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489 F.2d 1273 160 U.S.App.D.C. 149 U. S.v.James 72-2156 UNITED STATES COURT OF APPEALS District of Columbia Circuit 1/17/74 1 D.C.D.C. 2 AFFIRMED* * The judgment or order is accompanied by a Memorandum explanatory of the judgment. Such memorandum is not included with the opinions of the Court that are printed, and it may not be cited in briefs or memoranda of counsel as precedents, under local rule	{ "pile_set_name": "FreeLaw" }
UNITED STATES NAVY-MARINE CORPS COURT OF CRIMINAL APPEALS WASHINGTON, D.C. Before K.J. BRUBAKER, M.C. HOLIFIELD, D.A. NORKIN Appellate Military Judges UNITED STATES OF AMERICA v. MATTHEW J. RADZEWSKY SERGEANT (E-5), U.S. MARINE CORPS NMCCA 201500089 SPECIAL COURT-MARTIAL Sentence Adjudged: 25 November 2014. Military Judge: Maj N.A. Martz, USMC. Convening Authority: Commanding Officer, 2d Light Armored Reconnaissance Battalion, 2d Marine Division, Camp Lejeune, NC. Staff Judge Advocate's Recommendation: LtCol K.S. Woodard, USMC. For Appellant: CDR Brendan Curran, JAGC, USN. For Appellee: Mr. Brian K. Keller, Esq. 6 August 2015 --------------------------------------------------- OPINION OF THE COURT --------------------------------------------------- THIS OPINION DOES NOT SERVE AS BINDING PRECEDENT, BUT MAY BE CITED AS PERSUASIVE AUTHORITY UNDER NMCCA RULE OF PRACTICE AND PROCEDURE 18.2. PER CURIAM: A military judge sitting as a special court-martial convicted the appellant, pursuant to his pleas, of two specifications of possession, one specification of use, and one specification of introduction of a controlled substance; one specification of making a check without sufficient funds; and two specifications of dishonorably failing to pay debts, in violation of Articles 112a, 123a, and 134, Uniform Code of Military Justice, 10 U.S.C. §§ 912a, 923a, and 934. The military judge sentenced the appellant to confinement for 45 days, reduction to pay grade E-3, and a bad-conduct discharge. The convening authority (CA) approved the sentence as adjudged, but deferred and waived automatic forfeitures in accordance with the pretrial agreement. The appellant’s case was submitted to this court without assignment of error. Upon review, we find that corrective action is necessary. Following our corrective action, we conclude that the findings and sentence are correct in law and fact and that no error materially prejudicial to the substantial rights of the appellant remains. Arts 59(a) and 66(c), UCMJ. Pursuant to his pretrial agreement, the appellant pled guilty to two specifications of wrongfully possessing a controlled substance, each on "diverse [sic] occasions." 1 In advising the appellant of the elements of these offenses, the military judge omitted any reference to divers occasions. Furthermore, while the providence inquiry and stipulation of fact allow us to conclude that the appellant wrongfully possessed each substance during the period alleged, neither provides a factual basis to find that he did so on divers occasions. Accordingly, the findings of guilty to Specifications 3 and 4 under Charge III are affirmed, except for the words "on diverse occasions." The findings of guilty to the excepted words are set aside. The remaining findings of guilty are affirmed. United States v. Care, 40 C.M.R. 247 (C.M.A. 1969); RULE FOR COURTS-MARTIAL 910, MANUAL FOR COURTS-MARTIAL, UNITED STATES (2012 ed.). As a result of our action on the findings, we have reassessed the sentence in accordance with the principles contained in United States v. Moffeit, 63 M.J. 40 (C.A.A.F. 2006). We are satisfied that, absent the excepted language, the sentence would not have been any less than that adjudged by the military judge and approved by the CA. The sentence as approved by the CA is affirmed. For the Court R.H. TROIDL Clerk of Court 1 Specifications 3 and 4 under Charge III 2	{ "pile_set_name": "FreeLaw" }
253 P.3d 798 (2011) SHELOR v. KDL, INC. No. 104860. Court of Appeals of Kansas. July 1, 2011. Decision Without Published Opinion Affirmed.	{ "pile_set_name": "FreeLaw" }
386 F.Supp.2d 209 (2004) ROSELINK INVESTORS, L.L.C., a New Jersey Limited Liability Company, Zigmunt Wilf, Bne Associates, a New Jersey partnership, David Halpern, Davanne Realty Co., Inc., a corporation, and Andrew Abramson, Plaintiffs, v. Mark R. SHENKMAN and Charles R. Cumello, Defendants. No. 01CIV7176(MBM). United States District Court, S.D. New York. May 19, 2004. 210 211 212 213 Jeffrey M. Garrod, Orloff Lowenbach Stifelman & Siegel, Roseland, NJ, for Plaintiffs. Thomas J. Fleming, Patrick L. Gibson, Olshan Grundman Frome Rosenzweig & Wolosky, New York, NY, for Defendants. OPINION AND ORDER MUKASEY, District Judge. Plaintiffs Roselink Investors, L.L.C., Zigmunt Wilf, BNE Associates, David Halpern, Davanne Realty Co., Inc., and Andrew Abramson (collectively "Creditors") purchased Units offered in a private offering by Crown Books Corp. ("Crown Books") and Crownbooks.com ("CB.com"), a wholly-owned subsidiary of Crown Books responsible for Crown Books' Internet sales. Creditors purchased the Units in exchange for (i) a promissory note in a principal value equal to the purchase price of each Unit, and (ii) a warrant to purchase common stock in Crown Books at a fixed exercise price. Defendants Mark Shenkman and Charles Cumello were directors of CB.com. Creditors have sued defendants for breaches of fiduciary duties, fraudulent transfer, and tortious interference with contractual relations. Both parties have moved for summary judgment. For the reasons stated below, defendants' motion is granted. I. Plaintiff Roselink Investors, LLC is a New Jersey limited liability company with its principal place of business in New Jersey. (Compl.ś 4) Roselink's members reside in New Jersey or Pennsylvania. (Id.) Plaintiff Zigmunt Wilf resides in New Jersey. (Id. at ś 5) Plaintiff BNE Associates is a New Jersey partnership, and all its partners are residents of New Jersey. (Id. at ś 6) Plaintiff David Halpern resides in New Jersey. (Id. at ś 7) Plaintiff Davanne 214 Realty Co. is a New Jersey corporation with its principal place of business in New Jersey. (Id. at ś 8) Plaintiff Andrew Abramson resides in New Jersey. (Id. at ś 9) Defendant Mark Shenkman resides in Connecticut. (Id. at ś 10) Defendant Charles Cumello resides in Maryland. (Id. at ś 11) Therefore, subject matter jurisdiction arises under 28 U.S.C. § 1332(a)(1). Venue is proper in this district pursuant to 28 U.S.C. § 1391(a)(2) because a substantial part of the events giving rise to this action occurred within this district. II. The following facts are either undisputed or are presented in the light most favorable to plaintiffs. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) Crown Books is a Delaware corporation based in Maryland. (Id. at ś 12) After becoming one of the country's top discount retailers of books and book-related products, Crown Books filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 (2000), in July 1998. (Id. at ś 12-13) Crown Books emerged from bankruptcy with two working capital loans provided by Paragon Capital LLC ("Paragon") and Foothill Capital Corporation ("Foothill"). (Id. at ś 14) Substantially all of Crown Books' assets were pledged to Creditors. (Id.) In December 1999, Crown Books formed CB.com, also a Delaware corporation, a wholly-owned subsidiary that was to pursue an Internet retail sales strategy. (Id. at ś 16) Crown Books estimated that its total costs to implement this Internet strategy would range from $3 million to $7 million, excluding marketing expenses. (Id. at ś 17) To raise the necessary funds, Crown Books and CB.com extended a private offering to accredited investors on December 14, 1999. (Id. at ś 18) The private offering was for a minimum of ten and a maximum of 20 Units, each of which consisted of a three-year 6% subordinated promissory note to CB.com in the principal amount of $500,000, and a three-year warrant to purchase 183,824 shares of common stock of Crown Books at $2.72 per share. (Defendants' Statement Pursuant to Local Civil Rule 56.1 ("Deft.Stmt."), Ex. A at i) About February 23, 2000, Creditors entered into subscription agreements with Crown Books and CB.com. (Compl.ś 19) Creditors purchased Units with an aggregate principal amount of more than $1 million. (Id. at ś 20) The private offering closed in March 2000 after raising approximately $4 million, $1 million of which was transferred immediately to Crown Books from CB.com. (Id. at ś 25) By January 2001, the functionality of CB.com's website was about 80% complete. (Id. at ś 26) In the latter part of 2000, Crown Books found itself with accelerated holiday inventory receipts, unplanned trade payments for these receipts, and sales trends that were lower than reflected in its business plan. (Id. at ś 27) On December 8, 2000, Crown Books entered into an agreement with Paragon and Foothill to seek capital to lower its debt. (Id. at ś 28) The agreement obligated Crown Books to pay $1.5 million on or before December 12, 2000, at least $2 million on or before January 10, 2001, and at least $1.5 million on or before February 15, 2001. (Deft. Stmt., Ex. G at 2) About December 11, 2000, Shenkman and Cumello authorized a loan of $1.5 million from CB.com to Crown Books ("the Loan"). (Compl.ś 30) Two months later, Crown Books filed another voluntary petition for relief under Chapter 11 of the Bankruptcy Code. (Id. at ś 36) Plaintiffs have brought seven claims for relief against Creditors. Claim One is for breach of fiduciary duty. Claim Two is for 215 breach of the duty of loyalty. Claim Three is for breach of the duty of good faith. Claim Four is for common law wrongful transfer of funds. Claim Five is for violation of § 1304(a)(2) of the Delaware Uniform Fraudulent Transfer Act. Claim Six is for violation of § 1305(a) of the Delaware Uniform Fraudulent Transfer Act. Claim Seven is for tortious interference with contractual relations. III. A. Breach of Fiduciary Duty Claims Creditors allege that defendants, as directors of CB.com, owed them fiduciary duties of due care, loyalty and good faith. (Compl.śś 38, 45, 52) According to Creditors, defendants owed them fiduciary duties because CB.com was insolvent "when the Loan was made or was rendered insolvent by the Loan." (Id. at ś 38) Creditors claim that by making the Loan defendants breached their fiduciary duties. (Id. at śś 39-42, 46-49, 53-56) The threshold question is whether defendants owed Creditors any fiduciary duties. If so, the next question is whether defendants breached these duties. Delaware law, upon which the parties have relied, controls. See Texaco A/S (Denmark) v. Commercial Ins. Co. of Newark, NJ, 160 F.3d 124, 128 (2d Cir.1998) (parties' consent to application of forum law completes choice of law inquiry); American Fuel Corp. v. Utah Energy Development Co., 122 F.3d 130, 134 (2d Cir.1997) (same). 1. Did defendants owe plaintiffs any fiduciary duties? Under Delaware law, when one company wholly owns another, the directors of the parent and the subsidiary are obligated to manage the affairs of the subsidiary in the best interests only of the parent and its shareholders. See Anadarko Petroleum Corp. v. Panhandle Eastern Corp., 545 A.2d 1171, 1174 (Del.1988) (dismissing subsidiary's claim against parent corporation and three former directors of the subsidiary for breach of fiduciary duty by modifying contracts between subsidiary and parent); Dennis J. Block, Nancy E. Barton & Stephen A. Radin, THE BUSINESS JUDGMENT RULE: FIDUCIARY DUTIES OF CORPORATE DIRECTORS 376 (5th ed.2002). However, "where a corporation is operating in the vicinity of insolvency, a board of directors is not merely the agent of the residue risk bearers, but owes its duty to the corporate enterprise." Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Corp., Civ. A. No. 12150, 1991 WL 277613, at 34 (Del.Ch. Dec. 30, 1991). Delaware law requires that directors recognize that in managing the business affairs of a solvent corporation in the vicinity of insolvency, circumstances may arise when the right (both the efficient and the fair) course to follow for the corporation may diverge from the choice that the stockholders (or the creditors, or the employees, or any single group interested in the corporation) would make if given the opportunity to act. Id. at n. 55. Once a corporation enters "the zone of insolvency," the directors owe fiduciary duties not only to the corporation's shareholders but to its creditors as well. See Geyer v. Ingersoll Publications Co., 621 A.2d 784, 791 (Del.Ch.1992). This means that directors of a wholly-owned subsidiary, who otherwise would owe fiduciary duties only to the parent, also owe fiduciary duties to creditors of the subsidiary when the subsidiary enters "the zone of insolvency." There is no dispute here that CB.com was at least within "the zone of insolvency" when defendants made the Loan. Indeed, the facts show that CB.com was insolvent from the moment it was formed. All of its $4 million of capital was acquired 216 through the private offering, in which promissory notes were issued in exchange for Units. (Plaintiffs' Counterstatement of Undisputed Facts ("Pl.Cstmt.") śś 18-23) Because Crown Books decided to raise the capital through loans rather than a stock offering, CB.com's liabilities exceeded its assets when the Units were issued, which rendered CB.com insolvent from inception. "[A]n entity is insolvent when it has liabilities in excess of a reasonable market value of assets held." Geyer, 621 A.2d at 789; see also BLACK'S LAW DICTIONARY 799 (7th ed.1999) (defining "insolvent" as "having liabilities that exceed the value of assets"). Therefore, CB.com owed Creditors fiduciary duties from the moment Creditors purchased the units.[1] 2. Did defendants breach their fiduciary duties to creditors? The fiduciary duties of directors of a corporation are twofold, "generally characterized as the duty of care and the duty of loyalty." Norlin Corp. v. Rooney, Pace Inc., 744 F.2d 255, 264 (2d Cir.1984). "The duty of care refers to the responsibility of a corporate fiduciary to exercise, in the performance of his tasks, the care that a reasonably prudent person in a similar position would use under similar circumstances." Id. "The second restriction traditionally imposed, the duty of loyalty, derives from the prohibition against self-dealing that inheres in the fiduciary relationship." Id. Under Delaware law, to establish a breach of fiduciary duty, a plaintiff first must prove facts sufficient to overcome the presumption inherent in the business judgment rule. See Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1162-64 (Del.1995); Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360-61 (Del.1993); Spiegel v. Buntrock, 571 A.2d 767, 774 (Del.1990); Citron v. Fairchild Camera & Instrument Corp., 569 A.2d 53, 64 (Del.1989); Smith v. Van Gorkom, 488 A.2d 858, 872 (Del.1985). The business judgment rule "is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in honest belief that the action taken was in the best interests of the company." Orman, 794 A.2d at 19-20 (quoting Aronson v. Lewis, 473 A.2d 805, 811 (Del.1984)) (internal quotation marks omitted). Four elements define the business judgment rule presumption: (1) a business decision; (2) disinterestedness and independence; (3) due care; and (4) good faith. See Cinerama, 663 A.2d at 1162-64; Cede, 634 A.2d at 360-61; Spiegel, 571 A.2d at 774; Citron, 569 A.2d at 64; Van Gorkom, 488 A.2d at 872; Aronson, 473 A.2d at 811-816; see also Dennis J. Block, Nancy E. Barton & Stephen A. Radin, THE BUSINESS JUDGMENT RULE: FIDUCIARY DUTIES OF CORPORATE DIRECTORS 39, 85-88 (5th ed.2002). The presumption of the business judgment rule is rebutted in those rare 217 cases where a plaintiff establishes facts to show that any of the four elements was not present. See Parnes v. Bally Entertainment Corp., 722 A.2d 1243, 1246 (Del.1999). "While the Delaware cases use a variety of terms to describe the applicable standard of care, our analysis satisfies us that under the business judgment rule director liability is predicated upon concepts of gross negligence." Aronson, 473 A.2d at 812. Under Delaware law, a court should "reach conclusions as to the sufficiency of allegations regarding interest and independence only after considering all the facts alleged on a case-by-case basis." Orman, 794 A.2d at 23. Creditors claim that defendants owed them fiduciary duties "not to divert, dissipate or unduly risk assets of Crownbooks.com that would be necessary to satisfy Crownbooks.com's repayment obligation with respect to the monies due on Plaintiffs' Notes." (Compl.śś 38, 45, 52) Creditors argue that defendants breached their fiduciary duties "by making the Loan without first ensuring that Crownbooks.com had retained sufficient assets to pay its debts as they became due," "by failing to obtain adequate security for the Loan as well as other protections for Crownbooks.com as a lender and for Plaintiffs as creditors," and "by causing Crownbooks.com to make the Loan without first obtaining any assurance that Crown Books Corp. could obtain the other cash infusions required under its agreement with Paragon and Foothills." (Id. at śś 40-42, 47-49, 54-56) However, Creditors have failed to establish sufficient facts to rebut the presumption of the business judgment rule. a. Business Decision It is not disputed that the Loan was the product of a business decision on the part of defendants. Cumello stated in a letter dated December 22, 2000 â quoted by Creditors in the Complaint â that the Loan was made in answer to the problem Crown Books was having with raising cash needed to remain "in satisfactory standing with Paragon." (Compl.ś 29) Cumello further explained in a letter to Creditors dated January 2, 2001 â also quoted by Creditors in the Complaint â that the Loan was made "for the working capital needs of the parent." (Id. at ś 31) Therefore, defendants' decision to make the Loan constitutes a "business decision" for the purposes of the business judgment rule. b. Disinterestedness and Independence The Delaware Supreme Court has defined "interest" under a business judgment rule analysis as meaning "that directors can neither appear on both sides of a transaction nor expect to derive any personal financial benefit from it in the sense of self-dealing, as opposed to a benefit which devolves upon the corporation or all stockholders generally." Aronson, 473 A.2d at 812. Further, the benefit to a director must be material, Cede, 634 A.2d at 363, which means that it must be "significant enough, in the context of the director's economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the shareholders without being influenced by her overriding personal interest." Orman, 794 A.2d at 23 (internal quotation marks and ellipsis omitted) (emphasis in original). The Delaware Supreme Court has defined "independent" under a business judgment rule analysis as meaning "that a director's decision is based on the corporate merits of the subject before the board rather than extraneous considerations or influences." Aronson, 473 A.2d at 816. "In assessing director independence, Delaware courts apply a subjective `actual person' standard to determine whether a `given' director was likely to be affected in the same or similar circumstances." 218 McMullin v. Beran, 765 A.2d 910, 923 (Del.2000). "There must be coupled with the allegations of control such facts as would demonstrate that through personal or other relationships the directors are beholden to the controlling person." Aronson, 473 A.2d at 815. "To be disqualifying, the nature of the director interest must be substantial" and not merely "incidental." Cinerama, 663 A.2d at 1169. If a plaintiff successfully demonstrates facts sufficient to rebut the business judgment rule presumption, then the burden of proof shifts to the defendant directors to establish the "entire fairness" of the challenged transaction. Kahn v. Lynch Communication Sys., Inc., 638 A.2d 1110, 1115 (Del.1994). Creditors argue here that both Cumello and Shenkman were personally interested in the Loan because "both Cumello and Shenkman had personal interests that were placed at grave risk by the prospect of a Crown Books' bankruptcy," and the Loan "enabled Crown Books to live for another day, and in turn, advanced their respective interests for their own personal benefit." (Pl.Mem.53) Creditors allege that defendants served as directors of both Crown Books and CB.com. (Compl.śś 10-11) Creditors also note that Shenkman held ownership interests in two companies that together owned 35% of the common stock of Crown Books, and that Cumello received a salary as President and Chief Executive Officer of Crown Books. (Pl. Mem. at 53-54) In short, Creditors argue that defendants were not disinterested because they each had personal interests in Crown Books, thereby placing them on both sides of the transaction. However, presence on both sides of the transaction does not automatically rebut the business judgment rule presumption. Cullman, 794 A.2d at 20 n. 36. The interests attributed to defendants by Creditors do not deprive defendants of the protection of the business judgment rule because of one essential fact overlooked by Creditors: Crown Books was the sole shareholder of CB.com. As already discussed, defendants, as directors of CB.com, owed fiduciary duties to CB.com's shareholders. CB.com's only shareholder, however, was Crown Books, as CB.com was a wholly-owned subsidiary. Therefore, defendants owed fiduciary duties to Crown Books as the only shareholder. Under Delaware law, "in a parent and wholly-owned subsidiary context, the directors of the subsidiary are obligated only to manage the affairs of the subsidiary in the best interests of the parent and its shareholders." Anadarko Petroleum Corp. v. Panhandle Eastern Corp., 545 A.2d 1171, 1174 (Del.1988).[2] This means that defendants were obligated to consider the interests of Crown Books in any business decision they made, such as the decision to make the Loan. As a result, the personal interests attributed to defendants by Creditors did not extend beyond those that defendants were already obliged to consider because defendants had a fiduciary duty to consider the interests of Crown Books as the sole shareholder of CB.com. Indeed, given that Delaware law required defendants, as directors of a wholly-owned subsidiary, to consider the interests of the parent company, defendants would have been in breach of their fiduciary duties had they not considered the best interests of Crown Books in deciding whether to make the Loan.[3] Further, 219 Creditors have not asserted any personal interests on the part of defendants relating specifically to the Loan. In fact, it is undisputed that the money CB.com loaned to Crown Books was transferred to Paragon, such that defendants did not receive any of the transferred funds nor any benefit from the funds other than some indirect, attenuated benefit from keeping Crown Books alive a bit longer, which they were legally obliged to try to do anyway. Even assuming arguendo that the interests attributed to defendants by Creditors were additional interests beyond those defendants were obligated to consider, Creditors must also establish that these particular interests were material. Cede, 634 A.2d at 363. As explained below, Creditors have failed to do so. First, Shenkman's purported ownership interest in Crown Books is far too attenuated to constitute a material interest sufficient to rebut the business judgment rule presumption. Shenkman is the founder, President, Chief Investment Officer and managing member of Shenkman Capital Management, Inc. ("Shenkman Capital"). (Plaintiffs' Statement of Undisputed Material Facts ("Pl.Stmt.") ś 8) Shenkman Capital is the managing member and 1% owner of Royalty Books Associates ("Royalty"). (Id. at ś 9) Royalty owned approximately 35% of Crown Books' stock. (Id.) Therefore, Shenkman's ownership interest in Crown Books is comprised of his unspecified ownership interest in Shenkman Capital, Shenkman Capital's 1% ownership interest in Royalty, and Royalty's 35% ownership interest in Crown Books â which makes Shenkman's ownership interest in Crown Books some percentage of 1% of 35%. Even assuming Shenkman owns 100% of Shenkman Capital, this would make his interest in Royalty only 0.35%. This is far too little to render Shenkman interested in the Loan or controlled by Crown Books under a business judgment rule analysis. "[S]tock ownership alone, at least when it amounts to less than a majority, is not sufficient proof of dominion or control." Aronson, 473 A.2d at 815 (holding that 47% stock ownership was not sufficient to rebut independence) (internal quotation marks omitted). Cumello's employment as an officer of Crown Books also does not constitute a material interest under the particular circumstances here. Creditors argue that Cumello's employment with Crown Books gives him a personal interest in keeping Crown Books out of bankruptcy for as long as possible in order to protect his job. However, as already discussed above, regardless of his position as an officer of Crown Books, Cumello had a duty to Crown Books to manage CB.com in the best interests of Crown Books, and certainly the best interests of Crown Books would include an interest in keeping Crown Books out of bankruptcy for as long as possible. As a result, any personal interest Cumello had in keeping Crown Books out of bankruptcy was consistent 220 with the best interests of Crown Books, and thus any indirect benefit to Cumello from the Loan was immaterial. Therefore, Creditors have failed to establish that defendants were personally interested in or dependent on the business decision to make the Loan. c. Due Care "The duty of the directors of a company to act on an informed basis forms the duty of care element of the business judgment rule." Cinerama, 663 A.2d at 1164 n. 13 (internal quotation marks and ellipsis omitted). "[T]o invoke the rule's protection directors have a duty to inform themselves, prior to making a business decision, of all material information reasonably available to them." Aronson, 473 A.2d at 812. "[T]he standard for judging the informational component of the directors' decisionmaking does not mean that the Board must be informed of every fact. The Board is responsible for considering only material facts that are reasonably available, not those that are immaterial or out of the Board's reasonable reach." Brehm v. Eisner, 746 A.2d 244, 259 (Del.2000) (emphasis in original) "[T]he concept of gross negligence is [ ] the proper standard for determining whether a business judgment reached by a board of directors was an informed one." Van Gorkom, 488 A.2d at 873. Creditors have failed to present any facts sufficient to overcome the business judgment rule presumption of due care. According to defendants, they consulted counsel for CB.com and Crown Books before making the Loan to discuss both legal and strategic concerns. (Cumello Dec. śś 22-26) Additionally, Cumello reports that as President and Chief Executive Officer of Crown Books, he "regularly received and reviewed financial reports and updates regarding Crown Books' finances," "reviewed Crown Books' monthly financial packages," and "had almost daily discussions with Crown Books CFO regarding Crown Books' credit facilities with Paragon and Ingram." (Id. at ś 41) It is unreasonable to conclude that as directors of Crown Books and as an officer of Crown Books, defendants would be uninformed about the financial condition of the company. Indeed, Creditors have posited conflicting arguments for this very reason. First, claiming that defendants were uninformed, Creditors argue: It is undisputed that defendants did not engage in any credit risk assessment to determine whether Crownbooks.com should have lent its cash assets to Crown Books and, in particular, Shenkman did not consider Crown Books' financial capacity to repay the Loan. No independent financial consultants or advisors were retained by defendants for the purpose of evaluating Crown Books' creditworthiness and capacity for loan repayment. (Pl.Mem.41) In short, Creditors argue that defendants were not adequately informed about the financial condition of Crown Books, the recipient of the Loan. However, in the very next paragraph Creditors take a wholly contradictory position, arguing: "It is also undisputed that defendants already knew, through their dual directorial status, that Crown Books did not possess the financial wherewithal to repay, secure or otherwise guaranty repayment of Crownbooks.com's funds." (Id.) (emphasis added) Creditors then outline in detail the facts surrounding Crown Books' demise in late 2000 as defendants struggled to meet Paragon's demands. (Id. at 41-42) It is beyond any reasonable dispute that defendants were well aware of Crown Books' financial condition when the Loan was made, and thus were adequately informed in reaching the business judgment to make the Loan. Creditors' allegations boil down to a single contention: defendants made a 221 poor decision. Creditors argue that defendants should have ensured that CB.com "retained sufficient assets to pay its debts as they became due," obtained "adequate security for the Loan," and sought "assurance that Crown Books Corp. could obtain the other cash infusions required under its agreement with Paragon and Foothills." (Compl.śś 40-42) However, all of these arguments are factual claims directed at the wisdom of defendants' decision rather than at the level of information underlying the decision. Under the business judgment rule, courts do not "examine the wisdom of the decision itself." Brazen v. Bell Atlantic Corp., 695 A.2d 43, 49 (Del.1997). "[T]he Court gives great deference to the substance of the directors' decision and will not invalidate the decision, will not examine its reasonableness, and will not substitute [its] views for those of the board if the latter's decision can be attributed to any rational business purpose." Paramount Communications, Inc. v. QVC Network Inc., 637 A.2d 34, 45 (Del.1994); see also Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del.1971) ("A court under such circumstances will not substitute its own notions of what is or is not sound business judgment."); Gagliardi v. TriFoods Intern., Inc., 683 A.2d 1049, 1052 (Del.Ch.1996) ("[T]o allege that a corporation has suffered a loss as a result of a lawful transaction, within the corporation's powers, authorized by a corporate fiduciary acting in a good faith pursuit of corporate purposes, does not state a claim for relief against that fiduciary no matter how foolish the investment may appear in retrospect."). Therefore, Creditors have not demonstrated that defendants failed to exercise due care. d. Good Faith Delaware law does not recognize an independent duty of good faith. Under Delaware law, [a]lthough corporate directors are unquestionably obligated to act in good faith, doctrinally that obligation does not exist separate and apart from the fiduciary duty of loyalty. Rather, it is a subset or `subsidiary requirement' that is subsumed within the duty of loyalty, as distinguished from being a compartmentally distinct fiduciary duty of equal dignity with the two bedrock fiduciary duties of loyalty and due care. Orman v. Cullman, 794 A.2d 5, 14 (Del.Ch.2002) (quoting Emerald Partners v. Berlin, No. Civ.A. 9700, 2001 WL 115340, at 64 n. 63 (Del.Ch. Feb.7, 2001) (internal quotation marks omitted)). Good faith is also subsumed within the duty of due care. Id. at 19-20. Accordingly, summary judgment is granted for defendants dismissing Claim Three for breach of the duty of good faith. Creditors have failed to present any facts demonstrating that defendants acted in bad faith so as to establish a basis for their claims for breach of the fiduciary duties of due care and loyalty. The Delaware Supreme Court has defined "bad faith" as "not simply bad judgement or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that it contemplates a state of mind affirmatively operating with furtive design or ill will." Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1208 n. 16 (Del.1993). "[T]he absence of significant financial adverse interest creates a presumption of good faith, although the good faith requirement further demands an ad hoc determination of the board's motives in making the business decision." See Estate of Detwiler v. Offenbecher, 728 F.Supp. 103, 150 (S.D.N.Y.1989) (citing Delaware law). Bad faith may be found where a business 222 decision "is so far beyond the bounds of reasonable judgment that it seems essentially inexplicable on any ground other than bad faith." In re J.P. Stevens & Co., Inc. Shareholders Litigation, 542 A.2d 770, 780-81 (Del.Ch.1988). As already discussed, Creditors have not established any significant financial adverse interest on the part of defendants, so the only question is whether the decision to make the Loan is so far beyond the bounds of reasonable judgment that it must have been motivated by bad faith. According to Cumello, he "believed that if CB.com did not make the Loan, CB.com's assets would be consolidated into the assets of Crown Books, and the Unit Holders would lose their entire investment." (Cumello Dec. ś 42) Cumello further believed that structuring the transfer "as a loan, instead of a dividend, [would] balance the interests of CB.com and Crown Books [because] ... the loan would entitle CB.com to repayments when it needed funds to pursue its development program further." (Id. at ś 43) Cumello also "believed CB.com would have recourse in bankruptcy" if Crown Books went bankrupt after the Loan. (Id.) Shenkman shared Cumello's beliefs, approving the Loan because he believed that "it was in the best interest of all the parties involved, including the Unit Holders, CB.com and Crown Books." (Shenkman Dec. ś 9) Defendants' expressed motivations for the Loan demonstrate that there was no bad faith towards Creditors or CB.com in favor of Crown Books, and that defendants had a good faith belief that the Loan would not harm Creditors or CB.com and could benefit them in the long run. Further, it is undisputed that CB.com could not survive without Crown Books. According to Cumello, without Crown Books, CB.com would: 1) be unable to gain access to clients; 2) be unable to develop an effective product which displayed current and relevant books, periodicals and other products; and 3) not have the back office infrastructure to operate as an independent entity. As a result, CB.com had no hope for success without Crown Books. (Cumello Dec. ś 13) Shenkman also believed that "[i]t was essential to CB.com's survival that Crown Books also continue in business." (Shenkman Dec. ś 9) Defendants' beliefs about the dependence of CB.com on Crown Books are bolstered by the Offering Memorandum governing Creditors' investment. The Offering Memorandum states that CB.com intended "to attract significant online traffic and business" through Crown Books' "established name, reputation and value proposition." (Def. Stmt., Ex. A at 4) The Offering Memorandum further states that the purpose of CB.com is to "permit Crown Books customers to shop online at Crown Books both from home and in the stores, and [ ] help to facilitate an online/offline community for Crown Books." (Id.) (emphasis added) The Offering Memorandum informed Creditors when they purchased the Units that CB.com, as a wholly-owned subsidiary, existed for the benefit of Crown Books and would be entirely dependent on Crown Books for its customer base and its operations. In fact, the Offering Memorandum refers to the "Company" almost exclusively whenever discussing the new venture for which the Units were being offered, and the Offering Memorandum defines "Company" as both CB.com and Crown Books, leaving little doubt about the intimate, dependent relationship between these two entities. (Id. at Ex. A) Indeed, the Offering Memorandum effectively presents CB.com and Crown Books as one entity â namely, the "Company." (Id.) Therefore, defendants' business judgment that the Loan would help save Crown Books and that preserving Crown Books would help save CB.com 223 was not "so far beyond the bounds of reasonable judgment that it must have been motivated by bad faith." See In re J.P. Stevens, 542 A.2d at 780-81. Indeed, all evidence is to the contrary â namely, that defendants acted in good faith to preserve both Crown Books and CB.com. Creditors argue also that defendants lacked discretion to use the proceeds from the Unit sales for the Loan, but this argument is belied by indisputable facts. The Offering Memorandum includes a provision entitled "Broad Discretion in Use of Proceeds," which reads: Although the Company has generally provided for the intended use of the net proceeds from the Offering as of the date of this Term Sheet, the Company cannot specify with certainty the amount of the net proceeds of the Offering that will be allocated for each purpose. In addition, the Company reserves the right to reallocate the use of net proceeds it receives from the Offering in any manner it deems advisable. Accordingly, the Company's management will have broad discretion in the application of the net proceeds. See `Use of Proceeds.' (Def.Stmt., Ex. A, ii) (emphasis added) This language leaves no doubt about the "broad discretion" of defendants in their use of the proceeds generated by Creditors' purchase of the Units. Moreover, defendants' broad discretion over the use of the proceeds was further articulated in the Supplement to the Offering Memorandum, which states: "The Company reserves the right to reallocate the use of the net proceeds received in the Offering in any manner it deems advisable." (Id. at Ex. B, at 1) (emphasis added) Creditors argue that "broad discretion" is not the same as "unabridged, unbridled and unchecked discretion," and that defendants would need "sole" or "absolute" discretion to permit the Loan. (Pl.Mem.30) However, this is not a case where directors transferred company funds into their personal bank accounts; rather, defendants transferred funds to the parent corporation with the purpose of assisting the parent, which was entirely in keeping with their fiduciary duty to consider the best interests of Crown Books. See Anadarko, 545 A.2d at 1174. Defendants did not need absolute discretion to authorize the Loan, only broad discretion over the use of the proceeds, which they had under the express terms of the Offering Memorandum. Further, the "Broad Discretion" provision of the Offering Memorandum refers to the "Use of Proceeds" provision, which states, in relevant part, for the third time: "The Company reserves the right to reallocate the use of the net proceeds it receives from the Offering in any manner which it deems advisable." (Deft. Stmt., Ex. A at ii) (emphasis added) This provision also expressly informed Creditors that among the purposes for which the proceeds could be used was "for working capital and general corporate purposes of Crown Books." (Id.) Certainly, paying a debt owed by Crown Books in an attempt to avoid bankruptcy qualifies as "general corporate purposes." Therefore, defendants used the proceeds of the Unit sales for purposes expressly permitted under the terms of the Offering Memorandum. Indeed, it is entirely unclear for what purposes Creditors believe the proceeds could have been used. They challenge the purposes for which defendants used a portion of the proceeds â namely, the Loan â and yet offer no purpose for which they believe these proceeds should have been used. Creditors argue that at the time of the Loan CB.com "was already dead." (Reply Memorandum of Law in Further Support of Plaintiffs' Motion for Summary Judgment ("Pl.Reply") 38) So Creditors' argument essentially boils down to the contention that defendants should have locked away CB.com's funds and thrown away the 224 key â funds for which CB.com had absolutely no use as a "dead" entity and which could be reallocated for any purposes under the express terms of the Offering Memorandum â and simply watched idly as Crown Books went under. However, this again ignores the fact that Crown Books was CB.com's parent company, and thus defendants owed Crown Books a fiduciary duty to manage CB.com in the best interests of Crown Books. Anadarko, 545 A.2d at 1174. In fact, doing as Creditors demand may have constituted a breach of the fiduciary duties defendants owed Crown Books. Of course, defendants also had a fiduciary duty to consider Creditors' interests as well, but defendants believed â rightly or wrongly â that Creditors would lose the funds in bankruptcy anyway, in which case the Loan put Creditors in no worse position while possibly preserving Crown Books, and CB.com with it. (Cumello Dec. ś 42) In sum, Creditors have not demonstrated that defendants acted in bad faith. As already discussed, Creditors' claims are essentially an attack on the wisdom of defendants' decision. But the business judgment rule is intended to protect directors against just such attacks because their decisions are not to be second-guessed by courts with the benefit of hindsight. Creditors made high-risk loans for a high-risk venture by a high-risk company, and they lost the gamble. They were informed of all the risks associated with CB.com and Crown Books when they purchased the Units, and they were even afforded an opportunity to withdraw from their agreements with CB.com when CB.com failed to raise the desired funds in the time expected â yet Creditors chose not to walk away. (Def.Stmt., Ex. B) Defendants cannot be held liable for a business decision made in good faith with due care and without any controlling influences or personal interests, and such is the case here. Creditors have failed "to make a showing sufficient to establish the existence of an element essential to [their] case, and on which [they] will bear the burden of proof at trial." See Celotex v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). They have failed to establish facts necessary to negate any element of the business judgment rule, and thus defendants are "entitled to judgment as a matter of law." See Fed.R.Civ.P. 56. Accordingly, summary judgment is granted for defendants dismissing Claim One for breach of fiduciary duty and Claim Two for breach of the duty of loyalty. B. Fraudulent Conveyance Claims Creditors have brought claims against defendants for common law wrongful transfer and statutory fraudulent transfer. Creditors argue that defendants owed them "a duty not to wrongfully transfer or otherwise divert assets from Crownbooks.com for other purposes." (Compl.ś 59) Creditors further argue that defendants had a statutory duty "not to cause Crownbooks.com, in its capacity as a debtor, to make any transfer or incur any obligation without receiving a reasonably equivalent value in exchange therefore, at a time when Crownbooks.com was insolvent or became insolvent as a result of said transfer" or "under circumstances whereby the remaining assets of Crownbooks.com would be unreasonably small in relation to the business or transaction." (Id. at śś 64, 68) According to Creditors, defendants breached their common law and statutory duties by causing Crownbooks.com "to transfer $1.5 million to Crown Books Corp. by way of an unsecured loan." (Id. at śś 60, 65, 69) 1. Choice of Law Creditors argue that Delaware law should apply to these claims; defendants 225 argue that New York law should apply. "A federal court, sitting in diversity, must look to the choice-of-law rules of the state in which it sits â here New York â to resolve the conflict-of-law questions." AroChem International, Inc. v. Buirkle, 968 F.2d 266, 269-70 (2d Cir.1992) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). The parties not only dispute which state's substantive law should apply, but also which test under New York law should be applied to resolve the choice-of-law question. According to Creditors, the Loan involved the internal affairs of CB.com, and therefore the "internal affairs doctrine" should apply. According to defendants, however, Creditors' claims do not fall within the "internal affairs doctrine," and therefore an "interest analysis" should apply. "The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation's internal affairs â matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders â because otherwise a corporation could be faced with conflicting demands." Edgar v. MITE Corp., 457 U.S. 624, 645, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982). Under the internal affairs doctrine, "the law of the state of incorporation normally determines issues relating to the internal affairs of a corporation." First National City Bank v. Banco para el Comercio Exterior de Cuba, 462 U.S. 611, 621, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983) (emphasis in original). "Different conflicts principles apply, however, where the rights of third parties external to the corporation are at issue." Id. at 621, 103 S.Ct. 2591 (emphasis in original). Creditors' claims at issue here are tort claims regarding the rights of "third parties external to the corporation" as they are not brought by shareholders, officers or directors, nor are they brought derivatively on behalf of the corporation. Therefore, the "internal affairs doctrine" is inapplicable here. New York law employs an "interest analysis" in tort actions that applies the law of the jurisdiction with the greatest interest in the litigation. See Arochem, 968 F.2d at 270. Under this analysis, the court should focus almost exclusively on the parties' domiciles and the locus of the tort. Id. "As part of the interest analysis, the New York Court of Appeals has distinguished between rules regulating conduct and rules governing loss allocation. Generally, when the laws in conflict are conduct regulating, the law of the locus jurisdiction applies." Id. "A fraudulent conveyance statute is conduct regulating rather than loss allocating." See GFL Advantage Fund, Ltd. v. Colkitt, No. 03 Civ. 1256, 2003 WL 21459716, at 3 (S.D.N.Y. June 24, 2003). The only two states at issue here are New York and Delaware. None of the parties are domiciled in Delaware or New York, and the locus of the alleged tort is New York. In order to lay venue in the Southern District of New York, plaintiffs have alleged that "a substantial part of the events and actions of Defendants giving rise to the claims asserted [by plaintiffs] occurred within" New York. (Compl.ś 3) Additionally, the private placement under which Creditors purchased the Units giving rise to this litigation was supervised by a law firm located in New York. (Def.Stmt., Ex. B) Creditors have not alleged any facts showing any actions related to this litigation that occurred in Delaware. Further, New York recognizes the right of contracting parties to agree to the choice of law. See Turtur v. Rothschild Registry International, Inc., 26 F.3d 304, 310 (2d Cir.1994). The Subordinated Note issued to Creditors here contains a provision 226 entitled "Governing Law," which states: "This Note shall be governed by and construed in accordance with the laws of the State of New York." (Def.Stmt., Ex. D, ś 7(B)) Further, the Subscription Agreements entered into by the parties include a forum selection clause which states: Notwithstanding the place where this Subscription Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of New York. The parties hereby agree that any dispute which may arise between them arising out of or in connection with this Subscription Agreement shall be adjudicated before a court located in New York City and they hereby submit to the exclusive jurisdiction of the courts of the State of New York located in New York, New York and of the federal courts in the Southern District of New York with respect to any action or legal proceeding commenced by any party.... (Id. at Ex. C, ś 4.4) (emphasis added) In Turtur, the Court of Appeals affirmed summary judgment against securities brokers who brought an action for common law fraud after purchasing units in a limited partnership. 26 F.3d at 305. The subscription note by which the plaintiffs purchased the units contained a forum selection clause nearly identical to the clause here. Id. at 309. The Court held that the plaintiffs' fraud claim clearly arose out of or was related to their investment, which was governed by the subscription note containing the forum selection clause, and thus the forum selection clause applied to their fraud claim. Id. at 310. The Court concluded that under the forum selection clause New York law applied. Id. Likewise, under the forum selection clause in Creditors' Subscription Agreements, New York law is the applicable law here. (Def.Stmt., Ex. C, ś 4.4) Creditors, in keeping with their argument that Delaware law applies, have brought their fraud claims under Delaware law. (Compl. śś 64, 68; Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment ("Pl.Mem.") 46-47) Defendants have moved for summary judgment on the ground, among others, that Creditors have invoked the wrong law, given that New York law actually applies. (Def.Mem.28) However, "the failure in a complaint to cite a statute, or to cite the correct one, in no way affects the merits of a claim. Factual allegations alone are what matters." Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41, 45-46 (2d Cir.1997) (internal quotation marks omitted); see also Brandon v. Holt, 469 U.S. 464, 471, 105 S.Ct. 873, 83 L.Ed.2d 878 (1985) (holding that a court should decide the legal issues without requiring a formal amendment of the complaint where the allegations plainly identify a claim); Fed.R.Civ.P. 8 ("All pleadings shall be so construed as to do substantial justice."). Further, both parties have argued the merits of Creditors' fraud claims arguendo under New York law. Therefore, these claims will be considered under New York law. 2. Applying New York Law New York law does not recognize "a creditor's remedy for money damages against parties who, like defendants here, were neither transferees of the assets nor beneficiaries of the conveyance." F.D.I.C. v. Porco, 75 N.Y.2d 840, 842, 552 N.Y.S.2d 910, 910, 552 N.E.2d 158 (1990); see also Gallant v. Kanterman, 198 A.D.2d 76, 80, 603 N.Y.S.2d 315, 318 (1st Dep't 1993) (affirming dismissal of action for fraudulent conveyance where defendants were neither transferees or beneficiaries). 227 This is because "[t]he creditor's remedy in a fraudulent conveyance action is limited to reaching the property which would have been available to satisfy the judgment had there been no conveyance...." Geren v. Quantum Chemical Corp., 832 F.Supp. 728, 736 (S.D.N.Y.1993), aff'd., 99 F.3d 401 (2d Cir.1995). Therefore, there can be no action for damages against a party who did not receive any of the property sought by the creditors. Creditors argue here that both Cumello and Shenkman benefited from the Loan, as already discussed, because "both Cumello and Shenkman had personal interests that were placed at grave risk by the prospect of a Crown Books' bankruptcy," and the Loan "enabled Crown Books to live for another day, and in turn, advanced their respective interests for their own personal benefit." (Pl.Mem.53) Creditors note that Shenkman held ownership interests in two companies that together owned 35% of the common stock of Crown Books, and that Cumello received a salary as President and Chief Executive Officer of Crown Books. (Id. at 53-54) However, receipt of a salary from the transferee corporation as an officer of the corporation is not sufficient to render the officer a transferee or beneficiary of the transfer. See T.L.C. Merchant Bankers, Inc. v. Brauser, No. 01 Civ. 3044, 2003 WL 1090280, at 7 (S.D.N.Y. March 11, 2003) (holding that payment of a salary to an officer of a corporation receiving a transfer of assets did not render the officer a transferee or beneficiary of the transfer). Crown Books was entitled to pay Cumello a salary, and there is no evidence that his salary was in any way derived from the transferred property. Indeed, the undisputed evidence is that the property transferred in the Loan, namely $1.5 million, was transferred to Paragon. Further, Shenkman's ownership in two companies holding stock in Crown Books is too attenuated a relationship to render Shenkman a transferee or beneficiary of the Loan. In Brenner v. Philips, Appel & Walden, Inc., No. 93 Civ. 7838, 1997 WL 33471053 (S.D.N.Y. July 22, 1997), the Court found no evidence that defendants benefited from a transfer of $500,000 to a company in which one of the defendants owned 35% of the shares. Id. at 1, 5. There, the defendant had direct ownership of more than one-third of the transferee corporation's stock, and the Court nevertheless found no benefit to the defendant from the transfer. Id. Here, Shenkman has some unspecified ownership interest in two companies that together own 35% of the Crown Books' common stock, leaving Shenkman with no direct ownership interest in Crown Books and even further removed from the transfer property than the defendant was in Brenner. Therefore, Creditors have failed to present any evidence demonstrating a benefit to defendants from the Loan, "an element essential to [their] case, and on which [they] will bear the burden of proof at trial." See Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Accordingly, summary judgment is granted for defendants dismissing Claim Four for common law wrongful transfer of funds, Claim Five for violation of § 1304(a)(2) of the Delaware Uniform Fraudulent Transfer Act, and Claim Six for violation of § 1305(a) of the Delaware Uniform Fraudulent Transfer Act. C. Tortious Interference Claim Creditors allege that they and CB.com "were parties to Subordinated Notes, which were binding and enforceable contracts at law." (Compl.ś 72) According to Creditors, defendants caused CB.com to breach these contracts by rendering CB.com insolvent after transferring "all or substantially all of its assets to another entity." (Id. at 74) Creditors have brought this claim mistakenly under Delaware law, just as they did their fraudulent conveyance 228 claims. For the same reasons discussed above, New York law controls this claim. "Under New York law, the elements of a tortious interference claim are: (a) that a valid contract exists; (b) that a `third party' had knowledge of the contract; (c) that the third party intentionally and improperly procured the breach of the contract; and (d) that the breach resulted in damage to the plaintiff." Albert v. Loksen, 239 F.3d 256, 274 (2d Cir.2001). A "third party" for the purposes of a tortious interference claim is someone who is not a party to the contract at issue. Finley v. Giacobbe, 79 F.3d 1285, 1295 (2d Cir.1996). For an agent of a party to the contract to qualify as a "third party," the plaintiff must demonstrate that the agent acted outside the scope of his authority, id., or "committed an independent tortious act against the plaintiff." Albert, 239 F.3d at 275. "A corporate officer or director generally cannot be liable for tortiously interfering with a contract between the corporation and a third party." See Chardin v. Turkie, No. 97 CIV 4643, 1998 WL 886986, at 1 (S.D.N.Y. Dec. 18, 1998) (citing Murtha v. Yonkers Child Care Assn., 45 N.Y.2d 913, 915, 411 N.Y.S.2d 219, 220, 383 N.E.2d 865 (1978)). "Where the corporate officer/director is acting within the scope of his or her authority, the officer/director is not a third party vis-a-vis the corporation and as such cannot interfere with its own contract." Id. The parties do not dispute that a valid contract exists between Creditors and CB.com. However, defendants do dispute the allegation that they are "third parties" given their positions as directors of CB.com and CB.com's status as a party to the contract with Creditors. Creditors argue, on the other hand, that defendants are "third parties" because they acted outside the scope of their authority when they made the Loan, "promoting their own self-interests adversely to the interests of Crownbooks.com." (Pl.Memo.58) Citing the same personal interests underlying their other claims â namely, Shenkman's attenuated ownership interest in Crown Books and Cumello's salaried position as an officer of Crown Books â Creditors once again argue that defendants sought "to keep Crown Books alive" for their own personal gain. (Id. at 59) But just as these interests were insufficient to support their other claims, so are they insufficient to support this claim. As already discussed, these interests were consistent with the best interests of Crown Books, which defendants had a fiduciary duty to consider as directors of CB.com, a subsidiary wholly owned by Crown Books. See Anadarko, 545 A.2d at 1174. Therefore, defendants acted well within the scope of their authority by trying "to keep Crown Books alive." Moreover, Creditors have not alleged any independent torts committed by defendants toward Creditors, and thus defendants cannot be deemed "third parties" for the purposes of Creditors' tortious interference claim. Creditors have failed to present any evidence establishing "an element essential to [their] case, and on which [they] will bear the burden of proof at trial." See Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Accordingly, summary judgment is granted for defendants on Claim Seven for tortious interference with contractual relations. * * * Summary judgment is appropriate when 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 the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. Therefore, for the reasons stated above, summary judgment is granted 229 for defendants, and the complaint is dismissed. SO ORDERED. NOTES [1] Defendants make the implausible argument that plaintiffs are not creditors of CB.com but rather investors, and that this distinction negates any fiduciary duties defendants might otherwise owe plaintiffs. (Defendants' Memorandum of Law in Support of their Motion for Summary Judgment ("Def.Mem.") 23-27) Defendants concede that plaintiffs made a loan to CB.com, and yet argue that the loan was effectively an equity investment because it was made when CB.com had no assets, no revenue and no value capable of repaying the loan â i.e., when CB.com was insolvent. (Id. at 24) However, the financial condition of CB.com does not change the structure of the relationship between it and plaintiffs. A creditor is simply "[o]ne to whom a debt is owed." BLACK'S LAW DICTIONARY 375 (7th ed.1999). Issuance of a promissory note to plaintiffs by CB.com demonstrates an express recognition of a debt owed by CB.com to plaintiffs, and thus makes plaintiffs creditors of CB.com. [2] As discussed above, defendants also owed fiduciary duties to Creditors because CB.com was operating within the zone of insolvency. [3] Creditors, citing an unreported opinion from the Delaware Chancery Court, argue that defendants had a fiduciary duty to run CB.com as a "stand-alone company" rather than managing it in the best interests of the parent company, Crown Books. However, the case cited by Creditors, In re Student Loan Corp. Deriv. Litig., No. C.A. 17799, 2002 WL 75479 (Del.Chan.Ct.2002), is entirely inapposite because there the parent company owned 80% of the subsidiary, rather than owning 100%, as is the case here. Id. at 1. Where there are shareholders in addition to the parent company, both the directors of the subsidiary and the parent company, as controlling shareholder, have a duty to consider the interests of the minority shareholders. Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del.1971). However, where the subsidiary is wholly owned by the parent, the directors of the subsidiary owe the parent a fiduciary duty to manage the subsidiary in the best interests of the parent. Anadarko, 545 A.2d at 1174. Here, not only are Creditors not shareholders of CB.com â an argument they have made at great length â but there are no shareholders besides Crown Books. Therefore, had defendants managed CB.com as a stand-alone company, disregarding the best interests of Crown Books, they likely would have been in breach of their fiduciary duties to Crown Books as the parent company.	{ "pile_set_name": "FreeLaw" }
104 F.3d 791 65 USLW 2481, 52 Soc.Sec.Rep.Ser. 507,Medicare & Medicaid Guide P 45,005,Medicare & Medicaid Guide P 45,580 The TOLEDO HOSPITAL, Plaintiff-Appellant,v.Donna E. SHALALA, Secretary, Department of Health and HumanServices, Defendant-Appellee. No. 95-3858. United States Court of Appeals,Sixth Circuit. Argued Aug. 9, 1996.Decided Jan. 13, 1997.Rehearing and Suggestion for RehearingEn Banc Denied March 27, 1997. Ronald N. Sutter (argued and briefed), Powers, Pyles, Sutter & Verville, Washington, DC, for Plaintiff-Appellant. Neil H. Koslowe (argued and briefed), Office of the Attorney General, Civil Division, Washington, DC, for Defendant-Appellee. Before: BOGGS and NORRIS, Circuit Judges; HOOD, District Judge.* ALAN E. NORRIS, Circuit Judge. 1 At issue in this case is the validity of the Medicare reaudit regulation, 42 C.F.R. §§ 413.86(e)(1)(ii)-(iii). For the following reasons, we conclude that the reaudit regulation is invalid under the guidelines set out by the Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). I. Regulatory Framework 2 From 1965 to 1986, the Medicare program reimbursed participating hospitals, known as providers, for the reasonable costs incurred in furnishing graduate medical education ("GME"). The Secretary of Health and Human Services (the "Secretary") delegated the task of administratively determining these costs to fiscal intermediaries. The procedure for determining a provider's reasonable costs for GME involved several steps. First, providers would submit a cost report to a fiscal intermediary shortly after the end of the reporting year. See 42 C.F.R. § 413.24(f)(2)(i) (1995). The fiscal intermediary would then issue a notice of program reimbursement (an "NPR"). See 42 C.F.R. § 405.1803(a) (1995). A provider dissatisfied with the allowed costs could appeal the intermediary's determination to the Provider Reimbursement Review Board (the "Board"). See 42 U.S.C. § 1395oo (a)(1); 42 C.F.R. § 405.1835(a) (1995). Judicial review of final decisions of the Board was authorized by 42 U.S.C. § 1395oo (f)(1). 3 To aid in the audit and review of providers' claims, the Secretary required each provider to retain records pertaining to its physicians' compensation, as well as the amount of time each physician devoted to Medicare versus non-Medicare duties. 42 C.F.R. § 405.481(g)(3) (1995), removed, 60 Fed.Reg. 63,124, 63,175 (1995). The Secretary required that such records be retained for at least four years after the end of each cost reporting period to which the allocation applies. Id. To further ensure the accuracy of the audit process, the Secretary allowed for the reopening of a cost determination within three years of the last administrative action taken with respect to the year in question. See 42 C.F.R. § 405.1885(a) (1995). 4 In April of 1986, Congress enacted the Comprehensive Omnibus Budget Reconciliation Act of 1986 (the "Act"), Pub.L. No. 99-272, 1986 U.S.C.C.A.N. (100 Stat.) 82. Among the changes adopted, the Act converted GME reimbursements from a pass-through basis to a per-resident reimbursement indexed to a base year. Section 9202(a) of that act amended § 1886 of the Social Security Act, 42 U.S.C. § 1395ww, by, among other things, enacting 42 U.S.C. § 1395ww(h)(2)(A), the current version of which reads as follows: "The Secretary shall determine, for the hospital's cost reporting period that began during fiscal year 1984, the average amount recognized as reasonable under this subchapter for direct graduate medical education costs of the hospital for each full-time-equivalent resident." 1986 U.S.C.C.A.N. (100 Stat.) at 171-72 (the "GME amendment"). Section 9202(a) further provides that the base year per-resident average would be adjusted for inflation and used to calculate GME reimbursements for future years. See 42 U.S.C. §§ 1395ww(h)(2)(C)-(D). Section 9202(b) of the Act provides that the amendments in § 9202(a) "shall apply to hospital cost reporting periods beginning on or after July 1, 1985." 1986 U.S.C.C.A.N. (100 Stat.) at 175. 5 While the Act was passed in April of 1986, the Secretary waited until September of 1989 to adopt implementing regulations. See 54 Fed.Reg. 40,286, 40,316-17 (1989) (Codified at 42 C.F.R. § 413.86(e)(1)). These regulations first instruct the fiscal intermediaries to verify that the costs allowed for each provider for the base year, fiscal year 1984, are accurate and to exclude any costs improperly allowed in the initial audit. See 42 C.F.R. §§ 413.86(e)(1)(i)-(ii) (1995). The regulations then address GME cost determinations that are more than three years old and, therefore, are no longer subject to reopening: "If the hospital's cost report for its GME base period is no longer subject to reopening under § 405.1885 of this chapter, the intermediary may modify the hospital's base-period costs solely for purposes of computing the per resident amount." 42 C.F.R. § 413.86(e)(1)(iii) (1995) (together with 42 C.F.R. § 413.86(e)(1)(ii), the "reaudit regulation"). Thus, finding that a provider's 1984 GME costs were too high would not require repayment from the provider for that year if the reaudit occurred after the end of the reopening period. Because many providers had disposed of their records for 1984 after having retained the documents for the requisite four-year period, the Secretary allowed providers who no longer had their 1984 records to submit information from subsequent years as evidence of the number of residents and the percentage of time dedicated to Medicare activities for the base year. See 55 Fed.Reg. 35,990, 36,063-64 (1990). II. Facts 6 Plaintiff, The Toledo Hospital (the "Hospital"), uses the calendar year as its fiscal year. Accordingly, its base year for purposes of the Medicare regulations ended on December 31, 1984. On February 26, 1986, a fiscal intermediary issued the NPR for 1984, recognizing that the Hospital was entitled to $5,867,705 in reasonable GME costs. The Hospital did not appeal that finding to the Board, and the three-year reopening period for the 1984 determination ended on February 26, 1989. Under the four-year record-keeping requirement, the Hospital was required to retain its physician compensation records for 1984 until December 31, 1988. 7 Pursuant to the reaudit regulations adopted in September of 1989, a fiscal intermediary began a reaudit of the Hospital's base year in late 1990. On January 31, 1991, the intermediary found that the initial determination of the Hospital's base-year cost was nearly forty percent too high and that the appropriate GME costs for 1984 were $4,278,371. Based upon this adjusted cost figure and the number of full-time-equivalent residents for 1984, the intermediary determined an average per-resident GME amount that results in substantially lower GME reimbursements to the Hospital for cost years beginning on January 1, 1986, than would have been the case if the original cost figure had been used. 8 The Hospital appealed the fiscal intermediary's reaudit calculation to the Board. On December 17, 1993, the Board ruled that it lacked authority to decide the validity of the Secretary's reaudit regulation, thereby allowing for immediate judicial review in the district court. See 42 U.S.C. § 1395oo (f)(1). Shortly thereafter, the Hospital filed this suit in the United States District Court for the Northern District of Ohio seeking both declaratory and injunctive relief. The Hospital argued that (1) the reaudit regulation is impermissibly retroactive, (2) the regulation conflicts with the Medicare statute, and (3) the regulation is arbitrary and capricious. On March 27, 1995, the Hospital filed a motion for summary judgment, and the Secretary filed a cross-motion for summary judgment on March 30, 1995. On June 23, 1995, the district court issued an order granting summary judgment in favor of the Secretary and denying the Hospital's summary judgment motion. The Hospital filed this appeal. III. Chevron Analysis 9 We review the district court's grant of summary judgment de novo. See Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d 619, 622 (6th Cir.1996). Because the denial of the Hospital's motion for summary judgment was based entirely upon a ruling of law, rather than the presence of factual issues for trial, we review that decision de novo as well. See Greene v. Reeves, 80 F.3d 1101, 1104 (6th Cir.1996). The familiar standard for assessing the validity of federal regulations appears in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984): 10 When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. 11 Id. at 842-43, 104 S.Ct. at 2781-82 (footnotes omitted). Moreover, "[i]f a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect." Id. at 843 n. 9, 104 S.Ct. at 2781 n. 9. 12 The Hospital argues that Chevron does not apply in the present case because of the retroactive nature of the reaudit regulation. Although courts generally do not defer to retroactive agency regulations when the statutes that they implement do not require retroactive application, the reaudit regulation does not amount to an impermissible retroactive regulation. In Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), the Supreme Court defined the test for retroactivity as "whether the new provision attaches new legal consequences to events completed before its enactment." Id. at 270, 114 S.Ct. at 1499. While the reaudit regulation does require a determination based upon events occurring in the base year, it does not change the standards under which the base year costs are to be determined. Thus, we believe that Chevron applies in this case. A. Step One: Plain Meaning 13 The first step in the Chevron analysis is to determine whether Congress has expressed an intent on the issue at hand. That intent can appear in the language of the statute, or it can become apparent in light of the statutory scheme taken as a whole. The GME amendment directs the Secretary "to determine, for the hospital's cost reporting period that began during fiscal year 1984, the average amount recognized as reasonable under this subchapter for direct graduate medical education costs of the hospital for each full-time-equivalent resident." 42 U.S.C. § 1395ww(h)(2)(A). The Hospital contends that the plain meaning of this language prohibits the Secretary's reaudit regulation, which directs the fiscal intermediaries to recalculate the 1984 GME costs even after the three-year reopening period has expired. 14 Determining whether a statute is unambiguous is not always an easy matter. The first court to address the validity of the reaudit regulation, the District Court for the District of Columbia, held that the regulation contradicts the plain language of the statute. See Methodist Hosps. v. Sullivan, 799 F.Supp. 1210, 1216-17 (D.D.C.1992), rev'd sub nom. Administrators of the Tulane Educ. Fund v. Shalala, 987 F.2d 790 (D.C.Cir.1993), cert. denied, 510 U.S. 1064, 114 S.Ct. 740, 126 L.Ed.2d 703 (1994). In reversing the district court, however, the Court of Appeals for the District of Columbia discovered ambiguity in the words "determine," "recognized as reasonable," and "under this subchapter." Administrators of the Tulane Educ. Fund v. Shalala, 987 F.2d 790, 794-96 & n. 6 (D.C.Cir.1993), cert. denied, 510 U.S. 1064, 114 S.Ct. 740, 126 L.Ed.2d 703 (1994). The next three courts to address this issue, beginning with the district court in the case at bar, relied heavily upon the reasoning in Tulane and concluded that the statute is ambiguous. See Toledo Hosp. v. Shalala, No. 3:94CV7080, slip op. at 8-9 (N.D. Ohio June 23, 1995); St. Paul Ramsey Medical Ctr., Inc. v. Shalala, 1995 WL 879969, at 2 (D.Minn. Aug. 8, 1995), aff'd, 91 F.3d 57 (8th Cir.1996); St. Paul-Ramsey Medical Ctr., Inc. v. Shalala, 91 F.3d 57 (8th Cir.1996). 15 Before proceeding with our own examination of the GME amendment, we consider it worthwhile to review the approaches taken by the two courts of appeals that have had occasion to address the validity of the reaudit regulation. The Court of Appeals for the District of Columbia in Tulane began its analysis with the following summary: 16 [W]e do not believe that Congress spoke directly to the precise question of whether HHS should, in determining the base period GME per resident amount, automatically adopt the GME sum approved for reimbursement to hospitals for 1984 or whether it retained the residual authority to reassess at a later date the reasonableness of that calculation for prospective use only. Given this ambiguity, we find that HHS reasonably determined that Congress would not likely have wished misclassified and nonallowable costs inadvertently reimbursed to hospitals for fiscal year 1984 to be "cemented" into the base period amount and indefinitely carried forward in the formula for future reimbursements. To avoid that eventuality, HHS must retain the ability to revisit its 1984 reimbursements for error, even though those figures had previously been found reasonable, since the sole purpose of the reauditing was to calculate the base period formula applicable under the 1986 statute for fiscal year 1985 and later years. 17 987 F.2d at 792 (emphasis added). 18 The court identified the crux of the matter as follows: 19 The issue thus devolves into whether, assuming its knowledge of the long-standing regulation providing for a three year period for reopening approved costs, 42 C.F.R. § 405.1885, Congress in enacting the 1986 GME Amendments left some leeway for the eventuality that HHS might not be able to promulgate and implement regulations governing the new methodology until after that three year period had lapsed, or whether, even if the new regulations should be delayed until after the three year period, Congress clearly intended to prohibit the Secretary from reauditing the 1984 costs for past errors in order to establish an accurate base period per resident amount. 20 Id. at 794. The court then identified the purpose of the 1986 statute as to establish "a new and presumably more accurate methodology for reimbursing GME costs...." Id. at 795. The court concluded that there is no evidence that Congress meant to preclude the Secretary from revisiting the 1984 cost determinations. 21 The court then went on to note that the statutory language is ambiguous: 22 Finally, and perhaps most importantly, the relevant phrase "amount recognized as reasonable under this subchapter" is on its face ambiguous. We know only one thing for sure, that it certainly could not have included any amounts already finally approved before the statute was enacted since, in 1986, every hospital's 1984 NPR was still subject to the three year reopening period. See 42 C.F.R. § 405.1885. But beyond that given, it is decidedly unclear that the statute meant to allow the Secretary to use only the GME cost figure that would emerge as reasonable through the regular NPR review and three year reopening process. It might just as well have permitted the Secretary the option of using a figure that would be "recognized as reasonable under this title" at a later time after more careful assessment. 23 Id. at 796. 24 In a footnote, the court also considered the ambiguity of the word "determine": 25 We also note that because the statute directs the HHS to "determine" the "average amount" of GME costs per FTE resident "recognized as reasonable," it seems unlikely that Congress intended for the HHS to simply look up a hospital's approved NPR for 1984 and plug it into the statutory formula. This activist language suggests that Congress must have intended for the agency to make some kind of substantive calculation on its own, which might involve as well a current assessment of the reasonableness of prior determinations. 26 Id. at 796 n. 6. 27 The Court of Appeals for the Eighth Circuit explicitly adopted the reasoning of Tulane in St. Paul-Ramsey Medical Ctr., Inc. v. Shalala, 91 F.3d 57, 58 (8th Cir.1996). 28 With due respect to our sister courts, we believe that the approach taken by the court in Tulane misperceives the policy underlying Chevron deference. Chevron instructs courts to accept a reasonable administrative interpretation of a statute where Congress has delegated decisional autonomy to an agency. When Congress intentionally leaves gaps and ambiguous terms in a statute for the agency to flesh out, the principle of separation of powers counsels that this legislative delegation be respected by the judiciary. It is an entirely different matter, however, to presume a delegation of interstitial rulemaking authority when the claimed ambiguity in the statute stems not from the use of a word with several plausible interpretations, nor from the statute's lack of specificity regarding mundane procedural issues, but from nothing more than the failure of Congress to proscribe explicitly an unusual procedure which may be plainly at odds with the result Congress was trying to reach. 29 It seems to us that when the court in Tulane parsed the GME amendment, it failed to accord proper attention and importance to the word "average," a term that is critical to understanding congressional intent. The GME amendment, in establishing a reimbursement scheme keyed to a base-year figure, introduced the concept of the per-resident average cost. This concept had not been used previously in the calculation of reimbursements and became the basis for all future payouts. Upon fulfilling the obligation imposed by the GME amendment, the Secretary would arrive at this number, the per-resident average, which would then be adjusted for inflation and utilized to determine future reimbursements. Given the introduction of this entirely new cost concept, we do not believe that the Tulane court was warranted in seizing upon the word "determine" as "activist language" that would authorize agency action that goes far beyond a simple calculation of the per-resident average based upon 1984 figures arrived at through the normal administrative process. See Tulane, 987 F.2d at 796 n. 6. 30 We also see no ambiguity in the language "recognized as reasonable under this subchapter." While the court in Tulane felt that the temporal focus of this language was open-ended, thereby permitting the incorporation of substantive regulatory standards formulated at any time, including after the enactment of the GME amendment, that interpretation is strained at best. While we agree that the use of the past participle "recognized" does not restrict the Secretary to using numbers that had been finally determined prior to the passage of the GME amendment, as all of the base-year determinations were still subject to administrative reopening in 1986, there is no basis for the additional inferential leap that the Secretary was therefore free to "recognize" these costs at any time in the future and in a manner utterly detached from the established procedural framework. 31 When Congress passed the GME amendment in 1986, it knew that there was an administrative scheme in place that would determine the reasonable GME costs for providers for fiscal 1984. And one must assume that Congress also knew that the 1984 determinations would remain subject to reopening for over a year under the Secretary's existing regulations. It follows that Congress must have contemplated that the Secretary would use those administratively determined reasonable costs as the basis for calculating the average GME cost per full-time-equivalent resident. Indeed, it seems unlikely that Congress, having chosen for its benchmark a cost year still subject to reopening under the existing Medicare regulations, would have been contemplating anything else when it passed the amendment. 32 The strongest argument for ambiguity may stem from an inference that, because Congress must have understood that regulations might not be forthcoming until after the 1984 cost determinations had ceased to be subject to reopening, it intended that the Secretary would have the authority to reaudit the base-year numbers. That argument is circular, however, as it presupposes that Congress intended the GME amendment to require a reassessment of the 1984 costs. Only if the amendment would assign to the Secretary a new and substantial administrative burden would there be a congressional expectation that implementing regulations would take any real time to formulate. The Secretary argues that a three-year delay in enacting implementing regulations is understandable and foreseeable in light of the "complex statutory scheme," a phrase that seems to be invoked any time a statute occupies more than a page of the United States Code. However, the statute and its contemplated result are not at all complex. A major overhaul of the Medicare system might entitle the Secretary to consume a considerable amount of time in preparing regulations. That surely is not the case with the GME amendment, which merely directs the Secretary to divide one number by another. Moreover, if, as it seems clear to us, Congress intended the actual 1984 costs to be plugged into the per-resident average calculation, it was not attempting to create work for the Secretary with respect to the cost determination. And it follows that, since there was no such extra work contemplated and there was no reason to suppose that promulgating regulations would consume three years, there was no reason to address in the statute the specific issue of authority to reaudit closed base years. 33 What the Secretary is really saying is that Congress must have contemplated that the administrative mechanism to determine reasonable GME costs, created by Congress and implemented by the Secretary's regulations, might not work as well as planned. The Secretary's argument concedes that her agents, the fiscal intermediaries, were not as diligent as they could have been when they initially audited the 1984 numbers. The rationale offered by the Secretary is that because each year's cost determination formerly had no impact beyond that year, it was not as important at that time to get the numbers exactly right. Only now, when Congress has designated a base year that will affect future reimbursements, has it become essential that the fiscal intermediaries root out errors. However, when the statutory language is read in the context of the circumstances surrounding its adoption, it is difficult to come to any conclusion other than that Congress anticipated that the administrative scheme already in place would function properly and arrive at the true reasonable GME costs for fiscal 1984 and that these numbers would then be divided by the number of residents to yield the per-resident average costs. Congress could not have foreseen the Secretary's delay in issuing the regulations and her claim that the initial 1984 cost determinations were unreliable. Otherwise, it might well have authorized the reaudit scheme, or simply have selected a different base year. 34 The Secretary suggests that there was no choice but to reaudit, given the delay in issuing the regulations. It would not be "reasonable" under the GME amendment, the argument runs, to use a base-year cost figure that had since been discovered to be unreliable, so the statute required a recalculation. The answer to that argument is that the Secretary was without authority to issue the reaudit regulation. The Secretary should have either used the administratively determined 1984 figure or informed Congress of the need for further legislation. 35 The intent of Congress in enacting the GME amendment should also be considered in the context of the traditional presumption of issue preclusion with respect to administrative findings, since "Congress is understood to legislate against a background of common-law adjudicatory principles." Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 2169, 115 L.Ed.2d 96 (1991). It seems to us that, absent some indication from Congress that administrative findings were not to be given preclusive effect, courts should be hesitant to permit administrative agencies to require a party to reestablish or relitigate factual matters that have already been determined with finality. See id. at 107-08, 111 S.Ct. at 2169. We are unable to accept the Secretary's suggestion that estoppel does not apply because the incentive to determine the issue correctly did not exist during the initial audits, or was not as strong, when each year's cost determination had no effect beyond that year. See United States v. Berman, 884 F.2d 916, 922-23 (6th Cir.1989). After all, the Secretary was directed by statute to determine the reasonable costs for GME, a factual question identical to the determination in the reaudit regulation and one that the Secretary was required by law to resolve. The absence of statutory language negating the presumption of issue preclusion strongly suggests that Congress intended the Secretary to use the 1984 costs derived through the ordinary administrative process. 36 Finally, it is difficult to imagine that, had Congress intended the result urged by the Secretary, it would have used the language that ultimately found its way into the statute. Instead, a statute focusing on reaudits possibly leading to new, reasonable cost figures, could be expected to include directions to the Secretary to "determine, for the hospital's cost reporting period that began during fiscal year 1984, the amount recognized as reasonable under this subchapter for graduate medical education and the average cost of graduate medical education for each full-time-equivalent resident," or something similar. Surely, such a statute would not, as did the actual GME amendment, direct the Secretary to "determine" solely "the average amount." It seems apparent that the only substantive calculation contemplated by the statute is this per-resident average, and there is no basis for asserting that the 1984 figures should be reassessed outside the existing administrative scheme. 37 Under Chevron analysis, a regulation does not survive the first step merely because there is a metaphysical possibility that the statute could be read in the manner advocated by the agency. The GME amendment does not, by its terms, explicitly proscribe the reaudit that occurred in this case. Nevertheless, the statutory framework, as well as the regulations in place at the time that the GME amendment was enacted, provide clear illumination of the will of Congress. When this court can readily discern that an agency has strayed from the path intended by Congress, the inference of legislatively delegated authority vanishes. In the absence of delegated authority, Chevron deference is not warranted. Accordingly, we believe that the reaudit regulation is inconsistent with the legislative intent behind the GME amendment, and thus that it fails under the first prong of Chevron. B. Step Two: Reasonableness 38 When a regulation satisfies step one of Chevron, the analysis shifts to a determination of whether the agency's construction of its statute is reasonable. The review for reasonableness examines whether the agency properly exercised its discretion within the sphere of its delegated authority. Review of this question centers on whether the agency action either "fills a gap" or otherwise fits within "the legislature's revealed design." NationsBank of North Carolina v. Variable Annuity Life Ins. Co., 513 U.S. 251, ---- - ----, 115 S.Ct. 810, 813-14, 130 L.Ed.2d 740 (1995). Although we have concluded that the reaudit regulation fails at the first step of Chevron, we hold in the alternative that the reaudit regulation is an unreasonable interpretation of the GME amendment. 39 The two key considerations that led the court in Tulane to conclude that the reaudit regulation satisfies the second prong of Chevron were (1) the interest in preventing erroneous cost determinations from being perpetuated in the form of excessive future reimbursements and (2) the time needed by the Secretary to regulate within a "complex statutory scheme." Tulane, 987 F.2d at 797. The Secretary argues that a failure to reaudit would have been unreasonable, given the presumed intent of Congress to eliminate mistakes in the base-year calculations. The Secretary notes that the reaudits have resulted in many instances in findings of much lower base-year costs than were originally determined through the normal administrative mechanism. The Secretary also argues that it could have amended the reopening regulation to allow for a longer reassessment window. The district court in this case also stressed that the hospitals had at least some notice of the possibility of reauditing, see 53 Fed.Reg. 36,589, 36,591-92 (1988), and thus should have retained their physician compensation allocation records beyond the four-year period. 40 The Hospital responds that, because (1) the records have been disposed of, (2) many of the relevant hospital personnel have moved to other jobs, and (3) memories of what specific duties residents performed in 1984 have faded, there is no way that a reaudit would produce a more accurate assessment of 1984 costs than did the initial audits. As for the lower costs determined by the reaudits, the Hospital argues that the result necessarily follows from the absence of supporting documentation. Only those costs that could be proved were allowed in the reaudit, and without any records the Hospital could no longer prove as much of its GME costs as it was able to do in the original audit. 41 The Secretary is obviously correct that Congress did not want faulty base-year calculations to be perpetuated. What the Secretary fails to recognize is that Congress expected the Secretary to get the calculations right the first time. There is no claim that the Hospital tried to deceive the fiscal intermediary by submitting a fraudulent cost report for 1984, and the regulations expressly allow for reopening at any time where fraud is shown. See 42 C.F.R. § 405.1885(d) (1995). The Secretary simply claims that it was swamped with work, including coping with earlier amendments to the Medicare statute, that resulted in less attention being paid to the initial cost determinations for 1984. We believe that the principle of issue preclusion prevents the Secretary from requiring providers to reestablish the costs that they already proved years ago. 42 The other significant problem with the Secretary's argument is that the whole reaudit issue arose because the Secretary waited three years before issuing regulations. Had the Secretary acted promptly, there would have been no need to revisit any closed determinations, because all of the 1984 numbers were still subject to reopening for some time after the passage of the GME amendment. Even after the Secretary recognized that there might be problems with the 1984 numbers and that reaudits may be necessary, there was a delay of at least a year before the reaudit regulation was enacted. See Fed.Reg. 36, 589, 36, 591-92 (1988) (indicating that errors had been made in previous audits). During that year, many, if not most, of the 1984 determinations ceased to be subject to reopening. 43 The bottom line is that the Secretary's response to the GME amendments has been unreasonable on all counts. The Secretary read the amendments as requiring a substantive reevaluation of the 1984 numbers. The Secretary waited far too long to issue regulations, justified solely by the nebulous assertion of statutory and regulatory complexity. While there was a brief mention in the Federal Register of the possibility of reaudits once the Secretary came to suspect that the base-year calculations may have been flawed, those comments cannot be considered notice of the need to retain physician allocation and compensation records when all that the Secretary would have had to do to mitigate the harm here was to (1) extend the reopening period, (2) extend the record-keeping period, or (3) reopen all of the 1984 determinations. The Secretary ignored the principle of collateral estoppel and the basic fairness issues implicated. Finally, the Secretary ordered the reaudits to occur only after the providers had been permitted to dispose of the records necessary to allow for a meaningful audit. 44 The predicament was of the Secretary's making and it is unreasonable to expect the Hospital to answer for it. Accordingly, we believe that the reaudit regulation fails step two of Chevron. IV. Conclusion 45 The judgment of the district court, granting summary judgment to the Secretary and denying summary judgment to the Hospital, is reversed. The cause is remanded with instructions to grant summary judgment to the Hospital. * The Honorable Joseph M. Hood, United States District Judge for the Eastern District of Kentucky, sitting by designation	{ "pile_set_name": "FreeLaw" }
504 F.2d 168 SIOUX VALLEY EMPIRE ELECTRIC ASSOCIATION, INC., Appellee,v.Earl L. BUTZ, Secretary of Agriculture, and David A. Hamil,Administrator of Rural ElectrificationAdministration, Appellants. No. 74-1171. United States Court of Appeals, Eighth Circuit. Submitted June 13, 1974.Decided Sept. 26, 1974. David M. Cohen, Atty., Dept. of Justice, Washington, D.C., for appellants. Alan F. Glover, Brookings, S.D., for appellee. Before GIBSON, Chief Judge, and BRIGHT and WEBSTER, Circuit Judges. GIBSON, Chief Judge. 1 Defendants Earl L. Butz, Secretary of Agriculture, and David A. Hamil, Administrator of the Rural Electrification Administration, appeal from a summary judgment entered for the plaintiff, Sioux Valley Empire Electric Association, Inc., and the denial of a summary judgment in their favor.1 At issue is whether the Administrator2 had the discretion to terminate two percent direct loans under the Rural Electrification Act of 1936, 7 U.S.C. 901 et seq.,3 and to substitute five percent insured and guaranteed loans under the Rural Development Act of 1972. 7 U.S.C. 1926 et seq. We affirm the District Court's holding that Congress did not grant the Administrator the discretion to terminate the two percent direct loans under the Rural Electrification Act of 1936 (REA of 1936). 2 Preliminarily, the Administrator does not dispute that plaintiff is entitled to approval of a two percent direct loan under the REA of 1936 if the legal issues here are resolved in plaintiff's favor. In fact, plaintiff has received a two percent loan, which, as the parties have stipulated, will be switched to a five percent loan if defendants prevail here. Therefore, we affirm the District Court's granting of summary judgment for plaintiff without the necessity to remand for consideration of factual issues. 3 Plaintiff, a rural electric cooperative chartered in South Dakota and located in Colman, South Dakota, submitted an application for a two percent $599,000 direct loan under the REA of 1936 to the Administrator of Rural Electrification on November 26, 1972. These two percent direct loans under the REA of 1936 have been commonly referred to as Section 4 loans. 7 U.S.C. 904. While Sioux Valley's application was pending before the agency, the Department of Agriculture released the following statement to the press: 4 RURAL ELECTRIC AND RURAL TELEPHONE LOAN PROGRAMS CHANGE: 5 WASHINGTON, Dec. 29 (,1972)-- The U.S. Department of Agriculture announced today that the REA electric and telephone 2 percent direct loan programs are being converted to insured and guaranteed loan programs at somewhat higher interest rates effective Jan. 1, 1973. This action was made possible by the enactment of the Rural Development Act of 1972 in which the Congress provided very broad authorities to make guaranteed and insured loans to finance all types of community development programs. 6 This change is part of the effort to hold 1973 Federal budget outlays to $250 billion and keep the outstanding public debt within the statutory limit of $465 billion through June 30, 1973. It will eliminate direct Federal loans and substitute credit from private sources at interest rates that are more in line with the cost of money on today's market. Insured and guaranteed loans will reduce the impact on the Federal budget and the public debt and are designed to facilitate more rapid growth in the credit programs being provided by the National Rural Utilities Cooperative Finance Corporation, the Rural Telephone Bank and other private lenders. 7 Beginning on Jan. 1, 1973, all REA loans will be made as guaranteed and insured loans under the authority of Section 104 of the Rural Development Act of 1972 (Section 306(a)(1) of the Consolidated Farm and Rural Development Act). In order to meet more fully the needs of REA borrowers, an additional $200 million in loan authority will be made available over and above current allocations. This will provide a total loan authority of $618 million for rural electric loans and $145 million for rural telephone loans in fiscal year 1973. These funds are in addition to those loans available to REA borrowers from private sources, including CFC. 8 Loans to electric and telephone cooperatives will be made on an insured basis at 5 percent interest (guaranteed loans will also be available to electric cooperatives where private capital is available on advantageous terms). Loans to commercial power companies and commercial telephone companies will be guaranteed at market rates of interest. 9 Many details of this transition from the authorities of the Rural Electrification Act of 1936, as amended to the authorities of the Rural Development Act will require time to work out. Borrowers and other interested parties will be advised of the necessary changes in loan requirements and loan processing as repidly as possible. Every effort will be made to expedite new programs in order to meet the expanding needs of REA borrowers. 10 Sioux Valley did not apply to convert its pending application for an REA direct loan to an insured and guaranteed RDA loan. 11 On March 6, 1973, Sioux Valley filed this action, seeking to compel the Secretary and the Administrator to loan funds to it under the REA of 1936. The essence of plaintiff's suit is its desire to obtain the loan at a two percent, rather than five percent, annual interest rate. 12 The Government advances these arguments on appeal: (a) the action of the Administrator in denying Sioux Valley's application for a Section 4 loan is not subject to judicial review since that action is wholly committed to agency discretion by law; (b) the Administrator possessed the discretion to convert Section 4 loans under the REA of 1936 to RDA insured and guaranteed loans; (c) the Administrator reasonably exercised his discretion in denying Sioux Valley's Section 4 loan in order to maintain federal expenditures below $250 billion, to help curb inflation, and to provide for greater loan moneys for all rural cooperatives under the RDA. 13 The parties do not address themselves to the justiciable issues inherent in this type of case involving the withholding or termination of appropriated funds. The counsel for the Administrator during oral argument on appeal expressly said that the termination of this REA program was not an impoundment of appropriated funds. Apparently the Administrator's rationale is based on the position that no funds were actually withheld since more loan moneys were potentially available for rural electrification under the RDA than supposedly would have been available under the REA of 1936. He also argues here that this case involves only a statutory interpretation and not constitutional issues. The fact is that no REA funds were loaned from January 1, 1973, through May 11, 1973. Also, the Administrator only spent $228 million of the $595 million appropriated for REA loans from July 1, 1972, through December 31, 1972. No loans under the REA of 1936 were made subsequent to May 11, 1973, the effective date for another amendment to the REA creating two and five percent insured loans. 7 U.S.C. 935(b). All pending applications for Section 4 loans under the REA of 1936 could be converted to RDA loans; however, that later act has stricter requirements for qualification, and it is conceivable that fewer loan approvals under the RDA would have been possible. The parties provide us with no data concerning loans for rural electrification under the RDA program. Nevertheless, the funds for the lower interest rate Section 4 loans were terminated by the Administrator's decision. The fact that moneys were available under a different program with different qualifying requirements does not negate the fact that funds were terminated under the REA program. It cannot logically be maintained that the Section 4 loan program was not terminated since other loan moneys were available in another program at a higher interest rate.4 14 Although the Administrator during oral argument on appeal maintained that this case is not an impoundment case with its attendant justiciable issues, apparently his view has changed from his arguments presented before the District Court. There, the Administrator argued that this case was not justiciable due to the following theories: (a) the Government has not consented to be sued and sovereign immunity therefore bars federal question jurisdiction; (b) the political question doctrine prevents a judicial consideration of this case; and (c) the President of the United States has the authority to impound funds under Article II, 1 of the Constitution. These arguments concerning justiciability advanced before the District Court are the same arguments advanced in other sases conceded by other government officials to involve constitutional issues concerning executive impoundment of Congressionally appropriated funds. In State of Minnesota v. United States Environmental Protection Agency, No. 73-1446 (8th Cir., en banc, submitted February 13, 1974),5 the Government has raised the political question doctrine (the lack of judicially manageable standards) under Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). In Campaign Clean Water, Inc. v. Train, 489 F.2d 492 (4th Cir. 1973), cert. granted, 416 U.S. 969, 94 S.Ct. 1991, 40 L.Ed.2d 557 (1974), and New York City v. Train, 494 E.2d 1033 (D.C.Cir. 1974), cert. granted sub nom. Train v. City of New York, 416 U.S. 969, 94 S.Ct. 1991, 40 L.Ed.2d 557 (1974), Government counsel has raised the sovereign immunity argument. Apparently not only is impoundment a seed that generates many theories, but one that may be planted in all seasons and in the varying locales of our federal operations. Although the Administrator does not argue the justiciable issues here, this court must face such questions involving jurisdiction. No citation of authority is necessary for the elementary proposition that this court must satisfy itself that jurisdiction adheres before considering the merits of the case. 15 The Administrator does argue that judicial review is precluded because the action of the Administrator was committed wholly to his administrative discretion. Panama Canal Co. v. Grace Line, Inc., 356 U.S. 309, 78 S.Ct. 752, 2 L.Ed.2d 788 (1958). The Administrator contends that the very nature of economic judgments concerning the budget and government funding makes the issue of the termination of the REA program and the substitution of the RDA program one inappropriate for judicial review and therefore wholly committed to agency discretion. In State of Minnesota, supra, before this court en banc, the Government argues that the same economic judgments in the same fiscal year concerning government funding make that case appropriate for application of the political question doctrine. We fail to understand why the Government argues the agency discretion argument in this case without also, or instead, arguing the political question doctrine advanced in State of Minnesota and before the District Court in this case. 16 We only briefly deal with the justiciable issues here, for in our view State Highway Commission of Missouri v. Volpe, 479 F.2d 1099, 1106 (8th Cir. 1973) (hereinafter Volpe), indicates that this court will review cases involving withholding or termination of appropriated funds when 'the only issue before * * * (the) court is the question of statutory construction.' In such a case, there is a 'justiciable issue capable of judicial resolution.' Volpe, supra at 1107. In Volpe, this court rejected the Secretary's arguments that the political question doctrine precluded review6 and that the Anti-Deficiency Act, 31 U.S.C. 655(c), allowed the termination of appropriations for highways. Volpe, supra at 1118. 17 Volpe's rationale applies to this case. We must determine whether the REA of 1936, the RDA of 1972, the REA amendment of 1973 (7 U.S.C. 901 et seq., Pub.L. 93-32, effective May 11, 1973), permitted the Administrator the discretion to terminate the REA's Section 4 two percent direct loan program. The question involved is one of statutory interpretation and the issue, as held in Volpe, is justiciable. The argument that the Administrator's action was wholly committed to agency discretion is directly at odds with Volpe's statement that statutory construction is within the province of the courts. Also, there is 'law to apply,' the statutory construction of the relevant acts, and therefore the Administrator's action was not wholly 'committed to agency discretion by law.' Ratnayake v. Mack, 499 F.2d 1207, 1210 (8th Cir. 1974). Further, as in Volpe, federal question jurisdiction adheres pursuant to 28 U.S.C. 1331(a).7 18 The Administrator argues that Volpe is inapplicable to this case involving the REA of 1936, since the Federal Highway Act, 23 U.S.C. 101 et seq., contains detailed standards guiding the Secretary of Transportation's discretion in the obligation of highway funds to the states. The argument fails to appreciate that Volpe contained general standards of analysis concerning how statutes are to be analyzed in relation to an executive withholding of Congressionally appropriated funds. Also, it is true that Volpe involved the Federal Highway Act, which contained a provision, 23 U.S.C. 101(c), that, according to the Government, 'appeared to have been enacted for the express purpose of preventing impoundment as an anti-inflationary measure.' Although there is not a provision similar to 23 U.S.C. 101(c) in the REA of 1936, Volpe's whole method of statutory analysis should not be disregarded in this case. The existence of 23 U.S.C. 101(c) only provided this court with an additional reason for its finding. We think Volpe controls and is directly in point. 19 Before discussing the various acts and relevant legislative history involved in this case, an understanding of Volpe as it applies to this case will establish the method of statutory analysis to be used. Volpe first held that a review of the statute itself reveals the latitude of discretion that is vested in the officials involved. Volpe, supra, at 1109. Second, Volpe said that Article I, 8 of the Constitution delegates to the Congress the power 'to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, vested by this Constitution in the Government of the United States, or in any Department or Office thereof'; that Congress is the only branch of Government that can dictate the terms of those laws; and that 'the Secretary's authority is limited to carrying out the law according to its terms.' Volpe, supra at 1111. 20 Next, Volpe discussed a general approach to statutory construction. Volpe, supra at 1111-1114. According to Volpe, this court must determine the legislative intention in the questional act by looking to the whole scope of the statute to be construed. Also, the failure of the act to include a provision that explicitly or implicitly allows withholding of appropriated funds for purposes unrelated to achieving the goals of the act is strong evidence that Congress did not intend to grant that power to the Secretary or his representatives. Volpe, supra at 1114. Further, subsequent legislation that declares 'the intent of an earlier statute is entitled to great weight in statutory construction.' Volpe, supra at 1116, quoting Red Lion Broadcasting Co. v. Federal Communications Commission, 395 U.S. 367, 380-381, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969). This last standard is particularly relevant in this case, since the legislative history of the REA amendment of 1973 clearly reveals Congressional intentions in enacting the REA of 1936 and the RDA of 1972. 21 With these principles in mind, we look to the REA of 1936, the RDA of 1972, and the REA amendment of 1973 to determine if those acts and Congress' intention as revealed also in the legislative history allowed the Administrator the discretion to terminate the Section 4 loans and to substitute the RDA insured loans in their place. The REA amendment of 1973 and its legislative history gives us a subsequent act interpreting the legislative intention of the REA of 1936 and the RDA of 1972. 22 The Rural Electrification Administration, originally established on May 11, 1935, by Executive Order No. 7037 pursuant to the Emergency Relief Act of 1935,8 became a statutory agency when Congress enacted the REA of 1936. 7 U.S.C. 901 et seq. Congress was interested originally in providing for a ten-year program to bring rural electrification to one million more farmers,9 in equalizing the standard of living of rural areas as compared to urban areas,10 and in asserting federal government leadership into the financing of electrification as opposed to private financiers and utilities, termed the power trust, that were exacting 'tribute' from the farmers for electrical service.11 The whole scope of the original Act was to provide for direct loans for rural electrification, telephones, and plumbing. 7 U.S.C. 901, 902, 904, 905, and 922.12 23 The Administrator makes one specific argument concerning the REA of 1936. He argues that the REA of 1936 'authorized and empowered'13 the Administrator to make the loans, but does not compel him to do so. He further contends that the Act would have authorized and directed14 loans to be made if loans had to be made. The Administrator factually emphasizes that in fiscal 1972, the year before the activity involved in this case, the Administrator did not loan $107 million of the $545 million appropriated and that 'Congress merely added the $107 million to the appropriation for the next fiscal year without directing their expenditure.'15 24 In support of his position that no REA Section 4 loans need be made each year despite appropriations for that purpose, the Administrator directs us to a statement made by Representative Merritt in 1936: 'There is no compulsion on this autocrat to make any grants at all.' That statement, however, is taken out of context. The relevant portion of the statement reads: 25 The bill provides that of this first $50,000,000 and the subsequent allowances of $40,000,000 a year, 50 percent must be allocated to the various States in proportion that their unelectrified farms bear to the unelectrified farms of other States. But here is a provision which I think the House ought to know about. There is no compulsion on this autocrat (the Administrator) to make any grants at all. He may allocate, but any money that is not expended in any one year goes into a general fund which has no limitations whatever. The other 50 percent is without any limitation to start with. The only provision is that not over 10 percent shall be allowed to be used in any one State. 26 I do not say that the Administrator will do this, but it is possible under this bill for him not to use any money, if he wants to build up a fund. This will go over to the next year and will not be subject to any restrictions at all. Then he may use all of his fund if he wants to in only 10 States. I do not say he will do that, but he may. 27 80 Cong.Rec. 5278 (1936) (remarks of Representative Merritt). 28 In context, the statement lends an entirely different conclusion. Representative Merritt was saying that the Administrator had no compulsion to make any loans under the Act's provision relating to the restrictive allocation between the states based on the number of unelectrified farms. Any amount left over went into a general fund. The bill as passed called for a ten-year program with funding of $50 million for each of the first two years and $40 million for each of the last eight years for a total of $420 million. Act of May 20, 1936, Pub.L. No. 74-605 3(a) and (b), 49 Stat. 1364; 80 Cong.Rec. 5313 (1936); 80 Cong.Rec. 5281 (1936) (remarks of Representative Rayburn). 29 We think the legislative history of the original REA of 1936 contemplated that the appropriation of $420 million would be expended in its entirety, although the Administrator did have the discretion to withhold funds from the restrictive program and allow that money to enter the general fund. He also had the discretion to carry forward funds not expended in one fiscal year to the next fiscal year. 3(e), 49 Stat. 1364. However, the Act itself indicates an express desire to expend the appropriated amount of $420 million over ten years. In our view the Administrator under the original REA of 1936 was not given the discretion to terminate all appropriations and the entire program. In this regard, the REA of 1936 has not been amended, and the Administrator in 1973 similarly did not have the discretion to terminate the entire Section 4 program. 30 We do agree with the Government that 'authorize and direct' involves a mandatory commandment, whereas 'authorize and empower' involves a discretionary authority. However, the REA of 1936 did not give the Administrator the discretion to terminate the program.16 31 The Administrator further argues taht the RDA of 1972 allowed him the discretion to terminate the Section 4 direct loan program under the REA of 1936 and to convert these loans to RDA insured loans. Administrator Hamil announced this unexpected policy in his December 29, 1972, press release. The Administrator has consistently argued that he could convert Section 4 loans to RDA loans due to the following language in the RDA: 32 The Secretary is also authorized to make or insure loans * * * to provide for the application or establishment of * * * essential community facilities * * . 33 7 U.S.C. 1926(a)(1). 34 In the Administrator's opinion, rural electrification is an essential 'community facility' under the RDA. The Administrator's view is more fully explained in a legal memorandum to him of February 2, 1973:17 35 While Congress did not specifically indicate that rural electric or telephone systems were to be considered as 'essential community facilities' * * for the purpose of making loans under this Section, it would appear that such systems are 'needed for the orderly development of a rural community', a stated purpose of the Section, and are commonly understood to be 'essential community facilities'. Therefore, it is concluded that Sec. 306(a)(1) does authorize certain loans to be made pursuant to its terms for rural electric and reral telephone services. 36 119 Cong.Rec. 2919 (Feb. 20, 1973) (Exhibit 1, Memorandum from R. Stanley Harsh, Assistant General Counsel for Rural Development and Conservation, to Administrator Hamil). 37 The Administrator's interpretation of 'community facilities' and its conversion of REA to RDA loans is an ingenious display of legal reasoning; it however lacks one essential ingredient, any indication of Congressional approval. Nowhere in the legislative history of the RDA do we find any statement, express or otherwise, that Congress intended that community facilities would include rural electrification. 38 The REA amendment of 1973 (Pub.L. 93-32, effective May 11, 1973) and the legislative history of that amendment supports our conclusion. We accord great weight to this later legislation and the legislative history declaring the intention of Congress in enacting the RDA. Volpe, supra, at 1116. Extended discussion of this amendment in Congress reveals an outrage over the termination of the REA program. 39 The Senate on February 21, 1973, originally considered and passed Senate Bill 394, with the mandatory language of directing, instead of authorizing and empowering, the Administrator to make loans each fiscal year in the full amount of appropriations made by Congress. 119 Cong.Rec. 3087 (Feb. 21, 1973). In discussing S. 394, several senators expressed alarm in various degrees over executive usurpation of legislative power in terminating the Section 4 loan program. Senator Dole, a cosponsor of the bill, although concerned with the low two percent interest rate, said that the REA was 'a necessary program and a worthwhile program and one that should be continued.' 119 Cong.Rec. 2929 (Feb. 20, 1973) (remarks of Senator Dole). Senator Humphrey said that the 'Rural Development Act of 1972 was clearly not intended by Congress as a substitute for the Rural Electrification Act of 1936' and that 'it (the RDA) implied no authority to terminate the Rural Electrification Act loan program.' 119 Cong.Rec. 2917 (Feb. 20, 1973). He further stated: 40 It is the Congress' duty to dispose. It is the President's duty to propose. In this case the President has proposed and disposed. 119 Cong.Rec. 2923 (Feb. 20, 1973).18 41 Senator Humphrey was not alone in his outrage. Senator McGovern characterized the issue as 'whether or not the administration believes in law and order,' the law being the REA of 1936. 119 Cong.Rec. 2927 (Feb. 20, 1973).19 Senator McGovern said that the 'issue is whether the administration has a constitutional and legal right to terminate, at whim, a program created by an act of Congress.' 119 Cong.Rec. 2927 (Feb. 20, 1973). Senator McGovern appealed to the administration that 'our subcommittee (on Agricultural Credit and Rural Electrification) is willing, able, and eager to work with the administration, or any other party' for any changes needed in the REA. 119 Cong.Rec. 2927 (Feb. 20, 1973). Senator Mondale said taht the termination of the REA program and other executive actions in fiscal 1973 posed 'a grave threat to the integrity of our laws and to the systems of checks and balances against the abuse of power as provided in the Constitution.' 119 Cong.Rec. 3076 (Feb. 21, 1973). 42 Other comments support the above-described indignation. Senator Aiken said that 'the President or the administration was wrong in basing its decision to raise the interest rate by using the Rural Development Act of 1972 which was not intended for any such purpose at all.' 119 Cong.Rec. 3080 (Feb. 21, 1973). The House Committee on Agriculture said that 'the Rural Development Act was not designed for that purpose (rural electrification and telephone needs) and was never intended by the Congress to be used in such fashion.' H.Rep. No. 91, 1 U.S.Code Cong. & Admin.News, pp. 1365, 1367, 93rd Cong.1st Sess. (1973). Representative Poage said that the Administrator had 'ruthlessly abused' his discretion in terminating the REA program. 119 Cong.Rec. 2410 (April 4, 1973). 43 Our reading of the legislative history of the REA amendment of 1973 shows no support for the termination of the REA program, although there was a concern over the low interest rates and the mandatory language of the original Senate Bill (S. 394) and the House Bill (H.R. 2424). 119 Cong.Rec. 2406 (April 4, 1973) (remarks of Representative Martin). The House Bill, H.R. 2424, was passed on April 4, 1973, also with the mandatory language. 119 Cong.Rec. 2424 (April 4, 1973). The two bills were subsequently considered by a Conference Committee. 44 The Administration objected strongly to the mandatory language appearing identically in both the Senate and House bills, which directed the Secretary to expend all appropriated funds in each fiscal year. Statement of Hon. J. Phil Cambell, Undersecretary of Agriculture, 1 U.S. Code Cong. & Admin.News, pp. 1365, 1369, 93rd Cong. 1st Sess. (1973). The Conference Committee, composed of senators and representatives, met to reconcile certain provisions of the Senate and House bills. As pertinent to this case, the Committee recommended the deletion of the mandatory language and the processing of five and two percent insured loans under the Rural Electrification Agency. The Committee specifically said that it was deleting the mandatory language due to the following letter from the Secretary: 45 Department of Agriculture, 46 Washington, D.C., May 8, 1973. Hon. W. R. Poage Chairman, House Committee on Agriculture, Washington, D.C. 47 Dear Bob: I am pleased to provide you and the members of the conference committee the Administration's position on the REA financing bill now in conference, S. 394. As I told you during our meeting in your office last Thursday, speaking for the Administration, we can assure you that during each of the next three yrars an REA program at levels not less than budgeted for Fiscal Year 1974 will be operated through the REA under the authority of S. 394 as finally passed and that not less than $105 million-- $80 million for the electric program and $25 million for the telephone loan program (of new loans)-- will be made available at the 2% Rate. 48 This commitment is conditioned on but one cardinal principle-- mandatory language relating to criteria in Section 305 be stricken from the legislation. Further, there will be no legislative direction with respect to hardship cases beyond the criteria set forth in the House-- passed bill. As you know, the Secretary would, of course, have authority to exceed this minimum level for 2% Loans. 49 On behalf of the Administration and every American, I want to thank you and the conferees for your efforts to achieve constructive legislation which will ensure a viable rural electric and telephone system. 50 Sincerely, Earl L. Butz, Secretary. 51 Conf.Rep. No. 169, 1 U.S.Code Cong. & Admin.News, pp. 1388, 1389-90, 93rd Cong., 1st Sess. (1973); also reprinted at 119 CongRec. 8609 (May 9, 1973). 52 Both the Senate and House agreed to the Committee's recommendations, and S. 394 was enacted with the changes approved by the Conference Committee. The mandatory language was deleted. Most Senators and Representatives agreed to the new bill as a compromise or a fair resolution of the controversy. The Senate Bill with the Conference Committee's changes was passed by Congress, but with the express understanding that the Administrator had no discretion to alter the commitments made in Secretary Butz's letter of May 8, 1973.20 53 We summarize the above statutory interpretation and legislative history. First, the REA of 1936 did not authorize the Administrator to terminate the entire Section 4 loan program. In reviewing the statute itself, we find no provision that indicates such an authority. Subsequent amendments to the REA of 1936 likewise added no such discretion. The whole scope of the REA of 1936 indicates a Congressional intention to fund, inter alia, rural electrification under the Section 4 direct loan program. Termination of the program itself obviously could not carry out this goal. Also, there is no provision in the REA of 1936 that allows the Administrator to terminate the program for reasons unrelated to achieving the goals of the Act. As in Volpe, that failure to include such a provision is strong evidence that Congress did not intend to grant such discretion to the Administrator. Volpe, supra at 1114. 54 Second, the RDA of 1972 provides no support that it was ever intended to be used as a substitute for rural electrification. Further, there is no statutory support or legislative history in the RDA to indicate that rural electrification is a community facility under 7 U.S.C. 1926. 55 Sioux Valley, therefore, was entitled to summary judgment. One further comment on the interpretation of the REA amendment of 1973 should be made in order to clarify what was not presented in this case. Sioux Valley had a pending application under the REA of 1936 before it was amended on May 11, 1973. For any loan applications made after May 11, 1973, Congress intended that the REA as amended on May 11, 1973, should apply. The amendment of 1973 represents a political settlement of the differences between the Administrator and the Congress over the operation and direction of the Rural Electrification Program, and thus would control the terms and conditions of any loan applications made after its effective date. Representative Teague stated the Congressional intention clearly: 56 While this conference report does not change the direct loan authority in the existing act, it would be inconceivable to me, and I assume to the other conferees and the administration, that the old direct loan program be revived and restored (the Section 4 program under the REA of 1936). It certainly is not my intent to do so, and I strongly urge that in the days and years ahead the needed rural electric and rural telephone financing be done through the insured and guaranteed loan structure provided by this legislation. 57 119 Cong.Rec. 3546 (May 10, 1973) (remarks of Representative Teague). 58 The District Court's granting of summary judgment for plaintiff is affirmed. 1 The Honorable Fred J. Nichol, Chief Judge, United States District Court of South Dakota, filed an unpublished Memorandum Decision on November 29, 1973 2 For convenience, we shall herein refer to the actions of the Secretary and Administrator as actions of the Administrator. The Secretary has delegated his authority to the Administrator. 38 Fed.Reg. 3951 3 The REA of 1936 has been amended several times since 1936. Herein we shall refer to that original act as the REA of 1936. The pertinent amendment in this case was effective on May 11, 1973, and herein we shall refer to that amendment as the REA amendment of 1973 4 See Note, 86 Harv.L.Rev. 1505, 1521 n. 88 (1973) (discussion of impoundment during fiscal 1973 and reference to the REA) 5 That case is presently under consideration by this court en banc 6 Volpe, supra at 1106 7 Finding jurisdiction under 28 U.S.C. 1331(a), it is unnecessary to inquire further into other jurisdictional bases alleged in plaintiff's complaint 8 Reprinted at 80 Cong.Rec. 5281 (1936) 9 80 Cong.Rec. 5273 (remarks of Representative O'Connor). In 1936 only 800,000 of 68,800,000 farms had electricity. 80 Cong.Rec. 5273 (remarks of Representative O'Connor) 10 80 Cong.Rec. 5273 (1936) (remarks of Representative Miller) 11 80 Cong.Rec. 5274 (1936) (remarks of Representative Miller) 12 The interest rates charged by the REA have varied since 1936. The original REA of 1936 provided for an interest rate of three percent and a self-liquidating loan of 25 years. 7 U.S.C. 903. A september 21, 1944, amendment to 903 and 904 changed the interest rate to one and three-quarters percent and the self-liquidating period from 25 to 35 years. A two percent rate was effective at the time that Sioux Valley filed this suit. 7 U.S.C. 904. Representative Rayburn made this comment during debates on the floor and before passage of the REA of 1936: We do not want the Federal Government to lend money to any organization, to any corporation, or to any agency of the Government at less a figure than the Government can go out and borrow the money itself. 80 Cong.Rec. 5282 (1936) (remarks of Representative Rayburn) The three percent rate in the REA of 1936 demonstrated this intention. Apparently, subsequent Congresses-- who have lowered the rate of interest under the Act over the last four decades of generally increasing, and lately steeply increasing, interest rates-- have followed a different rationale and attitude for governmental participation in financing this program. The REA amendment of 1973 does establish a five percent rate, which we are sure still compares much more favorably for the electrical cooperatives to the market rate today compared to the three percent in 1936. 13 7 U.S.C. 902, 904, 905, and 922 14 The REA of 1936 authorizes and directs the Reconstruction Financing Corporation (since 1948, the Secretary of the Treasury) to make loans to the Administrator in the amount that Congress has appropriated for the fiscal year. 7 U.S.C. 903(a) 15 See H.Rep.No.1175, 92d Cong., 2d Sess. 48; S.Rep.No.983, 92d Cong., 2d Sess. 27; H.Rep.No.1283, 92d Cong., 2d Sess 16 In holding under the undisputed facts of this case that the Administrator had no discretion to terminate the program, we do not find it necessary to decide, nor do we intimate, whether the Administrator, in administering a program, may within the range of his discretion consider political or economic factors not expressly set forth in the statute itself. Cf. Campaign Clean Water, Inc. v. Train, 489 F.2d 492 (4th Cir. 1973), cert. granted, 416 U.S. 969. 94 S.Ct. 1991, 40 L.Ed.2d 557 (1974). Compare State Highway Commission of Missouri v. Volpe, 479 F.2d 1099, 1114 (8th Cir. 1973) 17 The termination of the Section 4 program occurred on January 1, 1973; Administrator Hamil requested this interagency legal memorandum on January 8, 1973; and the memorandum was given to the Administrator on February 2, 1973. It is a questionable procedure to terminate a program and then to request staff legal advice concerning the legality of the termination 18 See also 119 Cong.Rec. 3074-75 (Feb. 21, 1973) for further remarks of Senator Humphrey 19 Senator McGovern refers to an example of the Basin Electric Power Cooperative in Bismarck, North Dakota, whose loan was terminated. 119 Cong.Rec. 2927. Sioux Valley attempted to raise Basin's claims in this suit, but those claims were dismissed by the District Court due to lack of standing. Sioux Valley does not appeal that holding 20 E.g., 119 Cong.Rec. 3546 (May 10, 1973) (remarks of Representative Teague) ('I see no reason the Administrator need use his discretionary power to reach the stipulated amount.'); 119 Cong.Rec. 8609 (May 9, 1973) (remarks of Senator McGovern) ('assurance of the Secretary of Agriculture' for certain levels of funding); 119 Cong.Rec. 8610 (May 9, 1973) (remarks of Senator Dole) ('commitment' by Secretary as indicated in the letter to the Committee)	{ "pile_set_name": "FreeLaw" }
United States Court of Appeals FOR THE EIGHTH CIRCUIT ___________ No. 98-1201 ___________ United States of America, * * Appellee, * * Appeal from the United States v. * District Court for the * Eastern District of Missouri Michael J. Rickert, * * [UNPUBLISHED] Appellant. * ___________ Submitted: March 30, 1999 Filed: May 17, 1999 ___________ Before McMILLIAN, LOKEN, and MURPHY, Circuit Judges. ___________ PER CURIAM. Michael J. Rickert appeals from the final judgment entered in the District Court1 for the Eastern District of Missouri after he pleaded guilty to transporting in interstate commerce by computer a visual depiction, the production of which involved the use of a minor engaging in sexually explicit conduct, in violation of 18 U.S.C. § 2252(a)(2), and agreed to forfeit certain property used to commit the offense, pursuant to 18 U.S.C. § 2253(a). At sentencing appellant introduced testimony from his therapist and argued 1 The Honorable Donald J. Stohr, United States District Judge for the Eastern District of Missouri. that a downward departure from the applicable sentencing guidelines range was warranted because (1) his criminal history category overstated the seriousness of his prior alcohol-related driving convictions; (2) there existed mitigating circumstances not taken into consideration by the Guidelines, including his own sexual abuse and his rehabilitative efforts; and (3) he committed the instant offense “while suffering from significantly reduced mental capacity” as defined under U.S. S.G. § 5K2.13, p.s. (1998). The court refused to depart downward and sentenced appellant to 20 months imprisonment and three years supervised release. For reversal appellant argues the district court erred in denying his motions for downward departure and abused its discretion in admitting government Exhibits 2 and 3 at sentencing. For the reasons discussed below, we affirm the judgment of the district court. Reviewing the district court’s comments as a whole, we conclude that the court was aware of its authority to depart on all three grounds argued by appellant and that the court’s exercise of discretion not to depart under the circumstances is unreviewable on appeal. See United States v. Saelee, 123 F.3d 1024, 1026 (8th Cir. 1997) (where district court correctly understood its discretionary authority to depart rested upon determination that circumstances of case make it exceptional and atypical, such that it is outside of heartland of cases, its decision not to exercise such authority is unreviewable); United States v. Field, 110 F.3d 587, 591 (8th Cir. 1997) (absent unconstitutional motive, discretionary decision not to depart from Guidelines is unreviewable on appeal); United States v. Knight, 96 F.3d 307, 311 (8th Cir. 1996) (court’s decision not to depart downward from Guidelines range because it over- represented seriousness of earlier convictions is not reviewable on appeal where court understood it could depart), cert. denied, 520 U.S. 1180 (1997); United States v. Jackson, 56 F.3d 959, 960 (8th Cir. 1995). To the extent appellant is arguing that the court incorrectly determined his criminal history category by including a 1989 “Blood Alcohol Content” conviction, the argument is without merit. See U.S.S.G. §§ 4A1.1(c), 4A1.2, comment (n.5) (1998) -2- (convictions for driving while intoxicated and “similar offenses by whatever name they are known” are counted toward defendant’s criminal history); United States v. Herron, 97 F.3d 234, 238 (8th Cir. 1996) (where defendant did not object below, this court reviews only for plain error), cert. denied, 519 U.S. 1133 (1997). Last, the court did not abuse its discretion in admitting Exhibits 2 and 3, because both were relevant to the determination of appellant’s diminished-capacity departure motion. See United States v. Harris, 982 F.2d 317, 318-19 (8th Cir. 1992) (admissibility of evidence at sentencing is committed to sound discretion of district court); cf. U.S. S.G. § 6A1.3, p.s. (1998) (“In resolving any dispute concerning a factor important to the sentencing determination, the court may consider relevant information without regard to its admissibility under the rules of evidence applicable at trial, provided that the information has sufficient indicia of reliability to support its probable accuracy.”). Moreover, contrary to appellant’s argument, there is no indication in the record that the court utilized any criteria other than those set forth in the Guidelines in determining his sentence. See U.S.S.G. § 1B1.4 (1998) (in determining sentence to impose within Guidelines range, or whether departure from Guidelines is warranted, court may consider any information concerning background, character, and conduct of defendant unless otherwise prohibited by law). Accordingly, the judgment is affirmed. -3- A true copy. Attest: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT. -4-	{ "pile_set_name": "FreeLaw" }
