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765 F.2d 149
Mahoneyv.Matlin
84-1866
United States Court of Appeals,Ninth Circuit.
6/5/85
1
N.D.Cal.
AFFIRMED IN PART, VACATED IN PART AND REMANDED
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273 F.3d 542 (3rd Cir. 2001)
HANY MAHMOUD KIARELDEEN,v.JOHN ASHCROFT, ATTORNEY GENERAL; IMMIGRATION AND NATURALIZATION SERVICE; PAUL SCHMIDT, CHAIR, BOARD OF IMMIGRATION APPEALS; KEVIN D. ROONEY, ACTING COMMISSIONER, IMMIGRATION AND NATURALIZATION SERVICE; ANDREA QUARANTILLO, DISTRICT DIRECTOR, NEWARK, INS; RALPH GREEN, WARDEN HUDSON COUNTY CORRECTIONAL CENTER, APPELLANTS
No. 00-1823
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Submitted under Third Circuit LAR 34.1(a) September 10, 2001Filed December 5, 2001
Appeal from the United States District Court for the District of New Jersey District Judge: William H. Walls (D.C. Civil No. 99-03925)[Copyrighted Material Omitted]
Stuart E. Schiffer, Acting Assistant Attorney General, Michael P. Lindemann, Assistant Director, Douglas E. Ginsburg, Attorney, Lyle D. Jentzer, Attorney, Office of Immigration Litigation Civil Division, Department of Justice P.O. Box 878, Ben Franklin Station Washington, D.C. 20044, and James B. Clark, III Office of United States Attorney 970 Broad Street Room 700 Newark, N.J. 07102, for Appellants.
David D. Cole Counsel, Center for Constitutional Rights c/o Georgetown University Law Center 600 New Jersey Ave. NW Washington, D.C. 20001, Nancy Chang Center for Constitutional Rights 666 Broadway -- 7th Floor New York, NY 10012. Regis Fernandez 744 Broad Street Suite 1807 Newark, N.J. 07102, and Houeida Saad Blue Cross and Blue Shield Association 1310 G Street, NW Washington, D.C. 20005, for Appellee.
Daniel J. Popeo Richard A. Samp Washington Legal Foundation 2009 Massachusetts Avenue, NW Washington, D.C. 20036. Washington Legal Foundation; U.S. Representatives Sherwood Boehlert, J.D. Hayworth, Lamar Smith, and John E. Sweeney; U.S. Senator Jesse Helms; Allied Educational Foundation; Stephen Flatow; Grand Lodge Fraternal Order of Police; and the Jewish Institute For National Security Affairs as Amici Curiae in support of Appellants Seeking Reversal.
Before: Mansmann, Rendell and Aldisert, Circuit Judges.
OPINION OF THE COURT
Aldisert, Circuit Judge
1
In the course of proceedings to remove Appellee Hany Mahmoud Kiareldeen, an ethnic Palestinian and Israeli citizen, from the United States, the Immigration and Naturalization Service ("INS") relied on classified evidence obtained by the FBI's Joint Terrorism Task Force. This evidence suggested that Appellee was a member of a terrorist organization, was involved in the 1993 bombing of the World Trade Center and had made threats against Attorney General Janet Reno.
2
After numerous administrative hearings, stays and appeals, the district court granted Kiareldeen a writ of habeas corpus, reasoning that the INS had not sufficiently proved its case against him to justify its actions during removal proceedings. The court later awarded him $110,743.06 in attorney fees under the Equal Access to Justice Act ("EAJA"), determining that the INS's detention, and litigation in support of the detention, were not substantially justified. The Attorney General and the INS now appeal the grant of attorneys' fees. We reverse the judgment.
3
The EAJA provides that "a court shall award to a prevailing party other than the United States fees and other expenses... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. SS 2412(d)(1)(A); see also Comm'r, INS v. Jean, 496 U.S. 154, 159-160 (1990). The government must meet this threshold twice. First, it must independently establish that the agency action giving rise to the litigation was substantially justified. Second, it must establish that its litigation positions were substantially justified. See id. See also Natural Resources Defense Council, Inc. v. EPA, 703 F.2d 700, 708 (3d Cir. 1983). The principal argument advanced by the government is that its position during removal proceedings was substantially justified. We hold that it was, and reverse the district court's grant of attorneys' fees.
4
Although the government originally took the position that the district court lacked jurisdiction to hear this case, that court assumed jurisdiction under 28 U.S.C. S 2241. We have jurisdiction to review the government's appeal of the district court's final order granting attorneys' fees pursuant to 28 U.S.C. S 1291.
5
This court reviews a district court's determination of no substantial justification in an EAJA suit for abuse of discretion. See Morgan v. Perry, 142 F.3d 670, 682-683 (3d Cir. 1998) (citing Pierce v. Underwood, 487 U.S. 552, 558- 563 (1988)); cert. denied, 525 U.S. 1070 (1999). This court will not interfere with a district court's exercise of discretion "unless there is a definite and firm conviction that the court... committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors." Morgan, 142 F.3d at 683.
6
However, we may find an abuse of discretion "when no reasonable person would adopt the district court's view" or "when the district court's decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact." Id. at 682-683. This court will also "review an award [of attorneys' fees] de novo insofar as it rests on conclusions of law, such as an interpretation of the statutory terms that define eligibility for an award." Nat'l Ass'n of Mfrs. v. Dep't of Labor, 159 F.3d 597, 599 (D.C. Cir. 1998) (citing Love v. Reilly, 924 F.2d 1492, 1493 (9th Cir. 1991)); see also Friends of Boundary Waters Wilderness v. Thomas, 53 F.3d 881, 885 (8th Cir. 1995) (holding that when the abuse of discretion standard is applied in an EAJA case, the district court's conclusions of law are still reviewed de novo).
I.
7
Kiareldeen entered the United States on a student visa on April 27, 1990. He then violated the specific terms of his visa by remaining in the United States after completing his studies in 1994. On March 26, 1998, the INS served him with a Notice to Appear charging that he was removable under S 237(a)(1)(C)(i) of the Immigration and Nationality Act ("INA") for failing to comply with the terms of his visa. The service ordered him held without bond pending the outcome of his deportation hearing.
8
On April 27, 1998, an immigration judge denied bond and scheduled a removal hearing. On May 22, 1998, Kiareldeen conceded that he violated the terms of his visa, and then sought an adjustment of status based upon INA S 245 (marriage to a United States citizen). The INS resisted the adjustment of status with evidence that Kiareldeen had filed a false birth certificate with the immigration judge. The INS also submitted classified evidence to the immigration judge, in camera and ex parte, alleging that (1) Kiareldeen was a member of a foreign terrorist organization, (2) he was involved in a meeting planning the 1993 attack on the World Trade Center one week prior to the actual attack, at which a suicide bombing was discussed, and (3) he later threatened to kill Attorney General Janet Reno for her role in convicting those responsible for the 1993 bombing of the World Trade Center.
9
The INS provided Kiareldeen with several unclassified summaries of the classified evidence of the Federal Bureau of Investigation ("FBI"). The summary dated July 29, 1998, stated that the information was obtained by the Joint Terrorism Task Force, an FBI-supervised squad with detailed representation from numerous law enforcement agencies that work together on terrorism matters in the Newark, New Jersey area. The summary stated also that the information gathered was foreign intelligence information based on multiple sources, which the FBI considered to be reliable, and that the FBI had taken "additional steps to test the veracity of the source reporting the threat against the Attorney General." App. Vol. II at 25- 28. It emphasized that the reliability of the sources "is of fundamental concern to the FBI" and that the characterization of the reporting "is controlled by guidelines set forth in the National Foreign Intelligence Program Manual." Id. at 25. Finally, it explained that this type of information regarding terrorist investigations is "classified to protect against disclosure that would permit a terrorist or suspected terrorist organization, group, or individual to avoid preventive or detection measures, or would reveal FBI or other intelligence agency sources and methods by which such information is obtained." Id. at 26.
10
Kiareldeen responded to the accusations with character witness testimony from family and friends, as well as other evidence seeking to rebut the claims in the unclassified summaries. On April 2, 1999, the immigration judge granted his application for adjustment of status, awarded conditional permanent resident status and released him on bail. That same day, the INS appealed the decision to the Board of Immigration Appeals ("Board"), which then issued a stay of the release order.
11
Kiareldeen appealed the temporary stay, but the Board denied the motion. It stated that Kiareldeen's "use of a fraudulent birth certificate in conjunction with his application for adjustment of status... [is a] serious matter... [which] casts doubt on [Kiareldeen's] credibility and on the credibility of the evidence he submitted." Id. at 62. The Board further found that the INS was likely to prevail on its appeal, and that "there [are] sufficient reason[s] to believe that the respondent would be a threat to the national security... such that we find the respondent ineligible for bond." Id. Kiareldeen also filed a petition for a writ of habeas corpus in the district court challenging the government's use of classified evidence to detain him, which was also denied.
12
On October 15, 1999, a separate panel of the Board issued a decision on the merits of the case granting the adjustment of status. Because of this, the prior Board panel lifted the stay on the release order and bond appeal. On October 20, 1999, the district court issued an Opinion and Order finding 8 U.S.C. S 1229a(b)(4)(B) unconstitutional as applied and ordering Kiareldeen's release. See Kiareldeen v. Reno, 71 F. Supp. 2d 402, 414 (D.N.J. 1999). It held that Kiareldeen's due process rights were violated by the government's reliance on classified information, which denied him both meaningful notice and an opportunity to confront the evidence. Later that day, the Board panel considering his bond ordered his release.
13
The following day, the INS filed a notice of appeal and sought an emergency stay from this court. A single judge issued a stay of execution pending further action by a motions panel. On October 25, 1999, the INS released Kiareldeen, withdrew its stay motion and decided not to pursue further appeals on the merits of the habeas corpus decision. On October 28, 1999, we denied the INS's motion to vacate the district court decision.
14
In addition to ordering Kiareldeen's release, the district court also ordered the government to pay attorneys' fees and costs. See id. at 419. The court later vacated this part of the order, after which Kiareldeen petitioned for fees and costs under the EAJA. See generally 28 U.S.C. S 2412. On April 11, 2000, the court ordered the government to pay Kiareldeen $110,743.06 in attorneys' fees and costs. See Kiareldeen v. Reno, 92 F. Supp. 2d 403, 409 (D.N.J. 2000). The government now appeals the decision to award fees, arguing that the district court abused its discretion in determining that there was no substantial justification for the INS's actions against Kiareldeen.
II.
15
We vigorously emphasize that the issue before us is solely the grant of attorneys' fees and costs. We are not reviewing the merits of the decisions in the administrative proceedings or in the district court. It is necessary to make this strong statement because the tenor of the briefs submitted by the parties seems to concentrate on the merits of the decision granting the writ of habeas corpus, instead of on the much more limited issue of the attorneys' fee award. Our responsibility, therefore, is extremely limited. We must review the record and determine whether, in opposing Kiareldeen's various contentions in the removal and habeas corpus proceedings, "the position of the United States was [not] substantially justified." 28 U.S.C. SS 2412(d)(1)(A).
A.
16
The government argues first that it was justified in seeking Kiareldeen's removal from the United States because of the evidence presented by the FBI's Joint Terrorism Task Force. This evidence alleged that Kiareldeen was a member of a foreign terrorist organization, that he was involved in a meeting planning the 1993 bombing of the World Trade Center one week prior to the actual attack and that he later threatened to kill Attorney General Janet Reno for her role in convicting those responsible for the bombing. In prosecuting its case, the government relied on the alleged statements of Nidal Ayyad and Sheikh Omar Abdel Rahman in order to implicate Kiareldeen in the 1993 bombing.
17
The major position asserted by Kiareldeen in the habeas corpus proceeding was that he had been unlawfully detained by the INS on the basis of classified information that was not disclosed to him for national security reasons. The government contends that it had a duty to oppose Kiareldeen's position challenging the constitutionality of 8 U.S.C. S 1229a(b)(4)(B) as it was applied to him. The statute provides in relevant part:
18
The alien shall have a reasonable opportunity to examine the evidence against the alien, to present evidence on the alien's own behalf, and to cross- examine witnesses presented by the Government but these rights shall not entitle the alien to examine such national security information as the Government may proffer in opposition to the alien's admission to the United States or to an application by the alien for discretionary relief under this chapter.
19
8 U.S.C. S 1229a(b)(4)(B).
B.
20
Kiareldeen argues that his detainment was unlawful because it was based solely upon classified evidence. He argues that he was deprived of the "most basic elements of due process--meaningful notice of the evidence used against him and an opportunity to confront it." Appellee's Brief at 18-19. He also argues that "[t]he lack of substantial justification for the government's pre-litigation conduct is further buttressed by the exclusively hearsay character of the evidence it relied upon to detain Kiareldeen." Id. at 24. Kiareldeen further argues that he was not challenging the constitutionality of a statute, but simply the constitutionality of applying 8 U.S.C. S 1229a(b)(4)(B) to his particular case.
21
We are persuaded that Appellee's contentions, whatever force they may have had in influencing the ultimate administrative decisions and the district court judgment, are insufficient to demonstrate that the government's position either before or during litigation proceedings were not substantially justified.
III.
22
As the government's arguments are fact specific, we find it useful to consider the Appellee's contentions first.
A.
23
Kiareldeen vigorously argues that his detention, based primarily upon classified evidence, denied him the due process rights of meaningful notice and opportunity to respond. However, the favorable outcomes in both the administrative and district court proceedings severely dilute the efficacy of this contention. Kiareldeen was provided with several unclassified summaries of the information the INS had submitted to the immigration judge. Though these summaries were not highly fact-specific, ensuring that neither the FBI's sources nor national security were compromised, they did provide him with the "who," "what," "when" and "where" of the allegations against him. Armed with this information, he then presented a considerable amount of live testimony and documentary evidence to the accusations.
24
These unclassified summaries were apparently informative enough that he was even able to surmise the identity of one of the FBI's informants--his ex-wife, an individual who was "a potentially crucial source of government information." Kiareldeen v. Reno, 92 F. Supp. 2d. at 408. She had previously levied allegations of domestic violence, child abuse and terrorism against him. Because she now refused to answer Kiareldeen's questions in court, ostensibly out of fear for her own safety, the court offered him the opportunity to submit written interrogatories to her. Kiareldeen chose not to do so.
25
Although Kiareldeen argues that the information provided him was not detailed enough to adequately respond, the result obtained from the hearings belies that claim. In the end, he mounted a successful defense to the government's case, winning his case at both the administrative and district court levels. He was released from detention, and then was granted an adjustment of status. In light of this favorable outcome, it seems rather disingenuous to now assert that the classified summaries the government provided were insufficient to adequately respond to the allegations.
B.
26
Kiareldeen argues that the government denied him due process because it relied on hearsay evidence without first establishing that the original declarants were unavailable for testimony. Putting aside what seems to be obvious--it is difficult to claim a deprivation of due process of law when one has been totally victorious in the various administrative and judicial proceedings--the simple response to this contention is that hearsay evidence is, in fact, admissible in removal proceedings. Though the hearsay nature of evidence certainly affects the weight it is accorded, it does not prevent its admissibility in immigration cases. See Cunanan v. INS, 856 F.2d 1373, 1374 (9th Cir. 1988); Martin-Mendoza v. INS, 499 F.2d 918, 921 (9th Cir. 1974); Matter of Grijalva, 19 I. & N. 713, 721-722 (BIA 1988). In INS v. Lopez-Mendoza, 468 U.S. 1032 (1984), the Court recognized that a hearsay document (INS Form I-213) typically constitutes the exclusive basis for a decision made in a removal proceeding.
C.
27
Although Kiareldeen now insists that his case did not challenge the constitutionality of any statute, his habeas petition made the following assertions: (1) his detainment without bond, which was based on classified evidence, was not authorized by the INA; (2) his detention violated the Due Process Clause of the Constitution because it was based on classified evidence, and thus "deprived him of adequate notice and a meaningful opportunity to defend himself "; and (3) his detention violated the Fifth Amendment to the Constitution because the INS failed to produce a witness. We agree with the government that in this light, Kiareldeen's allegations that he did not "challenge the facial constitutionality of any statute" are somewhat specious. Appellee's Brief at 26.
28
Section 1229a(b)(4)(B) specifically denies an alien the opportunity "to examine such national security information as the Government may proffer in opposition to the alien's admission to the United States or to an application by the alien for discretionary relief..." Although bond and deportation proceedings are adjudicated separately, pursuant to 8 C.F.R. S 3.19(d), "[d]etention is necessarily a part of [the] deportation procedure." Carlson v. Landon, 342 U.S. 524, 538 (1952). Because Kiareldeen's brief challenges the general use of classified information, his assertions necessarily challenge the constitutionality of the federal statute. We conclude that the Justice Department is duty- bound to defend what Congress has enacted, and was therefore substantially justified in defending the constitutionality of this statute.
IV.
29
We turn now to the government's argument that because the "position of the United States was substantially justified," the award of attorneys' fees should be reversed. 28 U.S.C. SS 2412(d)(1)(A), (d)(2)(D).
A.
30
The government argues that, as a general rule, defense of a congressional statute "will usually be substantially justified." League of Women Voters of California v. F.C.C., 798 F.2d 1255, 1259 (9th Cir. 1986); see also Grace v. Burger, 763 F.2d 457, 458 n.5 (D.C. Cir. 1985) (explaining that Congress has a duty to self-police its measures for compatibility with the Constitution, and thus situations in which its defense of a statute is not substantially justified should be exceptional).
31
This general rule is a product of two constitutional norms: (1) the Executive Branch has an obligation to "take Care that the Laws be faithfully executed," U.S. Const., art. II, S 3, and (2) those laws enjoy a presumption of constitutionality in court. See Rostker v. Goldberg, 453 U.S. 57, 64 (1981). In enacting the EAJA, it is implausible that Congress intended to penalize the government for defending the constitutionality of its own enactments through the imposition of attorney fee liability.
32
The government argues that it has a duty to defend the constitutionality of statutes, including amendments to the INA, which Congress enacted in 1996. The INA governs the procedure used by the INS in removal proceedings. It declares that an alien's statutory right to examine the evidence against him in a removal proceeding does not entitle him "to examine such national security information as the Government may proffer in opposition to the alien's admission to the United States or to an application by the alien for discretionary relief under [the Act]." 8 U.S.C. S 1229a(b)(4)(B). This particular provision of the INA codified two previous cases which upheld the use of classified evidence to both oppose admissions and deny discretionary relief applications. See Shaughnessy v. United States ex rel. Mezei, 345 U.S. 206 (1953) (holding that the Attorney General cannot be compelled to disclose evidence used to exclude an alien); United States ex rel. Knauff v. Shaughnessy, 338 U.S. 537 (1950) (upholding a regulation providing for summary exclusion without a hearing for an alien deemed to be a security risk).
33
Kiareldeen responds to the government's argument by challenging the constitutionality of the use of classified evidence generally. He emphasizes that "[n]o court that has subjected the INS's use of secret evidence to the modern due process analysis set forth in Mathews v. Eldridge, 424 U.S. 319 (1976), has found its constitutionality even to be a close question." Appellee's Brief at 15. He relies on two decisions for the proposition that the INS's use of classified evidence is unconstitutional per se. See Rafeedie v. INS, 880 F.2d 506 (D.C. Cir. 1989); American-Arab Anti-Discrimination Comm. v. Reno, 70 F.3d 1045 (9th Cir. 1995) ("AADC").1 He emphasizes also that in both of these cases the INS abandoned appeals available to it, and was later ordered to pay attorneys' fees under the EAJA.
34
Although this addresses the merits of the district court's decision, it is simply beside the point. The propriety vel non of the district court's treatment of this constitutional argument is not before us, nor is it relevant to the appeal at hand. Because the appeal from the habeas corpus decision was withdrawn, that issue is still an open question in this court. What is relevant, however, is whether the government was substantially justified in defending the constitutionality of the statute Kiareldeen attacks. We hold that the government was obliged to do exactly that.
B.
35
The INS provided Kiareldeen with several unclassified summaries of the classified evidence. The summary provided on July 29, 1998 stated that it was comprised of information obtained by the FBI's Joint Terrorism Task Force. It explained that this information concerning terrorist investigations is "classified to protect against disclosure that would permit a terrorist or suspected terrorist organization, group, or individual to avoid preventive or detection measures, or would reveal FBI or other intelligence agency sources and methods by which such information is obtained." App. Vol. II at 26.2 Indeed, with each subsequent summary the government provided Kiareldeen, it appears to have been making a concerted effort to divulge as much information as possible to assist him in his defense, without disclosing information in a way that could potentially compromise national security.
36
Information contained in the unclassified summaries was ultimately sufficient to assist Kiareldeen in mounting a defense to the allegations. However, the same information proved insufficient to both the immigration judge and the district court. Although accepting the JTTF summaries as "expert evidence," the immigration judge determined that the INS's lack of testimony, both public and in camera, was insufficient to counter Kiareldeen's evidence. App. Vol. II at 43. The district court, however, attacked the credibility of the summaries directly, describing them as "lacking in either detail or attribution to reliable sources." Kiareldeen v. Reno, 71 F. Supp. 2d at 414. That the FBI would be unwilling to compromise national security by revealing its undercover sources, is both understandable and comforting. That a court would then choose to criticize the FBI for being unwilling to risk undermining its covert operations against terrorists is somewhat unnerving.
37
The district court also criticized the government for its apparent unwillingness to also bring criminal charges against Kiareldeen.3 It stated that "even the government does not find its own allegations sufficiently serious to commence criminal proceedings." Id.
38
This statement illustrates both a simplistic and entirely uninformed view of the processes by which the Justice Department investigates and deals with suspected terrorists within our borders. It completely disregards the often complex determinations involved in releasing confidential counter-terrorism intelligence into the public arena through its introduction into both administrative hearings and court proceedings. Such a criticism implies that the government may only utilize information against an individual in a civil context, such as in deportation procedures, if it also intends to commence criminal proceedings against that same individual. Such a fettering of the Executive Branch has no support in either case law or statute.
39
In determining when the government's position in immigration matters is substantially justified, especially when dealing with potential terrorists, it is improper to evaluate its position by using traditional standards of proof used in both administrative and court proceedings. "The function of a standard of proof, as that concept is embodied in the Due Process Clause and in the realm of fact finding, is to `instruct the fact finder concerning the degree of confidence our society thinks he should have in the correctness of the factual conclusions for a particular type of adjudication.' " Addington v. Texas, 441 U.S. 418, 423 (1979) (quoting In re Winship, 397 U.S. 358, 370 (1970)).
40
Thus, at one end of the spectrum is the familiar burden of proof in most civil proceedings: preponderance of the evidence. At the other end is the standard of proof designed to exclude, as nearly as possible, the likelihood of an erroneous judgment in a criminal case: proof beyond a reasonable doubt. The intermediate standard, generally utilized in fraud or quasi-criminal matters, requires a higher standard of proof than mere preponderance of the evidence. This is the standard that the government must utilize in removal proceedings. See Woodby v. INS, 385 U.S. 276, 286 (1966) ("We hold that no deportation order may be entered unless it is found by clear, unequivocal, and convincing evidence that the facts alleged as grounds of deportation are true"). See also Ribeiro v. INS, 531 F.2d 179 (3d Cir. 1976). In ascending order, quantifying the amount of evidence required in various proceedings, these burdens of proof may also be expressed as degrees of belief. As one commentator has suggested, "the only sound and defensible hypotheses are that the trier, or triers, of facts can find what (a) probably has happened, or (b) what highly probably has happened, or (c) what almost certainly has happened."4
41
We are impelled to emphasize, yet again, that in considering the question of attorneys' fees, we do not determine whether the government was substantially justified based upon the result reached in the district court proceeding, or upon an inquiry into whether the government met its stated burden of proof. Substantial justification is measured on the basis of whether the government was justified in initiating the proceeding and going forward with the hearing before the immigration judge. To be substantially justified, the government's position need not be "correct", or even "justified to a high degree." Pierce v. Underwood, 487 U.S. 552, 565, 566 n.2 (1988). Rather, the government must simply have a "reasonable basis in both law and fact" or be "justified in substance or in the main -- that is, justified to a degree that could satisfy a reasonable person." Id. (internal quotation marks omitted).5 Whether the government was substantially justified, therefore, does not present the same question as that presented by the underlying merits of the case. The relevant legal question is "not what the law now is, but what the Government was substantially justified in believing it to have been." Id. at 561.
42
A court must not "assume that the government's position was not substantially justified simply because the government lost on the merits." Morgan v. Perry, 142 F.3d 670, 685 (3d Cir. 1998) (citation omitted); accord Pierce, 487 U.S. at 569 (reminding that the government "could take a position that is substantially justified, yet lose"); see also S. Rep. No. 96-253, at 7 (1979); H.R. Rep. No. 96- 1418, at 11 (1979), reprinted in 1980 U.S.C.C.A.N. 4984, 4990 (stating that the EAJA "should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing"); Clarke v. INS, 904 F.2d. 172, 175 (3d Cir. 1990) ("EAJA is a waiver of sovereign immunity, however, so it must be construed strictly in favor of the United States").
43
To hold otherwise would force lower level supervisors in anti-terrorist investigations to utilize a cost/benefit analysis in deciding which cases to pursue. Rather than simply pursuing individuals and groups against which the government had the strongest case, they might be reluctant to pursue any case in which a sizeable fiscal loss could result. This would act as a disincentive to faithfully execute all the laws, and could result in the government pursuing only those individuals and groups against whom it appeared to have an almost guaranteed chance of success. Looming large would always be the possibility that, in the event of a mishap by the government's attorney, the government could not only lose its case, it could also lose substantial taxpayer funds as well. Finally, the floodgates of EAJA cases would be opened, subjecting the government to a case similar to this one every time it was unsuccessful. This was certainly not Congress's intent in passing the EAJA, and thus the government's loss does not, ipso facto, manifest a lack of substantial justification.
44
On the basis of the declassified summary the government furnished to Kiareldeen, we are satisfied that there was ample substantial justification for the position adopted by the government in the habeas corpus proceeding. This is especially true considering the FBI's statement that: "Investigation of international terrorism is necessary to the national security. Counter terrorism investigations are primarily intended to prevent harm to U.S. persons and U.S. interests, but also are designed to prevent harm generally." App. Vol. II at 25-26.
45
Certainly, in investigating suspected terrorists in immigration matters, the government should not be held to a higher standard than required by Rule Three and Rule Four of the Federal Rules of Criminal Procedure. These rules state that an arrest warrant shall be issued only upon a written and sworn complaint (1) setting forth "the essential facts constituting the offense charged," and (2) showing "that there is probable cause to believe that [such] an offense has been committed and that the defendant has committed it." Fed. R. Crim. P. 3, 4. Additionally, the Fourth Amendment states that "... no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." U.S. Const. amend. IV. This amendment applies to arrest warrants as well as search warrants. Giordenello v. United States, 357 U.S. 480, 485-486 (1958).
C.
46
Moreover, we should be mindful of the public policy statements reflected by Congress in the 1996 amendment to the INA. Section 240 of the INA states that an alien is not entitled "to examine such national security information as the Government may proffer in opposition to the alien's admission to the United States or to an application by the alien for discretionary relief under [the Act]." 8 U.S.C. S 1229a(b)(4)(B). Additionally, on October 26, 2001, President Bush signed the USA Patriot Act of 2001, which was approved by Congress just days before its signing. This Act expanded the investigative powers of our law enforcement agencies. It states that it is designed "to deter and punish terroristic acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes."6
D.
47
We are not inclined to impede investigators in their efforts to cast out, root and branch, all vestiges of terrorism both in our homeland and in far off lands. As the Court has stated:Few interests can be more compelling than a nation's need to ensure its own security. It is well to remember that freedom as we know it has been suppressed in many countries. Unless a society has the capability and will to defend itself from the aggressions of others, constitutional protections of any sort have little meaning.
48
Wayte v. United States, 470 U.S. 598, 611-612 (1985). The district court, in its fact finding process, understandably felt shackled by the government's unwillingness to provide Kiareldeen the names and addresses of its counter- terrorism personnel, both in uniform and in civilian clothes. Nonetheless, the public fisc should not lightly be exposed to financial penalties when the war on terrorism is transferred from the domestic battlefield that our country has become, to the vacuum-sealed environment of a federal courtroom, with such civilized accouterments as burdens of proof and axioms of evidence.
49
We conclude also that the government clearly met the test of being "substantially justified" by drawing an analogy to the concept of probable cause. Inside the courtroom, the profound bundle of constitutional rights remains to protect the petitioners. And in immigration matters, the government may not always be able to prove its case by clear, convincing and unequivocal evidence, but this should never deter its assiduous search to weed out from our midst those who would destroy us. The Court has instructed that
50
probable cause requires only a probability or substantial chance of criminal activity, not an actual showing of such activity... In making a determination of probable cause the relevant inquiry is not whether particular conduct is "innocent" or "guilty," but the degree of suspicion that attaches to particular types of non-criminal acts.
51
Illinois v. Gates, 462 U.S. 213, 243-244 n.13 (1983).
52
The eerie, if not prescient, information that the Joint Terrorism Task Force assembled from its sources, must be evaluated in light of "the degree of suspicion that attaches to particular types of [activities]." Id. In light of the pummeling that the FBI received following the September 11th tragedy for not possessing sufficient intelligence materials, consider the following information revealed by its sources in 1998, dealing with a meeting at which Kiareldeen was allegedly present:
53
A source advised that approximately one week before the bombing of the World Trade Center (WTC) in New York, Kiareldeen was present at a meeting with several individuals who were talking about plans to bomb the WTC. The meeting took place at Kiareldeen's residence in Nutley, New Jersey. According to a source, Nidal Ayyad (Ayyad) was present at this meeting (Ayyad is a convicted co-conspirator in the WTC bombing). Ayyad did most of the talking about bombing the WTC as the others listened. Ayyad stated that he suggested to Sheikh Omsar Abdel Rahman (Rahman) that a suicide bombing should be attempted on the WTC. According to Ayyad, Rahman had another idea about bombing the WTC and stated that a suicide bombing was not appropriate.
54
App. Vol. II at 26.
55
On July 29, 1998, the Joint Terrorism Task Force had information that Ayyad, the convicted terrorist in the 1993 bombing of the World Trade Center, suggested a suicide bombing of the Center. This understandably created apprehension on the part of the Joint Terrorism Task Force, alerting the government to take all necessary action to investigate all leads and assure the defense of our nation. On September 11, 2001, slightly over two years after the government supplied this information to both the INS and the district court in this case, the convicted terrorist's suggestion became a reality. It is impossible to conjure up a "particular type[ ]" of activity, as mentioned in Gates, that would be more nefarious than that which happened on Black Tuesday. See Gates, 462 U.S. at 243 n.13. Such activity surely constitutes a quantum of suspicion justifying probable cause, as well as substantial justification for the government's conduct in this case.
56
For all these reasons, therefore, we find "that the position of the United States was substantially justified or that special circumstances make an award unjust," 28 U.S.C. S 2412(d)(1)(A), and therefore the district court erred in requiring it to pay Kiareldeen attorneys' fees.
57
* * * *
58
We have considered all contentions raised by the parties and conclude that no further discussion is necessary.
59
The judgment of the district court awarding attorneys' fees will be reversed.
NOTES:
1
Since vacated by the Court in Reno v. American-Arab Anti- Discrimination Committee, 524 U.S. 471 (1999).
2
The July 29, 1998 communication which the FBI provided Kiareldeen stated the following:
The information in this communication was obtained from multiple reliable sources who have provided reliable information in the past.
The Joint Terrorism Task Force (JTTF) is an FBI supervised squad with detailed representation from numerous law enforcement agencies that work jointly on terrorism matters in the Newark, New Jersey area.
This document contains information obtained by the Federal Bureau of Investigation pursuant to its investigatory powers as governed by the Attorney General Guidelines for FBI Foreign Intelligence Collection and Foreign Counterintelligence Investigations, dated June 8, 1995. These guidelines are established by the Attorney General to govern all investigations of international terrorism conducted by the FBI pursuant to Executive Order 12333.
The majority of information collected pursuant to these guidelines is foreign intelligence information and is classified national security information as defined by Executive Order 12958. Certain information which would otherwise be unclassified when standing alone, such as the fact that an organization has been designated by the United States Secretary of State as a terrorist organization, may require classification when combined with or associated with other unclassified or classified information. Additionally, when presented in a context that would reveal the FBI's investigative interest in certain individuals, organizations, or countries, information which would normally be unclassified may be properly classified.
Reliability of source information is of fundamental concern to the FBI as it becomes the intelligence base of FBI investigations. Characterization of FBI asset reporting is controlled by guidelines set forth in the National Foreign Intelligence Program Manual.
"National security" as defined in Executive Order 12958, section 1.1(a), refers to the national defense or foreign relations of the United States. Investigation of international terrorism is necessary to the national security. Counter terrorism investigations are primarily intended to prevent harm to U.S. persons and U.S. interests, but also are designed to prevent harm generally. In conducting counter terrorism investigations, the FBI seeks information dealing with, but not limited to: (1) individuals, groups, or organizations who are or may be engaged in terrorist activities; (2) recruitment of targets by individuals or organizations who are or may be engaged in terrorist activities; (3) the organizational structure of terrorist and suspected terrorist organizations or groups of individuals; (4) methods of procurement and training employed by terrorist and suspected terrorist organizations or groups and individuals; (5) operational and financial plans and techniques of terrorist and suspected terrorist organizations or groups and individuals, including fund-raising; (6) methods of communication by terrorist and suspected terrorist organizations or groups and individuals; and (7) information needed to protect the safety of any persons or organizations, including those who are targets, victims or hostages of international terrorist organizations. Collection of this and similar information is essential to the FBI's ability to identify and counteract threats to the national security. Non-public information collected pursuant to international terrorism investigations is classified to protect against disclosure that would permit a terrorist or suspected terrorist organization, group, or individual to avoid preventive or detection measures, or would reveal FBI or other intelligence agency sources and methods by which such information is obtained.
HANY KIARELDEEN is a native of Israel who was born in Zaytoun, in the Gaza Strip on January 30, 1968.
The JTTF of the FBI Newark Division developed information that Hany Kiareldeen is a suspected member of a terrorist organization. Information has disclosed Kiareldeen maintains relationships with other members and/or suspected members of terrorist organizations dedicated to committing acts of violence against the people of the United States or its allies.
A source advised that approximately one week before the bombing of the World Trade Center (WTC) in New York, Kiareldeen was present at a meeting with several individuals who were talking about plans to bomb the WTC. The meeting took place at Kiareldeen's residence in Nutley, New Jersey. According to a source, Nidal Ayyad (Ayyad) was present at this meeting (Ayyad is a convicted co-conspirator in the WTC bombing). Ayyad did most of the talking about bombing the WTC as the others listened. Ayyad stated that he suggested to Sheikh Omar Abdel Rahman (Rahman) that a suicide bombing should be attempted on the WTC. According to Ayyad, Rahman had another idea about bombing the WTC and stated that a suicide bombing was not appropriate.
Recently, a source advised [sic] Kiareldeen expressed a desire to murder Attorney general Janet Reno for her role in the conviction of those responsible for the bombing of the World Trade Center. The information developed indicates that Kiareldeen poses a credible threat [sic] Attorney General Reno and potentially others within the United States. A source advised [sic] Kiareldeen stated in the present of others that they, including himself, must kill Janet Reno. Furthermore, Kiareldeen stated that an additional person would assist in the murder of the Attorney General. The FBI took additional steps to test the veracity of the source reporting the threat against the Attorney general.
App.Vol. II at 25-27.
3
The district court makes the following categorical statements: "[T]he government's reliance on secret evidence violates the due process protection that the Constitution directs must be extended to all persons within the United States, citizens and resident aliens alike." Kiareldeen, 71 F. Supp. 2d. at 414; and the Due Process Clause requires searching scrutiny of "government actions taken against resident aliens such as Kiareldeen." Id. at 409. Through the period of his detention, Kiareldeen never possessed resident alien status. Rather, he was a deportable alien who was in this country illegally, having overstayed his student visa. This is a distinction with a difference.
"For reasons long recognized as valid, the responsibility for regulating the relationship between the United States and our alien visitors has been committed to the political branches of the Federal Government." Mathews v. Diaz, 426 U.S. 67, 81 (1976). " `[O]ver no conceivable subject is the legislative power of Congress more complete.' " Fiallo v. Bell, 430 U.S. 787, 792 (1977) (quoting Oceanic Steam Navigation Co. v. Stranahan, 214 U.S. 320, 339 (1909)). Thus, "in the exercise of its broad power over immigration and naturalization, `Congress regularly makes rules that would be unacceptable if applied to citizens.' " 430 U.S., at 792 (quoting Mathews v. Diaz, supra, at 79-80). Respondents do not dispute that Congress has the authority to detain aliens suspected of entering the country illegally pending their deportation hearings, see Carlson v. Landon, 342 U.S. 524, 538 (1952); Wong Wing v. United States, 163 U.S., at 235. And in enacting the precursor to 8 U.S.C. S1252(a), Congress eliminated any presumption of release pending deportation, committing that determination to the discretion of the Attorney General. See Carlson v. Landon, supra, at 538-540. Of course, the INS regulation must still meet the (unexacting) standard of rationally advancing some legitimate governmental purpose..."
Reno v. Flores, 507 U.S. 292, 305-306 (1993).
4
J.P. McBaine, Burden of Proof: Degrees of Belief, 32 Cal. L. Rev. 242, 245-247 (1944).
5
This court usually expresses this formulation in this manner: To establish reasonable justification, the government must show "(1) a reasonable basis in truth for the facts alleged; (2) a reasonable basis in law for the theory it propounded; and (3) a reasonable connection between the facts alleged and the legal theory advanced." See, e.g., Morgan v. Perry, 142 F.3d 670, 684 (3d Cir. 1998).
6
It bears note that H.R. 1266, entitled the "Secret Evidence Repeal Act of 2001," was introduced on March 28, 2001, by Representative David Bonier (D-MI) and was later referred to the Subcommittee on Immigration and Claims of the House Judiciary Committee. This Act, whose objective is to limit the government's use of classified evidence in cases such as Kiareldeen's, nevertheless would still permit such evidence to be used, inter alia, for "terroristic activity deportation." See 8 U.S.C. S 1229a(b)(4)(B). See H.R. 1266, 107th Cong. (2001).
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996 S.W.2d 270 (1999)
William CHRISTIAN, Robert Armstrong, Robinson Neblett, James Stephens, Christopher Krenn, and John Cheek, Individually and on Behalf of all others similarly situated, and Ralph Shoberg, Individually, Appellants,
v.
ICG TELECOM CANADA, INC.; ICG Telecom Group, Inc.; ICG Communications, Inc.; Zycom Corporation; Zycom Corporation; and Zycom Network Services, Inc., Appellees.
No. 01-98-00814-CV.
Court of Appeals of Texas, Houston (1st Dist.).
May 27, 1999.
Rehearing Overruled July 2, 1999.
*271 Alice Oliver-Parrott, David Burrow, Philip C. Brashier, Robin C. Gribbs, Houston, for appellant.
Jeffrey C. Alexander, Jean C. Frizzell, Barrett H. Reasoner. Scott A. Humphries, Houston, for appellee.
Panel consists of Justices HEDGES, NUCHIA, and EVANS.[*]
OPINION
ADELE HEDGES, Justice.
Appellants appeal from the trial court's interlocutory denial of certification of a class and subclass of minority shareholders on derivative claims. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(3) (Vernon Supp. 1999). We consider whether class certification is necessary to assert shareholder derivative claims. Concluding it is not, we affirm the order denying class certification.
Background
We follow the usual standard of review of orders concerning class certification. See Sun Coast Resources, Inc. v. Cooper, 967 S.W.2d 525, 529 (Tex.App.-Houston [1st Dist.] 1998, pet. dism'd w.o.j.).
In 1995, appellees, ICG Telecom Canada, Inc., ICG Telecom Group, Inc., and ICG Communications, Inc. (the ICG appellees), purchased a controlling interest in Zycom Corporation and its two subsidiaries (collectively Zycom), in which appellants owned minority stock equity interests. In April 1997, appellants sued appellees, alleging, among other things, that the ICG appellees had dumped Zycom shares on the market, reported gross revenues substantially below those dictated by accepted accounting methods, and mismanaged the affairs of Zycom. All appellants other than Ralph Shoberg *272 asserted derivative claims on behalf of Zycom based on fraud and breach of fiduciary duty.[1] Shoberg asserted only individual claims of common-law and securities fraud.
The Motion for Class Certification
All appellants asserting derivative claims sought to have a class and subclass certified of all Zycom shareholders, excluding appellees, who owned stock on March 1, 1994 and September 7, 1995. These appellants sought class certification only of their derivative claims by attempting to fulfill all requirements of the general class certification rule. After hearing the class certification motion, the trial court denied appellants' request for class certification. Appellants appeal that ruling.
The Jurisdictional Issue
In a separately filed motion, appellees challenge this court's jurisdiction to consider the appeal on the ground that the trial court's order was actually one striking appellants' derivative claims, not one refusing to certify a class. Appellees correctly point out that a party seeking relief from an order striking shareholder derivative claims does not have a statutory right to an interlocutory appeal. Stary v. DeBord, 967 S.W.2d 352, 353-54 (Tex.1998) (holding orders striking derivative claims are not tantamount to orders denying class certification and, therefore, are not appealable); compare TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(3) (Vernon Supp.1999). The Stary Court did not hold, however, that orders denying class certification of derivative claims were tantamount to orders striking derivative claims and, thus, unappealable. We disagree with appellees' categorization of the nature of appellants' motion and the trial court's order denying that motion. In this case, as distinguished from Stary, the trial court was not presented with and did not rule upon any motion by appellees to strike appellants' derivative claims. Here, the trial court was faced with only the issues presented by appellants' motion seeking class certification. Because the trial court's order was limited to denying appellants' request for class certification, appellants are entitled to bring an interlocutory appeal from that ruling.
Accordingly, we overrule appellees' motion to dismiss the appeal for want of jurisdiction.
The Class (and Derivative) Action Rule
Texas Rule of Civil Procedure 42, which governs class actions generally and derivative actions particularly, provides as follows:
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if: (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
Derivative Suit. In a derivative suit brought pursuant to Article 5.14 of the Texas Business Corporation Act, the petition shall contain the allegations (1) that the plaintiff was a record or beneficial owner of shares, or of an interest of a voting trust for shares at the time of the transaction of which he complains, or his shares or interest thereafter devolved upon him by operation of law from a person who was the owner at that time, and (2) with particularity, the efforts of the plaintiff to have suit brought for the corporation by the board of directors, or the reasons for not making any such efforts. The derivative suit *273 may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders similarly situated in enforcing the right of the corporation. The suit shall not be dismissed or compromised without the approval of the court, and notice in the manner directed by the court of the proposed dismissal or compromise shall be given to shareholders.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(1) the prosecution of separate actions by or against individual members of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
(3) where the object of the action is the adjudication of claims which do or may affect specific property involved in the action; or
(4) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the difficulties likely to be encountered in the management of a class action.
TEX.R. CIV. P. 42(a), (b).
The second paragraph in Rule 42(a), entitled "Derivative Suit," prescribes specific criteria governing the maintenance of shareholder derivative actions. In essence, a plaintiff seeking to maintain such an action must allege the following:
1. record or beneficial ownership of shares, or an interest in a voting trust for shares, at the time of the transaction or which thereafter devolved upon the party by operation of law from an owner at that time and
2. the efforts the party made to have the suit brought for the corporation by the board of directors, or the reasons for not making such efforts
This paragraph further states that the derivative action may not be maintained if "it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders similarly situated in enforcing the right of the corporation."
The Business Corporation Act
This derivative action is also governed by Texas Business Corporation Act article 5.14(b) (Vernon 1980), amended by Act of May 13, 1997, 75th Leg., R.S., ch. 375, § 30, 1997 Tex. Gen. Laws 1540-43.[2] This statute provides as follows:
*274 B. Prerequisites. A derivative suit may be brought in this State only if:
(1) The plaintiff was a record or beneficial owner of shares, or of an interest in a voting trust for shares, at the time of the transaction of which he complains, or his shares or interest thereafter devolved upon him by operation of law from a person who was such an owner at that time, and
(2) The initial pleading in the suit states:
(a) The ownership required by Subsection (1), and
(b) With particularity, the efforts of the plaintiff to have suit brought for the corporation by the board of directors, or the reasons for not making any such efforts.
The Nature of Derivative Actions
Shareholder derivative suits have been classified as a "per se" or "a species of" class action because the shareholder plaintiffs assert claims on behalf of all similarly situated shareholders. See Ford v. Bimbo Corp., 512 S.W.2d 793, 795 (Tex.Civ.App.-Houston [14th Dist.] 1974, no writ). The class action procedural rule, in apparent recognition of the representative nature of shareholder derivative claims, has periodically included a subsection relating to such claims. See TEX.R. CIV. P. 42(a), 4 Tex. B.J. 494 (1941, amended 1977); TEX.R. CIV. P. 42(a) (as amended, 1984); Stary, 967 S.W.2d at 353-54 (noting history of Rule 42). A shareholder plaintiff bringing a derivative claim must comply with both the requirements of the "Derivative Suit" provision of Rule 42(a) and with the requirements and procedures of Texas Business Corporation Act article 5.14(B) and (C).[3]See Eye Site, Inc. v. Blackburn, 796 S.W.2d 160, 162 n. 3, 162-63 (Tex.1990).
Derivative suits, however, differ from class actions generally. See Stary, 967 S.W.2d at 354; Ford, 512 S.W.2d at 795. In a derivative action, the plaintiffs seek recovery for the corporation; in a class action, they seek recovery for individual members of the class. See Wingate v. Hajdik, 795 S.W.2d 717, 718 (Tex.1990). Also, the derivative plaintiff need not show compliance with the commonality and typicality tests of Rule 42(a) subsections (2) and (3) because those requirements are inherently satisfied by the very nature of a derivative suiti.e., all shareholders are affected by and will benefit from the suit indirectlyand a derivative suit lies even if the plaintiff shareholder is the only one "similarly situated." See Blackburn, 796 S.W.2d at 162-63; DeBord v. Circle Y of Yoakum, Inc., 951 S.W.2d 127, 131 (Tex. App.-Corpus Christi 1997), rev'd on juris. grounds sub nom. Stary v. DeBord, 967 S.W.2d 352 (Tex.1998).
The Questions
This appeal presents two related questions: First, must a shareholder asserting derivative claims, in addition to making the allegations required by the Derivative Suit paragraph in Rule 42(a) and the provisions of the Business Corporation Act article 5.14, move affirmatively for class certification of such claims and prove the additional elements required for class actions generally under Rule 42(b)? Second, must the derivative shareholder also follow the general class action procedures set forth in Rule 42(c) through (f)?
We answer both these questions in the negative.
There has been considerable confusion regarding the "exact interplay" between the Rule 42 general class action provisions and Rule 42(a)/article 5.14 derivative actions. See, e.g., Bimbo, 512 S.W.2d at 795; *275 compare Huddleston v. Western Nat'l Bank, 577 S.W.2d 778, 780 (Tex.Civ.App.-Amarillo 1979 writ ref'd n.r.e.) with Zauber v. Murray Sav. Ass'n, 591 S.W.2d 932, 935-36 (Tex.Civ.App.-Dallas 1979), writ ref'd n.r.e., 601 S.W.2d 940 (Tex.1980) (per curiam); see also PATRICK LANIER, DENNIS B. HELMER, 3 TEXAS CORPORATIONS: LAW AND PRACTICE, Shareholders' Derivative Actions, § 122.01[3] (May 1991); 1, 11 WILLIAM V. DORSANEO III, TEXAS LITIGATION GUIDE, §§ 13.04[2], 162.03, 162.20[2][b], 162.51[3] (Aug.1995, Nov. 1998) (recommending that shareholders asserting derivative claims follow the procedures applicable to class actions generally).
A review of the history of Rule 42(a) suggests some possible reasons for this confusion. Until 1977, Rule 42(a) expressly referred to derivative claims, and a shareholder asserting derivative claims had to comply with all requirements of that rule. See TEX.R. CIV. P. 42(a), 4 Tex. B.J. 494 (1941, amended 1977); Bimbo, 512 S.W.2d at 795. From 1977 to 1984, all references to derivative suits were deleted from the rule. TEX.R.APP. P. 42(a), 40 Tex. B.J. 563 (1977, amended 1984). Because of this omission, several courts held that the 1977 version of Rule 42 did not apply to derivative suits and that only article 5.14 applied. See Atkinson v. Reid, 625 S.W.2d 64, 67 (Tex.App.-San Antonio 1981, no writ); Zauber, 591 S.W.2d at 935-36. But see Huddleston, 577 S.W.2d at 780. In 1984, the Texas Supreme Court reintroduced the derivative action language by inserting a second paragraph under Rule 42(a) specifically relating to derivative actions. See Blackburn, 796 S.W.2d at 162 n. 3 (explaining that the second paragraph was inserted "to resolve the question of whether Rule 42(a) controls derivative suits").
As recently amended, the Business Corporation Act article 5.14 now contains provisions that parallel the prerequisites of the Derivative Suit paragraph of Rule 42(a). However, the Business Corporation Act article 5.14 does not contain the procedural provisions of Rule 42(b) through (f), and, instead, it sets forth its own detailed procedures that apply only to derivative suits. See TEX. BUS. CORP. ACT ANN. art. 5.14(D)-(L) (Vernon Supp.1999). Accordingly, by enacting these recent amendments, the legislature evidently intended to establish a separate procedural system governing derivative actions brought pursuant to the statute.
The logic favoring such a separate system is inescapable. It serves no purpose to certify a class of similarly situated shareholders whose interests are already indirectly represented by the plaintiffs' mere bringing of the derivative suit. See Bimbo, 512 S.W.2d at 795; Stary, 967 S.W.2d at 354. Moreover, there are important differences in the pre-trial procedures relating to the different actions. In a general class-action proceeding, the plaintiffs, as moving parties, must affirmatively seek and obtain a ruling from the court certifying compliance with all classaction prerequisites set forth in Rule 42. In a shareholder derivative action, the plaintiffs need only plead the elements of such an action as set forth in Texas Business Corporation Act article 5.14 and the Derivative Suit paragraph of Rule 42(a). Unless affirmatively challenged by the defendants, the plaintiffs are entitled to maintain their derivative action based on their pleadings. See generally Dodson v. Kung, 717 S.W.2d 385, 390 (Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e.) (special exceptions); Wingate, 795 S.W.2d 717 (special exceptions); Atkinson, 625 S.W.2d 64 (motion to abate); Blackburn, 796 S.W.2d 160 (motion to dismiss); Bimbo, 512 S.W.2d 793 (motion to dismiss or to strike); DeWoody v. Rippley, 951 S.W.2d 935 (Tex.App.-Fort Worth 1997, pet dism'd by agmt.) (motion for summary judgment); Crowley v. Coles, 760 S.W.2d 347 (Tex.App.-Houston [1st Dist.] 1988, no writ) (motion for summary judgment); Zauber, 591 S.W.2d 932 (motion for summary judgment).
*276 There are additional procedural reasons why Rule 42 subdivisions (b) through (f) do not apply to shareholder derivative suits. The Rule 42(a) Derivative Suit paragraph contains requirements of notice and approval of settlement or dismissal that mirror similar requirements found in Rule 42(e). If the Rule 42(e) requirements were applied to shareholder derivative claims, the very similar provisions relating to judicial approval and notification found in the Derivative Suit paragraph would be redundant. Furthermore, the opt-out provision of Rule 42(c) and some of the provisions contained in Rule 42(b) do not make sense when applied to a shareholder derivative suit.
Accordingly, appellants, as shareholders asserting derivative claims, were not required to seek, and the trial court was not required to grant, their request for certification of a class of similarly situated shareholders.
Certification of Individual Claims
By postsubmission brief, appellants assert for the first time that we should reverse, even though we have held that class certification procedure does not apply to derivative claims, because the class certification order would potentially cover shareholders' individual claims as well. That is, any class certification order should not be limited to derivative claims because these might later evolve into individual ones. We reject this argument. Appellants clearly moved to certify only their derivative claims; it is the position they consistently asserted, argued, and briefed here and below.
The Court's Holding
We conclude that it was unnecessary for appellants to seek class certification in order to maintain their shareholder derivative action. Since we have determined that certification was unnecessary, we also conclude that the trial court did not abuse its discretion in denying appellants' motion. Because our holding on this appeal is limited only to the trial court's ruling on appellants' motion for class certification, we expressly refrain from making comment regarding the merits of any affirmative challenge that might be made by appellees to appellants' derivative action under Texas Business Corporation Act article 5.14, Texas Rule of Civil Procedure 42(a), or otherwise. That matter is not before us. Neither do we express an opinion whether appellants can fairly and adequately represent the interests of similarly situated shareholders.
We affirm the trial court's order denying appellants' motion for class certification.
NOTES
[*] Retired Chief Justice Frank G. Evans, Court of Appeals, First District of Texas at Houston, sitting by assignment.
[1] It is unclear whether the petition also alleged individual claims personal to the shareholders.
[2] Article 5.14 was amended effective September 1, 1997, but the amendment applies only to actions or proceedings filed after that date. Act of May 13, 1997, 75th Leg., R.S., ch. 375, § 125(e), 1997 Tex. Gen. Laws 1610. This suit was filed before that date. The current version of article 5.14 is entitled "Derivative Proceedings." TEX.BUS. CORP. ACT ANN. art. 5.14 (Vernon Supp.1999).
[3] TEX. BUS. CORP. ACT ANN. art. 5.14(B), (C) (Vernon Supp.1999).
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Case: 11-16031 Date Filed: 03/28/2013 Page: 1 of 26
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-16031
________________________
D.C. Docket No. 3:11-cr-00009-MMH-TEM-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ARCHERY LYNN OVERSTREET,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(March 28, 2013)
Before CARNES, HULL and FAY, Circuit Judges.
HULL, Circuit Judge:
After a guilty plea, Archery Lynn Overstreet appeals his 420-month sentence
for possessing a firearm while being a convicted felon, in violation of 18 U.S.C.
Case: 11-16031 Date Filed: 03/28/2013 Page: 2 of 26
§ 922(g). Overstreet’s sentence resulted not only from his criminal history, which
included two different attempted murder convictions, but also from the district
court’s finding that he subsequently murdered his wife while absconding from his
state parole supervision. After thorough review of the record and consideration of
the parties’ briefs, we affirm. 1
I. BACKGROUND FACTS
A. The Indictment
A federal grand jury issued a superseding indictment (the “indictment”),
charging Overstreet with one count of possessing a firearm while being a convicted
felon, in violation of 18 U.S.C. §§ 922(g)(1) and 924(e). The indictment alleged
that Overstreet previously was convicted in Texas state court of five crimes
punishable by imprisonment for a term exceeding one year: (1) burglary of a
building, committed in July 1983; (2) burglary of a habitation, committed on May
27, 1986; (3) attempted murder, committed on May 27, 1986; (4) aggravated
sexual assault, committed on May 28, 1986; and (5) another attempted murder,
committed on May 28, 1986.2
1
This Court scheduled this case for oral argument. Subsequently, Overstreet filed an
unopposed motion to waive oral argument in light of our recently published decision in United
States v. Weeks, No. 12-11104 (11th Cir. Jan. 31, 2013), which disposed of a major issue in
Overstreet’s appeal, as discussed below. We granted Overstreet’s motion to waive oral
argument.
2
The indictment actually listed the dates of both burglary convictions as October 16,
1986, and the dates of the three other convictions as May 30, 1986. However, Overstreet’s
2
Case: 11-16031 Date Filed: 03/28/2013 Page: 3 of 26
B. Overstreet’s Prior Convictions
Overstreet’s four most serious prior convictions—burglary of a habitation,
two attempted murders, and aggravated sexual assault—stemmed from a crime
spree that occurred in Texas on May 27 and 28, 1986. That crime spree began
with burglary, when Overstreet and his brother, Clifford Carter, entered a private
home without permission and stole 13 firearms and a car.3 Later that evening,
Overstreet and Carter were pulled over by two police officers for a seatbelt
violation. As the officers approached the car, both Overstreet and Carter fired
handguns at the officers. One of the officers was grazed by a bullet on his right
temple and fell to the ground, but survived. The officers fired back, and Overstreet
and Carter drove off.
Overstreet and Carter then drove to a relative’s home in an apartment
complex, approximately seven miles away from the place of the police shooting.
They saw a young woman entering her minivan in a parking lot. Overstreet and
Carter entered the minivan, threw the woman into the back, and drove to a
secluded area outside of Houston, Texas, near the Brazos River. They then forced
the woman to remove her clothing and raped her twice. After the rape, Overstreet
conviction records, introduced at sentencing, show that the burglary-of-a-building offense
occurred in July 1983, and the other four offenses occurred on May 27 and 28, 1986. Overstreet
does not challenge the mistaken dates in the indictment.
3
We take the facts of Overstreet’s prior offenses from the Presentence Investigation
Report (“PSI”) and the evidence introduced at the sentencing hearing.
3
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and Carter made the woman walk away from the minivan wearing only her bra and
underwear. When the woman was approximately 15 feet away from the minivan,
Overstreet and Carter each shot her in the back. Four bullets hit the woman, and
she fell down an embankment. Overstreet later told the police that the woman was
still breathing when he and Carter left her, but they did not shoot her again because
they thought she would die anyway. Fortunately, the woman survived. After the
assailants left the scene, she managed to crawl to a nearby residence and was taken
to a hospital, where she underwent extensive surgery to remove her left kidney,
remove a section of her large and small intestines, and repair her lung.
As a result of this crime spree, Overstreet received one conviction for
burglary, two convictions for attempted capital murder (for shooting the officer
and the woman), and one conviction for aggravated sexual assault. He was
sentenced in state court to a total of 60 years in prison.
C. The Present Offense
While serving his 60-year sentence in Texas, Overstreet married a long-time
friend, Taffy Overstreet (“Taffy”). In 2008, after spending approximately 22 years
behind bars, Overstreet was released on parole under strict supervision and went to
live with Taffy at her house in Houston. He was 49 years old at the time of his
release. As part of his many parole conditions, Overstreet had to wear an
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electronic monitoring ankle bracelet that would set off an alarm if he left his home
between 6:30 p.m. and 9:00 a.m.
On November 8, 2010, at approximately 5:30 a.m., Overstreet cut his
electronic ankle bracelet, setting off an alarm, and fled Texas. Around the same
time, Taffy disappeared and has not been seen or heard from since. Overstreet was
eventually caught on December 8, 2010, in Jacksonville, Florida. Among other
things, the police discovered a loaded gun and a roll of blood-stained duct tape in
the trunk of the car he was driving.
Overstreet was the prime suspect in Taffy’s disappearance, but her body was
never found, and Overstreet was not charged with her murder. Rather, Overstreet
was indicted in federal court on one count of being a felon in possession of a
firearm, in violation of 18 U.S.C. § 922(g). He pled guilty to this firearm offense,
but did not admit the existence and nature of his prior convictions, aside from the
fact that he had at least one prior felony. Overstreet expressly reserved the right to
contest his potential sentencing enhancement under the Armed Career Criminal
Act (“ACCA”), 18 U.S.C. § 924(e). 4
At Overstreet’s sentencing hearing for the present offense, the district court
found that the government proved by a preponderance of the evidence that
4
Section 924(e) provides for a 15-year mandatory minimum sentence for a felon-in-
possession conviction if the defendant “has three previous convictions by any court . . . for a
violent felony . . . committed on occasions different from one another.” 18 U.S.C. § 924(e)(1).
5
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Overstreet murdered Taffy while absconding from parole. We review the initial
sentencing calculations, the ACCA objections and rulings, the evidence about
Taffy’s murder, and then the district court’s upward variance to a 420-month
sentence.
D. Sentencing Guideline Calculations
According to the Presentence Investigation Report (“PSI”), Overstreet’s
initial base offense level was 24, pursuant to U.S.S.G. § 2K2.1(a)(2). The PSI then
classified Overstreet as an armed career criminal under the ACCA and U.S.S.G.
§ 4B1.4(b) because he had at least three prior convictions for a violent felony. The
ACCA classification resulted in an offense level of 33. Overstreet qualified for a
total three-level reduction under U.S.S.G. § 3E1.1(a)-(b) for acceptance of
responsibility, yielding a total offense level of 30.
Based on his prior convictions and the fact that he was on parole when he
committed the present offense, the PSI placed Overstreet into criminal history
category V, which, combined with the offense level of 30, resulted in a guideline
range of 151 to 188 months’ imprisonment. However, the ACCA mandated a
minimum sentence of 15 years, or 180 months, and thus Overstreet’s guideline
range became 180 to 188 months. See 18 U.S.C. § 924(e); U.S.S.G. § 5G1.1(c)(2).
The statutory maximum term for Overstreet’s offense was life imprisonment. See
18 U.S.C. § 924(e)(1); United States v. Brame, 997 F.2d 1426, 1428 (11th Cir.
6
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1993) (holding the statutory maximum sentence under § 924(e) is life
imprisonment, even though the statute does not state so expressly).
E. Overstreet’s Challenge to the ACCA Enhancement
Overstreet filed a sentencing memorandum, objecting to his classification as
an armed career criminal. Overstreet argued that enhancing his sentence under the
ACCA violated his constitutional rights because (1) he did not admit to the
existence of his prior convictions when pleading guilty; and (2) one of the ACCA
elements—that the prior offenses be “committed on occasions different from one
another”—should have been, but was not, charged in the indictment and either
found by a jury beyond a reasonable doubt or admitted by him in pleading guilty.
At the sentencing hearing, the government introduced documentary evidence
showing that (1) Overstreet was, in fact, convicted of five prior felonies, as
charged in the indictment, and (2) he committed at least three of those felonies on
occasions different from one another. Overstreet expressly conceded that the
evidence presented by the government to prove the existence and nature of his
prior convictions came from documents approved by the Supreme Court in
Shepard v. United States, 544 U.S. 13, 16, 125 S. Ct. 1254, 1257 (2005) (holding
that, in determining the character of a prior conviction under the ACCA, a district
court “is generally limited to examining the statutory definition [of the offense of
the prior conviction], charging document, written plea agreement, transcript of plea
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colloquy, and any explicit factual finding by the trial judge to which the defendant
assented”). Overstreet argued, however, that both the (1) existence and (2) the
different-occasions nature of his prior convictions still needed to be charged in the
indictment and either proved beyond a reasonable doubt or admitted during a
guilty plea. 5
The district court overruled Overstreet’s objection to the ACCA
enhancement, concluding that, under the Supreme Court’s decision in Almendarez-
Torres v. United States, 523 U.S. 224, 118 S. Ct. 1219 (1998), and this Court’s
precedent, neither the existence nor the different-occasions nature of his prior
convictions needed to be charged in the indictment or proved beyond a reasonable
doubt. The district court also found that the government sufficiently proved not
only that Overstreet actually committed the prior offenses, but that at least four of
those offenses occurred on occasions different from one another. Specifically,
while Overstreet’s attempted murder of the woman and aggravated sexual assault
in 1986 may not have occurred separately, his other prior felonies, including the
July 1983 burglary of a building, the May 1986 attempted murder of the officer,
and the May 1986 burglary of a habitation, were committed on different occasions.
F. Evidence that Overstreet Murdered Taffy
5
Overstreet did not dispute at sentencing, and does not dispute on appeal, that at least
three of the five prior convictions proved by the government qualified as “violent felon[ies]”
under the ACCA. Rather, Overstreet challenges his ACCA enhancement on constitutional
grounds only.
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After the district court overruled Overstreet’s ACCA objections at the
sentencing hearing, the government introduced (1) the testimony of Sergeant
Norman Ruland of the Houston Police Department regarding Taffy’s
disappearance and the events leading to Overstreet’s arrest; and (2) a video
recording of Sergeant Ruland’s post-arrest interview with Overstreet, which the
district court watched almost in its entirety.
According to Sergeant Ruland’s testimony, on November 9, 2010, Taffy’s
son, Shabocker Rawls, reported Taffy missing. Rawls did not live with Taffy, but
kept in touch with her regularly. Before her disappearance, Taffy usually
contacted her family at least every other day through the telephone or the social
networking site Facebook. Taffy was unemployed at the time, and, as her sole
means of support, she received food stamps from the government, as well as
unemployment benefit payments deposited on a debit card.
Rawls informed Sergeant Ruland that Taffy had called him (Rawls) several
times on November 7, 2010, and indicated that she and Overstreet were fighting
and that she wanted Overstreet out of her house. During one of those
conversations, Rawls heard yelling in the background, and Taffy told him that she
bit Overstreet on the lip during a physical altercation.
Sergeant Ruland also interviewed Taffy’s uncle and cousin, both of whom
had talked to Taffy on November 7, 2010. Taffy called her uncle around noon on
9
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November 7, told him that she and Overstreet had been fighting, and asked him to
come to her house and remove Overstreet. The uncle came by the house later that
day, at approximately 10:00 p.m., but no one answered the door, and Taffy’s car
was gone. At 10:18 p.m. on November 7, Taffy’s cousin called Taffy and talked to
her about an upcoming movie. During that conversation, Taffy did not discuss any
dispute with Overstreet. In other conversations, however, Taffy had told this same
cousin that she had asked Overstreet to move out by December 2010.
Sergeant Ruland reviewed Taffy’s debit card and food stamp card records,
which indicated that the food stamp card was used on November 7 at
approximately 10:00 p.m. at a grocery store near Taffy’s house. Sergeant Ruland
also discovered that Taffy’s last Facebook entry was made at 12:03 a.m. on
November 8, 2010. Sergeant Ruland talked to Overstreet’s probation officer, who
said that, on November 7, he (the probation officer) received the beginning of a
voicemail message from Taffy, stating only, “This is Taffy.”
Rawls reported to Sergeant Ruland that several items were missing from
Taffy’s home, including a “couple guns,” Overstreet’s clothing, and Taffy’s car,
laptop, debit card, and cell phone. Sergeant Ruland and crime scene technicians
searched Taffy’s house for evidence of blood, tissue, or human remains, but did
not find anything.
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Cell phone records proved more fruitful, however. They showed that,
starting on November 8, 2010, Taffy’s stolen cell phone traveled southwest of
Houston, Texas, to the Brazos River area, where, in 1986, Overstreet and Carter
had raped the young woman and left her for dead. Taffy’s phone then traveled east
to Jacksonville, Florida, north to New York City, and then back to Jacksonville.
The bulk of the cell phone activity occurred in Jacksonville, and Taffy’s debit card
was used, or attempted to be used, in Jacksonville 25 times. Based on this
information, Sergeant Ruland contacted the Jacksonville law enforcement
authorities, who found Overstreet and arrested him during a traffic stop on
December 8, 2010.
As mentioned previously, in the trunk of Overstreet’s car, officers found a
loaded gun and a roll of duct tape containing a blood stain. A subsequent DNA
analysis determined that the blood likely came from Taffy, 6 although it was
unclear how long the blood had been on the tape.
After Overstreet’s arrest, Sergeant Ruland came to Jacksonville and
interviewed him. During this video-recorded interview, Overstreet admitted to
6
According to a DNA test report, the bloodstain contained “a mixture of DNA from at
least two individuals, with an unknown major female component.” The DNA report concluded
that Taffy was the source of the mixture’s major component “to a reasonable degree of scientific
certainty.” Overstreet’s attorney conceded at the sentencing hearing that the blood was probably
Taffy’s.
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absconding from parole and stealing Taffy’s belongings, but he denied killing
Taffy.
G. District Court’s Sentencing Findings
At the conclusion of the sentencing evidence, the government argued that
Overstreet murdered Taffy, and asked the district court “to impose a sentence at
the high end of what Congress has authorized, which is life in prison in this case.”
Overstreet responded that, although Taffy was missing, there was insufficient
evidence to show that she was dead or that he murdered her. Overstreet requested
a sentence within the guideline range.
After the parties completed their arguments, the district court recounted the
evidence presented at the sentencing hearing and found that Overstreet was not
credible in his recorded post-arrest interview. The district court observed: “Mr.
Overstreet’s demeanor, when asked if he killed his wife or why he killed her, was
quite telling. There was absolutely no emotion whatsoever.” The district court
concluded that, by “far greater than a preponderance of the evidence,” Overstreet
either killed Taffy or “kidnapped her and left her for dead.”
The district court then determined that a one-level upward departure was
appropriate under U.S.S.G. § 4A1.3 because Overstreet’s criminal history category
of V substantially underrepresented the seriousness of his actual criminal history.
The district court stated that, while it “certainly had other individuals with longer
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criminal histories, [it] ha[d] never seen an individual with such a serious criminal
history.” The district court noted that Overstreet was on probation during the 1986
crime spree, and that he was on parole when he committed the present firearm
offense. Accordingly, the district court departed upwards to place Overstreet into a
criminal history category of VI, which, combined with an offense level of 30,
resulted in a new guideline range of 180 to 210 months’ imprisonment. The
district court stated, however, that it would impose the same sentence even without
the upward departure.
The district court then imposed a sentence of 420 months in prison and 5
years of supervised release. The district court explained in detail why this far-
above-guideline sentence was warranted considering the 18 U.S.C. § 3553(a)
factors. Among other things, the district court found “that Mr. Overstreet is an
extremely dangerous individual with little or no regard for the law or for human
life other than his own,” and that this finding “is entirely evident from the actions
that resulted in his prior convictions.” The district court also found that the nature
and circumstances of Overstreet’s present offense were “extremely serious,” given
that he had a significant criminal record and possessed the firearm while
absconding from parole. Moreover, the need for a sentence to reflect the
seriousness of the offense, provide just punishment for the offense, and promote
respect for the law, “which Mr. Overstreet has shown he has none,” called for “an
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extremely serious sentence in this case.” The district court also suggested that this
case presented no unwarranted sentencing disparity because the court “never had a
defendant with such a record.”
The district court then stressed the factors of deterrence and the need to
protect the public from further crimes of defendant Overstreet, stating that these
two factors warranted “a significant upward variance” and that any lesser term of
imprisonment “would be absolutely insufficient.” The district court explained that
Overstreet had served 22 years in the Texas prison system for his 1986 crime
spree, yet this time in prison did not deter him from escaping parole, stealing his
wife Taffy’s belongings, and arming himself. Thus, it was unclear “what sentence
could deter him from future criminal conduct.” The district court concluded that
“no sentence short of one that is tantamount to a life sentence would be sufficient
to achieve the statutory purposes of sentencing in this case, not on these facts and
not with this defendant.”
The district court stated that it would impose the same 420-month sentence
even if it did not consider the fact that Overstreet killed Taffy. The court explained
that it might have imposed an actual life sentence if Overstreet had been charged
with killing Taffy and if the government proved the murder beyond a reasonable
doubt. However, the district court reaffirmed its previous finding of murder,
stating: “I’m not only convinced that Mr. Overstreet killed his wife, but I’m
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extraordinarily troubled that he has shown absolutely no remorse, emotion, or
concern about her at all.”
After the district court imposed the 420-month sentence, Overstreet stated
that he wished to raise all of his previously made sentencing objections. This
appeal followed.
II. DISCUSSION
A. ACCA Enhancement
On appeal, Overstreet argues that his ACCA enhancement was
unconstitutional because (1) he did not admit the existence of his prior predicate
convictions when he pleaded guilty, and (2) the fact that his prior offenses were
“committed on occasions different from one another” should have been alleged in
the indictment and proven beyond a reasonable doubt. 7 Both of Overstreet’s
arguments are foreclosed by binding precedent.
First, Overstreet himself concedes, and we agree, that the Supreme Court’s
decision in Almendarez-Torres forecloses his argument that the existence of his
prior convictions needed to be admitted in his guilty plea or otherwise proven
beyond a reasonable doubt. See Almendarez-Torres, 523 U.S. at 226-27, 118 S.
Ct. at 1222 (holding that, for sentence enhancement purposes, the fact of a
defendant’s prior conviction did not need to be alleged in the indictment or proved
7
We review constitutional errors in sentencing de novo, but will not reverse if the error is
harmless beyond a reasonable doubt. United States v. Paz, 405 F.3d 946, 948 (11th Cir. 2005).
15
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beyond a reasonable doubt where the fact of a prior conviction was not an element
of the present offense); United States v. Beckles, 565 F.3d 832, 846 (11th Cir.
2009) (holding that, under Almendarez-Torres, “the government need not prove
beyond a reasonable doubt that a defendant had prior convictions . . . in order to
use those convictions to enhance a defendant’s sentence” under the ACCA).
Second, regarding the different-occasions element, this Court has previously
concluded that a district court does have authority to determine “the factual nature”
of prior convictions for ACCA purposes, “including whether they were committed
on different occasions,” so long as the court limits itself to Shepard-approved
documents. United States v. Weeks, No. 12-11104, slip op. at 6-7 (11th Cir. Jan.
31, 2013); see also United States v. Sneed, 600 F.3d 1326, 1332-33 (11th Cir.
2010) (stating that, in determining whether prior offenses were committed on
different occasions, a district court “may look to certain facts underlying the prior
conviction[s],” although it must use only Shepard-approved sources); United States
v. Greer, 440 F.3d 1267, 1275 (11th Cir. 2006) (holding that Almendarez-Torres
permits a district court to determine not only the existence of prior convictions
under the ACCA, but the “nature” of those convictions as well); United States v.
Spears, 443 F.3d 1358, 1361 (11th Cir. 2006) (rejecting, on plain-error review, the
notion that the different-occasions determination under the ACCA must be
submitted to a jury and proved beyond a reasonable doubt).
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Overstreet argues that the Supreme Court’s decision in Nijhawan v. Holder,
557 U.S. 29, 129 S. Ct. 2294 (2009), abrogated our prior holdings on the different-
occasions issue, and now requires the separateness of prior offenses to be alleged
in the indictment and proved beyond a reasonable doubt. We reached the opposite
conclusion in Weeks. There, we explained that “Nijhawan merely implies that an
immigration court’s findings may not provide a constitutional basis for later
sentencing enhancements if they are not appropriately limited to Shepard sources.”
Weeks, No. 12-11104 at 8. “Nijhawan does not even suggest that circumstance-
specific determinations made for ACCA purposes must be proven to a jury beyond
a reasonable doubt . . . .” Id. at 8-9. Therefore, we held that a district court “ha[s]
the authority to apply the ACCA enhancement based on its own factual findings”
that the defendant’s offenses were committed on occasions different from one
another. Id. at 9.
Given our precedent, the district court in this case committed no
constitutional error in sentencing Overstreet as an armed career criminal. See id.;
18 U.S.C. § 924(e)(1).
B. Reasonableness of Overstreet’s Sentence
We review “all sentences—whether inside, just outside, or significantly
outside the Guidelines range—under a deferential abuse-of-discretion standard.”
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Gall v. United States, 552 U.S. 38, 41, 128 S. Ct. 586, 591 (2007). 8 First, we
determine whether the district court committed any “significant procedural error”
and, second, whether the sentence was “substantively reasonable under the totality
of the circumstances.” United States v. Turner, 626 F.3d 566, 573 (11th Cir.
2010). “A sentence may be procedurally unreasonable if the district court
improperly calculates the Guidelines range, treats the Guidelines as mandatory
rather than advisory, fails to consider the appropriate statutory factors, selects a
sentence based on clearly erroneous facts, or fails to adequately explain the chosen
sentence.” United States v. Gonzalez, 550 F.3d 1319, 1323 (11th Cir. 2008). “The
review for substantive unreasonableness involves examining the totality of the
circumstances, including an inquiry into whether the statutory factors in § 3553(a)
support the sentence in question.” Id. at 1324.
If the district court determines that a sentence outside the guideline range is
appropriate, “it must consider the extent of the deviation and ensure that the
justification is sufficiently compelling to support the degree of the variance.”
United States v. Williams, 526 F.3d 1312, 1322 (11th Cir. 2008) (internal
8
The government argues that we should review the reasonableness of Overstreet’s
sentence for plain error because he failed to object to that sentence. We disagree. Before being
sentenced, Overstreet expressly asked the court to sentence him within the applicable guideline
range, and, after being sentenced, stated that he wished to raise all of his previously-made
sentencing objections. Therefore, Overstreet has adequately preserved the issue of
reasonableness for appellate review. See United States v. Hoffer, 129 F.3d 1196, 1202 (11th Cir.
1997) (stating that a party preserves a sentencing objection by raising it “at some point during the
sentencing hearing”).
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quotation marks omitted). Even where the degree of the variance is substantial, we
will not reverse a sentence unless “we are left with the definite and firm conviction
that the district court committed a clear error of judgment in weighing the
§ 3553(a) factors by arriving at a sentence that lies outside the range of reasonable
sentences dictated by the facts of the case.” United States v. Shaw, 560 F.3d 1230,
1238 (11th Cir. 2009) (internal quotation marks omitted).9
In challenging the reasonableness of his sentence, Overstreet argues that the
district court improperly sentenced him as if he was convicted for the
disappearance and death of Taffy, even though he was only convicted for illegally
possessing a firearm. Overstreet contends that Taffy’s disappearance was
unrelated to his felon-in-possession offense, and that punishing him for her murder
violated the principle espoused by the Constitution and the Guidelines that he be
sentenced only for the firearm offense of conviction and related conduct.
Overstreet concedes that his role in Taffy’s disappearance could be considered for
9
Under § 3553(a), a sentencing court must impose a sentence that is “sufficient, but not
greater than necessary” to comply with the purposes of sentencing set forth in § 3553(a)(2),
which include the need to reflect the seriousness of the offense, promote respect for the law,
provide just punishment for the offense, deter criminal conduct, and protect the public from the
defendant’s further crimes. 18 U.S.C. § 3553(a)(2). Other factors to be considered in imposing
a sentence include the nature and circumstances of the offense, the history and characteristics of
the defendant, the available sentences, the applicable guideline range, the need to avoid
unwarranted sentence disparities, and the need to provide restitution to victims. Id. § 3553(a)(1),
(3)-(7).
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purposes of sentencing under the post-Booker10 advisory guideline regime, but
stresses that the district court placed excessive weight on his purported murder of
Taffy.
As an initial matter, the district court’s finding—that the government proved
by a preponderance of the evidence that Overstreet murdered Taffy—was not
clearly erroneous.11 Overstreet does not dispute the sufficiency of that evidence on
appeal. The following non-exhaustive list of circumstantial evidence led the
district court inescapably to that finding: (1) Taffy disappeared on the same day,
November 8, 2010, that Overstreet cut his ankle monitor and absconded from
parole; (2) the day before her disappearance, Taffy told a relative that she was
fighting with Overstreet and wanted him out of her house; (3) when he absconded,
Overstreet took Taffy’s car, perhaps her guns, her cell phone, laptop, and her only
means of support—the food stamp card and the debit card; (4) before heading to
Jacksonville, Florida, after absconding, Overstreet drove to the area near the
Brazos River in Texas where he had raped and shot a young woman in May 1986;
(5) Overstreet used Taffy’s debit card 25 times in Jacksonville, even though he
must have known that she would report the card as stolen if she was alive; (6)
when Overstreet was arrested in Jacksonville, a gun and a roll of duct tape with
10
United States v. Booker, 543 U.S. 220, 125 S. Ct. 738 (2005).
11
We review a district court’s fact findings at sentencing only for clear error. United
States v. Lebowitz, 676 F.3d 1000, 1015 (11th Cir. 2012).
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Taffy’s blood were found in the trunk of the car he was driving; and (7) although
Overstreet denied murdering Taffy during his interview with Sergeant Ruland, the
district court reviewed the video-taped interview and found that Overstreet’s
demeanor and lack of emotion cast serious doubt on his credibility. 12
Furthermore, we recognize that the district court did not find Overstreet’s
offense of conviction—possession of a firearm by a convicted felon—to be
connected to Taffy’s murder. 13 However, as Overstreet concedes, the district court
was still entitled to consider the murder in deciding whether to vary outside the
guideline range. The fact that Overstreet killed Taffy in the process of absconding
from parole is directly germane to several § 3553(a) factors, including the “history
and characteristics of the defendant,” and the need for the sentence to “promote
respect for the law,” “afford adequate deterrence to criminal conduct,” and “protect
the public from further crimes of the defendant.” See 18 U.S.C. § 3553(a)(1)-(2). 14
12
We recognize that the district court stated that it would have imposed the same sentence
even without considering Taffy’s murder. Because the district court’s consideration of the
murder was proper, we need not, and do not, decide whether the 420-month sentence would have
been reasonable otherwise.
13
The government had earlier objected to Overstreet’s offense level as calculated in the
PSI, arguing that his initial offense level should have been 34 rather than 33, pursuant to
U.S.S.G. § 4B1.4(b)(3)(A), because Overstreet possessed the gun “in connection with” a crime
of violence, i.e., Taffy’s murder. The district court overruled the government’s objection at
sentencing, finding that there was insufficient evidence to show that Overstreet possessed the
gun “in connection with” Taffy’s murder. The district court reasoned that there was no evidence
as to how Taffy was killed or how Overstreet came to possess the gun, aside from Overstreet’s
statement that the gun belonged to Taffy’s son Rawls.
14
We point out that the concept of “relevant conduct” under U.S.S.G. § 1B1.3 pertains to
determining the appropriate offense level, which is then used to calculate the guideline range. In
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The question becomes, then, whether the district court placed undue weight
on the murder. We think not. Obviously, the fact that Overstreet murdered his
wife and stole her belongings to escape parole not only casts a very negative light
on Overstreet’s character, but also demonstrates the need for a lengthy sentence to
protect the public from the defendant.
Overstreet’s dangerous nature is further reflected in his criminal history—
another factor heavily emphasized by the district court. Although four of
Overstreet’s five prior convictions occurred as a result of a two-day crime spree,
that crime spree was exceptionally violent and heinous. Overstreet and his brother
Carter (1) stole 13 guns and a car from a residence; (2) shot at police officers who
stopped them, hitting one in the head; and (3) kidnapped a young woman, brutally
raped her twice, and shot her in the back multiple times. Overstreet and Carter did
not finish that murder only because they thought the woman was going to die
anyway, although, contrary to their expectations, she miraculously survived.
Needless to say, Overstreet’s and Carter’s conduct showed an incredibly cold-
contrast, here, even if Overstreet’s murder of Taffy was completely unrelated to his offense of
conviction, this conduct may be considered as part of the defendant’s “history and
characteristics” and other § 3553(a) factors and, thus, may be considered in imposing a variance.
See United States v. Amedeo, 487 F.3d 823, 830 (11th Cir. 2007) (holding that this Court’s pre-
Booker mandate to consider only “relevant conduct” in calculating the defendant’s sentence “did
not apply to the district court’s imposition of a variance based on § 3553(a)”).
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blooded disregard for human life, which made Overstreet’s illegal possession of
the firearm all the more troubling.
Overstreet contends that, in focusing on his past criminal conduct, the
district court lost sight of the mild nature of the offense of conviction. Overstreet
notes that he was stopped in Jacksonville without incident, consented to the search
of his car, acknowledged possession of the single gun found in the trunk of his car,
and pled guilty to the offense. Overstreet also argues that the district court placed
undue emphasis on the need for deterrence and the fact that he was on parole when
he committed the offense of conviction.
Overstreet’s arguments are wholly unpersuasive. Although the district court
must evaluate all § 3553(a) factors in imposing a sentence, it is “permitted to attach
‘great weight’ to one factor over others.” See Shaw, 560 F.3d at 1237; see also
United States v. Clay, 483 F.3d 739, 743 (11th Cir. 2007) (“The weight to be
accorded any given § 3553(a) factor is a matter committed to the sound discretion
of the district court . . . .” (internal quotation marks omitted)).
In this particular case, given Overstreet’s murder of Taffy and his past
violent criminal conduct, the need for deterrence and public protection were
entitled to great weight. Overstreet was punished with a 60-year total sentence for
his 1986 crime spree. After serving 22 years of that sentence in state prison, at age
49, Overstreet received another chance at life in society and was released on parole
23
Case: 11-16031 Date Filed: 03/28/2013 Page: 24 of 26
under strict conditions. Yet the time Overstreet spent in prison, his advancing age,
and the intensive parole supervision had no deterrent effect on his violent nature
and willingness to kill. Two years after being released, at age 51, he murdered his
wife Taffy, stole her car and personal belongings, and absconded from parole
while in possession of a loaded firearm. All of this shows that virtually no amount
of time in prison would deter Overstreet from committing violent crimes, and that
he would still present a grave danger to the public if released from prison, no
matter how restrictive his conditions of release might be.
Overstreet’s cooperation with police after his arrest in Jacksonville does not
mitigate the need for deterrence and protection of the public. Overstreet may well
have cooperated with police after his 1986 crime spree and during his subsequent
time in prison. This did not necessarily mean that Overstreet was no longer willing
to kill or commit other crimes, given that he murdered Taffy, absconded from
parole, and illegally possessed a loaded gun. In light of these particular facts,
Overstreet’s cooperation with the police in Jacksonville has little or no bearing on
his propensity to violate the law. Thus, the district court acted well within its
discretion in saying that no sentence short of one that amounts to life imprisonment
would ensure adequate deterrence and protect the public from Overstreet’s further
crimes.
24
Case: 11-16031 Date Filed: 03/28/2013 Page: 25 of 26
As another challenge to the weight given to his criminal history, Overstreet
argues that the district court essentially triple-counted his prior convictions by
using them to (1) enhance his sentence under the ACCA and “shatter” the
otherwise-applicable mandatory minimum, (2) depart upwards one criminal history
category under § 4A1.3, and (3) vary upwards from the guideline range. This
argument is meritless.
The ACCA mandates a particular statutory sentencing range (15 years to life
imprisonment) for defendants with three previous violent felony convictions, and
nothing in our case law prohibits a district court from considering the nature of
those prior convictions to determine the appropriate sentence within that statutory
range. Indeed, this Court has previously stated that “a district court can rely on
factors in imposing a variance that it had already considered in imposing [a
guideline] enhancement.” United States v. Rodriguez, 628 F.3d 1258, 1264 (11th
Cir. 2010).15
For all of the above reasons, the district court did not abuse its discretion in
weighing the § 3553(a) factors and imposing an above-guideline sentence of 420
15
We also note that the district court’s upward departure under U.S.S.G. § 4A1.3 to
criminal history category VI, imposed due to Overstreet’s prior convictions and his status as a
parolee when he committed the present offense, had no effect on Overstreet’s sentence. The
court stated that it would have imposed the same 420-month sentence even without that
departure. Accordingly, any alleged error in using Overstreet’s prior convictions to depart
upwards under § 4A1.3 was harmless. See United States v. Barner, 572 F.3d 1239, 1248 (11th
Cir. 2009) (“A Sentencing Guidelines miscalculation is harmless if the district court would have
imposed the same sentence without the error.”).
25
Case: 11-16031 Date Filed: 03/28/2013 Page: 26 of 26
months in prison. See Shaw, 560 F.3d at 1237; Clay, 483 F.3d at 743. In fact, we
have previously affirmed as reasonable upward variances of similar extent. See
United States v. Early, 686 F.3d 1219, 1221-23 (11th Cir. 2012) (affirming a 210-
month sentence for bank robbery despite the guideline range of 78 to 97 months);
Shaw, 560 F.3d at 1239-41 (upholding a 120-month sentence for a felon-in-
possession conviction where the guideline range called for 30 to 37 months);
United States v. Amedeo, 487 F.3d 823, 827-28, 834 (11th Cir. 2007) (upholding a
120-month sentence for cocaine distribution where the guideline range was 37 to
46 months); United States v. Turner, 474 F.3d 1265, 1273-74, 1281 (11th Cir.
2007) (affirming a 240-month sentence for mail theft and related offenses despite a
guideline range of 51 to 63 months).
AFFIRMED.
26
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09-4748-ag
Liu v. Holder
BIA
McManus, IJ
A098 906 657
A098 906 658
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of
New York, on the 7th day of February, two thousand eleven.
PRESENT:
JOHN M. WALKER, JR.,
ROBERT A. KATZMANN,
RICHARD C. WESLEY,
Circuit Judges.
_______________________________________
MEI HUI LIU, ANTONIO XU LIU,
Petitioners,
v. 09-4748-ag
NAC
ERIC H. HOLDER, JR., UNITED STATES
ATTORNEY GENERAL,
Respondent.
______________________________________
FOR PETITIONERS: Dehai Zhang, Flushing, New York.
FOR RESPONDENT: Tony West, Assistant Attorney
General; Ada E. Bosque, Senior
Litigation Counsel; Puneet Cheema,
Trial Attorney, Office of
Immigration Litigation, Civil
Division, United States Department
of Justice, Washington, D.C.
UPON DUE CONSIDERATION of this petition for review of a
Board of Immigration Appeals (“BIA”) decision, it is hereby
ORDERED, ADJUDGED, AND DECREED that the petition for review
is DENIED.
Petitioners Mei Hui Liu (“Mei”), a native of China and
citizen of Venezuela, and her son Antonio Xu Liu, a native
and citizen of Venezuela, seek review of an October 22, 2009
decision of the BIA affirming the January 10, 2008 decision
of Immigration Judge (“IJ”) Margaret McManus denying their
application for asylum, withholding of removal, and relief
under the Convention Against Torture (“CAT”). In re Mei Hui
Liu, Antonio Xu Liu, Nos. A098 906 657/658 (B.I.A. Oct. 22,
2009), aff’g Nos. A098 906 657/658 (Immig. Ct. N.Y. City
Jan. 10, 2008). We assume the parties’ familiarity with the
underlying facts and procedural history of this case.
Under the circumstances of this case, we review the
IJ’s decision as supplemented by the BIA’s opinion. See Yan
Chen v. Gonzales, 417 F.3d 268, 271 (2d Cir. 2005). The
applicable standards of review are well-established.
See 8 U.S.C. § 1252(b)(4)(B); Yanqin Weng v. Holder, 562
F.3d 510, 513 (2d Cir. 2009).
As an initial matter, petitioners have failed to
2
meaningfully argue in their appellate brief that: (1) they
are entitled to asylum or withholding of removal because of
persecution on account of Mei’s membership in a particular
social group; or (2) they are entitled to CAT relief.
Accordingly, we do not address those arguments. See Yueqing
Zhang v. Gonzales, 426 F.3d 540, 541 n.1, 545 n.7 (2d Cir.
2005).
The government also contends that because petitioners
did not raise before the BIA two alleged incidents in which
the Venezuelan police forced Mei to produce her identity
card and required payments before releasing her, we lack
jurisdiction to consider the arguments regarding those
incidents that appear in the petitioners’ brief. We do not
decide the issue, but assume arguendo that we may consider
arguments regarding those incidents because they are
“specific, subsidiary legal arguments, or arguments by
extension” in relation to the petitioners’ arguments before
the BIA. Gill v. INS, 420 F.3d 82, 86 (2d Cir. 2005); see
also Steevenez v. Gonzales, 476 F.3d 114, 117 (2d Cir. 2007)
(issue exhaustion is mandatory, not jurisdictional). Even
considering those arguments, however, we conclude that the
agency reasonably determined that petitioners failed to
3
demonstrate that they were targeted on account of their race
or ethnicity.
The agency found that while the petitioners were the
frequent victims of crime in Venezuela, they did not
establish that they were targeted because they were ethnic
Chinese or that there was a pattern or practice of
persecution of ethnic Chinese persons in Venezuela.
Petitioners argue that the agency erred in ignoring the
background conditions which establish that their past
mistreatment was on account of their race and that there is
a pattern and practice of discrimination against the ethnic
Chinese in Venezuela. However, there is no indication that
the agency ignored any material evidence. See Xiao Ji Chen
v. U.S. Dep’t of Justice, 471 F.3d 315, 337 n.17 (2d Cir.
2006) (“[W]e presume that an IJ has taken into account all
of the evidence before h[er], unless the record compellingly
suggests otherwise.”). In fact, the agency specifically
addressed the background evidence, stating that it had
considered this information and that, while the background
materials indicated that human rights abuses have been
taking place in Venezuela, these materials did not establish
that there is widespread discrimination against Chinese
4
persons.
Moreover, the agency’s denial of relief is supported by
substantial evidence. The agency reasonably concluded that
the petitioners, although they were the unfortunate victims
of general crime, failed to establish that they were
persecuted in the past or would be persecuted in the future
on account of a protected ground. See Melgar de Torres v.
Reno, 191 F.3d 307, 314 (2d Cir. 1999) (explaining that the
existence of general crime does not support an asylum
claim). The petitioners provided no evidence of the
motivations of the perpetrators, beyond Mei’s speculation
that the police targeted the Chinese for identity checks,
which the agency reasonably noted was without any support in
the record. The news articles that the petitioners
provided, which note a single anti-Chinese riot and that
some ethnic Chinese persons have been the victims of crime,
do not compel the conclusion that the Venezuelan government
or people generally discriminate against the ethnic Chinese.
Cf. Xiao Ji Chen, 471 F.3d at 342 (holding that the weight
afforded to State Department country reports lies largely
within the discretion of the agency). Rather, as the agency
noted, the State Department’s 2004 and 2005 reports on
5
conditions in Venezuela, which were part of the agency
record, did not even mention discrimination against the
ethnic Chinese. See id. at 341 (“[A] report from the State
Department is usually the best available source of
information on country conditions.” (internal quotation
marks omitted)).
Thus, the agency reasonably decided that petitioners
did not meet their burden of proving past persecution or a
well-founded fear of future of persecution on account of a
protected ground. See 8 U.S.C. § 1101(a)(42). Because the
petitioners were unable to meet their burden for asylum,
they necessarily failed to meet the higher burden required
to succeed on a claim for withholding of removal. See Paul
v. Gonzales, 444 F.3d 148, 156 (2d Cir. 2006); Gomez v. INS,
947 F.2d 660, 665 (2d Cir. 1991).
For the foregoing reasons, the petition for review is
DENIED. As we have completed our review, the pending motion
for a stay of removal in this petition is DISMISSED as moot.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
6
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 06a0855n.06
Filed: November 22, 2006
No. 05-4149
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
POWER MARKETING DIRECT, INC., )
)
Plaintiff-Appellant, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
ALAN BALL, ) SOUTHERN DISTRICT OF OHIO
)
Defendant-Appellee. )
)
Before: GIBBONS and McKEAGUE, Circuit Judges; and FORESTER, District Judge.*
JULIA SMITH GIBBONS, Circuit Judge. Plaintiff-appellant Power Marketing Direct,
Inc. (“Power Marketing”) appeals the grant of summary judgment by the district court to defendant-
appellee Alan Ball on its Ohio law claim for tortious interference with contractual and business
relationships. For the following reasons, we affirm the district court’s decision.
I.
Power Marketing, an Ohio corporation, sells furniture and bedding through dealers who sign
licensing agreements that require dealers to expend their best efforts in operating their Power
Marketing dealerships. Power Marketing had the right to place dealers on a “Performance
Improvement Plan” and eventually to terminate the licensing agreement if sales were poor.
*
The Honorable Karl S. Forester, United States District Judge for the Eastern District of
Kentucky, sitting by designation.
-1-
Ball was a licensed dealer from September 2001 until August 2002 when he terminated his
business relationship with Power Marketing. Power Marketing claims Ball contacted other dealers
and encouraged them to terminate their business relationships with Power Marketing as well. To
support this claim, Power Marketing offers evidence of Ball’s contact with Rick Dooley, another
Power Marketing dealer. In his conversations with Dooley, Ball began to “badmouth” Power
Marketing and invited Dooley to join him in an independent mattress and furniture business. Dooley
attested that his conversations with Ball caused him to experience concern and anxiety, which
negatively impacted his work as a Power Marketing dealer and caused his sales to suffer. When
Dooley told Ball that he would not join Ball’s competing business and asked Ball to stop calling him,
Ball complied.
Power Marketing filed a complaint against Ball in Ohio state court, in relevant part claiming
tortious interference with contractual and business relationships under Ohio law, and seeking
injunctive relief. Ball, a Utah citizen, had the case removed to the United States District Court for
the Southern District of Ohio based on diversity of citizenship. After discovery, the district court
granted Ball’s motion for summary judgment on the tortious interference claim, relying on two
alternative grounds. First, Power Marketing could not prove tortious interference because there was
no evidence that Dooley or any other Power Marketing dealer breached their licensing agreements
as a result of Ball’s conduct. Second, because Ball had voluntarily ceased his efforts to recruit
Dooley, Power Marketing’s request for injunctive relief was moot. Power Marketing appealed the
grant of summary judgment.
II.
This court reviews the grant of summary judgment de novo, applying the standard used by
-2-
the district court. Williams v. Mehra, 186 F.3d 685, 689 (6th Cir. 1999) (en banc). Summary
judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with affidavits, if any, show that there is no genuine issue of material fact and that
the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). All “inferences
to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party
opposing the motion.” United States v. Diebold, 369 U.S. 654, 655 (1962). Summary judgment
must be entered against the opposing party, however, if it “fails to make a showing sufficient to
establish the existence of an element essential to that party’s case, and on which [it] will bear the
burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“The torts of interference with business relationships and contract rights generally occur
when a person, without a privilege to do so, induces or otherwise purposely causes a third person not
to enter into or continue a business relation with another, or not to perform a contract with another.”
A & B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 651 N.E.2d
1283, 1294 (Ohio 1995). To sustain the claim, the plaintiff must prove the following elements: “(1)
the existence of a contract, (2) the wrongdoer's knowledge of the contract, (3) the wrongdoer's
intentional procurement of the contract's breach, (4) the lack of justification, and (5) resulting
damages.” Fred Siegel Co., L.P.A. v. Arter & Hadden, 707 N.E.2d 853, 858 (Ohio 1999).
Power Marketing cannot prevail in its claim for tortious interference because it cannot prove
that Ball caused any Power Marketing dealer to breach his or her licensing agreement. Power
Marketing only presented evidence that Ball interfered with its licensing agreement by trying to
recruit Dooley away from Power Marketing. Dooley believes that, as a result, he did not expend his
best efforts in operating his Power Marketing dealership, as required by the licensing agreement.
-3-
All the objective evidence indicates that Dooley never breached his licensing agreement. Power
Marketing neither placed Dooley on a “Performance Improvement Plan” nor terminated his licensing
agreement for poor sales. Dooley remains a Power Marketing dealer. Dooley’s subjective opinion
of his efforts is insufficient to demonstrate the breach of contract required for the tortious
interference claim. As there is no other evidence that Ball caused dealers to breach their contracts
with Power Marketing, Power Marketing’s tortious interference claim fails, and the district court
properly granted Ball summary judgment.
III.
For the foregoing reasons, we affirm the district court’s grant of summary judgment in favor
of Ball.
-4-
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United States Court of Appeals,
Eleventh Circuit.
No. 94-6400.
JEFFERSON COUNTY, A political subdivision of the State of
Alabama, Plaintiff-Appellant,
v.
William W. ACKER, Jr., Defendant-Appellee.
JEFFERSON COUNTY, A political subdivision of the State of
Alabama, Plaintiff-Appellant,
v.
U.W. CLEMON, Defendant-Appellee.
Jan. 12, 1996.
Appeal from the United States District Court for the Northern
District of Alabama (Nos. CV-93-M-69-5 and CV-93-M-196-5), Charles
A. Moye, Jr., Judge.
ON PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC
(Opinion August 21, 1995, 11th Cir., 1995, 61 F.3d 848)
Before TJOFLAT, Chief Judge, and KRAVITCH, HATCHETT, ANDERSON,
EDMONDSON, COX, BIRCH, DUBINA, BLACK, CARNES and BARKETT, Circuit
Judges.*
BY THE COURT:
A member of this court in active service having requested a
poll on the suggestion for rehearing en banc and a majority of the
judges in this court in active service having voted in favor of
granting a rehearing en banc,
IT IS ORDERED that the above cause shall be reheard by this
court en banc. The previous panel's opinion is hereby VACATED.
*
Senior U.S. Circuit Judge Albert J. Henderson has elected
to participate in further proceedings in this matter pursuant to
28 U.S.C. § 46(c).
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293 S.W.3d 240 (2009)
FAWCETT, LTD., Appellant,
v.
IDAHO NORTHERN & PACIFIC RAILROAD COMPANY, Appellee.
No. 11-07-00154-CV.
Court of Appeals of Texas, Eastland.
May 14, 2009.
Opinion Overruling Rehearing and Modifying Judgment July 23, 2009.
*243 Elizabeth Sturdiyant Kerr, Walker C. Friedman, Christian D. Tucker, Friedman, Suder & Cooke, P.C., David E. Keltner, Kelly Hart & Hallman LLP, Fort Worth, TX, for appellant.
Ed Huddleston, Larry Bracken, Law, Snakard & Gambill, P.C., Dabney D. Bassel, Bassel & Wilcox, P.L.L.C., Fort Worth, TX, for appellee.
Panel consists of: WRIGHT, C.J., McCALL, J., and STRANGE, J.
OPINION
TERRY McCALL, Justice.
This case involves the construction of a real estate sales contract. Fawcett, Ltd. (Fawcett) agreed to sell its ranch to Idaho Northern & Pacific Railroad Company (Railroad). Because the parties were not certain as to the exact size of the ranch, they provided in the sales contract that either party could terminate the contract without penalty if the actual acreage contained in the survey turned out to vary by more than 10% (more or less) from 5,000 acres. The sales contract had an Exhibit A that included legal descriptions for the ranch's fourteen tracts that were to be surveyed; the new survey would replace Exhibit A and be titled Exhibit A-1. Unfortunately, the surveyor who gave Fawcett and the Railroad the estimate of 5,000 acres made a mistake in calculating the 5,000 acres.[1] His subsequent survey determined the acreage to be 5,531.6 acres. Fawcett terminated the contract.
The Railroad sued Fawcett under various theories with the goal of obtaining specific performance or partial specific performance. Although Fawcett contended that its termination was proper under the strict terms of the contract, Fawcett also counterclaimed for rescission in the alternative. Fawcett's counterclaim was based on the theory of a mutual mistake about the factual assumption of the ranch's size of 5,000 acres. Following a bench trial, the trial court reformed the terms of the contract and entered judgment directing Fawcett to convey to the Railroad 5,401.6 acres at $950 per acre for $5,131,520. To avoid the 10% termination provision, the trial court reduced the 5,531.6 acres by subtracting the Buzbee Tract (73 acres) and the Goundie Tract (57 acres) because it found that Fawcett did not have good and marketable title to those tracts. But the sales contract did not require the survey to include only land to which Fawcett held good and marketable title.[2] Fawcett appealed. We reverse and render judgment for Fawcett.
*244 Interpretation of Contracts
When construing a contract, the court's primary concern is to give effect to the written expression of the parties' intent. Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 311-12 (Tex.2005); Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex.1983); In re Great Western Drilling, Ltd., 211 S.W.3d 828, 834 (Tex.App.-Eastland 2006, orig. proceeding). All parts of the contract are read together to ascertain the agreement of the parties. Frost Nat'l Bank, 165 S.W.3d at 312; Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.1994); Royal Indem. Co. v. Marshall, 388 S.W.2d 176, 180 (Tex.1965). We examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that no provision will be rendered meaningless. In re Great Western, 211 S.W.3d at 834. The sales contract in this case is unambiguous and will be construed as a matter of law. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983).
The Sales Contract
The first portion of the sales contract between Fawcett and the Railroad was a standard Texas Real Estate Commission Farm and Ranch Contract. The parties attached a negotiated five-page addendum as Exhibit C. Exhibit C included twelve paragraphs and provided that the terms of the addendum would control if there were any conflicting terms contained in the standard portion of their contract. They signed the sales contract on March 18, 2002.
Fawcett bought the ranch without a survey in 1997 from the Waddell family. The Waddell family believed that the ranch contained approximately 5,500 acres. Fawcett then carved out a 140-acre tract and conveyed it to Roger Fawcett, individually. That tract was not to be included in the sale to the Railroad; however, Paragraph 8 of Exhibit C gave the Railroad a right of first refusal if Roger Fawcett decided to sell it later. Roger Fawcett testified that, when he listed the Fawcett Ranch with Jane Morgan, he told her that the acreage was between 5,300 and 5,400 acres. The Railroad's initial offer to purchase the ranch contained the figure of 5,370 acres, which was the number of acres Fawcett used to market the ranch. Rejecting that initial offer, Fawcett notified the Railroad that preliminary discussions with the surveyor indicated "a total of 5,000 acres +/-, instead of the 5,300 previously thought." Actually, the surveyor had calculated 4,950 acres.
Jesse G. Lawson, a registered land surveyor, had begun a survey for Fawcett in 2001, but stopped when an unrelated deal to sell the ranch fell through. Fawcett and the Railroad ultimately agreed that Lawson should finish his survey and that they would use his survey as the conclusive expression of the acreage to be conveyed.
Paragraph 3D of the sales contract provided that the estimated sales price of $4,750,000 (5,000 acres times $950 per acre) set forth in Paragraph 3A would be adjusted based on the survey. Paragraph 3D also provided a right of termination to either party if the adjustment exceeded ten percent:
The Sales Price will be adjusted based on the survey required by Paragraph 6B, and the number of acres over or under 5000 acres will be multiplied by $950.00 per acre. The result thereof will be added to or subtracted from the *245 Sales Price, and the cash amount set out in 3A will be adjusted accordingly; however, if the amount set out in 3A is to be adjusted by more than 10%, either party may terminate this contract and the earnest money will be refunded to Buyer.
In Exhibit C, the parties agreed on how the survey would be done and that the survey would be conclusive as to the area to be conveyed. The addendum provided:
2. The Survey to be provided pursuant to the terms of the Contract shall be staked on the ground and show all acreage contained in the property. Such survey shall be a perimeter survey. . . . The acreage determined by the Survey shall be conclusive as to the area to be conveyed for all purposes. . . .
3. The Parties agree that the metes and bounds description of the Survey shall be substituted for the description of the Property contained in the TREC Farm and Ranch Contract and shall become the legal description of the Property being conveyed pursuant to the terms of the Contract.
Attached as Exhibit C-1 to the sales contract is a letter dated June 22, 2001, from Lawson to Roger Fawcett setting forth the project:
The land survey that you requested would include the following:
1. A plat showing the boundary lines of your property as described in your deed and as found on the ground. The plat will show any major differences in the location of the existing fence lines relative to the true boundary lines and it will show existing building and major cross fences. The plat will also show any easements as can best be determined and it will show what was found or not for boundary markers.
2. A written metes and bounds description will be furnished that describes the subject property as well.
At the bottom of the letter are the initials of Roger Fawcett for Fawcett and Richard D. Bertel, president of the Railroad.
It is clear from Exhibit C and Exhibit C-1 that the survey was to be a perimeter survey of the ranch that would show all the acreage contained within that perimeter or boundary, as well as cross fences and buildings within the perimeter. To determine the outside perimeter and the acreage within it, Lawson had to survey each of the tracts. Fawcett and the Railroad signed the contract on March 18, 2002. At trial, they stipulated that Lawson disclosed to them that the ranch included 5,531.6 acres in April 2002; however, neither party contacted the other about amending the contract to correct the erroneous 5,000 acre number. On April 26 or 27, at Bertel's request, Lawson gave Ralph Crouch (a surveyor/engineer for the Railroad) a copy of the survey that Lawson had delivered to the title company on April 24. Crouch verified that the survey accurately reflected 5,531.6 acres. However, the Railroad did not seek to amend the contract.
There are two tracts in contention that put the total acreage over the 10% limit: the Buzbee Tract that contains 73 acres and the Goundie Tract that contains 57 acres. Both parties agree that there are 5,531.6 acres contained within Lawson's perimeter survey. At trial, two surveyors for the Railroad, David Lyons and Gerry Curtis, testified that 5,531.6 acres appeared to be correct and that they had no reason to believe Lawson's methodology was wrong.
Under Paragraph 2 of the standard portion of the sales contract, the new survey and legal description became Exhibit A-1 and replaced Exhibit A. Paragraph 2 of Exhibit C provided that the new survey "shall show all acreage contained in the *246 property" which it did (5,531.6 acres) and the acreage shown by the survey "shall be conclusive as to the area to be conveyed for all purposes."
Paragraph 6 of the standard portion of the sales contract required Fawcett to provide the survey and a title commitment. Paragraph 6B provided that the Railroad had seven days to make its objections after receiving the survey and the title commitment:
Buyer will have 7 days after the receipt of the latter of the Commitment or survey to object in writing to matters disclosed in the Commitment or survey except for those matters specifically described in Paragraph 2. Buyer's failure to object under Paragraph 6 within the time allowed will constitute a waiver of Buyer's right to object; except that the requirements in Schedule C of the Commitment will not be deemed to have been waived. Seller shall cure the timely objections of Buyer or any third party lender within 20 days after Seller receives the objections and the Closing Date will be extended as necessary. If objections are not cured by the extended Closing Date, this contract will terminate and the earnest money will be refunded to Buyer unless Buyer elects to waive the objections.
The contract does not state that the survey was to include only acreage to which Fawcett held "good and marketable" title. Paragraph 4a in Exhibit C was the provision that set forth Fawcett's obligation to convey good and marketable title at closing:
[4a.] At the closing, Seller will have and will convey to Buyer good and marketable title to the subject Property by Special Warranty Deed subject only to taxes for the current year, and any Title exceptions permitted by the terms of the Contract (emphasis added).
Title exceptions were dealt with in the quoted Paragraph 6B. Permitted title exceptions would include (1) title objections to a tract that were waived (e.g., the title commitment's exception for the Buzbee Tract could have been waived by the Railroad) and (2) matters in the commitment or survey that the buyer could have timely objected to but failed to object. The surveyor was only to determine the acreage to be conveyed. Among its findings, the trial court correctly stated that "[t]he surveyor did not, and could not, make the determination as to the property to which [Fawcett] had good and marketable title."
Under Paragraph 6B, the Railroad had seven days to object to any title problems concerning the Buzbee Tract or the Goundie Tract. The title commitment excepted the Buzbee Tract from its insurance coverage, and the Railroad objected to that exception. The Railroad did not object to the title company's commitment to include and ensure title to the Goundie Tract. By the terms of Paragraph 6B, Fawcett had to cure any Buzbee Tract title problem, and if it could not be cured, the contract would terminate unless the Railroad waived its objections. Instead of attempting to cure the Buzbee Tract title problem, Fawcett elected to terminate the contract under the 10% provision in Paragraph 3D.
We are restricted by the parties' agreement in Paragraph 3D that "[t]he sales price will be adjusted based on the survey required by Paragraph 6B, and the number of acres over or under 5000 acres will be multiplied by $950.00 per acre. . . . [I]f the amount set out in 3A is to be adjusted by more than 10%, either party may terminate this contract and the earnest money will be refunded to Buyer." There is no provision in the sales contract, including its exhibits, where the parties agreed that *247 the survey would be reduced by acreage to which Fawcett did not have good and marketable title. The trial court erred in deducting the acreage of the Buzbee Tract and the Goundie Tract from the surveyed acreage of 5,531.6 acres for purposes of the termination provision in Paragraph 3D.
Title problems are not relevant to the termination provision in Paragraph 3D. The parties specifically agreed that the contract could be terminated by either party if the final survey included acreage that varied more than 10% from the 5,000 acres. The Railroad did not prove that the survey was inaccurate and stipulated that the survey included 5,531.6 acres, a variance of over ten percent. Every surveyor who testified at trial agreed that Lawson did the survey correctly and that his survey included 5,531.6 acres. Either party could terminate the contract because of the 10% variance.
The Buzbee Tract and the Goundie Tract
The Railroad argues that the Buzbee Tract and the Goundie Tract should not have been included in the survey because Fawcett had no title to either tract at the time the contract was signed. The Railroad reasons that the Buzbee family had gained title by limitations and that the Goundie Tract had not been conveyed from Waddell to Fawcett. Fawcett's use of a survey that included those tracts for termination under Paragraph 3D was, therefore, wrongful and a default under the contract. We disagree.
The Railroad's premise that Fawcett had no title to the tracts is incorrect. The Railroad stipulated, and the record shows, that Fawcett has had record title to the Buzbee Tract since 1997. Because Fawcett had record title to the Buzbee Tract, that tract was correctly included in Lawson's survey; Fawcett could have conveyed his record title to the Buzbee Tract. The Goundie Tract was also correctly included within the perimeter survey because it was an interior tract and Fawcett had equitable title to the Goundie Tract. A lack of good and marketable title to the tracts was another matter to be dealt with as provided in Paragraph 6B of their contract. The trial court erred in its findings that Fawcett had no title to the two tracts.
The Buzbee family intervened in this suit with a trespass to try title claim to the 73-acre Buzbee Tract. The Railroad acknowledged that it was paying the legal fees for the Buzbees. The trial court found that the Buzbees had acquired title by limitations. Although that was determined after Fawcett terminated under Paragraph 3D, it demonstrates that Fawcett could not have cured the Railroad's objection to the title commitment's exception to the Buzbee Tract. Paragraph 6B provided the remedy had there been no termination under Paragraph 3D: the Railroad could waive its objection and accept the record title or it could terminate the contract.
The Railroad correctly states that the sales contract is to be interpreted as a whole in an effort to harmonize and give effect to all its provisions so that none will be rendered meaningless and no single provision taken alone will be given controlling effect. Stewman Ranch, Inc. v. Double M. Ranch, Ltd., 192 S.W.3d 808, 810 (Tex.App.-Eastland 2006, pet. denied); McMillan v. Dooley, 144 S.W.3d 159, 175 (Tex.App.-Eastland 2004, pet. denied). We find that the provisions of this contract do not conflict and that all provisions may be given meaning.
The parties typed an insert in Paragraph 2 of the sales contract that the new survey and legal description would be attached as an Exhibit A-1 that would replace Exhibit A. In Paragraph 2 of their Exhibit C addendum, the parties provided *248 that the "survey shall be a perimeter survey" and "[t]he acreage determined by the Survey shall be conclusive as to the area to be conveyed for all purposes." Paragraph 2 does not state that "good and marketable title" to the area will be conveyed, and Fawcett could have conveyed his record title to the Buzbee Tract. In Paragraph 3 of Exhibit C, the parties agreed that the metes and bounds description of the survey would be substituted for the "description of the Property contained in the TREC Farm and Ranch Contract and shall become the legal description of the Property being conveyed."
Paragraph 6B of the sales contract provided the Railroad the remedy of terminating or waiving its title objection to the commitment's exception of the Buzbee Tract, but there is no provision stating that the Railroad could simply reduce the survey by deleting acreage with title problems. The Railroad's objection was that the title commitment should not except the Buzbee Tract from its insurance. The Railroad did not object to the Buzbee Tract being included in the perimeter survey.
Paragraph 3D provided that "[t]he Sales Price will be adjusted based on the survey required by Paragraph 6B, and the number of acres over or under 5000 acres will be multiplied by $950.00 per acre." Paragraph 3D then further provides that, "if the amount set out in 3A [$4,750,000] is to be adjusted by more than 10%, either party may terminate this contract and the earnest money will be refunded to Buyer." Again, there is no provision that the survey would be adjusted to include only acreage to which Fawcett had good and marketable title or that the survey would be adjusted to exclude acreage where he lacked title.
The parties replaced the standard default provision in Paragraph 15 of the sales contract with their own special provision in Paragraph 11 in Exhibit C:
If Seller fails to comply with this Contract, Seller will be in default, and Buyer's sole and exclusive remedy will be to either (i) enforce specific performance. . . without any warranty of title greater than that contained in the Special Warranty Deed to be signed by Seller and delivered to Buyer, or (ii) terminate this Contract and receive a return of the earnest money. . . . Buyer shall not be permitted to specifically enforce any term or condition in the Contract except to cause Seller to convey the property by a Special Warranty Deed.
Fawcett's holding of record title only to the Buzbee Tract was not a default under their contract. The parties provided the usual method of dealing with title problems in Paragraph 6B if Fawcett could not cure his lack of good and marketable title to a tract, the Railroad had the option of waiving the objection and accepting what title Fawcett could convey by special warranty deed (record title) or simply allowing the contract to terminate. Had Fawcett not exercised his right to terminate, the Railroad could have obtained specific performance requiring Fawcett to convey his record title. Paragraph 11 did not change the clear language of Paragraph 2 in Exhibit C: "The acreage determined by the Survey [was to] be conclusive as to the area to be conveyed for all purposes." Thus, the survey was conclusive as to the area in the 10% termination provision in Paragraph 3D unless the Railroad made a successful objection to the survey under Paragraph 6B. But the Railroad did not object to the acreage of either the Buzbee Tract or the Goundie Tract being included in the survey.
We do not agree with the Railroad's assertion that the method of Paragraph 6B for dealing with title problems to acreage *249 included in the survey was not the exclusive remedy for dealing with title issues. The provision is a standard one in the TREC Farm and Ranch Contract that is specifically designed to deal with title objections to acreage being conveyed.
The Railroad makes three arguments concerning the Goundie Tract: (1) the contract did not authorize or instruct the surveyor to prepare a survey that included the Goundie Tract because the Goundie Tract was not included in the legal description in Exhibit A of the property to be conveyed; (2) the Railroad did not waive objections to Fawcett having no title to the Goundie Tract because there was nothing in Exhibit A-1 to put the Railroad on notice that the Goundie Tract had been included; and (3) Fawcett did not have any title to the Goundie Tract.
The Railroad's first argument is that the legal descriptions in the original Exhibit A to their contract did not include the Goundie Tract; therefore, Lawson should not have included it in his survey. This argument ignores the plain language of Paragraph 2 of Exhibit C that the survey was to be a perimeter survey to show "all acreage contained in the property" and that the new survey was to be Exhibit A-1, replacing Exhibit A. Exhibit C-1 to their contract, the letter from Lawson to Roger Fawcett and initialed by both parties, reflects that the parties wanted a "plat showing the boundary lines of [Fawcett's] property as described in [Fawcett's] deed." The outside perimeter boundary lines of the ranch were described in Exhibit A, although Lawson made corrections to them in Exhibit A-1.
Omission of the Goundie Tract would have left a hole in the interior of the ranch. At trial, Lyons and Curtis (surveyors for the Railroad) testified that the survey correctly showed 5,531.6 acres. Crouch, another surveyor for the Railroad, also agreed that Lawson's survey was correctly done. Under Paragraph 6B, the Railroad was given seven days to make objections to the commitment or the survey. Thus, the Railroad had seven days to have its attorneys compare Lawson's survey with the original description in Exhibit A. The Railroad then had to make an objection to the new survey or any such objection was contractually waived.[3]
In its second argument, the Railroad argues that it did not waive objections "to Fawcett having no title to the Goundie Tract" because nothing in the commitment or survey "disclosed" Fawcett's lack of title. That is too narrow a reading of the word "disclosed" in Paragraph 6B's contractual waiver provision. The new Exhibit A-1 survey and survey map revealed or disclosed that the Goundie Tract was included. The commitment also listed the Goundie Tract. It was incumbent on the Railroad to examine the survey and survey map and object to the Goundie Tract being included. However, even if the Railroad had objected to the Goundie Tract being included, that objection would have contravened the parties' agreement in Paragraph 2 of Exhibit C on how the survey was to be done. The Railroad's real problem was the termination provision in Paragraph 3D *250 did not limit the acreage to be conveyed to acreage to which Fawcett had good and marketable title.
The Railroad's third argument because Fawcett had no title to the Goundie Tract, it should have been excluded from the survey also is contrary to the language of the sales contract. The survey determined the acreage included in the perimeter of the ranch as designated by its metes and bounds; objections to title or lack of title to any of that acreage had to be made under Paragraph 6. All witnesses agreed and the trial court found that a surveyor does not determine title to the land being surveyed. Lawson correctly followed the contract's provisions concerning his survey when he included the Buzbee Tract and Goundie Tract.
Under the terms of the contract, it does not matter whether Fawcett had any title to the Goundie Tract when he terminated the contract relying on the terms of Paragraph 3D; it only mattered whether the survey was done correctly. If not, the parties had to object to the survey under Paragraph 6B.
As it turned out during the trial, Fawcett actually had equitable title to the Goundie Tract.[4] That was why the title company was willing to insure title to the Goundie Tract and included it in its title commitment. When Lawson wondered why the Goundie Tract, an interior tract, had not been included in the deed description to Fawcett (Exhibit A), he found that a 1966 deed from E.M. Beddo and wife to Waddell had been misfiled at Elliott & Waldron Abstract Company. Therefore, the Beddo deed covering the Goundie Tract was not picked up when Elliott & Waldron closed the sale from Waddell to Fawcett in 1997, although Beddo had conveyed title to the Goundie Tract to Waddell. Waddell had always paid all taxes on the Goundie Tract. Curtis, the Railroad's surveyor, testified that, if he had done the survey, he would have included the Goundie Tract "in a perimeter survey" of the ranch. Fawcett had title, although it was not record title. The trial court's findings that Waddell and Fawcett had no title to the Goundie Tract are wrong as a matter of law.
At trial, Fawcett demonstrated that it could have easily corrected any title problem to the Goundie Tract and then conveyed good and marketable title, just as the title company had concluded by its commitment. After the Railroad filed its suit, Fawcett obtained a deed without warranty from Waddell to Fawcett that covered the Goundie Tract. Marsha Waddell Moller, Earl Waddell's granddaughter, testified that Waddell's intent in 1997 was to sell the entire ranch to Fawcett, including the Goundie Tract.
Bertel testified that the Railroad had drafted the language about the survey being conclusive. In Hooks v. Cook, 345 S.W.2d 592 (Tex.Civ.App.-Houston 1961, writ ref'd n.r.e.), the contract provided that the surveyor's acreage determination would be binding on both parties. The appellate court held that a mutual mistake, even if material, did not override the contract. The Railroad has attempted to distinguish this case on the ground that Lawson did not perform the survey in accordance *251 with the sales contract between Fawcett and the Railroad. But Lawson did perform his survey as their sales contract directed. Hooks is authority for Fawcett's argument that Lawson's survey was conclusive for purposes of the 10% termination provision in Paragraph 3D, regardless of how title questions would have been resolved under Paragraph 6.
The Mutual Mistake
Both parties agree that Lawson made a mistake that caused the parties to put in 5,000 acres. The Railroad contends that their mutual mistake in writing 5,000 acres in Paragraphs 2 and 3 warranted a reformation of the contract and that the trial court properly reformed the contract.
The Railroad argues that the evidence in the record demonstrated that neither party cared whether the ranch contained 5,000 acres or 5,531.6 acres, i.e., that their agreement was for Fawcett to sell all of the acreage of the ranch at a price of $950 per acre. The Railroad cites to the following testimony at trial by Roger Fawcett:
Q. And so if Mr. Lawson had told you 5,531.6 on the day you signed that contract, you would have put 5,531.6 in the blank, right?
A. That is right.
In support of its argument, the Railroad cites Cherokee Water Co. v. Forderhause, 741 S.W.2d 377, 379 (Tex.1987), where the supreme court stated that "reformation requires two elements: (1) an original agreement and (2) a mutual mistake, made after the original agreement, in reducing the original agreement to writing." There must be an actual agreement that was reached prior to the drafting of the instrument involved. Id. at 379.
It does not appear from the record that the parties had reached an agreement before their mutual mistake in writing in the number of 5,000 acres. The Railroad first offered $865 an acre for 5,370 acres as opposed to the asking price of $1,050. In rejecting that offer, Roger Fawcett faxed Bertel noting that "[p]reliminary discussions with the surveyor are indicating a total of 5,000 acres +/-, instead of the 5,300 previously thought" and attached a $975 per acre counteroffer. Then on March 4, Bertel faxed Fawcett a counteroffer of $945 per acre for 5,000 acres with the offered purchase price of $4,725,000 to be adjusted at closing by the final acreage determined by the new survey. The parties stipulated that on March 13 there was an e-mail from the Railroad's lawyer proposing a rewrite of a paragraph. At one point, Bertel agreed that he and Fawcett had relied on Lawson's estimate before they signed the contract. The sales contract was signed on March 18, 2002.
Roger Fawcett's statement was only an acknowledgment that he was relying on Lawson to provide the base number for Paragraph 3D at the time they entered the contract. It is not evidence that the parties had reached an agreement on 5,531.6 acres as a base before the mutual mistake was made. There is no evidence in the record to support the trial court's finding that the parties had reached an agreement before their mutual mistake. Reformation, an equitable remedy, was not available to the Railroad under the facts of this case. Equity cannot be invoked to create a contract that the court considers should have been made but was not. Uhlhorn v. Reid, 398 S.W.2d 169, 175 (Tex. Civ.App.-San Antonio 1965, writ ref'd n.r.e.). To obtain reformation, the Railroad had to prove the true agreement of the parties; it was not enough to show that both parties were mistaken about some feature of their bargain. Nat'l Resort Cmtys., Inc. v. Cain, 526 S.W.2d 510, *252 513 (Tex.1975). Although the surveyor gave an erroneous estimate, the record reflects that the parties used that figure when they agreed on a sales price and set a base number of acres for the termination provision.
Paragraph 3D was material to the transaction. A 10% variance meant an adjustment of over $500,000 to the estimated price of $4,750,000. From the terms of Paragraph 3D, the parties obviously considered the 10% provision material at the time they entered into the contract. One would normally think of Paragraph 3D as protecting the buyer if the purchase price was going to exceed 10% of the estimated purchase price and protecting the seller if the purchase price was going to be less than 90% of the estimated purchase price. For example, assume that the Railroad only had a financing commitment that was limited to no more than 10% above the estimated price. Paragraph 3D gave the Railroad an automatic way to terminate the contract. Fawcett, on the other hand, had a way to terminate the contract if he was going to be paid an amount that would be less than 10% of the estimated purchase price and needed (or simply wanted) an amount closer to the estimated purchase price. Here, however, Fawcett terminated under Paragraph 3D even though he was going to receive more for the ranch than anticipated. Under the terms of Paragraph 3D, he was permitted to do so.
We need not consider whether to grant rescission to Fawcett. By the terms of their contract, he was entitled to terminate their sales contract under the provisions of Paragraph 3D.
Other Equitable Theories
We also find that there is no evidence to support the trial court's findings that Fawcett could not terminate the contract under Paragraph 3D because of estoppel, unclean hands, waiver, and laches. The record reflects that, until Fawcett terminated the contract on May 13, both parties took only steps that were consistent with performing under the contract. The Railroad has not pointed this court to any evidence that would demonstrate some sort of detrimental reliance on a contract modification. At trial, the Railroad referred to a telephone call from Roger Fawcett to Jane Morgan, the broker, to support a theory that Fawcett had ratified a modification to the contract that Paragraph 3D would be ignored. That testimony by Fawcett, Morgan, and Bertel was at best ambiguous. When asked if he called Morgan when the number of acres came back at 5,531.6 acres, Fawcett answered, "I don't know." Roger Fawcett was then asked if he told Morgan to call Bertel to see "if he was going to stay hitched." He answered, "I vaguely remember talking to her about it somehow."
Morgan testified that there was some correspondence that indicated that Fawcett asked her to call and see if Bertel "would stay hitched," but she did not recall the actual conversation. She also said that the correspondence led her to believe that she did follow up "because [she did] know that [Bertel] still wanted to buy it and [Fawcett] still wanted to sell it."
Bertel testified that, after he received information about the increase to 5,531.6 acres, he heard from Morgan. Morgan said that, in view of the dramatic increase in acreage, she "wanted to assure herself, and I believe Mr. Fawcett, that [Bertel] was still interested in going forward." Bertel said he told Morgan that he was. Morgan testified that it was more land than anyone thought and that every indication from Bertel was that he still wanted to buy the ranch, "if [Fawcett] still wanted to sell it to him."
*253 Fawcett further testified that he ultimately found out that Bertel wanted to go ahead with the sale. He was asked whether he was concerned when the number came back that the Railroad might get out of the contract. Fawcett's response was as follows:
I wouldn't call it concerned. I didn't give it a lot of thought. If he wanted to stay, he could; and if he wanted to leave, he could. I mean, that was the contract. He had all kinds of outs on that contract.
The evidence referred to does not support the equitable theories found by the trial court. The Railroad has not pointed us to other evidence in the record to support those equitable theories.
Nor has the Railroad provided us with argument and record citations to support the trial court's finding that "[Fawcett] waived its right to terminate the contract" or that Fawcett was barred by laches or had unclean hands. Waiver consists of full knowledge of a known right (such as the parties' rights under Paragraph 3D) and intentional conduct inconsistent with claiming that known right. See EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex.1996); U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971). Laches requires an unreasonable delay in asserting a right and a detrimental change in position by the other party. City of Fort Worth v. Johnson, 388 S.W.2d 400, 403 (Tex.1964). We have found no evidence in the record supporting a finding of an unreasonable delay by Fawcett in exercising his right of termination under Paragraph 3D, nor has the Railroad provided us with that evidence.
We have found no evidence to support the trial court's finding that Fawcett could not terminate the contract because of unclean hands. That concept involves the denial of relief to a litigant whose conduct has been unconscientious or unjust or violates the principles of equity and fair dealing. Crown Constr. Co. v. Huddleston, 961 S.W.2d 552, 559 (Tex. App.-San Antonio 1997, no pet.). There was evidence in the record that, just before Fawcett terminated the contract, he received a faxed higher offer for the ranch on May 13. However, the contract expressly stated in Paragraph 6C(7) that, unless expressly prohibited in writing by the parties, Fawcett could continue to show the ranch for sale "and to receive, negotiate and accept back-up offers."
There also was evidence that there was a meeting on May 7 attended by Fawcett, Bertel, and James Lattimore, who represented Allied Waste, a landfill company. It appears that Fawcett had been negotiating with Lattimore to receive a payment and property improvements in exchange for dropping his opposition to a proposed landfill near the ranch. Bertel had also been discussing matters with Allied. The record reflects that Fawcett and Bertel disagreed over whether the Railroad would share in any payment from Allied. We do not find that evidence sufficient to support a finding that Fawcett acted with unclean hands.
Summary
Paragraph 2 of the contract described the property as 5,000 acres, more or less. Paragraph 3D used 5,000 acres to calculate the estimated price of the ranch as 5,000 acres times $950 per acre or $4,750,000. Paragraph 3D also provided a termination right to either party if the final survey required by Paragraph 6B resulted in a variance of more than 10% when the acres contained in the survey were multiplied by $950 per acre. The parties agreed in Paragraph 2 of Exhibit C that the survey *254 would be a perimeter survey and that the acreage determined by the survey would be conclusive as to the area to be conveyed. In surveying the ranch, the surveyor correctly followed the instructions in Exhibits C and C-1 of the contract.
Under Paragraph 6B, the Railroad had seven days to object to any title commitment exceptions or problems with the survey. This included any objections to title problems concerning the Buzbee Tract or the Goundie Tract or to those tracts being included within the survey. The title commitment excepted the Buzbee Tract from its insurance coverage, and the Railroad objected to that exception. The Railroad did not object to the title company's commitment to include and ensure title to the Goundie Tract. By the terms of Paragraph 6B, Fawcett had to cure any Buzbee Tract title problem and, if it could not be cured, the contract would terminate unless the Railroad waived its objections.
Paragraph 2 of Exhibit C does not require that the survey was to only include acreage to which Fawcett had good and marketable title. Paragraph 4a in Exhibit C required Fawcett to convey good and marketable title at closing "subject only to taxes for the current year, and any Title exceptions permitted by the terms of the Contract." Title exceptions permitted by the contract included (1) the title exception to insurance coverage of the title to the Buzbee Tract to which the Railroad objected and (2) the inclusion of the Goundie Tract within the survey to which the Railroad failed to object within the seven days as required by Paragraph 6B. Had Fawcett not terminated the contract under the provisions of Paragraph 3D, the Railroad's remedy if Fawcett could not cure the title problem to the Buzbee Tract would have been (1) to waive its objection and accept a special warranty deed conveying only Fawcett's record title or (2) to terminate the contract. Had the Railroad objected to the inclusion of the Goundie Tract within the perimeter survey, Fawcett would have had an opportunity to clear up the title problem. Assuming that before closing the Railroad had not terminated the contract because of Fawcett's holding only record title to the Buzbee Tract, both tracts would have been included in the final calculation of the purchase price. That purchase price would have varied more than 10% from the initial estimated price.
Title problems were not relevant to the termination provision in Paragraph 3D. The Railroad did not prove that the survey was inaccurate. The survey included 5,531.6 acres and resulted in a variance of more than 10% under Paragraph 3D. Either party could have terminated the contract.
This Court's Ruling
The judgment of the trial court is reversed, and judgment is rendered for Fawcett.
OPINION ON MOTIONS FOR REHEARING AND TO MODIFY JUDGMENT
TERRY McCALL, Justice.
The Railroad's Motion for Rehearing
Idaho Northern & Pacific Railroad Company (Railroad) has filed a motion for rehearing. No new arguments are presented. Again, the Railroad argues that this is not a contract construction case, that the findings of the trial court that the parties agreed to sell all of the ranch that had good and marketable title supported reformation, and that the mistake in Paragraph 3D (the ten percent termination provision) was immaterial.
The Railroad has not demonstrated why this is not a contract construction *255 case. When parties have executed an unambiguous, fully-integrated written agreement, as Fawcett and the Railroad did, the general rule is that extrinsic evidence, whether written or oral, is not admissible to prove either the intent of the parties to a contract or the meaning of contractual terms. Mark K. Glasser & Keith A. Rowley, On Parol: The Construction and Interpretation of Written Agreements and The Role of Extrinsic Evidence in Contract Litigation, 49 BAYLOR L.REV. 657, 660 (1997). Although the trial court below allowed an extraordinary amount of extrinsic evidence and made findings to reform the contract to an agreement the parties never made, it was not necessary to lengthen our opinion to address the trial court's numerous findings that were not relevant to our construction of the contract as a matter of law.
For example, the trial court in Finding No. 475 stated that "[i]t was [the Railroad's] intention and agreement to purchase All of the acreage of the XO Ranch to which [Fawcett] had good and marketable title" and in Finding No. 478 stated that "[Fawcett] intended to sell only the acreage to which it had good and marketable title." Paragraph 2 of the contract described the "Property" being sold as "5000 acres, more or less." It does not state "5000 acres, more or less, with good and marketable title." Further, the Railroad's proposed reformation would also rewrite Paragraph 4a in Exhibit C that stated that at closing, Fawcett would convey to the Railroad good and marketable title to the Property subject to "any Title exceptions permitted by the terms of the Contract."
The parol evidence rule does not bar extrinsic proof of a mutual mistake. See Santos v. Mid-Continent Refrigerator Co., 471 S.W.2d 568, 569 (Tex.1971). We addressed the surveyor's mistake and the timing of the contract's formation. The uncontradicted evidence was that the mutual mistake concerning the acreage the parties wrote in Paragraph 3D came before the parties reached their agreement. We need not repeat that analysis.
To accept the Railroad's argument, we would have to delete Paragraph 3D from the contract. We decline to do so. The Texas Supreme Court has consistently reiterated the importance of construing a contract so as to give meaning to each provision. Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). The Railroad's motion for rehearing is overruled.
Fawcett's Motion to Modify the Judgment
The parties stipulated in the trial court that the prevailing party would recover reasonable and necessary attorney's fees from the non-prevailing party in the following amounts: (1) $700,000 for services rendered at the trial court level through judgment; (2) $50,000 for services rendered at the court of appeals level; (3) $15,000 for services rendered at the Texas Supreme Court level in the event the non-prevailing party filed a petition for review, the prevailing party filed a response to the petition for review, and the petition for review was denied or refused; and (4) $20,000 for services rendered at the Texas Supreme Court level in the event the non-prevailing party filed a petition for review, the Texas Supreme Court granted review, and the non-prevailing party was ultimately unsuccessful in the Texas Supreme Court. The trial court entered an order recognizing the parties' stipulation. In its judgment, the trial court awarded attorney's fees to Idaho Northern in accordance with the stipulation. The trial court also awarded postjudgment interest on those *256 fees.[1] In our original opinion, we reversed the judgment of the trial court and rendered judgment in favor of Fawcett. Our judgment did not include an award of attorney's fees to Fawcett.
Fawcett has filed a motion to modify in this court requesting us to modify our judgment to award it attorney's fees in accordance with the parties' stipulation. Because the parties stipulated that the prevailing party would recover reasonable and necessary attorney's fees and also stipulated as to the amounts of those fees, we grant Fawcett's motion and modify our judgment to award it the following attorney's fees:
(1) that Fawcett have and recover from Idaho Northern reasonable and necessary attorney's fees in the sum of $700,000 for services rendered at the trial court level, plus interest at the rate of 5% compounded annually, from March 8, 2007, until paid;
(2) that Fawcett have and recover from Idaho Northern reasonable and necessary attorney's fees in the sum of $50,000 for services rendered at the court of appeals level, plus interest at the rate of 5% compounded annually, from the date of the court of appeals's final judgment until paid;
(3) that, if Idaho Northern files a petition for review in the Texas Supreme Court and Fawcett is required to file a response to the petition, and the petition is denied or refused, Fawcett have and recover from Idaho Northern reasonable and necessary attorney's fees in the sum of $15,000, plus interest at the rate of 5% compounded annually, from the date that Idaho Northern's petition for review is denied or refused until paid; and
(4) that, if Idaho Northern files a petition for review and the Texas Supreme Court grants review, and the petition is ultimately unsuccessful, Fawcett have and recover from Idaho Northern reasonable and necessary attorney's fees in the sum of $20,000, plus interest at the rate of 5% compounded annually, from the date of the Texas Supreme Court's final judgment until paid.
The motion for rehearing is overruled. The motion to modify the judgment is granted, and the modified judgment is issued as of this date.
NOTES
[1] Paragraph 2 defines the "Property" as "5000 acres, more or less," with the legal descriptions attached as Exhibit A. If the parties had added the acreage described in the fourteen tracts in Exhibit A, they would have easily determined that the tracts appeared to contain 5,676.6 acres, not 5,000 acres. Thus, the final survey of 5,531.6 acres did not vary from the initial legal descriptions in Exhibit A by more than 10%. However, the parties agreed on 5,000 acres as the base number in Paragraph 3.
[2] If Fawcett did not or could not cure an objection by the Railroad that Fawcett did not have good and marketable title to a specific tract, the contract provided that the Railroad had the option of terminating the contract or waiving the title exceptions.
[3] The Railroad cites several cases for the proposition that it did not intentionally waive any of its rights: U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996); and Guzman v. Ugly Duckling Car Sales of Tex., L.L.P., 63 S.W.3d 522, 528 (Tex.App.-San Antonio 2001, pet. denied). The cases are inapposite. Here, the waiver involved is a contractual waiver under Paragraph 6 that does not require a showing of intent. These cases would only be applicable to an argument by the Railroad that Fawcett by conduct had waived the Railroad's failure to object under Paragraph 6.
[4] The record reflects that Fawcett had title by the concept of strips and gores. The 57-acre tract was small in comparison to the total acreage of the ranch, it was surrounded by the land conveyed to Fawcett, it belonged to Waddell at the time of conveyance to Fawcett, and the tract was insignificant. Glover v. Union Pac. R.R. Co., 187 S.W.3d 201, 212 (Tex.App.-Texarkana 2006, pet. denied). We again emphasize that Fawcett was not required to prove that it had title to the Goundie Tract. The Railroad failed to object to its inclusion in the survey.
[1] Postjudgment interest accrues automatically once a court renders its judgment. Office of Attorney Gen. of Tex. v. Lee, 92 S.W.3d 526, 528 (Tex.2002); see also RAJ Partners, Ltd. v. Darco Constr. Corp., 217 S.W.3d 638, 653 (Tex.App.-Amarillo 2006, no pet.) ("[P]ostjudgment interest is mandated by statute.").
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542 F.2d 1167
Berry, Appeal of
No. 76-1254
United States Court of Appeals, Third Circuit
9/15/76
1
W.D.Pa.
AFFIRMED
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85 F.3d 617
77 A.F.T.R.2d 96-2184, 96-1 USTC P 50,321
NOTICE: Fourth Circuit Local Rule 36(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Carl R. SMINK; Winifred A. Smink, Petitioners-Appellants,v.COMMISSIONER OF THE INTERNAL REVENUE SERVICE, Respondent-Appellee.
No. 95-2158.
United States Court of Appeals, Fourth Circuit.
Submitted: April 23, 1996.Decided: May 9, 1996.
Appeal from the United States Tax Court. (Tax Ct. No. 94-6444)
Stephen G. Cochran, Daniel M. Rathbun, COCHRAN & RATHBUN, P.C., McLean, VA, for Appellants. Loretta C. Argrett, Assistant Attorney General, Gary R. Allen, Ann B. Durney, Sara Ann Ketchum, Tax Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, DC, for Appellee.
U.S.T.C.
AFFIRMED.
Before ERVIN and MICHAEL, Circuit Judges, and CHAPMAN, Senior Circuit Judge.
OPINION
PER CURIAM:
1
Carl R. Smink and Winifred A. Smink appeal from the tax court's order dismissing, for failure to prosecute, their joint petition for redetermination of the asserted deficiencies in their taxes for the 1989 tax year. Finding no abuse of discretion, we affirm.
2
The Sminks, acting pro se, filed their petition on April 20, 1994. The tax court set the case for trial at the trial session beginning March 6, 1995, notifying the parties that they are "expected to be present at that time and be prepared to try the case." The parties were also notified that failure to appear or failure to cooperate in the preparation of a stipulation of facts and evidence may result in dismissal of the case. In the standing pre-trial order, the parties were notified to be prepared to try the case any time during the term of the trial session and that continuances are granted "only in exceptional circumstances."
3
On December 21, 1994, counsel for the Commissioner sent the Sminks a request for admissions, seeking an agreement as to the authenticity and admissibility of eleven named and attached exhibits. The Commissioner's counsel also served the Sminks with a request for production of documents. Although Mr. Smink agreed to provide the documents, he did not.
4
Lawrence E. Lewy entered his appearance as counsel for the Sminks on January 5, 1995. On January 30, counsel for the Commissioner filed a motion to compel answers to the interrogatories, which were propounded to the Sminks on December 6, 1994. The tax court granted this motion, ordering the Sminks to serve answers to all of the interrogatories by February 16, 1995. The court also ordered that the Commissioner's motion for sanctions be heard at the trial session scheduled to begin on March 6, 1995. The Commissioner thereafter moved to compel production of documents. The tax court also granted this motion, ordering production of the requested documents by February 21, 1995, and deferred ruling on the motion for sanctions until the trial date.
5
Three days prior to the beginning of the trial session at which their petition was scheduled to be heard, the Sminks, pro se, filed a motion for a continuance. In that motion, they asserted that their attorney failed to respond to requests for production of documents and interrogatories, even after ordered to do so by the court, failed to prepare for trial, failed to file stipulations for trial, and failed to prepare a trial memorandum. The Sminks requested a continuance because they were not prepared for trial and they wished to retain new counsel.
6
On March 6, 1995, the tax court called the Sminks' case and, upon being informed that the Sminks' counsel was not prepared to try the case, denied the motion for a continuance, denied the Sminks' motion to relieve counsel, and granted the Commissioner's motion for judgment by default. The tax court entered its order of dismissal and decision on March 7, 1995, granting the Commissioner's motion to dismiss for failure to prosecute and upholding the deficiency determination of the Commissioner. The court also denied as moot the Commissioner's motions for sanctions.
7
The Sminks' counsel moved for reconsideration of the tax court's dismissal order, asserting that when he entered his appearance in the case on January 5, 1995, he was not aware that the case had been set for trial on March 6, 1995; he thought the case was merely set for a calendar call on that date. From the time of his entry of his appearance, counsel asserted that he had several settlement discussions with the Commissioner's counsel, and he sincerely believed that the case would be settled, rather than go to trial. Counsel requested that the tax court reopen the proceedings. By marginal order, the tax court denied counsel's motion for reconsideration. The Sminks noted a timely appeal on June 2, 1995.
8
Dismissal of an action for failure to prosecute or failure to comply with the court's rules is within the discretion of the trial court. Doyle v. Murray, 938 F.2d 33, 34 (4th Cir.1991); Hillig v. Commissioner, 916 F.2d 171, 173 (4th Cir.1990) (dismissal under Tax Court Rule 123). However, because dismissal is a harsh sanction, the court must employ some restraint. Hillig, 916 F.2d at 173; Reizakis v. Loy, 490 F.2d 1132, 1135 (4th Cir.1974).
9
The tax court may dismiss a case or enter a default under Tax Court Rule 123 for the taxpayer's failure to comply with the Tax Court Rules or any order of the court or for failure to prosecute. Further, the tax court may dismiss a case for failure to obey discovery orders. Tax Court Rule 104(c); see Aruba Bonaire Curacao Trust Co. Ltd. v. Commissioner, 777 F.2d 38, 43-45 (D.C.Cir.1985), cert. denied, 475 U.S. 1086 (1986).
10
Four factors must be considered prior to dismissal for failure to prosecute: (1) the petitioner's personal responsibility; (2) the amount of prejudice to the respondent; (3) the presence of a history of proceeding in a dilatory manner; and (4) the effectiveness of less drastic sanctions. Hillig, 916 F.2d at 174. Applying these factors to the tax court's dismissal of the Sminks' case, we find no abuse of discretion in the tax court's dismissal order.
11
The Sminks contend that they should not be held responsible for their attorney's failure to respond to discovery requests, failure to comply with the tax court's orders compelling discovery, and failure to prepare for the trial of this case. However, prior to retaining counsel, the Sminks failed to comply with the tax court's pretrial order by failing to respond to the Commissioner's proposed stipulation of facts and by failing to comply with the Commissioner's discovery requests. See Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir.1985) (failure to stipulate to documents prior to trial is sufficient grounds for dismissal of tax court petition). Further, the Sminks canceled or ignored appointments and ignored deadlines, document requests, and interrogatories. Although Mr. Smink agreed to provide documents and responses to the interrogatories by certain dates, he failed to do so and he failed to contact the Commissioner to obtain an extension of time. All of this occurred before the Sminks retained counsel. We find that the Sminks' actions before retaining counsel evidence a history of dilatory tactics and the Sminks' personal responsibility for failing to prosecute their tax court case.
12
Further, after retaining counsel, the Sminks--although aware of discovery deadlines and the trial date--failed to follow up with coun sel to ensure that the deadlines were met and the case prepared for trial. Contrary to their contention, the Sminks were not blameless for their attorney's inaction. See Doyle, 938 F.2d at 35 (client has some responsibility in selecting and supervising counsel); cf. Hillig, 916 F.2d at 174 (dismissal not appropriate if client blameless). Although the Sminks assert that they inquired about their case and were informed that counsel expected to have the case continued and expected to settle the case, anticipated settlement of the case does not excuse failure to prepare for trial.
13
Concerning the second Hillig factor--prejudice to the respondent--the Sminks contend that "the prejudice, if any, was neither substantial nor irreparable." They contend that a lesser sanction, such as monetary sanctions against their counsel, would have remedied any prejudice to the Commissioner caused by the need for a continuance to prepare for trial. While lack of prejudice does not prevent the dismissal of the case, Reizakis, 490 F.2d at 1135, the Sminks' failure to comply with the Tax Court Rules and orders of the court hindered the Commissioner's trial preparation and caused the Commissioner to expend additional resources in an attempt to force the Sminks' to cooperate with discovery and stipulations for trial.
14
As for the last factor, any lesser sanction would not be effective. The Sminks' suggestion of imposing monetary sanctions against their counsel would not serve to sanction the Sminks for their failure to comply with the tax court's rules and orders governing cooperation with discovery requests and stipulations. An alternative sanction, such as excluding from evidence any documents not provided to opposing counsel or entering a decision against the taxpayers on any issue on which they have the burden of proof, see Tax Court Rules 104(c), 123(b); Pfluger v. Commissioner, 840 F.2d 1379, 1382-83 (7th Cir.), cert. denied, 487 U.S. 1237 (1988), would have the same result as the tax court's dismissal for failure to prosecute. The Sminks had the burden of proof on all of the issues and they failed to stipulate to any documents. See Tax Court Rule 142(a); Helvering v. Taylor, 293 U.S. 507, 515 (1935). Barring them from presenting evidence would also result in a default. See Tax Court Rule 149.
15
In conclusion, consideration of all the factors governing dismissals for failure to prosecute reveals no abuse of discretion by the tax court in dismissing the Sminks' case. We therefore affirm the tax court's order dismissing the Sminks' petition for redetermination. 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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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. WR-60,467-04
EX PARTE DON VICTOR HARBOLT, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
CAUSE NO. W90-11313-V IN THE 292ND DISTRICT COURT
FROM DALLAS COUNTY
Per curiam.
O R D E R
This is a post-conviction application for a writ of habeas corpus forwarded to this Court
pursuant to Tex. Code Crim. Proc. art. 11.07, § 3. Applicant was convicted of forgery and
punishment, enhanced by a prior conviction, was assessed at confinement for fifteen years and a
$500 fine. There was no appeal from this conviction.
Applicant contends that he has not received credit for several periods of time in which he
was confined in California between 1993 and 2004 pursuant to parole violator warrants in this
cause. The trial court has entered no findings of fact.
It is this Court's opinion that additional facts need to be developed, and since this Court
cannot hear evidence, Ex Parte Rodriguez, 334 S.W.2d 294, 294 (Tex. Crim. App. 1960), the
trial court is the appropriate forum. The trial court may resolve those issues as set out in Article
11.07, § 3(d), TEX.CODE CRIM.PROC., in that it may order affidavits, depositions, or
interrogatories from both the criminal institutions and parole divisions of the Texas Department
of Criminal Justice, or it may order a hearing.
If the trial court elects to hold a hearing the court should first decide whether Applicant is
indigent. If the trial court finds that Applicant is indigent, and Applicant desires representation
by counsel, the trial court shall then appoint an attorney to represent him at the hearing pursuant
to the provisions of Article 26.04, TEX.CODE CRIM.PROC.
Following the receipt of additional information the trial court should make findings of
fact as to: what credit Applicant has been given for time he was confined on parole violator
warrants between 1993 and 2004; what dates, if any, that Applicant was confined in California
between 1993 and 2004 pursuant to a parole violator warrant in this cause; and whether
Applicant has presented this claim to the Texas Department of Criminal Justice office of time
credit resolution. The trial court should also make any further findings of fact and conclusions of
law which it deems relevant and appropriate to the disposition of Applicant's claim for habeas
corpus relief.
This application for post-conviction writ of habeas corpus will be held in abeyance
pending the trial court's compliance with this order. Resolution of the issues shall be
accomplished by the trial court within 60 days of the date of this order. (1) A supplemental
transcript containing any affidavits, exhibits, or transcription of the court reporter's notes from
any evidentiary hearing, along with the trial court's supplemental findings of fact and conclusions
of law, shall be returned to this Court within 90 days of the date of this order. (2)
DELIVERED: January 18, 2006
DO NOT PUBLISH
Keasler, J., not participating.
1. 1 In the event any continuances are granted, copies of the order granting the
continuance should be provided to this Court.
2. 2 Any extensions of this time period should be obtained from this Court.
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940 N.E.2d 819 (2010)
IN RE C.R.
Supreme Court of Indiana.
July 15, 2010.
Transfer denied. All Justices concur.
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Suri v Grey Global Group, Inc. (2018 NY Slip Op 05627)
Suri v Grey Global Group, Inc.
2018 NY Slip Op 05627
Decided on August 2, 2018
Appellate Division, First Department
Moulton, J., J.
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 August 2, 2018
SUPREME COURT, APPELLATE DIVISION
First Judicial Department
David Friedman,J.P.
Marcy L. Kahn
Cynthia S. Kern
Jeffrey K. Oing
Peter H. Moulton, JJ.
100846/11 5201
[*1]Rachana Suri, Plaintiff-Appellant,
vGrey Global Group, Inc., et al., Defendants-Respondents,
Plaintiffs appeals from the order of the Supreme Court, New York County (Donna M. Mills, J.), entered May 19, 2016, which, insofar as appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the claims for employment discrimination, sexual harassment, and hostile work environment under the New York State and City Human Rights Laws.
Michael G. O'Neill, New York, for appellant.
Davis & Gilbert LLP, New York (Jessica Golden Cortes and Nirupama S. Hegde of counsel), for respondents.
MOULTON, J.
Plaintiff Rachana Suri brings this appeal after Supreme Court granted defendants' motion for summary judgment and dismissed her complaint in its entirety. Supreme Court correctly dismissed most of Suri's claims. However, it erred in dismissing Suri's claim that she was discriminated against because she rebuffed the sexual advance of Pasquale Cirullo, her immediate supervisor. Suri offers evidence that after this alleged incident Cirullo's behavior toward her turned from affable to malignant, and her workplace became a hostile environment. As discussed below, this evidence is sufficient to create a triable issue of fact concerning her gender discrimination claim under the City Human Rights Law.
We first summarize the claims that Supreme Court correctly found could not survive defendants' motion for summary judgment. We agree that Supreme Court properly dismissed Suri's claims that she was terminated from her employment on account of her gender or ethnicity [*2]in violation of the State and City Human Rights Laws. In response to defendants' assertion that Suri's position was eliminated and that she was terminated as part of a corporate reorganization and reduction in force, Suri pointed to no evidence showing that her termination was motivated by discrimination (see Cadet-Legros v New York Univ. Hosp. Ctr., 135 AD3d 196, 200 n 1, 202 [1st Dept 2015]; Bennett v Health Mgt. Sys., Inc., 92 AD3d 29, 41 [1st Dept 2011], lv denied 18 NY3d 811 [2012]). Suri's employer's decision to terminate her was not made by Cirullo, nor was it made in consultation with him. Suri's contention that she was replaced by two white men does not support her claim that her termination was discriminatory. The individuals that she identified performed duties that mostly did not overlap with hers.[FN1]
Supreme Court correctly rejected Suri's discrimination claim based on an alleged failure to promote her. While Cirullo was hired for a supervisory position to which Suri had also applied, she makes no showing that the decision was gender-based and all the record evidence is to the contrary.
In addition, we agree with Supreme Court that Suri did not point to any evidence that her employer discriminated against her because she was Indian. Cirullo's single, isolated comment that she had "dark" skin under the circumstances alleged was a "stray remark[]" that does not support an inference of discrimination (Hudson, 138 AD3d at 517; Melman v Montefiore Med. Ctr., 98 AD3d 107, 125 [1st Dept 2012]).
However, while Supreme Court properly dismissed Suri's gender discrimination claim under the State Human Rights Law, Supreme Court erred in dismissing Suri's claim under the more broadly protective City Human Rights Law (see Hernandez v Kaisman, 103 AD3d 106, 114 [1st Dept 2012]). Suri offers evidence that Cirullo used his position to implicitly demand sexual favors, and, when she rebuffed him, to explicitly make her life miserable for the next 18 months. By this evidence Suri demonstrated that there are triable issues of fact concerning her claim under Administrative Code of City of NY § 8-107(1)(a).
Suri states that she began reporting to Cirullo in October 2008. She asserts that on Cirullo's first day as Senior Vice President, he walked into her office and told her she had beautiful hair. The next day he told her that she had really nice boots. Suri claims that about one week later, when she sat next to Cirullo at a meeting, he put his hand on her thigh, close to her knee, and squeezed lightly for a few seconds. Suri explains that she immediately moved away. She understood Cirullo's behavior as a sexual overture.
After this meeting, Suri claims that Cirullo's behavior towards her changed. According to Suri he dismissed her work; talked over her; put his hand in her face when she was talking; criticized, belittled and mocked her in front of other employees; cut her out of meetings; withheld resources; and delayed one of her projects. For the last six months of her employment, Cirullo stopped talking to her, even though he sat next to her. She also maintains that because Cirullo mistreated her, other employees followed along believing that it was permissible to disrespect her.
Suri explains that she only complained about the overture to her friends. However, she complained to the Executive Vice President in March 2009 that Cirullo cut her out of meetings. According to Suri, after the Executive Vice President intervened, Cirullo briefly relented and invited her to a few meetings. However, Cirullo soon resumed cutting her out of meetings and emails. Suri maintains that after she objected, Cirullo gave her the task of setting up the very same meetings to which she was not invited. In May or June 2009, Suri states that she complained to the human resources manager that Cirullo pulled her on and off projects and left her with no resources on one project. According to Suri, the human resources manager responded "that that's how men are and we have to tiptoe around their egos and this is a male-dominated world and we already know we work twice as hard as they do with less pay." As a result of this complaint, Suri explains that the manager requested that Cirullo create a new job description for her. Cirullo did so, but three days after the complaint, he removed her from a project.
Suri claims that as a result of the treatment inflicted by Cirullo and his followers, she developed gastrointestinal problems, lost significant weight, and required mental health counseling.
