no application, other than by analogy, to habeas corpus proceedings unless by express statutory requirement. F.R.C.P. 81(a)(2), 28 U.S.C.A. United States ex rel. Jelic v. District Director of Immigration, 2 Cir., 106 F.2d 14
4
Although the present record contains little more than the petition for writ of habeas corpus and the order dismissing it, the facts gleaned from the state court opinions, to which reference is made, and allegations appear to be that the murder indictment was returned by the Carroll County grand jury on November 8, 1954, arraignment being held that same day with trial set for November 10, only two days later. On the date set for trial, counsel previously engaged by a relative of appellant in St. Louis, withdrew from the defense for reasons which are not indicated, leaving appellant without counsel to aid in his defense. The trial court appointed counsel from a neighboring county to assume the defense and the trial was passed until the following day when another attorney engaged from the local bar by relatives of appellant joined the defense and the trial proceeded to conviction and sentence. An appeal was carried to the Supreme Court of Mississippi which affirmed the judgment and sentence of the trial court, Goldsby v. State, 78 So.2d 762. Up until this time, March 28, 1955, there had never been any assertion that the constitutional rights of appellant had been denied. At this point, counsel who had withdrawn from the case on the date originally set for trila re-entered the defense and applied for a writ of certiorari from the United States Supreme Court to the Supreme Court of Mississippi, for the first time urging the systematic exclusion of Negroes from the jury lists. When this application was denied Goldsby v. State, 350 U.S. 925, 76 S.Ct. 216, 100 L.Ed. 809, Goldsby, on February 21, 1956, applied to the Supreme Court of Mississippi for a writ of error coram nobis or, in the alternative, habeas corpus, for the first time asserting in the state courts, the denial of due process of law. In denying the writ, the Supreme Court of Mississippi held that the denial of certiorari by the United States Supreme Court was res adjudicata of the constitutional question and that the application now came too late since no objection to the validity of the juries impaneled in the cause had been made at the time of the trial or on appeal. Goldsby v. State, Miss., 86 So.2d 27
5
Apparently as an additional reason why he either did not, or did not have to, make the challenge to the juries, Goldsby further alleged that the statutes of Mississippi preclude questioning the validity or regularity of the selection or impaneling of any jury once it has been impanelled and sworn as any jury once sworn is deemed to be a legal one. Code of Mississippi, 1942, 1784, 1798. But in its opinion denying petitioner's application for writ of error coram nobis, 86 So.2d 27, the Supreme Court of Mississippi pointed out that regardless of this statutory language, when a person is accused subsequent to the impaneling of the grand jury so that he has no opportunity to challenge the validity of the jury and a Federal Constitutional question is involved, that he is not precluded from moving to quash any indictment returned against him
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985 F.2d 577
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.In re W & S INVESTMENTS, INC., Debtors.NORTHMOUNT ASSOCIATES; J. Dimmitt Smith, Apellants,v.W & S INVESTMENTS, INC. Debtor-Appellant.
No. 91-35830.
United States Court of Appeals, Ninth Circuit.
Submitted Oct. 9, 1992.*Decided Jan. 28, 1993.
Appeal from the United States District Court for the Western District of Washington; No. C91-403, Thomas S. Zilly, District Judge, Presiding.
W.D.Wash.
REMANDED.
Before HUG, FLETCHER and BRUNETTI, Circuit Judges.
1
MEMORANDUM**
2
Northmount Associates and J. Dimmitt Smith appeal from the district court's dismissal of their appeal of two orders of the bankruptcy court imposing monetary sanctions on them for filing a frivolous motion to quash a subpoena for the production of records and a frivolous motion for reconsideration.
FACTS AND PROCEDURAL HISTORY
3
W & S Investments, Inc. ("W & S") filed a voluntary petition for bankruptcy in October 1990. W & S claims a 5.5% interest in Northmount Associates ("Northmount"), a joint venture organized under Washington law. J. Dimmitt Smith has acted as Northmount's counsel throughout this case and has a personal interest in Northmount as well.
4
Northmount was established in 1971 to construct and operate a shopping mall in Skagit County, Washington. In 1979, Northmount sold the mall; consequently, its sole remaining asset was the note and third deed of trust on the mall. The mall was purchased by W & C Corporation ("W & C") in late 1990. In November 1990, after the initiation of the W & S bankruptcy proceedings, Northmount entered into an agreement with W & C for payment and settlement of the third deed of trust.
5
In January 1991, W & S moved to examine Northmount through Smith under Rule 2004 of the Federal Rules of Bankruptcy Procedure. The examination was sought "on the ground that the Debtor, W & S Investments, Inc., is a joint venturer in Northmount Associates and seeks to examine Mr. Smith as to joint venture matters which relate to its acts, conduct and property and its liabilities and financial condition of the Debtor." (Record ("R.") 1 at 79.) The bankruptcy court granted the motion and issued a subpoena to Northmount and Smith for the production of records. Northmount and Smith moved to quash, contending that W & S was not a partner in the joint venture but at most a mere assignee of an interest in Northmount, and therefore was not entitled under Washington law to inspect Northmount's books and records.
6
The bankruptcy judge heard the motion to quash on February 22, 1991. The minutes of the hearing simply state, "Motion to dsm for 2004 exam denied pay ter[m]s of 200.00 respond by March." (R. 24 at 16.).1 The court later issued an order dated March 18, 1991 denying the motion to quash and imposing sanctions against Northmount and Smith in the amount of $200 on the ground that their motion was frivolous. The order did not otherwise explain the sanctions.
7
Northmount subsequently moved for reconsideration of the court's ruling. After a hearing on March 15, 1991, the bankruptcy court denied this motion as well, and issued a second order also dated March 18, 1991 imposing further sanctions on Northmount and Smith in the amount of $700, again on the ground that the motion was frivolous. In this second order, the court further directed that if Northmount and Smith failed to comply with the subpoena on or before April 5, 1991, they would be subject to additional terms of $2,500. Again, neither the minutes of the hearing nor the order itself explains the basis of the sanctions except to say that the motion was "frivolous."
8
Northmount and Smith appealed the two orders to the district court and moved for a temporary stay of the bankruptcy court's order requiring that they produce the documents or be subjected to the $2,500 sanction. After hearing arguments on April 4, 1991, the district court affirmed the bankruptcy court's rulings, denied the stay, and dismissed the appeal.2 Northmount submitted to the Rule 2004 examination on April 16, 1991. The district court denied Northmount and Smith's motion for rehearing in a minute order dated May 20, 1991.
DISCUSSION
9
Appellants claim that the district court erred in upholding the sanctions. We apply an abuse of discretion standard in reviewing the sanctions upheld by the district court. See Valley Nat'l Bank v. Needler (In re Grantham Bros.), 922 F.2d 1438, 1441 (9th Cir.), cert. denied, 112 S.Ct. 94 (1991). The bankruptcy court would necessarily have abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).
10
Rule 9011(a) of the Federal Rules of Bankruptcy Procedure, the bankruptcy equivalent of Rule 11, empowers bankruptcy courts to impose sanctions on the signer of a paper or the party he represents if the paper is frivolous or filed for an improper purpose. Valley Nat'l Bank, 922 F.2d at 1442. Under Rule 9011(a), as under Rule 11, a filing is considered frivolous if it is both baseless and made without a reasonable and competent inquiry. Id.
11
Bankruptcy Rule 2004 is a broadly construed discovery device which permits any party in interest in a bankruptcy proceeding to move for a court order to examine any entity so long as the examination relates to "acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge." Fed.R.Bankr.P. 2004(b). The scope of inquiry permitted under a Rule 2004 examination is generally very broad and can "legitimately be in the nature of a 'fishing expedition.' " In re Wilcher, 56 B.R. 428, 433 (Bankr.N.D.Ill.1985). Such an examination, however, cannot be " 'used for purposes of abuse or harassment' and it 'cannot stray into matters which are not relevant to the basic inquiry.' " In re Table Talk, 51 B.R. 143, 145 (Bankr.D.Mass.1985) (quoting In re Mittco, Inc., 44 B.R. 35, 36 (Bankr.E.D.Wis.1984)). If the party to be examined makes a motion to quash a Rule 2004 subpoena, the examiner must show that there is good cause for taking the requested discovery. In re Wilcher, 56 B.R. at 434.
12
Northmount and Smith advanced several arguments in bankruptcy court in support of their motion to quash. They claimed that the issuance of the subpoena violated Wash.Rev.Code § 25.04.270, which curtails the ability of an assignee of an interest in a Washington partnership to participate in the management of the business or inspect its books. They also asserted that W & S had failed to show just cause for the Rule 2004 examination and that the right of examination under Rule 2004 is not unlimited.
13
Because there is case law which suggests that not every Rule 2004 examination is proper, not every motion to quash a Rule 2004 subpoena is necessarily frivolous. In order to impose sanctions for appellants' motion to quash and subsequent motion for reconsideration, the bankruptcy judge had to find that these motions were baseless and made without reasonable or competent inquiry. Valley Nat'l Bank, 922 F.2d at 1442. In order to uphold them, the district court had to find that the bankruptcy court did not abuse its discretion. Unfortunately, we do not have the benefit of either the bankruptcy or district court's reasoning as to why sanctions were appropriate in this case.
14
We have held in the Rule 11 context that although
15
[d]istrict courts have broad fact-finding powers in this area to which appellate courts must accord great deference,.... we must know to what we defer; when we are not certain of the district court's reasoning, or when we cannot discern whether the district court considered the relevant factors, we must remand.
16
Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1366 (9th Cir.1990); see also Valley Nat'l Bank, 922 F.2d at 1441 (courts should look to Rule 11 in interpreting Rule 9011(a)). We REMAND to the district court with directions to remand to the bankruptcy court to vacate the sanctions or set forth the factual and legal bases for them.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
Apparently there is no transcript of this hearing or any of the subsequent hearings relevant to this appeal
2
Although it is not reflected in the record, appellants state in their brief on appeal that the district court affirmed on federal supremacy grounds
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 16-122V
Filed: August 7, 2017
* * * * * * * * * * * * * * *
PAMELA O’NEAL, * UNPUBLISHED
*
Petitioner, *
v. *
*
SECRETARY OF HEALTH * Decision on Interim Attorneys’ Fees and
AND HUMAN SERVICES, * Costs
*
Respondent. *
*
*
*
* * * * * * * * * * * * * * *
Andrew M. Krueger, Esq., Krueger & Hernandez S.C., Middleton, WI, for petitioner.
Sarah C. Duncan, Esq., U.S. Department of Justice, Washington, DC, for respondent.
DECISION ON INTERIM ATTORNEYS’ FEES AND COSTS1
Roth, Special Master:
On January 22, 2016, Pamela O’Neal (“Ms. O’Neal,” or “petitioner”) filed a petition for
compensation under the National Vaccine Injury Compensation Program.2 Petitioner alleged
that she suffered from Transverse Myelitis (“TM”) as a result of receiving a Hepatitis B
vaccination on March 11, 2013. Petition (“Pet.”), ECF No. 1
1
Because this unpublished decision contains a reasoned explanation for the action in this case, I
intend to post this decision on the United States Court of Federal Claims’ website, in accordance with the
E-Government Act of 2002, Pub. L. No. 107-347, § 205, 116 Stat. 2899, 2913 (codified as amended at 44
U.S.C. § 3501 note (2012)). In accordance with Vaccine Rule 18(b), a party has 14 days to identify and
move to delete medical or other information, that satisfies the criteria in 42 U.S.C. § 300aa-12(d)(4)(B).
Further, consistent with the rule requirement, a motion for redaction must include a proposed redacted
decision. If, upon review, I agree that the identified material fits within the requirements of that
provision, I will delete such material from public access.
2
National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755.
Hereinafter, for ease of citation, all “§” references to the Vaccine Act will be to the pertinent
subparagraph of 42 U.S.C. § 300aa (2012).
1
On July 20, 2017, petitioner’s counsel, Mr. Andrew Krueger, filed an Application for An
Interim Award of Attorneys’ Fees and Costs. Motion for Interim Fees. ECF No. 33. Mr.
Krueger requests attorneys’ fees in the amount of $30,297.50, and $16,232.90 in costs, for a total
amount of $46,530.40. Id. at 2-3. Petitioner’s counsel represented that petitioner incurred
$400.00 in out-of-pocket for the filing fee. Id. at 3.
On August 7, 2017, respondent filed a response to petitioner’s Motion for Interim Fees.
Response to Pet. Motion for Interim Fees, ECF No. 34. Respondent provided no specific
objection to the amount requested or hours worked, but instead “respectfully recommend[ed] that
the special master exercise her discretion and determine reasonable award for attorneys’ fees and
costs.” Id. at 3. On August 8, 2017, petitioner filed a reply, asserting that respondent provided
no precise objection to her request. Pet. Reply, ECF No. 35.
I. Procedural History
Petitioner filed her petition on January 22, 2016, and filed her medical records (Pet. Exs.
1-6) and a statement of completion two weeks later. ECF Nos. 8-9. The initial status conference
was conducted on February 25, 2016. Petitioner was ordered to file the outstanding medical
records addressed by respondent by April 25, 2016. Order, issued Feb. 25, 2016, ECF No. 10.
Between April and May of 2016, petitioner filed additional medical records (Pet. Exs. 7-
9) and a statement of completion. ECF Nos. 11, 13-14. A status conference was held on June
28, 2016. Respondent was ordered to file a Rule 4 Report by July 28, 2016. Petitioner was to
file an expert report by September 26, 2016. Order, issued Jun. 28, 2016, ECF No. 15.
Respondent filed a Rule 4 Report on July 28, 2016, stating that, “petitioner has not met
her prima facie burden to show causation-in-fact, and this case should be dismissed.” Resp. Rule
4 Report, ECF No. 16 at 9. On September 26, 2016, petitioner filed a motion for extension of
time to file an expert report, which was granted. ECF No. 19. On October 11, 2016, petitioner
filed an expert report from Dr. Yehuda Shoenfeld. Pet. Exs. 10-11, ECF No. 20.
A status conference was held on December 5, 2016. During the conference, petitioner’s
counsel stated that he was coordinating with petitioner’s expert to properly highlight the medical
literature referenced in his report. Petitioner was ordered to file the medical literature referenced
by her expert by February 3, 2017. Respondent’s responsive expert report was due by February
8, 2017. Order, issued Dec. 5, 2016, ECF No. 21.
Petitioner filed over 100 exhibits of medical literature (Pet. Exs. 12-135) on January 26,
2017. ECF Nos. 22-26. On February 2, 2017, respondent filed a motion for extension of time to
file an expert report, which was granted. ECF No. 28. Respondent filed an expert report from
Dr. Thomas P. Leist on March 8, 2017. ECF Nos. A-B.
A status conference was held on April 18, 2017. During the conference, petitioner’s
counsel stated that petitioner intended to file a supplemental report from Dr. Shoenfeld.
2
Petitioner was ordered to file Dr. Shoenfeld’s expert report by May 18, 2017. Order, issued Apr.
18, 2017, ECF No. 30.3
On June 28, 2017, petitioner filed a motion to substitute her current attorney of record,
Mark L. Krueger for Andrew M. Krueger, which was granted. ECF No. 31. On July 17, 2017,
petitioner’s counsel filed a supplemental report from Dr. Shoenfeld and additional medical
literature. Pet. Exs. 136-140.
On July 20, 2017, petitioner filed an application for interim attorneys’ fees and costs.
Pet. App. for Interim Fees, ECF No. 33. On August 7, 2017, respondent filed a response to
petitioner’s application for interim fees. Response, ECF No. 34. Respondent provided no
specific objection to the amount requested or hours worked, but instead “respectfully
recommend[ed] that the special master exercise her discretion and determine reasonable award
for attorneys’ fees and costs.” Id. at 3. On March 28, 2017, petitioner filed a reply, asserting
that respondent provided no precise objection and that the fees and costs were reasonable and
necessary. Pet. Reply, ECF No. 35.
II. Applicable Legal Standards
The Vaccine Act permits an award of “reasonable attorneys’ fees” and “other costs.”
§ 15(e)(1). If a petitioner succeeds on the merits of his or her claim, the award of attorneys’ fees
is automatic. Id.; see Sebelius v. Cloer, 133 S. Ct. 1886, 1891 (2013). However, a petitioner
need not prevail on entitlement to receive a fee award as long as the petition was brought in
“good faith” and there was a “reasonable basis” for the claim to proceed. § 15(e)(1). Moreover,
special masters have discretion to award interim fees while the litigation is ongoing if “the cost
of litigation has imposed an undue hardship” and there is “a good faith basis for the claim.”
Shaw v. Sec’y of Health & Humans Servs., 609 F.3d 1372, 1375 (Fed. Cir. 2010); see Avera v.
Sec’y of Health & Human Servs., 515 F.3d 1343, 1352 (Fed. Cir. 2008).
The Federal Circuit has endorsed the use of the lodestar approach to determine what
constitutes “reasonable attorneys’ fees” and “other costs” under the Vaccine Act. Avera, 515
F.3d at 1349. Under this approach, “an initial estimate of a reasonable attorneys’ fees” is
calculated by “multiplying the number of hours reasonably expended on the litigation times a
reasonable hourly rate.” Id. at 1347-48 (quoting Blum v. Stenson, 465 U.S. 886, 888 (1984)).
That product is then adjusted upward or downward based on other specific findings. Id.
A “reasonable hourly rate” is defined as the rate “prevailing in the community for similar
services by lawyers of reasonably comparable skill, experience and reputation.” Id. at 1348
(quoting Blum, 465 U.S. at 896 n.11). This rate is based on “the forum rate for the District of
Columbia” rather than “the rate in the geographic area of the practice of petitioner’s attorney.”
Rodriguez v. Sec’y of Health & Human Servs., 632 F.3d 1381, 1384 (Fed. Cir. 2011) (citing
Avera, 515 F. 3d at 1349). There is a “limited exception” that provides for attorneys’ fees to be
awarded at local hourly rates when “the bulk of the attorney’s work is done outside the forum
3
Dr. Shoenfeld’s supplemental report was rescheduled to be filed by July 19, 2017, due to
petitioner’s counsel of record, Mark Krueger, passing away in May 2017.
3
jurisdiction” and “there is a very significant difference” between the local hourly rate and forum
hourly rate. Id. This is known as the Davis County exception. See Hall v. Sec’y of Health &
Human Servs., 640 F.3d 1351, 1353 (Fed. Cir. 2011) (citing Davis Cty. Solid Waste Mgmt. &
Energy Recovery Special Serv. Dist. v. U.S. EPA, 169 F.3d 755, 758 (D.C. Cir. 1999)). For cases
in which forum rates apply, McCulloch provides the framework for determining the appropriate
hourly rate range for attorneys’ fees based upon the attorneys’ experience. See McCulloch v.
Sec’y of Health & Human Servs., No. 09-293V, 2015 WL 5634323 (Fed. Cl. Spec. Mstr. Sept. 1,
2015). The Office of Special Masters has issued a fee schedule that updates the McCulloch rates
to account for inflation in subsequent years.4
Once the applicable hourly rate is determined, it is applied to the “number of hours
reasonably expended on the litigation.” Avera, 515 F.3d at 1348. Counsel should not include in
their fee requests hours that are “excessive, redundant, or otherwise unnecessary.” Saxton ex rel.
Saxton v. Sec’y of Health & Human Servs., 3 F.3d 1517, 1521 (Fed. Cir. 1993) (quoting Hensley
v. Eckerhart, 461 U.S. 424, 434 (1983)). “Unreasonably duplicative or excessive billing”
includes “an attorney billing for a single task on multiple occasions, multiple attorneys billing for
a single task, attorneys billing excessively for intra office communications, attorneys billing
excessive hours, [and] attorneys entering erroneous billing entries.” Raymo v. Sec’y of Health &
Human Servs., 129 Fed. Cl. 691, 703 (2016). While attorneys may be compensated for non-
attorney-level work, the rate must be comparable to what would be paid for a paralegal or
secretary. See O’Neill v. Sec’y of Health & Human Servs., No. 08-243V, 2015 WL 2399211, at
*9 (Fed. Cl. Spec. Mstr. Apr. 28, 2015). Clerical and secretarial tasks should not be billed at all,
regardless of who performs them. See, e.g., McCulloch, 2015 WL 5634323, at *26. Hours spent
traveling are ordinarily compensated at one-half of the normal hourly attorney rate. See Scott v.
Sec’y of Health & Human Servs., No. 08-756V, 2014 WL 2885684, at *3 (Fed. Cl. Spec. Mstr.
June 5, 2014) (collecting cases). And “it is inappropriate for counsel to bill time for educating
themselves about basic aspects of the Vaccine Program.” Matthews v. Sec’y of Health & Human
Servs., No 14-1111V, 2016 WL 2853910, at *2 (Fed. Cl. Spec. Mstr. Apr. 18, 2016). It is “well
within the Special Master’s discretion to reduce the hours to a number that, in [her] experience
and judgment, [is] reasonable for the work done.” Saxton, 3 F.3d at 1522. In exercising that
discretion, special masters may reduce the number of hours submitted by a percentage of the
amount charged. See Broekelschen v. Sec’y of Health & Human Servs., 102 Fed. Cl. 719, 728-29
(2011) (affirming special master’s reduction of attorney and paralegal hours); Guy v. Sec’y of
Health & Human Servs., 38 Fed. Cl. 403, 406 (1997) (same).
Ultimately, special masters have substantial discretion in awarding fees and costs, and
may adjust a fee request sua sponte, apart from objections raised by respondent and without
providing petitioners with notice and opportunity to respond. See Sabella v. Sec’y of Health &
Human Servs., 86 Fed. Cl. 201, 209 (Fed. Cl. 2009). Special masters need not engage in a line-
by-line analysis of petitioner’s fee application when reducing fees. See Broekelschen, 102 Fed.
Cl. at 729.
4
This fee schedule is posted on the court’s website. See Office of Special Masters, Attorneys’
Forum Hourly Rate Fee Schedule: 2015-2016,
http://www.uscfc.uscourts.gov/sites/default/files/Attorneys-Forum-Rate-Fee-Schedule2015-2016.pdf
[hereinafter Hourly Rate Fee Schedule].
4
III. Discussion
A. Reasonable Hourly Rate
Petitioner requests $30,297.50 in attorneys’ fees. Pet Motion for Interim Fees. Tab 1,
ECF No. 33-1. The requested hourly forum rates, see id. at 13, are consistent with the rates
previously found to be reasonable in cases involving petitioner’s counsel. See, e.g., Herrera v.
Sec’y of Health & Human Servs., No. 15-651V, 2017 WL 1459002 (Fed. Cl. Spec. Mstr. Mar.
29, 2017). Therefore, the undersigned awards attorneys’ fees at the requested hourly rates.
B. Hours Reasonably Expended
Upon review of petitioner’s application, the undersigned finds that some of the hours
billed fall into the category of being “excessive, redundant, or otherwise unnecessary.” Saxton, 3
F.3d at 1522. For example, Mr. Andrew Krueger billed 5 hours to draft petitioner’s application
and affidavits. Mr. Krueger has been filing applications for fees before the undersigned on a
regular basis for several months and has continuously charged 5 hours for each application. The
undersigned finds the application as submitted should not have taken Mr. Krueger more than 2.5
hours to complete. As such, the requested $30,297.50 should be reduced by $500.00 (2.5 hours
at $200 per hour). Accordingly, $29,797.50 is awarded in attorneys’ fees.
C. Reasonable Costs
Petitioner requests a total amount of $16,232.90 in attorneys’ costs. ECF No. 33-1, Tab
2-3. The requested costs consist of $13,000.00 in expert fees for Dr. Yehuda Shoenfeld,
shipping costs, and medical record fees. The undersigned finds petitioner’s requested costs to be
reasonable.
IV. Total Award Summary5
Based on the reasonableness of petitioner’s request for interim attorneys’ fees and costs,
the undersigned GRANTS IN PART petitioner’s motion for attorneys’ fees and costs and
awards a lump sum of $46,030.40,6 representing reimbursement for attorneys’ fees and costs, in
the form of a check payable jointly to petitioner and petitioner’s counsel, Andrew Krueger,
Esq., and a lump sum of $400.00, representing reimbursement for petitioner’s payment of the
5
As a general rule, interim fees and costs are not normally granted at this stage in a case that was
filed a little over a year ago such as this case. However, interim fees and costs are only being granted in
this case due to the unfortunate death of Mark Krueger in May 2017 and the financial hardship that may
have been placed on his law firm as a result of his death.
6
This amount is intended to cover all legal expenses incurred in this matter. This award
encompasses all charges by the attorney against a client, “advanced costs” as well as fees for legal
services rendered. Furthermore, § 15(e)(3) prevents an attorney from charging or collecting fees
(including costs) that would be in addition to the amount awarded herein. See generally Beck v. Sec’y of
Health & Human Servs., 924 F.2d 1029 (Fed. Cir. 1991).
5
filing fee, in the form of a check payable to petitioner. The clerk shall enter judgment
accordingly.7
IT IS SO ORDERED.
s/ Mindy Michaels Roth
Mindy Michaels Roth
Special Master
7
Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by each party filing a notice
renouncing the right to seek review.
6
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591 P.2d 541 (1979)
Wallace E. MARTENS, Appellant,
v.
Edward H. METZGAR and Mary S. Metzgar, Appellees.
No. 3536.
Supreme Court of Alaska.
March 2, 1979.
*542 Murphy L. Clark, Anchorage, for appellant.
James M. Bendell, Robert H. Reynolds, of Robinson, McCaskey, Reynolds & Frankel, Albert C. Simmons, Anchorage, for appellees.
Before BOOCHEVER, C.J., and RABINOWITZ, CONNOR and MATTHEWS, JJ.
OPINION
RABINOWITZ, Justice.
This case is presently before this court for the second time. The factual circumstances which gave rise to the appeal were described in detail in Martens v. Metzgar, 524 P.2d 666 (Alaska 1974). Therefore, only such facts as are essential to an understanding of this second appeal will be alluded to in this opinion.
As in the original appeal, the present appeal involves a dispute as to which party should pay the costs of utility improvements which were constructed adjacent to twelve lots in the Geneva Woods subdivision in Anchorage. Following a lengthy non-jury trial, the superior court found that there was no express written contract between the subdivider, Wallace Martens, and the Metzgars relating to the obligation to construct or pay for utility improvements in the subdivision. In rejecting Martens' claim for recovery on a theory of unjust enrichment the trial court specifically found that, at the time Metzgar entered into the written agreement for the purchase of the twelve lots, he reasonably believed that the purchase price of $91,500 included the cost of utility improvements. Overall, the superior court concluded that Martens had failed to establish by a preponderance of the evidence the requisite elements for recovery of the costs of the utility improvements under either an express, an implied-in-fact, or an implied-in-law contract theory. Accordingly, judgment was entered in favor of the Metzgars.
In Martens v. Metzgar, 524 P.2d 666 (Alaska 1974), we sustained the bulk of the superior court's ruling which had been specified as error in that appeal. Nevertheless, it was concluded that the case should be remanded because of the superior court's erroneous preclusion of Martens' offer to use the deposition of Howard Hall.[1] Hall's deposition was relevant and material because the Metzgars had grounded their belief that the price of the lots included the cost of utility improvements on alleged oral statements made by the real estate agent Hall. More particularly, we wrote:
Our study of the record convinces us that this finding of the superior court relating to Metzgar's belief played a crucial role in its determination that it would not be inequitable to allow Metzgar to retain the benefits of the improvements in question without paying a prorated share of their costs. Given the central role accorded to Metzgar's belief that the price he paid for *543 the lots included the costs of all utility improvements, we now turn to Martens' claim that the trial court erroneously excluded Howard Hall's deposition.
We alluded earlier in the opinion to the fact that Hall was a realtor connected with McQuaid Realty, which was given the exclusive right by Martens to sell property within the Geneva Woods Subdivision. In his deposition, Hall testified that he told Metzgar that `The sale price was with the Lots without assessments.' This is the only evidence offered by Martens at the trial which contradicts the testimony of the Metzgars as to what they were told concerning inclusion of the costs of improvements in the price of the lots. Thus, any error committed by the superior court in excluding the deposition cannot, in the context of the circumstances surrounding the quasi-contract issue in the case at bar, be characterized as harmless error.[2]
In light of the foregoing, we concluded that the case had to be remanded for the primary purpose of taking Howard Hall's testimony, so far as it was relevant to resolution of Martens' claim for relief based on quasi-contract or unjust enrichment. We further stated:
If, after consideration of Hall's testimony and any new evidence deemed appropriate, it is concluded that it would be inequitable to permit the Metzgars to retain the benefit of the utility improvements without payment of a prorated share of their value, then the trial court is to determine the amount that the Metzgars should pay to Martens.[3]
Upon remand, the superior court heard the video tape deposition of Howard Hall and the further testimony of two rebuttal witnesses for appellees.[4] Hall stated in his deposition testimony that the purchase price did not include the costs of the improvements. The superior court then entered a "Memorandum of Supplemental Findings of Fact and Decision" in which the court found, in part, that:
4. Despite the additional evidence presented, I remain convinced that prior to their purchase the Metzgars believed that the purchase price included the cost of utility improvements and that such belief was reasonable under the circumstances.[5]
Upon consideration of its supplemental findings, the superior court concluded:
Given the Metzgars' understanding of what they were purchasing, and the added fact that they apparently never attempted to make any actual use of the utilities installed, I conclude that it would be inequitable to impose the cost of these utility improvements upon them at this time. As I view the evidence, the Metzgars were not unjustly enriched. Therefore, plaintiff is not entitled to recover on a quasi-contract basis. [emphasis in original]
The paramount issue in this second appeal is whether the superior court erred in rejecting Hall's and Martens' testimony and in finding that the Metzgars reasonably *544 believed that the purchase price included the improvements. In deciding this question, we recognize that it is not our appellate function to reweigh evidence which was adduced before the trial court or to substitute our own judgment for that of the trial court.[6] Deference to the findings of the superior court is particularly appropriate when, as in this case, the bulk of the evidence at trial is oral testimony.[7] Further, it is well established that this court will only disturb trial court findings when we are convinced that they were clearly erroneous; that is, when we are left with a definite and firm conviction on the entire record that a mistake has been made, even though there may be evidence to support the finding.[8]
Application of the foregoing principles has left us with the definite and firm conviction that the superior court was mistaken in its findings which formed the basis for its ultimate conclusion that the Metzgars reasonably believed that the purchase price of the twelve lots in the Geneva Woods subdivision included the costs of utility improvements. This holding is reached for several reasons. Overall, we think it significant that there is an absence of corroborative evidence to support the Metzgars' understanding that the costs of the utilities were included in the purchase price of the twelve lots. The written agreement between the parties governing the sale of the subdivision lots does not impose any obligation upon Martens either to construct or bear the costs of utility improvements. However, the cost of construction of the utility improvements exceeded fifty percent of the purchase price of the lots. Given this fact, and in view of the contention that the written agreement covered more than the sale of the raw land, it is highly improbable that the agreement would not have specified that such improvements were to be included in the purchase price. Additionally, the escrow instruction pertaining to the lots provided that the Metzgars would be subject to and pay for all assessments levied for improvements. This escrow instruction obviously implies that there would be assessments levied for improvements. Therefore, if the Metzgars had reasonably believed that the utility improvements would be put in at no cost to them, the agreement should have specified that there would be no assessments for such improvements.
Further, Edward Metzgar testified in another proceeding that he was never told whether or not he would be responsible for the cost of putting in any utility improvements.[9] Also of significance is the fact that Metzgar gave Martens a special power of attorney for the purpose of creating a special assessment district for the construction of improvements. If Metzgar had reasonably believed that he would not be charged with such assessments, it seems likely that he would have placed a provision in the power of attorney agreement to the effect that such assessments would be at no cost to him and without assessment for those improvements on the lots owned by him, or at least that he would have had a separate agreement with Martens to that effect.
*545 In light of the foregoing, we conclude that it would be inequitable to permit the Metzgars to retain the benefit of a prorated share of the value of the utility improvements. Thus, the matter is remanded to the superior court with directions to enter judgment for Martens on his quasi-contract claim for relief after the superior court has determined the amount that the Metzgars should pay to Martens.[10]
Reversed and Remanded for further proceedings in accordance with this opinion.
NOTES
[1] On this point, we stated in Martens v. Metzgar, 524 P.2d 666, 675 (Alaska 1974) (footnotes omitted):
At trial, counsel for Metzgar objected to Martens' use of the Hall deposition on the grounds that he had not received notice in accordance with our Rules of Civil Procedure. After reviewing the written, as well as the oral testimony going to this question, the superior court ruled that Martens was not entitled to use Hall's deposition. We have concluded that this ruling was erroneous in light of the circumstances appearing in this record.
[2] Id. at 674-75 (footnotes omitted).
[3] Id. at 677-78 (footnotes omitted).
[4] Edward H. Metzgar and Charles N. Allen testified in rebuttal to the deposition of Howard Hall.
[5] In addition to this finding of fact, the superior court made the following supplemental findings of fact:
1. Edward H. Metzgar's testimony, that Howard Hall had assured him that the purchase price he agreed to pay included the cost of the improvements to be later installed, is more worthy of belief than the contrary testimony of Howard Hall.
2. Mary S. Metzgar's testimony, that Howard Hall had assured her that the cost of the lots purchased by plaintiffs included the cost of the improvements, is likewise worthy of belief, and tends to corroborate the testimony of her husband.
3. Howard Hall's testimony that he informed the Metzgars that the sale price did not include the cost of the improvements is not believable to me. I view that testimony as being probably the result of innocent misrecollection, although possibly the result of intentional misstatement. In either event I do not believe that part of Hall's testimony.
[6] Moore v. State, 553 P.2d 8, 15, n. 3 (Alaska 1976); Stansberry v. Manson, 420 P.2d 449, 450 (Alaska 1966); Preferred Gen. Agency of Alaska, Inc. v. Rafetto, 391 P.2d 951, 952 (Alaska 1964).
[7] See Jackson v. White, 556 P.2d 530, 532 (Alaska 1976); Alaska Placer Co. v. Lee, 553 P.2d 54, 59 (Alaska 1976); Alaska Foods, Inc. v. American Mfg.'s Mut. Ins. Co., 482 P.2d 842, 843 (Alaska 1971); Monsma v. Williams, 385 P.2d 107, 110 (Alaska 1963).
[8] Alaska Rule of Civil Procedure 52(a). See City of Kenai v. Filler, 566 P.2d 670, 677 (Alaska 1977), quoting Alaska Placer Co. v. Lee, 553 P.2d 54, 59 (Alaska 1976). See also Curt's Trucking Co. v. City of Anchorage, 578 P.2d 975, 977, n. 6 (Alaska 1978); Alaska Gay Coalition v. Sullivan, 578 P.2d 951, 956, n. 7 (Alaska 1978) Saxton v. Splettstoezer, 557 P.2d 1126, 1127 (Alaska 1977).
[9] See February 26, 1970, deposition of Edward Metzgar in State v. Martens, No. 68-2082(B), at 22-66, and in particular pages 53 and 66. Though this deposition was not before the superior court in the original trial of this matter, counsel for appellant asked the superior court to take judicial notice of the deposition in the proceedings upon remand by this court.
[10] In this regard, in Martens v. Metzgar, 524 P.2d 666, 678 n. 32 (Alaska 1974), we stated: "It will be unnecessary to take any additional evidence regarding this question as this subject was gone into extensively at trial."
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591 S.E.2d 382 (2003)
264 Ga. App. 541
TRAUB
v.
WASHINGTON et al.
Connor
v.
Traub (two cases).
Washington
v.
Traub.
Nos. A03A1371, A03A1400 A03A1576, A03A1429.
Court of Appeals of Georgia.
November 17, 2003.
Reconsideration Denied December 4, 2003.
*384 Julian H. Toporek, Savannah, for Traub.
Brennan, Harris & Rominger, Richard A. Rominger, Edward R. Stabell III, Savannah, Hawkins & Parnell, T. Ryan Mock, Jr., Atlanta, for Washington et al.
Barrow & Ballew, Walter W. Ballew III, Savannah, for Connor.
*383 JOHNSON, Presiding Judge.
Sandra Traub sued her brother, Glenn Connor, for fraud, conspiracy, intentional infliction of emotional distress, and breach of his fiduciary duties as co-executor of their mother's estate. Traub also brought those causes of action and a claim of legal malpractice against Grant Washington, the attorney who represented Traub and Connor as co-executors, as well as attorney Richard Metz, whose assistance Washington enlisted in various debt collection matters involving Traub. Traub, Connor, and Washington filed these appeals and cross-appeals based on the trial court's rulings on the parties' motions for summary judgment; those motions and rulings will be discussed more fully below.
The record shows the following: After their mother died in July 1997, Traub and Connor decided to hire an attorney to gain access to their mother's will, which was in a safe deposit box to which only their mother had access. Connor suggested hiring Washington, an attorney whom he knew from church and had consulted about legal matters for six or seven years. When they met with Washington, Traub told him that she and Connor were estranged and voiced her concerns about potential conflicts of interest, given Washington's prior relationship with Connor. Traub had told Connor that she would prefer to hire an attorney whom neither party knew, and even asked Washington if she and Connor needed two attorneys. Washington replied that they did not, and that "that could get expensive." Connor and Washington assured Traub that Washington could represent them equally and fairly and that there was no conflict of interest. Connor and Traub agreed to hire Washington. In the course of the representation, Traub gave Washington some of her personal and financial information.
Connor and Traub were named as co-executors under the will and were appointed as such by the probate court. They were also, along with another sibling, equal beneficiaries of the estate. Connor and Traub disagreed about handling the estate. For instance, disputes arose regarding the need to inventory personal property of the estate, the distribution of stock proceeds, and the payment of estate taxes. Traub believed Washington was privately communicating with Connor. Connor allowed Washington to visit the mother's home, a decision with which Traub disagreed. Believing a conflict of interest had arisen, Traub faxed Washington a letter stating that she, as co-executor, would no longer authorize the payment to him of any additional legal fees for his representation of the estate.
After receiving the facsimile, Washington met with Connor and told him he did not see any conflict of interest and agreed to represent Connor alone. Washington sent a letter to Traub saying he interpreted her letter as an attempt to dismiss him as attorney for the estate, but that Connor expressed his desire to continue to have Washington's assistance in the disposition of the estate. Washington stated that if Traub was not inclined to assist in the "expeditious handling of the estate," he, on behalf of Connor, "would encourage [her] to resign" as co-executor; if she did not, she should be prepared to be served with a petition to be removed from her role as co-executor. Washington then petitioned for Traub's removal, and she petitioned for Connor's removal.
While they were still co-executors, Connor authorized Washington to search public records to determine whether any judgments or liens had been filed against Traub. Connor *385 was concerned that Traub's creditors could reach his assets. Connor also gave Washington a document he found at the mother's house indicating that his mother or Traub or both possibly owed a man named Robert Hunter $40,000 or $100,000. On behalf of Connor, Washington called Hunter to determine the validity of the debt. In spite of his former representation of Traub as co-executor, Washington represented Hunter in an action against Traub to collect the debt. After winning a judgment against Traub, Washington filed a garnishment to collect the debt from Traub's portion of the estate.
Washington also engaged Metz, an attorney with whom he shared office space, to investigate Traub's debts. At least one of the executions Metz found resulted in the filing of a garnishment action against Traub's estate assets in which Metz represented the creditor and Washington represented Connor.
Traub filed the underlying action against Washington, Metz, and Connor. The trial court granted summary judgment to Metz on all counts, and summary judgment to Washington and Connor on Traub's claim for intentional infliction of emotional distress. The court denied Connor's motion for summary judgment on Traub's claims of fraud, conspiracy, and breach of fiduciary duty. It denied Washington's motion for summary judgment on Traub's claims of fraud, conspiracy, legal malpractice, and breach of fiduciary duty.
In Case No. A03A1429, Washington appeals from the trial court's denial of his motion for summary judgment on Traub's claims for legal malpractice, breach of fiduciary duty, fraud, and civil conspiracy. In Case No. A03A1371, Traub appeals from the grant of summary judgment to Metz on her claims for breach of fiduciary duty and legal malpractice. In Case No. A03A1576, Connor files a cross-appeal from the denial of his motion for summary judgment on Traub's fraud, civil conspiracy, and breach of fiduciary duty claims. In Case No. A03A1400, Connor files an interlocutory appeal from the denial of his motion for summary judgment on claims of breach of fiduciary duty, civil conspiracy, and fraud, raising the same arguments he raises in his cross-appeal.
Case No. A03A1429
1. Washington contends he was entitled to summary judgment on Traub's legal malpractice claim, arguing there is no evidence that he breached a legal duty to Traub, no evidence that he used confidential information to her detriment, and no evidence that Traub was damaged because of his acts or omissions.
Washington contends that Traub's claim of malpractice is based solely on a breach of ethical duties, not on any act of negligence. Although the violation of a professional ethical standard, standing alone, cannot serve as a basis for a legal malpractice action,[1] state bar rules are relevant to the standard of care in a legal malpractice action.[2]
Here, Traub's expert did not merely opine that Washington violated a professional ethical standard. To the contrary, the affidavit shows that the expert set forth the conduct on Washington's part that allegedly constituted professional malpracticeincluding continuing to represent Connor after conflicts arose and taking action adverse to Traub to gain an advantage for Connor.[3] We note that Washington undertook representation of both parties, after Traub told him she was uncomfortable having him represent her given his relationship with Connor, from whom she was estranged.
Moreover, there was evidence that Washington used confidential information gained *386 in the process of representing Traub to her detriment. And, as discussed in Division 3, below, there was evidence that Traub was damaged as a result of Washington's actions. A jury issue exists as to whether Washington committed legal malpractice. Therefore, Washington was not entitled to summary judgment on the legal malpractice claim.
2. Washington urges that he was entitled to summary judgment on the breach of fiduciary duty claim. According to Washington, Traub's breach of fiduciary duty claim was merely duplicative of her legal malpractice claim, and it fails for the same reasons the malpractice claim fails. As we held above, however, a jury issue exists as to whether Washington committed legal malpractice. And, Traub had the right to plead alternative theories.[4] This enumeration is without merit.
3. Washington claims he was entitled to summary judgment on the fraud claim because Traub presented no evidence that she was damaged by any act or omission on Washington's part.[5] Washington adds that Traub was not damaged by merely having to pay certain debts that she legally owed.
But Traub argues that the creditors were not pursuing her until Washington gained information through representing Traub and Connor, and then contacted and represented Hunter, and requested assistance from Metz in collecting the debts. And Washington petitioned to remove Traub as co-executor, resulting in a loss of commissions for Traub. The existence of fraud may be shown by slight circumstances.[6] Washington was not entitled to summary judgment on the fraud claim.
4. Washington argues that the conspiracy count fails because there is no underlying tort. But given that there is evidence from which a jury could find an underlying tort, such as fraud, Washington was not entitled to summary judgment on this claim.
Case No. A03A1371
5. Traub contends the trial court erred in granting summary judgment to Metz on her breach of fiduciary duty and legal malpractice claims. Metz claimed he was entitled to summary judgment on the fiduciary duty claim because he had not been retained as her attorney and there was no evidence of a fiduciary relationship between him and Traub. On appeal, Traub urges that Washington violated the code of professional responsibility and committed fraud in order to deprive her of her inheritance. Metz aided and abetted Washington "in a sort of association or joint venture," and, Traub argues, Metz is vicariously liable for Washington's actions.
Traub admits in her brief that "Metz himself had no direct relationship with Traub," and that any liability on Metz's part would have to be in conjunction with Washington or based upon vicarious liability. Traub raises the vicarious liability argument for the first time on appeal, so it has not been preserved for review.[7]
To the extent Traub's argument was preserved, it is without merit. The evidence shows that Metz did not work for Traub, and that Metz and Washington were not partners. Metz contends he only rented space from Washington and that he checked the records as a gratuitous favor for Washington. There is no evidence that Metz knew that Washington formerly represented Traub and knew or should have known that Washington may have had a conflict of interest in representing Connor or Hunter. Without that knowledge, Metz could not have conspired or aided and abetted Washington to exploit that conflict to Traub's disadvantage.[8] The direct *387 evidence shows that Metz did not know of Washington's previous representation of Traub or the estate. The trial court did not err in granting summary judgment to Metz on the legal malpractice or breach of fiduciary duty claims.
Case No. A03A1576
6. Connor contends the trial court erred in denying his motion for summary judgment on Traub's fraud and conspiracy claims. Traub alleges that Connor engaged in a conspiracy with the attorneys to deprive her of her inheritance and that he thereby aided and abetted Washington's fraud.
The record shows that Connor relayed information to Washington and authorized Washington to investigate Traub's debts. Washington represented to Traub that he had no conflict of interest, but then filed a lawsuit against Traub based on information he received from Connor in the course of handling estate matters. A jury could find that Connor encouraged and aided Washington in committing fraud. A jury could find that Connor's actions were motivated by an animus toward Traub, and that he conspired with Washington.
"The essential element of a conspiracy is the common design. It is sufficient that two or more persons in any manner either positively or tacitly come to a mutual understanding that they will accomplish the unlawful design."[9] Because civil conspiracy is by its very nature a secret endeavor, concert of action, amounting to a conspiracy, is best suited for jury resolution.[10] Whether Connor's actions in passing on information, allowing Washington access to his mother's house and authorizing Washington to investigate Traub amount to a conspiracy is a jury question.[11] The trial court did not err in refusing to rule that Connor was entitled to summary judgment on the conspiracy and fraud claims.[12]
7. Connor contends the trial court erred in denying his summary judgment motion on Traub's breach of fiduciary duty claim.
An executor of an estate occupies a fiduciary relationship toward parties having an interest in the estate.[13] The relationship between an executor and those he represents normally is deemed confidential and requires the utmost good faith.[14] While Connor was a co-executor of the estate, he owed Traub, an heir under the estate, a fiduciary duty.[15]
Nonetheless, as Connor correctly argues, the probate court has exclusive, original jurisdiction over a claim that an executor has breached a fiduciary duty.[16] Since the proper forum for Traub's grievance is probate court, the trial court lacked jurisdiction over and erred in ruling on Traub's motion for summary judgment on her fiduciary duty claim against Connor as co-executor of the estate. The trial court's ruling on this claim is therefore vacated, and Traub is free to pursue her remedies in probate court.
Case No. A03A1400
8. In this interlocutory appeal, Connor raises the same issues resolved in his cross-appeal (Case No. A03A1576). This appeal is therefore moot.
Judgment affirmed in Case Nos. A03A1371 and A03A1429. Judgment affirmed in part and vacated in part in Case No. A03A1576. Appeal dismissed as moot in Case No. A03A1400.
ELDRIDGE and MIKELL, JJ., concur.
NOTES
[1] Davis v. Findley, 262 Ga. 612, 613, 422 S.E.2d 859 (1992).
[2] Allen v. Lefkoff, Duncan, Grimes & Dermer, P.C., 265 Ga. 374, 376(2)(a), 453 S.E.2d 719 (1995).
[3] See Peters v. Hyatt Legal Svcs., 220 Ga.App. 398, 469 S.E.2d 481 (1996), in which this Court affirmed the plaintiff's verdict in a legal malpractice case arising from dual representation and conflict of interest and in which this Court held that "evidence of even a potential conflict of interest is sufficient to raise a jury issue on punitive damages in a legal malpractice case." Id. at 401(1)(b), 469 S.E.2d 481.
[4] See Southern v. Sphere-Drake Ins. Co., 226 Ga. App. 450, 451, 486 S.E.2d 674 (1997).
[5] See generally Zampatti v. Tradebank Intl. &c. Corp., 235 Ga.App. 333, 341(7), 508 S.E.2d 750 (1998) (setting forth elements of fraud).
[6] See OCGA § 23-2-57.
[7] See generally Johnson v. First Union Nat. Bank, 255 Ga.App. 819, 820-821(1), 567 S.E.2d 44 (2002).
[8] See generally Gators of Tifton v. Stokes, 186 Ga.App. 912, 914, 368 S.E.2d 834 (1988) (no jury question in civil conspiracy case where no evidence that alleged conspirators came to a mutual understanding to accomplish an unlawful end or a lawful end by unlawful means).
[9] (Citation and punctuation omitted.) Davidson v. Collier, 104 Ga.App. 546, 550, 122 S.E.2d 465 (1961).
[10] Association Services v. Smith, 249 Ga.App. 629, 637(8), 549 S.E.2d 454 (2001).
[11] See id.
[12] See id.; see generally Potts v. UAP-GA AG CHEM, 256 Ga.App. 153, 156-157(1), 567 S.E.2d 316 (2002).
[13] Bloodworth v. Bloodworth, 260 Ga.App. 466, 470-471(1), 579 S.E.2d 858 (2003).
[14] Id.; see OCGA § 53-7-1(a).
[15] See Liner v. North, 188 Ga.App. 677, 678(2), 373 S.E.2d 846 (1988).
[16] Heath v. Sims, 242 Ga.App. 691, 693(1), 531 S.E.2d 115 (2000).
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IN THE COURT OF APPEALS OF THE STATE OF IDAHO
Docket No. 44993
JOSHUA THOMAS BENNETT, )
) Filed: July 27, 2018
Petitioner-Appellant, )
) Karel A. Lehrman, Clerk
v. )
) THIS IS AN UNPUBLISHED
STATE OF IDAHO, ) OPINION AND SHALL NOT
) BE CITED AS AUTHORITY
Respondent. )
)
Appeal from the District Court of the Seventh Judicial District, State of Idaho,
Bonneville County. Hon. Joel E. Tingey, District Judge.
Judgment summarily dismissing petition for post-conviction relief, affirmed in
part, vacated in part, and case remanded.
Eric D. Fredericksen, State Appellate Public Defender; Ben P. McGreevy, Deputy
Appellate Public Defender, Boise, for appellant.
Hon. Lawrence G. Wasden, Attorney General; Kale D. Gans, Deputy Attorney
General, Boise, for respondent.
________________________________________________
LORELLO, Judge
Joshua Thomas Bennett appeals from the district court’s judgment summarily dismissing
his petition for post-conviction relief. Bennett contends that the district court improperly
dismissed one of his claims without providing any notice of the grounds for dismissal. For the
reasons set forth below, we affirm in part, vacate in part, and remand.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Bennett was found guilty of delivery of a controlled substance following a jury trial.
Bennett filed a direct appeal from the judgment of conviction where he argued that the district
court improperly limited his cross-examination of the confidential informant to whom Bennett
allegedly delivered drugs. This Court, in an unpublished opinion, affirmed Bennett’s judgment
1
of conviction. State v. Bennett, Docket 41355 (Ct. App. Mar. 3, 2015). Bennett filed a petition
for post-conviction relief, asserting two claims: (1) the district court violated his rights under the
Sixth Amendment’s Confrontation Clause when it refused to allow him to confront his accuser
and sustained the State’s objection during cross-examination and (2) ineffective assistance of
counsel. The district court appointed counsel to represent Bennett.
The State filed a motion for summary dismissal. In its motion, the State noted both of
Bennett’s claims, but asserted that, when “synthesized,” it appeared Bennett was asserting two
ineffective assistance of counsel claims. The State argued that Bennett’s petition should be
dismissed because his claims were unsupported, “inadmissible,” and conclusory. At the hearing
on the State’s motion, the prosecutor also argued that Bennett failed to support his ineffective
assistance of counsel claims with “sufficient” evidence. At the conclusion of the hearing, the
district court granted the State’s motion after concluding there was “no real evidence that there
was a violation of the standard applicable to an attorney representing Mr. Bennett and whether
any such violation had an effect on the ultimate outcome of the case, which are the Strickland[ 1]
standards.” The district court subsequently entered a written order of dismissal and a judgment
dismissing Bennett’s petition. Bennett appeals.
II.
STANDARD OF REVIEW
On appeal from an order of summary dismissal, we apply the same standards utilized by
the trial courts and examine whether the petitioner’s admissible evidence asserts facts which, if
true, would entitle the petitioner to relief. Ridgley v. State, 148 Idaho 671, 675, 227 P.3d 925,
929 (2010); Sheahan v. State, 146 Idaho 101, 104, 190 P.3d 920, 923 (Ct. App. 2008). Over
questions of law, we exercise free review. Rhoades v. State, 148 Idaho 247, 250, 220 P.3d 1066,
1069 (2009); Downing v. State, 136 Idaho 367, 370, 33 P.3d 841, 844 (Ct. App. 2001).
III.
ANALYSIS
Bennett asserts that, because the State’s motion did not address his Confrontation Clause
claim with particularity, the district court improperly dismissed the claim without providing any
1
See Strickland v. Washington, 466 U.S. 668 (1984).
2
notice of the grounds for dismissal. The State contends that the district court dismissed the
entirety of the petition, which would include the Confrontation Clause claim, on the grounds set
forth in the State’s motion--the petition was not supported by sufficient evidence. Because the
State’s motion only requested dismissal of Bennett’s “synthesized” ineffective assistance of
counsel claims, and the district court only dismissed those claims based on Bennett’s failure to
present evidence under Strickland v. Washington, 466 U.S. 668 (1984), Bennett’s Confrontation
Clause claim was dismissed without the notice required by I.C. § 19-4906.
Pursuant to I.C. § 19-4906(b), the district court may sua sponte dismiss a petitioner’s
post-conviction claim if the court provides the petitioner with notice of its intent to do so, the
ground or grounds upon which the claim is to be dismissed, and twenty days for the petitioner to
respond. Under I.C. § 19-4906(c), the district court may also dismiss a petitioner’s
post-conviction claims on the State’s motion. If the State files and serves a properly supported
motion to dismiss, further notice from the court is ordinarily unnecessary. Martinez v. State, 126
Idaho 813, 817, 892 P.2d 488, 492 (Ct. App. 1995). The reason that subsection (b), but not
subsection (c), requires a twenty-day notice by the court of intent to dismiss is that, under
subsection (c), the motion itself serves as notice that summary dismissal is being sought.
Saykhamchone v. State, 127 Idaho 319, 322, 900 P.2d 795, 798 (1995).
Idaho Rule of Civil Procedure 7(b)(1) requires that the grounds of a motion be stated with
particularity. See DeRushé v. State, 146 Idaho 599, 601, 200 P.3d 1148, 1150 (2009) (reiterating
the requirement of reasonable particularity in post-conviction cases). If the State’s motion fails
to give such notice of the grounds for dismissal, the court may grant summary dismissal only if
the court first gives the petitioner the requisite twenty-day notice of intent to dismiss and the
grounds therefore pursuant to I.C. § 19-4906(b). See Saykhamchone, 127 Idaho at 322, 900 P.2d
at 798. Similarly, where the State has filed a motion for summary disposition, but the court
dismisses the application on grounds different from those asserted in the State’s motion, it does
so on its own initiative and the court must provide the twenty-day notice. Id. If the district court
dismisses on grounds not contained in the State’s motion, the petitioner has no opportunity to
respond and attempt to establish a material issue of fact. Baxter v. State, 149 Idaho 859, 865,
243 P.3d 675, 681 (Ct. App. 2010).
3
Bennett alleged two claims in his petition for post-conviction relief: (1) that the district
court violated his Sixth Amendment Confrontation Clause rights when it refused to allow him to
confront his accuser and sustained the State’s objection during cross-examination and
(2) ineffective assistance of counsel. In its motion for summary dismissal, although the State
noted Bennett alleged a substantive Sixth Amendment Confrontation Clause claim, it ignored
that claim and instead “synthesized” Bennett’s allegations into two ineffective assistance of
counsel claims--one related to counsel’s failure to communicate a plea offer and the other related
to counsel’s performance at trial. At the conclusion of the hearing on the State’s motion for
summary dismissal, the district court granted the State’s motion based on Bennett’s failure to
present evidence that counsel was ineffective. 2 Thus, although Bennett raised a Confrontation
Clause claim in his petition, neither the State’s motion nor the district court provided a reason for
dismissing the claim. 3 Failure to provide notice requires that a judgment denying a petition for
post-conviction relief be vacated. Mallory v. State, 159 Idaho 715, 721, 366 P.3d 637, 643 (Ct.
App. 2015).
The State asserts that, although its motion “did not specifically articulate the
‘Confrontation Clause’ claim,” because the conclusion of the State’s motion asserted that
dismissal was appropriate as Bennett’s “statements are unsupported, inadmissible, and
conclusory” and because the district court stated there was no evidence to support Bennett’s
claims, no additional notice was required. The State also asserts that Bennett cannot challenge
the adequacy of the notice for the first time on appeal. Both of the State’s arguments fail.
Bennett is not challenging the adequacy of the notice for the first time on appeal, he is
challenging the lack of notice. As noted, a claim may not be summarily dismissed absent notice
of the grounds for dismissal. The State’s argument that the notice requirement was satisfied by
the language in the conclusion of its motion for summary dismissal ignores the substance of the
motion, which the State acknowledges did not address Bennett’s Confrontation Clause claim. In
2
Bennett does not challenge the district court’s dismissal of his ineffective assistance of
counsel claims.
3
It appears that Bennett’s Confrontation Clause claim is similar to, if not the same as, the
claim Bennett raised on direct appeal. Although potentially applicable, neither the State nor the
district court cited I.C. § 19-4908 as a basis for dismissal.
4
fact, the State’s motion expressly characterized Bennett’s petition as raising two ineffective
assistance of counsel claims and then argued grounds for dismissing only those claims. The
district court’s comments at the summary dismissal hearing regarding the absence of evidence
also cannot be read as addressing Bennett’s Confrontation Clause claim because the preceding
context for the district court’s comments related to Bennett’s Strickland claims. The district
court’s dismissal of Bennett’s Confrontation Clause claim only occurred as a consequence of its
dismissal of Bennett’s petition in its entirety and without the benefit of prior notice of the reasons
for dismissal.
The State alternatively argues that this Court may affirm the summary dismissal of
Bennett’s Confrontation Clause claim even if Bennett did not receive notice of the reasons for
dismissal “because the record shows the decision was correct on the merits.” The State relies on
Ridgley v. State, 148 Idaho 671, 227 P.3d 925 (2010) to support this argument. In Ridgley, the
Idaho Supreme Court held that the district court failed to give the petitioner “appropriate notice”
of its intention to dismiss several claims on the basis of res judicata. Id. at 676, 227 P.3d at 930.
Rather, the district court’s notice stated its intent to dismiss on the grounds that Ridgley had
presented no evidence supporting the claims. Id. Nevertheless, the Court held that the lack of
notice of the reason for dismissal did not automatically require reversal because the Court could
affirm on the correct theory since the appellate court employs the same standards as the trial
court when deciding whether a petitioner failed to provide admissible evidence to support his
claims. Id. The Court then analyzed the petitioner’s claims to determine whether they were
supported by admissible evidence, concluded they were not, and affirmed the summary dismissal
on that basis. Id. at 676-77, 227 P.3d at 930-31.
The black letter law in Ridgley cited by the State supports the State’s position that this
Court can affirm summary dismissal by reviewing a petition de novo to determine whether the
petitioner has alleged a genuine issue of material fact. However, the facts of Ridgley reveal that
the Court affirmed the summary dismissal on grounds for which the petitioner received notice
even though the district court dismissed the claims on grounds not included in the notice. Thus,
the Court’s application of the law in Ridgley was consistent with the notice requirements set
forth in I.C. § 19-4906, which have been regularly enforced on appeal. See Caldwell v. State,
5
159 Idaho 233, 238-39, 358 P.3d 794, 799-800 (Ct. App. 2015) (distinguishing Ridgley and
reiterating statutory notice requirements).
It is undisputed that Bennett was entitled to adequate notice of the grounds upon which
dismissal was sought. See Takhsilov v. State, 161 Idaho 669, 673, 389 P.3d 955, 959 (2016).
Because Bennett received no notice of the reasons for dismissal of his Confrontation Clause
claim, the district court erred in summarily dismissing that claim.
IV.
CONCLUSION
Because the State failed to articulate grounds for dismissing Bennett’s Confrontation
Clause claim in its motion for summary dismissal and the district court subsequently failed to
provide Bennett with notice of the grounds for dismissal, the district court erred when it
summarily dismissed Bennett’s Confrontation Clause claim. Bennett does not challenge the
district court’s dismissal of his ineffective assistance of counsel claims. Therefore, we affirm the
district court’s judgment summarily dismissing Bennett’s petition for post-conviction relief as it
pertains to the ineffective assistance of counsel claims and vacate and remand on the
Confrontation Clause claim.
Chief Judge GRATTON and Judge GUTIERREZ, CONCUR.
6
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457 F.2d 802
Benjamin Alfonso HOLLAND, Petitioner-Appellant,v.E. Wilson PURDY, as Sheriff of Dade County, Florida,Respondent-Appellee.
No. 71-3090 Summary Calendar.*
United States Court of Appeals,Fifth Circuit.
March 17, 1972.
Benjamin Alfonso Holland, pro se.
Robert L. Shevin, Atty. Gen., Joel D. Rosenblatt, Asst. Atty. Gen., Miami, Fla., for respondent-appellee.
Before BELL, DYER and CLARK, Circuit Judges.
PER CURIAM:
1
This is an appeal from the district court's dismissal of Holland's petition for injunctive relief, filed pursuant to 42 U.S.C.A. Sec. 1983. We vacate and remand.
2
In his petition in the district court, Holland contended that he had been subjected to cruel and unusual punishment from June 16, 1971 until June 29, 1971, while incarcerated at the Dade County, Florida, Jail. He alleged that he was subjected to physical duress, and that the officials at the jail refused to permit him to see a notary public or send out any legal documents. In his complaint, Holland sought to have the officials at the Dade County Jail enjoined from such practices.
3
At the time his pleadings were filed in the district court, Holland had been transferred from the Dade County Jail to another penal institution in the State of Florida. Since Holland was no longer subjected to the complained-of conditions at the time this litigation was instituted, nor is he at the present time, the petition should have been dismissed on the ground of mootness. McCarroll v. Morrow, 5 Cir. 1971, 435 F.2d 560; Bryant v. Blackwell, 5 Cir. 1970, 431 F.2d 1203.
4
The judgment of the district court dismissing the action for failure to state a claim upon which relief could be granted is vacated and the cause is remanded with directions to dismiss the action on the ground of mootness.
5
Vacated and remanded.
*
Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I
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(Slip Opinion) OCTOBER TERM, 2012 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MUTUAL PHARMACEUTICAL CO., INC. v. BARTLETT
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIRST CIRCUIT
No. 12–142. Argued March 19, 2013—Decided June 24, 2013
The Federal Food, Drug, and Cosmetic Act (FDCA) requires manufac-
turers to gain Food and Drug Administration (FDA) approval before
marketing any brand-name or generic drug in interstate commerce.
21 U. S. C. §355(a). Once a drug is approved, a manufacturer is pro-
hibited from making any major changes to the “qualitative or quanti-
tative formulation of the drug product, including active ingredients,
or in the specifications provided in the approved application.” 21
CFR §314.70(b)(2)(i). Generic manufacturers are also prohibited
from making any unilateral changes to a drug’s label. See
§§314.94(a)(8)(iii), 314.150(b)(10).
In 2004, respondent was prescribed Clinoril, the brand-name ver-
sion of the nonsteroidal anti-inflammatory drug (NSAID) sulindac,
for shoulder pain. Her pharmacist dispensed a generic form of su-
lindac manufactured by petitioner Mutual Pharmaceutical. Re-
spondent soon developed an acute case of toxic epidermal necrolysis.
She is now severely disfigured, has physical disabilities, and is nearly
blind. At the time of the prescription, sulindac’s label did not specifi-
cally refer to toxic epidermal necrolysis. By 2005, however, the FDA
had recommended changing all NSAID labeling to contain a more ex-
plicit toxic epidermal necrolysis warning. Respondent sued Mutual
in New Hampshire state court, and Mutual removed the case to fed-
eral court. A jury found Mutual liable on respondent’s design-defect
claim and awarded her over $21 million. The First Circuit affirmed.
As relevant, it found that neither the FDCA nor the FDA’s regula-
tions pre-empted respondent’s design-defect claim. It distinguished
PLIVA, Inc. v. Mensing, 564 U. S. ___—in which the Court held that
failure-to-warn claims against generic manufacturers are pre-empted
by the FDCA’s prohibition on changes to generic drug labels—by ar-
2 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Syllabus
guing that generic manufacturers facing design-defect claims could
comply with both federal and state law simply by choosing not to
make the drug at all.
Held: State-law design-defect claims that turn on the adequacy of a
drug’s warnings are pre-empted by federal law under PLIVA. Pp. 6–
20.
(a) Under the Supremacy Clause, state laws that conflict with fed-
eral law are “without effect.” Maryland v. Louisiana, 451 U. S. 725,
746. Even in the absence of an express pre-emption provision, a state
law may be impliedly pre-empted where it is “impossible for a private
party to comply with both state and federal requirements.” English
v. General Elec. Co., 496 U. S. 72, 79. Here, it is impossible for Mu-
tual to comply with both its federal-law duty not to alter sulindac’s
label or composition and its state-law duty to either strengthen the
warnings on sulindac’s label or change sulindac’s design. Pp. 6–13.
(1) New Hampshire’s design-defect cause of action imposes af-
firmative duties on manufacturers, including a “duty to design [their
products] reasonably safely for the uses which [they] can foresee.”
Thibault v. Sears, Roebuck & Co., 118 N. H. 802, 809, 395 A. 2d 843,
847. Pp. 7–8.
(2) To assess whether a product’s design is “unreasonably dan-
gerous to the user,” Vautour v. Body Masters Sports Industries, Inc.,
147 N. H. 150, 153, 784 A. 2d 1178, 1181, the New Hampshire Su-
preme Court employs a “risk-utility approach,” which asks whether
the danger’s magnitude outweighs the product’s utility, id., at 154,
784 A. 2d, at 1182. The court has repeatedly identified three factors
as germane to that inquiry: “the usefulness and desirability of the
product to the public as a whole, whether the risk of danger could
have been reduced without significantly affecting either the product’s
effectiveness or manufacturing cost, and the presence and efficacy of
a warning to avoid an unreasonable risk of harm from hidden dan-
gers or from foreseeable uses.” Ibid. Increasing a drug’s “usefulness”
or reducing its “risk of danger” would require redesigning the drug,
since those factors are direct results of a drug’s chemical design and
active ingredients. Here, however, redesign was not possible for two
reasons. First, the FDCA requires a generic drug to have the same
active ingredients, route of administration, dosage form, strength,
and labeling as its brand-name drug equivalent. Second, because of
sulindac’s simple composition, the drug is chemically incapable of be-
ing redesigned. Accordingly, because redesign was impossible, Mu-
tual could only ameliorate sulindac’s “risk-utility” profile by
strengthening its warnings. Thus, New Hampshire’s law ultimately
required Mutual to change sulindac’s labeling. Pp. 9–13.
(3) But PLIVA makes clear that federal law prevents generic
Cite as: 570 U. S. ____ (2013) 3
Syllabus
drug manufacturers from changing their labels. See 564 U. S., at
___. Accordingly, Mutual was prohibited from taking the remedial
action required to avoid liability under New Hampshire law. P. 13.
(4) When federal law forbids an action required by state law, the
state law is “without effect.” Maryland, supra, at 746. Because it
was impossible for Mutual to comply with both state and federal law,
New Hampshire’s warning-based design-defect cause of action is pre-
empted with respect to FDA-approved drugs sold in interstate com-
merce. Pp. 13–14.
(b) The First Circuit’s rationale—that Mutual could escape the im-
possibility of complying with both its federal- and state-law duties by
choosing to stop selling sulindac—is incompatible with this Court’s
pre-emption cases, which have presumed that an actor seeking to sat-
isfy both federal- and state-law obligations is not required to cease
acting altogether. Pp. 14–16.
678 F. 3d 30, reversed.
ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J.,
and SCALIA, KENNEDY, and THOMAS, JJ., joined. BREYER, J., filed a dis-
senting opinion, in which KAGAN, J., joined. SOTOMAYOR, J., filed a dis-
senting opinion, in which GINSBURG, J., joined.
Cite as: 570 U. S. ____ (2013) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–142
_________________
MUTUAL PHARMACEUTICAL COMPANY, INC.,
PETITIONER v. KAREN L. BARTLETT
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 24, 2013]
JUSTICE ALITO delivered the opinion of the Court.
We must decide whether federal law pre-empts the New
Hampshire design-defect claim under which respondent
Karen Bartlett recovered damages from petitioner Mutual
Pharmaceutical, the manufacturer of sulindac, a generic
nonsteroidal anti-inflammatory drug (NSAID). New
Hampshire law imposes a duty on manufacturers to en-
sure that the drugs they market are not unreasonably
unsafe, and a drug’s safety is evaluated by reference to
both its chemical properties and the adequacy of its warn-
ings. Because Mutual was unable to change sulindac’s
composition as a matter of both federal law and basic
chemistry, New Hampshire’s design-defect cause of action
effectively required Mutual to change sulindac’s labeling
to provide stronger warnings. But, as this Court recog-
nized just two Terms ago in PLIVA, Inc. v. Mensing, 564
U. S. ___ (2011), federal law prohibits generic drug manu-
facturers from independently changing their drugs’ labels.
Accordingly, state law imposed a duty on Mutual not to
comply with federal law. Under the Supremacy Clause,
state laws that require a private party to violate federal
2 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
law are pre-empted and, thus, are “without effect.” Mary-
land v. Louisiana, 451 U. S. 725, 746 (1981).
The Court of Appeals’ solution—that Mutual should
simply have pulled sulindac from the market in order to
comply with both state and federal law—is no solution.
Rather, adopting the Court of Appeals’ stop-selling ra-
tionale would render impossibility pre-emption a dead
letter and work a revolution in this Court’s pre-emption
case law.
Accordingly, we hold that state-law design-defect claims
that turn on the adequacy of a drug’s warnings are pre-
empted by federal law under PLIVA. We thus reverse the
decision of the Court of Appeals below.
I
Under the Federal Food, Drug, and Cosmetic Act
(FDCA), ch. 675, 52 Stat. 1040, as amended, 21 U. S. C.
§301 et seq., drug manufacturers must gain approval from
the United States Food and Drug Administration (FDA)
before marketing any drug in interstate commerce.
§355(a). In the case of a new brand-name drug, FDA
approval can be secured only by submitting a new-drug
application (NDA). An NDA is a compilation of materials
that must include “full reports of [all clinical] investiga-
tions,” §355(b)(1)(A), relevant nonclinical studies, and “any
other data or information relevant to an evaluation of the
safety and effectiveness of the drug product obtained or
otherwise received by the applicant from any source,” 21
CFR §§314.50(d)(2) and (5)(iv) (2012). The NDA must also
include “the labeling proposed to be used for such drug,”
21 U. S. C. §355(b)(1)(F); 21 CFR §314.50(c)(2)(i), and “a
discussion of why the [drug’s] benefits exceed the risks
under the conditions stated in the labeling,” 21 CFR
§314.50(d)(5)(viii); §314.50(c)(2)(ix). The FDA may ap-
prove an NDA only if it determines that the drug in
question is “safe for use” under “the conditions of use pre-
Cite as: 570 U. S. ____ (2013) 3
Opinion of the Court
scribed, recommended, or suggested in the proposed label-
ing thereof.” 21 U. S. C. §355(d). In order for the FDA to
consider a drug safe, the drug’s “probable therapeutic
benefits must outweigh its risk of harm.” FDA v. Brown &
Williamson Tobacco Corp., 529 U. S. 120, 140 (2000).
The process of submitting an NDA is both onerous and
lengthy. See Report to Congressional Requesters, Gov-
ernment Accountability Office, Nov. 2006, New Drug
Development, 26 Biotechnology L. Rep. 82, 94 (2007) (A
typical NDA spans thousands of pages and is based on
clinical trials conducted over several years). In order to
provide a swifter route for approval of generic drugs,
Congress passed the Drug Price Competition and Patent
Term Restoration Act of 1984, 98 Stat. 1585, popularly known
as the “Hatch-Waxman Act.” Under Hatch-Waxman,
a generic drug may be approved without the same level
of clinical testing required for approval of a new brand-
name drug, provided the generic drug is identical to
the already-approved brand-name drug in several key
respects.
First, the proposed generic drug must be chemically
equivalent to the approved brand-name drug: it must have
the same “active ingredient” or “active ingredients,” “route
of administration,” “dosage form,” and “strength” as its
brand-name counterpart. 21 U. S. C. §§355(j)(2)(A)(ii) and
(iii). Second, a proposed generic must be “bioequivalent”
to an approved brand-name drug. §355(j)(2)(A)(iv). That
is, it must have the same “rate and extent of absorption”
as the brand-name drug. §355(j)(8)(B). Third, the generic
drug manufacturer must show that “the labeling proposed
for the new drug is the same as the labeling approved for
the [approved brand-name] drug.” §355(j)(2)(A)(v).
Once a drug—whether generic or brand-name—is ap-
proved, the manufacturer is prohibited from making any
major changes to the “qualitative or quantitative formula-
tion of the drug product, including active ingredients, or in
4 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
the specifications provided in the approved application.”
21 CFR §314.70(b)(2)(i). Generic manufacturers are also
prohibited from making any unilateral changes to a drug’s
label. See §§314.94(a)(8)(iii), 314.150(b)(10) (approval for
a generic drug may be withdrawn if the generic drug’s
label “is no longer consistent with that for [the brand-
name] drug”).
II
In 1978, the FDA approved a nonsteroidal anti-
inflammatory pain reliever called “sulindac” under the
brand name Clinoril. When Clinoril’s patent expired, the
FDA approved several generic sulindacs, including one
manufactured by Mutual Pharmaceutical. 678 F. 3d 30,
34 (CA1 2012) (case below); App. to Pet. for Cert. 144a–
145a. In a very small number of patients, NSAIDs—
including both sulindac and popular NSAIDs such as
ibuprofen, naproxen, and Cox2-inhibitors—have the seri-
ous side effect of causing two hypersensitivity skin reac-
tions characterized by necrosis of the skin and of the
mucous membranes: toxic epidermal necrolysis, and its
less severe cousin, Stevens-Johnson Syndrome. 678 F. 3d,
at 34, 43–44; Dorland’s Illustrated Medical Dictionary
1872 (31st ed. 2007); Physicians’ Desk Reference 146–147,
597 (6th ed. 2013); Friedman, Orlet, Still, & Law, Toxic
Epidermal Necrolysis Due to Administration of Celecobix
(Celebrex), 95 Southern Medical J. 1213, 1213–1214
(2002).
In December 2004, respondent Karen L. Bartlett was
prescribed Clinoril for shoulder pain. Her pharmacist
dispensed a generic form of sulindac, which was manufac-
tured by petitioner Mutual Pharmaceutical. Respondent
soon developed an acute case of toxic epidermal necrolysis.
The results were horrific. Sixty to sixty-five percent of
the surface of respondent’s body deteriorated, was burned
off, or turned into an open wound. She spent months in a
Cite as: 570 U. S. ____ (2013) 5
Opinion of the Court
medically induced coma, underwent 12 eye surgeries, and
was tube-fed for a year. She is now severely disfigured,
has a number of physical disabilities, and is nearly blind.
At the time respondent was prescribed sulindac, the
drug’s label did not specifically refer to Stevens-Johnson
Syndrome or toxic epidermal necrolysis, but did warn
that the drug could cause “severe skin reactions”
and “[f]atalities.” App. 553; 731 F. Supp. 2d 135, 142
(NH 2010) (internal quotation marks omitted). However,
Stevens-Johnson Syndrome and toxic epidermal necrolysis
were listed as potential adverse reactions on the drug’s
package insert. 678 F. 3d, at 36, n. 1. In 2005—once
respondent was already suffering from toxic epidermal
necrolysis—the FDA completed a “comprehensive review
of the risks and benefits, [including the risk of toxic
epidermal necrolysis], of all approved NSAID products.”
Decision Letter, FDA Docket No. 2005P-0072/CP1, p. 2
(June 22, 2006), online at http://www.fda.gov/ohrms/dockets/
dockets/05p0072/05p-0072-pav0001-vol1.pdf (as visited June
18, 2013, and available in Clerk of Court’s case file). As a
result of that review, the FDA recommended changes to
the labeling of all NSAIDs, including sulindac, to more
explicitly warn against toxic epidermal necrolysis. App.
353–354, 364, 557–561, 580, and n. 8.
Respondent sued Mutual in New Hampshire state court,
and Mutual removed the case to federal court. Respondent
initially asserted both failure-to-warn and design-defect
claims, but the District Court dismissed her failure-to-
warn claim based on her doctor’s “admi[ssion] that he
had not read the box label or insert.” 678 F. 3d, at 34.
After a 2-week trial on respondent’s design-defect claim, a
jury found Mutual liable and awarded respondent over
$21 million in damages.
The Court of Appeals affirmed. 678 F. 3d 30. As rele-
vant, it found that neither the FDCA nor the FDA’s regu-
6 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
lations pre-empted respondent’s design-defect claims. It
distinguished PLIVA, Inc. v. Mensing, 564 U. S. ___ —in
which the Court held that failure-to-warn claims against
generic manufacturers are pre-empted by the FDCA’s
prohibition on changes to generic drug labels—by arguing
that generic manufacturers facing design-defect claims
could simply “choose not to make the drug at all” and thus
comply with both federal and state law. 678 F. 3d, at 37.
We granted certiorari. 568 U. S. ___ (2012).
III
The Supremacy Clause provides that the laws and
treaties of the United States “shall be the supreme Law of
the Land . . . any Thing in the Constitution or Laws of any
State to the Contrary notwithstanding.” U. S. Const.,
Art. VI, cl. 2. Accordingly, it has long been settled that
state laws that conflict with federal law are “without
effect.” Maryland v. Louisiana, 451 U. S., at 746; McCul-
loch v. Maryland, 4 Wheat. 316, 427 (1819). See also Gade
v. National Solid Wastes Management Assn., 505 U. S. 88,
108 (1992) (“[U]nder the Supremacy Clause, from which
our pre-emption doctrine is derived, any state law, however
clearly within a State’s acknowledged power, which
interferes with or is contrary to federal law, must yield”
(internal quotation marks omitted)).
Even in the absence of an express pre-emption provi-
sion, the Court has found state law to be impliedly pre-
empted where it is “impossible for a private party to comply
with both state and federal requirements.” English v.
General Elec. Co., 496 U. S. 72, 79 (1990). See also Florida
Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 142–
143 (1963) (“A holding of federal exclusion of state law is
inescapable and requires no inquiry into congressional
design where compliance with both federal and state
regulations is a physical impossibility for one engaged in
interstate commerce”).
Cite as: 570 U. S. ____ (2013) 7
Opinion of the Court
In the instant case, it was impossible for Mutual to
comply with both its state-law duty to strengthen the
warnings on sulindac’s label and its federal-law duty
not to alter sulindac’s label. Accordingly, the state law is
pre-empted.
A
We begin by identifying petitioner’s duties under state
law. As an initial matter, respondent is wrong in assert-
ing that the purpose of New Hampshire’s design-
defect cause of action “is compensatory, not regulatory.”
Brief for Respondent 19. Rather, New Hampshire’s design-
defect cause of action imposes affirmative duties on
manufacturers.
Respondent is correct that New Hampshire has adopted
the doctrine of strict liability in tort as set forth in Section
402A of the Restatement (Second) of Torts. See 2 Re-
statement (Second) of Torts §402A (1963 and 1964) (here-
inafter Restatement 2d). See Buttrick v. Arthur Lessard &
Sons, Inc., 110 N. H. 36, 37–39, 260 A. 2d 111, 112–113
(1969). Under the Restatement—and consequently, under
New Hampshire tort law—“[o]ne who sells any product in
a defective condition unreasonably dangerous to the user
or consumer or to his property is subject to liability for
physical harm thereby caused” even though he “has exer-
cised all possible care in the preparation and sale of the
product.” Restatement 2d §402A, at 347–348.
But respondent’s argument conflates what we will call a
“strict-liability” regime (in which liability does not depend
on negligence, but still signals the breach of a duty) with
what we will call an “absolute-liability” regime (in which
liability does not reflect the breach of any duties at all, but
merely serves to spread risk). New Hampshire has adopted
the former, not the latter. Indeed, the New Hampshire
Supreme Court has consistently held that the manu-
facturer of a product has a “duty to design his product
8 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
reasonably safely for the uses which he can foresee.”
Thibault v. Sears, Roebuck & Co., 118 N. H. 802, 809,
395 A. 2d 843, 847 (1978). See also Reid v. Spadone Mach.
Co., 119 N. H. 457, 465, 404 A. 2d 1094, 1099 (1979) (“In
New Hampshire, the manufacturer is under a general
duty to design his product reasonably safely for the uses
which he can foresee” (internal quotation marks omitted));
Chellman v. Saab-Scania AB, 138 N. H. 73, 78, 637 A. 2d
148, 150 (1993) (“The duty to warn is part of the general
duty to design, manufacture and sell products that are
reasonably safe for their foreseeable uses”); cf. Simoneau
v. South Bend Lathe, Inc., 130 N. H. 466, 469, 543 A. 2d
407, 409 (1988) (“We limit the application of strict tort
liability in this jurisdiction by continuing to emphasize
that liability without negligence is not liability without
fault”); Price v. BIC Corp., 142 N. H. 386, 390, 702 A. 2d
330, 333 (1997) (cautioning “that the term ‘unreasonably
dangerous’ should not be interpreted so broadly as to
impose absolute liability on manufacturers or make them
insurers of their products”). Accordingly, respondent is
incorrect in arguing that New Hampshire’s strict-liability
system “imposes no substantive duties on manufacturers.”
Brief for Respondent 19.1
——————
1 Wecan thus save for another day the question whether a true
absolute-liability state-law system could give rise to impossibility
pre-emption. As we have noted, most common-law causes of action for
negligence and strict liability do not exist merely to spread risk, but
rather impose affirmative duties. See Riegel v. Medtronic, Inc., 552
U. S. 312, 323–324 (2008) (“In [Medtronic, Inc. v. Lohr, 518 U. S. 470
(1996)], five Justices concluded that common-law causes of action for
negligence and strict liability do impose ‘requirement[s]’ and would be
pre-empted by federal requirements specific to a medical device. . . . We
adhere to that view”); id., at 324 (“Absent other indication, reference to
a State’s ‘requirements’ includes its common-law duties. As the plurality
opinion said in Cipollone [v. Liggett Group, 505 U. S. 504, 522
(1992)], common-law liability is ‘premised on the existence of a legal
duty,’ and a tort judgment therefore establishes that the defendant has
Cite as: 570 U. S. ____ (2013) 9
Opinion of the Court
B
That New Hampshire tort law imposes a duty on manu-
facturers is clear. Determining the content of that duty
requires somewhat more analysis. As discussed below in
greater detail, New Hampshire requires manufacturers to
ensure that the products they design, manufacture, and
sell are not “unreasonably dangerous.” The New Hamp-
shire Supreme Court has recognized that this duty can be
satisfied either by changing a drug’s design or by changing
its labeling. Since Mutual did not have the option of
changing sulindac’s design, New Hampshire law ultimately
required it to change sulindac’s labeling.
Respondent argues that, even if New Hampshire law
does impose a duty on drug manufacturers, that duty does
not encompass either the “duty to change sulindac’s de-
sign” or the duty “to change sulindac’s labeling.” Brief for
Respondent 30 (capitalization and emphasis deleted).
That argument cannot be correct. New Hampshire imposes
design-defect liability only where “the design of the
product created a defective condition unreasonably dan-
gerous to the user.” Vautour v. Body Masters Sports In-
dustries, Inc., 147 N. H. 150, 153, 784 A. 2d 1178, 1181
(2001); Chellman, supra, at 77, 637 A. 2d, at 150. To
determine whether a product is “unreasonably dangerous,”
the New Hampshire Supreme Court employs a “risk-
utility approach” under which “a product is defective as
designed if the magnitude of the danger outweighs the
utility of the product.” Vautour, supra, at 154, 784 A. 2d,
at 1182 (internal quotation marks omitted). That risk-
utility approach requires a “multifaceted balancing pro-
cess involving evaluation of many conflicting factors.”
Ibid. (internal quotation marks omitted); see also Thi-
bault, supra, at 809, 395 A. 2d, at 847 (same).
While the set of factors to be considered is ultimately an
——————
violated a state-law obligation”).
10 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
open one, the New Hampshire Supreme Court has repeat-
edly identified three factors as germane to the risk-utility
inquiry: “the usefulness and desirability of the product to
the public as a whole, whether the risk of danger could
have been reduced without significantly affecting either
the product’s effectiveness or manufacturing cost, and the
presence and efficacy of a warning to avoid an unreasona-
ble risk of harm from hidden dangers or from foreseeable
uses.” Vautour, supra, at 154, 784 A. 2d, at 1182; see also
Price, supra, at 389, 702 A. 2d, at 333 (same); Chellman,
supra, at 77–78, 637 A. 2d, at 150 (same).
In the drug context, either increasing the “usefulness” of
a product or reducing its “risk of danger” would require
redesigning the drug: A drug’s usefulness and its risk
of danger are both direct results of its chemical design
and, most saliently, its active ingredients. See 21 CFR
§201.66(b)(2) (2012) (“Active ingredient means any compo-
nent that is intended to furnish pharmacological activity
or other direct effect in the diagnosis, cure, mitiga-
tion, treatment, or prevention of disease, or to affect the
structure of any function of the body of humans” (italics
deleted)).
In the present case, however, redesign was not possible
for two reasons. First, the FDCA requires a generic drug
to have the same active ingredients, route of adminis-
tration, dosage form, strength, and labeling as the
brand-name drug on which it is based. 21 U. S. C.
§§355(j)(2)(A)(ii)–(v) and (8)(B); 21 CFR §320.1(c). Conse-
quently, the Court of Appeals was correct to recognize that
“Mutual cannot legally make sulindac in another composi-
tion.” 678 F. 3d, at 37. Indeed, were Mutual to change the
composition of its sulindac, the altered chemical would be a
new drug that would require its own NDA to be marketed
in interstate commerce. See 21 CFR §310.3(h) (giving
examples of when the FDA considers a drug to be new,
including cases involving “newness for drug use of any
Cite as: 570 U. S. ____ (2013) 11
Opinion of the Court
substance which composes such drug, in whole or in part”).
Second, because of sulindac’s simple composition, the drug
is chemically incapable of being redesigned. See 678 F. 3d,
at 37 (“Mutual cannot legally make sulindac in another
composition (nor it is apparent how it could alter a one-
molecule drug anyway)”).
Given the impossibility of redesigning sulindac, the only
way for Mutual to ameliorate the drug’s “risk-utility”
profile—and thus to escape liability—was to strengthen
“the presence and efficacy of [sulindac’s] warning” in such
a way that the warning “avoid[ed] an unreasonable risk of
harm from hidden dangers or from foreseeable uses.”
Vautour, supra, at 154, 784 A. 2d, at 1182. See also
Chellman, 138 N. H., at 78, 637 A. 2d, at 150 (“The duty to
warn is part of the general duty to design, manufacture
and sell products that are reasonably safe for their fore-
seeable uses. If the design of a product makes a warning
necessary to avoid an unreasonable risk of harm from a
foreseeable use, the lack of warning or an ineffective warn-
ing causes the product to be defective and unreasonably
dangerous” (citation omitted)). Thus, New Hampshire’s
design-defect cause of action imposed a duty on Mutual to
strengthen sulindac’s warnings.
For these reasons, it is unsurprising that allegations
that sulindac’s label was inadequate featured prominently
at trial. Respondent introduced into evidence both the
label for Mutual’s sulindac at the time of her injuries and
the label as revised in 2005 (after respondent had suffered
her injuries). App. 553–556. Her counsel’s opening
statement informed the jury that “the evidence will show
you that Sulindac was unreasonably dangerous and had
an inadequate warning, as well. . . . You will hear much
more evidence about why this label was inadequate in
relation to this case.” Tr. 110–112 (Aug. 17, 2010). And, the
District Court repeatedly instructed the jury that it should
evaluate sulindac’s labeling in determining whether
12 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
Mutual’s sulindac was unreasonably dangerous. See
App. 514 (jury instruction that the jury should find “a
defect in design” only if it found that “Sulindac was unrea-
sonably dangerous and that a warning was not present
and effective to avoid that unreasonable danger”); ibid.
(jury instruction that no design defect exists if “a warning
was present and effective to avoid that unreasonable
danger”). Finally, the District Court clarified in its order
and opinion denying Mutual’s motion for judgment as a
matter of law that the adequacy of sulindac’s labeling had
been part of what the jury was instructed to consider. 760
F. Supp. 2d 220, 231 (2011) (“if the jury found that sulin-
dac’s risks outweighed its benefits, then it could consider
whether the warning—regardless of its adequacy—re-
duced those risks . . . to such an extent that it eliminated
the unreasonable danger”).2
Thus, in accordance with New Hampshire law, the jury
was presented with evidence relevant to, and was in-
——————
2 That Mutual’s liability turned on the adequacy of sulindac’s warn-
ings is not unusual. Rather, New Hampshire—like a large majority of
States—has adopted comment k to §402A of the Restatement (Second)
of Torts, which recognizes that it is “especially common in the field of
drugs” for products to be “incapable of being made safe for their intended
and ordinary use.” Restatement 2d, at 353; Bellotte v. Zayre Corp.,
116 N. H. 52, 54–55, 352 A. 2d 723, 725 (1976). Under comment k,
“[s]uch a product, properly prepared, and accompanied by proper
directions and warning, is not defective, nor is it unreasonably danger-
ous.” Restatement 2d, at 353–354. This Court has previously noted
that, as of 1986, “a large number of courts” took comment k to mean
that manufacturers “did not face strict liability for side effects of
properly manufactured prescription drugs that were accompanied by
adequate warnings.” Bruesewitz v. Wyeth, 562 U. S. ___, ___, n. 41
(2011) (slip op., at 10, n. 41).
Mutual withdrew its comment k defense “for purposes of the trial of
this matter.” Defendant’s Notice of Withdrawal of Defenses, in Case
No. 08–cv–358–JL (D NH), p. 1. However, as noted above, both
respondent and the trial court injected the broader question of the
adequacy of sulindac’s label into the trial proceedings.
Cite as: 570 U. S. ____ (2013) 13
Opinion of the Court
structed to consider, whether Mutual had fulfilled its duty
to label sulindac adequately so as to render the drug not
“unreasonably dangerous.” In holding Mutual liable, the
jury determined that Mutual had breached that duty.
C
The duty imposed by federal law is far more readily
apparent. As PLIVA made clear, federal law prevents
generic drug manufacturers from changing their labels.
See 564 U. S., at ___ (slip op., at 10) (“Federal drug regula-
tions, as interpreted by the FDA, prevented the Manufac-
turers from independently changing their generic drugs’
safety labels”). See also 21 U. S. C. §355(j)(2)(A)(v) (“[T]he
labeling proposed for the new drug is the same as the
labeling approved for the [approved brand-name] drug”);
21 CFR §§314.94(a)(8)(iii), 314.150(b)(10) (approval for a
generic drug may be withdrawn if the generic drug’s label
“is no longer consistent with that for [the brand-name]
drug”). Thus, federal law prohibited Mutual from taking
the remedial action required to avoid liability under New
Hampshire law.
D
When federal law forbids an action that state law
requires, the state law is “without effect.” Maryland,
451 U. S., at 746. Because it is impossible for Mutual
and other similarly situated manufacturers to comply
with both state and federal law,3 New Hampshire’s
——————
3 JUSTICE BREYER argues that it is not “literally impossible” for Mutual
to comply with both state and federal law because it could escape
liability “either by not doing business in the relevant State or by paying
the state penalty, say damages, for failing to comply with, as here, a
state-law tort standard.” Post, at 1 (dissenting opinion). But, as dis-
cussed below, infra, at 15–16—leaving aside the rare case in which
state or federal law actually requires a product to be pulled from the
market—our pre-emption cases presume that a manufacturer’s ability
to stop selling does not turn impossibility into possibility. See, e.g.,
14 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
warning-based design-defect cause of action is pre-empted
with respect to FDA-approved drugs sold in interstate
commerce.4
IV
The Court of Appeals reasoned that Mutual could escape
the impossibility of complying with both its federal- and
state-law duties by “choos[ing] not to make [sulindac] at
——————
Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 143
(1963) (There would be “impossibility of dual compliance” where “federal
orders forbade the picking and marketing of any avocado testing
more than 7% oil, while the California test excluded from the State any
avocado measuring less than 8% oil content”). And, of course, PLIVA,
Inc. v. Mensing, 564 U. S. ___ (2011), forecloses any argument that
impossibility is defeated by the prospect that a manufacturer could
“pa[y] the state penalty” for violating a state-law duty; that prospect
would have defeated impossibility in PLIVA as well. See id., at ___
(slip op., at 12) (“[I]t was impossible for the Manufacturers to comply
with both their state-law duty to change the label and their federal law
duty to keep the label the same”). To hold otherwise would render
impossibility pre-emption “all but meaningless.” Id., at ___ (slip op.,
at 14).
4 We do not address state design-defect claims that parallel the federal
misbranding statute. The misbranding statute requires a manufac-
turer to pull even an FDA-approved drug from the market when it is
“dangerous to health” even if “used in the dosage or manner, or with
the frequency or duration prescribed, recommended, or suggested in the
labeling thereof.” 21 U. S. C. §352(j); cf. Bates v. Dow Agrosciences
LLC, 544 U. S. 431, 447 (2005) (state-law pesticide labeling require-
ment not pre-empted under express pre-emption provision, provided it
was “equivalent to, and fully consistent with, [federal] misbranding
provisions”). The parties and the Government appear to agree that a
drug is misbranded under federal law only when liability is based on
new and scientifically significant information that was not before the
FDA. Because the jury was not asked to find whether new evidence
concerning sulindac that had not been made available to the FDA
rendered sulindac so dangerous as to be misbranded under the federal
misbranding statute, the misbranding provision is not applicable here.
Cf. 760 F. Supp. 2d 220, 233 (NH 2011) (most of respondent’s experts’
testimony was “drawn directly from the medical literature or published
FDA analyses”).
Cite as: 570 U. S. ____ (2013) 15
Opinion of the Court
all.” 678 F. 3d, at 37. We reject this “stop-selling” ra-
tionale as incompatible with our pre-emption jurispru-
dence. Our pre-emption cases presume that an actor
seeking to satisfy both his federal- and state-law obliga-
tions is not required to cease acting altogether in order to
avoid liability. Indeed, if the option of ceasing to act de-
feated a claim of impossibility, impossibility pre-emption
would be “all but meaningless.” 564 U. S., at ___ (slip op.,
at 14).
The incoherence of the stop-selling theory becomes plain
when viewed through the lens of our previous cases. In
every instance in which the Court has found impossibility
pre-emption, the “direct conflict” between federal- and
state-law duties could easily have been avoided if the
regulated actor had simply ceased acting.
PLIVA is an obvious example: As discussed above, the
PLIVA Court held that state failure-to-warn claims were
pre-empted by the FDCA because it was impossible for
drug manufacturers like PLIVA to comply with both the
state-law duty to label their products in a way that ren-
dered them reasonably safe and the federal-law duty not
to change their drugs’ labels. Id., at ___ (slip op., at 11). It
would, of course, have been possible for drug manufactur-
ers like PLIVA to pull their products from the market
altogether. In so doing, they would have avoided liability
under both state and federal law: such manufacturers
would neither have labeled their products in a way that
rendered them unsafe nor impermissibly changed any
federally approved label.
In concluding that “it was impossible for the Manufac-
turers to comply with both their state-law duty to change
the label and their federal law duty to keep the label the
same,” id., at ___ (slip op., at 12), the Court was unde-
terred by the prospect that PLIVA could have complied
with both state and federal requirements by simply leav-
ing the market. The Court of Appeals decision below had
16 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
found that Mensing’s state-law failure-to-warn claims
escaped pre-emption based on the very same stop-selling
rationale the First Circuit relied on in this case. See
Mensing v. Wyeth, Inc., 588 F. 3d 603, 611 (CA8 2009)
(“[G]eneric defendants were not compelled to market
metoclopramide. If they realized their label was insuffi-
cient . . . they could have simply stopped selling the prod-
uct”). Moreover, Mensing advanced the stop-selling
rationale in its petition for rehearing, which this Court
denied. PLIVA, supra; Pet. for Reh’g in No. 09–993 etc.,
p. 2. Nonetheless, this Court squarely determined that it
had been “impossible” for PLIVA to comply with both its
state and federal duties. 564 U. S., at ___ (slip op., at 12).5
Adopting the First Circuit’s stop-selling rationale would
mean that not only PLIVA, but also the vast majority—if
not all—of the cases in which the Court has found impos-
sibility pre-emption, were wrongly decided. Just as the
prospect that a regulated actor could avoid liability under
both state and federal law by simply leaving the market
did not undermine the impossibility analysis in PLIVA, so
it is irrelevant to our analysis here.
V
The dreadful injuries from which products liabilities
——————
5 Respondent attempts to distinguish this case from PLIVA, arguing
that “[w]here, as in PLIVA, state law imposes an affirmative duty on a
manufacturer to improve the product’s label, suspending sales does not
comply with the state-law duty; it merely offers an indirect means of
avoiding liability for noncompliance with that duty.” Brief for Re-
spondent 39. But that difference is purely semantic: the state-law duty
in PLIVA to amend metoclopramide’s label could just as easily have
been phrased as a duty not to sell the drug without adequate warnings.
At least where a State imposes liability based on a balancing of a
product’s harms and benefits in light of its labeling—rather than
directly prohibiting the product’s sale—the mere fact that a manufac-
turer may avoid liability by leaving the market does not defeat a claim
of impossibility.
Cite as: 570 U. S. ____ (2013) 17
Opinion of the Court
cases arise often engender passionate responses. Today is
no exception, as JUSTICE SOTOMAYOR’s dissent (hereinaf-
ter the dissent) illustrates. But sympathy for respondent
does not relieve us of the responsibility of following the
law.
The dissent accuses us of incorrectly assuming “that
federal law gives pharmaceutical companies a right to sell
a federally approved drug free from common-law liability,”
post, at 1, but we make no such assumption. Rather, as
discussed at length above, see supra, at 8–13, we hold that
state-law design-defect claims like New Hampshire’s that
place a duty on manufacturers to render a drug safer by
either altering its composition or altering its labeling are
in conflict with federal laws that prohibit manufacturers
from unilaterally altering drug composition or labeling.
The dissent is quite correct that federal law establishes no
safe-harbor for drug companies—but it does prevent them
from taking certain remedial measures. Where state law
imposes a duty to take such remedial measures, it “actu-
al[ly] conflict[s] with federal law” by making it “ ‘impos-
sible for a private party to comply with both state and
federal requirements.’ ” Freightliner Corp. v. Myrick, 514
U. S. 280, 287 (1995) (quoting English, 496 U. S., at 78–
79). The dissent seems to acknowledge that point when it
concedes that, “if federal law requires a particular product
label to include a complete list of ingredients while state
law specifically forbids that labeling practice, there is little
question that state law ‘must yield.’ ” Post, at 6–7 (quoting
Felder v. Casey, 487 U. S. 131, 138 (1988)). What the
dissent does not see is that that is this case: Federal law
requires a very specific label for sulindac, and state law
forbids the use of that label.
The dissent responds that New Hampshire law “merely
create[s] an incentive” to alter sulindac’s label or composi-
tion, post, at 7, but does not impose any actual “legal
obligation,” post, at 13. The contours of that argument are
18 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
difficult to discern. Perhaps the dissent is drawing a
distinction between common-law “exposure to liability,”
post, at 12, and a statutory “legal mandate,” ibid. But the
distinction between common law and statutory law is
irrelevant to the argument at hand: In violating a common-
law duty, as surely as by violating a statutory duty, a
party contravenes the law. While it is true that, in a
certain sense, common-law duties give a manufacturer the
choice “between exiting the market or continuing to sell
while knowing it may have to pay compensation to con-
sumers injured by its product,” post, at 16, statutory
“mandate[s]” do precisely the same thing: They require a
manufacturer to choose between leaving the market and
accepting the consequences of its actions (in the form of a
fine or other sanction). See generally Calabresi & Mela-
med, Property Rules, Liability Rules, and Inalienability:
One View of the Cathedral, 85 Harv. L. Rev. 1089 (1972)
(discussing liability rules). And, in any event, PLIVA—
which the dissent agrees involved a state-law “require-
ment that conflicted with federal law,” post, at 13—dealt
with common-law failure-to-warn claims, see PLIVA,
supra, at ___ (slip op., at 4). Because PLIVA controls the
instant case, the dissent is reduced to fighting a rearguard
action against its reasoning despite ostensibly swearing
fealty to its holding.
To suggest that Bates v. Dow Agrosciences LLC, 544
U. S. 431 (2005), is to the contrary is simply misleading.
The dissent is correct that Bates held a Texas state-law
design-defect claim not to be pre-empted. But, it did so
because the design-defect claim in question was not a
“requirement ‘for labeling or packaging ’ ” and thus fell
outside the class of claims covered by the express pre-
emption provision at issue in that case. Id., at 443–444
(emphasis in original). Indeed, contrary to the impression
one might draw from the dissent, post, at 12–13, the Bates
Court actually blessed the lower court’s determination
Cite as: 570 U. S. ____ (2013) 19
Opinion of the Court
that the State’s design-defect claim imposed a pre-
emptable “requirement”: “The Court of Appeals did, how-
ever, correctly hold that the term ‘requirements’ in
§136v(b) reaches beyond positive enactments, such as
statutes and regulations, to embrace common-law duties.”
Bates, supra, at 443. The dissent offers no compelling
reason why the “common-law duty” in this case should not
similarly be viewed as a “requirement.” We agree, of
course, that “determining precisely what, if any, specific
requirement a state common-law claim imposes is im-
portant.” Post, at 12, n. 5. As Bates makes clear, “[t]he
proper inquiry calls for an examination of the elements of
the common-law duty at issue; it does not call for specula-
tion as to whether a jury verdict will prompt the manu-
facturer to take any particular action.” 544 U. S., at 445
(citation omitted). Here, as we have tried to make clear,
the duty to ensure that one’s products are not “unreasona-
bly dangerous” imposed by New Hampshire’s design-defect
cause of action, Vautour, 147 N. H., at 153, 784 A. 2d, at
1181, involves a duty to make one of several changes. In
cases where it is impossible—in fact or by law—to alter a
product’s design (and thus to increase the product’s “use-
fulness” or decrease its “risk of danger”), the duty to ren-
der a product “reasonably safe” boils down to a duty to
ensure “the presence and efficacy of a warning to avoid an
unreasonable risk of harm from hidden dangers or from
foreseeable uses.” Id., at 154, 784 A. 2d, at 1182. The
duty to redesign sulindac’s label was thus a part of the
common-law duty at issue—not merely an action Mutual
might have been prompted to take by the adverse jury
verdict here.
Finally, the dissent laments that we have ignored
“Congress’ explicit efforts to preserve state common-law
liability.” Post, at 26. We have not. Suffice to say, the
Court would welcome Congress’ “explicit” resolution of the
difficult pre-emption questions that arise in the prescrip-
20 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
Opinion of the Court
tion drug context. That issue has repeatedly vexed the
Court—and produced widely divergent views—in recent
years. See, e.g., Wyeth v. Levine, 555 U. S. 555 (2009);
PLIVA, 564 U. S. ___. As the dissent concedes, however,
the FDCA’s treatment of prescription drugs includes
neither an express pre-emption clause (as in the vaccine
context, 42 U. S. C. §300aa–22(b)(1)), nor an express non-
pre-emption clause (as in the over-the-counter drug con-
text, 21 U. S. C. §§379r(e), 379s(d)). In the absence of that
sort of “explicit” expression of congressional intent, we are
left to divine Congress’ will from the duties the statute
imposes. That federal law forbids Mutual to take actions
required of it by state tort law evinces an intent to
pre-empt.
* * *
This case arises out of tragic circumstances. A combina-
tion of factors combined to produce the rare and devastat-
ing injuries that respondent suffered: the FDA’s decision
to approve the sale of sulindac and the warnings that
accompanied the drug at the time it was prescribed, the
decision by respondent’s physician to prescribe sulindac
despite its known risks, and Congress’ decision to regulate
the manufacture and sale of generic drugs in a way that
reduces their cost to patients but leaves generic drug
manufacturers incapable of modifying either the drugs’
compositions or their warnings. Respondent’s situation is
tragic and evokes deep sympathy, but a straightforward
application of pre-emption law requires that the judgment
below be reversed.
It is so ordered.
Cite as: 570 U. S. ____ (2013) 1
BREYER, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–142
_________________
MUTUAL PHARMACEUTICAL COMPANY, INC.,
PETITIONER v. KAREN L. BARTLETT
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 24, 2013]
JUSTICE BREYER, with whom JUSTICE KAGAN joins,
dissenting.
It is not literally impossible here for a company like
petitioner to comply with conflicting state and federal law.
A company can comply with both either by not doing busi-
ness in the relevant State or by paying the state pen-
alty, say damages, for failing to comply with, as here, a
state-law tort standard. See post, at 16–18 (SOTOMAYOR,
J., dissenting). But conflicting state law that requires a
company to withdraw from the State or pay a sizable
damages remedy in order to avoid the conflict between
state and federal law may nonetheless “ ‘stan[d] as an
obstacle to the accomplishment’ of ” the federal law’s ob-
jective, in which case the relevant state law is pre-empted.
Post, at 17 (quoting Crosby v. National Foreign Trade Coun-
cil, 530 U. S. 363, 373 (2000)).
Normally, for the reasons I set forth in Medtronic, Inc. v.
Lohr, 518 U. S. 470, 503 (1996) (opinion concurring in part
and concurring in judgment), in deciding whether there
is such a conflict I would pay particular attention to the
views of the relevant agency, here the Food and Drug
Administration (FDA). Where the statute contains no
clear pre-emption command, courts may infer that the
administrative agency has a degree of leeway to determine
the extent to which governing statutes, rules, regulations,
2 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
BREYER, J., dissenting
or other administrative actions have pre-emptive effect.
See id., at 505–506 (citing Smiley v. Citibank (South
Dakota), N. A., 517 U. S. 735, 739–741 (1996); Hills-
borough County v. Automated Medical Laboratories, Inc.,
471 U. S. 707, 721 (1985); Lawrence County v. Lead-
Deadwood School Dist. No. 40–1, 469 U. S. 256, 261–262
(1985); Chevron U. S. A. Inc. v. Natural Resources Defense
Council, Inc., 467 U. S. 837, 842–845 (1984)). See also
Wyeth v. Levine, 555 U. S. 555, 576–577 (2009). Cf. Skid-
more v. Swift & Co., 323 U. S. 134, 140 (1944). The FDA
is responsible for administering the relevant federal stat-
utes. And the question of pre-emption may call for consid-
erable drug-related expertise. Indeed, one might infer
that, the more medically valuable the drug, the less likely
Congress intended to permit a State to drive it from the
marketplace.
At the same time, the agency can develop an informed
position on the pre-emption question by providing inter-
ested parties with an opportunity to present their views.
It can translate its understandings into particular pre-
emptive intentions accompanying its various rules and
regulations. And “[i]t can communicate those intentions
. . . through statements in ‘regulations, preambles, inter-
pretive statements, and responses to comments.’” Medtronic,
supra, at 506 (opinion of BREYER, J.). (quoting Hillsbor-
ough, supra, at 718).
Here, however, I cannot give special weight to the FDA’s
views. For one thing, as far as the briefing reveals, the
FDA, in developing its views, has held no hearings on the
matter or solicited the opinions, arguments, and views of
the public in other ways. For another thing, the FDA
has set forth its positions only in briefs filed in litigation,
not in regulations, interpretations, or similar agency work
product. See Bowen v. Georgetown Univ. Hospital, 488
U. S. 204, 212–213 (1988) (“[A]gency litigating positions
that are wholly unsupported by regulations, rulings, or
Cite as: 570 U. S. ____ (2013) 3
BREYER, J., dissenting
administrative practice” are entitled to less than ordinary
weight). Cf. Christensen v. Harris County, 529 U. S. 576,
587 (2000).
Finally, the FDA has set forth conflicting views on this
general matter in different briefs filed at different times.
Compare Wyeth, supra, at 577, 579, 580, n. 13 (noting that
the FDA had previously found no pre-emption, that the
United States now argued for pre-emption, and that this
new position was not entitled to deference), with PLIVA,
Inc. v. Mensing, 564 U. S. ___, ___, n. 3, ___ (2011)
(slip op., at 6–7, n. 3, 8–11) (declining to defer to the
United States’ argument against pre-emption and, instead,
finding pre-emption), and with Brief for United States
as Amicus Curiae 12–13 (now arguing, again, for pre-
emption). See National Cable & Telecommunications
Assn. v. Brand X Internet Services, 545 U. S. 967, 981
(2005) (agency views that vary over time are accorded less
weight); Motor Vehicle Mfrs. Assn. of United States, Inc. v.
State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 41–42
(1983) (same); Verizon Communications Inc. v. FCC, 535
U. S. 467, 502, n. 20 (2002) (same).
Without giving the agency’s views special weight, I
would conclude that it is not impossible for petitioner to
comply with both state and federal regulatory schemes
and that the federal regulatory scheme does not pre-empt
state common law (read as potentially requiring petitioner
to pay damages or leave the market). As two former FDA
Commissioners tell us, the FDA has long believed that
state tort litigation can “supplemen[t] the agency’s regula-
tory and enforcement activities.” Brief for Donald Ken-
nedy et al. as Amici Curiae 5. See also Wyeth, supra, at 578
(“In keeping with Congress’ decision not to pre-empt
common-law tort suits, it appears that the FDA tradition-
ally regarded state law as a complementary form of drug
regulation”).
Moreover, unlike the federal statute at issue in Med-
4 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
BREYER, J., dissenting
tronic, the statute before us contains no general pre-
emption clause. See 518 U. S., at 481–482. Cf. Wyeth,
supra, at 574 (presence of pre-emption clause could show
that “Congress thought state-law suits posed an obstacle
to its objectives”). Furthermore, I have found no con-
vincing reason to believe that removing this particular
drug from New Hampshire’s market, or requiring damage
payments for it there, would be so harmful that it would
seriously undercut the purposes of the federal statutory
scheme. Cf. post, at 21–22.
Finally, similarly situated defendants in other cases
remain free to argue for “obstacle pre-emption” in respect
to damage payments or market withdrawal, and demon-
strate the impossibility-of-compliance type of conflict that,
in their particular cases, might create true incompatibility
between state and federal regulatory schemes.
For these reasons, I respectfully dissent.
Cite as: 570 U. S. ____ (2013) 1
SOTOMAYOR, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 12–142
_________________
MUTUAL PHARMACEUTICAL COMPANY, INC.,
PETITIONER v. KAREN L. BARTLETT
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
[June 24, 2013]
JUSTICE SOTOMAYOR, with whom JUSTICE GINSBURG
joins, dissenting.
In PLIVA, Inc. v. Mensing, 564 U. S. ___ (2011), this
Court expanded the scope of impossibility pre-emption
to immunize generic drug manufacturers from state-law
failure-to-warn claims. Today, the Court unnecessarily
and unwisely extends its holding in Mensing to pre-empt
New Hampshire’s law governing design-defects with re-
spect to generic drugs.
The Court takes this step by concluding that petitioner
Mutual Pharmaceutical was held liable for a failure-to-
warn claim in disguise, even though the District Court
clearly rejected such a claim and instead allowed liability
on a distinct theory. See infra, at 13–15. Of greater con-
sequence, the Court appears to justify its revision of re-
spondent Karen Bartlett’s state-law claim through an im-
plicit and undefended assumption that federal law gives
pharmaceutical companies a right to sell a federally ap-
proved drug free from common-law liability. Remarkably,
the Court derives this proposition from a federal law that,
in order to protect consumers, prohibits manufacturers
from distributing new drugs in commerce without federal
regulatory approval, and specifically disavows any intent
to displace state law absent a direct and positive conflict.
Karen Bartlett was grievously injured by a drug that a
2 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
jury found was unreasonably dangerous. The jury relied
upon evidence that the drug posed a higher than normal
risk of causing the serious skin reaction that produced
her horrific injuries; carried other risks; and possessed
no apparent offsetting benefits compared to similar pain
relievers, like aspirin. See 760 F. Supp. 2d 220, 233–241,
243–244 (NH 2011). The Court laments her “tragic” situa-
tion, ante, at 20, but responsibility for the fact that Karen
Bartlett has been deprived of a remedy for her injuries
rests with this Court. If our established pre-emption
principles were properly applied in this case, and if New
Hampshire law were correctly construed, then federal law
would pose no barrier to Karen Bartlett’s recovery. I re-
spectfully dissent.
I
I begin with “two cornerstones of our pre-emption juris-
prudence,” Wyeth v. Levine, 555 U. S. 555, 565 (2009), that
should control this case but are conspicuously absent from
the majority opinion. First, “ ‘the purpose of Congress is
the ultimate touchstone’ in every pre-emption case.” Ibid.
(quoting Medtronic, Inc. v. Lohr, 518 U. S. 470, 485
(1996)). Second, we start from the “assumption that the
historic police powers of the States [are] not to be super-
seded by [a] Federal Act unless that was the clear and
manifest purpose of Congress.” Rice v. Santa Fe Elevator
Corp., 331 U. S. 218, 230 (1947). “That assumption,” we
have explained, “applies with particular force when,” as is
the case here, “Congress has legislated in a field tradition-
ally occupied by the States.” Altria Group, Inc. v. Good,
555 U. S. 70, 77 (2008).1
——————
1 The majority’s failure to adhere to the presumption against pre-
emption is well illustrated by the fact that the majority calls on Con-
gress to provide greater clarity with regard to the “difficult pre-emption
questions that arise in the prescription drug context.” Ante, at 19–20.
Certainly, clear direction from Congress on pre-emption questions is
Cite as: 570 U. S. ____ (2013) 3
SOTOMAYOR, J., dissenting
The Court applied both of these principles to the Fed-
eral Food, Drug, and Cosmetic Act (FDCA), ch. 675, 52
Stat. 1040, as amended, 21 U. S. C. §301 et seq., in Levine,
where we held that a state failure-to-warn claim against
a brand-name drug manufacturer was not pre-empted by
federal law. 555 U. S., at 581. Tracing the history of
federal drug regulation from the 1906 Federal Food and
Drugs Act, 34 Stat. 768, up to the FDCA and its major
amendments, the Court explained that federal drug law
and state common-law liability have long been understood
to operate in tandem to promote consumer safety. See
Levine, 555 U. S., at 566–568, 574. That basic principle,
which the majority opinion elides, is essential to under-
standing this case.
The FDCA prohibits the “introduction into interstate
commerce [of ] any new drug” without prior approval from
the United States Food and Drug Administration (FDA).
21 U. S. C. §355(a). Brand-name and generic drug manu-
facturers are required to make different showings to re-
ceive agency approval in this premarketing review process.
See ante, at 2–3. But in either case, the FDA’s per-
mission to market a drug has never been regarded as a
final stamp of approval of the drug’s safety. Under the
FDCA, manufacturers, who have greater “access to infor-
mation about their drugs” than the FDA, Levine, 555
U. S., at 578–579, retain the ultimate responsibility for
the safety of the products they sell. In addition to their
ongoing obligations to monitor a drug’s risks and to report
adverse drug responses to the FDA, see 21 CFR §§314.80,
314.81, 314.98 (2012), manufacturers may not sell a drug
that is “deemed to be misbranded” because it is “danger-
——————
useful. But the whole point of the presumption against pre-emption is
that congressional ambiguity should cut in favor of preserving state
autonomy. See Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230
(1947).
4 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
ous to health” when used in the dosage or manner called
for in the drug’s label. 21 U. S. C. §352(j); see §331(a);
Brief for United States as Amicus Curiae 30–31 (hereinaf-
ter U. S. Brief) (indicating that the misbranding prohibi-
tion may apply to a drug that was previously approved for
sale when significant new scientific evidence demonstrates
that the drug is unsafe).
Beyond federal requirements, state common law plays
an important “complementary” role to federal drug regula-
tion. Levine, 555 U. S., at 578. Federal law in this area
was initially intended to “supplemen[t] the protection for
consumers already provided by state regulation and
common-law liability.” Id., at 566. And as Congress “enlarged
the FDA’s powers,” it “took care to preserve state law.”
Id., at 567. In the 1962 amendments to the FDCA, which
established the FDA’s premarketing review in its modern
form, Congress adopted a saving clause providing that
the amendments should not be construed to invalidate
any provision of state law absent “a direct and positive
conflict.” §202, 76 Stat. 793. And in the years since,
with “state common-law suits ‘continu[ing] unabated de-
spite . . . FDA regulation,’ ” Levine, 555 U. S., at 567
(quoting Riegel v. Medtronic, Inc., 552 U. S. 312, 340
(2008) (GINSBURG, J., dissenting)), Congress has not en-
acted a pre-emption provision for prescription drugs
(whether brand-name or generic) even as it enacted such
provisions with respect to other products regulated by the
FDA.2
Congress’ preservation of a role for state law generally,
——————
2 See 21 U. S. C. §360k(a) (medical devices); §379r (labeling require-
ments for nonprescription drugs); §379s (labeling and packaging
requirements for cosmetics); 42 U. S. C. §300aa–22(b)(1) (vaccines).
Instructively, Congress included a saving clause in the statutes ad-
dressing nonprescription drugs and cosmetics, which makes clear that
the express pre-emption provisions in these statutes do not affect state
product liability law. See 21 U. S. C. §§379r(e), 379s(d).
Cite as: 570 U. S. ____ (2013) 5
SOTOMAYOR, J., dissenting
and common-law remedies specifically, reflects a realistic
understanding of the limitations of ex ante federal regu-
latory review in this context. On its own, even rig-
orous preapproval clinical testing of drugs is “generally
. . . incapable of detecting adverse effects that oc-
cur infrequently, have long latency periods, or affect sub-
populations not included or adequately represented in
the studies.” Kessler & Vladeck, A Critical Examina-
tion of the FDA’s Efforts to Preempt Failure-to-Warn
Claims, 96 Geo. L. J. 461, 471 (2008); see National Acad-
emies, Institute of Medicine, The Future of Drug Safety:
Promoting and Protecting the Health of the Public 37–38
(2007) (hereinafter Future of Drug Safety) (discussing
limitations “inherent” to a system of premarket clinical
trials). Moreover, the FDA, which is tasked with monitor-
ing thousands of drugs on the market and considering new
drug applications, faces significant resource constraints
that limit its ability to protect the public from dangerous
drugs. See Levine, 555 U. S., at 578–579, and n. 11; Brief
for Former FDA Commissioner Donald Kennedy et al. as
Amici Curiae 6–7, 12–20. Tort suits can help fill the gaps
in federal regulation by “serv[ing] as a catalyst” to identify
previously unknown drug dangers. Bates v. Dow Agrosci-
ences LLC, 544 U. S. 431, 451 (2005).
Perhaps most significant, state common law provides
injured consumers like Karen Bartlett with an opportu-
nity to seek redress that is not available under federal law.
“[U]nlike most administrative and legislative regulations,”
common-law claims “necessarily perform an important re-
medial role in compensating accident victims.” Sprietsma
v. Mercury Marine, 537 U. S. 51, 64 (2002). While the
Court has not always been consistent on this issue, it has
repeatedly cautioned against reading federal statutes to
“remove all means of judicial recourse for those injured”
when Congress did not provide a federal remedy. Silk-
wood v. Kerr-McGee Corp., 464 U. S. 238, 251 (1984); see
6 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
e.g., Bates, 544 U. S., at 449; Lohr, 518 U. S., at 487 (plu-
rality opinion). And in fact, the legislative history of the
FDCA suggests that Congress chose not to create a federal
cause of action for damages precisely because it believed
that state tort law would allow injured consumers to
obtain compensation. See Levine, 555 U. S., at 574–575,
and n. 7.
II
In light of this background, Mutual should face an
uphill climb to show that federal law pre-empts a New
Hampshire strict-liability claim against a generic drug
manufacturer for defective design. The majority neverthe-
less accepts Mutual’s argument that “compliance with
both federal and state [law was] a physical impossibility.”
Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S.
132, 142–143 (1963); see ante, at 7. But if state and fed-
eral law are properly understood, it is clear that New
Hampshire’s design-defect claim did not impose a legal
obligation that Mutual had to violate federal law to satisfy.
A
Impossibility pre-emption “is a demanding defense,” Le-
vine, 555 U. S., at 573, that requires the defendant to
show an “irreconcilable conflict” between federal and state
legal obligations, Silkwood, 464 U. S., at 256. The logic
underlying true impossibility pre-emption is that when
state and federal law impose irreconcilable affirmative
requirements, no detailed “inquiry into congressional de-
sign” is necessary because the inference that Congress
would have intended federal law to displace the conflicting
state requirement “is inescapable.” Florida Lime, 373
U. S., at 142–143. So, for example, if federal law requires
a particular product label to include a complete list of
ingredients while state law specifically forbids that label-
ing practice, there is little question that state law “must
Cite as: 570 U. S. ____ (2013) 7
SOTOMAYOR, J., dissenting
yield.” Felder v. Casey, 487 U. S. 131, 138 (1988).
The key inquiry for impossibility pre-emption, then, is
to identify whether state and federal law impose directly
conflicting affirmative legal obligations such that state law
“require[s] the doing of an act which is unlawful under”
federal law. California Fed. Sav. & Loan Assn. v. Guerra,
479 U. S. 272, 292 (1987). Impossibility does not exist
where the laws of one sovereign permit an activity that
the laws of the other sovereign restricts or even prohibits.
See Barnett Bank of Marion Cty., N. A. v. Nelson, 517
U. S. 25, 31 (1996); Michigan Canners & Freezers Assn.,
Inc. v. Agricultural Marketing and Bargaining Bd., 467
U. S. 461, 478, n. 21 (1984). So, to modify the previous
example, if federal law permitted (but did not require)
a labeling practice that state law prohibited, there would
be no irreconcilable conflict; a manufacturer could com-
ply with the more stringent regulation. And by the same
logic, impossibility does not exist where one sovereign’s
laws merely create an incentive to take an action that the
other sovereign has not authorized because it is possible to
comply with both laws.