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-07-00072-CV Todd M. Hertzberg, Appellant v. The Austin Diagnostic Clinic Association, P.A. d/b/a The Austin Diagnostic Clinic, Appellee FROM COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY NO. 01-CV-05-002021, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING MEMORANDUM OPINION Appellant, Todd M. Hertzberg, appeals from a summary judgment in favor of appellee, The Austin Diagnostic Clinic Association, P.A. d/b/a The Austin Diagnostic Clinic (“ADC”), in a breach-of-contract suit. Hertzberg raises two issues on appeal, asserting that: (1) the trial court erred in granting summary judgment based on limitations where ADC failed to conclusively establish that the statute of limitations began running before November 25, 2001; and (2) the trial court erred in granting ADC’s requests for attorney’s fees and post-judgment interest. We affirm the trial court’s judgment. BACKGROUND In February 1999, Hertzberg entered into an employment contract with ADC in which he agreed to work for ADC as a physician radiologist from October 1, 1999 to September 30, 2001. The contract provided that both parties could terminate the agreement at any time upon three- months’ prior notice. Specifically with regard to ADC’s termination of the agreement, the contract stated: This Agreement may be terminated by [ADC], for any reason, upon three (3) months notice in advance. During the notice period, Doctor’s duties shall continue and Doctor shall receive compensation as usual until the end of said notice period, provided Doctor performs all of Doctor’s usual duties. The contract further provided that “[i]n the event of termination of this agreement by either party, Doctor hereby agrees to purchase a tail policy prior to such termination date.”1 In addition, the contract included a provision regarding Hertzberg’s possible advancement to an associate physician position, stating: [ADC] will notify physician ninety (90) days prior to end of employment agreement as to [ADC’s] intent to advance or not advance physician to Associate status. Should [ADC] not advance physician to Associate status and elect not to extend physician employment agreement, [ADC] agrees to bear the expense of tail policy for professional liability to cover the period of employment physician [sic] while working at [ADC], and [ADC] agrees to waive physician’s obligation to reimburse [ADC] for the expense of moving originally incurred to relocate physician to Austin at the commencement of this employment agreement. 1 A “tail policy” is an insurance policy covering a professional once the professional’s “claims-made” insurance policy is discontinued. Tail insurance essentially extends the period of the claims-made policy to allow additional time to make claims for acts occurring during the time the claims-made policy was in effect. See Woods v. Mercer, Inc., 769 S.W.2d 515, 516 (Tex. 1988). 2 During his term of employment, Hertzberg did not become board-certified in radiology. According to ADC policy, physicians were prohibited from being promoted to associate positions unless they first became board-certified in their respective specialties. Thus, rather than promoting Hertzberg, ADC offered in early September 2001 to extend his employment for one year and increase his salary. Hertzberg rejected the offer. In a memorandum dated September 11, 2001, ADC notified Hertzberg that because ADC could not offer him an associate position and because he had rejected ADC’s offer to extend his contract, his last day of employment at ADC would coincide with the last day of his contract term, which was September 30, 2001. The memo also stated that ADC expected Hertzberg to pay for his tail-insurance policy and reimburse ADC for his moving expenses. On September 14, 2001, Hertzberg’s attorney responded in a letter to ADC asserting that Hertzberg would not pay for his tail-insurance coverage or reimburse ADC for his moving expenses because ADC did not provide him with the required ninety days’ notice that he would not be promoted to an associate position and that ADC would not continue the employment relationship. Hertzberg ultimately worked until September 17, 2001, and was paid through the month of September due to leave he had accumulated during his employment. On November 21, 2005, he filed suit for breach of contract, alleging that ADC breached the employment agreement by failing to: (1) provide him with ninety days’ written notice that he would not be advanced to an associate position and that ADC would not extend the employment agreement; (2) provide him with a minimum of three months’ written notice of its intent to terminate the agreement; and (3) pay for his tail-insurance policy and waive reimbursement of his moving expenses. 3 On August 17, 2006, ADC filed a motion for summary judgment, contending that Hertzberg’s suit was barred by the four-year statute of limitations applicable to breach-of-contract claims. The trial court set a hearing for the motion on October 9, 2006. On September 29, 2006, Hertzberg filed a cross-motion for summary judgment, asserting that he filed his suit within the limitations period and that he was entitled to judgment as a matter of law on his claims. On October 5, 2006, ADC filed an objection to Hertzberg’s cross-motion, arguing that the trial court should not consider the motion at the hearing because Hertzberg did not timely file the motion. The trial court did not rule on ADC’s objection. At the hearing, the trial court considered and granted ADC’s motion and reserved the issue of attorney’s fees for another hearing. A month later, the trial court held a hearing in which it granted ADC’s request for attorney’s fees. The trial court then granted a final judgment in favor of ADC on November 7, 2006. ADC later filed a motion to modify the judgment to include post-judgment interest, and the trial court granted the motion and issued a modified final judgment including post-judgment interest on November 21, 2006. This appeal followed. STANDARD OF REVIEW We review the trial court’s summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Summary judgment is proper when there are no disputed issues of material fact, and the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003). A defendant moving for summary judgment on the affirmative defense of limitations has the burden of conclusively establishing that defense. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 4 842, 846 (Tex. 2005). If the movant establishes that limitations bars the action, the non-movant must then adduce summary-judgment proof raising a fact issue in avoidance of limitations. Id. When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. Valence Operating Co., 164 S.W.3d at 661. DISCUSSION Hertzberg raises two issues on appeal, contending that the trial court erred in: (1) granting summary judgment based on limitations where ADC failed to conclusively establish that the statute of limitations began to run before November 25, 2001; and (2) granting ADC’s requests for attorney’s fees and post-judgment interest. We address each issue in turn. Statute of Limitations The statute of limitations for a breach-of-contract action is four years from the date the cause of action accrues. See Tex. Civ. Prac. & Rem. Code Ann. § 16.051 (West 2008); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). As a general rule, a cause of action accrues and the statute of limitations begins to run when facts come into existence that authorize a party to seek a judicial remedy. Knott, 128 S.W.3d at 221. In most cases, a cause of action accrues when a wrongful act causes a legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet occurred. Id. In its motion for summary judgment, ADC argued that Hertzberg’s suit was barred by limitations because even assuming ADC breached the employment contract, the latest date 5 at which the cause of action could have accrued was September 30, 2001, the day the contract expired, and Hertzberg did not file suit until more than four years later, on November 21, 2005. Although Hertzberg did not file a response to ADC’s motion, he filed a cross-motion in which he argued that his cause of action did not accrue until November 25, 2001, the date on which he paid his tail-insurance premium. He asserts the same argument on appeal. In order to determine when Hertzberg’s cause of action accrued, we must first look at the injury on which he based his cause of action and then determine when the facts underlying the cause of action came into existence. See id. A. Alleged Injury The grounds on which Hertzberg filed his suit include allegations that ADC did not: (1) provide him with three months’ notice before terminating his employment; (2) provide him with ninety days’ notice of its intent to not advance him to associate status and not extend the contract; and (3) pay for his tail-insurance policy or waive reimbursement of his moving expenses. Regarding the first alleged breach, Hertzberg asserted in his petition that ADC’s failure to give him three months’ notice of termination of the employment agreement breached the provision in the contract stating that “[t]his Agreement may be terminated by [ADC], for any reason, upon three (3) months notice in advance.” Regarding the second and third alleged breaches—ADC’s failure to give Hertzberg ninety days’ notice of its intent to not promote him to an associate position and to not extend the contract, and ADC’s failure to pay for Hertzberg’s tail-insurance policy and waive the reimbursement of his moving expenses—Hertzberg asserted that those actions breached the provision of the contract stating: 6 [ADC] will notify physician ninety (90) days prior to end of employment agreement as to [ADC’s] intent to advance or not advance physician to Associate status. Should [ADC] not advance physician to Associate status and elect not to extend physician employment agreement, [ADC] agrees to bear the expense of tail policy for professional liability to cover the period of employment physician [sic] while working at [ADC], and [ADC] agrees to waive physician’s obligation to reimburse [ADC] for the expense of moving originally incurred to relocate physician to Austin at the commencement of this employment agreement. B. When Facts of Alleged Injury Came Into Existence Turning to the issue of when the facts underlying Hertzberg’s cause of action came into existence, we conclude that they did so on September 11, 2001, when ADC notified Hertzberg in a memorandum that his final day of employment would be September 30, 2001, and that he was expected to pay for his tail-insurance policy and reimburse ADC for his moving expenses. It was at that point that the facts that allegedly caused him injury came into existence and authorized him to seek a judicial remedy. See id. Specifically, the first alleged breach of the contract was made clear in the September 11 memo when ADC stated that it was “informing [Hertzberg] that [his] last day with ADC [would] coincide with the expiration of [his] current contract on 9/30/01.” Assuming that allowing the contract to expire was the same as terminating the contract, ADC breached the contract by providing only nineteen days’ notice of its termination rather than the three months’ notice required by the contract. ADC’s second alleged breach of the contract was also evident in the September 11 memo when ADC stated that “a physician must be board certified in his/her specialty in order to 7 become an associate physician at ADC” and that “[a]s of [that] date, [Hertzberg had] been unable to provide proof of [his] board certification in Radiology, which preclude[d] any offer of an associate contract.” Because the contract required ADC to notify Hertzberg ninety days prior to the end of the employment agreement of ADC’s intent not to advance him to associate status, ADC allegedly breached the contract when it notified him on September 11, 2001, only nineteen days prior to the end of the agreement. The third alleged breach was apparent in the September 11 memo when ADC stated that it expected Hertzberg “to reimburse ADC for the cost of [his] tail policy, as well as [his] moving expenses which were paid by [ADC].” Because the contract provided that ADC would pay for the tail insurance and moving expenses if it did not advance Hertzberg to associate status and did not extend the employment agreement, ADC allegedly breached the contract when it did not promote him and did not extend the agreement but still expected him to pay for his tail insurance and moving expenses. Because facts authorizing Hertzberg to seek a judicial remedy came into existence on September 11, 2001, his claims accrued on that date. See id.; Ambulatory Infusion Therapy Specialist, Inc. v. North Am. Adm’rs, Inc., 262 S.W.3d 107, 119 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (cause of action accrued when plaintiff received defendant’s letter stating that defendant would pay only $3,500 of plaintiff’s $31,089.20 invoice, thus denying reimbursement for remainder). 8 C. Other Arguments Regarding Accrual Date Although Hertzberg raises other arguments that his cause of action did not accrue until November 2001, he has waived those arguments on appeal by not raising them in the trial court. Specifically, Hertzberg contends that this case is similar to three different types of cases, each of which allegedly supports a determination that his cause of action did not accrue until November 2001. The three different types of cases he relies upon include: (1) those involving insurance claims in which there is no “outright denial” of a claim and an insurance company “strings an insured along without denying or paying a claim;” (2) those involving installment contracts; and (3) those applying the discovery rule, in which the cause of action accrues when the plaintiff discovered or should have discovered facts establishing a cause of action. See Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 n.2 (Tex. 1990) (insurance claim); Ehrig v. Germania Farm Mut. Ins. Ass’n, 84 S.W.3d 320, 325 (Tex. App.—Corpus Christi 2002, pet. denied) (insurance claim); F.D. Stella Prods. Co. v. Scott, 875 S.W.2d 462, 465-66 (Tex. App.—Austin 1994, no writ) (“installment contract” approach); Houston Livestock Show & Rodeo, Inc. v. Hamrick, 125 S.W.3d 555, 569-70 (Tex. App.—Austin 2003, no pet.) (discovery rule). However, there is nothing in the record indicating that Hertzberg raised these arguments in the trial court, and he has therefore waived the arguments on appeal. See Tex. R. App. P. 33.1(a)(1); Aldrich v. State, 104 S.W.3d 890, 895-96 (Tex. Crim. App. 2003). Even if he had not waived the arguments, the cases he cites in support of his arguments are inapplicable to this case. For example, this case does not involve an insurance claim, and the insurance-claim cases apply only when an insurance company does not provide an “outright 9 denial” of a claim and “strings along” an insured without approving or denying the claim. See Murray, 800 S.W.2d at 828 n.2; Ehrig, 84 S.W.3d at 325. Here, even assuming that ADC was acting in a role similar to an insurer and that the issue of payment of the tail insurance and moving expenses was akin to an insurance claim, ADC did not string Hertzberg along regarding its position on the payment issue. Rather, ADC specifically stated in its September 11, 2001 memo that it expected Hertzberg to pay for his tail-insurance policy and moving expenses. Regardless of any subsequent demands for payment Hertzberg may have made, he had sufficient facts with which to seek a judicial remedy as of the day he received the memo. See Mid-South Telecomms. Co. v. Best, 184 S.W.3d 386, 388, 391 (Tex. App.—Austin 2006, no pet.) (cause of action accrued when defendant defaulted on note, regardless of whether plaintiff still demanded and expected payment after default). Regarding the installment-contract cases, Hertzberg cites to only one case, and the case is considerably different from the one before us. See Scott, 875 S.W.2d at 465-66. In Scott, the plaintiff sued the defendant for past-due monthly lease payments, and the issue was whether a new cause of action accrued—and thus a new statute of limitations began running—for each missed payment. See id. at 466. The case before us does not involve a lease, nor does it involve multiple payments. Scott is therefore inapplicable. The cases involving the discovery-rule exception are also inapplicable to this case. The Texas Supreme Court has made it clear that the discovery-rule exception should be applied only where an injury is unlikely to be discovered within the prescribed limitations period despite due diligence. See Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313, 315 (Tex. 2006). The supreme court further stated that the discovery-rule exception should be restricted “to exceptional 10 cases” so as “to avoid defeating the purposes behind the limitations statutes.” Id. at 313. Here, any breach of the contract by ADC was evident in the September 11, 2001 memorandum. Hertzberg makes no argument that he could not have discovered his injury during the four-year limitations period. In fact, he argues that he discovered the injury in November 2001, when he claims that he had to pay his insurance premium by the insurance company’s deadline. Further, in the one case to which Hertzberg cites, Houston Livestock, this court pointed out that “[a] party seeking to avail itself of the discovery rule must plead the rule, either in its original petition or in an amended or supplemental petition in response to defendant’s assertion to the defense as a matter of avoidance.” 125 S.W.3d at 570. The record shows that Hertzberg never pleaded the discovery rule despite ADC’s assertion of the affirmative defense of limitations in its answer. Because the cases cited by Hertzberg are inapplicable to this case, we disregard them. D. Conclusion Regarding Accrual Date As previously indicated, any injury suffered by Hertzberg was known to him on September 11, 2001, when he received ADC’s memo. Thus, his cause of action accrued on that date. Hertzberg did not file suit until November 21, 2005. Because there is no genuine issue of material fact that he filed suit more than four years after his cause of action accrued, we affirm the trial court’s summary judgment. Attorney’s Fees and Post-Judgment Interest In his second issue, Hertzberg contends that the trial court erred in granting ADC’s requests for attorney’s fees and post-judgment interest and that the amount of attorney’s fees granted 11 was unreasonable. We review a trial court’s decision to either grant or deny attorney’s fees under an abuse-of-discretion standard, and we review the amount of attorney’s fees awarded under a legal- sufficiency standard. See Ridge Oil Co., Inc. v. Guinn Invs., Inc., 148 S.W.3d 143, 163 (Tex. 2004); Aaron Rents, Inc. v. Travis Cent. Appraisal Dist., 212 S.W.3d 665, 671 (Tex. App.—Austin 2006, no pet.). A trial court abuses its discretion if it acts without reference to any guiding rules and principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). To determine whether a trial court abused its discretion, we must determine whether the trial court’s action was arbitrary or unreasonable. Id. at 242. Because we review the amount of attorney’s fees awarded under a legal-sufficiency review, we must view the evidence in a light that tends to support the disputed finding and disregard evidence and inferences to the contrary. Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 739 (Tex. 2003). If more than a scintilla of evidence supports the challenged finding, the legal-sufficiency challenge must fail. Id. Although Hertzberg challenges the trial court’s award of attorney’s fees and post- judgment interest, he does not cite to any legal authority to support reversal of the trial court’s determinations, thus waiving error on the issue. See Tex. R. App. P. 38.1(i) (requiring citation to authority). Even if he had not waived error, we find nothing in the record to support his assertions. The trial court’s decision to award attorney’s fees and post-judgment interest is supported by the contract, which states: If the services of an attorney are retained and/or if any action at law or in equity is brought to enforce or interpret the provisions of this Agreement or to collect any monies due hereunder, the prevailing party shall be entitled to reasonable attorney’s fees together with 12 interest thereon at the highest rate provided by law in addition to any other relief to which he may be entitled at law or in equity. A “prevailing party” is a party who successfully prosecutes the action or successfully defends against it, prevailing on the main issue, even if not to the extent of its original contention. See Flagship Hotel, Ltd. v. City of Galveston, 117 S.W.3d 552, 564 (Tex. App.—Texarkana 2003, pet. denied); Dear v. City of Irving, 902 S.W.2d 731, 739 (Tex. App.—Austin 1995, writ denied). Because ADC successfully defended against Hertzberg’s suit by obtaining summary judgment on his claims, ADC is the prevailing party. See Robbins v. Capozzi, 100 S.W.3d 18, 27 (Tex. App.—Tyler 2002, no pet.). Thus, ADC is entitled to “reasonable attorney’s fees together with interest thereon” as provided by the contract. Accordingly, the trial court’s decision to grant ADC’s requests for attorney’s fees and post-judgment interest was not an abuse of discretion. Regarding the amount of attorney’s fees the trial court awarded, there are several factors a fact finder should consider in determining the reasonableness of a fee.2 Arthur Andersen 2 The factors include: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; (2) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; 13 & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). ADC’s attorney, Scott Brutocao, testified at the hearing on attorney’s fees as to several of the Arthur Andersen factors. First, he explained that the case was a standard breach-of-contract suit that required him and two associates at his firm to file an answer, perform research, conduct discovery, and prepare a summary-judgment motion. He also pointed out that additional research was required beyond that associated with a standard case because Hertzberg “was making a novel theory on the statute of limitations.” Second, Brutocao testified that the case took him and two associates at his firm 70.7 hours total, and he supported his assertion with the billing records of his firm, which were introduced as an exhibit at the hearing. Third, Brutocao testified that he was familiar with customary rates charged by attorneys for similar legal services in Austin, and he explained that the hourly rate his firm charged ADC was $235 and remained fixed regardless of whether he or an associate worked on the case. He also stated that the hourly rate his firm charged ADC was less than his standard rate, which was $335 an hour. Fourth, he testified extensively about his own experience and abilities as well as the experience (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). 14 and abilities of the two associates who worked on the case, and he offered his own and the two associates’ curriculum vitae as exhibits to support his assertions. Finally, he testified that the total amount of attorney’s fees for the case was $16,614.50 and that the amount was reasonable and necessary. Because there is evidence of several of the eight Arthur Andersen factors supporting the reasonableness of the award of attorney’s fees, we conclude that there is more than a scintilla of evidence to support the amount of the award. Accordingly, the trial court did not abuse its discretion in awarding $16,614.50 in attorney’s fees to ADC. See EMC Mortgage Corp. v. Davis, 167 S.W.3d 406, 418-19 (Tex. App.—Austin 2005, pet. denied). Appellate Attorney’s Fees ADC requests that we award it appellate attorney’s fees as monetary sanctions against Hertzberg for bringing a frivolous appeal. See Tex. R. App. P. 45 (authorizing appellate court to award prevailing party “just damages” upon determination that appeal is frivolous). In determining whether an appeal is frivolous, we review the record from the appellant’s viewpoint and decide whether the appellant had reasonable grounds to believe the judgment could be reversed. Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.—Houston [1st Dist.] 2001, pet. denied). Whether to grant sanctions for a frivolous appeal is a matter of discretion that an appellate court exercises with prudence and caution and only after careful deliberation in truly egregious circumstances. Goss v. Houston Cmty. Newspapers, 252 S.W.3d 652, 657 (Tex. App.—Houston [14th Dist.] 2008, no pet.). Although we have rejected Hertzberg’s arguments on appeal, we cannot characterize the appeal as objectively frivolous. Accordingly, we overrule ADC’s request. 15 In the alternative, ADC asks that we remand the case to the trial court for the award of appellate attorney’s fees. As previously indicated, the contract provides that the prevailing party in the suit is entitled to recover attorney’s fees. However, ADC did not request appellate attorney’s fees in the trial court and has not filed a notice of appeal on the issue. Accordingly, we must deny ADC’s request. See Tex. R. App. P. 25.1(c) (“A party who seeks to alter the trial court’s judgment or other appealable court order must file a notice of appeal.”); In re Lesikar, 285 S.W.3d 577, 586 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (appellee waived claim to appellate attorney’s fees on remand because she did not request appellate fees, present evidence to support fees, or obtain finding or judgment on issue in trial court) (citing Varner v. Cardenas, 218 S.W.3d 68, 69-70 (Tex. 2007)). CONCLUSION Because we find no error in the trial court’s determinations, we affirm the trial court’s summary judgment. ___________________________________________ David Puryear, Justice Before Justices Patterson, Puryear and Pemberton Affirmed Filed: September 11, 2009 16	{ "pile_set_name": "FreeLaw" }
FILED United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS January 9, 2009 TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court UNITED STATES OF AMERICA, Plaintiff-Appellee, No. 08-7085 (D.C. Nos. 6:07-CV-00414-RAW and v. 6:04-CR-00010-RAW-1) (E.D. Okla.) HOWARD WAYNE McGEHEE, Defendant-Appellant. ORDER DENYING CERTIFICATE OF APPEALABILITY Before LUCERO, TYMKOVICH, and HOLMES, Circuit Judges. Howard Wayne McGehee, a federal prisoner proceeding pro se, requests a certificate of appealability (“COA”) to appeal the district court’s denial of his 28 U.S.C. § 2255 motion to vacate, set aside, or correct his sentence. For substantially the same reasons as the district court, we deny a COA and dismiss the appeal. I On April 1, 2004, a jury convicted McGehee of seven criminal counts: (1) conspiracy to manufacture, possess with intent to distribute, and distribute methamphetamine in violation of 21 U.S.C. § 846; (2) attempt to manufacture methamphetamine in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(A)(viii), and 846 and 18 U.S.C. § 2; (3) possession of listed chemicals knowing or having reasonable cause to believe the listed chemicals would be used to manufacture methamphetamine in violation of 21 U.S.C. §§ 802 and 841(c)(2) and 18 U.S.C. § 2; (4) maintenance of a place for the purpose of manufacturing, distributing, and using a controlled substance in violation of 21 U.S.C. § 856(a)(1) and 18 U.S.C. § 2; (5) possession of methamphetamine with intent to distribute in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2; (6) possession of a firearm after a prior felony conviction in violation of 18 U.S.C. § 922(g)(1); and (7) carrying a firearm during and in relation to a drug trafficking felony and possession of a firearm in furtherance of a drug trafficking felony in violation of 18 U.S.C. § 924(c)(1)(A). On August 25, 2004, the district court entered judgment and sentenced McGehee to concurrent terms of 240 months’ imprisonment for each of counts 1 and 2; 235 months’ imprisonment for each of counts 3, 4, and 5; and 120 months’ imprisonment for count 6. In addition, the court imposed a consecutive term of 60 months’ imprisonment for count 7, for a total sentence of 300 months’ imprisonment. McGehee directly appealed his convictions and sentences to this court, challenging the sufficiency of the evidence on all counts, the application of a mandatory minimum sentence for a prior “drug felony offense” under 21 U.S.C. § 841(b)(1)(A) on counts 1 and 2, and the drug quantity calculation in his -2- presentence report. United States v. McGehee, 177 F. App’x 815, 819 (10th Cir. 2006). We affirmed his convictions and sentences in all respects. Id. at 828. He then petitioned the Supreme Court for a writ of certiorari, which was denied on March 26, 2007. McGehee v. United States, 127 S. Ct. 1903 (2007). On November 29, 2007, McGehee timely filed the underlying 28 U.S.C. § 2255 motion, claiming ineffective assistance of counsel and a supervening change in the law. Regarding the ineffective assistance of counsel claim, he alleged that trial counsel was ineffective for: (1) not moving to suppress the evidence returned from a search of his house, (2) failing to plea bargain, and (3) failing to call McGehee’s co-defendant as a witness. Regarding the supervening change in the law, McGehee argued that under Lopez v. Gonzales, 549 U.S. 47 (2006), his prior state felony conviction under the Texas Tax Code for failing to pay taxes on imported marihuana could not support the application of the mandatory minimum for a prior “felony drug offense” under 21 U.S.C. § 841(b)(1)(A) on counts 1 and 2. The district court dismissed his § 2255 motion, finding that his trial counsel’s assistance was at or above an objective standard of reasonableness because McGehee failed to rebut the presumption that his counsel pursued sound trial strategy. The district court also concluded that Lopez did not substantively change the law with respect to the application of the mandatory minimum for a prior felony drug conviction under 21 U.S.C. § 841(b)(1)(A). McGehee declined -3- to seek a COA from the district court but filed a timely notice of appeal. He then requested a COA from this court. II Because the district court denied his habeas petition and McGehee declined to seek a COA from that court, he may not appeal the district court’s decision absent a grant of a COA by this court. 28 U.S.C. § 2253(c)(1)(B). To obtain a COA, McGehee must make a “substantial showing of the denial of a constitutional right.” § 2253(c)(2). This requires him to show “that reasonable jurists could debate whether (or, for that matter, agree that) the petition should have been resolved in a different manner or that the issues presented were adequate to deserve encouragement to proceed further.” Slack v. McDaniel, 529 U.S. 473, 484 (2000) (quotations omitted). In order to determine whether McGehee has made a substantial showing of the denial of a constitutional right, we examine the merits of his claims. To establish ineffective assistance of counsel, McGehee must show (1) that his counsel’s actions fell below an objective standard of reasonableness, and (2) that this conduct prejudiced the proceedings such that, absent counsel’s errors, the outcome would have been different. Strickland v. Washington, 466 U.S. 668, 687 (1984). We employ a strong presumption that counsel acted within the wide range of reasonable professional assistance. Id. at 689. We conclude that -4- reasonable jurists would agree that McGehee cannot make the required showings under Strickland for any of his three theories of ineffectiveness. 1 First, McGehee asserts that counsel was ineffective for failing to file a motion to suppress when the warrant authorizing the search of his property was supported only by information from an unreliable informant. In fact, the officer’s supporting affidavit contains a number of facts corroborating the informant’s information and is sufficient to establish probable cause. Illinois v. Gates, 462 U.S. 213, 244-45 (1983). Because any motion to suppress would therefore have been meritless, this claim cannot survive either prong of Strickland. See Cargle v. Mullin, 317 F.3d 1196, 1202 (10th Cir. 2003) (“[I]f the issue is meritless, its omission will not constitute deficient performance.” (citation and footnote omitted)); Dennis v. Poppel, 222 F.3d 1245, 1261 (10th Cir. 2000) (failing to raise meritless claims is not prejudicial). Second, McGehee asserts that his trial counsel failed to plea bargain. McGehee admits that counsel advised him that his “best option was to proceed to trial,” and his claim that there was an “initial offer” from the government is not 1 Before this court, McGehee asserts for the first time that “[a]ppellate counsel was ineffective for failing to ‘properly’ appeal the above issues.” (emphasis added). “Issues not raised in the district court will not be considered for the first time on appeal when . . . there is no showing of an impediment to the appellant that precluded his raising the issue.” United States v. Chee, 514 F.3d 1106, 1115 (10th Cir. 2008) (quotations omitted). Because McGehee has failed to make such a showing, we decline to consider his new argument that appellate counsel in his direct appeal was ineffective. -5- supported by the record in this appeal. This suggests, as the district court concluded, that defense counsel’s advice was strategically sound. However, even if we assume that counsel was deficient in this regard, McGehee offers little more than the bare assertion that counsel’s failure to plea bargain was prejudicial. In particular, McGehee does not allege that he would have taken a plea offer or that such an offer would have reduced the sentence he received as a result of the jury conviction. Therefore, this claim fails under the second prong of Strickland. See United States v. Carter, 130 F.3d 1432, 1442 (10th Cir. 1997) (“As for the prejudice prong, there must be a reasonable probability that but for incompetent counsel a defendant would have accepted the plea offer and pleaded guilty.” (citation omitted)). McGehee’s final claim with regard to ineffective assistance is that counsel was deficient for not calling his co-defendant, Jason Don Sloan, as a witness. Although some of Sloan’s testimony might have been helpful to McGehee, it would have opened the door to harmful testimony regarding Sloan and McGehee’s drug use and evidence that Sloan had been producing methamphetamine immediately prior to their arrest. “[T]he decision of which witnesses to call is quintessentially a matter of strategy.” Boyle v. McKune, 544 F.3d 1132, 1139 (10th Cir. 2008); see also Strickland, 466 U.S. at 699. We do not second guess defense counsel’s decision and cannot say his performance was deficient under the first prong of Strickland. Because McGehee cannot satisfy the Strickland -6- standard on any of the grounds he raises, reasonable jurists would agree that his trial counsel was not ineffective. Lastly, McGehee asserts that his prior conviction under the Texas Tax Code is not a prior “felony drug offense” for the purposes of the mandatory minimum sentence required by 21 U.S.C. § 841(b)(1)(A) on counts 1 and 2. This issue was addressed on direct appeal, McGehee, 177 F. App’x at 824-26, and “a prior opportunity for full and fair litigation is normally dispositive of a federal prisoner’s habeas claim,” Withrow v. Williams, 507 U.S. 680, 721 (1993). However, McGehee asserts that the supervening decision in Lopez, 549 U.S. at 60, changed the law regarding which offenses qualify as prior drug offenses. Lopez does not resurrect McGehee’s argument. In Lopez, the Supreme Court held that for a prior offense to qualify as “illicit trafficking,” a term undefined by the statute at issue in that case, the underlying conduct had to constitute a federal felony. Id. Here, the question is whether McGehee has been convicted of a prior “felony drug offense,” which is defined by statute as “an offense that is punishable by imprisonment for more than one year under any law of the United States or of a State or foreign country that prohibits or restricts conduct relating to narcotic drugs, marihuana, anabolic steroids, or depressant or stimulant substances.” 21 U.S.C. § 802(44) (emphasis added). Under this definition, McGehee’s Texas conviction was a felony drug offense before Lopez, and it remains a felony drug offense today. Because Lopez did not change the -7- law applicable to McGehee, we will not disturb this court’s holding on his direct appeal that the mandatory minimum was correctly applied. 2 McGehee, 177 F. App’x at 826. III McGehee has failed to make a “substantial showing of the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2). We DENY a COA, DISMISS the appeal, and DENY the motion to proceed in forma pauperis on appeal. ENTERED FOR THE COURT Carlos F. Lucero Circuit Judge 2 Because we conclude on the record before us that reasonable jurists would not debate whether McGehee’s motion should have been resolved in a different matter, there is no need to address whether the district court should have held an evidentiary hearing. Anderson v. Attorney Gen. of Kan., 425 F.3d 853, 860 (10th Cir. 2005). -8-	{ "pile_set_name": "FreeLaw" }
135 F.Supp. 65 (1955) UNITED STATES of America, Plaintiff, v. The BAYER COMPANY, Inc. (New York); Sterling Products (Incorporated) (Delaware); Albert H. Diebold; William E. Weiss; and General Aniline & Film Corporation, Defendants. United States District Court S. D. New York. October 10, 1955. Stanley N. Barnes, Asst. Atty. Gen., Ephraim Jacobs, Richard B. O'Donnell, Special Assts. to the Atty. Gen., Wilbur L. Fugate, Daniel H. Margolis, Trial Attys., Washington, D. C., for plaintiff. Winthrop, Stimson, Putnam & Roberts, New York City, Peter H. Kaminer, Herbert L. Abrons, Merrell E. Clark, Jr., New York City, of counsel, for defendant General Aniline & Film Corp. 66 WEINFELD, District Judge. In this action charging violation of § 1 of the Sherman Act[1] the government moves for summary judgment against the defendant General Aniline & Film Corporation, hereinafter called "General Aniline". General Aniline cross-moves for summary judgment in its favor. The motions are based on the pleadings, exhibits, requests for admissions, answers to interrogatories and affidavits. Each party in support of its motion urges that no genuine issue exists as to any material fact and that it is entitled to prevail. The action has had a rather long history. General Aniline was not named as a defendant when the action was commenced in September, 1941. The original defendants were The Bayer Company, Inc. (New York) (hereinafter referred to as "Bayer"), Sterling Products (Incorporated) (Delaware), (hereinafter referred to as "Sterling"), and two individual officers of Sterling. The complaint charged those defendants with combining and conspiring to restrain interstate and foreign trade and commerce in pharmaceutical products in violation of § 1 of the Sherman Act. It alleged that the conspiracy resulted in and was furthered by two agreements, one dated April 9, 1923 between Bayer and a German company, known as and referred to herein as Leverkusen; the other dated November 15, 1926 which modified and confirmed the earlier agreement and was executed by Bayer and I. G. Farbenindustrie Aktiengesellschaft of Germany (herein referred to as "I. G. Farben") which succeeded to Leverkusen's interest. These agreements, the provisions of which will be considered in greater detail, are referred to herein as the 1923 and 1926 agreements, or the Bayer contract. The present controversy centers about a provision of the agreements under which Bayer agreed to pay I. G. Farben for a period of 50 to 55 years one-half of the net profits derived by Bayer from its business in Cuba, one of the countries where Bayer was given exclusive sales rights for designated pharmaceutical products. Upon the filing of the complaint in September, 1941, the original defendants consented to the entry of a decree adjudging the 1923 and 1926 agreements to be unlawful under the anti-trust laws.[2] The decree enjoined Bayer and Sterling (which owned Bayer), their successors and subsidiaries, from carrying out or enforcing the contracts or from paying to I. G. Farben, its successors or assigns, any royalties or share of profits under the contracts with respect to its sales. It is this latter provision which accounts for the present proceeding. In 1930 I. G. Farben issued a letter of instructions to Bayer to pay its (Farben's) share of the Cuban profits under the 1923 and 1926 agreements to American I. G. Chemical Corporation, which I. G. Farben had caused to be organized under the laws of Delaware. In 1931 it directed Bayer to pay the profits to General Aniline Works, Inc. which in 1939, as a result of changes of names and mergers with subsidiaries, became General Aniline & Film Corporation, the present defendant.[3] Bayer made the payments as directed by the instructions to 1940 but 67 refused to make further payments after the entry of the 1941 consent decree. In 1945 General Aniline, alleging itself to be the assignee of I. G. Farben, commenced an action against Bayer and Sterling in the Supreme Court of the State of New York to recover I. G. Farben's share of the Cuban profits for the years 1941 to 1944. It later filed a supplemental complaint to include the profits for each year from 1945 through 1951. The complaints alleged the due performance by I. G. Farben and its predecessor (Leverkusen) of all the terms and conditions on their parts to be performed under the agreements. Both Bayer and Sterling pleaded as an affirmative defense impossibility of performance, citing the provisions of the 1941 decree in this action declaring the contracts illegal and enjoining them from making any further payments thereunder. On General Aniline's motion the defense was stricken.[4] The Appellate Division[5] and the Court of Appeals[6] of the State of New York affirmed the order. The underlying rationale of the decisions was the absence of General Aniline as a party to the anti-trust suit, the courts holding that the decree was not binding upon it and that it was entitled to have its day in court to contest the claim of illegality of the Bayer contracts. While the appeal was pending in the New York Appellate Division, the Attorney General applied for, and was granted, leave to serve the supplemental complaint in this action.[7] Thus it came about that in 1952, more than ten years after the entry of the final decree against the original defendants, the government served first a supplemental complaint and then an amended supplemental complaint naming General Aniline as an additional defendant. The same general relief is sought as had been obtained under the original complaint declaring the 1923 and 1926 agreements to be illegal and in violation of § 1 of the Sherman Act. The amended supplemental complaint, in addition to the allegations in the original complaint, further charges that General Aniline had been and was engaged in a course of conduct designed to carry out and enforce the 1923 and 1926 agreements; that the prosecution by General Aniline of the New York State court action was for the purpose of giving effect to the unlawful contracts, schemes and conspiracies described in the original complaint; that by carrying out such conspiracies, contracts and combinations in restraint of trade and by its acts, General Aniline has directly, substantially and unreasonably restrained trade in pharmaceutical products. The prayer for relief seeks, in addition to a decree outlawing the agreements, to enjoin General Aniline from prosecuting the New York action or taking any other steps to enforce, or to receive the payments under, the contracts. The defendant's motions to dismiss the supplemental and the amended supplemental complaints were denied.[8] In support of its motion for summary judgment the government contends that but two questions, both purely of law, are presented: first, are the Bayer contracts of 1923 and 1926 illegal per se under the Sherman Act; and second, if they are, should General Aniline, successor to the rights of I. G. Farben, one of the contracting parties, be enjoined from carrying out or enforcing them. The defendant contends that the legality or the illegality of the 1923 and 1926 agreements is only of historical interest and is irrelevant with respect to the issue of whether General Aniline is entitled to 68 summary judgment. General Aniline urges that the government has failed to prove that it, as distinguished from I. G. Farben, its assignor, is presently violating or threatens any violation of the Sherman Act; further, that the prosecution of the law suit for the recovery of I. G. Farben's one-half share of the profits of Bayer's business in Cuba cannot be said to further any activity condemned by the anti-trust statute. I cannot agree with the defendant's position that the legality of the 1923 and 1926 contracts is of no relevancy on these motions. The determination of that issue is basic to a disposition of the matters in controversy. If the contracts are not violative of the anti-trust laws it concludes the inquiry; if they are, then we reach the other questions posed by the parties. There appears to be no question but that when the 1923 agreement was executed Leverkusen (and later its successor, I. G. Farben) and Bayer were majors in the distribution and production of pharmaceutical drugs and products throughout the world. Indeed, no issue is raised by the defendant on this score. This brings us to a consideration of the terms of the contracts. The preamble clauses recite that: (1) Bayer was formerly controlled by Leverkusen to carry on business in the United States and elsewhere but was no longer controlled by Leverkusen, the Alien Property Custodian of the United States having disposed of its shares in Bayer; (2) Bayer is the proprietor of various trademarks in the United States, including "Bayer" and "Bayer Cross", and also of trademarks and patents in the United Kingdom; (3) Bayer is entitled to various trademarks in Cuba, particularly the trademark "Aspirin" and "Bayer Cross", and also certain trademarks in South Africa; (4) Bayer obtained a judgment in its favor in Cuba concerning the trademarks "Bayer", "Bayer Cross" and "Aspirin" and is also the proprietor of a patent in Cuba; and (5) Bayer and Leverkusen, each sought the removal from the Register in the United Kingdom of certain trademarks registered in the name of the other and each also filed opposition proceedings to the application made by the other to register the "Bayer Cross" mark in the Commonwealth of Australia. The substance of the agreements deals with (1) a world wide division of the pharmaceutical market with specific areas allocated to Bayer and I. G. Farben and the exploitation of the remaining areas by a newly formed corporation in which both Bayer and I. G. Farben were to have specified interests; (2) transfer or recognition of trademarks, including future trademarks in certain areas, in favor of the party to whom an area was allocated; and (3) in the instance of Cuba, royalty payments by Bayer to I. G. Farben. The products as defined in the agreements, include, with certain exceptions, all substances used in medicine and pharmacy, perfumes, cosmetics, toilet articles, products used for agricultural or horticultural purposes, germicides, disinfectants, drugs or chemicals used for scientific purposes, and chemicals or substances used in the production of the foregoing products. 1. I. G. Farben agreed: (a) To discontinue selling and not thereafter sell or import any of the defined pharmaceutical products into the United States, Canada, the United Kingdom, Cuba,[9] Australia or South Africa, either directly or indirectly. (b) Not to contest or put in issue Bayer's title or exclusive right to any trademark registered in Bayer's name, including the trademarks "Bayer" or "Bayer Cross", in the United States, Canada, the United Kingdom and Cuba. (c) Not to license or permit others to use the name "Bayer" or "Bayer Cross" in the United States, Canada, Cuba, the 69 United Kingdom, Australia and South Africa, and also to use its best efforts to prevent others from importing therein any of the designated products bearing such trademarks or any of the trademarks belonging to Bayer. (d) To assign to Bayer any trademarks or other rights including patents covering any of the defined products possessed by it in Cuba, including the good will of the business with which the trademarks were used; further to permit Bayer to register in Cuba all new trademarks which were or might be registered by it (I. G. Farben) in other parts of the world. (e) To do its best to bring any agreements which it may have made with others to manufacture and sell any of the defined products in the United States and Canada within the terms of the current agreement. (f) To use its best efforts to obtain for itself and for Bayer the exclusive right to manufacture and/or market in the United States and Canada any new product with respect to which I. G. Farben may have entered into agreements with third persons. 2. Bayer agreed: (a) Not to engage in carrying on any business in the defined products in any other countries of the world not covered by the agreement (except as to "Aspirin" in Central and South America and Mexico). (b) To pay I. G. Farben one-half of its net profits from all business in Cuba for the next fifty years, or fifty-five years if Bayer terminated the agreement at the end of fifty years. (c) To assign and transfer to I. G. Farben all trademarks and patents owned by it in any other countries of the world not covered by the agreement with the exception of trademarks for "Aspirin" in Central and South America and Mexico. Other restrictions were imposed upon Bayer. It agreed: not to market (except in Cuba or for Winthrop Chemical Company, Inc., in which I. G. Farben had a 50% interest) chemicals or substances of any kind to be used in the production of "any of the other products mentioned in the definition of said products" as defined; not to sell or offer for sale any goods other than those under the agreement or those it might market for Winthrop, as provided in the previous clause, and other than Aspirin and compounds of Aspirin for its own account in the United States, Puerto Rico, the Philippine and Hawaiian Islands and the Panama Zone. 3. Exploitation by Bayer Products Limited, the new company: Bayer further agreed to organize a new company in the United Kingdom of Great Britain to be called "Bayer Products Limited" to exploit the defined products in the United Kingdom, New Zealand, Australia and South Africa. Bayer was to supply the required capital investment and I. G. Farben was to receive one-half of the net profits. Both Bayer and I. G. Farben agreed to assign trademarks and patents possessed by them in the United Kingdom, Australia, New Zealand and South Africa to the new company. 4. The term of the agreements is fifty years (to December, 1972), with provisions for periodic ten year renewals thereafter. In sum the agreements, which have been described as the "usual form of international cartel arrangement"[10] provide for a world wide territorial division of the pharmaceutical market. The division is as complete as words can express. Bayer was given the markets of the United States, Cuba and Canada. I. G. Farben was given all other markets except the United Kingdom, Australia, New Zealand and South Africa. The latter countries were to be exploited by the newly organized company, Bayer Products Limited. In addition to the division of the world market, trademark rights were mutually 70 transferred with respect to the territories according to the respective allocations. Thus I. G. Farben transferred or surrendered its trademark rights in the United States, Canada and Cuba, including in some instances patents and future trademarks, to Bayer, to which those countries were allocated. Bayer transferred its trademarks and patents in all remaining countries (except those allocated to Bayer Products Limited) to I. G. Farben. Finally, both I. G. Farben and Bayer agreed to transfer to the new company their respective trademark and patent rights in the United Kingdom, South Africa, Australia and New Zealand. The allocation of the world markets of the defined pharmaceutical products amongst Bayer, I. G. Farben and Bayer Products Limited is so all pervasive as to constitute a per se violation of § 1 of the Sherman Act, which condemns "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade".[11] The agreement in its essential features, at least as far as the division of territories and the exclusive use by the various corporations of the trade names "Bayer" and "Bayer Cross" and other trade names in the allocated territories is concerned, closely parallels that condemned in Timken Roller Bearing Co. v. United States.[12] Its impact in restraining trade, both domestic and foreign, is not open to serious question. It necessarily had the effect of eliminating competition both here and abroad. And while "the amount of interstate or foreign trade involved is not material * * since § 1 of the Act brands as illegal the character of the restraint not the amount of commerce affected",[13] it is clear that in fact it was substantial. The one-half share of profits of the Cuban operation alone from 1930 to 1940 amounted to more than $600,000. General Aniline, in its complaint in the state court action, asserts that the profits for the years 1941 to 1951 total more than $3,000,000. Finally, although the preamble clauses recite that the agreement is intended to settle trademark disputes between the parties, a fair reading of the related covenants of the agreement establish that their dominant purpose was to divide the world market among the participants. Mutual recognition and transfer of trademark rights were incidental to that major objective and were clearly intended to secure the more effective enforcement of the division of territories and their exploitation.[14] Here as in the Timken case, 71 the trademark provisions "`were subsidiary and secondary to the central purpose of allocating trade territories.'"[15] The agreements here went far beyond any protection required for the trademarks. I. G. Farben, in the case of Cuba, not only agreed not to contest Bayer's title to "Bayer" or "Bayer Cross" (which the agreement states had already been judicially determined in Bayer's favor) and to assign to Bayer all its trademarks and patents in Cuba, but also agreed to permit Bayer to register there all future trademarks including so-called house or establishment names registered by I. G. Farben in other parts of the world. Thus trademarks not yet in existence were yielded.[16] I. G. Farben also agreed not to license others to use the name "Bayer" or "Bayer Cross" in the United States, Canada and Cuba, countries allocated to Bayer. Significantly, I. G. Farben also undertook to bring any arrangements it may have made with others for the sale of the products in the United States and Canada within the terms of the agreement. We next consider whether the illegality of the agreement requires that General Aniline, as claimant of I. G. Farben's share of the Cuban profits, be enjoined from enforcing its claim. General Aniline not only resists the government's motion for injunctive relief but affirmatively asks that its motion for summary judgment be granted on the ground there is no showing that it is violating § 1 of the Sherman Act by restraining trade in pharmaceutical products. The substance of this argument is that (1) General Aniline and Bayer are engaged in entirely dissimilar and noncompetitive businesses General Aniline manufactures dyes, industrial chemicals, photographic equipment and supplies; Bayer manufactures pharmaceutical products, the subject matter of the agreement; (2) there is no evidence of restraint of trade in pharmaceutical products since 1941 when the consent decree was entered against Bayer, or since 1942 when the Alien Property Custodian vested the stock of General Aniline,[17] or since 1945 when I. G. Farben was seized by the Allied powers and subsequently dissolved; and (3) the maintenance of the New York law suit to recover profits does not restrain trade. The dissimilarity of business argument rather naively disregards the fact that it is I. G. Farben and not General Aniline which is the party to the illegal agreement; that I. G. Farben was in the pharmaceutical business; that it was, and either it or its successor remains, the beneficiary of the slicing of the world pharmaceutical pie. It overlooks the fact that the contract is still alive with almost twenty-five years to run and may, under its terms, be extended beyond its expiration date. Further, that I. G. Farben's rights, despite its alleged dissolution, have passed on to a successor[18] which (since neither was 72 named a defendant in this action)[19] is in a position to assert its validity and to seek enforcement of its terms.[20] It also overlooks the fact that General Aniline's right to recover under the 1931 letter of instruction is dependent upon continued performance of the agreement by I. G. Farben or its successors. When General Aniline alleges, as it does in its complaint and as it must to succeed, that its assignor has duly performed the conditions of the agreement from the years 1923 through 1951, it is saying, amongst other things, that I. G. Farben has withdrawn from competition in the areas allocated to others. Thus recovery by General Aniline of the one-half share of the Cuban profits is conditioned upon proof of continued violation of the anti-trust laws. And enforcement of any claims for its share of future profits must be similarly conditioned. General Aniline, by its state court action, has plainly demonstrated its purpose to enforce the contract which the Court finds violative of the Sherman Act. Every assertion by General Aniline of due performance by its assignor serves to give the agreement fresh vitality and to nourish it for the remainder of its term. To permit General Aniline to assert its present and future claims for I. G. Farben's share of the Cuban profits is tantamount to giving the Court's seal of approval to an illegal agreement which is destructive of our national policy of keeping open the avenues of competition; it is in effect asking the Court to condone or to disregard "perennial violation".[21] There can be little doubt that if I. G. Farben were before the Court an injunction would issue. General Aniline, which stands in I. G. Farben's shoes, is in no better position. To uphold the defendant's contention that because it is engaged in a dissimilar business from Bayer, or that its assignor is no longer in business, would at once recognize an effective means to frustrate the intent of the anti-trust laws. Under this concept all a foreign party to an illegal agreement need do is to remain beyond the jurisdiction of the Court, effect an assignment of the proceeds of the agreement (in this case to an affiliated company) and have its assignee enjoy the fruits of the illegal contract free of governmental sanction. The public policy underlying the antitrust laws is not to be frustrated so easily. Since "it is the unlawful agreement, whether it is executed or not, which violates the anti-trust laws",[22] the Court is justified in enjoining any action to realize the proceeds of the tainted agreement, particularly so where the action serves to keep the agreement alive and to encourage future violations. General Aniline urges that to bar recovery of the Cuban profits means a windfall to Bayer. Without conceding the validity of this position, the short answer is: "[A] court will not lend its aid, in any way, to a party seeking to realize the fruits of an agreement that appears to be tainted with illegality, although the result of applying that rule may sometimes be to shield one who has got something for which, as between man and man, he ought, perhaps, to pay, but for which he is unwilling to pay. "In such cases the aid of the court is denied, not for the benefit of the defendant, but because public policy demands 73 that it should be denied without regard to the interests of individual parties."[23] Other issues remain. The defendant next urges that the request for injunctive relief should be denied as an interference with the New York State courts contrary to the prohibition contained in 28 U.S.C. § 2283.[24] The answer is that § 4 of the Sherman Act grants the United States District Court jurisdiction "to prevent and restrain violations" of the Act.[25] The injunction is a necessary incident to the Court's power in order to effectuate its judgment that the Bayer contracts are illegal.[26] Simply to declare the agreement illegal and at the same time permit recovery of the proceeds would render the decree of the court quite sterile. The purpose of the decree is not only to prevent repetition of past offenses but also "to prevent the defendants from acquiring any of the fruits of the condemned project."[27] Moreover, jurisdiction was expressly reserved under the terms of the original decree[28] in this action and long before the filing by General Aniline of the state court suit. And it should not go unnoticed that the New York State Court of Appeals invited, at least inferentially, the disposition of the issues by the federal court.[29] Finally, the defendant contends that even assuming the illegality of certain provisions of the agreement, those sections which relate to Cuba and payments of Cuban profits to I. G. Farben are legal and severable from the balance of the agreement: that in any event whether or not the parties intended severability is a question of fact which precludes the grant of summary judgment. I cannot agree. This is a balanced agreement to effect a division of world markets with reciprocal covenants by each of the parties to achieve that purpose. The various mutual covenants with respect to territorial allocations, including Cuba to Bayer, are all interrelated parts of the plan. Thus to cite one example, Bayer agreed "so long as the arrangements covered by this Agreement are subsisting", it would not "directly or indirectly carry on * * any business in the said products in any other countries of the world not covered by the terms of this Agreement", and by the same clause also agreed to assign all its trademarks and patents in any other countries of the world not covered by the agreement. The removal of one covenant from the agreement would *74 cause the fall of the entire structure which the parties built. Bayer's obligation to pay royalties is interlaced with all other obligations in the agreement its own as well as those of I. G. Farben. To view the Cuban covenant in the light of the staking out of the world market, with corresponding clearances and transfer of trademarks to each allocated segment, as severable from all others is to fly in the face of reality. Nothing in the agreement supports the assumption that the parties so intended. On the contrary, a fair reading of the whole instrument compels the conclusion that it is an entire and integrated one.[30] The plaintiff's motion for summary judgment is granted and the defendant's cross motion is denied. The government is entitled to a decree (1) declaring the agreements to be unlawful; (2) enjoining the defendant General Aniline from enforcing the agreements either directly or indirectly; and (3) enjoining the defendant from continuing or instituting any litigation looking towards their enforcement. The plaintiff is requested to submit within ten days proposed findings of fact and conclusions of law based upon the foregoing, and either party may propose additional findings to include undisputed facts based upon the exhibits, pleadings and admissions. Thereafter, upon the filing of the Court's findings of fact and conclusions of law a decree may be proposed upon the settlement of which the parties, if they so desire, will be heard. NOTES [1] 15 U.S.C.A. § 1. [2] United States v. The Bayer Company, Inc., D.C.S.D.N.Y., Civ. 15-364, September 5, 1941. [3] When, in 1929, I. G. Farben organized the American I. G. Chemical Corporation, it guaranteed payment of principal and interest of the new company's initial bond issue of $30,000,000. It also paid $10,000,000 in cash to American I. G. Chemical Corporation and transferred to it 58,000 shares of the stock of General Aniline Works, Inc. and a 50% stock interest in the Winthrop Chemical Company, a Delaware corporation engaged in the prescriptive pharmaceutical business. In March, 1930 American I. G. Chemical Corporation acquired the remaining outstanding shares of General Aniline Works, Inc. On October 31, 1939 the latter company was merged with American I. G. and the name of the latter was changed to General Aniline & Film Corporation, the defendant herein. [4] General Aniline & Film Corp. v. Bayer Co., Inc., 188 Misc. 929, 64 N.Y.S.2d 492. [5] Id., 1st Dept., 281 App.Div. 668, 117 N.Y.S.2d 497. [6] Id., 305 N.Y. 479, 113 N.E.2d 844. See Derenberg, The Impact of the Antitrust Laws on Trade-Marks In Foreign Commerce, 27 N.Y.U.L.Rev. 414, 449; Note, Consent Decrees and Absent Cartel Participants, 56 Yale L.J. 396. [7] Pursuant to 15 U.S.C.A. § 5. [8] United States v. Bayer Co., Inc., D.C. S.D.N.Y., 105 F.Supp. 955; Id., Civ. 15-364, decided October 16, 1952 (unreported). [9] The agreement specified that "Cuba" shall be deemed to include the British possessions of the West Indies and the Islands of the West Indies, except Puerto Rico and the Virgin Islands. [10] General Aniline & Film Corp. v. Bayer Co., Inc., 188 Misc. 929, 930, 64 N.Y.S.2d 492, 494. [11] United States v. Timken Roller Bearing Co., D.C.N.D.Ohio, 83 F.Supp. 284, 307, 310, affirmed 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199; United States v. National Lead Co., D.C.S.D.N.Y., 63 F.Supp. 513, 523, affirmed 332 U.S. 319, 67 S.Ct. 1634, 91 L.Ed. 2077; United States v. American Tobacco Co., 221 U.S. 106, 182, 31 S.Ct. 632, 55 L.Ed. 663; United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271, affirmed 175 U.S. 211, 241, 20 S. Ct. 96, 44 L.Ed. 136; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 427, 439-445, 447-448; United States v. Imperial Chemical Industries, Ltd., D.C.S.D.N.Y., 100 F.Supp. 504, 593; United States v. General Dyestuff Corp., D.C.S.D.N.Y., 57 F.Supp. 642, 647. [12] 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199. [13] United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224, note 59, 60 S.Ct. 811, 845, 84 L.Ed. 1129. [14] The methods here adopted to restrain competition have been aptly described as follows: "In implementing a division of world markets, some cartels have parcelled among their members rights in a trade-mark on a geographical basis. All the parties sell the same product under the same mark, one operating in the United States, another perhaps in South America, and others in various parts of Europe. The apportionment of territorial rights in a mark can be an effective device to prevent shipment of the trademarked product from one market to another. Indeed, under such an arrangement the courts can be used to enforce and police the cartel restriction." Handler, Trade-marks and Anti-Trust Laws, 38 T.M.Rep. 387, 389. Cf. United States v. Imperial Chemical Industries, D.C.S.D.N.Y., 100 F.Supp. 504, 518. "Not only are the patents and processes agreements susceptible to being apt instruments of territorial divisions, but the very first such agreement was deliberately entered into with a view to effectuating that illegal purpose." [15] Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598, 71 S.Ct. 971, 975, 95 L.Ed. 1199. [16] Cf. United States v. National Lead Co., D.C.S.D.N.Y., 63 F.Supp. 513, 523-524. [17] In 1942 and 1943, the Alien Property Custodian vested approximately 97% of General Aniline's stock upon a finding that it was owned by I. G. Farben, an enemy national. 7 Fed.Reg. 3148, 8 Fed. Reg. 2453. [18] On February 10, 1954, the Tripartite I. G. Farben Control Group ruled the agreements had not been terminated and that the rights and obligations of I. G. Farben thereunder had been transferred to Farbenfabriken Bayer Aktiengesellschaft. The permanency of the agreements is underscored by a provision that "I. G. Farben" also includes: its successors or assigns, whether by operation of law, merger, fusion, consolidation, and any present or future constituent or subsidiary firms. Further: "In the event that any present or future constituent or subsidiary firm or corporation shall cease to form a part of or be included in I. G. [Farben], this agreement shall nevertheless remain in full force and effect between New York [Bayer] and I. G. [Farben], and shall continue to remain binding upon such constituent or subsidiary firm or corporation." Paragraph 4 of the 1926 Agreement modifying Paragraph 23 of the 1923 Agreement. [19] General Aniline & Film Corp. v. Bayer Co., Inc., 305 N.Y. 479, 113 N.E.2d 844. [20] I.e., until there is a determination to the contrary. [21] Cf. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 74, 31 S.Ct. 502, 55 L.Ed. 619. [22] Edward Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394, 397, note 3, 67 S.Ct. 416, 418, 91 L.Ed. 374. [23] Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U.S. 227, 262, 29 S.Ct. 280, 292, 53 L.Ed. 486. [24] "A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S.C. § 2283. [25] 15 U.S.C.A. § 4. [26] Cf. United States v. Bates Valve Bag Corp., D.C.D.Del., 39 F.2d 162, 165. [27] Mr. Justice Douglas (dissenting only as to the extent of the decree) in United States v. National Lead Co., 332 U.S. 319, 367, 67 S.Ct. 1634, 91 L.Ed. 2077. And see United States v. Crescent Amusement Co., 323 U.S. 173, 188, 65 S.Ct. 254, 89 L. Ed. 160. [28] Paragraph V of the consent decree, United States v. The Bayer Company, Inc., D.C.S.D.N.Y., Civ. No. 15-364, September 5, 1941. [29] General Aniline & Film Corp. v. Bayer Co., Inc., 305 N.Y. 479, 485, 113 N.E.2d 844, 847. "A question that naturally presents itself is where the issues involved should first be tried. Its answer depends, of course, upon considerations of comity and orderly procedure. Accordingly, should a stay of the present action be sought, it will be pertinent to consider among other matters whether it is in the state or in the federal forum that a more complete disposition of the issues may be obtained and whether it is the federal or the state court that possesses a greater familiarity and expertise with the trial of such issues." [30] Cf. Edward Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394, 67 S.Ct. 416, 91 L.Ed. 374; Chicago Title & Trust Co. v. Fox Theatres Corp., 2 Cir., 91 F.2d 907, 909; Manhattan Life Ins. Co. v. Prussian Life Ins. Co., 2 Cir., 296 F. 39, 41; Schminke Milling Co. v. Diamond Bros., 8 Cir., 99 F.2d 467, 471; Rosenthal Paper Co. v. National Folding Box & Paper Co., 226 N.Y. 313, 320, 123 N.E. 766; 6 Corbin on Contracts § 1520.	{ "pile_set_name": "FreeLaw" }
No. 03–06–0186 ______________________________________________________________________________ Filed July 10, 2007. IN THE APPELLATE COURT OF ILLINOIS THIRD DISTRICT A.D., 2007 SOLAI & CAMERON, INC. a/k/a SOLAI ) Appeal from the Circuit Court of & CAMERON TECHNOLOGIES and ) the 12th Judicial Circuit COMTEL TECHNOLOGIES, ) Will County, Illinois, PLAINFIELD COMMUNITY ) CONSOLIDATED SCHOOL DISTRICT ) Nos. 02–CH–1303 202 for the use and benefit of SOLAI & ) 02–CH–1304 CAMERON, ) 02–L–00652 ) 02–L–627 Plaintiffs, ) 03– CH–0001 ) 03–CH–1577 v. ) 03–CH–1665 ) 03–CH–1715 PLAINFIELD COMMUNITY ) 03–CH–1845 CONSOLIDATED SCHOOL DISTRICT ) 03–CH–1851 NO. 202, PAUL H. SCHWENDENER, ) 03–CH–509 INC. and AMERICAN HOME ) 04–CH–0578 ASSURANCE COMPANY, ) 04–CH–0579 ) 04–CH–1573 Defendants ) 05–LM–0046, cons. ) (Paul H. Schwendener, Inc., Counterplaintiff ) and Third-Party Plaintiff-Appellant v. ) Solai & Cameron, Inc., Counterdefendant, ) Honorable and Hartford Fire Insurance Company, ) Herman S. Haase, Third Party Defendant-Appellee). ) Judge Presiding. JUSTICE WRIGHT delivered the opinion of the court: Paul H. Schwendener, Inc. (PHS), appeals from an order of the circuit court of Will County granting partial summary judgment in favor of Hartford Fire Insurance Company (Hartford) and Solai & Cameron, Inc. (S&C).1 We affirm and remand. I. BACKGROUND On April 5, 2001, Plainfield Consolidated School District No. 202 (Plainfield) hired PHS as the general contractor to build Plainfield’s tenth and eleventh elementary school facilities, a fourth middle school facility, and additions to the second high school facility. The general contract required PHS to substantially complete all of the school projects by July 15, 2002. PHS entered into subcontracts dated June 25, 2001, with S&C for the electrical work on the fourth middle school facility (Fourth Middle School Project) and the second high school additions (Second High School Project). Section 2.c. of the S&C electrical subcontracts provides, in relevant part: “If during the course of the project, this subcontractor continually fails to properly execute his responsibilities, the General Contractor shall issue a three (3) day written notice identifying this condition. If after this three (3) day notice is issued, subcontractor continues to fail in properly executing his responsibilities, the General Contractor shall have the right to properly complete this subcontract with its own or other forces. All costs for the General Contractor to then complete this subcontract shall be charged to this subcontractor.” S&C, as “Contractor,” secured performance bonds dated June 18, 2001, from Hartford, as “Surety,” corresponding to each electrical subcontract, for the benefit of PHS, as “Owner,” under the 1 S&C joined in Hartford’s motion for partial summary judgment and the partial summary judgment ruling was also in favor of S&C, with regard to the surety bond issues. PHS and S&C’s claims against each other remain pending in the circuit court, as well as claims by other subcontractors in the underlying consolidated causes of action. 2 terms of the performance bonds. The performance bonds provide, in relevant part: “3 If there is no Owner Default, the Surety’s obligation under this bond shall arise after: 3.1 The Owner has notified the Contractor and the Surety at its address * that the Owner is considering declaring a Contractor Default and has requested and attempted to arrange a conference with the Contractor and the Surety to be held not later that fifteen days after receipt of such notice to discuss methods of performing the Construction Contract. If the Owner, the Contractor and the Surety agree, the Contractor shall be allowed a reasonable time to perform the Construction Contract, but such an agreement shall not waive the Owner’s right, if any, subsequently to declare a Contractor Default; and 3.2 The Owner has declared a Contractor Default and formally terminated the Contractor’s right to complete the contract. Such Contractor Default shall not be declared earlier than twenty days after the Contractor and the Surety have received notice as provided in Subparagraph 3.1; and 3.3 The Owner has agreed to pay the Balance of the Contract Price to the Surety in accordance with the terms of the Construction Contract or to a contractor selected to perform the Construction Contract in accordance with the terms of the contract with the Owner. 4. When the Owner has satisfied the conditions of Paragraph 3, the Surety shall promptly and at the Surety’s expense take one of the following actions: 3 4.1 Arrange for the Contractor, with consent of the Owner, to perform and complete the Construction Contract; or 4.2 Undertake to perform and complete the Construction Contract itself, through its agents or through independent contractors; or 4.3 Obtain bids or negotiated proposals from qualified contractors acceptable to the Owner for a contract for performance and completion of the Construction Contract, arrange for a contract to be prepared for execution by the Owner and the contractor selected with the Owner’s concurrence, to be secured with performance and payment bonds, executed by a qualified surety equivalent to the bonds issued on the Construction Contract, and pay to the Owner the amount of damages * in excess of the Balance of the Contract Price incurred by the Owner resulting from the Contractor’s default; or 4.4 Waive its right to perform and complete, arrange for completion, or obtain a new contractor and with reasonable promptness under the circumstances: .1 After investigation, determine the amount for which it may be liable to the Owner and, as soon as practicable after the amount is determined, tender payment therefor to the Owner; or .2 Deny liability in whole or in part and notify the Owner citing reasons therefor. 5. If the Surety does not proceed as provided in Paragraph 4 with reasonable promptness, the Surety shall be deemed to be in default on this Bond fifteen days after 4 receipt of an additional written notice from the Owner to the Surety demanding that the Surety perform its obligations under this Bond, and the Owner shall be entitled to enforce any remedy available to the Owner. If the Surety proceeds as provided in Subparagraph 4.4, and the Owner refuses the payment tendered or the Surety has denied liability, in whole or in part, without further notice the Owner shall be entitled to enforce any remedy available to the Owner.” The working relationship between PHS and S&C began to deteriorate in March 2002. By letter dated March 20, 2002, PHS sent a letter to S&C, with a copy to Hartford, regarding S&C’s inadequate performance on both electrical subcontracts. The letter contained the three-day notice to comply required by section 2.c. of the S&C electrical subcontracts. The letter also stated, “please note that a copy of this notice to comply has been sent to your bonding company as required in Section 3.1 of the Performance Bond and serves as their notification of default.” On March 25, 2002, PHS sent a second letter to S&C, with no indicated copy to Hartford, concerning S&C’s failure to properly perform on both electrical subcontracts. This letter threatened to remove S&C from both school projects unless substantial improvements were made in the following week. The letter discussed a March 27, 2002, meeting to review S&C’s progress on the projects. PHS and Hartford communicated by telephone on April 2, 2002, regarding S&C’s performance on the electrical subcontracts. On April 12, 2002, PHS retained Nu-Line Electric Co., Inc. (Nu-Line), to consult on the status of S&C’s unfinished work. Pursuant to the terms of the electrical subcontract, by letter dated May 1, 2002, PHS notified S&C it had 24 hours to properly man and equip the Second High School Project or PHS would 5 complete the electrical subcontract. PHS sent a copy of this letter to Hartford. On May 2, 2002, Hartford’s claim representative telephoned PHS and agreed to discuss the situation with S&C. By letter of May 6, 2002, Hartford indicated to PHS that S&C would meet the deadlines and “make any necessary improvements to complete the remaining work on both projects.” On May 9, 2002, PHS sent a letter to S&C, with a copy to Hartford, acknowledging that S&C would be expected to complete all electrical work according to the previous schedule. The letter also indicated that PHS would be “supplementing” S&C’s work force on the Fourth Middle School Project by using additional electricians to perform designated work. PHS also sent a letter to Hartford on May 9, 2002, informing Hartford that S&C “continues to fail to meet” scheduled deadlines. PHS identified Nu-Line as the company selected to supplement the electrical work on the Fourth Middle School Project in a May 14, 2002, letter to S&C. PHS did not send a copy of this letter to Hartford. The May 14, 2002, letter states, in part: “Also, I told you Nu-Line would continue to take over areas of your work responsibility whenever we are certain your crew is not able to start areas of work on time.” (Emphasis in original.) PHS and Nu-Line entered into a subcontract dated May 21, 2002, for electrical work on the Fourth Middle School Project with terms similar to the S&C electrical subcontract. Nu-Line signed the subcontract on May 28, 2002, and PHS signed on June 3, 2002. On June 2, 2002, PHS back charged S&C’s subcontract balance. Both S&C and Nu-Line continued to work on the Fourth Middle School Project until June 7, 2002. On June 7, 2002, PHS terminated S&C from the Fourth Middle School Project. The termination letter identifies six areas where S&C failed to satisfy the terms of the electrical subcontract and concludes: “ the work will be completed by Paul H. Schwendener, Inc. by whatever means necessary to fulfill the requirements of 6 the Subcontract Agreement and the project schedule.” PHS notified Hartford of S&C’s termination with a copy of the June 7, 2002, letter. On June 10, 2002, Nu-Line began supplementing S&C’s work on the Second High School Project. On June 15, 2002, PHS sent a handwritten fax to S&C terminating S&C from the Second High School Project. PHS did not send Hartford a copy of this faxed termination notice. In a letter to PHS dated June 20, 2002, Hartford confirmed the receipt of a copy of the June 7, 2002, letter terminating S&C from the Fourth Middle School Project. In Hartford’s letter to PHS, Hartford stated: “Please note that although Hartford does not object to your decision of completing the work [on the Fourth Middle School Project], I refer you to Sections 3 and 4 of the Bond, which lists the Owner and Surety’s obligations under the Bond. I am sure you understand that Hartford must reserve its rights and defenses in connection with this matter.” Nu-Line and PHS entered into a subcontract dated June 21, 2002, for the Second High School Project. This subcontract was signed by Nu-Line on June 27, 2002, and by PHS on July 3, 2002. On June 24, 2002, PHS back charged S&C by deductive change order. Also, on June 24, 2002, a telephone conference took place between Hartford’s claim representative and counsel for PHS concerning both projects and S&C’s termination from the Second High School Project. By letter dated June 25, 2002, counsel for PHS notified Hartford of S&C’s termination from the Second High School Project and demanded Hartford’s performance on the performance bond. On June 26, 2002, counsel for PHS sent a second letter to Hartford, demanding performance on the bonds for both the Second High School Project and the Fourth Middle School 7 Project. On July 1, 2002, PHS submitted two sworn written applications and certificates for payment to the Plainfield School District requesting the school district pay PHS directly for “electrical management” of the Fourth Middle School Project and the Second High School Project. PHS’s sworn applications stated the electrical work on each project was “100%” complete and the balance due S&C to be zero. On July 18, 2002, PHS allowed qualified representatives of Hartford to inspect the school project sites to determine the status of both projects. The inspections disclosed the electrical work on both projects substantially completed at the time of the inspections. On August 21, 2002, PHS requested Hartford’s performance on the bonds, and repeated this request for performance on October 2, 2002. PHS again renewed the request on October 16, 2002, when PHS reported debt to Nu-Line of approximately $1,700,000, and demanded immediate payment of $500,000 from Hartford. The litigation in this case began on July 16, 2002, when S&C filed a complaint in the circuit court of Will County against PHS, the school district, and PHS’s bonding company, seeking payment for work performed and other relief. On October 22, 2002, PHS filed a counterclaim against S&C and a third-party complaint against Hartford. Hartford denied the allegations of PHS’s third-party complaint. On December 15, 2004, Hartford filed a motion for partial summary judgments seeking dismissal of counts V, X, XI, XII, XVII, XXII, XXIII, and XXIV, of PHS’s fifth third-party complaint against Hartford, relating solely to the performance bond issues. In support of the motion for partial summary judgment, Hartford argued that PHS failed to meet the requirements of 8 paragraphs 3.2 and 3.3 of the performance bond, which negated Hartford’s obligation to pay as surety on the Fourth Middle School Project. Hartford also claimed PHS “materially impaired” Hartford’s rights by replacing S&C as the original electrical subcontractor without notice to Hartford as the surety. Hartford asserted the actions of PHS nullified the performance bond. Since S&C and Hartford shared the same rights and defenses relating to the performance bonds, the circuit court allowed S&C to join in Hartford’s motion for partial summary judgment. On February 7, 2006, the circuit court entered a written order, finding a question of material fact existed as to paragraph 3.1 of the performance bonds, which was not raised in Hartford’s motion for partial summary judgment, and did not rule on that issue. However, the court did find that PHS failed to comply with the provisions of paragraph 3.2 and 3.3 of the performance bonds, and thereby nullified Hartford’s right to investigate and act as set forth in paragraph 4 of the performance bonds. The circuit court reasoned: “In this case[,] a review of the documents, correspondence and contracts demonstrates that conditions 3.2 and 3.3 were not satisfied. In particular, PHS sent the notice of termination on June 7, 2002, while the contract that PHS entered into with Nuline [sic.] Electric for completion of S & C’s work was signed on May 21, 2002. Thus, Hartford had no time to investigate and perform under the conditions of its bond. * Because conditions precedent as set out in paragraphs 3.2 and 3.3 were not satisfied, Hartford is entitled to treat the bonds herein as null and void.” The circuit court further determined that a review of the pleadings, exhibits and arguments 9 failed to sustain PHS’s arguments of waiver and estoppel against Hartford’s assertion of PHS’s failure to comply with the conditions precedent of the performance bonds. The circuit court therefore granted partial summary judgment in favor of Hartford. The circuit court further held: “With regard to S&C joining the motion, the court enters the same ruling, but only with regard to the surety bond issues.” The circuit court made an express finding pursuant to Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a)), allowing an interlocutory appeal. PHS timely appealed. Additional facts will be discussed as necessary to an analysis of the issues. II. ANALYSIS The paramount issue in this appeal is whether the circuit court erroneously granted partial summary judgment in favor of Hartford and S&C. PHS challenges the circuit court’s decision to grant partial summary judgment in favor of Hartford and S&C on several grounds. First, PHS argues the circuit court erroneously granted partial summary judgment because genuine issues of material fact exist between the parties. Second, PHS argues the electrical subcontracts granted PHS superior rights to complete the electrical work when PHS terminated S&C. Third, PHS denies the actions of PHS nullified Hartford’s obligations under the performance bonds and contends that PHS substantially complied with paragraph 3 of the performance bonds. Fourth, PHS claims estoppel prevents Hartford’s defenses. Fifth, PHS claims Hartford waived the right to mitigate damages under the terms of the performance bonds. Summary judgment is proper when the pleadings, depositions and admissions, together with any affidavits on file, viewed in the light most favorable to the nonmoving party, show there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 735 10 ILCS 5/2–1005(c) (West 2004); Happel v. Wal-Mart Stores, Inc., 199 Ill. 2d 179, 186 (2002). The entry of summary judgment should only be employed when the right of the moving party is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). We review a circuit court’s summary judgment ruling de novo. Delaney v. McDonald’s Corp., 158 Ill. 2d 465, 467 (1994). A. Whether Genuine Issues of Material Fact Exist We first address PHS’s argument that the circuit court erroneously granted partial summary judgment because genuine issues of material fact exist between the parties. When the circuit court entered the written order, it found a question of material fact existed as to paragraph 3.1 of the performance bonds and did not rule on that issue, but granted partial summary judgment in favor of Hartford, finding PHS violated the terms of paragraphs 3.2 and 3.3 of the performance bonds. Therefore, we only review whether genuine issues of material fact exist with regard to the circuit court’s ruling on paragraphs 3.2 and 3.3 of the performance bonds. The parties do not dispute the material terms of the performance bonds or the S&C electrical subcontracts. However, PHS asserts that a comparison of the language of the performance bonds with the language of the S&C electrical subcontracts reveals conflicting methods for the completion of electrical work following S&C’s termination. According to PHS, the S&C electrical subcontracts granted PHS superior authority to complete the projects with a replacement subcontractor. Thus, PHS contends, summary judgment was improper because the effect of the contracts on each other is disputed, creating a genuine issue of material fact. We conclude the circuit court correctly viewed the relevant material facts as undisputed. The rights of PHS, S&C, and Hartford must be determined by construing the terms of the undisputed 11 contracts, thereby involving only a matter of law for the circuit court to decide. Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 62-63 (2006). Consequently, we find no genuine issues of material fact to preclude the circuit court’s consideration of whether Hartford and S&C were entitled to partial summary judgment as a matter of law. B. Whether the S&C Subcontracts Granted PHS Superior Rights PHS next argues the circuit court erred in granting partial summary judgment in favor of Hartford and S&C. Hartford relied on its rights under paragraphs 3, 4, and 5 of the performance bonds in seeking partial summary judgment. In contrast, PHS relied on its authority under section 2.c. of the S&C electrical subcontracts in opposing Hartford’s motion for partial summary judgment. On appeal PHS contends the performance bonds incorporated the S&C electrical subcontracts by reference. Thus, according to PHS, the terms of the S&C electrical subcontracts granted PHS the right to hire Nu-Line and superceded Hartford’s right to select the replacement subcontractor under the performance bonds. Hartford responds by asserting the performance bonds allow only Hartford the right to mitigate damages and created the exclusive contractual authority for Hartford to determine the method of completing the electrical work on the projects. Generally, when a performance bond incorporates the construction contract by reference, the provisions of the contract become the provisions of the bond, requiring the performance bond and the contract it secures to be read as one instrument. Lake View Trust & Savings Bank v. Filmore Construction Co., 74 Ill. App. 3d 755, 757 (1979). However, the general rule fails in this case on two grounds due to the unique language of the contracts and the unique chronology of the events. First, we address the unique language of the electrical subcontracts. Normally, courts construe the terms of a construction contract to become incorporated into the performance bond because the 12 bond and the construction contract mutually refer directly to each other. See Lake View Trust & Savings Bank, 74 Ill. App. 3d at 757. This is not the situation in the case at bar. Section 12 of the S&C electrical subcontracts deleted any requirement for S&C to obtain a performance bond at all. PHS’s declaration of its superior authority created by the electrical subcontracts over the performance bonds, is misplaced. Second, each performance bond is dated June 18, 2001, and contains a general reference to the corresponding S&C electrical subcontract. However, each of the S&C electrical subcontracts is dated June 21, 2001. Thus, the performance bonds predate the electrical subcontracts. Simply stated, the June 18, 2001, performance bonds refer to nonexistent electrical subcontracts. Accordingly, PHS cannot rely on the terms of the June 21, 2001, electrical subcontracts to extinguish Hartford’s rights under the performance bonds. A savvy owner should not be allowed to eviscerate a surety’s options and protections with language selected later in a subsequent contract with another party. This is especially true when, as here, the language of the subsequent contract has been argued to broaden the authority of PHS and to diminish the right of Hartford to mitigate the damages. To decide this issue in any other way strips Hartford of its protection, set forth in the performance bonds, which were the contracts reached first in time in this case. We hold the surety’s rights arising out of the performance bonds cannot be diminished by the owner’s authority under the terms of subcontracts that became effective after the performance bonds. Accordingly, in this case, the terms of the performance bonds supercede the terms of the S&C electrical subcontracts. 13 C. Whether the Actions of PHS Nullified the Performance Bonds Having determined the terms of the performance bonds control the rights and obligations of Hartford and PHS for both the termination and the subsequent replacement of S&C with Nu-Line, we now consider whether PHS’s actions nullified Hartford’s obligations under the performance bonds. At issue, therefore, is the application of the terms of the performance bonds. A performance bond is a contract, and contract principles apply in interpreting a performance bond. See Mountbatten Surety Co. v. Szabo Contracting, Inc., 349 Ill. App. 3d 857, 868 (2004) (noting that “an indemnity agreement is a contract and is subject to the rules for interpreting contracts”). “Under general contract principles, a material breach of a contract provision by one party may be grounds for releasing the other party from his contractual obligations.” Mohanty, 225 Ill. 2d at 70. A surety is not bound beyond the express terms of the performance bond and, when interpreting a performance bond, the court must look solely to the unambiguous language of the bond as evidence of the intentions of the parties. Board of Local Improvements South Palos Township Sanitary District ex rel. North Side Tractor Sales Co. v. St. Paul Fire & Marine Insurance, 39 Ill. App. 3d 255, 257-58 (1976). We begin by reviewing the terms of the performance bonds. Paragraph 3 of each performance bond unambiguously sets forth three specific requirements for PHS to satisfy before terminating S&C as the electrical subcontractor from each project and triggering Hartford’s obligations under the performance bonds. First, paragraph 3.1 required PHS to notify both S&C and Hartford of PHS’s intent to declare a default and then attempt to arrange a conference between the parties. Compliance with paragraph 3.1 is not an issue in this appeal. Second, paragraph 3.2 required PHS to wait 20 days, after providing the notice of default, before terminating S&C. Third, paragraph 3.3 required PHS to 14 agree to pay the contract balance to either Hartford or a replacement subcontractor. Only after PHS satisfied each of these three conditions could PHS terminate S&C without adverse consequences to the benefit of the performance bonds. If a proper declaration of default and subsequent termination takes place under paragraph 3 of the performance bonds, then paragraph 4 provides Hartford with only four options, including replacement, for completing the electrical work by: (1) arranging for completion with S&C, but only with the consent of PHS; (2) exercising Hartford’s “right to perform” the work itself, without PHS’s consent or approval required; (3) initiating and arranging for bids from new subcontractors approved by PHS, and then allowing the replacement subcontractor to sign a new contract with PHS, with limitations on the surety’s risk; or (4) initiating an investigation to determine the amount of payment. The structure of the performance bonds distinguished the act of termination from the act of replacement. Accordingly, these issues are treated in different paragraphs of the performance bonds, which specifically require that termination, as set forth in paragraph 3.2 of the bonds, must precede the option of replacement, as set forth in paragraph 4.3 of the same performance bonds. It is of vital importance to recognize that termination is a right available only to PHS under paragraph 3 of the bonds. Similarly, replacement is a form of mitigation available only to Hartford under the provisions of paragraph 4. The performance bonds balance the rights of both owner and surety. After clarifying the terms of the performance bonds, as well as the parties’ corresponding rights and responsibilities, we now consider whether PHS substantially complied with the performance bonds or whether PHS’s actions nullified the performance bonds. We address each school project separately. 1. Fourth Middle School Project 15 The circuit court determined, as a matter of law, that PHS failed to satisfy paragraphs 3.2 and 3.3 of the performance bond and that PHS’s actions caused the terms of the performance bond to be “null and void.” PHS argues that the circuit court erred in granting partial summary judgment in favor of Hartford and S&C on the Fourth Middle School Project because PHS substantially complied with these paragraphs of the performance bond. Therefore, we must consider whether PHS complied with paragraph 3 of the performance bond with regard to the Fourth Middle School Project. To reiterate, we have previously determined that the terms of the performance bond controls the rights and obligations of Hartford and PHS regarding termination and replacement of S&C. The performance bond requires a specific sequence of conditions must take place before Hartford is required to exercise one of its options set forth in paragraph 4 of the bond, which include the replacement of S&C. Importantly, termination as outlined in paragraph 3.2 must take place before Hartford may be expected to initiate the process of replacement as allowed in paragraph 4.3 of the performance bond. We examine the history of the Fourth Middle School Project and the written correspondence of the parties to determine if PHS acted to terminate S&C before the replacement of S&C occurred. Over the course of construction on the Fourth Middle School Project, PHS had escalating concerns with the timeliness of S&C’s electrical work. On March 20, 2002, PHS notified Hartford that PHS was considering declaring S&C in default as required by paragraph 3.1 of the performance bond. On March 25, 2002, PHS sent a second letter to S&C, requesting S&C to correct its work deficiencies, within the following week, to “avoid termination from the project.” The letter does not indicate a copy was sent to Hartford. Following the March correspondence, PHS waited approximately 20 days before retaining Nu-Line as a consultant on April 12, 2002, while allowing 16 S&C to stay on the project. On May 9, 2002, Nu-line began to supplement S&C’s sluggish electrical construction but S&C remained the principal electrical subcontractor. On May 21, 2002, PHS redefined Nu-Line’s duties and signed a subcontract with Nu-Line for the completion of electrical work previously the subject of S&C’s subcontract. By letter dated June 7, 2002, PHS terminated S&C from the Fourth Middle School Project. Hartford received a copy of the termination letter which stated, in part, “the work will be completed by Paul H. Schwendener, Inc. by whatever means necessary to fulfill the requirements of the Subcontract Agreement and the project schedule.” Examining the issues related to paragraph 3.2 only, we note S&C’s termination from the Fourth Middle School Project took place on June 7, 2002, but replacement took place on May 21, 2002, with the execution of the Nu-Line subcontract. The trial court’s ruling recognized termination must take place first in time before replacement. As to the Fourth Middle School Project, we agree with the trial court that the replacement of S&C occurred before termination. Technically, we disagree that this was a violation of paragraph 3.2 of the performance bond, but we agree with the trial court’s finding that PHS’s decision to replace S&C before terminating S&C violated paragraph 4 of the performance bond, which nullified Hartford’s duty to act. The trial court’s order granting partial summary judgment also addressed the parties’ arguments regarding paragraph 3.3 of the performance bond for the Fourth Middle School Project. Necessarily, we also continue our analysis of the trial court’s order by examining whether PHS met the requirements of paragraph 3.3 of the performance bond. Paragraph 3.3 of the performance bond required PHS to agree to pay the surety the contract price or agree to pay the replacement contractor that has been selected, subject to the restrictions of the performance bond itself. Significantly, PHS admits it did not agree to pay Hartford the balance of the subcontract as required by paragraph 3.3 17 of the performance bond. PHS contends it was not obligated to make this offer because Hartford did not specifically request PHS to pay Hartford the balance due on the subcontract. We reject PHS’s argument based on a plain reading of the performance bond. Paragraph 3.3 of the performance bond clearly places the affirmative duty on PHS to agree to pay the contract balance without any initial request from Hartford. PHS did not agree to pay and, therefore, PHS failed to comply with the terms of paragraph 3.3 of the performance bond. Next, we review the trial court’s determination that PHS’s actions caused the terms of the performance bond to be “null and void.” For an understanding of the trial court’s ruling, it is necessary to discuss Dragon Construction, Inc. v. Parkway Bank & Trust, 287 Ill. App. 3d 29 (1997), as it applies to the timing of the events with the replacement subcontractor, Nu-Line, in this case. Noting the sequence of events, which demonstrate PHS replaced S&C before PHS terminated S&C, Hartford directs our attention to Dragon in support of its argument that PHS’s actions compromised Hartford’s ability, as surety, to mitigate its damages as contemplated by the performance bond rendering the agreement null and void. In Dragon, the property owners hired a contractor to build a hardware store for them. The performance bond incorporated the terms of the construction contract, which required seven days’ written notice to both the contractor and the surety before the property owners could terminate the contractor from the project. Due to slow progress, the owners in Dragon terminated the contractor and hired a replacement contractor on the same day. The owners then immediately notified the surety that the original contractor had been both terminated and replaced. Consequently, the surety did not receive the required seven days’ written notice of the termination before the replacement contractor was hired. Additionally, the owners in Dragon hired 18 the replacement contractor without taking competitive bids as required by the surety bond. The appellate court in Dragon, affirmed the circuit court’s order, which found the owners’ conduct rendered the surety bond null and void and granted summary judgment in favor of the surety. The court in Dragon reasoned: “We find the [owners’] failure to provide adequate notice of Dragon’s termination and their hiring of a successor contractor before [the surety] received the late notice stripped [the surety] of its right to limit its liability and constituted a material breach of contract which rendered the surety bonds null and void.” Dragon Construction, Inc., 287 Ill. App. 3d at 34. Dragon is not directly on point with the case at bar, since paragraph 3.2 of the S&C performance bond does not require any notice to the surety regarding PHS’s decision to declare a default and terminate S&C. The bond requires PHS provide only a notice of intent to default under paragraph 3.1 of the bond and then wait 20 days as required by paragraph 3.2 of the bond. However, there are other similarities that cause the analysis in Dragon to be persuasive. In this case, the conduct of PHS acted to strip Hartford of its rights, just as the actions of the contractor in Dragon stripped the surety of its options, to mitigate. PHS’s decision to hire Nu-Line before declaring S&C in default and terminating S&C from the project extinguished the options available to Hartford under paragraphs 4.1, 4.2, and 4.3 of the performance bond, effectively forcing Hartford to forgo these options. The only option that survived PHS’s decision to terminate S&C was Hartford’s option to investigate and then agree to pay or deny payment as set forth in paragraph 4.4 of the performance bond. PHS arranged, undertook to perform, and negotiated the contract with the replacement 19 subcontractor, Nu-Line, in violation of paragraphs 4.1, 4.2, and 4.3 of the performance bond. Nonetheless, Hartford, in good faith, explored the possibility of waiving its right to mitigate damages by undertaking an investigation as allowed by subparagraph 4.4. However, Hartford’s inspection of the Fourth Middle School Project on July 18, 2002, was of limited value since the electrical work was substantially completed at that time, and it was difficult to determine what work Nu-Line completed after June 7, 2002, as the replacement contractor. We conclude, as to the Fourth Middle School Project, that PHS violated paragraph 3.3 of the performance bond by failing to agree to pay Hartford the balance of the subcontract. Additionally, we conclude PHS exceeded its authority under the performance bond by hiring Nu-Line first and thereafter declaring a subcontractor default and termination, which negated Hartford’s options under paragraphs 4.1, 4.2, and 4.3 of the performance bond. This course of conduct violated the terms of the performance bond and nullified Hartford’s duty to perform. The circuit court, therefore, properly granted partial summary judgment in favor of Hartford and S&C on the Fourth Middle School Project. 2. The Second High School Project We now consider whether PHS substantially complied with the performance bond on the Second High School Project or whether its actions nullified the performance bond. Similar to the Fourth Middle School Project, over the course of time, PHS grew increasingly dissatisfied with the timeliness of S&C’s work on the Second High School Project. In a letter dated March 20, 2002, PHS expressed its complaints regarding S&C’s electrical work on the Second High School Project. PHS sent Hartford a copy of the letter, which also made reference to paragraph 3.1 of the performance bond. More than 20 days after the March correspondence, PHS faxed a handwritten termination 20 notice to S&C on June 15, 2002. There is no indication PHS sent a copy of the termination notice to Hartford. The trial judge rendered a carefully written order resolving the issues raised in the motion for partial summary judgment, but the order includes a minor misunderstanding that June 7, 2002, was the date PHS terminated S&C from both projects. It is undisputed that S&C received the notice of its termination from the Second High School Project no earlier than June 15, 2002. On June 21, 2002, PHS hired Nu-Line to complete the Second High School Project without consulting Hartford or providing Hartford with notice that PHS terminated S&C. The Nu-Line replacement subcontract for the Second High School Project was dated June 21, 2001. Therefore, PHS did not replace S&C before it sent the termination notice to S&C on June 15, 2002. However, PHS did not notify Hartford of S&C’s termination until June 24, 2002. The next day, PHS demanded performance by Hartford on June 25, 2002, for the Second High School Project. Again, on June 26, 2002, PHS made a second written demand for Hartford’s performance on the Second High School Project performance bond and made the first written demand for performance on the Fourth Middle School Project performance bond. As the trial court correctly noted, “Hartford had no time to investigate and perform under the conditions of its bond.” PHS’s demand for performance under the Second High School Project performance bond did not afford Hartford any time to act with reasonable promptness to investigate its options set forth in paragraph 4 of the performance bond and then decide its course of conduct to either complete the project or pay the damages. We conclude PHS improperly demanded performance of Hartford under the performance bond nearly contemporaneously with the notice of termination of S&C on the Second High School Project. 21 The issue of nullification on the Second High School Project as it relates to paragraph 3.2 of the performance bond is more complex due to the sequence of events. Regarding the Second High School Project, we note the faxed June 15, 2002, notice of termination was PHS’s only attempt to comply with paragraph 3.2 of the performance bond. The record shows PHS hired Nu-Line as the replacement subcontractor for the Second High School Project on June 21, 2002, six days after the faxed notice of termination to S&C. However, PHS notified Hartford of the termination of S&C on June 24, 2002. Unlike the Fourth Middle School Project, the June 15, 2002, notice of termination did properly precede the June 21, 2002, replacement contract with Nu-Line on the Second High School Project. Therefore, we disagree that the timing of the termination and replacement violated the interlaced requirements of paragraphs 3 and 4 of the performance bond and did not independently nullify the obligations of Hartford to perform on the Second High School Project. Additionally, in the written order granting partial summary judgment, the trial court specifically found the conditions of “[paragraph] 3.3 were not satisfied.” Although PHS disputes the circuit court’s findings, PHS admits it did not agree to pay Hartford the balance of the subcontract but, again, PHS contends it was not obligated to make this offer. We have rejected PHS’s argument based on a plain reading of paragraph 3.3 of the performance bond, which clearly places the affirmative duty on PHS to agree to pay the contract balance without any initial request from Hartford. PHS did not agree to pay and, therefore, PHS violated paragraph 3.3 of the performance bond with regard to the Second High School Project. Since we have determined PHS exceeded its contractual authority under the controlling language of the performance bond by hiring Nu-Line, as the replacement electrical subcontractor, on both projects, we also conclude any purported agreement to pay Nu-Line was ineffective as to the 22 requirements of paragraph 3.3 of the performance bond. We conclude, as to the Second High School Project, that PHS violated the terms of paragraph 3.3 of the performance bond by not agreeing to pay the contract balance to Hartford, which negated Hartford’s duty to act under the terms of the performance bond. We also conclude PHS denied Hartford a reasonable time under the performance bond to exercise Hartford’s options under paragraph 4 of the performance bond, rendering the agreement null and void. The circuit court, therefore, properly granted partial summary judgment in favor of Hartford and S&C on the Second High School Project. D. Equitable Estoppel PHS argues Hartford should be estopped from contesting Nu-Line as replacement subcontractor, because Hartford failed to object to Nu-Line’s “supplementing” S&C’s electrical work. The circuit court rejected PHS’s estoppel argument. The doctrine of equitable estoppel may be invoked by a court to prevent fraud or injustice. Byron Community Unit School District No. 226 v. Dunham-Bush, Inc., 215 Ill. App. 3d 343, 348 (1991). “Estoppel arises when a party, by his word or conduct, * induces reasonable reliance by another on his representations and thus leads the other, as a result of that reliance, to change his position.” Byron Community Unit School District No. 226, 215 Ill. App. 3d at 348. Even after Hartford determined S&C would complete the electrical construction on the school projects in a timely manner, PHS contracted with Nu-Line to provide supplemental work. The performance bonds did not prohibit PHS from hiring additional electrical subcontractors to supplement S&C’s work and assist S&C to finish the projects in a timely fashion. Consequently, we do not believe Hartford could have effectively objected to the supplemental work by Nu-Line. The 23 supplemental work was a matter between S&C and PHS, not Hartford and PHS. PHS argues that Hartford did “not object to [PHS’s] decision of completing the work,” and therefore, Hartford is estopped from using the replacement of S&C as a basis to deny coverage under the performance bonds. We reject this argument. Geddes v. Mill Creek Country Club, Inc., 196 Ill. 2d 302, 313 (2001), set forth the elements for establishing equitable estoppel: “To establish equitable estoppel, the party claiming estoppel must demonstrate that: (1) the other person misrepresented or concealed material facts; (2) the other person knew at the time he or she made the representations that they were untrue; (3) the party claiming estoppel did not know that the representations were untrue when they were made and when they were acted upon; (4) the other person intended or reasonably expected that the party claiming estoppel would act upon the representations; (5) the party claiming estoppel reasonably relied upon the representations in good faith to his or her detriment; and (6) the party claiming estoppel would be prejudiced by his or her reliance on the representations if the other person is permitted to deny the truth thereof.” Geddes, 196 Ill. 2d at 313-14, citing Vaughn v. Speaker, 126 Ill. 2d 150, 162-63 (1988). Estoppel requires reliance and a change of position by one party. Byron Community Unit School District No. 226, 215 Ill. App. 3d at 348. Significantly, PHS must show that its reasonable reliance on Hartford’s letter of June 20, 2002, caused PHS to change its position regarding S&C. Specifically, Hartford’s letter of June 20, 2002, stated: “Please note that although Hartford does not object to your decision of 24 completing the work [on the Fourth Middle School Project], I refer you to Sections 3 and 4 of the Bond, which lists the Owner and Surety’s obligations under the Bond. I am sure you understand that Hartford must reserve its rights and defenses in connection with this matter.” The facts of this case demonstrate PHS did not rely on Hartford’s “does not object” language. With regard to the Fourth Middle School Project, it is undisputed that Hartford made this written statement on June 20, 2002, long after PHS replaced S&C with Nu-Line on May 21, 2002. As to the Second High School Project, PHS notified S&C of its termination in the June 15, 2002, handwritten fax. This fax was dispatched before the June 20, 2002, letter from Hartford, which contained the “does not object” language that PHS relies on to claim estoppel. In either situation, PHS did not change its position after Hartford’s June 20, 2002, letter because PHS terminated S&C long before receiving the letter. Simply stated, PHS cannot show reliance on Hartford’s statement. Ironically, we find PHS adopted a course of conduct that deliberately caused Hartford to believe PHS did not object to the performance bonds controlling PHS’s conduct on the issue of replacement of the electrical subcontractor. To demonstrate the irony in PHS’s estoppel argument, we examine the conduct of PHS. Pursuant to paragraph 3.1 of the performance bond, PHS provided both S&C and Hartford with notice of S&C’s default in a letter dated March 20, 2002. Pursuant to paragraph 3.2 of the performance bond, PHS honored the 20-day waiting period and attempted to set up a conference between the parties as required by the performance bond. During the 20-day waiting period, PHS allowed Hartford to attempt to resolve the difficulties with S&C as provided by the performance bond. Additionally, PHS did not object when Hartford arranged with S&C to 25 complete the electrical work. PHS participated in this process by cooperatively interacting with Hartford during the 20-day waiting period, which would have expired on or about April 11, 2002. Then, on April 12, 2002, without contacting Hartford, PHS hired Nu-Line, purportedly only to act as a consultant to PHS. On May 6, 2002, Hartford advised PHS that S&C would be completing the electrical work for the Fourth Middle School Project. Accordingly, PHS appeared to accept Hartford’s decision to allow S&C to complete the project and PHS wrote a letter to S&C on May 9, 2002. In this letter PHS did not object to S&C staying on the project. In fact, PHS reminded S&C it would be required to meet the April 22 schedule and sent a copy of the letter dated May 9 to Hartford. Importantly, on May 14, 2002, PHS specifically informed S&C that PHS “wish[ed] to finish this project successfully with your company.” PHS’s actions caused both Hartford and S&C to continue to believe S&C would be completing the contract and that Nu-line was only acting to supplement certain areas of work. Even after May 21, 2002, the date PHS hired Nu-Line to complete the Fourth Middle School Project, PHS continued to allow S&C to perform electrical work to complete the Fourth Middle School Project, and secretively failed to disclose that Nu-Line was acting to complete the project. PHS unfairly delayed the notice of replacement by waiting until June 7, 2002, to advise either Hartford or S&C of the replacement and termination of S&C from the Fourth Middle School Project and June 24, 2002, on the High School Project. This course of conduct shows PHS understood and attempted to negate Hartford’s exclusive right to choose the replacement contractor. This delayed notification is fatal to PHS’s request for 26 payment under the performance bond. PHS effectively extinguished three of Hartford’s options to mitigate damages as set forth in paragraphs 4.1, 4.2, and 4.3 of the performance bonds. Accordingly, we reject PHS’s equitable estoppel argument. E. Waiver Finally, PHS claims Hartford waived its right to mitigate damages under the terms of the performance bonds. PHS argues that Hartford waived its objection to the selection of Nu-Line by Hartford’s course of conduct and the letter dated June 20, 2002. The circuit court also rejected this argument. Since the June 20, 2002, letter from Hartford related only to the Fourth Middle School Project, we confine our waiver analysis to this project. “Waiver is an express or implied voluntary and intentional relinquishment of a known and existing right.” Batterman v. Consumers Illinois Water Co., 261 Ill. App. 3d 319, 321 (1994), citing Geier v. Hamer Enterprises, Inc., 226 Ill. App. 3d 372 (1992). Parties may waive contractual provisions and waiver may be established by conduct indicating that strict compliance with contractual provisions will not be required. Batterman, 261 Ill. App. 3d at 321, citing Whalen v. K Mart Corp., 166 Ill. App. 3d 339 (1988). “An implied waiver may arise from either of two situations: (1) an unexpressed intention to waive can be clearly inferred from the circumstances; or (2) the conduct of one party has misled the other party into a reasonable belief that a waiver has occurred.” Batterman, 261 Ill. App. 3d at 321. Whether PHS presented sufficient facts establishing Hartford waived any objection to the replacement of S&C becomes a question of law. Batterman, 261 Ill. App. 3d at 321. When the issue is purely a question of law, the applicable standard of review is de novo. People v. Chapman, 194 Ill. 27 2d 186, 217 (2000) (stating that de novo review is appropriate when there are no factual or credibility disputes and the appeal, therefore, “involves a pure question of law”). Although waiver may be implied under some circumstances, the actions constituting the waiver must be clear, unequivocal and decisive. Galesburg Clinic Ass’n v. West, 302 Ill. App. 3d, 1016, 1019-20 (1999). Waiver must be based on the conduct of the party impliedly waiving a contract. Batterman, 261 Ill. App. 3d at 321, citing Lavelle v. Dominick’s Finer Foods, Inc., 227 Ill. App. 3d 764, 771 (1992). Again, Hartford’s letter to PHS, with regard to the Fourth Middle School Project, stated: “Please note that although Hartford does not object to your decision of completing the work [on the Fourth Middle School Project], I refer you to Sections 3 and 4 of the Bond, which lists the Owner and Surety’s obligations under the Bond. I am sure you understand that Hartford must reserve its rights and defenses in connection with this matter.” The parties confuse PHS’s required three-day notice to cure inadequate work under the S&C electrical subcontract with PHS’s requirement to express its intent to declare a default under paragraph 3.1 of the performance bond. The March 20, 2002, letter from PHS to S&C refers to both the three-day notice to cure under 2.c. of the S&C electrical subcontract and the very different 20-day notice of intent to default under paragraph 3.1 of the performance bond. These notices arise out of separate contracts and are not one and the same. The June 20, 2002, letter shows that Hartford understood section 2.c. of the S&C electrical subcontract allowed PHS to correct work if S&C failed to comply with the three-day notice by curing and properly executing the work. However, the completion of work does not necessarily mean that 28 PHS could unilaterally replace S&C without severe consequences to the performance bond. As previously stated, the performance bond controlled the relationship of Hartford and PHS, not the electrical subcontract. The June 20, 2002, letter also clearly demonstrates that Hartford insisted and even reminded PHS that Hartford had superior rights to determine the method of completion of the electrical subcontract under paragraphs 3 and 4 of the performance bond. The letter reveals a clearly expressed intent on the part of Hartford to “reserve” and not to waive its rights under paragraphs 3 and 4 of the performance bond on the Fourth Middle School Project. Contrary to PHS’s argument regarding waiver, the fact that Hartford stated it did “not object” to PHS completing the electrical work on the Fourth Middle School Project became irrelevant due to PHS’s course of conduct. The timing of the contract between PHS and Nu-Line on May 21, 2002, is important to an understanding of this issue. When PHS terminated S&C on June 7, 2002, as to the Fourth Middle School Project, PHS had already contracted with Nu-Line as the replacement subcontractor on May 21, 2002. You cannot waive what you do not have and Hartford did not have the option of rejecting Nu-Line, because Nu-Line became PHS’s replacement subcontractor on the Fourth Middle School Project effective May 21, 2002. We conclude Hartford did not waive the requirements of paragraph 3 of the performance bond. III. CONCLUSION For the foregoing reasons, we conclude the circuit court properly granted partial summary judgment in favor of Hartford and S&C. We therefore affirm the judgment of the circuit court of Will County and remand for further proceedings. 29 Affirmed and remanded. McDADE and SCHMIDT, JJ., concurring. 30	{ "pile_set_name": "FreeLaw" }
10-3708-ag Bamba v. U.S. Dep’t of Justice BIA Morace, IJ A088 775 987 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Daniel Patrick Moynihan 3 United States Courthouse, 500 Pearl Street, in the City of 4 New York, on the 28th day of October, two thousand eleven. 5 6 PRESENT: 7 JOSÉ A. CABRANES, 8 PETER W. HALL, 9 DENNY CHIN, 10 Circuit Judges. 11 12 _____________________________________ 13 14 YAH BAMBA, a.k.a. YAYA CAMARA, 15 Petitioner, 16 17 v. 10-3708-ag 18 NAC 19 U.S. DEP’T OF JUSTICE, 20 Respondent. 21 ______________________________________ 22 23 FOR PETITIONER: Brian I. Kaplan, New York, New York. 24 25 FOR RESPONDENT: Tony West, Assistant Attorney 26 General; Ada E. Bosque, Senior 27 Litigation Counsel; Jem C. Sponzo, 28 Trial Attorney, Office of 29 Immigration Litigation, Washington 30 D.C. 1 UPON DUE CONSIDERATION of this petition for review of a 2 Board of Immigration Appeals (“BIA”) decision, it is hereby 3 ORDERED, ADJUDGED, AND DECREED that the petition for review 4 is DENIED. 5 Petitioner Yah Bamba, a native and citizen of the Ivory 6 Coast, seeks review of the August 17, 2010, order of the BIA 7 affirming the October 27, 2008, decision of Immigration 8 Judge (“IJ”) Philip Morace denying his application for 9 asylum, withholding of removal, and relief under the 10 Convention Against Torture (“CAT”) on credibility grounds. 11 In re Yah Bamba, No. A088 775 987 (B.I.A. Aug. 17, 2010), 12 aff’g No. A088 775 987 (Immig. Ct. N.Y. City Oct. 27, 2008). 13 We assume the parties’ familiarity with the underlying facts 14 and procedural history in this case. 15 Under the circumstances of this case, we review both 16 the IJ’s and the BIA’s decisions. See Yun-Zui Guan v. 17 Gonzales, 432 F.3d 391, 394 (2d Cir. 2005). The applicable 18 standards of review are well-established. See 8 U.S.C. 19 § 1252(b)(4)(B); Yanqin Weng v. Holder, 562 F.3d 510, 513 20 (2d Cir. 2009). 21 2 1 We find that substantial evidence supports the agency’s 2 adverse credibility determination. As an initial matter, 3 Bamba does not challenge the BIA’s finding that, despite 4 claiming to be a supporter of the political party Rally for 5 Republicans (“RDR”), he could not explain what the acronym 6 stood for. Accordingly, that finding stands as a valid 7 basis for the agency’s adverse credibility determination. 8 See Shunfu Li v. Mukasey, 529 F.3d 141, 146 (2d Cir. 2008). 9 With respect to the findings that Bamba does challenge, 10 each was proper. Bamba argues that the agency erred in 11 finding that the inconsistent accounts he and his sister 12 provided regarding how he discovered his mother’s death, and 13 when his sister learned of the death, undermined his 14 credibility, asserting that “the discrepancies were minor 15 and did not go to the crux of [his] claim.” However, under 16 the REAL ID Act, “an IJ may rely on any inconsistency or 17 omission in making an adverse credibility determination as 18 long as the ‘totality of the circumstances’ establishes that 19 an asylum applicant is not credible,” without regard to 20 whether those inconsistencies go “'to the heart of the 21 applicant’s claim.'” Xiu Xia Lin v. Mukasey, 534 F.3d 162, 3 1 163, 167 (2d Cir. 2008) (emphasis in original) (quoting 8 2 U.S.C. § 1158(b)(1)(B)(iii). Furthermore, although Bamba 3 contends that he provided a “perfectly plausible explanation 4 for any discrepancies,” specifically that he and his sister 5 “had little formal education and . . . were being asked 6 about some events that had taken place some four to six 7 years earlier,” that explanation would not compel the agency 8 to conclude that he was credible. See Majidi v. Gonzales, 9 430 F.3d 77, 80-81 (2d Cir. 2005). Indeed, Bamba testified 10 that he did not have any difficulty understanding the 11 interpreter’s questions during his asylum interview, and 12 neither he nor his sister testified that they had any 13 difficulty answering questions due to their lack of 14 education. 15 Bamba also argues that the agency erred in relying on 16 the Assessment to Refer produced by the officer who 17 conducted his asylum interview because it was unreliable. 18 We have held that while the record of an asylum interview is 19 more reliable when it describes the specific questions asked 20 or records the interview verbatim, an interview record even 21 without such assurances of reliability may be relied on as a 22 basis for an adverse credibility determination as long as it 4 1 contains a “meaningful, clear, and reliable summary of the 2 statements made by [the applicant] at the interview.” See 3 Maladho Djehe Diallo v. Gonzales, 445 F.3d 624, 632 (2d Cir. 4 2006). Here, the record contained both the officer’s 5 Assessment to Refer and his handwritten notes from the 6 interview itself. Thus, although, as Bamba points out, the 7 Assessment and the handwritten notes do not contain 8 precisely the same information, the two documents together 9 provided the agency a “clear[] and reliable summary of the 10 statements made.” Diallo, 445 F.3d at 631-33 (internal 11 citations and quotations omitted). Moreover, despite 12 Bamba’s assertion that there was no information regarding 13 the quality of the interpretation, he testified that he 14 brought his own interpreter and had no difficulty 15 understanding the translation. 16 Ultimately, the agency’s credibility determination was 17 supported by substantial evidence. See 8 U.S.C. 18 § 1252(b)(4)(B); Xiu Xia Lin, 534 F.3d at 167. Therefore, 19 it did not err in denying Bamba’s applications for asylum, 20 withholding of removal, and CAT relief. See Paul v. 21 Gonzales, 444 F.3d 148, 156 (2d Cir. 2006). 22 5 1 For the foregoing reasons, the petition for review is 2 DENIED. As we have completed our review, any stay of 3 removal that the Court previously granted in this petition 4 is VACATED, and any pending motion for a stay of removal in 5 this petition is DENIED as moot. Any pending request for 6 oral argument in this petition is DENIED in accordance with 7 Federal Rule of Appellate Procedure 34(a)(2), and Second 8 Circuit Local Rule 34.1(b). 9 10 FOR THE COURT: 11 Catherine O’Hagan Wolfe, Clerk 12 13 6	{ "pile_set_name": "FreeLaw" }
207 Va. 923 (1967) EUGENE C. TORAN v. C. C. PEYTON, SUPERINTENDENT OF THE VIRGINIA STATE PENITENTIARY. Record No. 6326. Supreme Court of Virginia. March 6, 1967. Philip S. Walker for the plaintiff in error. Reno S. Harp, III, Assistant Attorney General (Robert Y. Button, Attorney General, on brief), for the defendant in error. Present, All the Justices. 1. Toran, a juvenile, was convicted of armed robbery by the Corporation Court of the City of Newport News after being certified for trial as an adult by the Juvenile and Domestic Relations Court of that city. In the instant proceeding for writ of habeas corpus he contended that the corporation court did not acquire jurisdiction to try him because the juvenile court did not afford him the requisite hearing before certifying him. This question was held moot however, since the corporation court had followed the procedure set out in Code 1950, section 16.1-175 as a substitute for the juvenile court hearing in such cases. 2. Toran also complained that an incriminating statement made by him to a police officer was inadmissible since he had not been advised of his right to counsel and no counsel was present. But since the trial was held prior to the effective date of the federal case supporting his argument and since his case was factually distinguishable, his contention was disapproved. Error to a judgment of the Corporation Court of the city of Newport News. Hon. Douglas M. Smith, judge presiding. The opinion states the case. GORDON GORDON, J., delivered the opinion of the court. 924 Toran was convicted of armed robbery by the Corporation Court of the City of Newport News on June 17, 1963 and sentenced to a term of twenty years. He now appeals from an order entered by that court on February 25, 1965 denying his petition for a writ of habeas corpus, which challenged the validity of the 1963 conviction. Toran was a juvenile when the crime was committed. After a hearing, the Juvenile and Domestic Relations Court of the City of Newport News certified Toran for criminal proceedings in the Corporation Court of the City of Newport News as if the crime had been committed by an adult. Va. Code Ann. \| 16.1-176 (Repl. vol. 1960). Toran contends that the corporation court did not acquire jurisdiction to try him because the juvenile court did not afford him the requisite hearing before certifying him for trial by the corporation court as an adult. He says that the hearing was fatally defective because the juvenile court did not appoint a guardian ad litem to represent his interests at the hearing in the absence of his parents, as required by Va. Code Ann. \| 16.1-173 (Supp. 1966). We need not decide, however, whether Toran's hearing in the juvenile court was duly held. Code \| 16.1-175 sets forth a procedure that may be followed by a court of record as a substitute for a hearing before a juvenile court: {"If during the pendency of a criminal or quasicriminal proceeding against any person in any other court it shall be ascertained that the person was under the age of eighteen years at the time of committing the alleged offense, such court shall forthwith transfer the case, together with all papers, documents and evidence connected therewith, to the juvenile court of the city or county having jurisdiction, provided if such is pending in a court of record, the judge thereof, in his discretion upon completion of an investigation as prescribed in \| 16.1-176(b), may continue with the trial thereof. * " [Emphasis supplied] Va. Code Ann. \| 16.1-175 (Repl. Vol. 1960). After Toran was certified by the juvenile court for trial in the corporation court, he was indicted for armed robbery. According to the testimony in this case, Toran was tried twice on the indictment. His court-appointed counsel who represented him in the criminal proceedings said the court found Toran guilty at the conclusion of the first trial, but subsequently set aside the verdict and granted him a new 925 trial. The court apparently took this action upon counsel's suggestion that the Juvenile and Domestic Relations Court Law (Va. Code Ann. \|\| 16.1-139, et seq. ) had not been complied with. [1] About four months before Toran's second trial, the corporation court entered this order: "The Court requires the full and complete investigation of the physical, mental and social condition and personality of the above named juvenile and the facts and circumstances pertaining to the violation of the law which is the cause of his being before the Court, as provided by Title 16.1-176 of the Code of Virginia." In the conviction order entered June 17, 1963, the court recorded this fact: "[The] reports required by order of this Court entered on February 13, 1963, of the full and complete investigation of the physical, mental and social condition and personality of the said Eugene C. Toran and the facts and circumstances pertaining to the violation of the law which is the cause of his being before the Court, having been filed herein as provided by Title 16.1-176 of the Code of Virginia * * " [2] The record therefore shows that in proceeding with Toran's second trial, the corporation court exercised the discretionary power vested in it under Code \| 16.1-175. So any question about the validity of Toran's hearing before the juvenile court is academic. In Peyton French, 207 Va. 73, 147 S.E.2d 739 (1966), we held that the circuit court did not acquire jurisdiction to try a juvenile as an adult because the requirements of the Juvenile and Domestic Relations Court Law relating to preliminary hearings had not been complied with. But that case does not control this case. In French's case, the circuit court assumed jurisdiction to try him for a felony as an adult on the basis of an illegal certification made by the juvenile court -- illegal because the juvenile court did not follow 926 the mandatory requirements of the statutes governing hearings before a juvenile court. The report furnished the juvenile court pursuant to Code \| 16.1-176(b) was before the circuit court in the French case, but the record did not indicate that the circuit court made an independent determination pursuant to Code \| 16.1-175 whether French should be tried as an adult. In Toran's case, the corporation court directed its probation officer to furnish the report required by Code \| 16.1-176(b), obviously for the purpose of enabling the court to make a determination -- or, in the words of Code \| 16.1-175, to exercise its discretion -- whether Toran should be tried as an adult. The corporation court made this independent determination, instead of accepting the certification made by the juvenile court. Only two other questions raised on this appeal need be mentioned, and these only briefly. After Toran was arrested, he made an incriminating statement to a police officer, who had warned him of his "rights to make or not to make a statement". Toran argues that the statement was improperly admitted at his criminal trial because the officer did not advise him of his right to counsel when the statement was made and counsel was not present when it was made, citing Escobedo Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.ed.2d 977 (1964). But the Escobedo case is not applicable for two reasons. Escobedo involved denial of an accused's request to consult with counsel; Toran made no such request. Escobedo is applicable only to persons whose trials began after June 22, 1964; Toran was tried in June 1963. Johnson New Jersey, 384 U.S. 719, 86 S.Ct. 1772, 16 L.ed.2d 882 (1966). [3] Toran contends that he did not have effective assistance of counsel at his criminal trial. The record amply supports, however, the trial court's finding that he did have effective assistance of counsel. Affirmed. NOTES [1] "A [Toran's counsel]. We went to trial. After we had gone into the evidence, the Court found him guilty. I ascertained that the provisions of the statute for probation had not been applied with. I think that Section is 16-176-B. "Court: That's the juvenile? "A [Toran's counsel]. Yes, sir. "Court: That's right. "A [Toran's counsel]. So we -- we had pre-trial on that situation in the Judge's office and I made a motion that the verdict be set aside and we be awarded a new trial. The Court sustained the motion." [2] The record shows that the report of the Chief Parole Officer (District #19) required by the February 13, 1963 order was filed in the clerk's office of the corporation court on February 19, 1963. Also, by order entered March 5, 1963, the corporation court committed Toran to the Central State Hospital for observation, and the Superintendent reported by letter dated May 1, 1963 that Toran was legally responsible and capable of standing trial. [3] Under the holding in Johnson New Jersey, supra, the rule of Miranda Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.ed.2d 694 (1966), which might otherwise be applicable to Toran's incriminating statement, applies only to criminal trials which began after June 13, 1966.	{ "pile_set_name": "FreeLaw" }
383 A.2d 1046 (1978) GREEN MOUNTAIN POWER CORP. v. COMMISSIONER OF LABOR AND INDUSTRY. No. 60-77. Supreme Court of Vermont. February 7, 1978. 1047 Paul D. Sheehey, Burlington, for plaintiff. M. Jerome Diamond, Atty. Gen., and James S. Suskin, Asst. Atty. Gen., for defendant. 1048 Before BARNEY, C. J., DALEY, LARROW and BILLINGS, JJ., and SMITH, J. (Ret.), Specially Assigned. LARROW, Justice. This appeal involves construction of the "general duty clause" of Vermont's Occupational Safety and Health Act (VOSHA). 21 V.S.A. §§ 201-231. Proceedings Below Steven Bagalio, a lineman first class A for Green Mountain Power Corporation (GMP), was killed when, in an attempt to remove a "jumper," he came into contact with a live wire. The day following the accident an inspector from the Department of Labor and Industry conducted an inspection of the work site and, as a result, the Department issued a "serious citation" to GMP under § 210(a)(2) and (b), claiming a violation of VOSHA's general duty clause. 21 V.S.A. § 223(a). In addition, a $600.00 penalty was proposed by the Department for violation of that clause. GMP contested the citation and proposed penalty pursuant to § 226(a), and the Commissioner of Labor and Industry filed a complaint with the Occupational Safety and Health Review Board. After full evidentiary hearing under § 226(d), the Review Board issued findings of fact and a decision which upheld the citation and penalty. It concluded GMP failed under § 223(a) to provide Bagalio with a place of employment which was free from a recognized hazard that was likely to cause death or significant physical harm in that adequate protective covering was not used on energized wires in the area where he was performing his work. GMP appealed the Review Board's findings of fact and decision to the Chittenden Superior Court under the provisions of § 227(a). The superior court, acting as an intermediate appellate court, confirmed the findings of the Review Board in toto, but reversed the Board's decision, holding the record did not support the conclusion of a violation of VOSHA. The court reasoned that an uncovered energized line is not a "recognized" hazard for purposes of the general duty clause; rather, the employee's failure to obey the company rule requiring covering of lines within reach constituted the hazard. The court concluded the hazard was an isolated incident of employee misconduct, which was beyond the employer's control and for which the employer could not be held liable under VOSHA. The Commissioner of Labor and Industry now seeks review of the judgment of the superior court reversing the Review Board's decision. Finding that the superior court's judgment is erroneous and rests on an incorrect construction of § 223(a), we vacate the court's order and reinstate the Review Board's determination. Facts The findings of the Review Board, which were adopted in their entirety by the superior court and which are largely undisputed, may be summarized. At the time of the accident, Bagalio was one of a crew of five GMP employees, including three linemen first class A, one groundman and a working foreman. The crew, which had begun work at the job site five days before the fatal accident, was engaged in reconductoring (replacing) sections of copper lines with aluminum lines on five poles in a series running approximately 300 feet in length. It is the practice of GMP and of the industry to perform reconductoring work on energized lines to avoid prolonged interruptions of service. Temporary connections are made to the new lines to maintain service, and as permanent connections are made the temporary connections or "jumpers" (short sections of flexible insulated conductor) are removed and the old lines are cut down. Bagalio was working on one pole with another lineman and then descended that pole to climb Pole No. 3 in order to remove a jumper which had been in use on that pole. Before ascending Pole No. 3, Bagalio told the foreman what he intended to do. The foreman took no action except to admonish Bagalio that he should do nothing further without assistance after removing the jumper. With the foreman's authorization, Bagalio proceeded to climb Pole No. 3 and 1049 remove the jumper. At that time all three of the linemen were on separate poles, and the foreman was on the ground. Although no one saw Bagalio again before the accident, the Review Board concluded that, after climbing the pole, he "belted in" between the lower cross arm braces, detached one end of the jumper, shifted his body one-quarter of the way around the pole, and pulled the detached end of the jumper over the upper cross arm. In the process of removing the remainder of the jumper, Bagalio leaned backward and the back of his neck made contact with an uncovered wire, resulting in his instantaneous electrocution. There was additional protective equipment situated in the crew's truck at the time. Bagalio had worked for GMP for over six years, progressing from an apprentice lineman to a lineman first class A. At the time of the accident he was an experienced, able lineman, physically fit and mentally competent for the work of a lineman, and he had given his employer no reason to believe he would not comply with its safety standards. GMP has a continuing safety program that is conducted by an experienced safety supervisor. The safety program consists of meeting at least monthly, distribution of bulletins and literature, and periodic inspection of job sites followed by written reports to supervisors, warnings and disciplinary measures. It was described by the VOSHA compliance inspector as meriting full credit. GMP's safety policy with respect to the use of rubber cover on conductors during work on poles is to cover whatever is within reach of the lineman. This is a reasonable policy and one generally adopted in the industry. It is also GMP's policy that all safety determinations regarding protective covering are to be made by the lineman first class, even when he is under the immediate supervision of a foreman. At the time of the accident there was insufficient protective covering on Pole No. 3 to minimize the hazard encountered by Bagalio in removing the jumper without assistance, and the foreman on the job was aware of this fact. The Commissioner agrees with all of the Review Board's findings, but urges reversal of the superior court's judgment, claiming Bagalio's failure to comply with the company's safety policy of covering everything within reach should not be a defense under VOSHA. He contends that GMP's policy of leaving all decisions regarding the covering of wires to the lineman first class runs counter to the very purpose of VOSHA. And he argues vigorously that to allow an employer to shift the burden of safety responsibility to its employees when they are working directly under management is tantamount to absolving employers of any responsibility for providing the safe workplace contemplated by the Legislature. GMP, on the other hand, claims that failure to recognize employee noncompliance with established company safety policies as a defense is tantamount to imposing an absolute duty on employers to insure the safety of its employees, a duty which is not contemplated under VOSHA. Although GMP contends the superior court's judgment is supportable under the facts as found by the Review Board, it claims that findings 38 and 39 are erroneous in that they are unsupported by the evidence. Contested Findings The standard of appellate review in VOSHA cases is expressly set out in the Act itself: The findings of the review board with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive. [21 V.S.A. § 227(a)]. The somewhat imprecise "substantial evidence" standard has received elucidation in several United States Supreme Court cases. "`[S]ubstantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. . . . [It] must do more than create a suspicion of the existence of the fact to be established.. . . it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be 1050 drawn from it is one of fact for the jury.'" Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951). It differs little, if at all, from the "clearly erroneous" test of V.R.C.P. 52(a). See Seaway Shopping Center Corp. v. Grand Union Stores, Inc., 132 Vt. 111, 117, 315 A.2d 483 (1974). With that standard and its definition in mind, we proceed to appellee's claim that findings 38 and 39 are unsupported by the evidence. Finding 38 states: "The foreman on the job was aware of the fact that the pole did not have sufficient protective covering to permit an employee to remove the jumper without assistance." It is clear from the record that the foreman was aware of the fact that the pole did not have sufficient protective covering to permit an employee to remove the entire jumper, i. e. both ends of the jumper. It is equally clear, however, that the foreman felt there was adequate protective covering to de-energize the old wire, i. e. to remove only one end of the jumper. By "remove the jumper" did the Review Board mean removal of both ends of the jumper or removal of one end of the jumper? The Court is of the view that the plain and ordinary meaning of finding 38 is that the foreman was aware of the fact that the pole did not have sufficient protective covering to permit an employee to remove the jumper in its entirety without assistance. This construction is buttressed by the fact that the Review Board coupled the words "remove the jumper" with the words "without assistance," since there was considerable testimony to the effect that the foreman felt Bagalio could not have removed both ends of the jumper safely without assistance. Read as such, finding 38 is amply "supported by substantial evidence on the record considered as a whole." Finding 39 reads as follows: "The respondent's safety policy on the job site is that all safety determinations in reference to protective covering are to be made by the first class lineman even when such lineman is under the immediate supervision of a foreman." A careful review of the record reveals no error as to this finding. GMP's chief safety officer, in response to the question of who has responsibility for determining which wires should be covered, testified that, "The employee himself has, when he reaches a first class lineman's level, this responsibility." And the foreman on the job site at the time of the accident, responding to the question of whether it was Bagalio's responsibility to carry out the company safety policy of covering all wires, testified, "It was his responsibility to cover everything, he should have, yes." Although the business manager for the local electrical workers union testified that he felt there is a joint responsibility between the foreman and the lineman for covering wires, the testimony of GMP's chief safety officer and foreman, who presumably are in a better position to know the company's safety policy, is more than adequate to support finding 39. Legislative Background In 1970, Congress enacted the Occupational Safety and Health Act (OSHA) "to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources." 29 U.S.C. §§ 651-678. To accomplish these purposes, Congress established dual employer duties under OSHA. First, Congress conferred upon the Secretary of Labor authority to establish specific standards for safe and healthful conditions of employment. 29 U.S.C. § 655. Each covered employer has the duty of complying with all safety and health standards promulgated by the Secretary which are applicable to the employer's place of employment. 29 U.S.C. § 654(a)(2). These specific standards are intended to be the primary method of achieving OSHA's objectives. See 116 Cong.Rec. 38371 (1970). Second, in all cases not covered by such specific standards, the employer has a duty to "furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." 29 U.S.C. § 654(a)(1). This "general duty 1051 clause" was incorporated into OSHA in recognition of the fact that there will be a wide variety of hazardous employment situations which fall outside the scope of the specific standards. The comprehensive general duty requirement was included in OSHA to cover these cases. Since the purpose of OSHA is not to compensate injured employees, but rather to prevent injuries, the Act establishes a schedule of various penalties. 29 U.S.C. §§ 653(b)(4), 666. In keeping with the preventative nature of the Act, a violation of the Act is based upon the mere existence of unsafe or unhealthy working conditions, and actual injury, although relevant, is not conclusive as to the fact of violation. It is clear from the Act that Congress intended the states to have a major role in occupational safety and health matters. Nothing in the Act prevents any state from asserting jurisdiction, under state law, over any occupational safety or health issue with respect to which no federal standard is in effect. 29 U.S.C. § 667(a). And a state may preempt applicable federal standards by submitting an acceptable state plan for the development and enforcement of state standards. 29 U.S.C. § 667(b). The approval of a state plan by the Secretary of Labor is conditioned upon the state meeting several requirements which are designed to assure that the state plan is or will be as effective as the federal program. 29 U.S.C. § 667(c). The Secretary of Labor approved Vermont's plan on October 1, 1973; the plan was declared "operational" as of February 19, 1975. The Vermont plan (VOSHA) is patterned after the federal act. VOSHA adopts as state standards all federal standards applicable to employment in the state. 21 V.S.A. § 201(c)(2). And, as with OSHA, employers have dual duties under VOSHA. Each employer has a duty to comply with specific standards promulgated, and a general duty to furnish his employees with a place of employment that is "free from recognized hazards that are causing or are likely to cause death or significant physical harm to his employees." 21 V.S.A. § 223(a). VOSHA's general duty clause is nearly identical to the federal general duty clause, the only difference being OSHA's requirement of "serious" physical harm, in contrast to VOSHA's requirement of "significant" physical harm. In addition, both the federal and state acts impose on each employee a duty to comply with the safety and health standards of the respective acts, although no penalties or other enforcement mechanisms are provided for employee violations under either act. 29 U.S.C. § 654(b); 21 V.S.A. § 223(b). General Duty Clause Neither the general duty clause nor any other aspect of VOSHA has been construed by this Court to date. However, several federal circuit courts of appeals have interpreted OSHA and, in particular, OSHA's general duty clause. Although not binding upon us, we find these federal appellate court decisions instructive in light of the genesis of VOSHA and the substantial similarity between the two acts. In order to sustain a general duty clause violation, the Commissioner must establish that the employer (1) failed to render his place of employment "free" of a hazard that was (2) "recognized" and (3) "causing or likely to cause death or significant physical harm." The "hazard" under consideration here is the obviously dangerous activity of working with and around high voltage energized electrical wires without adequate protective cover. Since the parties agree that there was inadequate protective cover on the pole for the protection of Bagalio, there is no question that there is a "hazard" in this case. There is also no dispute that such a hazard is "likely to cause death or significant physical harm." Although no injury whatsoever is necessary to establish a causal nexus between the hazard and the likelihood of death or significant physical harm, Bagalio's instantaneous electrocution in this case is demonstrative of the potentiality for serious physical harm while working near energized wires without adequate protective covering. 1052 Is this hazard which is likely to cause death or significant physical harm a "recognized" hazard? The federal courts have given this term various interpretations. It has been held that a hazard is "recognized" if the employer has actual knowledge of the hazard. Brennan v. OSHRC (Vy Lactos Laboratories, Inc.), 494 F.2d 460, 464 (8th Cir. 1974). It also has been stated that a hazard is "recognized" if the hazard is known to the industry as a whole, even though the employer is unaware of the activity's potentiality for harm. National Realty & Construction Co. v. OSHRC, 160 U.S.App.D.C. 133, 141, 489 F.2d 1257, 1265 n. 32 (1973); see Brennan v. OSHRC (Hanovia Lamp Division), 502 F.2d 946 (3d Cir. 1974). And the First Circuit has suggested that an appropriate test for establishing a recognized hazard would be whether a "reasonably prudent man familiar with the circumstances of the industry would have protected against the hazard." Cape & Vineyard Division v. OSHRC, 512 F.2d 1148, 1152 (1st Cir. 1975). We need not adopt any one interpretation, however, because the evidence here is sufficient to establish a "recognized hazard" under any construction of the term. The evidence below clearly established that both GMP and the industry in general took the hazard in question seriously enough to formulate a specific safety rule of covering all wires within reach of a working employee. These safety rules certainly show their awareness of the hazard. Cf. Cape & Vineyard Division v. OSHRC, 512 F.2d 1148, 1154 (1st Cir. 1975). Indeed, even though the lower court held that "an uncovered energized line is not a `recognized' hazard," GMP does not seem to dispute the Commissioner's contention on appeal that working near energized wires without adequate protective cover is a recognized hazard within the meaning of the general duty clause. The primary issue then is whether GMP furnished its employee a place of employment which was "free" of the recognized hazard. It is undisputed that GMP has a good over-all safety program. The company's safety policy of covering all wires within reach of a lineman is a reasonable policy and one generally adopted in the industry. But it is also GMP's policy that all safety determinations with regard to protective covering are to be made by the lineman first class, even when he is under the immediate supervision of a foreman. Did GMP make its workplace "free" of the recognized hazard by issuing adequate safety instructions, or was GMP also under an affirmative duty to see to it that those instructions were implemented? Though a literal reading might suggest otherwise, the general duty clause does not impose an absolute duty on employers to render their workplaces free of recognized hazards. Two factors militate against a standard of absolute liability. First, the preventative and deterrent nature of VOSHA indicates the duty is to be an achievable one. VOSHA is intended to force employers to take action against preventable injuries and deaths. See 21 V.S.A. § 210(a)(4). Compare General Meat Co., 1971-1973 Occ.S. & H.Dec. (CCH) ¶ 15,098 (June 20, 1972) with 21 V.S.A. § 201(c). Its purpose is not to compensate injured employees, and it does not affect workmen's compensation laws in any manner. 21 V.S.A. § 222(a)(2). The penalties that may be imposed under the Act, which are collected by the state, exist to deter violations of the Act and to compel abatement or correction of hazardous conditions or activities. A hazard consisting of unforeseen employee misconduct cannot be completely eliminated. "A demented, suicidal, or willfully reckless employee may on occasion circumvent the best conceived and most vigorously enforced safety regime." National Realty & Construction Co. v. OSHRC, 160 U.S.App.D.C. 133, 142, 489 F.2d 1257, 1266 (1973); see Brennan v. OSHRC (Hanovia Lamp Division), 502 F.2d 946, 951 (3d Cir. 1974) (no strict liability for the results of "idiosyncratic, demented, or perhaps suicidal self-exposure of employees to recognized hazards"). When such a hazard is unpreventable the employer, of course, cannot correct or abate it. It follows, we think, that the Act does not make an employer the guarantor of employee compliance 1053 with the Act's provisions. Secondly, the avowed legislative occupational policies underlying VOSHA do not accord with a finding of an absolute duty. The declared policies of the state are twofold: (1) "that insofar as practicable no employee shall suffer diminished health, functional capacity or life expectancy as a result of his work experience," and (2) "that practices and procedures prescribed by an employer for performance of work or duties by his employees shall not be insofar as practicable, dangerous to the life, body or well being of the employees." 21 V.S.A. § 201(a)-(b) (emphasis added); see 21 V.S.A. § 202. Compare 21 V.S.A. § 201(c)(3) with 29 U.S.C. § 651(b). The proviso "insofar as practicable" evinces a legislative intent that the duty imposed by the general duty clause be an achievable one; a standard of absolute liability is not contemplated. See National Realty & Construction Co. v. OSHRC, supra, 489 F.2d at 1266 n. 35; accord, Horne Plumbing & Heating Co. v. OSHRC, 528 F.2d 564, 570-71 (5th Cir. 1976); Cape & Vineyard Division v. OSHRC, 512 F.2d 1148, 1152 (1st Cir. 1975); Brennan v. OSHRC (Alsea Lumber Co.), 511 F.2d 1139, 1144-45 (9th Cir. 1975); Brennan v. OSHRC (Hanovia Lamp Division), 502 F.2d 946, 951 (3d Cir. 1974); REA Express, Inc. v. Brennan, 495 F.2d 822, 826 (2d Cir. 1974). Nothing in VOSHA, on the other hand, is intended to relieve the employer of his general responsibility of obtaining employee compliance with the Act's requirements. Primary responsibility for achieving a safe and healthful workplace rests with the employer under the Act. The general duty clause imposes upon the employer a statutory duty to attempt to prevent and suppress hazardous conduct by employees, and this duty is not qualified by the doctrines of assumption of risk, contributory negligence, comparative negligence, or the fellow servant rule. Many, if not most, occupational injuries arise from varying degrees of employee negligencethis is why primary responsibility for compliance with the requirements of the Act remains with the employer. National Realty & Construction Co. v. OSHRC, supra, 489 F.2d at 1266 n. 36. A recognized hazard is preventable if "demonstrably feasible measures" taken by the employer would materially reduce the likelihood of the existence of the hazard. National Realty & Construction Co. v. OSHRC, supra, 489 F.2d at 1267; see Horne Plumbing & Heating Co. v. OSHRC, supra, 528 F.2d at 569; Brennan v. OSHRC (Hanovia Lamp Division), supra, 502 F.2d at 952. Where the employer could not have taken additional feasible steps to avoid noncompliance with the Act's requirements by his employee, there is no basis for imposing liability under the Act. Under the particular facts of this case, we hold that GMP did not discharge its statutory obligation by simply issuing adequate safety instructions and holding safety meetings. Delegating the responsibility of implementing the company's safety policies to rank and file employees, while under the immediate supervision of managerial personnel, does not comport with either the letter or the spirit of VOSHA. To hold otherwise would mean that once an employer provides its employees with safety equipment and issues orders or instructions regarding the safe use of that equipment, the employer is free to disregard the employee's actual compliance with those instructions. To say the company invokes disciplinary measures for noncompliance with its safety rules is not enough. Although such after-the-fact measures are within the intendment of the Act, actual supervision during the performance of a job, where feasible, also is intended. We do not hold that the employer must provide constant over-the-shoulder or one-to-one supervision for his employees. Such a duty would be impracticable, unfeasible, and unreasonable. Where, however, as here, a supervisor is present on the job site, has knowledge of the job, and is aware of a particular hazard that poses a high likelihood of serious injury in the absence of precautionary measures, an employer cannot rely on a company policy that provides that the employee should make his own 1054 determination of the need for protective cover. Such a policy may, of course, meet the mandate of VOSHA in certain situations, such as where a lineman first class must, by necessity, work alone. This is not the case here, however. Nor are we faced with the factual situation where an employee disobeys a direct order. The foreman, who was aware of the fact that there was inadequate protective cover around Pole No. 3, could easily have directed Bagalio to install additional protective cover. The judgment of the Chittenden Superior Court is reversed and vacated, and the determination of the Occupational Safety and Health Review Board is reinstated.	{ "pile_set_name": "FreeLaw" }