Cirullo denies complimenting Suri's appearance and squeezing her leg. He also contends that he treated all of his direct reports the same way and that, at worst, the behavior alleged by Suri just paints a portrait of a bad manager. Cirullo also maintains that even if Suri's allegations are true, the incidents amount to nothing more than petty slights or trivial inconveniences. Cirullo also takes issue with Suri's characterization of his hostility towards her, pointing to emails as evidence that they had a cordial relationship. He also maintains that she was too sensitive to her colleagues' tone, and attributed that sensitivity to her family issues.The City Human Rights Law
The City Human Rights Law is codified in title 8 of the Administrative Code (§ 8-101 et seq.). As is relevant to this action, Administrative Code § 8-107(1)(a) prohibits "[u]nlawful discriminatory practices" and provides that it is unlawful:
"(a) For an employer or an employee or agent thereof, because of the actual or perceived age, race, creed, color, national origin, gender, disability, marital status, partnership status, caregiver status, sexual orientation, uniformed service or alienage or citizenship status of any person:
"(1) To represent that any employment or position is not available when in fact it is available;
"(2) To refuse to hire or employ or to bar or to discharge from employment such person; or
"(3) To discriminate against such person in compensation or in terms, conditions or privileges of employment" (Administrative Code § 8-107{1}[a][1], [2], [3]).
In 2005, the City Council passed the Local Civil Rights Restoration Act of 2005 (Local Law No. 85 [2005] of City of NY § 1), finding that the provisions of the City Human Rights Law had been "construed too narrowly to ensure protection of the civil rights of all persons covered by the law." The Restoration Act revised the City Human Rights Law (Administrative Code § 8-130[a]) to state:
"The provisions of this title shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York State civil and human rights laws, including those laws with provisions worded [*3]comparably to provisions of this title, have been so construed."
In Williams v New York City Hous. Auth., in an opinion by Justice Acosta, we found that "the text and legislative history [of the Restoration Act] represent a desire that the City HRL meld the broadest vision of social justice with the strongest law enforcement deterrent" (61 AD3d 62, 68 [1st Dept 2009] [internal quotation marks omitted], lv denied 13 NY3d 702 [2009]). The Court of Appeals has also emphasized that all provisions of the City Human Rights Law should be construed "broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible" (Albunio v City of New York, 16 NY3d 472, 477-478 [2011]).
In Williams we also dispensed with the need for much of the nomenclature that has accreted over the years in gender discrimination jurisprudence, such as "sexual harassment" and "quid pro quo," and instead focused on "the existence of differential treatment" in connection with "unwanted gender-based conduct" (Williams, 61 AD3d at 75, 76). We explained:
"Despite the popular notion that sex discrimination' and sexual harassment' are two distinct things, it is, of course, the case that the latter is one species of sex- or gender-based discrimination. There is no sexual harassment provision' of the law to interpret; there is only the provision of the law that proscribes imposing different terms, conditions and privileges of employment based, inter alia, on gender" (id. at 75).
Thus, to establish a gender discrimination claim under the City Human Rights Law, a plaintiff need only demonstrate "by a preponderance of the evidence that she has been treated less well than other employees because of her gender" (id. at 78)[FN2]. We also found that the federal and state law, limiting actionable sexual harassment to "severe or pervasive" conduct, was not appropriate for the broader and more remedial City Human Rights Law (id. at 75-81). Instead, we recognized an affirmative defense whereby defendants can avoid liability if the conduct amounted to nothing more than what a reasonable victim of discrimination would consider "petty [*4]slights and trivial inconveniences" (id. at 80).[FN3]
In our view, the dissent's approach does not serve the broad remedial purpose of the City Human Rights Law. The dissent errs in parsing Suri's third cause of action into two claims: hostile work environment and sexual harassment, and then separately analyzing each claim as if they were unrelated. The dissent concludes that Cirullo's and Suri's coworkers' alleged mistreatment of her over an 18-month period far exceeded "petty slights." Nevertheless, the hostile work environment claim fails, the dissent concludes, because there is no evidence that the mistreatment was sexually motivated. In doing so, the dissent disregards Cirullo's alleged sexual overture (which is analyzed separately) and the temporal proximity between the alleged overture and the alleged 18-month period of mistreatment.
The dissent separately analyzes Cirullo's alleged overture as a sexual harassment claim, rejecting Suri's argument that it should be considered in connection with the 18-month period of mistreatment that followed. The dissent concludes that unlike the behavior over the 18-month period, the two compliments and the thigh squeeze amounted to nothing more than "petty slights." This conclusion is built upon the dissent's finding that Suri did not produce "some evidence" sufficient to raise an issue of fact as to whether Cirullo suggested a sexual relationship. In doing so, however, the dissent discounts Suri's own testimony.
The dissent erroneously rejects Suri's argument that her claim should be viewed holistically, finding that to do so improperly conflates or resurrects Suri's claims. The City Human Rights Law speaks to unequal treatment and does not distinguish between sexual harassment and hostile work environment. It contains no prohibition on conflating claims [FN4]. Rather the "overall context in which [the challenged conduct occurs] cannot be ignored" (Hernandez, 103 AD3d at 115).
Viewing the claim holistically, as we must, defendants are not entitled to summary judgment under the City Human Rights Law. The jury must decide whether Cirullo made a sexual overture, and whether Cirullo created a hostile work environment because Suri rebuffed that overture [FN5]. Sexual advances are not always made explicitly. The absence of evidence of a [*5]supervisor's direct pressure for sexual favors as a condition of employment does not negate indirect pressure or doom the claim (see Gallagher v Delaney, 139 F3d 338, 346 [2d Cir 1998] [jury must decide whether the plaintiff experienced a hostile work environment in violation of federal and state law where the plaintiff's supervisor never directly asked her to engage in sexual relations and never specifically conditioned her employment on accepting his gifts, offers, and signs of affection]).
Admittedly, that Cirullo did not expressly demand sex or engage in sexually charged conversations makes the facts of this case more equivocal than those of some of our precedents. However, "[i]t is not the province of the court itself to decide what inferences should be drawn . . .; if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper" (Vivenzio v City of Syracuse, 611 F3d 98, 106 [2d Cir 2010] [internal quotation marks omitted]).
It is a jury's function to determine what happened between Cirullo and Suri, and whether it amounted to gender discrimination. If it credits plaintiff's account of two "compliments" followed within approximately one week by her supervisor's palm on her thigh, and her description of how her treatment at the workplace deteriorated in the wake of these incidents, then a jury could find that such behavior did not constitute "petty slights or trivial inconveniences" (Williams at 80; compare Ji Sun Jennifer Kim v Goldberg, Weprin, Finkel, Goldstein, LLP, 120 AD3d 18, 25 [1st Dept 2014]).
Thus, in our view, Suri sufficiently raises an issue of fact as to whether she was "treated less well than other employees because of her gender" (Williams, 61 AD3d at 78) in violation of Administrative Code § 8-107(1)(a).The Bennett Burden-Shifting Framework
While we agree with the dissent's application of this framework to the wrongful termination and failure to promote aspects of Suri's claim under the City Human Rights Law (see Bennett, 92 AD3d at 29; see also Watson v Emblem Health Servs., 158 AD3d 179 [1st Dept 2018]; Hudson v Merrill Lynch & Co., 138 AD3d at 511), burden-shifting analysis does not apply to Suri's claim that Cirullo tacitly sought sexual favors from her, and treated her as a pariah for the next 18 months after she rebuffed him.[FN6]
The dissent cites to three of our prior decisions in order to buttress the position that the Bennett burden-shifting test applies to this claim (see Arifi v Central Moving & Stor. Co., Inc., 147 AD3d 551 [1st Dept 2017]; Kim, 120 AD3d at 18; Chin v New York City Hous. Auth., 106 AD3d 443 [1st Dept 2013], lv denied 22 NY3d 861 [2014]). The dissent's reliance on these three cases is misplaced.
In both Arifi and Kim, we did not apply the Bennett burden-shifting analysis to the plaintiffs' hostile work environment claims under the City Human Rights Law, although we applied the test to the plaintiffs' termination claims (Arifi, 147 AD3d at 551; Kim, 120 AD3d at 26). Our disagreement with the dissent, however, is not with the application of the Bennett burden-shifting test to Suri's termination or failure to promote claims. Rather, it is with respect to the application of the Bennett test to Suri's claim that she suffered a hostile work environment as the result of rejecting Cirullo's alleged sexual advance.
In Arifi, the plaintiff's hostile work environment claim failed because the plaintiff did not demonstrate that age discrimination was one of the motivating factors for the employer's hostile conduct (Arifi, 147 AD3d at 551). In Kim, the plaintiff's hostile work environment claim failed because the conduct at issue amounted to nothing more than "petty slights and trivial inconveniences" (Kim, 120 AD3d at 26 [internal quotation marks omitted]). Similarly, in Chin, the plaintiff's hostile work environment claim failed for reasons unrelated to the Bennett burden-shifting test - a test that was not applied to that claim. Although we applied the Bennett burden-shifting test in Chin to the plaintiff's failure to promote claim, the plaintiff's hostile work environment claim failed because the plaintiff did not demonstrate that she was treated less well than other employees because of her protected status or that discrimination was one of the motivating factors for the defendant's conduct (Chin, 106 AD3d at 444-445).
In our view, the dissent mistakenly applies the Bennett burden-shifting test to Suri's claim that Cirullo tacitly sought sexual favors from her, and mistreated her after she rebuffed him. In Bennett we weighed the applicability of the three-step burden-shifting framework set forth in McDonnell Douglas Corp. v Green (411 US 792 [1973]) to a summary judgment motion under the City Human Rights Law, where a plaintiff alleged wrongful termination [FN7]. We concluded [*6]that:
"[o]n a motion for summary judgment, defendant bears the burden of showing that, based on the evidence before the court and drawing all reasonable inferences in plaintiff's favor, no jury could find defendant liable under any of the evidentiary routes: under the McDonnell Douglas test, or as one of a number of mixed motives, by direct or circumstantial evidence" (Bennett, 92 AD3d at 41).[FN8]
Although we noted that a central purpose of the City Human Rights Law "was to resist efforts to ratchet down or devalue the means by which those intended to be protected by the City [Human Rights Law] could be most strongly protected" and "[t]hese concerns warrant the strongest possible safeguards against depriving an alleged victim of discrimination of a full and fair hearing before a jury of her peers by means of summary judgment," we nevertheless found that the defendants were properly granted summary judgment (id. at 44). We found that the employer justified its "adverse action" of termination because the plaintiff put forth no evidence that the defendants' explanations for terminating him were pretextual, or any evidence of a mixed motive.[FN9]
Notably, however, Bennett did not involve a claim for differential treatment resulting in a hostile environment. Our post-Williams cases demonstrate that courts should not automatically apply the Bennett burden-shifting framework to every aspect of a plaintiff's City Human Rights Law claim (see e.g. Kim, 120 AD3d at 18). In Kim, we applied the Bennett framework to a plaintiff's claim that she was terminated in retaliation for engaging in a protected activity, and we found triable issues of fact as to whether the employer's workforce reduction was a pretext for that termination (see id. at 25). However, in Kim we did not apply burden-shifting to that aspect of the plaintiff's claim arising out of a hostile workplace (id. at 26). Instead, we focused on whether a reasonable person would consider the conduct nothing more than petty slights and trivial inconveniences (id. at 26). We found that the claim, arising from one inappropriate gender-based comment and a reprimand for reading a book, should be dismissed because a [*7]reasonable person would consider the conduct nothing more than petty slights and trivial inconveniences (id.). Similarly, in Hernandez (103 AD3d at 106), where the issue of termination was not before us, we did not apply the Bennett test in concluding that summary judgment should be denied under the City Human Rights Law based on comments and emails which objectified women's bodies. Instead, we considered the totality of the circumstances, and, using a reasonable person standard, determined whether the behavior fell within the broad range of conduct between severe and pervasive on the one hand and petty slight or trivial inconvenience on the other (see Hernandez, 103 AD3d at 114-115 [internal quotation marks omitted]).[FN10]
In addition to the fact that cases such as Kim and Hernandez have not applied the Bennett burden-shifting framework to every aspect of a gender discrimination claim, we find the reasoning in Mihalik v Credit Agricole Cheuvreux N.A., Inc. (715 F3d 102 [2d Cir 2013]) persuasive. In that case, the Second Circuit analyzed a plaintiff's claim of gender discrimination and retaliation under the City Human Rights Law (id. at 107). The plaintiff alleged that she was subjected to suggestive comments and was propositioned for sex. After she refused her CEO's advances, she claimed that the CEO retaliated by excluding her from meetings, berating her in front of other employees, criticizing her work, and ultimately firing her (id. at 106-108).
In reversing the District Court's grant of summary judgment to the defendants, the Second Circuit criticized the District Court for considering the plaintiff's gender discrimination claim under a quid pro quo analysis and hostile work environment analysis (id. at 114). Under the City Human Rights Law, the Second Circuit observed, differential treatment may be actionable even where the treatment does not result in an employee's discharge. Williams made clear that the City Human Rights Law focuses on unequal treatment regardless of whether the conduct is "tangible" like hiring or firing (id.). Thus, even assuming that a plaintiff could not prove that she was dismissed for a discriminatory reason, she could still recover for other differential treatment based on her gender (id.). Notably, the Second Circuit observed that "[e]ven a poorly-performing employee is entitled to an environment free from sexual harassment" and that poor performance would not excuse alleged sexual advances and demeaning behavior (id.).
Therefore, while the Second Circuit applied the Bennett burden-shifting test to that part of the claim alleging wrongful termination, it declined to apply the framework to the alleged sexual advances and subsequent demeaning conduct (id.). Instead, drawing all reasonable inferences in the plaintiff's favor, the Second Circuit found that it could not conclude, as a matter of law, that there was no causal connection between the rejections of sexual advances and the supervisor's subsequent demeaning conduct.
Similarly, viewing the evidence in a light most favorable to Suri, we cannot conclude as a matter of law that Cirullo did not tacitly condition the terms, conditions or privileges of Suri's employment on submission to his alleged sexual overture and thereafter create a hostile work [*8]environment after she rejected him. That behavior would not be petty or trivial. Issues of fact exist for the jury as to whether Suri was treated less well because of her gender, in violation of Administrative Code § 8-107(1)(a).
Accordingly, the order of the Supreme Court, New York County (Donna M. Mills, J.), entered May 19, 2016, which, insofar as appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the claims for employment discrimination, sexual harassment, and hostile work environment under the New York State and City Human Rights Laws, should be modified, on the law, to deny the motion as to plaintiff's claim
under the City Human Rights Law in connection with her assertion that she rejected her supervisor's sexual overture and as a result he subjected her to a hostile work environment, and otherwise affirmed, without costs.
All concur except Friedman, JP.
and Kahn J. who dissent in part
in an opinion by Kahn, J.
KAHN, J. (dissenting in part)
I would affirm the order of the Supreme Court in all
respects. In my view, plaintiff has failed to proffer evidence
sufficient to raise an issue of fact as to whether those actions
allegedly taken by defendants that form the basis of plaintiff's
claims of hostile work environment and disparate treatment under the New York City Human Rights Law (Administrative Code of City of NY § 8-107[1][a]) (City HRL) were motivated by gender, race or ethnicity discrimination. With regard to plaintiff's conclusory allegations of two incidents of defendant Cirullo's complimenting her on her appearance and one incident of touching, while I believe that the behavior described in these alleged incidents is certainly inappropriate, I also believe that these incidents do not raise any issue of fact sufficient to defeat defendants' motion for summary judgment as to plaintiff's City HRL sexual harassment claim. Furthermore, I do not agree with the majority that three of plaintiff's retaliation claims (claims four, seven and eight), which she abandoned before the motion court and does not raise before us, also allege separable claims of hostile work environment and disparate treatment and, to that extent, should survive defendants' summary judgment motion. I do agree with the majority, however, that the remainder of plaintiff's claims were properly dismissed. I therefore respectfully dissent in part, as detailed below.
I. Statement of Facts
Except where indicated otherwise, the following facts are uncontested. Defendant Grey Global Group, Inc. is a global advertising and marketing agency. Plaintiff Rachana Suri, who identifies herself as a "brown skinned woman of Indian descent," was employed by Grey from June 2004 until her termination on April 27, 2010. Defendant Pasquale Cirullo was employed by Grey beginning in March 2008 and, in September 2008, became plaintiff's supervisor.
Plaintiff began working for Grey in June 2004 as a business analyst in its Financial Services Department at an annual salary of $70,000. She subsequently received several promotions and salary increases. In September 2005, she was promoted to Financial Manager at an annual salary of $85,000. In November 2006, her annual salary increased to $89,000. In January 2007, she was moved into Grey's Information Technology (IT) Department and promoted to Director.
In March 2008, plaintiff was invited to interview and apply for the position of Project Manager of the Donovan Data Systems (DDS) financial data management system which was to be implemented by Grey. Plaintiff was interviewed by John Grudzina, who was then Grey's [*9]Executive Vice President, General Counsel and Chief of Staff. He did not offer her the position, however, but instead offered it to Cirullo. According to Grudzina, his reasons for hiring Cirullo were that he was "very knowledgeable about the DDS system," "came very highly recommended" and "was directly involved in the negotiation of the DDS system."
One month later, in April 2008, plaintiff was again promoted, this time to the position of Vice President, which office she held until her termination, and her annual salary again increased, this time to $105,000. In July 2008, her annual salary was raised to $115,000 and remained at that amount until her termination in April 2010.
On September 1, 2008, Cirullo was promoted to Senior Vice President and Director of Business Systems and thereafter became plaintiff's supervisor. According to plaintiff, on Cirullo's first day as Senior Vice President and as her supervisor, he entered her office and, after a 5- to 10-minute work discussion, Cirullo told plaintiff that she had beautiful hair. The following day, Cirullo came into her office again and told her that she had nice boots.
According to plaintiff, in November 2008,[FN1] she and Cirullo attended a meeting with about six representatives of DDS. At the beginning of the meeting, while plaintiff was seated at a conference table with Cirullo seated directly to her right, Cirullo touched plaintiff's thigh, near her knee. He lightly squeezed her thigh for "[m]aybe a second or two." He did not caress her leg or otherwise move his hand on her leg, and he did not look at her or say anything. She immediately moved her chair away from him and made no eye contact with him throughout the two-hour meeting. Plaintiff interpreted Cirullo's touching her as a sexual overture, especially in light of his previous comments about her hair and boots.
Plaintiff has testified that the evening after the touching incident, she spoke about the incident with a friend who did not work at Grey, in the presence of her friend's boyfriend. That friend, in turn, introduced plaintiff to a person who worked in human resources at the United Nations, with whom plaintiff also discussed the incident. She has further stated that she also spoke about the incident with another close friend and confidant who is now deceased. Plaintiff has also stated that she eventually spoke to her parents about what had occurred that day. None of these individuals provided confirmation of such reports on the record before us, however. Plaintiff neither discussed the incident with Cirullo at any time nor reported it to anyone else at Grey. As plaintiff acknowledges, Cirullo never touched her again, and never made any sexual comments to her. In his own testimony, Cirullo denied that he touched plaintiff at any meeting, and did not recall giving her any compliments about her appearance, although he conceded that he may have done so.
According to plaintiff, over the course of the next 18 months, from November 2008 to April 2010, "Cirullo made my life at Grey miserable" in the following respects. Cirullo had been "very nice and outgoing" before the touching incident, but became distant and less communicative afterward. He also subjected her to a barrage of demeaning and negative treatment. Cirullo dismissed her work and her ideas. He talked over her, scoffed at her comments at meetings, publicly criticized her ideas, excluded her from meetings that she had arranged for him and invaded her privacy by snooping on her computer. Because Cirullo "set the tone" in her department, its other employees, who had previously respected her, felt at liberty to disrespect her. She experienced disrespectful treatment not only from her fellow Vice Presidents at Grey, but also from Grey employees who held a lower-level position than her own. In [*10]addition, Cirullo stole many of her ideas and presented them as his own, took her on and off projects at will and threatened to harm her career if she did not comply with his directives. Cirullo eventually removed her from important projects and stopped talking to her altogether.
According to Michael Yarcheski, a colleague of plaintiff's at Grey, however, he had attended "[q]uite a few" meetings with plaintiff and Cirullo and observed that Cirullo was "cordial to her." According to plaintiff, she complained to Mandy Preville Wellington, a former Grey employee who then worked in Grey's human resources department, "maybe ten times" in 2009 about the mistreatment she was receiving from Cirullo at Grey. Plaintiff has stated that she spoke to Wellington as a personal friend and not in her capacity as a Grey human resources employee, and does not believe that any formal report of her complaints was made by Grey's human resources department as a result of her conversations with Wellington. Wellington testified, however, that she does not recall plaintiff ever speaking to her about being mistreated or treated differently by Cirullo or any other Grey employees, however. Moreover, a series of email messages between Cirullo and plaintiff indicates a cordial relationship between the two of them, although plaintiff discounts the email messages as not representative of their relationship.
Cirullo further testified that plaintiff was not the only Grey employee reporting to him that he put on and took off projects, and that he also did this with other employees, male and female, when they had completed one aspect of a given project and when he thought that they would make a valuable contribution to a given aspect of another project. He also stated that he reassigned plaintiff at times when plaintiff's knowledge was redundant of that of other employees who were also working on the same project and that he thought that her time would be better spent on other projects.
According to plaintiff, Doug Livingston, who at the time was
head of the special projects group and who worked on a project with plaintiff but was not her supervisor, also belittled her, and talked over and disagreed with her at meetings.
Plaintiff maintains that in March 2009 she complained to Grudzina about Cirullo. Although plaintiff has not specified the nature of her March 2009 complaint, she has testified that, on an unspecified date, she went to Grudzina and told him that Cirullo wasn't inviting her to meetings, to which Grudzina responded that he would talk to Cirullo. According to plaintiff, after she complained to Grudzina, Cirullo invited her to two or three meetings but then excluded her from meetings once again.
In May 2009, plaintiff made a formal complaint to a female manager of Grey's human resources department, who was neither plaintiff's manager nor her supervisor, about being mistreated and disrespected by Cirullo and Livingston. She accused Cirullo of asking her to perform such tasks as sending out electronic meeting notices on his behalf, denying her the resources she needed to do her work and giving her no idea of what was expected of her. According to plaintiff, the human resources department manager's responses to her complaints were that "that's how men are," "this is a male-dominated world" and that women "work twice as hard as [men] do with less pay." Three days after her complaint to the human resources department manager, Cirullo removed her from a work project to which she had been assigned six weeks earlier. She then complained to Grudzina and the human resources department manager about being removed from the project and was told that her removal was Cirullo's decision to make.
Cirullo testified that, to the extent that plaintiff's complaint about lack of resources referred to her assigned task of training Grey's clients to use a computerized document repository system, with the exception of one other Grey employee with whom plaintiff was working at the time, she was the sole resource, as she and her coworker were the only ones trained to use the system and the only ones who could train others to use it.
After plaintiff's May 2009 meeting with the human resources department manager, Cirullo met with the same manager, who told him about plaintiff's complaint about not knowing what was expected of her. The manager suggested that Cirullo prepare a job description for plaintiff. Cirullo did so, and met with plaintiff to review the job description with her and to give her an outline of her responsibilities. According to Cirullo, plaintiff raised no objections or questions with regard to designated responsibilities and did not tell Cirullo that she needed any [*11]further resources to complete her designated tasks.
According to plaintiff, in October 2009, during a "terrorist alert day," she was pulled off the subway and searched, causing her to be late for a meeting at work. When she arrived at work, Cirullo commented that she should expect to be searched because she was "dark." Cirullo denied making any such comment.
In January 2010, Robert Walsh was hired as Grey's Chief Information Officer while the offices of other subsidiaries of WPP Group PLC, Grey's parent company, were being consolidated with Grey. Walsh was given the responsibility of determining how to consolidate the IT teams of the various WPP companies into one shared service, thereby eliminating overlap and duplication of resources and staff. The Grey IT Department consisted of several teams, including the Business Systems group, of which Cirullo was the Project Director and plaintiff the Project Manager. At the time, 10 to 15 employees worked in the Business Systems group. Pursuant to the consolidation effort, 13 Grey IT Department employees, including plaintiff, were dismissed as the result of reductions in force in February, April and May 2010. All of the terminated IT Department employees other than plaintiff were men, and included Caucasians, Asians and Latinos. Plaintiff was the only woman in the Business Systems group and was the only person in that group who was selected for termination in the course of the reductions in force.
Walsh testified that he decided to terminate plaintiff's employment without consulting Cirullo because he realized that she was working only on a single project and that the company needed to cut costs. He further testified that he did not know much about the quality of her job performance, but thought that, although she was capable of handling more work, she was not working at full capacity. He further observed that she was not asking to take on more work and did not seem like a "go-getter." Walsh included plaintiff in his list of employees to be terminated in the first round of layoffs in February 2010, but Cirullo urged him to defer her termination until April 2010 to allow her more time to finish her assigned tasks and to attempt to complete the one project on which she was working at the time. On the day of her termination, she was working on one aspect of one project but could not complete it that day. According to Cirullo, plaintiff was not replaced and no one took over her assignment after her dismissal.
After plaintiff's departure, Walsh hired two Caucasian men. According to Walsh, one of those two men, who had worked at a WPP subsidiary other than Grey, had been transferred to Grey by Walsh to perform work comparable to that performed by Cirullo. That man was placed in charge of oversight of Business Systems, a responsibility which plaintiff had not had while employed at Grey. The other of the two men, who had worked at yet another WPP subsidiary, was transferred to Grey by Walsh in May 2010 to "fix" the DDS system. That man replaced Cirullo as DDS Project Manager after Walsh's termination of Cirullo, which occurred in December 2010.
In January 2011, plaintiff commenced the instant action, alleging employment discrimination based on her gender, race and/or ethnicity in violation of the State and City HRLs, including claims for wrongful termination (claims nine and ten), failure to promote (claims one and two) and disparate treatment (claims five and six). Plaintiff also advanced a claim of creating a sexually, racially and/or ethnically hostile work environment and sexual harassment in violation of the City HRL (claim three). Defendants subsequently moved successfully for summary judgment dismissing all of plaintiff's claims.
II. Legal Standards
A. City HRL
The Court of Appeals has instructed that the City HRL must be "construe[d] . . . broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible" (Albunio v City of New York, 16 NY3d 472, 477—478 [2011]; see Administrative Code § 8-130[a] ["The [City HRL] shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York state civil and human rights laws . . . have been so construed"]; Administrative Code § 8-130[c] ["Cases that have correctly understood and analyzed the liberal construction requirement of subdivision a of this section and that have developed legal doctrines accordingly that reflect the broad and [*12]remedial purposes of [the City HRL] include [Albunio] . . ., [Bennett v Health Mgt. Sys., Inc., 92 AD3d 29 (1st Dept 2011), lv denied 18 NY3d 811 (2012)] . . . and the majority opinion in [Williams v New York City Hous. Auth., 61 AD3d 62 (1st Dept 2009), lv denied 13 NY3d 702 (2009)]"]).
In order to succeed on a motion for summary judgment dismissing City HRL employment discrimination claims of wrongful termination, failure to promote and disparate treatment, the moving defendant must establish that the evidence, viewed in the light most favorable to the plaintiff, shows that no reasonable jury could find the defendant liable "under any of the evidentiary routes," including the McDonnell Douglas framework (see McDonnell Douglas Corp. v Green, 411 US 792, 802 [1973]) and the "mixed motive" framework (see Williams, 61 AD3d at 78 n 27), "by direct or circumstantial evidence" (Bennett, 92 AD3d at 41).
With respect to City HRL employment discrimination claims, as our Court has explained:
"Under the McDonnell Douglas framework, a plaintiff asserting a claim of employment discrimination bears the initial burden of establishing a prima facie case, by showing that she is a member of a protected class, she was qualified to hold the position, and that she suffered adverse employment action under circumstances giving rise to an inference of discrimination. If the plaintiff makes such a showing, the burden shifts to the employer to show a legitimate, nondiscriminatory reason for the employment decision. If the employer succeeds in doing so, the burden then shifts back to the plaintiff to prove that the reason proffered by the employer was merely a pretext for discrimination" (Hudson v Merrill Lynch & Co., Inc., 138 AD3d 511, 514 [1st Dept 2016], lv denied 28 NY3d 902 [2016] [internal citations omitted]).
With respect to a claim of violation of the City HRL, we have cautioned:
"[The defendant's] explanatory second set of facts
. . . should not be relied on to negate the
plaintiff's prima facie case in the first instance,
but rather, seen as either: (a) the defendant's
articulation through competent evidence of
nondiscriminatory reasons for its action (stage two
in the McDonnell Douglas framework); or (b) part of
the defendant's ultimate effort to undercut the weight assigned to the plaintiff's evidence and thus disprove
the plaintiff's claim that it was more likely than not
that discrimination played a role in defendant's
actions" (Bennett, 92 AD3d at 37).
Under the "mixed motive" framework, the first two stages of the three-stage burden-shifting framework are the same as those of McDonnell Douglas, but the plaintiff's burden of proof in the third stage is lessened. In a "mixed motive" analysis, "[t]he question on summary judgment is whether there exist triable issues of fact that discrimination was one of the motivating factors for the defendant's conduct" (Williams, 61 AD3d at 78 n 27). Under this framework, "the employer's production of evidence of a legitimate reason for the challenged action shifts to the plaintiff the lesser burden of raising an issue as to whether the [adverse employment] action was motivated at least in part by discrimination" (Melman v Montefiore Med. Ctr., 98 AD3d 107, 127 [1st Dept 2012][internal quotation marks omitted]).
Under both the McDonnell Douglas and "mixed motive" frameworks, however, on a claim of employment discrimination under the City HRL, once the defendant has proffered nondiscriminatory reasons for the challenged action, "the plaintiff may not stand silent" (Bennett, 92 AD3d at 39). Rather, "[t]he plaintiff must either counter the defendant's evidence by producing pretext evidence (or otherwise), or show that, regardless of any legitimate motivations the defendant may have had, the defendant was motivated at least in part by discrimination" (id.). That burden may be satisfied by the plaintiff's offering of "some evidence that at least one of the [*13]reasons proffered by defendant is false, misleading, or incomplete" (Cadet-Legros v New York Univ. Hosp. Ctr., 135 AD3d 196, 200 [1st Dept 2015] [internal quotation marks omitted]). Only under "rare and unusual" circumstances should the defendant's production of evidence of a nondiscriminatory motive prompt the court to return to the question of whether the plaintiff made out a prima facie case for discrimination in the first instance (Bennett, 92 AD3d at 40).
On a claim of sexually hostile work environment in violation of the City HRL, a plaintiff must establish that she was " treated less well than other employees because of her gender'" (Short v Deutsche Bank Sec., Inc., 79 AD3d 503, 505-506 [1st Dept 2010], quoting Williams, 61 AD3d at 78). Such a claim may be dismissed only if the claim amounts to the "truly insubstantial case" in which the "defendant's behavior cannot be said to fall within the broad range of conduct that falls between "severe and pervasive" on the one hand and a "petty slight or trivial inconvenience" on the other'" (Hernandez v Kaisman, 103 AD3d 106, 114-115 [1st Dept 2012], quoting Williams, 61 AD3d at 80).
Although claims of hostile work environment in violation of the City HRL are to be liberally construed in the plaintiff's favor, the City HRL is not a "general civility code" (Williams, 61 AD3d at 79 [internal quotation marks omitted]). Accordingly, in order for such a claim to survive a summary judgment motion, the plaintiff must proffer "some evidence" that the defendant's adverse conduct toward the plaintiff had a discriminatory motive (see Cadet-Legros at 200; Bennett at 45).
Claims of sexual harassment under the City HRL are based upon allegations of "unwelcome sexual conduct — whether sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature" (Matter of Father Belle Community Ctr. v New York State Div. of Human Rights, 221 AD2d 44, 50 [4th Dept 1996], lv denied 89 NY2d 809 [1997] [addressing State HRL claims]). The City HRL does not differentiate sexual harassment from other forms of gender discrimination, however. Indeed, as we have explained in Williams, the City HRL has no express provision for sexual harassment claims at all (see Williams at 75 ["There is no sexual harassment provision' of the law to interpret; there is only the provision of the law that proscribes imposing different terms, conditions and privileges of employment based, inter alia, on gender"]). Rather, in City HRL analysis, "sexual harassment" is viewed as "one species of sex- or gender-based discrimination" (id.). However, our jurisprudence offers no basis for any departure from the Father Belle definition in identifying sexually harassing behavior. In short, sexual harassment under the City HRL involves unwelcome verbal or physical conduct of a sexual nature.
Thus, as we have stated in Williams, "the primary issue . . . in harassment cases, as in other terms and conditions cases, is whether the plaintiff . . . has been treated less well than other employees because of her gender" (Williams, 61 AD3d at 78). We have further observed that "[a]t the summary judgment stage, judgment should normally be denied to a defendant if there exist triable issues of fact as to whether such conduct occurred" (id.). While a plaintiff need not demonstrate that the incidents of an employer's unwelcome sexual conduct were "severe and pervasive" in order to establish an actionable claim of sexual harassment under the City HRL, summary dismissal of a City HRL sexual harassment claim is available to employers in "truly insubstantial cases" where "the alleged discriminatory conduct in question . . . could only be reasonably interpreted . . . as representing no more than petty slights or trivial inconveniences" (id. at 80).
With regard to the circumstances under which a corporate employer may be held vicariously liable for the discriminatory acts of its employees, the "City HRL imposes strict liability on employers for the acts of managers and supervisors . . . where . . . the offending employee exercised managerial or supervisory responsibility'" (McRedmond v Sutton Place Rest. & Bar, Inc., 95 AD3d 671, 673 [1st Dept 2012], quoting Zakrzewska v New School, 14 NY3d 469, 479 [2010], quoting Administrative Code § 8-107[13][b][1]).
B. State HRL
This Court's summary judgment review of State HRL employment discrimination claims is limited to McDonnell Douglas analysis under binding Court of Appeals precedent (see Forrest v Jewish Guild for the Blind, 3 NY3d 295, 305 [2004] [setting forth McDonnell Douglas [*14]framework only]; Fletcher v Dakota, Inc., 99 AD3d 43, 52 n 2 [1st Dept 2012] ["While we rely upon Forrest in addressing plaintiff's State HRL claim (because that case continues to be binding upon us in the context of State HRL claims), we do not rely upon Forrest with respect to plaintiff's City HRL claim"]).
III. Discussion
Plaintiff has delineated her claims of gender and race/ethnicity employment discrimination as wrongful termination (claims nine and ten), failure to promote (claims one and two) and disparate treatment (claims five and six) in violation of both the City and State HRLs. In addition, she advances a claim of creation of a sexually, racially and/or ethnically hostile work environment in violation of the City HRL and an apparent claim of sexual harassment in violation of the City HRL (claim three). Hence, I will address plaintiff's claims as so delineated.
At the outset, in order to determine whether plaintiff's claims were properly dismissed, a review of these claims under a combined McDonnell Douglas and "mixed motive" evidentiary framework analysis is consistent with our precedent (see e.g. Hudson, 138 AD3d at 514-517). Beginning with the first stage of the inquiry, here, it is undisputed that plaintiff, who describes herself as a "woman of Indian descent," is a member of a protected class; that she was qualified for the position she held at Grey; that she suffered the adverse employment action of being terminated from her position; and that she alleges that she was denied a promotion, subjected to a hostile work environment, was sexually harassed and received disparate treatment from that accorded to Caucasian male employees, under circumstances that give rise to an inference of gender or racial/ethnic discrimination on defendants' part. Thus, I would find that plaintiff has met her burden of establishing a prima facie case for all of her claims of employment discrimination. I now turn to the next stage of the analysis, which is to ascertain whether defendants have provided any nondiscriminatory explanation for their actions as to each of plaintiff's claims, and if so, whether plaintiff has sufficiently responded with some evidence to counter defendants' explanation.
A. Wrongful Termination Claims (Claims Nine and Ten)
1. City HRL
With respect to whether defendants have proffered any nondiscriminatory explanation for plaintiff's termination, Walsh testified that, without consulting Cirullo, he determined that plaintiff should be among the employees terminated in the reduction in force because she was working only on a single project at that time and because Grey needed to cut costs. "There is no question that a reduction in force undertaken for economic reasons is a nondiscriminatory basis for employment terminations" (Hudson, 138 AD3d at 515). In addition, unsatisfactory work performance is also a nondiscriminatory basis for termination (id., citing Bennett at 45-46). Thus, defendants have met their burden of providing nondiscriminatory explanations for plaintiff's termination.
Having determined that defendants have satisfied their burden under the second stage of both evidentiary frameworks, I now turn to the last stage of the inquiry, which is to determine whether, under the McDonnell Douglas framework, plaintiff has proven that the reasons proffered by defendants for her termination were merely a pretext for discrimination against her, or whether, under the lesser burden of the "mixed motive" framework, plaintiff has raised an issue as to whether her termination was motivated, at least in part, by discrimination. As our Court has stated, in the face of nondiscriminatory explanations for defendants' actions, "plaintiff may not stand silent" (Bennett, 92 AD3d at 39).
Here, in support of her argument that Walsh's explanations for her termination were a pretext for defendants' discriminatory motivation, plaintiff asserts that she was replaced by two Caucasian men hired by Walsh after her departure. However, Cirullo has testified that plaintiff was not replaced and that no one took over her assignments. Indeed, on the day that plaintiff was terminated, she was working only on one aspect of a single project. Moreover, the defense offered testimony that one of the men to whom plaintiff refers had been transferred from another WPP subsidiary to perform work comparable to Cirullo's, not plaintiff's, including oversight of Business Systems, a responsibility plaintiff did not have while working at Grey. The other man to whom plaintiff refers had worked on DDS at another WPP subsidiary and was hired by Walsh [*15]in May 2010 to "fix" the DDS system. That man eventually replaced Cirullo, not plaintiff, as DDS Project Manager. Plaintiff has not addressed any of this evidence.
Furthermore, plaintiff has not controverted Walsh's testimony that he did not consult Cirullo in making the decision to terminate plaintiff. There is no evidence that Cirullo's actions in pulling plaintiff off projects or any of the mistreatment plaintiff allegedly suffered at the hands of Cirullo was designed to create a pretext for plaintiff's termination. Collaboration between Cirullo and Walsh for the purpose of creating a pretext for plaintiff's termination is not supported by the record, not only in light of Walsh's uncontroverted testimony that he did not consult Cirullo prior to deciding to terminate plaintiff, but also in view of Cirullo's uncontroverted testimony that, upon learning that Walsh had placed plaintiff on the list of employees to be terminated, he prevailed upon Walsh to keep plaintiff on the job to allow her more time to attempt to finish her assigned tasks. Moreover, Walsh terminated Cirullo just a matter of months after he terminated plaintiff. No evidence has been presented casting doubt on Walsh's testimony that, at the time he was implementing the reduction in force, as far as he knew, plaintiff was working only on a single project rather than at full capacity. In any event, plaintiff has presented no evidence suggesting that even a single reason given by defendants for her termination is pretextual, i.e., "false, misleading or incomplete" (Cadet-Legros, 135 AD3d at 200 [internal quotation marks omitted]).
Additionally, plaintiff does not dispute that 12 other people, all men, were terminated from Grey's IT department following consolidation.
Although Grey could be found vicariously liable for any discriminatory actions taken by Walsh and Cirullo with
respect to her termination, as both of them exercised
managerial or supervisory authority over plaintiff at all
relevant times (see Zakrzewska, 14 NY3d at 479-480; McRedmond, 95 AD3d at 673), plaintiff has failed to rebut the nondiscriminatory reasons given for Walsh's actions and Walsh's assertion that Cirullo was not involved in plaintiff's termination. Accordingly, I concur with the majority that this claim, brought against Grey on a vicarious liability theory, does not survive defendants' summary judgment motion.
2. State HRL
Because plaintiff's City HRL claim, notwithstanding the more liberal analysis afforded to claims advanced under that law, does not survive defendants' summary judgment motion, a fortiori, its State HRL counterpart also fails on summary judgment review. Accordingly, I concur with the majority that this claim was properly dismissed.
B. Failure to Promote Claims (Claims One and Two)
1. City HRL
With regard to whether defendants have proffered any nondiscriminatory explanation for the failure to promote plaintiff, Grudzina has stated that he hired Cirullo because he was very knowledgeable about the DDS system, came highly recommended and was directly involved in the negotiation of that system. Plaintiff has made no showing that any of these nondiscriminatory reasons for hiring Cirullo was pretextual. Moreover, plaintiff has admitted that she has made no factual allegations of discrimination against Grudzina.
Plaintiff claims that Grey's discriminatory motive in failing to promote her is demonstrated by Cirullo's alleged statements to her about his experience and his own later dismissal by Walsh for poor managerial performance, both of which, she claims, show that he was not as qualified for the position as she was, and by his referral by a Caucasian man at WPP to Grudzina, another Caucasian man. She contends that all of these considerations give rise to an inference of gender, racial and/or ethnic discrimination. Her statement that Cirullo told her that he was not qualified for the position constitutes hearsay, and, in any case, does not establish discrimination on Grey's part, especially since Cirullo was already working in the DDS system at the time. Moreover, in April 2008, one month after plaintiff was passed over for promotion to the DDS manager position, plaintiff herself was promoted to the position of Vice President. Plaintiff's argument that Cirullo's referral by a Caucasian male to another Caucasian male demonstrates a discriminatory motive is speculative and conclusory. Thus, in response to [*16]defendants' motion, plaintiff has failed to raise a triable issue of fact as to whether Grey's denying plaintiff a promotion was attributable, in whole or in part, to gender, race and/or ethnic discrimination.
Moreover, plaintiff's argument that the failure to promote her is indicative of discrimination against her on Grey's part is undermined by the fact that in April 2008, one month after she was passed over for the DDS project manager position, upon her promotion to Vice President, her annual salary was increased to $105,000, followed by an increase to $115,000 in July 2008.
Therefore, plaintiff's claim of failure to promote in violation of the City HRL fails under both the McDonnell Douglas and "mixed motive" evidentiary frameworks. Accordingly, I believe that the motion court correctly granted summary dismissal of that claim.
2. State HRL
Because plaintiff's City HRL claim fails to survive the summary judgment motion under a McDonnell Douglas framework analysis, a fortiori, its State HRL counterpart also fails to survive the motion under the same evidentiary framework. Therefore, I concur with the majority that this claim, too, was correctly dismissed.
C. Hostile Work Environment Claim (Claim Three)
Plaintiff alleges that defendants created a sexually, racially and/or ethnically hostile work environment in violation of the City HRL. Specifically, plaintiff asserts that the series of incidents of alleged mistreatment she received from Cirullo and other Grey employees for the 18-month period following the alleged touching incident, i.e., from November 2008 to April 2010, during which Cirullo "made [her] life at Grey miserable," subjected her to a hostile work environment because of her gender, race and/or ethnicity.
1. Sexually hostile work environment
On a claim of creation of a sexually hostile work
environment in violation of the City HRL, a plaintiff must establish that she was "treated less well than other employees because of her gender" (see Williams, 61 AD3d at 78; see also Short v Deutsche Bank Sec., Inc., 79 AD3d at 505-506).
We addressed the subject of sexually hostile work environment in Hernandez v Kaisman (103 AD3d 106 [1st Dept 2012]). In Hernandez, the defendant, a physician, sent a series of sexually offensive email messages and repeatedly made sexually offensive comments to his employees. In modifying the motion court's order granting summary dismissal of the plaintiffs' claims to the extent of reinstating their claim of sexual discrimination/sexually hostile work environment under the City HRL, we found that the defendant's comments and email messages objectifying women's bodies, including comments about the size of one of his employee's breasts and the size of another employee's buttocks, and exposing them to sexual ridicule clearly showed that the defendant was creating a sexually hostile work environment (id. at 115). Thus, in Hernandez, the facts presented demonstrated that that case was not the "truly insubstantial case" in which a defendant's behavior amounts to no more than "petty slights and trivial inconveniences" (id. at 115). Significantly for present purposes, the facts also clearly showed that the defendant's conduct was sexually and gender motivated and, as such, supported the plaintiffs' sexually hostile work environment claim. Therefore, in Hernandez, denial of the defendant's summary judgment motion was required.
This case presents no such situation, however. To be sure, the recurring mistreatment plaintiff allegedly received from Cirullo and other employees at Grey over the 18-month period in question was disrespectful and demeaning, far exceeding the "petty slights and trivial inconveniences" found in truly insubstantial cases. There is no evidence, however, that in any of the series of incidents of harsh mistreatment of plaintiff that allegedly occurred during that time, "she was treated less well than other employees because of her [gender]" (see Chin v New York City Hous. Auth., 106 AD3d 443, 445 [1st Dept 2013], lv denied 22 NY3d 861 [2014] [emphasis added]; Short, 79 AD3d at 505-506; Williams, 61 AD3d at 78), or that defendants' conduct was, even in part, sexually motivated (see Chin at 445). In contrast to Hernandez, where each of the email messages and comments in question had a sexually offensive component to it that signaled the defendant's intention to foster a sexually demeaning work environment for women, the [*17]record in this case is bereft of any evidence that any of the degrading incidents described by plaintiff signaled a sexual or gender-based motivation on the part of Cirullo or any other Grey employee.
However badly plaintiff was treated, in order for plaintiff's claim of sexually hostile work environment in violation of the City HRL, which is not a "general civility code" (Williams, 61 AD3d at 79 [internal quotation marks omitted]), to survive a summary judgment motion, plaintiff must proffer "some evidence" that defendants' adverse conduct was motivated by gender or sexual discrimination (see Cadet-Legros at 200; Bennett at 45). Here, plaintiff proffers no such evidence.
Furthermore, Cirullo provided nondiscriminatory explanations for his actions, none of which are rebutted by plaintiff. With respect to plaintiff's allegations that Cirullo put her on and took her off projects, Cirullo explained that he also did this with other employees, male and female, when they had completed one aspect of a given project and when he thought that they would make a valuable contribution to a given aspect of another project. He further explained that he would reassign plaintiff because at times plaintiff's knowledge was redundant of that of other employees who were also working on the same project and that he thought that her time would be better spent on other projects. He also stated that he did not provide her with additional resources to aid her in training clients to use the computerized document system because only plaintiff and one other employee working with her were trained in the use of that system and were the only ones who could train others to use it. With regard to plaintiff's complaint that she had to arrange meetings, she has acknowledged that other people, including Cirullo, also set up meetings and invited her to attend them.
Thus, plaintiff has proffered no evidence rebutting Cirullo's nondiscriminatory explanations for the conduct of which she complains.
Notably, the uncontroverted record reveals that none of plaintiff's complaints to Grudzina or the human resources department manager mentioned gender-based or sexually discriminatory conduct, including her March 2009 complaint to Grudzina about Cirullo which apparently concerned Cirullo's failure to invite her to meetings; her May 2009 complaint to the human resources department manager about Cirullo's giving her the task of sending out electronic meeting notices, not giving her the resources she needed to do her job and not giving her any indication of what was expected of her; and her subsequent complaint to both Grudzina and the manager about Cirullo's taking her off a project three days after she made her prior May 2009 complaint to the manager.
Moreover, Cirullo has stated that after plaintiff met with the manager of Grey's human resources department and complained about, among other things, not knowing what was expected of her, Cirullo met with that same manager, who advised him to prepare a job description for plaintiff. He did so and reviewed it with plaintiff, giving her an outline of her responsibilities. According to Cirullo, plaintiff voiced no objections or questions with regard to her designated responsibilities and did not tell Cirullo that she needed any further resources to complete her designated tasks. Plaintiff does not dispute Cirullo's statement.
Furthermore, throughout the 18-month period in question, plaintiff's position as Vice President and her annual salary of $115,000 remained unchanged, and there is no evidence that Cirullo or anyone else at Grey took any steps to remove her from that position or to decrease her salary. Indeed, it is uncontroverted that when Walsh determined that plaintiff should be terminated in February 2010, Cirullo intervened and successfully persuaded him to postpone her termination to April 2010. Cirullo's intervention to forestall plaintiff's termination is inconsistent with plaintiff's claim that Cirullo actions were motivated by discrimination against her.
Thus, there is insufficient evidence to show that gender discrimination played any part in Cirullo's decisions or actions over the course of the 18-month period in question.
2. Racially and/or ethnically hostile work environment
With respect to that aspect of plaintiff's claim alleging that defendants created a racially and/or ethnically hostile work environment, the sole evidentiary basis of that claim is plaintiff's [*18]statement that Cirullo once referred to her as "dark." That comment could just as reasonably be interpreted as Cirullo's commiserating with plaintiff, however, by commenting on improper racial profiling by the police to explain to plaintiff why she was pulled off the subway, and not reflective of any racial or ethnic bias on his part.
Moreover, plaintiff proffers no evidence of any nexus between Cirullo's remark about her and the course of mistreatment she allegedly endured. At most, Cirullo's comment was a stray remark which does not constitute evidence of discrimination (see Godbolt v Verizon, N.Y. Inc., 115 AD3d 493, 494 [1st Dept 2014], lv denied 24 NY3d 901 [2014]; Melman v Montefiore Med. Ctr., 98 AD3d at 125).
Furthermore, Grey cannot be held liable for any discriminatory actions taken against plaintiff during the 18- month period in question by any Grey employees other than Cirullo because, with the exception of Walsh, who played no role in the course of mistreatment plaintiff allegedly endured, no other Grey employee, including Doug Livingston, had any managerial or supervisory authority over plaintiff (see Zakrzewska, 14 NY3d at 479-480; McRedmond, 95 AD3d at 673).
Therefore, in my view, the motion court properly dismissed plaintiff's claim of creation of a sexually, racially and/or ethnically hostile work environment in violation of the City HRL.
D. Sexual Harassment Claim (Claim Three)
To the extent that plaintiff alleges a sexual harassment claim in connection with her hostile work environment claim, the only unwelcome sexual conduct she alleges are the three alleged incidents from the fall of 2008: Cirullo's complimenting her hair on his first day of work as Senior Vice President; his complimenting her on her boots the following day; and his touching of her thigh shortly thereafter, apparently during the November 2008 meeting. As noted, Cirullo has denied the touching incident.
Here, although plaintiff "may not stand silent" (Bennett, 92 AD3d at 39), she proffers no evidence that the alleged incidents in question, the two compliments and the one touching incident, amount to anything more than "petty slights" (see Williams, at 80). Moreover, plaintiff does not support her contention that these incidents amount to an overture by Cirullo that plaintiff have a sexual relationship with him with "some evidence" sufficient to raise a triable issue of fact (see Cadet-Legros at 200; Bennett at 45). Finally, there is no evidence that any unwelcome sexual conduct was visited upon plaintiff from November 2008 to her departure in April 2010.
Although both plaintiff and the majority urge that we not consider the three incidents in question in isolation, but in connection with the incidents of mistreatment that occurred in the 18-month period that followed, to do so in the context of plaintiff's third claim for relief would improperly conflate her sexual harassment and hostile work environment claims. Further, in advancing this argument, plaintiff is attempting to resurrect her retaliation claims (claims four, seven, eight, eleven and twelve), which, as previously noted, were dismissed by the motion court without opposition from plaintiff, and have not been raised on the present appeal (see discussion in § III.F, infra).
Therefore, to the extent that, in claim three, plaintiff alleges a City HRL sexual harassment claim, I believe that the motion court properly dismissed it.
E. Disparate Treatment Claims (Claims Five and Six)
I now turn to plaintiff's claims of disparate treatment motivated by gender and racial and/or ethnic discrimination on defendants' part.
1. City HRL (Claim Six)
At the outset, plaintiff proffers no evidence that Caucasian men or any other Grey employees whose race or ethnicity differed from her own and who were similarly situated to her were better treated by defendants than she was.
To the extent that the factual underpinnings of plaintiff's claim of disparate treatment in violation of the City HRL have not already been addressed in our preceding discussion of plaintiff's wrongful termination and hostile work environment claims, applying the Bennett burden-shifting analysis, which remains applicable to plaintiff's claims of City HRL discrimination other than wrongful termination and has continuing vitality in our Court's [*19]jurisprudence (see Arifi v Central Moving & Stor. Co., Inc., 147 AD3d 551, 551 [1st Dept 2017] [applying Bennett analysis to City HRL hostile work environment claim]; Ji Sun Jennifer Kim v Goldberg, Weprin, Finkel, Goldstein, LLP, 120 AD3d 18, 25-26 [1st Dept 2014] [City HRL retaliatory discharge and gender/pregnancy discrimination claims]; Chin v New York City Hous. Auth., 106 AD3d at 444-445 [City HRL retaliation and hostile work environment claims], where, as here, no evidence is presented to rebut any of defendants' proffered nondiscriminatory reasons for their actions, plaintiff's discrimination claims must fail (see Arifi, 147 AD3d at 551 [the plaintiff's failure to present any evidence of discriminatory animus in response to the defendant corporation's proffered nondiscriminatory reason for its actions was "fatal" to the plaintiff's hostile work environment claim, citing Cadet-Legros at 202; Bennett at 39-40]; see also Chin, 106 AD3d at 444-445 [upholding dismissal of City HRL retaliation claim where the plaintiff employee failed to raise an issue of fact as to whether nondiscriminatory reasons proffered by the defendant authority for failing to promote her were pretextual]). Neither does plaintiff proffer any evidence that any negative treatment she allegedly experienced in the course of her employment at Grey due to Cirullo's or Walsh's actions was "because of her gender" (see Short, 79 AD3d at 505-506; Williams, 61 AD3d at 78) or was motivated by race and/or ethnicity discrimination.
Moreover, plaintiff's claim of disparate treatment is undermined by the fact that she received promotions and salary increases while at Grey, rising from the position of business analyst in its Financial Services Department at an annual salary of $70,000 to the position of Vice President at an annual salary of $115,000.
Therefore, in my view, this claim is not actionable under either the McDonnell Douglas or the "mixed motive" evidentiary framework and was properly dismissed by the motion court.
2. State HRL (Claim Five)
Because plaintiff's City HRL claim fails to survive under the McDonnell Douglas framework analysis, a fortiori, its State HRL counterpart also fails to survive defendant's summary judgment motion under the same evidentiary framework.
Therefore, I concur with the majority that this claim was properly dismissed.
F. Retaliation Claims (Claims Four, Seven, Eight, Eleven and Twelve)
None of plaintiff's retaliation claims (claims four, seven, eight, eleven and twelve) are properly raised on this appeal. Plaintiff failed to respond to defendants' motion as to those claims before the motion court and did not move for reargument upon that court's dismissal of them. Accordingly, any challenge to the dismissal of those claims is unpreserved on the record before us.
Plaintiff's mention in her appellate brief that defendants "discriminated against [her] by subjecting her to disparate treatment after she turned down Cirullo's advance" also fails to revive these claims here, as she neither mentions retaliation, nor makes any causal link between this general and vague claim and any specific actions of disparate treatment taken against her by defendants. Plaintiff never develops or discusses this argument further, either in her brief, nor by way of oral argument. In sum, plaintiff has failed to raise her retaliation claims on this appeal.
The majority opines that claims four is a properly presented City HRL claim for a discriminatory hostile work environment, and that claims seven and eight are properly presented as State and City HRL claims for discriminatory disparate treatment. In doing so, the majority conflates these claims, which allege sexually hostile work environment and disparate treatment, respectively, as a result of plaintiff's rejection of Cirullo's alleged advance, and which are clearly for retaliation, with the City HRL discriminatory hostile work environment claim, which is separately presented in claim three, and with the State and City HRL disparate treatment claims, which are separately presented in claims five and six, and I would so treat them. Accordingly, I believe that Supreme Court properly dismissed claims four, seven and eight in their entirety.
The majority's reliance upon Ji Sun Jennifer Kim v Goldberg, Weprin, Finkel, Goldstein LLP (120 AD3d 18 [1st Dept 2014]) in arguing that the temporal proximity of Cirullo's alleged sexual overture and his subsequent change in behavior toward her is sufficient to demonstrate a causal connection between these two alleged events is misplaced. In Kim, we upheld the [*20]plaintiff's claims of retaliatory discharge on summary judgment review, based in part upon our conclusion that the temporal proximity of the second of the plaintiff's two complaints of discriminatory treatment in the workplace and her termination two months later could be sufficient for a jury to find a causal connection between them (id. at 25). Here, plaintiff makes no claim of retaliation based on complaints of discrimination. And even under the majority's view, the three incidents she cites in support of her allegation that Cirullo's conduct amounted to a sexual overture were temporally removed from the noxious treatment she experienced and were unsupported by any evidentiary nexus with Cirullo's subsequent behavior towards her.
The view of the majority is that plaintiff's mere conclusory reassertion of being treated less well than other employees because of her gender in response to defendants' proffer of evidence of nondiscriminatory explanations for their actions is sufficient to defeat defendants' motion for summary judgment. As our jurisprudence following Bennett has consistently established, however, where a defendant meets its burden on the motion by showing that upon considering the evidence presented and "drawing
all reasonable inferences in plaintiff's favor, no jury could find the defendant liable under any of the evidentiary routes
[applicable to discrimination cases], . . . a plaintiff may
defeat summary judgment by offering some evidence that at least one of the reasons proffered by defendant is false, misleading
or incomplete'" (Watson v Emblem Health Servs., 158 AD3d 179, 183 [1st Dept 2018], quoting Bennett, 92 AD3d at 45; see Cadet-Legros, 135 AD3d at 200).
By advancing its differing view in this case, the majority is, in effect, virtually eliminating this established standard for review of summary judgment motions in City HRL cases, rendering it indistinguishable from that on review of CPLR 3211(a)(7) motions to dismiss in such cases. Furthermore, the majority is eliminating the relaxed requirement of Bennett and its progeny that a minimal evidentiary showing must be made by the plaintiff to refute the defendant's nondiscriminatory explanations.
Adhering to our precedent, I would apply the Bennett standard and find that here, plaintiff failed to proffer any evidence of discriminatory conduct or motive in response to defendants' nondiscriminatory explanations for their treatment of her. The record as presented fails to raise a material issue of fact as to whether defendants' treatment of her was the product of unlawful discrimination (cf. Watson, 158 AD3d at 183-185 [evidence of employer's failure to reasonably accommodate employee's disability, refusal to acknowledge medical documentation of her condition, and numerous emails containing derogatory comments about her medical condition sufficed to raise triable fact question of possible pretextual motive]).
Accordingly, I would affirm the motion court in all respects.
Order of the Supreme Court, New York County (Donna M. Mills, J.), entered May 19, 2016, modified, on the law, and otherwise affirmed, without costs.
Opinion by Moulton, J. All concur except Friedman, J.P. and Kahn, J. who dissent in part in an Opinion by Kahn, J.
Friedman, J.P., Kahn, Kern, Oing, Moulton, JJ.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: AUGUST 2, 2018
CLERK
Footnotes
Footnote 1:Suri's effort to carve the small Business Systems unit, of
which she was a part, out of the overall reduction in force, in order to show that she was the only woman impacted by the reduction in force within the smaller group, also fails. The sample sizes are too small to support a statistical inference of discrimination (see Hudson v Merrill Lynch & Co., Inc., 138 AD3d 511, 517 [1st Dept 2016], lv denied 28 NY3d 902 [2016]; Armstrong v Sensormatic/ADT, 100 AD3d 492 [1st Dept 2012]).
Footnote 2:Prior to Williams, our cases held that the New York State and City Human Rights Laws applied the same federal standards for quid pro quo and hostile environment sexual harassment claims, differing only in that the City Human Rights Law allows punitive damages (see Walsh v Covenant House, 244 AD2d 214, 215 [1st Dept 1997]). Quid pro quo harassment occurs when unwelcome sexual conduct (whether sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature) is used explicitly or implicitly, as the basis for employment decisions affecting compensation, terms, conditions, or privileges of employment (see Matter of Father Belle Community Ctr. v New York State Div. of Human Rights, 221 AD2d 44, 50 [4th Dept 1996], lv denied 89 NY2d 809 [1997]). The focus is on whether the supervisor has expressly or tacitly linked tangible job benefits to the acceptance or rejection of sexual advances and a claim is stated whether the employee rejects the advance and suffers the consequences or submits to the advance (id.).
Footnote 3:However, questions of severity and pervasiveness apply to the scope of damages (Williams at 76).
Footnote 4:Prior to 1998 federal cases separately analyzed, under federal law, quid quo pro and hostile work environment claims; hostile work environment claims spoke to an environment permeated with sexually harassing comments, materials or conduct (see Sharon P. Stiller, Employment Law in New York § 3:23 at 206 [2d ed 2012]). However, federal law moved away from those distinctions to focus on whether there was a tangible job detriment that altered the terms of employment (see Faragher v City of Boca Raton, 524 US 775 [1998]; Burlington Indus. Inc. v Ellerth, 524 US 742 [1998]).
Footnote 5:Suri's claim that Cirullo created a hostile work environment after she rebuffed his alleged sexual overture is before us on this appeal. We disagree with the dissent to the extent that the dissent characterizes this claim as one for retaliation under Administrative Code § 8-107(7), and then, as a result of this characterization, concludes that the claim sounding in hostile work environment is not before us. The dissent rejects our position that the three incidents in question must be viewed holistically in connection with the 18-month period of mistreatment that ensued. To view these incidents holistically, the dissent contends, would improperly resurrect Suri's retaliation claims (denominated in Suri's complaint as Claim Four, Claims Seven and Eight, and Claims Eleven and Twelve). However, Claim Four and Claims Seven and Eight of the complaint speak not only to retaliation, but to a hostile work environment which ensued as the result of Suri's rejection of Cirullo's alleged advance. Claim Four provides that "[f]rom October, 2008 through April, 2010, Cirullo subjected plaintiff to a hostile work environment in retaliation for her rejection of his November, 2008 sexual advance, in violation of Chapter Eight of the New York City Administrative Code" and concludes that "Grey is liable to plaintiff for the hostile work environment created by Cirullo." Claims Seven and Eight provide that "[f]rom October, 2008 through April, 2010, defendants subjected plaintiff to disparate terms and conditions of employment in retaliation for her rejection of Cirullo's November, 2008 sexual advance, in violation of . . . Chapter Eight of the New York City Administrative Code." Thus, Suri's claim is properly before us as a claim alleging gender-based discrimination in violation of Administrative Code § 8-107(1)(a).
Footnote 6:The dissent applies the Bennett framework and concludes that Suri's hostile work environment claim fails because Suri did not rebut Cirullo's nondiscriminatory explanations for the way she was treated during the 18-month period. The dissent also cites the Bennett framework in concluding that Suri did not support with "some evidence" her claim that Cirullo made a sexual overture sufficient to raise an issue of fact.
Footnote 7:The McDonnell Douglas framework was created to apply to an "adverse employment action" as defined by federal law. As noted above the City Human Rights Law is broader, and differential treatment may be actionable even where that treatment does not result in an employee's discharge or an "adverse employment action" as defined by federal law.
Footnote 8:The mixed-motive test employs the same burden-shifting as the McDonnell Douglas test (see Hudson, 138 AD3d at 511). It recognizes that it is not uncommon for there to be multiple or mixed motives for discrimination; the City Human Rights Law proscribes such partial discrimination and requires only that a plaintiff prove that discrimination was a motivating factor for an adverse employment action (see Bennett, 92 AD3d at 40).
Footnote 9: The defendants were entitled to summary judgment in light of the employer's credible evidence of reports of the plaintiff's unsatisfactory work performance, undisputed evidence that the plaintiff frequently slept and drank on the job, and left early without explanation (Bennett at 46). The plaintiff's claim of age discrimination was undermined by the fact that he was replaced by an older worker, and his claim of race discrimination was unsupported by evidence that a similarly situated, poor performing, black coworker was treated more leniently (id.).
Footnote 10:The Second Circuit and some sister circuits have similarly not applied the McDonnell Douglas burden-shifting framework to hostile work environment claims under federal law (see Reynolds v Barrett, 685 F3d 193, 202 [2d Cir 2012]; Moody v Atlantic City Bd. of Educ., 870 F3d 206, 213 n 11 [3d Cir 2017] ["Some of our sister circuits have concluded that the McDonnell Douglas framework does not apply in hostile work environment sexual harassment cases . . . We agree that the burden-shifting framework is inapplicable here because . . . there can be no legitimate justification for a hostile work environment"]).
Footnote 1: The record is somewhat unclear as to the timing of these three incidents. The personnel records and plaintiff's deposition testimony indicate that Cirullo's two comments allegedly occurred in early September 2008, immediately upon his promotion, while the meeting incident took place two months later. Plaintiff also testified and stated in her sworn affidavit that the two comments occurred in October 2008, about a week before the November 2008 meeting. In any case, it is undisputed that none of the three incidents occurred after November 2008.
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IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
May 7, 2003 Session
RAY D. EDWARDS, SR., ET AL. v. HALLSDALE-POWELL UTILITY
DISTRICT KNOX COUNTY, TENNESSEE
Appeal by Permission from the Court of Appeals
Circuit Court for Knox County
No. 3-104-00 Wheeler A. Rosenbalm, Judge
No. E2002-00395-SC-S09-CV - Filed August 27, 2003
The plaintiffs brought suit against Hallsdale-Powell Utility District for nuisance and inverse
condemnation after their homes were flooded with raw sewage on two occasions. The trial court
granted partial summary judgment to the utility district on the plaintiffs’ claim for inverse
condemnation, holding that no taking of their properties had occurred. The Court of Appeals vacated
the trial court’s grant of partial summary judgment. The intermediate appellate court held that the
plaintiffs had presented sufficient facts to overcome summary judgment by showing that the sewage
backup into their homes had caused a permanent loss of market value. We hold that a governmental
defendant must perform a purposeful or intentional act for a taking to exist. Because such an act was
not shown in the present case, we reverse the judgment of the Court of Appeals and remand the case
to the trial court for further proceedings in accordance with this opinion.
Tenn. R. App. P. 9 Appeal by Permission; Judgment of the Court of Appeals Reversed;
Case Remanded
JANICE M. HOLDER, J., delivered the opinion of the court, in which FRANK F. DROWOTA , III, C.J.,
and E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and WILLIAM M. BARKER, JJ., joined.
Dan D. Rhea and Samuel C. Doak, Knoxville, Tennessee, for the Defendant-Appellant, Hallsdale-
Powell Utility District.
J. Myers Morton and George W. Morton, Jr., Knoxville, Tennessee, for the Plaintiffs-Appellees,
Ray D. Edwards, Sr., Jewele C. Edwards, John F. Gazick, and Helene K. Gazick.
OPINION
Factual and Procedural Background
The plaintiffs are adjacent homeowners who live in Knox County, Tennessee. The
defendant, Hallsdale-Powell Utility District (“HPUD”), is a publicly-owned, governmental utility
district that provides water utility service and sewage disposal to the plaintiffs’ neighborhood.
On two occasions, once on March 31, 1999, and again on December 19, 1999, the public
sewer line that serves the plaintiffs’ homes became clogged, causing a backup of raw sewage. The
backup reached the lateral lines from the plaintiffs’ homes. Sewage ran up the lines to plumbing
fixtures located in the plaintiffs’ basements and flooded the interior of the plaintiffs’ homes.1 HPUD
cleaned the homes and repaired the damage to the homes after the first incident. HPUD also cleaned
the homes after the second incident. However, no repairs were made to the homes because HPUD
was not permitted to perform any further work.
On February 18, 2000, the plaintiffs filed suit against HPUD alleging nuisance under the
Tennessee Governmental Tort Liability Act. In the alternative, they assert that they are entitled to
compensation for a taking of their property under the inverse condemnation statute, Tennessee Code
Annotated section 29-16-123.2
Both sides moved for summary judgment on the issue of inverse condemnation. The
plaintiffs filed the affidavit of a real estate appraiser who opined that the sewage spills had reduced
the market value of the plaintiffs’ homes to zero. HPUD submitted affidavits to establish that the
damage to the plaintiffs’ homes could be repaired and that future incidents of sewage backflow could
be prevented as part of the repair effort.
The trial court granted HPUD’s motion for summary judgment and dismissed the plaintiffs’
inverse condemnation claim, holding that no taking of their properties had occurred. The trial court
granted the plaintiffs’ motion for an interlocutory appeal.
1
The plaintiffs have also reported incidents, occurring on August 15, 2000, and January 24, 2001, in which their
homes were filled with the smell of raw sewage after HPUD cleaned the sewer line.
2
The inve rse condemnation statute states,
(a) If, however, such [governmental defendant] has actually taken possession of
such land, occupying it for the purposes of internal improvement, the owner of such
land may p etition for a jury o f inquest [as pro vided for in the eminent dom ain
statutes] . . . or the owner may sue for dam ages in the ord inary way . . . .
Tenn. Cod e Ann. § 29-16-123 (2000).
-2-
The Court of Appeals granted review and vacated the trial court’s grant of partial summary
judgment.3 The intermediate appellate court held that the plaintiffs had presented sufficient facts to
overcome summary judgment by showing that the sewage backup into their homes had caused a
permanent loss of market value.
We granted review.
Standard of Review
Summary judgment is appropriate when “there is no genuine issue as to any material fact and
. . . the moving party is entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04. A ruling
on a motion for summary judgment involves only questions of law and not disputed issues of fact.
See Owner-Operator Indep. Drivers Ass’n v. Concord EFS, Inc., 59 S.W.3d 63, 68 (Tenn. 2001).
Accordingly, the standard for reviewing a grant of summary judgment is de novo with no
presumption of correctness as to the trial court’s findings. See Webber v. State Farm Mut. Auto. Ins.
Co., 49 S.W.3d 265, 269 (Tenn. 2001). The evidence must be viewed “in the light most favorable
to the nonmoving party,” and all reasonable inferences must be drawn in the nonmoving party’s
favor. Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 89 (Tenn. 2000).
Analysis
The Tennessee Constitution states that “no man’s particular services shall be demanded, or
property taken, or applied to public use, without the consent of his representatives, or without just
compensation being made therefor.” Tenn. Const. art. I, § 21. This constitutional provision
recognizes the governmental right of eminent domain. The government is prohibited, however, from
taking property for private purposes and must pay just compensation when property is taken for
public use. See Jackson v. Metro. Knoxville Airport Auth., 922 S.W.2d 860, 861 (Tenn. 1996). The
Tennessee General Assembly has implemented this provision by its passage of eminent domain and
inverse condemnation statutes. See Tenn. Code Ann. §§ 29-16-101 to 29-16-127 (2000 & Supp.
2002); 29-17-101 to 29-17-1202 (2000).
“Inverse condemnation” is the popular description for a cause of action brought by a property
owner to recover the value of real property that has been taken for public use by a governmental
defendant even though no formal condemnation proceedings under the government’s power of
3
While the case was on appea l, the plaintiffs, Mr. and Mrs. Edwards and M r. and Mrs. Gazick, requested the
Court of Appeals to consider post-judgment facts, alleging that a third event had occurred. On November 13, 2001,
sewage from HPUD ’s sewer system allegedly overflowed into a ditch located on the property owned by the Gaz icks.
Although the sewage did not actually invade the property owned by the Edwards, the amended co mplaint asserts that the
smell from the bac kflow affected the Ed ward s’ prop erty as well. The Court of Appe als found it unnecessary to rule on
the plaintiffs’ motion in light of its holding. We have reviewed the motion to consider post-judgment facts, and we
conclude that it is not well taken. Rule 14(a) of the Tennessee Rules of App ellate P rocedure allows appe llate courts to
consider facts that have not been established at trial when they are necessary to keep the record current. However, such
facts must be unrelated to the merits and not genuinely disputed . Duncan v. Duncan, 672 S.W .2d 765, 768 (Tenn. 1984 );
Hall v. Bookout, 87 S.W.3d 80, 87 (Tenn. Ct. App. 2002). The post-judgment facts before us can hardly be
characterized as “unrelated to the merits” or “not genuinely disputed.” Therefore, the plaintiffs’ motion is denied.
-3-
eminent domain have been instituted. See Johnson v. City of Greeneville, 435 S.W.2d 476, 478
(Tenn. 1968). A “taking” of real property occurs when a governmental defendant with the power
of eminent domain performs an authorized action that “destroys, interrupts, or interferes with the
common and necessary use of real property of another.” Pleasant View Util. Dist. v. Vradenburg,
545 S.W.2d 733, 735 (Tenn. 1977). Not every destruction or injury to property caused by
governmental action, however, constitutes a taking under article I, section 21 of the Tennessee
Constitution. See Jackson, 922 S.W.2d at 862 (citing PruneYard Shopping Ctr. v. Robins, 447 U.S.
74 (1980)). Tennessee courts have recognized two classifications of takings: physical occupation
takings and nuisance-type takings. See id. at 862-63.
Physical occupation takings arise when a governmental defendant causes either a direct and
continuing physical invasion of private property or a destruction of a plaintiff’s property rights. See
generally Ill. Cent. R.R. Co. v. Moriarity, 186 S.W. 1053 (Tenn. 1916); Barron v. City of Memphis,
80 S.W. 832 (Tenn. 1904). The construction of a permanent improvement by a governmental
defendant that diverts water from a stream onto private property and causes flooding is an example
of a direct and continuing physical invasion of real property. See Barron, 80 S.W. at 832-33; see
also Jackson, 922 S.W.2d at 862. We have held that such direct and physical invasions constitute
a governmental taking when real property is either actually appropriated or the common and
necessary use of the property is rendered impossible or seriously interrupted. See Barron, 80 S.W.
at 832-33; see also Jackson, 922 S.W.2d at 862. Physical occupation takings may also arise when
a governmental defendant causes a destruction of a plaintiff’s property rights. The destruction of the
easement of access to and from a plaintiff’s home by the closing of a street is an example of a
destruction of a property right. See Moriarity, 186 S.W. at 1053-54; see also Jackson, 922 S.W.2d
at 862. This type of physical occupation constitutes a taking when there is a diminution in the value
of real property peculiarly affected and directly invaded that is not shared by the public at large. See
Moriarity, 186 S.W. at 1054; see also Jackson, 922 S.W.2d at 862.
Tennessee courts also recognize nuisance-type takings. See, e.g., Jackson, 922 S.W.2d at
862; Johnson, 435 S.W.2d at 480. Such a taking occurs when the governmental defendant interferes
with a landowner’s beneficial use and enjoyment of the property. See Jackson, 922 S.W.2d at 862;
Johnson, 435 S.W.2d at 480. For example, this Court has held that a government’s extension of a
runway that results in noise, vibration, and pollutants from airplanes flying at low altitudes to the
detriment of nearby private property may be a taking. Jackson, 922 S.W.2d at 861, 863-64. In
Jackson, we established the standard for determining whether a nuisance-type taking has occurred:
the plaintiff must allege a direct and substantial interference with the beneficial use and enjoyment
of the property; this interference must be repeated and not just occasional; the interference must
peculiarly affect the property in a manner different than the effect of the interference to the public
at large; and the interference must result in a loss of market value. Id. at 865.
The plaintiffs argue that their homes were physically invaded by raw sewage and that this
case should be governed by cases such as Barron and Moriarity. HPUD, on the other hand, argues
that this Court should apply the Jackson test in the present case because sewage discharges have
traditionally been regarded as “nuisances.”
-4-
To constitute a taking under either line of cases, however, some action on the part of the
governmental defendant is required. As we have held, a taking occurs when a governmental
defendant with the power of eminent domain performs “any action . . . which destroys, interrupts,
or interferes with the common and necessary use of real property of another . . . .” Vradenburg, 545
S.W.2d at 735 (emphasis added). In each of the cases in which this Court has found that a taking
has occurred, the governmental defendant performed a purposeful or intentional act for the public
good that resulted in damage to a plaintiff’s property or property rights. In Johnson, the municipal
airport constructed a runway. 435 S.W.2d at 477-78. Similarly, in Jackson, the governmental
defendants extended a runway. 922 S.W.2d at 861. In both cases, the use of those runways gave rise
to the plaintiffs’ claims. See id.; Johnson, 435 S.W.2d at 477-78. In Moriarity, the city elevated
railroad tracks, effectively closing a street. 186 S.W. at 1053. In Barron, the city’s enlargement of
a pier was the action that resulted in consequences to the landowner. 80 S.W. at 832; see also
Vradenburg, 545 S.W.2d at 735 (involving the utility district’s intentional, regular, and necessary
discharge of water from its water treatment facility); Knox County v. Moncier, 455 S.W.2d 153,
154-55 (Tenn. 1970) (involving the county’s construction of an interstate highway, which changed
the natural drainage of the watershed area).
The parties point to, and we have found, only one Tennessee case that indicates that a
purposeful or intentional act may not be necessary to the existence of a taking. See Betty v. Metro.
Gov’t of Nashville and Davidson County, 835 S.W.2d 1 (Tenn. Ct. App. 1992). In Betty, the
plaintiffs sued the city for damage done to their dam as a result of the rupture of the city’s sewage
main, which they claimed was negligently operated and maintained. Id. at 4. The jury found that
the plaintiffs had successfully proven a taking of their property, and the city appealed. See id. at 3.
On appeal, the city asserted that the plaintiffs failed to make out a claim for inverse condemnation
because they did not show that the damages were permanent or that they were caused by an
intentional, affirmative act. See id. at 5. The Court of Appeals stated that “as long as a ‘taking’ has
occurred, whether the taking was intentional, unintentional, or negligent is irrelevant.” Id. at 7.
However, the court’s authority for this statement came exclusively from two California cases that
construed the “damaging” clause of the California Constitution. See Holtz v. Superior Court, 475
P.2d 441, 444-45 (Cal. 1970); Marin v. City of San Rafael, 168 Cal. Rptr. 750, 752 (Cal. Ct. App.
1980). This clause requires compensation for “damaging” property as well as for “taking” property.
See Cal. Const. art. I, § 19; see also Holtz, 475 P.2d at 444; Marin, 168 Cal. Rptr. at 752-53. Article
I, section 21 of the Tennessee Constitution is limited to “property taken” and does not contain a
“damaging” clause. See Jackson, 922 S.W.2d at 864 n.3. To determine that a governmental
defendant may “negligently take” private property would be to read a “damaging” clause into the
Tennessee Constitution. We decline to do so. We therefore hold that a governmental defendant
must perform a purposeful or intentional act for a taking to exist. To the extent that Betty holds
otherwise, it is overruled.
Case law from other states also supports the proposition that a governmental defendant must
perform some purposeful or intentional action for a taking to exist. See Nat’l By-Products, Inc. v.
City of Little Rock, 916 S.W.2d 745, 747 (Ark. 1996) (interpreting Article II, section 22 of the
Arkansas Constitution to require an intentional act by the governmental defendant); Sullivant v. City
of Oklahoma City, 940 P.2d 220, 225 (Okla. 1997) (requiring that the governmental act show an
-5-
intent to exercise the power of eminent domain or to take the property for a public use in order to
constitute a taking); Vokoun v. City of Lake Oswego, 56 P.3d 396, 400-01, 402 (Or. 2002) (holding
that a purposeful or intentional act is an element of an inverse condemnation claim); Lizza v. City
of Uniontown, 28 A.2d 916, 918 (Pa. 1942) (stating that a claim for inverse condemnation can be
made only if the plaintiff shows that the damages suffered were “the direct, immediate, necessary,
and unavoidable consequences of the making of the improvement”); City of Abilene v. Smithwick,
721 S.W.2d 949, 951 (Tex. Ct. App. 1986) (stating that the governmental defendant must
intentionally perform an act in order to give rise to a claim under Article I, section 17 of the Texas
Constitution).
In the present case, the damage to the plaintiffs’ property was not caused by a purposeful or
intentional act of HPUD. In their claim for inverse condemnation, the plaintiffs allege that the
“defendant has ruined and therefore taken their homes as a result of the sewage overflow.” The
plaintiffs do not allege, however, that HPUD performed any purposeful or intentional act that
resulted in damage to their homes. The record shows that the sewer line became clogged. The
backup was most likely caused by tree roots entering the line, not by any purposeful or intentional
act on the part of HPUD. If the backup was caused by the failure of HPUD to meet its obligation
to operate and maintain its sewer system as alleged, its failure would constitute negligence, not a
taking.
The Court of Appeals’ holding in this case suggests that permanent damage to real property
is sufficient to constitute a taking in physical occupation cases. Because we hold that either type of
taking requires a purposeful or intentional act on the part of the governmental defendant and because
no such act has been alleged, we reverse the Court of Appeals’ judgment, which vacated the trial
court’s grant of partial summary judgment to HPUD, and we remand the case to the trial court on
the plaintiffs’ remaining claims under the Governmental Tort Liability Act.
Conclusion
We hold that in an inverse condemnation claim the plaintiffs must prove that the
governmental defendant performed a purposeful or intentional act that resulted in damage to their
real property to show that a taking has occurred. We also conclude that no genuine issues of material
fact exist in this case, viewing the facts in a light most favorable to the nonmoving party. We
therefore reverse the judgment of the Court of Appeals and remand the case to the trial court for
further proceedings in accordance with this opinion. Costs of this appeal are taxed to the plaintiffs-
appellees, Ray D. Edwards, Sr., Jewele C. Edwards, John F. Gazick, and Helene K. Gazick, and their
surety, for which execution may issue if necessary.
___________________________________
JANICE M. HOLDER, JUSTICE
-6-
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655 N.W.2d 98 (2002)
2002 SD 155
John GILCHRIST, Plaintiff and Appellant,
v.
TRAIL KING INDUSTRIES, INC., Defendant and Appellee.
No. 22158.
Supreme Court of South Dakota.
Argued August 27, 2002.
Decided December 11, 2002.
*99 Rick Johnson of Johnson, Eklund, Nicholson & Peterson, Gregory, J.M. Grossenburg, Winner, South Dakota, Attorneys for plaintiff and appellant.
Cheryle Wiedmeier Gering, Susan Brunick Simons of Davenport, Evans, Hurwitz & Smith, Sioux Falls, South Dakota, Attorneys for defendant and appellee.
MILLER, Retired Justice.
[¶ 1.] John Gilchrist sued Trail King Industries, Inc. seeking damages for bad faith, wrongful termination, and intentional infliction of emotional distress. Gilchrist appeals a judgment based upon a jury verdict rendered in favor of Trail King. We reverse and remand.
FACTS AND PROCEDURE
[¶ 2.] The facts of this case are complex. Further specific details can be found in two of our earlier holdings (Gilchrist v. Trail King Industries, Inc. and Rehabilitation Strategies, Inc., 2000 SD 67, 612 N.W.2d 10 (Gilchrist I) and Gilchrist v. Trail King Industries, Inc., 2000 SD 68, 612 N.W.2d 1 (Gilchrist II)). For purposes of this appeal, however, we will briefly summarize the history of the case.
[¶ 3.] Gilchrist, as an employee of Trail King, was injured while taking inventory on September 1, 1994. He slipped and fell off a lift and was briefly suspended in air when a ring on his pinkie finger caught on a bracket. He sustained immediate injuries to his finger, neck, back, and shoulder. He ultimately developed carpal tunnel syndrome and severe depression.
[¶ 4.] Trail King, which is self-insured for workers' compensation, paid workers' compensation benefits to Gilchrist, including the initial cost of his medical care. After a couple months, Trail King employed Risk Strategies, Inc. (RSI) to facilitate Gilchrist's rehabilitation. Kathy Burns, an employee of RSI, was assigned to Gilchrist's case and her responsibility was to act as a sort of intermediary between Trail King and Gilchrist's doctors. Part of Burns' duties was to attend doctor appointments with Gilchrist and to keep Trail King informed of Gilchrist's medical status, including when he could return to work.
[¶ 5.] Dr. Cho, one of Gilchrist's doctors, issued Gilchrist a release to return to work for light duty under the misguided opinion that his health was improving. Furthermore, Dr. Cho was unaware that Gilchrist was suffering other symptoms *100 such as internal bleeding and vomiting. Although Burns, as the person hired by Trail King to oversee Gilchrist's rehabilitation program, had access to all of Gilchrist's medical records, she did not inform Dr. Cho of his other medical problems. Apparently, Dr. Cho asked Burns to give her Gilchrist's other medical records, but Burns did not send them to her. Moreover, in Dr. Cho's subsequent affidavit, she stated, "Burns ... had not kept me fully advised of John Gilchrist's ongoing treatment by other physicians at the time opinions were requested of me concerning Mr. Gilchrist's wrist problems." She further repudiated her earlier opinion that Gilchrist's back pain and carpal tunnel syndrome were not related to the work injury after she was furnished with Gilchrist's other medical records.
[¶ 6.] On December 13, 1994, Norman Tarbell, Trail King's worker compensation coordinator, met with Gilchrist to discuss his return to work. Gilchrist claims Tarbell told him he would not be receiving any further worker compensation benefits and that unless he returned to work the next day, he would be considered to have voluntarily ended his employment. After Gilchrist allegedly informed Tarbell that he was too sick to work, Tarbell told him to return the next morning and together they could call his doctors. Gilchrist never returned to work after this meeting. On December 14, 1994, Trail King sent a certified letter to Gilchrist informing him that because Dr. Cho had issued a return to work slip, he would be considered voluntarily terminated, if he did not return to work in the next forty-eight hours. (This was pursuant to Trail King's employment policy, outlined in its employee handbook, which provided that if an employee missed more than two consecutive work days without reason, he would be considered to have voluntarily terminated his employment.)
[¶ 7.] Gilchrist continued his medical treatment with several doctors, including Dr. Hoversten, with whom Trail King had arranged for an independent medical evaluation. Dr. Hoversten discovered Gilchrist had a right rotator cuff injury and carpal tunnel syndrome in both hands. He scheduled Gilchrist for surgery to correct both of these injuries at the same time. However, before such surgery and about a month later, Dr. Cho determined that the injuries to Gilchrist's right shoulder and hand were caused by his fall at work, but that the other injuries were not related to the accident. Based on this information, RSI recommended to Trail King that it not pay for the carpal tunnel surgery. After Dr. Hoversten's office was informed that Trail King would not pay for this part of the surgery, it informed Gilchrist, who in turn cancelled the entire procedure, expressing that he did not have money to pay for the uncovered part. It was Gilchrist's view that Trail King was "jerking him around."
[¶ 8.] Gilchrist filed a workers' compensation action and additionally brought a civil action against Trail King and RSI for wrongful termination, bad faith, and intentional infliction of emotional distress. The South Dakota Department of Labor initially issued a decision ruling that Gilchrist was entitled to rotator cuff surgery and carpal tunnel surgery on his right hand but denying that his severe depression, which Gilchrist claimed resulted in total disability, was caused by the work injury. Gilchrist appealed this decision to the Sixth Judicial Circuit Court which reversed the Department's ruling. It held that Gilchrist's psychological disability claim was work related and thus, compensable. However, the circuit court remanded the case to the Department for a determination of whether Gilchrist unreasonably refused or neglected to have his right rotator cuff surgery. The Department *101 thereafter ruled Gilchrist did not unreasonably refuse or neglect to avail himself to medical or surgical treatment and granted Gilchrist total disability benefits. That ruling was later affirmed by the Sixth Circuit Judge. In the meantime, before the Department's initial decision was reversed, Trail King and RSI both moved for summary judgment on the claims against them in the separate civil action. Those motions were heard in the Fourth Judicial Circuit Court. That judge granted summary judgment to RSI (he also entered certification under SDCL 15-6-54(b) so that an appeal could be perfected). Additionally, the circuit judge denied summary judgment to Trail King. Gilchrist appealed the Fourth Circuit Judge's grant of summary judgment to RSI, and Trail King appealed the Sixth Circuit's decision regarding the Department's workers compensation ruling.
[¶ 9.] In opinions filed concurrently, Gilchrist I and Gilchrist II, we affirmed both the circuit courts' decisions. We held that summary judgment was proper as to RSI and that the Department's ruling, which the Sixth Circuit affirmed, was not clearly erroneous.
[¶ 10.] Subsequently, a jury trial ensued on Gilchrist's civil action against Trail King. On October 1, 2001, the jury entered a verdict in Trail King's favor, dismissing all three of Gilchrist's cause of actions on their merits. Gilchrist appeals. Specifically, he raises the following issues:
1. Whether the trial court abused its discretion when it granted Trail King's motions in limine:
a. prohibiting Gilchrist from referring to or presenting evidence about RSI and/or Burns; and
b. prohibiting Gilchrist from referring to any conduct of Trail King after February 22, 1995.
2. Whether the trial court abused its discretion when it did not take judicial notice of certain facts adjudicated in previous proceedings involving Gilchrist's worker compensation claim.
3. Whether the trial court erred when it gave certain instructions to the jury at the close of the evidence.
STANDARD OF REVIEW
[¶ 11.] A trial court's evidentiary rulings are presumed correct and are reviewed under the abuse of discretion standard. State v. Larson, 1998 SD 80, ¶ 10, 582 N.W.2d 15, 17 (citing State v. Goodroad, 1997 SD 46, ¶ 9, 563 N.W.2d 126, 129). "The test is not whether we would have made the same ruling, but whether we believe a judicial mind, in view of the law and the circumstances, could have reasonably reached the same conclusion." Id. (citing Goodroad, 1997 SD 46 ¶ 9, 563 N.W.2d at 129). Additionally, to establish that a trial court's evidentiary ruling requires reversal, it must be shown it was prejudicial. See Joseph v. Kerkvliet, 2002 SD 39, ¶ 7, n.1, 642 N.W.2d 533, 534, (citing Carpenter v. City of Belle Fourche, 2000 SD 55, ¶ 7, 609 N.W.2d 751, 756 (citations omitted)).
ANALYSIS AND DECISION
[¶ 12.] Whether the trial court abused its discretion when it granted Trail King's motions in limine.
[¶ 13.] In its ruling granting Trail King's motions in limine, the trial court prohibited Gilchrist from mentioning Burns, the rehabilitation consultant from RSI, during the trial. The trial court also prohibited Gilchrist from introducing evidence or examining witnesses about what Trail King did or did not do after February *102 22, 1995[1]; and, from using the affidavit of doctors or psychiatrists that were made after that date. Gilchrist argues that when the trial court granted these motions in limine, it was an abuse of discretion and that prejudicial error resulted. Specifically, he contends that "the numerous redactions of Kathleen Burns' name and activities from the evidence provided to the jury ... left a big vacuum on what Trail King knew or should have known or whether their investigation was in good faith."
[¶ 14.] We ruled in Gilchrist I that the actions of RSI did not support Gilchrist's causes of action against RSI for bad faith, wrongful termination, or intentional infliction of emotional distress and therefore, summary judgment was proper. Specifically, we held that "RSI has not caused additional injuries to Gilchrist such that an action for bad faith can be sustained"; Gilchrist I, 2000 SD 67, ¶ 23, 612 N.W.2d at 17; RSI could not be liable for wrongful termination because it was not Gilchrist's employer; Id. at ¶ 24, 612 N.W.2d at 17; and RSI's actions were not outrageous enough to support a cause of action for intentional infliction of emotional distress. Id. at ¶ 26, 612 N.W.2d at 17.
[¶ 15.] Gilchrist argues that although we previously held that RSI did not cause additional damage to Gilchrist, the actions of RSI were relevant to show what Trail King knew at the time coverage was denied to Gilchrist. He further asserts that by not being able to put any of RSI's actions into evidence, he was not able to get the full set of relevant facts before the jury and thus, could not present his theory to the jury. We agree.
[¶ 16.] After a careful review of the record, it appears that the trial court misread our holding in Gilchrist I. While it is true that we held that RSI did not cause any additional damage to Trail King, this does not mean that we found that injury was not caused at Trail King's direction of RSI. Certainly, Gilchrist should have been able to present evidence about what conduct by RSI could have been attributable to Trail King. At the very least, Burns' interaction with Dr. Cho and the resultant work-release order, could be characterized as troubling. The trial court abused its discretion when it did not allow Gilchrist to present this evidence to the jury.
[¶ 17.] Support of the agency relationship that existed between Trail King and RSI can be found in Gilchrist I, where we found that the "relationship in these circumstances is primarily between the rehabilitation company and the workers' compensation insurer," i.e., Trail King in this case. 2000 SD 67, ¶ 18, 612 N.W.2d at 15-16 (citing Cole v. Byrd, 167 Ill.2d 128, 212 Ill.Dec. 234, 656 N.E.2d 1068 (1995)). Burns, in her deposition acknowledges, "I am a coordinator, a communicator between the insurance company, the injured worker, the employer and the medical providers." Id. at ¶ 17, 612 N.W.2d at 15.
[¶ 18.] Once it is determined that a principal/agent relationship exists, SDCL 59-6-5 provides:
As against a principal, both principal and agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary *103 care and diligence, to communicate to the other.
This statute presumes that an agent will relay to the principal all information that he or she acquires. Shykes v. Rapid City Hilton Inn, 2000 SD 123, ¶ 31, 616 N.W.2d 493, 500. As Trail King asserts, in a claim of bad faith against an employer, the relevant inquiry is what that employer knew at the time it denied coverage to the insured. Julson v. Federated Mut. Ins. Co., 1997 SD 43, ¶ ¶ 6, 8, 562 N.W.2d 117, 119-20. Therefore, relevant in this analysis is the knowledge that should be imputed by RSI/Burns to Trial King at the time coverage was denied to Gilchrist. Included in this imputed knowledge would be the knowledge that Burns had of Gilchrist's medical problems, unknown to Dr. Cho but known to Burns, at the time Burns solicited the work release from Dr. Cho.
[¶ 19.] In Walz v. Fireman's Fund Ins. Co., we articulated a two-prong test for bad faith in the worker's compensation context:
[F]or proof of bad faith, there must be an absence of a reasonable basis for denial of policy benefits and the knowledge or reckless disregard [of the lack] of a reasonable basis for denial, implicit in that test is our conclusion that the knowledge of the lack of a reasonable basis may be inferred and imputed to an insurance company where there is a reckless disregard of a lack of a reasonable basis for denial or a reckless indifference to facts or to proofs submitted by the insured.
1996 SD 135, ¶ 7, 556 N.W.2d 68, 70 (citing Champion v. United States Fidelity & Guar. Co., 399 N.W.2d 320, 324 (S.D.1987) (additional citations omitted)).
[¶ 20.] Here, Gilchrist contends that the motion in limine, which excluded evidence relating to Burns' actions, prevented him from presenting evidence that Trail King did not have a reasonable basis for denying policy benefits. Additionally, he alleges that Trail King acted in reckless disregard, reckless indifference and did not conduct a reasonable investigation into his medical claims. Furthermore, he claims that Trail King and Burns chose to disregard the necessity of coordinating Gilchrist's medical care by all his doctors and thus, acted to conceal his other medical conditions from Dr. Cho in order to obtain a return to work slip from her. He claims that even after several of his doctors confirmed that he was experiencing carpal tunnel problems and depression, Trail King chose to disregard these facts and to continue to deny him surgical repair and benefits. We find that this evidence was highly relevant and should not have been kept from the jury.
[¶ 21.] Trail King's main argument in support of its motion in limine is that if an agent is found not liable, then the actions of the agent cannot be used to establish liability of the principal. See Estate of Williams v. Vandeberg, 2000 SD 155, ¶ 15, 620 N.W.2d 187, 191. However, Trail King's reliance on this point of law is misplaced. As discussed above, RSI was found not to cause further injury to Gilchrist. This does not mean that Trail King should not be held responsible for his original injury. Thus, RSI's actions were highly relevant.
[¶ 22.] As for Trail King's contention that any evidence regarding RSI would serve to confuse or mislead the jury, we disagree. We have found that the actions and knowledge of RSI were highly relevant to support the theory of Gilchrist's case; therefore, its probative value outweighs its prejudicial value. See SDCL 19-12-2 (FRE 402); SDCL 19-12-3 (FRE 403). Furthermore, in order to ensure that the jury does not use evidence of RSI's actions improperly, Trail King *104 should request the trial court to use a limiting instruction. See SDCL 19-9-12 (FRE 105).
[¶ 23.] Gilchrist did not amend his complaint to allege facts that occurred after February 22, 1995. Therefore, the trial court did not allow into evidence anything that happened after this date. However, Gilchrist may cure this defect in his complaint by asking the court to amend his pleadings. See SDCL 15-6-15(b) (FRCP 15(b)).
[¶ 24.] Based on the foregoing, we do not reach the merits of the remaining arguments.
[¶ 25.] Reversed and remanded.
[¶ 26.] GILBERTSON, Chief Justice, and KONENKAMP, Justice, and AMUNDSON, Retired Justice, concur.
[¶ 27.] SABERS, Justice, concurs in part and dissents in part.
[¶ 28.] MILLER, Retired Justice, sitting by Order of the Court for ZINTER, Justice, disqualified.
[¶ 29.] MEIERHENRY, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.
SABERS, Justice (concurring in part and dissenting in part).
[¶ 30] I concur in all respects except as to paragraph 22, to which I dissent.
[¶ 31.] Even though Gilchrist did not amend his complaint to allege facts that occurred after February 22, 1995, facts occurring after that date were certainly relevant and admissible to show what Trail King knew prior to that date. Furthermore, we have consistently stated that in order to prove bad faith, it must be shown that there was 1) no reasonable basis for denial of policy benefits and 2) knowledge or reckless disregard of the lack of a reasonable basis. Walz v. Fireman's Fund Insurance Co., 1996 SD 135 ¶ 7, 556 N.W.2d 68, 70; Isaac v. State Farm Mutual Auto. Insurance Co., 522 N.W.2d 752, 759 (S.D.1994). Facts occurring after February 22 arguably show that Trail King persisted in a course of disregard for the opinions of doctors and psychiatrists as to Gilchrist's disability. That evidence is specifically relevant to the question of whether Trail King had a reasonable basis upon which to deny coverage. Therefore, I would reverse on Issue 1.b.
[¶ 32.] I do agree that the trial court may cure this defect by permitting an amendment to Gilchrist's pleadings, if any, on retrial.
NOTES
[1] Gilchrist's Complaint alleged events that transpired in December, 1994 through February 22, 1995. February 22, 1995 is the day that a letter was sent to Gilchrist advising him that the laceration on his right hand, the rotator cuff tear of his right shoulder, and his upper back problems were compensable but that his carpal tunnel was not. Gilchrist did not amend his Complaint to assert any claimed improper actions after February 22, 1995.
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41 S.W.3d 625 (2001)
Diana L. WHITWORTH and Richard L. Brown, Plaintiffs-Respondents,
v.
Melvina JONES, Defendant-Appellant.
Nos. ED 78008, ED 78015.
Missouri Court of Appeals, Eastern District, Division Four.
April 10, 2001.
*626 Gregory A. Oliphant, St. Louis, MO, for appellant.
James A. Stemmler, St. Louis, MO, for respondent.
MOONEY, Presiding Judge.
In this consolidated appeal, Defendant, Melvina Jones, appeals from the trial court's judgments that she trespassed on Plaintiffs', Diane L. Whitworth and Richard L. Brown, property and that Defendant committed civil contempt. Defendant contends the trial court erred in: (1) excluding testimony to rebut admissions Defendant made in response to Plaintiffs' request for admissions because Plaintiffs violated Supreme Court Rule 43.01(b) by submitting the request for admissions to Defendant rather than her attorney; (2) hearing Plaintiffs' motion for contempt for violating the judgment enjoining Defendant from entering Plaintiffs' property because the judgment was not final; and (3) failing to state sufficient findings of fact and circumstances in the order of contempt against Defendant.
We affirm the judgment for damages and injunctive relief and dismiss the appeal of the contempt order.
Facts
Plaintiffs purchased a home at 613 Sontag in January 1997 that shares a septic system with Defendant's home at 611 Sontag. Although the septic system extends onto both properties, Defendant disputed Plaintiffs' right to use the septic system, and tried to harass and threaten people that Plaintiffs hired to clean the system. In March 1997, Defendant moved a fence separating the properties two feet and two inches beyond where the fence previously stood, denying Plaintiffs access to the hatch by which the septic system is cleaned.
Believing that Defendant moved the fence onto their property, Plaintiffs sued Defendant under a theory of trespass for damages and petitioned the court to permanently enjoin Defendant from entering Plaintiffs' property. Defendant hired two *627 surveyors to determine which lot the fence was on, and both surveyors testified that the fence was on Plaintiffs' property. In March 2000, the trial court entered judgment against Defendant, finding that she committed trespass by moving the fence onto Plaintiffs' land and that a threat of future injury existed if the trespass continued. Therefore, the trial court ordered Defendant to remove the fence and to pay Plaintiffs $2,000 in compensatory damages, and the trial court permanently enjoined Defendant from entering Plaintiffs' property.
About one month later, Plaintiffs filed a motion for contempt against Defendant because she violated the trial court's judgment by firing a shotgun onto Plaintiffs' property and by interfering with the reconnection of Plaintiffs' home to the septic system. The trial court found Defendant in civil contempt and ordered her to pay $300 for attorney fees. Defendant files this timely appeal.
Analysis
In her first point, Defendant alleges that the court should disregard Defendant's failure to respond timely to Plaintiffs' request for admissions because Plaintiffs violated Supreme Court Rule 43.01(b) by submitting the request to Defendant rather than to her attorney. Consequently, Defendant argues the court erred in excluding the testimony she adduced to contradict these admissions. We disagree.
At trial, Plaintiffs' attorney made an oral motion in limine to exclude any evidence rebutting Defendant's admissions, including her acknowledgment that she trespassed on Plaintiffs' property when she moved the fence and that Plaintiffs have an ownership interest in the septic system. The trial court granted the motion, and sustained Plaintiffs' objections when Defendant attempted to present evidence on those and other admissions. The trial court allowed Defendant to make an offer of proof for each witness who was not allowed to testify to rebut the previous admissions.
The trial court's ruling regarding the acceptance or rejection of evidence will not be disturbed on appeal unless there is an apparent abuse of discretion. A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 390 (Mo.App. E.D.1998). Because the evidence was excluded, the question for review is whether the trial court abused its discretion, not whether the evidence is admissible. Id. at 391. The trial court abuses its discretion when the ruling is clearly against the logic of the circumstances before it and is so unreasonable and arbitrary as to shock the sense of justice and indicates a lack of judicial consideration. Id. To constitute grounds for reversal, we must find that the trial court's error in excluding evidence was prejudicial and not harmless. Id. at 392. Further, we cannot reverse a judgment unless we find the error committed materially affected the merits of the action. Id.
Here, even if we assume the trial court erred in rejecting Defendant's offer of proof, a question we need not decide, we are not persuaded that Defendant was prejudiced. Defendant offered several witnesses to rebut her admissions that she committed a trespass on Plaintiffs' property and that Plaintiffs had an ownership interest in the septic system. However, the testimony was vague on these issues and wholly unpersuasive.
Defendant offered the testimony of Albert Anders, who installed the septic system at 611 Sontag. Mr. Anders testified that he installed the single-family septic system between two fences, one on 611 Sontag and the other on 613 Sontag. *628 Then, Defendant offered Melvin Jones, Jr., her brother and former resident of 610 Sontag, to testify regarding where Melvin Jones, Sr. erected the fence on 611 Sontag. He testified that there is approximately ten to fifteen feet between the houses on 611 and 613 Sontag. Originally, the fence was almost directly against the house on 613 Sontag. Later, Melvin Jones, Sr. moved the fence back eight feet toward his home on 611 Sontag.
Darlene Lundergen, Defendant's sister and former resident of 613 Sontag, provided a history of the sewage system on both properties from 1975 through 1986, when she sold 613 Sontag. Both properties were connected to a septic system on a third property until 1982 when the owner of the septic system disconnected the lines to 611 and 613 Sontag. Because the county told Ms. Lundergen that she could not put a septic tank on her property, leaving her with no source of indoor plumbing, she prepared her house for sale. Her father, Melvin Jones, Sr., installed a septic system on his property, 611 Sontag, and he allowed Ms. Lundergen to connect her property to the septic system so she could sell it.
None of this testimony disproves Defendant's admissions. The testimony that when Defendant moved the fence, she returned it to its original location provides no defense to Defendant's admission that she trespassed on Plaintiffs' property. Furthermore, the court heard clear evidence from two surveyors hired by Defendant that she encroached on Plaintiffs' property when she moved the fence. Although Defendant apparently is attempting to show that the septic system was installed completely within the boundaries of her property, the offer of proof fails to do so. Defendant fails to show that she was justified in relocating the fence to enclose the system or that she had an exclusive right to use the system. In fact, none of Defendant's evidence refutes her admission that Plaintiffs have an ownership interest in the septic system. On the contrary, the offer of proof shows that the property at 613 Sontag was purposely connected to the septic system under an oral agreement between Defendant's father and sister. Clearly, their intention was that the properties at 611 Sontag and 613 Sontag would share the septic system. Moreover, the system has been shared without incident from approximately 1985 until 1997 when Plaintiffs purchased 613 Sontag. Because Defendant's offer of proof only provides vague allusions to facts, and information harmful to her own case, Defendant suffered no prejudice due to its exclusion.
Moreover, the remainder of Defendant's offer of proof is irrelevant to the issues in the case. Defendant offered the testimony of John Cooney as an expert in drain cleaning to testify that he had cleaned out the shared septic system three times in the past year and once prior to that in the past four years. In addition, Mr. Anders further testified how septic systems work and the problems that would occur if more than one household used this type of system and how to correct those problems. Defendant, herself, testified that she knew how septic systems function and that certain products can damage a septic system. She stated her belief that sewage backs up into her home due to Plaintiffs misuse of the septic system. Defendant also testified that Plaintiffs piled dirt on their side of the fence-line, causing water running off the hill behind Defendant's home to pool around her foundation. Consequently, Defendant's home sustained water damage.
This testimony does not refute Defendant's admissions that she committed a trespass on Plaintiffs' property and that Plaintiffs had an ownership interest in the *629 septic system. Rather, through this evidence, Defendant attempted to show that Plaintiffs were responsible for the problems with the septic system and to prove that her house was damaged without first demonstrating that Plaintiffs were responsible for the damage. The exclusion of the offer of proof did not materially affect the merits of the action and Defendant suffered no prejudice due to its rejection. Rule 84.13(b). Point denied.
In her second point, Defendant argues that the trial court abused its discretion when it heard Plaintiffs' motion for contempt because although the trial court had rendered judgment, it was not yet final. Defendant's third point alleges the trial court abused its discretion in failing to set out findings of fact on which the court based its order of contempt. We consider Defendant's second and third points together because both pertain to the civil contempt order.
Although the parties do not raise the question of appealability, we first determine whether the trial court's order is an appealable judgment. Clark v. Myers, 945 S.W.2d 702 (Mo.App. E.D.1997). For an appeal to lie, there must be a final judgment or order. Section 512.020 RSMo. (1994). A civil contempt order is not final until it is enforced. Clark, 945 S.W.2d at 702.
A civil contemnor has two options when confronted with a civil contempt order: (1) Defendant could purge herself of the contempt by complying with the court's order, making the case moot and unappealable; Id. or (2) Defendant may appeal the order, but she must wait until the court's order is enforced by incarceration or otherwise. See Creamer v. Banholzer, 694 S.W.2d 497, 499 (Mo.App. E.D.1985). Here, the record does not show that Defendant either complied with the order or that enforcement has been sought. Accordingly, the order of the trial court is interlocutory and not appealable. The appeal of the contempt order is dismissed without prejudice as premature.
The judgment for damages and injunctive relief is affirmed, and the appeal of the contempt order is dismissed.
SIMON and SULLIVAN, JJ., concur.
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559 F.2d 1213
Sutherlandv.U. S.
No. 76-2148
United States Court of Appeals, Fourth Circuit
8/16/77
1
E.D.Va.
REMANDED
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541 P.2d 755 (1975)
AREA, INC., et al., Appellants,
v.
John C. STETENFELD, Appellee.
No. 2258.
Supreme Court of Alaska.
October 23, 1975.
*756 Bernard J. Dougherty, of Cole, Hartig, Rhodes & Norman, Anchorage, for appellants.
Charles K. Cranston, of Gallagher, Cranston & Snow, Anchorage, for appellee.
Before RABINOWITZ, C.J., and CONNOR, ERWIN, BOOCHEVER and BURKE, JJ.
OPINION
BOOCHEVER, Justice.
This appeal involves a dispute concerning the validity of certain shares of corporate stock improperly issued in exchange for a promissory note. The stock was the subject of a repurchase agreement between the corporation and its former manager-shareholder who paid the promissory note in full prior to commencement of the suit. Another issue involves whether the repurchase agreement can be rescinded because the book value, upon which the repurchase price of the shares was based, was determined by a method allegedly at variance with generally accepted accounting principles. The superior court ruled in favor of the manager-shareholder, and we affirm.
Appellant Area, Inc., an Alaska corporation, was organized in 1970 for the purpose of engaging in the real estate business. The firm was founded by Leslie B. Pace, Audie L. Moore and John C. Stetenfeld. Stetenfeld was to act as general manager and administrator of the corporation. Stetenfeld, although not claiming that he was an expert in accounting, did indicate that he would be able to keep the corporate books; during his association with the firm he was primarily responsible for their accuracy.
On June 4, 1970, at the first meeting of Area, Inc.'s board of directors, 2,500 shares of common stock were issued to each of the firm's three founders. Pace and Moore both contributed $2,500.00 in cash for their shares whereas Stetenfeld's shares were issued in return for his unsecured promissory note in the amount of $2,500.00. This promissory note was later paid in full by Stetenfeld prior to February 25, 1972.
In March 1972, due to various disagreements over his managerial practices, Stetenfeld resigned at the request of the *757 board. In conjunction with his resignation, Stetenfeld included within a general proposal to settle all outstanding accounts between Area, Inc. and Stetenfeld an offer to sell his stock[1] to the corporation. A general agreement to this effect was executed on March 20, 1972. In substance, Area, Inc. agreed to pay Stetenfeld the sum of $44,000.00 for 2,500 shares of stock in Area, Inc., computed at a rate of $17.60 per share. The per share value of the stock was arrived at by using the book value figure computed by Stetenfeld on February 29, 1972. Stetenfeld also received $5,241.25 for separation pay, and it was agreed that the combined sum of $49,241.25 was in full settlement of all debts owed to Stetenfeld by Area, Inc.
After Stetenfeld's departure, an audit of the company books was conducted by Lee E. Fisher, a certified public accountant. Mr. Fisher submitted to the board of directors a comparative statement of the firm's financial position as of February 29, 1972. The statement set forth the figures used in computing the repurchase price of the stock and indicated ten adjustments, the most significant of which involved accounting for tax liability on deferred commissions. As a result of these adjustments, a book value per share of $12.48 was determined, which was more than $5.00 per share lower than the figure which had served as the basis for determining the purchase price of the stock in the March 20, 1972 agreement.
During the audit of the corporation, Mr. Fisher also had occasion to question the stock issued to Stetenfeld for his promissory note. The board requested an opinion from counsel and was advised that the shares which it had recently contracted to repurchase had been improperly issued to appellee. Later, the board discontinued the monthly installment payments owed pursuant to the repurchase agreement.
On August 25, 1972, Area, Inc. instituted this suit in the superior court for rescission or reformation of the agreement of March 20, 1972, for declaration that the shares issued to Stetenfeld were void, and for damages from Stetenfeld for the costs of the audit. Stetenfeld answered the complaint and counterclaimed against Pace and Moore.
The case was heard before Judge James K. Singleton who found that the issue of the voidness of the shares issued to Stetenfeld was moot because the improper issuance had been ratified by the actions of the board and the shareholders and because all other claims of the parties had been extinguished by the general settlement of March 20, 1972. He further found that there were no facts established which would justify rescission of the agreement. Judgment in favor of Stetenfeld and against Area, Inc. was entered on May 13, 1974 awarding the former $40,103.60.[2] This appeal followed.
I
Concerning the issue of the validity of the stock issuance, Area, Inc. urges this court to reverse the lower court's decision and declare all shares issued Stetenfeld for his unsecured promissory note to be in direct contravention of AS 10.05.099(b) and therefore void ab initio as a matter of law. It is argued that such a result is the only one consonant with the important public policy embodied in the statute. According to Area, Inc., no other remedy or construction of the statute would effectively assure *758 the integrity of the capital stock statements appearing on corporate balance sheets and thereby protect the interests of those who may be defrauded if the corporation's alleged capital assets are in reality merely notes evidencing the indebtedness of a shareholder.
Stetenfeld, on the other hand, essentially argues that, even though his shares were admittedly issued in violation of the statute, such shares are not per se void but are merely rendered voidable by their unlawful origin. Stetenfeld further contends that the corporation's subsequent acceptance of payment in full on the note validated the initial issuance or, at least, rendered the shares no longer voidable.
We are not faced with the question of whether corporate shares can lawfully be issued for an unsecured promissory note. AS 10.05.099(b) expressly and unequivocally prohibits the use of such notes as consideration. Rather, the question concerns both the effect of the violation of the statute and the related issue of whether subsequent payment of lawful consideration can cure the original unlawful transaction.
Statutes and constitutional provisions which define the types of consideration which may be paid for the issuance of shares appear in at least two different forms;[3] however, they seek to promote the same general purpose: the elimination of the opportunities for and the likelihood of fraud surrounding the issuance of stock. Specifically, there was concern about the once well-known practice of corporations issuing shares of capital stock without receiving its par value in money or the equivalent of money.[4] Thus, statutes were designed to provide that the corporation should receive the full value of the stock when it was issued.
One type of provision is illustrated by Alaska Statute 10.05.099 (1962):[5]
(a) Consideration for the issuance of shares may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the corporation. When payment of the consideration for shares is received by the corporation, the shares are considered fully paid and nonassessable.
(b) A promissory note or future service does not constitute payment or part payment for shares of a corporation.
The second type is exemplified by art. IX, sec. 39 of the Oklahoma Constitution:
No corporation shall issue stock except for money, labor done, or property actually received to the amount of the par value thereof, and all fictitious increase of stock or indebtedness shall be void . .. . (emphasis added)
The major distinction between the two types of enactments is that the Oklahoma provision expressly voids the results of a violation of the section whereas the Alaska enactment contains no comparable language.
Most of the authorities cited by Area, Inc. in support of its contention that all shares issued in violation of AS 10.05.099 are void ab initio involve state constitutional or statutory provisions of the Oklahoma variety and are thus inapposite.[6] In *759 such cases the courts, in construing the term "void", relied on a word that is conspicuously absent from the analogous Alaska provision.[7]
Area, Inc. so much as concedes that even its own voidness per se argument is not absolute for it is willing to admit that when third parties are involved and when the equities weigh heavily in their favor, some courts will not consider the transaction void.[8] It attempts to distinguish those cases from the instant one since the controversy here exclusively involves the parties to the initial unlawful issuance. Equities may also be involved here, however, where a managing shareholder has devoted his efforts to building up the value of corporate assets. It may well be that without the prospect of enhancement in value of his shares of stock, he would have demanded a higher salary and possibly would not have had the same incentive as far as his hours of work and efforts were concerned.
Even under a constitutional provision containing the voiding language,[9] however, the Colorado Supreme Court recently held a shareholder to be liable on his promissory note issued to the corporation. In Haselbush v. Alsco of Colorado, Inc., 161 Colo. 138, 421 P.2d 113 (1973), the court reasoned that since the main rationale of both the statutory and constitutional provisions is to prevent the watering of stock and the dilution of the capital of a corporation, these purposes would be better served by a decision allowing the corporation to enforce the payment of the note rather than a ruling which voided both the stock and the note.
Since Alaska has no provision voiding the issuance of stock, we need not gratuitously construe the term "void" and choose between those cases holding that the constitutional or statutory provision means void ab initio, and those cases which hold that the term means voidable only. We merely note that there are well reasoned cases presenting opposing constructions of the term "void".[10] We believe that the existence of a division of authority in jurisdictions having express voiding provisions bolsters our view holding that stocks issued in violation of AS 10.05.099 are voidable only, and that, in any event, once *760 valid consideration has been accepted by the corporation prior to suit, the issuance is validated.
Area, Inc. points out that the statute would be rendered meaningless if the consent of the directors and the shareholders were held to legitimize a violation of AS 10.05.099. In most cases, the consent of the directors could have been obtained at the time of issuance since the corporations were for one reason or another willing to accept the shareholder's note. It appears to be well settled that the unlawful acts of a corporation or its agents cannot be validated by the acquiescence or consent of either the shareholders or the directors.[11] Here, however, we are not confronted with the question of whether the vote of a board of directors, without more, could validate such an issuance. The question is whether a corporation can validate or cure an unlawful issuance by acceptance of consideration which, if it had been proffered initially, would have made the issuance lawful.
Ramsay v. Crevlin, 254 F. 813 (8th Cir.1918), is a typical case supporting Stetenfeld's contention that subsequent payment of a note can cure or validate the issuance of such shares.[12] The Ramsay case concerned a suit brought by the assignee of a note to collect the amount due from the maker. The note had been issued in exchange for shares of stock. In response to the objections of the other stockholders, the directors' paid the corporation cash in satisfaction of defendant's note a month after the stock was issued. The corporation signed the note over to the directors individually, and they in turn assigned their interest to Crevlin. The shareholder-maker tried to assert the voidness of the stock and the note as a defense. The court observed:
Conceding that the taking of the note and the issuance of the stock therefor before the note was paid constituted a violation of the statute was illegal, and contrary to the public policy disclosed by that statute, it does not follow that the payment of the corporation for that stock by the four directors ... was either immoral or illegal, or against the public policy of the state... .
Again, while the statute declares that stock issued in violation of it shall be void, it does not follow that such stock is void in such a sense ... that such stock may not be validated by the subsequent payment and receipt of the money for it.[13]
The court concluded that interpreting the word "void" in the statute as voidable was not only consistent with certain defensible rules of statutory interpretation, but also was the only way to effectuate the main purpose of the statute: to secure payment for a corporation's stock in money or its equivalent equal to the par value of the stock.[14]
The Ramsay case also involved an express agreement in which the shareholders waived their objections to the validity of the shares in return for the cash payment by the directors on behalf of the defendant. Prior to the director's agreeing to make the payment, they were promised repayment by Ramsay. This agreement was found to be valid and separable from the original issuance, and, therefore, even if the original shares were void and the note uncollectable, Ramsay could be held liable on the separate contractual obligation.
Thus, both alternate grounds of the Ramsay decision have some application to the instant case. In the first place, the subsequent payment of the note in February 1972 cured the invalidity of the shares or *761 estopped Area, Inc. from raising the issue. Secondly, the March 20, 1972 settlement in which both parties surrendered all other claims they had against each other could be seen as a separate source of Area, Inc.'s liability.
In any event, there can be no possible harm after the note is paid in full, as occurred here prior to entry of the repurchase agreement and the subsequent suit. Even if there were subsequent shareholders who somehow failed to read a financial report so as to become aware of the note, any possible harm would be remedied by the payment of the note.
The legislature has not seen fit to prescribe specific penalties for failure to comply with the provisions of AS 10.05.099, and we have no intention of imposing such a harsh penalty as that suggested by Area, Inc., whereby the other shareholders would receive a totally unjustifiable windfall at the expense of a fellow original shareholder who entered into the organizational arrangement in good faith.
Our holding is directed to the factual situation presented in this appeal. In the event that we find that innocent shareholders or others are prejudiced as a result of watering of stock, we are confident that the Alaska courts will have little difficulty in fashioning an appropriate remedy.
AS 10.05.099 furnishes yet another reason for our holding against parties seeking the voidance of stock after payment of the promissory note given in consideration for its issuance. Subsection (a) provides in part: "When payment of the consideration for shares is received by the corporation, the shares are considered fully paid and nonassessable." Thus, while a promissory note does not constitute payment for the stock, once the note has been paid, the stock must be considered as fully paid. Under circumstances here present, we shall not void stock which under the statutory provision is to be "considered fully paid".
In conclusion, since: (1) the relevant Alaska statute does not void defectively issued stock but merely renders it voidable; (2) subsequent acceptance by the corporation of valid consideration validated the shares; and (3) pursuant to the March 20, 1972 settlement agreement, Area, Inc. surrendered all other claims it had against Stetenfeld, we hold that the shares of stock repurchased by Area, Inc. were valid and there was no failure of consideration.
II
Appellants alternatively contend that the trial court erred by refusing to rescind the March 20, 1972 agreement whereby Area, Inc. bought out shareholder Stetenfeld. It is argued that this latter agreement was marred by a material mutual mistake of fact in that the book value of the stock was adjusted to reflect deferred compensation when no concomitant allowance was made for possible tax liability on this deferred income. As a result, the purchase price of the shares was based on an overvaluation, and the appellants insist that such an error constitutes an adequate ground for rescission.
In Day v. A & G Construction Co., Inc., 528 P.2d 440 (Alaska 1974), we were confronted with a somewhat similar problem pertaining to the interpretation of the term "costs" when used in a contract. The question presented was whether the term should be given the technical tax accounting sense. We stated:
Upon review of a trial court's decision pertaining to a contract, the interpretation of words is ordinarily held to be a matter for the court, while resolution of a dispute as to the surrounding circumstances is for the trier of facts. Here we have no basic dispute as to the surrounding circumstances, and we thus consider questions pertaining to the meaning to be given to the words of the contract in the same manner as questions of law.[15]
*762 Similarly, here there is no basic dispute as to the surrounding circumstances, and we must consider the question pertaining to the meaning to be given to the words "book value" in the same manner as a question of law.[16] In Day, we utilized the standard of the reasonable expectations of the parties in determining whether the trial court had properly interpreted the terms of the contract: "[A] reasonable man is placed in the position of the parties, and the question is what he would reasonably expect that language to mean under the circumstances."[17]
Area, Inc.'s argument is based on the dual assumptions that there is only one proper definition of the term "book value", and that the parties to the repurchase agreement intended to use the term in a narrow technical sense. We are unable to accept the validity of either assumption.
In the first instance, both parties to this appeal refer the court to cases which discuss the term "book value" and which unanimously conclude that the term has no uniform or fixed meaning either in the legal or accounting professions. In this vein, the California court in Pohlman Co. v. Easterling,[18] stated:
Defendant, however, asserts that the agreement, on its face, clearly and unambiguously requires inclusion of the omitted elements of value. The essence of his view is that "book value" of corporate stock is a term of fixed meaning, and requires inclusion of market value of each corporate asset listed on the books.
But "the law does not define `book value'". A court must look to the language of the agreement and to the significant circumstances surrounding its formulation and execution, and from all these determine the intent of the parties... .
This principle conforms with that part of the trial court's findings of fact and conclusions of law entered May 13, 1974, wherein Judge Singleton stated:
XXII
Authorities differ widely on which financial ingredients make up the assets and liabilities properly to be included in a calculation of book value, but agree that book value is neither helpful nor indicative of the true value of shares of corporate stock.
XXIII
The term "book value" does not involve a universally agreed value for any particular set of books of account.
XXIV
The parties to this action employed their term "adjusted book value" for internal use in evaluating the financial posture of their corporation.
These findings were also supported by the testimony of the parties' expert witnesses.[19]
*763 As admitted by both parties to this appeal, Area, Inc. computed book values by including in its assets 100 percent of deferred commissions receivable plus 80 percent of anticipated brokerage commissions on transactions awaiting closing. Using this method, the board of directors for purposes unrelated to the purchase of Stetenfeld's stock determined the book value of the shares to be $9.91 per share as of September 14, 1971 and $14.93 per share on January 19, 1972. Appellee Stetenfeld makes reference to two other instances where book value, calculated as outlined above, was relied on in stock transactions. Mr. Pace also testified that the same method was used several times to calculate book value. There thus was ample precedent for the method used to calculate the book value of Area, Inc. stock on February 29, 1972 which book value ($17.60 per share) was the basis of the March 20, 1972 agreement between Area, Inc. and Stetenfeld for the purchase of Stetenfeld's stock. We hold that there is adequate support for the trial court's findings that all parties to the March 20, 1972 buyout agreement were fully cognizant of the various factors making up the "adjusted book value" of the corporate shares as it was reflected in the February 29, 1972 financial statement. It had been the consistent practice of the corporation to expend corporate income on salaries, commissions, bonuses and other like distributions in an effort to minimize or eliminate taxable corporate income, and the corporation, in fact, incurred no income tax liability for any period relevant herein. Indeed, there was some testimony by Stetenfeld to the effect that he, Pace and Moore had discussed the likelihood of the continued absence of taxable corporate income in connection with a certain loan application. Stetenfeld stated that each party recognized that no such taxable income was anticipated for several years, and that a conscious decision by the board of directors had been made at that time not to include an estimate of potential tax liability in the loan application. Moore testified that there never was a discussion of tax liability, and Pace stated that he could not recall any such discussion. In any case, there is ample support that the trial court's finding that, based on the corporation's past record of income distribution, the parties could have reasonably concluded that no corporate tax liability would be created upon receipt of future receivables.
In conclusion, we hold that under the facts of the instant case as found by the trial court, there was no reason to believe that a mistake of any kind mutual or otherwise was made by either of the parties to the agreement. In so holding, we do not mean to suggest a rule of general application in determining "book value", as we recognize that inadvertent departure from accepted accounting techniques in the context of a corporation that in principle sought to adhere to those techniques or that historically generated taxable income might lead to a contrary result.[20] Here, *764 however, the parties had developed a method of computing book value which had been approved by the board of directors and which had been consistently utilized in the course of several prior stock transactions. There was no ambiguity whatsoever in regard to the factors which were to be taken into consideration. We hold that, since as a matter of law the term "book value" has no fixed meaning, the intent and understanding of the parties to the individual agreement must control. Whereas generally accepted accounting principles cannot be entirely disregarded in determining book value, technical variations from them cannot per se be deemed fatal errors especially in cases such as this, where the alternate method employed was well established and had, at one time, the approval of the board of the appellant corporation. The equitable remedy of rescission was therefore rightfully withheld by the trial court.
With regard to both allegations of error, the judgment of the trial court is affirmed.
Affirmed.
NOTES
[1] This offer was made pursuant to art. VII, sec. 1 of the by-laws of Area, Inc. which provides in part:
In the event a shareholder desires to sell his stock or withdraw from active participation in the corporation for any reason, he shall offer his stock to the corporation, and the corporation shall have the right to demand tender, with the price to be paid for the shares to be determined by the book value of the shares as that value appears on the financial statements of the corporation.
[2] Amended judgment in the same amount was entered on May 14, 1974 against Area, Inc. and the defendants on the counterclaim, Pace and Moore.
[3] See infra Page 758.
[4] For example, see Chilson v. Cavanagh, 61 Okl. 98, 160 P. 601, 602 (1916).
[5] This statute is patterned after sec. 19 of the Model Business Corporation Act, which provides in pertinent part:
The consideration for the issuance of shares may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the corporation. When payment of the consideration for which shares are to be issued shall have been received by the corporation, such shares shall be deemed to be fully paid and nonassessable.
Neither promissory notes nor future services shall constitute payment or part payment for shares of the corporation.
[6] Hirschfeld v. McKinley, 78 F.2d 124 (9th Cir.1935); Bank of Commerce v. Goolsby, 129 Ark. 416, 196 S.W. 803 (1917); Kahle v. Stephens, 214 Cal. 89, 4 P.2d 145 (1931); State ex rel. Weede v. Bechtel, 239 Iowa 1298, 31 N.W.2d 853 (1948).
[7] The comments of the Model Business Corporation Act give no reason for the abandonment of the "void" language. Some indication may be found in the statement that:
Creditors were the chief complainants in the so-called "watered stock" cases that arose in the late 19th and early 20th centuries. Creditor grievances are not numerous today, primarily because of the prophylactic effect of regulations of public service commissions, "blue sky" laws adopted in many states, and the Securities Act of 1933.
The valuation of property and services has always been and is today of importance also to existing shareholders vis-a-vis new shareholders, for overvalued consideration unfairly dilutes the interests of existing shareholders. 1 Model Bus.Corp.Act Ann. 2d § 19 ¶ 2 at pp. 435-36.
Thus the primary purpose for the provision today is to protect shareholders, particularly the existing ones, from future stock issuance watering down values.
[8] Washer v. Smyer, 109 Tex. 398, 211 S.W. 985 (1919) (bona fide purchaser); Thompson v. First National Bank, 109 Tex. 419, 211 S.W. 977 (1919) (following Washer and involving a suit brought by creditors on behalf of an insolvent bank).
[9] Art. 15, sec. 9 of the Colorado Constitution was of the Oklahoma-type, expressly voiding "all fictitious increase of stock". Like Alaska's provision, however, Colorado Revised Statutes 31-4-5(2) (1963) read: "Neither promissory notes nor future services shall constitute payment or part payment, for shares of a corporation".
[10] Compare Hirschfeld v. McKinley, supra; Southwesterern Tank Co. v. Morrow, 115 Okl. 97, 241 P. 1097 (1925), with Haselbush v. Alsco of Colorado, Inc., 161 Colo. 138, 421 P.2d 133 (1973); Bankers' Trust Co. v. Rood, 211 Iowa 289, 233 N.W. 794 (1930); Ramsay v. Crevlin, 254 F. 813 (8th Cir.1918). Cf. cases cited in note 6 which generally hold that the word "void" in their Oklahoma-type provisions does not apply to unlawfully issued stock (only to "fictitious increases"), and thus the transactions are rendered voidable without requiring the construction of the term "void" as "voidable".
[11] Kahle v. Stephens, 214 Cal. 89, 4 P.2d 145 (1931); Tooker v. National Sugar Refining Co., 80 N.J. Eq. 305, 84 A. 10 (1912).
[12] See also Oklahoma Gas & Electric Co. v. Hathaway, 192 Okl. 516, 138 P.2d 832 (1943); Brownfield State Bank v. Hudson, 73 S.W.2d 140 (Tex.Civ.App. 1934).
[13] 254 F. at 816-17 (citations omitted).
[14] Id. at 819.
[15] 528 P.2d at 443 (footnotes omitted).
[16] The burden of proof to be used in those reformation cases where there is a factual dispute concerning surrounding circumstances is discussed in Gablick v. Wolfe, 469 P.2d 391, 395 (Alaska 1970); Durkee v. Busk, 355 P.2d 588, 591 (Alaska 1960).
[17] 528 P.2d at 444. We concluded that under the circumstances presented in Day, the term "costs" was not to be given a technical tax accounting meaning.
[18] 211 Cal. App.2d 466, 27 Cal. Rptr. 450, 450-51 (1962). See also Lassallette v. Parisian Baking Co., 110 Cal. App.2d 375, 242 P.2d 671 (1952); Aron v. Gillman, 309 N.Y. 157, 128 N.E.2d 284, 286 (1955).
[19] Mr. Rompa, Stetenfeld's expert witness, stated that although he, as a certified public accountant, would have included an adjustment for deferred taxables payable, its omission would not necessarily render the book value thus obtained any less "true". Both Mr. Rompa and Mr. Fischer, expert witness for appellant, generally agreed with the trial court that book value refers to a balancing of assets and liabilities divided by the number of shares of ownership. Furthermore, both of the expert witnesses believed that the accounting principle involved here, that of including a figure for future tax on deferred income, was a relatively sophisticated one not likely to be one familiar to a businessman such as Stetenfeld who was versed only in the fundamentals of accounting.
[20] See Aron v. Gillman, 309 N.Y. 157, 128 N.E.2d 284, 288 (1955), where the New York Court of Appeals commented:
Clearly it makes no sense to charge the entire year's burden of income taxes to the income of the last month preceding termination of the taxable year. On the contrary, sound accounting practice requires that each dollar of income as it is earned throughout the year should bear its proportionate share of the costs of the enterprise, including the tax burden, ....
.....
Moreover, judicially, we must recognize that income taxes are continuing and reasonably predictable charges against corporate income. Their influence pervades modern business. Rare indeed is the corporation or businessman who is not acutely aware of their incidence and effect upon its or his operations. Under such circumstances, to accept defendants' argument that these taxes must be ignored because they weer not yet "liabilities" would be to subject our reason to what Mr. Justice Cardozo termed "the tyranny of labels". Snyder v. Com. of Massachusetts, 291 U.S. 97, 114, 54 S.Ct. 330, 335, 78 L.Ed. 674. If a corporation, such as here, has earned a given net income over the first seven months of its tax year, it is only reasonable that the tax which will be payable on that income should be included in a determination of its financial position in terms of book value. (emphasis added).
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13 N.Y.3d 941 (2010)
PEOPLE
v.
OXLEY.
Court of Appeals of New York.
January 19, 2010.
Application in criminal case for leave to appeal denied. (Read, J.).
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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
JANUARY 7, 2011
No. 09-11374
JOHN LEY
________________________
CLERK
D. C. Docket No. 06-01950-CV-T-33-TGW
WAYNE R. GRAY,
Plaintiff-Appellant,
versus
NOVELL, INC.,
THE SCO GROUP, INC.,
X/OPEN COMPANY LIMITED,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(January 7, 2011)
Before EDMONDSON, HILL and ALARCÓN,* Circuit Judges.
*
Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
PER CURIAM:
This case centers on ownership of the UNIX trademark. Plaintiff-Appellant
Wayne R. Gray (“Gray”) alleges that the Defendant-Appellees -- X/Open
Company Limited (“X/Open”), Novell, Inc. (“Novell”), and The Santa Cruz
Operation, Inc. (“SCO”)1 -- conspired to conceal the lawful owner of this mark,
that X/Open was not the true owner, and that X/Open’s administrative opposition
to Gray’s registration of the similar-sounding iNUX mark was therefore fraudulent.
The District Court granted summary judgment for Defendants, concluding that
X/Open was the indisputable owner of the UNIX mark when it opposed Gray’s
iNUX registration; we affirm the judgment.
I. Background
A. The UNIX Businesses and Trademarks
UNIX is a computer source code developed by American Telephone &
Telegraph (“AT&T”) in 1969. AT&T began using the trademark “UNIX” to
1
The Santa Cruz Operation, Inc., was the predecessor-in-interest to the SCO Group, with respect
to whom this appeal is currently stayed due to ongoing bankruptcy proceedings. We refer to
both companies as “SCO” herein.
2
identify operating systems based on this source code in 1972. In 1986, it filed two
UNIX trademark registrations with the U.S. Patent and Trademark Office (“PTO”).
In 1990, AT&T assigned the UNIX mark and registrations to its subsidiary, UNIX
Systems Laboratories (“USL”).
USL’s UNIX business had two facets: (1) a source-code business, for which
USL owned UNIX source code, developed operating systems based on that source
code -- most notably UNIX System V -- and licensed the UNIX trademark for
products created from UNIX source code; and (2) a product business, in which
USL -- along with Novell, its joint-venture partner -- sold a UNIX-based operating
system called UNIXWARE.2
In 1994, USL merged into Novell. As part of the merger, Novell acquired
the UNIX trademark. Novell’s post-merger UNIX operations were similar to those
of USL: Novell maintained both the source-code business -- under which it owned
the UNIX System V source code and the UNIX trademark, and licensed them to
third parties -- and the UNIXWARE product business.
The Term Sheet. Shortly before the completion of this merger, Novell and
several other companies selling UNIX-based operating systems agreed that it was
in the computer industry’s best interest to transfer Novell’s UNIX-licensing
2
We refer to the trademark associated with the source-code business as “the UNIX trademark,”
and the trademark associated with the product business as “the UNIXWARE trademark.”
3
business to an independent non-profit organization, which would then be
responsible for licensing the UNIX trademark to third parties. The companies also
agreed that this organization would license the UNIX mark not based on products’
use of UNIX source code -- this had been the standard in the past -- but instead
based on products’ conformity to certain compatibility specifications.
The independent organization selected to do this specification-based
licensing was X/Open, an international technology consortium based in the United
Kingdom. In October 1993, the companies signed a non-binding agreement,
entitled “Term Sheet,” declaring that Novell would begin licensing the UNIX mark
exclusively through X/Open, and would assign ownership of the mark to X/Open
within three years.
The Licensing Agreement. On 10 May 1994, Novell and X/Open
implemented the Term Sheet’s first step by executing a Licensing Agreement in
which Novell granted X/Open an “exclusive, perpetual, irrevocable license to use,
and sub-license to third parties the use of,” the UNIX trademark. In addition, this
agreement obligated X/Open to grant sub-licenses to products that conformed to
certain specifications, thus creating the specification-based licensing business
contemplated in the Term Sheet.
Novell also authorized X/Open to publish the acknowledgment that “UNIX
4
is a registered trade mark licensed exclusively by X/Open,” and committed to
assigning the UNIX trademark to X/Open in three years (unless the parties later
agreed to a different time). While this agreement gave X/Open responsibility for
the portion of Novell’s source-code business related to the licensing of UNIX,
Novell retained ownership of the System V source code and trademark. Novell
also kept the rights to issue maintenance releases and to receive royalties for
products licensed prior to the agreement. The Licensing Agreement did not
implicate Novell’s UNIXWARE business.
The Asset Purchase Agreement. A little over one year later, Novell reached
an agreement to sell certain assets, including much of the remainder of its UNIX
business, to SCO. Schedule 1.1(a) of the Asset Purchase Agreement (“APA”),
which listed the assets being transferred to SCO, transferred “[a]ll rights and
ownership of UNIX and UNIXWARE,” including -- “without limitation” -- the
“[t]rademarks UNIX and UNIXWARE as and to the extent held by [Novell]
(excluding any compensation [Novell] receives with respect of the license granted
to X/Open regarding the UNIX trademark).” Schedule 1.1(b) listed assets
specifically excluded from the transfer, among them “[a]ll copyrights and
trademarks, except for the trademarks UNIX and UNIXWARE.” In other words,
Schedule 1.1(b) confirmed that the UNIX and UNIXWARE trademarks were to be
5
transferred to SCO -- but, as indicated in Schedule 1.1(a), only “as and to the
extent held by” Novell.
The Confirmation Agreement. In September 1996, Novell, X/Open, and
SCO jointly executed a tripartite Confirmation Agreement that clarified the fate of
the UNIX trademark. This agreement “provide[d] for the acceleration of the
vesting of title in X/Open to the UNIX trademark, and the assignment to SCO of
Novell’s rights under the [Licensing] Agreement.” To accomplish this, the
Confirmation Agreement tasked Novell -- “the owner of legal title to the UNIX
trademark” -- with formally transferring title to the UNIX trademark to X/Open “as
soon as possible.” The agreement further provided that “such assignment by
Novell shall not be considered a breach of Novell’s obligations [to SCO] under the
APA,” and that the APA was “subject to rights and obligations established in” the
Licensing Agreement.
A month after executing the Confirmation Agreement, Novell and SCO
amended the APA, revising Schedule 1.1(b) -- the list of assets excluded from the
transfer -- to exclude “[a]ll copyrights and trademarks, except for the copyrights
and trademarks owned by Novell as of the date of the [APA] required for SCO to
exercise its rights with respect to the acquisition of UNIX and UNIXWARE
technologies.” This amendment reinforced the Confirmation Agreement in making
6
clear that Novell would not transfer to SCO any trademark that SCO did not
“require[]” with respect to the assets it was acquiring from Novell.
The Deed of Assignment. In November 1998 Novell finalized its
compliance with the earlier agreements by assigning ownership of the UNIX mark
to X/Open. Under this Deed of Assignment, Novell assigned “all property, right,
title and interest in the [UNIX] trademarks with the business and goodwill attached
to the said trademarks.” X/Open recorded the assignment with the PTO in June
1999.
B. The UNIX-iNUX Dispute
The events directly giving rise to this litigation began in 1999, when the
Appellant Gray filed an application with the Patent & Trademark Office to register
the trademark “iNUX.” Gray had incorporated a computer software business in
October 1998, initially under the name MegaChoice, Inc. But he later changed the
company’s name to iNUX, Inc. and applied to register the iNUX mark in April
1999.
This application prompted a response from X/Open, which sent Gray a letter
demanding that he abandon his application for the mark. X/Open contended that
7
iNUX was “virtually identical” to X/Open’s UNIX trademark. Shortly thereafter,
X/Open filed a formal administrative opposition to Gray’s application with the
Trademark Trial and Appeal Board (“TTAB”) of the PTO. In this opposition,
X/Open asserted that it owned several UNIX trademark registrations and that the
iNUX mark was likely to “cause confusion, mistake, or deception,” given its
similarity to the “famous” UNIX mark.
Gray responded to X/Open’s opposition by launching his own investigation
into X/Open and the UNIX mark. Through this investigation, he came to believe
that Novell had never transferred ownership of the UNIX mark to X/Open and that
X/Open’s opposition to the iNUX application was therefore fraudulent. After five
years of Gray’s investigation and ongoing discovery disputes between him and
X/Open, Gray filed this lawsuit against X/Open, Novell, and SCO. He also filed a
successful motion to have the TTAB suspend the opposition proceedings.3
C. Procedural History
The basis for Gray’s suit was his claim that the three defendants had
conspired to conceal the true owner of the UNIX mark. According to Gray, SCO
3
The TTAB proceedings remain unresolved and suspended pending resolution of this lawsuit.
8
-- not X/Open -- was the lawful owner of the mark; and so X/Open had falsely
claimed ownership of the mark in its opposition to Gray’s iNUX registration.
Claiming that the Defendants induced him to abandon his business so that he could
defend himself in court, Gray sought treble damages plus interest and attorney’s
fees -- an amount in excess of $4.5 million -- as well as injunctive relief and
cancellation of the UNIX trademark registrations X/Open claimed to own.
The complaint raised eleven distinct claims for relief. These claims relied
on the federal and Florida RICO statutes, 18 U.S.C. § 1961 et seq., Fla. Stat. § 895;
the Lanham Act, 15 U.S.C. §§ 1120, 1125(a); a federal criminal statute, 18 U.S.C.
§ 1001; the Florida Communications Fraud Act, Fla Stat. § 817.034; and common
law theories of fraud and conspiracy to defraud.
X/Open moved for summary judgment on liability and damages. X/Open
argued that no genuine issue of material fact existed, that X/Open was the lawful
owner of the UNIX trademark, and that any losses Gray suffered were due to his
own decision to abandon his business and pursue this suit. Novell also moved for
summary judgment on five of Gray’s claims. Novell contended that the claims
under the Lanham Act and 18 U.S.C. § 1001 failed because no evidence existed
that Novell had fraudulently procured a trademark registration and also contended
that the common law claims failed because no evidence existed that Novell had
9
made misrepresentations. Gray filed his own motion for summary judgment,
seeking an order either determining the issue of ownership or determining the
material facts not genuinely at issue.
The District Court concluded that Novell had granted X/Open an exclusive
license for the UNIX mark via the 1994 Licensing Agreement, that Novell
transferred ownership of the mark to X/Open via the 1998 Deed of Assignment,
and that no fraud was involved in either X/Open’s registration of its ownership of
the UNIX mark with the PTO or its opposition to Gray’s iNUX registration. The
District Court thus granted X/Open and Novell’s motions for summary judgment,
and the Court denied Gray’s motion. Gray now appeals.
II. Standard of Review
We review a district court’s summary judgment decision de novo, applying
the same legal standards as those that governed the district court. Capone v. Aetna
Life Ins. Co., 592 F.3d 1189, 1194 (11th Cir. 2010) (citation omitted). Summary
judgment is appropriate where “there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
We construe all facts and draw all reasonable inferences in favor of the non-
10
moving party. Abel v. S. Shuttle Servs., Inc., 620 F.3d 1272, 1273 n.1 (11th Cir.
2010) (citation omitted).
III. Discussion
The linchpin of Gray’s complaint is his allegation that X/Open is not the true
owner of the UNIX mark. He claims that Novell did not grant X/Open an
exclusive license to the UNIX mark. According to Gray, Novell instead
transferred ownership of this mark to SCO via the APA; and ever since, the three
Defendants -- X/Open, Novell, and SCO -- have conspired to conceal the mark’s
true owner. If Gray is mistaken about the ownership of the UNIX mark, all of his
claims must fail; nothing would be fraudulent in X/Open representing itself as the
UNIX mark’s owner, nor would there be fraud attributable to Novell or SCO.
Gray is mistaken. Beginning with the Licensing Agreement, Gray is incorrect
about the legal effect of each transaction at issue. We begin our analysis with the
Licensing Agreement. Gray has not shown why this agreement did not mean what
it said when it described the license X/Open received as “exclusive.” He argues
that this designation is not conclusive and that a licensee must receive “all
substantial rights” to intellectual property to become an exclusive licensee, but he
11
has failed to show any such right that X/Open did not receive in the Licensing
Agreement.
Through this agreement, Novell charged X/Open with certain
responsibilities on the future sublicensing of the UNIX mark and authorized
X/Open to publicize that it was the exclusive licensor of this mark. Novell did
retain certain rights in the Licensing Agreement -- for example, the right to use the
UNIX name within the UNIXWARE designation that Novell continued to own --
but Gray has not shown that these retained rights are inconsistent with the granting
of an exclusive license to X/Open.4 No genuine issue exists on the effect of the
Licensing Agreement: Novell made X/Open the exclusive licensee of the UNIX
trademark.
Gray is similarly mistaken about the Asset Purchase Agreement executed by
Novell and SCO. While it is true that the APA provided for the transfer of UNIX
and UNIXWARE to SCO “without limitation,” it expressly transferred ownership
of the corresponding trademarks only “as and to the extent held by” Novell. Here
4
Gray notes that Novell filed formal oppositions to at least three trademark registrations in the
PTO after executing the Licensing Agreement. He claims that Novell therefore must have
retained the obligation to enforce its rights in the UNIX trademark. But even after licensing the
UNIX mark to X/Open, Novell remained in the UNIX business. So Novell had an interest in
protecting the mark’s integrity. Standing to file a formal opposition requires only that one
“believe[] that he would be damaged by the registration of a mark upon the principal register.”
15 U.S.C. § 1063(a). Novell was not required to own the UNIX mark to file oppositions, and the
filing of such oppositions is entirely consistent with its exclusive licensing of the UNIX mark to
X/Open.
12
the distinction between Novell’s two UNIX-related businesses -- the source-code
business and the UNIXWARE product business -- is key.
When the APA was executed, Novell could not transfer the UNIX mark to
SCO; it had exclusively licensed that mark to X/Open, and the mark had since
come to identify products licensed by X/Open and conforming to X/Open’s
specifications. But Novell could transfer its remaining rights in the source-code
business: namely, the rights to issue maintenance releases and receive royalties for
products licensed prior to the Licensing Agreement. And Novell still owned the
UNIXWARE business in its entirety; this business, too, went to SCO.
In this way, the APA was entirely consistent with Novell’s Licensing Agreement
with X/Open. The APA expressly referenced that agreement when it excluded
from the transfer to SCO “any compensation [Novell] receives with respect of the
license granted to X/Open regarding the UNIX trademark.” This confirms that the
APA was reached in full contemplation of the Licensing Agreement. We see no
genuine issue of fact on the effect of the APA; it transferred only the UNIXWARE
product business and the portion of the UNIX source-code business that Novell
retained following the Licensing Agreement -- which did not include the UNIX
trademark.5
5
Gray repeatedly insists that this Court must consider the Utah District Court’s decision in SCO
Group, Inc. v. Novell, Inc., No. 2:04-cv-00139, 2007 WL 2327587 (D. Utah Aug. 10, 2007),
13
This point was reinforced by the Confirmation Agreement, notably executed
by all three Defendants. Given that the APA had not altered Novell’s obligations
under the Licensing Agreement in the first place, it is not clear that Novell and
SCO needed to modify the APA -- but they certainly had the right to do so under
California law (which they chose to govern the APA). Cal. Civ. Code § 1698(a)
(“A contract in writing may be modified by a contract in writing.”). And the parol
evidence rule does not preclude our consideration of subsequent agreements. Cal.
Civ. Proc. Code § 1856. Accordingly, we conclude that the Confirmation
Agreement reaffirmed that Novell would be assigning ownership of the UNIX
mark to X/Open.6 The post-Confirmation Agreement amendment to the APA --
rev’d in part, 578 F.3d 1201 (10th Cir. 2009), in which -- he claims -- Novell admitted (and the
Utah District Court accepted) that Novell had transferred the UNIX trademark to SCO via the
APA. But as the District Court in this case recognized, the issue before the Utah court was the
ownership of the UNIX and UNIXWARE copyrights -- not the trademarks with which we are
concerned. We are not bound by a decision involving an issue wholly distinct from the issue
before this Court. See Pleming v. Universal-Rundle Corp., 142 F.3d 1354, 1359 (11th Cir. 1998)
(collateral estoppel requires that the issue on appeal be “identical to the one involved in the prior
proceeding,” and that it was actually litigated in that prior proceeding).
6
Gray disputes this conclusion, and he argues that the Confirmation Agreement is unlawful
insofar as it references the transfer of the UNIX mark to X/Open. He notes that the
Confirmation Agreement references a Licensing Agreement executed on 14 May 1994, and that
the Licensing Agreement at issue in this case was executed on 10 May. On this basis, Gray
insists that Novell and X/Open must have entered into a second licensing agreement only four
days after signing the agreement we have reviewed, and that this second agreement included the
parties’ actual obligations for the UNIX mark. Because Gray offers nothing to support this
speculative assertion (that a second, unseen agreement actually exists), and because the
Confirmation Agreement is perfectly compatible with the Licensing Agreement we have
reviewed, we conclude that a reasonable fact-finder could not reject X/Open’s explanation --
which was accepted by the District Court -- that the Confirmation Agreement merely contained a
typographical error about the date of the Licensing Agreement.
14
excluding all trademarks from the transfer except those SCO “require[d]” -- further
supports this conclusion, as SCO did not need the UNIX mark to carry out the
business it acquired: it was X/Open, not SCO, who needed that mark for its
specification-based licensing. We conclude (as did the District Court) that the
Deed of Assignment accomplished the transfer that the Licensing Agreement,
APA, and Confirmation Agreement all contemplated: transferring to X/Open
ownership of the UNIX mark.
Having set forth the legal effect of these transactions, it becomes clear that
all of Gray’s claims must fail. Gray’s common law claims for fraud and
conspiracy to defraud depend on his allegation that the Defendants misrepresented
that X/Open owned the UNIX mark. See Pettinelli v. Danzig, 722 F.2d 706, 709
(11th Cir. 1984) (explaining that common law fraud requires some
misrepresentation). But X/Open was the mark’s lawful owner; no fraud arose in
the Defendants’ representations to this effect.
Gray’s federal and Florida RICO claims, as well as his claims under the
Florida Communications Fraud Act, all allege that Defendants fraudulently
schemed to conceal the UNIX mark’s owner. But again, these claims fail in the
light of the fact that X/Open truly did own the mark following the 1998 assignment
from Novell; there was no fraudulent scheme. 18 U.S.C. § 1962(c) (requiring a
15
“pattern of racketeering activity”); Fla. Stat. § 895.03(3) (same); Fla. Stat.
§ 817.034(4)(a) (requiring a scheme to defraud).
Gray’s claims of fraudulent trademark registration, fraud on the PTO, and
unfair competition all also fail in the light of the fact that X/Open was the true
owner of the UNIX mark when it registered with the PTO its receipt of that mark
from Novell. 15 U.S.C. § 1120 (“Any person who shall procure registration in the
Patent and Trademark Office of a mark by a false or fraudulent declaration or
representation . . . shall be liable . . . .”); 15 U.S.C. § 1125(a)(1) (establishing civil
liability for anyone who “uses in commerce . . . any false designation of origin”
likely to deceive); 18 U.S.C. § 1001(a) (establishing criminal liability for anyone
who makes a false representation in any matter within the federal government’s
jurisdiction). Because each and every one of Gray’s claims depends on the
common allegation that X/Open did not own the UNIX mark, he cannot prevail.
IV. Conclusion
Concluding that no genuine issues of material fact exist on the ownership of
the UNIX mark, we also conclude that the District Court properly granted
16
summary judgment against Gray on all claims.7 We therefore affirm the District
Court’s decision in all parts.
AFFIRMED.
7
Because we conclude that Gray is entitled to no relief on any of his claims, it is not necessary
to address the issue of damages (on which the District Court also granted summary judgment
against Gray.)
17
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573 F.2d 1314
Midwest Seafoodv.Truck Ins. Excg.
No. 77-1454
United States Court of Appeals, Eighth Circuit
3/10/78
E.D.Mo., 431 F.Supp. 1197
1
AFFIRMED**
**
See Local Rule 9
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551 F.Supp. 626 (1982)
EL CID, LTD., Plaintiff,
v.
The NEW JERSEY ZINC COMPANY, Gulf & Western Industries, Inc., Gulf & Western International Holding Company, Gulf & Western (Canada) Limited, Watts, Griffis & McQuat, Limited, Camino Gold Mines Limited, Confor Mining, Inc., Richard W. Hogeland and David M. Koogler, Defendants.
No. 76 Civ. 1388 (WK).
United States District Court, S.D. New York.
November 30, 1982.
*627 Malcolm H. Bell, Norwalk, Conn., for plaintiff.
Joseph Einstein, Kassel, Hoffman, Neuwirth & Geiger, Arthur Sobel, Kimmelman, Sexter & Sobel, New York City, for defendants.
MEMORANDUM & ORDER
WHITMAN KNAPP, District Judge.
After extensive discovery, the so-called Gulf & Western defendants[1] have brought a motion for summary judgment against the antitrust claim of the second amended complaint. For reasons set forth below, it is conditionally granted.[2]
THE ANTITRUST CLAIM
This case involves eight gold mining concessions [the Bolgol Concessions] located in Bolivia's Tipuani Valley. These concessions are owned by defendant Camino Gold Mines Ltd. [Camino], which does not mine them for gold. It is plaintiff's contention that, had the defendants not prevented it by unfair means from obtaining the necessary funds from its American backers, it and not Camino would now be the owner of the Bolgol Concessions. Plaintiff, moreover, asserts that it unlike Camino would have mined the concessions for gold.
The antitrust claim at issue is based on section 1 of the Sherman Act, 15 U.S.C. § 1, and section 73 of the Wilson Tariff Act which extends the antitrust laws to the importation of goods. 15 U.S.C. § 8. It alleges that defendants conspired wrongfully to deprive plaintiff of the Bolgol Concessions. This conspiracy is claimed to have affected, among others, the security markets and commerce in mining equipment and machinery. Complaint ¶ 22. In this connection the complaint states at ¶ 25:
The acts of the defendants have had and will have a substantial impact on trade and commerce among the several States and with foreign nations, in particular but without limitation, trade and commerce in mining equipment and machinery, in gold, and in the securities of such defendants as are publicly held and traded. The combination, conspiracy and concert of action alleged herein are between and among persons and corporations who, as agents or principals, are engaged or to become engaged in importing gold and other commodities into the United States; and such combination, conspiracy and concert of action are intended to operate in restraint of lawful trade and commerce. (Emphasis supplied.)
THE INSTANT MOTION
It is axiomatic that a motion for summary judgment may not be granted unless, after resolving all ambiguities and drawing all reasonable inferences in favor of the party against whom summary judgment is sought, there remains no material fact genuinely in dispute. FLLI Moretti Cereali v. Continental Grain Co. (2d Cir. 1977) 563 F.2d 563, 565; 6 Moore's Federal *628 Practice ¶ 56.23.[3] Accordingly, for the purposes of this motion, we will accept as established that defendants did indeed use unfair means to deprive plaintiff of the Bolgol Concessions and that the alleged conspiracy among defendants was planned and set in motion in the United States. We will focus at the outset on the pivotal question whether on the assumption that unfair means were used their "intended effects" had a sufficient impact upon United States commerce to warrant application of the antitrust laws to this extraterritorial dispute. We answer this first question in the negative. Furthermore, we then go on to observe that, after several years of discovery, plaintiff has failed to submit such evidence as would allow a reasonable jury to find defendants' conduct in depriving plaintiff of the Bolgol Concessions to have had an anticompetitive effect.
THE UNITED STATES CONNECTION
Facts
As noted above, the subject of this lawsuit is a gold mining concession located in Bolivia's Tipuani Valley and now owned by defendant Camino a Canadian corporation.
Plaintiff is a corporation organized in the Cayman Islands, British West Indies, with offices in San Jose, Costa Rica. It is not authorized to do business in any jurisdiction within the United States, and has no office or place of business here. It has, however, provided investment advice to investors in this country, and has had American citizens as stockholders. Plaintiff's Rule 3(g) Statement ¶ 2.[4] Moreover, plaintiff, its predecessors, and stockholders have generally conducted business in U.S. dollars, plaintiff's only checking account (presumably with a foreign bank) is and always has been denominated in U.S. dollars, and plaintiff's two main backers on the Bolgol venture S.J. Groves & Sons Co. and William J. Kilpatrick are both American. Plaintiff's Rule 3(g) Statement ¶ 57.