Of course, there are other types of pre-emption. Courts
may find that state laws that incentivize what federal law
discourages or forbid what federal law authorizes are pre-
empted for reasons apart from impossibility: The state
laws may fall within the scope of an express pre-emption
provision, pose an obstacle to federal purposes and objec-
tives, or intrude upon a field that Congress intended for
federal law to occupy exclusively. See Crosby v. National
Foreign Trade Council, 530 U. S. 363, 372–373 (2000).
But absent a direct conflict between two mutually incom-
patible legal requirements, there is no impossibility and
courts may not automatically assume that Congress in-
tended for state law to give way. Instead, a more careful
inquiry into congressional intent is called for, and that
inquiry should be informed by the presumption against
8 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
pre-emption.
In keeping with the strict standard for impossibility,
cases that actually find pre-emption on that basis are rare.
See Abrams, Plenary Power Preemption, 99 Va. L. Rev.
601, 608 (2013). Mensing is an outlier, as the Court found
impossibility because a generic drug manufacturer could
not strengthen its product label to come into line with a
state-law duty to warn without the exercise of judgment
by the FDA. See 564 U. S., at ___–___ (slip op., at 13–14).
But nothing in Mensing, nor any other precedent, dictates
finding impossibility pre-emption here.
B
To assess whether it is physically impossible for Mutual
to comply with both federal and state law, it is necessary
to identify with precision the relevant legal obligations
imposed under New Hampshire’s design-defect cause of
action.
The majority insists that Mutual was required by New
Hampshire’s design-defect law to strengthen its warning
label. In taking this position, the majority effectively re-
characterizes Bartlett’s design-defect claim as a de facto
failure-to-warn claim. The majority then relies on that re-
characterization to hold that the jury found Mutual liable
for failing to fulfill its duty to label sulindac adequately,
which Mensing forbids because a generic drug manufac-
turer cannot independently alter its safety label. Ante, at
13; see Mensing, 564 U. S., at ___ (slip op., at 10). But the
majority’s assertion that Mutual was held liable in this
case for violating a legal obligation to change its label is
inconsistent with both New Hampshire state law and the
record.
For its part, Mutual, in addition to making the argu-
ment now embraced by the majority, contends that New
Hampshire’s design-defect law effectively required it to
change the chemical composition of sulindac. Mutual
Cite as: 570 U. S. ____ (2013) 9
SOTOMAYOR, J., dissenting
claims that it was physically impossible to comply with
that duty consistent with federal law because drug manu-
facturers may not change the chemical composition of
their products so as to create new drugs without submit-
ting a new drug application for FDA approval. See 21
CFR §§310.3(h), 314.70(b)(2)(i). But just as New Hamp-
shire’s design-defect law did not impose a legal obligation
for Mutual to change its label, it also did not mandate that
Mutual change the drug’s design.
1
a
Following blackletter products liability law under §402A
of the Restatement (Second) of Torts (1963–1964) (herein-
after Second Restatement), New Hampshire recognizes
strict liability for three different types of product defects:
manufacturing defects, design defects, and warning de-
fects. See Cheshire Medical Center v. W. R. Grace & Co.,
49 F. 3d 26, 29 (CA1 1995). Because the District Court
granted Mutual summary judgment on Bartlett’s failure-
to-warn claim, only New Hampshire’s design-defect cause
of action remains at issue in this case.
A product has a defective design under New Hampshire
law if it “poses unreasonable dangers to consumers.”
Thibault v. Sears, Roebuck & Co., 118 N. H. 802, 807, 395
A. 2d 843, 846 (1978). To determine whether a product is
unreasonably dangerous, a jury is asked to make a risk-
benefit assessment by considering a nonexhaustive list
of factors. See ante, at 9–10. In addition, New Hamp-
shire has specifically rejected the doctrine, advocated by
the Restatement (Third) of Torts: Products Liability §2(b)
(1997) (hereinafter Third Restatement), that a plaintiff
must present evidence of a reasonable alternative design
to show that a product’s design is defective. Instead,
“while proof of an alternative design is relevant in a de-
sign defect case,” it is “neither a controlling factor nor an
10 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
essential element.” Vautour v. Body Masters Sports In-
dustries, Inc., 147 N. H. 150, 156, 784 A. 2d 1178, 1183
(2001).
While some jurisdictions have declined to apply design-
defect liability to prescription drugs, New Hampshire, in
common with many other jurisdictions, does subject pre-
scriptions drugs to this distinct form of strict products
liability. See 678 F. 3d 30, 35 (CA1 2012) (citing Brochu v.
Ortho Pharmaceutical Corp., 642 F. 2d 652, 655 (CA1
1981)); see also Third Restatement §6, Comment f (collect-
ing cases from other jurisdictions). Drug manufacturers in
New Hampshire have an affirmative defense under com-
ment k to §402A of the Second Restatement, which ex-
empts “[u]navoidably unsafe products” from strict liability
if the product is properly manufactured and labeled. As
explained by the lower courts in this case, see 678 F. 3d, at
36; 731 F. Supp. 2d 135, 150–151 (NH 2010), New Hamp-
shire takes a case-by-case approach to comment k under
which a defendant seeking to invoke the defense must first
show that the product is highly useful and that the dan-
ger imposed by the product could not have been avoided
through a feasible alternative design. See Brochu, 642
F. 2d, at 657. Comment k did not factor into the jury’s
assessment of liability in this case because Mutual aban-
doned a comment k defense before trial. Ante, at 12, n. 2.3
——————
3 Though the majority does not rely on comment k to find pre-
emption, it misleadingly implies that New Hampshire, like “a large
majority of States,” has applied comment k categorically to prescription
drugs to exempt manufacturers from “ ‘strict liability for side effects of
properly manufactured prescription drugs that [are] accompanied by ade-
quate warnings.’ ” Ante, at 12, n. 2 (quoting Bruesewitz v. Wyeth LLC,
562 U. S. ___, ___, n. 41 (2011) (slip op., at 10, n. 41). That is in-
correct. The majority also neglects to mention that while some courts
have applied comment k categorically to prescription drug designs,
“[m]ost courts have stated that there is no justification for giving all
prescription drug manufacturers blanket immunity from strict liability
under comment k.” 2 American Law of Products Liability 3d §17.45,
Cite as: 570 U. S. ____ (2013) 11
SOTOMAYOR, J., dissenting
b
The design-defect claim that was applied to Mutual
subjects the manufacturer of an unreasonably dangerous
product to liability, but it does not require that manufac-
turer to take any specific action that is forbidden by federal
law. Specifically, and contrary to the majority, see ante,
at 11, New Hampshire’s design-defect law did not require
Mutual to change its warning label. A drug’s warning
label is just one factor in a nonexclusive list for evaluating
whether a drug is unreasonably dangerous, see Vautour,
147 N. H., at 156, 784 A. 2d, at 1183, and an adequate
label is therefore neither a necessary nor a sufficient con-
dition for avoiding design-defect liability. Likewise, New
Hampshire law imposed no duty on Mutual to change
sulindac’s chemical composition. The New Hampshire
Supreme Court has held that proof of an alternative fea-
sible design is not an element of a design-defect claim, see
Kelleher v. Marvin Lumber & Cedar Co., 152 N. H. 813,
831, 891 A. 2d 477, 492 (2006), and as the majority recog-
nizes, ante, at 11, sulindac was not realistically capable of
being redesigned anyway because it is a single-molecule
drug.4
To be sure, New Hampshire’s design-defect claim cre-
ates an incentive for drug manufacturers to make changes
to its product, including to the drug’s label, to try to avoid
liability. And respondent overstates her case somewhat
when she suggests that New Hampshire’s strict-liability
law is purely compensatory. See Brief for Respondent 19.
As is typically true of strict-liability regimes, New Hamp-
——————
p. 108 (2010). Like New Hampshire courts, these courts apply comment k
on a case-by-case basis. See 1 L. Frumer & M. Friedman, Products
Liability §8.07[5], pp. 8–287 to 8–293 (2012).
4 Because of this feature of New Hampshire law, it is unnecessary to
consider whether the pre-emption analysis would differ in a jurisdiction
that required proof of a feasible alternative design as an element of
liability.
12 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
shire’s law, which mandates compensation only for “defec-
tive” products, serves both compensatory and regulatory
purposes. See Heath v. Sears, Roebuck & Co., 123 N. H.
512, 521–522, 464 A. 2d 288, 293 (1983). But exposure to
liability, and the “incidental regulatory effects” that flow
from that exposure, Goodyear Atomic Corp. v. Miller, 486
U. S. 174, 185–186 (1988), is not equivalent to a legal
mandate for a regulated party to take (or refrain from
taking) a specific action. This difference is a significant
one: A mandate leaves no choice for a party that wishes to
comply with the law, whereas an incentive may only influ-
ence a choice.
Our cases reflect this distinction. In Bates, for exam-
ple, we rejected an argument that design-defect claims
brought against a pesticide manufacturer were pre-empted
because they would likely “induce” the manufacturer to
change its product label and thus run afoul of an express
pre-emption provision forbidding state labeling “require-
ments” that were different or in addition to federal re-
quirements. 544 U. S., at 444–446. A requirement, we
explained, “is a rule of law that must be obeyed.” Id., at
445. “[A]n event, such as a jury verdict, that merely moti-
vates an optional decision,” does not rise to that level.
Ibid.5
——————
5 The majority suggests my account of Bates is “simply misleading,”
ante, at 18, but it simply misses the point. I recognize that, under the
Court’s precedents, common-law duties may qualify as “requirements,”
at least as that term has been used in express pre-emption provisions
in federal law. See Riegel v. Medtronic, Inc., 552 U. S. 312, 323–324
(2008). But determining precisely what, if any, specific requirement a
state common-law claim imposes is important. In Bates, the lower
court had accepted the same basic argument that the majority advances
here: that the plaintiffs’ design-defect claim that a pesticide was “un-
reasonably dangerous” was “merely a disguised claim for failure to
warn” because success on the claim that the pesticide was dangerous to
crops in soil above a certain pH level would “necessarily induce” a
manufacturer to change its product’s label to avoid liability. Dow
Cite as: 570 U. S. ____ (2013) 13
SOTOMAYOR, J., dissenting
So too here. The fact that imposing strict liability for
injuries caused by a defective drug design might make a
drug manufacturer want to change its label or design (or
both) does not mean the manufacturer was actually re-
quired by state law to take either action. And absent such
a legal obligation, the majority’s impossibility argument
does not get off the ground, because there was no state
requirement that it was physically impossible for Mutual
to comply with while also following federal law. The case
is therefore unlike Mensing, where it was “undisputed”
that applicable state tort law “require[d] a drug manufac-
turer that is or should be aware of its product’s danger” to
strengthen its label—a requirement that conflicted with
federal law preventing the manufacturer from doing so uni-
laterally, 564 U. S., at ___, ___ (slip op., at 4, 11–12).
New Hampshire’s design-defect law did not require Mu-
tual to do anything other than to compensate consumers
who were injured by an unreasonably dangerous drug.
2
Moreover, the trial record in this case confirms that, con-
trary to the majority’s insistence, Mutual was not held liable
for “breach[ing] [its] duty” “to label sulindac adequately.”
Ante, at 13.
When Bartlett filed suit against Mutual, she raised
distinct claims based on design defect and failure to warn.
——————
Agrosciences LLC v. Bates, 332 F. 3d 323, 332–333 (CA5 2003). This
Court explicitly rejected the notion that because design-defect liability
might lead a manufacturer to make a label change, it meant that the
State’s design-defect claim imposed a requirement for labeling or
packaging. See 544 U. S., at 445–446. The majority contends that this
case is different because the duty to redesign sulindac’s label was an
element of New Hampshire’s design-defect law. Ante, at 19. But it is
not. See supra, at 11. Rather, altering a product label is merely one
step a manufacturer might take to prevent its product from being
considered unreasonably dangerous, and it is a step that New Hamp-
shire law recognizes may be insufficient. See infra, at 16.
14 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
App. 102–108; see 659 F. Supp. 2d 279, 282 (NH 2009).
Pursuing both claims was consistent with New Hampshire
law’s recognition that “design defect and failure to warn
claims are separate.” LeBlanc v. American Honda Motor
Co., 141 N. H. 579, 586, 688 A. 2d 556, 562 (1997). After
the District Court granted summary judgment to Mutual
on the failure-to-warn claim, the court repeatedly ex-
plained that an alleged failure to warn by Mutual could
not and did not provide the basis for Bartlett’s recovery.
See 760 F. Supp. 2d, at 248–249.6
The majority notes that the District Court admitted
evidence regarding sulindac’s label. Ante, at 11–12. But
the court did so because the label remained relevant for
the more limited purpose of assessing, in combination
with other factors, whether sulindac’s design was defective
because the product was unreasonably dangerous. See
678 F. 3d, at 41. The District Court’s instructions to the
jury adhered to this limited purpose. The court first told
the jury to determine whether sulindac was unreasonably
dangerous by weighing its danger against its utility. App.
513. The court further instructed the jury that if it deter-
mined that sulindac was unreasonably dangerous without
reference to the warning label, it could then consider the
——————
6 For example, in a ruling on proposed jury instructions, the District
Court made clear that “Bartlett cannot be allowed to circumvent this
court’s summary judgment ruling by using Sulindac’s warning to
establish that the drug is unreasonably dangerous (i.e., arguing that
Sulindac is unreasonably dangerous because of its warning), where this
court has already ruled that any inadequacy in the warning did not
cause Bartlett’s injuries.” App. 343. Doing so, the court explained
“would effectively turn this case back into a failure-to-warn case,
rendering the summary judgment ruling meaningless.” Ibid.
The District Court later told counsel that it had removed a failure-to-
warn instruction from the jury instructions because “[t]his is not a
failure to warn case,” and the court admonished counsel to “tread care-
fully” in arguing about the warning label because the label’s adequacy
was “not an issue before this jury.” Id., at 496.
Cite as: 570 U. S. ____ (2013) 15
SOTOMAYOR, J., dissenting
presence and efficacy of the label to evaluate whether the
product was unreasonably dangerous “even with its warn-
ing.” Id., 513–514. In other words, to hold Mutual liable,
the jury was required to find that sulindac “was unreason-
ably dangerous despite its warning, not because of it.” Id.,
at 341. The District Court also explained to the jury that
because Bartlett’s claim addressed only whether sulindac’s
design was defective, Mutual’s conduct, “which included
any failure to change its warning, was ‘not relevant to this
case.’ ” 760 F. Supp. 2d, at 248.
The distinction drawn by the District Court between
permissible and impermissible uses of evidence regarding
sulindac’s label is faithful to New Hampshire law. That
law recognizes that the effectiveness of a warning label
is just one relevant factor in determining whether a prod-
uct’s design is unreasonably dangerous, and that design-
defect and failure-to-warn claims are “separate.” LeBlanc,
141 N. H., at 586, 688 A. 2d, at 562.7 In short, as the
District Court made clear, Mutual was not held liable for
“failing to change” its warning. 760 F. Supp., at 248–249.
C
Given the distinction that New Hampshire draws be-
tween failure-to-warn claims and design-defect claims, as
well as the clear and repeated statements by the trial
judge that Mutual’s liability was not predicated on breach-
ing a duty to label sulindac adequately, on what basis does
——————
7 To the extent the majority believes that the District Court in prac-
tice allowed the adequacy of the warning label to play a greater role
at trial than it should have, see ante, at 11–12, that is irrelevant to the
question before the Court. Statements by counsel, even if improper, do
not change the state law cause of action that we evaluate for pre-
emption purposes. And the Court of Appeals specifically concluded that
the District Court’s jury instructions were appropriate and that “[i]f
Mutual wanted a further caution in the instructions” concerning its
warning label, then Mutual “should have sought it.” 678 F. 3d 30, 41–
42 (CA1 2012).
16 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
the majority reach a contrary conclusion? Though the
majority insists otherwise, ante, at 17, it appears to rely
principally on an implicit assumption about rights con-
ferred by federal premarket approval under the FDCA.
After correctly observing that changing sulindac’s chemi-
cal composition would create a new drug that would have
to go through its own approval process, the majority rea-
sons that Mutual must have been under a state-law duty
to change its label because it had no other option to avoid
liability while continuing to sell its product. Ante, at 10–
11. But that conclusion is based on a false premise.
A manufacturer of a drug that is unreasonably danger-
ous under New Hampshire law has multiple options: It
can change the drug’s design or label in an effort to alter
its risk-benefit profile, remove the drug from the market,
or pay compensation as a cost of doing business. If federal
law or the drug’s chemical properties take the redesign
option off the table, then that does not mean the manufac-
turer suddenly has a legal obligation under state law to
improve the drug’s label. Indeed, such a view of state law
makes very little sense here because even if Mutual had
strengthened its label to fully account for sulindac’s risks,
the company might still have faced liability for having
a defective design. See Thibault, 118 N. H., at 808, 395
A. 2d, at 847 (explaining that strict liability “may attach
even though . . . there was an adequate warning”). When
a manufacturer cannot change the label or when doing so
would not make the drug safe, the manufacturer may still
choose between exiting the market or continuing to sell
while knowing it may have to pay compensation to con-
sumers injured by its product.8
——————
8 The majority’s suggestion that a manufacturer’s option of continuing
to sell while paying compensation is akin to violating a statutory
mandate and then suffering the consequence (such as paying a fine) is
flawed. See ante, at 18. In that scenario, the manufacturer would have
violated the law, and the fact that the law is enforced through mone-
Cite as: 570 U. S. ____ (2013) 17
SOTOMAYOR, J., dissenting
From a manufacturer’s perspective, that may be an un-
welcome choice. But it is a choice that a sovereign
State may impose to protect its citizens from dangerous
drugs or at least ensure that seriously injured consumers
receive compensation. That is, a State may impose such a
choice unless the FDCA gives manufacturers an absolute
right to sell their products free from common-law liability,
or state law otherwise “stands as an obstacle to the ac-
complishment” of federal objectives. Crosby, 530 U. S., at
373 (internal quotation marks omitted). Because the
majority does not rely on obstacle pre-emption, it must
believe that a manufacturer that received FDA premarket
approval has a right not only to keep its drug on the mar-
ket unless and until the FDA revokes approval, but also to
be free from state-law liability that makes doing so more
expensive. That proposition is fundamentally inconsistent
with the FDCA’s text, structure, saving clause, and his-
tory. See supra, at 3–6; Levine, 555 U. S., at 583 (THOMAS,
J., concurring in judgment).
It is simply incorrect to say that federal law presupposes
that drug manufacturers have a right to continue to sell a
drug free from liability once it has been approved. Noth-
ing in the language of the FDCA, which is framed as a
prohibition on distribution without FDA approval, see 21
U. S. C. §355(a), suggests such a right. Federal law itself
bars the sale of previously approved drugs if new infor-
mation comes to light demonstrating that the drug is
——————
tary sanctions (rather than through an injunction or imprisonment)
would not change that. Here, no matter how many times the majority
insists otherwise, ibid., a manufacturer who sells a drug whose design
is found unreasonably dangerous based on a balance of factors has not
violated a state law requiring it to change its label. In both cases, the
manufacturer may owe money. But only in the former will it have
failed to follow the law. Cf. National Federation of Independent Busi-
ness v. Sebelius, 567 U. S. __, __ (2012) (slip op., at 32) (recognizing that
a condition that triggers a tax is not necessarily a “legal command” to
take a certain action).
18 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
“dangerous to health” and thus “misbranded.” See §§331(a),
352(j); see supra, at 3–4.9 Even outside that sce-
nario, manufacturers regularly take drugs off the market
when evidence emerges about a drug’s risks, particu-
larly when safer drugs that provide the same therapeutic
benefits are available.10 According to the FDA, while
it has formal authority to withdraw approval for a drug
based on new adverse information, see §355(e), it is far
more common for a manufacturer to stop selling its prod-
uct voluntarily after the FDA advises the manufacturer
that the drug is unsafe and that its risk-benefit profile
cannot be adequately addressed through labeling changes
or other measures. See U. S. Brief 5.
New Hampshire’s design-defect cause of action thus
does no more than provide an impetus for an action that is
permitted and sometimes encouraged or even required by
federal law.
D
The majority derides any suggestion that Mutual’s
ability to “stop selling” sulindac is relevant to the validity
——————
9 The majority properly leaves open the question whether state de-
sign-defect claims that parallel the federal misbranding statute are pre-
empted. See ante, at 14, n. 4. The majority fails to appreciate, however,
that this statute undermines its impossibility argument (as compared
to an argument based on obstacle pre-emption) because it shows that
there is no federal right or obligation to continue to sell a drug like
sulindac that was previously approved. In fact, the statute demon-
strates that sometimes a drug manufacturer like Mutual may have a
federal duty not to sell its drug.
10 See Government Accountability Office, Drug Safety: Improvement
Needed in FDA’s Postmarket Decision-making and Oversight Process
10 (GAO–06–402, 2006) (noting that 10 drugs were voluntarily with-
drawn for safety reasons between 2000 and 2006); Wysowski & Swartz,
Adverse Drug Event Surveillance and Drug Withdrawals in the United
States, 1969–2002, 165 Archives Internal Med. 1363 (2005) (noting that
more than 75 drugs and drug products were withdrawn from the
market for safety reasons between 1969 and 2002).
Cite as: 570 U. S. ____ (2013) 19
SOTOMAYOR, J., dissenting
of its impossibility pre-emption defense. Ante, at 2, 14–16.
But the majority’s argument is built on the mistaken
premise that Mutual is legally obligated by New Hamp-
shire’s design-defect law to modify its label in a way that
federal law forbids. It is not. See supra, at 11–13. For
that reason, rejecting impossibility pre-emption here would
not render the doctrine “a dead letter” or “ ‘all but mean-
ingless.’ ” Ante, at 2, 15 (quoting Mensing, 564 U. S., at ___
(slip op., at 14)). On the other hand, it is the major-
ity that “work[s] a revolution in this Court’s [impossibility]
pre-emption case law,” ante, at 2, by inferring a state-law
requirement from the steps a manufacturer might wish to
take to avoid or mitigate its exposure to liability.
Not all products can be made safe for sale with an im-
proved warning or a tweak in design. New Hampshire,
through its design-defect law, has made a judgment that
some drugs that were initially approved for distribution
turn out to be inherently and unreasonably dangerous
and should therefore not be sold unless the manufacturer
is willing to compensate injured consumers. Congressional
intent to pre-empt such a cause of action cannot be
gleaned from the existence of federal specifications that
apply to the product if it is sold. Instead, whether New
Hampshire’s design-defect cause-of-action is pre-empted
depends on assessing whether it poses an obstacle to a
federal policy to approve sulindac for use. Yet the major-
ity skips that analysis and instead finds impossibility
where it does not exist by relying on a question-begging
assumption that Congress intended for Mutual to have a
way to continue selling sulindac without incurring com-
mon-law liability. See ante, at 9–11.
The distinction between impossibility and obstacle pre-
emption is an important one. While obstacle pre-emption
can be abused when courts apply an overly broad concep-
tion of the relevant federal purpose to find pre-emption,
see Levine, 555 U. S., at 601–602 (THOMAS, J., concurring
20 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
in judgment), it is a useful framework for a case like this
one because it would at least lead the Court to ask the
right questions.
For example, properly evaluating the asserted conflict
here through the lens of obstacle pre-emption would allow
the Court to consider evidence about whether Congress
intended the FDA to make an optimal safety determina-
tion and set a maximum safety standard (in which case
state tort law would undermine the purpose) rather than
a minimal safety threshold (in which case state tort
law could supplement it). See, e.g., Williamson v. Mazda
Motor of America, Inc., 562 U. S. ___, ___ (2011) (slip op.,
at 11). By contrast, the majority’s overbroad impossibility
framework takes no account of how federal drug safety
review actually works. Though the majority gestures to
the rigorous nature of the FDA’s review of new drug ap-
plications, ante, at 2–3, nothing in the majority’s reason-
ing turns on how the FDA’s premarketing review operates
or on the agency’s capacity to engage in postmarketing
review.
In taking the approach it does, the majority replaces
careful assessment of regulatory structure with an ipse
dixit that pharmaceutical companies must have a way to
“escape liability,” ante, at 11, while continuing to sell a
drug that received FDA approval. As a result, the major-
ity effectively makes a highly contested policy judgment
about the relationship between FDA review and state tort
law—treating the FDA as the sole guardian of drug
safety—without defending its judgment and without con-
sidering whether that is the policy judgment that Congress
made.11
——————
11 Defending a policy judgment that treats the FDA as the exclusive
guarantor of drug safety would be no easy task in light of evidence that
resource constraints and gaps in legal authority, among other factors,
limit the agency’s ability to safeguard public health. See Kessler &
Vladeck, A Critical Examination of the FDA’s Efforts to Preempt
Cite as: 570 U. S. ____ (2013) 21
SOTOMAYOR, J., dissenting
III
While the majority never addresses obstacle pre-
emption, Mutual did argue in the alternative that Bart-
lett’s design-defect cause of action is pre-empted because it
conflicts with the purposes and objectives of the FDCA, as
supplemented by the Hatch-Waxman Act, 98 Stat. 1585.
Though it presents a closer question than the impossibility
argument on which the majority relies, I would reject
Mutual’s obstacle pre-emption defense as well.
Mutual’s most substantial contention is that New Hamp-
shire’s design-defect claim frustrates the policy under-
lying the FDCA’s broader scheme of vesting authority
in the FDA as an expert agency to determine which
drug designs should enter and remain in interstate com-
merce. The FDA, through an amicus brief filed by the
United States, generally supports this argument. The
FDA states that the question whether a design-defect
claim12 is pre-empted is “difficult and close,” and it recog-
nizes that “[s]everal factors do weigh in favor of finding no
preemption,” including the absence of textual support in
the FDCA for the idea that an approved drug must be
made available in any particular State. See U. S. Brief
12, 21–22. But the FDA ultimately contends that design-
defect claims are pre-empted unless they parallel the
FDCA’s misbranding prohibition because the agency be-
lieves that permitting juries to balance the health risks
and benefits of an FDA-approved drug would undermine
the FDA’s drug-safety determinations and could reduce
——————
Failure-to-Warn Claims, 96 Geo. L. J. 461, 483–495 (2008); see also
Wyeth v. Levine, 555 U. S. 555, 578–579, and n. 11 (2009).
12 The FDA purports to address what it calls a “pure” design-defect
claim, and it references the Third Restatement §6 by way of illustra-
tion. The FDA’s separate discussion of a “pure” design-defect claim is
based on the premise that New Hampshire’s design-defect claim turns
on the adequacy of a drug’s warning. See U. S. Brief 20. But that is
incorrect. See supra, at 11.
22 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
access to drugs that the FDA has determined are safe and
effective.
Our cases have “given ‘some weight’ to an agency’s
views about the impact of tort law on federal objectives
when ‘the subject matter is technica[l] and the relevant
history and background are complex and extensive.’ ”
Levine, 555 U. S., at 576 (quoting Geier v. American Hon-
da Motor Co., 529 U. S. 861, 883 (2000)). But courts do
not “defe[r] to an agency’s conclusion that state law is pre-
empted,” 555 U. S., at 576, and the tension that the FDA
identifies in an effort to justify complete pre-emption of
design-defect claims for prescription drugs does not satisfy
the “ high threshold [that] must be met if a state law is to
be pre-empted for conflicting with the purposes of a federal
Act,” Chamber of Commerce of United States of America,
v. Whiting, 563 U. S. ___, ___ (2011) (slip op., at 22) (inter-
nal quotation marks omitted); see Silkwood, 464 U. S., at
256. Given the FDCA’s core purpose of protecting con-
sumers, our recognition in Levine that state tort law gen-
erally complements the statute’s safety goals, the practical
limits on the FDA’s ability to monitor and promptly ad-
dress concerns about drug safety once a drug is in the
market, see supra, at 5, 20–21, n. 11, and the absence of
any federal remedy for injured consumers, I would reject
this broad obstacle pre-emption argument as well.13
IV
The most troubling aspect of the majority’s decision to
once again expand the scope of this Court’s traditionally
narrow impossibility pre-emption doctrine is what it im-
——————
13 I note that we are not confronted with a case in which the FDA
promulgated “lawful specific regulations describing” whether and under
what circumstances state design-defect liability interferes with “the
safe drug-related medical care” sought through the FDCA. Levine, 555
U. S., at 582 (BREYER, J., concurring). See also ante, at 2–3 (BREYER, J.,
dissenting).
Cite as: 570 U. S. ____ (2013) 23
SOTOMAYOR, J., dissenting
plies about the relationship between federal premarket
review and state common-law remedies more generally.
Central to the majority’s holding is an assumption that
manufacturers must have a way to avoid state-law lia-
bility while keeping particular products in commerce.
See ante, at 9–11, 14–15. This assumption, it seems, will
always create an automatic conflict between a federal
premarket review requirement and state-law design-defect
liability because premarket review, by definition, prevents
manufacturers from unilaterally changing their products’
designs.14 That is true, for example, of the designs (i.e.,
the chemical composition) of brand-name drugs under
the FDCA no less than it is for generic drugs. See ante, at
3–4.
If the creation of such an automatic conflict is the ulti-
mate end-point of the majority’s continued expansion of
impossibility pre-emption, then the result is frankly aston-
ishing. Congress adopted the FDCA’s premarketing ap-
proval requirement in 1938 and then strengthened it in
1962 in response to serious public-health episodes involv-
ing unsafe drugs. See Future of Drug Safety 152. Yet by
the majority’s lights, the very act of creating that re-
quirement in order to “safeguard the consumer,” United
States v. Sullivan, 332 U. S. 689, 696 (1948), also created
by operation of law a shield for drug manufacturers to
avoid paying common-law damages under state laws that
are also designed to protect consumers. That is so not-
withstanding Congress’ effort to disclaim any intent to
pre-empt all state law. See supra, at 4. The majority’s
reasoning thus “has the ‘perverse effect’ of granting broad
immunity ‘to an entire industry that, in the judgment of
Congress, needed more stringent regulation.’ ” Riegel, 552
——————
14 Or at least it creates an automatic conflict with the caveat that
design-defect claims that parallel a federal duty for manufacturers to
withdraw a product might not be pre-empted. See ante, at 13–14, n. 3.
24 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
U. S., at 338 (GINSBURG, J., dissenting) (quoting Lohr, 518
U. S., at 487 (plurality opinion)).
This expanded notion of impossibility pre-emption
threatens to disturb a considerable amount of state law.
The FDCA’s premarket approval process for prescription
drugs has provided a model for the regulation of many
other products.15 In some statutes, Congress has paired
premarket regulatory review with express pre-emption
provisions that limit the application of state common-law
remedies, including, in some instances, claims for defec-
tive product design. See, e.g., Riegel, 552 U. S., at 323–
325; see supra, at 4, and n. 2. In other instances, such as
with prescription drugs, it has not. Under the majority’s
approach, it appears that design-defect claims are categor-
ically displaced either way, and Congress’ efforts to set the
boundaries of pre-emption more precisely were largely
academic. This could have serious consequences for prod-
uct safety. State design-defect laws play an important role
not only in discovering risks, but also in providing in-
centives for manufacturers to remove dangerous products
from the market promptly. See Levine, 555 U. S., at 578–
579; Bates, 544 U. S., at 451; see also Conk, Is There a
Design Defect in the Restatement (Third) of Torts: Prod-
ucts Liability? 109 Yale L. J. 1087, 1130 (2000) (“The tort
system can encourage FDA regulatory vigor and compe-
tence”). If manufacturers of products that require preap-
proval are given de facto immunity from design-defect
liability, then the public will have to rely exclusively on
imperfect federal agencies with limited resources and
sometimes limited legal authority to recall approved prod-
ucts. And consumers injured by those products will have
no recourse.
——————
15 See, e.g., 7 U. S. C. §136a (pesticides); 21 U. S. C. §348 (food addi-
tives); §360b (animal drugs); §§360c(a)(1)(C), 360e (certain medical
devices); §379e (color additives).
Cite as: 570 U. S. ____ (2013) 25
SOTOMAYOR, J., dissenting
The manner in which Congress has addressed pre-
emption with respect to vaccines is particularly instructive.
“[V]accines have been subject to the same federal pre-
market approval process as prescription drugs,” and prior
to Congress’ intervention, “compensation for vaccine-
related injuries ha[d] been left largely to the States.”
Bruesewitz v. Wyeth LLC, 562 U. S. ___, ___ (2011) (slip
op., at 1). In 1986, in response to a rise in tort suits that
produced instability in the vaccine market, Congress
enacted the National Childhood Vaccine Injury Act (Vac-
cine Act), 42 U. S. C. §300aa–22(b)(1). The Act established
a no-fault compensation program funded through an
excise tax on vaccines to compensate individuals injured
or killed by vaccine side effects. “The quid pro quo for
this” system, the Court stated in Bruesewitz, “was the
provision of significant tort-liability protections for vaccine
manufacturers.” 562 U. S., at ___ (slip op., at 4).
While Members of this Court disagreed on the scope of
the tort protections the Vaccine Act was intended to offer,
the Act’s history demonstrates that Congress is perfectly
capable of responding when it believes state tort law may
compromise significant federal objectives under a scheme
of premarket regulatory review for products it wants to
make available. And it illustrates that “an important
reason to require that preemption decisions be made by
Congress,” rather than by courts on the basis of an ex-
panded implied pre-emption doctrine, is Congress’ ability
to tie its pre-emption decisions “to some alternative means
for securing compensation.” Metzger, Federalism and Fed-
eral Agency Reform, 111 Colum. L. Rev. 1, 33 (2011).
By instead reaching out to find pre-emption in a context
where Congress never intended it, the majority leaves
consumers like Karen Bartlett to bear enormous losses on
their own.
26 MUTUAL PHARMACEUTICAL CO. v. BARTLETT
SOTOMAYOR, J., dissenting
* * *
The Court recognizes that “[t]his case arises out of
tragic circumstances.” Ante, at 20. And I do not doubt
that Members of the majority personally feel sympathy for
Karen Bartlett. But the Court’s solemn affirmation that
it merely discharges its duty to “follo[w] the law,” ante, at
17, and gives effect to Congress’ policy judgment, rather
than its own, is hard to accept. By once again expanding
the scope of impossibility pre-emption, the Court turns
Congress’ intent on its head and arrives at a holding that
is irreconcilable with our precedents. As a result, the
Court has left a seriously injured consumer without any
remedy despite Congress’ explicit efforts to preserve state
common-law liability.
I respectfully dissent.
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536 P.2d 1116 (1975)
96 Idaho 766
The STATE of Idaho, Plaintiff-Respondent,
v.
Arthur Leroy WIGGINS, Defendant-Appellant.
No. 11429.
Supreme Court of Idaho.
June 13, 1975.
*1117 Jeff Stoker, Rayborn, Rayborn & Ronayne, Twin Falls, for defendant-appellant.
Wayne Kidwell, Atty. Gen., James W. Blaine, Deputy Atty. Gen., Gordon S. Nielson, Senior Deputy Atty. Gen., Lynn E. Thomas, Deputy Atty. Gen., Boise, for plaintiff-respondent.
SHEPARD, Justice.
This is an appeal from a conviction of the offense of driving while under the influence of intoxicants and, since the defendant had been previously convicted of the same offense, a repeated offense, a felony. The sole question presented is whether the jury should have been informed of the previous conviction for the same offense. We reverse and remand for a new trial.
Appellant Wiggins was charged with, and pleaded not guilty to, the offense of driving while under the influence of intoxicants, in violation of I.C. § 49-1102. The information charged Wiggins with being a repeated offender and set forth the fact of the previous conviction. That information in pertinent part provided:
"* * * ARTHUR LEROY WIGGINS is accused by this Information of the crime of a felony, namely, OPERATING A MOTOR VEHICLE WHILE UNDER THE INFLUENCE OF INTOXICATING LIQUOR, REPEATED OFFENSE * * *.
That the said defendant * * * did * * * drive * * * a motor vehicle * * *, while he, the said defendant, was then and there under the influence of intoxicating liquor and/or drugs, the said defendant having been convicted of an offense of operating a motor vehicle while under the influence of intoxicating liquor prior thereto * * * as is shown by the judgment of conviction docketed * * *."
I.C. § 49-1102(d) [now codified as I.C. § 49-1102(e)] in effect escalates a repeated offense to the status of a felony by enhancing the punishment thusly:
"Every person who is convicted of a violation of this section shall be punished by imprisonment in the county or municipal jail for not more than six (6) months or by a fine of not more than three hundred dollars ($300) or by both * * * On a second or subsequent conviction he shall be imprisoned in the state penitentiary for not more than five (5) years."
At the outset of the trial the information in its entirety was read to the jury, and at *1118 the termination of the trial the jury was informed that appellant had been previously convicted of the same offense. The jury returned a verdict of guilty to the charge of driving while intoxicated, repeated offense, and thereon Wiggins was sentenced to two years imprisonment.
Appellant assigns error to the procedure followed by the trial court first in reading the information in its entirety to the jury when that information contained a reference to a prior offense and thereafter in specifically informing the jury of defendant's previous conviction of driving while intoxicated, all of which occurred prior to the jury's consideration of the particular charge.
Those contentions have never been answered with respect to I.C. § 49-1102. However, a clear analogy exists in this court's treatment of I.C. § 19-2514, Idaho's persistent violator statute. In State v. Johnson, 86 Idaho 51, 383 P.2d 326 (1963), the court held that its rule-making powers permitted it to prescribe procedures to be followed in the trial of cases involving persistent violator charges. The prescribed procedure requires that the information be prepared in two parts, one setting forth the particular offense, and the second, the prior offense and the recidivist charge. Only the first part is read to the jury upon trial of the particular offense and no mention is made of the prior offense (or, of course, the recidivist charge) during that phase of the trial, except that which would occur in the absence of a persistent violator charge such as in connection with impeachment of the defendant. Upon the withdrawal of the jury to consider a verdict, only the first part of the information is delivered to the jury. If a guilty verdict is returned on the first portion of the information, the second part is then read, and the jury proceeds to inquire into that phase of the case.
The Johnson procedure should be utilized in cases involving the repeated offender provision of I.C. § 49-1102. The possibility of prejudice against defendant resulting from evidence or knowledge of prior crimes outweighs any policy argument regarding the complication of trial proceedings. As was said in State ex rel. Edelstein v. Huneke, 249 P. 784 (Wash. 1926):
"It seems too plain for argument that to place before a jury the charge in an indictment, and to offer evidence on trial as a part of the state's case that the defendant has previously been convicted of one or more offenses is to run a great risk of creating a prejudice in the minds of the jury that no instruction of the court can wholly erase * * *"
See also People v. Bosca, 25 Mich. App. 455, 181 N.W.2d 678 (1970); Heinze v. People, 127 Colo. 54, 253 P.2d 596 (1953); State v. Stewart, 110 Utah 203, 171 P.2d 383 (1946).
While the state has not confessed error, it has said "the state is in wholehearted agreement with the principle of fairness laid down by the court." The state suggests that the area is one which should be clarified in order to guide the lower courts and prosecutors. We agree. Undoubtedly that attitude of the state has prompted it to waive any argument on the failure of defense counsel at trial to object to any of the procedures. Since the state has neither argued nor relied upon the action of defense counsel in failing to raise objections to the procedure, we need not consider whether such might amount to ineffective assistance of counsel, see State v. Badger, 96 Idaho 168, 525 P.2d 363 (1974), or fundamental error, see State v. Haggard, 94 Idaho 249, 486 P.2d 260 (1971).
The judgment of conviction is reversed and the case remanded for retrial in accordance with the procedure set forth in Johnson.
McQUADE, C.J., and McFADDEN, DONALDSON and BAKES, JJ., concur.
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27 Wis.2d 637 (1965)
NELSON, Respondent,
v.
BOULAY BROTHERS COMPANY, Appellant.
Supreme Court of Wisconsin.
April 29, 1965.
June 1, 1965.
*640 For the appellant there was a brief by McLeod, Donohue & Colwin of Fond du Lac, and oral argument by Joseph D. Donohue.
For the respondent there was a brief by Lucas & Plaisted of New Holstein, and oral argument by Thomas H. Lucas.
GORDON, J.
The appellant has challenged both the liability and the damage phases of this case.
*641 Liability.
The jury found that the plaintiff's examination of the yeast which was delivered either did reveal or ought to have revealed the presence of the defect. It follows that there could be no liability for the breach of an implied warranty of fitness under sec. 121.15 (3), Stats., or, in the absence of timely notice, for breach of warranty under sec. 121.49.
The record clearly establishes that Mr. Nelson knew by sight, taste, and smell that the yeast in the bags was different from that which he had previously used. This not only precluded his claim under the Sales Act, argues the appellant, but also it barred his recovery under a negligence count. The appellant advances a number of theories, including intervening cause and the claim that the plaintiff's negligence exceeded that of the defendant.
The jury found that the plaintiff was 25 percent negligent; the judgment in this case was entered based on common-law negligence, with the damages being reduced by the amount of the plaintiff's comparative negligence. Even though Mr. Nelson's inspection and his failure to give seasonable notice under sec. 121.49, Stats., defeated his contract claim, it did not foreclose the action in negligence. We do not believe that the loss of one's right to relief under the Sales Act automatically precludes recovery in an action based on negligence. No specific ruling to this effect has come to our attention, but this conclusion is implicit in Tews v. Marg (1944), 246 Wis. 245, 249, 16 N. W. (2d) 795, and Zingale v. Mills Novelty Co. (1943), 244 Wis. 144, 149, 11 N. W. (2d) 644. See also Greenman v. Yuba Power Products, Inc. (1962), 27 Cal. Rptr. 697, 377 Pac. (2d) 897, 899.
A number of cases have been presented to this court in which a plaintiff has alleged breach of warranty and, alternatively, negligence. E.g., Strahlendorf v. Walgreen *642 Co. (1962), 16 Wis. (2d) 421, 114 N. W. (2d) 823; Betehia v. Cape Cod Corp. (1960), 10 Wis. (2d) 323, 103 N. W. (2d) 64.
The instant action arose before the effective date of the Uniform Commercial Code. We note, however, that there is broad language in the new sec. 402.607 (3) (a), Stats., which would suggest that a buyer who fails to give notice is "barred from any remedy." We are not called upon to determine whether a different conclusion would result from the new legislation.
The plaintiff claimed that he did not anticipate any danger in using the irradiated yeast, and this position is not inherently incredible. The jury, however, charged 25 percent of the negligence to Mr. Nelson for using the yeast which he knew to be different from that which he had used in the past. We see no reason for upsetting that assessment.
We conclude that there is no error in connection with the findings of the jury as to liability and as to the comparison of negligence. The judgment, insofar as it reflects such findings, must be affirmed.
Damages.
If one takes the testimony which was most favorable to the plaintiff, there was a gross loss suffered by him in the sum of $41,203.60. The plaintiff has acknowledged that there are various deductions which would have to be taken from such gross loss, leaving a maximum net loss of $29,966.80. The jury fixed the damages of the plaintiff at $28,000, and we hold that the judgment based on such finding as to damages cannot stand. The reason for this conclusion is that the jury's assessment erroneously included all or almost all of the sum of $21,875 which the plaintiff claimed for damage to his future herd.
*643 The jury accepted the plaintiff's contention that his next year's mink crop was reduced by approximately 500 kits. The plaintiff's claim as to the loss of his future herd was as follows:
125 breeders at $100 apiece $12,500
375 pelters at $25 apiece 9,375
_______
Total $21,875
The allowance of an award for loss of future production is based on Mr. Nelson's contention that the death of some of his breeding herd in turn caused a diminution in the next year's total crop.
There are two flaws in connection with this award for a future loss. The first is that upon this record the amount is speculative, and the second is that there may be a duplication of damages, since the market value of an animal would ordinarily include an amount attributable to its ability to reproduce.
The speculative nature of the damages in this regard is apparent from Mr. Nelson's testimony. When asked to state the amount of his loss to his breeding herd, he replied, "The fact is, it is impossible to figure." Except for the figures recited above, there is no further explanation in the record as to how the plaintiff arrived at the figures of $12,500 and $9,375.
Upon the present record, the damages for loss of future births were not established with reasonable certainty. Smith v. Atco Co. (1959), 6 Wis. (2d) 371, 94 N. W. (2d) 697, 74 A. L. R. (2d) 1095. However, even if the speculative aspect could be removed by further evidence, we nevertheless view this as an improper item of damages. The basic measure of damages for the destruction of livestock is the animal's market value, with an appropriate reduction for any salvage value. Bell v. Gray-Robinson Construction Co. (1954), 265 Wis. 652, 62 N. W. (2d) 390; Gould v. *644 Merrill Railway & Lighting Co. (1909), 139 Wis. 433, 447, 121 N. W. 161; Anno. 79 A. L. R. (2d) 677, 687.
If a mink has increased value at a certain period of the year because of its breeding capacity, this should find expression in an appraisal of its market value. To allow recovery for both market value and also for the loss of future litters would open the door to a duplication of damages. If Mr. Nelson had to pay a high price for replacements at breeding periods, that would be but another factor in determining their market value. In the Gould Case, supra, the court said, at page 448:
"But where the full value at the time the horse was injured is recovered, there can be no additional recovery for loss of use of the horse."
In our opinion, Mr. Nelson was entitled to recover the market value of those mink which died because of the defendant's negligence less their salvage value. In addition, a deduction would have to be made for those mink which would have died in the normal course of operations. The market value would be demonstrated by the reasonable cost of replacing the mink with comparable animals. Mr. Nelson testified that he replaced only two of the dead mink, but the reason for such limited replacement was not fully explored. The record does not establish that these mink were unique.
A case which considered a problem comparable to that in the case at bar is Covey v. Western Tank Lines (1950), 36 Wash. (2d) 381, 218 Pac. (2d) 322. The Washington supreme court held there could be no recovery for unborn mink.
Since the verdict included in the answer to the damage question an item which was legally erroneous, we conclude that there must be a new trial on the question of damages. While this court in Spleas v. Milwaukee & Suburban Transport *645 Corp. (1963), 21 Wis. (2d) 635, 124 N. W. (2d) 593, has extended the rule of Powers v. Allstate Ins. Co. (1960), 10 Wis. (2d) 78, 102 N. W. (2d) 393, to permit its use in cases in which the prejudicial error was confined to damages, we believe that in the instant case the wiser course is to order a retrial of the damage issue.
In conclusion, the judgment must be affirmed in all respects except as to damages, and as to damages the judgment is to be reversed for a new trial limited to that issue. Costs are to be awarded to the appellant.
By the Court.Judgment affirmed in part and reversed in part. Cause remanded for further proceedings consistent with this opinion.
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Filed 2/8/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
HUB CONSTRUCTION SPECIALTIES, B263398
INC.,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. GC050916)
v.
ESPERANZA CHARITIES, INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court for the County of Los Angeles.
John P. Doyle, Judge. Reversed and remanded.
Howard Goodman for Plaintiff and Appellant.
Romero Law and Alan J. Romero for Defendant and Respondent.
____________________________________
SUMMARY
A preliminary written notice to the property owner is a necessary prerequisite to
the validity of a mechanic‟s lien. The issue in this case is whether a mechanic‟s lien is
invalid because the plaintiff lienholder did not strictly comply with the then-effective
statutory requirement governing proof that the preliminary written notice was served on
the defendant property owner by certified mail.
The defendant stipulated that the notice was served by certified mail, that the U.S.
Postal Service website tracking certified mail items showed the notice was delivered, and
that defendant actually received the notice. Despite these stipulations, the defendant
contends the lien is invalid because the plaintiff has no return receipt, and the statute
applicable at the time required plaintiff to prove the notice was served by “affidavit . . .
accompanied either by the return receipt of certified or registered mail, or by a photocopy
of the record of delivery and receipt maintained by the post office, showing the date of
delivery and to whom delivered . . . .” (Former Civ. Code, § 3097.1, subd. (a); Stats.
2010, ch. 697, § 16 [repealed].) The trial court agreed and dismissed the case, concluding
that plaintiff had not strictly complied with the statute.
We reverse the judgment. While strict compliance with the notice provisions of
the mechanic‟s lien law is required, the applicable precedents do not require or justify
applying that rule to the statutory provisions governing proof that the required notice was
properly given. A stipulation eliminates the need for proof. Accordingly, where it is
stipulated that notice was given in the statutorily prescribed manner, to require further
proof would elevate form over substance to a degree that cannot be countenanced in light
of the long-established principle that the mechanic‟s lien law is “remedial legislation, to
be liberally construed for the protection of laborers and materialmen.” (Connolly
Development, Inc. v. Superior Court of Merced County (1976) 17 Cal.3d 803, 826-827
(Connolly).)
FACTS
The parties stipulated to the pertinent facts as follows.
2
Plaintiff Hub Construction Specialties, Inc., supplied rebar and other materials to
the general contractor on a construction project on property owned by defendant
Esperanza Charities, Inc. The general contractor failed to pay plaintiff $81,857.55 for the
materials, a claim plaintiff has determined is uncollectible.
On March 16, 2012, “[plaintiff] caused a „California Preliminary Notice‟ to be
mailed by Certified Mail, to [the general contractor], [defendant], and the project
construction lender, . . . as attested to by Proof of Service executed 9/28/12.”
Plaintiff “furnished postage to the U.S. Postal Service sufficient to serve all
certified mail items and possesses a „Certified Mailer Manifest for: 3-16-12‟ reflecting
[the general contractor, defendant and the construction lender] as addressees and bearing
an Official Stamp of the U.S. Postal Service.”
Plaintiff did not request, and did not pay a fee to the U.S. Postal Service for, a
“return receipt” for the notices.
“The U.S. Postal Service website tracks certified mailed items and the tracking for
the certified mailed items indicates that they were all delivered. Further, [defendant] has
acknowledged in verified discovery responses that it received the preliminary notice
which [plaintiff] served. There is no signed return receipt.”
On December 12, 2012, defendant recorded a notice of completion, reciting that
the project was completed on December 3, 2012. On December 27, 2012, plaintiff
recorded a mechanic‟s lien against the property in the claim sum of $81,857.55. On
February 6, 2013, plaintiff filed a complaint to foreclose the mechanic‟s lien.
The value of the rebar that plaintiff furnished to the project from February 24,
2012 (20 days prior to the preliminary notice) was $53,070.18, and interest through
December 1, 2014, amounted to $9,287.25. Plaintiff sought a judgment for foreclosure of
the mechanic‟s lien, and defendant sought a judgment that the lien was invalid and an
order expunging the lien.
The case was initially scheduled for a court trial on the stipulated facts, but the
court ordered a modified summary judgment procedure instead (without separate
statements, and based on the stipulated facts). After a hearing, the trial court denied
3
plaintiff‟s motion for summary judgment and ordered the property released from
plaintiff‟s lien. The court found plaintiff “cannot provide sufficient proof of service by
documentation of the return receipt of certified mail, [or] a photocopy of the record of
delivery and receipt maintained by the post office, showing the date of delivery and to
whom delivered . . . as required under the statute in effect at the time the effectiveness of
the preliminary notice as given is sought to be established.”
Plaintiff filed a timely notice of appeal.
DISCUSSION
Plaintiff contends the absence of a return receipt does not bar enforcement of the
mechanic‟s lien, because proof of service is unnecessary where service by certified mail
has been admitted. Defendant contends the law in effect when plaintiff served the
preliminary notice applies and must be strictly construed; because that law required a
“return receipt” or a “record of delivery” to prove service of the notice, neither of which
plaintiff has, plaintiff‟s lien is unenforceable.1
We conclude from the relevant authorities that, while the principle of strict
construction applies to “the manner or form of serving notice upon an affected party”
(Harold L. James, Inc. v. Five Points Ranch, Inc. (1984) 158 Cal.App.3d 1, 6 (Harold L.
James)), it does not extend to matters of proof in a case where the defendant has admitted
that notice was served in the statutorily prescribed manner.
We begin by reciting the statutory provisions in effect when the preliminary notice
was served, and then turn to the relevant case authorities.
1 The “certified mailer manifest” shows plaintiff‟s payment for certified mail items
on March 16, 2012, addressed to defendant, the contractor, and the construction lender,
but does not show the date of delivery. Former Civil Code section 3097.1 required, as
proof of service by mail, an affidavit accompanied by either the return receipt or “a
photocopy of the record of delivery and receipt maintained by the post office, showing
the date of delivery and to whom delivered . . . .” (Id., subd. (a).)
4
1. The Statutory Background
Under current law, this case would not be before us. The law that became
operative on July 1, 2012 – several months after plaintiff served the preliminary 20-day
notice, but before execution of plaintiff‟s affidavit of service – expanded methods of
giving notice and methods of proving that notice was given. Defendant concedes that,
under current law, the “certified mailer manifest” proffered by plaintiff “might well have
sufficed as a record of „payment.‟ ”2 The statutes that were operative until July 1, 2012,
however, stated as follows:
Former Civil Code section 3097 provided that: “[E]very person who furnishes . . .
material for which a lien . . . otherwise can be claimed under this title, . . . shall, as a
necessary prerequisite to the validity of any claim of lien, . . . cause to be given to the
owner or reputed owner, to the original contractor, or reputed contractor, and to the
construction lender, if any, or to the reputed construction lender, if any, a written
preliminary notice as prescribed by this section.” (Id., subd. (a).) Further: “The notice
required under this section may be served as follows: [¶] . . . by first-class registered or
certified mail, postage prepaid, addressed to the person to whom notice is to be given at
his or her residence or place of business address . . . .” (Id., subd. (f)(1); ); Stats. 2010,
ch. 697, § 16 [repealed].)
Former Civil Code section 3097.1 provided that: “Proof that the preliminary 20-
day notice required by Section 3097 was served in accordance with subdivision (f) of
Section 3097 shall be made as follows: [¶] (a) If served by mail, by the proof of service
affidavit described in subdivision (c) of this section accompanied either by the return
receipt of certified or registered mail, or by a photocopy of the record of delivery and
receipt maintained by the post office, showing the date of delivery and to whom
delivered, or, in the event of nondelivery, by the returned envelope itself.”
2 Notice by mail now may be proved using several different documents, including
“[d]ocumentation provided by the United States Postal Service showing that payment
was made to mail the notice using registered or certified mail, or express mail.” (Civ.
Code, § 8118, subd. (b)(1).)
5
Former Civil Code section 3114 provided that: “A claimant shall be entitled to
enforce a lien only if he has given the preliminary 20-day notice (private work) in
accordance with the provisions of Section 3097, if required by that section, and has made
proof of service in accordance with the provisions of Section 3097.1.” (Stats. 2010,
ch. 697, § 16 [repealed].)
Current law states that, notwithstanding its July 1, 2012 operative date, “the
effectiveness of a notice given or other action taken on a work of improvement before
July 1, 2012, is governed by the applicable law in effect before July 1, 2012, and not by
this part.” (Civ. Code, § 8052, subds. (a) & (b).)
2. Case Authorities
We begin by noting the well-established principle that the mechanic‟s lien law is
“remedial legislation, to be liberally construed for the protection of laborers and
materialmen.” (Connolly, supra, 17 Cal.3d at pp. 826-827.) At the same time, the
Legislature “imposed the notice requirements for the concurrently valid purpose of
alerting owners and lenders to the fact that the property or funds involved might be
subject to claims arising from contracts to which they were not parties and would
otherwise have no knowledge.” (Romak Iron Works v. Prudential Ins. Co. (1980) 104
Cal.App.3d 767, 778 (Romak).) The liberal construction rule “may not be applied to
frustrate the Legislature‟s manifested intentto exact strict compliance with the
preliminary notice requirement.” (Ibid.)
Several Court of Appeal cases tell us that strict compliance with the notice
requirements of former Civil Code section 3097 is necessary (although another case,
described post, validated a mechanic‟s lien against an owner who was properly served
with notice, even though the subcontractor failed to comply with the statutory
requirement of sending notice to the contractor). Still other cases tell us that substantial
compliance with other provisions of the mechanic‟s lien law suffices under some
circumstances. There is no published authority determining whether strict compliance
with the proof of service provisions of former section 3097.1 is required. Here is a brief
review:
6
IGA Aluminum Products, Inc. v. Manufacturers Bank (1982) 130 Cal.App.3d 699
(IGA) is the principal case cited for the proposition that notice requirements are to be
strictly construed. In IGA, the question on appeal was “whether the notice requirement of
[Civil Code] section 3097 is satisfied by actual written notice delivered by ordinary first
class mail, and thus if there were a triable issue of fact raised as to whether such notice
was given.” (Id. at p. 702.) The court rejected the premise of the plaintiff‟s argument:
“that actual written notice, even though not transmitted in strict compliance with the
terms of section 3097, satisfies the statutory notice requirement.” (Ibid.) “We conclude
that such premise is incorrect as a matter of law,” and so summary judgment was proper.
(Ibid.; see id. at pp. 703, 704 [“[o]bviously the substantial compliance doctrine has no
application in the present case”; former section 3097 was “unambiguous as to its notice
requirement, and therefore there is no room for judicial construction, liberal or
otherwise”]; see also Romak, supra,104 Cal.App.3d at pp. 778, 773 [the plaintiff failed to
give preliminary 20-day notice to the defendant construction lender; notice given to
owner did not suffice; compliance was not excused by lack of knowledge of the identity
of the lender, as the statute allowed plaintiff to mail notice to the job site; statute
“imposed on [the plaintiff] an absolute obligation („must‟) to give a preliminary 20-day
notice to [the construction lender] „as a necessary prerequisite to the validity‟ of any stop
notice given it later”].)
On the other hand, in Industrial Asphalt, Inc. v. Garrett Corp. (1986) 180
Cal.App.3d 1001 (Industrial Asphalt), the plaintiff served the required preliminary 20-
day notice on the defendant owner, but did not serve the required notice on the original
contractor (who later declared bankruptcy). (Id. at p. 1005.) The Court of Appeal
reversed the trial court‟s invalidation of the lien, stating: “To construe the statute strictly
would require us to invalidate a lien against an owner who received notice because
someone else, the original contractor, did not receive notice. That strict statutory
construction would allow a party who received the required notice to be insulated from
liability because another party did not receive notice. We do not believe that the statute‟s
purpose should, or does, lead to this aridly formalistic result. We hold that the plaintiff‟s
7
notice to the defendant satisfied the prerequisites for a valid lien against the defendant,
and we reverse the trial court‟s judgment.” (Id. at p. 1006; see id. at p. 1007 [“where the
lien claimant has observed the property owner‟s right to notice, he should be allowed to
proceed to perfect his lien. We see no reason, in the absence of prejudice to the property
owner [citations], why the subcontractor‟s failure to serve notice upon an original
contractor should render unenforceable a lien against an owner who did receive proper
notice. To hold otherwise would allow the statute to frustrate enforcement of the
constitutional remedy instead of to effectuate it.”]; id. at p. 1008 [“statutory notice to the
original contractor would have been a useless, even futile act which the law does not
require”].)
Several other cases involve other aspects of former Civil Code section 3097, and
other provisions of the mechanic‟s lien law, and confirm that strict compliance with the
law is not always required.
The court in Harold L. James reviewed cases such as IGA and Romak requiring
strict compliance, as well as cases finding that other mistakes in lien documents did not
preclude enforcement of the lien. (E.g., Wand Corp. v. San Gabriel Valley Lumber Co.
(1965) 236 Cal.App.2d 855 (Wand Corp.) [mistake in failing to designate the contractor
in the lien document did not preclude enforcement of the lien, where the contractor was
correctly designated in the prelien notice, and the document itself was not fraudulent or
misleading].)
Harold L. James distilled the following principle reconciling cases requiring strict
compliance and cases calling for liberal construction of lien statutes: “The general
principles of liberal construction enunciated in Wand Corp. are still good law, subject to
this refinement . . . : where the Legislature has provided a detailed and specific mandate
as to the manner or form of serving notice upon an affected party that its property
interests are at stake, any deviation from the statutory mandate will be viewed with
extreme disfavor.” (Harold L. James, supra, 158 Cal.App.3d at p. 6.)
Harold L. James involved former Civil Code section 3097 requirements for the
content of the preliminary 20-day notice. The statute required “a boldface alert to the
8
property owner” with “explicit warning of the danger of losing his property in connection
with the labor or materials which were or were to be furnished by the subcontractor
giving the notice.” (Harold L. James, supra, 158 Cal.App.3d at p. 7.) The plaintiff‟s
notice used outdated statutory language “in rather small print” (id. at p. 3), and the Court
of Appeal observed that the Legislature, in amending the statute in 1976, “unmistakably
expressed its dissatisfaction with the former statutory language and the manner of its
presentation” and “was concerned with making the notification process as conspicuous to
the owner as possible” (id. at p. 7). The court concluded that “the Legislature‟s explicit
mandate requires a finding that, as a matter of law, plaintiff‟s use of outdated statutory
language in its preliminary notice did not substantially comply with section 3097 . . . .”
(Ibid.)
Harold L. James continued: “we need not speculate as to what, if any, deviations
from the currently specified statutory lien language might permit a court to determine that
such deviations did not render the subsequent lien unenforceable.” (Harold L. James,
supra, 158 Cal.App.3d at p. 7.) The court held: “we conclude that the transmittal
methods and notice requirements must be strictly construed. However, the issue of minor
errors in the body of the notice must be independently addressed on a case-by-case basis,
if and when such a case is presented.” (Ibid.; see also San Joaquin Blocklite v. Willden
(1986) 184 Cal.App.3d 361, 366, 364-365 [applying the same rule in a public works case;
the plaintiff admitted not sending a preliminary 20-day notice, but argued that the
defendant‟s actual knowledge of the material supplier, plus a notice sent by the state
about the materials, either excused compliance or constituted a kind of substantial
compliance; “transmittal methods and notice requirements” must be strictly construed].)3
3 Defendant also cites Truestone, Inc. v. Simi West Industrial Park II (1984) 163
Cal.App.3d 715. Truestone involved a statutory exception to the notice requirement for
“one under direct contract with the owner.” (Former Civ. Code, § 3097, subd. (a).) In
Truestone, the plaintiff admitted that the 20-day preliminary notice was sent by first class
regular mail, rather than by certified or registered mail, and that it had no proof of
service. (Id. at p. 720.) But declarations in the case showed the property owner admitted
he had received two 20-day notices, was “having trouble” with the contractor, and
9
3. This Case
From the stipulated facts and case authorities, several points are clear.
First, the cases demonstrate that the courts do not demand strict compliance with
every aspect of the mechanic‟s lien law. The cases go no further than to say that
“transmittal methods and notice requirements must be strictly construed.” (Harold L.
James, supra, 158 Cal.App.3d at p. 7.)
Second, plaintiff in fact served the preliminary notice on defendant in strict
compliance with former Civil Code section 3097, that is: “by first-class . . . certified
mail, postage prepaid, addressed to the person to whom notice is to be given . . . .”
(Former § 3097, subd. (f)(1).) Service by first-class certified mail “is complete at the
time of the deposit of that . . . certified mail.” (Id., subd. (f)(3).) Defendant agreed this is
so when it stipulated that on March 16, 2012, plaintiff “caused a „California Preliminary
Notice‟ to be mailed by Certified Mail, to [the general contractor], [defendant], and the
project construction lender, . . . as attested to by Proof of Service executed 9/28/12.”
Third, defendant in fact received the preliminary notice that plaintiff served by
certified mail. The stipulated facts tell us not only that defendant actually received the
notice (a point that is not determinative), but also that plaintiff actually mailed the
preliminary notice by certified mail to defendant (a point that is determinative). And if
that were not enough, the stipulated facts also tell us that plaintiff furnished sufficient
postage to the U.S. Postal Service for the certified mail items; that plaintiff has a stamped
record from the U.S. Postal Service (a “Certified Mailer Manifest for: 3-16-12”)
promised to pay for the materials supplied to the contractor if the plaintiff would continue
to make deliveries. (Id. at pp. 720-721.) The court pointed out the exception to the
notice requirement for “one under direct contract with the owner,” and found there was
“a factual issue concerning the existence of a contract between [the plaintiff and the
owner].” (Id. at p. 722.) Truestone also stated that in some cases, “even where there is
no contractual relationship between the parties, actual knowledge may estop the property
owner from asserting the notice requirements of section 3097.” (Ibid.) The court
observed that the policy of the law favors protection of laborers and materialmen, and
“[t]herefore, an exception to the statutory notice requirement precludes the defeat of the
lien on meaningless technicalities where a materialman is known to the property owner
and makes deliveries in reliance on his promise to pay.” (Id. at p. 723.)
10
“reflecting [the contractor, defendant, and the construction lender] as addressees”; and
that the U.S. Postal Service website tracking for the certified mailed items “indicates that
they were all delivered.”
In the face of the agreed facts and in the absence of binding authority to the
contrary, we decline to find that plaintiff‟s lien is unenforceable for lack of a return
receipt. We do not disagree with the rule that strict compliance with the notice
requirements of former Civil Code section 3097 is required. It is undisputed that plaintiff
complied with that statute. We merely decline to extend the rule of strict construction to
the proof of service requirements of former section 3097.1. In short, in a case where
defendant has admitted that notice was served in the statutorily prescribed manner,
plaintiff need not comply with the statutory requirements for proving that notice was
served in the statutorily prescribed manner. To hold otherwise would defy reason and
serve no conceivable purpose. Like the court in Industrial Asphalt, “We do not believe
that the statute‟s purpose should, or does, lead to this aridly formalistic result.”
(Industrial Asphalt, supra, 180 Cal.App.3d at p. 1006; see ibid. [“strict statutory
construction would allow a party who received the required notice to be insulated from
liability”].)
DISPOSITION
The judgment is reversed, and the cause is remanded to the trial court with
directions to vacate its order releasing the property from plaintiff‟s lien and enter a new
order for foreclosure of the mechanic‟s lien. Plaintiff is to recover its costs on appeal.
GRIMES, J.
WE CONCUR:
BIGELOW, P. J.
RUBIN, J.
11
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IN THE COURT OF APPEALS OF THE STATE OF IDAHO
Docket No. 41104
STATE OF IDAHO, ) 2014 Unpublished Opinion No. 403
)
Plaintiff-Respondent, ) Filed: March 6, 2014
)
v. ) Stephen W. Kenyon, Clerk
)
E.J. WENDELL BOSLEY, ) THIS IS AN UNPUBLISHED
) OPINION AND SHALL NOT
Defendant-Appellant. ) BE CITED AS AUTHORITY
)
Appeal from the District Court of the First Judicial District, State of Idaho,
Kootenai County. Hon. Richard S. Christensen, District Judge.
Order of restitution, affirmed.
John M. Adams, Kootenai County Public Defender; Jay Logsdon, Deputy Public
Defender, Coeur d’Alene, for appellant.
Hon. Lawrence G. Wasden, Attorney General; Mark W. Olson, Deputy Attorney
General, Boise, for respondent.
________________________________________________
MELANSON, Judge
E.J. Wendell Bosley appeals from the district court’s order of restitution entered upon his
plea of guilty to disturbing the peace. For the reasons set forth below, we affirm.
I.
FACTS AND PROCEDURE
The following facts were elicited at a preliminary hearing and are disputed by Bosley. In
February 2012, the victim and two friends walked along a street in downtown Coeur d’Alene.
All three had been drinking. Bosley, also walking down the street, began conversing with the
three. The conversation turned to football and the victim said some negative things about a team
Bosley liked. Bosley became angry and punched the victim in the head. The victim fell to the
ground and struck her head against the pavement. One of the victim’s friends attended to her
while the other began to fight Bosley. When police arrived, one of the friends reported the
foregoing facts to officers. However, the victim indicated she had not been hit and did not want
1
to press charges. The victim lacked any memory of the incident--she remembered talking about
football and then being on the sidewalk talking to officers. The following day, the victim went
to the hospital and was treated for a head injury.
The state charged Bosley with aggravated battery. I.C. §§ 18-903(a), 18-907(a). Bosley
agreed to plead guilty to an amended charge of disturbing the peace, I.C. § 18-6409, and agreed
to pay restitution. The district court imposed a sentence of 180 days in jail. The district court
suspended 170 days and allowed Bosley to work 40 hours in the community labor program in
lieu of the remaining 10 days in jail. The state requested restitution in the amounts of $400 for
wages lost by the victim due to missed work and $2730 for nonrefundable tuition payments
made for classes the victim was unable to attend. Bosley filed a written objection and requested
a hearing with respect to the proposed $2730 for tuition.
At the hearing, the victim testified and the state presented evidence supporting the $2730
restitution request. Bosley argued the district court should decline to award this amount because
there was no causal nexus between the injuries sustained by the victim and the crime Bosley pled
guilty to (disturbing the peace). Bosley also argued the tuition payments were an expense the
victim would have incurred regardless of whether she sustained the injury. The district court
ruled that, pursuant to the plea agreement, Bosley consented to pay the victim restitution for the
injuries to her head and the losses therefrom. The district court also found the tuition payments
to be economic losses resulting from the attack and entered a restitution order in the amounts
requested by the state. Bosley appeals.
II.
ANALYSIS
Bosley contends the district court erred by determining he consented to pay restitution for
losses not caused by his admitted criminal conduct. Specifically, Bosley contends the only
conduct he pled guilty to was “noise-making.” The state argues the terms of Bosley’s plea
agreement required him to pay restitution for economic losses the victim suffered as a result of
the attack.
A. Economic Loss Resulting from Bosley’s Criminal Conduct
Idaho’s restitution statute generally requires restitution orders for “any crime which
results in an economic loss to the victim,” I.C. § 19-5304(2), unless the parties consent to a
broader restitution order. See I.C. § 19-5304(9). Any restitution amount awarded under Section
2
19-53011(2) must be causally related to the crime. State v. Corbus, 150 Idaho 599, 602, 249
P.3d 398, 401 (2011). The statute defines “victim” as “a person or entity, who suffers economic
loss or injury as the result of the defendant’s criminal conduct.” I.C. § 19-5304(1)(e). The term
“economic loss” includes such things as “the value of property taken, destroyed, broken, or
otherwise harmed, lost wages, and direct out-of-pocket losses or expenses, such as medical
expenses resulting from the criminal conduct.” I.C. § 19-5304(1)(a). Except where the parties
have consented, a defendant cannot be required to pay restitution for damages stemming from
separate, uncharged, and unproven crimes. State v. Shafer, 144 Idaho 370, 372, 161 P.3d 689,
691 (Ct. App. 2007); State v. Richmond, 137 Idaho 35, 38, 43 P.3d 794, 797 (Ct. App. 2002).
Here, Bosley pled guilty to disturbing the peace under I.C. § 18-6409. This statute
provides, in part:
Every person who maliciously and willfully disturbs the peace or quiet of
any neighborhood, family or person, by loud or unusual noise, or by tumultuous
or offensive conduct, or by threatening, traducing, quarreling, challenging to fight
or fighting, or fires any gun or pistol, or uses any vulgar, profane or indecent
language within the presence or hearing of children, in a loud and boisterous
manner, is guilty of a misdemeanor.
I.C. § 18-6409(1). The state’s amended information alleged that Bosley, “did willfully and
maliciously disturb the peace and/or quiet of [the victim] by tumultuous conduct, offensive
conduct, threatening, quarrelling, fighting and/or challenging to fight.” Therefore, fighting is
both a statutory basis for a charge of disturbing the peace and a ground alleged by the state in its
information. Bosley pled guilty to this charge and expressly agreed to pay restitution. At the
restitution hearing, the victim testified that, as a result of the incident, she hit her head and
suffered a subcranial brain aneurysm. The state did not present evidence that Bosley violated
I.C. § 18-6409 in any way except for the punch to the victim’s head. Nor did Bosley present any
evidence that indicated he violated I.C. § 18-6409 in any other manner. Therefore, Bosley’s
criminal act of disturbing the peace encompassed the punch to the victim’s head (fighting).
Thus, the district court did not err in awarding restitution for the nonrefundable tuition
payments. 1
1
The district court did not rule on whether the head injury could have resulted from Bosley
disturbing the peace. However, where a ruling in a criminal case is correct, though based upon
3
B. Consent to Pay Restitution
An alternative ground to affirm the order for restitution is consent. Plea agreements are
contractual in nature and generally are examined by courts in accordance with contract law
standards. State v. Jafek, 141 Idaho 71, 73, 106 P.3d 397, 399 (2005); State v. Doe, 138 Idaho
409, 410-11, 64 P.3d 335, 336-37 (Ct. App. 2003); State v. Fuhriman, 137 Idaho 741, 744, 52
P.3d 886, 889 (Ct. App. 2002). In interpreting the provisions of a contract, a court must first
determine whether those terms are ambiguous or unambiguous as the application of an
unambiguous term is a question of law while the interpretation of ambiguous language presents a
question of fact as to the parties’ intent. Doe, 138 Idaho at 410-11, 64 P.3d at 336-37. Because
the question whether a plea agreement is ambiguous is an issue of law, it is reviewed de novo.
Fuhriman, 137 Idaho at 744, 52 P.3d at 889.
Even assuming the plea agreement here is ambiguous in that it could cover distress
caused by loud noises created by Bosley or, in the alternative, the head injury, Bosley’s argument
still fails. In interpreting an ambiguous contractual term, the fact-finder must attempt to “discern
the intent of the contracting parties, generally by considering the objective and purpose of the
provision and the circumstances surrounding the formation of the agreement.” State v. Allen,
143 Idaho 267, 272, 141 P.3d 1136, 1141 (Ct. App. 2006). If possible, ambiguous language in
plea agreements should be resolved in favor of the defendant. Fuhriman, 137 Idaho at 745, 52
P.3d at 890; State v. Cole, 135 Idaho 269, 272, 16 P.3d 945, 948 (Ct. App. 2000). On appeal,
however, we defer to a trial court’s findings of fact unless they are clearly erroneous. State v.
Hawkins, 131 Idaho 396, 400, 958 P.2d 22, 26 (Ct. App. 1998). Such findings are clearly
erroneous only if they are unsupported by substantial and competent evidence. State v. Thomas,
133 Idaho 682, 686, 991 P.2d 870, 874 (Ct. App. 1999).
In this case, the district court found Bosley agreed to pay restitution for the head injury to
the victim. There is substantial and competent evidence to support this finding. The victim
testified at the preliminary hearing and the restitution hearing to sustaining one physical
injury--the subcranial brain aneurysm. The victim did not testify to any distress caused by loud
noises made by Bosley. Nor did Bosley testify to engaging in any conduct resulting in loud
an incorrect reason, it still may be sustained upon the proper legal theory. State v. Pierce, 107
Idaho 96, 102, 685 P.2d 837, 843 (Ct. App. 1984).
4
noises. The only alleged conduct was a punch by Bosley and a head injury sustained by the
victim. Bosley’s concession to pay $400 for lost wages also undermines his interpretation of the
plea agreement. It would be illogical for Bosley to agree to pay restitution for lost wages of the
victim if the only conduct he admitted to was making loud noises that caused the victim distress.
Additionally, Bosley did not file an affidavit indicating he harbored a contrary understanding of
the plea agreement. See Schafer, 144 Idaho at 374, 161 P.3d at 693.
Bosley also argues the plea agreement itself demonstrates he did not intend to
compensate the victim for the head injury and resulting losses. This is because, in the plea
agreement, restitution for the victim’s lost tuition payments was crossed off and marked “subject
to hearing.” This argument lacks merit. The provision providing that Bosley pay $400 for the
victim’s lost wages is also crossed off--a provision Bosley concedes he owes restitution for.
Bosley does not explain why he would owe restitution for one crossed off provision but not the
other. In viewing the plea agreement, it appears both amounts were crossed off after the parties
agreed to have a hearing to determine the amount of restitution. Regardless, we put little weight
on these crossed-off terms. The district court’s finding that Bosley agreed to pay restitution for
the head injury to the victim and the resulting losses is supported by substantial and competent
evidence and, thus, is not clearly erroneous. 2
III.
CONCLUSION
Bosley pled guilty to conduct which resulted in a head injury to the victim. Further, even
if the conduct was not covered under I.C. § 18-6409, Bosley consented to pay restitution for the
injury to the victim’s head and the resulting losses. Accordingly, we affirm the district court’s
order of restitution.
Chief Judge GUTIERREZ and Judge LANSING, CONCUR.
2
Bosley does not challenge the district court’s determination that these tuition payments
constitute economic loss resulting from the head injury and we express no opinion on the
correctness of that determination.
5
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86 Ga. App. 137 (1952)
70 S.E.2d 886
HIGHT
v.
STEELY.
33988.
Court of Appeals of Georgia.
Decided May 9, 1952.
*138 Dan Winn, Charles B. Teal, for plaintiff.
Stewart & York, for defendant.
WORRILL, J.
(After stating the foregoing facts.) The record in this case presents for decision the question whether or not the trial judge should have granted a new trial upon the usual general grounds only. This case is an action for malicious prosecution. The facts are substantially the following: Homer Hunt was engaged in the retail jewelry business, and sold a certain ring to the plaintiff in error. The defendant in error was engaged in the operation of a collecting agency. The retention-title contract held by Homer Hunt against the plaintiff in error for the ring was turned over to the defendant in error for collection. At the instance of Homer Hunt, the defendant in error foreclosed the retention-title contract for the recovery of the ring from the plaintiff in error. When the defendant in error and the levying officer went to the home of the plaintiff in error, she informed them that she did not have the property in her possession, and that she had pawned it to Homer Hunt. Then Hunt was called and he came to the home of the plaintiff in error, and thereafter a warrant was served upon the plaintiff in error for disposing of mortgaged property. An accusation was drawn in the City Court of Polk County against the plaintiff in error for disposing of mortgaged property and was nolle *139 prossed at the July term, 1949, of said court. The facts further show that the defendant in error took these papers to the justice of the peace, obtained a warrant against the plaintiff in error, and went with the bailiff to her home. Upon arriving there he asked her if she had a ring which belonged to Hunt Jewelry Company; and, when she stated that she did not know what they were talking about, he told the bailiff to arrest her on the warrant, and he did. When Homer Hunt came to the home of the plaintiff in error, he assumed the responsibility of allowing her until the following morning to make bond, which she did. The defendant in error claimed that the entire proceedings were left up to Homer Hunt, and that he had nothing further to do with it.
The record shows no evidence of any malice or feelings on the part of the defendant in error towards the plaintiff in error, nor that the defendant in error knew that Homer Hunt had already accepted the property in pawn from the plaintiff in error. The record shows that the defendant in error took no part in the arrest or prosecution of the plaintiff in error; and, after the defendant in error learned that the plaintiff in error did not have the property, all subsequent proceedings were initiated and handled by Homer Hunt.
"A criminal prosecution, maliciously carried on, and without any probable cause, whereby damage ensues to the person prosecuted, shall give him a cause of action." Code, § 105-801. In order to maintain an action for malicious prosecution, all of the following necessary elements must be proven to the satisfaction of the jury: (1) that the offense charged was a criminal prosecution; (2) that the criminal prosecution was carried on maliciously by the defendant; (3) that the criminal prosecution was finally terminated legally in favor of the plaintiff; (4) that the criminal prosecution was carried on by the defendant without any probable cause; and (5) that as a result of the criminal prosecution by the defendant damage ensued to the plaintiff. See Cary v. Highland Bakery, 50 Ga. App. 553 (179 S. E. 197); Henderson v. Francis, 75 Ga. 178 (5). These elements were not proven in this case. "Want of probable cause shall be a question for the jury, under the direction of the court, and shall exist when the circumstances are such as to satisfy a reasonable man that the accuser had no ground for proceeding but his *140 desire to injure the accused." Code, § 105-802. The burden is on the plaintiff to show a want of probable cause by the defendant in the criminal prosecution. See Sledge v. McLaren, 29 Ga. 64, 65; Turner v. Davison-Paxon-Stokes Co., 22 Ga. App. 403 (1) (95 S. E. 1001).
"In any case when the verdict of a jury is found contrary to evidence and the principles of justice and equity, the presiding judge may grant a new trial before another jury." Code, § 70-202. This court has strongly held in a long line of decisions that, although the evidence before a trial jury might have authorized a different verdict, where there is enough evidence to support the verdict found, this court will not reverse the judgment of the trial court in refusing a new trial on only general grounds. See Marcus v. State, 76 Ga. App. 581 (1) (46 S. E. 2d, 770); Scott v. Gillis, 202 Ga. 220 (2) (43 S. E. 2d, 95). It is the duty of the court to construe the evidence most strongly in support of a verdict which has been approved by the trial judge. Brown v. Meador, 83 Ga. 406 (9 S. E. 681); Associated Mutuals v. Pope Lumber Co., 200 Ga. 487, 496 (37 S. E. 2d, 393). "The verdict was authorized by the evidence and has the approval of the trial court. No error of law appearing, it will not be disturbed by this court." Fowler v. State, 82 Ga. App. 197 (4) (60 S. E. 2d, 473).
Judgment affirmed. Sutton, C.J., and Felton, J., concur.
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40 F.2d 49 (1930)
BOYLE et al.
v.
UNITED STATES.
No. 4207.
Circuit Court of Appeals, Seventh Circuit.
April 15, 1930.
Rehearing Denied May 29, 1930.
A. B. Dennis and Walter Brewer, both of Danville, Ill., for appellants.
Mary G. Connor, of Washington, D. C., for appellee.
Before ALSCHULER, PAGE, and SPARKS, Circuit Judges.
ALSCHULER, Circuit Judge.
Appellants, with thirty-seven others, were indicted on the charge of violating section 1 of the Act of July 2, 1890 (15 USCA § 1), known as the Sherman Anti-Trust Law, for engaging in a conspiracy or combination in *50 restraint of interstate trade and commerce in candy and other confectionary products. Some pleaded guilty; thirty-five went to trial, of whom nineteen were acquitted, and sixteen, including appellants, were convicted and sentenced. For appellants it is contended that the evidence did not show their guilt, and that interstate commerce is not involved.
Most of the defendants were members of an unincorporated association known as Chicago Association of Candy Jobbers, which had many years of existence. Its professed objects were improvements in the business and social conditions of its members. Its membership of about 250 was composed almost entirely of so-called candy jobbers, whose business it was to buy candies and to sell them in Chicago and vicinity, usually carrying their stocks in automobiles or wagons, and delivering directly to the purchasers, who were generally small retailers. They purchased their stocks from manufacturers and dealers in Chicago, as well as in Milwaukee, New York, Boston, and other places in various states. Their collective business was large, running into several millions of dollars yearly.
In course of time there developed a disposition and purpose to control this automobile and wagon trade in Chicago, and to prevent subjobbers[1] who were members from trading with customers of the members, and customers of the members from trading with manufacturers and subjobbers who would not agree that they would not sell their products in Chicago and vicinity to any who were not members of the association, and who did not maintain prices fixed by the association. For some years efforts to that end were more or less unavailing, and in about April, 1926, the association employed as its manager one Pastor, who promised and inaugurated a vigorous policy.
He proposed an amendment to the constitution and by-laws as follows:
All members are requested to comply with the following:
A. To not purchase candy from manufacturers who do not support our association.
B. To not purchase candy from subjobbers who do not support our association.
C. To not sell to any one who jobs candy and is not a member in good standing.
D. All members who are subjobbers are requested to comply with the following rules:
E. To not sell candy to a jobber or subjobber who is not a member in good standing of the Chicago Association of Candy Jobbers.
F. To not sell any candy, and have same called for, to any jobber or subjobber who is not a member in good standing of the Chicago Association of Candy Jobbers.
The amendment was unanimously approved, first at a meeting of the executive committee, at which all of appellants were present except Goldsmith, Boyle, and Briley. All but these three were members of the executive committee, save that Goldsmith was a member of the "Amalgamated Benevolent Club," an organization which was composed of Jewish candy jobbers, and which paid dues to the Chicago Association of Candy Jobbers; Goldsmith generally representing them at meetings of the executive committee of the latter.
Much of the controversy raged about retail tobacco dealers who were selling nationally advertised chocolate and nut bars of various descriptions manufactured by concerns of other states, and who were not members of the association, and to whom, it was claimed, manufacturers and subjobbers would cut prices.
Pastor (who was indicted and pleaded guilty, and was the government's main witness) actively and aggressively undertook to force manufacturers and subjobbers to comply with his terms. He visited manufacturers in various states and openly told them they must cease selling to nonmembers of the association in Chicago and elsewhere, or they could sell nothing to association members. He undertook a system of issuing cards of identification and approval to representatives of such manufacturers as complied with his terms; and such as did not comply promptly lost customers and trade, through the efforts of Pastor and his associates. Nonmembers of the association who refused to join it, as well as members who did not comply with orders, were roughly handled. There were assaults and bombings and smashing of store fronts, all manifestly directed to the terrorizing of the small dealers, in order to require them to become members, and such as were members to abide by the manifest policy of the management of the organization, and to refrain from buying from such manufacturers and subjobbers as would sell to those in and about Chicago who were not members of the association, and to prevent manufacturers and subjobbers from *51 selling to any who were not members of the association.
It is apparent from the evidence that all of this had the direct or indirect co-operation, encouragement, and approval of the executive committee, including Goldsmith as a sort of ex officio or associate member thereof. Evidently in recognition of Pastor's efficiency, and by way of approval of his course, he was given a very substantial raise in salary.
As for Boyle, we find no evidence in the record connecting him consciously with any combination in restraint of interstate commerce. Membership in the organization would not alone imply participation in such a conspiracy or combination. Under the administration of Pastor's predecessor, which was evidently too mild to give satisfaction, Boyle was an investigator, as he says, mainly of the disappearence of goods, but he held no position during Pastor's administration, and had even ceased to be in the candy business long before Pastor appeared on the scene.
The contention that appellants themselves were not engaged in interstate commerce is not of importance. It is not necessary to a violation of the statute that the transgressors themselves be engaged in such commerce. Knauer v. United States (C. C. A.) 237 F. 8. The pertinent inquiry is, Did they enter into a combination which had, or would have, the effect of restraining interstate commerce? Their manifest purpose was, in part, to embarrass, divert, and restrain the trade of various foreign manufacturers of and dealers in candies and confectionery, and thereby to diminish, and if possible altogether to suspend, the flow of that commerce into Chicago and vicinity.
Under the authorities we are clearly of the opinion that interstate commerce was here involved, and that a conspiracy or combination in its restraint appears. Eastern States, etc., Ass'n v. United States, 234 U. S. 600, 34 S. Ct. 951, 58 L. Ed. 1490, L. R. A. 1915A, 788; Montague & Co. v. Lowry, 193 U. S. 38, 24 S. Ct. 307, 48 L. Ed. 608; Wholesale Grocers', etc., v. Federal Trade Com. (C. C. A.) 277 F. 657; Boyle v. United States, 259 F. 803 (7 C. C. A.); Belfi et al. v. United States, 259 F. 822 (3 C. C. A.); Hale v. Hatch & North Coal Co., 204 F. 433 (2 C. C. A.).
Without discussing at large the participation of each appellant, the record abundantly assures us that as to each and all of appellants, other than Boyle, there was evidence which warranted the jury's conclusion that they combined and conspired for the purpose and with the effect of restraining trade or commerce between the states. No other error appears seriously to be alleged and urged, and indeed we find no other allegation of error worthy of discussion.
The judgment against appellant Boyle is reversed, and as to him the cause is remanded to the District Court for another trial. The judgments against appellants Briley, Goldsmith, Hoffman, Jepsen, Kerksick, Lauritsen, and Meisterling are affirmed.
NOTES
[1] Contrary to the general usage of this term, a subjobber, in the business here described, is one who sells to these jobbers.
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33 A.3d 540 (2012)
423 N.J. Super. 475
In The Matter of The Application for Expungement of the Criminal Records of Marino LOBASSO.
Docket No. A-3577-10T4
Superior Court of New Jersey, Appellate Division.
Telephonically argued November 9, 2011.
Decided January 10, 2012.
*543 Daniel B. Kelley, Cherry Hill, argued the cause for appellant Marino LoBasso (Kelley Law Offices, LLC, attorneys; Mr. Kelley, on the brief).
Andrew M. Megill, Assistant Prosecutor, argued the cause for respondent State of New Jersey (Marlene Lynch Ford, Ocean County Prosecutor, attorney; Mr. Megill, on the brief).
Before Judges AXELRAD,[1] SAPP-PETERSON and OSTRER.
The opinion of the court was delivered by
OSTRER, J.S.C. (temporarily assigned).
Petitioner appeals from a February 9, 2011 Law Division order denying his application to expunge records of his 2005 conviction for third-degree eluding, N.J.S.A. 2C:29-2b. He relies on the recent enactment that reduced the waiting period for expungement of certain indictable offenses from ten years to five years after the date of conviction, payment of *544 fine, completion of probation or parole, or release from incarceration. L. 2009, c. 188, § 1, approved January 12, 2010, codified at N.J.S.A. 2C:52-2a(2). A petitioner may utilize this early pathway to expungement if the court finds "in its discretion that expungement is in the public interest, giving due consideration to the nature of the offense, and the applicant's character and conduct since conviction." Ibid. Construing the 2010 amendment, we conclude that the court may consider factors in addition to those pertaining to the "nature of the offense" and the applicant's "character and conduct since conviction." The court may also consider cognizable evidence pursuant to Rule 1:6-6 related to an arrest on a charge that was ultimately dismissed, although the court may not consider the arrest itself as evidence of guilt. State v. Brooks, 175 N.J. 215, 229, 814 A.2d 1051 (2002). Applying these legal conclusions, we affirm the trial court's order denying expungement.
I.
Petitioner prematurely filed a verified petition seeking expungement on October 29, 2010, which was less than five years after he completed probation on January 24, 2006. Cf. N.J.S.A. 2C:52-2a(2) (requiring at least five years after completion of probation before eligibility for expungement of conviction of indictable offense). After the court alerted the State that the matter had been filed under the early pathway provision, the State filed opposition by letter brief dated January 20, 2011, to which was attached various exhibits. Petitioner filed no reply. The petition was heard February 9, 2011, shortly after the prerequisite five-year period expired. The court considered documentary evidence pertaining to the nature and circumstances of the eluding offense, and petitioner's conduct and character since the offense. We address these in turn.
A.
According to a police report that the State submitted to the court, on June 19, 2004 at about 4:30 p.m., a Brick Township police patrolman observed the operator of a red, white and black Honda motorcycle, wearing a helmet with matching colors, fail to stop at a red light at an intersection, and then turn left across four lanes of moderate traffic nearly striking another vehicle. The patrolman was able to determine that the registration, in petitioner's name, was expired. The patrolman attempted to conduct a motor vehicle stop, activating warning lights and siren. The motorcycle then sped off, leading the officer in a pursuit through local streets, until the motorcycle entered the Garden State Parkway, at which point the officer terminated pursuit.
Two days later, petitioner reported to police that his motorcycle had been stolen the day of the pursuit. The patrolman who conducted the pursuit responded to petitioner's home to investigate the theft report. The officer suspected, based on petitioner's appearance and the design of the motorcycle helmet he observed at petitioner's home, that the petitioner had operated the motorcycle he claimed had been stolen. Petitioner ultimately admitted he had operated the vehicle on June 19 and his theft report was false. In an unsigned transcript of a Mirandized[2] statement, petitioner admitted that he continued driving knowing that a police officer wanted him to stop, his speed exceeded the officer's, and the officer ultimately fell out of view. He stated that after he entered the Garden State Parkway, he drove to a friend's *545 house, and stored the motorcycle in his shed.
Petitioner was initially charged by summons on June 22, 2004 with filing a false report, N.J.S.A. 2C:28-4b, and eluding, N.J.S.A. 2C:29-2b. He was also charged with numerous motor vehicle violations, including driving an unregistered motor vehicle, N.J.S.A. 39:3-4, failing to observe traffic signals, N.J.S.A. 39:4-81, failure to maintain lane (two times), N.J.S.A. 39:4-88b, reckless driving (four times), N.J.S.A. 39:4-96, improper left turn, N.J.S.A. 39:4-123b, failure to signal, N.J.S.A. 39:4-126, and failure to carry motor vehicle insurance coverage, N.J.S.A. 39:6B-2. He was later indicted in a single-count indictment for second-degree eluding, N.J.S.A. 2C:29-2b.
Petitioner entered a plea on October 12, 2004 to an amended charge of third-degree eluding. The State promised to recommend a non-custodial probationary term, and six months driver's license suspension. The State also promised to seek dismissal of the false report charge, as well as all the motor vehicle tickets, except the one that charged driving an unregistered motor vehicle.
The court sentenced petitioner on January 14, 2005 in accord with the plea agreement, imposing eighteen months probation on the eluding conviction. The court found aggravating factor nine, the need to deter, was in balance with mitigating factors seven, the absence of a prior record of delinquency or criminal activity (petitioner was thirty-eight years old), and ten, amenability to probation.[3]N.J.S.A. 2C:44-1a(9), b(7), b(10).
B.
Petitioner was discharged from probation early, on January 24, 2006. He had not been convicted of any crimes or offenses since his eluding conviction.
He asserted in his verified petition that he was a homeowner (he had become a Pennsylvania resident), and had been gainfully employed, although he provided no details or documentary evidence of where and when he was employed. He provided character references in the form of two unsworn letters, one from his former wife and another from a friend who is employed as a police officer in Pennsylvania.
His former wife stated that she had known petitioner for twenty-seven years. They divorced young. He dutifully paid child support and "went over and above his obligations as a father." Without suggesting a basis in personal knowledge, she also asserted his conviction caused him financial hardship. He lost his home in New Jersey, and she and petitioner were unable to afford to send their son to college. Petitioner had worked in construction, where background checks were not necessary. His criminal record prevented him from obtaining employment with health insurance. She alleged that he desperately needed medical insurance based on his medical condition.
Petitioner's friend stated that he had known petitioner for thirteen years. They first met when petitioner was his supervisor at his place of work. He stated that petitioner was a dedicated father, and had been a mentor to him.
At oral argument, petitioner's counsel also provided the court documents from *546 Goodyear Tire and Rubber Co. and Federal Express, to support his argument that petitioner had applied for employment with Goodyear in 2005 (when petitioner was still on probation) and Federal Express in 2007, but was unsuccessful after the businesses obtained his conviction record.
Petitioner also conceded in his verified petition that he had been arrested for simple assault on December 31, 2004more than two months after he entered his plea to eluding, but before sentencing.[4] He asserted that the charge was dismissed in Brick Township Municipal Court in April 2005.
In response, the State provided to the court the related domestic violence complaint filed by the alleged assault victim, petitioner's girlfriend, and related police reports. In her domestic violence complaint, she certified that during an argument, petitioner grabbed her by the neck and pushed her into a door; pushed her down again; then dragged her by the right arm, causing redness and bruising to her right bicep. She alleged prior unreported assaults in March, June and July 2004. A temporary restraining order was issued. Petitioner was arrested, apparently pursuant to N.J.S.A. 2C:25-21a(1) (stating that when an alleged victim exhibits "signs of injury caused by an act of domestic violence," police shall arrest the alleged perpetrator and sign a criminal complaint).
Pursuant to a search warrant, police seized a 9 mm handgun and other weapons. The Family Part entered an order in February 2005, compelling petitioner to sell his handgun, and other firearms that were seized on December 31, 2004.
According to petitioner's motor vehicle abstract and the New Jersey Automated Traffic System, after petitioner was sentenced on the eluding charge, he was charged in March 2007 with careless driving, N.J.S.A. 39:4-97, and ultimately pled guilty to obstructing passage of other vehicles. N.J.S.A. 39:4-67.[5]
Finally, petitioner submitted copies of his 1984 associates degree in applied science from Brookdale Community College.
C.
The court heard oral argument on the expungement petition on February 9, 2011. Petitioner's counsel was heard first and was permitted a reply. Neither side sought to call witnesses. After counsel concluded oral argument, the judge began to render his decision from the bench. Petitioner's counsel then interrupted, "My client had asked to address the Court. I'm sorry. I wasn't aware. Would your Honor entertain that?"
The judge explained that he needed to leave the bench in fifteen minutes, but he offered to return at 4 p.m. to allow petitioner *547 to speak, and then conclude the matter. Petitioner's counsel declined, stating that he had a municipal court appearance that evening and could not remain. The court then offered to continue the matter on February 28 at 9:00 a.m. Petitioner's counsel stated he was unavailable because of a scheduled medical procedure. Lastly, the court stated that petitioner could return without counsel at 4 p.m. to make his statement, but he would be subject to cross-examination. At that point, petitioner's counsel conferred with his client and stated, "[W]e'll just submit for a decision at this time."
In denying relief, the judge characterized expungement under the early pathway as "extraordinary relief."
This is extraordinary relief that is being sought. This is an area thatof the law where we don't have a lot of guidance. It is the petitioner's burden here to prove that he's worthy of the expungement under any circumstances and, likewise, under the five-year period as opposed to the ten-year period.
The court reviewed the nature of petitioner's offense, finding that the eluding posed a risk to public safety. The court noted that petitioner was a mature man in his thirties when he committed the offense, not a young driver whose poor judgment might be more understandable. The court also found that petitioner tried to persuade the police that the motorcycle was stolen, relying on petitioner's own Mirandized statement.
The court also considered the domestic violence case. Although the court recognized that petitioner was not convicted, the court nonetheless was persuaded that petitioner committed an act of assault, relying on the statements in the plaintiff's certified complaint and the police report. The court concluded, based on petitioner's arrest, that the officer must have viewed what appeared to be an injury. The court noted that the court issued a TRO. The judge asked petitioner's counsel whether, as he suspected, plaintiff voluntarily dismissed the domestic violence complaint. Counsel asserted that the case was tried and the complaint found unsubstantiated, but he did not provide the order or any other evidence that the domestic violence trial was concluded on the merits.
The court found the proofs sparse regarding petitioner's conduct and character since his conviction. Petitioner presented evidence of only two unsuccessful employment applications and had not persuaded the court that the conviction record had a substantial negative impact on his employability. That petitioner had led a law-abiding life since the conviction, but for his motor vehicle violation, was insufficient by itself to justify what the court called "extraordinary exceptional relief" under the statute.
Petitioner appeals and essentially raises three points. First, he argues the court misconstrued the 2010 amendment by deeming the early pathway exceptional and extraordinary relief and thereby imposing an excessive burden on petitioner to establish that expungement was in the public interest. Second, petitioner argues that the court erred in considering the arrest of the dismissed assault charge. Third, petitioner argues the trial judge denied petitioner's right to due process and to be heard. We reject each of these points.
II.
A.
We begin by reviewing the language of the 2010 amendment and prior law. As pertinent to the instant appeal, the new law supplements subsection (a) of N.J.S.A. 2C:52-2, which provides, subject to exceptions, *548 a presumptive entitlement to expungement after ten years.
In all cases, except as herein provided, wherein a person has been convicted of a crime under the laws of this State and who has not been convicted of any prior or subsequent crime, whether within this State or any other jurisdiction, and has not been adjudged a disorderly person or petty disorderly person on more than two occasions may, after the expiration of a period of 10 years from the date of his conviction, payment of fine, satisfactory completion of probation or parole, or release from incarceration, whichever is later, present a duly verified petition as provided in section 2C:52-7 to the Superior Court in the county in which the conviction was entered praying that such conviction and all records and information pertaining thereto be expunged.
[N.J.S.A. 2C:52-2a.]
Certain crimes however, are not eligible for expungement at all. N.J.S.A. 2C:52-2b (listing ineligible crimes); N.J.S.A. 2C:52-2c (certain drug-related crimes made ineligible).
It is well-settled that if a petitioner meets the objective requirements of subsection (a) by setting forth in an appropriate, verified petition, N.J.S.A. 2C:52-7, -8, that ten years elapsed since completion of a sentence and no subsequent convictions were incurred, then he or she is "presumptively entitled" to expungement. In re J.N.G., 244 N.J.Super. 605, 610, 583 A.2d 364 (App.Div.1990). See also In re L.B., 369 N.J.Super. 354, 363, 848 A.2d 899 (Law Div.2004) ("[E]xpungement is . . . routinely granted where the requirements of the statute have been satisfied."). A petitioner has the burden to establish these objective requirements by a preponderance of the evidence. In re D.H., 204 N.J. 7, 18, 6 A.3d 421 (2010) ("[I]n general, to support a petition for expungement, `[a] petitioner has the burden to satisfy the requirements of the expungement statute' . . . by a preponderance of the evidence[.]") (quoting In re G.R., 395 N.J.Super. 428, 431, 929 A.2d 602 (App. Div.2007)).
Once this burden is met, the burden shifts to the State. Ibid. Expungement may be denied if the State proves the "need for the availability of records" outweighs the "desirability of having a person freed from any disabilities" associated with the conviction record. N.J.S.A. 2C:52-14b. The State must prove the predominating need for record availability by a preponderance of the evidence. State v. XYZ Corp., 119 N.J. 416, 422-24, 575 A.2d 423 (1990). The court shall also deny the petition if "[a]ny statutory prerequisite, including any provision of this chapter, is not fulfilled or there is any other statutory basis for denying relief." N.J.S.A. 2C:52-14a.[6] Absent objection by the State or other authorized objectors, N.J.S.A. 2C:52-10, the court may sua sponte reject expungement on the same grounds. N.J.S.A. 2C:52-12.
The 2010 statute adds a pathway to expungement after as few as five years since completion of a sentence, provided the public interest supports expungement.
Notwithstanding the provisions of the preceding paragraph, a petition may be filed and presented, and the court may grant an expungement pursuant to this section, although less than 10 years has *549 expired in accordance with the requirements of the preceding paragraph where the court finds:
. . . .
(2) at least five years has expired from the date of his conviction, payment of fine, satisfactory completion of probation or parole, or release from incarceration, whichever is later; the person has not been convicted of a crime, disorderly persons offense, or petty disorderly persons offense since the time of the conviction; and the court finds in its discretion that expungement is in the public interest, giving due consideration to the nature of the offense, and the applicant's character and conduct since conviction.
[L. 2009, c. 188, § 1, codified at N.J.S.A. 2C:52-2a(2) (emphasis added).]
Even if this public interest test is met, expungement is not assured. If a petitioner satisfies his or her burden in meeting the statutory preconditions to early pathway expungement under N.J.S.A. 2C:52-2a(2), the State may nonetheless seek denial if it can meet its burden to show that the needs for availability of records outweighs the petitioner's interest. N.J.S.A. 2C:52-14. Concededly, that weighing process under N.J.S.A. 2C:52-14 may require review of some of the same facts considered in making the public interest determination under N.J.S.A. 2C:52-2a(2). Yet, based on the statute's clear and unambiguous language, the determinations are separate and distinct.
B.
The Legislature expressly provided that the court's public interest determination in early pathway petitions is discretionary. N.J.S.A. 2C:52-2a(2). We address the scope of that discretion and suggest factors to guide it.
The Legislature apparently did not intend that expungement under the early pathway would be "routine" in the same sense as expungement after ten years. Thus, something more than the mere offense-free passage of time is required. This is evident from the history of the legislation, which was intended to fulfill a recommendation of the Governor's 2007 Strategy for Safe Streets and Neighborhoods. Assembly Judiciary Committee, Statement to A.1771 (January 28, 2008); Senate Judiciary Committee, Statement to S.3061 (December 7, 2009). As part of extensive recommendations to enhance enforcement of the criminal laws, crime prevention, and reentry of former offenders, then-Governor Corzine recommended amendments to the expungement statute "to promote employability." A Strategy for Safe Streets and Neighborhoods, Executive Summary, issued by Gov. Jon S. Corzine (2007) at 24. Regarding expungement, the Governor proposed "reducing the time frame requirements for compelling cases." Ibid. (emphasis added). See also A Strategy for Safe Streets and Neighborhoods, Reentry, issued by Gov. Jon S. Corzine (2007) at 19 ("Courts should also be given limited authority to grant expungement in a shorter time period under limited circumstances for certain offenders.") (emphasis added).
Nonetheless, courts should not presume that the public interest showing can be made only in rare or unusual cases, lest they enhance the burden already established in the statute. The court must be mindful that the statute is intended to promote re-entry of ex-offenders by creating this early pathway to expungement. It would defeat the statute's purpose to set the threshold so high that virtually no one qualifies. In short, a petitioner must surmount the public interest threshold, but nothing more.
*550 The public interest determination will necessarily be fact-specific. Trial courts will identify relevant factors as they gain experience applying the new law. However, several factors are evident from reading the amendment in the context of the expungement statute as a whole, and in light of the legislative history.
One apparent function of the original ten-year waiting period was to increase the likelihood that a beneficiary of expungement had permanently turned away from criminal activity and will not re-offend. Cf. N.J.S.A. 2C:52-32 (stating that the expungement statute shall be construed "with the primary objective of providing relief to the one-time offender who had led a life of rectitude and disassociated himself with unlawful activity"). Appropriately, then, a court may consider, in the context of an early pathway petitioner's "conduct and character," whether he or she has engaged in activities that have limited the risk of re-offending, or has avoided activities that enhanced that risk. Logically, in our view, these may include whether a petitioner has obtained job training or education, complied with other legal obligations (such as child support and motor vehicle fines), and maintained family and community ties that promote law-abiding behavior, as well as whether the petitioner has severed relationships with persons in the criminal milieu.
A petitioner's performance while incarcerated or while on probation may also be relevant. Exemplary performance on probation and early discharge would be a positive factor. On the other hand, a record of probation violations, or an extension of probation, would not. Also, generally speaking, as the number of offense-free years after conviction increase, the risk of reoffending drops. See Megan C. Kurlycheck, et al., Scarlet Letters and Recidivism: Does an Old Criminal Record Predict Future Offending?, 5 Criminology & Public Policy 3, 489 (2006). See also U.S. Bureau of Justice Statistics, Recidivism of Prisoners Released in 1994 (2002) (showing rates of recidivism decreased over the first three years following release). This fact would generally tend to support petitions made closer to the ten-year mark than the five-year mark.
In connection with a petitioner's "character and conduct since conviction," a court may consider facts related to an arrest that did not lead to a conviction, if supported by cognizable evidence, and the court makes an appropriate finding, after a hearing if necessary. A court may not infer guilt from the fact of arrest alone. State v. Brooks, supra, 175 N.J. at 229, 814 A.2d 1051 (addressing use of arrest record in determining admission to pre-trial intervention); State v. Green, 62 N.J. 547, 571, 303 A.2d 312 (1973) (addressing use of arrest records in sentencing). Yet, a court may consider the underlying facts of a dismissed charge that a petitioner admits in his guilty plea to a related charge. Ibid. (in sentencing, court may rely on arrest record of dismissed charge where the arrest "relate[s] to an offense the defendant does not dispute, which offense was disposed of without further action as part of a plea bargain involving other offenses"); see also State v. Bausch, 83 N.J. 425, 435-36, 416 A.2d 833 (1980) (court may order restitution in connection with dismissed charge based in part on defendant's admission that he caused the harm in pleading to another offense); Brooks, supra, 175 N.J. at 237-8, 814 A.2d 1051 (Albin, J., dissenting) ("[I]f a defendant entered a plea of guilty to certain charges in a multi-count indictment and the factual basis for his plea substantiated the dismissed charges, then for sentencing or PTI purposes, I see nothing improper in the use of such information.").
*551 Likewise, a court may consider other forms of admissible proof of dismissed charges. See id. at 237, 814 A.2d 1051 (Albin, J., dissenting) (distinguishing between use of fact of arrest, and reference to "factual record that support[s] the truth of the charge by some manner of proof"); see also State v. Soto, 385 N.J.Super. 247, 254-55, 896 A.2d 1148 (App.Div.2006) (in sentencing for pointing a firearm, N.J.S.A. 2C:12-1b(4), court may consider as "nature and circumstances of offense," N.J.S.A. 2C:44-1a(1), fact that "victim and two others were bound with duct tape and terrorized by defendant," where fact was established in victim's impact statement, not defendant's allocution, but "defendant impliedly authorized the judge to engage in such factfinding") (emphasis added).[7]
The statute also expressly requires the court to consider the "nature of the offense." N.J.S.A. 2C:52-2a(2).[8] We distinguish the "nature of the offense" from the circumstances of the offense. The Legislature has itself chosen to distinguish the two concepts. While the statute only requires a court to consider the "nature of the offense" in making its public interest determination, a court must consider "the nature of those . . . convictions and the circumstances surrounding them" when determining whether subsequent convictions for two or fewer disorderly or petty disorderly persons offenses should bar relief. N.J.S.A. 2C:52-2a. Elsewhere, the Code reflects that the nature of an offense is distinct from the circumstances surrounding it. See N.J.S.A. 2C:44-1a(1) (aggravating factor in sentencing is "the nature and circumstances of the offense").
The "nature of the offense" would appear to pertain to facts surrounding the grade and definition of the offense, and the facts relating directly to the elements of the offense. Thus, the nature of an eluding offense might include that a petitioner drove at high speed or over a great distance to flee an officer, and the nature of risks presented. The nature of an assault case might include the age of the victim. The nature of a burglary might include whether the structure entered was a victim's occupied bedroom, or a detached garage or vehicle when no one was present. Consistent with the purpose of the expungement statute, a court may consider for example, that a petitioner was convicted of fourth-degree resisting arrest, N.J.S.A. 2C:29-2a, as opposed to third-degree or second-degree eluding, N.J.S.A. 2C:29-2b, although a conviction for any of them may be expunged.
Nonetheless, given the broad discretion vested in a trial court under the statute, we do not construe the provision to preclude the court from considering facts in addition to those covered by "the nature of the offense" and "the applicant's character and conduct since conviction." N.J.S.A. 2C:52-2a(2) (emphasis added). A court may be justified in appropriate cases *552 in considering also the circumstances surrounding an offense. These may either enhance or weaken the strength of a petition. For example, a relatively young petitioner who committed his or her offense while in the thrall of an older and overbearing cohort may present a more persuasive case for expungement than an older petitioner who acted alone.
In connection with the circumstances of the offense, the court may also consider related, but dismissed charges, if they are undisputed. As discussed above, the dismissed charge may be substantiated by the allocution to other charges, or the dismissed charge may otherwise be undisputed. As the Court stated in reference to PTI applications, undisputed facts regarding dismissed charges may be considered "`as it is the conduct not the charge [that] governs.'" Brooks, supra, 175 N.J. at 230, 814 A.2d 1051 (quoting State v. Imbriani, 280 N.J.Super. 304, 316, 654 A.2d 1381 (Law Div.1994), aff'd, 291 N.J.Super. 171, 677 A.2d 211 (App.Div.1996)).
In assessing the public interest, the court may also consider an applicant's character and conduct before conviction. In some cases, that may favor expungement, if a petitioner could demonstrate exemplary and law-abiding behavior before his or her conviction, making it more likely that the petitioner's conviction was an aberration unlikely to be repeated. In other cases, however, a petitioner's character and conduct before conviction (for example, a history of domestic violence or repeated, serious motor vehicle violations) may reflect a pattern of disrespect for the law or a threat to public safety that may undermine a court's confidence that the public interest supported expungement.
Finally, the legislative history makes clear that successful reentry of ex-offenders is in the public interest as it promotes public safety, and enhances the lives of the ex-offenders and communities where they live. A Strategy for Safe Streets and Neighborhoods, Reentry, issued by Gov. Jon S. Corzine (2007) at 3. Thus, we believe the court may include, in its public interest analysis, cognizable evidence that the conviction record actually has impeded the petitioner's efforts to resume a productive, law-abiding life.
III.
Applying these principles, we find no mistaken exercise of discretion in the trial court's denial of the petition. In reviewing the court's exercise of discretion, we first determine whether the court correctly applied the law. See Paradise Enters. v. Sapir, 356 N.J.Super. 96, 102, 811 A.2d 516 (App.Div.2002). Assuming no error of law, we defer to a trial court's exercise of discretion so long as it was not "clearly unreasonable in the light of the accompanying and surrounding circumstances. . ." Smith v. Smith, 17 N.J.Super. 128, 132-133, 85 A.2d 523 (App.Div. 1951), certif. denied, 9 N.J. 178, 87 A.2d 387 (1952); see also Parish v. Parish, 412 N.J.Super. 39, 73, 988 A.2d 1180 (App.Div. 2010) (Ashrafi, J., concurring and dissenting) (court's review of discretionary decision should be limited to "whether it falls outside a range of acceptable decisions").
We discern no misapplication of the law or unreasonable exercise of discretion. We first address petitioner's contention that the trial court "improperly heightened the standards set forth in N.J.S.A. 2C:52-2, imposing an extraordinary burden not envisioned by the Legislature in amending the expungement statute to apply more broadly." Petitioner claims the court's decision was premised upon its finding that expungement, earlier than the standard ten-year period of time, is "extraordinary exceptional relief." We find *553 no merit to this argument and conclude the court's use of words "extraordinary" and "exceptional" reflect the court's view of the nature of the relief sought in early pathway petitions, not the imposition of a heightened burden upon expungement petitioners to demonstrate they are "exceptional" or "extraordinary" applicants.
Early pathway relief is "exceptional" in the sense that the 2010 amendment creates an exception to the general requirement that a petitioner wait ten years for expungement. Moreover, the relief is "extraordinary," in the sense that a petitioner must show something more than that he or she has been offense-free for over five years. While trial courts should not place additional burdens on petitioners seeking early pathway expungement, we reject petitioner's implicit argument that relief should be routinely granted to offense-free petitioners.
We also reject petitioner's argument that the trial court inappropriately utilized petitioner's arrest for domestic violence assault. The court did not infer guilt on the basis of the fact of arrest alone. Rather, the court relied in large part on the allegations in the domestic violence complaint, which the alleged victim certified as true and therefore were cognizable evidence before the court. R. 1:6-6. The domestic violence plaintiff's allegations, presented to the court by the State, were undisputed by any admissible evidence in the record before the trial court. The court also inferred that a police officer observed physical signs of assault, based on the undisputed fact of arrest. Although petitioner's counsel asserted in oral argument that the Family Part affirmatively found the allegations unsubstantiated, he provided the court no evidence of that, before, during, or after the hearing.
The domestic violence incident related to petitioner's conduct and character before his eluding conviction, as the incident occurred before the court sentenced petitioner in accord with his plea agreement. Thus, it did not reflect a failure of his post-conviction rehabilitation. Nonetheless, a court may consider a petitioner's pre-conviction conduct.
The court appropriately considered both the nature and circumstances of petitioner's eluding offense. The offense behavior was exacerbated by petitioner's false report, which he admitted in his statement to police.
With regard to his conduct and character since his conviction, petitioner provided the court with relatively little cognizable evidence. His early discharge from probation was unquestionably a reflection of his positive adjustment to supervision. Yet, the record reflects little about how petitioner has conducted himself since his discharge. Aside from two alleged employment rejections, he provided no detailed evidence of current employment, his efforts to obtain employment, and the impact of his conviction record. Petitioner submitted two unsworn letters attesting to his dedication to his family. Petitioner himself provided no direct evidence of his medical status and the impact of his conviction record on his ability to secure insurance. In view of these facts, we do not conclude that the trial court exercised its discretion unreasonably in finding that the public interest test was unmet.
Finally, we reject petitioner's argument that the court denied his due process rights and right to be heard, when the court attempted to accommodate petitioner's late request to be heard. Petitioner's counsel did not seek to call witnesses, and did not request an opportunity for petitioner *554 to address the court until counsel had rested and the court's oral decision was already underway. The court attempted to accommodate petitioner by resuming the matter later that afternoon, but petitioner's counsel declined that opportunity, as well as an alternative date, and submitted the matter to the court. Thus, the court did not infringe petitioner's right to be heard.
Affirmed.
NOTES
[1] Judge Axelrad did not participate in oral argument. However, with the consent of counsel she has joined this opinion. R. 2:13-2(b).
[2] Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).
[3] The record does not include a transcript of petitioner's plea allocution, the sentencing hearing, or petitioner's presentence report. We suggest that trial courts routinely require the submission of such documents, if available, to assist the court in assessing the "nature of the offense," N.J.S.A. 2C:52-2b, as required in connection with an early pathway expungement petition.
[4] In a footnote in his brief, petitioner also requested expungement of that disorderly persons arrest, stating "[b]y and through this application . . . [petitioner] requests that at least the dismissed charge[ ] be ordered expunged from his record at this time." However, petitioner did not request this relief from the trial court, nor address expungement of the assault arrest in his notice of appeal. We will not address issues that an appellant did not raise before the trial court. State v. Robinson, 200 N.J. 1, 20, 974 A.2d 1057 (2009). Nor will we address issues raised merely by a footnote. Almog v. Israel Travel Advisory Serv., Inc., 298 N.J.Super. 145, 155, 689 A.2d 158 (App.Div.1997), appeal dismissed, 152 N.J. 361, 704 A.2d 1297, cert. denied, 525 U.S. 817, 119 S.Ct. 55, 142 L.Ed.2d 42 (1998).
[5] The abstract also indicated that petitioner had previously been convicted of disregarding a stop sign, failure to obey a directional signal, careless driving, driving without a license, improper passing, speeding, and placing injurious substances on a highway.
[6] N.J.S.A. 2C:52-14 provides other grounds for denial of expungement of a conviction, including: the record is the subject of certain civil litigation, N.J.S.A. 2C:52-14d; the petitioner under certain circumstances had a previous criminal conviction expunged, N.J.S.A. 2C:52-14e; and the petitioner has had criminal charges dismissed following completion of a supervisory treatment or other diversion program. N.J.S.A. 2C:52-14f.
[7] But see State v. Lawless, 423 N.J.Super. 293, 304-05, 32 A.3d 562, 569 (App.Div.2011) (holding that undisputed harm to a person not the object of the crime for which defendant is sentenced, may not be considered under aggravating factor two, "the gravity and seriousness of harm inflicted on the victim," N.J.S.A. 2C:44-1a(2) (emphasis added)).
[8] With respect to expungement after ten years, we have held that the nature of the crime itself is not sufficient grounds to deny relief, particularly since the statute specifies ineligible crimes. In re J.N.G., 244 N.J.Super. 605, 609-10, 583 A.2d 364 (App.Div. 1990). See also In re XYZ Corp., supra, 119 N.J. at 424, 575 A.2d 423 (rejecting suggestion that inherent nature of environmental crimes warrant rejection of expungement). However, under the 2010 amendment, the court is expressly directed to consider the nature of the crime that is otherwise eligible for expungement.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 01-6890
In Re: JEROME ADDISON,
Petitioner.
On Petition for Writ of Mandamus.
(CA-00-2557-2-12AJ)
Submitted: August 9, 2001 Decided: August 17, 2001
Before NIEMEYER, MOTZ, and GREGORY, Circuit Judges.
Petition denied by unpublished per curiam opinion.
Jerome Addison, Petitioner Pro Se.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Jerome Addison has filed a petition for a writ of mandamus in
this court seeking the district court to rule on his petition filed
under 28 U.S.C.A. § 2254 (West 1994 & Supp. 2000). Mandamus is a
drastic remedy to be used only in extraordinary circumstances.
Kerr v. United States Dist. Court, 426 U.S. 394, 402 (1976).
Mandamus relief is only available when there are no other means by
which the relief sought could be granted, In re Beard, 811 F.2d
818, 826 (4th Cir. 1987), and may not be used as a substitute for
appeal. In re Catawba Indian Tribe, 973 F.2d 1133, 1135 (4th Cir.
1992). The party seeking mandamus relief carries the heavy burden
of showing that he has no other adequate means to attain the relief
he desires and that his entitlement to such relief is clear and
indisputable. Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35
(1980). Addison has failed to make such a showing and we thus deny
the petition. We also deny Addison’s motion “for emergency relief”
in which he seeks release on personal recognizance under Fed. R.
App. P. 23(b)(3).
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.
PETITION DENIED
2
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362 B.R. 723 (2007)
In re Rene A. CHANDLER, Debtor.
No. 06-1043.
United States Bankruptcy Court, N.D. West Virginia.
March 1, 2007.
*724 Roger A. Isla, Steubenville, OH, for Debtor.
MEMORANDUM OPINION
PATRICK M. FLATLEY, Bankruptcy Judge.
Rene A. Chandler (the "Debtor") claims an exemption in real property that she owns in Wellsburg, West Virginia pursuant to 11 U.S.C. § 522(d). The Debtor, a former domiciliary of Georgia, has not lived in West Virginia for a period of 730 days preceding her Chapter 7 bankruptcy petition. Martin P. Sheehan, the Debtor's Chapter 7 trustee (the "Trustee"), objects to the Debtor's use of the federal exemptions on the basis that the Bankruptcy Code requires the Debtor to use the exemptions provided by the State of Georgia. The Debtor asserts that no prohibition exists to her use of the federal exemptions on the grounds that Georgia's opt-out statute does not apply to her inasmuch as she is not an "individual debtor whose domicile is in Georgia" pursuant to Ga.Code § 44-13-100(b).
The court held a telephonic hearing in this case on January 23, 2007, in Wheeling, West Virginia, at which time the court took the matter under advisement. For the reasons stated herein, the court will overrule the Trustee's objection.
I. BACKGROUND
The Debtor was a domiciliary [1]of West *725 Virginia for more than 180 days, but less than 730 days preceding her bankruptcy petition. In the 180 day period preceding that 730 day period, the Debtor was a domiciliary of Georgia. After the Debtor moved to West Virginia, she purchased real property in Wellsburg, West Virginia, which has a current value of $20,000, which is not subject to any liens, and which she now seeks to claim as exempt pursuant to 11 U.S.C. § 522(d). The Trustee acknowledges that if the Debtor is allowed to use the federal homestead exemption of $18,450, plus the wildcard exemption of $975, no benefit would exist for the estate in administering the Debtor's property. On the other hand, the Trustee asserts that the applicable Georgia exemption is $10,000. If the Debtor is limited to the use of the Georgia exemption, the Trustee would sell the Debtor's property to benefit the creditors of her bankruptcy estate.
III. DISCUSSION
The Trustee argues that, pursuant to § 522(b), Georgia has opted out of the federal exemptions provided by § 522(d) in favor of its State law exemption scheme. Because the Bankruptcy Code dictates that the applicable exemption statute for relocating debtors is based on the length of time a debtor is domiciled in a jurisdiction, Georgia law is applicable to the Debtor's claim of exemptions. Moreover, the Trustee asserts, application of Georgia's opt-out provision must uniformly apply to all debtors that are eligible to claim Georgia's exemptions.