558 F.2d 509 77-2 USTC P 9549 Daniel M. PILLA, Appellant,v.Donald C. ALEXANDER, C. D. Switzer, Director of InternalRevenue Service, and the United States of America, Ronald A.Mills, James L. Wilson, Clarence F. Lauth, Jr., William G.Tschida, Agents of Department of Internal Revenue Service,Ray Davis Lock Smith Co., Appellees. No. 76-2101. United States Court of Appeals,Eighth Circuit. Submitted July 18, 1977.Decided July 22, 1977. Daniel M. Pilla, pro se. Myron C. Baum, Acting Asst. Atty. Gen., Gilbert E. Andrews, Ann Belanger Durney and James E. Crowe, Jr., Attys., Tax Div., Dept. of Justice, Washington, D.C., and Robert G. Renner, U.S. Atty., Minneapolis, Minn., for appellees. Before LAY, BRIGHT and STEPHENSON, Circuit Judges. PER CURIAM. 1 Daniel Pilla appeals from the district court's1 entry of summary judgment in favor of the government and denial of his motion to convene a three-judge court. Appellant primarily challenges the constitutionality of the seizure of his property pursuant to 26 U.S.C. § 63312 by Internal Revenue agents. Because the merits of appellant's claims have been resolved in prior litigation, we affirm. 2 Appellant has been a familiar litigant in federal court. The facts underlying this case are adequately set forth in United States v. Pilla, 550 F.2d 1085 (8th Cir. 1977), cert. denied, --- U.S. ----, 97 S.Ct. 2954, 53 L.Ed.2d 1080 (1977), in which this court affirmed appellant's conviction pursuant to 26 U.S.C. § 7212(b) for unlawfully attempting to rescue property that had been seized by the Internal Revenue Service. The instant case represents the third civil action contesting the seizure of his property by IRS agents. 3 In the first case, appellant requested a three-judge court pursuant to 28 U.S.C. §§ 2282 and 2284 to declare unconstitutional all parts of the Internal Revenue Code of 1954, including 26 U.S.C. § 6331, that enable IRS agents to seize property without a court order. He sought declaratory and injunctive relief. The claim for injunctive relief was dismissed for lack of subject matter jurisdiction. The district court determined that the injunctive request was barred by 26 U.S.C. § 7421(a), which prohibits suits to restrain the assessment or collection of taxes. The court also concluded that the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, does not permit declaratory judgments with respect to federal taxes. For these reasons, the district court denied the request to convene a three-judge court.3 No appeal was taken. 4 In the second case, appellant sought compensatory and punitive damages for the allegedly unlawful seizure of his property. The district court, upon consideration of uncontroverted affidavits submitted by the IRS agents, found that the agents were acting within the scope of their employment and with the good faith belief that their actions were lawful. Accordingly, the court granted the government's motion for summary judgment. Again, Pilla did not appeal. 5 In the instant case, appellant repeats his allegation that IRS agents unlawfully entered his business premises and seized his property. His complaint requests compensatory damages, an injunction, a declaratory judgment and the convention of a three-judge court. As in his first civil action and in the criminal case, appellant contends that the levy statute, 26 U.S.C. § 6331, is unconstitutional. In addition, he maintains that 26 U.S.C. §§ 7421, 7422, and 28 U.S.C. § 2201 are unconstitutional to the extent they interfere with access to the courts. 6 The district court, in granting summary judgment in favor of the government, concluded that appellant's claims are barred under the doctrine of res judicata because "plaintiff is still complaining of the same alleged violation of his rights arising out of the seizure of his printing equipment." The district court also denied the motion to convene a three-judge court on the ground that the claims are insubstantial. This appeal followed. 7 Appellant contends the district court erred in denying his request to convene a three-judge court to rule on the constitutionality of 26 U.S.C. §§ 6331, 7421, 7422 and 28 U.S.C. § 2201. The essence of appellant's complaint in the instant case, as in the prior litigation, is that IRS agents unlawfully entered his business establishment and seized his property, and particularly, that section 6331 is unconstitutional.4 Because appellant has raised analogous claims in two prior civil proceedings, we conclude he is barred under the doctrine of res judicata from litigating matters that were or might have been raised in earlier suits. See Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 378, 60 S.Ct. 317, 84 L.Ed. 329 (1940); Hanson v. Hunt Oil Co., 505 F.2d 1237, 1239-41 (8th Cir. 1974). For the same reason, he has not presented a substantial federal constitutional question, and a three-judge court need not be convened. 8 Furthermore, in appellant's criminal case, United States v. Pilla, supra, 550 F.2d at 1092, this court stated: 9 The defendant's argument boils down to the proposition that 26 U.S.C. § 6331 is unconstitutional because it permits a seizure of property without prior judicial proceedings. That argument has been out of date since the Supreme Court decided Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 51 S.Ct. 608, 75 L.Ed. 1289 (1931), more than forty-five years ago. See Fuentes v. Shevin, 407 U.S. 67, 90-92, 92 S.Ct. 1283, 32 L.Ed.2d 556 (1972); Kalb v. United States, 505 F.2d 506, 510 (2d Cir. 1974); and Tavares v. United States, 491 F.2d 725 (9th Cir. 1974), cert. denied, 420 U.S. 925, 95 S.Ct. 1120, 43 L.Ed.2d 394 (1975). 10 On January 12, 1977, following the decision in United States v. Pilla, supra, 550 F.2d at 1085, the Supreme Court decided G. M. Leasing Corp. v. United States, 429 U.S. 338, 97 S.Ct. 619, 50 L.Ed.2d 530 (1977), in which G. M. Leasing Corporation sought, inter alia, damages arising from the levy and seizure pursuant to section 6331 of assets by IRS agents who conducted a warrantless entry into the corporation's business premises. The Supreme Court held5 that the warrantless entry into the privacy of the corporation's office was violative of the Fourth Amendment and, in order to determine entitlement to monetary damages, remanded for consideration of whether the IRS agents acted in good faith. 97 S.Ct. at 628-33. 11 Subsequently, this court had the opportunity to reconsider the Pilla decision in light of G. M. Leasing and, on March 15, 1977, denied appellant's motion for rehearing and rehearing en banc. Appellant's petition for certiorari was denied by the Supreme Court on June 20, 1977. 12 The merits of appellant's constitutional challenge to the seizure of his property have been decided in his criminal case.6 Moreover, in a prior civil case from which appellant did not appeal, the district court found that the IRS agents were acting within the scope of their employment and with the good faith belief that their actions were lawful. Cf. G. M. Leasing Corp. v. United States, supra, 97 S.Ct. at 619. The issues raised in the instant case have been fully heard and resolved during earlier litigation. 13 Affirmed. 1 The Honorable Earl R. Larson, United States District Judge for the District of Minnesota 2 Section 6331(a) authorizes collection of taxes "by levy upon all property and rights to property" belonging to a person who "neglects or refuses to pay" any tax "or on which there is a lien * * * for the payment of such tax." 3 The court suggested that the correct procedure for appellant to follow would be to pay the tax deficiency, file a claim for refund pursuant to 26 U.S.C. § 7422(a), and proceed with an action against the United States pursuant to 28 U.S.C. § 1346(a)(1). Section 7422 precludes a civil action unless a claim for refund has been filed 4 In this case, appellant has also claimed that the IRS agents failed to appraise and set aside $250 worth of exempt business property pursuant to 26 U.S.C. § 6334(a)(3) and (b). The record reflects that appellant was permitted to remove certain property from the building after the levies were served, and he has not raised any previous objection to lack of appraisal. Furthermore, this court in United States v. Pilla, supra, 550 F.2d at 1091-92, noted that the seizure complied with prescribed procedures 5 The Supreme Court declined to review the question of the validity of the levies placed during the unlawful entry and accepted the Tenth Circuit's determination that the levies were valid. Citing Phillips v. Commissioner, 283 U.S. 589, 596-97, 51 S.Ct. 608, 75 L.Ed. 1289 (1931), and its progeny, the Court reaffirmed that the statutory system under which taxes may be collected summarily meets the requirements of due process as long as there is an adequate opportunity for a post-seizure determination of the taxpayer's rights. 97 S.Ct. at 628 6 Because the substantive basis for the complaint has been resolved, we need not consider appellant's additional claims concerning the constitutionality of "jurisdictional" statutes, such as 26 U.S.C. §§ 7421, 7422, and 28 U.S.C. § 2201	{ "pile_set_name": "FreeLaw" }
132 F.3d 46 Haddlev.Garrison NO. 96-8856 United States Court of Appeals,Eleventh Circuit. Dec 05, 1997 Appeal From: S.D.Ga. ,No.9600029CV1AA 1 Affirmed.	{ "pile_set_name": "FreeLaw" }
UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 16-4392 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. FRANK MICHAEL PEARSON, Defendant - Appellant. No. 16-4529 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. FRANK MICHAEL PEARSON, Defendant - Appellant. Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. T. S. Ellis, III, Senior District Judge. (1:15-cr-00193-TSE-1) Submitted: January 31, 2017 Decided: February 15, 2017 Before SHEDD, AGEE, and THACKER, Circuit Judges. Affirmed by unpublished per curiam opinion. Daniel Tomas Lopez, BRIGLIAHUNDLEY, PC, Tysons Corner, Virginia, for Appellant. Dana J. Boente, United States Attorney, Matthew Burke, Mark D. Lytle, Assistant United States Attorneys, Alexandria, Virginia, for Appellee. Unpublished opinions are not binding precedent in this circuit. 2 PER CURIAM: Frank Michael Pearson appeals his conviction for four counts of embezzlement from a program receiving federal benefits, in violation of 18 U.S.C. § 666(a)(1)(A) (2012). Pearson challenges the district court’s ruling that he was competent to stand trial, the sufficiency of the evidence supporting his conviction, and the district court’s denial of his motion for a new trial. We reject each challenge and affirm. First, we conclude that Pearson waived his challenge to his competency because, after moving in the district court for a finding of incompetency, he declined to offer any arguments in favor of his motion. See United States v. Robinson, 744 F.3d 293, 298 (4th Cir. 2014) (“A party who identifies an issue, and then explicitly withdraws it, has waived the issue.”) (internal quotation marks omitted)). “When a claim of . . . error has been waived, it is not reviewable on appeal.” United States v. Claridy, 601 F.3d 276, 284 n.2 (4th Cir. 2010). We therefore do not review Pearson’s challenge to his competency. Second, we reject Pearson’s challenge to the sufficiency of the evidence against him. “In assessing the sufficiency of the evidence presented in a bench trial, we must uphold a guilty verdict if, taking the view most favorable to the Government, there is substantial evidence to support the verdict.” United 3 States v. Armel, 585 F.3d 182, 184 (4th Cir. 2009) (internal quotation marks omitted). “Substantial evidence means evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant’s guilt beyond a reasonable doubt.” Id. (internal quotation marks omitted). We conclude that the record contains substantial evidence of Pearson’s guilt, including documents, bank statements, and testimony linking Pearson to the embezzlement scheme beyond a reasonable doubt. Third, Pearson contends that the district court erred when it denied his motion for a new trial based on Brady v. Maryland, 373 U.S. 83 (1963). This court reviews a district court’s denial of a motion for a new trial for abuse of discretion. United States v. Wilson, 624 F.3d 640, 660 (4th Cir. 2010). In doing so, the court may not substitute its judgment for the judgment of the district court. Id. To receive a new trial based on Brady, “a defendant must: (1) identify the existence of evidence favorable to the accused; (2) show that the government suppressed the evidence; and (3) demonstrate that the suppression was material.” United States v. King, 628 F.3d 693, 701 (4th Cir. 2011). Pearson argues that the prosecution violated Brady when it withheld evidence supporting allegations of a third party’s wrongdoing found in an anonymous letter received after trial. The district court ruled 4 that Pearson only speculated that favorable evidence existed to support the allegations in the letter, and therefore, Pearson has failed to identify favorable evidence sufficient to establish a Brady violation. Because such speculation is insufficient under Brady, see United States v. Caro, 597 F.3d 608, 619 (4th Cir. 2010), we conclude that the district court did not abuse its discretion when it denied Pearson’s motion for a new trial based on Brady. Accordingly, we affirm the district court’s judgment and its order denying a motion for a new trial. We dispense with oral argument because the facts and legal contentions were adequately presented in the materials before this court and argument would not aid the decisional process. AFFIRMED 5	{ "pile_set_name": "FreeLaw" }
The State of TexasAppellee/s Fourth Court of Appeals San Antonio, Texas December 17, 2014 No. 04-14-00778-CR Victor R. MARTINEZ, Appellant v. THE STATE OF TEXAS, Appellee From the 175th Judicial District Court, Bexar County, Texas Trial Court No. 2010CR5362 Honorable Mary D. Roman, Judge Presiding ORDER The trial court’s certification in this appeal states that “this criminal case is a plea-bargain case, and the defendant has NO right of appeal.” The clerk’s record contains a written plea bargain, and the punishment assessed did not exceed the punishment recommended by the prosecutor and agreed to by the defendant; therefore, the trial court’s certification accurately reflects that the criminal case is a plea-bargain case. 1 See TEX. R. APP. P. 25.2(a)(2). Rule 25.2(d) of the Texas Rules of Appellate Procedure provides, “The appeal must be dismissed if a certification that shows the defendant has a right of appeal has not been made part of the record under these rules.” TEX. R. APP. P. 25.2(d). It is therefore ORDERED that this appeal will be dismissed pursuant to rule 25.2(d) of the Texas Rules of Appellate Procedure unless appellant causes an amended trial court certification to be filed by January 15, 2015, showing appellant has the right of appeal. See TEX. R. APP. P. 25.2(d); 37.1; see also Dears v. State, 154 S.W.3d 610 (Tex. Crim. App. 2005); Daniels v. State,110 S.W.3d 174 (Tex. App.—San Antonio 2003, no pet.). All other appellate deadlines are SUSPENDED pending our resolution of the certification issue. _________________________________ Patricia O. Alvarez, Justice IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said court on this 17th day of December, 2014. ___________________________________ Keith E. Hottle Clerk of Court 1 The plea bargain states, “If defendant fails to appear for sentencing on March 28, 2011, he is exposed to the full range of punishment.” The defendant failed to appear for sentencing on March 28, 2011.	{ "pile_set_name": "FreeLaw" }
IN THE COURT OF CRIMINAL APPEALS OF TEXAS NO. WR-75,729-01 EX PARTE ISAAC WHEELER, Applicant ON APPLICATION FOR A WRIT OF HABEAS CORPUS CAUSE NO. 94-0173 IN THE 71ST DISTRICT COURT FROM HARRISON COUNTY Per curiam. O R D E R Pursuant to the provisions of Article 11.07 of the Texas Code of Criminal Procedure, the clerk of the trial court transmitted to this Court this application for writ of habeas corpus. Ex parte Young, 418 S.W.2d 824, 826 (Tex. Crim. App. 1967). Applicant was convicted of capital murder and sentenced to life imprisonment. The Sixth Court of Appeals affirmed his conviction. Wheeler v. State, No. 06-95-00162-CR (Tex. App.-Texarkana 1996). Applicant contends that his trial counsel rendered ineffective assistance by failing to call witnesses who were available and could have assisted in his defense, and by failing to request jury instructions on accomplice witness testimony and the use of extraneous offense evidence. Applicant has alleged facts that, if true, might entitle him to relief. Strickland v. Washington, 466 U.S. 608 (1984); Ex parte Lemke, 13 S.W.3d 791,795-96 (Tex. Crim. App. 2000). In these circumstances, additional facts are needed. As we held in Ex parte Rodriguez, 334 S.W.2d 294, 294 (Tex. Crim. App. 1960), the trial court is the appropriate forum for findings of fact. The trial court shall obtain a response from Applicant's trial counsel regarding Applicant's claim of ineffective assistance of counsel. The trial court may use any means set out in Tex. Code Crim. Proc. art. 11.07, § 3(d). If the trial court elects to hold a hearing, it shall determine whether Applicant is indigent. If Applicant is indigent and wishes to be represented by counsel, the trial court shall appoint an attorney to represent Applicant at the hearing. Tex. Code Crim. Proc. art. 26.04. The trial court shall make findings as to whether Applicant would have been entitled to jury instructions on extraneous offense testimony and accomplice witness testimony and whether counsel was ineffective for failing to request such instructions. The trial court shall make findings as to whether counsel failed to call witnesses who were available to testify and would have assisted in the defense. The trial court shall make findings of fact as to whether the performance of Applicant's trial attorney was deficient and, if so, whether counsel's deficient performance prejudiced Applicant. The trial court shall also make any other findings of fact and conclusions of law that it deems relevant and appropriate to the disposition of Applicant's claim for habeas corpus relief. This application will be held in abeyance until the trial court has resolved the fact issues. The issues shall be resolved within 90 days of this order. If any continuances are granted, a copy of the order granting the continuance shall be sent to this Court. A supplemental transcript containing all affidavits and interrogatories or the transcription of the court reporter's notes from any hearing or deposition, along with the trial court's supplemental findings of fact and conclusions of law, shall be returned to this Court within 120 days of the date of this order. Any extensions of time shall be obtained from this Court. Filed: May 11, 2011 Do not publish	{ "pile_set_name": "FreeLaw" }
747 N.W.2d 527 (2008) 2008 WI App 51 STATE EX REL. METCALFE v. SCHWARZ[1]. No. 2006AP1043, 2006AP2405. Court of Appeals of Wisconsin. February 12, 2008. Unpublished opinion. Affirmed and remanded. NOTES [1] Petition for Review Filed.	{ "pile_set_name": "FreeLaw" }
[DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED ________________________ U.S. COURT OF APPEALS ELEVENTH CIRCUIT FEBRUARY 10, 2012 No. 11-12417 Non-Argument Calendar JOHN LEY CLERK ________________________ D.C. Docket No. 7:08-cv-00069-HL DEVONIA INMAN, llllllllllllllllllllllllllllllllllllllll Petitioner - Appellant, versus WARDEN, GEORGIA STATE PRISON, llllllllllllllllllllllllllllllllllllllll Respondent - Appellee. ________________________ Appeal from the United States District Court for the Middle District of Georgia ________________________ (February 10, 2012) Before CARNES, BARKETT and ANDERSON, Circuit Judges. PER CURIAM: Devonia Inman appeals the district court’s denial of his 28 U.S.C. § 2254 habeas corpus petition. A Georgia state court convicted Inman of malice murder, armed robbery, theft by taking, possession of a firearm during the commission of a crime, and possession of a firearm by a convicted felon. He contends that the trial court violated his Fourteenth Amendment right to due process and his right to present a complete defense by excluding hearsay statements implicating another man in the crimes for which he was convicted. I. A Georgia grand jury indicted Inman for the September 1998 malice murder and armed robbery of a woman outside of a Taco Bell. In connection with those crimes, it also charged him with theft by taking, possession of a firearm during the commission of a crime, and possession of firearm by a convicted felon. He pleaded not guilty, and the case went to trial. Inman wanted to introduce evidence that another man, Hercules Brown,1 was the one and only murderer. He did not call Brown to testify, though, because Brown had told Inman’s lawyer that he would invoke his Fifth Amendment privilege against self-incrimination if so called. Instead, Inman wanted to call 1 At the time of Inman’s trial, Brown had been indicted for an unrelated murder and the armed robbery of a convenience store. 2 three witnesses. Outside the presence of the jury, Inman’s lawyer summarized for the court the expected testimony of two of those witnesses. First, Inman’s girlfriend’s sister would testify that Brown confessed to the Taco Bell murder while they were smoking marijuana together. Second, Inman’s cousin, a former Taco Bell employee, would testify that Brown had asked her to help him rob the restaurant. The third potential witness, one of Brown’s life-long friends, testified outside the presence of the jury that Brown had told him that he had murdered and robbed the woman outside of the Taco Bell. The court excluded the hearsay testimony of all three witnesses, concluding that it did not pass “the smell test, much less any test for trustworthiness.” The jury then found Inman guilty on all counts and sentenced him to life imprisonment without parole for the malice murder conviction, and the court imposed other sentences for the other convictions. On direct appeal Inman argued, among other things, that the trial court violated his Fourteenth Amendment right to due process by excluding the proposed hearsay testimony. The Georgia Supreme Court “conclude[d] the trial court did not err” because that testimony did not contain persuasive assurances of trustworthiness. Inman v. State, 635 S.E.2d 125, 131 (Ga. 2006). He filed a motion for reconsideration in which he argued, among other things, that the exclusion of the hearsay testimony violated his right to 3 present a complete defense. The court denied that motion in a one-sentence order. He petitioned the Supreme Court of the United States for a writ of certiorari, which it denied. Inman v. Georgia, 552 U.S. 828, 128 S.Ct. 42 (2007). Inman then filed a § 2254 habeas corpus petition in federal district court, making two arguments: that the exclusion of Brown’s hearsay statements violated his Fourteenth Amendment right to due process under Chambers v. Mississippi, 410 U.S. 284, 93 S.Ct. 1038 (1973), and that it violated his right to present a complete defense under either the Sixth or Fourteenth Amendments pursuant to Holmes v. South Carolina, 547 U.S. 319, 126 S.Ct. 1727 (2006). The court denied that petition but granted a certificate of appealability on the following two issues: (1) whether [Inman’s] Due Process rights were violated on the basis that the trial judge should not have excluded hearsay statements showing another person committed the crime because the statements were reliable; and (2) whether [Inman’s] Sixth Amendment right to present a complete defense was violated when the trial judge excluded the hearsay evidence that another person committed the crime for which [Inman] was convicted. II. When examining a district court’s denial of a § 2254 habeas petition, we review de novo questions of law and mixed questions of law and fact, and review for clear error findings of fact. Maharaj v. Sec’y for the Dep’t of Corr., 432 F.3d 1292, 1308 (11th Cir. 2005). We may not grant habeas relief on claims that were 4 previously adjudicated on the merits in state court unless the adjudication resulted in a decision that “was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States,” or “was based on an unreasonable determination of the facts in light of the evidence presented.” 28 U.S.C. § 2254(d). III. A. Inman contends that the Georgia Supreme Court unreasonably applied clearly established federal law from Chambers. In Chambers, the United States Supreme Court held that the exclusion of hearsay statements critical to the defendant’s defense and that “bore persuasive assurances of trustworthiness” violated that defendant’s Fourteenth Amendment right to due process. 410 U.S. at 302, 93 S.Ct. at 1049. The hearsay statements at issue in Chambers were a declarant’s out-of-court confessions to the crime with which the defendant had been charged, and they “bore persuasive assurances of trustworthiness” because: (1) they were “made spontaneously to a close acquaintance shortly after the [crime] occurred”; (2) each statement was “corroborated by some other evidence in the case—[including] [the declarant’s] sworn confession [and] the testimony of an eyewitness”; (3) “each confession . . . was . . . self-incriminatory and 5 unquestionably against interest” and (4) “if there was any question about the truthfulness of the extrajudicial statements, [the declarant] was in the court room and was under oath. . . . [so that] [h]e could have been cross examined by the State, and his demeanor and responses weighed by the jury.” Id. at 300–01, 93 S.Ct at 1048–49. The Georgia Supreme Court’s decision was not an unreasonable application of Chambers. Brown was not in the courtroom and available to testify. Nor were Brown’s hearsay statements corroborated by other evidence, much less a sworn confession or eyewitness testimony. B. Inman also contends that the trial court violated his right to present a complete defense under Holmes by excluding the hearsay testimony about Brown’s statements.2 In Holmes, the Supreme Court held that a South Carolina rule excluding evidence of a third party’s guilt based solely on the strength of the 2 Although the court denied Inman’s motion for reconsideration, which raised multiple issues including his right-to-present-a-complete-defense claim, in a one-sentence order, that order is still entitled to deference under § 2254(d). See Harrington v. Richter, __ U.S. __, 131 S.Ct. 770, 784–85 (2011); Wright v. Sec’y for the Dep’t of Corr., 278 F.3d 1245, 1254–55 (11th Cir. 2002). The warden argues that Inman’s Holmes-based claim was procedurally defaulted because Inman did not raise it until his motion for reconsideration. Whether it was or was not does not matter to the result. 6 prosecution’s case violated the defendant’s right to present a complete defense. 547 U.S. at 329–31, 126 S.Ct. at 1734–35. The Georgia Supreme Court’s decision was neither contrary to nor an unreasonable application of Holmes. Instead of excluding the hearsay testimony about Brown’s statements solely because the prosecution’s case was strong, the trial court did so because those statements did not pass “the smell test, much less any test for trustworthiness.” See id. at 326, 126 S.Ct. at 1732 (“[W]ell established rules of evidence permit trial judges to exclude evidence if its probative value is outweighed by certain other factors such as unfair prejudice, confusion of the issues, or potential to mislead the jury.”). AFFIRMED. 7	{ "pile_set_name": "FreeLaw" }
11-1679-cv Greenberg v. Town of Scarsdale 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 TO 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 17th day of May, two thousand twelve. PRESENT: JOSEPH M. McLAUGHLIN, ROBERT A. KATZMANN, Circuit Judges, JOHN F. KEENAN,* District Judge. _________________________________________ Steven L. Greenberg, Plaintiff-Appellant, v. 11-1679-cv Town of Scarsdale, Village of Scarsdale, Nanette J. Albanese, Defendants-Appellees. _________________________________________ FOR PLAINTIFF -APPELLANT: Steven L. Greenberg, pro se, Scarsdale, N.Y. FOR DEFENDANTS -APPELLEES: Terry Rice, Law Offices of Rice & Amon, Suffern, N.Y. * The Honorable John F. Keenan, United States District Court for the Southern District of New York, sitting by designation. Appeal from a judgment of the United States District Court for the Southern District of New York (Owen, J.). UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED. Appellant Steven L. Greenberg, pro se, appeals from the judgment of the district court granting defendants’ motion to dismiss on the ground that the Tax Injunction Act, 28 U.S.C. § 1341, and the principle of comity, deprived it of subject matter jurisdiction over his complaint asserting, inter alia, violations of 42 U.S.C. § 1983. Greenberg also appeals from the district court’s denial of his motion seeking leave to amend his complaint. We assume the parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on appeal. This Court reviews de novo a district court’s conclusion that it lacked subject matter jurisdiction. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). “A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Id. In addition, to the extent a district court dismisses an action based on comity, we review that decision for an abuse of discretion. See Joseph v. Hyman, 659 F.3d 215, 218 n.1 (2d Cir. 2011). The Tax Injunction Act (“TIA”) provides that “[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” 28 U.S.C. § 1341; see Long Island Lighting Co. v. Town of Brookhaven, 889 F.2d 428, 431 (2d Cir. 1989) (“[T]he Tax Injunction Act . . . prevents federal courts from giving injunctive relief or declaratory relief, as long as there is a plain, speedy and efficient remedy in state court . . . .” (internal citations omitted)). Similarly, the principle of comity prevents a taxpayer from seeking damages in a § 2 1983 action if a plain, adequate, and complete remedy may be had in state court. See Long Island Lighting Co., 889 F.2d at 431. Thus, before the TIA may be invoked to bar district court jurisdiction, two conditions must exist: (1) the assessment or surcharge in question must constitute a tax; and (2) the plaintiff must lack a “plain, speedy and efficient remedy in state court.” Here, for substantially the same reasons cited by the district court and the magistrate judge, we find that the district court was correct in holding that the TIA and the principle of comity divested it of jurisdiction over the instant action. Greenberg’s complaint sought declaratory and injunctive relief, as well as damages pursuant to § 1983, in connection with the assessment of his real property for the purpose of collecting taxes on that property. On appeal, he argues, inter alia, that his complaint is not barred by the TIA or the principle of comity to the extent it challenges defendants’ ultra vires actions, seeks injunctive and declaratory relief that would increase the real property assessments of individuals and entities other than himself, and asserts a due process challenge to the notice of assessment and assessment review process. A close review of these arguments and the record below, however, leads to the conclusion that, despite Greenberg’s characterization of his claims as falling outside the ambit of the TIA and the principle of comity, all of his claims are “in effect seeking a federal-court ruling on a local tax matter,” which is precisely the type of suit the TIA and the principle of comity are intended to prohibit. Bernard v. Vill. of Spring Valley, 30 F.3d 294, 297 (2d Cir. 1994). In addition, as correctly determined by the district court, available New York remedies provide an adequate means for litigating all of Greenberg’s assessment claims in a state forum. See Long Island Lighting Co., 889 F.2d at 431-33. Accordingly, the judgment of the district court dismissing this action for lack of jurisdiction is affirmed. 3 Greenberg also challenges the magistrate judge’s denial of his motion to amend his complaint. We review this decision for abuse of discretion. See Sista v. CDC Ixis N. Am., Inc., 445 F.3d 161, 177 (2d Cir. 2006). Having reviewed Greenberg’s contentions on appeal and the record of proceedings below, we find that the district court properly concluded that amendment in this case would be futile. Thus, it did not abuse its discretion in denying Greenberg’s motion to amend. See AEP Energy Servs. Gas Holding Co. v. Bank of Am. N.A., 626 F.3d 699, 726 (2d Cir. 2010) (“Leave to amend may be denied on grounds of futility if the proposed amendment fails to state a legally cognizable claim or fails to raise triable issues of fact.”). We have considered all of Greenberg’s remaining arguments and find them to be without merit. Accordingly, we AFFIRM the judgment of the district court. FOR THE COURT: Catherine O’Hagan Wolfe, Clerk 4	{ "pile_set_name": "FreeLaw" }
IN THE COURT OF APPEALS OF IOWA No. 13-0242 Filed March 12, 2014 STATE OF IOWA, Plaintiff-Appellee, vs. DUSTIN LEE TRUAX, Defendant-Appellant. ________________________________________________________________ Appeal from the Iowa District Court for Black Hawk County, Bradley J. Harris, Judge. A defendant convicted of two counts of lascivious acts appeals the imposition of consecutive sentences. AFFIRMED. Mark C. Smith, State Appellate Defender, and Nan Jennisch, Assistant Appellate Defender, for appellant. Thomas J. Miller, Attorney General, Kevin Cmelik, Assistant Attorney General, Thomas J. Ferguson, County Attorney, and Linda Fangman, Assistant County Attorney, for appellee. Considered by Vogel, P.J., and Tabor and McDonald, JJ. 2 TABOR, J. This appeal involves a common sentencing challenge: whether the district court offered adequate reasons for imposing consecutive terms. Because we find no abuse of discretion in the district court’s reasons expressed for its overall sentencing plan, including its reference to the two different children affected by the defendant’s crimes, we affirm. I. Background Facts and Proceedings A jury convicted Dustin Lee Truax of two counts of lascivious acts with a child, both class “C” felonies,1 in violation of Iowa Code section 709.8 (2009). The two counts involved separate victims, ten-year-old twin sisters. Truax had been engaged to the girls’ mother. The presentence investigation report (PSI) prepared for sentencing recommended Truax be incarcerated for both offenses and that the sentences be run consecutively.2 The PSI preparer cited the defendant’s “lengthy criminal history” and his continued denial of committing the offenses. The district court held a sentencing hearing on January 7, 2013. The State recommended indeterminate ten-year sentences on each count, to run consecutive for a total of twenty years. The prosecutor explained why the State believed consecutive sentencing was appropriate: First of all, the facts and nature of the particular case. We do have two separate victims. They were two separate little girls who were molested in this case, and because of that, I don’t think a concurrent sentence is appropriate. A person should not get credit because they did it to two girls rather than one, and the fact that 1 The trial information lists a class “D” felony, which was a scrivener’s error. 2 The PSI preparer mistakenly referred to indeterminate five-year terms, recommending they run consecutively, for a total of ten years. 3 there were two girls entrusted to be in his care, who he had assumed a role of a parental role we think goes toward consecutive sentencing. The prosecutor also argued for consecutive sentences based on Truax’s criminal history. She highlighted portions of the PSI for the court, noting the preparer’s view that Truax answered questions “in an unrealistically virtuous manner to be seen in a more favorable light” and “doesn’t think he needs treatment.” The State noted the PSI’s somewhat unusual recommendation for consecutive terms, and urged the court to follow that proposal. As mitigating evidence, defense counsel offered testimony from Truax’s wife of two years, who trusted Truax with her nine-year-old daughter. Truax’s father also testified on his behalf at sentencing. The defense urged the court to suspend the sentences for both convictions and place Truax on probation. Following those arguments, the district court sentenced Truax to two indeterminate ten-year terms to be run consecutively. Truax now appeals that sentence, arguing the court did not provide sufficient reasons to impose consecutive sentences. II. Standard of Review/Sentencing Principles We review the sentence ordered for an abuse of discretion. State v. Barnes, 791 N.W.2d 817, 827 (Iowa 2010). We find an abuse of discretion when the sentencing court exercises its discretion on grounds clearly untenable or to an extent clearly unreasonable. Id. A trial court generally has discretion to impose concurrent or consecutive sentences for convictions on separate counts. Iowa Code § 901.8; State v. Delaney, 526 N.W.2d 170, 178 (Iowa Ct. App. 1994). A sentencing court may 4 consider the fact that there were two victims in deciding whether to impose consecutive sentences. State v. Millsap, 704 N.W.2d 426, 435 (Iowa 2005). Our rules of criminal procedure require the court to state—on the record— its reason for choosing a particular sentence. Iowa R. Crim. P. 2.23(3)(d). This requirement includes offering the rationale for imposing consecutive sentences. State v. Jacobs, 607 N.W.2d 679, 690 (Iowa 2000). We do not require detailed reasons, only a sufficient basis to allow our appellate review of the discretionary action. See State v. Evans, 672 N.W.2d 328, 331 (Iowa 2003). “‘A statement may be sufficient, even if terse and succinct, so long as the brevity of the court’s statement does not prevent review of the exercise of the trial court’s sentencing discretion.’” State v. Hennings, 791 N.W.2d 828, 838 (Iowa 2010) (quoting State v. Johnson, 445 N.W.2d 337, 343 (Iowa 1989)). In addition, we do not require the reasons “to be specifically tied to the imposition of consecutive sentences, but may be found from the particular reasons expressed for the overall sentencing plan.” Delaney, 526 N.W.2d at 178. We look to the whole record to find supporting reasons. Id. Finally, “[t]he fact that the reason given by the judge for consecutive sentences was the same reason that was given for not granting defendant probation does not present a basis for rejecting that reason as the controlling consideration for the imposition of consecutive sentences.” State v. Jacobs, 644 N.W.2d 695, 700 (Iowa 2001). III. Analysis Truax seeks resentencing on the limited question of whether he is deserving of consecutive or concurrent sentences. He claims the district court 5 erred in failing to provide specific reasons for ordering his indeterminate ten-year terms for lascivious acts to be served consecutively. At the sentencing hearing, the court pronounced: It is the judgment and sentence of the court in each of those cases that you’re sentenced to a term not to exceed 10 years under the direction of adult corrections. That you are ordered to pay a fine of $1,000 plus a 35 percent surcharge. The fine and surcharge in this matter will be suspended. The terms of incarceration will not be suspended. You will be ordered to serve those terms, and those terms will run consecutive in this matter for a total of 20 years. .... The court notes your lengthy criminal record, Mr. Truax. Also the fact that the jury found you guilty of lascivious acts with two different children. Those are two children whose lives have been affected by this. The court is also aware that that when you reach prison that you’ll be eligible for parole at an earlier time. You won’t have to serve 20 years. That amount of time will be based upon how you cooperate with the programs that are given to you down there. If you cooperate, you’ll be able to come out on parole sooner. If you don’t cooperate and don’t accept the help that’s there, then the fact that you’re looking at a 20-year sentence will mean that you’re away from children for a longer period of time. Truax relies on Jacobs, 607 N.W.2d at 690, State v. Uthe, 542 N.W.2d 810, 816 (1996), and State v. Jason, 779 N.W.2d 66, 76–77 (Iowa Ct. App. 2009), contending that while the district court provided sufficient reasons to support its decision to impose incarceration over probation, it did not articulate specific reasons for ordering consecutive terms. In response, the State draws our attention to two more recent supreme court cases: Barnes, 791 N.W.2d at 827–28 and Hennings, 791 N.W.2d at 838– 39. In Barnes, the sentencing court noted the defendant’s long criminal history, the majority of which dealt with crimes involving the taking of other people’s property, burglary, and going places where it was illegal for him to go; his lack of any 6 real work experience; and the court’s belief the defendant just did not “get it,” had no understanding of the rehabilitation process, and did not understand that he was not supposed to take other people’s property. 791 N.W.2d at 827-28. The sentencing court concluded by telling Barnes: “So the best way I can assist you, the best way I can assist the public and protect society is the sentence that I am going to now give you.” Id. at 828. The court proceeded to impose fifteen years on each of the two counts to run consecutively. Id. The sentencing court did not specify which of its reasons supported the consecutive sentences, but the supreme court nevertheless held: “The court’s reasons for ordering consecutive sentences were clearly expressed in its overall explanation for the sentence it imposed.” Id. (citing State v. Keopasaeuth, 645 N.W.2d 637, 641–42 (Iowa 2002) (rejecting defendant’s argument no reason was given for imposing consecutive sentences: “The State had argued to the court for consecutive sentences, consecutive sentences were imposed, and thereafter reasons for the sentence that had been pronounced were articulated”) and Jacobs, 644 N.W.2d at 700 (finding same reason adequately supported resentencing court’s decision to reject probation and to impose consecutive sentences)). In Hennings, the supreme court rejected a concession by the State that the district court did not state on the record its reasons for selecting consecutive sentences. 791 N.W.2d at 838. The supreme court explained: “The [sentencing] court spoke at length about the information it considered in making a sentencing determination and specifically, what factors influenced its ultimate decision.” Id. The Hennings court concluded: “([i]t is apparent to us that the district court 7 ordered the defendant to serve his sentences consecutively as part of an overall sentencing plan.)” Id. at 839 (citation omitted). The State defends the district court’s exercise of discretion in sentencing Truax to an indeterminate twenty-year term, noting the judge “expressly took into account the nature of the crimes committed, the fact that the defendant committed lascivious acts with two separate children, and the defendant’s ‘lengthy criminal record.’” The State further argues the sentencing court “explicitly linked the defendant’s time in prison to his inclusion and completion of rehabilitation in prison” and to the fact that he would be away from children for a longer period of time if he did not cooperate with treatment. We find the State’s argument persuasive. We acknowledge it would remove all doubt from these kind of sentencing challenges if the district court announced outright on the record something to the effect: “Here are the reasons I am ordering consecutive sentences”—even if those reasons doubled as the grounds for choosing incarceration over probation. But our case law does not require the judge to draw such an overt connection at the sentencing hearing, so long as the reason for consecutive sentences may be “found from the particular reasons expressed for the overall sentencing plan.” See Delaney, 526 N.W.2d at 178; Johnson, 445 N.W.2d at 343. The record before us is reminiscent of the proceedings in Johnson where the State’s attorney gave the following sentencing recommendation: “It’s my understanding that each of those two counts [of sexual abuse] deals with a separate individual, separate victim, therefore, I would ask the court to give good consideration to running the sentences consecutively because two different 8 people were in fact victimized as determined by the jury.” 445 N.W.2d at 343. The sentencing court agreed and sentenced Johnson to consecutive terms. Id. Similarly here, the prosecutor focused her request for consecutive sentences on Truax’s two separate victims. The court echoed the State’s reasoning in imposing consecutive terms, noting “[t]hose are two children whose lives have been affected by this.” The sentencing court did not discuss the two victims and Truax’s “lengthy criminal history” in a generic justification for imposing prison time, but rather in reference to its selection of an indeterminate twenty-year sentence. The court explained to Truax the actual length of his sentence would be determined by his behavior and willingness to get help. But the sentencing court warned: “If you don’t cooperate and you don’t accept the help that’s there, then the fact that you’re looking at a 20-year sentence will mean you’re away from children for a longer period of time.” The court’s overall explanation for Truax’s indeterminate twenty-year sentence satisfied the requirements of rule 2.23(3)(d) as interpreted in Barnes and Hennings. See Barnes, 791 N.W.2d at 827–28; Hennings, 791 N.W.2d at 838–39. The record is sufficient for us to determine the district court did not abuse its discretion in imposing consecutive sentences. AFFIRMED.	{ "pile_set_name": "FreeLaw" }
Case: 15-11187 Document: 00514560754 Page: 1 Date Filed: 07/18/2018 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals No. 15-11187 Fifth Circuit FILED Conference Calendar July 18, 2018 Lyle W. Cayce UNITED STATES OF AMERICA, Clerk Plaintiff - Appellee v. AMILCAR LINARES-MAZARIEGO, also known as Amilcar Linares, Defendant - Appellant Appeal from the United States District Court for the Northern District of Texas USDC No. 3:15-CR-201-1 ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES Before JOLLY and SOUTHWICK, Circuit Judges.* PER CURIAM:** Amilcar Linares-Mazariego was convicted of illegal reentry after removal in violation of 8 U.S.C. §§ 1326(a) and (b)(2). He appealed his conviction and sentence but acknowledged that his constitutional vagueness * Due to Judge Edward Prado’s retirement on April 2, 2018, this matter is being decided by a quorum. See 28 U.S.C. § 46(d). ** Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. Case: 15-11187 Document: 00514560754 Page: 2 Date Filed: 07/18/2018 No. 15-11187 challenge to 18 U.S.C. § 16(b) was then foreclosed by this court’s precedent. See United States v. Gonzalez-Longoria, 831 F.3d 670, 672 (5th Cir. 2016) (en banc), abrogated by Sessions v. Dimaya, 138 S. Ct. 1204 (2018). We granted his motion for summary disposition and affirmed the district court’s judgment. United States v. Linares-Mazariego, 677 F. App’x 182, 183 (5th Cir. 2017). The Supreme Court granted certiorari, vacated the judgment, and remanded this case to us for further consideration in light of Dimaya. The parties have submitted a joint supplemental letter brief that addresses the action we should take on remand. The parties agree that resentencing is not warranted. Consistent with a recent precedent, they agree we may reform the district court’s judgment to reflect a sentence according to Section 1326(b)(1) and affirm the judgment as modified. E.g., United States v. Godoy, 890 F.3d 531, 542 (5th Cir. 2018), as revised (June 25, 2018). Though we agree with the parties as to our authority to reform the judgment, we conclude that a change is clearer should it become relevant in the future if a new judgment is entered by the district court. Therefore, Linares-Mazariego’s conviction and sentence are AFFIRMED, but we REMAND this case to the district court for the limited purpose of entering a corrected judgment to reflect a conviction and sentence under 8 U.S.C. § 1326(b)(1). 2	{ "pile_set_name": "FreeLaw" }
796 F.2d 1197 24 ERC 1809, 55 USLW 2127, 16 Envtl.L. Rep. 20,866 WYCKOFF COMPANY, Plaintiff-Appellant,v.ENVIRONMENTAL PROTECTION AGENCY, the United States ofAmerica, and the Washington State Department ofEcology, Defendants-Appellees. No. 85-3518. United States Court of Appeals,Ninth Circuit. Argued and Submitted Feb. 12, 1986.Decided Aug. 14, 1986. Marvin B. Durning, Seattle, Wash., for plaintiff-appellant. Robert L. Klarquist, Dept. of Justice, Washington, D.C., Jeffrey D. Goltz, Olympia, Wash., for defendants-appellees. Appeal from the United States District Court for the Western District of Washington. Before WALLACE and THOMPSON, Circuit Judges, and STEPHENS,* District Judge. WALLACE, Circuit Judge: 1 Wyckoff Company (Wyckoff) brought an action for a judgment declaring that the Environmental Protection Agency (EPA) was without authority to issue two orders requiring Wyckoff to submit written proposals for the monitoring, testing, analysis, and reporting of hazardous wastes at two of Wyckoff's facilities. The district court denied Wyckoff's motion for a preliminary injunction restraining the EPA from enforcing those orders. We have jurisdiction pursuant to 28 U.S.C. Sec. 1292(a)(1), and we affirm. 2 * Wyckoff owns and operates two wood treatment plants at which it uses hazardous chemicals as wood preservatives and stores hazardous wastes. Both plants are in the State of Washington. The EPA found that hazardous materials at one site had seeped into the surrounding soil, the groundwater, and into Puget Sound. At the other site, hazardous wastes had entered the surrounding soil, and likely the groundwater as well. The EPA determined that the storage and release of hazardous wastes at each of these facilities "may present a substantial hazard to human health or the environment." It issued orders requiring Wyckoff to submit written proposals for monitoring, testing, analysis, and reporting of the hazardous waste at the facilities. II 3 To obtain preliminary relief, the moving party must make a clear showing of either " '(1) probable success on the merits and possible irreparable injury or (2) sufficiently serious questions going to the merits to make them fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.' " Lydo Enterprises v. City of Las Vegas, 745 F.2d 1211, 1212 (9th Cir.1984) (Lydo), quoting Ebel v. City of Corona, 698 F.2d 390, 392 (9th Cir.1983) (emphasis in original); see Wilson v. Watt, 703 F.2d 395, 399 (9th Cir.1983). These articulations of the required showing do not express two separate tests, but are " 'merely extremes of a single continuum.' " Lydo, 745 F.2d at 1212, quoting Benda v. Grand Lodge of Int'l Ass'n of Machinists, 584 F.2d 308, 315 (9th Cir.1978), cert. dismissed, 441 U.S. 937, 99 S.Ct. 2065, 60 L.Ed.2d 667 (1979). A weighing of the public interest is particularly important in cases, such as the one before us, where the public health and welfare may depend on unhindered enforcement of a federal environmental statute. See United States v. Akers, 785 F.2d 814, 823 (9th Cir.1986); California v. Tahoe Regional Planning Agency, 766 F.2d 1319, 1324 (9th Cir.1985). 4 We review a district court's denial of a preliminary injunction for abuse of discretion. Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d 750, 752 (9th Cir.1982). To determine whether there has been an abuse of discretion we " 'must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.' " Id., quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971). Thus, we will not substitute our own judgment for that of the district court. Id. Nevertheless, a district court's denial of preliminary relief may be reversed if the court "misapprehends the law with respect to the underlying issues in litigation." Id. 5 Wyckoff contends that the district court's misapprehension of the law was the basis for its denial of relief in this case. We must consider whether the district court misconstrued the relevant statutory provisions in concluding that Wyckoff had little chance of success on the merits. III 6 The Resource Conservation and Recovery Act (Act), 42 U.S.C. Sec. 6901 et seq., was enacted to protect the national health and environment. See 42 U.S.C. Secs. 6901, 6902. The Act confers on the Administrator of the EPA broad powers to regulate the storage, treatment, transportation, and disposal of potentially hazardous materials. See 42 U.S.C. Sec. 6912(a). The EPA orders that Wyckoff challenges were issued in August 1984 pursuant to section 3013 of the Act, which provides: 7 If the Administrator determines, upon receipt of any information, that-- 8 (1) the presence of any hazardous waste at a facility or site at which hazardous waste is, or has been, stored, treated, or disposed of, or 9 (2) the release of any such waste from such facility or site 10 may present a substantial hazard to human health or the environment, he may issue an order requiring the owner or operator of such facility or site to conduct such monitoring, testing, analysis, and reporting with respect to such facility or site as the Administrator deems reasonable to ascertain the nature and extent of such hazard. 11 42 U.S.C. Sec. 6934. 12 Wyckoff does not allege that there was any error in the Administrator's interpretation of the terms of section 3013, or in the Administrator's evaluation of the facts in this case. Instead, Wyckoff contends that section 3013 did not apply in the State of Washington at the time the orders were issued, because federal regulation under the Act had been superseded by the implementation of a federally approved state regulatory program under section 3006 of the Act. 42 U.S.C. Sec. 6926 (1982).1 13 Section 3006 provides for federal authorization of state hazardous waste programs. 42 U.S.C. Sec. 6926 (1982). The Administrator may refuse to authorize a state program if he timely finds that "(1) such State program is not equivalent to the Federal program under this subchapter, (2) such program is not consistent with the Federal or State programs applicable in other States, or (3) such program does not provide adequate enforcement of compliance with the requirements of this subchapter." 42 U.S.C. Sec. 6926(b) (1982). If authorization is not properly denied, the "State is authorized to carry out [its hazardous waste program] in lieu of the Federal program ... and to issue and enforce permits for the storage, treatment, or disposal of hazardous waste." Id. States may also request, and receive from the Administrator, "interim authorization" to carry out a hazardous waste program: 14 The Administrator shall, if the evidence submitted shows the existing State program to be substantially equivalent to the Federal program under this subchapter, grant an interim authorization to the State to carry out such program in lieu of the Federal program pursuant to this subchapter.... 15 42 U.S.C. Sec. 6926(c) (1982). Any action taken by the state under an authorized program "shall have the same force and effect as action taken by the Administrator under this subchapter." 42 U.S.C. Sec. 6926(d) (1982). The Administrator retains power, after a public hearing, to revoke the authorization of any state program not operated in accordance with the requirements of federal hazardous waste law. 42 U.S.C. Sec. 6926(e) (1982). 16 At the time the Administrator issued the section 3013 orders to Wyckoff, the State of Washington operated a state hazardous waste program that had received interim authorization from the Administrator, pursuant to section 3006(c). During the course of judicial proceedings, the state program has qualified as an authorized program under section 3006(b). IV 17 Wyckoff argues that because section 3006 authorizes state programs to be carried out "in lieu of the Federal program," Congress intended to revoke the EPA's power to issue orders under section 3013 where an authorized state program is in effect. The linchpin of Wyckoff's argument is that the term "program" in section 3006 encompasses "the sum of the hazardous waste management authorities and activities described anywhere in subtitle C" of the Act, including section 3013. In short, Wyckoff contends that the EPA's power under section 3013 constitutes part of the "Federal program" that is supplanted by an authorized state program under section 3006. Wyckoff concludes that the Administrator thus lacked power to issue the challenged orders. A. 18 In reviewing an agency's construction of a statute that it administers, we must first address 19 whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, .... the question for the court is whether the agency's answer is based on a permissible construction of the statute. 20 Chevron USA v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984) (footnotes omitted) (Chevron ). If the EPA's interpretation of section 3006 is reasonable, "[w]e must defer to the agency's interpretation even if the agency could also have reached another reasonable interpretation, or even if we would have reached a different result had we construed the statute initially." Washington v. United States EPA, 752 F.2d 1465, 1469 (9th Cir.1985) (Washington ); see Chevron, 467 U.S. at 843-45, 104 S.Ct. at 2782-83; Train v. Natural Resources Defense Council, 421 U.S. 60, 87, 95 S.Ct. 1470, 1485, 43 L.Ed.2d 731 (1975). 21 We can discern no clear congressional intent that section 3006 be read to disable the EPA from issuing orders under section 3013 wherever an authorized state hazardous waste program operates "in lieu of the Federal program." Wyckoff's argument that the EPA's power under section 3013 is part of the superseded "Federal program" has no unambiguous support in the Act. Far from expressly conferring on the terms "program" and "Federal program" the all-encompassing meaning that Wyckoff proffers, the Act does not even define these terms. See Act Sec. 1004, 42 U.S.C. Sec. 6903 (definitional provision). Further, nowhere in the Act or in its legislative history is there any clear indication that the EPA's section 3013 power is part of the "Federal program" to be supplanted under section 3006. 22 Indeed, section 3008 appears to refute the interpretation Wyckoff would have us adopt. Section 3008(a) provides in part: 23 (1) Except as provided in paragraph (2), whenever on the basis of any information the Administrator determines that any person is in violation of any requirement of this subchapter, the Administrator may issue an order requiring compliance immediately or within a specified time period or the Administrator may commence a civil action in the United States district court in the district in which the violation occurred for appropriate relief, including a temporary or permanent injunction. 24 (2) In the case of a violation of any requirement of this subchapter where such violation occurs in a State which is authorized to carry out a hazardous waste program under section 6926 of this title [ (Act Sec. 3006) ], the Administrator shall give notice to the State in which such violation has occurred prior to issuing an order or commencing a civil action under this section. 25 42 U.S.C. Sec. 6928(a)(1), (2) (1982); cf. 42 U.S.C. Sec. 6973(a) (1982) (EPA may take any action necessary upon finding imminent and substantial danger "notwithstanding any other provision"). Since the Administrator may exercise section 3008 powers even where a state program is in effect, it is clear that Congress did not intend, by authorizing a state program "in lieu of the Federal program," to preempt federal regulation entirely. 26 Wyckoff attempts to salvage its reading of section 3006 by arguing that section 3008, unlike section 3013, explicitly reserves federal authority in the face of an authorized state program. Where powers are not expressly reserved, it argues, they are displaced by the state program. This argument, however, misstates the apparent function of section 3008(a)(2). Read in context, section 3008(a)(2) does not explicitly reserve federal authority; rather, it simply conditions the exercise of such authority on the provision of prior notice. In other words, were section 3008(a)(2) to be eliminated from the Act, the apparent effect would not be to withdraw federal authority under section 3008 wherever authorized state programs were in effect; rather, it would be to free federal section 3008 authority of the notice requirement. B. 27 Having concluded that Congress did not clearly intend the interpretation proffered by Wyckoff, we have no difficulty finding that the EPA's interpretation of section 3006 is reasonable. The EPA's conclusion that its power to issue orders under section 3013 survives in those states where an authorized state program is operating is plainly consistent with a straightforward reading of the Act. Its reasonableness is further demonstrated by the fact that it comports with our opinion in Washington. In Washington, we upheld the EPA's refusal to authorize the State of Washington to apply its state program of hazardous waste regulations to activities of both Indians and non-Indians on Indian land. 752 F.2d at 1466. We held that despite the adoption of a state program in lieu of the federal program, the EPA would retain authority to regulate hazardous wastes on Indian lands, to the exclusion of state regulation of the activities of Indians on Indian land. Id. at 1472. While we had no occasion to hold that the territorial jurisdiction of federal and state agencies overlapped, see id. at 1468 ("We do not decide the question whether Washington is empowered to create a program reaching into Indian country when that reach is limited to non-Indians."), we recognized that "[w]here a state program is in effect, EPA retains certain oversight and enforcement powers, including the power to withdraw authorization if the state program fails to comply with the federal requirements." Id. at 1467 (emphasis added). We specifically cited section 3013 as one of the sections which the EPA retained its powers of "oversight and enforcement." Id. at 1467, citing 42 U.S.C. Sec. 6934 (Act Sec. 3013). V 28 Because the EPA's interpretation of section 3006 of the Act is a reasonable one, and is entitled to deference, we conclude that Wyckoff has an insubstantial chance of success on the merits in this case. Because the district court did not misapprehend the law, and properly applied the test for preliminary relief, we conclude that its denial of a preliminary injunction was not an abuse of discretion. 29 AFFIRMED. * Honorable Albert Lee Stephens, Jr., United States District Judge, Central District of California, sitting by designation 1 The Administrator's orders in this case were issued in August 1984, and the district court's order denying preliminary relief was issued on November 6, 1984. We consider the statutory language then in effect to determine whether the district court erred by concluding that the Administrator had authority to issue the August 1984 orders. The language of several relevant sections of the Act was altered by amendment later in November 1984. Wyckoff concedes that the 1984 amendments do not affect the import of the statute for purposes of the questions addressed in this appeal. We agree. Nevertheless, wherever language of a cited section has been altered by the 1984 amendments, our citations will include the parenthetical "(1982)."	{ "pile_set_name": "FreeLaw" }
268 F.Supp.2d 296 (2003) David R. MILLER, Petitioner, v. Daniel A. SENKOWSKI, Superintendent of Clinton Correctional Facility, A State Prison of Northern New York State, Respondent. No. CV 00-0208(DRH)ETB. United States District Court, E.D. New York. June 24, 2003. As Amended July 22, 2003. 298 Federal Defender Division Appeals Bureau by Darrell B. Fields, Esq., New York City, for Petitioner. Suffolk County District Attorney's Office by Thomas C. Costello, Esq., Riverhead, NY, for Respondent. AMENDED[1]MEMORANDUM & ORDER HURLEY, District Judge. I. Background A. Procedural Background of the Habeas Petition This 28 U.S.C. § 2254 habeas corpus application was commenced by the filing of a petition on January 10, 2000. In connection with this petition, the Court issued an Order to Show Cause for the Respondent to answer. Thereafter, the petition was respectfully referred to Magistrate Judge E. Thomas Boyle for a report and recommendation. Judge Boyle's Report and Recommendation ("Report") was received by this Court on July 24, 2002. Judge Boyle recommended, in his thorough and well-reasoned Report, that the application for a writ of habeas corpus be granted on the grounds that (1) Petitioner's trial counsel was constitutionally defective and (2) that Petitioner's sentence was retali Respondent was required to file any objections within 10 days of being served with a copy of Judge Boyle's report. Respondent filed timely objections. However, in an order dated September 3, 2002, this Court ruled that those objections were not sufficiently detailed to trigger de novo review of the petition. In that same order, this Court directed Respondent to cure these defects within 10 days or the Court would not apply de novo review to the Magistrate Judge's report. As of the date of this order, no renewed objections to the Magistrate Judge's Report have been submitted to the Court. Nonetheless, the Court, considering the importance of the subject matter, declines to review the Report for clear error. Instead, the Court conducts a de novo review of the Report. B. Factual Background of the Underlying Conviction and Subsequent Appeals.[2] Petitioner was arrested on February 16, 1995. On February 24, 1995, Suffolk County Grand Jury indicted Petitioner on four counts of sodomy in the first degree, one count of rape in the first degree and one count of endangering the welfare of a child. The child was Chanel, the then-ten-year old daughter of Petitioner's ex-girlfriend, Debra. Petitioner, Debra and Chanel are all of african-american descent. Before trial, the state made a plea offer to Petitioner of two (2) to six (6) years. At the time, the Honorable Gary J. Weber, 299 Judge of the Suffolk County Court ("Judge Weber"), stated that if the plea was accepted that day, he would be as "lenient as the law allows me" but that "he would not be thinking of that" at sentencing if Petitioner stood trial. Petitioner declined the offer maintaining that he was innocent of the charges. Petitioner said, "This moment in time, I would like to say that I think the offer is rather good for a person guilty of this crime. But, at this time, and at the time before my arrest, I was not guilty, and I'm still not guilty. So I'm not taking [the offer]. . . ." Suppression Hearing Tr. at 46. The case was thereupon scheduled for trial. Scott Allen, Esq. ("Allen"), Petitioner's assigned counsel at the time, made an application to adjourn the trial for approximately one week due to Allen's own health problems. On Tuesday, January 16, 1997, the court held a hearing on the adjournment request. At the hearing, Allen indicated that complications with a bone marrow transplant would cause him to be hospitalized for the next week, during which time Petitioner's trial was scheduled to begin. Allen, who was hospitalized later that day, said, "I would either request the Court to try to see if it can reschedule things to grant me that week to enter the hospital and get treated and continue recovery, or for the Court to do whatever it feels is appropriate." Allen further indicated that there was no guarantee that he could resume Petitioner's defense after one week and that later complications caused by his lowered immune system could further delay the proceedings. Judge Weber said, "[m]y inclination is not simply to grant an adjournment, but to relieve you [Allen] from the case." Judge Weber then asked Petitioner to state his opinion on the issue. The conversation between the court and Petitioner was as follows: MILLER: Your Honor, I feel very comfortable with Mr. Allen. And if it pleases the Court, I wish to continue to proceed on with these procedures with Mr. Allen whenever he is straight. COURT: Except, the problem there is, [Petitioner], I have no way to guarantee that Mr. Allen is going to be able to proceed on an adjourned date that I set. That has got two bad consequences. One, this case gets old. And, No. 2, you're in custody. So it's not good for your interests. Do you understand? MILLER: Yes, I do. COURT: Suppose, Mr. Allen, this is a recurring thing with him? Suppose what happens is that after a week or so, even assuming that week schedule proves true, that he comes back. It's wintertime now, and he catches influenza in the middle of your trial, then what do we do? So anyway, I think with those things in mind, it's probably a good idea that we should relieve Mr. Allen, don't you? MILLER: OK, your Honor. How long will this next lawyer have to familiarize himself? COURT: There is a couple of things the hearings have been done. What I'll do, whatever I find, I'll supply him with a copy of the decisions. A lot of the preliminary work has already been done by Mr. Allen. I don't know if the man will need that long a time. I'm thinking in terms of starting it up next week, but I will have the guy work on it today or tomorrow for sure. OK, [Petitioner]? Don't forget, there is further time on these things, because jury selection takes some time, and you can be working on that. So it's not a complete waste. With that in mind, I'm going to relieve Mr. 300 Allen. I'm going to be putting the case on the calendar, however, for tomorrow only for the purposes of seeing if I can have a new 18-B person in place for that day, and Mr. Allen is relieved . . . Hearing Tr. at 4-6. The next day, on Wednesday, January 17, 1996, the court appointed John Jiras, Esq. ("Jiras")[3] to represent Petitioner. Jury selection and trial began on the following Monday, January 22, 1996. Jiras did not request any adjournment of the trial for additional time to prepare Petitioner's defense. Before jury selection, Jiras made a motion to dismiss counts one, two, four, five and six of the indictment. Counts one and two of the indictment charged Petitioner with anal and oral sodomy in the first degree on occasions occurring between April 11 and June 24, 1993; count three charged Petitioner with rape in the first degree on June 24, 1993; counts four and five charged Petitioner with anal and oral sodomy in the first degree on occasions occurring between September 1 and October 31, 1993; and count six charged Petitioner with endangering the welfare of a child between April 11 and October 31, 1993. Jiras argued that counts one, two, four, five and six of the indictment should be dismissed because Petitioner was deprived of his right to develop an adequate defense, and specifically an alibi, by the indictments non-specific allegations of sexual abuse over a three-month period (with the exception of count three). Judge Weber denied the motion. Jury selection began on January 22, 1996. Three panels of prospective jurors participated in the process over the course of three days. Judge Weber issued preliminary instructions to all of the prospective jurors. One of these preliminary instructions directed the jurors to evaluate all evidence fairly and impartially. The prosecution and defense counsel were also allotted time to conduct their own voir dire. During the voir dire process, Jiras first advanced his theory as to why Chanel might not be telling the truth. As the Court understands the theory, Jiras was attempting to convey the idea that a poor child without both a mother and a father in the home is less likely to tell the truth than a corresponding child with greater economic means and a stable homelife. Jiras referred to this hypothetical child of economic and familial stability as "Beaver," referring to the eponymous character from the television show "Leave it to Beaver." The first jury panel was asked by Jiras if they agreed that the character of the parents, and particularly the mother, would significantly influence the upbringing of a child. The panel agreed. Jiras then asked whether a child's veracity might be affected by a mother of questionable character. Two prospective jurors acknowledged that a child's environment could affect that child's credibility. Jiras later asked an african-american prospective juror whether race would affect his ability to act as a jurcr. The prospective juror answered that it would not. The second day of jury selection involved the adding of more potential jury members to the jury pool. At this time, Jiras discussed his theory regarding credibility and stable homelife with one panel member. The potential juror, Mr. Reaves, disputed Jiras' proposed direct correlation 301 between stable homelife (as well as legitimacy) and the existence of some type of disadvantage. Mr. Reaves stated that "My son was born out of wedlock. I'm now married to his mother. Does that put him at a disadvantage up until that point?" Eventually, however, Mr. Reaves conceded that it is possible that "within that kind of difficult environment[,] that a child and her credibility might be affected...." Although Jiras continued to ask the potential juror whether a child in a stable homelife would be more "susceptible to the truth" than a child born out of wedlock, the potential juror declined to make such a broad generalization. Eventually, Jiras moved on to another panel member. Jiras would eventually exercise a peremptory challenge to strike Mr. Reaves from the panel. Another panel member, who worked for a child welfare agency, took issue with Jiras' theory. She stated, "It sounded like what you were trying to say if you are born out of wedlock you are at a disadvantage. There are a lot of parents that treat their children very very [sic] good in a lower socioeconomic neighborhood, but I don't think it has anything to do with the credibility of a child to tell the truth." This potential juror was eventually chosen to serve on petitioner's jury. Later, Jiras queried a different panel member who had relatives that were police officers. Jiras asked, MR. JIRAS: And [the police officers talk] about the environment that these people come out of? PROSPECTIVE JUROR: Yes. MR. JIRAS: And they talk about the disadvantage that they are at sometimes because of that environment? PROSPECTIVE JUROR: Yes. . . . . . MR. JIRAS: And you understand what I'm trying to talk about, about family backgrounds and family function? Do you disagree with my position that someone coming out of, a child grown out of wedlock or never resolves itself into marriage, lives in a community that you would, is unbelievable [sic] at a disadvantage as opposed to little Beaver? PROSPECTIVE JUROR: In a ways, [sic] yes, they are. MR. JIRAS: And, therefore, consequently, and I hate to use this word, I'm not going to say credibility because that is too strong a word to attribute to a 12 or 10 year old, let's say inversion of what reality is, is certainly influenced, isn't it? PROSPECTIVE JUROR: It could be, yes. Jury Selection Tr. at 223-24. This potential juror was eventually selected to serve on Petitioner's jury. On the third day of jury selection, Jiras began his portion of the voir dire by stating: If little Beaver was raped I think little Beaver, now you be the judge of this remark, little Beaver would probably be more capable of a truth than someone who came from out of an environment like this. There is no question that this environment is outrageous. Also, that is a two-way street but he has contributed to that environment so, you have to consider that as well. I mean, the father of little Beaver will probably be more capable of the truth than he [Miller] is because of his environment and he who create [sic] that environment. I think you have to realize Jury Selection Transcript at 271. At this point, the prosecution requested a side-bar conference, wherein Jiras, prompted by the prosecution's complaint, agreed to cease arguing his case to the jury pool. 302 Judge Weber subsequently cautioned Jiras that his remarks implied that Petitioner had an obligation to testify. Jiras responded that Petitioner would testify and curiously stated that he (Jiras) was "the captain of that ship." Id. at 272. Jiras then returned to questioning the panel and stated: What I'm saying, do you feelnow I finally have the questiondo you feel an environment that it will be established that this little girl came out of could have in the way affect her credibility? Living in the house that no one is married and people in and out of there in the neighborhood, do you think it would affect her credibility? Not that she is not capable of the truth. I'm not saying that, but do you think it could affect her credibility. Id. at 273. Two prospective panel members, responded by saying "No." Id. at 273-74. Neither of these panel members were selected to serve on Petitioner's jury. The trial commenced on January 25, 1996. Jiras, in his opening statement, asserted that the allegations made against Petitioner came from one impeachable individual, Chanel, and that her mother, Debra, conspired with her two daughters to falsely accuse the petitioner. Tr. at 31. Jiras also told the jurors that the petitioner would present "specific" evidence that Chanel's mother told Petitioner she would have the charges against him dropped if he would marry her. Trial Tr. at 32. In fact, we are going to present evidence, not speculative evidencewe are going to present evidence to you, specific evidence to you, that will show the mother even told the defendant that if he would marry her, she would have the children drop the charges, or this child drop the charges, because there were two charges brought, not by this one little girl, this little, pink dress, but the other sister, too. There were charges that were attempted to be brought that he did something to her as well. Trial Tr. at 32 (emphasis added). This was the first and only mention of allegations from Chanel's sister ("Sister") that she had also been sexually assaulted by Petitioner. Chanel was the first witness. She testified that in 1993, when Chanel was ten years old, the petitioner sexually abused her between April and October of 1993. She remembered the first time the defendant sexually abused her as occurring shortly after Easter in 1993. She testified that Petitioner had taken her out of school saying that she had a doctor's appointment. Instead, Petitioner drove her home where he allegedly orally and anally sodomized her. Chanel also testified that Petitioner allegedly raped her on June 24, 1993, the day of her sister's middle school graduation. She explained that she did not report these incidents right away because the defendant told her that he would kill her and she knew he had a gun. Her testimony stated that the pattern of oral and anal sodomy continued until two weeks before Hallowsen of 1993. This pattern included no other specific dates but did occur "at least 10 times." Chanel further testified that she twice ran away from home during the period that Petitioner lived with her. Both times she returned to live at her mother's house. Shortly after October 31, 1993, Chanel and her sister went to live with their great-grandmother permanently because her mother never returned to pick them up. Since then, Chanel testified she had seen her mother rarely and only returned to the home that was shared with Petitioner once. Chanel testified that she told no one about the abuse until January 23, 1995, when she told her great aunt. 303 Jiras cross-examined Chanel. First, Jiras established whom Chanel had told about the assaults and when she had told them. Then, he asked if anyone was around when the alleged abuse occurred. Chanel revealed that Petitioner's biological daughter and her boyfriend had been in the other room watching television on one occasion when Petitioner allegedly sodomized her in his bedroom. Jiras also asked Chanel whether she ever wanted her mother and Petitioner to marry, or heard them talk about marriage. Chanel testified that she never thought about her mother marrying Petitioner and that she never heard her mother and Petitioner discuss marriage. Jiras also asked what Chanel knew about her mother's drug problem. She answered that she had heard members of her family discuss it. Jiras did not cross-examine Chanel concerning the time lapse in the complainant's revelation of the alleged sexual abuse. Chanel's great-grandmother also testified. She stated that Chanel's mother was a drug user. According to the great-grandmother, Chanel and her Sister came to live with her after October 31, 1993, because Petitioner and the mother's fighting scared the children. She also testified that Chanel wet her bed often. However, the great-grandmother admitted that she did not tell Dr. Milton Gordon ("Dr.Gordon"), the pediatrician who was asked by Child Protective Services to examine Chanel, about these bed-wetting episodes. Dr. Gordon testified as to the results of his medical examination of Chanel on March 17, 1995. Dr. Gordon found an irregular triangular formation on the labial area of the vagina which he opined was evidence of vaginal trauma and penetration. Dr. Gordon could not identify how or when the trauma or penetration occurred, or even what kind of foreign object may have caused the penetration. When Jiras asked whether masturbation could have caused the observed vaginal trauma, Dr. Gordon said no. Jiras did not query as to the precise scientific support for that opinion. Dr. Gordon's found no other evidence of sexual abuse or of trauma. Dr. Gordon's Toluidine Blue Dye Test came back negative, indicating no irritation, rubbing or trauma to Chanel's anal region. Dr. Gordon referenced an "important" Johns Hopkins study to explain that a negative Toluidine Blue Dye test did not necessarily indicate that no abuse occurred. He stated the victim's body may have already healed itself. Dr. Gordon further explained the lack of evidence by stating "there would have to be a reoccurrence of anal sodomy at least a dozen times within six months." Though Jiras cross-examined Dr. Gordon, he never questioned Dr. Gordon about the conclusions or studies relating to anal sodomy. Dr. Gordon also testified that possible behavioral signs of sexual abuse included newly manifested clinging behavior and irritability; loss of bowel and bladder control; thumb sucking; renewed need for a security blanket; withdrawal; sleeping disturbances, including bed-wetting; and eating disorders. Jiras cross-examined Dr. Gordon about each and every finding in the medical report. As conducted by Jiras, this was a slow and unfocused process. Judge Weber eventually stated "We're getting tired of going through the pages.... Why don't you come down to the important parts of it?" Despite Jiras' desire to cover the report line-by-line, he did not ask every question that may have been helpful to Petitioner's defense. For example, he failed to cross-examine on the following issues: (1) Dr. Gordon's conclusion that the deformation of the hymen evidenced trauma and penetration, (2) Dr. Gordon's 304 conclusion that evidence of anal sodomy would only be observable after twelve instances of anal sodomy over a six month period, (3) Dr. Gordon's failure to visually record his examination of Chanel and (4) Dr. Gordon's references to academic studies that supposedly supported his conclusions. Dr. Eileen Treacy, a child psychologist, testified as to the nature and stages of child sexual abuse syndrome. While Treacy acknowledged that she did not interview Chanel, she testified that child abuse victims may exhibit signs of regressive behavior, including bed-wetting. Jiras cross-examined Dr. Treacy about a child's view of rape and sexuality. Dr. Treacy suggested that a child's view might be affected if she was raised in a culture that felt "if a girl loses ones [sic] virginity, that she's then stigmatized and damaged goods...." At this point, Jiras pursued a perplexing line of questioning. JIRAS That certainly doesn't happen to somebody from Wyandanch who is black, right? TREACY That's a very dangerous stereotype there that you're presenting. There are, undoubtedly, people who live in Wyandanch, who are black, who hold stigmatization in very high regard regarding their children's virginity. JIRAS You think there are black people that live in Wyandanch that live in a house where people aren't married hold that kind of regard? TREACY I think that there probably are people who are African-Americans who live in Wyandanch who are not married, as there may be European-Americans in Wyandanch who live together who may not be married. Trial Tr. at 390-92. Jiras and Dr. Treacy then spent a period parring over whether the people in Wyandanch are generally poor and of african-american descent. After this exchange, Jiras began again by asking, MR. JIRAS: Let me start over again. We talked about a certain environment of drug addiction. You talked about a certain environment of overcrowding conditions. We talked about certain conditions with a male and a female living together as man and wife when they're not married. We talked about young girls living up in that environment, and I asked you are these [sic] disadvantaged? "They" being the little girl. . . . . . TREACY: I said from a socio-economic perspective, they were disadvantaged, yes. Id. at 393-94. On re-direct, the prosecution asked Dr. Treacy whether there was any correlation between a person's socioeconomic background and his or her credibility, to which Dr. Treacy unequivocally responded that there was no such correlation. Id. at 397. On re-cross Jiras again broached the issue of the alleged witness' credibility. JIRAS: "Leave it to Beaver" and this complaining witness are equally credible; is that what you're telling me? TREACY: I did net comment on this child's credibility, and I certainly am not going to comment on Beaver's credibility. Id. at 409. The Sister also took the stand. The Sister had no direct knowledge of the abuse. Jiras extensively cross-examined the Sister about entries in her diary. These entries described her engaging in sexual intercourse. The Sister claimed that these entries were fictional descriptions of sexual "fantasies." The Sister further claimed that she concocted these fantasies 305 to satisfy her friends, who teased her about her lack of sexual experience. Collin Sheppy, owner of the taxi cab company where Petitioner worked, testified on rebuttal about Petitioner's work schedule and duties. This was the sole prosecution witness that Jiras chose not to cross-examine. Other witnesses testified for the prosecution but their testimony is not germane to our discussion. Their testimony is discussed more extensively by Magistrate Judge Boyle's report. Petitioner took the stand for the defense. Petitioner testified that, after living with Chanel and Debra, her mother, from 1990 to 1993, he moved out of the house in the middle of May 1993 and moved in with another girlfriend and her twin daughters. Petitioner testified that he left Debra because of her drug problem and because they disagreed about the way Chanel and her Sister should be raised. Petitioner testified that he had discovered the Sister's diary and found entries describing sexual intercourse. Petitioner said that the mother did nothing when he brought this information to her attention. While on the stand, Petitioner acknowledged also that he had a 1985 conviction for Criminal Impersonation and that he had fraudulently accepted payments from Social Services. Petitioner's neighbor, testified that she heard Petitioner and Debra argue constantly. She recalled that these arguments began around June of 1993. The neighbor also testified that Petitioner was a good neighbor who worked hard to maintain his property. Jiras called no additional witnesses. Jiras stated in his summation that he never called the alleged victim's mother because he could not locate her. He never requested an adjournment before or during trial to find the mother. During his closing argument, apparently abandoning the theory that there was a conspiracy to manufacture these charges, Jiras argued that Petitioner was not living in Chanel's house when the alleged sexual abuse was said to have occurred. Jiras also noted the lack of forensic evidence corroborating the allegations and the delay in reporting the alleged abuse. Also in the closing, Jiras addressed his client's own veracity, "[W]e have a defendant that gets on the stand, a defendant that, we have found out on cross examination is a liar because he lied to a police officer about his brother's license, a defendant who is a social services rip-off, a defendant who is a womanizer, a defendant that selects ladies to live with ..." Trial Tr. at 764. Jiras inaccurately stated that there were 30 to 40 alleged acts of abuse rather than the more accurate description of "more than ten" occasions. Id. at 739-41. Jiras also referred to Chanel and other witnesses by the wrong name. See, e.g., Id. at 745. Finally, Jiras revisited the theory that Chanel was not raised in a situation that promoted trustworthiness. I'm suggesting that [Petitioner] finds himself in a communityand, remember, when we were voir diring [sic] the jury, I may have offended some people. I know I offended a couple of them because I had a fight with them. Some of you weren't there when the fight occurred. Some people think that I am trying to say in the Brady Bunch, this wouldn't happen; that there is a condition of one's environment that affects one's credibility. There's no question of that. This environment that that poor girl lived in, no question, was affected by the mother of hers, no question of that, that junkie mother that is running around. Trial Tr. at 767. The prosecutor's summation highlighted Jiras' failure to follow through on the conspiracy theory. 306 The defendant promised you in his opening remarks that you would hear evidence that Debra and her girls made this up as a conspiracy in order to force the defendant to marry Debra, and the defendant asked almost all the People's witnesses: Did you ever hear any arguments about marriage? Trial Tr. at 804. Finally, the prosecutor urged the jury to not allow Chanel's background affect their decision. Throughout this trial, he [Jiras] has suggested, and I go back as far as voir dire, that Chanel is prone to lie. She is a poor, black child from Wyandanchhis words. If that were true, ladies and gentlemen, why then our justice system could only protect rich, little white kids. I don't buy that theory, and I think I know you don't either..... Ladies and gentlemen, the scales of justice are balanced by a woman who wears a blindfold, and she protects the black and the white, the rich and the poor, Jews and Christians, Asians and Indians, immigrants, people from Wyandanch and ten-year old little girls like [the alleged victim], but our blindfolded lady is only an ideal. You are not. You are real, and you have been silent for a long time, exhibiting great patience and attention throughout the course of this trial. Your service to the State of New York is not an easy one. I wish you courage and strength as you commence your deliberations. Trial Tr. at 811-13. The jury found Petitioner guilty of two counts of sodomy in the first degree, one count of rape in the first degree and one count of endangering the welfare of a child. Petitioner was acquitted of two counts of sodomy in the first degree. At sentencing the prosecution recommended a 12 to 36 year sentence. Sentencing Tr. at 5. Petitioner's new attorney, John O'Brien, Esq., who represented Petitioner at the sentencing, requested the minimum sentence. Id. at 6. On May 6, 1996, Petitioner was sentenced to 18 to 54 years.[4] Petitioner appealed his conviction to the Appellate Division, Second Department. He raised at least three arguments on his direct appeal to the Appellate Division: (1) that Jiras rendered him ineffective assistance of counsel because of Jiras' general ineptitude and his prejudicial remarks against African Americans, poor people, and his own client; (2) that the evidence was insufficient to maintain a conviction and against the weight of the evidence; and (3) that imposed sentence of 18 to 54 years was a harsh and excessive punishment for exercising his right to a trial, especially in light of the fact that he had been offered a plea bargain of a 2 to 6 year sentence. The Appellate Division affirmed the conviction on February 8, 1999. The court stated that: [W]e find that [the evidence] was legally sufficient to establish the defendant's guilt beyond a reasonable doubt. Moreover, upon the exercise of our factual review power, we are satisfied that the verdict of guilt was not against the weight of the evidence. Contrary to the defendant's contention, `the evidence, the law, and the circumstances of [the] case, viewed in totality and as of the time of the representation, reveal that' the defendant was provided with meaningful representation. 307 The sentence imposed was neither harsh nor excessive. People v. Miller, 258 A.D.2d 535, 684 N.Y.S.2d 793 (2d Dep't 1999) (citations omitted). The New York Court of Appeals denied petitioner's request for leave to appeal on March 24, 1999. See People v. Miller, 93 N.Y.2d 876, 689 N.Y.S.2d 438, 711 N.E.2d 652 (1999). II. Discussion Pursuant to the Antiterrorism and Effective Death Penalty Act ("AEDPA"), a court may only issue a writ of habeas corpus for a state prisoner if the state-court adjudication was (1) "was contrary to... clearly established Federal law, as determined by the Supreme Court of the United States," or (2) "involved an unreasonable application of ... clearly established Federal law, as determined by the Supreme Court of the United States." Lindstadt v. Keane, 239 F.3d 191, 198 (2d Cir.2001) (quoting Williams v. Taylor, 529 U.S. 362, 412-13, 120 S.Ct. 1495, 1523, 146 L.Ed.2d 389 (2000)). If the state court arrives at a conclusion of law opposite to that reached by the Supreme Court or decides a case differently "on a set of materially indistinguishable facts," that decision may be considered "contrary to" established federal law. Lindstadt, 239 F.3d at 198. Similarly, if the state court unreasonably applies the correct principle from the Supreme Court jurisprudence that would be considered an "unreasonable application." Id. A. Ineffective Assistance of Counsel. "In a petition for habeas relief alleging ineffective counsel, the question as to whether the matter is governed by existing Supreme Court precedent `is easily answered because the merits of [such] claim[s] are squarely governed by [the Supreme Court's] holding in Strickland v. Washington [, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984)].'" Lindstadt, 239 F.3d at 198 (citations omitted). Pursuant to Strickland, the respondent ordinarily must show: (1) that his counsel's performance fell below an objective standard of reasonableness; and (2) that there is a reasonable probability that, but for counsel's deficient performance, the result of the proceeding would have been different. 466 U.S. at 687-88, 104 S.Ct. 2052. The latter showing is required because even a professionally unreasonable error by counsel does not warrant setting aside a proceeding if such error did not affect the outcome of the proceeding. Id. at 691-92, 104 S.Ct. 2052. In certain discrete circumstances, the courts have recognized unusual cases in which prejudice may be presumed. One example is a situation in which there is a showing of actual conflict of interest between the defendant and his attorney. Id. at 692, 104 S.Ct. 2052; but see Smith v. Robbins, 528 U.S. 259, 287, 120 S.Ct. 746, 145 L.Ed.2d 756 (2000) ("requir[ing] the defendant to show that the conflict adversely affected his counsel's performance."). Likewise, prejudice may be presumed where counsel is physically absent during a critical stage of the proceedings, see Geders v. United States, 425 U.S. 80, 88-89, 96 S.Ct. 1330, 47 L.Ed.2d 592 (1976), or where the attorney sleeps through a substantial portion of the trial, see Javor v. United States, 724 F.2d 831, 833 (9th Cir.1984). See also United States v. O'Neil, 118 F.3d 65, 70-71 (2d Cir.1997). There is no suggestion that Jiras' conductincluding his social and economic theories, with their concomitant racial undercurrentsshould warrant a per se finding of prejudice. To demonstrate constitutionally ineffective assistance of counsel, Petitioner is obligated 308 to demonstrate that his counsel made errors "so serious that counsel was not functioning as the `counsel' guaranteed the defendant by the Sixth Amendment." Strickland, 466 U.S. at 687, 104 S.Ct. 2052. "In gauging the deficiency, the court must be `highly deferential,' must `consider[ ] all the circumstances,' must make `every effort... to eliminate the distorting effects of hindsight,' and must operate with a `strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance ...'" Id. at 688-89, 104 S.Ct. 2052. Magistrate Judge Boyle identified 6 "serious errors" that contributed to the denial of effective assistance of counsel. These errors included: 1. The inadequate opportunity to prepare for trial. 2. The trial court's failure to grant Allen's request for an adjournment. 3. Trial counsel's failure to perform a reasonable investigation 4. Trial counsel's "Racial View on Credibility of Complainant." 5. Trial counsel's "Disclosure of Other Acts of Sexual Abuse." 6. Trial counsel's failure to offer proof on the "failure to marry defense." The Court will discuss these errors in order and, ultimately, evaluate them collectively. 1. The inadequate opportunity to prepare for trial. There are circumstances in which late designation of trial counsel may combine with other factors to give rise to a presumption of prejudice. In Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932), the Court held that the defendants were deprived of effective assistance of counsel where they were assisted by an out-of-state lawyer, appointed on the day of the trial, who did not have an opportunity to prepare the case or familiarize himself with local procedure. However since its decision in Powell, the Supreme Court has clearly stated that late appointment of counsel does not in itself give rise to a presumption of prejudice. See Chambers v. Maroney, 399 U.S. 42, 54, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970). "[O]nly when surrounding circumstances justify a presumption of ineffectiveness can a Sixth Amendment claim be sufficient without inquiry into counsel's actual performance at trial." United States v. Cronic, 466 U.S. 648, 661, 104 S.Ct. 2039, 80 L.Ed.2d 657 (1984). Unless those specific circumstances are satisfied, the proper inquiry is whether the late appointment combined with other errors at trial collectively (1) rose to a sufficient level to be considered ineffective and (2) prejudiced the petitioner's trial. Id.; see also Aeid v. Bennett, 296 F.3d 58, 62 (2d Cir.2002) (all ineffective assistance of counsel theories of habeas relief require a showing of actual prejudice). In Cronic, the Supreme Court reviewed defense counsel's performance and held that the circumstances did not warrant the presumption of prejudice. 466 U.S. at 660-63, 104 S.Ct. 2039. This conclusion was reached even though the government spent four and a half years to prepare its case while appointed counsel, a young lawyer with a real estate practice, only had 25 days of pretrial preparation. Id. at 660, 104 S.Ct. 2039. The Supreme Court said that unless the defendant could show "the complete denial of counsel" or that "counsel entirely fails to subject the prosecution's case to meaningful adversarial testing", or other circumstances of similar magnitude, "there is generally no basis for finding a sixth amendment violation unless the accused can show how specific errors of counsel undermined the reliability of the finding of guilt." Id. at 659 n. 26, 104 S.Ct. 2039; see also Avery v. Alabama, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377 (1940); 309 Morris v. Slappy, 461 U.S. 1, 103 S.Ct. 1610, 75 L.Ed.2d 610 (1983); Chambers, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419. In Avery v. Alabama, counsel was appointed in a capital case with only three days to prepare prior to trial. 308 U.S. at 450, 60 S.Ct. 321. The trial court denied the counsels' request for additional time, even though both counsel submitted affidavits that they had been tied up in other trials during those three days and therefore had essentially no preparation time prior to trial. Id. The Supreme Court found that the defendant had not been deprived of effective counsel, noting the conclusion of the state court that counsel performed "intelligently and well." Id. The fact-based analysis suggested by the Supreme Court was to determine whether the tardiness of the appointment in fact rendered such appointments "a sham and nothing more than a formal compliance with the Constitution's requirement that an accused be given assistance of counsel." Id. at 446, 60 S.Ct. 321. Ultimately the Court concluded that the circumstances of that case did not warrant a per se finding of prejudice and that Counsel's actual performance satisfied the Court that the defendant had received effective assistance of counsel. Id. at 450, 60 S.Ct. 321. Similarly, in Morris v. Slappy, the Court reversed a court of appeals holding which had concluded that defendant had been denied effective assistance of counsel when counsel was appointed six days prior to trial on a charge of robbery, burglary, and rape. 461 U.S. at 12, 103 S.Ct. 1610 The Court concluded that broad discretion must be granted to the trial courts concerning whether a continuance should be granted to allow appointed counsel more time to prepare, and, under the specific facts of the representation there involved, the Court found no abuse of discretion. Id. at 11-12,103 S.Ct. 1610. Finally, in Chambers v. Maroney, the defendant was represented by one legal aid lawyer during his first trial, which ended in a mistrial. 399 U.S. at 44, 90 S.Ct. 1975. Upon retrial, a second legal aid lawyer appeared to represent petitioner, and that lawyer did not consult with the defendant until just a few minutes before the second trial began. The defendant alleged that his second lawyer did not render competent legal assistance to him. The Supreme Court affirmed the court of appeals, which concluded that the second counsel provided adequate legal representation. In so ruling, the Supreme Court said, "[W]e are not disposed to fashion a per se rule requiring reversal of every conviction following tardy appointment of counsel ..." Id. at 54, 90 S.Ct. 1975. In the instant case, Jiras was appointed on a Wednesday. The jury selection began on the following Monday. This represents a period of 3 business days and 5 calendar days. The record indicates that Jiras had the opportunity to consult with outgoing counsel and submit pretrial motions. Given the Supreme Court case law discussed supra, the Court concludes that this period, however brief, does not constitute a per se prejudicial error. Satisfied that there is no per se error, the Court now considers the surrounding circumstances to determine if the timing of this specific appointment was error. Jiras met twice with Allen, the outgoing attorney, prior to the beginning of the trial. At those meetings, it is acknowledged that they discussed the available evidence and trial strategies. Also, though Allen requested a one-week adjournment, the express purpose of that adjournment was to accommodate his illness. The mere fact that Allen now says that he would have desired a month-long adjournment to pursue different theories does not change the fact that he requested no such adjournment 310 at the time. (Allen's request for an adjournment was directed solely at addressing his illness and Allen represented that, health permitting, he would be ready to go to trial after a one-week adjournment. See Hearing Tr. dated Jan. 16,1996 at 2.) Even for an experienced criminal attorney like Jiras, the provision of only 3 business days renders defense admittedly difficult. However, the mere timing of the appointment, without more, remains insufficient to rise to a constitutional defect. See generally Cronic, at 660-663, 104 S.Ct. 2039. To the extent that the Court will consider this short period, it is best evaluated in light of any specific errors made by counsel at trial that are traceable to the short preparation time. Id. at 659 n. 26, 104 S.Ct. 2039. It warrants mention, however, that there is nothing in the record to suggest that, had he possessed more preparation time, Jiras would have proceeded any differently in defending Petitioner. 2. The trial court's failure to grant Allen's request for an adjournment. In Morris v. Slappy, the Supreme Court held that broad discretion must be granted to the trial courts concerning whether a continuance should be granted to allow appointed counsel more time to prepare. 461 U.S. at 11, 103 S.Ct. 1610. In fact, "only an unreasoning and arbitrary 'insistence upon expeditiousness in the face of a justifiable request for delay' violates the right to the assistance of counsel." Id. at 12, 103 S.Ct. 1610 (quoting Ungar v. Sarafite, 376 U.S. 575, 589, 84 S.Ct. 841, 11 L.Ed.2d 921 (1964)). Under the specific facts of this case, Judge Weber informed Petitioner that Allen's specific health situation could significantly delay the disposition of the case. After being informed of that potential delay and being asked whether Allen should be relieved, Petitioner said "OK, your Honor. How long will this next lawyer have to familiarize himself?" Judge Weber informed Petitioner that "the [evidentiary] hearings have been done," that there was additional time to prepare the substantive case during jury selection and that "[a,] lot of the preliminary work has already been done by Mr. Allen." In light of those circumstances, Judge Weber indicated that an attorney would not require a "long time" to prepare. As such, Judge Weber suggested that they start the trial "next week, but I will have the guy work on it today or tomorrow for sure." After that information was conveyed, Petitioner did not object to substituting Jiras for Allen. Magistrate Judge Boyle is of the view that this decision by the trial court represented an unreasoning and arbitrary insistence on rushing to trial. In support, Judge Boyle cites Norde v. Keane, 294 F.3d 401 (2d Cir.2002), for the proposition that a trial court's denial of defense counsel's request for an adjournment to consult with her client during jury selection is an unreasoning and arbitrary denial. However the circumstances in that case are distinguishable from Petitioner's situation. In Norde, the defendant was forcibly removed from the courtroom during jury selection. Id. at 414. At that point, defense counsel requested an adjournment to consult with the defendant. Id. The request was denied. Id. From that point on, the defendant was required to communicate to counsel through a bailiff. Id. It was that physical separation of the client from counsel during the critical voir dire proceeding that rendered the court's denial of an adjournment unreasonable and arbitrary. Id. In the instant case, Petitioner was never absent from a critical proceeding or denied direct access to counsel by the refusal of an adjournment. In any event, this Court declines to adopt the portion of the Report that indicates that 311 the trial court's denial of an adjournment was of constitutional significance. 3. Trial counsel's failure to perform a reasonable investigation. "[C]ounsel has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary." Strickland, 466 U.S. at 691, 104 S.Ct. 2052. Magistrate Judge Boyle identified three errors that he felt demonstrated Jiras' failure to conduct a reasonable investigation. This Court will address one, viz., Jiras' failure to obtain expert witnesses. On November 29, 1995, over a year before Jiras was appointed, the prosecution obtained Dr. Gordon's report detailing the observed condition of the alleged victim's hymen. In the intervening year, Allen made no effort to retain an expert. However, on the third day of jury selection, Jiras made two ex parte motions for leave to employ a child psychologist/psychiatrist and a medical doctor, respectively. These motions were granted by the court. There is no evidence that Jiras ever retained the services of either type of expert. He assuredly did not present such expert testimony at trial. Therefore, Jiras had the opportunity and actually considered utilizing defense experts. Nonetheless, Jiras ultimately failed to utilize the experts that he had considered. See Report at 48-49 ("The court's search of the record did not reveal that Jiras submitted an affidavit for payment (3) for an expert psychologist/psychiatrist retained by the defense" or for a "medical doctor" retained by the defense). In Pavel v. Hollins, 261 F.3d 210 (2d Cir.2001), the failure to investigate the medical claims that formed the physical evidence for sexual abuse charges was unreasonable and formed the basis for constitutionally defective assistance of counsel. 261 F.3d at 225. Much like in the instant case, in Pavel the complaining witness testified against the petitioner but the only testimony regarding physical evidence of abuse was derived from experts. Id. at 213-215. In the instant case, Jiras did cross-examine the expert. Dr. Gordon's testimony stated that the perceived injury to Chanel's hymen was triangular in shape and that it appeared to have been distorted via insertion of an object. Jiras cross-examined Dr. Gordon on whether masturbation could have caused this trauma. Dr. Gordon testified that masturbation could not cause the trauma but expressly stated that he could not say what type of foreign object caused what he perceived to be a misshapen hymen. This cross-examination does not cure the error of failing to seek a competing expert opinion. As stated by the Report, Dr. Gordon's methodology and conclusions regarding (1) the perceived damage to Chanel's hymen and (2) his explanation that evidence of trauma in the anal region would not be present unless there was a "reoccurrence of anal sodomy at least a dozen times within six months" were problematic.[5]See Report at 37-39. "[T]here is no indication in the record that [Jiras] had the education or experience necessary to assess relevant physical evidence, and to make for himself a reasonable informed determination as to whether an expert should be consulted or called to the stand." Pavel 261 F.3d at 225. Despite this lack of education and knowledge, Jiras consulted no experts prior 312 to his cross-examination and sought to introduce no competing expert testimony. The Second Circuit has stated that a reasonably competent attorney, when she notes an inconsistency in the medical testimony proffered by the prosecution in a sexual abuse case, "would have consulted and been prepared to call an expert to drive this disparity home." Id. at 224-225. In the instant case, the inconsistency was found in the fact that the Dr. Gordon could not rule out other causes for the supposed, and apparently questionable, injury to hymen. Neither could Dr. Gordon find any injury to the anus. Here, the only witnesses to the alleged abuse were its victims and the defendant, and there was no substantial circumstantial evidence of abuse. When a sex abuse case boils down to such a "credibility contest," physical evidence will often be important. Indeed, "many" sex abuse cases are "close ... on the evidence," Swofford v. Dobucki, 137 F.3d 442, 443 (7th Cir.1998), and when a case hinges all-but-entirely on whom to believe, an expert's interpretation of relevant physical evidence (or the lack of it) is the sort of "neutral, disinterested" testimony that may well tip the scales and sway the fact-finder. Williams[ v. Washington], 59 F.3d [673,] 682 [ (7th Cir.1995) ] ("In a credibility contest, the testimony of neutral, disinterested witnesses is exceedingly important."). Id. at 224. In light of these statements by the Second Circuit, the Court concludes that, in the instant circumstances, Jiras' decision to not call an expert witness to rebut the prosecution's witness, or at least confer with an expert prior to cross-examination, constituted error and was not related to a valid trial strategy. See generally id. at 224 n. 17 (collecting cases and articles that stand for the proposition that an expert must be called in circumstances similar to the instant case). "In sum, defense counsel's failure to consult an expert, failure to conduct any relevant research, and failure even to request copies of the underlying studies relied on by Dr. Gordon contributed significantly to his ineffectiveness." Lindstadt, 239 F.3d at 202. 4. Trial counsel's "Racial View on Credibility of Complainant." Judge Boyle's Report describes Jiras' argument that "poor illegitimate black children are less credible than middle class white children" as both "groundless" and "racially offensive." See Report at 51, 53. The Court has reviewed the record and certainly agrees with that description. However, in my view, it is not quite as constitutionally suspect as characterized by Judge Boyle. Jiras' theory, as the Court understands it, was that poor children raised by a single, drug-addicted parent are less likely to tell the truth than a financially comfortable child with a stable homelife. This theory falls within the ambit of trial strategy. However, the examples utilized by Jiras strongly suggest an racial undercurrent to the theory, which warrants further discussion. Jiras repeatedly compared the alleged victim's situation to that of the "Beaver" from the popular 1950's television show. The alleged victim happens to be of african-american descent while the "Beaver" happens to be white. This point of view is lamentable, but, given that its focal-point was essentially socio-economic, rather than racial in character, it is not fundamentally racist. As such, the theory does not implicate Second Circuit decisions, such as U.S. ex rel. Haynes v. McKendrick, 481 F.2d 152 (2d Cir.1973); McFarland v. Smith, 611 F.2d 414 (2d Cir.1979), that have decried arguments appealing to racial differences. Pursuant to the reasoning discussed 313 supra, Jiras' theory, albeit offensive and poorly articulated, does not appear to be beyond the "wide range of reasonable professional assistance." See Strickland, 466 U.S. at 689, 104 S.Ct. 2052. 5. Trial counsel's "Disclosure of Other Acts of Sexual Abuse." In the opening statement, Jiras revealed that there were allegations of abuse from the Sister. These allegations were not the subject of the proceeding and almost certainly would not have been admissible. Volunteering this information was an error by defense counsel. While this, if viewed in isolation, might be insufficient to establish ineffective assistance of counsel, see United States v. Bari, 750 F.2d 1169, 1182 (2d Cir.1984); Smithwick v. Walker, 758 F.Supp. 178, 182-183 (S.D.N.Y.1991), the error does provide evidence of the inadequate representation provided to Petitioner. The Court will consider this error in conjunction with all other alleged errors to determine the ineffective assistance of counsel claim. 6. Trial counsel's failure to offer proof on the "failure to marry defense." The problem in the instant case does not involve a theory that was actually pursued at trial. Rather, the Court is faced with a conspiracy defense that was delineated in the opening but never again mentioned by Jiras. "`Generally, only when ignored issues are clearly stronger than those presented, will the presumption of effective assistance of counsel be overcome.'" Mayo v. Henderson, 13 F.3d 528, 533 (2d Cir.1994) (quoting Gray v. Greer, 800 F.2d 644, 646 (7th Cir.1986)). Actions or omissions by counsel that "`might be considered sound trial strategy'" do not constitute ineffective assistance, Strickland, 466 U.S. at 689, 104 S.Ct. 2052 (quoting Michel v. Louisiana, 350 U.S. 91, 101, 76 S.Ct. 158, 100 L.Ed. 83 (1955)), and a court "may not use hindsight to second guess" counsel's tactical choices, see Lockhart v. Fretwell, 506 U.S. 364, 372, 113 S.Ct. 838, 122 L.Ed.2d 180 (1993). A petitioner may rebut the suggestion that the challenged conduct reflected merely a strategic choice by showing that counsel "omitted significant and obvious issues while pursuing issues that were clearly and significantly weaker." Mayo, 13 F.3d at 533. In the instant case, the alternative theory was that these allegations formed part of a conspiracy to force Petitioner into marriage. This theory is not clearly and significantly stronger than the theory that Jiras pursued at trial, viz., (1) Petitioner was a man with past legal difficulties but still incapable of this type of crime, (2) Petitioner was not living with at the home in which the alleged was said to occur after May of 1999, and (3) Chanel was a product of a troubled homelife that lead her to concoct several stories. After all, attempted and abandoned theories both revolve around the veracity of Chanel. Given this common ground, the Court is hard-pressed to identify one theory as clearly and significantly stronger than another. As a result, Petitioner has failed to rebut the strong presumption of effective assistance of counsel. See United States v. Schmidt, 105 F.3d 82, 90 (2d Cir.1997). Notwithstanding the above, the fact remains that, during his opening, Jiras represented that he would "present evidence" of a conspiracy. He never followed this representation with any evidence during trial or even an explanation for its absence during his closing. The Court will consider this error alongside the other identified errors to evaluate their cumulative effect upon Petitioner's assistance of counsel. 314 7. Cumulative Effect of the Noted Errors and Resulting Prejudice. "Since [Petitioner]'s claim of ineffective assistance of counsel can turn on the cumulative effect of all of counsel's actions, all his allegations of ineffective assistance should [also] be reviewed together." Rodriguez v. Hoke, 928 F.2d 534, 538 (2d Cir.1991); see also Report at 44-45 (citing Lindstadt, 239 F.3d at 199); Strickland, 466 U.S. at 695-696, 104 S.Ct. 2052. Therefore, "[e]ven if [Petitioner]'s claims, evaluated individually, might not amount to a due process violation sufficient to require habeas relief, nevertheless, given the number of errors in this case, habeas relief is proper on the basis of the cumulative effect of Jiras' trial errors. Rodriguez, 928 F.2d at 538. In the instant case, the Court concludes that, evaluated collectively, informing the jury of the inadmissible accusation as to the Sister and the failure to call, or at least consult, a competing expert combine to render Jiras' assistance constitutionally deficient. The inadequate representation was further aggravated by the failure to pursue, or otherwise explain, the conspiracy defense that was so aggressively advanced during his opening,[6] never to be revisited. Despite the above findings of error, Petitioner must still demonstrate that there is a reasonable probability that, but for counsel's deficient performance, the result of the proceeding would have been different. Strickland, 466 U.S. at 687-88, 104 S.Ct. 2052. A reasonable probability is a probability sufficient to undermine confidence in the outcome. Id. at 694, 104 S.Ct. 2052. Petitioner adequately makes this showing. The prosecution's case was reducible to the testimony of the alleged victim and the testimony of Dr. Gordon. If Jiras had sought expert assistance, the defense probably could have neutralized the probative effect of Dr. Gordon's already weak testimony. In this hypothetical situation, only the alleged victim's testimony would remain as part of the prosecution's case. However, Jiras admitted that the Sister had also implicated Petitioner. This admission further bolstered Chanel's allegations. Finally Jiras never followed through on the theory espoused during his opening as the key to Petitioner's defense. Jiras did not even attempt to explain the abandonment of this conspiracy theory to the jury. This failure was emphasized by the prosecution. See Trial Tr. at 804 ("The defendant promised you in his opening remarks that you would hear evidence that Debra and her girls made this up as a conspiracy in order to force the defendant to marry Debra, and the defendant asked almost all the People's witnesses: Did you ever hear any arguments about marriage?"). In a close case such as this one, where there was limited physical evidence and the case was reducible to a "credibility contest," these errors take on a special 315 importance. With that caveat in mind, the Court concludes that the cumulative effect of Jiras' errors prejudiced Petitioner. A. Petitioner's Sentence. In that Petitioner has established his right to a conditional release, see Part II infra, the question of whether he was the victim of retaliatory sentence is rendered moot and, thus, will not be addressed. B. Insufficiency of the Evidence. Judge Boyle found that there is sufficient evidence to support Petitioner's conviction. After a thorough review of the Report and the record, this Court agrees with that finding. III. Conclusion Based on de novo review, the Court concludes that Petitioner, due to the cumulative effect of several significant errors by trial counsel, was denied effective assistance of counsel and that the denial was prejudicial. To the extent that the reasoning and conclusions in the Memorandum and Order dovetail with those in the Reportas is true in errors 3, 5 and 6, see pg 21, suprathe Report is adopted as the decision of this Court for the reasons indicated herein. In light of the foregoing, the Court orders Petitioner's conditional release. See Herrera v. Collins, 506 U.S. 390, 403, 113 S.Ct. 853, 122 L.Ed.2d 203 (1993) ("The typical relief in federal habeas corpus is a conditional order of release unless the State elects to retry the successful habeas petitioner ...."). Accordingly, Respondent is ordered to release Petitioner unless within sixty (60) days of the docketing of this Memorandum and Order, "New York State has, by that point, taken concrete and substantial steps expeditiously to retry [Petitioner]." Pavel, 261 F.3d at 229. SO ORDERED. NOTES [1] The Court amends this order to address typographical errors on pages 9 and 24 of the original order. The Court also notes that the time period for New York State to take "concrete and substantial steps expeditiously to retry [Petitioner]" runs from the date of docketing. See infra at 36-37. This order has now been docketed on two datesthe date of the original order and the date of this amended order. To avoid any confusion, the Court concludes that the "date of docketing," for the purpose of measuring the relevant time period in which New York State must act, shall be the date of docketing for the original order. [2] These facts are discussed with greater detail in Magistrate Judge Boyle's report. [3] Mr. Jiras died on January 3, 2001, prior to Respondent's reply to the application for a writ of habeas corpus. [4] Petitioner received a term of imprisonment of 5 to 15 years on one sodomy count, a consecutive term of 6 to 18 years on the second sodomy count, and a consecutive term of 7 to 21 years on the rape count. A 1 year prison term for endangering the welfare of a child was to run concurrently with the consecutive 18 to 56 year sentence. [5] Indeed, Dr. Jocelyn Brown, a well-credentialed physician, described the latter conclusionin a Section 2254 hearing before Judge Boyleas "false" and the product of Doctor Gordon "making it up as he goes along." Report at 38. [6] Consider the following excerpts from defense counsel's opening statement JIRAS: We will present evidence that the mother, indeed formed a conspiracy with her two daughters to falsely accuse the defendant. It will be our evidence. That is not speculation. That is pure evidence coming from our case, which we're entitled to. Trial Tr. At 31. JIRAS: In fact, we are going to present evidence, not speculative evidencewe are going to present evidence to you, specific evidence to you, that will show the mother even told defendant that if he would marry her, she would have the children drop the charges, or this child drop the charges, because there were two charges brought, not by this one little girl, this little pink dress, but the other sister as well. There were other charges that were attempted to be brought that he did something to her as well. Id. at 32.	{ "pile_set_name": "FreeLaw" }
850 F.2d 330 11 Fed.R.Serv.3d 740 Andrea GEIGER, Plaintiff-Appellant,v.Donald ALLEN, Defendant-Appellee. No. 87-2172. United States Court of Appeals,Seventh Circuit. Argued April 15, 1988.Decided June 29, 1988. John Walshe, Walshe & Assoc., New York City, for plaintiff-appellant. William W. Kurnik, Kurnik, Cipolla, Stephenson, Barasha & O'Dell, Arlington Heights, Ill., for defendant-appellee. Before WOOD, Jr. and CUDAHY, Circuit Judges, and FAIRCHILD, Senior Circuit Judge. HARLINGTON WOOD, Jr., Circuit Judge. 1 Plaintiff Andrea Geiger appeals from a district court order dismissing her diversity action against defendant Donald Allen. The district court dismissed Geiger's action for failure to serve Allen within 120 days of filing her complaint, as mandated by Federal Rule of Civil Procedure 4(j). We affirm. I. FACTUAL BACKGROUND 2 For purposes of this appeal, the details of Geiger's underlying cause of action are irrelevant; we need only review the procedural history of this case. Geiger originally filed suit in the Northern District of Illinois on June 19, 1986, naming Allen and others as defendants. On September 25, 1986, the district court dismissed Geiger's action, with leave to file a motion to reconsider within thirty days. Geiger timely filed a motion to reconsider and the court reinstated her action on November 25, 1986.1 3 The only attempt Geiger's counsel made to locate Allen between filing the complaint on June 19 and the September 25 dismissal was to check with the Secretary of State's office to determine whether Allen, who is blind, had a restricted driver's license. After the court reinstated the case on November 25, Geiger's counsel asked McClurg Court Associates (McClurg), Allen's former employer and a co-defendant, for Allen's address. After four such requests, McClurg provided Geiger's counsel with the address during the week of January 5, 1987. On January 9, 1987, when the action had been pending for 143 days, Geiger's counsel finally mailed copies of the summons and complaint to Allen. 4 Allen subsequently moved that the court dismiss Geiger's suit for noncompliance with Federal Rule of Civil Procedure 4(j). On June 9, 1987, the district court issued a memorandum opinion granting Allen's motion to dismiss without prejudice, from which Geiger appeals. We have jurisdiction over this appeal pursuant to Fed.R.Civ.P. 54(b) and 28 U.S.C. Sec. 1291 (1982).2 II. DISCUSSION 5 Federal Rule of Civil Procedure 4(j) provides: 6 If a service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint and the party on whose behalf such service was required cannot show good cause why such service was not made within that period, the action shall be dismissed as to that defendant without prejudice upon the court's own initiative with notice to such party or upon motion. 7 As the Ninth Circuit explained, "[t]he rule is intended to force parties and their attorneys to be diligent in prosecuting their causes of action." Wei v. Hawaii, 763 F.2d 370, 372 (9th Cir.1985). Thus, Congress drafted the rule so that dismissal is mandatory if a defendant is not served within 120 days, unless the plaintiff can show good cause for the delay. Braxton v. United States, 817 F.2d 238, 240 (3d Cir.1987); Winters v. Teledyne Movible Offshore, Inc., 776 F.2d 1304, 1305 (5th Cir.1985); see 1982 U.S.Code Cong. & Admin.News 4434, 4441. 8 First, Geiger argues that Rule 4(j) does not apply to this case because Allen was actually served with process. Geiger contends that Rule 4(j) applies only to situations in which the 120-day period has run and the defendant has not been served. Because Geiger's counsel mailed a copy of the summons and complaint to Allen on January 9, 1987, Geiger argues that Allen was in fact served and therefore the court should have denied his motion to dismiss. This argument is meritless. 9 Rule 4(j) applies equally to defendants who were never served and defendants who were served after the 120-day period had lapsed. If we were to accept Geiger's reasoning, the ability of a defendant to move for dismissal of an action for failure to comply with Rule 4(j) would be virtually meaningless, since many defendants will not be aware that an action is pending until they are served. Instead, we agree with the reasoning of the Fifth Circuit that "the only exception to Rule 4(j) dismissal is good cause for failure to serve within the 120 days. Later service or later knowledge by the defendant is irrelevant to that." Winters, 776 F.2d at 1306. See Ordower v. Feldman, 826 F.2d 1569, 1575 (7th Cir.1987); Red Elk v. Stotts, 111 F.R.D. 87 (D.Mont.1986); Boykin v. Commerce Union Bank, 109 F.R.D. 344, 348 (W.D.Tenn.1986).3 10 Next, Geiger argues that the reinstatement of her action should have triggered a new 120-day period. The parties have cited no authority on this point,4 and we also have been unable to locate any cases dealing with this precise issue. Nevertheless, we do not believe that a new 120-day period should have begun at the time of reinstatement. Cf. Del Raine v. Carlson, 826 F.2d 698, 705 (7th Cir.1987) (court order allowing plaintiff to amend the complaint did not trigger new 120-day period). "[T]he general rule is that where a court, in the discharge of its judicial functions, vacates an order previously entered, the legal status is the same as if the order had never existed." Mitchell v. Joseph, 117 F.2d 253, 255 (7th Cir.1941); United States v. Jerry, 487 F.2d 600, 607 (3d Cir.1973); Wynne v. Rochelle, 385 F.2d 789, 796 (5th Cir.1967). Therefore, when the district court vacated the dismissal and reinstated Geiger's action, it was as if the district court had never dismissed the action in the first place. Geiger did not have to file a new complaint; nor did she have to reserve those defendants who had already been served with the summons and complaint prior to the dismissal. Therefore, we hold that the reinstatement of Geiger's action did not trigger a new 120-day period for service of process. 11 Under the language of Rule 4(j), the 120 days is counted from "the filing of the complaint." Geiger filed her complaint on June 19, 1986; the district court dismissed the action ninety-eight days later, on September 25, 1986. Of course, the 120-day period was tolled between the time that the action was dismissed and the date that the court reinstated the action, since no action was pending during that interval. When the court reinstated the action on November 25, 1986, Geiger still had twenty-two days in which to serve Allen. Geiger's counsel, however, did not mail the summons and complaint to Allen until forty-five days later, on January 9, 1987. At that time, the action had been pending for 143 days. Therefore, Geiger did not meet Rule 4(j)'s 120-day deadline for service of process. 12 Finally, Geiger argues that the district court erred in dismissing her action rather than granting her an extension of time in which to serve Allen. Rule 4(j) allows courts to extend the 120-day period if the plaintiff can demonstrate "good cause" for her failure to serve the defendant within the statutory time period. The plaintiff bears the burden of showing good cause. Fed.R.Civ.P. 4(j); Winters, 776 F.2d at 1305; Wei, 763 F.2d at 372. We will not overturn the trial court's decision that a plaintiff failed to establish good cause unless the court abused its discretion. Lovelace v. Acme Mkts., Inc., 820 F.2d 81, 83 (3d Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 455, 98 L.Ed.2d 395 (1987); Townsel v. County of Contra Costa, Cal., 820 F.2d 319, 320 (9th Cir.1987); see Del Raine, 826 F.2d at 705 (whether plaintiff established good cause is "a discretionary determination entrusted to the district court, and we are reluctant to substitute our own judgment for that court's"). 13 The only example of good cause provided by the legislative history of Rule 4(j) is when the putative defendant evades service of process. 1982 U.S.Code Cong. & Admin.News 4434, 4446 n. 25. Courts that have considered this issue, however, agree that counsel's inadvertent failure to serve a defendant within the statutory period does not constitute good cause. See, e.g., Lovelace, 820 F.2d at 84; Hart v. United States, 817 F.2d 78, 81 (9th Cir.1987); Braxton, 817 F.2d at 241; Winters, 776 F.2d at 1306; Wei, 763 F.2d at 372. Likewise, half-hearted efforts to serve a defendant will not excuse a plaintiff from adhering to the 120-day deadline. Lovelace, 820 F.2d at 84; Braxton, 817 F.2d at 241; United States ex rel. DeLoss v. Kenner Gen. Contractors, Inc., 764 F.2d 707, 710-11 (9th Cir.1985); Shuster v. Conley, 107 F.R.D. 755, 757 (W.D.Pa.1985); Coleman v. Greyhound Lines, Inc., 100 F.R.D. 476, 477-78 (N.D.Ill.1984). 14 Certainly, Geiger's counsel's efforts to serve Allen were half-hearted at best. The Chicago telephone directory contained only seven listings for Don or Donald Allen, one of whom was the defendant. Yet Geiger's counsel did not make even one phone call in an effort to locate Allen. Other than a fruitless inquiry to the Secretary of State, Geiger's counsel's only effort to locate Allen was to ask McClurg for his address. Geiger cannot rely on the fact that McClurg was dilatory in supplying Allen's address. See Martin v. City of New York, 627 F.Supp. 892, 900 (E.D.N.Y.1985). Geiger was obligated to pursue alternative methods of finding and serving Allen. See Lovelace, 820 F.2d at 85; Martin, 627 F.Supp. at 900. Other than making a few telephone calls, the most obvious solution would have been to ask Allen's former co-workers at McClurg if they knew Allen's current address.5 In fact, for the past twelve years, Allen has lived in the same building in which McClurg is located. 15 Geiger claims that the delay was due in part to her mistaken belief that Allen had left Illinois. This belief was based on a statement by Harold Heller, a McClurg employee, that Allen would "never work in Chicago again." As Geiger admits in her affidavit, however, Heller did not tell her that Allen was planning to leave Chicago. We also note that even if Allen had moved, that would not excuse Geiger or her counsel from making reasonable efforts to obtain his new address. See Shuster, 107 F.R.D. at 756-57; cf. Ordower, 826 F.2d at 1575. The efforts of Geiger's counsel to serve Allen within 120 days were less than diligent. The district court clearly did not abuse its discretion in finding that Geiger had not shown good cause to extend the period for service of process. 16 Geiger apparently filed her complaint only one day prior to the expiration of the applicable statute of limitations. Therefore, although the trial court's dismissal was without prejudice, the parties agree that Geiger's cause of action against Allen is now time-barred. In enacting Rule 4(j), however, Congress recognized the possibility that a plaintiff's cause of action would be barred if the statute of limitations expired prior to the court's dismissal under Rule 4(j). 1982 U.S.Code Cong. & Admin.News 4434, 4441-42. Thus, the fact that Geiger is now effectively precluded from bringing suit against Allen does not prevent the operation of Rule 4(j). Lovelace, 820 F.2d at 84-85; Townsel, 820 F.2d at 320-21; Hart, 817 F.2d at 81; DeLoss, 764 F.2d at 711 n. 5. III. CONCLUSION 17 We recognize that Geiger can no longer pursue what may be a meritorious cause of action. This is perhaps due in part to the neglect of her attorney. Litigants, however, generally are bound by the actions of their attorneys. Wei, 763 F.2d at 372; see Roland v. Salem Contract Carriers, Inc., 811 F.2d 1175, 1180 (7th Cir.1987). Because Geiger has failed to show good cause for her failure to serve Allen within 120 days as required by Rule 4(j), the district court's dismissal of this action is 18 AFFIRMED. 1 Geiger indicated to the district court that she wished to consolidate her action in the Northern District of Illinois with an action she had instituted in the Southern District of New York involving the same occurrence. She later determined that the defendants in the Northern District of Illinois action were not subject to personal jurisdiction in New York 2 Although the district court dismissed Geiger's action without prejudice, the parties agree that the applicable statute of limitations has run. Because Geiger's action against Allen is time-barred, we may treat the district court's order as a final judgment. Ordower v. Feldman, 826 F.2d 1569, 1572 (7th Cir.1987). Thus, the district court's dismissal is appealable under 28 U.S.C. Sec. 1291 3 Allen claims that Geiger's argument is inapplicable here because this case does not involve a defendant who was served after the 120-day period ended. The rule in this and other circuits is that service by mail is not complete until an acknowledgment is filed with the court. Del Raine v. Carlson, 826 F.2d 698, 705 (7th Cir.1987); Green v. Humphrey Elevator & Truck Co., 816 F.2d 877 (3d Cir.1987). Because it is undisputed that there is no acknowledgment on file with the court, Allen argues that he has never been served. See Combs v. Nick Garin Trucking, 825 F.2d 437, 448 (D.C.Cir.1987) (no effective service of process by mail when defendant does not return acknowledgment within designated period); Norlock v. City of Garland, 768 F.2d 654, 656-57 (5th Cir.1985) (court found that defendant was never served where plaintiff mailed defendant the summons and complaint but failed to enclose an acknowledgment form). We need not consider this argument, however, since we find that, under Rule 4(j), whether or not a defendant is served after the 120-day period has expired is generally irrelevant 4 Geiger cites Baranski v. Serhant, 602 F.Supp. 33 (N.D.Ill.1985), to support her argument. The court in Baranski, however, refused to apply Rule 4(j) because the action in that case was pending before Rule 4(j) came into effect. Id. at 35 5 In addition, Geiger or her counsel could have used other methods of locating Allen, including: inquiring at the post office; serving McClurg with an interrogatory to compel the disclosure of Allen's last known address; hiring a private process server; or inquiring at the Chicago headquarters of the American Massage Therapy Association (Allen was employed at McClurg as a masseur). Failing all else, Geiger could have moved for an extension of time under Federal Rule of Civil Procedure 6(b)	{ "pile_set_name": "FreeLaw" }