The cast of defendants includes three that are Canadian: Camino (the vehicle for defendants' Bolivian mining ventures), Watts, Griffis & McQuat, Ltd., and Gulf & Western (Canada). The other defendants, however, are American. As stated above, for present purposes, it must be taken as established that the alleged conspiracy to deprive plaintiff of the Bolgol was planned and set in motion within the United States. Thus, plaintiff avers that defendant Gulf & Western expended some $2,275,000 in interstate and foreign commerce in this connection; that defendants sought financing of approximately $7,000,000 for the project from New York City banks and financiers, obtaining a conditional commitment in 1975; and that defendants purchased and prepared to ship from California to Bolivia a large walking dragline valued at several hundred thousand dollars. Plaintiff's Rule 3(g) Statement ¶¶ 45, 47, 48.
All parties, moreover, used airlines, telexes, telephones, and other instrumentalities of United States interstate and foreign commerce and communication in their respective efforts to secure the Bolgol. Plaintiff's Rule 3(g) Statement ¶ 51.
As to the effect on United States commerce, plaintiff avers that, had defendants not wrongfully deprived it of the Bolgol, it and its partners would have purchased the bulk of their mining equipment some several million dollars worth in the United States. Defendants having failed to go forward with the venture, these purchases *629 were wholly lost to domestic commerce. Moreover, plaintiff offers documents which suggest that even if defendants had gone forward with the project, they would have purchased most of the necessary mining equipment in Canada, not in the United States. Plaintiff's Rule 3(g) Statement ¶¶ 49-50.
Plaintiff further avers that it would have brought into the United States a large portion either of the gold mined from the Bolgol or of the money received for it. Plaintiff's Rule 3(g) Statement ¶ 57. It concedes, however, that defendants would have, likewise, brought into the United States the fruits of the Bolgol had they not "failed to go forward with the project through their own missteps and fallingsout..." Plaintiff's Rule 3(g) Statement ¶ 56.
Finally, plaintiff states that its ability to conduct business in the United States and elsewhere has been hindered by defendants' actions, which wrongfully deprived it of "cash flow for implementing such operations." Plaintiff's Answer to Interrogatories, No. 15(c).
Discussion
Plaintiff's claim must fail because its impact on United States commerce is insufficient to warrant the application of the antitrust laws. As to this phase of the defendants' motion, Judge Learned Hand established the focus of inquiry with the oft-quoted statement that:
We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. United States v. Aluminum Co. of America (2d Cir.1945) 148 F.2d 416, 443.
There has been no want of litigation over the question of what must be shown to establish at least some "consequences" within the United States. Timberlane Lumber Co. v. Bank of America (9th Cir. 1976) 549 F.2d 597, 608 n. 12. See, generally, 6 Toulmin's Antitrust Laws § 31.7. A recent review of the law led Judge Carter to rule that any demonstrable effect would suffice, so long as it was not de minimus. Thus, in Dominicus Americana Bohio v. Gulf & Western Industries (S.D.N.Y.1979) 473 F.Supp. 680 he observed at 687:
According to the Alcoa rule, even wholly foreign conduct may come within the sweep of the antitrust laws if it has a sufficient effect on the interstate or foreign commerce of the United States. Indeed, it is probably not necessary for the effect on foreign commerce to be both substantial and direct as long as it is not de minimis. (Citations omitted.)
Accepting Judge Carter's formulation of the doctrine, we conclude that any effect in the United States of the alleged conspiracy would be, at most, de minimis.[5] (Footnote omitted.)
Examination of the cases cited by plaintiff on this issue shows that in each of them the defendants were claimed to have *630 conspired to control or to destroy some specific business activity either in existence or realistically planned within the United States, or had cut off the importation into the United States of specifically designated goods.[6] It can readily be seen that these *631 cases lend no support to a claim by a foreign plaintiff who has never imported anything into the United States and only alleges the vaguest and undocumented hope of ever doing so.
The startling thing about the facts and arguments submitted by plaintiff is that, despite the assertion that plaintiff and its predecessors had previously conducted "mining operations in Latin America" and that its president had "engaged in mining for many years", see Memorandum in Opposition at 10, 16, there is no suggestion that plaintiff, its president, or its predecessors had ever sold an ounce of gold or any other metal in the United States, or had made any specific plans to do so. All that we are given on this score is the vague and undocumented hope that, but for the conspiracy, many "millions of dollars and perhaps billions in gold and/or the proceeds of gold would have flowed from Bolivia" to the United States. No case cited by the plaintiff nor the totality of all of them suggests that the alleged frustration of such a vague hope can be deemed to constitute a recognizable consequence within the United States.
ANTI-COMPETITIVE EFFECT
Facts
Despite the completion of discovery[7], there is not enough here to support a reasonable finding that an antitrust violation has indeed occurred. Very little of substance can be gleaned from the papers submitted in connection with the instant motion as to the anti-competitive effect of defendants' conspiracy.
Defendants state flatly that there is no evidence that their actions did in fact restrain either gold mining or gold production. They further observe that plaintiff is not, and never has been, in either the mining equipment or the securities industries. Memorandum in Support of the Motion for Summary Judgment or Dismissal (hereinafter "Defendant's Memorandum") at 15, 17.
In response plaintiff contends that the relevant product markets include both the gold mining and mining equipment industries and that defendants have failed to focus on the commercial realities of the relevant geographic market the Tipuani Valley in Bolivia. Plaintiff's Memorandum of Law in Opposition to G & W Defendants' Motion (hereinafter "Plaintiff's Memorandum") at 13. As to the gold mining industry, plaintiff claims that defendants' predatory conduct has barred all in that industry from a competitive chance at the Bolgol the key concession in the gold-rich Tipuani Valley. Id. at 21. Plaintiff further observes that defendants are owners of other concessions in the Tipuani Valley e.g., the Rosario Concessions. These are currently out of production for all practical purposes, but were exploited by defendant Condor from 1966 to 1971. As set forth by the affidavit of James Bates submitted in support of the instant motion, defendants initially contemplated mining the Bolgol in conjunction with three other groups of concessions in the Tipuani Valley. Plaintiff's Supplemental Memorandum in Opposition at 1-2.
As to the mining equipment industry, plaintiff merely states:
The conspiracy also turned out to have an adverse effect on the mining equipment industry in that El Cid and its partner would have bought several million dollars worth of equipment, and defendants in fact did not. It should also be noted that the plainly predatory intent of defendants' *632 conduct in this case bolsters the conclusion that their conduct had an anticompetitive effect. Plaintiff's Memorandum at 22 (citations omitted).
Neither side, however, has provided us with any information about the gold market, the gold mining industry, or the mining equipment industry. In particular, we have no information on how or where gold is sold in Bolivia or world-wide; how far afield mining operators generally look for mining equipment, and what governs its selection; what percentage of world-wide or even national production of gold the Bolgol is capable of supplying; and what percentage of world-wide or other sales of mining equipment an operation of the Bolgol's projected size might reasonably be expected to require.
Discussion
Plaintiff has failed to make out a prima facie case of antitrust violation. We discard at the outset the line of cases, based on the First Circuit's opinion in Albert Pick-Barth Co. v. Mitchell Woodbury Corp. (1st Cir.1932) 57 F.2d 96, cert. denied, 286 U.S. 552, 52 S.Ct. 503, 76 L.Ed. 1288, later limited by George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc. (1st Cir.1974) 508 F.2d 547, which hold that a conspiracy to eliminate a competitor by unfair means is per se a violation of the Sherman Act. It seems to us the better rule is the one enunciated by the Court in Northwest Power Products, Inc. v. Omark Industries, Inc. (5th Cir.1978) 576 F.2d 83, that such conduct rises to the level of a Sherman Act violation only when it has an anticompetitive effect. Id. at 90. See also Eye Encounter, Ind. v. Contour Art, Ltd. (E.D.N.Y.1979) 81 F.R.D. 683, 690; Mr. Hanger, Inc. v. Rizzuto (S.D. N.Y.1975) 410 F.Supp. 1158 (dismissed for lack of jurisdiction); Vogue Instrument Corp. v. Lem Instruments Corp. (S.D.N.Y. 1966) 40 F.R.D. 497 (summary judgment denied). Thus, in sustaining a grant of summary judgment for a defendant who had concededly conspired to eliminate a competitor by unfair means, the Northwest Power Court observed:
[A]bsent some market impact comparable to that which would be forbidden by the law of mergers, the interests protected by the antitrust laws never arise. 576 F.2d at 89.
Compare Whitten, supra, 508 F.2d 547, 567, n. 31 (where there is no potential for an actual market effect there can be no liability even for conduct that would otherwise be a per se violation of the Sherman Act Section 1).
The difficulty with plaintiff's position in this regard is its failure to define the relevant geographic market. See Coniglio v. Highwood Services, Inc. (2d Cir.1974) 495 F.2d 1286, 1292 ("before there can be a conclusion as to whether there has been ... a contract in restraint of trade, a determination must be made as to what [is] the relevant ... market") (citing cases). Clearly the relevant product is gold. The plaintiff has suggested nothing to overcome what we believe to be the universally recognized fact that the market for gold is world-wide.[8] Although, as noted, neither party has furnished us with any information about the size of the international gold market, defendants' potential market share is obviously minimal. Therefore, it is difficult to conceive how anything defendants may have done or may plan to do with the Bolgol Concessions from shutting them down entirely to combining their operation with that of other mines in the Tipuani Valley could have any noticeable effect on the world-wide market for gold.[9]
*633 Plaintiff seeks to circumvent this difficulty by focussing on the resources of the Tipuani Valley as viewed from the perspective of a gold mining concern. The gold miner, however, is nothing more nor less than a seller of gold on the world market. As Judge Weinfeld aptly observed in United States v. Bethlehem Steel Corp. (S.D.N.Y.1958) 168 F.Supp. 576, 592:
Any definition of line of commerce which ignores the buyers and focuses on what the sellers do, or theoretically can do, is not meaningful.
Put another way, plaintiff in urging us to consider the effect of the alleged conspiracy on the gold mining industry in the Tipuani Valley would have us focus on the effect on competitors rather than on competition. It is abundantly clear, however, that the Sherman Act protects competition not competitors. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. (1977) 429 U.S. 477, 488, 97 S.Ct. 690, 697, 50 L.Ed.2d 701; Jarmatt Truck Leasing Corp. v. Brooklyn Pie Co. (S.D.N.Y. 1981) 525 F.Supp. 749, 750; Bustop Shelters, Inc. v. Convenience & Safety Corp. (S.D.N.Y.1981) 521 F.Supp. 989, 997; Clarke v. Amerada Hess Corp. (S.D.N.Y.1980) 500 F.Supp. 1067, 1074.
We regard as frivolous plaintiff's suggestion that we should consider the effect on the mining equipment industry. The avowed object of defendants' conspiracy was to secure ownership of the Bolgol; any effect it may have had on the mining equipment industry was accordingly fortuitous.[10] Furthermore, it is sheer speculation whether the shift in ownership of the Bolgol from plaintiff to defendants had any effect on the amount of mining equipment purchased, on the source thereof, or generally on competitive conditions in the market for mining equipment.[11]
CONDITIONS FOR GRANTING SUMMARY JUDGMENT
On the facts before us it seems that defendants' motion for summary judgment as to the antitrust claim should be granted. However, plaintiff strongly argues that it might ill serve judicial economy to grant the instant motion and then be faced with a trial of plaintiff's remaining claims which would require proof of many of the same facts involved in the antitrust claim. In this connection it will be recalled that defendants have already indicated an intent to move for summary judgment on plaintiff's other claims, but that we had ruled that permission for such further motion would be withheld until we should determine whether the instant motion was viable. Accordingly, we shall hold in abeyance entry of judgment dismissing the antitrust claim and direct that defendant serve any further motions for summary judgment on or before the 12th day of January, 1983. In the event no further motion is made, or having been made is denied, we shall hear argument addressed to the specific question of whether partial summary judgment dismissal of the antitrust claim would enhance or impair judicial economy.
SO ORDERED.
NOTES
[1] The New Jersey Zinc Company, Gulf & Western Industries, Inc., Gulf & Western International Holding Company, Gulf & Western (Canada) Limited, Richard W. Hogelan, and David Koogler.
[2] Since early 1978 the parties have conducted extensive discovery under the supervision of a Magistrate. In September of 1981 the Magistrate recommended that the Gulf & Western defendants be allowed to make the present motion. The motion was briefed and oral argument was held. Before we could rule, however, this action was stayed pending the outcome of unrelated litigation in another court among the holders of plaintiff's outstanding shares concerning the ownership of the corporate plaintiff. That matter has been resolved and the stay in this case has, accordingly, been lifted. Thus, the motion is now ripe for decision.
[3] We are aware, of course, that "summary proceedings in antitrust litigation are disfavored", Poller v. Columbia Broadcasting System, Inc. (1962) 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458, but "they are not to be read out of the antitrust laws." Reading Ind. v. Kennecott Copper Corp. (2d Cir.1980) 631 F.2d 10, 13, n. 6.
[4] A Rule 3(g) Statement is a "short and concise statement of the material facts as to which the moving party contends there is no genuine issue to be tried", or as to which the party in opposition contends there are indeed triable issues. See Local Civil Rule 3(g) (formerly 9(g)). Plaintiff's Rule 3(g) Statement refers to certain of its "principals" as being United States citizens. We interpret the term "principals" to mean holders of the outstanding shares of plaintiff's stock.
[5] The Alcoa rule also known as the "intended effects" test, see Conservation Council of Western Australia v. Alcoa (W.D.Pa.1981) 518 F.Supp. 270, 275; Dominicus Americana Bohio v. Gulf & Western, supra, 473 F.Supp. at 687 is the law in this Circuit. However, the rule has not remained unchanged since the mid 1940s when Judge Hand penned that well-known passage. As Judge Carter himself stated in Dominicus, "the effects test alone is inadequate, because it fails to take into account potential problems of international comity." Id. A commentator recently thus summarized the legal trend:
... American courts ... based their decisions to apply American antitrust law to foreign restraints exclusively on the effect of such restraints on United States foreign commerce. Their central concern was to draw the line between restraints that Congress intended to reach and restraints it did not intend to reach....
This attitude has recently given way to an awareness ... that courts should weigh foreign regulatory interests ... when deciding whether to give extraterritorial effect to American antitrust law. Note, Foreign Sovereign Compulsion in American Antitrust Law. 33 Stanford L.Rev. 131, 132-33 (1980) (footnotes omitted).
Accordingly, at least two Circuits the Third in Mannington Mills v. Congoleum Corp. (3d Cir. 1979) 595 F.2d 1287, and the Ninth in Timberlane Lumber Co. v. Bank of America, supra, 549 F.2d 597 have applied the "intended effects" test only "as the first step in a two-step process ... in determining whether to assert extraterritorial jurisdiction pursuant to the Sherman Act. * * * If such jurisdiction is proper [under the Alcoa rule] the court should then use a balancing test that takes into account various foreign relations impact factors in order to determine whether the exercise of that jurisdiction is appropriate." Conservation Council of Western Australia v. Alcoa, supra, 518 F.Supp. at 275. See also Industrial Inv. Development Corp. v. Mitsui & Co. (5th Cir.1982) 671 F.2d 876, 884 n. 7. In light of our ruling that plaintiff has failed under the "old" Alcoa test, we have no occasion to speculate whether our Circuit would follow the trend and thus modify the Alcoa rule in accordance with the teachings of Timberlane or Mannington Mills. Cf. Dominicus Americana, supra, 473 F.Supp. at 687-88.
[6] So far as we are aware, the collection of cases cited by plaintiff includes practically all regularly cited decisions on the extraterritorial application of antitrust legislation. We here briefly refer to each of the cases plaintiff has cited. In United States v. Sisal Sales Corp. (1927) 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042, among the allegations of the government's complaint were that the domestic commerce of the United States had an annual requirement of two hundred fifty to three hundred million pounds of sisal, all of which the defendants conspired to control; and that in the course of the conspiracy the defendants foreclosed mortgages on, and took title to, four hundred thousand bales of fiber actually stored within the United States. Id. at 272, 47 S.Ct. at 592. In United States v. National Lead Co. (1947) 332 U.S. 319, 67 S.Ct. 1634, 91 L.Ed. 2077, affirming, United States v. National Lead Co. (S.D.N. Y.1945) 63 F.Supp. 513, the government's complaint alleged, among other things, that the importation of titanium pigments was essential to a forty-million dollar domestic manufacturing industry, Id. at 517, and that no "titanium pigments entered the United States except with the consent of" one of the conspirators. Id. at 522. In Continental Ore Co. v. Union Carbide (1962) 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777, the Supreme Court remanded for a new trial, overturning the Ninth Circuit's decision to grant a directed verdict for defendants who had been charged with violating Sections 1 and 2 of the Sherman Act. "The complaint stated that [in the relevant period] the defendants produced over 99% of all ferrovanadium and over 90% of all vanadium oxide [the relevant markets] produced in the United States and that during the same period the defendants sold over 99% of the ferrovanadium and vanadium oxide sold in this country." Id. at 693-94, 82 S.Ct. at 1408 (footnote omitted). It was held that the trial court had erred in rejecting plaintiffs' offer to prove that they had been excluded from the Canadian market by a wholly owned subsidiary of one of the defendants "allegedly operating ... for the purpose of carrying out the overall conspiracy to restrain and monopolize the vanadium industry." Id. at 703, 82 S.Ct. at 1413. Such offer of proof was ruled relevant evidence as to the allegations of domestic misconduct, but there is no suggestion that the Canadian events standing alone would be cognizable under the antitrust laws. Pfizer, Inc. v. India (1978) 434 U.S. 308, 98 S.Ct. 584, 54 L.Ed.2d 563, merely established that a foreign government is a "person" within the meaning of § 4 of the Clayton Act, and has no bearing on the question before us. In Timberlane Lumber Co. v. Bank of America, supra, 549 F.2d 597, it was alleged that plaintiff was an Oregon partnership principally involved in the purchase and distribution of lumber at wholesale within the United States and in its importation into the United States for sale and use. Id. at 603. Yentsch v. Texaco, Inc. (2d Cir.1980) 630 F.2d 46, dealt with an alleged conspiracy in violation of § 1 of the Sherman Act whereby a domestic oil company sought to control the prices changed by its American retailers. In Industrial Investment Development Corp. v. Mitsui & Co. (5th Cir.1982) 671 F.2d 876, the Court of Appeals reversed an order granting summary judgment prior to discovery where it had been alleged that an American company engaged in importing lumber into the United States had conspired to prevent another American company from competing with it. In Joseph Muller Corp. v. Societe Anonyme de Gerance (2d Cir.1971) 451 F.2d 727, "the trade and commerce in the commodity involved originated in the United States and was to be shipped from it to other countries." Id. at 729. In Sanib Corp. v. United Fruit Co. (S.D.N.Y.1955) 135 F.Supp. 764, the District Court declined to dismiss as insufficient on its face a complaint by a United States citizen who alleged that a business he had been conducting in New York City had been destroyed by the alleged conspiracy. Todhunter-Mitchell & Co. v. Anheuser-Busch Inc. (E.D.Pa.1974) 383 F.Supp. 586, involved imposition of territorial restraint on distributors of beer in, among other places, Miami and New Orleans. In Dominicus Americana Bohio v. Gulf & Western, supra, 473 F.Supp. 680, Judge Carter denied summary judgment prior to discovery where plaintiffs, some of whom were American corporations, claimed to have been prevented from soliciting American citizens to travel from the United States to the Dominican Republic. Id. at 688, and further claimed that the use of American transportation facilities had been restricted by the conspiracy. Id. at 685. National Bank of Canada v. Interbank Card Ass'n (S.D.N.Y.1980) 507 F.Supp. 1113, had to do with a conspiracy to control the use of credit cards which had effects on, among other things, "the continuous use of Master Charge cards in the United States and Canada by cardholders who cross the border, [and] on the clearing activities of the various United States banks in the Interbank system..." Id. at 1120-21.
[7] Plaintiff asserts that certain interrogatories are still outstanding, but specifically disclaims any contention that discovery should not be deemed complete for purposes of this motion. Plaintiff's Memorandum of Law in Opposition to G & W Defendants' Motion at 8.
[8] For these purposes, we join plaintiff in rejecting defendants' contention that Bolivian gold can be sold only to the Bolivian government.
[9] In a different context the Supreme Court observed, "in general restraints upon competition have been condemned only when their purpose or effect was to raise or fix the market price." Apex Hosiery Co. v. Leader (1940) 310 U.S. 469, 500, 60 S.Ct. 982, 996, 84 L.Ed. 1311. Certainly, we have been given no information which would suggest that control over the Bolgol Concessions by defendants rather than by plaintiff would have any effect on the world-wide price of gold, nor how such control would "suppress or even destroy competition." Chicago Board of Trade v. United States (1918) 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683; Apex Hosiery, supra, 310 U.S. at 501, 60 S.Ct. at 996; E.J. Delaney Corp. v. Bonne Bell, Inc. (10th Cir.1975) 525 F.2d 296, 302, cert. denied (1976) 425 U.S. 907, 96 S.Ct. 1501, 47 L.Ed.2d 758.
[10] Plaintiff points out that, as things turned out, disputes among the defendants prevented them from exploiting the Bolgol once they had acquired it. Defendants' failure in this regard, however, is clearly independent of the claimed anti-competitive thrust of the conspiracy alleged. Cf. Schwimmer v. Sony Corp. of America (2d Cir.1980) 637 F.2d 41, 48 (quoting Contreras v. Grower Shipper Ass'n (N.D.Cal.1971) [1971] Trade Cas. ¶ 73,592, aff'd per curiam, (9th Cir.1973) 484 F.2d 1346, cert. denied, (1974) 415 U.S. 932, 94 S.Ct. 1445, 39 L.Ed.2d 490).
[11] Plaintiff's standing to sue on such an injury is altogether questionable. See Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc. (2d Cir.1971) 454 F.2d 1292, 1295; Reading Ind. v. Kennecott Copper Corp. (2d Cir.1980) 631 F.2d 10, 12-13; Schwimmer v. Sony Corp. of America (2d Cir.1980) 637 F.2d 41, 46-47. But cf. Reiter v. Sonotone Corp. (1979) 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931; Blue Shield of Virginia v. McCready (1982) ___ U.S. ___, 102 S.Ct. 2540, 73 L.Ed.2d 149.
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817 F.2d 761
Messickv.Leavins
85-3402
United States Court of Appeals,Eleventh Circuit.
4/23/87
N.D.Fla., 811 F.2d 1439
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538 N.E.2d 293 (1989)
Debra Ann BEESON, Petitioner (Appellant),
v.
William H. BEESON, Respondent (Appellee).
No. 29A02-8802-CV-78.
Court of Appeals of Indiana, Second District.
May 30, 1989.
*295 T. Reg Hesselgrave, Indianapolis, Douglas D. Church, Noblesville, for appellant.
John W. Donaldson, Donaldson, Andreoli & Truitt, Lebanon, Michael A. Howard, Pearce & Howard, Noblesville, for appellee.
BUCHANAN, Judge.
CASE SUMMARY
Petitioner-appellant Debra Ann Beeson (Debra) appeals from a decree of dissolution claiming the trial court abused its discretion in its award of child support, failed to provide for spousal maintenance, awarded inadequate attorneys fees, and should not have modified a stipulation of the parties concerning visitation rights of William H. Beeson (William).
We affirm.
FACTS
The facts most favorable to the judgment reveal that Debra and William were married on May 10, 1975, and that Debra petitioned for dissolution on November 1, 1985.
Debra and William first met in 1970 in Bloomington, Indiana, at Indiana University. In 1972, Debra received her associates degree from the University and William entered Indiana University's School of Medicine in Indianapolis. Debra worked in Danville, Illinois, for a short time, and joined William in Indianapolis in the spring of 1973. Debra was employed by Lazarus Department Stores working in retail sales while William continued his medical education.
William's parents paid his tuition and other school related expenses, and he worked part-time in medical related jobs. In 1976, William completed medical school and began a five-year residency specializing in head and neck surgery. Debra continued to work and regularly received promotions and salary increases. Their incomes were put into the marital pot and financed both of their living expenses. William chose to specialize in facial plastic and reconstructive surgery, and obtained a fellowship for further training in Birmingham, Alabama. In 1981, William moved to Alabama for one year while Debra remained in Indianapolis to continue her employment. After a year, William returned to Indianapolis and began to build his medical practice.
For the next several years William established himself as a successful plastic surgeon, and Debra continued her advancement at Lazarus. In 1984, William's practice had gross receipts of $426,537 and a profit of $135,318. In July, 1984, Debra terminated her employment at Lazarus because she was pregnant. At that time, she was earning $28,000 per year. The only child of the marriage, Michelle, was born on January 17, 1985. After the birth, William separated from Debra and Michelle and provided $2,000 per month for support. William continued to build his medical practice, and Debra volunteered for the Pan-Am Games held in Indianapolis. While a volunteer, Debra established contacts that she believed would be beneficial for her future career. Their 1985 adjusted gross income was $163,580.
Debra filed a petition for dissolution on November 1, 1985. Throughout the pendency of the divorce, Debra remained unemployed while William's practice continued to grow. William's 1986 adjusted gross income was $411,591. A final hearing was held on September 8 and 9, 1987.
On October 26, 1987, the trial court entered a decree that granted joint custody of Michelle to Debra and William, and provided that Michelle reside with Debra, awarded $1,000 per month in child support, ordered William to pay all of Michelle's medical expenses, ordered William to pay an additional $2,500 of Debra's attorneys fees (he had already paid $2,000), and divided the marital property. William received the equity in his medical practice, various personal items, and two vehicles, all of which could reasonably be valued at approximately $30,000. Debra received the marital residence, subject to its mortgage, all of the household goods, the furniture and jewelry in her possession, various checking, savings, and IRA accounts, an automobile, and *296 her inheritance from her father's estate. While the value of her inheritance was not calculated, as it was subject to her mother's life estate, the value of the remaining property awarded to Debra was approximately $105,000. Therefore, not including her inheritance, Debra received approximately 78 percent of the marital property, while William received 22 percent. The decree also contained a visitation schedule for William, but made no mention of spousal maintenance for Debra.
ISSUES
Debra presents four issues for our consideration:
1. Whether the trial court abused its discretion by only awarding $1,000 per month for child support?
2. Whether the trial court erred in failing to provide for spousal maintenance?
3. Whether the total award of only $4,500 for attorneys fees constituted an abuse of discretion?
4. Whether the trial court abused its discretion by altering the parties' stipulation concerning visitation?
DECISION
ISSUE ONE Did the trial court abuse its discretion by only awarding $1,000 per month in child support?
PARTIES' CONTENTIONS Debra claims that in light of William's substantial income, the award of only $1,000 per month for child support was an abuse of discretion. William responds that the evidence supports a determination that Michelle's needs were satisfied by the award.
CONCLUSION The trial court's award was supported by the evidence.
Debra presents a unique question in Indiana case law, i.e., whether a trial court can abuse its discretion by awarding inadequate child support. Typical appeals involving child support raise the issue of whether the trial court has awarded an excessive amount for the support of the child. The issue before us now is not whether the trial court could have ordered William to pay more, but rather, it is whether the trial court's award was supported by the evidence.
Frequent references are made to the principle that child support is within the sound discretion of the trial court, and such determinations will not be disturbed on appeal unless against the clear logic and effect of the facts and circumstances before the court, Porter v. Porter (1988), Ind. App., 526 N.E.2d 219, trans. denied; Wright v. Wright (1984), Ind. App., 471 N.E.2d 1240, trans. denied, and the necessary corollary that, reviewing the determination of child support, we do not reweigh the evidence or judge the credibility of witnesses. Helms v. Helms (1986), Ind. App., 490 N.E.2d 1153.
Debra has highlighted William's considerable income in her allegation that the trial court awarded inadequate child support. Our focus is different. When awarding child support, it is the needs of the child that are of primary concern. Hunter v. Hunter (1986), Ind. App., 498 N.E.2d 1278; Halum v. Halum (1986), Ind. App., 492 N.E.2d 30, trans. denied; Geberin v. Geberin (1977), Ind. App., 360 N.E.2d 41.
Ind. Code 31-1-11.5-12(a) (1988) is the authority. It provides in pertinent part:
"In an action pursuant to Section 3(a), 3(b), or 3(c) of this chapter, the court may order either parent or both parents to pay any amount reasonable for support of a child, without regard to marital misconduct, after considering all relevant factors including:
(1) the financial resources of the custodial parent;
(2) the standard of living the child would have enjoyed had the marriage not been dissolved or had the separation not been ordered;
(3) the physical or mental condition of the child and the child's educational needs; and
(4) the financial resources and needs of the noncustodial parent."
*297 It is the financial resources of both parents, as well as the standard of living the child would have enjoyed had the marriage not been dissolved that are the relevant inquiries. Porter, supra; Allen v. Allen (1985), Ind. App., 477 N.E.2d 104; Geberin, supra. So in order to establish that the trial court abused its discretion, Debra must show that the child support award was illogical or unreasonable in light of the evidence presented at trial concerning the standard of living Michelle would have enjoyed had Debra and William not separated, as well as the financial conditions of both Debra and William.
The primary evidence presented at trial to demonstrate Michelle's needs was a financial disclosure by Debra itemizing monthly household expenses. Record at 985-87. The disclosure, however, clearly indicates that it reflects the needs of both Michelle and Debra.[1] Debra has failed to demonstrate that Michelle's needs were approximately $3,000 per month, as she has contended. Also, the record reveals that during the pendency of the divorce, Debra received $1,000 per month in child support in addition to $1,000 per month in spousal maintenance. Record at 483. Nor did Debra present evidence that the standard of living Michelle enjoyed during the pendency of the divorce was lower than the standard of living she would have enjoyed had Debra and William not separated. So the trial court could reasonably conclude that Michelle's standard of living was substantially the same as it would have been had Debra and William not separated.
Turning to other relevant considerations, both Debra's and William's financial conditions were substantial. Debra received over $100,000 of the marital property, including a $10,000 savings account and a $15,000 individual retirement account. Record at 923. Further, Debra had earned an associates degree from Indiana University, had demonstrated an ability to succeed in gainful employment, and had made valuable personal contacts while she volunteered at the Pan American Games. Record at 844, 890-93, 941. William's financial condition was also quite considerable. His after-tax income was approximately $20,000 per month, with approximately $3,500 per month in expenses. Record at 1096. He was ordered to pay $1,000 per month in child support, as well as Michelle's medical, dental and optical expenses. Record at 752.
While the trial court could have ordered William to pay more, the amount the trial court did order William to pay was not illogical or unreasonable in view of all the facts and circumstances.
ISSUE TWO Did the trial court abuse its discretion by failing to provide Debra with spousal maintenance?
PARTIES' CONTENTIONS Debra argues that because of William's high income and her lack of gainful employment, she is deserving of spousal maintenance. William counters that the evidence does not demonstrate she is in need of maintenance.
CONCLUSION The trial court properly exercised its discretion in denying an award of spousal maintenance.
The trial court did not abuse its discretion by failing to provide Debra with spousal maintenance. The award of spousal maintenance, pursuant to IC 31-1-11.5-11(e),[2] is wholly within the discretion of the court. *298 Rump v. Rump (1988), Ind. App., 526 N.E.2d 1045, trans. denied; In Re Marriage of Dillman (1985), Ind. App., 478 N.E.2d 86. Again, our review of such awards is limited to examining the trial court's determination to see if it is clearly against the logic and effect of the facts and circumstances before it. Dillman, supra.
The record reveals that Debra was 34 years old at the time of the divorce and in good health. She earned an associates degree from Indiana University, and had chosen not to seek further education before she married William. Record at 941. She had a successful career in retail sales over a period of 10 years. She made valuable personal contacts by volunteering at the Pan American Games which could be expected to lead to gainful employment. Record at 890. She was given over 75 percent of the marital assets.
Given these facts and circumstances, it was not an abuse of discretion to fail to award Debra any spousal maintenance. Debra does not contend that the trial court misinterpreted the law, or that it ignored any of the statutory considerations. Her's is a plea for us to reweigh the evidence in her favor. This we cannot do. See Rump, supra. There is a rational basis for the trial court's denial of spousal maintenance.
ISSUE THREE Did the trial court abuse its discretion by only awarding a total of $4,500 for Debra's attorneys fees?
PARTIES' CONTENTIONS Debra contends the amount of the award, representing approximately one-quarter of her attorney's fees, was insufficient in view of William's considerable income. William responds that the trial court has full discretion in the award of attorneys fees.
CONCLUSIONS The trial court did not abuse its discretion.
In its determination of attorneys fees, the trial court must consider the factors that bear on the reasonableness of the award. Baker v. Baker (1986), Ind. App., 488 N.E.2d 361. Debra was given over $100,000 of the marital estate, including a savings account and an IRA totalling $25,000. She does not argue that the court failed to consider any relevant factor. She simply asks us to reweigh the evidence in her favor. There is no abuse of discretion.
ISSUE FOUR Did the trial court abuse its discretion when it altered the parties' stipulation of visitation?
PARTIES' CONTENTIONS Debra claims the trial court was bound by the stipulation. William counters that the trial court must approve or adopt the parties' agreement to be bound.
CONCLUSION There is no abuse of discretion.
Debra really presents no cogent argument nor cites any authority in support of her position that the trial court could not alter the stipulation. See Ind.Rules of Procedure, Appellate Rule 8.3(A)(7). In any event we see no error.
Visitation is an element of the custody order. Fox v. Fox (1984), Ind. App., 466 N.E.2d 789, trans. denied. When determining the custody and visitation rights of the parties, the best interests of the child is paramount. See Matter of Paternity of Joe (1985), Ind. App., 486 N.E.2d 1052; In Re Marriage of Larkin (1984), Ind. App., 462 N.E.2d 1338; Marsico v. Marsico (1972), 154 Ind. App. 436, 290 N.E.2d 99. A stipulation cannot place restrictions *299 upon a court's duty to protect the best interest of a child. 83 C.J.S. Stipulations § 17 (Supp. 1988).
When awarding custody, the crucial consideration for the trial court is the best interest of the child, not the desires or claims of the parents. Wright, supra. The trial court has wide discretion in its determination of custody or visitation rights, and we will only reverse if a manifest abuse of discretion is demonstrated. K.B. v. S.B. (1981), Ind. App., 415 N.E.2d 749. The visitation rights given to William are identical with the parties' stipulation except that their stipulation provided that William would have Michelle on Christmas Eve, and Debra would have her on Christmas day, and would otherwise alternate holidays. Record at 1559. The order provided Debra and William would have Michelle on alternate holidays, but made no special provision regarding Christmas. Record at 752. Debra fails to demonstrate that the visitation rights were not in Michelle's best interest, or that the order was illogical or unreasonable.
Lastly, Debra has petitioned this court for an award of appellate attorney's fees and other expenses pursuant to Ind. Code 31-1-11.5-16. Following Scheetz v. Scheetz (1987), Ind. App., 509 N.E.2d 840, this matter is remanded to the trial court for determination of appellate attorney's fees, and the judgment of the trial court is affirmed.
Judgment affirmed.
NEAL, J., concurs.
SULLIVAN, J. concurs as to Issues I, II, III, and IV; but dissents from the decision to remand for appellate attorney's fees.
NOTES
[1] On cross-examination, Debra admitted the amounts indicated in the disclosure for some items, such as food and clothing, reflect the needs of both her and Michelle. Record at 989-90. Other items, such as telephone, automobile and entertainment expenses, were not discussed, but it is clear they are not all Michelle's expenses.
[2] IC 31-1-11.5-11(e):
"(e) A court may make the following findings concerning maintenance:
.....
(2) If the court finds a spouse lacks sufficient property, including marital property apportioned to that spouse, to provide for that spouse's needs and that spouse is the custodian of a child whose physical or mental incapacity requires the custodian to forego employment, the court may find that maintenance is necessary for that spouse in an amount and for a period of time as the court deems appropriate.
(3) After considering:
(A) the educational level of each spouse at the time of marriage and at the time the action is commenced;
(B) whether an interruption in the education, training, or employment of a spouse who is seeking maintenance occurred during the marriage as a result of homemaking or child care responsibilities, or both;
(C) the earning capacity of each spouse, including educational background, training, employment skills, work experience, and length of presence in or absence from the job market; and
(D) the time and expense necessary to acquire sufficient education or training to enable the spouse who is seeking maintenance to find appropriate employment;
a court may find that rehabilitative maintenance for the spouse seeking maintenance is necessary in an amount and for a period of time that the court considers appropriate, but not to exceed three (3) years from the date of the final decree." (Emphasis supplied.)
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471 F.Supp.2d 814 (2007)
William E. BENNETT, Plaintiffs,
v.
AMERICA ONLINE, INC., Time Warner, Inc., Tucows, Inc., and John Doe, Defendants.
Civil Case No. 06-13221.
United States District Court, E.D. Michigan, Southern Division.
January 23, 2007.
*815 William E. Bennett, Mt. Morris, MI, Pro se.
William F. Kolakowski, III, Dykema Gossett, Bloomfield Hills, MI, Krista L. Lenart, Dykema Gossett, Ann Arbor, MI, Harold Z. Gurewitz, Gurewitz & Raben, Detroit, MI, Rebecca J. Hillyer, Troy S. Brown, Morgan, Lewis, Philadelphia, PA, for Defendants.
ORDER SUSTAINING OBJECTIONS TO MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION, REJECTING RECOMMENDATION, DENYING MOTION TO DISMISS OR TRANSFER VENUE, AND REFERRING MATTER TO. MAGISTRATE JUDGE FOR FURTHER CASE MANAGEMENT
LAWSON, District Judge.
This matter is before the Court on objections by the plaintiff to a report filed by Magistrate Judge Steven D. Pepe recommending that the matter be transferred in its entirety to the United States District Court for the Eastern District of Virginia in lieu of dismissal for improper venue, which is the main relief sought by defendant America Online, Inc. (AOL) in its pending motion. The Court agrees with the magistrate judge that dismissal of the action for improper venue is not appropriate. The Court finds, however, that although *816 transfer of the action against AOL under the forum selection clause contained in its service agreement may be appropriate under 28 U.S.C. § 1404(a), transfer of the action against co-defendant Tucows, Inc. would not be allowed because the action could not be brought against that defendant in the transferee court. Courts ought not transfer parts of actions when to do so effects a severance and requires a plaintiff to litigate in two forums. There fore, the Court will deny the motion to dismiss or transfer venue.
The plaintiff commenced this action pro se on July 17, 2006 alleging copyright violations against the defendants. On September 15, 2006, defendant AOL filed a motion to dismiss or transfer venue to Virginia based primarily on a provision in its standard internet service provider (ISP) service agreement that contained a forum selection clause indicating "exclusive jurisdiction" for disputes with AOL was in the courts of Virginia. Magistrate Judge Pepe, to whom the case had been referred to conduct all pretrial proceedings, issued a report on November 20, 2006 recommending that the motion be granted in part, and that the case be transferred to the United States District Court for the Eastern District of Virginia. He balanced the factors invoked by a 28 U.S.C. § 1404(a) motion and concluded that most of the factors favored transfer. He found that the plaintiff had failed to satisfy the heavy burden to set aside the forum selection clause. Magistrate Judge Pepe also recommended that the entire case be transferred to. Virginia, rather than just the claims against AOL. Objections were filed by the plaintiff on December 1, 2006. Each of the defendants filed a response to the plaintiffs objections on December 15, 2006.
In the amended complaint, which the plaintiff filed on October 2, 2006, he says he has been an AOL member for many years. In 1999, he started a software company called WEB Themes, through which he created hundreds of screen savers, including two that are the subject of this case, which he calls Pheasants in Flight and Solitude. The plaintiff claims that he and AOL had an implied contract pursuant to which the plaintiff granted AOL a non-exclusive, temporary software license that allowed AOL to provide his screen savers to AOL's members. Under this implied contract, AOL was required to protect the plaintiffs copyright rights and help promote the plaintiffs business by making the screen savers available to members. The plaintiff asserts that the non-exclusive license he granted to AOL contained the following provision:
The uploader claims and guarantees to have full and clear copyright to this work. This work is for the personal use of downloading member and may not be modified, distributed, etc in whole or in part. This work cannot be uploaded to any electronic system or BBS or included in any compact disk (CD-ROM) or collection of any kind without the written permission from the uploader. To do so places the user at legal risk of sever [sic] fines and penalties for copyright infringement.
Amend. Compl. ¶ 14. The plaintiff uploaded the files at issue to AOL through his AOL connection, and AOL apparently put these files in what the plaintiff refers to as the "old screen saver libraries." Amend. Compl. ¶ 17, 18, 21.
According to the plaintiff, on July 22, 2003, AOL destroyed all links to the old screen saver libraries and no longer made those libraries available to its members. AOL created a new upload/download center that was linked to defendant Tucows' website. At the same time, AOL created a new upload agreement that purports to *817 supercede any previous agreement. The plaintiff states that the new upload agreement is an adhesive contract that in effect transfers the plaintiffs copyright rights to AOL.
The amended complaint contains five counts of copyright infringement and three counts of breach of contract. Count 1 alleges that AOL's transfer of the files from the old libraries to the new download center violates the Copyright Act. Count 2 alleges that AOL's termination of the old upload agreement voided the non-exclusive license. However, AOL continued distributing the plaintiffs files, which violated plaintiffs copyright rights since AOL was no longer authorized to do so. In Count 3, the plaintiff contends that AOL knew he would not license it to use his files in the new download center, but AOL provided the files to defendant Tucows anyway for Tucows to post them in the new download center. Count 4 alleges that defendant Tucows violated the Copyright Act by posting his files to AOL's new download site. Count 5 accuses defendant Tucows of violating the Copyright Act by making the plaintiffs files available for download by AOL members. Count 6 alleges breach of contract: The plaintiff states he uploaded five hundred screen savers to AOL's old libraries and granted AOL licenses to make them available to its members. In consideration for the licenses, AOL allegedly agreed to let the plaintiff upload the files for free. However, the plaintiff paid $23.90 to use AOL. The plaintiff alleges that this violated the contract between the parties. Count 7 also alleges breach of contract in that AOL's termination of the old libraries violated the contract, under which AOL was required to make the plaintiffs files available to its members. Finally, Count 8 alleges that AOL breached its contract by granting Tucows a license to the plaintiffs files, which it was not permitted to do. The plaintiff seeks damages of $3,022,600 plus $20 for each hour he spent uploading his files to AOL and costs and attorney's fees. He also seeks a declaration that AOL's new upload agreement is void because it violates copyright law and that AOL's forum selection clause is unconscionable and void as against Michigan public policy.
AOL's motion to dismiss or transfer venue is based primarily on a forum selection clause contained in its ISP service agreement. It appears that the plaintiff or his wife has been an AOL member since 1995. The Membership Agreement in effect when they joined stated:
1. Terms of Service Agreement and Rules of the Road. The America Online service ("AOL") is provided by America Online Inc. ("AOL Inc.") to you ("Member" or "you"), subject to the terms of this Agreement ("TOS") and AOL Inc.'s operating policy, which is incorporated herein and referred to as the "Rules of the Road" or "ROR." (To access ROR on AOL use KEYWORD TOS). The TOS and the ROR comprise the entire agreement between AOL Inc. and you, and supersede any prior agreements between you and AOL Inc. with respect to the subject matter of the TOS and ROR. AOL Inc. may revise the TOS and ROR at any time, and such revision shall be effective immediately upon either posting of the revised TOS in the Member Services Area, or notifying you via email or conventional mail. You agree to review the TOS and ROR periodically to be aware of such revisions. If any revision to the TOS or ROR is unacceptable to you, you may terminate your membership as provided in Section 9 below. Your continued use of AOL following notice of any such revision to the TOS or the ROR shall be conclusively deemed acceptance of all such revisions.
. . .
*818 10. Law. . . . The TOS shall be governed by the laws of the Commonwealth of Virginia, excluding its conflicts of law rules, and Member and AOL Inc. each submit to the exclusive jurisdiction of the courts of the Commonwealth of Virginia.
AOL Mot. Dims. Ex. A2, 1995 Service Agreement. AOL submitted an affidavit from a paralegal swearing that no person can become an AOL member without agreeing to the TOS.
Of course, the original language does not require any litigant to bring an action against AOL in Virginia courts. However, the TOS was modified in 2003. The new agreement contains the following provision:
The laws of the Commonwealth of Virginia, excluding its conflict of law rules, govern this Member Agreement and your membership. You expressly agree that exclusive jurisdiction of any claim or dispute with AOL or relating in any way to your membership or use of the AOL Services resides in the courts of Virginia and you further agree and expressly consent to the exercise of personal jurisdiction in the courts of Virginia in connection with any such dispute including any claim involving AOL or AOL Services. The foregoing provision may not apply to you depending on the laws of your jurisdiction.
AOL Mot. Dism. Ex. A1, 2003 Service Agreement at 10. The plaintiff submitted an affidavit swearing he has never seen either of these agreements. Pl.'s Resp. to AOL's Reply Ex. 1, Bennett Aff. at ¶ 7. The magistrate judge assumed that the plaintiff was a signatory to these terms.
The magistrate judge first concluded that the 2003 agreement applies in this case. The report does not include an explanation for why this agreement governs rather than the 1995 agreement, and the parties have not submitted any evidence that the 2003 agreement was mailed to the plaintiff or posted on AOL's website.
The magistrate judge next found that the agreement allows for litigation in either state or federal court in Virginia because the 2003 agreement provides for "exclusive jurisdiction . . . in the courts of Virginia," which is broader than "the courts of the Commonwealth of Virginia." Finding that litigation could occur under the agreement in federal court, the magistrate judge determined that transfer would be more appropriate than dismissal because several courts of appeals (including the Sixth Circuit) have reversed district courts that dismissed cases based on forum selection clauses when they could have transferred them.
The magistrate judge rejected the plaintiffs claim that Michigan law limits the application of the forum selection clause. Michigan Compiled Laws § 600.745(3) states that written forum selection clauses should not be enforced if "[t]he plaintiff cannot secure effective relief in the other state for reasons other than delay in bringing the action," "[t]he other state would be a substantially less convenient place for the trial of the action than this state," or "[i]t would for some other reason be unfair or unreasonable to enforce the agreement." The magistrate judge cited Viron Int'l Corp. v. David Boland, Inc., 237 F.Supp.2d 812, 818 (W.D.Mich.2002), correctly, for the proposition that "in conducting a transfer analysis under § 1404(a), federal, not state, law on the enforceability of forum selection clauses governs."
The magistrate judge next concluded that a person seeking to avoid a forum selection clause bears the burden of proving that a transfer should not be granted. The magistrate judge found that the plaintiff did not meet this burden because he did not provide any independent evidence *819 of his poor health or lack of financial resources (the reasons the plaintiff has put forth in his argument that the transfer will be inconvenient), or any evidence at all on the other factors considered by courts deciding whether to transfer a case. The plaintiff did submit an affidavit swearing that "Except for possibly passing through Virginia while in military service, I have never been in Virginia nor do I desire to go there, (I'm too old (76 years) and in poor health (I suffer from Chronic Obstructive Pulmonary Disease [COPD]))." Pl.'s Resp. to AOL's Reply Ex. 1, Bennett Aff. at ¶ 4. The magistrate judge further found that AOL had provided several compelling reasons why the transfer should be granted, including that all of AOL's employees and records are located in Virginia.
The magistrate finally concluded that the claims against Tucows should also be transferred because of the "overlapping factual and legal issues."
Because AOL's motion was one to dismiss or in the alternative transfer, the magistrate judge issued a report and recommendation rather than an order. The Court believes that procedure was correct. When a dispositive motion includes alternative relief in non-dispositive terms, the matter must be treated as a dispositive motion by a magistrate judge under 28 U.S.C. § 636(b)(1)(B). See Rejects Skate Magazine, Inc. v. Acutrack, Inc., 2006 WL 889501 (M.D.Tenn. Mar. 29, 2006) (stating that "the Report and Recommendation (`R & R') recommended the denial in its entirety of the defendant's Motion to Dismiss Plaintiffs' Complaint, Strike Certain Claims, and Transfer Venue. . . . Because this is a dispositive motion, the court must make a de novo determination of any portion of the recommended disposition to which an objection has been made"); see also Sutton v. U.S. Small Business Administration, 92 Fed.Appx. 112, 119-20 (6th Cir.2003) (unpublished) (holding that a district court "could properly designate the magistrate to make a non-binding recommendation on" non-dispositive motions under section 636(b)(3), but such matters are reviewed de novo); Baker v. Peterson, 67 Fed. Appx. 308, 311 (6th Cir.2003) (same). The plaintiffs timely objection to the recommendation and report requires the Court to review the matter de novo.
AOL bases its dismissal motion on Federal Rule of Civil Procedure 12(b)(3), which authorizes dismissal of certain actions for improper venue. However, the Supreme Court has held that 28 U.S.C. § 1404(a) controls requests to give effect to, the parties' contractual choice of venue. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988). Title 28 U.S.C. § 1404(a) states that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). A contractual "forum-selection clause" is "one of the factors to consider in [the § 1404(a) ] calculus. . . . Such a clause should receive neither dispositive consideration . . . nor no consideration . . . but rather the consideration for which Congress provided in § 1404(a)." Kerobo v. S.W. Clean Fuels, Corp., 285 F.3d 531, 537-38 (6th Cir.2002). Although the forum-selection clause is a "significant factor" in deciding a change of venue motion, the Court should also consider "the private interests of the parties, including their convenience and the convenience of potential witnesses, as well as other public-interest concerns, such as systemic integrity and fairness, which come under the rubric of `interests of justice.'" Moses v. *820 Bus. Card Express, Inc., 929 F.2d 1131, 1137 (6th Cir.1991). In determining such a motion, the Court must be mindful of the inconvenience to the parties in splitting the cause of action, which granting AOL's motion could require.
In ruling on a motion to transfer venue pursuant to 28 U.S.C. § 1404(a), the Court must examine a number of factors, including (1) convenience of the parties and the witnesses, (2) accessibility of sources of proof, (3) the costs of securing testimony from witnesses, (4) practical problems associated with trying the case in the least expensive and most expeditious fashion, and (5) the interests of justice. . . . Other factors include (1) the relative congestion in the courts of the two forums, (2) the public's interest in having local controversies adjudicated locally, (3) the relative familiarity of the two courts with the applicable law, (4) the plaintiff's original choice of forum, and (5) whether the parties have agreed to a forum selection clause.
Viron Intern. Corp. v. David Boland, Inc., 237 F.Supp.2d 812, 816 (W.D.Mich.2002) (citing Moses, 929 F2d at 1136-37, and Moore's Federal Practice § 111.13[1][b] at XXX-XX-XX (3d ed.)).
One of the plaintiff's principal objections to the magistrate judge's report is to the part of the recommendation that the entire case be transferred rather than just the claims against AOL. The plaintiff states this is inappropriate under Rule 7(b) because defendant Tucows did not file a motion requesting such transfer and the plaintiff did not have notice and a chance to oppose such a transfer. The plaintiff also argues that transferring his claim against defendant Tucows to Virginia is improper under 28 U.S.C. § 1404(a) because that claim could not have been brought there. The plaintiff states there is no personal jurisdiction over Tucows in the Eastern District of Virginia. The plaintiff states that the pre-complaint facts determine whether the complaint "might have been brought" in that state. The plaintiff is also concerned that if the entire case is transferred to Virginia, Tucows could file a motion to dismiss for lack of personal jurisdiction.
The plaintiff is correct that section 1404(a) limits the choice of transferee courts. The statute reads: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a) (emphasis added). Although Tucows now states that it would consent to personal jurisdiction in Virginia, there is no evidence that the case could have been brought against it in that forum. Since there is no jurisdiction over Tucows in the proposed transferee court, the transfer of venue of AOL only would effectuate a severance of the case.
The Court believes that the case of Sunbelt Corp. v. Noble, Denton & Associates, Inc., 5 F.3d 28 (3d Cir.1993), provides considerable guidance on this issue. In that matter, the court was presented with a breach of contract action against two defendants, one of whom had a forum selection clause as part of its contract with the plaintiff. The district court had ordered the case transferred from the Eastern District of Pennsylvania to the Southern District of Texas, where the forum selection clause directed the litigation to be maintained against the moving defendant. The plaintiff sought review by mandamus, which was granted by the court of appeals. The court held that because the transferee court lacked personal jurisdiction over the co-defendant (who did not benefit from the forum selection clause), the transfer order was invalid because the Southern District of Texas was not a court in which the *821 action "might have been brought." Id. at 33 (quoting 28 U.S.C. § 1404(a)).
The court then addressed the propriety of transferring the action only against the defendant with the forum selection clause:
[W]e . . . conclude that severance would be inappropriate in this case. . . . We agree with the Fifth Circuit Court of Appeals' statement in Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir.1984), that "[the court] should not sever if the defendant over whom jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would require the same issues to be litigated in two places." See Wyndham Assoc. v. Bintliff, 398 F.2d 614, 618 (2d Cir.) (stating that severance and transfer may be used "in cases where . . . the defendants [seeking to avoid transfer] are alleged to be only indirectly connected to the . . . main subject matter of the action" and "where the administration of justice would be materially advanced"), cert. denied, 393 U.S. 977, 89 S.Ct. 444, 21 L.Ed.2d 438 (1968). . . . To grant severance here would place each defendant in the position of being able to defend by asserting the absent party's negligence. We refuse to encourage a result which in our view hampers rather than furthers the administration of justice. We conclude here that it would not be consistent with a sound exercise of discretion for the district court to grant severance in this case.
Id. at 33-34.
Similarly, this Court finds that it has no authority under the plain language of section 1404(a) to transfer the action against defendant Tucows because the case could not have been brought against that defendant in the Eastern District of Virginia. The Court also finds that the prospect of severing the action to give effect to the forum selection clause would require the case to be litigated in two forums and work a hardship against the plaintiff so as to counter-balance the other factors that must be considered when evaluating transfer motions. With respect to the convenience of the parties and witnesses, it appears that the proofs in the case largely will be documentary. When considering accessibility to sources of proof, the Court is mindful that much of the information is stored in digital form, which is highly portable and accessible virtually anywhere a party has access to a computer and an internet connection. Presumably, AOL has the capacity to gain such access. Neither party has suggested that Michigan is a more expensive forum to try the case, but the plaintiff has provided persuasive information of the hardship that would be visited on him in having to travel to Virginia to pursue his claim. The difference in the docket burdens of the two courts is negligible, and the other factors do not militate in favor of transfer, except, of course, for the forum selection clause, which would be a weighty matter in favor of transfer if the Court did not find that it is outweighed by the interests of justice in avoiding a severance.
The Court acknowledges that forum selection clauses are valid and enforceable. See Gibson v. American Bankers Ins. Co., 289 F.3d 943, 948 (6th Cir. 2002) (observing that "[w]hile forum selection clauses in contracts do not deprive courts of jurisdiction, they are presumptively valid"). However, they are not controlling or dispositive of transfer motions, and they must yield to other considerations when justice requires. The Court is convinced that the better exercise of discretion is to deny the transfer request and maintain the action in the present forum.
*822 Accordingly, it is ORDERED that the magistrate judge's report and recommendation [dkt # 38] is REJECTED.
It is further ORDERED that the plaintiff's s objections [dkt # 39] to the report and recommendation are SUSTAINED IN PART.
It is further ORDERED that defendant AOL's motion to dismiss or transfer venue [dkt # 11] is DENIED.
It is further ORDERED that the order staying the proceedings [dkt # 52] is VACATED.
It is further ORDERED that the plaintiffs objections to the stay order [dkt # 53] are DISMISSED as moot.
It is further ORDERED that the matter is referred to the magistrate judge to conduct all additional pretrial matters.
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No. 04-01-00650-CV
IN RE THE CIT GROUP/SALES FINANCING, INC.
Original Mandamus Proceeding
Arising from the 218th Judicial District Court, Wilson County, Texas
Trial Court No. 99-11-0448-CVW
Honorable Stella Saxon, Judge Presiding
Opinion by: Phil Hardberger, Chief Justice
Sitting: Phil Hardberger, Chief Justice
Paul W. Green, Justice
Karen Angelini, Justice
Delivered and Filed: January 9, 2002
PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED
The CIT Group/Sales Financing, Inc. ("CIT") seeks mandamus relief from the trial court's
order sanctioning CIT for discovery rule violations and failing to appear at a hearing on a motion to
compel. The trial court ordered CIT to produce the documents and awarded Tommy and Deborah
Scogin (the "Scogins"), the plaintiffs in the underlying lawsuit, attorneys' fees. The trial court's order
provided that if CIT failed to produce the documents and pay the fees as ordered a default judgment
would be granted. The trial court further ordered that: (1) CIT is refused to support or prosecute
any claim or defense against the Scogins; (2) CIT is disallowed any discovery against the Scogins;
and (3) CIT's pleadings against the Scogins are struck. Because the record does not reflect that the
trial court considered the availability of lesser sanctions, we conditionally grant the writ of mandamus
and order the trial court to consider lesser sanctions and reform its order to clarify the sanctions
imposed.
Procedural History
The Scogins sued San Angelo Mobile Homes, Inc., Signal Homes, Inc., and CIT for numerous
causes of action arising from the Scogins's purchase of a manufactured home. In April of 2000, the
Scogins served CIT with their first set of requests for production of documents. In June of 2000, CIT
served its response to the request asserting numerous general objections.
On April 5, 2001, the Scogins' attorney forwarded a letter to CIT's attorney stating that since
no documents were forthcoming following a conversation between the attorneys at the courthouse
on March 5, 2001, the Scogins had filed a motion to compel which was set for hearing on April 11,
2001. On April 11, 2001, the trial court held a hearing on the Scogins's motion. The order stated
that CIT did not appear at the hearing. The trial court granted the Scogins's motion and ordered
CIT: (1) to produce all requested documents; and (2) to pay $400 in attorney's fees. The trial court's
order provided that if CIT failed to produce the documents and pay the fees as ordered a default
judgment would be granted. The trial court further ordered that: (1) CIT is refused to support or
prosecute any claim or defense against the Scogins; (2) CIT is disallowed any discovery against the
Scogins; and (3) CIT's pleadings against the Scogins are struck.
On April 23, 2001, CIT filed a motion to reconsider. Two affidavits were attached to the
motion to reconsider. In CIT's attorney's affidavit, he stated that he was out of town and did not
receive the notice of hearing until after the hearing. The attorney's secretary, who is the only person
employed by the attorney, stated in her affidavit that she and her infant son were ill on April 5, 6, 9,
and 10, 2001, so she did not see the notice until after the April 11, 2001 hearing.
On May 3, 2001, CIT filed a supplement to the motion to reconsider. The supplement notes
that rule 191.2 requires the parties to confer regarding discovery and attempt to resolve differences
without court intervention; however, CIT contended that the Scogins's attorney made no effort to
arrange a date and time to review/inspect CIT documents. In addition, the supplement notes that
CIT's counsel did not receive a copy of the order from the Scogins's attorney until April 18, 2001,
the date the order required the production and payment to be complete. A letter dated April 18, 2001
is attached to the supplement reflecting a rule 11 agreement, extending the date of required
production and payment to April 25, 2001. The trial court denied the motion to reconsider.
Discussion
Mandamus relief is available from a trial court's discovery order if the party's ability to
present a viable claim or defense is vitiated or severely compromised. In re Ford Motor Co., 988
S.W.2d 714, 721 (Tex. 1998). In this case, the trial court struck CIT's pleadings and prohibited it
from pursuing discovery and asserting a claim or defense; therefore, CIT does not have an adequate
remedy by appeal, making mandamus relief appropriate. TransAmerican Natural Gas Corp. v.
Powell, 811 S.W.2d 913, 919 (Tex. 1991).
A trial court's imposition of sanctions is reviewed under an abuse of discretion standard.
Roberts v. Rose, 37 S.W.3d 31, 33 (Tex. App.--San Antonio 2000, no pet. h.). A trial court abuses
its discretion when it acts without reference to any guiding rules or principles. Roberts, 37 S.W.3d
at 33 (quoting Johnson v.. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex.1985)).
Whether an imposition of sanctions is just is measured by two standards. Powell, 811 S.W.2d
at 917. First, a direct relationship must exist between the offensive conduct and the sanction
imposed. Id. Under this standard, the trial court should attempt to determine whether the offensive
conduct is attributable to counsel only, or the party only, or both. Id. Second, just sanctions must
not be excessive. Id. A sanction imposed for discovery abuse should be no more severe than is
necessary to satisfy its legitimate purposes. Id.
Sanctions which are so severe that they preclude presentation on the merits should not be
assessed absent a party's bad faith or counsel's flagrant disregard for the responsibilities of discovery
under the rules. Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 849 (Tex. 1992). Discovery
sanctions should not be used to adjudicate the merits of a claim or defense unless a party's
obstruction of the discovery process justifies the presumption that the claim or defense lacks merit.
Powell, 811 S.W.2d at 918. Even then, lesser sanctions should be tested first to determine if they are
adequate to secure compliance, deterrence, and punishment of the offender. Powell, 811 S.W.2d at
917.
The record must reflect that the court considered the availability of lesser sanctions. GTE
Communications Systems Corp. v. Tanner, 856 S.W.2d 725, 729 (Tex. 1993). Case determinative
sanctions may be imposed in the first instance only in exceptional cases when they are clearly justified
and it is fully apparent that no lesser sanctions would promote compliance with the rules. Id. A trial
court's unsupported conclusion that lesser sanctions would not be effective is entitled to no deference
by a reviewing court. Id.
During oral argument before this court, counsel for the Scogins contended that the trial
court's order was not intended to be case determinative. Instead, counsel for the Scogins asserted
that the order was intended to leave CIT an "escape" from any "death penalty" sanction if CIT timely
produced its documents. Notwithstanding the representations made by counsel for the Scogins, the
language of the order can be construed as imposing "death penalty" sanctions in view of its language
prohibiting CIT from supporting or prosecuting any claim or defense, disallowing any discovery, and
striking its pleadings against the Scogins. Counsel for the Scogins assured this court that he simply
submitted a boilerplate order to the trial court and had no intentions of precluding CIT from their day
in court. Counsel for the Scogins stated that the only purpose in obtaining the order was to compel
the desired discovery. It is certainly possible that this was the Scogins's intent, as well as that of the
trial court. If so, however, the order is overly broad and needs to be reformed.
The guiding rules with respect to discovery abuse sanctions require the trial court to consider
the availability of lesser sanctions. See Tanner, 856 S.W.2d at 729; Powell, 811 S.W.2d at 917.
Based on the record before this court, the trial court abused its discretion in imposing case
determinative sanctions because the record does not demonstrate that the trial court considered
whether lesser sanctions would promote compliance.
Conclusion
The petition for writ of mandamus is conditionally granted. The trial court is ordered to
consider the availability of lesser sanctions with regard to those portions of its order directing that:
(1) CIT is refused to support or prosecute any claim or defense against the Scogins; (2) CIT is
disallowed any discovery against the Scogins; and (3) CIT's pleadings against the Scogins are struck.
The trial court is directed to reform its order to clarify the nature of the sanctions to be imposed. The
writ will only issue upon certification to this court that the trial court has failed to reform its order
within ten days from the date of our opinion and order.
PHIL HARDBERGER,
CHIEF JUSTICE
DO NOT PUBLISH
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 11-697V
Filed: September 10, 2015
* * * * * * * * * * * * * * * * UNPUBLISHED
S.A.H, a minor child, by her mother, ANA *
HASTINGS, *
* Special Master Gowen
Petitioner, *
* Joint Stipulation;
v. * Attorneys’ Fees and Costs;
*
SECRETARY OF HEALTH *
AND HUMAN SERVICES, *
*
Respondent. *
*
* * * * * * * * * * * * * * * *
Curtis R. Webb, Salina, KS, for petitioner.
Ann D. Martin, United States Department of Justice, Washington, DC, for respondent.
DECISION ON ATTORNEYS’ FEES AND COSTS1
On October 20, 2011, Ana Hastings (“petitioner”) filed a petition on behalf of her minor
child, S.A.H., pursuant to the National Vaccine Injury Compensation Program.2 42 U.S.C. §§
300aa-1 to -34 (2006). Petitioner alleged that as a result of receiving an Influenza (“flu”) vaccine,
and/or a Measles-Mumps-Rubella (“MMR”) vaccine on October 20, 2008, S.A.H sustained the
first symptom or manifestation of the onset of encephalitis within the time period set forth in the
Table for MMR vaccine. Stipulation for an Award at ¶ 2, 4. In the alternative, petitioner alleged
1
Because this decision contains a reasoned explanation for the undersigned’s action in this case,
the undersigned intends to post this ruling on the website of the United States Court of Federal
Claims, 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 (2006)). As provided by Vaccine Rule
18(b), each party has 14 days within which to request redaction “of any information furnished by
that party: (1) that is a trade secret or commercial or financial in substance and is privileged or
confidential; or (2) that includes medical files or similar files, the disclosure of which would
constitute a clearly unwarranted invasion of privacy.” Vaccine Rule 18(b).
2
The National Vaccine Injury Compensation Program is set forth in Part 2 of the National
Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755, codified as amended,
42 U.S.C. §§ 300aa-1 to -34 (2006) (Vaccine Act or the Act). All citations in this decision to
individual sections of the Vaccine Act are to 42 U.S.C.A. § 300aa.
1
that S.A.H. suffered from autoimmune encephalitis caused-in-fact by the minor’s MMR and/or flu
vaccinations. Id. at ¶ 4. On August 14, 2015, the parties filed a stipulation in which they agreed to
an award of compensation to petitioner. On August 17, 2015, the undersigned issued a Decision
adopting the parties’ stipulation for an award. See Decision on J. Stip., filed Aug. 17, 2015.
On September 8, 2015, the parties filed a stipulation concerning attorneys’ fees and costs.
Petitioner requests a total award of attorneys’ fees and costs in the amount of $67,350.00. Stip. for
Fees and Costs ¶ 3. Respondent does not object. Id. at ¶ 5. In accordance with General Order #9,
petitioner represents that she did not incur any reimbursable costs in pursuit of this claim. Id. at ¶
4.
The Vaccine Act permits an award of reasonable attorneys’ fees and costs. 42 U.S.C. § 300
aa-15(e). Based on the reasonableness of the parties’ stipulation, the undersigned GRANTS the
request for approval and payment of attorneys’ fees and costs.
Accordingly, an award should be made as follows:
(1) in the form of a check jointly payable to petitioner and to petitioner’s attorney, Curtis
R. Webb, in the amount of $67,350.00.
In the absence of a motion for review filed pursuant to RCFC Appendix B, the clerk of the
court SHALL ENTER JUDGMENT in accordance herewith.3
IT IS SO ORDERED.
s/ Thomas L. Gowen
Thomas L. Gowen
Special Master
3
Pursuant to Vaccine Rule 11(a), entry of judgment is expedited by the parties’ joint filing of
notice renouncing the right to seek review.
2
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541 U.S. 950
WILSON, AKA BLACKv.UNITED STATES.
No. 03-8989.
Supreme Court of United States.
March 22, 2004.
1
C. A. 9th Cir. Certiorari denied. Reported below: 86 Fed. Appx. 232.
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2 N.Y.3d 737 (2004)
PEOPLE v. ALDEGON
Court of Appeals of the State of New York.
March 19, 2004.
Application in criminal case for leave to appeal dismissed. (Graffeo, J.)
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856 F.2d 196
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.Robert SMITH, et al., Plaintiffs-Appellants,v.David BLAND, et al., Defendants-Appellees.
No. 87-5460.
United States Court of Appeals, Sixth Circuit.
Sept. 1, 1988.
Before BOYCE F. MARTIN Jr. and WELLFORD, Circuit Judges and JAMES H. JARVIS, District Judge.*
PER CURIAM.
1
This is an appeal by pro se inmates from a district court order finding the Commonwealth of Kentucky in substantial compliance with a Consent Decree entered into between the Commonwealth and inmates of the Kentucky State Penitentiary and Kentucky State Reformatory. The decree in question concerns conditions of confinement at those institutions. The appeal raises issues concerning limitations on a federal court's continuing supervision of the conditions of confinement in a state prison system.
2
This action was originally initiated as a class action under 42 U.S.C. Sec. 1983 in September, 1976 by various inmates of the Kentucky State Penitentiary (KSP) seeking relief from conditions of confinement in that institution allegedly violative of the Eighth Amendment's proscription against cruel and unusual punishment. Inmates of the Kentucky State Reformatory (KSR) were later joined as plaintiffs. In 1981, the Commonwealth and the plaintiffs, with the approval of the district court, entered into a Consent Decree intended to improve the conditions of confinement at the two institutions and resolve issues being litigated in the class action. See Kendrick v. Bland, 541 F.Supp. 21, 27-50 (W.D.Ky.1981). The Consent Decree contained timetables for the completion of certain plans, studies and improvements that would take place with regard to prison conditions. The decree contained no expiration date, but rather it was agreed that "The Court shall retain jurisdiction in this case until the plan submitted to the Court is fully implemented." Id. at 27. In the years following the entry of the Consent Decree, the district court monitored defendants' compliance with virtually every aspect of the decree. The plaintiffs do not dispute that following the entry of the Consent Decree defendants have made major improvement in the quality of life at both KSP and KSR.
3
On July 24, 1985, the district court scheduled a hearing for July, 1986 for a determination of defendants' "substantial compliance" with the goals of the Consent Decree. The compliance hearing was held on July 9-11, 14-16, and 21-23, 1986. The district court heard extensive testimony from inmates, prison officials and experts regarding defendants' compliance with the Consent Decree.
4
On March 13, 1987, the district court issued a Memorandum Opinion containing Findings of Fact and Conclusions of Law, finding that the defendants were in substantial compliance with the Consent Decree in all areas except the area of capital construction and renovation projects. Kendrick v. Bland, 659 F.Supp. 1188 (W.D.Ky.1987). With respect to the capital construction and renovation projects, the district court noted that under the timetable set by the Consent Decree complete compliance in that area will not be met until 1996. Based on these findings, the district court summarized its opinion as follows:
5
In summation, the Consent Decree is and will continue to be a contractual agreement between the parties. The court will cease to monitor all conditions other than the completion of construction. The case will be maintained on the court's inactive docket and the parties shall submit semi-annual reports on the progress of construction. In the event of major violations of the Consent Decree, the parties may apply to the court for reinstatement of the case on its active docket.
Id. at 1201.1
6
Plaintiffs' counsel filed no appeal from the order finding substantial compliance, and these plaintiffs thereafter filed this appeal pro se.
7
The appellants contend that the district court's finding of substantial compliance was erroneous, particularly with regard to two issues. First, plaintiffs contend that the defendants' failure to provide a Black Studies Program violates Item # 18 of the Consent Decree.2 Second, plaintiffs contend that the defendants have failed to comply with the due process requirements of Item # 6 of the Consent Decree with regard to hearings on disciplinary charges by the Adjustment Committee. See id. at 31-33. The issue regarding due process was presented to and considered by the district court. The issue regarding the Black Studies Program was not presented to the district court and was not addressed in its opinion.
8
In appellants' brief on appeal, they state the purpose of their appeal as follows:
9
This appeal is an attempt to keep the Consent Decree alive because of its substantial impact on the lives of prisoners housed at the Kentucky State Prison and the failure of the defendants to honor their contractual agreement. In particular, defendants' failure to maintain a Black Studies Program and to afford plaintiffs due process at Adjustment Committee hearings.
10
Further, it is to enlighten this Court of the ineffectiveness of the attorneys appointed by District Court to represent plaintiffs in Kendrick v. Bland, litigation.
11
Appellants' Brief, at p. 2.
12
In reviewing the district court's order, three primary considerations regulate our inquiry. First, the district court was in the best position to determine whether defendants have substantially complied with the Consent Decree. The factual findings of the district court cannot be set aside unless they are clearly erroneous. Rule 52(a), Federal Rules of Civil Procedure. Due to the district court's extended involvement and intimate understanding of the facts and issues in this litigation, its factual findings are entitled to extreme deference. See Kendrick v. Bland, 740 F.2d 432 (6th Cir.1984). The district court's findings regarding substantial compliance constitute such factual findings.
13
Second, the district court was in the best position to determine the appropriate equitable relief to insure that the goals of the Consent Decree are met, and its decision regarding the propriety of continuing to exercise jurisdiction over this case should only be overturned if there has been an abuse of discretion. See United States v. W.T. Grant Company, 345 U.S. 629, 633 (1953). Regarding the retention of jurisdiction by a district court over a case under its general power to do equity, the Court in Grant observed:
14
Along with its power to hear the case, the court's power to grant injunctive relief survives discontinuance of the illegal conduct. [citations omitted]. The purpose of an injunction is to prevent future violations, [citations omitted], and, of course, it can be utilized even without a showing of past wrongs. But the moving party must show the court that relief is needed. The necessary determination is that there exists some cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the case alive. The chancellor's decision is based on all the circumstances; his discretion is necessarily broad and a strong showing of abuse must be made to reverse it. To be considered are the bona fides of the expressed intent to comply, the effectiveness of the discontinuance and, in some cases, the character of the past violations.
15
Id. at 633. Thus, the district court's decision as to the appropriateness of discontinuing the exercise of its equitable powers in this case is also entitled to great deference.
16
Third, the United States Supreme Court has warned against unnecessary judicial interference with a state's regulation of conditions of its prison system. The Court has observed:
17
Traditionally, federal courts have adopted a broad hands-off attitude toward problems of prison administration. In part, this policy is the product of various limitations on the scope of federal review of conditions in state penal institutions. More fundamentally, this attitude springs from complementary perceptions about the nature of the problems and the efficacy of judicial intervention. Prison administrators are responsible for maintaining internal order and discipline, for securing their institutions against unauthorized access or escape, and for rehabilitating, to the extent that human nature and inadequate resources allow, the inmates placed in their custody. The Herculean obstacles to effective discharge of these duties are too apparent to warrant explication. Suffice it to say that the problems of prisons in America are complex and intractable, and, more to the point, they are not readily susceptible of resolution by decree. Most require expertise, comprehensive planning, and the commitment of resources, all of which are peculiarly within the province of the legislative and executive branches of government. For all of those reasons, courts are ill equipped to deal with the increasingly urgent problems of prison administration and reform. Judicial recognition of that fact reflects no more than a healthy sense of realism. Moreover, where state penal institutions are involved, federal courts have a further reason for deference to the appropriate prison authorities.
18
Procunier v. Martinez, 416 U.S. 396, 404-05 (1974) (footnotes omitted). In the context of the instant case, this "policy of minimum intrusion" demands that judicial supervision over the Kentucky prison system should be as limited as possible and terminated as quickly as possible once it is determined that the likelihood of future violations has ceased. See, e.g., Battle v. Anderson, 708 F.2d 1523 (10th Cir.1983); Taylor v. Sterrett, 600 F.2d 1135 (5th Cir.1979); Campbell v. McGruder, 580 F.2d 521 (D.C.Cir.1978).
19
Based on a consideration of the above factors, we find that the decision of the district court finding the defendants to be in substantial compliance with virtually all of the terms of the Consent Decree must be affirmed. The district court conducted lengthy hearings and heard extensive testimony regarding defendants' compliance on all issues raised by the plaintiffs. There can be no doubt that significant improvements have been made in the conditions of confinement for inmates at KSP and KSR. The extent of the improvements is evident from the fact that that plaintiffs have only been able to point out two areas in which they believe that the defendants have failed to comply with the Consent Decree. One of those areas, the lack of a Black Studies Program, was not raised at the substantial compliance hearing. The other specific claim, that the plaintiffs did not receive due process at the Adjustment Committee hearings, was duly considered by the district court, Kendrick, 659 F.Supp. at 1194-95, and the determination of substantial compliance on this issue is fully supported by the evidence of record. Plaintiffs simply disagree with the resolution of this issue by the district court. The plaintiffs have failed to demonstrate that the district court's finding of substantial compliance is clearly erroneous with respect to any of the issues raised at the compliance hearing.
20
The district court's order is a reasonable and efficient way to begin the process of ending 12 years of judicial supervision of the Kentucky prison system. It is noted that the order does not cut the plaintiffs off without a remedy. In the event of serious violations of the Consent Decree, plaintiffs may apply to the district court for reinstatement of the case on its active docket. Moreover, as we have previously noted, contempt proceedings are available should the defendants fail to comply with the district court's orders. Kendrick, 740 F.2d at 439. Finally, the district court has retained control over construction and renovation projects, the one area where it found that substantial compliance had not been met. Under these circumstances, it cannot be said that the plaintiffs have been prejudiced by the entry by the district court of the substantial compliance order.
21
With respect to appellants' claim that their counsel failed to adequately represent them when he filed no appeal from the substantial compliance order, we find nothing in the record to indicate that counsel's actions were unwarranted. The order entered by the district court adequately protects the interests of the plaintiffs. Plaintiffs have failed to demonstrate that counsel's conduct was outside the bounds of adequate representation.
22
Finally, we take this opportunity to commend the district court for its long and diligent efforts in regulating this lawsuit. Those efforts have contributed significantly to obvious and substantial improvements in the conditions under which inmates in the Kentucky prison system are housed. Hopefully, the district court's order signals the beginning of the end of judicial supervision of the Kentucky prison system.
23
Accordingly, the order of the district court is AFFIRMED.
*
The Honorable James H. Jarvis, U.S. District Judge for the Eastern District of Tennessee, sitting by designation
1
The accompanying order entered by the district court provided as follows:
IT IS ORDERED:
1
The Consent Decree constitutes a binding and continuing obligation upon the parties
2
The defendants are in compliance with the Consent Decree in all areas except construction and renovation
3
The case is transferred to the inactive docket for receipt of semi-annual reports from the parties on the progress of construction and renovation as required by the Consent Decree
4
In the event of major violations of the Consent Decree and the contractual obligations created and continuing thereunder, any party may apply to the court for reinstatement of the case on its active docket
This is a final and appealable order and there is no just cause for delay.
Joint Appendix, at pp. 197-98.
2
Item # 18 of the Consent Decree provided as follows:
18
RACIAL DISCRIMINATION
The defendants agree not to discriminate against any inmate on the basis of race, religion, or creed and to develop educational curricula addressing minority cultures which are designed to eliminate the effects of cultural disparities amongst prisoners and staff.
Kendrick, 541 F.Supp. at 39.
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891 F.2d 296
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.UNITED STATES of America, Plaintiff-Appellee,v.Vincent DORIA, Defendant-Appellant.
No. 89-10107.
United States Court of Appeals, Ninth Circuit.
Submitted Oct. 25, 1989*Decided Dec. 7, 1989.
Lloyd D. George, District Judge, Presiding.
Before ALARCON, O'SCANNLAIN, and LEAVY, Circuit Judges.
1
MEMORANDUM**
2
Vincent Doria appeals from the judgment entered upon his conviction and sentence on two counts for the use of an instrument of commerce to make threats to damage property by means of an explosive, in violation of 18 U.S.C. § 844(e). Doria contends that (1) the delay between the original indictment and his trial violated the Speedy Trial Act as well as his right to a speedy trial under the Sixth Amendment, (2) he was denied his right to the effective assistance of counsel at his trial, and (3) the district court abused its discretion in sentencing him. We disagree and affirm. We discuss each issue and the facts pertinent thereto under separate headings.
3
* SPEEDY TRIAL ACT
4
Doria contends that his conviction should be reversed because the delay between his original arraignment on September 15, 1986 and his trial on September 15, 1988 exceeded the 70-day limit imposed by the Speedy Trial Act, 18 U.S.C. § 3161(c)(1). We disagree.
5
Doria failed to raise his Speedy Trial Act argument before trial. "Failure of the defendant to move for dismissal prior to trial or entry of a plea of guilty ... shall constitute a waiver of the right to dismissal under this section." 18 U.S.C. § 3162(a)(2); see also United States v. Brown, 761 F.2d 1272, 1276-77 (9th Cir.1985) (failure to raise Speedy Trial Act constitutes waiver).
6
Doria's argument that he "was in no position to assert his own rights as he was undergoing a difficult divorce, was facing another trial on scurrilous charges in another district and was temporarily incarcerated in a federal psychiatric institution," is unavailing. Doria was represented by counsel throughout these proceedings.
II
SIXTH AMENDMENT RIGHT TO A SPEEDY TRIAL
7
Doria asserts that the delay in bringing this matter to trial violated the speedy trial clause of the Sixth Amendment. We disagree.
8
In reviewing a speedy trial clause violation, we consider four factors: (1) the length of the pretrial delay, (2) the reason for the delay, (3) whether the defendant asserted his speedy trial right, and (4) prejudice to the defendant. Barker v. Wingo, 407 U.S. 514, 530 (1972); United States v. Sears, Roebuck and Co., 877 F.2d 734, 739 (9th Cir.1989). "The length of delay is a 'threshold' factor. If 'presumptively prejudicial' the length of delay necessitates an examination of the other three factors." Sears, 877 F.2d at 739 (citations omitted).
9
The twenty-four month delay between the original indictment and the trial in the instant matter is sufficient to require an inquiry into the remaining speedy trial factors. See United States v. Valentine, 783 F.2d 1413, 1417 (9th Cir.1986) (six months between indictment and trial on charges of possession of a firearm by a convicted felon, although not very long, was "presumptively prejudicial"); United States v. Tercero, 640 F.2d 190, 194 (9th Cir.1980), cert. denied, 449 U.S. 1084 (1981) (twenty month delay between defendant's first trial resulting in a hung jury and second trial on charges of possession of marijuana with intent to distribute was clearly adequate to invoke further inquiry); United States v. Simmons, 536 F.2d 827, 831 (9th Cir.), cert. denied, 429 U.S. 854 (1976) (six month delay prior to trial on forgery charges was sufficiently lengthy to necessitate an inquiry into the other speedy trial factors).
10
"The reason for delay is the focal inquiry." Sears, 877 F.2d at 739 (citing United States v. Loud Hawk, 474 U.S. 302, 315 (1986)). The less at fault the government was for the delay, the more likely the delay was justified. Barker, 407 U.S. at 531.
11
On December 18 and December 23, 1986, approximately three months after he was originally indicted in the instant matter, Doria mailed sexually explicit photographs of a minor from Los Angeles, California, to his estranged wife in Henderson, Texas. (CR 11). He was arrested, indicted and put on trial in the Eastern District of Texas for unlawfully mailing a visual depiction of a minor engaging in sexually explicit conduct. (CR 11). Doria was convicted in the Texas case on October 13, 1987 and sentenced to a total of seven years imprisonment plus five years probation for committing an offense while on release for another offense. Id. Doria was temporarily released from his Texas prison so that he could be arraigned in the Nevada case on November 20, 1987. (CR 8). At the request of Doria's counsel, the arraignment was continued twice until December 4, 1987. (CR 12; CR 13). A trial date was set for January 25, 1988. (CR 18). The district court twice continued the trial date in order to allow Doria's counsel additional time to prepare for trial. (CR 22; CR 23). The trial date was then set for May 16, 1988. (CR 23). (CR 27). On May 11, 1988, five days before trial was to commence, Doria pleaded guilty to both counts and the trial date was vacated. (CR 30). On July 18, 1988, Doria was allowed to withdraw his guilty plea. (CR 38). Subsequently, the district court put the case back on calendar for September 12, 1988 and the trial occurred on September 15, 1988. (CR 39; CR 43).
12
This course of events demonstrates that the government was at fault for only a portion of the pretrial delay. First, there was a three-month gap between the original indictment and Doria's commission of the crime in the Texas matter. However, even this gap is not wholly attributable to the government since on November 13, 1986, in the midst of this time period, Doria pleaded guilty to the Las Vegas charges. Second there was a two-month period between Doria's arraignment on December 4, 1987, which was postponed due to his Texas case, and the first scheduled date of trial of January 25, 1988. Doria's requests for continuances coupled with his subsequently withdrawn plea of guilty contributed to the other pretrial delays. Thus, the government was solely responsible for no more than four months of pretrial delay, a minimal period for a case of this nature. See Simmons, 536 F.2d at 831 (for a simple crime, six month delay between indictment and trial was a "borderline" case just sufficiently prejudicial to be subject to judicial scrutiny); Valentine, 783 F.2d at 1417 (six month delay prior to trial on possession of a firearm by convicted felon was "not very long.").
13
The third factor, whether Doria asserted his right to a speedy trial, further undermines Doria's argument because he failed to assert his right to a speedy trial before the district court. Although a defendant cannot waive his or her sixth amendment right to a speedy trial, "the failure of [Doria] to press for trial on the merits 'is entitled to strong evidentiary weight' " in demonstrating that Doria was not deprived of his right to a speedy trial. Sears, 877 F.2d at 740 (citation omitted).
14
Doria asserts that he was prejudiced by the delay since the sentencing judge considered his Texas conviction before sentencing him. Appellant's Opening Brief at 11. The sentencing judge's consideration of Doria's previous criminal activity did not implicate the interests protected by the right to a speedy trial. In Barker, the Supreme Court instructed that a speedy trial is necessary to prevent oppressive pretrial incarceration, minimize anxiety of the defendant, and limit the possible impairment of a defense. Barker, 407 U.S. at 532. These concerns reflect the desire to protect the accused in the guilt phase of trial, not in the sentencing stage as Doria would suggest.
III
RIGHT TO THE EFFECTIVE ASSISTANCE OF COUNSEL
15
Doria makes two arguments that he was denied effective assistance of counsel. First, he asserts that his trial counsel did not provide him effective assistance because his counsel prejudiced the judge by stating at sidebar: "Judge, I just want you to--I just want you to understand that before we commence this exercise today, that from time to time it may arise that Mr. Doria becomes a little difficult ... I don't want you to think, Judge, that I am trying to waste your time." (RT 77). Doria contends that this alleged ineffectiveness "resulted in the trial judge being prejudiced against Doria at the time of imposition of sentence." Appellant's Opening Brief at 13.
16
"A claim of ineffective assistance of counsel in violation of the Sixth Amendment is a mixed question of law and fact which merits de novo review by this court." United States v. Rachels, 820 F.2d 325, 328 (9th Cir.1987).
17
To establish ineffective assistance of counsel, Doria must show that counsel performed deficiently in that he "made errors so serious that counsel was not functioning as the 'counsel' guaranteed the defendant by the Sixth Amendment." Strickland v. Washington, 466 U.S. 668, 687 (1984). Doria must also show that he was prejudiced by counsel's deficient performance in that "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id at 694.
18
Counsel made the above-quoted comments out of the presence of the jury. Even if these comments were the result of an "unprofessional error," they clearly could not affect the jury's decision. Moreover, no showing can be made that the judge was prejudiced by counsel's comments either at the guilt or sentencing phase of the trial. Judicial bias cannot stem from information and beliefs acquired while the judge is acting in his or her judicial capacity. United States v. Monaco, 852 F.2d 1143, 1147 (9th Cir.1988), cert. denied, 109 S.Ct 864 (1989) (citation omitted). Thus, Doria's first ineffective assistance contention must fail.
19
Doria's second ineffective assistance of counsel argument is that there was a "complete breakdown in communication" with his trial counsel. Appellant's Opening Brief at 14. He argues that this alleged breakdown is demonstrated by the following comments made by counsel to the trial judge:
20
And if [Doria] elects to take the stand, it will be against my advice. I would request, Your Honor, that if that is his decision that we make a record to some extent, for my protection, and that it is against my advice, and that there are certain risks inherent in his testimony. If you would assist me, I would appreciate it. I think you also might have the effect of making sure that Mr. Doria understands.
21
(RT 136). In United States v. Williams, 594 F.2d 1258, 1260 (9th Cir.1979), we held that the total incompatibility between the accused and his trial counsel deprived the accused of his right to the effective assistance of counsel. Williams, 594 F.2d at 1260. We found that the "client-attorney relationship had been a stormy one with quarrels, bad language, threats and counter threats." Williams, 594 F.2d at 1260. We can make no such finding from the record before us. In fact, the record demonstrates that Doria and his counsel eventually resolved their disagreement when Doria decided not to take the stand. (RT 139). No other instances of conflict appear on the record before us. We therefore reject Doria's second ineffective assistance contention.
IV
THE DISCRETION OF THE SENTENCING COURT
22
The district court sentenced Doria to two years imprisonment on Count One to run consecutively with the sentence he was serving for the Texas conviction. On Count Two Doria was sentenced to two years probation to run consecutively with the term imposed in the first count. Doria was also ordered to pay a special assessment of $100 under 18 U.S.C. § 3013.
23
Doria contends that the sentencing court abused its discretion in sentencing him by considering Doria's Texas conviction, by failing to individualize his sentence, and by not taking into account Doria's psychiatric reports and cultural background. These contentions have no merit.
24
When a sentence is within the statutory limits imposed, we review the sentence for an abuse of discretion. Monaco, 852 F.2d at 1151. Additionally, "[a] sentence which falls within statutory limits is ordinarily not reviewable unless there exist constitutional concerns." United States v. Meyers, 847 F.2d 1408, 1416 (1988). Doria's sentence for each count is within the statutory limits. 18 U.S.C. § 844(e) (1989). "The failure to individualize a sentence, however, compels reversal or resentencing of the defendant." Id. (citation omitted).
25
"No limitation shall be placed on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the purpose of imposing an appropriate sentence." 18 U.S.C. § 3661. Accordingly, the sentencing court did not abuse its discretion by considering Doria's Texas conviction. See Campbell v. Kincheloe, 829 F.2d 1453, 1461 (9th Cir.1987), cert. denied, 109 S.Ct 380 (1988) (defendant must show that a prior conviction relied on to enhance the sentence was unconstitutional before the sentence will be subject to review).
26
Doria's assertion that the sentencing court did not properly consider his mental condition and cultural background is belied by the record before us. Both of these factors were discussed in detail at the sentencing hearing. Sentence Hearing Transcript at 5-14. Nothing in the record suggests that the judge did not take into account these factors in imposing Doria's sentence.
27
The comments made by the sentencing judge after announcing the sentence demonstrate that the sentence imposed was based on an individual assessment of Doria's guilt. The sentencing judge stated: [A]s long as you rationalize and you accept the idea that there was some justification, Mr. Doria, in doing what you did and you understand that you break the law, you pay the price and I hope that you come out a better person.... Sentence Hearing Transcript at 24. The record does not show that Doria's sentence was the result of "a mechanistic application of a given sentence to a given category of crime." United States v. Barker, 771 F.2d 1362, 1365 (9th Cir.1985). Accordingly, the trial court did not abuse its discretion in sentencing Doria.
V
SPECIAL ASSESSMENT
28
Although the parties do not raise the issue, we have held that the special assessment statute, 18 U.S.C. § 3013, was passed in violation of the origination clause of the U.S. Const., art. I, § 7. United States v. Munoz-Flores, 863 F.2d 654, 661 (9th Cir.1988), cert. granted, 58 U.S.L.W. 3212 (1989). Accordingly, the $100 special assessment portion of Doria's sentence is vacated.
29
The conviction is AFFIRMED. The sentence is AFFIRMED in part and VACATED in part.
*
The panel unanimously finds this case suitable for submission on the record and briefs and without oral argument pursuant to Fed.R.App.P. 34(a), Ninth Circuit Rule 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
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288 N.E.2d 561 (1972)
Georgia NEAL, Appellant,
v.
REVIEW BOARD OF THE INDIANA EMPLOYMENT SECURITY DIV. ET AL., Appellees.
No. 2-772A40.
Court of Appeals of Indiana, Second District.
November 8, 1972.
Rehearing Denied December 12, 1972.
Solomon L. Lowenstein, Jr., Indianapolis, for appellant.
Theodore L. Sendak, Atty. Gen., Darrel K. Diamond, Deputy Atty. Gen., David F. McNamar, Steers, Klee, Sullivan & LeMay, Indianapolis, for appellees.
ON APPELLEE'S MOTION TO DISMISS
PER CURIAM.
This cause is an attempted appeal from the Review Board of the Employment Security Division and is pending before the Court on the motion of the appellee Holiday Inn to dismiss, the brief of the appellee Review Board in support of the motion to dismiss, the appellant's motion in opposition to the motion to dismiss and her brief in support of her motion in opposition. The motion to dismiss alleges as cause therefor that this Court lacks jurisdiction because the appeal was not initiated within *562 the time allowed by statute and was not perfected within the time allowed by statute or rule.
The record reveals the following action: On January 20, 1972, the claimant-appellant filed an application for benefits under the Indiana Employment Security Act. The deputy mailed his decision to her on February 9, 1972. Claimant promptly and timely filed, on February 16, 1972, a request for hearing before referee. A hearing was held before a referee, and on April 12, 1972, the decision of the referee which affirmed the decision of the deputy was mailed to claimant. Not until June 15, 1972, did claimant attempt to appeal the decision of the referee to the Review Board.
The pertinent statute, Ind.Ann. Statutes § 52-1542b (Burns 1964 Repl.), IC 1971, XX-X-XX-X, reads as follows:
"52-1542b. Hearing before referee Ruling on finding of deputy Notice of decision Appeal. Unless such request for hearing is withdrawn, a referee, after affording the parties a reasonable opportunity for fair hearing, shall affirm, modify or reverse the findings of fact and decision of the deputy. The parties shall be duly notified of such decision and the reasons therefor, which shall be deemed to be the final decision of the review board, unless within fifteen (15) days after the date of notification or mailing of such decision, an appeal is taken by the board or the director or by any party adversely affected by such decision to the review board. [Acts 1947, ch. 208, § 1803, p. 673; 1957, ch. 299, § 4, p. 795.]" (Our emphasis.)
Without an appeal having been taken within fifteen days from and after April 12, 1972, the decision of the referee became the final decision of the Review Board on April 27, 1972, by operation of law. As hereinbefore noted, claimant did nothing toward appealing until June 28, 1972, long after the time had expired within which she could have appealed.
Claimant's request for appeal tendered to the Review Board on June 28, 1972 presented nothing on which the Review Board could act, since its decision had become final on April 27. Had the Review Board attempted to act on the request for appeal, its action would have been reversible error. In the case of Steel Transportation Co., Inc. v. Review Board (1962), 134 Ind. App. 95, 186 N.E.2d 174, the Court held as follows:
"This is an appeal from the Review Board of the Indiana Employment Security Division. The appellant directly challenges the fact as to whether or not the claimant filed his notice of intention to appeal the decision of the Division Deputy within the ten (10) day period as provided by Burns' Ind.Sts.Anno. § 52-1542a 1962 Supplement.
"The record discloses that the notice of claimant's intention to appeal the decision of the Division Deputy was not in fact filed within the required statutory ten (10) day period. The Review Board therefore had no jurisdiction to hear the appeal. The decision of the Review Board is therefore set aside and the decision of the Division Deputy is determined to be final."
In the case of Teepe v. Review Board, etc. (1964), 136 Ind. App. 331, 200 N.E.2d 538, the claimant failed to file notice of intention to appeal within fifteen days from the mailing of the decision of the Review Board. The Appellate Court, by Judge Hunter, dismissed the appeal, and stated as follows:
"The Supreme Court of Indiana has held that where a statute provides the remedy for review of a decision of an administrative board and a proceeding to be followed, the procedure must be followed as a condition precedent to the acquiring of jurisdiction. In Ballman v. Duffecy (1952), 230 Ind. 220 at p. 229, *563 102 N.E.2d 646 we find the following quote:
`... where the statute provides the remedy of a review, and the procedure to be followed, the procedure must be complied with ... A failure to comply with the statute is jurisdictional, and therefore the trial court did not have jurisdiction of the parties or the particular case.'
"This rule is sustained further by our Supreme Court in the case of State ex rel. Public Serv. Comm. v. Marion C.C. (1961), 242 Ind. 145, at p. 150, 177 N.E.2d 397.
"It has also further held that where a statute providing for judicial review of an administrative order or decision contains a requirement that notice of intention to appeal shall be filed within a certain time with a specific person, that strict compliance with the requirement is a condition to the acquiring of jurisdiction by the court of judicial review, and a noncompliance with the requirement is grounds for dismissal of the appeal. Stanton v. Raub (1963), 244 Ind. 255, 191 N.E.2d 490, 491; City of Plymouth v. Stream Pollution Cont. Bd. (1958), 238 Ind. 439, 446, 151 N.E.2d 626; Lock Joint Tube Co. v. Citizens Trust & Sav. Bank (1941), 218 Ind. 162, 167, 171-172, 31 N.E.2d 989; Steel Transp. Co., Inc. v. Review Board etc. (1962), 134 Ind. App. 95, 186 N.E.2d 174; White v. Bd. of Med. Regis. and Exam. (1956), 235 Ind. 572, 577, 134 N.E.2d 556; Payne, President et al. v. Buchanan et al (1958), 238 Ind. 231, 245, 148 N.E.2d 537, 150 N.E.2d 250; Alexander v. Factory Store Company, etc. (1953), 123 Ind. App. 506, 507, 112 N.E.2d 298.
"Thus the rule has been stated that where a statute providing for judicial review of an administrative order or decision contains provision as to time for appeal, such provisions are mandatory as a condition precedent to the acquiring of jurisdiction of such an appeal." (Emphasis supplied.)
The case of Steel Transportation, supra, involved the first step in appeal, from the deputy to the Review Board. The Teepe case, supra, involved the second step in review, from the Review Board to the Appellate Court. In both cases the claimant failed to file the notice of intention to appeal within the time required by statute. In the first case, the Court held the Review Board had no jurisdiction to review the decision of the deputy. In the second case, the Court held it had no jurisdiction of the appeal from the Review Board.
The disposition of the case now before us is governed by the Steel Transportation and Teepe cases. There has been a break in the chain of jurisdiction by reason of the failure to the claimant-appellant to file her notice of intention to appeal the decision of the referee within fifteen days after notice was mailed to her as required by the statute.
Appellant attempts to assign as error that because she is not educated, having only progressed to the fifth grade of school, and cannot read, the standard form, printed notice which appears in the decision of the Appeals referee did not constitute proper notice to her of her right to appeal, that she did not voluntarily waive her right to appeal, that she has been denied of her right to appeal, and thereby deprived of equal protection and due process of law.
The appellant does not claim that she did not receive the notice. She claims the notice sent to her was not sufficient to advise her of her rights because she could not read it. If she could not read it herself, she had an affirmative duty to act in some manner to inform herself of its contents. By failing to inform herself of the contents of the notice, and failing to avail herself of the right to appeal within the *564 time permitted by statute and set out in the notice, appellant failed to invoke the jurisdiction of the Review Board, and subsequently of this Court. While the application of this rule may seem to create a harsh result in this case because of appellant's particular circumstance, had she acted promptly to inform herself there would be no reason for the application of the rule.
The appellee's Motion to Dismiss is sustained, and this cause is dismissed.
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No
No. 97-605
IN THE SUPREME COURT OF THE STATE OF MONTANA
1998 MT 275N
IN RE THE MARRIAGE OF
ROBERTA ANDERSON,
Petitioner and Appellant,
and
JOHN (JACK) MORELLI,
Respondent.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
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The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gary S. Deschenes, Randy L. Tarum, Deschenes Law Office, Great Falls, Montana
For Respondent:
John (Jack) Morelli, Bigfork, Montana (pro se)
Submitted on Briefs: March 26, 1998
Decided: November 12, 1998
Filed:
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__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1. Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal
Operating Rules, the following decision shall not be cited as precedent but shall be
filed as a public document with the Clerk of the Supreme Court and shall be
reported by case title, Supreme Court cause number and result to the State Reporter
Publishing Company and to West Group in the quarterly table of noncitable cases
issued by this Court.
¶2. Roberta Anderson (Roberta) appeals from the Findings of Fact and Conclusions
of Law, Judgment and Decree, and post-judgment rulings of the Twelfth Judicial
District Court, Hill County. We affirm.
¶3. Roberta raises eight issues on appeal, however we have consolidated them into
four dispositive issues and restate them as follows:
¶4. 1. Did the District Court err by ruling that Roberta failed to file a timely
objection to the Special Master's Final Report?
¶5. 2. Did the District Court err when it appointed a special master to be the
settlement master and judge in the trial of this case?
¶6. 3. Did the District Court err by awarding custody and visitation without having
an independent evaluation of the family conducted to determine the custody
arrangement that was in the best interest of the parties' minor child?
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¶7. 4. Did the District Court err by requiring Roberta to pay her own attorney's fees
and half of the Special Master's fees?
Factual and Procedural Background
¶8. Roberta and John (Jack) Morelli were married on September 23, 1989. Roberta
and Jack have one child, Michael John Morelli, who was born on April 13, 1990. On
April 1, 1994, Roberta filed an Amended Petition for Legal Separation. Two months
later, on June 6, 1994, Jack filed a response to Roberta's petition for legal separation
wherein he petitioned for dissolution of marriage.
¶9. On September 21, 1995, Jack moved the court for the appointment of a special
master pursuant to Rule 53, M.R.Civ.P. On October 12, 1995, the District Court
appointed John B. Kuhr (Kuhr) to serve as special master. Because of a conflict of
interest, on October 16, 1995, the District Court dismissed Kuhr and appointed
Curtis G. Thompson to serve as special master. The District Court's Order stated
that Jack and Roberta were to each pay one-half of the Special Master's fees. On
December 6, 1995, the District Court issued an Order Fixing Compensation for
Special Master that stated that each party would share the cost of the Special Master
equally.
¶10. From May 8, 1996, to May 10, 1996, the Special Master conducted a trial on this
matter. Apparently, the Special Master met with each party separately before the
trial in an attempt to settle the case. Roberta and Jack agreed at the trial to submit
proposed findings of fact and conclusions of law by May 30, 1996. Jack met this
deadline. Roberta, on the other hand, did not submit proposed findings of fact and
conclusions of law.
¶11. On June 18, 1996, the Special Master submitted his draft report to Roberta and
Jack. Jack provided the Special Master with suggestions concerning the report,
albeit one day after the deadline set to submit suggestions. Due to the unavailability
of her attorney, Roberta provided suggestions to the draft report pro se. Roberta's
suggestions were also provided one day late. Subsequently, Roberta's attorney filed
two motions requesting extensions of time so that he could provide suggestions to the
draft report. Despite these requests, Roberta's attorney did not provide the Special
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Master with any suggestions.
¶12. The Special Master filed his Final Report on October 1, 1996. The Special
Master attached to his Final Report his Suggested Findings of Fact, Conclusions of
Law and Decree; his child support worksheet; Roberta's child support worksheet;
and Jack's child support worksheet. On October 11, 1996, Jack filed his objections to
the Special Master's Suggested Findings of Fact, Conclusions of Law and Decree.
The Special Master filed the transcript of the hearing on October 24, 1996.
¶13. Roberta filed a motion to hold Jack in contempt of court on October 16, 1996.
Roberta filed an affidavit supporting this motion that stated that Jack had not been
paying child support or maintenance, that Jack hid assets from the Special Master,
and that she was disabled. On December 6, 1996, Roberta filed a notice stating that
she was unable to pay the Special Master and that she was contesting his fee. In her
affidavit supporting this motion, Roberta asserted that the Special Master was unfair
and biased. The District Court held an evidentiary hearing on May 7, 1997, to hear
testimony and receive evidence on the issues raised in Roberta's motions.
¶14. On July 14, 1997, the District Court issued its Findings of Fact and Conclusions
of Law which adopted most of the Special Master's suggested findings and
conclusions. The District Court also issued its Judgment and Decree on that date.
Subsequently, Roberta filed motions to alter or amend judgment, to amend the
District Court's Findings of Fact, and for a new trial. On August 21, 1997, the
District Court denied these motions. Roberta appeals from the District Court's
Findings of Fact and Conclusions of Law, Judgment and Decree, and post-judgment
rulings.
Issue 1.
¶15. Did the District Court err by ruling that Roberta failed to file a timely objection to
the Special Master's Final Report?
¶16. The District Court ruled that Roberta did not file timely objections to the
Special Master's Final Report. Roberta asserts that her Motion for Holding
Respondent in Contempt with Affidavit in Support filed on October 16, 1996, served
as her objections to the Special Master's Final Report. Although Roberta admits that
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these "objections" were "perhaps not in the form anticipated by the District Court,"
she contends that the District Court should have considered this motion and its
accompanying affidavit as her written objections to the Special Master's Final
Report.
¶17. Rule 53(e)(1), M.R.Civ.P., requires special masters to prepare and file a report
on the matter submitted to them. Rule 53(e)(2), M.R.Civ.P., states that, in nonjury
actions such as the case at bar, the district court "shall accept the master's findings
of fact unless clearly erroneous." A party who wishes to challenge a special master's
finding of fact must file written objections to the special master's report within ten
days after being served with notice that the special master has filed a report. Rule 53
(e)(2), M.R.Civ.P. The objecting party has the burden of proving that the special
master's finding of fact is clearly erroneous. In re Marriage of Doolittle (1994), 265
Mont. 168, 171-72, 875 P.2d 331, 334.
¶18. We have strictly construed Rule 53(e)(2), M.R.Civ.P., by holding that parties
who do not file written objections to a special master's finding of fact within the ten-
day period waive their right to object. In re Marriage of Hays (1993), 259 Mont. 302,
304, 856 P.2d 227, 229. Beyond this, we ruled in Doolittle that objections not made to
the district court within the ten-day period will not be considered by this Court on
appeal. Doolittle, 265 Mont. at 172, 875 P.2d at 334. See also Hays, 259 Mont. at 304,
856 P.2d at 229 (explaining that a timely objection to a special master's final report is
required to preserve the issue for appeal).
¶19. In the instant case, Roberta asserts that the District Court erred by not
considering her Motion for Holding Respondent in Contempt and its accompanying
affidavit as her written objections to the Special Master's findings of fact in regard to
her disability, the assets in the marital estate, Jack's income, child support, and
maintenance. Notwithstanding Roberta's argument, we cannot construe this motion
as written objections to the Special Master's Final Report because the record shows
that Roberta did not file this motion and its accompanying affidavit as her objections
to the Special Master's Final Report. In fact, in this motion, Roberta requested the
District Court to toll the time period allowed to respond to the report. Roberta also
requested an extension of time to respond to the Special Master's Final Report in a
brief filed on October 30, 1996. Roberta noted in this brief that the deadline to object
to the Special Master's Final Report had passed and explained that she had not yet
responded to the report because of "excusable neglect." Furthermore, at the District
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Court hearing on May 7, 1997, Roberta's attorney argued that Roberta did not have
a reasonable opportunity to file written objections to the Special Master's Final
Report because the Special Master did not file a transcript of the trial with his Final
Report. Finally, on May 27, 1997, Roberta filed Petitioner's Brief Against Making
Decree Adopting "Conclusions of Law" and "Findings of Fact" of Curtis Thompson,
Special Master wherein she objected to the Special Master's suggested findings and
conclusions.
¶20. The record, therefore, shows that Roberta did not file her motion to hold Jack in
contempt as objections to the Special Master's Final Report. To the contrary, the
record shows that Roberta requested the District Court to extend the time in which
to file objections to the report and continued to argue for an extension of time to file
objections to the report. The record also shows that Roberta filed objections to the
report even though the District Court did not grant her request for an extension of
time. Accordingly, the District Court did not err in ruling that Roberta failed to file
timely objections to the Special Master's Final Report.
¶21. Because Roberta did not file objections to the Special Master's Final Report
within the ten-day period as required by Rule 53(e)(2) M.R.Civ.P., she waived her
right to object to the report. Hays, 259 Mont. at 304, 856 P.2d at 229. Consequently,
we will not consider the issues that Roberta raised concerning Jack's income for
child support purposes, the distribution of the marital estate, maintenance, or her
disability because Roberta did not file timely objections to the Special Master's
findings and conclusions regarding those issues, and thus did not preserve those
issues for appeal. Doolittle, 265 Mont. at 172, 875 P.2d at 334. See also Hays, 259
Mont at 304, 856 P.2d at 229.
Issue 2.
¶22. Did the District Court err when it appointed a special master to be the settlement
master and judge in the trial of this case?
¶23. Roberta argues that the District Court erred by appointing a special master
under Rule 53, M.R.Civ.P., because no exceptional circumstances existed that
required the District Court to appoint a special master. In addition, she argues that
the District Court erred by requiring the Special Master to sit as the trier of fact in
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the case after he had unsuccessfully tried to settle the case. After reviewing the
record, we conclude that Roberta failed to preserve these issues for appeal.
¶24. To preserve an issue for appeal to this Court, a party must make a timely and
specific objection in the lower court. C. Haydon Ltd. v. MT Min. Properties, Inc.
(1997), 286 Mont. 138, 154, 951 P.2d 46, 56. We have repeatedly held that this Court
will not review issues or theories raised for the first time on appeal. Kovarik v.
Kovarik, 1998 MT 33, ¶ 27, 55 St.Rep. 117, ¶ 27, 954 P.2d 1147, ¶ 27 (citing In re
Marriage of Binsfield (1995), 269 Mont. 336, 344, 888 P.2d 889, 894). See alsoWelch v.
Welch (1995), 273 Mont. 497, 502, 905 P.2d 132, 136. The policy behind these rules is
that a district court cannot be placed in error for something that it did not have the
opportunity to decide. Kovarik, ¶ 27.
¶25. The record in the instant case shows that Roberta did not object to the
appointment of the Special Master. Rather, the record suggests that Roberta agreed
to have the case tried before the Special Master. The record also shows Roberta did
not object to the Special Master sitting as the trier of fact after he had tried to settle
the case until after he had issued his Final Report. Thus, we conclude that Roberta
did not make a timely objection to the scope of the Special Master's appointment.
Accordingly, we will not consider Roberta's argument that the District Court erred
by appointing a special master because she raises this issue for the first time on
appeal. Moreover, we will not consider her argument regarding the scope of the
Special Master's appointment because she failed to make a timely objection in
District Court.
Issue 3.
¶26. Did the District Court err by awarding custody and visitation without having an
independent evaluation of the family conducted to determine the custody arrangement
that was in the best interest of the parties' minor child?
¶27. The District Court did not adopt the Special Master's suggested finding of fact
number 7, which states that "[b]oth parties agree that an independent evaluation of
the immediate and extended family situations, to the extent that the situation may
involve, influence or impact the minor child, should be performed." Roberta
contends that the District Court erred by not adopting the Special Master's suggested
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finding and by awarding custody and visitation without considering the results of
such a study.
¶28. The standard of review for custody and visitation is whether substantial credible
evidence supports the district court's judgment. This Court will not overturn a
district court's custody or visitation decision unless the court's findings and
conclusions clearly demonstrate an abuse of discretion. In re Marriage of Boyer
(1995), 274 Mont. 282, 288, 908 P.2d 665, 668 (citing In re Marriage of Hunt (1994),
264 Mont. 159, 164, 870 P.2d 720, 723). We have stated that "[t]he district court has
broad power to address all problems concerning custody and visitation." Boyer, 274
Mont. at 288, 908 P.2d at 668.
¶29. The District Court did not adopt the Special Master's finding regarding an
independent family evaluation reasoning that Jack and Roberta have litigated this
case to the point where both have exhausted almost all of their resources and,
therefore, that the expenditure of further funds would be unwise. It is clear that the
District Court found the Special Master's recommended finding clearly erroneous
because of the cost to Jack and Roberta. The record shows that Jack had trouble
paying his attorney's fees on time. Additionally, Roberta has argued that she is
unable to pay the money that she owes the Special Master. Consequently, we hold
that the District Court did not abuse its discretion when it awarded custody and
visitation without having an independent evaluation of the family conducted.
Issue 4.
¶30. Did the District Court err by requiring Roberta to pay her own attorney's fees and
half of the Special Master's fees?
¶31. Roberta argues that the District Court erred by ruling that each party is to pay
their own attorney's fees. She also argues that the District Court erred by requiring
her to pay half of the Special Master's fees.
¶32. Section 40-4-110, MCA, permits a district court, after considering the financial
resources of both parties, to order one party to pay a reasonable amount for the
other party's costs of maintaining a marital dissolution case and for attorney's fees.
This Court will not disturb a district court's determination regarding costs and
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attorney's fees in a marital dissolution case absent an abuse of discretion. In re
Marriage of Lee (1997), 282 Mont. 410, 423, 938 P.2d 650, 658 (citing In re Marriage
of Walls (1996), 278 Mont. 413, 420, 925 P.2d 483, 487). Moreover, in a marital
dissolution case, a district court must simply " 'indicate its reasons for refusing to
grant attorney[']s fees.' " In re Marriage of Voelkel (1987), 226 Mont. 143, 147, 734
P.2d 217, 220 (quoting In re Marriage of Rolfe (1985), 216 Mont. 39, 49, 699 P.2d 79,
84).
¶33. Roberta cites In re Marriage of Skinner (1989), 240 Mont. 299, 783 P.2d 1350, to
support her argument that the District Court erred by ruling that she is to pay her
own attorney's fees. In Skinner, we upheld an award of attorney's fees because of a
"great financial disparity between the parties." Skinner, 240 Mont. at 307, 783 P.2d
at 1355. Skinner, however, is distinguishable from the case at bar.
¶34. Here, the District Court considered the property distribution, the history of this
case, and the parties' assets in ruling that Roberta and Jack should pay their own
attorney's fees and costs. This is a clear indication of the District Court's reasoning in
ruling that each party should pay their own attorney's fees. See Voelkel, 226 Mont. at
147, 734 P.2d at 220. Furthermore, unlike the appellant in Skinner who could afford
to pay the attorney's fees, the record in the instant case shows that Jack had trouble
paying his own attorney's fees. Thus, after reviewing the record, we hold that the
District Court did not abuse its discretion in requiring each party to pay their own
attorney's fees.
¶35. With regard to the Special Master's fees, the District Court noted that Roberta
and Jack agreed to have the case heard by a special master. In addition, the record
shows that Roberta did not object to paying half of the Special Master's fees until one
year after the District Court issued its order stating that Roberta and Jack were to
share the Special Master's fee equally. Thus, we hold that the District Court did not
abuse its discretion in requiring Roberta to pay half of the Special Master's fees.
Conclusion
¶36. We hold that the District Court did not err in ruling that Roberta did not file
timely objections to the Special Master's Final Report, in awarding custody and
visitation without having an independent family evaluation conducted, or in
requiring Roberta to pay her own attorney's fees and half of the Special Master's
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fees. Because Roberta did not file timely objections to the Special Master's Final
Report, we do not reach the issues regarding Jack's income for child support
purposes, the distribution of the marital estate, maintenance, or her disability.
Moreover, we will not consider Roberta's argument that the District Court erred by
appointing a special master because she raises this issue for the first time on appeal
and we will not consider her argument regarding scope of the Special Master's
appointment because she failed to make a timely objection in District Court.
¶37. Affirmed.
/S/ JAMES C. NELSON
We Concur:
/S/ KARLA M. GRAY
/S/ WILLIAM E. HUNT, SR.
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-605_(11-12-98)_Opinion_.htm (11 of 11)4/20/2007 10:46:59 AM
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NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2380-16T3
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
MARKEL FOWLKES, a/k/a
JOSH WILLIAMS,
Defendant-Appellant.
________________________________________________
Submitted November 1, 2017 – Decided November 15, 2017
Before Judges Yannotti and Mawla.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Indictment No.
08-12-2191.
Joseph E. Krakora, Public Defender, attorney
for appellant (Frank M. Gennaro, Designated
Counsel, on the brief).
Esther Suarez, Hudson County Prosecutor,
attorney for respondent (Kerry J. Salkin,
Assistant Prosecutor, on the brief).
PER CURIAM
Defendant Markel Fowlkes appeals from an order entered by the
Law Division on December 1, 2016, which denied his petition for
post-conviction relief (PCR). We affirm.
Defendant was charged with one count of second-degree
robbery, contrary to N.J.S.A. 2C:15-1. The trial court conducted
a hearing on February 7, 2011, and determined that defendant was
competent to stand trial.
On February 16, 2011, defendant pled guilty. The State agreed
to recommend a sentence of ten years of incarceration with an
eighty-five percent period of parole ineligibility, pursuant to
the No Early Release Act (NERA), N.J.S.A. 2C:43-7.2, to run
consecutively with a sentence defendant was already serving for
an unrelated crime. At the plea hearing, defendant admitted that
on April 12, 2008, he entered a hardware store in Jersey City,
demanded money from an attendant there, and shook and struck her,
causing injury.
During the hearing, the judge stated that he would impose an
eight-year sentence, with a NERA parole disqualifier, that would
run concurrently with his previously-imposed sentence. The judge
asked defendant if he understood the plea agreement, and defendant
replied, "Eight with eighty-five." When the court replied
affirmatively, defendant said, "Yes." Later on, after taking
defendant's testimony on the factual basis for the plea, the judge
asked whether defendant still wished to plead guilty. He replied,
"To eight, right?" Defendant confirmed that he wanted to take the
plea. The judge stated he was satisfied defendant pled guilty
2 A-2380-16T3
freely and voluntarily, understood what he was doing, waived his
rights, and understood the sentence that could be imposed.
Defendant's attorney then raised the issue of the concurrent
sentence, and defendant asked whether the thirty-one months he had
already served for the previous offense "don't count" towards the
new robbery sentence. Counsel told the judge, "I explained to him
that he will get gap time for [the prior sentence], no[t] jail
credit because he [cannot] get jail credit while serving a State
prison sentence." Defendant said, "It's concurrent, right?" The
judge replied, "[I]t'll be concurrent from now on."
Defendant also completed plea forms in which he indicated
that he understood he would be subject to the eighty-five percent
NERA parole disqualifier and a three-year term of parole
supervision. At the hearing, defendant confirmed that his attorney
had read the questions on the form to him, and that he understood
those questions. However, when asked whether he felt his attorney
had done "the best that she could for [him]," defendant answered,
"No."
On April 7, 2011, the court sentenced defendant in accordance
with its statement at the plea hearing. The court gave defendant
910 days of gap time credit. Defendant appealed from the judgment
of conviction dated April 8, 2011. The case was heard on our
3 A-2380-16T3
excessive sentence oral argument calendar. R. 2:9-11. We entered
an order dated April 17, 2012, affirming the sentence.
Thereafter, defendant filed a pro se petition for PCR,
alleging he was denied the effective assistance of counsel. Counsel
was appointed for defendant, and counsel filed an amended petition
and supporting certification. Defendant claimed his attorney was
ineffective because she told him he would be given jail credits
against his robbery sentence for the time he had already served
on his prior sentence.
Defendant stated that his attorney did not tell him he would
receive gap time credits instead of jail credits until shortly
before the plea hearing. Defendant said his attorney did not
adequately explain that this meant he would be required to serve
eighty-five percent of the robbery sentence. He also asserted that
his counsel was ineffective because she did not explain that he
would be subject to three years of parole supervision.
The PCR court granted defendant's request for an evidentiary
hearing and conducted the hearing on September 29, 2016.
Defendant's attorney testified that she had discussed the plea
forms with defendant prior to the plea hearing. She asked him each
question and circled the answers for him. The plea documents
included the forms dealing with NERA and parole supervision.
4 A-2380-16T3
Counsel stated that defendant had been "engaged" with her while
they reviewed the forms.
Defendant's attorney further testified that she told
defendant the plea would require him to complete eighty-five
percent of his sentence and she explained what parole supervision
would entail. Counsel also stated that she explained the
differences between jail credits and gap time credits, and told
defendant he would only be entitled to the latter.
Defense counsel advised defendant that nevertheless, a
sentence concurrent with the sentence he was already serving would
be "beneficial" to him. She stated that throughout her conversation
with defendant about the plea, she believed he understood what she
told him. When defendant asked questions, she tried to respond in
a manner so that he would understand the consequences he faced.
On December 1, 2016, the PCR judge denied defendant's petition
in a written opinion. The judge found that defendant had not
established a claim of ineffective assistance of counsel. The
judge stated that defendant had completed the forms for NERA cases,
indicating that he knew he would be required to serve eighty-five
percent of his sentence and would be subject to parole supervision.
The PCR judge noted that at the plea hearing, the trial judge
had reviewed those forms with defendant. The judge concluded that
there was "no evidence in the record to suggest" that counsel "did
5 A-2380-16T3
not review the nature and consequences [with defendant]," or that
the judge at the plea hearing "failed to ensure that [defendant]
understood the consequences of the plea."
In addition, the judge found that defendant's attorney spent
sufficient time explaining jail credits and gap time credits to
defendant. Finally, the judge found that because defendant was
sentenced to a concurrent eight-year term instead of the ten-year
consecutive sentence he potentially faced at trial, he had not
shown that he would not have pled guilty but for counsel's alleged
errors. The judge entered an order dated December 1, 2016, denying
PCR. This appeal followed.
On appeal, defendant argues that the PCR court improperly
denied his PCR petition. Defendant argues that his plea attorney
did not properly inform him that gap time credits would not reduce
the period of parole ineligibility that the court would impose for
his robbery conviction. He contends he did not understand how
concurrent sentences and gap time credits work, and that his plea
counsel did not explain these issues adequately. Defendant further
argues that his attorney did not explain that his plea included a
three-year period of parole supervision.
To succeed on his PCR claim of ineffective assistance of
counsel, a defendant must meet the test established by Strickland
v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 2064, 80 L. Ed.
6 A-2380-16T3
2d 674, 693 (1984), and adopted by our Supreme Court in State v.
Fritz, 105 N.J. 42, 58 (1987). Under Strickland, the defendant
must show that counsel's performance was deficient and, if it was,
that there was a "reasonable probability that, but for counsel's
unprofessional errors, the result of the proceeding would have
been different." Strickland, supra, 466 U.S. at 694, 104 S. Ct.
at 2068, 80 L. Ed. 2d at 698.
Where, as here, the defendant claims he was denied the
effective assistance of counsel with regard to a guilty plea, the
defendant must establish that counsel's performance was not
"within the range of competence demanded of attorneys in criminal
cases." State v. DiFrisco, 137 N.J. 434, 457 (1994) (quoting
Tollett v. Henderson, 411 U.S. 258, 266, 93 S. Ct. 1602, 1608, 36
L. Ed. 2d 235, 243 (1973)). The defendant also must show "there
is a reasonable probability that, but for counsel's errors, [the
defendant] would not have pled guilty and would have insisted on
going to trial." Id. at 457 (quoting Hill v. Lockhart, 474 U.S.
52, 59, 106 S. Ct. 366, 370, 88 L. Ed. 2d 203, 210 (1985)).
The record supports the PCR's court's determination that
defendant failed to establish he was denied the effective
assistance of counsel with regard to his plea. As the judge
explained, the plea forms that defendant executed show that he was
aware he would have to serve at least eighty-five percent of his
7 A-2380-16T3
eight-year prison sentence and that he would be subject to a
mandatory three-year period of parole supervision after he
completed serving that sentence.
Moreover, at the plea hearing, defendant told the judge he
understood his sentence would be "[e]ight with eighty-five," and
he did not disagree when his attorney stated that she had told him
that he was not eligible for jail credits for days served on his
prior sentence. There is no evidence that defendant's attorney
failed to adequately explain the plea and its consequences to
defendant.
Furthermore, defendant has not shown the result of the
proceeding would have been different if he had refused to enter
the plea. As the PCR judge noted in her opinion, defendant was
facing a second-degree robbery charge, which carried a maximum
sentence of ten years. That sentence could have run consecutively
with the sentence defendant was then serving.
Defendant only offered his bare assertion that he would not
have pled guilty if he had known that he would not get jail credits
for the time he was serving on the other offense, or that he would
have had a three-year period of parole supervision after serving
the sentence on the robbery charge. The PCR judge noted that
defendant's claim was refuted by the plea form for NERA cases.
8 A-2380-16T3
Moreover, the PCR judge pointed out in her opinion that
defendant received a sentence from the court, which was more
favorable than the sentence the State had initially agreed to
recommend. As noted previously, the State had agreed to recommend
a ten-year prison sentence, with a NERA period of parole
ineligibility, consecutive to the sentence defendant was then
serving. As the judge observed, it was unlikely defendant would
have refused to plead guilty in view of the risk that he could be
found guilty and sentenced to a ten-year prison term, consecutive
to the sentence he was already serving.
We therefore conclude that there is sufficient credible
evidence in the record to support the PCR court's findings and its
determination that defendant had not shown he was denied the
effective assistance of counsel in connection with his guilty
plea.
Affirmed.
9 A-2380-16T3
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646 F.3d 1038 (2011)
UNITED STATES of America, Appellee,
v.
Kendrick BUTLER, Appellant.
No. 10-2901.
United States Court of Appeals, Eighth Circuit.
Submitted: April 15, 2011.
Filed: July 22, 2011.
*1039 John Bishop, argued, Cedar Rapids, IA, for appellant.
Matthew Jeremy Cole, AUSA, argued, Rebecca Goodgame Ebinger, AUSA, on the brief, Cedar Rapids, IA, for appellee.
Before WOLLMAN, GILMAN,[1] and MELLOY, Circuit Judges.
*1040 WOLLMAN, Circuit Judge.
A jury found Kendrick Butler guilty of six counts of bank fraud, in violation of 18 U.S.C. §§ 2 and 1344. The district court sentenced him to 80 months' imprisonment. He appeals, arguing that the district court erred by applying (1) a two-level increase for possession or use of any device-making equipment or the production or trafficking of any unauthorized access device or counterfeit access device, U.S.S.G. § 2B1.1(b)(10) (2009); and (2) a three-level increase for his aggravating role as a manager or supervisor, id. § 3B1.1(b). We vacate Butler's sentence and remand to the district court to resentence him without the enhancement under § 2B1.1(b)(10).
I. Background
In January 2007, Butler became involved in a bank-fraud scheme that was controlled by Lasean Lyles and Darrell Sanders. Butler's role in the bank fraud was to recruit other individuals to cash counterfeit checks, the proceeds of which would be shared among the recruited individual, Butler, Lyles, Sanders, and other co-schemers. Butler recruited a minor (D.M.), Sara Kimball, Eric Wicks, and Carrie Campbell. During Butler's trial, D.M. testified that he did not believe that "there was something wrong," Trial Tr. vol. 2, 227:8, until he cashed his third check for the scheme. Kimball testified that initially she believed that the scheme was fraudulent, but cashed a check anyway after being threatened by another individual. Wicks testified that he believed that the first check that he cashed was legitimate and was assured by Lyles that the second check was legitimate as well. Campbell testified that she had not known that the checks she cashed were fraudulent. The jury convicted Butler of six counts of bank fraud. He does not appeal his conviction.
At the sentencing hearing, the district court determined that Butler's offense level was twenty, including: (1) a two-level increase for possession or use of any device-making equipment or the production or trafficking of any unauthorized access device or counterfeit access device, U.S.S.G. § 2B1.1(b)(10); and (2) a three-level increase for his aggravating role as a manager or supervisor, id. § 3B1.1(b). After calculating Butler's advisory guidelines range to be 70 to 87 months' imprisonment, the district court imposed an 80-month sentence, to be followed by five years' supervised release. The district court ordered Butler to pay a $600 special assessment and restitution of $12,982.00, jointly and severally with Lyles and Sanders.
II. Discussion
A. Device-Making Equipment Enhancement § 2B1.1(b)(10)
The government concedes that the district court erred in applying the § 2B1.1(b)(10) enhancement. Section 2B1.1(b)(10) increases a defendant's offense level by two levels if the offense involved: (A) the possession or use of any "device-making equipment," which is defined as "any equipment, mechanism, or impression designed or primarily used for making an access device or a counterfeit access device;" or (B) the production or trafficking of any unauthorized access device or counterfeit access device. See U.S.S.G. § 2B1.1(b)(10), cmt. n. 9 (citing 18 U.S.C. § 1029(e)). "Access device" is defined as "any card, plate, code, account number, [or] electronic serial number . . . (other than a transfer originated solely by *1041 paper instrument)." 18 U.S.C. § 1029(e)(1). Thus, U.S.S.G. § 2B1.1(b)(10) cannot be applied to offenses that involve a transfer originated solely by paper instrument, i.e., a scheme limited to fraudulent check-cashing. The Fifth Circuit has recognized that the exclusion of transfers "originated solely by paper instrument . . . unambiguously places the passing of bad checks and similar conduct outside the scope of [§ 1029]." United States v. Hughey, 147 F.3d 423, 434 (5th Cir.1998). Similarly, the Tenth Circuit has held that a scheme limited to passing counterfeit checks with bank account numbers printed thereon is outside the statutory definition of an access device and thus does not involve the use or possession of device-making equipment under U.S.S.G. § 2B1.1(b)(10)(A) nor trafficking or producing access devices under § 2B1.1(b)(10)(B). United States v. Tatum, 518 F.3d 769, 772-73 (10th Cir.2008). We thus conclude that the district court erred in applying § 2B1.1(b)(10) to Butler's fraudulent check-cashing scheme.
B. Aggravating Role Enhancement U.S.S.G. § 3B1.1(b)
Butler contends that the district court erred in applying U.S.S.G. § 3B1.1(b) to enhance his offense level because the individuals he recruited did not qualify as participants and thus he could not have been a manager or supervisor. Section § 3B1.1(b) increases a defendant's offense level by three levels if the defendant was a manager or supervisor and the criminal activity involved five or more participants. To qualify for the adjustment, the defendant must have been the "manager[] or supervisor of one or more other participants," § 3B1.1(b), cmt. n. 2; a "participant" is "a person who is criminally responsible for the commission of the offense, but need not have been convicted," § 3B1.1(b), cmt. n. 1. We review the district court's application of the sentencing guidelines de novo, and its factual findings for clear error. United States v. Durham, 618 F.3d 921, 924 (8th Cir.2010). The district court's credibility determinations are "virtually unreviewable on appeal." United States v. Garcia, 512 F.3d 1004, 1006 (8th Cir.2008). It is undisputed that the criminal activity involved five or more participants and that D.M., Kimball, Wicks, and Campbell had not been convicted.
Butler asserts that the district court erred in finding that D.M., Wicks, and Campbell were participants under § 3B1.1(b) because they did not knowingly act or intend to defraud during the scheme and thus are not persons who are criminally responsible for the commission of bank fraud. To be criminally responsible for bank fraud, a person must "knowingly" execute a scheme "to defraud a financial institution" or to obtain money from a financial institution "by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1344. However, a "defendant's willful blindness may serve as the basis for knowledge if, in light of certain obvious facts, reasonable inferences support a finding that a defendant's failure to investigate is equivalent to burying one's head in the sand." United States v. Chavez-Alvarez, 594 F.3d 1062, 1067 (8th Cir.2010) (internal quotation marks omitted); see also Global-Tech Appliances, Inc. v. SEB S.A., ___ U.S. ___, 131 S.Ct. 2060, 2068-71, 179 L.Ed.2d 1167 (2011). Willful blindness is a limited exception to the requirement of actual knowledge and may be found only if the defendant was "aware of facts that put him on notice that criminal activity was probably afoot and deliberately failed to make further inquiries, intending to remain ignorant." Chavez-Alvarez, 594 F.3d at 1067.
*1042 The district court did not clearly err in finding that the recruited individuals knew or were willfully blind to the fraud. During the sentencing hearing, the district court found that their testimony that they did not know the scheme was fraudulent was "simply not credible." Sentencing Tr. 21:5. It stated that "when somebody gives you a check with your name on it and you know you've done nothing to entitle you to that money, how could you not know it's illegal?" Id. at 21:16-19. Butler's counsel offered a response that some of the recruits may have thought that the checks were prepayment for future wages, to which the district court replied "I don't believe that they actually believed that. And if they did believe it, it was because they convinced themselves and because the defendants were smooth-talking." Id. at 24:25-25:3. The district court found that "it was willful blindness, at best, or they just knew it was illegal, at worst. So they're criminally responsible, in my view," id. at 25:4-6.
The record supports the district court's determination. The recruits testified that they provided their personal information to Butler, who forwarded it to his co-schemers for addressing the fraudulent checks. The recruits knew that they had not earned the money nor had any other relationship to the businesses that supposedly issued the checks. The recruits received only part of the money from the cashed checks, while Butler and his co-schemers divided the rest. Thus, the district court did not clearly err in finding that the recruits were criminally responsible and thus were participants, U.S.S.G. § 3B1.1, cmt. n. 1.
Butler's argument that Kimball acted under duress and thus was not a participant is similarly unpersuasive. Kimball did not have "a well-grounded fear of immediate death or serious bodily harm" if she refused to cash the checkshe was undecided whether she would cash the first check after being threatened, and the person that had threatened her was not present the following day when she cashed that check. See United States v. Ceballos, 605 F.3d 468, 471 (8th Cir.2010). And she had a "reasonable opportunity" to avoid cashing the check "without facing that danger." Id. She faced no consequences when she refused to cash additional checks. Id. Kimball was thus properly considered a participant. We conclude that the district court properly applied the aggravating role enhancement under § 3B1.1(b).
III. Conclusion
We reverse the district court's application of U.S.S.G. § 2B1.1(b)(10) and affirm its application of § 3B1.1(b). The sentence is vacated, and the case is remanded for resentencing consistent with this opinion.
NOTES
[1] The Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit Court of Appeals, sitting by designation.
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249 P.3d 596 (2011)
2011 UT App 63
LINDON CITY, Plaintiff and Appellee,
v.
Raymond STEWART, Defendant and Appellant.
No. 20110036-CA.
Court of Appeals of Utah.
March 10, 2011.
Raymond Stewart, Draper, Appellant Pro Se.
Brian K. Haws, Pleasant Grove, for Appellee.
Before Judges McHUGH, THORNE, and CHRISTIANSEN.
DECISION
PER CURIAM:
¶ 1 Raymond Stewart seeks to appeal his conviction for speeding after a trial de novo in district court. This is before the court on Lindon City's motion to dismiss for lack of jurisdiction.
¶ 2 Utah Code section 78A-7-118 provides for criminal appeals from justice courts. See Utah Code Ann. § 78A-7-118 (2008). If a defendant files a timely notice of appeal from a justice court conviction, "a defendant is entitled to a trial de novo in the district court." Id. § 78A-7-118(1). "The right to an `appeal' from a court not of record is satisfied by provision for a trial de novo in a court of record." Dean v. Henriod, 1999 UT App 50, ¶ 9, 975 P.2d 946. "The decision of the district court is final and may not be appealed unless the district court rules on the constitutionality of a statute or ordinance." Utah Code Ann. § 78A-7-118(7).
¶ 3 This case originated in justice court. The district court did not rule on the constitutionality of a statute or ordinance in convicting Stewart after a trial de novo. Accordingly, the district court's decision is final and this court lacks jurisdiction over this appeal.
¶ 4 Dismissed.
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Case: 19-30238 Document: 00515349218 Page: 1 Date Filed: 03/18/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 19-30238 FILED
Summary Calendar March 18, 2020
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
ANTHONY JOSEPH MEAUX,
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:17-CR-179-1
Before WIENER, COSTA, and ENGELHARDT, Circuit Judges.
PER CURIAM: *
Defendant-Appellant Anthony Joseph Meaux appeals his conviction for
possession of a firearm by a convicted felon. He challenges the denial of a
motion to suppress, contending that the warrantless search of his girlfriend’s
car, where the gun was found in the trunk, violated the Fourth Amendment.
The search was conducted by his parole officer, Brad Poole, pursuant to a
* 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: 19-30238 Document: 00515349218 Page: 2 Date Filed: 03/18/2020
No. 19-30238
condition of Meaux’s parole which allowed vehicle searches on reasonable
suspicion that he was engaging or had engaged in criminal activity.
We review the district court’s factual findings for clear error and its
conclusions on the constitutionality of the search de novo. United States v.
Powell, 732 F.3d 361, 369 (5th Cir. 2013). We view the evidence in the light
most favorable to the prevailing party, here the Government. See id. We may
affirm the ruling “on any basis established by the record.” Id. (internal
quotation marks and citation omitted).
Meaux’s reasonable expectation of privacy in the car, which he drove by
himself to a meeting with Poole, was significantly diminished by his knowing
agreement to the parole condition imposed in accordance with state law. See
LA. R.S. § 15:574.4.2(A)(2)(i) (2015); Samson v. California, 547 U.S. 843, 852
(2006); United States v. Knights, 534 U.S. 112, 114, 119-20 (2001). Given his
diminished privacy interest, the likelihood that he would recidivate as a
parolee, the State’s overwhelming interest in ensuring that he was
apprehended for any crimes committed while on parole, and its interest
promoting his reintegration into society through reduced recidivism, the
warrantless search of the vehicle was lawful if supported by reasonable
suspicion that Meaux was engaging or had engaged in criminal activity. See
Samson, 547 U.S. at 852-55, 857; Knights, 534 U.S. at 119-21.
We conclude that reasonable suspicion supported the search based on
the following: Poole’s possession of an active warrant for Meaux’s arrest on a
charge of unauthorized use of a vehicle; a tip Poole received from detectives
with the Crowley Police Department that Meaux was the suspect in a recent
armed robbery; Poole’s knowledge of Meaux’s history of armed robbery charges
and simple robbery convictions; Poole’s long relationship with Meaux and 15
years of experience as a parole officer; and Poole’s observation that Meaux was
2
Case: 19-30238 Document: 00515349218 Page: 3 Date Filed: 03/18/2020
No. 19-30238
uncharacteristically nervous and unusually insistent that his girlfriend pick
up her car immediately from the parole office when Poole arrested him on the
warrant, which caused Poole to suspect that there was evidence of a crime in
the car. See Griffin v. Wisconsin, 483 U.S. 868, 879 (1987); United States v.
Taylor, 482 F.3d 315, 319 (5th Cir. 2007); United States v. Keith, 375 F.3d 346,
351 (5th Cir. 2004).
Contrary to Meaux’s contentions, Poole’s authority to conduct the parole
search was not limited to the passenger compartment of the vehicle. The
relevant condition of parole authorized a search of the “vehicle” on reasonable
suspicion that Meaux was engaging or had engaged in criminal activity. The
condition itself is a “salient circumstance” in determining the reasonableness
of the search. Knights, 534 U.S. at 118-20; see also Samson, 547 U.S. at 852
(assessing reasonableness of the search according to terms of parole search
condition).
Neither was Poole prohibited from relying on a secondhand tip from the
Crowley detectives that Meaux was involved in a recent armed robbery. See
Griffin, 483 U.S. at 879-80 (determining that it is reasonable for a probation
officer to rely on “information provided by a police officer, whether or not on
the basis of firsthand knowledge, to support a probationer search”) (footnote
omitted); United States v. Williams, 880 F.3d 713, 720 (5th Cir.), cert. denied,
138 S. Ct. 2590 (2018) (noting that tips from other law enforcement officers are
sufficient to provide reasonable suspicion for a probation search). Poole’s
purpose for conducting the search was irrelevant. See Knights, 534 U.S. at
122; United States v. Causey, 834 F.2d 1179, 1184-85 (5th Cir. 1987) (en banc).
We conclude that the search of the car’s trunk was a lawful parole search,
so we need not consider the reasonableness of the search on any other ground
3
Case: 19-30238 Document: 00515349218 Page: 4 Date Filed: 03/18/2020
No. 19-30238
raised by the Government or implicated by the facts. See Powell, 732 F.3d at
369. The judgment of the district court is AFFIRMED.
4
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954 So.2d 1227 (2007)
Aaron CECEMSKI, Appellant,
v.
Ashly Ann CECEMSKI, Appellee.
No. 2D06-2391.
District Court of Appeal of Florida, Second District.
April 20, 2007.
J. Christopher Lombardo and Jennifer L. DeVries of Woodward, Pires & Lombardo, P.A., Naples, for Appellant.
No appearance for Appellee.
VILLANTI, Judge.
Aaron Cecemski appeals the relocation granted in the final judgment of dissolution of his marriage to Ashly Cecemski. Mr. Cecemski does not challenge the dissolution of marriage itself, the trial court's decisions regarding child support or shared parental responsibility, its designation of Mrs. Cecemski as the primary residential parent, or related matters.[1] Mr. Cecemski challenges only the trial court's decision to allow Mrs. Cecemski to relocate from Marco Island, Florida, to Louisiana[2] with the couple's then two-year-old daughter.[3]*1228 Because the trial court's decision to grant relocation was not supported by competent substantial evidence, we reverse.
In deciding a request for relocation, including a request made prior to a final judgment of dissolution, section 61.13(2)(d), Florida Statutes (2005),[4] requires a trial court to consider the following factors:
1. Whether the move would be likely to improve the general quality of life for both the residential parent and the child.
2. The extent to which visitation rights have been allowed and exercised.
3. Whether the primary residential parent, once out of the jurisdiction, will be likely to comply with any substitute visitation arrangements.
4. Whether the substitute visitation will be adequate to foster a continuing meaningful relationship between the child and the secondary residential parent.
5. Whether the cost of transportation is financially affordable by one or both parties.
6. Whether the move is in the best interests of the child.
See Borchard v. Borchard, 730 So.2d 748, 749-50 (Fla. 2d DCA 1999); Kuntz v. Kuntz, 780 So.2d 1022, 1023 (Fla. 4th DCA 2001). Under section 61.13(2)(d), there is no presumption in favor of, or against, relocation. Further, although the record must reflect that the trial court considered the statutory factors, section 61.13(2)(d) does not require the court to make specific findings regarding the factors. Mian v. Mian, 775 So.2d 357, 359 n. 2 (Fla. 2d DCA 2000).
Here, it is readily apparent that the trial court considered the six statutory factors because it commendably expressly noted each factor in the final judgment. On appeal, we cannot reweigh the evidence considered by the trial court. See Kuntz, 780 So.2d at 1023. Instead, we must affirm if substantial competent evidence exists to support the trial court's decision. See Berrebbi v. Clarke, 870 So.2d 172, 173 (Fla. 2d DCA 2004) (reversing an order granting relocation because the trial court's findings were not supported by substantial competent evidence); Kuntz, 780 So.2d at 1023 (affirming a decision denying relocation because the trial court's findings were supported by substantial competent evidence). However, after a thorough review of the record on appeal, we find that the facts in virtually every pertinent matter of consequence do not provide substantial competent evidence to support the trial court's findings, and hence, it was reversible error to grant the request for relocation. We note that factual findings often provide support for more than one statutory factor, but under the facts of this case, it is not necessary for us to address which finding pertains to which factor; the net result is that the trial court's ultimate conclusionthat the move was in the child's best interestis *1229 simply not justified by the evidence presented.
For example, in its first pertinent finding, the trial court found that Mrs. Cecemski could not "afford to rent her own apartment" and that "there is little affordable housing available on Marco Island." However, the trial transcript reveals no evidenceexpert testimony, lay testimony, stipulation, judicial notice, or otherwise regarding the housing market on Marco Island. Therefore, the trial court's assessment of Marco Island's affordable housing market, even if it seems intuitively correct, is supposition or conjecture, which axiomatically cannot support the conclusion that Mrs. Cecemski could not afford to rent her own apartment.
The trial court further found that the child's general quality of life would improve by relocating to Louisiana because Mrs. Cecemski "would be able to be gainfully employed, living in a home with her grandmother, and the child would be enrolled in a daycare program at a much earlier time" than if they were to stay in Marco Island. On the contrary, Mrs. Cecemski testified that she did not have a job lined up in Louisiana nor had she even applied for any jobs in Louisiana. In fact, she anticipated taking a job in Louisiana that paid significantly less than her existing job in Marco Island.
Moreover, although Mrs. Cecemski testified that she planned to live rent-free with her nontestifying grandmother, the grandmother's house was located next door to Mrs. Cecemski's parents' house. This is problematic because the trial court also found that Mrs. Cecemski's parents were drug users with whom the minor child would not be permitted to visit without the presence of "an appropriate qualified professional, non-family third party visitation facilitator."[5] The trial court did not arrange for the appointment of such a facilitator nor were the parties ordered to obtain the court's approval for their own chosen facilitator. Further, regardless of this omission, the trial court made no findings as to the affordability or viability of such a facilitator, and enforcement and jurisdictional issues would still remain. Thus, such uncontrolled proximity to Mrs. Cecemski's parents was not likely to foster an improved quality of life for the child.
In considering the fourth statutory factor of whether a substitute visitation schedule would "foster a continuing meaningful relationship between the child and [Mr. Cecemski]," the trial court discussed at considerable length both parties' drug use and then found that a particular substitute visitation schedule "should be implemented" without specifying how or why the substitute schedule related to the parties' drug use. The visitation schedule provided that, every six weeks until the child turns five years old, Mrs. Cecemski was to drive south from Louisiana with the child, and Mr. Cecemski was to drive north from Marco Island. After driving for seven to eight hours each, the parties would meet halfway, "probably in the Florida Panhandle area," so Mr. Cecemski could spend the weekend with the child. The *1230 trial court defined the weekend period as extending from 9 a.m. on Saturday through 7 p.m. on Sunday. In between these weekend visits, "to further facilitate visitation and contact," Mrs. Cecemski was to send videotapes and pictures of the child to Mr. Cecemski, the parties were to "attempt to obtain videocams for their computers to effectuate `videocam' visitation," and Mrs. Cecemski was to "coordinate frequent and liberal telephone contact" between the child and Mr. Cecemski. The trial court also suggested that Mr. Cecemski could videotape himself reading stories and then Mrs. Cecemski could play the tapes for the child. More important, there was no evidence to support the trial court's underlying assumption that the parties could realistically overcome the obvious obstacles associated with complying with the visitation scheme's framework, such as time, distance, finances, computer and videocam access or ownership, and work schedules; nor was there any evidence suggesting that such a substitute visitation scheme would generally be in the child's best intereststhe sixth factor of section 61.13(2)(d), acting as a linchpin, summarizing the other five factors.
Neither does the final judgment expressly find that this substitute visitation schedule would foster a continuing meaningful relationship, and based on the record before us, we do not see how the trial court could have made such a finding. The testimony was clear that both parties have very limited financial resources. Consequently, here, a recurring weekend visitation getaway to the Florida Panhandle from Marco Island and Louisiana, among other things, is a concept that seems more impractical than practical. For example, as argued by Mr. Cecemski compliance with the trial court's order, at a minimum, would entail both parties renting hotel rooms for Saturday night or making the drive home and back, requiring expensive fuel and eating up precious visitation time; they may also need hotel rooms for Friday night and Sunday night unless they planned to drive the seven to eight hours overnight before beginning the weekend at 9 a.m. on Saturday and after ending the visitation at 7 p.m. on Sunday. In addition, Mr. Cecemski would need to plan father/daughter activities, some of which would likely cost money that he cannot afford. This particular schedule with its long drives and short visits is not likely to foster any type of meaningful relationship between the child and Mr. Cecemski. See Doherty v. Padgett, 942 So.2d 464, 465 (Fla. 2d DCA 2006) (expressing concern that a long drive for a weekend visit was not in the child's best interest).
Further, the plan to meet halfway does not appear to have been proposed by the parties, except to the extent that Mrs. Cecemski, in response to a question posed by her attorney, testified that she would be willing to drive to Marco Island or meet in the middle. Although Mrs. Cecemski makes no appearance in this appeal, she may also be aggrieved by the substitute visitation scheme's infringement on her quality time with her daughter along with what appears to be an impossible financial burden.
In addition to the impractical visitation schedule, there was no evidence to support a finding that videos and phone calls with this child would foster a continuing meaningful relationship in lieu of the traditional visitation the child was enjoying with her father and his family before the substitute visitation schedule was engineered by the trial court. This court has repeatedly held that an adequate substitute visitation schedule is not expected to foster the same type or an equivalent degree of relationship between the child and the secondary residential parent as was occurring before relocation. See Fredman v. Fredman, 917 So.2d 1038, 1041 (Fla. 2d DCA 2006); Buonavolonta *1231 v. Buonavolonta, 846 So.2d 649, 650-51 (Fla. 2d DCA 2003); Wilson v. Wilson, 827 So.2d 401, 403 (Fla. 2d DCA 2002). Rather, the substitute visitation schedule must merely foster a continuing meaningful relationship. Id. Indeed, if relocation required that the same type of relationship be maintained, it is unlikely that relocation would ever be granted. See Fredman, 917 So.2d at 1041; Buonavolonta, 846 So.2d at 651. Here, it is obvious that the substitute visitation schedule will not foster the same type of relationship between the child and Mr. Cecemski. However, it surely will not adequately foster a continuing meaningful relationship either.
In closing, it appears that the trial court struggled with this "sad and difficult" case, searching for the ability to fashion its desired reliefto allow relocation with substitute visitation and at the same time, despite distance, enforcement, financial, and jurisdictional issues, still ensure the child's best interestwithout DCF's involvement or that of its counterpart in Louisiana.
Because there was no substantial competent evidence to support the trial court's decision allowing relocation, it was an abuse of discretion to grant Mrs. Cecemski's request for relocation. Accordingly, we reverse and remand for the trial court to enter an order vacating that portion of the final judgment allowing relocation and for further proceedings as appropriate on remand. In all other respects, the final judgment is affirmed.
Reversed in part, affirmed in part, and remanded with instructions.
SILBERMAN and LaROSE, JJ., Concur.
NOTES
[1] The parties stipulated to a settlement of marital personal property and liabilities, which the trial court approved.
[2] Although the final judgment grants relocation to Louisiana in general, we presume that Mrs. Cecemski planned to move to Lake Charles, Louisiana, because she grew up there.
[3] Mrs. Cecemski's motion for relocation was filed after Mr. Cecemski's petition for dissolution. All issues were tried together and determined under the umbrella of the same final judgment for dissolution of marriage.
[4] We note that the requirements provided for by section 61.13(2)(d) were deleted and different requirements were implemented in the newly added section 61.13001, effective October 1, 2006. See ch.2006-245, § 2, Laws of Fla. However, the old requirements of section 61.13(2)(d) apply to the present case because the trial was held on January 17, 2006, and the final judgment for dissolution was rendered on April 19, 2006, prior to the statutory change. See § 61.13001(11)(b), Fla. Stat. (2006).
[5] Unquestionably, the trial court faced numerous issuesjurisdictional and otherwise in attempting to fashion its desired relief. Partially in light of these issues, the trial court noted during the trial that it wanted to get the Department of Children and Family Services (DCF) involved and required a local DCF representative to sit in on the subsequent hearing at which the court announced its partial ruling granting relocation. Despite the parties' lifestyles, the accusations lodged by each party against the other, and certain negative admissions made by each party, the DCF representative stated that she did not anticipate the filing of a dependency action. Nevertheless, albeit with good intentions, the trial court attempted to overcome these insurmountable impediments on its own.
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SUPERIOR C()URT
oFTHE
STATE OF DELAWARE
AB|GAIL M. LEGROW LEoNAR[) L. WlLLlAMs JusTlCE CENTER
JUDGE 500 N. KlNG STREET, SlllTE 10400
WlLMlNGToN, DELAWARE 19801
TELEPHoNE (302) 255-0669
Submitted: March 31, 2017
Decided: June 23, 2017
“J” Jackson Shrum, Esquire Artemio C. Aranilla, II, Esquire
Werb & Sullivan Marshall Dennehey Warner
300 Delaware Avenue, Suite 1300 Coleman & Goggin
Wilmington, DE 19899 P.O. Box 8888
Wilmington, DE 19899
RE: John Vaughn vs. Stillwater Property & Casualty Insurance Co.
C.A. No. NlSC-05-035 AML
Dear Counsel:
The plaintiff, a homeowner Whose residence and personal property Were
damaged in a fire, seeks coverage under a homeowner’s policy on Which his ex-
Wife Was the sole named insured. At the beginning of the policy period, the
plaintiff and the named insured Were married and residing together. On the date of
the fire, however, the plaintiff Was divorced from the named insured and she no
longer resided in the home. The insurance company covered the damage to the
residence, but denied coverage for damage to the plaintiffs personal property
because he Was neither a named insured nor a relative of the named insured on the
date of loss. The insurance company maintained its denial of coverage after the
Vaughn v. Sl‘illwater Properly & Casualty Ins. Co.
June 23, 2017
Page 2
plaintiff submitted a policy amendment adding himself as a named insured. This
case presents two core issues. First, What is the relevant date for determining
coverage under an insurance policy: the effective date of the policy or the date of
loss? Second, if the date of loss is the determinative date, is the policy amendment
retroactive to the date of loss? l conclude the date of loss is the relevant date for
coverage purposes and the policy amendment Was not retroactive. I therefore grant
summary judgment for the insurance company. My reasoning folloWs.
Background
The following facts are undisputed or drawn from the uncontested
documents attached to the parties’ briefs. The parties filed cross-motions for
summary judgment and neither party contends material disputed facts preclude
entry of judgment as a matter of laW.
On December 17, 2009, the plaintiff, John Vaughn, jointly purchased 1803
Belfield Avenue, Wilmington, Delaware (the “Property”) With non-party Samantha
Brocklesby (“Ms. Brocklesby”). Both the plaintiff and Ms. Brocklesby Were
named on the deed and in the mortgage documents associated With the purchase of
the Property.l For unknown reasons, however, only Ms. Brocklesby, Who at the
time Was unmarried, filled out an application for homeowner’s insurance. Ms.
1 D.I. 31, Undisputed Background Facts 11 2.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 3
Brocklesby was the only named insured under the homeowner’s insurance policy
issued for the Property (the “Policy”).Z
The Policy initially was issued by a predecessor-in-interest to the defendant,
Stillwater Property & Casualty Insurance Company (“Stillwater”), and the Policy
annually was renewed. The Policy in effect on the date of the fire covered the
period from December 17, 2013 to December 17, 2014. The premium payments
for the Policy were escrowed through the mortgage company and paid by Vaughn
or Ms. Brocklesby as part of their mortgage.3 The bills for the Policy identified
only Ms. Brocklesby as the named insured, but it is unclear whether bills were
mailed to the Property since the premium payments were escrowed.4
Although Ms. Brocklesby was the only named insured on the Policy until
August 29, 2014, the Policy covered certain others who resided with her.
Specifically, the Policy defined “Insured” as:
(a) You and residents of your household who are:
(1) Your relatives; or
(2) Other persons under the age of 21 and in your care or the care
of a resident of your household who is your relative;
(b) A student enrolled in school full-time . . . provided the student
is under the age of:
(1) 24 and your relative; or
2 Ia'. at 11 3; Def.’s Opening Br. Support Mot. Summ. J. EX. C.
3 Vaughn alleges, and the Court assumes for purposes of the pending motions, that he solely paid
the mortgage
4 Def.’s Opening Br. Support Mot. Summ. J. EX. B.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 4
(2) 21 and in your care or the care of a resident of your household
who is your relative.5
The Policy also defined “You” and “Your” as “the ‘named insured’ shown in the
Declarations and: (1) The spouse; or (2) a Party who, with the ‘named insured’, has
entered into a civil union recognized under Delaware law; If a resident of the same
household.”6
Although they were not married at the time the Policy initially was issued,
Vaughn and Ms. Brocklesby married on December 28, 2012.7 They separated less
than a year later, on or about July 22, 2013, and formally divorced on March 6,
2014.8 Two months later, Vaughn and Ms. Brocklesby’s agreement regarding the
division of assets was entered by the Family Court as an order of that Court (the
“Ancillary Order”).9 It appears Ms. Brocklesby still was residing in the Property
with Vaughn at the time the Family Court entered the Ancillary Order. As to the
Property, the Ancillary Order provided:
The parties are joint owners of [the Property]. The parties agree that
[the Property] shall be [Vaughn’s] property. [Vaughn] does not have
5 Pl.’s Answering Br. Support Mot. Summ. J. EX. B, “Homeowners 3 Special Form.”
6 Def.’s Opening Br. Support Mot. Summ. J. EX. L at STILL0084.
7 Ia'. at EX. A at 1. This is the marriage date listed in the Ancillary Order signed by the parties
and issued by the Family Court. Other documents in the record indicate Vaughn and Ms.
Brocklesby were married on December 28, 2009. See, e.g. id. at Ex. J at 2 (“The mortgage
documents [for the Property], recorded on December 31, 2009, list[] both Mr. Vaughn and Ms.
Brocklesby as husband and wife grantees/owners.”). The discrepancy is not material to this
case’s resolution.
8 Id. at Ex. A at 2; D.I. 31, Undisputed Background Facts 11 4.
9 Def.’s Opening Br. Support Mot. Summ. J. Ex. A.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 5
to pay any monies to [Ms. Brocklesby] for her interest in the
[P]roperty, but [Vaughn] must refinance the mortgage into his sole
name within sixty (60) days of the date of this agreement [Vaughn]
shall also remove [Ms. Brocklesby’s] name from all other debts and
liabilities associated with the [P]roperty within sixty (60) days of the
date of this agreement At the time [Vaughn] removes [Ms.
Brocklesby’s] name from the mortgage, [Ms. Brocklesby] shall sign
the deed to the home into [Vaughn’s] sole name. Until [l\/Is.
Brocklesby’s] name is removed from the mortgage on the home, she
shall be entitled to reside in the home.