The Debtor argues that the Georgia opt-out statute only applies to a statutorily defined Georgia domiciliary; because the Debtor was not a Georgia domiciliary as of the date she filed her Chapter 7 bankruptcy petition, she is not bound by Georgia's opt-out statute.
A. Georgia's Opt-Out Statute
Section 522(b)(1) of the Bankruptcy Code allows a debtor to chose between using either a state's exemption statute or the federal exemption statute of § 522(d). In turn, § 522(b)(2) provides that a debtor may use the federal exemptions provided in § 522(d) only if allowed by the applicable state law. Thus, if applicable Georgia law does not require the Debtor to use the Georgia law exemptions, the Debtor may elect to use the federal exemptions provided in § 522(d).
Georgia's opt-out statute provides:
(b) Pursuant to 11 U.S.C. Section 522(b)(1), an individual debtor whose domicile is in Georgia is prohibited from applying or utilizing 11 U.S.C. Section 522(d) in connection with exempting property from his or her estate; and such individual debtor may exempt from property of his or her estate only such property as may be exempted from the estate pursuant to 11 U.S.C. Section 522(b)(2)(A) and (B). For the purposes of this subsection, an `individual debtor whose domicile is in Georgia' means an individual whose domicile has been located in Georgia for the 180 days immediately preceding the date of the filing of the bankruptcy petition or for a longer portion of such 180 day period than in any other place.
Ga.Code § 44-13-100(b).
This Georgia statute mirrored that of 11 U.S.C. § 522(b)(2)(A) before it was amended by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). Pub.L. 109-8, 119 Stat. 23 (2005). Before its amendment, § 522(b)(2)(A) stated:
(b) [A]n individual debtor may exempt from property of the estate
*726 . . . .
(2)(A) any property that is exempt under . . . State or local law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located for the 180 days immediately preceding the date of the filing of the petition, or for a longer portion of such 180 day period than in any other place.
11 U.S.C. § 522(b)(2)(A) (2004).
After its amendment by BAPCPA, the statute now provides:
(b) [A]n individual debtor may exempt from property of the estate
. . . .
(3) . . . (A) . . . any property that is exempt under . . . State or local law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located for the 730 days immediately preceding the date of the filing of the petition or if the debtor's domicile has not been located at a single State for such 730-day period, the place in which the debtor's domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place.
§ 522(b)(3)(A) (2006).
Thus, as argued by the Trustee, the issue is whether the language used in Georgia's opt-out statute is sufficient to incorporate the changes made to the federal statute such that the longer period for determining a debtor's domicile for the purpose of claiming exemptions would apply. Even assuming that the Georgia opt-out statute is one that incorporates the federal statute by reference,[2] however, the amendments made to former § 522(b)(2)(A) `did not similarly amend Georgia's opt-out statute by implication.
Under Georgia law, "`[w]hen a statute adopts a part or all of another statute, domestic or foreign, general or local, by specific and descriptive reference thereto, the adoption takes the statute as it exists at that time.'" Rich v. State, 237 Ga. 291, 227 S.E.2d 761, 767 (1976) (citation omitted). Accordingly, a "`subsequent amendment or repeal of the adopted statute or any part thereof has no effect upon the adopting statute.'" Id. (citation omitted); see also Boynton v. Lenox Square, Inc., 232 Ga. 456, 207 S.E.2d 446, 450 (1974) (same); Campbell v. Hunt, 115 Ga.App. 682, 155 S.E.2d 682, 684 (1967) (same); 73 Am.Jur.2d Statutes § 17 (2006) (same).
Consequently, even assuming that the language employed by the Georgia legislature in enacting Ga.Code § 44-13-100(b) with respect to defining "an individual debtor whose domicile is in Georgia" makes the provision a reference statute, the subsequent amendments, to 11 U.S.C. § 522(b) made by BAPCPA, which substantively alter the determination of a debtor's domicile for purposes of claiming exemptions, does not alter the meaning of, or language used in Ga.Code § 44-13-100(b). Accordingly, under the plain language of Georgia's opt-out statute, the Debtor in this case is not "an individual debtor whose domicile is in Georgia" because she was not "located in Georgia for the 180 days immediately preceding the date of the filing of the bankruptcy petition or for a longer portion of such 180 day period than in any other place." Because Georgia has not opted-out of the federal exemptions for non-residents like the *727 Debtor, the Debtor is free to use the federal exemptions.[3] 11 U.S.C. § 522(b)(1) (allowing an individual to chose either the applicable state law exemptions, or, if not precluded by applicable state law, the federal exemptions provided in § 522(d)); In re Battle, No. 06-50453, 2006 WL 3702734, at*2, 2006 Bankr.LEXIS 3522 at *3-4 (Bankr.W.D.Tex. Dec. 12, 2006) ("By its own terms, therefore, the [Florida] opt-out applies only to Florida residents. Because the Debtor was not a resident of Florida on the filing date, the Florida opt-out statute does not bar the Debtor from claiming the federal exemptions."); In re Underwood, 342 B.R. 358, 361-62 (Bankr. N.D.Fla.2006) ("The Colorado `opt-out' statute only prohibits Colorado residents from choosing to claim the federal exemptions.
The Debtor is not a resident of Florida, not Colorado. Therefore, even if the Debtor was eligible to claim Colorado exemptions, she could choose instead to claim federal exemptions because no state law prohibition against claiming federal exemptions applies to her.").
B. Uniformity
Recognizing that the court may find that the Debtor is not "an individual whose domicile is in Georgia" under the terms of Georgia's opt-out statute, the Trustee argues that, as a matter of federal law, Georgia is precluded from establishing different rules for exemptions with respect to a current and a former domiciliary.
Section 522(b)(2) of the Bankruptcy Code authorizes a state to opt-out of the *728 federal exemptions contained in § 522(d). 11 U.S.C. § 522(b)(2) ("Property listed in this paragraph is property that is specified under subsection (d), unless the State law that is applicable to the debtor under paragraph (3)(A) specifically does not so authorize."). The federal statute is silent on the issue of whether an individual state may elect to opt-out of the federal exemptions in some instances, and allow a debtor to chose between the federal and state exemptions for other purposes. The court does not believe, however, that any provision of the Bankruptcy Code, or the United States Constitution, constrains a state in the application of its opt-out rights with regards to debtors that have moved out of that state.
The United States Constitution grants Congress the power to "establish . . . uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const. art. I, § 8, cl.4. This uniformity requirement was challenged over 100 years ago after Congress passed a law that made the exemptions in the debtor's state of domicile applicable to bankruptcy proceedings which meant that the amount or value of property that a debtor could exempt from payment to the debtor's creditors varied greatly from state to state. The Supreme Court, however, upheld that law as not violating the Uniformity Clause:
We . . . hold that the system is, in the constitutional sense, uniform throughout the United States, when the trustee takes in each State whatever would have been available to the creditors if the bankrupt law had not been passed. The general operation of the law is uniform although it may result in certain particulars differently in different States.
Hanover Nat'l Bank v. Moyses, 186 U.S. 181, 189-90, 22 S.Ct. 857, 46 L.E d. 1113 (1902).
Eighty years later, the Supreme Court again discussed the requirement of uniformity, reiterating that perfect uniformity is not required by the Constitution; rather, the Court stated that the uniformity requirement is neither a "straightjacket that forbids Congress to distinguish among classes of debtors," nor does it require the elimination of differences among states to "resolve geographically isolated problems." Ry. Labor Executives' Ass'n v. Gibbons, 455 U.S. 457, 469, 102 S.Ct. 1.169, 71 L.Ed.2d 335 (1982) (striking down what the Court deemed to be a "private bill" meant only to affect the bankruptcy of a single railroad company). Geographical uniformity and class uniformity are separate concepts, and when a law is applied to a specified class of debtors, the uniformity requirement is met so long as the law applies uniformly to that defined class of debtors.[4]Id. at 473, 102 S.Ct. 1169; see, e.g., Reg'l Rail Reorganization Act Cases, 419 U.S. 102, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974) (upholding Congress's power to pass special legislation that applied only to bankrupt railroads). In short, the Uniformity Clause forbids only arbitrary regional differences in the provisions of the Bankruptcy Code, and private bankruptcy bills that are limited to a single debtor. In re Reese, 91 F.3d 37, 40 (7th Cir.1996); see also Dan J. Schulman, The Constitution, Interest Groups, and the Requirements of Uniformity: The United States Trustee and the Bankruptcy Administrator Programs, 74 Neb. L.Rev. 91, 105 (1995) ("[F]ederal bankruptcy law need not be absolutely uniform as to all debtors. . . . [D]ebtors may be classified and dealt with *729 differently, provided that the bankruptcy statute applies uniformly to a defined class, which must have more than one member.").
In enacting 11 U.S.C. § 522(b)(3)(A), Congress created special exemption rules for a specific class of debtors those that have relocated from one state to another within a defined period of time. The purpose of creating this separate class of debtors is well articulated:
The bill also restricts the so-called "mansion loophole." Under current bankruptcy law, debtors living in certain states can shield from their creditors virtually all of the equity in their homes. In light of this, some debtors actually relocate to these states just to take advantage of their "mansion loophole" laws. S. 256 closes this loophole for abuse by requiring a debtor to be a domiciliary in the state for at least two years before he or she can claim that state's homestead exemption; the current requirement can be as little as 91 days.
Report of the Committee on the Judiciary, House of Representatives, to Accompany S. 256, H.R.Rep. No. 109-31, Pt. 1, p. 15-16, 109th Cong., 1 st Sess. (2005); see also 14 Collier on Bankruptcy Intro.02[2] (Alan N. Resnick & Henry J. Sommer eds. 15th ed. rev. 2006) ("The clear intent of the 2005 amendments is to prevent possible abuse of the bankruptcy process by making it much more difficult for debtors to take advantage of one state's more generous exemptions.").
This court does not believe that creating a separate class of debtors for purposes of claiming exemptions based on the length of time such debtors have lived in a particular state violates the Uniformity Clause of the United States Constitution because: (1) the law is uniformly applicable to any debtor that relocates from one state to another; (2) the class of. debtors ensnared by § 522(b)(3)(A) is well defined; (3) it is not a private bankruptcy bill; and (4) the classification is not arbitrary inasmuch as the classification is a Congressional attempt to prohibit debtors from moving to a new state for the purpose of filing bankruptcy.
Finding that § 522(b)(3)(A) does not violate the Uniformity Clause of the United States Constitution, however, only resolves part of the issue raised in this case the Trustee argues that the Uniformity Clause is violated by the fact that § 522(b)(3) requires the Debtor to utilize the exemptions available to her in her former state of domicile, Georgia, but due to the application of Georgia law, the Debtor would not be bound by the opt-out statute that binds all other persons whose domicile is in Georgia. The court disagrees.
As the Supreme Court has proclaimed, a state enjoys broad rights in fashioning its exemption laws. Owen v. Owen, 500 U.S. 305, 308, 111 S.Ct. 1833, 114 L.Ed.2d 350 (1991) ("Nothing in subsection (b) (or elsewhere in the Code) limits a State's power to restrict the scope of its exemptions; indeed, it could theoretically accord no exemptions at all."); see also 4 Collier on Bankruptcy ¶ 522.02[2] ("While this statement [in Owen] is dictum, it clearly reflects the Court's view of the scope of a state's power both to opt out of the federal exemption system of section 522(d) and to limit dramatically its own citizens' exemption rights."). Many states already have laws that allow citizens to choose between the federal exemptions of § 522(d) of the state's list of exemptions. E.g., 14 Collier on Bankruptcy, Exemptions, Intro.02 n. 16 (listing the states that have opted out of the federal exemptions of § 522(d)).
By negative operation of Georgia's opt out statute, the Debtor is allowed to chose *730 the federal exemptions of § 522(d). The court ascertains no Uniformity Clause violation for states that allow their citizens to chose between the federal and state exemption statutes, and likewise ascertains no Uniformity Clause violation should a state restrict the application of its opt-out provision to those that are currently domiciled in that state as opposed to those who are currently domiciled in another state.
III. CONCLUSION
The court will enter a separate order pursuant to Fed. R. Bankr.P. 9021 that overrules the Trustee's objection to the Debtor's claim of federal exemptions.
NOTES
[1] For the purposes of 11 U.S.C. § 522, the terms "domicile" and "residence" are not synonymous. 4 Collier on Bankruptcy ¶ 522.06 (Alan N. Resnick and Henry J. Sommer eds. 15th ed. rev. 2006) ("The residence of a debtor may be noting more than a place of sojourn. . . . Domicile means actual residence coupled with a present intention to remain there.").
[2] Generally, a "reference statute" is one that refers "specifically to a particular statute by its title or section number." Campbell v. Hunt, 115 Ga.App. 682, 155 S.E.2d 682, 684 (1967).
[3] In its ruling, the court is in no way suggesting that the Georgia exemptions would be, or would not be, available to the Debtor had she chosen to use them. Cf., In re Tate, No. 06-61718, 2007 WL 81835, 2007 Bankr.LEXIS 98 (Bankr.D.Ore. Jan. 8, 2007) (concluding that an Oregon debtor could not use the Texas homestead exemption because Texas law limited the availability of the exemption to land situated within the State of Texas); In re West, 352 B.R. 905 (Bankr.M.D.Fla.2006) (holding that a debtor that relocated to Florida was not eligible to use Indiana's exemption statute because Indiana limited its use to Indiana residents); In re Jewell, 347 B.R. 120 (Bankr. W.D.N.Y.2006) (concluding that the "savings clause" after § 522(b)(3) compelled a finding that the exemptions available in the debtor's former state of residence were not applicable because otherwise, the savings clause would be unnecessary); In re Crandall, 346 B.R. 220 (Bankr.M.D.Fla.2006) (holding that the debtor was not entitled to claim New York's exemptions because she was no longer a New York resident and New York's exemptions were limited to residents of that State); In re Underwood, 342 B.R. 358 (Bankr.N.D.Fla. 2006) (stating that Colorado exemptions were limited to Colorado residents, and because the debtor was no longer a Colorado resident, she was not eligible to claim the Colorado exemption); with 11 U.S.C. § 522(b)(3) ("[T]he debtor may exempt. . . . any property that is exempt under . . . State . . . law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located fix. [the 180 days immediately preceding the 730 days before the filing of the petition]."); Drenttel v. Jensen-Carter (In re Drenttel), 403 F.3d 611 (8th Cir.2005) (allowing the debtors to use a Minnesota exemption for a Arizona homestead when the debtors moved from Minnesota to Arizona in June 2003, and filed bank ruptcy in July 2003); Arrol v. Broach (In re Arrol), 170 F.3d 934 (9th Cir.1999) (applying a California exemption statute to Michigan real property when the debtor moved to Michigan in November 1996, but filed bankruptcy on January 9, 1997); In re Battle, No. 06-50454, 2006 WL 3702734, at *2, 2006 Bankr.LEXIS 3522 at *2-3 (Bankr.W.D.Tex. Dec.12, 2006) (noting that § 522(b)(3) determines the applicable state's exemption law, which is to be applied to the facts as of the commencement of the case); Laura B. Bartell, The Peripatetic Debtor: Choice of Law and Choice of Exemptions, 22 Bankr.Dev. J. 401, 415 (2006) ("The Code is a federal statute, by referring to property designated as exempt under the state law applicable under the language of 522(b)(3)(A), it renders state law applicable. It is Congress, not the state legislature, that has given the state statute `extraterritorial' effect.").
[4] Contra Robert G. Drummond, The Exemption Opt-Out: Does it Violate the Constitutional Requirement of Uniformity? 26 Am. Bankr.L. J No. 1, p. 10 (Feb.2007) (arguing that strict geographic uniformity is required in the application of exemption laws).
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IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT NASHVILLE
October 25, 2005 Session
STATE OF TENNESSEE v. JAMES N. HARRELL
Appeal from the Circuit Court for Warren County
No. F-9808 Larry B. Stanley, Jr., Judge
No. M2005-01074-CCA-R9-CO - Filed March 6, 2006
Defendant, James N. Harrell, seeks interlocutory review of the Warren County Circuit Court’s
affirmance of the State’s denial of his application for pretrial diversion. Defendant is charged with
vehicular homicide by recklessness, four counts of reckless aggravated assault, underage possession
and consumption of alcohol, and underage driving while impaired. After unsuccessfully requesting
pretrial diversion, Defendant appealed to the trial court, who determined that the district attorney
general had not abused his discretion when denying Defendant’s request. After a thorough review
of the record and applicable law, we affirm the judgment of the trial court.
Tenn. R. App. P. 9; Judgment of the Circuit Court is Affirmed
THOMAS T. WOODALL, J., delivered the opinion of the court, in which ROBERT W. WEDEMEYER , J.,
joined. JAMES CURWOOD WITT , JR., J., filed a dissenting opinion.
Michael Galligan, and John Partin, McMinnville, Tennessee, for the appellant, James N. Harrell.
Paul G. Summers, Attorney General and Reporter; Preston Shipp, Assistant Attorney General; Dale
Potter, District Attorney General; and Larry Bryant, Assistant District Attorney General, for the
appellee, State of Tennessee.
OPINION
On the afternoon of June 8, 2003, Defendant, who was 17-years-old, and two of his friends,
C.J. Holmes, and Matt Brown, met up with three girls, Katie Hillis, Brooke Green, and Shannon
Green, in the parking lot of the Manchester Food Lion. The group got into Defendant’s pick-up
truck, and Defendant drove to the Par Four Market where he, Matt, and Brooke entered the store
where Defendant purchased a 12-pack of Bud Light beer. Defendant carried it back to his vehicle.
Once in the vehicle, the three boys began drinking beer. Defendant drank a beer while driving. The
group then drove to a deer stand on Defendant’s farm where they stayed for approximately 15 to 45
minutes, drinking beer and talking. The group then left the field to drive around and, according to
some witnesses, “jump hills.” It began raining lightly, and Defendant’s vehicle’s back end began
to swerve. He overcorrected, and his vehicle swerved off the road, hitting a tree. Upon impact, all
of the occupants, none of whom were wearing seat belts, were ejected from the vehicle and were
rendered unconscious. One occupant, Shannon Green, died as a result of the accident. The
remaining occupants suffered various injuries.
Defendant was charged as a juvenile, and the state successfully sought to have him
transferred and tried in adult criminal court. At his transfer hearing, the surviving occupants of the
vehicle, including Defendant, testified about the events that transpired leading up to the accident.
Those witnesses estimated Defendant’s speed to be anywhere from 95 miles per hour to 60 miles per
hour. Additionally, various occupants testified that they saw Defendant consume three to four cans
of beer; however, Defendant stated that while he drank from three different beer cans, he only
consumed a total amount of one and a half beers.
The accident occurred at approximately 4:30 p.m., and at 7:07 p.m., Defendant had a blood
alcohol level of .0205. His blood alcohol level was retested at 7:45 p.m., at which time it was .0092,
which, according to a Tennessee Bureau of Investigation (TBI) special agent, is technically a
negative blood alcohol reading. Expert witnesses for both the state and defense testified about
extrapolating Defendant’s blood alcohol level at the time of the accident from his blood alcohol
levels several hours after the accident. TBI Special Agent Michael Little testified that by using a
formula which allows him to extrapolate back to the time of the accident, he estimates that
Defendant had between a .04 and .07 blood alcohol level at the time of the crash. Medical examiner
Dr. Bruce Levy also testified that through his extrapolation methods, he estimates that Defendant had
a .06 blood alcohol level at the time of the crash, which is consistent with someone consuming three
to four beers. Charles Warren Harlan, a noted toxicology expert who has testified in thousands of
cases, testified that given the known low levels of Defendant’s blood alcohol, an extrapolation to
Defendant’s blood alcohol level at the time of the accident was neither feasible nor reliable.
Additionally, two accident reconstruction experts testified at the hearing. The state’s witness,
a crash reconstructionist with the Tennessee Highway Patrol, testified that he observed “scallop
marks” made by Defendant’s vehicle’s tires at the crash scene and that these marks indicated that
Defendant’s vehicle was airborne. The state’s expert further testified that Defendant was traveling
at a minimum of 79 miles per hour when his vehicle crashed. Defendant’s expert witness, an
emeritus professor of the University of Tennessee, testified that his analysis of the accident scene
revealed that Defendant’s vehicle was not airborne and that the vehicle was traveling between 68 and
81 miles per hour at the time of the accident.
Defendant testified that he did not brake when he started to lose control of his vehicle
because he believed braking would cause him to wreck his new truck. He testified that he has been
haunted by this accident and would do anything to change history. At the time of the transfer hearing
Defendant was working 12-hour days. His two employers, his grandmother and David Bryan,
testified that Defendant was hard-working and dependable and that they believe that Defendant has
been greatly affected by the accident and death of Shannon Green.
-2-
After the case was transferred to criminal court, Defendant filed a petition for pretrial
diversion, which the prosecutor’s office subsequently denied. Defendant then appealed the denial
to the Warren County Circuit Court. After conducting a hearing in which the court heard arguments
by counsel, the court concluded that the prosecutor had not abused his discretion when denying
Defendant’s request for pretrial diversion. Specifically, the court found that the prosecutor’s
response denying Defendant’s request demonstrated that he had considered all relevant criteria,
including the events comprising Defendant’s crime, his character, his education, his employment
history, his demonstration of remorse, and his admission of culpability or lack thereof.
In order to be eligible for pretrial diversion, a defendant must not have been previously
granted pretrial or judicial diversion; must not have a prior misdemeanor conviction in which
Defendant served a sentence of confinement or a prior felony conviction within a five-year period
after completing the sentence or probationary period for the prior conviction; and must not be
seeking diversion for a Class A or B felony, a sexual offense, driving under the influence, or
vehicular assault. Tenn. Code Ann. § 40-15-105(B)(i)(a)-(c) (2003). “A person who is statutorily
eligible for pretrial diversion is not presumptively entitled to diversion.” State v. Yancey, 69 S.W.3d
553, 557 (Tenn. 2002) (citing State v. Curry, 988 S.W.2d 153, 157 (Tenn. 1999)).
The decision whether to grant pretrial diversion rests within the discretion of the district
attorney general. See Tenn. Code Ann. § 40-15-105(b)(3) (2003); State v. Hammersley, 650 S.W.2d
352, 355 (Tenn. 1983). The process of applying for, adjudicating, and reviewing pretrial diversion
is attended by formulaic rules.
The burden is upon the defendant, “in the first instance, to provide the prosecuting attorney
with sufficient background information and data to enable that officer to make a reasoned decision
to grant or deny the relief sought.” State v. Herron, 767 S.W.2d 151, 156 (Tenn. 1989), overruled
on other grounds by Yancey, 69 S.W.3d at 559. To carry the burden, an applicant should provide
the prosecutor with “as complete an application as circumstances warrant.” State v. Winsett, 882
S.W.2d 806, 810 (Tenn. Crim. App. 1993).
Even though the defendant has the burden to demonstrate his or her eligibility and suitability
for pretrial diversion, the prosecutor has specific obligations, especially when he or she denies the
application. State v. Curry, 988 S.W.2d 153, 157 (Tenn. 1999). Our appellate courts have forged
the following guidelines for prosecutors’ use when considering applications for pretrial diversion:
(1) The prosecutor should focus on the defendant’s amenability to
correction. Id. at 156.
(2) The prosecutor must consider (a) the circumstances of the offense,
(b) the defendant’s criminal record, (c) the defendant’s social history,
(d) the physical and mental condition of a defendant where
appropriate, and (e) the likelihood that pretrial diversion will serve
the ends of justice and the best interests of both the public and the
-3-
defendant. Id.; Hammersley, 650 S.W.2d at 355; see also State v.
Washington, 866 S.W.2d 950, 951 (Tenn. 1993).
(3) “[T]he circumstances of the offense and the need for deterrence
may alone justify a denial of diversion, but only if [(a)] all of the
relevant factors have been considered as well,” Curry, 988 S.W.2d at
158 and (b) only when the circumstances are of such overwhelming
significance that they necessarily outweigh all other factors,
Washington, 866 S.W.2d at 951.
(4) Although this court has affirmed the denial of pretrial diversion
where the failure to admit the crime and/or express remorse revealed
that the defendant had been less than truthful with the court, see State
v. Karen Sue Kelsey, No. 03C01-9603-CC-00117, slip op. at 7 (Tenn.
Crim. App., Knoxville, Oct. 29, 1997), perm. app. denied (Tenn.
1998); State v. Martha Jean Frasier, No. 01C01-9601-CC-00012,
slip op. at 12-13 (Tenn. Crim. App., Nashville, Dec. 13, 1996); State
v. Nease, 713 S.W.2d 90, 92 (Tenn. Crim. App. 1986), remorse per
se has been held to be immaterial in determining suitability for
pretrial diversion, see State v. Stoney Gene Golden, No. 88-146-III,
slip op. at 3 (Tenn. Crim. App., Nashville, Apr. 12, 1989), perm. app.
denied (Tenn. 1989). On the other hand, the failure of the defendant
to admit guilt is not, in and of itself, a proper basis for denying
diversion. See State v. Dewey L. Clark, No. 03C01-9706-CR-00227,
slip op. at 7 (Tenn. Crim. App., Knoxville, July 16, 1998); State v.
Christie Quick, No. 01C01-9510-CC-00323, slip op. at 5-6 (Tenn.
Crim. App., Nashville, Feb. 20, 1997); State v. Carl Capps, No. 47,
slip op. at 1 (Tenn. Crim. App., Knoxville, June 13, 1989); cf. State
v. King, 640 S.W.2d 30, 33 (Tenn. Crim. App. 1982) (pretrial
diversion cannot be conditioned upon entry of guilty plea), overruled
on other grounds by State v. Sutton, 668 S.W.2d 678, 680 (Tenn.
Crim. App. 1984).
(5) A denial of the application (a) must be written and (b) must
contain not only an enumeration of the evidence the prosecutor
considered but also a discussion of the weight given to each factor,
State v. Pinkham, 955 S.W.2d 956, 960 (Tenn. 1997); see Curry, 988
S.W.2d at 157 (explaining importance of detailed, written denial);
Winsett, 882 S.W.2d at 810, and of why unfavorable factors outweigh
favorable ones, Herron, 767 S.W.2d at 156.
(6) “In addition to the foregoing items which the prosecutor should
include in a written record, he or she should also identify ‘any factual
-4-
disputes between the evidence relied upon and the petitioner’s
application.’” Pinkham, 955 S.W.2d at 960; see Winsett, 882 S.W.2d
at 810.
If the application is denied, the defendant may seek a writ of certiorari in the trial court. Tenn. Code
Ann. § 40-15-105(b)(3) (2003). The Code and the appellate courts have prescribed the procedure
for the petitioner to follow:
(1) The compiled record should be attached to the petition. Winsett,
882 S.W.2d at 810.
(2) In the petition, the defendant should identify any disputed facts
which the prosecutor has not identified. State v. Lane, 56 S.W.3d 20,
26 (Tenn. Crim. App. 2000).
(3) The defendant has the burden of proving that the district attorney
abused his or her discretion in denying diversion, State v. Watkins,
607 S.W.2d 486, 488 (Tenn. Crim. App. 1980), a process that may
entail showing an absence of any substantial evidence in the record
to support the prosecutors’s denial of pretrial diversion, Lane, 56
S.W.3d at 26; see State v. Houston, 900 S.W.2d 712, 714 (Tenn.
Crim. App. 1995).
Upon receiving a petition for certiorari filed by an aggrieved applicant for pretrial diversion, the trial
court must follow a prescribed procedure:
(1) The trial court limits its consideration to the evidence which was
before the prosecutor and to the reasons given by the prosecutor in
denying diversion. State v. Brown, 700 S.W.2d 568, 570 (Tenn.
Crim. App. 1985); Winsett, 882 S.W.2d at 809.
(2) The trial court may conduct a hearing only to resolve any factual
disputes raised by the prosecutor or the defendant; the court may not
hear additional evidence. Curry, 988 S.W.2d at 157-58.
(3) The trial court must also adhere to the same case-by-case
balancing procedure that is imposed upon the prosecutor. Herron,
767 S.W.2d at 156.
(4) The trial court must state its findings in writing. Id.
If the trial court declines to reverse the prosecutor’s denial of diversion, the defendant may seek
interlocutory review in this court. See generally Tenn. R. App. P. 9, 10; Tenn. R. Crim. P. 38. If
-5-
review is granted by this court, our review is confined to determining whether the trial court’s
determination is supported by a preponderance of the evidence. Curry, 988 S.W.2d at 158.
We first note that the state does not dispute that Defendant is an eligible candidate for pretrial
diversion. Thus, the resolution of Defendant’s appeal turns on our determination of whether the trial
court properly found that the district attorney general did not abuse his discretion when denying
Defendant’s request for pretrial diversion.
Defendant argues that in his letter denying Defendant’s petition for pretrial diversion, the
district attorney general merely gave perfunctory consideration to several factors weighing in favor
of pretrial diversion, including Defendant’s attainment of a G.E.D. and his consistent and impressive
employment history. The district attorney general eventually concluded that these factors were
favorable to a grant of pretrial diversion; however, Defendant complains that the district attorney
general failed to articulate how these factors were weighed. Defendant further complains that the
district attorney general failed to clarify whether two factors discussed in his letter were ultimately
deemed to be favorable or unfavorable to a grant of pretrial diversion: (1) Defendant’s stability of
residence based on his consistent residence with his parents and (2) his negligible prior involvement
with the criminal justice system based on juvenile truancy charges filed his senior year and an
uncharged act of purchasing alcohol as a minor.
Defendant argues that the district attorney general erroneously concluded that Defendant
demonstrated little remorse for his actions and failed to take responsibility for them. Specifically,
Defendant disagrees with the district attorney general’s conclusion that Defendant’s protestations
of remorse and sorrow are insincere. Defendant notes that the prosecutor’s conclusion is based on
Defendant’s testimony at his transfer hearing that he did not brake when his vehicle began to swerve
because he did not want to wreck his new pick-up truck. However, Defendant argues that the
sincerity of his remorse is unrelated to his thoughts about avoiding the accident before the accident
occurred. Moreover, after explaining his motivation for not braking, the district attorney general
asked Defendant whether his vehicle was more important than his passengers’ lives, and Defendant
responded that it was not. Finally, Defendant contends that the district attorney general’s reliance
on Defendant’s alleged failure to take responsibility for his actions is impermissible because this
court has stated that a grant of pretrial diversion cannot be conditioned upon a defendant’s admission
of criminal conduct. See, e.g., King, 640 S.W.2d at 33.
The state asserts that the district attorney general elucidated more than adequate reasons for
denying pretrial diversion: (1) Defendant failed to fully acknowledge his guilt, (2) he demonstrated
a lack of genuine remorse, and (3) granting pretrial diversion would fail to properly deter future
similar crimes. Specifically, the district attorney general noted that Defendant sought to minimize
his wrongdoing by testifying that he was traveling approximately 60 miles per hour at the time of
the accident when expert and eye witness testimony reflected that his actual speed was somewhere
between 79 and 95 miles per hour; he claimed to have consumed one and a half beers while
witnesses saw him consume three or four beers and expert testimony reflected that his blood alcohol
level was consistent with consuming three to four beers; and he testified that he did not actually
-6-
purchase the 12 pack of beer although all witnesses testified that he did indeed purchase it. Next,
the district attorney general noted that Defendant’s expressions of remorse seemed insincere when
considering his testimony that he deliberately did not brake during the accident to avoid wrecking
his new pick-up truck. Finally, the district attorney general concluded that granting pretrial diversion
would undermine the seriousness of Defendant’s offense and convey a message that no consequences
would result from reckless behavior.
We note that in his five-page letter, the district attorney general carefully considered and
thoroughly discussed all criteria relevant to his pretrial diversion determination, and the
comprehensiveness of his letter has greatly aided our appellate review.
The circumstances of the offense(s) and the need for deterrence may justify the denial of
pretrial diversion if all relevant factors have been considered, as was done in this case. State v.
Curry, 988 S.W.2d 153, 158 (Tenn. 1999). While the prosecutor in the case sub judice did not use
the specific words of “circumstances of the offense,” he did specifically detail the various facts of
the offenses in his letter denying pretrial diversion. However, the prosecutor’s reference to “the
public interest and how justice [would not be] served by granting pre-trial [sic] diversion in this
case” is a reference to the circumstances of the offenses. The prosecutor outlined Defendant’s illegal
purchase of beer as a seventeen-year-old, his sharing of the beer with two other juveniles,
consumption of beer by Defendant, and extremely reckless driving on a narrow, hilly road at speeds
up to 94 miles per hour. Defendant’s petition for writ of certiorari to the trial court does not contest
any of the facts relied upon by the prosecutor in denying pre-trial diversion. In fact, the petition
merely recites the charges brought against Defendant, states that Defendant falls within the category
of statutorily eligible offenders to be placed on pretrial diversion, and makes the bare conclusory
statement that “[t]he District Attorney General has abused his prosecutorial discretion by refusing
to agree to grant [Defendant] pretrial diversion.”
Defendant in this case had the burden in the trial court of proving that the prosecutor abused
his discretion in denying pretrial diversion. State v. Watkins, 607 S.W.2d 486, 488-89 (Tenn. Crim.
App. 1980). This entails a showing that there is an absence of any substantial evidence to support
the prosecutor’s decision to deny diversion. Curry, 988 S.W.2d at 158 (citing State v. Pinkham, 955
S.W.2d 956, 960 (Tenn. 1997)) (emphasis added).
The petition for writ of certiorari fails to set forth facts contained in the record which would
show that the prosecutor abused his discretion by denying diversion. The transcript of the certiorari
proceedings in the trial court contains only statements by counsel for Defendant and the prosecutor
and statements by the trial judge. Notwithstanding the fact that defense counsel set forth certain
disputes in the facts as related by the prosecutor in his letter denying diversion, statements of counsel
are not evidence. State v. Roberts, 755 S.W.2d 833, 836 (Tenn. Crim. App. 1988); State v. Dobbins,
754 S.W.2d 637, 640 (Tenn. Crim. App. 1988). Interestingly, defense counsel did emphasize at the
certiorari hearing, on more than one instance, that the prosecutor failed to focus upon Defendant’s
“amenability for correction.” This was, in fact, considered by the prosecutor in paragraph 8 of his
letter, though referred to as Defendant’s “amenability for rehabilitation.” The prosecutor did include
-7-
Defendant’s failure to “recognize” his fault in the offenses. However, the prosecutor also included
in his letter that: (1) Defendant first stated he was driving approximately 45 miles per hour, then later
said 60-62 miles per hour, while expert testimony put the speed at 79 to 94 miles per hour; (2)
Defendant denied purchasing the beer and stated that Matt Brown purchased the beer, while the
store’s clerk and Matt Brown both stated Defendant purchased the beer; (3) Defendant stated that
he only drank one to one and one-half beers while all other occupants of the vehicle who were with
Defendant stated that he drank three to four beers and expert testimony corroborated the testimony
of higher consumption; and (4) Defendant stated in his application for pretrial diversion that “there
was no evidence that he was under the influence of alcohol at the time of the offense[s]” despite the
fact that expert and lay testimony showed that he had consumed at least three to four beers. While
no testimony placed Defendant at or above the “legal” limit of intoxication of an “adult,” 0.08, see
T.C.A. § 55-10-401(a)(2) and 55-10-408, clear legislative intent establishes “impaired” driving of
a person between the ages of 16 and 21 at 0.02. See T.C.A. § 55-10-415. Defendant checked the
answer “no” to question number 29 in the pretrial diversion application, which is “[w]as there
evidence the defendant was under the influence of alcohol that actually contributed to the offense?”
These observations are particularly important in light of Defendant’s failure to put on proof
contesting the facts relied upon by the prosecutor. At least implicitly, the prosecutor found that
Defendant’s lack of candor on the subjects weighed against Defendant’s amenability for correction.
This is a permissible conclusion by the prosecutor. See State v. Dowdy, 894 S.W.2d 301, 305-06
(Tenn. Crim. App. 1994).
Regarding deterrence as a basis to deny pretrial diversion, the prosecutor did not specifically
state that the offenses of vehicular homicide, reckless aggravated assault, underage possession and
consumption of alcohol, and underage driving while impaired were crimes that necessitated the
general need for deterrence in his jurisdiction or the state as a whole. See State v. Hooper, 29
S.W.3d 1, 10 (Tenn. 2000). However, a fair reading of Hooper, reveals that the issue was the proof
necessary to establish deterrence when deterrence was the sole reason for denying probation. Id. at
3, 4, 6. Deterrence in a pretrial diversion case is guided by the same considerations as deterrence in
probation cases. Id. at 8, n. 9 (citing State v. Hammersley, 650 S.W.2d 352, 354 (Tenn. 1983)).
As stated above, the prosecutor properly considered the particular circumstances of the
offenses, as well as Defendant’s serious lack of amenability to correction in denying pretrial
diversion. Thus, deterrence is an additional, not a sole, factor to deny pretrial diversion. There is
no question that the prosecutor identified a factual basis to deny pretrial diversion based on
deterrence:
10. The State has considered the deterrent effect that granting pre-trial [sic]
diversion may have on others. This wreck took the life of Shannon Green
and resulted in serious injuries to four (4) other occupants. The two female
survivors, Brook Green and Katie Hillis, have had to undergo psychological
counsel and one has attempted suicide as a result of this incident. The
defendant was consuming alcohol and driving well above the speed limit on
-8-
a narrow, hilly, two-lane road. He never attempted to brake after losing
control of the vehicle, valuing his new truck more than the safety of his
passengers. To reward such behavior with pre-trial [sic] diversion would
have no deterrent effect and may well send a message that there is little
consequences to be had for driving and speeding recklessly resulting in the
death of an innocent party.
Paragraph 10, prosecutor’s letter denying diversion.
Taken in context, the prosecutor considered all of the offenses and their interrelationship with
each other, which culminated in the ultimate results of the offenses. In other words, deterrence
might not be applicable only to a charge of vehicular homicide in this case, or only to four (4)
charges of reckless aggravated assault, or to the remaining offenses if they had only been individually
committed and individually considered. However, combining the illegal purchase, distribution, and
consumption of beer, with reckless driving (jumping hills) and with excessive speed (up to 94 miles
per hour), resulting in the crash of a vehicle containing six (6) teenagers with the death of one and
serious injuries to the remaining occupants, a factual basis for deterrence was established.
The facts relied upon by the prosecutor were, in effect, totally undisputed. The prosecutor
considered all relevant criteria. Considering the prosecutor’s letter in its entirety, and not piecemeal,
it is clear that there is substantial evidence to support the prosecutor’s determination to deny pretrial
diversion.
The trial court’s decision denying relief to Defendant is supported by a preponderance of the
evidence. State v. Curry, 988 S.W.2d 153, 158 (Tenn. 1999). Accordingly, Defendant is not entitled
to relief in this appeal.
CONCLUSION
Based on the foregoing review and analysis, the judgment of the trial court is affirmed.
___________________________________
THOMAS T. WOODALL, JUDGE
-9-
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68 Md. App. 413 (1986)
511 A.2d 1128
JEROME EDWIN CHASE, JR.
v.
STATE OF MARYLAND.
No. 1616, September Term, 1985.
Court of Special Appeals of Maryland.
July 15, 1986.
Certiorari Granted November 10, 1986.
John L. Kopolow, Asst. Public Defender (Alan H. Murrell, Public Defender, on brief), Baltimore, for appellant.
Ronald M. Levitan, Asst. Atty. Gen., Baltimore (Stephen H. Sachs, Atty. Gen., Baltimore, Arthur A. Marshall, Jr., State's Atty. for Prince George's County and William T. Shockley, Asst. State's Atty. for Prince George's County, on brief, Upper Marlboro), for appellee.
Argued before WILNER, ROBERT M. BELL and WENNER, JJ.
WILNER, Judge.
Under current Constitutional doctrine, evidence seized by a policeman without a warrant and in violation of a person's Fourth Amendment rights ordinarily may not be used by the State to convict the person of a criminal offense. The principal question in this appeal is whether such evidence may be used in a probation revocation proceeding for the purpose of showing that the person has violated a condition of his probation. We are also asked to consider whether the record fails to show that appellant was present at his revocation hearing and that he waived certain fundamental rights, whether the proceeding itself was fundamentally unfair, and whether the new sentence order by the court was illegal.
I. The Facts
On May 17, 1983, appellant was convicted by the Circuit Court for Prince George's County of robbery. He was sentenced to ten years in prison, all but 55 days of which were suspended in favor of five years probation. A year later, he was found to have violated certain conditions of his probation, whereupon the court "reimposed" the ten-year sentence, gave credit for 250 days served, and again suspended execution of the balance in favor of five years probation.
On January 9, 1985, appellant was arrested and charged with possession with intent to distribute marijuana and simple possession of that substance. The circumstances of the arrest, as summarized in appellant's brief, were as follows:
"Officers Pappas and Anderson were in an area of considerable drug trafficking when they saw Appellant signal to a motorist. The car stopped, and Appellant gave something to the driver who gave something back to him. The officers arrested Appellant, searched him, and recovered about 60 grams of marijuana, 125 small manila envelop[e]s, and $171 in cash. Officer Anderson did not know Appellant or his probationary status at the time of the arrest. The reason for the arrest was prosecution of Appellant for the apparent drug transaction."
In February, while the criminal case was pending, the State filed a petition to revoke appellant's probation, alleging a failure to "obey all laws." In June, the court in the criminal case found appellant's arrest to be unlawful without probable cause and therefore suppressed the evidence recovered from him, whereupon, in August, the State dismissed the charges. It did not dismiss its petition to revoke appellant's probation, however.
Appellant appeared in court in the revocation case on September 13, 1985, and immediately moved to suppress the evidence taken at the time of his arrest or to dismiss the entire proceeding.[1] Applying a kind of balancing test, the court ultimately denied the motion, finding that "the probation process and community safety interests far outweigh any deterrent effect [of the exclusionary rule]" and thus concluding that "the exclusionary rule is not applicable to this violation of probation proceeding." Upon that ruling, appellant ultimately conceded that marijuana had indeed been taken from him. The court thereupon revoked his probation, once again "reimposed" the ten-year sentence, suspended all but four years, gave credit for 580 days of previous incarceration, and placed appellant on five years probation commencing upon his release from prison.
As noted, appellant raises four issues in this appeal. We shall deal with them in a slightly different order than presented:
II. Appellant's Presence
There were two court proceedings in this case one on September 13, 1985, which dealt almost exclusively with the suppression/dismissal issue, and one on December 5, 1985, which followed the court's ruling on that issue and dealt with the merits of the case. We are concerned here with the latter proceeding.
It is clear that appellant was not present in the courtroom at the very outset, his counsel indicating that he was in the lock-up but had been summoned. It is also clear that at some undefined point in the brief proceeding appellant indeed was brought to the courtroom, for, on page six of the transcript, he responded to a question from the court. Unfortunately, it was between pages one and six that (1) counsel conceded that marijuana had been taken from appellant, (2) based on that concession the court found appellant in violation of his probation, and (3) argument was made as to disposition.
We start with the proposition that, as part of the minimal due process applicable to probation revocation proceedings, appellant had a right to be present at the hearing, to present evidence, and to confront witnesses against him. Gagnon v. Scarpelli, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973). Those rights can, of course, be waived. Even in an actual criminal trial, to which the full panoply of due process requirements pertain,
"an effective waiver of the defendant's right to be present at every stage of the trial will not always require a personal waiver by the defendant. Where the right of confrontation is not implicated, and where there is involved no other right requiring intelligent and knowing action by the defendant himself for an effective waiver, a defendant will ordinarily be bound by the action or inaction of his attorney."
Williams v. State, 292 Md. 201, 219, 438 A.2d 1301 (1981).
No objection was made by counsel, and no objection was made by appellant himself, to the commencement of the proceeding without appellant being present. Indeed, as noted, it is not clear when appellant actually arrived, and it is therefore not clear that anything of significance occurred in his absence. His right of confrontation was certainly not transgressed, for no witnesses testified against him. It had already been determined that the evidence taken from him was admissible, and the most damaging thing that occurred was his counsel's stipulation that the substance seized was, in fact, marijuana. But that was never in dispute; indeed, at the September 13 hearing, appellant stipulated that a bag containing 58.6 grams of marijuana had been seized. On this record, we cannot find any basis for concluding that, to the extent appellant was, in fact, not present, his right of presence was not effectively waived. He is free, of course, to establish a more persuasive record in post-conviction proceedings, if there is any basis for doing so. See Haley v. State, 40 Md. App. 349, 392 A.2d 551, cert. denied 284 Md. 744 (1978).
III. Suppression
We turn now to the main issue: did the court err in permitting the State to use the evidence unlawfully taken from appellant? Preliminarily, it is important to note that, unlike Cook v. State, 281 Md. 665, 381 A.2d 671, cert. denied 439 U.S. 839, 99 S.Ct. 126, 58 L.Ed.2d 136 (1978), we are not dealing here with a situation in which the trial judge disagreed with an earlier ruling that the evidence was unlawfully taken. The State and the court in this case accepted the earlier conclusion; the issue, then, is not the correctness of the ruling or whether it is even open to reexamination, but simply whether the exclusionary rule flowing from it is or should be extended to this proceeding.
(a)
When, in Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), the Supreme Court discarded Wolf v. Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782 (1949), and made the exclusionary rule fashioned in Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652 (1914), a Constitutional doctrine applicable to the States, it spoke in rather dogmatic terms. Without the sanction of the exclusionary rule, it said, "the freedom from state invasions of privacy would be so ephemeral and so neatly severed from its conceptual nexus with the freedom from all brutish means of coercing evidence as not to merit this Court's high regard as a freedom `implicit in the concept of ordered liberty.'" 367 U.S. at 643, 81 S.Ct. at 1685. Thus, it held that "all evidence obtained by searches and seizures in violation of the Constitution is, by that same authority, inadmissible in a state court." Id.
The law, of course, has not been static in this area since 1961. Even before Mapp, the Court had viewed the exclusionary rule as a deterrent, rather than a redressive measure. In Elkins v. United States, 364 U.S. 206, 217, 80 S.Ct. 1437, 1444, 4 L.Ed.2d 1669 (1960), it said that the purpose of the rule "is to deter to compel respect for the constitutional guaranty in the only effective available way by removing the incentive to disregard it." Upon that rationale, and despite the broad doctrinal language in Mapp, the Court, while periodically reaffirming the need for and continued existence of the exclusionary rule in Fourth Amendment cases, eventually began to open some holes in the Constitutional net it had thrown over improperly seized evidence. Thus, in United States v. Calandra, 414 U.S. 338, 348, 94 S.Ct. 613, 620, 38 L.Ed.2d 561 (1974), the Court observed:
"Despite its broad deterrent purpose, the exclusionary rule has never been interpreted to proscribe the use of illegally seized evidence in all proceedings or against all persons. As with any remedial device, the application of the rule has been restricted to those areas where its remedial objectives are thought most efficaciously served."
Two years later, the Court began to subject the rule or at least proposed extensions of it beyond the criminal trial itself to a kind of cost-benefit analysis. In United States v. Janis, 428 U.S. 433, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976), for example, the Court permitted evidence unlawfully seized by State authorities to be used by the Internal Revenue Service in a civil tax proceeding. "[T]he additional marginal deterrence provided by forbidding a different sovereign from using the evidence in a civil proceeding," the Court said at 453-54, 96 S.Ct. at 3031-32, "surely does not outweigh the cost to society of extending the rule to that situation." (Footnote omitted.) Primarily on that basis that exclusion of the evidence in that situation "has not been shown to have a sufficient likelihood of deterring the conduct of the state police so that it outweighs the societal costs imposed by the exclusion" (id., 454, 96 S.Ct. at 3032) the Court found no justification for extending the rule.
The same kind of analysis, and language, was used in Stone v. Powell, 428 U.S. 465, 96 S.Ct. 3037, 49 L.Ed.2d 1067 (1976), decided the same day as Janis. The question there was whether, in a Federal habeas corpus proceeding, the court should relitigate whether evidence used to obtain a conviction in State court was unlawfully seized when the petitioner had a fair opportunity to litigate that issue in the State court. Quoting in part from Calandra, the Court observed at 486-87, 96 S.Ct. at 3048-49 that,
"[D]espite the broad deterrent purpose of the exclusionary rule, it has never been interpreted to proscribe the introduction of illegally seized evidence in all proceedings or against all persons. As in the case of any remedial device, `the application of the rule has been restricted to those areas where its remedial objectives are thought most efficaciously served."
Later, but in the same vein, it noted, at 490-91, 96 S.Ct. at 3050-51:
"Application of the rule thus deflects the truthfinding process and often frees the guilty. The disparity in particular cases between the error committed by the police officer and the windfall afforded a guilty defendant by application of the rule is contrary to the idea of proportionality that is essential to the concept of justice. Thus, although the rule is thought to deter unlawful police activity in part through the nurturing of respect for Fourth Amendment values, if applied indiscriminately it may well have the opposite effect of generating disrespect for the law and administration of justice."
(Footnotes omitted.)
This balancing analysis remains an integral part of the decisional law in this area. It was articulated again in United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984), where the Court actually retracted the exclusionary rule, withdrawing its application to evidence obtained in reasonable reliance on a search warrant issued by a neutral magistrate but later found to be unsupported by probable cause. At 907-08 of 468 U.S. at 3413 of 104 S.Ct., the Court pointed out:
"The substantial social costs exacted by the exclusionary rule for the vindication of Fourth Amendment rights have long been a source of concern. `Our cases have consistently recognized that unbending application of the exclusionary sanction to enforce ideals of governmental rectitude would impede unacceptably the truth-finding functions of judge and jury.' .... An objectionable collateral consequence of this interference with the criminal justice system's truth-finding function is that some guilty defendants may go free or receive reduced sentences as a result of favorable plea bargains. Particularly when law enforcement officers have acted in objective good faith or their transgressions have been minor, the magnitude of the benefit conferred on such guilty defendants offends basic concepts of the criminal justice system."
(Citations omitted; footnote omitted.)
In Logan v. State, 289 Md. 460, 425 A.2d 632 (1981), the Court of Appeals applied the Calandra approach in declining to extend the exclusionary rule to sentencing proceedings. The fruits of evidence obtained in violation of the Fourth Amendment could, it held, be considered by a court, after conviction, in determining sentence. In adopting that approach, the Court quoted with approval from United States v. Lee, 540 F.2d 1205, 1211 (4th Cir.), cert. denied 429 U.S. 894, 97 S.Ct. 255, 50 L.Ed.2d 177 (1976):
"`[I]f the exclusionary rule were extended to sentencing in the ordinary case, its additional deterrent effect would be so minimal as to be insignificant. Generally, law enforcement officers conduct searches and seize evidence for purposes of prosecution and conviction not for the purpose of increasing a sentence in a prosecution already pending or one not yet begun. If they are to be deterred from official lawlessness, it would seem obvious that the only effective deterrence is the threat that the prosecution arising out of the specific search and seizure in which they acted illegally would be rendered ineffective. The additional threat that a future sentence might be less severe because they acted unlawfully can be predicted to have little practical effect to accomplish its main objective.'"
289 Md. at 485-86, 425 A.2d 632.
Though clearly indicating its agreement with the rationale in Lee, the Court pointedly expressed one caveat. The Court stated:
"We add, however, that where a showing has been made that judicial consideration at sentencing of illegally obtained evidence provides an incentive for illegal official activity, the exclusionary rule may well be applicable. Such incentive may be most readily shown by proof that the unconstitutionally obtained evidence was seized by police officials `with a view toward enhancing the defendant's sentence.'"
289 Md. at 486, 425 A.2d 632 (quoting in part from United States v. Lee, supra, 540 F.2d at 1212).
This caveat is entirely consistent with the balancing approach. The decision not to apply the exclusionary rule in a given situation rests upon an assumption that the deterrent effect would either be of marginal significance or would be greatly outweighed by the detrimental effect. If that assumption turns out to be wrong, however if the court has underestimated the deterrent effect of applying the rule (or the pernicious effect of not applying it) the equation necessarily changes and a different result may be required.
(b)
The precise question before us, though new in Maryland, has been considered by many courts throughout the country, most of which have applied a form of cost/benefit analysis and concluded that the Fourth Amendment exclusionary rule is inapplicable to probation revocation proceedings.[2] The reasoning employed in Thompson v. United States, 444 A.2d 972 (D.C. 1982), is illustrative. A probation revocation proceeding, the Court noted, is not a criminal prosecution, but is "more in the nature of an administrative hearing intimately concerned with the probationer's rehabilitation." Id., 974 (quoting Short v. United States, 366 A.2d 781, 785 (D.C. 1976)). The decision to revoke probation is a discretionary one, and, in making that decision, the court must balance the competing interests of the community in safety with the rehabilitative goals of probation. To do that properly, "it is extremely important that all reliable evidence shedding light on the probationer's conduct be available during probation revocation proceedings." 444 A.2d at 974 (quoting United States v. Winsett, 518 F.2d 51, 55 (9th Cir.1975)) (emphasis in original). Thus:
"In determining whether to apply the exclusionary rule to probation revocation proceedings we must weigh the potential benefit deterrence of police misconduct which would result against the potential harm to the function of the probation and probation revocation system that would result from the exclusion of relevant evidence. See United States v. Calandra, supra, 414 U.S. at 349, 94 S.Ct. at 620. The majority of jurisdictions that have addressed this issue have concluded that the deterrence which would result from applying the exclusionary rule in this context is outweighed by the need of the sentencing court for full and accurate information, and hence have held the exclusionary rule inapplicable to probation revocation proceedings."
444 A.2d at 974.
A number of courts, including the Thompson Court, though generally declining to extend the exclusionary rule to revocation proceedings, have been reluctant to lay down an unconditional ruling in that regard. Thompson noted that:
"A number of courts have, however, held or suggested that under certain circumstances exclusion of unlawfully obtained evidence from a revocation hearing would be appropriate. Where, for example, illegal acts of a government agent were directed specifically at a probationer or shock the conscience the deterrent effect that exclusion of evidence would have outweighs the need of the sentencing court for full and reliable information."
444 A.2d at 975.
The articulation of the caveat has varied somewhat. The Thompson Court, for example, declined to extend the exclusionary rule "in the absence of egregious circumstances which warrant exclusion of illegally seized evidence from [revocation] proceedings." Id. In United States v. Winsett, supra, 518 F.2d 51, 54 n. 5, the Court stated:
"[W]hen the police at the moment of search know that a suspect is a probationer, they may have a significant incentive to carry out an illegal search even though knowing that evidence would be inadmissible in any criminal proceeding. The police have nothing to risk: If the motion to suppress in the criminal proceedings were denied, defendant would stand convicted of a new crime; and if the motion were granted, the defendant would still find himself behind bars due to revocation of probation. Thus, in such circumstances, extension of the exclusionary rule to the probation revocation proceeding may be necessary to effectuate Fourth Amendment safeguards."
See also United States v. Vandemark, 522 F.2d 1019 (9th Cir.1975), giving special attention to whether the officer was aware of the defendant's status as a probationer.
Other courts have expressed the caveat in terms of an absence of police "harassment." See United States v. Wiygul, 578 F.2d 577 (5th Cir.1978) (per curiam); United States v. Farmer, 512 F.2d 160 (6th Cir.), cert. denied 423 U.S. 987, 96 S.Ct. 397, 46 L.Ed.2d 305 (1975). At least one court has used a "good faith" standard, declining to apply the exclusionary rule "at least where there has been a good faith effort to comply with the law." Harris v. State, 270 Ark. 634, 606 S.W.2d 93, 95 (1980).
To some extent, this is a matter of semantics, but, because of its obvious importance to the conduct of probation (and parole) proceedings, if there is to be a caveat, it should be clearly expressed and easy to administer.
We align ourselves with the majority of courts that have declined to extend in any general fashion the Fourth Amendment exclusionary rule to probation revocation proceedings. We agree, as a general proposition, that the deterrent effect of such an application will be minimal and that whatever marginal deterrent benefit might accrue would be far outweighed by the harmful effect of denying access to relevant information concerning a probationer's behavior.
We also have a caveat. We cannot permit the police to use this as an incentive to violate the Fourth Amendment, and, while we are confident that the police agencies in this State would not, as a matter of policy, act in any less professional manner than they now do, we think the best way to deter individual violations is simply to apply the exclusionary rule upon a showing that the police did not act in good faith in effecting the search and seizure. The "good faith" standard is a familiar one generally in the law and, at least since United States v. Leon, has been found relevant and workable in the context of the exclusionary rule. It encompasses all aspects of the officer's actions how egregious the violation was, whether the officer knew the person was on probation or parole, what the circumstances were that led to the seizure.
Because we accept as a general proposition that the exclusionary rule should not apply to revocation proceedings, we think that the burden should be on the defendant initially to produce evidence showing a lack of good faith. Otherwise, it would be a wooden affair with the officer routinely, in every case, simply attesting that he acted in good faith. Once the defendant produces sufficient credible evidence that the officer did not act in good faith, however, the State must rebut that evidence and bear the burden of persuading the court that there was good faith. That approach, we think, makes the rule both fair and workable.
(c)
Applying these principles to the case at hand, we find no error in the court's ruling. Although appellant alluded at one point to the officers' having arrested him at gunpoint, we see nothing in the record indicating any lack of good faith.
IV. Fundamental Fairness
Relying on language in Fuller v. State, 64 Md. App. 339, 495 A.2d 366 (1985), appellant contends that "[w]here an evidentiary ruling strikes at the heart of a prosecution, causing it to be abandoned, principles of fundamental fairness preclude use of that same evidence to incarcerate the defendant through the expediency of a less formal proceeding," namely a probation revocation hearing.
In Fuller, two police officers had been permitted to testify at Fuller's probation revocation hearing as to transactions and events underlying a "bad check" charge, which had been "stetted," and of which they had no firsthand knowledge. Analyzing a probationer's right to confrontation and to cross-examine adverse witnesses, we held that "in probation revocation proceedings due process minimally requires that when criminal conduct for which, as here, a probationer had not been tried, is alleged as the basis for the probation revocation, hearsay evidence to prove the violation is inadmissible unless the witnesses to such conduct are unavailable or the evidence is otherwise shown to be reliable." 64 Md. App. at 352, 495 A.2d 366.
We further expressed "disapproval" with the State's conduct in Fuller because we believed that it had attempted to use the probation revocation proceedings as a substitute for a criminal prosecution. 64 Md. App. at 353, 495 A.2d 366. Suspecting that, from the outset, the State had no intention of proceeding with the "bad check" charge, either because it could not prove it or did not wish to invest the time or effort to do so, we stated that "[f]undamental fairness requires that, if the State does not intend to proceed criminally or is unable to prove the criminal charges, it should not proceed in another forum where less is required." Id. at 354, 495 A.2d 366 (footnote omitted).
The circumstances existing in the case at hand in no way evidence an attempt by the State to use the probation revocation proceedings as a substitute for the underlying criminal proceedings. In fact, in the instant case the petition for violation of appellant's probation was filed just shortly after appellant's arrest, well before the granting of his motion to suppress on the underlying charge, which prompted those charges to be nol prossed.
V. Sentence
Appellant lastly complains about the five-year probationary period commencing upon his release from prison. He points out that he has already served 408 days of probation and that the maximum period of probation allowed by law is five years. See Md. Code Ann. art. 27, §§ 641A(a) and 642. The State concedes the point, and so we shall remand the case with the direction that the probationary period be reduced by 408 days. Md. Rule 1071 b.
JUDGMENT AFFIRMED IN PART AND REVERSED IN PART; CASE REMANDED TO CIRCUIT COURT FOR PRINCE GEORGE'S COUNTY FOR MODIFICATION OF SENTENCE IN ACCORDANCE WITH THIS OPINION; COSTS TO BE PAID THREE-FOURTHS BY APPELLANT, ONE-FOURTH BY PRINCE GEORGE'S COUNTY.
NOTES
[1] Appellant did not file a written motion. The transcript reveals that the issue he presented was "whether or not the Court will consider the evidence seized at the time of [appellant's] arrest as the basis of violation of [appellant's] probation." In its Memorandum and Order, the court viewed the motion as one "to dismiss the action." The discrepancy, if there is one, is unimportant in this case.
[2] See United States v. Bazzano, 712 F.2d 826 (3d Cir.1983), cert. denied 465 U.S. 1078, 104 S.Ct. 1439, 79 L.Ed.2d 760 (1984); United States v. Frederickson, 581 F.2d 711 (8th Cir.1978) (per curiam); United States v. Winsett, 518 F.2d 51 (9th Cir.1975); United States v. Farmer, 512 F.2d 160 (6th Cir.), cert. denied 423 U.S. 987, 96 S.Ct. 397, 46 L.Ed.2d 305 (1975); United States v. Brown, 488 F.2d 94 (5th Cir.1973) (per curiam); United States v. Hill, 447 F.2d 817 (7th Cir.1971); State v. Alfaro, 623 P.2d 8 (Ariz. 1980); Harris v. State, 606 S.W.2d 93 (Ark. App. 1980); People v. Rafter, 41 Cal. App.3d 557, 116 Cal. Rptr. 281 (1974) (per curiam); People v. Atencio, 525 P.2d 461 (Colo. 1974); Thompson v. United States, 444 A.2d 972 (D.C. 1982); People v. Dowery, 20 Ill. App.3d 738, 312 N.E.2d 682 (1974), aff'd 340 N.E.2d 529 (III. 1975); Dulin v. State, 169 Ind. App. 211, 346 N.E.2d 746 (1976); Kain v. State, 378 N.W.2d 900 (Iowa 1985); State v. Caron, 334 A.2d 495 (Me. 1975); State v. Thorsness, 528 P.2d 692 (Mont. 1974); Stone v. Shea, 113 N.H. 174, 304 A.2d 647 (1973); State v. Lombardo, 306 N.C. 594, 295 S.E.2d 399 (1982); State v. Nettles, 287 Or. 131, 597 P.2d 1243 (1979); State v. Spratt, 120 R.I. 192, 386 A.2d 1094 (1978). Compare United States v. Workman, 585 F.2d 1205 (4th Cir.1978); aff'd after remand 617 F.2d 48 (4th Cir.1980); but see Grimsley v. Dodson, 696 F.2d 303 (4th Cir.1982). See generally Annot., Admissibility, in state probation revocation proceedings, of evidence obtained through illegal search and seizure, 77 A.L.R.3d 636 (1977 & Supp. 1985); Annot., Admissibility, in federal probation revocation proceedings, of evidence obtained through unreasonable search and seizure or in absence of Miranda warnings, 30 A.L.R.Fed. 824 (1976 & Supp. 1985).
| {
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} |
United States Court of Appeals
for the Federal Circuit
______________________
REGENTS OF THE UNIVERSITY OF CALIFORNIA,
UNIVERSITY OF VIENNA, EMMANUELLE
CHARPENTIER,
Appellants
v.
BROAD INSTITUTE, INC., MASSACHUSETTS
INSTITUTE OF TECHNOLOGY, PRESIDENT AND
FELLOWS OF HARVARD COLLEGE,
Appellees
______________________
2017-1907
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. 106,048.
______________________
Decided: September 10, 2018
______________________
DONALD B. VERRILLI, JR., Munger, Tolles & Olson
LLP, Washington, DC, argued for appellants. Appellants
Regents of the University of California, University of
Vienna also represented by GINGER ANDERS; EDWARD
GEORGE DANE, ADAM R. LAWTON, Los Angeles, CA.
RAYMOND N. NIMROD, Quinn Emanuel Urquhart &
Sullivan, LLP, New York, NY, argued for appellees. Also
2 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
represented by MATTHEW D. ROBSON; STEVEN R. TRYBUS,
HARRY J. ROPER, Jenner & Block LLP, Chicago, IL.
LI-HSIEN RIN-LAURES, RinLaures LLC, Chicago, IL,
for appellant Emmanuelle Charpentier. Also represented
by SANDIP PATEL, Marshall, Gerstein & Borun LLP,
Chicago, IL.
______________________
Before PROST, Chief Judge, SCHALL and MOORE, Cir-
cuit Judges.
MOORE, Circuit Judge.
The University of California, the University of Vien-
na, and Emmanuelle Charpentier, (collectively “UC”),
appeal a decision of the Patent Trial and Appeal Board
determining there was no interference-in-fact between
UC’s Application No. 13/842,859, and the claims of twelve
patents and one application owned by the Broad Institute,
Inc., Massachusetts Institute of Technology, and the
President and Fellows of Harvard College, (collectively
“Broad”). Because the Board’s underlying factual findings
are supported by substantial evidence and the Board did
not err in concluding that Broad’s claims would not have
been obvious over UC’s claims, we affirm.
BACKGROUND
The involved claims relate to the use of a
CRISPR-Cas9 1 system for the targeted cutting of DNA
molecules. The system includes three components: (1) a
“crRNA”; (2) a “tracrRNA”; and (3) the Cas9 protein.
J.A. 4803. The crRNA is an RNA molecule with a
variable portion that targets a particular DNA sequence.
J.A. 4799–803. The nucleotides that make up the
1 “CRISPR” is an acronym for “Clustered Regularly
Interspaced Short Palindromic Repeats.” J.A. 4682.
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 3
variable portion complement the target sequence in the
DNA and hybridize with the target DNA. J.A. 4801.
Another portion of the crRNA consists of nucleotides that
complement and bind to a portion of the tracrRNA.
J.A. 4801. The Cas9 protein interacts with the crRNA
and tracrRNA and cuts both strands of DNA at the target
location. J.A. 4799.
In August 2012, UC researchers published an article
(“Jinek 2012”) demonstrating that the isolated elements
of the CRISPR-Cas9 system could be used in vitro in a
non-cellular experimental environment. J.A. 4799–804.
In February 2013, Broad researchers published an article
describing the use of CRISPR-Cas9 in a human cell line.
J.A. 4682–86. Both parties sought patent protection.
CRISPR-Cas systems occur naturally in prokaryotes such
as bacteria, J.A. 4799, but have not been found to natural-
ly exist in eukaryotes, such as plants and animals,
J.A. 5488; see also J.A. 5006, 5029. It is undisputed that
the Jinek 2012 article did not report the results of exper-
iments using CRISPR-Cas9 in a eukaryotic cell, and the
claims in UC’s ’859 application do not refer to a particular
cell type or environment. J.A. 13, 9665–66. Claim 165 of
the ’859 application is representative:
165. A method of cleaving a nucleic acid compris-
ing
contacting a target DNA molecule having a target
sequence with an engineered and/or non-
naturally-occurring Type II Clustered Regularly
Interspaced Short Palindromic Repeats
(CRISPR)— CRISPR associated (Cas) (CRISPR-
Cas) system comprising
a) a Cas9 protein; and
b) a single molecule DNA-targeting RNA
comprising
4 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
i) a targeter-RNA that hybridizes
with the target sequence, and
ii) an activator-RNA that hybrid-
izes with the targeter-RNA to form
a double-stranded RNA duplex of
a protein-binding segment,
wherein the activator-RNA and the tar-
geter-RNA are covalently linked to one
another with intervening nucleotides,
wherein the single molecule DNA-
targeting RNA forms a complex with the
Cas9 protein,
whereby the single molecule DNA-
targeting RNA targets the target se-
quence, and the Cas9 protein cleaves the
target DNA molecule.
J.A. 9665. The claims in Broad’s patents and application
are limited to use in eukaryotic cells. Claim 1 of U.S.
Patent No. 8,697,359 is representative:
1. A method of altering expression of at least one
gene product comprising introducing into a eu-
karyotic cell containing and expressing a DNA
molecule having a target sequence and encoding
the gene product an engineered, non-naturally oc-
curring Clustered Regularly Interspaced Short
Palindromic Repeats (CRISPR)—CRISPR associ-
ated (Cas) (CRISPR-Cas) system comprising one
or more vectors comprising:
a) a first regulatory element operable in a
eukaryotic cell operably linked to at least
one nucleotide sequence encoding a
CRISPR-Cas system guide RNA that hy-
bridizes with the target sequence, and
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 5
b) a second regulatory element operable in
a eukaryotic cell operably linked to a nu-
cleotide sequence encoding a Type-II Cas9
protein,
wherein components (a) and (b) are located on
same or different vectors of the system, whereby
the guide RNA targets the target sequence and
the Cas9 protein cleaves the DNA molecule,
whereby expression of the at least one gene prod-
uct is altered; and, wherein the Cas9 protein and
the guide RNA do not naturally occur together.
J.A. 1831.
The Board instituted an interference, and Broad
moved to terminate the interference, arguing its claims
are patentably distinct from UC’s claims because a person
of ordinary skill in the art would not have had a reasona-
ble expectation that the CRISPR-Cas9 system would work
successfully in a eukaryotic cell. J.A. 7, 13. The Board
determined there was no interference-in-fact because,
given the differences between eukaryotic and prokaryotic
systems, a person of ordinary skill in the art would not
have had a reasonable expectation of success in applying
the CRISPR-Cas9 system in eukaryotes. J.A. 48–49. It
determined, therefore, that UC’s claims to the use of
CRISPR-Cas9 did not render obvious Broad’s claims to its
use in eukaryotes. J.A. 49.
UC timely appeals. We have jurisdiction over appeals
of interferences under 28 U.S.C. § 1295(a)(4)(A) as it
existed prior to changes made by the America Invents Act
(“AIA”). See Technical Corrections—Leahy–Smith Ameri-
ca Invents Act, Pub. L. No. 112-274, 126 Stat. 2456, 2458
(2013).
DISCUSSION
If two parties claim patentably indistinct subject mat-
ter, under pre-AIA 35 U.S.C. § 102(g), a patent may only
6 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
be awarded to the first inventor. 2 Whether an interfer-
ence occurs is determined by comparing the involved
claims. Noelle v. Lederman, 355 F.3d 1343, 1352 (Fed.
Cir. 2004). The Board applies a two-way test to deter-
mine whether the claims are patentably distinct, asking
whether “the subject matter of a claim of one party would,
if prior art, have anticipated or rendered obvious the
subject matter of a claim of the opposing party and vice
versa.” 37 C.F.R. § 41.203(a). If the two-way test is not
met, no interference-in-fact exists.
When an interference-in-fact turns on whether one set
of claims renders obvious the subject matter of another
set of claims, the standard of review mirrors that in an
obviousness review. Medichem, S.A. v. Rolabo, S.L., 353
F.3d 928, 932 (Fed. Cir. 2003). Obviousness is a question
of law based on underlying facts. WBIP, LLC v. Kohler
Co., 829 F.3d 1317, 1326 (Fed. Cir. 2016). In Graham v.
John Deere Co., 383 U.S. 1, 17–18 (1966), the Supreme
Court set forth factors for assessing obviousness. The
Graham factors—(1) the scope and content of the prior
art; (2) the differences between the claims and the prior
art; (3) the level of ordinary skill in the art; and
(4) objective considerations of nonobviousness—are ques-
tions of fact reviewed for substantial evidence. Arctic Cat
Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d
1350, 1358 (Fed. Cir. 2017).
An obviousness determination requires finding that a
person of ordinary skill in the art would have been moti-
vated to combine or modify the teachings in the prior art
2 The AIA replaced the first-to-invent rule with a
first-inventor-to-file rule, but the prior rule continues to
apply in this interference. See Leahy-Smith America
Invents Act, Pub. L. No. 112-29, sec. 3(n)(2), 125 Stat.
284, 293 (2011); Storer v. Clark, 860 F.3d 1340, 1342 (Fed.
Cir. 2017).
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 7
and would have had a reasonable expectation of success in
doing so. In re Stepan Co., 868 F.3d 1342, 1345–46 (Fed.
Cir. 2017). “Whether a person of ordinary skill in the art
would have been motivated to modify or combine teach-
ings in the prior art, and whether he would have had a
reasonable expectation of success, are questions of fact.”
Id. at 1346. We review the Board’s ultimate conclusion of
obviousness de novo, and the underlying factual findings
for substantial evidence. In re Mouttet, 686 F.3d 1322,
1330–31 (Fed. Cir. 2012).
This case turns in its entirety on the substantial evi-
dence standard. The Board found a person of ordinary
skill in the art would not have had a reasonable expecta-
tion of success in applying the CRISPR-Cas9 system in
eukaryotic cells. J.A. 48–49. Given the mixture of evi-
dence in the record, we hold that substantial evidence
supports the Board’s finding that there was not a reason-
able expectation of success, and we affirm. UC argues
that the Board: (1) improperly adopted a rigid test for
obviousness that required the prior art contain specific
instructions, and (2) erred in dismissing evidence of
simultaneous invention as irrelevant. For the reasons set
forth below, we hold the Board did not err in its analysis.
Reasonable Expectation of Success
The Board found that a person of ordinary skill in the
art would not have had a reasonable expectation of suc-
cess in applying the CRISPR-Cas9 system in a eukaryotic
cell. J.A. 48–49. It concluded, therefore, that if UC’s
claims were prior art, they would not have rendered
Broad’s claims obvious, so there was no interference-in-
fact. J.A. 49. Substantial evidence supports the Board’s
finding that there would not have been a reasonable
expectation of success.
Broad’s expert Dr. Paul Simons testified as to the dif-
ferences between prokaryotic systems and eukaryotic
systems that rendered the application of the CRISPR-
8 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
Cas9 system in eukaryotic cells unpredictable. He ex-
plained that the function of the CRISPR-Cas9 system is
dependent on the proper folding of the Cas9 protein.
J.A. 5526 at ¶ 6.9. He explained that folding is particu-
larly important for the CRISPR-Cas9 system because of
the conformational changes the Cas9 protein undergoes in
performing its function. Id. He further explained that
differences in cellular conditions can cause differences in
protein folding, id., and elaborated on some of the differ-
ences between prokaryotic and eukaryotic cellular condi-
tions that would make the functionality of CRISPR-Cas9
in eukaryotes unpredictable, J.A. 5527 at ¶ 6.13. These
included: intracellular temperature, the concentration of
various ions, pH, and the presence of other molecules that
may be present in one type of cell, but not the other. Id.
Dr. Simons identified additional concerns involving
the CRISPR-Cas9 system which he testified would have
caused a skilled artisan not to have a reasonable expecta-
tion that it would work in eukaryotic cells. The CRISPR-
Cas9 system relies on two RNA components, crRNA and
tracrRNA. J.A. 5528 at ¶ 6.15. Eukaryotic cells contain a
number of molecules, known as ribonucleases, which are
not present in prokaryotic cells, that cut up RNA mole-
cules. J.A. 5528–29 at ¶¶ 6.15–6.16. Eukaryotic cells also
contain systems that degrade double-stranded RNA. The
CRISPR-Cas9 system contains a section of double-
stranded RNA where the crRNA binds with the tracrRNA,
adding additional uncertainty. J.A. 5529–30 at ¶¶ 6.17–
6.20. Dr. Simons suggested a person of ordinary skill in
the art would have been concerned that the CRISPR-Cas9
system could result in an excessive number of double-
stranded DNA breaks given factors such as the greater
size of the human genome compared to typical bacterial
genome and the frequency with which similar DNA se-
quences appear in the human genome. J.A. 5530–32 at
¶¶ 6.22–6.27. He testified that these differences made it
such that a skilled artisan would not have had a reasona-
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 9
ble expectation of success in applying CRISPR-Cas9 in
eukaryotic cells. J.A. 5532 at ¶ 6.27.
In a September 2012 article, UC’s expert witness Dr.
Dana Carroll recognized many of the same issues that
could arise in attempting to apply the CRISPR-Cas9
system in eukaryotic cells. These included the possibility
that CRISPR-Cas9 might be degraded by nucleases in
eukaryotic cells and that toxicity could result from its use
in eukaryotic cells. J.A. 4797. He also noted potential
problems arising from the fact that, unlike prokaryotic
DNA, eukaryotic DNA exists in a chromatin complex, in
which the DNA is wrapped around protein structures.
J.A. 4797. He stated that “[t]here is no guarantee that
Cas9 will work effectively on a chromatin target or that
the required DNA-RNA hybrid can be stabilized in that
context.” J.A. 4797; accord J.A. 9111. He further noted
that the efficacy of prior systems relying on gene editing
through base pairing “remains discouragingly low in most
cases.” J.A. 4797. Ultimately, Dr. Carroll concluded that
whether the CRISPR-Cas9 system will work in eukary-
otes “remains to be seen” and “[o]nly attempts to apply
the system in eukaryotes will address these concerns.”
J.A. 4797. This is substantial evidence that skilled arti-
sans believed many problems could arise in implementing
the CRISPR-Cas9 system in eukaryotes, which the Board
viewed as indicating that an ordinarily skilled artisan
would have lacked a reasonable expectation of success.
The Board was also presented evidence of statements
by the UC inventors acknowledging doubts and frustra-
tions about engineering CRISPR-Cas9 systems to function
in eukaryotic cells and noting the significance of Broad’s
success. One of the named inventors, Dr. Jennifer Doud-
na, acknowledged the “huge bottleneck” in making genetic
modifications in animals and humans, J.A. 5911, and
after the publication of the initial UC research, she stated
“[o]ur 2012 paper was a big success, but there was a
problem. We weren’t sure if CRISPR/Cas9 would work in
10 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
eukaryotes,” J.A. 5880. She also explained that she had
“many frustrations” in getting CRISPR-Cas9 to work in
human cells, and that she thought success in doing so
would be “a profound discovery.” J.A. 5908. Evidence in
the record also suggested her colleagues recognized
Broad’s development was significant. When a colleague
contacted Dr. Doudna to inform her of Broad’s success he
stated “I hope you’re sitting down,” “CRISPR is turning
out to be absolutely spectacular in [Broad researcher]
George Church’s hands.” J.A. 5908. The Board viewed
this evidence as indicating that an ordinarily skilled
artisan would have lacked a reasonable expectation of
success. 3
The Board also considered evidence regarding the de-
velopment of other gene editing systems. It found several
of these were not particularly informative in assessing the
reasonable expectation of success of CRISPR-Cas9.
Specifically, it found that the prior art TALEN and zinc
finger nuclease (“ZFN”) systems were not analogous to
CRISPR-Cas9 because they have their origins in eukary-
otic domains and that the adaptability of small prokaryot-
ic protein systems like Cre would not have informed the
expectation of success for the larger CRISPR-Cas9 com-
plex. J.A. 17 (citing J.A. 4797), 41, 43. Broad presented
3 UC also argues the Board erred in giving “near-
dispositive weight” to statements by Dr. Doudna and Dr.
Carroll, which it claims were misinterpreted by the
Board. The Board considered a variety of statements
made by both Dr. Doudna and Dr. Carroll. In doing so, it
afforded the statements weight depending on the contexts
in which they were made and their relevance to its analy-
sis. See J.A. 14–23. To the extent UC argues the Board
erred in its reading of these statements in the contexts in
which they arose, we conclude substantial evidence sup-
ports the Board’s interpretation.
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 11
evidence regarding three other systems derived from
prokaryotes that had been adapted for use in eukaryotes:
riboswitches, ribozyme systems, and group II introns.
The Board found that in each instance there was either
limited efficacy or the technology required a specific
strategy to adapt it for use in eukaryotic cells. J.A. 36–38.
Broad presented expert testimony that only a few ri-
boswitches had been successfully adapted to work in
eukaryotes, and a prior art article explained that differ-
ences in RNA folding in vivo versus in a cellular environ-
ment may prevent the riboswitches from working. J.A. 36
(citing J.A. 5537–38 at ¶ 6.47; J.A 5893). Based on expert
testimony and an earlier publication, the Board found
that although some success was achieved using ribozyme
systems, “that success required a specific strategy devel-
oped particularly for ribozymes.” J.A. 38 (citing
J.A. 5889–90). As to group II introns, there was evidence
before the Board that despite 16 years of experimental
efforts and the development of a specific strategy to
increase the likelihood of success for that system, their
use in eukaryotes remained limited. J.A. 5535–36 at
¶¶ 6.37–39; J.A. 8653–56 at ¶¶ 1.45–53. This substantial
evidence supports the Board’s finding that the success in
applying similar prokaryotic systems in eukaryotes was
unpredictable and had relied on tailoring particular
conditions to the technology. J.A. 37–39. The Board also
found that “one skilled in the art would have expected
that the CRISPR-Cas9 system would have also required
its own set of unique conditions.” J.A. 39. We conclude
the record evidence is sufficient to support that finding.
In light of the record evidence, which includes expert
testimony, contemporaneous statements made by skilled
artisans, statements by the UC inventors themselves, and
prior art failures, we conclude that the Board’s fact-
finding as to a lack of reasonable expectation of success is
supported by substantial evidence.
12 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
UC expended substantial time and effort to convince
this court that substantial evidence supports the view it
would like us to adopt, namely, that a person of ordinary
skill would have had a reasonable expectation of success
in implementing the CRISPR-Cas9 system in eukaryotes.
There is certainly evidence in the record that could sup-
port this position. The prior art contained a number of
techniques that had been used for adapting prokaryotic
systems for use in eukaryotic cells, obstacles adopting
other prokaryotic systems had been overcome, and Dr.
Carroll suggested using those techniques to implement
CRISPR-Cas9 in eukaryotes. We are, however, an appel-
late body. We do not reweigh the evidence. It is not our
role to ask whether substantial evidence supports fact-
findings not made by the Board, but instead whether such
evidence supports the findings that were in fact made.
Here, we conclude that it does.
Specific Instructions
UC argues the Board erred in adopting a test requir-
ing that there be specific instructions in the prior art to
establish a reasonable likelihood of success. Appellants’
Opening Br. 19 (“its requirement that the art contain
‘specific instructions’”), 21 (“expressly refused to find
obviousness because the prior art lacked ‘specific instruc-
tions’”), 31 (“requiring that the prior art contain ‘specific
instructions’”; “insisted that the prior art must contain
‘instructions that are specifically relevant’”; “fell short
because it did not provide specific instructions”). It ar-
gues that instead of asking whether the claimed invention
is “the product not of innovation but of ordinary skill and
common sense,” the Board adopted a rigid test for obvi-
ousness that formalistically looked for specific instruc-
tions in the prior art while ignoring “the inferences and
creative steps that a person of ordinary skill in the art
would employ” without the need for specific guidance.
Appellants’ Opening Br. 27 (quoting KSR Int’l Co. v.
Teleflex Inc., 550 U.S. 398, 418, 420 (2007)). The Board
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 13
did not adopt a test requiring there be specific instruc-
tions in the art in order to make a finding of a reasonable
expectation of success, and we see no error in its analysis.
The Board acknowledged that certainty in the art is
not required, J.A. 12, and performed a factual analysis
based on the correct legal standard. In considering
whether there was a reasonable expectation of success, it
stated that it “look[ed] to whether or not there were
instructions in the prior art that would be specifically
relevant to CRISPR-Cas9,” as well as “whether there are
examples in the prior art of the success or failure of
similar systems.” J.A. 28–29. The Board noted that
“[s]pecific instructions that are relevant to the claimed
subject matter or success in similar methods or products
have directed findings of a reasonable expectation of
success.” J.A. 28. It further noted that in other cases the
combination of only generalized instructions and evidence
of failures with similar subject matter indicated there was
not a reasonable likelihood of success. J.A. 28. It made
clear that the determination “depends on the specific
nature of what was known from the prior art about closely
related subject matter.” J.A. 28. We see no error in these
statements of law—the Board did not hold specific in-
structions were needed.
In this case, the Board found there would not have
been specific instructions in the art as to CRISPR-Cas9
that would have given one of ordinary skill in the art a
reasonable expectation of success, and it was “persuaded
that the failure demonstrated with other systems would
have indicated the lack of a reasonable expectation of
success.” J.A. 45–46. At no point did the Board suggest it
found there would not have been a reasonable expectation
of success solely because there were not specific instruc-
tions in the art describing how to apply CRISPR-Cas9 in
eukaryotes. We see no error in the Board’s consideration
of the lack of specific instructions in conjunction with
14 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
prior failures at adapting prokaryotic systems to eukary-
otic cells based on general instructions.
Treatment of Simultaneous Invention Evidence
UC argues the Board erred in dismissing evidence of
simultaneous invention as irrelevant. It argues simulta-
neous invention can be compelling evidence of obvious-
ness, because it shows the claimed invention “was the
product only of ordinary mechanical skill or engineering
skill,” rather than genuine invention. Appellants’ Open-
ing Br. 37 (quoting Geo. M. Martin Co. v. All Mech. Sys.
Int’l, 618 F.3d 1294, 1305–06 (Fed. Cir. 2010)). It argues
simultaneous invention is strong objective evidence of
what constituted the level of ordinary skill in the art and
is relevant as a secondary consideration under the fourth
Graham factor. It argues six research groups inde-
pendently applied CRISPR-Cas9 in eukaryotic cells
within months of its disclosures, a secondary considera-
tion which the Board failed to address. The Board, how-
ever, did not treat this evidence as irrelevant. Instead,
the Board expressly recognized the relevance of simulta-
neous invention to the question of obviousness. J.A. 23.
Simultaneous invention may serve as evidence of ob-
viousness when considered in light of all of the circum-
stances. Lindemann Maschinenfabrik GMBH v. Am.
Hoist & Derrick Co., 730 F.2d 1452, 1460 (Fed. Cir. 1984).
We have recognized that simultaneous invention may
bear upon the obviousness analysis in two ways. Mon-
arch Knitting Mach. Corp. v. Sulzer Morat GmbH, 139
F.3d 877, 883 (Fed. Cir. 1998). First, it is evidence of the
level of skill in the art. Id. Second, it constitutes objec-
tive evidence that persons of ordinary skill in the art
understood the problem and a solution to that problem.
Id. Inherent in the existence of interference practice is
the principle that evidence of simultaneous invention
cannot alone show obviousness, otherwise any claims
involved in an interference would be unpatentable for
UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC. 15
obviousness. Lindemann, 730 F.2d at 1460. The weight
of evidence of simultaneous invention must, therefore, be
carefully considered in light of all the circumstances. See
Monarch Knitting, 139 F.3d at 883.
In August 2012, the Jinek 2012 paper was published
explaining the CRISPR-Cas9 system and its use in vitro
using isolated components. There is no dispute that this
represented a breakthrough in the art. The fact that six
research groups succeeded in applying this technology in
eukaryotic cells within a short period of time after this is
certainly strong evidence that there was a motivation to
combine the prior art in this manner. The Board express-
ly recognized UC’s evidence of simultaneous invention in
this context, and it concluded the evidence of simultane-
ous invention was evidence of the motivation to combine
the prior art references but did not “necessarily” indicate
an expectation of success prior to the completion of the
experiments. J.A. 23.
UC would have the Board read more into this evi-
dence and infer that because several research teams
pursued a particular approach, and that approach was
ultimately successful, they must have expected that
approach to work. It argued to the Board that absent an
expectation of success, multiple groups “would not have
undertaken the use of UC’s Type-II CRISPR-Cas system
in eukaryotic cells.” J.A. 245. The Board rejected this
bright-line rule and instead determined in this instance
the evidence of simultaneous invention did not establish a
reasonable expectation of success given the “specific
context of the art at the time.” See J.A. 23–25. The Board
explained that “[e]ach case must be decided in its particu-
lar context, including the characteristics of the science or
technology, its state of advance, the nature of the known
choices, the specificity or generality of the prior art, and
the predictability of results in the area of interest.”
J.A. 25 (quoting Abbott Labs. v. Sandoz, Inc., 544 F.3d
1341, 1352 (Fed. Cir. 2008)). We do not see any error in
16 UNIVERSITY OF CALIFORNIA v. BROAD INSTITUTE, INC.
this analysis. Contrary to UC’s claims, the Board recog-
nized that UC’s evidence of simultaneous invention is
relevant to the obviousness determination. We consider
Broad’s evidence of simultaneous invention, along with
evidence regarding the state of the art, the statements of
the inventors, failures involving similar technologies, and
the remainder of the record evidence, and conclude the
Board’s finding is supported by substantial evidence.
CONCLUSION
For the foregoing reasons, we affirm the Board’s
judgment of no interference-in-fact. The Board performed
a thorough analysis of the factual evidence and considered
a variety of statements by experts for both parties and the
inventors, past failures and successes in the field, evi-
dence of simultaneous invention, and the extent to which
the art provided instructions for applying the CRISPR-
Cas9 technology in a new environment. In light of this
exhaustive analysis and on this record, we conclude that
substantial evidence supports the Board’s finding that
there was not a reasonable expectation of success, and the
Board did not err in its determination that there is no
interference-in-fact.
We have considered UC’s remaining arguments and
find them unpersuasive. We note that this case is about
the scope of two sets of applied-for claims, and whether
those claims are patentably distinct. It is not a ruling on
the validity of either set of claims.
AFFIRMED
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967 A.2d 957 (2009)
COM.
v.
BRABAZON.
No. 678 MAL (2008).
Supreme Court of Pennsylvania.
March 25, 2009.
Disposition of petition for allowance of appeal. Denied.
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717 S.E.2d 736 (2011)
STATE
v.
Melvin Charles KING.
No. 385A11-1.
Supreme Court of North Carolina.
October 5, 2011.
Anne M. Middleton, Assistant Attorney General, for State of North Carolina.
Eddie H. Meacham, Pinehurst, for King, Melvin Charles.
Maureen Krueger, District Attorney, for State of North Carolina.
*737 The following order has been entered on the motion filed on the 3rd of October 2011 by State of NC for Extension of Time to File Brief:
"Motion Allowed by order of the Court in conference, this the 5th of October 2011."
State of NC shall have up to and including the 17th day of October 2011 to file and serve his/her brief with this Court.
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829 F.2d 326
Jean APPLE, As Administratrix of the Estate of Denise Smith,Deceased, Plaintiff-Appellee,v.JEWISH HOSPITAL AND MEDICAL CENTER, William Adel Aziz andThe United States of America, Defendants-Appellees,William Adel Aziz, Defendant-Appellee, Cross-Appellant,Medical Liability Mutual Insurance Company, DefendantIntervenor Appellant, Cross-Appellee.
Nos. 713, 714, Dockets 86-6218, 86-6224.
United States Court of Appeals,Second Circuit.
Argued Jan. 30, 1987.Decided Sept. 18, 1987.
Michael A. Ellenberg, New York City (James H. Irish, LeBoeuf, Lamb, Leiby & MacRae, New York City, of counsel), for intervenor-appellant Medical Liability Mut. Ins. Co.
Michael I. Josephs, New York City (Garbarini, Scher & DeCicco, P.C., of counsel), for defendant-appellant William Adel Aziz.
Kathleen Haggerty, Asst. U.S. Atty., Brooklyn, N.Y. (Andrew J. Maloney, U.S. Atty., E.D.N.Y., Robert L. Begleiter, Asst. U.S. Atty., Brooklyn, N.Y., of counsel), for appellee U.S. of America.
Alfred S. Julien, New York City (David B. Turret, Judith N. Reeves, Julien & Schlesinger, P.C., New York City, of counsel), filed a brief for plaintiff-appellee Jean Apple, as Administratrix of the Estate of Denise Smith, deceased.
Before CARDAMONE, WINTER and PRATT, Circuit Judges.
CARDAMONE, Circuit Judge:
1
This appeal encompasses two claims arising from the settlement of part, and trial of the remainder of, a medical malpractice action. Dr. William Adel Aziz appeals from so much of an October 1, 1986 order of the United States District Court for the Eastern District of New York (Costantino, J.) that denied his motion for a setoff from a jury award for the pain and suffering of decedent Denise Smith. Appellant seekspursuant to New York's General Obligations Law Sec. 15-108--to set off the amount of the settlement paid by two codefendants--the Jewish Hospital and Medical Center and the United States of America--to the plaintiff, Jean Apple, the administratrix of decedent Smith's estate. The details of the settlement are set out below. Intervenor-appellant Medical Liability Mutual Insurance Company (Medical Mutual), which provided medical malpractice insurance for Dr. Aziz, appeals from that part of the same order denying its motion to strike the finding that it was guilty of bad faith in not honoring its duty either to defend or to settle the action. Medical Mutual also appeals from the denial of its motion for the district court judge's recusal.
I BACKGROUND
A. Facts
2
Denise Smith was admitted to Jewish Hospital and Medical Center (Jewish Hospital) on April 24, 1981 under the care of Dr. Lesly Kernisant, an obstetrician and gynecologist. At that time, she was a week late in delivery and a decision was made to effect her delivery by caesarian section. Unfortunately, due to complications during that operation, the patient--who delivered a healthy baby boy--died a week later. Dr. Aziz, an anesthesiologist, was acting chief of the obstetrics anesthesia department at Jewish Hospital. Although his name was signed to the hospital record indicating that he had administered the anesthesia during Smith's operation, he did not actually administer it.
B. Proceedings Below
3
Jean Apple, as administratrix of the estate of Denise Smith and guardian of Smith's son, originally brought suit in New York State Supreme Court in June 1982. In her complaint against Jewish Hospital and Drs. Aziz and Kernisant, she alleged causes of action for conscious pain and suffering and wrongful death. Dr. Kernisant, an employee of the United States Public Health Service, a federal organization, informed the government of the suit, and Drs. Kernisant and Aziz also advised Medical Mutual, their malpractice carrier. The insurer retained counsel to represent both physicians.
4
In February 1983, the government removed the suit to the Eastern District of New York and moved to dismiss the action against Dr. Kernisant and to substitute itself for him. Apple cross-moved to remand the action in its entirety to New York Supreme Court. The district court granted both of the government's motions and denied plaintiff's cross-motion in a memorandum decision and order dated September 13, 1983, which is reported at 570 F.Supp. 1320 (E.D.N.Y.1983).
5
The action went to trial on May 27, 1986. Although the parties were conducting settlement discussions, Medical Mutual rejected efforts to settle the litigation. The first finding of bad faith against it was made at a conference held in the district judge's chambers on May 30, 1986. Attorneys representing the government, Jewish Hospital, and the plaintiff were present at that conference. Dr. Aziz had two attorneys: one, Robert Gibbons, Esq., was retained by Medical Mutual to represent Dr. Aziz in the action, the other, Paul Callan, Esq., was retained by Dr. Aziz personally to "observe ... portions of the trial."
6
During the conference, attorney Callan stated that the carrier had not "participated in a good faith manner in the settlement of the negotiations in any way, shape or form." Mr. Gibbons declined to address this contention but promised "to convey the relevant information to the carrier." Treating attorney Callan's statement as an application for a motion for a finding of bad faith against Medical Mutual, the district court granted the motion and ruled further that "any judgment [against Dr. Aziz] shall be a judgment against the insurance company." The effect of this ruling was to make Medical Mutual liable for any judgment against Dr. Aziz above the limits of his policy.
7
Subsequently at the same conference, the government's attorney claimed that Dr. Kernisant's policy with Medical Mutual required the company to defend the government as well as the doctor, and stated that it had previously asked the company to join in Dr. Kernisant's defense, but that the company had refused. The government's attorney then stated that the government "believes that the insurance company to be in bad faith with respect to the representational obligations to the doctor [Dr. Kernisant]."
8
The attorney representing Jewish Hospital also joined in the government's "motion" for a bad faith finding. Attorney Gibbons--perhaps recognizing the conflict of interest implications of his position--declined either to challenge or to concede bad faith. The district court again made a finding that Medical Mutual was acting in bad faith. While not specifically addressing the government's bad faith claim, the trial judge stated that any judgment entered against the government at trial would also be against the insurance company. The effect of the holding was to make Medical Mutual the indemnitor of the government as well as of Dr. Aziz. No determination was made at that time that Jewish Hospital would also be indemnified against any adverse judgment.
9
Against this backdrop, the trial resumed. On June 4 during a conference between the court and the attorneys for all the parties, plaintiff's attorney suggested continuing settlement talks, but said that Medical Mutual was reluctant to send a representative. The district court expressed its irritation at the carrier's failure to send anyone with authority to settle the case on behalf of Dr. Aziz and threatened to send out United States marshals "to bring in the head of the company." Mr. Gibbons offered to secure the attendance the following day of a representative with authority to settle.
10
Barry Aquilino, a claims examiner for the company appeared the next day, along with several lawyers representing Medical Mutual. The district court judge apparently instructed these individuals not to leave the courtroom or face arrest. The record is unclear at what time they arrived or when they were told of the threatened arrests. During the early afternoon of June 5, the district judge conducted a colloquy with them and the attorneys for the various parties. One of Medical Mutual's attorneys identified himself as representing the carrier and described Mr. Aquilino's position. Dissatisfied with Aquilino's lack of authority, the district judge again reiterated his desire to have a company official with "the final word" on a possible settlement involved in the negotiations. The judge again warned these company representatives that they were not free to leave the courtroom.
11
At the end of the day's trial session, one of the carrier's lawyers asked the court whether they would have to appear on the next day and was advised that all three must return. At that point, a Medical Mutual attorney attempted to serve the district court judge with a petition for a writ of mandamus seeking relief in this Court, which the judge refused to accept. Nonetheless, the petition was presented to this Court, which promptly stayed the district court's verbal order that had directed Medical Mutual's representatives to return to its courtroom the following day.
12
Prior to the trial's resumption, the plaintiff reached a settlement with the government and Jewish Hospital. The settlement--announced on June 9 and memorialized in an order filed June 19--provided that Jewish Hospital and the United States would contribute $600,000 and $199,500 respectively. In Apple's affidavit, annexed to the order, she states that the amount agreed to be paid was solely for the "compromise and settlement of the cause of action for wrongful death," while the "cause of action for conscious pain and suffering" was voluntarily discontinued. The stipulation, discontinuing the action with prejudice between Apple and Jewish Hospital and the government and signed by the district court and filed June 30, does not make a similar distinction between the two causes of action. Because both the order and stipulation each expressly state that the action against Dr. Aziz was not settled, trial of that action resumed on June 16 with Dr. Aziz as the sole defendant.
13
Meanwhile, the district court memorialized its earlier bad faith findings in an order filed June 27. Further, it stated that it had treated the government's and Jewish Hospital's motions to join Medical Mutual as a party as being "made" pursuant to Fed.R.Civ.P. 13(h) and granted them. Jewish Hospital's motion to assert a cross-claim for indemnity against both Dr. Aziz and Medical Mutual was also granted, and the court ordered that the government and Jewish Hospital have a judgment of indemnification against Dr. Aziz and Medical Mutual for the amount paid in settlement. It was further ordered that Dr. Aziz be indemnified by his insurance company for the amount he expended to indemnify the government and Jewish Hospital, as well as for liability above his policy limits.
14
Subsequent to this second order of June 27, the action against Dr. Aziz went to the jury, which on July 2 returned a verdict in favor of the plaintiff on both causes of action, awarding $325,000 for wrongful death and $50,000 for decedent's conscious pain and suffering. Answering an interrogatory, the jury found Dr. Aziz responsible for 40 percent of the total amount of damages.1 Appellant moved for a setoff of the settlement amount against the verdict, which the trial court held could be used to offset the wrongful death verdict but not the conscious pain and suffering verdict. Subsequently, Medical Mutual moved to intervene pursuant to Fed.R.Civ.P. 24. As part of its motion, Medical Mutual sought to vacate the June 27 indemnification order and to have the district court judge recuse himself from deciding the motion.
15
On October 1, the trial court declined to offset the jury's award on the pain and suffering claims, but nonetheless did reduce that award from $50,000 to $20,000 to reflect the jury's determination of Aziz's 40 percent liability. Judge Costantino also granted Medical Mutual's motion to intervene and vacated the earlier indemnification judgments that he had granted. At the same time, Jewish Hospital's cross-motion for indemnification against Dr. Aziz and his carrier was denied. The district court let stand its finding that Medical Mutual acted in bad faith with regard to its failures to settle and/or to defend. In making these rulings, the district judge obviously--without expressly so stating--refused to recuse himself. Both Dr. Aziz and Medical Mutual appeal from this October 1, 1986 order.
II DISCUSSION
16
A. Proper Application of General Obligations Law Sec. 15-108
17
The initial question raised on appeal requires a brief discussion of the provisions of New York's General Obligations Law Sec. 15-108. That statute deals with the effect of a release or settlement with one or more tortfeasors when the plaintiff does not also settle claims against the remaining tortfeasors. More specifically for our purposes, it provides that in situations involving tortfeasors liable "for the same injury, or the same wrongful death," a release or settlement with one of the tortfeasors does not release the other tortfeasors unless the explicit terms of the settlement contain a general release. N.Y.Gen.Oblig.Law Sec. 15-108 (McKinney 1978). But the statute permits the nonsettling tortfeasors to make use of the settlement. If the nonsettlers are found liable to the plaintiff for the same injury or wrongful death, their liability is reduced by the greatest of the following: the amount stipulated in the release, the amount of actual consideration given for the release, or the amount of the released tortfeasor's equitable share of the damages.
18
This appeal raises an interesting question regarding the scope of Sec. 15-108. The plaintiff here had several claims against the various defendants. The claim for wrongful death against Jewish Hospital and the government was settled, with a recited amount paid as consideration for a release. The claim for conscious pain and suffering against these two defendants was voluntarily discontinued, without a recited amount for the discontinuance. Dr. Aziz, the nonsettling defendant, was found liable on both claims. All the parties to this appeal agree that Aziz may claim a setoff on the judgment for wrongful death. More troublesome is whether he is entitled to a setoff against the $50,000 conscious pain and suffering award.
19
Although no controlling New York Court of Appeals precedent has been brought to our attention, there is case law that indicates that Dr. Aziz should be able to claim a setoff for both claims. In Killeen v. Reinhardt, 71 A.D.2d 851, 419 N.Y.S.2d 175 (2d Dep't 1979), plaintiff sued three physicians and a hospital for medical malpractice for wrongful death and conscious pain and suffering in the treatment of his deceased wife. At a pre-trial conference, plaintiff settled with two of the physicians for $265,000 and voluntarily discontinued the action against the third physician, receiving no monetary consideration for the discontinuance. Id. at 852, 419 N.Y.S.2d 175. The case went to the jury against the hospital alone, which returned a general verdict of $650,000. The jury apportioned liability as follows: settling physicians--30%; "voluntary discontinued" physician--20%; and the hospital--50%. The trial court held the hospital was entitled to a setoff under Sec. 15-108 that took account of the "voluntarily discontinued" physician's liability as well. Id.
20
On appeal, the Second Department agreed: "[W]e hold that the trial court correctly ruled that any verdict against the hospital must be reduced not only by the ... settlement but also by [the voluntarily discontinued physician's] equitable share of the damages...." Id. at 853, 419 N.Y.S.2d 175. This ruling meant that from the $650,000 general verdict the hospital was entitled to have the judgment against it reduced by the $265,000 settlement and also by the voluntarily discontinued physician's 20% equitable share of the damages. Given this holding, we believe that New York law would allow Dr. Aziz to claim a setoff against the settlement figure for the judgment on the claim that the plaintiff had voluntarily discontinued against Jewish Hospital and the government.
21
Consideration of the purposes underlying Sec. 15-108 also supports the conclusion that appellant should be entitled to a setoff on both claims. The section has two purposes: first, to encourage settlements, see Rock v. Reed-Prentice Division of Package Machinery Co., 39 N.Y.2d 34, 40-41, 382 N.Y.S.2d 720, 346 N.E.2d 520 (1976); and, second, to ensure that nonsettling tortfeasors are not required to bear more than their equitable share of liability. See Mielcarek v. Knights, 50 A.D.2d 122, 126, 375 N.Y.S.2d 922 (4th Dep't 1975). With regard to the first purpose, adopting the Killeen rule in the present case would not adversely affect the incentive of a party to settle. The effect of the rule, if any, would be on the parties' apportionment of the settlement, not on the more important question of whether to settle. Failing to adopt the Killeen rule, on the other hand, would do violence to the rule's second purpose. Not allowing the nonsettling tortfeasor to claim against the settlement amount would require that party to bear more than its equitable share. Without suggesting that plaintiff has maneuvered the present claims, we note that an alternate rule could lead to manipulation by a plaintiff. Since under CPLR 3217(a) a plaintiff is entitled to discontinue a claim without a court order, a plaintiff possessing two claims against each of two different tortfeasors might settle with one tortfeasor by accepting a settlement on the first claim, and voluntarily discontinuing that claim against the second tortfeasor. Then he could exploit the claims by proceeding to trial against the nonsettling tortfeasor on the claim that had been voluntarily discontinued against the settlor. Were we to adopt appellee Apple's theory, the nonsettling tortfeasor would not be able to claim any setoff against a possible judgment because no consideration would have been given for the voluntarily discontinued claim. Consequently, the nonsettling tortfeasor would clearly be burdened with more than its equitable share of plaintiff's damages.
22
For these reasons, Dr. Aziz is entitled to a setoff against plaintiff's claims for conscious pain and suffering as well as for wrongful death. Thus, from his total liability of 40 percent of $325,000, or $130,000, plus 40 percent of $50,000, or $20,000, it is obvious that crediting the $799,500 settlement against both causes of action leaves Dr. Aziz owing this plaintiff no damages.
B. The Validity of the Bad Faith Finding
23
We turn now to the two claims raised by Medical Mutual. The first claim is a challenge to the district court's refusal to vacate its finding that Medical Mutual acted in bad faith when it failed to honor its obligations to defend or to participate in settlement negotiations. The district court's June 27 order contained these bad faith findings, which were coupled with the order directing the carrier to indemnify Jewish Hospital, the government, and Dr. Aziz.
24
One sure sign of the confusing nature of these bad faith findings is the inability of the parties to agree on their proper characterization. Invoking Fed.R.Civ.P. 13, the government labels them a grant of a counterclaim, and Medical Mutual calls it a grant of a crossclaim. See Fed.R.Civ.P. 13(g). Attaching the proper label to what the district court did in its June 27 order was not the subject of briefing by the parties. Therefore, we decline to decide the issue, particularly since its resolution is not essential to deciding this appeal. However the district court's action is depicted--counterclaim, crossclaim, or third party complaint2--it cannot stand.
25
The reason is plain. Medical Mutual was never served with process prior to its motion to intervene. Original service of process is, of course, a sine qua non requirement for a court to acquire jurisdiction over an additional party. See 6 C. Wright & A. Miller, Federal Practice & Procedure Sec. 1436, at 194 (discussing counterclaims and crossclaims); Sec. 1445, at 240 (discussing third party complaints) (1971). The effect of the failure to serve the carrier with the mandated process is that the bad faith findings are invalid for want of personal jurisdiction. See American Telephone & Telegraph Co. v. Merry, 592 F.2d 118, 126 (2d Cir.1979); Martin v. New York State Department of Mental Hygiene, 588 F.2d 371, 373 (2d Cir.1978) (per curiam); see also Sieg v. Karnes, 693 F.2d 803, 807 (8th Cir.1982); Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir.1982). At the same time, we decline Medical Mutual's invitation to find that it acted in good faith in this matter. Such a determination--either way--is not the proper function of an appellate court.
C. The Recusal of the District Court
26
The remaining issue on appeal--Medical Mutual's motion made pursuant to 28 U.S.C. Secs. 144, 455 (1982) requesting the district court to disqualify itself--was, as noted, implicitly denied. Section 144 provides that a judge should recuse himself when a party has filed a "timely and sufficient affidavit" showing that the judge has "a personal bias or prejudice" against the party or in favor of an adverse party. Section 455(a) provides that a judge shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. Additionally, Sec. 455(b)(1) prescribes recusal where a judge has "a personal bias or prejudice concerning a party."
27
Courts considering the substantive standards of Secs. 144 and 455(b)(1) have concluded that they are to be construed in pari materia. See, e.g., United States v. Pugliese, 805 F.2d 1117, 1125 (2d Cir.1986). The analysis is the same under both sections, that is, it looks to extrajudicial conduct as the basis for making such a determination, not conduct which arises in a judicial context. In Re International Business Machines Corp., 618 F.2d 923, 928 (2d Cir.1980). And, the substantive standard for recusal is whether a reasonable person, knowing all the facts, would conclude that the court's impartiality might reasonably be questioned. See, e.g., United States v. Studley, 783 F.2d 934, 939 (9th Cir.1986).
28
We have previously held that Sec. 455(a) provides broader grounds for disqualification than either Sec. 144 or Sec. 455(b)(1). See United States v. Wolfson, 558 F.2d 59, 62-63 (2d Cir.1977); see also 13A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3542, at 556 (2d ed. 1984). When, as here, a party has not alleged any grounds for recusal other than those relating to the district court's alleged bias or prejudice, those broader grounds are not implicated. See United States v. Sibla, 624 F.2d 864, 867 (9th Cir.1980). Inasmuch as Medical Mutual only alleges instances of the district court's allegedly "immediate and hostile bias and prejudice" as grounds for recusal, we treat its motion as being made under Secs. 144 and 455(b)(1).
29
Before reaching the merits of a recusal motion, we must first consider whether the procedural requirements have been met. Section 144 expressly provides that a party moving for recusal make its motion in a timely fashion. Although Sec. 455 does not contain such a requirement, timeliness has been read into this section as well. See International Business Machines, 618 F.2d at 932. Further, Sec. 144 requires that a party file an affidavit, though the filing of such an affidavit does not automatically disqualify a judge. See National Auto Brokers Corp. v. General Motors Corp., 572 F.2d 953, 958 (2d Cir.1978), cert. denied, 439 U.S. 1072, 99 S.Ct. 844, 59 L.Ed.2d 38 (1979). The affidavit must be "sufficient," to provide "fair support" for the charge of partiality. See Wolfson v. Palmieri, 396 F.2d 121, 124 (2d Cir.1968) (per curiam) (quoting Rosen v. Sugarman, 357 F.2d 794, 797-98 (2d Cir.1966)). We have not decided whether the filing of an affidavit of bias is required as a procedural prerequisite for Sec. 455. See United States v. Wolfson, 558 F.2d at 62 n. 11. Cf. Sibla, 624 F.2d at 867-68 (suggesting that an affidavit is not required under Sec. 455). But when proffered, an affidavit is scrutinized for sufficiency. See National Auto Brokers, 572 F.2d at 958.
30
The decision whether to grant or deny a recusal motion--i.e., whether the affidavit is legally sufficient--is a matter confided to the district court's discretion. See Varela v. Jones, 746 F.2d 1413, 1415-16 (10th Cir.1984); Weingart v. Allen & O'Hara, Inc., 654 F.2d 1096, 1107 (5th Cir., Unit B, 1981); Johnson v. Trueblood, 629 F.2d 287, 290 (3d Cir.1980), cert. denied, 450 U.S. 999, 101 S.Ct. 1704, 68 L.Ed.2d 200 (1981); Blizard v. Frechette, 601 F.2d 1217, 1221 (1st Cir.1979). Complicating our review of the exercise of that discretion in this case is the trial court's silent implied denial of the motion.
31
Whether Medical Mutual timely made its motion presents a serious threshold question. Possibly the district court relied on this ground for denial. It is well-settled that a party must raise its claim of a district court's disqualification at the earliest possible moment after obtaining knowledge of facts demonstrating the basis for such a claim. See, e.g., Marcus v. Director, Office of Workers' Compensation Programs, 548 F.2d 1044, 1050 (D.C.Cir.1976) (per curiam); United States v. Patrick, 542 F.2d 381, 390 (7th Cir.1976), cert. denied, 430 U.S. 931, 97 S.Ct. 1551, 51 L.Ed.2d 775 (1977). Yet, in considering the question of timeliness, the actual time elapsed between the events giving rise to the charge of bias or prejudice and the making of the motion is not necessarily dispositive. See Smith v. Danyo, 585 F.2d 83, 86 (3d Cir.1978). A number of factors must be examined, including whether: (1) the movant has participated in a substantial manner in trial or pre-trial proceedings, see id.; (2) granting the motion would represent a waste of judicial resources, see International Business Machines, 618 F.2d at 933; (3) the motion was made after the entry of judgment, see Studley, 783 F.2d at 939 (motion for recusal filed "weeks" after trial is presumptively untimely); and (4) the movant can demonstrate good cause for delay. See United States v. Branco, 798 F.2d 1302, 1304 (9th Cir.1986); Studley, 783 F.2d at 939.
32
When a would-be intervenor makes a motion to intervene and recuse, the timeliness of its motion will be examined as though the intervenor was a party at the time it learned of facts demonstrating the basis for disqualification. As with the motion for recusal itself, two concerns prompt this rule. First, judicial resources should not be wasted; and, second, a movant may not hold back and wait, hedging its bets against the eventual outcome. Of course, the intervenor must have been able to intervene under the requirements of Fed.R.Civ.P. 24 at the time it learned of the facts that prompted its motion.
33
Medical Mutual's motion is untimely in light of these factors. We may safely assume that the carrier's representatives advised it of the district court's June 5th actions and that it learned of the bad faith finding on May 30th. Even if that assumption is misplaced, a copy of the court's proposed June 27th order--memorializing the May 30th finding--was served on Medical Mutual on June 19th. Thus, just after the middle of June the movant had notice that it was liable to indemnify Jewish Hospital and the government for the settlement they had previously reached with the plaintiff. Medical Mutual nonetheless waited for two months before it made its recusal motion. Moreover, it made the motion one month after the entry of judgment against Dr. Aziz. Given this sequence of events, the motion is presumptively untimely, see Studley, 783 F.2d at 939, particularly as Medical Mutual failed to give any reason for its delay. See Branco, 798 F.2d at 1304.
34
We acknowledge that some of the factors do not support a finding of untimeliness. Granting the motion would not represent a waste of judicial resources, since all the insurance company asks is that another judge vacate the finding of bad faith. Cf. International Business Machines, 618 F.2d at 934 (granting recusal motion after years of then unresolved litigation involving "technical" issues would be "catastrophic"). Further, Medical Mutual cannot be said to have held back and awaited the outcome of the litigation before bringing its motion. Regardless of what developed at the trial that ended in July, the company was liable for the settlement amounts as of the end of June. Whatever the result of Dr. Aziz's action, it would not affect that liability. Nevertheless, for the reasons stated, Medical Mutual should have made its motion earlier and its failure to do so made its recusal motion untimely.
D. Effort to Compel Settlement
35
Finally, we would be remiss were we not to comment on one aspect of the district court's conduct of the proceedings below; more specifically, its strong effort to effect a settlement of the case. The district court's bench order directing the insurance company representatives to remain in the courtroom under threat of arrest was most ill-advised, even granting a degree of frustration over what the trial court obviously considered the company's uncooperative attitude in disposing of this litigation. Yet, for a judge to employ the power of his judicial office because he is personally piqued evinces such a lack of patience and courtesy to those with whom the court deals in its official capacity as to bring into question the judge's impartiality. Forcing the three company representatives to sit in the courtroom like truant schoolchildren cannot be justified or condoned as an appropriate way for district judges to effectuate settlements. In addition, so far as can be seen from this record, the company was never afforded an opportunity to explain why it had refused to settle.
III CONCLUSION
36
Insofar as the judgment appealed from denied Dr. Aziz's motion to set off the whole of the judgment against him for decedent's conscious pain and suffering, it is reversed and the judgment is modified to reflect that setoff, resulting in no damages being owed from defendant Aziz to plaintiff Apple. The findings of bad faith against Medical Mutual are reversed and vacated for want of personal jurisdiction. The denial of Medical Mutual's motion to recuse is affirmed.
37
Reversed, except insofar as the appeal is from a denial of a motion to recuse, which is affirmed.
38
WINTER, Circuit Judge, concurring in the result:
39
Respectfully, I write separately with regard to Medical Mutual's recusal motion.
40
Because we vacate the bad faith findings for want of personal jurisdiction over Medical Mutual, the recusal motion is moot. The discussion is therefore unnecessary dictum.
41
Moreover, the discussion also seems a doubtful restatement of the law. First, it introduces a measure of confusion in declaring "that a party must raise its claim of a district court's disqualification at the earliest possible moment after obtaining knowledge of the facts demonstrating the basis for such a claim" and immediately thereafter announcing that "the actual time elapsed between the events giving rise to the charge of bias or prejudice and the making of motions is not necessarily dispositive."
42
Second, the "as soon as possible" language is particularly troubling. Recusal motions are serious matters, and responsible counsel are most reluctant to make them, largely out of respect for judges. This reluctance is by and large good for the judicial process. We should not therefore structure the law so as to encourage premature or unnecessary recusal motions.
43
I would therefore favor a rule requiring that facts indicating recusal be brought to a judge's attention immediately where the judge does not know of the basis for disqualification. This may be necessary to prevent an unintentional appearance of impropriety. Where the facts are known to the district judge, I see no reason to demand more than that counsel make their motion before judicial resources are unnecessarily wasted or before the judge renders a decision adverse to the movant. Indeed, my review of the case law cited by my colleagues suggests that that is in fact the law whatever the dicta that may be found in those opinions.
44
In view of the mootness of the issue in the present case I will not discuss whether the recusal motion was in fact timely made.
1
The interrogatory to the jury was perhaps misleading. Apparently, the sequence of questions to the jury was as follows: damages for wrongful death, percentage of liability for the total amount of damages, and damages for pain and suffering. Thus, the jury may have believed that the question concerning the percentage of liability referred only to liability for wrongful death. In partially granting Dr. Aziz's motion to reduce the award for the pain and suffering award, the district court implicitly held that the jury's determination concerning liability applied to both claims
2
Attempts to hold an insurer in bad faith for not honoring its obligations to defend or engage in good faith settlement negotiations are not uncommon. See, e.g., Luria Brothers & Co. v. Alliance Assurance Co., 780 F.2d 1082, 1092 (2d Cir.1986) (duty to defend); San Jose Production Credit Assoc. v. Old Republic Life Ins. Co., 723 F.2d 700, 703 (9th Cir.1984) (same); Kivi v. Nationwide Mutual Ins. Co., 695 F.2d 1285, 1287 (11th Cir.1983) (duty to engage in good faith negotiations). In instances where the insured, sued by someone injured by its action, seeks to determine the scope of an insurer's obligations under the policy, the procedural mechanism has apparently always been Rule 14 impleader of the insurer. See, e.g., Ezell v. Hayes Oilfield Constr. Co., 693 F.2d 489 (5th Cir.1982), cert. denied, 464 U.S. 818 (1983); Howard v. Russell Stover Candies, Inc., 649 F.2d 620 (8th Cir.1981); Colton v. Swain, 527 F.2d 296 (7th Cir.1975); see also 6 C. Wright & A. Miller, Federal Practice and Procedure Sec. 1449, at 268 (1971) (citing cases and commentary)
| {
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/29/2018 11:13 AM CDT
- 819 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
K im M. Thompson, appellant, v.
A aron M. Johnson and Shawna
L. Johnson, appellees.
___ N.W.2d ___
Filed May 4, 2018. No. S-17-445.
1. Summary Judgment: Appeal and Error. An appellate court will
affirm a lower court’s grant of summary judgment if the pleadings and
admitted evidence show that there is no genuine issue as to any material
facts or as to the ultimate inferences that may be drawn from those facts
and that the moving party is entitled to judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, an appellate court views
the evidence in the light most favorable to the party against whom the
judgment was granted and gives that party the benefit of all reasonable
inferences deducible from the evidence.
3. Torts: Intent: Proof. To succeed on a claim for tortious interference
with a business relationship or expectancy, a plaintiff must prove (1) the
existence of a valid business relationship or expectancy, (2) knowledge
by the interferer of the relationship or expectancy, (3) an unjustified
intentional act of interference on the part of the interferer, (4) proof that
the interference caused the harm sustained, and (5) damage to the party
whose relationship or expectancy was disrupted.
4. Torts: Employer and Employee. Factors to consider in determining
whether interference with a business relationship is “improper” include:
(1) the nature of the actor’s conduct, (2) the actor’s motive, (3) the
interests of the other with which the actor’s conduct interferes, (4) the
interests sought to be advanced by the actor, (5) the social interests in
protecting the freedom of action of the actor and the contractual interests
of the other, (6) the proximity or remoteness of the actor’s conduct to
the interference, and (7) the relations between the parties.
5. Torts: Liability. A person does not incur liability for interfering with
a business relationship by giving truthful information to another. Such
interference is not improper, even if the facts are marshaled in such a
- 820 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
way that they speak for themselves and the person to whom the infor-
mation is given immediately recognizes them as a reason for breaking a
contract or refusing to deal with another.
6. Summary Judgment: Proof. Once the moving party makes a prima
facie case, the burden shifts to the party opposing the motion to produce
admissible contradictory evidence showing the existence of a material
issue of fact that prevents judgment as a matter of law.
7. Appeal and Error. An appellate court is not obligated to engage in an
analysis which is not needed to adjudicate the controversy before it.
Appeal from the District Court for Douglas County, Horatio
J. Wheelock, Judge, on appeal thereto from the County Court
for Douglas County, Susan M. Bazis, Judge. Judgment of
District Court affirmed.
Joy Shiffermiller and Abby Osborn, of Shiffermiller Law
Office, P.C., L.L.O., for appellant.
Damien J. Wright, of Welch Law Firm, P.C., for appellees.
Heavican, C.J., Miller-Lerman, Cassel, and Stacy, JJ., and
Luther and O’Gorman, District Judges.
Luther, District Judge.
INTRODUCTION
This appeal arises from a lawsuit filed by Kim M. Thompson
(Kim) in which she alleged that Aaron M. Johnson and Shawna
L. Johnson tortiously interfered with her business relationship
with her employer, Millard Public Schools (MPS). The county
court for Douglas County granted Aaron and Shawna’s motion
for summary judgment, and the district court for Douglas
County affirmed. Kim now appeals to this court. Kim asserts,
in pertinent part, that the evidence shows a genuine issue of
material fact concerning whether interference by Aaron and
Shawna was justified. We conclude that the undisputed facts
show that Aaron’s and Shawna’s actions were justified, because
they provided truthful information to MPS. Therefore, we
affirm the district court’s order.
- 821 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
BACKGROUND
Parties
The undisputed evidence shows that Kim and Aaron met
through their work with MPS. In her position as a project man-
ager employed by MPS, Kim organized construction projects
within the district. Aaron worked on construction projects for
MPS as an independent contractor. At all times relevant to this
appeal, Aaron was married to Shawna and they had children
attending MPS. In October 2011, Kim and Aaron began an
extramarital affair.