609 F.Supp. 41 (1984) Mary C. HYDE v. PROTECTIVE INSURANCE CO. Civ. A. No. 84-2171. United States District Court, E.D. Pennsylvania. November 20, 1984. Gordon Gelfond and Alfred Sarowitz, Philadelphia, Pa., for Mary C. Hyde. Joseph G. Manta and Joel Schneider, Philadelphia, Pa., for Protective Ins. Co. MEMORANDUM GILES, District Judge. Plaintiff has brought this action claiming that she was the victim of sex and age discrimination. Jurisdiction is founded upon Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et. seq. and the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. After a Bench Trial and consideration of the parties' post-trial submissions, the court finds that plaintiff has not carried her burden of proof as to either claim and, accordingly, shall enter judgment in favor of defendant. The following constitutes the court's findings of fact and conclusions of law. Protective Insurance Company is engaged exclusively in the business of fleet truck insurance, offering personal injury and property damage coverage for over-the-road trucking operations. It does not employ claims adjusters. Rather, it contracts with independent claims adjusters to conduct field investigations of accident scenes. They gather relevant information and report either to the defendant's Branch or Headquarters Office their findings and recommendations. Within the company, there are claims supervisors who, with the adjuster's information, evaluate claims, negotiate with claimants or their attorneys, and correspond and cooperate with attorneys defending claims for the insurer. The claims supervisors are responsible for interpreting the terms and provisions of policies of Protective and those of other insurance companies whose insureds may be involved in an accident. In the branch offices, the claims supervisors have secretaries to whom they delegate various clerical aspects of the claims work. Mrs. Hyde held such a clerical post in the Wayne, Pennsylvania office. At the time of her separation from the company she had over 15 years of service. She was paid on an hourly basis. Her immediate supervisor was Robert Zucosky the claims supervisor. He was the only claims supervisor until January, 1983. Mr. Zucosky reported directly to the Vice-President of Claims at the Home Office on all claims decisions. The manager of the entire office, which included marketing and underwriting functions, was Charles Bernier. He was hired in 1981 as Branch Manager. Mr. Bernier 42 was not directly responsible for the day-to-day operations and decision-making on the claims work, nor was he familiar with the standards used by the company in settling claims. Mrs. Hyde contends that her troubles started with Mr. Bernier's arrival. She submits that he gradually and purposefully increased her workload beyond her physical ability and endurance so as to cause her to resign. She could not complete all assignments within any work day, even with overtime hours and weekend work. She contends that Mr. Bernier came to the Wayne office, with instructions from Protective's president, Gary Miller, to get rid of her because younger women could be hired for less money to perform the clerical work. She does not attribute an illegal motive to her immediate supervisor, Mr. Zucosky, in his assigning of work to her. She contends that many additional duties were assigned directly by Mr. Bernier in total disregard of her continual plea that she was already overburdened and could not reasonably do everything demanded. This workload steadily increased, according to her, from the latter part of 1982 through July 5, 1983 when she testified that she was fired by Mr. Bernier. Her workload included correspondence and other clerical duties relating to the offices' accounts receivables. Several weeks prior to her separation, it had come to Mr. Bernier's and Mr. Zucosky's attention, through checking by the Home Office, that the Wayne office's over 90-day accounts receivables were far more numerous for May and June, 1983 than for the preceding months. In April, the receivables were around $42,000. In May, they advanced to $109,000. In June they rose to $125,000 and in July, they peaked at $165,000. The effective management of the office was questioned by the Home Office because of this lapse in the collection of the accounts receivables. On June 20, 1983, when questioned about this lapse by Mr. Zucosky, Mrs. Hyde explained that she had been unable to perform the 90-day accounts receivable work for two weeks because of other job responsibilities. However, she had not told anyone that this work had gone unattended. Mr. Zucosky told her that because of her failure to do the accounts receivable work and to tell her superiors that she had not processed this work, he would not recommend that she receive an annual increase. At the same meeting he criticized the quality and quantity of her work, telling her, in effect, that she was not working effectively or efficiently. He noted that other important work had also been left undone. She threatened to resign if she did not get a raise. Mrs. Hyde had in all previous years received an annual increase. She had, in her mind, been a faithful and hard working employee, working even beyond her fullest capacity in an effort to keep up with her workload. Her reaction to the prospect of not getting a raise was, no doubt, a mixture of anger and disbelief. After a few weeks, when she did not get an increase, she went to Mr. Bernier's office to inquire whether there might have been some oversight. He told her that she was not going to get a raise. At this point the testimony of Mrs. Hyde and Mr. Bernier differs substantially. Mrs. Hyde testified that after being told that she was not going to get a raise, she explained to Mr. Bernier that she needed the raise badly because she could hardly manage on her current salary. Mr. Bernier responded that she should have realized all along that he was trying to force her out; that the Home Office wanted her fired because she was too old and younger women could be hired for less money to do the same work; and that he was simply following orders in forcing her to resign. Mrs. Hyde wanted to continue working but Mr. Bernier told her to go home and not to return. Before she left he asked her to sign a letter of resignation which she refused to do. He also stated that if she ever repeated that she had been fired because of her age that she would be "blackballed" in the insurance industry by the company and she would never get another job. 43 Mr. Bernier, on the other hand, testified that Mrs. Hyde came to his office uninvited and inquired about a raise. He told her that she was not going to get a raise because of the recent accounts receivables problem. Mrs. Hyde responded that if she did not get a raise she would quit. When Mr. Bernier would not give in, but repeated that she would not get a raise, Mrs. Hyde said she was quitting and left his office. She did not go home or return to her desk immediately. She went to the ladies' room. While she was there, he called the Personnel Department of the Home Office which advised him that, in view of her stated resignation, he should attempt to obtain from her a letter of resignation. Such a letter was prepared by Mr. Bernier's secretary. When it was presented to Mrs. Hyde, she was angry that it had been prepared, and, therefore, seen by another secretary. He recalled that she stated upon leaving the premises that she would sign it later and send it in. Mrs. Hyde also testified that after leaving she was so distraught that she needed a doctor-prescribed sedative. She was unable to return to work the next day. She did call that day or the next, spoke to Mr. Bernier and offered to come back to work. She was told that she could not because getting rid of her was what the Home Office wanted. He demanded her keys to the office. He also told her that she would have to come into the office to get her final check, herself, and that her daughter could not pick it up for her. She called the office on one occasion before going to get her check and spoke to a visiting officer from the Home Office. She repeated all that she had been told by Mr. Bernier, that is, that she had been fired because of her age at the insistence of the Home Office. This charge went unanswered in the telephone call. She arranged to meet the officer that day at a local restaurant but he did not show up as agreed. Mrs. McGough, plaintiff's daughter, testified that when she returned the office keys for her mother, Mr. Bernier also told her that her mother had been fired because the company could hire two "young girls" to take her place for less money. On a subsequent occasion, when she accompanied plaintiff to the Wayne office to pick up her final check, she testified that Mr. Bernier reiterated that there was nothing he could do inasmuch as the Home Office wanted Mrs. Hyde fired because she was too old. Mr. Bernier denied that he told Mrs. McGough that her mother was fired because of her age or for the purpose of hiring a younger woman or that she had even been fired. He also denied that he threatened that she would be "blackballed." With respect to her Title VII sex discrimination claim, plaintiff contends that in late 1982 she was being trained by her boss, Mr. Zucosky, to become a claims supervisor and to take on some of the claims adjusting work then being performed by him. She contends that her training stopped because the company wanted that kind of work to be performed by males only. She claims that she was qualified for the position by her job experience and that the minimum prerequisites of college education and 3-5 years of prior claims adjusting experience stated at trial by defendants are not job related and were advanced as a pretext for denying her the appointment. Plaintiff contends that she was never told of these minimum qualifications nor given the chance to qualify through on-the-job training. Defendant denies these allegations, contending that she was simply not qualified for the position and that its hiring criteria are job related. This case presents determinative credibility issues. On balance, I find that the plaintiff's version of events is not as credible as defendant's. First, I find that Mr. Bernier is a disinterested witness. Subsequent to plaintiff's departure from Protective, Mr. Bernier was fired because he had a difference of opinion with Protective's president, Mr. Miller, over the small fleet policy. Thus, he had nothing to gain by protecting Protective during the trial. 44 It is undisputed that there was a dramatic increase in workload for all employees at the Wayne branch office directly attributable to the underwriting of small fleet coverage. Prior to this decision to underwrite small fleet coverage, Protective had worked exclusively with large fleet coverage, where one policy covered many vehicles. With small fleet coverage, many policies had to be written. The bulk of the small fleet policies were written in the New York City area. A flood of claims resulted. Consequently, beginning around the end of 1982 and continuing well beyond plaintiff's employment with Protective there was a steadily increasing claims workload. The small fleet policy marketing approach also worked a mountainous workload on the underwriting and marketing aspects of the office. Because the office staff was limited in number, the pressure of the workload was felt by all employees as well as the several managers. Plaintiff was not aware of the workloads of the other employees. I accept the testimony of Mr. Bernier that all employees were busy and that no relief could be given to plaintiff's claims workload by the underwriting employees who were also paid on an hourly basis. Plaintiff was asked to prepare an estimate of the amount of time she had to devote to her various duties. Mr. Bernier stated that this request was made of her to obtain information necessary to persuade the Home Office, which was very cost-conscious, of the need for more staff assistance in the office. I credit this aspect of Mr. Bernier's testimony. There were two proposals, which were identified at trial, to meet the press of the generated work. One was to employ, on the underwriting side, certain innovative electronic devices, cathode ray tubes (CRTs), which would increase the work output. The other was to evaluate the clerical claims workload to justify hiring another claims secretary. These proposals resulted in the hiring of another claims secretary around mid-June who was assigned the accounts receivable work. Despite repeated requests for a time estimation of her various tasks, plaintiff failed to provide one for her manager. I find that it could have been done with reasonably little effort. That it was not done, is attributed to a belief by plaintiff that she should not have to justify the time spent on the work since it was obvious that she was overworked. She testified that she never had time to make the approximation of time that had to be devoted daily to the several aspects of her job. Plaintiff's explanation is not credible. She ignored the obvious importance of the request to her own detriment. It seems that she began to engage in a power struggle with her local management, pitting against their power to dictate assignments her sense of power over the rate of production of the clerical work. For example, when she stopped processing the accounts receivable work, she told no one that she assigned no priority at all to a task which she had to know was a priority item for the company. If plaintiff elected not to do the accounts receivable work to get management's attention, she succeeded but used poor judgment in doing so. She was blamed by her superiors, not so much for failing to do the work, but for failing to advise them that she had not been able to perform that specific task. Mr. Zucosky, and not Mr. Bernier, was responsible for assigning plaintiff the claims work, including accounts receivables. As plaintiff's witness, he testified that in June when he evaluated plaintiff's work as deficient, he was sincere in believing that she deserved no raise. He was not motivated by sex or age animus. Plaintiff does not attribute her firing to Mr. Zucosky. I accept his testimony in this respect. On July 5, 1983, plaintiff by-passed Mr. Zucosky in inquiring about a raise. She went directly to Mr. Bernier, who reiterated Mr. Zukosky's recommendation of no raise and restated the reasons. Mr. Bernier's testimony as to the events in his office are the more credible. First, plaintiff's contention at trial that she was fired and did not resign is totally at odds with all of her pretrial statements made under oath. She stated before the Unemployment Compensation Board, the Equal Employment 45 Opportunity Commission and in the complaint filed in this action that there was an act of resignation. To now deny that she resigned renders her testimony suspect. She went into Mr. Bernier's office unannounced and unsolicited. Mr. Bernier could not have been planning to fire her at that time. Plaintiff's testimony that Mr. Bernier told her he was carrying out a Home Office desire or directive in firing her makes little sense inasmuch as he had not called the Home Office before plaintiff was allegedly fired. Since she was not getting a raise there was no added economic burden in keeping her. The company was responding to her complaints that she needed help by hiring another clerical assistant. There was no one then employed, including the newly hired claims secretary, who was trained to assume plaintiff's duties in a manner that would ensure smooth claims operations, especially considering plaintiff's extensive knowledge of the company's files, procedures and claims. From the record, the last thing that Mr. Bernier needed in July, 1983, was another problem in the hectic administration of the small fleet policy program. Plaintiff's sudden departure could only have added to the administrative headache. Hence, the timing of plaintiff's leaving was not likely to have been initiated by him. She was offered an opportunity to sign a letter of resignation. She never did. The letter was not prepared before plaintiff came into Mr. Bernier's office but rather after she left and he had called the personnel office at the Home Office for guidance. His being told to ask Mrs. Hyde to execute a letter of resignation, if she said that she was resigning, or his being instructed as manager to write down all that had transpired contemporaneous to the event, does not strike me as unusual or the basis for an inference that the Home Office was out to get rid of her. Mr. Bernier's not pleading with plaintiff not to resign after she threatened to do so if she was not given a raise does not impress me as indicative of sex or age animus. It was a reasonable, predictable response to a situation where plaintiff gave no room for compromise. I credit Mr. Bernier's testimony that he, in fact, asked Mrs. Hyde not to resign but that he also told her that she would receive no raise. Under the undisputed facts, I do not find that the defendant's decision not to give plaintiff a raise was a pretext for illegal employment action. Plaintiff's failure to process the accounts receivable work was knowing and her failure to inform her superiors, who took for granted that this particular work was being done assiduously, was not a mere oversight. She made a choice between this important work and other work which she believed important. Her error of judgment was in not letting the managers make that choice, if indeed a critical choice between important functions had to be made. Her omission brought considerable criticism upon Mr. Bernier, as Branch Manager, at a time when he was trying to convince the Home Office that the small fleet policy route had been the right road to take. The omission was a justifiable basis for discipline. Plaintiff refused to accept the denial of a raise as just and resigned because she felt strongly that after all the other hard work she had given the company over the years she had been grievously wronged. Mrs. McGough testified that Mr. Bernier, whom she might have met very briefly and casually only once before, told her when she went to pick up some of her mother's personal effects from the office, and again when she went with her mother to pick up the final check that her mother had been fired for reasons of sex and age. Mr. Bernier denied any such statements. I credit his testimony. A critical bow in plaintiff's quiver of circumstantial evidence of sex and age discrimination is a statement attributed to the president of Protective, Mr. Miller, when he placed Mr. Bernier in the Wayne Branch. Mr. Zucosky testified that Mr. Miller told Mr. Bernier that he should take steps to get rid of Mrs. Hyde. Mr. Bernier then told Mr. Zucosky about Mr. Miller's instructions. Mr. Bernier admitted that Mr. Miller had had a similar conversation with him. In 1981, the company was still committed 46 to a large fleet sales program and the Branch Office was unprofitable. Mr. Bernier had been hired to make changes to improve the financial picture. In the context of cost-cutting, it was thought necessary to reduce the size of the support staff. Mr. Miller stated that "one of the girls" would have to go, suggesting Mrs. Hyde since he had heard that she was a "troublemaker" from a previous Wayne branch manager. Mr. Bernier investigated the suggestion but found nothing in any file to support it. Upon arriving at the Wayne office he made his own assessment of each employee. He testified that he found no evidence that Mrs. Hyde should be eliminated from the workforce because she was a "trouble-maker." Moreover, after the small fleet policy program was underway cutting the staff size was no longer a problem or an objective because of the dramatic increase in workload. Any conclusion that Mr. Bernier was dedicated to plaintiff's dismissal from the day he arrived is undermined by the fact that he recommended plaintiff for, and she received, annual salary increases and bonuses at the end of 1981 and 1982. During this time, Mrs. Hyde was the only employee trained to do the claims clerical work. No attempt was made to displace her from that position. She received a satisfactory performance review on December 29, 1982. Plaintiff has characterized it as a "glowing report." Her work was complimented from the mechanical, skill, and effort viewpoint. However, the evaluation noted that while "her attitude towards the job has greatly improved ... there are still areas for improvement...." Plaintiff had difficulty in getting along with several of the other women in the office. Some of the friction related to misfilings which affected plaintiff's area of responsibility. She believed that this was done purposely because it happened too frequently to be mere happenstance. Shortly after her evaluation, there was an incident in the office involving other female staff members which prompted a meeting on January 10, 1983 between plaintiff, her immediate supervisor and Mr. Bernier. At trial, plaintiff attributed her problems to the Branch's hiring only "young girls" who for some reason resented her. As a result of the January 10 meeting a memorandum was written which plaintiff refused to sign. Plaintiff does not deny that the events related therein occurred or that there was a basis for the meeting. She now sees the writing of the memorandum as an effort to document her shortcomings with an intent to discharge her for illegal reasons. She postulates that the memorandum coincided with a visit to the Wayne office by Mr. Miller, who, she argues, must have instructed his subordinates to take steps to get rid of her. Because I find that there was cause for the meeting with plaintiff, I attribute no probative weight to the memorandum helpful to plaintiff. It is noteworthy that the memorandum does not contradict the December, 1982 evaluation. No criticism was made of her technical job performance. Rather, issue was taken with her on-the-job attitude towards other employees. Plaintiff states that Mr. Bernier once stated that her problem of relating with a particular younger employee may be due to a generation gap. Mr. Bernier admitted that he said this. In her testimony at trial, plaintiff in effect agreed that this may have been true. In any event, I give no probative weight to the comment, especially considering that it was made in a social context. Plaintiff contends that the company became committed to hiring younger women at less pay than she was receiving at the time of separation from employment. Plaintiff's only evidence of this contention was her observation that the recently hired CRT operators were all under thirty years of age. She also stated that the second claims secretary was younger than she. Plaintiff offered no evidence that any qualified applicant protected under the ADEA had applied for any of these positions and been rejected. Mr. Bernier explained that the company looked to CRT training institutes for personnel and hired the best applicants. There is nothing improper about that approach. Plaintiff was not the only 47 female over 40 employed at the Branch Office. There was at least one other, who remains employed by that office. There was no evidence of the discharge of any other non-managerial employee from the Branch Office or the company. In summary, the plaintiff has failed to prove by a fair preponderance of the credible evidence that the company's reasons, advanced for denial of a raise and for her separation from employment, are pretextual for sex or age discrimination. Plaintiff also charges that she was denied a promotion to claims supervisor based upon her sex. Mr. Zucosky testified that in late 1982 he began training her to take over some of his responsibilities in the evaluation and resolution of small claims. He further testified that when Mr. Bernier learned of this training, Mr. Bernier told him, in effect, that the company considered claims adjusting work to be restricted to men. Further, the plaintiff proved that the company has never hired a female into the position of claims supervisor. Mr. Bernier denied that he made any such statement to Mr. Zucosky. He did testify that he understood company policy to be to train claims secretaries to handle some of the small, routine property damage claims which would otherwise occupy the time of the claims supervisor. He denied having any specific knowledge that Mr. Zucosky was training Mrs. Hyde and he denied that he would have discouraged such training. Again, a credibility determination must be made. Here, I find that the testimony of Mr. Zucosky is not credible. At the Unemployment Compensation Benefits Board hearing he testified that he told Mrs. Hyde in 1982 that she would not qualify for the position of claims supervisor because there were minimum requirements of a college degree and three to five years outside adjuster experience. Yet, at the trial, when asked if he knew of the company's requirements when he was training Mrs. Hyde for the position, he stated that he did not. Either he was untruthful at the unemployment compensation hearing or at trial. I find that the latter is more probable. Around the time he was training Mrs. Hyde, there were internal managerial discussions at the Branch Office about staffing, including the need for an additional claims supervisor. Mr. Zucosky, through a friend at Allstate Insurance Company, contacted Bruce Kleeman about interviewing for the job. Mr. Kleeman applied and was interviewed several times and then started with Protective in May, 1983. Mr. Bernier testified that in the course of discussions about another claims supervisor, Mr. Zucosky called the personnel officer at the Home Office and was told the minimum requirements for this position. Mr. Kleeman, before submitting his application, learned of the hiring requirements from Mr. Zucosky. Therefore, it is probable that Mr. Zucosky did indeed tell Mrs. Hyde that she would not qualify for the position of claims supervisor because of education and experience factors. Moreover, I find that he never undertook to train Mrs. Hyde to be a claims supervisor, but rather to handle small property damage claims. A claims supervisor would be responsible for handling the full range of claims, especially the significant and numerous personal injury claims, which were increasing. By her own admission, Mrs. Hyde was not trained to step immediately into the shoes of an experienced adjuster or claims supervisor in such matters. The company had an obvious need, with its growing claims files, for just such an experienced person. In all her years with the company, Mrs. Hyde had never had primary responsibility for the handling of any personal injury claim, however small, and, at most, had only handled property damage claims valued at $300 or less. Thus, it is not reasonable to expect that Mr. Zucosky or the company would have delegated any significant level of claims settlement authority to Mrs. Hyde. Mr. Zucosky testified that he never told Mr. Bernier or any one at the Home Office that he was training Mrs. Hyde, never determined if there was a position available, and, according to him, never checked to see if there were any minimum requirements for the job. In his testimony on direct examination, he stated *48 that the training of Mrs. Hyde would have led to a promotion. After further questioning, he modified his statement to the effect that plaintiff would have been recommended, presumably by him, for a raise based upon her assumption of more responsible duties, but would not have assumed the position of claims supervisor. Consequently, I conclude that Mr. Zucosky never specifically told Mrs. Hyde that she was in training for the job of claims supervisor. Plaintiff contends that had she been given on-the-job training she would have been able to assume the full duties of a claims supervisor. I find that given the way in which the company operated, it did not have the ability to train claims supervisors. It used outside or independent adjusters to do the investigative field work, make reports and/or to recommend levels of settlement. For that reason, it was not unreasonable or discriminatory for the company to seek an experienced adjuster to fulfill the responsibilities of claims supervisor. Plaintiff also urges that the college degree and three to five years of adjusting experience requirements for the job be found non-job related. Based upon the record evidence, I cannot find that plaintiff has carried her burden in this respect. Considering the job performance requirements of the position, I cannot say that the hiring requirements are arbitrary, unreasonable or a pretext for sex discrimination. For example, there was no evidence that females in the workforce today are disproportionately underrepresented in terms of college degrees or that industry-wide there are no female claims adjusters, although they may be few. That Protective has not received an application from any female claims adjuster for the position of claims supervisor has not been shown to be indicative of discriminatory non-hiring intent. The absence of qualified female applicants to Protective may be the result of scarcity of numbers of female adjusters in the workforce and does not necessarily imply that Protective preferred males for the position of claims supervisor. Protective does have female managers on the underwriting side of the business, which has not been shown to be any less important than the claims side. The Secretary-Treasurer of the company is female and over 40. Mrs. Hyde points to her inability to get a job in the insurance industry after she left Protective as evidence of her being black-balled. However, she had applied for positions as a claims adjuster, a position for which she was not qualified. Once she applied for secretarial positions, she was hired, albeit not by an insurance company. Consequently, I find that it was plaintiff's applying for positions for which she was not qualified, and not blackballing, that hindered her progress in obtaining subsequent employment. In conclusion, plaintiff has failed to show that either sex and age discrimination played a "but for" role in Protective's employment decisions concerning her. Accordingly, judgment shall be entered in favor of defendant and against plaintiff.	{ "pile_set_name": "FreeLaw" }
81 S.W.3d 79 (2002) STATE of Missouri, Respondent, v. Dayna M. HENDRIX, Appellant. Nos. WD 59338 and WD 59378. Missouri Court of Appeals, Western District. April 16, 2002. Motion for Rehearing and/or Transfer Denied May 28, 2002. Application to Transfer Denied August 27, 2002. 81 Draig Johnston, State Public Defender Office, Columbia, for Appellant. Jeremiah W. (Jay) Nixon, Atty. Gen. and Philip Koppe, Assistant Attorney General, Jefferson City, for Respondent. Motion for Rehearing and/or Transfer to Supreme Court Denied May 28, 2002. RONALD R. HOLLIGER, Judge. Dayna Hendrix appeals her conviction after a jury trial of the class A felony of trafficking in the second degree, § 195.223 RSMo 2000.[1] Because we find that the evidence was insufficient to support the conviction, we reverse. Facts On October 14, 1999, the Buchanan County Drug Strike Force executed a search warrant on an apartment rented by Sheila Knowles. For about six weeks, the Strike Force had performed periodic, drive-by surveillance of the apartment. Hendrix had been observed there on a regular basis, as had Knowles, Raymond Wilkinson, and another unknown woman. Hendrix was not present when the apartment was searched, although she was seen leaving shortly before the warrant was executed, and she returned later that evening. When the warrant was executed Wilkinson and Mario Dydell were present. When Hendrix returned to the apartment, officers stopped her and told her they were there on a "drug search warrant." Hendrix told the officers "basically" that any "dope" in the apartment either "wasn't hers" or "couldn't be pinned on her." When officers told her that they knew she had been staying at the apartment for the last month or so, Hendrix said, "Who cares, you can't pin any of the dope on me." The search of the apartment revealed contraband and a small bag of marijuana in the living room, contraband and a yellow 82 rock substance in the bedroom Hendrix slept in when she stayed there, and, in Knowles' bedroom, a digital scale, contraband, and 37 rocks of cocaine base hidden behind a clock on the wall. Hendrix was charged with trafficking based on the 37 rocks found behind Knowles' clock. Officers found a concealed crack pipe containing a small amount of cocaine on Hendrix's person. Hendrix was arrested. She admitted to using crack earlier that day, and told officers that "a friend" had given it to her. She also said that she had been staying at Knowles' apartment "for the past couple of months" because of problems at home. Knowles, who was in Kansas City buying crack when the search warrant was executed, was arrested on a later date. She was charged with trafficking in the second degree. She pled guilty to that charge pursuant to an agreement to testify against Hendrix and Wilkinson. In return she received a suspended imposition of sentence and "drug court." Knowles testified that Hendrix and Wilkinson, with whom Hendrix was romantically involved, had lived at her apartment since August 1999. Hendrix did not have a key to the apartment. Hendrix slept in the northwest bedroom but would usually smoke crack with Wilkinson in Knowles' bedroom. Knowles testified that Wilkinson sold crack on a regular basis, and that both women occasionally delivered for him. Knowles further testified that Ms. Hendrix would sometimes keep Wilkinson's crack on her person. She also testified that another man, Mark Cline, also known as L.D., sold "dope" out of her apartment, but she was not sure if he stored his product there. Knowles finally testified that she usually slept on the couch, not in her bedroom, and that the she owned the clock in which the substantial amount of cocaine was discovered. Wilkinson also pled guilty to a trafficking charge and testified for the State. He testified that he did not live at Knowles' apartment, and that he did not know if Hendrix lived there, but that he saw her there "on occasion." He testified that he also did not have a key to the apartment. He testified that neither woman sold nor delivered drugs for him, although he would give them drugs for their own use. He testified that he did not know about the rocks found in Knowles' clock. He also testified that he did not see L.D. at the apartment the day the search warrant was executed. Hendrix testified in her own defense. She testified that she did not live at the apartment in question, but rather that she stayed there on occasion. She denied telling officers that she had lived there for the past couple of months. She testified that she usually smoked crack in the northwest bedroom, but that occasionally she would smoke it in Knowles' bedroom. She testified that she received crack from Wilkinson but denied delivering drugs for him. She also denied any knowledge of any of the other drugs or paraphernalia found in the house. She did not recall telling officers that they could not "pin any dope you find on me." She also testified that L.D. had been packaging "dope" in the apartment the day the search warrant was executed. James Ginn testified for the defense that Hendrix lived with him during October 1999, but that she would occasionally spend nights elsewhere. Analysis Hendrix raises two points on appeal. In her first point, Hendrix argues that the trial court erred in overruling her motion for judgment of acquittal, in accepting the jury's guilty verdict, and in sentencing her, because there was insufficient evidence to 83 support her conviction of trafficking in the second degree. She argues that the evidence did not prove beyond a reasonable doubt that she constructively possessed the cocaine base found behind the clock. Because we reverse on the first point, we do not discuss the allegation of instructional error raised in her second point. Review of claims challenging the sufficiency of evidence is limited to a determination of whether there is sufficient evidence from which a reasonable juror might have found the defendant guilty beyond a reasonable doubt. State v. Clay, 975 S.W.2d 121, 139 (Mo. banc 1998). We view the evidence in a light most favorable to the verdict, considering all favorable inferences and disregarding all evidence and inferences contrary to the verdict. Id. We must consider whether, on this evidence, a reasonable juror could find each of the elements of the crime beyond a reasonable doubt. State v. Grim, 854 S.W.2d 403, 411 (Mo. banc 1993). A reviewing appellate court does not act as a "super juror" but must defer to the trier of facts' determination if a submissible case has been made by the State. State v. Chaney, 967 S.W.2d 47, 52 (Mo. banc 1998). Section 195.223.3 provides that a person commits the crime of trafficking drugs in the second degree if she possesses or has under her control, purchases or attempts to purchase, or brings into this state more than two grams of a mixture or substance which contains cocaine base. Section 195.223.3(2). The State elected to charge that Hendrix possessed the cocaine base. In order to prove that Hendrix possessed the cocaine base, the State was required to prove that she 1) had conscious and intentional possession of the 6.2 grams of cocaine base, either actual or constructive, and 2) was aware of the presence and nature of the substance. State v. West, 21 S.W.3d 59, 63 (Mo.App.2000). Because Hendrix did not actually possess the cocaine base, the State was required to prove that she constructively possessed it. In order to show constructive possession, the State must prove that Hendrix had access to and control over the premises where the cocaine base was found. Id. Exclusive possession of the premises raises an inference of knowledge and control. However, in a case of joint possession of the premises, more is required. Where the defendant shares possession of the premises with others, as was the case here, additional evidence of some incriminating circumstances must also be presented to permit the inference of knowledge and control over the substance. Id. In State v. Wiley, 522 S.W.2d 281 (Mo. banc 1975), the Missouri Supreme Court stated: Where a person is present on premises where drugs are found but does not have exclusive use or possession of the premises, it may not be inferred that he had knowledge of the presence of the drugs or had control, so that no submissible case is made. Additional factors are required. When the defendant is present on the premises and if there are additional independent factors showing his knowledge and control, then that is sufficient to withstand a motion for directed verdict. To justify a conviction in any case of possession it is necessary to prove that the accused knew of the presence of the forbidden substance and that the same was under his control. In the absence of incriminating circumstances no case is made. Id. at 292. Various additional incriminating circumstances have been held to permit an inference of knowledge and control in a case involving joint possession of premises: 84 self-incriminating statements, Wiley at 292-93; consciousness of guilt, State v. Dreiling, 830 S.W.2d 521, 524-25 (Mo.App. 1992); routine access to the place where the controlled substance is found; the commingling of the controlled substance with a defendant's personal belongings, State v. Steward, 844 S.W.2d 31, 33 (Mo. App.1992); a great quantity of the illegal substance at the scene, State v. Barber, 635 S.W.2d 342, 344 (Mo.1982); the substance in public view and access by defendant, State v. Kerfoot, 675 S.W.2d 658, 661 (Mo.App.1984). If the defendant is not present when the substance is discovered, the circumstantial evidence sufficient to show constructive possession should be scrutinized even more closely to make certain that it points to the defendant and not just circularly to joint possession. We must look at the totality of the circumstances to determine whether the State has proved sufficient additional incriminating circumstances. State v. Smith, 33 S.W.3d 648, 653 (Mo.App.2000). The State acknowledges the need to present additional evidence connecting Hendrix with the controlled substance found in the clock. State v. Norville, 23 S.W.3d 673, 676 (Mo.App.2000). A review of the evidence reveals that there were no additional incriminating circumstances present that could have raised an inference that Hendrix exercised control of the cocaine base. First, the State contends that Hendrix made a self-incriminating statement. The State imparts significance to the fact that Hendrix made her statement ("Who cares; you can't pin any of the dope on me.") before the cocaine base was discovered. This, the State argues, constituted evidence from which the jury could have inferred that Hendrix was aware of the cocaine base behind the clock. However, Hendrix made this statement not spontaneously, but rather in response to an officer informing her they were executing a drug warrant. Considering, as we must, the totality of the circumstances, this statement was not self-incriminating. It may imply knowledge that there was cocaine base hidden behind the clock; more likely it implies knowledge of the marijuana and paraphernalia strewn about the common areas of the apartment. In either case, the statement, "you can't pin any of the dope on me" does not imply control of the substance. In fact, it points to the opposite. In State v. Morris, 41 S.W.3d 494 (Mo. App.2000), a similar comment to an officer did not suffice to show possession of contraband. The Morris defendant was present during the search, but he did not live at the apartment. Id. at 496. When he was asked if there were any other drugs in the place, he replied, "No, you got it all." Id. at 497. This court held that the statement might have shown knowledge of the drugs, but it did not show control. Id. at 498. The State also argues that Hendrix exhibited a consciousness of guilt when she attempted to avoid her association with Wilkinson by refusing to tell police that she was driving his car. This behavior certainly may indicate that Hendrix did not want to be linked to Wilkinson, but it cannot be interpreted as evidence that she knew of or exercised control over the cocaine base. The State next argues that an additional incriminating circumstance by which it can show knowledge and control is routine access to the place where the substance is found. Clearly Hendrix had routine access to the bedroom in question. However, considering the totality of the 85 circumstances, Hendrix's access to the bedroom does not show control of the cocaine base found concealed there. West involved a defendant convicted of possession of methamphetamine and attempt to manufacture methamphetamine. 21 S.W.3d at 61. The defendant owned the house in joint tenancy with Terry Shelton. Id. Officers discovered a jar of black liquid in the freezer in the kitchen. Id. at 62. In reversing West, we noted that although West's undisputed access to the kitchen might show that she knew about the substance in the freezer,[2] it did not support a finding that West possessed that substance. Id. at 67. The State attempts to distinguish West on the grounds that there was no evidence that West sold for his co-occupant, while in the instant case, Knowles testified that Hendrix would deliver drugs for Wilkinson. The State ignores, however, that its own evidence showed that Wilkinson did not know of the drugs behind the clock. He denied any such knowledge. Knowles further testified that Wilkinson always kept his stash on his person or sometimes Hendrix kept it on her person for him. Although this testimony may, along with other evidence, show Hendrix's familiarity with illegal drugs, Wilkinson's illegal activities, and knowledge that drugs were sometimes on the premises, does not justify an inference that she possessed or controlled the drugs found behind Knowles' clock. We also note that Hendrix was not present in the apartment when the drugs were found, but other persons were. At least one other person sold drugs from Knowles' apartment and had been present the morning before the search. There is no evidence that Wilkinson stored his drugs behind the clock. And we note that Knowles was never asked whether she (or Hendrix) had any knowledge of the drugs in question. Although the State suggests in its brief that Hendrix would help Wilkinson package cocaine, our review of the transcript citation does not support that claim. There was no testimony that Hendrix packaged cocaine base for Wilkinson or anyone else. The State also argues that there was no testimony in West from the joint possessor of the premises that he was unaware of the substances, whereas here Wilkinson testified that he knew nothing about the cocaine base behind the clock. The State agues that by process of elimination since Hendrix was the only joint possessor of the apartment, it was reasonable to infer that the cocaine behind the clock was hers. The jury was, of course, free to believe such testimony, difficult as it would be to reconcile with Wilkinson's testimony that he pled guilty to trafficking of that same cocaine base. However, West is not distinguishable on this fact, because Knowles, like the joint possessor in West, did not testify that she was unaware of the cocaine base hidden behind her clock. The State argues that the paraphernalia and marijuana found about the apartment constitute evidence from which the jury could conclude that Hendrix had knowledge of the presence and character of the drugs found behind the clock. The State relies upon those cases holding that the presence of large quantities of illegal drugs and paraphernalia at the scene where a defendant is arrested permit an inference of awareness of the presence and 86 character of illegal drugs. See e.g., Morris, 41 S.W.3d at 497. Although the presence of the other illegal substances might indicate that Hendrix knew about the cocaine base concealed behind the clock, it does not indicate that she exercised control over it. And, although not dispositive, it is significant that Hendrix was not present in the apartment at the time of the search while others were and had been since the time she left the apartment. The record contains no indication that any of Hendrix's personal possessions were found commingled with the cocaine base, or that the substance was in public view. This case, like West, presents circumstances that might indicate that the defendant had knowledge of the substance, but no circumstances that could indicate that the defendant exercised control over the substance. Evidence of both is required to support a conviction. Smith, 33 S.W.2d at 653. Because there were no additional incriminating circumstances that permitted an inference that Hendrix exercised control over the cocaine base concealed behind the clock, the evidence was insufficient to show beyond a reasonable doubt that Hendrix constructively possessed that cocaine base. The judgment is, therefore, reversed and appellant ordered discharged. HAROLD L. LOWENSTEIN, Presiding Judge, and THOMAS H. NEWTON, Judge, concur. NOTES [1] All statutory references are to RSMo 2000 unless otherwise indicated. [2] We note that in West, as well as in this case, the substance was well concealed within the room the defendant had access to.	{ "pile_set_name": "FreeLaw" }
846 F.2d 434 46 Fair Empl.Prac.Cas. 1503,46 Empl. Prac. Dec. P 37,954, 56 USLW 2685 Anne B. ZIPES, et al., Plaintiffs-Appellees,v.TRANS WORLD AIRLINES, INC., et al., Defendants,andIndependent Federation of Flight Attendants, Intervenor-Appellant. No. 86-2731. United States Court of Appeals, Seventh Circuit. Argued April 23, 1987. Decided May 6, 1988.Rehearing and Rehearing In Banc Denied July 22, 1988. Steven A. Fehr, Jolley Walsh Hager & Gordon, Kansas City, Mo., for appellant. Aram A. Hartunian, Hartunian, Futterman & Howard, Chicago, Ill., for appellees. Before CUMMINGS, COFFEY, and MANION, Circuit Judges. COFFEY, Circuit Judge. 1 This dispute over liability for statutory attorneys' fees has its origins in a 1970 class action filed by the plaintiffs against Trans World Airlines ("TWA") alleging unlawful sex discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq. After nearly nine years of litigation, the plaintiffs entered into a comprehensive settlement agreement with TWA which was contested by the intervenor, the Independent Federation of Flight Attendants ("IFFA"), on the grounds that the terms of the settlement violated the rights of those TWA flight attendants not members of the plaintiff class. IFFA's opposition to the settlement agreement consumed three years of litigation culminating in 1982 when the plaintiff class prevailed before the Supreme Court. Subsequently, pursuant to section 706(k) of Title VII, 42 U.S.C. Sec. 2000e-5(k), plaintiffs' attorneys successfully petitioned the district court for fees incurred in connection with their post-settlement legal work. We affirm the district court's award of post-settlement fees against IFFA as well as its use of a multiplier in calculating that award. I. FACTS 2 The proceedings which pre-date this lawsuit are summarized in Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982). The plaintiffs brought this class action against TWA back in 1970, challenging the airline's policy of automatically terminating the employment of all female flight attendants who became mothers while permitting their male counterparts, new fathers, to continue flying.1 Soon after the filing of suit by the plaintiffs, TWA abandoned its "no-motherhood" policy and IFFA's predecessor, then representing both the plaintiff class and unaffected flight attendants, entered into a settlement with TWA. Although the district court approved the proffered settlement, several disenchanted class members appealed. We reversed the district court's approval of the 1971 settlement based upon the conflict we perceived between the then union's obligations to the plaintiff class on the one hand and to the then-currently working flight attendants on the other. Air Line Stewards and Stewardesses Association v. American Airlines, 490 F.2d 636 (7th Cir.1973). We ordered IFFA's predecessor to be replaced as the class representative. 3 Following reinstatement of the lawsuit, the district court granted the plaintiffs' motion for summary judgment, concluding that TWA's "no-motherhood" policy violated Title VII's proscription against discrimination in employment on the basis of sex. We affirmed the district court's finding of unlawful employment discrimination but held that the claims of a number of the members of the class were barred because charges had not been timely filed with the Equal Employment Opportunity Commission ("EEOC"). In re Consolidated Pretrial Proceedings in the Airline Cases, 582 F.2d 1142 (7th Cir.1978). Our holding on the timeliness issue necessitated that we divide the plaintiff class into two groups--Sub Class A, class members whose EEOC charges were timely, and Sub Class B, those whose charges were untimely--and that we remand the case with respect to the timely claims of Sub Class A. 4 Prior to any action in the district court in response to our remand, the parties reached a settlement which provided, inter alia, that TWA establish a $3,000,000 settlement fund to benefit all class members and that each class member be credited with full company and union seniority from the date of her termination by the airline. IFFA, the union certified to act as the collective-bargaining agent both for those TWA flight attendants not affected by the airline's discontinued "no-motherhood" policy and for flight attendants hired since the termination of the plaintiffs, sought and received permission to intervene in the lawsuit to object to the settlement. Specifically, IFFA opposed the proposed settlement on two grounds: first, that the untimely filing of charges with the EEOC by members of Sub Class B left the district court without jurisdiction to consider equitable relief affecting them, and second, that reinstatement of the plaintiffs with full retroactive "competitive" seniority2 would violate the collective bargaining agreement then in place between TWA and the union's incumbent members. After three days of hearings, during which time IFFA had an opportunity to air its objections, the district court approved the settlement agreement and expressly found that "full restoration of retroactive seniority will not have an unusual adverse impact upon currently employed flight attendants in a manner which is not typical of other Title VII cases...." (Mem.Op., November 8, 1979 at 2.) 5 IFFA appealed, arguing that in light of this court's earlier decision that the timely filing of an EEOC charge was a jurisdictional prerequisite, the district court erred in holding that it retained jurisdiction to approve the settlement agreement with respect to Sub Class B. Once again, we ruled in favor of the plaintiffs and affirmed the district court, reasoning that "the principles favoring settlement of class action lawsuits remain the same regardless of whether the disputed legal issues center on the jurisdiction of the court over the action." Air Line Stewards and Stewardesses Assn. v. Trans World Airlines, Inc., 630 F.2d 1164, 1169 (7th Cir.1980). We also affirmed use of the remedy of retroactive competitive seniority for eligible class members; in our view the settlement responded appropriately both to TWA's past acts of discrimination as well as to the tangible consequences of those past acts. Id. 6 IFFA filed a petition for certiorari. The Supreme Court granted the petition and consolidated it with an earlier petition filed by the plaintiffs, consideration of which the Court had deferred in light of the then-ongoing settlement negotiations between the plaintiffs and TWA. The plaintiffs had sought review of our prior decision holding that timely filing of EEOC charges constituted a jurisdictional prerequisite which barred the claims of Sub Class B. IFFA, on the other hand, petitioned for review of our ruling that the terms of the settlement agreement--the reinstatement of discharged flight attendants with retroactive competitive seniority--did not impermissibly infringe upon the collectively-bargained for rights of incumbent flight attendants. In Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982), the Court held that we had been mistaken in construing the filing requirement of Title VII, Section 2000e-5(e), as being jurisdictional but agreed that reinstatement of the plaintiffs with full retroactive competitive seniority was a remedy both authorized by Title VII and appropriate in these circumstances. 7 Having been twice vindicated in the Supreme Court, plaintiffs' attorneys petitioned the district court for an award of fees against IFFA for their successful defense of the settlement agreement. In turn, the district court assessed IFFA $57,258 as fees for counsel for Sub Class A and $171,747 (comprised of a "lodestar" figure of $85,873.50 increased by a multiplier of 2) as fees for counsel for Sub Class B. Air Line Stewards v. Trans World Airlines, Inc., 640 F.Supp. 861 (N.D.Ill.1986). Subsequently, upon motion, the district court lowered the multiplier used to compute the fees for Sub Class B from 2 to 1.44, yielding an award to counsel of $123,657.84. IFFA's total liability for fees incurred solely as a result of its challenge to the settlement agreement thus currently stands at $180,915.84. II. DISCUSSION 8 On appeal, IFFA asserts that the fee-shifting provision of Title VII, section 706(k),3 does not authorize an award of attorneys' fees against an intervening party which has not been accused of a violation of federal law and which, in an effort to protect the rights of its members, raises arguments analogous to those a plaintiff would ordinarily make. Alternatively, in the event we disagree with its interpretation of section 706(k), IFFA points to certain "special circumstances" which it claims render an award of fees inappropriate. Finally, IFFA argues that even if the district court's decision to award fees is upheld, the use of a multiplier to increase the amount of the award to counsel for Sub Class B was improper. We consider these arguments in turn. 9 A. Liability of "Innocent" Intervening Parties 10 In Charles v. Daley, 846 F.2d 1057 (7th Cir.1988), we addressed the question whether an "innocent" third party intervenor-defendant can be held liable for the attorneys' fees incurred by a prevailing party under the Civil Rights Attorneys' Fees Awards Act, 42 U.S.C. Sec. 1988.4 Charles involved an award of attorneys' fees pursuant to section 1988 against three private parties who intervened on the side of Illinois in a suit challenging the constitutionality of the State's criminal abortion statute. In finding against the intervening defendants and in favor of the prevailing plaintiffs in Charles, we held, that although the language of section 1988 does not explicitly enumerate those against whom an award of fees may be imposed, the overriding purpose of the statute--to encourage the vindication of civil rights by 'private attorneys general'--would be furthered by interpreting section 1988 to include discretionary fee awards against unsuccessful intervening defendants, regardless of whether the intervenor could actually be found to be a violator of federal law under 42 U.S.C. Sec. 1983. Id. at 12-13; see also Akron Center for Reproductive Health v. City of Akron, 604 F.Supp. 1268 (N.D.Ohio 1984) (Section 1988 fees awarded in part against private intervenors who joined City of Akron in defending constitutionality of local abortion ordinance). We are unpersuaded that the facts of the instant case require us to adopt a different rule under Title VII: not only is the operative language of section 706(k) virtually identical to that used in section 1988, but the Supreme Court has previously observed that in considering awards of attorneys' fees, courts should consult related attorneys' fees statutes and case law. See Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S.Ct. 1933, 1939 n. 7, 76 L.Ed.2d 40 (1983); see also Zabkowicz v. West Bend Co., 789 F.2d 540, 549 n. 9 (7th Cir.1986). Moreover, other circuits applying Title VII's fee award provision have construed the statute to allow fee awards against "innocent" defendants and intervenors. See e.g., Allen v. Terminal Transport Co., Inc., 486 F.Supp. 1195, 1202 (N.D.Ga.1980) (union defendant guilty of no discrimination held partially liable for Title VII attorneys' fees due to opposition to consent decree affecting its members), aff'd, 653 F.2d 1016 (5th Cir.1981); Moten v. Bricklayers, Masons and Plasterers, 543 F.2d 224 (D.C.Cir.1976) (business association seeking unsuccessfully to intervene in appeal of a Title VII lawsuit assessed fees despite having engaged in no unlawful activity); Thompson v. Sawyer, 586 F.Supp. 635 (D.D.C.1984) (Title VII attorneys' fees imposed against non-party union for unsuccessful attempts at intervention to challenge relief attained by plaintiffs).5 11 IFFA raises a related argument which proceeds from the premise that, because its role in opposing the settlement agreement was more closely analogous to that of a plaintiff than to that of a defendant, it should be held liable for fees only if its intervention in the lawsuit can be deemed frivolous or unreasonable. The district court rejected the intervenor's "functional plaintiff" argument and we concur. 12 It is settled law that a prevailing Title VII plaintiff is presumptively entitled to fees. Albemarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975); Zabkowicz, 789 F.2d at 548. However, in Christianburg Garment Co. v. E.E.O.C., 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Supreme Court held that a more rigorous standard of eligibility applies when prevailing Title VII defendants seek to recover fees from unsuccessful plaintiffs. Specifically, the Court held that prevailing defendants are entitled to an award of fees only upon a finding that the plaintiff's action was "frivolous, unreasonable or without foundation." Id. at 421, 98 S.Ct. at 700. While the Supreme Court has never explicitly considered the standard applicable to a request for an award of fees against an unsuccessful intervenor, IFFA urges that because it intervened solely to assert the rights of its non-discriminating incumbent members, it should be viewed, in practical terms, as a plaintiff, and hence assessed attorneys' fees only if its opposition to the settlement was found to have been groundless.6 In the instant case, the district court made no such finding. 13 The most recent exposition of IFFA's "functional plaintiff" argument appears to have been made in Reeves v. Harrell, 791 F.2d 1481 (11th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987). In Reeves, a case apparently not brought to the district court's attention, white police officers intervened to challenge the constitutionality of a consent decree entered into by black police officers and the Sheriff's Office of Bibb County, Georgia. The black officers brought suit against the Sheriff's Office alleging racial discrimination in job assignments and promotions in violation of 42 U.S.C. Secs. 1981 and 1983. The intervenors argued that the terms of the consent decree, which called for promotion of black officers on an equal basis with white officers, would in turn discriminate against them on the basis of race. Although the plaintiffs ultimately prevailed over the intervenors' challenge to the consent decree, the Eleventh Circuit's decision on the issue of section 1988 fees expressly recognized the importance of the countervailing constitutional claims raised by the intervening white officers. Indeed, the court found the role of the intervenors in Reeves to be the functional equivalent to that of plaintiffs.7 In so holding, the court suggested that such a result was required if defendants with good faith constitutional claims of their own were not to be deterred from litigating them for fear of statutory fee liability.8 Id. at 1484; see also Grano v. Barry, 783 F.2d 1104, 1112 (D.C.Cir.1986); Kirkland v. New York State Department of Correctional Services, 524 F.Supp. 1214, 1219 (S.D.N.Y.1981) ("[F]orcing intervenors to bring their constitutional claims only at the risk of becoming liable for their opponents' fees if they do not prevail may substantially deter such intervention ..."), aff'd in part, rev'd in part on other grounds, 520 F.2d 420 (2nd Cir.1975). IFFA would have us characterize its posture in this case precisely as the Eleventh Circuit characterized the intervenors' position in Reeves. We decline to do so. Acceptance of a "functional plaintiff" exception to the rule favoring fee awards to prevailing Title VII plaintiffs, in our view, unnecessarily threatens to undermine what has come to be interpreted as a deliberate statutory presumption in favor of such awards to prevailing parties. 14 One need only look to the plain language of section 706(k) to discover that Congress intended only one class of litigants, prevailing parties, be eligible to recover attorneys' fees expended in Title VII litigation. Conversely, nowhere does section 706(k) expressly exclude any class of litigants from liability for such awards. While we are not unmindful that a literal interpretation of section 706(k) may, from time to time, result in the imposition of a fee award against a party whose sole involvement in a Title VII lawsuit is limited to an assertion of countervailing constitutional rights (i.e., the intervenors in Reeves), we are nonetheless bound to apply the fee award provision of Title VII as it is written, not as it might have been written. See e.g. United States v. American Trucking Associations, Inc., 310 U.S. 534, 543, 60 S.Ct. 1059, 1063-64, 84 L.Ed. 1345 (1940) (plain meaning of statute must be given effect unless doing so would result in "absurd" or "futile" results or results so unreasonable as to be plainly at variance with the policy of the legislation as a whole). Section 706(k) unequivocally endorses fee awards to prevailing Title VII parties; the plaintiffs in the case at bar prevailed and, consequently, are entitled to the fees awarded them by the district court. 15 IFFA contends that such narrow and syllogistic reasoning places undue importance upon the nominal alignment of the parties. For example, IFFA argues that had it waited until after approval of the settlement between the plaintiffs and TWA and then filed a separate action of its own contesting the validity of the agreement, it could not have been held liable for the fees incurred in connection with even a successful defense of the settlement by either the plaintiff class or TWA. Thus, IFFA asserts that it could have escaped section 706(k) liability merely by deciding to file its own independent lawsuit, one which would not have identified the union's interests with those of TWA in the underlying litigation. Assuming for the moment that a subsequent suit by IFFA would not be barred as untimely,9 the fact that such a procedural loophole exists in Title VII's statutory scheme constitutes a flaw that must be addressed to Congress, not to the federal courts. Cf. Kennedy v. Whitehurst, 690 F.2d 951, 953 (D.C.Cir.1982) ("Arguments centering on the inequities caused by the absence of fee-shifting are properly addressed to the Congress and not to the courts."). The settlement phase of this case pitted the plaintiff class against intervening defendant IFFA; that IFFA now regrets having chosen to proceed as an intervenor does not relieve it from having to bear the financial consequences of that decision.10 16 Of even greater concern, however, is our belief that were we to adopt the "functional plaintiff" approach articulated in Reeves and advocated by IFFA, we might very well encourage intervenors, and ultimately defendants, in Title VII lawsuits to manufacture constitutionally-derived or statutorily-based defenses in an attempt to cloak themselves in the protective guise of functional plaintiffs, in effect rendering them immune from statutory fee liability except where their defenses are held to be completely without merit. See Christianburg, 434 U.S. at 421, 98 S.Ct. at 700. Congress has authorized attorneys' fee awards in employment discrimination cases as an inducement to individuals--both lawyers and laymen alike--to bring lawsuits as private attorneys general and thereby aid in the enforcement of Title VII; acceptance by the courts of a "functional plaintiff" exception to Title VII fee liability could substantially undermine this crucial incentive to ordinary citizens to enforce this Nation's civil rights laws in circumstances where the government simply cannot. We are not inclined to look favorably upon such a potentially injurious exception to this long-standing legislative scheme. B. Special Circumstances 17 Despite the general rule that prevailing parties in Title VII litigation are presumptively entitled to attorneys' fees, the Supreme Court has held that fees may be withheld where certain narrowly defined "special circumstances" are present that would render an award of fees unjust. Albemarle Paper Co., 422 U.S. at 415, 95 S.Ct. at 2370; Christianburg, 434 U.S. at 417, 98 S.Ct. at 698. IFFA contends that two such "special circumstances" exist in the instant case. First, as the exclusive bargaining representative of its members, IFFA claims that it was obliged, under the judicially implied duty of fair representation, to intervene in the plaintiffs' Title VII lawsuit in an effort to set aside the parties' settlement agreement, which adversely affected the collectively-bargained for rights of its members. Such compulsory participation, argues IFFA, surely constitutes a special circumstance vitiating any liability for Title VII fees. In addition, IFFA posits as a second special circumstance the fact that the plaintiffs have already been awarded a generous and more than adequate sum--in excess of $1,250,000--as attorneys' fees in connection with the pre-settlement phase of this litigation and hence no further award of fees is necessary. We are persuaded that neither asserted "special circumstance" justifies withholding an award of fees to the plaintiffs and their counsel. 18 Initially, IFFA is mistaken when it claims that the duty of fair representation, first recognized by the Supreme Court in Steele v. Louisville & Nashville R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173 (1944), required it to join this lawsuit to contest the validity of the settlement agreement reached between the plaintiffs and TWA. Steele, a case arising under the Railway Labor Act, held that "when Congress empowered unions to bargain exclusively for all employees in a particular bargaining unit, and thereby subordinated individual interests to the interests of the unit as a whole, it imposed on unions a correlative duty inseparable from the power of representation to exercise that authority fairly." International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 46, 99 S.Ct. 2121, 2125, 60 L.Ed.2d 698 (1979). A union must thus represent fairly the interests of all bargaining-unit members during the negotiation, administration and enforcement of collective-bargaining agreements. Conley v. Gibson, 355 U.S. 41, 46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In particular, a union breaches its duty of fair representation only "when [its] conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith," as, for example, when it "arbitrarily ignore[s] a meritorious grievance or process[es] it in [a] perfunctory fashion." Vaca v. Sipes, 386 U.S. 171, 190-91, 87 S.Ct. 903, 916-17, 17 L.Ed.2d 842 (1967); Foust, 442 U.S. at 47, 99 S.Ct. at 2125. 19 Notwithstanding IFFA's assertions to the contrary, the duty of fair representation does not and never has been construed to guarantee that an employee or bargaining unit has an absolute right to have a grievance or other action brought on its behalf, see Vaca, 386 U.S. at 191, 87 S.Ct. at 917. Graf v. Elgin, Joliet and Eastern Railway Co., 697 F.2d 771, 779 (7th Cir.1983); but see Richardson v. Alaska Airlines, 750 F.2d 763 (9th Cir.1984) (imposition of fee award against intervening union "would only punish it for performing an act it was under a duty to do"). In fact, in a conscious effort to minimize federal judicial intervention in labor disputes, unions have consistently been accorded considerable discretion in deciding whether and to what extent employee grievances should be prosecuted. See Ford Motor Co. v. Huffman, 345 U.S. 330, 337-38, 73 S.Ct. 681, 685-86, 97 L.Ed. 1048 (1953) ("A wide range of reasonableness must be allowed a statutory bargaining representative in serving the unit it represents ..."); see also Rupe v. Spector Freight Systems, Inc., 679 F.2d 685, 691 (7th Cir.1982); Baker v. Armsted Industries, Inc., 656 F.2d 1245, 1250 (7th Cir.1981); Peterson v. Kennedy, 771 F.2d 1244, 1253 (9th Cir.1985); Hart v. National Homes Corp., 668 F.2d 791, 794 n. 4 (5th Cir.1982); N.L.R.B. v. American Postal Workers Union, 618 F.2d 1249, 1255 (8th Cir.1980). Rather than requiring the initiation and pursuit of employee grievances by labor unions, the duty of fair representation merely sets forth standards to be adhered to by unions in determining not to prosecute or appeal grievances brought to them by their members. See N.L.R.B. v. Local 139, International Union of Operating Engineers, 796 F.2d 985, 992-93 (7th Cir.1986); United Independent Flight Officers v. United Airlines, 756 F.2d 1274, 1281 (7th Cir.1985). IFFA was thus in no way compelled to intervene in this lawsuit and, accordingly, its decision to so proceed does not constitute a "special circumstance" abrogating its fee liability under section 706(k). 20 IFFA's second posited "special circumstance" also fails to persuade us that the district court's award of fees to the plaintiffs was in any way inappropriate. The union argues that because plaintiffs' counsel received an "enormous" fee for their work performed in connection with the pre-settlement phase of this lawsuit, any additional award of fees for counsel's post-settlement legal work constitutes a windfall. Not only are objections here to the size of the district court's pre-settlement fee award belated, but that fee award is entirely irrelevant for purposes of evaluating the district court's post-settlement fee award. While fee-shifting statutes are not designed "as a form of economic relief to improve the financial lot of attorneys," Pennsylvania v. Delaware Valley Citizens' Council, 478 U.S. 546, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986), fee-shifting statutes are designed to reimburse plaintiffs for reasonable legal fees expended in certain types of lawsuits. IFFA has pointed to no errors in the district court's calculation of the plaintiffs' post-settlement fees (i.e., number of attorney hours claimed or hourly rates sought); its only contention is that counsel were over-compensated by the district court's earlier award and thus any further award amounts to an abuse of discretion. The post-settlement proceedings in this case, directed at attacking the very essence of this lawsuit's successful and carefully crafted resolution, have already consumed in excess of two years of litigation and have included arguments before the district court, this court and the Supreme Court; accordingly, we find no abuse of discretion in the district court's decision to reimburse the plaintiffs fully for the fees they incurred during this important and procedurally separate phase of litigation. C. Enhancement of the "lodestar" figure 21 After calculating the lodestar sum to which counsel for Sub Class B were entitled from IFFA, the district court, employing a multiplier of 1.44, adjusted its fee award upward by $37,984.65 to account for the delay in time between the filing of Sub Class B's post-settlement fee petition in May 1982 and the date of the court's actual fee award in September 1986. We have noted on at least two previous occasions that enhancement of a fee award to compensate counsel for the time-value of money (another way of saying delay in payment), while by no means mandatory, is certainly within a district court's discretion. See Ohio Sealy Mattress Mfg. Co. v. Sealy, Inc., 776 F.2d 646, 660 (7th Cir.1985); Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 770 n. 6 (7th Cir.1982), cert. denied, 461 U.S. 956, 103 S.Ct. 2428, 77 L.Ed.2d 1315 (1983). Moreover, in Pennsylvania v. Delaware Valley Citizens' Council, --- U.S. ----, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), decided after oral argument in this case and holding that lodestar adjustments based upon the risk of nonpayment are inappropriate, the Supreme Court observed, "[W]e do not suggest, however, that adjustments for delay are inconsistent with the typical fee-shifting statute." Id. at 3082. 22 In the instant case, the district court, through independent research, determined that a long-term Treasury Note purchased at about the time of Sub Class B's fee petition would have yielded its purchaser approximately 7 1/2% per year, representing a multiplier of 1.44. This multiplier was, in turn, used to augment the district court's basic lodestar figure. Although a strong presumption exists that at the time a fee petition is filed the lodestar figure represents the "reasonable" fee to which section 706(k) entitles prevailing parties, see e.g. Pennsylvania v. Delaware Valley Citizens' Council, 478 U.S. 546, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986), the passage of time and the economic vicissitudes inherent therein are capable of eroding a fee award to such an extent that, in real terms, it no longer represents a "reasonable" approximation of the value of the legal services intended to be compensated. It is for this very reason that courts frequently award prejudgment interest. Regardless of the method employed (use of a multiplier or an award of prejudgment interest), an equitable adjustment of the lodestar to offset a five year delay in payment does not, in the circumstances presented by this case, constitute an abuse of discretion.11 Delaware Valley, 107 S.Ct. at 3082; cf. Michaels v. Michaels, 767 F.2d 1185, 1204 (7th Cir.1985) ("[T]he decision to award prejudgment interest rests in the sound discretion of the district court."), cert. denied, 474 U.S. 1057, 106 S.Ct. 797, 88 L.Ed.2d 774 (1986). Accordingly, the district court's award of $123,657.84 against IFFA for post-settlement fees is upheld in its entirety. III. CONCLUSION 23 We hold (i) that in an appropriate exercise of its discretion, the district court found IFFA liable for statutory attorneys' fees under section 706(k) of Title VII and (ii) that the district court's use of a multiplier to enhance Sub Class B's fee award was also not an abuse of discretion. 24 AFFIRMED. 25 MANION, Circuit Judge, dissenting. 26 To protect its members' jobs, the IFFA intervened in this litigation and presented a substantial, good-faith challenge to the settlement between plaintiffs and TWA. When the IFFA's challenge ultimately proved unsuccessful, the district court awarded attorneys' fees to plaintiffs as "prevailing parties" against the IFFA under the same standard applicable to defendants who have violated their employees' civil rights. The majority upholds this award. I respectfully dissent.1 27 In Christianburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Supreme Court made clear that the standards under which Sec. 706(k) fees are awarded must be assessed in light of the policies underlying that statute. Under Sec. 706(k), a prevailing plaintiff is presumptively entitled to fees from a defendant held liable on the merits unless special circumstances would render awarding fees unjust. Id. 434 U.S. at 416-17, 98 S.Ct. at 697-98. A prevailing defendant, however, is not allowed to recover fees from a plaintiff unless "the plaintiff's action was frivolous, unreasonable, or without foundation...." Id. at 421, 98 S.Ct. at 700. The reason for this distinction is not contained in the statute's express language. The statute refers only to "prevailing parties." The Supreme Court, however, set forth three reasons for distinguishing between defendants and plaintiffs. First, Sec. 706(k) sought to facilitate the enforcement of the civil rights laws through "private attorneys general." Id. at 416-18, 98 S.Ct. at 698-99. Second, granting prevailing defendants attorneys' fees as a matter of course would act as a significant disincentive for plaintiffs to bring civil rights suits. Id. at 421-22, 98 S.Ct. at 700-01. Third, "when a district court awards counsel fees to a prevailing plaintiff, it is awarding them against a violator of federal law." Id. at 418, 98 S.Ct. at 699. 28 In this case, the IFFA intervened to assert the federal collective bargaining rights of the incumbent employees. In addition, neither the IFFA nor the incumbent employees were in any way responsible for the "no-motherhood" policy that spawned the underlying litigation and ultimate settlement. In such a situation, the application of the Christianburg Garment policies warrants treating the intervenors as plaintiffs for attorneys' fees purposes. See Reeves v. Harrell, 791 F.2d 1481, 1484 (11th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987). As there is no dispute that the IFFA presented a substantial, good-faith challenge to the settlement, the assessment of fees against it was inappropriate. Moreover, regardless of how the IFFA's posture in this litigation is characterized, the circumstances of this case render the award of fees unjust. 29 In the settlement negotiations between plaintiffs and TWA, neither side had a strong interest in protecting the jobs of TWA's incumbent employees. Plaintiffs obviously had a strong interest in regaining their old jobs. TWA's primary interest was in settling the lawsuit. TWA was going to have a full complement of flight attendants whether they came from the plaintiffs' or incumbent employees' ranks. While the IFFA may not have had a legal obligation to intervene, it certainly would have been unusual for the IFFA to simply ignore a settlement that substantially altered its contract with TWA and the job security of its members. In fact, this circuit dismissed the incumbent employees' predecessor union as the plaintiffs' class representative specifically because the union's interest in representing the collective bargaining rights of the incumbent employees conflicted with its position as class representative. See Air Line Stewards and Stewardesses Ass'n, Local 550 v. American Airlines, Inc., 490 F.2d 636, 639-42 (7th Cir.1973). The fact that the IFFA did what its members elected it to do and this circuit expected it to do, that is, represent the interests of incumbent employees, is not something that should subject it to Title VII attorneys' fees. 30 Moreover, the policy of encouraging "private attorneys general" to enforce Title VII does not warrant imposing fees against the IFFA. Section 706(k) seeks to encourage plaintiffs to bring suits against defendants who violate federal law. This policy has attenuated, if any, relevance to intervenors like the IFFA who did not violate Title VII. In addition, denying fee awards against such intervenors will not significantly diminish plaintiffs' ability to attract counsel. This is aptly demonstrated in the present case where plaintiffs' counsel has already received more than $1,250,000 from the $3,000,000 settlement. 31 Rather than encouraging persons to act as "private attorneys general," the majority's construction of Sec. 706(k) will have quite the opposite effect. Title VII lawsuits often affect many employees other than the named plaintiffs. The settlement of a Title VII suit or the granting of remedies by a court may leave some employees in a less desirable employment position or out of a job altogether. Many of these affected employees will have substantial claims that the settlement or remedies violate their own rights under a collective bargaining agreement, Title VII, or even the Constitution. The just resolution of these cases requires the full participation of everyone involved. Mechanically assessing attorneys' fees against intervening employees who did not violate anybody's rights and who are not fortunate enough to posture themselves as "plaintiffs," will ensure that in many cases only two sides will be heard in a multi-sided dispute. 32 I would reverse the district court's award of attorneys' fees. 1 Presumably, although it is not clear from the record, TWA actually terminated flight attendants upon learning of their pregnancy 2 Ordinarily, "seniority" determines an employee's entitlement to benefits earned under an employment contract. "Competitive seniority," on the other hand, is used to allocate entitlements to benefits among competing employees; for example, shift assignments; prerogative in scheduling vacation; training opportunities; etc 3 Section 706(k), 42 U.S.C. Sec. 2000e-5(k) provides in relevant part: In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the [Equal Opportunity Employment] Commission or the United States, a reasonable attorney's fee as part of the costs.... (Emphasis added). 4 Section 1988 states in pertinent part: In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985 and 1986 of this title, title IX of Public Law 92-318, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs. 5 IFFA cites Richardson v. Alaska Airlines, 750 F.2d 763 (9th Cir.1984), in support of its contention that only those found to be violators of federal law may be held liable for statutory attorneys' fees. Richardson, however, is clearly distinguishable from the case at bar. In Richardson, a pilots' union intervened unsuccessfully in a lawsuit brought under the Age Discrimination in Employment Act ("ADEA") to contest the fairness of a consent decree reached in the underlying litigation. The decree was ultimately approved by the district court and Richardson, the prevailing party in the original ADEA action, petitioned the court for statutory attorneys' fees against the union. Both the district court and, on appeal, the Ninth Circuit rejected Richardson's petition for fees but not, as IFFA would have us believe, because the union itself was innocent of any violation of federal law. Instead, Richardson was denied fees because the pertinent provision of the ADEA, 29 U.S.C. Sec. 626(b), provides for an award of fees only against an offending "employer." There is, of course, no such limiting language respecting those against whom fees may be imposed in section 706(k) of Title VII; thus, we are in no way precluded by Richardson from imposing fees against IFFA here Similarly, IFFA points to Natural Resources Defense Council, Inc. v. Thomas, 801 F.2d 457 (D.C.Cir.1986) (Scalia, J.) in which the District of Columbia Circuit refused to award attorneys' fees, pursuant to the attorney fee provision of the Clean Water Act, 33 U.S.C. Sec. 1365(d), against an intervenor guilty of no violation of federal law. In affirming the district court's denial of fees against the intervenor in Thomas, the court specifically noted that the statutory language employed in section 1365(d) was neither textually similar to the language of 42 U.S.C. Sec. 1988 (and by extension section 706(k) of Title VII) nor susceptible to the same pro-prevailing party interpretation that courts have accorded section 1988. Id. 801 F.2d at 461 n. 3. 6 In Charles v. Daley, Nos. 86-1552 and 86-3137, slip op. (7th Cir. May 5, 1988) we explicitly declined to consider such an argument because it had been raised only in an amicus brief 7 In the legislative colloquy preceding passage of 42 U.S.C. Sec. 1988, Congress specifically recognized that the vindication of civil rights need not always be the task of a plaintiff: "In the large majority of cases the party or parties seeking to enforce such rights will be the plaintiff and/or plaintiff-intervenors. However, in the procedural posture of some cases, the parties seeking to enforce such rights may be the defendants or defendant-intervenors." S.Rep. No. 1011, 94th Cong., 2d Sess. at 4 n. 4, U.S.Code Cong. & Admin.News 1976, pp. 5908, 5912, n. 4. While thus cognizant of the fact that defendants, too, may be in a position to assert important constitutional and statutory rights, nothing in section 1988's legislative history contradicts its plain language or suggests that any factor other than a party's success should be determinative of entitlement to or, conversely, liability for fees 8 Although the Eleventh Circuit found the intervenors to be functionally equivalent to plaintiffs for purposes of liability for Title VII attorneys' fees, the court found their intervention to have been untimely and thus, in the end, susceptible to the imposition of fee liability under Christianburg 9 In Marino v. Ortiz, --- U.S. ----, 108 S.Ct. 586, 98 L.Ed.2d 629 (1988), the Supreme Court, by an equally divided panel, let stand a court of appeals decision affirming a district court's dismissal of a separate suit challenging a consent decree brought by nonparties to the underlying Title VII litigation. Failure by the nonparties to have joined the lawsuit earlier as either co-defendants or intervenors rendered their subsequent action attacking the consent decree an "impermissible collateral attack." Marino v. Oritz, 806 F.2d 1144, 1146 (2d Cir.1986). It therefore remains unclear whether a subsequent collateral attack of a Title VII settlement by nonparties to the original lawsuit could be employed as a strategy by prospective intervenors to escape statutory fee liability 10 The dissent characterizes as "unjust" our decision to impose fee liability upon IFFA, which admittedly was in no way responsible for TWA's breach of Title VII. Moreover, the dissent asserts that "[d]enying fee awards against ... intervenors will not significantly diminish plaintiffs' ability to attract counsel." The instant case, however, demonstrates the fallacy of the dissent's reasoning. Absent the possibility of recovering their attorneys' fees from IFFA, the prevailing plaintiffs would likely have been hard-pressed to come up with sufficient funds to attract counsel willing to defend their settlement before the district court, this court and, finally, the Supreme Court 11 But see Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986), wherein the Supreme Court held that, as distinct from a private defendant's liability for fees, the federal government's traditional immunity from an award of interest could not be circumvented by enhancing a lodestar to compensate for a delay in receiving payment. Id. 106 S.Ct. at 2965 1 In Charles v. Daley, 846 F.2d 1057 (7th Cir.1988), this circuit recently held that under 42 U.S.C. Sec. 1988 the plaintiffs were entitled to attorneys' fees as a "prevailing party" against intervening defendants who were not liable on the merits of plaintiffs' 42 U.S.C. Sec. 1983 claims. I dissented in that case on the ground that the plaintiffs could not be deemed to have "prevailed" against defendants who were not liable to the plaintiffs on the merits. Likewise, I believe that Sec. 706(k) should not have been applied in this case because plaintiffs did not obtain any relief on the merits against the intervening union on their Title VII claims. Because Sec. 706(k) and 42 U.S.C. Sec. 1988 have the same operative language concerning prevailing parties, however, Charles requires that plaintiffs be treated as prevailing parties against the IFFA	{ "pile_set_name": "FreeLaw" }
538 U.S. 913 CHAPEYv.KEMNA, SUPERINTENDENT, CROSS-ROADS CORRECTIONAL CENTER. No. 02-8424. Supreme Court of United States. March 10, 2003. 1 CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT. 2 C. A. 8th Cir. Certiorari denied.	{ "pile_set_name": "FreeLaw" }
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 08a0371p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________ X Plaintiffs-Appellants, - DONALD S. ANDREWS; JILL BEELER ANDREWS, - - - No. 07-3632 v. , > COLUMBIA GAS TRANSMISSION CORPORATION, - Defendant-Appellee. - N Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 05-00501—Mark R. Abel, Magistrate Judge. Submitted: September 16, 2008 Decided and Filed: October 10, 2008 Before: GUY, BATCHELDER, and McKEAGUE, Circuit Judges. _________________ COUNSEL ON BRIEF: John P. Lavelle, LAVELLE & ASSOCIATES, Athens, Ohio, Gregory D. Brunton, REMINGER & REMINGER CO. L.P.A., Columbus, Ohio, for Appellee. Donald S. Andrews, Jill Beeler Andrews, Granville, Ohio, pro se. _________________ OPINION _________________ McKEAGUE, Circuit Judge. This diversity case involves what some consider to be a “[l]ocal David” standing up to an “out-of-state corporate Goliath.”1 Plaintiffs Donald S. Andrews and Jill Beeler Andrews appeal the district court’s determination that defendant Columbia Gas Transmission Corporation (“Columbia Gas”) is entitled to clear a fifty-foot right of way around each of its natural gas pipelines running through plaintiffs’ property. For the reasons stated below, we AFFIRM. 1 Press Release, Ohio Environmental Council, Local David stands up to out-of-state corporate Goliath (May 10, 2007), available at http://www.theoec.org/PDFs/press_releases/Mohican%20 Charities%20Press%20Release%205-10-07.pdf. 1 No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 2 I A. Factual Background The basic facts underlying this litigation are largely undisputed. In 1947, Ruby W. Davies owned the piece of land in Granville Township, Licking County, Ohio, where plaintiffs now reside. In January of 1947, she granted to The Ohio Fuel Gas Company (“Ohio Fuel”), and its successors and assigns, an easement2 “to lay a pipe line over and through the premises hereinafter described, and to maintain, operate, repair, replace and remove same.” JA 52. She also granted Ohio Fuel the right to “lay, maintain, operate, repair, replace and remove other lines of pipe at any points on said premises upon the payment of like consideration” and the right of “ingress and egress to and from the same” over and across the property. Id. Ohio Fuel agreed to “pay any damages which may arise to crops and fences from the laying, maintaining, operating and final removal of said pipe line.” Id. The agreement further provided that “[t]he Grantor . . . may fully use and enjoy said premises except for the purpose hereinbefore granted to the Company.” Id. The agreement did not specify the width of the easement. It was recorded in the official land records of Licking County, Ohio. Pursuant to the agreement, Ohio Fuel installed two large high-pressure underground natural gas transmission pipelines through the property. The first, Line K-170, is sixteen inches in diameter and was installed in 1947. The second, Line K-205, is twenty-four inches in diameter and was installed in 1957. The two pipelines run roughly parallel to each other, approximately thirty feet apart. By virtue of a corporate merger, Columbia Gas succeeded to Ohio Fuel’s interest in the right of way and has continued to operate and maintain the pipelines on the property. The property has changed hands several times over the past half century. In the late 1960s, then-owner Jan Baltus built a house on it. He also planted pine trees on the hillside behind the house, both for aesthetics and to prevent the hillside from eroding. Unbeknownst to Baltus, he planted the trees within twenty-five feet of Line K-170. JA 490-91. In March 2000, plaintiffs bought the property with notice of the 1947 right of way agreement. By then, the pine trees had matured. According to plaintiffs, their decision to purchase the property was motivated in large part by the rural setting and the hillside landscaping. Until 2004, Columbia Gas made no efforts to clear a right of way around its pipelines on plaintiffs’ property. In June 2004, a work crew informed Donald Andrews that the location of the pipeline required them to remove a stand of the pine trees on his property. Thereafter, Columbia Gas claimed the right to remove the trees and to maintain a right of way totaling approximately eighty feet: twenty-five feet on each side of the centerline of each of the pipelines, and the thirty feet between the two pipelines. In a letter dated September 29, 2004, Columbia Gas informed plaintiffs that it would begin clearing its right of way. Another letter dated April 25, 2005 informed them that the company planned to enter the property and remove the trees. B. Procedural History On April 28, 2005, plaintiffs, acting pro se, sued Columbia Gas in the Licking County Court of Common Pleas.3 They sought declaratory and injunctive relief and damages in the event that Columbia Gas removed the trees. Columbia Gas timely removed the action to the United States District Court for the Southern District of Ohio based on diversity jurisdiction. It also filed a 2 In line with decisions of Ohio state courts, we use the terms “easement” and “right of way” interchangeably. 3 Although they appeared pro se, plaintiffs are both practicing attorneys. Donald Andrews specializes in taxation, and Jill Beeler Andrews is an Assistant State Public Defender, focusing on juvenile law and appellate issues. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 3 counterclaim seeking declaratory and injunctive relief and damages for breach of contract. With the parties’ consent, the case was referred to a magistrate judge for disposition under 28 U.S.C. § 636(c). The magistrate judge entered a preliminary pretrial order on July 1, 2005. The deadline to amend pleadings was August 15, 2005. On January 23, 2006, plaintiffs filed a motion requesting additional time to serve a jury demand. The magistrate judge denied plaintiffs’ request. Following discovery, Columbia Gas moved for summary judgment. The magistrate judge denied that motion as well, and the case proceeded to a bench trial. After trial, the magistrate judge entered judgment in favor of Columbia Gas. He relied heavily on the testimony of two witnesses: Timothy Seibert and Paul Hollinger. Seibert was a long- time Columbia Gas employee and Operations Team Leader for the distribution area that included plaintiffs’ property. He was responsible for overseeing the inspection and maintenance of the pipelines running through plaintiffs’ property. Hollinger was an investigator for the Public Utilities Commission of Ohio (“PUCO”), the state agency responsible for overseeing natural gas transmission lines. Based on the testimony of Seibert and Hollinger, the magistrate judge concluded that a fifty- foot right of way for each pipeline was “necessary and convenient and consistent with the language of the 1947 Davies easement.” JA 455. He also declined to apply the doctrines of laches, estoppel, or waiver, noting that those doctrines do not apply to expressly granted easements under Ohio law. Finally, the magistrate judge concluded that plaintiffs were not entitled to compensation for removal of the trees because the right of way agreement only provided recovery for damage to crops and fences. Plaintiffs filed a timely motion to alter or amend the judgment pursuant to Rule 59(e) of the4 Federal Rules of Civil Procedure, which the magistrate judge denied. This timely appeal followed. II Plaintiffs make four arguments on appeal. First, they contend that the magistrate judge incorrectly construed the right of way agreement as granting Columbia Gas a fifty-foot easement to operate and maintain each of its pipelines on plaintiffs’ property. Second, they argue that the doctrines of laches, estoppel, and waiver, as well as the statute of limitations, precluded Columbia Gas from clearing the right of way forty years after5the trees were planted. Third, they maintain that they are entitled to damages for the removed trees. Finally, plaintiffs challenge the district court’s denial of their motion for additional time to serve a jury demand. A. Applicable Law Because Columbia Gas removed this matter to a federal district court sitting in Ohio, we must apply Ohio choice of law rules to determine the substantive law governing plaintiffs’ state claims. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). In Ohio, an easement grant is a contract for purposes of its construction. Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146, 150 (Ohio 1978). Absent an effective choice of law provision, Ohio courts apply the law of 4 In their notice of appeal, plaintiffs only appeal the April 6, 2007 denial of their Rule 59(e) motion to alter or amend the judgment. As a general matter, however, an “appeal from the denial of a Rule 59(e) motion is treated as an appeal from the underlying judgment itself.” Gencorp, Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 833 (6th Cir. 1999); see also Inge v. Rock Fin. Corp., 281 F.3d 613, 618 (6th Cir. 2002); Peabody Coal Co. v. Local Union Nos. 1734, 1508 & 1548, 484 F.2d 78, 81-82 (6th Cir. 1973). 5 In their brief, plaintiffs indicate that the trees have been removed. Even if this renders plaintiffs’ actions for injunctive and declaratory relief moot, the construction of the agreement and the width of the right of way are relevant to plaintiffs’ claim for monetary damages. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 4 the state with the most significant relationship to the contract.6 RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188; Ohayon v. Safeco Ins. Co. of Ill., 747 N.E.2d 206, 220 (Ohio 2001). Ohio clearly has the most significant relationship to the right of way agreement at issue here—it was the place of contracting, performance, and negotiation of the agreement, as well as the location of its subject matter and plaintiffs’ residence. Importantly, both parties have also assumed that Ohio law is controlling. Ohio law therefore governs our interpretation of the right of way agreement. The Federal Rules of Civil Procedure govern plaintiffs’ jury demand claim. See Hanna v. Plumer, 380 U.S. 460, 471-72 (1965). B. Standard of Review We review a district court’s determination of state law in diversity cases de novo. Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991); see also United States v. Dedman, 527 F.3d 577, 584 (6th Cir. 2008). In determining the substance of state law, we are bound by decisions of the state’s highest court, unless that court would overrule its decisions on similar facts. Kurczi v. Eli Lilly & Co., 113 F.3d 1426, 1429 (6th Cir. 1997). Where the high court has not spoken, our task is to make the best prediction of what the state court would do if confronted with the question. Combs v. Int’l Ins. Co., 354 F.3d 568, 577 (2004). State appellate court decisions are generally authoritative, “absent a strong showing that the state’s highest court would decide the issue differently.” Kurczi, 113 F.3d at 1429. We review a district court’s legal conclusions following a bench trial de novo. Davies v. Centennial Life Ins. Co., 128 F.3d 934, 938 (6th Cir. 1997). We will not disturb a district court’s findings of fact in a bench trial, however, unless they are clearly erroneous. FED. R. CIV. P. 52(a)(6); Schroyer v. Frankel, 197 F.3d 1170, 1173 (6th Cir. 1999). C. Construction of the Right of Way Agreement Under Ohio law, an easement is an interest in the land of another, created by prescription or express or implied grant, that entitles the owner of the easement to a limited use of the land in which the interest exists. Alban v. R.K. Co., 239 N.E.2d 22, 24 (Ohio 1968). The owner of the land subject to an easement has the right to use the land in any manner not inconsistent with the easement, but has no right to interfere with or obstruct the reasonable and proper use of the easement. Rueckel v. Tex. E. Transmission Corp., 444 N.E.2d 77, 84 (Ohio Ct. App. 1981). The owner of an easement has the right to remove objects within it that unreasonably interfere with or obstruct its reasonable and proper use. Id. at 84. Where the terms of an expressly granted easement are ambiguous, a court must determine its scope from the language of the grant, the circumstances surrounding the transaction, and what is reasonably necessary and convenient to serve the purposes for which the easement was granted. Crane Hollow, Inc. v. Marathon Ashland Pipe Line, LLC, 740 N.E.2d 328, 334 (Ohio Ct. App. 2000); Roebuck v. Columbia Gas Transmission Corp., 386 N.E.2d 1363, 1368 (Ohio Ct. App. 1977). Absent contrary evidence, “the court should presume that the parties contemplated that normal development would result in some changes in the mode of use of the easement, even if it were unlikely that the parties anticipated specific developmental changes.” Crane Hollow, 740 N.E.2d at 335. “Acquiescence for a long time in a certain construction of a grant of an easement,” however, “estops the assertion of a different construction.” Roebuck, 386 N.E.2d at 1368; see also Crane 6 The following factors are relevant in determining the state with the most significant relationship: the place of contracting, the place of negotiation, the place of performance, the location of the subject matter of the contract, and the domicile, residence, nationality, place of incorporation, and place of business of the parties. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188(2)(a)-(e). No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 5 Hollow, 740 N.E.2d at 335; Munchmeyer v. Burfield, No. 95CA7, 1996 WL 142579, at 4 (Ohio Ct. App. Mar. 26, 1996). Because an easement grant is treated as a contract under Ohio law, Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146, 150 (Ohio 1978), its interpretation is a question of law subject to de novo review, Ferro Corp. v. Garrison Indus., Inc., 142 F.3d 926, 931 (6th Cir. 1998). But “when the intended dimensions of an easement are not expressed in the grant itself, determining the dimensions becomes largely a question of fact.” Crane Hollow, 740 N.E.2d at 334; Voisard v. Marathon Ashland Pipeline, LLC, No. 9-05-49, 2006 WL 3803868, at 2 (Ohio Ct. App. Dec. 28, 2006). This court has also acknowledged that such cases are “particularly fact-sensitive.” Columbia Gas Transmission Corp. v. Zeigler, Nos. 02-3164, 02-3220, 2003 WL 22734806, at 3 (6th Cir. Nov. 18, 2003) (upholding 200-foot radius setback pursuant to easement agreement because district court’s factual findings were not clearly erroneous). As such, we review the magistrate judge’s factual findings, as the basis for his determination of the easement’s width, for clear error.7 1. Subsequent Use and Acquiescence Plaintiffs first argue that the scope of the right of way on their property has already been determined by subsequent use and acquiescence. They rely on Ashland Pipe Line Co. v. Lett, No. CA-942, 1990 WL 53505, at 4 (Ohio Ct. App. Apr. 11, 1990), which held that a gas company was not entitled to a fifty-foot right of way because it had only cleared a total of twenty-five feet in the past and because there were mature trees well within the claimed fifty feet. Plaintiffs also cite to Crane Hollow, where the Ohio court approved a fifty-foot right of way in part because the gas company had a long history of use and maintenance of that area around the pipeline. 740 N.E.2d at 336. Plaintiffs maintain that Columbia Gas never cleared any area within its claimed right of way, and never objected when Jan Baltus planted the pine trees in the late 1960s. Neither Lett nor Crane Hollow stands for the proposition that a company’s lack of action, standing alone, estops it from arguing that a certain width is reasonably necessary and convenient. Instead, in both cases a company’s affirmative acts were a consideration when determining the easement’s width. See Crane Hollow, 740 N.E.2d at 336; Lett, 1990 WL 52505, at 2. If Columbia Gas had consistently cleared only ten feet on each side of its pipelines, plaintiffs’ argument would have more force. But the fact that the company did nothing, without more, is not fatal. Although the terms of an easement may be determined by subsequent use and acquiescence, they can be determined in different ways as well. Further, Columbia Gas did not acquiesce to the trees. In Lett, the court stated that “[t]he intention of the parties at the time of the conveyance is the primary consideration in determining the status of an easement.” 1990 WL 53505, at 3 (citing Sieferd v. Stambor, 214 N.E.2d 106 (Ohio 1966)); see also Munchmeyer, 1996 WL 142579, at 3 (“[C]ourts must be careful to determine the location and dimensions of the easement on the basis of the circumstances at the time the easement was created.”). Here, the magistrate judge found that there were no trees on plaintiffs’ property at the time of the grant in 1947, except for a few cherry trees located away from where the pipelines were eventually laid. Jan Baltus testified that the hillside was empty when he planted the pines, and plaintiffs offered no evidence that there were trees in that area in 1947. Because the magistrate judge’s finding that there were no trees on the hillside at the time of the agreement was not clearly 7 Plaintiffs argue that we should ask whether the magistrate judge’s conclusions were against the manifest weight of the evidence. Although the “manifest weight” standard would be appropriate under Ohio law in an appeal to an Ohio appellate court, see Columbia Gas Transmission Corp. v. Bennett, 594 N.E.2d 1, 5 (Ohio Ct. App. 1990), federal law governs our standard of review in diversity cases, see Hisrich v. Volvo Cars of N. Am., Inc., 226 F.3d 445, 449 (6th Cir. 2000). No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 6 erroneous, it was proper for him to conclude that the conduct of Columbia Gas after the trees were planted did not evidence the original intent of the parties. Finally, plaintiffs argue that Columbia Gas acquiesced by allowing trees near its pipelines on other properties. If the original intent of the parties is the primary inquiry, however, only the conduct of the parties regarding the particular property at issue is relevant. Indeed, one Ohio court has stated that “[t]he fact that [the gas company] may or may not have enforced its easement to its fullest width elsewhere has absolutely no bearing at all on whether it may enforce its easement to its fullest width on the [landowners’] property.” Columbia Gas Transmission Corp. v. Large, 619 N.E.2d 1215, 1215 (Ohio C.P. 1992). 2. Reasonably Necessary and Convenient After trial, the magistrate judge noted that there was conflicting evidence regarding whether the pipelines could be safely maintained with less than a fifty-foot clearing. Relying on testimony by Timothy Seibert8 and Paul Hollinger, he ultimately concluded that a fifty-foot easement was reasonably necessary and convenient for the inspection, operation, and maintenance of each of the pipelines. The factual findings upon which he based that conclusion were not clearly erroneous. Before turning to the magistrate judge’s reasoning, a few points are worth noting at the outset. First, although each easement case is factually unique, almost every court to construe an easement with similar language as the one at issue here has concluded that a twenty-five foot right of way on both sides of the pipeline was reasonably necessary and convenient. See Crane Hollow, 740 N.E.2d at 335; Columbia Gas Transmission Corp. v. Bennett, 594 N.E.2d 1, 8 (Ohio Ct. App. 1990); Columbia Gas Transmission Corp. v. Adams, 646 N.E.2d 923, 926 (Ohio C.P. 1994); Large, 619 N.E.2d at 1215; see also Columbia Gas Transmission Corp. v. Tarbuck, 62 F.3d 538, 544 (3d Cir. 1995); Columbia Gas Transmission Corp. v. Davis, 33 F. Supp. 2d 640, 643 (S.D. Ohio 1998). Second, Columbia Gas’s business rationale for waiting until 2004 to begin clearing the pipelines is irrelevant to our review of the magistrate judge’s determination that a fifty-foot right of way for each pipeline was reasonably necessary and convenient.9 If the agreement granted such a right of way, Columbia Gas was not obligated to give specific reasons for acting within its rights. And it is also beside the point to argue that federal regulations do not require natural gas companies to clear rights of way around their pipelines. Assuming that to be true, the regulations do not prohibit gas companies from clearing rights of way. Moreover, although federal law may be helpful in construing certain ambiguous easements, see Swango Homes v. Columbia Gas Transmission Corp., 806 F. Supp. 180, 186 (S.D. Ohio 1992) (holding that the grant of an easement implies the right to maintain it in accordance with federal regulations), the rights granted in an easement ultimately 8 Plaintiffs make a passing reference to the argument that Seibert was not qualified as an “expert.” Yet several federal courts, including this court, have permitted and relied upon testimony by long-time gas company employees in determining whether a pipeline right of way was reasonably necessary and convenient. See Zeigler, 2003 WL 22734806, at 2; Columbia Gas Transmission Corp. v. Davis, 33 F. Supp. 2d 640, 642-43 (S.D. Ohio 1998). As one Ohio court noted: While appellee’s witnesses were all company employees, they, in our view, were not presented to give expert testimony, but rather were lay persons who had actual knowledge of the company policies, regulations, procedures, and reasons for such policies. The factual testimony which was admitted was within the perception and special knowledge of each of the witnesses and helped to explain why the pipeline company policy required removal of the trees within the easement right-of-way. Panhandle E. Pipeline Co. v. Howey, 2001 WL 1155838, at 1 (Ohio Ct. App. Sept. 28, 2001). 9 Plaintiffs, for example, argue that a 2004 PUCO report by Paul Hollinger did not spur Columbia Gas’s efforts to begin clearing the trees, as the company claimed it did. They also argue that Columbia Gas was disingenuous when it claimed that certain “world events” prompted the company’s attempts to clear its rights of way. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 7 emanate from a private agreement, see Southgate Dev. Corp. v. Columbia Gas Transmission Corp., No. 2343, 1976 WL 188659, at 2 (Ohio Ct. App. Jan. 14, 1976) (“Southgate’s claims are based upon a private easement contract founded upon and deriving its force from state law.”). With those initial observations, the magistrate judge’s reasons in support of his conclusions, as well as the parties’ arguments on appeal, are addressed in turn below. a. Pipeline Inspections The difficulties Columbia Gas might face in conducting pipeline inspections was a primary ground for the magistrate judge’s conclusion that a fifty-foot right of way was reasonably necessary and convenient for each of the pipelines on plaintiffs’ property. At trial, Seibert gave a detailed explanation of the methods Columbia Gas uses to inspect its pipelines.10 The first method is visual inspection, which includes so-called “walk-overs” and “fly-overs.” Visual inspections detect encroachments, equipment near the pipeline, exposure of the pipeline, third party activity, construction activity, and leakages. Columbia Gas conducts approximately five to six aerial inspections of the K-170 and K-205 lines each year. Although the company also conducts ground inspections, the primary method of patrol is aerial. Seibert testified that aerial inspections have become the standard method of inspection in the industry. With approximately 12,000 miles of pipeline, he testified that it would not be feasible for Columbia Gas to comply with its regulatory obligations if it only conducted ground inspections. Hollinger confirmed that aerial inspection is the most effective means of inspecting pipeline and that it is a very common practice. He also stated that aerial patrol is the most economically viable way to inspect thousands of miles of pipelines. Because plaintiffs’ property is located in a “high consequence area,”11 Columbia Gas also conducts “smart pigging” and “close interval surveys” on the K-170 and K-205 lines to detect any internal anomalies. In a smart pig inspection, a device inserted into the pipeline electronically checks for anomalies, such as cracks or thinning of the pipeline wall. In a close interval survey, an inspector walks the pipeline with a device that measures the electronic current running through the pipeline. That current, called cathodic protection, protects the pipeline from deterioration and corrosion. At trial, Columbia Gas offered evidence that the trees hindered the company’s ability to conduct both aerial and close interval pipeline inspections. According to Seibert, the presence of trees within the right of way interfered with aerial inspections. He testified that employees would not be able to see the pipeline or the area around it if trees were there. Hollinger agreed that trees within twenty-five feet of the center of a pipeline could hinder a company’s ability to conduct aerial patrol. Seibert testified that the trees directly above Line K-170 also hindered the company’s ability to conduct close interval surveys. Although prior close interval surveys on plaintiffs’ property had met company criteria, inspectors had gone around the trees to obtain a reading. The most accurate reading, however, could only be taken directly over the pipeline. Hollinger also agreed that large, mature trees could interfere with a close interval survey. 10 As a natural gas pipeline operator, Columbia Gas is subject to regulation by the Federal Energy Regulatory Commission (“FERC”) under the Natural Gas Act, 15 U.S.C. §§ 717 et seq., and by the United States Department of Transportation (“USDOT”) under the Natural Gas Pipeline Safety Act, 49 U.S.C. §§ 60101 et seq. Federal regulations require pipeline operators to develop and follow an “integrity management program.” 49 C.F.R. § 192.907(a). The program must contain a plan for the inspection and remediation of covered pipelines. 49 C.F.R. § 192.911. According to Seibert, Lines K-170 and K-205 are both covered pipelines and are part of Columbia Gas’s integrity management program. 11 If an operator identifies an area as a “high consequence area,” it must take additional measures to prevent and mitigate the consequences of a pipeline failure. 49 C.F.R. § 192.935. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 8 On appeal, plaintiffs argue that Columbia Gas has inspected its pipelines for over thirty-five years without violating federal law or its own internal criteria. They also contend that there are alternatives to aerial inspection that would not have required removing the trees. Yet both Seibert and Hollinger explained why the trees made it difficult for the company to conduct inspections even in the absence of federal or internal company violations. And both witnesses testified that aerial inspections were more convenient and cost-effective compared to the alternatives. Seibert and Hollinger provided sufficient evidence to justify the conclusion that trees within the claimed right of way hindered the company’s ability to inspect its pipelines. It was not clearly erroneous for the magistrate judge to rely on this evidence in defining the scope of the easement. b. Emergency Response and Excavation The magistrate judge also found that the trees would interfere with Columbia Gas’s ability to excavate the pipeline in the event of an anomalous inspection or an emergency such as a leak or rupture. If a smart pig, for example, detects an eighty percent loss in wall thickness, Columbia Gas is required to excavate the pipeline and inspect, repair, and/or replace the pipe within five days. Seibert testified that the presence of large trees within twenty-five feet of the pipeline would hinder the company’s ability to excavate within that time. The company, he said, would have to first remove the trees and then remove the debris before even starting to excavate. Hollinger agreed that large, mature trees could hinder the company’s ability to access a pipeline if required to do so by the results of a smart pigging test. Moreover, if an inspection indicates a pipeline leak, in certain circumstances Columbia Gas is required to excavate it immediately. Seibert stated that trees would significantly impact the company’s ability to quickly make the area safe and excavate and repair the pipeline. He discussed federal guidelines regarding trenching and shoring, should an excavation of the pipeline prove necessary. He also testified that a twenty-five foot right of way on each side of the pipeline was necessary to allow better ingress and egress for large equipment. Further, Hollinger testified that twenty-five feet on either side of the pipeline would be necessary for immediate excavation.12 In addition to this testimony, Columbia Gas submitted a detailed drawing of an excavation site. It illustrated the depth and width of a typical trench, as well as the space typically taken up by mandatory setbacks, the spoil pile (the dirt dug up to create the trench), the large equipment needed to excavate, and repairman’s and swamper’s trucks. Based upon this evidence, the magistrate judge concluded that a fifty-foot right of way for each pipeline was reasonably necessary and convenient “so that emergency responders would not have to waste valuable time clearing trees.” JA 452. Plaintiffs argue that Columbia Gas has safely maintained its pipelines for decades without removing the trees and that if an emergency ever arises, it can remove the trees quickly enough at that time. Seibert admitted that the pipelines had been safely maintained with the trees in place and that Columbia Gas was prepared to respond in case of an emergency on plaintiffs’ property. The magistrate judge recognized this as well, noting that “there are many circumstances under which Columbia would have time to conveniently remove the trees before beginning to excavate.” JA 452. However, the court also reasoned that there were some circumstances in which the additional time to remove the trees could impose a substantial hardship on customers who would be without natural gas service during the excavation. More importantly, the court noted, it was possible that the delay to remove the trees could unnecessarily jeopardize public safety if there was a leak or rupture. The court’s concerns were justifiable. See, e.g., Adams, 646 N.E.2d at 925 (holding that “[t]he public interest requires that Columbia be able to repair and service natural gas pipelines as quickly, safely, and reasonably as possible”); Davis, 33 F. Supp. 2d at 643 (holding that a fifty-foot right of way was 12 Plaintiffs argue that the drawing is inaccurate and does not represent their property, but both Seibert and Hollinger acknowledged that it was an accurate depiction of a typical excavation site. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 9 reasonable given the court’s concern for the safety of the landowners, the gas company’s employees, and the public). There is ample support in the record for its conclusion that a cleared right of way was reasonably necessary to ensure a safe, timely, and efficient excavation. c. Notice to Third Parties Another justification for the magistrate judge’s conclusion was that a cleared right of way gives contractors and other third parties notice that there is a high pressure gas transmission line in the area, which is important to maintaining the safety of the pipeline. On appeal, plaintiffs contend that Columbia Gas produced no evidence to support this contention. But as Columbia Gas points out, Seibert’s testimony directly supports this basis for the court’s holding. According to Seibert, it was important to have a cleared right of way for third parties to identify where the pipeline might be located. He stated that the greatest threat to pipelines was damage from third parties. Plaintiffs also argue that a cleared right of way on their property is unnecessary because a third party would receive notice of the pipeline from the orange markers warning its presence. Further, they argue that providing notice to construction crews is unnecessary because the location of their hillside prevents construction activity near the pipeline. Nonetheless, the record supports the magistrate judge’s concerns regarding notice to third parties. Even in light of plaintiffs’ arguments, he could have still reasonably concluded that a cleared right of way was the most effective means of notifying any potential third parties on plaintiffs’ property. Although the evidence may have permitted him to reach a different conclusion, our task is only to determine whether the one he did make was clearly erroneous. On the evidence before him, it was not. d. Industry Standard Finally, the magistrate judge considered evidence that a fifty-foot right of way is standard in the gas pipeline industry. Seibert said that it had been the standard at least from the beginning of his seventeen-year career at Columbia Gas. He also testified that other pipeline transmission companies followed the fifty-foot standard. Hollinger confirmed that it is common industry practice to clear and maintain twenty-five feet on each side of a pipeline. Plaintiffs argue that the industry standard does not bind them because they are not members of the natural gas pipeline industry. See 92 OHIO JUR. 3d Usages and Customs; Course of Dealing § 25 (2008). Although the industry standard may not be controlling in its own right, the fact remains that it is the standard for a reason: to conduct effective inspections and excavations and to provide notice to third parties. Ultimately, it lends even more weight to the magistrate judge’s conclusion. See Adams, 646 N.E.2d at 925 (acknowledging that it is “standard practice . . . to keep at least twenty-five feet on each side of the pipeline free and clear of encroaches”). e. Conclusion Given the purposes of this gas pipeline easement, as well as the evidence before the magistrate judge, we cannot say that it was clear error to conclude that a fifty-foot right of way for each pipeline was reasonably necessary and convenient. D. Plaintiffs’ Remaining Theories for Relief Even if a fifty-foot easement is reasonably necessary and convenient, plaintiffs argue, the company’s over-forty-year delay precluded it from clearing the right of way. Accordingly, they maintain that the doctrines of laches, estoppel, waiver, and the statute of limitations bar Columbia Gas from claiming a right of way. Because these issues involve the determination and application of Ohio law, we review the magistrate judge’s conclusions de novo. No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 10 1. Laches, Estoppel, and Waiver The magistrate judge properly concluded that Ohio courts do not apply the doctrines of laches and estoppel to an expressly granted easement. “[E]quity does not acknowledge the extinguishment of [an expressly granted] easement by recourse to estoppel and laches.” Lone Star Steakhouse & Saloon of Ohio, Inc. v. Ryska, No. 2003-L-192, 2005 WL 1538259, at 7 (Ohio Ct. App. June 30, 2005) (citing Zimmerman v. Cindle, 548 N.E.2d 1315 (Ohio Ct. App. 1998) (holding easement obtained by prescription may be subject to laches and estoppel)); see also Columbia Gas Transmission Corp. v. Ally, No. 1:04 CV 1338, 2006 WL 2505902, at 8 (N.D. Ohio Aug. 28, 2006) (citing Lone Star in holding that “estoppel may preclude the enforcement only of an easement created by prescription, not of a granted and recorded easement”). Plaintiffs argue that the Lone Star court incorrectly interpreted the holding of Zimmerman. As the decision of an Ohio appellate court, however, Lone Star is authoritative, and plaintiffs have offered no compelling reason why the Ohio Supreme Court would disagree with its holding. Although a recent Third Circuit decision suggests that laches may apply to an expressly granted easement, that court was applying New Jersey, not Ohio, law. See Twp. of Piscataway v. Duke Energy, 488 F.3d 203, 214 (3d Cir. 2007). And although plaintiffs argue they had no notice of the width of the easement, that is the harsh reality resulting from the term’s omission in the original grant. Forced to construe the agreement, the magistrate judge determined that it expressly granted a fifty-foot right of way for each pipeline. Thus, neither laches nor estoppel barred Columbia Gas’s exercise of its expressly granted rights. In Ohio, a “waiver is something akin to estoppel.” City of N. Olmsted v. Eliza Jennings, Inc., 631 N.E.2d 1130, 1134 (Ohio Ct. App. 1993). As such, we can assume that it too does not apply to an expressly granted easement. Even if it does, waiver is the “voluntary relinquishment of a known right.” State ex rel. Ryan v. State Teachers Ret. Sys., 643 N.E.2d 1122, 1127 (Ohio 1994). The party seeking to prove waiver must show a “clear, unequivocal, decisive act by the other party of such a purpose it amounts to an estoppel on that party’s part.” City of N. Olmsted, 631 N.E.2d at 1134. “Mere silence will not amount to waiver where one is not bound to speak.” List & Son Co. v. Chase, 88 N.E. 120, 122 (Ohio 1909). Here, plaintiffs allege that Columbia Gas failed to protest the trees; this is tantamount to alleging mere silence and is therefore insufficient to establish waiver under Ohio law.13 2. Statute of Limitations Finally, plaintiffs claim that the statute of limitations has expired for Columbia Gas to bring a breach of contract claim. They argue that the fifteen-year statutory period began to run on the day the trees were planted in the late 1960s, and that Columbia Gas was therefore precluded from claiming that the presence of the trees breached the right of way agreement. Columbia Gas argues that plaintiffs never raised this issue below and therefore did not preserve it for appeal. That is incorrect, as plaintiffs raised it in their trial brief. Columbia Gas also argues that plaintiffs did not begin to breach the agreement until they refused to grant the company access to remove the trees. We need not address that argument, however. The magistrate judge had authority to determine the parties’ rights under the agreement because plaintiffs themselves brought that issue before the court. Even if the statute of limitations had run on Columbia Gas’s breach of contract claim, the magistrate 13 Plaintiffs argue that Columbia Gas was “bound to speak” because the trees were on their property for more than twenty-one years, the statutory period for adverse possession in Ohio. See Ally, 2006 WL 2505902, at 7. In Ally, the court implied that a property owner’s adverse possession of a gas company’s setback could create a legal obligation for the company to speak for purposes of waiver analysis. Id. at 8. Even if that is true, plaintiffs have failed to adequately argue that they meet the stringent requirements for adverse possession under Ohio law. See Grace v. Koch, 81 Ohio St. 3d 577, 580-81 (Ohio 1998) (holding that “a party must prove, by clear and convincing evidence, exclusive possession and open, notorious, continuous, and adverse use” for the statutory period). No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 11 judge never awarded damages to the company for any breach. As such, the applicability of the statute of limitations to Columbia Gas’s counterclaim does not affect the outcome of this case. E. Damages for the Cleared Trees Plaintiffs also challenge the magistrate judge’s determination that they are not entitled to damages for removal of the trees. Because the trees were inconsistent with the easement rights of Columbia Gas, the company was authorized to remove them. See Rueckel v. Tex. E. Transmission Corp., 444 N.E.2d 77, 84 (Ohio Ct. App. 1981); see also Swango Homes, Inc. v. Columbia Gas Transmission Corp., 806 F. Supp. 180, 186 (S.D. Ohio 1992). In Rueckel, the Ohio court stated that the owner of an easement has the right to remove objects that unreasonably interfere with or obstruct its reasonable and proper use: [I]f the plaintiffs plant trees on their property which obstruct, unreasonably burden and interfere with the exercise of the easement, including the right to engage in appropriate pipeline maintenance operations, then the growing of such trees is inconsistent with the easement rights of defendants and is prohibited under the rights-of-way grants and plaintiffs are not entitled to compensation for the trees that are removed. 444 N.E.2d at 83. Plaintiffs argue that the trees did not burden or interfere with Columbia Gas’s use of the right of way. But whether the trees were such an interference is precisely what the magistrate judge considered when he determined the reasonably necessary and convenient scope of the right of way. Thus, plaintiffs are only entitled to damages if the terms of the agreement so provide. The magistrate judge denied damages under the agreement because it only provided that the company would pay damages “which may arise to crops and fences.” JA 52-53. Under the maxim expressio unius est exclusio alterius—the expression of one thing is the exclusion of another—he held that such language excluded any obligation to pay damages for timber. Because this claim involves the application of Ohio contract law, we review the magistrate judge’s interpretation of the agreement de novo. The magistrate judge did not err in holding that the plain meaning of the agreement precluded damages for the cleared trees. In Ohio, “[c]ommon words appearing in a written instrument will be given their ordinary meaning unless manifest absurdity results, or unless some other meaning is clearly evidenced from the face or overall contents of the instrument.” Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146, 148 (Ohio 1978). Here, the agreement provided for damages to crops and fences, not trees. The plain and ordinary meaning of these words is clear. Further, there is no indication that the parties otherwise intended compensation for damage to trees. At least one Ohio court has rejected damages for the cutting of trees under a clause with almost identical language. See Voisard v. Marathon Ashland Pipe Line, LLC, No. 9-05-49, 2006 WL 3803868, at *2 (Ohio Ct. App. 2006). Accordingly, plaintiffs are not entitled to compensation for the removed trees. F. Jury Demand Finally, plaintiffs argue that the magistrate judge erred when he denied their motion for additional time in which to demand a jury. A party must demand a jury trial in writing “no later than 10 days after the last pleading directed to the issue is served.” FED. R. CIV. P. 38(b). “A party waives a jury trial unless its demand is properly served and filed.” FED. R. CIV. P. 38(d). However, “a court may, on motion, order a jury trial on any issue for which a jury might have been demanded.” FED. R. CIV. P. 39(b). A district court has broad discretion in deciding whether to grant a Rule 39(b) motion. Moody v. Pepsi-Cola Metro. Bottling Co., Inc., 915 F.2d 201, 207 (6th Cir. 1990); Misco, Inc. v. U.S. Steel Corp., 784 F.2d 198, 205 (6th Cir. 1986). Generally, a district court No. 07-3632 Andrews, et al. v. Columbia Gas Transmission Corp. Page 12 will not abuse its discretion in denying a Rule 39(b) motion if the only justification offered for failure to demand a jury trial is mere inadvertence. Misco, 784 F.2d at 205. However, special consideration may be warranted in cases where “the party who failed to file a timely jury demand has been hailed into federal court against his will, or is proceeding pro se.” Id. at 205 n.8 (internal citations omitted). Here, plaintiffs requested a jury trial over five months after the date to amend the pleadings, and over six months after Columbia Gas filed its amended answer. They argue that they relied on the magistrate judge’s preliminary pretrial order, which stated that “[t]he case will be individually calendared for jury trial.” JA 89. They also argue that Columbia Gas would not have been prejudiced had the court granted its motion to demand a jury trial. The magistrate judge did not abuse his discretion in denying plaintiffs’ jury demand. Although he noted that plaintiffs were proceeding pro se, he also acknowledged that they are practicing attorneys. It was therefore not an abuse of discretion to deny them special consideration on the basis of their pro se status. The magistrate judge also reasoned that the pretrial order should have put plaintiffs on notice that they had not filed a jury demand. Ultimately, plaintiffs’ failure to demand a jury trial smacks of mere inadvertence. Because we believe the magistrate judge did not abuse his broad discretion in this matter, we affirm his decision to deny additional time to demand a jury trial. III For the foregoing reasons, we AFFIRM the judgment in favor of Columbia Gas.	{ "pile_set_name": "FreeLaw" }