If [Vaughn] cannot refinance the mortgage into his sole name within
sixty (60) days, then [the Property] shall immediately be placed on the
market for sale. . . . As long as [Ms. Brocklesby] is residing in the
[P]roperty, [Vaughn] shall pay the mortgage and [Ms. Brocklesby]
shall pay the other ordinary monthly expenses for the home . . . .
Once [Ms. Brocklesby] moves from the home[,] [Vaughn] shall be
solely responsible for all expenses for the home.
lt appears Vaughn was unable to refinance the mortgage into his sole name
within the 60-day time period established in the Ancillary Order, but Vaughn and
Ms. Brocklesby agreed to extend that period.10 Shortly thereafter, on August 3,
2014 (the “Date of Loss”), a fire occurred on the Property, damaging both the
residence and Vaughn’s personal property. On the Date of Loss, Ms. Brocklesby
was not living in the Property, and she and Vaughn were divorced.
Stillwater covered the damage to the residence, but refused Vaughn’s claim
for damage to his personal property and his expenses for alternate living
arrangements, concluding he was not an insured on the Date of Loss. Three weeks
10 See Pl.’s Answering Br. Support Mot. Summ. J. 6-7.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 6
after the Date of Loss, Vaughn contacted the servicing agent for the Policy, who
submitted a “policy change update” adding Vaughn as a named insured.ll The
amended declaration page (the “Amended Declaration”) issued after the policy
change, lists both Vaughn and Ms. Brocklesby as named insureds, indicates the
amendment “added spouse,” and lists the effective date for the amendment as
August 29, 2014.12 Stillwater continued to deny Vaughn’s claim for personal
property damage and living expenses, taking the position that the amendment was
not retroactive and therefore Vaughn could not make a claim under the Policy.
Vaughn then filed this action alleging claims for breach of contract and bad
faith. After the parties completed discovery, they filed cross-motions for summary
judgment. Both parties agreed the case likely could be resolved on summary
judgment and the trial date therefore was removed from the Court’s calendar.
After reviewing the parties’ initial briefs, l sought certain additional submissions
by the parties. More specifically, as a result of the argument Stillwater raised that
Vaughn had named the incorrect party as the defendant, l directed Vaughn to
amend the pleadings to correct that error. l also directed the parties to submit a
statement of undisputed facts along with simultaneous supplemental briefs
addressing what was then (and remains now) the fundamental question in the case:
ll Def.’s Opening Br. Support Mot. Summ. J. Ex. F.
12 Id. at Ex. D.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 7
“under the law, when is coverage under an insurance policy determined: at the
beginning of the policy period, at the date of loss, or at some other date?” After
supplemental briefing and argument, I took the parties’ motions under advisement.
This is my decision resolving those motions.
The Parties’ Contentions
Stillwater argues it is entitled to summary judgment as to both Vaughn’s
claims because he was not an insured on the Date of Loss. Stillwater asserts
Vaughn neither was residing with Ms. Brocklesby at the Property on that date, nor
was he her spouse or relative. Stillwater further argues that the Amended
Declaration is unambiguous and the addition of Vaughn as a named insured was
not effective until August 29, 2014, after the Date of Loss.
Vaughn, on the other hand, argues Stillwater breached the Policy and denied
his claim in bad faith because he met the definition of “Insured” on the Policy’s
effective date, December 17, 2013, and that date is determinative for coverage
purposes. Vaughn alternatively contends that even if coverage is determined as of
the Date of Loss, the Amended Declaration lists him as an insured, and that
amendment plainly was retroactive to the Date of Loss because it merely corrected
an error the parties previously overlooked. At worst, Vaughn argues, the Amended
Declaration is ambiguous and must be interpreted in favor of the insured and
against the Policy’s drafter, Stillwater. Finally, Vaughn asserts that, even if his
Vaughn v. Stillwater Properly & Casualty Ins. Co.
June 23, 2017
Page 8
other arguments fail, he is entitled to summary judgment because it would be
“inequitable, unfair, and unconscionable” not to allow his claim.13
Analysis
Summary judgment should be awarded if “the pleadings, depositions,
answers to interrogatories and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the moving
”14 Where, as here, the parties
party is entitled to a judgment as a matter of law.
have filed cross motions for summary judgment and have not argued an issue of
material fact precludes “disposition of either motion, the Court shall deem the
motions to be the equivalent of a stipulation for decision on the merits based on the
record submitted with the motions.”15
1. Coverage under the Policy is determined on the Date of Loss.
lt is undisputed that Vaughn was an “Insured” under the Policy on its
effective date, December 17, 2013. On that date, Vaughn and Ms. Brocklesby
legally were married and residing in the same household. Eight months later,
however, on the Date of Loss, Vaughn did not meet the definition of “Insured,”
because he was neither Ms. Brocklesby’s spouse nor a relative residing in her
13 Pl.’s Answering Br. Support l\/lot. Summ. J. 14.
“* super. Ct. civ. R. 56(¢).
15 Id. 56(h).
Vaughn v. Stillwater Property & Casualty Ins. C0.
June 23, 2017
Page 9
household. The first question, therefore, is what date applies to a coverage
determination
Stillwater points to decisions of this Court determining insurance coverage
based on circumstances existing on the date of loss, as well as decisions of other
state and federal courts expressly stating that the date of loss is determinative for
coverage purposes.16 Vaughn, although acknowledging “the insurable interest of
the parties to an insurance contract is determined by the facts existing at the time of
”17 argues he had an insurable interest in the Property because he was a
the loss,
mortgagee, co-owner, and resident of the Property. Vaughn, however, then
confusingly argues that “the relevant date for insurance coverage purposes is the
inception date of the policy period . . . .”18
Precedent in both this court and other jurisdictions provides that the date of
loss is the determinative date for purposes of defining the scope of coverage under
an insurance policy.19 Although specifically requested by the Court, Vaughn
16 Def.’S suppl. Br. 2-9.
17 Pl.’s Suppl. Br. 2.
18 Id. at 3. This argument appears to conflate insurable interest and insurance coverage.
19 For example, this Court has considered whether a person was a resident of a household on the
date of loss to determine coverage under an insurance policy. See, e.g. Cullen v. Dua’ley, 2013
WL 422872, at *1 (Del. Super. Jan. 29, 2013); Engerbretsen v. Engerbretsen, 675 A.2d 13, 20
(Del. Super. 1995); Harleysville Mut. Cas. Ins. Co. v. Carroll, 123 A.2d 128, 131 (Del. Super.
1956). Other states and federal courts explicitly have held that the date of loss is the relevant
consideration to determine coverage. See, e.g. Fussell v. AMCO lns. Co., 2013 WL 127675, at
*9 (E.D. Cal. Jan. 9, 2013) (citing numerous California state court decisions determining
insurance coverage based on conditions existing on the date of an accident or loss); Agee v.
Vaughn v. Stillwater Property & Casualty Ins. C0.
June 23, 2017
Page 10
identified no authority to the contrary.20 This rule is both logical and fair, because
it relies on the circumstances existing on the date of loss, without unnecessarily
including people who, due to changed circumstances, no longer meet the
conditions for coverage, while including those who did not meet the conditions for
coverage on the effective date but do as of the date of loss. As the Third Circuit
explained, any other conclusion would “lead to an unreasonable result.”21 A rule
that a party is entitled to coverage as long as he meets the definition of insured at
some point during the policy period would allow insureds to “affect the scope of
their policies,” which could not be the result the parties intended.22
On August 3, 2014, Vaughn was not a named insured, the spouse of the
named insured, or otherwise an “Insured” within the definitions of the Policy. He
argues, however, he was added as a named insured shortly thereafter and that
amendment was retroactive to the Date of Loss. That question requires the Court
to construe the terms of the Policy, specifically the Amended Declaration.
Traveler’s Indem. Co., 264 F. Supp. 322, 328 (W.D. Okla. 1967) (holding that a wife who
divorced the named insured five days before the date of loss was not an insured on the date of
loss and was not entitled to coverage); State Farm Mut. Auto. Ins. C0. v. Quinn, 62 F. App’x 425,
429-30 (3d Cir. 2003); Fireman’s Funa' Ins. C0. v. Freda, 156 A.D.2d 364, 365-66 (N.Y. App.
Div. 1989).
211 See D.I. 27.
21 Qumn, 62 F. App’X at 429.
22 Id.
Vaughn v. Stillwater Property & Casualty Ins. Co.
June 23, 2017
Page 11
2. The Amended Declaration does not bestow coverage retroactively.
Vaughn contends the Amended Declaration, which added him as a named
insured, unambiguously indicates Ms. Brocklesby and Vaughn were “named
insureds under the policy on the date of loss.”23 Stillwater conversely contends the
Amended Declaration unambiguously indicates the amendment adding Vaughn
was not effective until August 29, 2014, some three weeks after the Date of Loss.
Contractual interpretation, including insurance contracts, is a question of law
susceptible to familiar rules.24 lf language in an insurance contract is clear and
unambiguous, that language will be given its plain meaning, and this Court will not
“destroy or twist the words under the guise of construing them.”25 All pertinent
provisions of the policy must be read together.26 A contract is not ambiguous
merely because the parties disagree about its meaning. Rather, this Court will find
ambiguity only when the language at issue fairly is susceptible to two or more
interpretations27
On its face, the Amended Declaration provides that the amendment added a
“spouse,” that is, Vaughn, and that the change was effective August 29, 2014. Put
23 Pl.’s Suppl. Br. 5.
24 Hua'.s'on v. State Farm Mut. Ins. Co., 569 A.2d 1168, 1170 (Del. 1990); Klair v. Reese, 531
A.2d 219, 222 (Del. 1987).
25 Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925, 926 (Del. 1982); see also Johnson
v. Tally Ho, Inc., 303 A.2d 677, 679 (Del. Super. 1973).
26 Keesey v. Dombmwski, 1994 WL 465541, at *3 (Dei. super. July 21, 1994).
27 Rhone-Poulenc Basz`c Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
Vaughn v. Stillwater Property & Casually Ins. Co.
June 23, 2017
Page 12
simply, the only reasonable interpretation of this one-page document is that
Vaughn was added as a named insured effective on that date, Nothing on the face
of the Amended Declaration indicates it is retroactive; the effective date
unambiguously indicates the amendment was prospective. Having concluded the
Amended Declaration is not ambiguous, l cannot apply the principle of contra
proferentem to construe the language in Vaughn’s favor.28 Because the effective
date was after the Date of Loss, the Amended Declaration does not confer
coverage on Vaughn.
3. Principles of “equity” or “fairness” cannot vary the terms of the
unambiguous Policy.
Finally, Vaughn argues it would be unfair and inequitable to interpret the
Policy in a manner that excludes him from coverage because he alone paid all the
mortgage payments, including the escrowed Policy premiums, and the oversight in
omitting him as a named insured was unintentional and unknown to him until after
the Date of Loss. Vaughn argues, in essence, that Stillwater should not be
permitted to accept the Policy premiums but exclude him from coverage.
This argument fails to persuade for a number of reasons. First, Vaughn cites
no authority for his reliance on “equity” to vary the terms of the contract, and the
argument squarely contradicts fundamental principles that parties are bound by the
28 Ambiguous language in an insurance contract is construed against the drafter of the policy.
Steigler v. Ins. Co. ofN. Am., 384 A.2d 398, 400 (Del. 1978).
Vaughn v. Stillwater Property & Casually Ins. Co.
June 23, 2017
Page 13
unambiguous terms of their agreements29 Second, although there is a mechanism
under Delaware law to reform a contract for error, Vaughn did not assert that
claim, nor does this Court have jurisdiction to grant that relief.30 Third, even if
principles of fairness were relevant to issues before the Court, Vaughn has not
pointed to any evidence that Stillwater was aware of the error, but remained silent,
or otherwise acted inequitably to exclude Vaughn from coverage. Even if, as
Vaughn alleges, Stillwater was aware that Vaughn’s name was on the deed and the
mortgage, or that he made the mortgage payments, there is no fair inference to be
drawn that Stillwater knew, at any time before the Date of Loss, that Vaughn was
residing in the Property but not covered under the Policy’s terms.
For the foregoing reasons, Stillwater’s Motion for Summary Judgment is
GRANTED and Vaughn’s Motion for Summary Judgment is DENIED.
IT IS SO ORDERED.
Very truly yours,
Abigai M. LeGrow, J ge
29 ConAgm Foods, lnc. v. Lexingmn lns. Co., 21 A.3d 62, 69 (Del. 2011); Hallowell, 443 A.2d at
926.
311 Monsamo Co. v. Aema Cas. & Surezy Co., 1989 WL 997183, at *1-2 (Del. super sept 29,
1989); Danner v. Hertz Corp., 1985 WL 552292, at *3 (Del. Super. Jan. 15, 1985).
Original to Prothonotary
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172 Ga. App. 492 (1984)
323 S.E.2d 817
FELKER
v.
THE STATE.
68792.
Court of Appeals of Georgia.
Decided September 10, 1984.
Rehearing Denied October 31, 1984.
E. Crawford McDonald, for appellant.
Stephen A. Williams, District Attorney, Steven M. Harrison, *496 Assistant District Attorney, for appellee.
Richard H. Vincent, Robert N. Berg, amici curiae.
BANKE, Presiding Judge.
The appellant, a licensed physician, was convicted of possessing cocaine in violation of the Controlled Substances Act. On appeal, he contends both that licensed physicians are authorized as a matter of law to possess cocaine and that the cocaine which he was accused of possessing should have been excluded due to the alleged illegality of the search which resulted in its seizure.
Detective Jordan of the Dalton Police Department testified that the appellant had been under investigation since 1980 due to his contact with suspected drug smugglers at the Dalton airport. This contact resulted from the appellant's operation of an aviation business at the airport known as General Aviation. Asked by the state's attorney to provide "specifics of the information that you've heard about Dr. Felker in regards to this airport and drug smuggling," Jordan replied, "I have seven pages of information leading to Dr. Felker in relation to other proven known drug smugglers." The only specifics Jordan actually offered, however, were that a maintenance man formerly in the appellant's employ had been arrested and indicted by the federal government on drug charges and that certain aircraft known to have been involved in smuggling had landed at Dalton airport and had proceeded to General Aviation while the appellant was present there. Jordan ultimately denied specific knowledge of any direct involvement by the appellant in drug smuggling activities.
With regard to the events leading to the appellant's arrest, Jordan testified that on the night of January 10, 1984, he received a telephone call from a confidential informant to the effect that "the subject we had been looking for for some time was presently at the airport and him and the stuff we were looking for was there, that we needed to get out there quick." Jordan stated that he had known this informant for about 3-1/2 years and that during that time the informant had provided him with information which he (Jordan) had been able to verify. Based on the tip, Jordan and three other law enforcement officers proceeded immediately to the airport, where they observed two cars, a Datsun 280 ZX and a Volkswagen Rabbit, parked in front of the General Aviation building. The Datsun 280 ZX was recognized as having the same appearance as one belonging to the appellant. Jordan then phoned his informant to obtain "a little bit more information," and was informed specifically that the appellant "was there at General Aviation and was in possession of cocaine." In the *493 meantime, the two automobiles under surveillance in front of the General Aviation office left the vicinity of the airport.
The appellant's car was followed and was observed shortly thereafter parked in front of his medical office, which was the scene of a gathering of several persons. The appellant was subsequently detained as he was attempting to drive away from the office. A search of his person and vehicle resulted in the discovery of a nasal spray bottle containing cocaine, as well as a straw, a surgical knife, and a pocket knife containing cocaine residue. During the course of this search the appellant stated that he was entitled to possess cocaine and that he had more cocaine in his office. Based on this admission, a warrant was obtained for the search of his medical office. This search resulted in the discovery of three bottles in the appellant's desk drawer labeled "Cocaine, Hydrochloride Merck." Two of these bottles contained cocaine. Held:
1. We reject the appellant's apparent contention that a licensed physician is authorized under all circumstances to possess controlled substances. It is unlawful, under the Controlled Substances Act, for "any person" to possess or have under his control any controlled substance, "[e]xcept as authorized by this article." OCGA § 16-13-30 (a). One such exception, created by OCGA § 16-13-35 (b), is applicable to persons registered by the State Board of Pharmacy to manufacture, distribute, dispense, or conduct research with controlled substances, "to the extent authorized by their registration and in conformity with this article." (Emphasis supplied.) Pursuant to OCGA § 16-13-35 (g) (2), "[p]ersons licensed as a physician, dentist, or veterinarian under the laws of the state to use, mix, prepare, dispense, prescribe and administer drugs in connection with medical treatment to the extent provided by the laws of this state" are deemed automatically to be registered by the state Board of Pharmacy to do so.
While physicians are certainly given some authority under OCGA § 16-13-35 (b) and (g) (2) to possess controlled substances, we do not interpret this authority to be limitless. Rather, we read the two subsections as authorizing physicians to possess controlled substances to the extent they do so as physicians, i.e., to the extent such possession is for some use connected with their medical practice. To interpret the statute otherwise would be to give physicians carte blanche not only to possess controlled substances for their own personal, non-medical use but also to distribute them to others for non-medical use. Such was clearly not the intention of the Legislature in enacting the statute.
Though criminal statutes are to be construed strictly against the State, they are also to be construed so as to give legislative intent precedence over the literal import of words and to avoid unreasonable or illogical results. See generally Bunge v. State, 149 Ga. App. 712, *494 716 (256 SE2d 23) (1979); Mitchell v. State, 239 Ga. 3 (235 SE2d 509) (1977). In this case, the jury could reasonably have concluded from the State's evidence showing manner of the appellant's possession of the cocaine (viz., its presence on the two knives and the straw and in the nasal spray bottle) that it was being used for purposes unconnected with his medical practice. Consequently, we hold that the conviction was authorized by the statute.
2. It follows from the foregoing that the trial court did not err in denying the appellant's motion to quash the indictment. The indictment was proper on its face in any event, and a motion to quash or dismiss an indictment may not be predicated on extrinsic defects. See generally Walters v. State, 90 Ga. App. 360, 365 (83 SE2d 48) (1954); Walker v. State, 73 Ga. App. 20 (1), 21 (35 SE2d 391) (1945).
3. The State contends that the appellant waived appellate review of the denial of his motion to suppress by failing to object to the introduction of a crime lab report identifying the seized substances as cocaine. This contention is without merit. In stating that he had no objection to the report, counsel for the appellant obviously did not intend to stipulate either to the legality of the search or to the admissibility of the drugs themselves but merely to the admissibility of the crime lab tests identifying the drugs. It is to the State's advantage to encourage such stipulations, so as to minimize needless expenditure of judicial resources on proof of collateral elements as to which the parties have no bona fide dispute. This objective is not well served by unreasonable attempts to convert such cooperation into a weapon on appeal.
The appellant's failure to object to the admission of the contraband itself during the course of the trial likewise did not constitute a waiver of the motion to suppress. See Kilgore v. State, 247 Ga. 70 (274 SE2d 332) (1981).
4. The motion to suppress was meritorious and should have been granted. Whether the search is sought to be justified as incident to the appellant's arrest for possession of cocaine or whether it is sought to be justified by exigent circumstances, it cannot be upheld unless probable cause existed for a belief that the appellant was currently in unlawful possession of cocaine. Under the standard set forth by the United States Supreme Court in Illinois v. Gates, ___ U. S. ___ (103 SC 2317, 76 LE2d 527) (1983), probable cause may be predicated on an informant's tip only if, under the "totality of the circumstances," including the "veracity" and "basis of knowledge" of the informant, there is a "fair probability" that contraband or evidence of a crime will be found in a particular place. Id. at 4716. This test replaces the more stringent two-pronged test enunciated in Aguilar v. Texas, 378 U. S. 108 (84 SC 1509, 12 LE2d 723) (1964) and Spinelli v. United States, 393 U. S. 410 (89 SC 584, 21 LE2d 637) (1969), requiring an *495 informant's tip to be supported by underlying circumstances showing both the informant's reliability and the source of his information. However, the two tests are certainly not mutually exclusive (cf. State v. Stephens, 252 Ga. 181 (311 SE2d 823) (1984), and many of the cases decided under the Aguilar-Spinelli rule consequently remain helpful in assessing whether an informant's tip is sufficient to establish probable cause for a search.
Considering the totality of the circumstances in this case, we find that the information disclosed by Detective Jordan and the other witnesses for the State was totally insufficient to establish reasonable cause for a belief on their part that the appellant was currently in possession of cocaine. In the first place, there was no disclosure of the source of the informant's information. Compare, e.g., Parker v. State, 161 Ga. App. 37 (288 SE2d 852) (1982) (where the informant had observed the contraband personally). Given the lack of any independent corroboration of the tip, this must be regarded as an extremely significant omission. We reject the argument that such corroboration was provided by the mere observation of the appellant's car in front of the General Aviation building, for in view of the appellant's ownership of General Aviation, this fact was totally consistent with his innocence. Accord Rohrig v. State, 148 Ga. App. 869 (253 SE2d 253) (1979); Radowick v. State, 145 Ga. App. 231, 235 (244 SE2d 346) (1978). Compare Koza v. State, 158 Ga. App. 709 (2) (282 SE2d 131) (1981).
In addition to the lack of any showing of the source of the informant's information, there was also no showing of his or her reliability. It is, of course, well established that such reliability is not established by the mere, unsupported assertion that the informant has provided reliable information in the past. See Kouder v. State, 154 Ga. App. 597 (269 SE2d 92) (1980); Galgano v. State, 147 Ga. App. 284 (248 SE2d 548) (1978); Burns v. State, 119 Ga. App. 678, 683 (168 SE2d 786) (1969). There being neither any showing of the informant's knowledgeability, nor any showing of his or her veracity, nor any corroboration of the information provided by the informant, we can find no reasonable basis for a belief on the part of the arresting officers that the appellant was in possession of contraband at the time of his arrest. It follows that the State failed to meet its burden of establishing probable cause for the arrest and that the motion to suppress should have been granted.
Judgment reversed. Pope and Benham, JJ., concur.
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/13/2018 12:08 AM CDT
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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. PETSCH
Cite as 300 Neb. 401
State of Nebraska, appellee, v.
A dam T. Petsch, appellant.
___ N.W.2d ___
Filed June 29, 2018. No. S-17-997.
1. Constitutional Law: Search and Seizure: Motions to Suppress:
Appeal and Error. In reviewing a trial court’s ruling on a motion to
suppress based on a claimed violation of the Fourth Amendment, an
appellate court applies a two-part standard of review. Regarding histori-
cal facts, an appellate court reviews the trial court’s findings for clear
error, but whether those facts trigger or violate Fourth Amendment pro-
tection is a question of law that an appellate court reviews independently
of the trial court’s determination.
2. Trial: Investigative Stops: Warrantless Searches: Appeal and Error.
The ultimate determinations of reasonable suspicion to conduct an
investigatory stop and probable cause to perform a warrantless search
are reviewed de novo, and findings of fact are reviewed for clear error,
giving due weight to the inferences drawn from those facts by the
trial judge.
3. Motions to Suppress: Trial: Pretrial Procedure: Appeal and Error.
When a motion to suppress is denied pretrial and again during trial on
renewed objection, an appellate court considers all the evidence, both
from trial and from the hearings on the motion to suppress.
4. Constitutional Law: Police Officers and Sheriffs: Search and
Seizure: Arrests. A tier-one police-citizen encounter involves the vol-
untary cooperation of the citizen elicited through noncoercive question-
ing and does not involve any restraint of liberty of the citizen. Because
tier-one encounters do not rise to the level of a seizure, they are outside
the realm of Fourth Amendment protection. A tier-two police-citizen
encounter involves a brief, nonintrusive detention during a frisk for
weapons or preliminary questioning. A tier-three police-citizen encoun-
ter constitutes an arrest, which involves a highly intrusive or lengthy
search or detention. Tier-two and tier-three police-citizen encounters are
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STATE v. PETSCH
Cite as 300 Neb. 401
seizures sufficient to invoke the protections of the Fourth Amendment to
the U.S. Constitution.
5. Warrantless Searches: Probable Cause: Police Officers and Sheriffs.
Probable cause to support a warrantless arrest exists only if law enforce-
ment has knowledge at the time of the arrest, based on information that
is reasonably trustworthy under the circumstances, which would cause a
reasonably cautious person to believe that a suspect has committed or is
committing a crime.
6. Probable Cause: Words and Phrases. Probable cause is a flexible,
commonsense standard that depends on the totality of the circumstances.
7. Probable Cause: Appeal and Error. An appellate court determines
whether probable cause existed under an objective standard of reason-
ableness, given the known facts and circumstances.
8. Probable Cause: Police Officers and Sheriffs. An arresting officer’s
state of mind is irrelevant to the existence of probable cause.
9. Probable Cause: Appeal and Error. Appellate courts should avoid
an excessively technical dissection of the factors supporting probable
cause. The test to be employed is whether the totality of the circum-
stances would suggest that probable cause existed.
Appeal from the District Court for Lancaster County, Robert
R. Otte, Judge, on appeal thereto from the County Court
for Lancaster County, Timothy C. Phillips and Thomas E.
Zimmerman, Judges. Judgment of District Court affirmed.
Brad Roth, of McHenry, Haszard, Roth, Hupp, Burkholder
& Blomenberg, P.C., L.L.O., for appellant.
Douglas J. Peterson, Attorney General, and Siobhan E.
Duffy for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, and
Papik, JJ., and Johnson, District Judge.
Heavican, C.J.
INTRODUCTION
Adam T. Petsch was charged with aggravated driving under
the influence and displaying unlawful or fictitious license
plates. His motion to suppress was denied, and he was con-
victed following a stipulated bench trial. He appeals.
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STATE v. PETSCH
Cite as 300 Neb. 401
We moved this case to our docket because it presented
similar facts to, and Petsch relied upon the Nebraska Court
of Appeals’ opinion in, State v. Botts.1 We recently reversed
the Court of Appeals’ opinion in Botts on petition for further
review.2 We affirm Petsch’s convictions.
BACKGROUND
On November 20, 2015, at approximately 11:25 a.m., Troy
Aksamit, an officer with the Lincoln, Nebraska, police depart-
ment, observed a white sport utility vehicle (SUV) with an
expired license plate. Aksamit was traveling in his patrol
vehicle in the opposite direction, and so he conducted a U-turn
and proceeded to follow the SUV. The SUV had turned left
by that time, so Aksamit also turned left. Aksamit testified he
felt that the driver was “attempting to speed up and flee from
me.” At that time, Aksamit activated his patrol vehicle’s over-
head lights and sirens. Despite this, the SUV did not pull over
and continued to make left turns before eventually coming to
a stop.
A review of the video of the stop supports Aksamit’s tes-
timony that the SUV was attempting to flee from him. The
video shows that it took Aksamit approximately 20 seconds to
catch up to the SUV. At that time, Aksamit activated his patrol
vehicle’s lights and sirens. From that point, the SUV drove on
for over 45 seconds, making left turns on mostly deserted side
streets and also stopping at a stop sign, but then crossing that
street, with Aksamit’s patrol vehicle following behind with
lights flashing.
While stopped behind the SUV, Aksamit noted that it had
tinted windows and some equipment stored in the back, but
testified that he could see some movement inside the SUV.
After about 30 seconds, Aksamit made contact with Petsch, the
driver of the SUV. The video shows that Aksamit approached
the SUV with his service revolver drawn from its holster, but
1
See State v. Botts, 25 Neb. App. 372, 905 N.W.2d 704 (2017).
2
See State v. Botts, 299 Neb. 806, 910 N.W.2d 779 (2018).
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STATE v. PETSCH
Cite as 300 Neb. 401
held the revolver pointed down to the ground. As soon as
Petsch exited the SUV and indicated compliance through his
actions, Aksamit holstered his revolver. The revolver remained
unholstered for under 30 seconds and was never brandished
in a threatening manner. Askamit testified that he drew the
weapon for officer safety reasons because he was unaware of
whether there was another occupant in the SUV; it transpired
that Petsch was the only occupant of the SUV.
After exiting the SUV, Petsch was handcuffed without inci-
dent; Aksamit testified that he also handcuffed Petsch for
officer safety reasons. After other officers arrived at the scene,
Aksamit placed Petsch in the back of his patrol vehicle. Petsch
declined to undergo field sobriety tests and refused consent for
a search of his SUV.
Aksamit testified that he noticed Petsch seemed “impaired”
and had a “slowed response” and that he “had to ask him four
times, basically, the same question.” Aksamit was concerned
that Petsch might be having a medical episode. Aksamit also
testified that he noted Petsch had a “little bit of a problem
walking.” Aksamit left Petsch alone in the patrol vehicle for a
few minutes; upon returning, Aksamit “immediately detected
a strong odor of alcoholic beverage.” The record shows that a
second officer also detected this odor.
Aksamit testified that he did not see anything in plain view
when he looked into Petsch’s SUV, but that he later searched
it. In so searching, Aksamit found a cup in the SUV that
contained a “strong alcoholic beverage.” Aksamit also found
one empty 50-milliliter bottle and two unopened 50-milliliter
bottles of “Jack Daniel’s Tennessee Honey” whiskey.
Because of Petsch’s “reactions to the questions, me asking
questions four or five times, him slow to respond, acting as
though he was confused . . . a very strong odor of alcoholic
beverage,” Aksamit concluded that Petsch was under the influ-
ence of alcohol. Upon being transported to “detox,” a chemical
test was performed and Petsch’s breath test registered at .286
of a gram of alcohol per 210 liters of breath.
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STATE v. PETSCH
Cite as 300 Neb. 401
Petsch was cited for driving under the influence (DUI),
fleeing to avoid arrest, and failing to attach renewal decals to
his license plate. While Aksamit testified that Petsch’s SUV’s
front license plate did not have an updated sticker, he testified
that the back license plate did have such a sticker.
Petsch was charged in the county court with DUI and driv-
ing with fictitious plates. Petsch filed a motion to suppress
“any and all evidence regarding observations made of [Petsch],
statements . . . made by [Petsch], any results of chemical tests
of [Petsch’s] blood, breath, or urine or evidence of any kind
that was obtained by law enforcement personnel as a result
of the stop and subsequent arrest.” As relevant to this appeal,
Petsch alleged that law enforcement lacked (1) reasonable sus-
picion to stop and seize his SUV, (2) probable cause to hand-
cuff him, and (3) probable cause to arrest him for DUI.
Following a hearing, the county court denied Petsch’s
motion to suppress. Petsch was eventually found guilty in a
stipulated bench trial. For the DUI conviction, Petsch was
sentenced to probation, with a 30-day term of house arrest and
a $1,000 fine. For the fictitious plates conviction, Petsch was
fined $50. Petsch appealed to the district court, which affirmed.
He appeals.
ASSIGNMENTS OF ERROR
Petsch assigns that the district court erred in (1) finding
that he was not arrested when he was handcuffed at gunpoint,
(2) finding sufficient probable cause to arrest him for DUI,
(3) overruling his motion to suppress, and (4) finding him
guilty of second-offense DUI and unlawful/fictitious display of
license plates.
STANDARD OF REVIEW
[1,2] In reviewing a trial court’s ruling on a motion to sup-
press based on a claimed violation of the Fourth Amendment,
an appellate court applies a two-part standard of review.3
3
Id.
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STATE v. PETSCH
Cite as 300 Neb. 401
Regarding historical facts, an appellate court reviews the trial
court’s findings for clear error, but whether those facts trig-
ger or violate Fourth Amendment protection is a question of
law that an appellate court reviews independently of the trial
court’s determination.4 The ultimate determinations of reason-
able suspicion to conduct an investigatory stop and prob-
able cause to perform a warrantless search are reviewed de
novo, and findings of fact are reviewed for clear error, giving
due weight to the inferences drawn from those facts by the
trial judge.5
[3] When a motion to suppress is denied pretrial and again
during trial on renewed objection, an appellate court considers
all the evidence, both from trial and from the hearings on the
motion to suppress.6
ANALYSIS
The crux of Petsch’s appeal is that the county court erred
in denying his motion to suppress. Petsch contended in the
motion to suppress that law enforcement lacked (1) reasonable
suspicion to stop and seize his vehicle, (2) probable cause to
handcuff him, and (3) probable cause to arrest him for DUI.
Petsch sought the suppression of “any and all evidence regard-
ing observations made of [Petsch], statements . . . made by
[Petsch], any results of chemical tests of [Petsch’s] blood,
breath, or urine or evidence of any kind that was obtained by
law enforcement personnel as a result of the stop and subse-
quent arrest.”
Before turning to the issues on appeal, we note what is not
at issue on appeal. In his motion to suppress, Petsch contends
that the stop of his SUV was not supported by reasonable
suspicion. Aksamit testified that the initial reason for stopping
Petsch was for operating a vehicle with fictitious plates. And
on appeal, Petsch assigns that the court erred in finding him
4
Id.
5
Id.
6
State v. Rogers, 297 Neb. 265, 899 N.W.2d 626 (2017).
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guilty of that charge. But Petsch does not challenge the stop in
his appeal, and does not further argue his assignment of error
regarding the fictitious plates conviction. Accordingly, we will
not address either contention.
[4] We begin with a refresher on police-citizen encoun-
ters and probable cause. A tier-one police-citizen encoun-
ter involves the voluntary cooperation of the citizen elicited
through noncoercive questioning and does not involve any
restraint of liberty of the citizen. Because tier-one encoun-
ters do not rise to the level of a seizure, they are outside the
realm of Fourth Amendment protection.7 A tier-two police-
citizen encounter involves a brief, nonintrusive detention dur-
ing a frisk for weapons or preliminary questioning.8 A tier-three
police-citizen encounter constitutes an arrest, which involves
a highly intrusive or lengthy search or detention.9 Tier-two
and tier-three police-citizen encounters are seizures sufficient
to invoke the protections of the Fourth Amendment to the
U.S. Constitution.10
[5-7] Probable cause to support a warrantless arrest exists
only if law enforcement has knowledge at the time of the arrest,
based on information that is reasonably trustworthy under the
circumstances, which would cause a reasonably cautious per-
son to believe that a suspect has committed or is committing
a crime.11 Probable cause is a flexible, commonsense standard
that depends on the totality of the circumstances.12 An appel-
late court determines whether probable cause existed under an
objective standard of reasonableness, given the known facts
and circumstances.13
7
Id.
8
Id.
9
Id.
10
Id.
11
State v. McClain, 285 Neb. 537, 827 N.W.2d 814 (2013).
12
Id.
13
Id.
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STATE v. PETSCH
Cite as 300 Neb. 401
Law Enforcement Had Probable
Cause to Arrest Petsch Based
Upon Petsch’s Flight.
We turn first to Petsch’s contention set forth in his first
assignment of error: that he was arrested when Aksamit placed
him in handcuffs after stopping his SUV and that probable
cause to do so was lacking. We observe that Aksamit testified
that he did not arrest Petsch at the time he handcuffed him, but,
rather, restrained Petsch for officer safety reasons. However,
we do not opine on the propriety of Aksamit’s action insofar
as it relates to officer safety, because we conclude that there
was probable cause to arrest Petsch as a result of his flight
from Aksamit.14
[8] The U.S. Supreme Court explained in Devenpeck v.
Alford 15 that
an arresting officer’s state of mind (except for the facts
that he knows) is irrelevant to the existence of prob-
able cause. . . . That is to say, his subjective reason for
making the arrest need not be the criminal offense as
to which the known facts provide probable cause. As
we have repeatedly explained, “‘the fact that the officer
does not have the state of mind which is hypothecated
by the reasons which provide the legal justification for
the officer’s action does not invalidate the action taken
as long as the circumstances, viewed objectively, justify
that action.’” . . . “[T]he Fourth Amendment’s concern
with ‘reasonableness’ allows certain actions to be taken
in certain circumstances, whatever the subjective intent.”
. . . “[E]venhanded law enforcement is best achieved by
the application of objective standards of conduct, rather
than standards that depend upon the subjective state of
mind of the officer.”
14
See Neb. Rev. Stat. § 28-905 (Reissue 2016).
15
Devenpeck v. Alford, 543 U.S. 146, 153, 125 S. Ct. 588, 160 L. Ed. 2d 537
(2004) (citations omitted).
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STATE v. PETSCH
Cite as 300 Neb. 401
In this case, the fact that Aksamit’s subjective belief was
that he was handcuffing Petsch for officer safety reasons is
immaterial. Aksamit knew that Petsch had attempted to flee
from him when Aksamit activated his patrol vehicle’s lights
and sirens and tried to stop Petsch. Indeed, Aksamit referenced
in his testimony that Petsch “just took off from me,” as sup-
port for his decision to place Petsch in handcuffs. A reasonable
officer could have believed that Petsch was operating a “motor
vehicle to flee in such vehicle in an effort to avoid arrest or
citation” as prohibited by § 28-905(1).
There was probable cause to support Petsch’s arrest for
operating a motor vehicle to avoid arrest. As such, we find no
merit to Petsch’s first assignment of error.
Probable Cause to Support
DUI Arrest.
In his second assignment of error, Petsch assigns that law
enforcement lacked probable cause to arrest him for DUI. We
again disagree.
Aksamit testified that Petsch had a slow reaction time,
appeared confused, and had to be asked questions multiple
times. According to Aksamit, Petsch stumbled while walk-
ing to Aksamit’s patrol vehicle. After being in that vehicle
for a short period of time, both Aksamit and another officer
noticed the odor of alcoholic beverage. Aksamit’s report,
which was part of the trial stipulation, noted that prior to
Petsch’s being placed into the patrol vehicle, the vehicle did
not smell like alcohol. In other words, the record shows that
the smell of alcohol was emanating from Petsch and not from
another source.
Finally, Aksamit testified that he was concerned Petsch had
tried to flee and that he, Aksamit, was unaware of what Petsch
was doing inside his SUV during and immediately after the
vehicle stop.
On appeal, Petsch contends that there were other indicia
that would suggest that he was not under the influence of alco-
hol—for example, he did not engage in other erratic driving;
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did not admit to drinking; did not have watery or bloodshot
eyes; did not have slurred speech; was cooperative; and walked
appropriately and did not fall, stagger, or sway. Also, no field
sobriety tests were conducted and no preliminary breath test
was requested.
[9] Relying on U.S. Supreme Court case law, we recently
noted in State v. Botts that “appellate courts should avoid an
‘“excessively technical dissection” of the factors supporting
probable cause.’”16 The test to be employed is whether the
totality of the circumstances would suggest that probable cause
existed. We went on to observe that “[i]n assessing probable
cause, an officer’s ‘“relevant inquiry is not whether particu-
lar conduct is ‘innocent’ or ‘guilty,’ but the degree of suspi-
cion that attaches to particular types of noncriminal acts.”’”17
And in applying that rationale here, we note that the fact that
these indicia of DUI were not present does not mean that
Aksamit was not permitted to consider the signs that were pres-
ent—chief among these being the strong odor of alcohol and
Petsch’s apparent confusion and slowed reaction time.
Petsch also argues that no field sobriety tests or preliminary
breath test were conducted, and he further asserts that any
suggestion that he declined those tests was not reflective of
the record. But one of the responding officers testified, and
the recording of the stop confirmed, that the officer tried to
conduct a field sobriety test involving the alphabet. Petsch
declined to participate and indicated that he would first speak
to his lawyer. It was not unreasonable, given this request, that
no further field sobriety testing or preliminary breath testing
was sought.
We find that given the totality of these circumstances, prob-
able cause existed to support the DUI arrest. There is no merit
16
State v. Botts, supra note 2, 299 Neb. at 816, 910 N.W.2d at 788 (quoting
District of Columbia v. Wesby, ___ U.S. ___, 138 S. Ct. 577, 199 L. Ed.
2d 453 (2018)).
17
Id. at 817, 910 N.W.2d at 788.
- 411 -
Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. PETSCH
Cite as 300 Neb. 401
to Petsch’s second assignment of error. And because there
was probable cause to support Petsch’s detention and arrest,
the county court’s denial of the motion to suppress was not in
error. There is no merit to Petsch’s third assignment of error.
No Error in Guilty Finding.
Finally, Petsch assigns that the court erred in finding him
guilty of DUI and driving with fictitious plates. As we noted
above, Petsch does not argue the assignment of error as it
relates to the fictitious plates. And while Petsch does pre-
serve his assignment of error as to the DUI conviction, this
contention is based upon his assertion, which we have above
rejected, that the county court erred in denying his motion
to suppress.
We have concluded that there was probable cause to arrest
Petsch. And we further note that when alcohol breath testing
was later completed at a detoxification center, the content of
alcohol in Petsch’s breath was .286, which is 31⁄2 times the
legal limit and sufficient to support Petsch’s conviction for
DUI.18 There is no merit to Petsch’s final assignment of error.
CONCLUSION
The decision of the district court affirming the county
court’s convictions is affirmed.
A ffirmed.
18
See Neb. Rev. Stat. §§ 60-6,196 (Reissue 2010) and 60-6,197.03(5) (Supp.
2015).
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205 F.Supp. 702 (1962)
STERN & CO., a corporation of the State of Pennsylvania, Plaintiff,
v.
STATE LOAN AND FINANCE CORPORATION, a corporation of the State of Delaware, Defendant.
Civ. A. No. 2429.
United States District Court D. Delaware, at Wilmington.
June 8, 1962.
*703 *704 E. N. Carpenter, II (Richards, Layton & Finger), Wilmington, Del., and W. Wilson White, and Bernard V. Lentz (White & Williams), Philadelphia, Pa., for plaintiff.
Howard L. Williams (Morris, James, Hitchens & Williams), Wilmington, Del., Robert Ash, and Carl F. Bauersfeld (Ash, Bauersfeld & Burton), Washington, D. C., for defendant.
LEAHY, Senior District Judge.
I. Dismissal. Defendant's motion for dismissal of the complaint is bottomed on four arguments that:
1) this Court lacks jurisdiction over this subject matter under the Declaratory Judgment Act; 2) such relief as sought by plaintiff is not binding on the United States Treasury Department, not a party here; 3) the present action should be dismissed, in any event, as the complaint and exhibits show defendant made no binding representation regarding plaintiff's federal tax liability such as to support plaintiff's suit at bar; and 4) this Court should not exercise its declaratory judgment jurisdiction, even if it exists, since such exercise is discretionary and because the same issues attempted to be tried here are already before the Tax Court for consideration.
1. 28 U.S.C. § 2201 provides:
"In a case of actual controversy within its jurisdiction, except with respect to Federal taxes, any court of the United States, upon the filing of appropriate pleadings, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such." (Emphasis added).
As originally adopted in 1934 the exemption with respect to Federal taxes was not contained in the statute, thus leading to serious speculation[1], [2] that the then new declaratory judgment act could be used as a quick way for persons to gain a determination of tax status. The additional words were specially fashioned to avoid any such "radical departure from the long-continued policy of Congress * * * with respect to the determination, assessment, and collection of Federal *705 taxes."[3] That the exemption does prevent a taxpayer from obtaining declaratory relief from the Commissioner has been frequently proclaimed through the years.[4]
But, in the case at bar, however, one plaintiff-taxpayer seeks declaratory relief from an alleged breach of contract[5] by the other contracting party, which breach plaintiff claims will result in serious consequences of a tax nature to it. Defendant simply says this matter is "with respect to federal taxes" and obviously falls within the specific exemption found in the present Declaratory Judgment Act.
I cannot agree. For, if plaintiff's allegations in ¶ 10 of its complaint are true, defendant has breached the contract. If, for example, the contract had stated explicitly what plaintiff claims it stated "by necessary and inevitable implication", i. e., that defendant pledged not to allocate or cause its subsidiaries to allocate any part of the purchase price to the covenants not to compete, found in two of the four separate agreements signed by the parties, then plaintiff would have a valid action for breach of contract against defendant. Too, it would have a valid action under the Declaratory Judgment Act to prevent the alleged subsequent breach from occurring.[6], [7]
*706 Thus I hesitate to deny plaintiff an opportunity to be heard simply on the basis of the exemption in the statute. This Court should examine the facts and determine whether plaintiff's interpretation of the contract is correct. This Court may not determine tax liability; but it may determine facts which may have a direct, even immediate, bearing on what the tax liability will be.[8] The fact that plaintiff has "tax motives" for bringing this suit to determine rights of parties under their contract cannot squeeze this action into the statutory exemption by virtue of depriving this Court of jurisdiction. Such motives are relevant in determining the quantum of taxes due; they are not relevant in determining whether a party has made a claim to which he is entitled to declaratory relief. Veil-piercing techniques have a place in the law, particularly in the law of corporate action and taxation, but such mechanisms should not lead Courts to dismiss timely actions on the basis of a search for such motive-hunting. If the declaratory judgment act affords plaintiff a remedy, the mere bringing of the suit is an act of independent legal significance; and a plaintiff's motive, under such circumstances, has no relevance on whether the Court should exercise its judgment in taking cognizance of the law suit and whether the Court should decide it.
2. Defendant's argument that a judgment of this Court would be binding neither on the Commissioner of Internal Revenue nor the Treasury Department nor the Tax Court is true, but also irrelevant. It should be understood the most plaintiff can receive by way of declaratory judgment from this Court is a determination that defendant has breached its contract with plaintiff. Final decisions as to taxes are decisions for the Tax Court. Functioning under its expertise, it will determine how much, if anything, defendant may claim was paid as consideration for the covenants not to compete mentioned in the agreements. It may engage [as this Court will not] in the balancing process of determining how much, if any, of the $1,218,742.80 allegedly paid for covenants not to compete may be so treated for tax purposes. The point of the matter here is that all plaintiff asks is for this Court to bind defendant against its breach, not the United States. I think this Court has power so to act.
3. Defendant's third point is essentially for dismissal on the merits because the exhibits show it made no representation such as plaintiff claims here. As this claim is similar to that of plaintiff for summary judgment, it shall be considered, infra, together with that particular motion.
4. Defendant's argument that the same issues as are being tried here are already before the Tax Court may have merit. It is true that,
"Upon reaching the conclusion that the ends of justice would be best served by such a course * * [of declining jurisdiction] a court of the United States in its discretion may refuse declaratory relief because another court has jurisdiction in an executory or non-declaratory action of proceedings involving an issue identical with that involved in the suit for declaratory relief. Such a conclusion must be based upon sound reasons why under all the circumstances a non-declaratory or *707 executory action is to be preferred over a suit for a declaration. See Borchard, Declaratory Judgments, p. 181 et seq." (Emphasis supplied.)[9]
Here it would seem the issues may be identical with those before the Tax Court. The same contract may there be interpreted; the same parties may there be heard; the same factors may there be weighed in making a determination as to the tax consequences of the sales agreement.
If the Tax Court does, in fact, take into account issues identical with those that would be taken into account here, and every issue that would be so taken into account, this case might then be ripe for dismissal on the basis of the Tax Court determination. But if the Tax Court does not, the case at bar might then be heard by trial; and, while an injunction would no longer aid plaintiff, damages could and might issue from this Court in the form of a monetary decree were it to find what plaintiff claims here. Meanwhile, it would serve no useful purpose to hear this case at the present time; but it well might be an injustice to dismiss it. Therefore, the present case shall be stayed until the Tax Court's decision is made; this will enable this Court to consider its further decision as to what may then appear to be meet.
II. Summary Judgment. While the above decision to stay these proceedings allows this Court the option of staying determination on plaintiff's motion for summary judgment, the motion has been made, briefed, and argued; and it best be disposed of at this time.
The object of a motion for summary judgment "is to separate what is formal or pretended in denial or averment from what is genuine and substantial, so that only the latter may subject a suitor to the burden of a trial."[10] The Supreme Court has again recently restated the general policy with respect to the granting of such motions as follows:
"Summary judgment should be entered only when the pleadings, depositions, affidavits, and admissions filed in the case `show that [except as to the amount of damages] there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' Rule 56(c), Fed.Rules Civ. Proc., [28 U.S.C.A.] This rule authorizes summary judgment `only where the moving party is entitled to judgment as a matter of law, where it is quite clear what the truth is, * * * [and where] no genuine issue remains for trial * * * [for] the purpose of the rule is not to cut litigants off from their right of trial by jury if they really have issues to try.' Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627 [64 S. Ct. 724, 88 L.Ed. 967]."[11]
In the second circuit, debate, always instructive and often profound, has been long-standing between those proponents of the views of Judge Clark, who favor a broader grant of summary judgment, and those of the late Judges Learned Hand and Frank, who favored a more limited grant.[12] In this circuit, the decision has long since been reached *708 that courts will look particularly closely to insure that parties are not too quickly deprived of a "full dress" trial. Hart & Co. v. Recordograph Corporation, 3 Cir., 169 F.2d 580.[13] In the present case, genuine factual dispute exists on numerous issues which would require sustained and detailed consideration to determine. Two examples should suffice:
(a) Plaintiff claims the contract of sale was entered into on September 7, 1956, as a result of its acceptance of an offer made August 30, 1956, by defendant in a letter which defendant stated, in part:
"From your standpoint, the transaction will simply entail your sale of all of the stock of your subsidiaries for the purchase price set out in the first paragraph of this letter. We are advised by counsel that this sale will constitute a taxable transaction for federal income tax purposes, and you will be required to report the gain or profit on each of the sales. By definition of Section 1221 of the 1954 Internal Revenue Code, corporate stock constitutes the capital asset so that the gain or profit on the sales will be taxable at capital gain rates, which at present is a maximum of 25% of the gain.
"While we realize your company is not concerned with our procedures after completion of the purchase of this stock, we felt you might be interested in knowing that after the purchase, our subsidiaries will liquidate and dissolve the corporations which they have acquired under the provisions of Section 334(b) (2) of the Internal Revenue Code. This procedure is necessary since our purpose in this purchase is to acquire the loan contract of your subsidiaries rather than their stock. Following this liquidation and in line with our corporate policy of having each office a separate corporation, we will form additional subsidiaries in Pennsylvania and New Jersey, each of which will acquire the assets of one office."[14]
Defendant argues that these two paragraphs fall in the same category as every other "vagrant thought"[15] expressed by the parties during the course of negotiation and that only the final agreement dated September 20, 1956 should be considered in determining what the parties meant by the contract.
(b) Plaintiff claims that neither "at the time of execution of these closing agreements, nor at any time prior thereto, had there been any negotiation whatsoever between the parties concerning any covenant not to compete, and no agreement was at any time made which modified the agreement of the parties of September 7, 1956. * * *"[16] Defendant replies that ¶ 7 of the proposed contract specifically provided:
"As a material part of the consideration for this contract, Seller specifically agrees that it will not, for a period of three (3) years from and after that date of this agreement, either directly or indirectly, individually or in association with others, engage in the business of making loans. * * *"[17]
Defendant further argues that this matter was under negotiation and consideration prior to August 30, 1956,[18] and that the extent of the negotiations is indicated by the fact that the final agreement of September 20, 1956, extended the time limit of the covenants, as stated in the *709 draft, from three to five years, and only applied them to two of the four subsidiary corporations purchased by defendant.[19]
The disposition of these two issues alone manifestly would cut much of the heart out of this case. But such issues can be evaluated neither by lawyer's briefs nor by participants' affidavits. They can be critically analyzed for evaluation only by consideration of testimony of witnesses under oath, subject to cross examination and bound by rules of evidence as to what these parties did intend, what these negotiations did encompass, and what these agreements do require. A trial, as Mr. Justice Frankfurter has written, "is not a game of blind man's buff."[20] Neither is the opportunity to grant summary judgment a call for judges to decide cases blindly. Granted too expeditiously, summary judgment becomes summary justice. The summary judgment mechanism negates the inquisitorial and fact-finding function of the trial judge, especially absent the jury as is the case here.
Defendant's motion for dismissal is denied; and plaintiff's motion for summary judgment is also denied. Further action in this case shall be stayed until proceedings involving the parties in the Tax Court are completed.
An order may be submitted.
APPENDIX
Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 301, 63 S.Ct. 1070, 87 L.Ed. 1407:
"* * * [W]e think it plain also that the enactment of the Act of August 30, 1935, 49 Stat. 1027, 28 U. S.C. § 400(1), which excluded from the operation of the Declaratory Judgments Act all cases involving federal taxes, cannot be taken to deprive the courts of their discretionary authority to withhold declaratory relief in other appropriate cases. This amendment was passed merely for the purpose of `making it clear' that the Declaratory Judgments Act would not permit `a radical departure from the long-continued policy of Congress' to require prompt payment of federal taxes. See S.Rep. No. 1240, 74th Cong., 1st Sess., p. 11; H.R.Rep. No. 1885, 74th Cong., 1st Sess., p. 13."
Eccles v. Peoples Bank, 333 U.S. 426, 431, 68 S.Ct. 641, 92 L.Ed. 784:
"A declaratory judgment, like other forms of equitable relief, should be granted only as a matter of judicial discretion, exercised in the public interest. Brillhart v. Excess Insurance Co., 316 U.S. 491, [62 S.Ct. 1173, 86 L.Ed. 1620]; Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 297-98, [63 S.Ct. 1070, 87 L.Ed. 1407]; H.R.Rep. No. 1264, 73rd Cong., 2d Session, p. 2; Borchard, Declaratory Judgments (2d ed. 1941) pp. 312-14. It is always the duty of a court of equity to strike a proper balance between the needs *710 of the plaintiff and the consequences of giving the desired relief."
Public Service Commission v. Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291 (Reed, J., concurring opinion, p. 250, 73 S.Ct. p. 243):
"However, it was recognized that the Declaratory Judgment Act introduced a new method for determining rights into the body of existing law. Therefore the language of the Act was deliberately cast in terms of permissive, rather than mandatory, authority to the courts to take cognizance of petitions seeking this new relief. This enables federal courts to appraise the threatened injuries to complainant, the necessity and danger of his acting at his peril though incurring heavy damages, the adequacy of state or other remedies, particularly in controversies with administrative bodies."
NOTES
[1] See, Note, Enjoining the Assessment and Collection of Federal Taxes Despite Statutory Prohibition, 49 Harv.L.Rev. 109 (1935) and cases cited therein.
[2] See, Note, Challenging the Validity of a Federal Tax by Means of the Declaratory Judgment, 44 Yale L.J. 1451 (1935).
[3] Sen.Rep. No. 1240, 74th Cong., 2d Sess. 11 (1935); See, Note, Declaratory Judgment in the Federal Courts, 49 Harv.L. Rev. 1351, n. 66 (1935).
[4] Singleton v. Mathis, 8 Cir., 284 F.2d 616; Mayer v. Wright, 9 Cir., 251 F.2d 178; Jolles Foundation, Inc. v. Moysey, 2 Cir., 250 F.2d 166; Carmichael v. United States, 5 Cir., 245 F.2d 676; Martin v. Andrews, 9 Cir., 238 F.2d 552; Taylor v. Allan, 10 Cir., 204 F.2d 485; Noland v. Westover, 9 Cir., 172 F.2d 614, cert. den. 337 U.S. 938, 69 S.Ct. 1515, 93 L. Ed. 1744; Commissioner of Int. Rev. v. Procter, 4 Cir., 142 F.2d 824, 154 A.L.R. 1215, cert. den. 323 U.S. 756, 65 S.Ct. 90, 89 L.Ed. 606; Tomlinson v. Smith, 7 Cir., 128 F.2d 808; Red Star Yeast & Products Co. v. La Budde, 7 Cir., 83 F.2d 394; Pilip v. United States, D.C.Alaska, 186 F.Supp. 397, opinion supplemented 191 F.Supp. 943; Christenson v. Brodrick, D.C.Kan., 169 F.Supp. 388; England v. United States, D.C.Ill., 164 F.Supp. 322; Standard Oil Co. (N.J.) v. McMahon, D.C.S.D.N.Y., 139 F.Supp. 690, aff'd 244 F.2d 11; General Mutual Ins. Co. v. United States, D.C.S.D.N.Y., 119 F.Supp. 352; Kyron Foundation, Inc. v. Dunlap, D.C.D.C., 110 F.Supp. 428; John J. Casale, Inc. v. Pedrick, D.C.S.D.N.Y., 72 F.Supp. 848.
[5] Paragraph 10 of the Complaint states:
"By the Agreement of September 7, 1956, defendant expressly agreed that the sum of $2,500,000 was the purchase price of the stock of the Loan Companies sold by plaintiff to defendant pursuant to said Agreement.
"By necessary and inevitable implication, defendant further agreed therein: (a) that defendant would upon closing of the transaction allocated or cause its subsidiaries to allocate the entire purchase price of $2,500,000 to the stock of the Loan Companies; (b) that defendant would not thereafter allocate or cause its subsidiaries to allocate any part of the purchase price to anything other than (1) the stock of the Loan Companies, or (2) upon their subsequent liquidation under Section 334(b) (2) of the Internal Revenue Code, [26 U.S.C.A. § 334(b) (2)], to the assets of the Loan Companies themselves received upon, and solely by reason of, such liquidation; and (c) that defendant would not, directly or through any of its subsidiaries, take any action, adopt any position, or make any claim or contention, in connection with the Federal income tax liability of defendant or any of its subsidiaries, inconsistent with defendant's express agreement that the entire sum of $2,500,000 paid to plaintiff as aforesaid was in payment for the stock of the Loan Companies."
[6] In Motor Terminals v. National Car Co., D.C.Del., 92 F.Supp. 155, Judge Rodney stated: "A proceeding in the nature of declaratory judgment is a form of remedial procedure which is particularly appropriate where the basic issue underlying the claim of the plaintiff is the interpretation or construction of a contract." (p. 161).
[7] The teachings of the Supreme Court indicate the resiliency of the declaratory judgment act makes for a sensitivity to the particular equity of a plaintiff seeking protective relief under the statute. See references contained in the Appendix, infra.
[8] Defendant's citation of In re Inland Gas Corporation, 6 Cir., 241 F.2d 374, and Wilson v. Wilson, 4 Cir., 141 F.2d 599, is unconvincing. The former case affirmed the District Court's refusal to accept a corporate reorganization plan; the Court ruled on the reorganization plan and refused to rule on the Commissioner's ruling as to tax consequences. Here, however, plaintiff does not ask for a ruling on tax consequences, a ruling this Court no more than that in Inland Gas is authorized to give.
In Wilson, plaintiff in effect asked the Court to enjoin the Commission from levying various taxes (as well as asking declaratory relief against plaintiff's wife). The Court held there was no controversy as between husband and wife and that the only controversy was between family and Commissioner, thus bringing into play the statutory exemption.
[9] Samuel Goldwyn, Inc. v. United Artists Corp., 3 Cir., 113 F.2d 703, 710; Eccles v. Peoples Bank, 333 U.S. 426, 68 S.Ct. 641, 92 L.Ed. 784; Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407; Brillhart v. Excess Insurance Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620; Crosley Corporation v. Westinghouse Electric and Mfg. Co., 3 Cir., 130 F.2d 474; Creamery Package Mfg. Co. v. Cherry-Burrell Corp., et al., 3 Cir., 115 F.2d 980. See, Borchard, Declaratory Judgments, 2d ed., p. 312; see, Note, Availability of a Declaratory Judgment when Another Suit is Pending, 51 Yale L.J. 511 (1942).
[10] Cardozo, J., in Richard v. Credit Suisse, 242 N.Y. 346, 152 N.E. 110, 45 A.L.R. 1041 (1926).
[11] Pollar v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458; cf. U. S. v. Diebold, Inc., 82 S.Ct. 993.
[12] See, 6 Moore's Fed.Prac., § 56.15(1), pp. 2106-2111.
[13] See my discussion in Dovberg v. Dow Chemical Co., E.D.Pa., 195 F.Supp. 337, and cases cited at n. 5, p. 339.
[14] Complaint, Appendix A.
[15] Transcript of Oral Argument of defendant, p. 49.
[16] Brief in Support of Plaintiff's Motion for Summary Judgment, p. 4; Deposition of Joseph Shanis, Vice President of plaintiff, p. 3.
[17] Complaint, Exhibit A-1, ¶ 7.
[18] Deposition of Paul Williams, Executive Vice President, and Secretary of Defendant, pp. 3-6; Deposition of L. J. Holroyd, Assistant General Counsel of defendant, pp. 3-5.
[19] Paragraph 7 of the final agreement states:
"As a material part of the consideration for this contract, Seller specifically agrees that it will not, for a period of five (5) years from and after the date of this Agreement, either directly or indirectly, individually or in association with others, engage in the business of making loans in the amount of six hundred dollars ($600) or less under the provisions of the Pennsylvania Small Loan Act [7 P.S. § 751 et seq.], nor under the provisions of any other of the laws of the States of Pennsylvania or New Jersey, in the cities or communities of Allentown, Chester, Easton, Germantown, Hatboro, Kensington, Lancaster, Lansdale, Mayfair, Norristown, Philadelphia, Reading, South Philadelphia, Upper Darby, West Chester, West Philadelphia and Woodland, Pennsylvania or within fifteen (15) miles of the city limits thereof.
"It is understood and agreed that Purchaser shall have the right to convey or assign and transfer this covenant in whole or in part and in such event the transferee shall have the same rights hereunder as Purchaser."
[20] Johnson v. United States, 333 U.S. 46, 54, 68 S.Ct. 391, 92 L.Ed. 468.
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404 F.2d 824
SEA-LAND SERVICE, INC., Petitioner,v.FEDERAL MARITIME COMMISSION andUnited States of America, Respondents.
No. 21529.
United States Court of Appeals District of Columbia Circuit.
Argued June 20, 1968.
Decided October 21, 1968.
Mr. Warren Price, Jr., Washington, D. C., for petitioner.
Mr. Robert N. Katz, Solicitor, Federal Maritime Commission, with whom Messrs. James L. Pimper, General Counsel, and Joseph F. Kelly, Jr., Atty., Federal Maritime Commission, were on the brief for respondent, Federal Maritime Commission.
Mr. Seymour H. Dussman, Atty., Department of Justice, of the bar of the Supreme Court of Michigan, pro hac vice, by special leave of court, with whom Asst. Atty. Gen. Donald F. Turner and Mr. Irwin A. Seibel, Atty., Department of Justice, were on the brief, for respondent, United States of America. Mr. Howard E. Shapiro, Washington, D. C., also entered an appearance for respondent, United States of America.
Mr. Fritz R. Kahn, Deputy General Counsel, Interstate Commerce Commission, with whom Mr. Raymond M. Zimmet, Atty., Interstate Commerce Commission, was on the brief, for Interstate Commerce Commission, as amicus curiae.
Before BASTIAN, Senior Circuit Judge, and TAMM and ROBINSON, Circuit Judges.
BASTIAN, Senior Circuit Judge:
1
This action is a petition for review of an order of respondent, Federal Maritime Commission (hereinafter referred to as FMC). Petitioner, Sea-Land Service, Inc., (hereinafter cited as Sea-Land) is a large common carrier by water, with extensive operations in the transportation of containerized cargo. Since 1964, petitioner has operated between Seattle, Washington, and Anchorage, Alaska, a port-to-port service, including local motor pick-up and delivery. Sea-Land held itself out to the shipper or to the consignee in the Seattle and Anchorage port areas as the carrier solely responsible for the door-to-door transportation of the goods. This was done within the regulatory ambit of the FMC; the tariffs covering this service were filed with and approved by respondent. On June 26, 1967, Sea-Land filed notice to cancel this tariff, asserting that, with respect to its Seattle-Anchorage route, it would change from single carrier services and rates to joint through water and motor services and rates and would now redesignate its activities as those of a participant in a joint effort with a motor common carrier. Tariff schedules for this endeavor were accepted by the Interstate Commerce Commission (hereinafter referred to as ICC).
2
Sea-Land's notice to FMC of cancellation of tariffs was followed by respondent's order of suspension and investigation.1 There followed a hearing which resulted, on October 23, 1967, in the issuance by FMC of a report and order2 declaring that Sea-Land's activities in question are subject to FMC jurisdiction rather than to that of ICC. Sea-Land's petition for reconsideration of the order was denied by respondent. This proceeding ensued.
3
We have before us, in effect, competing claims of regulatory jurisdiction by two federal agencies. We must therefore review the legislative development of the particular activity sought to be regulated. Under the terms of the Shipping Act of 19163 and of the Intercoastal Shipping Act of 19334 jurisdiction over water common carriers engaged in interstate commerce in the Alaska trade was reposed in the FMC. This jurisdiction was buttressed by the Alaska Statehood Act5 of 1958, Section 27(b) of which provides:
4
Nothing contained in this or any other act shall be construed as depriving the Federal Maritime Board of the exclusive jurisdiction heretofore conferred on it over common carriers engaged in transportation by water between any port in the State of Alaska and other ports in the United States, its territories or possessions, or as conferring upon the Interstate Commerce Commission jurisdiction over transportation between any such ports.
5
Congress undoubtedly deemed this language necessary because the Transportation Act of 19406 had transferred to the ICC jurisdiction over water transportation between the then existing forty-eight states. To the extent that the Shipping Acts of 1916 and 1933 were inconsistent, they were repealed. Further, it should be noted that motor common carriers picking up or delivering goods, preceding or following shipment by water between the mainland and Alaska, are subject to the regulatory requirements of the ICC under the Motor Carrier Act of 1935.7
6
The distillation of the spirit of all of this legislation reduces itself to the following:
7
The FMC has jurisdiction over all-water transportation between Alaska and the mainland; the ICC must certificate motor common carriers connected with such transportation. However, neither Agency would accept tariff schedules establishing through routes and joint rates involving a combined transportation service between both motor and water common carriers. It was this problem to which Congress addressed itself in 1962 when it passed Public Law 87-5958 which amended Section 216(c) and 305(b) of the Interstate Commerce Act.9 Indeed, it is the language and intent of this so-called Rivers Bill upon which our case turns. The pertinent wording provides:
8
As used in this sub-section, the term `common carriers by water' includes water common carriers subject to the Shipping Act, 1916, as amended, or the Intercoastal Shipping Act of 1933, as amended (including persons who hold themselves out to transport goods by water, but who do not own or operate vessels) engaged in the transportation of property in interstate or foreign commerce between Alaska or Hawaii on the one hand, and, on the other, the other States of the Union, and through routes and joint rates so established and all classifications, regulations, and practices in connection therewith shall be subject to the provisions of this part.
9
Thus did Congress declare that, as to through routes and joint rates, jurisdictional authority shall vest in the ICC.
10
Respondent does not contest ICC's exclusive jurisdiction "where a motor carrier joins with a water carrier in establishing a combined motor-water service to Alaska via Seattle from an interior point in one of the contiguous forty-eight states."10 However, respondent contends that this is the limit of Public Law 87-595, and that it does not extend to combined motor-water services where the motor portion is confined to pick-up and delivery in the port areas. We do not agree.
11
The first and most significant barrier to the FMC's position is the actual language of Public Law 87-595. Nowhere in the statute do we read, as respondent would have us do, a mileage limitation upon the authority of the ICC to regulate through routes and joint rates. The language of the statute makes no distinction between motor carrier participation of line-haul dimensions and motor carrier participation of merely pick-up and delivery in the port areas; no distinction between a thousand miles and a few blocks, as long as both motor and water carriers are performing a joint through service.
12
Perhaps the crux of respondent's position is that Sea-Land's terminal area motor pick-up and delivery activity is merely incidental to the line-haul water transportation, and thus, does not constitute a valid through route service. However, an analysis of the component parts of a through route service indicates that the extent of the motor participation is not the determining factor. What is required is that both motor and water carriers hold themselves out to the public as participants in a joint transportation endeavor and file appropriate tariff schedules reflecting these joint rates and through services.
13
In Thompson v. United States, 343 U. S. 549, 557, 72 S.Ct. 978, 983, 96 L.Ed. 1134 (1952), the Supreme Court states, "The test of the existence of a `through route' is whether the participating carriers hold themselves out as offering through transportation service". This exact language was approved by the Court in Denver & Rio Grande Western Railroad Co. v. Union Pacific Railroad Co., 351 U.S. 321, 327, 76 S.Ct. 982, 100 L.Ed. 1220 (1956), and, more recently, in Western Pacific Railroad Co. v. United States, 382 U.S. 237, 243, 86 S.Ct. 338, 15 L.Ed.2d 294 (1965).
14
Another counterweight to respondent's position is that small terminal railroads performing only pick-up and delivery service for line-haul railroads have long had the right to join in the publication of through route, joint rate tariffs.11 Of even greater significance is the fact that through routes have historically been validated in situations where one of the participating transporter's activities have been extremely minimal.12
15
The FMC states that it has traditionally regulated water carrier service which has included incidental pick-up and delivery by motor carrier in the port area.13 Respondent contends that the legislative history of Public Law 87-595 evidences no intent upon the part of Congress to alter this FMC jurisdiction.14 We are in agreement; we perceive no diminution of FMC jurisdiction as the result of our decision today. What is meant by the FMC when it refers to its traditional jurisdiction is regulation of water carrier tariffs which include motor pick-up and delivery service, so-called single-factor or all-water rates. Our decision here is confined to joint through services; it in no way affects all-water tariffs, the regulation of which remains within the authority of the FMC.
16
Respondent argues that there has been no change in Sea-Land's physical activities; that petitioner is merely using different nomenclature for the same conduct. This argument is wide of the mark, for it fails to distinguish the legal significance attaching, on the one hand, where Sea-Land assumes exclusive responsibility for the successful performance of door-to-door transportation, and on the other hand, where Sea-Land is a participant with a motor carrier in a joint undertaking. In the latter instance, there is a contract of carriage between both carriers and the shipper (or consignee), and both carriers are jointly and severally liable.
17
Respondent states that Congress, in deciding where to place regulatory authority over through routes and joint rates, confined itself to the situation where two line-haul carriers participate in a through route and joint rate service; in short, that Congress did not intend Public Law 87-595 to cover Sea-Land's type of activity. Our answer is that petitioner's services fall within the plain language of the statute. Ordinarily, where the language of a statute is clear and unambiguous on its face, the thrust of that language should not be controverted by seeking to show an inconsistent legislative intent.15 However, we do not rely on this alone in deciding whether or not Congress intended to include Sea-Land's type of activity within the language of Public Law 87-595. A careful reading of the legislative history of that Act reveals such history to be inconclusive on this point; we, therefore, must assume that Congress intended to use the terms "through routes" and "joint rates" as they have historically been understood for the past half century.16
18
We come to the final cannon in respondent's arsenal, that since the motor portion of Sea-Land's services is minimal, Congress intends it to be regulated as part of the dominant water haul. We believe that a careful reading of Section 202(c) of the Interstate Commerce Act17 shows a different intention on the part of Congress. That section of the Act expressly exempts from ICC regulation motor carriers performing pick-up and delivery service in the terminal areas of line-haul railroad, airline and truck carriers subject to ICC or Civil Aeronautics Board (CAB) regulation. As long as the ICC or the CAB oversees the dominant transportation service, the pick-up and the delivery motor services in the terminal areas are exempt. However, no such exemption exists where the dominant transportation service is supplied by a water carrier subject to the Shipping Act of 1916.18 This means that Sea-Land in its port areas cannot participate with or employ a motor carrier for pick-up and delivery unless that motor carrier is authorized by and has its tariffs filed with the ICC. This does not evidence to us an intent on the part of Congress, having now given exclusive jurisdiction over through route service to the ICC, to withdraw that jurisdiction because the water haul is dominant.
19
We conclude that even though the motor portion of Sea-Land's activities are confined to pick-up and delivery service within the port areas in question, Congress did not intend the motor carrier to be regulated as part of the dominant water transportation. Thus, it follows that where Sea-Land and a motor carrier are participants in a through route endeavor, regardless of the extent of the motor carrier's service, appropriate jurisdiction rests in the ICC. This same conclusion has been reached recently by the Ninth Circuit in a case presenting precisely the same facts and issues as this one.19
20
Reversed and remanded, with instructions that the Order of October 23, 1967, be vacated.
Notes:
1
Docket No. 67-43 Sea-Land Service, Inc. — Cancellation of FMC Port-to-Port Rates — West Coast/Alaska Trade
2
Ibid.
3
46 U.S.C. § 817 (1916)
4
46 U.S.C. § 843et seq. (1933).
5
48 U.S.C. § 1et seq. (1958).
6
49 U.S.C. § 901et seq. (1940).
7
49 U.S.C. § 301et seq. (1935).
8
49 U.S.C. § 316 (1962)
9
49 U.S.C. §§ 316(c) and 905(b) (1940)
10
Brief for Respondent, pg. 7
11
Powell v. United States, 300 U.S. 276, 286, 57 S.Ct. 470, 81 L.Ed. 643 (1937)
12
Tapline cases, 234 U.S. 1 (1914); Manufacturer's R. Co. v. United States, 246 U.S. 457, 38 S.Ct. 383, 62 L.Ed. 831 (1918); ICC v. Hoboken Manufacturer's R. R., 320 U.S. 368, 64 S.Ct. 159, 88 L.Ed. 107 (1943); United States v. Capital Transit, 325 U.S. 357, 65 S.Ct. 1176, 89 L.Ed. 1663 (1945)
13
North Carolina Line — Rates to and from Charleston, S. C., 2 U.S.M.C. 83 (1939). Increased Rates, Kuskokwin River, Alaska, 4 F.M.B. 124 (1952)
14
"This bill does not detract from the authority presently exercised by the Federal Maritime Commission over the Alaska waterborne carriers. It merely enables all surface carriers of origin in the 48 states to enter into through routes and joint rate arrangements I have mentioned and only to the extent that through routes and joint rates are involved would the ICC attain any jurisdiction over the vessels plying in the Alaskan trade." Congressman Rivers, 108 Cong.Rec. 11420 (1962)
15
See United States v. Oregon, 366 U.S. 643, 81 S.Ct. 1278, 6 L.Ed.2d 575 (1961)
16
See note 12,supra.
17
49 U.S.C. § 302 (1940)
18
Congress has considered the matter and has decided not to extend the 202 (c) exemption. House Comm. on Interstate and Foreign Commerce, Amending Section 202(c) of the Interstate Commerce Act, H.R.Rep. No. 116, 87th Cong., 1st Session (1961); Hearing on S. 1978 (Amendment to Section 202, Interstate Commerce Act-Terminal Exemption). Before Senate Comm. on Commerce, 87th Cong., 1st Session (1961)
19
Alaska Steamship Co. v. FMC, 399 F.2d 623, 9th Cir. (1968)
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583 S.W.2d 289 (1979)
STATE of Missouri, Plaintiff-Respondent,
v.
Leonard D. RALLS, Defendant-Appellant.
No. KCD 30305.
Missouri Court of Appeals, Western District.
June 11, 1979.
*290 Clifford A. Cohen, Kevin Locke, Gary L. Gardner, Kansas City, for defendant-appellant.
John D. Ashcroft, Atty. Gen., Steven D. Steinhilber, Asst. Atty. Gen., Jefferson City, for plaintiff-respondent.
Before DIXON, P. J., and TURNAGE and KENNEDY, JJ.
KENNEDY, Judge.
Defendant Ralls after a jury trial was convicted of stealing from the person (§ 560.156, RSMo 1969 and § 560.161, RSMo 1975). As a Second Offender he was sentenced to six years' imprisonment by the Division of Corrections, and has appealed to this court. We reverse and remand for a new trial, for reasons hereafter explained.
The facts disclosed by the evidence are as follows:
On September 3, 1976, a warm, sunny day, witness Doris Smith, 65, had just come out of the Skaggs store at the Metro Plaza, a shopping center, at about 11:00 a. m., when a man passed her from the left rear, hooked her purse which she was carrying on her left arm, and fled with it. The man was black, according to her description, about 19 years old, weighing 150 pounds, and was five feet nine inches tall. He was wearing dark red trousers, a red, white and blue printed shirt, and a brown cap. She cried out for help and pursued the man until he disappeared, about a quarter of a block away, into the Citadel apartment complex. The purse, Mrs. Smith said, contained $52 represented by two $20 bills, one $10 bill and two $1 bills.
She was conducted to the office of the manager of the apartment complex to call the police, but learned that the police had already been called. In fact, a policeman, Officer White, arrived almost at once. She was giving him her report of the purse-snatching, and a description of the thief, when a message came over the car radio that a suspect was in custody at a point about two blocks away. (The failure to furnish us the exhibits referred to by the witness has placed us at a disadvantage in locating the various points and routes.)
The witness rode with the police officer to the place where defendant was in custody. He was standing by another police car at the side of the street, handcuffed. There were three officers close by. Officer White either stopped his car momentarily or slowed down almost to a stop. The witness immediately identified the defendant as being the culprit, although he had on no shirt or cap.
Testimony of police officers established that an officer in a helicopter over the area, upon receiving the report of the theft, had seen the defendant running and slowing down to a walk in the vicinity of the arrest. The defendant had on no shirt. The helicopter officer alerted officers on the ground, who accosted the defendant and placed him under arrest. Defendant was sweating profusely and was breathing heavily. He had on his person $52, in two $20 bills, one $10 bill, and two $1 bills.
Searching the surrounding area, the police found on a patio a sweat-dampened shirt and a hat, identified as having been worn by the thief. On the second floor of the same complexon a balcony, according *291 to the suppression hearing testimonythey found the stolen purse.
By way of defense, the defendant's mother testified that she had sent defendant, who lived with her, to the grocery store at the Metro Plaza at about 11 o'clock that morning, with $10 to buy some groceries. He was wearing no shirt, and owned no shirt such as the one worn by the thief. He walked and ran with a limp because one leg was shorter than the other. She explained that he breathed heavily after walking because of a bullet wound to his lung received two years earlier.
Identification of defendant.
Witness Smith on the trial was asked if she could identify the man who had stolen her purse. "This is the man right here," she answered. Thereupon defendant objected to the in-court identification and moved to suppress the same. The motion was denied, and the ruling is assigned as error.
If I have correctly traced defendant's argument, it is this: The witness in her testimony in a pre-trial suppression hearing had testified she did not positively identify defendant when she saw him in police custody, only that in build, size, color of trousers and racial characteristics he resembled the thief; that if she had testified to a positive "facial" identification on the suppression hearing (as she did at the trial), then the judge (a different judge from the one trying the case) would have sustained the motion to suppress as indicated by his comments in overruling the motion; and that, since the witness now on the trial positively identified the defendant as the purse snatcher, the trial court should reopen and sustain the motion to suppress. We do not agree with defendant about the tenor and effect of witness Smith's suppression hearing testimony, or about the meaning of the judge's comments in overruling the motion. We do not need to go into them, however, for if we granted the validity of both propositions, his conclusion would not necessarily follow that the in-court identification should be suppressed.
We believe that the trial court ruled correctly in denying defendant's motion to suppress the witness's in-court identification. Combining all of her testimony relating to identification, both in the suppression hearing and in the trial, looking at the "totality of circumstances", as we must, there was not such a "very substantial likelihood of irreparable misidentification", Manson v. Brathwaite, 432 U.S. 98, 97 S.Ct. 2243, 2254, 53 L.Ed.2d 140 (1977); Neil v. Biggers, 409 U.S. 188, 93 S.Ct. 375, 34 L.Ed.2d 401 (1972); State v. Bivens, 558 S.W.2d 296 (Mo.App.1977), as to justify suppressing the witness's identification testimony and removing it from the jury's consideration. True it is that the witness did not have an opportunity fully to view the thief's face, but she did have ample opportunity to see his retreating figure. Within a short time, perhaps as short as eight minutes, she viewed him in police custody. The time lapse between the time of the crime and the time the suspect is viewed by the eyewitness is a factor to be considered in assaying identification testimony . .; the shorter the time, the more reliable the identification. Neil v. Biggers, supra; State v. Hudson, 508 S.W.2d 707, 710 (Mo. App.1974). The procedure here used by the police, i. e., allowing the witness to see the suspect by himself in custody at the scene of the crime or at the scene of the arrest, is an approved procedure. State v. White, 549 S.W.2d 914, 918 (Mo.App.1977). It does not vitiate the identification unless the evidence shows that the witness made the identification as a response to the suggestion or encouragement of the police, rather than on his own observation and visual recollection of the defendant's appearance. State v. French, 528 S.W.2d 170, 173 (Mo.App.1975). There was nothing of such undue suggestion in the procedure here.
As for the inconsistencies in the trial and prior testimony of the witness, they were brought out on cross-examination and were for the jury to evaluate. The jury was competent to deal with the issue. State v. Bivens, 558 S.W.2d at 298, 299. Manson v. Brathwaite, supra 432 U.S. at 116, 97 S.Ct. 2243.
*292 Refusal to declare mistrial upon the receipt of inadmissible evidence.
Defendant next complains of the court's failure to declare a requested mistrial when police officer Wolfe testified that witness Smith identified defendant as the culprit when she saw him in custody. This testimony, by one other than the identifying witness himself, is condemned by State v. Degraffenreid, 477 S.W.2d 57 (Mo. banc 1972). The court did sustain an objection to the testimony and instructed the jury not to consider the same, but refused a mistrial. We will assume the court's denial of a mistrial was within an allowable discretion, but need not decide the same in view of our ruling upon the next point.
Refusal to declare mistrial for argument of excluded evidence.
Then during argument, the prosecutor argued to the jury the same testimony. Once again defendant objected, reminding the court of his earlier ruling on the evidence, and asked for a mistrial. The court denied the mistrial, but sustained the objection and directed the jury to disregard the argument of the prosecutor on that subject. The court's denial of a mistrial on this occasion is said to be prejudicial error.
Mistrial, of course, is a drastic remedy. State v. Raspberry, 452 S.W.2d 169, 173 (Mo.1970); State v. Csolak, 571 S.W.2d 118, 125 (Mo.App.1978). The trial court is quite properly reluctant to abort a trial. Appellate reversal is yet a more drastic remedy. But here the prosecutor in argument boldly repeated testimony which the court had specifically ruled out and had instructed the jury to disregard. The evidence ruling had come after some discussion at the bench. It could not have been easily forgotten. If the court's action was sufficient in sustaining the objection to the testimony and instructing the jury to disregard it, we do not think it was sufficient when the same evidence was then recited in argument. We have here the added impact of a repetition of the improper evidence, aggravated by prosecutorial misconduct.
The improper evidence, upon which the improper argument was based, was not merely cumulative. Evidence is cumulative when the fact is "fully and properly proved by other testimony", so as to take it out of the area of serious dispute. On that point, see the concurring opinion of Finch, C. J., in Degraffenreid, at 66. That was not quite the case here, for the identification by witness Smith was sharply challenged and she was the only identification witness.
We believe the defendant's complaint is well taken, and for that reason we reverse and remand for a new trial.
Allowing argument, otherwise improper, in retaliation.
Defendant's final complaint is that the prosecutor was permitted to argue to the jury that they could assume that the testimony of five other persons, who were members of the same household as defendant, but who were not called by defendant to testify that he did not own such a shirt as was worn by the thief, would have been unfavorable to the defendant. Defendant's mother, with whom defendant lived, had testified to the fact defendant did not own such a shirt, and also that three other of her children, ages 7-18 years of age, and two "grandbabies", ages 10 and 13, lived with her. Defendant's criticism of the prosecutor's argument is that the witnesses were no more available to defendant than to the state, and that the testimony of the five would have been cumulative. State v. Wallach, 389 S.W.2d 7, 13 (Mo.1965); State v. Collins, 350 Mo. 291, 165 S.W.2d 647 (1942); State v. Davis, 504 S.W.2d 221, 225 (Mo. App.1973). However that may be, the prosecutor's argument had been invited by defendant when he had argued to the jury: "Now, who else would know that he doesn't own a shirt like that? If I could find other witnesses, sure, I'd bring them to you. But I can't. But who else do you have?" It was within the court's discretion to permit this type of retaliatory argument. State v. Treadway, 558 S.W.2d 646, 650 (Mo. banc 1977); State v. Whiteaker, 499 S.W.2d 412, 419 (Mo.1973); State v. Swenson, 551 *293 S.W.2d 917, 920 (Mo.App.1977); State v. Lacy, 548 S.W.2d 251, 253-4 (Mo.App.1977).
The judgment is reversed and the cause is remanded for a new trial.
All concur.
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946 F.2d 1356
Larry GRIFFIN, Appellant,v.Paul DELO, Appellee.
No. 90-2377.
United States Court of Appeals,Eighth Circuit.
Submitted June 13, 1991.Decided Oct. 11, 1991.
1
Daniel J. Gralike, Clayton, Mo., argued, for appellant.
2
Frank A. Jung, Jefferson City, Mo., argued (William A. Webster, on brief), for appellee.
3
Before BEAM and FLOYD R. GIBSON, Circuit Judges, and URBOM,* Senior District Judge.
4
URBOM, Senior District Judge.
5
Larry Griffin appeals from a judgment of the district court1 denying his petition for a writ of habeas corpus filed pursuant to 28 U.S.C. § 2254. We affirm.
6
Griffin was convicted of capital murder pursuant to § 565.001 R.S.Mo. (1978) and was sentenced to death. The Supreme Court of Missouri affirmed the conviction and sentence on appeal. State v. Griffin, 662 S.W.2d 854 (Mo. banc 1983), cert. denied, 469 U.S. 873, 105 S.Ct. 224, 83 L.Ed.2d 153 (1984). Griffin's motion for post-conviction relief was denied. Griffin v. State, 748 S.W.2d 756 (Mo.App.1988). His petition for federal habeas corpus relief pursuant to 28 U.S.C. § 2254 was denied by Judge Filippine, who adopted the magistrate judge's report and recommendations.2
7
Arguing for reversal, Griffin states that (1) he was denied due process by the admission of testimony from the victim's mother regarding telephone threats she purportedly received, (2) he received ineffective assistance of counsel when his attorney failed to object to the threat testimony and failed to contact, interview, or call a certain witness, (3) he was denied his right to confront an adverse witness when the trial court admitted hearsay testimony, and (4) he was denied due process when the prosecutor knowingly used perjured hearsay testimony.
I. Threat Testimony
8
At the trial the state called the victim's mother as a witness to testify that she received anonymous threats over the telephone prior to her son's death. State v. Griffin, 662 S.W.2d 854, 859 (Mo. banc 1983). These threats were never directly or indirectly linked to the appellant.
9
Two independent grounds exist for affirming the district court's disposition of this claim. The procedural ground is that there was no timely objection at the trial and no request to strike the testimony, whereupon the petitioner has defaulted on this claim. Benson v. State, 611 S.W.2d 538 (Mo.App.1980). Accordingly, the petitioner cannot receive federal habeas corpus relief unless he shows both cause and actual prejudice for his procedural default. Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977); Engle v. Isaac, 456 U.S. 107, 102 S.Ct. 1558, 71 L.Ed.2d 783 (1982). Neither cause nor actual prejudice has been shown or attempted to be shown.
10
The substantive ground for denying relief is that admissibility of evidence is a matter of state law and generally does not give rise to constitutional error subject to redress in a federal habeas corpus case. Harrison v. Dahm, 880 F.2d 999, 1001 (8th Cir.1990). An evidentiary question is reviewable "only when the alleged error infringes a specific constitutional right or is so grossly or conspicuously prejudicial that it fatally infected the trial and denied petitioner fundamental fairness." Ford v. Armontrout, 916 F.2d 457, 460 (8th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1594, 113 L.Ed.2d 657 (1991). The appellant has failed to show that the admission of the victim's mother's testimony was so egregious as to have infected the entire trial fatally and thereby make it fundamentally unfair. Hamilton v. Nix, 809 F.2d 463, 470 (8th Cir.1960), cert. denied, 483 U.S. 1023, 107 S.Ct. 3270, 97 L.Ed.2d 768 (1987). This ground for relief is without merit.
II. Ineffective Assistance of Counsel
11
Appellant contends that he received ineffective assistance of counsel when his trial counsel failed to object to the victim's mother's testimony concerning telephone threats she received prior to her son's death. We disagree. The record discloses a proper and timely objection was not made by appellant's counsel, nor was a proper motion to strike made of the answer. Griffin, 662 S.W.2d at 859. However, on a motion for rehearing the Missouri Court of Appeals found that it need not address the claim of ineffective assistance of counsel, because the appellant failed to show how he was prejudiced. Griffin, 748 S.W.2d at 761. A claim of ineffective assistance of counsel is reviewed under the two-prong standard of Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). First, the appellant must demonstrate that counsel's performance was deficient, and second, that such deficient performance prejudiced the appellant's defense. Id. at 687, 104 S.Ct. at 2064; Williamson v. Jones, 936 F.2d 1000, 1004 (8th Cir.1991).
12
As to the first prong, there must be a showing that the attorney did not render reasonably effective assistance. Strickland, 466 U.S. at 687-88, 104 S.Ct. at 2064-65. In conducting such a review we "indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance." Id. at 689, 104 S.Ct. at 2065. The second prong requires appellant to demonstrate with reasonable probability that "but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S.Ct. at 2068.
13
The Missouri Court of Appeals found that appellant's trial counsel had filed a motion in limine to exclude the victim's mother's testimony regarding the threats and that the motion was denied. Griffin, 748 S.W.2d at 761.3 Moreover, no evidence was ever presented to link appellant to the threats. Id. Given those facts, even if counsel failed to object to the testimony at trial, we find that his performance amounted to reasonable trial strategy, was not deficient, and no prejudice has been shown.
14
The appellant further alleges ineffective assistance of counsel because his attorney failed to contact, interview, or call Robert Campbell as a witness who could allegedly refute damaging testimony of other witnesses. However, as explained below, the reasonable strategic and tactical decisions made by trial counsel cannot be the basis for finding ineffective assistance of counsel. Strickland, 466 U.S. at 690-691, 104 S.Ct. at 2065-66.
15
The trial strategy of the appellant's counsel was revealed at an evidentiary hearing, where he testified that the appellant's defense was one of alibi and more likely to succeed by keeping Campbell out of the courtroom with a motion in limine, but the motion was denied. Griffin, 748 S.W.2d at 759. It was counsel's opinion that Campbell's testimony could only implicate the appellant in an earlier attempt on the victim's life. Id. at 758. In that earlier incident in which Campbell was shot, he identified the vehicle from which his assailant alighted as one in which Griffin was soon thereafter apprehended. Id. Given such circumstances, trial counsel's actions in attempting to keep Campbell out of the courtroom were clearly trial strategy of a reasonable nature, and we find that counsel's assistance was not ineffective.
III. Confrontation of Witnesses
16
The appellant argues that the district court erred in finding that the appellant was not denied his constitutional right under the sixth amendment to the United States Constitution to confront an adverse witness whose testimony was presented through admissible hearsay. We agree with the district court that the appellant did not present that argument to the state courts for review. It is procedurally barred from review here.
17
The argument as raised on direct appeal to the Missouri Supreme Court was that the police officer's testimony "was irrelevant and its probative value was outweighed by its inflammatory and prejudicial nature." State v. Griffin, 662 S.W.2d at 857. His argument before this court is that his constitutional right of confrontation was denied by the receipt of that testimony. The two theories are not the same, and the substance of the appellant's federal habeas corpus claim was not previously presented to the state courts. See Buckley v. Lockhart, 892 F.2d 715, 719 (8th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3243, 111 L.Ed.2d 753 (1990). The appellant has made no showing of any cause for the default or actual prejudice and the claim is procedurally barred. Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977).
IV. Due Process
18
The last claim is that the district court erred in finding no denial of due process by the prosecutor's use of testimony allegedly known to be false. The appellant asserts that the prosecutor used hearsay statements of police officers to determine that Robert Campbell, after being shot, identified the appellant as his assailant, and purposefully did not call Campbell as a witness because the prosecutor knew his testimony would contradict the police officers' testimony. While a conviction obtained by the knowing use of perjured testimony is fundamentally unfair, United States v. Agurs, 427 U.S. 97, 103, 96 S.Ct. 2392, 2397, 49 L.Ed.2d 342 (1976), a challenge to evidence through another witness or prior inconsistent statements is insufficient to establish prosecutorial use of false testimony. United States v. White, 724 F.2d 714, 717 (8th Cir.1984), cert. denied, 489 U.S. 1029, 109 S.Ct. 1163, 103 L.Ed.2d 221 (1989) (citing with approval United States v. Sutherland, 656 F.2d 1181, 1203 (5th Cir.1981), cert. denied, 455 U.S. 949, 102 S.Ct. 1451, 71 L.Ed.2d 663 (1982)).
19
Griffin's allegation as to what Campbell's testimony would have been, had he testified, is wholly conjecture. The hearsay testimony in question was clearly admissible under the excited utterance exception and, therefore, bore a degree of trustworthiness. The prosecution's use of the police officers' hearsay testimony was not fundamentally unfair to the appellant. Furthermore, appellant has failed to show that the testimony was known to have been false or that the prosecutor's conduct was so egregious in the context of the entire trial that it rendered the trial fundamentally unfair. We find no denial of due process.
20
Having fully examined all of the appellant's allegations of error, we conclude that the decision of the district court denying habeas relief was correct.
21
Accordingly, we affirm the order of the district court.
*
The Honorable Warren K. Urbom, United States Senior District Judge for the District of Nebraska, sitting by designation
1
The Honorable Edward L. Filippine, United States District Judge for the Eastern District of Missouri
2
The Honorable David C. Noce, United States Magistrate Judge for the Eastern District of Missouri
3
By a pro se letter dated August 5, 1991, the petitioner has said that the finding by the Missouri Supreme Court was in error, because "A search of the legal file reflects that a motion in limine was filed on June 22, 1981, this pleading did not address this issue in any form." Title 28, § 2254(d) requires that we presume the finding of the state court to be correct unless one of eight conditions obtains. None of those conditions has been shown to exist
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960 F.2d 1099
UNITED STATES of America, Appellee,v.Jack J. MINICONE, Jr., also known as Jake; Jack Zogby, alsoknown as Turk; Anthony J. Inserra; BenedettoCarcone, also known as Benny; RussellE. Carcone, Appellants.
Nos. 91, 295-297 and 721-723, Dockets 91-1014, 91-1015,91-1018, 91-1020, 91-1062, 91-1319, 91-1334.
United States Court of Appeals,Second Circuit.
Argued Dec. 4, 1991.Decided Jan. 23, 1992.As Amended on Petition for Rehearing April 13, 1992.
Emil M. Rossi, Syracuse, N.Y. (John A. Cirando, Patrick J. Haber, and Ivette Iza, on the brief), for appellant Jack J. Minicone, Jr.
Edward Z. Menkin, Syracuse, N.Y., for appellant Jack Zogby.
David Lenefsky, New York City, for appellant Anthony J. Inserra.
Anthony J. LaFache, Utica, N.Y., for appellant Benedetto Carcone.
Joseph E. Fahey, Syracuse, N.Y. (Wiles & Fahey, on the brief), for appellant Russell E. Carcone.
Andrew G. Levchuk, Atty., U.S. Dept. of Justice, Washington, D.C. (Frederick J. Scullin, Jr., U.S. Atty., Kevin E. McCormack, and Edward R. Broton, Asst. U.S. Attys., Albany, N.Y., on the brief), for appellee.
Before: TIMBERS, MINER and ALTIMARI, Circuit Judges.
TIMBERS, Circuit Judge:
1
Appellants Jack J. Minicone, Jr., Jack Zogby, Russell E. Carcone, and Benedetto Carcone appeal from judgments entered December 28, 1990 and January 2, 1991 after a jury trial in the Northern District of New York, Howard G. Munson, District Judge, convicting them of conducting the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c) (1988), and of conspiring to conduct and participate in the affairs of an enterprise in violation of 18 U.S.C. § 1962(d) (1988). Appellant Anthony J. Inserra appeals from the judgment entered January 2, 1991 convicting him of conspiring to conduct and participate in the affairs of an enterprise in violation of 18 U.S.C. § 1962(d). Zogby also appeals from the judgment entered January 2, 1991 convicting him of conspiring to receive and transport stolen property in violation of 18 U.S.C. § 371 (1988).
2
Appellants' chief contentions on appeal are that there was insufficient evidence to support their convictions; that the district court erred in instructing the jury; that the district court erred in not declaring a mistrial; and that the district court erred in sentencing them. The government cross-appeals, contending that the district court erred in applying the Sentencing Guidelines.
3
We affirm the convictions and the sentences of all appellants, except we vacate Minicone's sentence and remand his case to the district court for the limited purpose of resentencing him in accordance with the Sentencing Guidelines.
I.
4
We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.
5
Following a jury trial, Minicone, Zogby, Benedetto Carcone and Russell Carcone were convicted of conducting the affairs of an enterprise through a pattern of racketeering activity (RICO), in violation § 1962(c). They and Inserra also were convicted of conspiring to conduct and participate in the affairs of an enterprise through a pattern of racketeering activity (RICO conspiracy), in violation of § 1962(d). Zogby was convicted of conspiring to receive and transport stolen property, in violation of § 371.
6
Appellants' convictions stemmed from their alleged involvement in a wide-ranging criminal enterprise that profited from extortion, loansharking, illegal gambling, and trafficking in stolen property during the period from approximately 1973 to 1989. The alleged enterprise was centered in Utica, New York. It was run by unindicted co-conspirators Anthony Falange and Angelo Conte; both Falange and Conte died before the indictment in this case was returned. Cooperating witnesses Dennis Pritchard and Michael Andrello also participated in the enterprise.
7
The following is a brief account of appellants' principal activities as disclosed by the evidence at trial.
8
(A)
9
In 1973, Minicone and Inserra asked Pritchard to "do a score" on two local bookmakers, Philip and Frank DeFazio, after Falange and Conte had been approached by two individuals who were owed money by the DeFazios. Pritchard and another man proceeded to rough up the DeFazios and stole $8,000 in cash from them, $800-900 of which they gave to Minicone and Inserra. Minicone and Inserra did not "do the score" themselves because they feared they would be recognized by the DeFazios.
10
(B)
11
In 1976, Minicone, Zogby, and Inserra decided to kill Al Marrone shortly after his release from prison because they feared that Marrone wanted to kill Falange, and possibly them as well. They feared also that Marrone wanted to take over their territory. Minicone, Zogby, and Inserra began planning Marrone's murder six months beforehand. They initially contemplated paying $10,000 to an inmate at the penitentiary where Marrone was incarcerated. They rejected that idea, however, and proceeded to interview several other potential "hitmen". Ultimately, they hired Edward Noel, who had spent time in prison with Zogby, to help them kill Marrone. Inserra, Minicone, Zogby and Pritchard met with Noel in the early fall 1976 in a restaurant in Utica to plan the murder. In late September, Inserra and the others showed Noel one of the weapons to be used on Marrone, a semi-automatic rifle with field scope. Two to three weeks before Marrone's murder, Minicone asked to borrow Pritchard's .38 caliber pistol because he believed his own handgun might not be powerful enough to protect him in the event Marrone decided to strike first.
12
On the night of October 2, 1976, while Minicone and Inserra kept their distance and monitored a police scanner, Noel, Zogby, and another man shot Marrone dead on the sidewalk in front of his girlfriend's home.
13
Minicone and Inserra were indicted for Marrone's murder. The indictments were dismissed because Noel was a fugitive at the time, and the state did not have the nonaccomplice corroboration required by New York law. The state accepted a plea from Zogby to a lesser charge of soliciting murder, since Pritchard was not available to testify at that time. Zogby later confessed to his participation in the murder while talking with District Attorney Investigator Robert Graziano in Utica. Zogby claimed, however, that he had not fired the shots that killed Marrone.
14
(C)
15
On October 23, 1983, Thomas Bretti was injured when a bomb on the steps of his home exploded as he approached. The bomb had been made by government witness Andrello. It was planted by Minicone who had been assigned a contract on Bretti's life by Anthony Falange. Bretti had stopped paying some Utica bookmakers and had gotten into heated arguments with Falange and Louis Brindisi, Falange's attorney.
16
(D)
17
Appellants engaged regularly in the extortion of local bookmakers. Inserra once stated to Pritchard that "[t]he way we collect money is we scare people, we put fear in them, we rough them up. We have to use violence, but as long as they are scared they will pay." The ubiquitous Carl Mazza helped insure that bookmakers did not fall too far behind in their payments. Local bookmakers were forced to make regular stops at Benny's Swap Shop at 512 Albany Street, Utica, a headquarters of appellants, in order to make their monthly "protection payment".
18
George "Butch" Sandouk, a longtime Utica bookmaker, regularly stopped by Benny's Swap Shop to make protection payments to the enterprise. On numerous occasions he was observed delivering the payments to Benedetto Carcone, Russell Carcone, and Minicone. On January 12, 1988, prior to Sandouk's arrival at the Swap Shop, Benedetto Carcone informed Minicone that Sandouk was "like clockwork." When Sandouk arrived, Minicone and Benedetto Carcone discussed requiring Sandouk to pay extra during the basketball season:
19
"Carcone: Hey, how are you, Butch?
20
Minicone: ... [D]id he tell you about the baskets?
21
Sandouk: What baskets?
22
Minicone: You have to pay for the baskets, the baskets.
23
Sandouk: Yeah.
24
Minicone: Alright.
25
* * * * * *
26
Sandouk: Yeah ... alright ... this is towards ...
27
Minicone: Yours is twenty-five because your [sic] small, right?
28
Sandouk: Yeah, I know.
29
Carcone: And you don't have to ride around saying anything to anybody that your [sic] paying this thing.
30
Minicone: No, he knows better, he had his first time ... he knows better.
31
Carcone: Yeah.
32
Sandouk: Okay.
33
* * * * * *
34
Carcone: If anybody asks you, you're doing the same as you were ... did before.
35
Sandouk: Nobody knows nothing, I don't say nothing."
36
George "Hoppy" Tamer operated a bookmaking operation out of Utica for many years. He also ran a card game that allowed him to take a cut of the pot. Around 1983, Tamer was approached by Anthony Falange, who told him to make payments of $50-per-week so he "wouldn't have any problems". He originally made the payments directly to Falange. In approximately 1986 or 1987, at the request of Falange, Tamer began making the payments to Benedetto Carcone. Tamer usually sent his brother-in-law, Hiklel Yaghy, to make the payments. Yaghy would deliver the payments to Carcone at the Swap Shop at 512 Albany Street. Tamer also made occasional payments to Minicone. On one occasion, Tamer paid Minicone while he was seated at a bar with Inserra and Pritchard. After Tamer walked away, Minicone said, "This is a joke. Its like taking candy from a baby with these people. Keep them scared, they keep paying. They even find us." Inserra agreed.
37
(E)
38
Pritchard and Inserra participated in a bookmaking operation during 1978-79. Inserra later was convicted and fined on charges related to that operation. Pritchard assisted Inserra in collecting and paying off bets. Minicone also took and collected bets.
39
(F)
40
Benedetto and Russell Carcone, along with two other individuals, conducted a football parlay sheet operation out of 512 Albany Street between November 1987 and April 1988. They were not successful in the endeavor. Benedetto Carcone once commented to Falange that "I'm the only f---ing bookmaker in town that's losing money in these f---ing things."
41
(G)
42
Zogby engaged in the fencing of stolen property, much of which was supplied to him by government witness Pritchard. Pritchard also sold stolen goods to Falange and Benedetto Carcone, who resold the goods from their respective Swap Shops. Pritchard and others would obtain merchandise on shoplifting or "boosting" trips throughout the Northeast. Zogby became anxious when he learned that Pritchard had begun cooperating with the government; he commented "They got me with interstate transportation...."
43
(H)
44
Appellants also were active in loansharking. In a conversation recorded in October 1986, Inserra commented to Pritchard that "Benny's in charge of the loansharking", and "[y]ou pay 10% a week or a month, or whatever the hell it is, interest." Pritchard and Andrello both borrowed money at usurious rates to finance their burglary and financing ventures. Once, when Andrello fell behind in his payments, Minicone and Inserra paid him a visit to tell him that "Ange [Conte] wants that money...." Andrello told them that he would pay Conte in person. He did so the next day.
45
In December 1987, Minicone brought Salvatore Spina to 512 Albany Street to discuss borrowing $2,500 for six months. Benedetto Carcone told him that the interest rate would be "2 points a week--10 points a month." Later that day, Carcone told Falange about the individual who wanted to borrow money, saying that Minicone had okayed it. When Spina later was arrested and could no longer make the payments, Minicone indicated to Carcone that he himself would have to make good on the loans since he had vouched to Falange for Spina.
46
(I)
47
When appellants learned of the government's investigation involving them and of the cooperation of Pritchard and Andrello, they discussed the matter amongst themselves with grave concern. Minicone commented to Benedetto Carcone, "You know how many people are going to jail? He was wired two f---ing years." They planned to kill Pritchard, but they were frustrated because security around Pritchard was too tight and they could not get close enough to kill him.
48
(J)
49
Following a jury trial, appellants were convicted of the offenses set forth in the first paragraph of this opinion.
50
Minicone was sentenced to a total of 391 months imprisonment and 3 years of supervised release. Inserra was sentenced to a total of 240 months imprisonment and 3 years of supervised release. Zogby was sentenced to a total of 78 months imprisonment and 3 years of supervised release. Benedetto Carcone was sentenced to a total of 30 months imprisonment and 2 years of supervised release. Russell Carcone was sentenced to a total of 18 months imprisonment and 2 years of supervised release. Each of the appellants appeal. The government cross appeals the sentences of Minicone, Zogby, Russell Carcone, and Benedetto Carcone.
51
For the reasons set forth below, we affirm the convictions and sentences of all appellants, except we vacate Minicone's sentence and remand his case to the district court for the limited purpose of resentencing him in accordance with the Sentencing Guidelines.
II.
52
(A)
53
Inserra, Zogby, Benedetto Carcone and Russell Carcone contend that the evidence against them was insufficient as a matter of law to support their convictions. When reviewing such claims, we view the evidence in the light most favorable to the government, United States v. Stanley, 928 F.2d 575, 576 (2 Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 141, 116 L.Ed.2d 108 (1991), drawing all reasonable inferences and resolving all issues of credibility in favor of the verdict. United States v. Macklin, 927 F.2d 1272, 1277 (2 Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 146, 116 L.Ed.2d 112 (1991).
54
Zogby and Russell Carcone contend that the evidence was insufficient to support their substantive RICO convictions. Zogby concedes that there was sufficient evidence to support the jury's finding that he committed the predicate acts which charged the Marrone murder and receiving and transporting stolen property, but he contends that these crimes were unrelated to any enterprise and did not constitute a pattern of racketeering.
55
Similarly, Russell Carcone contends that the two predicate acts for which he was charged--the extortion of George Sandouk and the conduct of the football parlay operation--did not amount to participation in the affairs of an enterprise through a pattern of racketeering. Benedetto Carcone makes the same argument with respect to the predicate acts for which he was charged--bookmaking, multiple acts of extortion of bookmakers--and two acts of illegal debt collection.
56
Proof of a RICO violation pursuant to § 1962(c) requires a showing that an "enterprise" engaged in a "pattern" of racketeering activity. An enterprise is "a group of persons associated together for a common purpose of engaging in a course of conduct", and it "is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246 (1981).
57
"[T]he pattern requirement should be interpreted to prevent the application of RICO to the perpetrators of 'isolated' or 'sporadic' criminal acts". United States v. Indelicato, 865 F.2d 1370, 1383 (2 Cir.1989) (en banc). Two predicate acts will suffice to prove a pattern of racketeering, provided the prosecution also shows that "the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 2900, 106 L.Ed.2d 195 (1989) (emphasis in original).
58
The requirement of "relatedness" embodies two different concepts. The racketeering acts must be related to each other ("horizontal" relatedness), and they must be related to the enterprise ("vertical" relatedness). United States v. Long, 917 F.2d 691, 697 (2 Cir.1990). Evidence of relatedness and continuity or the threat of continuity may arise from facts external to the two predicate acts, United States v. Kaplan, 886 F.2d 536, 542 (2 Cir.1989), cert. denied, 493 U.S. 1076, 110 S.Ct. 1127, 107 L.Ed.2d 1033 (1990); Indelicato, supra, 865 F.2d at 1383, including the nature of the RICO enterprise itself. Kaplan, supra, 886 F.2d at 542; Indelicato, supra, 865 F.2d at 1383. Two racketeering acts that "are not directly related to each other may nevertheless be related indirectly because each is related to the RICO enterprise." Indelicato, supra, 865 F.2d at 1383. Moreover, "[w]here the enterprise is an entity whose business is racketeering activity, an act performed in furtherance of that business automatically carries with it the threat of continued racketeering activity." Id. at 1383-84; United States v. Coiro, 922 F.2d 1008, 1017 (2 Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2826, 115 L.Ed.2d 996 (1991); Kaplan, supra, 886 F.2d at 542; see also H.J. Inc., supra, 492 U.S. at 242-43, 109 S.Ct. at 2902 ("[T]he threat of continuity is sufficiently established where the predicates can be attributed to a defendant operating as part of a long-term association that exists for criminal purposes.").
59
The requisite vertical nexus between the RICO enterprise and the predicate racketeering acts may be established by evidence that the defendant was " 'enabled to commit the predicate offenses solely by virtue of his position in the enterprise or involvement in or control over the affairs of the enterprise,' " or that " 'the predicate offenses are related to the activities of that enterprise.' " United States v. Robilotto, 828 F.2d 940, 947-48 (2 Cir.1987) (emphasis in original), cert. denied, 484 U.S. 1011, 108 S.Ct. 711, 98 L.Ed.2d 662 (1988) (quoting United States v. Scotto, 641 F.2d 47, 54 (2 Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981)).
60
Zogby contends that his involvement in the Marrone murder and his stolen property transactions were merely isolated dealings and that he was acting on his own personal behalf, not as a member of the enterprise. Although Marrone had threatened the lives of Inserra, Zogby and Minicone, the threats stemmed from Marrone's plan to take over what he believed was his--control of the operation in the Oneida County area. Moreover, Marrone's murder was perpetrated through the joint efforts of Zogby, Minicone and Inserra. The record supports the jury's finding that the murder of Marrone was accomplished as part of appellants' long-term association with the enterprise and was performed for the purpose of enriching the enterprise's members and consolidating its power. Indelicato, supra, 865 F.2d at 1383.
61
Likewise, there was sufficient evidence to support the jury's finding that Zogby's conduct of the stolen goods operation was related to conduct of the enterprise. Pritchard, a long-time associate of the enterprise, did the bulk of the shoplifting for Zogby. Pritchard also sold stolen property directly to Falange and Benedetto Carcone. Furthermore, Falange, Inserra and Minicone loaned money to Pritchard to help finance his "boosting" trips. There was sufficient evidence to support the jury's finding that Zogby's participation in the stolen goods operation, together with his participation in the murder of Marrone, constituted a pattern of racketeering activity in furtherance of the enterprise's affairs.
62
The evidence of Benedetto Carcone's participation in multiple acts of extortion of local bookmakers and collection of unlawful debts provided ample basis for the jury's finding that he had participated "directly or indirectly, in the conduct of [the] enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c). Indeed, the extortion and debt collection activity engaged in by Benedetto Carcone, and by the enterprise in general, is at the heart of the conduct targeted by the RICO statute. H.J. Inc., supra, 492 U.S. at 245, 109 S.Ct. at 2903; Russello v. United States, 464 U.S. 16, 26, 104 S.Ct. 296, 302, 78 L.Ed.2d 17 (1983); Turkette, supra, 452 U.S. at 591, 101 S.Ct. at 7532. Such acts of extortion and illegal debt collection inherently exude a "pattern" and a threat of continuing criminal activity.
63
The evidence indicates that Russell Carcone's participation in the affairs of the enterprise may have been less extensive than that of the other appellants. Nevertheless, the two racketeering acts with which he was charged--participating in a gambling operation and in the extortion of Sandouk--support the jury's conclusion that he engaged in a pattern of racketeering in furtherance of the enterprise's affairs. Although Russell Carcone's acceptance of extortion payments from Sandouk, in violation of 18 U.S.C. § 1955, clearly was in furtherance of the enterprise's affairs, he contends that his RICO conviction should be reversed because the bookmaking operation was unrelated to the affairs of the enterprise. We hold that there was sufficient evidence for the jury reasonably to infer otherwise. Moreover, the evidence showed that Falange, the enterprise's boss, was aware of the bookmaking operation. In light of the enterprise's pervasive involvement in local bookmaking activities, the jury's finding that the bookmaking operation was sufficiently related to the affairs of the enterprise will not be disturbed.
64
Although the relationship between Sandouk's extortion and the bookmaking operation, standing by themselves, appears tenuous, evidence external to the acts themselves establishes the requisite "pattern". Here, the enterprise itself provides the requisite nexus between Russell Carcone's participation in bookmaking and extortion. Kaplan, supra, 886 F.2d at 542; Indelicato, supra, 865 F.2d at 1383; United States v. Masters, 924 F.2d 1362, 1366 (7 Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2019, 114 L.Ed.2d 105 (1991). Appellants constituted an informal organization associated for the common purpose of engaging in an ongoing course of criminal conduct, Turkette, supra, 452 U.S. at 583, 101 S.Ct. at 2528, including extortion, loansharking, illegal gambling, and trafficking in stolen property. Russell Carcone's participation in the bookmaking operation and the extortion of Sandouk, on the specific facts of this case, demonstrate a pattern of racketeering activity.
65
Inserra contends that his involvement in the Marrone murder and in the gambling operation were isolated acts unrelated to the activities of the enterprise and therefore were insufficient to support the conspiracy charge against him. To prove a RICO conspiracy under § 1962(d), the government must show that the defendant agreed to participate in two predicate racketeering acts and he knew that the general nature of the conspiracy extended beyond his individual role. United States v. Rastelli, 870 F.2d 822, 828 (2 Cir.), cert. denied, 493 U.S. 982, 110 S.Ct. 515, 107 L.Ed.2d 516 (1989). As stated above, the Marrone murder suffices as a predicate act sufficiently related to the enterprise's activities. We are invited to hold, however, that the sports book operation was not sufficiently related to the enterprise. We decline the invitation. The operation was run out of Inserra's house. Pritchard testified that he participated in the sports book operation and that Minicone took bets over the telephone and helped collect money from the gamblers. Pritchard also testified that the gambling operation actually was run by Inserra's brother, Mook, and that Anthony Inserra worked for Mook.
66
As the government points out, it is inconceivable that Pritchard, Minicone and Inserra could have been participating in the gambling operation without the enterprise also being involved. Indeed, as with Russell Carcone, Inserra's conviction is supported by the evidence regarding the enterprise's pervasive involvement in local gambling. The jury reasonably could have found that the gambling operation was related to the activities of the enterprise. Moreover, the jury reasonably could have found that the gambling operation and the murder of Marrone "form[ed] a pattern defined by the purposes of the enterprise." Masters, supra, 924 F.2d at 1366. The question of whether acts form a pattern "rarely is a problem with a criminal enterprise, as distinct from a lawful enterprise that commits occasional criminal acts." Id.
67
(B)
68
Inserra contends that he withdrew from the conspiracy more than five years before the indictment was handed down in August 1989 and that the RICO conspiracy charge therefore was time-barred pursuant to 18 U.S.C. § 3282 (1988). To escape liability, Inserra would have to prove some act that affirmatively established that he disavowed his criminal association with the conspiracy, United States v. Borelli, 336 F.2d 376, 388 (2 Cir.1964), cert. denied, 379 U.S. 960, 85 S.Ct. 647, 13 L.Ed.2d 555 (1965); United States v. Nerlinger, 862 F.2d 967, 974 (2 Cir.1988), and that he communicated his withdrawal to the co-conspirators. Nerlinger, supra, 862 F.2d at 974. Here, Inserra bases his claim of withdrawal on his serious falling out with Minicone--to the point that Minicone shotgunned Inserra's home--in the early 1980's and that at that time Minicone had assumed a strong position within the enterprise. The dispute between Minicone and Inserra arose over the collection of money from some gamblers. Inserra had collected the money but kept Minicone's share because Minicone owed him money. Minicone was so incensed that he shot out the windows of Inserra's kitchen. At a sit-down with enterprise boss Falange, they were ordered to settle their differences. Although Inserra and Minicone apparently remained on less-than-friendly terms, there is evidence that Inserra maintained his connection with the conspiracy. In January 1988, Inserra asked Benedetto Carcone for 9 mm. bullets, although the ammunition was not supplied to him. In April 1988, Inserra stopped by the Swap Shop and told Carcone to get word to Falange that "there's something f---ing coming down."
69
We hold that there was sufficient evidence to support the jury's finding that Inserra had not withdrawn from the conspiracy.
70
(C)
71
Inserra and Zogby also contend that the district court failed properly to instruct the jury on the RICO counts. Specifically, they contend that the court failed to inform the jury that the predicate acts must be related to each other and to the enterprise. With respect to the requirement that the predicate acts be related to the enterprise and to each other, the court clearly instructed the jury that:
72
"The government must still convince you, beyond a reasonable doubt, that these predicate racketeering acts were united or related to each other in such a way that you can honestly say that you have been convinced beyond a reasonable doubt that there is a pattern of racketeering which links at least two of these acts as to each Defendant to the pattern which the government alleges.... [I]t is the quality and nature of those acts and how they are related to each other and to the alleged enterprise which, upon sober and reasonable reflection, you may say do or do not make out a consistent and unifying pattern of conduct through which the enterprise conducted its affairs."
73
Moreover, the court instructed the jury that:
74
"The acts of racketeering must also be part of a continuing course of conduct. The continuity required refers either to a closed period of repeated conduct or to past conduct that by its nature projects into the future with the threat of repetition."
75
We hold that the district court properly instructed the jury regarding the requirement that the predicate acts be related to each other and to the enterprise.
76
(D)
77
Minicone, Inserra, Russell Carcone and Zogby contend that a mistrial should have been declared because of the "grossly prejudicial incidents" they say were attributable to the prosecution. "[R]eversing a criminal conviction for prosecutorial misconduct is a drastic remedy that courts generally are reluctant to implement." United States v. Valentine, 820 F.2d 565, 570 (2 Cir.1987). There can be no reversal unless appellants can demonstrate "substantial prejudice" which deprived them of their right to a fair trial. Id.
78
Zogby claims that the jury was tainted during jury selection by the comment of one prospective juror to the effect that another prospective juror, after being excused, had indicated to another prospective juror that the case was about "the mob". The latter and those within earshot subsequently were excused. Another prospective juror commented that the indictment read like a novel, and a third prospective juror, who subsequently was excused, made a joking remark about organized crime. Although one of the prospective jurors who heard these comments was not excused, the court carefully instructed the jurors that the case did not involve the mafia and warned them not to discuss the case.
79
Inserra and Minicone also complain of three occasions during the trial when witnesses alluded to criminal conduct not charged in the indictment. The court struck such testimony and instructed the jury to disregard it. Furthermore, after hearing argument on the issue, the court determined that the incidents were attributable to the government's witnesses, not to the prosecutor.
80
Appellants also claim they were prejudiced by a witness who was in such poor condition (due to a car accident unrelated to the case) that he had to be brought on a stretcher into the courtroom to testify. The judge had not yet entered the courtroom. The jury reentered the courtroom before the judge. The witness subsequently was removed from court and his testimony was taken by deposition. The court instructed the jury that the witness's injuries were the result of a car accident and were unrelated to this case.
81
We hold that appellants have failed to demonstrate substantial prejudice which denied them their right to a fair trial.
82
(E)
83
Minicone contends that a taped conversation between Pritchard and Inserra was not admissible against him as a statement of a co-conspirator made in furtherance of the conspiracy, e.g. Rastelli, supra, 870 F.2d at 837, because Pritchard, at the time of the conversation, was an agent of the government. United States v. Birnbaum, 337 F.2d 490, 494-95 (2 Cir.1964). He contends that, since the tape was not redacted to exclude reference to him, he should have been granted a separate trial. Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968).
84
Minicone's contention is without merit, since it is immaterial that Pritchard was working for the government at the time the conversation was recorded. "So long as the declarant and the party against whom the statement is offered in court were members of a conspiracy at the time the statement was made, any witness who heard the statement may recount it at trial, whether the statement was made to a conspiracy member or not...." 4 Weinstein & Berger, Weinstein's Evidence, p 801(d)(2)(E), pp. 801-305 (1991); United States v. Long, supra, 917 F.2d at 701; United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1199 (2 Cir.), cert. denied, 493 U.S. 933, 110 S.Ct. 324, 107 L.Ed.2d 314 (1989). The district court's finding that the statement was intended to promote the goals of the conspiracy is reviewed according to the clearly erroneous standard. Long, supra, 917 F.2d at 701; Beech-Nut, supra, 871 F.2d at 1198-99. Certainly, this finding was not clearly erroneous.
85
Moreover, to overturn a conviction based on the denial of a severance motion, a defendant must show that he was so severely prejudiced that, in effect, he was denied a fair trial--not only that his chances would have been improved at a separate trial. United States v. Scarpa, 913 F.2d 993, 1015 (2 Cir.1990). We hold that Minicone's contention that the district court committed reversible error in refusing to grant his motion for a severance lacks merit.
III.
86
(A)
87
Inserra and Minicone contend that the district court erred in sentencing them under the Sentencing Guidelines. We hold that Minicone's claims, including, among others, that he was a minor or minimal participant in the crimes charged, are without merit. Inserra claims that the Guidelines should not have been applied to him because he withdrew from the conspiracy prior to November 1, 1987, when the Guidelines took effect. Since we already have held that Inserra failed to establish that he affirmatively withdrew from the conspiracy, his claim that the Guidelines should not have been applied to him also is without merit.
88
(B)
89
Inserra contends that the court improperly used the first degree murder guideline to establish his base offense level. Although New York law would have categorized the murder of Marrone only as second degree murder, the task of the district court was to find the offense level corresponding to the most analogous federal offense. U.S.S.G. § 2E1.1. According to the New York Penal Law § 125.25, a person is guilty of murder in the second degree when, with intent to cause the death of another, he causes the death of such person or third person. 18 U.S.C. § 1111 (1988) defines first degree murder as "willful, deliberate, malicious, and premeditated killing".
90
We hold that the district court did not err in concluding that the most analogous federal offense was first degree murder under § 1111.
91
Inserra also contends that application of the Guidelines to him violates the Ex Post Facto Clause of the Constitution, U.S. Const. art. I, § 9. Prior to November 1, 1987, a person convicted of a RICO conspiracy faced an indeterminate sentence of not more than 20 years. 18 U.S.C. § 1963 (superseded). Under the Guidelines, the sentence instead is based on the highest offense level applicable to the underlying racketeering activity, if that offense level exceeds 19. U.S.S.G. § 2E1.1. The highest offense level here was 43, based on the 1976 murder, and calls for the 20 year sentence the district court imposed.
92
We have found that in general no Ex Post Facto violation occurs by application of the Guidelines to "straddle crimes," that is, crimes beginning before the date of the Guidelines, but continuing thereafter. United States v. McCall, 915 F.2d 811, 816 (2 Cir.1990); United States v. Story, 891 F.2d 988, 991-92 (2 Cir.1989). In this case, Inserra was sentenced for a RICO conspiracy active between 1973 and 1989. While Inserra himself committed no predicate acts after the date of the Guidelines, he did not withdraw from the conspiracy and therefore remains fully liable for the acts of co-conspirators. United States v. Bafia, 949 F.2d 1465, 1477 (7 Cir.1991).
93
We recognize, as unique to Inserra's case, that no act of any conspirator committed during the Guidelines period, even if charged to Inserra, could result in the 20 year sentence imposed, and that the length of Inserra's sentence is determined solely on the basis of pre-Guidelines conduct. We note, however, that recidivist statutes, which operate similarly in this respect, do not violate the Ex Post Facto Clause even if enacted after commission of the past crimes forming the basis for the recidivist penalties. Gryger v. Burke, 334 U.S. 728, 732 (1948) (citations omitted) ("The [recidivist sentence] is not to be viewed as either a new jeopardy or additional penalty for the earlier crimes. It is a stiffened penalty for the latest crime, which is considered to be an aggravated offense because a repetitive one.").
94
The RICO conspirators in this case continued to act after the effective date of the law here being challenged, with full notice of the consequences. As in the case of a recidivist statute, fair warning of the penalty existed notwithstanding that the penalty itself is mechanically a function of a crime committed prior to passage of the sentencing law. Since Inserra did not withdraw from the conspiracy, he therefore may be charged with the notice that his co-conspirators had when they acted. The fair notice and reliance purposes of the Ex Post Facto Clause, Miller v. Florida, 482 U.S. 423, 429-30 (1987), are not violated by application of the Guideline to Inserra.
95
(C)
96
The government asks us to hold that the district court erred, as a matter of law, in using Zogby's solicitation of murder conviction only in calculating his criminal history and not in calculating his base level offense. The court applied Guideline § 2E1.1, Note 4, which provides that:
97
"[C]ertain conduct may be charged in the count of conviction as part of a 'pattern of racketeering activity' even though the defendant has previously been sentenced for that conduct. Where such previously imposed sentence resulted from a conviction prior to the last overt act of the instant offense, treat as a prior sentence under § 4A1.2(a)(1) and not as part of the instant offense.... If this treatment produces an anomalous result in a particular case, a guideline departure may be warranted."
98
The government contends that since Note 4 applies only when a defendant previously has been sentenced for certain "conduct", and Zogby previously was sentenced only for soliciting a murder, Note 4 should not have barred using the conduct charged and proved in this case--the actual murder and activities leading up to that murder--in calculating his base offense level.
99
This presents what appears to be an issue of first impression in our Court. Although the government's contention strikes us as having some merit, we hold that the district court reasonably construed Note 4 to mean that the conduct underlying the previously imposed sentence should not be used in calculating the base level for the instant offense.
100
(D)
101
The government also contends that the district court erred in sentencing Minicone by departing downward to a total of 32 years 7 months rather than imposing the statutory maximum of 40 years. The court was motivated by a desire to avoid the unfairness that would result from the "grave disparity" between his sentence and that of the co-defendants. The court felt that "to blindly impose two 20-year consecutive sentences for this Defendant would, in the court's opinion, directly contradict one of the main goals in guideline sentencing, that is, to eliminate sentencing disparity." Disparity between the sentences of individual co-defendants, however, is not a proper basis for the downward departure made by the district court here. United States v. Restrepo, 936 F.2d 661, 671 (2 Cir.1991) (quoting United States v. Joyner, 924 F.2d 454, 460-61 (2 Cir.1991)) ("To reduce the sentence by a departure because the judge believes that the applicable range punishes the defendant too severely compared to a co-defendant creates a new and entirely unwarranted disparity between the defendant's sentence and that of all similarly situated defendants throughout the country.").
102
We hold that the district court abused its discretion in granting Minicone a downward departure to avoid a disparity between his sentence and that of his co-defendants. We therefore vacate Minicone's sentence and remand his case for the limited purpose of resentencing him in accordance with the Sentencing Guidelines.
IV.
To summarize:
103
We hold that the evidence was sufficient to support appellants' convictions under the RICO statute, 18 U.S.C. § 1962(c) and (d). We also hold that the district court properly instructed the jury on the necessary elements of the crimes charged. We further hold that the district court did not err in refusing to declare a mistrial. With the exception of Minicone's sentence, we hold that the district court did not err in sentencing appellants and all convictions are affirmed. With respect to Minicone, we vacate his sentence and remand his case to the district court for the limited purpose of resentencing him in accordance with the Sentencing Guidelines. We find no merit in the remainder of appellants' claims on appeal.
104
Affirmed in part; vacated and remanded in part.
ON PETITION FOR REHEARING
105
Submitted Feb. 18, 1992.
106
Decided April 13, 1992.
PER CURIAM:
107
The petition for rehearing of appellant Inserra is granted to the extent of amending our opinion by adding the following immediately after Part III(B) on pages 1110-1111:
108
In all other respects the petition for rehearing is denied.
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726 F.2d 753
U.S.v.Buchman***
NO. 83-5054
United States Court of Appeals,eleventh Circuit.
FEB 09, 1984
1
Appeal From: S.D.Fla.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
**
Local Rule: 25 case
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248 S.W.3d 36 (2008)
William L. McBURNEY, et al., Appellants,
v.
Jeffrey C. CAMERON, et al., Respondents.
No. WD 65679.
Missouri Court of Appeals, Western District.
January 22, 2008.
Motion for Rehearing and/or Transfer Denied March 4, 2008.
Application for Transfer Denied April 15, 2008.
*39 David H. Dunlap, Kansas City, MO, for Appellant.
Norman Irwin Reichel, Jr., Overland Park, KS, and David Thurman Greis, Kansas City, MO, for Respondent.
Before VICTOR C. HOWARD, P.J., HAROLD L. LOWENSTEIN, PAUL M. SPINDEN, JAMES M. SMART, JR., JOSEPH M. ELLIS, THOMAS H. NEWTON, and LISA WHITE HARDWICK, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied March 4, 2008.
JAMES M. SMART, JR., Judge.
The husband and children of Doris McBurney (deceased) appeal the judgment of the Circuit Court of Jackson County in favor of the defendants, Dr. Jeffrey Cameron, Karen Gage, and Kansas City General and Vascular Surgery, P.C., on the appellants' wrongful death medical malpractice claim filed pursuant to section 537.080.[1] The judgment is affirmed.
Background
On July 30, 2001, Mrs. McBurney, then age 77, entered Research Hospital in Kansas City, Missouri, for surgery to repair a small ventral hernia near her navel. Dr. Cameron, assisted by Gage, performed the laparoscopic surgery, which lasted approximately one hour. Mrs. McBurney was kept overnight in the hospital for observation and was scheduled to be released the following day, July 31, 2001. However, due to postoperative complications, she was not released.
By August 2, 2001, the third day following the surgery, Mrs. McBurney's abdomen was swollen, and she had developed adult respiratory distress syndrome, which is a serious reaction of the lung to some form of injury. Due to her deteriorating condition, Dr. Cameron, on August 7, eight days after the surgery, reopened the surgical site to inspect for any infection. He found an abscess in a subphrenic cavity, indicating the presence of an infectious process, and a one-centimeter perforation of the small bowel. Dr. Cameron repaired the perforation and cleansed the abdomen. The next day Mrs. McBurney passed away.
*40 Thereafter, the appellants filed a petition against the respondents for the wrongful death of Mrs. McBurney, naming Cameron, Gage, and Kansas City General & Vascular Surgery, P.C., as defendants. Kansas City General & Vascular Surgery, P.C., was named as a defendant based on a theory of vicarious liability. In their petition, the appellants alleged medical negligence as the cause of Mrs. McBurney's death. They alleged that during the first surgery, Cameron perforated Mrs. McBurney's small bowel, allowing postoperative leakage into her abdomen, resulting in conditions that led to her death. They also alleged that the respondents were negligent in that they failed to inspect and repair the perforation in a timely and reasonable fashion that would have saved her life.
In February 2005, the appellants' case proceeded to a jury trial. During voir dire, the appellants' counsel asked, among other things, about prior involvement in personal injury litigation by any venire member (or any family member). A venireperson named Marchant disclosed that his brothers had been involved in personal injury litigation. With regard to a later question about whether anyone had "been a defendant in a claim or lawsuit," Marchant did not respond. Marchant sat on the jury and served as the foreperson.
After a jury verdict for the defendants, the appellants checked the civil litigation records and found that Merchant, along with his parents, had been sued by three different business suppliers. Appellants filed a motion for new trial alleging, inter alia, intentional nondisclosure by Mr. Marchant, for failing to disclose, when asked during voir dire about previous litigation experience, that he had been sued in connection with these debts.
At a hearing on the motion for new trial, Mr. Marchant, under questioning by appellants' trial counsel, stated that Marchant's Decorating Services, which was owned by his parents and in which he also apparently had some ownership interest, had been sued because the business was financially unable to pay its suppliers. He acknowledged that he also was personally named as a defendant and served with process. Marchant testified that he did not mention this matter during voir dire because he did not think of it in connection with the questions asked by counsel. Marchant did not indicate that the suits were unjustified.
The trial court, after stating on the record several times that it believed there was no intentional nondisclosure because it could reasonably be understood that the questions were asking only about personal injury claims and lawsuits, denied the appellants' motion for new trial.
I. Nondisclosure Issue
In their first point, the appellants claim that the trial court erred in denying their motion for new trial, because the record of the motion hearing established intentional nondisclosure of prior litigation experience by Mr. Marchant. They point out that counsel's question during voir dire solicited information about whether or not any of the venire members had ever been "a defendant in a claim or lawsuit." Appellants contend that Marchant was guilty of misconduct for nondisclosure of a material matter.
The parties to a lawsuit have a right to a fair and impartial jury composed of twelve qualified jurors. Nadolski v. Ahmed, 142 S.W.3d 755, 764 (Mo.App. 2004). During voir dire, each prospective juror is under a duty to "fully, fairly and truthfully answer each question asked so that determinations may be made about each juror's qualifications and counsel may make informed challenges." Id. If there is *41 an intentional nondisclosure of a material matter, prejudice will be presumed, resulting in the necessity of a new trial. Id.
A. Timeliness
Initially, we comment on the issue of the timeliness of the appellants' efforts in researching the litigation history of those chosen to serve on the jury. Because conducting a civil jury trial is extremely demanding, we do not wish to add another burden to counsel's checklist; but timeliness in a juror challenge is important in view of the expense and burden to parties and taxpayers of conducting another jury trial. If the issue is raised before submission of the case, there remains time to remove a challenged juror and to replace that juror with an alternate.
The common delay in checking records generally seems to be based on counsel's assumptions 1) that the voir dire questions were all clear in context; and 2) that all the jurors tend to be very open and forthright, happy to inform counsel of every matter remotely related to a question, even if the matter is personally embarrassing to the juror. Experience continues to confirm that such assumptions are unrealistic.
It would be realistic for an attorney to send a member of his or her clerical staff to any computer, at any time of day or night, to research the civil litigation records before submission of the case, rather than waiting until after an adverse verdict to do so. The appellants in this case had more than a week after the selection of the jury and before submission of the case to raise this issue, but did not do so.
Another result of the delay, besides sometimes having to conduct a new trial, can be collateral damage to innocent jurors who have already donated a significant amount of time to the matter. In this case, another juror (besides Marchant) was subpoenaed to appear at the motion hearing an unnecessary disruption for her, as it turned out, because that juror was merely a victim of name confusion. She had not been sued; her name was identical to that of someone who had been sued. A timely raising of the issue of prior litigation would have timely resolved the issue not only as to Marchant, but would also have saved her from a compelled appearance at a post-trial hearing.
The issue of timeliness was raised in Brines v. Cibis, 882 S.W.2d 138 (Mo. banc 1994). In that case, plaintiffs appealed an adverse verdict on the basis of one juror's failure to disclose on voir dire that he had been sued several times in collection cases. Id. at 139. The defendants there argued that the claim was untimely, amounting to waiver, because the plaintiff could have researched the jurors' experience, through the use of "due diligence," well before the jury began its deliberations. Id. at 140. This was the first time that the issue of timeliness had been raised with regard to a search of juror litigation histories. The Court, at that time, declined to adopt defendant's argument that an issue about litigation history must be raised before submission. Id. However, the issue may not necessarily be settled forever in view of the technological advances in the thirteen years since Brines.
The Missouri court system now has an automated case record service, CaseNet, by which civil litigation history can be readily accessed by any computer at any time. This was not true at the time the Court considered the issue in Brines. At some point, counsel (or perhaps a court) will again raise the issue of timeliness and waiver, at least with regard to cases that extend beyond a short time. We encourage counsel to make such challenges before submission of the case whenever practicable.
*42 The issue of timeliness has not been raised in this case. We will move to the merits of the appeal, but we commend consideration of this matter to the attention of counsel trying future cases.
B. The Threshold Issue Clarity
While a juror has a duty to respond truthfully, the lawyers have a duty to frame their questions in a way that makes clear what information is being sought. Ambiguity in the phrasing of questions cannot create a unilateral option to demand a new trial based on nondisclosure. Thus, intentional nondisclosure can be found only if a clear question is asked on voir dire. Wingate By Carlisle v. Lester E. Cox Med. Ctr., 853 S.W.2d 912, 916 (Mo. banc 1993); Bell v. Sabates, 90 S.W.3d 116, 120 (Mo.App.2002). There is no issue of nondisclosure when the question does not trigger a duty to respond. Payne v. Cornhusker Motor Lines, Inc., 177 S.W.3d 820, 841 (Mo.App.2005).
The first issue, therefore, in a case of claimed nondisclosure is whether the question, in context, was clear and unambiguous. See Wingate, 853 S.W.2d at 916. This is an objective inquiry that looks to whether the appellant can show that there exists "no reasonable inability to comprehend the information solicited by the question." Brines, 882 S.W.2d at 139. In other words, if a person could reasonably be confused, the question is not sufficiently clear to warrant further inquiry into the alleged nondisclosure. See Keltner v. K-Mart Corp., 42 S.W.3d 716, 726 (Mo.App. 2001).
The burden of demonstrating from the record that the question was clear and unambiguous is logically on the party who is seeking a new trial, especially when that party's counsel was the one who framed the question in the first place. With regard to the issue of clarity of the question, it cannot help an appellant to argue that a reasonable venire member could have understood the question (that is, could have understood what counsel intended). The issue is whether a reasonable venire member would have understood what counsel intended. The question is clear only if "a lay person would reasonably conclude that the undisclosed information was solicited by the question." Keltner, 42 S.W.3d at 726 (emphasis added). See also Williams By and Through Wilford v. Barnes Hosp., 736 S.W.2d 33, 37 (Mo. banc 1987); Payne, 177 S.W.3d at 841; and Ewing v. Singleton, 83 S.W.3d 617, 621 (Mo.App.2002) (the opinion in each case using the word "would" rather than "could" in reference to the juror's ability to understand what counsel was seeking). If a reasonable member could have understood the question's intent, that fact is not sufficient by itself to cause us to declare that the question was clear. See Ewing, 83 S.W.3d at 621.
The threshold determination of the clarity of a question is reviewed de novo. Id. It is only after it is objectively determined that the question was reasonably clear in context that we consider, under an abuse of discretion standard, whether the trial court abused its discretion in deciding whether a nondisclosure was intentional. Id.; see also Williams, 736 S.W.2d at 36.
C. Voir Dire in this Case
In this case, in voir dire, plaintiff's attorney asked whether anyone had ever:
made a claim against somebody for injuries? And . . . this is for any reason.[2]
*43 After one person mentioned a wrongful death claim, counsel elaborated that he was wondering whether any of them had . . .
experiences in the legal system that and specifically claims for personal injury that will color the way you think about this case, okay?
Counsel then said that, "in the interest of time, he would lump lawsuits and claims into the same category." He asked whether anyone had . . .
filed a lawsuit, made a claim or members of your immediate family in the jury box?
Venireperson Marchant was the first to respond. He told about two personal injury matters from his family. Marchant said these instances would not cloud his judgment. Counsel also informed the venire that he was interested in experiences in which they "[got] sued and [they did not] think it was proper," to which Marchant responded "Right."
Counsel continued:
Anyone else, claim or lawsuit where you actually made a claim or member of your immediate family? Okay, let's just deal with this you group of folks first [:][a]nyone else ever had a been a defendant in a claim or lawsuit or members of your immediate family other than what we have just talked about?
This question about being a "defendant in a claim or lawsuit" is the voir dire question on which appellants base their challenge. Appellants say that Marchant should have, but failed, to disclose the prior business collection matter.
The record here does not show any response by any venireperson Marchant or any of the other forty or so members. Counsel then followed with a question directed to a different set of venirepersons:
Okay, now let's go back here to the back. Same first question have you all made claims or filed lawsuits for personal injuries . . . ?
He seems to say that the question is the "same" as the "first question." Here, he is talking about claims or lawsuits for personal injuries.
At this point, various venirepersons responded. They mentioned five matters that were clearly personal injury claims. One person mentioned two matters that presumably were not personal injury related a class action claim against Dillard's and a Masonite siding claim. One other person also mentioned making a claim for Masonite siding. No one at that point mentioned being a defendant in any kind of case, domestic, collection, automobile, or anything else.
Continuing to consider the context here, we note that next, at the conclusion of the foregoing questions, after addressing the various responses, counsel then seemed to summarize the nature of all of his questions:
Okay, have I overlooked anyone involved in a claim or lawsuits for personal injuries or being defendant or having one made against you? (There was no further response).
The question for our determination is whether counsel's intent was so clear, in context, that a reasonable venireperson in Marchant's shoes must be held to know that at that point the question was no longer about personal injury matters, but *44 was about all kinds of lawsuits, including collection matters.
D. The Significance of Context
The reasonable interpretation of the question must be discerned from a review of the record sufficient to display the context of the question. The reasonable interpretation of the question "depends on the context of the question as well as the wording of the question." Ewing, 83 S.W.3d at 621; see also Keltner, 42 S.W.3d at 726.
The leading case in Missouri on the matter of juror nondisclosure of prior litigation experience is Williams v. Barnes Hospital, 736 S.W.2d 33 (Mo. banc 1987). After a judgment for the plaintiff in that case, the defendant hospital appealed, contending that several venire members did not respond truthfully to voir dire questions concerning prior litigation. Id. at 34. The Court held in that case that one juror had been guilty of intentional nondisclosure of a material matter when he failed to disclose that he had brought a personal injury action in which he had obtained a settlement. Id. at 38. A new trial was ordered due to the intentional nondisclosure. The Court's analysis as to the allegation of the nonresponsiveness of the other jurors is also helpful in understanding the law. In that case, plaintiff's counsel had asked whether anyone . . .
had a lawsuit or a claim brought against him or her?
Have any of you folks been sued?
Id. at 34. Counsel then stated that he was "not talking about domestic relations." Id. He said he was "talking about something that would involve an injury to you." Id. at 35.
He asked if any of "you folks ever had a lawsuit or claim brought against you?" Id. He asked further about "suits," "lawsuits," and "claims," whether brought against them or against someone else by them. Id. He also asked again, after extensive questioning:
Let me ask the other side of the coin. How many of you have been in the position that Barnes hospital is now in, that someone has asserted a claim against you? Are there any of you that have been defendants in an actual lawsuit?
Id. The question as to whether any of them had "been defendants in an actual lawsuit," isolated from its context, is entirely clear. A juror named Holloman did not mention two credit card collection actions brought against her. Id. at 37. She said the credit card actions did not dawn on her. Id. The court in Williams refused to isolate the question from its context in reviewing the trial court's determination that the nondisclosure in Holloman's case was unintentional. Id. The Court affirmed the trial court's finding. Id. In reaching that conclusion, the Court noted:
the examples used by both counsel during voir dire consistently narrowed the focus of the questions during voir dire to actions involving personal injuries.
Id. The Court found it "understandable" that Ms. Holloman would mention a personal injury claim she brought, but would not think of the credit card actions. Id.
Williams was only the first of several cases to significantly emphasize the importance of context of the questioning in determining whether a question about litigation history was clear. See, e.g., Wingate, 853 S.W.2d 912; Payne, 177 S.W.3d 820; Ewing, 83 S.W.3d 617; and Keltner, 42 S.W.3d 716.
In Ewing, the plaintiff appealed from the denial of a motion for new trial on grounds of juror nondisclosure. 83 S.W.3d at 620. In that case, the panel members *45 were asked whether any of them or a family member had "been involved in an automobile accident that caused some serious injuries." Id. at 619. A panel member named Cesar did not respond, and ended up serving on the jury. Id. at 620. It was later discovered that Cesar's son had been involved in an accident in which there were fatalities and serious injuries, though Cesar's son had not been injured. Id. The question, considered in isolation, was obviously entirely clear. The court in Ewing noted, however, that the context of the question was one in which Cesar could reasonably have thought counsel was seeking to know about accidents in which serious injuries were suffered by venire members or members of their families (rather than by other persons). Id. at 621. The court held that because the question was "not clear" in its context, the failure of Cesar to mention his son's accident "did not constitute an intentional or unintentional nondisclosure." Id. at 622. Ewing demonstrates the significance of context in interpreting the reasonable meaning of a question and illustrates that a question cannot be considered in isolation from the other questions asked.
In Payne, 177 S.W.3d 820, the court was faced with a scenario similar to the one before us. Counsel asked a question about whether any of the venire had "been a party to a lawsuit." The context was as follows:
Any of you been a party to a lawsuit? Whether you had a claim for injury or you may have been sued for an injury?
Id. at 841. Then there was discussion with venire members about "accidents" and "claims," and counsel asked: "anybody involved in an accident?" Id. Then, a little later, counsel asked:
[A]nyone else, prior claim, prior lawsuit?
Id. After more discussion about accidents, counsel then asked:
[I]s there anyone else here who, since it was asked previously, recalls that you have been involved in some type of claim which you have sought money from another person or an individual or from a company?
Id. at 841-42. Counsel then closed with another question about "personal injuries or monetary damages." Id. at 842. After the verdict, counsel sought a new trial for intentional nondisclosure. The reviewing court, examining the entire context, determined that it was reasonable for the jurors to have assumed the questions were solely regarding injury claims. Id. at 843.
Here, also, after early comments about personal injury matters, there was never a definitive statement broadening the scope of the inquiry. Also, as in Payne, the final question seemed to represent a summary (to see if anything had been overlooked) of what had gone before and it was clearly limited to personal injury matters.
In this case, the context was extensively involved with questions about personal injury litigation and claims. Appellants now seek to separate the question about "being a defendant" from its context of personal injury claims. Under the law, we cannot do that.
Appellants also show that they are willing to consider context, when it helps their arguments. Here, they argue that because counsel did not discourage the venire members from mentioning the Masonite siding claims, which were not personal injury claims, this showed to the venire that counsel was interested in any kind of litigation. It may be true that this particular part of the context tends to suggest that a reasonable venireperson could have believed that counsel was interested in all kinds of litigation. But it does not show *46 that in the total context the question was so clear that every reasonable venire member would have believed that counsel wanted to know about all kinds of litigation. In spite of the fact that counsel did not discourage people from mentioning the Masonite claims, counsel simply did not make clear that he wanted to know about all kinds of litigation. Noticeably lacking is any statement from counsel that he was talking about all kinds of claims, such as specifying that he meant to include, for instance, domestic, contract, business, credit card, landlord-tenant, small claims, and neighborhood disputes, just to give some examples.
The duty of counsel to show that the question was clear is not satisfied when some venire members could reasonably think one thing, and some other venire members could reasonably think the opposite. If the record shows that the question was not clear in the total applicable context, the risk of lack of clarity should fall on the party framing the question, not the opposing party. See Ewing, 83 S.W.3d at 622 (suggesting greater care in the posing of questions).
Although we review this matter de novo, we agree with the trial court that a venireperson could reasonably have understood that counsel was asking exclusively about injury claims. We do not agree with appellants that a reasonable venireperson would have understood that counsel's intention was to ask about all kinds of claims and cases.
This case clearly is not like Nadolski v. Ahmed, 142 S.W.3d 755, 765 (Mo.App. 2004), where the juror withheld information about a personal injury claim that had been brought and settled by her husband, where the question was: "Has anyone on the panel or any member of your immediate family brought an action against anybody else, for personal injury or wrongful death?" No issue was raised on appeal about the context creating any confusion. The question was specific. It was clearly about personal injury or wrongful death. The only quibble about meaning was whether the word "anybody" would be understood to include a corporation. Id. In this case, in contrast, the question, limited to its own terms, was general, but in context could be reasonably understood as referring to personal injury.
This case also is not like Massey v. Carter, 238 S.W.3d 198, 201 (Mo.App.2007), where the attorney asked generally, "Have any of you ever filed a lawsuit?" After a venireperson mentioned filing a claim "as a homeowner," and after finding out the venireperson was satisfied with how things were resolved in that case, counsel then asked, "Have any of you ever been sued by anyone?" Id. The juror in question failed to disclose he had been sued five times in collection lawsuits. Id. at 200. The court in Massey pointed out that, after the question about having been "sued by anyone," there were no follow-up questions "honing in" on a specific kind of lawsuits, as there was in Payne. Id. at 201. The court said that therefore the question "remained a general question." Id.
This case is also not like Brines v. Cibis, 882 S.W.2d 138, 139 (Mo. banc 1994), where a juror failed to disclose he had been sued eight times in collection matters after the judge, in voir dire, had inquired, "do we have anyone on the panel who is now or ever has been a defendant in a lawsuit?" In Brines, there is no indication that anything in the context might have confused the juror. The Court saw the question as straightforward, and devoted no attention to context, although we know from Williams that the Court would have considered context if it were pertinent. Williams, 736 S.W.2d at 37. The lack of comment on context in Brines, which cited *47 and relied upon Williams, can only be due to the fact that in Brines, unlike the present case, there was no confusion arising from the context.
Thus, we fail to find any authority dictating that we reverse the trial court in this case. The authority is to the contrary. The trial court correctly ruled that counsel's intent was not clearly expressed.
For all the foregoing reasons, we deny Point I.
II. Dr. Lairmore's "Personal Standard" Testimony
In their second point, appellants claim that the trial court erred in excluding certain deposition excerpts of defense expert Dr. Lairmore, which they believe would have impeached his testimony on the applicable standard of care.
In a medical malpractice action, the plaintiff must prove that the defendant failed to use the degree of skill and learning ordinarily used under the same or similar circumstances by members of the defendant's profession and that his actions caused the plaintiff's injury. Coon v. Dryden, 46 S.W.3d 81, 90 (Mo.App.2001).
During trial, excerpts from the depositions of the parties' expert witnesses were read into evidence. Appellants proposed to read from the deposition of Dr. Lairmore, who offered his view that the medical providers in this case conducted treatment in a manner commensurate with the degree of skill and care used under the same or similar circumstances by members of the defendants' profession.
On cross-examination in the deposition, Dr. Lairmore said,
It's possible that I would have taken made different moves at different points of the diagnostic dilemmas that were presented. Yes. . . . Would I have possibly ordered slightly different tests or intervened at a different time interval? I think it's fair to say that I might well have.
. . . .
It's possible I would have intervened earlier. Yes. . . . If you're asking me if is it possible that I would have wound up operating on her sooner, the answer is yes, it's possible I would have.
. . . .
I think, as I tried to say before, that it would have been a result of a constellation of findings and not one single test, and so it would require me to speculate what I would have done at that particular time.
I think it's possible I would have taken the patient back earlier.
. . . .
I don't know if I can form opinions as to an exact date in time that that suspicion [of sepsis] should have been highest. I have testified that I may have taken this patient to the operating room sooner, and I have testified that I think it should have been a high suspicion all along.
Plaintiffs offered to read these excerpts to the jury. The trial court excluded the evidence in response to the objection of the respondent doctors that the witness's own personal standard of care was irrelevant. Appellants now claim that the trial court should have permitted them to read these excerpts from Dr. Lairmore's deposition in order to impeach his credibility after he testified that respondents' actions met the standard of care.
Our review of an alleged error in the admission or exclusion of evidence is limited to whether the trial court abused its discretion in admitting or excluding the evidence. Aliff v. Cody, 26 S.W.3d 309, 314 (Mo.App.2000). A trial court abuses its discretion when its ruling is clearly against the logic of the circumstances then *48 before the court and so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration. Id. at 315. If reasonable people can differ about the propriety of the action taken by the trial court, it cannot be said that the court abused its discretion. Id.
At trial, respondents' counsel objected to the introduction of these portions of Dr. Lairmore's deposition testimony, stating that Dr. Lairmore's personal standard was not relevant to determining the standard of care. In response, appellants' counsel argued as follows:
My response is, he [Dr. Lairmore] never answers any of these questions, for one. And the second response is that, you're right, that we're not offering this [as] standard of care testimony. And, in fact, I recognize in my question on page 58 that he believes that Dr. Cameron's decision to wait was not below the standard.
However, the personal experience of an expert witness, who [has] the same and like qualifications as the expert I mean as the witness he's testifying for [] is admissible. It's admissible as foundation, it's admissible to explain the witness's testimony. It has there is nothing inadmissible about it in terms of being prejudicial or anything else. I'm not offering this as comments on the standard of care, and I make clear that isn't standard of care stuff.
The foregoing remarks are not entirely clear. They suggest that appellants are conceding that they cannot use Dr. Lairmore's personal practices to establish what the standard of care is, but they can use the deposition excerpts as to what he thinks he might have done differently to try to cast doubt on the reliability of the foundation of Dr. Lairmore's opinion as to the standard of care. In other words, although the plaintiffs did not use the word "impeachment" or "credibility," this is what they really had in mind. And that is their argument on this appeal. The reason to ask about the foundation of the witness's testimony would be to cross-examine the witness on how the witness arrived at the conclusion that the defendants' practice was within the standard of care, if the witness thinks he might "possibly" have done it differently. It would be inquiring as to how the witness holds to his position on the standard of care if his personal practice might "possibly" be different. And it would be asking about what circumstances would make his personal approach different.
It might not have been immediately clear to the trial judge that this was the nature of the offer. In any event, there was no explanation given to the court how merely pointing out that the witness might "possibly" have done it differently would, in itself, impeach the witness or attack the foundation of his conclusion concerning the applicable standard of care. Here we were dealing with deposition excerpts, not live testimony, so there was no opportunity to demonstrate a contradiction of the witness with his own opinion. Even as deposition testimony, if the witness had admitted that, given the same circumstances, he would have done it differently, there would have been a stronger argument that this was to some extent a potential impeachment of the foundation of the physician's opinion. But, here, there was no clear link between the acknowledgment that the witness might "possibly" have done it differently and the impeachment of the foundation of the doctor's opinion. It simply was not clear from the comments of plaintiffs' counsel that the admission of these excerpts would serve to attack the doctor's credibility in a meaningful way that would be helpful to the jury. Thus, we do not need to decide directly in this case whether *49 such an approach is, as a general proposition, a permissible method of impeaching a physician's testimony as to the standard of care.
The trial court is in the best position to determine whether the offered testimony will help explain a witness's testimony, relate to the foundation of the witness's opinion, or merely confuse the jury. See Nguyen v. Haworth, 916 S.W.2d 887, 889 (Mo.App.1996) ("The trial judge sits as an intimate observer and is in the best position to determine the effect admission of evidence has upon the case."). Based upon the arguments made before it, the trial court evidently decided that the testimony was not admissible for the purposes mentioned in the appellant's response to the objection. We find no error in the decision of the trial court for the reasons given. Because it did not directly impeach the doctor's opinion, it is not necessary for us to reach the issue of whether "personal standard" testimony may be used to impeach an expert's credibility as to the applicable standard of care. Point denied.
III. Testimony of Dr. Salzman
In their final point, appellants claim that the trial court erred when it allowed Dr. Gary Salzman's testimony as to the cause of Mrs. McBurney's death. As previously stated, we review the trial court's admission of evidence for an abuse of discretion. Aliff, 26 S.W.3d at 314.
Two possible causes of Mrs. McBurney's death were theorized at trial. The first was abdominal infection secondary to surgical bowel injury, and the other was sequelae of pneumonia caused by aspiration (inhaling of vomitus). The second cause could provide no relief to appellants as it would demonstrate that any negligence on the part of the respondents was not the operative cause of death. Respondents put forth at trial an expert, Dr. Salzman, who acknowledged that he did not have the expertise to evaluate the issues related to Mrs. McBurney's abdomen and bowel injuries. Instead, he was present only to opine on the sequelae of aspiration pneumonia, an area within his expertise. He testified that in his opinion the aspiration pneumonia caused the sepsis, and that the pneumonia and the sepsis with multi-system organ failure caused her death.
Appellants argue that Dr. Salzman's opinion of the cause of Mrs. McBurney's death could not be given to a reasonable degree of medical certainty because he had no ability to evaluate the abdominal theory. In other words, appellants argue that because Dr. Salzman could not rule out the possibility that the bowel leak caused sepsis which caused Mrs. McBurney's death, he did not have the ability to state that the aspiration was the cause of sepsis and death to a reasonable degree of medical certainty. The question here is not whether the limitations of his expertise weakened the force and weight of his opinion in the face of an opposing opinion. If that were the question, the answer would be yes, it does in fact weaken the weight of his opinion. That argument is very appropriately made to the fact finder. The question here, though, is whether the limitations of his expertise rendered his opinion inadmissible on grounds that it would tend to seriously mislead or confuse the jury.
Because medicine is highly specialized, it would seem to us that it is not unusual for a physician to testify only within the sphere of that physician's particular expertise as to causation factors. To establish causation, the plaintiff must prove that the defendant's conduct was both the cause in fact and the proximate, or legal, cause of the plaintiff's injury. Coon, 46 S.W.3d at 90. To establish cause *50 in fact, the plaintiff must show that the injury would not have occurred but for the conduct of the defendant. Id. To show proximate case, the injury must be the natural and probable consequence of the defendant's negligence. Id.
Dr. Salzman testified that Mrs. McBurney died of sepsis resulting from aspiration pneumonia as the major factor. He did not purport to evaluate the bowel condition. In doing so, Dr. Salzman was, in effect, undermining the "but for" causation that the appellants were attempting to prove with regard to the bowel leakage.