October 2012 Suspension
In October 2012, Shawna learned of the affair between Kim
and Aaron. Aaron ended the affair and informed MPS that he
would no longer work with Kim. Following an investigation,
MPS discovered that Kim had used MPS’ computers “to com-
municate inappropriate messages and pictures” with Aaron, in
violation of MPS policy. As a result, MPS suspended Kim for
8 days without pay.
Continued Contact and
M arch 2014 Directives
Kim and Aaron continued to have contact with each other.
On February 26, 2014, in response to an email from Kim in
which she stated that Aaron did not care about her, Aaron
wrote, “If I didn’t care about you at all, why would I have ever
agreed to talk to you? . . . If I didn’t care and I wanted to go
into your boss and get you fired, and ruin your life, I could
have done it long ago.”
Not long afterward, new concerns about Kim’s job per
formance prompted a meeting between her and MPS officials.
At the meeting on March 3, 2014, MPS officials addressed
the issue of an angry and loud telephone call that Kim had
conducted with her ex-husband in the workplace and allega-
tions that Kim had gone through documents on her supervi-
sor’s desk.
- 822 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
During the meeting process, Kim volunteered that she
was having issues with Aaron and Shawna. Kim stated to
MPS officials that in November 2013, Aaron had shown up
at her workplace demanding to speak to her and threaten-
ing to cause a scene. Kim told MPS officials that to process
her feelings after “good talks” with Aaron in the summer of
2013, she had painted a painting of her and Aaron and posted
it on Facebook, initially identifying the two by name. She
stated that when Aaron asked her to remove the painting,
she removed the identifying names, but she did not remove
the painting. Kim reported that this caused Aaron to threaten
to call her supervisor and jeopardize her employment. Kim
also told MPS officials that Shawna had been stalking Kim’s
Facebook page.
On March 7, 2014, MPS wrote a letter to Kim documenting
the topics discussed and the expectations communicated at the
March 3 meeting. In part, the letter stated:
ISSUE #5: The issue of your relationship with the
person who almost cost you your job (Aaron) came up
repeatedly . . . . This is related to the affair you had with
Aaron (a former contractor for the District) in 2012 that
was dealt with in your reprimand and suspension letter
from late 2012.
....
EXPECTATION: . . .
....
We discussed how your affair with Aaron almost cost
[you] your job before. Now, you appear to be escalating
a confrontation with Aaron and his wife by posting on a
public media page. . . . As we discussed, if you escalate
this conflict and that escalation impacts [the] workplace,
it is likely to lead to future discipline, up to and includ-
ing termination.
....
. . . Specifically, it is not our intention to take any
action if Aaron or his wife reacts irrationally to a post that
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Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
is not about them. However, if your communications can
be reasonably interpreted as an escalation of that conflict
and that conflict disrupts the workplace, we may not be
able to support you.
Kim signed the document, acknowledging that she had
received it.
Further Contact Between Parties,
M arch to June 2014
On or about March 25, 2014, Shawna received a link from
“Lisa Johnson,” who claimed to be a friend of Kim’s. The link
invited Shawna to view a cloud account that contained over
200 documents showing communications between Kim and
Aaron, to demonstrate to Shawna “what has been happening
behind your back for the last year.” “Lisa Johnson” claimed
that she was able to access the information because Kim’s
password was easy to deduce. Shawna and “Lisa Johnson,”
who Shawna believed to be Kim, corresponded about the affair
on Facebook, and Shawna used the format to tell Kim not to
contact Aaron or Shawna again. On March 30, Aaron posted
on the “Lisa Johnson” Facebook page, telling Kim to cease
contact with him and his family.
On April 2, 2014, an attorney representing Aaron and
Shawna sent a letter to Kim, telling her not to contact them.
On April 9, an attorney for Kim sent a letter to Aaron and
Shawna’s attorney. The letter requested that Aaron not contact
Kim at any location, including her workplace.
On April 14 and 23, 2014, Kim sent text messages to Aaron
sarcastically praising Aaron’s relationship with Shawna and
expressing sadness over losing Aaron. On April 24, Shawna
sent a long email message to Kim, telling her to stop contact-
ing Aaron.
On April 28, 2014, Kim emailed Shawna an invitation to
“Find me on Facebook.” The email prompted Shawna to search
Facebook, which led her to discover a Facebook page for
“Kimberly Johnson.” The “Kimberly Johnson” page consisted
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Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
of long, indepth journal-style posts related to Kim’s affair with
Aaron. This content was viewable to the public. Kim made
similar posts on her “Kim Thompson” Facebook page. Kim
continued to post on the Facebook pages with comments and
questions specifically directed at Shawna.
On May 12, 2014, Shawna emailed Kim to arrange a meet-
ing between Aaron, Shawna, and Kim to resolve the issues
that had occurred. The meeting did not take place, but over
the course of 5 days, Shawna and Kim exchanged a series of
lengthy email messages, the tone of which ranged from vitri-
olic to sympathetic on both sides. Ultimately, Shawna asked for
no further contact from Kim and shut down the email account
that she had used to communicate with Kim.
Kim continued to post on her “Kimberly Thompson”
Facebook page with comments directed at Aaron and Shawna.
On May 31, 2014, Kim referenced Aaron and Shawna’s chil-
dren: “I burst out crying tonight just thinking about your boys
[I] grew to love from just your stories. I am SO sad. I know it
sounds crazy, but [I] feel like [I] lost them too.”
On June 2, 2014, Kim reported to MPS that Shawna had
posted on her Instagram account that Shawna had sched-
uled principal/parent meetings to discuss security concerns
for her children due to an employee. Kim informed MPS that
Aaron and Shawna had been “blocked” from her Facebook
account.
On June 5, 2014, in a post directed at Shawna, Kim stated,
“I do love your boys like my own, and I would never hurt
them intentionally.” Also on June 5, “Macy James” messaged
the “Kimberly Thompson” Facebook account and stated, “I
WILL follow through with the meetings scheduled this fall b/c
you are unstable and should not have access to my kids in any
way.” Other elements of the message suggested that “Macy
James” was likely Shawna.
On June 24, 2014, Kim sent a brief message to Aaron’s work
email account, calling him a “horrible person” and an “ugly
man” with “no heart or a conscience.” Aaron and Shawna
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299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
believed that this was the first time Kim had emailed that
particular account. Shawna was concerned that Kim may have
obtained the email address from MPS files for Aaron and
Shawna’s children, where the email address was listed as con-
tact information. Further, Shawna was concerned, because, due
to Kim’s employment, Kim had access to MPS buildings; and
Shawna thought it possible that Kim would attempt to involve
her children in the situation or make contact with them to pro-
voke a reaction from Aaron and Shawna.
July 2014 Termination
On July 2, 2014, Shawna emailed MPS to address the con-
cerns that she and Aaron had for the safety and privacy of their
children, whom Kim had not met. Shawna’s email summarized
the contact she and Aaron had with Kim beginning in 2012.
Shawna further stated:
Last week [Kim] emailed my husband’s business email
account . . . . The only way he or I can think she may
have gotten this email account is through our children’s
confidential information held by the district . . . .
. . . [W]e have sound reason to be concerned for
the well[-]being of our children as [Kim] has access
to all buildings in the district due to the nature of her
job as I understand it. We are also very concerned that
our privacy will inevitably be compromised so long as
[Kim] works for MPS and our kids attend MPS. We
are considering removing them from the district for this
reason . . . .
Shawna requested a meeting on the matter, but she did not
request any specific action relating to Kim. In an affidavit,
Shawna specifically disclaimed sending the email with the
intent of ending Kim’s employment.
Shawna’s email included a link to the “Kim Thompson”
Facebook page and offered to provide additional documen-
tation upon request. The same day, the director of human
resources for MPS called Shawna and asked for additional
- 826 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
documentation. Shawna provided printouts of several Facebook
postings, messages from Kim, and Shawna’s own handwritten
notes documenting her interactions with Kim.
During the resulting meeting with MPS on July 7, 2014,
Kim admitted inviting Shawna to view her Facebook page
and, except for some minor factual discrepancies, she admitted
to posting the majority of the material provided by Shawna.
MPS placed Kim on nondisciplinary, paid administrative leave
while MPS investigated the matter. MPS officials told Kim
not to have further contact with Aaron and Shawna until MPS
decided how to proceed.
On July 8, 2014, the day after the meeting, Shawna received
a notification from a social media website that Kim had
“repinned [one] of [Shawna’s] pins.” MPS officials subse-
quently learned of this notification, which they considered con-
trary to the no-contact directive they had given to Kim.
MPS officials decided to terminate Kim’s employment. At
a deposition, MPS’ director of employee relations explained
that MPS officials based the decision on “insubordination,
unprofessional conduct, just the continuation of the escalation
of the conflict where she continued to post things that made
it . . . uncomfortable with [Aaron and Shawna’s] kids being
in school as parents of the district, residents of the district,
just inappropriate conduct.” He also testified regarding why
Thompson’s employment was terminated in 2014 and not in
2012, when the affair first came to light:
Q. Why wasn’t [Kim] fired in 2012 when the affair was
first discovered?
A. . . . I recall the conversation being that she’s had
a fairly long tenure as a decent employee. Is there any-
thing we can do to save her where she might change her
behaviors? And at that point, it was thought there was a
reasonable probability of success was the consensus if we
allowed [Kim] to continue [her] job.
Q. And in 2014, there was not the same feeling?
A. Correct.
- 827 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
MPS officials offered Kim the option to resign in lieu of
termination of her employment. Kim opted to resign.
Litigation
On September 14, 2015, Kim filed a lawsuit against Aaron
and Shawna in the county court. She alleged, inter alia, a cause
of action based on the theory of tortious interference with
a business relationship. In part, she averred that Aaron and
Shawna had “committed numerous unjustified intentional acts
of interference in an attempt to cause [Kim] to lose her job at
[MPS]” and that such interference was done with the intent or
reasonably foreseeable effect of causing harm to Kim.
Aaron and Shawna filed a motion for summary judgment.
Following a hearing on the motion, consisting of the evidence
above, the county court granted summary judgment in favor of
Aaron and Shawna and dismissed Kim’s complaint, with preju-
dice. In part, the county court found that Aaron and Shawna
were justified in contacting MPS due to concerns for their
children and that Shawna’s email did not cause termination
of Kim’s employment. Instead, the county court determined
that Kim’s own conduct and continued contact with Aaron and
Shawna caused the termination.
Kim appealed the county court’s order to the district court.
After a hearing, the district court affirmed.
Kim now appeals to this court.
ASSIGNMENTS OF ERROR
Kim assigns, condensed and restated, that the county court
erred in failing to find a genuine issue of material fact that
precluded summary judgment against her claim of tortious
interference with a business relationship.
STANDARD OF REVIEW
[1,2] An appellate court will affirm a lower court’s grant
of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts or
- 828 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
as to the ultimate inferences that may be drawn from those
facts and that the moving party is entitled to judgment as a
matter of law.1 In reviewing a summary judgment, an appel-
late court views the evidence in the light most favorable to the
party against whom the judgment was granted and gives that
party the benefit of all reasonable inferences deducible from
the evidence.2
ANALYSIS
Kim appeals the order of the district court that affirmed
the county court’s order granting summary judgment in favor
of Aaron and Shawna. For the benefit of judges and practi
tioners, we take this opportunity to note that, effective August
24, 2017, the Legislature modified Neb. Rev. Stat. § 25-1332
(Supp. 2017) to impose citation and argument requirements
regarding assertions of disputed facts on summary judg-
ment. But here, neither party assigns error based upon the
new procedures.
[3] This appeal turns on a single theory of recovery: tortious
interference with a business relationship. To succeed on a
claim for tortious interference with a business relationship or
expectancy, a plaintiff must prove (1) the existence of a valid
business relationship or expectancy, (2) knowledge by the
interferer of the relationship or expectancy, (3) an unjustified
intentional act of interference on the part of the interferer, (4)
proof that the interference caused the harm sustained, and (5)
damage to the party whose relationship or expectancy was
disrupted.3 On appeal, Kim disputes the county court’s find-
ings that no genuine issue of material fact existed concerning
whether Aaron’s and Shawna’s interference was unjustified
and whether such interference caused Kim to lose her job
with MPS.
1
Benard v. McDowall, LLC, 298 Neb. 398, 904 N.W.2d 679 (2017).
2
Id.
3
Recio v. Evers, 278 Neb. 405, 771 N.W.2d 121 (2009).
- 829 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
Whether Interference by A aron
and Shawna Was Unjustified
[4] To assist in determining whether interference is “unjus-
tified” under the third prong of the foregoing test, Nebraska
has adopted the seven-factor balancing test of the Restatement
(Second) of Torts.4 Under the Restatement’s general test, fac-
tors to consider in determining whether interference with a
business relationship is “improper” include: (1) the nature of
the actor’s conduct, (2) the actor’s motive, (3) the interests
of the other with which the actor’s conduct interferes, (4) the
interests sought to be advanced by the actor, (5) the social
interests in protecting the freedom of action of the actor and
the contractual interests of the other, (6) the proximity or
remoteness of the actor’s conduct to the interference, and (7)
the relations between the parties.5
[5] Ordinarily, we would use these factors to determine
whether interference is “improper” and, thus, “unjustified”
under our law.6 However, if the information provided is truth-
ful, the interference is not unjustified.7 We have expressly
stated, “[A] person does not incur liability for interfering
with a business relationship by giving truthful information to
another.”8 Such interference is not improper, even if the facts
are marshaled in such a way that they speak for themselves
and the person to whom the information is given immedi-
ately recognizes them as a reason for breaking a contract
or refusing to deal with another.9 When truthful information
provides the basis for a termination of a business relationship,
the resulting liability, if any, should rest on the party who
4
See, Sulu v. Magana, 293 Neb. 148, 879 N.W.2d 674 (2016), citing Recio
v. Evers, supra note 3; Restatement (Second) of Torts § 767 (1979).
5
Id.
6
See Sulu v. Magana, supra note 4.
7
Sulu v. Magana, supra note 4; Recio v. Evers, supra note 3.
8
Recio v. Evers, supra note 3, 278 Neb. at 421, 771 N.W.2d at 133.
9
Id.
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Nebraska Supreme Court A dvance Sheets
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THOMPSON v. JOHNSON
Cite as 299 Neb. 819
made an informed choice to terminate the relationship—not
the party who provided the facts upon which that decision
was based.10
Viewed in the light most favorable to Kim, the evidence
demonstrates that Aaron and Shawna conveyed truthful infor-
mation to MPS and that, therefore, such communication was
not unjustified. First, in 2012, Aaron informed MPS of his
affair with Kim. The entire record and Kim’s suit are based on
the truthfulness of that disclosure. Second, Shawna’s July 2,
2014, email to MPS officials raised Aaron’s and Shawna’s con-
cerns for the safety and privacy of their children. Shawna pro-
vided specific examples of Kim’s questionable behavior that
were either supported or undisputed by the record. Her email
also included a link to Kim’s “Kim Thompson” Facebook
page, and Shawna later provided additional documentary evi-
dence of Kim’s online activity to MPS. When MPS confronted
Kim with the documentation provided by Shawna, Kim admit-
ted to posting the material, except for a few minor factual
disputes. But the discrepancies noted by Kim did not establish
any genuine issue of material fact about the truthfulness of
Shawna’s disclosures to MPS.
Thus, because Aaron and Shawna deduced evidence that
their communications with MPS were truthful and therefore not
“unjustified,” they disproved an essential element of tortious
interference with a business relationship and made a prima
facie showing that they were entitled to summary judgment.
[6] Once the moving party makes a prima facie case, the
burden shifts to the party opposing the motion to produce
admissible contradictory evidence showing the existence of
a material issue of fact that prevents judgment as a matter of
law.11 Kim asserts that she presented evidence that Aaron’s and
Shawna’s communications with MPS were not based in truth,
thereby rebutting their position that those communications
10
Id.
11
Sulu v. Magana, supra note 4.
- 831 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
were justified. She primarily attempts to raise factual disputes
about Aaron’s and Shawna’s beliefs relating to the source of
Aaron’s work email address and about their concerns regarding
the children that Shawna said prompted her July 2014 email to
MPS. We find no merit to Kim’s arguments.
Kim contends that Shawna’s email falsely claimed that
prior to the message Kim sent to Aaron’s work email address
in June 2014, Kim had not used that particular address. Kim
cites to the record and claims that she used Aaron’s work email
address in February 2014. However, the February 2014 email
address cited by Kim is different from the one she used in
June 2014; and the record does not reveal any other instance
of Kim’s sending messages to that address or receiving mes-
sages from it. Additionally, we note that Shawna’s email did
not categorically assert that Kim had accessed the children’s
records to obtain Aaron’s work email address, but, rather,
stated that the children’s records were the only source for the
information that Aaron and Shawna could surmise. The record
simply does not raise any dispute as to the truthfulness of
Aaron’s and Shawna’s professed beliefs about the source of
the email address.
Kim further attempts to discredit Shawna’s concern for
her children’s safety because Kim had never met the chil-
dren and because Shawna was aware, through the copious
documents disclosed to her, that Kim had expressed to Aaron
that she cared about the children. Similarly, Kim argues that
the evidence does not support concern for the children on
Aaron’s part, because he and Kim had previously corresponded
about the children and Kim’s potential relationship with them.
However, the record does not contradict the sincerity of the
concerns that Shawna attributed to herself and to Aaron. In fact,
the undisputed evidence demonstrates that Aaron and Shawna
had ample reason to be concerned. After the affair ended,
Kim made varied, time-consuming, and at times underhanded
efforts to engage Aaron and Shawna in intense discussions
about the affair and about Aaron and Shawna as individuals.
- 832 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
These communications included references to Aaron and
Shawna’s children, to whom Kim had potential access through
her employment. Certainly, Aaron’s and Shawna’s communi-
cations with Kim contributed to escalating tensions with her.
But their participation does not negate the truthfulness of their
reports to MPS concerning their interactions with Kim.
Kim also tries to refute the veracity of Aaron’s and Shawna’s
concerns by citing their previous “threats” and actions to jeop-
ardize Kim’s employment. She specifically refers to Shawna’s
Instagram post, messages authored by “Macy James,” the
February 2014 email to Kim from Aaron, and Aaron’s attempts
to contact her at MPS. According to Kim, this evidence
reflects the intent to have Kim’s employment terminated. We
note that Shawna expressly denied that she intended to end
Kim’s employment by emailing MPS. Furthermore, we have
previously observed that while a malicious motive is a factor
which may be considered in determining whether interference
is unjustified, it is generally insufficient standing alone to
establish that fact; and in making that observation, we reiter-
ated that a party will not incur liability for the communication
of truthful information.12 While the evidence cited by Kim
may imply an underlying desire that Kim’s employment with
MPS end and while the information Shawna provided was
marshaled in a way that was damning to Kim, these factors do
not diminish the truthfulness of Aaron’s and Shawna’s com-
munications with MPS.
The factual disputes that Kim attempts to generate simply
are not issues of material fact. Having considered Kim’s argu-
ments while giving her the benefit of all reasonable inferences
deducible from the evidence, we discern no issue of material
fact concerning the truthfulness of the information Aaron and
Shawna provided to MPS.
In sum, Kim failed to meet her burden to produce admis-
sible contradictory evidence creating a material issue of fact
12
See Recio v. Evers, supra note 3.
- 833 -
Nebraska Supreme Court A dvance Sheets
299 Nebraska R eports
THOMPSON v. JOHNSON
Cite as 299 Neb. 819
to rebut Aaron and Shawna’s prima facie case; and the district
court did not err in affirming the county court’s order granting
summary judgment in favor of Aaron and Shawna.
Whether Interference by A aron and
Shawna Caused H arm to K im
[7] Because we have concluded that Aaron and Shawna are
not liable to Kim based on their truthful communications with
MPS, thus defeating Kim’s claim, we need not consider Kim’s
contentions that those communications caused her harm.13 An
appellate court is not obligated to engage in an analysis which
is not needed to adjudicate the controversy before it.14
CONCLUSION
For the reasons stated above, we conclude that because
Aaron and Shawna provided truthful information to MPS about
Kim, they could not incur liability for interfering with Kim’s
business relationship with MPS. Therefore, the county court
did not err in granting Aaron and Shawna’s motion for sum-
mary judgment on Kim’s claim of tortious interference with a
business relationship, and the district court did not err when it
affirmed the county court’s ruling. Accordingly, we affirm the
district court’s order.
A ffirmed.
Funke, J., participating on briefs.
Wright, J., not participating.
13
See id.
14
Id.
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40 F.3d 390
U.S.v.0.87 Acres*
NO. 93-9146
United States Court of Appeals,Eleventh Circuit.
Nov 04, 1994
1
Appeal From: N.D.Ga., No. 92-00119-2-CV-WCO
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
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FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D17-1906
_____________________________
WILLIAM BAULDREE,
Appellant,
v.
STATE OF FLORIDA,
Appellee.
_____________________________
On appeal from the Circuit Court for Leon County.
Martin A. Fitzpatrick, Judge.
November 15, 2018
PER CURIAM.
AFFIRMED.
ROWE, RAY, and MAKAR, JJ., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
Andy Thomas, Public Defender, and Kevin P. Steiger, Assistant
Public Defender, Tallahassee, for Appellant.
Pamela Jo Bondi, Attorney General, and Robert Quentin
Humphrey, Assistant Attorney General, Tallahassee, for Appellee.
2
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405 F.Supp. 730 (1975)
MAR FOOD CORPORATION et al., Plaintiffs
v.
David DOANE et al., Defendants.
No. 73 C 1959.
United States District Court, N. D. Illinois, E. D.
December 2, 1975.
Ronald L. Futterman, Pressman & Hartunian, Chicago, Ill., for plaintiffs.
George L. Plumb, Pedersen & Houpt, Chicago, Ill., for defendants.
MEMORANDUM OPINION AND ORDER
McLAREN, District Judge.
This case is before the Court on motion to determine whether leave should be granted to plaintiffs to file a second amended complaint and whether Count I of that complaint states a claim upon which relief can be granted under section one of the Sherman Act, 15 U.S.C. § 1.[1] In addition to presenting a new theory of liability under the Sherman Act in the second amended complaint, plaintiffs seek to add certain additional defendants.
In light of the liberal grounds provided in the Federal Rules of Civil Procedure for amendment in the interests of justice, leave is hereby granted to plaintiffs to file their second amended complaint, Fed.R.Civ.P. 15(a).
Counts II and III, founded on diversity jurisdiction, state claims upon which relief may be granted for alleged unfair methods of competition torts. For the reasons stated below, however, Count I is dismissed.
This Court finds that the various methods of unfair competition alleged in the second amended complaint, such as disparaging plaintiffs' business, breaching fiduciary duties and soliciting plaintiffs' customers, do not state a cause of action under section one of the Sherman Act. Plaintiffs cite in support of their antitrust theory a line of cases beginning with the First Circuit's Albert Pick-Barth Co. v. Mitchell Woodbury Corp., 57 *731 F.2d 96 (1st Cir.), cert. denied, 286 U.S. 552, 52 S.Ct. 503, 76 L.Ed. 1288 (1932) and continuing through Tower Tire & Auto Center v. Atlantic Richfield Co., 392 F.Supp. 1098 (S.D.Tex.1975). Pick-Barth and its progeny hold that a conspiracy with intent to hurt a competitor by means of unfair methods of competition is a per se violation. In George R. Whitten Jr., Inc. v. Paddock Pool Bldrs., Inc., 508 F.2d 547 (1st Cir. 1974), cert. denied, 421 U.S. 1004, 44 L.Ed.2d 673, 95 S.Ct. 2407 (1975), the First Circuit acknowledged its previous failure to define with precision those practices which were to be held a per se violation. Id. at 561. Indeed, the First Circuit expressed doubts about its earlier pronouncements and limited its per se treatment to conspiracies and those instances where intent and actions are directed at eliminating a competitor rather than merely injuring a competitor's business.
In the absence of any Supreme Court decisions on the issue, the Pick-Barth line of authority is unpersuasive. The distinction between practices directed at injuring a competitor as opposed to eliminating him is indeed hazy. Great care should be exercised in creating new per se categories of antitrust liability which would elevate to a federal crime that which was previously a state law civil wrong. In addition, the creation of antitrust liability for unfair competition torts would greatly expand the number of actions brought under the Sherman Act and would in effect create a federal common law of unfair competition. See Whitten, supra at 560. To equate unfair competition torts with price-fixing and thus to create a new per se category is unsound in light of the limited case law in this area. Plaintiffs' Count I is therefore held not to state a per se violation of the Sherman Act.
Under a rule of reason analysis, plaintiffs' Count I is also lacking. In the Pick-Barth line of cases, defendants' businesses were a significant factor in the markets in question. Tower Tire & Auto Center, supra at 1108. Here, plaintiffs have failed to allege a lessening of competition within a defined market which in any way injures the public. See duPont Walston, Inc. v. E. F. Hutton & Co., Inc., 368 F.Supp. 306 (S.D.Fla. 1973).
Leave is hereby granted for plaintiffs to file their second amended complaint. Count I of that complaint, however, will be dismissed for failure to state a claim under the Sherman Act upon which relief can be granted.
It is so ordered.
NOTES
[1] On July 21, 1975, leave was granted to plaintiffs to file their second amended complaint; however, on the Court's own motion, Count I was dismissed at that time for failure to state a claim upon which relief can be granted. The order of July 21, 1975 is hereby vacated and this Court will rule on these issues in this memorandum opinion.
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986 F.2d 1428
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
Lee Alphonso MOORE, Plaintiff-Appellant,v.(NFN) (NMI) HAM, (NFN) (NMI) Shreeve, Defendants-Appellees.
No. 92-3305.
United States Court of Appeals, Tenth Circuit.
Jan. 12, 1993.
Before McKAY, Chief Judge, and SETH and BARRETT, Senior Circuit Judges.
ORDER AND JUDGMENT*
BARRETT, Senior Circuit Judge.
1
After examining the briefs and the appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Cir.R. 34.1.9. The cause is therefore ordered submitted without oral argument.
2
Lee Alphonso Moore (Moore), appearing pro se, appeals from an order of the United States District Court for the District of Kansas granting the defendants' motion for summary judgment and denying Moore all relief requested. Finding Moore's allegations conclusory, frivolous, and not taken in good faith, the court also denied Moore leave to proceed in forma pauperis on appeal. We grant Moore's request to proceed without prepayment of fees and costs and affirm the judgment of the district court for the reasons stated below.
3
Moore, an inmate of the United States Penitentiary at Leavenworth, Kansas (Leavenworth), brings this action pursuant to 28 U.S.C. § 1331. Relying on Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), Moore alleges that Captain D. L. Ham and Lieutenant James Shreeve, then serving as prison officials at Leavenworth, arbitrarily caused him to be removed from the general prison population and placed him in a segregated housing unit for administrative detention in violation of his Fifth, Eighth, and Fourteenth Amendment rights. Moore requests compensatory and punitive damages.
4
In late February, 1989, Leavenworth officials received information that Moore had made threats against the life of a staff member. On February 28, 1989, Moore was called to the administrative offices where Lieutenant Shreeve explained that Moore was being placed in administrative detention pending the completion of an investigation into the alleged threats. That same day, Lieutenant Shreeve completed an Administrative Detention Order,1 a copy of which was provided to Moore as required by 28 C.F.R. § 541.22(b), and had Moore escorted to the administrative detention facility.
5
Investigation into the alleged threats revealed no evidence which would substantiate the allegations, and no incident report was prepared. Moore was then released from detention on March 2, 1989, after having been held for no more than three days.
6
Moore contends that the defendants conspired to harass and intimidate him in retaliation for previous complaints which Moore allegedly filed against Captain Ham and also in attempt to prevent him from filing grievances against institutional staff members. A review of the administrative remedy records at the penitentiary at Terre Haute, Indiana, where Moore allegedly filed complaints against Captain Ham, revealed that although Moore filed several complaints there, none concerned Captain Ham. Thus, the claim that Moore's detention resulted from retaliation lacks supporting evidence. Moore cannot rely on this broad and conclusory allegation. This court has held that "it is imperative that plaintiff's pleading be factual and not conclusory. Mere allegations of constitutional retaliation will not suffice; plaintiffs must rather allege specific facts showing retaliation because of the exercise of the prisoner's constitutional rights." Frazier v. Dubois, 922 F.2d 560, 562 n. 1 (10th Cir.1990).
7
Moore asserts that the Federal Bureau of Prisons, in 28 C.F.R. § 541.22, grants him a liberty interest in remaining in the general prison population. However, this regulation provides that an inmate may be placed in administrative detention for one of eight reasons, including "when the inmate's continued presence in the general population poses a serious threat to life, property, self, staff, other inmates or to the security or orderly running of the institution [, and] the inmate . . . [i]s pending an investigation of a violation of Bureau regulations . . . ." See, 28 C.F.R. § 541.22(a). While Moore asserts that the defendants fabricated the rationale given for detention, the record makes clear that Moore was segregated pursuant to a rationale outlined in the regulations.
8
Moore's assertion that 28 C.F.R. § 541.22 grants him a liberty interest in remaining in general prison population is not supported by the law of this jurisdiction. If "segregation is non-punitive in nature and is done for administrative or supervisory reasons, the inmate has no due process rights prior to administrative confinement unless prison regulations provide him with a liberty interest." Frazier, 922 F.2d at 562 (citing Hewitt v. Helms, 459 U.S. 460 (1983)). Moore does not cite any prison regulation which provides him with a liberty interest. We have recognized that Hewitt "reflects the current trend to recognize wide discretionary authority in prison officials as to how they may deal with inmates." Frazier, 922 F.2d at 562.
9
Moore also contends that the district court failed to consider that he was not given the opportunity to contest the allegation which gave rise to his segregation. However, 28 C.F.R. § 541.22(c) provides that the Segregation Review Official, who reviews the status of inmates housed in administrative detention, "shall conduct a record review within three work days of the inmate's placement in administrative detention and shall hold a hearing and formally review the status of each inmate who spends seven continuous days in administrative detention . . . ." Here, the record reveals that a review was conducted and Moore was returned to general prison population within three days. Section 541.22 would not have entitled Moore to a hearing until he had spent seven continuous days in detention. Therefore, the defendants plainly satisfied the due process requirements for administrative detention pending the outcome of the investigation.
10
We have reviewed the entire record and are satisfied that the district court properly considered Moore's petition and correctly found that Moore failed to allege facts constituting a denial of his constitutional rights. Accordingly, we AFFIRM the district court's order of dismissal. The mandate shall issue forthwith.
*
This Order and Judgment has no precedential value and shall not be cited, or used by any court within the Tenth Circuit, except for purposes of establishing the doctrines of the law of the case, res judicata, or collateral estoppel. 10th Cir.R. 36.3
1
The Administrative Detention Order read: "You are being placed in Administrative Detention pending the completion of an investigation for possible threats you may have made against institution staff. Threatening staff disrupts the orderly running of the institution and hambers staff's ability to control their area of responsibility and creates an unsafe environment for both staff and inmates."
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871 P.2d 502 (1994)
127 Or. App. 121
THE COMMUNICATIONS GROUP, INC., and James Keeling, Appellants, and
Karen Dick, Quality Connection Sales and Installation, Ltd., Plaintiffs,
v.
GTE MOBILNET OF OREGON, an Oregon limited partnership, and GTE Mobilnet, Inc., Respondents, and
Nada Perrie, Suesan Weeks, Sandra West, Mark Ripley, William Porto and Edward Ragan, Defendants.
9012-08136; CA A75184.
Court of Appeals of Oregon.
Argued and Submitted January 21, 1994.
Decided March 23, 1994.
Mark E. Griffin, Portland, argued the cause for appellants. With him on the briefs was Griffin & McCandlish.
*503 Jeffrey M. Batchelor, Portland, argued the cause for respondents. With him on the brief were George L. Kirklin, Richard C. Hunt and Lane Powell Spears Lubersky.
Before ROSSMAN, P.J., and De MUNIZ and LEESON, JJ.
LEESON, Judge.
Plaintiffs James Keeling and The Communications Group, Inc. (TCG) appeal from an adverse judgment on all of their claims.[1] We write only to address their claim for deceit, on which the trial court granted defendants'[2] motion for judgment notwithstanding the verdict. ORCP 63. We review the record in the light most favorable to plaintiffs to determine whether there is any evidence from which a reasonable jury could find each element of their claim, Tran v. Tehrani, 99 Or.App. 141, 781 P.2d 393 (1989), mod. 101 Or.App. 216, 789 P.2d 702, rev. den. 310 Or. 243, 796 P.2d 360 (1990), and affirm.
At the relevant times, Keeling owned and operated TCG, a business that sold cellular telephone service. In September, 1988, Keeling, as a representative of TCG, entered a 2-year "agent agreement" to sell cellular telephone service as the agent of defendant GTE Mobilnet of Oregon (GTE Oregon), a limited partnership. As an agent, plaintiffs sold on behalf of GTE Oregon for a commission. In late 1989, Keeling decided that he wanted to be a "reseller," rather than an agent. A reseller buys blocks of cellular telephone "air time," and sells them on its own behalf.
In November or December, 1989, Keeling raised the subject of becoming a reseller in a conversation with Kelly, the general manager for the Pacific region of defendant GTE Mobilnet, Inc. (GTE), based in Hayward, California.[3] Kelly said that he and other GTE representatives in Hayward would formulate a contract and send it to Keeling.
On December 14, 1989, Keeling sent Kelly a letter asking Kelly to "expedite the information needed to become a reseller." Keeling also made several telephone calls to Kelly complaining that he had not yet received a reseller contract. Kelly told Keeling that applicable reseller rates had not yet been established, but that GTE would send a contract to Keeling by July 20, 1990. A representative of GTE Oregon also sent Keeling a letter, dated June 17, 1990, stating:
"We are in the midst of reshaping our retail pricing. Wholesale pricing is dependent on the retail environment. I will provide you an updated reseller agreement when our price change is complete. However, if you would like to look at an agreement without pricing let me know and we can arrange for you to review an agreement. I expect to be able to provide you the full package, with pricing[,] by July 20."
At about the same time that Keeling first expressed his interest in obtaining a reseller contract, he and TCG became involved in litigation with one of their competitors, McCaw Cellular Communications, Inc. (McCaw). McCaw filed an action in which it alleged that Keeling and TCG had unlawfully appropriated its confidential customer list, which included the names of 20 or 30 of McCaw's employees. The list contained several misspellings. The McCaw employees whose names were on the list had received solicitations from Keeling in June and August, 1989, that contained the same misspellings found on McCaw's list. The circuit court issued an order restraining plaintiffs from "continued misappropriation and use of" the list, followed by a preliminary injunction.
Thereafter, Interstate Mobilephone Company (IMC) was substituted for McCaw as plaintiff in the ongoing litigation concerning the customer list. IMC requested production of documents calculated to show how *504 Keeling and TCG acquired the names that were used in the June and August, 1989, mailings. Keeling and TCG refused. IMC then moved for an order compelling production of the documents. On May 2, 1990, the court granted that motion. Keeling and TCG refused to comply with the order, on the ground that IMC's request for production would divulge GTE Oregon's mailing lists, and that they were prohibited under the agent agreement with GTE Oregon from disclosing those lists. As a sanction for defying its discovery order, the court struck the answer and entered a default order. On July 3, 1990, the court entered a default judgment against Keeling and TCG for $213,000. On July 13, 1990, IMC began garnishing all of Keeling's and TCG's commissions from GTE Oregon.
On July 19, 1990, the day before GTE's self-imposed deadline for offering plaintiffs a reseller contract, GTE wrote to Keeling, saying that it had
"concluded that a reseller agreement with [TCG] is not appropriate. Therefore, we will not be forwarding a draft agreement to you as previously indicated."
Plaintiffs filed claims against defendants, including a claim for deceit based on defendants' refusal to offer a reseller contract, as they previously represented they would do. Although plaintiffs do not specify the representations on which they rely, the allegedly fraudulent misrepresentations appear to be Kelly's statements to Keeling that defendants would formulate a contract and send it to plaintiffs, and the letter of June 17, 1990. Defendants moved for directed verdict at the close of plaintiffs' case-in-chief, and again at the close of all the evidence, on the ground that, among other things, there was insufficient evidence of a false representation. The trial court decided to submit the claim to the jury, but stated that it would entertain a motion for judgment notwithstanding the verdict if the jury found for plaintiffs. See ORCP 63 B. The jury returned a special verdict, finding that defendants had "committ[ed] fraud * * *, resulting in damages to plaintiffs." It awarded $0 in general damages, and $25,000 in punitive damages. Defendants made no timely objection to the form of that verdict.
Defendants then moved for judgment notwithstanding the verdict. The trial court granted the motion on the ground that the evidence was insufficient, and, alternatively, that the jury verdict improperly awarded plaintiff punitive damages without awarding any actual damages. Plaintiffs assign error to that ruling.
To recover for deceit, plaintiffs have the burden of proving that: (1) defendants made a false representation; (2) they made it with the knowledge or belief that it was false, or with an insufficient basis for asserting that it was true; (3) they made the representation with the intent that plaintiffs would rely on it; (4) plaintiffs justifiably relied on it; and (5) they suffered consequent damages. Riley Hill General Contractor v. Tandy Corp., 303 Or. 390, 405, 737 P.2d 595 (1987). The proof of each element must be clear and convincing. 303 Or. at 407.
Because the alleged misrepresentations are promises to do something in the future, plaintiffs must prove that defendants either intended not to perform when they made the promises, or that they made the promise with reckless disregard for whether they could perform. Sproul v. Fossi, 274 Or. 749, 752, 548 P.2d 970 (1976); Lawrence v. Underwood, 81 Or.App. 533, 537, 726 P.2d 1189 (1986). There is no contention that defendants were unable to perform. Plaintiffs contend only that defendants never intended to perform the promise to offer a reseller contract.
A fraudulent intent not to perform may not be inferred from the mere fact of the eventual failure to perform. Jones v. Northside Ford Truck Sales, 276 Or. 685, 691, 556 P.2d 117 (1976); Tran v. Tehrani, supra, 99 Or.App. at 144-45, 781 P.2d 393. Other circumstances of a substantial character must be shown in addition to nonperformance, to support the inference that the promisor never intended to perform. Conzelmann v. N.W.P. & D. Prod. Co., 190 Or. 332, 352, 225 P.2d 757 (1950); Tran v. Tehrani, supra. In this case, therefore, plaintiffs must show that there is evidence in the *505 record, beyond the mere fact of nonperformance, from which a reasonable juror could find that, at the time defendants made their representations, they did not intend to honor them.
Defendants maintain that there is no evidence that they did not intend to offer plaintiffs a reseller contract at the time the representations were made. They contend that all of the evidence suggests that they were working on the contract, but that shortly before their self-imposed deadline for completing it, IMC obtained a $213,000 judgment against plaintiffs, and began garnishing all of plaintiffs' commissions. Those events persuaded defendants that it would be unwise to offer plaintiffs a reseller contract.
Plaintiffs argue that "overwhelming" circumstantial evidence supports the inference that defendants never intended to carry out their promise. It is far from clear, and plaintiffs do not elaborate, how the evidence that they direct us to proves that defendants did not intend to perform their promises when they made them. The evidence that plaintiffs rely on to show that defendants' representations were fraudulent is the same evidence that they rely on to show the existence of those representations.
For example, plaintiffs direct us to Keeling's testimony describing his conversations with Kelly about entering into a reseller contract. Keeling testified that Kelly promised to get together with GTE's representatives in Hayward and formulate a contract for him, and that Kelly substantially reiterated that promise during a number of telephone calls. That testimony is evidence of the representations themselves. It is not evidence that the representations were fraudulent.
The same thing can be said of the letter of June 17, 1990, quoted above, to which plaintiffs also direct us. The letter arguably contains a representation that a contract would be offered after defendants completed repricing. It does not support the inference that that, or any other, representation was made fraudulently. It is also noteworthy that plaintiffs have not shown how defendants stood to benefit from the alleged fraud. As the court stated in Conzelmann v. N.W.P. & D. Prod. Co., supra, 190 Or. at 353, 225 P.2d 757, "[o]rdinarily, persons indulging in fraudulent conduct do so with a purpose in mind to gain some benefit for themselves."
We are unaware of any evidence, and plaintiffs have directed us to none, from which a reasonable trier of fact could conclude that defendants promised to offer plaintiffs a contract, but never intended to perform the promise. The trial court correctly concluded that there was no evidence of fraudulent intent, and, therefore, did not err by granting defendants' motion for judgment notwithstanding the verdict.
In the light of this disposition, we need not address defendants' cross-assignments of error.
Affirmed.
NOTES
[1] Other plaintiffs were involved below, but their claims are not a part of this appeal.
[2] "Defendants" refers to GTE Mobilnet of Oregon, and GTE Mobilnet, Inc. Other defendants were also joined in plaintiffs' complaint, but the claims against them are not a part of this appeal. Some of the defendants raised counterclaims, which are also not a part of this appeal.
[3] GTE and GTE Oregon are distinct business entities. The parties, however, do not distinguish plaintiffs' claims against the two. Accordingly, we treat them together.
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FILED
NOT FOR PUBLICATION JUL 22 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
NATHAN SPENCER, No. 09-55583
Plaintiff - Appellant, D.C. No. 3:08-CV-00416-JM-JMA
v.
MEMORANDUM *
MORRIS; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Southern District of California
Jeffrey T. Miller, District Judge, Presiding
Submitted June 29, 2010 **
Before: ALARCÓN, LEAVY, and GRABER, Circuit Judges.
Nathan Spencer, a California state prisoner, appeals pro se from the district
court’s judgment dismissing his 42 U.S.C. § 1983 action for failure to exhaust
administrative remedies under the Prison Litigation Reform Act, 42 U.S.C.
§ 1997e(a). We have jurisdiction under 28 U.S.C. § 1291. We review de novo the
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
district court’s dismissal for failure to exhaust, and for clear error its factual
determinations, Wyatt v. Terhune, 315 F.3d 1108, 1117 (9th Cir. 2003), and we
affirm.
The district court properly dismissed the action because Spencer failed to
exhaust administrative remedies prior to filing suit. See Woodford v. Ngo, 548
U.S. 81, 93-95 (2006) (holding that “proper exhaustion” under section 1997e(a) is
mandatory and requires adherence to administrative procedural rules); see also
McKinney v. Carey, 311 F.3d 1198, 1199 (9th Cir. 2002) (per curiam) (inmates are
required to exhaust administrative remedies prior to filing suit in federal court).
Spencer’s remaining contentions are unpersuasive.
AFFIRMED.
2 09-55583
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Case: 16-30984 Document: 00514686940 Page: 1 Date Filed: 10/17/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-30984 FILED
October 17, 2018
Lyle W. Cayce
STEMCOR USA INCORPORATED, Clerk
Plaintiff
v.
CIA SIDERURGICA DO PARA COSIPAR, ET AL.,
Defendants
----------------------------------------------
DAWEOO INTERNATIONAL CORPORATION,
Plaintiff - Appellant
v.
THYSSENKRUPP MANNEX GMBH,
Intervenor Plaintiff - Appellee
v.
AMERICA METALS TRADING L.L.P., ET AL.,
Defendants
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:12-CV-2966
Case: 16-30984 Document: 00514686940 Page: 2 Date Filed: 10/17/2018
No. 16-30984
Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
In Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar, 870 F.3d 370,
372 (5th Cir. 2017), opinion withdrawn and superseded on reh’g, 895 F.3d 375
(5th Cir. 2018), we interpreted, inter alia, a matter of Louisiana law: whether
the state non-resident attachment statute, La. Code Civ. Proc. art. 3542, allows
for attachment in a suit to compel arbitration. A divided panel concluded that
it does not, after reading the phrase “action for a money judgment” to exclude
such a suit.
This narrow issue of state statutory interpretation has divided judges on
our court. While we regret the time that has passed, the parties’ separate
rehearing petitions have convinced us that the precise meaning of the phrase
“action for a money judgment” under Louisiana’s non-resident attachment
statute carries significant consequences for state and federal commercial law.
We believe re-examination is needed. Because we conclude that Louisiana’s
Supreme Court is the appropriate authority to resolve the matter, we exercise
the certification privilege granted by Rule XII of the Rules of the Supreme
Court of Louisiana.
I. STYLE OF THE CASE
The style of the case we certify is Stemcor USA Inc. v. Cia Siderurgica
do Para Cosipar, et al., No. 16-30984, on appeal from the United States
District Court for the Eastern District of Louisiana, Stemcor USA, Inc. v. Am.
Metals Trading, LLP, 199 F. Supp. 3d 1102, 1107 (E.D. La. 2016).
* 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.
2
Case: 16-30984 Document: 00514686940 Page: 3 Date Filed: 10/17/2018
No. 16-30984
II. STATEMENT OF FACTS
The factual and procedural background of this case appears at Stemcor
USA Inc., 895 F.3d at 377-78.
III. QUESTION CERTIFIED
We hereby certify, on our own motion, the following determinative
question of law to the Supreme Court of Louisiana:
Is a suit seeking to compel arbitration an “action for a money
judgment” under Louisiana’s non-resident attachment statute, La.
Code Civ. Proc. art. 3542?
IV. CONCLUSION
Should the Louisiana Supreme Court accept our request for an answer
to this question, we disclaim any intent that the answer be confined to the
precise form or scope of this certification. Any answer provided by the
Louisiana Supreme Court will determine the issue on appeal in this case.
Along with our certification, we transfer this case’s record and the appellate
briefs.
3
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NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT MAY 20 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
JUAN JOSE ACEVEDO-ALVAREZ, No. 12-72721
Petitioner, Agency No. A094-372-990
v.
MEMORANDUM*
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted May 13, 2014**
Before: CLIFTON, BEA, and WATFORD, Circuit Judges.
Juan Jose Acevedo-Alvarez, a native and citizen of Nicaragua, petitions for
review of the Board of Immigration Appeals’ order dismissing his appeal from an
immigration judge’s (“IJ”) decision denying his application for protection under
the Convention Against Torture (“CAT”). We have jurisdiction under 8 U.S.C.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
§ 1252. We review for substantial evidence the agency’s denial of relief under
CAT, Silaya v. Mukasey, 524 F.3d 1066, 1070 (9th Cir. 2008), and we deny the
petition for review.
Substantial evidence supports the agency’s denial of Acevedo-Alvarez’s
CAT claim because he failed to demonstrate it is more likely than not he would be
tortured by or with the consent or acquiescence of the Nicaraguan government if
returned. See id. at 1073; see also Go v. Holder, 640 F.3d 1047, 1054 (9th Cir.
2011) (concluding country reports and petitioner’s credible testimony were
insufficient to compel the conclusion that petitioner met his burden of proof for
CAT). Accordingly, Acevedo-Alvarez’s CAT claim fails.
PETITION FOR REVIEW DENIED.
2 12-72721
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-4769
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
LENA GANT,
Defendant - Appellant.
No. 12-4946
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
SHANNON FISHBURNE,
Defendant - Appellant.
Appeals from the United States District Court for the District
of South Carolina, at Charleston. David C. Norton, District
Judge. (2:12-cr-00119-DCN-1; 2:12-cr-00119-DCN-3)
Submitted: May 14, 2013 Decided: July 11, 2013
Before WILKINSON, KING, and AGEE, Circuit Judges.
No. 12-4769 affirmed in part, vacated in part, and remanded; No.
12-4946 affirmed by unpublished per curiam opinion.
J. Robert Haley, Assistant Federal Public Defender, Charleston,
South Carolina; Timothy Kirk Truslow, THE TRUSLOW LAW FIRM, LLC,
North Myrtle Beach, South Carolina, for Appellants. Dean Hodge
Secor, Assistant United States Attorney, Charleston, South
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Lena Gant and Shannon Fishburne pled guilty, pursuant
to plea agreements, to conspiracy to defraud the United States,
in violation of 18 U.S.C. § 371 (2006). The court sentenced
Gant to twenty-seven months’ imprisonment and five years’
supervised release and imposed $133,175.25 in restitution. The
court sentenced Fishburne to eighteen months’ imprisonment and
three years’ supervised release and imposed $39,196.35 in
restitution. On appeal, counsel have filed a brief pursuant to
Anders v. California, 386 U.S. 738 (1967), stating that there
are no meritorious issues for appeal but questioning whether the
district court complied with Fed. R. Crim. P. 11 in accepting
Appellants’ pleas and whether Appellants’ sentences are
reasonable. Appellants were advised of their right to file pro
se supplemental briefs, but they did not do so. We affirm in
part, vacate in part, and remand for resentencing.
Because Appellants did not move in the district court
to withdraw their guilty pleas, our review of their Rule 11
hearings is for plain error. United States v. Martinez, 277
F.3d 517, 525-26 (4th Cir. 2002); see United States v.
Massenburg, 564 F.3d 337, 343 (4th Cir. 2009) (providing plain
error standard in context of guilty pleas). After reviewing the
Rule 11 colloquies pursuant to Anders, we conclude that the
district court substantially complied with the requirements of
3
Rule 11, failing only to inform Appellants of their right to
persist in their pleas of not guilty, and that this minor
omission did not affect Appellants’ substantial rights. See
Massenburg, 564 F.3d at 344 (holding that “mere existence of an
error cannot satisfy the requirement that [defendants] show that
[their] substantial rights were affected”); United States v.
Goins, 51 F.3d 400, 402-03 (4th Cir. 1995) (holding that
district court’s failure to provide requisite information in
Rule 11 hearing is harmless error where defendant was advised of
omitted information through another means before hearing). We
therefore affirm Appellants’ convictions.
Our review of Gant’s term of supervised release,
however, reveals that it is not free from plain error. See
United States v. Hernandez, 603 F.3d 267, 273 (4th Cir. 2010)
(providing plain error standard in context of sentencing). The
offense of conspiracy to defraud the United States carries a
statutory maximum of five years’ imprisonment, making it a Class
D felony. 18 U.S.C. §§ 371, 3559(a)(4) (2006). The maximum
term of supervised release for a Class D felony is three years.
18 U.S.C. § 3583(b)(2) (2006). Accordingly, the district court
plainly erred by sentencing Gant to a five-year term of
supervised release, exceeding the statutory maximum. Thus, we
vacate Gant’s five-year term of supervised release and remand
for resentencing.
4
We review the remainder of Gant’s sentence and
Fishburne’s sentence for reasonableness under a deferential
abuse-of-discretion standard. Gall v. United States, 552 U.S.
38, 41 (2007). This review requires consideration of both the
procedural and substantive reasonableness of the sentence. Id.
at 51. After reviewing the sentencing transcript pursuant to
Anders, we conclude that the sentences are procedurally
reasonable, as the district court properly calculated
Appellants’ applicable Guidelines ranges, gave each party the
opportunity to present argument and to allocute, considered the
18 U.S.C. § 3553(a) (2006) factors, and sufficiently explained
the selected sentences. See Gall, 552 U.S. at 49-51 (listing
factors for court to consider when determining procedural
reasonableness). Moreover, we conclude that Appellants’ within-
Guidelines sentences, apart from Gant’s term of supervised
release, are substantively reasonable. See United States v.
Mendoza-Mendoza, 597 F.3d 212, 217 (4th Cir. 2010) (holding
that, on appeal, within-Guidelines sentences are presumptively
reasonable); United States v. Montes-Pineda, 445 F.3d 375, 379
(4th Cir. 2006) (holding that defendants bear burden of showing
“that the sentence[s are] unreasonable when measured against the
§ 3553(a) factors” (internal quotation marks omitted)). Thus,
we affirm Fishburne’s sentence and affirm the remainder of
Gant’s sentence.
5
In accordance with Anders, we have reviewed the record
in this case and have found no other meritorious issues for
appeal. We therefore affirm Appellants’ convictions and
Fishburne’s sentence. We vacate Gant’s five-year term of
supervised release and remand for resentencing and affirm Gant’s
sentence in all other respects. This court requires that
counsel inform their clients, in writing, of the right to
petition the Supreme Court of the United States for further
review. If either requests that a petition be filed, but
counsel believes that such a petition would be frivolous, then
counsel may move in this court for leave to withdraw from
representation. Counsel’s motion must state that a copy thereof
was served on his client.
We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before this court and argument would not aid the decisional
process.
No. 12-4769 AFFIRMED IN PART,
VACATED IN PART, AND REMANDED
No. 12-4946 AFFIRMED
6
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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 5 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JAMES ROBERT DRURY, No. 17-17217
Plaintiff-Appellant, D.C. No. 2:15-cv-02048-CWH
v.
MEMORANDUM*
BARCELONA HOLDINGS, LLC, DBA
Siegel Slots and Suites; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Carl W. Hoffman, Magistrate Judge, Presiding**
Submitted March 1, 2019***
Before: TROTT, SILVERMAN, and TALLMAN, Circuit Judges.
James Robert Drury appeals pro se from the district court’s summary
judgment in his diversity action alleging state law tort claims arising from a dispute
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The parties consented to proceed before a magistrate judge. See 28
U.S.C. § 636(c).
***
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
over the allocation of municipally imposed taxes. We have jurisdiction under 28
U.S.C. § 1291. We review de novo, and we may affirm on any grounds supported
by the record. Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008). We affirm.
Summary judgment was proper on Drury’s claims based on his purported
entitlement to tax refunds under Clark County Code § 4.08 because Drury failed to
raise a genuine dispute of material fact as to whether he was entitled to the funds as
a result of defendants’ purported overpayment of the county’s transient lodging
tax. See Clark County Code § 4.08.010(b), (c) (transient lodging tax constitutes a
debt owed by lodging establishment whether or not establishment passes cost on to
guests).
The district court properly granted summary judgment on Drury’s claim for
“retaliatory eviction” under Nev. Rev. Stat. § 118A.510 because Drury failed to
raise a genuine dispute of material fact as to whether Drury suffered damages for
which the statute provides a remedy. See Nev. Rev. Stat. §§ 118A.390,
118A.510(2) (identifying remedies available to tenant for landlord’s violation of
§ 118A.510(1)); Paullin v. Sutton, 724 P.2d 749, 751 (Nev. 1986) (punitive
damages not recoverable on retaliatory eviction claim).
The district court did not abuse its discretion by denying Drury’s requests
for entry of default and default judgment under Fed. R. Civ. P. 55 because
defendants appeared and timely filed documents indicating an intent to defend
2 17-17217
themselves in the action. See Fed. R. Civ. P. 55(a) (permitting the entry of default
only when a defendant “has failed to plead or otherwise defend”); Direct Mail
Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 F.2d 685, 689 (9th Cir.
1988) (default judgment inappropriate if defendant indicates its intent to defend the
action); see also Eitel v. McCool, 782 F.2d 1470, 1471- 72 (9th Cir. 1986) (setting
forth standard of review and discussing process for obtaining default judgment).
We do not consider arguments raised for the first time on appeal or matters
not specifically and distinctly raised and argued in the opening brief. See Padgett
v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009).
Drury’s arguments on his behalf are meritless to the point of being frivolous.
The district court’s decisions were supported by the record and correct in all
respects.
Drury’s request for judicial notice and motion for “pacer access and fee
waiver” (Docket Entry Nos. 14, 24) are denied.
AFFIRMED.
3 17-17217
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66 So.3d 516 (2011)
Selena Scifo FORNERETTE, Individually and as Executrix of the Succession of Marguerite Scifo Graff, and Randy Scifo
v.
Kenneth V. WARD and Rosemary E. Ward.
No. 2010-CA-1219.
Court of Appeal of Louisiana, Fourth Circuit.
May 11, 2011.
*518 Robert H. Matthews, Pauline M. Warriner, Matthews & Warriner, L.L.C., New Orleans, LA, for Selena Scifo Fornerette, Individually and as Executrix of the Succession of Marguerite Scifo Graff, & Randy Scifo.
Vallerie Oxner, Metairie, LA, for Kenneth V. Ward & Rosemary E. Ward.
(Court composed of Judge DENNIS R. BAGNERIS, SR., Judge TERRI F. LOVE, Judge MAX N. TOBIAS, JR.).
TERRI F. LOVE, Judge.
This appeal arises from a dispute regarding the actions of an executrix and an attorney for the executrix of a succession. The trial court found that the attorney for the succession charged $24,500 in excessive fees and ordered repayment. The trial court also dismissed a reconventional demand filed by the executrix seeking her commission. We find that the trial court did not err in finding that the attorney charged excessive fees after weighing conflicting testimony and affirm. We also find that the trial court correctly dismissed the executrix's reconventional demand due to its finding that the executrix "acted imprudently regarding certain succession property" and affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Marguerite Scifo Graff ("Decedent") died on August 27, 2006. The Decedent's last will and testament appointed Kenneth *519 Ward as the attorney for the Succession and the executrix, and appointed his wife, Rosemary E. Ward (collectively referred to as the "Wards"), as the executrix of the Succession. Mr. Ward filed pleadings to open the Succession in the Twenty-Fourth Judicial District for the Parish of Jefferson ("24th JDC"). The sworn descriptive list ("List") documented $309,632.13 in cash assets, but failed to include immovable property the Decedent co-owned with one of her grand-nephews and thirty-five bags of jewelry in Mrs. Ward's possession. Mr. Ward took no action to pay the mortgage on the immovable property and it was foreclosed upon.
Mr. Ward filed a judgment of possession, which awarded $126,946 to each of the residuary legatees, Selena Scifo Fornerette and Randy Scifo (collectively referred to as the "Residuary Legatees"). However, Mr. Ward later filed an amended judgment of possession, which sought to withhold the money from the Residuary Legatees, and alleged that the Succession may become liable to Countrywide Home Loans, Inc. in the foreclosure proceedings. Then, Mrs. Ward, as the executrix of the Succession, petitioned for permission to pay Mr. Ward an additional $37,000 in attorney's fees[1] for over 150 hours of alleged work on the Succession. After Mr. Ward was awarded payment, the Residuary Legatees filed a motion to remove executrix and for accounting.[2] Mrs. Ward was removed[3] and Ms. Fornerette was appointed as the new executrix, whereupon she fired Mr. Ward.
The Residuary Legatees then filed a petition for damages in Orleans Parish against the Wards alleging that Mr. Ward's actions fell below the standard of care of attorneys practicing in the community. The petition also alleged that Mrs. Ward paid excessive legal fees to the Succession attorney and breached her duty to the heirs and legatees to the Decedent's estate. The Wards filed an exception of prematurity because no action for a deficiency judgment was filed. The Wards filed an answer, which included a reconventional demand by Mrs. Ward seeking the payment of an executrix commission. Following a trial, the trial court awarded the Residuary Legatees a judgment of $24,500, plus interest from the date of judicial demand. The trial court also found that Mrs. Ward "acted imprudently regarding certain succession property" and dismissed her reconventional demand with prejudice. The Wards filed a timely motion for a suspensive appeal.
*520 The Wards assert that the trial court erred in not finding that the Residuary Legatees' petition was an impermissible collateral attack, by finding that Mr. Ward charged an excessive amount of attorney's fees, and by dismissing Mrs. Ward's reconventional demand.
STANDARD OF REVIEW
This Court may not set aside findings of fact of the trial court unless we find that the findings were manifestly erroneous or clearly wrong. Allerton v. Broussard, 10-2071, p. 3 (La.12/10/10), 50 So.3d 145, 147. As the appellate court, we "must review the record in its entirety and (1) find that a reasonable factual basis does not exist for the finding, and (2) further determine that the record establishes that the fact finder is clearly wrong or manifestly erroneous" in order to reverse the trial court. Id. If the trial court's findings were reasonable, no manifest error exists. Stobart v. State, through Dep't of Transp. and Dev., 617 So.2d 880, 882 (La.1993). "[R]easonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony." Id.
"However, where one or more trial court legal errors interdict the fact-finding process, the manifest error standard is no longer applicable." Evans v. Lungrin, 97-0541, 97-0577 (La.2/6/98), 708 So.2d 731, 735. "[I]f the record is otherwise complete, the appellate court should make its own independent de novo review of the record and determine a preponderance of the evidence." Id. "A legal error occurs when a trial court applies incorrect principles of law and such errors are prejudicial." Hamp's Constr., L.L.C. v. Hous. Auth. of New Orleans, 10-0816, p. 3 (La. App. 4 Cir. 12/1/10), 52 So.3d 970, 973. "Legal errors are prejudicial when they materially affect the outcome and deprive a party of substantial rights." South East Auto Dealers Rental Ass'n, Inc. v. EZ Rent To Own, Inc., 07-0599, p. 5 (La.App. 4 Cir. 2/27/08), 980 So.2d 89, 93.
Legal questions are reviewed utilizing the de novo standard of review. Cherry v. Audubon Ins. Co., 09-1646, p. 4 (La.App. 4 Cir. 10/20/10), 51 So.3d 109, 113.
COLLATERAL ATTACK
The Wards assert that the petition filed by the Residuary Legatees constituted an impermissible collateral attack on the order in the 24th JDC, which awarded Mr. Ward's attorney's fees.[4] "A collateral attack is defined as an attempt to impeach a decree in a proceeding not instituted for the express purpose of annulling it." Lowman v. Merrick, 06-0921, p. 10 (La.App. 1 Cir. 3/23/07), 960 So.2d 84, 90.
Conversely, the Residuary Legatees contend that the claim of excessive attorney's fees must be included in the petition for damages due to the doctrine of res judicata. "A party shall assert all causes of action arising out of the transaction or occurrence that is the subject matter of the litigation." La. C.C.P. art. 425.
Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the *521 subject matter of the litigation are extinguished and merged in the judgment.
(2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
(3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.
La. R.S. 13:4231.
The Residuary Legatees allege in their petition that Mr. Ward committed legal malpractice while handling the Succession, that he did not earn $39,500 in attorney's fees, that he "failed to preserve and manage assets of the succession and obtained a judgment of possession improperly." Succinctly, the Residuary Legatees asserted that Mr. Ward fell "below the standard of care for attorneys practicing in this community" and sought damages accordingly. Their petition does not seek to invalidate or nullify the judgment of the 24th JDC.
We find that the Residuary Legatees had to include the claim for excessive attorney's fees along with their claims for damages and assertion of conflicts of interest or the final judgment in the case sub judice would have barred the claim. Once a final judgment was rendered based upon the petition for damages, all of the possible claims by the Residuary Legatees would be extinguished. Further, the trial court did not attempt to invalidate the judgment from the 24th JDC and stated:
I am not going to take up certainly Judge Regan's judgment. What I would think would be relevant herein is Ms. Cook's opinion as to the billing practice itself, not to the end result. That's for the Court to determine whether it was reasonable or not, if I decide to take that up. And not to be in contravention of Judge Regan's judgment, because I agree, it's already been ruled on. But I will entertain a process opinion.
Accordingly, we do not find that the Residuary Legatees' suit was a collateral attack.
EXCESSIVE ATTORNEY'S FEES
The Wards contend that the Residuary Legatees did not prove that Mr. Ward's attorney's fees were excessive and that the trial court did not specify the amount of hours or which hours were needlessly charged.
Mr. Ward testified that he practiced law for over fifty-six years, but was retired from the practice of law when he served as the attorney for the executrix and the Succession. He prepared the Decedent's last will and testament, which named Mrs. Ward as the executrix. Mr. Ward stated that the Decedent was essentially debt free except for the mortgage on the co-owned immovable property. He testified that he knew of the mortgage. However, he did not include the mortgaged property on the List because: 1) he did not want to spend $600 on an appraisal, 2) the foreclosure process had begun, and 3) the Decedent no longer wanted to pay the mortgage prior to her death. Mr. Ward also testified that he omitted the thirty-five bags of jewelry from the List to avoid the appraisal fee.
Mr. Ward testified that he worked approximately fifteen hours arranging the funeral and burial, prior to opening the Succession. He stated that he spent at least seven hours opening a checking account and disagreed that the previously mentioned functions were responsibilities of the executrix. Further, Mr. Ward testified *522 that he spent at least twenty hours on two complaints filed by George Scifo, Jr. to the Louisiana Disciplinary Board. In regards to the deposition of Mrs. Ward, required by Mr. Scifo, Jr., Mr. Ward billed six hours for conferencing with David Browne, Mrs. Ward's attorney, prior to the deposition, and eight hours for attending the deposition.[5] Mr. Ward billed twenty-five hours for preparing the documents for the probate of the will, travel, filing, and waiting for the judge to sign the pleadings. Mr. Ward's notes also reflect that he charged six hours for preparing three checks and attending one meeting with some of the Decedent's relatives.
The remainder of Mr. Ward's notations chronicles the procedure by which he calculated his charge for a total of 151 hours. Mr. Ward charged an hourly rate of $261.60. He charged for an entire hour even if he only worked forty-five minutes of the hour. Mr. Ward was unsure whether he totaled the bill of $37,000 first or the hourly rate.[6] Mr. Ward testified that his initial plan was to charge five percent of the assets of the Succession, which he valued at approximately $15,000.
Byron Ann Cook, an attorney and the Residuary Legatees legal expert in probate and taxation,[7] testified that her opinion was that "Mr. Ward's conduct was below the standard of care in" the community. Ms. Cook stated that Mr. Ward failed to include all of the Decedent's assets in the List, petitioned for the judgment of possession without discussing it with the legatees or the relatives, and that he petitioned the court for the amended judgment of possession in March 13, 2007, without a hearing. She further stated that the judgment of possession was improperly amended.
Upon reviewing Mr. Ward's bill, Ms. Cook concluded that "a number of items... were inappropriately billed to the estate." That included billing fifteen hours for the funeral arrangements, which were not legal services. Ms. Cook also testified that she would have billed less than twenty-five hours for the preparation of the petition for probate and the affidavits of death and heirship. As for opening a checking account for the Succession, Ms. Cook stated that the work should have been performed in about an hour by the executrix in accordance with La. C.C.P. art. 3222. Ms. Cook would not have included Mrs. Ward's personal defense as a debt of the Succession. Additionally, Ms. Cook would not have charged the Succession for items occurring pre-death/succession, for the time required to defend the disciplinary complaints, or for the petition to annul the Decedent's pre-death transfers. Ms. Cook also testified that the checks are typically prepared by the executrix, but that the check preparation should have taken about fifteen minutes. Ms. Cook stated that Mrs. Ward's deposition was not an expense of the Succession because she was not sued in her capacity as executrix, but in her capacity as a mandate *523 of the Decedent.[8]
Ms. Fornerette testified that the Decedent prearranged her burial and made all arrangements. Ms. Fornerette also stated that Mr. Ward sought to disburse $100,000 to each of the Residuary Legatees instead of $126,946 each because he did not know if the Succession would be liable for additional funds on the mortgaged property.
When determining the reasonableness of an attorney's fee, we may evaluate:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) The fee customarily charged in the locality for similar legal services; (4) The amount involved and the results obtained; (5) The time limitations imposed by the client or by the circumstances; (6) The nature and length of the professional relationship with the client; (7) The experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) Whether the fee is fixed or contingent.
State, Dep't of Transp. and Dev. v. Williamson, 597 So.2d 439, 442, n. 9 (La.1992), quoting Rule 1.5(a) of the Rules of Professional Conduct. When considering the above factors, we do not find that the trial court erred in ordering Mr. Ward to disgorge $24,500 of his attorney's fees. First, the trial court was presented with conflicting testimony regarding the difficulty of the work and the amount of time required to perform the services. Further, the Residuary Legatees' expert stated that Mr. Ward charged the Succession for some of Mrs. Ward's responsibilities as the executrix of the Succession. Second, the Succession work did not preclude Mr. Ward from undertaking any other legal work, as he was retired. Further, the trial court found:
[t]he Courts finds, considering the evidence, the hours accumulated by Mr. Ward to be excessive. Mr. Ward claimed that he spent 151 hours on the Succession of Mrs. Marguerite Graff at $261.00 an hour. Many of these hours, however, were unnecessary to probate Mrs. Graff's will. Some of Mr. Ward's time entries should not have been charged to the succession. These entries include Mr. Ward's answers to complaints lodged with the Louisiana State Bar Association by George Scifo Jr., as well as Mrs. Ward's deposition that was taken in preparation of this matter. The Court does not find the hourly rate to be outrageous given Mr. Ward's experience. Considering the foregoing, the Court finds a reasonable amount of fees earned by Mr. Ward to be $15,000.00. Mr. Ward is ordered to disgorge $24,500.00 in collected fees related to the Succession of Mrs. Marguerite Scifo.
Given the conflicting testimony presented to the trial court, we do not find that the trial court manifestly erred by ordering the disgorgement of $24,500 of Mr. Ward's attorney's fees.[9]
*524 COMMISSION OF EXECUTRIX
Lastly, Mrs. Ward contends that the trial court erred by denying her reconventional demand for an executrix commission pursuant to La. C.C.P. art. 3351.
The statute provides that when the testament fails to provide for compensation, "the administrator or executor shall be allowed a sum equal to two and one-half percent of the amount of the inventory as compensation for his services in administering the succession." La. C.C.P. art. 3351. The usage of the word "shall" connotes "must" in Louisiana's legislative enactments. However, this Court held that "[a] succession representative has no absolute right to the executor's fee provided for in La. C.C.P. art. 3351 until he has completed the administration of the succession and has filed his final account." Succession of Vazquez, 07-0816, p. 7 (La.App. 4 Cir. 1/16/08), 976 So.2d 209, 215. This Court further affirmed the trial court's holding that an executor who failed to perform his duties and violated his position was not entitled to a commission. Id. We stated that the trial court's determination was a factual one. Id.
The trial court in the case sub judice found that Mrs. Ward "acted imprudently regarding certain succession property." Further, the trial court found that the "weight of the evidence clearly establishe[d] a conflict of interest" between Mr. and Mrs. Ward. Finally, the trial court found "Mrs. Ward liable for conflict of interest as executrix of the Succession of Marguerite Scifo Graff by approving excessive attorney's fees."
Mrs. Ward did not complete the Succession, as discussed in Vazquez. In fact, she was removed as the executrix. We do not find that the trial court erred in its factual findings that Mrs. Ward acted imprudently and had a conflict of interest. Therefore, we affirm the dismissal of Mrs. Ward's reconventional demand.
DECREE
For the above mentioned reasons, we find that the trial court did not err and affirm the disgorgement of attorney's fees and the dismissal of Mrs. Ward's reconventional demand seeking an executrix commission.
AFFIRMED
NOTES
[1] Mr. Ward previously received $2,500 in attorney's fees.
[2] The motion to remove executrix and for accounting alleged that Mrs. Ward "failed to account for assets of the estate," "failed to include assets in the Descriptive List," took "possession of and exercised control over succession properties prior to the conclusion of the administration of" the succession, "failed to preserve and manage assets of the succession," "obtained a judgment of possession improperly," "paid her husband excessive legal fees as her attorney out of funds which were withheld in a judgment and an amended judgment of possession," and "otherwise breached her fiduciary duties to the heirs and legatees in the above respects, all independently and in contravention of the provisions of LSA-C.C.P. Art. 3182." Further, the motion alleged that Mrs. Ward, through Mr. Ward was "unresponsive to repeated requests for information concerning the decedent's accounts and other properties" and "stated to certain heirs and legatees on more than one occasion that they will use the remaining succession assets if anyone attempts to challenge their actions or seek to remove her as executrix and her husband at [sic] attorney for the succession."
[3] The judgment removing Mrs. Ward as executrix is not contained in the record, but her formal removal is undisputed.
[4] The Wards did not file a declinatory exception asserting that the matter was not properly before the trial court. Mrs. Ward did file a reconventional demand.
[5] The deposition was in relation to pre-death transfers and not regarding Mrs. Ward's capacity as executrix.
[6] The handwritten notes on the typed sheets entered into evidence show that the total number of hours Mr. Ward alleged worked, 151, was divided into $39,500, which created the $261.60 hourly rate. However, the handwritten hourly notes document that Mr. Ward multiplied 151 hours by $262, which equaled $39,562.00. Thus, it is unclear from the evidence if Mr. Ward calculated his hourly rate prior to the lump sum amount of attorney's fees.
[7] Ms. Cook is board certified in estate planning and administration and board certified in taxation.
[8] On November 9, 2005, the Decedent appointed Mrs. Ward as her agent to perform the following: 1) "[t]o open all correspondence addressed to me," 2) "[t]o prepare checks and draw needed money from any bank bank [sic] account to pay my bills only," 3) "[t]o deposit any dividends or funds received to my bank account," 4) "[t]o perform whatever acts that may be necessary for my general well-being and to preserve my assets," and 5) "[t]o reinvest my certificates of deposit when they mature."
[9] The Wards assert that it was "unclear" how the trial court calculated the disgorgement figure of $24,500. However, as stated above, $39,500 minus $24,500 equals $15,000, approximately five percent of the assets of the Succession.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
UNITED STATES OF AMERICA )
)
v. ) Criminal Action No. 05-100-13 (RWR)
)
DESMOND THURSTON, )
)
Defendant. )
______________________________)
MEMORANDUM ORDER
Defendant Desmond Thurston filed an unopposed motion under
18 U.S.C. § 3582(c) for a reduction of his sentence on two
counts of distributing crack cocaine because the sentencing
guidelines range upon which his sentence was based was later
lowered by Amendment 782 to the U.S. Sentencing Guidelines
(“U.S.S.G.”). Unopposed Motion to Reduce Sentence, ECF No. 1540
(“Mot.”) at 1-2. Because the factors under 18 U.S.C. § 3553(a)
that must be considered in deciding Thurston’s reduction motion
were fully considered when Thurston was given his original
sentence which reflected a downward departure from the then-
applicable sentencing range and do not weigh in favor of
reducing Thurston’s sentence further, the motion will be denied.
A jury found Thurston guilty of two counts of unlawful
distribution of less than 5 grams of crack cocaine in violation
-2-
of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C). See Judgment, ECF No.
1405 at 1. The applicable guidelines range for Thurston at the
time of sentencing was 262 to 327 months of imprisonment from an
offense level of 36 and a criminal history category of IV. Mot.
at 1. Thurston’s range was based largely upon Thurston’s
responsibility for at least 1.5 kilograms of cocaine base as
relevant conduct. Id. at 2. However, as I announced at
sentencing, I departed downward from the applicable range to the
range of 168 to 210 months represented by an offense level of 33
and a criminal history category of III.
Thurston was sentenced on October 29, 2010 to 194 months of
imprisonment. Thurston unsuccessfully appealed his sentence to
the D.C. Circuit which held, among other things, that the
sentence did not violate Thurston’s Sixth Amendment Rights.
United States v. Jones, 744 F.3d 1362, 1370 (D.C. Cir. 2014).
Now, Thurston seeks to have his sentence reduced since the crack
cocaine sentencing penalties were lowered after he was
sentenced.
Section 3582(c)(2) requires a court to consider factors
identified in 18 U.S.C. § 3553(a). Those factors include, among
others, “the nature and circumstances of the offense,” “the
history and characteristics of the defendant,” “the need for the
sentence imposed to reflect the seriousness of the offense, to
promote respect for the law, and to provide just punishment for
-3-
the offense,” “the need for the sentence imposed to afford
adequate deterrence to criminal conduct,” and “the need to
protect the public from further crimes of the defendant.” See
18 U.S.C. § 3553(a).
At sentencing, I considered and discussed all of those
factors and others. I explained that for many years, Thurston
was involved in hustling crack with many others in a
neighborhood held hostage to violence and addiction. His group
felt free to spread this poison and help keep people strung out.
Thurston lined his own pockets off of their misery and lessened
the lives of countless others. The substantial evidence of
Thurston’s repeated acts of violence and gun play was very
troubling. Cf., e.g., Presentence Report, ECF No. 1401 at
¶¶ 38, 43, 46-48, 53, 57-59, 61. There was no charitable view
of that kind of behavior, and it deserved substantial
punishment.
However, mitigating factors warranted a downward departure.
The departure resulted from concerns about the gross disparity
between the applicable sentencing range and the far lower range
applicable solely to the two small amounts of crack the jury
found that he had sold, concerns about how his applicable
criminal history category of IV would be only III if sentencing
had been held only one business day later when a lower
guidelines calculation would take effect, and consideration of
-4-
mitigating factors in his background and the delay he
experienced in having his sentencing hearing.
The Court found a downward departure to a sentence of 194
months of imprisonment to be fair and just after considering all
§ 3553(a) factors. Thurston now seeks a sentence reduction to
one within a range of 168 to 210 months. He currently is
serving a sentence within that very range; that is the same
range within which I already sentenced him. He has presented no
facts or arguments that support any different result.
Therefore, it is hereby
ORDERED that Thurston’s Unopposed Motion to Reduce Sentence
[1540] be, and hereby is, DENIED.
SIGNED this 7th day of April, 2015.
/s/
______________________
RICHARD W. ROBERTS
Chief Judge
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-2146
VIJAYKUMAR A. PATEL; BHAVANABEN B. PATEL,
Plaintiffs - Appellants,
v.
MICHAEL CHERTOFF, Secretary, U.S. Department of Homeland
Security,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, District Judge.
(8:05-cv-01304-PJM)
Submitted: March 12, 2008 Decided: March 25, 2008
Before WILKINSON, MICHAEL, and KING, Circuit Judges.
Affirmed by unpublished per curiam opinion.
R. Scott Oswald, Nicholas W. Woodfield, EMPLOYMENT LAW GROUP, PC,
Washington, D.C., for Appellants. Rod J. Rosenstein, United States
Attorney, Tarra DeShields-Minnis, Assistant United States Attorney,
Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Vijaykumar A. Patel and his wife, Bhavanaben B. Patel,
natives and citizens of India, appeal the district court’s order
denying their motion for reconsideration of its dismissal of their
declaratory judgment action. In their action, the Patels sought to
challenge the regulation set forth at 8 C.F.R. § 1245.10(j) (2007)
as ultra vires. Because the Patels failed to raise any issues
pertaining to the propriety of the district court’s finding that it
lacked jurisdiction over their challenges to the regulation, we
find that they failed to preserve any issues for review. See Fed.
R. App. P. 28(a)(9)(A) (“[T]he argument . . . must contain . . .
appellant’s contentions and the reasons for them, with citations to
the authorities and parts of the record on which the appellant
relies.”); Edwards v. City of Goldsboro, 178 F.3d 231, 241 n.6 (4th
Cir. 1999) (“Failure to comply with the specific dictates of [Rule
28] with respect to a particular claim triggers abandonment of that
claim on appeal.”). Accordingly, we affirm for the reasons stated
by the district court. See Patel v. Chertoff, No. 8:05-cv-01304-
PJM (D. Md. Aug. 31, 2006). We dispense with oral argument because
the facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
- 2 -
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Stubbs v Facey (2018 NY Slip Op 01632)
Stubbs v Facey
2018 NY Slip Op 01632
Decided on March 14, 2018
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on March 14, 2018
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
CHERYL E. CHAMBERS
COLLEEN D. DUFFY
FRANCESCA E. CONNOLLY, JJ.
2015-09069
(Index No. 21830/11)
[*1]Gina R. Stubbs, appellant,
vDalkeith G. Facey, respondent.
Gina Stubbs, suing herein as Gina R. Stubbs, Midland, Texas, appellant pro se.
Dalkeith Facey, sued herein as Dalkeith G. Facey, Massena, NY, respondent pro se.
DECISION & ORDER
Appeal from a judgment of divorce of the Supreme Court, Suffolk County (John Iliou, J.), dated May 29, 2015. The judgment, insofar as appealed from, upon a decision of that court dated December 18, 2014, made after a nonjury trial, directed the plaintiff to maintain a life insurance policy naming the parties' child as beneficiary and the defendant as trustee of the policy funds, and awarded the plaintiff the sum of only $294,400 as her equitable share of the defendant's enhanced earning capacity from his medical license.
ORDERED that the judgment is affirmed insofar as appealed from, with costs.
The parties were married on August 4, 2001. During the course of their marriage, they had one child, born in 2004. The plaintiff commenced this action for a divorce and ancillary relief in July 2011. Following a nonjury trial, the Supreme Court, inter alia, directed each party to maintain a life insurance policy naming the parties' child as beneficiary and the other party as trustee of the insurance policy funds, and awarded the plaintiff the sum of $294,400 as her equitable share of the defendant's enhanced earning capacity from his medical license. The plaintiff appeals.
Contrary to the plaintiff's contention, the Supreme Court properly directed the plaintiff to maintain a life insurance policy naming the parties' child as beneficiary and the defendant as trustee of the insurance policy funds (see Geller v Geller, 69 AD3d 563, 564; Peri v Peri, 2 AD3d 425).
Further, in valuing and equitably distributing the defendant's enhanced earning capacity from his medical license, which was earned during the marriage, the Supreme Court properly took into consideration the marital portion of the defendant's student loan debt in determining his enhanced earning capacity (cf. Heydt-Benjamin v Heydt-Benjamin, 127 AD3d 814, 815).
MASTRO, J.P., CHAMBERS, DUFFY and CONNOLLY, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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947 F.Supp. 879 (1996)
Donald J. BROPHY and Joan B. Brophy, Plaintiffs,
v.
CHASE MANHATTAN MORTGAGE CO. and William Bowen, Defendants.
Civil Action No. 95-7388.
United States District Court, E.D. Pennsylvania.
December 5, 1996.
*880 Anthony L. Cianfrani, Philadelphia, PA, for Plaintiffs.
Alan C. Gershenson, Ann E. Kim, Philadelphia, PA, for Defendants.
MEMORANDUM
ANITA B. BRODY, District Judge.
Before me is defendants' Motion for Summary Judgment. Plaintiffs Donald Brophy and Joan Brophy ("the Brophys") allege that the defendant Chase Manhattan Mortgage Corporation ("Chase Manhattan") and its agent, defendant William Bowen ("Bowen"), violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C.A. § 2601 et seq., the Truth in Lending Act ("TILA"), 15 U.S.C.A. § 1601 et seq., the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq., and Pennsylvania tort law by misrepresenting the terms and charges of a Veterans Affairs, fixed rate, thirty (30) year mortgage for the purchase of residential real estate. I will grant defendants' Motion for Summary Judgment with respect to the Brophys' claim under RESPA and TILA, and I will dismiss all remaining claims under state law.
I. Facts
On June 8, 1995, the Brophys applied for a thirty (30) year fixed-rate mortgage from Chase Manhattan to purchase residential real estate. In connection with their application the Brophys were given two documents, one a "Good Faith Estimate" and the other a Regulation Z Disclosure ("Initial Regulation Z Disclosure"). Under "Items Payable in Connection with Loan," the Good Faith Estimate estimated the Loan Origination Fee would be $886.38, which represented one (1) percent of the loan. The Good Faith Estimate showed a zero ($0.00) figure as the amount for the Loan Discount, indicating that none would be payable. Furthermore, under the section entitled, "Items Required by Lender to be Paid in Advance," the Mortgage Insurance Premium was estimated to be $1,738.[1] Good Faith Estimate dated June 8, 1995. On June 12, 1995, the Brophys signed the Good Faith Estimate and the *881 Initial Regulation Z Disclosure and returned them to Chase Manhattan.[2]
When the Brophys settled on July 31, 1995, Chase Manhattan gave them a Settlement Statement and a final Regulation Z Disclosure ("Final Regulation Z Disclosure") detailing the actual charges and fees that the Brophys were required to pay. The Settlement Statement listed a Loan Origination Fee of $1,902.02, a Loan Discount of $885.07, and a FA Funding Fee of $2,607. Settlement Statement dated July 31, 1996. In other words, the Loan Origination Fee which was estimated at $886.38 was now $1,902.02; the FA Funding Fee estimated at $1,738 was now $2,607; and the Loan Discount that was estimated at zero ($0.00) was now $885.07.[3] The annual percentage rate, 7.5 percent, did not vary from the time the good faith estimates were made on June 8, 1995, until the time of settlement on July 31, 1995. Good Faith Estimate dated June 8, 1995; Mortgage Note dated July 31, 1995.
II. Discussion
The Brophys claim that Chase Manhattan and Bowen violated RESPA, TILA, the Pennsylvania Unfair Trade and Consumer Protection Act, and state tort law by misrepresenting the charges they would incur at settlement for the mortgage on their home.
A. Real Estate Settlement Procedures Act ("RESPA")
The Brophys contend that the defendants did not comply with the statutory disclosure requirements of RESPA because the defendants failed to provide them with a good faith estimate of the charges that they were likely to incur in connection with the settlement of their mortgage. The Brophys claim that the disclosures they received from the defendants were inaccurate and misleading and thereby violated the requirements of 12 U.S.C.A. § 2604(c) of RESPA[4] and the applicable regulation, Regulation X, 24 C.F.R. § 3500.7(c).[5] The defendants respond that the Brophys do not state a claim under RESPA because no private right of action exists under § 2604.
The primary source of a private right of action is the text of the statute itself. American Telephone and Telegraph v. M/V Cape Fear, 967 F.2d 864, 866 (3d Cir.1992). Section 2614 of RESPA, the only provision of the Act that provides for a private right of action, states:
Any action pursuant to the provisions of section 2607 or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction ...
12 U.S.C.A. § 2614. Thus, § 2614 provides for a private right of action for claims brought under § 2607 (prohibits the giving or accepting of fees, kickbacks, or a portion, percentage, or split of the charges for settlement services with others who did not perform *882 those services) and § 2608 (prohibits the seller from requiring the buyer to purchase title insurance from any particular title company) but does not provide for such a right under § 2604, the section the Brophys claim the defendants violated.
"The plain meaning of legislation should be conclusive, except in `the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of the drafters.'" United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989) (citation omitted). "Courts presume that Congress expressed its legislative intent through the ordinary meaning of the words it chose to use, and if the statutory language is unambiguous, the plain meaning of the words ordinarily is regarded as conclusive." In re TMI, 67 F.3d 1119, 1123 (3d Cir.1995) (citation omitted). Since the statute specifically provides for a private right of action under specific sections but not § 2604 a private right of action should not be implied under § 2604. The Honorable Morton A. Brody (no relation to me) in Campbell v. Machias Savings Bank, 865 F.Supp. 26, 32 (D.Maine 1994), is the only other judge found to have spoken on this issue and his holding accords with mine.
The legislative history strengthens my plain meaning interpretation of the statute relating to an implied right of action under § 2604. As originally enacted in December 1974, § 2604(c) required lenders to provide to those who filed an application to borrow money to purchase residential real estate with a booklet to help them better understand the nature and costs of real estate settlement services. It read:
Each lender [who makes federally related mortgage loans] shall provide the booklet described in such subsection to each person from whom it receives an application to borrow money to finance the purchase of residential real estate. Such booklet shall be provided at the time of receipt of such application.
Real Estate Settlement Procedures Act of 1974, Pub.L. No. 93-533, § 5(c) (amended 1976), 88 Stat. 1725, reprinted in 1974 U.S.C.C.A.N. 1984, 1986-87. The original legislation also included § 2605 ("Section 6") now repealed which required lenders to provide prospective borrowers with an itemized disclosure of each charge arising in connection with a real estate settlement, or if the exact amount was not available, a good faith estimate of that charge. Section 6 also required lenders to provide these advance disclosures or good faith estimates no later than twelve (12) days prior to settlement. If the lender did not comply with these provisions, Section 6(b) provided for an express private right of action against the lender.[6]
*883 Several months after enacting RESPA, Congress determined that the twelve (12) day advance notice provision under Section 6 only further complicated the settlement process instead of simplifying it. H.R.Rep. No. 667, 94th Cong., 1st Sess. 4 (1975), reprinted in 1975 U.S.C.C.A.N. 2448, 2451. As a result, in January 1976, Congress repealed Section 6, including the private right of action against lenders who failed to comply with the advance disclosure/good faith estimate provisions. Still intending to promote the objectives it sought with advance disclosures and good faith estimates, Congress amended § 2604 in January 1976. According to the legislative history, Congress amended § 2604 in order that there would be disclosure of good faith estimates of settlement costs in the special information booklet provided to the borrower at the time a written application for a mortgage loan was made. H.R.Rep. No. 667, 94th Cong., 1st Sess. 2 (1975), reprinted in 1975 U.S.C.C.A.N. 2448, 2449. This amendment was codified in § 2604(c), the present form of the statute, and contained no express private right of action for a violation of this good faith estimate requirement.
Furthermore, the legislative history reveals that Congress was well aware that it was eliminating a private right of action by repealing Section 6 and amending § 2604. In opposing the above amendments to RESPA, Representative Leonor K. Sullivan of Missouri warned: "[I]t should be noted that in repealing Section 6, the bill eliminates any penalty whatsoever for failing to give information which is, in fact, a `good faith' estimate." H.R.Rep. No. 667, 94th Cong., 1st Sess. 18 (1975), reprinted in 1975 U.S.C.C.A.N. 2448, 2459. Notwithstanding Representative Sullivan's concern, Congress repealed Section 6, amended § 2604, and as a result, extinguished the private right of action that had initially existed for failure to comply with the advance disclosure/good faith estimate provisions of RESPA. Hence, I conclude that the legislative history indicates that Congress did not intend to create a private right of action under amended § 2604. Therefore, I will grant defendants' Motion for Summary Judgment on the Brophys' claim under RESPA.
B. Truth in Lending Act ("TILA")
The Brophys allege that the defendants' estimates of the costs associated with their mortgage were not made in good faith in violation of 15 U.S.C.A. § 1638 and Regulation Z, 12 C.F.R. §§ 226.17-.19, because the estimates inaccurately and misleadingly understated the actual costs incurred at settlement. Specifically, at settlement, the Loan Origination Fee that was estimated at $886.38 was $1,902.02; the FA Funding Fee (Mortgage Insurance Premium) that was estimated at $1,738 was $2,607; and the Loan Discount that was estimated at zero ($0.00) was $885.07. Despite these numerical discrepancies, the defendants claim that they have complied with the statutory disclosure requirements under TILA because the statute simply requires them to provide an initial disclosure statement and a final disclosure statement which they did.[7] Defs.' Mot. Summ.J. at 2, 8-9. Accordingly, defendants assert that the Brophys fail to state a claim under TILA and request summary judgment in their favor.
Section 1638(b)(2) of TILA requires lenders in residential mortgage transactions to provide good faith estimates of the financial disclosures required under § 1638(a).[8] It states:
*884 In the case of a residential mortgage transaction ... good faith estimates of the disclosures required under subsection (a) of this section shall be made in accordance with regulations of the Board under section 1631(c) of this title before the credit is extended, or shall be delivered or placed in the mail not later than three business days after the creditor receives the consumer's written application, whichever is earlier. If the disclosure statement furnished within three days of the written application contains an annual percentage rate which is subsequently rendered inaccurate within the meaning of subsection 1606(c)[9] of this title, the creditor shall furnish another statement at the time of settlement or consummation.
15 U.S.C.A. § 1638(b)(2) (West 1982). The corresponding regulation, Regulation Z, § 226.19, provides in pertinent part:
(a) Residential mortgage transactions subject to RESPA (1) Time of disclosures. In a residential mortgage transaction subject to the Real Estate Settlement Procedures Act ... the creditor shall make good faith estimates of the disclosures required by § 226.18 before consummation, or shall deliver or place them in the mail not later than three business days after the creditor receives the consumer's written application, whichever is earlier.
12 C.F.R. § 226.19(a)(1) (West Supp.1996).
Section 1631(c) of TILA authorizes the Board of Governors of the Federal Reserve System, the Board authorized to prescribe regulations under § 1604 of the Act, to allow estimates to satisfy the statutory disclosure requirements of the statute. It states, in pertinent part:
The Board may provide by regulation that any portion of the information required to be disclosed by this subchapter may be given in the form of estimates where the provider of such information is not in a position to know exact information.
15 U.S.C.A. § 1631(c) (West 1996). The corresponding regulation provides:
If any information necessary for an accurate disclosure is unknown to the creditor, it shall make the disclosure based on the best information reasonably available and shall state that the disclosure is an estimate.
12 C.F.R. § 226.17(c)(2) (West 1982).
Rule 56(e) provides that the non-moving party to a motion for summary judgment "must set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). No genuine issue for trial exists unless there is sufficient evidence supporting the non-movant's case such that a jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). "If the evidence [produced by the non-moving party] is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S.Ct. at 2511. The critical question is whether "a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient." Id. at 252, 106 S.Ct. at 2512. All justifiable inferences should be drawn in the non-movant's favor. Id. at 255, 106 S.Ct. at 2513-14.
In the present case, the only evidence presented in support of summary judgment was the estimate required under § 1638(b)(2), the settlement statement, and the corresponding Regulation Z disclosures. No depositions, affidavits, or other testimony were submitted by either side. Without more, the Brophys argue that a trier of fact may draw an inference from the disparities between the initial good faith estimates and the final settlement *885 figures that the defendants' initial estimates were not made in good faith. I disagree.
The evidence submitted is uncontradicted: both parties agree that the estimates, settlement statement, and Regulation Z Disclosures are what they claim to be. The dispute centers around the interpretation of the discrepancies within these documents. Although the Brophys assert that the differences between the estimates and the settlement statement stem from the fact that the estimates were not made in good faith, they have proffered no evidence specifically setting forth this claim. In actuality, there are a plethora of possible reasons not involving defendants' lack of good faith as to why the estimated figures fluctuated by the time of settlement. While the Brophys insist that an inference of the defendants' lack of good faith can be drawn from the evidence before me sufficient to withstand summary judgment, I cannot take that leap. "The judge's inquiry ... unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict." Id. Without depositions, affidavits, or other evidence of that nature detailing specific underlying facts of this dispute, an inference that the defendants estimates were not made in good faith cannot be justifiably drawn. The Brophys have not even submitted an affidavit from a professional in the residential mortgage industry opining on the significance of the disparities between the estimates and the settlement statement and how that might indicate a lack of good faith. Based on the limited evidence before me, a finding by the jury that the defendants' estimates were not made in good faith would be mere speculation.[10]
The statutory framework of TILA also suggests that a discrepancy between the estimates and the final settlement figures without more is insufficient to draw an inference that the defendants' estimates were not made in good faith. Under TILA, the nature of the disclosures required in non-residential mortgage transactions fundamentally differs from that of the disclosures required in the residential mortgage context. In non-residential mortgage transactions TILA directs:
[T]he disclosures required under [§ 1638(a)] shall be made before the credit is extended.
15 U.S.C.A. § 1638(b)(1) (West 1982). In contrast, in residential mortgage contexts, TILA requires:
In the case of a residential mortgage transaction, ... good faith estimates of the disclosures required under [§ 1638(a)] shall be made in accordance with [Regulation Z] ... before the credit is extended.
15 U.S.C.A. § 1638(b)(2) (West 1982). Thus, in residential mortgage contexts, TILA requires estimates not actual disclosures of the items listed in § 1638(a). The fact that § 1638(b)(2) only requires estimates of the disclosures presumes that the final figures might change before settlement. In fact, § 1631(c) explicitly states that estimates will be given "where the provider of such information is not in a position to know exact information." 15 U.S.C.A. § 1631(c). Apparently, then, the statute makes allowances for variance between estimates and final disclosures in residential mortgage transactions. Therefore, I cannot draw the inference that the defendants' estimates were not made in good faith solely because the estimates vary from the settlement disclosures.
Along similar lines, the strict liability regime created under the statute also suggests that the Brophys cannot legitimately draw an inference from the discrepancies between the estimates and the settlement statement that the defendants' estimates were not made in good faith. TILA is a strict liability statute liberally construed in favor of consumers. Smith v. Fidelity Consumer Discount Co., 898 F.2d 896, 898 (3d Cir.1990). A creditor who fails to comply with the Act in any respect is liable to the consumer under the statute. Id. "[O]nce the court finds a violation, no matter how technical, it has no discretion with respect to *886 [imposing] liability." Id. (quoting Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir. 1976)). Therefore, except in the residential mortgage context, any discrepancy between an actual disclosure and what a borrower is later charged ordinarily constitutes a violation under the Act.[11]See McGowan v. King, Inc., 569 F.2d 845, 848 (5th Cir.1978) (understatement of "deferred payment price" by $3.52 constituted violation of TILA); Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir.1976) (finance charge understated by $16.00 constitutes a violation of TILA). In contrast, in residential mortgage transactions, good faith estimates are required instead of actual disclosures. Estimates are given when a creditor "is not in a position to know exact information," 15 U.S.C.A. § 1631(c), are and "based upon the best information reasonably available." 12 C.F.R. § 226.17(c)(2). Hence, the fact that an estimate fluctuates by the time of settlement does not itself constitute a violation of the Act. Thus, unlike disclosures in non-residential mortgage contexts, the good faith estimates can vary from the time they are revealed until settlement without giving rise to a statutory violation of the Act. Hence, fluctuation of an estimate alone does not invoke liability under the Act. This further supports my conclusion that the necessary inference cannot be drawn that the defendants' estimates failed to be made in good faith on the basis of a change in the estimate alone.
For these reasons, I find that the Brophys' proffer of the documents alone fails to provide the basis for a justifiable inference that the defendants estimates were not made in good faith. Accordingly, I will grant summary judgment in favor of defendants on this claim.
C. Supplemental State Law Claims
The Brophys also allege violations under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq., and state tort law for the misleading and inaccurate representations concerning the amount and variability of the loan fees. As I am granting defendants' Motion for Summary Judgment on plaintiffs' claims under RESPA and TILA, there are no remaining federal questions before this Court. As a result, I dismiss without prejudice all of plaintiffs' supplemental state law claims.
NOTES
[1] Correspondingly, the Initial Regulation Z Disclosure listed the sum of $886.38 for the item designated "Loan Fee Paid by Buyer" and the sum of $1,738 as a charge for "Private Mortgage Insurance/MIP/VA Funding Fee." Initial Regulation Z Disclosure dated June 8, 1995.
[2] The Brophys allege that Bowen, an agent for Chase Manhattan, assured them that the terms of the mortgage were "locked in." Compl. ¶ 18. There is nothing in the evidentiary record, however, to support this.
[3] Correspondingly, the Final Regulation Z Disclosure disclosed the sum of $2,787.09 for the "Loan Fee Paid by Buyer" (includes the sum of the Loan Origination Fee and the Loan Discount Fee on the Settlement Statement) and $2,607 for the "Private Mortgage Insurance/MIP/VA Funding Fee." Final Regulation Z Disclosure dated July 31, 1995.
[4] Section 2604(c) of RESPA provides:
Each lender shall include with the booklet a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement as prescribed by the Secretary.
12 U.S.C. § 2604(c) (West 1989).
[5] Regulation X, 24 C.F.R. § 3500.7(c) provides in pertinent part:
Content of good faith estimate. A good faith estimate consists of an estimate, as a dollar amount or range, of each charge which:
* * * * * *
(2) That the borrower will normally pay or incur at or before settlement based upon common practice in the locality of the mortgaged property. Each such estimate must be made in good faith and bear a reasonable relationship to the charge a borrower is likely to be required to pay at settlement, and must be based upon experience in the locality of the mortgaged property ...
24 C.F.R. § 3500.7(c) (West Supp.1996).
[6] Section 6 stated in pertinent part:
Advance Disclosure of Settlement Costs
(a) Any lender agreeing to make a federally related mortgage loan shall provide or cause to be provided to the prospective borrower, to the prospective seller, mortgage loan shall provide or cause to be provided to the prospective borrower, to the prospective seller, and to any officer or agency of the Federal Government proposing to insure, guarantee, supplement, or assist such loan, at the time of the loan commitment, but in no case later than twelve calendar days prior to settlement, upon the standard real estate settlement form develop and prescribed under section 4 [§ 2603], or upon a form developed and prescribed the Secretary specifically for the purposes of this section, and in accordance with regulations prescribed by the Secretary, an itemized disclosure in writing of each charge arising in connection with such settlement ... In the event the exact amount of any such charge is not available, a good faith estimate of such charge may be provided.
(b) If any lender fails to provide a prospective borrower or seller with the disclosure as required by subsection (a), it shall be liable to such borrower or seller, as the case may be, in an amount equal to
(1) the actual damages involved or $500, whichever is greater, and
(2) in the case of any successful action to enforce the foregoing liability, the court costs of the action together with a reasonable attorney's fee as determined by the court; except that a lender may not be held liable for a violation in any action brought under this subsection if it shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures adopted to avoid any such error.
* * * * * *
Real Estate Settlement Procedures Act of 1974, Pub.L. No. 93-533, § 6, reprinted in 1974 U.S.C.C.A.N. 1984, 1987 (repealed).
[7] Actually, TILA did not require the defendants to provide a final disclosure statement. TILA does not require a subsequent disclosure statement unless the estimated annual percentage rate varies by more than 1/8 of one percent in a regular transaction or by more than ¼ of one percent in an irregular transaction, as defined by § 226.22 of the regulations. 12 C.F.R. § 226.19(a)(2). In this case, the annual percentage rate did not change from the time of the estimate until the time of settlement. Hence, no final disclosure was required.
[8] Section 1638(a) requires lenders to disclose: (1) creditor's identity; (2) amount financed; (3) consumer's right to obtain written itemization of the amount financed; (4) non-itemized finance charge; (5) annual percentage rate; (6) total of payments; (7) total sale price, if applicable; (8) descriptive explanations of aforementioned terms; (9) statement of what property a security interest has been taken in, if any; (10) amount of late payment charges; (11) indication of whether consumer is entitled to rebate of finance charge under certain circumstances; (12) referral to contract for information regarding nonpayment, default, right to accelerate maturity of debt, and prepayment rebates and penalties; (13) in residential mortgage transactions, a statement indicating whether a subsequent purchaser or assignee may assume the debt obligation on its original terms. 15 U.S.C.A. § 1638(a) (West 1982).
[9] Section 1606(c) concerns the degree to which the annual percentage rate can vary from the time of disclosure and yet still comply with the Act.
[10] If the Brophys' claim were based upon an attack of how the estimates were produced under Regulation Z although it does not seem to be then it might survive summary judgment by showing that the defendants failed to base their estimates upon "the best information reasonably available." 12 C.F.R. § 226.17(c)(2). The Brophys, however, have proffered no evidence to show this either.
[11] Sections 1640(b), (c), (f) enumerate statutory defenses to violations of the Act.
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804 So.2d 1118 (2001)
Jeannie TURNER
v.
Timothy TURNER.
2000356.
Court of Civil Appeals of Alabama.
June 22, 2001.
*1119 Stephen P. Johnson and Kelly A. McGriff of Brackin & McGriff, P.C., Foley, for appellant.
Gary L. Armstrong of Armstrong, Vaughn & Scroggins, Daphne, for appellee.
YATES, Presiding Judge.
On June 10, 1999, Timothy Turner sued Jeannie Turner, seeking a divorce and alleging incompatibility of temperament and an irretrievable breakdown of the marriage. The wife answered and counterclaimed for a divorce, alleging adultery. While the divorce action was pending, the husband was ordered to pay the wife $1,500 per month in temporary support.
Following an ore tenus proceeding, the trial court entered a judgment on August 22, 2000, divorcing the parties. The divorce judgment provides in part as follows:
"1. The court finds from the evidence that the 29-year marriage, in the instant case, failed because the [husband] began an [adulterous] affair, in the later stages of the marriage and that he moved in with the woman in another state shortly after filing the petition for divorce. Therefore, the court grants the wife's counterclaim for divorce on the grounds of adultery.
". . . .
"3. The court finds from the evidence that during the long-term marriage, the wife and the children moved a number of times in order to further the various careers of the husband. Consequently, the wife has not developed any job skills other than secretarial skills and some minor sales experience. The court is of the opinion that, in order to meet the wife's necessary living expenses and for her to approximate the standard of living to which she was accustomed during marriage, periodic alimony is necessary. The husband is ordered to pay periodic alimony in the amount of $1,250.00 per month, beginning in September 2000.
"4. The court finds that the parties have essentially divided the real estate and personal property between themselves. The court hereby ratifies and confirms the division of personal property heretofore made by the parties and each party shall retain the personal property now in his or her possession. The husband is ordered to immediately execute the Certificate of Title conveying his interest in the Buick automobile to the wife.
". . . .
"6. The court finds from the evidence that the outstanding credit card bills were paid off from a portion of the sales proceeds of the parties' former marital residence in Spanish Fort, Alabama. The court determines that the husband paid off some credit card bills that he had incurred in setting [up] the new household in Virginia, with his live-in girl friend. The husband is ordered to pay the wife the sum of $2,000.00 to *1120 adjust the equities in paying off the credit card bills.
"7. The court finds from the evidence that the husband bought nine years of military service to be applied on his FBI retirement. The court has taken into consideration the fact that the husband served some time in the military before the marriage and will complete some service with the FBI before becoming eligible for retirement. The court determines that the wife is entitled to receive 30% of any retirement benefits that the husband receives and at the time that the husband enters into retirement, the periodic alimony shall be reduced to an amount equal to 30% of his retirement benefits. The husband is ordered to sign any necessary papers to carry out this provision of the divorce decree."
The wife moved the trial court to alter, amend, or vacate its judgment, or, in the alternative, for a new trial, arguing that the trial court erred in not specifically awarding her a portion of the Thrift Savings Plan that was accumulated by the parties during the marriage. On November 28, 2000, the trial court amended its judgment and awarded the wife 30% of the husband's retirement fund, as well as 30% of the Thrift Savings Plan.
The wife appeals, arguing that the trial court erred in its award of alimony and in its division of the marital property.
In reviewing a judgment of the trial court in a divorce case, where the trial court has made findings of fact based on oral testimony, we are governed by the ore tenus rule. Under this rule, the trial court's judgment based on those findings will be presumed to be correct and will not be disturbed on appeal unless it is plainly and palpably wrong. Hartzell v. Hartzell, 623 So.2d 323 (Ala.Civ.App.1993). This presumption of correctness is based on the trial court's unique position to observe the witnesses and to assess their demeanor and credibility. Hall v. Mazzone, 486 So.2d 408 (Ala.1986). Additionally, matters of alimony and property division rest soundly within the trial court's discretion, and rulings on those matters will not be disturbed on appeal except for a plain and palpable abuse of discretion. Welch v. Welch, 636 So.2d 464 (Ala.Civ.App.1994). Matters of alimony and property division are interrelated, and the entire judgment must be considered in determining whether the trial court abused its discretion as to either of those issues. Willing v. Willing, 655 So.2d 1064 (Ala.Civ.App.1995). Factors the trial court should consider in its award of alimony and its division of property include the earning abilities of the parties; the future prospects of the parties; their ages and health; the duration of the marriage; the parties' station in life; the marital properties and their sources, values, and types; and the conduct of the parties in relation to the marriage. Id., at 1067. Further, a division of the marital property in a divorce case does not have to be equal, only equitable, and a determination of what is equitable rests within the sound discretion of the trial court. Id. Moneys paid into a retirement fund are an asset that may be considered by the court in effecting an equitable property division. Welch, supra, 636 So.2d 464.
Our review of the record reveals that the husband was 50 years old and the wife was 54 at the time of the trial. There were two children born of the marriage, both of whom are past the age of majority.
The husband has been employed by the Federal Bureau of Investigation since 1984 and is presently an instructor at the FBI Academy in Virginia. Before his employment with the FBI, the husband had been *1121 on active duty with the United States Navy, had spent a year as an automobile salesman, had obtained an undergraduate degree from Baylor University, had worked as a farm laborer in Omaha, had obtained a master's degree, and had attended two years of law school. As a result of the husband's military assignments, educational pursuits, and FBI career, the family moved 14 times. The family has lived in Baldwin County for the last nine years.
During the 29-year marriage, the wife was the primary caregiver for the children. She was employed for short periods at various jobs, but never accumulated any retirement fund or benefits. At the time of the trial, she was employed at a Sherwin Williams paint store as a decorator, earning approximately $800 per month. It appears that the wife does not have a college education.
The husband's monthly income was $4,333. He accumulated funds in two retirement plans: the Thrift Savings Plan and a federal retirement plan. The Thrift Savings Plan was valued at $260,000, and the value of the federal retirement plan was unknown at the time of the trial. Both retirement plans were accumulated during the marriage, with the exception of 22 months of military service earned before the marriage. Because the amount of Social Security tax charged on FBI retirement differed from military retirement, the parties decided to use marital funds to pay the difference in Social Security tax on nine years from the husband's military service in order to enhance his retirement. That included the 22 months for which the husband earned retirement credit while he was in the military service before the marriage. The husband will complete 20 years of service with the FBI in 2004 and will be eligible to withdraw funds at that time if he retires.
The husband testified, with regard to paying alimony, that he was "an economic slave," because, he stated, "the fruits of my labor, the fruits of my work, are not mine, they were stolen from me, they are taken from me." With regard to the wife's entitlement to a portion of his retirement accounts, he testified that "she had the opportunity to work and earn hers." On several of the checks written to his wife for temporary alimony, the husband wrote on the memo line "hate and greed money" and "blood and hate money."
The wife testified that her living expenses were approximately $1,535 per month. However, she argues in her brief that this figure does not include health-insurance premiums, which the husband had previously paid through his employment, and premiums for automobile insurance. The husband estimated his monthly expenses at $3,808 per month.[1]
Although the husband attempts to argue that the wife failed to prove adultery, he filed no postjudgment motion raising that issue. An argument not raised before the trial court cannot be raised on appeal. Mann v. Mann, 725 So.2d 989 (Ala.Civ.App.1998). Further, he did not cross-appeal. We add that there was ample evidence to support the trial court's finding of adultery, including testimony from the husband's brother. Also, the husband told the wife that he might have infected her with a sexually transmitted disease, and he admitted that he had had himself tested.
*1122 We conclude that the trial court's distribution of the retirement accounts and the alimony award were inequitable and an abuse of discretion, based on the 29 year marriage; the fact that the wife had reared two children, had moved at least 14 times during the marriage because of the husband's employment and schooling, and has no retirement plan of her own; and the husband's conduct in causing the breakdown of the marriage. Cf. Strain v. Strain, 793 So.2d 804 (Ala.Civ.App. 2001)(award of one-half of wife's retirement savings plan and periodic alimony was equitable based on the length of the marriage and disparity in income); Higgins v. Higgins, 726 So.2d 713 (Ala.Civ.App.1998)(trial court abused its discretion in failing to award wife a portion of husband's retirement benefits where parties were married for 21 years, had 4 children, moved 7 times during the marriage, and wife had no retirement plan and was ill); Laws v. Laws, 653 So.2d 293 (Ala.Civ.App.1994)(trial court erred in its distribution of husband's five retirement accounts, based on length of marriage; wife's age, health, and employment status; and husband's adulterous conduct). The judgment is reversed, and the case is remanded for the trial court to enter an order consistent with this opinion.
REVERSED AND REMANDED WITH INSTRUCTIONS.
THOMPSON and PITTMAN, JJ., concur.
MURDOCK, J., concurs in the result.
CRAWLEY, J., dissents.
CRAWLEY, Judge, dissenting.
I would affirm the trial court's award of periodic alimony and its division of marital property. Our supreme court has stated that an appellate court reviewing a trial court's judgment should not
"substitute its judgment of the facts for that of the [trial] court. Rea v. Rea, 599 So.2d 1206 (Ala.Civ.App.1992). Instead, our task is simply to determine if there was sufficient evidence before the [trial] court to support its decision against a charge or arbitrariness and abuse of discretion. Peterman v. Peterman, 510 So.2d 822 (Ala.Civ.App.1987)."
Ex parte Smith, 673 So.2d 420, 422 (Ala. 1995).
The trial court granted the divorce on the ground of the husband's adultery. The trial court awarded the wife $1,250 periodic alimony and awarded the wife 30% of the husband's retirement accounts. The husband's monthly income is $4,333the wife's periodic alimony award is almost 30% of the husband's monthly income. I conclude that the award of alimony and the division of the retirement benefits are equitable. The wife would be entitled only to a maximum of 50% of the husband's retirement benefits, as stated in § 30-2-51(b)(3), Ala.Code 1975. I do not conclude that the trial court's finding of adultery mandates a higher percentage of the retirement benefits or a higher periodic-alimony award.
NOTES
[1] The parties agree in their briefs that the husband's monthly expenses were $3,808. However, the exhibit cited by both parties estimates $8,858 in monthly expenses, including a $1,267 mortgage payment, $500 in home upkeep, $100 in laundry charges, and numerous other items of expense. It is unclear which expense items the parties used to come up with the $3,808.
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64 F.3d 669
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
Joseph Macastle JACKSON, Petitioner-Appellant,v.L.L. YOUNG, Respondent-Appellee.
No. 95-6161.
United States Court of Appeals, Tenth Circuit.
Aug. 16, 1995.
Before SEYMOUR, Chief Judge, McKAY and HENRY, Circuit Judges.
ORDER AND JUDGMENT1
1
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.
2
This matter is before the court on appellant's application for a certificate of probable cause and request for leave to proceed in forma pauperis. We issue a certificate of probable cause, grant appellant's request to proceed in forma pauperis, and proceed to the merits of appellant's appeal.2
3
Mr. Jackson seeks habeas corpus relief pursuant to 28 U.S.C. 2254 claiming that Oklahoma has unconstitutionally delayed granting him consideration for parole. We find his arguments to be unpersuasive, and affirm the denial of habeas corpus for substantially the reasons set forth in the magistrate judge's Report and Recommendation and the district court's Order adopting same.
4
AFFIRMED. The mandate shall issue forthwith.
1
This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of the court's General Order filed November 29, 1993. 151 F.R.D. 470
2
Appellant has filed a second Motion for Appointment of Counsel. The motion is hereby denied
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662 F.2d 731
Marvia A. COWART, SSN omt-ac-eben Plaintiff-Appellant,v.Richard S. SCHWEIKER, Secretary of Health and HumanServices, Defendant- Appellee.
No. 81-7124Non-Argument Calendar.
United States Court of Appeals,Eleventh Circuit.
Nov. 30, 1981.
Donald B. Hanna, Decatur, Ga., for plaintiff-appellant.
Bernard E. Namie, Asst. U. S. Atty., Macon, Ga., for defendant-appellee.
Appeal from the United States District Court for the Middle District of Georgia.
Before TJOFLAT, VANCE and CLARK, Circuit Judges.
CLARK, Circuit Judge:
1
Marvia A. Cowart appeals from the judgment of the district court affirming a decision by the Secretary of Health and Human Services (Secretary) denying Mrs. Cowart's claim for disability insurance benefits under the Social Security Act. The district court found that the Secretary's decision was supported by substantial evidence and thus affirmed. After a careful review of the record in this case, we conclude, for several reasons, that Mrs. Cowart did not receive a "full and fair hearing" in the administrative proceedings. Accordingly, we reverse the judgment of the district court and remand this case with instructions that it be returned to the Secretary for further proceedings consistent with this opinion.
FACTS
2
The appellant, Marvia A. Cowart, worked as a nurse from 1962 until October 1978. On October 25, 1978, Mrs. Cowart underwent surgery to correct a bloodvessel malformation in her brain. Following this surgery, complications ensued and Mrs. Cowart required further operations on November 2, 1978, and November 17, 1978. On March 21, 1979, Mrs. Cowart filed an application for Social Security disability insurance benefits, alleging disability due to certain aftereffects of her surgery. Mrs. Cowart's claim was denied on May 10, 1979. On July 3, 1979, Mrs. Cowart filed a request for reconsideration of her claim. After reconsideration, her claim again was denied on August 6, 1979.
3
On October 4, 1979, Mrs. Cowart filed a request for a hearing before an administrative law judge (ALJ). This hearing was held on January 3, 1980, and lasted for 40 minutes. Mrs. Cowart appeared at the hearing without counsel. The only witnesses appearing before the ALJ were Mrs. Cowart and her husband, David Cowart. Mrs. Cowart testified that her disability consisted of the following ailments: vision impairment, difficulty in concentrating, severe headaches, nervousness, partial loss of sensation in her left leg, a history of seizures, side effects from prescribed medications, poor balance, a tendency to drop things, and speech impairment. Subsequent to the hearing, the ALJ arranged for Mrs. Cowart to be examined by two physicians, one a neurologist and the other an ophthalmologist. These physicians submitted reports to the ALJ, who incorporated the reports into the record of the hearing.
4
The ALJ found that Mrs. Cowart, although unable to perform her prior work as a nurse, was able to perform the requirements of sedentary work activity. He thus determined that Mrs. Cowart did not qualify for disability insurance benefits and denied her claim on April 9, 1980. On June 12, 1980, Mrs. Cowart filed a request for review of the ALJ's decision by the Appeals Council. This request was denied on July 15, 1980. The decision of the ALJ therefore became the final decision of the Secretary.
5
Mrs. Cowart appealed the Secretary's decision to the district court under 42 U.S.C. §§ 405(g) and 1383(c)(3). The district court affirmed on the ground that the Secretary's decision was supported by substantial evidence. Mrs. Cowart thereupon appealed to this court, claiming that she was denied due process of law because the district court failed to consider and comment upon all issues raised before it by the appellant. We find no merit in this contention as such. We do find serious procedural deficiencies in the administrative proceedings and we believe that justice requires reversal of the district court judgment.
6
The Secretary contends that the only issue before this court is whether the decision of the Secretary is supported by substantial evidence. This assertion is correct only insofar as our review of the merits of appellant's disability claim is concerned. This is not correct when an appellant raises a due process issue, and intervening cases, which we will later discuss, clarify Social Security claimants' right to counsel.
ADEQUACY OF NOTICE OF RIGHT TO COUNSEL
7
A claimant has a statutory right to counsel at a Social Security hearing. 42 U.S.C. § 406. The Secretary has a duty to notify the claimant of this right prior to such a hearing. Clark v. Schweiker, 652 F.2d 399, 403 (5th Cir. 1981). In several recent cases, this circuit has concluded that the Secretary's notice to the claimant of the right to counsel was inadequate. See Peppers v. Schweiker, 654 F.2d 369 (5th Cir. 1981); Benson v. Schweiker, 652 F.2d 406 (5th Cir. 1981); Clark v. Schweiker, 652 F.2d 399 (5th Cir. 1981); Doss v. Harris, 638 F.2d 1354 (5th Cir. 1981). In the case sub judice, the Secretary provided the following notice concerning the appellant's right to counsel at the hearing before the ALJ:
8
While it is not required, you may be represented at the hearing by an attorney or other qualified person of your choice. If (you) wish attorney representation and cannot afford it, your social security office will provide a list of offices where you may be able to obtain representation. Any fee which your representative wishes to charge must be approved by the Bureau of Hearings and Appeals, and your representative must furnish you with a copy of the petition.
9
If you are found entitled to benefits and your representative is an attorney, 25 percent of your back benefits will normally be withheld for payment to your attorney upon approval of his fee. If the approved fee is less than the 25 percent withheld, the difference will be paid directly to you. If the approved fee is more than 25 percent, payment of the difference is a matter to be settled between you and your attorney.
10
If your representative is not an attorney, none of your benefits will be withheld; and payment of the fee which is approved is a matter to be settled between you and him.
11
This notice is substantially the same as the notices involved in Peppers, Clark, and Benson. See Peppers v. Schweiker, supra, at 370; Benson v. Schweiker, 652 F.2d at 407-08; Clark v. Schweiker, 652 F.2d at 401. On the basis of these cases and for the reasons stated therein, we hold that the notice to Mrs. Cowart was inadequate.
WAIVER OF RIGHT TO COUNSEL
12
The ALJ stated in his decision that Mrs. Cowart "wished to proceed without an attorney or representative." (Emphasis supplied.) If Mrs. Cowart in fact had wished to proceed without counsel, of course, this would constitute a waiver of her right to counsel. The ALJ's conclusion that Mrs. Cowart waived the right to counsel was based on the following exchange at the hearing:
13
ALJ: You were advised in the notice of hearing and correspondence that our office had with you about your right to have a lawyer or other qualified person here to aid you at this hearing. Did you read and understand this?
14
CLAIMANT: Yes, yes.
15
ALJ: And you're here without a lawyer so can I assume that you wish to proceed without one?
16
CLAIMANT: Yes, as of now, I don't have one.
17
We do not agree that Mrs. Cowart's statement at the hearing evinced a "wish" to proceed without counsel. To the contrary, it seems clear from the following statements made before the ALJ by Mrs. Cowart's husband, David, that Mrs. Cowart wished to proceed with counsel, but was unsuccessful in her attempts to obtain free public counsel and could not afford private counsel:
18
ALJ: Okay, and what did you want to tell me?
19
DAVID COWART: That she said well, you said from the beginning about the lawyer. We read the papers, and we called the public service office, which is here in town.
20
ALJ: Uh-huh.
21
DAVID COWART: And they could not they said that I made too much for them to represent her. And with the doctor bills that we have, I was unable to obtain a lawyer because (INAUDIBLE). She have (sic) seven doctors that she go (sic) to, and we don't have any help with any of them. This is one full reason why we don't have a lawyer.
22
ALJ: Okay.
23
On the basis of this testimony, we conclude that Mrs. Cowart's failure to obtain counsel was due to her inability to afford counsel rather than a "wish" to proceed without counsel. Thus, we hold that there was no waiver of Mrs. Cowart's right to be represented by counsel at the ALJ hearing. For reasons expressed throughout the remainder of this opinion, we also hold that Mrs. Cowart was prejudiced by the lack of counsel.
FULL AND FAIR HEARING
24
Because a hearing before an ALJ is not an adversary proceeding, the ALJ has a basic obligation to develop a full and fair record. This obligation exists even if the claimant is represented by counsel, Thorne v. Califano, 607 F.2d 218, 219 (8th Cir. 1979), or has waived the right to representation, Clark v. Schweiker, 652 F.2d 399, 404 (5th Cir. 1981). Where the right to representation has not been waived, as in this case, the ALJ's " 'basic obligation to develop a full and fair record rises to a special duty when an unrepresented claimant unfamiliar with hearing procedures appears before him.' " Clark v. Schweiker, 652 F.2d at 404 (quoting Barker v. Harris, 486 F.Supp. 846, 849 (N.D.Ga.1980)). This duty requires the ALJ to "scrupulously and conscientiously probe into, inquire of, and explore for all the relevant facts." Cox v. Califano, 587 F.2d 988, 991 (9th Cir. 1978); Gold v. Secretary of Health, Education & Welfare, 463 F.2d 38, 43 (2d Cir. 1972). The ALJ must be "especially diligent in ensuring that favorable as well as unfavorable facts and circumstances are elicited." Cox v. Califano, 587 F.2d at 991 (quoting Rosa v. Weinberger, 381 F.Supp. 377, 381 (E.D.N.Y.1974)).