788 F.2d 938 UNITED STATES of Americav.GAMBINO, Rosario, Erasmo Gambino, Antonio Gambino, andAnthony Spatola, Appellants. Nos. 84-5842, 84-5843, 84-5866, 84-5880 and 85-5396. United States Court of Appeals,Third Circuit. Argued Jan. 8, 1986.Decided April 18, 1986.As Amended April 23, 1986. Pamela W. Higgins, Higgins & Madden, Philadelphia, Pa., Herald Price Fahringer, (Argued), Lipsitz, Green, Fahringer, Roll, Schull & James, New York City, for Rosario Gambino. Edna Ball Axelrod, (Argued), Asst. U.S. Atty., U.S. Atty's. Office, Newark, N.J., for appellee. Ronald P. Fischetti, (Argued), Fischetti, Feigus & Pomerantz, New York City, for Erasmo Gambino. Neil G. Duffy, III, Carey, Sayers & Duffy, Millburn, N.J., for Anthony Spatola. Ira J. Friedman, (Argued), Gary A. Zucker, Brooklyn, N.Y., for Antonio Gambino. Before: WEIS, HIGGINBOTHAM and BECKER, Circuit Judges OPINION OF THE COURT A. LEON HIGGINBOTHAM, Jr., Circuit Judge. 1 Appellants1 Rosario Gambino, Erasmo Gambino, Antonio Gambino and Anthony Spatola were indicted by a federal grand jury on multiple counts of narcotics related offenses. They were convicted inter alia of conspiring to distribute heroin in violation of 21 U.S.C. Sec. 846. Appellants now appeal from their judgments of conviction. Alternatively, appellants urge that their sentences be vacated and their cases remanded for resentencing. For the reasons set forth below, we will affirm the district court. I. 2 Pursuant to a multi-count indictment, appellants Rosario Gambino, Erasmo Gambino, Antonio Gambino, and Anthony Spatola were convicted of conspiracy to distribute heroin in violation of 21 U.S.C. Sec. 846. Indicted along with appellants on the conspiracy charge and related offenses were Mario Gambino and Giovanni Bosco. At the conclusion of the trial, Mario Gambino was acquitted on all counts with which he was charged. Bosco remained a fugitive throughout the trial. Rosario Gambino, Erasmo Gambino, and Anthony Spatola were convicted on two counts of possession of heroin and two counts of distribution of heroin in contravention of 21 U.S.C. Secs. 841(a)(1) and 841(b)(1)(A). Antonio Gambino was convicted on three counts of those offenses. The remaining counts contained charges of using the telephone to facilitate a conspiracy to distribute heroin in violation of 21 U.S.C. Secs. 843(b) and (c). Rosario Gambino was convicted on one count of this offense; Erasmo Gambino, on two counts; Antonio Gambino, on three counts; and Anthony Spatola, on six counts. 3 Subsequent to the jury verdict, the district court imposed the following sentences on the defendants: 4 Rosario Gambino--three consecutive fifteen-year prisons terms; one concurrent four-year term; terms of Special Parole, and total fines of $105,000. 5 Erasmo Gambino--two consecutive fifteen-year prison terms; one concurrent fifteen-year prison term; two concurrent four-year terms; terms of Special Parole, and total fines of $95,000. 6 Antonio Gambino--two consecutive fifteen-year prison terms; two concurrent fifteen-year prison terms; three four-year prison terms concurrent with each other and consecutive to the fifteen-year prison terms; terms of Special Parole, and total fines of $50,000. 7 Anthony Spatola--two consecutive fifteen-year prison terms; one concurrent fifteen-year prison term; six four-year prison terms concurrent with each other and consecutive with the fifteen-year prison terms; Special Parole, and total fines of $50,000. 8 Three primary questions are presented on this appeal from the district court's entry of judgments of conviction against the appellants for conspiracy to distribute heroin and against each of them individually for various related substantive offenses: (1) whether the evidence adduced at trial established the impermissible entrapment of appellant Antonio Gambino as a matter of law; (2) whether the district court abused its discretion pursuant to Federal Rule of Criminal Procedure 23(b) by allowing deliberations to proceed with an eleven person jury despite the availability of an alternate juror, or alternatively, whether the district court committed legal error in interpreting Rule 23(b) as precluding substitution of alternate jurors; and (3) whether appellant Rosario Gambino's sixth amendment right to effective assistance of counsel was violated because his trial lawyer's performance was adversely affected by a conflict of interest.2 II. FACTUAL BACKGROUND Antonio Gambino 9 On October 23, 1983, during the course of an undercover operation investigating drug trafficking in the New Jersey area, Special Agent Michael Glass of the Federal Bureau of Investigation was introduced to Antonio Gambino by a government informant called "Hank." During the meeting, which was recorded by Agent Glass, Antonio Gambino agreed to sell Glass a small quantity of cocaine and also indicated that he had access to and could provide Glass with a sample of heroin. App. 1641a-1644a, 1654a-1656a. While Antonio never specifically disclosed the source of his drug supply, he intimated that his suppliers were members of his family. See App. 166a, 758a. 10 Following this meeting, Antonio met with Agent Glass on a number of occasions to sell cocaine and to continue discussions about the impending heroin deal. On December 27, 1983, shortly over two months after their initial meeting, Antonio Gambino supplied Agent Glass with a sample of heroin. Glass was in turn to deliver the sample to his contacts in Las Vegas who would then decide, based upon the quality of the sample, whether they wanted to purchase a kilogram. App. 781a-789a. Three days later, on December 30, 1983, Agent Glass telephoned Antonio and informed him that the sample was satisfactory and that he was interested in consummating their proposed heroin deal. 11 In another series of recorded conversations, Antonio Gambino, using code language, discussed the arrangements for the drug deal with various people. Thereafter, on January 18, 1984, Antonio Gambino, together with two of his co-conspirators, Anthony Spatola and Giovanni Bosco,3 delivered approximately one half kilogram of heroin to Agent Glass and two other undercover agents. The transaction took place between Rooms 311 and 858 of Caesar's Boardwalk Regency Hotel in Atlantic City, New Jersey and was secretly videotaped by the FBI. On February 20, 1984, Antonio Gambino participated in the sale of a second half kilogram of heroin to Agent Glass and another undercover agent. Antonio Gambino's particular objection on appeal is that the evidence adduced at trial demonstrated entrapment as a matter of law. Anthony Spatola 12 Immediately after Agent Glass authorized Antonio Gambino to negotiate the purchase of one kilogram of heroin, Anthony Spatola made a series of phone calls, which were intercepted by authorized wiretaps, attempting to contact Erasmo Gambino. Eventually a meeting between Erasmo Gambino and Anthony Spatola was arranged to discuss the proposed transaction. Spatola met with Erasmo at the Playboy Casino Hotel on January 3, 1984. On the following evening, Spatola was introduced to Agent Glass by Antonio Gambino in a meeting devoted to discussing the mechanics of the proposed heroin purchase. Agent Glass was required to wear a bathing suit and meet with Spatola in a jacuzzi at the Golden Eagle Motel in Cape May to assure that the meeting was not being recorded. App. 855a-857a. The heroin sale was scheduled for January 16 or 17. 13 On January 13, 1984, Agent Glass telephoned Antonio Gambino to advise him that all financial and personnel arrangements necessary for the completion of the heroin deal had been made. Glass suggested that the transaction occur on Tuesday, January 17, 1984. During this discussion, Antonio Gambino extensively used code language to refer to the heroin purchase, particularly employing references related to "marriage" and "cars." App. 241a-251a. Immediately thereafter, Antonio Gambino phoned Spatola and informed him that the sale would take place on Tuesday. App. 253a, 871a. Similar code language was used in this conversation and in a subsequent conversation between Spatola and Erasmo Gambino in which the two discussed the need to pick up the "fiance", i.e., heroin, on Monday. 14 Prior to the sale, intercepted telephone conversations and observations of surveillance agents revealed that Spatola made numerous attempts to contact Rosario and Erasmo Gambino either to obtain approval of the pending negotiations or to obtain the heroin for the drug deal. Ultimately, Spatola was present for the actual heroin sales on both January 19, 1984 and February 20, 1984. Spatola's appeal focuses on the propriety of the eleven person jury verdict. Erasmo Gambino 15 Following Erasmo Gambino's meeting with Spatola at the Playboy Casino Hotel, a series of intercepted phone calls involving Antonio Gambino and Spatola revealed their persistent efforts to again contact Erasmo apparently to enlist his assistance in obtaining the heroin for the impending deal. App. 264a-265a, 270a-274a. Three of those calls were placed to the Caffe Milano in Brooklyn, New York. App. 275a-276a, 284a, 286a. Finally, on January 17, 1984, Erasmo placed a collect call to Spatola and told him that there had been a delay and that the sale could not be completed until Thursday. App. 306a-307a. After further efforts on the part of Spatola and Antonio Gambino, however, a sale of approximately one half kilogram of heroin was arranged and completed early Wednesday morning. 16 During the discussions surrounding the transaction that morning, Antonio Gambino and Spatola discussed with undercover agents the possibility of providing a steady supply of heroin. App. 400a-438a. Left unresolved was the amount of heroin Antonio and Spatola would be able to produce on a monthly basis. On January 20, 1984 Antonio Gambino met with Special Agent Glass to continue discussions about future sales. App. 1048a-53a. Agent Glass told Antonio that before another deal could be approved, the quality of the heroin purchased two days earlier had to be tested. App. 1057a. Later that same day, Antonio had a telephone conversation with Erasmo Gambino in which Antonio stated "I spoke with him today ... and he told me, its because he has to speak to that guy--the other guy, no?" App. 456a-57a. Antonio then suggested that he call Erasmo in five minutes from an "outside phone" so that he could "speak more freely." Id. 17 Two other phone calls involving Erasmo Gambino from which his involvement in the drug transactions could be inferred were intercepted by authorized wiretap on January 22, 1984. App. 503a, 546a. Prior to the sale of the second half kilogram, Erasmo was observed with Spatola and Giovanni Bosco in Brooklyn at the Caffe Milano on February 2, 1984. App. 2667a-2670a. Several days later Erasmo apparently met with Spatola and Antonio Gambino in Philadelphia. App. 604a-605a, 608a-609a, 2066a-2067a. The second heroin transaction was completed on February 20, 1984. Both Spatola and Antonio were present at the sale. 18 Erasmo Gambino's principal contention on appeal alleges reversible error in the district court's decision to proceed with an eleven person jury. Rosario Gambino 19 Rosario Gambino was first implicated in the heroin conspiracy on January 17, 1984 when Anthony Spatola and Antonio Gambino were desperately seeking heroin to sell to Agent Glass the following day. On that day Spatola and Giovanni Bosco met at the Caffe Milano in Brooklyn at approximately 2:27 p.m. App. 2091a-2094a, 2109a-2110a. Approximately thirteen minutes later, a yellow Mercedes Benz bearing New Jersey registration 228-VIF was observed leaving the curb in front of Caffe Milano. App. 2080a. Although the residence and insurance policy listed on the registration were false, App. 2471a-2472a, 2571a-2573a, during the course of the investigation the automobile was frequently observed at the residence or in the use of Rosario Gambino. App. 2215a-2216a, 2473a. 20 In an intercepted phone conversation later that day, Anthony Spatola conveyed to Antonio Gambino that he had talked to his cousin,4 the "short guy," who indicated that he would try to get the "car." App. 318a-319a. About an hour later, Spatola again talked to Antonio, this time to confirm that the "short guy" would produce one half of the heroin immediately as a favor to Spatola. App. 321a. In yet another phone conversation, between Spatola and Antonio, Spatola indicated that the heroin would arrive at the Caffe Milano between eleven and eleven-thirty that evening. App. 968a-972a. At approximately 11:19 p.m., the yellow Mercedes was again observed at the Caffe Milano, and at 11:29 p.m., it was observed departing. App. 2237a-2238a. 21 Spatola and Bosco left the Caffe Milano at 1:10 a.m. on January 18, 1984, and drove to Caesar's Boardwalk Regency Hotel in Atlantic City where the drug transaction was completed. App. 349a-438a, 2239a-2240a. Spatola, Bosco and Antonio Gambino rented Room 311 at Caesar's to use during the drug transaction. At approximately 8:20 a.m., shortly before Spatola, Bosco and Antonio checked out of the hotel, a call was placed from Room 311 to the residence of Rosario Gambino. App. 2047a-2051a. Upon leaving the hotel, Spatola, Bosco and Antonio drove directly to Rosario Gambino's residence in Cherry Hill, New Jersey, arriving there at approximately 9:30 a.m. App. 2475a. Parked outside of Rosario's residence when the trio arrived was the yellow Mercedes Benz, New Jersey registration number 228-VIF. App. 2579a. The three men left Rosario's home at about 10:40 a.m. App. 2502a. 22 Pursuant to ongoing heroin negotiations, Agent Glass communicated with Antonio Gambino several times after the January 18 transaction to determine whether future sales would occur. These negotiations were complicated by highly publicized heroin arrests which took place in Philadelphia on January 26, 1984. During a meeting with Spatola and Antonio Gambino on January 27, Agent Glass showed them a Philadelphia Daily News article in which the arrests were discussed. App. 1161a. There were many similarities between the ongoing heroin negotiations and the ones which had taken place in Philadelphia, including complaints about dilution of the heroin. App. 1162a-1168a. Consequently, Agent Glass encountered some difficulty in making arrangements for the second purchase. App. 515a-579a. 23 On January 30, 1984 a number of phone calls either directly involving Rosario Gambino or making reference to him through code names such as "Saruzzo" and "the short one," were intercepted by FBI wiretap. App. 586a-592a. Those conversations revealed ongoing efforts to schedule a second sale of heroin to Agent Glass. Eventually an agreement was reached to conduct the next sale on February 2, 1984. App. 594a. The planned transaction was aborted, however, due to the continuing apprehensiveness of Antonio's suppliers in the wake of the Philadelphia arrests. App. 1242a. 24 Finally, on February 20, 1984, the second transaction was completed. Agent Glass and another undercover agent purchased a second half kilogram of heroin from Antonio and Spatola for $120,000. App. 622a-669a, 1352a. Copies of the bills used to purchase the heroin were made and maintained. App. 1352a. On March 16, 1984 Rosario Gambino was arrested and a search of his residence conducted. Two of the $100 bills used to purchase the heroin were seized from Rosario Gambino's master bedroom. App. 3421a-3422a, 4035a, 4130a. 25 On appeal, Rosario Gambino alleges that his sixth amendment right to effective assistance of counsel was violated because his trial lawyer's performance was adversely affected by a conflict of interest. III. ENTRAPMENT 26 In this circuit, to be entitled to an entrapment charge, a defendant must first present evidence both that the government initiated the crime, regardless of the amount of pressure applied, and that the defendant was otherwise not predisposed to commit the crime. See United States v. Jannotti, 729 F.2d 213, 224 (3d Cir.1984) (Jannotti II ) (citing United States v. Watson, 489 F.2d 504, 509 (3d Cir.1973)). In the instant case, appellant Antonio Gambino demanded an entrapment charge based on evidence that (a) Special Agent Glass initiated the topic of heroin sales during negotiations for a cocaine purchase, and (b) there were several instances in their initial meeting where Antonio expressed hesitancy to arrange the heroin sale, and later where his lack of knowledge about the heroin business was revealed to Agent Glass. App. 4943a-4944a. Accordingly, the trial judge submitted the issue of entrapment to the jury pursuant to a jury charge which is not challenged on this appeal. App. 5876a-5878a. The jury rejected the defense of entrapment and returned a verdict of guilty against Antonio Gambino on ten of the twelve counts with which he was charged.5 Antonio Gambino argues on appeal that his convictions nevertheless should be reversed because he was entrapped as a matter of law. We disagree. 27 Although appellant Antonio Gambino met the threshold evidentiary requirements entitling him to an entrapment instruction, we are unconvinced on this record that he is entitled to have his defense sustained as a matter of law. Where the evidence is undisputed that the defendant had no predisposition to commit the crimes with which he is charged, and was induced to do so only by the trickery, persuasion or fraud of the government, entrapment is established as a matter of law. See United States v. Kaminski, 703 F.2d 1004, 1007 (7th Cir.1983). See also Sherman v. United States, 356 U.S. 369, 372, 78 S.Ct. 819, 820, 2 L.Ed.2d 848 (1958) ("Entrapment occurs only when the criminal conduct was 'the product of the creative activity' of law-enforcement officials"); United States v. Jannotti, 673 F.2d 578, 597 (3d Cir.) (en banc), cert. denied, 45 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982) (Jannotti I ) ("Entrapment occurs when a defendant who was not predisposed to commit the crime does so as a result of the government's inducement"). In general, however, entrapment is a jury question, see United States v. Bocra, 623 F.2d 281, 289 (3d Cir.), cert. denied, 449 U.S. 875, 101 S.Ct. 217, 66 L.Ed.2d 96 (1980), and "[t]he ultimate factual decisions ... must be left to the jury." Jannotti I, 673 F.2d at 606. 28 To establish his claim of entrapment as a matter of law, Antonio Gambino first argues that Special Agent Glass induced him to sell heroin. However, even if the agent is presumed to have induced the sale by his initial inquiry and subsequent expressions of interest, government inducement alone does not establish entrapment as a matter of law. Rather, the key consideration upon review is whether the undisputed evidence shows a lack of predisposition on the part of the accused. Hampton v. United States, 425 U.S. 484, 488, 96 S.Ct. 1646, 1649, 48 L.Ed.2d 113 (1976); United States v. Russell, 411 U.S. 423, 436, 93 S.Ct. 1637, 1645, 36 L.Ed.2d 366 (1973). Evidence concerning predisposition is not undisputed if the determination depends upon the credibility of witnesses or the interpretation of the evidence. See United States v. Pennell, 737 F.2d 521, 534 (6th Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 906, 83 L.Ed.2d 921 (1985); Bocra, 623 F.2d at 289; United States v. Spain, 536 F.2d 170, 173-74 (7th Cir.), cert. denied, 429 U.S. 833, 97 S.Ct. 96, 50 L.Ed.2d 97 (1976). 29 Appellant presents two arguments alleging that the undisputed evidence demonstrates his lack of predisposition to engage in the criminal conduct for which he was convicted. First, Antonio Gambino argues that government evidence regarding his involvement in cocaine trafficking established predisposition to sell only cocaine, not heroin. In support of his position, however, appellant can point only to the eloquent dictum of Mr. Justice Frankfurter in Sherman: "No matter what the defendant's past record and present inclinations to criminality, or the depths to which he has sunk in the estimation of society, certain police conduct to ensnare him into further crime is not to be tolerated by an advanced society." 356 U.S. at 382-83, 78 S.Ct. 825-26 (Frankfurter, J. concurring in result). In so doing, however, appellant merely attempts to shift the focus away from his own behavior by rehashing the proposition that has been considered and rejected several times by the United States Supreme Court, viz. whether excessive governmental conduct, if proved, in itself negates evidence of predisposition, or, put otherwise, whether the entrapment defense should be defined in terms of the government's conduct rather than the defendant's state of mind. See Hampton v. United States, 425 U.S. 484, 495-99, 96 S.Ct. 1646, 1652-55, 48 L.Ed.2d 113 (1976) (Brennan, J. dissenting); United States v. Russell, 411 U.S. 423, 437-39, 439-43, 93 S.Ct. 1637, 1645-46, 1646-48, 36 L.Ed.2d 366 (1973) (Douglas, J. dissenting) (Stewart, J. dissenting); Sherman v. United States, 356 U.S. 369, 378-83, 78 S.Ct. 819, 823-26, 2 L.Ed.2d 848 (1952) (Frankfurter, J. concurring in result); Sorrells v. United States, 287 U.S. 435, 458-59, 53 S.Ct. 210, 218-19, 77 L.Ed. 413 (1932) (Roberts, J. dissenting).6 While we recognize that government inducement is not wholly irrelevant to the determination of defendant's predisposition, see Watson, 489 F.2d at 511 ("the stronger the inducement, the more likely that any resulting criminal conduct of the defendant was due to the inducement rather than to the defendant's own predisposition"), in ascertaining predisposition we focus on 'the defendant's state of mind and inclinations before his initial exposure to government agents.' United States v. Kaminski, 703 F.2d 1004, 1008 (7th Cir.1983) (quoting United States v. Jannotti, 501 F.Supp. 1182, 1191 (E.D.Pa.1980), rev'd on other grounds, 673 F.2d 578 (3rd Cir.) (en banc), cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982) (emphasis added)). 30 An appellate court reviewing a record in an effort to divine a defendant's predisposition to commit a crime must examine a variety of factors. The second circuit has enumerated three categories of evidence from which the government may discharge its burden of proof on the issue of predisposition: "the Government may prove propensity by showing (1) an existing course of criminal conduct similar to the crime for which the defendant is charged, (2) an already formed design on the part of the accused to commit the crime for which he is charged, or (3) a willingness to commit the crime for which he is charged as evidenced by the accused's ready response to the inducement." United States v. Viviano, 437 F.2d 295, 299 (2d Cir.), cert. denied, 402 U.S. 983, 91 S.Ct. 1659, 29 L.Ed.2d 149 (1971).7 Evidence of Antonio Gambino's ongoing involvement in cocaine trafficking is clearly subsumed by the category of evidence noted in item one. Nevertheless, appellant submits that evidence of such involvement cannot provide the basis for a determination that he was predisposed to engage in similar activity where the government agent conceded that his "primary goal" was to induce appellant to engage in the sale of heroin. 31 Other courts, however, although focusing on problems of admissibility, have recognized the probative value of similar acts evidence on the issue of a defendant's predisposition to commit comparable crimes where a defense of entrapment was raised. See e.g., United States v. Segovia, 576 F.2d 251, 252-53 (9th Cir.1978) ("the probative value of appellant's willingness to arrange for a sale of a significant quantity of marijuana in the context of his entrapment defense in a trial for similar activities involving cocaine cannot be disputed"); see also United States v. Williams, 705 F.2d 603, 623 (2nd Cir.1983) (in ABSCAM prosecution evidence of conduct 'morally indistinquishable' from offense charged was probative of defendant's willingness to engage in similar activity); cf. United States v. Murzyn, 631 F.2d 525, 528-29 (7th Cir.1980) (discussing the appropriate and reasonable restraints on the use of character evidence to prove disposition). The dictum quoted in Segovia is particularly apropos: 32 "Merely because the drugs involved are different does not strip this conduct of its evidentiary value. The past acts of negotiation leading to the distribution of one drug is [are] relevant to show knowledge, motive and intent on the part of appellant to partake in the attempt here to import commercial quantities of yet another drug for purposes of distribution. The relevant factor is the type of activity undertaken, not the identity of the drugs." 33 Segovia, 576 F.2d at 252 (quoting United States v. Batts, 573 F.2d 599, 603 (9th Cir.1978)). That the determination of the weight of the evidence and inferences to be drawn therefrom is exclusively within the province of the jury is a vital linchpin of our criminal justice system. We think that the issue whether appellant's involvement in the heroin transactions for which he was convicted was solely a result of government inducement or rather, the result of a predisposed criminal mind as evidenced by his prior cocaine dealings, was properly left to the jury. 34 Nor do we find any persuasive force in Antonio Gambino's suggestion that, viewed independently of government inducement, evidence of his prior involvement with cocaine was insufficient to establish predisposition. Indeed, we need not reach the issue whether, standing alone, evidence of prior similar activity is sufficient proof of predisposition, for there is ample additional evidence on this record from which predisposition may be inferred.8 35 The record reflects, despite appellant's contention to the contrary, that the government also produced evidence that Antonio exhibited a willingness to enter into the heroin transactions. Relying on United States v. McLernon, 746 F.2d 1098 (6th Cir.1984), Antonio Gambino argues that his initial reluctance to engage in heroin sales was only overcome after repeated inducements by Agent Glass. We do not find Gambino's argument convincing. The facts of McLernon are clearly distinguishable from those presented in this case. McLernon involved a situation whereby a government agent over a period of years became the accused's "blood-brother," and preyed upon that relationship by convincing the accused that the agent would be murdered if the accused did not aid in negotiating a cocaine deal. McLernon, 746 F.2d at 1113. We conclude that the evidence with regard to Antonio's willingness to sell heroin and the sundry interpretations urged by the parties were properly before the jury for resolution. On review, our task is to determine whether, viewing the evidence in the light most favorable to the government, there was sufficient evidence for a rational jury to find that the defendant was predisposed. Burks v. United States, 437 U.S. 1, 16, 98 S.Ct. 2141, 2149, 57 L.Ed.2d 1 (1978); Jannotti I, 673 F.2d at 598. After a thorough examination of the record before us, we do not find that the jury was unreasonable in concluding beyond a reasonable doubt that Antonio Gambino was predisposed to engage in heroin trafficking. Accordingly, the jury's determination will not be disturbed. IV. RULE 23(b) AND THE ELEVEN-PERSON JURY 36 Appellants Erasmo Gambino and Anthony Spatola both contend that the district court committed reversible error when, after excusing a juror for cause after jury deliberations had commenced, the court permitted a verdict to be returned by an eleven-person panel over the objection of all of the defendants.9 Appellants concede that they have no constitutional right to a twelve-person jury, see Williams v. Florida, 399 U.S. 78, 103, 90 S.Ct. 1893, 1907, 26 L.Ed.2d 446 (1970), but insist that where alternate jurors are available, albeit in contravention of Federal Rule of Criminal Procedure 24(c)10, defendants are entitled, at a minimum, to a determination whether the jury could begin its deliberations anew upon the substitution of a properly sequestered alternate. Absent a finding of potential prejudice to the parties, appellants argue that the preference of the defendants--in this case juror-substitution--should be honored. 37 The events precipitating this challenge are as follows:11 38 At the time that the jury retired to begin deliberations, Judge Lacey decided to retain two alternate jurors in sequestration. App. 5903a-5909a. After over twenty hours of deliberation, the jury notified the court through their foreman that three documents, not marked into evidence, had been discovered in the exhibit box. The court immediately marked the note from the jury and the three documents as Court Exhibits C-22, (a), (b), and (c), respectively, and promptly conducted an inquiry into the matter with counsel and in the presence of all of the defendants. 39 Upon questioning the jury panel, the court determined that only jurors four and five had seen any of the unauthorized documents. Neither juror had discussed what they had viewed with the other members of the panel. Only one of the two, juror number five, had viewed a document that the court and counsel considered potentially prejudicial. As a result, at the conclusion of the hearing all defense counsel joined in a motion to remove juror number five and substitute him with one of the two alternates the court had retained at the time the jury retired. The government did not oppose this request. Notwithstanding the desires of defense attorneys to return the jury to its full complement of twelve, the court found just cause to remove juror number five but refused to replace him with the first alternate, noting instead that Rule 23(b) compelled him to proceed with an eleven person jury. At that juncture the court discharged the two alternate jurors. Later that day, the remaining 11 jurors rendered a verdict. 40 Rule 23(b)12 of the Federal Rules of Criminal Procedure authorizes the trial court, in its discretion, to proceed with a jury of eleven in the event a juror is excused for cause after the jury has retired to consider its verdict. Appellants argue nonetheless that Judge Lacey misinterpreted Rule 23(b) as precluding the option of substituting an available alternate for the excused juror.13 Thus, appellants do not challenge the district court's discretion to proceed with an eleven-person jury; rather, they charge that that discretion was supplanted by Judge Lacey's implementation of what he erroneously believed to be the sole mandate of Rule 23(b). We simply find no merit to appellants' contention. 41 Prior to August 1, 1983, Rule 23(b) required the stipulation of counsel in order to proceed with an eleven-person jury. Meanwhile, Federal Rule of Criminal Procedure 24(c)14 required that all alternate jurors be excused at the time the case was submitted to the jury for deliberation. Thus, the interaction between Rules 23(b) and 24(c) enabled defendants to force a mistrial if a juror became incapacitated during deliberations, for absent stipulation the court could not proceed with a jury of eleven and post-submission substitution was barred by 24(c). As a result, particularly after lengthy trials, some judges took the precaution of retaining alternates, in clear violation of 24(c), in order to avoid mistrial if counsel refused to proceed with a jury of eleven after a juror became incapacitated during deliberations. Appellate courts reviewing this problem invariably held that a departure from the plain language of Rule 24(c) would not automatically constitute reversible error; rather, the verdict would be sustained absent a showing of prejudice to defendant. See, e.g., United States v. Hillard, 701 F.2d 1052, 1058 (2d Cir.), cert. denied, 461 U.S. 958, 103 S.Ct. 2431, 77 L.Ed.2d 1318 (1983); United States v. Kopituk, 690 F.2d 1289, 1309-11 (11th Cir.1982), cert. denied sub. nom., Turner v. United States, 461 U.S. 928, 103 S.Ct. 2089, 77 L.Ed.2d 300 (1983); United States v. Phillips, 664 F.2d 971, 994-96 (5th Cir.1981), cert. denied sub. nom., Meinster v. United States, 457 U.S. 1136, 102 S.Ct. 2965, 73 L.Ed.2d 1354 (1982). In so doing, however, these courts refused to endorse violations of Rule 24(c) as a matter of course. The Eleventh Circuit in Kopituk, supra, noted: 42 It is not our intention, nor is it within our province, to authorize routine deviation from the terms of Rule 24(c). That rule is 'the rule' and the substituted juror procedure upheld herein is a narrowly limited exception to the rule, applicable only in extraordinary situations and, even then, only when extraordinary precautions are taken ... to ensure that the defendants are not prejudiced. 43 Kopituk, 690 F.2d at 1311. 44 We begin our analysis of procedures employed by Judge Lacey, then, with the observation that the initial decision by the district court to retain and sequester two alternate jurors once the case had been submitted to the jury was a clear violation of Rule 24(c). Accord Phillips, 664 F.2d at 994. The unique position advanced on this appeal, however, does not allege error in the violation of Rule 24(c). Instead, appellants, in effect, challenge the failure of the district judge to violate (or at a minimum, seriously consider violating) the rule in toto. Appellants' proposition is absurd. 45 When the Advisory Committee on the Federal Rules of Criminal Procedure studied the interaction between Rules 23(b) and 24(c) and, specifically, the stumbling block imposed by the stipulation requirement, it explicitly rejected the proposed solution of amending Rule 24(c) to permit substitution.15 The Committee's aversion to the juror-substitution option is beyond doubt. The Committee noted: 46 There have been proposals that the rule should be amended to permit an alternate to be substituted if a regular juror becomes unable to perform his duties after the case has been submitted to the jury. An early draft of the original Criminal Rules had contained such a provision, but it was withdrawn when the Supreme Court itself indicated to the Advisory Committee on the Criminal Rules doubts as to the desirability and constitutionality of such a procedure. These doubts are as forceful now as they were a quarter century ago. To permit substitution of an alternate after deliberations have begun would require either that the alternate participate though he has missed part of the jury discussion, or that he sit in with the jury in every case on the chance he might be needed. Either course is subject to practical difficulty and to strong constitutional objection. 47 Advisory Committee Note, 97 F.R.D. 245, 300 (1983) (quoting Wright, Federal Practice and Procedure Sec. 388 (1969)). Instead, the Committee concluded that the better alternative was to amend 23(b) to permit the judge, on his own motion, to proceed with a jury of eleven. The amendment was thus designed to avert the dilemma posed by the very cases on which appellants now rely, e.g., Phillips, supra. 48 Although the primary objective of the amendment to Rule 23(b) is to provide judges with an alternative to mistrial after a juror is excused for cause, the amendment also contemplates compliance with Rule 24(c). Because the amendment does not allow the court, on its own motion, to proceed with a panel of less than eleven, however, Judge Lacey retained the two alternates as a precaution were he later confronted with the necessity of excusing two jurors for cause.16 See United States v. Gambino, 598 F.Supp. 646, 660 (D.N.J.1984). That potentiality never materialized and, therefore, Judge Lacey was not forced to journey into unknown territory. He was instead faced with a set of circumstances for which a solution had been devised, viz. Rule 23(b), a solution which appellants urge us to ignore. We refuse to do so. It is clear from the record that the district court did not abuse its discretion under Rule 23(b) in opting for the eleven-panel verdict. It is equally clear that under Rule 23(b) Judge Lacey did all that he was required to do. "The [Rule] provides that if a juror is excused after the jury has retired to consider its verdict, it is within the discretion of the court whether to declare mistrial or to permit deliberations to continue with 11 jurors." 97 F.R.D. at 301 (emphasis added). The court was under no obligation to consider the feasibility of any other options, particularly one which was explicitly disfavored as a remedial device by the Rules Committee that studied and revised Rule 23(b). V. CONFLICT OF INTEREST 49 Rosario Gambino alleges that his sixth amendment right to effective assistance of counsel was violated because his trial lawyer's performance was adversely affected by a conflict of interest. The factual predicate of this claim rests upon the simultaneous representation of Rosario Gambino and Gaetano Mazzara by defense attorney, Jacob Evseroff. While representing Rosario at the trial level in the instant action, Mr. Evseroff had also been retained as counsel for Gaetano Mazzara in United States v. Badalamenti, et al., No. 84-Cr-286, a narcotics conspiracy case pending in the United States District Court for the Southern District of New York. Documents filed in connection with the prosecution's case in Badalamenti indicated that Mazzara was also under suspicion as the source of the heroin sold to undercover agents by Anthony Spatola and Antonio Gambino on January 18, 1984. Rosario Gambino argues that Mr. Evseroff's dual representation created an actual conflict of interest because "for Mr. Evseroff to demonstrate that it was not Rosario Gambino, but Mazzara, who supplied the heroin would breach his duty of loyalty to Mazzara. Thus counsel's fidelity to Rosario Gambino--including inculpating Mazzara to exculpate Gambino--clashed with his allegiance to Mazzara." Brief of Rosario Gambino at 24-25. A. 50 A litany of cases in this circuit firmly establish our general policy against entertaining ineffective assistance of counsel claims on direct appeal, see e.g., Government of the Virgin Islands v. George, 741 F.2d 643, 646 (3d Cir.1984); United States v. Davis, 710 F.2d 104, 110 (3d Cir.1983); United States v. Frankenberry, 696 F.2d 239, 241-42 (3d Cir.1982); United States v. Sturm, 671 F.2d 749, 750-51 (3d Cir.1982) (per curiam), cert. denied, 459 U.S. 842, 103 S.Ct. 95, 74 L.Ed.2d 86 (1985); United States v. Jackson, 649 F.2d 967, 973 (3d Cir.), cert. denied, 454 U.S. 871, 1034, 102 S.Ct. 341, 574, 70 L.Ed.2d 176, 479 (1981); United States v. Rad-O-Lite of Philadelphia, Inc., 612 F.2d 740, 743-744 (3d Cir.1979); United States v. Garcia, 544 F.2d 681, 684 n. 1 (3d Cir.1976). The rationale underlying this preferred policy is that oft-times such claims involve allegations and evidence that are either absent from or not readily apparent on the record. Thus, we have maintained that the better course is for the accused to pursue his objections in an appropriate collateral proceeding, see e.g., 28 U.S.C. Sec. 2255, where the district court may compile a sufficient factual record thereby facilitating appellate review. 51 Recently, in Government of the Virgin Islands v. Zepp, 748 F.2d 125 (3d Cir.1984), this court had occasion to carve out a narrow exception to the general rule against hearing ineffective assistance of counsel claims on direct appeal. Therein we held that "where an objection has been properly made at trial, or, where the record clearly shows actual conflict of interest and objections made at trial did or should have put the trial court on notice that potential conflict of interest existed, this court's 'preference' for developing such issues on collateral attack need not be followed, and a full consideration of the issue is appropriate." Zepp, 748 F.2d at 134. In arriving at this conclusion, we observed the teachings of two contemporaneous United States Supreme Court decisions. 52 In United States v. Cronic, 466 U.S. 648, 104 S.Ct. 2039, 80 L.Ed.2d 657 (1984) and Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), the Supreme Court was asked to determine the proper standards for judging sixth amendment claims of ineffective assistance of counsel. Claims of ineffective assistance of counsel may be broadly categorized into two groups: (1) those claims primarily founded upon external factors,17 and (2) those founded upon the actual conduct or misconduct of the trial lawyer. Moreover, as observed in Strickland and Cronic, claims that involve allegations of attorney misconduct may be further divided into (1) those premised on the incompetence of counsel due to specific errors or omissions during the course of representation, Cronic, 104 S.Ct. at 2046 n. 20; Strickland, 104 S.Ct. at 2064-69; or (2) those premised on an actual conflict of interest that adversely affected counsel's performance, Cuyler v. Sullivan, 446 U.S. 335, 348, 100 S.Ct. 1708, 1718, 64 L.Ed.2d 333 (1980); Strickland, 104 S.Ct. at 2067. Under the first type of claim, where an ineffective assistance claim alleges deficient performance by trial counsel, the Court instructed that a defendant must "affirmatively prove prejudice." Strickland, 104 S.Ct. at 2067. Upon addressing the burden to be borne by an accused advancing an ineffective assistance of counsel claim due to an actual conflict of interest, however, the Strickland Court reiterated its prior pronouncement, announced in Cuyler v. Sullivan, that an actual conflict of interest warrants a presumption of prejudice. See Strickland, 104 S.Ct. at 2067. 53 It is important to note that overemphasis on the presumption of prejudice cannot operate to obviate the requisite obligation to demonstrate the existence of an actual conflict. "Prejudice is presumed only if the defendant demonstrates that counsel 'actively represented conflicting interests' and 'that an actual conflict of interest adversely affected his lawyer's performance.' " Strickland, 104 S.Ct. at 2067 (quoting Cuyler v. Sullivan, 446 U.S. at 350, 348, 100 S.Ct. at 1719, 1718) (emphasis added). Thus, the less stringent test to obtain relief under the sixth amendment for conflicts of interest does not give rise to a less stringent standard in determining whether such claims should be resolved on direct appeal. As we stated in Zepp, the desirability of leaving to the district court, in the first instance, the development of an appropriate factual record, whether through an evidentiary hearing or in the course of a habeas corpus collateral proceeding, is equally applicable to claims of ineffective assistance of counsel based on a conflict of interest as to those based on trial counsel's incompetence. See Zepp, 748 F.2d at 133. The critical inquiry on this direct appeal, then, is whether the record evidence demonstrates that Jacob Evseroff "actively represented conflicting interests." B. 54 "Actual conflict of interest is evidenced if, during the course of representation, the defendants' interests diverge with respect to a material factual or legal issue or to a course of action.... This conflict must cause some lapse in representation contrary to the defendant's interests but such lapse need not rise to the level of actual prejudice." Sullivan v. Cuyler, 723 F.2d 1077, 1086 (3d Cir.1983) (Sullivan II ). 55 Following trial in this matter, appellant Rosario Gambino filed a Rule 33 motion for a new trial. Fed.R.Crim.Pro. 33. Relying on various statements contained in government pleadings filed in the Badalamenti narcotics case, Rosario Gambino argued, inter alia, that those "documents conclusively demonstrate that prior to Rosario Gambino's trial the government was in possession of evidence which it contended demonstrated that Spatola and Bosco obtained the heroin [for the January 18, 1984 transaction] not from Rosario Gambino but instead from Castronovo and Mazzara or through their agent, Joseph LaRosa." App. 65a. Accordingly, Rosario Gambino requested that Judge Lacey order a new trial on the ground of newly discovered evidence.18 56 Our review of the record on the Rule 33 motion reveals that, though not specifically raising a claim of ineffective assistance of counsel, Rosario, through newly acquired counsel, twice alluded to a potential conflict of interest in memorandum filed in support of his motion.19 First, in the course of responding to the government's position that documents and the information contained therein were not newly discovered evidence, Rosario argued that "[s]urely, the government could not expect Rosario Gambino's attorney to contend that his other client, Gaetano Mazzara, might have supplied the heroin, especially in view of the total lack of any such claim by the government at the Gambino trial." App. 84a-85a. Then, in response to the government's contention that the Badalamenti documents could have been discovered through due diligence of trial counsel, Rosario Gambino's memorandum again observed the potential conflict: "Surely [Mr. Evseroff] cannot be considered to be less than diligent for failing to review documents in a wholly separate case to see whether those documents might impact upon Rosario Gambino's trial. This is especially true when the government did not in any way indicate to him that it knew that the case might be interrelated and that he would have a clear and unquestionable conflict of interest between his two clients, Rosario Gambino and Gaetano Mazzara." App. 86a-87a. 57 Upon ruling on appellant's motion for a new trial, Judge Lacey found that the information regarding Mazzara and Castronovo was contained in documents that were made public well in advance of Rosario Gambino's trial and therefore, was available to the defense in the exercise of due diligence. App. 151a. In addition, Judge Lacey expressly noted that in his capacity as attorney of record for Mazzara in the Badalamenti proceeding, Mr. Evseroff had actual possession of the information now labeled as newly discovered. Finally, Judge Lacey concluded that, notwithstanding any constructive notice afforded to counsel, Mr. Evseroff was actually provided with a surveillance log--J-146--of the events of January 17, 1984 at the Caffe Milano during the course of the trial. The judge observed: 58 This very exhibit was used carefully and deliberately by Mr. Evseroff in his cross-examination of surveillance agents.... J-146 contains several log entries naming and noting the observation of Gaetano Mazzara and Francesco Castronovo at the Caffe Milano, consistent of course with what is now so heavily relied upon by the defendant. While Mr. Evseroff and other defense counsel conducted extensive cross-examination of the surveillance agents, not one elected to question the agents about the activities of Gaetano Mazzara and Francesco Castronovo at the Caffe Milano on that date. 59 App. 151-52a. 60 At the outset, Rosario Gambino asserts that multiple representation20 is clearly established on the record by Mr. Evseroff's undertaking to simultaneously defend, albeit in separate proceedings in federal courts in New Jersey and New York, two clients accused of committing the exact same crime. He then turns to Judge Lacey's findings on the Rule 33 motion and argues that those findings constitute direct record evidence of Mr. Evseroff's conflict of interest. 61 In addition to his reliance on evidence emanating from the Rule 33 motion, Rosario argues that the actual conflict posed by Mr. Evseroff's dual representation is established by certain omissions noted during the course of the trial: (1) counsel's failure to shift suspicion away from his client by questioning government agents about Mazzara's involvement in the January 18 drug transaction, (2) counsel's failure to investigate and obtain additional witnesses to implicate Mazzara and exonerate Rosario, and (3) counsel's failure to vigorously suggest to the jury during summation that Mazzara was the supplier of the heroin. The failure to advance such a defense, Rosario contends, is tantamount to a serious lapse in representation that clearly indicates that Mr. Evseroff labored under an actual conflict of interest that adversely affected his performance. Finally, Rosario points to Mr. Evseroff's failure to alert the trial judge of counsel's dual representation of Mazzara prior to trial, or at the earliest point during trial after which the conflict became apparent, as an impermissible lapse in representation.21 Thus, Rosario Gambino concludes that the record before this court is adequate to review his ineffective assistance of counsel claim on direct appeal. 62 In response, however, the government argues that Rosario's claim reveals neither an actual conflict of interest nor one that adversely affected trial counsel's performance. Instead, the government describes the claim as one "based totally on speculation and hypothetical analysis." Having extensively reviewed and outlined the evidence on the alleged conflict of interest, we think that it is far from manifest that an actual conflict existed. While the evidence strongly indicates that there may have been a conflict, "a possible conflict inheres in almost every instance of multiple representation." Cuyler, 446 U.S. at 348, 100 S.Ct. at 1718. Both parties have advanced various, plausible interpretations of the trial strategy employed by Mr. Evseroff at Rosario Gambino's trial. Consequently, we cannot approach this record with the sanguinity envisioned by Zepp. The narrow exception enunciated in Zepp is tailored to fit only those exceptional situations that lend themselves to only one conclusion--that trial counsel labored under an actual conflict of interest. Our past precedent compels us to affirm the conviction of appellant Rosario Gambino without prejudice to his ability to initiate a Sec. 2255 collateral proceeding for the resolution of his conflict of interest claim.VI. SENTENCING 63 Appellants urge us on various prudential and constitutional grounds to vacate their sentences and remand for resentencing. We find no merit in those arguments. Thus, absent a procedural defect or a clear abuse of discretion, we will not interfere with a sentence imposed within the statutory limits afforded to the trial judge. See United States v. Matthews, 773 F.2d 48, 52 (3d Cir.1985). We find evidence of neither. Accordingly, the sentences imposed by the district court shall be affirmed. 1 Because three of the appellants bear the same surname, Gambino, for purposes of clarity they will be referred to by either their full names or their first names 2 Other contentions raised by the appellants not directly addressed in this opinion, include: 1 That remarks made by the prosecution in summation attacking the credibility of Anthony Spatola denied Rosario Gambino due process and a fair trial 2 That the district court erred in denying Rosario Gambino's motion for a new trial and a motion for related discovery 3 That appellants were denied a fair trial when the district court permitted the prosecutor to read an alleged prejudicial newspaper article to the jury 4 That Antonio Gambino's due process rights were violated by outrageous government conduct After thoroughly reviewing the above contentions, we conclude that they lack merit. Accordingly, the judgment of the district court will be affirmed. 3 Giovanni Bosco was a co-defendant in the underlying action. At the time of trial Bosco had not been arrested and remained a fugitive for over year. He was apprehended on April 19, 1985 and was awaiting trial at the time of this appeal 4 Rosario Gambino and Anthony Spatola are cousins. App. 4608a 5 The only two counts upon which Antonio was acquitted were counts 6 and 9 in which he was charged along with Mario Gambino with using the telephone to facilitate a conspiracy to distribute heroin. These were the only telephone counts with which Mario Gambino was charged and he was acquitted of all charges 6 In United States v. Russell, the majority opinion conceded that there "may some day be ... a situation in which the conduct of the law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction." 411 U.S. at 431-32, 93 S.Ct. at 1642-43. Subsequently, this court accorded recognition to this principle in United States v. Twigg, 588 F.2d 373 (3d Cir.1978), holding on its facts that the "nature and extent of police involvement ... was so overreaching as to bar prosecution of the defendants as a matter of due process of law." 588 F.2d at 377 Antonio Gambino separately alleges a due process violation and implores this Court to overturn his conviction even if we find sufficient evidence on the issue of predisposition. Despite the holding in Twigg, this court and other appellate courts have since exercised extreme caution in finding due process violations in undercover settings. See e.g., United States v. Beverly, 723 F.2d 11, 12-13 (3d Cir.1983); United States v. Alexandro, 675 F.2d 34, 40-41 (2d Cir.), cert. denied, 459 U.S. 835, 103 S.Ct. 78, 74 L.Ed.2d 75 (1982); Jannotti I, 673 F.2d at 607-608. Thus, "a successful due process defense must be predicated on intolerable government conduct," and an appellate court should "exercise scrupulous restraint before ... denounc[ing] law enforcement conduct as constitutionally unacceptable." Jannotti I, 673 F.2d at 607. On the facts before us, we do not find the type of egregious government misconduct that is repugnant to the concept of fundamental fairness. Accordingly, we reject Antonio's due process argument. 7 We cite Viviano solely to illustrate the types of evidence which may support a finding of predisposition. Nothing in our reliance on Viviano affects this court's rejection of the bifurcated entrapment charge, see Jannotti II, 729 F.2d at 224, embraced in that opinion 8 Antonio Gambino argues that "[t]he only evidence of predisposition on the part of appellant rests upon the allegation that he had previously sold cocaine." Brief for Appellant Antonio Gambino at 7 9 Each appellant has invoked Rule 28(i) of the Federal Rules of Appellate Procedure, joining the arguments of their co-appellants insofar as those arguments are applicable to them and not inconsistent with the arguments in their briefs. Presumably, all appellants join in this argument 10 See infra note 13 11 A more detailed account of these facts is found in Judge Lacey's opinion in United States v. Gambino, 598 F.Supp. 646, 658-60 (D.N.J.1984) 12 Rule 23(b) provides: (b) Jury of Less Than Twelve. Juries shall be of 12 but at any time before verdict the parties may stipulate in writing with the approval of the court that the jury shall consist of any number less than 12 or that a valid verdict may be returned by a jury of less than 12 should the court find it necessary to excuse one or more jurors for any just cause after trial commences. Even absent such stipulation, if the court finds it necessary to excuse a juror for just cause after the jury has retired to consider its verdict, in the discretion of the court a valid verdict may be returned by the remaining 11 jurors. Fed.R.Crim.Pro. 23(b). 13 Rule 23(b) makes no provision for the substitution of alternate jurors. Juror substitution is authorized and governed by the provision of Rule 24(c) of the Federal Rules of Criminal Procedure which provides in pertinent part: (c) Alternate Jurors. The court may direct that not more than 6 jurors in addition to the regular jury to be called and impaneled to sit as alternate jurors. Alternate jurors in the order in which they are called shall replace jurors who, prior to the time the jury retires to consider its verdict, become or are found to be unable or disqualified to perform their duties.... An alternate juror who does not replace a regular juror shall be discharged after the jury retires to consider its verdict. Fed.R.Crim.Pro. 24(c). Although 24(c) requires that alternate jurors be discharged once the jury retires for deliberations, Judge Lacey had retained and sequestered two alternates who remained available at the time the disqualified juror was dismissed. See discussion infra. 14 See supra note 13 15 For a review of the rejected proposed rule permitting juror substitution following the commencement of jury deliberations, see Preliminary Draft of Proposed Amendments to the Federal Rules of Criminal Procedure, 91 F.R.D. 289, 341-45 (1981) 16 Judge Lacey's action in anticipation of the dismissal of two jurors is not challenged before this court. Accordingly, we express no opinion as to the propriety or desirability of such action. We note, however, that Judge Lacey's apprehensions were not unfounded. Indeed, it is merely fortuitous that juror number four did not also view the document that necessitated the dismissal of juror number five, or that the document viewed by juror number four was deemed innocuous by the court and counsel. See United States v. Gambino, 598 F.Supp. at 658 17 In Cronic the Supreme Court acknowledged ineffective assistance claims "based on actual or constructive denial of the assistance of counsel altogether, as well as claims based on state interference with the ability of counsel to render effective assistance to the accused." Strickland, 104 S.Ct. at 2062 (citing Cronic, 104 S.Ct. at 2047-48). Such claims contemplate particularly egregious circumstances such as where the defendant is denied the assistance of counsel at a critical stage of the litigation prosecution. Cronic, 104 S.Ct. at 2047 & n. 25, or where external interference prevents even the most able lawyer from providing meaningful assistance, see Cronic, 104 S.Ct. 2047-48 (citing Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932)). The Court concluded that "when surrounding circumstances justify a presumption of ineffectiveness ... a Sixth Amendment claim [may] be sufficient without inquiry into counsel's actual performance at trial." Cronic, 104 S.Ct. at 2048 18 Rosario Gambino alleges reversible error in the district court's denial of his motion for a new trial. After reviewing the record and the claims of appellant, we do not find that the trial judge improperly denied Gambino's motion for a new trial 19 We acknowledge that the positive record evidence relied on by appellant as demonstrative of an actual conflict consists exclusively of documents filed in connection with appellant's Rule 33 motion. The requirement that an objection be properly raised at trial, however, is not a rigid, mechanical rule blind to valid claims properly raised in pre- or post-trial proceedings. See e.g., Zepp, 748 F.2d at 134 n. 9 (recognizing conflict claims raised during suppression hearing); Cronic, 104 S.Ct. at 2051 n. 42 (acknowledging that an ineffective assistance claim properly raised and ruled on in a Rule 33 motion for a new trial may be considered on direct appeal); cf. American Home Assurance Co. v. Sunshine Supermarket, Inc., 753 F.2d 321, 324-25 (3d Cir.1985) (objection when evidence of nonprosecution was introduced during hearing on motion in limine was not required to preserve for appeal the specific issue raised in the motion) 20 In Sullivan II we noted that a conflict of interest violative of the sixth amendment is established upon proof of (1) multiple representation that, (2) creates an actual conflict of interest that (3) results in an adverse effect upon the lawyer's performance. 723 F.2d at 1084. We subsequently acknowledged in Zepp that "our decision [in Sullivan II ] must not be construed so narrowly as to encompass only those factual situations where counsel simultaneously represents different defendants." 748 F.2d at 135. Thus, traditional multiple representation remains a salient, though non-essential, element of a cognizable conflict of interest claim. Rosario alleges multiple representation in the defense of two clients not defendants in the same trial. Our key consideration remains whether trial counsel "actively represented conflicting interests." Cuyler, 446 U.S. at 350, 100 S.Ct. at 1719 21 In addition to the argument that Mr. Evseroff's failure to inform the district court of his dual representation is proof of actual conflict, Rosario Gambino asserts that his own ignorance of the existence and implications of Mr. Evseroff's dual representation "raises the question of whether [Rosario] even needs to demonstrate that an actual conflict of interest adversely affected counsel's performance." Brief of Rosario Gambino, at 30 n.*. Whatever the merits of this position to a substantive resolution of Rosario's claim, it has no bearing on our determination whether such substantive resolution is warranted on direct appeal. Cf. Briguglio v. United States, 675 F.2d 81, 82 (3d Cir.1982) (affirming defendant's conviction without prejudice to his right to pursue claims in a collateral proceeding despite defendant's ignorance during trial of criminal investigation of his trial attorney by the same United States Attorney's Office prosecuting the case against accused) In Cuyler v. Sullivan the Supreme Court acknowledged that "[d]efense counsel have an ethical obligation to avoid conflicting representations and to advise the court promptly when a conflict of interest arises during the course of trial." The Court proceeded to note, however, that "[a]bsent special circumstances, ... trial courts may assume either that multiple representation entails no conflict or that the lawyer and his clients knowingly accept such risk of conflict as may exist." 446 U.S. at 346-47, 100 S.Ct. at 1717-18 (emphasis added). We think that the highlighted segment of the Cuyler quote is suggestive of but a few of the possibilities on which this record is silent. Absent direct evidence, we will not assume, for the sake of addressing Rosario Gambino's sixth amendment claim, that there was an actual conflict, or that counsel and clients did not "knowingly accept such risk of conflict as may exist." These issues are better explored in a Sec. 2255 proceeding.	{ "pile_set_name": "FreeLaw" }
45 N.J. 580 (1965) 214 A.2d 23 IN THE MATTER OF MICHAEL L. MALANGA, AN ATTORNEY-AT-LAW. The Supreme Court of New Jersey. Decided October 25, 1965. Mr. Frederick C. Vonhof for the order to show cause. Mr. Ferdinand D. Masucci argued the cause for respondent. 581 The opinion of the court was delivered PER CURIAM. The Essex County Ethics Committee filed a presentment in which it found that the respondent, Michael L. Malanga, violated Canon 11 of the Canons of Professional Ethics by appropriating to his own use and failing to promptly account for funds belonging to his client. The facts, as developed at hearings before the Committee, fully substantiate its findings. The complainant, John J. Erla, retained the respondent in January 1962, to press a claim for damages arising from an automobile collision in which he had suffered physical injury and property damage. After negotiating with the insurance carrier, the respondent received an offer of settlement. On July 11, 1962 the complainant signed a general release which respondent used to obtain a draft, dated July 19, 1962, for $3,250, payable to the order of "John J. Erla and Michael L. Malanga, Attorney." A direction printed on the back of the draft reads, "This draft must be endorsed by payee personally. * " On July 23, 1962, the respondent deposited the draft in his bank account. The back of the cancelled draft shows that in addition to the endorsement of the respondent, the name "John J. Erla" appears. Mr. Erla did not endorse the draft and had no knowledge of the endorsement, and the respondent admits that, at his direction, Mr. Erla's name was placed there by someone else. It is significant to note that Mr. Erla's name was written on the draft so as to simulate his real signature. At the time of the deposit, the $3,250 represented almost all the money in the respondent's bank account. From then until December 19, 1962, the respondent wrote 89 checks leaving a balance on that date of $2. None of these checks were payable to the complainant. None were for large amounts, and most were apparently used to pay the respondent's personal or office expenses. Complainant saw the respondent for the last time on July 11, 1962, when the general release was executed and, despite numerous attempts to communicate with the respondent, 582 could get no closer to him than his answering service. Unable to obtain his share of the proceeds of the settlement for nearly two years, the complainant retained another attorney in the Spring of 1964. However, the respondent continued his evasiveness, and this attorney had no more success in dealing with him than had the complainant. Payment of $2,200, which has been accepted by the complainant in satisfaction of his claim, has been made by the respondent, but under circumstances which are hardly extenuating. After the original complaint was filed with the Committee on October 7, 1964, a copy was sent to the respondent pursuant to R.R. 1:16-4 with the request that he file a written answer thereto within 10 days. Upon his failure to file such an answer, this court entered an order on December 7, 1964, directing the respondent to show cause why he should not be suspended pending the outcome of the charge against him. On January 5, 1965, the return date of the order to show cause, the respondent filed his answer and was directed by the court to forthwith turn over to the secretary of the Committee the sum of $2,200. Respondent made payment on the same day, two and one-half years after the settlement of the claim. Although the respondent admits his wrongful conduct and offers no direct defense, he alleges that there are mitigating circumstances. Both parties have indicated that there was some dispute over the amount of the fee to be paid out of the recovery, and respondent contends that this dispute partially accounts for his dereliction. This contention finds no support in the record. It is clear from the testimony of both the respondent and the complainant that whatever difference there was between them was not serious. Of more importance, since respondent never communicated with complainant after he received the draft from the insurance company, there was never any dispute while the money was actually in the respondent's possession. Moreover, if the respondent did believe there was a genuine dispute over the amount of his fee, his proper course of action would have been to deduct from 583 the settlement the amount to which he thought himself entitled, remitting the remainder to his client with a statement of how the fee was calculated, and to arrange seasonably for an adjudication as to the disputed amount. As an additional mitigating circumstance, the respondent asserts that he always maintained at his home in a dresser drawer an amount of cash equivalent to that owed to the complainant. This court has in the past indicated that it need not accept an unsubstantiated claim of this type. In re Banner, 31 N.J. 24, 27 (1959). However, even admitting the truth of the respondent's claim, it is of no help to him. The gravamen of the presentment is not that the respondent was impoverished, but that he wrongfully obtained money belonging to the complainant, used such money for his own purposes and withheld payment for two and one-half years. If the respondent did in fact keep a large amount of cash in his home, this proves only that his derelictions were not motivated by personal financial needs which makes these derelictions even less comprehensible. Canon 11 provides: "The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly, and should not under any circumstances be commingled with his own or be used by him." Violations of this canon have always been considered among the most serious breaches of an attorney's obligations. "The funds in the hands of an attorney that belong to a client or others must be kept inviolate. For obvious reasons, the strictest rules of conduct apply here and every presumption works against the wrongful user." In re Gavel, 22 N.J. 248, 264 (1956). The respondent violated every part of Canon 11 and by his conduct has shown that he either does not understand or is unwilling to undertake its basic obligations. An examination of the respondent's checkbook, as maintained during 584 the period in question, discloses extreme carelessness and shows a lack of appreciation of the fundamentals required to assure fulfillment of the duty so clearly imposed by the canon. The object of disciplinary measures is "the protection of the public, the purification of the bar and the prevention of a re-occurrence." In re Baron, 25 N.J. 445, 449 (1957). In the circumstances of this case, we conclude that the respondent should be suspended from the practice of law for a period of three years and until further order of this court. For suspension for three years Chief Justice WEINTRAUB and Justices JACOBS, FRANCIS, PROCTOR, HALL, SCHETTINO and HANEMAN 7. Opposed None.	{ "pile_set_name": "FreeLaw" }
422 F.2d 397 Frank Paul RILEY, Petitioner-Appellant,v.E. P. PERINI, Superintendent, Marion CorrectionalInstitution, Respondent-Appellee. No. 19637. United States Court of Appeals, Sixth Circuit. Feb. 27, 1970. Frank Paul Riley, in pro per. Paul W. Brown, Atty. Gen., Stephen M. Miller, Asst. Atty. Gen., Columbus, Ohio, for appellee. Before PHILLIPS, Chief Judge, and WEICK and EDWARDS, Circuit Judges. 1 PER CURIAM and ORDER. 2 Petitioner applied for a writ of habeas corpus in the District Court claiming that the Ohio Adult Parole Authority, in denying parole to him, took into account his criminal record. 3 The District Judge, in considering the habeas corpus application, interpreted our decision in Rose v. Haskins, 388 F.2d 91 (6th Cir. 1968), cert. denied, 392 U.S. 946, 88 S.Ct. 2300, 20 L.Ed.2d 1408, as conferring authority upon him to review the action of the Ohio Adult Parole Authority to determine whether, in denying parole to the prisoner, the Authority abused its discretion. In our opinion, Rose is not susceptible of any such interpretation. 4 Federal Courts have jurisdiction to review the action of state parole boards only where it involves violation of the Constitution of the United States. Hinkle v. Adult Parole Authority, 419 F.2d 130 (6th Cir. 1969); MacKenna v. Avery, 404 F.2d 71 (6th Cir. 1968); Rose v. Haskins, supra. 5 In determining the application of a prisoner for parole, the Parole Authority may consider all relevant factors, including the prisoner's criminal record. Jones v. Salisbury, Sup't., 422 F.2d 1326 (No. 19,569) (6th Cir. 1970); cf. Rose v. Haskins, 21 Ohio St.2d 94, 255 N.E.2d 260 (1970). 6 It is therefore ordered that the judgment of the District Court be and it is hereby affirmed. 7 Entered by order of the Court.	{ "pile_set_name": "FreeLaw" }
330 F.2d 56 George PUSCHELBERG and Margaret Puschelberg, Plaintiffs-Appellees,v.UNITED STATES of America, Defendant-Appellant. No. 15000. United States Court of Appeals Sixth Circuit. April 6, 1964. Stephen B. Wolfberg, Department of Justice, Washington, D. C., John B. Jones, Jr., Acting Asst. Atty. Gen., Lee A. Jackson, Harry Baum, Attys., Department of Justice, Washington, D. C., Lawrence Gubow, U. S. Atty., Robert Ritzenhein, Asst. U. S. Atty., Detroit, Mich., on brief, for appellant. Bruce Donaldson, Detroit, Mich., Raymond, Chirco, Fletcher & Donaldson, Detroit, Mich., on brief, for appellees. Before MILLER, CECIL and PHILLIPS, Circuit Judges. SHACKELFORD MILLER, Jr., Circuit Judge. 1 The plaintiffs-appellees, George Puschelberg, hereinafter referred to as the taxpayer, and his wife, Margaret Puschelberg, brought this action in the District Court to recover from the defendant-appellant, United States of America, income taxes paid by them for the year 1954, following a claim for refund and the disallowance thereof by the Commissioner. The claim arises out of the receipt by the taxpayer of the sum of $95,278.74, which the taxpayer claimed was erroneously reported by him as ordinary income and taxed as such rather than as long-term capital gain. The case was heard by the District Judge without a jury, who found for the taxpayer in the amount of $17,249.85, plus interest. The United States has taken this appeal. 2 The basic facts, which are uncontradicted, are as follows. For several years prior to 1945 the medical profession and the pharmaceutical firms were looking for a low-cost throw-away blood filter in order to avoid the expense of the cleaning of the metal filters that were in use prior to the manufacture of the filter involved in this case, as well as certain medical hazards inherent in reusing filters. During the early 1940s the taxpayer was employed by Industrial Wire Cloth Company, which had engaged in the fabrication of metal blood filters. Prior to 1941 he knew nothing about blood filtering problems. Through his employment with that company he learned of the medical profession's dissatisfaction with the high cost and consequent required re-use of the metal filters. The taxpayer spent several years of his free time attemping to develop a blood filter constructed from low-cost base materials. Dr. Warren B. Cooksey, a practicing physician, had also unsuccessfully attempted to develop a satisfactory disposable blood filter. 3 In the summer of 1944 the taxpayer brought to Dr. Cooksey an experimental model of a blood filter which he had developed over a two-year period. Dr. Cooksey immediately recognized its merit and possibilities. A period of time in excess of one year was dedicated to research by the taxpayer in association with Dr. Cooksey. When the co-inventors felt that they had developed a workable blood filter, Dr. Cooksey made contact with Baxter Laboratories, Inc., hereinafter referred to as Baxter, which was a Delaware corporation, having a principal place of business at Glenview, Illinois, engaged as an ethical pharmaceutical house in the drug industry, and which for some years had specialized in supplying the medical profession with solutions and implements used in parenteral therapy. In 1945 Baxter was supplying a blood administration apparatus utilizing a metal filter. Dr. Cooksey arranged a conference, at which the blood filter was exhibited to Baxter. Baxter immediately became interested and arranged for the manufacture by the taxpayer of a quantity of the filters for clinical and market testing. On the occasion of this contact and this arrangement Baxter indicated to the taxpayer that in the event the clinical and marketing tests were successful it wanted to acquire the exclusive rights to this filter — otherwise, it would not be interested in further negotiations. 4 At a meeting during the summer of 1945 after the tests had been concluded, Baxter again stated that it wanted the exclusive right from the co-inventors by way of a license agreement. In addition, Baxter stated that if it purchased any more filters any price that would be agreed upon would embody two elements, — first, consideration for the transfer of the exclusive rights to the invention, and — second, consideration for the sale of the manufactured filter. 5 On September 18, 1945, the taxpayer and Dr. Cooksey entered into an agreement with Baxter, hereinafter referred to as the "license agreement." The opening paragraphs of this agreement stated that the licensor was the owner of certain inventions, developments, and techniques relating to non-metallic filters impregnated with a resinous composition for filtering parenteral fluids and contemplated applying for a patent thereon, and that the licensee desired to obtain exclusive license under said inventions, developments and techniques. Under the agreement the licensor granted to the licensee "an exclusive license throughout the world to make, have made for it, use and sell," the blood filters invented by the taxpayer for a period of seventeen years, or for the life of the last expiring patent on the filter issued within ten years of the date of the agreement. The agreement provided that Baxter would pay to the taxpayer and Dr. Cooksey royalties in the amount of 6% of the licensee's net sales price of all filters sold by the licensee under the license "provided, however, no royalties are to be paid by licensee for filters purchased from licensor." 6 Contemporaneously with the execution of the license agreement, negotiations were had between Baxter and the co-inventors regarding the manufacture of the blood filter by the taxpayer, doing business as "Fabricated," for the purpose of supplying Baxter with the filters. A price of 8 cents per unit was agreed upon for units over and above the first ten thousand. As to these first ten thousand, a unit price of 9 cents was to prevail, the one cent difference to cover the cost of getting into production. 7 The taxpayer understood the provisions of the license agreement to mean that the co-inventors were disposing of all their rights to the invention. He further understood that the manufacturing arrangement for the production of the blood filters contemplated that the 8 cents per unit price embraced a royalty, as well as the sale price. Baxter took the position that it had purchased a substantial right to the use of the invention and subsequent patent. It was recognized by Baxter that the 8 cents per unit purchase price included a manufacturing profit to Fabricated. 8 Baxter needed 200,000 filters for experimentation by test marketing of them. The results of the test marketing impressed Baxter with the fact that the blood filter had a stable commercial market. 9 The taxpayer and Dr. Cooksey entered into an agreement of March 14, 1947, which constituted a working arrangement between them for the payment to Dr. Cooksey of certain sums of money derived from the sale of the patent and of the blood filter manufactured by the taxpayer. 10 The agreement provided that Dr. Cooksey would receive 2½ per cent of the 8 cents which Baxter paid for filters supplied by Fabricated. In the event Baxter manufactured or obtained outside manufacture of the filter, 25 per cent of the 6 per cent royalty due under the exclusive license was to be paid Dr. Cooksey. 11 On June 5, 1947, an application was filed with the United States Patent Office for Letters Patent for the blood filter, which was the subject matter of the license agreement between Baxter and the co-inventors. Letters Patent were issued covering this blood filter on October 9, 1951, being No. 2,571,059. 12 The 6% royalty payment to be paid to the co-inventors under the terms of the license agreement in the event the blood filter was manufactured by any manufacturer other than Fabricated remained dormant when it was found that, as a practical matter, the blood filter produced by Fabricated had a stable commercial market. The 6% royalty provision never became operative. 13 During the year 1954, the tax year here in issue, 2,182,000 blood filters were sold to Baxter by Fabricated, the manufacturer. During the year 1954 Baxter paid to Fabricated the sum of $174,671.50 representing both the purchase price of the blood filters and royalty payments. The basis for these payments was 8 cents per unit. Taxpayer's cost of producing these filters was $79,392.76. The difference between the amount received from Baxter and the cost of producing the filters, namely, $95,278.84, was reported in taxpayer's 1954 return as ordinary income and so taxed and paid. 14 According to the testimony of an expert produced by the taxpayer, the 1954 fair market value of the blood filter was 4.3 cents per unit. No attempt was made by the expert to testify as to the 1945 fair market value of the blood filter. 15 Upon the advice of an attorney, a claim for refund was later filed on the basis that the amount received from the sale of the exclusive license agreement of September 18, 1945, was incorrectly reported as normal income rather than as capital gains under Section 1235 of the Revenue Act of 1954. 16 The District Judge found that the transfer to Baxter, evidenced by the exclusive license, constituted the transfer of all substantial and valuable rights under the invention; that it was mutually understood and recognized by the parties that under the agreement the 8 cents paid on each filter unit supplied by Fabricated embraced two, and only two, separate and identifiable elements of consideration; the first was consideration for the manufactured value of the filter, being the amount at which Baxter in a given year could have purchased the filter from manufacturers other than Fabricated; and the second being the consideration for the exclusive rights in the invention. He held that the agreement contemplated, and the parties at all time recognized, that the differences between the manufactured value of the filter and the 8 cents per unit represented the second and distinct element of consideration for the invention. 17 He also held that the parties to the 8 cents per unit agreement did not apportion the 8 cents per unit figure between the manufacturing price of the filter unit and the royalty; that at the time the 8 cents per unit agreement was entered into in 1945, Section 1235(a) of the Revenue Act of 1954 was not in existence; that there was no direct method of computing the exact proportion of the 8 cents per unit which was properly allocable to royalty for the year 1954 in that Baxter did not resell the filters separately; and that the manufactured price of 4.3 cents per unit was a fair and reasonable approximation for the purpose of determining the royalty to be allocated in breaking down the 8 cents per unit between royalty and manufactured price. 18 He held that that portion of the 8 cents per unit so allocated to royalty was the amount paid for the assignment of the invention under Section 1235, Revenue Act of 1954, and should be taxed as capital gain instead of ordinary income. Judgment was entered for the taxpayer on that basis. 19 Section 1235, Revenue Act of 1954, dealing with taxable income, provides as follows: 20 "§ 1235. Sale or exchange of patents. 21 (a) General. — A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 6 months, regardless of whether or not payments in consideration of such transfer are — 22 "(1) payable periodically over a period generally coterminous with the transferee's use of the patent, or 23 "(2) contingent on the productivity, use, or disposition of the property transferred." 24 Section 1235 is substantially a statement of the case law on the subject at the time of its enactment in 1954, although the Commissioner of Internal Revenue had shown some reluctance to recognize the rulings. Waterman v. Mackenzie, 138 U.S. 252, 256, 11 S.Ct. 334, 34 L.Ed. 923; Kavanagh v. Evans, 188 F. 2d, 234, C.A. 6th; United States v. Carruthers, 219 F.2d 21, C.A. 9th; Commissioner v. Hopkinson, 126 F.2d 406, C.A. 2nd; Commissioner v. Celanese Corp., 140 F.2d 339, C.A.D.C. The Commissioner, of course, recognizes in the present case, now covered by Section 1235, that the transfer of all substantial rights to a patent by a holder shall be considered the sale or exchange of a capital asset held for more than six months, even though the payment therefor is not made at the time of the transfer, but is made periodically later over a period of time. His contention in this case is that the rights in the patent, which were transferred by the taxpayer and Dr. Cooksey, was not a transfer "of all substantial rights to a patent," as is required by the statute, but that in making the transfer the taxpayer and Dr. Cooksey retained the right to manufacture the filters under the patent. His contention is a sound one if it should be held under the facts of this case that the taxpayer and Dr. Cooksey retained the right to manufacture the filters under the patent. Kirby v. United States, 297 F.2d 466, C.A. 5th. 25 We think that this contention is without merit. The license agreement is unambiguous. It provides that the licensor granted to the licensee "an exclusive license throughout the world to make, have made for it, use and sell, filters embodying said inventions, developments, techniques, and any patents which may issue therefor." It grants not only an exclusive license, but it also pertains to the whole world and specifically provides that the licensee shall have the right to make the filters under the patent. Appellant's argument to the contrary, is that, regardless of the wording of the license agreement, it was understood between the parties that the taxpayer would manufacture the filters and, as an actual fact, that is what happened. Waterman v. Mackenzie, supra, 138 U.S. 252, 256, 11 S.Ct. 334, 34 L.Ed. 923; Consumers Credit etc. Corp. v. Commissioner, 319 F.2d 475, 478-479, C.A. 6th; Gilbert v. Commissioner, 248 F.2d 399, 402, C.A. 2nd. It is contended that the transaction must be considered in its entirety and that the license agreement should be given a construction consistent with the acts of the parties under it. 26 We do not so construe the agreement Baxter clearly acquired the right to manufacture the filters under the agreement. The agreement also gave Baxter the right to have the filters manufactured for it. This did not confer upon the taxpayer any right to manufacture the filters, but merely authorized Fabricated to manufacture the filters if Baxter asked it to do so. The District Judge found that it was the understanding of both of the contracting parties that in executing the license agreement, the co-inventors were disposing of all their rights to the invention. 27 Appellant also points out that the license agreement in granting to the licensee an exclusive license also provided in the same paragraph thereof "that said license is expressly limited to non-metalic filters impregnated with a resinous composition for use in parenteral therapy and of a mesh suitable for final filtration of fluids prior to parenteral use, Licensor reserving all rights to and under said inventions, developments, and techniques, material, processes, and apparatus in other fields than these specifically licensed to Licensee." Appellant contends that this was an express reservation by the licensor of rights under the patent and that, accordingly, the license agreement did not transfer "all substantial rights to a patent," as is required by Section 1235. However, the District Judge found that neither Baxter nor the co-inventors conceived that there was any feasible use for the invention other than in parenteral therapy. There is no evidence that any of these reserved rights had any ascertainable fair market value at the time the license agreement was executed. We are of the opinion that whatever rights were retained under the agreement were speculative and of very little, if any, value, and did not prevent the rights which were transferred from being "substantial rights" as provided by the statute. United States v. Carruthers, supra, 219 F.2d 21, 25, C.A. 9th; Lawrence v. United States, 242 F. 2d 542, 545, C.A. 5th. 28 Appellant's remaining contention is that in the agreement fixing the price of 8 cents per unit which Baxter would pay for filters manufactured by taxpayer, no allocation was made between the amount to be paid for the purchase of the filter as a manufactured article and the additional amount, which would bring the total price to 8 cents, which additional amount would be the amount paid for the invention. It was necessary for the taxpayer to show the amount paid for the invention in order for it to be treated as a capital gain. Appellant contends that the allocation by the District Judge of 4.3 cents for the price of the filter and 3.7 for the purchase of the invention was unauthorized and arbitrary and should be set aside. 29 In support of this, it is contended that the license agreement provided for a royalty of six per cent of the licensee's net sales price and that this showed that the parties contemplated a royalty of six per cent of the 8 cents sale price, which would amount to only .48 cents per filter. However, the six per cent royalty was to be paid on Baxter's net sale price, not on taxpayer's net sale price, and since the filter was never resold by Baxter as a separate article there was no evidence showing the net sales price at which Baxter resold the filter. In addition, the parties never operated under the 6% royalty provision. 30 Appellant also contends that the agreement between the co-inventors pertaining to the division of the royalties received from Baxter shows that the co-inventors considered the amount of the royalty, which would be treated as the amount paid for the invention, would be 10% of the taxpayer's gross sales. It is unnecessary here to detail the mathematics used to reach this result. The answer to this contention is, as found by the District Judge, that the agreement between the co-inventors was negotiated and entered into almost two years after the execution of the license agreement and independently of the agreement between the co-inventors and Baxter; that Dr. Cooksey, for reasons of professional ethics, did not wish to receive any large amount for his part in the blood filter invention; and that it was intended by the agreement only to recognize contribution by Dr. Cooksey and to pay to him an amount which he believed he could accept within the bounds of professional propriety. 31 We agree with the conclusion of the District Judge that, under the circumstances, the manufactured price of 4.3 cents per filter was a fair and reasonable approximation for the purpose of determining the royalty to be allocated in breaking down the 8 cents per unit between royalty and manufactured price. 32 The judgment of the District Court is affirmed.	{ "pile_set_name": "FreeLaw" }
784 N.W.2d 803 (2010) PEOPLE of the State of Michigan, Plaintiff-Appellee, v. Shannon FRENCH, Defendant-Appellant. Docket No. 140900. COA No. 288798. Supreme Court of Michigan. July 26, 2010. Order On order of the Court, the application for leave to appeal the February 16, 2010 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.	{ "pile_set_name": "FreeLaw" }
IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Nos. 97-41055 & 97-41152 UNITED STATES OF AMERICA, Plaintiff-Appellee, versus URI SHEINBAUM, Defendant-Appellant. ************************************************************ UNITED STATES OF AMERICA, Plaintiff-Appellee, versus MARC A. BIRNBAUM, Defendant-Appellant. Appeals from the United States District Court For the Eastern District of Texas February 27, 1998 Before GARWOOD, JOLLY, and HIGGINBOTHAM, Circuit Judges. HIGGINBOTHAM, Circuit Judge: Defendants Uri Sheinbaum and Marc Birnbaum each pled guilty to one count of conspiracy to defraud the government and to commit bankruptcy fraud. They now appeal both the sentence and the restitution order that the district court imposed upon them. We affirm. I. Birnbaum and Sheinbaum were principals in various entities that were partners in a limited partnership known as 5555 Apartments, Ltd. In 1984, the partnership obtained a $10.2 million loan from Alice Savings & Loan Association to purchase an apartment complex in Dallas, Texas, called the 5555 Apartments. The terms of the Promissory Note negotiated between the parties provided for a deferred downpayment of $1.7 million, with the first installment of $237,500 due in October 1985 and the remaining principal and accrued interest due in October 1994. Birnbaum and Sheinbaum were not personally liable under the Note. Securing the Note instead were a deed of trust, a security agreement, and an assignment of rents. The security language in the Note read as follows: THIS DEED OF TRUST, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS is made . . . FOR THE PURPOSE of securing payment of the indebtedness . . . . TO SECURE the full and timely payment of the indebtedness . . . Grantor has ASSIGNED . . . (f) all revenues, income, rents, issues and profits of any of the Land, Improvements, personal property or Leases (collectively, the “Rents”) . . . . V. Assignment of Rents: Grantor does hereby absolutely and unconditionally assign, transfer and convey to Beneficiary, as well as to Trustee on Beneficiary’s behalf, all Rents under the following provisions: 1. Grantor reserves the right, unless and until an Event of Default occurs under this Deed of Trust, to collect such rents as a trustee for the benefit of Beneficiary, and Grantor shall apply the Rents so collected in the order set forth in paragraph 7 of Section III hereof. 2. Upon an Event of Default, Beneficiary, or Trustee on Beneficiary’s behalf, may at any time and without notice, either in person, by agent or by receiver to be appointed by a court, enter and take possession of the Property or any part thereof and in its own name sue for or otherwise collect the Rents. The partnership made the first $237,500 installment on the deferred downpayment in November 1985. 2 In October 1987, the parties to the Note renegotiated its terms and executed a written Modification Agreement. The Agreement provided that all rents and income from the apartment complex were to be placed into a separate account to be used to pay off expenses and indebtedness. It stated: Grantor shall maintain a special account . . . into which all income derived from all sources in connection with the operation of the Property . . . shall be deposited by Grantor, and against which checks shall be drawn only for the payment of the sums becoming due and payable under the terms of the Note or this Deed of Trust and for the payment of the necessary and reasonable expenses incurred by Grantor in connection with the operation of the Property, with such latter payments being made directly to the persons or entities providing the goods or services for which such expenses are incurred. By 1994, the ownership of the Note had passed to Banker’s Trust Company of California. In September 1994, Birnbaum and Sheinbaum decided to default on their debt payments while retaining the income from the apartments for themselves. By withholding the apartments’ income, they hoped to force Banker’s Trust to renegotiate the terms of the Note. To aid them in this scheme, the defendants obtained the assistance of Gail Cooper, a financial consultant who had also helped the defendants to renegotiate the Note in 1987. On January 30, 1995, Banker’s Trust sued Sheinbaum and Birnbaum in Texas state court, seeking an accounting of all rents collected since default. On February 27, 1995, before an accounting could be completed, Birnbaum filed a petition in Bankruptcy Court for the Northern District of Texas, seeking relief for 5555 Apartments, Ltd. under Chapter 11. 3 As part of the bankruptcy proceedings, Birnbaum and Sheinbaum were required to disclose all payments made to “insiders” of 5555 Apartments, Ltd. in the year preceding the bankruptcy filing. On March 22, 1995, the defendants filed a Statement of Financial Affairs in the bankruptcy court. The Statement revealed that $498,995 had been paid to insiders in the year prior to the bankruptcy petition, $134,000 of which had gone to Birnbaum and Lawrence Lambert, a business partner. The Statement asserted that the other $364,995 had been paid to an entity controlled by Sheinbaum as repayment for a debt owed to him by 5555 Apartments, Ltd. The Statement claimed that this debt had arisen from Sheinbaum’s personal contribution towards the November 1985 payment of the first $237,500 installment on the Note. In fact, Sheinbaum’s debt had long since been repaid. Sheinbaum and Birnbaum later repeated this false statement in an Amended Statement of Financial Affairs, under oath at a creditors’ meeting, and in a deposition. On June 21, 1996, the government charged Sheinbaum, Birnbaum, Cooper, and Lambert in a four-count indictment. In February 1997, Sheinbaum and Birnbaum pled guilty to count one of the indictment, charging them with conspiracy to defraud the government and to commit bankruptcy fraud. The district court sentenced them on August 25, 1997. At sentencing, the government contended that Sheinbaum and Birnbaum’s scheme had caused a loss of $498,995. In support of this position, it produced an affidavit from Victoria Tutterrow, 4 who had worked on the 5555 Apartments, Ltd. bankruptcy as a representative for the United States Trustee’s Office for the United States Bankruptcy Court for the Northern District of Texas. Tutterrow testified that the defendants deceived her into believing that the payments made to them out of the apartments’ income within the year preceding bankruptcy were for legitimate pre-existing business debts. Tutterrow stated that had she known that those debts had already been repaid, she would have sought the appointment of an independent trustee, who would have sued to recover the apartment’s income appropriated by the defendants. The defendants, on the other hand, disputed the government’s loss calculations. Relying on the testimony of John Flowers, a former United States Bankruptcy judge, Birnbaum and Sheinbaum argued that they were legally entitled to take the income from the apartment complex. Furthermore, Phillip Palmer, a bankruptcy attorney, concluded in an affidavit that the false statements by the defendants could not have affected Tutterrow’s decision to appoint an independent trustee and thus did not contribute to any loss, an opinion shared by Flowers. Finally, the defendants contended that they should owe little or no restitution, partly because they caused no loss and partly because they had reached a civil settlement with the victim prior to sentencing. The district court sided with the government on all these issues and fixed the loss from the defendants’ scheme at $498,995. Under U.S.S.G. § 2F1.1(b)(1)(J), a loss of between $300,000 and $500,000 mandates a nine-level increase in the offense level for a 5 fraud. After adding these nine levels and then subtracting three levels for acceptance of responsibility, the district court arrived at a total offense level of fourteen, yielding a sentence range of fifteen to twenty-one months of incarceration. However, because the defendants provided the government with substantial assistance in prosecuting others, the district court granted the government’s motion for a downward departure, settling on a sentence of seven months for each defendant. In addition, it fined Birnbaum $20,000 and ordered both defendants to pay $498,995 in restitution to their victim, Banker’s Trust. II. The defendants’ first argument on appeal is that the district court erred in determining the amount of loss for sentencing purposes. They contend that they in fact caused no loss, as they were legally entitled to keep the income from the apartment complex for themselves and their actions in no way altered the course of the bankruptcy proceedings. The defendants advance a complicated state-law argument, the premise of which is that the Note and the Modification Agreement entitled them to control of the income from the apartments. They entice the government into engaging them on this front. Yet whether or not the Note and the Modification Agreement created a “pledge” or an “absolute assignment” of rents is irrelevant in determining the amount of loss caused by the defendants’ scheme. See generally Taylor v. Brennan, 621 S.W.2d 592, 593 (Tex. 1981) (discussing Texas law on assignment-of-rent clauses). 6 Under the Bankruptcy Code, the bankruptcy trustee could avoid any transfer from the bankrupt estate made to insiders within the year preceding the filing of the bankruptcy petition. See 11 U.S.C. § 547(b)(4)(B). At sentencing, the defendants admitted that as insiders they received $498,995 from the apartments in that one- year period. Under the Code, the only relevant defense available to Birnbaum and Sheinbaum was that these monies were received “in the ordinary course of business.” See 11 U.S.C. § 547(c)(2). The defendants’ fraud operated by deceiving Tutterrow into believing that they had received the income in the ordinary course of business. Sheinbaum and Birnbaum lied to the bankruptcy court, informing it that $364,995 of the monies transferred to them were in satisfaction of a legitimate business debt. In fact, that debt had long since been repaid. As Tutterrow testified, had she known that there was no legitimate business justification for receiving that sum, she would have sought the appointment of an independent trustee, who could have sued to recover the entire $498,995 paid to insiders. Instead, she permitted the defendants to retain trustee powers as debtors-in-possession, thereby allowing them to abscond with the money. Thus, the defendants’ fraud on the bankruptcy court directly led to a loss of $498,995. The defendants attempt to argue that Texas state law entitled them to receipt of the income from the apartments, despite the Modification Agreement. This fact is simply irrelevant, however. As the defendants freely admitted in their factual resumes accompanying their guilty pleas, they knowingly withheld the 7 apartments’ income from the noteholder in an attempt to force the noteholder to renegotiate the terms of the loan. By no stretch of the imagination, therefore, can the payments to the defendants be considered to have been made “in the ordinary course of business.” Thus, whether or not the defendants had the right under state law to receive the income initially, under the Bankruptcy Code they could be forced to disgorge those monies unless they were entitled to the ordinary-course-of-business defense. Their fraud deceived Tutterrow into believing that they were so entitled. As Tutterrow stated in her affidavit, had she had any indication that the defendants were attempting to defraud the noteholder, she immediately would have sought the appointment of an independent trustee. Moreover, the defendants further conceded that they knew that under the Modification Agreement the income from the apartment complex could not be paid to them directly before the expenses and indebtedness on the apartments were satisfied. Defendants move too quickly when they admit as much during their plea, but then argue to us on appeal that somehow they were entitled to retain the apartments’ income for themselves. The defendants attempt to escape from the consequences of their crime by arguing that their actions caused no loss, as Tutterrow had sufficient independent authority to avoid the transfers to them, regardless of their status as ordinary-course- of-business payments. They suggest that Tutterrow could always have employed the fraudulent conveyance provisions of 11 U.S.C. § 548(b) to avoid the transfers to the defendants. Thus, they 8 contend, their false statements were of no consequence, because they did not foreclose all of Tutterrow’s options. Yet Tutterrow in her affidavit never expressed a willingness to exercise her § 548(b) powers, perhaps because the defendants’ deceptions led her to believe that they would be entitled to a good faith defense under 11 U.S.C. § 548(c). Regardless, as Tutterrow stated, an indication of fraud is what would have led her to seek the appointment of an independent trustee to avoid any preferential transfers. Because the defendants masked their fraud through their false statements, their crime altered Tutterrow’s actions and directly caused the loss to the noteholder. Finally, Sheinbaum and Birnbaum contend that even if they lied when they claimed they took the apartments’ income to satisfy an unpaid loan, their falsehood caused no loss because 5555 Apartments, Ltd. also owed Sheinbaum $500,000 on a separate debt, which was never satisfied. Yet as the government points out, this $500,000 debt arose out of a judgment in favor of an investment banking firm, F.M. Roberts, which Sheinbaum and Birnbaum had employed to try to find investors to buy their ownership interests in 5555 Apartments, Ltd. Tutterrow believed that these syndication expenses were incurred for the personal financial benefit of the defendants, and thus did not arise “in the ordinary course of business.” See 11 U.S.C. § 547(c)(2). According to Tutterrow’s affidavit, had she been told that the defendants had taken income from the apartments to pay off this particular $500,000 obligation, she would have sought the appointment of an independent trustee. 9 We conclude that the district court erred neither in determining that Birnbaum and Sheinbaum caused a loss to the noteholder nor in calculating the magnitude of that loss. Accordingly, in sentencing the defendants, the court used the proper total offense level as a basis for its downward departure. III. The defendants also challenge the $498,995 of restitution ordered by the district court, repeating the arguments we reject above that they never caused any losses. In addition, the defendants contend that they should not owe any restitution to the victim, Banker’s Trust, because prior to their convictions they entered into a civil settlement with Banker’s Trust. Pursuant to the settlement, Banker’s Trust agreed to release Sheinbaum and Birnbaum from all civil liability. Because Banker’s Trust has already been recompensed, argue the defendants, they should not also be required to pay restitution pursuant to the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-64 (Supp. 1997). In support of their position, the defendants rely upon United States v. Coleman, 997 F.2d 1101 (5th Cir. 1993), cert. denied, 510 U.S. 1077 (1994). In Coleman, we held that a district court cannot order a defendant to pay restitution to a defrauded government entity when that entity had previously entered into a civil settlement and release with the defendant. The Coleman court, however, expressly declined to reach “the question of the effect of a full release in a civil suit not involving the government on a subsequent criminal prosecution.” Id. at 1107 n.4. The defendants 10 urge us to extend the Coleman rule to cover all civil settlements and releases. See also United States v. Bruchey, 810 F.2d 456, 460 (4th Cir. 1987) (implying that a voluntarily executed agreement between a defendant and his victim would render a restitution order unnecessary). But see United States v. Cloud, 872 F.2d 846, 853-54 (9th Cir.) (rejecting the Bruchey holding), cert. denied, 493 U.S. 1002 (1989). The resolution of this question turns on our characterization of the nature of restitution under the VWPA. If restitution is purely a penal device, then a civil release from liability should have no effect on a restitution order, as a court must consider public, not private, interests in fixing its sentence. If, on the other hand, restitution is inherently a compensatory measure, then civil settlements should prohibit restitution awards, as the victim would already have been compensated to its satisfaction. See Bonnie Arnett Von Roeder, Note, “The Right to a Jury Trial to Determine Restitution Under the Victim and Witness Protection Act of 1982,” 63 Tex. L. Rev.671, 677-79 (1984) (describing scholarly debate over the nature of restitution). There are strong arguments to be made that the goal of the VWPA is compensatory. See id. at 679-84 (analyzing text and legislative history of VWPA and concluding that it was intended primarily to be a compensatory, rather than punitive, statute). Indeed, the very title of the VWPA -- “The Victim and Witness Protection Act” -- might lead one to believe that the point behind the VWPA is compensation, not retribution or the like. 11 Nevertheless, the overwhelming trend in the caselaw is to read the VWPA as a penal provision. The catalyst for this trend was the Supreme Court’s decision in Kelly v. Robinson, 479 U.S. 55 (1986). In Kelly, the Court was asked to consider the nature of restitution ordered under a Connecticut statute. In concluding that the Connecticut restitution statute was penal in character, the Court commented broadly about the purpose of restitution in the criminal law: The criminal justice system is not operated primarily for the benefit of victims, but for the benefit of society as a whole. Thus, it is concerned not only with punishing the offender, but also with rehabilitating him. Although restitution does resemble a judgment “for the benefit of” the victim, the context in which it is imposed undermines that conclusion. The victim has no control over the amount of restitution awarded or over the decision to award restitution. Moreover, the decision to impose restitution generally does not turn on the victim’s injury, but on the penal goals of the State and the situation of the defendant. As the Bankruptcy Judge who decided this case noted in Pellegrino: “Unlike an obligation which arises out of a contractual, statutory or common law duty, here the obligation is rooted in the traditional responsibility of a state to protect its citizens by enforcing its criminal statutes and to rehabilitate an offender by imposing a criminal sanction intended for that purpose.” Id. at 52 (citations omitted). Technically, the Court’s comments in Kelly were aimed only at a state restitutionary system, yet in a footnote the Court hinted that they might apply to the VWPA as well. See id. at 53 n.14; see also United States v. Caddell, 830 F.2d 36, 39 (5th Cir. 1987) (concluding Kelly generally applies to both state and federal restitution orders). Nearly every circuit that has later confronted the question has taken Kelly to mean that the VWPA is penal, not compensatory, in nature. See United States v. Savoie, 12 985 F.2d 612, 619 (1st Cir. 1993); United States v. Vetter, 895 F.2d 456, 459 (8th Cir. 1990); United States v. Hairston, 888 F.2d 1349, 1355 (11th Cir. 1989); Cloud, 872 F.2d at 854. But see Bruchey, 810 F.2d at 460-61 (confusingly concluding that VWPA is fundamentally penal in nature but that nevertheless a civil settlement can absolve a defendant of the need to pay restitution). Our Circuit, without citing Kelly, has held that the effect of a civil settlement on a criminal restitution order “depends upon what payment was made in the settlement, whether the claims settled involved the same acts of the defendants as those that are predicated on their criminal convictions, and whether the payment satisfies the penal purposes the district court sought to impose.” United States v. Rico Indus., 854 F.2d 710, 715 (5th Cir.) (emphasis added), cert. denied, 489 U.S. 1078 (1989). Rico Indus. and Kelly lead us to conclude that district courts possess the discretion to impose restitution orders in spite of civil settlements. That the victim has agreed in a civil proceeding that it has been compensated fully does not prevent a district court from pursuing the rehabilitative and retributive functions of the criminal law served by restitution. Cf. Coleman, 997 F.2d at 1107 (recognizing that “‘the law will not tolerate privately negotiated end runs around the criminal justice system’ in the use of the VWPA”) (quoting Savoie, 985 F.2d at 618). Coleman does not command a different result. In Coleman, a government agency (working in close connection with the U.S. Attorney’s Office) negotiated a civil settlement with the 13 defendant. We reasoned that in releasing the defendant from future civil liability, the government was essentially estopped from seeking further compensation in criminal litigation from the defendant. No such estoppel principle exists in this case, however, as the government here sought a restitutionary order in favor of a third party, Banker’s Trust. Indeed, the Coleman court stressed that its holding was not meant to apply to situations like the one before us. See Coleman, 997 F.2d at 1107 & n.4. The defendants also argue that because the RTC was a named beneficiary of their civil settlement with Banker’s Trust, the Coleman rule should apply. Yet as Coleman stressed, it was the fact that the government negotiated the settlement with the defendants that created an estoppel issue. Here, there is no record evidence indicating that the RTC played a substantial role in settling the civil matter. IV. Of course, to avoid double-counting, a district court must reduce the size of its restitution order by any amount received by the victim as part of a civil settlement. See 18 U.S.C. § 3664(j)(2) (Supp. 1997); Rico Indus., 854 F.2d at 715 (“If [the settlement] is based on the same acts, the object of restitution -- to restore the party harmed -- would indicate that [the defendant] be credited with the amount of the settlement.”). Here, the victim and the defendants entered into a settlement, whereby Banker’s Trust agreed to release Birnbaum and Sheinbaum from civil liability. Yet the record does not reveal what Banker’s Trust 14 obtained in return for this release; the release itself simply states that it was given for “good and valuable consideration.” We doubt that Banker’s Trust struck a bargain in which it was to receive nothing of value in exchange for its release. Yet the district court ignored the potential value of the release in fashioning its restitution order. Instead, the court required the defendants to pay to Banker’s Trust the full $498,995 of loss caused by their crime. The government, however, contends that the district court’s failure to credit the defendants for the value of their civil settlement does not invalidate the restitution order, as it was the defendants’ burden to proffer evidence to the court as to the value of the consideration they gave to the victim in exchange for the release. We agree. The federal restitution statute provides: Any dispute as to the proper amount or type of restitution shall be resolved by the court by the preponderance of the evidence. The burden of demonstrating the amount of the loss sustained by a victim as a result of the offense shall be on the attorney for the Government. The burden of demonstrating the financial resources of the defendant and the financial needs of the defendant’s dependents, shall be on the defendant. The burden of demonstrating such other matters as the court deems appropriate shall be upon the party designated by the court as justice requires. 18 U.S.C. § 3664(e) (Supp. 1997). It might appear to the casual observer that § 3664(e) places the burden of proof on the government on all issues relating to loss to the victim. Yet the burden section of the statute only requires the government to establish “the amount of loss sustained by [the] victim,” United States v. Razo-Leora, 961 F.2d 1140, 1146 (5th Cir. 1992); it does 15 not speak to any compensation later received by the victim for that loss. Logically, the burden of proving an offset should lie with the defendant. The statute allocates the various burdens of proof among the parties who are best able to satisfy those burdens and who have the strongest incentive to litigate the particular issues involved. Having investigated the crime and wishing to provide as strong a deterrent as possible, the government is best suited to persuade the court as to the amount of loss caused by the offense. On the other hand, the defendant is better positioned to proffer evidence about his own financial resources and needs, and his desire to lower his restitution order gives him the incentive to litigate such mitigating circumstances. In a similar vein, the defendant should know the value of any compensation he has already provided to the victim in civil proceedings, so the burden should fall on him to argue for a reduction in his restitution order by that amount. Cf. United States v. Flanagan, 80 F.3d 143, 146 (5th Cir. 1996) (“[A]s a general rule, the party seeking the adjustment in the sentence is the party that has the burden of proving the facts to support the adjustment.”). Therefore, we conclude that “justice requires” that the burden of establishing any offset to a restitution order should fall on the defendant. See 18 U.S.C. § 3664(e) (Supp. 1997) (“The burden of demonstrating such other matters as the court deems appropriate shall be upon the party designated by the court as justice requires.”). Although we doubt that in releasing the defendants from civil liability Banker’s Trust acted in the spirit of 16 altruism, the defendants failed to present any evidence to the district court as to the value of the consideration they provided in exchange for the release. We will not simply assume that the monetary value of the consideration and the bundle of rights conferred upon the victim by the settlement equaled the monetary value of the loss sustained by the victim. If that were the case, then § 3664 would absolutely bar restitution whenever a civil settlement was reached between the defendant and the victim, rather than providing an offset for the value of the settlement. Accordingly, having failed to present valuation evidence to the district court, the defendants waived their offset claim. The district court was entitled to order both of them to pay as restitution to the victim the entire amount of loss caused by their scheme. See United States v. Chaney, 964 F.2d 437, 452-54 (5th Cir. 1992) (upholding district court’s authority to impose joint and several liability for restitution). V. We affirm both the sentence and the restitution order imposed by the district court. AFFIRMED. 17	{ "pile_set_name": "FreeLaw" }
620 S.E.2d 760 (2005) 270 Va. 414 Tavares Lamont BROWN v. COMMONWEALTH of Virginia. Record No. 050639. Supreme Court of Virginia. November 4, 2005. 761 Gregory W. Franklin, Senior Appellate Defender, for appellant. Virginia B. Theisen, Asst. Atty. Gen. (Judith Williams Jagdmann, Atty. Gen.; Deana A. Malek, Asst. Atty. Gen., on brief), for appellee. Present: HASSELL, C.J., LACY, KOONTZ, KINSER, LEMONS, and AGEE, JJ., and RUSSELL, Senior Justice. ELIZABETH B. LACY, Justice. In this appeal we determine whether, based on the totality of the circumstances, a police officer had probable cause to arrest an individual seen holding a hand-rolled cigarette. FACTS AND PROCEEDINGS Officer Edward C. Lambert, III's supervisor instructed him to patrol a particular block of Lakeview Avenue in Richmond, Virginia, because of several recent shootings and a homicide in the area. One morning while patrolling the area, Officer Lambert observed a red automobile parked in an alley in a manner that would not allow a wide emergency vehicle to pass through the alley. Officer Lambert got out of his patrol car and, as he approached the vehicle, four men standing nearby quickly walked away in different directions. When he reached the red car, Officer Lambert saw the defendant, Tavares Lamont Brown, asleep in the passenger seat holding a partially-burned, hand-rolled cigarette in one hand and a lighter in the other. Officer Lambert woke Brown up, took the items out of his hands, and asked him to step out of the vehicle. The record does not reflect Officer Lambert observed any drug related items in the vehicle or around Brown. Further, Officer Lambert testified that he later smelled the cigarette and "did not believe it to be marijuana" because "it smelled like tobacco." A subsequent search of Brown's pockets produced a folded $5.00 bill. Laboratory tests showed that the hand-rolled cigarette and the folded money contained traces of cocaine and heroin, respectively. Brown was charged with possession of cocaine and possession of heroin, violations of Code § 18.2-250. He filed a motion to suppress the evidence arguing that it "was obtained during a warrantless and unlawful search." At the suppression hearing, Officer Lambert testified that Brown was seized "when [Officer Lambert] approached the vehicle and saw the hand[-]rolled item in his hand." Officer Lambert further testified that, based on his 19 years of law enforcement experience during which he saw over 100 hand-rolled cigarettes each containing a controlled substance, he "knew" Brown's hand-rolled cigarette contained a controlled substance. On cross-examination, Officer Lambert agreed that some people roll their own tobacco cigarettes. At the conclusion of the suppression hearing, the trial court denied Brown's motion to suppress, finding Officer Lambert had probable cause to search Brown: In looking at the totality of the circumstances and looking at the car blocking an alley, four males standing near the car and then dispersing when the police officer shows up, the fact that this gentleman is sound asleep in the car at 7:30 a.m. in the morning, the fact that this officer testified that the smoking item in his experience of more than hundreds of times he's encountered the situation it has never contained just tobacco, his strong belief about the fact that it contained an illegal substance, I believe he had probable cause to arrest this individual and any search subsequent to that arrest was legal and valid. In a bench trial, the trial court found Brown guilty on both charges and sentenced him to a total of 20 years imprisonment with 16 years and 6 months suspended. The Court of Appeals of Virginia affirmed the trial court's judgment. Brown v. Commonwealth, No. 0160-04-2, 2005 WL 405832 (February 22, 2005). Brown then appealed to this Court. 762 DISCUSSION Brown argues here, as he did in the trial court and Court of Appeals, that Officer Lambert did not have probable cause to arrest him and, therefore, the evidence of cocaine and heroin should have been suppressed as the fruit of an unconstitutional search.[1] The Fourth Amendment to the United States Constitution safeguards the privacy and security of individuals against arbitrary invasions by governmental officials. Camara v. Municipal Court, 387 U.S. 523, 528, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967). Searches and seizures may be conducted in compliance with the Fourth Amendment if they are reasonable. Elkins v. United States, 364 U.S. 206, 222, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960). Searches and seizures conducted pursuant to a particularized warrant based on probable cause as adjudged by a magistrate are reasonable. See Massachusetts v. Sheppard, 468 U.S. 981, 987-91, 104 S.Ct. 3424, 82 L.Ed.2d 737 (1984); McDonald v. United States, 335 U.S. 451, 455-56, 69 S.Ct. 191, 93 L.Ed. 153 (1948). Because law enforcement will not always be in a position to secure a warrant prior to detaining or searching persons suspected of criminal activity, searches and seizures based on probable cause that the individual is engaged in criminal activity are also reasonable for purposes of the Fourth Amendment. Whren v. United States, 517 U.S. 806, 819, 116 S.Ct. 1769, 135 L.Ed.2d 89 (1996); United States v. Watson, 423 U.S. 411, 423-24, 96 S.Ct. 820, 46 L.Ed.2d 598 (1976). Whether an officer has probable cause to arrest an individual in the absence of a warrant is determined under an objective test based on a reasonable and trained police officer's view of the totality of the circumstances. See Parker v. Commonwealth, 255 Va. 96, 106, 496 S.E.2d 47, 53 (1998). On appellate review, we give deference to the historical facts determined by the trial court, but we review de novo whether the legal standard of probable cause was correctly applied to the historical facts. Jackson v. Commonwealth, 267 Va. 666, 672, 594 S.E.2d 595, 598 (2004); see Ornelas v. United States, 517 U.S. 690, 699, 116 S.Ct. 1657, 134 L.Ed.2d 911 (1996). To determine whether probable cause exists, we "will focus upon `what the totality of the circumstances meant to police officers trained in analyzing the observed conduct for purposes of crime control.'" Taylor v. Commonwealth, 222 Va. 816, 820-21, 284 S.E.2d 833, 836 (1981) (quoting Hollis v. Commonwealth, 216 Va. 874, 877, 223 S.E.2d 887, 889 (1976)). In this case, the probable cause requirement arose when Officer Lambert approached the car and saw the hand-rolled cigarette, the point at which the parties agree Brown was seized. Thus, the circumstances relevant to the probable cause determination are the position of the red car in an alley in an area Officer Lambert had been instructed to patrol, the dispersal of four men when Officer Lambert approached the red car, finding of Brown asleep in the car at 7:30 a.m. with a partially-burned, hand-rolled cigarette in his hand, and the strong belief of Officer Lambert that the hand-rolled cigarette contained a controlled substance based on his prior experience with hand-rolled cigarettes. The red car's position and the dispersal of the four men could indicate criminal activity under some circumstances; however, here, the basis for such indication could no longer be supported when Officer Lambert found Brown asleep in the car. Brown was not engaged in any activity implicating the position of the car or the other men. The Court of Appeals also referred to the area as a "high crime" area, but this characterization and the directive to patrol the area were based on a recent history of violent crimes and, again, provided no support to the proposition that the sleeping Brown was engaged in such activities. Officer Lambert's experience with controlled substances and his observation of a hand-rolled cigarette in Brown's hand undoubtedly 763 support Officer Lambert's suspicion that Brown may have been engaged in criminal activity. We have considered a number of instances in which an officer's expertise and training made his observation of an item suspected to contain contraband a significant factor in the probable cause analysis. In none of these cases, however, has that fact alone supported a finding of probable cause when the suspicious item is also capable of legitimate use. In Matthews v. Commonwealth, 218 Va. 1, 2, 235 S.E.2d 306, 306 (1977), an officer stopped Matthews for speeding and observed a "pack of cigarette wrapping papers" and a "folded brown paper bag." We held the officer did not have probable cause to look inside the bag because the connection he made between the bag and the cigarette wrapping papers "was not combined with any other circumstance which might have justified a rational belief that the bag contained contraband drugs." Id. at 3, 235 S.E.2d at 307. Similarly, in Harris v. Commonwealth, 241 Va. 146, 154, 400 S.E.2d 191, 196 (1991), we rejected the Commonwealth's argument that an officer had probable cause to open a film canister found during a valid investigatory stop and pat down because the officer recognized it as a container often used to hold drugs. We observed that although in the officer's experience people kept drugs in film canisters, law-abiding citizens used film canisters for legitimate purposes, and we concluded that no probable cause existed because the only other evidence to support a finding of probable cause in that case was a report from an informant who was not shown to be reliable. Id. We have found that the requisite probable cause for a warrantless search of a vehicle existed based on the police officer's belief that a hand-rolled cigarette held by a passenger contained marijuana combined with the passenger's actions in attempting to hide or get rid of the hand-rolled cigarette. Hollis, 216 Va. at 877, 223 S.E.2d at 889. In Lawson v. Commonwealth, 217 Va. 354, 355, 228 S.E.2d 685, 686 (1976), the officer testified that he observed a yellow bag that "looked like a `nickel bag of marijuana.'" We concluded that the totality of the circumstances supported a finding of probable cause to arrest a passenger in a vehicle because officers observed the driver and passenger repeatedly pass the yellow bag between them and the passenger locked the car door as the officers approached the car. Id. at 357-58, 228 S.E.2d at 687. These cases show that for the last 25 years, this Court has consistently declined to find that probable cause can be established solely on the observation of material which can be used for legitimate purposes, even though the experience of an officer indicates that such material is often used for illegitimate purposes. To support a finding of probable cause, such observations must be combined with some other circumstance indicating criminal activity. This requirement is consistent with that of many other jurisdictions that have considered the issue. See, e.g., United States v. Anderson, 401 F.Supp. 996, 1000 (E.D.Tenn.1975) (officer did not have probable cause to arrest upon observing a "`home-made looking' cigarette in the ashtray" of a car because he "had no way of knowing at that instant whether it contained tobacco, corn-silks, `rabbit-tobacco', [sic] marijuana or a myriad of other combustible substances"); Thomas v. Superior Court, 22 Cal.App.3d 972, 99 Cal.Rptr. 647, 652 (1972) (presence of hand-rolled cigarette insufficient to form probable cause without "evidence of other circumstances such as attempted concealment of the item, the defendant's distinctive manner of smoking it, the odor of burned marijuana, the defendant's evasiveness or abnormal physical condition, an admission by the defendant, or the arresting officer's expertise on the subject"); Caplan v. State, 531 So.2d 88, 91-92 (Fla.1988) (the mere observation of a hand-rolled cigarette without more cannot constitute probable cause); People v. Wright, 80 Ill.App.3d 927, 36 Ill.Dec. 311, 400 N.E.2d 731, 733-34 (1980) (mere observation of a hand-rolled cigarette does not without additional circumstances furnish reasonable cause to arrest the suspect or seize the item); State v. Ball, 124 N.H. 226, 471 A.2d 347, 353 (1983) ("To transform mere suspicion about the contents of the hand-rolled cigarette into a reasonable belief based on probable cause, the officer must 764 articulate additional corroborating facts."); see also 2 Wayne R. LaFave, Search and Seizure § 3.6(b), at 317-18 (4th ed. 2004). Because Officer Lambert's strong suspicion that the hand-rolled cigarette in Brown's possession contained contraband was not sufficient by itself to establish probable cause to arrest Brown, and because as explained above, the other relevant circumstances could not support a reasonable conclusion that the sleeping Brown was engaged in criminal activity, the conclusion that the totality of the circumstances established probable cause to arrest Brown was error.[2] CONCLUSION Considering the totality of the circumstances, Officer Lambert did not have probable cause to arrest and search Brown and, thus, the trial court erred in denying Brown's motion to suppress the evidence. Accordingly, we will reverse the judgment of the Court of Appeals, vacate Brown's convictions, and remand the case to the Court of Appeals with direction to remand the matter to the trial court for further proceedings, if the Commonwealth be so advised. Reversed and remanded. NOTES [1] We note that Officer Lambert searched Brown before officially arresting him. This does not affect our probable cause analysis because a search conducted before an arrest is not invalid if probable cause to arrest the person existed at the time of the search. See Italiano v. Commonwealth, 214 Va. 334, 336, 200 S.E.2d 526, 528 (1973). [2] The Commonwealth also argues that even if Officer Lambert lacked probable cause, the evidence could have been admitted under the doctrine of inevitable discovery. The Commonwealth did not raise this argument below, and we will not consider an alternative argument raised for the first time on appeal. See Eason v. Eason, 204 Va. 347, 352, 131 S.E.2d 280, 283 (1963).	{ "pile_set_name": "FreeLaw" }
720 F.Supp.2d 229 (2010) Nicholas MORGAN, Plaintiff, v. The COUNTY OF NASSAU, a municipal entity; Nassau County Commissioner of Police Lawrence W. Mulvey; Nassau County Police Officer "Michael" Quagliano; Nassau County Police Lieutenant Nicholas Pandolfo, Commanding Officer, Mounted Unit; Nassau County Police Officer Christopher P. Maker, Shield No. 1578 individually and in their official capacities; and John Does 1-10, Nassau County Police Officers, Supervisors and/or Commanders, individually and in their official capacities, Defendants. No. 09-cv-4168 (ADS)(AKT). United States District Court, E.D. New York. July 1, 2010. 231 Beldock, Levine & Hoffman LLP by Jonathan C. Moore, Esq., Vera M. Scanlon, Esq., of Counsel, New York, NY, for plaintiff. Leeds Morelli & Brown, P.C. by Matthew Brian Weinick, Esq., of Counsel, Carle Place, NY, for defendants. 232 MEMORANDUM OF DECISION AND ORDER SPATT, District Judge. The plaintiff Nicholas Morgan is a U.S. Army veteran who served in Iraq, and is a member of a group called Iraq Veterans Against the War. Morgan alleges that he attended a protest of the Iraq War at the second presidential debate at Hofstra University on October 15, 2008, and that Nassau County Police Officers assaulted and falsely arrested him for this exercise of his rights. The defendants now move to dismiss Morgan's complaint for failure to state a claim. For the reasons that follow, the Court grants this motion in part and denies it in part. I. BACKGROUND The following facts are taken from the plaintiff's complaint. As required in reviewing a motion to dismiss, the Court accepts the alleged facts as true, and draws all reasonable inferences in favor of the plaintiff. The plaintiff Nicholas Morgan was an active duty member of the United States Army from 2003 to 2006, and was deployed as a heavy construction equipment operator in Iraq from February 2004 to February 2005. Some time after returning from Iraq, Morgan joined the Iraq Veterans Against the War ("IVAW"), a group of current and former servicemen opposed to the war in Iraq. On October 15, 2008, approximately two years after Morgan was discharged from the Army, Hofstra University hosted a presidential debate between then-Senators John McCain and Barack Obama. In connection with this event, IVAW organized a protest of the Iraq War to take place during the debate. Morgan traveled to Nassau County from his residence in West Virginia, and attended the protest wearing his Army-issued desert camouflage uniform. Approximately two hundred to three hundred protesters, including many individuals who were not members of the IVAW, also attended the rally. The area of the Hofstra campus where the October 15, 2008 debate was held is bordered on the south by Hempstead Turnpike, and there is an entrance to the campus from that road. The IVAW staged the demonstration near this access point, which serves as a main entrance to the University. Security at the entrance along Hempstead Turnpike was provided by the Nassau County Police Department ("NCPD"), who deployed officers there both on foot and on horseback. These officers established a "police line" near the entranceway to the campus where the protest was staged. Prior to the demonstration, IVAW had informed the Nassau County Police that certain IVAW members would act in "civil disobedience," and seek to enter the debate hall to pose questions to the presidential candidates. Thus, around 7:00 p.m., a number of Iraq veteransnot including Morganapproached the "police line" and requested entrance to the University campus. The NCPD arrested these individuals. Morgan in no way participated in this activity, and was not arrested at that time. Directly following these arrests, the NCPD began to "forcefully and aggressively move the rest of the crowd of demonstrators away from the entrance to Hofstra University . . . onto a sidewalk area that was too crowded for the demonstrators to move into or stand safely." (Compl., ¶¶ 36, 37.) To accomplish this, the police officers who were mounted on horseback backed and "sp[un]" (Compl., ¶¶ 39-40) their horses into the crowd. In the course of moving the crowd in this way, the police officers and their horses injured several protestors. 233 When the police officers started to move the crowd using their horses, Morgan was at the front of a group of protestors, and was directly in front of the police horses. Defendant Nassau County Police Officer Michael Quagliano was one of the mounted police officers moving the crowd, and Quagliano's horse hit Morgan as he moved the crowd toward the sidewalk. Eventually, Morgan arrived at the sidewalk onto which the police was moving the crowd. There, he saw unnamed police officers "grab Geoff Millard, a demonstrator, without justification or cause, and pull him off the sidewalk." (Compl., ¶ 41.) Then, while still standing on the sidewalk, Morgan "was knocked or pushed to the ground by one or more NCPD officers." (Compl., ¶ 42.) Before Morgan could return to his feet, Officer Quagliano's police horse stepped on Morgan's head. Morgan lost consciousness and lay on the ground bleeding. Later, Morgan discovered that, as a result of being stepped on by Quagliano's horse, "his cheekbone was crushed, his lower orbital was shattered, his nose was broken, he had a large knot on the back of his head, and he was severely bruised." (Compl., ¶ 64.) While Morgan lay on the ground, no police officers provided him with medical care. Rather, the officers "attempt[ed] to prevent other demonstrators from providing medical assistance to Morgan." (Compl., ¶ 47.) Then, "at some point," Nassau County police officers dragged Morgan "across the street," handcuffed him, and placed him in a bus with other arrestees from the demonstration. (Compl., ¶ 48.) Although Morgan is somewhat unclear in alleging who arrested him, the Court construes the complaint to assert that defendant Nassau County Police Officer Christopher P. Maker effected the actual arrest. (See Compl., ¶ 77(a).) Morgan also specifically asserts that Maker falsely indicated on Morgan's "desk appearance ticket" that Morgan had walked into a traffic lane in violation of the police officers' barriers and directives. Morgan does not indicate at what point he regained consciousness, but after he had been placed on the bus with the other arrestees, he accepted an offer from a police officer to be taken to a hospital. At that point, Nassau County police officers took Morgan to Nassau County Medical Center, where he was treated for his injuries and scheduled for an appointment with the facial surgery department. Morgan was then released from the hospital and taken to a Nassau County police station for processing. At the Nassau County police station, unidentified Nassau County police officers "told Morgan and other arrestees that they were `cowards' and `traitors'." (Compl., ¶ 55.) Finally, after being issued a desk appearance ticket, Morgan was released from custody in the early morning hours of October 16, 2008. At the time of his release, the police officers directed Morgan to appear with the other protestors for arraignment on November 10, 2008. Morgan timely appeared and was charged with disorderly conduct, but the charge was ultimately dismissed. Neither Morgan nor the other arrestees from the protest were ever prosecuted for their activities at the demonstration. On September 28, 2009, after complying with the state law notice of claim requirements, Morgan commenced the present action against the following defendants: Officer Michael Quagliano, Officer Christopher P. Maker, Nassau County Police Commissioner Lawrence W. Mulvey, Nassau County Police Lieutenant Nicholas Pandolfo, Nassau County, and ten unnamed "John Doe" Nassau County police officers. The plaintiff asserts federal claims against 234 all of these defendants pursuant to 42 U.S.C. § 1983, and names the following substantive violations of his rights: (1) violation of his First Amendment rights to speech and assembly, (2) false arrest, (3) excessive force, (4) abuse of process, (5) violation of his Fourteenth Amendment right to equal protection under the law, (6) deliberate indifference to the plaintiff's medical condition, and (7) failure to intervene. The plaintiff also asserts the following state law claims against all of the defendants: (1) violation of his New York State constitutional rights, (2) false arrest and false imprisonment, (3) assault and battery, (4) intentional infliction of emotional distress, (5) negligent infliction of emotional distress, and (6) negligence. For relief, the plaintiff seeks (1) a declaration that his rights have been violated and monetary damages for those violations, (2) a declaration that "the use of horses by NCPD police officers against demonstrators as a means of crowd control when no emergency or exigent circumstances exist is unconstitutional as a matter of law", and (3) an order requiring the NCPD to provide additional training to their mounted officers. The defendants now move pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss all of the plaintiff's claims for failure to state a claim and for lack of standing. The plaintiff opposes this motion in its entirety. II. DISCUSSION A. As to the Plaintiff's Proposed Amended Complaint As a preliminary matter, the Court notes that the plaintiff has submitted a proposed amended complaint in connection with his opposition to the defendants' motion to dismiss. The plaintiff requests that the Court analyze this motion to dismiss with respect to this proposed amended complaint, instead of the original complaint. However, because the plaintiff did not file his proposed complaint within twenty-one days of the defendants' filing of their motion to dismiss, the plaintiff may no longer amend his complaint as of right. See Fed.R.Civ.P. 15(a)(1)(B). In addition, to the extent the plaintiff seeks to amend his complaint with the Court's leave, the plaintiff has not properly moved for such relief. Therefore, the plaintiff's original complaint remains the only complaint in this case properly before the Court. To the extent the plaintiff presently moves for leave of the Court to amend his complaint, the Court denies this motion without prejudice to renew in the proper form. B. Standard on a Motion to Dismiss Under the now well-established Twombly standard, a complaint should be dismissed only if it does not contain enough allegations of fact to state a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). The Second Circuit has explained that, after Twombly, the Court's inquiry under Rule 12(b)(6) is guided by two principles. Harris v. Mills, 572 F.3d 66 (2d Cir.2009) (quoting Ashcroft v. Iqbal, ____ U.S. ____, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)). "First, although `a court must accept as true all of the allegations contained in a complaint,' that `tenet' `is inapplicable to legal conclusions' and `threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.'" Id. (quoting Iqbal, 129 S.Ct. at 1949). "`Second, only a complaint that states a plausible claim for relief survives a motion to dismiss' and `[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common 235 sense.'" Id. (quoting Iqbal, 129 S.Ct. at 1950). Thus, "[w]hen there are wellpleaded factual allegations, a court should assume their veracity and ... determine whether they plausibly give rise to an entitlement of relief." Iqbal, 129 S.Ct. at 1950. C. As to all of the Claims Asserted Against Commissioner Mulvey, Lieutenant Pandolfo, and the Nassau County Police Officer John Doe Defendants Before addressing, in greater detail, the plaintiffs claims against Nassau County, Police Officer Quagliano, and Police Officer Maker, the Court will now briefly address the federal and state law claims asserted against Commissioner Mulvey, Lieutenant Pandolfo, and the Nassau County Police Officer John Doe Defendants. First, with respect to Mulvey and Pandolfo, the Court notes that, to sustain a Section 1983 claim against a person in his or her individual capacity, a plaintiff must allege facts showing the individual's personal involvement in causing the harm alleged. See Wright v. Smith, 21 F.3d 496, 501 (2d Cir.1994) ("It is well settled in this Circuit that personal involvement of defendants in alleged constitutional deprivations is a prerequisite to an award of damages under § 1983.") (internal quotations omitted); see also Gollomp v. Spitzer, No. 06-cv-802, 2007 WL 433361, 4 (N.D.N.Y. Feb. 5, 2007) (affd, 568 F.3d 355, 365 (2d Cir.2009)). Generally, the position held by a supervisor, alone, will not support the conclusion that the supervisor had personal involvement in the alleged acts. See Colon v. Coughlin, 58 F.3d 865, 873-74 (2d Cir.1995) (holding that the high position held by defendant Commissioner of New York City Correctional Facilities was insufficient to sustain conclusory claim that he negligently trained and supervised officers). Here, the plaintiff asserts that, at the time of the alleged incident, Mulvey was the Commissioner of Police for Nassau County, and Pandolfo was the commanding officer of the "Mounted Unit" for the Nassau County Police Department. While the plaintiff asserts claims against these defendants, he does not allege any specific acts done by Mulvey or Pandolfo that resulted in the harm that the plaintiff alleges. Rather, the plaintiff asserts that each is liable as a result of his respective position of authority in the Nassau County Police Department. To be sure, the plaintiff alleges that Pandolfo "knew or should have known" (Compl., ¶¶ 83, 85) about his subordinates' violations, and concludes that "[o]n information and belief, [Pandolfo was] personally involved in either ordering, or failing to take preventative measures to guard against, plaintiffs constitutional deprivations." (Compl., ¶ 86.) However, the plaintiff alleges no facts to support these conclusions, except to state Pandolfo's position of authority. The Court finds that this is insufficient to state a claim against Pandolfo in his personal capacity. Similarly, the allegation that Mulvey was the Commissioner of the Nassau County Police Department is also insufficient to state a claim against him in his personal capacity. Thus, the Court dismisses all of the Section 1983 claims asserted against Pandolfo and Mulvey in their personal capacities. To the extent the plaintiff asserts state law claims against Pandolfo and Mulvey, the Court dismisses these claims as well, based on the same lack of allegations of personal involvement. In addition, the Court also dismisses the plaintiffs claims against Pandolfo and Mulvey in their official capacities, as they are duplicative of his claims against Nassau County. See, e.g., Tsotesi v. Bd. of Educ., 258 F.Supp.2d 336, 338 n. 10 (S.D.N.Y.2003). 236 As for the unnamed John Doe Nassau County Police Officers, at this juncture the Court declines to rule on the defendants' motion to dismiss the plaintiffs claims against these individuals, except to the extent that, as described below, the Court explicitly dismisses certain claims as to all defendants. It is the Court's view that the plaintiffs current pleading may assert some valid claims against certain currently unnamed John Doe defendants. However, the Court will not presently attempt to analyze these claims in the abstract. Thus, for now, the Court denies the defendants' motion to dismiss the claims against the unnamed John Doe defendants without prejudice. D. As to the Section 1983 Claims Asserted Against Officers Quagliano and Maker The plaintiff asserts numerous claims against defendants Quagliano and Maker pursuant to 42 U.S.C. § 1983, which provides individuals the right to assert causes of action against government actors for violation of substantive federal rights. The Court now addresses those causes of action. 1. Federal Claims Against Quagliano and Maker: False Arrest The plaintiff asserts that Officers Quagliano and Maker violated his federal constitutional rights to "freedom from arrest without probable cause" and "freedom from false imprisonment" through their actions as described above. (Compl., ¶ 73(f)-(g).) Pursuant to the law of this Circuit, the Court analyzes these claims under New York State law. Posr v. Doherty, 944 F.2d 91, 96 (2d Cir.1991) (holding that a Section 1983 false arrest claim is analyzed under local state law). New York law makes no distinction between false arrest and false imprisonment, and the Court therefore views both of these claims together as a Section 1983 claim for false arrest. See id. Under New York law, a police officer generally commits a false arrest when he arrests a person without a warrant or probable cause. See Curry v. City of Syracuse, 316 F.3d 324, 335 (2d Cir. 2003). However, a police officer is entitled to qualified immunity from suit for false arrest even when no probable cause existed, as long as a reasonable officer in the same situation could have believed there was probable cause for the arrest. See, e.g., Droz v. McCadden, 580 F.3d 106, 109 (2d Cir.2009). Here, the plaintiff alleges that, on the date of his arrest, he was obeying the law and the directives of the Nassau County Police at all times. The plaintiff further alleges that, in spite of this, Nassau County Police Officers arrested him without a warrant or probable cause. The defendants do not assert that they had a warrant for Morgan's arrest, but rather urge the Court to infer from the complaint that the there was probable cause to arrest the plaintiff. According to the defendants, the fact that the plaintiff alleges that he and other protestors were forcibly moved onto a sidewalk shows that they were previously illegally in the street. Moreover, note the defendants, the plaintiff describes the acts of the protestors who approached the gate to Hofstra University as "civil disobedience." According to the defendants, use of the term "civil disobedience" is an admission that these individuals were acting illegally. In the Court's view, the plaintiff has alleged facts plausibly showing that he was arrested without probable cause, and the defendants' assertions to the contrary are insufficient to undermine this finding. While the complaint may admit of the possibility that Morgan was illegally in the 237 street prior to his arrest, this is not a necessary conclusion from the pleading. Therefore, it is not a conclusion that the Court may draw at this point. Rather, at the pleading stage, the Court takes the complaint in the best light for the plaintiff, and here that light reveals a scene in which it is plausible that there is no probable cause for the plaintiffs arrest. In addition, the Court sees little relevance in the plaintiffs description of certain protestors' actions as "civil disobedience." The plaintiff makes clear that he was not one of the individuals who committed this "civil disobedience." Thus, whether or not the "civil disobedience" that the plaintiff describes was against the lawand it is not entirely clear to the Court that the complaint describes any acts by the arrested protestors that were illegalthis has no effect on the officers' probable cause to arrest Morgan. The only remaining issue with respect to the federal false arrest claim is whether the plaintiff has asserted a valid false arrest claim against both Officers Quagliano and Maker. The Court is satisfied that the plaintiffs have asserted a claim for false arrest against Maker, as the plaintiff alleges that Maker effected the plaintiffs arrest. However, with respect to Quagliano, the plaintiff does not allege that Quagliano took any other actions to arrest him after Quagliano's horse allegedly stepped on him. It is thus not obvious to the Court that Quagliano participated in the plaintiffs arrest. However, taking the pleading in the best light for the plaintiff, the Court finds that it is plausible that Quagliano's acts were at least part of the efforts of the Nassau County Police to arrest the plaintiff. Thus, at this procedural stage, the Court finds that the plaintiffs false arrest claim against Quagliano may survive. The Court therefore denies the defendants' motion to dismiss the Section 1983 false arrest claims against Quagliano and Maker. 2. Federal Claims Against Quagliano and Maker: Excessive Force The plaintiff also asserts excessive force claims against Quagliano and Maker. As a preliminary matter, the Court finds that there is no basis for a valid excessive force claim against Maker, as the plaintiff has not even alleged what, if any, physical interaction he had with Maker at the time of his arrest. The plaintiff does not dispute this conclusion, and the Court thus dismisses the plaintiffs excessive force claim against Maker. The plaintiffs excessive force claim against Quagliano requires greater analysis. First, the parties dispute whether the Court should analyze the plaintiff's excessive force claim under the Fourth or Fourteenth Amendment of the federal constitution. Generally, the Second Circuit has held that courts should analyze an excessive force claim related to an arrest or seizure under the Fourth Amendment, and analyze all other excessive force claims under the Fourteenth Amendment. See Hemphill v. Schott, 141 F.3d 412, 418 (2d Cir.1998) (citing Graham v. Connor, 490 U.S. 386, 394, 109 S.Ct. 1865, 1871, 104 L.Ed.2d 443 (1989)) In practical terms, the determination of whether to apply the Fourth or Fourteenth Amendment will dictate how stringent a standard to apply to the analysis. A Fourth Amendment excessive force claim is analyzed under an objective, reasonableness standard, while a Fourteenth Amendment claim relies on a more stringent "shocks the conscience" test. Id. at 416-18. Here, the plaintiff asserts that Quagliano's actions were directly associated with the plaintiffs seizure and arrest, and the plaintiff thus maintains that the Court should therefore employ the Fourth 238 Amendment excessive force test. By contrast, the defendants maintain that Quagliano's actions, as alleged, only implicate the Fourteenth Amendment. The defendants therefore advocate for the application of the "shocks the conscience" test. At present, the Court need not resolve which test to apply, because the Court is satisfied that the plaintiff has alleged facts that could plausibly support an excessive force claim under the more stringent "shocks the conscience" test. In explaining this test, the United States Supreme Court has stated that "conduct intended to injure in some way unjustifiable by any government interest is the sort of official action most likely to rise to the conscienceshocking level." County of Sacramento v. Lewis, 523 U.S. 833, 849, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998). Here, the Court finds that, taking the complaint in the best light for the plaintiff, Quagliano's alleged actions could plausibly be viewed as unjustifiably intended to injure Morgan, and thus conscience-shocking. The Court therefore denies the defendants' motion to dismiss the plaintiff's claim against Quagliano for excessive force. 