Appellants argue that because of Dr. Salzman's lack of expertise with regard to the bowel conditions, we should declare as a matter of law that he could not achieve reasonable medical certainty in his opinion of cause of death, and, thus, his opinion should have been excluded. Appellants have provided us no authority supporting the notion that an expert must rule out other potential causes of death in order to be able to state within a reasonable degree of medical certainty what his or her conclusion is as to cause of death.
It is true, of course, that expert medical testimony must be given to a reasonable degree of medical certainty. Tompkins v. Cervantes, 917 S.W.2d 186, 189 (Mo.App.1996); see Williams v. Daus, 114 S.W.3d 351, 363 (Mo.App.2003). We cannot say as a matter of law, however, that Dr. Salzman could not present such an opinion in this case because of the lack of expertise concerning bowel conditions. The validity of Dr. Salzman's opinion remained for the jury to determine in light of all the evidence.
We hold that the trial court did not abuse its discretion in allowing the testimony of Dr. Salzman about the cause of Mrs. McBurney's death. Point denied.
Conclusion
For all of the foregoing reasons, the judgment is affirmed.
HOWARD, SPINDEN, NEWTON, and HARDWICK, JJ., concur.
ELLIS, J., concurs in separate opinion.
LOWENSTEIN, J. dissents in separate opinion.
BRECKENRIDGE and HOLLIGER, JJ., recuse.
JOSEPH M. ELLIS, Judge, concurring.
On the juror disclosure issue, I concur only in the result reached. I do so because I cannot say with any certainty that the questions were sufficiently clear that a reasonable juror might not have perceived that they were only about personal injury claims, as found by the trial court. Unlike in Bell v. Sabates, 90 S.W.3d 116 (Mo.App. W.D.2002), where "there was a common understanding among the venire that the discussion went to claims and lawsuits," id. at 122, the record before us in the instant appeal does not compel the conclusion that a reasonable juror could not have misunderstood that the inquiry was about "all claims and lawsuits" as opposed to only those involving personal injuries.
On the other issues presented on appeal, I concur in the majority opinion.
HAROLD L. LOWENSTEIN, Judge, dissenting.
I respectfully dissent and would reverse and remand the case for a new trial. Ordering a new trial because of an intentional nondisclosure of a venireperson is indeed a drastic remedy. But, during jury selection where there has been a nondisclosure, that is deemed intentional, bias and prejudice are normally presumed to have influenced the verdict. Nadolski v. Ahmed, 142 S.W.3d 755, 764 (Mo.App.2004). I believe *51 such a result is warranted here because of the failure of the eventual foreperson of the jury to disclose that he had been sued by three creditors, and personally served as a named defendant, all for unpaid debts of his and his parents' business.
A "nondisclosure" occurs when a clear question unequivocally triggers the venireperson's response (would a lay person reasonably conclude the undisclosed information) that had been solicited by the question. Keltner v. K-Mart, 42 S.W.3d 716, 723 (Mo.App.2001). That issue is reviewed de novo.
If it is determined by the court there was a nondisclosure, the party seeking a new trial must show this failure to answer the clear question was "intentional," that the venireperson has no reasonable inability to understand the question and either remembers the experience, or the significance of purported forgetfulness is unreasonable. Redfield v. Beverly Health and Rehabilitation Services, Inc., 42 S.W.3d 703, 708 (Mo.App.2001). This question is reviewed for an abuse of discretion, but here, that standard is inapplicable since the trial court denied the motion for a new trial, finding that the first prong, nondisclosure, had not been met.
It is my belief that no matter how this question, "Anyone else ever had been a defendant in a claim or a lawsuit or members of your immediate family, other than what we've just talked about?" was clogged between other questions related to personal injury suits to this specific question, its answer could not be avoided because of context. The fact that no other member of the venire answered this particular question does not bolster the conclusion that no one understood this question. It is just as logical to assume no other venireperson, or a member of his or her family, had been sued. (Apparently, a check of the plaintiff-defendant records netted no other juror names.) The scenario here is akin to a recent decision of this court in which a new trial was ordered where counsel, after inquiring about lawsuits filed by venirepersons then asked, "Have any of you ever been sued by anyone?" Massey v. Carter, 238 S.W.3d 198, 202 (Mo.App.2007). No doubt, the question in the case at bar could have been better posed, and contained in a context isolated from other questions, but the question here was clearly asked and not masked by context.
If the question here was clear, the next prong to be addressed is whether the nondisclosure was intentional. As this court said in Hatfield v. Griffin, 147 S.W.3d 115, 119 (Mo.App.2004), it was unreasonable that the venireperson could have forgotten or that it "did not enter her mind" that she had been sued where he was made a defendant and served in a suit for unpaid medical bills. The Supreme Court in Brines v. Cibis, 882 S.W.2d 138, 140 (Mo. banc 1994) has said, "questions and answers pertaining to a prospective juror's prior litigation experience are material." The transcript of the new trial motion discloses the venireperson had no trouble remembering the lawsuits, so the failure to disclose was unreasonable and, therefore, intentional. Williams, supra 736 S.W.2d at 38.
It is counsel's duty in jury selection to make clear, concise questions. In order for there to be a fair and impartial jury to decide factual issues, the venirepersons must also be encouraged to disclose matters that would impair or cloud their ability to decide fairly.
I would reverse the denial of the new trial motion and would remand for a new trial.
NOTES
[1] All statutory references are to the Revised Statutes of Missouri 2000, unless otherwise indicated.
[2] In the quotations from the voir dire colloquy in the transcript, we have chosen to add emphasis to pertinent words and phrases through the use of italics. Direct quotations from counsel's questions are bolded.
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279 F.2d 517
I. Robert WRIGHT and wife, Laura B. Wrightv.UNITED STATES.
No. 129-56.
United States Court of Claims.
June 8, 1960.
Alvin Y. Bell, Dayton, Tenn., for plaintiffs. Taylor H. Cox, Knoxville, Tenn., was on the briefs.
David D. Hochstein, Washington, D. C., with whom was Asst. Atty. Gen. Perry W. Morton, for defendant.
WHITAKER, Judge.
1
Plaintiffs are the owners of 4.5 acres of land in Blount County, Tennessee, about 9 miles south of the city of Knoxville, and about a mile north of the northeast end of the runway at the McGheeTyson Airport, principally used by military aircraft. They sue for the taking of an avigation easement by the Government under which it asserts the right to fly its planes of whatever character over plaintiffs' property at an altitude of 250 feet and above.
2
We are of opinion that plaintiffs are entitled to recover.
3
The airport is owned by the city of Knoxville. It was put into operation as a civilian airport for private and commercial planes sometime prior to 1942. On December 19, 1951, the city of Knoxville leased approximately 850 acres in the northern part of the airport to the United States on a one-year renewable basis until September 1, 1971. As amended, the lease provided for a rental of $28,593.62 a year until September 1, 1971, and for a rental of $1.00 a year thereafter. In 1953 the United States constructed a runway, running from northeast to southwest, 9,000 feet long, and about 1,400 feet northwest of and parallel to a 5,000-foot runway, which had been constructed by the city of Knoxville prior to the opening of the airport in 1942. This 9,000-foot runway was used for instrument landings for all types of planes and was used almost exclusively by the military planes of the defendant whether the landing was made on instruments or not.
4
Plaintiffs moved into their property in May 1946, after the airport had been in operation for some four years. On plaintiffs' property there was a six-room brick dwelling, and six-room frame cottage, separated from one another by 300 feet. Plaintiffs' house was a mile from the northeast end of the 9,000-foot runway.
5
In 1953 the 355th Fighter Group of the United States Air Force was stationed at the McGhee-Tyson Airport, and it remained stationed there until approximately July 1, 1958. The 355th Fighter Group was equipped with F-86D's, which are single-engine, all-weather, radarequipped, fighter-interceptor, jet aircraft, known as Sabre Jets. In landing and taking off they make a terrific noise, and belch a great volume of fire and smoke from their exhausts. There were an average of 79 take-offs a day toward the northeast end of this runway.
6
Theoretically, these jets are supposed to be airborne after travelling about 3,500 to 4,000 feet of the runway, and thereafter to climb at the rate of 500 feet per minute, rapidly increasing this to 1,000 feet a minute. When this theoretical pattern was followed, the planes would be from 600 to 1,200 feet above the ground when they passed over plaintiffs' property. The pilots and operation officers attached to this Fighter Group testified that 90 percent of all the planes that took off toward the northeast end of this runway turned away from plaintiffs' property after they were a few hundred feet from the end of the runway and, hence, did not pass directly over plaintiffs' property. The other 10 percent did pass over plaintiffs' property, but they testified that they did so at altitudes ranging from 700 to 1.200 feet.
7
However, notwithstanding this testimony, the Commissioner has found, and after careful study we have adopted his finding, that a substantial number of the jet aircraft did pass over plaintiffs' property at altitudes of less than 300 feet. In order to give such aircraft an added thrust at take-off, they were equipped with "afterburners", and on occasion these aircraft flew so low over plaintiffs' property that the fire from these afterburners scorched the foliage, thereby inducing the fear in plaintiffs that such aircraft might strike the houses erected on the property.
8
As a result of these flights, the Commissioner has found:
9
"The noise and vibration caused by the jet aircraft in flying over plaintiffs' property at low altitudes have caused plaintiffs to live in a state of nervousness, fright and apprehension. Plaintiffs' sleep, conversation, entertainment of guests, and other normal activities of daily living have been thereby interrupted and disrupted. The vibrations have caused jagged cracks to appear in the walls and ceilings of the plaintiffs' main house. The disturbance and apprehension caused by such flights have substantially deprived plaintiffs of the normal use and enjoyment of their property as a home."
10
We have adopted this as the finding of the court.
11
The mission of the 355th Fighter Group was to protect a number of industrial and governmental installations in and around Knoxville, Tennessee. These installations include the extensive installations of the Aluminum Company of America (Alcoa), the hydro-electric facilities of the Tennessee Valley Authority, such as the Norris Dam and others, the installations of the Atomic Energy Commission at Oak Ridge, and also Fort Knox, Kentucky, and other things. Based on the Commissioner's finding, to which no exceptions were taken, we have found that "considering the industrial targets under the protection of the 355th Fighter Group at McGhee-Tyson Airport, it seems inevitable that such group or a similar group will be stationed at this airport for an indefinite period of time".
12
Under the foregoing facts, it must be concluded that the United States took an easement of flight over plaintiffs' property at altitudes of 250 feet and above, and that the taking of this easement has substantially affected plaintiffs' use and enjoyment of their property. See Causby v. United States, 60 F.Supp. 751, 104 Ct.Cl. 342, United States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206; Highland Park, Inc. v. United States, 142 Ct.Cl. 269; Matson v. United States, Ct. Cl., 171 F.Supp. 283.
13
The situation described above continued from sometime in 1953 until the 8th of January 1958. On that date the 355th Fighter Group was inactivated and the military facilities at this airport were turned over to the Tennessee Air National Guard, which has been federally recognized but which had not been called into the service of the Federal Government during any part of the time with which we are concerned. Upon the inactivation of the 355th Fighter Group at the McGhee-Tyson Airport, the 134th Fighter Group of the Tennessee Air National Guard moved in and took over the airport facilities of the United States Air Force.
14
On February 13, 1958, the Department of the Air Force directed the Chief of Engineers to obtain a modification of the existing lease between the city of Knoxville and the United States covering the use of the McGhee-Tyson Airport, in order to permit the Tennessee Air National Guard to use it. Accordingly, on April 2, 1958, the lease was amended to provide for such use and to provide for the payment of the stipulated rental by the Tennessee Air National Guard United States Property and Fiscal Officer, instead of by the Finance Officer at Grandview Air Force Base, Missouri. The amendment to the lease recited, in part:
15
"Whereas, the Department of the Air Force has deactivated the military units stationed at the facility, and suspended operations on the leased premises; and
16
"Whereas, the Tennessee Air National Guard contemplates the use of the leased premises, and the assumption of the payment of rentals thereunder; * * *.
17
* * * * * *
18
"a. Paragraph 2 is amended, effective 1 April 1958, by adding "and for Tennessee Air National Guard purposes" to the last line of said paragraph, so that said line will read as follows:
19
"`Said premises are to be used for military purposes and Tennessee Air National Guard purposes.'
20
"b. Paragraph 4 of the original lease, as amended, is hereby further amended to provide that effective 1 July 1958, rental payments accruing on and after said date will be made by the United States Property and Fiscal Officer, Vultee Boulevard, Nashville, Tennessee.
21
"All other terms of the original lease as amended shall remain in full force and effect."
22
The Tennessee Air National Guard had a complement of 25 F86 Sabre Jets, 2 jet trainers, and 2 propeller-driven cargo aircraft. All of the pilots of the planes and other personnel at the airport were thereafter civilians and members of the Tennessee Air National Guard, although the pilots were also reservists in the United States Air Force, on inactive duty. From the time the 151st Fighter-Interceptor Squadron, which was a part of the 134th Fighter Group, reached its full strength in the summer of 1958, the flights have averaged about 400 a month, each flight including a take-off and a landing, and a substantial number of these flights passed over plaintiffs' property at substantially the same altitudes as when the United States Air Force was using the airport. These flight operations were not under the control of the United States Air Force, but were under the sole and exclusive control and direction of the Tennessee Air National Guard, and were made by pilots attached to the Tennessee Air National Guard, and not by pilots of the United States Air Force, except in a few instances now to be mentioned.
23
A daily 14-hour alert was maintained at the McGhee-Tyson Airport, after the Tennessee Air National Guard took over, for training purposes. This alert is known as a "scramble". Its purpose is to assure that the assigned pilot will be airborne within 5 minutes, in case of emergency. It is carried on by 5 pilots, each of whom is on duty at various times between 5:30 a. m. and 7:30 p. m. each day. These pilots are selected by rotation from the pilots of the Tennessee Air National Guard, and when they are engaged in this "scramble" they do so as reserve officers of the United States Air Force, having been recalled to active duty in the United States Air Force for this purpose. These flights average about one a day, and all of them pass over plaintiffs' property at varying altitudes.
24
The Commissioner found: "During the operation of flights by personnel of the Tennessee Air National Guard [both the `scrambles' and other flights], the disturbance of plaintiffs' enjoyment of their property" has been substantially of the same character as it was when the 355th Fighter Group of the United States Air Force was stationed at the McGhee-Tyson Airport, though to a lesser degree. This finding is unexpected to and has been adopted by the court as one of its findings of fact.
25
As heretofore stated, the Commissioner found that, considering the industrial targets under protection of air forces at the McGhee-Tyson Airport, it is to be presumed that some element of the United States Air Force, or some allied group, will be stationed at this airport for an indefinite period of time. When the Government asserted the right to fly its jet planes over plaintiffs' property at these low altitudes, it did not do so for a limited time, but for such time as it cared to use it, that is to say, for an indefinite time. When it inactivated the 355th Fighter Group at the McGhee-Tyson Airport, it did not abandon the easement, as is shown by the amendment to the lease. This amendment recited: "Whereas, the Department of the Air Force has deactivated the military units stationed at the facility, and suspended operations on the leased premises; * * *." The amendment to the lease also recited: "Said premises are to be used for military purposes and Tennessee Air National Guard purposes." (Italics supplied.) The easement taken by the United States was not abandoned; it was merely suspended except for the times it was used by pilots called into the service of the Air Force for the scrambles.
26
Moreover, the proof shows that the United States paid 75 percent of the cost of the maintenance of the 134th Fighter Group of the Tennessee Air National Guard. The United States Government did this in order that it might have in reserve an efficient, well-trained unit of the Tennessee Air National Guard which might be called into Federal service when needed. While the Tennessee Air National Guard was not a part of the armed forces of the United States until it was called into Federal service, nevertheless, it was supported by the military establishment as a reserve which could be called into Federal service at the will of the United States. The training of it was for the benefit of the United States, as well as for the benefit of the State of Tennessee, and hence the United States cannot escape liability for the use of the easement after it itself had discontinued its use of it and had turned it over to the Tennessee Air National Guard, especially since this use was by permission of the United States until such time as the United States itself elected to resume use of it.
27
By this we do not mean to say that under all circumstances the United States would be liable for the acts of a State National Guard which had not been called into Federal service. We merely say that under the circumstances of this case the United States is liable to pay compensation for the easement it took and which it asserts the right to continue to use, and which in the meantime it has permitted the Tennessee Air National Guard to use.
28
The Commissioner finds that the value of plaintiffs' property was $30,000, and that it had suffered a depreciation in value of 50 percent by reason of the flights of these jet airplanes over it. No exception is taken to this finding, and we have adopted it as a finding of fact by the court.
29
It results that the United States is liable for the taking of an easement of flight over plaintiffs' property at altitudes of 250 feet and above in the sum of $15,000. Judgment for this amount will be rendered, with interest at 4 percent per annum from the date of the taking, to compensate plaintiff for the delay in payment. Further proceedings will be held pursuant to Rule 38(c), 28 U.S.C.A. to determine the date of the taking. The United States is vested with an easement of flight over plaintiffs' property at altitudes of 250 feet and above for all types of planes.
30
It is so ordered.
31
JONES, Chief Judge, and DURFEE, LARAMORE, and MADDEN, Judges, concur.
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89 N.Y.2d 1 (1996)
674 N.E.2d 268
651 N.Y.S.2d 338
In the Matter of Jose Baez, Respondent-Appellant,
v.
Mary Jo Bane, as Commissioner of the New York State Department of Social Services, et al., Appellants-Respondents.
In the Matter of Cesar Cespedes, Respondent-Appellant,
v.
Mary Jo Bane, as Commissioner of the New York State Department of Social Services, et al., Appellants-Respondents.
In the Matter of Dorothy Linton, Respondent-Appellant,
v.
Michael J. Dowling, as Commissioner of the New York State Department of Social Services, et al., Appellants-Respondents.
In the Matter of Virgen Ayala, Respondent-Appellant,
v.
Michael J. Dowling, as Commissioner of the New York State Department of Social Services, et al., Appellants-Respondents.
Court of Appeals of the State of New York.
Argued September 10, 1996
Decided October 10, 1996.
Paul A. Crotty, Corporation Counsel of New York City (Alan G. Krams, Kristin M. Helmers and Pamela Seider Dolgow of counsel), for Commissioner of the New York City Department of Social Services, appellant-respondent in the four above-entitled proceedings.
Dennis C. Vacco, Attorney-General, New York City (Steven M. Connolly, Victoria A. Graffeo and Ronald P. Younkins of counsel), for Commissioner of the New York State Department of Social Services, appellant-respondent in the four above-entitled proceedings.
Jill Ann Boskey, Wayne G. Hawley, New York City, Susan Bondurant, Arnold Cohen, Long Island City, Cherie Howard and Cherie Gaines, Brooklyn, for respondents-appellants in the four above-entitled proceedings.
Chief Judge KAYE and Judges SIMONS, TITONE, SMITH, LEVINE and CIPARICK concur.
*5BELLACOSA, J.
The common question in these appeals is whether appellants, New York City and New York State Department of Social Services, forfeit all reimbursement with respect to Supplemental Security Income (SSI) retroactive benefit checks because of administrative delays of one to seven days, beyond the statutorily prescribed 10-day period, in forwarding excess benefit refunds to recipients. In the four cases before us, the Appellate Division held that the City and State lost reimbursement as to the entire sums of interim home relief benefits previously paid by them to the petitioners, because the excess amounts, ultimately transmitted by the Federal Government, were not refunded within the statutorily prescribed 10 working days (42 USC § 1383 [g] [4]). Petitioners, as cross appellants, also sought counsel fees, which the Appellate Division denied.
The Appellate Division granted cross applications for leave to appeal, and we now modify to dismiss the petitions in each case. We hold that forfeiture is not an authorized or appropriate remedy and, therefore, need not reach the counsel fee question.
*6Matter of Baez
Petitioner applied for Federal Supplemental Security Income disability benefits in September 1980. That application was denied in October 1984. He reapplied in October 1988, and in September 1989, the Social Security Administration issued a determination that he was disabled as of June 10, 1986, and was entitled to SSI benefits from that date. Baez appealed the Administration's determination on the ground that his disability had begun prior to the date determined.
While his applications for SSI benefits were pending, Baez applied for and received interim home relief benefits from the City. As a condition to receiving the interim payments, he was required to complete a written authorization allowing the Social Security Administration to remit SSI benefits later determined to be due to him to the New York City Department of Social Services (see, Social Services Law § 158 [a]). The Social Security Administration eventually sent the City Department of Social Services two checks constituting the initial retroactive SSI payment to Baez. The City received the first check in the amount of $8,953.65, on December 12, 1989, and six working days later notified Baez that it was retaining the entire amount of the check as partial reimbursement for the $11,379.67 of interim assistance it had paid to him during the period from June 10, 1986, through December 29, 1989. The City received the second check on December 20, 1989, in the amount of $8,827.19, for the balance of initial retroactive SSI benefits due Baez. Eleven working days later on January 8, 1990, the City notified Baez that it was also retaining the entire proceeds of the second check as reimbursement for previously paid interim home relief. On February 7, 1990, the Department corrected its calculations and sent Baez a check for $6,407.90 as excess proceeds from the second check, along with notices of explanation. Only these payments are in issue, although others were challenged below and are no longer relevant under this Court's decision in Matter of Rodriguez v Perales (86 N.Y.2d 361).
By letter dated July 1, 1992, Baez requested a fair hearing before the New York State Department of Social Services concerning the recovery of amounts in the SSI checks sent to the City in 1989 and early 1990 the only ones still at issue. The State rejected Baez's argument that the City lost the opportunity to seek any reimbursement for amounts of interim assistance it had paid because of its failure to remit to him the *7 balance of SSI benefits in excess of the reimbursable amount within 10 working days (18 NYCRR 353.2 [c] [4]). Baez commenced this CPLR article 78 proceeding seeking to annul the State's determination. Supreme Court granted the petition, annulled the determination and ordered the City to return all but the initial retroactive SSI benefit check (159 Misc 2d 838).
Matter of Cespedes
Petitioner applied for SSI disability benefits in May 1988, and his application was approved by the Social Security Administration in March 1992, with benefits payable retroactive to May 1988. On May 15, 1992, the City received a check for $6,399.03 in retroactive SSI benefits and on May 19, 1992, the City received a second check for $8,076.82 constituting the balance of retroactive SSI benefits due Cespedes. On June 9, 1992, 17 working days after receiving the first check and 13 working days after receiving the second check, the City gave notice to Cespedes that the entire balance of the first check and all but $390.85 of the second check would be retained as reimbursement for $14,085 in interim assistance the City had paid him during the period September 1988 to May 1992. The State Department of Social Services essentially ruled in favor of the City on Cespedes' fair hearing application. Cespedes initiated this article 78 proceeding. The trial court held that the City was required to refund the entire amount of retroactively refunded interim relief which it had held more than 10 working days.
Matter of Linton
Petitioner applied for SSI disability benefits in December 1990, and her application was approved in September 1992, with benefits payable retroactive to the date of her application. On November 10, 1992, the City received a SSI benefits check on her behalf for $508 and on November 30, 1992, 12 working days later, gave notice that it was retaining the entire amount of the check as partial reimbursement for the $6,291.25 in interim home relief it had paid her. On December 15, 1992, the City received a second SSI benefit check for $9,713.49 and on December 31, 1992, 11 working days later, it notified Linton that it deducted $5,783.25 from this check and refunded to her the excess balance of $3,930.24.
Linton requested a fair hearing in January 1993. She challenged the City's right to any reimbursement from the first check which she claimed was not subject to levy because it was *8 not a retroactive payment. She also asserted that the City did not have any right to reimburse itself from the proceeds of the second check because it did not comply with the applicable 10-day limit. The State determined that the City was not required to turn over the entire amount of SSI benefits received just because of the slight delay in payment beyond the prescribed 10 days.
Linton initiated this article 78 proceeding seeking annulment of the State's determination and a refund of all proceeds the City withheld from the retroactive reimbursement on the ground that its delay beyond the statutory period barred the retention of any amount of previously paid interim assistance. Supreme Court denied the petition holding that she was not entitled to a duplicative recovery based solely on the City's slight delay in processing the reimbursement.
Matter of Ayala
Petitioner received interim home relief benefits from July 1989 through June 1992, during which time her application for SSI disability benefits was pending. Following approval of her application for SSI benefits retroactive to July 1989, the Social Security Administration forwarded two SSI benefit checks to the City. The first check, for $6,977, was received on September 22, 1992, and the second check, for $9,720.55, representing the balance of retroactive SSI benefits, was received on September 28, 1992.
On October 15, 1992, 17 working days after receiving the first check and 13 working days after receiving the second check, the City notified Ayala that the home relief payments advanced to her during the pendency of her application for Federal benefits totaled $11,601.78, and that she was entitled to a refund of $5,095.77 as an excess payment from the two SSI checks. Ayala requested a fair hearing seeking a refund of the entire SSI reimbursement benefits retained by the City due to its failure to refund the excess benefits within 10 working days. The State rejected the argument. Ayala commenced this article 78 proceeding seeking to annul the State's determination. Supreme Court dismissed the petition holding that there was no statutory authorization for forfeiting the City's right to reimbursement based merely on its failure to make the partial refund within 10 working days.
I.
Following the trial court determinations in these four matters, a consolidated appeal was heard and decided by the Appellate *9 Division (220 AD2d 166). Relying heavily on the Second Circuit Court of Appeals decision in Rivers v Schweiker (692 F.2d 871 [1982], cert denied sub nom. Rivers v Blum, 460 US 1088), the Appellate Division held that the City lost reimbursement to any sums when it failed to comply with the 10-working-day limitation in 42 USC § 1383 (g) (4) (220 AD2d, at 173). It also denied the petitioners' applications for attorney's fees. The Appellate Division noted that although the Second Circuit did not order forfeiture as a remedy, the City's continuing failure to comply prospectively with the Rivers limited decree during the ensuing 10-year period demonstrated a bureaucratic lapse justifying the forfeiture remedy (220 AD2d, at 172-173).
With respective certified questions, the Appellate Division granted motions for leave to appeal by the City and State as to the grant of the petitions with the forfeiture remedy, and also granted the petitioners' motions to cross-appeal with respect to the denial of attorney's fees. We now modify the order of the Appellate Division by dismissing the petitions in all four cases, thus obviating any need to address the attorney's fees issue.
II.
The City and State concede that they are statutorily required to remit excess refundable SSI benefit payments to SSI recipients within 10 working days. They assert, however, that their failure to do so does not legally effect a forfeiture of the right to appropriate reimbursement for interim home relief payments, actually and already paid to recipients.
The SSI program provides that where a State grants "interim assistance" to applicants awaiting SSI benefits rulings who are later determined to be entitled retroactively to such benefits, the State may be reimbursed from the eventual Federal payment of SSI benefits for the amounts of State-City paid interim assistance during the application period (42 USC § 1383 [g]). To accomplish this protection against what would otherwise constitute double payments, the State must enter into an agreement with the Social Security Administration. The arrangement allows the Social Security Administration to make payments to the State or its political subdivision (New York City in these cases) as reimbursement for the paid interim assistance. When the Federal check is greater than the amount of State interim assistance paid to the recipient, "the State (or political subdivision) shall pay to the individual the balance of such payment in excess of the reimbursable amount as expeditiously as possible, but in any event within ten working days or *10 a shorter period specified in the agreement" (42 USC § 1383 [g] [4] [A] [emphasis added]; see, 20 CFR 416.1910 [b] [1]). The initial SSI benefit payment may be sent directly to the State or local agency upon written authorization from the beneficiary (42 USC § 1383 [g] [1]).
Social Services Law § 211 (5) authorizes the New York State Department of Social Services to enter into agreements with the Federal Government, and such agreements were in effect in these cases. As a condition of eligibility for interim home relief benefits from the State, recipients are required to sign an authorization allowing the Federal agency to pay initial SSI payments directly to the local social services district and allowing the district to recoup any reimbursable interim home relief benefits previously paid to the recipient (Social Services Law § 158 [a]). The petitioners in these cases completed this authorization and the Social Security Administration forwarded the initial SSI payments to the City as previously described.
The petitioners assert that the clear words and policy of this temporal feature of the statute dictate that the City's failure to refund the excess SSI benefits within 10 working days causes a forfeiture of any reimbursement of any portion of these checks. We conclude that they misread the purport and effect of this aspect of the statute.
The SSI Interim Assistance Reimbursement program was enacted by Congress in 1974 (42 USC § 1383 [g], added by Pub L 93-368 § 5) in response to the Supreme Court's decision in Philpott v Essex County Welfare Bd. (409 US 413). It construed the Social Security Act's antiattachment provision (42 USC § 407 [a]; see, 42 USC § 1383 [d] [1]) as barring States from recouping payments out of retroactive SSI payments. The purpose of the 1974 amendment was to allow the Federal Government to reimburse States for emergency assistance provided to SSI recipients during the frequently extended Federal application review process (see, 120 Cong Rec 20,968 [1974] [statement by Senator Taft]). In commenting upon legislation, two years later, to make the reimbursement program permanent (Pub L 94-365), the Congressional Budget office noted that "[i]n the absence of this reimbursement provision, no State would have the incentive to make interim payments" (HR Rep No. 1296, 94th Cong, 2d Sess 3-5, reprinted in 1976 US Code Cong & Admin News 1726, 1729-1730).
This legislative history demonstrates that the plain thrust of the Interim Assistance Reimbursement program was to induce *11 States to provide temporary assistance to SSI recipients while their benefit applications were being reviewed by Federal administrators (see, Moore v Colautti, 483 F Supp 357, 363, n 6 [ED Pa 1979], affd 633 F.2d 210). Petitioners concede the lack of any express statutory penalties against State and municipal agencies for failing to timely remit excess reimbursements to SSI beneficiaries within the 10-working-day limitation. Indeed, such a drastic remedy as forfeiture of reimbursement of once-already paid benefits would discourage States from providing interim assistance. Thus, neither the governing statutory language nor the purpose and policy of the statute support petitioners' argument and the Appellate Division holding. These are highly technical, fiscally nuanced, interlocking programs. Courts should not, in effect, create and promulgate such a remedy for bureaucratic lapses concerning this kind of statutory timing mechanism, when the legislation itself has specified no sanction and certainly none of this breadth and consequence (see, United States v James Daniel Good Real Prop., 510 US 43, 63-64).
III.
Petitioners also argue that after the statutory 10-day period has passed, the full SSI retroactive benefit checks "vest" in them. They build this argument on their perception of the holding in Rivers v Schweiker (692 F.2d 871, supra). They urge that Rivers stands for the proposition that forfeiture against municipal agents can be an appropriate penalty at this point in the history and administration of this statute and its long-contested entanglements. This argument finds no support in Rivers and takes its holding and meaning too far beyond sustainable statutory and juridical limits.
In Rivers, members of a class of SSI beneficiaries who had applied for and received interim assistance benefits from the State, challenged, among other practices, the failure of the City and State to make timely refunds of excess SSI benefits over those used to account for dollar-to-dollar reimbursement (Rivers v Schweiker, 523 F Supp 783, 785 [SD NY 1981], affd 692 F.2d 871, cert denied sub nom. Rivers v Blum, 460 US 1088, supra). The District Court found that the statute was clear and ordered the City and State to process refund checks within the statutory period (Rivers v Schweiker, supra, 523 F Supp, at 788-789). In reaching its conclusion, the court noted that the record showed that in December 1979, the average processing time for retroactive SSI checks was over 16 days and that only *12 a little over 1% of checks were processed in a timely fashion (id., at 788).
Contrary to petitioners' assertion in these four appeals, nothing in the District Court holding in Rivers suggests that 42 USC § 1383 (g) (4) was intended to create a "vested right" in SSI beneficiaries to the entire proceeds of retroactive SSI benefits checks upon the mere passage of 10 working days, following their receipt by the City, without payment of the excess nonreimbursable amounts. The very fact that the court in Rivers did not deprive the City of reimbursement, as it would have been required to do if it had found that title to the benefits had legally transferred to and vested in the recipients, serves to defeat petitioners' legal reasoning in this argument. Pointedly, the court instead limited its decree to requiring the City to fulfill its obligation to timely process SSI checks (Rivers v Schweiker, supra, 523 F Supp, at 789). On appeal, the Second Circuit also rejected the vesting argument now proffered (Rivers v Schweiker, 692 F.2d 871, 874, supra).
Petitioners lastly urge that the Second Circuit's affirmance in Rivers (692 F.2d 871, supra) impliedly acknowledges the existence and propriety of the forfeiture remedy. We find no persuasive support or basis for this remedial leap. The court in its decision did not hold or imply that forfeiture was an available remedy under 42 USC § 1383 (g), but rather stated that the plaintiffs in that case had an available remedy under the Federal Rules of Civil Procedure if the City and State are found to be deficient in complying with the District Court order (Rivers v Schweiker, supra, 692 F2d, at 874). The court noted that there was a "reasonable basis" for the limited injunctive relief granted by the District Court and, therefore, the Federal trial court decision was not disturbed (id., at 874).
Our decision today that the forfeiture remedy granted by the Appellate Division in these cases is unavailable does not mean that petitioners and similarly situated, entitled and aggrieved recipients of public aid are without legal recourse should circumstances not now before us develop and warrant. As the City and State concede, the 10-day time prescription in 42 USC § 1383 (g) (4) is mandatory and should be satisfied. We note also that the City has represented, without contradiction from petitioners' counsel, that it has been meeting its obligation to refund excess SSI retroactive benefit amounts within the 10-day period. That compliance should continue.
Rivers remains cogently instructive and precedentially viable. There, the record evidence demonstrated that there was a *13 consistent failure on the part of the City to make refunds to SSI beneficiaries within the 10-day period. Based on that evidence, the court was able to find that the City had failed systemically and egregiously to comply with the statute. It fashioned a remedy which took into account the interests of all class members, while still giving effect to the statutory purpose (Rivers v Schweiker, 523 F Supp 783, 788-789, supra).
The four petitioners here, on the other hand and in effect, seek windfall damages in addition to entitlement benefits. Such extraordinary relief was not granted in Rivers and we are satisfied that it is not warranted on these records. Since the other branches of government have not enacted and directed such a remedy, neither should the courts within this statutory regime and in these circumstances. The finite public purse should not have to suffer such double debits.
Accordingly, the order of the Appellate Division should be modified, without costs, and the petitions dismissed in their entirety and, as so modified, affirmed. The respective certified questions need not be answered as the Appellate Division order is final.
Order modified, without costs, by dismissing the petitions in their entirety and, as so modified, affirmed. Certified questions not answered upon the ground that the order appealed from in each proceeding is final and the certified questions are thus unnecessary.
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Opinion issued October 7, 2004
In The
Court of Appeals
For The
First District of Texas
NO. 01-03-00280-CR
____________
JASON F. TARR, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the County Court at Law
Walker County, Texas
Trial Court Cause No. 02-368
MEMORANDUM OPINION
A jury found appellant, Jason F. Tarr, guilty of the offense of disorderly
conduct
and assessed punishment at a fine of $350. In two points of error, appellant
contends that the trial court erred in denying appellant’s motion for new trial and that
the evidence was legally and factually insufficient to sustain his conviction.
We affirm.
Factual Background
Huntsville Police Officer D. Warner testified that, while he was on patrol during
the early morning hours of July 20, 2001, he saw appellant standing in a public
parking lot outside of a bar on Sam Houston Avenue in Huntsville. Appellant’s legs
were “somewhat spread” and he was facing away from the road. Although appellant
was not facing Warner, and he could not see appellant’s hands, Warner saw
appellant’s “elbows and arms hanging down in front” of appellant and “what appeared
to be a stream of urine coming from in front of [appellant].”
Warner then drove into the parking lot to investigate the situation. Upon his
arrival, Warner saw appellant “zipping up” and “buttoning” his pants. Warner then
got out of his marked patrol car, walked toward appellant, and identified himself as
a police officer. Warner saw a puddle of liquid on the ground which, based on his
experience, “smelled like urine.” Warner testified that appellant was not holding a cup
or any other container which could have been a potential source of the liquid on the
ground. Warner admitted that he did not see appellant’s genitals; however, he
believed that the circumstantial evidence indicated that appellant’s genitals had been
exposed when he was urinating. Based on what he observed, Warner issued appellant
a citation for disorderly conduct.
Appellant testified that, after leaving the bar, he was in the process of changing
his shirt in the parking lot because a drink had been spilled on him inside the bar.
Appellant stated that he was tucking in his shirt and closing his pants just as Officer
Warner arrived. Appellant also testified that Emily Drummel, his date that evening,
had accompanied him to the parking lot as he changed his shirt. Appellant stated that,
prior to Warner’s arrival, Drummel had urinated on the ground in the same area where
appellant was standing. Appellant testified that Drummel was the source of the urine
that Warner had observed on the ground. However, appellant did not mention this to
Warner at any time prior to or after receiving the citation, and he explained that he did
not do so because he “didn’t want [Drummel] to get in trouble.”
Two of appellant’s friends, Eric Delacruz and Christine Valentine, testified that
they were within appellant’s immediate vicinity when the incident occurred. Delacruz
testified that Drummel was the source of the urine that Warner had seen on the ground,
not appellant. Delacruz also stated that appellant had recently changed his shirt and
was in the process of zipping up his pants when Warner arrived. Valentine testified
that she too saw appellant changing his shirt and zipping up his pants upon Warner’s
arrival. Valentine did not know the source of the urine on the ground.
Sufficiency of the Evidence
In his second point of error, appellant argues that the evidence was legally and
factually insufficient to support the jury’s verdict because “the legislature clearly
intended that the [entire] genitals, and not just part of the genitals, be exposed in the
instant case in order for the conviction to stand” and that “the record is devoid of
evidence that any part of the Appellant’s genitals were [sic] exposed within the
contemplation of the statute.”
In reviewing the evidence on legal sufficiency grounds, we view the evidence
in the light most favorable to the verdict to determine whether any rational trier of fact
could have found the essential elements of the offense beyond a reasonable doubt.
King v. State, 29 S.W.3d 556, 562 (Tex. Crim. App. 2000). In reviewing the evidence
on factual sufficiency grounds, all of the evidence as a whole must be reviewed
neutrally, not in the light most favorable to the prosecution. Johnson v. State, 23
S.W.3d 1, 7 (Tex. Crim. App. 2000). A factual sufficiency review asks whether a
neutral review of all the evidence, both for and against the finding, demonstrates that
the proof of guilt is so obviously weak as to undermine confidence in the jury’s
determination, or whether the proof of guilt, although adequate if taken alone, is
greatly outweighed by contrary proof. Id. at 11.
A person commits the offense of disorderly conduct if he intentionally or
knowingly “exposes his anus or genitals in a public place and is reckless about
whether another may be present who will be offended or alarmed” by this conduct.
Tex. Pen. Code Ann. § 42.01(a)(10) (Vernon Supp. 2004-2005). Because there is no
statutory definition of “expose,” we give the word its ordinary meaning: “to lay open
to view.” McGee v. State, 804 S.W.2d 546, 547 (Tex. App.—Houston [1st Dist.]
1991, no pet.). Here, the State was only required to prove that appellant’s genitals
were “open to view,” not that a person actually saw his genitals. See Wilson v. State,
9 S.W.3d 852, 856 (Tex. App.—Austin 2000, no pet.).
Appellant’s legal sufficiency argument is based on a false premise. Section
42.10(a)(10) does not expressly require that a person must expose his or her genitals,
in their entirety, to commit an offense. Tex. Pen. Code Ann. § 42.01(a)(10). In
construing the word “genitals,” “Texas courts have treated a specific area of the
genitals synonymously with the genitals as a whole.” Claycomb v. State, 988 S.W.2d
922, 925 (Tex. App.—Texarkana 1999, pet. ref’d) (holding evidence legally sufficient
where indictment alleged that defendant “exposed his genitals” and State proved that
defendant exposed his penis). Here, Officer Warner testified that he saw appellant
urinating in a public parking lot and that, from this, he concluded that appellant had,
therefore, knowingly exposed himself in a public place. It is reasonable for the jury
to have concluded that, for appellant to have been zipping up his pants after urinating
in a public parking lot—creating a stream of urine between his legs, as Officer Warner
testified that he observed—at least some portion of appellant’s genitals would have
been “open to view.” The testimony was undisputed that the parking lot was an open,
public place, was located next to a major thoroughfare, and that various other persons
were present or walking to their vehicles as they left the adjacent bar. At trial, there
was no evidence contradicting Officer Warner’s testimony concerning appellant’s
recklessness with regard to whether any persons were present who would have seen
and would have been offended or alarmed by his conduct. Accordingly, we hold that
the evidence was legally sufficient to prove the essential elements of disorderly
conduct beyond a reasonable doubt.
As noted above, appellant did not contest the issue of his alleged recklessness
with regard to whether any persons were present who would have been offended or
alarmed by his conduct. Rather, in his defense, he asserted that he had not urinated
and that his date, Drummel, had been the source of the urine in the parking lot. In
support of his argument that the evidence was factually insufficient to support the
jury’s verdict, appellant relies on his own testimony, as well as that of Delacruz and
Valentine. Appellant testifed that his date, Drummel, created the puddle of urine
observed by Warner and that, at the time that Warner arrived at the parking lot,
appellant was merely changing his shirt. Delacruz testified that Drummel had urinated
on the ground and that appellant was merely closing his pants after having changed
his shirt. Valentine also testified that appellant was closing his pants after having
changed his shirt.
Under both a legal and a factual sufficiency review, we may not substitute our
own judgment for that of the fact finder. Jones v. State, 944 S.W.2d 642, 648 (Tex.
Crim. App. 1996). A jury’s resolution of conflicting testimony and evidence against
a party does not make the jury’s finding “clearly wrong and unjust.” Cain v. Bain, 709
S.W.2d 175, 176 (Tex. 1986). As the fact finder, the jury was entitled to judge the
credibility of the witnesses and to determine what weight to give to their testimony.
See id. Here, the jury apparently chose to believe the testimony of Officer Warner, and
not that of appellant and the defense witnesses, concerning whether appellant had
urinated in the parking lot. Based on the record presented, and viewing all of the
evidence neutrally, we hold that the proof of guilt was not so obviously weak as to
undermine confidence in the jury’s determination and that the proof of guilt, although
adequate if taken alone, was not greatly outweighed by contrary proof. Johnson, 23
S.W.3d at 11.
We overrule appellant’s second point of error.Motion for New Trial
In his first point of error, appellant argues that the trial court erred in denying
his motion for new trial because the evidence was insufficient to support the jury’s
verdict. Having held that the evidence was legally and factually sufficient to support
the jury’s verdict, we further hold that the trial court did not err in denying appellant’s
motion for new trial on this ground. See McCall v. State, 113 S.W.2d 479, 480 (Tex.
App.—Houston [1st Dist.] 2003, no pet.) (“We apply the same standard of review to
a trial court’s denial of a motion for new trial brought on the basis of insufficient
evidence as we do to appellate review of challenges to the legal sufficiency of the
evidence.”).
We overrule appellant’s first point of error.Conclusion
We affirm the judgment of the trial court.
Terry Jennings
Justice
Panel consists of Justices Taft, Jennings, and Bland.
Do not publish. See Tex. R. App. P. 47.2(b).
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573 F.2d 1311
U. S.v.Galvez
No. 77-5147
United States Court of Appeals, Sixth Circuit
12/9/77
E.D.Mich
AFFIRMED
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ST/Yfr f:!- MiVA^iyr-fA^
ifllG 0CT26 AH 9: 19
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
STATE OF WASHINGTON, No. 72101-1-
Respondent,
v.
DONALD HOWARD TURPIN, PUBLISHED OPINION
Appellant. FILED: October 26, 2015
Verellen, J. — This appeal presents the question whether the public trial right is
implicated when a trial judge excuses a juror who reports as ill while court is not in
session. Donald Turpin fails to show the excusal for illness constituted a process that
has historically been open to the public, and public access does not play a significant
role in that administrative process. Because neither prong of the experience and logic
test is satisfied, Turpin's public trial right is not implicated. Accordingly, we affirm.
FACTS
The State charged Donald Turpin with burglary in the second degree, theft in the
first degree, trafficking in stolen property in the first degree, and leading organized
crime. At the close of evidence, the court instructed the jury and announced that
closing arguments would begin after a recess for lunch. The lunch recess lasted
approximately two hours. Once the jurors returned, the court stated, "Ladies and
gentlemen, Juror Number 3 got sick, you probably know that, and so we've excused
No. 72101-1-1/2
Juror Number 3. Could our alternate juror please take your materials and please have a
seat right there? You're on the jury now."1
The clerk's minutes note that the juror's excusal occurred off the record:
11:27:40 Recess
Off Record:
Due to illness, Juror 3 is excused from further consideration of this cause.
The Court instructs the Bailiff to excuse Juror 3.
On Record:
1:22:54 Jury present.
The court having excused Juror 3, Juror 14 will take Juror 3's place.[2]
Turpin did not object to the sick juror's excusal or to the replacement with the
alternate juror. The jury ultimately found Turpin guilty as charged.
Turpin appeals and seeks to "reconstruct" the record to prove a courtroom
closure occurred.
ANALYSIS
Turpin argues the court violated his public trial right when it excused the sick
juror off the record. But we conclude the court's excusal of the juror did not implicate
Turpin's public trial right.
An alleged violation of the right to a public trial presents a question of law that
this court reviews de novo.3 Both our federal and state constitutions guarantee a
1 Report of Proceedings (RP) (May 21, 2014) at 1105.
2 Clerk's Papers (CP) at 217.
3 State v. Wise. 176Wn.2d 1, 9, 288 P.3d 1113(2012).
No. 72101-1-1/3
criminal defendant's right to a public trial.4 Article I, section 10 of the Washington
Constitution provides an additional guaranty of open court proceedings. "Justice in all
cases shall be administered openly, and without unnecessary delay."5 There is a strong
presumption that courts are to be open at all stages of trial.6
A party who proposes closure of a proceeding must show "an overriding interest
based on findings that closure is essential to preserve higher values and narrowly
tailored to serve that interest."7 In State v. Bone-Club, our Supreme Court set forth a
five-factor test courts must use to evaluate the constitutionality of a proposed closure.8
4 Id, (citing Wash. Const, art. I, § 22; U.S. Const, amend. VI).
5 Wash. Const, art. I, § 10.
6 State v. Sublett. 176 Wn.2d 58, 70, 292 P.3d 715 (2012).
7 State v. Momah. 167 Wn.2d 140, 148, 217 P.3d 321 (2009).
8128 Wn.2d 254, 906 P.2d 325 (1995). The Supreme Court held that trial courts
must consider the following factors on the record:
"1. The proponent of closure or sealing must make some showing
[of a compelling interest], and where that need is based on a right other
than an accused's right to a fair trial, the proponent must show a 'serious
and imminent threat' to that right.
2. Anyone present when the closure motion is made must be given
an opportunity to object to the closure.
3. The proposed method for curtailing open access must be the
least restrictive means available for protecting the threatened interests.
4. The court must weigh the competing interests of the proponent of
closure and the public.
5. The order must be no broader in its application or duration than
necessary to serve its purpose."
Jd. at 258-59 (alteration in original) (quoting Allied Daily Newspapers v. Eikenberry. 121
Wn.2d 205, 210-11, 848 P.2d 1258 (1993)).
No. 72101-1-1/4
Our Supreme Court has held that a public trial claim may be raised for the first time on
appeal and that a violation is generally structural error warranting a new trial.9
"But not every interaction between the court, counsel, and defendants will
implicate the right to a public trial or constitute a closure if closed to the public."10
Before deciding if the court violated Turpin's right to a public trial, we must determine if
the process at issue "implicates the public trial right, thereby constituting a closure at
all."11 In State v. Sublett, our Supreme Court adopted the experience and logic test
articulated by the United States Supreme Court to determine if a particular process
must remain open to the public absent a Bone-Club analysis.12
The first part of the test, the experience prong, asks "whether the place
and process have historically been open to the press and general public."
The logic prong asks "whether public access plays a significant positive
role in the functioning of the particular process in question."[13]
The guiding principle is "whether openness will 'enhance[ ] both the basic fairness of the
criminal trial and the appearance of fairness so essential to public confidence in the
system.'"14 If the answer to both questions is "yes," the public trial right attaches, and
9 State v. Nionqe. 181 Wn.2d 546, 554, 334 P.3d 1068, cert, denied. 135 S. Ct.
880, 190 L Ed. 2d 711 (2014).
10 Sublett, 176Wn.2dat71.
11 id,
12 176 Wn.2d 58, 73, 292 P.3d 715 (2012) (rejecting the distinction between legal
and ministerial proceedings and adversarial and factual proceedings to determine
whether the proceeding at issue implicates the public trial right) (citing Press-Enter. Co.
v. Superior Court. 478 U.S. 1, 8-10, 106 S. Ct. 2735, 92 L. Ed. 2d 1 (1986)).
13 jd, (citation omitted) (quoting Press-Enter., 478 U.S. at 8).
14 jd, at 75. (alteration in original) (quoting Press-Enter, v. Superior Court. 464
U.S. 501, 508, 104 S. Ct. 819, 78 L. Ed. 2d 629 (1984)).
No. 72101-1-1/5
the superior court must apply the Bone-Club factors to evaluate whether a proposed
closure is constitutional.15
The public trial right analysis has evolved significantly over the last few years. In
2014, our Supreme Court utilized a three-step inquiry to analyze public trial right
claims.16 Applying the threshold experience and logic test, a court first focuses on the
process at issue to determine whether the public trial right is implicated.17 Second, the
court asks whether a closure occurred.18 Third, the court examines whether the closure
was justified.19 If the court concludes after applying the experience and logic test that
the right to a public trial does not apply to the process, it need not reach the second and
third steps in the analysis.20
Experience
Here, the process at issue is the administrative process of excusing jurors who
report as ill while court is not in session. Washington cases demonstrate that the
"experience" regarding the overall process of excusing sitting jurors and prospective
jurors draws a distinction between purely administrative decisions and decisions based
on challenges for cause.
In State v. Wilson, Division Two of this court held that Wilson failed to show the
excusal of two jurors who were physically ill before voir dire began in the courtroom was
15 State v. Paumier, 176 Wn.2d 29, 35, 288 P.3d 1126 (2012): State v. Wise, 176
Wn.2d 1, 12, 288 P.3d 1113 (2012).
16 State v. Smith, 181 Wn.2d 508, 513-14, 334 P.3d 1049 (2014).
17 id,
18]d,
19JU
20 Id. at 519.
No. 72101-1-1/6
improper or constituted a process that has historically been open to the general public.21
The Wilson court determined that "both the Legislature and our Supreme Court have
acknowledged that a trial court has discretion to excuse jurors outside the public
courtroom for statutorily-defined reasons, provided such juror excusals do not amount to
for-cause excusals or preemptory challenges traditionally exercised during voir dire in
the courtroom."22 Because the trial court had broad discretion to excuse prospective
jurors upon a showing of undue hardship or any reason deemed sufficient by the court
pursuant to RCW 2.36.100(1), Wilson failed to satisfy the experience prong of the
experience and logic test.23
Other cases also recognize the distinction between pure administrative excusals
and other juror disqualifications.24 The basic distinction between purely administrative
excusals and other disqualifications is consistent with RCW 2.36.110 and CrR 6.5
standards. "RCW 2.36.110 and CrR 6.5 place a continuous obligation on the trial court
21 174 Wn. App. 328, 345, 298 P.3d 148 (2013).
22 jd, at 344 (footnote omitted).
23 id, at 346. RCW 2.36.100(1) provides: "Except for a person who is not
qualified for jury service under RCW 2.36.070, no person may be excused from jury
service by the court except upon a showing of undue hardship, extreme inconvenience,
public necessity, or any reason deemed sufficient by the court for a period of time the
court deems necessary."
24 See State v. Russell. No. 85996-5, 2015 WL 4943899, at *5 (Wash. Aug. 20,
2015) ("Determining whether a juror is able to serve at a particular time or for a
particular duration (as in hardship and administrative excusals) is qualitatively different
from challenging a juror's ability to serve as a neutral factfinder in a particular case (as
in peremptory and for-cause challenges)."); State v. Love, 183 Wn.2d 598, 606, 354
P.3d 841 (2015) ("Unlike administrative or hardship excusals, for cause and peremptory
challenges can raise questions about a juror's neutrality and a party's motivation for
excusing the juror that implicate the core purpose of the right, and questioning jurors in
open court is critical to protect that right.").
No. 72101-1-1/7
to excuse any juror who is unfit and unable to perform the duties of a juror."25
RCW 2.36.110 states, "It shall be the duty of a judge to excuse from further jury service
any juror, who in the opinion of the judge, has manifested unfitness as a juror by reason
of. . . any physical or mental defect or by reason of conduct or practices incompatible
with proper and efficient jury service."26 Similarly, CrR 6.5 directs that if"at any time
before submission of the case to the jury a juror is found unable to perform the duties[,]
the court shall order the juror discharged."
Although no cases directly address midtrial off-the-record excusals of jurors who
report as ill, the general "experience" with excusing ill jurors is to allow the trial court to
make such purely administrative decisions off the record. Notably here, the juror's
illness came to light during a lunch recess while court was not in session. The court's
broad discretion to administer the process of dealing with an ill juror necessarily
includes making contemporaneous decisions about whether to excuse that juror.
Turpin fails to show the excusal of the juror who reported as ill while the court
was not in session constituted a process that has historically been open to the public.
Accordingly, he fails to satisfy the experience prong of the Sublett test.
Logic
Turpin also fails to satisfy the logic prong of the test. He has not shown that
"public access plays a significant positive role in the functioning of the process of
25 State v. Jorden, 103 Wn. App. 221, 227, 11 P.3d 866 (2000) (emphasis added)
(trial court's removal of a juror on grounds that her fitness as a juror had been
compromised, without further questioning of the juror, was not an abuse of discretion);
see also State v. Elmore. 155 Wn.2d 758, 773, 123 P.3d 72 (2005) ("Washington and
other courts have granted broad discretion to the trial judge in conducting an
investigation of jury problems.").
26 (Emphasis added.)
No. 72101-1-1/8
excusing a juror who reports as ill when court is not in session.27 There are few
alternatives when a juror becomes ill during a court recess. Turpin concedes that the
court has the authority to allow an ill juror to receive medical attention, go to the
hospital, or visit a doctor and that the court can make that decision off the record.
Turpin argues that the court must defer making any "formal" decision whether to
legally excuse a juror until court has resumed. But delaying such a decision is not a
significant positive role in the functioning of that process. On the contrary, it would play
a negative role to compel the court to artificially delay making a decision whether to
excuse an ill juror until court is back in session. An excusal for illness off the record
does not implicate the basic fairness of Turpin's trial or the appearance of fairness
essential to public confidence, especially when, as here, the court promptly announced
its decision in open court as soon as court was back in session.
Turpin relies upon State v. Jones, where Division Two of this court held that the
random drawing of alternate jurors by the court clerk during a recess at the close of
evidence constituted a courtroom closure that implicated Jones's public trial right.28 In
analyzing the logic prong, the Jones court focused on two of the purposes of the public
trial right: "basic fairness to the defendant and reminding the trial court of the
importance of its functions."29 The court concluded those purposes were implicated
because the off-the-record selection by the court clerk lacked safeguards against
manipulation and chicanery:
27 Sublett, 176 Wn.2d at 73 (quoting Press-Enter. Co.. 478 U.S. at 8).
28 175 Wn. App. 87, 91, 303 P.3d 1084 (2013).
29 jd, at 101-02.
8
No. 72101-1-1/9
The issue is not that the drawing in this case was a result of manipulation
or chicanery on the part of the court staff member who performed the task,
but that the drawing could have been. Where such a drawing occurs
during a court recess off the record, the defendant and the public lack the
assurance of a truly random drawing that they would have if the drawing
were performed in open court on the record. This lack of assurance raises
serious questions regarding the overall fairness of the trial and indicates
that court personnel should be reminded of the importance of their duties.
Accordingly, we conclude that considerations of logic "implicate the core
values the public trial right serves."[30]
But the concerns of possible manipulation and chicanery in Jones are not
present here. The record reflects that the juror's off-the-record excusal was promptly
memorialized in the clerk's minutes shortly after the jury returned to their seats after
lunch. And the court contemporaneously went on the record to expressly acknowledge
"Juror Number 3 got sick, you probably know that, and so we've excused Juror Number
3."31 Thus, both the clerk's minutes and the record negated any concerns about
secrecy and informed the public of what had occurred.
Once the court determined Juror 3 was physically unfit to serve, the logical and
practical course of action was to excuse Juror 3 and seat the alternate juror. Consistent
with Wilson, Juror 3's off-the-record excusal for illness, rather than for cause or
misconduct, was not "'a proceeding so similar to the trial itself that the same rights
attach, such as the right to appear, to cross-examine witnesses, to present exculpatory
evidence, and to exclude illegally obtained evidence.'"32 Instead, it was a purely
administrative process unrelated to the substantive facts of Turpin's case, which did not
30 Id, (quoting Sublett, 176 Wn.2d at 72).
31 RP (May 21, 2014) at 1105 (emphasis added).
32 Wilson, 174 Wn. App. at 346 (quoting Sublett. 176 Wn.2d at 77).
No. 72101-1-1/10
invoke any of the "concerns the public trial right is meant to address regarding perjury,
transparency, or the appearance of fairness."33
We need not address whether disqualification of a sitting juror on other grounds
would implicate the public trial right. As to illness revealed while court is not in session,
the public trial right is not implicated.
We need not address Turpin's argument about closure nor his motion to
reconstruct the record as it relates to closure.
Affirmed.
WE CONCUR:
Y«y/ur^ GI QnktA
33 Smith. 181 Wn.2d at 518; see State v. Sadler, 147 Wn. App. 97, 114, 193P.3d
1108 (2008) ("A defendant does not, however, have a right to a public hearing on purely
ministerial or legal issues that do not require the resolution of disputed facts.).
10
| {
"pile_set_name": "FreeLaw"
} |
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as State
v. Pountney, Slip Opinion No. 2018-Ohio-22.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2018-OHIO-22
THE STATE OF OHIO, APPELLANT, v. POUNTNEY, APPELLEE.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as State v. Pountney, Slip Opinion No. 2018-Ohio-22.]
Criminal law—R.C. 2925.11(C)(1)(c)—Aggravated possession of drugs—
Fentanyl—Enhanced felony levels—R.C. 2925.01(D)(1)(d)—Definition of
“bulk amount”—Because state failed to prove maximum daily dose in the
usual dose range specified in a standard pharmaceutical reference manual
for transdermal fentanyl, it failed to establish the “bulk amount” of that
drug for purposes of increasing felony level—State may not rely on usual
dose range of morphine to establish bulk amount of transdermal fentanyl—
Judgment of the court of appeals affirmed.
(No. 2016-1255—Submitted September 13, 2017—Decided January 4, 2018.)
APPEAL from the Court of Appeals for Cuyahoga County, No. 103686,
2016-Ohio-4866.
_____________________
SUPREME COURT OF OHIO
FRENCH, J.
{¶ 1} In this appeal, we examine the statutory requirements for proving
enhanced felony levels of aggravated possession of fentanyl based on the amount
of the drug involved. Ohio defines these levels in terms of multiples of the “bulk
amount,” which for the fentanyl at issue in this case means “five times the
maximum daily dose in the usual dose range specified in a standard pharmaceutical
reference manual.” R.C. 2925.01(D)(1)(d). Appellant, the state of Ohio, asks this
court to hold that “because there is no ‘usual dose range’ of fentanyl, the State may
rely upon the usual dose range of morphine, the prototype drug for fentanyl, to
establish the bulk amount of fentanyl under R.C. 2925.01(D)(1)(d).”
{¶ 2} Fentanyl, a Schedule II controlled substance, is a synthetic opioid that
is approximately 100 times more potent than morphine and 50 times more potent
than heroin. R.C. 3719.41 (Schedule II(B)(9)); United States Dept. of Justice, Drug
Enforcement Administration, Drugs of Abuse, A DEA Resource Guide 40 (2017),
https://www.dea.gov/pr/multimedia-library/publications/drug_of_abuse.pdf#page
=40 (accessed Dec. 12, 2017). Fentanyl and related drugs were involved in nearly
60 percent of Ohio’s 4,050 overdose deaths in 2016. Ohio Dept. of Health, News
Release, Fentanyl, Carfentanil and Cocaine Drive Increase in Drug Overdose
Deaths in 2016 (Aug. 30, 2017), http://www.odh.ohio.gov/-
/media/ODH/ASSETS/Files/health/injury-prevention/ODH-News-Release----
2016-Ohio-Drug-Overdose-Report.pdf?la=en (accessed Dec. 12, 2017). And in the
first two months of 2017, approximately 90 percent of unintentional overdose
deaths in 25 Ohio counties involved fentanyl, fentanyl analogs or both.
Daniulaityte, Juhascik, Strayer, Sizemore, Harshbarger, Antonides, and Carlson,
Overdose Deaths Related to Fentanyl and its Analogs—Ohio, January-February
2017, 66 Morbidity & Mortality Weekly Report No. 34, 904, 905-906,
https://www.cdc.gov/mmwr/volumes/66/wr/pdfs/mm6634a3.pdf (accessed Dec.
12, 2017), datum corrected in Errata: Vol. 66 No. 34, 66 Morbidity & Mortality
2
January Term, 2018
Weekly Report No. 38, 1030, https://www.cdc.gov/mmwr/volumes/66/wr/pdfs/
mm6638a8.pdf (accessed Dec. 12, 2017) (clarifying that the number of counties
was 25).
{¶ 3} To be sure, enhanced felony prosecution for possession of fentanyl is
one weapon in the state’s arsenal in the war on drug-related crime. But what the
state asks here requires the General Assembly, not this court, to act. We reject the
state’s interpretation of the enhancement provisions for fentanyl possession
because it conflicts with unambiguous statutory language. We affirm the judgment
of the court of appeals.
Facts and procedural background
{¶ 4} Appellee, Mark H. Pountney, was indicted on two counts of theft, one
count of identity fraud, and two counts of drug possession—one of which involved
fentanyl and one of which involved acetaminophen with codeine. Pountney
stipulated to the allegations underlying the charges of theft, identity fraud, and
possession of acetaminophen with codeine. Count 4 of the indictment—the only
count relevant here—alleged that Pountney knowingly obtained, possessed or used
at least 5 but not more than 50 times the bulk amount of fentanyl, in violation of
R.C. 2925.11(A), which is a second-degree felony under R.C. 2925.11(C)(1)(c).
{¶ 5} Subject to certain exceptions not applicable here, R.C. 2925.11(A)
prohibits a person from knowingly obtaining, possessing or using a controlled
substance or controlled-substance analog. A violation of R.C. 2925.11(A)
involving fentanyl constitutes aggravated possession of drugs. R.C. 2925.11(C)(1);
R.C. 3719.41 (Schedule II(B)(9)).
{¶ 6} Except as provided in R.C. 2925.11(C)(1)(b) through (e), aggravated
possession of drugs is a fifth-degree felony. R.C. 2925.11(C)(1)(a). If, however,
the amount of the drug involved meets statutorily defined thresholds, the offense is
enhanced to a first-degree, second-degree or third-degree felony. R.C.
2925.11(C)(1)(b) through (e). As relevant here, “If the amount of the drug involved
3
SUPREME COURT OF OHIO
equals or exceeds five times the bulk amount but is less than fifty times the bulk
amount,” the offense is a second-degree felony. R.C. 2925.11(C)(1)(c).
{¶ 7} The General Assembly has defined the “bulk amount” of a Schedule
II opiate or opium derivative, like fentanyl, as an “amount equal to or exceeding
twenty grams or five times the maximum daily dose in the usual dose range
specified in a standard pharmaceutical reference manual.” R.C. 2925.01(D)(1)(d).
Here, we are concerned only with the second prong of that definition. Pountney
stipulated that he knowingly obtained ten three-day transdermal fentanyl patches,
each of which delivered 50 micrograms of fentanyl per hour. He disputed,
however, that the patches equaled the “bulk amount or some multiple of the bulk
amount” of transdermal fentanyl.
{¶ 8} The Cuyahoga County Court of Common Pleas conducted a bench
trial solely on the state’s proof regarding the “bulk amount” of transdermal fentanyl.
If the state proved that the ten fentanyl patches equaled or exceeded five times the
bulk amount of transdermal fentanyl, Pountney would be guilty of a second-degree
felony; otherwise, based on his stipulations, he would be guilty of a fifth-degree
felony. R.C. 2925.11(C)(1)(a) and (e).
{¶ 9} The trial court found Pountney guilty on all counts in the indictment,
including second-degree-felony aggravated possession of fentanyl involving at
least five times the bulk amount. After merging allied offenses, the trial court
sentenced Pountney to three years in prison for aggravated possession of fentanyl
and 18 months in prison for identity fraud, to be served concurrently. The trial
court also imposed a $7,500 fine and three years of mandatory postrelease control.
{¶ 10} Pountney appealed his conviction for aggravated possession of
fentanyl, arguing that the state failed to present sufficient evidence of the “bulk
amount.” The Eighth District Court of Appeals agreed with Pountney, reversed the
trial court’s judgment, and remanded this case with instructions for the trial court
4
January Term, 2018
to enter a finding of guilty on Count 4 as a fifth-degree felony and to resentence
Pountney accordingly.
{¶ 11} This court accepted the state’s discretionary appeal. The state’s
single proposition of law asserts that the state may rely upon the usual dose range
of morphine, the prototype opiate, to establish the bulk amount of fentanyl under
R.C. 2925.01(D)(1)(d). We reject the state’s proposition.
The evidence
{¶ 12} At trial, the state presented an expert report and testimony from Paul
Schad, a pharmacist employed as a compliance specialist for the Ohio State Board
of Pharmacy. Attached to Schad’s report is a portion of the American Hospital
Formulary Service Drug Information (“AHFS”), which the board of pharmacy has
approved as a standard pharmaceutical reference manual, Ohio Adm.Code 4729-
11-07(F).
{¶ 13} Schad’s report cites the R.C. 2925.01(D)(1)(d) definition of “bulk
amount”—“[a]n amount equal to or exceeding * * * five times the maximum daily
dose in the usual dose range specified in a standard pharmaceutical reference
manual.” In his testimony, Schad stated, “I would refer to the standard
pharmaceutical reference” to determine the usual dose range for a particular drug.
Schad’s report states, “Pursuant to the definition of Bulk Amount, the ‘maximum
daily dose in the usual dose range specified in a standard pharmaceutical reference
manual’ was taken from” the AHFS. But Schad admitted, “you’re not going to see
a usual dosage range” for fentanyl patches in the AHFS. Nevertheless, he stated
that the bulk amount of 50-microgram-per-hour fentanyl patches is two patches.
{¶ 14} The AHFS states that transdermal fentanyl should be used only with
patients who are opiate tolerant:
Dosage of transdermal fentanyl should be individualized according
to the clinical status of the patient, desired therapeutic effect, and
5
SUPREME COURT OF OHIO
patient age and weight and should be assessed at periodic intervals.
However, the most important factor to be considered in determining
the appropriate dose is the degree of existing opiate tolerance. In
selecting an appropriate initial dose of the transdermal system,
consideration also must be given to the daily dose, potency, and
characteristics * * * of the opiate the patient has been receiving and
the reliability of potency estimates, which may vary by route, used
to calculate an equivalent transdermal dose.
(Endnotes omitted.)
{¶ 15} Having acknowledged that the AHFS does not state a “usual dose
range” for transdermal fentanyl, Schad explained, “We need to look at dosing—
usual dosage range of the other opiates, considering Morphine as the prototype of
opiates. We look at the usual dosage range of Morphine, finding a maximum daily
dose within the usual dosage range of Morphine, and convert that to Fentanyl
patches.” Schad then engaged in a series of calculations in an effort to deduce the
bulk amount of transdermal fentanyl from the usual dose range of morphine.
{¶ 16} Schad testified that the “usual dosage range of oral morphine found
in the standard pharmaceutical reference is 10 to 30 milligrams every four hours,”
for a maximum daily dose in the usual dose range of 180 milligrams. Schad then
turned to Table 2 of the AHFS manual regarding fentanyl. Table 2, titled
Transdermal Fentanyl Dose Based on Current Oral Opiate Dosage, sets out
manufacturer-provided, conservative, initial dosage recommendations for
switching an opiate-tolerant patient to transdermal fentanyl from other, oral opiates,
including morphine. For a patient who is being transferred from morphine, the
table recommends a transdermal fentanyl dose of 25, 50, 75 or 100 micrograms per
hour, based upon the patient’s daily dose of morphine (ranging in the table from 60
to 404 milligrams). For a patient who has been receiving the 180-milligram
6
January Term, 2018
maximum daily dose in the usual dose range for morphine, Table 2 recommends an
initial transdermal fentanyl dose of 50 micrograms per hour. Based solely on that
conversion, Schad testified that 1200 micrograms per day—50 micrograms per
hour multiplied by 24 hours—is the maximum daily dose in the usual dose range
for transdermal fentanyl.
{¶ 17} Schad next multiplied 1200 micrograms by five to calculate a “bulk
amount” of 6000 micrograms, or 6 milligrams, for transdermal fentanyl. Because
an indivisible 50-microgram-per-hour fentanyl patch contains 5 milligrams of
fentanyl, Schad testified that it takes two patches to equal the “bulk amount.”
Analysis
{¶ 18} The Eighth District held that the state did not present sufficient
evidence that Pountney possessed the “bulk amount” of fentanyl. 2016-Ohio-4866,
¶ 26.
{¶ 19} When reviewing the sufficiency of the evidence, an appellate court
does not ask whether the evidence should be believed but, rather, whether the
evidence, “if believed, would convince the average mind of the defendant’s guilt
beyond a reasonable doubt.” State v. Jenks, 61 Ohio St.3d 259, 574 N.E.2d 492
(1991), paragraph two of the syllabus. “The relevant inquiry is whether, after
viewing the evidence in the light most favorable to the prosecution, any rational
trier of fact could have found the essential elements of the crime proven beyond a
reasonable doubt.” Jenks at paragraph two of the syllabus. Although the Eighth
District framed its decision in terms of sufficiency of the evidence, the overriding
question in this case is the meaning of R.C. 2925.01(D)(1)(d)’s definition of “bulk
amount” and its application to the undisputed facts.
{¶ 20} Interpretation of a statute is a question of law that we review de novo.
State v. Pariag, 137 Ohio St.3d 81, 2013-Ohio-4010, 998 N.E.2d 401, ¶ 9. “The
primary goal of statutory construction is to ascertain and give effect to the
legislature’s intent,” as expressed in the plain meaning of the statutory language.
7
SUPREME COURT OF OHIO
State v. Lowe, 112 Ohio St.3d 507, 2007-Ohio-606, 861 N.E.2d 512, ¶ 9. If the
statutory language is unambiguous, we apply it as written. Pariag at ¶ 10. Only
when a statute is ambiguous may we engage in further construction. Id.
{¶ 21} The method of proving an increased felony level for drug possession
based on the amount of the drug involved depends on the identity of the drug. For
Schedule II controlled substances like fentanyl, the increase is based on either the
weight of the drug or multiples of the “bulk amount” of the drug. See R.C.
2925.11(C)(1). For other drugs, the increase is based solely on the weight of the
drug, see R.C. 2925.11(C)(3) and (4), or on either the weight of the drug or the
number of “unit doses,” see R.C. 2925.11(C)(5). Here, to convict Pountney of
second-degree felony aggravated possession of drugs, the state had to prove that
Pountney obtained or possessed at least five times the bulk amount of transdermal
fentanyl. R.C. 2925.11(C)(1)(c).
{¶ 22} The starting point for establishing the bulk amount of a controlled
substance under the second prong of R.C. 2925.01(D)(1)(d) is the “maximum daily
dose in the usual dose range specified in a standard pharmaceutical reference
manual.” By using that language, the General Assembly chose to tie the definition
of “bulk amount” to the contents of a reference manual beyond its control. The
plain language of R.C. 2925.01(D)(1)(d) requires that the maximum daily dose in
the usual dose range be specified in a standard pharmaceutical reference manual.
“Specify” means “to mention or name in a specific or explicit manner: tell or state
precisely or in detail.” Webster’s Third New International Dictionary 2187 (2002).
{¶ 23} The state may prove the maximum daily dose in the usual dose range
in one of three ways: “(1) by stipulation, (2) by expert testimony as to what a
standard pharmaceutical reference manual prescribes, or (3) by a properly proven
copy of the manual itself.” State v. Montgomery, 17 Ohio App.3d 258, 260, 479
N.E.2d 904 (1st Dist.1984); but see State v. Caldwell, 5th Dist. Richland No. CA-
2369, 1986 WL 7456, *3 (June 23, 1986) (approving judicial notice of bulk amount
8
January Term, 2018
stated in a standard pharmaceutical reference manual). The state contends that it
established the bulk amount of transdermal fentanyl through Schad’s expert report
and testimony and the portion of the AHFS regarding fentanyl that was admitted as
evidence.
{¶ 24} The AHFS explicitly states usual dose ranges for certain controlled
substances, including morphine. Schad repeatedly stated that the AHFS specifies
a usual dose range of 10 to 30 milligrams every four hours for morphine. And Ohio
courts have noted direct statements of usual dose ranges for other controlled
substances in the AHFS or other standard pharmaceutical reference manuals. See
State v. Bange, 4th Dist. Ross No. 10CA3160, 2011-Ohio-378, ¶ 12 (quoting from
the AHFS entry for “ ‘Oxycodone Hydrochloride Tablets USP’ ” a “usual adult
dose” of “ ‘2 to 15 mg every 4 to 6 hours as needed’ ”); State v. Baker, 2d Dist.
Montgomery No. 7753, 1982 WL 3801, *2 (Sept. 23, 1982) (“In examining any
one of a number of ‘standard pharmaceutical reference manuals’ as defined in R.C.
2925.01(N), one finds that the maximum daily dose (in the usual dosage range
specified) for Methaqualone is 300 milligrams”).
{¶ 25} The AHFS does not, however, specify either a “usual dose range” or
a “maximum daily dose in the usual dose range” for transdermal fentanyl. Instead,
it directs that dosage of transdermal fentanyl should be individualized and
periodically assessed. The state concedes that “there was no ‘usual dose range’ for
fentanyl because doctors only ever prescribe fentanyl based on whatever dose of
opiate the patient is already taking.” This creates a problem of proof for the
prosecution, but it is not a problem that we may remedy by ignoring the
unambiguous statutory language the General Assembly has employed.
{¶ 26} Though Schad testified that he “refer[ed] to” the AHFS to make his
findings, he did not identify a “maximum daily dose in the usual dose range
specified in a standard pharmaceutical reference manual” for fentanyl, as R.C.
2925.01(D)(1)(d) requires. He did not identify a “usual dose range” for transdermal
9
SUPREME COURT OF OHIO
fentanyl, either by reference to the AHFS or otherwise. The Ohio Attorney
General, as amicus curiae, argues that R.C. 2925.01(D)(1)(d) is satisfied if the
reference manual specifies “[t]he manner for determining fentanyl’s ‘usual dose
range.’ ” (Emphasis added.) But that reading is contrary to the plain statutory
language, which requires that the manual specify the maximum daily dose in the
usual dose range. In context, the plain meaning of “specified in a standard
pharmaceutical reference manual” requires more than a reference point for
calculating a maximum daily dose; the manual must specify the usual dose range
itself, or at least the maximum daily dose within that range.
{¶ 27} Even assuming that the absence of an express statement in the AHFS
of the usual dose range of transdermal fentanyl does not, in itself, defeat the state’s
position, Schad’s testimony does not establish a maximum daily dose in the usual
dose range for fentanyl by reference to the AHFS. Table 2 sets out the drug
manufacturer’s conservative, initial dosage recommendations for switching opiate-
tolerant patients from oral opiates to transdermal fentanyl, but it does not establish
analgesic equivalents. In fact, the AHFS warns that Table 2 should not be used to
convert patients from transdermal fentanyl to the listed oral opiates, because the
conversions may result in an overestimated dose of the oral opiate.
{¶ 28} From Table 2’s recommendation of an initial 50-microgram-per-
hour dose of transdermal fentanyl for a patient being transitioned from the 180-
milligram maximum daily dose in the usual dose range of morphine, Schad stated
that 50 micrograms per hour, or 1200 micrograms per day, is the maximum daily
dose in the usual dose range of transdermal fentanyl. But he acknowledged the
statement in the AHFS that “many patients are likely to require upward dosage
titration after initial application of a transdermal dose” and that many patients will
have their doses increased beyond 50 micrograms per hour. He also acknowledged
that fentanyl patches are manufactured in doses as high as 100 micrograms per hour
and that doctors may prescribe multiple patches to be worn simultaneously to
10
January Term, 2018
increase a patient’s hourly and daily doses of fentanyl. Nothing in the AHFS,
including Table 2, supports Schad’s testimony that the initial, conservative dose of
transdermal fentanyl recommended for a patient being transitioned from the
maximum daily dose in the usual dose range of morphine equals the maximum
daily dose in the usual dose range of transdermal fentanyl.
{¶ 29} Schad relied upon Table 2’s recommended conversion from
morphine to transdermal fentanyl to calculate the maximum daily dose in the usual
dose range, but applying Schad’s methodology to other oral opiates listed in Table
2 results in different recommended doses of transdermal fentanyl. For example,
Table 2 recommends that a patient taking the 360-milligram maximum daily dose
in the usual dose range of codeine phosphate be switched to a transdermal fentanyl
dose of 25 micrograms per hour but that a patient taking the 120-milligram
maximum daily dose in the usual dose range of methadone hydrochloride be
switched to a transdermal fentanyl dose of 100 micrograms per hour.1 Each of
those doses differs from Schad’s calculation of the maximum daily dose in the usual
dose range for transdermal fentanyl, based on morphine. So even using Schad’s
methodology, the maximum daily dose in the usual dose range of transdermal
fentanyl is a moving target that provides no meaningful guidance to potential
offenders or to the prosecutors who bring criminal charges.
{¶ 30} In State v. Huber, 187 Ohio App.3d 697, 2010-Ohio-2919, 933
N.E.2d 345 (2nd Dist.)—apparently the only other Ohio appellate decision to
address the sufficiency of evidence of the bulk amount of fentanyl based on the
maximum daily dose in the usual dose range—the Second District held that the
state failed to prove the maximum daily dose in the usual dose range of fentanyl
1
For these comparisons only, we take the maximum daily doses in the usual dose range from the
board of pharmacy’s Controlled Substance Reference Table (which at the relevant time was not an
approved pharmaceutical reference manual), because the record does not contain the portions of the
AHFS regarding the oral opiates listed in Table 2.
11
SUPREME COURT OF OHIO
when there was no stipulation, the state did not submit an authenticated copy of a
standard pharmaceutical reference manual that specified the maximum daily dose
in the usual dose range, and there was no expert testimony “as to what a standard
pharmaceutical reference manual prescribes.” Id. at ¶ 9. We agree. The state
argues that Huber is distinguishable based on the existence of Schad’s expert
testimony in this case, but Schad did not testify “as to what a standard
pharmaceutical reference manual prescribes” as the maximum daily dose in the
usual dose range for fentanyl. See id. So, we conclude that as in Huber, the state
did not prove the maximum daily dose in the usual dose range for fentanyl.
{¶ 31} Before the court of appeals, the state argued that this case is
analogous to Bange, 4th Dist. Ross No. 10CA3160, 2011-Ohio-378. In Bange, the
Fourth District affirmed a conviction for aggravated possession of extended-release
Oxycodone tablets even though the testifying pharmacist relied on the usual dose
range for nonextended-release Oxycodone tablets to determine the bulk amount.
The AHFS contained separate listings, with different usual dose ranges, for
extended-release and nonextended-release Oxycodone tablets. The nonextended-
release listing stated a usual adult dose of “2 to 15 mg every 4 to 6 hours,” whereas
the extended-release listing stated, “[d]osage must be individualized by the
physician according to the severity of pain and patient response.” (Brackets sic.)
Id. at ¶ 11-12. The Fourth District rejected Bange’s sufficiency and manifest-
weight challenges. It recognized, “[I]t is not clear whether the [extended-release]
listing even provides a maximum usual daily dose,” and held, “Under these
circumstances, we see no reason why a pharmacist cannot determine that another
listing provides a sufficient basis for stating the maximum daily dose in the usual
dose range.” Id. at ¶ 20. Whether or not we would have reached the same
conclusion as the Fourth District, its approval of the use of a specified dose range
for another form of Oxycodone in Bange does not justify the use of the usual dose
12
January Term, 2018
range for morphine—an entirely different drug—to determine the bulk amount of
fentanyl.
{¶ 32} The issue in this case is not Schad’s credibility or the persuasiveness
of his testimony. Rather, the issue is whether Schad’s testimony satisfies the
statutory definition of “bulk amount,” that is, whether he testified to a maximum
daily dose in the usual dose range for fentanyl specified in a standard
pharmaceutical reference manual. We hold that he did not.
{¶ 33} The Eighth District’s decision, which we affirm here, recognizes that
the state cannot prove a “bulk amount” of fentanyl patches under the dosage prong
of R.C. 2925.01(D)(1)(d) because the AHFS does not specify a maximum daily
dose in the usual dose range for fentanyl patches. The General Assembly made the
policy decision to tie the degree of offense for aggravated possession of Schedule
II controlled substances, like fentanyl, to the bulk amount rather than to weight or
unit doses, as it did with other controlled substances. And because the AHFS,
which Schad relied on, does not state a maximum daily dose in the usual dose range
for transdermal fentanyl, the state is unable to prove the “bulk amount” under the
current statutory scheme. So, without a standard pharmaceutical reference manual
that specifies the maximum daily dose in the usual dose range for transdermal
fentanyl, possession of less than 20 grams of transdermal fentanyl will be a fifth-
degree felony under R.C. 2925.11(C)(1)(a) unless and until the General Assembly
amends the statutory framework for assigning enhanced felony levels to offenses
involving possession of fentanyl.
{¶ 34} Pountney accurately notes that there is a bill pending before the
General Assembly that proposes changes to the statutory scheme addressing the
escalation of penalties for possession of fentanyl. 2017 Am.Sub.S.B. No. 1
proposes to anchor escalation of penalties for fentanyl possession to “unit doses”
instead of “bulk amount.” Id. The Senate passed the bill on March 29, 2017, and
it has been before the House Criminal Justice Committee since May 9, 2017. Ohio
13
SUPREME COURT OF OHIO
Legislature, 132nd General Assembly, Senate Bill 1, Status,
https://www.legislature.ohio.gov/legislation/legislation-status?id=GA132-SB-1.
But unless and until the General Assembly acts, our role is to apply the current
statutory scheme as enacted. And in doing so, we must affirm the Eighth District’s
judgment.
Conclusion
{¶ 35} R.C. 2925.01(D)(1)(d) defines the “bulk amount” of fentanyl as
“five times the maximum daily dose in the usual dose range specified in a standard
pharmaceutical reference manual.” However, the AHFS, the standard
pharmaceutical reference manual used in this case, does not specify a maximum
daily dose in the usual dose range for fentanyl. Therefore, it does not provide a
basis for proving the “bulk amount” under the statute. Although the AHFS states
that an initial dose of transdermal fentanyl should take into account a patient’s
opiate tolerance and the type and dose of opiate therapy the patient is being
transferred from, neither R.C. 2925.01(D)(1)(d) nor the AHFS justifies reliance on
the usual dose range of morphine to establish the bulk amount of fentanyl. For
these reasons, we reject the state’s proposition of law and affirm the Eighth
District’s judgment.
Judgment affirmed.
O’CONNOR, C.J., and O’DONNELL, KENNEDY, O’NEILL, FISCHER, and
DEWINE, JJ., concur.
_________________
Michael C. O’Malley, Cuyahoga County Prosecuting Attorney, and
Christopher D. Schroeder, Assistant Prosecuting Attorney, for appellant.
Mark A. Stanton, Cuyahoga County Public Defender, and John T. Martin,
Assistant Public Defender, for appellee.
14
January Term, 2018
Michael DeWine, Attorney General, Eric E. Murphy, State Solicitor, and
Hannah C. Wilson, Deputy Solicitor, urging reversal for amicus curiae, Ohio
Attorney General Michael DeWine.
_________________
15
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67 F.3d 305
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.Harish K. BHARTI and Anoop Bharti, husband and wife,Plaintiffs-Appellants,v.KING COUNTY; Bruce Knutson; Jane Doe Knutson; Pat Nixon;Gary Tomlinson; et al., Defendants-Appellees.
No. 94-35599.
United States Court of Appeals, Ninth Circuit.
Submitted Sept. 15, 1995.*Decided Sept. 26, 1995.
1
Before: ALARCON and CANBY, Circuit Judges and FITZGERALD,** Senior District Judge.
2
MEMORANDUM***
3
Harish Bharti ("Bharti") appeals from the district court's issuance of a protective order and grant of summary judgment in favor of King County and various officials of its Superior Court ("King County"). This court has jurisdiction pursuant to 28 U.S.C. Sec. 1291. We affirm.
I.
4
Bharti served the King County Superior Court as a volunteer Court Appointed Special Advocate ("CASA") and as a member of the Conference Committee Diversion Program from 1987 until June 19, 1989. On October 27, 1993, Bharti filed an action in the district court against King County alleging that he had been wrongfully discharged from his position in violation of both public policy and his federal constitutional and statutory rights.
5
In May 1989, Bruce Knutson, the Conference Committee director, informed Bharti that he had concerns regarding Bharti's performance as a CASA volunteer. On June 19, 1989, Knutson wrote Bharti reiterating his disapproval of Bharti's performance. The letter concluded: "I am terminating your volunteer services with King County Superior Court. This decision is effective immediately." Gary Tomlinson, the Superior Court administrator, wrote to Bharti on July 12, 1989, confirming the dismissal and informing Bharti that Knutson's decision was not subject to a formal review process. In a letter dated January 17, 1990, Tomlinson informed Bharti that the dismissal from the Conference Committee was appealable. Bharti was given until April 6, 1990 to respond to Knutson and to initiate the appeal process. No response from Bharti appears in the record.
6
The October 27, 1993 action arises from Bharti's termination as a Superior Court volunteer. After Bharti filed an amended complaint on April 8, 1994, King County filed a motion to dismiss on April 15, 1994. King County argued, among other things, that Bharti's claims were time-barred by Washington's statute of limitations. King County submitted declarations in support of its contention that Bharti's claims were time-barred. In accordance with Rule 12(c) of the Federal Rules of Civil Procedure, the district court considered King County's motion to dismiss as a Rule 56 motion for summary judgment.
7
On April 19, 1994, Bharti filed a motion to compel answers to interrogatories and production of documents requested through discovery. King County responded with a cross-motion for a protective order pursuant to Rule 26(c) of the Federal Rules of Civil Procedure. In support of this motion, King County argued that responding to discovery requests while the summary judgment motion was pending would be unduly burdensome.
8
The district court denied Bharti's motion to compel and granted the protective order on May 13, 1994. Bharti's motion to reconsider was denied. On June 6, 1994, the district court granted King County's summary judgment motion, ruling that Bharti's claims were time-barred by Washington's applicable statute of limitations. The district court did not address the other issues raised in King County's motion for summary judgment.
9
Bharti appeals both from the June 6, 1994 grant of summary judgment and the May 13, 1994 protective order.
II.
10
The parties do not dispute that Washington's three-year statute of limitations on personal injury actions governs Counts I, II, IV, V, and VI of Bharti's complaint. Wash.Rev.Code Ann. Sec. 4.16.080(2) (West 1989). Nor do they dispute that Count III is governed by the two-year statute of limitations for defamation actions. Wash.Rev.Code Ann. Sec. 4.16.100 (West 1989). These statutes time-bar Bharti's claims if the claims accrued on or before October 27, 1990. The district court's order granting summary judgment reflects the court's determination that there was no genuine issue of material fact regarding the date that Bharti's claims accrued.1
11
In his affidavit opposing summary judgment, Bharti contends that King County "misrepresented the facts relating to [his] real status with [the] CASA program." The district court interpreted this statement as an attempt by Bharti to invoke the doctrine of equitable estoppel and thus to prevent King County from asserting the statute of limitations as the basis of its summary judgment motion. In its order granting summary judgment, the district court ruled that Bharti "failed to prove the elements of equitable estoppel sufficient to withstand [King County's] well-documented motion [for summary judgment]." On appeal, Bharti claims that the affidavit, "by itself, should destroy any legitimate claim for Summary Judgment."
12
"[E]quitable estoppel applies when a plaintiff who knows of his cause of action reasonably relies on the defendant's statements or conduct in failing to bring suit." Stitt v. Williams, 919 F.2d 516, 522 (9th Cir.1990). Addressing the question of equitable estoppel often requires the court to go beyond the affidavits and to assess the credibility of witnesses. Aronsen v. Crown Zellerbach, 662 F.2d 584, 595 (9th Cir.1981), cert. denied, 459 U.S. 1200 (1983). Accordingly, when equitable estoppel is an issue, a court affirming a grant of summary judgment must determine that "the facts as alleged could not be reasonably construed as permitting equitable estoppel[.]" Id.
13
Bharti states in his affidavit that he was told by Tomlinson on several occasions that the June 19, 1989 termination letter was "rash and incorrect ... and [you] should disregard it." According to Bharti's affidavit, Tomlinson made these statements prior to May 15, 1989. Bharti does not explain how Tomlinson could have told him in May to disregard a letter that was not even written until June 19th. Furthermore, even if Bharti received mixed signals prior to June 19th, the July 12, 1989 letter from Tomlinson was an unequivocal confirmation of the June 19, 1989 termination.
14
Bharti also contends that the ongoing Ombudsman process invited him to delay filing a complaint. This argument is without merit. The Ombudsman process concluded October 17, 1990, more than three years before the action was filed.
15
The facts as alleged by Bharti do not demonstrate that King County's conduct compels the application of the doctrine of equitable estoppel. Bharti clearly does not satisfy the traditional elements of the doctrine. See Robinson v. City of Seattle, 830 P.2d 318, 345 (Wash.), cert. denied, 113 S.Ct. 676 (1992). ("The elements to be proved are: first, an admission, statement, or act inconsistent with a claim afterwards asserted; second, action by another in reasonable reliance on that act, statement, or admission; and third, injury to the party who relied if the court allows the first party to contradict or repudiate the prior act, statement, or admission."). Bharti has not demonstrated that his failure to file a complaint until his claims were time-barred was caused by his reasonable reliance on intentional or misleading conduct and statements. Consequently, the district court did not err by allowing King County to assert the statute of limitations as a basis for summary judgment.
III.
16
Bharti next contends that the protective order deprived him of "the opportunity to obtain documents and testamentary evidence, which would permit [him] to intelligently oppose the Motion for Summary Judgment." He argues that this erroneous denial constitutes reversible error. This court reviews for abuse of discretion the district court's entry of a protective order barring discovery. Travers v. Shalala, 20 F.3d 993, 999 (9th Cir.1994).
17
Rule 26(c) of the Federal Rules of Civil Procedure gives a district court the discretion to issue a protective order barring discovery if the discovery request is unduly burdensome or expensive. The Supreme Court has stated that "[t]he trial court is in the best position to weigh fairly the competing needs and interests of parties affected by discovery." Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36, cert. denied, 467 U.S. 1230 (1984). Thus, the district court was required to balance the burden placed on King County by Bharti's discovery request against the risk that protecting King County from such a burden would impair Bharti's ability to oppose the motion for summary judgment.
18
Because the motion for summary judgment was based on the failure to comply with the applicable statute of limitations, the only relevant discovery requests would be for information pertaining to the date Bharti's claims accrued. Bharti did not request any information or documents relevant to this issue. The interrogatories and document requests were broad and non-specific.
19
An affidavit attached to King County's motion for a protective order states that complying with Bharti's motion to compel "would entail a significant amount of time and work by Superior Court management and judges." King County argued that such a time commitment would be unduly burdensome in light of the fact that the discovery requests were unrelated to the pending summary judgment motion.
20
The record reflects that the district court considered the interests of the two parties in deciding whether to issue the protective order. Bharti's broad, non-specific discovery requests were insufficient to outweigh the definite burden that compliance with such requests would place on King County. Consequently, the district court did not abuse its discretion by denying Bharti's motion to compel and granting the protective order barring discovery.
21
Bharti also contends that the issuance of the protective order provides support for his equitable estoppel argument. He argues that King County should be estopped from asserting the defense of the statute of limitations because its attempt to obtain the protective order was part of a deliberate scheme to conceal information and to delay his filing of the lawsuit. This argument is wholly without merit. Discovery did not commence until after Bharti filed this action. It is difficult to understand how an event that occurred post-filing could be proffered as evidence of a purposeful tactic by King County to delay Bharti's filing of the complaint until after the statute of limitations had run. Bharti's contention that the protective order prevented him from discovering what it was that lulled him into inaction and induced him to delay filing this action is equally without merit.
22
Accordingly, we conclude the district court did not err by allowing King County to argue that the applicable statute of limitations time-barred Bharti's claims. We also conclude the district court's decision to grant the protective order was a proper exercise of its discretion.
23
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
Honorable James M. Fitzgerald, Senior United States District Judge for the District of Alaska, sitting by designation
***
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
On appeal, Bharti does not directly challenge the district court's finding as to when the claims accrued. In his complaint, Bharti refers to an October 28, 1990 "communication" from King County terminating him from the CASA program. In his brief, Bharti states: "[T]he termination was reinstated by a letter dated October 28, 1990." However, Bharti does not make the argument that this letter raised a genuine issue of material fact precluding the grant of summary judgment in favor of King County. The only issue raised on appeal pertaining to the merits of the grant of summary judgment is whether King County should be estopped from asserting the statute of limitations defense
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636 F.Supp. 77 (1986)
Paul Y. FENG and Marie R. Feng, Plaintiffs,
v.
James SANDRIK, John Madonia, Rafaele Suriano, Richard Matre, Loraine Serwatka, Raymond Baumhart, Board of Trustees and Members of the Board of Trustees of Loyola University of Chicago, Lay Board of Trustees and Members of the Lay Board of Trustees of Loyola University of Chicago, and Loyola University of Chicago, Defendants.
No. 85 C 7111.
United States District Court, N.D. Illinois, E.D.
February 10, 1986.
*78 *79 Paul Y. Feng, Pro se.
Leon S. Conlon/William H. Oswald, Chicago, Ill., for defendants.
MEMORANDUM OPINION AND ORDER
ASPEN, District Judge:
Pro se plaintiffs Paul Feng ("Paul") and Marie Feng ("Marie") brought this sex-discrimination action against defendants Loyola University of Chicago ("Loyola"), unnamed individual members of Loyola's Board of Trustees and Lay Board of Trustees and several Loyola employees ("the individual defendants"). The Fengs seek compensatory and punitive damages plus equitable relief in their three-count complaint alleging sex-based salary disparities and retaliatory actions taken by defendants against Marie for complaining about those disparities. Loyola and the individual defendants have moved to dismiss most of the claims in the Fengs' complaint under Fed.R.Civ.P. 12(b)(1) and 12(b)(6). The Fengs have moved to disqualify defendants' counsel and for a stay of proceedings pending decisions on pretrial motions in another case involving some of these parties. For the reasons stated below, the defendants' motion is granted in part and denied in part, and the plaintiffs' motion is denied.
I. FACTUAL ALLEGATIONS
The Fengs allege the following facts which, for the purposes of the present motion, we assume to be true along with all reasonable inferences to be drawn from them. Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir.1981). Marie was a full-time assistant professor at Loyola's School of Dentistry for the academic years 1970 through 1979, receiving tenure in 1975. She was also a part-time faculty member for the 1979-1980 academic year. Her husband Paul was never employed by Loyola, nor did he ever apply for employment there.
The Fengs allege that a pattern of salary discrimination for assistant professors existed at Loyola from 1976 to 1979. The average salary for male assistant professors exceeded the average for female assistant professors in the 1976-1977 academic year, and subsequent salary increases were greater for males as well, making the disparity even wider. Marie's salary and salary increases corresponded to this pattern and were less than those for males in the same position, despite Marie's advance in seniority and recognized merit. On September 17, 1979, the Fengs pointed out the pattern of salary discrimination to Loyola's general counsel, who referred the matter to defendant Richard Matre, Provost of the Loyola University Medical Center. No explanation for the salary differences was offered. Matre advised the Loyola School of Dentistry of the Fengs' inquiry and characterized it as a complaint and a charge of sex discrimination. As a result of the complaint, defendant James Sandrik, Chairman of the Department of Dental Materials, in alleged conspiracy with defendants John Madonia, Rafaele Suriano, Raymond Baumhart[1] and Matre, *80 asked Marie to accept a pay reduction without a commensurate reduction in her work load in the latter part of 1979.[2] Additionally, Sandrik or defendant Loraine Serwatka, Matre's assistant, or both, in alleged conspiracy with Madonia, Suriano, Matre and Baumhart, suspended or denied Marie's pending promotion.
Between November 1979 and August 1980, the Fengs repeatedly told Sandrik and Matre that Marie was willing to continue working with no change in pay. Nevertheless, Sandrik, in conspiracy with the other named individual defendants, sent a letter to Marie on August 27, 1980, informing her that she would not be re-employed, even though her re-employment had been authorized by Loyola.
Marie filed a charge of sex discrimination with the Equal Employment Opportunity Commission ("EEOC") on May 11, 1981. The only party charged with discrimination was Loyola, although Sandrik was mentioned in the EEOC complaint. The Commission conducted an investigation of the charge and found that there was no reasonable cause to believe that Marie's allegations were true. It issued a right-to-sue letter to Marie on May 16, 1985, and this suit followed. The pro se complaint is divided into three "counts," although the various causes of action pled are only loosely tied to any particular count. In sum, the complaint alleges violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17 (1982), the Equal Pay Act, 29 U.S.C. § 206 (1982), a provision of the Fair Labor Standards Act, 29 U.S.C. § 215 (1982) and § 1985(3) of the Civil Rights Act of 1871, 42 U.S.C. § 1985(3) (1982). The Fengs also included pendent state law claims alleging breach of contract and various tort claims, including infliction of emotional distress. The defendants moved to dismiss all of these claims with the exception of Marie's Title VII action against Loyola.[3] In a separate motion, the Fengs moved that we disqualify defendants' counsel and stay proceedings in this suit.
II. TITLE VII CLAIMS
All of the named individual defendants moved to dismiss Marie's Title VII claim against them since they were not named in the complaint filed with the EEOC. Since none of the members of the Loyola Board of Trustees or Lay Board of Trustees were named in the EEOC complaint either, this discussion applies to them as well. For the reasons set forth in this section of the opinion, the motion is granted.
A person who wants to file an employment discrimination suit in federal court under Title VII must first file a charge with the EEOC alleging a Title VII violation and exhaust her remedies with the Commission. 42 U.S.C. § 2000e-5 (1982). The EEOC is responsible for investigating the charges and, if there is reasonable cause to believe their truth, achieving voluntary compliance with the law through conciliation and persuasion. If these efforts are unsuccessful, or if the EEOC finds that there is not reasonable cause to believe the charges are true, it informs the parties and issues a letter authorizing the complainant to file a Title VII suit. Id. Accordingly, it is well settled that ordinarily a person not named in the EEOC charge may not be sued under Title VII. Eggleston *81 v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 905 (7th Cir.1981), cert. denied, 455 U.S. 1017, 102 S.Ct. 1710, 72 L.Ed.2d 134 (1982); Zewde v. Elgin Community College, 601 F.Supp. 1237, 1243-44 (N.D.Ill.1984).
The Seventh Circuit has characterized this requirement as jurisdictional since it serves both the purpose of putting the charged party on notice of the alleged Title VII violation and of bringing the party before the EEOC to facilitate efforts at conciliation. Eggleston, 657 F.2d at 905. However, the EEOC filing requirement is subject to some exceptions designed to avoid dismissals based on procedural technicalities where laypersons are preparing the complaints, as they often do. Id. at 907. The factors considered by the Eggleston court in deciding whether the filing requirement can be bypassed were: (1) whether the unnamed parties had adequate notice of the EEOC charge; (2) whether the unnamed parties were given an opportunity to participate in the EEOC conciliation proceedings; and (3) whether the complainant has the opportunity to receive complete redress of legitimate grievances unencumbered by procedural technicalities, especially where requiring strict compliance with the procedural requirements would have no relation to the purposes of those requirements. Id. at 906-07.[4] The individual defendants argue that they were never on notice of the EEOC charge and that they were not permitted an opportunity to engage in conciliatory negotiations with the plaintiffs. Marie responds that it was the fraudulent concealment of information by the defendants which prevented her from naming the individuals in her EEOC complaint, although she has not elaborated this allegation which appears for the first time in her memorandum on this motion. She also argues that the individual defendants were given "abundant opportunity" to participate in the EEOC conciliation effort, although there is no basis to support this claim in the record. Furthermore, she claims that the individual defendants will suffer no prejudice if they are retained as defendants in this action since they were aware of charges pending against them in a suit by Paul under the Employee Retirement Income Security Act ("ERISA") in another court in this district.
We cannot construe these arguments to allow the individual defendants to be sued under Title VII. Notice was never given to them with respect to the EEOC complaint, and Marie has not demonstrated that they were afforded an opportunity to participate in the EEOC proceedings. Although it appears that Matre, and perhaps Sandrik, were aware that Marie might raise a dispute with Loyola, there is nothing to support a finding that they could have anticipated an action against them. Furthermore, the fact that the individual defendants were involved in a lawsuit filed by Paul on a different substantive matter is not sufficient to support an inference of constructive notice of the EEOC charges. Finally, we note that the inclusion of these defendants adds little to Marie's Title VII claims, since she can still receive the full measure of available relief against her employer, Loyola. See Scott v. University of *82 Delaware, 385 F.Supp. 937, 942 (D.Del. 1974).
The defendants also moved to dismiss Paul's Title VII claim because he lacks standing. The Fengs alleged that Paul has been harmed by defendants' actions and that he may recover under Title VII as well as Marie. However, nowhere is it alleged that Paul was ever employed by Loyola or that he ever sought or even desired employment at Loyola. His only connection with the defendants' behavior is the fact that he is married to Marie.
Title VII actions against employers for discriminatory employment practices may be brought by any "person claiming to be aggrieved." 42 U.S.C. § 2000e-5(f)(1) (1982). Generally, the phrase "persons aggrieved" encompasses employees or applicants for employment with the allegedly offending employer. "To have standing as a `person aggrieved' under Title VII the plaintiff must show that (1) he has actually suffered an injury and (2) that the `interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute ... in question.'" Pecorella v. Oak Orchard Community Health Center, Inc., 559 F.Supp. 147, 149 (W.D.N.Y.1982), aff'd, 722 F.2d 728 (2d Cir.1983), citing Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970). In this case, Paul has made broad allegations regarding injuries he has suffered through Loyola's behavior toward Marie. However, spouses of individuals who have been victimized by employment discrimination cannot be said to fall within the class of persons Title VII was intended to protect. There is certainly no need to provide a statutory cause of action to the employee and her spouse.
Furthermore, remedies available under Title VII are generally limited to injunctive relief and back pay awards since compensatory and punitive damages are not recoverable. See Zewde v. Elgin Community College, 601 F.Supp. 1237, 1243 (N.D.Ill. 1984). Thus, there is no relief which would really be applicable to Paul even if he could support the other requirements for a Title VII action.
For all of these reasons, Paul does not have standing to maintain a Title VII action against any of the defendants. Accordingly, we dismiss his claim.
III. FAIR LABOR STANDARDS ACT AND EQUAL PAY ACT CLAIMS
The Fengs allege that defendants violated sections of the Equal Pay Act ("EPA"), 29 U.S.C. § 206(d)(1) (1982), and a provision of the Fair Labor Standards Act, 29 U.S.C. § 215(a)(3) (1982). Section 206(d)(1) prohibits sex-based salary discrimination with respect to the payment of wages by covered employers to employees performing equivalent work. Section 215(a)(3) makes it unlawful for an employer to discharge or otherwise discriminate against an employee because that employee files a complaint or institutes a proceeding under the fair labor standards statute. The defendants contend that the Fengs' EPA claims are barred by the two-year statute of limitations set forth in 29 U.S.C. § 255 (1982). We agree.
According to the statutory language, § 255(a) provides a two-year statute of limitations for suits based on violations of sections 206 and 215, measured from the date the cause of action accrued to the date the EPA complaint was filed, unless the cause of action arose out of a willful violation by the defendants. Even under the latter circumstance, there is only a three-year statute of limitations. 29 U.S.C. § 255(a) (1982).
The Fengs acknowledge that approximately five years passed between the time the cause of action accrued until the time they filed this suit, but argue that their EPA claims were timely filed since the filing of Marie's administrative Title VII complaint with the EEOC tolls the EPA limitations period. Other courts have rejected this proposition, see, e.g., Melanson v. Rantoul, 536 F.Supp. 271, 285 (D.R.I. 1982), and we do also. While Title VII and *83 the Equal Pay Act provide similar protection to individuals victimized by gender-based salary discrimination, they also provide clearly independent avenues of relief. There is no requirement under the EPA that a party file any administrative claim as a prerequisite to filing a complaint in federal district court. Nor is it required that a party pursue her Title VII remedies concurrently with her EPA claims. The Fengs could have filed the EPA action as soon as they discovered the salary discrepancy between Marie and Loyola's male assistant professors doing "equal work," but they chose instead to wait until disposition of her Title VII EEOC complaint. In doing so, they foreclosed independent statutory relief which would otherwise have been available. Although the pursuit of EPA claims while an EEOC complaint based on the same factual situation is pending might seem counterproductive with respect to the goals of conciliation and compromise encouraged by Title VII, that is the remedial scheme with which Congress has left us. Cf. Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 461, 95 S.Ct. 1716, 1720-21, 44 L.Ed.2d 295 (1975) (rejecting proposition that timely filing of EEOC complaint tolls limitations period for actions under 42 U.S.C. § 1981). Accordingly, we dismiss the Fengs' EPA claims.[5]
IV. SECTION 1985(3) CLAIMS
The Fengs further contend that Loyola and the individual defendants have conspired to deprive them of equal protection and their privileges and immunities under the law in violation of 42 U.S.C. § 1985(3) (1982).[6] Defendants argue that Marie's section 1985(3) claims do not sufficiently allege a factual basis for a conspiracy action as required by the pleading rules for such actions. In order to state a claim under § 1985(3), even a pro se plaintiff must allege more than conclusional allegations declaring a conspiracy. Briscoe v. LaHue, 663 F.2d 713, 723 (7th Cir.1981), cert. denied in relevant part, 460 U.S. 1037, 103 S.Ct. 1426, 75 L.Ed.2d 787 (1983), aff'd companion case, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983). In the present case, Marie alleges that the individual defendants conspired to request her to accept a pay reduction, suspend or deny her promotion and terminate her employment. However, there are no facts alleged that suggest any sort of agreement between these individual defendants that would support the existence of a conspiracy, nor are there any facts from which a conspiracy could be reasonably inferred. Cf. Quinones v. Szorc, 771 F.2d 289, 291 (7th Cir.1985). Furthermore, the supreme Court held in Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971), that plaintiffs suing under § 1985(3) must show "some racial, or otherwise class-based individiously discriminatory animus behind the conspirator's actions." The complaint must allege facts specific enough to suggest the existence of this type of motivation underlying the defendant's actions. See Briscoe, 663 F.2d at *84 723. Because the complaint in this case does not fulfill the necessary pleading requirements for a § 1985(3) action, we dismiss this claim under Fed.R.Civ.P. 12(b)(6).[7]
V. PENDENT STATE LAW CLAIMS
In concluding that none of Paul's federal claims can withstand defendants' motion to dismiss, we must also dismiss his pendent state tort and contract claims since there is no independent basis for asserting federal jurisdiction over the latter. See United Mine Workers of America v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966).
Defendants' moved to dismiss Marie's pendent state law claims pursuant to the appropriate statutes of limitations. These state law allegations include tort claims for interference with a business relationship, damage to professional career and infliction of emotional distress. Whether or not these state legitimate causes of action, none of these claims has been filed in a timely manner. The plaintiffs admit that they knew of the individual defendants' actions as early as May 16, 1983, when they unearthed information in the course of discovery in a separate suit between these parties. The present action was filed on August 12, 1985, more than two years from the date of Marie's "discovery" that she had been injured by the defendants. Thus, dismissal is required on the basis of the two-year Illinois statute of limitations for personal injury actions Ill. Rev.Stat. ch. 110, ¶ 13-202 (1983).[8]
Marie also alleged that defendants breached her oral contract with them to be re-employed for the 1980-81 school year. Since the termination letter was sent on August 29, 1980, and this suit was filed within the five-year statute of limitations for oral contracts, Ill.Rev.Stat. ch. 110, ¶ 13-205 (1983), the contract action is not time barred. Therefore, because the allegations underlying Marie's contract action against the defendants arise from a common nucleus of operative fact with her Title VII claim against Loyola, she may continue her pursuit of this pendent claim. However, since her employment contract was with Loyola, and not the other defendants, the claim can only be maintained against Loyola.
*85 VI. MOTION TO DISQUALIFY DEFENDANTS' COUNSEL
The Fengs moved to disqualify counsel representing all of the defendants, claiming that representation of multiple defendants is a conflict of interest in violation of Canon 5 of the Code of Professional Responsibility as adopted in Illinois. Ill. Rev.Stat. ch 110A, Canon 5 (1983). They also request that all motions and pleadings filed by these attorneys be quashed if the motion to disqualify is granted. Counsel for defendants have represented to the Court that Loyola customarily indemnifies and defend its employees when they are sued for acts done within the scope of their employment, making a conflict of interest unlikely. Furthermore, all defendants have consented to representation by the same counsel. Under these circumstances, we conclude that it is clear that defendants' counsel can adequately represent all of the defendants without conflict, and that the defendants have consented to joint representation upon full disclosure of the consequences under Ill.Rev.Stat. ch. 110A, Rule 5-105(c) (1983). Since there is no reason to believe that the defendants' counsel cannot adequately represent the interests of all of the defendants in this action, the plaintiffs' motion is denied.
The Fengs have also requested a stay of proceedings in this Court until pending motions in another lawsuit between Loyola and Paul Feng are decided. The Fengs assert that the other case, an ERISA action, has questions of law and fact common to those in this case as well as common parties. However, after briefly reviewing the pleadings in the other case, Feng v. Loyola University of Chicago, No. 81 C 7274 (N.D.Ill.), we do not feel that those proceedings are related closely enough to this case to warrant a stay in the proceedings, as no interest in judicial economy will be furthered. Furthermore, the only plaintiff in the ERISA case is Paul Feng, who is no longer a party to this suit. Accordingly, the Fengs' motion to stay proceedings is denied.
VII. CONCLUSION
In accordance with the above discussion, plaintiff Paul Feng and all of the individual defendants are dismissed from this suit. The defendants' motion to dismiss is denied with respect to Marie's pendent contract claims against Loyola[9] but is granted in all other respects. Finally, the Fengs' motion to disqualify defendants' counsel and to stay these proceedings is denied. It is so ordered.
NOTES
[1] Madonia and Suriano were the Associate Dean and Dean, respectively, of Loyola's School of Dentistry. Baumhart was apparently the President of the dentistry school, although the complaint does not make this clear.
[2] The Fengs did not offer a reason for Marie's change in status from a full-time to a part-time faculty member. We assume this move was of her own volition.
[3] The defendants argued in their motion to dismiss that the plaintiffs' response to that motion should not be considered with respect to Marie because she failed to sign it as required by Fed.R.Civ.P. 11. However, it is clear that in signing the plaintiffs' response, Paul intended to represent both himself and Marie. And, as noted by the Advisory Committee on the Rules, "the court has sufficient discretion to take account of the special circumstances that often arise in pro se situations." Fed.R.Civ.P. 11 Advisory Committee Note. In exercising our discretion, we reject defendants' request and will consider the response of these pro se plaintiffs as applicable to both Paul and Marie.
[4] The Eggleston court also reviewed the facts in that case with respect to the often-cited test from Glus v. G.C. Murphy Co., 562 F.2d 880, 888 (3d Cir.1977). The Third Circuit evaluates the following four factors in determining whether a federal suit may be maintained where a plaintiff has failed to name defendants in an EEOC charge:
(1) whether the role of the unnamed party could through reasonable effort by the complainant be ascertained at the time of the filing of the EEOC complaint;
(2) whether, under the circumstances, the interests of a named [party] are so similar as the unnamed party's that for the purpose of obtaining voluntary conciliation and compliance it would be unnecessary to include the unnamed party in the EEOC proceedings;
(3) whether its absence from the EEOC proceedings resulted in actual prejudice to the interests of the unnamed party; and
(4) whether the unnamed party has in some way represented to the complainant that its relationship with the complainant is to be through the named party.
We conclude that application of this test, too, would require the dismissal of the individual defendants here.
[5] As with their Title VII claim, the Fengs alleged that Paul has been harmed by defendants' actions under the fair labor standards and equal pay provisions. 29 U.S.C. §§ 206(d)(1), 215(a)(3). However, private enforcement for both of these provisions is limited to employees. 29 U.S.C. § 216(b) (1982). Hence, Paul lacks standing to bring actions under these statutes as well.
[6] That provision states in pertinent part:
If two or more persons in any State or Territory conspire or go in disguise on the highway or on the premises of another, for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws; or for the purpose of preventing or hindering the constituted authorities of any State or Territory from giving or securing to all persons within such State or Territory the equal protection of the laws ... in any case of conspiracy set forth in this section, if one or more persons engaged therein do, or cause to be done, any act in furtherance of the object of such conspiracy, whereby another is injured in his person or property, or deprived of having and exercising any right or privilege of a citizen of the United States, the party so injured or deprived may have an action for the recovery of damages occasioned by such injury or deprivation, against any one or more of the conspirators.
[7] Even if the pleadings were sufficiently specific to allege a § 1985(3) conspiracy, the Fengs have probably not alleged the deprivation of a right for which § 1985(3) provides a remedy. A close reading of the papers filed in this case reveals that the primary rights which the Fengs contend were violated are those created by Title VII and the Equal Pay Act. However, deprivation of rights created by Title VII cannot be the basis for a § 1985(3) action. Great American Savings & Loan Association v. Novotny, 442 U.S. 366, 378, 99 S.Ct. 2345, 2352, 60 L.Ed.2d 957 (1979). Furthermore, it has been called into doubt whether the deprivation of rights under the Equal Pay Act can be the basis for § 1985(3) actions. See, e.g., Whitten v. Petroleum Club of Lafayette, 508 F.Supp. 765, 771-72 (W.D.La. 1981).
Paul also raised an argument in his memorandum in opposition to the defendants' motion to dismiss claiming his § 1985(3) action was predicated on the defendants' alleged conspiracy to deprive him of his First Amendment "right to advocate equal pay between male and female employees doing similar work." Feng Memorandum at 13. Even without considering Paul's failure to allege this in the complaint, we find that his claim does not state a cause of action since the scope of substantive rights protected through § 1985(3) actions does not include those contained in the First Amendment. Afro-American Police League v. Fraternal Order of Police, 553 F.Supp. 664, 673 (N.D.Ill.1982).
[8] The Fengs also argue that the tort claims should not be barred because the five-year statue of limitations set forth in Ill.Rev.Stat. ch. 110, ¶ 13-215 (1983) should be applied. That provision establishes a five-year limitations period if a person liable for an action fraudulently conceals the cause of action from the knowledge of the person entitled to sue. The five years run from the time of discovery of the fraudulent concealment. However, under Illinois pleading rules, a person claiming that ¶ 13-215 is applicable must affirmatively allege facts which show the defendant fraudulently concealed a cause of action. Pratt v. Sears Roebuck & Company, 71 Ill.App.3d 825, 830, 28 Ill.Dec. 304, 308, 390 N.E.2d 471, 475 (1st Dist. 1979). In this case, where the state law action is in federal court on a claim of pendent jurisdiction, we find that similar specificity in pleading is necessary. Accordingly, since the Fengs have neglected to plead any facts regarding fraudulent concealment by the defendants, the statute of limitations from ¶ 13-215 will not be applied.
[9] What now remains in this case are Marie's Title VII and pendent contract claims against Loyola. Discovery as to these two claims should be completed expeditiously.
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101 F.3d 703
NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.UNITED STATES of America, Plaintiff-Appellee,v.David Ernest WINKELMAN, Defendant-Appellant.
No. 96-5365.
United States Court of Appeals, Sixth Circuit.
Nov. 15, 1996.
Before: KEITH, SILER, and BATCHELDER, Circuit Judges.
PER CURIAM.
1
David Winkelman appeals his convictions for obstruction of justice and aiding and abetting the obstruction of justice, challenging both the admission of testimony regarding polygraph examinations and the sufficiency of the evidence in support of the convictions. For the following reasons we AFFIRM the decision of the district court.
I. Facts and Procedural History
2
In March 1995, William Jones, a convicted felon, arrived at the Cincinnati/Northern Kentucky International Airport on a flight from El Paso, Texas. After exiting the plane, Jones was approached by members of the Narcotics Interdiction Unit, one of whom asked Jones for permission to search his duffel bag. Jones consented to the search and the officer found a loaded Taurus .38 caliber semi-automatic handgun.
3
A federal grand jury subsequently indicted Jones for being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g). Shortly after his indictment, Jones passed two polygraph examinations which indicated that he had no knowledge of the firearm in his duffel bag. Based upon these examinations, and Jones's cooperation with the authorities, the government dismissed the weapons charge.
4
On the day of Jones's indictment, Clermont County Deputy Sheriff William Williams approached an associate of Jones, Shaun Christoff, seeking his cooperation in a drug investigation unrelated to Jones's weapons charge. Williams told Christoff that, although Christoff was in a great deal of trouble, he could avoid prosecution if he agreed to cooperate. Christoff agreed, and the ensuing conversation revealed that Jones and Ernest "Butch" Winkelman had asked Christoff to provide an explanation for the presence of the firearm found in Jones's luggage. Essentially, Jones and Winkelman told Christoff to testify that the firearm was his and that he accidently placed it in Jones's bag.
5
Upon Williams's request, Christoff subsequently recorded various conversations, both over the phone and face-to-face, involving Jones and Winkelman. The recordings revealed a plan by Jones and Winkelman to concoct a story that Christoff would tell authorities in support of Jones's assertion that Jones did not know that the gun was in his bag. Winkelman paid Christoff to secure his false testimony.
6
Based on the foregoing, Winkelman and Jones were named in a two-count indictment charging them with conspiracy to obstruct justice in violation of 18 U.S.C. § 371 and with aiding and abetting each other to obstruct justice in violation of 18 U.S.C. §§ 1502 and 1503. Jones pleaded guilty to count one and was sentenced accordingly. Winkelman proceeded to trial, where the jury found him guilty on both counts.
II. Discussion
A. Polygraph Evidence
7
At Winkelman's trial the government called three witnesses: Williams, Christoff, and Jones. During cross-examination, defense counsel asked Williams whether the government had dismissed the weapons charge against Jones, and, if so, why it had done so. Specifically, defense counsel asked Williams if there was "independent, extraneous evidence" that Jones was not guilty of the weapons charge. On redirect, the government followed up on this line of questioning and Williams explained that the government decided to dismiss the charges because Jones had passed two polygraph tests and fully cooperated with the authorities.
8
Winkelman objected to Williams's reference to the polygraph tests. The district court overruled the objection, stating that the polygraph examinations explained the decision to dismiss Jones's weapons charge, an issue which defense counsel had raised. The court then instructed the jury regarding the limited purpose for which they could consider the polygraph evidence.
9
The polygraph tests were mentioned a second time during the government's direct examination of Jones. When the government asked Jones to explain the circumstances that led to Winkelman's prosecution, Jones recounted the events which transpired in the Cincinnati airport and further stated that he did not know that the gun was in his duffel bag. It was in regard to the latter that Jones referred to his passing two polygraph tests.
10
Winkelman objected to Jones's answer. The district court, once again, overruled the objection and instructed the jury on the relevance of the polygraph evidence.
11
On appeal, Winkelman argues that the district court abused its discretion when it allowed the government's witnesses to refer to the polygraph tests.
12
The decision regarding the admissibility of a polygraph examination is within the sound discretion of the trial court. United States v. Blakeney, 942 F.2d 1001, 1014 (6th Cir.1991), cert. denied, 502 U.S. 1035 (1992). We review this for an abuse of discretion. United States v. Carter, 969 F.2d 197, 200 (6th Cir.1992).
13
Ordinarily, results of a polygraph examination are inadmissible as evidence. See United States v. Barger, 931 F.2d 359, 370 (6th Cir.1991). "However, there are some circumstances under which polygraph evidence may be admissible." United States v. Weiner, 988 F.2d 629, 633 (6th Cir.), cert. denied, 510 U.S. 848 (1993). Winkelman's case presents just such circumstances.
14
The first reference to Jones's polygraph examinations occurred during the government's redirect examination of Williams. The government did not elicit the polygraph evidence to prove Jones's veracity, "but because [Winkelman] had opened the door for an explanation of the government's conduct in" dismissing the weapons charge. Id. After admitting the evidence through the door originally opened by Winkelman, the district court properly instructed the jury that the polygraph examination was relevant only to the decision to dismiss the weapons charge, and could not be considered by the jury in evaluating Jones's testimony at trial.
15
"This circuit has developed a two-step analysis when considering the admissibility of polygraph evidence. First, the evidence must be relevant; second, its probative value must outweigh the risk of unfair prejudice." Barger, 931 F.2d at 370. Winkelman put the government's reasons for dismissing the weapons charge at issue, thus making the polygraph evidence relevant. See id. In light of the evidence's purpose and the limiting instruction, we hold that the danger of unfair prejudice from the evidence does not substantially outweigh the probative value. We therefore hold that the district court did not abuse its discretion in admitting Williams's reference to the polygraph examinations.
16
Jones's testimony regarding the results of his polygraph examinations resulted from his narrative about the facts giving rise to Winkelman's prosecution, and were not offered in response to an evidentiary door opened by Winkelman. We will therefore focus on the district court's curative instruction to the jury.
17
Our sister circuit has previously stated, and we have adopted, the following nonconstitutional error test for situations such as Winkelman's:
18
The most important questions to consider in determining whether a curative instruction or a mistrial is appropriate after a reference to a polygraph test are these: (1) whether an inference about the result of the test may be critical in assessing the witness's credibility, and (2) whether the witness's credibility is vital to the case.
19
United States v. Brevard, 739 F.2d 180, 182 (4th Cir.1984), adopted in, United States v. Walton, 908 F.2d 1289, 1294 (6th Cir.), cert. denied, 498 U.S. 990 (1990).
20
While an inference from the result of the polygraph examinations may have impacted the jury's assessment of Jones's credibility, we find that his credibility was not vital to this case. The evidence against Winkelman was neither conjectural nor circumstantial. Christoff's testimony, together with the tape recordings of Winkelman's conversations, supports the government's case independent of Jones's testimony. Not only was Jones's credibility not vital to the case, his testimony was not vital in light of the other evidence presented. Accordingly, we affirm the district court on this issue.
B. Sufficiency of the Evidence
21
Winkelman also alleges that the evidence produced at trial was insufficient to support his convictions. "The relevant inquiry when reviewing claims of insufficient evidence is 'whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.' " United States v. Blakeney, 942 F.2d 1001, 1010 (6th Cir.1991), cert. denied, 502 U.S. 1035 (1992) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)).
22
After a thorough review of the record, and in light of our foregoing discussion, we believe that a rational trier of fact could have found the essential elements of Winkelman's crimes beyond a reasonable doubt.
23
Accordingly, the judgment of the district court is AFFIRMED.
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641 F.Supp.2d 536 (2009)
Kandie R. WRIGHT, Plaintiff
v.
David H. SMITH, M.D. and Abingdon Surgical Associates, P.C., Defendants.
Civil Action No. 1:08cv00052.
United States District Court, W.D. Virginia, Abingdon Division.
June 30, 2009.
*537 Anthony Marc Russell, Gentry Locke Rakes & Moore, Roanoke, VA, for Plaintiff.
William Wayne Eskridge, Penn Stuart & Eskridge, Abingdon, VA, for Defendants.
*538 MEMORANDUM OPINION
PAMELA MEADE SARGENT, United States Magistrate Judge.
This case is currently before the court on the defendants' motion in limine. (Docket Item No. 34) ("Motion"). The Motion is before the undersigned magistrate judge by referral, pursuant to 28 U.S.C. § 636(b)(1)(A). The Motion was heard on June 19, 2009. Based on the parties' arguments and representations to the court, and for the reasons set forth below, the Motion will be granted in part and denied in part.
I. Facts
On February 20, 2007, Wright presented to the emergency department at Johnston Memorial Hospital, ("JMH"), in Abingdon, Virginia, and was diagnosed with acute appendicitis with probable rupture. The emergency room physician consulted with the defendant, Dr. David H. Smith, M.D., a surgeon, who admitted Wright to the hospital with a diagnosis of acute appendicitis. On the same day,[1] Dr. Smith attempted an appendectomy on Wright. Dr. Smith submitted the tissue removed from Wright's abdomen to pathology, but the pathologist was not able to identify an "actual appendix" in the tissue removed from Wright.
On August 13, 2007, Wright presented to the emergency department at Wellmont Bristol Regional Medical Center, ("BRMC"), due to severe right lower quadrant pain. She was diagnosed with chronic appendicitis by the emergency room physician, who consulted Dr. Michael D. Rowell, M.D., a general surgeon. Dr. Rowell admitted Wright to the hospital, and on August 17, 2007, he surgically removed her ileum, cecum and appendix. The pathology report following Dr. Rowell's surgery showed a terminal ileum and cecum with retrocecal appendix showing chronic appendicitis with perforation. Wright was discharged on August 22, 2007.
Some of Wright's medical bills incurred for the February 2007 hospitalization and surgery at JMH were paid by the Virginia Department of Medical Assistance Services, ("Medicaid").
II. Analysis
The Motion asks the court to exclude from opening statements, argument by counsel and evidence at trial the following: (1) medical bills or other damages for treatment that the plaintiff would have required regardless of the defendants' alleged negligence; (2) medical bills or other damages for treatment unrelated to the defendants' alleged negligence; and (3) any and all amounts for medical treatment that the plaintiff claims to be related to the defendants' alleged negligence to the extent that such amounts exceed the amounts which were approved for payment by Medicaid. In particular, the defendants ask that the plaintiff be required to elect whether she will claim the expenses of the surgery performed by Dr. Smith or the surgery performed by Dr. Rowell as damages. The defendants further contend that any medical expenses submitted into evidence should be reduced by the amount disallowed by Medicaid as exceeding the "reasonable and customary charges" for such services.
Since this is a diversity case, the court, under Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), must apply Virginia substantive law. While the Motion addresses the evidence the court will allow to be presented at trial, the court's decision turns on the types of damages that are allowed in personal *539 injury cases under Virginia substantive law. Thus, Virginia substantive law, insofar as it can be discerned by this court, controls.
First, the defendants argue that Wright cannot recover for both the surgery performed by Dr. Smith and the surgery performed by Dr. Rowell. They argue that, at most, Wright claims that she underwent two surgeries for a condition appendicitisthat should have been corrected in one surgical procedure. However, in her discovery responses, Wright states that she is claiming as damages medical bills for both surgeries. The defendants contend that Wright is improperly seeking to obtain the appendectomy for free. To support their argument, the defendants cite to Fitzgerald v. Manning, 679 F.2d 341, 346-47 (4th Cir.1982), for the proposition that in order to recover damages for alleged malpractice, a qualified expert must testify, to within a reasonable degree of medical certainty, that the damages in question were causally related to the negligence of the defendant. The defendants argue that, in this case, Wright developed appendicitis through no fault of her own, but also through no fault of the defendants, and she required an appendectomy to cure her condition. They assume that Wright is claiming the expenses of the surgery by Dr. Smith as damages because that surgery did not accomplish its intended purpose, and she claims the expenses of the surgery by Dr. Rowell on the theory that it would not have been necessary if Dr. Smith had removed her appendix. However, the defendants claim that Wright is not entitled to the appendectomy free of charge. Instead, they argue that she should be required to elect which surgery she will include in her claim for damages.
Although the defendants advance the above-stated argument, they point the court to no case law to support these propositions, and the court has found none. Instead, the court will rely on general damages principles and common sense in deciding this issue. It is well-settled that an injured person is entitled to recover all damages caused by a defendant's negligence. See Lawrence v. Wirth, 226 Va. 408, 309 S.E.2d 315, 318 (1983) (citing Blair v. Eblen, 461 S.W.2d 370 (Ky.1970)). It is not disputed that Wright's appendicitis required surgical attention. Moreover, as the defendants argue, Wright's appendicitis was in no way caused by any negligence on Dr. Smith's part. When she presented to Dr. Smith for the first time on February 20, 2007, she was diagnosed with appendicitis, and it was determined that she needed an appendectomy. While it is true that had Dr. Smith removed Wright's appendix, she would not have had to undergo the second surgery by Dr. Rowell, she, nonetheless, still would have had to undergo one successful surgery for the removal of the appendix. Allowing Wright to recover damages for both surgeries would create a windfall to the plaintiff, in that, as the defendants point out, she would essentially receive her appendectomy free of charge. Because no negligence by Dr. Smith caused Wright to have to undergo an appendectomy, this would be an unfair result to the defendants and one that the court will not allow. All of this being said, the court finds the defendants' argument that Wright must elect to pursue the costs of either the surgery performed by Dr. Smith or that performed by Dr. Rowell as damages persuasive.
Next, the defendants argue that Wright cannot recover damages that are not causally related to the negligence of Dr. Smith. In order to establish a prima facie case of medical malpractice, the plaintiff bears the burden of establishing: (1) the applicable standard of care; (2) that the standard has been violated, and; *540 (3) that there is a causal relationship between the violation and the alleged harm. See Fitzgerald, 679 F.2d at 346. The defendants argue that several months after Dr. Smith's surgery, Wright was admitted to BRMC, where she was initially treated for medical problems unrelated to any treatment, or alleged lack of treatment, by Dr. Smith. Such problems included a lower venous duplex study, a pulmonary medicine consultation, treatment for a urinary tract infection and treatment for headaches. The defendants are correct that Wright has not alleged that any such conditions were related to any negligence of Dr. Smith, nor does the Rule 26 report from Wright's expert state that any such problems were caused by Dr. Smith. Therefore, the defendants argue that those medical problems, and the expenses of diagnosing and treating them, are not recoverable as damages.
As stated above, an injured person is entitled to recover all damages caused by a defendant's negligence. See Lawrence, 309 S.E.2d at 318 (citing Blair, 461 S.W.2d 370). Thus, the inverse is true that any damages not caused by a defendant's negligence are not recoverable. It is the burden of the plaintiff to show, through expert testimony, that a defendant's negligence is the proximate cause of a plaintiff's damages. See Reed v. Church, 175 Va. 284, 8 S.E.2d 285, 288 (1940). That being the case, I find that, to the extent that Wright fails to show any causal relationship between certain medical conditions and related expenses and the defendants' alleged negligence, she cannot recover for those medical expenses in this action.
Additionally, the defendants argue that the plaintiff must show, through expert testimony, that her three days' hospitalization prior to her surgery by Dr. Rowell, and the five days' hospitalization following that surgery, were causally related to the defendants' negligence and were reasonably and medically necessary. They cite Virginia Code Annotated § 8.01-413.01, relating to the authenticity and reasonableness of medical bills, which provides as follows:
In any action for personal injuries ... the authenticity of bills for medical services provided and the reasonableness of the charges of the health care provider shall be rebuttably presumed upon identification by the plaintiff of the original bill or a duly authenticated copy and the plaintiff's testimony (i) identifying the health care provider, (ii) explaining the circumstances surrounding his receipt of the bill, (iii) describing the services rendered and (iv) stating that the services were rendered in connection with treatment for the injuries received in the event giving rise to the action.
VA.CODE ANN. § 8.01-413.01(A) (2007 Repl. Vol.) The defendants further cite McMunn v. Tatum, 237 Va. 558, 379 S.E.2d 908, 913 (1989), in which the Virginia Supreme Court held that proof of medical expenses by the introduction of bills through the sole testimony of the plaintiff requires consideration of four major components: (1) authenticity, (2) reasonableness in amount, (3) medical necessity, and (4) causal relationship. Stated differently, a defendant, whose liability for a plaintiff's damages has been established, is only responsible for those medical bills which are (1) authentic, i.e., accurate statements of charges actually made by those who provided the services to the plaintiff for which recovery is claimed; (2) reasonable, i.e., not excessive in amount, considering the prevailing cost of such services; (3) medically necessary, i.e., reasonably necessary in the opinion of experts qualified in the appropriate field to cure the plaintiff, ameliorate his injuries, or relieve his suffering, not the product of overtreatment or unnecessary treatment; and (4) rendered necessary solely by a *541 medical condition proximately resulting from the defendant's negligence, not by an unrelated or preexisting condition except to the extent such a condition was aggravated by the defendant's negligence. See McMunn, 379 S.E.2d at 913. The court in McMunn also stated that the question of whether a particular treatment is medically necessary, as well as the often more difficult question of whether such treatment is causally related to a condition resulting from some act or omission on a defendant's part, can usually be determined only by a medical expert qualified in the appropriate field who has studied the plaintiff's particular case. See McMunn, 379 S.E.2d at 914. Thus, the McMunn court held that where a defendant objects to the introduction of medical bills, indicating that the defendant's evidence will raise a substantial contest as to either the question of medical necessity or the question of causal relationship, the court may admit the challenged medical bills only with foundation expert testimony tending to establish medical necessity or causal relationship, or both, as appropriate. See McMunn, 379 S.E.2d at 914.
Here the defendants have put Wright and her counsel on notice that they are objecting to portions of the medical bills related to Wright's August 13-22 admission at BRMC. That being the case, I find that Wright must establish through expert testimony that her hospitalization and treatment at BRMC immediately prior to and following her surgery was causally related to the defendants' negligence and was reasonable and medically necessary.
Lastly, the defendants argue that Wright cannot seek to recover as damages any portion of her medical bills that were written off by Medicaid. The evidence before the court shows that Medicaid paid at least $5,589.90 of Wright's medical expenses related to her February 2007 hospitalization and surgery. The court does not have evidence before it with regard to any amounts charged by the medical providers for these services. Nonetheless, as the defendants explain in their brief, health care providers who participate in the Medicaid program are required by law to enter into agreements that provide that they will not collect from the Medicaid patient, or any other source, the difference between the charges billed and the amount paid by Medicaid, with the exception of certain co-payments and deductibles. See 42 C.F.R. § 447.15 (2008); VA.CODE ANN. § 32.1-317 (2004 Repl. Vol.); see also McAmis v. Wallace, 980 F.Supp. 181, 182 (W.D.Va.1997). As a result of these agreements, following Medicaid's "adjustment" of the medical bill from the health care provider, the difference between the original bill and the amount that Medicaid and the patient actually pay is "written off." That means that no one may collect this difference from the patient. As the defendants note, these bills are extinguished as a matter of law and are treated as if they never existed.
The defendants also argue that Virginia's collateral source rule does not apply to write offs due to state or federal law, as here, but only to write offs due to agreements between health care providers and private health insurance carriers. The collateral source rule provides that benefits received by an injured claimant from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer. See Acuar v. Letourneau, 260 Va. 180, 531 S.E.2d 316, 320 (2000). Under this rule, the wrongdoer cannot enjoy any benefits which may arise from contracts or from any other relation that may exist between the injured claimant and a third party which is wholly independent of the wrongdoer. See Schickling v. Aspinall, 235 Va. 472, 369 *542 S.E.2d 172, 174 (1988); see also VA.CODE ANN. § 8.01-35 (2007 Repl. Vol.) The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is entitled to compensation to make him whole, but no more, and; (2) a defendant is liable for all damages that proximately result from his wrong. See Schickling, 369 S.E.2d at 174.
The Virginia Supreme Court has not yet determined whether the collateral source rule would allow a personal injury plaintiff, whose medical expenses were covered by Medicaid, to seek damages for the amount charged for medical treatment rather than for only the amount paid for medical treatment. Therefore, this court must attempt to predict what the Virginia Supreme Court would hold in this case. See Mitchell v. Hayes, 72 F.Supp.2d 635, 637 (W.D.Va.1999) (citing Wells v. Liddy, 186 F.3d 505, 528 (4th Cir.1999)). Based on the Virginia Supreme Court's recent expansive view of the collateral source rule, I am of the opinion that, given the opportunity, the Virginia Supreme Court would hold that the collateral source rule would allow a personal injury plaintiff to seek damages for the full costs of medical treatment regardless of whether any amounts were written off under Medicaid or some other government-funded program.
In reaching this conclusion, I am aware that the presiding judge in this case, Senior United States District Judge Glen M. Williams previously analyzed this issue and reached the opposite conclusion in McAmis, 980 F.Supp. 181. However, that decision was reached before the Virginia Supreme Court's decision in Acuar and its even more expansive application of the collateral source rule in Bullard v. Alfonso, 267 Va. 743, 595 S.E.2d 284 (2004). In light of the Virginia Supreme Court's decisions and reasonings in these case, I am forced to conclude that, given these facts, the court would hold that the collateral source rule allows a plaintiff to present evidence of the full amount charged by a health care provider regardless of the amount the provider accepts as payment.
In Acuar, the Virginia Supreme Court held that a personal injury plaintiff may present evidence of the "full amount of his reasonable medical expenses without any reduction for the amounts written off by his health care providers" pursuant to agreements with his health insurance carrier. 531 S.E.2d at 323. The court cited the Restatement (Second) of Torts in support of its conclusion. "`[I]t is the tortfeasor's responsibility to compensate for all harm that he [or she] causes, not confined to the net loss that the injured party receives.' Restatement (Second) of Torts § 920A cmt. b (1977)." Acuar, 531 S.E.2d at 323. Thus, the court held, "[t]o the extent that such a result provides a windfall to the injured party, we have previously recognized that consequence and concluded that the victim of the wrong rather than the wrongdoer should receive the windfall." Acuar, 531 S.E.2d at 323 (citing Schickling, 369 S.E.2d at 174).
Subsequent to its decision in Acuar, the Virginia Supreme Court has specifically held that the collateral source rule also prevents a defendant from introducing evidence of the amounts accepted by health care providers as payment in full as evidence of the reasonable value of services. See Radvany v. Davis, 262 Va. 308, 551 S.E.2d 347, 348 (2001). A year later, the court recognized that the collateral source rule prevents a tortfeasor from benefitting from any payment made to a tort victim from any source other than from the tortfeasor himself. "`If the plaintiff was himself responsible for the benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself. If the benefit was a gift to the *543 plaintiff from a third party or established for him by law, he should not be deprived of the advantage that it confers.'" Acordia of Va. Ins. Agency v. Genito Glenn, L.P., 263 Va. 377, 560 S.E.2d 246, 251 (2002) (quoting Restatement (Second) of Torts § 920A cmt. b (1979)). In fact, the court has continually recognized that, while the collateral source rule originally involved money paid to a plaintiff by his own insurer, it has been expanded over the years to cover a number of other payments, including benefits provided by the operation of law, such as social security, unemployment and worker's compensation benefits. See Acordia, 560 S.E.2d at 251 (quoting Schickling, 369 S.E.2d at 174).
In Bullard, the Virginia Supreme Court further expanded the collateral source rule to allow a plaintiff to seek damages for lost wages when, in fact, he lost no wages due to his injuries. See 595 S.E.2d at 287-88. In Bullard, the plaintiff was employed as a drywall hanger and plasterer by a subchapter S corporation of which the plaintiff was sole stockholder and president. See Bullard, 595 S.E.2d at 285. As a result of injuries sustained in a motor vehicle accident, the plaintiff was unable to perform his work as a drywall hanger and plasterer for six months. See 595 S.E.2d at 285. The employer continued to pay the plaintiff his full salary during the period that he was unable to work. See 595 S.E.2d at 285. Despite the fact that the plaintiff actually suffered no loss of income during his disability, the court allowed the plaintiff to seek damages for loss of income because of his disability. See 595 S.E.2d at 287-88. Furthermore, the court held that, under the collateral source rule, the defendant could not introduce any evidence that the plaintiff had continued to receive his full salary during his disability. See 595 S.E.2d at 287-88.
Judge Williams's earlier decision in McAmis concluded that contributions to the Medicaid system through payroll taxes are not analogous to private insurance premiums, thereby finding that the collateral source rule was inapplicable. In light of the Virginia Supreme Court's reasoning in Acordia that, under the collateral source rule, a plaintiff should not be deprived of a benefit provided for him by his prior agreements, gifts or the operation of law, I find that the Virginia Supreme Court would not agree with the distinctions made by the McAmis decision. For these reasons, I will deny the Motion and allow Wright to introduce, through argument or evidence, the full amounts charged by her health care providers.
An appropriate order shall be entered.
NOTES
[1] There are some references to Wright's surgery having been performed on February 20, 2007, and other references to it having been performed on February 21, 2007. Dr. Smith's surgical note has not been provided to the court.
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902 F.2d 957
U.S.v.Ybarra-Mongaroz (2 Cases)*
NOS. 89-2444, 89-2449
United States Court of Appeals,Fifth Circuit.
APR 30, 1990
1
Appeal From: S.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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715 F.Supp. 32 (1989)
John A. AMODIO, et al.
v.
BLINDER, ROBINSON & CO.
Civ. No. H-89-233 (PCD).
United States District Court, D. Connecticut.
June 23, 1989.
*33 Richard Weinstein, Pearson, Baum & Weinstein, West Hartford, Conn., for plaintiffs.
Eliot B. Gersten, Gersten & Clifford, Hartford, Conn., for defendant.
RULING ON MOTION TO COMPEL ARBITRATION
DORSEY, District Judge.
Plaintiffs allege violations of Section 12 of the Securities Act of 1933, 15 U.S.C. § 77l; Section 10 of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j; and the Connecticut Uniform Securities Act, Conn.Gen.Stat. §§ 36-470, 36-472 and 36-498. Plaintiffs also assert common law claims of negligent and fraudulent misrepresentation. Plaintiffs propose an action on behalf of all who invested in the "Federal National Mortgage Association Interest Only Security Leveraged Investment Program" ("Investment Program"). Defendant moves to stay these proceedings and to compel arbitration on the ground that relevant customer agreements contain arbitration clauses enforceable under the Federal Arbitration Act, 9 U.S.C. §§ 1-15.
Discussion
Section 2 of the Arbitration Act provides:
A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist of law or in equity for the revocation of any contract.
The Arbitration Act "`was intended to revers[e] centuries of judicial hostility to arbitration agreements.'" Shearson/American Express v. McMahon, 482 U.S. 220, 225, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987), quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 510, 94 S.Ct. 2449, 2453, 41 L.Ed.2d 270 (1974). It is an expression of a "liberal federal policy favoring arbitration agreements." Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). "`[T]he act was to assure that those who desired arbitration and whose contracts related to interstate commerce that their expectations would not be undermined by federal judges, or ... by state courts or legislatures.'" Southland Corp. v. Keating, 465 U.S. 1, 13, 104 S.Ct. 852, 859, 79 L.Ed.2d 1 (1984), quoting Metro Indus. Painting Corp. v. Terminal Const. Co., 287 F.2d 382, 387 (2d Cir.1961). The Act creates a body of federal substantive law and "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Hosp., 460 U.S. at 24-25, 103 S.Ct. at 941. "The Arbitration Act, standing alone, therefore mandates enforcement of agreements to arbitrate statutory claims." McMahon, 482 U.S. at 226, 107 S.Ct. at 2337.
"When considering a motion to stay proceedings and compel arbitration under the Act, a court has four tasks: first, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be non-arbitrable;[1] and fourth, if the court concludes that some, but not all, of the claims in the action are subject to *34 arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration." Creative Securities Corp. v. Bear Stearns & Co., 671 F.Supp. 961, 965 (S.D.N.Y.1987), aff'd mem., 847 F.2d 834 (2d Cir.1988).
In support of its motion to compel arbitration, defendant has produced three exhibits, each containing an arbitration provision which it contends evidences an agreement to arbitrate all disputes. The first exhibit is entitled Client's Agreement and contains the following arbitration provision:
Any controversy arising out of or relating to my account, to transactions with or for me to this Agreement or the breach thereof ... shall be settled by arbitration in accordance with the rules of the NASD.... This provision does not apply to any claim arising out of Federal securities law.
The second exhibit is a copy of the back side of a trade confirmation which contains the following arbitration provision:
It is understood that the following agreement to arbitrate does not constitute a waiver of the right to seek a judicial forum where such a waiver would be void under the federal securities laws. All controversies which may arise between us concerning this transaction or the construction, performance or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration....
Finally, the third exhibit contains cash account agreements signed by three of the plaintiffs. The agreement signed by plaintiffs Kessler and Amodio provides that: "[a]ll controversies which may arise between us concerning this transaction or the construction, performance, or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration." While the agreement signed by plaintiff Leahy provides that: "[i]t is understood that the following agreement to arbitrate does not constitute a waiver of the right to seek a judicial forum where such a waiver would be void under the federal securities laws. All controversies which may arise between us concerning this transaction or the construction, performance or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration."
Plaintiffs contend that the Client's Agreements established the margin account between each respective plaintiff and defendant and was the only agreement executed by each plaintiff with respect to the margin investments in issue. Thus, plaintiffs argue that the Client's Agreement controls the issue of arbitrability. Defendant argues that plaintiffs have ratified additional clauses for arbitration, namely the trade conformations and cash account agreements, which evidence an agreement to arbitrate all disputes notwithstanding the limiting language in the Client's Agreement.
Defendant's argument, although not particularized in its brief, appears to rely on language in the trade confirmations and cash account agreements which provide that "[a]ll controversies which may arise between us concerning this transaction or the construction, performance or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration." (Emphasis added). Defendant argues that plaintiffs can be bound by the arbitration provisions in their account agreements, as well as the trade confirmations containing the arbitration provision upon which defendant relies to pursue its arbitration. Plaintiffs respond by arguing that the Client's Agreements containing the limiting language upon which they purport to rely in opposing arbitration have not been modified by any subsequent agreements. Further, they argue that the subsequent agreements referred to by defendant either do not pertain to the margin investments in issue or were not *35 signed by plaintiffs.[2]
Plaintiffs' claims herein center on alleged misrepresentations and omissions concerning margin investments made in the Investment Program in issue. The Client's Agreements executed by each plaintiff established the margin account under which such investments were made. See Transcript of Testimony of J. Richard Busque (5/19/89) at 28-30. The arbitration provisions in the cash account agreements and the trade confirmation are broader than that contained in the Client's Agreement and purport to submit all controversies to arbitration.[3] These provisions conflict with the arbitration provision of the Client's Agreement which excludes federal securities claims from its scope. However, neither refers to nor expressly modifies or supersedes the arbitration provision in the Client's Agreement or any other existing or subsequent arbitration provision. Although the arbitration clause contained in the trade confirmations and cash account agreements purports to apply to "any other agreement between [the parties], whether entered into prior, on or subsequent to the date hereof," it does not specifically negate the limited language of arbitration contained in the Client's Agreement. Each plaintiff executed a Client's Agreement establishing their margin account which contained an arbitration provision expressly providing that it did "not apply to any claim arising out of federal securities law." The fact that other arbitration provisions did not contain such limiting language does not negate the limited scope of arbitration provided in the Client's Agreement. Plaintiffs contracted for that language in connection with their margin accounts and are entitled to rely on it in relation to a dispute arising from such margin investments. Accordingly, the arbitration provision in the Client's Agreement is found to control the issue of arbitrability of plaintiffs' claims raised in this dispute.
The next issue is the scope of that arbitration provision, the last clause of which provides that "[t]his provision does not apply to any claim arising out of federal securities laws." Defendant argues that this clause was required by SEC Rule 15c2-2, 17 C.F.R. § 240.15c2-2, which has since been rescinded. Defendant argues that the rescission and recent Supreme Court authority permitting arbitration of claims arising under both the 1933 and 1934 Act renders the disputed clause meaningless. Plaintiffs contend that there is no basis for ignoring the clause's unequivocal language. Defendant's argument in the face of a similar exclusion clause has been rejected. Brick v. J.C. Bradford & Co., 677 F.Supp. 1251, 1255-56 (D.D.C.1987). The clause in Brick provided that the "agreement to arbitrate does not apply to any controversy ... for which a remedy may exist ... under the federal securities laws." Id. at 1256 (emphasis added). As a matter of contract law, that clause clearly excluded federal securities claims from arbitration. Id. Absent ambiguity in the provision or any indication that the clause constituted a mere notice or would be vitiated upon a change in federal law regarding arbitration of securities disputes, the exclusion clause would be enforced. Id.; see also Federal Ins. Co. v. Mallardi, 696 F.Supp. 875, 879-80 (S.D.N.Y.1988); Church v. Gruntal & Co., 698 F.Supp. 465, 468-69 (S.D.N.Y.1988); but see Sease v. *36 Paine Webber, Inc., 697 F.Supp. 1190, 1193 (S.D.Fla.1988).
The reasoning of Brick is persuasive as to the present case. While the clause in the arbitration agreement may have been inserted only to comply with SEC Rule 15c2-2, this agreement nowhere links the clause to the continued existence of the regulations. It is not stated to be dependent on the state of the law. The clause unequivocally excludes federal securities claims. Defendant could have drafted a narrower clause providing only that the arbitration provision did not operate to waive any rights to seek a judicial forum where such a waiver would be void under federal securities law. Instead, defendant drafted a clause which unequivocally excluded federal securities claims from arbitration. Plaintiffs have the right to rely on the express language of the exclusionary clause. Defendant cannot complain that it is being required to abide by an exclusion that it drafted and which is unambiguous. The law has changed, to be sure. However, defendant did not anticipate nor provide for such change when it drafted the agreement.
The cases cited by defendant which ordered arbitration notwithstanding "Rule 15c2-2 language" are distinguishable. Those cases did not involve language expressly exempting federal securities claims from arbitration. For example, in DeKuyper v. A.G. Edwards & Sons, 695 F.Supp. 1367, 1368-69 (D.Conn.1987), the language at issue did not contractually forbid arbitration of federal securities claims, but rather notified the customer that "[a]rbitration cannot be compelled with respect to disputes arising under federal securities laws." This provision was held not to be a "bargained-for-term of the contract," but merely provided notice of the customer's rights. Id. at 1369. Similarly, in Finkle & Ross v. A.G. Becker Paribas, Inc., 622 F.Supp. 1505, 1510 (S.D.N.Y.1985), the arbitration agreement provided that the customer did not "waive any rights [they] may have [had] under the federal securities laws for controversies arising under such laws." That language was held not to function as an agreement between the parties, but merely put the customer on notice to investigate his or her specific rights regarding arbitration. Id. at 1510.
In the case at bar, the arbitration agreement expressly "does not apply to any claim arising out of Federal securities law." An agreement to arbitrate must be interpreted in accordance with generally accepted principles of contract law. See Genesco, Inc., 815 F.2d at 845. There is no basis for ignoring the unequivocally expressed intent of the parties to exclude federal securities claims from arbitration. Though defendant may have included the exclusion in response to the regulation, as it reserved no right to vitiate the exclusion when the reason for it evaporated, it cannot unilaterally impose its rationale for the content of the agreement. A contract is a meeting of the minds of the parties. The fact that one party's reason for agreeing as they did has now disappeared is not a justification for that party changing the agreement. Therefore, the exclusion claim remains in effect and plaintiffs' federal securities law claims are not subject to the arbitration agreement.
Summary
Defendant's motion to compel arbitration of plaintiffs' claims under Section 12 of the Securities Act of 1933, 15 U.S.C. § 77l, and Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j, is denied.
Defendant's motion to compel arbitration of plaintiffs' state statutory and common law claims is granted. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217, 105 S.Ct. 1238, 1240, 84 L.Ed.2d 158 (1985).
As some of the claims in the case are arbitrable, there remains the question whether to stay the remaining claims pending arbitration. "[A]rbitration and federal litigation should proceed simultaneously absent compelling reasons to stay the litigation." Chang v. Lin, 824 F.2d 219, 223 (2d Cir.1987). The record reflects no reason to defer resolution of plaintiffs' federal securities law claims pending arbitration of their state claims. See, e.g., Byrd, 470 U.S. at 225, 105 S.Ct. at 1244 (White, J., concurring) *37 ("[T]he heavy presumption should be that the arbitration and the lawsuit will each proceed in its normal course."). Accordingly, defendant's motion to stay these proceeds pending arbitration is denied.
SO ORDERED.
NOTES
[1] Plaintiffs herein have alleged violations of both the Securities Act of 1933 and the Securities and Exchange Act of 1934. The Supreme Court has found that neither Act expresses any intent on the part of Congress to void pre-dispute arbitration agreements. See Rodriguez de Quijas v. Shearson/American Express, ___ U.S. ___, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989) (construing 1934 Act). Accordingly, arbitration of plaintiffs' federal statutory claims would be permissible unless the parties have otherwise agreed.
[2] The fact that the trade confirmations were not signed by plaintiffs is not dispositive. Courts have "recognized that arbitration clauses contained in confirmation slips are enforceable as written agreements to arbitrate." Middlebrooks v. Merrill Lynch, Pierce, Fener & Smith, Inc., Sec.L.Rep. (CCH) ¶ 94,399 (N.D.Ala.1989); see also Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir.1987) (long-standing and ongoing relationship evidenced agreement to arbitrate disputes under unsigned sales confirmation forms).
[3] Although not all of the Client's Agreements are dated, it appears that most were executed in March of 1988. The cash account agreements executed by plaintiffs Kessler and Amodio are dated in May 1988, while that executed by plaintiff Leahy is dated January 14, 1988. Further, while there seems to be no dispute regarding the receipt of the trade confirmations, there is no evidence as to the dates of such receipt nor the number of confirmations received, although presumably such confirmations were received after the execution of the Client's Agreements to confirm plaintiffs' margin investments.
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791 F.2d 930
*E.F. Huttonv.Boyce
85-3597
United States Court of Appeals,Fifth Circuit.
6/3/86
1
E.D.La.
REVERSED
2
---------------
* Fed.R.App.P. 34(a); 5th Cir.R. 34.2.
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178 Kan. 672 (1955)
291 P.2d 428
In the Matter of the Estate of Katherine E. Hupp, Deceased.
(SARAH E. DILLMAN and LOUISE PROUTY, Petitioners and Appellants,
v.
L.J. NELSON, Executor of the Estate of Katherine E. Hupp, Deceased;
LOUIS SPANGLER and EDWIN O. PETERS, Respondents and Appellees.)
No. 39,961
Supreme Court of Kansas.
Opinion filed December 10, 1955.
Bernard Peterson and J.G. Somers, both of Newton, argued the cause, and John W. Plummer, George A. Robb and Forrest A. Wilson, all of Newton, were with them on the briefs for the appellants.
J. Rodney Stone, of Newton, argued the cause and was on the brief for Edwin O. Peters, appellee.
Lelus B. Brown, of Newton, argued the cause and was on the brief for Louis Spangler, appellee.
Cliff Morgan, of Newton, was on the brief for L.J. Nelson, Executor, appellee.
The opinion of the court was delivered by
PARKER, J.:
This is the second appearance of this action in this *673 court (See In re Estate of Hupp, 177 Kan. 202, 277 P.2d 618). The appeal is from a judgment denying petitioners' claim against the estate of Katherine E. Hupp, deceased, and from all other adverse rulings.
It goes without saying that the issues now to be reviewed are dependent upon later events and proceedings. Nevertheless, since this cause was determined by the court below on the record in the first case it is particularly important that readers of this opinion understand the facts, circumstances and conditions governing our decision in the first appeal. They are clearly and succinctly set forth in the opinion of that decision where they can be found by reference when required for purposes essential to the disposition of this appeal. For that reason they will not be here detailed or repeated.
After the first appeal, wherein this court held that the trial court had reached its decision on an erroneous premise and thus left it with no alternative than to grant a new trial, the first move on the part of claimants was to file a petition in the court below requesting that the district judge, who had tried the first case, should remove himself from the trial of the cause and all further proceedings to be had therein.
This petition discloses the ground of disqualification relied on and is not too lengthy to preclude its quotation. Omitting formal averments, matters of no consequence and the prayer it reads:
"This action originated in the Probate Court of Harvey County, Kansas, as a demand filed in the Estate of Katherine E. Hupp, deceased, by Sarah E. Dillman and Louise Prouty, as claimants. The demand was disallowed by the Probate Court of Harvey County, Kansas, and thereafter an appeal was taken from the order of disallowance to the District Court of Harvey County, Kansas.