25
We hold that the ALJ failed to discharge his special duty to develop the facts in this case. The ALJ apparently made little or no effort to elicit evidence favorable to Mrs. Cowart's claim. For example, at the hearing, the ALJ had Mrs. Cowart's husband, David, before him, yet he failed to ask David any questions regarding Mrs. Cowart's condition. Such testimony clearly would have been relevant and quite likely would have been favorable for Mrs. Cowart. We realize that testimony from a claimant's spouse might be accorded less weight than testimony from a disinterested witness, but this provides no good reason to fail to elicit the testimony in the first place. We cannot say that the ALJ "scrupulously and conscientiously" explored for all the relevant facts, nor that he was "especially diligent in ensuring that favorable ... facts are elicited," in light of his failure to elicit such readily available testimony.
26
The ALJ also failed to develop a full and fair record for several other reasons. First, the decision rendered by the ALJ does not make clear the weight accorded to the various testimony considered. The decision states only that the ALJ "has carefully considered all of the testimony ... and exhibits ... and has given weight to each as he feels should be properly accorded to it." This statement tells us nothing whatsoever it goes without saying that the ALJ gave the testimony the weight he believed should be accorded to it. What is required is that the ALJ state specifically the weight accorded to each item of evidence and why he reached that decision. In the absence of such a statement, it is impossible for a reviewing court to determine whether the ultimate decision on the merits of the claim is rational and supported by substantial evidence. "Unless the Secretary has analyzed all evidence and has sufficiently explained the weight he has given to obviously probative exhibits, to say that his decision is supported by substantial evidence approaches an abdication of the court's 'duty to scrutinize the record as a whole to determine whether the conclusions reached are rational.' " Stawls v. Califano, 596 F.2d 1209, 1213 (4th Cir. 1979) (quoting Arnold v. Secretary of HEW, 567 F.2d 258, 259 (4th Cir. 1977)).
27
Second, the ALJ made no mention of any specific jobs that Mrs. Cowart is capable of performing. Although the burden of proving disability is on the claimant, 42 U.S.C. § 423(d)(5) (1976); Western v. Harris, 633 F.2d 1204, 1206 (5th Cir. 1981), once the claimant establishes a prima facie case by showing that her impairment prevents her from performing her prior occupation, the burden shifts to the Secretary, who must produce evidence to show that the claimant is able to perform alternative substantial gainful work that exists in the national economy. Western v. Harris, 633 F.2d at 1206; Lewis v. Weinberger, 515 F.2d 584, 587 (5th Cir. 1975); Dousewisz v. Harris, 646 F.2d 771, 772 (2d Cir. 1981); Hall v. Secretary of HEW, 602 F.2d 1372, 1375 (9th Cir. 1979); Hephner v. Mathews, 574 F.2d 359, 362 (6th Cir. 1978); Small v. Califano, 565 F.2d 797, 800 (1st Cir. 1977); Thompson v. Mathews, 561 F.2d 1294, 1296 (8th Cir. 1977); McLamore v. Weinberger, 538 F.2d 572, 574 (4th Cir. 1976); Meneses v. Secretary of HEW, 442 F.2d 803, 807 (D.C.Cir.1971). To meet this burden, "(i)t is incumbent on the Secretary at a minimum, to come forward with specific findings showing that the claimant has the physical and mental capacity to perform specified jobs ...."1 Hall v. Secretary of HEW, 602 F.2d at 1377. The ALJ's decision states merely that "(c)laimant is able to perform the requirements of sedentary work activity." A general finding of this nature fails to demonstrate that the Secretary has met the burden of showing that the claimant retains the residual capacity to work. Hall v. Secretary of HEW, 602 F.2d at 1377; Hephner v. Mathews, 574 F.2d at 362-63.
28
Ordinarily, the preferred method of demonstrating that the claimant can perform specific jobs is through the testimony of a vocational expert. See Hall v. Secretary of HEW, 602 F.2d at 1377; O'Banner v. Secretary of HEW, 587 F.2d 321, 323 (6th Cir. 1978); Garrett v. Richardson, 471 F.2d 598, 603-04 (8th Cir. 1972). Although there is no per se rule that a vocational expert be called to testify, Hall v. Secretary of HEW, 602 F.2d at 1377; O'Banner v. Secretary of HEW, 587 F.2d at 323, the ALJ must articulate specific jobs that the claimant is able to perform, and this finding must be supported by substantial evidence, not "mere intuition or conjecture by the administrative law judge." O'Banner v. Secretary of HEW, 587 F.2d at 323. In the case sub judice, the ALJ did not elicit testimony from a vocational expert, nor any other testimony, regarding specific jobs that Mrs. Cowart is able to perform. We hold, therefore, that the ALJ failed to meet his duty of developing a full and fair record. Furthermore, the absence of such testimony indicates that Mrs. Cowart was prejudiced by the lack of counsel, for any able attorney would have insisted that the ALJ produce a vocational expert to testify as to this matter. As this circuit recently observed in Brenem v. Harris, 621 F.2d 688 (5th Cir. 1980), "(t)he very fact that the vocational expert was insufficiently questioned in the interrogatories is ample evidence that (appellant) may have been prejudiced by the lack of counsel." Id. at 690-91. In the case under review, there was not only insufficient questioning of a vocational expert there was no questioning of a vocational expert. This would seem to be more than ample evidence that appellant was prejudiced by the lack of counsel.
29
The ALJ further failed in his duty to develop the record fully because he neither elicited testimony nor made any findings regarding the effect of Mrs. Cowart's prescribed medications upon her ability to work. At the hearing, Mrs. Cowart testified that she was taking the following medications: Diazide, Dilantin, Phenobarbitol, Inderol, Flexeril, Butazolidin-Alka, and Decadron. Mrs. Cowart stated that, as a result of taking these drugs, she was "kind of zonked most of the time." It is conceivable that the side effects of medication could render a claimant disabled or at least contribute to a disability. This fact was recognized by the First Circuit in Figueroa v. Secretary of HEW, 585 F.2d 551 (1st Cir. 1978), and indeed is even recognized by the Secretary's own regulations, 20 C.F.R. Part 404, Subpart P, App. 1, § 11.00 (1981). The following language from Figueroa is directly applicable to the case under review:
30
The present record contains no medical evidence regarding whether appellant's medication was in "unusually large doses" or whether its side effects might conceivably be disabling. While appellant's claim might be exaggerated, a layman is in no position to make any such determination on this record. It would have been appropriate for the administrative law judge to have sought further medical evidence, or to have made some further inquiry, since appellant raised the question. See Thompson v. Califano, 556 F.2d 616, 618 (1st Cir. 1977); Miranda v. Secretary, 514 F.2d 996 (1st Cir. 1975). At very least, the administrative law judge should have made a finding on appellant's claim regarding side effects, making it possible for a reviewing tribunal to know that the claim was not entirely ignored.
31
585 F.2d at 554.
32
We also find the administrative proceedings to be procedurally deficient in one final respect. The ALJ's decision apparently was based in large part on written reports submitted post-hearing by two physicians who examined Mrs. Cowart at the request of the ALJ. "The Secretary's reliance upon such reports ... has been held to invalidate a decision denying benefits where the claimant was afforded no opportunity to subpoena and cross-examine the declarant." Gullo v. Califano, 609 F.2d 649, 650 (2d Cir. 1979) (citing Lonzollo v. Weinberger, 534 F.2d 712 (7th Cir. 1976)). Mrs. Cowart was not given an opportunity to examine or challenge these reports, nor to cross-examine the physicians, prior to the ALJ's decision.2 Therefore, the decision of the ALJ must be invalidated on this ground as well. Regarding this point, we note with approval the following language in Gullo v. Califano, where the Second Circuit was faced with similar facts:
33
The procedures utilized in the case at bar denied the claimant any opportunity to rebut Dr. Miller's report, and, since the hearing judge's substantial reliance upon the Miller report is clear, due process has been denied. Consequently, we view with some alarm the Secretary's confident assertion that "it is not uncommon for the ALJ to receive reports subsequent to the administrative hearing," especially if such unchallenged submissions supply the basis for decision.
34
609 F.2d at 650.
35
For the reasons expressed in this opinion, we hold that Mrs. Cowart was denied a full and fair hearing before the ALJ. Accordingly, the judgment of the district court is reversed and the case is remanded with instructions that it be returned to the Secretary for further proceedings consistent with this opinion.
36
REVERSED and REMANDED.
1
We are aware that the Secretary recently promulgated regulations purporting to take administrative notice of the existence of jobs in the national economy, thereby making it unnecessary for the ALJ to articulate specific jobs that exist and that the claimant is capable of performing. See 20 C.F.R. Part 404, Subpart P, App. 2, §§ 200.00-204.00 (1981). The ALJ applied these regulations in denying Mrs. Cowart's claim. Whether reliance on these regulations is sufficient to meet the Secretary's burden is the subject of disagreement among the courts that have considered the question. Compare, e. g., Maurer v. Harris, 502 F.Supp. 320, 322-24 (D.Or.1980), and Santise v. Harris, 501 F.Supp. 274 (D.N.J.1980), with Ward v. Harris, 515 F.Supp. 859, 867-68 (W.D.Okl.1981), and Simonsen v. Secretary of Health and Human Services, 512 F.Supp. 1064, 1065-66 (S.D.Cal.1981). We have serious doubts whether these regulations standing alone can be used to meet the burden placed on the Secretary once a prima facie case of disability is established by the claimant. We do not reach this issue, however, because the regulations do not apply in cases where, as here, the claimant alleges nonexertional kinds of impairments. 20 C.F.R. Part 404, Subpart P, App. 2, § 200.00(e); Walker v. Harris, 504 F.Supp. 806, 811 (D.Kan.1980); Maurer v. Harris, 502 F.Supp. 320, 323-24 (D.Or.1980); Fields v. Harris, 498 F.Supp. 478, 492 (N.D.Ga.1980); Phillips v. Harris, 488 F.Supp. 1161, 1166 (W.D.Va.1980)
2
In the transcript of the hearing before the ALJ, it is noted that Mrs. Cowart "waived" her right to see this evidence prior to its entry into the record. Although Mrs. Cowart did execute a standard waiver form to this effect, we hold that the asserted waiver was invalid in light of her lack of counsel. The execution of this "waiver" is further evidence that Mrs. Cowart was prejudiced by the lack of counsel, for no able attorney would have agreed to a waiver of the right to examine and challenge such evidence
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676 F.2d 291
28 Fair Empl.Prac.Cas. 785,28 Empl. Prac. Dec. P 32,580Bruce BURKHALTERv.MONTGOMERY WARD AND COMPANY, INC., Appellee,v.Ellen BUCKLEY; Ronald Lewis; Merylon Barnes; Adib Abdullah;Habeeb-Ullah T. Akbar; Jackie Luster; Gary Brooks;James McMullen; James E. Bobo; VerochiaThomas and Ronald L.Sheffield, Appellants.
No. 81-1787.
United States Court of Appeals,Eighth Circuit.
Submitted Jan. 14, 1982.Decided April 2, 1982.
Manuel L. Pruitt, Richard Quiggle, Little Rock, Ark., for appellants.
Jackson, Lewis, Schnitzler & Krupman, Atlanta, Ga., for appellee; Thomas J. Hughes, Jr., Gary R. Kessler, Diane S. Austin, Atlanta, Ga., of counsel.
Before LAY, Chief Judge, STEPHENSON and ARNOLD, Circuit Judges.
STEPHENSON, Circuit Judge.
1
This is an appeal from the district court's1 refusal to allow appellants to intervene in a suit filed by Bruce Burkhalter and settled by him several days prior to appellants' attempted intervention. Appellants sought to intervene as plaintiffs for the purpose of appealing the district court's order striking the class action allegations from the complaint. We hold the district court erred in denying the motion to intervene but affirm the court's action in striking the class action allegations from the complaint.
2
On June 15, 1978, Bruce Burkhalter filed a lawsuit against appellee Montgomery Ward and Company, Inc. complaining of racial discrimination against himself and other black employees. The action was brought pursuant to 42 U.S.C. §§ 1981, 2000e et seq. On August 13, 1979, the district court entered a pre-trial order directing Burkhalter to file his motion for class certification by November 1, 1979. No motion for class certification was filed. On January 10, 1980, the court dismissed the class allegations from the case. More than a month later, Burkhalter filed a motion requesting reconsideration of the dismissal of the class claims which the court denied.
3
Prior to trial, Jewell Brown, Burkhalter's original attorney, advised the court that the case had been settled and the complaint was dismissed with prejudice on March 13, 1980. It later developed that the case had been settled without Burkhalter's consent or knowledge and attorney Brown had kept the proceeds of the settlement.
4
Attorney Brown subsequently admitted to the embezzlement and surrendered his license to practice. Burkhalter did not receive any of the settlement and retained other counsel to proceed with his suit. He moved to have his case reopened under Rule 60(b). On November 5, 1980, the court granted the motion. On February 2, 1981, approximately within ninety days later, Burkhalter moved to have his denial of class certification reconsidered. The court denied this motion.
5
On April 29, 1981, the date set for trial, Burkhalter agreed to settle the case for $2,000. This settlement was announced in open court. Under the terms of the settlement, Burkhalter agreed to dismiss his suit and not to appeal the class action aspects of the suit. The complaint was dismissed with prejudice.
6
Nearly two weeks later, on May 11, appellants in the present case filed a motion to intervene for the purpose of appealing the district court's order striking the class action allegations from the complaint. The district court, in denying the motion, stated:
7
First, it was never necessary for this Court to pursue questions of numerosity, typicality or commonality. The class allegations were stricken from the complaint because of plaintiff's failure to move for class certification within the time allowed by this Court. Certainly this failure was indicative of the plaintiff's ability to be an adequate class representative, as were his actions on the day set for trial.
8
Second, this matter was originally dismissed in March, 1980. None of the applicants sought intervention at that time, so it can hardly be said that they have been relying on the plaintiff to champion their cause. Accordingly, this Court does not believe the applicants' request can be described as timely under the facts of this case.
9
Third, defendant would be unduly prejudiced by intervention at this point in the case. Defendant has already watched one settlement go by the wayside in the interest of justice. To allow intervention would, for all practical purposes, void the benefits of the second settlement as far as defendant is concerned. What incentive would remain for a defendant to ever settle a claim prior to a judgment on the merits if there was always the risk of the case rising from the dead simply because the original complaint contained the apparently magic words "class action"?
10
This Court recognizes that questions of whether issues are moot or subject to appeal are matters for appellate courts. A district court, however, should not be barred from considering such issues in a case such as the present one. As noted earlier, in McDonald (United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977) ) there was a judgment on the merits and the majority of the Court assumed the original plaintiffs could have appealed the denial of class certification. At the time of the settlement in that case the question of liability was answered and the only question remaining was how much the defendant owed the plaintiffs. In the present case, the parties entered into a settlement prior to any judgment on the merits, and in this Court's opinion the settlement mooted all issues and prevents an appeal by the original plaintiff or any putative class member, even if Mr. Burkhalter had not expressly agreed to forego an appeal.
11
In summary, this Court finds that the request is not timely and if granted would result in undue prejudice to the defendant. Accordingly, the motion to intervene is denied.
12
Burkhalter v. Montgomery Ward & Co., 92 F.R.D. 361, 26 Empl.Prac.Dec. (CCH) P 32,076 (E.D.Ark.1981).
13
On appeal, appellants claim the district court erred in denying intervention on the grounds that under United Airlines, Inc. v. McDonald, supra, 432 U.S. at 392-96, 97 S.Ct. at 2468-71, the district court should have allowed intervention even though the motion to intervene was made after Burkhalter had settled the suit and the court had dismissed it. Also, the dismissal was erroneous in view of the unethical conduct of Burkhalter's attorney.
14
Appellee replies that because the settlement of Burkhalter's claims removed his personal stake in the suit, the putative class members had no remaining class interest. Also, it claims that intervention was properly refused because it was not sought on a timely basis, there was no longer a viable cause of action after the entry of an order of dismissal with prejudice, Montgomery Ward would be unfairly prejudiced, and no unusual or compelling circumstances had been shown that would justify the delay.
INTERVENTION
15
The seminal case in the area of intervention is United Airlines, Inc. v. McDonald, supra, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423. In that case, one Romasanta challenged, on the basis of Title VII of the 1964 Civil Rights Act, a rule requiring stewardesses, but not stewards, to remain unmarried as a condition of employment. Romasanta fashioned the suit as a class action on behalf of herself and all other United stewardesses discharged because of the no-marriage rule.
16
The district court ruled that only those stewardesses who had filed charges under either a fair employment statute or United's collective bargaining agreement constituted the class. The court found the class was too small to satisfy the numerosity requirement of Fed.R.Civ.P. 23(a)(1) and granted United's motion to strike the class allegations. However, the court allowed twelve married stewardesses who had protested their discharge to intervene as additional parties plaintiff.
17
The litigation proceeded as a joint suit on behalf of the original parties and the intervenors. The district court found the plaintiffs were entitled to back pay and reinstatement. Upon agreement by the parties as to the amounts to be awarded each plaintiff, the court entered a judgment of dismissal.
18
Upon learning of the judgment and plaintiffs' decision not to appeal the denial of class certification, McDonald, a putative member of the original class action, filed a motion to intervene for purposes of appealing the adverse class determination order. The district court denied the motion and the court of appeals reversed. Romasanta v. United Airlines, Inc., 537 F.2d 915 (7th Cir. 1976), aff'd sub nom, United Airlines, Inc. v. McDonald, supra, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423.
19
The Supreme Court, in affirming the circuit court, said:
20
United can hardly contend that its ability to litigate the issue was unfairly prejudiced simply because an appeal on behalf of putative class members was brought by one of their own, rather than by one of the original named plaintiffs. And it would be circular to argue that an unnamed member of the putative class was not a proper party to appeal, on the ground that her interests had been adversely determined in the trial court. United was put on notice by the filing of the Romasanta complaint of the possibility of classwide liability, and there is no reason why Mrs. McDonald's pursuit of that claim should not be considered timely under the circumstances here presented.
21
* * * The critical inquiry in every such case is whether in view of all the circumstances the intervenor acted promptly after the entry of final judgment. * * * Here, the respondent filed her motion within the time period in which the named plaintiffs could have taken an appeal.
22
United Airlines, Inc. v. McDonald, supra, 432 U.S. at 394-96, 97 S.Ct. at 2470-71 (citations and footnotes omitted). See Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 331-40, 100 S.Ct. 1166, 1170-74, 63 L.Ed.2d 427 (1980); United States Parole Commission v. Geraghty, 445 U.S. 388, 395-408, 100 S.Ct. 1202, 1207-1214, 63 L.Ed.2d 479 (1980).
23
The factual circumstances of the cases were very similar. In McDonald, there was a period of eighteen days between entry of final judgment and the filing of the motion to intervene. In the present case there was a twelve-day delay between the entry of the judgment and the filing of the motion to intervene. After reviewing the facts of the present case, we conclude that the guidelines set forth in McDonald required the district court to allow intervention.
CLASS ACTION STATUS
24
Our holding that the district court erred in not allowing intervention does not dispose of the case. On August 13, 1979, the district court directed Burkhalter to file his motion for certification of the class by November 1, 1979. By January 10, 1980, he had failed to do so. As a result, the court struck the class allegations from the complaint.
25
The district court had the power to establish reasonable times for the filing of documents and if those deadlines were not met, the court had the discretion to dismiss all or part of the suit. The district court's action in striking the class action allegations from the complaint for failure to comply with the court's order fixing a time limit for class certification is reviewed on an abuse of discretion standard. M. S. v. Wermers, 557 F.2d 170, 175 (8th Cir. 1977); Welsh v. Automatic Poultry Feeder Co., 439 F.2d 95, 96-97 (8th Cir. 1971).
26
The district court gave Burkhalter over two months to file his motion for class certification. It waited another two months before it struck the class allegations. We hold that the deadline set and the resulting striking of the class action allegations in the present case were reasonable. We also note that after the case had been reopened, Burkhalter waited nearly ninety days before he filed his motion for reconsideration of the denial of class certification.
27
Because the dismissal of the class allegations was proper, the failure of the district court to allow post-settlement intervention constituted harmless error. Unlike the situation in United Airlines, Inc. v. McDonald, supra, 432 U.S. at 385-96, 97 S.Ct. at 2464-71, there was no otherwise viable class action into which the intervenors could intervene. In McDonald, the Court found a "timely filing of a complaint for classwide relief, providing United with 'the essential information necessary to determine both the subject matter and size of the prospective litigation * * *.' " Id. at 392-93, 97 S.Ct. at 2468-69 (quoting American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974)). In light of Burkhalter's failure to timely file a motion to certify the class, the filing which in McDonald constituted a timely filing of a complaint for classwide relief did not exist in the present case. To allow class action intervention would unduly prejudice Montgomery Ward and would circumvent the power of the district court to establish deadlines and proceed with its docket.
28
Affirmed.
1
The Honorable William R. Overton, United States District Judge for the Eastern District of Arkansas
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170 F.Supp.2d 718 (2001)
Alistair J. MACPHAIL Plaintiff,
v.
OCEANEERING INTERNATIONAL, INC. Defendant.
No. G-01-266.
United States District Court, S.D. Texas, Galveston Division.
October 17, 2001.
*719 *720 Joseph W Walker, Franklin Mosele & Walker, Houston, TX, Gary J Siller, Strasburger & Price LLP, Houston, TX, for Alistair J MacPhail, plaintiff.
James Patrick Cooney, Royston Rayzor et al, Houston, TX, for Oceaneering International, Inc., defendant.
ORDER DENYING OCEANEERING INTERNATIONAL'S RULE 12(b)(3) MOTION TO DISMISS
KENT, District Judge.
Plaintiff Alistair MacPhail ("MacPhail") brings this lawsuit pursuant to the General Maritime Law of the United States of America, the Jones Act, 46 U.S.C.App. § 688, and the state laws of Texas. Plaintiff seeks monetary damages for injuries suffered in the course of his employment as a saturation diver on the dive support vessel OCEAN WINSERTOR, owned and operated by Defendant Oceaneering International, Inc. ("Oceaneering"), a large multi-national corporation headquartered in Houston, Texas. Now before this Court is Defendant's Rule 12(b)(3) Motion to Dismiss pursuant to an Australian Forum Selection Clause contained in a Deed of Release and Discharge ("Release") executed by the Parties on November 3, 1999. For the reasons articulated below, Defendant's Motion is hereby DENIED.
I.
Title 28, United States Code § 1406(a) instructs District Courts to dismiss or transfer a case if venue is improper where filed.[1] A party may move to dismiss an action based on improper venue pursuant to Fed.R.Civ.P. 12(b)(3). The burden of demonstrating that venue is improper and transfer is therefore warranted lies with the movant. See Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir.1966); Texas Marine & Brokerage, Inc. v. Euton, 120 F.Supp.2d 611, 612 (E.D.Tex.2000); Sanders v. Seal Fleet, Inc., 998 F.Supp. 729, 733 (E.D.Tex.1998); Bounty-Full Entm't, Inc. v. Forever Blue Entm't *721 Group, 923 F.Supp. 950, 957-958 (S.D.Tex. 1996).
This Court observes that the Fifth Circuit has not conclusively established that Fed.R.Civ.P. 12(b)(3) is in fact the precise procedural rule governing motions to dismiss based upon the enforcement of forum selection clauses. However, the decision reached by the Fifth Circuit in Mitsui & Co. (USA), Inc. v. MIRA M/V, 111 F.3d 33 (5th Cir.1997), suggests that the Fifth Circuit would indeed adopt such a view. In that case, the District Court characterized its dismissal pursuant to a forum selection clause as a Rule 12(b)(3) motion to dismiss. See Mitsui & Co. (USA), Inc. v. M/V MIRA, No. CIV.A.95-4224, 1996 WL 444193, at *1 (E.D.La. Aug.7, 1996). Although the Fifth Circuit did not address the exact procedural issue upon appeal, the Court fully affirmed the District Court's decision to dismiss the lawsuit. See Mitsui, 111 F.3d at 37.
The Seventh, Ninth and Tenth Circuits agree that a motion to dismiss pursuant to a forum selection clause falls within the purview of Rule 12(b)(3). See e.g., R.A. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996) (concluding that a motion to dismiss premised upon enforcement of forum selection clause is governed by Rule 12(b)(3)); Frietsch v. Refco, Inc., 56 F.3d 825, 830 (7th Cir.1995) (deciding that Rule 12(b)(3) is the proper procedural tool for a motion to dismiss based upon a forum selection clause); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th Cir.1992) (same). On the other hand, the First, Second and Third Circuits endorse different positions. See Salovaara v. Jackson Nat'l Life Co., 246 F.3d 289, 299 (3d Cir.2001) (concluding that Rule 12(b)(6) dismissal is a permissible means for enforcing a forum selection clause); New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24, 28-29 (2d Cir.1997) (remarking that the burden "is analogous to that imposed on a plaintiff to prove that the federal court has subject matter jurisdiction over his suit"); Lambert v. Kysar, 983 F.2d 1110, 1112 n. 1 (1st Cir.1993) (noting that dismissal due to forum selection clause is a Rule 12(b)(6) motion, not a 12(b)(3) motion); Avc Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 152-59 (2d Cir.1984) (permitting dismissal pursuant to Rule 12(b)(1)). Although the Circuit split is evident, this Court concludes that, in light of the Mitsui decision, coupled with persuasive authorities from the Seventh, Ninth and Tenth Circuits, Oceaneering's Motion to Dismiss pursuant to a forum selection clause is properly characterized as a Rule 12(b)(3) motion to dismiss.
II.
Federal law governs this Court's inquiry into the enforceability of a forum selection clause. See Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir.1997). Forum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances." The BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972). "The burden of proving unreasonableness is a heavy one, carried only by a showing that the clause results from fraud or overreaching, that it violates a strong public policy, or that enforcement of the clause deprives plaintiff of his day in court." Mitsui, 111 F.3d at 35 (citing BREMEN, 407 U.S. at 12-13, 15, 18, 92 S.Ct. at 1914-15, 1916, 1917-18), see also Afram Carriers, Inc. v. Moeykens, 145 F.3d 298, 301 (5th Cir. 1998).
III.
In its Motion to Dismiss, Oceaneering argues that this Court may not judge the *722 soundness of the forum selection clause in the Release by the merits of the underlying settlement agreement, because any inquiry into the merits is best left to the forum selected by the parties. As such, Oceaneering insists that the clause automatically warrants a dismissal of this action without further inquiry into the circumstances surrounding this litigation. In response, MacPhail argues that this Court should and must examine the background facts giving rise to this lawsuit, because the relevant circumstances surrounding not the soundness of the forum selected, but the capacity of the Plaintiff to participate in that selection, or indeed in the creation of the entire Release document, preclude a finding that the forum selection clause is valid. Specifically, MacPhail argues that the clause is unenforceable because: (1) Oceaneering procured the Release, including the forum selection clause, through fraud and overreaching; (2) enforcement of the clause would violate public policy; and (3) enforcement of the clause would effectively deprive MacPhail of his day in court. After an exhaustively careful in-depth examination of the affidavits and other materials submitted by both Parties regarding this matter, this Court agrees with MacPhailthe circumstances of this lawsuit are so dire, and the alleged conduct of Oceaneering so egregious, that this Court simply must consider the clause's enforceability in light of the averments presented by MacPhail's affidavits.
The affidavits submitted by MacPhail aver the following set of facts: While working for Oceaneering on May 18, 1998, MacPhail was committed under pressure to saturation diving in the China Sea.[2] Along with three diving partners, MacPhail was "stored" at a depth of approximately 100 feet with a breathing mix of helium and oxygen. During the thirty day period that MacPhail remained in saturation, he and his diving partners undertook approximately fifteen "bell runs" in which they would descend to the bottom in a diving bell, exit the bell for several hours of work and then return to the vessel to await their next run.
As MacPhail entered the diving bell for his second bell run, he observed oil, mud and sludge coating the hoses and the inside of the bell. While on the bottom during the run, MacPhail experienced severe headaches, loss of concentration and decreased coordination. Upon returning to the bell, MacPhail felt disoriented. After the bell was returned to the vessel, MacPhail experienced headaches, loss of appetite, nausea and vomiting. MacPhail promptly and specifically reported his problems to surface management and the deck crew cleaned the interior of the bell.
Throughout the entire remainder of the saturation period, MacPhail continued to experience headaches, nausea, the loss of dental fillings and other severe and immediate medical problems. Although MacPhail repeatedly reported his troubles to management, the dive was not shut down and Oceaneering sent MacPhail on numerous subsequent dives. Later analysis of the seabed showed that the mud contained toxic levels of various metals including arsenic and mercury, cyanide, hydrogen sulfide and polychlorinated biphenyls.
When MacPhail was brought to the surface after thirty days, he was weakened, disoriented and exuding a "disgusting" odor. Clearly, he was in dire need of medical attention. MacPhail was transported first from the vessel to Hong Kong, *723 where he received one day of medical attention, and then to Singapore, for additional treatment.
Upon returning to Australia (his residence at the time), MacPhail visited additional doctors provided by Oceaneering, but his condition continued to worsen. Over the ensuing months, MacPhail suffered sleep loss, depression, pain in his teeth, episodes of intense anger, excruciating headaches, fainting spells and a host of other complications. MacPhail continued to make requests to Oceaneering for experts in hyperbaric medicine and toxicology, but was repeatedly told that Oceaneering was either looking for or unable to locate appropriate specialists. Ultimately (and incomprehensibly), Oceaneering failed to refer MacPhail to even one specialist experienced in diving medicine, chemical poisoning, or hyberbaric medicine.
Oceaneering appointed Cocks Macnish, an Australian law firm, to liaise with MacPhail. Two Oceaneering employees, Overland and Leung, assured MacPhail that the Cocks Macnish lawyers were not adversarial but rather, were appointed to allocate resources and seek out the best medical help available. However, Patricia Saraceni, the Cocks Macnish solicitor handling the case, blithely responded to MacPhail's repeated requests for help by informing him that Oceaneering could not continue to help him and that the situation required closure. Furthermore, Overland and Leung repeatedly telephoned MacPhail, deprecating his problems and offering him a sum of money to "put it all behind us." Later, after Saraceni, Overland and Leung informed MacPhail that there was nothing more medically that could be done, and threatened to cut off future medical and financial assistance. Sick, frightened and intimidated, MacPhail agreed to sign the Release. MacPhail was not represented by counsel at that time.
The Release was prepared by Saraceni and executed in Western Australia on November 3, 1999. In consideration of the Release, MacPhail received $280,000.00, a commitment on the part of Oceaneering to provide MacPhail with additional training courses and an escrow fund in the amount of $25,000.00 to cover future medical expenses. The forum selection clause contained in the Release reads:
In the event of any dispute in respect of or arising from this Deed of Release and Discharge or any matter relating thereto the parties hereby agree to submit their dispute to the exclusive jurisdiction of the District Supreme Court of Western Australia, or to the Federal Court of Australia and the parties hereby agree to submit to the exclusive jurisdiction of the said courts.
The execution of the Release was followed by the entry of a judgment in the District Court of Western Australia, Perth.
By the spring of 2000, MacPhail was a shadow of his former self. Severely depressed and in constant pain, MacPhail found himself unable to work or carry on normal relationships with others. That year, he became aware that one of his similarly situated diving partners had received helpful treatment in the United States from the Van Meter hyperbaric group. MacPhail subsequently traveled to the United States and was treated by the Van Meter specialists for one month, beginning on November 15, 2000. MacPhail was diagnosed with multiple physical abnormalities, including significant brain and nerve damage, all linked to toxic chemical exposure and decompression sickness. Tragically, one Van Meter physician noted that MacPhail's "short, medium and long term prognosis would have been very different had he been immediately treated."
MacPhail later discovered that Oceaneering had never contacted any hyperbaric *724 specialist or expert toxicologist, but rather, relied upon individuals with no diving medical experience to coordinate his treatment, even though Oceaneering actually knew of such specialists and had used them in the past. Furthermore, Oceaneering originally provided Plaintiff with an incomplete chemical analysis of the substances he had been exposed to while diving, even though Oceaneering had possessed the complete analysis. This omission may have substantially impeded his treatment and recovery. In light of these discoveries, MacPhail was moved to file this lawsuit. Oceaneering responded by filing its Motion to Dismiss for improper venue pursuant to the forum selection clause recited above.
IV.
As previously stated, a forum selection clause is unreasonable, and therefore unenforceable, in any of three circumstances: (1) the clause is the result of fraud or overreaching; (2) enforcement of the clause would violate a strong public policy; or (3) enforcement of the clause would deprive the plaintiff of his day in court.
A. Fraud & Overreaching
A forum selection clause is unenforceable for fraud only "if the inclusion of that clause in the contract was the product of fraud or coercion." Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n. 14, 94 S.Ct. 2449, 2456 n. 14, 41 L.Ed.2d 270 (1974). Stated differently, a court may consider a claim that a party was fraudulently induced to include a forum selection clause in an agreement, but may not entertain a claim that the entire agreement was procured by fraud.
The Fifth Circuit's analysis in Afram Carriers, Inc. v. Moeykens, 145 F.3d 298 (5th Cir.1998), illustrates these principles. In that case, Peruvian port authorities had ordered Afram to fumigate its ship. See id. at 300. All crew members were evacuated except for the captain, the chief engineer, and four employees of Servipro, a contract security service. Augustin Panta, a Servipro employee, died from inhalation of the toxic substance used for fumigation. Afram then entered into a settlement agreement, containing a Peruvian forum selection clause, with Panta's wife and children for $2000, in exchange for releasing all claims in Peruvian and United States courts. See id. At the same time, Afram instituted a limitation of liability proceeding under the Limitation of Liability Act, 46 U.S.C. §§ 181-189, in the United States District Court for the Southern District of Texas. See Afram, 145 F.3d at 300. When the Pantas became aware of the proceeding, they moved to intervene. However, the court denied the motion to intervene based on the forum selection clause found in the settlement agreement. See id.
Upon its review of the lower court's decision, the Fifth Circuit found the forum selection clause valid despite extensive evidence of fraud and overreaching.[3] The Court commented that this was evidence of disagreement over the entire settlement, but not over the forum selection clause itself. See id. at 301-02. The Court further noted that while the facts were certainly dire, the settlement offer of $2000, *725 which was made in the weeks following Panta's death and accepted by his family in exchange for waving all claims, was not procured by fraud or duress. See id. at 300. As such, the Court held that even if the forum selection clause was part of an illegally obtained contract, it was impermissible to draw a further inference that the clause itself was obtained via fraud or overreaching. See id. at 301-02.
In light of Afram, this Court has no choice but to reject MacPhail's fraud argument. Although MacPhail, much like the Afram plaintiffs, has presented multiple affidavits suggesting fraud, coercion, and manifest overreaching by Oceaneering, none of these averments support a finding that MacPhail was induced to include the forum selection clause itself in the Release. Ultimately, MacPhail's challenge is not separate and distinct from his challenge to the entire agreement. As such, this Court must decline to set aside the clause on the basis of fraud or overreaching by Oceaneering.
B. Public Policy
In Afram, after rejecting the plaintiffs' fraud argument, the Fifth Circuit turned to a discussion of public policy. See id. at 302. Noting that a forum selection clause is potentially unreasonable when it undermines a strong public policy of the forum, the Court undertook a determination of whether the equitable resolution afforded by the Limitation Act was a "strong" public policy that justified overcoming the forum selection clause at issue. See id. In doing so, the Court considered the two goals of the Limitation Act the goal of subsidizing shipowners and promoting settlement, and the goal of equitable resolution. See id. Ultimately, the Court concluded that "[g]iven these two competing policy concerns, it is hard to say that equitable resolution is a `strong' public policy contravening the enforcement of a forum selection clause. The more fundamental policy underlying the Limitation Act-providing subsidization to the shipping industry-seems to diminish the strength of the equitable resolution principle, and, as a result, to prevent it from overcoming the presumption in favor of the forum selection clause's enforceability." Id. at 303. Thus, the Fifth Circuit rejected the Pantas' claim that the Peruvian forum selection clause was unenforceable as a violation of public policy. See id.
However, this lawsuit is markedly different from Afram. MacPhail's lawsuit, unlike Afram, is not a Limitation Act proceeding, but rather, a tort suit brought by an injured seaman. The competing policies behind the Limitation Act-equitable resolution and the protection of shipowners-are not implicated at all in the present action. Thus, the public policy analysis undertaken by the Fifth Circuit in Afram is not directly instructive to the present lawsuit. Instead, the analysis required in the instant action invokes the policy underlying the General Maritime Law and the Jones Act. Specifically, this Court must determine whether the long-standing public policy of affording seaman, as wards of the Admiralty court, special protection from the hazards of life at sea justifies overcoming the forum selection clause in the Release.
A strong policy favoring the protection of seaman is deeply entrenched in our legal system. In Castillo v. Spiliada Mar. Corp., 937 F.2d 240 (5th Cir.1991), the Fifth Circuit affirmed this policy, declaring that "[s]eaman, as wards of the court, are entitled to a careful review when a district court refuses to exercise jurisdiction over their claims. We are convinced that federal courts must remain vigilant in protecting the rights of seaman, whether foreign or domestic, in their relations with *726 their employer." Id. at 247. This Court elaborated upon this perennial notion in Sabocuhan v. Geco-Prakla, 78 F.Supp.2d 603 (S.D.Tex.1999), stating: "These seaman often labor aboard dilapidated vessels in deplorably dangerous working conditions, and yet at considerable risk to life and limb they assist in bringing products to this country which inure to the benefit of all United States citizens. Denying an injured seaman a forum is utterly contrary to the beneficent attitude towards seamen that has for centuries characterized the Admiralty courts of the English speaking world." Id. at 606.
As a saturation diver, MacPhail was engaged in a highly dangerous profession that required him to remain underwater for long periods of time. He bravely faced the perils of the sea while furthering Oceaneering's interests in far-away waters, and was tragically and permanently injured as a result. Affidavits submitted by MacPhail establish that he was told by Oceaneering agents that if he did not sign the Release, medical and financial assistance from Oceaneering, the corporation he had risked his life for, would cease. Not knowing whether his condition was going to worsen or improve. MacPhail understandably feared he couldn't risk losing future medical assistance. Therefore, while racked with pain, haunted by depression and unrepresented by counsel, MacPhail reluctantly agreed to enter into an agreement he simply lacked the capacity to fully evaluate. These averments establish that MacPhail unquestionably falls within the group of plaintiffs that our venerable and strong public policy favoring the rights of seamen was fashioned to protect. To deny MacPhail an opportunity to litigate his claims in this forum by enforcing the unreasonable forum selection clause in the Release would eviscerate the fundamental notion that the rights of seaman are worthy of special protection by the Admiralty courts.[4]
C. A Meaningful Day in Court
A forum selection clause is unreasonable if "trial in the chosen forum would be so difficult and inconvenient that the party would effectively be denied a meaningful day in court." See Argueta, 87 F.3d at 325. MacPhail's affidavits aver that MacPhail is unable to pursue a remedy in relation to his injuries either in the Federal Courts of Australia or in the Western Australian Courts because (1) the Release was not concluded in Australia and has no connection to Australia; (2) Oceaneering has no legal presence in Australia; (3) the only connection between Oceaneering and Australia is that Oceaneering is a shareholder in Oceaneering Australia Pty Ltd., a separate legal entity which has no connection with MacPhail's injuries; (4) MacPhail is not a citizen of Australia; (5) the acts and circumstances giving rise to the injuries took place outside the jurisdiction of the Australian courts; and (6) there is no indication that it was the common intention of the Parties that the Release would be governed by Australian law. If MacPhail attempted to commence proceedings in Australia, it appears clearly to this Court that those proceedings *727 would either be dismissed for lack of jurisdiction or, in the alternative, stayed and transferred to another forum. Id. at 5. In light of these averments, a real possibility exists that MacPhail will be unable to secure his rights in an Australian forum. Oceaneering has offered no evidence to the contrary.[5] As such, it would be unjust and unreasonable for this Court to decline jurisdiction over this case in favor of a forum selection clause choosing an implausible and unworkable forum.
In sum, this Court finds the forum selection clause at issue unreasonable and therefore unenforceable because its enforcement would violate a strong public policy and because Plaintiff would thereby be deprived of his day in court. To find such a clause valid and enforceable in the precise facts of this case would amount to an unmistakable violation of our strong public policy protecting the rights of seamen as wards of the American admiralty courts, and furthermore, would effectively deprive MacPhail of his rightful day in a court of proper jurisdiction. As such, Oceaneering's Motion to Dismiss is hereby DENIED.
IT IS SO ORDERED.
NOTES
[1] Section 1406(a) reads as follows: "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any division in which it could have been brought." 28 U.S.C. § 1406(a).
[2] Saturation diving requires a diver to spend extended periods of time under pressure before resurfacing.
[3] The Pantas presented evidence that the forum selection clause was obtained by fraud, including evidence that Afram told the Pantas that they could not sue the ship because the shipowner was American, that Afram failed to notify them of the Limitation of Liability proceeding and that they would have filed claims in the limitation proceeding but for the misrepresentations and failures to disclose. See Afram Carriers, Inc. v. Moeykens, 145 F.3d 298, 302 n. 3 (5th Cir.1998).
[4] In Sabocuhan, this Court reluctantly held the forum selection clause at issue enforceable, even though to do so appeared contrary to public policy, because the Court was bound to do so by the Fifth Circuit's decision in Marinechance Shipping Ltd. v. Sebastian, 143 F.3d 216 (5th Cir.1998). Sabocuhan and Marinechance both involved forum selection clauses in employment contracts incorporating the Migrant Workers' and Overseas Filipinos' Act of 1995. However, while the opinion in Marinechance was squarely on point in Sabocuhan, the Marinechance decision is distinguishable from the facts of the instant action, which involves a forum selection clause in the context of a settlement agreement.
[5] The Court notes that in its Motion to Dismiss, both parties stipulated to jurisdiction in an Australian forum. However, MacPhail does not aver that an Australian Court would dismiss MacPhail's suit based upon a lack of personal jurisdiction. Rather, MacPhail avers that an Australian Court would dismiss the lawsuit based upon a lack of subject matter jurisdiction over the substance his claims. Thus, Oceaneering's submission to jurisdiction in Australia will not cure the potential jurisdictional obstacles that MacPhail faces in Australia. It is axiomatic that agreement of the Parties is not enough to sustain jurisdiction. MacPhail must be able to invoke Australian jurisdiction as a matter of law, which to this Court appears impossible.
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51 F.3d 1044
U.S.v.Nunn**
NO. 94-50571
United States Court of Appeals,Fifth Circuit.
Mar 23, 1995
Appeal From: W.D.Tex., No. W-91-CR-038
1
AFFIRMED.
**
Conference Calendar
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NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-3014
EDWARD P. MENDIOLA,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
Edward P. Mendiola, of San Antonio, Texas, pro se.
Tara J. Kilfoyle, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for respondent. With her on
the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Martin F. Hockey, Assistant Director.
Appealed from: Merit Systems Protection Board
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-3014
EDWARD P. MENDIOLA,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
Petition for review of the Merit Systems Protection Board in DA831E070110-I-1.
___________________________
DECIDED: June 24, 2008
___________________________
Before NEWMAN and GAJARSA, Circuit Judges, and WARD, District Judge. ∗
PER CURIAM.
Petitioner Edward P. Mendiola, appearing pro se, appeals the final order of the Merit
Systems Protection Board (MSPB) affirming the Office of Personnel Management’s (OPM)
dismissal of his application for disability retirement under the Civil Service Retirement
System (CSRS) as untimely. 1 We affirm.
∗ Honorable T. John Ward, United States District Court for the Eastern
District of Texas, sitting by designation.
1
Mendiola v. OPM, Docket No. DA-831E-07-0110-I-1 (M.S.P.B. Aug. 9, 2007).
BACKGROUND
Mr. Mendiola served as a machine tool operator at Kelly Air Force Base in San
Antonio until he was separated from service on September 11, 1999. He filed an
application for CSRS disability retirement in June 2005; OPM responded that 5 U.S.C.
§8337(b) requires that applications for CSRS disability retirement be filed with OPM before
separation from service or within one year thereafter, with that requirement waived only
when the former employee was mentally incompetent within one year after separation. The
OPM letter stated that Mr. Mendiola’s application was untimely and requested that he
submit evidence relevant to any competency determination. Mr. Mendiola submitted
affidavits from his wife and a friend stating that he began suffering from various medical
conditions and had undergone several surgeries after his separation. The OPM dismissed
the application as untimely, stating that the documentation Mr. Mendiola provided was
insufficient to show that he was unable to file his application within the one-year limit. Mr.
Mendiola requested reconsideration, and OPM, affirming its dismissal, stated that Mr.
Mendiola had submitted additional medical documentation of his medical conditions, but
that none of the evidence suggested that his medical conditions would have rendered him
mentally incompetent within a year of his separation from service.
Mr. Mendiola appealed to the MSPB. He stated that he was unaware of the time
limit and that he had waited to apply for disability retirement because he had hoped to
return to work, and that “[e]ven though there was a time limitation and I may not be able to
say I was mentally incompetent, there was a lot of stress and depression on my part from
not having a job and under one surgery after another.” He also submitted letters from two
doctors, Dr. Robert Ramirez and Dr. Sanjay Misra, who described his medical treatments
2008-3014 2
and commented on his mental state. Dr. Ramirez, who began treating Mr. Mendiola on
September 30, 2003, stated that Mr. Mendiola’s medical history reflected that he suffered
from “severe depression and stress” after he was laid off in 1999 and 2000, and that “it is
not unreasonable to infer that he had at least some degree of mental incompetence during
that time.” Dr. Misra stated that he had treated Mr. Mendiola since 1999 for shoulder
problems and cubital tunnel syndrome and that Mr. Mendiola was depressed about his job
status and had taken muscle relaxants “which might alter his mentation.”
An MSPB administrative judge (AJ) conducted a hearing on January 25, 2007, at
which Mr. Mendiola’s wife testified that he was depressed and under stress and that he was
unaware of the time limit for disability filing. A friend testified that Mr. Mendiola’s health had
been deteriorating and that some consideration should be given to his lack of knowledge of
the filing time requirements. Mr. Mendiola testified to the surgeries he had undergone and
to his medical conditions, and reiterated his lack of awareness of the deadline for filing the
application, particularly in view of his expectation that he would return to work. On
February 14, 2007 the AJ issued an initial decision, finding that Mr. Mendiola had not
established by preponderant evidence that he was mentally incompetent at the time of his
separation or within one year thereafter, and therefore affirming the OPM decision.
Mr. Mendiola petitioned the full Board for review of the initial decision, but the Board
denied his petition, rendering the initial decision final on August 9, 2007. He appealed to
this court pursuant to 28 U.S.C. §1295(a)(9).
DISCUSSION
The scope of this court’s review of MSPB decisions is limited. The decision must be
affirmed unless it is (1) arbitrary, capricious, an abuse of discretion, or otherwise not in
2008-3014 3
accordance with law; (2) obtained without procedures required by law, rule, or regulation
having been followed; or (3) unsupported by substantial evidence. 5 U.S.C. §7703(c); see,
e.g.,Cheeseman v. OPM, 791 F.2d 138, 140 (Fed. Cir. 1986). Concerning the time for filing
a disability retirement application, 5 U.S.C. §8337 (b) provides:
A claim may be allowed under this section only if the application is filed with
the Office before the employee or Member is separated from the service or
within 1 year thereafter. This time limitation may be waived by the Office for
an employee or Member who at the date of separation from service or within
1 year thereafter is mentally incompetent, if the application is filed with the
Office within 1 year from the date of restoration of the employee or Member
to competency or the appointment of a fiduciary, whichever is earlier.
MSPB determinations as to the timeliness of an application under this statute are reviewed
under the above standard. McLaughlin v. OPM, 353 F.3d 1363, 1367-68 (Fed. Cir. 2004)
(discussing further limitations on appellate review of CSRS disability retirement cases
imposed by 5 U.S.C. §8347 and Lindahl v. OPM, 470 U.S. 768, 791 (1985) but explaining
that our review of timely filing is not affected by these limitations).
The MSPB reviewed Mr. Mendiola’s evidence, and particularly mentioned Dr.
Rodriguez’s statement that Mr. Mendiola suffered “severe depression” during the relevant
time period and that “it is not unreasonable to infer that he had at least some degree of
mental incompetence during that time.” The MSPB found this statement insufficient both
because it was not a conclusive opinion of incompetence and because Dr. Ramirez was not
treating Mr. Mendiola during the year following his separation. Similarly, the MSPB
observed that Dr. Misra never stated the opinion or belief that Mr. Mendiola was
incompetent. The MSPB found more compelling Mr. Mendiola’s own statement that “I
might not be able to say I was mentally incompetent.” The MSPB further found the
evidence relating to Mr. Mendiola’s physical condition, and his lack of knowledge of
2008-3014 4
§8337(b), provided no support for his delay.
Mr. Mendiola argues that the MSPB erred by failing to take into account his physical
disability and his lack of knowledge of the one-year filing deadline for disability retirement
claims. He does not argue that the MSPB applied the wrong legal standard; rather, he
challenges the fairness of rigid application of the standard to his case, in light of his
physical impairments and lack of knowledge. Mr. Mendiola also argues that the MSPB
failed to consider that his doctors consider him totally disabled and have not “released” him
from treatment. On this appeal Mr. Mendiola filed additional medical records, including a
report from Dr. Anna Gonzaba who tested Mr. Mendiola for carpal tunnel syndrome, and an
additional letter from Dr. Ramirez stating his belief that Mr. Mendiola has a permanent
disability.
No legal error has been shown in the MSPB’s interpretation of 5 U.S.C. §8337(b),
which provides that the one-year filing period for filing disability applications is extendable
only if the applicant was or became mentally incompetent during that period. As applied to
late filing under §8337(b), “mentally incompetent” means that the applicant had “no more
than some minimal capacity to manage his own affairs.” French v. OPM, 810 F.2d 1118,
1119 (Fed. Cir. 1987). The applicant must establish mental incompetence by preponderant
evidence. See 5 C.F.R. §1201.56(a).
The MSPB did not err in holding that lack of knowledge of the law, and the evidence
of Mr. Mendiola’s medical conditions, did not establish “mental incompetence” for the
purpose of excusing the one-year deadline imposed by 5 U.S.C. §8337(b). The new
evidence Mr. Mendiola submitted with this appeal only goes to his physical condition, and
provides no additional support for showing mental incompetence during the relevant time
2008-3014 5
period. This court does not have authority to depart from the statutory mandate.
The MSPB conclusion that Mr. Mendiola did not meet the requirements of the statute
is supported by substantial evidence, and must be sustained.
No costs.
2008-3014 6
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Case: 15-40580 Document: 00513344286 Page: 1 Date Filed: 01/15/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-40580
Summary Calendar
United States Court of Appeals
Fifth Circuit
FILED
January 15, 2016
UNITED STATES OF AMERICA,
Lyle W. Cayce
Clerk
Plaintiff-Appellee
v.
CAROL CHERI THOMAS,
Defendant-Appellant
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 4:12-CR-141
Before SMITH, BENAVIDES and HAYNES, Circuit Judges.
PER CURIAM: *
Carol Thomas appeals from her sentence following her guilty plea
conviction on three counts of mail fraud. The district court sentenced Thomas
to 57 months of imprisonment based, in part, upon a two level adjustment for
obstruction of justice pursuant to U.S.S.G. § 3C1.1. She argues on appeal that
the district court erred in making the § 3C1.1 adjustment because she made
statements in a verified objection to her presentencing report that prove that
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-40580 Document: 00513344286 Page: 2 Date Filed: 01/15/2016
No. 15-40580
she did not “willfully” take any actions to obstruct or impede the
administration of justice. According to Thomas, because the Government
failed to submit any evidence to rebut the statements in her verified objection,
the district court erred in making the adjustment.
This court reviews “the district court’s legal interpretation of the
Sentencing Guidelines de novo and factual findings for clear error.” United
States v. Brooks, 681 F.3d 678, 712 (5th Cir. 2012). A factual finding is clearly
erroneous if it is implausible in light of the record as a whole. See United States
v. Huerta, 182 F.3d 361, 364 (5th Cir. 1999). “When making factual findings
for sentencing purposes, a district court may consider any information which
bears sufficient indicia of reliability to support its probable accuracy.” United
States v. Zuniga, 720 F.3d 587, 590 (5th Cir. 2013) (internal quotation marks
and citation omitted); § 6A1.3 (court may consider “relevant information
without regard to its admissibility under the rules of evidence applicable at
trial”).
Generally, “a PSR bears sufficient indicia of reliability, such that a
sentencing judge may consider it as evidence in making the factual
determinations required by the Sentencing Guidelines.” Huerta, 182 F.3d at
364. A district court, therefore, may adopt the facts contained in a PSR
“without further inquiry if those facts have an adequate evidentiary basis with
sufficient indicia of reliability and the defendant does not present rebuttal
evidence or otherwise demonstrate that the information in the PSR is
unreliable.” United States v. Harris, 702 F.3d 226, 230 (5th Cir. 2012) (internal
quotation marks and citation omitted). Facts in a PSR that do have an
adequate evidentiary basis can only be refuted by the defendant with “rebuttal
evidence demonstrating that those facts are ‘materially untrue, inaccurate or
unreliable.’” Harris, 702 F.3d at 230 (quoting Huerta, 182 F.3d at 364). A
2
Case: 15-40580 Document: 00513344286 Page: 3 Date Filed: 01/15/2016
No. 15-40580
defendant’s “[m]ere objections do not suffice as competent rebuttal evidence.”
United States v. Parker, 133 F.3d 322, 329 (5th Cir. 1998) (citing United States
v. Puig-Infante, 19 F.3d 929, 943 (5th Cir. 1994)).
In making a § 3C1.1 upward adjustment to Thomas’s sentence, the
district court relied upon the findings contained in her presentencing report.
Those findings had an “adequate evidentiary basis with sufficient indicia of
reliability,” Harris, 702 F.3d at 230, based upon the statements made by the
Government at Thomas’s sentencing hearing. Although Thomas’s sworn
objection contained statements which refuted the findings of the presentencing
report, Thomas did not testify at the sentencing hearing and she otherwise
offered no evidence in support of her objections. Because Thomas failed to
refute the facts in her presentencing report with evidence demonstrating that
those facts are “materially untrue, inaccurate or unreliable,” Huerta, 182 F.3d
at 364, Thomas cannot establish that the district court’s findings are clearly
erroneous or implausible in light of the record as a whole. Accordingly, the
district court’s assessment of a two-level upward adjustment on the basis of
§ 3C1.1 and corresponding refusal to make any downward adjustment based
on § 3E1.1 were proper.
The judgment of the district court is AFFIRMED.
3
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T.C. Summary Opinion 2003-25
UNITED STATES TAX COURT
ROBERT J. HARTZ & SHARI L. HARTZ, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
ROBERT J. HARTZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 2730-01S, 2731-01S. Filed March 24, 2003.
Georg Jensen, for petitioners.
Robert A. Varra, for respondent.
DINAN, Special Trial Judge: These consolidated cases were
heard pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petitions were filed. The
decisions to be entered are not reviewable by any other court,
and this opinion should not be cited as authority. Unless
otherwise indicated, subsequent section references are to the
- 2 -
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
Respondent determined the following deficiencies in
petitioners’ Federal income taxes, addition to tax, and penalty,
for the respective taxable years:
Sec. 6651(a)(1) Sec. 6662(a)
Docket No. Year Deficiency Addition to tax Penalty
2731-01S 1995 $2,259 $508 -0-
2730-01S 1996 24,448 -0- $4,890
2730-01S 1997 4,080 -0- -0-
Unless otherwise indicated, references to petitioner with respect
to any taxable year, and any references to petitioners with
respect to 1995, are references solely to petitioner Robert J.
Hartz.
The issues for decision are: (1) Whether petitioners
received unreported income in 1995 and 1996; (2) whether
petitioners are entitled to certain disallowed business expense
deductions in each year in issue, and to an additional deduction
for interest expense in 1995; (3) whether petitioners are
entitled to deduct a loss on the disposition of purported
business property in 1997; (4) whether petitioner is liable for
the section 6651(a)(1) addition to tax for failure to file timely
his Federal income tax return in 1995; and (5) whether
- 3 -
petitioners are liable for the section 6662(a) accuracy-related
penalty for 1996.1
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Hillsdale, Wyoming, on the date the petitions were filed in these
cases.
During the years in issue, petitioner was engaged in the
business of installing bleachers as a sole proprietor.
Petitioner filed an individual Federal income tax return for
taxable year 1995. Petitioners were married in 1996 and filed
joint Federal income tax returns in 1996 and 1997.
Unreported Income
With respect to petitioner’s sole proprietorship,
petitioners reported business gross income of $140,559 in 1995
and $189,159 in 1996. Respondent determined that there was
unreported business income of $13,153 in 1995 and $38,641 in
1996. The notices of deficiency include no details concerning
the source of the unreported business income. Respondent also
1
Petitioners generally do not dispute, and we do not
address, those adjustments by respondent which favor petitioners.
Although the parties addressed at trial the meal and
entertainment expense deductions, the adjustments with respect
thereto are in petitioners’ favor and need not be addressed here.
Adjustments to self-employment income taxes and deductions
therefor in each year in issue, and to the earned income credit
in 1996, are computational and will be resolved by the Court’s
holding on the issues in these cases.
- 4 -
determined that petitioner Shari L. Hartz received unreported
wage income of $13,595 in 1996.
Gross income generally includes all income from whatever
source derived, including compensation for services and gross
income derived from business. Sec. 61(a)(1) and (2).
In his trial memorandum, respondent argues as follows with
respect to the unreported income:
Gross receipts of $140,559 were reported for the year
1995 for Hartz Bleachers. Forms 1099-MISC totaling $153,712
were issued to Hartz Bleachers for the year 1995.
Respondent determined that the amount reported on the Forms
1099-MISC accurately reflected gross income for Hartz
Bleachers for * * * 1995.
Gross receipts of [$189,159] were reported for the year
1996 for Hartz Bleachers. Forms 1099-MISC totaling $187,809
were issued to Hartz Bleachers for the year 1996. Books
kept for Hartz Bleachers reported receipts of $227,800.
Bank deposits into accounts held by petitioners and Hartz
Bleachers for the year 1996 totaled $239,234. Respondent
determined that the correct amount of income was [$227,800],
as shown on petitioners’ books and records.
* * * * * * *
For the year 1996, [$13,595] of the amount allowed by
respondent as a deduction for compensation [see discussion
infra] was for amounts Hartz Bleachers paid to petitioner
Shari L. Hartz. Respondent also determined that this amount
should be reported as income by Shari L. Hartz for * * *
1996.
No party presented reliable evidence concerning the correct
amount of wage and business income in 1995 and 1996. Although
petitioner testified briefly concerning the business income, the
extent of his testimony was that he relied upon the Forms 1099 in
calculating the total amount of income in each year. The Forms
- 5 -
1099 were not introduced into evidence by petitioners or
respondent, but the amounts reflected on these forms for 1995
were stipulated by the parties.
Because petitioners have not introduced any credible
evidence regarding the amount of unreported income determined by
respondent, petitioners ultimately bear the burden of proof with
respect to this issue. Sec. 7491(a)(1);2 Rule 142(a); Ruidoso
Racing Association, Inc. v. Commissioner, 476 F.2d 502, 507-508
(10th Cir. 1973), affg. in part and remanding in part T.C. Memo.
1971-194 (“With regard to unreported income, the taxpayer must
prove that the determination is arbitrary or erroneous, and if it
does so the Commissioner must satisfy the court as to the
existence and amount of unreported income.”). The nature of the
business activity giving rise to respondent’s determination of
unreported income is not in dispute: Both the unreported
business income and the unreported wage income are connected to
petitioner’s undisputed sole proprietorship. Petitioners have
presented no evidence refuting respondent’s determination or
otherwise tending to show it to be arbitrary or erroneous. We
find that petitioners have failed to meet their burden and,
2
Respondent asserts that the “audit in this case began on
April 3, 1998, so the provisions of I.R.C. sec. 7491 do not
apply.” Because sec. 7491 does not alter the outcome, however,
we need not decide whether its provisions are inapplicable in one
or both of these cases.
- 6 -
subject to a concession by respondent,3 sustain respondent’s
determination with respect to the 1995 and 1996 unreported
income.
Business Expense Deductions
With respect to petitioner’s sole proprietorship,
petitioners claimed the following deductions and respondent
disallowed the respective portions thereof:
1995 1996 1997
Claimed Disallowed Claimed Disallowed Claimed Disallowed
Travel $6,591 $959 $26,811 $2,420
Legal fees 5,675 5,765 $21,240 $21,240
Depreciation 16,604 2,420 23,420 2,256
Car and truck 6,116 3,054 17,615 6,627 24,267 4,853
Rent 4,569 2,188
Contract labor/wages 75,662 11,266
While a taxpayer generally may deduct expenses incurred in
conducting a trade or business, a taxpayer may not deduct
personal, family, or living expenses. Secs. 162(a), 262(a).
Moreover, a taxpayer generally must keep records sufficient to
establish the amounts of the items reported on his Federal income
tax return. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.
In the event that a taxpayer establishes that a deductible
expense has been paid but is unable to substantiate the precise
amount, we generally may estimate the amount of the deductible
expense bearing heavily against the taxpayer whose inexactitude
in substantiating the amount of the expense is of his own making.
3
Respondent concedes in the parties’ stipulation that the
correct amount of business gross income in 1995 is $152,012. We
accordingly find that petitioner had unreported business income
of $11,453 in that year.
- 7 -
Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). We
cannot estimate a deductible expense, however, unless the
taxpayer presents evidence sufficient to provide some basis upon
which an estimate may be made. Vanicek v. Commissioner, 85 T.C.
731, 743 (1985). Furthermore, section 274(d) supersedes the
Cohan doctrine and prohibits estimating certain expenses.
Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. 412 F.2d
201 (2d Cir. 1969). That section provides that, unless the
taxpayer complies with certain strict substantiation rules, no
deduction is allowable (1) for travel expenses, (2) for
entertainment expenses, (3) for expenses for gifts, or (4) with
respect to listed property. Listed property includes passenger
automobiles and other property used as a means of transportation.
Sec. 280F(d)(4). To meet the strict substantiation requirements,
the taxpayer must substantiate the amount, time, place, and
business purpose of the expenses. Sec. 274(d); sec. 1.274-5T,
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
With respect to the travel expenses, petitioners provided a
summary document prepared in 1996 or 1997 listing various
destinations and lengths of stay during 1995. This document was
not prepared contemporaneously with the travel and does not meet
the section 274(d) requirement that business purpose be
documented.
With respect to the legal fees, petitioners provided a
summary document from the office of petitioners’ counsel
- 8 -
reflecting payments by petitioners of $1,500 during 1996. The
parties stipulated that in 1996 petitioners paid their counsel
$2,175 and paid various other legal expenses of $822. However,
there is little evidence that these expenses were related to
petitioner’s business. To the contrary, the office records and
petitioner’s testimony indicate that the legal work was primarily
related to the matter involving the Winnebago, discussed infra,
and was therefore personal in nature and nondeductible under
section 262(a). Petitioner testified that a portion of the legal
expenses was incurred for obtaining advice on whether filing for
bankruptcy was necessary in order to continue his business
activity. Certain bankruptcy-related legal expenses incurred in
connection with a business activity may be deductible as business
expenses. See, e.g., Tarakci v. Commissioner, T.C. Memo. 2000-
358. However, petitioners have not shown that any amount of the
legal expenses they incurred was connected with petitioner’s
business. Although a record for a $75 billing refers to a matter
involving “ch 13”, presumably a reference to a chapter 13
bankruptcy proceeding, this amount was also billed as legal work
for the personal Winnebago lawsuit; nothing indicates that there
was any connection to petitioner’s sole proprietorship.
With respect to depreciation, the only evidence presented by
petitioners was a copy of the supporting schedule which had been
- 9 -
attached to the 1997 return and which summarized the various
items claimed thereon as section 179 expenses and depreciation.
These items were a 1994 Dodge truck, 1992 Dodge truck, van, file
cabinet, computer cabinet, fax machine, van engine, and cargo
trailer, and tools. No supporting documentation was provided
showing when these items were purchased, what their cost or other
basis was, or how the items were used in petitioner’s business.
At trial, petitioner failed to provide any testimony regarding
these or other substantiating details.
With respect to the car and truck expenses, petitioner
testified that the vehicles for which he claimed the deductions
were used solely for business purposes, and that he had other
vehicles which he used for personal purposes. He also partially
relied upon the same reconstructed travel summary discussed
supra. However, petitioner provided no substantiation of the
amounts, times, places, and business purposes of the car and
truck expenses as required by section 274(d), such as a
contemporaneous mileage log.
At trial, petitioners did not address specifically, and did
not provide substantiation for, the disallowed rent expense
deduction for 1996.
Petitioners briefly addressed the adjustments made to the
contract labor expense deductions in each year in issue. A
- 10 -
dispute exists between the parties concerning whether the expense
is properly characterized as contract labor expense or wage
expense subject to employment taxes. Although petitioners raised
this as an issue in their petitions to this Court, the parties
stipulated that respondent had not issued a notice of
determination concerning this issue and that it is not currently
before this Court. See sec. 7436. As such, only the amounts
paid to the individuals in 1996--not the characterization of the
payments--is at issue. The amount of the payments was not
addressed at trial, however, and nothing was produced to
substantiate any such payments in excess of what respondent
determined had been made.
Petitioners have failed to substantiate any of the above
alleged expenses as business expenses deductible under section
162(a). Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. We
therefore sustain respondent’s disallowance of the deductions
therefor.
Finally, petitioner argues that he is entitled to an
additional deduction which he claimed on an amended return form
which he filed for 1995. Petitioner intended to use an amended
return to make a variety of changes to amounts of income and
deductions reported on the original 1995 return. These changes,
resulting in a reduction of petitioner’s reported adjusted gross
income from $80,867 to $11,582, were not accepted by respondent
- 11 -
and are not reflected in the notice of deficiency. The only item
appearing on the amended return form which petitioner chose to
pursue at trial was a claim for an additional deduction for
business interest expense of $1,487. Petitioner testified that
the expense was incurred in connection with vehicles used for
business purposes. Petitioner, however, provided no reliable
substantiation that he incurred this expense in this amount or
that the expense had a business purpose. Consequently,
petitioner is not entitled to an additional business expense
deduction for 1995. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax
Regs.
Loss on Disposition of Business Property
On October 10, 1995, petitioner and Jeanie L. Melson (Ms.
Melson) jointly entered into an installment contract to purchase
a 1995 Winnebago. The contract indicated that the Winnebago was
to be used primarily for personal, family, or household use. The
purchase price of the Winnebago was $65,613. After applying a
downpayment and incurring various costs and fees, the total
principal amount financed under the contract was $62,848.
Approximately 10 to 15 days after its purchase, Ms. Melson took
the Winnebago from petitioner’s possession. The bank which
financed the purchase of the Winnebago sued petitioner for
amounts due with respect thereto in 1996 and repossessed the
vehicle from Ms. Melson in 1997. Petitioners claimed a deduction
- 12 -
in 1997 for a loss of $5,245 on the disposition of the Winnebago.
Respondent disallowed this deduction in full.
Taxpayers generally are entitled to deduct from gross income
certain losses sustained during the taxable year. Sec. 165(a).
However, individual taxpayers may not deduct a loss unless the
loss was incurred in a trade or business or another activity
entered into for profit, or the loss arose from a casualty or
from theft. Sec. 165(c).
Petitioner testified that he purchased the Winnebago solely
for business purposes. Petitioner also testified that, in the 10
to 15 days in which he had access to the vehicle, he used it for
one business trip and had transferred all of his business files
into a filing cabinet located in it, causing him to lose the
files when the Winnebago was taken by its co-owner. We do not
accept petitioner’s testimony that the Winnebago was to be used
solely for business purposes. The contract indicated that the
Winnebago was for personal use and the Winnebago was financed
jointly with Ms. Melson, who subsequently took possession of it
solely for her own purposes. Furthermore, petitioner did not
indicate how the Winnebago would have been used in his business.
We find that the use of this vehicle was personal in nature and
not connected with petitioner’s business. Thus, any losses
related thereto are not deductible as a business loss. Sec.
165(c)(1). Petitioners have not argued that any loss relating to
- 13 -
the Winnebago was the result of theft, so we need not address any
issues of amount or timing. See sec. 165(c)(3), (e), (h).
Section 6651(a)(1) Addition to Tax
Petitioner’s individual Federal income tax return for
taxable year 1995 was dated September 12, 1997, postmarked
September 13, 1997, and received by the Internal Revenue Service
on September 19, 1997. The return showed a tax liability of
$28,240 and stated that no payments had been made to satisfy that
liability. Respondent determined that petitioner is liable for
an addition to tax under section 6651(a)(1) for 1995 for failure
to file a return by the prescribed date.
Section 6651(a)(1) imposes an addition to tax equal to 5
percent of the amount required to be shown as tax on a return for
each month or fraction thereof past the prescribed due date in
which the return is not filed, not to exceed a total of 25
percent. Generally, the amount of the addition to tax under
section 6651(a)(1) is reduced by the amount of any addition to
tax imposed under section 6651(a)(2) (which relates to failure to
pay the tax shown on a return by the prescribed date) with
respect to each month in which both are otherwise applicable.
Sec. 6651(c)(1).
A taxpayer may avoid the addition to tax under section
6651(a)(1) if he establishes that the failure to file is due to
reasonable cause and not due to willful neglect. “Reasonable
- 14 -
cause” requires the taxpayer to demonstrate that he exercised
ordinary business care and prudence and was nonetheless unable to
file a return within the prescribed time. United States v.
Boyle, 469 U.S. 241, 246 (1985). “Willful neglect” means a
conscious, intentional failure or reckless indifference. Id. at
245.
Although respondent bears the burden of production with
respect to this addition to tax, petitioner ultimately bears the
burden of proof. Sec. 7491(c); Rule 142(a). It is clear that
petitioner did not file a return for taxable year 1995 until
September 1997. Petitioner did not attempt to explain the
failure to file and provided no indication that he had reasonable
cause therefor. We sustain respondent’s determination that
petitioner is liable for the addition to tax under section
6651(a)(1).4
Section 6662(a) Accuracy-Related Penalty
Respondent determined that petitioners are liable for an
accuracy-related penalty under section 6662(a) for 1996 with
4
Respondent applied a 22.5 percent rate to the total amount
of tax required to be shown on petitioner’s return, $30,499, and
offset the resulting amount by a previously assessed sec.
6651(a)(1) addition to tax of $6,354. See sec. 6665(b).
Respondent presumably had previously assessed a sec. 6651(a)(2)
addition to tax as well. See id.; sec. 6651(c)(1).
- 15 -
respect to the underpayment resulting from the total amount of
the deficiency in that year.
Section 6662(a) imposes a 20-percent penalty on the portion
of an underpayment attributable to any one of various factors,
one of which is any substantial understatement of income tax.
Sec. 6662(b)(2). A substantial understatement of income tax
exists if the amount of the understatement exceeds the greater of
$5,000 or 10 percent of the tax required to be shown on the
return. Sec. 6662(d)(1)(A). Generally, the amount of an
understatement is reduced by the portion of the understatement
which is attributable to either (1) the tax treatment of any item
for which there is or was substantial authority, or (2) any item
with respect to which (a) the relevant facts were adequately
disclosed on the return or on a statement attached to the return,
and (b) the taxpayer had a reasonable basis for the tax treatment
thereof. Sec. 6662(d)(2)(B).
Section 6664(c)(1) provides that the penalty under section
6662(a) shall not apply to any portion of an underpayment if it
is shown that there was reasonable cause for the taxpayer’s
position and that the taxpayer acted in good faith with respect
to that portion. The determination of whether a taxpayer acted
with reasonable cause and in good faith is made on a case-by-case
basis, taking into account all the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The most
- 16 -
important factor is the extent of the taxpayer’s effort to assess
his proper tax liability for the year. Id.
Petitioners made a substantial understatement of tax on
their 1996 return. They have failed to produce books and records
or to otherwise show the method used to arrive at the amounts of
the deductions and income which were reported. Based on the
record before us, we find petitioners have not established that
they had substantial authority or a reasonable basis for the
items in question. Nor have they established that there was
reasonable cause for the underpayment or that they acted in good
faith with respect to the underpayment. Consequently, we sustain
respondent’s determination that petitioners are liable for the
section 6662(a) accuracy-related penalty for 1996.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decisions will be entered
for respondent in docket No.
2730-01S and under Rule 155 in
docket No. 2731-01S.
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116 P.3d 1278 (2005)
The PEOPLE of the State of Colorado, Petitioner-Appellee,
In the Interest of C.M., a Child,
and Concerning G.M., Respondent-Appellant,
and M.J. and P.J., Special Respondents-Appellees.
No. 04CA1144.
Colorado Court of Appeals, Division A.
June 2, 2005.
*1280 George N. Monsson, County Attorney, David W. Bute, Assistant County Attorney, Fort Morgan, Colorado, for Petitioner-Appellee.
Dennis L. Brandenburg, Guardian Ad Litem.
Brad D. Redmiles, Salida, Colorado, for Respondent-Appellant.
Gagliano & Matuszczak, LLC, Stephanie M.G. Gagliano, Sterling, Colorado, for Special Respondents-Appellees.
Opinion by Chief Judge DAVIDSON.
In this dependency or neglect proceeding, G.M. (father) appeals from a judgment awarding permanent legal custody of his child, C.M., to the child's maternal grandfather and his wife, M.J. and P.J. (grandparents). We vacate the judgment and remand with directions.
I.
Intervention was required after R.J. (mother), who had sole custody of the child pursuant to a 1997 domestic relations case, failed to pick up the child from kindergarten and admitted to methamphetamine use. With mother's agreement, the county department of social services (department) filed a motion to place the child in the temporary physical and legal custody of the grandparents. The motion was granted by the trial court in October 2002.
Two weeks later, the department filed a petition in dependency or neglect, which named mother and father as respondents and the grandparents as special respondents. Following an adjudicatory trial in March 2003, the trial court sustained the petition, finding that the child lacked proper parental care through the acts or omissions of the parents and that the child's environment was injurious to his welfare. The child remained in the physical and legal custody of the grandparents, with protective supervision by the department.
Later in March 2003, a treatment plan was approved for father. The plan required that he (1) demonstrate financial independence and stability and contribute to the financial support of the child; (2) meet the requirements of his assessed child support arrears; (3) participate in parenting time with the child; (4) attend parenting classes; and (5) participate in a substance abuse evaluation and comply with any recommendations.
Father, who was living with his girlfriend and their children, reasonably complied with the treatment plan. To determine whether he could provide an appropriate, permanent home, physical and legal custody of the child was split between him and the grandparents in August 2003.
In December 2003, the department filed a motion to place legal and physical custody of the child with father, subject to protective supervision by the department. The motion, however, was withdrawn before it could be heard because father separated from his girlfriend, moved out of the home, and moved to another city.
Father's instability caused the department to file a motion seeking an award of legal custody to the grandparents in late December 2003. Several weeks later, the grandparents filed a petition for allocation of sole parental responsibility of the child. The department consented to the grandparents' motion and sought an order terminating its involvement with the family. In February 2004, the question of permanent legal custody was certified to the trial court by the district court that made the initial custody determination in 1997. See § 19-1-104, C.R.S. 1004.
By the time of the March 2004 custody hearing, father was unemployed, but had reconciled with his girlfriend, whom he considered his common law wife. Although the caseworker was concerned about father's recent use of marijuana and instability, she had no child welfare or safety concerns about his home.
Relying on §§ 19-1-102, 19-1-104, 19-1-115, and 19-3-508, C.R.S.2004, the trial court determined that an award of permanent legal custody to the grandparents was in the child's best interests. In reaching this conclusion, the trial court stated that it did not believe that father was unfit, but found that he was "unsuitable" to serve the best interests *1281 of the child. The latter finding was based on father's tendency to engage the child in adult matters, his unstable housing and employment, and his recent use of marijuana.
II.
Father challenges the facial constitutionality of the Colorado Children's Code (Code), § 19-1-101, et seq., C.R.S.2004, and in particular, §§ 19-1-102, 19-1-104, 19-1-115, and 19-3-508, on the basis that they do not require a showing of unfitness or endangerment before allowing an award of legal custody to a nonparent. Father did not make a facial attack on the Code or these provisions during the proceeding before the trial court. Therefore, we do not address his contention on appeal. See People v. Cagle, 751 P.2d 614 (Colo.1988); People v. Boyd, 30 P.3d 819 (Colo.App.2001) (refusing to address constitutional claims raised for the first time on appeal).
III.
Father also contends that the Code, and in particular §§ 19-1-102, 19-1-104, 19-1-115, and 19-3-508, are unconstitutional as applied. We conclude that these statutes are inapplicable and, thus, do not reach father's constitutional challenge.
A.
The Code provisions relied on by the trial court do not address or prescribe the standard for an award of permanent legal custody to a nonparent. Section 19-1-102 delineates the legislative purposes of the Code, which must be considered by a juvenile court in making a custody determination. L.A.G. v. People in Interest of A.A.G., 912 P.2d 1385, 1392 (Colo.1996). It does not, however, prescribe the criteria or standard upon which a custody determination must be made. Similarly, § 19-1-104 gives a juvenile court jurisdiction to determine the legal custody of a child who comes within its jurisdiction, but does not set forth the criteria or standard to be applied in making such an award.
Section 19-1-115 is a general provision concerning awards of temporary legal custody for determinate periods made during the pendency of any proceeding under the Code. Section 19-1-115(4), C.R.S.2004. It creates a custodial preference in favor of a grandparent, if in the best interests of the child, upon a finding that a suitable parent is not available. Section 19-1-115(1)(a), C.R.S.2004. It does not address the criteria or standard upon which an award of permanent legal custody may be made in a dependency or neglect proceeding.
Finally, § 19-3-508 sets forth dispositional alternatives for children who have been adjudicated dependent or neglected, including an award of legal custody to a parent, a relative, the department of social services, or a child placement agency. See § 19-3-508(1), C.R.S.2004. A dispositional order placing a child out of the home pursuant to § 19-3-508(1) is temporary and subject to periodic review by the juvenile court. Section 19-3-507(4), C.R.S.2004. The statute does not provide for an award of permanent legal custody to a nonparent.
B.
Short of termination of the parent-child legal relationship, see § 19-3-601, et seq., C.R.S.2004, the only Code provisions that address long-term permanency for children placed out of the home during the pendency of a dependency or neglect proceeding are §§ 19-3-702 and 19-3-703, C.R.S.2004. Section 19-3-703 provides that a child who is under the age of six when a petition is filed must be placed in a permanent home within twelve months of the initial out-of-home placement, unless the court determines that a permanent home is not in the child's best interests at that time. Although an award of permanent custody to a nonparent is included in the permanency options, § 19-3-703 does not set forth the standard to be applied in making such an award. Further, the statute is inapplicable here because the child was six years old when the petition was filed.
Section 19-3-702, the permanency hearing statute, provides for the adoption and implementation of a specific permanency plan for a child placed into foster care during *1282 the pendency of a dependency or neglect proceeding. Section 19-1-103(83.5), C.R.S. 2004; People in Interest of M.B., 70 P.3d 618, 623 (Colo.App.2003); Chief Judge Directive (CJD) 98-02, Memorandum of Procedures (MOP) § VII.A. Although the Code defines "foster care" as "the placement of a child into the legal custody or legal authority of a county department of social services for physical placement of the child in a certified or licensed facility," § 19-1-103(51.3), C.R.S.2004, the General Assembly has declared that long-term permanency planning is in the best interests of any child who has been removed from the home. Section 19-1-102(1.5)(a)(III), C.R.S.2004. Reading the Code as a whole and giving its provisions a consistent, harmonious, and sensible effect, we conclude that the General Assembly intended the permanency hearing statute to apply to all children placed out of the home, not only to those placed into foster care. See M.S. v. People, 812 P.2d 632 (Colo.1991); People in Interest of A.R.M., 832 P.2d 1093 (Colo.App.1992); People in Interest of T.R.W., 759 P.2d 768 (Colo.App.1988).
Pursuant to § 19-3-702(1), C.R.S.2004, a juvenile court must conduct a permanency hearing no later than twelve months after a child age six or older has been placed out of the home. At the hearing, the court must determine whether the child can be returned to the physical custody of a parent, and, if not, whether there is a substantial probability that the child can be returned within six months. Section 19-3-702(3), C.R.S.2004; People in Interest of A.W.R., 17 P.3d 192 (Colo.App.2000). If there is no substantial possibility of return to the home within six months,
the court shall enter an order determining the future status or placement of the child. Any court order regarding future status or placement of a child out of the home shall include specific findings concerning the placement goal for the child. . . . In cases in which the county department has documented to the court a compelling reason for determining that it would not be in the best interests of the child to return home, the court's findings shall include a determination of whether the placement goal for the child is that the child be referred for termination of parental rights, be placed for adoption, be placed with a fit and willing relative, be placed with a legal guardian or custodian, or be placed in another permanent living arrangement.
Section 19-3-702(4).
Here, the dependency or neglect proceeding had been pending for more than twelve months when the department filed its motion for an award of legal custody to the grandparents. Although the motion did not cite the legal basis on which it was premised, it sought a definitive, long-term decision regarding the child's permanent placement. See CJD 98-02, MOP § VII.B.3. Thus, the trial court should have applied § 19-3-702 in resolving the custody issue. Accordingly, we must remand the matter for reconsideration of the issue of permanent legal custody under § 19-3-702.
IV.
Because father's remaining contention is likely to arise on remand, we address it here.
Father contends that the trial court should have applied an unfitness standard, which would require awarding him permanent legal custody absent a finding of unfitness, rather than the best interests of the child standard in determining who should have permanent legal custody of the child. Father's argument is premised on Troxel v. Granville, 530 U.S. 57, 120 S.Ct. 2054, 147 L.Ed.2d 49 (2000), and People in Interest of A.W.R., supra. We conclude that a finding of unfitness is not required in order to decline to award a parent permanent legal custody in these circumstances.
The overriding purpose of the Code is to protect the welfare and safety of children by providing procedures through which their best interests can be served. L.G. v. People, 890 P.2d 647 (Colo.1995); see § 19-1-102. To this end, dependency or neglect proceedings focus primarily on the protection and safety of children susceptible to harm from the effect of abuse and neglect, not on the custodial interests of the parent. L.G. v. People, supra.
*1283 A dependency or neglect proceeding must be initiated by the filing of a petition by the state. McCall v. District Court, 651 P.2d 392 (Colo.1982). The petition must allege, in effect, that one or more aspects of the child's custodial situation are harmful to his or her health and welfare or to the interest of the public. L.A.G. v. People in Interest of A.A.G., supra; see §§ 19-3-201, 19-3-502, C.R.S.2004. To determine whether the factual allegations of the petition are supported by a preponderance of the evidence and whether the status of the child warrants protective or corrective state intervention into the family, an adjudicatory hearing must be conducted. People in Interest of A.M., 786 P.2d 476 (Colo.App.1989); see § 19-3-505(1), C.R.S.2004. If the petition is sustained, the juvenile court may enter an order of adjudication, which is not made "as to" the parents, but relates only to the status of the child. Section 19-3-505(7)(a), C.R.S.2004; People in Interest of C.T., 746 P.2d 56 (Colo.App.1987); People in Interest of P.D.S., 669 P.2d 627 (Colo.App.1983); see People in Interest of A.M., supra.
An order of custody may not be made until after a child has been adjudicated dependent or neglected. Section 19-3-507(1)(a), C.R.S.2004; L.A.G. v. People in Interest of A.A.G., supra. "Thus, a precondition to any determination of custody in a dependency and neglect proceeding is a judicial determination that the child's present custodial circumstances or other aspects of the child's present environment are detrimental to the child and, with government supervision, must be altered." L.A.G. v. People in Interest of A.A.G., supra, 912 P.2d at 1392.
When making a custody determination, a juvenile court must be guided by the purposes of the Code and resolve the issue in a manner that furthers the best interests of the child and the public. L.A.G. v. People in Interest of A.A.G., supra. Custody orders entered in the context of a dependency or neglect proceeding are a plan for permanency, subject to change as warranted by the best interests of the child, over which the juvenile court retains jurisdiction until the child is twenty-one years old. See § 19-3-205, C.R.S.2004; L.L. v. People, 10 P.3d 1271 (Colo.2000).
In Troxel v. Granville, supra, the Supreme Court held that a fit, natural parent has a first and prior right to custody and is presumed to act in the best interests of the child. This presumption, however, is based on the existence of a healthy parent-child relationship. See State ex rel. J.M.V., 958 P.2d 943 (Utah Ct.App.1998). See generally In re R.A., ___ P.3d ___, 2005 WL 774465 (Colo.App. No. 04CA0503, Apr. 7, 2005) (applying the presumption in a visitation dispute between fit adoptive parents and the child's paternal grandparents); In Interest of E.L.M.C., 100 P.3d 546 (Colo.App.2004) (applying the presumption in a custodial dispute between a fit adoptive parent and the child's psychological parent). Therefore, the presumption does not arise in the context of a dependency or neglect proceeding, which requires a judicial determination that the child's custodial circumstances or environment is injurious to his or her well-being before a custody order may be made. See L.A.G. v. People in Interest of A.A.G., supra.
Under the permanency statute, the department must establish a compelling reason why it is not in the child's best interests to return home before a trial court may award permanent custody of the child to a nonparent. Section 19-3-702(4). In People in Interest of A.W.R., supra, a division of this court held that the juvenile court properly applied a parental unfitness standard in determining whether a child could be returned home under the permanency statute. While parental unfitness clearly constitutes a compelling reason not to return a child home, we do not read A.W.R. as establishing a rule requiring an express finding of parental unfitness in every permanency determination. Instead, parental deficiencies less serious than unfitness may give rise to a compelling reason not to return the child home when considered in light of the child's physical, mental, and emotional conditions and needs.
Thus, under the dependency or neglect statutes, an award of permanent custody to a nonparent may be made even if a parent is not found to be unfit. Accordingly, *1284 on remand, the trial court shall determine the issue of permanent custody in accordance with § 19-3-702. In so doing, the trial court must be guided by the purposes of the Code and resolve the issue in a manner that furthers the best interests of the child and the public. L.A.G. v. People in Interest of A.A.G., supra.
Because of this disposition, it is unnecessary to address father's concern that, were this matter recertified as a domestic relations case, he would be required to show endangerment in order to obtain parental responsibility for his child.
The grandparents' request for attorney fees on appeal is denied. See C.A.R. 38(d); Wood Bros. Homes, Inc. v. Howard, 862 P.2d 925 (Colo.1993).
The judgment is vacated, and the case is remanded to the trial court for further proceedings consistent with the views expressed herein. The trial court may, in its discretion, conduct a new hearing. Until new orders are entered on remand, the trial court's current orders regarding permanent legal custody shall remain in effect. See In re Marriage of Martin, 42 P.3d 75 (Colo.App.2002).
Judge VOGT and Judge LOEB concur.
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207 S.W.3d 593 (2006)
William FLORMAN; Frank Boyce Moodie, III, Kathleen Moodie; Berrian Minerals, Inc.; and Larry Glass, Appellants,
v.
MEBCO LIMITED PARTNERSHIP, A Kentucky Limited Partnership; Cumberland River Resources, LLC; Jim Smith Contracting, LLC; Lawrence L. Pedley; John C. Pedley; David Pedley; H. Gregory Maddux; Phillip Maddux; Hazel Maddux; Martha Lee Wright; and T.L. Maddux, Jr., Appellees.
MEBCO Limited Partnership, Appellant,
v.
William Florman; Frank Boyce Moodie, III; Kathleen Moodie; Berrian Minerals, Inc; Larry Glass; Lawrence L. Pedley; John C. Pedley; David Pedley; H. Gregory Maddux; Phillip Maddux; Hazel Maddux; Martha Lee Wright; and T.L. Maddux, Jr., Appellees.
Lawrence C. Pedley; John C. Pedley; and David Pedley, Appellants,
v.
William Florman; Frank Boyce Moodie, III; Kathleen Moodie; Berrian Minerals, Inc.; Larry Glass; MEBCO Limited Partnership, A Kentucky Limited Partnership; H. Gregory Maddux; Phillip Maddux; Hazel Maddux; Martha Lee Wright; T.L. Maddux, Jr.; Cumberland River Resources, LLC; and Jim Smith Contracting, LLC, Appellees.
Nos. 2004-CA-001908-MR, 2004-CA-002072-MR, 2004-CA-002074-MR.
Court of Appeals of Kentucky.
June 16, 2006.
Discretionary Review Denied by Supreme Court December 13, 2006.
Case Ordered Published by Supreme Court December 13, 2006.
*594 Richard H. Peek, Jr., Smithland, KY, Bobby H. Richardson, Glasgow, KY, Ben J. Talbott, Jr., Louisville, KY, for appellants/appellees Florman and Moodie defendants.
Willard B. Paxton, Princeton, KY, for appellants Pedley Heirs.
Vance W. Cook, Princeton, KY, George E. Stigger, St. Mary, GA, for appellee MEBCO.
Kerry D. Smith, Paducah, KY, for appellees CRR and Jim Smith Contracting.
Before GUIDUGLI and JOHNSON, Judges; HUDDLESTON, Senior Judge.[1]
OPINION
JOHNSON, Judge.
William Florman, Frank Boyce Moodie, III, (i.e. Boyce Moodie), Kathleen Moodie, Berrian Minerals, Inc., and Larry Glass (collectively the "Moodie defendants"); MEBCO Limited Partnership, a Kentucky Limited Partnership (MEBCO); and Lawrence L. Pedley, John C. Pedley, David Pedley (collectively the "Pedley heirs") have appealed[2] separately from the orders *595 entered by the Livingston Circuit Court on September 3, 2004, which adopted the recommendations of Special Commissioner Marvin Wilson submitted on August 5, 2004. The Moodie defendants have appealed that portion of the circuit court's order which awarded the clay on the land to MEBCO, the surface owner, and seek a determination that the ancillary language in the Shelby/Watkins deeds prohibits surface mining of the minerals and substances such as limestone and clay. MEBCO has appealed that portion of the circuit court's order which awarded the limestone on the land to the Moodie defendants as the mineral rights owner, arguing that Kentucky law provides that limestone is not a mineral. The Pedley heirs have appealed that portion of the circuit court's order which upheld the trust formerly set up in another civil action into which their portion of the royalties is placed. Having concluded under Kentucky law that limestone and clay are not minerals and thus were retained by the surface owners, we affirm in part and reverse in part. While the circuit court failed to make a determination as to whether the Moodie defendants were granted the right to surface mine the land, we also hold that they were not conveyed such rights. Having further concluded that the Pedley heirs failed to preserve any of the issues raised in their appeal, we dismiss their claims without addressing them on the merits.
HISTORY OF THE LAND
This case involves the ownership of "all the minerals on and under" 200 acres of land in Livingston County, Kentucky on the Cumberland River (the land). The land is a portion of a much larger tract of land owned by MEBCO,[3] whose principals are Firmon Cook, III and his wife, Betty Cook (collectively the "Cooks"). The Cooks acquired the land on April 25, 1991, and they later conveyed it to their company, MEBCO.
At the time the Cooks obtained title to the land, they received an interest in the surface only, not the minerals. The minerals had been previously severed from the surface estate in 1873, by two deeds.[4] On July 15, 1873, C.C. Shelby conveyed to Geo. W. Norton, Wm. F. Norton, John S. Long, F. Berrian Moody and J.C. Waller (the grantees) "all the minerals" in a portion of the land consisting of 185 acres (the Shelby Deed). Also on July 15, 1873, James Watkins conveyed to the grantees "all the minerals" in a portion of the land containing 12.41 acres (the Watkins Deed).[5] Those mineral rights were subsequently acquired by Salem Fluorspar Corporation (Salem Fluorspar) in 1942, which is now defunct.[6] The defendants claiming *596 rights through Salem Fluorspar include the Moodie defendants[7] and the Pedley heirs.
In addition to a conveyance of the minerals, the Shelby/Watkins deeds contain certain surface-related rights that may be utilized by the mineral owner in the removal of such minerals. The ancillary rights set out in the Watkins deed are as follows:
Together with sufficient surface land on the bank of the river for ware rooms for storing away the minerals and mining material with right of way over said land to and from the mines with as much timber and surface land as may be necessary for buildings and cribbing of shafts for developing such minerals as may be sought for on and under said land [descriptions of the land omitted]. But it is clearly understood that the surface land on the bank of the river for ware rooms is not to exceed one acre to be in a square, and the right of way over said land not to exceed forty feet in width and to run direct from the mines to the nearest line of said survey [and] thence with said line to the ware house.
The ancillary rights in the Shelby deed are the same as the ancillary rights in the Watkins deed, except there was added to the last sentence quoted above "[and] not to interfere with the hill selected [sic] by me for a building site."[8]
LEASES ON THE LAND
Jim Smith Contracting Company, LLC, and its wholly-owned company, Cumberland River Resources, LLC, (collectively CRR)[9] have been developing a limestone quarry on three adjacent properties in Livingston County.[10] In 1998 Rex Smith, a general partner of CRR, became interested in the possibility of acquiring a mineral lease on the land for the acquisition of the limestone, clay, and other substances.[11] Smith understood that the ownership of the limestone and clay located on the land was contested between MEBCO and the Moodie defendants; and therefore, in order to ensure that the limestone, clay, and aggregates were under lease regardless of who was determined to own the substances, CRR[12] obtained leases from both sides. On November 16, 1999, Smith, through his companies, entered into a mineral lease with Boyce Moodie (the Moodie lease),[13] and thereafter on December 21, *597 1999, he entered into a separate lease with the Cooks on the MEBCO property (Cook/MEBCO lease).[14] At trial the parties stipulated, without objection, as to the validity of CRR's leases with MEBCO and the Moodie defendants.
PROCEDURAL HISTORY
It is undisputed that MEBCO owns the surface of the land set out in the Shelby/Watkins deeds. However, following the execution of the above-referenced leases, MEBCO filed the present action on May 30, 2002, as a Petition to Quiet Title and for Declaration of Rights regarding ownership of certain substances on the Shelby/Watkins tracts. In Count I of its petition, as amended, MEBCO sought to quiet its title to the limestone, clay, sand, and gravel in and underlying the two parcels of land in the Shelby/Watkins deeds.[15] MEBCO claimed that although it did not own the minerals on the land, it did own the limestone and clay as part of the surface estate. In Count II of its petition, MEBCO sought a declaration of rights of the mineral owners to surface mine the land of the Shelby/Watkins deeds in the recovery of minerals.
On July 25, 2002, in response to MEBCO's petition, the Moodie defendants filed their defenses and their own counterclaims and cross-claims, asserting that, as a consequence of the Shelby/Watkins deeds conveying their predecessor in title "all the minerals on and under" the property, they are the owners of the clay and limestone on the land in the Shelby/Watkins deeds. The Moodie defendants acknowledged that they had entered into a mineral lease with CRR.[16]
On August 6, 2002, the Pedley heirs filed their answer and counterclaim to MEBCO's petition, wherein they claimed that they had inherited some stock in Salem Fluorspar from Gracean M. Pedley. The Pedley heirs also expressly acknowledged that in 1998, "Moodie, d/b/a Berrian Minerals purchased an interest in the properties which had formerly been owned by [] Salem Fluorspar [], including the [land]". The Pedley heirs never filed a reply or answer to the cross-claims of the Moodie defendants or CRR in this action, and they never raised any issue in their own pleadings about the validity or amount of the Moodie defendants' interest in the minerals on the land. Despite the circuit court's *598 scheduling order, the Pedley heirs never filed a trial brief setting forth the "disputed facts and legal issues" of its case.
On February 24, 2003, MEBCO filed its motion for partial summary judgment arguing that the Shelby/Watkins deeds which conveyed "all the minerals on and under" the land did not convey the limestone and clay on the land. After extensive briefing on this matter by both MEBCO and the Moodie defendants, the circuit court, by orders dated December 15, 2003, and December 19, 2003, denied MEBCO's motion for summary judgment, and appointed Special Commissioner Wilson to try the case and to make recommended findings to resolve the factual issues regarding the questions of whether limestone and/or clay on the land were part of minerals owned by the Moodie defendants.
Hearings were held on May 17, 2004, through May 20, 2004, by Special Commissioner Wilson. The main issue in the case was whether the Shelby/Watkins deeds conveyed to the predecessors of the Moodie defendants the limestone and clay on such property, along with the rights to remove those substances, when the grantors conveyed to the grantees "all the minerals on and under" the property. Thus, the circuit court was required to determine whether or not the term "mineral" as used in the Shelby/Watkins deeds in 1873 included the substances of "limestone" and "clay". At trial, MEBCO, as surface owner, claimed it had full legal title to the limestone and clay, because such material belonged to the surface estate not the mineral estate; and MEBCO requested that the circuit court declare that the severance of the "minerals" through the Shelby/Watkins deeds did not include the right to remove the limestone or the clay. The Moodie defendants argued that the limestone and clay had such a peculiar value that both should be considered "minerals," and thus were not a part of the surface rights.
Upon request, the parties stipulated that the Pedley heirs owned five shares each, or a total of 15 shares, of Salem Fluorspar out of a total of 4,000 shares. Except for this stipulation, no other evidence of any kind was introduced regarding the issue of whether the Pedley heirs have any interests in the minerals. Further, the Pedley heirs made no opening statement, nor did they offer any witnesses to testify on their behalf.
CRR contended that regardless of whom the circuit court declared to be the owner of the limestone, clay, and related aggregates, such materials are subject to its leasehold interests under either, or both, the Cook/MEBCO Lease or the Moodie Lease. At the start of the trial, the attorney for the Pedley heirs, along with counsel for all other parties, expressly stipulated to the validity of the Cook/MEBCO and Moodie lease agreements with CRR.
Subsequently, the parties filed their proposed recommendations, including findings of fact and conclusions of law, to be considered by Special Commissioner Wilson. On August 12, 2004, Special Commissioner Wilson submitted his recommendations to the circuit court. Both MEBCO and the Moodie defendants filed exceptions to the recommendations on August 23, 2004. CRR also filed exceptions seeking an interpretation of certain lease provisions in its mineral leases and also tendered its proposed order adopting and modifying Special Commissioner Wilson's recommendations,[17] which the circuit court entered on September 3, 2004, as the judgment in this case.
The Pedley heirs did not tender their own pre-trial findings of fact or conclusions of law to suggest any questions of *599 fact or law which they believed were at issue. However, on June 7, 2004, the Pedley heirs expressly adopted as their own the Moodie defendant's proposed recommendations, including a memorandum opinion, findings of fact, conclusions of law, and judgment, which specifically stated that the Moodie defendants now "own an undivided 90.9% of such minerals, and the remainder thereof 9.1% is held in trust by Raymond McGee, the Trustee appointed on March 7, 2001 by [the circuit court] for the unknown or missing owners." However, the Pedley heirs subsequently attempted to introduce new issues into this case, in an objection filed on June 14, 2004. The Moodie defendants moved to strike the Pedley heirs' objection, and the circuit court ruled in favor of the Moodie defendants, pursuant to the recommendation of Special Commissioner Wilson. The Pedley heirs never took exception to that recommendation, and on September 3, 2004, said recommendation became a part of the circuit court's final order and judgment of this case.
The circuit court held that the limestone was a "mineral" under the phrase "all the minerals on or under" the land as used in the Shelby/Watkins deeds, and that the "clay and limestone on the subject property possess unusually, unique and extraordinary qualities over and above `ordinary' clay and limestone deposits, thereby imparting to them `special value'." The circuit court stated that this conclusion was based upon expert testimony of several witnesses that the clay in this case could be used to make Portland cement and various ceramic products, and the limestone could be used to make Portland cement, roof shingles, agricultural lime, and various other products. However, in adopting Special Commissioner Wilson's recommendations, the circuit court further determined the clay could not be removed without destroying the surface and ruled the clay should remain a part of the surface estate.
In summary, the circuit court held that (1) the limestone was a mineral and a part of the mineral estate and thus belonged to the Moodie defendants; (2) the clay, while being a mineral, was still part of the surface estate because it could not be removed without destroying the surface and thus belonged to MEBCO; and (3) all limestone, clay, and other aggregates, regardless of ownership, were subject to the lease rights of CRR. These appeals followed.
There are three appeals in this case. The Moodie defendants present two issues in their appeal, (1) whether the limestone and clay on the land are owned by the surface owner or the mineral owner, and (2) whether the Shelby/Watkins deeds allow the mineral owner the right to surface mine the land in order to recover minerals. These same issues are also argued by MEBCO[18] in its appeal. The issues in the Pedley heirs' appeal do not overlap with these issues from a legal standpoint, and thus will be dealt with separately.
DOES KENTUCKY LAW CLASSIFY LIMESTONE AND CLAY AS MINERALS?
Both MEBCO and the Moodie defendants raise before this Court the issue of whether, under Kentucky law, limestone and/or clay are minerals. The analysis as to whether either substance is a mineral is the same.[19] As stated previously, the circuit *600 court, by adopting Special Commissioner Wilson's report, held that both limestone and clay were minerals because in this case they each have unique qualities and special value. However, the circuit court reasoned that because the clay could not be removed without destroying the surface, it remained a part of the surface estate. We hold that the circuit court failed to follow the current law of our Commonwealth and erred as a matter of law when classifying limestone and clay as minerals.
The interpretation of a deed is a matter of law, and thus our review of this case is de novo.[20] This rule applies equally to a deed involving mineral rights.[21] In interpreting a deed, we look to the intentions of the parties, "gathered from the four corners of the instrument" [citations omitted],[22] using its words' common meaning and understanding.[23] We will not substitute what was intended "for what was said" [citations omitted].[24] Further, a deed shall be construed based upon its provisions as a whole.[25] Since we agree with the circuit court's conclusion in this case that the terms of the Shelby/Watkins deeds granting the mineral rights were not ambiguous, we do not have to construe the terms of the deeds strongly against the preparers, whether that be the grantor or the grantees.[26]
The Moodie defendants argue that the limestone and clay were part of the mineral estate which was severed based upon the broadness of the language in the Shelby/Watkins deeds conveying "all the minerals on and under." Further, they argue that the common ordinary meaning of the term "mineral," both in 1873 and today, includes the terms limestone and clay and, regardless, the circuit court found by expert testimony that the limestone and clay under and on the land has "unusual, unique and extraordinary qualities . . . thereby imparting to them `special value.'" Thus, the Moodie defendants argue that the limestone and clay also meet the legal definition of minerals because they are sought "for the purpose of profit."[27] However, we agree with MEBCO's argument that pursuant to the current law in Kentucky the clay and the limestone are not minerals.
In briefing this issue, both sides have cited various cases from several jurisdictions. However, the two cases in Kentucky that deal with whether limestone is a mineral are sufficient authority for our decision. We begin with Rudd v. Hayden,[28]*601 which involved 125 acres of land located on the banks on the Cumberland River in Livingston County. The issue in Rudd was whether limestone was embraced in a 1900 deed that included the following language:
"All minerals, coal, clays, spars, oilgases and every other kind and character of mineral cement, oil, gases, [] not included in the above general description, in on and under the after described land, together with the exclusive right to mine same and a right of way across said premises and ingress and egress over said land, for the purpose of operating any mine or mines and privilege of using water in their operation and in fact the full mining right and privilege in and to the following described land . . . [emphasis added]."[29]
The Rudd Court determined, in construing the deeds, that the terms of the deeds in question plainly set forth the intent of the parties.[30] Further, the Rudd Court found that "[t]he authorities agree that the word `minerals,' as used in a deed, does not ordinarily include limestone" [citations omitted].[31]Rudd quotes the Virginia case of Beury v. Shelton,[32] as follows:
"It is a well-known fact, and known of course to the parties to the deed here involved, that the section where this deed was to operate was a limestone country, where the land is everywhere underlain with limestone, and where it crops out on practically every tract of land that is not bottom land, and where it makes its appearance in manner varying from huge cliffs, as in the case here, to small outcroppings on various parts of the land. It is on the land everywhere, either breaking through it, or lying under it at different depths. In this country it is a part of the soil, and a conveyance that reserves the limestone with the right to remove it would reserve practically everything and grant nothing" [emphasis added].[33]
Even though the Court in Rudd, found that the limestone in question was "regarded as excellent Portland cement material[,]" the Court concluded that "the use of the term `minerals,' without more, would not show an intention to include limestone within the grant of the deed, stating limestone is not within `the ordinary and popular sense of the word'" [citation omitted].[34] The Rudd Court later noted that the term mineral cement was intended to cover limestone capable of use in the manufacture of cement,[35] otherwise the inclusion of limestone in this group would not have occurred.
Approximately 30 years later, the Court in Little v. Carter,[36] accepted the position set out in Rudd by stating "that under the plain language of Rudd . . . the use of the term `minerals,' without more, would not show an intention to include limestone within the reservation under consideration."[37]Little involved a reservation of a *602 specified interest in the "oil and gas, . . . fire clay, and . . . other minerals on the land conveyed."[38] The limestone surface owner leased the limestone for a royalty of $.05 per ton. The limestone lessee began quarrying the limestone and the mineral owner brought suit against the surface owner for his share of the royalties.[39]Little does not discuss the quality of the limestone or how the limestone was being utilized; however, in holding that limestone was not included in the mineral reservation, the Little Court quotes at length from Rudd, which quoted Beury. While there are no reported Kentucky cases where the Court had an occasion to consider whether a conveyance (as opposed to a reservation) of minerals does or does not include limestone, cases from other jurisdictions indicate that the decision would be the same.[40]
The Moodie defendants cite Kalberer, where our Supreme Court discussed the meaning of the term "minerals" as used in deeds. The Moodie defendants argue that although the holding of Kalberer specifically applied to sandstone, a surface mineral, the decision expressly states that the term "minerals" also includes clay, as well as every substance which can be obtained from the earth "for the purpose of profit."[41] We conclude that Kalberer is distinguishable from this case. First, Kalberer was a sandstone case that was decided between the rulings in the limestone cases of Rudd and Little.[42] Second, Little rejected the stance of Kalberer when it ruled that limestone was not a mineral.[43] Further, Kentucky cases have held since the ruling in Kalberer that clay is not a mineral.[44]
While Little sets out a quote from the Texas case of Heinatz v. Allen,[45] regarding special value, the initial wording in Heinatz was dicta at the time it was written, stating that if limestone, sand, or gravel is "rare and exceptional" or has "special value", it may be considered as a mineral, otherwise such substances are not considered minerals "within the ordinary and natural meaning of the word."[46] However, the later Texas case of Atwood v. Rodman,[47] rejected this dicta in Heinatz and held that limestone was not a mineral or such a material as was contemplated by the term "other minerals" used in the instruments.[48] The Texas Court in Atwood stated as follows:
To hold that usage controls would make for hopeless confusion, because if limestone is . . . highly useful and valuable in building and construction, then there would be an inevitable conflict between those who claim that it is a mineral and want to use it for cement, and those who claim that it is rock used for construction. . . . For these reasons we do not think usage, which here is used to mean subsequent development to the dates of *603 the instruments, can or does change the intent of the grantors and grantees.[49]
The quote from Heinatz in Little was made with no discussion, and therefore serves as no more than dicta therein. Since Texas itself has disavowed the dicta in Heinatz, we do not find it to be persuasive in the case before us.
In Cumberland,[50] the Court addressed whether clay or sandstone were within a reservation of "the mineral, oil, and gas in, upon and under" certain lands in Pulaski, Whitley, and Laurel Counties, Kentucky.[51] The Court in Cumberland stated that "[n]either clay nor sandstone is a mineral . . . from the scientific standpoint."[52] While following Kentucky law, the Cumberland Court sought to distinguish Kalberer, rather than follow it,[53] and found that the reservation did not include clay because, otherwise "practically everything would be reserved and nothing granted" [citations omitted].[54] In Elkhorn City, the Court also found that clay was not a mineral when it held that sandy clay loam and sandy shale were not included in the reservation of minerals.[55]
After reviewing the cases in Kentucky and other jurisdictions, we hold that limestone and clay regardless of their value are not minerals. Thus, we reverse the circuit court on the issue that limestone is a mineral belonging to the mineral owner and affirm the circuit court's order to the extent that it held that the clay on the land belongs to the surface owner, but we are affirming for a different reason because we also hold that clay is not a mineral.
SURFACE MINING ISSUE
The circuit court did not specifically determine whether the Moodie defendants were allowed to surface mine on the land, even though the issue was raised by both MEBCO and the Moodie defendants in their pleadings. MEBCO's position is that the ancillary rights in the Shelby/Watkins deeds clearly indicate that the mineral extraction process must take place underground, as such rights were limited to the following surface uses: (1) one acre, on the river, in the form of a square, for ware rooms for storing the minerals and mining materials; (2) right of way over such lands not to exceed 40 feet in width, the location of which is specified to run directly from the mines to the nearest line of the survey, thence with said line to the warehouse; and (3) such timber and surface as may be needed for buildings and cribbings[56] of shafts for developing such minerals. In addition, the Shelby deed provides that the right of way is not to interfere with the hill selected by Shelby for a building site.
The Moodie defendants argue, to the contrary, that surface mining should be allowed on the lands conveyed in the Shelby/Watkins deeds because there is no word in either deed which prohibits surface mining. The Moodie defendants further argue that not allowing surface mining is "totally at odds" with the grant of timber and surface land which was "for developing such minerals as may be sought for on and under said land," and that "it is simply unrealistic to believe that the parties necessarily intended that the minerals on the *604 surface would only be removed by a process of underground mining."
In support of this argument, the Moodie defendants cite Rudd, where the Court held that the term "mine" was not restricted to underground mining, "but may include `open cut,' `strip,' or `hydraulic' methods of mining."[57] In addition, the Court noted that because the deed conveyed the minerals "on" the property, as well as the minerals "in" and "under the property," the method of mining could not have been limited to underground mining.[58] The Moodie defendants also rely upon Kalberer, where the Court held that the deed provision that "`the party of the second part agrees not to interfere with the farming interest of the parties of the first [part] in said land,'"[59] did not prevent the grantee from quarrying the sandstone which was held to be a mineral.[60]
MEBCO argues that there is no case law supporting language similar to that in the Shelby/Watkins deeds to include an implied right to quarry or to surface mine. The case law cited by the Moodie defendants in support of this claim is referring to broad form deeds, which do not apply in this action.[61] In the case of Commerce Union Bank v. Kinkade,[62] our Supreme Court held that the language of three non-broad form deeds, i.e., "right to such surface space as may be necessary in mining operations,"[63] was not sufficient to show a grant to strip mine the property.[64] The Supreme Court held that "[t]he language of the conveyances . . . is such that it must be readily realized that there was no grant of rights necessary for removing the coal by the open-pit or strip method. . . ."[65] The Supreme Court went on to state as follows:
[T]here must be a definite enlargement of specified mining rights in the instrument creating those rights before an owner may conduct mining operations contrary to the rights usually implied in a mineral grant [emphasis added].[66]
*605 Then in 1997, this Court spoke directly to strip mining methods. In Karst-Robbins Coal Co., Inc. v. Arch of Kentucky, Inc.,[67] this Court held the following:
Hence, the owner of a mineral estate thereafter [the Ward decision] could not use strip mining methods to extract minerals without the surface owner's consent, unless there was clear and convincing evidence that regardless of when the original severance deed was executed, the parties thereto intended to permit recovery of the minerals by such strip mining methods.[68]
Based on this current law, MEBCO argues that there was no clear and convincing evidence presented that the parties to the Shelby/Watkins deeds intended to permit recovery of minerals by surface or strip mining methods, as is stated in pages nine and ten of Special Commissioner Wilson's report. MEBCO goes on to argue that because the Shelby/Watkins deeds do not expressly grant the right to surface or strip mine the minerals, any right to such use of the premises would have to be implied.
In the absence of an authorization contained in the grant or reservation, the mineral owner may not destroy the surface of the land by strip mining.
In some circumstances, the deed grants the mineral owner the right to surface mine. . . . [S]uch a right is not to be lightly or casually implied [footnotes omitted].[69]
This is the current law of Kentucky which is in line with common law.[70] Therefore, we agree that without extrinsic evidence indicating such approval, the Moodie defendants do not have the right to surface mine for minerals.
ISSUES RAISED BY THE PEDLEY HEIRS
The Pedley heirs argue that the circuit court erred in "impress[ing]" a trust on their interest income from Salem Fluorspar. This argument is based on the 2001 case filed by Berrian Minerals in which the Pedley heirs claimed they were not properly served, but the circuit court entered a decree imposing a trust and named a trustee for the unknown or missing shareholders of Salem Fluorspar. They further argue that Salem Fluorspar was never administratively dissolved, but rather expired by the terms of its charter in 1967 and that Boyce Moodie, as a director and officer of the company, breached his fiduciary duty to the Pedley heirs in failing to settle the affairs of the corporation.[71]
Prior to trial, discovery was taken in this case. In Boyce Moodie's deposition, he testified regarding his January 12, 2001, lawsuit[72] which he had filed pursuant to *606 KRS 353.460, and the petition and court decree of the 2001 case were furnished to the parties. Contrary to the unsupported statements that the Pedley heirs were not served with summons or process, the records clearly show that they were constructively served pursuant to the statutes and Kentucky Rules of Civil Procedure. In any event, no pleadings were ever filed with respect to said question on behalf of the Pedley heirs, and no evidence disputing or contesting the validity of the decree was ever presented by the Pedley heirs at trial.
While the Pedley heirs acknowledge that the question as to the amount of stock that the Moodie defendants own is not ripe for review and that they cannot prove that they own more than 15 shares in the corporation, they argue that the circuit court erred in finding that the Moodie defendants owned 90.9% of the minerals under the Shelby/Watkins deeds and that the other 9.1% should be held in trust for the beneficial owners. They further argue that because the Moodie defendants do not wholly own the mineral rights they had no right to enter into the lease with CRR and, thus, the Pedley heirs are not bound by the decree establishing the trust. The Pedley heirs have asked this Court to reverse the circuit court's ruling and to send this case back for a determination as to what stock the Pedley heirs and other shareholders of Salem Fluorspar, Inc. are entitled.
However, we must conclude that the Pedley heirs have failed to comply with the Kentucky Rules of Civil Procedure in preserving these issues on appeal. First, in violation of CR 76.03(8), they did not set forth any of these issues in their pre-hearing statement, and thus, have not substantially complied with the rule.[73] The only issue stated in their pre-hearing statement was that "[t]he circuit court was in error when it held that [the Pedley heirs] were bound by a judgment in a prior action to which they were not parties."
The Pedley heirs raise several issues which are different from the vague presentation in their pre-hearing statement, including that Boyce Moodie had breached his fiduciary duty to the Pedley heirs. In conflict with CR 13.01,[74] this issue was not pled as a cross-claim or other claim, nor was it tried before Special Commissioner Wilson at the trial of this matter on May 17, 2004. Two other issues omitted from the Pedley heirs' pre-hearing statement were actually stipulated to by all parties at trial, including the amount of stock owned by the Pedley heirs and the validity of the lease between the Moodie defendants and CRR.[75] Not only were both of these issues stipulated to by the Pedley heirs, they did nothing to preserve the issues at trial.
*607 The Pedley heirs also violated CR 76.12(4)(c)(iv) and CR 76.12(4)(c)(v) which state as follows:
(iv) A "STATEMENT OF THE CASE" consisting of a chronological summary of the facts and procedural events necessary to an understanding of the issues presented by appeal, with ample references to the specific pages of the record, or tape and digital counter number in the case of untranscribed tape-recordings, supporting each of the statements narrated in the summary.
(v) An "ARGUMENT" conforming to the Statement of Points and Authorities, with ample supportive references to the record and citations of authority pertinent to each issue of law and which shall contain at the beginning of the argument a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner.
There is no citing reference to the evidence in the record or to where the issues were preserved in the circuit court for our review.[76]
Further, CR 8.01[77] requires that claims to be litigated be plainly stated. "The scope of review is limited to the theory or theories upon which the case was tried."[78] "The Court of Appeals is one of review and is not to be approached as a second opportunity to be heard as a trial court. An issue not timely raised before the circuit court cannot be considered as a new argument before this Court."[79] Based on all the foregoing, we hold that the Pedley heirs failed to adequately preserve any of the issues in their appeal to this Court and, thus, we will not address the merits of the issues raised.
For the foregoing reasons, the orders of the Livingston Circuit Court are affirmed in part and reversed in part, and this matter is remanded for further proceedings consistent with this Opinion.
ALL CONCUR.
NOTES
[1] Senior Judge Joseph R. Huddleston sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS) 21.580.
[2] MEBCO filed one notice of appeal; however, the notice of appeal was given two docket numbers, i.e., 2004-CA-02072-MR and 2004-CA-02073-MR. The Pedley heirs filed one notice of appeal; however, the notice of appeal was given two docket numbers, i.e., 2004-CA-02074-MR and 2004-CA-02075-MR. In order to correct the appellate record, cases numbered 2004-CA-0273-MR and 2004-CA-2075-MR were ordered dismissed on March 1, 2005.
[3] The land is a portion of the MEBCO property along the Cumberland River to the south, forming a backward "L" shape.
[4] Boyce Moodie testified at trial that his grandfather, Francis Berrien Moodie, a resident of Louisville, had come to Livingston County in 1870 for the purpose of acquiring limestone and that he eventually acquired sole ownership of the minerals on and under the land. Furthermore, because of the presence of high calcium carbonate limestone in Kentucky and across the Ohio River in Indiana, in 1870 the Louisville Cement Company built the largest cement plant in the world. Before the end of that century, the Louisville Cement Company and its competitors in Louisville and in Clark County immediately across the Ohio River, together "produced approximately 90% of the nation's cement."
[5] These deeds will be referred to collectively as "the Shelby/Watkins deeds."
[6] After the mineral rights were severed, no mineral development took place on, in, or under this land for the next 130 years. No limestone quarry was erected or operated during the following century and three decades. Instead, the land was used for agricultural purposes by the surface owner.
[7] Frank Boyce Moodie, III and his wife Kathleen Moodie, assigned rights to Berrian Minerals, Inc., and then to William Florman. Larry Glass then acquired part of Florman's rights.
[8] In each of the deeds, I.T. Handlin, who had retained a vendor's lien in prior deeds, was also a party and he "release[d] his lien for purchase money on the minerals & rights of way & surface for ware rooms herein conveyed."
[9] Smith assigned all of the interest in both the Moodie Lease and the Cook/MEBCO Lease to its own wholly-owned company, CRR. CRR is a successor to the LLC.
[10] These properties include the S & P Ventures property and the Rudolph property, and border the land on the west and the north while the Cumberland River borders on the south. Since the land in question is wholly within property owned by MEBCO, the owners of the other properties are not parties to this case.
[11] The total amount of property owned by MEBCO was 1,200 acres.
[12] During Smith's testimony, all leases, assignments, and related documents were introduced into evidence. CRR has acquired a quarry permit.
[13] On November 16, 1999, the Moodie defendants entered into an option lease and lease agreement with Jim Smith Contracting as lessee, granting Smith the right to prospect the premises with the option to lease for "marketable limestone, sandstone, and other construction aggregates" on the Shelby/Watkins tracts. On January 9, 2001, the Moodie defendants assigned their interest in the lease to their company, Berrian Minerals, Inc. Then, on November 13, 2001, Berrian assigned its rights to receive income from the Smith lease to a third party, Florman. Moodie testified that under an assignment, Florman was granted the option to buy Moodie's rights. Consequently, Florman now claims all or part of the Moodie/Berrian rights purportedly derived from Salem Fluorspar. Florman then assigned a portion of his interest to Glass.
[14] On December 21, 1999, the Cooks entered into an Option to Lease and Lease Agreement with Jim Smith Contracting granting Smith the right to prospect and explore the entire "L" shaped tract (including but not limited to that portion of the land as set out in the Shelby/Watkins deeds) and the option to lease the premises of "marketable limestone, sandstone and other construction aggregates" on the premises. The Cooks conveyed their property to MEBCO at about the same time. Firmon Cook testified that Smith and CRR had the right to quarry the property.
[15] It was stipulated at the trial that MEBCO is the owner of sand and gravel in and under the premises contained in the Shelby/Watkins deeds.
[16] Thereafter, CRR moved to amend its pleadings to assert its cross-claims against the other defendants, including the claim that it had acquired certain valid mineral leasehold interests from the Moodie defendants under the November 16, 1999, lease agreement. On November 6, 2002, the motion was granted and the cross-claims of CRR were filed.
[17] MEBCO filed a response to CRR's exceptions and proposed order.
[18] In addition, MEBCO raised two other issues including, (1) whether the term "aggregates" in the Cook/MEBCO lease includes clay, and (2) whether payments under the Moodie lease triggers the "most favored nation" clause of the Cook/MEBCO lease. These issues have been dismissed upon MEBCO's own motion and by order of this Court entered on May 9, 2006, and will not be discussed further in this appeal.
[19] See Elkhorn City Land Co. v. Elkhorn City, 459 S.W.2d 762, 765 (Ky.1970).
[20] Morganfield National Bank v. Damien Elder & Sons, 836 S.W.2d 893, 895 (Ky.1992).
[21] Yunker's Co-Exr's v. Mason, 284 S.W.2d 98, 99 (Ky.1955).
[22] Phelps v. Sledd, 479 S.W.2d 894, 896 (Ky. 1972).
[23] Franklin Fluorspar Co. v. Hosick, 239 Ky. 454, 39 S.W.2d 665, 666 (1931) (stating that "`words employed in a deed should be given their fair and reasonable meaning, receiving the interpretation accorded them by the common usage of mankind, having in view the circumstances of their use and the context.' . . . The rule is also well settled that the deed will be construed most strongly against the grantor and in favor of the grantee if it admits of two constructions" [citations omitted]).
[24] Phelps, 479 S.W.2d at 896.
[25] Brown v. Harlow, 305 Ky. 285, 286, 203 S.W.2d 60, 61 (1947).