3. Federal Claims Against Quagliano and Maker: First Amendment The plaintiff asserts that Quagliano and Maker's actions violated his First Amendment rights to speech, assembly, and association. Although not entirely clear from the complaint, the Court understands the plaintiff to assert a First Amendment retaliation claim. Generally, to prove a First Amendment retaliation claim, a plaintiff must show that: (1) he has an interest protected by the First Amendment; (2) defendants' actions were motivated or substantially caused by his exercise of that right; and (3) defendants' actions effectively chilled the exercise of his First Amendment right. Curley v. Village of Suffern, 268 F.3d 65, 73 (2d Cir.2001) (citing Connell v. Signoracci, 153 F.3d 74, 79 (2d Cir.1998)). However, if a police officer has probable cause to arrest a person, this will serve as a complete defense to any claim of First Amendment retaliation based on that arrest. See Curley v. Village of Suffern, 268 F.3d 65, 73 (2d Cir.2001); Singer v. Fulton County Sheriff, 63 F.3d 110, 120 (2d Cir. 1995). Here, the defendants do not dispute that the plaintiff had a First Amendment interest in participating in the protest at Hofstra University on October 15, 2008. Nor do the defendants dispute that the defendants' alleged acts chilled the plaintiff's exercise of his First Amendment rights. However, the defendants assert that the plaintiff has not alleged facts sufficient to satisfy the second prong of the test, which requires that the plaintiff show that the defendants' acts were "motivated or substantially caused" by the plaintiff's exercise of his First Amendment rights. Curley, 268 F.3d at 73. In addition, the defendants assert that there was probable cause to arrest the plaintiff, thus barring any First Amendment claim. The Court has already addressed the issue of probable cause, and found that, under the facts alleged, it is plausible that there was no probable cause for the plaintiff's arrest. Thus, this issue presents no bar to the plaintiff's First Amendment claim. The Court also finds that the plaintiff has alleged sufficient facts to support an inference that the defendants' acts were plausibly motivated by the plaintiff's exercise of his First Amendment rights. First, the plaintiff alleges that the defendants 239 assaulted and arrested him directly following his allegedly peaceful and lawful exercise of his First Amendment rights. At the pleading stage, this alone is sufficient to show a plausible intention to retaliate. In addition, the plaintiff also specifically asserts that Nassau County Police Officers at the Nassau County Police Station "harassed, mocked and taunted" him and other protestors, and called them "cowards" and "traitors." (Compl., ¶ 55.) While these statements are not ascribed directly to Maker or Quagliano, the Court finds that, at this stage, these allegations provide circumstantial support for Quagliano's and Maker's retaliatory motive. The Court therefore denies the defendants' motion to dismiss the plaintiff's First Amendment claims against Quagliano and Maker. 4. Federal Claims Against Quagliano and Maker: Abuse of Process The plaintiff also asserts Section 1983 claims against Quagliano and Maker for abuse of process. The defendants do not explain the basis for their motion to dismiss the plaintiffs abuse of process claim, except to assert that it is barred by the presence of probable cause for the plaintiffs arrest. As discussed above, the Court finds that the plaintiff has alleged facts that plausibly show that there was no probable cause for his arrest. This cause of action is therefore not dismissed on these grounds. Further, the Court sees no other basis that it should raise sua sponte for dismissing this claim. The Court therefore denies the defendants' motion to dismiss the plaintiff's federal abuse of process claim against Quagliano and Maker. 5. Federal Claims Against Quagliano and Maker: Deliberate Indifference to Medical Needs The plaintiff further asserts that Quagliano and Maker are liable under Section 1983 for showing deliberate indifference to his medical needs. Generally, to prevail on a Section 1983 deliberate indifference claim, "[t]he plaintiff must show that she or he had a serious medical condition and that it was met with deliberate indifference," from his custodian. Caiozzo v. Koreman, 581 F.3d 63, 72 (2d Cir.2009) (internal quotations omitted). Here, the plaintiff asserts that Quagliano's horse gave him a head wound that was a "serious medical condition," and that Officers Quagliano and Maker were deliberately indifferent to this condition. First, with respect to Maker, the Court finds that the plaintiff has alleged no facts that show Maker's deliberate indifference to the plaintiff's medical condition. The plaintiff does not allege any facts that describe when Maker arrested him, or what Maker did or failed to do in response to the plaintiffs alleged medical condition. The plaintiff has therefore stated no deliberate indifference claim against Maker. As for Quagliano, the Court finds that, taking the complaint in the best light for the plaintiff, there is a plausible claim that Quagliano was aware of the plaintiff's medical condition, and was deliberately indifferent to a potentially serious condition. To be sure, the plaintiff alleges few facts describing Quagliano's observation of the plaintiff or his ability to provide medical care for the plaintiff. However, the plaintiff does allege that, after Quagliano's horse stepped on him, he lay unattended and unconscious on the ground, bleeding from the head. Thus, the Court finds it plausible to infer that Quagliano saw that the plaintiff's medical need was urgent, and that Quagliano deliberately ignored that need for an unreasonable period of time. The defendants do cite to several cases to challenge both (1) whether the plaintiff's 240 alleged injury was sufficiently serious to state a claim for deliberate indifference, and (2) whether care was sufficiently delayed so as to support that claim. See Shankle v. Andreone, No. 06-cv-487, 2009 WL 3111761, 6 (E.D.N.Y. Sept. 25, 2009) (finding at summary judgment that a halfinch head wound would not provide basis for deliberate indifference claim when evidence showed that an ambulance was promptly called); Basnight v. Rossi, No. 97-cv-1312, 2003 WL 722810, at 2 (E.D.N.Y. Mar. 4, 2003) (granting summary judgment against a claim of deliberate indifference where plaintiff received treatment, including six stitches, within four hours of his arrest); LaPierre v. Nassau County, No. 08-cv-1642, Docket Entry # 94 (E.D.N.Y. Jan. 12, 2010) (adopting report of Magistrate Judge, at Docket Entry # 80, granting a motion to dismiss a deliberate indifference claim after taking notice of evidence that showed that plaintiffs head wound was minor, and that the plaintiff had not lost consciousness prior to being treated). However, in each of the cases that the defendant relies on, the relevant court examined evidence of the harm suffered by the plaintiff, as well as evidence of how long the defendants waited to call for medical help. Here, at the motion to dismiss stage, the Court has access to no such information. Thus, drawing all appropriate inferences in favor of the plaintiff, the Court finds that the plaintiff has alleged harm and delay sufficient to state a claim for deliberate medical indifference against Quagliano. The Court therefore denies the defendants' motion to dismiss the plaintiffs deliberate indifference claim asserted against Quagliano. 6. Federal Claims Against Quagliano and Maker: Failure to Intervene The plaintiff also asserts against the "defendants" a Section 1983 failure to intervene claim. However, taking the complaint as a whole, the Court finds that the only reasonable construction of the plaintiffs complaint is that it asserts this claim only against the John Doe defendants. To the extent the plaintiff does assert this claim against Quagliano and Maker, the Court finds that there are insufficient facts alleged to state a claim against either of them for failure to intervene, particularly in light of the fact that Quagliano is alleged himself to have used excessive force, and the plaintiff alleges no facts suggesting that Maker observed Quagliano use this force. 7. Federal Claims Against Quagliano and Maker: Equal Protection Finally, the plaintiff asserts against Quagliano and Maker a Fourteenth Amendment equal protection claim. Generally, the equal protection clause of the Fourteenth Amendment guarantees individuals the right not to be treated differently under the law than others who are similarly situated. See, e.g., Vill. of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000). Here, the plaintiff has asserted no facts that support an equal protection claim, nor has he offered any argument in favor of this claim in his briefing. The Court therefore dismisses the plaintiffs equal protection claim against Quagliano and Maker. E. As to the Section 1983 Claims Asserted Against Nassau County The plaintiff also advances against Nassau County all of the Section 1983 claims that the plaintiff asserts against Quagliano and Maker. To prevail on a claim against a municipality pursuant to Section 1983, a plaintiff must satisfy the 241 well-settled requirements of Monell v. New York City Dept. of Social Servs., 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Under Monell and its progeny, a Section 1983 plaintiff must show that a violation of his rights by an employee or agent of a municipality was the result of a "policy or custom" of the municipality. Id. at 694, 98 S.Ct. 2018. Conclusory allegations of municipal custom or policy are insufficient to satisfy this requirement. See Ying Jing Gan v. City of New York, 996 F.2d 522, 536 (2d Cir.1993) ("The mere assertion ... that a municipality has such a custom or policy is insufficient in the absence of allegations of fact tending to support, at least circumstantially, such an inference.") (quoting Dwares v. City of New York, 985 F.2d 94, 100 (2d Cir.1993)); Cerbelli v. City of New York, 600 F.Supp.2d 405, 411 (E.D.N.Y.2009) (holding same). Here, the plaintiff asserts several theories in support of his assertion of Monell liability against Nassau County in this case. First, the plaintiff alleges that the defendant Nassau County Police Officers' activities on October 15, 2008 were directed by a policy maker for Nassau County, and thus can be attributed to the County itself. Second, the plaintiff alleges that the defendant police officers' acts demonstrate an accepted custom or practice of violating protestors' civil rights that amounts to a de facto Nassau County policy. Third, the plaintiff alleges that the defendant police officers' acts evince Nassau County's failure to train officers to deal properly and legally with protestors. In opposition, the defendants contend that the plaintiff has asserted insufficient facts to support any of these three theories. With respect to the plaintiffs claims for First Amendment violations, excessive force, false arrest, and abuse of process, the Court addresses only the last of these theories, finding that, at this juncture, it is sufficient to sustain these claims against Nassau County. Generally, a municipality's failure to train employees to properly protect individuals' constitutional rights is a basis for municipal liability under Monell. Jenkins v. City of New York, 478 F.3d 76, 94 (2d Cir.2007). Here, the plaintiff alleges that the defendant police officers on horsebacka potentially harmful weapon in a crowdacted aggressively and dangerously to move a crowd of largely law-abiding protestors onto a sidewalk. The plaintiff also alleges that this act resulted in physical harm to several protestors, and a loss of some of those protestors' ability to exercise their First Amendment rights. Further, the plaintiff alleges that at least one other protestor was arrested despite his compliance with police directives. In the Court's view, these alleged facts are sufficient at this early stage to show that Nassau County failed to train the defendant officers, especially those on horseback near a large crowd, to properly manage a protesting crowd. The Court finds that this plausibly resulted in false arrest, abuse of process, use of excessive force, and violations of First Amendment rights. The Court therefore denies the defendants' motion to dismiss these claims against Nassau County. However, the Court finds that none of the plaintiffs' three theories of municipal liability support claims against Nassau County for deliberate indifference, failure to intervene, or violation of the Fourteenth Amendment equal protection clause. With respect to the plaintiff's deliberate indifference and failure to intervene claims, the plaintiff alleges no facts that show that these violationsto the extent they are in fact alleged against individual defendantswere the result of directives of policy makers. Nor has the 242 plaintiff alleged facts showing that other individuals were subjected to these alleged violations. See City of Oklahoma City v. Tuttle, 471 U.S. 808, 823-24, 105 S.Ct. 2427, 85 L.Ed.2d 791 (1985) ("Proof of a single incident of unconstitutional activity is not [alone] sufficient to impose liability under Monell ...."). As for the plaintiff's equal protection claim, the Court has found that the plaintiff has alleged no facts to support this claim against the individual defendants, and therefore no derivative equal protection claim may lie against Nassau County. The Court therefore grants the defendants' motion to dismiss the plaintiff's deliberate indifference, failure to intervene, and equal protection claims against Nassau County. F. As to the State Law Claims Against the Defendants The plaintiff asserts numerous state law claims against the defendants. These claims are, namely: (1) violation of his New York State constitutional rights, (2) false arrest and false imprisonment, (3) assault and battery, (4) intentional infliction of emotional distress, (5) negligent infliction of emotional distress, and (6) negligence. The plaintiff asserts these causes of action against Quagliano and Maker as direct actors, and against Nassau County under the doctrine of respondeat superior. See, e.g., Murcia v. County of Orange, 226 F.Supp.2d 489, 501 (S.D.N.Y.2002) (noting that "there is respondeat superior liability for municipalities under State law"). The defendants advance substantive grounds for dismissing only two of these claims: (1) intentional infliction of emotional distress and (2) negligent infliction of emotional distress. With respect to intentional infliction of emotional distress, the defendants assert that this claim must be dismissed because the defendants' alleged conduct is not sufficiently "extreme and outrageous." See Howell v. New York Post Co., Inc., 81 N.Y.2d 115, 121, 612 N.E.2d 699, 596 N.Y.S.2d 350 (N.Y.1993) (holding that the elements of intentional infliction of emotional distress are: "(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and injury; and (iv) severe emotional distress.") With respect to the plaintiff's claims against Quagliano, the Court finds that the plaintiff has alleged sufficient facts to show extreme and outrageous conduct. In the Court's view, Quagliano's alleged aggressive use of his horse to subdue an allegedly lawful protestor is, taken in the best light for the plaintiff, sufficiently exceptional to satisfy the relevant standard. The Court therefore denies the defendants' motion to dismiss the plaintiff's intentional infliction of emotional distress claim as to Quagliano and his employer, Nassau County. However, the Court does grant the plaintiff's motion to dismiss this claim as to Maker, as there are no facts alleged that would support any extreme and outrageous conduct by Maker. As for the plaintiff's claim for negligent infliction of emotional distress, the defendants contend that they owed no direct duty to the plaintiff, and therefore cannot be liable for this tort. See Mortise v. United States, 102 F.3d 693, 696 (2d Cir. 1996) (holding that "a plaintiff has a cause of action for negligent infliction of emotional distress if she suffers an emotional injury from defendant's breach of a duty which unreasonably endangered her own physical safety. The duty in such cases must be specific to the plaintiff, and not some amorphous, free-floating duty to society.") (internal citations omitted). The plaintiff does not dispute that he has failed to allege the required special duty that forms the basis for this tort, and the Court 243 agrees that the plaintiff has plead no facts supporting such a duty. The Court therefore dismisses the plaintiffs claim for negligent infliction of emotional distress as to all the defendants. The defendants provide only procedural reasons to dismiss the remaining state law claims. With respect to the plaintiffs claims for (1) false arrest and false imprisonment, (2) assault and battery, and (3) negligence, the defendant only urges the Court not to exercise supplementary jurisdiction over these claims. As the Court has found that the plaintiff has stated a claim for several directly related federal causes of action, the Court elects to exercise its supplemental jurisdiction over these state law claims, and denies the plaintiffs motion to dismiss these causes of action. Finally, the defendants assert that the plaintiffs causes of action for violation of the New York State Constitution should be dismissed as duplicative of his causes of action pursuant to the Federal Constitution. While it is true that New York State Constitutional law is often directly influenced by analogous Federal Constitutional law, the bodies of law are not identical. See, e.g., People ex rel. Arcara v. Cloud Books, Inc., 68 N.Y.2d 553, 557-58, 510 N.Y.S.2d 844, 503 N.E.2d 492 (N.Y.1986) (holding that New York State Constitutional guarantees of free speech are influenced by, but generally larger than, the First Amendment free speech guarantee). Thus, the Court declines to dismiss the plaintiffs state constitutional law claims as duplicative. However, the Court does dismiss the plaintiffs state constitutional law claim for equal protection, as it is, like the plaintiffs analogous federal claim, unsupported by any alleged facts. See Coakley v. Jaffe, 49 F.Supp.2d 615, 628 (S.D.N.Y. 1999) ("the New York State Constitution's guarantees of equal protection and due process are virtually coextensive with those of the U.S. Constitution"). G. As to the Plaintiff's Request for Equitable Relief The plaintiff seeks both monetary and equitable compensation for his alleged harms. The defendants do not challenge the plaintiffs standing to request monetary relief in this case, but they do challenge the plaintiffs standing to seek the equitable relief he requests. The plaintiff seeks equitable relief that, generally, would change the way that Nassau County uses mounted officers for crowd control. Specifically, the plaintiff seeks: a declaratory judgment that the use of horses by NCPD police officers against demonstrators as a means of crowd control when no emergency or exigent circumstances exist is unconstitutional as a matter of law; [and] an order requiring the NCPD to institute training of its Mounted Unit as to the proper constitutional standard for the use of the NCPD Mounted Unit horses as a means of crowd control and to implement such standards in the operations of the NCPD Mounted Unit. (Compl., ¶ 122(b)-(c).) To have standing to obtain injunctive and related declaratory relief from the government, a plaintiff "must show a likelihood that he will be injured in the future" by the conduct he seeks to enjoin. Shain v. Ellison, 356 F.3d 211, 215 (2d Cir.N.Y. 2004) (quoting Deshawn E. by Charlotte E. v. Safir, 156 F.3d 340, 344 (2d Cir.1998)) (internal quotations and alterations omitted); see also O'Shea v. Littleton, 414 U.S. 488, 495-96, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974) (holding that "past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive 244 relief ... if unaccompanied by any continuing, present adverse effects"). Further, "the injury or threat of injury must be both real and immediate, not conjectural or hypothetical." Shain, 356 F.3d at 215 (quoting O'Shea, 414 U.S. at 494, 94 S.Ct. 669 (internal quotations omitted)). Here, the plaintiff is a West Virginia resident who does not assert that he regularly spends any time in Nassau County, and who is thus unlikely to be affected in the future by Nassau County's use of mounted police officers. Nevertheless, the plaintiff asserts in his briefingalthough not in the complaintthat "if there are future Iraq Veterans Against the War events in Nassau County, he may travel to participate in them." (Pl.'s Opp. to Mot. to Dismiss at 24.) The plaintiff further asserts that he is fearful of attending any such events because of Nassau County's alleged improper use of mounted officers to control crowds. Based on these assertions, the plaintiff maintains that he faces real and immediate harm from Nassau County's policies regarding the use of mounted officers. The plaintiff therefore contends that he has standing to seek the injunctive relief he requests. The Court finds that the plaintiffs alleged future harm is insufficiently imminent to grant him standing to seek injunctive relief. Even had the plaintiff included the described allegations in his complaint, his claim that "if there are future Iraq Veterans Against the War events in Nassau County, [the plaintiff] may travel to participate in them" (id. (emphasis added)) is precisely the kind of hypothetical harm that is insufficient to confer standing on a plaintiff. Therefore, the Court grants the defendants' motion to dismiss the plaintiff's request for the injunctive and declaratory relief related to the Nassau County Police Department's use of mounted police officers, as set forth above. III. CONCLUSION For the foregoing reasons, it is hereby ORDERED that the defendants' motion to dismiss all claims against Nassau County Commissioner of Police Lawrence W. Mulvey is granted; and it is further ORDERED that the defendants' motion to dismiss all claims against Nassau County Police Lieutenant Nicholas Pandolfo is granted; and it is further ORDERED that the defendants' motion to dismiss all claims against the unnamed John Doe defendants is denied without prejudice; and it is further ORDERED that the defendants' motion to dismiss Section 1983 claims against Officer Michael Quagliano for (1) false arrest, (2) excessive force, (3) First Amendment violations, (4) abuse of process, and (5) deliberate indifference to medical needs is denied; and it is further ORDERED that the defendants' motion to dismiss Section 1983 claims against Officer Michael Quagliano for (1) violation of the equal protection clause of the Fourteenth Amendment, and (2) and failure to intervene is granted; and it is further ORDERED that the defendants' motion to dismiss Section 1983 claims against Officer Christopher P. Maker for (1) false arrest, (2) First Amendment violations, and (3) abuse of process is denied; and it is further ORDERED that the defendants' motion to dismiss Section 1983 claims against Officer Christopher P. Maker for (1) excessive force, (2) deliberate indifference to medical needs, (3) violation of the equal protection clause of the Fourteenth Amendment, (4) and failure to intervene is granted; ORDERED that the defendants' motion to dismiss Section 1983 claims against Nassau County for (1) false arrest, (2) excessive force, (3) First Amendment violations, and (4) abuse of process is denied; and it is further 245 ORDERED that the defendants' motion to dismiss Section 1983 claims against Nassau County for (1) violation of the equal protection clause of the Fourteenth Amendment, (2) failure to intervene, and (3) deliberate indifference to medical needs is granted; and it is further ORDERED that the defendants' motion to dismiss the state common law claim for intentional infliction of emotional distress as to Quagliano and Nassau County is denied; and it is further ORDERED that the defendants' motion to dismiss the state common law claim for intentional infliction of emotional distress as to Maker is granted; and it is further ORDERED that the defendants' motion to dismiss the state common law claim for negligent infliction of emotional distress as to all defendants is granted; and it is further ORDERED that the defendants' motion to dismiss the state common law claims for (1) false arrest and false imprisonment, (2) assault and battery, and (3) negligence as to all defendants is denied; and it is further ORDERED that the defendants' motion to dismiss the claim for violation of the New York State Constitution as to all defendants is denied; and it is further ORDERED that the defendants' motion to dismiss the request for injunctive and declaratory relief related to the constitutionality and future use of mounted police units, as described above, is granted; and it is further ORDERED that the Clerk of the Court is directed to amend the caption of this case to read: SO ORDERED.	{ "pile_set_name": "FreeLaw" }
260 F.3d 654 (6th Cir. 2001) In re: Marilyn E. Morris, Debtor.John Poss, Appellant,v.Marilyn E. Morris, Appellee. No. 99-4454 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Submitted: December 1, 2000Decided and Filed: August 13, 2001 [Copyrighted Material Omitted][Copyrighted Material Omitted] Alexander Jurczenko, Cleveland, Ohio, for Appellant. Carl D. Rafoth, James B. Dietz, FRIEDMAN & RUMMELL COMPANY, L.P.A., Youngstown, Ohio, for Appellee. Before: WELLFORD, SILER, and BATCHELDER, Circuit Judges. OPINION ALICE M. BATCHELDER, Circuit Judge. 1 Marilyn E. Morris, a debtor in Chapter 13 bankruptcy proceedings, initiated an adversary proceeding against John Poss, a creditor, in the United States Bankruptcy Court for the Northern District of Ohio at Youngstown. She sought a determination of the ownership interests of the estate and Poss in certain real property. Morris moved for summary judgment, but Poss failed to respond after seeking an extension of the time to reply. The bankruptcy court granted the motion, and Poss appealed to the United States District Court for the Northern District of Ohio. In the district court, the parties consented to the exercise of jurisdiction by a magistrate, who affirmed the decision of the bankruptcy court. This appeal followed. We now reverse. I. Statement of Facts 2 A. The Underlying Transactions and Initial State Court Judgment 3 This appeal arrives before us with a tangled history of multiple, concurrent legal proceedings arising from two transactions over fifteen years ago involving a certain plot of land. In 1982, Morris wished to relocate her precision tool manufacturing business, the Fine Cut Diamond Tool Company, from Newbury, Ohio, to Rock Creek, Ohio, but was unable to secure conventional financing. Poss, a longtime friend, agreed to loan Morris $17,500 to purchase a 17.5-acre parcel on Rome-Rock Creek Road (the "property") for the business, and Morris took title to the property. Poss did not execute a mortgage on the property, and the only evidence of the loan was a cognovit note that provided for repayment over fifteen years. Although Morris made some payments to Poss, none of those payments were in accordance with the terms of the note. 4 Soon, Morris convinced Poss to finance the construction of a building to house her business. Without taking a mortgage, promissory note, or any security interest for the loan, he advanced an additional $149,750. Instead, with an eye toward maximizing his tax position, Poss leased from Morris, for fifteen years at a nominal rent, the two-and-one-half acres on which the business was to be located. He then constructed the building to Morris's specifications and leased the structure to Morris for fifteen years with a monthly payment intended to amortize the $149,750 with interest over the life of the lease. The structure of this second transaction resulted in an anomalous situation in which Poss owned the building housing Morris's business, Morris owned the land on which the building was situated, and each leased his or her respective interest to the other. Significantly, the agreement did not account for either party's default in making lease payments. Neither Morris nor Poss made lease payments pursuant to this agreement. 5 By the time Poss and Morris formally executed these leases, Morris had secured a $40,000 loan from Huntington National Bank, without the knowledge of Poss, by pledging the business premises as security and giving the bank a first mortgage on the property. Although Morris had fallen behind on payments under the cognovit note and had not made any payments on the lease, Poss did not pursue a default judgment and offered to postpone commencement of payments for one year. Upon learning of the Huntington Bank mortgage, however, Poss filed suit on the cognovit note in the Ashtabula County Court of Common Pleas and secured a judgment in 1986 of $17,114.18 plus statutory interest and costs. When Morris failed to satisfy the judgment, Poss brought a foreclosure action. 6 In 1989, Poss brought a second action in common pleas court seeking to recover the lease payments for the building due under the terms of the second transaction. The common pleas court consolidated this suit with the foreclosure action. After a trial on these consolidated claims in 1992 before Judge Gary Yost, the court found that the remaining balance on the cognovit note was $2,300.17 and that Poss had a valid lien in this amount plus interest. In addition, after offsetting Poss's failure to make lease payments to Morris as agreed, the court entered judgment of $149,750 plus interest for Poss. Therefore, Poss secured judgment in a total amount of $152,050.17 plus interest. 7 B. The Settlement Agreement and Further Proceedings 8 When Poss experienced difficulties enforcing his judgment against Morris, the parties entered into negotiations. At a point when they broke down, Poss filed a forcible entry and detainer action against Morris claiming that her continued possession of the building and the property was unlawful. Shortly after the filing of that suit, in July 1993 the parties executed a settlement agreement. The agreement concluded the forcible entry and detainer action by requiring Morris to vacate the building by January 1, 1994. It further obligated her to convey a specific 7.735-acre parcel to Poss within sixty days. Morris consented to entry of judgment against her in the pending forcible entry and detainer action on the condition that "no order of eviction shall be issued unless [she] fail[s] to comply" with the terms of the settlement agreement. In return, the settlement relieved Morris from liability under the mortgage and judgment lien. In September 1993, Judge Yost entered judgment adopting the agreement and incorporating it as the order of the court to conclude Poss's foreclosure action. Judge Yost's judgment further indicated that Huntington Bank had assigned its mortgage to Poss. The judge in the forcible entry and detainer action similarly adopted the settlement agreement as the judgment of the court. 9 On the same day Judge Yost adopted the settlement as the judgment of the court, Morris moved for relief from the judgment. Poss countered by seeking enforcement of the settlement. In April 1994, Judge Yost denied Morris's motion and disposed of Poss's motion for enforcement by stating that "[Morris] shall comply with her settlement agreement, forthwith. Upon [her] failure to comply with the settlement agreement, [Poss] may undertake any remedy available to him, at law or in equity." Morris appealed, and the Ohio Court of Appeals affirmed on June 30, 1995. Within ten days of this decision from the state court of appeals, Poss obtained an ex parte order from the common pleas court enjoining the county recorder to convey the 7.735-acre parcel to himself. When Morris learned of the ex parte order, she immediately appealed. Poss returned to court claiming that Morris and her business had failed to comply with the terms of the settlement by not paying rent during the five-month holdover period and moved the court for a writ of restitution. Following an evidentiary hearing, the court agreed that Morris had failed to pay rent and issued the writ, ordering the sheriff to seize the building. Morris appealed both the finding that she failed to comply with the settlement and the issuance of the writ. 10 C. Morris's Petition for Bankruptcy under Chapter 13 11 On September 8, 1995, Morris filed a voluntary petition for bankruptcy under Chapter 13. Her petition listed the 17.5-acre property as having a market value of $100,000, subject to a $1,000 judgment lien obtained by the power company and a $4,000 tax lien in addition to Poss's disputed interest, to which the petition assigned a value of $90,000. Her petition also identified Poss as a secured creditor owed $150,000. The summary of her Chapter 13 plan indicated that Morris resided in a small apartment above the manufacturing facility on the 17.5-acre parcel. Morris moved the bankruptcy court for modification of the automatic stay to pursue her appeals in state court. When no party appeared in opposition, the bankruptcy court granted the motion. 12 Following the filing of Morris's petition, the bankruptcy court set January 23, 1996, as the bar date for filing a proof of claim against the estate. Poss had actual knowledge of Morris's Chapter 13 petition as well as the bar date. Despite the court's explicit suggestion to Poss's counsel that he file a proof of claim, he failed to do so even after the court granted him leave to request an extension of the bar date. Once the bar date passed and Poss had not filed a proof of claim, Morris filed an amended Chapter 13 plan, which updated the value of the property by increasing it to $100,800. Most importantly, the amended plan made filing a timely proof of claim and holding an allowed claim prerequisites to receiving a distribution. Understandably, Poss objected to the plan, but because he had not filed a proof of claim the bankruptcy court overruled his objections. Moreover, the court concluded that Poss's objections to the plan did not constitute an informal proof of claim; therefore, the court ruled that his objections were moot and further delay would prejudice the other creditors of the estate. Poss appealed this decision to the Bankruptcy Appellate Panel of the Sixth Circuit, which later dismissed the appeal as premature since the bankruptcy court had not yet entered a final, appealable order. D. Commencement of the Adversary Proceeding 13 On February 16, 1996, before the bankruptcy court overruled Poss's objections to Morris's amended Chapter 13 plan as moot, Morris filed a "Complaint to Avoid Preference and Avoid Lien Impairing Exemption" with the bankruptcy court. Count One of the complaint sought to set aside the ex parte order Poss had obtained in state court on the ground that its enforcement would enable Poss to obtain more from the estate than he otherwise would under the amended Chapter 13 plan. In Count Two, Morris claimed that she was entitled to a $5,000 homestead exemption under state and federal law and that Poss's lien impaired this exemption to the extent that it exceeded the value of the property. The complaint prayed for reconveyance of the property to the estate in bankruptcy and a determination that Poss's secured status be set at $89,800. Morris arrived at this figure by starting with the appraised value of the property, $100,800, and subtracting the tax lien, now set at $5,000, the $1,000 power company lien, and her $5,000 homestead exemption, yielding a sum of $89,800. 1. State Court Proceedings 14 On March 29, 1996, one day after the bankruptcy court ruled that Poss's objections to the Chapter 13 plan were moot, the Ohio Court of Appeals issued two decisions in response to Morris's appeals of the ex parte order and the judgment in the forcible entry and detainer action. With respect to the former, the court of appeals concluded that the common pleas court erred by issuing the order in an ex parte manner and concluded that Poss had never requested conveyance of the specific parcel as the court ordered. The court of appeals remanded for further proceedings. As to the latter, finding that the settlement agreement granted Poss the right to immediate possession of the property if Morris failed to satisfy her obligations under the agreement, the appellate court held that the common pleas court had the authority to evict Morris and her business. Because of the nature of the actions for forcible entry and detainer under Ohio law, however, the court noted that this decision said nothing about the parties' title to the property and only addressed the right to present possession. 15 2. Default Judgment in the Adversary Proceeding 16 When Poss failed to file an answer to the complaint initiating this adversary proceeding, the bankruptcy court entered default judgment against him on April 23, 1996. The next day, without leave of the court, Poss answered,1 Morris promptly moved to strike, and at a scheduling conference the court granted Poss leave to amend by June 21, 1996. On June 21, Poss filed an amended answer. Unfortunately, he did so with the bankruptcy court in Cleveland rather than Youngstown. Nonetheless, Morris did not object, and the court accepted the pleading. 17 In addition to asserting four affirmative defenses to Morris's complaint, the answer asserted three counterclaims. First, Poss sought payment of $8,367 plus 10% interest from April 30, 1990, as the assignee of the Huntington Bank mortgage. Second, Poss asserted that Morris was liable for (1) the judgment of $2,300.07 plus interest from August 19, 1991, following the foreclosure judgment against Morris, and (2) the judgment of $149,750 plus interest from June 1, 1994, as provided in the lease agreement between the parties. Third, Poss sought specific performance of the settlement agreement embodied in the state court judgments. Additionally, the answer raised two third-party complaints. First, Poss claimed that Morris transferred ownership of 750 shares of her business to her son without consideration or reasonably equivalent value with the result that Morris became insolvent. Second, because of this transfer, Poss sought the imposition of a constructive trust on the 750 shares of stock. Therefore, in addition to dismissal of Morris's complaint, Poss sought (1) a determination that he had the first and best lien on the property in a total amount of $160,417.07; (2) specific performance of the settlement agreement and conveyance of the property pursuant to the state court's ex parte order; (3)avoidance of the transfer of the 750 shares of stock to Morris's son; and (4) the imposition of a constructive trust on the shares. 3. Final Decision of the State Courts 18 After finally answering the complaint in the adversary proceeding, Poss moved the bankruptcy court for modification of the automatic stay to proceed with the remand from the Ohio Court of Appeals to Judge Yost to determine his ownership interest in the property. Recognizing the state's interest in adjudicating the ownership interests in the property and the importance of settling this issue before concluding the bankruptcy proceedings, the court granted the motion. 19 On April 16, 1997, Judge Yost issued a decision settling the ownership rights of Poss and Morris in the disputed parcel. Reviewing the nature of the agreements between the parties, although "[Morris] ha[d] never complied with the settlement agreement" Judge Yost found: 20 [F]rom the initial judgment up to the date of the settlement agreement, [Poss's] rights with respect to the subject real property were the same as those of any creditor holding judgment liens which might be satisfied through execution against the property. Following the settlement agreement, [Poss] had an enforceable contract for conveyance of the property to him by [Morris]. Unfortunately [Poss] has never completed either an execution on his judgment liens against the property, or a conveyance of the property in accordance with the settlement agreement prior to [Morris's] filing of the bankruptcy proceedings. 21 Following the appellate court's reversal of the ex parte order, Judge Yost noted that Poss filed no further motions in state court seeking conveyance of the property. Judge Yost concluded that "legal title to the subject real estate has remained in [Morris], and that she had legal ownership of the property at the time of the filing of her petition" for bankruptcy. Finally, Judge Yost stated that Morris's failure to abide by the terms of the settlement entitled Poss "to pursue appropriate enforcement proceedings in this Court, including an application for an order transferring legal title from [Morris] to [himself]. However, until such an order is validly rendered, legal title and ownership of the real estate remains in [Morris]."E. The Bankruptcy Court's Disposition of the Adversary Proceeding 22 In September of 1998, Morris moved for summary judgment. After seeking an extension of the time to reply, Poss failed to do so. Therefore, the bankruptcy court decided Morris's motion on the basis of the record before it. In a memorandum opinion, the bankruptcy court granted judgment in favor of Morris in all respects. Specifically, the court concluded that the action of the Ohio Court of Appeals resolved Morris's request for relief from the conveyance of the property pursuant to theex parte order. Because of the state appellate court decision and the subsequent determination by Judge Yost that Morris retained legal title to the property, the court agreed that the conveyance was a nullity. Moreover, the court determined that, even if Poss attempted to enforce this conveyance, Poss secured the ex parte order within ninety days prior to the filing of Morris's Chapter 13 petition to satisfy an antecedent debt. Therefore, federal bankruptcy law created a presumption, not rebutted by Poss, that Morris was insolvent on the date of the conveyance. As a result, bankruptcy law would void the transfer in any event. With respect to Poss's secured status, the court valued the real estate at $100,800, granted Morris the homestead exemption, and determined that the tax and power company liens had priority over Poss's judgment lien. After allowance for these prior claims, the court fixed Poss's secured interest in the estate at $80,490.75 and determined the remainder of his claims to be unsecured to the extent allowable by law. In conclusion, the court granted Morris judgment on both counts in her complaint and on Poss's counterclaims. Finally, finding that Poss never timely served the third-party defendants, the court dismissed the third-party complaint. F. The District Court's Opinion 23 On appeal to the Northern District of Ohio, the parties consented to the exercise of jurisdiction by a magistrate. On October 26, 1999, the magistrate affirmed the decision of the bankruptcy court in a memorandum opinion and order. On appeal, Morris sought to bar Poss from raising substantive issues since he failed to oppose her motion for summary judgment in the bankruptcy court. Reviewing the case law of this circuit, the magistrate concluded that Poss could raise issues for the first time on appeal to the extent that they turned on issues of law and required no factual development. Proceeding to a consideration of the substantive issues raised on appeal, the magistrate determined that the bankruptcy court applied the proper summary judgment standard and having reviewed the history of proceedings between the parties correctly followed the decisions of the Ohio courts. In response to Poss's contention that the bankruptcy court erroneously established the value of the property, the magistrate barred the issue as requiring factual development not appropriately addressed for the first time on appeal. 24 II. Issues Raised for the First Time on Appeal 25 When we review appeals from the decisions of a district court in a case originating in bankruptcy court, our standard of review is somewhat different than normal. We directly review the decision of the bankruptcy court rather than the district court's review of the bankruptcy court's decision. In re M.J. Waterman & Assocs., Inc., 227 F.3d 604, 607 (6th Cir. 2000) (citation omitted). See also In re Brown, 248 F.3d 484, 486-87 (6th Cir. 2001). "In appeals from the decision of a district court on appeal from the bankruptcy court, the court of appeals independently reviews the bankruptcy court's decision, applying the clearly erroneous standard to findings of fact and de novo review to conclusions of law." In re Madaj, 149 F.3d 467, 468 (6th Cir. 1998) (internal quotations, citations, and alterations omitted). When reviewing mixed questions of law and fact, we break the question down into its constituent elements and apply the appropriate standard of review to each.Investors Credit Corp. v. Batie (In Re Batie), 995 F.2d 85, 88 (6th Cir. 1993). Therefore, because a grant of summary judgment presents a pure question of law, the district court reviews the bankruptcy court's grant of summary judgment de novo, as do we in turn. Id. at 88-89. 26 Before we proceed to review the bankruptcy court's grant of summary judgment, however, we must confront the threshold issue of the effect of Poss's failure to respond to the motion for summary judgment. As a general rule, appellate courts do not consider any issue not passed upon below. Singleton v. Wulff, 428 U.S. 106, 120 (1976). Morris argues that Poss has forfeited his opportunity to raise substantive issues for the first time on appeal and that no extraordinary circumstance warrants a departure from the general rule. Additionally, she contends that the issues Poss does raise require further factual development properly left to the bankruptcy court. In response, Poss urges us to follow the district court by considering the issues he raises to the extent they clearly present issues of law. 27 The Supreme Court has declined to provide guidance to the courts of appeals regarding the propriety of enforcing the general rule. In Singleton, two physicians challenged the constitutionality of a Missouri law denying Medicaid coverage for abortions that were not medically necessary. In response to a pre-answer motion to dismiss for lack of standing, the physicians attached affidavits averring that they performed abortions and had been denied Medicaid reimbursement pursuant to the Missouri law. Finding that the physicians lacked standing, the district court dismissed, but the Eighth Circuit reversed and proceeded to consider the case on the merits. The Supreme Court chastised the Eighth Circuit for going beyond the standing issue since the state had only filed a pre-answer motion to dismiss and had not addressed the merits of the suit in any pleading. Id. at 119-20, 96 S. Ct. 2868. In this context, the Court articulated the general rule that "a federal appellate court does not consider an issue not passed upon below." Id. at 120, 96 S. Ct. 2868. As a rationale, the Court explained that the rule is "essential in order that parties may have the opportunity to offer all the evidence they believe relevant to the issues and in order that litigants may not be surprised on appeal by final decision there of issues upon which they have had no opportunity to introduce evidence." Id. (citing Hormel v. Helvering, 312 U.S. 552, 556 (1941) (alterations omitted)). Noting that in certain circumstances, such as where proper resolution is beyond any doubt or "where injustice might otherwise result," an appellate court could properly consider issues not passed on below, the Court left the matter of the types of issues appropriate for consideration for the first time on appeal to the discretion of the courts of appeals. Id. at 121, 96 S. Ct. 2868 (citingTurner v. City of Memphis, 369 U.S. 350 (1962), and quoting Hormel, 312 U.S. at 557) (internal quotations omitted). 28 Our leading case on the matter is Pinney Dock & Transport Co. v. Penn Central Corp., 838 F.2d 1445 (6th Cir. 1988). There, in the context of a challenge to a party's standing to raise certain antitrust claims, we identified the general rule as an accepted practice or rule of procedure rather than a jurisdictional bar to hearing issues for the first time on appeal. Id. at 1461 (quoting Hormel, 312 U.S. at 557). We identified the circumstances meriting a departure from the general rule. "Deviations are permitted in exceptional cases or particular circumstances, or when the rule would produce a plain miscarriage of justice." Id. (quoting Hormel, 312 U.S. at 557-58) (internal citations and quotations omitted). Additionally, we determined that we should address an issue for the first time on appeal "to the extent the issue is presented with sufficient clarity and completeness and its resolution will materially advance the progress of . . . litigation." Id. (citingAlexander v. Aero Lodge No. 735, 565 F.2d 1364, 1370-71 (6th Cir. 1977)). 29 In subsequent cases, we have reiterated that the exceptions to the general rule are narrow and intended to promote finality in litigation. See, e.g., Foster v. Barilow, 6 F.3d 405, 407 (6th Cir. 1993). In addition to the promotion of finality, we may consider an issue not presented to a district court when doing so serves "an over-arching purpose beyond that of arriving at the correct result in an individual case," such as when the state of the law is uncertain. Id. at 408 (citations omitted). We have typically applied the "Pinney Dock exception" when the issue raised for the first time on appeal involves a question of law that requires no additional factual development. E.g., Semaan v. Allied Supermarkets, Inc. (In re Allied Supermarkets, Inc.), 951 F.2d 718, 725-26 (6th Cir. 1991). 30 Against this background, the following principles guide our decision whether to address the arguments Poss raises on appeal. First, we may deviate from the general rule if this is an exceptional case, if declining to review issues for the first time on appeal would produce a plain miscarriage of justice, or if this appeal presents a "particular circumstance" warranting departure. Pinney Dock, 838 F.2d at 1461 (quoting Hormel, 312 U.S. at 557). We also may hear an issue for the first time on appeal if doing so would serve an overarching purpose other than simply reaching the correct result in this case. Foster, 6 F.3d at 408 (citations omitted). Finally, we should address an issue presented with sufficient clarity and requiring no factual development if doing so would promote the finality of litigation in this case. Pinney Dock, 838 F.2d at 1461 (citing Alexander, 565 F.2d at 1370-71). See also United States v. Butler, 207 F.3d 839, 849-50 (6th Cir. 2000). Reviewing Poss's arguments, we conclude that he has presented legal issues requiring no further factual development with sufficient clarity to fall within the Pinney Dock exception. Because our consideration of these issues will aid in the resolution of Morris's bankruptcy petition and promote finality in the years of rancorous litigation between the parties, we follow the district court in proceeding to address Poss's arguments to the extent they require no additional factual development. We do so mindful that we risk excusing the failure of Poss's attorney to respond to Morris's motion for summary judgment after requesting an extension to do so and seeking to set aside the default judgment entered against him in this matter. Pinney Dock counsels that we address the issues in this case, nonetheless, and we note the availability of remedies for this sort of performance and the discretion of lower courts to sanction such behavior. 31 III. The Bankruptcy Court's Summary Judgment Standard 32 Poss challenges the bankruptcy court's grant of summary judgment by arguing that the court used an improper standard that did not require it to review the entire record. Under Federal Rule of Bankruptcy Procedure 7056, Rule 56(c) of the Federal Rules of Civil Procedure governs motions for summary judgment in adversary proceedings in bankruptcy court. We review a grant of summary judgment de novo, using the same standard under Rule 56(c) as the lower court. Williams v. Mehra, 186 F.3d 685, 689 (6th Cir. 1999) (en banc). Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). When reviewing a motion for summary judgment, the evidence, all facts, and any inferences that may be drawn from the facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). To prevail, the non-movant must show sufficient evidence to create a genuine issue of material fact. Klepper v. First Am. Bank, 916 F.2d 337, 342 (6th Cir. 1990). A mere scintilla of evidence is insufficient; "there must be evidence on which the jury could reasonably find for the [non-movant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Entry of summary judgment is appropriate "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 33 Poss objects to the bankruptcy court's citation of Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir. 1989), for the proposition that under the "new era" of summary judgments ushered in by Anderson, Celotex, and Matsushita the trial court no longer has the duty to search the entire record to establish that it is bereft of a genuine issue of material fact. Id. at 1479-80 (citing Frito-Lay, Inc. v. Willoughby, 863 F.2d 1029, 1034 (D.C. Cir. 1988)). The bankruptcy court interpretedStreet to mean that "the nonmoving party has an affirmative duty to direct the court's attention to those specific portions of the record upon which it seeks to rely to create a genuine issue of material fact." This reading accords with the burdenCelotex places on the nonmoving party. In articulating the standard under Rule 56(c), the bankruptcy court properly stated and applied the governing principles of Anderson, Celotex, and Matsushita as well as this court's synthesis of them inStreet. Therefore, this assignment of error lacks merit. IV. Constructive Trust 34 Starting with the proposition that Ohio property law determines the interests of the parties in the real estate at issue,Unsecured Creditors' Comm. of Highland Superstores, Inc. v. Strobeck Real Estate, Inc. (In re Highland Superstores, Inc.), 154 F.3d 573, 578 (6th Cir. 1998) (citing Butner v. United States, 440 U.S. 48, 54 (1979)); Demczyk v. Mutual Life Ins. Co. of N.Y. (In re Graham Square, Inc.), 126 F.3d 823, 827 (6th Cir. 1997) (citations omitted), Poss further objects to the judgment of the bankruptcy court. Specifically, he maintains that the bankruptcy court erred by failing to recognize that prior to Morris's filing of her petition in bankruptcy a constructive trust had attached to the property for his benefit under Ohio law. Poss relies on 11 U.S.C. §541(d), which provides: Property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest . . . becomes property of the estate . . . only to the extent of the debtor's legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold. 35 With regard to a constructive trust, we have been clear that this section does not authorize bankruptcy courts to recognize a constructive trust based on a creditor's claim of entitlement to one; rather, section 541(d) only operates to the extent that state law has impressed property with a constructive trust prior to its entry into bankruptcy. In XL/Datacomp, Inc. v. Wilson (In re Omegas Group, Inc.), 16 F.3d 1443, 1451 (6th Cir. 1994), we held that "a creditor's claim of entitlement to a constructive trust is not an 'equitable interest' in the debtor's estate existing prepetition, excluded from the estate under § 541(d)." In that fairly typical bankruptcy proceeding in which the creditor had transferred property to the debtor in the ordinary course of business, allegedly due to the fraud of the debtor, the creditor pressed its case for imposition of a constructive trust in bankruptcy court when no state court proceedings had occurred prior to the filing of the bankruptcy petition and state law did not provide a clear answer to whether the circumstances warranted such a remedy. In short, the creditor in Omegas Group sought to use an equitable remedy to recover a greater amount of the estate's assets than that to which it would otherwise have been entitled. Reviewing the remedial nature of constructive trusts, we concluded that "a claim filed in bankruptcy court asserting rights to certain assets 'held' in 'constructive trust' for the claimant is nothing more than that: a claim." Id. at 1449. Even while stressing that the bankruptcy policy of ratable distribution among creditors conflicts with the constructive trust remedy and counsels its sparing use, id. at 1451 (quotingThe Oxford Organisation, Ltd. v. Peterson (In re Stotler & Co.), 144 B.R. 385, 388 (N.D. Ill. 1992)), we acknowledged that in certain very limited circumstances not present in Omegas Group recognition of a constructive trust would be appropriate. For example, we noted that "[u]nless a court has already impressed a constructive trust upon certain assets ... the claimant cannot properly represent to the bankruptcy court that he was, at the time of the commencement of the case, a beneficiary of a constructive trust held by the debtor." Id. at 1449 (footnote omitted). See also id. at 1451 ("We do not address here property already impressed with a constructive trust by a court in a separate proceeding prepetition."). 36 Since deciding Omegas Group, we have clarified several relevant points. We have recognized that imposition of a constructive trust might be appropriate when property in bankruptcy was not subject to distribution to creditors and so did not implicate the rationale of ratable distribution. McCafferty v. McCafferty (In re McCafferty), 96 F.3d 192, 196-97 (6th Cir. 1996) (quoting Begier v. IRS, 496 U.S. 53, 58 (1990)). We have also recently made clear that Omegas Groupaddressed the relatively common situation in which a creditor with a claim arising in the ordinary course appeals to the bankruptcy court for preferential treatment: 37 Before In re Omegas, each of those unsecured creditors would rush to the bankruptcy court to argue that debtor's dealings with it were more egregious than his dealings with the others and the debtor's bad conduct justified special treatment, i.e., the imposition of a constructive trust by the bankruptcy court. 38 In re Omegas spoke definitively to quash such postpetition scrambling by creditors pushing to a place at the head of the line. 39 Kitchen v. Boyd (In re Newpower), 233 F.3d 922, 936 (6th Cir. 2000). In Newpower, we held that creditors who had initiated proceedings in state court prepetition may have the automatic stay lifted to pursue their action and that our decision in Omegas Group "does not bar the enforcement of such a judgment by the bankruptcy court." Id. at 937. Of course, whether a judgment obtained by a creditor in a state court proceeding initiated prepetition but concluded postpetition following the lifting of the automatic stay has an effective date prior to the filing of a bankruptcy petition is a matter left to state law. Id. 40 Poss's claim that a constructive trust impressed the property prior to the day on which Morris filed her petition for bankruptcy does not fall within the class of typical cases to which Omegas Group applies, and in any event Omegas Groupwould present no bar to the bankruptcy court's enforcement of a constructive trust in favor of Poss. Poss secured a lifting of the automatic stay to allow Judge Yost to determine his prepetition interest in the property as a matter of state law, and recognizing a constructive trust in this case would not interfere with the policy of ratable distribution. Therefore, our task is to determine whether Ohio law impressed the property in dispute with a constructive trust prior to the time Morris filed her petition. 41 The Ohio Supreme Court has defined a constructive trust as: 42 A trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. 43 Ferguson v. Owens, 459 N.E.2d 1293, 1295 (Ohio 1984) (per curiam) (quoting 76 Am. Jur. 2d Trusts § 221 (1975)). Under this definition, constructive trust is a remedy used by courts for the prevention of fraud, unjust enrichment, or other inequitable conduct. Peterson v. Teodosio, 297 N.E.2d 113, 120 (Ohio 1973). Further, the Ohio Supreme Court has counseled the imposition of a constructive trust "where it is against the principles of equity that the property be retained by a certain person even though the property was acquired without fraud." Ferguson, 459 N.E.2d at 1295. As a prerequisite to the imposition of a constructive trust, a case must give rise to jurisdiction by a court of equity. Henkle v. Henkle, 600 N.E.2d 791, 796 (Ohio Ct. App. 1991). "There must be some specific legal principle or situation which equity has established or recognized[] to bring a case within the scope of the doctrine." Croston v. Croston, 247 N.E.2d 765, 768 (Ohio Ct. App. 1969) (quoting American Univ. v. Forbes, 183 A. 860, 862 (N.H. 1936)). 44 Ohio follows the traditional rule of the common law that regards contracts for the conveyance of real property as falling within the jurisdiction of courts of equity because of the inherent inadequacy of any legal remedy. Ayres v. Cook, 43 N.E.2d 287, 291 (Ohio 1942) ("[A]n action at law does not ordinarily afford an adequate remedy for refusal to convey real estate in accordance with a valid agreement."), overruled on other grounds by Sherman v. Johnson, 112 N.E.2d 326, 332 (Ohio 1953). Although the availability of an equitable remedy such as specific performance depends upon the inadequacy of a remedy at law, "where land is the subject matter of the agreement, the jurisdiction of equity to grant specific performance does not depend upon the existence of special facts showing the inadequacy of a legal remedy in the particular case."Gleason v. Gleason, 582 N.E.2d 657, 661 (Ohio Ct. App. 1991) (quoting 71 Am. Jur. 2d Specific Performance § 112 (1973)) (alteration omitted). Equitable jurisdiction in Ohio extends broadly so that a court may fashion any relief just and appropriate for the circumstances. Brinkerhoff v. Smith, 49 N.E. 1025, 1029 (Ohio 1897); McDonald & Co. Sec., Inc, Gradison Div. v. Alzheimer's Disease & Related Disorders Ass'n, Inc., 747 N.E.2d 843, 850 (Ohio Ct. App. 2000) (quotingWinchell v. Burch, 688 N.E.2d 1053, 1057 (Ohio Ct. App. 1996)). In other words, under Ohio law a contract for the conveyance of real property falls squarely within the equitable jurisdiction to fashion an appropriate remedy. 45 Essentially, Ohio courts will use the remedy of constructive trust "where there is some ground . . . upon which equity will grant relief." Henkle, 600 N.E.2d at 796 (citing Croston, 247 N.E.2d at 768-69). In these situations, Ohio law creates an equitable duty to convey property. Gabel v. Richley, 655 N.E.2d 773, 779 (Ohio Ct. App. 1995); Union Sav. & Loan Ass'n v. McDonough, 655 N.E.2d 426, 428 (Ohio Ct. App. 1995) (citing Ferguson, 459 N.E.2d at 1293); Bilovocki v. Marimberga, 405 N.E.2d 337, 340 (Ohio Ct. App. 1979)). Accordingly, every wrongful acquisition or holding of property will not give rise to a constructive trust. For example, breach of contract or failure to pay a debt without more cannot give rise to a constructive trust. Croston, 247 N.E.2d at 768-69. Yet, a wrongful acquisition or retention of property cognizable in equity will. Id. at 768. Where an equitable duty to convey property exists, it is not necessary for a court to impress a constructive trust by decree. Rather, in Ohio it attaches by operation of law. McCafferty, 96 F.3d at 198 (citing Croston, 247 N.E.2d at 767, and Kungle v. Equitable Gen. Ins. Co., 500 N.E.2d 343, 348 (Ohio Ct. App. 1985)). See also Ferguson, 459 N.E.2d at 1295. 46 When we apply these principles, it is clear that a constructive trust in favor of Poss attached to the property prepetition. In the final decision of the state courts adjudicating the rights of the parties in the disputed property, Judge Yost found that following the settlement Poss had an enforceable contract for conveyance of the property. Under Ohio law, this contract is enforceable in equity, and because of the availability of equitable relief Morris had a duty to convey the property. Where such a duty exists, a constructive trust arises by operation of law. Additionally, the concluding language of Judge Yost's opinion emphasizing that Morris retained legal ownership of the property reinforces our conclusion that Morris held equitable title in constructive trust for Poss. Similarly, the state court's determination that legal title remained in Morris until such time that Poss pursued enforcement all but says that Poss holds equitable title to the property. Finally, another fact convinces us that this case does not involve an ordinary equitable interest in a conveyance that might arise pursuant to a contract concerning real estate under Ohio law: the "contract" between the parties here is the order of a court. The interest of the Ohio judiciary in ensuring the efficacy of its judgments gives the settlement a heightened basis for equitable relief and calls for imposition of a constructive trust. 47 Although in Omegas Group we said that a constructive trust "does not exist until a plaintiff obtains a judicial decision finding him to be entitled to a judgment 'impressing' defendant's property or assets with a constructive trust," 16 F.3d at 1451, we recognized in McCafferty that a constructive trust can arise without a formal judicial decision under Ohio law. This case addresses one of the questions Newpower noted remained open following Omegas Group, namely whether the bankruptcy court may give effect to a state court judgment obtained postpetition in an action initiated prepetition. We answer that question affirmatively, reaffirming that state law governs the effective date of such a judgment. As we held inNewpower, Omegas Group does not present a bar to the imposition of a constructive trust on the facts of this case. Therefore, we conclude that the bankruptcy court erred by failing to recognize that Ohio law had impressed the property with a constructive trust in favor of Poss prior to the filing of Morris's bankruptcy petition. 48 Our decision that a constructive trust arose here moots Poss's additional arguments that the bankruptcy court failed to give proper consideration and deference to the proceedings in state court and erred by not specifically enforcing the settlement by conveying the property. Accordingly, we have no occasion to consider them. V. Preferential Transfer 49 Morris contends that the bankruptcy court correctly held in the alternative that enforcement of the settlement through theex parte order occurred within ninety days of her petition and, since Poss has failed to rebut the statutory presumption that she was insolvent during this period, the order is void as a preferential transfer. This argument fails because the constructive trust in this case arose more than ninety days before Morris filed for bankruptcy and, in any event, a constructive trust is not a preferential transfer. 50 Section 547 of the bankruptcy code permits a trustee to avoid certain preferential transfers made in the ninety days prior to the filing of a bankruptcy petition. We note that section 547(b) requires a transfer before it can operate. Because the Ohio Court of Appeals set aside the ex parte order, it cannot form the basis for finding a preferential transfer here. Therefore, Morris can only prevail on the basis of the alternative holding of the bankruptcy court if a constructive trust arose in this case in the ninety days prior to the filing of Morris's bankruptcy petition and the property held in constructive trust falls within the preferential transfer statute. 51 In Newpower we recognized that state law determines the effective date of a judgment obtained by a creditor in a state court proceeding initiated prepetition but concluded postpetition. Newpower, 233 F.3d at 937. Under Ohio law, "where a person holding title to property is subject to an equitable duty to convey it to another" a constructive trust arises by operation of law and attaches to that property. Croston, 247 N.E.2d at 767 (quoting Restatement of the Law of Restitution § 160 (1969)). See also McCafferty, 96 F.3d at 198; Bilovocki, 405 N.E.2d at 340. In the final judgment of the state courts, Judge Yost determined that the parties' interests in the disputed property changed when Poss and Morris entered into the settlement agreement. At that point Judge Yost determined that Morris no longer retained equitable title to the property. 52 We have already concluded that by imposing a duty on Morris to convey the property this agreement impressed the property with a constructive trust by operation of law. Although our research has failed to locate authority directly on point, we think that Ohio law creates a constructive trust at the moment the law imposed an equitable duty on Morris to convey the property. Whether in this case that duty arose when the parties entered into the settlement agreement or the common pleas court adopted the settlement as its order, it is clear that Ohio law impressed the property with a constructive trust long before Morris filed her petition for bankruptcy on September 8, 1995. 53 Moreover, the avoidance power of the trustee only reaches "an interest of the debtor in property." 11 U.S.C. § 547(b). Although the statute does not define this term, the Supreme Court has interpreted it to mean "that property that would have been part of the estate had it not been transferred before the commencement of bankruptcy proceedings." Begier, 496 U.S. at 58. Under section 541(d), "property of the estate" includes all property to which the debtor holds legal title, except "to the extent of any equitable interest in such property that the debtor does not hold." "Because the debtor does not own an equitable interest in property he holds in trust for another, that interest is not 'property of the estate.' Nor is such an equitable interest 'property of the debtor' for purposes of § 547(b)." Begier, 496 U.S. at 59. Other circuits have held that this reasoning applies as fully to constructive trusts as express trusts, e.g., Taylor Assocs. v. Diamant (In re Advent Mgmt. Corp.), 104 F.3d 293, 295 (9th Cir. 1997), as have we in dicta. McLemore v. Third Nat'l Bank in Nashville (In re Montgomery), 983 F.2d 1389, 1393 (6th Cir. 1993). Because the property had been impressed by operation of state law with a constructive trust more than ninety days prior to the filing of Morris's petition for bankruptcy, equitable title in the property never became property of the estate, and Morris holds no interest in the property subject to the avoidance power of section 547(b). Therefore, we find that Morris's reliance on the alternative holding of the bankruptcy court is misplaced. VI. Valuation of the Property 54 Finally, Poss challenges the bankruptcy court's grant of summary judgment for Morris by questioning the use of an appraised value of $100,800 for the property. He maintains that $167,250, representing the acquisition cost of the property over fifteen years ago ($17,500 for the land plus $149,750 for the building), would more accurately capture its value than Morris's appraisal. Resolution of this issue requires further development of the record and is therefore inappropriate for consideration for the first time on appeal. VII. Conclusion 55 For the foregoing reasons, we find that Ohio law impressed a constructive trust on the property in favor of Poss prior to the day on which Morris filed her bankruptcy petition. We also hold that a constructive trust does not constitute a voidable preference under the bankruptcy code. These conclusions necessitate reversal of the judgment of the bankruptcy court. We therefore remand this case for further proceedings not inconsistent with this opinion. Note: 1 With the benefit of the state appellate court judgments, Poss also prepared a proof of claim for the Chapter 13 proceeding. Based on those rulings, he asserted that Morris was liable for (1) $8,367 plus 10% interest from April 30, 1993, pursuant to the mortgage Morris gave to Huntington Bank; (2) $2,300.07 plus 10% interest from August 19, 1991, as a judgment lien attributable to the cognovit note; and (3) $149,750 plus 10% interest from June 1, 1984, as a judgment lien arising from the decisions of the Ohio Court of Appeals.	{ "pile_set_name": "FreeLaw" }
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 10-APR-2019 09:09 AM	{ "pile_set_name": "FreeLaw" }
In the United States Court of Appeals For the Seventh Circuit ____________ No. 07-2658 CAVEL INTERNATIONAL, INC., et al., Plaintiffs-Appellants, v. LISA MADIGAN, et al., Defendants-Appellees. ____________ Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 07 C 50100—Frederick J. Kapala, Judge. ____________ SUBMITTED JULY 17, 2007—DECIDED JULY 18, 2007 OPINION AUGUST 6, 2007 ____________ Before EASTERBROOK, Chief Judge, and POSNER and ROVNER, Circuit Judges. POSNER, Circuit Judge. Cavel International, the principal appellant (we can ignore the others), produces horsemeat for human consumption. The plant at which it slaughters the horses is in Illinois. Americans do not eat horsemeat, but it is considered a delicacy in Europe and Cavel exports its entire output. Its suit challenges the constitutionality of a recent amendment to the Illinois Horse Meat Act, 225 ILCS 635/1.5, that makes it unlawful for any person in the state to slaughter a horse for human consumption or “to 2 No. 07-2658 import into or export from this State, or to sell, buy, give away, hold, or accept any horse meat if that person knows or should know that the horse meat will be used for human consumption.” Cavel lost in the district court, has appealed, and, after unsuccessfully moving the dis- trict court for an injunction pending appeal, has asked us for such an injunction, emphasizing the disastrous consequences for its business if the decision of the district court stands. An affidavit by the firm’s general manager states that it is a virtual certainty that if the injunction is denied the result will be the “permanent closure” of its plant. The state counters feebly with an unattested statement that because Cavel some years ago reopened after a fire had forced it to close for two years, it can probably reopen again if it has to close during the appeal. But there is no contention that Cavel lacked fire insurance to tide it over that earlier period of closure. Should the judgment of the district court upholding the constitutionality of the new statutory amendment be reversed, Cavel could not obtain monetary relief from the defendants. They are state officials sued in their official capacities because the only relief sought against them is an injunction. They therefore are not sub- ject to liability for damages; a suit against state officials in their official capacity is treated as a suit against the state itself. Cavel has made a compelling case that it needs the injunction pending appeal to avert serious irreparable harm—the uncompensated death of its business. Its showing persuaded the D.C. Circuit to grant Cavel a stay pending judicial review of an order by the Depart- ment of Agriculture that would if upheld force the shut- down of its business on grounds unrelated to those of the No. 07-2658 3 present litigation. Humane Society of the United States v. Cavel International, Inc., No. 07-5120 (D.C. Cir. May 1, 2007) (per curiam). The state does not question the gravity of Cavel’s situation (despite the remark about the fire) but responds that the state will incur irreparable harm, too, if the injunction is granted, because a “slaughter cannot be undone.” But the statute does not seem to be intended to protect horses. (The object of the statute is totally obscure.) For it is only when horsemeat is intended for human consumption—the niche market that Cavel serves (less that 1 percent of its output is sold for other con- sumption)—that a horse cannot be killed for its meat. Were Cavel or a successor able to find a market in pet-food companies, the slaughter of horses at its plant would continue without interference from the state. And, if not, all that will happen is that horses will be slaughtered elsewhere to meet the demands of the European gourmets. The state argues that the injunction will diminish “the scope of democratic governance.” That is a powerful reason for judicial self-restraint when a statute, state or federal, is sought to be invalidated by a court. A rule barring state statutes from going into effect until any challenges to their validity were litigated to completion would be offensive on that ground; it would amount to rewriting the effective date in all Illinois statutes. But at issue is a stay, based on a showing in a particular case that the harm to the challenger from denial of a stay would greatly exceed the harm to the state from its grant, that would delay the application of the statute to the challenger for a few months (the appeal in this case has been expedited and will be argued on August 16). Such a stay does not operate as a statutory revision or sig- nificantly impair democratic governance. It is a detail that 4 No. 07-2658 because the statute in question is applicable to only a single entity, a stay of enforcement against that entity acts to postpone the effective date of the statute rather than just to postpone the statute’s application to one entity subject to it. The state does not argue that a statute can never be enjoined pending appeal; it concedes, as we shall see, that such an injunction is appropriate if the usual criteria for a stay pending appeal are satisfied. The horsemeat statute is remote from the vital interests of most Illinois residents; a brief delay in its enforcement against Cavel will not create a perceptible harm. Indeed, it is difficult to see what harm would ensue from permanently abrogating the statute if the welfare of horses would not be affected, as it might well not be, as we have pointed out. Even though denying the injunction pending appeal would do far more harm to Cavel than granting it would do to the state, we must consider whether the appeal has any merit. If an appeal has no merit at all, an injunction pending the appeal should of course be denied. But if the appeal has some though not necessarily great merit, then harm of the magnitude shown by Cavel in this case would justify the granting of an injunction pending appeal provided, as is also true in this case, that the defendant would not suffer substantial harm from the granting of the injunction. This is the “sliding scale” approach to decisions on motions for preliminary injunc- tion that we have endorsed in previous cases, e.g., Christian Legal Society v. Walker, 453 F.3d 853, 859 (7th Cir. 2006); FoodComm International v. Barry, 328 F.3d 300, 303 (7th Cir. 2003); American Hospital Supply Corp. v. Hospital Products Ltd., 780 F.2d 589, 593-94 (7th Cir. 1985), as have other courts. E.g., Serono Laboratories, Inc. v. Shalala, 158 F.3d 1313, No. 07-2658 5 1317-18 (D.C. Cir. 1998); Dan River, Inc. v. Icahn, 701 F.2d 278, 283 (4th Cir. 1983). It amounts simply to weighting harm to a party by the merit of his case. In denying the motion for an injunction pending appeal, the district judge did not apply this test or indeed any other. He said only that Cavel had failed to make a “strong showing” that the horsemeat amendment is unconstitu- tional. He ignored the balance of harms. Cavel’s failure to make a strong showing is certainly relevant to the granting of relief, but it is not decisive. The judge did not exercise the required discretion in determining whether to grant the injunction, and so his decision is not entitled to the deference to which discretionary rulings are entitled. Nor is his ruling that Cavel failed to make a strong showing of likelihood to prevail entitled to defer- ence. It was a legal ruling the appellate review of which is plenary. Hinrichs v. Bosma, 440 F.3d 393, 396 (7th Cir. 2006). There is a difference between asking a district court for a preliminary injunction and asking a court of appeals for a stay of, or other relief from, the district court’s ruling. But the sliding-scale approach is also applied in such a case. Id.; Sofinet v. INS, 188 F.3d 703, 706-07 (7th Cir. 1999); In re Forty-Eight Insulations, Inc., 115 F.3d 1294, 1300-01 (7th Cir. 1997); cf. Hilton v. Braunskill, 481 U.S. 770, 777-78 (1987). As the Supreme Court explained in Hilton, “different Rules of Procedure govern the power of district courts and courts of appeals to stay an order pending appeal. See Fed. Rule Civ. Proc. 62(c); Fed. Rule App. Proc. 8(a). Under both Rules, however, the factors regulating the issuance of a stay are generally the same.” Id. at 776. Cavel, it is true, is not seeking a stay; it is seeking to enjoin the enforcement of the horsemeat statute against 6 No. 07-2658 it pending appeal. But Rule 8(a)(1)(C), (2), of the appellate rules explicitly authorizes the court of appeals to grant an injunction pending appeal and does not suggest that the standard is different from that applicable to a motion to stay the district court’s judgment. We are mindful that Chief Justice Rehnquist, in a chambers opinion (and thus speaking only for himself and not for any of the other Justices), Brown v. Gilmore, 533 U.S. 1301 (2001), ruled that the authority to grant such an injunction is conferred not by Rule 8 but by the All Writs Act, 28 U.S.C. § 1651. Tradition- ally of course the applicant for relief under the Act must show an incontrovertible right to relief, and not merely some likelihood of prevailing. The Chief Justice required the same high showing by an applicant for an injunction pending appeal. As the 1967 Committee Note to Rule 8 points out, however, the Supreme Court had held that the power was an inherent judicial power; and so it doesn’t have to be grounded in the All Writs Act. The approach proposed in Brown has not caught on. The decision has been cited in seven cases. One was another chambers opinion by Chief Justice Rehnquist. Wisconsin Right to Life, Inc. v. FEC, 542 U.S. 1305, 1305-06 (2004). The other six (five district court opinions and an unpublished court of appeals opinion) do not actually apply the Chief Justice’s heightened standard to requests for injunctions against state statutes. In re McEvily, 55 Fed. Appx. 712 (4th Cir. 2003); Do The Hustle, LLC. v. Rogovich, No. 03 Civ. 3870, 2003 WL 21436215, at 8 (S.D.N.Y. June 19, 2003); Line Communications Corp. v. Reppert, 265 F. Supp. 2d 353, 358 (S.D.N.Y. 2003); Foster v. Argent Mortgage Co., No. 07-11250, 2007 WL 2109558, at 4 (E.D. Mich. July 23, 2007); Smith v. Directors of the Enemy of Alien Control Unit of Dept. of Justice, No. 07CV0508LJOTAG, 2007 WL 1655780, at *2 (E.D. No. 07-2658 7 Cal. June 7, 2007); Lawrence v. Reno, No. 00 Civ. 4559, 2003 U.S. Dist. LEXIS 14867 (S.D.N.Y. Aug. 28, 2003). In Purcell v. Gonzales, 127 S. Ct. 5 (2006) (per curiam), the Supreme Court vacated an injunction against a state statute pend- ing appeal without suggesting that any special standard applied to such injunctions and without citing Brown v. Gilmore. See also Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 842 n. 1 (D.C. Cir. 1977). The state in our case does not cite Brown but instead relies on our Hinrichs decision, which says nothing about an incontrovertible right of relief, but instead asks the district court to consider merely whether the movant has a significant probability of prevailing on his claim. The sliding scale justifies the injunction sought by Cavel. The argument for the invalidity of the horsemeat statute is not negligible. A state can without violating the com- merce clause in Article I of the U.S. Constitution (which has been interpreted to limit the power of states to regulate foreign and interstate commerce even in the absence of applicable federal legislation) forbid the importation into the state of dangerous or noxious goods. E.g., Maine v. Taylor, 477 U.S. 131, 151-52 (1986). But this case involves a limitation on exports, because Cavel has no domestic market; and the only ground that Illinois advances for the horsemeat amendment is “public morality.” The state has a recognized interest in the humane treatment of animals within its borders, and we can assume that this interest embraces the life of the animals and not just a concern that they not be killed gratuitously or in a painful manner. But as we noted earlier, the Illinois statute does not forbid the killing of horses, but only the killing of them for human consumption of their meat. If Cavel could (as apparently 8 No. 07-2658 it cannot) develop a market for its horsemeat as pet food, there would be no violation of the statute. So it is possible that the burden that the statute places on the foreign commerce of the United States is not offset by a legitimate state interest, in which event the statute is unconstitu- tional. Kassel v. Consolidated Freightways Corp. of Delaware, 450 U.S. 662, 669-70 (1981). “[T]he incantation of a purpose to promote the public health or safety does not insulate a state law from Commerce Clause attack” Id. at 670. Since Cavel has no significant domestic market, the stat- ute does not “discriminate” against the foreign commerce of the United States, but it does burden it and so the state is obliged to give some reason for it. We do not suggest that Cavel has a winning case or even a good case (the Fifth Circuit in Empacadora de Carnes de Fresnello, S.A. v. Curry, 476 F.3d 326, 336-37 (5th Cir. 2007), recently upheld a similar Texas law against a challenge based on the commerce clause), but only that it has a good enough case on the merits for the balance of harms to entitle it to an injunction pending an expedited appeal that will enable the merits to be fully briefed and argued. It is important to note in this regard that the sliding- scale approach that governs Cavel’s request for an injunc- tion pending appeal does not require a “strong showing” that the applicant will win his appeal. The Supreme Court was precise in stating in Hilton v. Braunskill, supra, 481 U.S. at 776, that among “the factors regulating the issuance of a stay are . . . whether the stay applicant has made a strong showing that he is likely to succeed on the merits.” Certainly that is one of the factors to be considered, but it has to be balanced against the harms to the parties of granting or denying the injunction. The injunction pending appeal is therefore granted. No. 07-2658 9 EASTERBROOK, Chief Judge, dissenting. My colleagues assume that, when deciding whether to issue an injunc- tion pending appeal, both the trial and appellate courts should use the same sliding scale that a district judge uses when deciding the case as an initial matter. This is a mistake. Once a plaintiff has litigated and lost, a higher standard is required for an injunction pending appeal. That’s one conclusion of Hilton v. Braunskill, 481 U.S. 770, 776 (1987). Hilton holds that a stay of a district court’s order pending appeal requires a “strong showing” that the appellant is likely to prevail. The Court equated ap- pellate stays and injunctions pending appeal, both of which fall under Fed. R. App. P. 8. One cannot escape this by appealing to “inherent judicial power” (slip op. 5); once a rule has codified an approach, the rule must be followed to the exclusion of the common-law doctrines that pre- ceded it. See Bank of Nova Scotia v. United States, 487 U.S. 250 (1988). Cf. Cheney v. United States District Court, 542 U.S. 367, 381 (2004) (the applicant must show a “clear and indisputable” right to obtain equitable relief under the All-Writs Act, 28 U.S.C. §1651). So I ask (as my colleagues do not) whether plaintiff has made out a “strong showing” that this court is likely to reverse on the merits. It has not done so. Cavel’s posi- tion is functionally identical to the one raised, and rejected, in Empacadora de Carnes de Fresnello, S.A. v. Curry, 476 F.3d 326 (5th Cir. 2007). My colleagues do not say that the fifth circuit is mistaken; all they are willing to venture is that the statute just might burden foreign commerce. That’s a distraction, however, for Illinois does not dis- criminate against foreign (or interstate) commerce. No one in Illinois may slaughter a horse for human consump- tion, no matter where the meat will be eaten. 225 ILCS 10 No. 07-2658 635/1.5(a). That no one in Illinois wants to eat horse flesh means that all of Cavel’s product is exported, but this does not convert a law regulating horse slaughter (an intra- state activity) into one that discriminates against com- merce. If the (potential) problem in the law lies in subsection (b), which forbids the export of meat produced in violation of subsection (a), then the injunction should be directed against enforcement of subsection (b). Such an injunction would do Cavel no good, however, because the prohibition in subsection (a) against killing and butchering the horses would remain. It is telling that my colleagues enjoin operation of the statute as a whole, without suggesting that the rule against slaughtering a horse for human consumption—the only part of the law that injures Cavel—is subject to any non-frivolous legal objection given the Supreme Court’s tolerant approach to even silly statutes that regulate business. See, e.g., New Orleans v. Dukes, 427 U.S. 297 (1976). Although a “strong showing” on the merits is required for any injunction pending appeal, insisting on a sig- nificant likelihood of success is especially apt when the subject is enforcement of a statute. An injunction pending appeal does not permanently frustrate attainment of the state’s goal. It does, however, permanently discard the statute’s effective date. This provision won’t be enforced at some later time; it will never be enforced. It is as if the majority had held that the norm under the Illinois Constitution of 1970—that laws take effect on the June 1 following their enactment—violates federal law and must be replaced by something along the lines of: “No state law that imposes a substantial cost on any private interest may take effect until all judicial challenges have been ex- No. 07-2658 11 hausted.” But my colleagues don’t explain what federal rule requires this displacement of the state’s choice of an effective date. An unspoken (and unjustified) norm of judicial supremacy lies behind this claim of power to override the state’s decision. Almost all laws cause injury; very few statutes are Pareto-superior (meaning that no one loses in the process, and at least some people gain). When a rule benefits some persons without injuring others, there is no need for legislation; the people involved will reach the accommoda- tion on their own. Laws that cause loss to some persons (Cavel, for example) create transition effects. How these should be accommodated is itself a question for democratic choice. Some scholars favor immediate change, with the losers not being compensated. See, e.g., Louis Kaplow, An Economic Analysis of Legal Transitions, 99 Harv. L. Rev. 506 (1986). Illinois has opted for a longer period as a rule, although allowing the legislature to provide for immediate effectiveness of statutes enacted before June 1, or by a super-majority.^ Usually both the gains and losses of effective dates are felt by the state’s populace; there is no reason to distrust the state’s conclusion that the gains from swift effectiveness exceed the losses. ^ Article 4 Section 10 of the Illinois Constitution provides: “The General Assembly shall provide by law for a uniform effective date for laws passed prior to June 1 of a calendar year. The General Assembly may provide for a different effective date in any law passed prior to June 1. A bill passed after May 31 shall not become effective prior to June 1 of the next calendar year unless the General Assembly by the vote of three-fifths of the members elected to each house provides for an earlier effective date.” The Illinois Horse Meat Act became law on May 24, 2007, and took effect the same day by virtue of §99 in the statute. 12 No. 07-2658 No state of which I am aware—and no federal law or serious student of the subject—has advocated the rule: “Laws that impose losses large enough to prompt people to hire lawyers take effect only at the conclusion of fed- eral judicial review.” Such a rule not only denies states part of their legislative power but also leads to strategic behavior: people hire lawyers and file suits not because they expect to win, but just because they can benefit from delay. That’s a fair characterization of this suit. Just as the state won’t compensate Cavel for losses in the interim if Cavel wins in the end, Cavel does not propose to com- pensate Illinois for any injury caused by delayed effective- ness of the statute. The majority does not require Cavel to post an injunction bond. Requiring an applicant to back its position with a promise to pay would curtail strategic claims. Federal courts should allow states to select and enforce effective dates for their statutes. Equitable relief is ap- propriate only when the plaintiff shows a substantial likelihood of winning. Cavel has not met this standard and is not entitled to an injunction pending appeal. A true Copy: Teste: _____________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—8-14-07	{ "pile_set_name": "FreeLaw" }
245 F.3d 538 (6th Cir. 2001) UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,v.MICHAEL SMITH, DEFENDANT-APPELLANT. No. 99-3894 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Argued: August 2, 2000Decided and Filed: March 27, 2001 1 Appeal from the United States District Court for the Southern District of Ohio at Cincinnati. No. 99-00011--Sandra S. Beckwith, District Judge. 2 Terry Lehmann (argued), Timothy D. Oakley (briefed), Assistant United States Attorney, Cincinnati, OH, for Appellee. 3 C. Ransom Hudson (argued and briefed), Assistant Federal Public Defender, Cincinnati, OH, for Appellant. 4 Before: Moore and Clay, Circuit Judges; Hood, District Judge* OPINION 5 Denise Page Hood, District Judge. 6 On January 20, 1999, a federal grand jury sitting in the Southern District of Ohio charged Defendant Michael Smith and five co-defendants with drug-related offenses in a ten-count indictment. Defendant Smith was named in Counts I, II, and X of the indictment. Defendant Smith and his co-defendants pleaded guilty to Count I of the indictment, which is conspiracy to possess with the intent to distribute cocaine base and cocaine from October 1, 1998, until January 20, 1999, in violation of 21 U.S.C. § 846. Count II of the indictment charged that Defendant Smith and James Oglesby unlawfully distributed cocaine base in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B)(iii) and 18 U.S.C. § 2 on October 8, 1998. Count X charged Defendant Smith and George Carter with unlawfully distributing cocaine base in an amount in excess of five grams on November 9, 1998, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B)(iii) and 18 U.S.C. § 2. 7 On January 21, 1999, Defendant Smith was arrested and held without bond until a hearing on January 25, 1999. Defendant Smith was arraigned and entered a not guilty plea on January 28, 1999. Trial was scheduled on March 8, 1999 but was postponed until April 1, 1999, at a pre-trial conference with Defendant Smith's attorney. On the day of trial, Defendant Smith changed his plea and pleaded guilty to Count I of the indictment, conspiracy to possess with the intent to distribute cocaine base and cocaine. The government was informed of Defendant Smith's decision to plead guilty late in the day on the eve of trial. At Defendant Smith's sentencing hearing on June 30, 1999, he objected to the inclusion of 5.5 grams of cocaine base in the calculation of his base offense level. Defendant Smith's objection was as follows: 8 Objection No. 1: The defense counsel objects to paragraphs #44, #45, and #46 of the presentence report. Specifically, the defense objects to Mr. Smith [sic] involvement in the sale of 5.5 grams of crack cocaine. According to Mr. Smith, there was another individual involved in the sale of the 5.5 grams of cocaine known as "the Fatman"; therefore, he feels he is not responsible for this transaction. 9 It was Defendant Smith's contention that if the 5.5 grams of crack cocaine had been excluded from the calculation of his base offense level, the level would have been thirteen instead of twenty-three. A base offense level of thirteen, coupled with Defendant Smith's criminal history category of V, would have given Defendant Smith 30 to 37 months' imprisonment lessening the 84-105 months of imprisonment imposed. 10 Defendant Smith's objection was overruled at the sentencing. The district court determined that Defendant Smith was responsible for the additional 5.5 grams of crack cocaine. The district court also determined, based upon Defendant Smith's untimely acceptance of responsibility, he qualified for only a two point reduction and not a three point reduction. Therefore, Defendant Smith's guideline range was 92 - 115 months; he was sentenced to a term of 92 months of imprisonment. Defendant Smith filed a timely notice of appeal. I. BACKGROUND 11 The Drug Enforcement Agency ("DEA") and the Lockland, Ohio and Lincoln Heights, Ohio Police Departments conducted a joint investigation during the late summer of 1997. The state police departments requested assistance from the DEA in handling the growing drug trafficking problem in their towns. A specialized investigative unit known as the Mobile Enforcement Team ("MET") from Detroit, Michigan was sent to assist in the investigation in September of 1998. The local police officers had discovered during their preliminary investigations that the biggest source of drug trafficking was centered around 608 Walnut Street in Lockland, Ohio. The Walnut address was a two-family, two-story residence. Joseph Oglesby and his family lived on the first floor of the dwelling and Defendant Smith lived on the second floor of the dwelling. The local police had received numerous private complaints of drug sales by Defendant Smith, Oglesby, and Oglesby's son, Joseph Cain, out of 608 Walnut. Persons involved in the drug activity often loitered around the dwelling and purchased drugs primarily from Defendant Smith. 12 In October of 1998, the MET began targeting individuals involved in drug trafficking at 608 Walnut. Confidential informants were sent to make "controlled purchases" of crack cocaine. On October 9, 1998, the confidential informant purchased $100 worth of crack cocaine from Cain at the 608 Walnut address under the surveillance of the MET. The MET agents observed the confidential informant drive to 608 Walnut, get out of the vehicle and speak briefly with Oglesby. Oglesby informed the informant that Cain was not home, but that Oglesby could sell the informant some crack cocaine. The informant arranged a time and place to meet Oglesby in order to conduct the transaction. Prior to the time that the informant had agreed to meet, agents observed Oglesby talking to Defendant Smith in front of 608 Walnut. Defendant Smith handed Oglesby a small item which was believed to be crack cocaine. At the designated time, Oglesby left and met the informant and gave the informant the package in exchange for $100. The package contained.75 grams of crack cocaine. 13 On November 8, 1998, during one of the many controlled buys which occurred over the next couple of months, the informant purchased one-half ounce of crack cocaine from Defendant Smith and his co-defendant George Carter. Defendant Smith told the informant to come to 608 Walnut to make the buy. The surveillance officers observed the informant speaking with Defendant Smith as he leaned out of a second floor window. Defendant Smith was later identified by Officer Watts as the person leaning out of the window because Defendant Smith's identity could not specifically be determined from the video. Officer Watts used binoculars to ascertain the identity of the person with whom the informant was conversing. The agents heard Defendant Smith instruct the informant to come to the rear of the house via an audio wire worn by the informant. The informant met Defendant Smith in therear of the house where the informant inquired about the purchase price of the half-ounce of crack cocaine. Defendant Smith responded that the cost was $500. The agents heard the informant's conversation with Defendant Smith via the audio wire, and heard the name "Mike" as well as the nickname "Fat", referring to the "Fatman", the nickname of co-defendant Cornelius Ogletree. Defendant Smith instructed the informant to return in approximately half an hour. 14 The informant returned to 608 Walnut thirty minutes later and found Defendant Smith standing outside of the house with two other individuals, one of which was co-defendant Carter. The agents were only able to audiotape the meeting between the informant and the defendants because any attempt to videotape the meeting would have compromised the investigation. The voices on the audio tape were identified as those of the informant, Defendant Smith and Carter. The other individual was not identified. At the meeting, Defendant Smith instructed the informant to drive to the "Man's Lounge" located in Lincoln Heights. The informant refused stating that he did not want to drive to another location. Defendant Smith turned to Carter and spoke in low tones. Defendant Smith then told the informant to follow him and Carter to the rear of the house. When the group reached the rear of the house, Carter asked the informant if he had a scale. The informant provided Carter with a scale. Carter immediately reached into his pocket and removed a clear plastic bag containing the crack cocaine and handed the bag to Defendant Smith. Defendant Smith weighed the bag. The bag was handed to the informant and the informant handed Carter $500 in exchange. Carter gave the $500 to Smith. The bag contained 5.5 grams of crack cocaine. 15 On January 21, 1999, Smith was arrested as a part of the MET investigation. II. JURISDICTION 16 Jurisdiction is proper under 18 U.S.C. § 3231 which grants subject matter jurisdiction to United States District courts in cases involving offenses against the laws of the United States. Appellate jurisdiction is invoked pursuant to 28 U.S.C. § 1291. III. ANALYSIS A. Fifth Amendment 17 Defendant Smith claims that the district court erred in allowing co-defendant George Carter to assert his Fifth Amendment right not to testify at Defendant Smith's sentencing hearing. "A defendant's challenge to his sentence on constitutional grounds presents a question of law over which this Court should exercise de novo review." United States v. Lloyd, 10 F.3d 1197, 1220 (6th Cir. 1993). 18 Co-defendant Carter was called to the stand during Defendant Smith's sentencing hearing. Co-defendant Carter was sworn in immediately thereafter, and acting through counsel, asserted his Fifth Amendment right stating that he did not wish to testify. The prosecution failed to object to the assertion of the privilege stating that Carter may be exposing himself to criminal prosecution if he were to testify. Defendant Smith argued that Carter had already pleaded guilty to Count X of the indictment and made statements to the government regarding the drug transactions and therefore, should not be allowed to assert his Fifth Amendment privilege. In contrast, Carter's attorney argued that Carter never made statements regarding the issue which Defendant Smith wished to question him. Carter's attorney further argued that if Carter was compelled to testify, he wouldbe exposing himself to perjury and possible obstruction charges. Defendant Smith was permitted to question Carter while Carter's attorney stood next to him to advise Carter of the appropriate instances to assert his Fifth Amendment privilege. Carter answered questions regarding a plea agreement with the government, but objected and asserted his Fifth Amendment rights when questioned about those persons who were present during the November 9, 1998, drug transaction involving the 5.5 grams of crack cocaine. The court sustained the objection. Defendant Smith, again, attempted to question Carter about the persons involved in the incident, but Carter's attorney objected based upon the same grounds. The objections were again sustained by the court. 19 On appeal, Defendant Smith argues that the district court erred in allowing Carter to assert his Fifth Amendment privilege regarding the November 9, 1998 events. Defendant Smith argues that, when Carter entered his guilty plea agreement regarding Count X, any privilege against self-incrimination ceased to exist. Defendant Smith relies upon the Supreme Court's recent decision in Mitchell v. United States, 526 U.S. 314 (1999) in support of his contention that co-defendant Carter was not entitled to assert the Fifth Amendment privilege. 20 It is true, as a general rule, that where there can be no further incrimination, there is no basis for the assertion of the privilege. We conclude that principle applies to cases in which the sentence has been fixed and the judgment of conviction has become final. If no adverse consequences can be visited upon the convicted person by reason of further testimony, then there is no further incrimination to be feared. 21 Id. at 326 (citation omitted). 22 Defendant Smith also offers United States v. Pardo, 636 F.2d 535, 542 (D.C. Cir. 1980) in support of his contention. Defendant Smith claims that the District of Columbia Circuit found that a co-defendant should have been compelled to testify when called by the defendant where the co-defendant feared no other reprisal from the events in question. 23 The government argues that the district court properly allowed Carter to assert his Fifth Amendment privilege. It is the government's position that Carter's testimony may have subjected him to additional charges of perjury, obstruction of justice, and possibly false statements to the police. Therefore, according to the government, Mitchell and Pardo are not applicable to this case. 24 In Mitchell, the Supreme Court resolved the conflict among the circuits created by the Third Circuit regarding whether a convicted defendant could invoke the Fifth Amendment protection against self-incrimination when his testimony at sentencing would have the potential of enhancing his sentence. The Third Circuit had split from those circuits which had held that a defendant convicted but not yet sentenced could invoke the Fifth Amendment privilege against self-incrimination if the testimony sought could be used to enhance the sentence. Mitchell, 526 U.S. 314, 321 (1999) (citing United States v. Kuku, 129 F.3d 1435 (11th Cir. 1997); United States v. Garcia, 78 F.3d 1457 (10th Cir. 1996); United States v. De La Cruz, 996 F.2d 1307 (1st Cir. 1993); United States v. Hernandez, 962 F.2d 1152 (5th Cir. 1992); United States v. Bahadar, 954 F.2d 821 (2nd Cir. 1992); Bank One of Cleveland, N.A. v. Abbe, 916 F.2d 1067 (6th Cir. 1990); United States v. Lugg, 892 F.2d 101 (D.C. Cir.1989); United States v. Paris, 827 F.2d 395 (9th Cir. 1987)). The Supreme Court, reversing the Third Circuit, held that the petitioner in Mitchell "retained the privilege at her sentencing hearing." Id. The Court wrote, that "[t]he centerpiece of the Third Circuit's opinion [was] the idea that the entry of the guilty plea completed the incrimination of the defendant, thus extinguishing the privilege." Id. at 325. The Court stated, "[w]here a sentence has yet to be imposed, however, this Court has already rejected the proposition that 'incrimination is complete once guilt has been adjudicated.'" Id. (quoting Estelle v. Smith, 451 U.S. 454, 462 (1981)). 25 Carter rightfully invoked his Fifth Amendment right against incrimination even though he had already been sentenced. We held in In Bank One of Cleveland, N.A. v. Abbe, that "[a]lthough a defendant pleading guilty to an offense waives the constitutional privilege with regard to the offense admitted, he does not thereby submit 'a blanket waiver as to other offenses that might form the basis of later charges'" regardless of the defendant's sentencing status. 916 F.2d 1067, 1076 (6th Cir. 1990) (citation omitted in Abbe) (quoting United States v. Seaver, 472 F.2d 607, 611 (6th Cir. 1973)). This Court's reasoning was based upon the potential for later charges, not an enhanced sentence. This Court did go on to consider the effect of the defendant's potential testimony on his sentencing and joined the other circuits in holding that Fifth Amendment self-incrimination rights "continue in force until sentencing." Id. at 1075-76. 26 The district court did not err in allowing Carter to assert his Fifth Amendment privilege against self-incrimination at Defendant Smith's sentencing. The D.C. Circuit held in Pardo that the privilege against self-incrimination is lost once a witness has been convicted of the offense with respect to which he fears incrimination, as well as when a witness pleads guilty to the offense in question, rather than being convicted at trial. See Pardo, 636 F.2d at 543. The privilege against self-incrimination is also lost where charges or counts of an indictment are dismissed as part of a plea agreement. Id. The court reasoned that "[s]ince promises to dismiss charges as part of a plea agreement are binding on the Government, a witness may not be exposed to prosecution on those charges, and the need for the privilege is lost." Id. Therefore, a co-defendant could not invoke his Fifth Amendment right regarding the events which surrounded a drug transaction because the co-defendant had already entered into a plea agreement with the government regarding the transaction. Id. at 543-44. "At the same time, it is equally true that a witness does not lose his Fifth Amendment right to refuse to testify concerning other matters or transactions not included in his conviction or plea agreement." Id. at 544 ("Pleading guilty to a crime does not waive the privilege not to incriminate oneself at other times in other crimes, any more than conviction of one crime erases the privilege as it relates to others.") 27 Carter's testimony regarding the November 9, 1998 incident to which he pleaded guilty potentially subjected him to other charges such as perjury or obstruction of justice if the testimony was of a self-incriminating nature, especially since Carter had previously represented that Cornelius Ogletree, not Defendant Smith, was the other person who participated in the November 9, 1998 transaction. Even under Pardo, Defendant Smith's argument on this issue fails. 28 B. Smith's Responsibility for Additional 5.5 Grams of Crack Cocaine 29 "When reviewing a district court's sentencing decision, this court will disturb theunderlying factual findings only if they are clearly erroneous." United States v. Hill, 79 F.3d 1477, 1481 (6th Cir. 1996)(citing 18 U.S.C. §3742(e)); United States v. Hamilton, 929 F.2d 1126, 1130 (6th Cir. 1991)); see United States v. Meacham, 27 F.3d 214, 216 (6th Cir. 1994) (reviewing a district court's factual findings regarding the amount of narcotics attributable to a defendant for clear error)). A finding of fact is clearly erroneous when "'although there is evidence to support it, the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed.'" United States v. Gort-Di-Donato, 109 F.3d 318, 320 (6th Cir. 1997) (quoting United States v. Perez, 871 F.2d 45, 48 (6th Cir. 1989)). 30 In order to calculate a base offense level using the sentencing guidelines, the sentencing court must consider those quantities of drugs not specified in the counts of conviction which were part of the same course of conduct or common plan or scheme. See Meacham, 27 F.3d at 216 (citing USSG § 1B1.3(a)(2); United States v. Zimmer, 14 F.3d 286, 290 (6th Cir. 1994)). "Where the amount is uncertain, the court is urged to err on the side of caution and only hold the defendant responsible for the quantity of drugs for which the defendant is more likely than not actually responsible." Id. (citations and internal quotations marks omitted). "The sentencing court's relevant conduct approximation must be based on reliable information and supported by a preponderance of the evidence." Id. (citing USSG § 6A1.3(a)). 31 The district court found, by a preponderance of the evidence, that the 5.5 grams of cocaine recovered from the November 9, 1998 drug transaction was attributable to Defendant Smith. The court's determination was based upon the testimony of Officer Watts, an officer who worked with the MET. Officer Watts testified that he was personally familiar with Defendant Smith and Cornelius Ogletree. Officer Watts knew that Defendant Smith lived at 608 Walnut Street. Watts had used binoculars to observe the November 9, 1998 encounter with Defendant Smith at 608 Walnut. Officer Watts also heard the informant and Defendant Smith arrange the purchase of one-half ounce of crack cocaine for $500 through an audio recording device. The informant was told to return to 608 Walnut in appropriately thirty minutes, however, Officer Watts was unable to observe the interaction because he was unable to position himself at the surveillance point. Although he was unable to see the transaction, Officer Watts was able to hear the conversation between the informant and Defendant Smith through the audio recording device. Officer Watts testified that he heard the voices of the informant, Defendant Smith and Carter as they attempted to weigh the cocaine. Officer Watts also heard another co-defendant Joe Oglesby. The testimony of Officer Watts, the videotape and the audiotape of the November 9, 1998, were played for the district court at sentencing. 32 The district court found that the record showed, by a preponderance of the evidence, that Defendant Smith was involved in the November 9, 1998 transaction. The district court stated: 33 I am satisfied by a preponderance of the evidence that Mr. Smith was involved in this transaction. I have to concede, along with Mr. Hudson, that neither the video nor the audiotapes are a model of clarity. However, I certainly could make out the name "Michael," from Mr. Oglesby, in response to the question "who is up there," from the confidential informant. 34 The officer who testified, Agent Watts, indicated that he knew MichaelSmith, knew his voice, saw him through a pair of binoculars, which gave him a better view of the person in the window with the distinctive yellow hat, and also recognized his voice. 35 The quality of the tape is poor, and the speed varies so that at times the voice sounds more like Mickey Mouse than it does anybody else than any of us, think, know in real life. But I still believe that the agent's testimony was credible in that he said he recognized Michael both visually and on the tape. He also indicated that he does know the so-called "fat-man," Cornelius Ogletree, both by sight, and would recognize his voice, and that he did not see him or hear him in the course of this transaction. 36 And Mr. Smith has not adduced any testimony or evidence to contradict Agent Watts. And while Mr. Hudson [defense attorney] has made an heroic attempt to attack Agent Watts's credibility or observations, nevertheless, I think without success. 37 I am satisfied at least by a preponderance of the evidence, and actually probably more than that, that Mr. Smith was involved in this transaction. 38 (J.A. at 100-01.) 39 On appeal, Defendant Smith argues, that the district court should not have relied upon the audiotape. Defendant Smith contends that because the quality of the audiotape is poor the name "Mike" or "Michael" is hard to discern from the tape. Defendant Smith asserts that there is nothing to show that Defendant Smith is the "Mike" in question. It is Defendant Smith's position that the word "fat" which can be heard on the tape indicates that the person present at the transaction was "the Fatman" (Cornelius Ogletree). Defendant Smith contends that if the audio tape is not considered, the district court is left with nothing but Officer Watts' testimony to support its conclusion that Defendant Smith was present at the time of the November 9, 1998 drug transaction. Defendant Smith contends that the district court erred in solely relying upon the testimony of one officer in finding that Defendant Smith was present at the time of the drug transaction. Defendant Smith relies upon Meacham. 40 Meacham held that the district court had clearly erred in relying upon the testimony from a single officer in determining the amount of drugs attributable to the defendants for sentencing purposes. However, Meacham did not base its holding solely on this premise. The Meacham court was most troubled by the district court's failure to make an individualized inquiry into the nature of the defendants' involvement in the conspiracy when the court determined the amount of drugs attributable to defendants. See 27 F.3d at 217. The court stated specifically that: 41 While troubled by the somewhat speculative nature of the court's quantity calculation, we are most disturbed by the fact that the district court failed to make individualized findings regarding the scope of the conspiracy and the duration and nature of each defendant's participation in the scheme. The court held a single hearing at which a lone government witness testified, then indiscriminately imported its factual findings concerning the amount of narcotics for which Jones was responsible into the Meacham and Botello sentencing calculus. Apparently, the district court simply assumed that Meacham and Botello were to be held accountable for all narcotics channeled through the conspiracy. In doing so, the court erred. Id. 42 It was the failure of the district court to differentiate between co-conspirators, not the reliance upon the government'ssingle witness that this Court found clearly erroneous. 43 In the case at bar, the district court did not engage in speculation when calculating the amount of drugs attributable to Defendant Smith. The court made the individualized inquiry into Smith's involvement in the November 9, 1998 drug transaction that we found lacking in Meacham. The district court viewed all the available evidence. The court viewed the videotape, listened to the audiotape, and heard testimony from Officer Watts (who was familiar with Defendant Smith) that he heard Defendant Smith's voice on the audiotape. The district court's findings are distinguishable from the assumptions made by the district court in Meacham. Given the entire record, the district court clearly did not err in attributing the 5.5 grams of crack cocaine to Defendant Smith for sentencing purposes. The findings of the district court as to the amount of drugs attributable to Defendant Smith for sentencing purposes were not clearly erroneous. C. Reduction of Smith's Offense Level 44 The sentencing court's acceptance of responsibility determination is "entitled to great deference on review." USSG § 3E1.1, comment(n.5). This Court reviews "for clear error a district court's finding that a defendant is not entitled to a sentence reduction for acceptance of responsibility." See United States v. Tilford, 224 F.3d 865, 867 (6th Cir. 2000). "However, the standard of review is de novo where... the only issued presented is the propriety of the application of the reduction to uncontested facts." Id. The reduction of Defendant Smith's offense by two levels instead of three levels for acceptance of responsibility is not error. 45 At sentencing, Judge Beckwith invited defense counsel to address the issue of whether Defendant Smith was entitled to a three level reduction in his offense level for acceptance of responsibility. Judge Beckwith noted that the additional one level reduction is typically awarded when a defendant promptly notifies the government of his intention to plead guilty. Defendant Smith did not notify the government until the evening before trial. The record reflects the following: 46 THE COURT: The extra point for acceptance of responsibility under Section 3E1.1(b) may be awarded for either of two reasons; first timely providing complete information to the government concerning his own involvement in the offense; or, second, timely notifying authorities. 47 Anything you would like to say on the issue of providing complete information to the government? 48 MR. OAKLEY [PROSECUTOR]: Your Honor, we have never spoken to Mr. Smith. We don't have any information as to what he would say to us. 49 THE COURT: You agree with that, Mr. Hudson? 50 MR. HUDSON [DEFENSE COUNSEL]: That would be accurate, Your Honor. 51 THE COURT: All right. So clearly Mr. Smith does not qualify under Subsection(b)(1). The only way he could qualify for the extra point is if, under (b) (2), he timely notified authorities of his intention to enter a plea of guilty, permitting the Court and the government to allocate its resources efficiently. 52 I think clearly on this record that Mr. Smith is not entitled to that additional reduction under Section (b) (4), timely notification. That would increase his offense level to 24. And that would move him from a sentencing range of 84 to 105months, to a sentencing range of 92 to 115 months. 53 Before we move beyond that point I will give both counsel any - the opportunity to make any comments that they would like. 54 MR. OAKLEY: Nothing from the United States, Your Honor. 55 THE COURT: Mr. Hudson? 56 MR. HUDSON: Did you say, I am sorry, Your Honor, did you say before we move beyond that point? 57 THE COURT: Right. It's my opinion, and I haven't heard anything to the contrary, unless you have something new on the point, that it's going to be my ruling that Mr. Smith is not entitled to the third acceptance or responsibility point reduction because he did not accept responsibility and notify the government in a timely fashion, nor did he provide complete information to the government, and therefore, he does not qualify. 58 MR. HUDSON: I have no more objections nor any more information on that Your Honor. 59 (J.A. at 104-05.) 60 The district court did not err in reducing Defendant Smith's offense level by only two points instead of three for acceptance of responsibility. Pursuant to the sentencing guidelines, a defendant may decrease his offense level by two levels if he "clearly demonstrates acceptance of responsibility for his offense." See USSG § 3E1.1(a). In United States v. Bashara, 27 F.3d 1174, 1184 (6th Cir. 1994), this Court found that the district court did not err in limiting a defendant's reduction to two levels because the defendant waited until five days before trial to enter his guilty plea. Due to the delay by the defendant, the government was compelled to prepare its entire case for trial. Similarly, Defendant Smith waited until 6:00 p.m. on the eve of trial to notify the government of his decision to plead guilty requiring the government to prepare its entire case as in Bashara. In light of the above outlined facts, the district court did not err in limiting Smith's reduction to two levels for acceptance of responsibility. IV. CONCLUSION 61 For the reasons set forth above, we AFFIRM Defendant Smith's judgment of conviction and sentence. NOTE: * The Honorable Denise Page Hood, United States District Judge for the Eastern District of Michigan, sitting by designation.	{ "pile_set_name": "FreeLaw" }
266 F.Supp. 651 (1967) W. H. WILLIAMS et al., Plaintiffs, v. WHEELING STEEL CORPORATION, etc., Defendant. No. 1061-W. United States District Court N. D. West Virginia. April 13, 1967. 652 Gilbert S. Bachmann, Melvin W. Kahle, Wheeling, W. Va., James A. Ashton, Pittsburgh, Pa., for plaintiffs. Thomas B. Miller, Schmidt, Laas, Schrader & Miller, Burr A. Horn, Jr., Gen. Counsel, Wheeling Steel Corp., Wheeling, W. Va., for defendant. James P. Clowes, Wheeling, for United Steel Workers of America, as amicus curiae. MAXWELL, Chief Judge. This suit, purporting to be a class action, was brought by a number of former employees of the Wheeling Steel Corporation against their employer.[1] The defendant, Wheeling Steel Corporation, has filed a motion to dismiss the plaintiffs' action for failure to state a claim upon which relief could be granted. This motion was made pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure. Thus, it is within the narrow procedural framework of this motion that the Court now considers the claims of these plaintiffs. The plaintiffs allege, and the record at this juncture does not contradict the allegation, that they were members in good standing of the union which represented them during the events which lead to this controversy. The union, the United Steelworkers of America (hereinafter Steelworkers), was originally a party defendant in this suit but was dismissed with prejudice by an order entered on October 22, 1962. The plaintiffs, at that time, made no objection to the dismissal of the Steelworkers. The plaintiffs set forth the factual background of their alleged cause of action in paragraphs 9 and 10 of their amended complaint, filed with this Court on November 1, 1962. "On or about March 5, 1956, defendant, Wheeling Steel Corporation, announced and represented to its employees that one of their plants, namely the Wheeling Factory located in the City of Wheeling, West Virginia, was to close. Simultaneously with the aforesaid action of the Wheeling Steel Corporation, said corporation did announce to all employees of the Wheeling Factory that they would be required to make a final and irrevocable choice of one of the following options: (a) Interplant transfer option, or (b) Pension option for those who may be eligible, or (c) Severance pay option for those who may be eligible, and each employee was required within five (5) days following the contact to make known his or her choice of option on a form to be signed by the employee. "Plaintiffs allege and aver that the representations of the defendant, Wheeling Steel Corporation, that said plant would close, was false and fraudulent and/or a material misrepresentation of fact; that in fact, said plant did not close and was still operating as late as 1962 and continued in active operation from the 5th day of March 1956 until the early part of January 1961." The amended complaint goes on to specify some five categories into which the plaintiffs, and those whom they claim to represent, allegedly fall. Without attempting to delineate with precision the 653 bounds of plaintiffs' categories, each of the wrongs alleged flows from the three options which the plaintiffs were given on March 5, 1956. In essence, the plaintiffs contend that they were denied their contractual rights to continued employment from the time that they were actually laid off until the time that they would have been laid off if the contractual provisions covering the "phasing out" of the Wheeling Factory had been followed. There are two collective bargaining agreements between Wheeling Steel and the Steelworkers which cover the employment status of the plaintiffs. The first of these contracts is the "1954 Agreement" which covered all of the employees of Wheeling Steel. This agreement is of little importance here, except that it outlines the grievance adjustment procedure.[2] The Court assumes, and has not been advised to the contrary, that the arbitration provisions of the 1954 Agreement are applicable to the Supplemental Agreement of 1956. However, if the arbitration provisions did not apply there would be no question that the plaintiffs here could maintain their suit. Smith v. Evening News Ass'n, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246. The second, and more important, contract which is applicable here is the "Agreement of April 24, 1956," which sets out in detail the procedure to be followed in the "phasing out" of the Wheeling Factory. Here, Wheeling Steel and the Steelworkers spelled out the options, and the ramifications thereof, which were to be afforded the employees of the Wheeling Factory in light of the anticipated closing of that facility. This agreement, in the section dealing with the Inter-Plant Transfer Option, provides that these employees shall continue to retain Wheeling Factory seniority for certain limited purposes. Section I(A) D (c)1 provides in part: "If such employee should be laid off from the plant to which transferred, he may use his Wheeling Factory Plant seniority or Unit seniority for the purpose of obtaining work at Wheeling Factory by displacing another employee of such Certified Collective Bargaining Unit junior to him in Wheeling Factory seniority." This provision seems to indicate that transferred employees could have returned to the Wheeling Factory provided that certain special conditions were met, i. e., the retention of plant or unit seniority sufficient to displace an individual who was working at the Wheeling Factory. The provisions of the 1956 Agreement dealing with those employees who elected the pension or severance pay options do not contain a similar clause. At this point, the issue before the Court is not the merits of the plaintiffs' claims but, rather, the question of whether their amended complaint states a valid cause of action. It is, of course, well-settled that where, as here, the contract covering the employment status of the company's employees contains an exclusive arbitration clause, the employees must at least attempt to exhaust the grievance and arbitration procedures established by the collective bargaining agreement. Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580. This is 654 grounded on the idea that since the employee's claim arises from the collective agreement, he must follow the procedure which is set up for the adjustment of disputes with regard to his contractual rights. The Maddox case left open the question of the employee's status after he had attempted to exhaust his contract remedies. This situation has been clarified by the United States Supreme Court in its recent decision of Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842, which was handed down on February 27, 1967. The factual situation in Vaca v. Sipes is somewhat different from the case at bar, but the Court enunciated guidelines applicable in a suit by an employee against his employer. One of the situations mentioned by the Court in its opinion was: " * * when * * * the union has sole power under the contract to invoke the higher stages of the grievance procedure, and if, as is alleged here, the employee-plaintiff has been prevented from exhausting his contractual remedies by the union's wrongful refusal to process the grievance." (Emphasis by the Court). The Court further observed that although the employer might be blameless in the situation in that he "may have done nothing to prevent exhaustion of the exclusive contractual remedies," the employer has nonetheless committed a wrongful discharge in breach of the agreement; "* * * a breach which could be remedied through the grievance process to the employee-plaintiff's benefit were it not for the union's breach of its statutory duty of fair representation to the employee." In paragraph 16 of their amended complaint, the plaintiffs make the following allegation: "Notwithstanding the efforts of large numbers of the plaintiffs to have the Union file and process a grievance for them, none was ever processed until after this suit was filed and then, unknown to any of the parties thereto, the defendant corporation and certain members of the officers of the Union and the Grievance Committee caused a grievance to be processed for approximately thirty-two (32) individuals without their knowledge and although the grievance was successfully prosecuted for part of the individuals (sic) claim, your plaintiffs knowing nothing about it, did not testify concerning it and they feel that by reason of the small amount recovered, it was nothing more than an attempt to defeat this lawsuit by said action * * ." This allegation would appear to fall within the requirement set out in Vaca v. Sipes providing that an aggrieved employee, to maintain a cause of action in the face of an asserted defense grounded on failure to exhaust the exclusive contract grievance procedure, must allege that his attempt to exhaust was thwarted by "arbitrary, discriminatory or * bad faith" conduct on the part of the union. The plaintiffs' burden in resisting a motion to dismiss for failure to state a cause of action is a relatively slight one. Professor Moore puts it well: "* * * a complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim. Pleadings are to be liberally construed. Mere vagueness or lack of detail is not ground for a motion to dismiss, but should be attacked by a motion for a more definite statement." (Emphasis and footnotes omitted.) 2 Moore, Federal Practice, Section 12.08. As Mr. Justice Black cogently observes in his Vaca v. Sipes dissent, the courthouse door has been opened only slightly in suits by employees against their employer and/or union. The plaintiffs in the action now before the Court have a heavy burden to bear in completing the full circle of their litigation. A breach of the duty of fair 655 representation can not be established merely by proving that the grievances of these employees had merit. However, this Court feels that the plaintiffs here should have an opportunity to attempt to meet this burden. It may be that this case is an appropriate one for summary judgment when the parties have completed the necessary discovery. One of the difficulties of this case is that there is presently no information before the Court with regard to the handling of those grievances which were processed. The Maddox case indicates that the mere fact that an employee's grievance was processed would not in itself be enough to bar the employee's suit. "If the union * * only perfunctorily presses the individual's claim differences may arise as to the forms of redress then available." 379 U.S. at 652, 85 S.Ct. at 616. However, this is a question that can not be passed on until it is more precisely presented to the Court. The Court will, therefore, overrule the motion of the defendant, Wheeling Steel Corporation, to dismiss for failure to state a cause of action. NOTES [1] The plaintiffs, in their brief, argue that they can recover on either of two theories: "* * * the first a common law action of deceit and the second an action under the collective bargaining agreement itself." The plaintiffs largely abandoned the first theory during oral argument, conceding that their case was, for all practical purposes, based on Section 301 of the Labor Management Relations Act (29 U.S.C. § 185). [2] Article IX of this agreement provides for the adjustment of grievances. Section 1 of this article contains the standard quid pro quo agreement between the company and the union in which the union yields the right to strike for the period of the contract and the company agrees to arbitrate the grievances which arise under the agreement. The procedure set out in Section 2 provides for five stages of negotiations. The first four stages provide for conferences between increasingly higher levels of company and union officials. The fifth and final stage of the grievance procedure calls for the submission of the grievance to "* * * an impartial umpire to be appointed by mutual agreement of the parties hereto." It further provides that the decision of this umpire will be final. It is not immediately clear from the agreement itself whether an individual employee may sua sponte prosecute his grievance to the fifth stage.	{ "pile_set_name": "FreeLaw" }
92 Ill. App.3d 509 (1980) 415 N.E.2d 34 SERVO INSTRUMENTS, INC., Plaintiff-Appellant, v. FENWAY MACHINE COMPANY, Defendant-Appellee. No. 80-157. Illinois Appellate Court Third District. Opinion filed December 31, 1980. Thomas Perona, of Perona, Perona & Tonozzi, of Spring Valley, for appellant. Boyle & Goldsmith, of Hennepin (Walter Durley Boyle, Linn C. Goldsmith, and Roger C. Bolin, of counsel), for appellee. Judgment affirmed. Mr. JUSTICE SCOTT delivered the opinion of the court: Plaintiff, hereinafter referred to as Servo, brings this appeal from an order of the Circuit Court of Bureau County which granted a motion of the defendant, hereinafter referred to as Fenway, to quash service of process for lack of personal jurisdiction. The order further dismissed Servo's cause of action which sought recovery of damages for an alleged breach of contract for the sale of electrical components. Servo is an Illinois corporation engaged in the business of manufacturing and selling electrical equipment, having its plant and only place of business located in Spring Valley, Illinois. Fenway is a Pennsylvania corporation and has never been licensed to transact business in Illinois. Fenway does not have or maintain offices in Illinois, nor does it send agents, officers or other personnel into the State of Illinois to conduct its business. Servo became aware of Fenway's possible need of electrical parts when Mr. Gran of Howard Industries, located at Milford, Illinois, told Robert Small, president of Servo, that Howard Industries was unable to fill an order for such material. Gran informed Small of Fenway's address, 510 telephone number, and the name of its sales manager, to-wit, Mr. Yermish. Mr. Small on behalf of Servo placed a call to Mr. Yermish in Philadelphia. This call resulted in Small going to Philadelphia for the purpose of conferring and negotiating with representatives of Fenway. Affidavits filed by plaintiff and defendant are in conflict as to whether an agreement was reached between the parties on June 21, 1977, or at a later date after further phone calls and negotiations. The affidavit filed on behalf of Fenway strongly indicates that an agreement was reached in Philadelphia on June 21, 1977, since an invoice (No. 1843) bearing that date requesting the shipment of a number of armatures and fields is attached to Fenway's affidavit. A supplemental affidavit filed by Fenway is supported by an Exhibit A, which is correspondence from Mr. Small of Servo to Mr. Yermish of Fenway and which in pertinent part reads as follows: "July 5, 1977 Mr. Joseph Yermish Fenway Machine Company, Inc. 1910 N. Marshall Street Philadelphia, PA 19122 Dear Mr. Yermish, Thank you for the courtesies extended to Al Boada and myself during our visit. I also want to thank you for your P.O. #1843 for: * * Very truly yours, Robert A. Small President." Further orders for electrical equipment were placed by Fenway with Servo, however, on October 3, 1979, Servo filed a complaint against Fenway to collect the purchase price for such material. Fenway, after being served with summons in Philadelphia, filed a special appearance pursuant to section 20 of the Illinois Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 20) and a motion to quash summons based on its assertion that the Illinois circuit court did not have in personam jurisdiction over the defendant. After considering affidavits filed by the respective parties and arguments of counsel, the trial court as previously stated granted Fenway's motion and this appeal ensued. The sole issue presented is whether the Circuit Court of Bureau County had in personam jurisdiction over the defendant. The determination of this issue requires an examination of what is 511 commonly known as the "long-arm" statute (Ill. Rev. Stat. 1977, ch. 110, par. 17), which provides in pertinent part: "(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts: (a) The transaction of any business within this State; * ." The long-arm statute reflects a conscious purpose to assert jurisdiction over nonresident defendants to the extent permitted by the due process requirements. These requirements of due process were first set out in International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L.Ed. 95, 66 S.Ct. 154, in which the Supreme Court held that a defendant must have certain minimum contacts with the forum State such that maintenance of the suit does not offend traditional notions of fair and substantial justice. The United States Supreme Court further defined due process requirements in Hanson v. Denckla (1958), 357 U.S. 235, 2 L.Ed.2d 1283, 78 S.Ct. 1228. In Hanson it was stated that, "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws." 357 U.S. 235, 253, 2 L.Ed.2d 1283, 1298, 78 S.Ct. 1228, 1240. As previously stated, the affidavits of the parties present a sharp conflict as to the question of where the contract they entered into was consummated. Should we deem it necessary to make such a determination it would be difficult to quarrel with Fenway's position that a contract was entered into when Small of Servo journeyed to Pennsylvania. We do not, however, find it compelling to make such a determination, since the precise question as presented in the instant case and resulting from a strikingly similar factual situation was resolved in the case of Woodfield Ford, Inc. v. Akins Ford Corp. (1979), 77 Ill. App.3d 343, 395 N.E.2d 1131. In Woodfield an Illinois automobile dealer sued a Georgia automobile dealer for breach of contract concerning the sale of cars. The defendant moved to quash service of process and dismiss for lack of personal jurisdiction. The trial court denied the motion, however, upon review the decision was reversed by the Appellate Court of the First District. The appellate court held that defendant's contacts with Illinois were not sufficient to support jurisdiction under Illinois' long-arm statute where sale of cars by defendant was initiated by plaintiff, both by telephone and personal visit to Georgia, and defendant's entire performance took place in Georgia with payment and delivery occurring 512 there and there were no contracts indicating that defendant voluntarily conducted business in Illinois. In Woodfield the appellate court made the following observation: "On the contrary, the record shows that plaintiff sought out defendant, who then performed entirely from outside of the State. To uphold jurisdiction in this instance would be tantamount to allowing plaintiff to `lure' defendant into the State. Finding jurisdiction over defendant here on the basis of plaintiff's actions is not consistent with the `traditional notions of fair play and substantial justice' mandated by International Shoe." 77 Ill. App.3d 343, 351, 395 N.E.2d 1131, 1137. The foregoing observation in Woodfield is applicable to and determinative of the issue present in the instant case, and consequently we support the trial court in its holding that the Circuit Court of Bureau County did not have in personam jurisdiction over the defendant Fenway. We set out in some detail the conflict concerning the locus in quo consummation of the contract between the parties occurred. Recognition of this conflict was deemed necessary as the result of Servo's strong reliance on the case of Ward v. Formex, Inc. (1975), 27 Ill. App.3d 22, 325 N.E.2d 812. Ward is also a case similar to the instant case; however, it is distinguishable in that in Ward the defendant Nevada corporation admitted that it had arranged a contract for services with an Illinois resident. Unlike the defendant in Woodfield, the defendant in Ward was not "lured" into the State of Illinois, but on the contrary purposely availed itself of conducting business activities in Illinois, thus invoking the benefits and protection of the laws of our State. For the reasons set forth the judgment order of the Circuit Court of Bureau County is affirmed. Affirmed. ALLOY, P.J., and STOUDER, J., concur.	{ "pile_set_name": "FreeLaw" }
962 So.2d 912 (2007) STATE v. CONNER. No. 2D06-1869. District Court of Appeal of Florida, Second District. August 10, 2007. Decision without published opinion. Affirmed.	{ "pile_set_name": "FreeLaw" }