"This cause came on for hearing on appeal before the Honorable Alfred G. Schroeder, Judge of the Ninth Judicial District, at Newton, Harvey County, Kansas, on the 10th day of June, 1953.
"The primary question involved was whether or not the contract alleged to have been made between the decedent, Katherine E. Hupp, and your petitioners, whereby, in consideration of the conveyance by your petitioners, Sarah E. Dillman and Louise Prouty, of their interests in a certain eighty-acre tract to the decedent, Katherine E. Hupp, so that she in turn could convey it to Louis E. Spangler, Katherine E. Hupp agreed to bequeath and devise all of her property to the children of your petitioners, was ever made.
"The trial court made findings of fact and conclusions of law. Finding of Fact No. 12, made by the Honorable Alfred G. Schroeder reads:
*674 "`12. That during the administration of the estate of Frank S. Hupp, deceased, Katherine E. Hupp, as Administratrix, had several conversations with claimants and the other heirs at law of Frank S. Hupp, with respect to the disposition and division of the real and personal property of said estate, the true nature and extent of which cannot be determined from the evidence, but all of which are so closely related to the subject dealt with in the written family agreement dated September 17, 1949, that said prior conversations and negotiations are deemed merged into said written family agreement.'
"Conclusion of Law No. 4 made by the Honorable Alfred G. Schroeder reads:
"`4. Katherine E. Hupp did not enter into a verbal agreement with her sisters, Sarah E. Dillman and Louise Prouty, that she would leave, will or devise all of her property unto her nieces and nephews, the children of Sarah E. Dillman and Louise Prouty.'
"Thereafter and on the 13th day of November, 1953, the claim of the petitioners was denied.
"An appeal was thereafter duly and regularly perfected to the Supreme Court of the State of Kansas from the order, judgment, ruling and decision of the Honorable Alfred G. Schroeder denying the claim of your petitioners, Sarah E. Dillman and Louise Prouty.
"Reference is made to the opinion of the Supreme Court of the State of Kansas wherein the judgment of the trial court was reversed with directions to grant a new trial, reported in Volume 177 (2) of the Advance Sheets of the Kansas Reports at page 202.
"At page 207 the Supreme Court, speaking through Price, J., said:
"`As before stated, really only two matters were in dispute. The first was whether it was Frank's wish that Spangler have the eighty-acre tract after his death. By the very language of the quoted portion of the written family agreement Frank's heirs "agreed" that such was the fact. The other question was whether the alleged oral agreement, whereby, in consideration of the conveyance by Sarah and Louise of their interests in the eighty-acre tract to Katherine so that the latter could in turn convey it to Spangler, Katherine agreed to bequeath and devise all of her property to the children of Sarah and Louise, was ever made. Narrowed down, that was actually the only issue in the case.'
"The opening day of the February, 1955, term of the District Court of Harvey County, Kansas, is the 14th day of February, 1955, on which date this cause, being on docket, will be set for trial pursuant to the direction of the Supreme Court granting a new trial herein. There is but one material question of fact to be determined. That question being, was there a contract made between Katherine E. Hupp, the decedent, in her lifetime, and petitioners, whereby, in consideration of the conveyance by your petitioners of their interests in the eighty-acre tract to Katherine E. Hupp so that she could in turn convey it to Spangler, Katherine E. Hupp agreed to bequeath and devise all of her property to her nieces and nephews, the children of your petitioners.
"The Honorable Alfred G. Schoeder as trial judge, sitting as court and jury, heard the uncontradicted and corroborated evidence adduced by your petitioners in the former trial, and after hearing all such evidence, found and *675 determined that Katherine E. Hupp did not enter into a verbal agreement with Sarah E. Dillman and Louise Prouty that she would leave, will or devise all of her property to her nieces and nephews, the children of your petitioners.
"Since the original trial of this case in the District Court of Harvey County, Kansas, the claimants, petitioners herein, have been unable to discover any new, additional or even cumulative evidence, either in support of or in denial of their claims so that the evidence to be introduced at the new trial, insofar as the claimants are concerned, will be substantially the same as that introduced at the original trial.
"Therefore your petitioners respectfully represent that having not only formed but having officially expressed an opinion and conclusion of fact on the salient issue the mind of the Honorable Alfred G. Schroeder is not in that condition of impartiality that is required of the trier of facts and in all fairness to these petitioners he should remove himself from the trial of this cause."
Subsequent to a hearing on the foregoing petition the district judge denied the relief therein sought. It is interesting to note the record discloses that in making such ruling he made the following statement:
"I have read the petition and, of course, a reading of the petition would make it appear that I should disqualify from hearing the case; however, if counsel will recall, a letter was submitted in connection with the announcement of the ruling in this case in which this paragraph was inserted in the letter: `So much of the evidence in this case as tends to vary or contradict the terms of a written contract is stricken and such evidence has not been considered by the court in reaching its decision. Such evidence is considered to be incompetent and its admission is in violation of the parol evidence rule.' Therefore, the evidence which apparently is incorporated in the petition to be the reason for disqualification was disregarded in ruling the case and that apparently was the decision of the Supreme Court, the evidence not having been considered was error. For that reason, this court I do not feel that I am disqualified to hear the case in any sense of the word. Therefore, the petition for disqualification is denied."
Following the ruling on the petition for disqualification the cause, as has been heretofore indicated, was submitted to the trial court on the previous record. Thereafter such court made findings of fact and conclusions of law, one of which conclusion is similar in substance to conclusion of law No. 4, as it appears in the petition heretofore quoted, and then, in conformity with such findings of fact and conclusions of law, rendered judgment, as it did in the first case, denying the petitioners' claim. Motions to set aside and vacate the findings of fact and conclusions of law and for a new trial were then filed by petitioners. When these were overruled they perfected the instant appeal where, under proper specifications of *676 error, they now challenge the propriety of each and all of the rulings to which reference has been heretofore made as well as the judgment.
The first of numerous specified errors is that the trial judge erred in refusing to disqualify himself upon the petitioners' verified application because he had theretofore judicially determined the salient question involved. Since, if it is to be upheld, other specifications of error become immaterial so far as disposition of the cause is concerned we turn directly to the issue it raises.
There can be no doubt regarding the basic principle upon which provisions of our statute (See G.S. 1949, 20-305 and 60-511) relating to the disqualification of judges rest. Long ago in Tootle v. Berkley, 60 Kan. 446, 56 Pac. 755, we held:
"The purpose of the law is that no judge shall hear and determine a case in which he is not wholly free, disinterested, impartial, and independent." (Syl. ¶ 1)
Mindful of the fundamental concept from which it stems we are impelled to conclude the corollary of the rule just above stated is that when circumstances and conditions surrounding litigation are of such nature they might cast doubt and question as to the fairness or impartiality of any judgment the trial judge may pronounce, such judge, even though he is not conscious of any bias or prejudice, should disqualify himself and permit the case in question to be tried before a judge pro tem.
Moreover in view of the foregoing rules, as well as our statute, all must admit it is the duty of this court to maintain and safeguard the right of trial by a fair and impartial tribunal and to be vigilant in seeing to it that every possible semblance of reasonable doubt or suspicion on that question is removed and eliminated to the end that justice may be properly administered.
In our opinion application of the foregoing rules and proper exercise of appellate obligation with respect to the peculiar factual situation existing in this case makes disposition of the issue now under consideration comparatively simple. Resort to the record discloses that in the first case the trial judge made finding of fact No. 12 and conclusion of law No. 4, set forth at length in the petition for disqualification. The same source reveals the fact, which in view of the heretofore quoted statement made by him in denying the petition for disqualification in the second case cannot be successfully challenged or denied, that the trial court on the basis of no evidence whatsoever was able to conclude, as a matter of law, on what this *677 court has specifically determined was actually the only issue in the case, that Katherine E. Hupp did not enter into a verbal agreement with her sisters (the petitioners herein) that she would leave, will or devise all of her property to her nieces and nephews, the children of such petitioners.
In the face of what has been heretofore stated and pointed out the composite or collective impression gained by careful consideration of the over-all situation, as it existed at the time of the overruling of the petition for disqualification, forces this court to the conclusion that it would be better for all parties concerned, and of a certainty conducive to the best interests of the judiciary in general, if the trial judge had sustained the petition for disqualification and permitted the case to be tried by a judge pro tem. Therefore we hold that it was error for him to refuse to do so.
In reaching the foregoing conclusion we have not overlooked, but rejected as here inapplicable, the rule announced in Sheldon v. Board of Education, 134 Kan. 135, 4 P.2d 430, wherein it is held that "Previous adverse rulings of a trial judge, although numerous and erroneous, where they are subject to review, are not ordinarily and alone sufficient to show such bias or prejudice as would disqualify him as judge." All we now hold is that the existing circumstances and conditions, as herein outlined, are such as to cast doubt and question on the impartiality of any judgment the trial judge may pronounce and that for that reason, and it alone, he should have granted the petition for disqualification.
Nor have we ignored contentions advanced by appellants that even though the trial judge did not disqualify himself when he should have done so they are entitled to judgment on the record, because of other errors alleged and ruled on, in a case where such judge went ahead and proceeded to render a judgment against them. We are cited to and know of no authorities warranting any such action.
The judgment is reversed and a new trial granted with directions that the district judge grant the petition for disqualification and that the cause proceed thereafter in the manner contemplated by statute.
It is so ordered.
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616 F.2d 566
Taferov.Wainwright*
No. 78-3776
United States Court of Appeals, Fifth Circuit
4/24/80
1
M.D.Fla.
AFFIRMED
*
Fed.R.App.P. 34(a); 5th Cir.R. 18
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FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D18-1122
_____________________________
FLORIDA ASSOCIATION OF THE
AMERICAN INSTITUTE OF
ARCHITECTS, INC.,
Appellant,
v.
FLORIDA BUILDING COMMISSION,
Appellee.
_____________________________
On appeal from the Division of Administrative Hearings.
Elizabeth McArthur, Administrative Law Judge.
October 26, 2018
PER CURIAM.
AFFIRMED.
WOLF, JAY, and M.K. THOMAS, JJ., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
J. Michael Huey, D. Ty Jackson, Allison G. Mawhinney, and
Andy Bardos of GrayRobinson, P.A., Tallahassee, for Appellant.
W. Justin Vogel, Chief Legal Counsel, Tallahassee, for Appellee.
2
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Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral Dec 05 2013, 9:58 am
estoppel, or the law of the case.
APPELLANT PRO SE: ATTORNEYS FOR APPELLEE:
DARRYL L. ABRON GREGORY F. ZOELLER
Plainfield, Indiana Attorney General of Indiana
JODI KATHRYN STEIN
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
DARRYL L. ABRON, )
)
Appellant-Petitioner, )
)
vs. ) No. 49A04-1301-PC-56
)
STATE OF INDIANA, )
)
Appellee-Respondent. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Clark Rogers, Judge
Cause No. 49G22-0805-FC-116813
December 5, 2013
MEMORANDUM DECISION – NOT FOR PUBLICATION
BARNES, Judge
Case Summary
Darryl Abron appeals the denial of petition for post-conviction relief. We affirm.
Issues
Abron raises three issues, which we restate as:
I. whether the post-conviction court properly determined
that he did not receive ineffective assistance of trial
counsel;
II. whether the post-conviction court properly determined
that his guilty plea was knowing, intelligent, and
voluntary; and
III. whether the post-conviction court properly determined
that the jury trial issue was waived.
Facts
In 2008, Abron was charged with Class C felony burglary, Class A misdemeanor
resisting law enforcement, and Class A misdemeanor criminal mischief. Abron was also
alleged to be an habitual offender. Attorney Dan Mohler was appointed to represent
Abron.
Shortly before the scheduled jury trial, the State offered Abron a plea arrangement
in which he would plead guilty to the burglary charge and the habitual offender
enhancement with a minimum sentence of six years and a maximum sentence of twelve
years. After Mohler and Abron discussed the offer, Abron did not accept it, and the offer
expired.
On September 29, 2008, after a jury was selected, Abron had a panic attack and
was transported to the hospital, and the trial was continued until the next day. In the
2
meantime, Abron and the State entered into a written plea agreement that called for
Abron to plead guilty to the burglary and resisting law enforcement charges and to being
an habitual offender. In exchange, the criminal mischief charge would be dismissed, and
the executed sentence would be capped at twelve years.
When the trial reconvened on September 30, 2008, Abron refused to plead guilty
to being an habitual offender. Abron then indicated he wanted to abandon the plea
agreement, plead guilty as charged to the burglary, resisting law enforcement, and
criminal mischief charges, and have a jury trial on the habitual offender enhancement.
Abron explained that Mohler suggested this strategy before his panic attack the day
before. In response, Mohler explained that that advice was given before the current plea
offer was made. Mohler then advised Abron to take the plea agreement because “[t]hings
have changed” and it “is a totally different situation” than when he was advising Abron
the day before. Trial Tr. p. 43. Abron rejected this advice and again indicated he wanted
to plead guilty to the pending charges and have a jury decide the habitual offender
enhancement. Mohler and Abron discussed the situation, and Mohler stated, “Things
have changed since my advice to you last time. . . . My previous advice has changed
because of an intervening situation.” Id. at 45-46.
Mohler then informed the trial court and Abron that the decision to plead guilty
was Abron’s alone, that he was disassociating himself from Abron’s decision to plead
guilty or proceed to a jury trial, and that he was not saying anything else until Abron
made a final decision. Mohler then apparently walked away from the defense table but
remained in the courtroom while Abron pled guilty to the pending charges.
3
Mohler then represented Abron during the jury trial on the habitual offender
allegation and objected to the use of the prior convictions on cruel and unusual
punishment and double jeopardy grounds. The objection was overruled, and Abron was
found to be an habitual offender. The trial court sentenced Abron to eight years on the
burglary charge, which was enhanced by twelve years for being an habitual offender, and
to one year on each of the misdemeanor charges, for a total sentence of twenty-two years.
Abron filed a direct appeal arguing that his convictions for burglary and criminal
mischief violated double jeopardy principles and that his sentence was not proportionate
to the nature of the crime. A panel of this court dismissed his appeal as it related to his
convictions and affirmed his sentence. See Abron v. State, No. 49A02-0811-CR-986
(Ind. Ct. App. July 30, 2009).
In 2010, Abron filed a pro se petition for post-conviction relief, which he amended
in 2012. Following a hearing, at which Mohler and Abron testified, the post-conviction
court denied Abron’s petition. Abron now appeals.
Analysis
A petitioner in a post-conviction proceeding bears the burden of proof, and an
unsuccessful petitioner appeals from a negative judgment. Pruitt v. State, 903 N.E.2d
899, 905 (Ind. 2009). A petitioner appealing from a negative judgment must show that
the evidence as a whole leads unerringly and unmistakably to a conclusion opposite to
that reached by the post-conviction court. Id. We will disturb a post-conviction court’s
decision as being contrary to law only where the evidence is without conflict and leads to
but one conclusion and the post-conviction court has reached the opposite conclusion. Id.
4
I. Ineffective Assistance of Counsel
Abron claims that he received ineffective assistance of counsel. “To prevail on a
claim of ineffective assistance of counsel, a petitioner must demonstrate both that his
counsel’s performance was deficient and that the petitioner was prejudiced by the
deficient performance.” McCullough v. State, 987 N.E.2d 1173, 1176 (Ind. Ct. App.
2013) (citing Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 2064
(1984)), trans. denied. The failure to satisfy either prong will cause the claim to fail. Id.
“Counsel’s performance is deficient if it falls below an objective standard of
reasonableness based on prevailing professional norms.” Id. To establish prejudice, the
petitioner must show that there is a reasonable probability that, but for counsel’s
unprofessional errors, the result of the proceeding would have been different. Id.
A. Counsel’s Advice Regarding Habitual Offender Enhancement
Abron asserts that Mohler incorrectly advised him that the State could not use the
prior felony convictions to support the habitual offender enhancement because those
same convictions had already been used to support a previous habitual offender
enhancement. Abron claims that Mohler’s advice regarding the use of the convictions
informed his decision to reject the plea agreement and plead guilty to the pending charges
and to have a jury trial on the habitual offender enhancement.
The record does not establish that Abron was misadvised by Mohler. It is clear
from the transcript of the trial proceedings that Mohler’s advice to plead guilty to the
pending charges and proceed to a jury trial on the habitual offender enhancement was
5
given when there was no plea offer from the State. Mohler explained that the situation
changed in light of the plea offer and advised Abron to accept the offer.
At the post-conviction hearing, Mohler testified that he had come across this issue
before in his representation of another client and learned that the State could use the same
convictions it had already used to support a previous habitual offender enhancement.
Mohler testified that, although the higher courts had already ruled on the issue, he
intended to challenge the use of the same underlying felony convictions. This is
consistent with Mohler’s objection to the use of the prior convictions on cruel and
unusual punishment and double jeopardy grounds during the habitual offender trial. This
was a reasonable strategy in the absence of a plea offer.
The post-conviction court concluded:
The fact that Petitioner ultimately set out on a course that led
to a longer prison sentence (22 years, instead of the capped
12-year offer that Mr. Mohler had advised him to take) cannot
be blamed on Mr. Mohler, who, in the Court’s opinion, did
everything that he could lawfully and properly do to advise
Petitioner, who, to his detriment, thought he could do better
for himself. As stated above, the Court does not find that
Petitioner’s mistaken belief about the State’s ability to prove
the habitual offender charge can be attributed to Mr. Mohler.
App. p. 41. Based on our review of the post-conviction relief hearing testimony and the
transcript of the underlying proceedings, Abron has not established that the evidence as a
whole leads unerringly and unmistakably to a conclusion opposite to that reached by the
post-conviction court.
B. Abandonment
6
When Abron rejected the plea agreement and decided to plead guilty to the
pending charges, the relationship between Abron and Mohler became very strained and
Mohler walked away from the defense table but remained in the courtroom while the trial
court accepted Abron’s guilty plea and a factual basis was established. Abron claims
that, by walking away from the table, Mohler abandoned him during a critical stage in the
proceeding.
Abron has not established that Mohler’s representation fell below an objective
standard of reasonableness because Mohler did not abandon Abron during the guilty plea
proceedings. Mohler testified at the post-conviction relief hearing that, when he met with
Abron at the jail, Abron agreed to accept the plea agreement but, when they arrived at
court, Abron changed his mind. Mohler testified that he and Abron were not on the same
page the day of the plea and that he explained to Abron that he could not make the
decision whether to plead guilty for Abron. Mohler then physically removed himself
from sitting next to Abron to try to show him that the decision regarding the plea was his.
On this issue, the post-conviction court found that, by creating space, Mohler most
likely reduced tension levels to a point where Abron could more effectively make his
decision and that the transcript revealed “that the continual dithering by Petitioner, his
constant vacillations and apparent refusal to hear what was being told to him put all
parties and the Court in a tense and frustrating situation.” App. p. 40. The post-
conviction court concluded that, at that point, Abron had been fully advised by Mohler,
that Abron was fully and accurately advised by the trial court about the plea, and that
Mohler did not cease to act as Abron’s attorney simply because he momentarily walked
7
away from the table when Abron was “making it difficult, if not impossible for Mr.
Mohler to perform his duties.” Id. at 41. The evidence as a whole does not lead
unerringly and unmistakably to the opposite conclusion.
C. Failure to Object
Abron argues that he received ineffective assistance of counsel because Mohler
failed to object to the trial court’s convening of a jury to determine Abron’s habitual
offender status. According to Abron, the habitual offender status should have been
determined by the trial court pursuant to Indiana Code Section 35-50-2-8(f), which
provides, “If the person was convicted of the felony in a jury trial, the jury shall
reconvene for the sentencing hearing. If the trial was to the court or the judgment was
entered on a guilty plea, the court alone shall conduct the sentencing hearing under IC 35-
38-1-3.”
The transcript of the trial proceedings clearly shows that Abron requested a jury
trial on his habitual offender status. It is well-settled that a defendant may not request a
trial court to take an action and later claim on appeal that such action is erroneous.
Baugh v. State, 933 N.E.2d 1277, 1280 (Ind. 2010). Under the invited error doctrine,
Abron may not take advantage of any error that was created by his request for a jury trial
on the habitual offender allegation. See id.
Nevertheless, on this issue, the post-conviction court concluded that Abron “fails
to show any prejudice from being permitted, albeit erroneously under state statute, to
exercise his constitutionally guaranteed right to a jury trial. And he fails to show any
8
likelihood of a different result had the evidence been presented to the judge alone.” App.
p. 43.
In an attempt to circumvent the prejudice prong of an ineffective assistance of
counsel claim, Abron claims that the resulting jury trial amounted to fundamental error
and, therefore, prejudice is presumed. The cases Abron cites do not support this
proposition. In fact, Benefield v. State, 945 N.E.2d 791, 804 (Ind. Ct. App. 2011), trans.
denied, upon which Abron relies, explains that fundamental error and prejudice for
ineffective assistance of trial counsel claims are different questions. Ineffective
assistance prejudice is based on a reasonable probability of a different result, while
fundamental error occurs only when the error is so prejudicial that a fair trial is rendered
impossible. Id. Thus, our review is limited to whether Abron has established a
reasonable probability that the result of the habitual offender trial would have been
different had it been decided by the trial court. He has not. The post-conviction court
properly rejected this claim.
II. Knowing, Intelligent, and Voluntary Plea
Abron claims that the post-conviction court failed to address his claim that,
because of the ineffective assistance of counsel, his guilty plea was not knowing,
intelligent, and voluntary. To the contrary, the post-conviction court specifically found
that Abron’s “decision to plead guilty as he did was made knowingly, intelligently and
voluntary as it pertains to Mr. Mohler’s performance as defense counsel.” App. p. 41.
The post-conviction court also found, based on the evidence presented at the hearing, that
there is “no reason to believe that the state of Petitioner’s mental health had an effect on
9
his decision to reject a more favorable plea.” Id. at 41-42. Thus, Abron’s contention that
the post-conviction court failed to address this issue is not supported by the record.
Further, the record does not support Abron’s assertion that Mohler ultimately
advised him to reject the State’s offer, plead guilty to the pending charges, and have a
jury trial on the habitual offender status. During the trial proceedings, Mohler clearly and
repeatedly advised Abron to accept the plea agreement and explained that his earlier
advice was no longer relevant in light of the plea offer. Thus, Abron has not established
that counsel’s advice rendered his guilty plea unknowing or unintelligent.
As for Abron’s claim that Mohler knew Abron suffered from mental issues, which
rendered Abron “unstable and unable to make important and intelligent decision[s],” the
record does not support this claim. Appellant’s Br. p. 17. Although Abron had a panic
attack on the first day of the trial court proceedings, there is no indication that his guilty
plea to the pending charges was unknowing, unintelligent, or involuntary. Mohler
testified that, although Abron was agitated and angry and “coming off the effects of drug
addiction,” he believed Abron “had sufficient mental capacity to be able to make
decisions such as pleading guilty.” Tr. p. 28. Mohler explained that, had he felt Abron
did not have that capacity, he would have filed a motion for a competency evaluation.
Mohler also believed that the judge accepting Abron’s guilty plea would confirm that he
was acting voluntarily. In light of this evidence, Abron has not shown that the evidence
as a whole leads unerringly and unmistakably to a conclusion opposite to that reached by
the post-conviction court.
III. Waiver
10
Abron alleged that the trial court erred in allowing a jury to determine his habitual
offender status after he pled guilty to the pending charges. The post-conviction court
held that this issue is waived because it was available at the time of Abron’s direct appeal
and not raised. Abron argues that the post-conviction court erred because a defendant
who pleads guilty may not challenge the plea by direct appeal and must seek relief
through post-conviction remedies. See Tumulty v. State, 666 N.E.2d 394, 395 (Ind.
1996). As Tumulty explained, “the plea as a legal act brings to a close the dispute
between the parties, much as settling civil parties do by submitting an agreed judgment.
To permit appeal by settling parties would, of course, make settlements difficult to
achieve in any litigation.” Id.
Although Abron is generally correct, he did not plead guilty to the habitual
offender status. Instead, a jury found him to be an habitual offender. Thus, the reasoning
in Tumulty does not apply here. As such, an impropriety in conducting a jury trial, as
opposed to a bench trial, to determine Abron’s habitual offender status was a free-
standing issue available for direct appeal. Because this issue was not raised on direct
appeal, the post-conviction court correctly determined that it is waived. See Timberlake
v. State, 753 N.E.2d 591, 597-98 (Ind. 2001) (“[M]ost free-standing claims of error are
not available in a postconviction proceeding because of the doctrines of waiver and res
judicata.”), cert. denied.
11
Conclusion
Abron has not established that he received ineffective assistance of trial counsel,
that his guilty plea was unknowing, unintelligent, or involuntary, or that the jury trial
issue was available for post-conviction relief proceedings. We affirm.
Affirmed.
CRONE, J., and PYLE, J., concur.
12
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74 F.3d 910
64 USLW 2511, 28 Bankr.Ct.Dec. 608, Bankr.L. Rep. P 76,761,96 Cal. Daily Op. Serv. 419,96 Daily Journal D.A.R. 693
MSR EXPLORATION, LTD., a Canadian corporation;Gypsy-Highview Gathering System, Inc., a Montanacorporation, Plaintiffs-Appellants,v.MERIDIAN OIL, INC.; Fina Oil & Chemical Co., Inc.;Blackleaf Partners, Inc.; Blackleaf Gas Assocs.,Defendants-Appellees.
No. 94-35833.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Nov. 17, 1995.Decided Jan. 22, 1996.
Kenneth D. Tolliver, Wright, Tolliver and Guthals, Billings, Montana, for plaintiffs-appellants.
Stephen H. Foster and W. Scott Mitchell, Holland & Hart, Billings, Montana, Steven M. Johnson, Church, Harris, Johnson & Williams, Great Falls, Montana, and Mark D. Parker, Billings, Montana, for defendants-appellees.
Appeal from the United States District Court for the District of Montana.
Before: WRIGHT, FERNANDEZ, and KLEINFELD, Circuit Judges.
FERNANDEZ, Circuit Judge:
1
MSR Exploration, Ltd. and Gypsy-Highview Gathering Systems, Inc. (collectively MSR) brought this action for malicious prosecution against Meridian Oil, Inc., Fina Oil & Chemical Co., Inc., Blackleaf Partners, Inc., and Blackleaf Gas Associates, LLC (collectively Producers). The action was based upon MSR's claim that Producers had maliciously filed and pursued creditors' claims in MSR's Chapter 11 bankruptcy proceeding. The district court dismissed for lack of jurisdiction because it found that the action was entirely preempted by the provisions of the bankruptcy law. We agree that it is preempted and we affirm.
BACKGROUND
2
MSR had a contract with the Producers' predecessors in interest to take and process raw natural gas from the Blackleaf Canyon Unit in Teton County, Montana. The contract required MSR to pay for the gas on a monthly basis and also required MSR and the Producers to share equally in any drop in gas prices. From 1982 until 1985, MSR purchased and paid for the gas each month without dispute.
3
However, in late 1984 after a drop in the price of processed gas, MSR informed the Producers that it would be reducing the price it paid for gas from the Unit. In early 1985, a unit operator employed by one of the Producers objected to the lower price, wrote a letter stating that the deduction was contrary to the contract, and directed MSR to "stop making these deductions immediately and issue a check to us to cover all prior deductions." MSR did not agree and continued as before, without dispute. In 1987, because the Producers were unable to meet the contract requirements, MSR and the Producers agreed to a new pricing schedule. MSR continued to purchase and pay for raw gas pursuant to that schedule.
4
In 1992, MSR filed a Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the District of Montana. The Producers filed creditors' claims against MSR based upon the assertion that had been made by the unit operator in 1985. After MSR filed objections to the Producers' claims, the bankruptcy court entered an order disallowing them. MSR did not pursue sanctions, attorneys fees, or any other remedy in the bankruptcy court.
5
Instead, MSR waited until its reorganization plan was confirmed and substantially consummated, whereupon it brought this malicious prosecution action in the district court. The Producers asserted that the claim was preempted and could only be pursued in the bankruptcy court itself. The district court agreed and dismissed for lack of subject matter jurisdiction. This appeal ensued.
STANDARD OF REVIEW
6
The existence of subject matter jurisdiction is a matter of law reviewed de novo. Seven Resorts, Inc. v. Cantlen, 57 F.3d 771, 772 (9th Cir.1995) (this court reviews de novo the district court's determination that it lacks subject matter jurisdiction); Valdez v. United States, 56 F.3d 1177, 1179 (9th Cir.1995) (same). Similarly, preemption is a question of law which we review de novo. See Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812, 816 (9th Cir.1992) (ERISA preemption).
DISCUSSION
7
The major issue in this case is whether state malicious prosecution actions for events taking place within the bankruptcy court proceedings are completely preempted by federal law. If they are, it is clear that there is a federal question involved in this action, and that will establish the jurisdiction of the district court to rule upon the issue. See 28 U.S.C. Sec. 1331. As the Supreme Court said in Caterpillar, Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 2430, 96 L.Ed.2d 318 (1987) (citation omitted), "[o]nce an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." See also Ramirez v. Fox Television Station, Inc., 998 F.2d 743, 747-48 (9th Cir.1993); Milne Employees Ass'n v. Sun Carriers, Inc., 960 F.2d 1401, 1406 (9th Cir.1991), cert. denied, --- U.S. ----, 113 S.Ct. 2927, 124 L.Ed.2d 678 (1993). Thus, preemption and jurisdiction are to that extent inexorably intertwined. We shall so consider them here.
8
We do recognize that preemption assertions are normally matters of defense and will not suffice to establish federal jurisdiction. See, e.g., Caterpillar, 482 U.S. at 392-93, 107 S.Ct. at 2430. Again, the complete preemption doctrine is often an exception to that rule. Id. Even then we must be careful. A plaintiff remains master of his pleading and may pitch his complaint on entirely separate grounds, even though he could have spelled out what would have been a preempted claim. When that occurs, a preemption assertion remains a matter of defense and will not establish jurisdiction. See Caterpillar, 482 U.S. at 398-99, 107 S.Ct. at 2433; Karambelas v. Hughes Aircraft Co., 992 F.2d 971, 974-75 (9th Cir.1993); Westinghouse Elec. Co. v. Newman & Holtzinger, P.C., 992 F.2d 932, 935-36 (9th Cir.1993). That conceptual difficulty is not a difficulty in this case. The complaint filed by MSR is self-consciously and entirely one which seeks damages for a claim filed and pursued in the bankruptcy court. The complaint states precisely that on its face and even goes on to refer to the fact that Federal Bankruptcy Rule 9011 provides sanctions for those who file improper claims. Therefore, nothing is hidden here. The Producers did not need to inject anything into the case in order to show what its true nature was.
9
Of course, the district court did ultimately determine that preemption deprived it of jurisdiction, but we see no anomaly in that. It is true that we have indicated that "where federal law preempts state law yet fails to provide its own cause of action" federal jurisdiction is not established. Ultramar America, Ltd. v. Dwelle, 900 F.2d 1412, 1416 (9th Cir.1990); see also Garibaldi v. Lucky Food Stores, Inc., 726 F.2d 1367, 1370 n. 5 (9th Cir.1984), cert. denied, 471 U.S. 1099, 105 S.Ct. 2319, 85 L.Ed.2d 839 (1985). That presents no impediment here because there is a federal remedy even if it is not to be found outside of the bankruptcy court. The fact that MSR did not avail itself of the remedy does not suggest that the district court had no jurisdiction to determine whether the purported malicious prosecution action was preempted. Nothing in Ultramar indicates the contrary. In addition, it almost goes without saying that the district court had jurisdiction to decide whether it had jurisdiction. In making that decision, it had to consider the preemption issue, as we must now do.1 Having cleared away the underbrush, we now turn to the trees.
10
As the Supreme Court said in Fidelity Federal Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 152-53, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982) (citations omitted):
11
The pre-emption doctrine, which has its roots in the Supremacy Clause, U.S. Const., art. VI, cl. 2, requires us to examine congressional intent. Pre-emption may be either express or implied, and "is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." Absent explicit pre-emptive language, Congress' intent to supersede state law altogether may be inferred because "[t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it," because "the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject," or because "the object sought to be obtained by federal law and the character of the obligations imposed by it may reveal the same purpose."
12
See also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137-38, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990); FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990). For a number of reasons, we are satisfied that preemption does apply in this case.
13
First, Congress has expressed its intent that bankruptcy matters be handled in a federal forum by placing bankruptcy jurisdiction exclusively in the district courts as an initial matter. 28 U.S.C. Sec. 1334(a). The mere fact that exclusive jurisdiction over a particular action is in the district courts would not necessarily mean that a later malicious prosecution action must be brought there. However, it does militate in that direction. In Berg v. Leason, 32 F.3d 422 (9th Cir.1994), we allowed a malicious prosecution claim to go forward. There the defendant had brought, and lost, a RICO claim, 18 U.S.C. Sec. 1961-68, and a federal securities claim, 15 U.S.C. Secs. 78j(b), 78t(a) in federal court. There was concurrent state and federal court jurisdiction over the RICO claim, but federal court jurisdiction over the securities claim was exclusive. We did not find it dispositive, but did agree that the defendant's argument against allowing a malicious prosecution action had "greater force" with regard to the securities claim because the federal courts did have exclusive jurisdiction over that claim. Id. at 425-26. Thus, the exclusivity of federal jurisdiction over bankruptcy matters is an indication of Congress's intent. Although a preemption claim is asthenic when applied to cases where there is concurrent state and federal jurisdiction over the underlying federal cause of action, it becomes puissant when applied to bankruptcy.
14
Second, in a related vein, a mere browse through the complex, detailed, and comprehensive provisions of the lengthy Bankruptcy Code, 11 U.S.C. Secs. 101 et seq., demonstrates Congress's intent to create a whole system under federal control which is designed to bring together and adjust all of the rights and duties of creditors and embarrassed debtors alike.2 While it is true that bankruptcy law makes reference to state law at many points, the adjustment of rights and duties within the bankruptcy process itself is uniquely and exclusively federal. It is very unlikely that Congress intended to permit the superimposition of state remedies on the many activities that might be undertaken in the management of the bankruptcy process.
15
Debtors' petitions, creditors' claims, disputes over reorganization plans, disputes over discharge, and innumerable other proceedings, would all lend themselves to claims of malicious prosecution. Those possibilities might gravely affect the already complicated processes of the bankruptcy court. See, e.g., Gonzales v. Parks, 830 F.2d 1033 (9th Cir.1987) (attempted malicious prosecution claim for debtors' filing of a petition in bankruptcy); Koffman v. Osteoimplant Technology, Inc., 182 B.R. 115 (D.Md.1995) (attempted malicious prosecution claim for the filing of an involuntary petition and for violation of a stay); Edmonds v. Lawrence Nat'l Bank & Trust Co., 16 Kan.App.2d 331, 823 P.2d 219 (1991) (attempted malicious prosecution claim for filing a petition to revoke a debtor's discharge); Idell v. Goodman, 224 Cal.App.3d 262, 273 Cal.Rptr. 605 (1990) (attempted malicious prosecution claim for adversary proceeding to preclude a discharge of debts). Of course, the opportunities for asserting malicious prosecution claims would only be limited by the fertility of the pleader's mind and by the laws of the state in which the proceeding took place.
16
In short, the highly complex laws needed to constitute the bankruptcy courts and regulate the rights of debtors and creditors also underscore the need to jealously guard the bankruptcy process from even slight incursions and disruptions brought about by state malicious prosecution actions. To put it another way, the problem here is not only one of state courts deciding issues of federal law in one manner or another. That is not an entirely unique situation, even when uniformity is required. See Berg, 32 F.3d at 426. The difficulty here goes much deeper. It is a question of state courts, in effect, interfering with the whole complex, reticulated bankruptcy process itself. That is not to say that the need for uniformity should be denigrated. There can be no doubt that Congress did place considerable weight on the need for a uniform bankruptcy process, which leads to our third reason for finding preemption.
17
Bankruptcy law does require uniformity, and that need persuaded the framers of the United States Constitution to expressly grant Congress the power "to establish ... uniform Laws on the subject of Bankruptcies throughout the United States." Art. I, Sec. 8, cl. 4. At a time when each grant of power to the federal government was often looked upon with a degree of suspicion, Madison, while engaging in a lengthy defense of various grants that might seem obvious today, was able to refer to the bankruptcy provision rather tersely:
18
The power of establishing uniform laws of bankruptcy is so intimately connected with the regulation of commerce, and will prevent so many frauds where the parties or their property may lie or be removed into different States, that the expediency of it seems not likely to be drawn into question.
19
The Federalist No. 42, at 308 (James Madison) (Benjamin Fletcher Wright ed., 1961). Justice Story was of the same opinion. He indicated that the reasons for conferring the bankruptcy power upon the United States:result from the importance of preserving harmony, promoting justice, and securing equality of rights and remedies among the citizens of all the states. It is obvious, that if the power is exclusively vested in the states, each one will be at liberty to frame such a system of legislation upon the subject of bankruptcy and insolvency, as best suits its own local interests and pursuits. Under such circumstances no uniformity of system or operations can be expected.... There can be no other adequate remedy than giving a power to the general government to introduce and perpetuate a uniform system.
20
2 Joseph Story, Commentaries on the Constitution of the United States Sec. 1107 (2d ed. 1851).
21
It is true that in many circumstances state courts can, and do, resolve questions of federal law "with no difficulty." Berg, 32 F.3d at 426. Nevertheless, the unique, historical, and even constitutional need for uniformity in the administration of the bankruptcy laws is another indication that Congress wished to leave the regulation of parties before the bankruptcy court in the hands of the federal courts alone. Of course, Congress did provide a number of remedies designed to preclude the misuse of the bankruptcy process. See, e.g., Fed.Bankr.R. 9011 (frivolous and harassing filings); 11 U.S.C. Sec. 105(a) (authority to prevent abuse of process); 11 U.S.C. Sec. 303(i)(2) (bad faith filing of involuntary petitions); 11 U.S.C. Sec. 362(h) (willful violation of stays); 11 U.S.C. Sec. 707(b) (dismissal for substantial abuse); 11 U.S.C. Sec. 930 (dismissal under Chapter 9); 11 U.S.C. Sec. 1112 (dismissal under Chapter 11). That, too, suggests that Congress has considered the need to deter misuse of the process and has not merely overlooked the creation of additional deterrents. Cf. Mertens v. Hewitt Assocs., 508 U.S. 248, ----, 113 S.Ct. 2063, 2067, 124 L.Ed.2d 161 (1993) (enforcement scheme in ERISA indicates Congress did not forget other remedies); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 1556-57, 95 L.Ed.2d 39 (1987) (ERISA remedies preempt others, even if some possible remedies are left out); Gibson v. Prudential Ins. Co., 915 F.2d 414, 418 (9th Cir.1990) (same).
22
Last, though far from least, we have previously spoken to the need for preemption in this area. In Gonzales, the debtors had defaulted on an obligation, and the creditors attempted to foreclose on the debtors' real property. 830 F.2d at 1033. Thereupon, the Gonzaleses filed a Chapter 11 bankruptcy proceeding, which halted the sale. The creditors decided that the filing was an abuse of process, so they sued for that tort in state court and obtained a default judgment. Id. at 1033-34. The Gonzaleses then filed an adversary proceeding to obtain relief from the state judgment. The bankruptcy court granted relief, the district court affirmed, and so did we. In affirming, we said:
23
Implicit in the [creditors'] appeal is the notion that state courts have subject matter jurisdiction to hear a claim that the filing of a bankruptcy petition constitutes an abuse of process. We disagree with that assumption. Filings of bankruptcy petitions are a matter of exclusive federal jurisdiction. State courts are not authorized to determine whether a person's claim for relief under a federal law, in a federal court, and within that court's exclusive jurisdiction, is an appropriate one. Such an exercise of authority would be inconsistent with and subvert the exclusive jurisdiction of the federal courts by allowing state courts to create their own standards as to when persons may properly seek relief in cases Congress has specifically precluded those courts from adjudicating. The ability collaterally to attack bankruptcy petitions in the state courts would also threaten the uniformity of federal bankruptcy law, a uniformity required by the Constitution. U.S. Const. art. I, Sec. 8, cl. 4.
24
That Congress' grant to the federal courts of exclusive jurisdiction over bankruptcy petitions precludes collateral attacks on such petitions in state courts is supported by the fact that remedies have been made available in federal courts to creditors who believe that a filing is frivolous. Debtors filing bankruptcy petitions are subject to a requirement of good faith, and violations of that requirement can result in the imposition of sanctions. Congress' authorization of certain sanctions for the filing of frivolous bankruptcy petitions should be read as an implicit rejection of other penalties, including the kind of substantial damage awards that might be available in state court tort suits. Even the mere possibility of being sued in tort in state court could in some instances deter persons from exercising their rights in bankruptcy. In any event, it is for Congress and the federal courts, not the state courts, to decide what incentives and penalties are appropriate for use in connection with the bankruptcy process and when those incentives or penalties shall be utilized.
25
Id. at 1035-36 (citations and footnotes omitted). Finally, we indicated that the state court judgment could be collaterally attacked and set aside because the case was within exclusive federal jurisdiction. Id. at 1036.
26
What we said in Gonzales applies to this case. Here, too, there is the threat that the exclusive jurisdiction of the bankruptcy court will be invaded and that uniformity will be undercut. A creditor's claim may be unmeritorious, but then so too might a debtor's petition. In fact, a creditor may have less flexibility than a debtor. The debtor initiates the process and, as here, can obtain a cutoff date for the filing of claims. The creditor may have less time to ruminate on the merits of the claim before filing it. A failure to appear in a timely fashion may well forfeit whatever rights the creditor might have. Thus, while a creditor's claim cannot be said to be solely defensive in nature, it does have that flavor to some extent. The threat of later state litigation may well interfere with the filings of claims by creditors and with other necessary actions that they, and others, must or might take within the confines of the bankruptcy process. Whether creditors should be deterred, and when, is a matter unique to the flow of the bankruptcy process itself--a matter solely within the hands of the federal courts. Nor can we be insouciant about creditors' rights on the theory that the law is designed to help debtors. To so decide would be shortsighted, even purblind. Bankruptcy law does not exist solely for debtors. It is also for the benefit of creditors; it gives them a single forum where debts and priorities can be determined in an orderly manner, a forum where those debts can be collected in whole or (more likely) in part. As Justice Story put it long ago: "The general object of all bankrupt ... laws is, on the one hand, to secure to creditors an appropriation of the property of their debtors pro tanto to the discharge of their debts ...; and, on the other hand, to relieve unfortunate and honest debtors from perpetual bondage to their creditors...." 2 Joseph Story, Commentaries on the Constitution of the United States Sec. 1106 (2d ed. 1851).
CONCLUSION
27
In arguing for the viability of its malicious prosecution action, MSR asks for a world where the specter of additional litigation must haunt virtually every actor in a bankruptcy proceeding. While bankruptcy proceedings are not irenic, we determine that they are more peaceful than what MSR would have. We hold that MSR's malicious prosecution action against the Producers is completely preempted by the structure and purpose of the Bankruptcy Code. Therefore, MSR's purported action must, in fact, be a federal claim. That claim, however, should have been brought in the bankruptcy court itself, and not as a separate action in the district court. Thus, the district court properly determined that it lacked jurisdiction to hear the matter.
28
AFFIRMED.
1
Because we do find complete preemption, we need not seek to unravel the mysteries of "related-to" bankruptcy jurisdiction as they may apply when a Chapter 11 plan has been substantially consummated. See In re Fietz, 852 F.2d 455, 457 (9th Cir.1988); Cook v. Chrysler Credit Corp., 174 B.R. 321, 327 (M.D.Ala.1994); Walnut Associates v. Saidel, 164 B.R. 487, 492-93 (E.D.Pa.1994). Nor need we consider the somewhat arcane diversity questions which might be presented by the fact, among others, that Blackleaf Gas Associates, LLC, is an entity that partakes of both corporate and partnership characteristics. See 28 U.S.C. Sec. 1332; 17 Wy.Stats. Secs. 17-15-101 to 17-15-136 (1977)
2
For example, the court has great authority over the allowance and disallowance of claims, for a myriad of reasons. See 11 U.S.C. Sec. 502. Similarly, it can affect debtors, creditors, and claims in ways that would never be dreamt of outside of the bankruptcy process. See, e.g., 11 U.S.C. Secs. 365, 506
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-5212
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
LEONARD A. CLEMENT, a/k/a L,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of North Carolina, at Statesville. Richard L. Voorhees,
District Judge. (05:05-cr-00009-23)
Submitted: July 25, 2007 Decided: August 2, 2007
Before GREGORY and SHEDD, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Reggie E. McKnight, MCKNIGHT LAW FIRM, P.L.L.C., Charlotte, North
Carolina, for Appellant. Thomas Tullidge Cullen, OFFICE OF THE
UNITED STATES ATTORNEY, Charlotte, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Leonard A. Clement pled guilty to conspiracy to possess
with intent to distribute more than fifty grams of crack cocaine,
more than five kilograms of cocaine, and more than 1000 kilograms
of marijuana (Count 1), in violation of 21 U.S.C. § 846 (2000).
The district court imposed a mandatory life sentence under 21
U.S.C.A. § 841(b)(1)(A) (West 1999 & Supp. 2007), based upon at
least two prior felony drug convictions. Clement’s counsel has
filed a brief pursuant to Anders v. California, 386 U.S. 738
(1967), challenging Clement’s sentence but stating that, in his
view, there are no meritorious issues for appeal. Clement filed a
pro se supplemental brief. We affirm.
Relying on United States v. Collins, 415 F.3d 304 (4th
Cir. 2005), counsel suggests that the district court erred by
sentencing Clement without first determining the amount and type of
drugs attributable to him individually. Counsel also asserts that
the district court violated Clement’s Sixth Amendment rights at
sentencing. Because Clement did not object at sentencing on these
grounds, this court’s review is for plain error. See United
States v. Smith, 452 F.3d 323, 330-31 (4th Cir.) (discussing
standard of review), cert. denied, 127 S. Ct. 694 (2006). Here,
the district court sentenced Clement to a mandatory life sentence
under § 841(b)(1)(A) based upon at least two prior felony drug
convictions. Moreover, contrary to Clement’s claim in his pro se
- 2 -
supplemental brief that his prior convictions were misdemeanors, he
admitted at the sentencing hearing that the prior convictions were
felonies. Thus, we conclude there is no error in Clement’s
sentence.
In accordance with Anders, we have reviewed the entire
record for any meritorious issues and have found none.
Accordingly, we affirm the district court’s judgment. This court
requires that counsel inform the 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
- 3 -
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946 F.2d 885
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.FRANK HOWARD, Petitioner,v.CS & S TRUCKING CORPORATION; DIRECTOR, OFFICE OF WORKERS'COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OFLABOR, Respondents.
No. 91-2904.
United States Court of Appeals,Fourth Circuit.
Submitted: July 26, 1991Decided: October 10, 1991
On Petition for Review of an Order of the Benefits Review Board. (89-4007-BLA)
Before HALL and NIEMEYER, Circuit Judges, and BUTZNER, Senior Circuit Judge.
Frank Howard, Petitioner Pro Se.
Timothy Ward Gresham, PENN, STUART, ESKRIDGE & JONES, Abingdon, Virginia; Roscoe C. Bryant, III, Barbara J. Johnson, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Respondents.
PER CURIAM:
1
Frank Howard seeks review of the Benefits Review Board's decision and order affirming the administrative law judge's denial of black lung benefits pursuant to 30 U.S.C. § 901 et seq. Our review of the record and the Board's decision and order discloses that this appeal is without merit. Accordingly, we affirm on the reasoning of the Board. Howard v. CS & S Trucking Corporation, 89-4007-BLA (Benefits Review Board Jan. 28, 1991). 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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NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; [email protected]
15-P-1531 Appeals Court
DAVID A. ALVES vs. MASSACHUSETTS STATE POLICE & others.1
No. 15-P-1531.
Bristol. November 3, 2016. - January 4, 2017.
Present: Agnes, Blake, & Desmond, JJ.
Res Judicata. Collateral Estoppel. Judgment, Preclusive
effect. Negligence, Police. Practice, Civil, Summary
judgment. State Police.
Civil action commenced in the Superior Court Department on
June 29, 2012.
The case was heard by Richard T. Moses, J., on a motion for
summary judgment.
Sonja L. Deyoe for the plaintiff.
Adam R. LaGrassa, Assistant Attorney General, for
Massachusetts State Police.
BLAKE, J. Following the execution of an anticipatory
search warrant, Massachusetts State police officers arrested the
plaintiff, David A. Alves, on various charges stemming from the
1
Paul Baker and William Donnelly. Neither Baker nor
Donnelly is a party to this appeal.
2
seizure of a package containing approximately twenty-five pounds
of marijuana. The charges were subsequently dismissed,
whereupon Alves filed a civil suit in the Superior Court
asserting Federal civil rights violations against two State
police officers, Paul Baker and William Donnelly, and negligence
claims against the State police. The officers removed the
Federal claims to the United States District Court for the
District of Massachusetts (Federal District Court), where a
magistrate judge allowed Baker's motion for summary judgment.2
The State police then filed a motion for summary judgment in the
Superior Court, where the State-based claims remained. Relying
on the findings of fact made by the magistrate judge in his
resolution of the Federal claims, a judge of the Superior Court
allowed the motion. Alves now appeals. We agree that the
matter is governed by principles of issue preclusion and
accordingly affirm.
Background. After intercepting a suspicious package
addressed to a recipient in Massachusetts, a postal inspector at
the processing and distribution center of the United States
Postal Service in Providence, Rhode Island obtained a Federal
search warrant to search the package.3 The inspector found
2
Alves voluntarily dismissed his claim as to Donnelly.
3
The package was heavy, was sent express mail at a high
cost, bore a California return address, and was heavily taped.
3
approximately twenty-five pounds of marijuana in the package,
with an approximate street value of $35,000. The inspector
contacted Baker, a Massachusetts State police trooper, who
obtained an anticipatory search warrant from the Taunton
District Court, to be triggered by the acceptance or acquisition
of the package, which bore a distinctive tracking number, and
was addressed to "John Couture 443 Weir Street, Taunton, MA."
The search warrant authorized the retrieval of the package from
"44 [sic] Weir Street . . . [a] gray, two-story, multi-unit
building" and from "[a]nyone who accepts the package for 443
Weir Street, Taunton."4 The warrant did not limit the search to
a specific unit within that building. 443 Weir Street is
located at the corner of Forest and Weir Streets in Taunton.
Upon the execution of the warrant, Alves answered the door
to unit 2 and indicated to the postal inspector that he was
expecting a package. Unit 2 is one of the units within 443 Weir
Street, but its entrance faces Forest Street. Ultimately,
another person from unit 2 signed for and accepted the package.
The addressee listed did not match the name of the person
residing at the listed address, and, upon being contacted by the
postal inspector, the listed senders denied having sent it. A
canine from the Rhode Island State police also gave a strong
positive alert for marijuana after examining the package.
4
The parties agree that the warrant's reference to "44 Weir
Street" is a typographical error. The street address was
actually 443 Weir Street.
4
Alves was arrested and was unable to post bail. Approximately
three months later, the charges against him were dismissed.5
On June 29, 2012, Alves filed a complaint in the Superior
Court alleging two counts of negligence against the State police
-- one for the negligent execution of the search warrant and the
other for inadequate training or supervision -- and two counts
of Federal civil rights violations against the officers pursuant
to 42 U.S.C. § 1983. As we have noted, the officers removed the
claims against them to the Federal District Court where, by
decision dated April 9, 2014, a magistrate judge allowed Baker's
motion for summary judgment, ruling that the lawful execution of
the search warrant provided probable cause to arrest Alves.
Alves did not appeal that ruling.6 Some eight months later, on
December 24, 2014, the State police moved for summary judgment
in the Superior Court. After hearing, in a decision dated April
6, 2015, a judge of the Superior Court allowed the motion,
holding that principles of issue preclusion barred further
litigation of Alves's claims.7 This appeal followed.
5
The record does not indicate the basis for the dismissal.
6
The decision of the magistrate judge was therefore final,
as the parties had consented to jurisdiction by a magistrate
judge.
7
At the Superior Court hearing on the motion for summary
judgment, Alves abandoned the count alleging failure to train or
supervise. Thus, at the time the Superior Court judge ruled on
5
Standard of review. Summary judgment shall be granted when
there are no genuine issues of material fact and the moving
party is entitled to judgment as a matter of law. Augat, Inc.
v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991).
Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002). We
review the allowance of a motion for summary judgment de novo.
Juliano v. Simpson, 461 Mass. 527, 529 (2012). "Whether a
previous decision is to be given preclusive effect presents a
question of law appropriate for resolution on summary judgment."
Alicea v. Commonwealth, 466 Mass. 228, 234 (2013), citing
Premier Capital, LLC v. KMZ, Inc., 464 Mass. 467, 469 (2013).
Discussion. Resolution of Alves's claims on appeal
requires us to determine whether the magistrate judge's decision
has a preclusive effect on Alves's State-based negligence claim.
Whether a Federal court judgment precludes a State-based action
in the Commonwealth is a question governed by Federal common
law. Alicea, 466 Mass. at 234-235, citing Taylor v. Sturgell,
553 U.S. 880, 891 (2008).8 "Under Federal common law, the
doctrines of claim preclusion and issue preclusion
the motion, the only count remaining was against the State
police for negligent execution of the search warrant.
8
Here, as in Alicea, the Federal District Court's
jurisdiction over Alves's claims under 42 U.S.C. § 1983 was
premised on Federal question jurisdiction, to which the rules of
res judicata developed by the Federal courts apply. Alicea,
supra at 235 & n.11.
6
(collectively, res judicata) define the preclusive effect of a
prior judgment." Alicea, supra at 235. "Claim preclusion makes
a valid, final judgment conclusive on the parties and their
privies, and prevents relitigation of all matters that were or
could have been adjudicated in the action." Santos v. U.S. Bank
Natl. Assn., 89 Mass. App. Ct. 687, 692 (2016). "Issue
preclusion, in contrast, bars 'successive litigation of an issue
of fact or law actually litigated and resolved in a valid court
determination essential to the prior judgment,' even if the
issue recurs in the context of a different claim." Alicea,
supra, quoting from Taylor, supra at 892. Together, claim
preclusion and issue preclusion promote judicial economy and
comity between the State and Federal courts, prevent the cost
and aggravation of additional litigation, and encourage reliance
on prior adjudications. Alicea, supra at 235-236.
At issue in this case is the question whether there is an
identity of issues between those determined by the magistrate
judge and those necessary to the State court action such that
the doctrine of issue preclusion applies. It allows preclusion
when "(1) the issue sought to be precluded in the later action
is the same as that involved in the earlier action; (2) the
issue was actually litigated; (3) the issue was determined by a
valid and binding final judgment; and (4) the determination of
the issue was essential to the judgment." Alicea, supra at 236,
7
quoting from Latin Am. Music Co. v. Media Power Group, Inc., 705
F.3d 34, 42 (1st Cir. 2013). On the record here, the State
police have met their burden as to each of the four prongs. As
Alves challenges only the first and fourth prongs on appeal, we
examine those in turn.9
1. Issue to be precluded. To satisfy the first prong of
the analysis, both the Federal District Court and the State
trial court must be called upon to decide the same issue. Here,
the Federal and State-based claims arise from the same
complaint, and the same factual allegations contained therein.
Those allegations give rise to one central issue: whether the
police had probable cause to arrest Alves. That issue is at the
crux of each claim. To proceed with his § 1983 claim, Alves was
required to show that he was subject to an unlawful arrest in
violation of the Fourth Amendment to the United States
Constitution. To make that determination, the magistrate judge
was required to, and did, engage in a detailed probable cause
analysis. That analysis included both the execution of the
warrant, and the resulting evidence tying Alves to the package.
9
The second and third prongs are easily satisfied. It is
apparent from the record that Alves actually litigated the
probable cause issue in his § 1983 claim, which was resolved by
a valid and binding final judgment in the Federal District Court
from which Alves did not appeal. See, e.g., Steele v.
Ricigliano, 789 F. Supp. 2d 245, 248 (D. Mass. 2011) (claim
preclusion).
8
To proceed with his negligence claim at the State level, Alves
is also required to show, at a minimum, that the officers had no
probable cause to arrest him. The issues in each action are
thus aligned.
Alves nevertheless contends that the first prong is not
satisfied because he faced a higher burden of proof in his
Federal case. The argument is unavailing, as both actions
require the plaintiff to prove each element of the claim by a
preponderance of the evidence. See generally Andrews,
petitioner, 449 Mass. 587, 595 (2007) ("[T]he general rule in
civil cases is that proof must be by a preponderance of the
evidence").10
2. Whether the issue was essential to the judgment. As we
have already observed, the success of the § 1983 false arrest
claim hinged on the probable cause analysis. Alves argues,
however, that the magistrate judge's finding as to the location
of the search warrant execution, an important fact in the
determination of Alves's State negligence claim, was not
10
In support of his assertion, Alves cites the Restatement
(Second) of Judgments § 28(4) (1982), which states, in pertinent
part, that relitigation of an issue is not precluded where
"[t]he party against whom preclusion is sought had a
significantly heavier burden of persuasion with respect to the
issue in the initial action . . . ; the burden has shifted to
his adversary; or the adversary has a significantly heavier
burden than he had in the first action." None of these
scenarios is applicable here.
9
essential to the magistrate judge's probable cause finding,
which had numerous bases. Underlying Alves's argument is his
claim that execution of the search warrant was unlawful because
it occurred at 2 Forest Street rather than at 443 Weir Street.
The magistrate judge explicitly considered the same argument and
rejected it, finding that the warrant did not specify a unit or
apartment number, and that unit 2 is contained within 443 Weir
Street, which is a multi-unit building.11 That analysis was a
key part of his determination that the execution of the search
warrant was lawful, which, in turn, was essential to the
probable cause finding and ultimate allowance of Baker's motion
for summary judgment. See Rodriguez-Garcia v. Miranda-Marin,
610 F.3d 756, 771 (1st Cir. 2010), cert. denied, 562 U.S. 1180
(2011) (intermediate findings in prior action may preclude
relitigation). Having thus satisfied the requirements of each
of the four prongs, Alves's negligence claim is precluded under
Federal law.
Conclusion. Alves had a full and fair opportunity to
litigate the issues raised in the first action before the
Federal District Court, and there are no circumstances present
that justify affording him the opportunity to relitigate those
11
The magistrate judge also considered the manner in which
the package was addressed and shipped and what the officers knew
about the address at the time the warrant was executed.
10
same issues at the State level. See Fidler v. E. M. Parker Co.,
394 Mass. 534, 541 (1985); Restatement (Second) of Judgments
§ 29 (1982). Indeed, it is this precise situation that the
doctrine of issue preclusion seeks to prevent. See Rodriguez-
Garcia v. Miranda-Marin, 610 F.3d at 770. We accordingly affirm
the judgment of the Superior Court on the ground of issue
preclusion. As a result, we need not reach the other theories
advanced by Alves.12
Judgment affirmed.
12
We note that Alves's complaint suggests a claim for
negligent false arrest. We are not aware of any appellate
decision in the Commonwealth that recognizes such a cause of
action. Indeed, the claim could be read as an attempt to recast
an intentional tort as one which sounds in negligence. If
viewed as an intentional tort, the Massachusetts State police
are immune pursuant to G. L. c. 258, § 10(c). See Barrows v.
Wareham Fire Dist., 82 Mass. App. Ct. 623, 626 & n.2 (2012).
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697 S.E.2d 327 (2010)
Faye B. BROWN, Petitioner
v.
The NORTH CAROLINA DEPARTMENT OF CORRECTION; Alvin Keller, in his capacity as Secretary of the Department of Correction; and Kenneth Royster, in his capacity as Superintendent of Raleigh Correctional Center for Women, Respondents.
No. 517PA09.
Supreme Court of North Carolina.
August 27, 2010.
Staples S. Hughes, Appellate Defender, and Katherine Jane Allen, Benjamin Dowling-Sendor, Daniel R. Pollitt, and Daniel K. Shatz, Assistant Appellate Defenders, for petitioner-appellee.
Roy Cooper, Attorney General, by Tiare B. Smiley and Robert C. Montgomery, Special Deputy Attorneys General, for respondent-appellants State of North Carolina and North Carolina Department of Correction.
Elliot Pishko Morgan, P.A., Winston Salem, by David Pishko, and Abrams & Abrams, P.A., Raleigh, by Margaret Abrams, for North Carolina Advocates for Justice, amicus curiae.
PER CURIAM.
For the reasons stated in Jones v. Keller, ___ N.C. ___, ___ S.E.2d ___ (2010), we reverse the trial court's 14 December 2009 order allowing petitioner's petition for writ of habeas corpus.
REVERSED.
Justices BRADY and NEWBY concur in the result for the reasons stated in the concurring opinion in Jones v. Keller, ___ N.C. ___, ___ S.E.2d ___ (2010).
Justices TIMMONS-GOODSON and HUDSON dissent for the reasons stated in the dissenting opinion in Jones v. Keller, ___ N.C. ___, ___ S.E.2d ___ (2010).
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In the
United States Court of Appeals
For the Seventh Circuit
No. 13-2241
IN RE:
B.R. BROOKFIELD COMMONS
NO. 1 LLC, et al.,
Debtors-Appellants,
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 2:13-cv-00310-JPS — J. P. Stadtmueller, Judge.
ARGUED SEPTEMBER 13, 2013 — DECIDED NOVEMBER 4, 2013
Before BAUER, FLAUM, and ROVNER, Circuit Judges.
BAUER, Circuit Judge. In this bankruptcy proceeding, the
creditor, ValStone Asset Management, LLC (“ValStone”),
succeeded to the rights of a second mortgage secured by a lien
on a shopping center owned by the debtor, B.R. Brookfield
Commons No. 1, LLC and B.R. Brookfield Commons No. 2,
LLC (“Brookfield”). Brookfield argues that because the second
mortgage is a nonrecourse loan, and there was no equity in the
shopping center at the time of the bankruptcy filing, the claim
on the bankrupt estate should be disallowed. Both the bank-
ruptcy court and the district court held that the claim was
valid. We agree with the lower courts and affirm.
2 No. 13-2241
I. BACKGROUND
Brookfield owns a commercial shopping center
(“Brookfield Property”) that serves as the collateral for two
mortgages. The first mortgage, in the amount of approximately
$8,900,000, is held by TS7-E Grantor Trust. ValStone serves as
attorney in fact for TS7-E Grantor Trust. Integrity Development
held the second mortgage in the amount of approximately
$2,539,375 (“Integrity Claim”), but has since transferred its
interest to ValStone. ValStone now holds an interest in both the
first and second mortgage claims.
The Integrity Claim is a nonrecourse loan agreement1 that
is secured by a lien on the Brookfield Property. Brookfield and
ValStone do not dispute that the lien is valid and enforceable.
Outside of bankruptcy proceedings, state law would allow
ValStone to foreclose on the Brookfield Property upon
Brookfield’s default on the loan. ValStone could bid on the
Brookfield Property at auction or receive proceeds from the
sale of the Brookfield Property at market value. However,
since the Integrity Claim is a nonrecourse loan, if the proceeds
from the sale were not enough to repay the first mortgage or
repay the Integrity Claim in full, ValStone would be barred
from pursuing a deficiency claim for the outstanding debt;
ValStone never initiated foreclosure proceedings under state
law.
1
A nonrecourse loan limits a Creditor to look only to the Debtor’s
collateral for repayment. Bank of Am. Nat’l Trust and Sav. Ass'n v. 203 N.
LaSalle St. P’ship, 526 U.S. 434, 438 (1999).
No. 13-2241 3
On June 10, 2011, Brookfield filed its Chapter 11 bankruptcy
petition. Unique to a Chapter 11 bankruptcy proceeding,
Brookfield is allowed to reorganize its debts and still retain
ownership in the Brookfield Property. It listed both the TS7-E
Grantor Trust first mortgage and the Integrity Claim as
secured claims on Schedule D of the bankruptcy petition.
Under its reorganization plan, Brookfield elected to retain
ownership of the Brookfield Property rather than selling it.
Brookfield’s election required the bankruptcy court to establish
a judicial value for the Brookfield Property by means of
independent appraisals. Though a judicial valuation for the
Brookfield Property has not yet been established, both
Brookfield and ValStone expect that the value will be less than
the amount of the first mortgage. So, absent a significant and
unexpected increase in value, the Integrity Claim, which is
second in priority, will be totally unsecured by any equity in
the Brookfield Property.
At issue before this Court is the validity of the Integrity
Claim. Brookfield objects to the validity of the Integrity Claim,
because it is not secured by any value in the Brookfield
Property. Brookfield argues that this totally unsecured,
nonrecourse loan should be disallowed because neither
state law nor 11 U.S.C. § 1111(b) allows ValStone to pursue a
deficiency claim against Brookfield. ValStone, on the other
hand, argues that 11 U.S.C. § 1111(b)(1)(A) treats its nonre-
course Integrity Claim as if it had recourse, and its unsecured
deficiency claim should be allowed.
The issue surrounding the validity of the Integrity Claim is
no stranger to review in this jurisdiction. Brookfield raised this
4 No. 13-2241
issue twice in the bankruptcy court, and sought review from
the district court as well. We now address the issue.
II. DISCUSSION
We review a district court’s decision to affirm the bank-
ruptcy court’s allowance of a claim de novo. In re Boone County
Utilities., LLC, 506 F.3d 541, 542 (7th Cir. 2007).
The only issue before this Court is whether the Integrity
Claim should be disallowed. The decision turns on the inter-
pretation of § 1111(b)(1)(A). This is an issue of first impression
in this Circuit; we have found no controlling law on this issue.
So, following the well-established principles of statutory
construction, we first look to the language of the statute.
Greenfield Mills, Inc. v. Macklin, 361 F.3d 934, 954 (7th Cir. 2004).
The text of § 1111(b)(1)(A) reads:
A claim secured by a lien on property of the estate
shall be allowed or disallowed under section 502 of
this title the same as if the holder of such claim had
recourse against the debtor on account of such
claim, whether or not such holder has such recourse.
In this case, the district court found that, “[t]he plain
meaning of § 1111(b)(1)(A) is clear and unambiguous … There
is one prerequisite: the claim is secured by a lien on the
property of the estate.” The district court’s plain reading is
consistent with the Second Circuit’s interpretation of
§ 1111(b)(1)(A).
In In re 680 Fifth Avenue Associates, the Second Circuit held
that the protections of § 1111(b) were not limited by a
lienholder’s contractual privity with the debtor. 29 F.3d 95 (2d
No. 13-2241 5
Cir. 1994). In 680 Fifth Avenue, the debtor purchased real estate
subject to an existing nonrecourse mortgage. Id. at 96. When
the debtor filed for Chapter 11 bankruptcy, the market value of
the real estate was insufficient to cover the full amount of the
indebtedness. Id. The court interpreted § 1111(b)(1)(A) to
address whether a nonrecourse lienholder, not in privity with
the debtor, could assert a deficiency claim against the debtor’s
estate. Id. at 96–97. The Second Circuit agreed with the bank-
ruptcy court’s reasoning that:
The plain meaning of § 1111(b) does not limit itself
to consensual or nonconsensual liens. Moreover,
§ 1111(b) is not limited to nonrecourse loans or to
claims where the lienholder is in privity with the
debtor. The only precondition to the statute’s applica-
tion is a claim secured by a lien on property of the
estate.
Id. (emphasis added). Similarly, we agree with the district
court’s finding in this case that the statute does not state that
the claim be secured by any value in the property of the estate,
and that the only prerequisite is that a claim be “secured by a
lien on property of the estate.” It is uncontested that the
Integrity Claim is secured by a valid lien against the Brookfield
Property. The language of § 1111(b)(1)(A) is plain, and the
Integrity Claim shall be treated as if it had recourse against
Brookfield.
If the language of the statute is plain, our only function is
to enforce the statute according to its terms. United States v. Ron
Pair Enterprises, Inc., 489 U.S. 235, 241 (1989). However, the
parties cite opposing cases that differ in their interpretation of
6 No. 13-2241
how to enforce § 1111(b)(1)(A). Brookfield primarily relies on In
re SM 104 Ltd., in which the bankruptcy court interpreted
§ 1111(b)(1)(A) to disallow a creditor’s nonrecourse lien claim
completely because it was totally unsecured by any value in
the collateral. 160 B.R. 202, 216 (Bankr. S.D. Fla. 1993). ValStone
cites to In re Atlanta West VI, in which the bankruptcy court
reached the conclusion that § 1111(b)(1)(A) requires a totally
unsecured, nonrecourse claim to “be classified and provided
for in [the] debtor’s plan.” 91 B.R. 620, 624 (Bankr. N.D. Ga.
1988).
This Court recently recognized “the danger of such differ-
ing interpretations, stating ‘[n]ot only is the rule against
multiple interpretations of the same statute well entrenched, it
is of special importance. Without it, even a statutory term used
but a single time in a single statute risks never settling on a
fixed meaning.’” In re Ryan, 725 F.3d 623, 628 (7th Cir. 2013)
(quoting In re Woolsey, 696 F.3d 1266, 1277–78 (10th Cir. 2012)).
Because we are concerned about the differing interpretations
of the statute, “we look to the legislative history of the statute
to guide our interpretation.” Kelly v. Wauconda Park Dist., 801
F.2d 269, 270 (7th Cir. 1986).
And, the Congressional Records of the U.S. House and U.S.
Senate describe § 1111(b)(1) as, “the general rule that a secured
claim is to be treated as a recourse claim in chapter 11 whether
or not the claim is nonrecourse by agreement or applicable law.
This preferred status for a nonrecourse loan terminates if the
property securing the loan is sold under section 363 or is to be
sold under the plan.” 124 Cong. Rec. 32406 (1978); see also 124
Cong. Rec. 34006 (1978).
No. 13-2241 7
So, the congressional record alone does not provide full
guidance on the function and enforcement of the statute at
issue. However, consideration of the case law that led Con-
gress to enact § 1111(b) is instructive. Congress enacted
§ 1111(b) in response to the harsh result in Pine Gate Associates,
when a debtor used the “cramdown” powers to avoid a
nonrecourse creditor’s undersecured deficiency claim. Great
Nat’l Life Ins. Co. v. Pine Gate Associates, Ltd., 2 B.C.D. 1478
(Bankr. N.D. Ga. 1976). In Pine Gate, the lender financed an
apartment project on a nonrecourse basis, expecting either full
payment of the loan or the right to foreclose on the property as
the negotiated benefit of the bargain. Id. At a time when real
estate prices were depressed, the debtor filed bankruptcy
under Chapter XII of the former Bankruptcy Act. Id. Under the
former Code, the debtor retained ownership of the apartment
project and was able to “cash out a nonrecourse, undersecured
holder of a first priority security deed at the value of the
debtor’s property instead of the amount of the debt.” In re
Atlanta West VI, 91 B.R. at 623 (describing the facts in Pine
Gate). The debtor received the benefit of any future apprecia-
tion in the property, while the creditor received no payment on
its undersecured deficiency claim. Id. Thus, the former Code
left the creditor with neither full payment of the loan nor the
right to foreclose on the property, resulting in a windfall to the
debtor.
Collier on Bankruptcy suggests that the purpose behind the
addition of § 1111(b) to the bankruptcy code was to “strike a
balance between the debtor’s need for protection and a credi-
tor’s right to receive equitable treatment.” 7 Collier on Bank-
ruptcy ¶ 1111.03 (Alan N. Resnick & Henry J. Sommer eds.,
8 No. 13-2241
16th ed. 2013). The judicial valuation specific to a Chapter 11
reorganization deprives a lienholder of the right to bid on the
collateral and the opportunity to “benefit from any unantici-
pated post-valuation appreciation.” In re 680 Fifth Avenue
Associates, 29 F.3d at 97. Congress promulgated § 1111(b)(1)(A)
to allow a creditor’s loan to surpass the limitations of nonre-
course agreements and state law, and instead receive treatment
as a recourse claim because the judicial valuation specific to
Chapter 11 “was not part of a nonrecourse creditor’s bargain.”
7 Colliers on Bankruptcy ¶ 1111.03[1][a] (Alan N. Resnick &
Henry J. Sommer eds., 16th ed. 2013). Application of § 1111(b)
prevents a windfall to the debtor, and “puts the Chapter 11
debtor who wishes to retain collateral property in the same
position as a person who purchased property ‘subject to’ a
mortgage lien would face in the nonbankruptcy context.” In re
680 Fifth Avenue Associates, 29 F.3d at 97. After full consider-
ation of the legislative history of § 1111(b), it is apparent that
the district court’s interpretation of § 1111(b)(1)(A) is congru-
ent with Congress’ intent to strike a balance between debtor
protections and equitable treatment of creditors.
We agree with ValStone that the facts and analysis in
Atlanta West are analogous to this case. In Atlanta West, the
debtor proposed retaining a commercial office park under its
reorganization plan. 91 B.R. at 621. Three liens existed on the
commercial office park; the third lien was totally unsecured by
any equity in the property. Id. at 622. The Atlanta West court
analyzed the plain meaning, legislative intent, and case law
relevant to § 1111(b) to conclude that the “statute does not
require that the lien on the property be secured by actual
value” and the creditor “cannot be denied a claim as debtor
No. 13-2241 9
proposes.” Id. at 624. Here, Brookfield cannot dispute that
the Integrity Claim is secured by a lien on the Brookfield
Property, which is the only prerequisite for the application of
§ 1111(b)(1)(A). The value in the collateral is immaterial;
§ 1111(b)(1)(A) treats the Integrity Claim as a recourse loan for
purposes of Brookfield’s Chapter 11 reorganization and
ValStone’s Integrity Claim cannot be disallowed.
Brookfield’s contention that the analysis of the Integrity
Claim begins with the application of 11 U.S.C. § 506(a),
referenced in 11 U.S.C. § 1111(b)(2), is unpersuasive. That
position is inconsistent with the plain reading and the logical
flow of § 1111(b).
The facts and, more importantly, the analysis conducted in
Brookfield’s keystone case, SM 104, are distinguishable from
this case. In re SM 104 Ltd., 160 B.R. at 216. There are two
similar facts from SM 104 to this case. First, the collateral was
fully encumbered by the first mortgage claim, leaving no
equity for the second mortgage claim. Id. at 209. And, the
second mortgage was a nonrecourse loan. Id. However, that is
where the similarity between SM 104 and this case ends. The
SM 104 court summarily decided that:
Since Capital Bank’s mortgage is junior to
EquiVest’s mortgage, it necessarily follows that the
value of Capital Bank’s interest in the property of
the Debtor, and thus the amount of its secured claim
and lien, is zero. See 11 U.S.C. § 506(a). Accordingly,
Capital Bank does not hold a ‘claim secured by a lien
on property of the estate’ and does not have a
§ 1111(b) deficiency claim. See 11 U.S.C.
10 No. 13-2241
§ 1111(b)(1)(A). In addition, since the loan is nonre-
course, § 502(b)(1) prevents Capital Bank from
maintaining any unsecured deficiency claim. Since
Capital Bank has no right to payment from the
Debtor or the Debtor’s property, it is not a creditor
of the Debtor.
Id. at 216. In the course of its § 1111(b) analysis, the SM 104
court denied the junior mortgage’s entire claim, and along with
it, the creditor’s right to vote on the debtor’s plan. The SM 104
court did not consider bankruptcy treatises, legislative history,
persuasive cases, or controlling cases during its statutory
interpretation. This Court does not adopt the outlier opinion
proposed by Brookfield.
III. CONCLUSION
We hold that under § 1111(b)(1)(A), the existence of a valid
and enforceable lien is the only prerequisite for § 1111(b)(1)(A)
to apply. Regardless of whether the claim is secured by any
value in the collateral, § 1111(b)(1)(A) treats the nonrecourse
Integrity Claim as if it had recourse against Brookfield.
The decisions of the bankruptcy court and the district court
are hereby AFFIRMED.
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140 T.C. No. 16
UNITED STATES TAX COURT
ROLLIN J. MOREHOUSE AND MAUREEN B. MOREHOUSE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 823-11. Filed June 18, 2013.
During 2006 and 2007 P-H received payments under the U.S.
Department of Agriculture Conservation Reserve Program (CRP).
Respondent determined that P-H was liable for self-employment tax
under I.R.C. sec. 1401 on the CRP payments. P-H claims that the
CRP payments are not includible in his self-employment income
because he was neither engaged in nor derived the CRP payments
from operation of a trade or business. Alternatively, P-H claims that
the CRP payments are excluded from the calculation of his net
earnings from self-employment under I.R.C. sec. 1402(a)(1) because
the CRP payments constituted “rentals from real estate”.
Held: P-H’s CRP payments are includible in his self-
employment income under I.R.C. sec. 1401 because he was engaged
in a trade or business during the years in issue and there was a nexus
between his trade or business and the CRP payments he received.
-2-
Held, further, P-H’s CRP payments are not “rentals from real
estate” within the meaning of I.R.C. sec. 1402(a)(1). Wuebker v.
Commissioner, 110 T.C. 431 (1998), rev’d, 205 F.3d 897 (6th Cir.
2000), is overruled.
Paul J. Quast and Neal J. Shapiro, for petitioners.
Blaine C. Holiday, for respondent.
MARVEL, Judge: In a notice of deficiency dated October 14, 2010,
respondent determined deficiencies with respect to petitioners’ Federal income tax
of $3,341 and $3,664 for 2006 and 2007, respectively. After concessions,1 the
sole issue for decision is whether petitioners are liable for self-employment tax
under section 14012 on payments they received under the U.S. Department of
Agriculture (USDA) Conservation Reserve Program (CRP).
1
On their 2006 Schedule E, Supplemental Income and Loss, petitioners
reported that they paid management fees of $2,001 with respect to property in
Grant County, South Dakota, that Rollin J. Morehouse owned. See infra p. 3.
Petitioners concede that their tax return preparer erroneously entered $2,001 and
that they actually paid management fees of $201 with respect to the property.
2
Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect for the years in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure. Some amounts
have been rounded to the nearest whole number.
-3-
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of
facts is incorporated herein by this reference. Petitioners resided in Minnesota
when they filed their petition.
I. Background
Mr. Morehouse (hereinafter, petitioner) holds a bachelor’s degree in
business from the University of Minnesota. Following graduation he worked as a
regional sales manager and as an associate publisher. In 1987 petitioner began
providing marketing and fundraising services for the University of Texas at
Austin.
In 1994 petitioner acquired 503 acres of land in Grant County, South
Dakota (Grant County property), 320 acres of land in Roberts County, South
Dakota (Roberts County property), and 400 acres of land in Day County, South
Dakota (Day County property) (collectively, South Dakota properties). He
acquired the South Dakota properties through inheritance and by purchasing
various undivided interests in the properties from his relatives. All of the land was
tillable cropland, with the exception of: (1) a gravel pit on the Grant County
-4-
property; and (2) 129 acres of the Roberts County property, which petitioner’s
father had placed in the CRP program.3
Petitioner, who lived in Texas at the time he acquired the South Dakota
properties, did not personally farm any of the land. Instead, he rented the tillable
portions of the South Dakota properties to various individuals who farmed their
rented portions.4
In 2003 petitioner left his position at the University of Texas and moved
with his family to Minnesota. Upon moving to Minnesota petitioner became the
primary caregiver for his four sons. Although petitioner retired from the corporate
sphere, he continued to manage his various investments and property interests,
including his interests in the South Dakota properties.
3
The CRP contract with respect to the 129-acre parcel in Roberts County
was conveyed with the land to petitioner in 1994. In 1999 petitioner in his
capacity as owner of the Roberts County property entered into a new CRP contract
with respect to the 129-acre parcel. See infra p. 8.
4
Petitioner rented the Grant County property and the remaining 191 acres of
the Roberts County property until 1997, when he placed that land in the CRP. See
infra p. 6. He rented the Day County property from the time of his acquisition
through the years in issue.
-5-
II. Petitioner’s Participation in the CRP
A. The CRP in General
The CRP was established pursuant to the Food Security Act of 1985. See
Food Security Act of 1985, Pub. L. No. 99-198, secs. 1231-1236, 99 Stat. at 1509-
1514 (codified as amended at 16 U.S.C. secs. 3831-3835 (2012)); see also 7
C.F.R. pt. 1410 (2011). Under the CRP, the USDA may enter into contracts with
owners and operators of land “to conserve and improve the soil, water, and
wildlife resources of such land and to address issues raised by State, regional, and
national conservation initiatives.” 16 U.S.C. sec. 3831(a). Owners and operators
of land agree to implement a conservation plan and refrain from using the land for
agricultural purposes. Id. sec. 3832(a). In return, the USDA shares the cost of
carrying out the conservation plan and pays to the owner or operator an “annual
rental payment”.5 Id. sec. 3833.
5
Tit. 16 U.S.C. sec. 3833(2) (2012) provides that the annual “rental”
payment is intended to compensate owners and operators for “(A) the conversion
of highly erodible cropland normally devoted to the production of an agricultural
commodity on a farm or ranch to a less intensive use; and (B) the retirement of any
cropland base and allotment history that the owner or operator agrees to retire
permanently.”
-6-
B. Petitioner’s Enrollment in the CRP and the CRP Contracts
In 1997 petitioner submitted applications to the USDA, offering for
enrollment in the CRP the tillable land on the Grant County property as well as the
remaining 191 acres of the Roberts County property.
In 1997 the Grant County and Roberts County Farm Service Agency (FSA)
offices approved petitioner’s applications and accepted his land into the CRP.
Subsequently, the Commodity Credit Corporation (CCC) executed the resulting
CRP contracts with respect to the Grant County and Roberts County properties.
Petitioner personally assumed all obligations and responsibilities of compliance
under the CRP contracts.
With respect to the Grant County property, petitioner and the CCC executed
two contracts: (1) contract No. 262, covering 180 acres of land (contract 262);
and (2) contract No. 263, covering 251 acres of land (contract 263). Both Grant
County CRP contracts listed petitioner as the owner of the land and did not
identify anyone as the operator of the land. Contract 262 provided that the CCC
would pay to petitioner a first-year payment of $8,609 and an annual contract
-7-
payment of $9,391.6 Contract 263 provided that the CCC would pay to petitioner
a first year payment of $12,405 and an annual contract payment of $13,533.7
Pursuant to a conservation plan attached to the Grant County CRP contracts,
petitioner agreed to: (1) maintain already established grass and legume cover for
the life of the contract; (2) “[e]stablish perennial vegetative cover on land
temporarily removed from agricultural production”, including pubescent or
intermediate wheatgrass, alfalfa, and sweet clover; and (3) engage in “pest control
and pesticide management” for the life of the contract. The CCC agreed to share
with petitioner the cost of establishing these conservation plans.
The Roberts County CRP contract covered 191 acres of petitioner’s land.
The Roberts County CRP contract listed petitioner as the owner of the land and
did not identify anyone as the operator of the land. The Roberts County CRP
contract provided that the CCC would make an annual contract payment of
$9,666.8
6
The “rental rate” under contract 262 was set at $52.26 per acre.
7
The “rental rate” under contract 263 was set at $53.83 per acre.
8
The “rental rate” under the Roberts County CRP contract was set at $50.50
per acre.
-8-
Pursuant to a conservation plan attached to the Roberts County CRP
contract, petitioner agreed to: (1) “[c]ontrol pests such as weeds, livestock, insects
and disease” and (2) “[e]stablish adapted native perenial [sic] vegetative cover”
including Western wheatgrass, green needlegrass, and alfalfa. The conservation
plan also provided an estimated cost share for the plan. Once the work was
completed, petitioner was required to provide to the CCC “a report of
performance” and “submit receipts and seed tags affiliated with practice
establishment”. The CCC agreed to share with petitioner the costs of establishing
the conservation plan.9
In June 1999 petitioner and the CCC executed a new CRP contract (1999
Roberts County CRP contract) with respect to the 129-acre parcel in Roberts
County that petitioner had acquired in 1994 already subject to a CRP contract.
The 1999 Roberts County CRP contract listed petitioner as the owner of the land
and did not identify any operator of the land. The 1999 Roberts County CRP
contract provided that the CCC would make an annual contract payment of
9
In September 2006 the CCC agreed to modify the Roberts County CRP
contract and extend the expiration date of that contract to September 30, 2012.
-9-
$5,757.10 Under the 1999 Roberts County CRP contract, petitioner agreed to: (1)
maintain already established grass and legume cover for the life of the contract;
(2) “establish native perennial vegetative cover on land temporarily removed from
agricultural production”; (3) engage in “pest control and pesticide management”
for the life of the contract; and (4) control weeds by either mowing or chemical
means. The 1999 Roberts County CRP contract prohibited petitioner from haying
or grazing the enrolled land.
C. Implementation of the Conservation Plans
Petitioner hired Wallace Redlin to carry out some of petitioner’s obligations
under the CRP contracts.11 Mr. Redlin was a retired farmer who had placed all of
10
The “rental rate” under the 1999 Roberts County CRP contract was set at
$44.63 per acre.
11
On July 30, 1997, petitioner mailed to the Grant County FSA a letter, titled
as an addendum. In the letter petitioner indicated that he will “assume all
obligations and responsibilities of contractual compliance as may be administered
by and through FSA or otherwise pertaining to subject lands by independent
contract with WALLACE L. REDLIN, Jr. for machine hire, monitoring and
supervision as essential and necessary on all land identified in the CRP contract”.
Petitioner testified that he sent the addendum to the Grant County FSA to clarify
how he planned to comply with the CRP contract considering the fact that he
resided in Texas at the time.
- 10 -
his land in the CRP. Mr. Redlin previously had rented the Grant County and
Roberts County properties from petitioner for use in Mr. Redlin’s farming
operations.
In 1998 petitioner purchased the required seeding materials and shipped the
materials to Mr. Redlin. Mr. Redlin then performed the initial seedbed preparation
and seeding. In 2000, pursuant to the 1999 Roberts County CRP contract, Mr.
Redlin plowed a portion of the land and reseeded it with various grasses.
D. Termination of CRP Contract 262
In 2001 Grant County FSA employees discovered that petitioner was
engaging in gravel quarry activity on the Grant County property and had been
using part of the property for a road. The Grant County FSA, acting on behalf of
the USDA, terminated petitioner’s participation in the CRP with respect to nine
acres of the Grant County property and required him to refund $2,540, an amount
equal to all prior payments with respect to that portion of the property, plus
interest and liquidated damages. The Grant County FSA also provided for the
implementation of CRP contract No. 262-A, covering the remaining 171 acres of
the Grant County property, which continued to be enrolled in the CRP program.
- 11 -
III. Petitioner’s Activities With Respect to the South Dakota Properties
Although Mr. Redlin performed some of petitioner’s obligations under the
CRP contracts at petitioner’s request and direction, petitioner fulfilled other
obligations, including the making of annual certifications that he was
implementing the conservation plans in accordance with the CRP contracts.
Between 1997 and 2007 petitioner participated in three CRP haying programs with
respect to the South Dakota properties. In July 2002 petitioner requested authority
for emergency haying or grazing.12 Petitioner signed the necessary forms and
made donations to ranchers and farmers as provided for by the CRP.
Petitioner also personally purchased materials needed to implement the
conservation plans, which he then shipped to Mr. Redlin. Petitioner paid Mr.
Redlin for the work he performed to satisfy some of petitioner’s obligations under
the CRP contracts. Petitioner also sought and received from the USDA cost-
sharing payments for the seeding and weeding activities on the Grant County and
Roberts County properties. Petitioner gathered various documents, including
12
Petitioner donated the hay and/or the haying or grazing privileges to a
livestock producer and accordingly was not required to reduce the amount of his
CRP payment with respect to that land.
- 12 -
receipts and invoices, and submitted these documents along with official
applications in order to receive the cost-sharing payments.
In addition to his activities with respect the CRP contracts, petitioner
engaged in various other activities with respect to the South Dakota properties.
Petitioner allowed individuals to hunt on portions of the South Dakota properties.
He traveled to meetings with various parties with the express purpose of
negotiating agreements with people interested in hunting on the South Dakota
properties. Petitioner also operated a gravel pit on the Grant County property.
During the years at issue petitioner sold gravel to the Grant County Highway
Department and Lura Township, the local township. Petitioner also rented the
Day County property.
Between 1994 and 2007 petitioner visited the South Dakota properties
several times each year. In 2006 petitioner visited the South Dakota properties
four times. In 2007 petitioner visited the South Dakota properties two times. He
typically visited the South Dakota properties for two to three days at a time. On
such trips petitioner would visit the gravel pit to ensure that there had been no
unauthorized excavation or removal of gravel, drive to each of the South Dakota
properties, and meet with officials at the FSA and the Grant County Highway
- 13 -
Department. He also would meet with individuals who had an interest in renting
one of his properties or in hunting on the properties.
IV. Petitioner’s Income With Respect to the South Dakota Properties
In 2006 petitioner received CRP payments of $22,449 and $15,423 with
respect to the Grant County and Roberts County properties, respectively.
In 2007 petitioner received income of $25,869 with respect to the Grant
County property as follows: (1) CRP payments of $22,449; (2) a payment of
$2,515 from Mr. Redlin for hunting privileges; and (3) a payment of $905 from
Mike Krakow for the right to cut hay on the land. He received income of $17,281
with respect to the Roberts County property as follows: (1) CRP payments of
$15,423; and (2) a payment of $1,858 from the South Dakota Game and Fish
Department for participation in a walk-in hunting program.
V. Petitioners’ Tax Reporting and the Notice of Deficiency
Petitioners timely filed Forms 1040, U.S. Individual Income Tax Return, for
2006 and 2007. On their returns petitioners identified their occupations as “self-
employed”. On attached Schedules E petitioners reported income and expenses
with respect to their three properties as follows:
- 14 -
2006 Schedule E
Day County Grant County Roberts County
property property property
Rents received $22,478 $22,449 $15,423
Total expenses 3,287 7,606 4,662
Net income 19,191 14,843 10,761
2007 Schedule E
Day County Grant County Roberts County
property property property
Rents received $37,962 $25,869 $17,281
Total expenses 3,017 5,194 4,287
Net income 34,945 20,675 12,994
On October 14, 2010, respondent mailed to petitioners the notice of
deficiency for 2006 and 2007 determining that: (1) petitioners erroneously
reported their CRP payments as farm rental income on their returns; (2) petitioners
should have reported the CRP payments as income on a Schedule F, Profit or Loss
From Farming, for each year. Respondent also determined that the CRP payments
constituted self-employment income and therefore determined that petitioners had
unreported self-employment income of $25,60413 and $28,39114 for 2006 and
13
This figure represents the net income petitioner received in 2006 with
respect to the Grant County and Roberts County properties. As stated supra
p. 13, in 2006 petitioner’s only income with respect to the Grant County and
Roberts County properties consisted of CRP payments.
14
This figure represents the net CRP payments petitioner received in 2007
(continued...)
- 15 -
2007, respectively.15 Respondent allowed petitioners additional deductions with
respect to the self-employment tax liabilities.
OPINION
A taxpayer’s self-employment income is subject to self-employment tax.
Sec. 1401(a) and (b). Self-employment tax is assessed and collected as part of the
income tax, must be included in computing any income tax deficiency or
overpayment for the applicable tax period, and must be taken into account for
estimated tax purposes. Sec. 1401; see also sec. 1.1401-1(a), Income Tax Regs.
Self-employment income generally is defined as “the net earnings from self-
employment derived by an individual”. Sec. 1402(b). Section 1402(a) defines
“[n]et earnings from self-employment” as “the gross income derived by an
individual from any trade or business carried on by such individual, less the
deductions allowed by this subtitle which are attributable to such trade or
14
(...continued)
with respect to the Grant County and Roberts County properties. As discussed
supra p. 13, in 2007 petitioner received additional income of $5,278 with respect
to these properties. Respondent did not include this additional income in
calculating petitioners’ unreported self-employment income.
15
Respondent appears to have accepted that the income generated by
petitioner’s rental activity with respect to the Day County property is not subject
to self-employment tax, presumably because of the provisions of sec. 1402(a)(1).
See also Henderson v. Flemming, 283 F.2d 882, 888 (5th Cir. 1960).
- 16 -
business”. See also sec. 1.1402(a)-1, Income Tax Regs. In computing a
taxpayer’s net earnings from self-employment, section 1402(a)(1) provides:
[T]here shall be excluded rentals from real estate and from personal
property leased with the real estate (including such rentals paid in
crop shares)[16] together with the deductions attributable thereto,
unless such rentals are received in the course of a trade or business as
a real estate dealer; except that the preceding provisions of this
paragraph shall not apply to any income derived by the owner or
tenant of land if (A) such income is derived under an arrangement,
between the owner or tenant and another individual, which provides
that such other individual shall produce agricultural or horticultural
commodities (including livestock, bees, poultry, and fur-bearing
animals and wildlife) on such land, and that there shall be material
participation by the owner or tenant (as determined without regard to
16
In 2008 Congress amended sec. 1402(a) to read: “[T]here shall be
excluded rentals from real estate and from personal property leased with the real
estate (including such rentals paid in crop shares, and including payments under
section 1233(2) of the Food Security Act of 1985 (16 U.S.C. 3833(2)) to
individuals receiving benefits under section 202 or 223 of the Social Security
Act)”. Under sec. 1402(a) as amended, payments made under 16 U.S.C. sec.
3833(2) to individuals who were receiving benefits under sec. 202 or sec. 223 of
the Social Security Act (SSA) are excluded from the calculation of net earnings
from self-employment. Tit. 16 U.S.C. sec. 3833(2) (2012) refers to payments
received from the USDA under the CRP. See supra p. 5. The amendment applies
to CRP payments made after December 31, 2007. Food, Conservation, and
Energy Act of 2008, Pub. L. No. 110-246, sec. 15301(c), 122 Stat. at 2263. SSA
sec. 202 provides for the payment of old-age and survivors insurance benefits. 42
U.S.C. sec. 402 (2012). SSA sec. 223 provides for the payment of disability
insurance benefits. 42 U.S.C. sec. 423 (2012).
Petitioner received the payments at issue before December 31, 2007.
Furthermore, petitioner does not contend, and he has not introduced any evidence
to show, that he was receiving benefits under the SSA. Accordingly, the 2008
amendment to sec. 1402(a) is inapplicable to our analysis herein.
- 17 -
any activities of an agent of such owner or tenant) in the production
or the management of the production of such agricultural or
horticultural commodities, and (B) there is material participation by
the owner or tenant (as determined without regard to any activities of
an agent of such owner or tenant) with respect to any such
agricultural or horticultural commodity.[17] * * *
The self-employment tax provisions are construed broadly in favor of treating
income as earnings from self-employment. Braddock v. Commissioner, 95 T.C.
639, 644 (1990); Hornaday v. Commissioner, 81 T.C. 830, 834 (1983); Hennen v.
Commissioner, T.C. Memo. 1999-306; S. Rept. No. 81-1669 (1950), 1950-2 C.B.
302, 354.
Respondent contends that the CRP payments are taxable as self-employment
income because petitioner derived the CRP payments from his trade or business of
conducting an environmentally friendly farming operation.18
17
The regulations under sec. 1402(a)(1) refer to the farm rental income that
is included in a taxpayer’s net earnings from self-employment as includible farm
rental income. See, e.g., sec. 1.1402(a)-4(b), Income Tax Regs. In this Opinion
we will refer to such income as includible farm rental income.
18
In arguing that petitioner was engaged in an active trade or business,
respondent relies on determinations made by the Grant County FSA that petitioner
was “actively engaged in a farming operation”. This Court previously has held
that a determination by the USDA that an individual was actively engaged in
farming “is not a determination for Federal income tax purposes that * * * [the
individual was] actively engaged in a trade or business for purposes of section
162(a).” Hasbrouck v. Commissioner, T.C. Memo. 1998-249, 1998 WL 373337,
at *12, aff’d without published opinion, 189 F.3d 473 (9th Cir. 1999).
(continued...)
- 18 -
Petitioner contends that the CRP payments are not income from a trade or
business and therefore are not includible in his self-employment income.
Petitioner contends that he was not involved in the trade or business of farming,
that his minimal activities with respect to the CRP land did not cause him to
become active in the trade or business of farming, and that there was no nexus
between the CRP payments received and his business activities. In the alternative,
petitioner contends that the CRP payments are excluded from the calculation of
net earnings from self-employment under the “rentals from real estate” exclusion
in section 1402(a)(1).
We examine the parties’ contentions below, taking into account the burden
of proof, which rests upon petitioners. See Rule 142(a)(1). Respondent’s
determinations are presumed to be correct; petitioners must prove that
respondent’s determinations are erroneous in order to rebut the presumption and
satisfy their burden of proof. See id.; Welch v. Helvering, 290 U.S. 111, 115
(1933).
18
(...continued)
Accordingly, the Grant County FSA determination does not control our decision
as to whether petitioner was actively engaged in a trade or business for purposes
of sec. 162(a).
- 19 -
I. Self-Employment Income
A taxpayer’s net earnings from self-employment include the gross income
derived from any trade or business carried on by the taxpayer. Sec. 1402(a)(1).
The term “derived from” “necessitates a nexus between the income and the trade
or business actually carried on by the taxpayer.” Bot v. Commissioner, 353 F.3d
595, 599 (8th Cir. 2003), aff’g 118 T.C. 138 (2002); see also McNamara v.
Commissioner, 236 F.3d 410, 413 (8th Cir. 2000), rev’g T.C. Memo. 1999-333.
The term “trade or business” “shall have the same meaning as when used in
section 162 (relating to trade or business expenses)”. Sec. 1402(c). The
applicable regulations provide that “[t]he trade or business must be carried on by
the individual, either personally or through agents or employees.” Sec. 1.1402(a)-
2(b), Income Tax Regs. Under these principles, payments constitute self-
employment income if they: “(1) are derived (2) from a trade or business (3)
carried on by * * * [the taxpayer or his] agents.” Bot v. Commissioner, 353 F.3d
at 599; see also Wuebker v. Commissioner, 205 F.3d 897, 901 (6th Cir. 2000),
rev’g 110 T.C. 431 (1998). Accordingly, we must decide: (1) whether petitioner
carried on a trade or business during the years in issue, whether personally or
through an agent; and (2) if so, whether there was a nexus between the trade or
business conducted and the income petitioner received.
- 20 -
A. Existence of a Trade or Business
1. Analysis
To be engaged in a trade or business with respect to which deductions are
allowable under section 162, the taxpayer must be involved in the activity with
continuity and regularity, and the taxpayer’s primary purpose for engaging in the
activity must be for income or profit. Commissioner v. Groetzinger, 480 U.S. 23,
35 (1987). Additionally, the taxpayer’s business operations must have
commenced. Goodwin v. Commissioner, 75 T.C. 424, 433 (1980), aff’d without
published opinion, 691 F.2d 490 (3d Cir. 1982). Whether a taxpayer is engaged in
a trade or business must be ascertained from a review of all relevant facts and
circumstances. Commissioner v. Groetzinger, 480 U.S. at 35.
The record establishes that petitioner expanded his participation in the CRP
over the years and that he participated in the CRP with continuity and regularity
during 2006 and 2007. The record further establishes that petitioner did so with
the primary purpose of making a profit. After his initial experience with the CRP
petitioner decided to enroll the Grant County and Roberts County properties in the
CRP because he could get a higher rate of return from participating in the CRP
than from leasing the properties for farming. He negotiated and executed the CRP
contracts and, by doing so, obligated himself, as the owner of the properties to
- 21 -
satisfy significant contractual obligations regarding planting, maintenance, and use
of the properties enrolled in the CRP and compliance with CRP requirements.
Although petitioner did not actually perform the planting and maintenance work
required by the CRP, he hired an individual, Mr. Redlin, to perform the work
according to CRP specifications, purchased necessary materials, such as seed, and
provided them to Mr. Redlin, and regularly inspected the properties to ensure that
they were being maintained and used in accordance with the CRP contractual
obligations. On these facts we find that petitioner engaged in the business of
participating in the CRP and managing his CRP properties with the primary intent
of making a profit.
Petitioner contends that his actual participation in the CRP and his work
complying with the CRP contract requirements were de minimis and did not
constitute farming. He maintains that all physical labor necessary to plant, seed,
weed, mow, and maintain the properties (property maintenance activities) in
accordance with the CRP contracts was performed by his contractor and should
not be attributed to him. It is immaterial, however, that the property maintenance
activities were carried out by someone other than petitioner. As noted supra, for
purposes of section 1402 a taxpayer may conduct his trade or business personally
or through an agent. Sec. 1.1402(a)-2(b), Income Tax Regs.; Rev. Rul. 60-32,
- 22 -
1960-1 C.B. 23 (stating that similar payments made to individuals under the Soil
Bank Act were includible in the individual’s net earnings from self-employment if
the individual operated his farm either personally or through agents or
employees).19 A taxpayer who hires another “to render the services necessary to
fulfill” the taxpayer’s obligations under a contract is nonetheless liable for self-
employment tax with respect to the income the taxpayer receives pursuant to that
contract. Moorhead v. Commissioner, T.C. Memo. 1993-314, 1993 WL 267200,
at *6.
19
Rev. Rul. 60-32, 1960-1 C.B. 23, 26, states in pertinent part:
Payments and benefits attributable to the acreage reserve
program are includible in determining the recipient’s net earnings
from self-employment if he operates his farm personally or through
agents or employees. This is also true if his farm is operated by
others and he participates materially in the production of
commodities, or management of such production, within the meaning
of section 1402(a)(1) * * *. * * * If he does not so operate or
materially participate, payments received are not to be included in
determining net earnings from self-employment.
The Internal Revenue Service (IRS) has stated that Notice 2006-108, 2006-2 C.B.
1118, discussed infra pp. 30-34, would render Rev. Rul. 60-32, supra, obsolete.
- 23 -
As a participant in the CRP, petitioner, either directly or through Mr. Redlin
as his agent,20 regularly and continuously: (1) satisfied seeding and weed control
20
Neither party addresses whether, under applicable State law, Mr. Redlin
was petitioner’s agent. Because South Dakota has the most significant
relationship to petitioner and Mr. Redlin and the transaction at issue, whether Mr.
Redlin was petitioner’s agent is governed by South Dakota law. See Stockmen’s
Livestock Exch. v. Thompson, 520 N.W.2d 255, 257-258, 258 n.1 (S.D. 1994).
Under South Dakota law, the elements required to create an agency relationship
are “‘manifestation by the principal that the agent shall act for him, the agent’s
acceptance of the undertaking, and the understanding of the parties that the
principal is to be in control of the undertaking.’” Tisdall v. Tisdall, 422 N.W.2d
105, 107-108 (S.D. 1988) (quoting Southard v. Hansen, 376 N.W.2d 56, 58 (S.D.
1985)). In Tisdall, the Supreme Court of South Dakota found that a principal-
agent relationship existed when the principal directed the agent to distribute
revenue according to applicable statutory guidelines.
Petitioner hired Mr. Redlin to perform all of the physical farming duties
required under the CRP contracts. Mr. Redlin apparently accepted petitioner’s
offer, as indicated by Mr. Redlin’s completion of the seeding, weeding, mowing
and maintenance activities required under the CRP contracts. Although petitioner
testified that he never directed Mr. Redlin’s activities, we reject the testimony as it
is apparent from the record that petitioner initially directed Mr. Redlin to perform
the property maintenance activities required by the CRP contracts and retained the
ability to direct and control the work that Mr. Redlin was to perform to comply
with the CRP contracts. See id. Accordingly, we find that Mr. Redlin was
petitioner’s agent.
We note that Notice 2006-108, supra, states that “[p]articipation in a CRP
contract meets the criteria to be a trade or business irrespective of whether the
participant performs the required activities personally or arranges for his
obligations to be satisfied by a third party.” Notice 2006-108, supra, does not
discuss the apparent requirement under sec. 1.1402(a)-2(b), Income Tax Regs.,
that the trade or business be carried on by the individual either personally, or
through the individual’s employee, as that term is defined in sec. 1402(d), or
(continued...)
- 24 -
obligations with respect to the Grant County and Roberts County properties as
required under the CRP contracts; (2) visited the Grant County and Roberts
County properties to ensure that the properties maintained their status as CRP
properties; (3) filed annual certifications; (4) participated in emergency haying
programs; (5) requested cost-sharing payments; and (6) made decisions regarding
the profitability of keeping the Grant County and Roberts County properties
enrolled in the CRP. Regardless of whether some or all of these activities qualify
as farming, we find that petitioner was engaged in the business of participating in
the CRP and that he enrolled, maintained, and managed multiple properties subject
to CRP contracts with the primary intent of making a profit.
2. Additional Support
Our conclusion is supported by and is consistent with existing caselaw and
the administrative position of the IRS set forth in Notice 2006-108, 2006-2 C.B.
1118, which was released on December 5, 2006. It is also consistent with
Congress’ enactment in 2008 of a limited exclusion for CRP payments made to
20
(...continued)
agent, as that term is defined under applicable State law. Because we find that Mr.
Redlin was petitioner’s agent, we need not decide whether an individual’s
participation in a CRP contract constitutes a trade or business under sec. 1402(a)
where the individual arranges for a third party to perform the obligations required
by the CRP contract and the third party is neither an employee nor an agent of the
individual.
- 25 -
taxpayers receiving Social Security retirement or disability benefits. We explain
below.
a. Caselaw
This Court previously has addressed the proper treatment of CRP payments
for self-employment tax purposes. Wuebker v. Commissioner, 110 T.C. 431;21
Ray v. Commissioner, T.C. Memo. 1996-436. However, we are unable to find any
case other than Ray that addresses whether and to what extent a taxpayer who
receives CRP payments is engaged in a trade or business. While there is very little
law focusing on whether and to what extent participation in the CRP constitutes a
trade or business, Bot v. Commissioner, 118 T.C. 138, provides guidance
regarding the proper treatment of analogous payments for self-employment tax
purposes. Accordingly, we examine each of these decisions and their application
to the case at bar.
21
In Wuebker v. Commissioner, 110 T.C. 431 (1998), rev’d, 205 F.3d 897
(6th Cir. 2000), this Court considered whether the taxpayers were liable for self-
employment tax on CRP payments they had received. However, in that Opinion
this Court did not address whether the taxpayers were engaged in a trade or
business but instead addressed only whether the CRP payments were excluded
from the taxpayers’ net earnings from self-employment as “rentals from real
estate” under sec. 1402(a)(1). In Wuebker v. Commissioner, 205 F.3d 897, the
U.S. Court of Appeals for the Sixth Circuit addressed whether the CRP payments
derived from the taxpayers’ farming business but did not decide whether the
taxpayers were in the trade or business of farming. We discuss both of the
Wuebker decisions later in this Opinion. See infra pp. 37-39.
- 26 -
In Ray v. Commissioner, T.C. Memo. 1996-436, the taxpayer was engaged
in the trade or business of farming. He then purchased land that had been placed
in the CRP by the previous owner. The taxpayer fulfilled the previous owner’s
obligations under the CRP contract and received CRP payments in exchange. This
Court concluded that the taxpayer received the CRP payments in connection with
his ongoing trade or business of farming. See also Hasbrouck v. Commissioner,
T.C. Memo. 1998-249, aff’d, 189 F.3d 473 (9th Cir. 1999), in which the
Commissioner, on the basis of this Court’s decision in Ray, conceded that the
taxpayers were involved in the trade or business of farming and therefore entitled
to the deductions claimed on their Schedules F. In so conceding, the
Commissioner noted that the only difference between the two factual scenarios
was that the taxpayer in Ray was a farmer when he acquired the CRP land,
whereas the taxpayers in Hasbrouck had no prior farming experience.
In Bot v. Commissioner, 118 T.C. at 141, this Court addressed the treatment
for self-employment tax purposes of payments taxpayers received from an
agricultural cooperative (MCP). The taxpayers were retired farmers who
purchased MCP cooperative stock and units of equity participation, which
“specified the maximum number of bushels of corn the member could be required
to produce and deliver to” MCP each year. Id. at 141-142. The taxpayers also
- 27 -
entered into uniform marketing agreements (UMAs) with MCP. Id. at 141. In
return, MCP was required under the UMAs to process the corn its members
produced and make payments to each individual member equal to at least 80% of
the loan value of each bushel of corn delivered by the individual plus a value-
added payment, representing “[the] value added to the corn as a result of its
processing”, a payment from MCP’s earnings in accordance with its bylaws, and,
in some instances, a storage fee and interest. Id. at 143. The taxpayers satisfied
their production and delivery obligations using corn that MCP held in its option
pool, rather than corn they personally had grown on their farm, and accordingly
received only the value-added payments. Id. at 142, 144. The Commissioner
determined that the value-added payments were includible in the calculation of the
taxpayers’ net earnings from self-employment. Id. at 144.
In deciding whether the taxpayers’ actions constituted a trade or business,
this Court acknowledged that although the taxpayers had retired from farming,
they continued to participate in MCP and their participation constituted a trade or
business. Id. at 147. In particular, this Court stated:
Although petitioners retired from daily farming in 1987 and
turned over their farm operation to the sons, petitioners nevertheless
continued to maintain their membership in MCP from 1987 through
at least 1995. As active members of MCP during 1994 and 1995 [the
years in issue,] petitioners, either directly or through the sons as their
- 28 -
agents, regularly and continuously (1) maintained their status as
producers under the UMAs, (2) made decisions regarding how to
satisfy their production and delivery obligations * * * under the
UMAs, (3) acquired option pool corn which they used to satisfy their
production and delivery obligations to MCP several times each year,
and (4) sold corn and corn products for profit through MCP.
Id. at 147-148 (fn. ref. omitted). In rejecting the taxpayers’ contention that their
involvement was too minimal to constitute a trade or business, this Court relied on
the fact that the taxpayers “regularly and continuously purchased and sold corn
with the intention of making a profit” and purchased additional units of equity
over time. Id. at 149.
The U.S. Court of Appeals for the Eighth Circuit affirmed the decision of
the Tax Court. Bot v. Commissioner, 353 F.3d 595. While the Court of Appeals
emphasized the unique nature of the cooperative arrangement, the court also
distinguished the taxpayers’ participation in the cooperative, which constituted a
trade or business, from an individual’s investment in a corporation or gas well,
which was merely a passive investment. Id. at 599-600. Unlike a passive
investment, the investment in MCP required the taxpayers “to do more than hold
the stock or equity units” in order to receive payment. Id. at 600.
In Ray v. Commissioner, T.C. Memo. 1996-436, this Court relied on the fact
that the taxpayer was engaged in the trade or business of farming before and
- 29 -
during his participation in the CRP in finding that the CRP payments were
includible in his self-employment income. However, we do not read Ray to make
the taxpayer’s engagement in the business of farming before enrolling property in
the CRP determinative of whether CRP payments constitute income from self-
employment. A taxpayer is not required to have prior experience in a particular
trade or business to be permitted deductions under section 162; what is required is
that the taxpayer have commenced an activity that qualifies as a trade or business.
Goodwin v. Commissioner, 75 T.C. at 433.
Like the taxpayers in Bot v. Commissioner, 118 T.C. 138, petitioner was an
active participant in a payment program (in this case the CRP) who regularly and
continuously maintained his status as a participant, maintained the eligibility
status of his properties, made decisions regarding how to satisfy his obligations
under the CRP contracts, including hiring Mr. Redlin, entering into the 1999
Roberts County CRP, removing a portion of the Grant County property from the
CRP, and participating in the emergency haying programs, and he engaged in such
activities for profit. Furthermore, because the receipt of CRP payments depended
on petitioner’s continued maintenance of his land in accordance with the CRP
contracts, his participation in the CRP was not merely a passive investment.
Whether petitioner’s activities with respect to the CRP constituted farming or
- 30 -
simply continuous and regular participation in an activity for profit, we are
convinced that petitioner was engaged in a trade or business as defined by section
162.22
b. Notice 2006-108
On December 5, 2006, the IRS released Notice 2006-108, supra, which
contained a proposed revenue ruling regarding whether CRP payments were
includible in net income from self-employment for purposes of calculating a
taxpayer’s liability for self-employment tax, and solicited comments concerning
the conclusions reached in the proposed revenue ruling. The IRS in Notice 2006-
108, supra, explained that it had previously issued an announcement,
Announcement 83-43, Q&A-3, 1983-10 I.R.B. 29, regarding the self-employment
tax treatment of payments made by the USDA under land diversion programs in
22
In deciding whether a full-time gambler who made wagers solely for his
own account was engaged in a trade or business for Federal income tax purposes,
the Supreme Court in Commissioner v. Groetzinger, 480 U.S. 23, 27 n.7 (1987),
stated as follows: “Judge Friendly some time ago observed that ‘the courts have
properly assumed that the term [trade or business] includes all means of gaining a
livelihood by work, even those which would scarcely be so characterized in
common speech.’ Trent v. Commissioner, 291 F.2d 669, 671 (CA2 1961).”
(Emphasis added.)
The concept of work that the term “trade or business” embodies is incorporated
into the CRP contracts, which impose meaningful obligations and duties on
petitioner that he had to perform with continuity and regularity in order to receive
the CRP payments.
- 31 -
which it stated that a farmer who receives cash or a payment in kind from the
USDA for participation in a land diversion program is liable for self-employment
tax on the payments, a conclusion that was consistent with guidance provided in
Rev. Rul. 60-32, supra, with respect to two earlier land diversion programs. The
IRS also noted, however, that Rev. Rul. 60-32, supra, states that participants in
land diversion programs are not subject to self-employment tax on the payments if
the participants do not operate a farm or materially participate in the farming
activities. The IRS explained that the conclusion in Rev. Rul. 60-32, supra, is
relevant only with respect to the exception from net income from self-employment
provided in section 1402(a)(1) for “rentals from real estate”. It cited with approval
and relied on the opinion of the U.S. Court of Appeals for the Sixth Circuit in
Wuebker v. Commissioner, 205 F.3d 897, for the proposition that CRP payments
do not fall within the rental income exclusion but pointed out that the taxpayer in
Wuebker was engaged in the business of farming when he received the CRP
payments. Because the IRS had received questions regarding whether CRP
payments received by a recipient who is retired or not otherwise actively engaged
in farming are subject to self-employment tax, it issued the proposed revenue
ruling to respond to those questions.
- 32 -
In Notice 2006-108, 2006-2 C.B. at 119, the proposed revenue ruling holds
that CRP rental payments (including incentive payments) from the USDA to (1)
“a farmer actively engaged in the trade or business of farming who enrolls land in
CRP and fulfills the CRP contractual obligations personally” (taxpayer A) and (2)
“an individual not otherwise actively engaged in the trade or business of farming
who enrolls land in CRP and fulfills the CRP contractual obligations by arranging
for a third party to perform the required activities” (taxpayer B) are both includible
in net income from self-employment and are not excluded from net income from
self-employment as “rentals from real estate” under section 1402(a)(1). The IRS
explained the holdings of the proposed revenue procedure as follows:
Participation in a CRP contract is a trade or business for both A and
B. The participant is obligated to perform a number of activities,
including but not limited to tilling, seeding, fertilizing, and weed
control. Although more extensive activities are required at the
beginning of the contract term than later, the obligation to perform
activities extends throughout the ten-year period, giving participation
in CRP the continuity and regularity necessary to be considered a
trade or business. Also, both A and B enrolled land in the CRP
program to earn a profit. Participation in a CRP contract meets the
criteria to be a trade or business irrespective of whether the
participant performs the required activities personally or arranges for
his obligations to be satisfied by a third party. Thus, the trade or
business treatment is the same for A and B even though A meets the
CRP requirements for maintenance of the land himself whereas B
arranges for someone else to do it. Furthermore, the CRP meets the
criteria to be a trade or business based on the activities required
directly under the program and without being affected by whether the
- 33 -
participant is otherwise engaged in farming or any other trade or
business. * * * Thus, for both A and B, the CRP rental payments are
includible in their net income from self-employment.
Id., 2006-2 C.B. at 1120.
Although we are not obligated to defer to the IRS’ interpretation of a statute
as reflected in administrative pronouncements such as Notice 2006-108, supra,
see, e.g., Tax Analysts v. IRS, 416 F. Supp. 2d 119, 125-126 (D.D.C. 2006), the
notice sets forth the IRS’ interpretation of the statute and, consequently, “may
provide evidence of the proper construction of the statute”, Wells Fargo & Co. &
Subs. v. Commissioner, 224 F.3d 875, 886 (8th Cir. 2000) (discussing the
precedential value of private rulings), aff’g in part, rev’g in part Norwest Corp. &
Subs. v. Commissioner, 112 T.C. 89 (1999); see Nelson v. Commissioner, 568
F.3d 662, 665 (8th Cir. 2009) (adopting the framework set forth in Skidmore v.
Swift & Co., 323 U.S. 134, 140 (1944), in considering what weight to give
revenue rulings), aff’g 130 T.C. 70 (2008); see also Berger v. Xerox Corp. Ret.
Income Guar. Plan, 338 F.3d 755, 762 (7th Cir. 2003) (discussing the precedential
value of IRS notices); Esden v. Bank of Boston, 229 F.3d 154, 168-169 (2d Cir.
2000) (discussing the precedential value of IRS notices). In this instance, we
conclude that the IRS’ analysis of the CRP and the payments made thereunder and
the classification of the CRP payments for self-employment tax purposes as set
- 34 -
forth in Notice 2006-108, supra, while not controlling, are nevertheless well-
grounded and consistent with the analysis set forth herein.
c. Congressional Intent Regarding CRP Payments
Several attempts have been made to convince Congress to enact a blanket
exclusion for self-employment tax purposes with respect to CRP payments, but
Congress did not enact proposed legislation amending section 1402 to exclude
CRP payments from self-employment tax entirely. See 153 Cong. Rec. 9170-9171
(2007); 149 Cong. Rec. 15950-15951 (2003); 147 Cong. Rec. 1776-1783 (2001);
133 Cong. Rec. 8557 (1987). Congress did, however, enact a partial exclusion.
Following the issuance of Notice 2006-108, supra, Congress in 2008 amended
section 1402(a)(1) to exclude CRP payments from the calculation of a taxpayer’s
net earnings from self-employment where the taxpayer is receiving Social Security
retirement or disability payments.23 Food, Conservation, and Energy Act of 2008,
Pub. L. No. 110-246, sec. 15301(a), 122 Stat. at 2263. If we were to interpret
section 1402 to exclude entirely CRP payments from the calculation of net
earnings from self-employment as petitioners contend we should, such an
23
The Staff of the Joint Committee on Taxation has noted that CRP
payments generally constitute self-employment income, except in the case of
taxpayers who receive Social Security retirement or disability benefits. See Staff
of J. Comm. on Taxation, Description of the Social Security Tax Base, at 22 (J.
Comm. Print 2011).
- 35 -
interpretation would render the enactment of the 2008 exclusion meaningless. By
enacting only a limited exclusion with respect to taxpayers receiving Social
Security retirement or disability payments who are also receiving CRP payments,
Congress has evidenced an intent not to exclude all CRP payments in calculating a
taxpayer’s net earnings from self-employment under section 1402.
Having found that petitioner, either individually or through his agent, was
engaged in a trade or business during the years at issue, we examine what would
appear to be self-evident--whether there was a nexus between the CRP payments
petitioner received and his business activity.
B. “Derived From” Requirement
Petitioner received the CRP payments as consideration for fulfilling his
obligations under the CRP contracts for the years in issue. Such consideration
provides the required nexus between the CRP payments and his trade or business
of participating in the CRP during the years in issue. See Bot v. Commissioner,
353 F.3d at 600; see also Wuebker v. Commissioner, 205 F.3d at 902-903 (holding
that CRP payments had a direct nexus to the taxpayers’ trade or business of
farming); Ray v. Commissioner, T.C. Memo. 1996-436.
- 36 -
II. Petitioner’s Alternative Argument Under Section 1402(a)(1)
Section 1402(a)(1) provides that “rentals from real estate” shall be excluded
from the calculation of net earnings from self-employment. Petitioner
alternatively contends that the CRP payments are excluded from his net earnings
from self-employment under section 1402(a)(1) because the payments constituted
rental income.24 Respondent contends that petitioner is not eligible for the “rentals
from real estate” exception under section 1402(a)(1) because petitioner did not
receive the CRP payments in exchange for the USDA’s occupancy or use of the
South Dakota properties but instead received the payments as compensation for
conducting his farming operation in an environmentally friendly manner.
Accordingly, we must decide whether the CRP payments constituted “rentals from
real estate” within the meaning of section 1402(a)(1).
Neither section 1402 nor any other self-employment tax provision of the
Code defines the term “rentals from real estate”. See also Wuebker v.
Commissioner, 205 F.3d at 903. However, this Court has stated that the exception
for “rentals from real estate” must be “narrowly construed.” Johnson v.
Commissioner, 60 T.C. 829, 833 (1973); see also Delno v. Celebrezze, 347 F.2d
24
In so arguing, petitioner relies, in part, on the fact that the CRP contracts
identified the payments as “rental payments”.
- 37 -
159, 165 (9th Cir. 1965). Ordinarily, rent is defined as compensation “for the use
or occupancy of property”. Wuebker v. Commissioner, 205 F.3d at 904.
In Wuebker v. Commissioner, 110 T.C. at 437, the taxpayers argued that the
CRP payments they received constituted “rentals from real estate”. In addressing
the taxpayers’ contention, this Court first noted that rent ordinarily is defined “as
compensation for the occupancy or use of property.” Id. at 436. The Court went
on to find that the CRP statute, the applicable regulations, and the CRP contract
identified the payments as rental payments. Id. at 438. After briefly discussing
the taxpayers’ obligations under the CRP contracts, this Court concluded that
In imposing the above-described restrictions on the use of the
land, the primary purpose of the CRP contract was to effectuate the
statutory intention of converting highly erodible croplands to soil
conserving uses. The services that petitioner was required to perform
over the contract term included maintaining the vegetative cover,
controlling weeds, insects, and pests on the land, and fulfilling certain
reporting requirements. These service obligations were not
substantial and were incidental to the primary purpose of the contract.
Thus, the CRP payments represented compensation for the use
restrictions on the land, rather than remuneration for petitioner’s
labor. * * *
Id. Accordingly, the Court held that the CRP payments qualified as “rentals from
real estate” under section 1402(a)(1). Id.
The U.S. Court of Appeals for the Sixth Circuit reversed this Court’s
decision, holding that the CRP payments were not “rentals from real estate” within
- 38 -
the meaning of section 1402(a). Wuebker v. Commissioner, 205 F.3d at 903-905.
The Court of Appeals began its analysis by stating that generally, rental payments
constitute consideration paid for either the use or occupancy of property. Id. at
904. The Court of Appeals quickly dispensed with the issue of whether the CRP
payments constituted consideration for the occupancy of the taxpayers’ property,
noting that the USDA’s access was limited to inspections of the property to
determine whether the taxpayers were in compliance with their CRP contract. Id.
The Court of Appeals acknowledged that the second issue, i.e., whether the
CRP payments constituted consideration for the use of the taxpayers’ property,
presented a much closer question. Id. However, the Court of Appeals ultimately
decided that the USDA did not make the CRP payments in exchange for the use of
the taxpayers’ property:
Citing the many objectives of the CRP, such as the reduction of soil
erosion and the protection of the nation’s long-term food production
capabilities, the * * * [taxpayers] assert, and the dissent agrees, that
the government is “using” the land in question. We believe, however,
that such an argument impermissibly stretches the plain meaning of
the term “use,” especially in light of the narrow construction required
of the rentals-from-real-estate exclusion. * * * Although it is true that
the * * * [USDA] is seeking, and receiving, a public benefit by
conserving lands enrolled in the CRP, the * * * [taxpayers] continue
to maintain control over and free access to their premises. The
dissent reasons that, because the government “greatly reduced the
range of uses to which the * * * [taxpayers] could put their property,”
it exercised a level of control akin to “use.” We remain unpersuaded,
- 39 -
however, that the restrictions imposed by the * * * [USDA] on a
farmer’s use of his own land somehow translate into “use” by the
* * * [USDA] itself.
The essence of the program is to prevent participants from
farming the property and to require them to perform various activities
in connection with the land, both at the start of the program and
continuously throughout the life of the contract, with the
government’s access limited to compliance inspections. Given this
arrangement, we disagree with the Tax Court’s determination that the
* * * [taxpayers’] maintenance obligations were legally insignificant.
Id. at 903-905. In so holding, the Court of Appeals also stated that although the
CRP statute, the applicable regulations, and the contract referred to the amounts as
rental payments, such references did not dictate a conclusion that the CRP
payments fell within the “rentals from real estate” exclusion. Id. at 904.
Following the decision in Wuebker, the IRS issued Notice 2006-108, supra,
proposing a revenue procedure holding that “CRP rental payments are not
payments for the right to use or occupy real property. CRP rental payments are
made in exchange for conducting activities that meet the commitments of a CRP
contract. Therefore, CRP rental payments are not * * * rentals from real estate.”
Following the issuance of Notice 2006-108, supra, in 2008 Congress amended the
section 1402(a)(1) exclusion for “rentals from real estate”, effective for CRP
payments received after December 31, 2007, to exclude from the calculation of net
earnings from self-employment CRP payments made to taxpayers who are
- 40 -
receiving Social Security retirement or disability payments. However, Congress
neither enacted a blanket exclusion with respect to CRP payments nor evidenced
any disagreement with the analysis of the Court of Appeals for the Sixth Circuit in
Wuebker v. Commissioner, 205 F.3d 897.
Given the history recited above and our obligation to reconsider our
position following the reversal of our decision in Wuebker by the Court of
Appeals for the Sixth Circuit, we agree with and adopt the analysis of the Court of
Appeals in Wuebker v. Commissioner, 205 F.3d at 903-905, regarding whether,
under section 1402(a)(1), CRP payments are excluded from the calculation of net
earnings from self-employment as “rentals from real estate”. Under the CRP, a
participating owner who enrolls land in the program does not relinquish control of
the land to the USDA, and the USDA does not engage in any activities with
respect to the land that constitute “use” of the land by the USDA, applying a
commonsense definition of the term. See, e.g., Merriam Webster’s Collegiate
Dictionary 1297 (10th ed. 2002) (“to put into action or service: avail oneself of:
EMPLOY”). Taxpayers participating in the CRP “maintain control over and free
access to their premises”. Wuebker v. Commissioner, 205 F.3d at 904. Although
the CRP restricts the taxpayer’s use of the property, i.e., the taxpayer’s ability to
plant certain crops and engage in certain activities with respect to the enrolled
- 41 -
property, which the taxpayer agrees to in exchange for consideration, the
Government does not take possession of the property or acquire the right to use
the property for its own purposes.
Furthermore, we agree with the finding of the Court of Appeals for the Sixth
Circuit in Wuebker, that a taxpayer’s activities with respect to the CRP contract
are legally significant. Id. As discussed supra pp. 23-24, a taxpayer who
participates in a CRP contract, either individually or through an agent or
employee, must engage in property maintenance activities for the benefit of the
enrolled properties with regularity and perform periodic administrative and
reporting duties to satisfy his obligations under the contract and receive CRP
payments. The contractual obligations are substantial and require more than de
minimis action by the taxpayer or his agent to satisfy them.
Additionally, we note that the activities required of petitioner under the
CRP contracts were not limited to maintenance activities and instead included the
performance of duties not “usually or customarily rendered in connection with”
the mere rental of farmland. Johnson v. Commissioner, 60 T.C. at 831-832
(holding that boat stall rental payments did not constitute “rentals from real estate”
where the taxpayer also provided various services at no additional charge,
including the providing gas and oils, selling sundry items, making arrangements
- 42 -
for boat repairs, recharging batteries, loaning boating equipment, providing fishing
tips, and checking for overdue boats); see also Delno, 347 F.2d at 165
(interpreting an identical provision of the SSA and finding that the individual’s
activities with respect to the property were not those usually rendered in
connection with the rental of property).
Although the CRP statute, the regulations, and the contracts refer to the
payments as rental payments, we do not find that the use of the term “rental”
dictates a conclusion that the payments constituted “rentals from real estate”. See,
e.g., Wuebker v. Commissioner, 205 F.3d at 904 (noting that Congress qualified
the use of the term “rent” with respect to CRP payments by providing that the CRP
payments would be made “in the form of rental payments”). We are not required
to treat as rental payments all payments labeled “rent”. Instead we may examine
the substance of so-called rent payments to decide whether the payments actually
constituted rent or some other type of income. See Opine Timber Co. v.
Commissioner, 64 T.C. 700, 709-711 (1975), aff’d without published opinion, 552
F.2d 368 (5th Cir. 1977). The CRP payments petitioner received appear to be
proceeds from his own use of the land rather than rent he received for permitting
another entity to use his land. See, e.g., Webster Corp. v. Commissioner, 25 T.C.
55, 61 (1955), aff’d, 240 F.2d 164 (2d Cir. 1957); Harding v. Commissioner, T.C.
- 43 -
Memo. 1970-179 (holding that conservation reserve program payments “are in the
nature of receipts from farm operations in that they replace income which
producers could have expected to realize from the normal use of the land devoted
to the program”); Rev. Rul. 60-32, supra. Such a conclusion is consistent with our
holding that the “rentals from real estate” exception should be narrowly construed.
Johnson v. Commissioner, 60 T.C. at 833.
We hold that the CRP payments at issue do not constitute “rentals from real
estate” within the meaning of section 1402(a)(1) and are not excluded from the
calculation of petitioner’s net earnings from self-employment for 2006 and 2007.
In so doing, we overrule our holding in Wuebker v. Commissioner, 110 T.C. 431.
III. Conclusion
We sustain respondent’s determination that the CRP payments petitioner
received in 2006 and 2007 must be included in the calculation of his net earnings
from self-employment under section 1401 and hence are subject to self-
employment tax. The CRP payments are not excluded from this calculation by
virtue of section 1402(a)(1) because the CRP payments do not constitute “rentals
from real estate”. Because we find that the CRP payments are not “rentals from
real estate”, we need not reach the issue of whether the CRP payments constituted
includible farm income.
- 44 -
We have considered all of the parties’ arguments. To the extent not
discussed above, we find those arguments to be irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered under
Rule 155.
Reviewed by the Court.
COLVIN, HALPERN, FOLEY, VASQUEZ, GALE, GOEKE, WHERRY,
KROUPA, HOLMES, GUSTAFSON, MORRISON, KERRIGAN, BUCH, and
LAUBER, JJ., agree with this opinion of the Court.
PARIS, J., did not participate in the consideration of this opinion.
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Order Michigan Supreme Court
Lansing, Michigan
June 25, 2008 Clifford W. Taylor,
Chief Justice
134072 Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
In re Estate of CHRISTOPHER R. MORDEN, Maura D. Corrigan
Deceased Robert P. Young, Jr.
Stephen J. Markman,
_________________________________________/ Justices
ELIZABETH MORDEN, Personal Representative
of the Estate of CHRISTOPHER R. MORDEN,
Plaintiff-Appellant,
v SC: 134072
COA: 272505
Grand Traverse CC: 04-024311-NM
GRAND TRAVERSE COUNTY, GRAND
TRAVERSE COUNTY JAIL, MARGARET
SCHOFIELD, R.N., ELAINE LOZEN, R.N., SANDI
MINOR, R.N., GRAND TRAVERSE SHERIFF,
and MARILYN CONLON, M.D.,
Defendants-Appellees,
and
WELL-SPRING PSYCHIATRY, P.C., ANNE
MARIE BAASE, JIM TALBOT, and TONY
KARLIN,
Defendants.
_________________________________________/
On order of the Court, the application for leave to appeal the April 24, 2007
judgment of the Court of Appeals is considered, and it is DENIED, because we are not
persuaded that the questions presented should be reviewed by this Court.
CAVANAGH and KELLY, JJ., would grant leave to appeal.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
June 25, 2008 _________________________________________
t0618 Clerk
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696 F.Supp. 845 (1988)
RCA CORP., Warner Bros. Records, Inc., and RSO Record, Inc., Plaintiffs,
v.
George TUCKER, Super-Dupers, Inc., Frank Martino and Ramart Printing Corp., Defendants.
CASABLANCA RECORDS & FILMWORKS, INC., Plaintiff,
v.
George TUCKER, Super-Dupers, Inc., Frank Martino and Ramart Printing Corp., Defendants.
Nos. 79 CV 983, 79 CV 1034.
United States District Court, E.D. New York.
October 5, 1988.
*846 *847 David O. Wright, Stein, Zauderer, Ellenhorn, Frischer & Sharp, New York City, for petitioners.
H. Elliot Wales, New York City, for stakeholder RHM Industries.
Marlene M. Remmert, Punta Gorda, Fla., for claimant Hannelore Martino.
MEMORANDUM AND ORDER
DEARIE, District Judge.
Petitioners in this turnover proceeding moved for summary judgment. In a Report and Recommendation, the Hon. Allyne R. Ross, United States Magistrate, recommended that the motion be granted. Two parties with an interest in the res filed timely objections to the Magistrate's report. The Court accepts Magistrate Ross' recommendation, and adopts her report (reproduced below) as the opinion of the Court, adding only these few comments upon consideration of the objections.
Objectors argue that application of New York law in this proceeding would violate the full faith and credit clause of the United States Constitution. This contention is incorrect. A forum state's choice of its own law is constitutional so long as the forum state has significant contacts with the litigation. Allstate Ins. Co. v. Hague, 449 U.S. 302, 312-13, 101 S.Ct. 633, 639-40, 66 L.Ed.2d 521 (1981) (plurality opinion); id. at 332, 101 S.Ct. at 650 (Powell, J. dissenting). That test is easily satisfied here. Objectors' interpretation of the full faith and credit clause would require New York courts to apply foreign law anytime foreign contacts to the litigation exist, even at the cost of disregarding New York law and public policy. The Constitution compels no such result. Id. at 322-23, 101 S.Ct. at 645 (Stevens, J., concurring).
Objectors also argue that Magistrate Ross pre-judged the choice of law question by determining, at the outset, that the conveyance was fraudulent. Contrary to objectors' contention, however, the Magistrate did not conclude that the conveyance was fraudulent, and therefore that conflicts principles applicable to tort cases should govern. Rather, the Magistrate correctly concluded that the core issue in this proceeding was whether the conveyance was fraudulent as to petitioner, not whether the conveyance was valid (as a matter of property law) as between the Martinos. Because different characterizations of the suit imply different choice of law rules that in turn imply application of different substantive law, the Magistrate was required to choose between the competing characterizations. In the Court's view, she chose correctly.
*848 The Clerk of the Court is directed to enter judgment in accordance with Magistrate Ross' attached Report and Recommendation.
SO ORDERED.
REPORT AND RECOMMENDATION IN TURNOVER PROCEEDINGS IN AID OF EXECUTION OF JUDGMENT
ALLYNE R. ROSS, United States Magistrate:
Petitioners, RCA Corp., et al., bring these turnover proceedings in aid of execution of a 1986 judgment for approximately 1.3 million dollars entered in their favor against judgment debtors Frank D. Martino, Sr. ("Martino") and Ramart Printing Corp. ("Ramart"), a now dissolved New York corporation. The two post-judgment proceedings are brought under Rule 69, Fed.R.Civ.P., and N.Y.Civ.Prac.Law §§ 5225 and 5227 (McKinney 1978) ("CPLR"), which together provide for a summary-type special proceeding to enforce a judgment by directing a third party garnishee to turn over to the judgment creditor property or debts belonging to the judgment debtor.
The first proceeding, in aid of enforcement of petitioners' judgment against Martino, is brought against RHM Industries, Ltd. ("RHM"), a New York corporation, as garnishee. In that proceeding, petitioners seek an order requiring RHM to turn over to them monies RHM assertedly owes to Martino on a note executed in connection with the redemption of Martino's RHM stock.
In the second proceeding, in aid of enforcement of their judgment against Ramart, petitioners name as garnishees three former shareholders, officers and directors of Ramart, the now dissolved debtor corporation namely, Frank Martino, Jr. ("Martino, Jr.," Martino's son), Gerard V. Hughes and Miquel A. Rosa. Petitioners seek to recover from these garnishees funds they received upon Ramart's dissolution constituting the proceeds of the sale of Ramart's assets to RHM.
By order of the Hon. Raymond J. Dearie, the two proceedings were referred to me for report and recommendation. While a report on both proceedings has been prepared, counsel recently advised that a settlement has been reached in the second proceeding, to be consummated in early March, 1988. Accordingly, those portions of the legal discussion of the report pertaining solely to the second proceeding have been deleted. With respect to the first proceeding, based on the undisputed facts detailed below and for the noted reasons, I recommend that petitioners be granted the relief they seek.
THE FACTS
The Copyright Proceeding and Judgment
In April of 1979, petitioners brought suit in this district for infringement of their copyrights in various sound recordings and record album graphics, naming as defendants Martino, Ramart and others.[1] Following a trial before the Hon. Thomas C. Platt, the Court, on July 11, 1986, entered a final judgment against Martino and Ramart, awarding petitioners both injunctive relief and damages in the amount of $1,346,726.20, plus interest, from July 11, 1986. To date, no portion of that judgment has been satisfied.
Ramart's Dissolution and The Distribution of Its Assets
While that action was pending, on July 9, 1982, the officers, directors and shareholders of Ramart Martino, Martino, Jr., Hughes and Rosa dissolved the corporation, then a defendant in the suit. At that time, Ramart executed an agreement transferring all of its assets to RHM, a corporation having the same directors and shareholders as Ramart, in exchange for a promissory note in the amount of $125,000. Ramart then assigned the note to its four shareholders in proportion to their ownership interest in the corporation, distributing *849 $63,750 to Martino, Sr., $25,000 to Martino, Jr. and $18,125 each to Hughes and Rosa.
The RHM Note and Martino Assignment
One week later, by agreement executed July 16, 1982, Frank Martino, Sr., then a 40% shareholder of RHM, sold all of his RHM stock back to that corporation. The stock was redeemed for a total purchase price of $250,000, payable $55,000 in cash and $195,000 by an eight year installment note. Thereafter, Martino and his wife, Hannelore, moved to Florida where they purchased a home and have since resided.
On May 13, 1983, Martino executed a document purporting to assign to his wife the debt owed to him by RHM. The assignment was drawn up by a Florida attorney, and was presumably executed in Florida. While the assignment recites that it is "[f]or value received," Martino has conceded that no legally cognizable consideration passed.[2] Rather, as Martino explained at his deposition, the assignment was made solely to ensure his wife's financial security in the event that he became disabled.[3] Following the assignment, at least some payments on the note were made to Hannelore Martino.
In December of 1986, petitioners served a restraining notice on RHM, subsequently extended by notice served in December of 1987. Pursuant to that notice under CPLR 5222, prohibiting the transfer of any property in which Frank Martino has an interest, RHM is currently holding a total of $102,900 in payments due on the Martino note.
The First Turnover Proceeding
Thereafter, petitioners commenced the two instant turnover proceedings. As noted above, the first was brought against RHM as garnishee to secure the $102,900 in payments owed on the Martino note, in partial satisfaction of their judgment against Frank Martino.
In opposition, RHM and Martino have raised two objections seeking dismissal of the proceeding. First, Martino protests that petitioners failed to acquire personal jurisdiction over him. Further, both RHM and Martino initially urged dismissal for failure to join an indispensible partyMartino's wife, Hannelore. As detailed below, however, the latter objection has since been resolved by RHM's impleading of Hannelore Martino, who has appeared in the proceeding and answered on the merits.
As to the substance of the claim, it is petitioners' view that, applying New York law to the undisputed facts, the assignment of the RHM note to Hannelore Martino is a fraudulent conveyance. Hence, they urge, as a matter of law they are entitled to the proceeds of the note as an asset of judgment debtor Martino. The Martinos argue, in response, that the legal viability of the assignment is governed by Florida law. According to respondents, that law, when applied to the facts of this case, warrants, at a minimum, an evidentiary hearing regarding the validity of the assignment.
DISCUSSION
A. Respondents' Arguments for Dismissal
At the outset, an examination of respondents' preliminary objections regarding lack of personal jurisdiction and failure to join an indispensible party requires an understanding of the rule and statutes governing the proceeding. Those provisions are as follows:
1. The Nature of the Proceeding
Under Rule 69(a), Fed.R.Civ.P., a judgment creditor seeking to enforce a federal judgment is directed to employ, in federal court, the practice and procedure governing execution of judgments of the state in which the federal court sits. The rule provides, in pertinent part:
The procedure on execution, in proceedings supplementary to and in aid of judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in *850 which the district court is held, existing at the time the remedy is sought ...
Among the New York statutory procedures in aid of execution of a judgment are the turnover proceedings provided by CPLR 5225(b) and 5227. CPLR 5225(b) authorizes a "special proceeding" by a judgment creditor to secure an order directing a third party garnishee to turn over to the creditor, in satisfaction of the judgment, "money or other personal property in which a judgment debtor has an interest." CPLR 5227 authorizes an identical proceeding to direct a third party garnishee who "is or will become indebted to the judgment debtor" to pay that debt to the judgment creditor.
The procedural requirements of the two special proceedings are virtually identical. Under CPLR 403(c) and (d), both are commenced by service on the garnishee of a notice of petition and petition or an order to show cause. Further, although the judgment debtor must be notified of the proceeding, he need not be formally designated as a respondent; and notice to him is sufficient if given by registered or certified mail with return receipt requested. CPLR 5225(b) and 5227. The judgment debtor may then seek to intervene in the proceeding if he wishes, as may any "adverse claimant" to the debt or property. Upon such intervention, the proceeding is converted into a plenary test of who is entitled to the disputed debt or property. See CPLR 5239. The Practice Commentary to CPLR 5227 advises that "[if] there is any possibility that the debt is owed to someone other than the judgment debtor, the garnishee must assure that ... any third person claimant is made a party, seeking court leave to interplead them if need be," Siegel, Practice Commentaries on CPLR 5227, C5227:1 at 283 (McKinney 1978), citing CPLR 1006(b), 401. Otherwise, the commentator cautions, the judgment will not be binding on the omitted claimant, "thus subjecting the garnishee to double liability in a future lawsuit by the claimant." Id. at 283-84.
Finally, as to subject matter jurisdiction, the authorities are unanimous that a federal court maintains ancillary jurisdiction to enforce its own judgments, and that, under Rule 69, Fed.R.Civ.P., no independent jurisdictional basis is necessary to commence an enforcement proceeding against a garnishee not a party to the original suit. See, e.g., Skevofilax v. Quigley, 810 F.2d 378, 384 (3d Cir.) (en banc), cert. denied, ___ U.S. ___, 107 S.Ct. 1956, 95 L.Ed.2d 528 (1987) (rejecting argument that federal court must possess an independent basis of subject matter jurisdiction over a garnishee; the Court wrote: "Rule 69 does not contemplate that the holders of federal judgments must resort to state tribunals for their enforcement."); Blackburn Truck Lines, Inc. v. Francis, 723 F.2d 730, 732 (9th Cir.1984) ("`[T]he jurisdiction of a court is not exhausted by the rendition of the judgment, but continues until that judgment is satisfied.... Process subsequent to judgment is as essential to jurisdiction as process antecedent to judgment else the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred by the constitution'", quoting Riggs v. Johnson County, 73 U.S. (6 Wall.) 166, 187, 18 L.Ed. 768 (1867)); Chambers v. Blickle Ford Sales, Inc., 313 F.2d 252, 256 (2d Cir.1963); American Safety Table Co. v. Schreiber & Goldberg, Inc., 320 F.Supp. 603, 604 (S.D. N.Y.1970) (observing that federal courts are vested with ancillary jurisdiction over proceedings to enforce their judgments because "a federal court [has] a vital interest in seeing that [its] judgments are not rendered ineffective by ... misconduct.").
2. Martino's Jurisdictional Objection
The sole jurisdictional complaint advanced in the first proceeding is Frank Martino's claim that, since he is concededly a Florida resident, personal jurisdiction could not be acquired over him by mail service in Florida or service upon his attorney. The short answer to Martino's complaint is that, as the judgment debtor, he is not a necessary party to the proceeding. As indicated above, under both CPLR 5225(b) and 5227, the judgment debtor need not be made a respondent. He must be afforded appropriate notice, but the statute *851 is satisfied if notice is served by registered or certified mail, with return receipt requested. Matter of Ruvolo v. Long Island Railroad Co., 45 Misc.2d 136, 145, 256 N.Y. S.2d 279 (Sup.Ct.Queens Co.1965). Since that requirement was met here, Martino received all the notice he was due. He was thereafter free to intervene to contest the merits of petitioners' claim. While Martino's counsel formally took the position that his appearance was solely for the purpose of contesting jurisdiction, he fully availed himself of the opportunity to address the merits of the case at oral arguments before the Court.
3. The Non-Joinder of Hannelore Martino
Both RHM and Martino initially urged the dismissal of the proceeding for failure to join an indispensible party, Hannelore Martino. Based on the assignment of the note from Martino to his wife, they argued that unless Hannelore Martino was made a party to the proceeding, she would not be bound by the Court's decision, thus subjecting RHM to potential double liability on the note. In advancing the argument they relied, primarily, on Bergdorf Goodman, Inc. v. Marine Midland Bank, 97 Misc.2d 311, 411 N.Y.S.2d 490 (N.Y.Civ.Ct.1978), holding, apparently in the alternative, that a joint tenant in a bank account which is the subject matter of a turnover proceeding is an indispensible party whose non-joinder requires dismissal of the petition.
At the outset, as set forth above, CPLR 5225 and 5227 by their terms do not require a turnover petitioner to join adverse claimants as respondents in the proceeding, but rather expressly contemplate that such adverse claimants may intervene. Hence, the language of the statutes itself casts considerable doubt on the correctness of the Court's reasoning in Bergdorf Goodman. See Matter of Ruvolo v. Long Island Railroad Co., 45 Misc.2d at 146-47, 256 N.Y.S. 2d 279 (adverse claimants are not necessary parties in proceedings under CPLR 5225(b) and 5227; rather, the statutes provide that interested third parties may intervene to assert their claims).
Nonetheless, in light of the Practice Commentary's admonishment that it is the garnishee's responsibility to ensure against potential double liability by joining in the proceeding any adverse claimants to the fund, RHM was directed, at oral argument held November 19, 1987, to implead Hannelore Martino by serving her in Florida, her state of residence, in the same manner as service of a summons in New York, under CPLR 403 and 308.[4] This service was accomplished as directed and Hannelore Martino has since appeared in the proceeding and presented her opposition on the merits. Accordingly, respondents' claim that the proceeding must be dismissed for failure to join an indispensible party is now moot.
B. The Merits of the Proceeding
As noted above, petitioners seek by this proceeding to secure the $102,500 still owed by RHM on the Martino note, in partial satisfaction of their judgment against Martino. The thrust of respondents' opposition is that because Frank Martino assigned the note to his wife, Hannelore, it is no longer a debt belonging to the judgment debtor. Hence, respondents conclude, it cannot be reached by petitioners. Because, as indicated below, the parties are in agreement that, if New York substantive law governs the dispute, petitioners are entitled to relief as a matter of law, the outcome of the proceeding turns on the choice of substantive law to be applied.
1. The Substantive Law
It is uncontroverted that, under New York law, the assignment of the note *852 by Martino to his wife is a fraudulent conveyance that must be treated as a nullity for purposes of this proceeding. Section 273-a of the New York Debtor and Creditor Law ("D.C.L.") provides:
Every conveyance made without fair consideration when the person making it is a defendant in an action for money damages ... is fraudulent as to the plaintiff in that action without regard to the actual intent of the defendant if, after final judgment for the plaintiff, the defendant fails to satisfy the judgment.
Here, of course, Martino was a defendant in the instant suit when he assigned the RHM note to his wife, and it is undisputed that, in return for the assignment, he received no legally cognizable consideration.[5] It is therefore not surprising that Martino has conceded that the assignment was fraudulent under New York law and that, if New York law applies, petitioners are entitled to the relief they seek as a matter of law.[6]
Instead, respondents take the position that the validity of the assignment is governed not by New York law but by Florida law. Under Florida law, unlike New York's D.C.L. § 273-a, a judgment creditor seeking to set aside a conveyance as fraudulent must generally prove fraudulent intent that is, that the judgment debtor made the conveyance with the intent to "delay, hinder or defraud creditors." FLA. STAT. § 56.29(6)(b) (1973). This is so even if, as here, the conveyance is made without consideration during the pendency of the lawsuit.
The Florida statute does provide an exception to the general requirement of proof of fraudulent intent if the judgment debtor conveys property to a relative or another in a confidential relationship within one year prior to the commencement of the judgment execution proceeding. Under such circumstances, the burden shifts to the debtor to establish an absence of intent to "delay, hinder or defraud creditors" by the conveyance. FLA.STAT. § 56.29(6)(a). Here, however, Martino executed the assignment in 1983, nearly four years before this turnover proceeding was commenced. Hence, if Florida law governs the validity of the assignment, petitioners would bear the burden of establishing that Martino made the assignment to his wife with the intent to defraud his creditors.
This burden is not easily met short of an evidentiary hearing. There is substantial authority that issues of intent or state of mind cannot be appropriately decided on a motion for summary judgment. See, e.g., Wakefield v. Northern Telecom, Inc., 813 F.2d 535, 540 (2d Cir.1987) ("Summary judgment is usually inappropriate when ... state of mind is an issue."); United States v. Paladin, 539 F.Supp. 100, 104 (W.D.N.Y. 1982) ("Because actual intent to defraud is a necessary element of a cause of action under ... [particular New York fraudulent conveyance statute], summary judgment is inappropriate with respect thereto."). Here, while much evidence in the record indicates that the assignment was made with actual fraudulent intent, the deposition testimony of Frank Martino proffering an alternative explanation suffices to raise a genuine issue of fact. Hence, unless New York law applies, the merits of the *853 first proceeding cannot be decided summarily and the Martinos are entitled to an evidentiary hearing.
2. Applicable Conflict of Law Principles
On the question of what law applies in testing the validity of the assignment, the initial task is one of characterization. In other words, to select the appropriate principles governing the choice of law, one must first identify the nature of the issue to be determined.
It is the Martinos' perspective that the matter before the Court should be viewed, simply, as a transfer of title to intangible property. Such an issue, they urge, is governed by New York conflict of laws principles for property questions, which direct the application of the law of Florida, the place where the assignment was executed. According to petitioners, however, the issue to be determined is in fact one of fraud or tort. Hence, invoking New York conflict of laws rules applicable to torts, they conclude that the issue is governed by New York law.
A recognition that the issue posed here involves the validity of an assignment of intangible property does not, however, itself resolve the problem. One must also consider the context in which the validity of that assignment is being assessed. Were the controversy here between the parties to the assignmentMr. and Mrs. Martino and if their dispute involved the validity or interpretation of the assignment instrument as it affects their respective property interests in the note, then the issue could reasonably be described as one of intangible property law. In such a case, as urged by the Martinos, the issue would be determined by the conflict of laws rules governing the transfer of intangible property interests. These include, as the Martinos note, a rule that the assignment of intangible property is governed by the law of the place of the assignment. See, e.g., Callwood v. Virgin Islands National Bank, 221 F.2d 770, 774 (3d Cir.1955).[7]
But the dispute here cannot be meaningfully described as one involving title to or property rights in the note as between the parties to the assignment. Rather, the issue is whether that assignment, regardless of its validity in passing property interests to Mrs. Martino, was nonetheless fraudulent as to a third party judgment creditor of Mr. Martino, the assignor. If so, such a defrauded creditor may be entitled to avoid the assignment and secure the asset, whether or not the assignment was otherwise valid as between the immediate parties. In short, because the instant controversy actually concerns not the validity of the assignment in a vacuum but whether that assignment was wrong or fraudulent vis a vis petitioners, it is one of tort law, not property law. Accordingly, it should be determined by conflict of laws principles governing the selection of law in tort cases.
This choice of applicable principles is well-supported by the authorities. In Dearing v. McKinnon Dash & Hardware Co., 165 N.Y. 78, 58 N.E. 773 (1900), the judgment debtor, a Michigan corporation, had executed a trust indenture agreement, valid under Michigan law, transferring to a Michigan trustee certain interests in all of its property, including a number of buggies located in New York. Thereafter, a New York judgment creditor attached those buggies to satisfy its New York judgment. The New York Court of Appeals squarely rejected the argument that the validity of the trust instrument under Michigan law defeated the New York judgment creditor's rights to reach the goods, writing:
Judicial comity does not require us to enforce any clause of the [trust] instrument, *854 which, even if valid under the lex domcilii [Michigan, where the instrument was executed], conflicts with the policy of our state relating to property within its boarders, or impairs the rights or remedies of domestic creditors.... A transfer in another state, although valid there, which would be void as to creditors if made here, does not confer title to personal property situated here that is good as against a resident of this state armed with legal process to collect a debt....
Id. at 87, 58 N.E. 773 (citations omitted).
In Irving Trust Co. v. Maryland Casualty Co., 83 F.2d 168 (2d Cir.), cert. denied, 299 U.S. 571, 57 S.Ct. 34, 81 L.Ed. 421 (1936), Judge Learned Hand, writing for the Second Circuit, reached an analogous result in a case involving a conveyance of real property located in another state. There, a foreign corporation doing business in New York made a preferential transfer of real property located in Missouri; the deed was delivered to the transferee in New York. The transfer was fraudulent under New York law but was valid under the law of Missouri. Judge Hand held that although the transfer was valid under the law of the situs and would therefore be regarded as passing title even in New York, the transaction should be characterized as one in tort. Hence, applying the law of the place of the wrongNew York the grantee was "liable to the grantor's [New York] creditors" despite his "unimpeachable" title. Id. at 171.
More recently, in In Re Lea Fabrics, Inc., 226 F.Supp. 232 (D.N.J.1964), the Court directly addressed the issue of "what law governs the validity as to third parties of assignments and transfers of intangibles." Id. at 236 (emphasis in original). The Court reasoned:
Although the validity of an assignment of intangibles between the assignor and assignee would be governed by the law of the place of the assignment, Callwood v. Virgin Islands National Bank, 3 Cir. 1955, 221 F.2d 770, such a choice of law rule is inappropriate to the determination of the validity of the assignment as to creditors of the assignor or assignee, and the choice of law in such a case depends upon an analysis of each particular situation, Ehrenzweig on Conflict of Laws, 1962, § 242 pp. 636-637.
Id. See also In re O.P.M. Leasing Services, Inc., 40 B.R. 380, 391-95 (Bankr.S.D.N. Y.), aff'd on other grounds, 44 B.R. 1023 (S.D.N.Y.1984) (deeming a fraudulent conveyance a tort in selecting applicable conflict of law principles); Leflar, American Conflicts Law § 185 at 380 n. 6 (3d ed. 1977) (approving "tort characterization" in determining "law governing validity of allegedly fraudulent or preferential transfers and assignments"); Ehrenzweig and Westen, Fraudulent Conveyances in the Conflict of Laws: Easy Cases May Make Bad Law, 66 Mich.L.Rev. 1679, 1689 (1968) ("the conflicts law of torts ... controls ... fraudulent conveyances"); Comment, Choice of Law In Fraudulent Conveyance, 67 Colum.L.Rev. 1313 (1967) (advocating view that "when a conveyance of land is claimed to be a fraud on a judgment creditor," id. at 1313, "the central issue [in determining choice of law] can be most meaningfully described not as one of property law, but as one of tort law." Id. at 1314).
In sum, both logic and authority dictate that the issue presented in this case whether the assignment of the RHM note may be avoided as a fraud on New York creditorsshould be characterized as a tort for purposes of selecting the appropriate New York conflict of laws principles.
3. Application of New York Conflicts Rules Governing Torts
Turning to New York's choice of law rules in tort cases, the New York Court of Appeals, in Babcock v. Jackson, 12 N.Y.2d 473, 240 N.E.2d 743, 191 N.E.2d 279 (1963), announced that it would henceforth abandon the traditional choice of law rule of lex loci delictithat is, the law of the place of the tort, and instead adopt the "center of gravity" or "grouping of contacts theory" that it had previously applied in contract cases. That theory, as formulated in the contract context in Auten v. Auten, 308 N.Y. 155, 160, 124 N.E.2d 99 *855 (1954), no longer "regard[s] as conclusive the parties' intention or the place of making or performance, [but] ... emphasi[zes] rather ... the law of the place which has the most significant contacts with the matter in dispute" (citations omitted). Id. at 161, 124 N.E.2d 99. In Babcock, the Court deemed this "center of gravity" or "grouping of contacts" doctrine "as likewise affording the appropriate approach for accomodating the competing interests in tort cases with multi-state contacts," observing:
Justice, fairness and `the best practical result' may best be achieved by giving controlling effect to the law of the jurisdiction which because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.