[26] See Croley v. Round Mountain Coal Co., 374 S.W.2d 852, 854 (Ky.1964). See also Gladys City Oil, Gas & Mfg. Co. v. Right of Way Oil Co., 137 S.W. 171, 178 (Tex.Civ.App. 1911) (noting that where a deed is prepared by the grantee, the rule is reversed and any ambiguity is construed most strongly against the grantee).
[27] Kalberer v. Grassham, 282 Ky. 430, 138 S.W.2d 940, 942 (1940).
[28] 265 Ky. 495, 97 S.W.2d 35 (1936).
[29] Rudd, 97 S.W.2d at 36.
[30] Id. (stating that the question "of intention [is] to be decided upon the language of the grant or reservation," unless such language "is so ambiguous as to leave the mind in doubt as to its proper construction, in which event extrinsic evidence may be resorted to as an aid in determining the true meaning of the instrument").
[31] Id.
[32] 151 Va. 28, 144 S.E. 629, 632 (1928).
[33] Rudd, 97 S.W.2d at 36.
[34] Id. at 36-37.
[35] Id. at 37.
[36] 408 S.W.2d 207 (Ky.1966).
[37] Id. at 209.
[38] Little, 408 S.W.2d at 208.
[39] Id.
[40] See Wulf v. Shultz, 211 Kan. 724, 508 P.2d 896, 900 (1973) (noting that a grant which included "other mineral substances" was held not to include limestone. The Court reasoned that such grant "should not be construed to include a substance which requires destruction of the surface estate for its removal").
[41] Kalberer, 138 S.W.2d at 942.
[42] See Id. at 941.
[43] Little, 408 S.W.2d at 209.
[44] Cumberland Mineral Co. v. United States, 206 Ct.Cl. 797, 513 F.2d 1399, 1401 (1975); Elkhorn City, 459 S.W.2d at 765.
[45] 147 Tex. 512, 217 S.W.2d 994 (1949).
[46] Heinatz, 217 S.W.2d at 997.
[47] 355 S.W.2d 206 (Tex.Civ.App.1962).
[48] Atwood, 355 S.W.2d at 214-16.
[49] Id. at 215. See also Acker v. Guinn, 464 S.W.2d 348, 351 (Tex.1971).
[50] 513 F.2d at 1399.
[51] Cumberland, 513 F.2d at 1400.
[52] Id. at 1401.
[53] Cumberland, 513 F.2d at 1403.
[54] Id.
[55] Elkhorn City, 459 S.W.2d at 765.
[56] Cribbing is defined as "[a] framework support, as of timber lining a shaft." Webster's II College Dictionary (2001).
[57] Rudd, 97 S.W.2d at 37.
[58] Id.
[59] Kalberer, 138 S.W.2d at 941.
[60] Id. at 944. The Moodie defendants also argue that Kentucky law holds that the surface estate is subservient to the mineral estate. The Moodie defendants cite KRS 381.430, which states that when the mineral interest has been severed from the surface estate, the possession of the surface estate "shall be deemed to be for the benefit of the person, his heirs and assigns, to whom the mineral, interests or rights have passed." MEBCO argues that the Moodie defendants' argument regarding dominant versus subservient estates has no application to this issue, but rather the statutory reference cited by the Moodie defendants applies to adverse possession and has nothing to do with dominant or subservient estates. We agree.
[61] In non-broad form deeds, the rights of the surface owners are not necessarily subordinate to the mineral owner. Broad form deeds were deeds used in the past 30 years that were held by our courts to grant the right to strip mine without compensation to the surface owner. Later, these broad form deeds were for a limited period of time held to include the right to strip mine upon payment to the surface owner. Finally, our Supreme Court ruled that the broad form deeds were unconditionally not to include the right to strip mine without the consent of the surface owner. See Ward v. Harding, 860 S.W.2d 280, 287 (Ky.1993) (stating that "[a]s this Court's decision in Buchanan v. Watson [290 S.W.2d 40 (Ky.1956)] presumed a right to surface mine merely by virtue of the ownership of mineral rights, by this decision we hold that no such presumption shall hereafter exist").
[62] 540 S.W.2d 861 (Ky.1976).
[63] Id. at 862.
[64] Id. at 864.
[65] Id.
[66] Commerce Bank, 540 S.W.2d at 863. See also Peabody Coal Co. v. Erwin, 453 F.2d 398, 399 (6th Cir.1971) (noting that the non-broad form deed included all the rights proper and necessary for the mining of coal and the court held that such language "does not indicate the intention of the parties that the mineral owner bought the right to destroy the surface").
[67] 964 S.W.2d 419 (Ky.App.1997).
[68] Id. at 424.
[69] 58 CJS Mines and Minerals § 182 (Supp. 2005).
[70] See 58 CJS Mines and Minerals § 167 (Supp.2005).
[71] The Pedley heirs argue that KRS 271.580 controlled the dissolution of Salem Fluorspar, and that the mineral estate should have been sold and the proceeds distributed to the shareholders in 1967.
[72] On January 22, 2001, the case of Berrian Minerals, Inc. v. Grace M. Brown, Case No. 01-CI-00007, was filed in the Livingston Circuit Court, in which the Moodie defendants sought the declaration of a trust concerning the heirs so that a mineral lease could be developed. The last order in that case, dated May 6, 2001, appointed Raymond McGee as trustee for the minority 9% interest for unknown and missing owners of mineral rights. This trusteeship included the Pedley heirs and the Maddox heirs. At the trial in this case, Boyce Moodie testified that Salem Fluorspar's interest had descended to its shareholders and that Moodie obtained 90.9% of the outstanding shares; therefore, Moodie filed an action in the Livingston Circuit Court concerning the other 9.1% of the shares to get authority to enter into a lease, shown by the petition and decree in that lawsuit.
[73] See Capital Holding Corp. v. Bailey, 873 S.W.2d 187, 197 (Ky.1994).
[74] CR 13.01 states in relevant part that "[a] pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim. . . ."
[75] The Pedley heirs argue to this Court that they stipulated to the existence, not the validity, of the lease between the Moodie defendants and CRR. However, from our review of the trial record, it appears that the validity of this lease was never contested after the stipulation was entered and, at oral arguments before this Court, the Pedley heirs' attorney stated that such was not contested.
[76] See Elwell v. Stone, 799 S.W.2d 46, 47-48 (Ky.App.1990).
[77] CR 8.01(1) states that "[a] pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain (a) a short and plain statement of the claim showing that the pleader is entitled to relief and (b) a demand for judgment for the relief to which he deems himself entitled. Relief in the alternative or of several different types may be demanded."
[78] Weissinger v. Mannini, 311 S.W.2d 199, 201 (Ky.1958).
[79] Lawrence v. Risen, 598 S.W.2d 474, 476 (Ky.App.1980).
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182 Ga. App. 115 (1987)
354 S.E.2d 696
HANDCRAFTED FURNITURE, INC. et al.
v.
BLACK et al.
73583.
Court of Appeals of Georgia.
Decided March 11, 1987.
Robert P. Hein, for appellants.
Michael R. Eddings, Renzo S. Wiggins, for appellees.
POPE, Judge.
Workers' compensation. Defendants, employer Handcrafted Furniture, Inc. and its insurer, International Indemnity Company, bring this appeal from the superior court's affirmance of the board's award of benefits to claimants, all survivors of the deceased employee, Sherman Black. The administrative law judge (ALJ) made the following findings of fact and conclusions of law, which were adopted by the board:
"The deceased employee and Allan Aylsworth were co-owners of Handcrafted Furniture, Inc. and began operation in July of 1982. During the early part of 1983, the corporation was moved from Calhoun to Adairsville, Georgia. Because Mr. Black would leave numerous times during the day, would come in late many times, because of his inexperience and numerous mistakes, because of friction between Mr. Black and employees, because Mr. Aylsworth did not believe Mr. Black to share his part of the responsibilities, and because Mr. Black would not sell his 50 percent ownership in the business to Mr. Aylsworth, Mr. Aylsworth became increasingly frustrated with Mr. Black. Commencing about October 1982, Mr. Aylsworth began planning the murder of Mr. Black with several employees. On February 18, 1983, Allan Aylsworth, Robert Hunter, and James Couch murdered Mr. Black at the premises of Handcrafted Furniture, Inc. while Mr. Black was working. The three murderers were subsequently arrested, convicted of murder, and received life sentences.
"The employer/insurer contend that this claim is not compensable in that the deceased employee was murdered for purely personal reasons. However, from Mr. Aylsworth's testimony, I find that the deceased employee was murdered because he was a poor business partner and Mr. Aylsworth desired to gain complete control of the business *116 and eliminate Mr. Black as a problem to the business. Thus, I find that the deceased employee was killed for a business reason rather than a purely personal reason.
"The employer/insurer also contend that Lanette Black conspired with Mr. Aylsworth to murder her husband. In support of this, the employer/insurer argue that Lanette Black and Allan Aylsworth were having an affair and planned to murder Mr. Black in order to eliminate him from the picture and to receive the life insurance proceeds as a result of his death. In support of this, the defendants offered the testimony of several former employees of Handcrafted Furniture, Inc., which amounted to little more than gossip. The employer/insurer did offer the testimony of Mrs. Brenda Aylsworth, wife of Allan Aylsworth. In her testimony, Mrs. Aylsworth testified that Lanette Black, in an indirect way, admitted to having an affair with her husband and that her husband told her that he had an affair with Lanette Black. Mrs. Aylsworth confessed that in an earlier trial in Federal Court she had testified that she did not have any knowledge about an affair between her husband and Lanette Black. When faced with this contradiction, Mrs. Aylsworth stated that she lied under oath in Federal Court but that she was telling the truth to the undersigned. Because of Mrs. Aylsworth's admission of perjury along with my personal observation of Mrs. Aylsworth's demeanor, I find her testimony to be unworthy of belief. Additionally, Allan Aylsworth testified that although he would not answer any questions pertaining to his relationship with Lanette Black, that any relationship between himself and Lanette Black had no bearing on the murder of Sherman Black."
1. Defendant's first enumeration of error asserts that Sherman Black's death was caused by the wilful acts of Allan Aylsworth for personal reasons and thus was non-compensable within the meaning of OCGA § 34-9-1 (4). We find this issue controlled adversely to defendants by the holding in State of Ga. v. Purmort, 143 Ga. App. 269 (1) (238 SE2d 268) (1977): "The findings and award were authorized by the evidence, and the record does not demand a finding ... that the attack was directed against [the deceased] for nonwork-related personal reasons. Consequently, while a different result could have been reached, the award was authorized, the `any evidence' rule being applicable to [this question]." (Citations and punctuation omitted.) Accord Commercial Constr. Co. v. Caldwell, 111 Ga. App. 1 (140 SE2d 298) (1965); McLaughlin v. Thompson, Boland & Lee, 72 Ga. App. 564 (3) (34 SE2d 562) (1945); Muscott v. Janice Stores Corp., 6 A. D. 2d 921 (175 NYS2d 746) (1958). Compare Murphy v. ARA Svcs., 164 Ga. App. 859 (298 SE2d 528) (1982); Lanier v. Brown Bros., 44 Ga. App. 831 (163 SE 263) (1932).
2. Defendant's second enumeration cites as error the ALJ's excluding *117 or limiting testimony of witnesses concerning statements made by Allan Aylsworth since such testimony was admissible as original evidence to prove Aylsworth's motive for murdering Sherman Black. See OCGA § 24-3-2. The ALJ found that such testimony "amounted to little more than gossip."
The ALJ and full board "as factfinders have exclusive prerogative of weighing evidence, including determinations of credibility of witnesses; the courts on appeal are bound by findings if supported by any evidence.... [I]n arriving at the truth, [they] may apply all of the rules of law with reference to the credibility of the witnesses testifying, their intelligence, their means and opportunity of knowing the facts to which they testify, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and their personal credibility so far as the same legitimately appears from the trial." Howard Sheppard, Inc. v. McGowan, 137 Ga. App. 408, 411 (224 SE2d 65) (1976). Upon review of the record in this case, we find no error in the ALJ's ruling. See Jones v. State, 247 Ga. 268 (9) (275 SE2d 67), cert. den., 454 U. S. 817 (1981).
3. In light of our holding in Division 2, supra, we also find no error in the ALJ's finding that Mrs. Aylsworth's testimony was "unworthy of belief." See OCGA § 24-9-85 (a).
4. We find no error in admitting the testimony of Allan Aylsworth as to his reasons for killing the deceased over defendants' objection that same was a self-serving declaration. See Childers v. Ackerman Constr. Co., 211 Ga. 350 (3) (86 SE2d 227) (1955). See generally Price v. Star Svc. &c. Corp., 119 Ga. App. 171, 177 (166 SE2d 593) (1969).
5. Defendants' gender-based constitutional challenge to OCGA § 34-9-13 (b) (formerly Code Ann. § 114-414 and as effective prior to amendment July 1, 1985, see Ga. L. 1985, p. 727, § 1) has been previously addressed and resolved by our Supreme Court in Insurance Co. of N. America v. Russell, 246 Ga. 269 (2) (271 SE2d 178) (1980). The board's award regarding the dependency of the widow, Lanette Black, which reversed the award of the ALJ in this regard, is in accord with the holding in Russell, is supported by the evidence and, thus, must be affirmed. See Neese v. Subsequent Injury &c. Fund, 164 Ga. App. 136 (296 SE2d 427) (1982). In any event, "[w]here the death of the employee is compensable[,] the law fixes the amount to be paid the dependents described by [OCGA § 34-9-13. See OCGA § 34-9-265] The number of dependents who participate in the use of the fund is of no concern to the employer or insurance carrier; their only interest is to see that the amount of the award is paid to those entitled to receive the same." Georgia Forestry Comm. v. Harrell, 98 Ga. App. 238, 240 (105 SE2d 461) (1958).
*118 6. Defendants' assertion that OCGA § 34-9-13 (a and b) (in effect prior to July 1, 1985) unconstitutionally created a conclusive presumption of dependency of stepchildren has been decided adversely to them in Flint River Mills v. Henry, 239 Ga. 347 (236 SE2d 583) (1977), cert. dismissed, 434 U. S. 1003 (1978). Therefore, we affirm the ALJ's finding that "[f]rom the conclusive presumption contained in OCGA § 34-9-13 (b) as well as the testimony of Lanette Black wherein she testified that the deceased employee contributed to their support for food, clothing, and doctor bills, I find the deceased employee's step-children to have been wholly dependent upon the deceased employee for their support." We find no basis for concluding that the July 1, 1985 amendment to the statute, providing a presumption of dependency to "dependent stepchildren" rather than to stepchildren without qualification, "imperatively requires" its retroactive application in this case. See Hart v. Owens-III., 250 Ga. 397 (297 SE2d 462 ) (1982).
Judgment affirmed. McMurray. P. J., and Carley, J., concur.
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242 P.3d 196 (2010)
STATE of Kansas, Appellee,
v.
Clifford BAUGHMAN, Appellant.
No. 100,604.[1]
Supreme Court of Kansas.
May 28, 2010.
*197 Rick Kittel, of Kansas Appellate Defender Office, of Topeka, for appellant.
Sherri Schuck, county attorney, and Steve Six, attorney general, for appellee.
Before MARQUARDT, P.J., BUSER, J., and LARSON, S.J.
LARSON, J.
This is Clifford Baughman's direct appeal from his conviction in a jury trial of aggravated indecent liberties with a child in violation of K.S.A. 21-3504(a)(1).
Baughman alleges on appeal that the district court erred (1) in giving the "deadlocked" jury instruction over his specific objection; (2) in failing to require an election or giving an instruction in a multiple acts situation; (3) by excluding evidence of the victim's previous sexual history for the purpose of impeachment; and (4) by refusing to remove Baughman's appointed counsel on the morning of the jury trial.
We reverse and remand for further proceedings because the district court erred in giving, over Baughman's specific objection, a deadlocked jury instruction which had been disapproved by our appellate court in State v. Salts, 288 Kan. 263, 200 P.3d 464 (2009), State v. Scott-Herring, 284 Kan. 172, 180-81, 159 P.3d 1028 (2007), State v. Turner, 34 Kan.App.2d 131, 132-36, 115 P.3d 776 (2005), and other cases.
We will briefly set forth trial testimony in commenting on other issues, but such a discussion is not necessary to resolve the dispositive issue in this appeal.
The Allen v. United States, 164 U.S. 492, 17 S.Ct. 154, 41 L.Ed. 528 (1896), "deadlocked jury instruction" was given in this case, along with other jury instructions, and reads as follows:
"No. 14
"This is an important case. If you should fail to reach a decision, the case is left open and undecided. Like all cases, it must be decided sometime. Another trial would be a heavy burden on both sides.
There is no reason to believe that the case can be tried again any better or more exhaustively than it has been. There is no reason to believe that more evidence or clearer evidence would be produced on behalf of either side.
Also, there is no reason to believe that the case would ever be submitted to 12 people more intelligent or more impartial or more reasonable than you. Any future jury must be selected in the same manner that you were.
This does not mean that those favoring any particular position should surrender their honest convictions as to the weight or effect of any evidence solely because of the opinion of other jurors or because of the importance of arriving at a decision.
This does mean that you should give respectful consideration to each other's views and talk over any differences of opinion in a spirit of fairness and candor. If at all possible, you should resolve any differences and come to a common conclusion. You may be as leisurely in your deliberations as the occasion may require and take all the time you feel necessary."
Because Baughman objected to instruction No. 14, the instructions are to be considered by an appellate court as a whole and not isolate any one instruction. Even if erroneous in some way, instructions are not reversible error if they properly and fairly state the law as applied to the facts of the case and could not have reasonably misled the jury. State v. McKissack, 283 Kan. 721, 732, 156 P.3d 1249 (2007).
Baughman, in a Supreme Court Rule 6.09 letter (2009 Kan. Ct. R. Annot. 47) following oral argument, suggests that this standard has been stated another way in a recent case, State v. Williams, 42 Kan. App.2d 725, Syl. ¶ 1, 216 P.3d 707 (2009): "An appellate court examines jury instructions as a whole, without focusing on any single instruction, in order to determine whether they properly and fairly state the applicable law or whether it is reasonable to conclude that they could have misled the jury." We will follow the standard of review most recently set forth in a Supreme Court opinion, State v. Appleby, 289 Kan. 1017, 1059, 221 P.3d 525 (2009), which states:
*198 "When a party has objected to an instruction at trial, the instruction will be examined on appeal to determine if it properly and fairly states the law as applied to the facts of the case and could not have reasonably misled the jury. In making this determination an appellate court is required to consider the instructions as a whole and not isolate any one instruction. [Citations omitted.]"
In his appeal, Baughman argues the instruction is unduly coercive, misleading, confusing, and legally infirm because it allows the jury to consider matters outside the evidence produced at trial and improperly appeals to the financial interests of jurors. He further argues instruction No. 14 is in direct conflict with instruction No. 11. Specific language in instruction No. 14 has been disapproved in prior appellate opinions, and the instruction given follows exactly the pre-2005 version of PIK Crim.3d 68.12, which our Supreme Court in State v. Scott-Herring, 284 Kan. at 181, 159 P.3d 1028, specifically directed that trial judges should discontinue using.
The State recognizes the holdings of the several cases which Baughman cites but argues they do not require reversal in our case. The State points out that while "like all cases, it must be decided sometime" is an inaccurate statement of law, State v. Scott-Herring did not require reversal and under the standard of review proper and fair instructions were required rather than "technically perfect instructions." The State further points to the fact there was no objection in the State v. Salts case, which required a clearly erroneous standard of review, and the court concluded there was no reversible error because there was no real possibility the jury would have reached a different verdict absent the error. 288 Kan. at 266-67, 200 P.3d 464.
The State distinguishes the recent case of State v. Page, 41 Kan.App.2d 584, 203 P.3d 1277 (2009), where giving the deadlocked jury instruction was objected to and deemed to be reversible error because the jury had informed the court it was deadlocked on count II but continued deliberations the following day and eventually found Page guilty. The State argues Baughman's case is different as there were no deadlock or hung jury announcements and, in fact, the jury came back with a split verdict, finding Baughman not guilty on count I and guilty on count II.
The problems with the language of PIK Crim.3d 68.12 was first set forth in Judge Malone's opinion in State v. Turner where the "Like all cases, it must be decided sometime" language was held to be an inaccurate statement of law because the case might not be retried and could be dismissed without prejudice and never decided. 34 Kan.App.2d at 134, 115 P.3d 776. The Turner opinion stated there was nothing to support a pressured verdict and the jury could not reasonably have been misled by the instructions. 34 Kan.App.2d at 136, 115 P.3d 776.
This same language was objected to in State v. Scott-Herring but not found to be sufficiently erroneous to require reversal of a first-degree murder conviction. Justice Rosen pointed out in Scott-Herring that appellant's argument had recently been rejected in State v. Anthony, 282 Kan. 201, 215-16, 145 P.3d 1 (2006), where a clearly erroneous standard was applied because the defendant had not objected to the instruction. The Scott-Herring opinion noted that much of the concern about the instruction had been remedied by the PIK Committee, and the court stated that the current version was a more accurate statement of a jury's responsibilities. The Scott-Herring opinion quoted the modified instruction as it now reads:
"Like all cases, this is an important case. If you fail to reach a decision on some or all of the charges, that charge or charges are left undecided for the time being. It is then up to the state to decide whether to resubmit the undecided charge(s) to a different jury at a later time.
This does not mean that those favoring any particular position should surrender their honest convictions as to the weight or effect of any evidence solely because of the opinion of other jurors or because of the importance of arriving at a decision.
This does not mean that you should give respectful consideration to each other's views and talk over any differences of opinion in a spirit of fairness and candor. *199 You should treat the matter seriously and keep an open mind. If at all possible, you should resolve any differences and come to a common conclusion.
You may be as leisurely in your deliberations as the occasion may require and take all the time you feel necessary. PIK Crim.3d 68.12 (2005 Supp.)." 284 Kan. at 181, 159 P.3d 1028.
As we previously noted, the Scott-Herring opinion further directs trial judges to discontinue using the pre-2005 version of PIK Crim.3d 68.12. It is factored in our decision to reverse the trial court that this direction was not followed in our case and the instruction given, over objection, was in the precise language of the pre-2005 version of PIK Crim.3d 68.12.
State v. Salts was decided subsequent to the trial in our case. The unobjected-to Allen-type instruction there included the "another trial would be a burden on both sides" language. Also given in the Salts case and in ours was instruction No. 11, which states: "Your only concern in this case is determining if the defendant is guilty or not guilty. The disposition of the case thereafter is a matter for determination by the Court."
In discussing the challenged language, Justice Beier said:
"Salts' argument that the challenged language is misleading and inaccurate has merit. Contrary to this language, a second trial may be burdensome to some but not all on either side of a criminal case. Moreover, the language is confusing. It sends conflicting signals when read alongside Instruction 11 or a similar instruction that tells jurors not to concern themselves with what happens after they arrive at a verdict.
"We therefore hold that including the language `[a]nother trial would be a burden on both sides' in PIK Crim.3d 68.12 is error." 288 Kan. at 266, 200 P.3d 464.
Using a clearly erroneous standard, the Salts court did not reverse, being "firmly convinced that there is no real possibility the jury would have rendered a different verdict if the error had not occurred." 288 Kan. at 267, 200 P.3d 464.
State v. Page was decided by the Court of Appeals shortly after the Salts opinion was handed down. In the Page opinion by Chief Judge Rulon, the holding of Salts was discussed. It was recognized that the "deadlocked" jury instruction had been objected to by the defendant and the Page opinion concluded:
"According to our Supreme Court, telling a jury that `"[a]nother trial would be a burden on both sides"' is misleading, inaccurate, and confusing. [288 Kan. at 265-66, 200 P.3d 464]. Moreover, in this case the jury actually informed the district court a hung jury was a real possibility. In fact, the jury indicated it was deadlocked as to count II. The district court responded by recessing for the evening. When the jury returned the next day, the jury requested the court read back certain testimony. The jury eventually convicted the defendant of two counts of rape. Given the fact our Supreme Court has held the deadlocked jury instruction misleading and the real possibility the jury in this case was at least influenced by the erroneous language in the jury instruction, this defendant's convictions must be reversed." 41 Kan.App.2d at 586-87 [203 P.3d 1277].
It appears in Page that our court did, in part, rely on the jury's statement of possible deadlock in reaching its decision. However, Page does not say that signs of possible jury deadlock are necessary for reversal, only that it was a factor.
Our next Court of Appeals decision, State v. Pruitt, 42 Kan.App.2d 166, 211 P.3d 166 (2009), reversed a conviction as the result of the giving of an improper Allen instruction without any discussion of whether the jury might have been deadlocked or evidence that it was. The Pruitt opinion noted that the Allen instruction conflicted with the instruction which stated: "Your only concern in this case is determining whether the defendant is guilty or not guilty. The disposition of the case thereafter is a matter for determination by the Court." 42 Kan.App.2d at 174, 211 P.3d 166. Pruitt discussed the Salts decision and concluded:
"Here, Pruitt, however, objected to the giving of the deadlocked jury instruction. *200 As a result, the clearly erroneous standard applied in Salts is inapplicable to this case. We must consider whether the Allen instruction properly and fairly stated the law as applied to the facts of the case and whether the instruction could have misled the jury. Because the Allen instruction was misleading and it contradicted another jury instruction, Pruitt's conviction must be reversed. See State v. Page, 41 Kan. App.2d 584, 586-87, 203 P.3d 1277 (2009). (`Given the fact our Supreme Court has held the deadlocked jury instruction misleading and the real possibility the jury in this case was at least influenced by the erroneous language in the jury instruction, this defendant's convictions must be reversed.')." 42 Kan.App.2d at 175, 211 P.3d 166.
It should also be noted that the Pruitt court reversed the conviction on an alternate ground of cumulative error, but Judge McAnany concurred in part and dissented in part, stating:
"I concur with the majority that this case must be reversed and remanded. Because Pruitt objected to the Allen instruction, State v. Salts, 288 Kan. 263, Syl. ¶ 2, 200 P.3d 464 (2009), requires that we do so. However, I would not reverse based upon the other claimed trial errors or based upon a cumulative error analysis." 42 Kan.App.2d at 178, 211 P.3d 166.
It is thus clear that Judge McAnany would have reversed solely as the result of the objected-to Allen instruction and further that the panel did not believe any confusion or thought of deadlock on the part of the jury was necessary for reversal to be required.
There are also two more recent Court of Appeals cases, both of which were not published, which turned on the Allen issue. In State v. Rivera, No. 100,848, 2010 WL 445689, unpublished opinion filed January 29, 2010, a DUI conviction was reversed where the "deadlock" jury instruction was given prior to opening statements. As the trial court reached the "another trial would be a heavy burden language," Rivera immediately objected, stating: "Judge, I would request that you not give them the [Allen-type] charge before they start deliberating because I don't think that's appropriate before, I mean, you're basically giving them an [Allen-type] charge." Slip op. at 11-12, 2010 WL 445689. The trial court overruled the objection and read the instruction again.
After retiring for deliberations, the jury asked several questions and eventually advised the court, "We are at an impasse." The judge asked the jury if they had additional time if they could reach a verdict and when a juror responded affirmatively, the jury was directed to continue to deliberate and eventually returned a guilty verdict.
The Rivera opinion commented on Salts, Page, the conflicting language, and the effect on a deadlocked jury, and reversed the conviction and remanded for a new trial because the deadlocked jury instruction had been disapproved in Salts. Slip op. at 16-17.
The most recent decision on this issue is State v. Starbird, No. 101,559, 2010 WL 744803, unpublished opinion filed February 26, 2010, where the deadlocked jury instruction was given prior to deliberations but was not objected to. The Starbird panel found this did not constitute reversible error under a clearly erroneous standard. After discussing Salts and Page, the Starbird court held there was never any indication the jury was deadlocked or impacted by the instruction and following Salts, Starbird was unable to establish the giving of the instruction was clearly erroneous.
In reaching our conclusion, we begin with the fact the instruction as given and objected to was in clear violation of the express direction by our Supreme Court in the 2007 opinion in Scott-Herring to discontinue using the pre-2005 version of PIK Crim.3d 68.12. See 284 Kan. at 181, 159 P.3d 1028. The instruction given was subject to all of the negatives that have been set forth in the cases we have cited. Scott-Herring does not set forth the consequences of failure to follow its direction but an obvious result would be reversal of the offending case.
However, the question which must be answered where there is a clear objection to an erroneous instruction is whether it "could not have reasonably misled the jury." We hold it is not necessary to have a jury report *201 that it is at an impasse in order to reach the decision that an admittedly erroneous instruction has misled a jury. The fact there was a split verdict in our case does not show the lack of confusion as the State argues, it could just as easily be evidence of confusion.
The instruction given in our case was specifically determined by our Supreme Court in Salts to be misleading, inaccurate, and erroneous. See 288 Kan. at 266, 200 P.3d 464. The clear reasoning, language, and result in Pruitt where a reversal was ordered without any discussion of the interaction of the jury with the court is persuasive.
We hold the instruction as given, considered in its entirety, could have reasonably misled the jury. Consequently, we reverse the defendant's convictions and remand for further proceedings.
The future course of this case is not within our control. But, if it is tried again and the evidence presented is substantially the same as in the first trial, we offer limited comments as to the other issues raised on appeal.
The testimony as to the interaction between the defendant and victim on July 15, 2007, showed a brief sexual encounter which involved both digital and penile penetration of the victim. We do not believe this was a multiple acts situation as there appeared to be a limited lapse of time between the two penetrations, and so a unanimity instruction was not required.
We point the parties to State v. Voyles, 284 Kan. 239, 244-56, 160 P.3d 794 (2007), for a comprehensive discussion of this issue. We also note that Baughman's claim of multiplicity could be addressed on retrial by the State, informing the jury of which act to rely on or having the trial court instruct the jury to agree on a specific criminal act.
We will not repeat the testimony but the trial court was correct in refusing to allow the defense to cross-examine the victim as to prior sexual conduct "as a matter of credibility" as such would have been in violation of the rape shield motion in limine that had been filed.
Finally, there is no way to know who will represent Baughman in the future and we make no comment on the alleged error of failing to remove his appointed counsel on the morning of trial.
Reversed and remanded for further proceedings.
MARQUARDT, J.
I concur that this is not a multiple acts case. I respectfully dissent from the majority's holding that giving the Allen instruction was reversible error. Even though it was error, I believe it was harmless error because of the overwhelming evidence against Baughman and this case should be affirmed.
Baughman, a 23-year old, was charged with two counts of aggravated indecent liberties with a child and one count of sexual exploitation of a child. Count I was aggravated indecent liberties with a child in June 2007. Count II was aggravated indecent liberties with a child in July 2007. The victim was a 15-year old girl, D.E.K. The sexual exploitation of a child charge was dismissed. Baughman's trial lasted 2 days.
D.E.K.'s Testimony
D.E.K. testified that she met Baughman through a friend, in March 2007. In April they began "talk[ing] on the computer," using Facebook, and she told him she was 15.
The first time D.E.K. and Baughman "hung out alone" was in June 2007. D.E.K. was babysitting for an entire weekend and was using her cell phone to text back and forth with Baughman. Late Saturday night or early Sunday morning, they arranged to meet behind the Gas 4 Less station while her friends watched the children she was supposed to be babysitting. She told her friends that she was going to meet Baughman.
When D.E.K. met Baughman, they hugged and kissed. She said, "After awhile we were talking and he fingered me," which meant that he unbuttoned her pants, put his hand down her pants, and put his finger in her vagina. They stayed behind the Gas 4 Less for 2 or 3 hours.
The next time Baughman and D.E.K. were alone together was in July 2007. D.E.K. was hanging out with C.S., L.B., and K.D. on *202 Saturday and they went to a motorcycle rally. All of them were under 18 years of age.
That evening, D.E.K. and Baughman were texting each other and agreed to meet again behind the Gas 4 Less. When Baughman and D.E.K. met, they hugged and talked. They sat down with Baughman seated behind her. At some point he had his hand on her crotch, started putting his fingers in her shorts, and then he "fingered" her. It was the same type of "fingering" he had done in June.
Baughman told her to get up and she did. He then told her to lie down. She saw him unbuckling his pants and said, "`No, not yet,' and he said, `Don't worry, I'm not going to stick it in you,' and he did." She eventually took off her shorts and her underwear. He never took his pants off, just took his penis out. They went over by an old truck and he wanted her to "sit and do it" on the edge of the truck. But that "didn't work." Then he told her to turn around, and she "thought that he was going to do something else but he didn't."
They "finally did it lying down." She said he was "gentle." When it hurt, she told him to stop, so he did. Then he "went at it again" and "once it started hurting [she] told him to stop." Then "after the pain went away he kept going." The prosecutor asked D.E.K. what she meant when she said that "he put it in you." D.E.K. said: "He put his penis in my vagina." The prosecutor asked how long the two had "sexual intercourse" and D.E.K. said 15 or 20 minutes.
Because Baughman was not wearing a condom, D.E.K. was concerned she would get pregnant. Baughman said she would not because she "didn't let him finish." He told her he did not ejaculate. After they had sexual intercourse D.E.K. said she stayed about 10 minutes and then walked back to C.S.'s house.
D.E.K. did not tell her friends immediately what had happened but later she told K.D., "because it was my first time and it hurt and so they noticed a little. She thought something happened." D.E.K. said K.D. "kind of figured that I was walking weird," so D.E.K. told her she was in pain and she had had sex with Baughman.
K.D. testified: "She [D.E.K.] said that behind Gas 4 Less her and Clifford had sex and she had lost her virginity to him." Monday night K.D. told D.E.K.'s best friend, who threatened to tell D.E.K.'s parents what happened if D.E.K. did not tell them herself. So D.E.K. told her parents about it on Tuesday.
Christine Hazlett-Allen's Testimony
D.E.K. was examined by Christine Hazlett-Allen, a sexual assault nurse examiner, on July 18. Allen collected evidence, including the underwear that D.E.K. had been wearing at the time of the incident. The collected evidence was sent to the KBI; however, no biological evidence was found on the clothing.
Allen also examined D.E.K.'s vaginal area using a colposcope to magnify and photograph the area. Some of the photographs were introduced at trial. Allen described injuries to D.E.K.'s hymen that were "consistent with a blunt penetrating trauma."
D.E.K. told Allen that Baughman had "fingered" her and that they had had vaginal intercourse. Allen said the injuries were consistent with an object entering the vagina, and consistent with what D.E.K. told her. But she said there was no way for her to know what caused the injury.
Officer William Coon's Testimony
Officer Coon of the Wamego Police Department was dispatched to talk to D.E.K.'s family when D.E.K.'s father reported she had admitted to having sex with an older man. Earlier that evening, Baughman had called and told Officer Coon that he had been "confronted" by D.E.K.'s mother who said that Baughman had had sex with D.E.K.
Officer Coon interviewed D.E.K. about the July incident. She told him that after Baughman digitally penetrated her, she removed her shorts and underwear and Baughman pulled down his jeans and underwear and they began to have "sex." Officer Coon asked D.E.K. what she meant when she said they had "sex" and she responded that sex was a man's penis in a woman's vagina.
D.E.K. also told Officer Coon about the June incident.
*203 Officer Coon interviewed L.B. and M.H. He testified that there was nothing inconsistent between what these witnesses said and what D.E.K. had told him.
Officer Coon interviewed Baughman. The interview was recorded and then played for the jury. A transcript of the interview was also admitted. Baughman at first denied being with D.E.K. on July 15. He told Officer Coon that he had called D.E.K. after the motorcycle rally and met her at the same place D.E.K. told Officer Coon that they had met. He also admitted he had been at the same place about a month before.
At first Baughman denied having sex with D.E.K. Officer Coon told him that the police knew sex had occurred and all they were trying to figure out was whether it was consensual. Baughman "advised that it was consensual sex at that point." Then he said he was not sure that his penis had actually been in her vagina. But he said that what he meant by sex was a man's penis in a woman's vagina.
When Officer Coon asked Baughman to clarify, did he or did he not have sex with D.E.K., Baughman said that they may have had sex. Officer Coon asked him to further clarify and Baughman told the officer that at times he just talks around subjects, and then said that he meant that they had had sex. Baughman denied digitally penetrating D.E.K.
Baughman said several times during the interview that he thought D.E.K. was 16 years old, not 15. He said they only had sex for a minute because he was uncomfortable with the age difference.
Baughman's Defense
Baughman presented no evidence. When the jury was being instructed, Baughman objected to instruction number 14, the Allen instruction, which included the statements, "Like all cases, it must be decided sometime," and "Another trial would be a heavy burden on both sides." The court overruled the objection and gave the instruction.
Jury Verdict
The jury found Baughman not guilty on Count I, the June 2007 charge. Baughman was found guilty on Court II, the July 2007 aggravated indecent liberties with a child charge. Baughman did not file any posttrial motions except a departure motion. He was sentenced to 68 months' imprisonment.
With all of this evidence, and the fact that the jury found Baughman not guilty on Count I, I do not believe that the Allen instruction could have reasonably misled the jury. I would affirm the jury's conviction.
NOTES
[1] REPORTER'S NOTE: Previously filed as an unpublished opinion, the Supreme Court granted a motion to publish pursuant to Rule 7.04 (2009 Kan. Ct. R. Annot. 54). The published version was filed with the Clerk of the Appellate Courts on November 8, 2010.
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Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
1-28-2009
In Re: William Lans
Precedential or Non-Precedential: Non-Precedential
Docket No. 08-1674
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2009
Recommended Citation
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 07-2886
____________
GOVERNMENT OF THE VIRGIN ISLANDS;
BUREAU OF INTERNAL REVENUE
v.
WILLIAM M. LANSDALE;
MARIANTHI LANSDALE;
LA ISLA VIRGEN, INC.;
MARINA PACIFICA OIL COMPANY;
LONESOME DOVE PETROLEUM COMPANY,
Appellants
____________
No. 08-1674
____________
In re: WILLIAM M. LANSDALE;
MARIANTHI LANSDALE,
Petitioners
____________
On Appeal from the District Court of the Virgin Islands
Division of St. Thomas
(D.C. Nos. 01-cv-00157 and 92-cv-00079)
District Judge: Honorable Raymond L. Finch
____________
Argued December 10, 2008
Before: FISHER, JORDAN and STAPLETON, Circuit Judges.
(Filed: January 28, 2009)
John J. Gibbons (Argued)
Kevin C. McNulty
Gibbons
One Gateway Center
Newark, NJ 07102-5310
Attorneys for Appellants and Petitioners
James L. Hymes, III
Bart F. Higgins (Argued)
Law Offices of James L. Hymes, III
5065 Norre Gade, Suite 3
P.O. Box 990
St. Thomas, VI 00804
Attorneys for Government of the Virgin Islands
and Bureau of Internal Revenue
Aquannette Chinnery-Montell
Office of Attorney General of Virgin Islands
Department of Justice
34-38 Kronprindsens Gade
GERS Complex, 2nd Floor
Charlotte Amalie
St. Thomas, VI 00802
Attorney for Bureau of Internal Revenue
Mark D. Hodge
Hodge & Francois
1340 Taarneberg
Charlotte Amalie
St. Thomas, VI 00802
Richard Vanneck
9800 Buccaneer Mall, Suite 9
St. Thomas, VI 00802
Attorneys for Lonesome Dove Petroleum Company
2
Maria T. Hodge (Argued)
Hodge & Francois
1340 Taarneberg
Charlotte Amalie
St. Thomas, VI 00802
Phillip S. Stenger
Stenger & Stenger
4095 Embassy Drive, Suite A
Grand Rapids, MI 49546
Attorneys for Joanne E. Bozzuto
____________
OPINION OF THE COURT
____________
FISHER, Circuit Judge.
William Lansdale and Marianthi Lansdale appeal three orders entered by the
District Court of the Virgin Islands disposing of motions involving tax receivership and
arbitration proceedings. The Lansdales have also filed a petition for a writ of mandamus.
The Virgin Islands Bureau of Internal Revenue (“VIBIR”) and the Receiver have filed
motions to dismiss the appeal for lack of jurisdiction. For the reasons set forth below, we
will dismiss the appeal for lack of jurisdiction and deny the petition for a writ of
mandamus.
3
I.
We write exclusively for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.1
A.
In 1991, the VIBIR obtained a tax deficiency judgment in the District Court
against La Isla Virgen, Inc., a Lansdale-owned company, in the amount of
$21,895,969.00.2 The District Court subsequently appointed a Receiver on behalf of the
Lansdale corporations to locate and secure assets belonging to the corporations. In 1998,
the VIBIR filed a complaint against the Lansdales seeking to hold them personally liable
for their corporations’ tax liability.
Following court-ordered mediation, the VIBIR and the Lansdales executed a final
settlement agreement (“FSA”) in November 2002. Pursuant to the FSA, the VIBIR was
entitled to a settlement amount of $6.5 million and the VIBIR agreed to “promptly request
the Receiver to file a final accounting; request, with [the VIBIR’s] full cooperation and
support, that the Court discharge the Receiver; and authorize [the] Receiver to return full
1
The complex factual and legal history of this case is well documented in previous
rulings by the District Court. See Gov’t of the Virgin Islands v. Lansdale, 172 F. Supp. 2d
636 (D.V.I. 2001); Gov’t of the Virgin Islands v. Lansdale, Nos. 2001-157, 1992-0079,
2004 WL 1918753 (D.V.I. Aug. 23, 2004).
2
La Isla Virgen merged into Marina Pacifica Oil Company in 1988 and Marina
Pacifica merged into Lonesome Dove Petroleum Company in 1992.
4
control of Lonesome Dove to the Lansdales along with all corporate records (financial
and otherwise) of Lonesome Dove.” The Lansdales agreed to “immediately thereafter
cause Lonesome Dove to use its best efforts to sell all non-liquid assets owned by
Lonesome Dove,” and “[a]ll proceeds from the asset liquidation” would then “be paid to
[the VIBIR] and [would] not be credited toward” the $6.5 million. The FSA also
included a dispute resolution provision, which stated that “[a]ny controversy, claim or
dispute” which arose “out of or relate[d] to” the FSA, was to be resolved by arbitration.
The District Court appointed Joanne Bozzuto as the successor Receiver and, following
the appointment, the Receiver began the process of filing years of Lonesome Dove
delinquent tax returns, drafting security agreements, and marshaling corporate oil and gas
assets into the receivership.
As the receivership investigation progressed, the Lansdales sought arbitration
pursuant to the FSA because they perceived that the VIBIR was not complying with the
FSA’s provision requiring the VIBIR to promptly request termination of the receivership.
The Lansdales raised three issues to the arbitrator: (1) Whether the oil and gas royalties
being collected by the Receiver were to be credited against the $6.5 million cash portion
of the settlement; (2) whether the VIBIR violated the FSA by failing to move for the
termination of the receivership; and (3) what Lonesome Dove’s non-liquid assets were, to
which the VIBIR was entitled to the proceeds of sale.
5
On May 10, 2006, the arbitrator entered an Interim Arbitration Decision and
Award resolving the first and second issues raised by the Lansdales, finding that (1) the
oil and gas royalties were to be considered liquid assets which were to be credited toward
the $6.5 million settlement sum, and (2) the VIBIR was required to request the Receiver
to file a final accounting and request the District Court to discharge the Receiver in order
to return control of Lonesome Dove to the Lansdales.
B.
The Lansdales timely appeal three orders issued by the District Court following the
arbitrator’s Interim Award. First, on July 24, 2006, the Lansdales filed a motion in the
District Court to confirm the arbitrator’s Interim Award, and on August 3, 2006, the
VIBIR filed a motion to vacate it. On May 30, 2007, the District Court denied both
motions in a single order (“Arbitration Order”), explaining in a memorandum opinion that
because the arbitrator decided only two of the three issues submitted for arbitration, the
Interim Award was not a final award to be reviewed for confirmation or vacation.
Second, on August 31, 2006, the Receiver filed a motion petitioning the District
Court to rule that the Court had exclusive jurisdiction over determining the rightful assets
of Lonesome Dove. On May 14, 2007, the District Court denied the Receiver’s motion
(“Determination Order”). The District Court explained that “if any issue is nonarbitrable,
the arbitrator lacks jurisdiction over it” and the District Court could vacate the award if
the arbitrator exceeded his power, but concluded that “it was not the appropriate juncture
6
to” decide whether it had exclusive jurisdiction over “[t]he determination of what assets
are the corporate properties of Lonesome Dove, how and when those assets are to be
liquidated, and the distribution proceeds.”
Third, on November 15, 2006, the Receiver filed a motion asking the District
Court to order William Lansdale to return over $1.6 million to Lonesome Dove. On
May 14, 2007, the District Court granted the Receiver’s motion (“Turnover Order”),
stating that the Receiver “submitted uncontradicted evidence that William M. Lansdale
diverted revenues from oil and gas leases that are the undisputed assets of Lonesome
Dove.”
II.
We begin by addressing the appellees’ assertion that we lack jurisdiction over
these orders. We “exercise de novo review over an argument alleging a lack of appellate
jurisdiction.” Reilly v. City of Atlantic City, 532 F.3d 216, 223 (3d Cir. 2008). Under 28
U.S.C. § 1291, we have jurisdiction over “final decisions” of the District Court. Ortiz v.
Dodge, 126 F.3d 545, 547 (3d Cir. 1997). To constitute an appealable final decision,
§ 1291 “most often requires that a district court issue a decision that completely ends the
litigation,” In re Carco Electronics, 536 F.3d 211, 213 (3d Cir. 2008), in order to further
the interest of avoiding inefficient piecemeal appeals. Frederico v. Home Depot, 507
F.3d 188, 192 (3d Cir. 2007).
7
We agree with the appellees that none of the three orders constitute final decisions
under § 1291 because this “matter remains open, unfinished [and] inconclusive.” Cohen
v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949); see also Aluminum Co. of Am.
v. Beazer E., Inc., 124 F.3d 551, 557 (3d Cir. 1997) (stating that a final decision “will
fully resolve all claims presented to the district court” and “after the decision has been
issued, there will be nothing further for the district court to do”). Specifically, the
Arbitration Order refrains from confirming or vacating the Interim Award in anticipation
of further arbitration proceedings, the Determination Order declines to rule that certain
asset determinations belong solely to the District Court, and the Turnover Order does not
conclusively resolve the ongoing asset determinations. See Isidor Paiewonsky Assocs.,
Inc. v. Sharp Props., Inc., 998 F.2d 145, 150 (3d Cir. 1993) (explaining that a final
decision “disposes of the whole subject” and “gives all the relief that was contemplated”)
(internal quotation marks and citation omitted).
Nor do any of the three orders fall within the narrowly-construed collateral order
doctrine. See We, Inc. v. City of Philadelphia, 174 F.3d 322, 324 (3d Cir. 1999) (“Under
the ‘collateral order’ doctrine, . . . a decision of a district court may be appealable as a
‘final decision’ under 28 U.S.C. § 1291 if it (1) ‘conclusively determine[s]’ the disputed
question; (2) ‘resolve[s] an important issue completely separate’ from the merits of the
action; and (3) is ‘effectively unreviewable’ on appeal from a final judgment.”) (quoting
Coopers & Lybrand v. Livesay, 437 U.S. 463, 468-69 (1978)).
8
The Lansdales argue alternatively that jurisdiction over the three orders exists
independent of § 1291. First, the Lansdales assert that we have jurisdiction to review the
District Court’s Arbitration Order under section 16 of the Federal Arbitration Act
(“FAA”). We disagree. The FAA provides, inter alia, that a party may appeal an order
“confirming or denying confirmation of an award or partial award.” 9 U.S.C.
§ 16(a)(1)(D). Here, the District Court declined to confirm or vacate the Interim Award
on the ground that it was not final and therefore not ripe for confirmation or vacation.
The District Court reasoned that if it were to confirm the Interim Award – which only
resolved two of the three issues submitted to arbitration – and terminate the receivership
upon the VIBIR’s motion, the arbitrator might be hindered in resolving the third issue still
pending in arbitration, involving the determination of the non-liquid assets belonging to
Lonesome Dove. Because the District Court postponed determining the parties’ dispute
until all three interrelated issues are resolved in arbitration, the Arbitration Order is not
appealable under § 16(a)(1)(D).3 See, e.g., Middleby Corp. v. Hussman Corp., 962 F.2d
3
The Lansdales rest their jurisdictional argument on the plain language of
§ 16(a)(1)(D), but their interpretation of that statutory provision ignores the context
provided by the rest of § 16. According to § 16(b), which designates certain orders
regarding arbitration as interlocutory, “an appeal may not be taken from an . . . order . . .
directing arbitration to proceed.” 9 U.S.C. § 16(b)(2). That was the practical effect of the
Arbitration Order here: it instructed the parties to complete arbitration before seeking
review of the award. Because § 16 was intended “to prevent the appellate aspect of the
litigation process from impeding the expeditious disposition of an arbitration,” David D.
Siegel, Practice Commentary: Appeals from Arbitrability Determinations, 9 U.S.C.A.
§ 16, at 352 (West Supp. 2008), permitting an appeal of the Arbitration Order would
frustrate rather than further the section’s purpose.
9
614, 616 (7th Cir. 1992) (finding that under § 16(a)(1)(D) a delay in confirmation “is a far
cry from ‘denying’ confirmation” because “the court promises final judgment at the
appropriate time”).
Next, the Lansdales assert that we may review the District Court’s Determination
Order pursuant to 28 U.S.C. § 1292(a)(2) and 9 U.S.C. § 16(a)(1)(A) and (B). We reject
both contentions. First, 28 U.S.C. § 1292(a)(2) provides appellate jurisdiction over
“[i]nterlocutory orders appointing receivers, or refusing orders to wind up receiverships
or to take steps to accomplish the purposes thereof, such as directing sales or other
disposals of property.” The Lansdales argue that by denying the Receiver’s motion for
the District Court to declare exclusive jurisdiction over the asset determination, the
Court’s Determination Order has the effect of refusing to wind up the receivership or to
take steps to carry out that purpose. However, § 1292(a)(2) must be “interpreted
narrowly” and “permit[s] appeals only from the three discrete categories of receivership
orders specified in the statute, namely [1] orders appointing a receiver, [2] orders refusing
to wind up a receivership, and [3] orders refusing to take steps to accomplish the purposes
of winding up a receivership.” In re Pressman-Gutman Co., 459 F.3d 383, 393 (3d Cir.
2006) (internal quotation marks and citation omitted). The Determination Order falls into
none of these three discrete categories and thus appellate jurisdiction does not exist under
§ 1292(a)(2).
10
Second, 9 U.S.C. § 16(a)(1)(A) and (B) permit an appeal from an order “refusing a
stay of any action under section 3 of this title” or an order “denying a petition under
section 4 of this title to order arbitration to proceed.” The Determination Order clearly
does not respond to a motion to stay or a motion to compel and thus does not fall under
the explicit language of § 16(a)(1)(A) or (B). However, the Lansdales argue that by
refusing to rule on the District Court’s jurisdiction over certain asset determinations, the
Determination Order has the same effect as an order denying a stay of district court
litigation and an order denying arbitration because the Receiver’s continuing role has, “in
practical terms,” restricted the arbitration proceedings. We disagree with this
characterization. The Determination Order plainly rejected the Receiver’s argument that
the District Court should effectively remove certain asset determinations from arbitration
by exercising exclusive jurisdiction, and therefore, contrary to the Lansdales’ assertion,
this ruling does not result in precluding arbitration of the issues committed to that forum.
Accordingly, the Lansdales’ argument that § 16(a)(1)(A) and (B) are implicated by the
Determination Order fails.
Finally, the Lansdales argue that the District Court’s Turnover Order is
immediately appealable under 9 U.S.C. § 16(a)(1) because the Turnover Order, like the
Determination Order, is equivalent to an order denying a motion to compel or refusing a
stay. Again, we disagree with the Lansdales’ characterization and find no alternative
basis for exercising jurisdiction over the Turnover Order. See, e.g., F.T.C. v. Overseas
11
Unlimited Agency, Inc., 873 F.2d 1233, 1235 (9th Cir. 1989) (finding that an order
directing funds to be turned over to a receiver is a non-final order and not appealable
pursuant to 28 U.S.C. § 1292(a)); United States v. Beasley, 558 F.2d 1200, 1201 (5th Cir.
1977) (finding no jurisdiction over a turnover order requiring funds to be paid to a
receiver); United States v. Chelsea Towers, Inc., 404 F.2d 329, 330 (3d Cir. 1968) (“The
order requiring the delivery of certain deposits to the receiver is neither final nor within
any category of appealable interlocutory orders.”).4
Therefore, we lack jurisdiction over the three orders that the Lansdales appeal
because the orders are not final under 28 U.S.C. § 1291 and there are no alternative
grounds for exercising jurisdiction at this time.
III.
The Lansdales have also filed a petition for a writ of mandamus, asking that we
direct the District Court “to stay or dismiss the pending litigation, discharge the receiver,
and finally and completely submit the contested issues to arbitration.”
Mandamus relief is “a drastic and extraordinary remedy reserved for really
extraordinary causes.” Cheney v. United States Dist. Court, 542 U.S. 367, 380 (2004)
4
The Lansdales also assert that the doctrine of pendent appellate jurisdiction
permits us to review these orders. Because there is no appellate jurisdiction over any of
the three orders, we reject this argument. See Hoxworth v. Blinder, Robinson & Co., Inc.,
903 F.2d 186, 209 (3d Cir. 1990) (“[P]endent appellate jurisdiction over an otherwise
unappealable order is available only to the extent necessary to ensure meaningful review
of an appealable order.”).
12
(internal quotation marks and citation omitted). We have explained that “mandamus is
not a mere alternative to an appeal and instead properly is viewed as a safety valve in the
final-judgment rule proving a drastic remedy . . . only in extraordinary circumstances in
response to an act amounting to a judicial usurpation of power.” In re Pressman-Gutman
Co., 459 F.3d at 398 (internal quotation marks and citation omitted). Thus, to qualify for
mandamus relief, a petitioner must demonstrate “that there is (1) ‘no other adequate
means’ to attain the relief sought, and (2) a right to the writ that is ‘clear and
indisputable[]’ and, (3) even if these first two conditions are met, the reviewing court in
its discretion must conclude that the writ ‘is appropriate under the circumstances.’” In re
Briscoe, 448 F.3d 201, 212 (3d Cir. 2006) (quoting Cheney, 542 U.S. at 380-81).
Upon careful review of the Lansdales’ assertions, we find that the petitioners have
failed to carry their burden of demonstrating entitlement to such extraordinary relief. The
Lansdales have not established they lack alternative adequate means to obtain relief,
given the availability of the arbitration process, and moreover, they have failed to
demonstrate a clear and indisputable right to the relief they seek. We are unconvinced
that issuing the writ is warranted under the circumstances of this case and, accordingly,
we will deny the petition for a writ of mandamus. Nevertheless, we are mindful of the
extraordinary length of time this matter has been pending and urge the District Court to
actively facilitate and encourage a final resolution. A receivership process that becomes
interminable is not appropriate.
13
IV.
For the foregoing reasons, we will dismiss the appeal for lack of jurisdiction and
deny the petition for a writ of mandamus.
14
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Fourth Court of Appeals
San Antonio, Texas
June 26, 2018
No. 04-18-00365-CR
Adrian Nicholas PAZ,
Appellant
v.
The STATE of Texas,
Appellee
From the 227th Judicial District Court, Bexar County, Texas
Trial Court No. 2016CR8126
Honorable Kevin M. O'Connell, Judge Presiding
ORDER
Appellant’s court-appointed attorney has filed a brief pursuant to Anders v. California,
368 U.S. 738 (1967), in which he asserts there are no meritorious issues to raise on appeal.
Counsel has informed the appellant of his right to file his own brief and provided appellant with
a form motion for requesting the appellate record. See Kelly v. State, 436 S.W.3d 313, 319-20
(Tex. Crim. App. 2014); Nichols v. State, 954 S.W.2d 83, 85 (Tex. App.—San Antonio 1997, no
pet.); Bruns v. State, 924 S.W.2d 176, 177 n.1 (Tex. App.—San Antonio 1996, no pet.).
If the appellant desires to request the appellate record, he must file the motion requesting
the record within ten days from the date of this order. If the appellant desires to file a pro se
brief, he must do so within thirty days from the date of this order. See Bruns, 924 S.W.2d at 177
n.1. If the appellant files a pro se brief, the State may file a responsive brief no later than thirty
days after the date the appellant’s pro se brief is filed in this court. It is further ORDERED that
the motion to withdraw, filed by appellant’s counsel, is HELD IN ABEYANCE pending further
order of the court.
_________________________________
Sandee Bryan Marion, Chief Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 26th day of June, 2018.
___________________________________
KEITH E. HOTTLE,
Clerk of Court
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458 F.Supp. 992 (1978)
Patricia M. REILLY, on behalf of herself and all persons similarly situated, Plaintiff,
v.
BOARD OF EDUCATION, COMMON SCHOOL DISTRICT 14, NEW BERLIN, WISCONSIN and Virgil M. Staples, Superintendent of Public Schools, New Berlin, Wisconsin, Defendants.
No. 75-C-311.
United States District Court, E. D. Wisconsin.
August 25, 1978.
*993 *994 Philip L. Atinsky, Atinsky, Kahn & Sicula, Milwaukee, Wis., for plaintiff.
Fred G. Groiss and Patrick W. Schmidt, Quarles & Brady, Milwaukee, Wis., for defendants.
MEMORANDUM AND ORDER
WARREN, District Judge.
This is a civil action arising under 42 U.S.C. § 1983 and the Civil Rights Act of 1964 as amended by the Equal Employment Opportunity Act of 1972, 42 U.S.C. § 2000e et seq.
In her complaint, plaintiff, Patricia Reilly, alleges that she was denied the position of District Music Coordinator for Common School District 14, New Berlin, Wisconsin, solely on the basis of sex. The defendant Board of Education, Common School District 14, New Berlin, Wis. (the Board) is a quasi-municipal corporation charged with running the schools in the City of New Berlin, Wisconsin. Defendant, Virgil M. Staples, is the superintendent of the New Berlin public schools.
A court trial was held before this Court on December 5 through December 8, 1977.
A brief review of the facts shows that, during the 1971-72 school year, the district music coordinator of the New Berlin public schools resigned his position. The job of district music coordinator is a part-time position which is handled on a co-curricular contract basis. The job entails work over and above that performed in a person's regular teaching duties. The person holding the job is directly responsible to the deputy superintendent of schools. During the 1972-73 school year, this job paid $675.00.
By letter of March 3, 1972, the plaintiff applied for this position but was informed by Lawrence Olson, Deputy Superintendent of Schools, that there was no plan to fill the *995 position for the balance of the school year. He informed the plaintiff that if something should develop, he would contact her.
On May 17, 1972, a job announcement for the district supervisor of music position was circulated throughout the New Berlin school system. A statement headed "Qualifications" and a separate fourteen-point job description giving the general duties and responsibilities of the supervisor of music position was appended to the job announcement. The qualifications for the job were listed as follows:
The district school music coordinator must be a fully certified teacher of public school music. (Plaintiff's Exhibit 4)
The general duties and responsibilities of the supervisor of music were given as follows:
1. The primary function of the district music coordinator is the promotion, constant development and improvement of the school music program.
2. He is to supervise the music staff members in the development of a philosophy and sequential curriculum on a K-12 basis and for recommendation of texts and materials necessary to implement the curriculum.
3. He is to submit the proposed curriculum and recommendations to the Deputy Superintendent.
4. He is to submit recommendations for improvements of the music program to the Deputy Superintendent of Schools for action.
5. Prepare and maintain inventory of instruments, uniforms, music and other music equipment and supplies for each school.
6. Review the inventory prepared by each school and provide copies for distribution to personnel concerned.
7. Act on any repair bills on instruments and equipment and in turn submit them for payment.
8. Act on all requisitions for supplies and equipment.
9. Prepare a budget annually in cooperation with the staff members and submit for review.
10. Meet with members of the department from all the district schools and coordinate the calendar for musical events.
11. Coordinate the arrangements for special musical events or activities for the various musical organizations in the district.
12. Plan and arrange the necessary summer school music programs.
13. Plan and arrange attendance of staff members at music conferences.
14. Meet with the Deputy Superintendent at least once each month to discuss items of mutual concern. (Plaintiff's Exhibit 4)
At the trial, plaintiff testified that she had experience in all but one of the areas listed as general duties and responsibilities of the coordinator of music. The only one she did not have experience in was point 14, meeting with the deputy superintendent at least once a month to discuss items of mutual concern. Plaintiff had extensive teaching experience and held a doctorate degree in music and higher education administration.
By letter of May 19, 1972, to Virgil Staples, Superintendent of Schools for New Berlin, plaintiff applied for this position. The deputy superintendent interviewed the plaintiff and the other job applicants in early June, 1972, and made his recommendations in a letter to the superintendent. This letter stated:
I have had a discussion with each of the four following applicants and would recommend them in the following order:
1. Mr. White
2. Mr. Metz
3. Mr. Morateck
4. Miss Reilly
Following are some of the reasons why I would recommend Mr. White:
1. He has the administrative training and background to handle the job.
2. In his position at the middle school he has not had the benefit of co-curricular contracts such as is available to the high school people.
*996 3. It would be difficult to accuse him of showing preference to one of the high schools because he is not attached to a specific high school program, although he will be housed at Eisenhower High School next year.
4. He seems to have a good acquaintance with the music stores in the area.
5. I think he is honest and loyal.
6. His strength is the instrumental program which is the major portion of this responsibility.
7. There have been a number of instances in the past where he has had disappointments in being selected and I think this is an opportunity to place him in a position of succeeding.
8. Mr. White has served the district longer than any of the others.
9. I believe he can get along with the music people and I know that I can relate to him.
(Plaintiff's Exhibit 9)
By letter of June 6, 1972, plaintiff was informed by the superintendent of schools that he would recommend to the Board of Education that Bruce White be appointed the district coordinator of music. (Plaintiff's Exhibit 5)
The recommendation to appoint White was forwarded to the Board of Education in a memorandum dated June 12, 1972 (Defendant's Exhibit 9) The Board approved White's co-curricular contract without discussion.
In her letter dated August 15, 1972, plaintiff inquired of the superintendent as to the criteria used in making the selection for the job. (Plaintiff's Exhibit 6) He replied on August 18, 1972 with a handwritten note on the bottom of her letter, stating:
We were blessed with four well qualified applicants you were one of them for a single position. We choose one of the current practioners. (Plaintiff's Exhibit 6)
On November 8, 1973, plaintiff filed a complaint with the Wisconsin Department of Industry, Labor & Human Relations (DILHR) alleging that she was denied the job because of her sex. (Defendant's Exhibit 3) The Equal Employment Opportunity Commission issued plaintiff a right to sue letter on March 10, 1975. (Plaintiff's Exhibit 7)
In a non-class action complaint under Title VII alleging disparate and discriminatory treatment in employment, the complainant has the initial burden of establishing a prima facie case of discrimination. Plaintiff can make out a prima facie claim by showing:
(i) that he belongs to a racial minority; (ii) that he applied and was qualified for a job for which the employer was seeking applicants; (iii) that, despite his qualifications, he was rejected; and (iv) that, after his rejection, the position remained open and the employer continued to seek applicants from persons of complainant's qualifications. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668.
These standards also apply to sex discrimination cases under Title VII.
As the Court stated in Furnco Construction Corp. v. Waters, ___ U.S. ___, ___, 98 S.Ct. 2943, 2949, 57 L.Ed.2d 957 (1978, citing International Brotherhood of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977)):
The central focus of the inquiry . . is always whether the employer is treating `some people less favorably than others because of their race, color, religion, sex, or national origin.'
The court in Furnco Construction then explained that a prima facie showing of discrimination is not the equivalent of a factual finding of discrimination. Rather, the court stated:
[I]t is simply proof of actions taken by the employer from which we infer discriminatory animus because experience has proved that in the absence of any other explanation it is more likely than not those actions were bottomed on impermissible considerations. Id. at ___, 98 S.Ct. at 2951.
*997 Once the plaintiff has established a prima facie case, the burden shifts to the employer to articulate some legitimate, nondiscriminatory reason for the employee's rejection. McDonnell Douglas Corp. v. Green, supra 411 U.S. at 802, 93 S.Ct. 1817. The burden which shifts to the employer is merely that of proving that he based his employment decision on a legitimate consideration and not an illegitimate one such as sex or race. Furnco Construction v. Waters, supra; McDonnell Douglas Corp. v. Green, supra.
If the employer meets this burden, the plaintiff must then be given an opportunity to introduce evidence that the proffered justification is merely a pretext for discrimination. Id.
In this case, the only listed job qualification was that the district school music coordinator be a fully certified teacher of public school music. The plaintiff presented evidence showing that she met this qualification. The other applicants were also certified music teachers. Plaintiff was the only applicant who had a doctorate degree. One of the male applicants who was ranked ahead of the plaintiff by the deputy superintendent only had a bachelor's degree at the time of the recommendations.
Fourteen general duties and responsibilities were also listed for the position. Plaintiff had experience in all but one of these areas. Testimony at trial showed that plaintiff was certified as both a vocal and instrumental teacher and had worked as a supervisor of music. She also had taught music on the college level, had served as dean of women at Parsons College and had served as a curriculum consultant to a publishing company.
Plaintiff had taught in the New Berlin school system in 1964 and had returned to that school district as a guidance counselor at the Glen Park Middle School. Plaintiff was not teaching music at the time she applied for the district music coordinator's position.
To bolster her position, plaintiff also submitted statistical evidence which showed that from approximately 1965 to 1976, no woman served as principal or vice principal in the New Berlin School System. In 1976, one woman was appointed vice principal. During this time, approximately 60 percent of the employees in the New Berlin school system were female.
Although the position of principal and vice principal are not identical to the district music coordinator's position, they all involved some administrative and supervisory responsibilities. The Court, therefore, found that this evidence was relevant to the issues raised in this case.
In light of the evidence presented, the Court finds that plaintiff clearly established that she was qualified for the job.
Defendants argue that plaintiff must not only establish that she was treated differently because of her sex but that such different treatment was based on discriminatory motive or intent.
In Teamsters v. United States, supra 431 U.S. at 335 n. 15, 97 S.Ct. at 1854, the court stated that in cases alleging disparate treatment, "proof of discriminatory motive is critical, although it can in some situations be inferred from the mere fact of differences in treatment." Some courts now require plaintiff to prove the existence of discriminatory motive in a Title VII case.
But, in United States v. Chicago, 573 F.2d 416 (7th Cir. 1978), the Seventh Circuit Court of Appeals relied on Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976) and expressly rejected the contention that discriminatory purpose or intent be demonstrated in a Title VII case. In Washington v. Davis, the Court stated:
Under Title VII, Congress provided that when hiring and promotion practices disqualifying substantially disproportionate numbers of blacks are challenged, discriminatory purpose need not be proved. Id. at 246-47, 96 S.Ct. at 2051.
Therefore, this Court finds that plaintiff need not prove discriminatory intent in a Title VII case.
*998 Although in this case, the fourth criteria set forth in McDonnell Douglas is not present, the Supreme Court indicated that the prima facie proof required will vary with differing factual situations. McDonnell Douglas Corp. v. Green, supra 411 U.S. at 802 n. 13, 93 S.Ct. 1817.
Plaintiff here has shown that she is a woman who was qualified for the position of district coordinator of music and that she was rejected for the job. Based upon the evidence presented at trial, the Court concludes that plaintiff has established a prima facie case of sexual discrimination.
The defendant employer then has an opportunity to rebut plaintiff's prima facie case and "articulate some legitimate, nondiscriminatory reason for the employee's rejection." Id. at 802-3, 93 S.Ct. at 1824.
Defendants argue that the decision to appoint White to the position was based upon the deputy superintendent's valid, nondiscriminatory judgment.
Nine specific reasons were given for selecting White over all the other candidates. The deputy superintendent considered White's experience in the district as one major factor in his selection, although he testified it was not the most important consideration. White had taught in the New Berlin school system for seventeen years prior to being appointed to the district music coordinator's position. At this time, plaintiff had been working in the school district for three years.
The faculty was not told that length of service was an important consideration in selecting the district music coordinator, according to the testimony of the superintendent of schools.
The deputy superintendent testified that there was no school board policy stating that tenure was an important factor in filling the job of district coordinator of music. He further stated at his deposition that a person from outside the New Berlin school system would have as equal an opportunity of obtaining the music coordinator's job as a person who was already employed by that school system.
Deputy Superintendent Olson testified at trial that he reviewed White's credentials prior to his interview. However, at the hearing before the Wisconsin Department of Industry, Labor and Human Relations, Olson testified that he did not look through White's records prior to selecting him for the job.
With respect to White's administrative training and background, the deputy superintendent testified at trial that he was "impressed" with the fact that White had had courses in school administration which would naturally relate to the job. Olson also testified that he did not recall whether White had ever held any administrative position. At the DILHR hearing Olson testified that he did not know of an administrative position White held prior to being appointed district music coordinator.
At the trial Olson testified that he knew White had not held any prior supervisory position. He also stated that he did not question White as to his experience in teaching string instruments. At the DILHR hearing, Olson testified that one of the responsibilities of a district coordinator of music was the supervision and administration of the teaching of string instruments.
At the trial Olson stated that, at the time he recommended White for the job, he did not know whether White had any experience in teaching general classroom music or vocal music or in teaching on the K-6 level.
Staples, the Superintendent of Schools, testified that he knew White did not have any administrative or supervisory experience when he selected him for the position. He merely "rubber stamped" Olson's recommendation and did not conduct any independent investigation.
Both the superintendent and deputy superintendent were aware of plaintiff's administrative background and experience.
The second reason given for recommending White was that he has not had the benefit of co-curricular contracts. However, Olson admitted that plaintiff had not had a co-curricular contract and that White *999 did receive extra pay for serving as a band director.
With respect to many of the remaining stated reasons for White's selection, with the exception of the ninth stated reason, the deputy superintendent's testimony established that the plaintiff also fulfilled these requirements. For example, Olson testified he had no reason to believe that plaintiff was not loyal and honest or did not have a familiarity with area music stores.
White's one major strength was his length of service in the district. Testimony showed though that there was no school board policy stating that tenure should be a relevant factor in filling the district music coordinator position.
The Court is thus faced with determining whether the defendant has given some legitimate, nondiscriminatory reason for plaintiff's rejection or whether the reasons given for hiring White instead of the plaintiff are merely pretextual.
Defendants argue that Olson was validly exercising his judgment in choosing White for the job. They contend that this is simply a case where several qualified applicants seek one position and the employer must make a choice.
Plaintiff argues that the defendants' decision was sexually discriminatory. The Court notes that plaintiff was ranked last of all four applicants for the position.
While the Court recognizes that an employer has the right to exercise his best judgment in hiring personnel, the decision must not be based upon impermissible grounds.
The Court further recognizes that length of service with a school system may be an important factor in assigning job positions. However, this reason does not serve as a valid defense when applied to the facts of this case.
First of all, the record clearly shows that neither the job qualifications nor the duties and responsibilities of the position cited length of service with the new Berlin school system as a consideration in filling the job. Secondly, the New Berlin school board had no such stated policy. Furthermore, the deputy superintendent testified that a person from outside the school system would have had an equal opportunity to be selected for this job.
The Court finds that a question exists concerning the extent to which the defendants were committed to a "length of service" policy in selecting applicants for the position of district music coordinator. An employer cannot discriminate against a person in contravention of the law and then, after the fact, provide some previously unknown and nondiscriminatory reason for the selection of another person.
The Court is thus unpersuaded by defendants' "length of service" rationale.
In light of the foregoing, this Court finds that plaintiff has established a factual case of discrimination under Title VII and that the defendants have failed to articulate a valid, nondiscriminatory reason for not selecting plaintiff for the job of district music coordinator.
Accordingly, it is the judgment of the Court that the defendants be enjoined from engaging in any further unlawful employment practices against this plaintiff, that the defendants be ordered to offer the plaintiff a position as district coordinator of music, and that the plaintiff be awarded compensatory damages in the amount of $3,920 for the school years 1972-1977, plus the amount paid the district music coordinator in the new Berlin School system for the 1977-78 school year.
With respect to plaintiff's attorney's fees, counsel for plaintiff is herewith directed to submit an itemized statement of his fees to the Court within ten (10) days of the date of this order.
After examination of this statement, the Court will make its award of attorney's fees in this action.
Counsel for plaintiff is ordered to prepare an appropriate form of judgment for the Court's signature, after submitting same to opposing counsel for approval as to form.
*1000 The foregoing constitutes the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
SO ORDERED this 25th day of August, 1978, at Milwaukee, Wisconsin.
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268 S.E.2d 120 (1980)
STATE of West Virginia
v.
Denzil Ray FENDER.
No. 14100.
Supreme Court of Appeals of West Virginia.
July 15, 1980.
*121 John W. Bennett, Logan, for Fender.
Chauncey H. Browning, Atty. Gen., Ann V. Dornblazer, Asst. Atty. Gen., Charleston, for State.
PER CURIAM:
In this appeal, Denzil Ray Fender, who was convicted of breaking and entering in the Circuit Court of Logan County, contends that more than three terms of the circuit court passed between the return of the indictment against him and his trial, and that under the "Three Term Rule," W.Va. Code 62-3-21 [1959], he should have been discharged from prosecution. We disagree.
During the May 1971 Term of the Circuit Court of Logan County, the appellant was indicted for breaking and entering. During the same term a capias was issued for his arrest, and he was apprehended and then released pending trial on a $1,500 bond which was in customary form and required him to be amenable to further appearances in the court. By order entered July 6, 1971, the case was continued on the appellant's motion, to the September Term of the Circuit Court. At that time he was allowed to remain on his original bond until September 24, 1971.
On August 23, 1971, a Federal court committed the appellant to the National Reformatory in Petersburg, Virginia, for violating the National Firearms Act. Later he was transferred to the Federal Youth Center in Ashland, Kentucky. Because he was in Federal custody the appellant failed to appear in the Circuit Court during the September 1971 Term according to the terms of his continuance and bond.
Thereafter, at the January 1972 Term of Court the State filed two writs of habeas corpus ad prosequendum to procure his return to West Virginia so that he could be tried on the breaking and entering indictment. The record does not disclose *122 what transpired after the filing of the first writ of habeas corpus. The second writ was filed April 6, 1972, still within the January 1972 Term. It apparently resulted in the appellant's writing to his counsel by a letter dated April 11, 1972, where he stated:
"I am very happy and well pleased to hear you have discussed my case with the honorable Judge, and that he is willing to continue may case until I am released from Federal confinement. My present release date is October 1, 1972. It is my wish and desire to continue my case until this or a later date, in order and so that we will have sufficient and proper time to prepare my case."
Subsequently, on May 23, 1972, his counsel filed a written motion for continuance in which he requested the case be continued. In the affidavit attached to the motion counsel stated that if the defendant were returned for trial upon the writ of habeas corpus ad prosequendum he could not be confined in the county jail because it was not an approved facility for Federal prisoners. He would be confined in Cabell County which would make it difficult to communicate with him. Further, he attached appellant's letter and pointed out that the appellant would be released in the fall. As a consequence of this motion nothing further was done to procure the appellant's return to the State.[1]
On September 13, 1972, the appellant was released from the Federal Youth Center. Upon his release he returned to Logan County but failed to present himself to the Circuit Court. For the next two and one-half years he remained at large, and the State was not aware of his whereabouts. On May 9, 1975, the appellant was arrested on a misdemeanor charge, and at that time the State reactivated the breaking and entering proceedings.
When it became apparent that the State intended to prosecute him on the felony, the appellant filed a Plea in Bar asserting that he was discharged from prosecution by the terms of the "Three Term Rule", W.Va. Code 62-3-21 [1959].[2] After conducting a hearing on the matter, the Circuit Court, by order entered August 28, 1975, overruled the plea.
We have recognized that W.Va. Code 62-3-21 [1959] imposes a duty on the State to exercise reasonable diligence to procure temporary custody of an out-of-state accused for the purpose of offering him a speedy trial once his out-of-state whereabouts become known. The failure of the State so to act will cause the terms during which the accused was in out-of-state custody to be chargeable against the State under the "Three Term Rule." State ex rel. Boso v. Warmuth, 270 S.E.2d 631 (W.Va., 1980); State ex rel. Stines v. Locke, W.Va., 220 S.E.2d 443 (1975).
There are three methods by which the State may attempt to secure the presence of a defendant who is incarcerated out of state. One method is provided by W.Va. Code 62-14-1 [1971] et seq., the "Agreement on Detainers". Article IV of that agreement provides a mechanism whereby a West Virginia prosecutor, who has lodged a detainer against an accused confined in a foreign state subscribing to the "Agreement," may procure temporary custody of him for the purpose of affording him a *123 trial. Where the State has obtained custody of an accused through the procedure established by the "Agreement on Detainers," trial must be commenced within one hundred twenty days after the prisoner returns to the State, unless a continuance is granted for good cause shown in open court with the accused or his attorney present in court. Moore v. Whyte, W.Va., 266 S.E.2d 137 (1980); W.Va. Code 62-14-1 [1971]; see, Yackle, Taking Stock of Detainer Statutes, Loy.L.A.L.Rev. 88 (1975).
Prior to the enactment of the "Agreement on Detainers" the State had available the common law writ of habeas corpus ad prosequendum for obtaining for trial the temporary custody of an out-of-state accused. Traditionally that writ has been issued by a court in the state seeking custody of the defendant. It has been directed to the person having custody of him in the foreign sovereignty. Although by the writ the seeking state cannot compel the jurisdiction having custody to return the accused for trial,[3] custodian jurisdictions commonly, on the basis of comity, have recognized and honored the requests. See, In re Habeas Corpus of Yoder, Okl.Cr., 298 P.2d 1083 (1956); Commonwealth v. Tees, 179 Pa.Super. 605, 118 A.2d 585 (1955).
The federal government has been among jurisdictions honoring writs of habeas corpus ad prosequendum from the states. In sanctioning the procedure Chief Justice Taft in Ponzi v. Fessenden, 258 U.S. 254, 261, 42 S.Ct. 309, 311, 66 L.Ed. 607 (1922), said:
"There is no express authority authorizing the transfer of a federal prisoner to a state court for such purposes [trial on a state charge]. Yet we have no doubt that it exists and is to be exercised with the consent of the attorney general. In that officer, the power and discretion to practice the comity in such matters between the federal and state courts, is vested."
We do not believe that in enacting the "Agreement on Detainers" our Legislature abolished or amended the right of the State to seek the temporary custody of an out-of-state accused through a writ of habeas corpus ad prosequendum. It would appear that it established an alternative devise which, because it was uniform in other subscribing jurisdictions, regularized the return procedure.
In Syllabus Point 2 of Moore v. Whyte, supra, we stated that: "A writ of habeas corpus ad prosequendum is a `written request for temporary custody' under the Agreement of Detainers." In that case we held that we would treat a writ of habeas corpus ad prosequendum filed subsequent to the filing of a detainer as meeting the language of W.Va. Code 62-14-1 [1971] requiring a "written request for temporary custody" in addition to the detainer. This ruling was in accordance with a similar holding in United States v. Mauro, 436 U.S. 340, 98 S.Ct. 1834, 56 L.Ed.2d 329 (1978), where the United States Supreme Court construed the same provision of the "Agreement on Detainers". Moore was not intended to abolish the habeas corpus ad prosequendum proceeding. It only concluded that if a detainer had been filed the writ should act as a request for temporary custody. As previously noted, the writ performs this function independently at common law.
W.Va. Code 5-1-7 [1937], the State extradition law, establishes a third means whereby State authorities may obtain custody of an out-of-state accused for the purpose of affording him a trial.
In State ex rel. Boso v. Warmuth, supra, and in State ex rel. Stines v. Locke, supra, we mandated that the State move with reasonable diligence to procure the return for trial of an incarcerated out-of-state accused where his whereabouts were known *124 and where a mechanism existed to procure his return. The gist of our requirement was that the State move with reasonable diligence to activate a recognized return mechanism. Otherwise, the terms of out-of-state confinement are chargeable against the State under the "Three Term Rule." We did not mandate in Boso or Stines the use of the "Agreement on Detainers" or any other specific mechanism. We merely held that the State make a reasonable diligent effort to procure the return. Boso established that if the defendant fights the State's attempt to return him for trial he may not claim that the State has failed to act with reasonable diligence.
In the present case the defendant was indicted in the May 1971 Term and the first writ of habeas corpus was issued by the State in the January 1972 Term. In computing the three-term rule we do not count the term at which the indictment is returned. State ex rel. Smith v. DeBerry, 146 W.Va. 534, 120 S.E.2d 504 (1961).
The next term was the September 1971 Term and the record does not reveal whether the State was aware of the defendant's out-of-state incarceration in the federal institution. If it was not aware its duty to exercise reasonable diligence to seek his return would not begin. Because of the ultimate result of our opinion the September 1971 Term is not critical to the three-term count.
We have shown that the State's efforts to seek his return started at the January 1972 Term so that this term cannot be counted against the State. It was at the May 1972 Term that the defendant's attorney sought and obtained a continuance; therefore, this term is not counted against the State under Syllabus Point 2 of State ex rel. Spadafore v. Fox, 155 W.Va. 674, 186 S.E.2d 833 (1972), where we said that:
"Any term at which a defendant procures a continuance of a trial on his own motion after an indictment is returned, or otherwise prevents a trial from being held, is not counted as one of the three terms in favor of discharge from prosecution under the provisions of Code 62-3-21, as amended."
It was the next term the September 1972 Term that the appellant was released from federal custody and returned to Logan County but failed to make any appearance according to his recognizance bond. Consequently the appellant cannot claim the September 1972 Term nor any subsequent term until May 1975 when he was finally arrested because he was free from confinement and failed to appear according to his recognizance. The Three-Term Statute is clear that this failure tolls such terms:
"Every person charged by presentment or indictment with a felony or misdemeanor, and remanded to a court of competent jurisdiction for trial, shall be forever discharged from prosecution for the offense, if there be three regular terms of such court, after the presentment is made or the indictment is found against him, without a trial, unless the failure to try him was caused . . . by reason of his escaping from jail, or failing to appear according to his recognizance,. . . ."
The judgment of the Circuit Court of Logan County is, therefore, affirmed.
Affirmed.
NOTES
[1] The appellant now argues that since no order was entered in May 1972 formally granting the continuance motion, it was error for the court to enter a nunc pro tunc order showing the continuance in January 1976 after he was arrested. The motion for continuance and the other documents relating to it do constitute sufficient memoranda to support the entry of the nunc pro tunc order by the court. McCoy v. Fisher, 136 W.Va. 447, 67 S.E.2d 543 (1951).
[2] W.Va. Code 62-3-21 [1959] provides in part:
"Every person charged by presentment or indictment with a felony or misdemeanor, and remanded to a court of competent jurisdiction for trial, shall be forever discharged from prosecution for the offense, if there be three regular terms of such court, after the presentment is made or the indictment is found against him, without a trial, unless the failure to try him was caused . . . by a continuance granted on the motion of the accused; or by reason of his escaping from jail, or failing to appear according to his recognizance . . . ."
[3] This is true notwithstanding U.S.Const. art. IV, § 2, for in Kentucky v. Dennison, 65 U.S. (24 How.) 66, 16 L.Ed. 717 (1860), the Supreme Court of the United States held that Congress had no power to compel the governor of a state to perform his moral duty under the Constitution. The Court declined to enforce either the constitutional provision or the implementing statute, leaving state executives de facto discretion to refuse delivery of a prisoner in appropriate circumstances.
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840 So.2d 573 (2003)
Roberto MOLINA, Sr. and Vicki Lynn Zulli, Individually and in Her Capacity as the Natural Tutrix of the Minor Children, Robert Molina, III and Alli Molina
v.
CITY OF NEW ORLEANS.
Karen Grace Mann, et al.
v.
City of New Orleans.
No. 2003-C-0156.
Supreme Court of Louisiana.
March 28, 2003.
Denied.
VICTORY, J., would grant the writ.
WEIMER, J., would grant the writ.
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721 N.W.2d 485 (2006)
BOLDT v. BOLDT.
No. 2005AP0710.
Supreme Court of Wisconsin.
July 25, 2006.
Petition for review denied.
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195 S.W.3d 351 (2006)
Jeffrey C. VACCARO, Appellant,
v.
The STATE of Texas, Appellee.
No. 10-04-00336-CR.
Court of Appeals of Texas, Waco.
July 12, 2006.
*352 Jeffrey C. Vaccaro, Amarillo, pro se.
B.J. Shepherd, Bosque County Dist. Atty., Meridian, for appellee.
Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
ORDER REGARDING VIDEOTAPE
PER CURIAM.
Jeffrey Vaccaro is representing himself in this appeal. He is in a State prison. The problem we must deal with in this order is just one of many problems encountered in this circumstance.
A portion of a videotape of Vaccaro's arrest was played during his trial. It is unclear precisely where the playing of the tape stopped. We have viewed the videotape and the reporter's record. We have determined that the tape was started from at least counter marker 22:07:48 and was stopped prior to counter marker 22:11.
Vaccaro has sought a copy of the entire tape, not limited to what was played at trial. He has been provided a copy three times but the law librarian of his prison unit has returned it to the court reporter. The explanation provided when the tape was last returned is as follows:
Offenders, [sic] do not have access to the equipment to view video tapes, nor can they have possession of a video tape. If you can provide a court order to have this offender view this tape that order will be entertained.
This is just one of the myriad of factors courts should consider in determining if defendants will be allowed to represent themselves on appeal. See Sickles v. State, 170 S.W.3d 298, 301 (Tex.App.-Waco 2005, order) (Gray, C.J., dissenting).
Vaccaro now seeks an order from this Court compelling the trial court to produce the tape and a written order to the warden compelling the warden to allow *353 Vaccaro to view the tape as described more fully below. Vaccaro is actually asking us to compel the trial court, in the nature of a mandamus, to render an order against the warden of a TDCJ unit not in the trial court's district. Because this case is on appeal, the trial court would not have the authority, if it otherwise would, to order the production of "a true and correct copy of `Defendant's Exhibit One' (videotape) that was entered at trial and provide a written order directing Warden Bruce Zeller to allow appellant proper time and environment to transcribe said video into a noterized [sic] legal document for appeal purposes." Vaccaro's specific request is denied.
To get this appeal moving, however, we will grant his motion in part and render the following order:
The Clerk of this Court is ordered to prepare a copy of the videotape from counter marker 22:07:48 to 22:11:00. The Clerk must produce this copied portion of the tape, which contains at least what was played before the jury, if not more, to Vaccaro in care of the warden of his unit, Warden Bruce Zeller, within 14 days after the date of this Order.
The warden should make the videotape available for Vaccaro, who is acting as his own attorney, to view the tape and take notes as Vaccaro deems appropriate for his appeal within 45 days after the date of this Order. Because there is only limited time and conversation/talking recorded on the tape, we would be surprised if this required more than two hours of access to and playing of the videotape, but may require multiple playbacks.
The tape should be retained by TDCJ according to their standard procedures and returned to this Court at the time Vaccaro files his second supplemental brief. Vaccaro's second supplemental brief should address any additional issues he identifies as a result of watching the video or to provide supplemental argument to the issues already briefed and presented to this Court. The supplemental brief is due no later than 75 days after the date of this Order. The State's briefing on all issues, including the supplemental brief, if any, is due 105 days after the date of this Order.
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57 F.Supp.2d 576 (1999)
MAN ROLAND INC., Plaintiff,
v.
QUANTUM COLOR CORP., Defendant.
No. 98 C 7753.
United States District Court, N.D. Illinois, Eastern Division.
July 15, 1999.
*577 *578 David G. Lynch, Norman Mitchell Leon, Kim Matsunaga, Rudnick & Wolfe, Chicago, IL, for plaintiff.
David S. Ruskin, James A. Marino, Law Offices of David S. Ruskin, Chicago, IL, for defendant.
MEMORANDUM OPINION AND ORDER
ALESIA, District Judge.
Before the court is plaintiff MAN Roland Incorporated's motion to strike defendant Quantum Color Corporation's amended affirmative defenses. For the following reasons, the court denies in part and grants in part plaintiff MAN Roland Incorporated's motion to strike Quantum Color Corporation's amended affirmative defenses.
I. BACKGROUND
For the sake of brevity, the court will not restate the facts. The facts may be found in MAN Roland Inc. v. Quantum Color Corporation, 57 F.Supp.2d 568 (N.D.Ill.1999). Any additional facts, the court will discuss in further detail under the appropriate affirmative defense.
In this motion, MAN Roland Incorporated (MAN Roland) argues that all seven of Quantum Color Corporation's ("Quantum") amended affirmative defenses are insufficient. Thus, the court should strike these amended affirmative defenses.
II. DISCUSSION
A. Standard of review for motions to strike affirmative defenses
Under Federal Rule of Civil Procedure 12(f), "the court may order stricken from any pleading any insufficient defense." FED.R.CIV.P. 12(f). Nevertheless, motions to strike are generally disfavored. Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir.1989); Codest Eng'g v. Hyatt Int'l Corp., 954 F.Supp. 1224, 1228 (N.D.Ill.1996). Thus, these motions will be granted only if the affirmative defenses are insufficient as a matter of law or present no questions of law or fact. Heller, 883 F.2d at 1294 (citing United States v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir.1975)).
*579 Affirmative defenses are pleadings and, therefore, are subject to all of the pleading requirements of the Federal Rules of Civil Procedure. Id. (citing Bobbitt v. Victorian House, Inc., 532 F.Supp. 734, 736-37 (N.D.Ill.1982)). Accordingly, affirmative defenses must set forth a "short and plain statement." FED.R.CIV.P. 8(a). Furthermore, the affirmative defenses must fulfill the Federal Rule of Civil Procedure 12(b)(6) standard. Codest, 954 F.Supp. at 1228 (citing Bobbitt, 532 F.Supp. at 737).
Under Federal Rule of Civil Procedure 12(b)(6), the court must accept all factual allegations as true and draw all reasonable inferences in favor of the pleader. Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7th Cir.1992). If, when viewed in the light most favorable to the pleader, the allegation fails to state a claim upon which relief can be granted, the court must dismiss it. See FED.R.CIV.P. 12(b)(6); Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir.1987). However, the court may dismiss the allegation only if it appears beyond a doubt that the pleader can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Even under the liberal notice pleading standard of the Federal Rules of Civil Procedure, however, an allegation must include either direct or inferential allegations respecting all material elements of the claim asserted. Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). Bare legal conclusions attached to narrated facts will not suffice. Strauss v. City of Chicago, 760 F.2d 765, 768 (7th Cir.1985).
B. Applicable law
In analyzing these defenses, the court will apply Illinois law because the contract specifically states that the parties entered into this contract in Illinois and that Illinois law shall govern the contract. (Pl. Compl.Ex.1.) Under Illinois law, Article II of the Uniform Commercial Code ("UCC") applies to transactions in goods. 810 ILL. COMP.STAT. 5/2-102. However, "[u]nless displaced by the particular provisions of this Act [the UCC], principles of law and equity, including the law merchant and the law relative to ... fraud, misrepresentation, ... mistake ... or other validating or invalidating cause shall supplement" the UCC's provisions. Id. 5/1-103. Thus, where the UCC is silent on the issue, this court will rely upon common law cases.
C. First and second amended affirmative defenses Mistake
In its first and second amended affirmative defenses, Quantum, respectively, alleges that either both it and MAN Roland were mistaken or just it was mistaken about certain material facts which formed the bases to their contract. Quantum claims that these alleged mistakes constitute a defense to MAN Roland's claims. However, MAN Roland argues that both the first and second amended affirmative defenses fail because (1) there were no mistakes which are material to the subject matter of the contract and (2) even if there were any mistakes, the contract allocates the risk to Quantum.
1. Materiality of the mistake
MAN Roland first alleges that a mistake as to the quality of the press is not material to the contract's subject matter. Thus, it is not the type of mistake which would excuse Quantum from performance under the contract.
There are two types of mistakes. The first type is "fundamental in character" and relates to an essential element of the contract. Harley v. Magnolia Petroleum Co., 378 Ill. 19, 37 N.E.2d 760, 765 (1941). "These generally have to do with ... the existence and identity of the subject matter [and] errors as to price [and] quantity," and thus, are grounds for recission. Id. The other type of mistake occurs when, through some error, the agreement *580 reduced to writing is not actually the agreement which the parties or one of the parties understood it to be. Id. This type of mistake is only grounds for reformation of the contract and not recission. Id. Furthermore, for a mistake to be actionable, the parties must not have known of the mistake or consciously ignored the facts at the time of contract formation. See Bentley v. Slavik, 663 F.Supp. 736, 741-42 (S.D.Ill.1987); Harley, 37 N.E.2d at 765-66.
In this case, Quantum is seeking recission of the contract based upon mutual or unilateral mistake. Thus, the mistake must relate back to an essential element of the contract. See Harley, 37 N.E.2d at 765. MAN Roland's entire argument that there was no mistake rests upon a Court of Appeals of Idaho case which involves the purchase of two machines that did not perform certain functions. Fernandez v. Western R.R. Builders, Inc., 112 Idaho 907, 736 P.2d 1361, 1362 (Id.App.Ct.1987). The court found that functional defects do not change the subject matter of the contract because if "defects were deemed to change the subject matter of a contract, then `mistake' would preempt the entire body of law including the UCC dealing with nonconforming goods.... [Furthermore,] [i]t also would be inconsistent with the declaration in the UCC ... that general principles of equity `supplement' the Code."[1]Id. at 1363-64; see also Cohen v. North Ridge Farms, Inc., 712 F.Supp. 1265, 1270 (E.D.Ky.1989) (quoting the reasoning of Fernandez as one of the bases for dismissing a claim for recission based on mutual mistake).
After its own research, this court could find no similar cases in which an Illinois court or a federal court applying Illinois law addressed whether functional defects of any machinery changed the subject matter of the contract. However, there is an analogous Illinois case which addresses the effect of a dysfunctional septic tank on a contract for the sale of a house. Diedrich v. Northern Ill. Publ'g Co., 39 Ill.App.3d 851, 350 N.E.2d 857, 861 (1976). In Diedrich, the Illinois Appellate Court found that, where there was no claim of fraud or misrepresentation and the claim of mistake only went to the value of the transaction, a party could not claim mistake as a ground for recission. Id. at 862-64.
In this case, Quantum's allegation that the press does not perform to the standards that it expected goes to the quality and the value of the press. Quantum has made no claim that the press does not perform at all; only that the press does not produce in a commercially acceptable manner. (D. First Am. Answer ¶¶ 49-51, 66-67.) Based on these facts, the mistakes which Quantum alleges do not relate to an essential element of the contract; they are merely collateral mistakes.
Because the mistakes were collateral to the contract, it would not be inconsistent for the court to strike Quantum's first and second affirmative defenses. However, Quantum has also alleged that it was induced into making the contract due to misrepresentations made by MAN Roland. Thus, the court will not strike Quantum's first and second amended affirmative defenses based on MAN Roland's claim that there were no mistakes material to the contract.[2]
2. Allocation of risk
MAN Roland also alleges that the court should strike Quantum's first and second amended affirmative defenses because the contract allocates the risk to Quantum. Quantum, on the other hand, *581 alleges that the contract did not allocate the risk to it because the "as is" provision is inoperative.[3] However, as explained in this court's previous opinion on MAN Roland's motion to dismiss Quantum's counterclaims, the "as is" provision of the contract is operative. See MAN Roland, 57 F.Supp.2d 568, 571-73.
MAN Roland primarily relies upon a decision by the United States District Court for the Eastern District of Kentucky ("Eastern District of Kentucky") for the proposition that the "as is" provision shifts the risk to Quantum. Cohen, 712 F.Supp. at 1270-71. In Cohen, the conditions of sale stated that there is no implied warranty of merchantability or fitness and "all sales are made on an as is basis." Id. at 1267. Based upon this provision, the Eastern District of Kentucky found that "the clear and unambiguous terms of the Conditions of Sale operated to `shift the burden of responsibility for any fortuitous conditions which might arise upon the bidder.'" Id. at 1270 (quoting United States v. Hathaway, 242 F.2d 897, 900 (9th Cir.1957)). Thus, the Eastern District of Kentucky dismissed the plaintiff's claim for recission based on mutual mistake. Id. at 1271.
MAN Roland does not cite, nor could this court find, any cases decided by an Illinois court or by a federal court interpreting Illinois law which support this proposition. However, aside from the Eastern District of Kentucky, the Ninth Circuit and the Supreme Court of Michigan also have found that recission is not available to a purchaser who has assumed the risk. See Hathaway, 242 F.2d at 899 ("Mutual mistake renders a sales contract voidable only if the parties have not agreed among themselves that the risk of such mistake shall be assumed by the purchaser. ... A party to a contract may assume the risk of every chance occurrence."); Lenawee County Bd. of Health v. Messerly, 417 Mich. 17, 331 N.W.2d 203, 209-10 (1982) ("Recission is not available, however, to relieve a party who has assumed the risk of loss in connection with the mistake."). Similarly, sections 152 and 154 of the Restatement (Second) of Contracts provide additional support for MAN Roland's contention. RESTATEMENT (SECOND) OF CONTRACTS § 152(1) (1981) ("Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake."); id. § 154 ("A party bears the risk of mistake when ... the risk is allocated to him by agreement of the parties.").
The contract in this case, similar to the condition of sale in Cohen, disclaims all warranties. The provision states: "ALL WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED AND STATUTORY, ARE HEREBY DISCLAIMED. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED. THE MACHINERY (INCLUDING ANY ACCESSORIES AND COMPONENTS) IS SOLD `AS IS.'" (P.Compl.Ex. 1 ¶ 11). This language clearly communicates that all warranties are excluded and shifts any risk of loss to the purchaser, Quantum. Because this court has previously found this provision to be operative and this provision allocates the risk of loss to Quantum, Quantum's affirmative defenses of mutual mistake and unilateral mistake fail to state a claim.
Although the court did not strike Quantum's first and second amended affirmative defenses based on MAN Roland's *582 claim that there were no mistakes material to the contract, the court has found that both of these affirmative defenses fail to state a claim because Quantum assumed the risk of loss. Accordingly, the court grants MAN Roland's motion to strike Quantum's first and second amended affirmative defenses.
D. Third and fourth amended affirmative defenses Breach of contract
Quantum alleges in both its third and fourth amended affirmative defenses that MAN Roland breached the contract. Thus, Quantum is asking this court to rescind the contract based on MAN Roland's failure to deliver the "standard equipment" and failure to "install" the equipment. These two amended affirmative defenses are substantively the same as Quantum's first and second amended counterclaims. Thus, for the reasons stated in Part II.B. of the court's previous opinion in this case, Quantum's affirmative defenses for breach of contract state a claim. MAN Roland, 57 F.Supp.2d 570-71. Accordingly, the court denies MAN Roland's motion to strike Quantum's third and fourth amended affirmative defenses.
E. Fifth amended affirmative defense Lack of consideration
Quantum styles its fifth amended affirmative defense as an allegation of a lack of consideration. Although, in reality, Quantum is alleging a failure of consideration because MAN Roland failed to perform certain conditions of the agreement. Thus, this court will treat Quantum's fifth amended affirmative defense as a failure of consideration and not a lack of consideration.
Consideration is a bargained-for exchange of promises or performances which is of benefit to one party or detriment to the other party. Serpe v. Williams, 776 F.Supp. 1285, 1288 (N.D.Ill. 1991); McInerney v. Charter Golf, Inc., 176 Ill.2d 482, 223 Ill.Dec. 911, 680 N.E.2d 1347, 1350 (1997). Accordingly, "mutual promises have long been held sufficient consideration to support a contract ... [and] the consideration does not fail because of non-performance, since the promise, and not the performance, is the real consideration." Wilson v. Continental Body Corp., 93 Ill.App.3d 966, 49 Ill.Dec. 412, 418 N.E.2d 56, 59 (1981); see also Crum v. Krol, 99 Ill.App.3d 651, 54 Ill.Dec. 864, 425 N.E.2d 1081, 1086 (1981) ("As a general rule of contract law, if the consideration is a promise to perform in the future, a party's non[-]performance does not cause consideration to fail, the real consideration is the promise to perform."). However, if the consideration does fail, there is no contract. Serpe, 776 F.Supp. at 1288. Thus, a court's determination that there is a failure of consideration is an extraordinary remedy. Finke v. Woodard, 122 Ill.App.3d 911, 78 Ill.Dec. 297, 462 N.E.2d 13, 16 (1984).
In this case, the real consideration was the promise by MAN Roland to sell to Quantum the press and Quantum's promise to buy the press from MAN Roland.[4]See Wilson, 49 Ill.Dec. 412, 418 N.E.2d at 59. The consideration was not the performance of certain conditions. Thus, MAN Roland's failure to perform the conditions of the agreement, did not result in the failure of the consideration. Accordingly, the court grants MAN Roland's motion to strike Quantum's fifth amended affirmative defense.
F. Sixth amended affirmative defense Fraudulent misrepresentation
In its sixth amended affirmative defense, Quantum alleges that MAN Roland fraudulently misrepresented certain material *583 facts to induce Quantum into the contract. MAN Roland, however, contends that this affirmative defense fails because Quantum has failed to satisfy the requirements of a defense based upon fraud. More specifically, MAN Roland alleges that Quantum has failed (1) to allege that the representation was a statement of material fact and (2) to prove, "by clear and convincing evidence," that its reliance on any alleged misrepresentations was reasonable as a matter of law. (P.Mot. at 5.)
To assert a defense of fraudulent misrepresentation under Illinois law, Quantum must allege the following: (1) the representation was a statement of material fact, rather than a mere promise or opinion; (2) the statement was false; (3) the person making the statement knew or believed that the representation was false; (4) the person to whom the representation was made reasonably relied on the truth of the statement; (5) the statement was made for the purpose of causing the other party affirmatively to act; and (6) the reliance by the person to whom the statement was made led to his injury. LaScola v. U.S. Sprint Communications, 946 F.2d 559, 567-68 (7th Cir.1991). "Mere allegations of fraud are not enough. Rather, pleadings must state the `specific content of the false representations as well as the identities of the parties to the misrepresentations.'" Mutual Life Ins. Co. v. Veselik, No. 97 C 6291, 1998 WL 30672, at *3 (N.D.Ill. Jan.23, 1998) (quoting Graue Mill Dev. Corp. v. Colonial Bank & Trust Co., 927 F.2d 988, 992-93 (7th Cir.1991)).
In its amended affirmative defense, Quantum alleges that MAN Roland personnel represented that the press "produced and could produce commercially acceptable two color process work in a commercially acceptable manner ... and in accordance with [Quantum's] subjective operation, reliability and quality requirements," "was maintained and serviced in accordance with its current design specifications," and "was operating and could operate in accordance with its design specifications (i.e. 10,000 impressions per hour, etc.) and design and accepted mean time between service call specifications." (D. First Am. Answer ¶¶ 99-102.) Quantum also alleges that MAN Roland personnel knew these statements were false and fraudulent and made these misrepresentations to induce Quantum into the contract. (Id. ¶¶ 99-103.) Furthermore, Quantum alleges that it believed these statements to be true and reasonably relied upon these statements. (Id. ¶¶ 104-05.)
1. Statements of material fact
MAN Roland contends that the alleged misrepresentations were not statements of material fact, but were merely promises or expressions of opinion. "To support an action for fraud, the alleged misrepresentation must be one of fact and not an expression of opinion." People ex rel. Peters v. Murphy-Knight, 248 Ill.App.3d 382, 187 Ill.Dec. 868, 618 N.E.2d 459, 463 (1993) (citing Equity Capital Corp. v. Kreider Transp. Serv., Inc., 967 F.2d 249, 253-54 (7th Cir.1992); Duhl v. Nash Realty, Inc., 102 Ill.App.3d 483, 57 Ill.Dec. 904, 429 N.E.2d 1267, 1274 (1981)). "A statement that merely expresses an opinion or that relates to future or contingent events, rather than past or present facts, does not constitute an actionable representation." West v. Western Cas. & Sur. Co., 846 F.2d 387, 393 (7th Cir.1988). Thus, the misrepresentation "must be an affirmance of fact and not a mere promise or expression of opinion or intention; or in other words `the fraud must be in the original contract or transaction, and not in its nonfulfillment.'" Zaborowski v. Hoffman Rosner Corp., 43 Ill.App.3d 21, 1 Ill.Dec. 465, 356 N.E.2d 653, 655 (1979) (quoting Luttrell v. Wyatt, 305 Ill. 274, 137 N.E. 95, 97 (1922)). Furthermore, statements that are "nothing more than a recommendation of one's product are not representations of fact, but rather [are] `mere commendation or opinion' and are not actionable as fraud," Murphy-Knight, 187 *584 Ill.Dec. 868, 618 N.E.2d at 464 (quoting Spiegel v. Sharp Elec. Corp., 125 Ill.App.3d 897, 81 Ill.Dec. 238, 466 N.E.2d 1040, 1044 (1984)).
In Lefebvre Intergraphics, Inc. v. Sanden Machine Ltd., 946 F.Supp. 1358, 1364-66 (N.D.Ill.1996), this court outlined a continuum for whether a statement is a material fact or a mere opinion. The facts of this present case fall somewhere on this continuum. On one end of the continuum is Murphy-Knight. In Murphy-Knight, the Illinois Appellate Court found the alleged misrepresentations that the thermal banks were "as called for in the specifications" and had a "capacity of `100,000 pounds of ice at 2½ inch thickness'" to be specific, quantifiable and verifiable statements. Murphy-Knight, 187 Ill.Dec. 868, 618 N.E.2d at 464-65 (citations omitted). Furthermore, these statements concerned "the capabilities of a machine which was either in existence at the time the statements were made, or one of a known, specified, and certain type." Id. at 464. Thus, the court found that the statements were representations of existing fact, and as such, were actionable as fraud. Id. at 464-65. On the other end of the continuum is Spiegel. In Spiegel, the Illinois Appellate Court found the statements that a copier would produce "`picture perfect copies'" and "`reduce error waste'" to be subjective representations which would be difficult to prove. Spiegel, 81 Ill.Dec. 238, 466 N.E.2d at 1044 (citations omitted). Accordingly, the court found that these statements amounted to "mere commendation or opinion," and thus, were not actionable for fraud. Id.
Unlike Lefebvre, where this court found Lefebvre to fall closer to Spiegel on the continuum, this case falls closer to Murphy-Knight. Although, MAN Roland's alleged misrepresentations are similar to the statements in Lefebvre that the press "could produce the printing ... required in a commercially acceptable manner" and "could produce commercially acceptable four color process work," Lefebvre, 946 F.Supp. at 1363, the court, nevertheless, finds this case to be more similar to Murphy-Knight. In Lefebvre, this court found that "statements that the printing press could produce commercially acceptable four color process work were statements of opinion or promises about the future performance of a machine to be built ...; they were not statements about past or present facts." Id. at 1366. However, in this case, similar to Murphy-Knight, the alleged statements made by MAN Roland concerned the capabilities of a machine which was already in existence. Thus, these alleged misrepresentations must be considered representations of existing fact, and thus actionable as fraud. See Murphy-Knight, 187 Ill.Dec. 868, 618 N.E.2d at 464. Accordingly, this court will not strike Quantum's sixth amended affirmative defense on this ground.
2. Quantum's reliance on the alleged misrepresentations
MAN Roland also contends that Quantum's affirmative defense of fraudulent misrepresentation fails because the alleged misrepresentations were inconsistent with the terms of the contract. Thus, MAN Roland argues that Quantum's reliance on these statements was unjustified and unreasonable.
"Where the alleged misrepresentation is explicitly addressed and negated in the written agreement signed by the parties, any reliance on contrary oral assertions would be unreasonable as a matter of law." Heritage Remediation/Eng'g, Inc. v. Wendnagel, No. 89 C 413, 1989 WL 153373, at *7 (N.D.Ill. Nov.9, 1989); see also Associates in Adolescent Psychiatry, S.C. v. Home Life Ins. Co., 941 F.2d 561, 571 (7th Cir.1991) ("Documents that unambiguously cover a point control over remembered (or misremembered, or invented) oral statements.") (citing Zobrist v. Coal-X, Inc., 708 F.2d 1511 (10th Cir. 1983)). However, the words in the written agreement must be "true, clear, and complete, in order to be dispositive." Acme *585 Propane, Inc. v. Tenexco, Inc., 844 F.2d 1317, 1325 (7th Cir.1988).
In this case, the contract does not specifically contradict or negate any alleged prior oral statements. The phrase "the machinery ... is sold `as is,'" (P.Compl. ¶ 11), is not clearly contrary to any of the alleged prior misrepresentations; nothing in the term "as is" should arouse a suspicion in Quantum that the press could not perform as specified in the alleged misrepresentations.[5] Thus, this court cannot determine, as a matter of law, that Quantum's reliance on the alleged misrepresentations was unreasonable and unjustified. Accordingly, the court denies MAN Roland's motion to strike Quantum's sixth amended affirmative defense on this ground.
In sum, Quantum's affirmative defense of fraudulent misrepresentation alleges a statement of material fact and reasonable reliance upon the alleged misrepresentations. Thus, this court denies MAN Roland's motion to strike Quantum's sixth amended affirmative defense.
G. Seventh amended affirmative defense Fraudulent omissions
In its seventh amended affirmative defense, Quantum alleges that MAN Roland fraudulently omitted certain material facts to induce Quantum into the contract. MAN Roland, however, contends that this affirmative defense fails for the same reasons Quantum's affirmative defense of fraudulent misrepresentation fails. See supra Part II.F.
Illinois courts recognize a cause of action for fraudulent omissions under certain circumstances. Under Illinois law, the failure to disclose material information (i.e., an omission) may be considered a false statement of fact, but only if the person failing to disclose the information "owed a duty to disclose that information to the party across the bargaining table." Equity Capital Corp. v. Kreider Transp. Serv. Inc., 967 F.2d 249, 253 (7th Cir.1992); see also AMPAT/Midwest, Inc. v. Illinois Tool Works, Inc., 896 F.2d 1035, 1040 (7th Cir.1990) ("For an omission to rise to the level of fraud, ... there must be a duty to disclose.").
In this case, neither party has even addressed whether MAN Roland had a duty to disclose the alleged omissions. Regardless of both parties considerable oversight, this court will dismiss this affirmative defense because Quantum has failed to allege in its affirmative defense that MAN Roland was under any duty to disclose the alleged omissions. Accordingly, the court grants MAN Roland's motion to strike Quantum's seventh amended affirmative defense.
CONCLUSION
For the reasons set forth in this opinion, the court denies in part and grants in part plaintiff MAN Roland's motion to strike defendant Quantum's amended affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). Accordingly, the court enters the following orders:
1. The court denies MAN Roland's Rule 12(f) motion to strike Quantum's third, fourth and sixth amended affirmative defenses.
2. The court grants MAN Roland's Rule 12(f) motion to strike Quantum's first, second, fifth, and seventh amended affirmative defenses.
NOTES
[1] Quantum does not address this case or even this basis; it makes no argument whatsoever that a mistake as to the quality of goods produced by the press relates to the fundamental subject matter of the contract.
[2] MAN Roland has failed to object to Quantum's pleading of misrepresentation as a basis for the mistake; thus, the court will assume Quantum plead it in accordance with the appropriate standard.
[3] This is the essence of Quantum's "as is" argument. Quantum did not specifically address the argument made by MAN Roland. It simply cut and pasted the breach of contract and breach of express and implied warranties responses made in its "Reply Memorandum in Opposition to Plaintiff's Motion to Strike Defendant's First Amended Counterclaims." Thus, Quantum's entire argument on the "as is" provision is not applicable.
[4] Quantum in its response brief entitled "Reply Memorandum" does not dispute that this was the consideration. In fact, Quantum makes no response whatsoever to MAN Roland's motion to strike this affirmative defense.
[5] MAN Roland also alleges that the contract affirmatively represents "that MAN Roland had not made any representations regarding the Press and that it [Quantum] was not relying upon any such representations in entering into the [c]ontract." (Pl.Mot. at 6-7) (emphasis in original). However, MAN Roland has failed to cite this provision and the court has failed to find this provision. Thus, the court will not address any impact this provision may have.
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Third District Court of Appeal
State of Florida
Opinion filed July 27, 2016.
Not final until disposition of timely filed motion for rehearing.
________________
No. 3D11-3270
Lower Tribunal No. 10-41578
________________
Paula Font, individually, and as personal representative of the
Estate of Luis Torres, deceased,
Appellant,
vs.
Union Carbide Corporation,
Appellee.
An appeal from the Circuit Court for Miami-Dade County, Joseph P. Farina,
Judge.
The Ferraro Law Firm and Paulo R. Lima and Juan P. Bauta, II, for
appellant.
Carlton Fields Jorden Burt, P.A., and Matthew J. Conigliaro (Tampa), for
appellee.
Before SUAREZ, C.J., and WELLS and LAGOA, JJ.
ON REMAND FROM THE FLORIDA SUPREME COURT
PER CURIAM.
We reconsider on remand our opinion in Font v. Union Carbide Corp., 118
So. 3d 1005 (Fla. 3d DCA 2013) (“Font I”), which was quashed by the Supreme
Court of Florida following its decision in Font v. Union Carbide Corp., 41 Fla. L.
Weekly S113 (Fla. Jan. 12, 2016) (“Font II”). As ordered by the Supreme Court of
Florida, we must apply Aubin v. Union Carbide Corp., 177 So. 3d 489 (Fla. 2015)
(“Aubin II”), to our earlier opinions. Based on Aubin II, we are constrained to
conclude that the jury instruction requested by Appellant, Paula Font (“Font”),
accurately stated the applicable law, the evidence supported the giving of the
instruction, the instruction was necessary to resolve the issues properly, and Font
was entitled to submit her strict liability claims to the jury on both the “risk utility”
test of the Restatement (Third) of Torts (“Third Restatement”) and the “consumer
expectations” test of the Restatement (Second) of Torts (“Second Restatement”).
Thus, we reverse the final judgment in favor of Appellee, Union Carbide
Corporation (“Union Carbide”), and remand for a new trial.
I. FACTUAL & PROCEDURAL HISTORY
Font, individually and on behalf of the Estate of Luis Torres (“Torres”),
deceased, filed a wrongful death action for negligence and strict liability for failure
to warn and the manufacture of a defective product against Union Carbide and
other asbestos manufacturers and distributors. Font alleged that Torres, her father,
died of malignant pleural mesothelioma as a result of exposure to joint compound
2
products and texture sprays designed, manufactured, and supplied by the
defendants that contained Union Carbide’s Calidria SG-210 asbestos. Font
presented evidence that Calidria SG-210, when in a respirable form, can and does
cause mesothelioma, as well as other asbestos-related illnesses.
At the charge conference on November 9, 2011, Font requested that the
standard jury instruction PL 5 be given to the jury verbatim. That instruction, in
which the Supreme Court Committee on Standard Jury Instruction in Civil Cases
(“Committee”) defined “unreasonably dangerous” under both the risk utility and
the consumer expectations tests, states in pertinent part: “A product is
unreasonably dangerous because of its design if the product fails to perform as
safely as an ordinary consumer would expect when used as intended or in a manner
reasonably foreseeable by the manufacturer or the risk of danger in the design
outweighs the benefits.” Fla. Std. Jury Instr. (Civ.) PL 5. Font argued that she was
entitled to submit her case to the jury on both theories of strict liability. Union
Carbide disagreed, arguing that pursuant to Agrofollajes, S.A. v. E.I. Du Pont De
Nemours & Co., 48 So. 3d 976 (Fla. 3d DCA 2010),1 this Court had rejected the
Second Restatement’s consumer expectations test and determined that after Kohler
Co. v. Marcotte, 907 So. 2d 596 (Fla. 3d DCA 2005),2 the appropriate standard
1 Subsequently, disapproved of by the Supreme Court of Florida in Aubin v. Union
Carbide Corp., 177 So. 3d 489 (Fla. 2015).
2 Subsequently, disapproved of by the Supreme Court of Florida in Aubin v. Union
Carbide Corp., 177 So. 3d 489 (Fla. 2015).
3
was the risk utility test articulated in the Third Restatement. Union Carbide asked,
therefore, that the case be submitted to the jury only on the risk utility theory. The
trial court denied Font’s request to include the consumer expectations instruction.
The jury returned a verdict in favor of Union Carbide and Font appealed to this
Court.
On appeal, Font sought reversal because the trial court did not instruct the
jury on the consumer expectations test as expressed in PL 5. On August 21, 2013,
this Court affirmed the jury’s verdict in favor of Union Carbide with citation to
both Agrofollajes and Union Carbide Corp. v. Aubin, 97 So. 3d 886 (Fla. 3d DCA
2012). (“Aubin I”). See Font I, 118 So. 3d 1005. Following Agrofollajes, this
Court had determined in Aubin I that the trial court erred in failing to apply the
Third Restatement’s exclusive adoption of the risk utility test for a design defect
claim, which imposes on plaintiffs the requirement of proving a reasonable
alternative design. 97 So. 3d at 893-894. Font petitioned for review by the
Supreme Court of Florida, and while that petition was pending, the Supreme Court
quashed this Court’s opinion in Aubin I, holding that the Second Restatement’s
consumer expectations test could also apply to design defect claims. Aubin II, 177
So. 3d at 519-20. Notably, the Supreme Court stressed that this Court’s holding in
Aubin I expressly and directly conflicted with its holding in West v. Caterpillar
Tractor, Co., 336 So. 2d 80 (Fla. 1976), and with the Fourth District’s decision in
4
McConnell v. Union Carbide Corp., 937 So. 2d 148 (Fla. 4th DCA 2006),
disapproved of on other grounds by Aubin v. Union Carbide Corp., 177 So. 3d 489
(Fla. 2015), both of which applied the consumer expectations test set forth in the
Second Restatement as an alternative theory for design defect under strict products
liability. Aubin II, 177 So. 3d at 502.
On January 12, 2016, the Supreme Court issued an order in which it
accepted jurisdiction of the instant case—which involves the same defendant and
the same product as Aubin I and Aubin II—and “ordered that the Petition for
Review is granted, that the Third District Court of Appeal’s decision in this case is
quashed, and this matter is remanded for reconsideration upon application of our
decision in Aubin v. Union Carbide Corp., 177 So. 3d 489 (Fla. 2015).” Font II,
41 Fla. L. Weekly S113. Thus, on remand, this Court must determine, under the
specific circumstances of this case, whether the jury should have also been
instructed on the Second Restatement’s consumer expectations test, as requested
by Font.
II. ANALYSIS
“A party is entitled to have the jury instructed on the theory of its case when
the evidence supports that theory.” Aubin II, 177 So. 3d at 517. Generally, trial
courts are accorded broad discretion in formulating jury instructions, and a
decision not to give an instruction “will not be reversed unless the error
5
complained of resulted in a miscarriage of justice, or unless the ‘failure to give the
instruction was reasonably calculated to confuse or mislead the jury.’” Force v.
Ford Motor Co., 879 So. 2d 103, 106 (Fla. 5th DCA 2004) (quoting Hart v. Stern,
824 So. 2d 927, 929 (Fla. 5th DCA 2002)); see also, e.g., Aubin II, 177 So. 3d at
517 (“[T]he appellate court must assess whether the instruction reasonably might
have misled the jury.”); McPhee v. Paul Revere Life Ins. Co., 883 So. 2d 364, 368
(Fla. 4th DCA 2004) (“[T]he test for reversible error arising from an erroneous
jury instruction is not whether the instruction misled, but only whether it
reasonably might have misled the jury.”); Jacobs v. Westgate, 766 So. 2d 1175,
1180 (Fla. 3d DCA 2000) (“Reversal is required where a jury might reasonably
have been misled, regardless of whether it has actually been misled.”). The party
who asserts that the trial court erred in failing to give a requested jury instruction
“must show ‘the requested instruction contained an accurate statement of the law,
the facts in the case supported a giving of the instruction, and the instruction was
necessary for the jury to properly resolve the issues in the case.’” Aubin II, 177
So. 3d at 517 (quoting Barkett v. Gomez, 908 So. 2d 1084, 1086 (Fla. 3d DCA
2005)); see also H & H Elec., Inc. v. Lopez, 967 So. 2d 345, 349 (Fla. 3d DCA
2007); Force, 879 So. 2d at 106.
In light of Aubin II, a review of the record here supports Font’s request for
the standard jury instruction in each respect: (1) the language of PL 5 was an
6
accurate statement of Florida law; (2) Font presented substantial factual evidence
to support the giving of the instruction; and (3) the instruction was necessary for
the jury to properly resolve the dispute. Significantly, Union Carbide did not
assert at trial that Font’s proposed use of PL 5 did not accurately state Florida strict
liability law, or that no evidence supported the consumer expectations theory, or
that the standard instruction would confuse the jury. Rather, Union Carbide’s
argument was that pursuant to this Court’s decisions in Kohler and Agrofollajes
rejecting the Second Restatement’s consumer expectations test as an independent
basis for finding design defect, PL 5 was simply not applicable to Font’s case in
this District.
Union Carbide has not identified any relevant factual distinctions between
Aubin II and this case which would lead this Court to conclude that Aubin II
should not apply here. Indeed, Aubin I and Aubin II “involved this identical
defendant, this identical product, this identical use by a plaintiff, this identical
injury, the identical theories of liability, the same underlying issues, and (finally)
much the same evidence.” McConnell, 937 So. 2d at 154. As a result of Aubin II,
this Court’s prior decisions embracing the Third Restatement’s exclusive adoption
of the risk utility test for defective design claims have been quashed, and the
consumer expectations test enunciated by the Florida Supreme Court in West
remains alternatively available to a plaintiff bringing a design defect strict products
7
liability case. Because Font’s proposed use of PL 5 met the criteria discussed
above, we hold that it was error not to give that instruction.
III. CONCLUSION
Based on the Florida Supreme Court’s opinion in Aubin II, and the
undisputed factual similarity between Aubin II and this case, we reverse the
judgment in favor of Union Carbide and remand to the trial court with directions
that Font’s strict liability claim (Count II)3 be retried before a jury that has been
instructed consistent with the standard jury instructions approved by the Florida
Supreme Court in Aubin II. See In re Std. Jury Instr. in Civ. Cases—Report No.