95 B.R. 451 (1988) In re FOOD CITY, INC., Debtor. Bankruptcy No. 88-51685. United States Bankruptcy Court, W.D. Texas, San Antonio Division. December 23, 1988. 452 Randolph N. Osherow, Thomas W. McKenzie, Kampmann & Church, San Antonio, Tex., for debtor. Andrew E. Jillson, Jeffrey H. Weir II, Jenkins & Gilchrist, P.C., Dallas, Tex., for KP/Miller Realty Group Fund I. David S. Gragg, Jeffers, Brook, Kreager & Gragg, Inc., San Antonio, Tex., for NCNB Texas Nat. Bank as successor to First Republic Bank San Antonio, N.A. Ben Steinhauser, Burns and O'Gorman, San Antonio, Tex., for Mendez Bros. Produce Co. Bruce Waitz, Waitz, Greer, Harrell & Cennamo, San Antonio, Tex., for Official Unsecured Creditors' Committee. DECISION AND ORDER LEIF M. CLARK, Bankruptcy Judge. At San Antonio, Texas on the 10th day of November, 1988, came on for hearing the Application of K.P./Miller for payment of administrative expenses arising from breach of a covenant of a nonresidential real property lease, together with the Responses thereto by the debtor, the official creditors' committee, and NCNB-Texas National Bank. Upon consideration thereof, the court enters the following decision and order. BACKGROUND FACTS KP/Miller Realty Growth Fund I ("KP Miller") leased a commercial site in a shopping center to Food City, the debtor in this case, for one of the debtor's discount grocery marts. The site comprised forty percent of the total leased space in the shopping center. According to KP Miller's representative, the grocery accounted for a substantial portion of the "traffic" throughout the center, one of the prime benefits to be gained by the landlord from renting the space to such a tenant as the debtor. KP Miller spent something in excess of $250,000 in tenant finish-out, as part of the inducement to Food City to lease the space. The lease was executed in December 1987. Some seven months before, the previous tenant (another supermarket retailer) had moved out without warning. It built its own store less than a mile away, but prevented a competitor from moving into the 453 vacated space by holding the lease with continued monthly payments. In the process, it deprived the landlord of the traffic an active tenant would otherwise provide for the remainder of the center. KP Miller insists that it was this bitter experience which lead to the inclusion of a "going dark" clause in the current lease. This rather unusual provision levied a fee of $250,000 against the debtor if the debtor ceased to do business as a grocery store on the premises within the term of the lease.[1] The debtor filed bankruptcy on or about June 3, 1988. Sixteen days later, on June 19, 1988, the debtor "went dark" at this location. The debtor took no steps to assume or reject the lease until nearly the end of the sixty day grace period provided in Section 365(d)(4).[2] The creditor, meanwhile, took no steps to enforce the terms of the "going dark" clause until July 28, 1988, when it filed its motion for immediate payment of administrative expenses. The lease was deemed rejected by operation of law on August 2, 1988. KP Miller contends that the debtor failed to "timely perform" one of its obligations under the lease after the bankruptcy filing, namely, the obligation to continue operating a grocery store on the leased premises. As a result, it contends that the debtor has incurred an administrative claim of $250,000 due to KP Miller. What is more, KP Miller adds that the fee is immediately due and payable, because the obligations imposed by this section of the Bankruptcy Code are independent of Section 503(b)(1), which otherwise regulates the allowance of administrative claims for the actual, necessary costs and expenses of preserving the estate. See In re By-Rite Distributors, Inc., 47 B.R. 660 (Bankr.D.Utah 1985). KP Miller relies heavily on Section 365(d)(3), which provides that The trustee shall timely perform all the obligations of the debtor, except those specified in section 365(b)(2), arising from and after the order for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected, notwithstanding section 503(b)(1) of this title. . . . 11 U.S.C. § 365(d)(3) (emphasis added). The debtor, the unsecured creditors' committee, and NCNB, the debtor's principal secured lender all oppose KP Miller's request.[3] They maintain that Section 365(d)(3) was never intended to apply to this sort of default. Even if it did, it would in any event not entitle the landlord to recover any more than state law would authorize and, under Texas law, such penalties 454 are not enforced. Finally, they argue that, in any event, the debtor is not guilty of failure to "timely perform," because its liability under the lease would mature only upon the expiration of thirty days' notice of default. They point out that no notice was given, other than the filing of the motion for payment of administrative expense, and that thirty days after that motion's filing would place timely performance outside the sixty day period during which the duty imposed by Section 365(d)(3) applies.[4] For the reasons set out herein, this court finds the debtor's position (and the position of its allies) the more tenable and denies the requested relief. ANALYSIS I. The obligation in question was not the sort of obligation contemplated by Section 365(d)(3) The default in question does not appear to have arisen from the rejection of the lease, as it took place more than a month prior to the debtor's formal rejection of the lease. 11 U.S.C. § 365(g).[5] A debtor may decide to neither assume nor reject for a period of time, while it evaluates its options. During this "grace period," the general rule has been that the debtor will still be liable to the nondebtor party to the lease or executory contract for the value of the services or benefits derived therefrom, to the extent the services were reasonably necessary and to the extent of the benefit derived by the estate. See In re By-Rite Distributing, Inc., 47 B.R. 660, 663-64 (Bankr.D.Utah 1985). Such claims have traditionally been accorded priority status as administrative claims arising under Section 503(b)(1). The claim was only allowed upon application, and was not paid until the time for distribution of assets. In a chapter 11 case, that generally did not occur until confirmation. 11 U.S.C. § 1129(a)(9)(A); 3 Collier on Bankruptcy, para. 503.02 at 503-5 (1987). Section 365 was amended in response to intense lobbying by shopping center landlords who chafed under Section 502(b)(1)'s constraints. In re By-Rite Distributors, Inc., supra. At least two discrete problems were raised by that lobby and addressed by Congress in two separate provisions of Section 365(d). First, there was the problem of long-term vacancy or partial occupancy. The landlord could not re-let the space until the lease was actually rejected, but the "dark" store hurt other tenants because of reduced customer traffic and the bad impression that a dark store makes. 130 Cong Rec S8894 (June 29, 1984) (remarks of Sen. Hatch). To remedy this problem, Congress enacted Section 365(d)(4), which forced the debtor to make a decision to assume or reject within sixty days or the lease would be rejected automatically and the debtor forced to surrender the premises to the landlord, if it had not already done so. Id.; 11 U.S.C. § 365(d)(4). In this way, Congress reallocated the relative burdens imposed by a tenant's "going dark" by limiting the landlord's exposure to sixty days. The harm to the landlord was not entirely eliminated, however, as landlords must bear part of the cost of bankruptcy just as must other creditors and the debtor.[6] 455 Section 365(d)(3) was enacted to address a different problem, that of a landlord's having to "carry" the cost of the tenant's occupancy, often at the expense of other tenants. A second and related problem is that during the time the debtor has vacated space but has not yet decided whether to assume or reject the lease, the trustee has stopped making payments due under the lease. These payments include rent due the landlord and common area charges which are paid by all the tenants according to the amount of space they lease. In this situation, the landlord is forced to provide current services the use of its property, utilities, security, and other services without current payment. No other creditor is put in this position. In addition, the other tenants often must increase their common area charge payments to compensate for the trustee's failure to make the required payments for the debtor. Id. (emphasis added). To meet this problem, Section 365(d)(3) requires the trustee to maintain these "current" obligations: The bill would lessen these problems by requiring the trustee to perform all the obligations of the debtor under a lease of nonresidential real property at the time required in the lease. This timely performance requirement will insure that debtor-tenants pay their rent, common area, and other charges on time pending the trustee's assumption or rejection of the lease. Id. (emphasis added); 11 U.S.C. § 365(d)(3).[7] The clear intent is thus to assure that landlords not be compelled to furnish current services without being compensated on a current basis.[8] The use in the statute of the phrase "all obligations" must be read against the backdrop of the legislative history, which did not purport to confer a windfall on landlords but merely to protect them from bearing too much of the burden incident to the process of assumption/rejection. KP Miller, however, arguing that the phrase must be given a literal interpretation, contends that Food City's obligation was to pay KP Miller $250,000 when it moved out. That interpretation does not square well either with a fair reading of the lease or with a fair reading of the statute as a whole. First of all, the "obligation" in question is not to pay the fee, but to keep the store open, i.e., not to "go dark." It was that obligation which, when breached, raised the issue of the charge.[9] The fee itself is merely the remedy for failure to perform, i.e., for not keeping the store open and operating. In this regard, the "going dark" fee differs fundamentally from other rights to payment under the lease. Rents, for example, are not a remedy for breach of an obligation. They are the obligation. The same is true for such other items as common area maintenance charges, utilities, and even taxes. See 130 Cong Rec S8994-95 (daily ed. June 29, 1984) (remarks of Sen. Hatch) ("this timely performance 456 requirement will insure that debtor-tenants pay their rent, common area and other charges on time . . ."). Section 365(d)(3) may compel timely performance of obligations due under the lease, such as the obligation to pay rent. It does not, in this court's view, compel the timely payment of the default remedy for failure to timely perform an obligation due under the lease, such as the obligation to keep the store open. The obligation not to go dark is not a proper subject for Section 365(d)(3) in any event.[10] In fact, the problem of early vacancy is already addressed far more efficiently by Section 365(d)(4), which returns the premises to the landlord within 60 days after the bankruptcy filing. There is no need to look to Section 365(d)(3) for further remedy to the problem and to do so only confers a benefit on landlords never intended by Congress.[11] Even were the obligation in question to be in fact the obligation to pay the "going dark" fee, Section 365(d)(3) does not purport to encompass such a fee within its directive that the trustee timely perform all the obligations of the debtor. See footnote 10, supra. Virtually every case which has ever applied this statute (including every case cited by KP Miller in its brief) has done so in the context of current obligations such as rent, common area maintenance charges, trash pick-up and the like. In re Rare Coin Galleries of America, Inc., 72 B.R. 415, 416 (D.Mass.1987) (rent and trash pick-up); In re Dieckhaus Stationers of King of Prussia, Inc., 73 B.R. 969, 972 (Bankr.E.D.Pa.1987) (rents); In re DeSantis, 66 B.R. 998, 1004-05 (Bankr.E. D.Pa.1986) (rents); In re Coastal Dry Dock & Repair Corp., 62 B.R. 879, 882-83 (Bankr.E.D.N.Y.1986) (rents and utility charges); Matter of Lonqua, 58 B.R. 503, 505 (Bankr.W.D.Wis.1986) (rents). None of these cases authorized recovery of liquidated damages, penalties, or other extraordinary fees. This court does not believe that Congress ever intended the word "all" to be read so literally that it would include such charges as this "going dark" fee simply because the charge serendipitously arises during the sixty day grace period preceding the deadline for assumption or rejection.[12] II. The debtor was not obligated under Section 365(d)(3) because timely performance of the obligation was not required within the 60 day period contemplated under that section Even if KP Miller were right in its interpretation of Section 365(d)(3), it is wrong in application of its salutary provisions to the facts of this case, for the default in question did not become an obligation of the estate until August 28, 1988, thirty days after the first writing which could be considered a notice of default under 457 the lease. The lease specifically accords the debtor thirty days within which to cure any breach of a covenant under the lease, one of which is the covenant not to "go dark."[13] Under Section 365(d)(3), the trustee is obligated to timely perform the obligation of the debtor. Timely performance in this case would not have been triggered until the notice was sent. KP Miller argues that the automatic stay prevented the landlord from giving notice under the lease.[14] Arguably, the automatic stay should not prevent a landlord from enforcing a post-petition obligation of the trustee that arises under the Bankruptcy Code itself.[15] By virtue of Section 365(d)(3), the current obligations of the debtor are imposed upon the trustee. A number of courts have acknowledged that the section is disquietingly silent about the remedies available to the landlord when the debtor does not timely perform these obligations. In re Dieckhaus Stationers of King of Prussia, Inc., 73 B.R. 969, 973 (Bankr.E.D.Pa.1987); In re Compass Van & Storage Corp., 61 B.R. 230, 233 n. 4 (Bankr.E.D.N.Y.1986); In re Musikahn, 57 B.R. 942, 945 (Bankr.E.D.N.Y.1986); In re Southwest Aircraft Services, Inc., 53 B.R. 805, 808 (Bankr.C.D.Cal.1985). The landlord's caution is understandable, in view of the substantial damages which can accrue from a violation of the stay. See 11 U.S.C. § 362(h); see generally Comment, Monetary Awards to the Debtor for Violations of the Automatic Stay, 11 Fla.S.U.L.Rev. 423 (Summer 1983). Caution does not translate into excuse, however. Cases in this area suggest a number of ways in which the matter could have been brought to a head, for example, by filing a motion for relief from stay, as was done in Compass Van & Storage Corp., or by filing a motion to compel performance under Section 365(d)(3), as the landlord did in Dieckhaus Stationers. As it was, KP Miller took no such action until nearly the end of the sixty-day grace period. Under the exact terms of the lease (and it is KP Miller which so strenuously insists on the lease's exact terms), the Debtor had thirty days after notice, and until the expiration of that grace period, was excused from performance. The first "written notice" was KP Miller's application, filed July 28, 1988. Thirty days expired at a point in time which all agree was well after the lease was rejected by operation of law. Section 365(d)(3) does not apply to the payment of the "going dark" penalty under the facts of this case. KP Miller counters that the fee was in fact due immediately upon the debtor's going 458 dark, noting for support how important it was to KP Miller to prevent a repeat of its experience with a previous grocer at this location. Such a close reading of the "going dark" clause would cut off any chance to cure the default, rendering nugatory the default and cure provisions of the lease. In construing a contract, a court should arrive at that interpretation which most harmoniously gives effect to all of its substantive terms. Deaville Corp. v. Federated Dept. Stores, Inc., 756 F.2d 1183 (5th Cir.1985); R.C. Small & Assoc., Inc. v. Southern Mechanical, Inc., 730 S.W.2d 100 (Tex.App. Dallas 1987, no writ); Seaman v. Seaman, 686 S.W.2d 206 (Tex.App. Houston [1st Dist.] 1984, writ ref'd n.r.e.). The generic default provision is not overridden by any more specific default terms in the "going dark" clause itself. A fair reading of both clauses together leads to the conclusion that KP Miller could not have successfully collected the "going dark" fee in a nonbankruptcy setting until the debtor had been afforded the opportunity to cure the default. There is no reason to give the word "due" any different reading in the bankruptcy context. The real function of the "going dark" fee was to discourage the very thing that happened. Once it happened, the fee was proved to be ineffective as a deterrent, much as security interests often fail as deterrents to default. We do not grant immediate relief from stay to secured creditors solely on a showing that the debtor defaulted. We should be no more solicitous of this landlord, especially as the statute already treats landlords of nonresidential real property far more favorably than it treats secured creditors of the debtor. Compare 11 U.S.C. § 365(d)(4) with 11 U.S.C. § 362(d)(2)(B) and United Savings Association of Houston, Texas v. Timbers of Inwood Forest Assoc., Ltd., 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988). The leasehold premises were returned to KP Miller just sixty days after filing, far sooner than most secured creditors recover their collateral in a bankruptcy case of this size and complexity.[16] III. The damages sought in any event are not compensable under state law because they are liquidated damages in the nature of a penalty The Debtor, the Creditors' Committee, and NCNB all argue that the "going dark" fee is not recoverable in any event, as it represents a penalty which could not be enforced under Texas law. See Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484 (1952); Community Development Service, Inc. v. Replacement Parts Manufacturing, Inc., 679 S.W.2d 721 (Tex.App. Houston [1st Dist] 1984, no writ). While there may be merit to that position, the court need not address the issue at this time, as it has already concluded that the "going dark" fee cannot be recovered under the authority of Section 365(d)(3). The testimony does indeed suggest, however, that the damages which KP Miller alleges it suffered as a result of the closing of Food City's store flow from the loss of traffic at the center, and not the cost of the tenant finish-out. The testimony also strongly indicates that the fee's function was to induce specific performance with the threat of a costly penalty in the event of a breach. If the fee is indeed a penalty, it may be recovered only to the extent KP Miller proves its actual damages flowing from the closing. See Community Development Services, Inc. v. Replacement Parts Manufacturing, Inc., supra. In any event, the fee will be an allowed administrative expense only to the extent it represents an actual, necessary cost or expense of preserving the estate. 11 U.S.C. § 503(b)(1)(A).[17] 459 It is therefore ORDERED, ADJUDGED, and DECREED that the application of KP Miller to recover the "going dark" fee of $250,000 under Section 365(d)(3) be and the same is hereby denied. The claim is disallowed as a claim under Section 365(d)(3), without prejudice to refiling. The Debtor is ORDERED, however, to pay KP Miller, the remaining charges sought in its motion, consisting of two months' rent (including late charges), common area maintenance charges, utilities, and the like, within ten (10) days of the effective date of this order. This order does not constitute either allowance or disallowance of KP Miller's claim under Sections 503(b)(1)(A), 502(g), or 502(b)(6). NOTES [1] The provision reads as follows: Tenant shall commence business operations in the leased premises on or immediately after the Commencement Date and shall operate its business in an efficient, high class and reputable manner so as to produce the maximum amount of sales from the leased premises. Tenant shall only operate in the entire leased premises the type of business . . . for which the leased premises are leased. In the event that the Tenant shall leave the leased premises vacant and shall not conduct and carry on in the entire leased premises the type of business [specified], Tenant must pay to Landlord (which fee is in addition to all other rights and remedies of Landlord) a fee for "going dark" as follows: (i) if the closing of the store on the leased premises occurs on or before the third anniversary of the date on which Tenant occupied the leased premises ("Occupancy Date"), the fee is $250,000 or if less, the actual amount paid to Tenant by Landlord pursuant to the Tenant Finish-out Allowance of even date herewith . . . The parties agree that more than $250,000 was paid to the Tenant (or paid out for the benefit of the Tenant) in finish-out expenses, though there was dispute over whether the funds were "advances" or "expenses incurred." The distinction is without a difference. [2] The section provides as follows: Notwithstanding paragraphs (1) and (2), in a case under any chapter of this title, if the trustee does not assume or reject an unexpired lease of nonresidential real property under which the debtor is the lessee within 60 days after the date of the order for relief, or within such additional time as the court, for cause, within such 60-day period, fixes, then such lease is deemed rejected, and the trustee shall immediately surrender such nonresidential real property to the lessor. 11 U.S.C. § 365(d)(4) (Bankr.L.Ed.1988). [3] The secured creditor would, in all likelihood, have to fund the payment of the expense if the court determines it is due immediately, as all of the debtor's current cash is encumbered by cash collateral orders, a simple reality which explains its alliance with the debtor and the unsecured creditors on this point. [4] The obligation to perform expires upon the assumption or rejection of the lease in question. Section 365(d)(4) operates to reject the lease by operation of law if it is not affirmatively assumed within the sixty day period there specified (unless the sixty day period is extended and it was not in this case). Thus, the duty to timely perform the lease's obligations would in all events have terminated in this case on August 2, 1988, just five days after the motion to pay administrative expenses was filed by KP Miller. [5] Section 502(g) accords the nondebtor party to an executory contract an allowed unsecured claim for claims arising from the rejection of such a contract, including the deemed rejection that results from failing to timely assume an unexpired nonresidential lease. 11 U.S.C. § 502(g). The court need not and does not reach this issue on the merits at this time. [6] Congress contemplated that a landlord might well have to suffer sixty days worth of vacancy as part of the shared burden of bankruptcy. 130 Cong Rec S8894 (June 29, 1984) (remarks of Sen. Hatch) ("The bill would lessen the problems caused by extended vacancies . . ."). If more immediate relief is needed, a landlord in KP Miller's position could always move for immediate rejection of the lease under Section 365(d)(2) and ask for an expedited hearing, in an effort to mitigate its damages suffered as a result of the breach of its "going dark" provision. See Bankr.R. 9006. It might also conceivably seek relief from the automatic stay. In re DeSantis, 66 B.R. 998, 1001 (Bankr.E.D.Pa. 1986). [7] The debtor can obtain a reprieve from paying these current obligations immediately, though the reprieve is only good for the first sixty days, after which they must be paid on a current basis. 130 Cong Rec S8894 (June 29, 1984) (remarks of Sen. Hatch). No such reprieve was sought in this case. [8] It was apparently the one-sidedness of excusing one party's performance while holding the other party to continued performance that offended Congress. Such a result is out of keeping with the very definition of an executory contract, under which a failure to perform by one party is said to excuse performance by the other party. See V. Countryman, "Executory Contracts in Bankruptcy," 58 Minn.L.Rev. 479, 502 (1974). If a debtor is going to be able to insist on continued use of leasehold premises, that debtor should be prepared to pay for that use on a current basis. [9] The charge itself was also, of course, an obligation once assessed, but not one that was reasonably incident to continued performance. The focus of Section 365(d)(3) is on mutual obligations of the sort the failure of which will excuse the other party from further performance. [10] The obligation to continue operations does not fit well within the statutory framework of Section 365(d)(3). For example, "[t]he court may extend, for cause, the time for performance of any such obligation that arises within 60 days after the date of the order for relief. . . ." 11 U.S.C. § 365(d)(3). It is difficult to conceive what such an extension would mean in the context of a debtor such as Food City desiring to cease operations immediately. In fact, the "going dark" provision is more properly characterized as a negative covenant than an affirmative obligation. It makes no sense to talk of "timely performance" of negative covenants. [11] A thing may be within the letter of a statute and yet not within that statute because not within its spirit nor within the intention of its makers. California Federal Savings & Loan Assoc. v. Guerra, 479 U.S. 272, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987); Anderson Bros. Ford v. Valencia, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981); United Steelworkers of America, et al. v. Weber, 443 U.S. 193, 99 S.Ct. 2721, 61 L.Ed.2d 480 (1979). [12] Indeed, KP Miller's interpretation would tend to undercut the grace period which Section 365(d)(4) grants the estate for deciding whether to assume or reject. To avoid having to pay a huge charge as an immediate administrative expense under Section 365(d)(3), the trustee would be forced to reject the lease immediately. Such an interpretation would encourage landlords to insert "poison pills" in their leases to force just such precipitous rejections, a result entirely inconsistent with the spirit of the Bankruptcy Code. One part of a statute should not be interpreted in a fashion which would undermine other portions of the same statute. United Savings Assoc. of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988). [13] The applicable default provision reads as follows: The following events shall be deemed to be events of default by Tenant under this lease: . . . . . (b) Tenant shall fail to comply with any term, provision or covenant of this lease, other than as described in subsection (a) above [relating to rental obligations], and shall not cure such failure within thirty (30) days after written notice thereof to Tenant. The applicable remedy provision reads as follows: Upon occurrence of any such events of default, Landlord may enforce the performance of such defaulted covenant in any manner provided by law, and/or may declare this lease forfeited at Landlord's discretion, and/or Landlord, or his agents or attorneys, shall have the right, without further notice or demand, to re-enter and remove all persons therefrom without being deemed guilty of any manner of trespass, and without prejudice to any remedies for arrears of rent or breach of covenants, or the Landlord, or Landlord's agent or attorney, may resume possession of the leased premises, and relet the same for the remainder of the term, at the rent it may obtain for the account of the Tenant who shall make good any deficiency of all rents. [14] KP Miller's representative acknowledged that, on the advice of counsel, she did not send the notice letter contemplated by the default portion of the lease, evidently fearing a violation of the automatic stay. [15] See In re S. & F. Concession, Inc., 55 B.R. 689, 691 (Bankr.E.D.Pa.1985) ("the clear language of § 365(d)(3) mandates that the trustee immediately pay all postpetition rent and remain current on future rent payments as they come due"); In re Dieckhaus Stationers of King of Prussia, Inc., 73 B.R. 969, 973 (Bankr.E.D.Pa. 1987) ("I conclude that a . . . claim arising under section 365(d)(3) should be paid immediately unless the trustee establishes good cause for withholding the payment"); In re M.H.I., Inc., 61 B.R. 69, 70 (Bankr.D.Md.1986) ("§ 365(d)(3) carries with it a mandatory direction to maintain lease payments until the lease is rejected"). [16] KP Miller also notes that it actually expended more than $250,000 to finish out the store, and that the "going dark" fee was intended to approximate recovery of that cost. Had Food City not moved out, however, KP Miller would have no doubt gladly absorbed that cost. Had Food City elected to assume the lease after "going dark," it arguably could have escaped paying the fee, notwithstanding its obligation to cure outstanding defaults, on grounds that the fee is a penalty not recoverable under Texas law. See Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484 (1952). [17] The claim may even turn out to be a claim arising from termination of the lease, or a claim arising from the rejection of the lease. See 11 U.S.C. §§ 365(g), 502(b)(6), 502(g). The court reserves this question until such time as the claim is subjected to the appropriate claims allowance process.	{ "pile_set_name": "FreeLaw" }
496 F.3d 670 (2007) Michael H. HOLLAND, as Trustee of the United Mine Workers 1992 Benefit Plan, et al., Appellants v. WILLIAMS MOUNTAIN COAL COMPANY, d/b/a Naoma Coal Company, a Corporation, et al., Appellees. No. 06-7041. United States Court of Appeals, District of Columbia Circuit. Argued January 16, 2007. Decided July 31, 2007. Peter Buscemi argued the cause for appellants. With him on the briefs were Stanley F. Lechner, Charles P. Groppe, John R. Mooney, and David W. Allen. Larry D. Newsome entered an appearance. Gregory B. Robertson argued the cause for appellees. With him on the brief were Susan F. Wiltsie, Mary Lou Smith, and Charles L. Woody. Before: ROGERS, GARLAND, and BROWN, Circuit Judges. Opinion for the Court filed by Circuit Judge GARLAND. GARLAND, Circuit Judge: The trustees of the 1992 United Mine Workers of America Benefit Plan appeal from an order directing them to pay attorney's 671 fees to two coal companies, Williams Mountain Coal Company and Augusta Processing, Inc. The companies incurred the fees in the course of defending themselves against a suit by the trustees to compel them to provide health benefits coverage for six retired miners. In that underlying suit, the district court granted summary judgment in favor of the companies, and we affirmed. See Holland v. Williams Mountain Coal Co., 256 F.3d 819 (D.C.Cir. 2001). For the reasons set forth below, however, we reverse the award of attorney's fees and remand for further proceedings. I Congress established the 1992 United Mine Workers of America Benefit Plan (the "1992 Plan") in the Coal Industry Retiree Health Benefit Act of 1992 (the "Coal Act"), 26 U.S.C. § 9701 et seq. See id. § 9712. The 1992 Plan was part of Congress' response to the failure of certain coal companies to pay the health benefits they had promised their miners. See Williams Mountain, 256 F.3d at 821. The primary responsibility for financing health benefits for a retired miner who is entitled to benefits under the Act falls upon the "last signatory operator," defined as "the most recent coal industry employer of such retiree," 26 U.S.C. § 9701(c)(4), as well as upon "related persons," defined to include (among other things) "a trade or business which is under common control" with the signatory operator, id. § 9701(c)(2)(A)(ii). See id. § 9711(a), (c). The Coal Act further provides that "[t]he term `last signatory operator' shall include a successor in interest of such operator." Id. § 9711(g)(1) (emphasis added); see also id. § 9701(c)(2)(A) (defining a "related person" to "also include a successor in interest of" a related person). Having allocated this responsibility, the statute leaves the term "successor in interest" undefined.[1] In 1996, the trustees brought this action against Williams Mountain and Augusta Processing on behalf of six retired miners. See 29 U.S.C. § 1451(a)(1) (authorizing a plan fiduciary who is adversely affected "by the act or omission of any party" to bring an action for appropriate legal or equitable relief); see also 26 U.S.C. § 9721(1) (making § 1451 applicable to any claim arising out of an obligation under the Coal Act). The trustees contended that the defendant coal companies were liable for providing health benefits coverage as "successors in interest" of the last signatory operator, Toney's Branch Coal Company, which had employed the miners but had since gone bankrupt. Although the defendant companies never employed any of the six miners, after Toney's Branch withdrew from mining, the defendants successively operated the same mine where the six had worked for Toney's Branch. In operating the mine, the defendants employed other miners who had worked at the mine for Toney's Branch, as well as equipment purchased from a Toney's Branch affiliate that Toney's Branch had previously used at the mine. In arguing that the defendant companies were liable for the retirees' health benefits coverage, the "trustees urge[d] a broad definition of successors in interest, namely the `substantial continuity of operations test.'" Williams Mountain, 256 F.3d at 672 821. That test, which the trustees borrowed from labor and employment law, is "a multi-factor inquiry that examines, among other things, the ability of the predecessor to provide relief; whether the new employer had notice of potential liability; whether he uses the same plant, equipment and workforce; and whether he produces the same product." Id. (citing Secretary of Labor v. Mullins, 888 F.2d 1448, 1453-54 (D.C.Cir.1989)). In opposition, Williams Mountain and Augusta Processing "urge[d] narrower definitions, drawn both from general corporate law and from federal tax law." Id. Under those definitions, a "party simply acquiring property of a firm in an arm's length transaction, and taking up its business activity, does not become the selling firm's `successor in interest.'" Id. at 822.[2] The district court rejected the trustees' broad construction of "successor in interest," found that the defendant coal companies did not qualify as successors in interest of Toney's Branch under the narrower definition, and granted summary judgment for the defendants. We affirmed. See Williams Mountain, 256 F.3d at 825. Although we acknowledged that "the companies may well be successors in interest to Toney's Branch" under the substantial continuity of operations standard because they "seamlessly took over operations" at the mine, id. at 821, we concluded that this standard should not apply to successorship under the Coal Act. The "text and structure of the [Coal Act] point firmly against successor liability based on substantial continuity of operations," we said, which distinguished the Act from the labor and employment statutes to which the standard had been applied. Id. at 825. Instead, we turned to corporate and tax law, and found that the defendants were "plainly not successors in interest of Toney's Branch" under either authority. Id. at 822. Following our decision in their favor, the defendants filed motions in the district court requesting attorney's fees from the trustees. The court referred the matter to a magistrate judge, who recommended an award of fees. The district court ruled in accord with that recommendation, and this appeal followed. II Section 9721 of the Coal Act incorporates one of the fee-shifting provisions of the Employee Retirement Income Security Act (ERISA), section 4301(e), codified at 29 U.S.C. § 1451(e). See 26 U.S.C. § 9721. That provision states that "the court may award all or a portion of the costs and expenses [of litigation], including reasonable attorney's fees, to the prevailing party." 29 U.S.C. § 1451(e). We review for abuse of discretion a district court's decision to award such fees. See Board of Trs. of the Hotel & Rest. Employees Local 25 v. JPR, Inc., 136 F.3d 794, 798 (D.C.Cir.1998). In considering the defendants' request for attorney's fees, the district court began with the five-factor test that we employed in Eddy v. Colonial Life Ins. Co. of Am., 59 F.3d 201 (D.C.Cir.1995), to determine whether to award attorney's fees under another fee-shifting provision of ERISA, 673 29 U.S.C. § 1132(g)(1).[3] The Eddy factors are: (1) the losing party's culpability or bad faith; (2) the losing party's ability to satisfy a fee award; (3) the deterrent effect of such an award; (4) the value of the victory to plan participants and beneficiaries, and the significance of the legal issue involved; and (5) the relative merits of the parties' positions. Eddy, 59 F.3d at 206; see id. (noting that the factors are "neither exclusive nor quantitative, thereby affording leeway to the district courts to evaluate and augment them on a case-by-case basis"). In the end, however, the district court determined that the "only question . . . is whether Plaintiffs' position, and their decision to press on with their arguments in support of that position, were so devoid of merit as to rise to the level of bad faith." Holland v. Williams Mountain Coal Co., No. 96-1405, Mem. Op. at 6 (D.D.C. May 24, 2004) (emphasis added). Finding "this to be the case," the court pretermitted examination of any other factors and awarded the defendants attorney's fees. Id. at 10. Accordingly, we turn to an examination of the four reasons the court and the defendants offer for finding the trustees' position "so devoid of merit as to rise to the level of bad faith." Id. at 6. 1. We begin with the defendants' claim that the trustees "pursued an action . . . on a legal theory at odds with prevailing law." Appellees' Br. 13. The district court did not rely on this argument and correctly so. When this lawsuit was initiated in 1996, there was no "prevailing law" regarding the meaning of "successor in interest" as it appears in the Coal Act. At that time, neither this circuit nor any circuit had ruled on the question. It is true, as the defendants note, that a West Virginia district court, reviewing a bankruptcy court proceeding, had ruled on the issue. See UMWA 1992 Benefit Plan v. Leckie Smokeless Coal Co., 201 B.R. 163 (S.D.W.Va.1996). The West Virginia court, applying a definition of "successors in interest" found in Internal Revenue Service regulations, held that "purchasers of assets in bankruptcy cannot be `successors in interest' because . . . they do not inherit the tax attributes of their predecessors." Id. at 171. That ruling was on appeal when the trustees filed their complaint, and was later affirmed on grounds unrelated to the definition of "successor in interest." See In re Leckie Smokeless Coal Co., 99 F.3d 573 (4th Cir.1996).[4] It is also true that, after our own district court issued its judgment, and while the case was pending on appeal to this court, the United States Court of Appeals for the Sixth Circuit reached a decision in accord with that of the West Virginia district court. See Holland v. New Era Coal Co., 179 F.3d 397, 403 (6th Cir.1999). On appeal, we cited the Sixth Circuit's conclusion in reaching our own. See Williams Mountain, 256 F.3d at 822. 674 But these cases cannot alone support a charge that the trustees acted in bad faith. Decisions of the Southern District of West Virginia and of the Sixth Circuit do not bind this court. Such decisions may, of course, influence our own decisions because of their persuasive force as indeed happened here but the fact that another jurisdiction has rejected a legal theory does not render it so devoid of merit as to make reliance on it an exercise in bad faith. It is hardly unusual for courts of appeals, including this court of appeals, to disagree with their sister circuits. To the contrary, such circuit splits are an important font of the Supreme Court's workload. 2. In the view of the district court, the trustees' suit was devoid of merit because it was without "factual predicate." Mem. Op. at 7. According to the court, there was no factual basis for the trustees' contention that the defendants were successors in interest to Toney's Branch, because the defendants had no corporate ties to the latter. Moreover, the trustees assertedly knew that was so, as their own investigation had "turned up no information at all indicating [a] special relationship" between the companies. Id. at 7. Instead, the "only thread tying Defendants to Toney's Branch turned out to be Defendants' purchase of mining equipment from Toney's Branch, their hiring of some of Toney's Branch's former employees, and their operation of the same mine." Id. at 7-8. This, the court said, was insufficient. The problem with this analysis is that it assumes the narrow corporate and tax law definitions of successors in interest. But as our opinion on the merits recognized, the very factual thread the district court discounted the purchase of equipment, the hiring of employees, and the operation of the same mine might well have made the defendants successors in interest of Toney's Branch under the broader, substantial continuity of operations test. See Williams Mountain, 256 F.3d at 821. Although we ultimately rejected that test, we have emphasized that "a loss on the merits does not mean that legal arguments advanced in the context of our adversary system were unreasonable." Taucher v. Brown-Hruska, 396 F.3d 1168, 1174 (D.C.Cir.2005) (reversing an award of attorney's fees under the Equal Access to Justice Act (EAJA)); see Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421-22, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978) (warning that courts must "resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation"). Hence, whether there was a reasonable factual predicate for the trustees' suit depends entirely upon whether there was a reasonable legal theory to which that predicate could be tied. 3. The district court found the trustees' legal theory meritless because it thought their broad definition of "successor in interest" was at odds with the statutory text, which appeared to assign separate meanings to "successor in interest" and "successor." Under the Coal Act, "successors in interest" are required to share liability with last signatory operators, see 26 U.S.C. § 9711(g)(1), while "successors" are permitted "to assume[,] by contract[,] liability for health benefits owed to retirees," Williams Mountain, 256 F.3d at 822; see 26 U.S.C. § 9711(g)(2). In its decision in the underlying lawsuit, the district court concluded that the trustees' broad definition would render the two interchangeable, and hence redundant, and therefore rejected the trustees' definition. On appeal, we agreed. We acknowledged the trustees' argument that Coal Act § 9711(g)(1), which defines "last signatory operator" to include "successor in interest," 675 is simply headed "Successor." Williams Mountain, 256 F.3d at 822. But we rejected the use of "a heading, which normally is a kind of shorthand, to justify stripping the actual text of two words, `in interest,'" which we thought were "obviously included deliberately." Id. We concluded that "[t]he natural reading is that Congress intended `successors' in subsection (g)(2) to include a broad[er] class of persons, e.g., firms that take over mining operations from others, and are not liable as a matter of law, but assume liability by contract with the seller to suit the mutual convenience . . . of the contracting firms." Id. This did not, however, end our analysis. While we concluded that "the text and structure of § 9711 point powerfully toward the [defendants'] position," id. at 823, we credited the trustees' argument "that courts have often used the substantial continuity test to determine successor liability in federal statutes (particularly those adopted for the protection of employees), even when those statutes include no language directly supporting liability for successors of any kind," id. at 824. And as we further noted, "statutory interpretation proceeds on the assumption that Congress's choice of words reflects a familiarity with judicial treatment of comparable language." Id. (citing Traynor v. Turnage, 485 U.S. 535, 545-46, 108 S.Ct. 1372, 99 L.Ed.2d 618 (1988)). Because we could "[]not say, without some consideration of the cases using substantial continuity, that the trustees' claim [was] a priori wrong," we proceeded to a review of the origins of that test. Id. at 824. In short, before we could determine whether there was merit to the trustees' reliance on the substantial continuity test, we thought it necessary to examine the circumstances in which the test had previously been applied. We must do the same here. Our previous opinion's review of the "origins of the substantial continuity test" began by noting that, under "the traditional rule on corporate successorship liability, a corporation that acquires manufacturing assets from another corporation does not thereby assume the liabilities of the seller." Id. We observed, however, that in tort cases, although the majority of courts still follow the traditional rule, "some courts have" employed "the substantial continuity of operations test advocated by the trustees" in order to protect plaintiffs. Id. at 825 (emphasis added). Moreover, we further noted that, in "the context of federal statutes whose primary beneficiaries are employees," it "appears that most courts invoke the substantial continuity test." Id. at 825 (emphasis added). "This departure from the traditional rule," we said, "was sparked by four Supreme Court cases, two involving disputes under the National Labor Relations Act (`NLRA') and two the Labor Management Relations Act (`LMRA')." Id. (citations omitted).[5] This circuit, we recognized, has followed those cases in applying the substantial continuity test to the NLRA. See id. at 826 (citing Harter Tomato Prods. Co. v. NLRB, 133 F.3d 934, 936-37 (D.C.Cir.1998)). In addition, "[a]lthough the four cases concerned the core labor relations statutes," we found that "the reasoning has been used to find broad successor liability under other statutes that govern employees' rights whether they explicitly address successor liability 676 or not." Id. at 825.[6] This circuit has followed that path as well. See id. at 821 (citing Secretary of Labor v. Mullins, 888 F.2d 1448, 1453-54 (D.C.Cir.1989), in which we applied the substantial continuity test to the Mine Safety and Health Act). In the final analysis, we concluded that the large number of cases that have employed the substantial continuity test were distinguishable because "the text and structure" of the statutes at issue in those cases did not "point firmly against successor liability based on substantial continuity" as they did in the Coal Act. Id. at 825. But given how often that test has been applied to analogous statutes in both this and other circuits, we cannot say that it was an act of bad faith for the trustees to urge its application to the Coal Act. We certainly cannot say so in a case of first impression not only in this circuit, but in virtually every other jurisdiction as well. 4. Finally, the district court's determination relied in part on the fact that, while the trustees sued Williams Mountain and Augusta Processing, they failed to sue Imperial Leasing Company another coal company that, unlike the defendants, was owned by the same individuals who owned Toney's Branch. This common ownership, the district court held, made Imperial Leasing "a far more appropriate defendant" and the suit against Williams Mountain and Augusta Processing "untenable." Mem. Op. at 7. But the Coal Act does not limit a plaintiff to a suit against the "more appropriate defendant." It is true, as the defendants point out, that the purpose of the Act was "to assign the duty of paying premiums `to persons most responsible for plan liabilities.'" Williams Mountain, 256 F.3d at 823 (emphasis added) (quoting 26 U.S.C. § 9701 note). But as the statutory text indicates, Congress determined that "the persons most responsible" were the last signatory operators, related persons, and successors in interest, and it made them all "jointly and severally liable." See 26 U.S.C. § 9711(c), (g)(1). This means that the trustees were free to sue any party who reasonably fell within those categories, and that they were likewise free to sue some potential defendants and to settle with others. (In fact, the trustees ultimately did settle with Imperial Leasing. See Appellants' Br. 30.) Because we have concluded that it was reasonable for the trustees to regard Williams Mountain and Augusta Processing as successors in interest, their decision not to sue Imperial Leasing cannot be taken as an indicator of bad faith. III The district court's conclusion that the trustees' legal theory was completely without merit was no doubt due in part to the language of our own prior decision. Like other judges, we too aspire to write opinions like those that Judge Friendly said Justice Brandeis wrote: opinions in which "`the right doctrine emerges in heavenly glory and the wrong view is consigned to the lower circle of hell.'" Taucher, 396 F.3d at 1173-74 (citing HENRY J. FRIENDLY, Mr. Justice Brandeis The Quest for Reason, in BENCHMARKS 291, 294 (1967)). But as we have previously cautioned, although one panel may characterize a litigant's position as "patently erroneous," another panel equally unpersuaded by the same argument may use words like "unsupported," *677 "unconvincing," or "without merit." Halverson v. Slater, 206 F.3d 1205, 1212 (D.C.Cir.2000) (internal quotation marks omitted). And yet, neither may intend to suggest that the argument in question was not "substantially justified." Id. (applying a provision of the EAJA that denies attorney's fees to a prevailing party if the position of the United States was "substantially justified"). In our previous opinion in this case, we did say that there is "`no warrant whatever for broad successor liability'" under the Coal Act. Mem. Op. at 10 (quoting Williams Mountain, 256 F.3d at 826). But as noted above, before reaching that conclusion, we also declared that "we cannot say, without some consideration of the cases using substantial continuity, that the trustees' claim is a priori wrong." Williams Mountain, 256 F.3d at 824. That is not the language we typically use to mark a claim as devoid of merit. Nor could we have done so here. As we have discussed, this was a case of first impression, in which the trustees urged upon us a test that "most courts invoke" in "the context of federal statutes whose primary beneficiaries are employees." Id. at 825. The Coal Act is such a statute. Hence, this was not a case the plaintiffs "lost because [they] vainly pressed a position flatly at odds with the controlling case law," but rather one they "lost because an unsettled question" as to which they had a reasonable position "was resolved unfavorably." Taucher, 396 F.3d at 1174 (internal quotation marks and citation omitted). Because the district court made clear that it rested its decision to award attorney's fees solely upon its determination that the trustees brought their underlying suit in bad faith, we need not belabor our discussion with an examination of the other Eddy factors. As both parties agreed at oral argument, a determination that the court erred in finding the suit so meritless as to have been brought in bad faith requires us to reverse the award as an abuse of discretion. See Oral Arg. Recording at 11:50, 29:59. Moreover, where as here the issuance of an award requires the exercise of a district court's discretion, and where we disagree with the ground upon which the district court relied, our usual course is to reverse and to remand the case to that court for further proceedings. Accordingly, the judgment of the district court is Reversed and remanded. NOTES [1] On December 20, 2006, Congress enacted an amendment to 26 U.S.C. § 9701 that provides a specified "safe harbor" from "successor in interest" status. Pub.L. No. 109-432, § 211(d), 120 Stat. 2922, 3023 (2006) (codified at 26 U.S.C. § 9701(c)(8)). As the amendment applies only "to transactions after the date" of enactment, id. § 211(e), 120 Stat. at 3023, it has no bearing on the instant case. [2] Under "the standard corporate law definition[,][i]n order to be a `successor in interest,' a party must continue to retain the same rights as [the] original owner[,] . . . and [a] transferee is not a `successor in interest.'" Williams Mountain, 256 F.3d at 821-22 (quoting BLACK'S LAW DICTIONARY 1431-32 (6th ed.1990)). The tax law definition "shares with the corporate law definition the element of commingled ownership." Id. at 822 (citing 26 U.S.C. § 381; 26 C.F.R. § 1.1503-2A(c)(3)(vii)(B)). [3] As the trustees correctly point out, we have never expressly ruled that the Eddy factors apply to § 1451(e). In Grand Union Co. v. Food Employers Labor Relations Ass'n, 808 F.2d 66, 71-72 (D.C.Cir.1987), the court assumed without deciding that factors like those identified in Eddy applied to § 1451(e). We need go no further than that to resolve their appeal. [4] The Fourth Circuit stated: "The courts below determined that the purchasers of Appellees' assets would not be Appellees' successors in interest within the meaning of the [Coal] Act. We need not and do not now resolve the matter, having concluded that, even if [the purchasers were] successor[s] in interest, the Bankruptcy Court may extinguish Coal Act successor liability." Leckie Smokeless Coal Co., 99 F.3d at 585. [5] See Howard Johnson Co. v. Detroit Local Joint Executive Bd., Hotel & Rest. Employees & Bartenders Int'l Union, 417 U.S. 249, 94 S.Ct. 2236, 41 L.Ed.2d 46 (1974); Golden State Bottling Co. v. NLRB, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973); NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). [6] See Williams Mountain, 256 F.3d at 825-26 (citing cases from numerous circuits finding broad successor liability under the Vietnam Era Veterans' Readjustment Assistance Act, the Family Medical Leave Act, Title VII, the Civil Rights Act of 1866, and the Age Discrimination in Employment Act).	{ "pile_set_name": "FreeLaw" }
Slip Op. 19- UNITED STATES COURT OF INTERNATIONAL TRADE PERFECTUS ALUMINUM, INC., Plaintiff, v. UNITED STATES, Before: Gary S. Katzmann, Judge Court No. 18-00085 Defendant, and ALUMINUM EXTRUSIONS FAIR TRADE COMMITTEE, Defendant-Intervenor. OPINION [Defendant-Intervenor’s motion to dismiss is denied. Plaintiff’s motion to supplement the record by taking judicial notice of the complaint in United States v. Real Property Located at 10681 Production Avenue, Fontana California, Court No. 5:17-cv-01872 is granted. Plaintiff’s motion for judgment on the agency record is denied.] Dated:-XO\ David J. Creegan, White and Williams LLP, of Philadelphia, PA, argued for plaintiff. With him on the brief was Platte B. Moring, III; and J. Kevin Horgan, deKieffer & Horgan, of Washington, DC, argued for plaintiff. Amie Lee, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of counsel was Orga Cadet, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC. Robert E. DeFrancesco, III, Wiley Rein LLP, of Washington, DC, argued for defendant-intervenor. With him on the brief was Alan H. Price. Court No. 18-00085 Page 2 Katzmann, Judge: Can an electronic transmission -- or only snail mail -- qualify as a “mailing?” Do certain pallet products fall within the plain meaning of the scope of an order seeking to effectuate fair trade for domestic producers and industry? This case involves these jurisdictional and scope interpretation issues. Plaintiff Perfectus Aluminum, Inc., (“Perfectus”) is an importer and distributor of aluminum extrusions. Defendant-Intervenor Aluminum Extrusions Fair Trade Committee (“AEFTC”) is a trade association of domestic producers of aluminum extrusions that requested a scope ruling finding that Perfectus’s pallet products composed of aluminum extrusions are subject to the antidumping and countervailing duty orders on aluminum extrusions from the People’s Republic of China. Aluminum Extrusions from the People’s Republic of China: Antidumping Duty Order, 76 Fed. Reg. 30,650 (Dep’t Commerce May 26, 2011) (“Antidumping Duty Order”); Aluminum Extrusions from the People’s Republic of China: Countervailing Duty Order, 76 Fed. Reg. 30,653 (Dep’t Commerce May 26, 2011) (“Countervailing Duty Order”) (collectively, the “Orders”). The United States Department of Commerce (“Commerce”) found that Perfectus’s merchandise is within the plain language of the scope of the Orders and instructed United States Customs and Border Protection (“Customs”) to continue to suspend liquidation of entries back to the date of the first suspension of Perfectus’s merchandise. Perfectus appeals Commerce’s determination. AEFTC counters that this appeal is untimely because it was commenced more than thirty days after notification of the final scope ruling through email notification, that the case should be dismissed for lack of jurisdiction, and that, in any event, Commerce did not err in its scope ruling. The court (1) concludes that jurisdiction over this action exists because Perfectus’s complaint seeking review of the scope ruling was filed within thirty days of the mailing by post of that ruling as required by statute and Court No. 18-00085 Page 3 was therefore timely, and (2) sustains Commerce’s finding that the pallet products fall within the plain language of the scope of the Orders. BACKGROUND I. Legal and Regulatory Framework of Scope Reviews Generally Dumping occurs when a foreign company sells a product in the United States for less than fair value -- that is, for a lower price than in its home market. Sioux Honey Ass’n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012)). Similarly, a foreign country may provide a countervailable subsidy to a product and thus artificially lower its price. U.S. Steel Grp. v. United States, 96 F.3d 1352, 1355 n.1 (Fed. Cir. 1996). To empower Commerce to offset economic distortions caused by dumping and countervailable subsidies, Congress enacted the Tariff Act of 1930. 1 Sioux Honey Ass’n, 672 F.3d at 1046–47. Under the Tariff Act’s framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential dumping or subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Id. Because the description of products contained in the scope of an antidumping or countervailing duty order must be written in general terms to encompass the full range of subject merchandise, issues may arise as to whether a particular product is included within the scope of the order. See 19 C.F.R. § 351.225(a). To provide producers and importers with notice as to whether their products fall within the scope of an antidumping or countervailing duty order, Congress authorized Commerce to issue scope rulings clarifying “whether a particular type of merchandise is within the class or kind of merchandise described in an existing . . . order.” 19 1 Further citations of the Tariff Act of 1930 are to the relevant portions of Title 19 of the U.S. Code, 2012 edition. Court No. 18-00085 Page 4 U.S.C. § 1516a(a)(2)(B)(vi). As “no specific statutory provision govern[s] the interpretation of the scope of antidumping or countervailing orders,” Commerce and the courts developed a three- step analysis. Shenyang Yuanda Aluminum Indus. Eng’g Co. v. United States, 776 F.3d 1351, 1354 (Fed. Cir. 2015); Polites v. United States, 35 CIT __, __, 755 F. Supp. 2d 1352, 1354 (2011); 19 C.F.R. § 351.225(k). Because “[t]he language of the order determines the scope of an antidumping duty order[,]” any scope ruling begins with an examination of the language of the order at issue. Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005) (citing Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002)). If the terms of the order are unambiguous, then those terms govern. Id. at 1382–83. “[T]he question of whether the unambiguous terms of a scope control the inquiry, or whether some ambiguity exists is a question of law that we review de novo.” Meridian Prod., LLC v. United States, 851 F.3d 1375, 1382 (Fed. Cir. 2017). “Although the scope of a final order may be clarified, it can not be changed in a way contrary to its terms.” Duferco, 296 F.3d at 1097 (quoting Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed. Cir. 1990)). For that reason, “if [the scope of an order] is not ambiguous, the plain meaning of the language governs.” ArcelorMittal Stainless Belg. N.V. v. United States, 694 F.3d 82, 87 (Fed. Cir. 2012). “In determining the common meaning of a term, courts may and do consult dictionaries, scientific authorities, and other reliable sources of information, including testimony of record.” NEC Corp. v. Dep’t of Commerce, 23 CIT 727, 731, 74 F. Supp. 2d 1302, 1307 (1999) (quoting Holford USA Ltd. v. United States, 19 CIT 1486, 1493–94, 912 F. Supp. 555, 561 (1995)). Furthermore, “[b]ecause the primary purpose of an antidumping order is to place foreign exporters Court No. 18-00085 Page 5 on notice of what merchandise is subject to duties, the terms of an order should be consistent, to the extent possible, with trade usage.” ArcelorMittal, 694 F.3d at 88. If Commerce determines that the terms of the order are either ambiguous or reasonably subject to interpretation, then Commerce “will take into account . . . the descriptions of the merchandise contained in the petition, the initial investigation, and [prior] determinations [of Commerce] (including prior scope determinations) and the [International Trade] Commission.” 19 C.F.R. § 351.225(k)(1) (“(k)(1) sources”); Polites, 755 F. Supp. 2d at 1354; Meridian, 851 F.3d at 1382. To be dispositive, the (k)(1) sources “must be ‘controlling’ of the scope inquiry in the sense that they definitively answer the scope question.” Polites, 755 F. Supp. 2d at 1354 (quoting Sango Int’l v. United States, 484 F.3d 1371, 1379 (Fed. Cir. 2007)). If Commerce “can determine, based solely upon the application and the descriptions of the merchandise referred to in paragraph (k)(1) of . . . section [351.225], whether a product is included within the scope of an order . . . [Commerce] will issue a final ruling[.]” 19 C.F.R. § 351.225(d). If a § 351.225(k)(1) analysis is not dispositive, Commerce will initiate a scope inquiry under § 351.225(e) and apply the five criteria from Diversified Prods. Corp v. United States, 6 CIT 155, 162, 572 F. Supp. 883, 889 (1983) as codified in 19 C.F.R. § 351.225(k)(2). 2 II. Factual and Procedural History of the Orders On May 26, 2011, after the International Trade Commission had determined that imports of certain aluminum extrusions were materially injuring United States industry, Commerce issued 2 These criteria are: (1) the physical characteristics of the product, (2) the expectations of the ultimate purchasers, (3) the ultimate use of the product, (4) the channels of trade in which the product is sold, and (5) the manner in which the product is advertised and displayed. 19 C.F.R. § 351.225(k)(2); see Diversified Prods., 572 F. Supp. at 889. Court No. 18-00085 Page 6 antidumping and countervailing duty orders covering 1xxx, 3xxx, and 6xxx aluminum extrusions from China. Orders. The scope of the Orders reads, in relevant part: The merchandise covered by the order is aluminum extrusions which are shapes and forms, produced by an extrusion process, made from aluminum alloys having metallic elements corresponding to the alloy series designations published by The Aluminum Association commencing with the numbers 1, 3, and 6 . . . The scope . . . excludes finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels. Antidumping Duty Order, 78 Fed. Reg. at 30,650–51. 3 III. Factual and Procedural History of this Case On March 3, 2017, AEFTC filed a request with Commerce to determine that certain 6xxx aluminum extrusions from China are within the scope of the Orders. Petitioner’s Scope Ruling Request for 6xxx Series Aluminum Pallets (Mar. 3, 2017), Public Record (“P.R.”) 1–7, Confidential Record (“C.R.”) 1–7 (“6xxx Scope Ruling Request”). In the 6xxx Scope Ruling Request, AEFTC described the merchandise at issue as follows: “extruded profiles made of series 6xxx aluminum alloy cut-to-length and welded in the shape of pallets . . . regardless of producer or exporter.” Id. at 5. Commerce issued the requested scope ruling on June 13, 2017, finding that the merchandise at issue is subject to the Orders. Antidumping and Countervailing Duty Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on Certain Aluminum Pallets (June 13, 2017), P.R. 28 (“6xxx Final Scope Ruling”). Specifically, Commerce found that the merchandise at issue is within the plain language of the scope of the Orders, the 3 The Antidumping Duty Order and Countervailing Duty Order are materially similar for purposes of this proceeding. Court No. 18-00085 Page 7 finished merchandise exclusion does not apply here, and the merchandise at issue is in existence. Id. at 13, 15. Commerce further instructed Customs to continue to suspend liquidation of entries back to the merchandise at issue’s date of first suspension. Id. at 15. On March 27, 2018, upon realizing that it had not previously done so, Commerce mailed the notice of the 6xxx Final Scope Ruling. 4 See Memorandum re: Antidumping and Countervailing Duty Orders on Aluminum Extrusions from the People’s Republic of China: March 27, 2018 Mailing of Final Scope Ruling on Certain Aluminum Pallets, (June 4, 2017), P.R 34 (“Proof of Mailing”). Within thirty days of that mailing, Perfectus filed a summons and complaint with this court. Summ., Apr. 23, 2018, ECF No. 1; Compl., Apr. 25, 2018, ECF No. 9. On August 3, 2018, AEFTC moved to dismiss this case on the grounds that Perfectus’s complaint was untimely. Def.-Inter.’s Mot. to Dis., ECF No. 25 (“Def.-Inter.’s MTD Br.”). Perfectus and the Government both filed briefs opposing AEFTC’s motion on August 28, 2018. Pl.’s Resp. to Mot. to Dis., ECF No. 28 (“Pl.’s Resp. to MTD”); Def.’s Resp. to Mot. to Dis., ECF No. 26 (“Def.’s Resp. to MTD”). AEFTC filed a brief in further support of its motion to dismiss on October 29, 2018. Def.-Inter.’s Mot. to Dis. Reply, ECF No. 32 (“Def.-Inter.’s MTD Reply”). On October 30, 2018, Perfectus moved for judgment on the agency record pursuant to Rule 56.2 of this court. Pl.’s Mot. for J. on the Agency Record, ECF No. 34. Earlier, on August 28, 2018, Perfectus had filed its brief in support of a motion for judgment on the agency record. Pl.’s 56.2 Br., ECF No. 27. The Government and AEFTC both responded to Perfectus’s motion on November 16, 2018. Def.’s Resp. to 56.2 Mot., ECF No. 36; Def.-Inter.’s Resp. to 56.2 Mot., ECF 4 Although the communications themselves are not part of the administrative record, Perfectus states that on (i) August 15, 2017, it alerted Commerce that it had yet to receive mailed notice of the 6xxx Final Scope Ruling and (ii) on March 26, 2018, Perfectus threatened to sue Commerce if it did not provide mailed notice of the 6xxx Final Scope Ruling. Pl.’s Opp’n to Mot. to Dismiss, Aug. 28, 2018, ECF No. 28 at Exs. A, B. Court No. 18-00085 Page 8 No. 37. Perfectus filed its reply to the Government and AEFTC on December 31, 2018. Pl.’s Reply to 56.2 Mot., ECF No. 39. On January 10, 2019, Perfectus moved to supplement the record. Pl.’s Br. for Mot. to Suppl., ECF No. 42. The Government responded on February 8, 2019. Def.’s Resp. to Mot. to Suppl., ECF No. 48. 5 Oral argument was held before this court on March 20, 2019. ECF No. 53. On June 12, 2019, the parties filed supplemental submissions. Pl.’s Suppl. Br., ECF No. 60; Def.’s Suppl. Br., ECF No. 61; Def.-Inter.’s Suppl. Br., ECF No. 62. DISCUSSION I. Motion to Dismiss Subject matter jurisdiction constitutes a threshold inquiry. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). Where subject matter jurisdiction is challenged pursuant to USCIT Rule 12(b)(1), “the burden rests on plaintiff to prove that jurisdiction exists.” Lowa, Ltd. v. United States, 561 F. Supp. 441, 443 (1983), aff’d, 724 F.2d 121 (Fed. Cir. 1984) (quoted in Pentax Corp. v. Robison, 125 F.3d 1457, 1462 (Fed. Cir. 1997), modified in part, 135 F.3d 760 (Fed. Cir. 1998)). Here, AEFTC filed a motion to dismiss, alleging that Perfectus failed to timely 5 The court grants the motion to supplement and takes judicial notice of the fact that the United States filed a complaint in United States District Court for the Central District of California in a matter captioned United States v. Real Property Located at 10681 Production Avenue, Fontana California, Court No. 5:17-cv-01872. See United States v. New-Form Mfg. Co., 27 CIT 905, 917 n.14, 277 F. Supp. 2d 1313, 1325 n.14 (2003) (noting that courts frequently take judicial notice of other courts’ records) (citing Genentech, Inc. v. U.S. Int’l Trade Comm’n, 122 F.3d 1409, 1417 n.7 (Fed. Cir. 1997)). The court further takes judicial notice of the contents of that complaint, but only to the extent that the United States made the allegations and other statements contained within and filed them in district court. The court does not take judicial notice of the contents of the complaint for the truth of what it asserts because the factual allegations contained therein may be subject to reasonable dispute. See Fed. R. Evid. 201(b) (“The court may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”); see also 28 U.S.C. § 2641 (stating that the Federal Rules of Evidence apply to all civil actions, with certain exceptions not relevant here, in the U.S. Court of International Trade). Even if the court were to take judicial notice of the complaint for the truth of what it asserts, this matter’s disposition would not change. Court No. 18-00085 Page 9 commence this action as required by the jurisdictional requirements set forth in 19 U.S.C. § 1516a(a)(2)(A), and that as a result, the court lacks subject matter jurisdiction over Perfectus’s complaint pursuant to USCIT Rule 12(b)(1). See Def.-Inter.’s MTD at 1. Perfectus, as plaintiff, contends that there is subject matter jurisdiction. The defendant, the Government -- though urging that on the merits plaintiff’s motion for judgment on the agency record should fail -- at the same time supports Perfectus’s contention that the complaint was timely filed and that this court has jurisdiction. Perfectus filed this action asserting jurisdiction under 28 U.S.C. § 1581(c). Compl. ¶ 3; First Amended Compl. ¶ 3, May 2, 2018, ECF No. 12. 28 U.S.C. § 1581(c) confers on this court “exclusive jurisdiction of any civil action commenced under section 516A . . . of the Tariff Act of 1930,” as amended (the “Act”). 28 U.S.C. § 1581(c). The Act was amended to include the provisions on judicial review through the Trade Agreements Act of 1979. H. Rep. No. 96-317 at 179–82 (1979); S. Rep. 96-249 at 27–28 (1979). Section 516A of the Act, codified at 19 U.S.C. § 1516a, enumerates eight different determinations in antidumping and countervailing duty proceedings subject to judicial review. Through the Trade and Tariff Act of 1984, Congress added the provision to 19 U.S.C. § 1516a specifically identifying scope rulings as reviewable determinations and providing the deadline to appeal such determinations. See 19 U.S.C. § 1516a(a)(2)(B)(vi) (making reviewable “[a] determination by the administering authority as to whether a particular type of merchandise is within the class or kind of merchandise described in an existing finding of dumping or antidumping or countervailing duty order”); H. Rep. No. 98-1156, at 91 (1984) (Conf. Rep). The statute distinguished between those determinations for which the deadline for filing an appeal would be based on the date of publication of the applicable determination in Court No. 18-00085 Page 10 the Federal Register and those determinations for which the deadline for filing an appeal would be based on the date of mailing of a determination. Section 1516a(a)(2) provides that, “in general,” judicial review of determinations on the record must be commenced within thirty days after “the date of publication in the Federal Register.” 19 U.S.C. § 1516a(a)(2)(A)(i). However, judicial review of a determination described in clause (vi) of subparagraph (B) -- such as the 6xxx Final Scope Ruling currently before the court -- must be commenced thirty days after “the date of mailing of a determination.” 19 U.S.C. § 1516a(a)(2)(A)(ii). 6 This distinction was necessary for scope determinations by Commerce because they, unlike the other determinations identified in the statute, were not published in the Federal Register. 7 When these provisions were added to the statute, in 1984, email or electronic notification of Commerce’s determinations was not possible. Thus, for a determination that would not be published in the Federal Register, the only way to notify interested parties of a final ruling was by post. 6 19 U.S.C. § 1516a(a)(2)(A) provides that: (A) In general. Within thirty days after - (ii) the date of mailing of a determination described in clause (vi) of subparagraph (B), an interested party who is a party to the proceeding in connection with which the matter arises may commence an action in the United States Court of International Trade by filing a summons, and within thirty days thereafter a complaint, each with the content and in the form, manner, and style prescribed by the rules of that court, contesting any factual findings or legal conclusions upon which the determination is based. 7 Some years after the 1984 statute was enacted, Commerce’s regulations regarding Federal Register publication provided for publication on a quarterly basis of scope rulings (although there was no amendment to the statute). See 19 C.F.R. § 351.225, 62 Fed. Reg. 27,405 (May 19, 1997) (“On a quarterly basis, the Secretary will publish in the Federal Register a list of scope rulings issued within the last three months. This list will include the case name, reference number, and a brief description of the ruling.”). Court No. 18-00085 Page 11 Section 1516a(a)(2)(A)(ii) does not define “mailing.” With respect to review of a scope determination, Commerce has interpreted “mailing” to mean the transmission of materials by mail or courier as understood in common parlance -- for example, via the United States Postal Service -- and as was understood in 1984 when the statute was enacted. Here, Commerce issued a final scope ruling concerning the merchandise at issue on June 13, 2017, and subsequently mailed that final scope ruling to Perfectus on March 27, 2018. Proof of Mailing. Perfectus commenced this action within thirty days of that mailing: on April 23, 2018, Perfectus filed a summons with this court. Summ. Perfectus (joined by the Government) thus asserts that it commenced its action within the requisite thirty days and that this court therefore has jurisdiction. AEFTC, however, argues that Perfectus did not timely commence this action. AEFTC notes that Commerce notified the parties of the final scope ruling through an email notification produced by the Antidumping and Countervailing Duty Centralized Electronic Service System (“ACCESS”) 8 on June 14, 2017. Def-Inter.’s MTD Br. at Ex. 3. According to AEFTC, this email notification constitutes a “mailing,” and thus Perfectus’s commencement of this action on April 23, 2018 was outside the statutory window and untimely. AEFTC asserts that “the Court should interpret ‘mailing’ within the meaning of 19 U.S.C. § 1516a(a)(2)(A) to include electronic mail notifications” because “[t]he term mail in the statute does not expressly limit itself to only hand mailing.” Id. at 7. The court does not consider AEFTC’s argument persuasive. “Since section 1516a(a)(2)(A) 8 ACCESS is Commerce’s centralized electronic service system that has been in effect since 2010. See Import Administration IA ACCESS Pilot Program, 75 Fed. Reg. 32,341 (Dep’t of Commerce June 8, 2010); Antidumping and Countervailing Duty Proceedings: Electronic Filing Procedures; Administrative Protective Order Procedures, 75 Fed. Reg. 44,163 (Dep’t of Commerce July 28, 2010); Antidumping and Countervailing Duty Proceedings: Electronic Filing Procedures; Administrative Protective Order Procedures, 76 Fed. Reg. 39,263 (Dep’t of Commerce July 6, 2011). Court No. 18-00085 Page 12 specifies the terms and conditions upon which the United States has waived its sovereign immunity in consenting to be sued in the Court of International Trade, those limitations must be strictly observed and are not subject to implied exceptions.” Georgetown Steel Corp. v. United States, 801 F.2d 1308, 1312 (Fed. Cir. 1986) (citing Lehman v. Nakshian, 453 U.S. 156, 161 (1981)); see also Orlando Food Corp. v. United States, 423 F.3d 1318, 1320 (Fed. Cir. 2005) (“Courts are not free to infer waivers of sovereign immunity.”) (citing Library of Cong. v. Shaw, 478 U.S. 310, 318 (1986)). Where a waiver of sovereign immunity is at issue, the language of the statute must be strictly construed, and any ambiguities resolved in favor of immunity. See Orlando Food, 423 F.3d at 1320 (noting that “any express waivers must be narrowly construed”) (citing Library of Cong., 478 U.S. at 318); United States v. Williams, 514 U.S. 527, 531 (1995) (stating that, in resolving questions about the waiver of sovereign immunity, “we may not enlarge the waiver beyond the purview of the statutory language”). Here, a strict construction limits the definition of “mailing” to a physical, hand-mailing -- extant in 1984 when the legislation was enacted -- as opposed to an electronic missive (not then available). AEFTC has not presented any authority suggesting that Congress intended the “date of mailing” to include transmission by electronic means, nor has the court found such authority. The court’s conclusion is consistent with this court’s prior, persuasive cases addressing whether electronic forms of communication constitute “mailing.” In Bond Street, Ltd. v. United States, where plaintiff commenced the action for review after fax notification but there was no mailing of the final scope ruling, this court held that a fax did not satisfy the statutory mailing requirement and dismissed the matter, without prejudice, for want of jurisdiction. 31 CIT 1691, 1695, 521 F. Supp. 2d. 1377, 1381–82 (2007) (citing Georgetown Steel, 801 F.2d at 1312). Similarly, in Medline Indus. v. United States, where plaintiff commenced the action after email Court No. 18-00085 Page 13 notification but before the mailing of the final scope ruling, this court held that an “email message” did not satisfy the statutory “mailing” requirement and disposed of the matter in the same fashion as the Bond Street court. 37 CIT __, __, 911 F. Supp. 2d 1358, 1361–62 (2013). 9 AEFTC contends that Bond Street and Medline are distinguishable because the plaintiffs in Bond Street and Medline did not wait “an unreasonable amount of time” prior to filing. Perfectus’s diligence is not relevant here because (i) the statute does not contain a diligence requirement and (ii) Perfectus filed within thirty days of Commerce’s physical mailing. Even if the statute contained a diligence requirement, Perfectus notified Commerce in August 2017 that it had yet to receive a physical mailing of the final scope ruling. Additionally, Perfectus even threatened litigation to compel the mailing. See supra, n.4. AEFTC also argues that Bond Street and Medline are distinguishable because the underlying proceedings pre-date ACCESS’s use in antidumping and countervailing duty proceedings, and that an ACCESS notification constructively satisfies the “mailing” requirement. General widespread use of email and fax technology pre-dates both Bond Street and Medline, yet the court in those cases declined to expand the statutory definition out of concern for impermissibly enlarging the waiver of sovereign immunity contained in section 1516a(a)(2)(A). See, e.g., Medline, 911 F. Supp. 2d at 1361 (“Although email is a widespread means of communication, Medline has not demonstrated that an email is sufficient to commence the filing period under section 1516a(a)(2)(A)(ii).”). Therefore, Bond Street and Medline are not distinguishable from the case 9 Bond Street and Medline were cases in which this court dismissed actions as premature because a party attempted to commence an action before the mailing of a final scope ruling. Conversely, this court dismissed an action as untimely where a party failed to commence an action within thirty days of the mailing of a final scope ruling. See Bags on the Net Corp. v. United States, 33 CIT 315, 325, 612 F. Supp. 2d 1341, 1348 (2009) (dismissing the action because plaintiff commenced the action more than 75 days after the mailing of the final scope ruling). In these cases, in contrast to the case now before the court, the Government challenged the court’s jurisdiction. Court No. 18-00085 Page 14 here and are persuasive. AEFTC also draws attention to Perfectus’s concession of actual notice of the final scope ruling as of June 14, 2017. Def.-Inter.’s MTD Reply at 10. However, the statute does not reference actual notice when setting the filing deadline; it only refers to the date of mailing. 19 U.S.C. § 1516a(a)(2)(A)(ii). Therefore, the court finds this argument unpersuasive. 10 In short, AEFTC’s assertion that a notification generated by ACCESS triggers the clock 11 12 for judicial review is unsupported. This case was brought within thirty days after the date of mailing of Commerce’s determination. Commerce mailed the 6xxx Final Scope Ruling on March 27, 2018. Proof of Mailing. Perfectus commenced this case on April 23, 2018, 27 days after the 10 AEFTC contends that several cases before this Court have proceeded without explicit reference to a physical mailing. Def.-Inter.’s MTD Reply at 6–7. However, the question of physical mailing was not raised in any of those cases and any speculation as to jurisdiction is not warranted. 11 Further undercutting AEFTC’s assertion is that Commerce’s ACCESS Handbook on Electronic Filing Procedures, available on the ACCESS website and attached as Exhibit 2 to AEFTC’s motion, expressly states that the Handbook does not supersede the requirements of the Tariff Act of 1930 and Commerce’s regulations: In event of a conflict between the Tariff Act of 1930, as amended (“the Act”), the Department’s regulations, and this Handbook, the applicable provisions of the Act and the Department’s regulations shall govern. This Handbook is designed to be read in conjunction with the Department’s regulations, 76 FR 39263 (“Final Rule”) and the ACCESS External User Guide. This Handbook does not alter or waive any provisions governing the filing of documents with entities and/or persons other than the Department. ACCESS Handbook at 5. The Department’s regulations incorporate the ACCESS handbook. 19 C.F.R. § 351.303(b)(2). 12 In support of its argument that ACCESS email notification constitutes “mailing” within the meaning of 19 U.S.C. § 1516a(a)(2)(A)(ii), AEFTC states that “this [c]ourt no longer hand-mails its decisions and it provides notice through its electronic docketing system called CM/ECF.” Def.- Inter.’s MTD Br. at 11. Needless to say, the procedures of this court do not concern whether email notification triggers the time to contest scope rulings, and in any event, do not supersede the laws conferring subject matter jurisdiction on this court. Court No. 18-00085 Page 15 date on which Commerce mailed the scope ruling. The court concludes that Perfectus’s complaint was timely and denies AEFTC’s motion to dismiss. The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(vi). II. Motion for Judgment on the Agency Record The standard of review in this action is set forth in 19 U.S.C. § 1516a(b)(1)(B)(i): “[t]he court shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” According to Perfectus, its merchandise is not within the scope of the Orders because it qualifies for the finished merchandise exclusion. Perfectus further argues that Commerce’s issuance of a scope ruling here was improper because it did not initiate a formal scope inquiry and that the record does not indicate the merchandise at issue was being produced or imported at the time the scope ruling was issued. Perfectus also contends that Commerce should not have instructed Customs to retroactively suspend liquidation because liquidation of the merchandise at issue was never suspended in the first place. For the reasons described below, the court denies Perfectus’s motion for judgment on the agency record. A. The Merchandise at Issue Fits Within the Plain Language of the Scope of the Orders and Does Not Qualify for Any Exclusions. According to the Government, the finished merchandise exclusion does not apply to the merchandise at issue for two reasons: first, the merchandise at issue consists entirely of aluminum extrusions, and, second, the merchandise at issue is not suitable for use as a pallet and is thus not a finished product. Perfectus contends that both these bases are incorrect. 13 13 Commerce did not address Perfectus’s argument that “fake” pallets or “scrap” are necessarily outside the scope of the Orders, but this argument is unpersuasive, as the Orders’ plain language includes scrap aluminum extrusions. Moreover, this argument is only relevant to Commerce’s alternative basis for its conclusion which, as discussed infra, n.14, the court need not reach. Court No. 18-00085 Page 16 The relevant scope language includes “aluminum extrusions which are shapes and forms, produced by an extrusion process, made from aluminum alloys having metallic elements corresponding to the alloy series designations published by the Aluminum Association commencing with the numbers 1, 3, and 6.” Antidumping Duty Order, 76 Fed. Reg. at 30,650. Further, “[a]luminum extrusions are produced and imported in a wide variety of shapes and forms, . . . [and] may also be fabricated, i.e., prepared for assembly[,] . . . [which] include[s], but [is] not limited to, extrusions that are cut-to-length.” Id. “Subject extrusions may be identified with reference to their end use . . . . Such goods are subject merchandise if they otherwise meet the scope definition, regardless of whether they are ready for use at the time of importation.” Id. at 30,651. The relevant language excludes from the scope “finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels.” Id. (emphasis added). The merchandise at issue consists of “certain aluminum extrusions from [China] made of series 6xxx aluminum alloy which are cut-to-length and welded together in the form of a pallet, regardless of producer or exporter.” 6xxx Final Scope Ruling at 1. The court concludes that Commerce’s determination that the pallets are within the scope of the Orders and do not qualify for the finished merchandise exclusion because they exist entirely of aluminum extrusions and contain no other materials “as parts” is in accordance with law. 14 First, an alternative interpretation would result in reading out the “as parts” term from the relevant scope language. Second, the plural construction of “as parts” requires the finished merchandise 14 The court therefore does not address Commerce’s alternative basis for its determination. Court No. 18-00085 Page 17 exclusion to cover products consisting of both aluminum extrusions and non-extruded aluminum parts; an alternative interpretation would, as Commerce noted in its 6xxx Final Scope Ruling, allow the finished merchandise exclusion to “swallow the rule embodied by the scope.” Third, the examples given in the finished merchandise exclusion’s text contain both an aluminum extrusion and a non-aluminum component. Thus, in light of the plain language of the Orders, the court concludes that Commerce did not err by concluding that the meaning of “as parts” in the context of the finished merchandise exclusion requires both aluminum extrusion and non-aluminum extrusion components. In Perfectus’s view, this interpretation is incorrect because the Federal Circuit’s opinion in Whirlpool Corp. v. United States, 890 F.3d 1302 (Fed. Cir. 2018), “made it clear that Commerce erred in interpreting the Orders to require goods qualifying for the finished merchandise exclusion to also have non-extruded aluminum components.” Pl.’s 56.2 Br. at 14. However, the Federal Circuit made no such pronouncement in Whirlpool. In that case, the product at issue was finished merchandise containing aluminum extrusions and non-aluminum extrusions; the Federal Circuit addressed whether an exception for fasteners to the finished good kits exclusion applied to the finished merchandise exclusion as well. The fastener exception states that “[a]n imported product will not be considered a ‘finished goods kit’ and therefore excluded from the scope of the investigation merely by including fasteners such as screws, bolts, etc. in the packaging with an aluminum extrusion product.” Whirlpool, 890 F.3d at 1306 (quoting Meridian, 851 F.3d at 1385). The Federal Circuit held that, based on the plain language of the fastener exception, the fastener exception applied only to the finished good kits exclusion from the scope order and remanded to Commerce on that basis. Id. at 1310–11. The Federal Circuit did not decide whether the products at issue in that case “me[t] the requirements for the finished merchandise exclusion.” Id. at 1311. Court No. 18-00085 Page 18 Nor did the Federal Circuit determine that a product composed entirely of aluminum extrusions -- unlike the product at issue in Whirlpool, which contained non-aluminum extrusion parts -- would be eligible for the finished merchandise exclusion. Perfectus’s argument is therefore inapposite. Moreover, Meridian, 851 F.3d 1375, supports Commerce’s interpretation. In Meridian, the Federal Circuit, in interpreting the separate “finished goods kit” exclusion of the Orders at issue here, noted that “[a]lthough not necessary to our analysis . . . [t]he plain text of the other passages in the Orders thus contemplates a basic divide between products whose components relevant to the scope inquiry consist of non-aluminum extrusion parts, which are excluded from the scope of the Orders, and products whose components relevant to the scope inquiry contain only aluminum extrusion parts, which are not excluded.” Meridian, 851 F.3d at 1384. Perfectus argues that the relevant language in Meridian concerns the finished goods kit exclusion, not the finished merchandise exclusion, and is thus inapposite. 15 Pl.’s Reply to 56.2 Mot. at 11 n.13. However, the issue in Meridian and the issue here are meaningfully similar. Meridian’s analytical approach to the text of the Orders -- the contemplation of a “basic divide” between merchandise containing only aluminum extrusions and merchandise with non-aluminum extrusion components -- easily applies to the finished merchandise exclusion. Perfectus also takes issue with Commerce’s reliance on the fact that the listed examples in the exclusion’s text are unlike the products at issue. Perfectus casts a wide net in search of 15 Perfectus also cites Rubbermaid Com. Prods. LLC v. United States, No. 11-00463, 2015 WL 4478225 at *3 n.2 (Ct. Int’l Trade 2015). Pl’s Reply to 56.2 Mot. at 10 n.9. Rubbermaid involved interpreting the Orders at issue here. According to Perfectus, Rubbermaid supports the proposition that the finished merchandise exclusion covers products consisting only of aluminum extrusion parts. This argument is unavailing, as the Rubbermaid court’s footnoted discussion of this issue explicitly did not resolve it. Court No. 18-00085 Page 19 authority supporting the proposition that lists need not be exhaustive, Pl.’s Reply to 56.2 Mot. at 11 n.11, but fails to persuade the court that Commerce’s interpretation was incorrect. As Commerce noted, a product consisting entirely of aluminum extrusions, “real” or otherwise, is unlike any of the examples listed. The authority Perfectus cites, see Pl.’s Reply to 56.2 Mot. at 11 n.11, only suggests that lists do not need to be exhaustive. It does not affirmatively suggest that products unlike items entered on a list should receive treatment identical to the listed items. The issue Perfectus faces here is not that the list of example products covered by the finished merchandise exclusion is exhaustive -- it clearly is not -- but instead that the product Perfectus would have covered by the finished merchandise exclusion is substantially unlike any of the examples provided. Perfectus’s products consist entirely of aluminum extrusions, whereas all the examples in the Orders are made of both aluminum extrusions and non-aluminum extrusion parts. See, e.g., Antidumping Duty Order, 76 Fed. Reg. at 30,651. For these reasons, the court concludes that Commerce’s determination Perfectus’s merchandise does not qualify for the finished merchandise exclusion and is within the plain language of the scope is in accordance with law. B. Commerce Properly Issued a Scope Ruling Without Initiating a Formal Scope Inquiry. Commerce issued a final scope ruling in this matter without initiating a formal scope inquiry. Perfectus argues that this was inappropriate because the merchandise at issue was not unambiguously within the Orders’ scope. The court concludes that Commerce’s instructions were proper because the merchandise at issue was unambiguously within the plain language of the Orders’ scope. As discussed above, the plain language of the Orders places the merchandise at issue within the scope, and the finished merchandise exclusion does not cover products consisting entirely of Court No. 18-00085 Page 20 aluminum extrusions. However, Perfectus argues that the 6xxx Final Scope Ruling’s reference to the 19 C.F.R. § 351.225(k)(1) factors -- and particularly to prior scope rulings 16 -- means that Commerce must have determined that the text of the Orders is ambiguous. Pl.’s 56.2 Br. at 7. Perfectus’s contention is unpersuasive. Prior to reaching the (k)(1) analysis, Commerce had determined that the plain language of the Orders sufficed to place the products at issue within the scope. Commerce’s subsequent (k)(1) analysis is part of a “belt-and-suspenders” approach, and it would be strange to penalize an agency’s analytical thoroughness. The fact that the 6xxx Final Scope Ruling describes how its interpretation is consistent with prior final scope rulings neither means that Commerce’s determination relies on this consistency, nor renders the text of the Orders ambiguous. Finally, Perfectus argues that the fact Commerce previously declined to find that 6xxx pallets were within the scope means that the products at issue in this case were necessarily outside the scope. Pl.’s 56.2 Br. at 23–24 (citing Antidumping and Countervailing Duty Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on Certain Aluminum Pallets (Dec. 7, 2016), P.R. 31 (“1xxx Final Scope Ruling”)). However, the 1xxx Final Scope Ruling declined to make a determination about products made of aluminum alloy in any series other than 1xxx because the record in that proceeding did not include evidence of existing merchandise for any alloy other than 1xxx. For these reasons, the court concludes that Commerce properly issued a scope ruling despite not initiating a formal scope inquiry. 16 See, e.g., Antidumping and Countervailing Duty Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on Certain Aluminum Pallets (Dec. 7, 2016), P.R. 31 (finding that pallets composed of 1xxx alloy aluminum extrusions were within the scope of the Orders). Court No. 18-00085 Page 21 C. Commerce Properly Issued a Scope Ruling Because the Merchandise at Issue Was in Existence. Perfectus argues that Commerce improperly issued a scope ruling by allegedly deviating from a practice of only issuing scope rulings for products “currently in production.” Pl.’s Reply to 56.2 Mot. at 16. Perfectus asserts that the 1xxx Final Scope Ruling and a Federal Register notice are evidence of this practice. See Pl.’s 56.2 Br. at 18–20 (quoting 1xxx Final Scope Ruling at 12; Antidumping and Countervailing Duty Proceedings: Documents Submission Procedures; APO Procedures, 73 Fed. Reg. 3634, 3639 (January 22, 2008) (“Federal Register Notice”)). Both the 1xxx Final Scope Ruling and the Federal Register Notice do discuss evidence of production; however, Perfectus mischaracterizes Commerce’s practice by ignoring key language in both documents. Commerce explains that its practice is to “not conduct hypothetical scope rulings on products that are not yet in production,” 1xxx Final Scope Ruling at 12 (emphasis added); that is, Commerce “will not issue a scope ruling or conduct a scope inquiry on a purely hypothetical product,” Federal Register Notice, 73 Fed. Reg. at 3639. In this context, Commerce’s determination, as explained in the 6xxx Final Scope Ruling, is consistent with conducting scope inquiries on existing -- i.e., not hypothetical -- products: [Commerce]’s practice with respect to scope ruling requests is not limited to products which are continuously being imported, but, rather, the requesting party must be able to show that the product is in existence, for instance, by demonstrating that the product is in commercial production or has been imported. We find that the petitioner has satisfied this burden, regardless of whether the merchandise is already imported. 6xxx Final Scope Ruling at 15. Moreover, even were Commerce’s decision to issue a scope ruling for a product in existence, but not currently in production, a deviation from its typical practice, Commerce provided an appropriate explanation: “[w]ere we to adopt the view of Perfectus, this would limit our scope rulings only to products which were continually subject to importation, Court No. 18-00085 Page 22 creating a loophole for parties to avoid a ruling on merchandise which might otherwise be subject to an AD/CVD order.” Id.; see Consol. Bearings Co. v. United States, 348 F.3d 997, 1007 (Fed. Cir. 2003) (“If that analysis shows that Commerce acted differently in this case than it has consistently acted in similar circumstances without reasonable explanation, then Commerce’s actions will have been arbitrary.”) (citing RHP Bearings v. United States, 288 F.3d 1334, 1347 (Fed. Cir. 2002)); Nakornthai Strip Mill Pub. Co. v. United States, 32 CIT 1272, 1276–77, 587 F. Supp. 2d 1303, 1307–08 (2008) (noting that Commerce may “change its policies and practices as long as they are reasonable and consistent with their statutory mandate [and] may adapt its views and practices to the particular circumstances of the case at hand, so long as the agency’s decisions are explained and supported by substantial evidence on the record”) (quoting Trs. in Bankr. of N. Am. Rubber Thread Co. v. United States, 32 CIT 663, 533 F. Supp. 2d 1290, 1297 (2008)); Hyundai Steel Co. v. United States, 41 CIT __, __, 279 F. Supp. 3d 1349, 1371 (2017). Thus, Commerce’s issuance of a scope ruling was not improper. D. The Issue of Liquidation Is Moot. Commerce instructed Customs to continue to suspend liquidation of entries made prior to the date of the 6xxx Scope Ruling Request. See, e.g., Countervailing Duty Order, 76 Fed. Reg. 30,653 at 30,654. As discussed above, the plain language of the Orders places the merchandise at issue here within the scope -- therefore, the products at issue here were clearly subject to suspension of liquidation. See Sunpreme Inc. v. United States, 924 F.3d 1198, 1213 (Fed. Cir. 2019) (noting that “[w]hen, based on examination of the product in question and the plain meaning of the words in an antidumping or countervailing duty order, there is no question that the product is [] within . . . the scope of the order,” Customs’ suspension of liquidation is a lawful performance of “its ministerial duties because the duty order in question is not ambiguous as to whether it Court No. 18-00085 Page 23 applies to the particular imported products”) (citations omitted). Nonetheless, Perfectus argues that the liquidation of two entries of its merchandise in 2012 demonstrates that suspension of liquidation had never occurred and thus suspension for entries of its products could not “continue.” . 17 Pl.’s Reply to 56.2 Mot. at 17–18; 6xxx Final Scope Ruling at 15; Pl.’s Suppl. Br. at 2–3. The suspension of liquidation issue is moot, as it appears that Perfectus’s entries were liquidated, without being subject to antidumping or countervailing duties, prior to the initiation of the anticircumvention inquiry. See Perfectus’s EOA and APO Application at Ex. A (Mar. 13, 2017), P.R. 10 (“Perfectus’s EOA and APO App.”). The parties do not dispute that these liquidations are final. 18 See Def.’s Resp. to 56.2 Mot. at 23 (noting that “any entries made in 2015 would also have been liquidated before the initiation of the scope inquiry in 2017, presuming they were entered like its two entries on the record and mischaracterized as Type 01”); Pl.’s Reply to 56.2 Mot. at 18 (“All entries of Perfectus’ Series 6xxx aluminum pallets in years 2011 to 2015 have been liquidated and are now final.”). 19 The court therefore can provide no further relief, 17 Perfectus’s reference to United Steel and Fasteners, Inc. v. United States, 41 CIT __, __, 203 F. Supp. 3d 1235, 1241 (2017) is inapposite because the circumstances are not, as Perfectus claims, “directly analogous.” Pl.’s Reply to 56.2 Mot. at 17. United Steel concerned a matter where the plain language of the relevant antidumping and countervailing duty orders was insufficient to determine whether the products at issue in that case were within the scope. That is manifestly different from this case, as Commerce has correctly determined that the merchandise at issue is within the scope per the Orders’ plain language. 18 Voluntary reliquidation by Customs is governed by 19 U.S.C. § 1501, and Customs is time- barred by the relevant version of the statute from reliquidating those entries to include the assessment of antidumping and countervailing duties. See 19 U.S.C. § 1501 (2012) (providing for reliquidation within 90 days “from the date on which notice of the original liquidation is given or transmitted to the importer, his consignee or agent”); 19 U.S.C. § 1501 (Supp. V 2012) (providing for reliquidation within “[90] days from the date of the original liquidation”). 19 The parties do not dispute that all the entries were liquidated pursuant to Customs’ ordinary practice. To the extent that any entries had remained unliquidated, Commerce’s instructions to Customs were proper. The Government notes that the entries Perfectus placed on the record, see Perfectus’s EOA and APO Application at Ex. A (Mar. 13, 2017), P.R. 10, were liquidated only Court No. 18-00085 Page 24 rendering the issue of Commerce’s liquidation instructions to Customs moot. See Heartland By- Prod., Inc. v. United States, 568 F.3d 1360, 1368 (Fed. Cir. 2009) (finding liquidation instruction issue moot when company no longer imported subject merchandise and Customs would not be reliquidating the relevant entries to include the duties). CONCLUSION The court concludes that Perfectus timely filed its complaint and that Commerce properly issued the 6xxx Final Scope Ruling finding that (1) the plain meaning of the unambiguous language of the Orders includes the merchandise at issue, and (2) the finished merchandise exclusion does not cover the products at issue because they consist entirely of aluminum extrusions without initiating a formal scope inquiry. Commerce’s determination is sustained. SO ORDERED. /s/ Gary S. Katzmann Gary S. Katzmann, Judge Dated: -XO\ New York, New York because they were misidentified as Type 01 (for which suspension of liquidation did not apply) instead of Type 03 (for which suspension of liquidation did apply). Def.’s Resp. to 56.2 Mot. at 23; Def.’s Suppl. Br. at 3. Further, the cases Perfectus cites to support its argument that Commerce is not permitted to continue to suspend liquidation “for entries of products that were not suspended prior to the initiation of a scope inquiry” are distinguishable. Pl’s 56.2 Br. at 21; Pl.’s Suppl. Br. at 2–3. AMS Assocs. v. United States, 737 F.3d 1338 (Fed. Cir. 2013) and Sunpreme, 924 F.3d 1198 are distinguishable because, in those cases, Commerce clarified a product’s status with respect to the scope. AMS, 737 F.3d at 1343; Sunpreme, 924 F.3d at 1215 (stating that “the holding in this case applies only in a narrow set of circumstances because, when the duty order is clear and unambiguous, Customs can suspend liquidation of subject merchandise pre-scope inquiry and Commerce is free to continue that suspension”) (citing AMS, 737 F.3d at 1344). That is not the issue here; as Commerce correctly concluded, Perfectus’s products fall within the scope per the Orders’ plain language, and were thus unambiguously included within the scope of the Orders. As discussed above, although Commerce’s determination also referenced (k)(1) factors, that reference was not a concession that the language of the Orders was ambiguous. Therefore, the court finds that Commerce properly instructed Customs to continue to suspend liquidation of entries made prior to the date of the scope ruling request.	{ "pile_set_name": "FreeLaw" }
IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 97-10747 Conference Calendar FRENANDO RAY TAYLOR, Plaintiff-Appellant, versus CECIL G. PURYEAR, Judge; SAM R. CUMMINGS, Federal Judge, Defendants-Appellees. - - - - - - - - - - Appeal from the United States District Court for the Northern District of Texas USDC No. 5:97-CV-182-C - - - - - - - - - - October 22, 1997 Before POLITZ, Chief Judge, and WIENER and DENNIS, Circuit Judges. PER CURIAM:* Frenando Ray Taylor, Texas prisoner # 535001, is BARRED from proceeding in forma pauperis (IFP) under the Prison Litigation Reform Act of 1995 (PLRA) because, on at least three prior occasions while incarcerated, Taylor has brought an action or appeal in a United States court which was dismissed as frivolous. Taylor v. Easley, No. 93-8847 (5th Cir. Aug. 12, 1994) (affirming dismissal as frivolous in USDC No. W-93-CV-169); Taylor v. * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. No. 97-10747 -2- Puryear, No. 97-10405 (5th Cir. Aug. 18, 1997) (affirming dismissal as frivolous in USDC No. 5:96-CV-94); see 28 U.S.C. § 1915(g); Adepegba v. Hammons, 103 F.3d 383, 388 (5th Cir. 1996). Accordingly, Taylor’s IFP status is DECERTIFIED, and he may not proceed IFP in any civil action or appeal filed while he is in prison unless he is under imminent danger of serious physical injury. 28 U.S.C. § 1915(g). Taylor has 15 days from the date of this order to pay the full appellate filing fee of $105 to the clerk of the district court, should he wish to proceed with his appeal. Failure to pay the filing fee in full will result in dismissal of Tyler’s appeal. See 5th Cir. R. 42.3.1.2. APPEAL DISMISSED IF FULL FILING FEE NOT PAID.	{ "pile_set_name": "FreeLaw" }
779 F.2d 1578 Wayne T. LAKES, Petitioner-Appellant,v.Paul FORD, Warden, Respondent-Appellee. No. 84-8859. United States Court of Appeals,Eleventh Circuit. Jan. 17, 1986. Kenneth P. McDuffie, Atlanta, Ga. (Court Appointed), for petitioner-appellant. Paula K. Smith, Asst. Atty. Gen., Atlanta, Ga., for defendant-appellant. Appeal from the United States District Court for the Northern District of Georgia. Before HILL and FAY, Circuit Judges, and TUTTLE, Senior Circuit Judge. HILL, Circuit Judge: 1 This case is before the court on defendant-appellant Wayne T. Lakes' appeal from the district court's denial of habeas corpus relief sought pursuant to 28 U.S.C. Sec. 2254. 2 Appellant was convicted of malice murder and sentenced to life imprisonment in Georgia state court in 1979. His conviction and sentences were affirmed by the Supreme Court of Georgia on direct appeal. Lakes v. State, 244 Ga. 217, 259 S.E.2d 469 (1979). 3 Appellant filed his first petition for habeas corpus in state court in February 1980. Following a hearing, relief was denied. Appellant filed a second state habeas petition in March 1982. That petition was dismissed as successive, and appellant's application for a certificate of probable cause to appeal to the Georgia Supreme Court was subsequently denied. 4 In June 1983 appellant filed the instant petition for habeas corpus relief in federal district court. In December 1983 the United States Magistrate entered an order finding one of appellant's claims unexhausted. Appellant subsequently filed a motion to delete the unexhausted claim, which motion was granted by the magistrate. In June 1984 the magistrate entered his report and recommendation, recommending that relief be denied. The district court adopted the report and recommendation and denied habeas corpus relief on October 16, 1984. Appellant appeals from the judgment of the district court for appellee entered on that date. 5 Appellant argues on this appeal that (1) the trial court's charge to the jury unconstitutionally shifted the burden of persuasion on the issue of intent to appellant, which error cannot be considered harmless beyond a reasonable doubt; (2) the district court should have granted appellant's request for an evidentiary hearing on his Brady violation claim; (3) the district court should have granted appellant an evidentiary hearing on whether he had exhausted his ineffective assistance of counsel claim; and (4) he is entitled to an evidentiary hearing on the merits of that claim. Because of the conclusion we reach with respect to appellant's first claim above, we need not and do not address the remainder of his claims on this appeal. FACTS 6 Appellant's prosecution arose out of a shooting that occurred shortly before dawn one morning in front of a liquor store in Fulton County, Georgia. According to the testimony of Charles Chester, who testified for the state, the shooting victim had joined a dice game in progress in front of the liquor store just a few minutes before he was shot. Chester testified that he saw appellant walk up to the victim, approaching him from behind, and that, although Chester "didn't pay too much attention," it "seemed like [appellant] had something in his hand." According to Chester, the victim was bending over as he prepared to throw the dice when appellant approached. Chester testified that he heard someone shout "Look out, he's got a gun," and that the victim then turned and rose to a standing position as the first shot was fired. Chester testified that the victim grabbed appellant and that, as they struggled over the gun, two more shots were fired. The witness stated that he could not see whose hand was on the gun when the shots were fired. 7 The state presented the expert testimony of a forensic pathologist who performed an autopsy on the victim shortly after his death. The expert testified that the victim was hit by two of the shots fired from appellant's gun. One shot entered the outside of the victim's right shoulder, penetrating the skin and muscles of the victim's right arm and proceeding downward through the right chest cavity, finally lodging in the sixth thoracic vertebra. The other shot entered the victim's right lower chest and proceeded at a slightly upward angle through the right lung, causing some damage to the area of the heart. The forensic pathologist testified that a powder burn surrounded the second shot's point of entry into the body, indicating that the shot had been fired from a muzzle positioned no more than an inch away from the victim's body. No powder burn surrounded the bullet hole in the victim's right shoulder. Thus the expert's testimony tended to support the version of events described by Chester in his testimony for the state. 8 Janet Johnson, who was called by the defense, testified that she was with the victim on the night of the shooting. She stated that she and the victim had been drinking and were walking toward the liquor store when she heard a gun shot. Johnson testified that she ran behind a car and, from that location, heard two more shots. According to Johnson, she then stood up and saw appellant and the victim struggling. 9 Appellant testified that he was throwing dice when the victim approached him from behind and attacked him. According to appellant, the two men began fighting and appellant pulled out his gun. Appellant testified that four shots were fired in the course of the ensuing scuffle, but that he did not know whether the victim pulled the trigger or the gun discharged for some other reason. 10 As the men were struggling, a police officer patrolling the area approached in his patrol car. The officer testified that it appeared as if the victim was attempting to hold on to appellant, and that the victim said he had been shot. The officer did not hear any shots, nor did he see a gun until the .32 caliber revolver used in the shooting was recovered from a spot near where the incident occurred. 11 Appellant testified that he had known the victim for a long time, and that the victim was a dangerous individual who commonly carried a knife. Appellant claimed he was assaulted by the victim, who then cut him on the face and neck, a week before the shooting. A friend of the victim testified that sometime during the week preceding the shooting appellant told a group of people that he was looking for the victim, that he was going to kill the victim the next time he saw him, and that they should relay to the victim those facts. Appellant denied making any such statements. DISCUSSION 12 We need only address appellant's claim that the trial court's charge to the jury unconstitutionally shifted the burden of persuasion on intent, and that the trial court's error cannot be considered harmless beyond a reasonable doubt. The portion of the charge that appellant claims impermissibly shifted the burden of persuasion instructed the jury as follows: 13 [T]he acts of a person of sound mind and discretion are presumed to be the product of the person's will, and such person is presumed to intend the natural and probable consequences of his acts, but either of these presumptions may be rebutted. 14 The state urges that we read the instruction quoted above in conjunction with the following statement, which immediately followed the challenged portion of the charge: 15 Such person, however, would not be presumed to act with criminal intention, but you, the jury, may find such intention upon consideration of the words, the conduct, the demeanor, the motive and all other circumstances connected with the act for which the accused is on trial, it being your duty to carefully evaluate all of the relevant circumstances in that regard, the question of intent resting finally with you. 16 According to the state, this language distinguishes the charge given in this case from otherwise similar charges that we have held unconstitutional, clarifying the nature of the task the jury must perform and eliminating any ambiguity that might otherwise exist concerning who bears the burden of proof on intent and how that burden might be satisfied. 17 The due process clause of the fourteenth amendment "protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1073, 25 L.Ed.2d 368 (1970). This principle has been held to render unconstitutional any evidentiary presumption in a jury charge that may have the effect of relieving the state of its burden of persuasion on any element of the crime with which the accused has been charged. See Sandstrom v. Montana, 442 U.S. 510, 520-24, 99 S.Ct. 2450, 2457-59, 61 L.Ed.2d 39 (1979). 18 Intent to kill is an element of the crime of malice murder in Georgia, see Mason v. Balkcom, 669 F.2d 222, 224 (5th Cir. Unit B 1982)1; a finding of intent to kill would also have satisfied the scienter element of the offense at issue in Sandstrom. 442 U.S. at 521, 99 S.Ct. at 2458. The jury in Sandstrom was instructed that "[t]he law presumes that a person intends the ordinary and natural consequences of his voluntary acts." Id. at 513, 99 S.Ct. at 2453. Because the jurors were not told that the presumption could be rebutted, "a reasonable jury could well have interpreted the presumption as 'conclusive,' that is, not technically as a presumption at all, but rather as an irrebuttable direction by the court to find intent once convinced of the facts triggering the presumption." Id. at 517, 99 S.Ct. at 2456. The Court also recognized that a reasonable juror could have interpreted the challenged instruction as creating a rebuttable presumption, shifting to the defendant the burden of persuasion on intent. Id. Finding either interpretation to have deprived the petitioner in that case of due process of law, the Court held the instruction given there unconstitutional. 19 In Francis v. Franklin, --- U.S. ----, 105 S.Ct. 1965, 85 L.Ed.2d 344 (1985), the Court held, as it had indicated in dicta in Sandstrom, that an instruction that might reasonably be interpreted as creating only a mandatory rebuttable presumption of intent is also unconstitutional, despite the presence of extensive curative language in the charge. In that case the jury was instructed that the defendant was presumed innocent until proven guilty, that the state was required to prove every element of the offense beyond a reasonable doubt, and that the defendant would not be presumed to act with criminal intent. 105 S.Ct. at 1973-77. The Court found those instructions insufficient to save the mandatory rebuttable presumption of intent from constitutional infirmity, concluding that "[l]anguage that merely contradicts and does not explain a constitutionally infirm instruction will not suffice to absolve the infirmity." Id. at 1975. See also Davis v. Kemp, 752 F.2d 1515, 1518-19 (11th Cir.) cert. denied, --- U.S. ----, 105 S.Ct. 2689, 86 L.Ed.2d 706 (1985); Patterson v. Austin, 728 F.2d 1389, 1394 (11th Cir.1984); Francis v. Franklin, 720 F.2d 1206, 1212 (11th Cir.1983), affirmed, --- U.S. ----, 105 S.Ct. 1965, 85 L.Ed.2d 344 (1985). 20 We are constrained by the foregoing binding precedent to find the charge given the jury on intent in this case unconstitutional. The assertedly curative instruction concerning criminal intent in this case adds to similar instructions found constitutionally insufficient to explain any ambiguity created by similar mandatory presumptions in many prior cases only the following italicized language: 21 Such person, however, would not be presumed to act with criminal intention, but you, the jury, may find such intention upon consideration of the words, the conduct, the demeanor, the motive and all other circumstances connected with the act for which the accused is on trial, it being your duty to carefully evaluate all of the relevant circumstances in that regard, the question of intent resting finally with you. 22 The italicized language above does indeed distinguish the charge given in this case from otherwise similar charges we have condemned in one important respect. In cases involving similar instructions, but lacking the italicized language, this court and the Supreme Court have taken the view that the language concerning criminal intent, because it repeatedly refers to criminal intent and never refers to intent alone, might be interpreted by the jury simply to require that the state prove that the act was a criminal act, while the burden would remain on the defendant to rebut the presumption that he intended to kill. See Francis v. Franklin, 105 S.Ct. at 1974; Patterson v. Austin, 728 F.2d at 1394.2 In this case, however, the italicized language renders it clear that the instruction concerning criminal intent and the preceding mandatory presumption both refer to the intent element of the crime.3 But that distinction is not enough to cure the constitutional error in the mandatory presumption of intent. Given the construction we have found a reasonable juror might give the mandatory rebuttable presumption of intent, the assertedly curative language on criminal intent only contradicts the mandatory presumption without explaining its import and applicability. Further, the added language that we have rejected to explain to the jury that they should determine appellant's intent from the evidence alone, and that they should not rely on the mandatory presumption to satisfy the state's burden of proof. If the extensive curative language present in Franklin was not enough to save the mandatory presumption there from constitutional infirmity, we cannot find virtually the same language, aided only by the clarification added by the italicized language quoted above, sufficient to cure the error in this case. It seems clear in the wake of Franklin that, at least in this area of the law, the admonition of Cupp v. Naughten, 414 U.S. 141, 146-47, 94 S.Ct. 396, 400-01, 38 L.Ed.2d 368 (1973), that reviewing courts endeavor always to read and evaluate a jury charge as a whole when determining its constitutionality has fallen somewhat by the wayside. We therefore must find a Franklin violation in the charge given the jury in this case.4 23 We thus proceed to a consideration of whether the impermissibly burden-shifting instruction on intent constitutes harmless error under the circumstances of this case. The Supreme Court has again recently left undecided the question whether such an error can ever be considered harmless. See Francis v. Franklin, 105 S.Ct. at 1977. We have since reaffirmed the view of this circuit, however, that impermissible burden-shifting instructions, like other errors of constitutional magnitude, may be held harmless beyond a reasonable doubt. See, e.g. Brooks v. Kemp, 762 F.2d 1383, 1390 (11th Cir.1985). Our cases establish that a Sandstrom or Franklin violation may be found harmless in either of two situations: (1) where the evidence of the defendant's guilt, or the satisfaction of the burden the prosecution should have borne on the issue on which the burden was improperly shifted, is overwhelming; or (2) where the instruction concerns an element of the crime not at issue in the trial. See generally Davis v. Kemp, 752 F.2d at 1520-21; Brooks v. Kemp, 762 F.2d at 1390-94; Drake v. Kemp, 762 F.2d at 1453-57; Tucker v. Kemp, 762 F.2d at 1501-03. 24 In this case, we cannot know how the case was argued to the jury, as counsel's opening statements and opening and closing arguments were not recorded and transcribed. That fact renders it considerably more difficult for us to determine whether the error on intent was harmless beyond a reasonable doubt. See Mason v. Balkcom, 669 F.2d 222, 228 (5th Cir. Unit B 1982) (Hill, J., specially concurring). In this case, however, we need not speculate about arguments appellant's defense counsel might have made at trial in order to see that intent to kill was clearly an issue on which a reasonable juror might have entertained a reasonable doubt. 25 Appellant testified at trial that he pulled the gun on his assailant when the shooting victim attacked him, and that he "couldn't tell whether the gun went off or whether [the victim] pulled the trigger" when it discharged and fatally wounded the victim during their struggle. To convict appellant, the jury must have found appellant to have shot the victim and thereby caused his death.5 That finding could not have been influenced by the erroneous instruction on intent, so we may assume for the purposes of our analysis that appellant fired the fatal shots. The jury's rejection of appellant's claim that he did not shoot the victim, however, does not necessarily imply that they could have entertained no reasonable doubt concerning whether he intended to cause the victim's death. They may well have found it plausible that, as appellant testified, the fatal shots were fired in the course of a struggle, and they may thus have entertained some doubt about whether appellant intended to fire the shots that killed the victim at all.6 Because appellant's intent to kill was at issue in the trial and was supported by evidence sufficient to create a reasonable doubt concerning appellant's intent, we cannot find "beyond a reasonable doubt that the error complained of did not contribute to the verdict obtained." Chapman v. California, 386 U.S. 18, 24, 87 S.Ct. 824, 828, 17 L.Ed.2d 705 (1967). CONCLUSION 26 For the reasons set forth above, the judgment of the district court denying habeas corpus relief on the Sandstrom/Franklin claim is REVERSED. The case is REMANDED to the district court with instructions to grant the writ of habeas corpus unless the state grants appellant a new trial within a reasonable period of time to be determined by the district court. 1 This circuit has adopted as precedent all decisions of Unit B of the former Fifth Circuit. Stein v. Reynolds Securities, Inc., 667 F.2d 33 (11th Cir.1982) 2 In Franklin, the following instruction on criminal intent immediately followed the mandatory presumption in the charge: A person will not be presumed to act with criminal intention but the trier of facts, that is, the Jury, may find criminal intention upon a consideration of the words, conduct, demeanor, motive and all other circumstances connected with the act for which the accused is prosecuted. 105 S.Ct. at 1974. The Supreme Court interpreted the instruction quoted above as follows: The statement "criminal intention may not be presumed" may well have been intended to instruct the jurors that they were not permitted to presume the absence of provocation or justification but that they could infer this conclusion from circumstantial evidence. Whatever the court's motivation in giving the instruction, the jury could certainly have understood it this way. A reasonable juror trying to make sense of the juxtaposition of an instruction that "a person of sound mind and body is presumed to intend the natural and probable consequences of his acts," App. 8a-9a and an instruction that "[a] person will not be presumed to act with criminal intention," App. 9a, may well have thought that the instructions related to different elements of the crime and were therefore not contradictory--that he could presume intent to kill but not the absence of justification or provocation. 105 S.Ct. at 1974 (emphasis in original). In Patterson, we stated concerning a similar instruction on criminal intent that "[a]t worst, the jury could have made the instructions consistent, interpreting the burden to be on the defendant to rebut the presumption that he intended to kill [the victim], and on the State to show that the killing itself was criminal." 728 F.2d at 1394. In other cases we have been less precise. In Davis v. Kemp, after quoting the preceding language from Patterson, we stated of a curative instruction on criminal intent similar to that at issue in Patterson and Franklin as follows: The court concluded in both Patterson and Franklin that the challenged instruction unconstitutionally shifted the burden of proof, the same is true of the instant instruction, whose criminal intent provision is more likely to enhance than to correct the jury's confusion. 752 F.2d at 1518-19. See also Drake v. Kemp, 762 F.2d 1449, 1453 (11th Cir.1985) (similar criminal intent instruction found insufficient to cure error created by mandatory presumption because indistinguishable from that found insufficient in Franklin ); Tucker v. Kemp, 762 F.2d 1496, 1501 (11th Cir.1985) (same). 3 The instruction on criminal intent in Drake included language that is very similar to the italicized language in the charge given the jury in this case. In Drake we rejected the argument that the criminal intent instruction cured the error in the mandatory presumption of intent, finding Franklin to be controlling. Although the language used in the criminal intent charge in Drake is similar to that at issue in this case, the state trial court in Drake referred only to "criminal intent" or "such intent," nowhere making clear that criminal intent referred to or incorporated the same "intent" element of the crime to which we have found the mandatory presumption to be reasonably understood to refer 4 We note that the result we reach in this case was only presaged in dicta in the case law on which we rely, and that no case to our knowledge has previously decided the constitutionality of the charge given in this case. In prior cases in which similar mandatory presumptions and instructions concerning criminal intent have been considered reconcilable, as referring to separate elements of the crime, this court and the Supreme Court have stated that even if the jury read the instructions both to refer to intent and thus to conflict, the constitutional infirmity in the charge remained. See Franklin, 105 S.Ct. at 1975-76; Patterson, 728 F.2d at 1394. Where a reasonable juror could have reconciled the instructions as the courts suggested in those cases, however, and such an interpretation rendered the charges unconstitutional, any further discussion of the constitutionality of other interpretations jurors might have given the charges in those cases was dicta 5 The indictment, which went into the jury room to aid the jury in its deliberations, charged that appellant "did unlawfully and with malice aforethought, cause the death of [the shooting victim], a human being, by shooting him with a pistol." At the outset of its charge to the jury, the trial court read the indictment to the jury, stating that it "forms the issue which you are to try in this case." The court reiterated near the conclusion of the charge that the jury had to "believe beyond a reasonable doubt that [appellant] did kill and murder [the victim] as alleged in [the] indictment" before they could return a guilty verdict 6 The testimony of the forensic pathologist who performed the autopsy on the victim tended to support the version of events described by Mr. Chester, who testified for the state. The expert's testimony cannot be read, however, to have established conclusively that appellant intended to take the victim's life	{ "pile_set_name": "FreeLaw" }
69 U.S. 200 (1864) 2 Wall. 200 BANK TAX CASE. Supreme Court of United States. 201 Messrs. Devlin, Brady, and Kernan, for the tax commissioners. Messrs. Daniel Lord, A.W. Bradford, B.D. Silliman, Marshall Spring Bidwell, Benedict, Bonney, Van Winkle, and others, contra, for different Banks. 206 Mr. Justice NELSON delivered the opinion of the court. The question involved is, whether or not the stock of the United States, in which the capital of the Bank of the Commonwealth is invested, is liable to taxation by the State of New York, under an act passed by its legislature 29th of April, 1863, or, to state the question more directly, whether or not that act imposes a tax upon these stocks thus invested in the capital of the bank? It will be remembered that the previous act, the act of 1857, directed that the capital stock of the banks should be assessed and taxed at its actual value. By the present act, as is seen, the tax is imposed on a valuation equal to the amount of their capital paid in or secured to be paid in, &c. Looking at the two acts, and endeavoring to ascertain the alteration or change in the law from the language used, the 207 intent of the law-makers would seem to be quite plain, namely, a change simply in the mode of ascertaining or fixing the amount of the capital of the banks, which is made the basis of taxation. By the former, the actual value of the capital, as assessed by the commissioners, is prescribed. By the latter, the capital paid in, or secured to be paid in, in the aggregate, is the valuation prescribed. By the former, the commissioners were bound to look into the financial condition of the banks, into the investments of their capital, losses, and gains, and ascertain the best way they can the sum of present value as the basis of taxation. By the latter, they need only look into the condition of the banks in order to ascertain the amount of the capital stock paid in, or secured to be paid in; and this sum, in the aggregate, will constitute the basis. The rule of the present law is certainly more simple and fixed than that of the former, and much less burdensome to the commissioners or assessors, and in its practical operation is, perhaps, as just. The former mode involved an inquiry into the whole of the financial operations of the bank, its several liabilities, and its available resources; often a complicated and difficult undertaking, and, at best, of uncertain results. In order more fully to comprehend the meaning of the language used in the act of 1863, it may be well to refer, for a moment, to the system of the general banking law of 1838, and the amendments of the same, under which these institutions have been organized. Any number of persons may associate to establish a bank under this law, but the aggregate amount of capital stock shall not be less than $100,000. The instrument of association must specify, among other things, the amount of the capital stock of the association, and the number of shares into which the same shall be divided. It may also provide for an increase of their capital and of the number of the associates, from time to time, as may be thought proper. The association is required to deposit with the superintendent of the bank department stocks of the State of New York or of the United States, or bonds and mortgages upon 208 real estate, at a prescribed valuation, before any bills or notes shall be issued to it for circulation as currency. Nor can it commence the business of banking until these securities have been deposited to the amount of $100,000. The public debt and bonds and mortgages are to be held by the superintendent exclusively for the redemption of the bills and notes put in circulation as money until the same are paid. And it is made the duty of the superintendent not to countersign any bills or notes for an association to an amount, in the aggregate, exceeding the public debt, or public debt and bonds and mortgages so pledged. It is true, the associations are not obliged to invest more of their capital paid in in stocks, or stocks and bonds and mortgages, than is required as security, with the superintendent, for the bills and notes delivered for circulation as currency. The investment, however, cannot be for a less amount than $100,000. It may exceed that limit. But this reference to the system shows that however large the amount of the capital of the association, fixed by its articles and paid in, the whole or any part of it may be lawfully invested in these stocks. The whole need not be used as a pledge for the redemption of the bills or notes as currency, as the issuing of these for circulation is only one branch of the business of banking. The banks, therefore, were but obeying the injunction of the law in investing the capital paid in in these stocks. Now, when the capital of the banks is required or authorized by the law to be invested in stocks, and, among others, in United States stock, under their charters or articles of association, and this capital thus invested is made the basis of taxation of the institutions, there is great difficulty in saying that it is not the stock thus constituting the corpus or body of the capital that is taxed. It is not easy to separate the property in which the capital is invested from the capital itself. It requires some refinement to separate the two thus intimately blended together. The capital is not an ideal, fictitious, arbitrary sum of money set down in the articles of association, but, in the theory and practical operation 209 of the system, is composed of substantial property, and which gives value and solidity to the stock of the institution. It is the foundation of its credit in the business community. The legislature well knew the peculiar system under which these institutions were incorporated, and the working of it; and, when providing for a tax on their capital at a valuation, they could not but have intended a tax upon the property in which the capital had been invested. We have seen that such is the practical effect of the tax, and we think it would be doing injustice to the intelligence of the legislature to hold that such was not their intent in the enactment of the law. We will add, that we have looked with some care through the statutes of New York relating to the taxation of moneyed corporations, including the act of 1823, in which the first material change was made in the system, the act of 1825, the revision of 1830, the acts of 1857 and of 1863; and it will be seen in all of them that the tax is imposed on the property of the institutions, as contradistinguished from a tax upon their privileges or franchises. Since the act of 1825, the capital has been adopted as the basis of taxation, as furnishing the best criterion of the value of the property of which these institutions were possessed. Under their charters or articles of association, this amount was paid in, or secured to be paid in, by the stockholders or associates to the corporate body, or ideal person, constituting the capital stock, to be managed and disposed of by directors or trustees in furtherance of the objects and purposes for which the institutions were created. It constituted the fund raised by the corporators, with which the institutions began and carried on the particular business in which they were engaged. The injunction of the charters, which required this capital to be paid in, made it necessarily substantial property. The amount might fluctuate according to the good or ill fortune of the enterprise. It might become enhanced by gains in business, or diminished by losses; but, whether the one or the other, the tax in contemplation of the legislature and of the charters was imposed on the property of the institution 210 consisting of its capital. In case of a permanent loss, a remedy against grievous taxation was always at hand by a reduction of the capital. Having come to the conclusion that the tax on the capital of the Bank of the Commonwealth is a tax on the property of the institution, and which consists of the stocks of the United States, we do not perceive how the case can be distinguished from that of the Bank of Commerce v. New York City, 2 Black, 620, heretofore before this court. JUDGMENT REVERSED, and the cause remitted, with directions to enter judgment in conformity with this opinion.	{ "pile_set_name": "FreeLaw" }
UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT CARNIE NORRIS,  Petitioner-Appellant, v. STATE OF SOUTH CAROLINA; PHILLIP MCCLOUD, Warden of Peery  No. 01-8075 Correctional Institution; CHARLES M. CONDON, Attorney General of the State of South Carolina, Respondents-Appellees.  Appeal from the United States District Court for the District of South Carolina, at Charleston. David C. Norton, District Judge. (CA-00-2333-2-18) Submitted: April 29, 2002 Decided: May 17, 2002 Before MICHAEL and MOTZ, Circuit Judges, and HAMILTON, Senior Circuit Judge. Dismissed by unpublished per curiam opinion. COUNSEL Carnie Norris, Appellant Pro Se. Donald John Zelenka, Chief Deputy Attorney General, Jeffrey Alan Jacobs, OFFICE OF THE ATTOR- NEY GENERAL, Columbia, South Carolina, for Appellees. 2 NORRIS v. STATE OF SOUTH CAROLINA Unpublished opinions are not binding precedent in this circuit. See Local Rule 36(c). OPINION PER CURIAM: Carnie Norris seeks to appeal the district court’s order denying relief on his petition filed under 28 U.S.C.A. § 2254 (West 1994 & Supp. 2001). In his federal habeas petition, Norris raised ten claims, three of which he first raised in his petition for post-conviction relief before a circuit court in South Carolina ("PCR petition"), and seven he raised for the first time in a pro se filing supplementing his petition for a writ of certiorari to the South Carolina Supreme Court, filed pur- suant to Anders v. California, 386 U.S. 738 (1967), and Johnson v. State, 364 S.E.2d 201 (1988).* For the following reasons, we deny a certificate of appealability and dismiss. With respect to the first set of three claims, which were initially raised in Norris’ PCR petition, we have reviewed the record and the district court’s opinion accepting the recommendation of the magis- trate judge and find no reversible error. Accordingly, we deny a cer- tificate of appealability and dismiss the appeal as to those claims on the reasoning of the district court. See Norris v. South Carolina, No. CA-00-2333-2-18 (D.S.C. Nov. 6, 2001). To the extent Norris con- tends he was entitled to an evidentiary hearing as to those claims, each of which relates to the validity of his guilty plea to common law robbery, Norris’ factual allegations are insufficient to overcome the strong presumption of correctness accorded state courts factual deter- minations, see § 2254(e)(1), and the formidable barrier Norris’ sworn statements at his plea hearing pose in any subsequent collateral pro- ceedings. See Blackledge v. Allison, 431 U.S. 63, 73-74 (1977). Accordingly, we find no error in regard to the district court’s resolu- tion of those claims without a hearing. *Johnson reaffirms South Carolina’s authorization of Anders appeals from post-conviction proceedings, despite the Supreme Court’s earlier holding in Pennsylvania v. Finley, 481 U.S. 551 (1987), that such appeals were not required. NORRIS v. STATE OF SOUTH CAROLINA 3 With respect to the seven claims the district court dismissed as pro- cedurally barred based upon the report and recommendation of the magistrate judge, we conclude that although they are not procedurally barred, the claims are meritless. The district court concluded that because Norris raised these issues for the first time in his petition for a writ of certiorari to the South Carolina Supreme Court, filed pursu- ant to Johnson, Norris’ claims were both unexhausted and procedur- ally defaulted. While we conclude the claims were not procedurally barred, see O’Sullivan v. Boerckel, 526 U.S. 838, 847 (1999) (citing Re Exhaustion of State Remedies in Criminal & Post-Conviction Relief Cases, 471 S.E.2d 454 (S.C. 1990)); Harris v. Reed, 489 U.S. 255, 265 n.11 (1989); State v. McKennedy, 559 S.E.2d 850, 854 (S.C. 2002), they were nevertheless properly subject to dismissal. Claims 3, 4, 7, 9, and 10 allege errors of state law, and as such do not consti- tute a basis for federal habeas corpus review. See Lewis v. Jeffers, 497 U.S. 764, 780 (1990). Furthermore, Norris’ claim that his post- conviction attorney failed to appeal denial of his state habeas petition is meritless, as ineffective assistance of counsel during state post- conviction proceedings is not cognizable under § 2254. See § 2254(i). Nor does Norris’ final allegation, that despite his sworn statements to the contrary at his guilty plea hearing he did not actually commit the crime for which he pled guilty, support his claim for habeas corpus relief. See Blackledge v. Allison, 431 U.S. 63, 73-74 (1977); see also North Carolina v. Alford, 400 U.S. 25 (1970). Finally, we find no merit to Norris’ allegation that the district court abused its discretion in failing to sanction the Appellees. Accordingly, we deny a certificate of appealability and dismiss this appeal. We dis- pense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. DISMISSED	{ "pile_set_name": "FreeLaw" }