12 N.Y.2d at 481, 240 N.Y.S.2d 743, 191 N.E.2d 279. But see Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 699, 405 N.Y.S.2d 441, 376 N.E.2d 914 (1978) (lex loci delicti remains the general rule in tort cases to be displaced only in extraordinary circumstances).
The same approach has been adopted in the Restatement (Second) of Conflict of Laws (1969) (hereafter "Restatement"). Section 145 provides that an issue in tort is to be determined by the law of the state having "the most significant relationship to the occurrence and the parties." In reaching this assessment, a court is instructed to look to enumerated contacts, "according to their relative importance with respect to the particular issue," including:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, ... place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
Restatement, § 145(2). Further, a court is advised to evaluate these contacts in light of stated principles, including the "relevant policies" and "interests" of the forum and other interested states, "the protection of justified expectations," the "policies underlying the particular field of law," and "certainty, predictability and uniformity of result." Restatement, § 6.
Here, as in Babcock, 12 N.Y.2d at 482, 240 N.Y.S.2d 743, 191 N.E.2d 279, "[c]omparison of the relative `contacts' and `interests' of New York and [Florida] in this litigation, vis-a-vis the issue here presented, makes it clear that the concern of New York is unquestionably the greater and more direct and that the interest of [Florida] is at best minimal." The instant action involves the question of whether petitioners, who have secured a New York judgment against a debtor who was previously a New York domiciliary, may set aside the debtor's conveyance to his wife of an asset located in New York which is fraudulent as against petitioners under New York law. As to relevant "contacts" with the forum, New York has been the domicile of the judgment creditors throughout the pertinent time period and, until five years ago, was the domicile of the debtor and his wife, too. New York is also the situs of the disputed asset, RHM's remaining debt under the note, and that asset is now frozen under a New York restraining order. Further, New York is the place where petitioners sustained their injury; it is here that they have been thwarted in their ability to collect their New York judgment.
Beyond this, New York is the state where most of the relevant relationships between the parties are centered. It is the location of the debtor's infringement of petitioners' copyrights, giving rise to their injuries in the first instance. It is also the forum of the lawsuit in which a judgment has been entered against the debtor awarding $1.3 million in damages to petitioners. Finally, New York is the site of the debtor's relationship with RHM, which gave rise, under an agreement executed in New York, to the debt which is the subject of the dispute. In sharp contrast, Florida's sole contacts with the issue presented here are that the judgment debtor and his wife, previously New York residents and domiciliaries, moved there some four years after the commencement of this lawsuit; and the debtor's assignment of the note to his wife was presumably executed in Florida.
*856 Even more importantly, however, New York has an especially strong interest in applying its law when one of its domiciliaries alleges that it has been defrauded, see, e.g., O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194, 205 (2d Cir.), cert. denied, 439 U.S. 1034, 99 S.Ct. 638, 58 L.Ed.2d 696 (1978); Accusystems, Inc. v. Honeywell Information Systems, Inc., 580 F.Supp. 474, 480 (S.D.N.Y.1984), and in ensuring that its judgments are not frustrated by wrongful acts of judgment debtors, regardless of where those acts might occur, see, e.g., Irving Trust Co. v. Maryland Casualty Co., 83 F.2d at 171; Dearing v. McKinnon Dash & Hardware Co., 165 N.Y. at 87, 58 N.E.2d 773. Indeed, the New York legislature's recent enactment of D.C.L. § 273-a attests to an explicit state policy to facilitate the collection of New York judgments against defendants who, during a New York lawsuit, make transfers of their assets that are presumptively fraudulent because made without fair consideration.
By contrast, the Florida statutory scheme does not even address the situation presented herethat is, a debtor's transfer of assets that is concededly made without fair consideration. Rather, the Florida statute places a one year time limit on the presumption of fraudulent intent it accords all conveyances, regardless of consideration, to transferees in a confidential relationship with the judgment debtor. Even assuming that this time limitation suggests some interest on Florida's part in according an added measure of protection to such transferees (by requiring that the judgment creditor prove fraudulent intent), there is no reason to believe that Florida has a legitimate interest in extending this protection to shelter a New York judgment debtor who effects a conveyance within its borders that is fraudulent as to New York creditors because concededly made without consideration. At a minimum, New York's strong interest in preventing such a result overcomes Florida's narrow interest as evidenced by the time limitation on its statutory presumption.
Finally, of course, application of Florida law here would sorely undermine any "certainty and predictability ... of result" in enforcing New York judgments. If the outcome of a New York judgment enforcement proceeding can be dictated by the fortuity that the judgment debtor, by design or coincidence, happens to move to a state less protective of its own judgment creditors than is New York, there can be no certainty or predictability in the enforcement of New York judgments. Thus, an examination of the relevant contacts and policies under a "center of gravity" analysis overwhelmingly favors the law of New York as governing the issue here.
Applying the traditional tort principles of lex loci delicti leads to the identical result. The authorities are unanimous that in fraud cases where the wrongful acts occur in a state other than that in which the injury is suffered, the case is governed by the law of the state where the injury or economic loss is felt. See, e.g., Industrial Consultants, Inc. v. H.S. Equities, Inc., 646 F.2d 746 (2d Cir.), cert. denied, 454 U.S. 838, 102 S.Ct. 145, 70 L.Ed.2d 120 (1981); Sack v. Low, 478 F.2d 360 (2d Cir. 1973); Maiden v. Biehl, 582 F.Supp. 1209 (S.D.N.Y.1984); Posner v. Merrill Lynch, Pierce, Fenner & Smith, 469 F.Supp. 972, 979-80 (S.D.N.Y.1979). Here, of course, petitioners' injurytheir inability to collect their New York judgmentis felt in New York. Hence, under this theory too, New York law applies.[8]
*857 4. Petitioners' Entitlement to Summary Judgment
Finally, as noted, once New York law is applied to Martino's assignment to his wife of the RHM note, it is undisputed that the assignment was fraudulent as to petitioners under D.C.L. § 273-a. Accordingly, as a matter of law they are entitled to avoid the assignment and collect the proceeds of the note to satisfy, in part, their judgment against Martino.[9]
CONCLUSION
For the foregoing reasons, I recommend that judgment be entered directing RHM to turn over to petitioners money presently owed and to become owed by RHM to judgment debtor Frank Martino under the July 16, 1982 note.[10]
ANY OBJECTIONS to this Report and Recommendation must be filed with the Clerk of Court within ten (10) days of receipt of this notice. Failure to file objections within the specified time waives the right to appeal the District Court's order.
Dated: Brooklyn, New York
February 5, 1988
NOTES
[1] When the Court entered judgment against defendants George Tucker and Super-Dupers, Inc. on June 30, 1983, the action against Martino and Ramart was severed and proceeded separately.
[2] This concession was made by Martino's counsel at oral argument held November 19, 1987.
[3] See Deposition of Frank Martino, Sr., of April 6, 1987, pp. 61-64.
[4] Such out-of-state service sufficed to join Hannelore Martino as a third party respondent because turnover proceedings under CPLR 5225(b) and 5227 are in fact actions in rem. See CPLR 314(2), providing for "[s]ervice ... without the state ... in the same manner as service is made within the state ... where a judgment is demanded that the person to be served be excluded from a vested or contingent interest in ... specific ... personal property within the state ..." See also Staklinski v. General Electric Co., 27 Misc.2d 1084, 210 N.Y.S.2d 573 (Sup.Ct. N.Y.Co.1960).
[5] Martino acknowledged in his deposition that no money or property changed hands, nor was the assignment in satisfaction of any antecedent debt. His proffered reason for the assignment that he wished to provide for his wife who had cared for him during his illnessfails to establish fair consideration as a matter of law. See, e.g., Marine Midland Bank v. Murkoff, 120 A.D.2d 122, 125, 508 N.Y.S.2d 17 (2d Dept.1986) (affirming summary judgment under § 273 where husband conveyed property because of his "ill health and his long-standing promise to his wife's father to convey his interest [in their home] to her once the mortgage had been satisfied"); Duckstein v. Rosa, 118 A.D.2d 951, 499 N.Y.S.2d 515 (3d Dept.1986) (husband's promise to give home to wife when mortgage was paid did not constitute fair consideration); Rush v. Rush, 19 A.D.2d 846, 244 N.Y.S.2d 673 (2d Dept. 1963) ("love and affection" and wife's promise to provide for husband's young daughter by a previous marriage not fair consideration); Corbin v. Litke, 105 Misc.2d 94, 96-97, 431 N.Y.S.2d 800 (Sup.Ct. Suffolk Co.1980) (wife's attempt to resolve marital dispute and agreement to continue living with husband not fair consideration).
[6] This concession was made during oral argument held November 19, 1987.
[7] A second rule the Martinos invokethat the assignment is governed by the law of the situs of the debtis simply misapplied by them. Contrary to their contention, the situs of a debt does not follow the creditor but remains with the debtor. See, e.g., Intermeat, Inc. v. American Poultry, Inc., 575 F.2d 1017 (2d Cir.1978); Beck v. Manufacturers Hanover Trust Co., 125 Misc.2d 771, 481 N.Y.S.2d 211 (Sup.Ct.N.Y.Co. 1984). Since RHM, the debtor on the Martino note, is a New York corporation with its offices in New York, the situs of the debt is here in New York. Hence, were this rule applicable to the instant dispute, New York law would govern.
[8] Even analyzing the issue by reference to the principles invoked by the Martinos, New York law would govern. As noted above (at n. 7), under the rule that the validity of a conveyance of intangible property, including a debt, is governed by the law of the state where the property is situated, New York law applies. The Martinos have also cited the rule that the validity of the assignment of an intangible is governed by the place of the assignmenthere, presumably in Florida. See, e.g., Callwood v. Virgin Islands National Bank, 221 F.2d at 774. It is recognized, however, that if the situs of the property here, New York, where RHM holds the asset has a greater interest, its law may control. In Re Liebl's Estate, 201 Misc. 1102, 1106, 106 N.Y. S.2d 715 (Sur.Ct. Kings Co.1951) ("The general rule that the transfer of a chose in action is governed by the law where the transfer is made is not without exceptions ..., and where the property is located in another state, such transfer is not valid in that other state if the transfer conflicts with the interest of that state and its citizens." (citations omitted)).
[9] A final issue, apparently raised at oral argument before Judge Dearie, concerns the choice of statute of limitations governing this proceeding. The law is clear that New York uniformly applies its own limitations period unless the cause of action accrued outside of the state in favor of a non-resident. Arneil v. Ramsey, 550 F.2d 774, 779 (2d Cir.1977); Gross v. Diversified Mortgage Investors, 438 F.Supp. 190, 197 (S.D.N. Y.1977); 1 Weinstein-Korn-Miller, New York Civil Practice ¶ 202.01 (1986); CPLR 202. Here, since the cause of action accrued in New York, see Industrial Consultants, Inc. v. H.S. Equities, Inc., 646 F.2d at 747, in favor of a New York resident, New York's six year limitations period controls. Petitioners are well within it. See Federal Deposit Insurance Corp. v. Pappadio, 606 F.Supp. 631, 632 (E.D.N.Y.1985); Buttles v. Smith, 281 N.Y. 226, 236-37, 22 N.E.2d 350 (1939); CPLR 213(1).
[10] Respondents have sought sanctions against petitioners' counsel for failure to disclose the assignment of funds in his moving papers. Given petitioners' good-faith, and correct, position that the assignment was fraudulent and a nullity, and in the absence of any indication of willfulness or bad faith on counsel's part, I recommend that the request be denied. See Eastway Construction Corp. v. City of New York, 762 F.2d 243 (2d Cir.1985).
| {
"pile_set_name": "FreeLaw"
} |
(2008)
Dr. Stephen H. CHRISTENSEN, D.D.S., Plaintiff,
v.
METROPOLITAN LIFE INSURANCE COMPANY (TNE/MET), Successor in Interest by Merger to New England Mutual Life Insurance Company, Defendant.
Civ. No. 06-4319 (JNE/JJG).
United States District Court, D. Minnesota.
February 22, 2008.
ORDER
JOAN N. ERICKSEN, District Judge.
This is an action for declaratory relief and damages brought by Dr. Stephen H. Christensen, D.D.S., against Metropolitan Life Insurance Company (Met Life), successor in interest by merger to New England Mutual Life Insurance Company (New England). Christensen seeks a declaration that he is entitled to lifetime disability income benefits under a disability insurance policy he purchased from New England and damages for breach of contract, breach of covenant of good faith and fair dealing, violations of state consumer protection statutes, and misrepresentation. The case is before the Court on crossmotions for summary judgment. For the reasons set forth below, Met Life's motion is granted in part and denied in part and Christensen's motion is denied.
I. BACKGROUND
Stephen Christensen practiced restorative dentistry as a Prosthodontist for over thirty-five years. In September 1988, Christensen purchased Disability Income Policy # D139393 (the Policy) from New England. The Policy provides "monthly income benefits for total disability of the insured." Section 1 of the Policy is central to the parties' motions and is reproduced in its entirety in Figure 1.
Figure 1
Section 2 of the Policy, includes the following provision: The Contract
The Contract
The Policy, which includes the attached Application, is the entire contract between you and the Company. All Riders are listed in Section 1. No change in or waiver of the provisions of the Policy is valid unless the change or waiver is signed by the President or the Secretary of the Company.
The Policy includes a single-page document titled "Rider: Lifetime Disability Income after Age 65" (LDI Rider). The parties dispute whether the LDI Rider is part of the Policy. The LDI Rider states in part:
The Company agrees to pay monthly income benefits to the Owner for a Total Disability of the Insured which continues beyond the Maximum Period for Benefits: ...
Which results from a sickness and which started before the policy anniversary on or next following the 60th birthday of the Insured.
The LDI Rider also contains the following provision:
Contract
A copy of the application for this Rider is attached to and made a part of the Rider. This Rider is made a part of the Policy to which it is attached if the Rider is listed in the Policy Schedule.
In May 2002, Christensen was diagnosed with a brain tumor. He was sixty-one years old. Following surgery to remove the tumor, Christensen was unable to return to his dental practice. He applied for disability income benefits under the Policy and began receiving $5,000 per month in September 2002.
On September 23, 2002, Met Life Lead Customer Service Representative Janice King sent a letter to Christensen's attorney detailing Christensen's disability insurance coverage under the Policy. King's letter stated the following:
His Disability Income coverage is as follows:[the Policy] pays a monthly benefit of $5,000. The waiting period is 90 days and the benefit period goes to the policy anniversary date after age 65. (There was a lifetime rider on this policy, but in order for it to apply, the disability must begin prior to the policy anniversary on or next following the sixtieth birthday of the insured. That date was 11/10/01).
In November 2002, King provided verification of the amount and duration of Christensen's disability income benefits under the Policy to two financial institutions in connection with Christensen's mortgage refinancing activities. On both occasions, King indicated that Christensen's disability income benefits were payable at $5,000 per month "to age 65."
The following year, Christensen again requested a verification of disability income benefits from King in connection with refinancing activities. King's verification letter, dated August 11, 2003, stated that "[the Policy] provides monthly benefits of $5,000 per month after a waiting period of 90 days. Benefits will continue for your lifetime." On December 23, 2003, King sent another income verification letter to Christensen stating benefits under the policy were "$5,000 per month for Lifetime." Christensen asked his insurance representative, Gregory Davis, to verify and confirm the information in King's letter. Davis's assistant, Mary Capra, contacted Met Life by telephone. According to Capra, customer service representative Jane Hunt verified that Christensen's disability income benefits would continue for his lifetime if his disability continued. Met Life disputes Capra's account and Hunt testified at her deposition that she does not recall offering any such opinion about Christensen's benefits under the Policy.
In April 2006, Met Life sent Christensen a letter advising him that his monthly disability payments would terminate on the policy anniversary following his 65th birthday pursuant to the terms in the Policy. Met Life discontinued the payments in November 2006. Christensen subsequently brought this action against Met Life claiming he is entitled to lifetime disability income benefits under the Policy and that Met Life wrongfully discontinued payments of those benefits. Met Life asserts that the Policy provides disability income benefits to age 65, and only conditionally provides lifetime disability income benefits pursuant to the terms of the LDI Rider. Met Life asserts Christensen does not qualify for lifetime benefits under the terms of the LDI Rider. Each party now seeks summary judgment on all claims.
II. DISCUSSION
Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The movant "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant satisfies its burden, the party opposing the motion must respond by submitting evidentiary materials that "set out specific facts showing a genuine issue for trial." Fed.R.Civ.P. 56(e)(2); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A. Construction of the Policy language
The parties disagree about the proper construction of the Policy's language. Met Life argues that the plain language of the Policy unambiguously provides lifetime disability income benefits pursuant to the terms of the LDI Rider. Christensen contends the LDI Rider is not part of the Policy. Christensen argues that the Policy language unambiguously provides disability income benefits for his lifetime without regard to any rider, and asserts that he paid an additional premium under the Policy in exchange for an extension of the maximum period for benefits to include monthly disability income payments for his lifetime.[1]
The Court applies general contract principles when construing the language of an insurance policy. See Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn.1998).[2] In construing an insurance contract, the policy must be considered as a whole. See Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn.1986). If a contract is clear and unambiguous, then the language is given its plain and ordinary meaning. Id. However, if the policy is, by its language alone, susceptible to more than one reasonable interpretation, it is ambiguous. See Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 34 (Minn.1979); ICC Leasing Corp. v. Midwestern Mack Co., 257 N.W.2d 551, 554 (Minn.1977). Whether the language of an insurance policy is ambiguous is a question of law. Columbia Heights Motors, 275 N.W.2d at 34. Here, the Court concludes that when the Policy is considered as a whole, the term "listed" in Section 2 and in the LDI Rider is susceptible to more than one reasonable interpretation.
On the one hand, Section 1 of the Policy identifies the names of three separate disability income benefits provided under the Policy. Two of these names correspond to the names of riders that are available for purchase and the documents describing the terms and conditions of these riders are included at the end of the general policy documents. In addition, Christensen's policy application includes a check mark next to the item "Rider: Lifetime Disability Benefit" and a check mark next to "Other," which is then defined as "Proportionate Disability Income Rider" (PDI Rider). A reasonable construction of the term "listed" in Section 2 and in the LDI Rider is "to give the names" or "to set forth a series of names," such that the LDI Rider and the PDI Rider are "listed" in the Schedule of Benefits in Section 1 of the Policy and apply to Christensen's disability income claims.
Alternatively, in Section 1, the Policy Schedule, the term "See Rider" is included in the entry for proportionate disability income benefits. There is no such designation in the entry for lifetime disability income after age 65. Due to the difference in these designations, a reasonable construction of the term "listed" in Section 2 and in the LDI Rider is "enumerated as a rider" or "identified as a rider" such that the PDI Rider is a listed rider in the Schedule of Benefits but the LDI Rider is not. Under this construction, the LDI Rider does not apply to Christensen's disability claims. Rather, lifetime benefits are payable under the terms of the Policy in exchange for payment of the LDI premium identified in the Schedule of Annual Premiums portion of Section 1.[3]
While the Court does not consider extrinsic evidence when determining if a contract is ambiguous, see In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 498 (Minn.1995), because the Court has found that the language of the Policy is ambiguous, extrinsic evidence can be considered to determine the intent of the parties and clarify the ambiguity. See Wessman v. Mass. Mut. Life Ins. Co., 929 F.2d 402, 407 (8th Cir.1991); Nord v. Herreid, 305 N.W.2d 337, 340 (Minn.1981); ICC Leasing Corp. v. Midwestern Mack Co., 257 N.W.2d 551, 554 (Minn.1977). The construction and effect of a contract are questions of law for the court, but "where ambiguity exists, and construction depends upon extrinsic evidence, the proper construction is a question of fact for the jury." Lewis v. Equitable Life Assur. Soc. of the U.S., 389 N.W.2d 876, 884 (Minn. 1986) (citing Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn.1979)).
The extrinsic evidence in this case is not conclusive as to the parties' intent and instead raises issues of fact regarding the proper construction of the Policy language regarding the availability of lifetime disability income benefits. While the Policy application, which is signed by Christensen, includes a request for the inclusion of the LDI Rider, Christensen testified at his deposition that his insurance representative, Barry Effress, filled out the Policy application and then provided it to Christensen for signature.[4] According to Christensen, at the time he purchased the Policy in 1988, he understood the Policy to provide lifetime income benefits if he became disabled regardless of the time that he became disabled. See ICC Leasing, 257 N.W.2d at 554 (consideration of the parties' conversations and conduct during preliminary negotiations proper to aid in the construction of ambiguous contract).
Evidence of the subsequent conduct of Met Life's customer service representatives raise uncertainty about Met Life's intent in issuing the Policy to Christensen in exchange for his payment of the premiums identified in the Policy Schedule. See Wessman, 929 F.2d at 407 (where parties to a contract have given it a practical construction by their conduct, as by acts in performance thereof, such construction may be considered by the court in determining its meaning and in ascertaining the mutual intent of the parties) (citations omitted); O'Connell v. Ward, 130 Minn. 443, 153 N.W. 865, 866 (1915) (consideration of surrounding circumstances for the purposes of determining intent and meaning of ambiguous language of a contract proper). For example, over the course of several years, Met Life Lead Customer Service Representative Janice King provided contradictory interpretations of benefits provided under the Policy. King represented that lifetime disability income benefits were unavailable to Christensen under the terms of the LDI Rider. King subsequently represented that the lifetime income benefits would be paid pursuant to the terms of the Policy without making any reference to the LDI Rider. King testified that she would have consulted the Schedule of Benefits in Section 1 when she provided the benefit verifications to Christensen, and the Court has already determined that ambiguous Policy language is susceptible to more than one reasonable interpretation of the Schedule of Benefits. Although King testified that she made a mistake in 2003 when she twice indicated that the Policy would pay Christensen disability income benefits for his lifetime, King's representations raise an issue of fact as to the intent of the parties regarding the availability of lifetime disability income benefits under the Policy.
In addition, Mary Capra's deposition testimony indicates that she received telephonic verification of Christensen's lifetime disability income benefits from customer service representative June Hunt on August 13, 2003. Hunt testified that she does not recall providing verification of Christensen's lifetime disability income benefits to Capra and that she would have declined to respond to such an inquiry.
Finally, Met Life's internal documents indicate that on March 5, 2004, the administration of Christensen's disability income claim was referred to the "extended duration unit." The referral form, which bears the signature of Janice King, states that the reason for the referral as "condition unlikely to change, age of insured." The form also indicates that that the Policy currently provides benefits in the amount of "$5,000 base" and provides a "Max Ben Date" of "lifetime." A notation in the margin indicates that on November 10, 2006, "base ends. Life begins." From this extrinsic evidence of the circumstances surrounding the application for the Policy and its subsequent implementation and administration by Met Life, the Court concludes that the proper construction of the ambiguous language of the Policy is a question of fact for a jury. See Lewis, 389 N.W.2d at 884.
B. Claim for declaratory judgment for breach of contract and breach of covenant of good faith and fair dealing and damages
To obtain declaratory judgment in his favor on his breach-of-contract and breach of covenant of good faith and fair dealing claims, Christensen must first show that a contract was formed by the acceptance of a specific and definite offer that was supported by consideration, that he has performed any conditions precedent, and that Met Life failed to perform according to the terms of the contract. See Commercial Assocs., Inc. v. Work Connection, Inc., 712 N.W.2d 772, 782 (Minn.Ct.App.2006). To recover damages for a breach of contract Christensen must prove that Met Life's breach caused his damages. Nguyen v. Control Data Corp., 401 N.W.2d 101, 105 (Minn.Ct.App.1987).
Here, Christensen's claim for a declaration and for damages regarding Met Life's alleged breach of contract and breach of covenant of good faith and fair dealing cannot be resolved until after a determination has been made regarding the proper construction of the terms of the Policy.[5] The language of the Policy regarding the availability of lifetime disability income benefits and the applicability of the LDI Rider is ambiguous and the extrinsic evidence in the record is inconclusive as to the proper construction of the Policy.[6] Therefore, whether Met Life has failed to perform under the Policy remains an unresolved issue of material fact. Consequently, summary judgment in favor of either party is unwarranted on Christensen's claim for declaratory judgment and damages for breach of contract and breach of covenant of good faith and fair dealing.[7]
C. Claims for violations of Minnesota consumer protection statutes
Christensen claims that Met Life violated Minnesota's Prevention of Consumer FraudAct, Minn.Stat. §§ 325F.68-.70 (2006).Section 325F.69 of that Act provides, in relevant part:
The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable....
Minn.Stat. § 325F.69, subd. 1 (2006).[8]
Christensen also alleges that Met Life violated Minnesota's Uniform Deceptive Trade Practices Act, Minn.Stat. § 325D.43-.48 (2006). The Uniform Deceptive Trade Practices Act lists a variety of ways in which one engages in a deceptive trade practice in the course of business, including "(5) represent[ing] that ... goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have; ... [or] (13) engag[ing] in any other conduct which similarly creates a likelihood of confusion or of misunderstanding." Minn.Stat. § 325D.44, subd. 1(5), (13) (2006).
In support of these claims, Christensen relies upon his allegations of false, misleading, and deceptive statements by Met Life's agents regarding the availability of lifetime disability income benefits under the Policy. Met Life asserts Christensen's statutory fraud claims fail as a matter of law because the alleged false, misleading, or deceptive statements can be found to be so only through an unreasonable interpretation of the unambiguous language of the Policy and LDI Rider. The Court has already concluded that the proper construction of the Policy regarding the availability of lifetime disability income benefits is a factual issue to be decided by a jury. It follows that the issue of whether any alleged statements by Met Life regarding the availability of lifetime benefits were actually false, misleading, or deceptive misrepresentations of lifetime benefits available under the Policy, or statements likely to create confusion or misunderstanding about those benefits is also an issue of fact. Accordingly, summary judgment in favor of either party on Christensen's statutory claims is unwarranted.
D. Claims for negligent and reckless misrepresentation
Negligent misrepresentation may occur if a person, having a pecuniary interest in a transaction, supplies false information for the guidance of others in connection with the transaction and "fails to exercise reasonable care or competence in obtaining or communicating the information." Colangelo v. Norwest Mortg., Inc., 598 N.W.2d 14, 19 (Minn.Ct.App. 1999) (quoting Bonhiver v. Graff, 311 Minn. 111, 248 N.W.2d 291, 298 (1976)). Reckless misrepresentation occurs when "a misrepresenter speaks positively and without qualification, but either is conscious of ignorance of the truth, or realizes that the information on which he or she relies is not adequate or dependable enough to support such a positive, unqualified assertion." Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn.1986). Both torts require, at a minimum, a misrepresentation. See Williams v. Tweed, 520 N.W.2d 515, 517 (Minn.Ct.App.1994) (citing Florenzano, 387 N.W.2d at 177-78 n. 2, 3, 5 (Simonett, J., concurring)).
Once again, Christensen point to allegedly false statements made by Met Life's agents regarding the availability of disability income benefits for his lifetime under the Policy. Met Life reasserts its contentions that no false or misleading statements were made given the unambiguous language of the Policy. It is undisputed that Met Life's customer service representative Janice King informed Christensen that he was eligible to receive disability income benefits under the Policy for the duration of his life. For the reasons already stated, the issue of whether or not this information constitutes false or misleading representations of the availability of lifetime disability income benefits under the Policy is an issue of fact for a jury. Thus, summary judgment in favor of either party on Christensen's misrepresentation claims is inappropriate.
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. Metropolitan Life Insurance Company's motion for summary judgment [Docket No. 18] is GRANTED AS TO COUNT V AND DENIED AS TO COUNTS I, III, IV, VI, VII and VIII.
2. Count II of the Complaint is DISMISSED.
3. Count V of the Complaint is DISMISSED WITH PREJUDICE.
4. Stephen H. Christensen's motion for summary judgment [Docket No. 28] is DENIED.
NOTES
[1] Christensen alternatively argues that if the Court determines that the LDI Rider applies to the Policy, he is still entitled to lifetime disability income because the sickness that led to his disability began at a time when he was eligible for benefits under the terms of the LDI Rider.
The alternative claim lacks merit. The language of the LDI Rider is unambiguous and, if applicable, disqualifies Christensen for lifetime disability income benefits given the date of onset of his disability. See Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn.1986). Accordingly, summary judgment is granted to Met Life on Christensen's claim seeking a declaration that Met Life breached the terms of the LDI Rider (Count V).
[2] There is no dispute that Minnesota substantive law governs the Policy at issue here. See Wessman v. Mass. Mut. Life Ins. Co., 929 F.2d 402, 404 (8th Cir.1991).
[3] The Schedule of Annual Premiums section of the Policy Schedule is also ambiguous as it does not indicate whether the $1,097 annual premium for "LDI" represents payment for benefits under the LDI Rider or payment in exchange for the continuation of disability income benefits for Christensen's lifetime.
[4] According to the parties, Mr. Effress is deceased.
[5] Under Minnesota law, the implied covenant of good faith and fair dealing does not extend to actions beyond the scope of the underlying contract. See In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d at 503.
[6] This distinguishes the instant case from the cases cited by Met Life as those cases involve unambiguous contract language. See, e.g., Syverson v. FirePond, Inc., 383 F.3d 745, 749 (8th Cir.2004); Employers Mut. Cas. Co. v. Wendland & Utz, Ltd., 351 F.3d 890, 895 (8th Cir.2003); Anderson v. Minn. Ins. Guar. Assoc., 534 N.W.2d 706, 709 (Minn. 1995).
[7] The Court construes Christensen's equitable and promissory estoppel claim (Count II) as an alternative theory of recovery under his breach of contract claim. See Complaint at ¶ 56 ("In the event Dr. Christensen is not allowed to receive LDI Benefits after age 65, he is entitled to the damages that he suffered as a direct and proximate result of the promises made by Defendant and upon which he relied to his detriment."). This theory of recovery is inapposite in this case. Should the jury conclude the LDI Rider is not "listed" in Section 1 of the Policy, Christensen would be entitled to damages pursuant to his breach of contract claims. Should the jury conclude the LDI Rider applies to the Policy, Christensen would not be entitled to lifetime benefits under the Policy and could not then invoke the doctrine of estoppel in an attempt to obtain lifetime benefits because "[t]he doctrine of estoppel may not be used to enlarge the coverage of an insurance policy." Shannon v. Great Am. Ins., 276 N.W.2d 77, 78 (Minn. 1979); see, e.g., Cont'l Cas. Co. v. Advance Terrazzo & Tile Co., 462 F.3d 1002, 1010 (8th Cir.2006); Minn. Commercial Ry. Co. v. Gen. Star Indem. Co., 408 F.3d 1061, 1063 (8th Cir.2005); Alwes v. Hartford Life & Accident Ins. Co., 372 N.W.2d 376, 379 (Minn.Ct.App. 1985) ("The Shannon principle intends to prevent insured persons from `creating' coverage which does not exist.").
[8] The term "merchandise" has been interpreted to include insurance policies. See Force v. ITT Hartford Life & Annuity Ins. Co., 4 F.Supp.2d 843, 859 (D.Minn. 1998).
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Case: 12-51075 Document: 00512340315 Page: 1 Date Filed: 08/13/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 13, 2013
No. 12-51075
Summary Calendar Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
RODNEY HARRISON, also known as Black Boy, also known as Rodney Elvy
Harrison,
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:12-CR-464-1
Before WIENER, OWEN, and HAYNES, Circuit Judges.
PER CURIAM:*
Rodney Harrison pleaded guilty to conspiracy to possess with intent to
distribute more than 28 grams of cocaine base in violation of 21 U.S.C. § 846,
and he was sentenced to 120 months of imprisonment and four years of
supervised release. Harrison pleaded guilty pursuant to a plea agreement in
which he waived the right to appeal his sentence.
*
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: 12-51075 Document: 00512340315 Page: 2 Date Filed: 08/13/2013
No. 12-51075
Harrison argues that the Government breached its plea agreement when
the United States Probation Officer applied the career offender enhancement in
U.S.S.G. § 4B1.1, thereby, in his view, failing to provide the required notice that
it intended to seek an increased mandatory minimum sentence under 21 U.S.C.
§ 851. He contends that prior to his guilty plea, the Government wrote to his
attorney and explained that it would agree not to seek an adjustment based on
the career offender enhancement, contingent upon Harrison’s agreement to
plead guilty.
The Government contends that nothing in the plea agreement addressed
whether Harrison would receive a career offender enhancement under the
Sentencing Guidelines. The Government argues that Harrison is confusing a
statutory sentence enhancement under §§ 841 and 851 with the career-offender
guideline enhancement under § 4B1.1.
Although Harrison waived his right to appeal his sentence in his plea
agreement, we have held that “an alleged breach of a plea agreement may be
raised despite a waiver provision.” United States v. Roberts, 624 F.3d 241, 244
(5th Cir. 2010) (citing United States v. Keresztury, 293 F.3d 750, 755-57 (5th Cir.
2002). As a general rule, whether the Government breached a plea agreement
is a question of law subject to de novo review, but in this case our review is
limited to plain error because Harrison did not raise the breach issue in the
district court. See United States v. Reeves, 255 F.3d 208, 210 (5th Cir. 2001). To
prevail on plain error review, Harrison must show that an error occurred, that
the error was clear or obvious, and that the error affected his substantial rights.
Puckett v. United States, 556 U.S. 129, 135 (2009). In those circumstances, we
still must determine whether to exercise discretion to correct the error. United
States v. Escalante-Reyes, 689 F.3d 415, 425 (5th Cir. 2012)(en banc).
In determining whether the Government has breached a plea agreement,
we examine whether the Government’s conduct is consistent with the
defendant’s reasonable understanding of the agreement. United States v.
2
Case: 12-51075 Document: 00512340315 Page: 3 Date Filed: 08/13/2013
No. 12-51075
Pizzolato, 655 F.3d 403, 409 (5th Cir. 2011), cert. denied, 132 S. Ct. 1126 (2012).
The defendant has the burden of establishing the facts showing a breach. Id.
Although it is not part of the written plea agreement, the Government
agreed in e-mail correspondence with Harrison’s counsel that although “the
government has the option of filing a notice of enhancement pursuant to 21
U.S.C. section 851, in which case the statutory mandatory minimum sentence
would be increased from 5 years to 10 years, and the term of supervised release
would be increased from 4 to 8 years” the Government would “agree not to file
a notice of enhancement if your client pleads promptly, i.e. before the next Ellis
deadline.” The correspondence did not mention the career offender enhancement
under the Sentencing Guidelines in § 4B1.1.
The record shows that the Government complied with its agreement not
to seek a statutory sentence enhancement under § 851. The Government
correctly argues that a statutory sentence enhancement under § 841(b) and § 851
is different from a career offender sentence enhancement under § 4B1.1 of the
Guidelines. Harrison’s sentence was enhanced under § 4B1.1, not § 841(b), and
he therefore was not entitled to notice under § 851. See United States v.
Marshall, 910 F.2d 1241, 1245 (5th Cir. 1990). Harrison “could not have
reasonably understood the plea agreement” as prohibiting the career offender
enhancement. See Pizzolato, 655 F.3d at 410. Harrison has not demonstrated
plain error in the application of the career offender guideline under his plea
agreement. See Reeves, 255 F.3d at 210. We therefore do not need to address
Harrison’s argument about whether the inclusion of the career-offender
enhancement in the Pre-Sentence Report at the direction of the United States
Probation Office could qualify as a “Government breach.”
The Government argues that Harrison’s appeal waiver should be enforced
and his appeal should be dismissed. Harrison has the right to appeal in order
to challenge his appeal waiver on grounds of breach of the plea agreement by the
Government. See Roberts, 624 F.3d at 244. However, having determined that
3
Case: 12-51075 Document: 00512340315 Page: 4 Date Filed: 08/13/2013
No. 12-51075
the Government did not breach the plea agreement, Harrison may not appeal his
sentence. See Keresztury, 293 F.3d at 756-57 (distinguishing issue of breach of
plea agreement from sentencing issue); Pizzolato, 655 F.3d at 411-12
(determining that Government did not breach the plea agreement and that the
appeal waiver thus applied to the sentencing challenge).
Although Harrison does not clearly delineate a sentencing issue separate
from his argument that the Government breached the plea agreement, he does
argue that the career offender enhancement was improper and that the district
court lacked the authority to enhance his sentence based upon a prior conviction
because the Government failed to comply with the notice procedures of § 851.
He asks that his case be remanded to the district court for a new sentence.
Because the Government did not breach the plea agreement, the appeal
waiver is enforced to preclude consideration of this sentencing issue. However,
because Harrison had the right to appeal to challenge the appeal waiver in the
plea agreement based on a breach, we do not dismiss the appeal, but we affirm
his sentence. See Roberts, 624 F.3d at 244; Pizzolato, 655 F.3d at 412.
AFFIRMED.
4
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ACCEPTED
FILED 13-15-00086-CR
IN THE 13TH COURT OF APPEALS THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI CORPUS CHRISTI, TEXAS
12/10/2015 11:06:57 PM
12/10/15 Dorian E. Ramirez
CLERK
DORIAN E. RAMIREZ, CLERK
BY DTELLO
No. 13-15-00086-CR
RECEIVED IN
In The 13th COURT OF APPEALS
CORPUS CHRISTI/EDINBURG, TEXAS
Court of Appeals
12/10/2015 11:06:57 PM
For The
DORIAN E. RAMIREZ
Thirteenth District of Texas Clerk
THEODORE ENDTER,
Appellant,
v.
THE STATE OF TEXAS,
Appellee.
On Appeal From the 117th Judicial District Court
Cause No. 14-CR-0637-B
Nueces County, Texas
BRIEF FOR APPELLANT
The Pastrano Law Firm, P.C.
E. Chevo Pastrano
State Bar No.: 24037240
202 Travis Street, Suite 307
Houston, Texas 77002
Telephone: 713.222.1100
Facsimile: 832.218.7114
[email protected]
Counsel for Appellant
ORAL ARGUMENT REQUESTED.
Identity of Parties and Counsel
The undersigned counsel of record certifies that the following is a complete list of
all parties to the trial court’s judgment and a complete list of the names and addresses of
all trial and appellate counsel:
Mr. Brent de la Paz
214 Dwyer Avenue, Suite 315
San Antonio, Texas 78204
Telephone: 210.229.1311
Facsimile: 210.227.0685
Trial Counsel for Appellant, Theodore Endter
Mr. E. Chevo Pastrano
Mrs. Ginna G. Pastrano
The Pastrano Law Firm, P.C.
202 Travis Street, Suite 307
Houston, Texas 77002
Telephone: 713.222.1100
Facsimile: 832.218.7114
Appellate Counsel for Appellant, Theodore Endter
Mr. Mark Skurka
Nueces County District Attorney
901 Leopard Street, Room 206
Corpus Christi, Texas 78401
Telephone: 361.888.0410
Facsimile: 361.888.0700
Trial and Appellate Counsel for Appellee, The State of Texas.
ii
Table of Contents
Page(s)
Index of Authorities ..................................................................................................iv
Statement of the Case ................................................................................................ 1
Issue Presented .......................................................................................................... 1
Statement of Facts ..................................................................................................... 1
Summary of Argument .............................................................................................. 3
Point of Error Number One ....................................................................................... 4
The trial judge erred in denying Appellant’s motion to suppress
evidence obtained pursuant to an illegal vehicle stop.
Prayer ....................................................................................................................... 14
Certificate of Service ............................................................................................... 15
Certificate of Compliance........................................................................................ 15
iii
Index of Authorities
United States Constitution
U.S. CONST. amend. IV ........................................................................................... 4
U.S. CONST. amend. XIV ........................................................................................ 4
United States Supreme Court Cases
Mapp v. Ohio,
367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961)........................................... 4
Terry v. Ohio,
392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968)..................................... 5-6, 11
Texas Cases
Cornejo v. State,
917 S.W.2d 480 (Tex.App.—Houston [14th Dist.] 1996, pet. ref’d) ................ 8-9
State v. Griffey,
241 S.W.3d 700 (Tex.App.—Austin 2007, pet. ref’d) ............................... 3, 6-13
Stewart v. State,
22 S.W.3d 646 (Tex.App.—Austin 2000, pet. ref’d) ..................... 7-8, 10, 11, 12
Wright v. State,
18 S.W.3d 245 (Tex.App.—Austin 2000, pet. ref’d) ..................................... 4, 13
iv
Statement of the Case
Appellant was charged by indictment with the felony offense of driving
while intoxicated. (CR 5-6). Appellant filed a “Motion to Suppress Evidence.”
(CR 14-20). After a hearing was held on the motion to suppress, the trial court
denied the requested relief. (RR II 43) (stating “[I] am not above changing my
mind, but right now, you can probably count on a denial on both.”) (RR V 6)
(Defense re-urging motion to suppress).
Subject to the trial court’s ruling, a jury trial was held. (CR 72-80).
Appellant was convicted by a jury and punishment was assessed at ten years
confinement in the Texas Department of Criminal Justice probated for five years
and a $2500 fine. (CR 94-95) (RR VII 12-13). The trial court certified appellant’s
right to appeal. (CR 62). Appellant timely filed Notice of Appeal. (CR 86). Brief
for appellant was due on November 30, 2015. Appellant is simultaneously filing a
motion for extension of time for the filing of Appellant’s brief so that this brief
may be accepted and filed as timely.
Issues Presented
The trial judge erred in denying Appellant’s motion to suppress
evidence obtained pursuant to an illegal vehicle stop.
Statement of Facts
On January 23, 2015, at the time of the suppression hearing, Officer Joshua
Swaim (“Swaim”) was employed by the City of Corpus Christi Police Department
1
as a patrolman for ‘about ten years[.]’ (RR II 17).
On February 22, 2014, while patrolling his district within the City of Corpus
Christi, Swaim received a dispatched call regarding a ‘man down’ at a
Whataburger, although no one reported a man in need of medical assistance. (RR
II 8, 19). The call said it was a man slumped over in the driver’s seat of the
vehicle. (RR II 8). The vehicle was described as a dark vehicle in the drive-thru of
the Whataburger. (RR II 8). The caller is unknown or anonymous. (RR II 16).
The Whataburger was located at 14301 SPID on North Padre Island, Corpus
Christi, Nueces County, Texas. (RR II 9).
Swaim responded to the Whataburger and located a dark SUV stopped in the
drive thru between the point where orders are made and the pick up window. (RR
II 9). The dark SUV was blocking the drive thru. (RR II 9). The only persons
reported to be at the Whataburger upon Swaim’s arrival were two employees on
the inside. (RR II 19).
The drive thru is in the back of the Whataburger so Swaim came in through
the back. (RR II 9). After locating the dark SUV, Swaim parked his patrol vehicle
in front of the dark SUV to “prevent them from going.” (RR II 18) (RR V 15, 36).
After parking his patrol vehicle in front of the dark SUV to prevent them
from going anywhere, Swaim and Corpus Christi Officer Jonathan McGinley
(“McGinley”) exited their patrol vehicles and approached the driver’s side of the
2
vehicle. (RR II 9, 28). The SUV was running. (RR II 9). Swaim and McGinley
then looked through the window and could see a male slumped over in the driver’s
seat. (RR II 9, 28). The vehicle was in park. (RR II 9). Swaim concedes that the
driver may simply be sleeping. (RR 24).
Swaim and McGinley entered the SUV, turned the SUV off and took the
keys from the SUV. (RR II 10). Swaim then developed a concern that the driver,
later identified as the appellant, was in need of medical attention. (RR II 10).
After awaking appellant, Swaim conducted a DWI investigation, which led
to the arrest of appellant for the offense of driving while intoxicated. (RR II 11-
13).
Summary of Argument
The caller in the instant case reported that an individual was passed out
behind the wheel in the drive thru line, which does not constitute criminal
behavior. State v. Griffey, 241 S.W.3d 700, 705 (Tex.App.—Austin 2007, pet.
ref’d)1.
The trial judge erred in denying appellant’s motion to suppress evidence
obtained by an illegal search of the appellant’s person and vehicle during an illegal
vehicle stop. Swaim lacked reasonable suspicion. Swaim lacked probable cause.
1
Griffey is directly on point with the instant cause. It is the identical situation except for in
Griffey, the detaining officer could see the driver upon his arrival to the Whataburger. In the
instant cause, the detaining officer could not see appellant until after appellant was detained and
the detaining officer walked up to appellant’s window. Detention was accomplished by parking
a patrol vehicle directly in front of the vehicle in the Whataburger drive thru.
3
Swaim’s stop of appellant was an unreasonable application of the community
caretaking function.2
Point of Error
Point of Error Number One:
The trial judge erred in denying Appellant’s motion to suppress
evidence obtained pursuant to an illegal vehicle stop.
Since the Fourth Amendment’s right of privacy has been declared
enforceable against the States through the Due Process Clause of the Fourteenth, it
is enforceable against them by the same sanction of exclusion as is used against
the Federal Government. Mapp v. Ohio, 367 U.S. 643, 655, 81 S.Ct. 1684, 1691, 6
L.Ed.2d 1081 (1961) (emphasis added). However much in a particular case
insistence upon such rules may appear as a technicality that inures to the benefit of
a guilty person, the history of the criminal law proves that tolerance of shortcut
methods in law enforcement impairs its enduring effectiveness. Id. at 658
(citations omitted).
“There are those who say … that under our constitutional
exclusionary doctrine the criminal is to go free because the constable
has blundered. In some cases this will undoubtedly be the result. But,
… there is another consideration—the imperative of judicial integrity.
The criminal goes free, if he must, but it is the law that sets him free.
Nothing can destroy a government more quickly than its failure to
observe its own laws, or worse, its disregard of the charter of its own
existence. Id. at 659 (citations omitted).
The Fourth Amendment provides that ‘the right of the people to be secure in
2
Wright v. State, 18 S.W.3d 245 (Tex.App.—Austin 2000, pet. ref’d).
4
their persons, houses, papers, and effects, against unreasonable searches and
seizures, shall not be violated.’ Terry v. Ohio, 392 U.S. 1, 8, 88 S.Ct. 1868, 1873,
20 L.Ed.2d 889 (1968). No right is held more sacred, or is more carefully guarded
by the common law, than the right of every individual to the possession and control
of his own person, free from all restraint or interference of others, unless by clear
and unquestionable authority of law. Id. at 9 (citations omitted).
It must be recognized that whenever a police officer accosts an individual
and restrains his freedom to walk away, he has ‘seized’ that person. Id. at 16.
“Under our decision, courts still retain their traditional responsibility
to guard against police conduct which is over-bearing or harassing, or
which trenches upon personal security without the objective
evidentiary justification which the Constitution requires. When such
conduct is identified, it must be condemned by the judiciary and its
fruits must be excluded from evidence in criminal trials. And, of
course, our approval of legitimate and restrained investigative conduct
undertaken on the basis of ample factual justification should in no
way discourage the employment of other remedies than the
exclusionary rule to curtail abuses for which that sanction may prove
inappropriate.” Id. at 15.
“In justifying the particular intrusion the police officer must be able to
point to specific and articulable facts which, taken together with
rational inferences from those facts, reasonably warrant that intrusion.
The scheme of the Fourth Amendment becomes meaningful only
when it is assured that at some point the conduct of those charged
with enforcing the laws can be subjected to the more detached, neutral
scrutiny of a judge who must evaluate the reasonableness of a
particular search or seizure in light of the particular circumstances.
And in making that assessment it is imperative that the facts be judged
against an objective standard: would the facts available to the officer
at the moment of the seizure or the search ‘warrant a man of
reasonable caution in the belief’ that the action taken was
5
appropriate? Anything less would invite intrusions upon
constitutionally guaranteed rights based on nothing more substantial
than inarticulate hunches, a result this Court has consistently refused
to sanction. And simple good faith on the part of the arresting officer
is not enough. If subjective good faith alone were the test, the
protections of the Fourth Amendment would evaporate, and the
people would be ‘secure in their persons, houses, papers and effects,’
only in the discretion of the police.” Id. at 22-23 (citations omitted)
(emphasis added).
State v. Griffey
A police officer may conduct a brief investigative detention if he has a
reasonable suspicion to believe that an individual is involved in criminal activity.
State v. Griffey, 241 S.W.3d 700, 703 (Tex.App.—Austin 2007, pet. ref’d)
(citations omitted). The burden is on the State to elicit testimony showing
sufficient facts to create a reasonable suspicion. Id. A reasonable suspicion must
be based on more than a mere hunch or non-specific suspicion of criminal activity.
Id. The reasonableness of a temporary detention must be examined in terms of the
totality of the circumstances at its inception and will only be justified if the officer
can point to specific articulable facts that, when combined with rational inferences
from those facts, would lead him to reasonably suspect that a specific person had
engaged in or was or soon would be engaging in criminal activity. Id. at 703-04.
We look only at those facts known to the officer at the inception of the stop—a
stop or search unlawful at its inception may not be validated by what it turns up.
Id. at 704.
6
Reasonable suspicion may be established based on information given to
police officers by citizen informants, provided the facts are adequately
corroborated by the officer. Id. The officer should evaluate the reliability of a
citizen informant by examining “the very nature of the circumstances under which
the incriminating information became known to him.” Id. A tip by an unnamed
informant of undisclosed reliability may justify the initiation of an investigation;
standing alone, however, it rarely will establish the requisite level of reasonable
suspicion necessary to justify an investigative detention. Id. “There must be some
further indicia of reliability, some additional facts from which a police officer may
reasonably conclude that the tip is reliable and a detention is justified. Id. Factors
to be considered in determining how much weight the anonymous tip deserves
include an officer’s prior knowledge and experience and his corroboration of the
details of the tip. Id.
The circumstances surrounding a citizen-informant tip—and the resulting
reliability of the information—can vary from a completely anonymous phone call
to a face-to-face informant who is willing to be held accountable for his tip and
whose only contact with the police results from his witnessing a criminal act. Id.
A completely anonymous tip, such as the one illustrated in Stewart v. State, 22
S.W.3d 646 (Tex.App.—Austin 2000, pet. ref’d), is the least reliable and must be
corroborated by additional facts. In Stewart, an officer detained a subject for DWI
7
based solely on an anonymous tip from a caller who stated that the driver of the
vehicle appeared to be highly intoxicated and “fell down a couple of times trying
to get into the vehicle.” Id. An officer arrived on the scene and followed the
vehicle described by the unidentified caller, but did not observe any traffic
violations or other activity to corroborate the tip. Id. Because the detention was
based solely on the anonymous caller’s tip, which was “uncorroborated in its
assertion of possible illegality,” this Court held that the detention was not
sufficiently supported by a reasonable suspicion that the driver was intoxicated.
Id.
In contrast, the most reliable form of citizen-informant tip is information
given by a face-to-face informant who has no other contact with the police beyond
witnessing a criminal act, such as the informants in Cornejo v. State, 917 S.W.2d
480 (Tex.App.—Houston [14th Dist.] 1996, pet. ref’d). There, the citizen
informants spoke with police in person, stating that two gang members had fired a
weapon at them from an automobile and pointing out the vehicle to the officers.
Id. The court held that when police receive information from a citizen “whose
only contact with the police is a result of having witnessed a criminal act
committed by another, the credibility and reliability of the information is inherent.”
Id. Because of the inherent reliability of the citizen informants, the information
they provided to police was sufficient to establish reasonable suspicion to detain
8
the driver of the vehicle without additional corroboration. Id.
The Instant Cause
Griffey is almost a carbon copy of the instant matter.
In Griffey, the Third Court of Appeals stated the following:
“[T]he citizen informant was not completely anonymous in that
he identified himself as the Whataburger manager. However, he was
not a face-to-face informant, nor was he a witness to a crime because
the information he provided to the police did not allege any criminal
activity. The manager simply reported that an individual was passed
out behind the wheel in the drive-through lane, which does not
constitute criminal behavior. Significantly, the manager did not report
that the driver was intoxicated or that she exhibited any signs of
intoxication. Furthermore, the manager did not report that the driver
had been passed out or asleep long enough to obstruct the passageway
or whether the drive-through was ever obstructed.” Griffey, at 705.
In the instant case, the citizen informant was completely anonymous. When
asked if he knew specifically who called 911, Swaim testified “I don’t know
specifically who called. It came in through 911.” (RR II 8). Like in Griffey, the
caller was not a face-to-face informant, nor was he a witness to a crime because the
information he provided to the police did not allege any criminal activity—in the
instant case, the dispatch was a vague dispatch for a “man down” which “could
either be laying on the ground or they can be in a vehicle.” (RR II 8). This time it
was a man down in a vehicle. (RR II 8). Significantly, as in Griffey, in the instant
case, the caller did not report that the driver was intoxicated or that he/she
exhibited any signs of intoxication. Furthermore, in the instant case, the
9
anonymous caller did not report that the driver had been passed out or asleep long
enough to obstruct the passageway or whether the drive-through was ever
obstructed.
The tip in the instant case is less reliable than the ‘not completely
anonymous’ tip given in Griffey. In fact, the tip in the instant case is less reliable
than the tip given in Stewart. In the instant case, not only was it a completely
anonymous tip, it was a completely vague and completely anonymous tip. Swaim
simply reports he was dispatched to a “man down” which could mean different
things—in this case a man down in a vehicle. The anonymous tip in Stewart
contained detailed facts. The instant tip is less reliable than the tip in Stewart,
which the Court in Griffey characterized as the least reliable type of tip.
The Third Court of Appeals, in Griffey, continued:
“The circumstances that Nelson observed when he arrived on
the scene—that Griffey was awake in her vehicle at the drive-through
window—not only failed to corroborate the tip, but actually
contradicted the manager’s report. Upon arriving at the scene, Nelson
would have been justified in initiating a consensual encounter to
determine if there was additional information to corroborate the
manager’s tip. But instead, Nelson initiated an investigative detention
without obtaining any additional corroboration of the manager’s tip.”
Like in Griffey, upon arriving at the scene, Swaim would have been justified
in initiating a consensual encounter to determine if there was additional
information to corroborate the anonymous tip. But instead, Swaim initiated an
investigative detention without obtaining any additional corroboration of the
10
anonymous tip.
Swaim parked his patrol vehicle in front of the dark SUV to “prevent them
from going.” (RR II 18) (RR V 15, 36). Like in Griffey, this was a detention. The
purpose was to prevent the SUV from going anywhere. It must be recognized that
whenever a police officer accosts an individual and restrains his freedom to [drive]
away, he has ‘seized’ that person. Terry v. Ohio, 392 U.S. 1, 16, 88 S.Ct. 1868,
1873, 20 L.Ed.2d 889 (1968).
The only notable difference between the instant cause and Griffey is that
upon arrival in the instant case, Swaim did not or could not corroborate the tip,
while in Griffey, the circumstances contradicted the tip. However, the apparent
contradiction in Griffey is not what is required to prevail in this matter. A police
officer may conduct a brief investigative detention if he has a reasonable suspicion
to believe that an individual is involved in criminal activity. State v. Griffey, 241
S.W.3d 700, 703 (Tex.App.—Austin 2007, pet. ref’d) (citations omitted). The
burden is on the State to elicit testimony showing sufficient facts to create a
reasonable suspicion. Id. A completely anonymous tip, such as the one illustrated
in Stewart v. State, 22 S.W.3d 646 (Tex.App.—Austin 2000, pet. ref’d), is the least
reliable and must be corroborated by additional facts. Id. at 704.
In Griffey, the tip was not corroborated and it was contradicted. In the
instant case, the tip was not corroborated. The tip was of a “man down.” Swaim
11
responded to the Whataburger and parked his patrol vehicle in front of the SUV
located in the drive thru. The facts elicited by the State do not support any other
determination. A detention occurred without any corroboration at all. As stated in
Griffey, sleeping in a parked vehicle is not against the law. Neither is parking a car
waiting for roadside assistance. Parking and entertaining a protracted telephone
conversation is also not against the law.
Before parking his patrol car directly in front of the SUV, Swaim failed to
corroborate the anonymous tip by additional facts as required by Stewart. Only
after detaining the SUV by parking in front of it did Swaim approach the SUV and
see a male slumped over. (RR II 10). At that point, after detaining the vehicle and
witnessing the male slumped over did Swaim develop a concern that there was a
medical emergency (RR II 10) (responding to the question “Were you concerned
about the fact that he was - - appeared to be sleeping in the vehicle?”).
As a side issue, it is important to note that the Court in Griffey is clear to
state that the tip did not convey that the vehicle in Griffey was obstructing the
passageway. Id. at 705. The instant record reflects the same. Moreover, on direct
examination, the State elicited the following:
Q: Were there other - - was it preventing other people from coming
through the drive-thru?
A: Yes, nobody could get around where it was parked at. (RR II
9).
12
The question posed was unclear. On cross examination, defense counsel clarified:
Q: And then the Whataburger you said there was people there?
A: The staff was inside, it was just before two, so they usually
have a couple of people inside the Whataburger. (RR II 19).
The only conclusion supported by the facts is that, while (hypothetically) nobody
could get around the SUV where it was parked, there were a couple of people at
the Whataburger on the inside only. Like in Griffey, the SUV was not obstructing
a passageway.
Swaim’s stop of appellant was an unreasonable application of the
community caretaking function. 3 The following factors are relevant to said
determination:
1. the nature and level of the distress exhibited by the individual;
2. the location of the individual;
3. whether or not the individual was alone and/or had access to
assistance independent of that offered by the officer; and
4. to what extent the individual—if not assisted—presented a danger to
himself or others. Wright v. State, 7 S.W.3d 148, 152 (Tex.Crim.App.
1999).
These factors must be assessed before the detention—not after. None of these
factors favor the State’s position.
3
Wright v. State, 18 S.W.3d 245 (Tex.App.—Austin 2000, pet. ref’d).
13
The evidence in the instant cause should have been suppressed.
Accordingly, the trial court erred. This Court should reverse the trial court’s denial
of appellant’s motion to suppress and remand this cause for further proceedings
consistent with that reversal.
Prayer
Appellant respectfully asks this Court to sustain his point of error and to
reverse the judgment of the trial court.
Respectfully submitted,
The Pastrano Law Firm, P.C.
202 Travis Street, Suite 307
Houston, Texas 77002
Telephone: 713.222.1100
Facsimile: 832.218.7114
By:___________________________
E. CHEVO PASTRANO
State Bar No. 24037240
[email protected]
Counsel for Appellant
14
Certificate of Service
I hereby certify that a true and correct copy of the foregoing instrument has
been served on all counsel by facsimile or hand-delivery, in accordance with Rule
9.5 of the Texas Rules on Appellate Procedure, on this 11th day of December,
2015.
Mr. Mark Skurka
Nueces County District Attorney
901 Leopard Street, Room 206
Corpus Christi, Texas 78401
Telephone: 361.888.0410
Facsimile: 361.888.0700
_____________________________
E. CHEVO PASTRANO
Certificate of Compliance
I hereby certify, pursuant to Rule 9.4 (i) (2) (B) and rule 9.4 (i) (3) of the
Texas Rules of Appellate Procedure that the instant brief is computer-generated
using Microsoft Word for Mac and said computer program has identified that there
are 5000 words or less within the portions of this brief required to be counted by
Rule 9.4 (i) (1) & (2) of the Texas Rules of Appellate Procedure.
The document was prepared in proportionally spaced typeface using Times
New Roman 14 for text and Times New Roman 12 for footnotes.
_____________________________
E. CHEVO PASTRANO
15
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703 F.2d 573
Andersonv.Fisher
82-3077
UNITED STATES COURT OF APPEALS Ninth Circuit
2/23/83
1
D.Or.
AFFIRMED
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FILED
NOT FOR PUBLICATION FEB 24 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 09-50289
Plaintiff - Appellee, D.C. No. 3:04-CR-01835-LAB-1
v.
MEMORANDUM *
MARIO PEREZ LARA, JR.,
Defendant - Appellant.
Appeal from the United States District Court
for the Southern District of California
Larry A. Burns, District Judge, Presiding
Argued and Submitted February 5, 2010
Pasadena, California
Before: SCHROEDER, FISHER and N.R. SMITH, Circuit Judges.
Mario Perez Lara, Jr. appeals his sentence, claiming that the trial court erred
by (1) failing to calculate his guideline range on the record and failing to
sufficiently consider the applicability of relevant 18 U.S.C. § 3553 factors;
(2) considering the coercive effect of the imposed sentence, even though coercion
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
is not a relevant § 3553 factor; and (3) imposing a term of supervised release (to be
served after a term of imprisonment) on the mistaken assumption that such a
sentence was required by Ninth Circuit precedent. In reviewing alleged errors in
sentencing, “we first consider whether the district court committed significant
procedural error, then we consider the substantive reasonableness of the sentence.”
United States v. Carty, 520 F.3d 984, 993 (9th Cir. 2008) (en banc).
1. “All sentencing proceedings are to begin by determining the applicable
Guidelines range. The range must be calculated correctly. In this sense, the
Guidelines are the starting point and the initial benchmark, and are to be kept in
mind throughout the process.” Carty, 520 F.3d at 991 (internal quotations and
citations omitted). “The district court should then consider the § 3553(a) factors to
decide if they support the sentence suggested by the parties . . . .” Id. “[T]he
district court’s total failure to announce its calculated Guidelines range to the
parties and to consider expressly the § 3553(a) factors is such a serious departure
from established procedures that we will not reject the appeal because of the
prejudice prong of plain error review.” United States v. Waknine, 543 F.3d 546,
554 (9th Cir. 2008).
The sentencing court committed plain error when it failed to calculate Lara’s
guideline range and failed to expressly consider the relevant § 3553(a) factors.
2
2. Lara claims that the district court committed procedural error, causing the
sentence to be substantively unreasonable, when it impermissibly considered
coercion as a factor in sentencing.
“The improper reliance on a factor Congress decided to omit from those to
be considered at revocation sentencing, as a primary basis for a revocation
sentence, would contravene the statute in a manner similar to that of a failure to
consider factors specifically included in § 3583(e).” United States v. Miqbel, 444
F.3d 1173, 1182 (9th Cir. 2006). In sentencing for a violation of the terms and
conditions of supervised release, Miqbel prohibits punishment for the underlying
criminal conduct leading to the revocation of supervised release. However, it
allows the court to “sanction a violator for his ‘breach of trust’” in violating the
terms and conditions of his supervised release. Id. Whether the district court
describes the sentence as “coercion,” “punishment” or “sanction,” under Miqbel,
the sentence is proper, so long as it is motivated by the breach of trust, instead of
the underlying crime.
Here, the district court did not abuse its discretion or impose a substantively
unreasonable sentence when it considered (1) the nature of Lara’s breach of trust,
and (2) the type of sanction that would be effective in restoring the trust of the
court.
3
3. Having remanded Lara’s first claim and having clarified the Ninth Circuit’s
Miqbel precedent, regarding Lara’s second claim, this claim is moot. We point
out, for purposes of resentencing on remand, that a district court, when imposing a
revocation sentence, may impose a term of incarceration without imposing a
subsequent term of supervised release. See 18 U.S.C. § 3583(h).
Therefore, we VACATE the sentence and REMAND this case to the district
court for resentencing.
4
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560 F.2d 1023
Cooper Stevedoring of Louisiana, Inc.v.Washington
No. 76-2849
United States Court of Appeals, Fifth Circuit
9/21/77
Ben.Rev.Bd. La., 556 F.2d 268
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614 F.Supp. 1196 (1985)
Arnold CLEMENTE and Gloria V. Clemente, Plaintiffs,
v.
PHILIPPINE AIRLINES, Defendant.
No. 84 Civ. 4645.
United States District Court, S.D. New York.
August 9, 1985.
*1197 Antonio M. Flores, New York City, of counsel, for plaintiffs.
Condon & Forsyth, New York City (Edward C. Dial, Jr., New York City, of counsel), for defendant.
OPINION AND ORDER
EDELSTEIN, District Judge:
This is an action for breach of contract of carriage. The verified complaint, originally filed in state court, was removed to this court on June 29, 1984, pursuant to 28 U.S.C. § 1441(d). Plaintiffs have made no motion to remand to state court. Jurisdiction is predicated on 28 U.S.C. § 1330(a), which confers jurisdiction upon the district courts of any nonjury civil action against "a foreign state." 28 U.S.C. § 1603(b)(2) defines a foreign state as any entity which has a majority of its shares owned by a foreign state or a political subdivision of a foreign state. Defendant has demonstrated that the majority of defendant Philippine Airline's ("PAL") capital stock is owned by the Government Service Insurance System and the National Development Company, which are owned and were created by the government of the Republic of the Philippines. Affidavit of Eduardo J. Berenguer, June 25, 1985. Accordingly, this court has subject matter jurisdiction over the action.
On May 28, 1985, the case was tried without a jury before this court. After the plaintiffs presented their case, the court granted defendant's motion to dismiss, pursuant to Rule 41(b) of the Federal Rules of Civil Procedure and directed defendant to submit proposed findings of fact and conclusions of law.[1] The only witnesses called *1198 by plaintiffs' counsel were the plaintiffs themselves. Having heard the testimony and examined the proof offered by the plaintiffs, the court makes the following findings of fact and conclusions of law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
FINDINGS OF FACT
On March 26, 1984, plaintiffs, Arnold Clemente and his wife Gloria V. Clemente, purchased from defendant's New York office PAL tickets numbered XXX-XXXXXXXXXXX and XXX-XXXXXXXXXXX, for round trip transportation from New York to Manila, Philippines and back. The tickets were issued pursuant to defendant's "Fiesta Fare," a package deal, by which plaintiffs were provided a hotel room and which had a maximum validity of fifteen days running from the date of departure from the United States. Plaintiffs departed for the Philippines on March 27, 1984.
The tickets and the advice to international passengers annexed to the tickets provide that a passenger on an international flight must reconfirm his reservation at least seventy-two hours prior to departure and that failure to reconfirm within the required time entitles the airline to cancel the reservation. In addition PAL's Passenger Rules Tariff on file with the Civil Aeronautics Board provides that PAL will:
cancel the reservation of an international portion of an itinerary (including the complete remaining international itinerary) of any passenger on a flight operated by it: (b) unless the passenger advises the carrier of his intention to use his reservation by communicating with a reservations or ticket office of the carrier at least 72 hours before scheduled departure of the flight.
Plaintiffs had booked reservations aboard PAL flight No. 106 from Manila to the United States, scheduled to depart on April 11, 1984 at 3:00 p.m. Plaintiffs, therefore, were required to reconfirm their reservation before April 8, 1984 at 3:00 p.m., at least seventy-two hours in advance of scheduled departure. After considering plaintiffs' testimony, the court finds that plaintiffs did not reconfirm their reservation seventy-two hours in advance. Arnold Clemente testified that he called PAL three days before the scheduled departure, although he was unsure of the dates. Mr. Clemente also testified, however, that by his computations, April 9 is three days before April 11. Tr. at 43 & 44. Based on this erroneous computation, he testified several times that he made the call on April 9, 1984, which is less than the required seventy-two hours. Mrs. Clemente also testified that her husband called PAL on April 9, 1984. Tr. at 79. Mr. Clemente testified that he made the call from his room at the Manila Hotel. Tr. at 53.[2] The Clementes' hotel bill contains an itemized list of all the phone calls made from the room. The hotel bill contains no listing for phone calls made on April 8, 1984. The bill, however, shows that one phone call was made from the Clementes' room on April 9, 1984. Based on the testimony and exhibits the court finds that the Clementes did not call PAL seventy-two hours in advance of their scheduled flight back to the United States.
PAL did not allow plaintiffs to board when they arrived at the airport on April 11, 1984, because plaintiffs' reservations had already been cancelled. Plaintiffs' tickets were honored aboard PAL flight No. 106 to Los Angeles, California on April 25, 1984.
*1199 CONCLUSIONS OF LAW
The weight of credible evidence adduced at trial conclusively demonstrates that PAL did not breach its contract of carriage by refusing to allow plaintiffs to board flight 106 to the United States on April 11, 1984. Plaintiffs' tickets, the advice to international passengers annexed to these tickets and PAL's tariffs on file with the Civil Aeronautics Board constitute the contract of carriage. Under this contract, plaintiffs were required to reconfirm at least seventy-two hours in advance in order to be entitled to carriage back to the United States. Plaintiffs failed to reconfirm in a timely fashion. Accordingly, PAL did not breach the contract of carriage.
Plaintiffs allege that when they bought the tickets at PAL's New York office, Cynthia Gonzalez, a PAL employee, told them that they did not have to reconfirm their flight. In the joint pretrial order prepared by the parties for this case, however, plaintiffs did not state any intention to call Ms. Gonzales as a witness. In fact, Ms. Gonzales was listed as one of defendant's witnesses to testify as to the instructions given to plaintiffs when they purchased the tickets. Accordingly, the court assumes that Ms. Gonzales would not have provided testimony favorable to the plaintiffs. The court does not find plaintiffs' uncorroborated testimony credible, particularly in view of their strong bias. Indeed, the Clementes' testimony demonstrates that, despite any statements made by Ms. Gonzales, the Clementes were aware of the seventy-two hour reconfirmation requirement, but miscalculated the deadline for calling the airline.
Moreover, even if Ms. Gonzales had told plaintiffs that they did not need to reconfirm seventy-two hours in advance, PAL would still not be liable for breach of contract. It is well settled that tariffs filed with the Civil Aeronautics Board constitute the contract of carriage between passenger and airline and, if valid,[3] conclusively determine the rights and liabilities between the parties. Tishman & Lipp, Inc. v. Delta Airlines, 413 F.2d 1401, 1403 (2d Cir.1969); Mao v. Eastern Airlines, Inc., 310 F.Supp. 844, 846 (S.D.N.Y.1970). "`The tariffs are both conclusive and exclusive; they may not be added to through reference to outside contracts or agreements or understandings or promises.'" North American Philips v. Emery Air Freight, 432 F.Supp. 519, 524 (S.D.N.Y.1977) (quoting United States v. Associated Air Transport, Inc., 275 F.2d 827, 833 (5th Cir.1960)), aff'd, 579 F.2d 229 (2d Cir.1978). In this case, the tickets themselves contained the same seventy-two hour notice provision as the tariff. Plaintiffs were certainly on notice of the seventy-two hour provision, despite any contrary expressions by Ms. Gonzales.
Plaintiffs also testified that when Mr. Clemente called on April 9, 1984 to reconfirm the reservation, he was told by a PAL employee that he did not need to reconfirm and that his reservation was still valid. Plaintiffs were not informed that their reservations had been cancelled until they arrived at the airport on April 11, 1984. The court finds plaintiffs' uncorroborated testimony in this regard not credible. Plaintiffs have not so much as identified the PAL employee who allegedly made this statement. Moreover, plaintiffs' hotel bill does not indicate that they checked out of their hotel room on April 11, 1984. If plaintiffs were assured, as they claim, that their reservations would be honored, they would have checked out of the Manila hotel on April 11, 1984. In any event, this testimony is not relevant to the cause of action for breach of contract of carriage. After April 8, 1984, PAL had an absolute right under the contract to cancel plaintiffs' reservation. Plaintiffs might have suffered additional damages because of the representations of the PAL employee, however, *1200 these damages cannot be redressed by a cause of action based on breach of contract.[4]
The majority of plaintiffs' testimony at trial was devoted to proof of their damages. This, of course, is unavailing, because plaintiffs did not establish that PAL was liable. Plaintiffs' counsel also asked several questions designed to suggest that in spite of plaintiffs' failure timely to reconfirm their reservation, PAL would have honored their reservation had plaintiffs offered a bribe. Again, these factual allegations are not relevant to the breach of contract claim, but to an unpleaded cause of action in tort. Moreover, stipulated fact number seven in the joint pre-trial order is that "[n]o PAL employee in the Philippines or the United States sought, requested, or obtained any illegal payments from plaintiffs in order to their [sic] reconfirm their reservations with PAL." This conforms with Mr. Clemente's testimony on cross-examination. Tr. at 49. Plaintiffs' attempt to prove by innuendo the Filipinos' "custom" of bribery is irrelevant, and improper.
CONCLUSION
Plaintiffs have failed to demonstrate that defendant breached the contract of carriage. The complaint is dismissed in all respects.
SO ORDERED.
NOTES
[1] In Anderson v. City of Bessemer City, N.C., ___ U.S. ___, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985), the Supreme Court warned of "the potential for overreaching and exaggeration on the part of attorneys preparing findings of fact when they have already been informed that the judge has decided in their favor." This court is aware of such danger. However, after plaintiffs rested, it was clear that they had not made out a prima facie claim for breach of contract of carriage. The court gave plaintiffs' counsel the opportunity to state why the case should not be dismissed. Plaintiffs' counsel had no argument to make, except for the declaration "plaintiffs have incurred damages and they should be compensated for that." Tr. at 89. Under the circumstances, the court saw no reason to allow plaintiffs to file proposed findings of fact and conclusions of law. However, this court has not "uncritically accepted [defendants] findings," id., but has made its own determination based on the record and the pretrial memoranda submitted by the parties.
[2] This fact was brought out by the Clementes' counsel on redirect examination. Tr. at 53.
[3] Plaintiffs have not challenged the validity of the tariffs. In any event, the Civil Aeronautics Board has primary jurisdiction to determine the validity of a filed tariff. Danna v. Air France, 463 F.2d 407, 409 (2d Cir.1972). Because plaintiffs have not sought administrative review of the applicable tariff, they are bound by its provisions for the purposes of this action.
[4] Plaintiffs' complaint states one cause of action for breach of contract of carriage. Even if by a liberal reading of the complaint, the complaint could be construed as containing a cause of action based on another theory of relief, plaintiffs have admitted in the joint pre-trial order that they seek recovery only for breach of contract of carriage. The joint pretrial order clearly states that the pleadings are amended in accordance with the provisions of the order. Accordingly, the court cannot allow recovery based on another theory of relief.
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838 F.Supp. 1564 (1993)
William E. BROWNING, Raymond L. Gravatt, David V. Hanna, John E. Luedecke, Jerry L. Williams, and Thomas P. Yusko, Plaintiffs,
v.
AT & T PARADYNE, Defendant.
No. 92-1401-CIV-T-17B.
United States District Court, M.D. Florida, Tampa Division.
November 19, 1993.
*1565 Ronald W. Fraley, Fraley & Fraley, Tampa, FL, Frederick A. Stuart, Marguerite H. Taylor, Stuart & Irvin, Atlanta, GA, for plaintiffs.
Peter Wolfson Zinober, Zinober & McCrea, P.A., Tampa, FL, for defendant.
ORDER ON DEFENDANT'S MOTION TO DISQUALIFY COUNSEL
KOVACHEVICH, District Judge.
This cause is before the Court on Defendant's Motion to Disqualify Counsel (Docket No. 18), filed August 2, 1993, and response thereto (Docket No. 26), filed October 4, 1993. Pursuant to Rules 4-1.6, 4-4.2, and 4-8.4(d) of the Rules Regulating The Florida Bar, and Local Rule 2.04(c) of the United States District Court for the Middle District of Florida, Defendant, AT & T Paradyne, has moved to disqualify counsel for Plaintiffs, William E. Browning, Raymond L. Gravatt, David V. Hanna, John E. Luedecke, Jerry L. Williams, and Thomas P. Yusko, for violation of these rules.
I. BACKGROUND
In November, 1991, Defendant notified its workforce that it intended to implement a reduction-in-force (RIF). Shortly before the RIF was announced, Dennis Barsema, vice president of U.S. sales for AT & T Paradyne created a new department called Special *1566 Markets. Plaintiffs, Browning, Gravatt, Luedecke, Williams, and Yusko were among the employees assigned to this new division. Plaintiff Luedecke was made Director of Special Markets and reported directly to Dennis Barsema. In November of 1991, Plaintiff Luedecke was informed of and became involved with the RIF. He reviewed the terminations of a number of employees and assisted in evaluations of other employees. Through the RIF, Plaintiffs Gravatt, Hanna and Williams were terminated, and Plaintiffs Browning and Yusko were demoted. Shortly thereafter, Plaintiff Luedecke was also terminated. In response to the effect of the RIF, Plaintiffs Browning, Gravatt, Hanna, Williams and Yusko brought an age discrimination claim against Defendant. Plaintiff Luedecke also filed an EEOC charge and was later joined as a plaintiff in this suit.
A. Defendant's Allegations
Defendant has alleged that Luedecke's involvement as a plaintiff in this case raises serious ethical problems. Specifically, because Plaintiff Luedecke was a supervisory employee, and because he was instrumental in the decision making concerning certain employee terminations, Defendant asserts that Plaintiff Luedecke is a party within the meaning of Fla.Bar Code of Prof.Cond., 4-4.2. Rule 4-4.2 prohibits attorneys from directly communicating with adverse parties, including employees or former employees of the corporate parties represented by counsel. Through this reasoning, Defendant asserts that any ex parte communication with Plaintiff Luedecke by other Plaintiffs and their counsel is strictly prohibited, and that Plaintiffs' counsel violated this rule warranting their disqualification. Furthermore, Defendant alleges that there is the appearance that Plaintiffs' counsel has violated Fla.Bar Code of Prof.Cond., 4-1.6, by improperly inducing Plaintiff Luedecke to disclose confidential and proprietary matters relating to Defendant's managerial practices and strategies. Defendant concludes that this behavior constitutes conduct which is prejudicial to the administration of justice, thereby violating Fla.Bar Code of Prof.Cond., 4-8.4.
B. Plaintiffs' Allegations
Plaintiffs assert that Plaintiff Luedecke is not a "party" within the meaning of Rule 4-4.2, because he is a former employee and is outside the scope of the rule. Therefore, Plaintiffs' counsel's representation of Plaintiff Luedecke is not in violation of Rule 4-4.2.
Plaintiffs further allege that even if Plaintiff Luedecke could be considered a "party" under Rule 4-4.2, Defendant has waived any right to assert control over Plaintiff Luedecke. Specifically, when Defendant filed a counterclaim against Plaintiff Luedecke, Plaintiff Luedecke's interests are then in conflict with Defendant and Plaintiff Luedecke necessarily could not be represented by Defendant's counsel. Therefore, Plaintiffs claim that Plaintiff Luedecke is not a party represented by Defendant's counsel for purposes of 4-4.2.
In addition, Plaintiffs have asserted that there is no evidence that Plaintiff Luedecke had any access to any of Defendant's privileged information or legal strategies. Again, without access to this type of information, Plaintiffs claim that Plaintiff Luedecke is not a "party" within the meaning of Fla.Bar Code of Prof.Cond. 4-4.2.
II. ANALYSIS
A. Standard for Disqualification
The professional conduct of all members of the Bar of this Court is governed by the model rules of professional conduct of the American Bar Association as modified and adopted by the Supreme Court of Florida. U.S.Dist.Ct., M.D.Fla.Loc.R. 2.04(c). While the Code of Professional Conduct does not contain an express provision prohibiting the appearance of impropriety, Florida law clearly retains this requirement. The Florida Supreme Court has ruled that attorneys must still avoid even the appearance of professional impropriety. State Farm Mutual Auto. Co. v. K.A.W., etc., et al., 575 So.2d 630, 633 (Fla.1991). Accordingly, it has been held that "even an appearance of impropriety may, under appropriate circumstances, require prompt remedial action from the court. *1567 Consequently, any doubt is to be resolved in favor of disqualification." Id. at 718.
B. Ex Parte Communication With Former Employees
The Supreme Court of Florida has adopted the Rules Regulating The Florida Bar, which are patterned after the ABA Model Rules of Professional Conduct. Model Rule 4.2 states:
In representing a client, a lawyer shall not communicate about the subject of the representation with a Party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer, or is authorized to do so.
The comments to this Model Rule explain its application where the client is an organization instead of an individual.
In the case of an organization, this Rule prohibits communications by a lawyer for one party concerning the matter of representation with persons having a managerial responsibility on behalf of the organization, and with any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization.
An organizational "party" is defined as including: (1) managerial employees, (2) any other person whose acts or omissions in connection with the matter at issue may be imputed to the corporation for liability, and (3) persons whose statements constitute admissions by the corporation. Rentclub, Inc. v. TransAmerica Rental Finance Corp., 811 F.Supp. 651 (M.D.Fla.1992) citing Polycast Technology Corp. v. Uniroyal, Inc., 129 F.R.D. 621, 625 (S.D.N.Y.1990). The cases that have followed the traditional interpretation of DR 7-104(A)(1), the precursor to Model Rule 4.2, which was not meant to include former employees within the definition of corporate "party", do not involve the situation where a former employee was privy to the corporation's legal strategies after his employment had terminated or where a former employee had access to privileged information while employed. Rentclub, Inc. v. TransAmerica Rental Finance Corp., 811 F.Supp. 651 (M.D.Fla.1992). It has been held that "the problem of protecting privileged material is best dealt with on a case-by-case basis. And where there is a strong likelihood that a former employee does possess such information, an appropriately tailored order can be issued." Rentclub, (quoting Polycast at 628). In reliance on Rule 4-4.2 and its corresponding comments, this Court has and continues to hold that a "party" for purposes of this rule includes former managerial employees, if their statements "... could be admissions against the corporation or ... their actions could be imputed to the corporation." Rentclub, Inc. v. TransAmerica Rental Finance Corp., 811 F.Supp. 651 (M.D.Fla.1992).
In reliance on 4-4.2 and this Court's interpretation of the rule set forth in Rentclub, Defendant asserts that Plaintiff Luedecke falls into the former managerial employee category. This Court finds that Rentclub is not totally instructive in the instant case. In Rentclub, Canales was a former high ranking employee that was hired as a fact witness to give information against his former employer. However, Canales was not a party in that action or a party in any other action related to his former employer. Therefore, Canales had not been put into a position where his interests were in conflict with the interests of his employer. Because this conflict did not exist, it was feasible that Canales would be represented, because of his corporate party status, by his former employer's counsel. Therefore, Canales' retention as a fact witness by the plaintiffs' counsel was ex parte communication in violation of Rule 4-4.2.
In contrast, Plaintiff Luedecke could not be represented by Defendant's counsel since their interests are in conflict as is evidenced by Plaintiff Luedecke's Age Discrimination suit against Defendant and Defendant's counterclaim against Plaintiff Luedecke. Counsel for Plaintiffs therefore did not communicate about the subject matter of the representation in this case with a party they knew to be represented by another lawyer. Plaintiffs' counsel cannot be logically accused of having *1568 ex parte communications with their own client. Based on this contention, contact by Plaintiffs' counsel with Plaintiff Luedecke is not in violation of Rule 4-4.2. Therefore, counsel for Plaintiffs will not be disqualified based on the reasoning of Rentclub and there is no violation of Rule 4-4.2.
C. Rule 4-1.6 and 4-8.4
Defendant's assertion that Plaintiffs' counsel have violated Rule 4-1.6, is unfounded. Rule 4-1.6 requires attorneys to maintain confidentiality and imposes upon attorneys a correlative duty to refrain from inducing others to disclose confidential matters. It is necessary that Plaintiff Luedecke disclose pertinent matters to his counsel in furtherance of the case in which he is a party. This does not fall within the realm of improperly inducing Plaintiff Luedecke to disclose confidential matters. In fact, Defendant has recognized that the information that Plaintiff Luedecke is privy to is not considered privileged and does not suggest that Plaintiffs may not obtain it through proper discovery. Defendant is concerned by the fact that Plaintiffs will have access to this information outside the bounds of traditional discovery. This particular concern is not within the scope of Rule 4-1.6.
Additionally, this Court also finds unfounded Defendant's contention that Plaintiffs' counsel have violated Rule 4-8.4(d). Rule 4-8.4(d) prohibits attorneys from engaging in conduct that is prejudicial to the administration of justice. Defendant claims that Defendant is forbidden from having any ex parte communication with Plaintiff Luedecke, and must rely upon formal discovery to learn what Plaintiff Luedecke knows. Further, Defendant claims that so long as Plaintiffs' counsel represents Luedecke, attorney-client privilege bars Defendant from obtaining disclosure of the statements and information that Plaintiff Luedecke has shared with opposing counsel. Given the adversarial relationship which exists between Defendant and Plaintiff Luedecke, the situation that Defendant complains of would exist whether or not Plaintiff Luedecke was represented by Plaintiffs' counsel or if Plaintiff Luedecke was represented by separate counsel. Furthermore, if Plaintiff Luedecke were to have counsel separate from the other Plaintiffs, Defendant still could not prevent Plaintiff Luedecke from cooperating fully with the other Plaintiffs if Plaintiff Luedecke chose to do so. This Court does not agree that Defendant is impeded from preparing its own defense beyond the normal inconvenience of having to participate in the formal discovery process. Therefore, this Court does not find that counsel for Plaintiffs should be disqualified based on a violation of either Rule 4-1.6 or Rule 4-8.4(d).
III. CONCLUSION
This Court finds no grounds upon which to disqualify Plaintiffs' counsel. Accordingly, it is:
ORDERED that Defendant's Motion to Disqualify Counsel (Docket No. 18) be DENIED.
DONE AND ORDERED.
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153 P.3d 830 (2006)
2006 UT App 517
STATE of Utah, Plaintiff and Appellee,
v.
Tamara RHINEHART, Defendant and Appellant.
No. 20050553-CA.
Court of Appeals of Utah.
December 29, 2006.
*831 David M. Perry, Perry Malmberg & Perry, Logan, for Appellant.
Mark L. Shurtleff, Attorney General, and Erin Riley, Assistant Attorney General, Salt Lake City, for Appellee.
Before Judges GREENWOOD, BILLINGS, and McHUGH.
GREENWOOD, Associate Presiding Judge:
¶ 1 Defendant Tamara Rhinehart was convicted after a jury trial of burglary, a second *832 degree felony, in violation of Utah Code section 76-6-202, see Utah Code Ann. § 76-6-202 (2003), and theft, a second degree felony, in violation of Utah Code section 76-6-404. See id. § 76-6-202 (2003). She appeals from the (1) denial of her motion to quash bind-over, (2) overruling of her objection to the order of trials, and (3) overruling of her objection to the use of hearsay evidence at trial. We affirm.[1]
BACKGROUND[2]
¶ 2 Sometime after June 5, 2003, Defendant and her boyfriend, Craig Nicholls, stole a safe belonging to Defendant's aunt, Sue Davis. Davis kept the safe, which contained approximately $6500, in her apartment. To accomplish the theft, Defendant lured Davis out of her home while Nicholls stole the safe. During roughly the same time period, Defendant told her hair dresser, Marne Christianson, that she and Nicholls stole a safe containing $5000, that Nicholls stole it from someone's house after Defendant had lured the owner out of the home, and that they dumped the safe in a parking lot after cracking it open. Defendant also told Jessica Goalen, a nanny who she employed, that she and Nicholls stole a safe containing a large sum of money, that the theft was "just like [the film] The Italian Job" in that it was "really slick . . . [i]n and out," and that Defendant and Nicholls cracked the safe open and then left it in a field.
¶ 3 The facts surrounding the theft and burglary came to light while Defendant and Nicholls were being investigated for a related charge of murder. Nicholls pleaded guilty to the murder in exchange for a sentence of life without parole. The State agreed to drop any remaining charges against Nicholls, and he agreed to "fully cooperate with the State in their prosecution of [his] co-defendant, Tamara Rhinehart . . . by truthfully disclosing all aspects of [their] planning and carrying out" the murder. During a subsequent police interview that was primarily focused on the murder charge, Nicholls briefly discussed his and Defendant's participation in the burglary and theft. Nicholls told police that he and Defendant devised a plan whereby Defendant would take Davis out to eat, and while they were gone, Nicholls would steal Davis's safe.
¶ 4 The police charged Defendant with burglary, theft, and murder. At Defendant's preliminary hearing on all of the charges, Nicholls invoked his Fifth Amendment right against self-incrimination and was therefore unavailable to testify. The State then presented into evidence the transcript of Nicholls's police interview as evidence of Defendant's role in the crimes charged. The State also introduced a sworn statement from Davis and a transcript of a telephone interview with Christianson. There was no other evidence introduced at the preliminary hearing to implicate Defendant in the burglary and theft charges.
¶ 5 Defendant was bound over on all charges and subsequently requested severance of the charges for trial. Defendant also moved to quash the bindover on grounds that hearsay was wrongly admitted at the preliminary hearing. The trial court agreed to sever the burglary and theft charges from the murder charge, but denied Defendant's motion to quash. Defendant also moved to have the burglary and theft trial held after the murder trial. However, that motion was denied.
¶ 6 During the burglary and theft trial, defense counsel asked the investigating officer, Detective Bennett, on cross-examination whether he spoke to anyone about the existence *833 of the missing safe: "You never determined that there is another person on this planet that ever saw a safe in the possession of Sue Davis, correct?" Detective Bennett responded, "Correct." On re-direct examination, the prosecutor asked several follow up questions:
Q. Did you talk to Craig Nicholls about a safe?
A. Yes, I did.
. . . .
Q. Did he tell you anything that would lead you to believe whether or not Sue Davis had a safe?
A. Yes.
Q. And what was that?
A. Well, at the time he described the area that he had gone to to retrieve the safe.
Q. And what did he describe?
A. He described coming into the valley. . . . He described the Sear's store which is located down by Macey's at the south end of Logan. . . . He described that he was to go into a home because there was an aunt of Tam[a]ra Rhinehart who possessed a safe with some money in that safe. That he would go into that home to take that safe out while Tam[a]ra Rhinehart took the family members to lunch or dinner.
¶ 7 Defense counsel objected to Detective Bennett's response on grounds that it contained hearsay, but the trial court overruled the objection, accepting the State's argument that defense counsel had opened the door to the testimony. At the conclusion of the trial, the jury convicted Defendant on both counts. Defendant subsequently moved for a new trial. That motion was denied. Defendant now appeals.
ISSUES AND STANDARDS OF REVIEW
¶ 8 Defendant claims that the trial court should have granted her motion to quash the bindover because hearsay evidence was improperly permitted at the preliminary hearing. The determination of whether to bind a defendant over for trial generally involves a mixed question of law and fact, which requires this court to afford some deference to the trial court. See State v. Virgin, 2006 UT 29, ¶ 26, 137 P.3d 787. However, when a case presents only a question of law, namely whether hearsay used at the preliminary hearing was admissible under Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004), or reliable under rule 1102 of the Utah Rules of Evidence, this court will review the bindover determination for correctness giving no deference to the trial court. See State v. Graham, 2006 UT 43, ¶ 16 n. 7, 143 P.3d 268.
¶ 9 Defendant also argues that the trial court erred in refusing to hold the murder trial before the burglary and theft trial. We review a claim regarding the administration of a trial court's docket for abuse of discretion. See Walker Drug Co. v. LaSal Oil Co., 972 P.2d 1238, 1244 (Utah 1998) ("Rule 42(b) of the Utah Rules of Civil Procedure gives the trial court `considerable discretion' to administer the business of its docket and determine how a trial should be conducted."); Morton v. Continental Baking Co., 938 P.2d 271, 275 (Utah 1997) ("A trial judge is given a great deal of latitude in determining the most fair and efficient manner to conduct court business.").
¶ 10 Finally, Defendant argues that hearsay evidence should not have been allowed at trial because it was prejudicial and the trial court incorrectly ruled that the "door had been opened." "Our standard of review on the admissibility of hearsay evidence is complex, since the determination of admissibility `often contains a number of rulings, each of which may require a different standard of review.'" State v. Workman, 2005 UT 66, ¶ 10, 122 P.3d 639 (quoting Norman H. Jackson, Utah Standards of Appellate Review, 12 Utah Bar J. 8, 38 (1999)). Legal questions regarding admissibility are reviewed for correctness, and questions of fact are reviewed for clear error. See id. And, "[f]inally, we review the district court's ruling on admissibility for abuse of discretion." Id.
ANALYSIS
I. Whether the Trial Court Erred in Denying Defendant's Motion to Quash Bindover
¶ 11 Defendant argues that the trial court should have granted her motion to quash the *834 bindover because the State presented inadmissible hearsay at the preliminary hearing, and without the hearsay, there would have been no evidence to support a finding of probable cause. See State v. Virgin, 2006 UT 29, ¶ 17, 137 P.3d 787 (holding that at a preliminary hearing, the State must establish probable cause with "evidence sufficient to support a reasonable belief that the defendant committed the charged crime"). Specifically, Defendant claims that hearsay should not have been allowed at her preliminary hearing because Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004); the Sixth and Fourteenth Amendments to the United States Constitution, see U.S. Const. amend. VI, XIV; Article I Sections 12 and 13 of the Utah Constitution, see Utah Const. art. I, §§ 12-13; and "due process rights both federal and state in origin" provide criminal defendants with the right to confront and cross-examine the witnesses against them at preliminary hearings. In the alternative, Defendant argues that hearsay should not have been admitted at her preliminary hearing because it was unreliable and, therefore, inadmissible under Article I Section 12 of the state constitution or rule 1102 of the Utah Rules of Evidence. See Utah Const. art. I, § 12; Utah R. Evid. 1102.
A. Whether Crawford Applies at Preliminary Hearings
¶ 12 The Sixth Amendment to the Constitution states, "In all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witnesses against him. . . ." U.S. Const. amend. VI. This provision, also known as the "Confrontation Clause," was recently the focus of the United States Supreme Court decision, Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). There, the Court held that testimonial statements by witnesses absent at trial may only be admitted if the declarant is unavailable and the defendant has had a prior opportunity to cross-examine the declarant. See id. at 59, 68, 124 S.Ct. 1354. Although the Supreme Court in Crawford provided an exhaustive discussion of the Confrontation Clause, in contrast to Defendant's argument, it never indicated that it applies at preliminary hearings. See id. at 42-69, 124 S.Ct. 1354.
¶ 13 Moreover, the Supreme Court has previously explained that the Confrontation Clause provides a trial right, not a pre-trial right. For example, in Pennsylvania v. Ritchie, 480 U.S. 39, 107 S.Ct. 989, 94 L.Ed.2d 40 (1987), a plurality of the Court stated that "the right to confrontation is a trial right, designed to prevent improper restrictions on the types of questions that defense counsel may ask during cross-examination." Id. at 52, 107 S.Ct. 989 (citing California v. Green, 399 U.S. 149, 157, 90 S.Ct. 1930, 26 L.Ed.2d 489 (1970); Barber v. Page, 390 U.S. 719, 725, 88 S.Ct. 1318, 20 L.Ed.2d 255 (1968)). And, in Gerstein v. Pugh, 420 U.S. 103, 95 S.Ct. 854, 43 L.Ed.2d 54 (1975), the Court explained that cross-examination is "not essential for the probable cause determination" that is the focus of the preliminary hearing. Id. at 121, 95 S.Ct. 854; see also State v. Pledger, 896 P.2d 1226, 1228 n. 4 (Utah 1995) (interpreting Gerstein, 420 U.S. at 120-22, 95 S.Ct. 854). Although confrontation and cross-examination may enhance the reliability of the probable cause determination, the Supreme Court explained that "their value would be too slight to justify holding, as a matter of constitutional principle, that these formalities and safeguards designed for trial must also be employed in making the Fourth Amendment determination of probable cause." Gerstein, 420 U.S. at 123, 95 S.Ct. 854.
¶ 14 Although Utah has not specifically addressed whether hearsay is admissible at preliminary hearings post-Crawford, other jurisdictions have, and they have reached the same conclusion that we do today. See, e.g., People v. Felder, 129 P.3d 1072, 1073 (Colo.Ct.App.2005) (concluding that the right to confrontation is a trial right, and "[n]othing in Crawford suggests that the Supreme Court intended to alter" this conclusion); State v. Woinarowicz, 720 N.W.2d 635, 641 (N.D.2006) ("[The] Sixth Amendment right to confrontation is a trial right, which does not apply to pretrial suppression hearings."). The Confrontation Clause pertains to a criminal defendant's right to confront and cross-examine the witnesses *835 against the defendant at trial; it does not afford the right to confront and cross-examine witnesses at a preliminary hearing, and Crawford does not alter the Court's previous holdings with respect to this matter. Consequently, we are not persuaded by Defendant's argument that Crawford requires application of the Confrontation Clause at preliminary hearings.[3]
B. Whether State law Provides the Right to Confrontation at Preliminary Hearings
¶ 15 Defendant relies on State v. Anderson, 612 P.2d 778 (Utah 1980), for the proposition that the right to confrontation exists at preliminary hearings under state law. In Anderson, the Utah Supreme Court acknowledged the "critical character" of the preliminary hearing and thus held that the Confrontation Clause applies. See id. at 785-86. However, this decision was expressly abrogated first, by amendment to Article I, Section 12 of the Utah Constitution,[4]see Utah Const. art. I, § 12, and subsequently, by rule 1102 of the Utah Rules of Evidence.[5] See Utah R. Evid. 1102 advisory committee's note ("To the extent that State v. Anderson prohibited the use of hearsay at preliminary examinations, that case has been abrogated.").[6] Defendant argues that rule 1102 is invalid because Crawford supersedes the state's evidence rules-and that under Crawford she is entitled to cross-examine declarants at a preliminary hearing. However, as previously discussed, Crawford does not address preliminary hearings, and therefore, does not invalidate rule 1102.
C. Whether the Testimony Introduced at the Preliminary Hearing was Unreliable
¶ 16 Defendant further argues that Nicholls's testimony at the preliminary hearing, introduced via the transcript of his plea interview, was unreliable because even though it met the requirements of rule 1102(b)(8), it was offered by a coconspirator. In Lilly v. Virginia, 527 U.S. 116, 119 S.Ct. 1887, 144 L.Ed.2d 117 (1999), the Supreme Court explained that statements by accomplices that implicate criminal defendants are inherently unreliable. See id. at 131-34, 119 S.Ct. 1887. In light of Lilly, Defendant argues that "[r]ule 1102 is not and cannot . . . be read as a list of sufficient conditions indicative of reliab[le] hearsay for the purposes of preliminary hearings." However, Lilly is inapplicable here.
¶ 17 Like Crawford, Lilly was concerned solely with the right to confrontation at trial; it did not address the admissibility of hearsay at the preliminary hearing stage. See id. at 122-36, 119 S.Ct. 1887. The prosecution in Lilly attempted to introduce a co-defendant's hearsay statements at trial without providing an opportunity for the defendant to cross-examine the declarant. See id. at 121, 119 S.Ct. 1887. Consequently, the Court analyzed whether the statements at issue fell within a firmly rooted hearsay exception, and whether they satisfied the "residual `trustworthiness' test." Id. at 131-36, 119 S.Ct. *836 1887. The Court made no references to the admissibility of the statements at the preliminary hearing stage, and Defendant fails to provide an argument for why Lilly should apply here. Therefore, we are not persuaded by Defendant's arguments concerning Lilly.
¶ 18 Furthermore, the trial court determined that the hearsay testimony admitted at the pretrial hearing met the reliability criteria of rule 1102. See Utah R. Evid. 1102(b)(8). We agree with that ruling because the statements were each "written, recorded or transcribed verbatim." Id.
II. Whether the Trial Court Erred in Refusing to Reverse the Order of Trials
¶ 19 Defendant asserts that the trial court erred by proceeding with the burglary and theft trial before the murder trial, arguing that she was unfairly prejudiced. We disagree. Utah Code section 77-8a-1(4)(a) provides,
If the court finds a defendant or the prosecution is prejudiced by a joinder of offenses or defendants in an indictment or information or by a joinder for trial together, the court shall order an election of separate trials of separate counts, grant a severance of defendants, or provide other relief as justice requires.
Utah Code Ann. § 77-8a-1(4)(a) (2003). In the event that a severance is granted, the statute does not address the order of trials. To the contrary, our supreme court has noted that a trial court has "`considerable discretion' to administer the business of its docket and determine how a trial should be conducted.'" Walker Drug Co. v. La Sal Oil Co., 972 P.2d 1238, 1244 (Utah 1998) (citation omitted); see also Morton v. Continental Baking Co., 938 P.2d 271, 275 (Utah 1997) ("A trial judge is given a great deal of latitude in determining the most fair and efficient manner to conduct court business."). Consequently, when a trial court grants a criminal defendant's request to sever charges, the trial court retains considerable discretion to determine the order of trials, and that decision will not be overturned absent an abuse of discretion.
¶ 20 However, the question of whether the trial court abused its discretion in scheduling trials in a particular order after severance is an issue of first impression for our courts. The few jurisdictions analyzing the same question have used a balancing test to assess the competing interests of the State and the criminal defendant. See, e.g., State v. Walland, 555 So.2d 478, 481-82 (La.Ct.App.1989) (balancing the defendant's right to present a defense with the State's right to determine the order of trials); State v. Nelson, 255 N.J.Super. 270, 604 A.2d 999, 1001 (App.Div. 1992) (holding that when two unrelated crimes are charged, evidence from one trial could potentially be used in a subsequent murder trial, and the defendant requests the murder trial be tried first, "the court is required to perform a balancing test and determine the prejudice to the parties in interest by the requested delay"); State v. Scovil, 159 N.J.Super. 194, 387 A.2d 413, 416 (App.Div.1978) ("In ordering the [docket after severance] there must inevitably be a balancing of interests."); People v. Garnes, 134 Misc.2d 39, 510 N.Y.S.2d 409, 412 (1986) (holding that even though prosecutor has broad discretion to determine "prosecutorial priorities . . . priority should be given, among others, to cases where there is a critical issue involving guilt or innocence, or the possible loss of witnesses to the prosecution or the defense"). But see Coe v. State, 174 Ark. 1103, 298 S.W. 356, 356 (1927) ("Where defendants jointly indicted sever, they stand in court as they would had they been indicted separately. If one is not ready for trial, or is not tried when his case is reached, the next in order of succession stands for trial like all other cases upon the criminal docket of the court."). We believe that this balancing test is salutary, and suggest that trial courts engage in this type of inquiry when determining the order of trials after severance.
¶ 21 In this instance, although the trial court did not explicitly engage in a balancing test, both parties fully briefed their respective interests and the court clearly considered those arguments. Therefore, we can legitimately assume that the trial court engaged in a process of balancing the parties' interests. Moreover, we conclude that, after *837 balancing those interests, it was not an abuse of discretion for the court to proceed with the burglary and theft case prior to the murder case.
¶ 22 First, Defendant argued that if the burglary and theft case were tried first, her right to confront and cross-examine the witnesses against her would be limited because she would be unable to expose the fact that the State's witness, Nicholls, had received immunity in exchange for his testimony. The State, however, responded that Nicholls was given immunity solely for his cooperation in the murder case, not with regard to the burglary and theft case.
¶ 23 Second, Defendant argued that she would be prejudiced by the order of trials because the jurors in the burglary and theft case could potentially learn of and be prejudiced by their knowledge of the pending murder charge. However, Defendant filed a motion in limine to suppress all statements related to the murder charge, and although it is unclear from the record whether the court granted that motion, the murder charge was never mentioned during the burglary and theft trial. Moreover, as the State points out, Defendant's position was inconsistent. On one hand, she wanted to refer to the murder charge in an effort to impeach the State's witnesses, and on the other hand, she wanted to shield the jury from learning of the murder charge so as not to inflame prejudice.
¶ 24 Defendant next argued that if convicted of the burglary and theft charges, the State could use Defendant's convictions as aggravating circumstances in her murder trial. Although this argument may have validity, it does not hinder Defendant's right to a fair trial in the burglary and theft case. See Walland, 555 So.2d at 480-81 (examining whether the order of trials would prevent the defendant from presenting exculpatory evidence in the first trial). The trial court had no reason to assume that Defendant would in fact be convicted of the crimes charged. And finally, the State was prepared to proceed with the burglary and theft case but was not then prepared to proceed with the murder case, and urged the court to consider the State's primary goal of expediting cases.
¶ 25 After examining the arguments presented to and considered by the trial court, we conclude that it was within the trial court's discretion to proceed with the burglary and theft case prior to the murder case. Our conclusion is further bolstered by the fact that the trial court was in the best position to assess the strength of the parties' arguments. See Morton v. Continental Baking Co., 938 P.2d 271, 275 (Utah 1997) ("The trial judge is in the best position to evaluate the status of his cases, as well as the attitudes, motives, and credibility of the parties."); see also Golsun v. United States, 592 A.2d 1054, 1058 (D.C.1991) ("We accord the trial court substantial deference in exercising its discretion because of the court's familiarity with the proceedings, its observations of the witnesses and lawyers, and its superior opportunity to get a feel for the case.").
III. Whether the Trial Court Erred by Allowing Hearsay Statements at Trial
¶ 26 Defendant argues that the trial court erred when it allowed Detective Bennett to present hearsay testimony at trial based on its conclusion that Defendant had opened the door to the testimony.[7] Although "`it is proper to allow . . . any testimony which would tend to dispute, explain or minimize the effect of evidence that has been given by one's opponent,'" State v. Harper, 2006 UT App 178, ¶ 18, 136 P.3d 1261 (quoting State v. Sanders, 27 Utah 2d 354, 496 P.2d 270, 274 (1972)), the hearsay testimony at issue in this case went beyond explaining *838 Detective Bennett's responses to defense counsel's questions, and was therefore inadmissible.
¶ 27 On cross-examination, defense counsel asked Detective Bennett if he had spoken to anyone about the existence of the safe, to which he responded in the negative. On re-direct, the State asked Detective Bennett whether he had spoken to Nicholls about the safe. Upon answering affirmatively, the State asked Detective Bennett what Nicholls had said. At this point, the State's questioning went beyond the scope of cross-examination, and Detective Bennett's remaining testimony constituted inadmissible hearsay. However, we determine that the admission of Detective Bennett's testimony resulted in harmless error.
¶ 28 "Notwithstanding error by the trial court, we will not reverse a conviction if we find that the error was harmless." State v. Calliham, 2002 UT 86, ¶ 45, 55 P.3d 573. "An error is harmless when it is `sufficiently inconsequential that we conclude there is no reasonable likelihood that the error affected the outcome of proceedings.'" State v. Loose, 2000 UT 11, ¶ 10 n. 1, 994 P.2d 1237 (quoting State v. Hamilton, 827 P.2d 232, 240 (Utah 1992)). Here, we maintain confidence in the verdict notwithstanding the improper admission of Detective Bennett's testimony.
¶ 29 First, Davis testified about the existence of the safe and its disappearance. Second, Christianson testified that Defendant told her she had stolen a safe, that it contained approximately $5000, and that Defendant had lured the safe owner out of the house so Nicholls could steal the safe. Third, Goalen testified that Defendant told her that she had come into some money in the same manner the actors did in the film The Italian Job. Goalen further testified that The Italian Job, which Defendant and Goalen had seen together, was about a group of thieves that stole a safe. Finally, Goalen testified that Defendant said she had received some money from Nicholls, and that she had to drive by and pick up Nicholls after he stole a safe. Because this testimony, standing alone, was sufficient to establish the existence of the stolen safe, the admission of Detective Bennett's testimony was harmless error.
CONCLUSION
¶ 30 We address three rulings challenged by Defendant on appeal: denial of her motion to quash bindover, overruling of her objection to the order of trials, and overruling of her objection to the use of hearsay evidence at trial.
¶ 31 First, regarding the bindover order, because Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004), does not apply at preliminary hearings, the State was entitled to, and did in fact, introduce reliable hearsay testimony in compliance with rule 1102 of the Utah Rules of Evidence. Use of hearsay at preliminary hearings is not prohibited by either the United State Constitution's Confrontation Clause or Article I, Section 12 of the Utah Constitution. Consequently, it was not error for the trial court to deny Defendant's motion to quash bindover. Second, the trial court has broad discretion to determine the order of trials after granting a request for severance, and in this instance, the trial court did not abuse that discretion. And finally, we hold that the trial court erred in admitting Detective Bennett's hearsay evidence at trial; however, the error was harmless. Accordingly, we affirm Defendant's convictions.
¶ 32 WE CONCUR: JUDITH M. BILLINGS and CAROLYN B. McHUGH, Judges.
NOTES
[1] Defendant also raises claims regarding a motion for new trial based on newly discovered evidence. We do not address Defendant's claim that her motion for new trial should have been granted because it was inadequately briefed. See Valcarce v. Fitzgerald, 961 P.2d 305, 313 (Utah 1998) ("It is well established that an appellate court will decline to consider an argument that a party has failed to adequately brief."). Likewise, we do not address Defendant's newly discovered evidence argument because Defendant fails to identify any newly discovered evidence or discuss how it would have advanced her defense at trial. See id.
[2] "When reviewing a challenge to a criminal conviction, `we recite the facts from the record . . . in the light most favorable to the jury's verdict.'" State v. Lee, 2006 UT 5, ¶ 2, 128 P.3d 1179 (omission in original) (quoting State v. Geukgeuzian, 2004 UT 16, ¶ 2, 86 P.3d 742).
[3] Our conclusion is strengthened by the fact that the Federal Rules of Evidence, which are constrained by the limits of the Constitution, see Fed.R.Evid. 802, expressly allow for the introduction of hearsay at preliminary hearings. See id. 1101(d) ("The rules [of evidence] do not apply [at] Preliminary Examinations in Criminal Cases.").
[4] The 1994 amendment to Article I, Section 12, effective July 1, 1995, added the following language:
Nothing in this constitution shall preclude the use of reliable hearsay evidence as defined by statute or rule in whole or in part at any preliminary examination to determine probable cause at any pretrial proceeding with respect to release of the defendant if appropriate discovery is allowed as defined by statute or rule.
Utah Const. art. I, § 12.
[5] Rule 1102 provides that hearsay evidence is admissible at the preliminary hearing as long as that evidence is reliable. See Utah R. Evid. 1102(a). The rule further explains that hearsay is reliable if it is "a statement of a declarant that is written, recorded, or transcribed verbatim . . . under oath or affirmation; or . . . pursuant to a notification to the declarant that a false statement made therein is punishable." Id. at 1102(b)(8).
[6] The Supreme Court of Utah is constitutionally empowered to "adopt rules of procedure and evidence." Utah Const. art. I, § 4; see also Utah Code Ann. § 78-24-4(1) (2002).
[7] Defendant further argues that Detective Bennett's testimony about statements made by Nicholls was inadmissible in violation of Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). However, the Supreme Court made clear in Crawford that there is no Confrontation Clause violation when the declarant appears for cross-examination at trial. "The Confrontation Clause places no constraints at all on the use of . . . prior testimonial statements. . . . The Clause does not bar admission of a statement so long as the declarant is present at trial to defend or explain it." Id. at 59 n. 9, 124 S.Ct. 1354 (citations omitted). Because Nicholls testified at trial and was available for cross-examination, and did in fact testify regarding his statements to Detective Bennett, Defendant's Crawford argument fails.
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734 F.2d 735
Joseph Patrick ROBINSON, Plaintiff-Appellee,v.UNITED STATES of America, Defendant-Appellant.
No. 82-6133.
United States Court of Appeals,Eleventh Circuit.
June 18, 1984.
Stanley Marcus, U.S. Atty., Patricia D. Kenney, Linda Collins Hertz, Asst. U.S. Attys., Miami, Fla., for defendant-appellant.
Louis Vernell, North Miami Beach, Fla., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before FAY and ANDERSON, Circuit Judges, and MARKEY*, Chief Judge of the Federal Circuit.
MARKEY, Chief Judge:
1
Appeal from a Final Judgment of the United States District Court for the Southern District of Florida, entered September 9, 1982, and ordering the government to return to Robinson $82,603 and other personal property it had seized. We affirm.
Background
2
On September 11, 1981, Robinson was arrested upon arrival in the United States from Nassau, Bahamas for allegedly making a false statement on a United States Customs form regarding the amount of United States currency and negotiable instruments he was carrying into this country and for transporting such currency and negotiable instruments. Robinson was released on bond on September 14, 1981. No indictment or information was filed until August 23, 1982, when Robinson was indicted for alleged violations of federal law governing transportation of currency into the United States. The subsequent criminal proceeding was dismissed on January 5, 1983 for failure to comply with the Speedy Trial Act; an appeal of that dismissal is pending.
3
At the time of the arrest, officers of the United States Customs Service seized $82,603 in currency and other personal property of Robinson, who filed this action on November 18, 1981 for return of the items seized. The present complaint alleges, inter alia, that the government's retention of the seized items was "wrongful and unlawful and in contravention of [Robinson's] constitutional rights".
4
Robinson's complaint was served on the United States Attorney on November 27, 1981, and on the Attorney General of the United States on November 30, 1981. On March 22, 1982, the district court issued an order noting the absence of a government response and directing the government to advise the court within ten days what it intended to do with the case. Ten days later, on April 1, 1982, Robinson sought and obtained entry of a default under Rule 55(a) of the Federal Rules of Civil Procedure for failure of the government to respond to the complaint. Rule 55(a) states: "When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter his default". Robinson made clear that he was not seeking entry of judgment at that time but that, after entry of the default, an evidentiary hearing should be held at which the court could consider evidence in support of the entry of a default judgment. Rule 55(e), acknowledged by Robinson in his motion for default, states: "Nojudgment by default shall be entered against the United States or an officer or agency thereof unless the claimant establishes his claim or right to relief by evidence satisfactory to the court".
5
Robinson sought a Final Default Judgment and a hearing was held on June 3, 1982. At the hearing, the government explained that the Assistant United States Attorney (AUSA) on the case had been ill for two months, that the AUSA had a large case load, that the case "may have slipped through the cracks", and that it had been unaware of the entry of default until notice of the hearing. Robinson argued that the complaint allegations are supported by the documentary material of record, that he was present to testify, and that default judgment should be entered. The court stated it was "somewhat inclined to agree" with Robinson's position, was "very, very much inclined" to grant the requested relief, and was "at a loss" to understand the government's position. However, in response to its request for time to respond to the complaint and to file a forfeiture proceeding, the court allowed the government five days "to file something" indicating why the court should not enter a default judgment.
6
Confronting further problems (illness and transfer of the assigned AUSA), the government was apparently unable to file anything within the five days allowed, but did file a forfeiture proceeding on June 18, 1982. The government filed on June 21, 1982 a motion to dismiss Robinson's complaint (asserting lack of jurisdiction and failure to state a claim) and a motion to transfer the complaint to the judge handling the forfeiture proceeding.1 The AUSA who filed the motion to dismiss was not the one who attended and stated at the June 3 hearing that the government did not know of the default until notice of the hearing. The new AUSA, saying she did not learn of the default until the week of August 3, filed on August 24, 1982 a motion to set aside the entry of default and an affidavit stating that the government's failure to respond timely to the complaint filed in November, 1981 was due to inadvertent failure of the United States Attorney's staff to calendar the complaint for response.
7
On September 9, 1982, the district court, without specifically ruling on the government's motions to set aside the default and to dismiss, entered a Final Judgment ordering return of the seized property. The court concluded that in light of the default, Robinson's affidavit, and the evidence adduced, the government had failed to demonstrate any lawful basis for continued retention of Robinson's property. In subsequent orders, the court stated that "the institution of proceedings here, some ten months after the subject currency was seized, demonstrates a denial of due process rights", and referred to:
8
the government's almost continuous mishandling of the case sub judice as typified by the default entered against it on April 1, 1982 (almost five months after process was effected), the commencement of forfeiture proceedings some ten months after its seizure of the subject currency, and myriad instances reflected in the record evidencing its delay or neglect. The cummulative effect of this conduct resulted in this Court finding, by Order dated November 17, 1982, the Plaintiff's due process rights had been denied.
9
The government filed this appeal and this court stayed execution of the Final Judgment pending the outcome here. The government argues that the district court had no power to order return of the seized property after the forfeiture proceeding was filed, and, if it had such power, its implied denial of the government's motion to set aside the entry of default constituted an abuse of discretion. The government does not urge, nor did it before the district court, that Rule 55(e) precludes default judgment against the Government. The district court apparently concluded that a sufficient amount of evidence "satisfactory to the court" (e.g., documents and arguments at the June 3 hearing) was presented to establish Robinson's claim.
ISSUES
10
(1) Whether the district court had the power to order return of seized property on the basis of default.
11
(2) Whether the district court abused its discretion in not setting the default aside.
OPINION
12
It is sad and sombre soliloquy, but many a judge has noted the potential for suffocation of justice in the mound of paperwork generated by a litigious society. The present case is exemplary. When, however, understandably, the rules are not followed by the humans who must staff a government agency struggling against the paper flow, something has to give. However the government v. citizen balance may be struck in other cases, it must be struck here in favor of Robinson.
13
A. The District Court had the power to order a return of the property on the basis of default.
14
An unreasonably long retention without instituting a forfeiture proceeding can constitute a denial of due process, see e.g., United States v. $8,850 in United States Currency, --- U.S. ----, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983); United States v. $23,407.69 in United States Currency, 715 F.2d 162 (5th Cir.1983). It has been the basis for dismissal of a forfeiture action, United States v. $23,407.69, supra, and for a private motion or action, see e.g., Ferris v. United States, 511 F.Supp. 795 (D.Nev.1981); Boston v. Stephens, 395 F.Supp. 1000 (S.D.Ohio 1975).
15
The government argues that Castleberry v. Alcohol, Tobacco and Firearms Division, 530 F.2d 672 (5th Cir.1972), which is binding on us, Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir.1981), precludes the relief ordered here by the district court. Castleberry (says the government) limits relief to a requirement that the government decide either to institute forfeiture proceedings or to return the seized property.
16
In Castleberry, however, no default had been entered, the district court's order to return property issued only thirty-four days after the seizure, thirteen days after the private complaint was filed, and four days before the government's forfeiture action. Left open was the possibility that other situations might warrant a different result:
17
Instances may arise in which due to extraordinary circumstances, manifest bad faith on the part of government agents, or irreparable damage to the plaintiff, more immediate and drastic relief would be appropriate.
18
530 F.2d at 675. We hold that the present instance falls among those envisaged by our predecessor court in Castleberry.
19
The government desires that we limit the district court's ability to fashion appropriate relief, merely because it filed a forfeiture proceeding after entry of default. We decline the invitation. Parties to private actions must abide the Federal Rules and trial courts must be free to enforce those Rules. Allowing the government to avoid its responsibility under the Rules merely by filing a forfeiture action after default entry would contribute nothing to the respect due the judicial process.
20
The district court's power to order relief is derived from "the equitable powers of the district court necessarily inherent in the court's supervision of its own docket". Castleberry, 530 F.2d at 677. Accord, Mr. Lucky Messenger Service v. United States, 587 F.2d 15, 16-17 (7th Cir.1978); United States v. Premises Known, 584 F.2d 1297, 1302 (3rd Cir.1978). The government argues that under Hunsucker v. Phinney, 497 F.2d 29 (5th Cir.1974), the power to fashion relief is limited in this case by equitable considerations. On the contrary, equitable considerations compel the relief here granted.
21
Entry of default for the government's failure to plead for four months is one such consideration. Compare, United States v. $8,850, 103 S.Ct. at 2314 (where government acted with "due speed", no due process violation found). Another is the government's having deprived Robinson of a substantial sum for considerable time without filing for forfeiture and without to this day filing an answer to his complaint. "Being deprived of this substantial sum of money for [such a significant period of time] is undoubtedly a significant burden". United States v. $23,407.69, supra, 715 F.2d at 166. On the other hand, as was the case in United States v. $8,850, supra, 103 S.Ct. at 2014, Robinson acted promptly to obtain return of his money.
22
Lastly on the power of the district court, the government argues that the forfeiture court acquires jurisdiction over the res and the private action court (though the private action was filed first) cannot remove that in rem jurisdiction. No authority is cited, however, for the proposition that a district court which has entered a default loses its jurisdiction and ability to grant relief the moment an in rem proceeding is thereafter filed. None of the three cases cited by the government involved entry of a default: United States v. Amore, 335 F.2d 329 (7th Cir.1964) (order for return of money after Secretary of Treasury had given notice of forfeiture proceedings); United States v. Rapp, 539 F.2d 1156 (8th Cir.1976) (Rule 41(e) motion held improper because filed after conviction; no separate complaint filed); United States v. Fields, 425 F.2d 883 (3rd Cir.1970) (district court had no jurisdiction to return property to a non-party).
23
B. The District Court did not abuse its discretion in refusing to set the default aside.
24
Action on a motion to set aside a default is within the discretion of the district court, McGrady v. D'Andrea Electric, Inc., 434 F.2d 1000 (5th Cir.1970). Hence a denial of the motion will not be set aside on appeal unless there was an abuse of discretion. We find no such abuse here.
25
The government says its default was not willful. Few defaults are. Due process is no less denied by neglect than by wilfulness. Here the district court found that the government "continuously mishandled" the matter. It failed to respond in any manner to the complaint for over six months. It failed to respond in any manner to the March 22, 1982 order directing it to advise the court of its intention within 10 days. It made no response to the April 1, 1982 entry of default, until at the June 3 hearing it said it had been unaware of that entry. Given five days to file something to counter entry of default judgment, it waited 15 days and then filed a forfeiture proceeding 10 months after seizing the property. It waited 18 days, after being given five, to file a motion to dismiss. Such negligent prosecution weighs heavily in favor of the district court's refusal to set aside the default.
26
The government's argument concerning the need to balance prejudice to Robinson against its allegedly meritorious defense to his complaint fails in light of two considerations: (1) the denial of due process to Robinson is prejudicial; (2) belated filing of a forfeiture proceeding does not retroactively wipe the slate clean of that denial. We do not here face, and therefore need not discuss, the type of situation on which the government's argument is based, i.e., a virtually simultaneous filing of a forfeiture proceeding and a private action for recovery.
CONCLUSION
27
This court's stay of execution of the district court's Final Judgment is accordingly vacated and that Final Judgment is affirmed.
28
AFFIRMED.
*
Honorable Howard T. Markey, Chief Judge, U.S. Court of Appeals for the Federal Circuit, sitting by designation
1
A motion under Rule 55(c) to set aside the entry of default would appear to have been more appropriate. That Rule states: "For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)"
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Case: 07-20225 Document: 00511232169 Page: 1 Date Filed: 09/13/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 13, 2010
No. 07-20225
Lyle W. Cayce
Clerk
LARRY TORRES,
Petitioner - Appellant
v.
RICK THALER, DIRECTOR, TEXAS DEPARTMENT OF CRIMINAL JUSTICE,
CORRECTIONAL INSTITUTIONS DIVISION,
Respondent - Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:04-CV-1080
Before KING, HIGGINBOTHAM, and GARZA, Circuit Judges.
PER CURIAM:*
Larry Torres filed a 28 U.S.C. § 2254 petition in the Southern District of
Texas. The alleged Constitutional violations stemmed from the presence on the
petit jury of a man who alluded that his ability to be fair and impartial may be
negatively impacted by his personal experiences. The district court denied relief,
deferring to the state habeas court’s findings that trial counsel kept the juror as
part of a defense strategy. We agree and affirm.
*
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: 07-20225 Document: 00511232169 Page: 2 Date Filed: 09/13/2010
No. 07-20225
I.
Torres relies heavily upon our decision in Virgil v. Dretke.1 We turn first
to that case. A Texas jury convicted Frank Virgil for attacking an elderly person
and sentenced him to thirty years. Two jurors explained during voir dire that
they could not be fair and impartial:
DEFENSE COUNSEL: [H]ave you had any association in the past
with police officers in your family or friends?
VENIREMAN #16: Yes, I have relatives. I’m just saying from their
experience that they’ve told me about, repeated offenders.
DEFENSE COUNSEL: So therefore you could not serve as an
impartial juror in this case?
VENIREMAN #16: Perhaps not.
DEFENSE COUNSEL: Is your answer no or yes?
VENIREMAN #16: I would say no.2
...
DEFENSE COUNSEL: Your number?
VENIREMAN #17: 17. . . . I don’t know that it’s going to be partial
or impartial, but my mother was mugged and they never found the
mugger. The thought keeps crossing my mind while we’re talking
about this, as far as assault on an elderly person. So it’s weighing
me because of the fact that they never did find the person. I’m
thinking about that.
1
446 F.3d 598 (5th Cir. 2006).
2
Id. at 603.
2
Case: 07-20225 Document: 00511232169 Page: 3 Date Filed: 09/13/2010
No. 07-20225
DEFENSE COUNSEL: Would this cause you to be a juror who could
not be fair and impartial in this case?
VENIREMAN #17: Yeah, I believe so.
DEFENSE COUNSEL: All right. Not believe or is it so?
VENIREMAN #17: I said: Yes, I do believe so.3
Defense counsel never challenged these two veniremen. “At no point
during voir dire did counsel attempt to clarify, confirm, or rehabilitate this
testimony. Moreover, the trial judge never expressed any concern regarding the
statements by the . . . jurors regarding their ability to be fair.”4 After sentencing,
Virgil lost his direct appeal, and the state denied his habeas petition. The
federal district court denied his § 2254 petition, but this court granted a
certificate of appealability (COA) on the question of whether Virgil’s counsel
offered effective representation in failing to challenge biased jurors. We found
that counsel had not, aware that “our review [was] limited by the Antiterrorism
and Effective Death Penalty Act of 1996.” 5
We noted the Sixth Amendment’s requirement of an impartial jury,6
explaining “[i]t is clearly established that the Supreme Court views the denial
of the right to an impartial decisionmaker to be such an error that taints any
3
Id. at 603–04.
4
Id. at 604.
5
Id.
6
Citing favorably to Hughes v. United States, 258 F.3d 453 (6th Cir. 2001), and United
States v. Nell, 526 F.2d 1223 (5th Cir. 1976).
3
Case: 07-20225 Document: 00511232169 Page: 4 Date Filed: 09/13/2010
No. 07-20225
resulting conviction with constitutional infirmity.”7 We refused to “hold that a
structural error alone is sufficient to warrant a presumption of prejudice in the
ineffective assistance of counsel context,” but explained “the fundamental nature
of such rights—including the right to an impartial jury—serves as an important
guidepost in our evaluation of whether the state court’s denial of Virgil’s
ineffective assistance of counsel claim was ‘objectively unreasonable’ under
AEDPA.”8
Guided by Strickland v. Washington and its two-part test,9 we first found
deficient performance for failing to challenge the two jurors—either for cause or
peremptorily.10 We were not persuaded by an affidavit submitted by defense
counsel explaining his inaction to the state habeas court:
I spent approximately thirty (30) minutes talking to and
questioning the jury in this case. I was able to ask all of the
questions that I thought were necessary to determine if there was
any prejudice or bias against my client. I was also able to question
the potential jurors regarding any issues that I thought might arise
in this case.
In determining the final jurors, I used all peremptory strikes
that were available to me. I have reviewed the record and
confirmed the number of strikes I used in this case. I struck all
persons whom I thought had some type of bias, prejudice or issue
7
Virgil, 446 F.3d at 607.
8
Id.
9
See 466 U.S. 668, 687 (1984).
10
Virgil, 446 F.3d at 610.
4
Case: 07-20225 Document: 00511232169 Page: 5 Date Filed: 09/13/2010
No. 07-20225
based upon my voir dire.11
We observed that the affidavit “lacks any suggestion of a trial strategy for not
using peremptory or for-cause challenges” and “fails to explain why the answers
given [by the two jurors] did not indicate prejudice or bias.” 12
We also concluded Virgil had established both that (1) the deficient
performance prejudiced his defense and (2) the state habeas court’s adverse
decision “was an unreasonable application of clearly established federal law as
determined by the Supreme Court.”13 “We are required to presume that the
judge or jury acted according to law, yet the law mandates a juror willing to lay
aside his impression or opinion and render a verdict based on the evidence
presented in court.”14 That did not happen in Virgil’s case. “Given the
fundamental nature of the impartial jury and the consistent line of Supreme
Court precedent enforcing it, we must conclude that ‘the result of [Virgil’s trial]
[wa]s unreliable because of a breakdown in the adversarial process that our
system counts on to produce just results.’” 15
II.
Larry Torres is 11 years into a 70 year sentence for possession of cocaine
11
Id.
12
Id. (quotation marks omitted).
13
Id.
14
Id. at 612–13 (citations and quotation marks omitted).
15
Id. at 613 (quoting Strickland v. Washington, 466 U.S. 668, 696 (1984)) (first
alteration in original).
5
Case: 07-20225 Document: 00511232169 Page: 6 Date Filed: 09/13/2010
No. 07-20225
with intent to distribute. Jon Gorman served as foreman of the jury that
convicted and sentenced Torres. During voir dire, the judge asked all panelists
whether they could: honor the burden of proof and presumption of innocence,
consider the full range of punishment, and follow the Fifth Amendment if the
defendant failed to testify. Gorman did not raise any concerns in response to
these inquiries. Specifically, when explaining reasonable doubt, the trial judge
told the panel that the court needed to know of any feelings that might prevent
a panelist from being fair and impartial. One panelist raised his hand, but
Gorman did not. Yet when the prosecutor asked: “Anybody had a friend, family
member, close relative had a problem with drugs who would not be able to sit in
this case, guilt or innocence or punishment, anyone at all?” Gorman spoke up.
“I might have a problem with that, 34.” Later, Gorman approached the bench.
THE COURT: The next one I have is 34. I have just a question
mark.
PROSECUTOR: He would not consider life, your Honor.16
THE COURT: You want to agree, Ira [Chenkin, defense counsel], or
talk?
DEFENSE COUNSEL: I would like to talk.
PROSECUTOR: Yeah, me too.
THE COURT: Mr. Gorman, 34 . . . . Are you active in the Air Force?
GORMAN: Yes, sir.
16
Nothing in the record shows Gorman would not consider a life sentence so the
prosecutor likely misspoke here.
6
Case: 07-20225 Document: 00511232169 Page: 7 Date Filed: 09/13/2010
No. 07-20225
THE COURT: Living here now?
GORMAN: Yes, sir.
THE COURT: I’m an Air Force retiree. Good to have you here.
What is your rank?
GORMAN: E-6.
THE COURT: I was one of those once. Mr. Chenkin has a question.
DEFENSE COUNSEL: Can you consider the full range of
punishment?
GORMAN: You know, I would have a hard time and the reason is
I’m a foster parent and I have foster children living with me right
now from the State of Washington and their mother put me in the
situation that my foster daughter is in.
DEFENSE COUNSEL: I don’t understand.
GORMAN: Could I consider the full range? Yeah, I could very easily
consider the full range.
PROSECUTOR: Now I’m a little hesitant. Is there some experience
that would make you not be able to judge these facts objectively?
GORMAN: Possibly. I mean, I’ve I thought about it because it took
me a while to think about what is going on; internalizing on myself.
I need to separate my experiences from what might be at and hear
and in that case I may have a problem making a decision based on –
PROSECUTOR: This evidence?
GORMAN: Yes.
THE COURT: Whatever those situations were or are, do you think
7
Case: 07-20225 Document: 00511232169 Page: 8 Date Filed: 09/13/2010
No. 07-20225
you can set those aside and when you are considering the evidence
in this case or do you think that is going to affect your ability to be
fair and impartial?
GORMAN: I think it would affect my ability to be fair and impartial
because they are there.
THE COURT: You don’t think you can set them aside?
GORMAN: I’ve been doing this for about five years now and there
are things I’ve seen that I think –
THE COURT: Based upon experiences, you feel like you can’t be fair
to the defendant or the State?
GORMAN: Probably more for the State.
THE COURT: You don’t think you could be as fair to him?
GORMAN: That’s correct.
THE COURT: Question?
PROSECUTOR: No.
DEFENSE COUNSEL: No further questions.
THE COURT: Thank you, sir.
PROSECUTOR: I think we should keep him.
DEFENSE COUNSEL: Leave him alone.
No further questions were put to Gorman. Defense counsel did not move
to strike Gorman, either for cause or to exercise a peremptory challenge. Torres
8
Case: 07-20225 Document: 00511232169 Page: 9 Date Filed: 09/13/2010
No. 07-20225
was convicted and sentenced to 70 years; appealed and lost; and did not seek
Supreme Court review.
Torres filed a state habeas petition, alleging jury bias and ineffective
assistance of counsel for failure to strike Gorman. The state habeas court (a
different judge than the one who presided over the trial) ordered Chenkin to file
an affidavit. It stated:
I have been asked to explain the reasons for my decision not
to challenge or exercise a peremptory strike against venireman Jon
Gorman at . . . trial in the primary case. I recall, based on general
voir dire discussions with the venirepanel, that I had the impression
that Mr. Gorman was going to be a defense-oriented juror. I recall
that I had developed this impression based on Mr. Gorman’s
responses to questions as they were asked by both myself and the
State, although I don’t believe Mr. Gorman’s specific responses are
reflected in the appellate record. I further recall that, because I
believed Mr. Gorman was defense-oriented, I did not wish to
question him at the bench. However, the prosecutor did want to
question Mr. Gorman, so I attempted to protect him as a defense
juror.
As Mr. Gorman began to answer questions posed by the judge,
prosecutor, and myself, I realized that he was starting to flip-flop on
several of his answers. However, I remember at the time thinking
that it would not be a bad idea to have an equivocating juror on this
case. The evidence against Larry Torres was strong, Mr. Torres was
a difficult client, and I believed it was going to be a difficult case to
win.
I thought that Mr. Gorman’s presence on the jury, if not
sufficient to result in an acquittal, would at least give us a good
chance at getting a hung jury and a mistrial. I made the strategic
decision not to challenge Mr. Gorman for cause; likewise, I chose not
to exercise a peremptory strike against him. Although some of Mr.
Gorman’s answers at the bench were not exactly favorable to the
9
Case: 07-20225 Document: 00511232169 Page: 10 Date Filed: 09/13/2010
No. 07-20225
defense, it was still my impression that he would be a good defense
juror or, at least his presence might lead to a mistrial.
The state habeas court ruled on the merits, finding Chenkin to be credible and
the facts asserted in Checkin’s affidavit to be true: he made a strategic decision
not to challenge Gorman. The Texas Court of Criminal Appeals denied relief
based on the state habeas court’s recommendation.
Torres filed a pro se 28 U.S.C. § 2254 petition in federal district court.
Texas responded and moved for summary judgment.17 The district court granted
summary judgment, denying relief. As to juror bias, the district court deferred
to the state court fact finding that Gorman was not partial. Although his
colloquy at the bench suggested he might not be fair to Torres, Gorman’s
responses to questions about burden of proof and trial procedure outweighed any
potential bias. As to ineffective assistance, the district court again deferred to
state court fact finding that Chenkin had made a strategic choice to keep
Gorman. The court differentiated Virgil on the idea that the after-the-fact
affidavit here was more thorough and direct than the lawyer’s after-the-fact
affidavit there. This court granted a COA on the juror bias and ineffective
assistance claims.
17
Summary judgement in federal habeas is different than in the average civil case. See,
e.g., Smith v. Cockrell, 311 F.3d 661, 668 (5th Cir. 2002), abrogated on other grounds by
Tennard v. Dretke, 542 U.S. 274 (2004) (“[Section] 2254(e)(1) – which mandates that findings
of fact made by a state court are ‘presumed to be correct’ – overrides the ordinary rule that,
in a summary judgment proceeding, all disputed facts must be construed in the light most
favorable to the nonmoving party. Unless [the petitioner] can ‘rebut [ ] the presumption of
correctness by clear and convincing evidence’ as to the state court’s findings of fact, they must
be accepted as correct.” (third alteration in original)).
10
Case: 07-20225 Document: 00511232169 Page: 11 Date Filed: 09/13/2010
No. 07-20225
III.
A.
We review the factual issues of a district court’s denial of habeas relief for
clear error and the legal issues de novo, applying the same deference to the state
court’s decision as the district court must.18 Torres’s § 2254 petition falls under
AEDPA, so we “defer to a state court’s adjudication of a claim if the claim has
been adjudicated on the merits in the state court proceedings unless the state
court decision was (1) ‘contrary to, or involved an unreasonable application of,
clearly established Federal law, as determined by the Supreme Court,’ or (2)
‘was based on an unreasonable determination of the facts in light of the evidence
presented in the State court proceeding.’”19 We must accept the state habeas
court’s fact finding unless rebutted by clear and convincing evidence.20 The jury
bias question is one of fact,21 and the ineffective assistance issue presents a
mixed question of law and fact.22
B.
Contrary to what Torres claims, this case is not controlled by Virgil. In
Virgil, the two questionable jurors provided specific statements during voir dire
indicating why they could not be fair and impartial.23 Later, defense counsel
18
Ortiz v. Quarterman, 504 F.3d 492, 496 (5th Cir. 2007).
19
Woodfox v. Cain, 609 F.3d 774, 789 (5th Cir. 2010) (quoting 28 U.S.C. § 2254(d)).
20
28 U.S.C. § 2254(e)(1); see also Virgil, 446 F.3d at 610 n.52.
21
See Virgil, 446 F.3d at 610 n.52.
22
See Woodfox, 609 F.3d at 789; Virgil, 446 F.3d at 604–05.
23
See Virgil, 446 F.3d at 609-10 (noting that one juror stated his relationship with law-
enforcement officers and knowledge of repeat offenders would preclude him from being
11
Case: 07-20225 Document: 00511232169 Page: 12 Date Filed: 09/13/2010
No. 07-20225
provided only a “conclusory affidavit” that “fail[ed] to rehabilitate his
performance, as it lack[ed] any suggestion of a trial strategy for not using
peremptory or for-cause challenges.”24 In contrast, here the juror’s statements
on the record during voir dire were vague. Gorman implied that a “situation”
with his foster daughter’s mother would affect his ability to be fair, but he never
described an experience with drugs or drug dealers that would affect his
impartiality.25 Further, unlike the Virgil affidavit, Chenkin’s affidavit described
a trial strategy that involved Gorman’s statements and personality.26 Chenkin
believed that Gorman’s presence on the jury might result in a hung jury or
possibly an acquittal, an explanation the state habeas court credited.27 As the
impartial and the other juror stated his mother’s mugging prevented him from being
impartial).
24
Virgil, 446 F.3d at 610.
25
Gorman’s nebulous conversation at the bench also differentiates this case from the
Sixth Circuit case we relied on in Virgil. Hughes v. United States, 258 F.3d 453 (6th Cir.
2001). In Hughes, the juror said, “I don’t think I could be fair,” in a case where the defendant
was said to have stolen a firearm from a federal marshal at gunpoint. The juror’s assessment
of her own fairness was based on her close relationship with members of the police force. The
court found these statements to be evidence of bias. In contrast, Gorman initially stated he
“would have a hard time” considering the full range of punishment. Moments later, he stated
he “could very easily consider the full range.” He never described instances involving drugs
or the police that would make him bias against the defendant.
26
We also found the Virgil affidavit lacking because it failed to indicate why for-cause
challenges were not used against the jurors in question. Virgil, 446 F.3d at 610. That problem
does not exist in this case, as Chenkin specifically stated he made a strategic decision not to
use the for-cause challenge.
27
This court gives “substantial deference to counsel’s performance, applying the strong
presumption that counsel performed adequately and exercised reasonable professional
judgment. Because we must make every effort to eliminate the distorting effects of hindsight,
a conscious and informed decision on trial tactics and strategy cannot be the basis for
constitutionally ineffective assistance of counsel unless it is so ill chosen that it permeates the
entire trial with obvious unfairness.” Virgil, 446 F.3d at 608 (citations and quotation marks
12
Case: 07-20225 Document: 00511232169 Page: 13 Date Filed: 09/13/2010
No. 07-20225
Texas Court of Criminal Appeals has explained, “That appellant was ultimately
assessed the maximum punishment means only that the [strategic] risk did not
pay off; it does not mean the strategy was unacceptable from the perspective of
jury selection.” 28
Torres argues that Gorman unequivocally expressed he could not be fair
and impartial. However, when the trial judge asked the panel whether anyone
was unable to properly follow the laws of presumption of innocence and burden
of proof, Gorman remained silent, indicating his ability to follow the law. The
trial judge specifically told panelists to report feelings that would hinder their
ability to apply reasonable doubt “because you may not be able to be a fair and
impartial juror.” Gorman said nothing.29 Moreover, Gorman’s statements at the
bench did not expressly indicate a clear prejudice. He said he thought his
experiences would affect his impartiality and that he would “probably” be more
for the State, but unlike the Virgil jurors, none of Gorman’s responses
definitively showed he would not be impartial.30
omitted).
28
Delrio v. State, 840 S.W.2d 443, 447 (Tex. Crim. App. 1992) (reversing the court of
appeals and finding that defense counsel’s failure to strike an ex-narcotics officer venireperson
in a drug-related case could have been trial strategy).
29
In addition, the voir dire transcript shows that defense counsel asked panelists
person by person whether “You think you could be a fair and impartial juror?”
30
We have previously differentiated Virgil on this basis. See Seigfried v. Greer, 2010
WL 1404046, at *4, 2010 U.S. App. LEXIS 7202, at *10 (5th Cir. Apr. 7, 2010) (unpublished)
(“Although the statements made by Juror 2 hinted at possible bias against Seigfried, Juror 2
never explicitly stated that she could not be an impartial juror. In contrast to the statements
by Juror 2 during voir dire, both this court and others courts have found actual bias where a
juror forthrightly states that she could not be fair and impartial.”); White v. Quarterman, 275
F. App’x 380, 382–83 (5th Cir. 2008) (unpublished).
13
Case: 07-20225 Document: 00511232169 Page: 14 Date Filed: 09/13/2010
No. 07-20225
IV.
The record supports the state habeas court’s findings that Larry Torres’s
lawyer had a strategy in accepting Gorman as a juror despite the late arising
impartiality concerns. The state habeas court’s application of federal law was
objectively reasonable, the standard required by AEDPA before granting relief.31
Finding Virgil to be inapposite, we hold that Torres’s trial was constitutionally
sound and affirm the district court’s judgment denying habeas relief.
AFFIRMED.
31
See Virgil, 446 F.3d at 614 (“The state court’s rejection of Virgil’s ineffective
assistance of counsel claim was contrary to the Supreme Court’s decision in Strickland.”
(citing 28 U.S.C. § 2254(d)(1))); see also Renico v. Lett, 130 S. Ct. 1855, 1862 (2010) (reciting
that an incorrect application of federal law is not sufficient).
14
| {
"pile_set_name": "FreeLaw"
} |
J-S33012-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
GAYLORD (NMN) SPELL
Appellant No. 1011 WDA 2015
Appeal from the PCRA Order May 26, 2015
in the Court of Common Pleas of Lawrence County Criminal Division
at No(s): CP-37-CR-0000603-2007
BEFORE: GANTMAN, P.J., OLSON, J., and FITZGERALD,* J.
MEMORANDUM BY FITZGERALD, J.: FILED OCTOBER 12, 2016
Appellant, Gaylord (NMN) Spell, appeals from the order of the
Lawrence County Court of Common Pleas denying his first Post Conviction
Relief Act1 (“PCRA”) petition following evidentiary hearings. Appellant claims
the PCRA court erred in denying relief on his numerous claims of ineffective
assistance of counsel. We affirm.
The Pennsylvania Supreme Court summarized the facts underlying
Appellant’s convictions in his direct appeal from the imposition of the death
sentence.
In the early morning hours of March 1, 2007, a
custodian at the Lawrence County Career and Technical
Center noticed a van traveling slowly through the school’s
parking lot. Later that morning, a teacher at the Center
found a nude body lying sideways in the parking lot, and
*
Former Justice specially assigned to the Superior Court.
1
42 Pa.C.S. §§ 9541-9546.
J-S33012-16
called the police. Investigators soon identified the victim
and determined she was last seen alive on the evening of
February 27. Around 3:00 p.m. on March 1, a PennDOT
road crew alerted State Police after discovering clothing
strewn along a roadway in Butler County. State Police
recovered a bra, blue jeans, a sock, a flannel long-sleeve
shirt, thermal bottoms, a black slipper, a sock covered in
blood, a sweatshirt covered in blood, a blood-soaked
pillow, a bloodstained cover for the arm of a couch, and a
blood-covered tablecloth.
Dr. James Smith, a board certified forensic pathologist,
performed an autopsy on the victim’s body, which revealed
ten lacerations on her head and face, including two on
both her left and right temple, three on the back of her
head, and three on her scalp. The victim suffered a
fracture at the base of her skull, a laceration of her brain,
and a fracture on the back of her skull. She also had two
broken ribs and bruising on her head, face, lower back,
and legs. Dr. Smith determined the cause of death was
blunt force trauma to the head. Because the lacerations
looked identical, he opined she had been repeatedly struck
with the same round object.
State Police found material under the victim’s
fingernails and seminal fluid on her body, which allowed
them to produce a DNA profile. The profile was entered
into the Combined DNA Index System, a nationwide
database which includes DNA profiles of convicted felons; a
database in Virginia matched the DNA profile to
[A]ppellant. DNA testing further revealed the blood on the
thermal bottoms and black slipper was the victim’s, while
blood from the tablecloth matched both the victim and
[A]ppellant.
Appellant was interviewed by State Police; he denied
meeting the victim or ever having her in his residence.
State Police executed a search warrant of [A]ppellant’s
residence, and discovered a couch matching the arm cover
recovered on the road. A sequin was found that matched
the bra discovered along the roadway. Bloodstains were
found on [A]ppellant’s mattress and the floor between his
bed and nightstand. State Police also executed a search
-2-
J-S33012-16
warrant for [A]ppellant’s van, and found the victim’s blood
on the driver-side door window.
Investigation revealed [A]ppellant was scheduled to
work February 28, but called his employer to excuse
himself; he returned to work March 1, at 2:47 p.m. The
clothing, found around 3 p.m. that day, was on a route
[A]ppellant could have used to get to his workplace.
Appellant was charged with criminal homicide and
abuse of a corpse [on April 24, 2007, and the
Commonwealth filed a notice of aggravating circumstances
seeking the death penalty].
Commonwealth v. Spell, 28 A.3d 1274, 1277-78 (Pa. 2011).
Appellant was represented by the Public Defender’s Office. His trial
counsel, Harry O. Falls, Esq. (“trial counsel”), was the Chief Defender at that
time and appeared on his behalf at Appellant’s preliminary hearing with co-
counsel, Dennis Elisco, Esq. Trial counsel thereafter resigned as Chief
Defender in February 2008. N.T. PCRA Hr’g I, 4/30/14, at 34. He took a
disability leave from March to August 2008, during which he also sought
inpatient mental health treatment from May 31st to June 9th. Id. at 27, 36.
He returned to the Public Defender’s Office as a part-time Assistant Defender
in August 2008. Id. at 37.
After his return, trial counsel continued to represent Appellant along
with co-counsel. At that time, trial counsel’s caseload included two other
homicide cases: one, which resulted in a plea, and the other, which
proceeded to trial. N.T. PCRA Hr’g I at 18. Trial counsel’s protocol was to
consider each case serially, not simultaneously, and avoid discussing a case
-3-
J-S33012-16
with the defendant until he reviewed discovery. Trial counsel did not review
discovery in Appellant’s case until early 2009. In February 2009, trial
counsel filed a motion for a competency evaluation. According to a prison
log-in sheet, trial counsel met with Appellant on March 25, 2009, for twenty-
five minutes, on March 26, 2009, for fifty minutes, and on April 8, 2009, for
an unknown period of time.
Appellant appeared before the trial court on April 13, 2009, for jury
selection. Appellant requested new counsel, which the trial court denied.
N.T. Voir Dire I, 4/13/09, at 3-16. During the litigation of Appellant’s
request for new counsel, trial counsel indicated that “the closer we’ve gotten
to trial, the less cooperative he’s become.” Id. at 9. Jury selection
commenced that same day.
On April 20, 2009, trial counsel described Appellant as “now being one
hundred percent uncooperative.” N.T. Voir Dire VI, 4/20/09, at 18. Trial
counsel informed the trial court that Appellant intended to testify, but
refused to disclose the substance of his proposed testimony. Id. at 17.
Trial counsel asserted that Appellant authored a note addressed to the
Commonwealth, which Appellant gave to trial counsel. In the note,
Appellant indicated that he intended “to testify at trial that the killing in this
matter was committed by Crystal Black[,”] his girlfriend. Id. at 23.
Appellant accused trial counsel of disclosing the contents of the note and his
trial strategy. Id. Appellant again requested new counsel, which the trial
-4-
J-S33012-16
court denied. Id. at 28. Jury selection continued until April 22nd.
Meanwhile, the prison logs indicated that trial counsel again met with
Appellant on April 21st for thirty minutes.
On April 27, 2009, before opening statements, the District Attorney
disclosed that he was making campaign telephone calls and inadvertently
spoke with a juror empaneled for Appellant’s trial. N.T. Trial I, 4/27/09, at
3. The District Attorney indicated that the juror told him that he “was doing
a pretty good job” and she “was impressed” by him when she was in court.
Id. at 4. The court examined the juror, and the juror stated she
remembered the phone call, but did not recall the substance of her
conversation with the District Attorney. She did not recall relaying a
favorable opinion of the prosecutor and asserted she could remain fair. Id.
at 10, 13-14. Trial counsel did not object or move to replace the juror. Id.
at 16. Following a discussion with Appellant, trial counsel indicated that
Appellant agreed to have the juror sit for trial. Id. at 16. The court ruled
that the juror could continue to serve. Id. That same day, the
Commonwealth and Appellant gave opening statements and the
Commonwealth began presenting its evidence.
As indicated above, the trial evidence against Appellant was largely
circumstantial, but supported by DNA evidence suggesting that Appellant
had physical contact with the victim, disposed of the victim in Lawrence
County, and threw some of his and the victim’s personal items out of his van
-5-
J-S33012-16
in Butler County while driving to work. The Commonwealth’s evidence
included the testimony that the victim worked as a prostitute. Appellant,
against trial counsel’s advice, did not testify and presented no other
evidence.
On April 30, 2009, the jury found Appellant guilty of first-degree
murder and abuse of a corpse. On May 4th, the jury found an aggravating
circumstance, torture, and no mitigating circumstances. On May 15th, the
trial court imposed a sentence of death.
Appellant appealed to the Pennsylvania Supreme Court. The Court
affirmed the conviction, but found the evidence insufficient to sustain the
jury’s finding of torture and remanded for resentencing to a life sentence.
Spell, 28 A.3d at 1284. On December 2, 2011, the trial court resentenced
Appellant to life imprisonment.
On August 15, 2012, Appellant mailed the timely pro se PCRA petition
giving rise to this appeal. The PCRA court appointed present PCRA counsel.
PCRA counsel did not amend Appellant’s PCRA petition or respond to the
numerous pro se amendments Appellant filed with the trial court. After
requesting several continuances, PCRA counsel represented Appellant at
evidentiary hearings on April 30 and August 4, 2014, at which trial counsel
testified. Following the submission of a counseled brief by Appellant, the
PCRA court denied relief on May 26, 2015.
-6-
J-S33012-16
Appellant filed a timely notice of appeal. On June 29, 2015, the PCRA
court entered an order requiring the submission of a Pa.R.A.P. 1925(b)
statement. Appellant did not file a required statement. On September 10,
2015, the PCRA court authored an opinion noting the procedural defect, but
requesting that its order denying the PCRA petition be affirmed. PCRA Ct.
Op., 9/10/15, at 1, 45.
Appellant, in his counseled brief in this appeal, raises the following
questions for review:
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failure to adequately
consult with Appellant and prepare a strategy for trial?
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failure to contest, through
filing of an omnibus pretrial motion, the legality of the
multiple searches of [Appellant’s] residence and vehicle as
well as challenge the execution of the search warrants
issued for the searches?
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failing to hire an expert or
specialist to examine and challenge the Commonwealth’s
physical evidence and expert testimony presented at time
of trial?
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failing to explore an
independent exculpatory statement and secure the
testimony of witness Russell A. Wardman?
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failing to make a timely
objection to preserve for appeal actual telecommunication
between the prosecutor and juror?
-7-
J-S33012-16
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failure to present and
preserve a Batson[2] claim at time of trial?
Did the [PCRA] court err in finding that Appellant’s trial
counsel was not ineffective for failure to recognize, address
and preserve for review a conflict between the Public
Defender’s Office and [Appellant] as a result of former
representation of the victim?
Appellant’s Brief at 7-8.3
Preliminarily, we must consider Appellant’s failure to file a court-
ordered Rule 1925(b) statement. As stated by the Pennsylvania Supreme
Court:
[o]ur jurisprudence is clear and well-settled, and firmly
establishes that: Rule 1925(b) sets out a simple bright-line
rule, which obligates an appellant to file and serve a Rule
1925(b) statement, when so ordered; any issues not
raised in a Rule 1925(b) statement will be deemed waived;
the courts lack the authority to countenance deviations
from the Rule’s terms; the Rule’s provisions are not
subject to ad hoc exceptions or selective enforcement;
appellants and their counsel are responsible for complying
with the Rule’s requirements; Rule 1925 violations may be
raised by the appellate court sua sponte, and the Rule
applies notwithstanding an appellee's request not to
enforce it; and, if Rule 1925 is not clear as to what is
required of an appellant, on-the-record actions taken by
the appellant aimed at compliance may satisfy the Rule.
We yet again repeat the principle first stated in
[Commonwealth v. Lord, 719 A.2d 306 (Pa. 1998)] that
must be applied here: “[I]n order to preserve their claims
for appellate review, [a]ppellants must comply whenever
the trial court orders them to file a Statement of Matters
Complained of on Appeal pursuant to Pa.R.A.P. 1925. Any
2
Batson v. Kentucky, 476 U.S. 79 (1986).
3
The Commonwealth has not filed a responsive brief.
-8-
J-S33012-16
issues not raised in a Pa.R.A.P. 1925(b) statement will be
deemed waived.”
Commonwealth v. Hill, 16 A.3d 484, 494 (Pa. 2011) (citations and
footnote omitted); accord Commonwealth v. Johnson, 51 A.3d 237, 246
(Pa. Super. 2012) (en banc).
The Pennsylvania Supreme Court, in Hill, addressed waiver under the
former version of Rule 1925. Hill, 16 A.3d at 490 n.11. The Court stated:
We need not determine whether the circumstances
presented would satisfy the terms of amended Rule
1925(c)(3), if the amendment applied. We note, however,
that the amendment speaks of remand only in “criminal
cases.” Technically, the PCRA is civil in nature. See
Commonwealth v. Haag, . . . 809 A.2d 271, 284 ([Pa.]
2002) (“The PCRA system is not part of the criminal
proceeding itself, but civil in nature.”) (citing
Pennsylvania v. Finley, 481 U.S. 551, 557 . . . (1987)).
Id. at 495 n.14.
The Hill Court also addressed a remand procedure under former Rule
1925(b) that adopted “efficiencies in the direct appeal context, involving an
issue frequently arising in Superior Court, and bottomed in existing remedial
caselaw.” Id. at 496 (emphasis added) (discussing the remand procedure
adopted in Commonwealth v. West, 883 A.2d 654 (Pa. Super. 2005) and
codified in current Rule 1925(c)(3)).
The Hill Court further noted:
[I]n the distinct context of a serial PCRA petition, this
Court has recognized the potential cognizability of a claim
of ineffective assistance of counsel premised upon counsel
abandonment. See Commonwealth v. Bennett, 593 Pa.
382, 930 A.2d 1264 (2007) (involving failure to file brief
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on PCRA appeal which, under practice since eliminated by
Superior Court, resulted in dismissal of appeal; claim
deemed sufficient to warrant remand for consideration
under exception to PCRA time-bar set forth in 42 Pa.C.S. §
9545(b)(1)(ii) (governing previously unknown facts)).
Id. at 497 n.16.
Thus, the Hill Court applied the “bright line” rule of waiver based on
the former version of Rule 1925. Although it discussed the remand provision
of the current version of Rule 1925 and suggested current Rule 1925(c)(3)
should not apply in a PCRA appeal, that discussion is not mandatory
authority in the present case.
The current version of Rule 1925 contains the following remand
procedures in Subdivision (c):
(1) An appellate court may remand in either a civil or
criminal case for a determination as to whether a
Statement had been filed and/or served or timely filed
and/or served.
(2) Upon application of the appellant and for good cause
shown, an appellate court may remand in a civil case for
the filing nunc pro tunc of a Statement or for amendment
or supplementation of a timely filed and served Statement
and for a concurrent supplemental opinion.
(3) If an appellant in a criminal case was ordered to file a
Statement and failed to do so, such that the appellate
court is convinced that counsel has been per se ineffective,
the appellate court shall remand for the filing of a
Statement nunc pro tunc and for the preparation and filing
of an opinion by the judge.
Pa.R.A.P. 1925(c)(1)-(3).
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Instantly, the exceptions in Paragraphs (c)(1) and (2) do not apply.
There is no indication that PCRA counsel has attempted to comply with the
PCRA court’s order for a Rule 1925(b) statement. See id. 1925(c)(1).
Further, assuming that a PCRA appeal is civil in nature, PCRA counsel has
not applied for, nor attempted to show good cause for, his failure to do so.