13-01, 160 So. 3d 869, 871 (Fla. 2015) (employing both the consumer expectations
test and the risk utility test as alternative definitions of design defect).
Reversed and remanded for new trial as to Count II.
3 Font’s counsel, at oral argument, conceded that the only claim that should be
retried was Count II, the strict liability claim. We agree. This claim was presented
to the jury under three alternative theories.
8
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805 F.2d 1037
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Frances WILLIAMS, Plaintiff-Appellant,v.SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant-Appellee.
No. 85-1814.
United States Court of Appeals, Sixth Circuit.
Oct. 6, 1986.
Before ENGEL, NELSON and RYAN, Circuit Judges.
PER CURIAM.
1
Plaintiff Frances Williams appeals from a district court order affirming the Secretary's denial of Mrs. Williams' claim for Social Security disability benefits. Believing, as did the district court, that the Secretary's determination was supported by substantial evidence, we shall affirm.
2
Mrs. Williams, borne in 1926 or 1927, attended school through the sixth grade. She worked as a hotel maid from 1965 until the latter part of 1982. The vocational expert who testified at the administrative hearing described Mrs. Williams' work as unskilled, under the Social Security regulations, with exertional requirements in the "lower end of the medium category."
3
Although Mrs. Williams stopped working in the fall of 1982, saying she "just felt sick everywhere," the first medical report she submitted related to a hospitalization from December 29, 1983, through January 10, 1984--more than a year later. The discharge diagnosis was acute viral gastritis, uncontrolled diabetes mellitus, arteriosclerotic heart disease, arthritis, diabetic retinopathy, and pelvic inflammatory disease. A March 15, 1984, report of Dr. Wood--based upon an examination requested by Michigan's Disability Determination Service--confirmed diabetes, hypertension, mild osteoarthritis, and scarring from burns suffered years before. The final item in the rather short medical record is a July 13, 1984, report of Mrs. Williams' treating physician, Dr. Amalfitano, who diagnosed diabetes, arteriosclerosis, arthritis, hypertension, recurrent respiratory involvement, and hyperlipidemia.
4
At the hearing, Mrs. Williams testified to complaints of constant mid-back pain and headaches, arthritis in her neck, shoulders, arms and knees, and frequent dizzy spells. She also testified that swelling of her left hand, on which she had once suffered a third degree burn, prevented her from taking up hobbies such as sewing; the hand "swells so bad that I can't hardly use it," she said. Her daily activities were said to consist mainly of watching television, reclining on the couch, and walking about the house; her daughter did the shopping, the cooking and the laundry. Upon inquiry by the ALJ as to the frequency of her visits with relatives or friends, Mrs. Williams replied that she had not felt up to leaving the house.
5
The administrative law judge determined that Mrs. Williams could perform her past relevant work and thus was not disabled. We must uphold such a determination if we find it is supported by substantial evidence. Houston v. Secretary of HHS, 736 F.2d 365, 366 (6th Cir.1984). 42 U.S.C. Sec. 405(g). In this instance the determination is so supported.
6
The ALJ acknowledged that Mrs. Williams had a severe hand impairment that significantly limited her ability to perform fine manipulation and involved some loss of grip strength. Accepting Dr. Amalfitano's estimate that Mrs. Williams had lost 40 percent of the grip strength in her left hand, and 30 percent in the right, along with an unspecified loss of fine dexterity, the vocational expert testified and the ALJ found that such restrictions would not preclude performance of Mrs. Williams' past work. The expert explained that employment as a maid demanded gross motor coordination, but the fine manipulation required was only "minimal." While Mrs. Williams had to be able to exert pressure, in scrubbing a tub for example, the vocational expert observed that grip strength was not involved in such work. This testimony, particularly in light of Dr. Wood's finding of no atrophy, spasm, swelling, or diminished range of motion in either hand, constituted substantial evidence in support of the ALJ's finding that Mrs. Williams' hand impairment did not prevent her from returning to her former occupation.
7
In addition to her hand impairment, Mrs. Williams has long suffered from diabetes. At the time of her hospitalization in December of 1983, however, her acute uncontrolled diabetes was said to be a function of her poor compliance with the insulin program that had been directed by her doctor. During her hospitalization Mrs. Williams was instructed in the control of her condition, but Dr. Amalfitano's later report suggests that even as of July, 1984, she was not fully adhering to the diet prescribed to assist in control of her diabetes. Still, Dr. Amalfitano found no end organ damage. While funduscopic examinations uncovered some "arteriolar narrowing," Mrs. Williams does not claim her eyesight interferes with her ability to work, and Dr. Wood's test of her corrected vision indicates no such interference.
8
The hospitalization in December of 1983 was necessitated by Mrs. Williams' own failure to follow her insulin program. Such a failure to follow prescribed treatment justifies denial of benefits. 20 C.F.R. Sec. 404.1530. At the hearing, held in August of 1984, it developed that Mrs. Williams' daughter had by then taken over responsibility for administering the insulin shots, and the diabetes appeared to be under better control. This improvement and the lack of end organ damage constitute substantial evidence in support of the ALJ's determination of the absence of disability from diabetes.
9
Although back pain headed the list of medical ailments related to the ALJ, that complaint was not mentioned in the hospital charts. No tenderness or spinal deformity was noted upon examination at the time of the hospitalization. Dr. Amalfitano did write, in July of 1984, that the claimant suffered from "severe back pain," but the ALJ properly observed that the doctor did not perform any nerve root irritation tests, and the regulations direct that statements of pain be evaluated in view of the underlying clinical findings. 20 C.F.R. Secs. 1527, 1529. In the absence of supporting medical findings, a doctor's conclusory statements regarding disability need not be given significant weight by the Secretary. Garner v. Heckler, 745 F.2d 383, 391 (6th Cir.1984). In this instance, the record medical evidence supports the ALJ's finding of no disabling pain. X-rays taken as part of Dr. Wood's March, 1984, exam only indicate "minimal degenerative change of the lumbar spine." That doctor's examination, prompted by Mrs. Williams' complaint of back pain, found no striking abnormalities and no paraspinal muscle tenderness or spasm. Dr. Wood (who, unlike Dr. Amalfitano, performed a straight leg raising test) concluded that Mrs. Williams merely suffered "mild osteoarthritis" of the spine. Such medical findings constitute substantial evidence in favor of the Secretary. When severity of pain is the issue, moreover, the ALJ's opportunity to observe the claimant should not be ignored. Houston v. Secretary, 736 F.2d at 367, supra.
10
In addition to back pain, Mrs. Williams complained of pain in her neck, shoulders, arms and knees. Upon examination, however, Dr. Wood found no abnormality in any joint, and found limitation of motion only in the left shoulder. No swelling or inflammation was discovered, even though Mrs. Williams complained of such symptoms to Dr. Wood. Furthermore, an entry in the December, 1983, hospital charts noted that "movements of the extremities are normal." Given these findings and our standard of review, we can not overturn the determination that Mrs. Williams' arthritis did not prevent her from working as a maid. We are in a particularly poor position to evaluate subjective claims of disability that depend on the individual's tolerance of pain--which is precisely the reason the ALJ's determination on the severity of pain is owed deference. Houston v. Secretary, 736 F.2d at 367, supra.
11
At the hearing Mrs. Williams complained of headaches, but the hospital charts recorded "no headaches." Dr. Wood noted that Williams was in no distress at the time of his examination, and Dr. Amalfitano's report made no mention of this ailment. Given the absence of medical findings, the ALJ could properly discount Mrs. Williams' claim of constant headaches. As to the testimony concerning dizziness, Dr. Amalfitano did not mention any dizziness and Dr. Wood was told only that "[s]ometimes she has dizziness in the morning when she first gets up." As to hypertension, Dr. Amalfitano listed unremarkable blood pressure readings and no organ damage. Finally, Mrs. Williams has not shown that her arteriosclerotic heart disease impairs her ability to work.
12
Besides questioning the conclusion drawn from the medical evidence, Mrs. Williams takes issue with the ALJ's characterization of the exertional level of her prior work as a maid. It is argued that the "Administrative Law Judge totally misunderstood and mischaracterized the vocational expert's testimony." When the ALJ termed Mrs. Williams' past employment as a maid as "light, sometimes ranging into the lower end of medium," however, he was accurately reflecting the vocational expert's testimony. In the view of the vocational expert, the exertional requirements of a hotel maid ranged from "light at the lowest level up to medium traditionally at the highest level." The expert considered Mrs. Williams' experience to be at the "lower end of the medium category." Mrs. Williams was placed in "medium" category because she occasionally had to lift thirty pound bundles of linens and towels; "light" work, under the regulations, may not include lifting of weights in excess of twenty pounds. 20 C.F.R. Sec. 404.1568(b). The ALJ's written determination suggests no misunderstanding of the requirements of Mrs. Williams' previous employment.
13
The authorities cited by Mrs. Williams do not require a reversal of the judgment. Bonilla v. Secretary of HEW, 671 F.2d 1245 (9th Cir.1982), stands for the proposition that if a claimant is able to prove that she can no longer perform her past work, the Secretary has the burden to demonstrate the existence of other work which the claimant is capable of performing. The claimant in Bonilla proved she could not perform her past work, and the ALJ was held to have erred in concluding that other work existed which Ms. Bonilla could perform; there was no expert testimony as to the exertional requirements of such alternate employment or as to whether Ms. Bonilla's impairment would interfere with such employment. Here, conversely, the ALJ concluded Mrs. Williams could perform her past work, and that conclusion was based upon the vocational expert's testimony regarding the exertional demands placed on maids in general and Mrs. Williams in particular. Valencia v. Heckler, 751 F.2d 1082 (9th Cir.1985), holds that the Secretary may not consider only the least physically taxing elements of the claimant's former employment when characterizing the exertional level of that previous work. No equivalent error occurred here, however, for the ALJ's determination incorporates the opinion of the vocational expert who took into account all of the exertional requirements of Mrs. Williams' previous employment.
14
AFFIRMED.
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537 U.S. 1143
BAKERv.UNITED STATES.
No. 02-7821.
Supreme Court of United States.
January 13, 2003.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
2
C. A. 9th Cir. Certiorari denied. Reported below: 45 Fed. Appx. 761.
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Sherry Radack Christopher A. Prine
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Phone: 713-274-2700
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Court of Appeals Fax: 713-755-8131
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283 F.Supp.2d 8 (2003)
UNITED STATES of America,
v.
Tommy EDELIN, Earl Edelin, Shelton Marbury, Henry Johnson, Marwin Mosley, Bryan Bostick, Defendants.
No. CRIM.98-264 (RCL).
United States District Court, District of Columbia.
September 16, 2003.
*9 James W. Rudasill, Jr., Pleasant S. Brodnax, III, Christopher Michael Davis, Mary Elizabeth Davis, Davis & Davis, Shawn Franklin Moore, Federal Public *10 Defender for D.C., Jensen Egerton Barber, Law Offices of J.E. Barber, P.C., Jerry Ray Smith, Washington, DC, William W. Kanwisher, Baltimore, MD, for defendants.
MEMORANDUM OPINION
LAMBERTH, District Judge.
This comes before the Court on Defendant Tommy Edelin's motion for appropriate relief [650], the United States' Response [648], Edelin's reply [667], Bryan Bostick's Supplement [702] and memorandum [707], and Earl Edelin's [666] and Marwin Mosley's [697] motions to join. Also pending before the Court is Tommy Edelin's motion for a complete investigation [7/30/02], the government's response [708], and the motions to join of Marwin Mosley [710], Earl Edelin [712], Shelton Marbury [713], and Henry Johnson [8/1/03], and Johnson's memorandum in support [715]. The final pending motion is Henry Johnson's motion for an evidentiary hearing [709], and the government's response [714]. Upon consideration of the law, the facts, the parties' submissions, and the evidentiary hearings conducted by the Court, the motions for relief will be denied.
I. Background
This post-verdict motion comes after a lengthy criminal trial in which the defendants were convicted on various narcotics and homicide offenses, and in which the jury declined to impose the death penalty. Tommy Edelin's counsel filed a motion after being approached at the dry cleaner by an alternate juror, Alternate Juror 2,[1] who had been released before deliberations began. Local Criminal Rule 24.2 prohibits a party or attorney from speaking with a juror after a verdict has been rendered "except when permitted by the court for good cause shown in writing." L.Cr.R. 24.2. Furthermore, Federal Rule of Evidence 606(b) provides for a very limited inquiry into outside influences on a jury, but not through an ex parte communication with an attorney. Despite these proscriptions, counsel spoke with the Alternate Juror 2 long enough to gather several allegations of jury bias from her, and included the substance of these allegations in a motion to the Court.[2] Alternate Juror 2 allegedly made three allegations that defense counsel for Tommy Edelin urges show improper jury bias: that Juror 7 had an inappropriate relationship with the Deputy Marshal in charge of the case, that Juror 7 revealed the tally of votes and the jury's split to the Deputy Marshal, and that the jurors improperly deliberated before being instructed.[3]
A few weeks later, one of the attorneys for Bryan Bostick ran into Alternate Juror *11 2 at a community meeting. Bostick filed a supplement to Edelin's motion stating that Alternate Juror 2 had discussed the jury's conduct with him despite his request that she not do so.[4] The supplement alleges that Alternate Juror 2 stated that the jury panel discussed the case before deliberations, that the deliberating jurors communicated with the discharged alternate juror during deliberations, that the Deputy Marshal told Alternate Juror 2 that Bryan Bostick had confessed to a crime, that the jury panel suspected and discussed among themselves that Juror 7 had an inappropriate relationship with the Deputy Marshal, and that Juror 7 would remain in the van that returned the jury to its secure location at the end of the day with the Deputy Marshal.
To determine whether any of these alleged improprieties occurred and whether they affected the jury's impartiality, the Court held two evidentiary hearings. The first hearing was held June 27, 2003. At that hearing, the Court took the testimony of Alternate Juror 2 and Juror 7. Alternate Juror 2 testified that Edelin's counsel told her that some people, she believed it was the Marshals, were making negative statements regarding her character, which were that she was a violent person who did not get along with the other jurors. Tr. at 7-8. She recounted that she expressed frustration to counsel that the jury had deliberated with only 11 jurors, and that she should have been called back to deliberate,[5] and wondered if this had something to do with the fact that her "character was discredited." Tr. at 9. She stated that she had told Edelin's counsel that she believed that the Deputy Marshal had an inappropriate relationship with Juror 7. Tr. at 10. She said that Juror 7 and several other jurors had been taken to the bank by the *12 Deputy Marshal, Tr. at 31, and that she had witnessed Juror 7 remaining in the van with the Deputy Marshal on two occasions and had heard rumors from other jurors "that they saw other things." Tr. at 35.
Alternate Juror 2 testified that after she was discharged, the Deputy Marshal asked her by telephone how she felt about the case, and that when she stated she did not believe the government had proven its case against Bryan Bostick, the Marshal said, "Do you know that he admitted he did that?" Tr. at 11, 15. Alternate Juror 2 testified that she responded, "Well as far as the instructions are concerned, I was told that I must see where they had proven that he was guilty beyond a believable [sic] doubt and I didn't see that." Tr. at 11. She said that she had a conversation with Juror 2269, a deliberating juror, while the jury was deliberating, and that Juror 2269 discussed the difference between the charges with her. Tr. at 12-13. She later stated that believed she had told Juror 2269 about the Deputy Marshal's comment regarding Bostick's alleged confession during this telephone call while the jurors were deliberating. Tr. at 30.
Alternate Juror 2 recounted that during the trial she believed that Bryan Bostick was looking at her, and that the other jurors expressed a belief that Bostick might have a romantic interest in her. Tr. at 13-14. She relayed an exchange between herself and the Deputy Marshal, that when the Marshal saw her ML 300 Mercedes he joked that she might need to be investigated. Tr. at 24. She also spoke of another exchange in which the Marshal assigned her and another juror seats in the van that transported the jury from their secret location to the courthouse; the incident happened when the two jurors squabbled over seats, and she noted that no other jurors had assigned seats. Tr. at 25. She commented that the jurors engaged in some form of discussion regarding the evidence before being charged, and that she did not believe the government had proven its case beyond a reasonable doubt. Tr. at 26-27. The only other type of discussion or outside evidence Alternate Juror 2 could recall was that one of the other jurors said that some of Tommy Edelin's relatives attended the school where that juror taught and the juror felt uncomfortable. Tr. at 30. She explained that she had attended the reading of the jury's verdict on the guilt/innocence phase. Tr. at 27-28. Finally, Alternate Juror 2 explained that she had seen one of the other jurors after the trial ended, and one of the prosecutors, but had not discussed the case with either one. Tr. at 33.
The next witness called at the June 27 hearing was Juror 7, the juror Alternate Juror 2 suspected had an inappropriate relationship with the Deputy Marshal. Juror 7 credibly testified that her relationship with the Deputy Marshal was professional, and that she had never had any social interaction with him outside the courthouse and jury context. Tr. at 41-43. She further recounted that she had never discussed the case, including the defendants' guilt or innocence, with the Deputy Marshal. Tr. at 42, 49. She stated that she had never gone anywhere in the jury van alone with the Deputy Marshal. Tr. at 43. She also testified that she never spent any time in the van alone with the Deputy Marshal, aside from a brief goodbye if she was the last juror to exit the van. Tr. at 47. She described the only outing she had attended with the Deputy Marshal, which involved going with two or three other jurors to pick up a pizza for the jury lunch while the trial was ongoing *13 and before deliberations.[6] Tr. at 44, 46-47. She said that neither she nor any other juror, to her knowledge, had discussed the vote tallies with the Deputy Marshal. Tr. at 48.
The July 11 hearing was held to examine Juror 2269, the juror that Alternate Juror 2 testified she had spoken with while the jury was deliberating. Juror 2269 testified that she had spoken with Alternate Juror 2 in the courtroom the day after the verdict was read. Tr. at 6. Juror 2269 could not recall whether Alternate Juror 2 discussed her views of the case. Tr. at 7-8. She recounted that Alternate Juror 2 was upset about not being included in the deliberations. Tr. at 8. She testified that Alternate Juror 2 had not said anything about an alleged confession by Bryan Bostick. Tr. at 8-9. She credibly testified that while she may have had one or more phone conversations with Alternate Juror 2, these conversations did not occur during deliberations and she did not disclose any vote tallies to Alternate Juror 2. Tr. at 14-15. The Court questioned Juror 2269 regarding Juror 7 and the Deputy Marshal. Juror 2269 responded that she never witnessed any irregularity or unusual relationship between them. Tr. at 15-16, 19, 21. S
II. Analysis
Federal Rule of Evidence 606(b) limits a juror from testifying on any matter related to deliberations and the verdict except as to "whether extraneous prejudicial information was improperly brought to the jury's attention or whether any outside influence was improperly brought to bear upon any juror." Fed.R.Evid. 606(b). That is, nobody may inquire into so-called "inside" influences on the jury-such as pressure among jurors, misunderstanding of instructions, a compromise verdict, or a self-imposed time limit-but only into outside influences. United States v. Logan, 250 F.3d 350, 381 (6th Cir.2001). A district court has great discretion in shaping the appropriate inquiry into an allegation of jury prejudice. United States v. Williams-Davis, 90 F.3d 490, 496-97 (D.C.Cir.1996); United States v. Williams, 822 F.2d 1174, 1190 (D.C.Cir.1987). Generally, the remedy is to hold a hearing to inquire into the alleged prejudicial contact. Williams-Davis, 90 F.3d at 496; but cf. United States v. Boney, 977 F.2d 624, 634 (D.C.Cir.1992) ("We do not now hold that any false statement or deliberate concealment by a juror necessitates an evidentiary hearing.").
The hearing "need not be conducted as a full evidentiary hearing," the inquiry "need only be sufficiently detailed to permit the judge to determine whether any prejudice is likely to result." United States v. Butler, 822 F.2d 1191, 1196 (D.C.Cir.1987). The prevention of "juror harassment" through extensive questioning and cross-examination is a legitimate reason to curtail a hearing or not to call jurors in for questioning. Id. at 499; see also Williams, 822 F.2d at 1189 (declining to adopt a per se rule requiring individual questioning of jurors for a prejudice determination). Discretion in the trial judge is the hallmark in conducting post-verdict examinations of jurors. See, e.g., United States v. Logan, 250 F.3d 350, 378 (6th Cir.2001) ("[T]rial judges are afforded considerable discretion in determining the amount of inquiry necessary, if any, in response to allegations of jury misconduct.").
Remmer v. United States, 347 U.S. 227, 74 S.Ct. 450, 98 L.Ed. 654 (1954), imposes a hearing requirement "whenever an encroachment upon the impartiality of the *14 jury is threatened." United States v. Williams, 822 F.2d 1174, 1188 (D.C.Cir. 1987) (citing Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982)). The D.C. Circuit has interpreted this to require (1) notice to the accused of juror contact, and (2) an opportunity for the accused to participate in any proceeding to determine its impact. Williams, 822 F.2d at 1190. The trial court determines the level of participation that is appropriate by the accused. These requirements were fulfilled in this case. The defendants received notice of the juror contact through the motions of Tommy Edelin and Bryan Bostick. At the hearings, the Court conducted the questioning, with frequent interruptions to allow counsel to propose questions to be asked of the jurors. Each counsel was given the opportunity to suggest questions, and the only questions rejected were those that improperly inquired into the internal functioning of the jury. See Fed. R. Evid 606(b).
Several courts have endorsed the view that an examination of jurors need not rise to the level of a full adversarial hearing. See, e.g., United States v. Butler, 822 F.2d 1191, 1195 (D.C.Cir.1987); United States v. Calbas, 821 F.2d 887, 896 (2d Cir.1987) ("The court wisely refrained from allowing the inquiry to become an adversarial evidentiary hearing, so as to minimize intrusion on the jury's deliberations."). The D.C. Circuit has "clearly" stated that "the trial court has broad discretion over the `methodology' of inquiries into third-party contacts with jurors," a latitude the court explicitly extends to "trial courts' choices as to the proper procedures for post-trial hearings." Williams-Davis, 90 F.3d at 498-99 (citation omitted). The risk of "massive examination and cross-examination" rising to the level of juror harassment is a permissible factor to consider in shaping the procedure for a hearing on juror issues. Id. at 499. All the court is required to do is "conduct[] an inquiry broad enough to lead it to a reasonable judgment that there has been no prejudice on an assumption as to the facts favorable to defendant's claim." Id. The more "speculative or unsubstantiated" the allegation of misconduct, the less the burden to investigate. United States v. Bertoli, 40 F.3d 1384, 1395 (3d Cir.1994) (quoting United States v. Caldwell, 776 F.2d 989, 998 (11th Cir.1985)).
The D.C. Circuit upheld a district court's decision to itself question jurors on whether they were aware of a statement made by defendant to a juror in an elevator, and to refuse to ask more detailed questions suggested by counsel. United States v. Butler, 822 F.2d 1191, 1195, 1197 (D.C.Cir.1987). The Second Circuit upheld a case in which the district judge conducted an inquiry by taking unsworn testimony in camera from jurors with an opportunity for defense counsel to submit questions beforehand. Calbas, 821 F.2d at 894; cf. also Bertoli, 40 F.3d at 1397 (no Fifth Amendment violation where Court examined jurors in camera for second round of examination). Here, the Court conducted the questioning in the defendants' presence and permitted them to suggest questions to be asked of the jurors.
A Court need not examine all jurors, only those relevant to the accusation. Leisher v. Conrad, 41 F.3d 753, 756 (D.C.Cir.1994) ("[T]here is no per se rule that individual questioning is always required."); United States v. Williams, 822 F.2d 1174, 1189 (D.C.Cir.1987) ("We are unwilling to adopt a per se rule that individual questioning is always required."); United States v. Bertoli, 40 F.3d 1384, 1395 (3d Cir.1994) (no need for further investigation where court interviewed all jurors involved in alleged misconduct). *15 Further, a Court has discretion to assess the credibility of jurors' testimony. Bertoli, 40 F.3d at 1395 ("[W]e cannot say that the court's decision to believe Juror Six over Juror Thirteen was clearly erroneous. The trial court had to believe one of the two jurors."); see also Smith v. Phillips, 455 U.S. 209, 217 n. 7, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982) (juror testimony is not "inherently suspect").
Once there has been a hearing, "[t]he judge then determines whether the exposure was prejudicial or harmless." United States v. Butler, 822 F.2d 1191, 1196 (D.C.Cir.1987). In United States v. Williams-Davis, 90 F.3d 490 (D.C.Cir. 1996), the D.C. Circuit accepted the District Court's finding of no prejudice where the forewoman's husband allegedly told the jury to "nail" the defendant. The weight of the evidence against the defendants is relevant to the prejudice inquiry. Williams-Davis, 90 F.3d at 497. In Williams-Davis, the D.C. Circuit found no abuse of discretion by the trial judge in finding no prejudice in part because "the evidence against defendants was overwhelming." Id. This case comprised eight months of evidence and testimony, and resulted in multiple convictions. The evidence in this case can certainly be described as "overwhelming."
Not every contact is prejudicial, or "calls for the same investigative technique." Williams, 822 F.2d at 1190. Ultimately, "Where the court conducts an inquiry broad enough to lead it to a reasonable judgment that there has been no prejudice, on an assumption as to the facts favorable to defendants' claim, it has fulfilled its procedural as well as its substantive duty." Williams-Davis, 90 F.3d at 499.
Remmer placed the burden on the government to overcome the presumption that a contact was prejudicial. Remmer v. United States, 347 U.S. 227, 229-30, 74 S.Ct. 450 (presumption of prejudice when there is private communication with a juror). However, this standard was modified by the Supreme Court's subsequent decisions in Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982) and United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). Smith v. Phillips states that the remedy for allegations of juror partiality "is a hearing in which the defendant has the opportunity to prove actual bias." Smith v. Phillips, 455 U.S. at 216, 102 S.Ct. 940; see also Williams-Davis, 90 F.3d at 496. The D.C. Circuit had interpreted Remmer and its successors as vesting "broad discretion in the trial court to assess the effect of alleged intrusions." Williams-Davis, 90 F.3d at 496-97. Only if there is a sufficient "likelihood of prejudice" from a particular intrusion will the government have the burden of proving harmlessness. Id. at 497. If the court finds that any particular intrusion poses enough of a "likelihood of prejudice," the burden shifts to the government to prove harmlessness. Williams-Davis, 90 F.3d at 497.
Due process, of course, "does not require a new trial every time a juror has been placed in a potentially compromising situation," Smith, 455 U.S. at 217, 102 S.Ct. 940, but only where actual bias has been proven and found to be prejudicial. In assessing juror bias the Court is to consider a number of factors, including: "the nature of the communication, the length of the contact, ... and the impact of the communication on both the juror involved and the rest of the jury." United States v. Williams, 822 F.2d 1174, 1188-89 (D.C.Cir.1987). The decision whether the jury was improperly influenced and biased by an outside communication depends "upon how the jury interprets and expectably *16 will react to the communication made." Id. at 1189.
A. Allegations Made by Alternate Juror 2
Alternate Juror 2 described three different circumstances that could give rise to a possibility of juror bias: an inappropriate relationship between Juror 7 and the Deputy Marshal, the Deputy Marshal's alleged statement that Bryan Bostick had confessed to a murder and Alternate Juror 2's decision to tell this to Juror 2269 about this statement during deliberations, and jury deliberations before being charged. Alternate Juror 2 did not confirm the allegations she had allegedly made to counsel for Tommy Edelin and Bryan Bostick and presented by counsel to the Court that Juror 7 or any other juror disclosed vote tallies to the Deputy Marshal, nor did the other jurors testify that this occurred. Nevertheless, the Court will address this allegation.
1. Inappropriate Relationship
Alternate Juror 2 described the circumstances and rumors that led her to believe in the existence of an "inappropriate relationship" between Juror 7 and the Deputy Marshal: that she recalled the Deputy Marshal taking Juror 7 and several others to the bank on one occasion, June 27 Tr. at 31; that she witnessed Juror 7 speaking with the Deputy Marshal in the van on two occasions ("I have seen them twice where we all left and they were still communicating with each other, talking at the bus and on the bus, you know, stepping up to her or whatever," id. at 35); that she had heard "hearsay I was told by some other jurors that they saw other things," id.; and that she had observed that Juror 7 "would get upset when other Marshals, female Marshals, got near him," id. at 10.
As an initial matter, Alternate Juror 2's statements must be considered in the context in which she made them. She described her conversation with Tommy Edelin's counsel as opening with her complaint that she was not called to deliberate. She recalled saying to him: "I didn't understand why they didn't call me if they had 11 jurors. They are supposed to have 12." June 27 Tr. at 7. Counsel's response, she reported, was to mention to her "some statements that were made in reference to my character," which were "that I was a violent person, that I didn't get along with any of the jurors. I was always a problem when I was in the jury room." Id. at 7-8. When inquired as to who counsel said made these statements, Alternate Juror 2 responded, "My understanding if I remember it was Marshals who stated it." Id. at 8. The tone of the conversation between herself and Edelin's counsel, then, was set by an allegation by Edelin's counsel that the Marshals had defamed her character.
Alternate Juror 2 was upset by this alleged statement, and mentioned it repeatedly throughout her testimony. June 27 Tr. at 8, 9-10, 16, 33. This created an atmosphere in which Alternate Juror 2 felt hostility toward the Marshals, with whom she had not had a good relationship to begin with, see infra, and gave her an incentive to discredit them. Furthermore, she was upset that she had not been called back to deliberate, June 27 Tr. at 16-17, a fact corroborated by Juror 2269, July 11 Tr. at 8, and believed it had something to do with the alleged character defamation-giving her further incentive to seek to undermine the jury's verdict. Finally, the Court notes that Alternate Juror 2 has been untruthful in the past, when she failed to disclose a criminal arrest on her initial jury voir dire questionnaire, May 7, 2001 Tr. at 3809-3818, and in her voir dire. April 30, 2001 Tr. at 3395-3397 (discussing *17 the incident but not revealing that she had been arrested in connection with it).
Alternate Juror 2 did not allege that she observed any inappropriate contact or behavior between the Deputy Marshal and Juror 7; her allegations were based on rumor, inference, and suspicion. She herself acknowledged that she had "no real proof." June 27 Tr. at 10. Furthermore, both Juror 7 and Juror 2269 testified to the contrary. Juror 7 stated that she had a purely professional relationship with the Deputy Marshal and that she never had any social interaction with him other than as a member of the jury. June 27 Tr. at 42. She said that the outing with herself and several other jurors during a lunch recess had not been to the bank, but to pick up a pizza. Tr. at 43. Alternate Juror 2 had not alleged that the outing had been taken by Juror 7 and the Deputy Marshal alone, and Juror 7 recalled that there were probably three and at the least two other jurors present. Tr. at 46. This gives no rise even to an inference of an inappropriate relationship.
As to the van, the laws of physics dictate that the jurors had to alight from the bus one at a time, and that the last person to leave the bus would be on it alone with the Deputy Marshal for the few seconds it takes to say goodbye. This is how Juror 7 described the situation, Tr. at 47, and Alternate Juror 2's account, even if credible, does not contradict it.
Juror 2269 repeatedly stated that she had observed no irregularity or improper behavior between anyone on the jury and any court staff, including the Marshals. July 11 Tr. at 15-16, 19, 21. She said, "A question was never raised to me [that anyone was acting improperly]. I thought the Marshals at all times were rather nice to us, and all of us, and we had conversations that had nothing to do with the court, but just very pleasant people. So I wouldn't say any of it was inappropriate. I never saw anything happen inappropriately, so I'd have to say no." Tr. at 19. When questioned specifically in reference to Juror 7, identified by her jury nickname, she maintained that she had never seen anything irregular between Juror 7 and any court staff or Marshal. Tr. at 21.
The Court finds that there is no evidence that Juror 7 was involved in an inappropriate relationship with the Deputy Marshal, and that Alternate Juror 2's suspicions were unfounded. Alternate Juror 2 presented no evidence whatsoever that such an inappropriate relationship existed, but based her speculation on rumors and suspicions. Juror 7 testified unequivocally that she did not have a social relationship, much less an inappropriate one, with the Deputy Marshal. And Juror 2269 testified that she had not observed anything irregular between Juror 7 and the Deputy Marshal. Furthermore, the burden is on the defendant to prove actual bias. United States v. Williams-Davis, 90 F.3d 490, 496 (D.C.Cir.1996). Here, there is no indication of bias, much less of prejudice.
2. Deputy Marshal's Alleged Statement Regarding Confession
The most serious accusation made by Alternate Juror 2 is her allegation that the Deputy Marshal told her that Bryan Bostick had confessed to one murder. The Court does not find Alternate Juror 2 credible on this point. Alternate Juror 2 herself acknowledged that "the Marshals didn't say a lot to us." June 27, 2003 Tr. at 14. This sentiment was reflected in Juror 7's testimony, when she stated that the jurors and the Deputy Marshal "never discussed this trial ever," June 27 Tr. at 42, and that she never had any discussions with the Deputy Marshal regarding the guilt or innocence of the defendants or the evidence in the case, id. at 49. Alternate *18 Juror 2 also indicated in her testimony that she did not have a good relationship with the Deputy Marshal, in recounting the incident in the van with the seating, in which she felt she was unfairly given an assigned seat, June 27 Tr. at 24-25, and that she did not respond in a joking manner to the Deputy Marshal's joke that she might need to be investigated because she drove a nice car, Tr. at 24. She testified that "at times [the Deputy Marshal] made me feel uncomfortable." Tr. at 24. These circumstances make it unlikely that the Deputy Marshal would discuss the case in such an open and conversational manner with Alternate Juror 2 at any time.
Even if this incident occurred, it occurred after Alternate Juror 2 had been released, and therefore could not have created any actual bias in Alternate Juror 2 or caused any prejudice to the defendants. Moreover, the Deputy Marshal's alleged statement did not influence Alternate Juror 2. She stated that "in my opinion it wasn't proven that he committed the crime," and that despite the confession "I was told that I must see where they had proven that he was guilty beyond a believable [sic] doubt and I didn't see that." June 27 Tr. at 11; see also id. at 27 ("Being honest, I probably would have said [the defendants were] not guilty because I didn't see the proof."); id. at 29 ("I made statements [to the Deputy Marshal] because basically I guess my comment was that even if he admitted it, I didn't see proof and so I still couldn't say, yes, you are guilty."). That Alternate Juror 2 either disbelieved or discredited the Deputy Marshal's alleged statement makes the possibility that she passed it on to a deliberating juror even more remote.
Alternate Juror 2 was unsure that she had relayed this comment to Juror 2269, and that if she had it was during deliberations. June 27 Tr. at 30 ("I think I did say to that to [Juror 2269]. I think I mentioned that to her .... If I am correct it was during the time while they were deliberating I think."). Alternate Juror 2 stated that in her alleged telephone call with Juror 2269 during deliberations, she refrained from giving an opinion on the verdict in telling her "I don't know [how I would vote] because I don't even know what the questions are." June 27 Tr. at 13. If she refused to comment on the evidence in the case, it is even less likely that she would comment on an alleged extra-judicial comment on non-evidence.
Juror 2269 stated that she had not spoken with Alternate Juror 2 by telephone while the jury was deliberating, saying "I did not talk to her at all, as far as I remember, during deliberation." July 11 Tr. at 15. Her testimony consistently revealed the truth of this statement.[7] She *19 stated that she had not discussed the deliberations with Alternate Juror 2 because "I didn't talk to her during deliberations." Id. When questioned whether she had discussed the jury's vote tally with Alternate Juror 2, Juror 2269 responded, "I suppose not, because I didn't talk to her during deliberation." Id. Juror 2269 testified emphatically that Alternate Juror 2 had not made any statement to her regarding Bostick's alleged confession, responding to the question with "Absolutely not," and "She never said that to me." July 11 Tr. at 9. The Court finds that Juror 2269 is the more credible witness on this point.
Alternate Juror 2 testified that she initiated the call to Juror 2269. Tr. at 26. Alternate Juror 2 stated "[Juror 2269] said she was going to call me and just talk to me as a friend. She never did." June 27 Tr. at 13. Juror 2269 stated that she had not spoken to Alternate Juror 2 since shortly after the trial. July 11 Tr. at 7. She had difficulty recalling when and where she spoke to Alternate Juror 2. July 11 Tr. at 6-7 (spoke to her in courtroom either the day the verdict was announced or the day after). She did not remember Alternate Juror 2's views on the case. Tr. at 7-8 ("I don't remember what those views were, to be honest with you. It's almost a year and a-half ago, and I really don't."). These discrepancies between the jurors' testimony show that Alternate Juror 2 perceived a level of friendship between the two jurors that Juror 2269 did not share. Juror 2269 could not remember speaking with Alternate Juror 2 outside the trial until reminded of it, and could not recall how often they had spoken. She did not remember Alternate Juror 2's views on the case. Alternate Juror 2 expressed some disappointment that the women had not become friendly enough for Juror 2269 to call her. Given this situation, Alternate Juror 2's testimony that they discussed the case in detail during deliberations is not credible, especially given her acknowledged inability to remember clearly whether she had spoken to Juror 2269 during deliberations and, if she had, whether she had told Juror 2269 about Bostick's alleged confession.
The Court further finds that the circumstances surrounding this particular allegation make it even less likely to be credible that the other allegations. During the trial, a bench conference was held in which the Court stated that "Alternate Number 2, who is one of those that had made that comment about Mr. Bostick staring at him [sic], said to the Marshal, `What do you do if one of the defendants looks like he's fallen in love with you?' ... I did observe the defendants today and did not see any kind of nonverbal communication that was apparent to me. I did observe Mr. Bostick throughout the course of the day and never really saw any nonverbal communication between he and any juror. I did see this afternoon he had a number of conversations with both of his counsel and wrote notes back and forth and looked at the witness, and I really never observed him even looking at the jurors." July 30, 2001 Tr. at 15,811. Mr. Bostick's counsel responded "This is very ironic, Your Honor, because Mr. Bostick expressed concerns to me ... and [co-counsel] that she was staring at him ... and I actually noticed and I kept saying to her [sic] just don't look at *20 her.... I mean I noticed and [co-counsel] can confirm that. He's shaking his head yes. But, yeah, we did notice that she was, you know, seemingly staring at him because he said, gee, does she know me or whatever." Id. at 15,812. In the June 27 hearing, Alternate Juror 2 acknowledged that during the trial she believed that Bryan Bostick was staring at her, which she said lead the other jurors to joke that he had fallen in love with her. June 27 Tr. at 14. That Alternate Juror 2 believed that there was a connection between Bostick and herself gave her an especial incentive to undermine the verdict against him.
The only relevant inquiry where a postverdict allegation of extraneous information is proffered is "the precise nature of the information proffered and the degree, if any, to which that information was actually discussed or considered." United States v. Calbas, 821 F.2d 887, 896-97 (2d Cir.1987). There are several factors to consider in assessing juror bias: the nature of the communication, the length of the contact, the possibility of removing juror taint by limiting instruction (inapplicable here), and the impact of communication on the involved juror and the rest of the jury. United States v. Williams, 822 F.2d 1174, 1188-89 (D.C.Cir.1987). Here, there is no evidence that the information was discussed or considered by the jury, and hence no evidence of any impact the alleged communication had on the jury. Juror 2269 did not receive the information, and therefore could not have given it to the deliberating jurors. Alternate Juror 2 was not a deliberating juror, and therefore could not have "actually discussed or considered" the alleged confession during deliberation. The Court finds that Alternate Juror 2's allegation that the Deputy Marshal told her that Bryan Bostick had confessed to a murder is unsupported and not credible. Furthermore, even if this statement had been made, it was not relayed to a deliberating juror, much less to the entire deliberating jury.
3. Pre-Deliberation Discussions
While the D.C. Circuit has not condoned pre-deliberation discussions, it has taken a practical approach rooted in reality to acknowledge that jurors are likely to discuss the case before being charged, and that "[t]he probability of some adverse effect on the verdict is far less than for extraneous influences" and "`there is no reason to doubt that the jury based its ultimate decision only on evidence formally presented at trial.'" Williams-Davis, 90 F.3d at 505 (quoting United States v. Resko, 3 F.3d 684, 690 (3d Cir.1993)). The court ruled that "a trial court is virtually automatically justified in declining to pursue such an inquiry." Id. at 504. This is partly because the probability of an adverse effect on a verdict is lower than for outside influences. Id. at 505; see also United States v. Bertoli, 40 F.3d 1384, 1394 (3d Cir.1994) ("[I]ntra-jury communications pose a less serious threat to defendant's right to an impartial trial than do extra-jury influences, and therefore district courts are entitled to even greater deference in their responses to them than in responses to outside influences.").
Here, the allegation of premature deliberation must be inferred from Alternate Juror 2's testimony:
The Court: Okay. Did you say anything to her [Juror 2269] about how you thought the jury should vote or what you thought about the evidence or anything like that?
The Alternate Juror: That was said-everybody, not everybody most of the jurors made comments about that. That was like, no, we are not supposed to talk about it, but we did and most of the *21 jurors made comments in reference to that.
So I am not-I don't know if I said that on the phone in conversations or I may have said it when we were in the jury room because it appeared that everybody had their different views; but I can say that as far as me personally, if you are asking me to find beyond a reasonable doubt that the prosecutors find these people guilty and there are certain issues that I think don't constitute that they really did it, this is not proved to me, then I will say whether I believe they did it or not I have to go with the truth. They didn't prove it to me.
June 27 Tr. at 26-27.
Assuming that Alternate Juror 2 meant to say by this statement that the jurors engaged in discussion with one another regarding the evidence before being charged, nothing in this statement, and the defendants point to nothing, indicates that any pre-deliberation that might have occurred was prejudicial. No outside influence is alleged. The trial lasted 8 months, and the D.C. Circuit has recognized the possibility that jurors, "whose salient common interest must be the trial unfolding before them for several hours a day," might be unlikely "to obey the strictures of the standard rule." Williams-Davis, 90 F.3d at 505. Given the fact that even if these discussions occurred, no allegation of prejudice is offered (nor can the Court discern any manner in which this may have prejudiced defendants). Quite the opposite, in fact, as Alternate Juror 2 clearly had a strong belief that the government had not met its burden of proof and the opinion she expressed during any pre-deliberation, as quoted above, reflected that belief, and any prejudice would be to the government rather than the defendants. Cf. United States v. Calbas, 821 F.2d 887, 896 n. 9 (2d Cir.1987) (district court entitled to rely on the fact that extraneous information was intended to lead to acquittal to find no prejudice to defendant).
4. Disclosures to Deputy Marshal
Tommy Edelin's counsel reported in his motion that Alternate Juror 2 stated that Juror 7 had disclosed vote tallies and vote splits to the Deputy Marshal. Alternate Juror 2 did not confirm this allegation during her testimony. Juror 7 stated that she did not disclose any vote tallies to the Deputy Marshal. June 27 Tr. at 48. However, to avoid any future disputes, the Court will evaluate this allegation as though Alternate Juror 2 had made it. This conduct is evaluated as a communication outside the trial. There is no allegation that the Deputy Marshal provided any outside information about the case but rather that information was allegedly passed to the outside from the jury. Thus, as in Butler, "[t]he nature of the contact was relatively innocuous; it did not provide the juror with any crucial extra-judicial information, and it did not constitute an attempt to bribe or intimidate the juror." United States v. Butler, 822 F.2d 1191, 1196 (D.C.Cir.1987). The prejudice analysis depends, inter alia, on the type of contact alleged to have occurred between the jury and an outside source. "[T]he innocuous nature of a contact will have great bearing on the question whether prejudice has already occurred." United States v. Williams, 822 F.2d 1174, 1188 & n. 147 (D.C.Cir.1987). Here, giving the defendants all reasonable inferences and presumptions, even if this alleged communication occurred, it was not prejudicial. Moreover, even if this was occurring, it *22 was in the nature of pre-deliberation[8] and, as discussed above, does not require further inquiry.
B. Contact between Deputy Marshal and Juror 2269
At the July 11 hearing, Juror 2269 stated that she had spoken with the law clerk and with the Deputy Marshal to arrange her pick-up to attend the hearing. She described the entire content of her conversation with the Deputy Marshal as limited to "where I was going to be picked up, what time, and with whom." July 11 Tr. at 14. She further stated that she did not know why she had been called to the Court, id., confirming that she had not spoken with the Deputy Marshal on any substantive matter but only on the logistical aspects of her pick-up.
The defendants argue that this contact between Juror 2269 and the Deputy Marshal was improper and prejudicial. This argument fails. The jury in this trial was anonymous, based on a determination that the defendants posed a danger to the jurors. This Court has preserved that jury anonymity throughout the proceedings. Preservation of juror anonymity and protection of the jurors required following the same procedures for these hearings as were followed in the trial: the jurors met the Marshals at a designated but undisclosed Metro stop, and were brought to the courthouse in a van. This procedure was employed every day the jury sat in this lengthy eight month trial. Having coordinated this procedure for the entire trial, the Deputy Marshal was the person most familiar with and the best able to arrange for Juror 2269's pick-up. The routine use of this procedure and telephone confirmation of it by the Deputy Marshal was not improper.
There is no need to inquire further into the contact because the Court thoroughly explored it at the July 11 hearing, and the juror stated and confirmed that the contact was limited to the pick-up arrangement. The Deputy Marshal did not operate the van that brought Juror 2269 to the courthouse or have any direct contact with her. Furthermore, Juror 2269 swore to tell the truth in this matter. July 11 Tr. at 5. There is no indication whatsoever that she broke that oath. Her testimony was internally consistent and credible and her demeanor was thoughtful, without a sign of nervousness or other behavior that would indicate a lack of truthfulness
C. Henry Johnson's Motion for Hearing
Henry Johnson's counsel was not present at the June 27 hearing because of a family emergency, and arranged for substitute counsel to represent Mr. Johnson. At the hearing, substitute counsel stated that he was not aware that the hearing was to be an evidentiary hearing, and that he needed to speak with Mr. Johnson regarding whether the defendant wanted to go forward with substitute counsel. At this point, Mr. Johnson interjected, stating, "I object, Your Honor." Mr. Johnson, left without representation based upon his own objection, was then excused from the courtroom. June 27 Tr. at 3-4. Johnson filed a motion seeking to have the Court reconvene the hearing for his counsel to question Alternate Juror 2 and Juror 7.
Rule 43 requires the defendant's presence in three specified stages of a trial: "(1) the initial appearance, the initial arraignment, and the plea; (2) every trial *23 stage, including jury impanelment and the return of the verdict; and (3) sentencing." Fed.R.Crim.P. 43(a). The June 27 hearing did not fall into any of those three categories. The trial in this case was completed when the jury delivered its final verdict on October 24, 2001. The defendants have not yet been sentenced. Rule 43 does not mention nor apply to a hearing that is neither an appearance, a trial, nor a sentencing. While a defendant has a right to be present at trial, this has never extended to a right to be present at hearings held before or after trial. United States v. Lynch, 132 F.2d 111, 113 (3d Cir.1943); see also Snyder v. Commonwealth of Massachusetts, 291 U.S. 97, 107, 54 S.Ct. 330, 78 L.Ed. 674 (1934) ("The underlying principle gains point and precision from the distinction everywhere drawn between proceedings at the trial and those before and after. Many motions before trial are heard in the defendant's absence, and many motions after trial or in the prosecution of appeals."). Defendant Johnson's presence was not required at the hearing. Johnson effected a waiver of his presence by objecting to representation by substitute counsel. See Diaz v. United States, 223 U.S. 442, 455, 32 S.Ct. 250, 56 L.Ed. 500 (1912) (holding that a defendant can waive his right to be present at trial); Campbell v. Blodgett, 978 F.2d 1502, 1509-10 (9th Cir.1992) (recognizing a variety of circumstances in which a defendant may waive his presence at trial).
Furthermore, had Johnson remained in the hearing after dismissing his substitute counsel, his presence would not have affected the proceedings. Snyder, 291 U.S. at 106-07, 54 S.Ct. 330 ("Nowhere in the decisions of this court is there a dictum, and still less a ruling, that the Fourteenth Amendment assures the privilege of presence when presence would be useless, or the benefit but a shadow."). It would not have been in Johnson's interest to participate directly in the proceedings, as it could have resulted in a waiver of his Fifth Amendment right against self incrimination. Furthermore, "[f]or any represented party to communicate with the court directly is unorthodox." Yardis Corp. v. Perry Silver, 2000 WL 1763667 (E.D.Pa. Nov.30, 2000).
Johnson's counsel contends, "[a]s a result of Mr. Johnson and his counsel were absence [sic], questions that may be important to Mr. Johnson's defense were not allowed to be asked." Johnson Motion [709] at 5. Counsel did not elaborate on any such question. The government, in its response [709], urged counsel to submit any questions that were not asked that would have been beneficial to Johnson's case. Johnson did not seek to supplement his motion. None of the jurors implicated or even mentioned Johnson in any way. Nor has Johnson's counsel reported any unauthorized contact with any of the jurors that has raised further issues or issues specific to him. It is unknown what questions Johnson could have asked other than those asked by the Court and suggested by the attorneys for the other defendants. All the issues raised by counsel for Tommy Edelin and Bryan Bostick were thoroughly explored. In the absence of any indication from Johnson that any specific questions were left unasked or unanswered, in light of the Court's denial of all motions for relief in connection with Alternate Juror 2's allegations, and given that Rule 43 did not confer on Johnson a right to attend the hearing and that he waived any right he may have had, the Court will not hold a further evidentiary hearing in this matter.
III. Conclusion
To disturb a jury's verdict, the Court must be satisfied that there is proof both of an improper outside influence causing *24 bias and that the bias prejudiced the defendant. The Court has great discretion in crafting the inquiry and remedy where there has been an allegation of improper jury conduct. The defendants here claim that a variety of circumstances caused prejudicial bias within the jury: an inappropriate relationship between Juror 7 and the Deputy Marshal, a comment by the Deputy Marshal to released Alternate Juror 2 that Bryan Bostick confessed to a murder, pre-deliberation, and a disclosure of jury vote tallies by Juror 7 to the Deputy Marshal.
After conducting two evidentiary hearings, the Court finds that there was no inappropriate relationship between Juror 7 and the Deputy Marshal; that the Deputy Marshal did not tell Alternate Juror 2, after she was released, that Bryan Bostick had confessed to a murder and that Alternate Juror 2 did not relay such an alleged comment to deliberating Juror 2269 during deliberations; that Alternate Juror 2 did not speak to Juror 2269 during deliberations; and that Juror 7 did not disclose any jury votes to the Deputy Marshal. The Court further finds that the jury did not engage in pre-deliberation, and that if it did "`there is no reason to doubt that the jury based its ultimate decision only on evidence formally presented at trial.'" Williams-Davis, 90 F.3d at 505 (quoting United States v. Resko, 3 F.3d 684, 690 (3d Cir.1993)). The Court further finds that the brief telephonic contact between Juror 2269 and the Deputy Marshal to arrange the routine pick-up necessary to preserve her anonymity and limited to the logistics of that pick-up did not prejudice the defendants. Finally, the Court finds that Henry Johnson was not prejudiced by his absence from the June 27 hearing.
A separate Order shall issue this date.
ORDER
This comes before the Court on Defendant Tommy Edelin's motion for appropriate relief [650], the United States' Response [648], Edelin's reply [667], Bryan Bostick's Supplement [702] and memorandum [707], and Earl Edelin's [666] and Marwin Mosley's [697] motions to join. Also pending before the Court is Tommy Edelin's motion for a complete investigation [7/30/02], the government's response [708], and the motions to join of Marwin Mosley [710], Earl Edelin [712], Shelton Marbury [713], and Henry Johnson [8/1/03], and Johnson's memorandum in support [715]. The final pending motion is Henry Johnson's motion for an evidentiary hearing [709], and the government's response [714]. Upon consideration of the law, the facts, the parties' submissions, and the evidentiary hearings conducted by the Court, and for the reasons set forth in an accompanying memorandum opinion,
It is hereby ORDERED that the Tommy Edelin's motion for appropriate relief [650] is DENIED.
It is further ORDERED that Earl Edelin's motion to join in part Tommy Edelin's motion for appropriate relief [666] is hereby GRANTED.
Earl Edelin's motion to waive his presence and the presence of counsel and to be represented by substitute counsel [703] was GRANTED orally at the June 27, 2003 hearing. It is hereby ORDERED that the Clerk shall terminate this motion from the pending motions docket.
It is further ORDERED that Shelton Marbury's motion to join the motion for appropriate relief [497] is hereby GRANTED.
It is further ORDERED that Marwin Mosley's motion to join the motion for appropriate relief [697] is GRANTED.
*25 It is further ORDERED that the Clerk's office shall docket Bryan Bostick's Motion to Join and Adopt Co-Defendant Tommy Edelin's Motion for Appropriate Relief [10/21/2002]. It is further ORDERED that the motion is hereby GRANTED.
It is further ORDERED that Tommy Edelin's motion for a complete investigation [7/30/02] is DENIED.
It is further ORDERED that Marwin Mosley's motion to join Tommy Edelin's motion for a complete investigation and Henry Johnson's motion for an evidentiary hearing [710] is GRANTED.
It is further ORDERED that Earl Edelin's motion to join Tommy Edelin's motion for a complete investigation [712] is GRANTED.
It is further ORDERED that Shelton Marbury's motion to join Tommy Edelin's motion for a complete investigation [713] is GRANTED.
It is further ORDERED that Henry Johnson's motion to join Tommy Edelin's motion for a complete investigation [8/26/2003] is GRANTED.
It is further ORDERED that Henry Johnson's motion for an evidentiary hearing [709] is DENIED.
SO ORDERED.
NOTES
[1] The jury in this case was empaneled anonymously upon a determination that the defendants posed a danger to their safety. To continue that anonymity, the Court will refer to the three jurors questioned as Alternate Juror 2, Juror 7, and Juror 2269.
[2] The motion as originally filed included the name and physical description of the alternate juror, in contravention of the Court's order that the jurors empaneled in this case be anonymous for their own safety. Order of March 5, 2001[441]. The Court ordered that the original motion be sealed, and that counsel refile the motion without any identifying information. Order of October 30, 2002[657].
[3] The Court was curious that Alternate Juror 2 never brought to the Court's attention any of these allegations. Alternate Juror 2 confirmed in her testimony that she received a letter, from the undersigned judge, dated November 8, 2001, with the following text:
You recently served as a juror in my court in the case of United States of America v. Tommy Edelin, et al., a trial over which I presided. This was the longest and most difficult criminal case that I have ever handled. Jury selection began on March 26, and opening statements began on May 7. The trial finally concluded with a final verdict on October 24.
I would like to express my formal appreciation to you, individually, for your service to our court in this case. You have contributed to the fair and impartial administration of justice in our community by your performance of duty on this jury. I know that jury duty imposes at least some sacrifice for each person whose routine schedule is disrupted. In this case, you literally had to put your normal life on hold for months. It was really more than any good citizen should be expected to do, and our court and our community were indeed fortunate to have your services.
I especially appreciate your patience as I tried to keep to a minimum the unavoidable delays that occur in any trial, particularly one as complicated as this one, with so many participants.
Without good citizens like you, we could not fairly administer justice. Thank you very much for your dedicated and conscientious service on this jury
Sincerely,
Royce C. Lamberth
It is passing strange that this juror did not make her concerns known to the Court, orally or in writing, but, instead, engaged in a conversation with defendants' counsel.
[4] At the June 27 hearing the Court discussed this chance meeting with Alternate Juror 2, and explored whether Bostick's counsel had tried to avoid running afoul of Local Criminal Rule 24.2:
The Court: Okay. In the conversation you had with [Bostick's counsel] at the community meeting, you approached him and said you recognized him?
The Alternate Juror: Um-hmm.
The Court: And then did he make some comment to you about he couldn't talk to you or anything like that?
The Alternate Juror: Not that I remember. June 27, 2003 Tr. at 31.
[5] The jury reached a verdict in the guilt/innocence phase of this trial as a jury of 12. Following the guilt/innocence verdict, the parties presented additional evidence and testimony in the penalty phase of this death penalty case. During the penalty phase one of the jurors fell ill, and the penalty phase jury deliberated with 11 members. Tr. of Oct. 23, 2001 at 664-65. Because the alternate jurors had not heard the penalty phase evidence, an alternate juror was not called to replace the dismissed member of the panel.
[6] The Court supplied the jurors with lunch each day.
[7] Juror 2269's testimony at one point can be interpreted to say that she spoke with Alternate Juror 2 during deliberations:
The Court: So did you talk to her during the course of the trial also?
Juror Number 2269: I don't remember talking to her on the phone, but I may have, but we did talk during lunch.
The Court: Okay. Do you have any notion if she thought that during the time the jury was deliberating you had two or three phone conversations, do you have any
Juror Number 2269: That may be true. That may be true but it was in a personal nature as far as I remember.
The Court: It didn't deal with the jury matters of the deliberations?
Juror 2269: No. No.
The Court: Okay. You didn't
Juror Number 2269: I did not talk to her at all, as far as I remember, during deliberation.
July 11 Tr. at 15. While Juror 2269 said at one point that it "may be true" that she had conversations with Alternate Juror 2 during deliberations, the transcript and her demeanor at the hearing show that she had misunderstood the question to ask had she ever had two or three telephone conversations with Alternate Juror 2. Upon realizing her mistake, she quickly corrected her testimony-without a question from the Court-to state that she did not speak to Alternate Juror 2 during deliberations. This was an understandable, brief, and quickly corrected misstatement arising from confusion. Juror 2269 was called to the courthouse and was given no explanation as to why she needed to appear, and then was called to testify to a full courtroom. It is only to be expected that she would be nervous and might misspeak.
[8] Because Alternate Juror 2 was not present during deliberations, her alleged claim to defense counsel could not have been that Juror 7 supplied vote tallies to the Deputy Marshal during deliberations, but would have to apply to pre-deliberation.
| {
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} |
FILED
DEC 16 2011
1 SUSAN M SPRAUL, CLERK
U.S. BKCY. APP. PANEL
2 OF THE NINTH CIRCUIT
3
UNITED STATES BANKRUPTCY APPELLATE PANEL
4
OF THE NINTH CIRCUIT
5
In re: ) BAP No. CC-11-1323-KiDJu
6 )
DEAD OAK ESTATES, INC., ) Bk. No. 08-28230-MM
7 )
Debtor. ) Adv. No. 09-02730
8 ______________________________)
)
9 MICHAEL F. BURKART, Chapter 7 )
Trustee; SUSAN VINEYARD, )
10 )
Appellants, )
11 )
v. ) M E M O R A N D U M1
12 )
ROBERT KUPKA; CYNTHIA KUPKA, )
13 )
Appellees. )
14 ______________________________)
15 Argued and Submitted on November 16, 2011
at Sacramento, California
16
Filed - December 16, 2011
17
Appeal from the United States Bankruptcy Court
18 for the Eastern District of California
19 Honorable David E. Russell, Bankruptcy Judge, Presiding
_____________________________________
20
Appearances: Kristen Ditlevsen, Esq. argued for appellants,
21 Michael F. Burkart and Susan Vineyard;
George C. Hollister, Esq. of the Hollister Law
22 Corporation argued for appellees, Robert Kupka and
Cynthia Kupka.
23 _____________________________________
24
Before: KIRSCHER, DUNN, and JURY, Bankruptcy Judges.
25
26
1
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8013-1.
1 Appellants, chapter 72 trustee Michael F. Burkart
2 (“Trustee”) and Susan Vineyard (“Vineyard”)(collectively
3 “Trustee”), appeal a bankruptcy court judgment in favor of
4 defendants, appellees Robert Kupka (“Robert”) and Cynthia Kupka
5 (“Cynthia”)(collectively “Defendants”), on Trustee’s action for
6 declaratory relief regarding debtor’s rights under an option to
7 purchase real property owned by Defendants. We AFFIRM.
8 I. FACTUAL AND PROCEDURAL BACKGROUND
9 A. Prepetition Facts.
10 Debtor, Dead Oak Estates, Inc. (“Dead Oak”), is a Delaware
11 corporation originally incorporated on June 7, 1982. Dead Oak’s
12 name was changed to Hangtown Leasing Company by amendment filed
13 on July 11, 1986 (“Hangtown”). Dead Oak’s name was changed back
14 to Dead Oak Estates, Inc. by amendment filed on April 4, 2002.
15 Phil Sheridan (“Sheridan”) owned and operated a small
16 charter airline, Galaxy Airlines (“Galaxy”), located in Fort
17 Lauderdale, Florida. In January 1985, a Galaxy flight crashed in
18 Reno, Nevada, killing 70 of the 71 persons on board. Shortly
19 after the crash, the U.S. Department of Transportation (“DOT”)
20 suspended Galaxy’s operational certificate. Sheridan’s efforts
21 to reinstate the operational certificate were unsuccessful, and
22 he decided to sell Galaxy.
23 In 1987, Sheridan entered into a Stock Purchase Agreement
24
25
2
Unless otherwise indicated, all chapter, section and rule
26 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
27 The Federal Rules of Civil Procedure will be referred to as
“FRCP.” The Federal Rules of Evidence will be referred to as
28 ?FRE.”
- 2 -
1 (“Agreement”) transferring his 100% interest in Galaxy to John
2 Kupka (“John”) and John’s assigns, in exchange for: a promissory
3 note to Sheridan in the amount of $400,000, an agreement to pay
4 Sheridan’s debt to Cardinal Corporation in the amount of
5 $900,000, and payment of Galaxy’s 941 tax obligation to the IRS.
6 John’s “assigns” were Hangtown n/k/a Dead Oak, one of several
7 corporations controlled by John through the Kupka Family Trust,
8 and William and Tammy Tsui (collectively “buyers”). In October
9 1987, the buyers attempted to rescind the Agreement for, inter
10 alia, Sheridan’s failure to disclose the correct amount of the
11 IRS’s tax lien, and the buyer’s inability to reinstate the
12 operational certificate with the DOT.3 Sheridan rejected the
13 rescission notice.
14 In 1988, Sheridan sued the buyers in a Florida federal court
15 for specific performance of the Agreement. While the suit was
16 pending, Sheridan filed for chapter 7 bankruptcy. In August
17 1993, the Florida court entered a default judgment in favor of
18 Donna Bumgardner, Sheridan’s chapter 7 trustee, and Cardinal
19
3
20 In January 1988, the DOT issued an Order to Show Cause
(“OSC”) tentatively revoking Galaxy’s operational certificate for
21 failing to comply with the continuing aviation fitness
requirements. Prior to the OSC, John had submitted documentation
22 to the DOT in an effort to get Galaxy’s operational certificate
reinstated, including an Option to Purchase Real Estate, dated
23 November 10, 1986 (the “Option”). Also in the DOT’s file
submitted by John was a letter dated June 3, 1987, from John to
24 Richard Taylor, attorney for Galaxy on the DOT matter, in which
John stated that “the family trust has first option on the
25 airport property for $1.8 [million],” and that Lodi Airport was
worth “roughly $7.5 [million],” with total debt of “less than
26 $1.2 [million].”
The DOT noted several reasons in the OSC for revoking
27 Galaxy’s operational certificate, including its apparent poor
financial condition, John’s “overstated” value of Lodi Airport,
28 and John’s prior criminal record for false swearing under oath.
- 3 -
1 Corporation (the third-party beneficiary to the Agreement) and
2 against John, Hangtown, and the Tsuis (the “Sheridan Judgment”).
3 In 1995, Marika Tolz succeeded Donna Bumgardner as trustee for
4 Sheridan’s estate. In 1996, the bankruptcy court approved
5 trustee Tolz’s employment of co-plaintiff Vineyard as collection
6 agent for the Sheridan Judgment. In 2000, Vineyard filed a
7 chapter 7 bankruptcy. John filed a chapter 7 bankruptcy in 2001.
8 In 2001, Cardinal Corporation assigned its portion of the default
9 judgment (about $1.4 million plus interest) to the trustee of
10 Vineyard’s bankruptcy estate. In 2003, the bankruptcy court
11 entered an order approving the trustee’s abandonment of
12 Vineyard’s estate’s interest in the Sheridan Judgment back to
13 Vineyard. After years of having no success in collecting on the
14 Sheridan Judgment, in May 2005, trustee Tolz filed a notice of
15 intent to abandon Sheridan’s portion of the Sheridan Judgment
16 (about $600,000 plus interest) back to Sheridan. In July 2005,
17 Sheridan affirmed and assumed the assignment agreement between
18 trustee Tolz and Vineyard for collection of the Sheridan
19 Judgment.
20 B. Postpetition Facts.
21 Vineyard filed an involuntary chapter 7 petition against
22 Dead Oak on June 20, 2008. John is the principal of Dead Oak.4
23 Upon no objection, an order for relief was entered in August
24 2008. Two proofs of claim were filed in Dead Oak’s case,
25 including a general unsecured claim by Vineyard for $5,955,000
26
27
4
John, father to Robert and Cynthia, passed away during
28 this case on October 5, 2010.
- 4 -
1 based in part on the Sheridan Judgment. On August 21, 2009, the
2 bankruptcy court approved a compromise authorizing the joint
3 prosecution (at Vineyard’s expense) of the estate’s Option to
4 purchase real property owned by Defendants in Acampo, California,
5 commonly known as Lodi Airport for $1.8 million, and providing
6 for a division of any net recovery to Vineyard and the estate’s
7 other creditors. In September 2009, pursuant to an order based
8 on Dead Oak’s failure to file documents, Vineyard filed schedules
9 and a statement of financial affairs on behalf of Dead Oak. In
10 those documents, Vineyard identified the Option as property of
11 the estate.
12 On November 11, 2009, Trustee filed a declaratory relief
13 action against Defendants seeking a determination that Dead Oak’s
14 Option was valid. Attached to the complaint was a copy of the
15 Option, dated November 10, 1986, which stated:
16 The following is an option, with first right of refusal,
given to Hangtown Leasing Company, a Delaware Corporation
17 to purchase all that real property described in exhibit
“A” attached, commonly known as Lodi Airport situated in
18 Acampo, California. Option price is One million, eight
hundred thousand dollars. ($1,800,000.00).
19
20 The Option reflected the signatures of Robert and Cynthia in
21 their individual capacities as co-owners of Lodi Airport.
22 Trustee alleged that Defendants never revoked the Option, and it
23 did not limit Dead Oak’s right to exercise it to any specific
24 time period or describe a particular manner in which it must be
25 exercised. Defendants disputed the validity of the Option, thus
26 explaining Trustee’s need for declaratory relief.
27 Defendants moved to dismiss Trustee’s complaint on
28 December 15, 2009. In their motion, Defendants denied knowing
- 5 -
1 about the unrecorded Option until Vineyard’s counsel brought it
2 to their attention in February 2008. Defendants denied ever
3 agreeing to the Option and asserted that they had never received
4 any payment with respect to or on account of it. The motion also
5 referred to a letter sent by Defendants’s counsel to Trustee on
6 May 11, 2009. In the letter, attached to Robert’s Declaration in
7 support of the motion, counsel asserted that Robert’s and
8 Cynthia’s signatures on the Option had been forged, and that the
9 Option was never signed by either of them. Defendants’s motion
10 was denied on January 20, 2010. They filed an answer on
11 February 2, 2010. Defendants subsequently filed two motions for
12 summary judgment, both of which were denied.
13 Two days before trial, Trustee filed his trial brief and a
14 motion in limine to exclude certain evidence of Defendants. In
15 his brief, Trustee conceded that he was not convinced Cynthia
16 personally signed the Option based on the opinions of the
17 handwriting experts employed by both parties. However, contended
18 Trustee, their expert’s analysis of Cynthia’s questioned
19 signature was limited due to Defendants’s unwillingness to
20 produce known signature exemplars for her for the period from
21 1985 to 1990.5 As for Robert’s questioned signature, Trustee’s
22 expert concluded that it was probably genuine. Based on the
23 expert’s findings, Trustee contended that it was more probable
24 than not that Robert signed both his own signature and Cynthia’s
25
26
5
The bankruptcy court subsequently found that Cynthia’s
27 questioned signature on the Option was not genuine. Appellants
do not appeal that finding. We discuss Cynthia’s testimony as it
28 relates to the conduct of John and Robert.
- 6 -
1 signature, either mechanically or at her direction, or in his
2 capacity as her authorized agent. Cynthia had admitted at
3 deposition that Robert handled the day-to-day operations of Lodi
4 Airport, that she had little involvement with it, and that she
5 deferred to Robert’s judgment on documents to be executed on
6 their behalf.
7 In his motion in limine, Trustee disputed the admission of a
8 statement by Robert in his Alternate Direct Testimony (“ADT”).
9 In the ADT, Robert asserted that upon showing John a copy of the
10 Option in February 2008, John told Robert that he recognized the
11 document and stated that he had forged the signatures so the
12 Option would appear to be an asset for purposes of his
13 application to acquire Galaxy and DOT approval. Trustee
14 contended Robert’s statement was inadmissable hearsay being
15 offered for the first time on the eve of trial to exculpate
16 Defendants. Moreover, John had since passed away so Trustee was
17 unable to question him about it. Alternatively, Trustee
18 contended that John’s “forgery” statement to Robert should be
19 excluded under FRCP 37 for failing to disclose it in
20 interrogatories.
21 C. The Trial.
22 The two-day trial commenced on May 11, 2011. As a
23 preliminary matter, the parties agreed to address the basis of
24 Trustee’s motion in limine when Robert testified.
25 Cynthia testified that she had never authorized John to sign
26 any documents on her behalf, but that John had done so without
27 her authorization in the past. Specifically, when she was away
28 at college, John had signed three credit card applications in
- 7 -
1 Cynthia’s name without her knowledge. John subsequently failed
2 to pay the credit card debts and served time in jail as a result.
3 Cynthia also testified that she had never authorized Robert to
4 sign any document on her behalf, nor did she know of any
5 circumstance in which he had signed something on her behalf
6 without her knowledge.
7 Robert testified that even though he knew John had purchased
8 Galaxy in 1987, which in Robert’s opinion was a “crazy” idea,
9 Robert had no involvement with John’s efforts to reinstate
10 Galaxy’s operational certificate with the DOT. As for the
11 Option, Robert testified that although the questioned signature
12 looked like his, he did not sign it. Robert again confirmed that
13 once he showed the Option to John in 2008, John admitted faking
14 the document and forging the signatures as a means to acquire
15 Galaxy. Robert testified that he had never seen the Option
16 before February 2008. Robert admitted that he did not disclose
17 John’s “forgery” story in the interrogatories because he did not
18 remember it at the time, and he assumed his denial of signing it
19 was sufficient.
20 On cross-examination, Robert testified that he would never
21 have signed the Option. Robert further testified that Cynthia
22 never authorized him to sign her name on any documents, and he
23 never did so. Finally, Robert testified that John had also
24 obtained credit cards in Robert’s name without his knowledge.
25 Both expert witnesses testified on day two of the trial.
26 Trustee’s expert, David Moore (“Moore”), testified that even
27 though the Option was a copy, he found nothing in either
28 signature to suggest they were not naturally written. In other
- 8 -
1 words, the signatures were not traced. Moore further testified
2 that he had a sufficient amount of known signature exemplars from
3 Robert and concluded that Robert’s questioned signature was
4 “probably” genuine. Moore explained that on the scale used by
5 forensic document examiners, with the finding of “did sign it” at
6 the far right end and the finding of “did not sign it” at the far
7 left end, a conclusion of “probably” was just below the finding
8 of “very probably,” which was just below “did sign it.” Moore
9 further explained that in the middle of the scale is the finding
10 of “no conclusion,” which means the evidence is evenly split or
11 insufficient information exists to lean one way or the other. In
12 this case, explained Moore, his finding of “probably” with
13 respect to Robert’s signature meant the evidence was strong but
14 some limiting factors existed - i.e., the absence of an original.
15 Because the Option was only a copy, Moore could not exclude the
16 possibility that Robert’s signature was a “cut-and-paste.” Moore
17 could also not recall an instance where a document contained both
18 a forged signature and a cut-and-paste signature of another.
19 On cross-examination, Moore testified that he was not asked
20 to determine whether Cynthia’s questioned signature was written
21 by Robert. He did opine, however, that since their signatures
22 were so sufficiently dissimilar it would be like comparing apples
23 and oranges, and he would be unable to determine whether or not
24 Robert wrote Cynthia’s signature.
25 Defendants’s expert, James Blanco (“Blanco”), testified
26 next. When asked whether it was “probable” that Robert, assuming
27 his signature on the Option was genuine, wrote the questioned
28 “Cynthia Kupka” signature, Blanco replied: “I would say it would
- 9 -
1 not be probable.” Trial Tr. (May 12, 2011) 77:6. On cross-
2 examination, Blanco testified that he saw no evidence of cut-and-
3 paste, but admitted that he was retained only to opine on
4 Cynthia’s signature, not Robert’s, because Robert had admitted
5 that the questioned signature looked like his. Blanco further
6 testified that he saw no traces of Robert’s signature
7 characteristics in Cynthia’s signature that indicated Robert
8 signed for her.
9 After Blanco’s testimony, Trustee’s counsel asserted that
10 any pending evidentiary objections, particularly all hearsay
11 objections with respect to submitted documents, needed to be
12 resolved before he could present closing argument. The
13 bankruptcy court responded that all exhibits had been admitted as
14 far as it was concerned. During further colloquy on this issue,
15 the court stated that any documents containing hearsay statements
16 of John would be disregarded, to which Trustee’s counsel
17 responded:
18 Well, your Honor, before you come to that conclusion,
there may be some things in there you may regard. You
19 may accept them. You’re perfectly capable of weighing
the evidence.
20
21 Trial Tr. (May 12, 2011) 100:5-8. The court then noted that the
22 primary issue in the case was whether Robert forged Cynthia’s
23 signature on the Option. However, it believed Blanco had ruled
24 out that possibility. Furthermore, Robert had testified he had
25 never signed Cynthia’s name, and Cynthia had testified she never
26 authorized anyone to sign her name on any document.
27 Trustee’s counsel then stated he had one more witness to
28 call before closing his case in chief. The court asked counsel
- 10 -
1 for an offer of proof regarding this witness “because at this
2 stage in the game, [Trustee] d[id]n’t have a case.” Id. at
3 104:1-2. Counsel offered that this witness would impeach
4 Robert’s testimony, to which the court responded: “You have an
5 unfortunate problem there because I happen to believe that
6 [Robert] was a very reliable witness.” Id. at 104:13-15. The
7 court then asked counsel whether the witness would impeach
8 Robert’s testimony about not signing the Option. Counsel
9 responded that the witness would impeach Robert’s testimony about
10 having no involvement in the DOT proceedings. In response, the
11 court stated:
12 I don’t care about that. I really don’t care about that.
That’s got nothing to do with this case as I see it. And
13 I believe Mr. Kupka’s testimony.
14 . . . .
15 . . . [A]nd I also believe [Robert’s] testimony that all
of this has to do with John . . . trying to get some
16 evidence in, trying to get something together to show
that he had assets.
17
. . . .
18
So how does that ever get you to the point where this
19 option, 30-year-old option, whatever it is, that is not
signed by either Mr. Kupka or his sister, how can that
20 possibly result in something that you can enforce?
21 Id. at 105::21-23; 106:6-15. In the court’s opinion, even if
22 Trustee’s witness testified that Robert was involved with the DOT
23 proceedings, it would not rehabilitate the Option, which was a
24 “complete nothing.” Id. at 108:21. Even if Robert was not
25 telling the truth, opined the court, the outcome remained
26 unchanged because both signatures had to be genuine for a valid
27 Option, and the evidence showed that Cynthia never signed it and
28 never authorized Robert to sign it (or anything else) on her
- 11 -
1 behalf.
2 Despite the court’s position, Trustee’s counsel stated that
3 he still wanted to put on his last witness the following day, to
4 which the court responded: “You may do so.” Id. at 110:17.
5 Counsel explained that the witness was the county planner from
6 1987 who spoke with Robert about moving Galaxy from Florida to
7 Lodi Airport. The court responded that regardless of what the
8 planner had to say, it would not render the Option valid.
9 Furthermore, the evidence showed that John had previously forged
10 Cynthia’s name on various documents, and even if Robert had at
11 one time expressed to the county planner an interest in moving
12 Galaxy to Lodi Airport, Robert had testified that he determined
13 the prospect was useless considering Galaxy’s debt load.
14 Finally, the court noted that even Trustee’s expert could not
15 rule out the possibility that Robert’s signature on the Option
16 was a cut-and-paste job.
17 Upon counsel’s further offer of proof about the planner’s
18 testimony, the court stated:
19 Don’t buy it. I have no reason to. As I said, I think
Robert Kupka is a reliable witness. I heard him testify.
20 I have no reason to doubt his testimony. I believe him.
I believe his sister. And they’re both saying, “Hey, we
21 didn’t have anything to do with this stupid document.”
There you are.
22
23 Id. at 118:8-14. The court reiterated that Trustee’s counsel
24 could call the planner to testify, but that it would not be
25 persuaded:
26 You’ve made your offer of proof, which I think is
adequate, I mean, sufficient to at least bring to the
27 attention of any appellate court as to what kind of
evidence you were going to bring on, namely, that there
28 was a conversation between [Robert] and the planner that
- 12 -
1 was in charge, I guess, of Lodi Airport improvements --
that they were talking about bringing [Galaxy] to the
2 Lodi Airport. But, as I said before . . . it doesn’t do
anything for this bogus document. That document, that
3 option agreement is bogus.
4 Id. at 121:17-122:3. Counsel then explained that the planner’s
5 testimony was not based just on his memory of conversations with
6 Robert, but it was also based on a report that is part of the
7 public record. The court paused momentarily, but ultimately
8 determined the planner’s testimony was not going to change the
9 court’s mind. As a result, it dismissed Trustee’s complaint with
10 prejudice.6 The court further denied Trustee’s motion in limine
11 to exclude John’s “forgery” hearsay statement to Robert.
12 An order denying Trustee’s motion in limine was entered on
13 May 17, 2011. A judgment in favor of Defendants was entered on
14 June 8, 2011. This timely appeal followed.
15 II. JURISDICTION
16 The bankruptcy court had jurisdiction under 28 U.S.C.
17 §§ 157(b)(2)(A) and 1334. The order denying Trustee’s motion in
18 limine was an interlocutory order that merged into the final
19 judgment. United States v. Real Prop. Located at 475 Martin
20 Lane, Beverly Hills, Cal., 545 F.3d 1134, 1141 (9th Cir. 2008)
21 (under the merger rule interlocutory orders entered prior to the
22 judgment merge into the judgment and may be challenged on
23 appeal). Therefore, we have jurisdiction over both the order
24 denying the motion in limine and the judgment under 28 U.S.C.
25
26
6
Since the dismissal occurred at the close of the evidence
27 presented on Trustee’s case in chief, including his offer of
proof, it appears to have been a Judgment on Partial Findings as
28 allowed by FRCP 52(c), as incorporated by Rule 7052.
- 13 -
1 § 158.
2 III. ISSUES
3 1. Did the bankruptcy court clearly err in finding that the
4 Option was invalid?
5 2. Did the bankruptcy court abuse its discretion by not having
6 the county planner testify and by admitting the hearsay
7 testimony?
8 3. Did the bankruptcy court apply the proper burden of proof?
9 IV. STANDARDS OF REVIEW
10 We review the bankruptcy court’s findings with respect to
11 the validity of the Option for clear error. A finding is clearly
12 erroneous when it is illogical, implausible or “without support
13 in inferences that may be drawn from the facts in the record.”
14 United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)
15 (en banc). If the trial court’s account of the evidence is
16 plausible in light of the record viewed in its entirety, the
17 court of appeals may not reverse it even though convinced that
18 had it been sitting as the trier of fact, it would have weighed
19 the evidence differently. S.E.C. v. Rubera, 350 F.3d 1084, 1094
20 (9th Cir. 2003)(citing Anderson v. City of Bessemer City, N.C.,
21 470 U.S. 564, 573-74 (1985)). Great deference is to be given to
22 the bankruptcy court’s determinations on witness credibility due
23 to its opportunity to observe the witness. Retz v. Samson
24 (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010)(citing
25 Anderson, 470 U.S. at 575 (1985)).
26 To reverse an evidentiary ruling, we must conclude that the
27 bankruptcy court both abused its discretion and that the error
28 was prejudicial. Latman v. Burdette, 366 F.3d 774, 786 (9th Cir.
- 14 -
1 2004). We review the bankruptcy court’s ruling on a motion in
2 limine for an abuse of discretion. United States v. Rude,
3 88 F.3d 1538, 1549 (9th Cir. 1996). To determine whether the
4 bankruptcy court abused its discretion, we conduct a two-step
5 inquiry: (1) we review de novo whether the bankruptcy court
6 “identified the correct legal rule to apply to the relief
7 requested” and (2) if it did, whether the bankruptcy court's
8 application of the legal standard was illogical, implausible or
9 “without support in inferences that may be drawn from the facts
10 in the record.” Hinkson, 585 F.3d at 1261-62.
11 Whether the bankruptcy court properly applied the correct
12 burden of proof is a question of law reviewed de novo. United
13 States v. Banuelos, 322 F.3d 700, 704 (9th Cir. 2003).
14 V. DISCUSSION
15 We begin by noting that our review of this appeal is
16 hindered due to Trustee’s failure to include in his excerpts of
17 record: the complaint, answer, all pretrial motions including the
18 subject motion in limine and related order, the pretrial order,
19 any pretrial statements, Trustee’s trial brief, the Alternate
20 Direct Testimony of Robert and Blanco, Blanco’s report, the
21 notice of appeal, and the judgment. This is a severe violation
22 of Rule 8009(b) subjecting Trustee’s appeal to dismissal. Kyle
23 v. Dye (In re Kyle), 317 B.R. 390, 393 (9th Cir. BAP 2004).
24 Nonetheless, we exercised our discretion to retrieve many of
25 these items from the bankruptcy court’s electronic docket, of
26 which we take judicial notice. See Atwood v. Chase Manhattan
27 Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP
28 2003)(we are free to take judicial notice of relevant documents
- 15 -
1 on the bankruptcy court’s docket). However, the Alternate Direct
2 Testimony of Robert and expert witness Blanco, as well as
3 Blanco’s report, were not available.
4 A. The bankruptcy court did not clearly err in finding that the
Option was invalid.7
5
Trustee disputes the bankruptcy court’s finding that the
6
Option was not valid based on what he believes was compelling
7
evidence to the contrary. In order to reverse the bankruptcy
8
court on this basis, we must conclude that its findings of fact
9
are illogical, implausible, or not supported by the record.
10
Hinkson, 585 F.3d at 1261-62.
11
Trustee contends he established the Option’s validity by the
12
following. The copy of the Option and John’s 1987 letter
13
referencing the Option demonstrated its existence. Robert and
14
Cynthia’s names appear on the Option, signed by someone. Both
15
experts opined that Robert’s signature was probably written by
16
him, and Robert admitted that it looked like his signature.
17
Cynthia admitted that she was unfamiliar with the business
18
dealings of Lodi Airport, and that she would sign documents when
19
Robert advised her to do so. Cynthia also admitted she had
20
little memory of the time period when the Option was executed,
21
22
7
Trustee contends the bankruptcy court did not appear to be
23 fully familiar with the written materials submitted by the
parties prior to trial and did not have a complete grasp on
24 Trustee’s arguments. Trustee further contends the court let
Defendants’s counsel argue extensively in his opening statement,
25 which likely influenced the court’s evaluation of the evidence
presented.
26 First, we see no objections by Trustee’s counsel to any of
Defendants’s opening statement in the transcript. Further, the
27 transcript reflects that the bankruptcy court was familiar with
Trustee’s legal arguments, but it chose to reject them based on
28 the evidence.
- 16 -
1 and that she could not remember signing several airport-related
2 documents at the time she signed them. Trustee asserts that even
3 if Cynthia did not sign the Option, the evidence suggests she may
4 have authorized Robert to sign it on her behalf. Thus, contends
5 Trustee, even assuming Cynthia’s signature is not genuine,
6 Robert’s signing of both their signatures is sufficient to
7 establish their intent to be bound by the Option’s terms. In
8 short, Trustee asserts that based on the evidence one of the
9 following must have occurred: either John forged the Option, or
10 Robert signed it and forged Cynthia’s signature, either with her
11 authorization or without it.
12 Although Trustee’s scenario of Robert forging Cynthia’s
13 signature on the Option is plausible, we also have to consider
14 all of the evidence and testimony offered in this case. In
15 addition to Cynthia’s testimony that she would sign documents
16 when Robert advised her to do so, and that she could not remember
17 signing various airport-related documents at the time she signed
18 them, Cynthia also testified that she did not sign the Option.
19 Both experts agreed that Cynthia’s signature on the Option was
20 not genuine. Cynthia also testified that she never authorized
21 Robert to sign any document on her behalf, including the Option.
22 As for whether Robert forged Cynthia’s signature on the Option,
23 Blanco determined that Robert probably did not, and Moore could
24 not determine that Robert did. Robert testified that he did not
25 forge Cynthia’s signature. Robert testified that he did not sign
26 the Option, and both experts could not conclusively rule out the
27 possibility that his signature was a cut-and-paste job. Cynthia
28 and Robert also testified as to John’s history of forging his
- 17 -
1 children’s signatures on documents. Furthermore, according to
2 the DOT’s OSC, one of the reasons it refused to reinstate
3 Galaxy’s operational certificate was John’s prior criminal record
4 of lying under oath. The bankruptcy court made explicit findings
5 that Robert and Cynthia were credible witnesses. It also found
6 expert Blanco’s testimony more persuasive than expert Moore’s.
7 Even if we as the fact-finder would have weighed the
8 evidence differently, “when there are two permissible views of
9 the evidence, the trial judge’s choice between them cannot be
10 clearly erroneous.” Village Nurseries v. Gould (In re Baldwin
11 Builders), 232 B.R. 406, 410 (9th Cir. BAP 1999). We cannot
12 conclude on this record that the bankruptcy court clearly erred
13 in finding the Option was bogus. This finding is not illogical,
14 implausible, or without any support in the record viewed in its
15 entirety. Hinkson, 585 F.3d at 1261-62.
16 B. The bankruptcy court did not abuse its discretion by not
having the county planner testify or by admitting the
17 “forgery” hearsay testimony.
18 Trustee contends the bankruptcy court abused its discretion
19 when it “refused” to allow him the opportunity to call the county
20 planner, whose testimony would have impeached Robert’s testimony
21 on the key issue of his involvement with John’s efforts with the
22 DOT and to bring Galaxy to Lodi Airport. Despite Trustee’s
23 failure to disclose the county planner as a witness in the
24 pretrial order, the record clearly shows that the bankruptcy
25 court did not deny Trustee the opportunity to call him. The
26 court considered Trustee’s offer of proof regarding the planner’s
27 testimony and ultimately concluded that regardless of what he had
28 to say about Robert’s involvement with relocating Galaxy to Lodi
- 18 -
1 Airport, it would not rehabilitate what the court determined was
2 a bogus document. The court went further to say that even if
3 Robert was not being truthful about his involvement with the DOT
4 proceedings, the Option was still invalid because Cynthia never
5 signed it and never authorized anyone else to sign it on her
6 behalf, and to be a valid contract both signatures had to be
7 genuine. We see no abuse of discretion here.
8 Trustee also contends the bankruptcy court abused its
9 discretion by precluding the admission of relevant documentary
10 evidence demonstrating Robert’s involvement in John’s affairs
11 that would have discredited Robert and diminished the weight the
12 court could reasonably have placed on his testimony. Trustee
13 fails to state what “documentary evidence” the court failed to
14 admit, but we assume he is referring to the planner’s report from
15 1987. As the bankruptcy court noted, even if Robert was not
16 being truthful about his involvement with relocating Galaxy to
17 Lodi Airport or the DOT proceedings, the planner’s documentary
18 evidence could not render the Option valid.
19 Finally, Trustee contends that the bankruptcy court abused
20 its discretion by admitting the hearsay testimony that John told
21 Robert he forged the signatures on the Option because its
22 admission must have tainted the outcome of his case. “Hearsay”
23 is a statement, other than one made by the declarant while
24 testifying at the trial or hearing, offered in evidence to prove
25 the truth of the matter asserted. FRE 801(c). Unless falling
26 under an exception in FRE 803 and 804, hearsay statements are
27 inadmissible under FRE 802. The “forgery” hearsay testimony was
28 subject to the motion in limine, which the bankruptcy court
- 19 -
1 denied. A motion in limine is “any motion whether made before or
2 during trial to exclude anticipated prejudicial evidence before
3 the evidence is actually offered.” Luce v. United States,
4 469 U.S. 38, 40 (1984).
5 We agree with Trustee that the bankruptcy court erred by
6 allowing in the “forgery” hearsay testimony. However, on this
7 record, such error was harmless because it was not the only
8 evidence before the court on the genuineness of the signatures.
9 Early in the litigation, counsel for Defendants informed Trustee
10 by letter that the signatures on the Option were forgeries.
11 Admittedly, Defendants did not provide the basis for their
12 position. Nonetheless, both experts concluded that Cynthia’s
13 signature was not genuine. Moore could not conclusively
14 determine that Robert forged Cynthia’s signature, and Blanco
15 determined that Robert had not forged it. Cynthia testified that
16 she did not sign the Option and did not authorize or tell Robert
17 to sign it on her behalf. Robert testified that he did not sign
18 Cynthia’s name or his name. Finally, neither expert could rule
19 out the possibility that Robert’s signature was not the product
20 of cut-and-paste. On this record, the bankruptcy court could
21 plausibly have found the Option was invalid without the hearsay
22 testimony.
23 Accordingly, we cannot conclude the court abused its
24 discretion or that Trustee was unfairly prejudiced by allowing in
25 the “forgery” hearsay testimony.
26 C. The bankruptcy court applied the correct burden of proof.
27 Trustee contends the bankruptcy court erred by applying a
28 clear and convincing standard of proof to his declaratory relief
- 20 -
1 action, rather than the required standard of preponderance of the
2 evidence. Under a preponderance of the evidence standard, the
3 trier of fact is simply required to believe that the existence of
4 a fact is more probable than its non-existence. Concrete Pipe
5 and Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for
6 S. Cal., 508 U.S. 602, 622 (1993).
7 Trustee’s contention is purely conjecture. He points to
8 nothing specific in the record to support his assertion that the
9 bankruptcy court applied an improper burden of proof. We note
10 that during the trial, Trustee’s counsel stated that the burden
11 of proof in this case was preponderance of the evidence. The
12 bankruptcy court expressly agreed. Trial Tr. (May 12, 2011)
13 116:9-13.
14 We see nothing in the record to conclude that anything other
15 than a preponderance of the evidence standard was applied.
16 Because we conclude the bankruptcy court applied the proper
17 burden of proof, we need not address Trustee’s argument about
18 what the court might have determined with respect to the Option
19 if it had applied a preponderance standard.
20 VI. CONCLUSION
21 Based on the foregoing reasons, we AFFIRM.
22
23
24
25
26
27
28
- 21 -
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676 F.2d 699
Berz Ambulance and Oxygen Service, Inc.v.N. L. R. B.
81-1382
UNITED STATES COURT OF APPEALS Seventh Circuit
1/19/82
1
N.L.R.B.
PETITION FOR REVIEW DENIED; ORDER ENFORCED
| {
"pile_set_name": "FreeLaw"
} |
554 F.2d 551
1977-1 Trade Cases 61,429
GEORGE C. FREY READY-MIXED CONCRETE, INC., George C. FreyBatching Plant, Inc., and Herbert Frey and LoisMuck, as co-executors of the Estate ofGeorge C. Frey, Deceased,Plaintiff-Appellants,v.PINE HILL CONCRETE MIX CORP., Regent Sand & Gravel Corp.,Ludwig F. Kahle, Joseph Pfohl, Paul M. Pfohl, and Fidelis H.Pfohl, individually and as the controlling and survivingdirectors, officers, shareholders, liquidators and receiversof the assets of Pfohl Brothers, Inc., a dissolvedcorporation, and Pfohl Brothers, Inc., Defendants-Appellees.
No. 363, Docket 75-7698.
United States Court of Appeals,Second Circuit.
Argued March 2, 1977.Decided May 6, 1977.
Arnold Weiss, Buffalo, N. Y. (Raichle, Banning, Weiss & Halpern, Buffalo, N. Y., of counsel), for plaintiffs-appellants.
Victor T. Fuzak, Buffalo, N. Y. (Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo, N. Y., of counsel), for defendants-appellees.
Before LUMBARD and OAKES, Circuit Judges, and BRYAN, District Judge.*
OAKES, Circuit Judge:
1
This is an appeal from a judgment of the United States District Court for the Western District of New York, John T. Curtin, Chief Judge, which granted one or the other or both1 of appellees' motions for dismissal and summary judgment, Fed.R.Civ.P. 12, 56. We find the court's decision unjustified on either of these grounds and therefore reverse.
2
On both sides of this suit are corporations engaged, inter alia, in the production and sale of ready-mixed concrete and gravel in the Buffalo, New York, area. On June 17, 1970, appellants brought suit charging appellees with monopolization, various restraints of trade, and conspiracy in violation of the Sherman and Clayton Antitrust Acts, 15 U.S.C. §§ 1 et seq., 12 et seq., as well as various state antitrust and contract law violations. Appellees were granted permission to complete their discovery before appellants began their own. On May 7, 1971, appellees were chastised by the district court for their desultory discovery process and ordered to adhere to a strict schedule. A long series of mutually agreed upon delays followed, however, and on October 16, 1974, the court, disturbed with the dilatoriness of both sides, referred the suit to a magistrate for close supervision and a quick termination of the discovery process. On October 22, 1974, the magistrate established a schedule calling for appellees to end their protracted discovery by November 29 and for appellants to begin their discovery immediately thereafter. On November 27, appellants filed their first request for documents pursuant to this schedule. Appellees filed substantial objections to this request on December 17, and, before the court could act on these objections, appellees moved on January 10, 1975, for dismissal of the action and summary judgment. A decision on these motions was delayed at appellants' instance while they examined some documents not covered by appellees' objections and, with the aid of evidence gained in this brief examination, moved that any judgment on appellees' motions to dismiss and for summary judgment be delayed until after discovery was completed. The court denied appellants' motion and dismissed the action or granted summary judgment on November 10, 1975.
3
The first apparent ground for the court's decision was that the complaint failed to state a claim on which relief could be granted and that therefore appellees should have judgment on the pleadings under Fed.R.Civ.P. 12(c).2 For purposes of this motion, we may look only at the pleadings, with all of "the well-pleaded material facts alleged in the complaint . . . taken as admitted," Gumer v. Shearson, Hammill & Co., 516 F.2d 283, 286 (2d Cir. 1974), and the complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Under this standard, appellants' complaint may not be dismissed for failure to state a claim. The complaint alleges that both appellants and appellees made substantial purchases of materials, especially cement, that had been transported in interstate or foreign commerce and made sales across state or national boundaries; this is a sufficient allegation of effect on interstate commerce to state a cause of action under the Sherman and Clayton Acts. Compare Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974) (intrastate sales of asphaltic concrete for use on interstate highways are not sales "in commerce" under Clayton Act; no evidence of effects on interstate commerce). The complaint further alleges that appellees bought up appellants' source of grit and gravel supplies as part of a continuing effort to monopolize the local ready-mixed concrete industry and that, by controlling the best source of supply, the appellees were in a position to force appellants out of business with a cost-price squeeze. The complaint further indicated that the markets involved were those for gravel and ready-mixed concrete in the Buffalo or Western New York area. Taken together, these allegations were adequate to put the appellees on notice as to the nature of appellants' claim. Appellees dispute these allegations, but where there is a dispute as to material facts judgment on the pleadings is inappropriate, 5 C. Wright & A. Miller, Federal Practice and Procedure § 1367, at 685 (1969).
4
Even though appellants' claims were alleged with what would ordinarily be considered sufficient specificity, appellees contend, and the court below appeared to believe, that antitrust claims, because of their complexity, must be pleaded with greater specificity than other claims. It has been clear in this circuit since Nagler v. Admiral Corp.,248 F.2d 319 (2d Cir. 1957) (Clark, C. J.), however, that a short plain statement of a claim for relief which gives notice to the opposing party is all that is necessary in antitrust cases, as in other cases under the Federal Rules. See 5 C. Wright & A. Miller, supra, § 1228. Compare, e. g., Newburger, Loeb & Co. v. Gross, 365 F.Supp. 1364, 1367-68 (S.D.N.Y.1973) ("skeletal" allegations sufficient), with, e. g., Heart Disease Research Foundation v. General Motors Corp., 463 F.2d 98, 100 (2d Cir. 1972) ("a bare bones statement of conspiracy or of injury under the antitrust laws without any supporting facts permits dismissal"). The discovery process is designed to provide whatever additional sharpening of the issues may be necessary. Insofar as the court's decision rested on Fed.R.Civ.P. 12, it is reversed.
5
The appellees contend, however, that if the court's action be considered as summary judgment, it was appropriate under Fed.R.Civ.P. 56. The court apparently held as a matter of law that plaintiffs had not alleged sufficient connection with interstate commerce.3 Unlike a Rule 12 motion, in which a party's allegations in the pleadings must be accepted, a court in considering summary judgment may look behind the pleadings to facts developed during discovery. See 10 C. Wright & A. Miller, supra, § 2713 (1973). Here, however, the court had virtually nothing to look to other than the pleadings, since appellants had had little opportunity for discovery.
6
We hold that consideration of a summary judgment motion at this point in the proceedings was premature. In a series of recent cases, this court has repeatedly emphasized that "on a motion for summary judgment the court cannot try issues of fact; . . . it must resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought, . . . with the burden on the moving party to demonstrate the absence of any material factual issue genuinely in dispute . . . ." Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975); see Gladstone v. Fireman's Fund Insurance Co., 536 F.2d 1403, 1406 (2d Cir. 1976); United States v. Bosurgi, 530 F.2d 1105, 1110 (2d Cir. 1976); National Life Insurance Co. v. Solomon, 529 F.2d 59, 60-61 (2d Cir. 1975) (per curiam); Home Insurance Co. v. Aetna Casualty & Surety Co., 528 F.2d 1388, 1390 (2d Cir. 1976) (per curiam); Jaroslawicz v. Seedman, 528 F.2d 727, 731 (2d Cir. 1975); Judge v. City of Buffalo, 524 F.2d 1321, 1322-23 (2d Cir. 1975). "This is particularly so when, as here, one party has yet to exercise its opportunities for pretrial discovery." National Life Insurance Co. v. Solomon, supra, 529 F.2d at 61; see Meetings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714, 717 (2d Cir. 1974). Moreover, because antitrust actions so integrally involve motive and intent to conspire and injure, they have been said to be particularly inappropriate for summary judgment treatment, Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); 10 C. Wright & A. Miller, supra, § 2732, at 608-10, although of course baseless antitrust claims may be dismissed before trial, see Heart Disease Research Foundation v. General Motors Corp., supra, 463 F.2d at 100; Beckman v. Walter Kidde & Co., 451 F.2d 593 (2d Cir. 1971) (per curiam), cert. denied, 408 U.S. 922, 92 S.Ct. 2488, 33 L.Ed.2d 333 (1972); Rosemound Sand & Gravel Co. v. Lambert Sand & Gravel Co., 469 F.2d 416, 418 (5th Cir. 1972).
7
The consideration of these factors leads to the conclusion that a motion for summary judgment should not be entertained before discovery has been completed in antitrust cases in which the relevant facts are disputed and intent to injure is an issue. See Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 746, 96 S.Ct. 1848, 1853, 48 L.Ed.2d 338 (1976) ("in antitrust cases . . . dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly"); Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 55 F.R.D. 292, 296-97 (S.D.N.Y. 1972); cf. ALW, Inc. v. United Airlines, Inc., 510 F.2d 52, 55 (9th Cir. 1975) (summary judgment upheld because plaintiff had had full discovery and could show no genuine issues of fact); Beckman v. Walter Kidde & Co., supra (same); Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183, 189 (2d Cir. 1970) (same), cert. denied, 401 U.S. 923, 91 S.Ct. 877, 27 L.Ed.2d 826 (1971); Sulmeyer v. Seven-Up Co., 411 F.Supp. 635, 641 (S.D.N.Y.1976) (same). It follows that summary judgment should not be granted when the facts disputed concern effect on interstate commerce, as to which a plaintiff cannot be expected to have sufficient knowledge until discovery has taken place, see Hospital Building Co. v. Trustees of Rex Hospital, 511 F.2d 678, 680 (4th Cir. 1975), rev'd on other grounds, 425 U.S. 738, 96 S.Ct. 1848 (1976); Mar-Farr Corp. v. Copley Press, Inc., 64 F.R.D. 456 (N.D.Ill.1974); Chapiewsky v. G. Heileman Brewing Co., 297 F.Supp. 33, 38 (W.D.Wis.1968).4
8
Of course, a court has the inherent power to take appropriate action against a plaintiff whose interminable discovery simply postpones an inevitable dismissal, see Note, Proposed 1967 Amendments to the Federal Discovery Rules, 68 Colum.L.Rev. 271, 293-94 (1968), as well as explicit power under Fed.R.Civ.P. 37 to punish disobedience of discovery orders, see Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 207-08, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958), but here we do not have recalcitrant plaintiffs. Rather, we have plaintiffs who, partially through their own lack of prosecution but at least as much because of delays by the defendants and insufficient supervision by the court or magistrate were not able to begin discovery until 41/2 years after they had initiated the suit,5 and then were not able to get a court ruling on defendants' objections to plaintiffs' first request for documents before summary judgment overtook them. Insofar as the court's decision rested on Fed.R.Civ.P. 56, it is reversed without prejudice to a renewed motion for summary judgment at the completion of discovery.
9
Judgment reversed and cause remanded.
*
Hon. Frederick vanPelt Bryan, United States District Judge for the Southern District of New York, sitting by designation
1
We have had not a little difficulty in determining just what the court below intended to do. Unfortunately, the briefs in this case do little to aid divination of the precise holding of the court below
2
Fed.R.Civ.P. 12(c) allows a party to "move for judgment on the pleadings" "(a)fter the pleadings are closed but within such time as not to delay the trial." Pursuant to Rule 12(h)(2), a Rule 12(c) motion may be used to raise the "defense of failure to state a claim upon which relief can be granted," a defense ordinarily raised under Rule 12(b)(6) before the pleadings are closed. See Shapiro v. Merrill Lynch, Pierce, Fenner & Smith Inc., 353 F.Supp. 264, 268 (S.D.N.Y.1972), aff'd, 495 F.2d 228 (2d Cir. 1974)
3
The question whether an antitrust claim affects interstate commerce sufficiently to violate the antitrust laws was referred to by the court below as a question of "jurisdiction." In Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974), the Supreme Court also used jurisdictional language, see id. at 188, 191, 195, 199, 95 S.Ct. 392, but did not resolve whether the issue is in fact jurisdictional, see id. at 203 n. 19, 95 S.Ct. 392, and the question was again left open in Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 742 n. 1, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976). While several other courts have used jurisdictional language, see, e. g., DeVoto v. Pacific Fidelity Life Ins. Co., 516 F.2d 1, 4 (9th Cir.), cert. denied, 423 U.S. 894, 96 S.Ct. 194, 46 L.Ed.2d 126 (1975); United States v. Finis P. Ernest, Inc., 509 F.2d 1256, 1258-61 (7th Cir.), cert. denied, Modern Asphalt Paving & Construction Co. v. United States, 423 U.S. 874, 96 S.Ct. 142, 46 L.Ed.2d 105, cert. denied, 423 U.S. 893, 96 S.Ct. 191, 46 L.Ed.2d 124 (1975); Rosemound Sand & Gravel Co. v. Lambert Sand & Gravel Co., 469 F.2d 416, 418 (5th Cir. 1972), the Fourth Circuit has stated that the question is not jurisdictional but rather goes to the elements of an antitrust cause of action. See Mims v. Kemp, 516 F.2d 21, 23 (4th Cir. 1975) (per curiam); Hospital Building Co. v. Trustees of Rex Hospital, 511 F.2d 678, 680-81 (4th Cir. 1975), rev'd on other grounds, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976)
The general point was expressed by Mr. Justice Jackson for the Supreme Court:
As frequently happens where jurisdiction depends on subject matter, the question whether jurisdiction exists has been confused with the question whether the complaint states a cause of action. . . . If the complaint raises a federal question, the mere claim confers power to decide that it has no merit, as well as to decide that it has. In the words of Mr. Justice Holmes, ". . . if the plaintiff really makes a substantial claim under an act of Congress there is jurisdiction whether the claim ultimately be held good or bad." The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25 (33 S.Ct. 410, 412, 57 L.Ed. 716) (1913).
Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 249, 71 S.Ct. 692, 694, 95 L.Ed. 912 (1951). Many Supreme Court cases are to the same effect. See, e. g., Baker v. Carr, 369 U.S. 186, 198-200, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962); Romero v. International Terminal Operating Co., 358 U.S. 354, 359, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959) (Frankfurter, J.); Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946) (Black, J.); Binderup v. Pathe Exchange, Inc., 263 U.S. 291, 305-08, 44 S.Ct. 96, 68 L.Ed. 308 (1923).
Thus, when a plaintiff makes a nonfrivolous allegation that the antitrust laws have been violated, a federal district court should take jurisdiction over the claim. If the defendant's argument is only that no interstate commerce is affected, he should move to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) or 12(c), as was done in Lieberthal v. North Country Lanes, Inc., 332 F.2d 269, 270 (2d Cir. 1964), or, if the claim survives such a motion, after appropriate discovery he may move for summary judgment under Rule 56. A motion to dismiss for lack of jurisdiction, pursuant to Rule 12(b)(1) or 12(h)(3), is inappropriate in such cases unless the interstate commerce claim is patently frivolous. See Bell v. Hood, supra, 327 U.S. at 682-83, 66 S.Ct. 773; Elders v. Consolidated Freightways Corp., 289 F.Supp. 630, 633 (D.Minn.1968).
4
Typically a plaintiff in an antitrust case will be able to allege specifically those acts said to cause him injury, as was done here, but will be unable to do more than generally allege that the defendant is engaged in interstate commerce, an indispensable element of a cause of action under the antitrust laws. Not until discovery will the books and records of a defendant confirm or deny the requisite interstate connection. The value of such discovery is well illustrated in this case. Appellants' hurried partial discovery resulted in two affidavits in support of an eleventh hour motion to defer a decision on appellees' motions until after discovery was completed. The August 18, 1975, affidavit of James J. Neill, Jr., unremarked in either brief or in the opinion below, contains a list of interstate purchases by appellees that, unless rebutted, may well in and of itself constitute sufficient evidence of appellees' involvement in interstate commerce to survive a motion for summary judgment on the Sherman Act claims
5
We note that a substantial factor leading to the lengthy delays in this case was the order that appellees be allowed to complete their discovery before appellants could begin, following the much criticized and delay-inducing "rule of priority" in discovery. As the defending parties, appellees had little or no reason to proceed diligently with the litigation, but with priority on appellees' side appellants were helpless to proceed with their discovery. Under the current version of Fed.R.Civ.P. 26(d), which became effective two weeks after this litigation began, both parties should have been allowed concurrent discovery in this case. See 8 C. Wright & A. Miller, Federal Practice and Procedure §§ 2046-47 (1970)
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725 F.2d 671
U.S.v.Smith (Brad Leroy)
NO. 82-5619
United States Court of Appeals,Third circuit.
DEC 15, 1983
Appeal From: W.D.Pa.,
Teitelbaum, J.
1
AFFIRMED.
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9 So.3d 269 (2009)
HOUSING AUTHORITY OF NEW ORLEANS
v.
Tony EASON.
No. 2008-CA-0525.
Court of Appeal of Louisiana, Fourth Circuit.
March 4, 2009.
Rehearing Denied April 2, 2009.
*270 Laetitia Black, Kim R. Variste, Interim General Counsel, Wayne E. Woods, General Counsel, Housing Authority of New Orleans, New Orleans, LA, for Plaintiff/Appellee.
Mark Moreau, New Orleans Legal Assistance, New Orleans, LA, for Defendant/Appellant.
(Court composed of Judge CHARLES R. JONES, Judge PATRICIA RIVET MURRAY, and Judge JAMES F. McKAY, III).
CHARLES R. JONES, Judge.
The appellant, Tony Eason appeals the First City Court's judgment granting the Housing Authority of New Orleans' (hereinafter HANO) Rule for Possession. We reverse and render.
Mr. Eason leases a subsidized apartment from HANO, pursuant to the Office of Housing and Urban Development's (HUD's) program for funded public housing for indigent persons.
Under Mr. Eason's residential lease, which he signed on October 19, 2004, his monthly rent is $254.00, which is below the market rents in the metropolitan area of New Orleans. His rent was due on the first day of each month.
On January 18, 2006, Mr. Eason signed a Memorandum of Understanding that expressed his intention to occupy the unit from HANO and revived the original October 19, 2004 lease agreement.
Due to Mr. Eason's failure to pay his rent consistently in accordance with the lease agreement, HANO made efforts to counsel Mr. Eason by delaying the collection of his rent, and attempted to work out a repayment plan with Mr. Eason, but to no avail. HANO sought to dissolve its lease with Mr. Eason and regain possession over the premises pursuant to Louisiana law.
On September 4, 2007, HANO filed a Rule for Possession of Premises to evict Mr. Eason from the property[1] for non-payment of rent from the period of January 1, 2007, through September 1, 2007, totaling $2,620.13 in late rent. A rule to show cause was scheduled to occur in First City Court on October 3, 2007.
However, on October 2, 2007, at approximately 5:00 p.m., Mr. Eason filed a Bankruptcy Petition in the United States Bankruptcy Court seeking relief under Chapter 7 of Title 11 of the United States Code. In his bankruptcy petition, Mr. Eason listed HANO as an "Unsecured Non-priority Claim."
At the scheduled eviction hearing on October 3, 2007, at 10 a.m., Mr. Eason's counsel served HANO with notice of Mr. Eason's bankruptcy filing and an Answer. First City Court continued the matter for thirty (30) days due to the automatic stay, which was required due to the bankruptcy proceedings in federal court.
On October 12, 2007, the parties met to discuss the contents of Mr. Eason's file and to discuss his options due to his bankruptcy petition; however, Mr. Eason himself did not attend the meeting. During the course of the meeting, it was decided that Mr. Eason was to deposit the post-bankruptcy rental payments into an escrow account with the First City Court.
However, on November 5, 2007, Mr. Eason served HANO with an Exception of *271 Lack of Jurisdiction and Amended Answer alleging that the automatic stay in the Bankruptcy Court divested the First City Court of jurisdiction. Since the automatic stay was still in effect, HANO informed the court that it would not file any subsequent documents regarding the matter in Bankruptcy Court.
When Mr. Eason's counsel attempted to tender payment for post-petition rents in open court, HANO informed Mr. Eason that it was not the proper party to accept past due rental payments. The post-petition rental payments were then deposited into the registry of the court.
On November 9, 2007, HANO attended a pre-scheduled Meeting of the Creditors wherein Mr. Eason's Bankruptcy Petition was flagged as an eligible Discharge.
On December 5, 2007, based on the information gathered at the Creditor Meeting and the expiration of sixty (60) days from the automatic stay, HANO filed its Motion to Lift Automatic Stay. The hearing on the motion was scheduled in the Bankruptcy Court for January 9, 2008.
On December 19, 2007, Mr. Eason filed an Objection to HANO's Motion to Lift Automatic Stay.
At the hearing on the Motion to Lift Automatic Stay on January 9, 2008, HANO presented evidence of its efforts to offer Mr. Eason financial counseling, the opportunity to schedule a payment plan for past due rents, and notices informing Mr. Eason that his failure to pay the past due rents would result in the termination of the lease agreement.
At the same hearing, Mr. Eason submitted receipts showing payment of post-petition rent, and argued that since the pre-petition rent was dischargeable in bankruptcy that the post-petition rent is current and HANO is owed nothing. Mr. Eason argued that HANO could not pursue an eviction against him.
After the hearing, the Bankruptcy Court granted HANO's Motion to Lift Stay, and opined, "that rents paid post-petition are too little too late." The Bankruptcy Court's order also allowed HANO to proceed with the eviction hearing which was scheduled for January 10, 2008.
On January 9, 2008, at approximately 7 p.m., Mr. Eason filed an Appeal and Motion for Stay of the Bankruptcy Court's order. The motion also requested that the Bankruptcy Court continue the eviction hearing until January 17, 2008. However, the Appeal and Motion for Stay was denied the following day.
On January 14, 2008, Mr. Eason then filed an Emergency Motion for Stay Pending Appeal with the Bankruptcy Court. HANO filed an opposition to Mr. Eason's emergency motion and continued the eviction hearing until February 7, 2008.
The Emergency Motion for Stay Pending Appeal was denied by the U.S. District Court on January 31, 2008. Again, the Bankruptcy Court's order allowed HANO to proceed with the eviction hearing on February 7, 2008, as scheduled.
On February 6, 2008, Mr. Eason filed a Motion to Reconsider Emergency Motion for Stay Pending Appeal. Again, the Bankruptcy Court denied the motion and ordered HANO to proceed with the eviction hearing.
The eviction hearing proceeded as scheduled on February 7, 2008, at which time the First City Court heard testimony and evidence presented by the parties, as well as the orders rendered by the Bankruptcy Court. The First City Court ruled in HANO's favor allowing it to take possession of the property. On the same date, Mr. Eason filed a motion for appeal
*272 On February 8, 2008, HANO filed an objection to Mr. Eason's motion for appeal, and a motion for contempt and sanctions against Mr. Eason's counsel for alleged unprofessional conduct in court.
About a month later on March 6, 2008, Mr. Eason filed a reply to HANO's objection of his motion for appeal, in addition to a motion for contempt and sanctions against HANO's counsel.
The following day, the Bankruptcy Court ordered the discharge of Mr. Eason's debt under Chapter 7 of the Bankruptcy Code.
On March 11, 2008, Mr. Eason filed a motion to dismiss his appeal of the Bankruptcy Court order granting HANO's motion to lift stay alleging that the issue was moot, and that the court lacked jurisdiction.
Or March 12, 2008, the First City Court refused to consider HANO's objection to Mr. Eason's motion for appeal stating that the court was divested of jurisdiction. The First City Court also denied HANO's motion for contempt, and refused to address Mr. Eason's motion for contempt because it was not properly set for hearing. This appeal followed.
In his sole assignment of error, Mr. Eason argues that the First City Court erred in granting HANO's rule for possession.
DISCUSSION
As reiterated by this Court in Abrimson v. Ethel Kidd Real Estate, 2004-2085, pp. 3-4 (La.App. 4 Cir. 1/18/06), 926 So.2d 568, 569-570:
[A]court of appeal may not set aside a trial court's or a jury's finding of fact in the absence of "manifest error" or unless it is "clearly wrong." Stobart v. State through Dept. of Transp. and Dev., 617 So.2d 880, 882 (La.1993), citing, Rosell v. ESCO, 549 So.2d 840 (La. 1989). Questions of law are resolved by determining whether the trial judge was legally correct or legally incorrect. Delacroix Corporation v. Perez, 98-2447, p. 4 (La.App. 4 Cir. 11/8/00), 794 So.2d 862, 865, citing Palmer v. Blue Water Marine Catering, Inc., 95-342 (La.App. 5 Cir. 10/18/95), 663 So.2d 780.
The provisions of La. C.C.P 4701 et seq. specifically set out the procedure by which a landlord may seek the eviction of a tenant. Eviction procedure of the Code of Civil Procedure is designed to expedite as quickly as possible determination of right of lessor to be restored to possession of premises. Edenborn Partners Ltd. Partnership v. Korndorffer, 94-891 (La.App. 5 Cir. 3/1/95), 652 So.2d [1027,] 1032. When lessee's right of occupancy ceases for any reason, lessor is entitled to utilize summary eviction proceedings to obtain possession of the premises. New Orleans Hat Attack, Inc. v. New York Life Ins. Co., XXXX-XXXX (La.App 4 Cir. 11/30/95), 665 So.2d 1186.
Although Mr. Eason's assignment of error, as presented, is a bit misleading, the real issue before this Court is whether a public housing tenant can assert an affirmative defense under Bankruptcy law to prevent his eviction in a state court proceeding.
However, before this Court addresses the merits of the instant appeal, a thorough explanation of the applicable statutes must be discussed.
The Court's review of the legislative and jurisprudential history of 11 U.S.C. § 525(a), was fully discussed in Stoltz v. Brattleboro Housing Authority, 315 F.3d 80 (2d Cir.2002). The Second Circuit of the United States Court of Appeals observed that § 525(a) evolved from the U.S. *273 Supreme Court case Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971). Id., at 87. In its discussion of the codification of § 525(a), the Second Circuit, in Stoltz, noted that the Perez case was:
[A] seminal bankruptcy case in which the Supreme Court struck down a state statute that withheld driving privileges from debtors who failed to satisfy motor-vehicle-related tort judgments against them, even if the judgments were discharged under bankruptcy law. The Supreme Court used the Supremacy Clause to invalidate the state statute, finding that it discriminated against debtors in a manner that frustrated and was contrary to the fresh start principles of the Bankruptcy Act. Id. at 649-52, 91 S.Ct. at 1711-13. Congress thereafter signaled its approval of the Perez holding by enacting section 525(a), which prohibits bankruptcy-based discrimination by governmental units against debtors. Section 525(a) states, in relevant part, that:
[A] governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
11 U.S.C. § 525(a) (2001) (emphasis added). Notably, the text of Section 525(a) does not limit its scope to the facts presented in Perez. Section 525(a) applies to any governmental unit, not just a State agency or department; it covers not only licenses, but also permits, charters, franchises, and other similar grants; and it applies regardless of whether the governmental unit involved is the creditor whom the debtor failed to pay, or is simply a grantor conditioning a grant on the debtor's satisfaction of a discharged debt owed to a third party.
* * *
In the nearly twenty-four years that have passed since its enactment, section 525(a) has been interpreted by the courts to protect debtors from discrimination in a wide variety of contexts, including a debtor's right to operate a motor vehicle, see, e.g., In re Adler, 47 B.R. 554 (Bankr.S.D.Fla.1985) (holding section 525(a) prohibits enforcement of statute that allows state department of motor vehicles to suspend licenses and registrations of judgment debtors, even if motor-vehicle-related judgments against them were discharged in bankruptcy); ability to engage in a trade or business, see, e.g., In re Walker, 927 F.2d 1138 (10th Cir.1991) (finding statute, which automatically revokes real estate license of any licensee for whom payment was made from real estate recovery fund, contravenes section 525(a)); and ability to obtain essential goods and services, In re Heath, 3 B.R. 351 (Bankr.N.D.Ill.1980) (holding state university's refusal to release student-debtor's *274 transcript until he paid prepetition debt in full violated section 525(a)).
Despite more than twenty years of judicial consideration, however, the scope of Section 525(a)'s protection in the context of public housing is still unsettled. No circuit court has yet spoken on the issue, and the bankruptcy courts and district courts that have done so have done so inharmoniously. It is undisputed that a public housing authority is a governmental unit within the meaning of 525(a). FN3 See 11 U.S.C. § 101(27); see also In re Robinson, 169 B.R. 171, 176 (N.D.Ill.1994), In re Szymecki, 87 B.R. 14, 16 (Bankr.W.D.Pa.1988).
Stoltz, 315 F.3d at 87-88. [Emphasis added]
In the instant matter, Mr. Eason argues that since his pre-petition rents were discharged in the bankruptcy proceedings and that his post-petition rents were placed in escrow, HANO is not owed any pre-petition rents for the unit and that he is entitled to remain on the premises. Additionally, he asserts that since HANO sought to evict him solely based on his non-payment of pre-petition rents, that HANO's actions are discriminatory and are expressly prohibited under § 525(a).
In support of this contention Mr. Eason cites FCC v. NextWave Personal Communications, 537 U.S. 293, 123 S.Ct. 832, 154 L.Ed.2d 863 (2003), in which the U.S. Supreme Court ruled that the debtor's (Nextwave's) failure to pay its debt, which was dischargeable in bankruptcy, to the FCC was the proximate cause of the cancellation of the debtor's licenses for broadband personal communications services. Id. at 301-302, 123 S.Ct. 832. As a result, the Supreme Court held that the FCC was prohibited from revoking the licenses pursuant to section 525(a). Id. In its decision, the Supreme Court explained that "[w]hen a statute refers to the failure to pay a debt as the sole cause of cancellation ("solely because"), it cannot reasonably be understood to include, among the other causes[2] whose presence can preclude the application of the prohibition, the governmental unit's motive in effecting the cancellation." Id. at 301, 123 S.Ct. 832.
Mr. Eason notes that the United States Supreme Court has not ruled on the specific issue of whether § 525(a) bars a public housing authority from evicting a tenant for failure to pay pre-petition rent. He notes that only one federal circuit court of appeal has addressed the specific issue. The case to which he refers is a case mentioned earlier in our discussion, Stoltz v. Brattleboro Housing Authority, 315 F.3d 80 (2d Cir.2002).
In Stoltz, a creditor-public housing authority moved for relief from stay, in order to evict a Chapter 7 debtor from her publicly subsidized apartment based on her nonpayment of discharged pre-petition rent. The United States Bankruptcy Court for the District of Vermont, granted the motion, and the debtor appealed. The district court reversed and reinstated the automatic stay. The public housing creditor appealed.
Addressing issues of apparent first impression among the circuits, the Court of Appeal, held that: (1) a public housing lease is a grant "similar" to a "license, permit, charter, [or] franchise," within the meaning of section of the Bankruptcy Code that protects debtors from discrimination by governmental units; Id., p. 91, (2) debtor's eviction was "solely because" *275 of discharged pre-petition rent, within the meaning of the antidiscrimination provision; Id., p. 93, and (3) section of the Code setting forth the antidiscrimination provision is more specific than section of the Code providing that landlords in general may evict debtor-tenants for nonpayment of discharged pre-petition rent, and so, to the extent these sections conflict, the former "trumps" the latter. Id.