See id. 1925(c)(2). Although the applicability of Paragraph (c)(3) in a PCRA
appeal is in doubt, see Hill, 16 A.3d at 495 n.14, this case presents similar
efficiencies to a criminal direct appeal. Specifically, the failure to submit a
Rule 1925(b) statement results in waiver of all claims, and PCRA counsel’s
abandonment could give rise to a PCRA-time bar exception under Bennett
and a reinstatement of Appellant’s PCRA appeal rights. Notwithstanding
PCRA counsel’s failure to file a Rule 1925(b) statement, the PCRA court
addressed all claims raised in this appeal. Therefore, we decline to find
waiver based on Rule 1925(b)(4)(vii) and will proceed to consider the issues
raised in this appeal.
Our standard of review is as follows:
[A]n appellate court reviews the PCRA court’s
findings of fact to determine whether they are
supported by the record, and reviews its conclusions
of law to determine whether they are free from legal
error. . . .
* * *
. . . Counsel is presumed effective, and to rebut that
presumption, the PCRA petitioner must demonstrate that
counsel’s performance was deficient and that such
deficiency prejudiced him. In Pennsylvania, we have
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refined the [Strickland v. Washington, 466 U.S. 668
(1984),] performance and prejudice test into a three-part
inquiry. Thus, to prove counsel ineffective, the petitioner
must show that: (1) his underlying claim is of arguable
merit; (2) counsel had no reasonable basis for his action or
inaction; and (3) the petitioner suffered actual prejudice as
a result. If a petitioner fails to prove any of these prongs,
his claim fails. . . . To demonstrate prejudice, the
petitioner must show that there is a reasonable probability
that, but for counsel’s unprofessional errors, the result of
the proceedings would have been different. A reasonable
probability is a probability that is sufficient to undermine
confidence in the outcome of the proceeding.
Commonwealth v. Charleston, 94 A.3d 1012, 1019 (Pa. Super. 2014)
(some citations omitted), appeal denied, 104 A.3d 523 (Pa. 2014).
However, “[a]n accused cannot refuse to cooperate with counsel in
preparation of a particular trial strategy and then argue counsel's
ineffectiveness for failing to pursue that course of action.” Commonwealth
v. Bomar, 826 A.2d 831, 857 (Pa. 2003) (citations and quotation marks
omitted).
Appellant first claims that the PCRA court erred in rejecting his claim
that trial counsel failed to consult with him and prepare a defense. He
asserts that “trial counsel’s complete lack of attentiveness to the case
prevented [trial counsel] from adequately reviewing the voluminous
discovery” and prevented Appellant from assisting in his own defense.
Appellant’s Brief at 12. He concludes, “[T]rial counsel’s irrational and
unsound failure to prepare for a trial of this importance constitutes an
abandonment of the minimum performance required . . . .” Id. at 13.
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Appellant notes that trial counsel acknowledged the Public Defender’s Office
was understaffed and overworked, and he suffered “adverse physical and
mental health conditions” while representing Appellant. Id. at 13. No relief
is due.
Initially, we note that Appellant’s brief fails to cite any law in support
of his contention. See Pa.R.A.P. 2119(a). With respect to abandonment by
trial counsel, however, it is well settled “that counsel’s failure to prepare for
trial is ‘simply an abdication of the minimum performance required of
defense counsel.’ Moreover, . . . in a death penalty case, ‘it is not possible
to provide a reasonable justification for [defending a case] without thorough
preparation.’” Commonwealth v. Brooks, 839 A.2d 245, 248 (Pa. 2003).
“Brooks essentially announced the minimum action required by counsel to
provide what is deemed constitutionally effective representation in capital
cases: counsel must conduct at least one face-to-face meeting with
his client.” Commonwealth v. Brown, ___ A.3d ___, ___, 2016 WL
4429846 at *5 (Pa. Super. 2016).
However, this Court has noted that Brooks applies when trial counsel
“failed to meet with his client ‘at all.’” Johnson, 51 A.3d at 243. Thus, this
Court has found Brooks inapplicable where trial counsel, in part, “met face-
to-face with Appellant at his preliminary hearing, again at the prison [before
jury selection, but] before trial and performed at least one telephone
consultation.” Id. at 245; see id. at 247 (Wecht, J., concurring).
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Instantly, trial counsel appeared with Appellant at his preliminary
hearing in May 2007. Although there was a gap of almost two years, trial
counsel filed a motion for a mental health evaluation in February of 2009,
and met with Appellant at prison twice in late March of 2009, once in April
2009 before jury selection, and again after jury selection, but before the
presentation of evidence. The PCRA court noted that “[i]n early 2009,
[Appellant] became dissatisfied with trial counsel and would not provide
counsel with information, which included refusing to discuss the facts of the
case, or his version of what happened on the date when the victim was
killed.” PCRA Ct. Op. at 21. The fact that Appellant refused to cooperate
with trial counsel in 2009 is amply supported by the record.
To the extent Appellant asserts he is entitled to relief based on trial
counsel’s abandonment or abdication of his pretrial duties of preparation and
consultation, we conclude no relief is due. See Johnson, 51 A.3d at 245.
Nevertheless, although Appellant is not entitled to relief based on a Brooks
claim, it is apparent his remaining claims assert individual claims of deficient
preparation. Therefore, we will consider his remaining claims independently
and as arguments in support of trial counsel’s lack of preparation.
Appellant’s second claim focuses on trial counsel’s failure to seek
suppression of evidence obtained under search warrants for his residence
and his van. Appellant’s Brief at 14. He asserts that the warrants were not
timely executed within forty-eight hours. Id. Although this claim implicates
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trial counsel’s preparation, we agree with the PCRA court that Appellant
cannot establish prejudice resulting from trial counsel’s failure to file a
pretrial motion to suppress. See PCRA Ct. Op. at 24.
A review of the record reveals that the untimely search of the van was
actually litigated during a recess at trial. See N.T. Trial II, 4/28/09, at 81-
93. The trial record, including the impromptu suppression hearing,
established that search warrants were issued for Appellant’s home and van
on April 20, 2007. Id. at 65. State troopers searched Appellant’s home
that same day and seized Appellant’s van. Id. at 65, 88. The van was
stored in a garage in Butler County. Id. at 96. A second warrant was
obtained in Butler County for the search of the van where it was impounded.
An additional warrant was issued for a second search of Appellant’s home,
during which state troopers obtained, inter alia, samples of suspected blood
that was discovered during the April 20th search of his home.
As to Appellant’s home, we note that the record established that the
search was conducted on April 20, 2007, the same day the first warrant was
issued, and additional evidence was obtained during the execution of a
second warrant for his home. The collection of the evidence under the
second warrant was not challenged in the PCRA proceeding. Thus, Appellant
has not established arguable merit to his claim that trial counsel should have
sought suppression of the evidence collected from his home. See
Charleston, 94 A.3d at 1019.
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As to the van, Appellant focuses on the discrepancy between the
alleged issuance of the Lawrence County warrant on April 20th and the
search that was conducted in Butler County three days later on April 23rd.
Appellant presents no argument that the seizure of the van under the April
20th Lawrence County warrant was improper. He develops no argument
that the April 23rd Butler County warrant was illegal or did not authorize the
search inside his van when the van was impounded in that county.
Therefore, we discern no basis to disturb the PCRA court’s conclusion that
Appellant did not establish prejudice resulting from trial counsel’s failure to
file a timely pretrial suppression motion. See id. at 1019.
Appellant’s third claim focuses on trial counsel’s decision “not to
conduct any comparative analysis or testing of the forensic and DNA
evidence.” Appellant’s Brief at 16. He asserts trial counsel’s failure to
prepare in this regard resulted in a “comprehensive failure to engage in any
basic, skilled, or thorough cross-examination of any of the prosecution’s
witnesses. . . . As such trial counsel was not able to show any weakness or
limitations of any testimony or challenge any witness.” Id. No relief is due.
The PCRA court considered this issue as follows:
[T]rial counsel stated that he did not feel it was necessary
to obtain an expert witness in the field of DNA evidence as
he had experience and education litigating cases
containing that type of evidence. Trial counsel explained
that he was familiar with DNA evidence and he did not
believe that expert testimony would have been beneficial
to [Appellant’s] case. In addition, there is no indication
that an expert in the field of forensics would have been
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helpful in preparing a defense as nothing was provided to
the Court to demonstrate the testimony presented at trial
by the Commonwealth was inaccurate in any way.
[Appellant] appears to argue that there was evidence of a
long hair that was not consistent with [Appellant] nor the
victim which was found and an expert would have been
helpful in demonstrating the unknown individual was
responsible for the victim’s murder, not [Appellant]. . . .
[T]rial counsel was able to show through cross
examination there was an unrelated hair found which was
not from [Appellant].
PCRA Ct. Op. at 28-29.
We agree with the PCRA court that Appellant has failed to demonstrate
any merit to his contention that further research or testing of the scientific
evidence would have yielded any exculpatory or additional matters relevant
to cross-examination. See Commonwealth v. Chmiel, 30 A.3d 1111,
1143 (Pa. 2011) (“The mere failure to obtain an expert rebuttal witness is
not ineffectiveness. Appellant must demonstrate that an expert witness was
available who would have offered testimony designed to advance appellant’s
cause.” (citation omitted)); Charleston, 94 A.3d at 1019. Similarly, we
have no basis to conclude that Appellant suffered actual prejudice based on
trial counsel’s failure to conduct further research or testing regarding the
scientific evidence. See id. With respect to Appellant’s assertion that trial
counsel completely failed to cross-examine the Commonwealth’s experts,
the record supports the PCRA court’s finding that trial counsel cross-
examined the experts regarding the anomalous hair, as well as the
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Commonwealth’s failure to test the unrelated hair using mitochondrial DNA
tests. Thus, the PCRA court properly denied relief on this claim.
Appellant, in his fourth claim, asserts that the PCRA court erred in
denying relief on his claim that trial counsel failed to investigate a statement
of a potential witness. No relief is due.
By way of background, this claim relates to a statement by Russell A.
Wardman to the Pennsylvania State Police on March 5, 2007, during the
investigation of the homicide. Wardman told troopers that on February 25,
2007, two days before the victim was last seen alive and four days before
her body was discovered, he saw the victim in an altercation with an
unidentified Caucasian male. According to Wardman, the victim asked the
male, “What you want to do, kill me?” The male replied, “It doesn’t sound
too bad to kill you?” N.T. PCRA Hr’g I at 53.
At the PCRA hearing, trial counsel testified that he was aware of
Wardman’s statement prior to trial, but believed it did not merit further
investigation in light of the DNA evidence linking Appellant to the victim.
Trial counsel reiterated that Appellant refused to discuss the case with him,
which impeded trial counsel’s ability to place Wardman’s statement in the
context of a defense strategy. Id. at 54.
The Pennsylvania Supreme Court considered the interplay between law
governing claims of a failure to investigate and a failure to call a witness.
Counsel has a general duty to undertake reasonable
investigations or make reasonable decisions that render
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particular investigations unnecessary. Counsel’s
unreasonable failure to prepare for trial is “an abdication of
the minimum performance required of defense counsel.”
[Brooks, 839 A.2d at 248]. The duty to investigate, of
course, may include a duty to interview certain potential
witnesses; and a prejudicial failure to fulfill this duty,
unless pursuant to a reasonable strategic decision, may
lead to a finding of ineffective assistance. Recently . . .
this Court stated that:
[C]ases . . . arguably stand for the proposition that,
at least where there is a limited amount of evidence
of guilt, it is per se unreasonable not to attempt to
investigate and interview known eyewitnesses in
connection with defenses that hinge on the credibility
of other witnesses. They do not stand, however, for
the proposition that such an omission is per se
prejudicial.
Indeed, such a per se failing as to performance, of course,
does not make out a case of prejudice, or overall
entitlement to [PCRA] relief.
When raising a failure to call a potential witness claim,
the PCRA petitioner satisfies the performance and
prejudice requirements . . . by establishing that:
(1) the witness existed; (2) the witness was
available to testify for the defense; (3) counsel knew
of, or should have known of, the existence of the
witness; (4) the witness was willing to testify for the
defense; and (5) the absence of the testimony of the
witness was so prejudicial as to have denied the
defendant a fair trial.
To demonstrate . . . prejudice, the PCRA petitioner “must
show how the uncalled witnesses’ testimony would have
been beneficial under the circumstances of the case.”
Commonwealth v. Johnson, 966 A.2d 523, 535-36 (Pa. 2009) (citations
omitted).
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Instantly, the PCRA court denied relief on Appellant’s claim for the
following reasons:
[Appellant] has failed to provide . . . a signed certification
stating Russell Allan Wardman was able and willing to
testify on his behalf. Moreover, [Appellant] failed to
provide a certification setting forth the substance of Mr.
Wardman’s proposed testimony. Although, it is apparent
that the witness exists as he provided a statement to the
police officers when they were investigating the victim’s
murder, there is no indication that he was available to
testify or that he was willing to testify on [Appellant’s]
behalf. [Appellant] also failed to present any testimony
from Mr. Wardman during the hearings on the
[Appellant]’s PCRA Petition to demonstrate that his
testimony would have aided [Appellant] at trial.
Therefore, [Appellant] has failed to establish that trial
counsel was ineffective for failing to interview Mr.
Wardman or failing to call him as a witness at trial.
PCRA Ct. Op. at 30-31.
We add that at the PCRA hearing, trial counsel explained his decision
not to pursue an investigation of Mr. Wardman or use his statement to police
in the following exchange with PCRA counsel.
[Trial counsel]: I never did anything with this report
because of subsequent events.
Q What subsequent events?
A The DNA match, the searches, all these things.
Q So because the DNA matched [Appellant], you made an
independent determination that that was sufficient? You
were satisfied with the Commonwealth’s investigation,
that’s it?
A No. Simply—you know, you have to develop a theory of
the case.
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Q What was your theory?
A You have to probe for—
Q What was your theory, Mr. Falls?
A Well, due to the lack of cooperation from [Appellant], it
was very difficult to garner a theory of the case because
when the time came for him to discuss the evidence in this
case, he was so estranged from me and my office that he
refused to help.
Q So it sounds as if it was [Appellant’s] problem, not your
problem?
A Quite the opposite, it was my problem and not
[Appellant’s] problem.
N.T. PCRA Hr’g I at 54-55.
We further note that in explaining his limited cross-examination of the
Commonwealth’s witnesses, trial counsel noted:
[T]he most I ever got out of [Appellant] or [co-counsel]
ever got out of [Appellant] is, well, I didn’t do it; put me
on the stand and I’ll say what happened. Well, I need to
know what happened. If I start—If I start saying, so, I
can’t develop a theory of the case without once I get an
understanding of what the Commonwealth is going to be,
what is our potential response to that? Is he going to say,
well, you know, I knew she was dead, so I lied about
whether I knew her. You know, I mean, I really—I had to
have something from [Appellant]. What his position was
as to what happened is going to dictate what I’m going to
challenge, what I’m not going to challenge, so I never was
a person to ask a lot of questions, but I was afraid that
any question I asked may be in two days, be contradicted
by [Appellant] himself.
* * *
I couldn’t do anything that might come back to haunt the
defense, and I didn’t know if there was going to be a
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defense, and if so, what it was going to be, which limited
me.
N.T. PCRA H’rg I at 83, 87.
Lastly, we reiterate that the record established that Appellant initially
intended to testify at trial and assert Crystal Black, his girlfriend, killed the
victim. N.T. Voir Dire VI at 23.
Although Appellant’s frustration with the lack of communication with
trial counsel for nearly two years before trial was understandable, and
certainly highlights the difficulties in implementing the right to counsel, we
are constrained to conclude that Appellant failed to demonstrate
constitutionally deficient assistance of counsel. See Charleston, 94 A.3d at
1019. Trial counsel’s hesitation in developing and implementing a theory of
the case when Appellant indicated he wished to testify but refused to
cooperate with trial counsel was reasonable. See Bomar, 826 A.2d at 857.
Moreover, the record confirms trial counsel’s belief that Appellant initially
intended to testify at trial and inculpate his girlfriend in the killing. Under
these circumstances, Appellant cannot establish that the failure to
investigate the Wardman statement or use the statement at trial was
unreasonable. Accordingly, we discern no basis to conclude that the PCRA
court erred when denying relief based on this claim.
Appellant’s fifth claim focuses on trial counsel’s failure to object to the
seating of the juror whom the District Attorney contacted during a campaign
phone call before trial. Appellant contends that trial counsel’s failure to
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object resulted in waiver of an issue for direct appeal. Appellant’s Brief at
18. No relief is due.
The PCRA court issued the following opinion on this issue.
In the case sub judice, then District Attorney John J.
Bongivengo, Esquire, reported to the [c]ourt that he was
making general phone calls to registered voters concerning
his reelection campaign for the Democratic primary
election being held on May 19, 2009, when he attempted
to call Edward Fisher around 6:00 p.m. on April 24, 2009.
A female answered the telephone at that time and then
District Attorney Bongivengo identified himself and
explained that he was running for reelection. He also
inquired as to how the woman believed he was performing
as District Attorney. According to Attorney Bongivengo,
she responded by saying that she saw him in court and
was impressed by Attorney Bongivengo. Upon further
inquiry, she explained that she was on the jury for the
[Appellant’s] homicide trial. At that time, Attorney
Bongivengo instructed her that he should not be speaking
with her and the conversation concluded. Attorney
Bongivengo informed the [c]ourt of that occurrence as
soon as he could, which was April 27, 2009.[ ] The juror
was identified as Roberta Fisher. The [c]ourt called Ms.
Fisher into Chambers along with William J. Flannery,
Esquire, co-counsel for the Commonwealth, and trial
counsel. Upon questioning by the [c]ourt, Ms. Fisher
indicated that she spoke with Attorney Bongivengo
concerning his reelection campaign and it had nothing to
do with the [Appellant]’s homicide trial. At that time, she
did not make any expression as to whether she would vote
for Attorney Bongivengo and she did not recall making any
indication as to whether or not Attorney Bongivengo was
doing a good or bad job during jury selection. Ms. Fisher
informed the [c]ourt that the communication between her
and Attorney Bongivengo would not affect her ability to be
a fair and impartial juror and she would not favor one side
over the other due to that communication.
It is apparent from the record that Ms. Fisher’s
impartiality as a juror was not affected by the
communication she had with Attorney Bongivengo as the
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conversation lasted approximately one minute and was
concluded once it was known that Ms. Fisher was a juror in
[Appellant]’s case. In addition, they did not speak about
the substance of the case in any manner and it must be
noted that testimony did not commence in [Appellant’s]
trial until the following Monday, which was April 27, 2009.
Ms. Fisher also indicated that she was unaffected by the
conversation and initially thought “it might have been a
prank.” She informed the [c]ourt that the conversation
would not affect her ability to be a fair and impartial juror.
Moreover, she explained that she would not be more likely
to favor one side over the other as she works with the
Commonwealth everyday for her job as an online
messenger site for the Pennsylvania Department of
Transportation. There is no indication on the record that
the communication in question influenced Ms. Fisher in any
manner and she was able to act as a fair and impartial
juror. Thus, trial counsel was not ineffective for failing to
request a mistrial on the basis of Ms. Fisher’s contact with
Attorney Bongivengo.
PCRA Ct. Op. at 32-34.
Appellant’s argument, which again lacks any citation to law, fails to
address the standards for disqualifying a juror, and fails to frame any claim
directed toward an abuse of discretion or error in the PCRA court’s ruling.
See Appellant’s Brief at 18-19. In any event, we have reviewed the record
and discern no basis to disturb the trial court’s determination that the juror
was able to remain fair and impartial despite the contact. See
Commonwealth v. Janda, 14 A.3d 147, 162 (Pa. Super. 2011) (reiterating
that “[t]he decision on whether to disqualify is within the discretion of the
trial court and will not be reversed in the absence of a palpable abuse of
discretion” (citation omitted)). Therefore, Appellant’s underlying claim lacks
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arguable merit and fails to establish any prejudice with respect to Appellant’s
direct appeal. See Charleston, 94 A.3d at 1019.
Appellant’s sixth claim focuses on trial counsel’s failure to develop a
record to assert a Batson challenge. As noted by the PCRA court, this claim
was utterly undeveloped and Appellant failed to establish arguable merit by
presenting any evidence regarding the prospective jurors, the composition of
the jury, or the Commonwealth’s exercise of its strikes. See
Commonwealth v. Johnson, 139 A.3d 1257, 1282 (Pa. 2016) (reiterating
that PCRA petitioner bears burden of establishing prima facie Batson
violation to assert claim of ineffectiveness for failure to object based on
Batson). Thus, we agree with the PCRA court that no relief is due.
Appellant’s final claim is that trial counsel was ineffective for failing to
withdraw from representation based on the Public Defender’s Office’s
representation of the victim in two prior matters. We agree with the PCRA
court that Appellant did not establish merit to this claim.
The Pennsylvania Supreme Court has stated:
“A defendant cannot prevail on a conflict of interest
claim absent a showing of actual prejudice.” In
Commonwealth v. Hawkins, . . . 787 A.2d 292 ([Pa.]
2001), this Court reiterated that while “it is true that
prejudice is presumed when counsel is burdened by an
actual conflict of interest, this is only if the defendant
demonstrates that counsel ‘actively represented conflicting
interests’ and ‘that an actual conflict of interest adversely
affected his lawyer’s performance.’”
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Commonwealth v. Spotz, 896 A.2d 1191, 1231-32 (Pa. 2006) (citations
omitted).
Instantly, Appellant established that the Public Defender’s Office
previously represented the victim. There was no dual representation.
Aside from his belief that this former representation “adversely impacted his
relationship with trial counsel[,]” Appellant proffers no support for finding
that the former representation impacted trial counsel’s representation in the
present matter. See Appellant’s Brief at 21. Therefore, no relief is due.
In sum, we have reviewed Appellant’s claim of abandonment and his
individual claims of ineffective assistance of counsel and found neither
warrant relief either individually or collectively. Accordingly, we affirm the
order denying Appellant’s PCRA petition.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/12/2016
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| {
"pile_set_name": "FreeLaw"
} |
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 18-0595V
UNPUBLISHED
CARON STAPLETON, Chief Special Master Corcoran
Petitioner, Filed: May 5, 2020
v.
SECRETARY OF HEALTH AND Special Processing Unit (SPU); Joint
HUMAN SERVICES, Stipulation on Damages; Hepatitis B
Vaccine; Shoulder Injury Related to
Respondent. Vaccine Administration (SIRVA)
Danielle Strait, Maglio Christopher & Toale, PA, Seattle, WA, for Petitioner.
Lara Ann Englund, U.S. Department of Justice, Washington, DC, for Respondent.
DECISION ON JOINT STIPULATION1
On April 26, 2018, Caron Stapleton filed a petition for compensation under the
National Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10, et seq.,2 (the
“Vaccine Act”). Petitioner alleges that she suffered a shoulder injury related to vaccine
administration (“SIRVA”) as a result of receiving a hepatitis B vaccine administered to
her on April 19, 2016. Petition at 1; Stipulation, filed May 5, 2020, at ¶¶ 2, 4. Petitioner
further alleges that she experienced the residual effects of this condition for more than
six months and that there has been no prior award or settlement of a civil action for
damages as a result of her condition. Petition at 3; Stipulation at ¶¶4-5. “Respondent
denies that petitioner sustained a SIRVA Table injury; denies that the vaccine caused
petitioner’s alleged shoulder injury, or any other injury; and denies that her current
condition is a sequela of a vaccine-related injury.” Stipulation at ¶ 6.
1
Because this unpublished decision contains a reasoned explanation for the action in this case, I am
required to post it on the United States Court of Federal Claims' website in accordance with the E-
Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal Management and Promotion of
Electronic Government Services). This means the decision will be available to anyone with access
to the internet. In accordance with Vaccine Rule 18(b), Petitioner has 14 days to identify and move to
redact medical or other information, the disclosure of which would constitute an unwarranted invasion of
privacy. If, upon review, I agree that the identified material fits within this definition, I will redact 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).
Nevertheless, on May 5, 2020, the parties filed the attached joint stipulation,
stating that a decision should be entered awarding compensation. I find the stipulation
reasonable and adopt it as my decision awarding damages, on the terms set forth
therein.
Pursuant to the terms stated in the attached Stipulation, I award the following
compensation:
A lump sum of $60,000.00, in the form of a check payable to Petitioner.
Stipulation at ¶ 8. This amount represents compensation for all items of
damages that would be available under § 15(a). Id.
I approve the requested amount for Petitioner’s compensation. In the absence of
a motion for review filed pursuant to RCFC Appendix B, the clerk of the court is directed
to enter judgment in accordance with this decision.3
IT IS SO ORDERED.
s/Brian H. Corcoran
Brian H. Corcoran
Chief Special Master
3
Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by the parties’ joint filing of notice
renouncing the right to seek review.
2
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
OFFICE OF SPECIAL MASTERS
CARON STAPLETON, )
)
Petitioner, )
)
v. ) No. 18-595V ECF
) Chief Special Master Brian Corcoran
SECRETARY OF )
HEALTH AND HUMAN SERVICES, )
)
Respondent. )
)
STIPULATION
The parties hereby stipulate to the following matters:
1. Petitioner Caron Stapleton (“petitioner”) filed a petition for vaccine compensation
under the National Vaccine Injury Compensation Program, 42 U.S.C. § 300aa-10 to 34 (the
“Vaccine Program”). The petition seeks compensation for injuries allegedly related to
petitioner’s receipt of the hepatitis B vaccine, which vaccine is contained in the Vaccine Injury
Table (the “Table”), 42 C.F.R. § 100.3 (a).
2. Petitioner received a hepatitis B vaccine on or about April 29, 2016.
3. The vaccine was administered within the United States.
4. Petitioner alleges that she sustained a shoulder injury related to vaccine administration
(“SIRVA”) within the time period set forth in the Table. She further alleges that she experienced
the residual effects of this condition for more than six months.
5. Petitioner represents that there has been no prior award or settlement of a civil action
for damages as a result of her condition.
6. Respondent denies that petitioner sustained a SIRVA Table injury; denies that the
vaccine caused petitioner’s alleged shoulder injury, or any other injury; and denies that her
current condition is a sequelae of a vaccine-related injury.
7. Maintaining their above-stated positions, the parties nevertheless now agree that the
issues between them shall be settled and that a decision should be entered awarding the
compensation described in paragraph 8 of this Stipulation.
8. As soon as practicable after an entry of judgment reflecting a decision consistent with
the terms of this Stipulation, and after petitioner has filed an election to receive compensation
pursuant to 42 U.S.C. § 300aa-21(a)(1), the Secretary of Health and Human Services will issue
the following vaccine compensation payment:
A lump sum of $60,000.00, in the form of a check payable to petitioner. This amount
represents compensation for all damages that would be available under 42 U.S.C.
§ 300aa-15(a), including pain and suffering and past unreimbursed expenses.
9. As soon as practicable after the entry of judgment on entitlement in this case, and after
petitioner has filed both a proper and timely election to receive compensation pursuant to 42
U.S.C. § 300aa-21(a)(1), and an application, the parties will submit to further proceedings before
the special master to award reasonable attorneys’ fees and costs incurred in proceeding upon this
petition.
10. Petitioner and her attorney represent that they have identified to respondent all
known sources of payment for items or services for which the Program is not primarily liable
under 42 U.S.C. § 300aa-15(g), including State compensation programs, insurance policies,
Federal or State health benefits programs (other than Title XIX of the Social Security Act (42
U.S.C. § 1396 et seq.)), or entities that provide health services on a pre-paid basis.
2
11. Payment made pursuant to paragraph 8 and any amounts awarded pursuant to
paragraph 9 of this Stipulation will be made in accordance with 42 U.S.C. § 300aa-15(i), subject
to the availability of sufficient statutory funds.
12. The parties and their attorneys further agree and stipulate that, except for any award
for attorneys’ fees and litigation costs and past unreimbursable expenses, the money provided
pursuant to this Stipulation will be used solely for the benefit of petitioner as contemplated by a
strict construction of 42 U.S.C. § 300aa-15(a) and (d), and subject to the conditions of 42 U.S.C.
§ 300aa-15(g) and (h).
13. In return for the payments described in paragraphs 8 and 9, petitioner, in her
individual capacity, and on behalf of her heirs, executors, administrators, successors or assigns,
does forever irrevocably and unconditionally release, acquit and discharge the United States and
the Secretary of Health and Human Services from any and all actions or causes of action
(including agreements, judgments, claims, damages, loss of services, expenses and all demands
of whatever kind or nature) that have been brought, could have been brought, or could be timely
brought in the Court of Federal Claims, under the National Vaccine Injury Compensation
Program, 42 U.S.C. § 300aa-10 et seq., on account of, or in any way growing out of, any and all
known or unknown, suspected or unsuspected personal injuries to or death of petitioner resulting
from, or alleged to have resulted from, the hepatitis B vaccination administered on or about April
29, 2016, as alleged by petitioner in a petition for vaccine compensation filed on or about April
26, 2018, in the United States Court of Federal Claims as petition No. 18-595V.
14. If petitioner should die prior to entry of judgment, this agreement shall be voidable
upon proper notice to the Court on behalf of either or both of the parties.
3
15. If the special master fails to issue a decision in complete conformity with the terms
of this Stipulation or if the Court of Federal Claims fails to enter judgment in conformity with a
decision that is in complete conformity with the terms of this Stipulation, then the parties’
settlement and this Stipulation shall be voidable at the sole discretion of either party.
16. This Stipulation expresses a full and complete negotiated settlement of liability and
damages claimed under the National Childhood Vaccine Injury Act of 1986, as amended, except
as otherwise noted in paragraph 9 above. There is absolutely no agreement on the part of the
parties hereto to make any payment or to do any act or thing other than is herein expressly stated
and clearly agreed to. The parties further agree and understand that the award described in this
Stipulation may reflect a compromise of the parties’ respective positions as to liability and/or
amount of damages, and further, that a change in the nature of the injury or condition or in the
items of compensation sought, is not grounds to modify or revise this agreement.
17. This Stipulation shall not be construed as an admission by the United States or the
Secretary of Health and Human Services that the hepatitis B vaccine caused petitioner’s alleged
shoulder injury or any other injury or her current condition.
18. All rights and obligations of petitioner hereunder shall apply equally to petitioner’s
heirs, executors, administrators, successors, and/or assigns.
END OF STIPULATION
/
/
/
/
/
/
/
4
Respectfully submitted,
PETITIONER:
-
CAR/l:;LE$c=
ATTORNEY OF RECORD FOR AUTHORIZED REPRESENTATIVE
PETITIONER: OF THE ATTORNEY GENERAL:
Cc____
MAGLIO CHRISTOPHER & TOA LE, PA
701 Fifth Avenue, Suite 3505
Seattle, WA 98104 Civil Division
(888) 952-5242 U.S. Department of Justice
P.O. Box 146
Benjamin Franklin Station
Washington, DC 20044-0146
AUTHORIZED REPRESENTATIVE ATTORNEY OF RECORD FOR
OF THE SECRETARY OF HEALTH RESPONDENT:
~A~
AND HUMAN SERVICES:
Uj~1~
TAMARA OVERBY LARA A. ENGLUND
Acting Director, Division of Senior Trial Attorney
Injury Compensation Programs Torts Branch
Healthcare Systems Bureau Civil Division
U.S. Department of Health U.S. Department of Justice
and Human Services P.O. Box 146
5600 Fishers Lane Benjamin Franklin Station
Parklawn Building, Mail Stop 08Nl46B Washington, DC 20044-0146
Rockville, MD 20857 (202) 307-3013
Dated: -s/sj>v
5
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evidentiary rulings, as those rulings are discretionary" and defendant may
appeal if convicted); Hardin v. Griffin, 98 Nev. 302, 304, 646 P.2d 1216,
1217 (1982) (observing that challenges to admissibility of evidence on
constitutional grounds "should be made in a motion to suppress evidence,
and review of the district court's ruling may be sought following trial and
conviction"). Accordingly, we deny the petition. See NRAP 21(b).
It is so ORDERED.'
cc: Hon. Jessie Elizabeth Walsh, District Judge
Oronoz & Ericsson
Brown Law Office
Attorney General/Carson City
Clark County District Attorney
Eighth District Court Clerk
"The petition includes a request for a stay of the trial scheduled for
July 15, 2013. Because such a request must be made in separate motion
that complies with NRAP 27 and explains why a stay is warranted,
petitioner's request is improper. Nevertheless, considering our decision,
we deny petitioner's request as moot.
SUPREME COURT
OF
NEVADA
2
(0) 1947A
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162 F.3d 94
Garciav.Harmon**
NO. 98-20097
United States Court of Appeals,Fifth Circuit.
October 20, 1998
Appeal From: S.D.Tex. ,No.H-96-CV-2542
1
Dismissed.
**
Conference Calendar
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405 F.Supp. 872 (1976)
Samuel WINDHAM et al., Plaintiffs,
v.
The CITY OF NEW YORK et al., Defendants.
No. 75 CIV. 6511 (MP).
United States District Court, S. D. New York.
January 9, 1976.
*873 Davis & Seitel, New York City, for plaintiffs by Stanley Seitel, New York City.
W. Bernard Richland, Corp. Counsel, New York City, for defendants (City of New York, Human Resources Administration, Agency for Child Development, Abraham Beame, James R. Dumpson and Betti S. Whaley) by Carmela Ackman, New York City.
*874 POLLACK, District Judge.
Plaintiffs have moved for a preliminary mandatory injunction principally against the defendant Agency for Child Development (hereafter "ACD") which has terminated its monetary support as of December 31, 1975 of the Samuel's Temple Day Care Center (hereafter "Center") located in the Borough of Manhattan, New York. The plaintiffs consist of the Center, its affiliated church, and representatives of parents of children who attend the Center.
The defendant ACD is a division of The New York City Human Resources Administration (hereafter "HRA") which is also a defendant. The other defendants named in the complaint include various social welfare agencies, officials and employees of New York City, as well as four private corporations who are not sought to be enjoined in this proceeding.
An evidentiary hearing was held in respect to the motion, and an opportunity for oral argument was provided both to counsel and to the plaintiff Samuel M. Windham, the director of the Center and due deliberation was had thereon. For the reasons which appear hereafter, the motion for a preliminary injunction is denied.
Although plaintiff's complaint does not clearly assert a ground for federal relief, plaintiff's theory, as presented at the hearing, appears to be that the defendant ACD violated the Due Process clause of the Constitution by terminating the payments to the Center without first providing a hearing to the Center and the parents served by it. A government agency must conduct a hearing where it proposes to deprive a person of funds or benefits to which he has a "legitimate claim of entitlement;" such a claim constitutes a property interest which enjoys the protections of due process. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L. Ed.2d 548 (1972).
A preliminary injunction may be granted only where the moving party has demonstrated a combination of probable success on the merits and the possibility of irreparable injury, or, in the alternative, where there are serious questions going to the merits and the balance of hardships tips decidedly in the movant's favor. Brown & Williamson Tobacco Corp. v. Engman, 527 F.2d 1115 (2d Cir., 1975). As a threshold matter, therefore, it is essential for the moving parties to make a reasonable showing of entitlement to funds and benefits from ACD, and that ACD has deprived them of such benefits without a hearing. Since the plaintiff Center and the plaintiff parents do not necessarily stand in the same posture, it will be helpful to consider their claims separately.
As is shown hereafter, the plaintiff Center has failed to make a showing that it has the requisite property interest in continued funding from the defendant.
The Center, which has been in operation since 1969, has received financial support from ACD since December 1, 1970. As of a recent date, the Center had been serving 437 children of 332 parents, and it is the only child care program in its area which has provided services on a twenty-four hour day basis, seven days a week.
The Center derives the bulk of the funding of its program from ACD. Since it is located in a structural facility which has not been licensed by the Department of Health of New York City, it is not eligible for state or federal funds, and although the situation in the remote past is unclear, ACD has received no reimbursement from federal funds for its payments to the Center for at least the past 18 months.
On or about November 1, 1975, ACD was notified by HRA that its overall budget would be cut by some $29,000,000 as a consequence of New York City's well-known fiscal condition. ACD consequently determined that funding for 28 day care programs, of which the plaintiff Center was one, would not be continued after December 31, 1975. The agency *875 has not initiated funding of any day care centers to which it was not previously obligated since it was notified of the cut in the funds available to it. The Center was notified of ACD's decision to terminate the funding of its child care program in a mailgram dated November 21st and by a letter dated November 24, 1975. The November 24th letter advised the Center of the applicable procedures for the transfer of services to other day care facilities.
In distinction to an earlier notification to the Center dated February 24, 1975 that its program funding would shortly thereafter be terminated (which decision was apparently rescinded), the notifications sent in November did not advise the Center that it had an opportunity to controvert the reasons for the termination at a hearing. Rev. Windham requested such a hearing in a letter dated December 11th to the defendant Betti S. Whaley, the Commissioner of ACD. Although no formal evidentiary hearing was held pursuant to that request, a meeting was held at Rev. Windham's request on December 23rd in the office of HRA Administrator James R. Dumpson, at which defendants Dumpson and Whaley were present to discuss the basis for ACD's decision. At that time, Rev. Windham was advised that the Center's funding was terminated because the facility in which the program is located was unlicensed and its condition was unlicenseable. Rev. Windham disputes the latter and contends that the Center has failed to obtain a license because of fault on the part of the City's agencies. Non constat, the Center is unlicensed.
ACD normally engages the services and facilities of day care centers by approving a budget of a center's expenses, and authorizing a center to procure the goods and services represented in the budget. The authorization provided by ACD is subject to periodic review. ACD's financial relationship with the plaintiff Center has been more tentative in recent years than is envisioned in the normal procedure, as a consequence of an investigation into an alleged misuse of funds by Rev. Windham conducted by HRA and the New York City Department of Investigation, of which the defendant Scoppetta is Commissioner. No criminal or other proceedings have resulted from this investigation, which began in July 1973.
The plaintiff Center has no contract with ACD which obligates the latter to provide funding on a permanent basis. Under the state statute authorizing the day care program, ACD's relationship with the Center was merely that of purchaser with a seller of day care services. N.Y.Soc.Serv.Law § 410(3)(a) (McKinney Supp.1975). Hence, the plaintiff Center has no statutory or contractual entitlement to continued funding.
While the Center's interest in continued funding may have been of considerable importance to it, it does not constitute a property interest which is protected by the Fourteenth Amendment. Board of Regents v. Roth, supra. It is clear that the Due Process clause does not require a government agency to conduct a hearing whenever it fails to renew a contract with a private business, even where that contract constitutes the sole business of the firm. See Myers & Myers, Inc. v. United States Postal Service, 527 F.2d 1252 (2d Cir., 1975).
Furthermore, there is no evidence of arbitrariness or bad faith on the part of any defendant, nor of the failure of ACD to follow its own rules, regulations and procedures. Thus, to the extent that the Center may have cause to challenge the substance of ACD's decision, such as its contention that it is a licenseable facility, its proper avenue for redress would seem to be judicial review of agency action (or inaction) in the New York state courts.
ACD has not decided to terminate funding because of the existence of the investigation of Rev. Windham's administration, and there is no evidence that *876 ACD's decision has damaged his standing and associations in the community, or foreclosed his ability to acquire other funding or employment. Board of Regents v. Roth, supra, 408 U.S. at 573, 92 S.Ct. 2701; Myers & Myers, Inc., supra. He has not made such allegations, and no evidence was offered to establish stigma or damage to his reputation. Indeed, it appears unlikely that such a showing could be made.
The claim of the plaintiffs who sue as parents of children enrolled at the Center must also fail, though for a different reason. Such plaintiffs do appear to have a statutory entitlement to day care services, and thus are entitled to the protection of the Due Process clause before the defendants may act to deprive them of it. However, they as yet have no grounds for complaint, for ACD has disputed neither their entitlement nor their continued eligibility for day care services.
After what the defendant ACD characterizes as a futile attempt to enlist the cooperation of Rev. Windham in an orderly transfer of services to the eligible children enrolled in his program, ACD sent letters dated December 12, 1975 directly to those parents of children enrolled at the Center of whom ACD had a record. The letter advised parents to contact ACD by December 17th to arrange "referral to other child care services in the community," and it mentioned ACD's recognition that "continuity of day care services is vital to all parents enrolled in the program." These letters were received in some instances on December 17th too late to comply with the advisory; however, the opportunity to arrange for referrals has not lapsed or been withdrawn. By early January, some 20 parents had sought ACD's assistance in arranging substitute facilities; two such requests had been completely processed, and the others are subject to processing.
The plaintiffs have no statutory or other right to receive services from a specific day care center. Since ACD asserts that substitute services will be made available to them, plaintiffs have not yet been deprived of any benefits to which they may be entitled.
Some reduction in services available to the plaintiffs may be inevitable, however, if only because the plaintiff Center was the only facility in the area which offered night-time services. Nonetheless, the statutory entitlement of the parents and their children appears to be a flexible one; not surprisingly, the statute authorizing the program limits the services to be provided to those for which "funds have been made available." N.Y.Soc.Serv.Law § 410(1) (McKinney 1966). Thus, a reduction in services, where compelled by absence of funds available to ACD for the day care program at a particular facility, would apparently not ground a constitutional right to a hearing.
Moreover, as long as the plaintiffs' eligibility for whatever services are available is not disputed by ACD, little purpose would be served by requiring an individual adjudicatory hearing. Such hearings are appropriate only where issues of fact exist which can and should be resolved only after the individual affected has been afforded the opportunity to present his perception of the facts and to refute that of the agency. A reduction in services which is made inevitable by a reduction in funds appropriated to the agency does not present an issue of fact concerning an individual's eligibility status, but rather an issue of policy and discretion as to where cuts may best be made. Hence, while such discretionary decisions by the agency are doubtless constrained by the Equal Protection clause, due process does not require that individual hearings be held before they are made. See Burr v. New Rochelle Municipal Housing Authority, 479 F.2d 1165, 1169 (2d Cir. 1973). See also WBEN, Inc. v. United States, 396 F.2d 601, 618 (2d Cir.), cert. denied, 393 U.S. 914, 89 S.Ct. 238, 21 L. Ed.2d 200 (1968); 1970 Supp. K. Davis, *877 Administrative Law Treatise § 7.01 at 301.
None of the plaintiffs has established either probable success on the merits, threat of irreparable injury or serious questions going to the merits, and the balance of hardship does not tip decidedly in plaintiffs' favor. The motion for a preliminary injunction must be and is denied.
The foregoing shall constitute the findings of fact and conclusions of law made in accordance with Fed.R.Civ.P. 52(a).
So ordered.
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673 F.2d 1304
Ziav.U. S.
80-2217
UNITED STATES COURT OF APPEALS Third Circuit
11/19/81
1
E.D.Pa.
AFFIRMED
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SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1180
CAF 12-00203
PRESENT: SMITH, J.P., FAHEY, SCONIERS, VALENTINO, AND WHALEN, JJ.
IN THE MATTER OF MICHAEL S., JR.,
RESPONDENT-APPELLANT.
--------------------------------- MEMORANDUM AND ORDER
MONROE COUNTY ATTORNEY,
PETITIONER-RESPONDENT.
TANYA J. CONLEY, ATTORNEY FOR THE CHILD, ROCHESTER, FOR
RESPONDENT-APPELLANT.
WILLIAM K. TAYLOR, COUNTY ATTORNEY, ROCHESTER (SCOTT WILLIAM
WESTERVELT OF COUNSEL), FOR PETITIONER-RESPONDENT.
Appeal from an order of the Family Court, Monroe County (Joan S.
Kohout, J.), entered December 29, 2011 in a proceeding pursuant to
Family Court Act article 7. The order, among other things, placed
respondent in the custody of the Commissioner of Health and Human
Services of Monroe County for a period of 12 months.
It is hereby ORDERED that the order so appealed from is
unanimously reversed on the law without costs, the motion is granted
and the petition is dismissed.
Memorandum: Respondent appeals from a dispositional order
entered in a violation of probation proceeding pursuant to Family
Court Act § 779. The order revoked respondent’s probation and imposed
a placement outside of his home for a period of 12 months.
Respondent’s appeal from the dispositional order brings up for review
the denial of respondent’s motion to dismiss the violation petition
(see CPLR 5501 [a] [1]; Matter of James L. [appeal No. 2], 74 AD3d
1775, 1775). We conclude that Family Court erred in denying that
motion. In the absence of the filing of a declaration of delinquency
pursuant to Family Court Act § 779-a, which tolls a disposition of
probation pending a final determination on the violation petition, the
court’s authority to enter a dispositional order expired on the date
on which the order of probation expired (see §§ 779, 779-a).
Entered: November 16, 2012 Frances E. Cafarell
Clerk of the Court
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United States Court of Appeals
For the First Circuit
No. 15-1045
UNITED STATES OF AMERICA,
Appellee,
v.
NICHOLAS WEBSTER,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Barron, Circuit Judges.
Sarah A. Churchill and Nichols & Webb, P.A., on brief for
appellant.
Renée M. Bunker, Assistant United States Attorney, and
Thomas E. Delahanty II, United States Attorney, on brief for
appellee.
April 13, 2016
TORRUELLA, Circuit Judge. This case concerns whether
the district court abused its discretion when it imposed sex
offender treatment on Nicholas Webster ("Webster") as a condition
of supervised release. Webster was convicted of attempted gross
sexual assault and solicitation of a child by computer in Maine
state court in 2007. He was subsequently convicted for failing
to register as a sex offender in Maine and New Hampshire state
courts.
In 2012, Webster pleaded guilty to charges in the United
States District Court for the District of New Hampshire stemming
from his failure to register as a sex offender, as required by the
Sex Offender Registration and Notification Act ("SORNA"), 18
U.S.C. § 2250(a), after moving from Maine to New Hampshire.
In 2014, Webster pleaded guilty in the United States
District Court for the District of Maine to violating the
conditions of supervised release that were imposed on him due to
his SORNA violation. Namely, Webster pleaded guilty to: (1)
failing to stop for a police officer; (2) driving to endanger; (3)
criminal mischief; (4) operating under the influence of alcohol;
(5) driving without a license; and (6) consumption of an unknown
quantity of alcoholic beverages. The district court sentenced him
to eleven months of incarceration and a supervised release term of
120 months, subject to a number of conditions. These included
-2-
that Webster participate in sex offender treatment and undergo
random periodic polygraph exams if required by the therapeutic
program. He appeals the sex offender and polygraph conditions
imposed.
I.
In 2007, Webster was convicted of attempted gross sexual
assault and solicitation of a child by computer in Cumberland
County Superior Court in Maine. Specifically, he was found guilty
of arranging a meeting with a thirteen-year-old female in order to
engage in sexual acts.1 During the course of the conversation
between Webster and the individual posing as an underage female,
Webster provided sexually explicit descriptions of his own
anatomy, and informed the minor that he could "teach her how to
please a man." Police arrested Webster as he drove to meet the
underage female at a prearranged meeting place.
Webster was sentenced to a term of five years
imprisonment, with all but fifteen months suspended, to be followed
by a probation term of three years. Webster was also required to
register as a sex offender.
1 The record reveals that Webster was in fact communicating with
an individual working for Perverted Justice, an organization
devoted to catching sex offenders online, who was posing as a
thirteen-year-old child.
-3-
After completing his incarceration, Webster's probation
was revoked on two separate occasions in Maine state court. 2
Webster's second probation revocation was due in part to his
failure to register as a sex offender with the Maine Sex Offender
Registry. Additionally, Webster was convicted of failing to
register as a sex offender in the state of New Hampshire. In
addition to his state convictions for failing to register as a sex
offender, Webster has a 1998 state conviction for Reckless Conduct,
which involved domestic violence, various motor vehicle offenses,
and multiple counts of Burglary and Theft by Unauthorized Taking.
On December 12, 2012, a federal grand jury returned a
one-count indictment against Webster, charging him with traveling
in interstate commerce while knowingly failing to register as a
sex offender in the state of New Hampshire, in violation of 18
U.S.C. § 2250(a). On June 25, 2013, Webster pleaded guilty to one
count of failure to register as a sex offender, and was sentenced
2 Three parole revocation petitions were filed in Maine state
court. However, his second and third revocation petitions were
adjudicated together. Webster's second revocation petition
alleged that he failed to notify the Maine Sex Offender Registry
of a change of address, which led to him being charged with a new
offense. The second revocation petition also alleged that Webster
changed his address without permission, failed to report as
directed, and failed to undergo sex offender treatment. His third
revocation petition alleged that Webster committed theft, failed
to identify himself as a probationer to law enforcement, provided
a false name to a police officer, and failed to refrain from the
use or possession of marijuana.
-4-
to 18 months imprisonment and 15 years of supervised release. The
district court recommended that he participate in sex offender
treatment during his incarceration, but did not mandate sex
offender treatment as a supervised release condition.
On March 7, 2014, Webster was released from custody and
began serving his term of supervised release. On April 2, 2014,
the District of Maine assumed supervision of Webster's terms of
release.3
On April 5, 2014, a Maine State Police trooper pulled
Webster over for travelling at seventy-four miles per hour in a
fifty-five mile per hour zone. The trooper stepped out of his
cruiser and, as he approached the rear side door of the vehicle,
Webster drove away. Following a brief chase, the trooper found
the vehicle with two female passengers inside, who informed the
officer that the driver had absconded on foot. Another officer
subsequently apprehended Webster who "smelled of alcohol" and had
"glassy and bloodshot" eyes. Although one of the passengers
attested to Webster's alcohol consumption, Webster did not consent
to a breathalyzer test.
Thereafter, on April 7, 2014, the United States
Probation Office filed a Petition for Warrant or Summons for
3 Previously, the United States District Court for the District
of New Hampshire had jurisdiction over Webster's supervision.
-5-
Offender Under Supervision alleging six parole violations.
Specifically, the petition adduced that Webster violated the
following conditions of supervision: (1) eluding an officer;4 (2)
driving to endanger; (3) criminal mischief; (4) operating a vehicle
under the influence of alcohol; (5) driving without a license; and
(6) consuming an unknown quantity of alcoholic beverages.
The district court conducted a revocation hearing on
December 19, 2014. At the start of the hearing, Webster admitted
that he committed all six violations. Probation Officer Kristin
Cook 5 testified that sex offender treatment is generally not
imposed as a release condition in the District of New Hampshire.
However, "[e]very case that has a prior sex offense or is convicted
of failure to register" in the District of Maine is ordered to
undergo sex offender treatment as a condition of release. The
treatment includes a psychosexual assessment, as well as a
polygraph exam. Ms. Cook added that, without the polygraph,
probation officers would be forced to take sex offenders on their
word.
4 The charge for eluding an officer was later re-filed as failure
to stop for a police officer.
5 The transcript of the proceedings incorrectly refers to the
Probation officer as "Crystal Cook," however, her name is Kristin
Cook.
-6-
Webster retained Dr. Peter Donnelly ("Dr. Donnelly"),6
a psychologist, to perform competency and criminal responsibility
evaluations, as well as a psychosexual risk assessment.
Dr. Donnelly diagnosed Webster with schizoaffective disorder, a
serious mental illness. Further, Dr. Donnelly testified that
Webster's responses to his questions failed to correlate to those
of "known child molesters or known rapists." In Dr. Donnelly's
view, Webster's sexual deviance was subsequent to Webster's
primary issues of mental health and substance abuse. However,
Dr. Donnelly noted that Webster can "fall into criminal problems"
including sexual offenses when he is engaging in substance abuse
or not properly managing his mental illness. Dr. Donnelly's
written report did not address whether sex offender treatment would
be beneficial. Nonetheless, Dr. Donnelly conceded that Webster
could benefit from sex offender treatment in his testimony.
6 We note that Dr. Donnelly also evaluated Webster in 2007 in
relation to the sex offense charges brought against him in Maine
state court. In his 2007 report, Dr. Donnelly noted that Webster
acknowledged committing a sex offense and that Webster endorsed
the position that his sex offense "happened because [he] knew the
person already had sexual experience and they wanted it" and that
his "sexual offense happened because of stress in [his] life."
Webster also admitted to "some sex play between [himself] and the
person who accused [him] but the truth is the person invited it
and wanted it." As part of his recommendations, Dr. Donnelly
noted that therapeutic efforts will need to be tailored to ensure
that Webster achieves greater self-awareness "of how he could have
made himself vulnerable to committing a sex-related crime."
-7-
Although Dr. Donnelly initially questioned the effectiveness of
polygraph exams, he ultimately acknowledged their helpfulness.
During his allocution, Webster sought to explain his
previous transgressions. He told the court that he was undergoing
a "dark period" in December of 2006 due to his divorce and engaging
in alcohol abuse. He admitted to inappropriate sexual behavior
in his past, but claimed that it did not involve minors. According
to Webster, the person he spoke with online in 2007 did not have
an age profile and he did not "remember all of the circumstances"
regarding what transpired. Webster also denied that he was
driving to meet the purported minor with whom he was chatting
online. Instead, he was driving to meet adults whom he also had
met online.
Webster also sought to explain why he failed to register
with the Maine sexual offender registry. In his view, he did not
blatantly refuse to register or attend treatment, but did so as a
result of his circumstances. He told the court that he was living
with his father at the time and the police told him to leave after
his father assaulted him. Instead of going home, Webster "ended
up [. . .] with friends that were not right."
Webster also told the court that he did not maliciously
break the law during his most recent supervised release violation
because he thought he had a valid driver's license. Finally,
-8-
Webster expressed that he felt that sex offender treatment was
"counterproductive," because in his view his principal issues are
substance abuse and depression.
After listening to witness testimony and Webster's
allocution, the district court sentenced Webster to eleven months
imprisonment and a 120-month period of supervised release. In
addition, the district court ordered Webster to undergo sex
offender treatment and periodic polygraph examinations, if
required by the therapeutic program, as conditions of his
supervised release.
The district court ably explained that sex offender
treatment and polygraph examinations were necessary in light of:
(1) Webster's self-medication and mental health issues; (2) the
court's understanding that Webster had not been forthright; (3)
Webster's statement to Dr. Donnelly that he thought he was chatting
with a sixteen- or seventeen-year-old girl and "was doing a quick
two-step with regard to when he was arrested and how he was
arrested;"(4) the fact that Webster's sex offense conviction is at
odds with Webster's statement to Dr. Donnelly that he never had
sexual interest in a child or engaged in deviant sexual behavior;
(5) Dr. Donnelly's statement that sex offender treatment could be
beneficial; (6) sex offender treatment had been previously ordered
by the Maine state court; and (7) the court's concern that
-9-
Webster's refusal to register as a sex offender could indicate
that Webster sought to deny or rationalize his past sexual
misconduct.
While the court noted that the scientific community is
divided on the usefulness of polygraphs, the court found that its
use is appropriate where a sex offender lacks candor. Given
Webster's less than forthcoming allocution, the district court
reasoned that the polygraph component was necessary.
II.
We review challenges to conditions of supervised release
for abuse of discretion. United States v. Morales-Cruz, 712 F.3d
71, 72 (1st Cir. 2013).
"There are two basic kinds of supervised release
conditions. The first kind are mandatory conditions. By
operation of statute, mandatory conditions are automatically
imposed in every case in which a defendant receives supervised
release as part of his sentence." United States v. Medina, 779
F.3d 55, 60 (1st Cir. 2015) (citing 18 U.S.C. § 3583(d)). The
second kind are those special conditions imposed at the discretion
of the court. Id.
District courts enjoy "significant discretion to impose
special conditions of supervised release." Id. However, district
-10-
courts may impose a special condition only if the court determines
that the condition:
(1) is reasonably related to the factors set forth
in [18 U.S.C. §] 3553(a)(1), (a)(2)(B), (a)(2)(C),
and (a)(2)(D);
(2) involves no greater deprivation of liberty than
is reasonably necessary for the purposes set forth
in [18 U.S.C. §] 3553(a)(2)(B), (a)(2)(C), and
(a)(2)(D); and
(3) is consistent with any pertinent policy
statements issued by the Sentencing Commission
pursuant to 28 U.S.C. [§] 994(a).
18 U.S.C. § 3583(d).
Section 3553(a)(1) requires that the district court take
account of "the nature and circumstances of the offense and the
history and characteristics of the defendant." District courts
must also take account of the need "to afford adequate deterrence
to criminal conduct," id. § 3553(a)(2)(B), "to protect the public
from further crimes of the defendant," id. § 3553(a)(2)(C), and
"to provide the defendant with needed educational or vocational
treatment, medical care, or other correctional treatment in the
most effective manner," id. § 3553(a)(2)(D); see also Medina, 779
F.3d at 60. Thus, district courts may impose a special condition
only if the condition will further at least one of the goals of
supervisory release, which include: (1) the need to protect the
community; (2) deterrence; and (3) the effective educational,
vocational, medical, or other correctional treatment of the
-11-
defendant. United States v. York, 357 F.3d 14, 20 (1st Cir. 2004)
(citing U.S.S.G. § 5D1.3(b)(1)); see also Medina, 779 F.3d at 60-
61.
"The critical test is whether the condition is
reasonably related to one or more of the goals of supervised
release." Morales-Cruz, 712 F.3d at 74 (citing York, 357 F.3d at
20). Importantly, sex offender treatment may be imposed in a case
in which the underlying crime is not a sex offense. York, 357
F.3d at 19-20.
Webster contends that the district court abused its
discretion by requiring that he participate in sex offender
counseling and submit to polygraph testing as part of his
supervised release.7 More specifically, Webster argues that the
court imposed sex offender treatment on him as a matter of policy
even though this condition is not reasonably related to the conduct
that triggered his violation of supervised release. Secondly,
Webster emphasizes that because his conviction for sexually
7 Arguably, Webster waived his challenge to the polygraph testing
condition by failing to develop his argument in his brief. To the
extent that he is alleging that the polygraph condition is
unreasonable, we discuss his objections to the polygraph testing
condition in tandem with his objections to the imposed sex offender
treatment. Nonetheless, we note that the district court tailored
the polygraph condition to ensure the protection of Webster's Fifth
Amendment rights, as well as any concern that violation proceedings
may arise solely from Webster's failure to pass a polygraph exam.
See York, 357 F.3d at 23-25.
-12-
deviant behavior took place in 2007, it is too remote in time to
support the imposition of sex offender treatment or polygraph
testing.8 Thus, Webster contends that the imposed conditions are
not tailored to his particular history and characteristics.
In Morales-Cruz, the defendant violated the conditions
of his supervised release by failing to register as a sex offender
as required by SORNA. The district court sentenced the defendant
to 48 months of imprisonment and a ten-year term of supervised
release, which included participation in sex offender treatment
and/or mental health treatment programs. The majority upheld the
imposition of sex offender treatment as a condition of supervised
release even though the underlying sex offense was sixteen years
old. According to the majority, the defendant's multiple
convictions for failure to register as a sex offender in three
different jurisdictions warranted the imposition of sex offender
treatment because it permitted a reasonable inference that the
defendant "presented a recidivism risk and warranted deterrent
8 Webster cites the dissenting opinion in Morales-Cruz to support
his argument that when the sexually offending behavior is
temporally removed from the events that trigger the sentencing, a
strong nexus between the need for sex offender treatment and the
defendant's circumstances must be shown. 712 F.3d at 77 (Torruella,
J., dissenting) (citing United States v. Dougan, 684 F.3d 1030,
1036 (10th Cir. 2012)). Even under the dissent's reasoning,
however, Webster's argument fails because the district court
provided a sufficient nexus between Webster's characteristics and
the need for sex offender treatment.
-13-
punishment." Id. at 75. The majority also noted that the
defendant had a recent conviction for battery on the woman with
whom he lived.9 Id. at 72.
Unlike the defendant in Morales-Cruz, Webster did not
violate his supervised release conditions because of a failure to
9 As part of its analysis, the majority distinguished the
defendant in Morales-Cruz from cases in our sister circuits in
which supervised release conditions were reversed because the
conditions were premised on behavior that was too remote to justify
sex offender or mental health conditions. See United States v.
Sharp, 469 F. App'x 523 (9th Cir. 2012)(sex offender conditions
reversed where the sex offense was more than a decade old, the
defendant was convicted of being a felon in possession of a
firearm, no suggestion of prior sex offender registration
convictions, and the district court failed to provide
justification for the sex offender condition); United States v.
Carter, 463 F.3d 526 (6th Cir. 2006)(sex offender conditions
reversed where the defendant was convicted of being a felon in
possession of a firearm, the defendant's prior sex offense was 17
years old); United States v. Scott, 270 F.3d 632 (8th Cir. 2001)
(sex offender conditions reversed where the defendant was
convicted of armed robbery and the sex offense was 15 years
removed); United States v. Kent, 209 F.3d 1073 (8th Cir. 2000)
(reversing mental health conditions because they were unrelated to
the mail fraud conviction and there was no evidence in the record
to suggest that mental health counseling would further the goals
of deterrence or public protection); Dougan, 684 F.3d 1030
(reversing imposed sex offender conditions because previous
convictions for sexual battery took place 17 years prior); United
States v. Rogers, 468 F. App'x 359 (4th Cir. 2012) (per curiam)
(reversing sex offender conditions because the sex offense was
over twenty years old and there was no suggestion that the
defendant had chronically failed to comply with sex offender
registration requirements).
The majority emphasized that these cases were distinguishable
because they did not involve a defendant with a recent conviction
for domestic violence. Moreover, in four of the cases the
challenged conditions "bore no relationship to the offense of
conviction and the defendant's recent criminal history provided no
-14-
register under SORNA. Nor was Webster's supervised release
violation a sexual offense. Nonetheless, we find that the
district court sufficiently articulated the need for sex offender
treatment and polygraph testing in this case. As mentioned
earlier, the district court provided a detailed accounting as to
why the imposed conditions were appropriate.
In light of Dr. Donnelly's testimony and Webster's
allocution, we find that the record supports that the sex offender
treatment and polygraph conditions are in fact tailored to the
nature and circumstances of Webster's sex offense and Webster's
particular characteristics. Webster's refusal to accept
responsibility for his sex offense, lack of candor towards the
court, and continued self-medication pose a real risk of
recidivism. See United States v. Roy, 438 F.3d 140, 143 (1st Cir.
2006) (describing statement by a treatment counselor that with sex
offenders, dishonesty is commonly a risk factor for recidivism).
We have previously highlighted that sex offender treatment has
been linked to reduced recidivism. See United States v. Mercado,
777 F.3d 532, 537 (1st Cir. 2015) (citing Morales–Cruz, 712 F.3d
at 75; York, 357 F.3d at 21). Further, Dr. Donnelly's testimony
linked Webster's mental illness and substance abuse to his sexual
basis for the conditions." Morales-Cruz, 712 F.3d at 75.
-15-
deviance. Thus, we conclude that the imposed conditions are
reasonably related to Webster's offense and his characteristics.
We also find that the imposed conditions are sufficiently related
to the supervised release goals of rehabilitation and the need to
protect the community.
Webster's argument that his 2007 sex offense is too
remote to be reasonably related to the imposition of sex offender
treatment also fails. In Morales-Cruz, the majority affirmed the
imposition of sex offender treatment when the underlying sex
offense was sixteen years old. 712 F.3d at 72. We are well aware
that "our sister circuits continue to take a dim view of equivalent
sentencing conditions based on temporally remote sex offense
convictions where there has been no subsequent similar conduct."
United States v. Del Valle-Cruz, 785 F.3d 48, 59 (1st Cir. 2015).
The imposition of sex offender conditions is troubling when the
underlying sex offense conviction is temporally remote. However,
in this case, we find that the district court properly articulated
the need for sex offender treatment in light of Webster's personal
characteristics. As has been repeatedly mentioned throughout this
opinion, the court found that Webster's lack of candor, denials of
responsibility, continued self-medication, and the testimony from
his own retained therapist necessitated the imposed conditions.
Thus, even though Webster's underlying sex offense conviction
-16-
dates back to 2007, his history and characteristics support the
district court's imposed conditions. Further, the record amply
supports that Webster will likely benefit from sex offender
treatment as part of his rehabilitation. Similarly, Webster's
allocution indicates that his refusal to accept responsibility for
his conduct and his continuing self-medication present a danger to
the community.
Because we find that the sex offender treatment and
polygraph testing conditions were warranted by Webster's
individual characteristics and that such conditions were also
necessary to achieve the goals of supervised release, we conclude
that affirmance is appropriate in this case.
III.
Accordingly, we affirm the district court's imposition
of sex offender treatment and polygraph examination.
Affirmed.
-17-
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11th
Court of Appeals
Eastland,
Texas
Opinion
William Lambard and Barbara Lambard
Appellants
Vs. No. 11-01-00316-CV B Appeal from Taylor County
Woodridge Properties, LLP
Appellee
This case arises out of a real estate
transaction. William Lambard and
Barbara Lambard, appelalnts, filed the lawsuit to obtain specific performance
of a contract for deed. After a trial
to a jury, the trial court entered a judgment denying specific performance and
denying appellants=
request for damages and attorney=s
fees. We affirm.
Charles Lambard, William Lambard=s father, entered into a
contract for deed regarding his purchase of real property described in the
contract. Woodridge Properties, LLP, appellee,
was the owner of the property. The
parties entered into the contract in October 1993. The contract called for a total price of $11,500.00 to be paid
out at a certain rate each month plus an additional amount for a tax and
insurance escrow account. After Charles
died, appellants continued to live on the property and they entered into a new
contract with appellee. This new
contract was signed on April 1, 1994.
This contract stated the price to be $11,281.66.
Appellants became delinquent in their payments
under the April contract. On September
9, 1998, appellee sent appellants an Aeviction
notice.@ Later, after appellants had settled an
unrelated lawsuit in which they made certain claims in connection with the
death of William=s
mother, there was another contract between the parties. On December 4, 1998, appellants took
$5,000.00 from the settlement and paid it to appellee, and the new contract was
entered. The new contract provided for
a purchase price of $6,000.00. On
August 23, 2000, appellants were again delinquent, and it became necessary for
appellees to send another notice letter to appellants. The letter contained details of the default
and gave appellants the opportunity to cure the delinquencies. The deadline for compliance was October 25,
2000. On October 6, 2000, appellants
responded by filing this lawsuit.
Appellants first sought specific performance, alleging that the purchase
price in the last contract was $6,000.00, that they had paid the $5,000.00 payment,
leaving a balance of $1,000.00, and that they had overpaid by making more
monthly payments than required. In its
answer, appellee specifically pleaded that appellants had not complied with all
conditions precedent under the contract.
Appellee also filed a counterclaim, seeking cancellation of the
contract, damages for past due payments, and attorney=s fees.
Appellants later amended their petition by adding claims for damages for
deceptive trade practices and for breach of fiduciary duty, and they also
sought an accounting.
The trial court refused to submit appellants= requested issues in
connection with the new claims raised in the amended petition. The case was submitted to the jury upon
three separate jury questions. In the
first question, the trial court basically asked the jury whether appellants had
performed all of their obligations under the contract and whether all
conditions precedent had either been met or excused. The jury found that appellants had not performed their
obligations. In the two other issues,
the jury first found that no damages were due to appellee and also awarded A0@ to appellee for attorney=s fees.
Appellants bring two issues on appeal. First, they claim that the trial court erred
in canceling the contract because appellee did not comply with AProperty Code Section
5.061.@ The complaint is made that the notice which
appellants received was in A12
point type@ rather
than in A14 point bold
face type@ or
uppercase letters.
Former TEX. PROP. CODE '5.061 (Vernon 1984) has been amended and is
now located at TEX. PROP. CODE ANN. '
5.063 (Vernon Supp. 2002). The statute
prescribes the method of notice to be given to one who is in default under
certain executory contracts for deed.
Former Section 5.063, now TEX. PROP. CODE ANN. ' 5.064 (Vernon Supp. 2002), required a seller
under certain executory contracts for deed to give the notice prescribed by
former Section 5.061. Former Section
5.061, now Section 5.063, was amended
in 1993, 1995, and 2001. At the time
that appellants= cause
of action accrued, former Section 5.061 required that a certain part of the
notice be given in 10 point boldfaced type or uppercase typewritten
letters. The current Section 5.063
requires that the specified part of the notice be conspicuous and printed 14
point boldface type or 14 point uppercase typewritten letters. The notice given by appellee complied with
the statute in effect at the time that it was given.
Furthermore, the notice required by Section 5.064
and prescribed by former Section 5.063 is simply a prerequisite which a seller
under certain executory contracts for deed must meet before the seller can
enforce a claim for Arescission
or forfeiture and acceleration.@ Section 5.064. Here, appellant initiated the lawsuit over the property. If appellee wanted to seek to have the
contract canceled, it was required to file its claim when it did. TEX.R.CIV.P. 97 governs compulsory
counterclaims. A counterclaim is
compulsory if: it is within the
jurisdiction of the court; it is not at the time of filing the answer the
subject of a pending action; the claim is mature and owned by the defendant at
the time of filing the answer; it arose out of the same transaction or
occurrence that is the subject matter of the opposing party's claim; it is
against an opposing party in the same capacity; and it does not require the presence of third parties over whom
the court cannot acquire jurisdiction.
A party asserting a claim which has all of these elements must assert
the claim in the initial action, and the claim cannot be asserted in a later
action. Ingersoll‑Rand Company v.
Valero Energy Corporation, 997 S.W.2d 203, 207 (Tex.1999). Appellee=s
claim was a compulsory counterclaim. Appellants also argue in their first issue
that the trial court could not award relief to appellee because appellee failed
to obtain any favorable jury findings.
The jury found that appellants had not performed the agreement. That was a finding favorable to appellee and
was a finding upon which the trial court=s
judgment could be based. Furthermore,
appellants have cited us to no authority in connection with this
contention. Appellants= first issue on appeal is
overruled.
In their second issue, appellants maintain that
the trial court erred in failing to submit their damage issues. The damage issues stemmed from appellants= claims of deceptive trade
practices and breach of fiduciary duty.
Again, we have been cited to no authority in appellants= second issue. Nevertheless, we will discuss the issue.
Generally, failure to perform terms of a contract
results in a breach of contract action, not a tort action. Crim Truck & Tractor Co. v. Navistar
International Transportation Corporation, 823 S.W.2d 591, 596 (Tex.1992). While a contract may create duties that
sound both in contract and in tort, if the claim arises solely from the
contract and the damages sought are only economic damages, the action is one in
contract, not in tort. Southwestern
Bell Telephone Company v. DeLanney, 809 S.W.2d 493 (Tex.1991); Montgomery Ward
& Co. v. Scharrenbeck, 204 S.W.2d 508 (Tex.1947). Merely making a claim
under TEX. BUS. & COM. CODE ANN. '
17.001 et seq. (Vernon 2002) (DTPA) does not convert a contract action into a
DTPA violation where it is merely a dispute relating to contract performance
based on differing contract interpretations; traditional contract principles
apply. See Quitta v. Fossati, 808
S.W.2d 636, 644 (Tex.App. - Corpus Christi 1991, writ den=d). The conduct must involve more than a mere
breach of contract. Ashford
Development, Inc. v. USLife Real Estate Services Corporation, 661 S.W.2d 933,
935 (Tex.1983). By itself, failure to
perform a promise in an agreement does not constitute a misrepresentation nor
does such failure constitute an unconscionable act as those terms are defined
in the DTPA. Crawford v. Ace Sign,
Inc., 917 S.W.2d 12, 14‑15 (Tex.1996); Chilton Insurance Company v. Pate
& Pate Enterprises, Inc., 930 S.W.2d 877 (Tex.App. ‑ San Antonio
1996, writ den=d). The
case before us is one which involves alleged damages which stem from the
contract itself and which involve economic loss only. In their prayer for relief, appellants ask for recovery of their Aeconomic damages.@ The trial court did not err in failing to submit appellants= issues to the jury.
There is another reason why the trial court did
not err in failing to submit appellants=
issues to the jury. If the pleadings
and the evidence support them, a trial court is required to submit requested
questions to a jury. Elbaor v. Smith,
845 S.W.2d 240 (Tex.1992). In order to
make that determination, an appellate court must examine the record for
evidence which supports the submission and must ignore all evidence to the
contrary. We have performed that
examination and hold that there is no evidence in this record to support the
submission of the issues. Appellants
argue that they were never furnished an accounting for the escrow account, but
it is undisputed that they never requested one. It is also undisputed that they never had an insurance claim
which was not covered by insurance. The
evidence shows that the essence of the dispute is the payment of the final
sales price as stated in the last contract.
The trial court did not err when it refused to submit the questions and
instructions tendered by appellants.
The second issue on appeal is overruled.
The judgment of the trial court is affirmed.
JIM R. WRIGHT
JUSTICE
August 15, 2002
Do not publish. See
TEX.R.APP.P. 47.3(b).
Panel
consists of: Arnot, C.J., and
Wright,
J., and McCall, J.
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932 P.2d 57 (1997)
324 Or. 585
Navajo BAKER, Personal Representative of the Estate of Timothy B. Baker, Deceased, Petitioner on Review/Respondent on Review,
v.
Woodruff J. ENGLISH, II, M.D., Respondent on Review/Petitioner on Review.
CC 9211-08042; CA A81150; SC S42379, S42428.
Supreme Court of Oregon.
Argued and Submitted January 5, 1996.
Reassigned July 8, 1996.
Decided February 21, 1997.
*58 John Paul Graff, of Graff & O'Neil, Portland, argued the cause for petitioner on review/respondent on review Baker. With him on the briefs was Jeffrey B. Wihtol, Portland.
Janet M. Schroer, of Hoffman, Hart & Wagner, Portland, argued the cause for respondent on review/petitioner on review English. With her on the briefs was Marjorie A. Speirs, Portland.
Before CARSON, C.J., and VAN HOOMISSEN, FADELEY, GRABER, and DURHAM, JJ.[*]
CARSON, Chief Justice.
The issue in this medical malpractice case is whether an erroneous discovery ruling by the trial court constituted prejudicial error, requiring reversal of a judgment in plaintiff's favor. For the reasons that follow, we conclude that the trial court's ruling was not prejudicial and, hence, that reversal is not required.
Because a jury rendered a verdict in favor of Timothy Baker ("plaintiff"), we view the facts in the light most favorable to him.[1]See Conway v. Pacific University, 324 Or. 231, 233 n. 1, 924 P.2d 818 (1996) (stating principle). At some time in the 1980s, plaintiff and his wife became infected with Human Immunodeficiency Virus (HIV) and, by 1990, both had developed Acquired Immune Deficiency Syndrome (AIDS). In June 1990, after deciding to find a new treating physician, plaintiff and his wife consulted with Dr. Woodruff J. English, II, M.D. ("defendant"), an infectious disease specialist. They became defendant's patients in August 1990. Shortly thereafter, plaintiff's wife died of complications from AIDS. Defendant continued to treat plaintiff after the death of plaintiff's wife.
On November 27, 1990, in order to prevent the onset of pneumocystis pneumonia, which commonly infects AIDS patients, defendant prescribed Cotrim, a sulfa-based medication, for plaintiff. Defendant did not inform plaintiff that Cotrim contained sulfa and also did not inform him about the risks of taking Cotrim or about any alternative treatments, despite the fact that defendant's chart indicated that plaintiff was allergic to sulfa.
Plaintiff had a severe allergic reaction to Cotrim and was hospitalized in early December 1990. On December 20, 1990, defendant advised plaintiff and members of plaintiff's family that plaintiff might have only a few weeks to live. Plaintiff then was transported to a hospital in California. After eight months of hospitalization and home nursing care, plaintiff recovered, for the most part, from his allergic reaction to Cotrim.
In November 1992, plaintiff filed this medical malpractice action against defendant, alleging that defendant negligently prescribed Cotrim when he knew or should have known about plaintiff's allergy to sulfa and also that defendant negligently failed to obtain plaintiff's informed consent before prescribing Cotrim. During pretrial discovery, defendant subpoenaed the records of Dr. Drucker, a psychologist who had conducted counseling sessions with plaintiff and his wife beginning in May 1990, and had continued to see plaintiff after the death of plaintiff's wife in August 1990. Plaintiff provided the records to defendant but deleted all references to Drucker's counseling sessions with plaintiff before November 27, 1990. Defendant moved to compel production of that part of Drucker's records, which the judge hearing pretrial motions denied. At the beginning of the trial in June 1993, the trial court judge[2] declined to revisit the discovery issue. After the close of evidence, the jury rendered a verdict for plaintiff and awarded him $104,109.65 in economic damages and $75,000 in noneconomic damages.
*59 Defendant appealed, assigning error to the denial of his motion to compel production of Drucker's records. The Court of Appeals held that the trial court erred when it denied defendant's motion to compel, concluding that the records were discoverable under ORCP 36 B(1).[3]Baker v. English, 134 Or. App. 43, 46-47, 894 P.2d 505 (1995). In addressing the issue whether the error was prejudicial or harmless, the court stated:
"[T]here is no basis for concluding one way or the other whether [the] denial [of discovery] might have affected [defendant's] trial strategy or the result of the trial. Consequently, we cannot affirmatively conclude that the error was unlikely to have affected the result and cannot hold that it was harmless." Id. at 48, 894 P.2d 505.
The Court of Appeals then concluded that, upon remand, the case should be limited to the issue of noneconomic damages. Id. at 49, 894 P.2d 505. One judge dissented, arguing that, although the trial court had erred in denying defendant's motion to compel production, the error was harmless and did not require reversal. Id. at 50-52, 894 P.2d 505 (De Muniz, J., dissenting).
Both parties petitioned this court for review. Plaintiff argued that the Court of Appeals erred in holding that the discovery ruling was prejudicial error. Defendant argued that the Court of Appeals erred in limiting the issues upon remand. We allowed both petitions and now reverse the decision of the Court of Appeals.
Upon review, plaintiff concedes that the trial court erred when it denied defendant's motion to compel production.[4] Consequently, the issues before us now are whether that error was prejudicial and, if so, whether the issues should be limited upon remand. As we shall explain, we conclude that the error was not prejudicial and, therefore, that the Court of Appeals erred when it reversed the judgment in plaintiff's favor.[5]
At the outset, it is helpful to clarify the law governing our task in this case. ORS 19.125(2) provides:
"No judgment shall be reversed or modified except for error substantially affecting the rights of a party." (Emphasis added.)
See Baden v. Sunset Fuel Co., 225 Or. 116, 120, 357 P.2d 410 (1960) (citing ORS 19.125(2) and stating the "familiar precept that not every error entitles a litigant to a new trial but only error which has resulted in prejudice to him"). That statute sets forth the testwhether a trial court's error "substantially affect[ed] the rights of a party" under which we must determine whether an error requires reversal or modification. A determination that an error did substantially affect the rights of a party within the meaning of ORS 19.125(2) leads to the conclusion that the trial court committed "prejudicial," or "harmful," error, requiring reversal or modification of the trial court's judgment. In contrast, a determination that a trial court error did not substantially affect a party's rights leads to the conclusion that the error was not prejudicial, i.e., was "harmless," and that the judgment shall be affirmed. Thus, the terms "prejudicial error" and "harmless error," as well as similar terms, serve to describe the conclusion that results from our application of the statutory test.
*60 We also note that, in applying ORS 19.125(2), this court often examines whether it is likely that a trial court's error affected the outcome of the case below. For example, in cases in which a trial court's error either did or may have affected the outcome, such as an error concerning a key issue before the jury, this court has concluded that the error substantially affected the rights of a party and, therefore, was prejudicial. The rationale behind such a conclusion is obvious: The rights of an aggrieved party are substantially affected if the outcome either would have or may have been different had the error not occurred.
A review of our case law illustrates that principle. In U.S. National Bank v. Boge, 311 Or. 550, 555, 814 P.2d 1082 (1991), the trial court erroneously instructed the jury that, on the defendants' counterclaim, the plaintiff must have presented evidence showing more than mere honesty on its part in order to prove that it had acted in good faith. This court concluded that giving the instruction constituted prejudicial error because "[t]he standard for [the plaintiff's] conduct was the central issue to be decided" and the jury may have reached its verdict based upon the erroneous instruction. Id. at 566, 814 P.2d 1082. Likewise, in Honeywell v. Sterling Furniture Co., 310 Or. 206, 211, 797 P.2d 1019 (1990), this court held that it was prejudicial error to instruct the jury about the statutorily mandated distribution of a punitive damages award, despite the fact that the instruction legally was correct. In so holding, the court reasoned that the instruction "encouraged the jury to award punitive damages for a [specific] purpose" and, consequently, that "[o]ffering [the] jury an additional, inappropriate basis for awarding punitive damages harmed the defendant." Id. at 211, 212, 797 P.2d 1019. See also Brooks v. Bergholm, 256 Or. 1, 6, 470 P.2d 154 (1970) (prejudicial error to refuse to give a limiting instruction cautioning the jury against considering the defendant's wealth in determining compensatory damages because the error "related to the amount of damages" and, therefore, the court "[could not] say that it did not affect the jury's verdict"); Armstrong v. Stegen, 251 Or. 340, 344, 445 P.2d 509 (1968) (prejudicial error to submit to the jury a negligence allegation that was not supported by any evidence because doing so required the jury to speculate in reaching its result); Watson v. Dodson, 238 Or. 621, 623, 395 P.2d 866 (1964) (prejudicial error to deny a motion to amend a complaint to conform to the proof because, had the trial court allowed the amendment, additional instructions would have been given that might have affected the jury's consideration of the evidence).
Similarly, this court has concluded that a trial court's error is harmless when such error was not likely to have affected the outcome of the case below. For example, in Smith v. Fields Chevrolet, 239 Or. 233, 396 P.2d 200 (1964), this court addressed the issue whether an erroneous, ambiguous jury instruction required reversal of a jury verdict in the plaintiff's favor. After reviewing the challenged instruction in the context of the instructions as a whole, the court stated:
"[W]e are satisfied that the error was not the kind of error that was likely to affect the outcome of the litigation. See ORS 19.125. * * *
"We can find no reason for believing that this jury, which had spent the better part of two days listening to voluminous evidence * * *, was misled by the minor error in the instruction. The issue was clear. If the jury believed the plaintiff's evidence the defendants were liable." 239 Or. at 237, 396 P.2d 200.
See also Grover v. Sturgeon, 255 Or. 578, 583, 469 P.2d 617 (1970) (harmless error when it was clear from the jury's verdict that the trial court's failure to grant a motion for directed verdict did not affect the verdict).[6]
*61 The case law summarized above demonstrates that an inquiry into the likelihood whether a trial court's error affected the outcome of the case below can serve as a useful tool in determining whether the error resulted in prejudice to a party. However, that inquiry, albeit helpful in some cases, is not the test for determining prejudice. Rather, our focus in this and all similar cases is the statutory test set forth in ORS 19.125(2): "No judgment shall be reversed or modified except for error substantially affecting the rights of a party."[7] (Emphasis added.) That is the only statutorily mandated test for determining whether an error requires reversal. Our task here, therefore, is to determine whether the trial court's erroneous discovery ruling substantially affected defendant's rights.[8]
In their arguments before this court, the parties disagree over how we should apply the test set forth in ORS 19.125(2) in this case. Plaintiff contends that defendant already had possession before trial, through other sources, of essentially equivalent information as that contained in Drucker's records and, consequently, that the denial of access to Drucker's records could not substantially have affected defendant's rights. Defendant, on the other hand, contends that the trial court's ruling substantially affected his rights because he lost the ability to review and analyze all discoverable evidence before making certain strategy decisions, which, in turn, affected his presentation of evidence at trial. As we shall explain, we agree with plaintiff.
In the context of this erroneous discovery ruling, the central issue is whether defendant, before trial, already knew or had possession of qualitatively the same information as that contained in the denied discovery. If such information were known before trial through other sources, the denial of discovery could not substantially have affected defendant's rights under ORS 19.125(2). That is so because, having already known or been in possession of qualitatively indistinguishable information, defendant could have chosen to pursue or utilize that information in formulating a theory of the case and a strategy of presenting evidence.
Such a focus upon existing knowledge or possession of the information at issue is consistent with our case law. In Woosley v. Dunning, 268 Or. 233, 249, 520 P.2d 340 (1974), a wrongful death case, this court was asked to determine whether the trial court's error in denying the defendant's pretrial motion for production of slides from the decedent's autopsy constituted prejudicial error. The court concluded that the error was not prejudicial because virtually the same information as that contained in the slides either was provided or was available to the defendant before trial. For example, in Woosley, the plaintiff had provided the defendant with the decedent's complete hospital records, including an autopsy report. Id. at 249-50, 520 P.2d 340. Consequently, the defendant *62 "was not prejudiced as the result of the failure of the trial court to require the production of [the] slides in advance of trial." Id. at 250, 520 P.2d 340.[9]
Having established an analytical framework, we now turn to the specific facts of this case. Defendant makes two contentions supporting his conclusion that the denial of access to Drucker's records substantially affected his rights, resulting in prejudicial error. First, he contends that Drucker's records would have enabled him to mitigate the award of noneconomic damages in plaintiff's favor because the records demonstrate that plaintiff already was in a fragile emotional state before defendant prescribed Cotrim on November 27, 1990, and, consequently, that defendant's conduct could not have caused all plaintiff's emotional damages. Second, defendant contends that he also would have used Drucker's records to challenge plaintiff's credibility.
We have reviewed Drucker's records and agree with defendant that they indicate that plaintiff had emotional problems and was coping with several stressful issues before defendant prescribed Cotrim on November 27, 1990. The records therefore would have been helpful, as defendant contends, to mitigate plaintiff's claim of noneconomic damages.
However, after reviewing the entire trial record, which includes some information that was available to the parties before trial but that was not submitted to the jury in this case, we conclude that defendant already was aware of qualitatively the same information as that contained in Drucker's records, which would have allowed him to pursue the theory of mitigation that he now advances upon review. That information either was possessed by or provided to defendant before trial through many sources, including plaintiff's hospital records, plaintiff's deposition, and defendant's own chart notes and deposition. Consequently, the denial of access to Drucker's records did not substantially affect
defendant's right to prove all the facts necessary to support his theory of mitigation of noneconomic damages.
As to defendant's contention concerning plaintiff's credibility, we agree that plaintiff's credibility was a central issue in the case, particularly plaintiff's recollection of his November 27, 1990, visit with defendant, when defendant prescribed Cotrim. We disagree with defendant, however, that the trial court's discovery ruling substantially affected his rights in that regard.
Defendant first argues that, according to Drucker's records, plaintiff was undergoing certain emotional stressors that may have affected his memory in late November 1990. In defendant's view, had he seen Drucker's records before trial, he would have challenged plaintiff's credibility by cross-examining plaintiff at his deposition "about the emotional issues that might have affected his memory of events on the date of that discussion" and also by presenting testimony at trial "that directly impacted the central liability issue in the case." We reject defendant's argument because, as discussed above, defendant already had possession of information concerning plaintiff's emotional problems and other similar issues before trial, despite his lack of access to Drucker's records.
Defendant finally argues that he could have used some of the information contained in Drucker's records to impeach plaintiff's credibility because the information demonstrated that plaintiff had or may have provided conflicting information to different people about various issues. We again conclude that, through sources including plaintiff's hospital records, plaintiff's deposition, and defendant's own deposition, defendant already knew, before trial, of qualitatively the same information that he now contends could have been used to challenge plaintiff's credibility. Consequently, we reject defendant's impeachment argument.
*63 In summary, after reviewing Drucker's records and the trial record, we conclude that defendant had knowledge before trial of information qualitatively indistinguishable from that contained in Drucker's records. Had defendant chosen to do so, he could have raised at trial the issues that he now contends depended upon access to Drucker's records. We hold that the erroneous discovery ruling did not substantially affect defendant's rights under ORS 19.125(2) and, therefore, did not result in prejudice to defendant. Accordingly, the trial court's ruling does not require reversal of the judgment in plaintiff's favor.
The decision of the Court of Appeals is reversed in part and affirmed in part. The judgment of the circuit court is affirmed.
NOTES
[*] Gillette, J., did not participate in the consideration or decision of this case; Unis, J., retired June 30, 1996, and did not participate in this decision.
[1] Timothy Baker died after trial, while this appeal was pending. His personal representative, Navajo Baker, has been substituted as a party.
[2] In this opinion, we refer to the judge who presided over the trial as the "trial court judge." The trial court judge was not the same judge who initially denied defendant's pretrial motion to compel production of Drucker's records. We refer to both judges collectively as the "trial court."
[3] ORCP 36 B(1) provides:
"For all forms of discovery, parties may inquire regarding any matter, not privileged, which is relevant to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things, and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence."
[4] That issue is not before us upon review and, accordingly, we do not consider it.
[5] Our disposition of the first issue makes it unnecessary to consider defendant's petition for review, which concerns the second issue, that is, whether the issues should be limited upon remand in the light of Maxwell v. Port. Terminal RR. Co., 253 Or. 573, 456 P.2d 484 (1969). That decision held that a new trial in a personal injury action "ordinarily should be a new trial on all contested factual issues, regardless of the ability of the parties on appeal to pinpoint error so as to show that the error, if any, may have affected only one issue." 253 Or. at 577, 456 P.2d 484.
[6] We note, however, that this court has developed a narrow exception to the general principle that a party's rights ordinarily are not substantially affected by an error that likely did not affect the outcome of the case. In Highway Commission v. Walker et ux, 232 Or. 478, 376 P.2d 96 (1962), this court addressed the issue whether a trial court's refusal to permit the plaintiff to exercise a peremptory challenge constituted prejudicial error. In concluding that the error automatically was prejudicial, the court adopted the following reasoning:
"There is no great likelihood that [excusal of the juror] would affect the result, given the assumption that jurors act reasonably * * *[.] [B]ut since there is no way for a party deprived of his peremptory challenge to show prejudice, there is no sanction to enforce his right unless violation thereof is adjudged automatically prejudicial." 232 Or. at 485, 376 P.2d 96 (emphasis added; internal quotation marks omitted).
As is clear from that text, this court established a prophylactic, per se rule specifically for the purpose of analyzing error pertaining to peremptory challenges. The holding of Highway Commission should not be interpreted to reach beyond that context.
[7] Indeed, in many cases, this court has focused upon only that wording and the issue of prejudice in making a determination under the statute. See, e.g., McBee v. Knight, 239 Or. 606, 609, 398 P.2d 479 (1965) (erroneous jury instruction regarding a particular allegation of negligence was harmless error because the instructions as a whole made the issues and law clear to the jury and, therefore, "did not [substantially] affect the * * * rights of the parties"); Rogers v. Day, 230 Or. 564, 566, 370 P.2d 624 (1962) (permitting a certain pleading to be filed was harmless error partially because, by the time of trial, "the pleadings * * * had been so far forgotten by both sides that no one was prejudiced"); Baden v. Sunset Fuel Co., 225 Or. 116, 121, 357 P.2d 410 (1960) (trial court's error in refusing to receive the initial jury verdict was harmless error because the error did not "result[] in any prejudice" to the plaintiff).
[8] We note that ORS 19.125(2) contemplates that an error below has affected the rights of a party. To rise to the level of prejudicial error, however, the error must have affected the rights of a party substantially.
[9] The court in Woosley also noted that the defendant could have subpoenaed either the pathologist who performed the autopsy or other physicians who had knowledge of the information contained in the slides, and also could have gained access to the slides by subpoenaing them for production at trial. 268 Or. at 250, 520 P.2d 340. Despite those additional factors, Woosley is helpful to our analysis here because the aggrieved party in that case also had knowledge of the information contained in the denied discovery.
| {
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} |
In the United States Court of Federal Claims
No. 12-125C
(Filed: August 18, 2015)
)
JAMES H. WOLLMAN, )
)
Plaintiff, ) Equal Access to Justice Act, 28 U.S.C.
) § 2412; Government Position Not
v. ) Substantially Justified; Reduction for
) Partial Success on Merits
THE UNITED STATES, )
)
Defendant. )
)
Jason E. Perry, Wellington, FL, for plaintiff.
Michael D. Snyder, United States Department of Justice, Civil Division,
Washington, DC, with whom were Benjamin C. Mizer, Principal Deputy Assistant
Attorney General, Robert E. Kirschman, Jr., Director, and Steven J. Gillingham,
Assistant Director. Capt. Christopher J. Koschnitzky, of counsel.
OPINION AND ORDER
Firestone, Judge.
Pending before the court is the application for attorney’s fees and costs filed by
plaintiff James H. Wollman (“Mr. Wollman”) pursuant to the Equal Access to Justice Act
(“EAJA”), 28 U.S.C. § 2412(d). Plaintiff seeks $50,014.60 in attorney’s fees and
$578.22 in costs, arguing that the position of defendant the United States (“the
government”) in this litigation was not substantially justified. According to Mr.
Wollman, this lack of justification is demonstrated by the court’s finding that the decision
of the Army Physical Disability Review Board (“APDRB”) was arbitrary, capricious, and
not supported by substantial evidence. In response, the government argues that the
government’s position was substantially justified under the governing standards, and the
fact that plaintiff prevailed in the litigation is not enough to support an award under
EAJA.
For the reasons below, the application is GRANTED-IN-PART and DENIED-
IN-PART.
I. BACKGROUND
The history of plaintiff’s case against the government is detailed in the court’s two
prior opinions: Wollman v. United States, 108 Fed. Cl. 656 (2013) (“Wollman I”) and
Wollman v. United States, 116 Fed. Cl. 419 (2014) (“Wollman II”). In his complaint,
plaintiff alleged that he was entitled to compensation and benefits stemming from various
medical conditions—namely, plantar fasciitis, a wrist injury, and ankylosing spondylitis
(“AS”). On the government’s motion for judgment on the administrative record, the
court found that plaintiff had waived his claims for compensation and benefits in
connection with his alleged plantar fasciitis and wrist injury but remanded the case to the
APDRB on the remaining AS claim, finding that the record had not been fully developed
to permit a decision by the court. Specifically, the court ordered the APDRB to
determine whether the “genetic predisposition” element of AS categorized it as a genetic
disease and, accordingly, what the proper burdens of proof should be.1 Wollman I, 108
1
The court also denied plaintiff’s request to be restored to active duty pending review of his
claims on the grounds that his exclusive remedy would be disability pay. Wollman I, 108 Fed.
Cl. at 674-75 (citing Barnick v. United States, 591 F.3d 1372, 1379 (Fed. Cir. 2010)).
2
Fed. Cl. at 673-74. The court additionally asked the APDRB to address the fitness tests
that plaintiff passed and the findings of military physicians that plaintiff had not
contracted AS until January 2005. Id. The court required that plaintiff be provided an
opportunity to respond to the APDRB’s findings and that he be provided with sources or
principles for any “accepted medical principles” used to reach a final decision. Id. at 674.
On remand, the APDRB elected not to address the issues identified in the court’s
order. Wollman II, 116 Fed. Cl. at 421. Rather, in a September 4, 2013 decision, it
changed the grounds for its decision, finding that Mr. Wollman’s back pain itself pre-
existed his service and was a sufficient ground for separation because there was no
evidence that the back pain had been permanently aggravated by military service. Id.
The APDRB did not provide an opportunity for plaintiff to respond to its decision on
remand. Id. The government then filed a status report with the court informing it of the
APDRB’s decision and representing “that ‘the board’s decision adequately addresses the
Court's instructions on remand and . . . the decision is legally and factually sound.’” Id.
at 426 (quoting Joint Status Report, ECF No. 39). On February 3, 2014, however, the
government asked for a voluntary remand to allow the agency to analyze the issues
identified by the court in its order. Def.’s Mot. to Remand, ECF No. 49. The court
denied the government’s remand request, Order, ECF No. 50, and thereafter ruled that the
agency decision on remand was arbitrary, capricious, and unsupported by substantial
evidence, Wollman II, 116 Fed. Cl. at 428-30. Accordingly, the matter was remanded
again to the APDRB for further proceedings. On the second remand, the APDRB
assigned Mr. Wollman a 10% disability rating, based on his AS. See Joint Status Report,
3
ECF No. 58. On December 3, 2014, the parties stipulated to the dismissal of the case.
Stipulation, ECF No. 68.
II. STANDARD OF REVIEW
In order to award attorney’s fees and costs under EAJA, the court must find that
(1) the fee application was submitted within 30 days of final judgment in the action and
be supported by an itemized statement; (2) at the time the civil action was initiated, the
applicant, if an individual, was not valued at more than $2,000,000 in net worth; (3) the
applicant was the “prevailing party” in a civil action brought by or against the United
States; (4) the government’s position was not “substantially justified;” and (5) no special
circumstances exist that would make an award unjust. 28 U.S.C. § 2412(d)(1)(A), (B);
see also Comm’r, Immigration & Naturalization Serv. v. Jean, 496 U.S. 154, 158 (1990);
United Partition Sys., Inc. v. United States, 95 Fed. Cl. 42, 49 (2010); ACE Constructors,
Inc. v. United States, 81 Fed. Cl. 161, 164 (2008).
III. DISCUSSION
A. Plaintiff Meets the Criteria for an EAJA Award of Attorney’s Fees and
Costs
In this case, the only dispute between the parties concerns whether the government’s
position in the litigation was substantially justified. Plaintiff argues that the government’s
position was not substantially justified because the government did not prevail in the
rejection of plaintiff’s disability claim based on his AS diagnosis. Specifically, plaintiff
focuses on the court’s 2014 finding that the APDRB’s decision to ignore plaintiff’s AS in
4
denying his disability claim was arbitrary and capricious and therefore not rational.
Additionally, plaintiff argues that the years of administrative and judicial challenges weigh
in favor of granting attorney’s fees and costs under EAJA.
The government argues that the APDRB’s conduct was substantially justified
because it properly examined the facts and arrived at a reasonable conclusion. The
government contends that plaintiff changed his position about whether his AS pre-existed
his service between the Medical Evaluation Board and Physical Evaluation Board
(“PEB”) stages of the process. The government argues that the PEB properly relied on
medical literature in its findings, which the APDRB properly accepted. Regarding its
conduct on remand, the government argues that the APDRB properly considered the
limited evidence about AS—as required by the court—as well as the fuller evidence of
plaintiff’s back pain in general. The government contends that its motion for a voluntary
remand was also reasonable.
Where, as here, the government loses its case on the merits, it bears the burden of
showing that its position was “substantially justified.” See, e.g., White v. Nicholson, 412
F.3d 1314, 1315 (Fed. Cir. 2005); Dalles Irrigation Dist. v. United States, 91 Fed. Cl.
689, 702-03 (2010) (finding that the government’s position was not substantially justified
where government conduct directly contravened the parties’ contract); see also Doty v.
United States, 71 F.3d 384, 385 (Fed. Cir. 1995). The government’s “position” that must
be substantially justified encompasses the entirety of its conduct, including both agency-
level action and the litigation. Doty, 71 F.3d at 386; Standard Commc’ns, Inc. v. United
States, 106 Fed. Cl. 165, 172 (2012). In this context, substantially justified means
5
“justified in substance or in the main – that is, justified to a degree that could satisfy a
reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565 (1988). Indeed, a position
may be substantially justified even if it is wrong. Hyperion, Inc. v. United States, 118
Fed. Cl. 540, 545 (2014) (citing Manno v. United States, 48 Fed. Cl. 587, 589 (2001)).
The court finds that overall the government has failed to meet its burden that its
position was substantially justified with regard to plaintiff’s disability claim based on his
AS. The government’s positions with regard to the denial of back pay and of a disability
award based on plaintiff’s wrist pain and plantar fasciitis were justified. However,
because the central issue in this case was whether plaintiff was entitled to a disability
award following his discharge based on his AS diagnosis, the government cannot prevail.
Specifically, the government was not justified in its decision to ignore plaintiff’s AS on
remand and instead change the rationale for its decision. The new rationale—that
plaintiff’s symptom of back pain pre-existed his service and was alone sufficient to deny
him compensation—was not supported. First, it ignored the Army’s decision to
discharge plaintiff based on his AS; the Army’s findings early in plaintiff’s career that his
back pain was not caused by AS; and the fact that plaintiff had passed multiple physical
fitness tests through at least 2002 without any mention of back pain. Moreover, the
APDRB issued its new decision without providing plaintiff with the opportunity to
respond, as required by the court. This conduct was unreasonable, both in its adoption of
a new rationale belied by the record evidence and its disregard for the instructions given
by the court for the remand.
6
When a court determines that the government’s position is substantially justified
only in part, it must then determine whether the positions that are not substantially
justified “were ‘substantially dramatic in impact’ to justify an award of fees.” Greenhill
v. United States, 96 Fed. Cl. 771, 777 (2011) (quoting Precision Pine & Timber, Inc. v.
United States, 83 Fed. Cl. 544, 551-53 (2008); Loomis v. United States, 74 Fed. Cl. 350,
355 (2006)). Here, the court finds that the government failed to support its contentions
that plaintiff’s AS was hereditary, that the AS pre-existed his service, and that the true
cause of his discharge was back pain. The failure to present a substantially justified
position on these issues was at the core of this case and warrant an award of attorney’s
fees and costs under EAJA.
B. Plaintiff’s Requested Attorney’s Fees and Costs Must be Reduced
Having determined that plaintiff is entitled to attorney’s fees and costs sought
pursuant to EAJA, the court now turns to the question of the proper calculation of that
amount. This includes three elements: (1) the hourly rate, (2) the reasonableness of the
hours expended, and (3) plaintiff’s success on the merits.
1. Hourly Rate
While EAJA fees are capped by statute at an hourly rate of $125, courts may
permit increases for cost of living or other special factors. 28 U.S.C. § 2412(d)(2)(A)(ii).
7
In this case, there is no dispute that plaintiff is entitled to an upward cost of living
adjustment to an hourly rate of $179.65.2
2. Allowable Hours and Costs
The government seeks to reduce plaintiff’s fee award based on (1) plaintiff’s
limited overall success—considering the court’s finding that plaintiff waived his claims
regarding plantar fasciitis and a wrist injury, as well as the denial of plaintiff’s requests
for restoration to active duty and for back pay—and (2) certain hours that the government
contends are excessive. Plaintiff also seeks additional fees for work performed in seeking
EAJA fees.
As an overall matter, the government argues that the fees should be limited to the
amount that plaintiff actually paid for representation. The government states that the
actual amount paid is unknown, but that plaintiff’s counsel publicly advertises a total cost
of $14,000 to $20,000, with the possibility of a contingency fee or a mixed flat and
contingency fee arrangement in some cases. Thus, the government contends that EAJA
fees should be capped at $20,000 unless plaintiff demonstrates that the actual amount
paid to plaintiff’s counsel was higher.
2
While plaintiff initially sought a further increase to an hourly rate of $225, he conceded in his
reply that only a cost of living adjustment is permissible in this case.
8
In response, plaintiff argues that nothing in EAJA requires that the fees granted be
capped at the amount actually paid to counsel. Plaintiff argues that where, as here,
counsel has provided records of the hours for which fees are sought, such a cap is
inappropriate.
Regarding specific reductions, the government argues that the hours worked are
excessive and should be reduced or denied. First, the government contends that 6.3 hours
of work from August 28-29, 2014 on the parties’ joint status report should be reduced to
1 hour in light of the fact that the stipulation of dismissal several months later made that
work unnecessary. Second, the government contends that 4.5 hours of work on October
23, 2013 for email correspondence about a Board of Veterans Appeals decision is
excessive both in the time spent and the lack of relevance to this litigation. Third, the
government argues that .5 hours of work on December 4-5, 2014, to review the order of
dismissal and judgment of dismissal following the parties’ stipulation of dismissal is
excessive, as the entries are each one sentence and were expected by the parties.
In response, plaintiff argues that the government ignores information that makes
the fees sought reasonable. As an initial matter, plaintiff argues that plaintiff’s counsel
exercised considerable billing judgment and had reviewed time-keeping records and
reduced the hours sought prior to filing this application. Plaintiff contends that the
records already “excluded much, indeed an extreme amount, of the time spent that could
have been claimed,” and attaches numerous emails for which no fees are sought. Pl.’s
Reply 7-8. Regarding the 6.3 hours, plaintiff argues that the government ignores the
phone calls and emails with the government regarding the drafting of the joint status
9
report, of which it would have had personal knowledge. Regarding the 4.5 hours,
plaintiff argues that the fact that the Board of Veterans Appeals decision did not turn out
to be relevant does not meant that it was unreasonable for counsel to review the
document for potential importance to this case. Finally, regarding the .5 hours, plaintiff
argues that counsel did expend that amount of time, which includes obtaining the
documents, researching the rules on EAJA fees, and notifying plaintiff of the
developments.
Plaintiff also claims he is entitled to an additional $3,970.26 for fees incurred
seeking an award under EAJA. According to plaintiff, 22.1 hours were expended by
counsel in seeking fees.
After reviewing the time reports and documents submitted by plaintiff, the court
finds that plaintiff is entitled to the hours sought except for the 4.5 hours spent reviewing
an irrelevant decision. These hours were excessive as plaintiff should have been able to
discern far more quickly whether the case was relevant. Accordingly, plaintiff is entitled
to only .5 hours for this review. Plaintiff has provided a reasonable explanation as to why
the other amounts are not excessive. Further, plaintiff is entitled to fees associated with
the EAJA application, to the extent that he “successfully defends his original fee
application.” Wagner v. Shinseki, 640 F.3d 1255, 1259-60 (Fed. Cir. 2011) (citing Fritz
v. Principi, 264 F.3d 1372, 1377 (Fed. Cir. 2001)).
Regarding a cap on an EAJA award based on the fees actually paid to plaintiff’s
counsel, the court finds that an award “under EAJA is ‘not necessarily contingent upon
an obligation to pay counsel.’” Greenhill, 96 Fed. Cl. at 776 (quoting Ed A. Wilson, Inc.
10
v. Gen. Servs. Admin., 126 F.3d 1406, 1409 (Fed. Cir. 1997)) (citing Rodriguez v.
Taylor, 569 F.2d 1231, 1245 (3d Cir. 1977), found as dicta on other grounds by Kunda v.
Muhlenberg Coll., 621 F.2d 532, 541 n.3 (3d Cir. 1980)). This includes plaintiffs who
are represented pro bono, Wilson, Inc., 126 F.3d at 1409 (citing Watford v. Heckler, 765
F.2d 1562, 1567 n.6 (11th Cir. 1985); Cornella v. Schweiker, 728 F.2d 978 (8th Cir.
1984)), plaintiffs who appear pro se, id. (citing Jones v. Lujan, 883 F.2d 1031 (D.C. Cir.
1989)), and plaintiffs whose contingent fee arrangement meant that they were only
obligated to their counsel for a portion of the fee awarded, id (citing Phillips v. Gen.
Servs. Admin., 924 F.2d 1577 (Fed. Cir. 1991)). Instead, a plaintiff must only
demonstrate that attorney’s fees and costs were “incurred,” as required by EAJA, on the
plaintiff’s behalf. Id. (quoting Goodrich v. Dep’t of the Navy, 733 F.2d 1578 (Fed. Cir.
1984)). That is not to say that courts may never cap an EAJA award based on the
agreement between plaintiff and plaintiff’s counsel: the government points the court to
KMS Fusion, Inc. v. United States, in which the court distinguished Phillips on the
grounds that the contingency fee at issue had not actually reached the conditions required
to activate it. 39 Fed. Cl. 593, 604-05 (1997). In this case, however, the government
makes no such argument, and instead argues that there is a general cap on EAJA awards.
The court finds that the precedent does not support this argument. Plaintiff is therefore
entitled to an appropriate EAJA award regardless of the actual fee arrangement.
3. Reduction to Reflect Partial Success on the Merits
The government argues that an EAJA award must be reduced to reflect plaintiff’s
limited success on the merits in this case. Specifically, plaintiff sought a disability rating
11
of 30% to 100% as a result of AS, a wrist condition, and plantar fasciitis, as well as
reinstatement and back pay while his disability claim was under review. Ultimately, the
only relief that plaintiff obtained was a 10% rating for his AS. Accordingly, the
government contends that a reduction in the EAJA award of at least 50% is required to
account for the issues on which plaintiff was not successful.
Plaintiff disputes the characterization of his success as limited. Plaintiff contests
the government’s statement that Mr. Wollman’s rating was changed from 0% to 10%,
arguing that the actual change was from non-compensable—which does not include
severance pay, whereas a 0% rating does—to 10%. Plaintiff argues that this severance
pay is $72,048, subject to adjustments by the Defense Financial Accounting Service.
Plaintiff argues that a finding of a compensable condition allows him to seek a retirement
finding, which would include retroactive payment of at least $145,307.88—based on a
30% rating, which is the minimum required for recurring payments—as well as
continuing monthly payments and health care coverage. Further, plaintiff argues that the
various remedies sought are all related to the same claim, and therefore the EAJA award
should not be reduced because the court did not grant every remedy sought.
The court finds that a reduction in the EAJA award is appropriate based on
plaintiff’s limited success. Plaintiff sought relief regarding three separate injuries, but the
court found that he had waived his ability to challenge the APDRB’s decision on two of
the three and was not legally entitled to reinstatement and back pay. Thus, regardless of
the success on the remaining one injury, plaintiff was successful on only one of his
claims. On that remaining one injury, his AS, plaintiff succeeded in obtaining some
12
relief, though at a lower rating than he sought. Moreover, while plaintiff argues that this
rating is an important first step in obtaining a much larger award in the future, such an
argument is speculative at this stage.
A court may reduce fees in accordance with the ratio of successful claims. Dalles,
91 Fed. Cl. at 704 (reducing EAJA award by three sevenths where plaintiff prevailed on
three of seven claims). However, it is important to consider that some claims require
additional effort on the part of plaintiff’s counsel. Comty. Heating & Plumbing Co. v.
Garrett, 2 F.3d 1143, 1146 (Fed. Cir. 1993) (awarding 30% of requested fees where 30%
of time was spent on prevailing issue, even though it was only one of six). In this case,
while plaintiff was only successful on one of his claims, 100% of plaintiff’s counsel’s
time after the first opinion was spent on the prevailing claim.3 Accordingly, the court
finds that a reduction of 50% is appropriate to account for plaintiff’s success on one out
of three of his claims and the increased time spent on the successful claim.
IV. CONCLUSION
In light of the foregoing, plaintiff’s application is GRANTED-IN-PART and
DENIED-IN-PART. The Clerk is directed to enter judgment in favor of plaintiff in the
amount of $25,226.20, which includes $24,647.98 in attorney’s fees and $578.22 in costs.
IT IS SO ORDERED.
3
According to plaintiff’s submissions, plaintiff’s counsel expended 101.2 allowable hours before
the issuance of the court’s first opinion, 151.1 allowable hours after the opinion, and 22.1
allowable hours related to the EAJA application.
13
s/Nancy B. Firestone
NANCY B. FIRESTONE
Judge
14
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101 Ariz. 520 (1966)
421 P.2d 877
STATE of Arizona ex rel. Darrell F. SMITH, The Attorney General, Petitioner,
v.
Robert C. BOHANNAN, Jr., Respondent.
No. 8841.
Supreme Court of Arizona. In Banc.
December 21, 1966.
Rehearing Denied January 17, 1967.
*521 Darrell F. Smith, Atty. Gen., Philip M. Haggerty, Sp. Counsel, for petitioner.
Lewis, Roca, Scoville, Beauchamp & Linton, John P. Frank, and Thomas A. Latta, Phoenix, for respondent.
PER CURIAM.
This is an original proceeding in quo warranto filed in this Court in the name of the State of Arizona out of the relation of Darrell F. Smith, Attorney General, against Robert C. Bohannan, Jr., a member of the State Board of Public Welfare. Jurisdiction was accepted on September 27, 1966, pursuant to Article 6, § 5, subsec. 1, Constitution of Arizona, A.R.S. and after the filing of briefs submitted for decision on November 22, 1966.
By statute, a state official is prohibited from having an interest directly or indirectly in any purchase made by a board of which he is a member.
"A. Members of the legislature or state, county, city, town or precinct officers shall not be interested directly or indirectly in any contract or in any sale or purchase made by them in their official capacity, or by any body or board of which they are a member." A.R.S. § 38-446.
The facts admitted in this Court establish that from January 1, 1961, to March 12, 1962, respondent was president and a director of the Associated Mortgage and Investment Company, an Arizona corporation, and also a member of the Arizona State Retirement Board; that during this time Arizona Mortgage and Investment Company sold mortgages in an amount in excess of three million dollars to the Arizona State Retirement Board as investments for the state retirement fund.
*522 It is, we believe, accepted without dissent that public officers must have no personal interest in transactions with the government which they represent. The rule is most aptly stated in Stockton Plumbing and Supply Co. v. Wheeler, 68 Cal. App. 592, 229 P. 1020:
"The principle upon which public officers are denied the right to make contracts in their official capacity with themselves or to be or become interested in contracts thus made is evolved from the self-evident truth, as trite and impregnable as the law of gravitation, that no person can, at one and the same time, faithfully serve two masters representing diverse or inconsistent interests with respect to the service to be performed." 68 Cal. App. 592, 601, 229 P. 1020, 1024.
This Court said in Williams v. State, 83 Ariz. 34, 315 P.2d 981:
"In order that he [the public officer] act only for and on behalf of the state's interest, it is imperative that he have no personal interest that might clash or conflict with that of the state. * * * Public policy requires that personal interests not exist as a possible factor influencing a public official in the performance of his duties."
We also said in removing by quo warranto an attorney general of this state for official misconduct:
"The object of the removal of a public officer for official misconduct is not to punish the officer, but to improve the public service. The public interest demands that public affairs be administered by officers upon whom rests no stigma * * * of any offense involving a violation of their official duties." State ex rel. De Concini v. Sullivan, 66 Ariz. 348, 359, 188 P.2d 592, 599.
As a member of the State Retirement Board, it was respondent's obligation to invest the funds of the state retirement system, A.R.S. § 38-743, and, in doing so, to pass upon the desirability of investments in order to insure the solvency of the retirement system. As president and a director of Associated Mortgage, it was his duty to further the interest of the corporation and to actively work for its financial betterment.
Respondent, as president and director of Associated Mortgage and Investment Company and as a member of the Arizona State Retirement Board, was obviously representing diverse and inconsistent interests since the interest of one must necessarily be sacrificed to the interest of the other.
By § 38-447, A.R.S., an officer who violates § 38-446 is subject to certain penalties.
"An officer or person prohibited by the laws of this state from making or being interested in contracts, or from becoming a vendor or purchaser at sales, or from purchasing evidences of indebtedness, who violates any provision of such laws, shall be punished by a fine of not more than one thousand dollars or by imprisonment in the state prison for not more than five years, and is forever disqualified from holding any office in this state." A.R.S. § 38-447.
The Arizona Legislature did not consider the violation of § 38-446 as a trivial or minor infraction. Punishment by imprisonment in the state penitentiary makes the offense a felony.
Respondent urges that § 38-447 has no application because there must be some benefit to him resulting in a profit before a violation of the law exists. We do not pause long in contemplation of this point. It is conduct which may be detrimental to the interests of the state which the statute seeks to prohibit.
But were it otherwise, respondent's personal profit is clearly evident. The records of the State Retirement Board, of which we take judicial notice, 9 Wigmore on Evidence, 3rd Ed., 537, 538, § 2568a; cf. *523 Climate Control, Inc. v. Hill, 86 Ariz. 180, 342 P.2d 854, establish that the written agreements between Associated Mortgage and Investment Company and the Retirement Board provide for payments each year by the board to the mortgage company of one-half of one percent per annum of the outstanding principal balance on the mortgages as a service charge. Associated Mortgage, as a minimum, profits by the agreements to the extent of one-half of one percent on three million dollars, and respondent, as its president and director, profits indirectly as the company prospers and directly in proportion to his stock-holdings.
Nor does the fact, if it be a fact, that respondent did not participate by voting as a board member for the purchase of these mortgages detract from the unlawfulness of his conduct. A public body is entitled to have the active service of its officers. See City of Ensley v. J.E. Hollingsworth & Co., 170 Ala. 396, 54 So. 95. If, by nonparticipation, respondent could avoid the duties of his office, he would be using this violation of his duties to justify the breach of the others. It has been held that prohibitory statutes are applicable where the public officer had nothing at all to do with the transaction, Capron v. Hitchcock, 98 Cal. 427, 33 P. 431, and where the public officer was not present to vote but had taken part in the preliminary negotiations, Stockton Plumbing and Supply Co. v. Wheeler, supra.
Respondent argues that this Court lacks jurisdiction entirely to determine this matter or, in its sound discretion, ought not to exercise its jurisdiction. It is urged that there is another action pending in the Superior Court of Maricopa County between respondent and the State Retirement Board in which the Retirement Board, as cross claimant, seeks to recover the profits which Associated Mortgage and Investment Company made out of the prohibited contract, and that the action in this Court constitutes a splitting of the State's cause of action against Bohannan prohibited by the Rules of Civil Procedure.
In this, respondent's position is wholly without merit. The original jurisdiction of the Supreme Court is fixed by the Constitution, supra, and in matters of public importance such as this we will take jurisdiction regardless of whether one of the parties has invoked the jurisdiction of an inferior tribunal.
Moreover, the petition here is not a splitting of a cause of action. The parties in the superior court are Bohannan and others against the State Retirement Board. The action here is against Bohannan by the State of Arizona. The State and the State Retirement Board are individual legal entities. Both have the power to sue and be sued, each independent of the other. A.R.S. § 38-743. The State of Arizona is not a party to the suit in the superior court and would not be foreclosed by a judgment there from invoking the criminal penalties prescribed in § 38-447 or the civil disqualification from forever holding public office.
Respondent's principal argument in resisting quo warranto is predicated on the theory that there must be a previous criminal conviction for the offense prohibited by the statute before he is subject to the disqualification set forth in the last clause of § 38-447. He argues that when originally enacted by the Territorial Legislature in 1901 § 38-446 was contained in the civil code and § 38-447 was contained in the penal code; that only thereafter were the two sections brought together in subsequent revisions. The premise of respondent's argument is that where the constitution or statute of a state provides that a public office is forfeited upon the conviction of a public official for a criminal offense, the conviction is a prerequisite to any proceeding to remove the officer. This is, of course, the rule in Arizona, as elsewhere. State ex rel. DeConcini v. Sullivan, supra.
*524 From this premise, respondent presses upon this Court a statement from an annotation in 119 A.L.R., at page 741. Since it embodies his theory of defense, we quote directly therefrom:
"Misconduct upon the part of a public officer is not of itself ground for forfeiting his office upon proceedings in quo warranto unless such misconduct has been already judicially established or unless the acts of misconduct charged are declared by statute ipso facto to work a forfeiture of his office."
Respondent's argument stems from the fact that his misconduct has not yet been judicially established. We think, however, that the correct rule is stated in State ex inf. McKittrick v. Wymore, 343 Mo. 98, 119 S.W.2d 941, 119 A.L.R. 710. There the Court held:
"The rule is stated by standard texts as follows:
"`Quo warranto will also lie for the purpose of ousting an incumbent whose title to the office has been forfeited by misconduct or other cause. And in such a case it is not necessary that the question of forfeiture should ever before have been presented to any court for judicial determination, but the court, having jurisdiction of the quo warranto proceeding, may determine the question of forfeiture for itself. The question must, however, be judicially determined before he can be ousted. * * *' Mechem, Public Officers, Sec. 478, p. 308."
In the present case, respondent has admitted the acts which the legislature has prohibited. He has acknowledged that the transactions were consummated while he was a member of the Arizona Retirement Board and president and director of the Associated Mortgage and Investment Company. This is, in effect, a determination of those facts. We are not constrained to hold that this Court, upon the admission before it of a public offense, is so impotent as to be unable to apply the civil penalty of disqualification expressly provided by the legislature.
Respondent interprets § 38-447 as meaning that an officer who violates the statute shall be punished by disqualification from public office only after a criminal conviction for the offenses prohibited. We do not so construe it. Courts will not read into a statute something which is not within the manifest intent of the legislature as gathered from the statute itself. State ex rel. Morrison v. Anway, 87 Ariz. 206, 349 P.2d 774.
The statute, § 38-447, supra, does not provide that the officer shall be forever disqualified from holding an office upon conviction of a felony as do many statutes. See A.R.S. § 38-291. In essence, it provides two consequences for its violation: (1) A fine or imprisonment and (2) disqualification from forever holding public office. Before a fine or imprisonment may be imposed by a court, due process requires a criminal proceeding ending in a conviction. Before a disqualification can be imposed against holding a public office, all that the language of the statute requires is a judicial determination of the fact upon which the disqualification rests.
"The general rule with respect to a public official is that eligibility to hold office is of a continuing nature and must exist not only at the commencement of the term but during the occupancy of the office. Some of the courts of other states hold that the date of election or appointment is the time to test eligibility to hold office. But most of the courts hold that even though a candidate is qualified at the time of his election this is not sufficient to entitle him to qualify and continue to hold office, if, at the commencement of the term, or during the continuance of the incumbency, he ceases to be qualified." Valle v. Pressman, 229 Md. 591, 185 A.2d 368, 377.
The principle has been accepted and applied under varying situations that where a constitution or statute creates a *525 qualification for an office the subsequent loss of the qualification constitutes valid grounds for removal of the officer. See State ex rel. Coe v. Harrison, 217 Ala. 80, 114 So. 905; Helwig v. Payne, 197 Cal. 524, 241 P. 884; Jeffries v. Rowe, 63 Ind. 592; State ex rel. Anderson v. Stice, 186 Kan. 69, 348 P.2d 833; State ex rel. Gray v. Pipes, 173 La. 488, 137 So. 862; State ex rel. Patterson v. Land, 231 Miss. 529, 95 So.2d 764, 96 So.2d 828; State ex rel. Johnston v. Donworth, 127 Mo. App. 377, 105 S.W. 1055; State ex rel. Good v. Marsh, 125 Neb. 125, 249 N.W. 295; State ex rel. McMillan v. Sadler, 25 Nev. 131, 58 P. 284, 59 P. 546, 63 P. 128; State ex rel. Attorney General v. Orr, 61 Ohio St. 384, 56 N.E. 14; Commonwealth ex rel. v. Yeakel, 13 Pa.Co.Ct. 615; State ex rel. Willis v. Monfort, 93 Wash. 4, 159 P. 889, L.R.A. 1917B, 801; State ex rel. Fugina v. Pierce, 191 Wis. 1, 209 N.W. 693.
The Supreme Court of Pennsylvania long ago, in 1876, concluded, in disposing of a similar argument that a prior conviction was necessary before the disqualification provisions of a statute were applicable:
"So that by the time the Commonwealth had followed the defendant to the end of his sinuous path, the contest might become of little real importance, and the victory, if obtained, a barren one." Commonwealth v. Walter, 83 Penn.St. 105, 24 Am.Rep. 154.
Since respondent is not eligible to hold his present office by reason of his prior admitted misconduct, we have no alternative but to order his removal.
It is the judgment of this Court that respondent's motion to quash is overruled, and that respondent, Robert C. Bohannan, Jr., be and he is hereby declared excluded from the office of a member of the State Board of Public Welfare for the remainder of the term ending January 31, 1967, and is forever disqualified from holding any public office in this state.
Note: Vice Chief Justice CHARLES C. BERNSTEIN, having disqualified himself, did not participate in this decision.
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297 F.Supp.2d 676 (2004)
Yvonne RODRIGUEZ, Plaintiff,
v.
The McGRAW-HILL COMPANIES, INC. Long Term Disability Plan, Robert Marchetti, as Administrator of The McGraw-Hill Companies, Inc. Long Term Disability Plan, The McGraw-Hill Companies, Inc., and The Prudential Insurance Company of America, Defendants.
No. 02 Civ. 0045(JSR).
United States District Court, S.D. New York.
January 6, 2004.
Daniel G. Heyman, Scarsdale, NY, for Plaintiff.
Gregory I. Rasin, Jackson Lewis, LLP, Cuyler Burk, Julie M. Vales, Cuyler, Burk, L.L.P., New York City, for Defendants.
*677 OPINION AND ORDER
RAKOFF, District Judge.
With the gruesome example of AIDS so salient in our collective consciousness, it should come as no surprise that "new" diseases are first recognized by their symptoms and only much later by their etiology. At what point, therefore, an ailment becomes "medically determinable" is a complex question, not easily reducible to a single test or formula. The issue here presented is whether the malady known as "fibromyalgia" is medically determinable, notwithstanding the absence of a definitive objective test for its diagnosis. The issue arises in the context of the parties' renewed cross-motions for summary judgment.[1]
The facts pertinent to the instant motions are as follows. Plaintiff Yvonne Rodriguez began working for defendant McGraw-Hill Companies ("McGraw-Hill") as a secretary in July 1979 and, over the course of the next twenty years, rose to become Director of Editorial Operations for Business Week Magazine, in which capacity she was responsible for, inter alia, the production, printing, and timely closing of each edition of the magazine. See Affidavit of Daniel G. Heyman, sworn to July 26, 2002 ("Heyman Affidavit"), Ex. U (Deposition of Yvonne Rodriguez, June 6, 2002, hereinafter "Rodriguez Deposition") at 10-11, 38-39. Between December 1998 and February 1999, however, plaintiff was diagnosed as suffering from costochondritis, fibromyalgia, and chronic fatigue syndrome ailments that, she alleges, caused her severe pain, headaches, and fatigue. Rodriguez Deposition at 43, 66, 68.
According to Rodriguez, by June 1999 her symptoms had become so severe that she was unable to perform her normal duties. See Rodriguez Employment File D00725-726. Beginning June 28, 1999, she went on leave and, under the terms of McGraw-Hill's Short Term Disability Plan, received 100% weekly compensation for a period of 26 weeks. When this was exhausted, she applied for the first tranche of the longer-term disability benefits available under McGraw-Hill's Long Term Disability Plan, which, if granted, would have provided her with certain benefits for an additional 24-month period commencing December 28, 1999. However, the Plan Administrator, co-defendant Prudential Insurance Company of America, denied the request. After exhausting her administrative appeals, Rodriguez commenced the instant lawsuit, seeking the 24-month additional benefits and other relief.[2]
The operative provision of the Long Term Disability Plan, Section VI, states in subsection (1) that:
A Participant shall be entitled to benefits under the Plan, beginning ... the first day following the Qualifying Disability Period [i.e., the 26 week period provided for under the Short Term Disability *678 Plan], upon presentation of proof that he/she incurred Total Disability due to accidental bodily injury or disease.
Heyman Affidavit, Ex. F (McGraw-Hill Long Term Disability Plan) at 8.
Subsection (2) of Section VI, in turn, defines "Total Disability" to mean:
(a) with respect to the Qualifying Disability Period and the first 24 months thereafter, a state of incapacity resulting from a medically determinable physical or mental impairment which prevents the Participant from performing his/her normal duties for the Employer, and (b) after the period described in (a) above, a state of complete incapacity resulting from a medically determinable physical or mental impairment which prevents the Participant from performing any occupation or employment for which he/she is reasonably qualified by education, training or experience.
Id.
Thus, to qualify for the 24-month extension she here seeks (and that the Plan Administrator denied), plaintiff must show, based on the administrative record,[3] that at all relevant times she was sufficiently incapacitated by medically determinable impairments to be unable to perform her normal duties.
With respect to at least one of the ailments here in issue, fibromyalgia, defendants argue that no such showing is possible because its diagnosis, they allege, is so subjective as not to be "medically determinable." In light of this argument, the Court, with the parties' consent, sought assistance from the Program on Court Appointed Scientific Experts of the American Association for the Advancement of Science, which in turn recommended three potential candidates to serve as the Court's technical advisor on this issue. After consultation with the parties and review of the candidates' qualifications, the Court selected Lawrence Kagen, M.D., Professor of Medicine at the Weill Medical College of Cornell University and a highly regarded rheumatologist, to serve as the Court's advisor.[4]
After a thorough review of the relevant materials, Dr. Kagen submitted a succinct but most helpful report. See Kagen, Fibromyalgia Report for the Court (the "Kagen Report"). The report notes that, even though "the causation and pathogenesis of this illness remain unknown," Kagen Report at 4, fibromyalgia has nonetheless achieved the status of a "diagnostic entity recognized by the American College of Rheumatology," id. at 3. This is because, even though no "objective, specific diagnostic test" for fibromyalgia has yet been developed, id. at 5, the widely-reported subjective symptoms such as "the presence of widespread chronic pain present for at least three months in all four quadrants of the body" and "tender points ... present in at least eleven of eighteen predetermined body parts," id. at 4 provide sufficient criteria for diagnosing the condition and distinguishing it from other ailments. Id. at 3-4. The bottom line is that "experienced physicians do recognize fibromyalgia as a real entity." Id. at 4.[5]
*679 It follows that, for the purposes here relevant, fibromyalgia is medically determinable. While the absence of a dispositive objective test may make the diagnosis more difficult, medical determinability has never been wedded to such a requirement as shown, for example, by the numerous recognized mental disorders for which there is no objective test whatsoever. The Court therefore rejects defendants' argument that fibromyalgia does not qualify as a medically determinable impairment under McGraw-Hill's Long Term Disability Plan.
The Kagen Report goes on to conclude that fibromyalgia can lead to substantial physical and cognitive disabilities, id. at 5, and that, despite the reliance on subjectively elicited information, "it should be possible in many cases for an examiner to determine a level of function indicative of the presence of work disability," id. at 6. The Court agrees. Indeed, that fibromyalgia can in certain cases result in severe disability is no longer an open question in the Second Circuit, for the Court of Appeals has recently held that "fibromyalgia is a disabling impairment" that can qualify an individual for disability payments even though "there are no objective tests which can conclusively confirm the disease." Green-Younger v. Barnhart, 335 F.3d 99, 108 (2d Cir.2003). See also Lisa v. Secretary of Dep't of Health and Human Services, 940 F.2d 40, 43 (2d Cir.1991).
This still leaves open, however, the question of whether, based on the administrative record, plaintiff has proved both that she suffered (at the times here relevant) from fibromyalgia and/or the other ailments of which she complains and that, as a result, she was in the requisite "state of incapacity" during the 24-month period for which she now seeks damages. Dr. Kagen notes that these are in effect the conclusions reached by the physicians who actually examined Ms. Rodriguez, and that "[t]he experts who have suggested otherwise have examined the records, not the patient." Id. at 6. Before undertaking its own de novo review of the administrative record, however, the Court would like to develop a firmer basis for clarifying the ambiguities in some of the testimony given below, as well as for assessing the credibility of the competing experts. Accordingly, while the Court's ultimate determination will be based on the evidence in the administrative record, the Court hereby exercises its authority to convene a brief hearing for the aforementioned purposes. See generally Connors v. Connecticut General Life Insurance Co., 272 F.3d 127, 134-35 (2d Cir.2001); DeFelice v. American International Life Assurance Co. of New York, 112 F.3d 61, 66 (2d Cir.1997).
Specifically, the Court will set aside six hours for this hearing. In the first four hours, plaintiff will present herself and at least one of the doctors on whose testimony she relies, for a combined total of three hours cross-examination by defendants' counsel on the testimony given below, followed by a combined total of one hour redirect testimony. In the remaining two hours, the defendants will present one or more of those doctors on whose testimony they rely, for a combined total of one and one-half hours cross-examination on the testimony given below, followed by one-half hour redirect testimony.
Except to the limited extent indicated above, the parties' renewed motions for summary judgment are hereby denied. Upon receipt of this Opinion and Order, *680 counsel for the respective parties should jointly call Chambers, by no later than January 16, 2004, to schedule the aforementioned hearing.
SO ORDERED.
NOTES
[1] Previously, by Order dated October 18, 2002, the Court granted defendants' motion for summary judgment on the sixth of plaintiff's six claims for relief (relating to whether the defendant violated plaintiff's ERISA rights under 29 U.S.C. § 1140), and granting plaintiff's motion for summary judgment in so far as it sought a de novo standard of review and the opening of the administrative record to include the testimony of Mark Morrison, Managing Editor of Business Week Magazine. The parties' original cross-motions for summary judgment were denied in all other respects.
[2] Although plaintiff seeks long-term disability benefits going beyond the 24-month extension, these claims are not properly before the Court since they involve a somewhat different test than that applicable to the 24-month extension, see infra, and the Plan Administrator has never ruled on them. See Peterson v. Continental Casualty Co., 282 F.3d 112 (2d Cir.2002).
[3] As previously noted, the administrative record has now been enlarged to include the previously-excluded testimony of Mark Morrison, and will be reviewed by the Court de novo.
[4] The Court takes this occasion to express its great thanks to Dr. Kagan and to Deborah Runkle, Project Manager with the Program on Court Appointed Scientific Experts, for their assistance in this matter.
[5] According to the most recent issue of the Harvard Women's Health Watch published by the Harvard Medical School, "Two to four percent of Americans have fibromyalgia, and ... [it is] second only to osteoarthritis as the condition most frequently diagnosed by rheumatologists." Harvard Medical School, Harvard Women's Health Watch, Jan. 2004, at 4.
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337 S.W.3d 927 (2011)
PHONG XUAN DAO, Appellant,
v.
The STATE of Texas, Appellee.
No. 14-10-00369-CR.
Court of Appeals of Texas, Houston (14th Dist.).
April 14, 2011.
*928 Bob Wicoff, Houston, for appellant.
Patricia Lykos, Houston, for state.
Panel consists of Justices BROWN, BOYCE, and JAMISON.
OPINION
JEFFREY V. BROWN, Justice.
Appellant Phong Xuan Dao was found guilty by a jury of the misdemeanor offense of driving while intoxicated. ("DWI"), and the trial judge sentenced him to three days' confinement in the Harris County Jail, probated for fifteen months. In a single issue, Dao contends the trial court erred by not including a requested jury instruction under Texas Code of Criminal Procedure article 38.23 that would have informed the jury that it was to disregard evidence of Dao's field-sobriety tests if it found that such tests were conducted in an unconstitutional manner due to a language barrier between the officer and Dao. We affirm.
I
Shortly after 2:00 a.m. on October 7, 2009, Houston Police Officer Tony Tomeo was on patrol when he noticed a Toyota Sienna minivan traveling west on Westheimer Road with a flat tire and without the headlights illuminated. He also saw that the vehicle's driver was having difficulty remaining within his lane of traffic, and at one point, he almost struck another vehicle.
Tomeo stopped the vehicle, which Dao was driving, and requested Dao's driver's license. Instead of a driver's license, Dao handed Tomeo a credit card. Dao told Tomeo that he had been at a birthday party and had "three or four beers" between 6:30 p.m. and 8:00 p.m. Tomeo also noticed a "strong odor of alcoholic beverage" when he approached Dao. When Tomeo asked Dao to step out of the vehicle, he noticed that Dao had trouble keeping his balance and had to hold onto the vehicle's door to keep from falling.
Tomeo asked Dao to perform several field-sobriety tests, including the horizontal-gaze-nystagmus ("HGN") test, the walk-and-turn test, and the one-leg-stand test. Dao performed poorly on these tests. Based on the totality of his observations, Tomeo determined that Dao was intoxicated. Tomeo then drove Dao to a downtown police station to obtain a valid breath sample.
*929 At the station, Dao was shown a videotape in Vietnamese of the statutory warnings concerning the consequences of accepting or declining the request for a breath sample. Dao agreed to provide a breath sample, but the officer who operated the intoxilyzer instrument was unable to obtain a sufficient breath sample because Dao failed to perform the test as instructed. Dao was then instructed to perform several field-sobriety tests while his performance was recorded on videotape. Dao again performed poorly on the tests.
Tomeo testified at Dao's trial that, at the scene, he and Dao were able to understand each other without any difficulty, and he saw no need to call for a Vietnamese-speaking officer. Tomeo stated that it was only after he began videotaping Dao that Dao appeared to have difficulty understanding English. Tomeo also testified that the first time he heard Dao say that he did not understand English was when he received the breath-sample instructions at the station. On cross-examination, however, Tomeo recalled that Dao had earlier stated that he "could not understand" the instructions during the walk-and-turn test at the scene, and told Tomeo during the one-leg-stand test that he did not speak English "very good." Tomeo agreed that a person's ability to perform field-sobriety tests could be compromised if the person has difficulty understanding the English language.
The officer who administered the intoxilyzer test to Dao, Officer Joshua Hattan, also testified at trial. Hattan explained that after Dao viewed the statutory warnings and agreed to provide a breath sample, Hattan conducted the required fifteen-minute observation of Dao before administering the test. During this time, Hattan conversed with Dao and another officer. Hattan testified that, although he could not remember the details of what they discussed, Dao was "actively engaged" in the conversation and "forming full complete thoughts in English." Hattan then told Dao how to perform the test, but Dao did not blow into the intoxilyzer instrument's mouthpiece sufficiently and with enough force to obtain an accurate reading. Hattan testified that Dao understood his instructions, but failed to comply with them. He also testified that he did not believe that a language barrier was a problem, although he did demonstrate or reiterate the instructions for Dao after he initially failed to comply to ensure that Dao understood the instructions.
Hattan also testified that he conducted the HGN test on Dao at the station, and he "observed all six clues" for HGN, indicating that Dao was too intoxicated to safely operate a vehicle. Hattan also noted that that there was a distinct odor of an alcoholic beverage coming from Dao's breath, he was very talkative, had slurred speech, red, glassy eyes, and he appeared to not have normal balance. Hattan opined that, based on all of his observations, Dao was intoxicated.
The defense presented one witness, Truong Tran, Dao's friend of ten years. Tran testified that he and Dao mostly communicated in Vietnamese, but Dao could understand English "[i]n general." Tran saw Dao at the birthday party Dao attended shortly before he was arrested. Although Tran did not remember exactly how many beers he saw Dao drink at the birthday party, he thought it was "about two." On cross-examination, Tran acknowledged that Dao had taken one or two years of classes at Houston Community College. When asked what classes Dao took, Tran testified, "[c]lasses some English class, I don't know." He also confirmed that Houston Community College does not offer classes in Vietnamese.
*930 At the charge conference, Dao's counsel requested that the jury be instructed on two issues: (1) the reasonable suspicion to stop Dao's vehicle, and (2) the "asking and taking of Standardized Field Sobriety Tests based on the language barrier of Mr. Dao" in violation of his constitutional rights. The trial court agreed to the first request and denied the second.
II
A
Texas Code of Criminal Procedure article 38.23 provides that "[n]o evidence obtained by an officer or other person in violation of any provisions of the Constitution or laws of the State of Texas, or of the Constitution or law of the United States of America, shall be admitted in evidence against the accused on the trial of any criminal case." Tex.Code Crim. Proc. 38.23(a). Thus, the exclusionary language of article 38.23(a) applies only if an officer or other person obtains evidence in violation of either the constitutions or the laws of the United States or the State of Texas. State v. Toone, 872 S.W.2d 750, 751 (Tex. Crim.App.1994).
The primary purpose of article 38.23(a) is to deter unlawful actions which violate the rights of criminal suspects. Carroll v. State, 911 S.W.2d 210, 221 (Tex. App.-Austin 1995, no pet.). The Court of Criminal Appeals has explained that a defendant's right to the submission of an article-38.23 jury instruction is limited to instances in which there are affirmatively disputed issues of fact that are material to the claim of a constitutional or statutory violation that would make the disputed evidence inadmissible. Madden v. State, 242 S.W.3d 504, 510 (Tex.Crim.App.2007). In reviewing alleged charge error, we must first determine whether error actually exists in the charge, and second, if error is found, whether sufficient harm resulted from the error to require reversal. Ngo v. State, 175 S.W.3d 738, 743-44 (Tex.Crim. App.2005).
B
Dao acknowledges that the Court of Criminal Appeals has held that field-sobriety tests do not violate the privilege against self-incrimination, as they yield physical evidence of a suspect's mental and physical faculties rather than an express or implied assertion of fact. Gassaway v. State, 957 S.W.2d 48, 51 (Tex.Crim.App. 1997). Dao also concedes that Officer Tomeo had a right to conduct the field-sobriety tests. See Thomas v. State, 723 S.W.2d 696, 705 (Tex.Crim.App.1986) (noting that the State has a right to compel physical evidence of intoxication). He argues, however, that the "threshold issue" in this case is "whether it is an unconstitutional or illegal violation of a person's rights to present incriminating evidence that has been obtained from him due to his failure to understand English." Specifically, Dao complains that the field-sobriety tests should have been administered in a manner that comported with "fundamental due process," i.e., in a language Dao understood, and if a fact issue was raised as to whether Dao's inability to perform the tests was due to his inability to understand English rather than intoxication, then he was entitled to an article-38.23 instruction informing the jury that they should exclude the evidence of the field sobriety tests if they concluded that a constitutional violation occurred in obtaining the evidence.
Dao does not cite any relevant authority to support his contention that a suspect's due-process rights under either the Texas or United States constitutions could be violated if field-sobriety tests are not performed in the suspect's first, or preferred, *931 language, or that a violation of this right would require the exclusion of any evidence obtained from the field-sobriety tests. Additionally, this court is not aware of, and has not located, any such authority to support Dao's contention.
In his brief, Dao relies on a single case, Atkinson v. State, 923 S.W.2d 21 (Tex. Crim.App.1996), overruled on other grounds by Motilla v. State, 78 S.W.3d 352 (Tex.Crim.App.2002). In Atkinson, the defendant was convicted of DWI, based in part on a chemical analysis of his breath. Id. at 22. The defendant contended there was a fact issue concerning whether the officers complied with the rules established by the Texas Department of Public Safety when they administered the breath test. Id. The court held that the defendant was entitled to an article-38.23 instruction, explaining that although "mere noncompliance with administrative agency rules does not provide a basis for the exclusion of evidence under article 38.23," in the defendant's case, a state statute expressly provided that evidence not obtained according to agency rules was illegally obtained. Id. at 23 & n. 1. But Atkinson is not analogous to Dao's case and does not advance his contention because Dao does not identify any Texas or federal statute similarly providing that the results of field-sobriety tests are illegally obtained unless they are performed in a person's first, or preferred, language.
We therefore overrule Dao's sole issue and affirm the trial court's judgment.
* * *
The trial court's judgment is affirmed.
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NO. 12-10-00038-CR
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
AMBER CHRIE WHITWORTH, § APPEAL FROM THE
APPELLANT
V. § COUNTY COURT AT LAW #1
THE STATE OF TEXAS,
APPELLEE § ANGELINA COUNTY, TEXAS
MEMORANDUM OPINION
Appellant Amber Chrie Whitworth appeals her conviction for family violence assault. She
raises five issues on appeal. We affirm.
BACKGROUND
Appellant was depressed for two weeks after the birth of her daughter, Ember. After
listening to her complain for two weeks, William Tuburen, the child‟s father, told Appellant to
leave if she was so unhappy. But Tuburen would not let her take the baby. Appellant began to beat
on Tuburen‟s head and to scratch him. He wrapped his arms around her to prevent her hitting him,
so she bit him. Tuburen called the police, who interviewed him and took photos of the bite mark
and the scratches. Appellant was so irate that the police were unable to interview her, but she made
several inculpatory comments, including admitting scratching and biting Tuburen. Appellant was
arrested and charged with family violence assault. The information alleged that
on or about the 29th day of March, A.D. 2009, . . . in the County of Angelina and the State of Texas,
one AMBER CHRIE WHITWORTH, Defendant, did then and there intentionally, knowingly, or
recklessly cause bodily injury to WILLIAM TUBUREN by BITING HIM.
The couple subsequently went to court and established custody of Ember, but by the time of
Appellant‟s trial, the couple had reunited. Tuburen sought to have the charges dismissed. During
the trial, Tuburen had difficulty remembering the events of the evening he made the complaint
against Appellant, and offered excuses for Appellant‟s actions. Tuburen‟s main “testimony” came
in the form of a transcript of his previous statements, in which he said,
And she started hitting me in the back of the head. There wasn‟t no marks from that. I told the police
about it, but they didn‟t take no pictures of the back of my head. And then she started choking me.
She bit me, scratched me, and just all kinds of stuff. Eventually I went outside the house because I
was tired of her beating on me.
Tuburen agreed that these previous statements, which the State read to him on the record, accurately
reflected the facts of the assault that he had previously stated he could not fully remember.
The arresting officer testified about his investigation of the assault at the Tuburen
household. The officer stated that Tuburen “said that she had scratched him and bit him. And she
basically said that she had bit him and scratched him because he was cheating on her.” He
identified six photographs, which were admitted into evidence and which showed Tuburen‟s
injuries.
After the State closed, Appellant moved for a directed verdict because there “was no
description of any bite by Mr. Tuburen. He did not testify that any bite that‟s alleged in the
Complaint caused any pain. There‟s insufficient evidence for this case to go to the jury and [we]
ask for a directed verdict.” The court denied the motion.
Appellant then testified she was depressed after Ember‟s birth, and that on the morning of
the assault, she found “phone messages from some girl, nude pictures or whatever.” She testified
that she was upset and was going to leave, but then she and Tuburen got into a confrontation over
her taking the baby, and they “both hit each other.” She also said that at one point, Tuburen was on
her, so she bit him on the shoulder or arm to make him let her up or get off her. When she bit him,
he released her, and he then went outside and called the police. Appellant offered photographs her
grandmother had taken of bruises on Appellant‟s legs, and testified that her legs had been bruised in
the scuffle.
The jury convicted Appellant of family violence assault, and the trial court individually
polled the jury to ensure that each of them had found Appellant “guilty.” The court sentenced
Appellant to ninety days in jail, probated for one year, and assessed a two hundred dollar fine.
2
Appellant filed two motions for new trial. The first motion alleged insufficiency of the
evidence because there was no testimony by Tuburen that he had received bodily injury or that he
experienced any pain as a result of Appellant‟s bite. The trial court denied this motion without a
hearing. The second motion alleged jury misconduct because two jurors were “pressured to vote
guilty because it was the lunch hour.” After conducting a hearing during which a juror testified
about the deliberations, the trial court denied the motion.
MOTION FOR NEW TRIAL
Appellant complains that the trial court erroneously denied her second motion for new trial.
In her first issue, she argues that the jury engaged in misconduct by considering evidence outside
the record. In her fourth issue, she argues that the trial court erred in denying her motion for new
trial based on that evidence.
The Hearing
The State objected to the court‟s conducting a hearing on Appellant‟s motion for new trial,
noting that a motion for new trial containing an allegation of jury misconduct requires a sworn
affidavit in support of the motion. Nonetheless, the court held a hearing at which Juror Griffin was
allowed to testify. Griffin testified that the verdict was not “unanimous” because she “felt that we
were being pressured to hurry up for lunch.” Griffin “strongly” felt Appellant was not guilty, but
she voted “guilty,” and she then told the judge her vote was “guilty” when the jury was polled.
Griffin testified that she regretted her decision not to vote her conscience. She also stated that,
during jury deliberations, another juror said, “Oh, it has probably happened before.” Griffin said she
immediately corrected the juror, explaining that there was no evidence of any other violence. And
she testified that during the jury discussions, a juror said that Appellant had “probably done this
before.” The judge denied the motion after the hearing.
Waiver
To preserve error caused by juror misconduct, the defendant must either move for a mistrial
or file a motion for new trial supported by affidavits of a juror or other person in a position to know
the facts of the alleged misconduct. See Trout v. State, 702 S.W.2d 618, 620 (Tex. Crim. App.
1985); Menard v. State, 193 S.W.3d 55, 59 (Tex. App.–Houston [1st Dist.] 2006, pet. ref‟d).
Appellant did not move for a mistrial and did not file an affidavit to support the allegations of jury
3
misconduct in her motion for new trial. Consequently, she has waived her jury misconduct
complaint. See Trout, 702 S.W.2d at 620; Menard, 193 S.W.3d at 59. But even if we assumed
Appellant preserved the issue, she could not prevail.
To demonstrate jury misconduct, a defendant must show that (1) the misconduct occurred
and (2) the misconduct resulted in harm to the movant. Gomez v. State, 991 S.w.2d 870, 871 (Tex.
App.–Houston [1st Dist.] 1999, pet. ref‟d) (citing Garza v. State, 630 S.W.2d 272, 274 (Tex. Crim.
App. [Panel Op.] 1981)). The issue of whether jury misconduct occurred is determined by the trial
court. Id. at 871. The finding of the trial court that no jury misconduct occurred is binding on the
reviewing court and will be reversed only where a clear abuse of discretion is shown. Id.
A new trial must be granted when “after retiring to deliberate, the jury has received other
evidence . . . .” TEX. R. APP. P. 21.3(f). Jurors must base their decisions on guilt and punishment on
the “information obtained in the courtroom: the law, the evidence, and the trial court‟s mandates.”
Ocon v. State, 248 S.W.3d 880, 884 (Tex. Crim. App. 2009). But jurors are prohibited from
testifying “as to any matter or statement occurring during the jury‟s deliberations, or the effect of
anything on any juror‟s mind or emotions or mental processes, as influencing any juror‟s assent to
the verdict.” TEX. R. EVID. 606(b); State v. Lewis, 151 S.W.3d 213, 219 (Tex. App–Tyler 2004,
pet. ref‟d). However, a juror may testify about (1) whether any outside influence was improperly
brought to bear upon any juror, or (2) to rebut a claim that the juror was not qualified to serve. TEX.
R. EVID. 606(b).
Here, there was no evidence of influence or evidence from outside the jury room. Griffin
testified about “matter[s] or statement[s] occurring during the jury‟s deliberations,” and the effect of
those matters or statements on the deliberative process. Rule 606(b) prohibits this testimony.
Because the record does not include any admissible evidence that provides a proper basis for
granting a motion for new trial, we could not have concluded that the trial court abused its
discretion in denying the motion, even if the issue were preserved.
Appellant‟s first and fourth issues are overruled.
EVIDENTIARY SUFFICIENCY
In her second and third issues, Appellant argues that the evidence is legally and factually
insufficient to support her conviction. More specifically, she contends that the State‟s evidence
4
fails to establish that the bite she inflicted on Tuburen caused him any physical pain or any
impairment of his physical condition.
Standard of Review
“Legal sufficiency is the constitutional minimum required by the Due Process Clause of the
Fourteenth Amendment to sustain a criminal conviction.” Escobedo v. State, 6 S.W.3d 1, 6 (Tex.
App.–San Antonio 1999, pet. ref‟d) (citing Jackson v. Virginia, 443 U.S. 307, 315-16, 99 S. Ct.
2781, 2786-88, 61 L. Ed. 2d 560 (1979)). The standard of review is whether any rational trier of
fact could have found the essential elements of the offense beyond a reasonable doubt. Jackson,
443 U.S. at 319, 99 S. Ct. at 2789; LaCour v. State, 8 S.W.3d 670, 671 (Tex. Crim. App. 2000).
The evidence is viewed in the light most favorable to the verdict. Jackson, 443 U.S. at 319, 99 S.
Ct. at 2789; LaCour, 8 S.W.3d at 671. The conviction will be sustained “unless it is found to be
irrational or unsupported by more than a „mere modicum‟ of the evidence.” Moreno v. State, 755
S.W.2d 866, 867 (Tex. Crim. App. 1988). The jury is the sole judge of the credibility of witnesses
and of the weight to be given their testimony. Barnes v. State, 876 S.W.2d 316, 321 (Tex. Crim.
App. 1994). Any reconciliation of conflicts and contradictions in the evidence is entirely within the
jury‟s domain. Losada v. State, 721 S.W.2d 305, 309 (Tex. Crim. App. 1986). If a reviewing court
finds the evidence legally insufficient to support a conviction, the result is an acquittal. Tibbs v.
Florida, 457 U.S. 31, 41-42, 102 S. Ct. 2211, 2217-18, 72 L. Ed. 2d 652 (1982).
In conducting a factual sufficiency review of the evidence supporting the jury‟s verdict, we
consider all of the evidence weighed by the jury that tends to prove the existence of the elemental
fact in dispute and compare it to the evidence that tends to disprove that fact. See Santellan v.
State, 939 S.W.2d 155, 164 (Tex. Crim. App. 1997). Ultimately, we must ask whether a neutral
review of all the evidence, both for and against the finding, demonstrates that the proof of guilt is so
obviously weak as to undermine our confidence in the jury‟s determination, or the proof of guilt,
although adequate if taken alone, is greatly outweighed by contrary proof. Johnson v. State, 23
S.W.3d 1, 11 (Tex. Crim. App. 2000); see also Ortiz v. State, 93 S.W.3d 79, 87 (Tex. Crim. App.
2002) (verdict will be set aside “only if the evidence supporting guilt is so obviously weak, or the
contrary evidence so overwhelmingly outweighs the supporting evidence, as to render the
conviction clearly wrong and manifestly unjust”); see Sims v. State, 99 S.W.3d 600, 601 (Tex.
Crim. App. 2003). A clearly wrong and manifestly unjust verdict occurs where the jury‟s finding
5
“shocks the conscience” or “clearly demonstrates bias.” Jones v. State, 944 S.W.2d 642, 648 (Tex.
Crim. App. 1997).
Applicable Law
A person commits the offense of family violence assault if she “intentionally, knowingly, or
recklessly causes bodily injury to another, including the person‟s spouse.” TEX. PENAL CODE ANN.
§ 22.01(a) (Vernon Supp. 2009). “Bodily injury” is defined as “physical pain, illness, or any
impairment of physical condition.” TEX. PENAL CODE ANN. § 1.07(8) (Vernon Supp. 2009). Pain
is “an unpleasant sensation, occurring in varying degrees of severity resulting from injury, disease,
or emotional disorder.” AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 942 (1978).
The statutory definition of “bodily injury” appears to be purposefully broad and seems to
encompass even relatively minor physical contacts so long as they constitute more than mere
offensive touching. Lane v. State, 763 S.W.2d 785, 786 (Tex. Crim. App. 1989). The failure of a
complaining witness to specifically testify that he felt pain or that his bruises and strain hurt did not
defeat the defendant‟s conviction for aggravated assault. Goodin v. State, 750 S.W.2d 857, 859
(Tex. App. –Corpus Christi 1988, pet ref‟d). In Goodin, the defendant drove with the complaining
witness hanging onto the hood of a car, causing the complaining witness strains and bruises. The
court noted that
[t]he terms “physical pain,” “illness,” and “impairment of physical condition” are terms of common
usage, and when construed “according to the fair import of their terms,” in the context used . . . are
not “so vague that men of common intelligence must necessarily guess at its meaning and differ as to
their application.”
People of common intelligence understand both physical pain and some of the natural causes
of pain. 23 C.J.S. Criminal Law § 902 (1961) recognizes the fundamental [principle] that “[i]n
arriving at their verdict the jury are not confined to a consideration of the palpable facts in evidence,
but they may draw reasonable inferences and make reasonable deductions therefrom . . . .” It is a
reasonable inference men of common intelligence could certainly make that [the victim‟s] bruises and
muscle strain caused him “physical pain” according to the fair import of that term as used in section
1.07(a)(7). The fact of a physical intrusion on the body in the form of a cut or scrape can itself be
sufficient evidence of the associated physical pain necessary to show “bodily injury.”
Id. (citations and brackets omitted).
Analysis
Appellant contends that since Tuburen did not specifically say that the bite she inflicted
caused him any physical pain or impairment, the evidence is legally insufficient to establish the
6
element of bodily injury. The State‟s primary evidence is a transcript of Tuburen‟s previous
statements that Appellant hit him in the back of the head, choked him, bit him, and scratched him.
There is also the testimony of the arresting officers who testified Tuburen said Appellant bit him.
Appellant testified and admitting biting Tuburen while he was holding her. According to
Appellant‟s testimony, the bite was so effective (i.e. painful) that Tuburen released her. Finally, the
State introduced the photographs the officers took of the scratches and the bite mark, with some of
the photographs showing a glistening surface indicating an abrasion or cut into the subcutaneous
layer of skin. From this evidence, a rational trier of fact could have found that Appellant caused
bodily injury to Tuburen. Therefore, the evidence is legally sufficient to support Appellant‟s
conviction.
As to factual sufficiency of the evidence to show bodily injury, there is no evidence
contradicting that the bite occurred or that Tuburen responded to the bite by releasing Appellant.
Therefore, the evidence is also factually sufficient to support Appellant‟s conviction.
Having reviewed the record in its entirety, we conclude that the evidence is legally and
factually sufficient to establish that bodily injury occurred. Therefore, the jury was entitled to find
Appellant guilty of family violence assault. Accordingly, Appellant‟s second and third issues are
overruled.
MOTION FOR INSTRUCTED VERDICT
In her fifth issue, Appellant contends the trial court erred in denying her motion for
instructed verdict at the close of the State‟s case. Appellant contends, as she did in her second and
third issues, that because the element of bodily injury was not established, the trial court erred in
denying her motion for instructed verdict. We have held that the evidence is legally and factually
sufficient to establish bodily injury. Therefore, we hold the trial court did not err in denying her
motion for instructed verdict. Appellant‟s fifth issue is overruled.
DISPOSITION
The judgment of the trial court is affirmed.
7
SAM GRIFFITH
Justice
Opinion delivered September 1, 2010.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
(DO NOT PUBLISH)
8
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