HANO asserts that the lease it terminated due to Mr. Eason's failure to pay rent renders § 525 inapplicable to the instant case. Quite simply they assert that the eviction was not sought in retaliation; rather it was done in response to Mr. Eason violating the terms of the lease. Therefore, HANO maintains that it followed state law proceedings to evict a Louisiana tenant who violated a Louisiana lease.
HANO also argues that pursuant to La. C.C. art. 2704, titled, Nonpayment of rent, that "[i]f the lessee fails to pay the rent when due, the lessor may, in accordance with the provisions of the Title "Conventional Obligations or Contracts," dissolve the lease and may regain possession in the manner provided by law."
HANO also distinguishes the NextWave and Stoltz cases in pointing out that NextWave concerned a license rather than a lease agreement. It also asserts that Stoltz is distinguishable because it concerns a discriminatory eviction based solely on pre-petition rent previously discharged.
Nevertheless, HANO argues that there are no Federal or Louisiana laws which would allow a tenant to live free for two years, with the exception of cases in which a discriminatory or retaliatory eviction occurred. HANO points out that it went out of its way to assist Mr. Eason in paying rent and allowed extensions of his occupancy. However, instead of making a good faith effort to pay his rent, Mr. Eason filed his bankruptcy claim, which delayed the eviction proceedings for eight (8) months. Essentially, HANO concludes that Mr. Eason merely used the bankruptcy to prevent his eviction.
However, we disagree with HANO's assessment once the following facts are considered: (1) Mr. Eason filed his bankruptcy proceedings when he was served with HANO's Rule for Possession for the leased premises; (2) the pendency of the bankruptcy procedure stayed the First City Court eviction proceeding, as required under 42 U.S.C. § 362; (3) the Bankruptcy Court granted Mr. Eason's relief under Chapter 7 under the U.S. Bankruptcy Code; (4) Mr. Eason's bankruptcy extinguished all of his pre-petition debt, including the pre-petition rent of approximately $2,620.13 owed to HANO on or about September 2007; (5) Mr. Eason put the post-petition rent into an escrow account; and finally (6) the applicable jurisprudence, as stated in Stoltz, unambiguously sets forth that entities, such as HANO, are deemed governmental entities and prohibits evictions solely on the basis of non-payment of rent under § 525(a).
As explained in Meyer & Associates, Inc. v. Coushatta Tribe of Louisiana, 2007-2256 (La.9/23/08), 992 So.2d 446:
It is a well-settled principle of statutory construction that absent clear evidence of a contrary legislative intention, a statute should be interpreted according to its plain language. Cleco Evangeline, LLC v. Louisiana Tax Commission, 01-2162, p. 5 (La.4/3/02), 813 So.2d 351, 354. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. La. C.C. art. 9. The meaning and intent *276 of a law is determined by a consideration of the law in its entirety, and the court's construction should be consistent with the express terms of law and with the obvious intent of the lawmaker in enacting it. Bridges v. Autozone Properties, Inc., 04-0814 (La.3/24/05), 900 So.2d 784, 799. The best evidence of the legislature's intent is the wording of the statute. State v. Williams, 00-1725 (La.11/28/01), 800 So.2d 790, 800.
Id., 2007-2256, p. 7-8, 992 So.2d at 452. Furthermore, given the explanations set forth in NextWave and Stoltz, regarding the construction and application § 525(a), we are inclined to agree with Mr. Eason's argument.
An "[e]viction is a summary action which involves the single issue of whether the owner is entitled to possession of the premises. Mascaro v. Hudson, 496 So.2d 428, 429 (La.App. 4 Cir.1986). The tenant or occupant cannot defeat the owner's right to summary eviction by injecting foreign issues into the case in an attempt to convert it into an ordinary proceeding. Id. The only affirmative relief that can be granted is the right to remain in the premises." Capone v. Kenny, 646 So.2d 510, 512 (La.App. 4 Cir. 11/30/94). Based on Mr. Eason's affirmative defense of his discharge in bankruptcy, given we find that the only reason elicited by HANO is his failure to pay pre-petition rent, we find that HANO's action fits the type of discriminatory conduct expressly prohibited by § 525(a).
We are satisfied that Mr. Eason has shown that the First City Court erred in granting HANO's Rule for Possession and order to vacate. We can only arrive at this conclusion by giving strict application of the legislative and jurisprudential history of § 525. Therefore, we conclude that Mr. Eason has a right to remain in the leased premises at this time.
However, this conclusion does not relieve Mr. Eason from paying all postpetition rent. Although we have concluded that Mr. Eason cannot be evicted from the unit[3] based upon the protections afforded to him under § 525(a), and further noting that Mr. Eason's pre-petition rent has been discharged through bankruptcy, he must still fulfill all other obligations under his lease agreement, prospectively, from the date of his discharge in bankruptcy. The post-petition rental payments deposited into the court registry by Mr. Eason are the property of HANO, and HANO is ordered to collect the money held in escrow in order to get Mr. Eason's account up to date.
We note that HANO has not waived the right to evict Mr. Eason on some other basis, besides non-payment of rent, constituting a breach of his lease agreement. However, these issues are not before us at this time.
Our review of the record reveals that Mr. Eason attempted to pay post-petition rents, but these payments were not accepted by HANO and are currently held in the court's registry. In order to cure the defect, and comply with the non-discriminatory provisions as a governmental entity, HANO must accept the post-petition rent payments that are currently held in escrow, to allow Mr. Eason the "fresh start" that his Chapter 7 bankruptcy debt discharge has granted to him.
DECREE
The First City Court erred in granting HANO's Rule of Possession and order to vacate directed to Mr. Eason. The judgment of the First City Court is reversed. Additionally, HANO is ordered to claim all *277 post-petition rent payments deposited by Mr. Eason that are currently held in the registry of the court.
REVERSED AND RENDERED.
MURRAY, J., concurs with reasons.
MCKAY, J., dissents with reasons.
MURRAY, J., concurs with reasons.
Although I agree with the result reached and the rationale adopted by the majority opinion, I write to more fully address some of the arguments HANO advanced. This case presents compelling, competing interests. On the one hand, Congress enacted Section 525(a) to protect debtors from bankruptcy-based discrimination by governmental units that provide essential services. On the other hand, the viability of public housing programs is dependent on enforcement of the requirement that tenants promptly pay their rent.
Section 525(a) provides that its protection extends to "licenses, permits, charters, franchises," and to "other similar grants." The statute, however, does not define the term "other similar grants." Construing the contours of the catchall phrase "other similar grants" is the primary dispute over the application of Section 525(a) in the public housing setting; is a public housing lease an "other similar" grant within the meaning of Section 525(a). The most prominent case addressing this issue is In re Stoltz, 315 F.3d 80, 91 (2d Cir.2002).
The majority in Stoltz, citing dictionary definitions, concluded that a "housing lease is a grant by which a public housing authority conveys to a public housing tenant the right to use and occupy public housing in exchange for rent." Id. at 89-90.[1] The majority identified the common qualities of the specified grants protected under section 525(a)licenses, permits, charters, and franchisesto be that such grants are unobtainable from the private sector and are essential to a debtor's fresh start. The majority found that a public housing lease was a similar grant because it too was unobtainable from the private sector and essential to a debtor's fresh start. The majority further found that a debtor tenant who was evicted from public housing, in all likelihood, would become homeless, which condition would not promote the fresh start policy of the Bankruptcy Code. The majority still further found that its construction of the phrase "other similar grants" as including public housing leases was consistent with the legislative history of Section 525(a), which indicated that the enumeration of various forms of protected grants was not intended to be exhaustive. Id. at 89, n. 4.
Conversely, the dissent in Stoltz, which HANO cites in support of its arguments, identified the common characteristic of the specified grants protected under Section 525(a) to be that "each allows the grant-holder to engage in certain regulated conduct." Id. at 95. The dissent thus concluded that "other similar grants" means "grant[s] relating to authorization to engage in income-generating conduct." Id. Based on this reasoning, the dissent concluded that Section 525(a) did not extend to public housing leases because "[s]uch leases do not directly enable their holders to engage in the kind of an income-generating activity as do licenses, permits, charters, and franchises." Id. at 96. The dissent further reasoned that "not to include *278 leases makes sense as a matter of public housing policy." Id. As alluded to earlier, construing Section 525(a) to protect debtors from bankruptcy-based discrimination by governmental units that provide essential services is at odds with the public housing policy of requiring prompt rental payments by tenants. "Congress emphasized the importance of requiring prompt rental payments from public housing tenants when it conditioned contributions to public housing agencies on `the establishment of satisfactory procedures designed to assure the prompt payment and collection of rents and the prompt processing of evictions in the case of nonpayment of rent.'" Id. at 96 (quoting 42 U.S.C. § 1437d(c)(4)(B)).
Although the dissent in Stoltz makes a valid point, I am persuaded by the rationale of the majority in Stoltz that "the plain language of the provision indicates that eviction [of a public housing tenant because of non-payment of pre-petition rent] would revoke a protected grant, i.e., the lease, in violation of section 525(a)." Id. at 89. Congress intended that Section 525(a) protect bankrupt debtors' fresh start, and the legislative history specifically rejects a narrow construction of this statute. Id. at 92, n. 6. The legislative history also indicates that the judiciary was assigned the task of establishing the boundaries of this anti-discriminatory provision in accord with sound bankruptcy policy. Id. The broad construction of Section 525(a) espoused by the majority in Stoltz is bolstered by the more recent United States Supreme Court opinion in Federal Communications Comm'n v. NextWave Personal Communications, 537 U.S. 293, 303, 123 S.Ct. 832, 154 L.Ed.2d 863 (2003), which broadly construed Section 525(a) to reject a governmental agency's arguments that its regulatory conditions should be excluded from the scope of the statute.
Disallowing HANO's eviction of Mr. Eason because of his pre-petition debt does not free him from his rental obligation. Should he fail to pay post-petition rent in accordance with the lease agreement, HANO can evict him.
For these reasons, I concur.
McKAY, J., dissents with reasons.
McKAY, J., dissents with reasons.
I respectfully dissent and would affirm the trial court's judgment granting HANO's Rule for Possession.
Despite the majority's reliance on Stoltz v. Brattleboro Housing Authority, 315 F.3d 80 (2d Cir.2002), I am not convinced that 11 U.S.C. § 525 applies in the context of public housing. Other than the Stoltz, case, there is no indication that it should apply in this type of situation. Furthermore, Stoltz is distinguishable from the instant case because it concerned a discriminatory eviction based solely on prepetition rent previously discharged.
In the instant case, HANO asserts that its eviction of Mr. Eason was not sought in retaliation, but was done in response to Mr. Eason violating the terms of his lease with HANO. Pursuant to Louisiana Civil Code Article 2704, "[i]f the lessee fails to pay the rent when due, the lessor may, in accordance with provisions of the Title "Conventional Obligations or Contracts," dissolve the lease and may regain possession in the manner provided by law." Mr. Eason failed to pay his rent for more than nine months before HANO sought to evict him. When HANO did move to evict him, it did so before he filed for bankruptcy. Clearly, Mr. Eason violated the terms of his lease with HANO and that was the cause for his eviction. This cause did not magically disappear because of his bankruptcy. He still violated the terms of his *279 lease and HANO was within its rights to evict him. Accordingly, I would affirm the trial court's judgment.
NOTES
[1] The property was specified as being located at "1205 Bienville Street, Apartment D."
[2] An example of the inapplicability of § 525(a) is much clearer, for instance, if Mr. Eason had violated some other terms of the subsidized lease agreement, other than (or in addition to) non-payment of rent.
[3] As of the date of this opinion, it is unclear whether Mr. Eason has vacated the premises.
[1] The majority in Stoltz cited Merriam Webster's Collegiate Dictionary 507 (10th ed.2000)(defining a grant as "a transfer of property by deed or writing"), and Black's Law Dictionary, 707 (7th ed.1999)(defining a grant as "[a]n agreement that creates a right of any description other than the one held by the grantor. Examples include leases, easements, charges, patents, franchises, powers, and licenses.")
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67 F.3d 1137
69 Fair Empl.Prac.Cas. (BNA) 111,67 Empl. Prac. Dec. P 43,751Charles J. FULLER, Jr., Plaintiff-Appellant,v.Kennard L. PHIPPS, Sheriff, Montgomery County Sheriff'sOffice, Defendant-Appellee.
No. 95-1036.
United States Court of Appeals,Fourth Circuit.
Argued Sept. 29, 1995.Decided Oct. 25, 1995.
ARGUED: Terry N. Grimes, King, Fulghum, Snead, Nixon & Grimes, P.C., Roanoke, Virginia, for Appellant. William Fain Rutherford, Jr., Woods, Rogers & Hazlegrove, Roanoke, Virginia, for Appellee. ON BRIEF: Frank K. Friedman, Todd A. Leeson, Woods, Rogers & Hazlegrove, Roanoke, Virginia, for Appellee.
Before WILKINSON, WILLIAMS, and MOTZ, Circuit Judges.
Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge WILLIAMS and Judge MOTZ joined.
OPINION
WILKINSON, Circuit Judge:
1
This case requires us to assess the propriety of the district court's jury instructions in an employment discrimination pretext case. Appellant Charles J. Fuller, an African American, brought a discrimination claim under 42 U.S.C. Sec. 1981 and Title VII of the Civil Rights Act, 42 U.S.C. Sec. 2000e et seq., alleging that Sheriff Kennard L. Phipps' failure to hire him as a correctional officer was based on Fuller's race. Phipps responded that his hiring decision was based solely on nondiscriminatory reasons. The jury returned a verdict for Sheriff Phipps.
2
On appeal, Fuller challenges the district court's jury instructions, contending that he should have received a different instruction based on Section 107 of the Civil Rights Act of 1991. His challenge fails for two reasons. First, the instruction he seeks is available only in mixed-motive cases; and second, the instruction he received, when judged in its entirety, is acceptable in pretext cases such as this one. Accordingly, we affirm the jury's verdict.
I.
3
In January, 1992, Fuller applied for a position as a correctional officer in the Montgomery County Sheriff's Department. By the end of 1992, three temporary positions became available. After considering several candidates, including Fuller, Sheriff Phipps chose three other individuals. Fuller then brought suit, alleging racial discrimination in the refusal to hire. The case was tried to a jury. The district judge instructed the jury as follows:
4
In determining whether the Plaintiff Fuller is entitled to recover any damages, you must decide one issue, whether Fuller has proved by a preponderance of the evidence that his race was the determinative factor in Defendant Phipps not rehiring him.
5
In other words, for Fuller to recover, he must prove by the preponderance of the evidence that but for the fact that he is black he would have been reappointed by Phipps.
6
If Phipps chose not to hire Fuller for any other reason, then Fuller cannot recover, and you must find for Phipps.
7
If, however, you find that race was a determinative factor in Fuller not being hired, you must consider the issue of damages.
8
Fuller objected to this charge, claiming that he was entitled to an instruction under Section 107 of the Civil Rights Act of 1991, which reads: "an unlawful employment practice is established when the complaining party demonstrates that race ... was a motivating factor for any employment practice, even though other factors also motivated the practice." 42 U.S.C. Sec. 2000e-2(m). The district judge disagreed. In his view, Section 107 was meant to apply only in mixed-motive cases, not in pretext cases such as this one. The jury then returned a verdict for Sheriff Phipps.
II.
9
Fuller appeals the refusal of the district court to give his requested instruction. We think, however, that the refusal to give a mixed-motive instruction in this typical pretext case was proper.
10
Employment discrimination law recognizes an important distinction between mixed-motive and pretext cases. Price Waterhouse v. Hopkins, 490 U.S. 228, 247 n. 12, 109 S.Ct. 1775, 1789 n. 12, 104 L.Ed.2d 268 (1989) (plurality opinion); see Ezold v. Wolf, Block, Schorr and Solis-Cohen, 983 F.2d 509, 522 (3d Cir.1992) ("Intentional discrimination in employment cases fall within one of two categories: 'pretext' cases and 'mixed-motives' cases."), cert. denied, --- U.S. ----, 114 S.Ct. 88, 126 L.Ed.2d 56 (1993); Tyler v. Bethlehem Steel Corp., 958 F.2d 1176, 1180 (2d Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). The distinction is critical, because plaintiffs enjoy more favorable standards of liability in mixed-motive cases, and this is even more so after the Civil Rights Act of 1991.
11
Pretext cases represent the typical disparate treatment action. They take their name from the analysis developed in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981), and refined in St. Mary's Honor Ctr. v. Hicks, --- U.S. ----, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993). In pretext cases, the plaintiff seeks to prove that the defendant's proffered non-racial reason for an adverse employment action was, in reality, a pretext for a racially motivated decision. Once the parties satisfy their relatively modest obligations under the now familiar McDonnell Douglas/ Burdine framework for producing evidence, see Burdine, 450 U.S. at 252-56, 101 S.Ct. at 1093-95, "the trier of fact proceeds to decide the ultimate question: whether plaintiff has proven 'that the defendant intentionally discriminated against [him]' because of his race." Hicks, --- U.S. at ----, 113 S.Ct. at 2749 (quoting Burdine, 450 U.S. at 253, 101 S.Ct. at 1093). Throughout, the plaintiff retains the ultimate burden of persuasion. Id. Most discrimination cases are pretext cases and will fall within this traditional McDonnell Douglas/ Burdine framework.
12
By contrast, if plaintiffs can present sufficiently direct evidence of discrimination, they qualify for the more advantageous standards of liability applicable in mixed-motive cases. Originally, Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989), established the proper inquiry in mixed-motive cases. Under the Price Waterhouse framework, if a plaintiff satisfied the evidentiary threshold necessary to obtain mixed-motive treatment, he became entitled to a shift in the burden of persuasion: The employer could then avoid liability only by demonstrating that it would have reached the same decision absent any discrimination. Id. at 258, 109 S.Ct. at 1794-95 (plurality opinion); id. at 259-60, 109 S.Ct. at 1795-96 (White, J., concurring); id. at 276, 109 S.Ct. at 1804 (O'Connor, J., concurring).
13
The Civil Rights Act of 1991 modified the Price Waterhouse scheme, making mixed-motive treatment more favorable to plaintiffs. Under Section 107 of the Act, an employer can no longer avoid liability by proving that it would have made the same decision for nondiscriminatory reasons. Instead, liability now attaches whenever race "was a motivating factor for any employment practice, even though other factors also motivated the practice." 42 U.S.C. Sec. 2000e-2(m).
14
Thus, employers now violate the Act when race plays an actual role in an employment decision, regardless of other considerations that may independently explain the outcome. See Preston v. Virginia ex rel. New River Community Coll., 31 F.3d 203, 207 (4th Cir.1994). Proof by the employer that it would have reached the same determination without any discriminatory animus does, however, limit the remedies available to the plaintiff.1 See Russell v. Microdyne Corp., 65 F.3d 1229, 1237 (4th Cir.1995).
15
To earn a mixed-motive instruction in accordance with the standards set forth in Section 107, a plaintiff must satisfy the evidentiary burden necessary to make out a mixed-motive case. This requires "direct evidence that decisionmakers placed substantial negative reliance on an illegitimate criterion." Price Waterhouse, 490 U.S. at 277, 109 S.Ct. at 1805 (O'Connor, J., concurring); see Wilson v. Firestone Tire & Rubber, 932 F.2d 510, 514 (6th Cir.1991); Jackson v. Harvard Univ., 900 F.2d 464, 467 (1st Cir.), cert. denied, 498 U.S. 848, 111 S.Ct. 137, 112 L.Ed.2d 104 (1990). Moreover, "[n]ot all evidence that is probative of discrimination will entitle the plaintiff to a [mixed-motive] charge." Ostrowski v. Atlantic Mut. Ins. Cos., 968 F.2d 171, 181 (2d Cir.1992). Otherwise, any plaintiff who is able to establish a prima facie showing in a pretext case would qualify for a mixed-motive instruction, conflating the two categories of cases and subverting the Supreme Court's efforts to distinguish the two theories. Hook v. Ernst & Young, 28 F.3d 366, 374-75 (3d Cir.1994); Schleiniger v. Des Moines Water Works, 925 F.2d 1100, 1101 (8th Cir.1991) ("Simply because a discriminatory reason might be inferred from a prima facie case does not mean that a mixed motive case exists."). What is required instead is evidence of conduct or statements that both reflect directly the alleged discriminatory attitude and that bear directly on the contested employment decision. See Ostrowski, 968 F.2d at 182; Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089, 1096 (3d Cir.1995); Radabaugh v. Zip Feed Mills, Inc., 997 F.2d 444, 449 (8th Cir.1993).
16
Whether a plaintiff has satisfied this evidentiary threshold is a decision for the district court after it has reviewed the evidence.2 Price Waterhouse, 490 U.S. at 247 n. 12, 109 S.Ct. at 1789 n. 12 (plurality opinion); id. at 278-79, 109 S.Ct. at 1805-06 (O'Connor, J., concurring). If so, the plaintiff is entitled to mixed-motive treatment. If not, the plaintiff must prevail under the standards that apply in pretext cases. See Radabaugh, 997 F.2d at 448. Thus, whether a case is a pretext or mixed-motive case ultimately hinges on the strength of the evidence establishing discrimination.3 See Starceski, 54 F.3d at 1097 (concluding that "the distinction between a Price Waterhouse and a McDonnell Douglas/ Burdine case lies in the kind of proof the employee produces on the issue of bias").
17
Here, Fuller failed to make out a mixed-motive case. Fuller's allegations of discrimination focus on three items of evidence. First, he identifies statistics purporting to show that the Montgomery County Sheriff's Office hires few black employees. Second, he suggests that he was more qualified than the individuals chosen by Sheriff Phipps. Third, he alleges that he was treated differently in the interviewing process, specifically by being asked to think over the consequences of giving up the permanent position he already held in favor of one of the temporary openings available in Phipps' office.
18
Sheriff Phipps produced substantial evidence disputing each of these allegations, which would itself justify a conclusion that Fuller failed to qualify for a mixed-motive instruction. Moreover, even if believed, Fuller's allegations do not involve the sort of direct evidence that is necessary to establish a mixed-motive case. His statistical evidence does not suffice, because statistical evidence by nature does not merit a mixed-motive charge. Ostrowski, 968 F.2d at 182. The same is true of his evidence concerning his relative qualifications for the position; such evidence is an issue in virtually every discrimination case. Id. Finally, even if Fuller was treated differently in his interview, there is no evidence demonstrating that this was on account of his race--the allegation consequently does not directly reflect a discriminatory attitude. In fact, requesting that Fuller think over the ramifications of accepting a temporary position seems more to demonstrate a concern for Fuller than any discriminatory animus against him. In short, Fuller's evidence is a far cry from the documented prejudice that triggered mixed-motive treatment in Price Waterhouse: statements by persons involved in the decisional process describing the plaintiff as "macho" and as "overcompensat[ing] for being a woman," and urging her to "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." Price Waterhouse, 490 U.S. at 235, 109 S.Ct. at 1782 (plurality opinion).
19
The district court was thus right to treat this case as an ordinary pretext case. Fuller has misconstrued the scope of Section 107 when he seeks an instruction under that provision: Section 107 was intended to benefit plaintiffs in mixed-motive cases; it has nothing to say about the analysis in pretext cases such as this one. The Supreme Court has indicated as much, observing that Section 107 "responds to Price Waterhouse ... by setting forth standards applicable in 'mixed motive' cases." Landgraf v. USI Film Products, --- U.S. ----, ---- - ----, 114 S.Ct. 1483, 1489-90, 128 L.Ed.2d 229 (1994). See also Chenault v. U.S. Postal Service, 37 F.3d 535, 536 (9th Cir.1994) (remarking that "Section 107 ... creates a new framework for analyzing mixed-motive discrimination claims"); Washington v. Garrett, 10 F.3d 1421, 1432 n. 15 (9th Cir.1993) (stating that the "Civil Rights Act of 1991 modified ... Price Waterhouse as to when a plaintiff is entitled to relief in a mixed motive case"). Moreover, the language of Section 107 contemplates a mixed-motive setting, specifically referring to situations in which the plaintiff demonstrates that an illicit consideration has influenced the employment decision and in which other factors may also have played a role. See 42 U.S.C. Sec. 2000e-2(m). And the legislative history makes evident that Congress sought to alter the standards of liability in mixed-motive cases. See H.R.Rep. No. 102-40(I), 102d Cong., 1st Sess. 45, 48-49 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 583, 586-87. Consequently, only those plaintiffs who satisfy the evidentiary burden entitling them to mixed-motive treatment can qualify for an instruction under Section 107. Fuller, plainly, is not such a plaintiff.
III.
20
Fuller also alleges that the jury instructions were insufficient even for a pretext case. We disagree. When evaluated in their entirety, the district court's charges fairly placed before the jury the dispositive question of whether race was a determinative factor in the adverse employment decision. Moreover, the evidence plainly supports the jury's conclusion that Sheriff Phipps' hiring decision was based on factors other than Fuller's race.
21
"It is not the appellate function to pick myopic fault with trial instructions." Nelson v. Green Ford, Inc., 788 F.2d 205, 209 (4th Cir.1986). Rather, the appropriate inquiry is whether "the charge in its totality sufficiently focused the eye of the jury on the finding it was to make." Mullen v. Princess Anne Volunteer Fire Co., 853 F.2d 1130, 1137 (4th Cir.1988). The district court's instructions here do not run afoul of this standard.
22
The court's closing instruction to the jury was to determine whether "race was a determinative factor in Fuller not being hired." This charge was appropriate. In Hazen Paper Co. v. Biggins, --- U.S. ----, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993), the Supreme Court used very similar language in establishing the proper inquiry in pretext cases, explaining that "a disparate treatment claim cannot succeed unless the employee's protected trait actually played a role in [the decisionmaking] process and had a determinative influence on the outcome."4 Id. at ----, 113 S.Ct. at 1706 (emphasis added); see Miller v. CIGNA Corp., 47 F.3d 586, 595-96 (3d Cir.1995) (en banc) (concluding that the Hazen Paper standard represents the governing standard in pretext cases).
23
Having adequately apprised the jury of the appropriate standard, the instructions need not have gone further. Simple instructions are normally to be preferred, in order not to "inject needless complexity and potential confusion where simplicity is far more appropriate." Mullen, 853 F.2d at 1138. Though the district court provided additional instructions here, none of them compel reversal. The court also directed the jury to assess whether Fuller had established that "but for the fact that he is black he would have been reappointed by Phipps." This charge essentially restates in different language the court's unobjectionable "a determinative factor" instruction. See Miller, 47 F.3d at 595-96 (equating a "but for" standard with Hazen Paper 's "a determinative influence" instruction); EEOC v. Clay Printing Co., 955 F.2d 936, 940-41 (4th Cir.1992) (suggesting that a "but for" instruction is synonymous with a charge focusing on "a determining factor"). Although perhaps superfluous here, the "but for" instruction is an accurate one in pretext cases.
24
The court also directed the jury to determine whether race was "the determinative factor" in Sheriff Phipps' hiring decision, and instructed that Fuller could not recover if "Phipps chose not to hire Fuller for any other reason." When examined in isolation, these charges might be construed to require erroneously that race must have been the sole decisional factor. See Price Waterhouse, 490 U.S. at 241, 109 S.Ct. at 1785-86 (plurality opinion); id. at 259, 109 S.Ct. at 1795 (White, J., concurring); id. at 284, 109 S.Ct. at 1808 (Kennedy, J., dissenting). But these statements should not be considered in artificial isolation, for jury instructions "must be judged in the 'context of the overall charge,' " Western Air Lines, Inc. v. Criswell, 472 U.S. 400, 420, 105 S.Ct. 2743, 2755, 86 L.Ed.2d 321 (1985) (citing Cupp v. Naughten, 414 U.S. 141, 147, 94 S.Ct. 396, 400, 38 L.Ed.2d 368 (1973)), and should be evaluated in their entirety. Spartanburg County Sch. Dist. Seven v. National Gypsum Co., 805 F.2d 1148, 1150 (4th Cir.1986). When viewed as a whole, the district judge's instructions do not rise to the level of reversible error--they plainly put before the jury the appropriate standards of liability in a pretext case. See Smith v. Great American Restaurants, Inc., 969 F.2d 430, 436-37 (7th Cir.1992) (upholding jury instructions in age discrimination case where language which seemed erroneous in isolation was sandwiched between appropriate charges).
25
Here the evidence supports the view that any instructional error was harmless, see Hardin v. Ski Venture, Inc., 50 F.3d 1291, 1296 (4th Cir.1995), and that Fuller's race had nothing to do with Sheriff Phipps' hiring decision. Phipps' overriding concern was to avoid filling temporary openings with individuals who risked relinquishing permanent positions they held elsewhere. There was testimony that all the hired applicants received warnings about the temporary nature of the vacancies. Moreover, none of the three individuals chosen by Sheriff Phipps faced the danger of losing a full-time permanent position--two of the three were unemployed at the time, and the third was working for his father in a position to which he could easily return. Fuller, on the other hand, held a permanent position in the Roanoke County Sheriff's Office, a factor which was of considerable concern to Sheriff Phipps.
26
The evidence also supports other nondiscriminatory rationales for Sheriff Phipps' decision not to hire Fuller. Fuller had twice before resigned from employment at the Montgomery County Sheriff's Office after relatively short stints, calling into question his commitment to the department. Also, Fuller had on one occasion used abusive language in lodging a noise complaint with the Sheriff's Office, causing Sheriff Phipps to doubt Fuller's sense of judgment.
27
Phipps' interactions with Fuller also manifest the lack of any discriminatory animus. Soon after Sheriff Phipps was elected in November, 1991, Fuller contacted Phipps to express an interest in working in the Montgomery County Sheriff's Office, and continued to communicate with Phipps throughout 1992. Phipps advised Fuller to stay in touch, and that he would inform Fuller of any opening as soon as it became available. In December, 1991, Fuller visited Phipps at his home, and the two of them had what both individuals characterize as a cordial conversation, during which Phipps reiterated that he would contact Fuller when an opening arose. When the three temporary positions became available in late 1992, Fuller was the first person notified by Sheriff Phipps, and Phipps promptly offered Fuller an interview. Throughout, Sheriff Phipps seems to have treated Fuller without regard to his race.
IV.
28
There simply is no reason in this case to disturb the jury's verdict. The judgment is hereby
29
AFFIRMED.
1
This is accomplished through the following provision:
On a claim in which an individual proves a violation under section 2000e-2(m) of this title and a respondent demonstrates that the respondent would have taken the same action in the absence of the impermissible motivating factor, the court--
(i) may grant declaratory relief, injunctive relief (except as provided in clause (ii)), and attorney's fees and costs demonstrated to be directly attributable only to the pursuit of a claim under section 2000e-2(m) of this title; and
(ii) shall not award damages or issue an order requiring any admission, reinstatement, hiring, promotion, or payment, described in subparagraph (A).
42 U.S.C. Sec. 2000e-5(g)(2)(B).
2
As such, a plaintiff need not decide at the outset whether to classify his case as a "pretext" or a "mixed-motive" case. Instead, the district judge makes this determination after evaluating the evidence, and instructs the jury accordingly. See Armbruster v. Unisys Corp., 32 F.3d 768, 781 n. 17 (3d Cir.1994) (concluding that "an employee may present his case under both theories and the district court must then decide whether one or both theories properly apply at some point in the proceedings prior to instructing the jury")
3
In this light, the terms "pretext" and "mixed-motive" are somewhat misleading. The distinction does not depend on whether single or multiple motives inspired an employment decision: Pretext cases may often involve situations in which the record suggests that both legitimate and illegitimate motives caused the employment decision. See Miller v. CIGNA Corp., 47 F.3d 586, 597 (3d Cir.1995) (en banc). The Supreme Court's ruling in St. Mary's Honor Ctr. v. Hicks, --- U.S. ----, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993), makes this evident. Miller, 47 F.3d at 597 & n. 9 (noting that the "term of art 'mixed motives' is ... misleading because it describes only a small subset of all employment discrimination cases in which the employer may have had more than one motive")
4
While Hazen Paper involved a claim brought under Age Discrimination in Employment Act (ADEA), that statute and Title VII contain directly analogous provisions assigning liability. As a result, where appropriate, the standards that govern ADEA claims are interchangeable with the standards that define Title VII claims. See Armbruster v. Unisys Corp., 32 F.3d 768, 777 n. 10 (3d Cir.1994)
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463 F.Supp.2d 944 (2006)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
REGAL-BELOIT CORPORATION, Defendant.
No. 06 C 568 S.
United States District Court, W.D. Wisconsin.
November 21, 2006.
Jeffrey P. Clark, Attorney at Law, Milwaukee, WI, for Defendant.
MEMORANDUM and ORDER
SHABAZ, District Judge.
Plaintiff Equal Opportunity Commission filed the above entitled matter in the United States District Court for the Northern District of Illinois on August 8, 2006. On September 29, 2006 the Court transferred the case to this Court.
On October 17, 2006 defendant moved for summary judgment pursuant to Rule 56, Federal Rules of Civil Procedure, submitting proposed findings of fact, conclusions *945 of law, affidavits and a brief in support thereof. This motion has been fully briefed and is ready for decision.
On a motion for summary judgment the question is whether any genuine issue of material fact remains following the submission by both parties of affidavits and other supporting materials and, if not, whether the moving party is entitled to judgment as a matter of law. Rule 56, Federal Rules of Civil Procedure.
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. An adverse party may not rest upon the mere allegations or denials of the pleading, but the response must set forth specific facts showing there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
There is no issue for trial unless there is sufficient evidence favoring the non-moving party that a jury could return a verdict for that party. If the evidence is merely colorable or is not significantly probative, summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
FACTS
For purposes of deciding defendant's motion for summary judgment the Court finds that there is no genuine dispute as to any of the following material facts.
Plaintiff Equal Employment Opportunity Commission is the federal agency charged with administration and interpretation of Title VII. Defendant Regal-Beloit is a business located in Beloit, Wisconsin.
Defendant hired Edmund C. Meadows, Jr. on approximately March 12, 2003. Meadows was terminated by the defendant on March 31, 2004 and filed a charge with EEOC on June 21, 2004 alleging that the defendant violated Title VII.
Monique Debusmann, the Enforcement Supervisor in the Chicago District EEOC office, supervised the investigation of Meadows' charge. EEOC received defendant's position statement on August 6, 2004. In February 2005 the Enforcement Unit referred the case to the Legal Unit. The case was returned to the Enforcement Unit in May, 2005. On August 30, 2005, the EEOC notified defendant of its finding that there was reasonable cause to believe that discrimination had occurred. On September 16, 2005 the EEOC sent defendant a letter pursuant to 29 C.F.R. § 1601.25 notifying it that "further conciliation efforts would be futile or non-productive."
EEOC's Legal Unit assigned the file to an attorney for review in November 2005. In February 2004 the attorney concluded that it would be appropriate to file suit in this case and sought litigation approval. The memo seeking litigation approval was submitted to the Office of the General Counsel in May 2006. Litigation approval was granted on June 16, 2006.
EEOC filed this lawsuit on August 8, 2006 alleging that defendant had terminated Meadows in retaliation for his cooperation in its investigation of a then subsidiary of the defendant, Foote-Jones/Illinois Gear. Defendant had sold the assets of Foote-Jones/Illinois Gear to a competitor in May 2005.
Scott Schneier who terminated Meadows is still employed by defendant as a vice president. Four former Regal-Beloit employees who may be witnesses in this case no longer work for the defendant.
MEMORANDUM
Title VII does not contain an express limitation on the time within which the Commission may bring an enforcement *946 suit. The Commission, however, may be barred by laches from filing a suit if it has delayed inexcusably and the defendant was materially prejudiced by its delay. Occidental Life Insurance Company of California v. EEOC, 432 U.S. 355, 373, 97 S.Ct. 2447, 53 L.Ed.2d 402 (1977). Prejudice to the defendant is shown by some material change in the circumstances. Lingenfelter v. Keystone Consolidated Industries, Inc., 691 F.2d 339, 340 (7th Cir.1982.)
In Equal Emp. etc. v. Massey-Ferguson, Inc., 622 F.2d 271, 277-278 (7th Cir. 1980), the Court found that the Commission's filing of suit four years and nine months after the charges were filed was unreasonable delay. Delays of between four years, five months and nine years, three months have been held to be unreasonable as a matter of law. See EEOC v. CW Transport, 658 F.Supp. 1278, 1288 fn. 6, 1290 (VV.D.Wis.1987).
In this case, time from the filing of the charges, June 21, 2004 until the filing by the Commission of this suit, August 8, 2006 was two years and two months. This delay was caused by the process from September 21, 2005 to August 8, 2006 to determine whether to file suit and obtain approval for the suit. The Court cannot find as a matter of law that this delay was unreasonable or inexcusable.
Had the Court found that the delay was unreasonable defendant would have to show that it was materially prejudiced by the delay. Defendant argues that it was prejudiced because some of its witnesses are unavailable. The decision maker, however, is an employee of the defendant and is available.
Defendant also argues that it is prejudiced because back pay has been expanded by the delay in fling the case. Defendant claims it has been exposed to additional back pay for nearly an entire year. It has not, however shown that payment of this back pay would constitute an undue burden.
In conclusion the Court finds that plaintiffs delay in filing this action was not unreasonable. Further, had it been unreasonable defendant has nu: been materially prejudiced. Accordingly, defendant's motion for summary judgment on the basis of laches will be denied.
ORDER
IT IS ORDERED that defendant's motion for summary judgment is DENIED.
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895 F.Supp. 831 (1995)
Stephanie J. KING, Plaintiff,
v.
John H. DALTON, Secretary of the Navy, et al., Defendants.
Civ. A. No. 95-250-A.
United States District Court, E.D. Virginia, Alexandria Division.
July 28, 1995.
*832 *833 *834 Paul J. Kennedy, Kip Schwartz, Susan B. Gerson, Graham & James, Washington, DC, for plaintiff.
Helen F. Fahey, United States Attorney, Jeri Kaylene Somers, Assistant United States Attorney, Meredith Manning, Special Assistant United States Attorney, Alexandria, VA, Kevin J. Keefe, Associate Counsel, Office of the General Counsel, Department of the Navy, Arlington, VA, for John H. Dalton, Sec. of the Navy.
Frank G. Aschmann, Aschmann and Aschmann, Alexandria, VA, for John C. Lovett.
MEMORANDUM OPINION
ELLIS, District Judge.
In this Title VII[1] sexual harassment suit brought against the Navy[2] and one of its employees, the question presented is whether, and under what circumstances, an employee of a government contractor is also deemed to be an employee of the government for Title VII purposes. The threshold, general question is whether an employee may have more than one employer under 42 U.S.C. § 2000e-16, the provision governing the federal government's Title VII liability. If so, then the specific question presented here is whether the facts at bar warrant a conclusion that both the Navy and the government contractor were plaintiff's employers for purposes of Title VII liability.
For the reasons that follow, the Court concludes first that an aggrieved employee, in appropriate circumstances, can have more than one employer under § 2000e-16. Next, the Court further concludes that those circumstances did not exist in the instant case.
I.[3]
Plaintiff Stephanie King was hired by Booz-Allen & Hamilton, Inc. ("Booz-Allen") in June 1990. At the time, Booz-Allen was performing under a contract with one of its large clients, the Department of the Navy's Space and Naval Warfare System Command ("SPAWAR"). Under one portion of the contract, Booz-Allen was to help coordinate the installation of satellite communication systems aboard U.S. Navy ships, submarines, and shore batteries. While the Navy contemplated that it would perform the actual installation of the equipment, it hired Booz-Allen to provide certain support services and to devise an implementation plan for the communication systems' installation. In August 1990, two months after her arrival, Booz-Allen assigned King to work on this portion of the SPAWAR contract ("the project"). Among others, her responsibilities included scheduling the communication systems' installation and preparing the project budget. Dan Coole, another Booz-Allen employee, *835 was King's immediate supervisor and generally managed Booz-Allen's performance of the project.
Booz-Allen's performance of the SPAWAR contract necessarily involved close and frequent dealings between Navy and Booz-Allen personnel. In particular, Defendant John Lovett was the Navy employee in charge of planning and executing the project. It was his responsibility to insure that the communication systems were properly installed. In this capacity, he met several times a week with Booz-Allen personnel, including King, at Booz-Allen's offices to discuss the project and monitor its progress.
King worked exclusively on the SPAWAR project from August 1990 until June 1993. During this period, she contends, Lovett subjected her to repeated and unwelcome sexual advances. More specifically, she alleges that Lovett frequently made sexually explicit and demeaning remarks to her, touched her inappropriately or positioned himself in close proximity to her, commented on her physical appearance, and leered at her. In addition, he suggested that she accompany him on certain business trips, which, he indicated, were at least partly for pleasure. King reported Lovett's behavior to Booz-Allen and Navy management, both of which ultimately investigated her complaint. Following her complaint, Robert McGlothlin, the Navy's Director of SPAWAR, directed Lovett to write King a letter of apology and to attend sexual harassment prevention training. Despite these reprimands, Lovett's behavior continued. According to King, when she again made it clear that she was uncomfortable working directly with Lovett and would not tolerate his demeaning behavior, she was removed from the project and demoted to a less desirable and less responsible position. Dissatisfied, King then resigned from Booz-Allen.
On March 4, 1994, King filed suit against Booz-Allen for sexual harassment in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq. ("Title VII"), and for intentional infliction of emotional distress under state common law. In her complaint, she alleged that Booz-Allen was her employer, that the company did not take adequate steps to remedy the situation with Lovett (whom she referred to as the "client"), and that it retaliated against her for her complaints of sexual harassment. Booz-Allen and King ultimately settled that dispute, the terms of which are neither publicly available nor material to the instant dispute.
Following her settlement with Booz-Allen, King brought this suit against the Secretary of the Navy, John Dalton, in his official capacity ("the Navy") and against Lovett in both his individual and official capacities. This complaint charges one count of Title VII sexual harassment against both defendants. In response, the Navy filed a motion to dismiss on the ground that the Navy was not King's employer during the period in question, and therefore is not a proper defendant under the relevant Title VII provisions.[4] Similarly, Lovett moves to dismiss on the ground that he is not an employer and therefore not subject to suit under Title VII. King opposes the motions, claiming that Defendants possessed sufficient control over the means and manner of her work to render them "employers" for purposes of Title VII liability. Resolution of these opposing contentions constitutes the task at hand.
Because the parties have referred to matters outside the pleadings in connection with the motions to dismiss, including declarations and transcripts of deposition testimony,[5] the motions will be treated as ones for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See Fed. R.Civ.P. 12(b). See also Hagel v. United Land Co., 759 F.Supp. 1199, 1201 n. 7 *836 (E.D.Va.1991); Hawkins v. Murray, 798 F.Supp. 330, 332 n. 3 (E.D.Va.1992).
II.
Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin. 42 U.S.C. § 2000e, et seq.[6] As originally enacted, however, Title VII did not extend to discrimination in the federal work-place. See § 2000e(b) (excluding federal government from definition of "employer"). To remedy this, Congress amended Title VII in 1972 by explicitly waiving the United States' sovereign immunity with respect to employment discrimination. Equal Employment Opportunity Act of 1972, § 11, 42 U.S.C. § 2000e-16. Yet, rather than simply adding the United States to the universe of possible "employers" that may be sued under § 2000e-2, Congress created a separate and distinct provision to govern federal workplace discrimination. § 2000e-16. Significantly, the Supreme Court has held that § 2000e-16 "provides the exclusive judicial remedy for claims of discrimination in federal employment." Brown v. General Servs. Admin., 425 U.S. 820, 835, 96 S.Ct. 1961, 1969, 48 L.Ed.2d 402 (1976). Therefore, the Navy's liability, if any, must be found in accordance with the strictures of § 2000e-16.
Section 2000e-16, entitled "Employment by Federal Government," provides, in pertinent part:
All personnel actions affecting employees or applicants for employment ... in military departments ... shall be made free from any discrimination based on race, color, religion, sex, or national origin.
§ 2000e-16(a). As the explicit terms of this provision make clear, a threshold requirement for imposing Title VII liability against the federal government is that the plaintiff be an "employee[] or applicant[] for employment" of the defendant federal agency, in this instance, the United States Navy.[7]
As King readily concedes, Booz-Allen was plainly her employer during the time of the alleged harassment. Booz-Allen interviewed King; hired her for an indefinite time period; assigned her to the SPAWAR project; supervised her work; gave her regular performance appraisals; provided her workplace, equipment and supplies; maintained sole authority for hiring, training, and firing her; paid her salary; withheld income taxes; paid her Social Security; and provided her with annual leave, raises, bonuses, and health insurance. In short, Booz-Allen's connection with King displays all the indicia of a traditional, common law employment relationship. Indeed, as noted, King has already brought suit against Booz-Allen based on the same underlying allegations of harassment.
Citing the previous litigation between King and Booz-Allen, the Navy urges as a preliminary matter that King is judicially estopped from claiming that the Navy was her employer. The doctrine of judicial estoppel precludes a party from "playing fast and loose" with the judicial system by taking inconsistent positions in successive judicial proceedings in accordance with that party's fluctuating self-interest. Guinness PLC v. Ward, 955 F.2d 875, 899 (4th Cir.1992). *837 Thus, the Navy contends, King should be estopped from claiming that the Navy was her employer during her work on the SPAWAR contract, when she previously claimed in her suit against Booz-Allen that Booz-Allen was her employer during this same time period. But the Navy's judicial estoppel argument misses the mark, for it incorrectly assumes that King may have only one employer for Title VII purposes. King does not dispute that she was an employee of Booz-Allen during the period of alleged harassment. Instead, she contends that both Booz-Allen and the Navy were her de facto employers for purposes of satisfying Title VII's broad remedial goals.
The threshold question, therefore, is whether § 2000e-16 can be read to permit multiple "employers" for one aggrieved "employee". And this question, it appears, has not yet been addressed in the decisional law. Nonetheless, several courts, including this one, have considered this question in the private employment context under § 2000e-2 and concluded that a plaintiff may, in certain circumstances, have more than one "employer" for purposes of Title VII liability. See, e.g., Magnuson v. Peak Technical Servs., Inc., 808 F.Supp. 500, 507-08 (E.D.Va.1992) (stating that "[a]n individual may be the employee of more than one `employer' for purposes of Title VII"); Amarnare v. Merrill Lynch, Pierce, Fenner & Smith, 611 F.Supp. 344, 347-49 (S.D.N.Y.1984) (temporary employee was employee of both temporary agency and brokerage firm to which she was temporarily assigned); Alie v. Nynex Corp., 158 F.R.D. 239, 245 (E.D.N.Y.1994) (stating that "[t]he law is clear that an individual may be the employee of more than one `employer' for Title VII purposes"). Cf. Virgo v. Riviera Beach Assocs., Ltd., 30 F.3d 1350 (11th Cir.1994) (interpreting term "employer" under Title VII to include "joint employers").
Nothing in the text of § 2000e-16 or its legislative history suggests that a different result should obtain when the federal government is one of the putative "employers", nor has the Navy pointed to any case law to the contrary. While § 2000e-16 indisputably requires an employment relationship between the government and the aggrieved individual, it is consistent with the underlying remedial purpose of Title VII to accord a liberal interpretation of its requirements. See Magnuson, 808 F.Supp. at 508 & n. 3. Moreover, in enacting § 2000e-16, "Congress clearly intended to give public employees the same substantive rights and remedies that had previously been provided for employees in the private sector." Douglas v. Hampton, 512 F.2d 976, 981 (D.C.Cir.1975) (citations omitted). Thus, where the text permits, and it does so here, § 2000e-2 and § 2000e-16 should be read in harmony.[8] Given this, Booz-Allen's undisputed status as King's employer does not automatically preclude a finding that the Navy shared that status during the time period in question. Accordingly, the question then is whether the Navy's relationship with King warrants the conclusion that, for Title VII purposes, King was employed by the Navy as well as by Booz-Allen.
As noted earlier, § 2000e-16 requires the plaintiff to be an "employee[] or applicant[] for employment" with the federal government. As a result, independent contractors and others who lack an employment relationship with the federal government are not covered by § 2000e-16. See, e.g., Spirides v. Reinhardt, 613 F.2d 826, 829 (D.C.Cir.1979). But the distinction between an employee and an independent contractor is easier stated than applied, and the line between them is sometimes indistinct. Nonetheless, courts are experienced in drawing such lines. Over the years, courts have developed several tests in the effort to distinguish employees from independent contractors. Under the common law standard, the determinative factor is the employer's "right to control" the putative employee's work, "not only as to the result accomplished by the work, but also as to the details and means by which that result is accomplished." Smith v. Dutra Trucking Co., 410 F.Supp. 513, 516 (N.D.Cal.1976) (quoting N.L.R.B. v. *838 Phoenix Life Ins. Co., 167 F.2d 983, 986 (7th Cir.), cert. denied 335 U.S. 845, 69 S.Ct. 68, 93 L.Ed. 395 (1948)), aff'd, 580 F.2d 1054 (9th Cir.1978). See also Garrett v. Phillips Mills, Inc., 721 F.2d 979, 981 (4th Cir.1983). But in 1947, the Supreme Court rejected the common law "right to control" test as unnecessarily rigid for cases arising under the Social Security Act, and instead developed what has come to be known as the "economic realities" test. Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947). Under this standard, "employees are those who as a matter of economic reality are dependent upon the business to which they render service." Id. at 130, 67 S.Ct. at 1550. Thus, the "economic realities" test broadens the definition of employee to include not only those whose employers maintain control over the details of their work, but also those in certain circumstances whose long-term, on-going business relationship with another renders them economically dependent on that relationship.
In the context of Title VII litigation, however, most courts, including the Fourth Circuit, have adopted yet a third test for determining "employee" status. Garrett, 721 F.2d at 981-82 (applying third standard to ADEA case and recognizing its applicability to Title VII). First annunciated in Spirides v. Reinhardt, 613 F.2d 826 (D.C.Cir. 1979), a case decided under § 2000e-16, this test essentially combines the "right to control" and "economic realities" standards. Under this combined test, the employer's right to control the individual's work remains the most important factor. Garrett, 721 F.2d at 982. But it is not the only factor, nor is it dispositive. Id. Other relevant factors to be considered in the "employee vs. independent contractor" calculus include:
(1) the kind of occupation, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular occupation; (3) whether the "employer" or the individual in question furnishes the equipment used and the place of work; (4) the length of time during which the individual has worked; (5) the method of payment, whether by time or by the job; (6) the manner in which the work relationship is terminated; i.e., by one or both parties, with or without notice and explanation; (7) whether annual leave is afforded; (8) whether the work is an integral part of the business of the "employer"; (9) whether the worker accumulates retirement benefits; (10) whether the "employer" pays social security taxes; and (11) the intention of the parties.
Spirides, 613 F.2d at 832, quoted in Garrett, 721 F.2d at 982. See also Mares v. Marsh, 777 F.2d 1066 (5th Cir.1985) (applying Spirides factors to determine whether United States Army was plaintiff's employer under Title VII). Both the Navy and King agree that the Spirides standard provides the appropriate framework for determining King's employment status.[9]
As noted, the most significant factor in determining employer status is whether the putative employer controlled the means and manner of the individual's work. See Garrett, 721 F.2d at 982; Spirides, 613 F.2d at 831; Mares, 777 F.2d at 1068. Given the importance of this factor, it is unsurprising that the Navy and King dispute the extent to which Lovett controlled the details of King's work for the SPAWAR contract at Booz-Allen. The parties submitted declarations containing opposing, and somewhat conclusory, statements regarding the working relationship between Lovett and King. For her part, King declares that she received "continuous supervision and direction" from Lovett and that he reviewed her work on a "near daily" basis.[10] On the other hand, the Navy *839 contends that while Lovett may have given assignments to Booz-Allen personnel, through Booz-Allen's project manager Dan Coole, it was always up to Booz-Allen to determine the best method and manner in which to complete the assignments. The Navy admits that Lovett periodically reviewed King's and other Booz-Allen personnel's work with respect to contract performance issues. But it denies that Lovett or any other Navy employee reviewed, or had the authority to review, King's individual job performance.
Of course, since the matter is before the Court on a motion for summary judgment, King's version of the facts must be presented "wherever the parties' evidence conflicts, at least to the degree that her allegations have support in affidavits, depositions, or other documentary evidence." Paroline v. Unisys Corp., 879 F.2d 100, 102-03 (4th Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986)), vacated and remanded in part en banc on other grounds, 900 F.2d 27 (4th Cir.1990). Nonetheless, the party opposing summary judgment must "set forth specific facts showing that there is a genuine issue for trial," Fed.R.Civ.P. 56(e), Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (emphasis added), and purely conclusory allegations are insufficient to defeat a motion for summary judgment. See, e.g., Martin v. Nannie & the Newborns, Inc., 3 F.3d 1410, 1418 (10th Cir.1993); Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995); Rivera-Cotto v. Rivera, 38 F.3d 611, 615 (1st Cir.1994). Moreover, although the parties' conclusions regarding the extent of Lovett's control over King differ, a review of the more specific deposition testimony and documentary evidence on record provides a clearer picture of their working relationship and suggests that many of the actual facts are not actually disputed.
It is undisputed that the Navy was Booz-Allen's client, and that Lovett was King's primary client contact at the Navy. Also uncontested is the fact that Booz-Allen hired King and assigned her to the SPAWAR contract without input from the Navy. The Navy had no control over King's work schedule; Booz-Allen set her daily work hours and approved her vacation and medical leave. In addition, her direct supervisors were Booz-Allen employees: Dan Coole was her immediate supervisor, who in turn was supervised by Paul James. And, it is apparent from the record evidence that when Lovett acted inappropriately, King reported his behavior to, and sought advice from, her Booz Allen superiors.[11] Furthermore, King did not contact Navy upper-management directly regarding Lovett's behavior; rather, such meetings were arranged by Booz-Allen.
With respect to Lovett's direct interactions with King, the record reflects that Lovett met frequently with Booz-Allen staff to coordinate and review contract performance issues. Lovett's deposition testimony provides insight into the details of his interactions with King.
*840 Q: Tell me, if you can, describe the kind of professional interaction that you had with Ms. King for the period of 1991.
A: Well, we would meet, you know, my dealings with Booz-Allen was [sic] quite frequent. I would say three or four times a week I would go over their [sic] office. We would meet in their team room. Working conditions were still in the old building. It still was kind of hard to deal with. I would spend a lot of time in their offices, their team room, their little conference room. I'd work with all the people there.... We would go over the various tasks at hand, who was doing what, the action item, we asked her to start tracking the action items, we asked her to start doing the financial plan and one of the things that we needed to do was coordinate with the financial planning people and we asked Stephanie [King], we kind of empowered her to go over on her own to NAVSEA, empowered her to go over there and deal with the people there.
(Lovett Tr., at 21-22) (internal paragraph breaks omitted). Generally, on the days that Lovett went to Booz-Allen, he spent either a morning or an afternoon there, although occasionally he stayed an entire day. While Coole was Lovett's direct counter-part and primary contact at Booz-Allen, Lovett also met directly with King from time to time. And as the foregoing deposition testimony makes clear, he would delegate assignments when needed. Furthermore, when there were business trips involving the SPAWAR project, Lovett would dictate how many Booz-Allen employees could attend. However, it was then up to Booz-Allen to determine which specific employees filled those slots.[12] Thus, Lovett admittedly worked closely with King and other Booz-Allen personnel, and he played an active and integral role in overseeing their implementation of the SPAWAR project.
It is also plain that Lovett provided some input into King's performance reviews at Booz-Allen, although neither he nor the Navy performed formal reviews of her work. Booz-Allen apparently consulted Lovett before completing King's performance reviews, as her Booz-Allen "Performance Appraisal" form includes "clients" in the list of "sources of data" consulted.[13] While this input certainly affected King's job evaluations[14] and therefore influenced to some degree her status *841 and success at Booz-Allen, both parties agree that Lovett had no direct input regarding Kings' compensation, bonuses, or promotions. In addition, on a more informal level, Lovett would provide routine feedback to King and her supervisor, Dan Coole, regarding the quality of her work. He testified that although King's work was generally good, "[s]ometimes I'd get some work that was haphazard or, you know, half done and I'd complain about it to Mr. Coole and her. She would have to go back and re-do it." (Lovett Tr., at 25).
Thus, viewing the evidence in the light most favorable to King, it seems that Lovett had some influence over King's work product as well as the pace and direction of the overall project. It is also clear that if Lovett complained to King's Booz-Allen supervisors regarding her work, King's performance reviews might be affected. And while neither Lovett nor the Navy had the power to fire King, it is reasonable to conclude that if Lovett strongly objected to King's continued participation in the project, he could effectively persuade Booz-Allen to remove her.[15] This is especially true given the ever-present possibility that the Navy could simply take its lucrative business elsewhere.
Despite all of this, the totality of the circumstances, as reflected in the record evidence, nonetheless points persuasively to the conclusion that the Navy was not King's employer. The Navy simply did not maintain the sort of direct, supervisory control over the daily details of her work to render it her employer. Moreover, the remaining applicable Spirides factors point away from a conclusion that the Navy was her employer. Booz-Allen provided her work place, as well as all of her equipment and supplies. The Navy did not hire, train, or fire her, and other than her meetings with Lovett, she had little contact with Navy personnel. King's work involved a specific, isolated contract that Booz-Allen had with the Navy. Furthermore, King received no compensation, annual leave, or retirement benefits from the Navy, nor did the Navy pay her social security taxes. Finally, the only record evidence regarding the intention of the parties is an internal SPAWAR document stating that:
all [support services] contracts must be structured and administered as non-personal services contracts. A non-personal services contract is a contract in which the personnel rendering the services are not subject, either by contractual terms or by manner of administration, to the supervision and control usually prevailing in relationships between the government and its employees.
(SPAWAR Inst., Def.Ex. 10, at ¶ 4.5.2.1.g.). While certainly not dispositive of the absence of an employer/employee relationship, the document signals the Navy's intent not to treat its SPAWAR contractors as employees.
*842 Although control is the most important individual factor in determining whether an employment relationship exists, the totality of circumstances must be considered. And, in this regard, it is important to recognize that all clients maintain some degree of control over the work of a hired independent contractor, although there is clearly a continuum. At one end of the continuum is the traditional employer/employee relationship, where a company hires a salaried employee, such as an engineer or secretary, to work full-time, and the company controls his or her assigned projects, work place, and schedule. At the polar opposite end of the continuum is the standard client/independent contractor relationship, such as the association between an automobile owner who drops her vehicle off with the auto mechanic in the morning and picks it up when the work is completed in the afternoon. There, while the automobile owner maintains some control over the results to be accomplished, she maintains virtually no control over the details of how the work is performed. The auto mechanic is plainly an independent contractor, and the vehicle owner her client.
Somewhere in the middle of this continuum, but closer to the employer/employee end, may be found the temporary secretary hired by a company for a period of several months. While the company does not pay his wages and is not a permanent employer, it maintains such exclusive control over the temporary secretary's work assignments and so integrates him into its work environment that it could, in certain circumstances, be considered his employer. Also in the middle of this continuum, but tending toward the opposite pole, is the corporation that hires a law firm for representation in litigation. There, the client is involved much more intimately with decision-making and performance issues, yet a law firm attorney working with a client is nonetheless an independent contractor and not an employee of the client corporation.
King's relationship with the Navy seems quite similar to this last example. Like Lovett, the client may meet frequently with firm lawyers to discuss litigation strategy and even delegate particular matters to be researched. Similarly, if the litigation is large and complex, a firm associate may find herself spending all of her time on that one client's project. Moreover, if the client were dissatisfied with her work, it may request that another of the firm's attorneys take over the litigation. Such a request, of course, may adversely affect the attorney's career and chances for advancement at the firm. Or, if a client representative were to make inappropriate sexual advances toward the attorney and she complained to firm management, the firm might be reluctant to upset a lucrative client and therefore decide, inappropriately perhaps, to remove her from the project rather than to confront the client concerning the offending client employee. Notwithstanding the client's frequent interaction with the firm associate, its control over the work she receives, and its indirect influence over her success at the firm, the corporate client in that instance would simply not be the attorney's employer for Title VII purposes. There, as here, the totality of the circumstances points persuasively toward the conclusion that the client has not so transcended the bounds of client-contractor relationship as to become her employer.
Contesting this result, King relies heavily upon this Court's ruling in Magnuson v. Peak Technical Services, 808 F.Supp. 500 (E.D.Va.1992), where a Title VII sexual harassment plaintiff claimed three employers: Peak, Volkswagen, and the Fairfax Volkswagen dealership.[16] But Magnuson is factually distinguishable and ultimately not controlling here. In Magnuson, the plaintiff was officially hired by Peak, a company that provided field marketing specialists and manufacturer's representatives for Volkswagen. She became a field marketing specialist and initially spent her days visiting various different Volkswagen dealerships to monitor their sales and marketing of Volkswagen vehicles. Sometime thereafter, she was promoted to a position as a manufacturer's representative, *843 which required her to work full time at the Fairfax Volkswagen dealership.
But while the plaintiff in Magnuson was actually hired by Peak, it was Volkswagen, not Peak, that initially interviewed her for the job. Indeed, the record showed that Volkswagen directed Peak to hire her. In addition, while Peak paid the plaintiff's salary and benefits, Volkswagen provided all of her training and direct supervision. And due to the nature of her job, the plaintiff spent her working days at Volkswagen, not Peak, offices. Moreover, it was Volkswagen, not Peak, that eventually promoted her to a position as a manufacturer's representative at the Fairfax Volkswagen dealership. Finally, the contract between Volkswagen and Peak contemplated that Volkswagen would maintain some control over the basic conditions of the plaintiff's employment. For instance, Volkswagen controlled her hours, signed her weekly time sheet, and reported to Peak if she was absent from work. In these circumstances, the Court held that a jury could reasonably find that Volkswagen was the plaintiff's employer for Title VII purposes. Id. at 509.
The Court also ruled that the Fairfax Volkswagen dealership could be her de facto employer. Once the plaintiff in Magnuson became a manufacturer's representative, she worked exclusively on the premises of the dealership. As a result, she worked closely with the dealership's personnel, attended sales meetings there, and was supervised by the dealership's general manager. The evidence also suggested that the floor manager kept track of her hours. She was, in effect, fully integrated into the dealership's working environment. Given this, there was a material issue of fact regarding whether the Fairfax Volkswagen dealership was her employer under Title VII.
Evident in Magnuson is that the "employers" there maintained much greater and more active control over the plaintiff's work schedule, duties, and environment, than did the Navy in the case at bar. Unlike the Navy here, Volkswagen in Magnuson interviewed and selected the plaintiff. In addition, both Volkswagen and the dealership provided her place of work, scheduled her hours, supervised her directly, trained her, and promoted her. In other words, except for the absence of an employment contract and direct payment for services, the relationship between the defendants there and Ms. Magnuson bore almost every indicia of an employer/employee relationship. Furthermore, like a temporary employment agency, see Amarnare, 611 F.Supp. at 347-49, and unlike Booz-Allen here, Peak relinquished daily supervision over the plaintiff to Volkswagen and the dealership, maintaining no control over or direction regarding the details of her work. In this respect, Volkswagen and the dealership had many attributes of an employer's control that Peak, the employer with whom she was in contractual privity, did not. The absence of these factors in this case significantly distinguishes Magnuson from the case at bar, and indeed, makes clear that King's relationship with the Navy is that of a contractor/client.[17]
III.
In addition to the Navy, King sued Lovett in both his individual and official capacities for sexual harassment under Title VII. Lovett moves to dismiss on the ground that he is not an employer and therefore not subject to suit under § 2000e-2 or § 2000e-16. King opposes the motion, claiming that Lovett meets the statutory definition of "employer", which definition includes "agents" of *844 employers.[18] Given the foregoing ruling that the Navy was not King's employer, however, Lovett's status as the Navy's agent does not render him her employer in this instance, and Lovett's motion to dismiss must be granted.
Alternatively, even if the Navy were King's employer, section 2000e-16 explicitly states that for suits brought pursuant to its provisions, "the head of the department, agency, or unit, as appropriate, shall be the defendant." § 2000e-16(c). Because § 2000e-16 is the exclusive Title VII provision governing suits against the federal government, see supra § II.A., it is clear that for governmental liability, the Secretary of the Navy, in his official capacity, is the only proper defendant. Thus, the motion to dismiss King's claim against Lovett in his official capacity must be granted on this ground as well.
This raises the question whether § 2000e-16 also precludes Title VII suits against federal government employees as individuals. While the statute does not explicitly address this issue, the Supreme Court has broadly stated that § 2000e-16 "provides the exclusive judicial remedy for claims of discrimination in federal employment." Brown, 425 U.S. at 835, 96 S.Ct. at 1969. In addition, courts that have considered this issue have uniformly held that individual federal employees may not be sued for employment discrimination under Title VII. See Person v. United States Dept. of Agric., 593 F.Supp. 1054, 1059 (E.D.Wis.1984) (stating that in Title VII suit involving discrimination in the federal workplace, it is "axiomatic" that "[t]he proper party defendant is the pertinent agency head, not his or her various employees"). See also Pierce v. Runyon, 857 F.Supp. 129, 131 (D.Mass.1994); Beasley v. Griffin, 427 F.Supp. 801, 803 (D.Mass.1977); Ellis v. United States Postal Serv., 784 F.2d 835, 838 (7th Cir.1986); Newbold v. United States Postal Serv., 614 F.2d 46, 47 (5th Cir.), cert. denied, 449 U.S. 878, 101 S.Ct. 225, 66 L.Ed.2d 101 (1980). Therefore, dismissal of the Title VII claim against Lovett in his individual capacity is also appropriate on this ground.
IV.
For the foregoing reasons, the motions to dismiss will be granted. An appropriate order shall issue.
NOTES
[1] Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq.
[2] The named defendant is John H. Dalton, and he is sued in his official capacity as Secretary of the Navy. For convenience and clarity, this defendant is referred to as "the Navy".
[3] In light of the procedural posture of this case, the facts are presented here in the light most favorable to Plaintiff. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
[4] Initially, the Navy and Lovett also moved to dismiss on the independent ground that King had not exhausted her administrative remedies. Defendants have apparently abandoned this argument in view of King's statements that she repeatedly attempted to file an administrative claim, but was turned away because she was not a Navy employee.
[5] At the time that these motions to dismiss were filed, discovery in this action had not yet commenced. The deposition transcripts that were submitted by King in opposition to the motions had been prepared in connection with her previous suit against Booz-Allen.
[6] It is well settled that this prohibition includes "quid pro quo" sexual harassment, as well as harassing conduct that creates a "hostile environment" for the injured employee. Meritor Sav. Bank v. Vinson, 477 U.S. 57, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986).
[7] In her initial pleading opposing the Navy's motion to dismiss, King argued as a preliminary matter that Title VII does not require a plaintiff to be an employee of the defendant employer. In support of this argument, King cited the language of § 2000e-2 (rendering it "an unlawful employment practice for an employer ... to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment") (emphasis added) and cases decided thereunder. See, e.g., King v. Chrysler Corp., 812 F.Supp. 151, 153 (E.D.Mo. 1993) (rejecting need for employee-employer relationship between plaintiff and defendant under § 2000e-2); Pardazi v. Cullman Medical Ctr., 838 F.2d 1155, 1156 (11th Cir.1988) (defendant's interference with plaintiff's employment relationship with third party suffices under § 2000e-2). But, as King now apparently concedes, § 2000e-2 is inapplicable to cases against the federal government, and the plain terms of § 2000e-16, which govern here, require a plaintiff to be an employee of the defendant agency. See, e.g., Spirides v. Reinhardt, 613 F.2d 826, 829 (D.C.Cir. 1979) (holding that § 2000e-16 "cover[s] only those individuals in a direct employment relationship with a government employer").
[8] As noted, the text may not always support uniform treatment of the two provisions. See supra note 7; infra § III.
[9] It is worth noting that the Spirides test was developed in a context where there was only one putative employer (that is, where the plaintiff was either the defendant's employee or not an employee at all). Despite this distinction, the parties correctly agree that the Spirides standard also provides the proper framework for analyzing the status of a putative co- or joint-employer.
[10] Without greater specificity regarding the details of their working relationship, King's statements are inconclusive with respect to whether Lovett controlled the means and manner of her work. In the typical client-contractor relationship, the client will "review" the work performed by the contractor to determine whether it meets his expectations. In addition, while suggestive of control, King's statement that Lovett "supervised" her work is also somewhat ambiguous. Presumably, any large government contract will be supervised to some extent by the relevant government agency. Yet, the word "employee" in § 2000e-16 clearly does not encompass every government contractor.
[11] The interaction among these individuals is reflected in part in the EEO Counselor's report describing King's version of events:
1/91 Mr. Lovett asked Ms. King to lunch. She told him she would get back to him. She asked her immediate supervisor at BAH (Dan Coole) if she should go, Mr. Coole told her to go to lunch with Mr. Lovett....
2/91 Ms. King spoke with Mr. Coole and informed him of Mr. Lovett's inappropriate behavior; such as lewd comments. She told Mr. Coole she wanted him to speak with Mr. Lovett about his behavior. Mr. Coole agreed to do so.
* * * * * *
9/92 Mr. Lovett informed Ms. King he had some good and bad news. The three day trip to California was canceled, but there would be one half day session they would be required to attend. She told him it was not cost effective to go for a half day session. Mr. Lovett told Ms. King to go anyway. During this time he would lick his lips. During this time, Mr. Coole was on vacation. Ms. King went to Mr. James (Coole's boss) and informed him she didn't want to go on the trip and explained Mr. Lovett's behavior up to this point. Mr. James to [sic] Ms. King to go on the trip and don't say anything.
(EEO Rpt., ¶ 9 attachment).
[12] During his deposition, Lovett was asked about an incident where King had been scheduled to attend a meeting in Hawaii but was subsequently excluded.
Q: Did you believe that Ms. King should have been in attendance at that meeting?
A: The original plan was for her to be there, yes. She had a definite job.
Q: What changed the plans?
A: What changed the plan was our Captain Price decided to go with us and we had an entourage we had too many people on the trip and I was afraid he was going to call me on the carpet for having too many people on the trip so at the last minute, probably two or three days before the trip I decided I asked could we drop people and Ms. King and a male employee from another company was dropped from the list.
Q: At your recommendation?
A: At my recommendation. I did not recommend the people by name. I just recommended that we drop people from each company.
* * * * * *
Q: But your testimony is that you didn't recommend to Mr. Coole that he disinvite Stephanie? He made that decision?
A: He makes all the decisions on matters in his company.
(Lovett Tr., at 65-68).
[13] (Performance Appraisal, Pl.Ex. 8). Also included in this list are the employee herself, her assignment managers, and her peers. Id.
[14] For instance, in one Performance Appraisal that was favorable overall, Booz-Allen notes that King "has not however, responded fully to the requests of the client to better proof her work, in which a simple editorial error (e.g., a wrong year on an installation schedule, errors in a fixed format funding requests) may have significant deleterious impact." (Performance Appraisal, Pl.Ex. 8, at 3).
[15] Although the Navy contends that King requested to be taken off the project, King denies making such a request and claims that she was removed from the project "upon the request of Mr. Lovett." (King Decl., ¶ 7). While King cannot testify to matters beyond her personal knowledge, Goenaga, 51 F.3d at 18, there is some support for such an inference in the record. The record reflects that in April 1993, Randolph Bricker, a Vice President at Booz-Allen, wrote a letter conveying King's complaints regarding Lovett to Robert McLaughlin, an upper-level manager at SPAWAR. Shortly after this, Lovett told Coole that he was "uncomfortable" working directly with King and requested that they "formalize" their relationship. (Lovett Tr., at 69-70). In his deposition, Lovett explained what he meant by "formalize":
Q: What do you mean by that?
A: That I didn't want to have any direct dealings with her. I would rather work through Mr. Coole, work through him and receive deliverables from him.
Q: Now, would it be possible for Stephanie King to still perform her responsibilities that she had been performing up to that point without direct contact with you?
A: Yes.
Q: By going through Mr. Coole?
A: Yes. It would have made Mr. Coole's job a lot harder but it could have worked.
Q: Basically any time what you wanted was that any time Stephanie King had a question for you, that she ask the question of Mr. Coole and then Mr. Coole ask the question of you, you relay your answer to Mr. Coole?
A: Or put it in writing. That's the formal relationship that is by the book we call it.
(Lovett Tr., at 70-71). Reading this testimony in the light most favorable to King, it is a reasonable inference that Lovett's request in this regard contributed to Booz-Allen's decision to transfer her to another, less desirable position.
[16] Magnuson was decided under § 2000e-2, not § 2000e-16. Given the conclusion that both provisions permit multiple employers for one aggrieved employee, however, Magnuson is not distinguishable on that ground.
[17] It is worth noting that were the economic realities test the proper standard for Title VII cases in this circuit, the result may well be different. For it is clear in a pragmatic sense that King's occupational stability, like that of many contractors, depended in large part on the continued willingness of the Navy to contract with Booz-Allen and to approve of her work. See Hill v. New York City Bd. of Educ., 808 F.Supp. 141, 146-48 (E.D.N.Y.1992) (applying economic realities test to conclude that school bus driver employed by bus company was also employee of city Board of Education since Board had "exclusive power to certify" him to drive on school bus routes and since Board "indirectly exercised significant control over [his] work" through regulations and policies). But the Fourth Circuit, like most jurisdictions, has not adopted such a lenient standard in the Title VII realm. Garrett, 721 F.2d at 981. Under the hybrid Spirides test, the Navy was not King's employer, and its motion to dismiss must be granted.
[18] Specifically, § 2000e(b) defines "employer" to be "a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or proceeding calendar year, and any agent of such person."
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400 F.Supp.2d 885 (2005)
Lonzy C. OWENS, Plaintiff,
v.
Jo Anne B. BARNHART, Commissioner of Social Security, Defendant.
No. 1:05cv00038.
United States District Court, W.D. Virginia, Abingdon Division.
October 13, 2005.
*886 Roger W. Rutherford, Wolfe Williams & Rutherford, Norton, VA, for Plaintiff.
Sara Bugbee Winn, United States Attorney's Office, Roanoke, VA, for Defendant.
MEMORANDUM OPINION
SARGENT, United States Magistrate Judge.
In this social security case, I affirm the final decision of the Commissioner denying benefits.
I. Background and Standard of Review
Plaintiff, Lonzy C. Owens, filed this action challenging the final decision of the Commissioner of Social Security, ("Commissioner"), denying plaintiff's claims for disability insurance benefits, ("DIB"), and supplemental security income, ("SSI"), under the Social Security Act, as amended, ("Act"), 42 U.S.C.A. §§ 423 and 1381 et seq. (West 2003 & Supp.2005). Jurisdiction of this court is pursuant to 42 U.S.C.A. § 405(g) and § 1383(c)(3). This case is before the undersigned magistrate judge upon transfer pursuant to the consent of the parties under 28 U.S.C.A. § 636(c)(1).
The court's review in this case is limited to determining if the factual findings of the Commissioner are supported by substantial evidence and were reached through application of the correct legal standards. See Coffman v. Bowen, 829 F.2d 514, 517 (4th Cir.1987). Substantial evidence has been defined as "evidence which a reasoning mind would accept as sufficient to support a particular conclusion. It consists of more than a mere scintilla of evidence, but may be somewhat less than a preponderance." Laws v. Celebrezze, 368 F.2d 640, 642 (4th Cir.1966). "`If there is evidence to justify a refusal to direct a verdict were the case before a jury, then there is `substantial evidence.''" Hays v. Sullivan, 907 F.2d 1453, 1456 (4th Cir.1990) (quoting Laws, 368 F.2d at 642).
The record shows that Owens protectively filed applications for DIB and SSI on or about July 17, 2002, alleging disability as of April 21, 2000, based on hypertension, *887 regional ileitus,[1] degenerative disc disease, rheumatoid arthritis, bulging discs in the neck, pinched nerves in the neck, asthma, emphysema, continual pain in middle and lower back, depression, anxiety, tension, agitation, continual pain in the neck and numbness in the left outside arm from the shoulder to the elbow, the right little finger and the adjacent edge of the palm of the right hand up to the wrist. (Record, ("R."), 62-65, 78, 85, 245-47.) Owens's claims were denied both initially and on reconsideration. (R. at 35, 37-39, 40-42, 46-47, 249-51.) Owens requested a hearing before an administrative law judge, ("ALF), (R. at 43), and this hearing was held on May 5, 2004, at which Owens was represented by counsel. (R. at 257-97.)
By decision dated June 22, 2004, the ALJ denied Owens's claims. (R. at 17-26.) The ALJ found that Owens met the disability insured status requirements of the Act for disability purposes through the date of the decision. (R. at 25.) The ALJ found that Owens had not engaged in substantial gainful activity since April 21, 2000. (R. at 25.) The ALJ also found that Owens had severe impairments, namely cervical radiculopathy, degenerative osteoarthritis of the left shoulder joint, degenerative disc disease of the lumbar spine and chronic obstructive pulmonary disease, ("COPD"),[2] but he found that Owens did not have an impairment or combination of impairments listed at or medically equal to one listed at 20 C.F.R. Part 404, Subpart P, Appendix 1. (R. at 25.) The ALJ further found that Owens's allegations regarding his limitations were not totally credible. (R. at 25.) The ALJ found that Owens retained the residual functional capacity to perform light work,[3] diminished by an ability to only occasionally climb, balance, stoop, kneel, crouch and crawl, an inability to sustain steady extension of the left arm, a limited ability to write with the dominant hand, an inability to repetitively turn, flex and extend the arms bilaterally and a need to avoid extreme temperatures, humidity, fumes and allergens. (R. at 25.) Thus, the ALJ found that Owens could perform his past relevant work as a teacher. (R. at 25.) The ALJ further found that Owens was not disabled as defined by the Act and was not eligible for benefits. (R. at 25-26.) See 20 C.F.R. §§ 404.1520(f), 416.920(f) (2005).
After the ALJ issued his decision, Owens pursued his administrative appeals, (R. at 13), but the Appeals Council denied his request for review. (R. at 6-9.) Owens then filed this action seeking review of the ALJ's unfavorable decision, which now stands as the Commissioner's final decision. See 20 C.F.R. §§ 404.981, 416.1481 (2005). This case is before this court on Owens's motion for summary judgment filed September 26, 2005. Based on the decision set forth below, I dispense with the requirement that the Commissioner file written legal arguments in this matter.
II. Facts and Analysis
Owens was born in 1944, (R. at 63, 245), which classifies him as a person of advanced age under 20 C.F.R. *888 §§ 404.1563(e), 416.963(e) (2005). He has a college education and a master's degree in education. (R. at 84, 263.) He has past relevant work experience as a teacher, a college professor, an electrician's helper and an industrial construction foreman. (R. at 87, 265-72.)
At his hearing, Owens testified that he last worked in 2000 as a foreman in a clean room for approximately four and one-half years. (R. at 265, 267.) He stated that he had to quit after being involved in a motor vehicle accident that resulted in a dislocated shoulder and scrapes and cuts to the head, right ear and left elbow. (R. at 267, 274.) Owens further testified that he had suffered from chronic neck pain since the accident. (R. at 274.) He stated that he had not attempted to return to work since that time. (R. at 271.) Owens further stated that his abilities to read and write had diminished since the accident, noting that his hands cramped and would "lock up" on him when he tried to write. (R. at 272-73.) He further testified that he had been diagnosed with depression, which affected his ability to concentrate. (R. at 273.) He testified that he had been diagnosed with back problems, degenerative disc disease with radiculopathy, osteoarthritis of the left shoulder, COPD, emphysema, asthma, a fixed airway obstruction, pulmonary hyperinflation, an anxiety disorder, depression, hypertension and regional ileitis. (R. at 275-76.)
Owens testified that he experienced anxiety while he was teaching and "probably a little bit" of depression. (R. at 277.) He stated that some of the other teachers thought that he was "odd." (R. at 277.) Owens testified that after his last teaching job in 1995, he interviewed for other teaching jobs, but never got called back. (R. at 278.) He stated that the interviews made him anxious and nervous. (R. at 278.)
Owens testified that surgery for his back had not been recommended. (R. at 279.) However, he stated that if he knew that surgery would work, he would do it. (R. at 279.) Owens testified that he had not regained full use of his shoulder since the motor vehicle accident in 2000. (R. at 279.) He stated that he had participated in physical therapy three separate times, but to no avail. (R. at 279-80.) Owens testified that his asthma bothered him every day, and he further stated that he had been informed that it would probably worsen. (R. at 282.) He testified that he had difficulty lifting due to his impairments. (R. at 283.) Owens further testified that he had difficulty concentrating, following both simple and detailed instructions and tolerating fellow employees, supervisors and the general public. (R. at 286.)
Michael R. Gore, a vocational expert, also was present and testified at Owens's hearing. (R. at 287-97.) Gore classified Owens's past work as an elementary school teacher, as a teacher for children with learning disorders, as a high school teacher and as a college professor all as light and skilled, as an electrician's helper and as a supervisor as medium[4] and semiskilled and as an industrial cleaner as medium and unskilled. (R. at 288-89.) Gore was asked to assume a hypothetical individual of Owens's age, education and past work experience, who retained the functional capacity to perform light work, but who could perform postural activities only occasionally, who could not sustain steady extension of the left dominant arm, who had a diminished ability to write with the *889 dominant hand, who could not repetitively turn, flex or extend the arms bilaterally and who should avoid temperature extremes, humidity, allergens and fumes. (R. at 289-91.) Gore testified that such an individual could perform the job of a teacher, as long as he would not have to stand for more than six hours in an eight-hour workday. (R. at 294.)
In rendering his decision, the ALJ reviewed records from Tazewell Community Hospital; Dr. Paul Lallande, O.D.; Tri-County Health Clinic; Dr. T. Patel, M.D.; Dr. German Iosif, M.D.; Dr. Donald R. Williams, M.D., a state agency physician; Eugenie Hamilton, Ph.D., a state agency psychologist; Dr. Joseph Claustro, M.D.; Dr. Gary Parrish, M.D., a state agency physician; and Hugh Tenison, Ph.D., a state agency psychologist.
The Commissioner uses a five-step process in evaluating DIB and SSI claims. See 20 C.F.R. §§ 404.1520, 416.920 (2005). See also Heckler v. Campbell 461 U.S. 458, 460-62, 103 S.Ct. 1952, 76 L.Ed.2d 66 (1983); Hall v. Harris, 658 F.2d 260, 264-65 (4th Cir.1981). This process requires the Commissioner to consider, in order, whether a claimant 1) is working; 2) has a severe impairment; 3) has an impairment that meets or equals the requirements of a listed impairment; 4) can return to his past relevant work; and 5) if not, whether he can perform other work. See 20 C.F.R. §§ 404.1520, 416.920 (2005). If the Commissioner finds conclusively that a claimant is or is not disabled at any point in this process, review does not proceed to the next step. See 20 C.F.R. §§ 404.1520(a), 416.920(a) (2005).
Under this analysis, a claimant has the initial burden of showing that he is unable to return to his past relevant work because of his impairments. Once the claimant establishes a prima facie case of disability, the burden shifts to the Commissioner. To satisfy this burden, the Commissioner must then establish that the claimant has the residual functional capacity, considering the claimant's age, education, work experience and impairments, to perform alternative jobs that exist in the national economy. See 42 U.S.C.A. §§ 423(d)(2)(A), 1382c(a)(3)(A)-(B) (West 2003 & Supp.2005); McLain v. Schweiker, 715 F.2d 866, 868-69 (4th Cir.1983); Hall, 658 F.2d at 264-65; Wilson v. Califano, 617 F.2d 1050, 1053 (4th Cir.1980).
As stated above, the court's function in this case is limited to determining whether substantial evidence exists in the record to support the ALJ's findings. This court must not weigh the evidence, as this court lacks authority to substitute its judgment for that of the Commissioner, provided her decision is supported by substantial evidence. See Hays, 907 F.2d at 1456. In determining whether substantial evidence supports the Commissioner's decision, the court also must consider whether the ALJ analyzed all of the relevant evidence and whether the ALJ sufficiently explained his findings and his rationale in crediting evidence. See Sterling Smokeless Coal Co. v. Akers, 131 F.3d 438, 439-40 (4th Cir.1997).
Thus, it is the ALJ's responsibility to weigh the evidence, including the medical evidence, in order to resolve any conflicts which might appear therein. See Hays, 907 F.2d at 1456; Taylor v. Weinberger, 528 F.2d 1153, 1156 (4th Cir.1975). Furthermore, while an ALJ may not reject medical evidence for no reason or for the wrong reason, see King v. Califano, 615 F.2d 1018, 1020 (4th Cir.1980), an ALJ may, under the regulations, assign no or little weight to a medical opinion, even one from a treating source, based on the factors set forth at 20 C.F.R. §§ 404.1527(d), 416.927(d), if he sufficiently explains his *890 rationale and if the record supports his findings.
In his brief, Owens argues that the ALJ erred by failing to find that he suffered from a severe mental impairment, particularly, by rejecting the opinion of Dr. Patel, his treating physician. (Plaintiffs Brief In Support Of Motion For Summary Judgment, ("Plaintiffs Brief'), at 6-9.) Owens also argues that the ALJ erred by failing to consider his impairments in combination in determining that he was not disabled. (Plaintiffs Brief at 9-10.)
Owens first argues that the ALJ erred by failing to find that he suffered from a severe mental impairment, particularly, by rejecting the opinion of Dr. Patel, his treating physician. (Plaintiffs Brief at 6-9.) However, for the following reasons, I find that the ALJ's findings are supported by substantial evidence.
It appears that the first mention of any mental condition occurred on August 21, 2001, nearly a year and a half after the date of alleged onset of disability, during Owens's initial assessment at Tri-County Health Clinic, ("Tri-County"). (R. at 160.) At that time, Owens reported anxiety and depression. (R. at 160.) However, no description of symptoms related thereto was included in the treatment note, nor did the treating source include any findings regarding this alleged anxiety and depression. (R. at 160.) Nonetheless, Owens was diagnosed with anxiety and was prescribed Zoloft. (R. at 161-62.)
On January 30, 2003, Owens did not state that he was taking Zoloft or any other psychotropic medication when asked about his medications by Dr. German Iosif, M.D. (R. at 176.) Dr. Iosif noted that Owens was alert and oriented, and he reported that his long- and short-term memory and mood were unremarkable. (R. at 177.) On March 12, 2003, Eugenie Hamilton, Ph.D., a state agency psychologist, completed a Psychiatric Review Technique form, ("PRTF"), concluding that Owens suffered from a nonsevere anxiety-related disorder with coexisting nonmental impairments that required referral to another medical specialty. (R. at 190-204.) Hamilton found that Owens experienced no restriction on his activities of daily living, had only mild difficulty maintaining social functioning, experienced no difficulties maintaining concentration, persistence or pace and had experienced no episodes of decompensation. (R. at 200.) Hamilton opined that Owens's mental symptoms and allegations were only minimally credible. (R. at 202.) Finally, Hamilton noted that Owens's activities of daily living were restricted mainly due to his physical complaints. (R. at 204.)
Owens was again seen at Tri-County from March 5, 2002, through May 20, 2003. (R. at 208-15.) The only information relevant to Owens's alleged mental condition contained in these treatment notes appears to be consistent refills of Zoloft. (R. at 208-15.) However, as noted earlier, no subjective complaints by Owens nor any findings by the treating source related to anxiety or depression are contained in these notes for this period of time. (R. at 208-15.)
Hugh Tenison, Ph.D., another state agency psychologist, completed a PRTF on August 25, 2003, concluding that Owens suffered from a nonsevere affective disorder and a nonsevere anxiety-related disorder. (R. at 223-35.) Tenison found that Owens was only mildly restricted in his activities of daily living, experienced no difficulties in maintaining social functioning or in maintaining concentration, persistence or pace and had experienced no repeated episodes of decompensation. (R. at 233.) Tenison opined that Owens's subjective allegations regarding his mental condition *891 were only partially credible. (R. at 235.)
On May 4, 2004, Dr. T. Patel, M.D., completed a mental assessment, indicating that Owens had a fair ability to deal with work stresses, to function independently, to understand, remember and carry out detailed and complex job instructions and to demonstrate reliability.[5] (R. at 236-38.) Dr. Patel concluded that Owens had a poor or no ability to maintain attention and concentration. (R. at 236.) However, in the majority of areas of adjustment, Dr. Patel found that Owens had an unlimited or very good ability. (R. at 236-37.) Interestingly, Dr. Patel noted that there were no medical or clinical findings to support his assessment. (R. at 237.)
Owens was again seen at Tri-County from June 16, 2003, through April 6, 2004. (R. at 240-44.) The treatment notes again reveal Zoloft refills without any mention of anxiety- or depression-related symptoms or findings related thereto. (R. at 240-41, 243-44.)
Given Owens's lack of mental health treatment, aside from medication refills, his very minimal complaints regarding any alleged mental impairment, the state agency psychologists' findings that Owens suffered from nonsevere mental impairments and the imposition of very minimal restrictions on Owen's mental abilities, I find that substantial evidence supports the ALJ's finding that Owens did not suffer from a severe mental impairment. I further note that, although Owens contends that Dr. Patel, a physician with Tri-County, is his treating physician, it appears that Owens consistently saw nurse practitioners there. In fact, it is unclear from the treatment notes contained in the record whether Owens ever actually saw Dr. Patel. In any event, neither the notes from Tri-County nor Dr. Patel's mental assessment, in which he found that Owens retained an unlimited or very good ability in the majority of adjustment areas, supports a finding that Owens has a severe mental impairment.
I will next address Owens's argument that the ALJ erred by failing to consider his physical and mental impairments in combination. (Plaintiffs Brief at 9-10.) Again, I find that substantial evidence supports the ALJ's findings.
The record reveals that Owens was involved in a motor vehicle accident on April 21, 2000, resulting in a dislocated left shoulder and abrasions and lacerations of the left elbow and fingers. (R. at 127-32, 143.) He underwent a successful shoulder reduction. (R. at 143.) Thereafter, Owens complained of shoulder pain, back pain and neck pain. An MRI of the lumbar spine taken on May 27, 2000, revealed small herniated nuclear pulposuses at the C3-4 and C4-5 levels, a disc protrusion at the C6-7 level and hypertrophic degenerative disease. (R. at 141.) On May 24, 2000, Owens was seen at the Department of Physical Therapy And Work Rehabilitation at Tazewell Community Hospital for an evaluation. (R. at 139-40.) He complained of bilateral shoulder pain, left greater than the right, intermittent numbness in the left hand with no focal neurological distribution, numbness in the lateral upper arm, numbness in the right hand and cervical pain and pain in the low back with no radicular symptoms. (R. at 139.) A physical examination revealed decreased strength with left shoulder flexion, extension, abduction, internal rotation and external rotation. (R. at 139.) However, Owens's bilateral upper and lower extremity reflexes were normal. (R. at 139.) He *892 exhibited a decreased range of motion of the left shoulder. (R. at 139.) Owens was diagnosed with adhesive capsulitis[6] on the left shoulder post dislocation and radicular numbness in the right C8 dermatome and the left C5 dermatome with no associated reflex or motor impairment. (R. at 140.) It was further noted that Owens had a very limited range of motion of the left shoulder and elbow that would prevent him from performing most activities of daily living that required lifting, reaching and holding with the left hand. (R. at 140.) Finally, it was noted that Owens had cervical and lumbar pain. (R. at 140.) He was scheduled to participate in physical therapy three times weekly for two weeks. (R. at 140.)
Owens underwent physical therapy for his left shoulder from May 24, 2000, through October 15, 2000. (R. at 148-58.) By July 14, 2000, Owens reported that he could use his arm a little bit better, but it was noted that Owens's range of motion was very slowly progressing. (R. at 144, 154.) On July 19, 2000, it was noted that Owens's subjective complaints were greater than the objective findings. (R. at 154.) On August 1, 2000, Owens reported that Flexeril helped him to raise his arm a little higher. (R. at 153.) On October 4, 2000, Owens reported constant pain, but his physical therapy was discontinued on October 15, 2000, for noncompliance. (R. at 145, 148.) The record reveals that from August 30, 2000, through October 15, 2000, Owens either canceled or simply did not appear for physical therapy on at least nine separate occasions. (R. at 148-51.)
Owens was seen at Tri-County from August 21, 2001, through May 20, 2003. (R. at 159-64, 208-15.) On August 21, 2001, he complained of bodily swelling, general all over body aches, headaches, a bulging disc and pinched nerve with pain and degenerative disc disease and numbness in the right arm. (R. at 162.) On November 20, 2001, Owens reported that he did not feel that his arthritis medication was working well. (R. at 164.) Over this time period, Owens was diagnosed with hypertension, low back pain and osteoarthritis of the knees. (R. at 161.) He was prescribed various medications over this time period including dyflex, sulfasalazine, etodolac, furosemide, guanabenz, clonidine, Bidex, Atacand, Lodine, albuterol, hydroxyzine, Vistaril, Azulfidine, catapres, verapamil, Proventil and Celebrex. (R. at 161-64, 208-15.)
Owens saw Dr. Iosif on January 30, 2003, for a physical evaluation at the request of Disability Determination Services. (R. at 175-79.) At that time, he reported having experienced constant neck pain that radiated into the lower spine and interscapular area following his motor vehicle accident. (R. at 175.) He further noted that the pain was exacerbated by repetitive turning, flexion or extension movements of the cervical spine and when maintaining one or both upper extremities in an elevated extended position. (R. at 175.) Owens also described a frequent numbness sensation and paresthesias extending from the left shoulder into the arm down to the right little finger. (R. at 175.) He also reported persistent left shoulder pain. (R. at 175.) Although Owens had been diagnosed with asthma, he reported that he was not using a bronchodilator or anti-inflammatory therapy due to the expense. (R. at 176.) He described daily wheezing and coughing exacerbated by exertional activities or exposure to extreme environmental cold or humidity. (R. at 176.)
*893 A physical examination revealed that Owens was slightly hoarse and dyspneic at rest with occasional audible wheezes. (R. at 177.) Somewhat diminished breath sounds were noted throughout both lungs. (R. at 177.) Owens's extremities were without gross joint deformities or inflammation, but there was decreased muscle bulk over the right hypothenar prominence with diminished sensation to touch and pain sensation over the ulnar edge of the right hand and extending distally throughout the little finger. (R. at 177-78.) However, Dr. Iosif reported no significant motor weakness in the right hand and wrist area, and he noted that Owens was able to sustain a strong grip with the right hand. (R. at 178.) Owens's range of motion of the upper and lower extremity joints was unremarkable except for a reduced active and passive abduction of the right shoulder.[7] (R. at 178.) He also exhibited a limited range of flexion and extension motion of the cervical segment. (R. at 178.) Owens was diagnosed with degenerative disc disease of the cervical spine with chronic pain syndrome and possible compression radiculopathy with involvement of the C6-7 level of the spine on the right side, suggesting irreversible nerve damage at that level. (R. at 178.) Dr. Iosif also diagnosed post-traumatic degenerative osteoarthritis of the left shoulder joint with limited range of motion and moderate to severe persistent asthma with indication of fixed airway obstruction and pulmonary hyperinflation. (R. at 178.)
X-rays of the lumbar spine yielded normal results. (R. at 165.) A chest x-ray revealed moderate COPD changes bilaterally and the thoracic spine was osteoporotic. (R. at 166.) Owens exhibited a decreased range of motion of the cervical spine, left shoulder and left knee. (R. at 167-68.) Dr. Iosif also performed spirometry testing, which revealed mild upper airway obstruction. (R. at 169-74.) However, it was noted that Owens gave a poor initial effort. (R. at 169, 171, 173.)
Dr. Iosif opined that Owens's musculo-skeletal conditions and related functional impairments would prevent him from performing his past work in the construction industry. (R. at 178-79.) He further opined that Owens's cervical radiculopathy on the right side would impair his ability to write or maintain a steady extended attitude of his distal upper extremity. (R. at 179.) Finally, Dr. Iosif opined that Owens's untreated asthma could be adversely affected by exposure to extreme environmental conditions or extreme environmental changes or conditions in humidity, temperature, fumes, gases and dust. (R. at 179.)
Dr. Donald R. Williams, M.D., a state agency physician, completed a physical assessment on March 12, 2003, concluding that Owens could perform medium work diminished by a limited ability to push and/or pull with the upper extremities. (R. at 180-89.) He found that Owens could frequently climb stairs, balance, stoop, kneel and crouch, that he could occasionally crawl, but that he could never climb ladders. (R. at 182.) Dr. Williams further found that Owens was limited in his ability to reach in all directions. (R. at 183.) He imposed no visual or communicative limitations, but found that Owens should avoid even moderate exposure to fumes, odors, dusts, gases and poor ventilation. (R. at 183-84.)
Owens was again seen at Tri-County from June 16, 2003, through April 6, 2004. (R. at 240-44.) Again, it appears that these visits consisted primarily of medication *894 checks and refills. (R. at 240-41, 243-44.) In April 2004, Owens complained of pain in the lower back and swelling of the legs. (R. at 244.) His medications were refilled. (R. at 244.)
Dr. Gary Parrish, M.D., a state agency physician, completed a physical assessment on August 25, 2003, concluding that Owens could perform light work. (R. at 216-22.) Dr. Parrish further found that Owens could occasionally climb, balance, stoop, kneel, crouch and crawl. (R. at 218.) He imposed no manipulative, visual, communicative or environmental limitations on Owens. (R. at 218-19.) Dr. Parrish concluded that the medical evidence established medically determinable impairments of degenerative disc disease and COPD. (R. at 221.) Dr. Parrish found Owens's subjective allegations only partially credible. (R. at 222.)
X-rays of the lumbar spine taken on April 22, 2004, showed very mild degenerative changes at the lumbosacral region associated with minimal splinting to the right, likely related to muscle spasm. (R. at 239.)
I first note that, in his decision, the ALJ explicitly stated that he was considering all of Owens's impairments in reaching the determination that Owens was not disabled. (R. at 22.) Moreover, the ALJ's decision reveals that he thoroughly considered all of the evidence relating to both alleged physical and mental impairments. As the ALJ found, and as supported by substantial evidence, Owens suffers from cervical radiculopathy, degenerative osteoarthritis of the left shoulder, degenerative disc disease of the lumbar spine and COPD. Furthermore, the restrictions imposed on Owens's work-related physical abilities by both the treating and nontreating sources are taken into account in the ALJ's physical residual functional capacity determination. Lastly, I note that, even though there is evidence from state agency physician Dr. Williams that Owens could perform a reduced range of medium work, the ALJ, nonetheless, concluded that Owens could perform only a reduced range of light work. (R. at 25.)
For all of these reasons, I find that substantial evidence exists in the record to support the ALJ's failure to find that Owens suffered from a severe mental impairment. I further find that the ALJ properly considered all of Owens's impairments in combination in making the physical residual functional capacity determination and in concluding that Owens was not disabled.
III. Conclusion
For the foregoing reasons, Owens's motion for summary judgment will be denied and the Commissioner's decision denying benefits will be affirmed.
An appropriate order will be entered.
NOTES
[1] Regional ileitus refers to Crohn's disease affecting the distal portion of the small intestine. See DORLAND'S ILLUSTRATED MEDICAL DICTIONARY, ("Dorland's"), 816 (27th ed.1988).
[2] COPD is a chronic lung disease, such as asthma or emphysema, in which breathing becomes slowed or forced. See STEDMAN'S MEDICAL DICTIONARY, ("Stedman's"), 157 (1995).
[3] Light work involves lifting items weighing up to 20 pounds at a time with frequent lifting or carrying of items weighing up to 10 pounds. If someone can perform light work, he also can perform sedentary work. See 20 C.F.R. §§ 404.1567(b), 416.967(b) (2005).
[4] Medium work involves lifting items weighing up to 50 pounds at a time with frequent lifting or carrying of items weighing up to 25 pounds. If someone can perform medium work, he also can perform light and sedentary work. See 20 C.F.R. §§ 404.1567(c), 416.967(c) (2005).
[5] I note that Dr. Patel actually checked the line for both "unlimited/very good" and "fair" regarding Owens's ability to interact with supervisors. (R. at 236.)
[6] Adhesive capsulitis refers to an adhesive inflammation between the joint capsule and the peripheral articular cartilage of the shoulder with obliteration of the subdeltoid bursa, characterized by painful shoulder of gradual onset, with increasing pain, stiffness and limitation of motion. See Dorland's at 267.
[7] The Range of Motion Form indicates that it was Owens's left shoulder that was limited. (R. at 167.)
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 23, 2003
Charles R. Fulbruge III
Clerk
No. 02-20309
Conference Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARTIN COMPEAN-PORTALES,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Southern District of Texas
USDC No. H-01-CR-790-ALL
--------------------
Before DAVIS, BARKSDALE, and STEWART, Circuit Judges.
PER CURIAM:*
Martin Compean-Portales (Compean) appeals his conviction and
the sentence he received after he pleaded guilty to reentry into
the United States after having been convicted of an aggravated
felony. Compean argues that he received the ineffective
assistance of counsel. Because the record is insufficiently
developed to permit this court to fairly evaluate his claim on
direct appeal, we decline to resolve the issue. United States v.
Haese, 162 F.3d 359, 363 (5th Cir. 1998). We do so without
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 02-20309
-2-
prejudice, so that Compean retains the right to dispute his
counsel’s effectiveness collaterally. United States v. Palmer,
122 F.3d 215, 221-22 (5th Cir. 1997).
AFFIRMED.
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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
C. HUGH JONSON, No. 16-35923
Plaintiff-Appellant, D.C. No. 2:16-cv-01220-RSM
v.
MEMORANDUM*
TED CHEPOLIS, an individual doing
business in Skagit County, Washington; et
al.,
Defendants-Appellees.
C. HUGH JONSON, No. 16-35965
Plaintiff-Appellee, D.C. No. 2:16-cv-01220-RSM
v.
TED CHEPOLIS, an individual doing
business in Skagit County, Washington,
Defendant-Appellant,
and
PHILLIP JENNINGS, an individual doing
business in King County, Washington; et al.,
Defendants.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
C. HUGH JONSON, No. 16-35978
Plaintiff-Appellee, D.C. No. 2:16-cv-01220-RSM
v.
TED CHEPOLIS, an individual doing
business in Skagit County, Washington,
Defendant,
and
PHILLIP JENNINGS, an individual doing
business in King County, Washington; et al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, Chief Judge, Presiding
Submitted August 9, 2017**
Before: SCHROEDER, TASHIMA, and M. SMITH, Circuit Judges.
C. Hugh Jonson appeals pro se from the district court’s judgment dismissing
his action alleging violations of federal law. Defendants cross-appeal from the
district court’s order denying their motions for sanctions. We have jurisdiction
under 28 U.S.C. § 1291. We review de novo. Stewart v. U.S. Bancorp, 297 F.3d
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 16-35923
953, 956 (9th Cir. 2002) (Fed. R. Civ. P. 12(b)(6) dismissal on the basis of res
judicata); Hiser v. Franklin, 94 F.3d 1287, 1290 (9th Cir. 1996) (summary
judgment). We may affirm on any ground supported by the record. Johnson v.
Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008). We affirm.
The district court properly granted summary judgment for defendant
Chepolis and properly dismissed Jonson’s claims against the remaining defendants
on the basis of the doctrine of res judicata because Jonson asserted the same claim
against the same defendants concerning the same subject matter in a prior
Washington State court action that was dismissed with prejudice. See Intri-Plex
Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007) (federal courts
look to state law to determine the preclusive effect of a state court judgment);
Williams v. Leone & Keeble, Inc., 254 P.3d 818, 821 (Wash. 2011) (en banc)
(setting forth elements of the doctrine of res judicata under Washington law);
Fluke Capital & Mgmt. Servs. Co. v. Richmond, 724 P.2d 356, 361 (Wash. 1986)
(en banc) (“Under the doctrine of res judicata . . . a claim decided in a prior action
cannot be raised in a subsequent action . . . . A claim includes all rights of the
[claimant] to remedies against the defendant with respect to all or any part of the
transaction, or series of connected transactions, out of which the action arose,
without regard to whether the issues actually were raised or litigated.” (citation and
internal quotation marks omitted)).
3 16-35923
The district court did not abuse its discretion by denying defendants’
motions for sanctions under Federal Rule of Civil Procedure 11 because defendants
failed to establish grounds for sanctions. See Fed. R. Civ. P. 11(b); Christian v.
Mattel, Inc., 286 F.3d 1118, 1126-27 (9th Cir. 2002) (setting forth standard of
review and describing grounds for Rule 11 sanctions).
Defendants’ Federal Rule of Appellate Procedure 38 motions for fees
(Docket Entry Nos. 11 and 13 in appeal No. 16-35923; Docket Entry Nos. 10 and
12 in appeal No. 16-35965; Docket Entry Nos. 8 and 10 in appeal No. 16-35978)
are denied.
AFFIRMED.
4 16-35923
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114 B.R. 177 (1989)
In re HOLIDAY INTERVAL, INC., Debtor.
Bankruptcy No. 87-00668-C.
United States Bankruptcy Court, W.D. Missouri, C.D.
October 2, 1989.
*178 John C. Curran, Osage Beach, Mo., for claimants.
C. Christy Barton, Jefferson City, Mo., for trustee.
Jack E. Brown, trustee, Columbia, Mo.
D. James Mariea, Fulton, Mo., for Holiday Shores Property Owners Ass'n.
MEMORANDUM OPINION
FRANK W. KOGER, Chief Judge.
The Trustee herein alleges that certain state court default judgments obtained by three claimants against the debtor are preferential transfers within 11 U.S.C. Section 547(b) and, therefore, subject to the avoiding powers of the Trustee. The Trustee further asserts that preclusive effect should not be given to these state judgments regarding the validity of the claims underlying the default judgments. The claimants challenge the position that their state court judgments should not be given preclusive effect. At issue is whether this Court is bound to give full faith and credit to these prior state court default judgments against the debtor in favor of parties who are now claimants in the debtor's estate.
STATEMENT OF FACTS
Holiday Shores Property Owner's Association commenced the present involuntary Chapter 7 bankruptcy proceeding against Holiday Interval, Inc. on February 17, 1987. In its petition, Holiday Shores alleged the following in support of its assertion that Holiday Interval (hereinafter referred to as "Debtor") was generally not paying its debts as they came due: (1) debtor failed to pay Holiday Shores a sum of approximately $53,000.00 for breach of a contract, the amount paid to the debtor for maintenance services which the debtor never performed; (2) debtor failed to satisfy a judgment owed to G.J. Harms and Associates, Inc.; and (3) debtor had not paid a judgment owed to Dam Red-E-Mix, Inc.
Pursuant to various orders of this Court, creditors Dam Red-E-Mix, G.J. Harms and Associates, Inc. and Kenneth Steele Construction Company (hereinafter "claimants") filed a series of claims against the debtor's estate.[1] These claims are based on default judgments entered against the debtor and others on December 9, 1986, by the Circuit Court of Camden County, State of Missouri.[2] The motions were granted based on "Motions for Sanctions" filed by the plaintiffs in each case.
The trustee alleges that the state court default judgments obtained by the three claimants were transfers within the scope of Section 547(b) of Title 11, United States Code, and are thus subject to the avoiding powers of the Trustee. That being the case, the Trustee further asserts that preclusive effect should not be given to the state judgments regarding the validity of *179 the claims underlying the default judgments.
The claimants reject this reasoning. While conceding the Trustee's power to set aside the judgment liens if all the requisites of Section 547 are met, the claimants challenge the position that the state court judgments should not be given preclusive effect. Invalidation of the judgments, claimants add, would unfairly force individual creditors of the debtor to relitigate the issues that have already been decided by the Missouri State Courts.
This Court is not here deciding whether the judgments in question fall within the scope of the Trustee's avoiding powers. The sole issue determined here is whether this Court is bound to give full faith and credit to the prior state court default judgments against the debtor in favor of parties who are now claimants in the debtor's estate. This specific issue is one of first impression in the Western District of Missouri, however, a review of the law indicates that a federal bankruptcy court must give preclusive effect to state court judgments to the extent that the rendering state would do so.
OVERVIEW
The practice of one court affording preclusive effect to valid judgments of another court is historically well established. The origins of "giving full faith and credit" can be traced to English common law, where the expression generally related to the effect which decisions of the ecclesiastical courts were entitled to in the common law courts. See, Bunting v. Lepingwell, 4 Co. Rep. 29a, 75 Eng.Rep. 950 at 952 (1585) (first published in 1658), quoted by Kent, J. in Vandenheuval v. The United Insurance Company, 2 Johns Cas. (N.Y.) 127 at 141-143 (1801). To facilitate harmony and cooperation between the colonies, our nation's founding fathers incorporated the concept into the Articles of Confederation, 19 Journals of the Continental Congress, Ford ed., 214, 215 (1912). As ratified by the Continental Convention, our Constitution included a "full faith and credit" clause, Article IV, Section 1, United States Constitution.[3]
Article IV, Section 1 mandates that judicial proceedings in each State of the Union shall be given full faith and credit in the courts of every other state.[4] The Act of May 26, 1790, 1 Stat. 122 extended the rule of the Constitution to all courts, federal as well as state. Mills v. Duryee, 7 Cranch 481, 485, 3 L.Ed. 411; Davis v. Davis, 305 U.S. 32, 59 S.Ct. 3, 83 L.Ed. 26 (1938). The circumstances wherein the federal courts must afford state court judgments full faith and credit is currently codified in 28 U.S.C. Section 1738 which reads in part as follows:
The records and judicial proceedings of any court of any such State, Territory or possession, or copies thereof, shall be proved or admitted in other courts within the United States and its Territories and Possessions by the attestation of the clerk and the seal of the court annexed, if a seal exists, together with a certificate of a judge of the court that the said attestation is in proper form.
Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such States, Territory or Possession from which they are taken. (emphasis added).
Thus, in addition to being afforded full faith and credit by their sister states under Article IV, state court judgments are also entitled to preclusive effect by federal *180 courts under Section 1738.[5]
APPLICATION OF LAW
By virtue of Section 1738, Congress has specifically required all federal courts to give preclusive effect to a state court judgment whenever the courts of the State from which the judgment emerged would do so. As part of the federal court system, the mandate of 1738 applies to bankruptcy courts. Kelleran v. Andrijevic, 825 F.2d 692 (2d Cir.1987); Bowers v. Connecticut National Bank, 78 B.R. 388 (D.Conn.1987); In re Farrell, 27 B.R. 241, 243 (Bankr.E.D. N.Y.1982).
In resolving whether a state court judgment is entitled to full faith and credit, Section 1738 commands the federal court to ask whether the rendering state would afford the judgment full faith and credit. Kremer v. Chemical Construction Corporation, 456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982) (Section 1738 mandates that state court proceedings shall have the same full faith and credit in federal court as they have in state court); Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (in federal court, collateral estoppel effect may be given to a state court judgment under the Civil Rights Act of 1871).
Kelleran v. Andrijevic, 825 F.2d 692 (2nd Cir.1987) illustrates the application of these principles to facts similar to those in the controversy before this Court. In Kelleran, the issue before the Second Circuit was whether a bankruptcy court's equitable powers permit it to disregard the preclusive effect of a state court default judgment.
In Kelleran, Slavko Andrijevic and C. Russell Kelleran formed a corporation for the purpose of buying and developing real estate. After their relationship deteriorated, Andrijevic filed a mechanic's lien on certain property owned by the corporation. The corporation filed a timely answer denying the claim and counterclaimed for breach of contract and willful exaggeration of a mechanic's lien. Kelleran brought a separate suit against Andrijevic for unpaid legal fees.
Andrijevic defaulted on the counterclaim by not serving a reply. He tried to subsequently reopen the default judgment, but was unsuccessful. The court entered a judgment in favor of the corporation with respect to the counterclaims as to liability and scheduled a hearing on damages. Before the hearing could take place, Andrijevic filed for bankruptcy, which automatically stayed all state proceedings, including the damages inquest.
The corporation and Kelleran filed proofs of claim with the bankruptcy court. The corporation sought to enforce the state court judgment. The bankruptcy court found the claims totally "without merit" and refused to give the state court default judgment binding effect. The district court affirmed, finding the creditors' claims to be "incredible".
Based on Section 1738 and New York law, the Second Circuit, in a 2-1 decision, reversed. First, the court noted that Congress, in Section 1738, has specifically required all federal courts to give preclusive effect to state court judgments whenever the courts of the State from which the judgments emerged would do so. Kelleran, supra, 825 F.2d at 694, citing Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (parallel citations omitted). Turning then to New York law, the Second Circuit held that the time to contest the default judgment had passed:
In New York, when a party defaults by failure to answer and the court orders an inquest as to damages, the defaulting litigant may not further contest the liability issues. Amusement Business Underwriters v. American International Group, 66 N.Y.2d 878, 498 N.Y.S.2d 760, 762, 489 N.E.2d 729, 731 (1985), Rokina Optical Co. v. Camera King, Inc., 63 N.Y.2d 728, 480 N.Y.S.2d 197, 198-99, 469 N.E.2d 518, 519-20 (1984), Metropolitan Property and Liability Insurance v. Cassidy, 127 Misc.2d 641, 486 N.Y.S.2d 843, 847 (N.Y.Sup.Ct.1985).
*181 Kelleran, supra, 825 F.2d at 694. The majority noted that the bankruptcy court was thus bound to the liability determination of the state court unless an exception existed to prevent operation of the judgment's preclusive effect. Four exceptions exist which allow a bankruptcy court to look beyond a state court judgment: (1) where the judgment was procured by fraud or collusion, Margolis v. Nazareth Fair Grounds and Farmers Market, 249 F.2d 221, 223-24 (2d Cir.1957); (2) where it is necessary to determine whether the state judgment involved fraud and was thus nondischargeable, Brown v. Felsen, 442 U.S. 127, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979); (3) where the rendering court lacked jurisdiction, Heiser v. Woodruff, 327 U.S. 726, 66 S.Ct. 853, 90 L.Ed. 970 (1946); and (4) where it is necessary for the court to determine the amount of a tax, fine or penalty under 11 U.S.C. Section 505, In re Buchert, 69 B.R. 816 (Bankr.N.D.Ill.1987). In Kelleran, the Second Circuit did not find any of these exceptions applicable. Consequently, the state court judgment was afforded full faith and credit, and preclusive effect was given to the state court judgment.
The above discussion illustrates the mandate this Court is bound to follow: in determining whether Section 1738 requires preclusive effect to be given a state court default judgment, we are required to determine whether the judgment is a lawfully obtained Missouri Court judgment. If the Missouri Courts would give the judgment preclusive effect, then we are obligated to do so as well.
A. Missouri Law
In Missouri, the procedure for entry of default judgments is set forth in V.A.M.R. 74.05. Section (a) of the rule explains that an interlocutory default may be entered against a party from whom a judgment for affirmative relief is sought if the party fails to plead or defend. The next paragraph, section (b), adds that after entry of an interlocutory order of default, a default judgment may be entered and damages and relief may be assessed and awarded.
This Court interprets Rule 74.05 to mean that if the party in default did not motion to have the judgment vacated within one year,[6] and thereafter have the judgment vacated, the judgment is final under Missouri law.[7]
In his memorandum in support of creditor's claims, counsel for claimants notes that both the Holiday Shores Property Owner's Association and the Attorney General for the State of Missouri attempted to set aside the state court default judgments. These efforts were unsuccessful. Attached to each claim challenged herein is a copy of the state court default judgment upon which the claim is founded. Having *182 been authenticated as based on valid state court judgments, these final judgments are entitled to full faith and credit before this Court. The Trustee has not offered evidence that the default judgments entered against the debtor are anything other than final state court judgments. The Trustee has not presented any statement of facts or arguments of law in support of the argument that the state court judgments should not be given preclusive effect.
Absent any facts in the record to show that the default judgments entered against the debtor were vacated in the manner required by Missouri law, this Court finds that the default judgments entered on behalf of the claimants constitute final state court judgments entitled to full faith and credit pursuant to 28 U.S.C. Section 1738.
While this Court adheres to the principle that it is required to give full faith and credit to claimant's state court default judgments under the analysis above, it should be noted that the Supreme Court has expressly stated that federal courts are also required to give final state court judgments preclusive effect under the doctrine of res judicata. Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). See also, Insurance Co. of North America v. Bay, 784 F.2d 869 (8th Cir. 1986). (Holding state court default judgment is not subject to collateral attack in federal court). Applying the doctrines of res judicata and collateral estoppel to state court judgments tempers the federal government's relationship with the states by promoting harmony between them.[8] This comity of sovereigns has been recognized as a bulwark of the federal system. Allen v. McCurry, supra, 449 U.S. at 96, 101 S.Ct. at 415, citing Younger v. Harris, 401 U.S. 37, 43-45, 91 S.Ct. 746, 750-51, 27 L.Ed.2d 669 (1971). The Supreme Court has required application of res judicata in this manner via the direction of Section 1738. American Surety Co. v. Baldwin, 287 U.S. 156, 53 S.Ct. 98, 77 L.Ed. 231 (1932) (Constitution and Act of 1790, now Section 1738, mandates res judicata effect be given by federal courts to state court judgments). It is probable that preclusive effect would be given to the judgments here in question under a res judicata analysis. However, this Court need not engage in such an analysis due to our conclusion that it is proper to afford the judgments in question full faith and credit as final state court default judgments pursuant to the applicable Missouri procedural rules discussed above.
CONCLUSION
Generally, a federal bankruptcy court must afford full faith and credit to a valid state court judgment to the extent that the rendering state would do so. Under Missouri law, the default judgments entered against the debtor on behalf of the claimants herein are valid, final judgments insofar as the debtor failed to have them vacated through the Missouri statutory framework. Thus, the claims of Dam Red-E-Mix, Inc., G.J. Harms, Inc. and Kenneth Steele Construction, Inc. based on these judgments are final determinations regarding the debtor's liability for these claims and the amounts of such liability. The Court again cautions that any issue as to any potential liens created thereby is not addressed herein. The only issue reached herein is that the objections of the Trustee to the claims are DENIED and said claims are ALLOWED as unsecured claims in the estate.
The foregoing Memorandum Opinion constitutes Findings of Fact and Conclusions of Law as required under Rule 7052, Rules of Bankruptcy.
SO ORDERED.
NOTES
[1] Though Dam Red-E-Mix is now known as "Lake Ozark Construction Industries", any reference herein to it will specifically use its former name.
[2] Creditor's claims in the state herein are based on the following state court default judgments: Kenneth Steele Construction, Inc. v. Comp-Tech Companies, Inc., et al., CV186-83CC; Dam Red-E-Mix, Inc., v. Comp-Tech Companies, Inc., et al., CV186-256-CC; Dam Red-E-Mix Inc. v. Comp-Tech Companies, Inc., et al., CV186-254CC; Kenneth Steele Construction v. Comp-Tech Companies, Inc. et al., CV186-83CC; Dam Red-E-Mix, Inc. v. Comp-Tech Companies, Inc., et al., CV186-256CC; G.J. Harms and Associates, Inc. v. Lake Club Cafe, et al., CV186-466CC; G.J. Harms and Associates, Inc. v. Holiday Interval, Inc., et al., CV186-439CC; in the Circuit Court, Camden County, Missouri.
[3] See, Farrad, Record of the Federal Convention 176 (Journal), 177 et. seq. (Madison) (1911), and Nadelmann, Full Faith and Credit To Judgments and Public Acts, A Historical-Analytical Reappraisal, 56 Mich.L.Rev. 33 (1957).
[4] "Full Faith and Credit" shall be given in each state to the public Acts, Records, and Judicial Proceedings of every other state. And the Congress may by general laws prescribe the manner in which such Acts, Records and Proceedings shall be proved, and the effect thereof.
[5] The Act of May 26, 1790 was amended by R.S. Section 905, 28 U.S.C. Section 687. Section 687 was revised by the Act of June 25, 1948, 62 Stat. 947 (1948) which created Section 1738.
[6] Section (c) describes when a default judgment may be set aside:
Upon motion stating facts constituting meritorious defense and for good cause shown, an interlocutory order of default or a default judgment may be set aside. The motion shall be made with a reasonable time not to exceed one year after entry of the default judgment. Good cause includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process. An order setting aside an interlocutory order of default or a default judgment may be conditioned on such terms as are just, including a requirement that the party in default pay reasonable attorney fees and expenses incurred as a result of the default by the party who requested the default.
[7] Rule 74.05 was adopted May 22, 1987 and went into effect January 1, 1988. At the time the default judgments in question herein were entered against the debtor, Missouri procedure governing review of final state court default judgment was codified in V.A.M.R. sections 74.12 and 74.13. Rule 74.12 allowed the party in default to appeal for good cause provided the petition was brought within one year after serving the defendant with notice of the appeal. Section 74.14 added that if a petition for review is not filed within three years after the final default judgment was entered, the default judgment was absolute.
Former Rule 74, entitled "Judgments, Orders and Proceedings Thereon", which consisted of subdivisions 74.01 to 74.79, was repealed on January 1, 1988. Review of the record before this Court shows that the judgments entered against the debtor are final judgments under Missouri law under application of either the old or new Missouri default judgment procedures. No evidence to the contrary has been presented to this Court. These judgments, being final in nature, are therefore not subject to collateral attack in this forum and are entitled to the full range of credit which would be afforded them under the laws of the State of Missouri.
[8] This relationship between the national government and each of the separate state governments, commonly referred to as "Our Federalism", is perhaps best explained by Justice Black:
What the concept does represent is a system in which there is sensitivity to the legitimate interests of both State and National Governments, and in which the National Government, anxious though it may be to vindicate and protect federal rights and federal interests, always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the states.
Younger v. Harris, 401 U.S. at 44, 91 S.Ct. at 750.
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237 F.3d 1168 (9th Cir. 2000)
DAN MARIUS ANDREIU, Petitioner,v.JANET RENO, Attorney General, Respondent
No. 99-70274
UNITED STATES COURT OF APPEAL FOR THE NINTH CIRCUIT
Filed December 27, 2000
INS No. Aoh-cqn-rpy
ORDER
BEFORE: SCHROEDER, Chief Judge.
1
Upon the vote of a majority of non recused regular active judges of this court1, it is ordered that this case be reheard by the en banc court pursuant to Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to this court or any district court of the Ninth Circuit, except to the extent adopted by the en banc court.
Note:
1
Judge Fisher was recused.
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