230 Ind. 165 (1951) 101 N.E.2d 264 UNDERHILL ET AL. v. FRANZ ET AL. No. 28,700. Supreme Court of Indiana. Filed October 24, 1951. Rehearing denied December 6, 1951. 166 William C. Welborn and Milford M. Miller, both of Evansville, for appellants. Addison M. Beavers, of Boonville, for appellees. GILKISON, J. A petition was filed in the Warrick Circuit Court under Section 27-120, Burns' 1948 Replacement, 167 asking to repair two public drains in Warrick County, Indiana, one of which, known as the Stevens drain, was established June 23, 1911 and is 33,122 feet in length; and the other known as the Maurer drain was established Septemebr 13, 1921 and is 32,899 feet in length. It averred that the two drains constituted one system and that it is out of repair for its entire length, and is not sufficient to perform the drainage intended and designed. The petition was filed, and docketed in the same name and style that the separate petitions had been filed and docketed on June 23, 1911 and September 13, 1921 respectively, thus: "In the Matter of the Petition for Drainage by William E. Stevens, Dorsey Reed, Adam Maurer et al. No. A-598 and In the Matter of the Petition for Drainage by Adam J. Maurer, Heilman Polk, Charles Nonweiler et al." This petition was signed by twenty-seven real estate owners in the territory affected by the proposed repair. On February 10, 1948 fifteen of the petitioners in writing asked leave of court to withdraw their names from the petition and asked the court to strike their names therefrom. This motion was sustained by the court on February 16, 1948, and the names of these petitioners were stricken from the petition, before the cause was ordered docketed. The court then found "that there remain on the petition persons owning more than five per cent. of the acreage on said drain" and "that proper notice" had been given to more than 4/5ths of the landowners, and the cause was ordered docketed on February 16, 1948. At that time there remained twelve names on the petition. 168 On March 10, 1948 some one hundred seventy persons whose lands were affected by the proposed repair filed a remonstrance to the petition, and a number of other such landowners filed objections and motions to dismiss the petition. On March 19, 1948 these objections were sustained and by leave of court the petitioners orally requested and were allowed to amend their petition by striking out rhetorical paragraph one thereof the Stevens drain, 33,122 feet in length and substituting rhetorical paragraph two of the petition the Maurer drain, 32,899 feet in length for the stricken paragraph. The record is composed of 993 pages, and appellants' brief contains 263 pages. We shall condense the matters as much as possible and attempt to decide with reasonable clarity the matters properly presented. As before noted the petition was entitled in the names of the original petitioners for the construction of the two drains now sought to be repaired. This is irregular though not reversible error. It should have been entitled in the names of the present petitioners to repair the drains. If it had been so entitled much confusion and many questions presented on appeal could have been avoided. Of course, only those who signed the present petition and have not withdrawn therefrom are moving parties in this proceedings to repair, and they alone are appellees. The signers of the original construction petitions are in no way parties herein. We are entitling this opinion in the name of the remonstrators and objectors as appellants, and the petitioners as appellees. After the report of the viewer and surveyor was filed on October 1, 1948 and notice had been given to the new parties named therein, a series of remonstrances were filed by appellants and others questioning the assessment of benefits; the sufficiency of the 169 report; that the assessments exceed the aggregate benefits; and that the proposed repairs would not be sufficient to drain the lands affected. These remonstrances were by some 144 landowners. A trial of the issues raised by the remonstrances was had without the intervention of a jury, beginning on January 30, 1950, and ending February 2, 1950. The cause was then taken under advisement and decided on March 25, 1950 in favor of the petitioners, appellees, naming them and being eight in number, and against the remonstrators, appellants, naming them and being some 165 in number. The report of the "drainage commissioners" was confirmed; the assessments made and as modified by the judgment were approved and made "liens upon the real estate as described in the report of the Viewers and Surveyor." Judgment was rendered accordingly. A motion for new trial was seasonably filed. It was overruled and this appeal is taken. It is asserted by appellants that it was error for the court to sustain a parol motion to amend the petition by striking out rhetorical paragraph one thereof which asked for the repair and cleaning out of the Stevens drain, and making rhetorical paragraph two, for the repair and cleaning out of the Maurer drain, rhetorical paragraph one of the petition. Section 2-1069, Burns' 1946 Replacement, which governs in this matter, in the absence of anything in the special statute under which the proceedings is instituted to the contrary, requires such motion to be in writing. However, it is not shown that appellants were injured in any manner by reason of the ruling. Kalleres et al. v. Glover, Receiver (1935), 208 Ind. 472, 478, 196 N.E. 679; Dickerson v. Dickerson (1938), 104 Ind. App. 686, 689, 10 N.E.2d 424, 11 N.E.2d 514. It is further shown by the record that upon the 170 written motion of the petitioners the matters so stricken from the petition were later restored to the petition, so that the first ruling of the court, while technically erroneous, could not have been injurious to appellants and violated none of their substantial rights. Section 2-1071, Burns' 1946 Replacement. Hall v. Grand Lodge, etc. (1914), 55 Ind. App. 324, 330, 103 N.E. 854; Domestic Block Coal Co. v. DeArmey (1913), 179 Ind. 592, 600, 100 N.E. 675; Harmon, Rec. v. Speer, Admx. (1924), 195 Ind. 199, 211, 144 N.E. 241; Kallers et al. v. Glover, Receiver, supra. It is contended that the court erred in permitting an amendment to the petition that restored the stricken part as above noted. This alleged error is so interwoven with alleged errors Nos. 3 to 8 inclusive, that we shall consider them together. It is contended that the court erred in overruling remonstrators' and objectors' verified motion to dismiss the action for want of jurisdiction of the subject-matter and of the particular action and of the persons of the parties remonstrating and objecting. The same question was again presented after the report of the viewer and surveyor was filed making new parties to the proceeding when some 102 of such new parties filed similar objections on October 29, 1948. We shall consider these objections together. This alleged error is based upon the fact that on motion of petitioners, rhetorical paragraph No. 1 of the petition (being that part of the petition asking for the repair and cleaning out of the Stevens Drain) was stricken from the petition on March 19, 1948. That the effect of this was to dismiss the petition to repair the Stevens Drain and to dismiss the action as to the appellants and their lands, since, we suppose, in the matter of repair they and their lands are concerned only in the Stevens drain. 171 On May 19, 1948 petitioners filed their written motion to again amend the petition by restoring rhetorical paragraph one thereof that had been stricken out on their motion, and to strike out rhetorical paragraph two as originally filed and made rhetorical paragraph one by interlineation on March 19, 1948. This motion was sustained by the court and the petition was thus amended. In a petition for the original construction of a drain commenced in or appealed to the circuit court, we have frequently held that amendments may be allowed at any time before final judgment. Poundstone et al. v. Baldwin (1896), 145 Ind. 139, 144, 44 N.E. 191; Clarkson v. Wood (1907), 168 Ind. 582, 586, 81 N.E. 572; Brown v. Powers (1914), 182 Ind. 145, 148, 104 N.E. 857; Thompson et al. v. Ryan et al. (1915), 183 Ind. 232, 237 and cited cases, 108 N.E. 98; 2 Works' Ind. Practice (Lowe's Revision), §§ 21.13, 21.14, p.p. 88, 89. In the matter of the petition to clean out and repair the drain in the instant case the same rule should prevail. The reasons for the rule are well stated by Elliott, C.J. in Zigler v. Menges et al. (1889), 121 Ind. 99, 22 N.E. 782. It was not error for the court to allow these amendments. Thereafter, on June 9, 1948 viewers were appointed and the court issued instructions to the viewers and surveyor in which the length of the drain to be repaired was given from point to point aggregating 36,610 feet, or 3,488 feet more than that described in the petition. The viewers qualified and later on October 1, 1948 one viewer and the surveyor filed their report. One viewer refused to sign for reasons given. Hearing on the viewer's and surveyor's report was fixed for November 5, 1948. This report gave the length of the ditch to be 172 repaired as 39,835.6 feet, or 6,713.6 feet beyond the terminus of the Stevens drain as described in the petition, and 3,423.4 feet beyond the length thereof as described in the court's instructions to the viewers and surveyor. These instructions we recognize only as surplusage, since they are not provided for by the law under which the proceedings is instituted. However, the length, as given in these instructions, was accepted by the surveyor and viewer as the length of the drain to be repaired instead of the length as stated in the petition. The law authorizes a 10% increase in the extent of a drain in a repair proceeding, which would allow an increase in the length of this drain of some 3,312.2 feet, or a total length for repair of 36,434.2 feet. On October 29, 1948, as before noted, some one hundred fifty-two landowners named in the viewers' report and who are appellants herein, appeared specially by their attorneys, for the purpose of objecting to the jurisdiction of the court over the subject-matter of the action, and of the case, and of the persons of the objecting parties; and asked that the proceedings be dismissed. They filed their verified motions accordingly. These motions were overruled on January 6, 1949. On January 17, 1949, under special appearance these parties filed their plea in abatement to the proceedings for the same reasons as stated in the motion and others. Since neither appellants nor appellees in their briefs mention the answer in abatement, nor give any information concerning how it was determined by the court or raise any question thereon, we shall give it no further attention. However, the verified motion to dismiss the proceedings questioned the jurisdiction of the court of the 173 subject-matter, of the case, and of the persons of the objectors. We hold that the court had jurisdiction of the case, and of the persons of the objectors, and had jurisdiction of the subject-matter within the limits fixed by the empowering statute before noted which allows the repair of the drain described in the petition to an additional extent not exceeding 10% of that petitioned for (paragraph (b) Sub. Sec. 2, § 27-120 Burns' 1948 Replacement) limiting the extent of the repairs in this proceeding to 36,434.2 feet. As to the remaining extent thereof 3,423.4 feet contained in the viewer's and surveyor's report the court was without jurisdiction in this proceedings. A court has no power to do anything which is not authorized by law and when its procedure is defined by a special statute, its judicial functions are essentially controlled thereby, and the remedy is confined to the mode prescribed, and the procedure so provided excludes resort to another or different procedure. Lowery v. State Life Ins. Co. (1899), 153 Ind. 100, 104, 54 N.E. 442; Ryan et al. v. Ray et al. (1885), 105 Ind. 101, 106, 4 N.E. 214; Bartlett et al. v. Manor et al. (1897), 146 Ind. 621, 625, 45 N.E. 1060; Hudson v. Voreis, Trustee (1893), 134 Ind. 642, 643, and cases cited, 34 N.E. 503. See also Drinkwatter et al. v. Eikenberry et al. (1946), 224 Ind. 84, 95, 64 N.E.2d 399. Freeman on Judgments 5th Ed. § 355, p. 737. There can be no doubt that a judgment may be valid in part because within the jurisdiction of the court and void in part for want of jurisdiction. Kline v. Kline (1881), 57 Iowa 386, 42 Am. Rep. 47, 49; Belford v. Woodward (1895), 158 Ill. 122, 134, 29 L.R.A. 593, 599. That part of the judgment approving the viewer's and surveyor's report and ordering the repair of the *174 Stevens drain from the point of beginning on the line between Boon and Hart Townships in Warrick County, Indiana, at a point 1,282 feet west of the northeast corner of section two (2) township five (5) south, range eight (8) west; thence following the line thereof as set forth in the petition a distance of 33,122 feet to the end of said drain as set forth in the petition and a ten per cent. extension thereof, or 3,312.2 feet as contained in the viewer's and surveyor's report, making a total length to be repaired of 36,434.2 feet is hereby affirmed. That part of the judgment approving the viewer's and surveyor's report and ordering the repair of an additional extension of said drain of 3,401.4 feet is reversed, for the reason it was not before the court. It is coram non judice and therefore void. The cause is remanded with instructions to the trial court to modify its judgment agreeable with this opinion. NOTE. Reported in 101 N.E.2d 264.	{ "pile_set_name": "FreeLaw" }
In the United States Court of Appeals For the Seventh Circuit No. 08-2705 U NITED S TATES OF A MERICA, Plaintiff-Appellee, v. F RANK D. M C G RAW, Defendant-Appellant. Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 06 CR 28—Theresa L. Springmann, Judge. A RGUED JANUARY 9, 2009—D ECIDED JULY 2, 2009 Before M ANION, R OVNER, and SYKES, Circuit Judges. S YKES, Circuit Judge. While executing a search warrant for drugs inside a Fort Wayne, Indiana apartment building, police officers noticed that the building had several housing-code violations. Police called a neighbor- hood code-enforcement officer, who arrived and deter- mined that the apartment building must be condemned. That determination required officers to go door-to-door and notify the building’s residents that they needed to leave their apartments. When Frank McGraw, the second- 2 No. 08-2705 floor tenant, arrived on the scene, officers instructed him to secure his dog and collect the belongings he would need for a few days. They also explained their need to inspect his apartment for housing-code violations and to search for potential stragglers. McGraw consented to the search three times before leaving the apartment building with his dog. During that search, police observed narcotics in plain view, and McGraw was charged with possession of crack cocaine. McGraw moved to suppress the evidence, claiming that any consent he gave was not voluntary but instead constituted acquiescence to the officers’ display of author- ity. The district court denied the motion, finding that McGraw’s consent was voluntary. McGraw then entered into a conditional plea agreement, in which he waived his right to appeal sentencing determinations but pre- served his right to appeal the court’s suppression ruling. At sentencing the district court classified McGraw as a career offender under the guidelines and sentenced him to 262 months’ imprisonment. On appeal McGraw chal- lenges the court’s suppression ruling and its determina- tion that he qualified as a career offender. We affirm. The district court did not clearly err in finding that McGraw voluntarily consented to the offi- cers’ search. The court analyzed the totality of the circum- stances and determined that despite the way in which some of the officers phrased their request to search McGraw’s unit, McGraw voluntarily consented to their search. Because the court’s conclusion is entirely plausible in light of the record viewed in its entirety, the No. 08-2705 3 court properly denied McGraw’s motion to suppress. Further, we hold that McGraw waived his right to chal- lenge the district court’s sentencing determination. I. Background A. Officers Search McGraw’s Apartment1 On April 6, 2006, Officer Squadrito, Officer Musi, and other officers executed a search warrant for drugs in the third-floor unit of an apartment building in Fort Wayne, Indiana. In the process of searching the apartment and arresting its inhabitants, officers noticed several housing- code violations. They contacted Mark Salomon, a neighbor- hood code-enforcement officer, who arrived and deter- mined that the building must be condemned because, among other violations, it lacked a working furnace. Because this decision required the officers to board up the building until the landlord made the necessary repairs, the officers first had to notify the residents of the condemnation and ensure that everybody vacated the building. Frank McGraw, the second-floor tenant, was absent, but officers could hear a large dog barking behind his door. Officers soon learned that McGraw was across the street, and they summoned him to his apart- ment. By the time McGraw arrived, Salomon had 1 The historical facts concerning the search are taken from the district court’s opinion denying McGraw’s motion to suppress. McGraw does not challenge these findings of fact on appeal. 4 No. 08-2705 attached a “condemned sign” to the front of the building. A crowd of bystanders had also gathered, and a S.W.A.T. team from the third-floor raid stood by. Salomon and Musi greeted McGraw on the building’s front porch. McGraw asked what his apartment had to do with the third-floor search, and Salomon answered that the entire building had been condemned. Salomon twice explained to McGraw that officers “would need to go into his apartment to do a[n] inspection inside of his apartment to look for other housing code violations.” Salomon also told McGraw that the dog prevented the officers from conducting this inspection. Salomon thus offered McGraw the choice to retrieve his dog or have Animal Control do it for him. McGraw chose the former and commented that his “dog did not like people in uniform,” a statement the district court interpreted as a joke. As McGraw approached the building’s entrance, Squadrito told him “to retrieve his dog and his belongings, because it was going to be a day or two” before McGraw could reenter the condemned building. McGraw responded that officers were “welcome to go up there with him” and reiterated that his dog, a “pit bull[,] doesn’t like police officers.” Inside the building but outside his apartment, McGraw then spoke with Musi, who asked, “Sir, do you mind if we go in with you to make sure there’s nobody else in there?” McGraw responded, “Go ahead if you want to search,” or “Yeah, go ahead and come in and search if you want to.” Squadrito, however, told his fellow officers to stay outside because the pit bull threat- ened their safety. No. 08-2705 5 McGraw entered his apartment, and a few minutes passed while he searched for his dog’s leash. Because of the delay, police told McGraw to leave his apartment. McGraw quickly leashed his dog with his cell-phone cord and exited the apartment, leaving his door ajar and his lights and television on. Once outside the building, McGraw again briefly spoke with Squadrito, who told McGraw that police “were going to check his apartment.” McGraw responded that his door was open and that they were “more than welcome” to enter but that nobody remained inside. Squadrito explained that police would nonetheless have to make sure before they boarded up the building. McGraw then left the premises with his dog. Squadrito entered McGraw’s apartment to search for stragglers, while Salomon searched the unit for other housing-code violations. In McGraw’s bedroom Squadrito saw in plain view a digital scale with a white residue, a plastic bag containing a green weed-like substance, and an open gym bag containing money and suspected crack cocaine. Squadrito had Salomon photograph the sus- pected narcotics, and they quickly exited the apartment. Police later obtained a search warrant and recovered the evidence. B. The Proceedings Below McGraw was charged with possession with intent to distribute crack cocaine in violation of 21 U.S.C. § 841(a)(1). He moved to suppress the evidence obtained in the search of his apartment. The district court concluded that the officers had performed a warrantless search without 6 No. 08-2705 exigent circumstances and that suppression therefore turned on whether McGraw had voluntarily consented to the search. The court held that “a totality of the cir- cumstances shows that the Defendant voluntarily gave permission to the officers.” The court found that McGraw consented first to Squadrito’s request to search and then to Musi’s before entering his apartment to retrieve his dog, but that the scope of those consents was limited to a search with McGraw present. The court further held that McGraw extended the scope of his consent to en- compass a search outside of his presence when, as he exited the building with his dog, he told Squadrito that officers were “more than welcome” to search his apartment. The court rejected McGraw’s argument that any consent he gave was merely acquiescence to the officers’ display of authority and therefore not voluntary. The court believed that the facts “present a close case” but nonetheless concluded that the officers did not claim authority to search and that any consent was voluntarily given. As the court explained, This finding rests primarily on the facts that [McGraw] was not a suspect and had no reason to think that he was a suspect, that [McGraw] gave consent to the officers to come with him into his apartment twice, that [McGraw] invited them in a third time as he was leaving, and that the interactions between [McGraw] and the officers had been calm and coopera- tive. The district court also considered the officers’ comments. It construed Salomon’s statement of a “need to go inside” No. 08-2705 7 to inspect the apartment as a request rather than a com- mand because it had no coercive effect and did not imply that Salomon suspected McGraw of wrongdoing. The court interpreted Squadrito’s statement that police “were going to check his apartment” as a “follow-up” to McGraw’s first invitation into his apartment or, alterna- tively, as a suggestion of authority based only on McGraw’s previous consents. The court also highlighted that Musi’s question whether officers could enter McGraw’s apartment implied that permission could be refused, yet McGraw nevertheless welcomed officers into his apartment. Finally, the court noted that “the total lack of any statement by [McGraw] implying that he objected to the officers’ search of his apartment also suggests he voluntarily consented to the search of his apartment.” Having lost the suppression battle, McGraw entered a conditional plea of guilty, waived his right to challenge any aspect of his sentencing, and preserved his right to challenge the district court’s denial of his motion to suppress. At sentencing the district court classified McGraw as a career offender under § 4B1.1 of the United States Sentencing Guidelines and sentenced him to 262 months, the low end of the applicable guidelines range. II. Analysis This case presents two issues on appeal: first, whether the district court clearly erred in determining that McGraw voluntarily consented to the search of his apart- ment, and second, whether McGraw may challenge the 8 No. 08-2705 district court’s classification of McGraw as a career of- fender. Because we conclude that the district court did not clearly err in its suppression ruling and that McGraw waived his right to challenge his sentencing, we affirm. A. The District Court’s Suppression Ruling The Fourth and Fourteenth Amendments safeguard the “right of the people to be secure in their . . . houses . . . against unreasonable searches and seizures.” A warrantless search of a suspect’s house without exigent circumstances is presumptively unreasonable, Payton v. New York, 445 U.S. 573 (1980), and the exclusionary rule generally re- quires suppression of the evidence obtained from such searches. However, this general rule is subject to well- recognized exceptions, including the suspect’s voluntary consent to the search.2 See, e.g., Schneckloth v. Bustamonte, 412 U.S. 218 (1973). Consent-search cases distinguish between voluntary consent and consent resulting from duress, coercion, or acquiescence to authority. This is a “question of fact to be determined from the totality of all the circumstances,” id. at 227, and the government 2 We presume for purposes of this appeal that the search was constitutional only if McGraw voluntarily consented to the officers’ entry. The government has not disputed the district court’s finding that no exigent circumstances justified this warrantless search, nor has the government suggested that the special-needs or administrative-search doctrines are rele- vant. No. 08-2705 9 bears the burden of proving voluntary consent by a preponderance of the evidence, United States v. Basinski, 226 F.3d 829, 833 (7th Cir. 2000). Factors bearing on this inquiry include: (1) the person’s age, intelligence, and education, (2) whether he was advised of his constitutional rights, (3) how long he was detained before he gave his consent, (4) whether his consent was immediate, or was prompted by repeated requests by the authorities, (5) whether any physical coercion was used, and (6) whether the individual was in police custody when he gave his consent. United States v. Raibley, 243 F.3d 1069, 1075-76 (7th Cir. 2001); see also Schneckloth, 412 U.S. at 226 (listing essentially the same factors). In this case the district court concluded that the gov- ernment satisfied its burden of proving voluntary consent. The parties agree that we review that determination for clear error. See Raibley, 243 F.3d at 1076; United States v. Nafzger, 965 F.2d 213, 216 (7th Cir. 1992). “A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. Rice, 995 F.2d 719, 722 (7th Cir. 1993). “Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574 (1985). Stated differ- ently, “ ‘[i]f the district court’s account of the facts is plausible in light of the record viewed in its entirety, we 10 No. 08-2705 may not reverse that decision even if we may have decided the case differently.’ ” Raibley, 243 F.3d at 1076 (quoting Cent. States, Se. & Sw. Areas Pension Fund v. Kroger Co., 226 F.3d 903, 910 (7th Cir. 2000)). We agree with the district court that this is a close case. On the one hand, considerable evidence suggested that McGraw voluntarily consented to the officers’ search. For instance, Musi specifically requested the right to enter McGraw’s apartment, signaling that McGraw may with- hold consent. Yet McGraw readily allowed Musi to enter. Further, McGraw consented to Squadrito’s entry both before and after he secured his dog. McGraw also left his door ajar and his lights on, and told Squadrito of this fact as he left his apartment building, thus suggesting he approved of the officers’ entry into his apartment. More- over, the district court found that the tone of the interac- tion between McGraw and the officers at all times re- mained calm and cooperative, and the evidence sup- ports this finding. Finally, McGraw even joked with police about his dog’s dislike of officers, suggesting (as the district court held) that McGraw was not over- whelmed by any show of authority. On the other hand, there is also some evidence that weighs against a finding of voluntariness. Most impor- tantly, in their encounter with McGraw, both Squadrito and Salomon arguably implied that they had a right to search McGraw’s apartment without his permission. Further, Squadrito testified that if he were unable to locate McGraw, he “would have made the decision to have contacted the landlord, unlock the door, and made sure No. 08-2705 11 there [were] no human occupants within the dwelling.” Had a search resulted merely from the landlord’s consent, the exclusionary rule might be triggered. See Chapman v. United States, 365 U.S. 610 (1961). Faced with competing evidence, the district court looked to the “totality of the circumstances” in determining whether McGraw’s consent was voluntarily given. The court treated Salomon’s and Squadrito’s suspect language as a “factor [that] weighs against a finding of voluntary consent,” and suggested that even in the presence of such language, the proper inquiry is “whether such claims [of authority] outweigh the other factors suggesting consent was voluntary.” That is precisely the approach that we outlined in United States v. Nafzger. In that case we referred to an improper claim of police authority as a “factor” that must be “weigh[ed] . . . along with the other factors that Schneckloth . . . directs courts to weigh in totality-of-the-circumstances cases.” Nafzger, 965 F.2d at 216; see also Bolden v. Se. Penn. Transp. Auth., 953 F.2d 807, 824 (3d Cir. 1991) (en banc) (“If the party conducting the search claimed the authority to search without consent, that factor weighs against a finding of voluntary consent.”). The district court concluded that the officers’ arguable assertions of authority did not outweigh the evidence supporting the conclusion that McGraw’s consent was voluntary, namely, McGraw’s conduct, his calm coopera- tion, and his broadly phrased consents following Musi’s unambiguous request to inspect his apartment. The court’s finding that McGraw voluntarily consented to the officers’ search is certainly “plausible in light of 12 No. 08-2705 the record viewed in its entirety.” Raibley, 243 F.3d at 1076. We are not left with “the definite and firm conviction that a mistake has been committed.” United States v. Rice, 995 F.2d 719, 722 (7th Cir. 1993). Keeping in mind the deference due the district judge, who is in a superior position to observe the witnesses and determine exactly what happened and how it happened, we conclude that the court did not clearly err. McGraw, however, argues that Nafzger compels the opposite result. We disagree. In Nafzger, police went to Nafzger’s farm and asserted the right to search his prop- erty for a stolen pickup truck based on a legally insuf- ficient search warrant. Nafzger was permitted to read the search warrant and then led officers to a toolshed where the stolen truck was parked. Nafzger later moved to suppress the evidence, and the district court denied his motion. We reversed, holding that Nafzger merely acquiesced to the search based on the officers’ false claim of authority. Nafzger is distinguishable for several reasons. First, the officers in this case did not make any comparable claim of authority akin to asserting they had a warrant; nor did they, as in Nafzger, actually produce one. Second, even if Squadrito and Salomon did claim authority to search—a finding, as we explained above, the district court rejected—their assertions were tempered by Musi’s question and McGraw’s actions. Third, Nafzger does not suggest that an officer’s assertion of authority ends the factual inquiry. On the contrary, our opinion recognized that the district court must apply a totality-of-the-evidence analysis even when faced with officers’ claims of authority. Nafzger, 965 F.2d at 216. Here, the district court did precisely that. No. 08-2705 13 B. McGraw’s Waiver of His Right to Appeal His Sen- tence McGraw also tries to challenge his sentencing class- ification as a career offender, which increased his guide- lines range from 92-115 months to 262-327 months. He argues that fleeing from an officer and intimidating an officer are no longer crimes of violence after Begay v. United States, 128 S. Ct. 1581 (2008). We do not address the merits of this question, however; in his plea agree- ment, McGraw waived his right to appeal his sentence. A knowing and voluntary appeal waiver precludes appellate review, United States v. Jones, 381 F.3d 615, 619 (7th Cir. 2004), and McGraw admits that his plea agreement in- cluded an unambiguous waiver of his right to challenge the district court’s sentencing determinations. He none- theless argues that because he did not anticipate Begay, he could not have knowingly and voluntarily waived his right to appeal based on a Begay-type argument. We have consistently rejected arguments that an appeal waiver is invalid because the defendant did not anticipate subsequent legal developments. In United States v. Lockwood, 416 F.3d 604 (7th Cir. 2005), for example, we considered a challenge from a defendant sentenced before the Supreme Court declared the sen- tencing guidelines advisory in United States v. Booker, 543 U.S. 220 (2005). The defendant argued that “his appeal waiver is invalid because the parties and the court failed to anticipate Booker.” Lockwood, 416 F.3d at 607. We instead concluded that Lockwood knowingly and intentionally waived his right to appeal his sentence for any reason. . . . The fact 14 No. 08-2705 that Lockwood, the government, and the district court failed to anticipate Booker or its sweeping effect on federal guidelines sentencing does not change this conclusion. There simply is nothing special about Booker that would preclude enforcement of an other- wise valid appeal waiver. Id. at 608 (citations omitted). Our position in Lockwood is consistent with our long- expressed view that plea-bargain appeal waivers involve risk: By binding oneself one assumes the risk of future changes in circumstances in light of which one’s bargain may prove to have been a bad one. That is the risk inherent in all contracts; they limit the parties’ ability to take advantage of what may happen over the period in which the contract is in effect. United States v. Bownes, 405 F.3d 634, 636 (7th Cir. 2005) (also rejecting the argument that Booker created a “sea change” in the law and commenting that in any event, a “ ‘sea change’ exception to the rule . . . would be hope- lessly vague”). We also noted that our conclusion could differ had the defendant “insisted on an escape hatch that would have enabled him to appeal if the law changed in his favor after he was sentenced.” Id. Lockwood and Bownes thus require that we affirm. By entering into an appeal waiver that did not include an escape hatch of the kind we contemplated in Bownes, McGraw relinquished his right to challenge his sentence based on intervening Supreme Court decisions. Moreover, No. 08-2705 15 the case for recognizing any exception after Begay is far weaker than the case for recognizing an exception after Booker. After all, Begay was a statutory-interpretation case, whereas Booker invalidated the entire mandatory- guidelines system on constitutional grounds. If a defen- dant’s plea agreement remains knowing and voluntary despite Booker, Begay cannot command a contrary result. Accordingly, because McGraw’s waiver of his right to appeal his sentence is valid, we do not reach the merits of McGraw’s sentencing argument. A FFIRMED. 7-2-09	{ "pile_set_name": "FreeLaw" }
784 N.W.2d 823 (2010) PEOPLE of the State of Michigan, Plaintiff-Appellee, v. Anthony Darryl JAMES, Defendant-Appellant. Docket No. 140424. COA No. 292411. Supreme Court of Michigan. July 26, 2010. Order On order of the Court, the application for leave to appeal the October 28, 2009 order of the Court of Appeals is considered, and it is DENIED, because the defendant has failed to meet the burden of establishing entitlement to relief under MCR 6.508(D). The motion for peremptory reversal and the motion to remand are DENIED.	{ "pile_set_name": "FreeLaw" }
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. IN THE ARIZONA COURT OF APPEALS DIVISION ONE STATE OF ARIZONA, Appellee, v. JESSE LUNA, Appellant. No. 1 CA-CR 14-0864 FILED 2-23-2016 Appeal from the Superior Court in Maricopa County No. CR2013-438634-001 DT The Honorable Brian Kaiser, Judge Pro Tempore AFFIRMED COUNSEL Arizona Attorney General’s Office, Phoenix By Joseph T. Maziarz Counsel for Appellee Maricopa County Public Defender’s Office, Phoenix By Joel M. Glynn Counsel for Appellant STATE v. LUNA Decision of the Court MEMORANDUM DECISION Judge Donn Kessler delivered the decision of the Court, in which Presiding Judge Lawrence F. Winthrop and Judge Samuel A. Thumma joined. K E S S L E R, Judge: ¶1 Appellant Jesse Luna appeals his convictions for two counts of aggravated driving under the influence (“DUI”) and two concurrent eight-year prison terms.1 Counsel for Luna filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967), and State v. Clark, 196 Ariz. 530 (App. 1999). Finding no arguable issues to raise, counsel requested that this Court search the record for fundamental error. Luna was given the opportunity to, but did not file, a supplemental brief in propia persona. For the reasons that follow, we affirm Luna’s convictions and sentences. However, we correct the sentencing minute entry in this case referencing Luna’s 1990 prior felony conviction. FACTUAL AND PROCEDURAL HISTORY ¶2 On August 13, 2013, an on-duty Phoenix police officer stopped Luna on suspicion of drunk driving. Luna’s driver’s license showed an interlock device requirement and a search of state vehicle records revealed Luna’s driving privileges were suspended. The officer could smell alcohol on Luna’s breath, and found open beer containers in Luna’s car. Another officer conducted a Horizontal Gaze Nystagmus (“HGN”) test on Luna, and found four out of six maximum cues of alcohol impairment. Luna refused to do any more sobriety tests. ¶3 Luna was arrested and taken to a DUI van, where a phlebotomist drew Luna’s blood pursuant to a search warrant authorizing the draw. Luna also spontaneously stated that he would be sober before 1Count 1 (aggravated DUI, impaired, a class four felony with two historical prior felony convictions); and Count 2 (aggravated DUI, alcohol concentration of 0.08 or more, a class four felony with two historical prior felony convictions). 2 STATE v. LUNA Decision of the Court the police would get his blood. Luna’s reported blood alcohol concentration was 0.120. ¶4 A jury convicted Luna for two counts of aggravated DUI. At sentencing, the judge found Luna had two historical prior felony convictions, and sentenced Luna concurrently to two mitigated eight-year terms, with credit for 42 days of presentence incarceration.2 ¶5 Luna timely appealed. We have jurisdiction of the appeal pursuant to Article 6, Section 9, of the Arizona Constitution, and Arizona Revised Statutes (“A.R.S.”) sections 13-4031 (2010), -4033(A)(1) (2010). DISCUSSION ¶6 In an Anders appeal, this Court must review the entire record for fundamental error. Error is fundamental when it affects the foundation of the case, deprives the defendant of a right essential to his defense, or is an error of such magnitude that the defendant could not possibly have had a fair trial. State v. Henderson, 210 Ariz. 561, 567, ¶ 19 (2005). To reverse, the defendant must also show that the error prejudiced him. Id. at ¶ 20. ¶7 In reviewing the sufficiency of evidence at trial, “[w]e construe the evidence in the light most favorable to sustaining the verdict, and resolve all reasonable inferences against the defendant.” State v. Greene, 192 Ariz. 431, 436, ¶ 12 (1998). “Reversible error based on insufficiency of the evidence occurs only where there is a complete absence of probative facts to support the conviction.” State v. Soto-Fong, 187 Ariz. 186, 200 (1996) (quoting State v. Scott, 113 Ariz. 423, 424–25 (1976)). ¶8 The record reveals substantial evidence to support the jury’s verdicts for both aggravated DUI counts. Count 1 required proof that Luna was driving while under the influence of intoxicating liquor, impaired, and while under a court order to equip his vehicle with a certified ignition interlock device. See A.R.S. §§ 28-1381(A)(1) (2012), -1383(A)(4) (Supp. 2015).3 Count 2 required proof that Luna was driving while under the influence of intoxicating liquor, with an alcohol concentration of 0.08 or more, and while under a court order to equip his vehicle with a certified ignition interlock device. See A.R.S. §§ 28-1381(A)(2), -1383(A)(4). 2 Luna was not present at the return of the verdict and later was arrested on a warrant issued by the trial court. 3 We cite the current version of the applicable statutes unless revisions material to this decision have occurred since the events in question. 3 STATE v. LUNA Decision of the Court ¶9 Phoenix police officers testified that Luna was driving a vehicle and swerving between traffic lanes before they stopped him. The officers also testified they found open beer cans in Luna’s vehicle, he smelled like alcohol, and an HGN test revealed four out of six maximum cues of alcohol impairment. The phlebotomist who performed Luna’s blood analysis testified Luna’s blood alcohol concentration was 0.120. An MVD custodian of records/analyst testified Luna had an ignition interlock requirement on his license and that his driving privilege was suspended. Thus, there was sufficient evidence to satisfy all of the elements of both aggravated DUI counts. ¶10 The record reveals substantial evidence to support the sentencing judge’s finding of two historical prior felonies. In 1990, Luna was convicted of aggravated assault, a class 3 “dangerous” felony. See A.R.S. §§ 13-702 (2010), -1204 (Supp. 2015).4 In Arizona, a prior felony conviction that involved a dangerous offense is a “historical prior felony” irrespective of the date of conviction. A.R.S. § 13-105(22)(a)(ii) (Supp. 2015). Luna also was convicted for two class four felonies for misconduct involving weapons in 2002. Thus, Luna’s felony convictions in 2002, in conjunction with the aggravated assault felony conviction from 1990, constituted his third felony conviction, and his second historical prior felony. See A.R.S. § 13-105(22)(d) (providing that “[a]ny felony conviction that is a third or more prior felony conviction” constitutes a “historical prior felony”). CONCLUSION ¶11 After careful review of the record, we find no meritorious grounds for reversal of Luna’s convictions or modification of the sentences imposed. The evidence supports the verdicts, the sentences imposed were within the sentencing limits, and Luna was represented at all stages of the proceedings below. Accordingly, we affirm Luna’s convictions and sentences. ¶12 The sentencing minute entry erroneously states Luna’s 1990 prior aggravated assault conviction as “CR1990-006588 Assault, a Class 4 Felony.” However, the sentencing minute entry from the 1990 case documents Luna’s conviction as “CR90-06588 Aggravated Assault, a class three dangerous felony.” (Emphasis added.) Accordingly, we correct the 4A.R.S. § 13-702 embodies the current version of A.R.S. § 13-604 (1989), which was the Arizona statutory provision in effect in 1990 that classified Luna’s 1990 felony conviction as “dangerous.” 4 STATE v. LUNA Decision of the Court sentencing minute entry here referring to Luna’s 1990 prior felony conviction as follows: Aggravated Assault, a Class 3 and Dangerous Felony committed on 6/1/1990 and convicted on 10/4/1990 in CR90-06588 in Maricopa County Superior Court. ¶13 Upon the filing of this decision, counsel shall inform Luna of the status of the appeal and his options. Defense counsel has no further obligations, unless, upon review, counsel finds an issue appropriate for submission to the Arizona Supreme Court by petition for review. See State v. Shattuck, 140 Ariz. 582, 584–85 (1984). Luna shall have thirty days from the date of this decision to proceed, if he so desires, with a pro per motion for reconsideration or petition for review. :ama 5	{ "pile_set_name": "FreeLaw" }
223 P.3d 1148 (2010) 2010 UT App 8 STATE of Utah, Plaintiff and Appellee, v. Tina HARDING, Defendant and Appellant. No. 20080772-CA. Court of Appeals of Utah. January 22, 2010. Rehearing Denied February 8, 2010. 1149 Margaret Lindsay, Spanish Fork, for Appellant. Mark L. Shurtleff, Atty. Gen. and Marian Decker, Asst. Atty. Gen., Salt Lake City, for Appellee. Before Judges THORNE, BENCH, and GREENWOOD.[1] OPINION GREENWOOD, Judge: ¶ 1 Defendant Tina Harding appeals her convictions for illegal possession or use of a controlled substance and possession of a dangerous weapon by a restricted person. These charges stem from the search of a vehicle in which Defendant was a passenger. Specifically, she appeals the trial court's denial of her motion to suppress evidence obtained during the search, arguing that the search of her bags, which were inside the rear storage compartment of the vehicle, was 1150 a violation of her Fourth Amendment rights. We affirm. BACKGROUND ¶ 2 Defendant was a passenger in her friend's vehicle when Officer Jeffery Westerman initiated a traffic stop for an equipment violation because the vehicle's plate lamp was inoperable. Officer Westerman ran a routine check on the driver and learned that she did not have a valid driver license. He then requested the names and birth dates of each of the three passengers and discovered that none of them had a valid driver license.[2] Officer Westerman asked the driver to exit the vehicle and issued a citation for an inoperable plate lamp and driving without a license. He then told her she was free to leave, but advised her to contact someone to come drive the vehicle because none of the passengers had a valid driver license. The driver began to walk toward her vehicle but returned to ask Officer Westerman a question. At that point, Officer Westerman asked her if he could look in the vehicle and she consented. Officer Westerman asked the passengers to exit the vehicle and told them they could wait with the backup officer "if they wanted." This second officer arrived before Officer Westerman completed his investigation and prior to the driver consenting to a search. The emergency lights on both of the officers' vehicles were off before the driver exited her vehicle. ¶ 3 During Officer Westerman's search of the vehicle he found a brown bag and a blue bag[3] in the cargo space behind the back seat of the vehicle. Before searching the bags, Officer Westerman did not ask to whom they belonged, and none of the passengers claimed ownership of them. There were no visible indications on the bags that they belonged to anyone other than the driver. The bags contained drugs and drug paraphernalia and other items indicating the bags belonged to Defendant. Officer Westerman then searched Defendant and found a lock blade knife with a three-inch blade. Officer Westerman arrested Defendant and gave her Miranda warnings. ¶ 4 Defendant moved to suppress the evidence, but the trial court denied the motion. Defendant entered conditional guilty pleas, see State v. Sery, 758 P.2d 935, 938-40 (Utah Ct.App.1988) (discussing and expressly authorizing guilty pleas conditioned upon the ability to appeal the denial of a motion to suppress evidence), and now appeals. ISSUE AND STANDARD OF REVIEW ¶ 5 Defendant argues that the trial court erred in denying her motion to suppress evidence because the evidence was obtained as a result of an illegal search and seizure. We afford little discretion to the district court's determination in cases involving the legality of a search and seizure "because there must be state-wide standards that guide law enforcement and prosecutorial officials." State v. Hansen, 2002 UT 125, ¶ 26, 63 P.3d 650 (internal quotation marks omitted). ANALYSIS I. The Initial Detention De-escalated to a Consensual Encounter ¶ 6 Unreasonable searches are prohibited by the Fourth Amendment to the United States Constitution. See U.S. Const. amend. IV. This protection extends to automobile stops, although reasonable traffic stops are allowed if the "purpose of the stop is limited and the resulting detention quite brief." Delaware v. Prouse, 440 U.S. 648, 653, 99 S.Ct. 1391, 59 L.Ed.2d 660 (1979). When a traffic stop occurs, "the driver of the car is seized within the meaning of the Fourth Amendment .... [and] a passenger is seized as well and so may challenge the constitutionality of the stop." Brendlin v. California, 551 U.S. 249, 251, 127 S.Ct. 2400, 168 L.Ed.2d 132 (2007). That seizure continues "[f]or the duration of a traffic stop." Arizona v. Johnson, ___ U.S. ___, ___, 129 S.Ct. 781, 782, 172 L.Ed.2d 694 (2009). Generally 1151 speaking, a traffic stop for a traffic violation observed by an officer is justified. See Hansen, 2002 UT 125, ¶ 30, 63 P.3d 650. Recognizing this principle, the parties in this case stipulated that the initial traffic stop was a legally valid investigatory detention. ¶ 7 "Once the purpose of the initial stop is concluded ... the person must be allowed to depart." Id. ¶ 31. Further, "[a] traffic stop that begins as a seizure may de-escalate to a mere consensual encounter." Id. ¶ 33. Thus, we consider whether the vehicle occupants' encounter with Officer Westerman had de-escalated from an investigatory detention to a consensual encounter before Officer Westerman asked the driver if he could look in her vehicle. Any investigatory traffic stop may properly be determined to have "de-escalate[d] to a consensual encounter when a reasonable person would believe, based on the totality of the circumstances, that he or she is free to end the encounter and depart." Id. ¶ 39. ¶ 8 In State v. Hansen, 2002 UT 125, 63 P.3d 650, the Utah Supreme Court addressed de-escalations to consensual encounters. By definition, "`an encounter initiated by a traffic stop may not be deemed consensual unless the driver's documents have been returned to [her].'" Id. ¶ 40 (quoting United States v. Gregory, 79 F.3d 973, 979 (10th Cir.1996)). If the driver's documents have been returned, we consider "factors tending to show de-escalation," including "informing a person [s]he is free to leave, or that [s]he does not have to answer additional questions." Id ¶ 41. By contrast, factors that weigh against de-escalation include "failure to issue a warning or citation before engaging in additional questioning" and "a coercive show of authority, such as the presence of more than one officer, the display of a weapon, physical touching by the officer, or [the officer's] use of a commanding tone of voice indicating that compliance might be compelled." Id. (internal quotation marks omitted). ¶ 9 In Hansen, the supreme court reversed this court's decision that a traffic stop had de-escalated to a consensual encounter, determining that there was no noticeable break between the initial traffic stop and the further questioning unrelated to the purpose for the traffic stop. See id. ¶ 68. In addition, the officer did not address the traffic violations before questioning the defendant about possible contraband and did not tell the defendant he was free to leave. See id. ¶ 45. Because the supreme court "question[ed] whether a reasonable person would feel free to leave before being issued a warning or citation, or at least being told he or she could leave," id., it concluded that the "detention had not de-escalated to a consensual encounter at the time of the additional questioning; and thus, [the defendant] was illegally seized," id. ¶ 46. ¶ 10 In this case, however, the driver's documents had been returned to her and she was cited for the equipment violation and lack of a driver license. Further, there was a distinct break in the encounter when Officer Westerman told the driver she was free to leave. At that point, the purpose of the traffic stop had clearly been concluded. However, the driver then approached Officer Westerman to ask a question. While it is true that there was a backup officer present, the facts do not suggest coercion. For example, the officers' vehicles' emergency lights were off, and there is no indication that the officers' weapons were displayed, that the officers touched the driver or the passengers, or that the officer used a commanding tone of voice. See id. ¶ 41 (listing these criteria as examples of behavior that would indicate coercion). ¶ 11 We conclude that, under these circumstances, the driver would have reasonably felt free to leave and, therefore, the encounter had de-escalated to a consensual encounter. See id. ¶¶ 33-34. Thereafter, the driver consented to a search of the vehicle. Although Defendant lacked standing to object to the search because she did not own or exercise authority over the vehicle, the State stipulated that she had standing to challenge the search of her bags because she had a legitimate expectation of privacy in the bags and did not abandon them. Thus, we turn to the legality of the search of Defendant's 1152 bags.[4] II. The Search of Defendant's Bags Was Legal ¶ 12 Our analysis of the legality of the search of Defendant's bags begins with the question of whether it was reasonable for Officer Westerman to conclude that the driver's consent extended to Defendant's personal belongings. As noted above, the State concedes that Defendant has standing to challenge whether the officer had a reasonable belief that the driver's consent to search the vehicle extended to Defendant's bags. ¶ 13 In Florida v. Jimeno, 500 U.S. 248, 111 S.Ct. 1801, 114 L.Ed.2d 297 (1991), the United States Supreme Court stated that "[t]he standard for measuring the scope of a suspect's consent under the Fourth Amendment is that of `objective' reasonableness what would the typical reasonable person have understood by the exchange between the officer and the suspect?" Id. at 251, 111 S.Ct. 1801 (citing Illinois v. Rodriguez, 497 U.S. 177, 183-89, 110 S.Ct. 2793, 111 L.Ed.2d 148 (1990)). In Jimeno, the car driver consented to a search and the officer searched a folded, brown paper bag located on the floor of the car, discovering cocaine in the bag. See id. The Court examined whether the consent extended to the paper bag and concluded "that it was objectively reasonable for the police to conclude that the general consent to search [the] car included consent to search containers within that car which might bear drugs. A reasonable person may be expected to know that narcotics are generally carried in some form of a container." Id. Furthermore, if a person consents to a general search of their property, within which is contained property owned by another person, the consent is valid so long as the consenting party has authority over the area or has a "sufficient relationship to the premises or effects sought to be inspected." State v. Messer, 2007 UT App 166, ¶ 21, 164 P.3d 421. ¶ 14 The critical inquiry then is whether the police officer reasonably believed that the consenting party has sufficient authority to consent to the search. In State v. Messer, 2007 UT App 166, 164 P.3d 421, the police searched a car located on a third party's property with the property owner's consent and discovered contraband in bags in the car's trunk belonging to the defendant. See id. ¶ 4. This court noted that common authority over property was not necessarily dependent on ownership, but could also be established by possession. See id. ¶ 22. The search and seizure were upheld "[b]ecause the officers could have, at the very least, reasonably believed that [the property owner] had authority to consent to a search of the car trunk and its contents." Id. ¶ 23. ¶ 15 The State cites cases holding that a driver's consent to a vehicle search extends to the property of a third person in the vehicle when the property does not clearly belong to a person other than the driver. 1153 See United States v. Hammons, 152 F.3d 1025, 1028 (8th Cir.1998) (noting that the defendant's garment bag was properly searched where the defendant's wife consented to the vehicle search and the officers did not see identifying tags on the bag, reasonably believing that the bag belonged to the defendant's wife); State v. Sawyer, 147 N.H. 191, 784 A.2d 1208, 1212-13 (2001) (holding officers reasonably believed driver had authority to consent to search of bag belonging to defendant); State v. Maristany, 133 N.J. 299, 627 A.2d 1066, 1070 (1993) (stating officers had reasonable belief driver had authority to consent to search of luggage in vehicle trunk where there were no indications luggage belonged to passengers). The State further contends that because the ultimate test of a search's legality is objective reasonableness, police officers are not required to seek permission to open each closed container during a consensual vehicle search, because consent to search a vehicle "is equivalent to general consent to search the vehicle and its contents, including containers such as luggage," United States v. Crain, 33 F.3d 480, 484 (5th Cir.1994) (citing United States v. Rich, 992 F.2d 502, 508 (5th Cir.1993)). ¶ 16 Defendant disagrees with the State's application of this case law and argues that the driver's consent in this case did not extend to Defendant's bags located in the rear of the car. In support of that argument Defendant urges us to adopt the rule applied in State v. Frank, 650 N.W.2d 213 (Minn.Ct. App.2002). There, a vehicle was stopped for having only one working headlight. See id. at 215. After citing the driver for the equipment violation, the officer became suspicious of drug activity, separated the individuals in the car, and asked the driver for and received permission to search the vehicle. See id. The officer opened the trunk of the vehicle and found two suitcases. See id. The officer did not ask who owned the suitcases and did not ask permission from the passengers to search the suitcases. See id. The officer found drugs and later learned that the suitcase belonged to the defendant, a passenger in the vehicle. See id. The Minnesota court reviewed cases from other jurisdictions and "conclude[d] that the cases holding that a driver's consent to search a motor vehicle does not extend to property owned by passengers who are present and available to consent to the search of their property are more consistent with constitutional limits on warrantless searches than the cases that conclude otherwise." Id. at 218-219. The Minnesota court held that, "when a vehicle search is based only on consent, an officer has an obligation to ascertain the ownership of items not owned by or within the control of the consenter when the circumstances do not clearly indicate that the consenter is the owner or controls the items to be searched." Id. at 219. ¶ 17 Here, Defendant argues that a reasonable person in Officer Westerman's position would reasonably believe that the bags belonged to one of the three passengers rather than to the driver. The presence of the three passengers and the location of the bags in the small storage space behind the rear passenger seat would lead to that reasonable belief. Under these circumstances, Defendant asserts, Officer Westerman should have inquired about the bags' ownership and sought consent to search from anyone who asserted ownership. Defendant contends that without having done so, Officer Westerman's search of the bags was illegal. We do not agree, and we believe that Frank's requirement is too sweeping. ¶ 18 As acknowledged in Frank, in determining what justifies a legal search, "[e]ach case depends on what is an objectively reasonable belief for the officer to hold in a particular situation." Id. at 217 (citing Florida v. Jimeno, 500 U.S. 248, 251, 111 S.Ct. 1801, 114 L.Ed.2d 297 (1991)). If items in a vehicle clearly do not belong to a consenting driver and there are passengers who may likely own the items, the driver's consent to search would not reasonably extend to those items. Examples might include an item with a label or tag indicating ownership, or a purse, when there is a male driver and a female passenger. See United States v. Welch, 4 F.3d 761, 764 (9th Cir.1993) (stating that under the circumstances it was not reasonable for officers to believe male driver had authority to consent to search of his passenger/girlfriend's purse). Other situations where the vehicle's contents are more 1154 anonymous would likely lead to an objectively reasonable belief that the consenting driver owned and/or exercised control over the vehicle and items contained therein. ¶ 19 The particulars of the situation in this case lead us to conclude that the search of Defendant's bags was based on a reasonable belief that they belonged to the driver and that the driver had authority to consent to their search. These particulars include the following, taken from the brief testimony of Officer Westerman, the only witness called to testify: (1) there was a small storage area in the rear of the car behind the backseat; (2) items in this storage area included a brown bag and a dark blue bag, and various loose items; (3) there was nothing on or about the bags to indicate they belonged to anyone other than the driver; (4) the vehicle's occupants consisted of the driver and three passengers; (5) neither the driver nor any of the passengers informed Officer Westerman about where they had been or where they were going; (6) none of the vehicle's occupants stated that the bags belonged to anyone other than the driver; and (7) no one objected to the search. Under these circumstances it was objectively reasonable for Officer Westerman to believe the bags belonged to the driver. Any belief that the bags belonged to one of the passengers would necessarily be based on speculation. On the other hand, it is patently reasonable to believe that a car owner would toss or place bags or other items in a small storage area of a car, located behind the passenger seat. We therefore conclude that under these circumstances, search of Defendant's bags was lawful. ¶ 20 Affirmed. ¶ 21 I CONCUR: RUSSELL W. BENCH, Senior Judge. THORNE, Judge (dissenting): ¶ 22 I respectfully dissent from the majority opinion, as I cannot agree with its conclusion that the search of Defendant's bags pursuant to the driver's consent was permissible. Here, the trial court expressly found that, under the circumstances, Officer Westerman "had no way of knowing whose bags they were." Accordingly, I disagree that Officer Westerman can be said to have had a reasonable belief as to the driver's ownership of the bags, and I would hold that the State failed to meet its burden of demonstrating that the driver had the apparent authority to consent to the search of Defendant's bags. ¶ 23 Both the trial court and, to a lesser extent, the majority opinion treat this as a case about the scope of the driver's consent. It is not. There is no dispute that, had the bags belonged to the driver, permission to search the bags would have been included within the scope of her consent to search the car. See Florida v. Jimeno, 500 U.S. 248, 251, 111 S.Ct. 1801, 114 L.Ed.2d 297 (1991) ("We think that it was objectively reasonable for the police to conclude that the general consent to search respondents' car included consent to search containers within that car which might bear drugs."). Rather, the question presented in this case involves the driver's authority to consent to the search of the bags. ¶ 24 "`If a third party rather than the defendant consents to a search, the third party must be one who possesses "common authority" over the area or has some other "sufficient relationship to the premises or effects sought to be inspected."'" State v. Messer, 2007 UT App 166, ¶ 21, 164 P.3d 421 (quoting State v. Brown, 853 P.2d 851, 855 (Utah 1992)). "Moreover, a search is valid even in instances where the third party does not possess common authority, as long as the police `reasonably believe[ ]'" that the third party possesses such authority. Id. (alteration in original) (quoting Illinois v. Rodriguez, 497 U.S. 177, 189, 110 S.Ct. 2793, 111 L.Ed.2d 148 (1990)). However, the State bears the burden of establishing that one who consents to a search has the authority to do so. See Brown, 853 P.2d at 855 ("The State bears the burden of proving common authority, and it must do so by a preponderance of the evidence."); see also State v. Worwood, 2007 UT 47, ¶ 23, 164 P.3d 397 ("When challenged, the [S]tate has the burden of proving the reasonableness of the officer's actions during an investigative detention."). ¶ 25 It is undisputed in this case that the driver did not have actual authority to consent 1155 to the search of Defendant's bags.[5] Thus, in order for the State to justify the search, it must demonstrate that the facts known to Officer Westerman would nevertheless have caused a person of reasonable caution to conclude that the driver had such authority. Cf. State v. Duran, 2005 UT App 409, ¶ 14, 131 P.3d 246 ("If the facts known to the officers would not cause a person of reasonable caution to conclude that the consenting party had authority over the premises, `then warrantless entry without further inquiry is unlawful unless authority actually exists'" (quoting Rodriguez, 497 U.S. at 188-89, 110 S.Ct. 2793)). It appears that the only indicia of ownership or control of the bags was their mere presence in the driver's vehicle, along with multiple passengers and in an area accessible to those passengers. As the trial court aptly found, this information alone gave Officer Westerman "no way of knowing whose bags they were." ¶ 26 At best, Officer Westerman was presented with a situation where ownership and control of the bags was ambiguous. Utah law requires further inquiry before a consent search can be deemed valid in such ambiguous situations. See id. ¶ 17 ("The officers were faced with an ambiguous situation concerning the trailer. Although it was owned by Mother, it was rented to Horvath. Despite that ambiguity, the officers made no further inquiry and proceeded with the warrantless [consent] search. The search was not lawful ...." (footnote omitted)); State v. Davis, 965 P.2d 525, 533 (Utah Ct.App.1998) (stating that the State's burden to prove common authority cannot be met "`if agents, faced with an ambiguous situation, nevertheless proceed without making further inquiry'" (quoting United States v. Whitfield, 939 F.2d 1071, 1075 (D.C.Cir.1991))). ¶ 27 Had Officer Westerman made further inquiry, he could likely have easily ascertained that the bags belonged to Defendant and sought her consent to search them. If further inquiry had resulted in the passengers, including Defendant, denying ownership of the bags, then Officer Westerman would have had some reason to believe that the bags belonged to the driver. Or, had everyone denied ownership of the bags, then perhaps an abandonment analysis would have been appropriate. See generally State v. Rynhart, 2005 UT 84, ¶ 21, 125 P.3d 938 (discussing abandonment); see also United States v. Veatch, 674 F.2d 1217, 1220-21 (9th Cir.1981) (finding abandonment where the defendant disclaimed ownership of a wallet found on the seat of a vehicle). Here, however, Officer Westerman made no inquiry whatsoever and, thus, his search of Defendant's bags pursuant to the driver's consent cannot be deemed objectively reasonable under Utah case law governing consent searches. ¶ 28 Because I would suppress the results of the search of Defendant's bags under existing Utah case law, I see no need to rely on Defendant's primary source of authority, State v. Frank, 650 N.W.2d 213 (Minn.Ct. App.2002). However, I agree with the logic and analysis of Frank and note that its common-sense holding is itself merely another way of stating Utah's law that a consent search based on apparent authority is not valid in the face of ambiguity of ownership or control. See id. at 219 ("[W]hen a vehicle search is based only on consent, an officer has an obligation to ascertain the ownership of items not owned by or within the control of the consenter when the circumstances do not clearly indicate that the consenter is the owner or controls the item to be searched."). ¶ 29 When Officer Westerman searched Defendant's bags pursuant to the driver's consent, he had "no way of knowing whose bags they were." Faced with this ambiguity as to whose bags they were, Officer Westerman's 1156 search, without further inquiry, is objectively unreasonable and, therefore, unlawful. See Duran, 2005 UT App 409, ¶ 17, 131 P.3d 246; Davis, 965 P.2d at 533. For these reasons, I would suppress the results of the search and reverse Defendant's resulting convictions, and I respectfully dissent from the majority opinion. NOTES [1] Judges Russell W. Bench and Pamela T. Greenwood heard and voted on this case as regular members of the Utah Court of Appeals. They both retired from the court on January 1, 2010, before this decision issued. Hence, they are designated herein as Senior Judges. See Utah Code Ann. § 78A-3-103(2) (2008); Sup.Ct. R. of Prof'l Practice 11-201(6), [2] Defendant initially gave a false name to Officer Westerman. [3] Although Defendant describes the bags as backpacks in her briefs, Officer Westerman testified that they were bags. He was the only witness who testified. [4] Defendant's primary argument pertaining to the legality of the search is that there was no de-escalation from the seizure resulting from the traffic stop. We have determined that de-escalation did occur prior to the driver consenting to the search and that Defendant lacks standing to object to the consent to search the vehicle. However, Defendant also argued to the trial court, and briefly on appeal, that the seizure of the passengers continued during the vehicle search because the passengers could not have reasonably believed they were free to leave. The trial court rejected this argument as irrelevant because Defendant could not object to the vehicle search because she did not own the vehicle. Defendant cites no authority addressing whether, when the traffic stop is over from the driver's standpoint, it is also over for any passengers. Furthermore, Defendant does not address how, if at all, de-escalation as to the driver from a valid traffic stop to a consensual encounter affects her status as a passenger. In this respect, Defendant's brief is inadequate. See Valcarce v. Fitzgerald, 961 P.2d 305, 313 (Utah 1998) (noting that generally we will not address an inadequately briefed argument). Our analysis assumes that, as is the case here, nothing happened to raise any suspicions about the vehicle's passengers. The only facts of record that would indicate a continued detention of the passengers is Officer Westerman's request that they exit the vehicle and suggestion that they stand by the second officer while Officer Westerman conducted the search. Nothing occurred that would cause Officer Westerman to suspect Defendant or the other passengers of illegal activity or to believe that they had a basis to object to a search of the vehicle or its contents. Given these circumstances and the lack of adequate briefing by Defendant, we decline to further address this possible issue. See id. [5] The trial court found that Defendant had not abandoned her bags and retained a legitimate expectation of privacy in them. Further, this is not a case where Defendant left her bags in the care of a third person and thereby took the risk that the third person might not respect her privacy. See, e.g., State v. Messer, 2007 UT App 166, ¶ 22, 164 P.3d 421 ("[I]n leaving the bags in Hasch's car on Hasch's property, [d]efendant took the risk that Hasch might not maintain [defendant's privacy interest in the bags."); see also United States v. Austin, 66 F.3d 1115, 1119 (10th Cir.1995) ("By leaving his bag in the possession and control of [a third party], defendant assumed the risk that [the third party] would allow the authorities access to the bag.").	{ "pile_set_name": "FreeLaw" }
513 So.2d 50 (1986) Thomas Henry JONES, Jr. v. STATE. 1 Div. 290. Court of Criminal Appeals of Alabama. October 14, 1986. Rehearing Denied November 12, 1986. Certiorari Quashed August 28, 1987. James M. Byrd, Mobile, for appellant. Charles A. Graddick, Atty. Gen., and J. Elizabeth Kellum, Asst. Atty. Gen., for appellee. Alabama Supreme Court 86-268. 51 BOWEN, Presiding Judge. Thomas Henry Jones, Jr. was convicted of driving under the influence of alcohol, fined $300, and ordered to attend a DUI court referral program. I Jones was initially convicted in district court on a complaint (U.T.T.C.) charging that he "did unlawfully operate a motor vehicle ... in violation of 32-5A-191(A2) [sic] State Code." On appeal to the circuit court, the solicitor's complaint charged that Jones "did ... operate or was in actual physical control of a motor vehicle ... while under the influence of alcohol in violation of Section 32-5A-191 of the Code of Alabama." (Emphasis added.) Jones argues that because the complaint in circuit court contained the alternative and additional averment, "or was in actual physical control," which was not alleged in the District Court complaint, the solicitor's complaint is not supported by the original complaint and his conviction is due to be reversed. Jones' argument is without merit. "[I]n a criminal prosecution technical accuracy in the description of the offense, either in the complaint or warrant, is not required." Wilson v. State, 18 Ala.App. 375, 92 So. 508 (1922). A warrant must state the offense either by name or so that it can be clearly inferred. Spraggins v. State, 139 Ala. 93, 35 So. 1000, 1003 (1904). "The affidavit and warrant are far from perfect, and would be insufficient as an indictment, but the same particularity is not required in prosecutions of this character before a magistrate, and it is sufficient to designate the offense, either in the complaint or warrant, by name only, or by words from which it may be inferred. Brown's case, 63 Ala. 97; Adams v. Coe, 123 Ala. 664, 26 South. 652. The warrant charges the offense of `buying mortgaged property,' and can be reasonably interpreted as charging a violation of section 7342 of the Code of 1907, the caption of which is: `Removing, Selling or Buying Property to Which Others Have Claim.'" Nolen v. Jones, 200 Ala. 577, 578, 76 So. 935 (1917). Criminal charges brought by affidavit and warrant are "in a large measure informal." Bonner v. State, 28 Ala.App. 406, 407, 187 So. 643 (1938), cert. denied, 237 Ala. 446, 187 So. 645 (1939) (Defendant properly convicted of attempt to commit petit larceny on a trial de novo in circuit court on a complaint charging the commission of petit larceny). A warrant issued upon a complaint "is sufficient, if it designates the offense by name, or describes it, or if it employs terms from which the offense may be inferred." Brown v. State, 63 Ala. 97, 101 (1879). "Independent of statutory provision, technical accuracy in such proceedings, had before a justice of the peace, was not expected or required; and they were regarded as sufficient, whenever, upon a fair, reasonable construction of their language, a charge of a known criminal offense could be gathered." Brown, supra. If the original complaint is not void, the complaint based thereon, and filed in circuit court for trial de novo, may state the charge so as to cure any amendable defects. Freeland v. State, 26 Ala.App. 74, 75, 153 So. 294 (1934); Royals v. State, 31 Ala.App. 367, 368, 18 So.2d 417, cert. denied, 245 Ala. 677, 18 So.2d 418 (1944). "It is well settled that, on an appeal from municipal court, the circuit court may allow the prosecution to amend a defective complaint over the objection of the defendant where no new or different offense is introduced." Mosley v. City of Auburn, 428 So.2d 165, 167 (Ala.Cr.App.1982). Here, the circuit judge properly refused to dismiss a complaint charging the defendant with unlawfully operating or being in actual physical control of a motor vehicle while under the influence of alcohol on trial de novo in the appeal of a conviction from the district court on a complaint charging only the unlawful operation of a motor vehicle. See also Holley v. State, 25 Ala.App. 260, 261, 144 So. 535, cert. denied, 225 Ala. 597, 144 So. 537 (1932) (no variance between affidavit charging being intoxicated and complaint charging being under the influence of intoxicating liquors). 52 II The results of the photo-electric intoximeter test were properly admitted into evidence even though the State Trooper "did not determine whether the test results would be contaminated due to disease or medication" and even though the trooper "repeatedly testified that he could not verify the accuracy of the machine he used." Appellant's brief, p. 8. The defendant's arguments go to the weight to be accorded the test results by the jury and not to the initial admissibility of the test results. The elements necessary to lay the proper predicate for the admissibility of the P.E.I. test results are: (1) that the law enforcement agency has adopted the particular form of testing that was in fact used; (2) that the test was performed according to methods approved by the State Board of Health; and (3) that the person administering the test has a valid permit issued by the State Board of Health for that purpose. Ex parte Bush, 474 So.2d 168, 170 (Ala. 1985). These elements were proven in this case. "There is no need for the State to offer testimony concerning a periodic inspection of the testing equipment in order to lay the predicate for admissibility of the P.E.I. test results." Ex parte Reed 492 So.2d 293 (Ala.1986). The trooper testified that the defendant did not eat or drink anything during the prescribed waiting period before the test was given and that the machine had been calibrated. It was not necessary for the test operator to testify that he had determined that the driver had no disease and was taking no medication which would contaminate the test and that he could personally verify the accuracy of the machine used. III The complaint in circuit court only charged a violation of subsection (2) of Alabama Code 1975, § 32-5A-191(a) (driving "under the influence of alcohol"). The circuit judge charged the jury on subsections (1) and (2) (driving where "there is 0.10 percent or more by weight of alcohol in his blood" and driving "under the influence of alcohol"). The defendant argues that the judge's instructions "constituted a fatal variance from the solicitor's complaint." Appellant's brief, p. 9. The prosecution must prove the specific charge contained in the complaint. Boyd v. City of Montgomery, 472 So.2d 694, 699 (Ala.Cr.App.1985) ("Since it was specifically alleged in the complaint that the defendant did `drive ... while there was 0.10% percent or more by weight of alcohol in his blood, to wit: GCI reading .13%' it was incumbent on the City to prove this particular allegation."). A finding of 0.10 percent or more by weight of alcohol in a person's blood creates a statutory presumption that the person was under the influence of alcohol. Alabama Code 1975, § 32-5A-194(b)(3). Consequently, the instructions of the trial judge did not authorize the jury to find the defendant guilty of an offense with which he was not charged. Boyd, supra. Here, the defendant was not convicted of the same crime under a different set of facts than those charged in the complaint. Compare Ex parte Hightower, 443 So.2d 1272 (Ala.1983). The prosecution proved that the defendant's blood alcohol level was .11%. "[T]here must be a material variance between indictment and proof before a conviction will be overturned for that reason." Ex parte Collins, 385 So.2d 1005, 1009 (Ala.1980) (emphasis in original). "The law of this state is well settled that `[t]here is no material variance where there is proof of so much of an indictment as shows the defendant committed a substantial offense specified therein.'" House v. State, 380 So.2d 940, 943 (Ala.1979). The judgment of the circuit court is affirmed. AFFIRMED. All Judges concur.	{ "pile_set_name": "FreeLaw" }
235 B.R. 104 (1999) In re Barbara E. HODES, Debtor. In re Phillip Hodes, Debtor. Bankruptcy Nos. 98-20039-7, 98-20040-7. United States Bankruptcy Court, D. Kansas. June 16, 1999. 105 Cynthia F. Grimes, Grimes & Rebein, L.C., Lenexa, KS, for Debtor. Eric C. Rajala, Overland Park, KS, trustee. Mark S. Carder, Stinson Mag & Fizzell, Kansas City, MO. Michael L. Kahn, Stinson, Mag & Fizzell, P.C., Overland Park, KS. MEMORANDUM OPINION AND ORDER JULIE A. ROBINSON, Bankruptcy Judge. Judgment Creditors, Lawrence S. Jenkins and Roger W. Hood, M.D., filed an objection to the debtors', Phillip Hodes and Barbara Hodes, claimed homestead exemption. The parties have submitted this matter on briefs and deposition transcripts. Their submissions evidence no genuine dispute of the pertinent facts. The matter is now ready for decision. The pivotal issue in this case is whether in an involuntary case, the property subject to exemption is the property in existence on the date the involuntary petition was filed, or the date that the order for relief was entered. In this case, on the petition date, the debtors owned a home. On the date that the orders for relief were entered, the debtors owned a home that was undergoing improvements by a builder who was drawing from a cash deposit paid to him prepetition. This Court concludes that the property subject to exemption is the property in existence on the date of the entry of the orders for relief, and that under these facts, the cost of the home improvements made before and after the entry of the orders for relief is exempt, although the construction was incomplete on the date of the entry of the orders for relief. JURISDICTION The Court has jurisdiction over this proceeding. 28 U.S.C. § 1334. This is a core proceeding. 28 U.S.C. § 157(b)(2)(B). FINDINGS OF FACT In 1993, Jenkins and Hood commenced a civil action against Phillip and Barbara Hodes seeking damages from a breach of a contract concerning the Hodeses' sale of their interest in certain corporate stock to Jenkins and Hood. On November 10, 1997, a jury returned a verdict against the Hodeses and other codefendants and in favor of Jenkins and Hood for $4 million. 106 On November 17, 1997, the court entered a judgment in accordance with the verdict. Soon thereafter, the Hodeses began liquidating approximately $514,000 in nonexempt securities and acquiring exempt assets with the funds. The Hodeses used part of this money to prepay a home builder for an addition to their home in Leawood, Kansas. There is no allegation that any of the funds paid to the builder were fraudulently obtained. The Hodeses contend that they began discussions with the home builder in the summer of 1997, when they decided to enlarge their home in anticipation of the birth of their daughter's twins. The twins were not going to live with them, but the Hodeses wanted more space so that they could babysit the twins. On December 7, 1997, the Hodeses entered into a contract with the builder and gave him a $250,000 cash deposit. The contract estimated that the addition would cost $190,000 plus the builder's 15% fee, but no more than a total of $250,000. The contract called for a 1056 square foot addition to the Hodeses' 3700 square foot home. The addition included an office, an enlarged family room and modifications to the master bedroom. The Hodeses had purchased this home in 1989 for $545,000. On January 6, 1998, Jenkins and Hood filed involuntary Chapter 7 bankruptcy petitions against Phillip Hodes and Barbara Hodes. As of January 6, the builder had not commenced construction of the addition and was in possession of the $250,000 deposit. The construction commenced sometime after January 6. On February 23, 1998, Jenkins and Hood filed a motion under § 303(f)[1] to stop the construction and to restrict the Hodeses' use of the deposited funds prior to entry of the orders for relief. The parties attempted to resolve this contested § 303(f) motion and on March 2, 1998, recited the terms of their settlement to the Court. The settlement included the Hodeses' agreement to obtain a mortgage on their home and use these borrowed funds to pay $290,000 to Jenkins and Hood. Later, when the Hodeses failed to pay the $290,000, Jenkins and Hood filed a motion to compel settlement. In their submissions on the exemption issue, the parties did not refer to this motion to compel. The courtroom minute sheet from the hearing on October 28, 1998, states that Jenkins and Hood agreed to withdraw their motion to compel, but they have not yet submitted a journal entry withdrawing the motion. In the meantime, construction of the home addition proceeded. On April 16, 1998, the Hodeses consented to the entry of orders for relief in their cases on that date. At the time of the entry of the orders for relief, the builder had expended $8,966.67 of the deposit. As of October 28, 1998,[2] the builder had expended a total of $164,837.24. CONCLUSIONS OF LAW In their schedules, the Hodeses acknowledge that the $250,000 on deposit with the builder is property of the estate, but claim the funds exempt as improvements to their homestead. In Kansas, debtors may exempt their homestead, including improvements on the homestead, pursuant to K.S.A. 60-2301, which states: A homestead to the extent of 160 acres of farming land, or of one acre within the limits of an incorporated town or city, or a manufactured home or mobile home, occupied as a residence by the owner or by the family of the owner, or by both the owner and the family thereof, together with all the improvements on the same, shall be exempted from 107 forced sale under any process of law, and shall not be alienated without the joint consent of husband and wife, when that relation exists; but no property shall be exempt from sale for taxes, or for the payment of obligations contracted for the purchase of said premises, or for the erection of improvements thereon. The provisions of this section shall not apply to any process of law obtained by virtue of a lien given by the consent of both husband and wife, when that relation exists.[3] The Kansas Constitution provides for this homestead exemption, as well.[4] The homestead laws of Kansas are to be liberally construed in favor of those claiming the exemption.[5] The purpose of the homestead exemption is to protect the family from destitution as they begin their fresh start and to benefit society by preventing her citizens from becoming paupers.[6] Jenkins and Hood posit three reasons why these funds expended on the improvements to the Hodeses's homestead are not exempt. Two of these arguments are clearly without merit. First, Jenkins and Hood contend that the Hodeses waived their exemption in the improvements as a term of their settlement of the contested § 303(f) motion. But that settlement was never reached, and in fact Jenkins and Hood announced at the October 28, 1998 hearing that they were withdrawing their motion to compel settlement. Moreover, even if the settlement agreement was enforceable, to the extent that the agreement included an express waiver of the Hodeses' homestead exemption, such a waiver by executory contract would be unenforceable as contrary to public policy.[7] Secondly, Jenkins and Hood contend that the Hodeses lost their claim of exemption by virtue of fraudulent conduct. The Court cannot determine from the record before it whether the Hodeses committed fraud. In fact, this is a highly disputed issue that cannot be resolved by reading the deposition transcripts relied upon by Jenkins and Hood. The mere fact that these debtors used nonexempt assets to fund a $250,000 addition to a $545,000 home is not prima facie evidence of fraud. The Kansas exemption statutes place no value limitation on the homestead or on improvements to the homestead. Jenkins and Hood's most compelling argument is that the Hodeses are not entitled to exempt the cost or value of improvements made to the homestead after the involuntary petitions were filed. The general rule is that exemptions are determined as of the date of the filing of the bankruptcy petition.[8] Indeed, § 522(b)(2)(A)[9] states that the debtor may claim as exempt: any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition at the place in which the debtor's 108 domicile has been located for the 180 days immediately preceding the date of the filing of the petition, or for a longer portion of such 180-day period than in any other place. Courts have been uniform in deciding that debtors' rights to exemptions are determined by the law in existence on the date that the bankruptcy petition was filed. That is the applicable law for purposes of § 522(b). For example, in Marcus v. Zeman,[10] the Tenth Circuit Court of Appeals held that the law in effect on the date of filing of the original Chapter 13 petition controlled what exemptions were available to the debtor, rather than the date of conversion to Chapter 7, and distinguished the holding in Armstrong v. Lindberg,[11] that the date of conversion controls. The Tenth Circuit observed: The Lindberg court was not required to address the consequences of a change in the law between filing and conversion. Where, as here, the law, rather than the facts, has changed, the plain language of the statutes dictate the result..... We hold that the law in effect on the date of filing controls what exemptions will be available to a debtor converting from Chapter 13 to Chapter 7.[12] The Tenth Circuit implicitly recognized a distinction between cases where the applicable law has changed and where the facts have changed after the petition date. In this case, the exemption laws did not change after the bankruptcy petitions were filed, but the Hodeses' property changed after the petitions were filed. At the time the involuntary petitions were filed, the Hodeses' home was not under construction and the builder was holding a $250,000 cash deposit. At the time of the orders for relief, the construction was underway and the builder had drawn down some of the $250,000. This is a scenario that could not happen in a voluntary Chapter 7 case, where the debtor loses authority to use, acquire or dispose of property. The trustee has the authority, not the debtor. But in an involuntary case, in the gap period between the petition filing and order for relief, § 303(f) gives the debtor the right to use, acquire and dispose of property, absent a court order to the contrary. In effect, the debtor has the power to dispose of nonexempt property and to acquire exempt property, unless the court orders otherwise. For example, in First Beverly Bank v. Adeeb (In re Adeeb),[13] the court refused to deny the debtor's discharge solely on the basis that the debtor had not recovered property he transferred in the year preceding the filing of an involuntary petition, agreeing with the analysis in Andreotti,[14] that it would be inequitable to not allow the involuntary debtor time to engage in prebankruptcy planning like a voluntary debtor. Because of the powers vested in an involuntary debtor during the gap period, a number of courts have held that for purposes of determining what property is subject to exemption, the proper date for determination is as of the order for relief, not as of the petition date. In In re Andreotti,[15] the court held that in an involuntary bankruptcy case, "the line of cleavage" which establishes whether an asset is exempt or nonexempt is the date of the order for relief, not the date that the petition was filed.[16] The Andreotti 109 court reasoned that the rights of parties do not become fixed and the debtor's property does not pass out of his hands into the bankruptcy estate until the order for relief, because in the interim between the filing of the involuntary petition and the entry of the order for relief, the debtor may use, acquire or dispose of property as if the involuntary case had not been filed.[17] The court further noted that it would be inequitable to allow the voluntary debtor to engage in prebankruptcy planning of exemptions, but to deny the same opportunity to a debtor against whom an involuntary petition is filed.[18] Section 303(f) affords the involuntary debtor a period of time to engage in this type of activity. The court distinguished cases frequently cited for the proposition that exemptions are fixed as of the date the petition is filed. For example, White v. Stump,[19] was a case decided under the Bankruptcy Act, which did not have a provision like § 303(f). The court also distinguished the White case and the Matter of Blue[20] case, among others, that involved voluntary petitions. In In re Peacock,[21] the court held that the filing of the involuntary petition determined the applicable state exemption law, such that the debtor could not take advantage of a favorable amendment to the state exemption law that became effective after the involuntary petition was filed. The court reasoned that § 522(b)(2)(A) by its plain language fixed the filing date as determinative of the available exemptions to both voluntary and involuntary debtors. But the Peacock court distinguished the Andreotti and Wilson cases because those cases involved changes in the debtor's property, not changes in the exemption laws during the gap period between the filing of the involuntary petition and entry of the order for relief.[22] The Peacock court observed that there is a material distinction: whether or not the petition is voluntary or involuntary, the applicable exemption law is the law in existence on the date of the filing of the petition; but § 303(f) allows the debtor to change his or her assets during this period, suggesting that what property is subject to analysis under § 522(b)(2)(A) may not be determinable until the order for relief.[23] This Court agrees that where involuntary debtors exercise their rights under § 303(f) during the gap period and commence improvements to their homestead, they are entitled to claim as exempt the improvements commenced during the gap period. In this case, the builder continued to make improvements even after the entry of the orders for relief. Jenkins and Hood argue that even if the cost of improvements made before the orders for relief is exempt, the cost of improvements made after the entry of the orders for relief is not exempt, because the monies on deposit with the builder were nonexempt funds, not actual improvements. But Jenkins and Hood did not fully prosecute their § 303(f) motion or their motion to compel settlement of the § 303(f) motion; nor did they or the trustee file any motion or action to recover the funds on deposit with the builder. Thus, construction continued after the entry of the orders for relief. Whether funds deposited with a builder for home improvements is exempt property, is an issue of first impression. But, the Kansas Supreme Court addressed a similar issue in Kessler v. Frost.[24] In Kessler, the defendants borrowed money 110 secured by a mortgage on their homestead, and deposited the loan funds into their bank account. They intended to use the funds to pay off a debt incurred for the erection of improvements to their homestead. The court held that these funds were exempt because they were intended to pay for improvements.[25] Moreover, in Kansas, proceeds of a homestead that will be used to acquire a new homestead are exempt.[26] These cases evidence a strong public policy in Kansas of protecting the homestead, as well as improvements to the homestead, whether construction is completed or in progress. A debtor with a new house under construction at the time of the petition or the order for relief would be entitled to claim the house exempt, without any partition of the value of the unfinished construction at the time of the petition or order for relief.[27] This Court sees no reason why improvements to an existing house should be treated any differently. IT IS THEREFORE ORDERED BY THE COURT that the objection to the debtors' homestead exemption filed by Lawrence S. Jenkins and Roger W. Hood, M.D., shall be DENIED. This Memorandum shall constitute findings of fact and conclusions of law under Rule 7052 of the Federal Rules of Bankruptcy Procedure and Rule 52(a) of the Federal Rules of Civil Procedure. A judgment based on this ruling will be entered on a separate document as required by Rule 9021 of the Federal Rules of Bankruptcy Procedure and Rule 58 of the Federal Rules of Civil Procedure. IT IS SO ORDERED. JUDGMENT ON DECISION DENYING OBJECTION TO EXEMPTION Judgment Creditors, Lawrence S. Jenkins and Roger W. Hood, M.D., filed an objection to the debtors', Phillip Hodes and Barbara Hodes, claimed homestead exemption. The Honorable Julie A. Robinson, presiding. The Court took the matter under advisement, and a decision having been rendered, IT IS THEREFORE ORDERED BY THE COURT that the objection to the debtors' homestead exemption filed by Lawrence S. Jenkins and Roger W. Hood, M.D. shall be DENIED. IT IS SO ORDERED. NOTES [1] 11 U.S.C. § 303(f) provides that unless the Court orders otherwise, and until an order for relief is entered, the debtor may continue to use, acquire or dispose of property as if the involuntary case concerning the debtor had not been commenced. [2] This is the date Jenkins and Hood filed their Supplemental Brief in Support of Objection to Exemptions. [3] Kansas has opted out of the federal exemption package, 11 U.S.C. § 522(d), such that the only exemptions available to the debtors are those available under Kansas law. Furthermore, the validity and extent of such exemptions are controlled by state law. [4] Kan. Const., art. 15, § 9. [5] In re Estate of Dittemore, 152 Kan. 574, 576, 106 P.2d 1056 (1940). [6] Anderson v. Shannon, 146 Kan. 704, 711, 73 P.2d 5 (1937) (citation omitted). [7] Celco, Inc. of America v. Davis Van Lines, Inc., 226 Kan. 366, 369-70, 598 P.2d 188 (1979). [8] Mansell v. Carroll, 379 F.2d 682, 684 (10th Cir.1967); In re Johnson, 19 B.R. 371, 374 (Bankr.D.Kan.1982). [9] Section 522(b) gives debtors the option of electing the federal exemptions pursuant to subsection (b)(1), or the exemptions as set forth in subsection (b)(2). Kansas has opted out of the federal exemption scheme, thereby preventing its residents from claiming the federal exemptions and forcing them to elect the exemptions set forth in § 522(b)(2). [10] 1 F.3d 1050, 1051 (10th Cir.1993) [11] 735 F.2d 1087, 1088 (8th Cir.1984), cert. denied, 469 U.S. 1073, 105 S.Ct. 566, 83 L.Ed.2d 507 (1984). [12] Marcus, 1 F.3d at 1052 (citation omitted). [13] 787 F.2d 1339, 1346 (9th Cir.1986) (reversing denial of discharge and remanding for determination of whether debtor had recovered property he transferred by the time the petition was filed or within a reasonable time thereafter). [14] 16 B.R. 28, 31 (Bankr.E.D.Cal.1981). [15] Id. at 30-31. [16] Accord, In re Wilson, 62 B.R. 43, 46 (E.D.Tenn.1985). [17] Andreotti, 16 B.R. at 30-31; see 11 U.S.C. § 303(f). [18] Andreotti, 16 B.R. at 31. [19] 266 U.S. 310, 45 S.Ct. 103, 69 L.Ed. 301 (1924) (stating that the "line of cleavage" is on the petition date). [20] 5 B.R. 723 (Bankr.S.D.Ohio 1980). [21] 119 B.R. 605, 607-608 (Bankr.N.D.Ill. 1990). [22] Id. at 609. [23] Id. [24] 103 Kan. 711, 175 P. 967 (1918). [25] Id. at 712-13, 175 P. 967. [26] First National Bank v. Dempsey, 135 Kan. 608, 609, 11 P.2d 735 (1932); International Harvester Credit Corp. v. Ross, 217 Kan. 683, 687, 538 P.2d 655 (1975) (noting that the Kansas Supreme Court has held that where a debtor intends to invest money received from the sale of a homestead in another homestead and has not abandoned that intention, the money is exempt). [27] Generally, in a voluntary case, the measuring date would be the date of the petition; and in an involuntary case, it would be the date of the entry of the order for relief.	{ "pile_set_name": "FreeLaw" }
513 N.W.2d 834 (1994) Terry POOLEY, Appellant, v. MANKATO IRON & METAL, INC., et al., Respondents. No. C8-93-1901. Court of Appeals of Minnesota. March 22, 1994. Review Denied May 17, 1994. 835 Michael G. Singer, Minneapolis, for appellant. 836 Randall C. Berkland, Stephen P. Rolfsrud, Blethen, Gage & Krause, Mankato, for respondents. Before FORSBERG, P.J., and CRIPPEN and AMUNDSON, JJ. OPINION FORSBERG, Judge. Appellant Terry Pooley sued Mankato Iron & Metal (Mankato) and respondents Gregory and Ronald Pooley for violating the Minnesota Business Corporation Act. See Minn.Stat. §§ 302A.001-302A.917. The trial court found that respondents, as directors of Mankato's board, unfairly prejudiced appellant by freezing him out of a business in which he reasonably expected to participate. The trial court found that the value of appellant's shares was $630,000 and was not to be discounted due to the shares' minority status. It ordered respondents to buy out appellant's shares for this amount. The trial court further ordered that respondents pay interest on appellant's shares from the date of entry of judgment. Finally, the trial court ruled that Mankato was not required to reimburse appellant for his 1990 K-1 tax obligation. Appellant moved for a new trial but the trial court denied his motion. Appellant now seeks review of the trial court's denial. By notice of review, respondents seek review of the trial court's failure to reduce the value of appellant's shares by a minority discount. We affirm. FACTS In 1979, appellant Terry Pooley and respondents Gregory and Ronald Pooley incorporated Mankato Iron & Metal. The parties each owned one-third of Mankato's stock. Mankato employed appellant to oversee the ferrous operation. The parties had a difficult relationship. In the early 1980's, appellant pleaded guilty to assaulting someone in the scope of his employment. In 1989, appellant assaulted respondent Gregory Pooley. He also damaged a customer's truck. As a result, a jury convicted appellant of assault and criminal damage to property. Following this conviction, Mankato terminated appellant's employment. On April 27, 1990, the parties held a special shareholder and directors meeting. Respondents voted out appellant as an officer and later removed him as a director. Appellant sued Mankato for breach of an oral contract for lifetime employment. A jury found no such contract existed. Appellant later sued Mankato and respondents for breaching an implied employment contract with appellant and for violating the Minnesota Business Corporation Act by acting in an unfairly prejudicial manner toward appellant. See Minn.Stat. §§ 302A.001-302A.917. The trial court found appellant had no implied contract for lifetime employment with Mankato. The trial court, however, did conclude that respondents, as directors of Mankato's board, unfairly prejudiced appellant by freezing him out of a business in which he reasonably expected to participate. The trial court ordered respondents to buy out appellant's shares for their fair market value. The trial court concluded April 27, 1990 was the equitable date for determining the fair value of appellant's shares in Mankato. On June 3, 1993, the trial court entered judgment finding that the value of appellant's shares was $630,000 and ordering they were not to be discounted for their minority status. The trial court further ordered that respondents pay interest on appellant's shares from the date of entry of judgment. Finally, the trial court ordered that Mankato was not required to reimburse appellant for his 1990 K-1 tax obligation. Both appellant and respondents moved the trial court to amend the June 3 judgment. Moreover, appellant alternatively moved for a new trial. On August 18, 1993, the trial court denied these motions. Appellant and respondents now seek review. ISSUES 1. Did the trial court err by not requiring respondents to pay appellant interest beginning on April 27, 1990 on the shares they were ordered to buy from appellant? 837 2. Did the trial court err by not requiring Mankato to reimburse appellant for his 1990 K-1 tax obligation? 3. Did the trial court err by not reducing the fair value of appellant's shares by a minority discount? ANALYSIS Appellant did not file a timely appeal from the June 3, 1993 judgment, but the August 18, 1993 order denying a new trial is separately appealable. This court will not disturb a trial court's denial of a motion for a new trial absent a clear abuse of discretion. Jack Frost, Inc. v. Engineered Bldg. Components Co., 304 N.W.2d 346, 352 (Minn.1981). 1. The trial court concluded that respondents acted in a manner unfairly prejudicial toward appellant, and, pursuant to its equitable powers, ordered that they buy appellant's shares in Mankato under Minn.Stat. § 302A.751 (1988). Minn.Stat. § 302A.751, subd. 2 provides for valuation in such sales: If the parties are unable to agree on fair value within 40 days of entry of the order, the court shall determine the fair value of the shares under the provisions of section 302A.473, subdivision 7, and may allow interest or costs as provided in section 302A.473, subdivisions 1 and 8. Id. Pursuant to this provision, the trial court found the fair value of appellant's shares was $630,000. It further awarded appellant interest from the date of entry of its June 3, 1993 order. Appellant argues the trial court erred by not awarding him interest beginning on April 27, 1990, the date the trial court set as the valuation date of his shares. We believe the trial court properly calculated interest in accordance with its equitable powers. Although the trial court ultimately ordered respondents to buy appellant's shares in June 1993, appellant first brought suit against respondents in May 1990 for breach of an oral employment contract. Two months later when appellant brought this action, he also alleged respondents breached an implied employment contract with appellant. Due to these contract claims, the trial court was delayed three years in disposing of the present action. The trial court could reasonably conclude it would have been unfair to respondents for the trial court to order them to pay interest during that time. We see no abuse of the trial court's discretion in making this determination. See City of Cloquet v. Cloquet Sand & Gravel, Inc., 312 Minn. 277, 279, 251 N.W.2d 642, 644 (1977) (this court will not disturb a trial court's grant of equitable relief unless it finds the trial court abused its discretion). 2. During 1989, the parties agreed to build a recycling facility and forego their rights to wages beginning October 5, 1989, to finance the facility's construction. The parties also arranged to have Mankato taxed as a Subchapter S corporation as of October 1989. In 1990, due to this change in tax status, each party was required to report to the federal and state taxing authorities $170,000 in K-1 income. The parties did not receive all of this income due to their wage agreement, but each reported it as income on their individual tax returns. Respondents received some 1990 income because they began drawing $3,200 every two weeks as of mid-August 1990. Appellant, in contrast, received no income during 1990 due to his termination. Thus, appellant paid $70,000 in income taxes from his personal funds. Appellant moved for reimbursement of this amount, arguing that equity dictates respondents indemnify appellant for the adverse tax consequences he suffered following his termination. The trial court denied appellant's request. In its memorandum to its June 3, 1993 order, the trial court noted that, when respondents wanted to obtain a loan to enable the corporation to pay dividends for the 1990 tax year, appellant refused to sign a bank-required personal guarantee. The trial court seemed to reason that because appellant would have received funds from the corporation to pay his tax liability if he had agreed to sign for the loan, equity does not now demand the corporation reimburse him. A court may fashion equitable remedies based on the exigencies and facts of each case so as to accomplish justice. Clark 838 v. Clark, 288 N.W.2d 1, 11 (Minn.1979). Because appellant refused to take available steps to receive funds from the corporation to cover payment for his tax liability, the trial court acted fairly by declining to order respondents to reimburse him for it. See Minn.Stat. § 302A.751, subd. 1 ("a court may grant any equitable relief it deems just and reasonable in the circumstances"). Thus, we conclude the trial court did not abuse its discretion and properly denied a new trial on this issue. 3. Pursuant to a notice of review, respondents argue the trial court erred by not reducing the value of appellant's shares by a minority discount. The trial court based its decision on two dissenter's rights cases that prohibit courts from applying minority discounts when valuing shares. See MT Properties, Inc. v. CMC Real Estate Corp., 481 N.W.2d 383, 388 (Minn.App.1992); Spinnaker Software Corp. v. Nicholson, 495 N.W.2d 441, 445 (Minn.App.1993), pet. for rev. denied (Minn. Mar. 30, 1993). Respondents argue that because both parties' experts applied a minority discount when valuing appellant's shares and neither party contested the application of such a discount, the trial court erred. But the judge, as the trier of fact, need not accept a witness's opinion. See State v. Poganski, 257 N.W.2d 578, 581 (Minn.1977). Respondents further reason that because this court in Spinnaker found MT Properties did not hold that the value of shares is always determined by the corporation's price, disregarding minority discounts defeats the statutory goal of valuation. They argue that by not applying the discount, each shareholder's shares are valued equally even though the minority shares may actually be worth less. But this court in MT Properties held minority discounts to be improper "because the legislature has enacted the statute with the evident aim to protect the dissenting shareholder." MT Properties, 481 N.W.2d at 388. Finally, respondents argue that a balancing of the equities requires a discount be applied. They reason that appellant's criminal activities weigh against him receiving equal value for his shares. In spite of appellant's activities, the trial court found respondents' actions unfairly prejudiced appellant. As the trial court had already found that appellant merits the fair value of his shares, it did not have reason to later discount that value. The trial court found that appellant was unfairly prejudiced by respondents' removal of him as a director and officer. The trial court ordered respondents to buy appellant's shares to remedy this wrong. We find this court's rationale in MT Properties and Spinnaker regarding the determination of "fair value" in dissenter's rights cases also applies to the determination of "fair value" in buy-out situations under Minn.Stat. § 302A.751. Therefore, because appellant is an unwilling vendor of his shares in Mankato we hold the trial court properly exercised its discretion in not reducing appellant's shares' value by a minority discount. DECISION The trial court properly declined to reduce the fair value of appellant's shares by a minority discount. The award of interest on the shares as of the date it entered judgment was within the trial court's discretion. Furthermore, the trial court properly found that respondents were not liable for appellant's 1990 K-1 tax obligation. Affirmed.	{ "pile_set_name": "FreeLaw" }
193 F.Supp.2d 503 (2002) Inga Britt LILLBASK as legal guardian on behalf of Lindsey MAUCLAIRE, Plaintiff, v. Theodore S. SERGI, et al., Defendants. No. 3:97CV1202 (PCD). United States District Court, D. Connecticut. March 30, 2002. 504 505 Winona Wellman Zimberlin, Hartford, Arthur Allan Smith, Education Law Project, Inc, Mansfield Center, for Ingabritt Lillbask, Legal Guardian O/B/O Lindsey Mauclaire, plaintiffs. Richard J. Buturla, Marsha Belman Moses, Berchem, Moses & Devlin, P.C., Milford, Nyle Kimrick Davey, Attorney General's Office, Health & Human Services, Hartford, Brian A. Lema, Michelle Claire Laubin, Berchem, Moses & Devlin, P.C., Milford, for Dept of Education, Theodore S. Sergi, Comm, Board of Education, Kenneth Freeston, Supt, Redding Schools, Redding Bd of Ed, defendants. RULING ON SECOND MOTIONS FOR SUMMARY JUDGMENT DORSEY, Senior District Judge. Plaintiff moves to submit additional evidence. State Defendants and Redding Defendants each separately move for summary judgment against Plaintiff. Plaintiff separately cross-moves for summary judgment against State Defendants and Redding Defendants. Plaintiff moves to compel discovery. Plaintiff moves for relief from the previous summary judgment ruling. I. JURISDICTION Subject matter jurisdiction is pursuant to 20 U.S.C. § 1415(i)(3)(A) and 28 U.S.C. § 1331. II. BACKGROUND A. Factual Background Lindsey Mauclaire, a handicapped child, receives special education under the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq. He is cared for by Plaintiff, his guardian, who has made many sacrifices to care for him. In 1996-97, he attended a pre-kindergarten program at Redding Elementary School ("RES"). On August 5, 1997, a Planning and Placement Team ("PPT") met to develop his Individualized Education Plan ("IEP") for the 1997-98 school year. The Redding Board of Education ("Board") decided to place Lindsey at St. Vincent's Special Needs Center ("St. Vincent's") in Trumbull, Connecticut. Pursuant to the IDEA, Plaintiff appealed this placement and other aspects of his IEP to the Connecticut Department of Education for a due process hearing. This case concerns four hearing decisions, dated May 5, 506 1997 (Second Hearing, Case 97-046), August 5, 1997 (First Hearing, Case 97-028), September 5, 1997 (Third Hearing, Case 97-131), and August 7, 1998 (Fourth Hearing, Case 97-231). The Fourth Hearing Officer upheld the Board's decision to place Lindsey at St. Vincent's. Under the stay-put rule, Lindsey remains at RES under his original IEP. B. Procedural History Pursuant to the IDEA, Plaintiff sued the Board and Kenneth Freeston as Superintendent of Schools (collectively, "Redding Defendants") and the CDE and Theodore S. Sergi as Connecticut Department of Education Commissioner (collectively, "State Defendants") to challenge these four hearing decisions. Plaintiff claims injunctive relief and damages under § 504 of the Rehabilitation Act (29 U.S.C. § 794), related state statutes (CONN. GEN. STAT. § 10-76a et seq.), and the due process and equal protection clauses of the federal and Connecticut constitutions. Essentially, Plaintiff contends that Redding Defendants placed Lindsey at St. Vincent's in retaliation for exercising her statutory hearing rights. On December 30, 1999, this court directed the parties to "file cross motions for partial summary judgment on the issue of the hearing appeals under the IDEA .... Until the hearing appeals are resolved, there will be no consideration of [P]laintiff's retaliation claims." On September 29, 2000, summary judgment was granted for and against some of Plaintiff's claims. See Lillbask ex rel. Mauclaire v. Sergi, 117 F.Supp.2d 182 (D.Conn.2000). On May 1, 2001, Plaintiffs first motion to compel discovery was denied. The parties now cross-move for summary judgment on the remaining claims. III. PLAINTIFF'S MOTION TO SUBMIT ADDITIONAL EVIDENCE Plaintiff moves to submit additional evidence to supplement the administrative record. The evidence relates to Lindsey's progress at RES subsequent to the decision to place him at St. Vincent's. The taking of additional evidence is a matter of left to the discretion of the trial court. See Town of Burlington v. Dep't of Educ., 736 F.2d 773, 791 (1st Cir.1984), aff'd on other grounds sub nom. Sch. Comm. v. Dep't of Educ., 471 U.S. 359, 105 S.Ct. 1996, 85 L.Ed.2d 385 (1985). The issue is whether the administrative record is sufficient evidence to evaluate the hearing officer's decision. See Gill v. Columbia 93 Sch. Dist., 217 F.3d 1027, 1037-38 (8th Cir.2000). Plaintiff had earlier sought to compel discovery as to Lindsey's current progress at RES. In ruling on that motion, this court held, Whether Lindsey would, today, be better served at RES rather than at St. Vincent's is not an issue before this court .... The claim here is not whether Lindsey is currently progressing appropriately at RES, but, in part, whether he was accorded the procedural protections required by federal and state law either in the administrative hearings or by the time Plaintiff filed her complaint herein. To hold otherwise would transform this case into an ongoing review of Lindsey's educational status until he is twenty-one.[1]507 In recognition of this earlier ruling, Plaintiff now argues that evidence of Lindsey's current progress at RES is relevant to the appropriateness of the 1997 decision to place him at St. Vincent's. Her argument is contrary to the intent of the IDEA. The IDEA provides that "the court (i) shall receive the records of the administrative proceedings[, and] (ii) shall hear evidence at the request of a party." 20 U.S.C. § 1415(i)(2)(B). The statute seeks to avoid a trial de novo by prohibiting witnesses from repeating or embellishing previously rendered testimony. See Town of Burlington, 736 F.2d at 790; see also Wills v. Ferrandino, 830 F.Supp. 116, 120 (D.Conn. 1993) (following Town of Burlington). The record now includes about 47 days of hearings and about 8000 pages of testimony exclusive of exhibits. In avoiding a trial de novo, see Walker County Sch. Dist. v. Bennett, 203 F.3d 1293, 1298-99 (11th Cir.), cert. denied, 531 U.S. 1059, 121 S.Ct. 670, 148 L.Ed.2d 572 (2000), the IDEA seeks to promote speedy resolution of the litigation. Evidence as to Lindsey's' progress several years after an administrative decision does not necessarily show that the same placement would have been appropriate several years earlier. Moreover, to make such evidence admissible would suggest it is discoverable. "A lenient standard for additional evidence would have the consequence of making the whole IDEA process more time consuming, as parties scrambled to use the federal court proceeding to patch up holes in their administrative case. Whether this lengthy process would serve students is doubtful at best." Springer v. Fairfax County Sch. Bd., 134 F.3d 659, 667 (4th Cir.1998). To permit ongoing and lengthy discovery of a student's current progress through his or her school records, teachers, administrators, paraprofessionals, and doctors, pending an administrative appeal, would increase the litigious nature of proceedings and undermine expediency, contrary to the command to give "due weight" to the findings of the hearing officer, see Bd. of Educ. v. Rowley, 458 U.S. 176, 206, 102 S.Ct. 3034, 73 L.Ed.2d 690 (1982), by diluting the evidence before the hearing officer, O'Toole ex rel. O'Toole v. Olathe Dist. Sch. Unified Sch. Dist. No. 223, 963 F.Supp. 1000, 1015 (D.Kan.1997) (court should not allow a party to undercut the statutory role of administrative expertise), aff'd, 144 F.3d 692 (1998). Evidence beyond the administrative record, if considered to be "supplemental," requires care "not to allow such evidence to change the character of the hearing from one of review to a trial de novo," Town of Burlington, 736 F.2d at 790, lest in doing so the PPT and the hearing officer lose their intended first consideration of the child's educational needs. IV. MOTIONS FOR SUMMARY JUDGMEN A. Standard of Review 1. Legal standard for summary judgment Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The mere existence of an alleged factual dispute is not, by itself, sufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The adverse party must provide sufficient evidence to demonstrate that there is a genuine issue of material fact. See id. at 248-49, 106 S.Ct. 2505. "Only disputes over facts that might affect the outcome of the suit under the governing 508 law will properly preclude the entry of summary judgment." Id. at 248, 106 S.Ct. 2505. The court must view the facts in the light most favorable to the adverse party and draw all inferences in its favor. See Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.1992). However, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response ... must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). A party may not "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir.1986). 2. Standard of review of prior administrative hearings under the IDEA The IDEA provides that "[a]ny party aggrieved by the findings and decision" made by a hearing officer "shall have the right to bring a civil action with respect to the complaint presented ... in a district court of the United States." 20 U.S.C. § 1415(i)(2)(A). The district court "(i) shall receive the records of the administrative proceedings; (ii) shall hear additional evidence at the request of a party; and (iii) bas[e] its decision on the preponderance of the evidence." 20 U.S.C. § 1415(i)(2)(B); see 34 C.F.R. § 300.512. The district court must give "due weight" to the findings and decision of the hearing officer. See Rowley, 458 U.S. at 206, 102 S.Ct. 3034. This deference seeks to ensure that district courts do not "substitute their own notions of sound educational policy for those of the school authorities which they review." Id.; see also Mrs. B. ex rel. M.M. v. Milford Bd. of Educ., 103 F.3d 1114, 1120 (2d Cir.1997). Federal courts "are expected to give due weight to [administrative decisions], mindful that the judiciary generally lacks the specialized knowledge and experience necessary to resolve persistent and difficult questions of educational policy." Walczak v. Fla. Union Free Sch. Dist., 142 F.3d 119, 129 (2d Cir.1998) (quotation marks and original alteration omitted); see also Naugatuck Bd. of Educ. v. Mrs. D., 10 F.Supp.2d 170, 177 (D.Conn.1998); Wall ex rel. Wall v. Mattituck-Cutchogue Sch. Dist., 945 F.Supp.2d 501, 507 (E.D.N.Y.1996); Wills, 830 F.Supp. at 121 n. 1. In reviewing the findings and decisions of the hearing officers, questions of fact dealing with how and to what extent the IDEA has been applied to particular factual circumstances are accorded deference and due weight. Procedural issues regarding the IDEA, other federal and state statutes, and due process issues under the U.S. or Connecticut constitutions are reviewed de novo. See Mrs. B., 103 F.3d at 1122 (they "concern[] an issue of law; namely, the proper interpretation of the federal statute and its requirements"). Deference is not warranted as hearing officers do not have greater experience or expertise than courts in such matters. B. Timeliness of Hearing 97-231 (as against State Defendants) The IDEA requires a hearing officer to reach a decision within 45 days of receipt of a hearing request. The decision in Hearing 97-231, marked by dozens of extensions and continuances, took almost a year to be released. Against this, State Defendants argue that Plaintiff's timeliness claim is moot, asserting that new regulations approved on March 23, 2000 address the timeliness issue. Plaintiff does not dispute the applicability or effectiveness or sufficiency of the new regulations. Instead, she argues that her situation is an exception to the mootness doctrine. Mootness deprives a court of subject matter jurisdiction. Bd. of Trs. of the 509 State Univ. of N.Y., 42 F.3d 135, 140 (2d Cir.1994). "It is a firmly entrenched and fundamental principle of law that a cause is moot when the question presented for decision seeks a judgment upon some matter which, if the judgment was rendered, could not have any practical effect upon the then existing controversy" Flight Eng'rs Int'l Ass'n v. TWA, Inc., 305 F.2d 675, 680 (8th Cir.1962) (citation omitted). Mootness can be demonstrated by showing "no practical relief can follow a judicial determination of the controversy." Id. (citation omitted). If in the future State Defendants were to violate the new regulations as to a future plaintiff and that plaintiff would be without a remedy, then State Defendants' conduct would be "capable of repetition, yet evading review" and hence an exception to the mootness doctrine. See Honig v. Doe, 484 U.S. 305, 318, 108 S.Ct. 592, 98 L.Ed.2d 686 (1988) (quoting Murphy v. Hunt, 455 U.S. 478, 482, 102 S.Ct. 1181, 71 L.Ed.2d 353 (1982)). While Plaintiff recites this doctrine and argues State Defendants have repeatedly violated similar protections in the IDEA and in the consent decree in Barbara R. v. Tirozzi, No. H-83-991 (D. Conn. entered Sept. 11, 1985), she fails to assert a necessary element of the doctrine, namely that a future plaintiff would also be without a remedy, given the new regulations. In an effort to escape the mootness doctrine, Plaintiff next points to the monetary damages she seeks for violation of the IDEA.[2] The availability of monetary damages prevents dismissal for mootness. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 608-09, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). However, monetary damages are generally not available under the IDEA directly.[3]Neil F. ex rel. Charlie F. v. Bd. of Educ., 98 F.3d 989, 991 (7th Cir.1996). While there are exceptional circumstances permitting monetary damages, Stellato v. Bd. of Educ., 842 F.Supp. 1512, 1516 (N.D.N.Y.1994), Plaintiff fails to assert the necessary facts to support these exceptional circumstances. In an effort to escape the mootness doctrine, Plaintiff next points to the monetary damages she seeks for violation of CONN. GEN. STAT. § 10-76h(b). State Defendants respond that there is no evidence that Plaintiff has suffered any financial damage.[4] Plaintiff asserts damages because she was never heard by a hearing officer regarding some issues in her 1996-97 IEP. As resolved in the previous summary judgment, a hearing officer's alleged refusal to hear issues not previously raised at a PPT meeting would fault Redding Defendants for failing to fulfill their state law obligations to allow the issue to be heard at a PPT meeting, not State Defendants. Lillbask, 117 F.Supp.2d at 190. Moreover, Plaintiff's failure to be get resolution of these issues before the First Hearing Officer flowed from her voluntary withdrawal of her dispute. Plaintiff also asserts damages as Lindsey has been under an outdated IEP for several years. This is a conclusory argument to the effect that the 510 IEP is old. Plaintiff does not assert any actual harm flowing from an older IEP. Indeed, here she is the one enforcing the stay-put order to keep Lindsey at RES, which is where the earlier IEP placed him. Plaintiff lastly argues that Lindsey is eligible for compensatory education, a remedy which would defeat mootness. See Pihl v. Mass. Dep't of Educ., 9 F.3d 184, 189-90 (1st Cir.1993). The doctrine of compensatory education is not applicable here. The doctrine permits a court to grant a parent compensation for educational services, required but not rendered. Plaintiff seeks the status quo. Plaintiff seeks to preclude Lindsey from being sent to St. Vincent's. The remedy for this is to challenge the hearing officer's determination to place him at St. Vincent's, not compensatory education. Validity of the hearing officer's determination has been resolved in the previous summary judgment. Lillbask, 117 F.Supp.2d at 199-202. In light of the new regulations, Plaintiff is unable to assert some form of practical relief as to Hearing 97-231. Plaintiff ultimately secured a hearing officer determination and during this time Lindsey remained at RES, the result Plaintiff wanted. The timeliness claim as to Hearing 97-231 is moot. A finding of mootness is not meant to condone State Defendants' provision of a hearing which took almost a year, not 45 days, to complete. C. Timeliness of Hearings 97-028, 97-046, and 97-131 (as against State Defendants) In the previous ruling, Plaintiff was granted summary judgment that State Defendants violated the IDEA and CONN. GEN. STAT. § 10-76h(b) as to the timeliness of Hearings 97-028, 97-046, and 97-131. State Defendants move for reconsideration of this conclusion, arguing that since they complied with the Barbara R. consent decree, they did not violate federal or state law. As a motion for reconsideration would be untimely, see D. CONN. L. CIV. R. 9(e) ("[m]otions for [r]econsideration shall be filed within ten (10) days of the filing of the decision or order from which relief is sought"), they submit a motion for extension of time nunc pro tunc. In support, State Defendants assert that they recently changed internal counsel, that they did not act in bad faith, malice, or disregard of this court or of the applicable rules of civil procedure, and that because of the present motion for summary judgment Plaintiff would not be prejudiced. They also argue this court contributed to their error, asserting that summary judgment was granted against them as to these three hearings only because they failed to submit a Local Rule 9(c) statement and asserting that such statements were not submitted because of this court's instruction "that the parties shall rely primarily on the administrative record." See Lillbask, 117 F.Supp.2d at 186. The motion for extension of time nunc pro tunc comes over ten months after the first summary judgment was entered. Change of internal counsel is irrelevant. Lack of bad faith and of prejudice, while relevant, is not sufficient to justify the unreasonably long delay. State Defendants' attribution of their error to this court is unfounded. This court called for the parties to file motions for summary judgment. D. CONN. L. CIV. R. 9(c) clearly requires Local Rule 9(c) statements when filing motions for summary judgment. Nothing in this court's order was to the contrary. Indeed, all the other parties submitted Local Rule 9(c) statements. State Defendants assert that they followed this court's directive "that the parties shall rely primarily on the administrative 511 record," to the exclusion of filing a Local Rule 9(c) statement. There was nothing wrong with this court's directive. The parties were directed to rely on the administrative record as their primary source of evidence in making their arguments. This is not a foundation for an expectation that this court would marshal facts on behalf of a party. State Defendants' argument, if accepted, was that they were not obliged to file a Local Rule 9(c) statement, to assert any contrary facts in their memorandum of law, or to argue against Plaintiff's conclusions. Rather, their implicit assertion is that they expected this court to hunt through the entire administrative record in an effort to find any facts that might contradict Plaintiff's assertions. This is not reasonable. See Little v. Cox's Supermarkets, 71 F.3d 637, 641 (7th Cir.1995) ("[J]ust as a district court is not required to `scour the record looking for factual disputes,' it is not required to scour the party's various submissions to piece together appropriate arguments. A court need not make the lawyer's case.") (internal citation omitted). Even assuming arguendo that State Defendants' expectation was reasonable, it leaves wholly unexplained their failure to move for reconsideration within ten days of reading the summary judgment ruling and realizing their mistake. State Defendants' argument is to the effect that this court exclusively focused on their failure to file a Local Rule 9(c) statement. The reason State Defendants did not prevail in the previous motion for summary judgment is not limited to the procedural failure to file a Local Rule 9(c) statement. Apart from not submitting a Local 9(c) statement, State Defendants failed to oppose or contradict any of Plaintiff's assertions in their memorandum of law. This is not to say that State Defendants were silent or had no knowledge of Plaintiff's arguments. Indeed, they argued vigorously on other grounds against granting Plaintiff summary judgment as to these three hearings. Their arguments were fully heard and found to be without merit. While they point to their lack of a Local Rule 9(c) statement, the present motion for an extension of time nunc pro tunc is instead a vehicle to raise new arguments that their previous counsel declined to raise ten months earlier. "The purpose of [the law of the case] doctrine is to promote the judicial system's interest in finality and in efficient administration." Hayman Cash Register Co. v. Sarokin, 669 F.2d 162, 165 (3d Cir.1982) (internal quotation marks omitted). The same purpose drives the requirement to file motions for reconsideration in a timely fashion. Good cause not having been shown for the ten-month delay, the motion for extension of time nunc pro tunc is denied and so the motion for reconsideration is denied as untimely. D. Connecticut Due Process and Plaintiff's Request for a PPT (as against Redding Defendants) Public education in Connecticut is guaranteed by Article 8 § 1 of the Connecticut constitution. It provides, "There shall always be a free public elementary and secondary schools in the state. The general assembly shall implement this principle by appropriate legislation." This imposes on the legislature an affirmative constitutional obligation to provide school-children throughout the state with educational opportunities. Sheff v. O'Neill, 238 Conn. 1, 17, 678 A.2d 1267 (1996); Horton v. Meskill, 172 Conn. 615, 648-49, 376 A.2d 359 (1977) (educating children is the constitutional duty of the state). Plaintiff's complaint does not directly claim a denial of Lindsey's right to a free public education. She instead claims State Defendants and Redding Defendants denied Lindsey's state due process rights. 512 Thus, the issue, more precisely framed, is not whether Lindsey was denied his right to a free public education but whether any denial was without due process of law. See Mr. & Mrs. D. v. Southington Bd. of Educ., 119 F.Supp.2d 105, 116 (D.Conn. 2000) (when due process has been provided, not a constitutional deprivation to deny the service sought), remanded sub nom. M.D. v. Southington Bd. of Educ., 16 Fed. Appx. 70 (2d Cir.2001) (unpublished) (remanded for supplementation of the record). The due process clause of the state constitution, Article 1 § 10,[5] reads that "[a]ll courts shall be open, and every person, for an injury done to him in his person, property or reputation, shall have remedy by due course of law, and right and justice administered without sale, denial or delay." State and federal constitutional provisions need not be interpreted to have identical meanings. See Horton, 172 Conn. at 642, 376 A.2d 359. "[F]ederal decisional law is not a lid on the protections guaranteed under [the] state constitution." Fair Cadillac-Oldsmobile Isuzu P'ship v. Bailey, 229 Conn. 312, 316, 640 A.2d 101 (1994) (alternation in original) (quoting Doe v. Maher, 40 Conn.Supp. 394, 419, 515 A.2d 134 (Super.Ct.1986)). That being said, the Connecticut Supreme Court has held that the 14th Amendment due process clause has substantially the same meaning as the state civil due process clause, and therefore imposes no new limitation on the power of the people to determine their civil rights by their fundamental law. See Proctor v. Sachner, 143 Conn. 9, 17-18, 118 A.2d 621 (1955) (referring to Article 1 § 12, now Article 1 § 10); see also Brunswick Corp. v. Liquor Control Comm'n, 184 Conn. 75, 82 n. 4, 440 A.2d 792 (1979); In re Alexander V., 25 Conn. App. 741, 742 n. 1, 596 A.2d 934 (App.Ct. 1991), aff'd, 223 Conn. 557, 613 A.2d 780 (1992). Plaintiff argues that Lindsey's right to public education should not be denied without a showing Lindsey was not making progress in RES in 1997 and that Lindsey's right to public education would be meaningless if Redding Defendants were allowed to exclude him from RES. For a disabled child, she argues, the state constitutional right of access to public education must mean, at the least, that the child may attend public school if the school is able to provide an appropriate program in which the child can make progress. Whether or not this argument is sound, it does not go to show that Lindsey has a right to attend the school of Plaintiff's choice. The Connecticut right to a public education does not establish a right for a particular student to a particular school. See Savage v. Aronson, 214 Conn. 256, 286-87, 571 A.2d 696 (1990). Neither State Defendants nor Redding Defendants have barred Lindsey from attending public school or receiving a free public education. If Lindsey were placed at St. Vincent's instead of RES, without cost to Plaintiff, he is merely being afforded his right to public education in a different location. Plaintiff argues that, under the state constitution, it was error for the Second Hearing Officer to deny her request for a PPT. This is not quite correct. The single question presented to the Second Hearing Officer was "May the Board refuse to schedule a[PPT] meeting in response to a request for such a meeting from a Parent?" The Second Hearing Officer, in a thoughtful and reasoned opinion, held that Redding Defendants should 513 grant any reasonable request to hold a PPT meeting. This ruling of the hearing officer does not violate Connecticut due process and does not preclude Plaintiff from being heard. As was held in the previous summary judgement discussing violations of federal due process protections, Plaintiff's argument misstates the avenues open to her. She can still avail herself of the state hearing system for review as to whether a denial of a request for a PPT meeting was reasonable. Should the hearing officer decide that the request was reasonable, Redding Defendants would be obliged to provide one. Should the hearing officer decide that the request was not reasonable, Plaintiff can then still request this court to review that decision. The avenues of due process are still very much available to her. Lillbask, 117 F.Supp.2d at 196. The other inquiry is whether in this instance, Redding Defendants violated Plaintiff's state due process rights when they found that Plaintiff's request for a PPT meeting was unreasonable. The hearing officer found that there were a large number of PPT meetings held in the previous six months; that all of the issues raised by Plaintiff had previously been discussed and investigated; that many of the issues that were offered for discussion did not involve changes to Lindsey's IEP; and that the two issues that were germane to his IEP were not ripe for discussion at the time the PPT meeting was requested. Such is found not violative of Plaintiff's state due process rights. "The PPT meeting is not an insta-matic forum to allow parents to be heard whenever and about whatever they want; rather, it is a procedural step in the protection of a child's educational rights under the IDEA." Id. E. Connecticut Procedural Due Process and Conduct of the Hearings (as against State Defendants and Redding Defendants) Plaintiff's complaint limits this claim to procedural due process, not substantive due process. As noted in the previous summary judgment ruling, Lillbask, 117 F.Supp.2d at 203, Plaintiff has previously limited this claim to the assertion that she was not afforded a hearing were when comments made in the determinations regarding the conduct of her attorney. Previously, this was found not to violate her federal due process rights. Where, as here, "a party does not provide an independent analysis asserting the existence of greater protection under the state constitutional provision than its federal counterpart, [a court] will not of [its] own initiative address that question." See Barton v. Ducci Elec. Contractors, Inc., 248 Conn. 793, 812 n. 15, 730 A.2d 1149 (1999). Without any distinguishing between the contours of state procedural due process and federal due process, the same result is reached. F. Connecticut Due Process and CONN. GEN. STAT. § 10-76h(a)(1) (as against State Defendants and Redding Defendants) Plaintiff argues that CONN. GEN. STAT. § 10-76h(a)(1) is unconstitutional under the state due process clause as applied to Lindsey. Due process requires notice and opportunity to be heard at a meaningful time and in a meaningful manner, but does not mandate any specific form of procedure; rather, it protects substantive rights. See Fermont Div., Dynamics Corp. of Am., Inc. v. Smith, 178 Conn. 393, 423 A.2d 80 (1979) (federal and state due process). Plaintiff has not been denied an opportunity to be heard. She was merely required by state law to raise the issue 514 first at a PPT meeting prior to raising it before a hearing officer. Administrative processes which are not overly time-consuming or burdensome can further, not obstruct, due process by allowing parties access to a forum and determination in a timely fashion. Requiring that issues be first raised at a PPT may resolve issues, permitting prompt implementation and making review by a hearing officer unnecessary. Cf. Hous. Auth. v. Papandrea, 222 Conn. 414, 420-21, 610 A.2d 637 (1992). Plaintiff argues the requirement that issues first be aired at PPT meeting has in fact been used to deny Plaintiff the opportunity to be heard. Plaintiff argues that Redding Defendants refused to allow certain issues to be heard at PPT meetings; hearing officers then allegedly refused to hear Plaintiff's concerns at two subsequent due process hearings. Any claim of denial of due process would lie against Redding Defendants for failure to fulfill their state law obligations as the statute commands. It does not warrant finding the state statute unconstitutional. See Barton, 248 Conn. at 813, 730 A.2d 1149 ("We have consistently held that every statute is presumed to be constitutional and have required that invalidity be established beyond a reasonable doubt.") (citation omitted); State v. Breton, 212 Conn. 258, 269, 562 A.2d 1060 (1989) ("we indulge in every presumption in favor of the statute's constitutionality"). G. Connecticut Equal Protection and CONN. GEN. STAT. § 10-76h(a)(1) Plaintiff argues that CONN. GEN. STAT. § 10-76h(a)(1) violates the equal protection clause of the state constitution. Her argument is not reached as this is not a count alleged in her complaint. She points to paragraphs 48 and 50. While these counts do mention the "equal protection clause of the ... Connecticut Constitution" and "state law," both counts refer to the actions of the hearing officers as violative of her rights, not that the statute itself is unconstitutional. H. Connecticut Equal Protection and Plaintiff's Request for a PPT (as against Redding Defendants) State equal protection appears in two clauses. Article 1 § 1 reads, "All men when they form a social compact, are equal in rights; and no man or set of men are entitled to exclusive public emoluments or privileges from the community." Article 1 § 20 (as amended) reads, "No person shall be denied the equal protection of the law nor be subjected to segregation or discrimination in the exercise or enjoyment of his civil or political rights because of ... physical or mental disability." State and federal constitutional provisions need not be read to have identical meanings. Horton, 172 Conn. at 642, 376 A.2d 359 "[F]ederal decisional law is not a lid on the protections guaranteed under [the] state constitution." Fair Cadillac-Oldsmobile Isuzu P'ship, 229 Conn. at 316, 640 A.2d 101. That being said, the state equal protection clause has substantially the same meaning as the 14th Amendment equal protection clause. See Barnes v. City of New Haven, 140 Conn. 8, 14, 98 A.2d 523 (1953) (Article 1 § 1); accord Caldor's Inc. v. Bedding Barn, Inc., 177 Conn. 304, 314, 417 A.2d 343 (1979) (federal and state clauses have the same meanings and the same limits).[6] Where, as here, "a party does not provide an independent analysis asserting the existence of greater protection under the state constitutional provision than its federal 515 counterpart, [a court] will not of [its] own initiative address that question." See Barton, 248 Conn. at 813, 730 A.2d 1149. Plaintiff argues that since Redding Defendants' actions are inconsistent with IDEA procedure, this a violation of her state equal protection rights. The IDEA ensures the protection of the rights of disabled children requiring special education. See 20 U.S.C. § 1400(d)(1)(B). If Redding Defendants' actions were consistent with IDEA procedure, there is no violation of federal equal protection. See Scanlon v. San Francisco Unified Sch. Dist., No. C91-2559(FMS), 1994 WL 860768, at 11 (N.D.Cal. Apr.14, 1994), aff'd, 69 F.3d 544 (9th Cir.1995) (unpublished). As resolved in the previous summary judgment ruling, Lillbask, 117 F.Supp.2d at 194-95, Redding Defendants' actions in refusing to grant a PPT was found not to have violated the IDEA. Plaintiff neither alleges nor asserts any other way in which Redding Defendants have treated Lindsey differently than similarly situated students. I. Retaliation Claim (as against Redding Defendants) Plaintiff claims Redding Defendants placed Lindsey at St. Vincent's in retaliation against her for her advocacy in the due process hearings. She sues under § 504 of the Rehabilitation Act and for violation of 34 C.F.R. Part 104.61. Section 504 of the Rehabilitation Act, 29 U.S.C. § 794(a), provides, "No otherwise qualified individual with a disability ... shall solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance ...." Against her claim, Redding Defendants first argue that the statute protects only a "qualified individual with a disability," not the guardian of a "qualified individual with a disability." Their argument is meritless. The statute has been construed on behalf of disabled people to include those on whom they depend to vindicate their rights. Weber ex rel. Samuel M. v. Cranston Sch. Comm., 212 F.3d 41, 48 (1st Cir.2000). The companion federal regulation, 34 C.F.R. § 100.7(e) (emphasis added), comes to the same conclusion: "No recipient ... shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege secured by ... the Act ... because he has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding or hearing under this part." Redding Defendants next argue that because the determination of the hearing officer to place Lindsey at St. Vincent's was upheld after being given due weight, the act of placing him there can not support a retaliation claim. Redding Defendants sought to portray Plaintiff as a "hostile parent" and did so before the Fourth Hearing Officer. That she was assertedly hostile was claimed as a reason to place Lindsey at St. Vincent's. The submitted evidence of her hostility was the long-standing relationship she has had with the Board, a relationship defined by each of their respective advocacy on behalf of Lindsey. Redding Defendants characterizes the causal connection as a mere "metaphysical doubt." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). It is not. It is a genuine issue of material fact, sufficient to survive summary judgment. Evidence of hostility and of zealous advocacy involve similar factual predicates. Redding Defendants asserted before the Fourth Hearing Officer that in part because of Plaintiff's hostility, Lindsey should be sent to St. Vincent's. Whether they were motivated by the intent 516 to thereby punish Plaintiff or by the intent to do what is in Lindsey's best interest is a question for the jury to decide. V. PLAINTIFF'S MOTION TO COMPEL DISCOVERY Plaintiff moves to compel answers to her written requests for admission and answers to her deposition questions. In this court's previous ruling on discovery, discovery against Redding Defendants was limited to matters, not privileged, relevant to Plaintiff's retaliation claim, that is to say, whether Redding Defendants' IEP placing Lindsey at St. Vincent's was in retaliation against Plaintiff. See FED. R. CIV. P. 26(b)(1) (Nov. 30, 2000). Questions which sought answers already available in the administrative record were barred as duplicative. On November 16, 2000, Plaintiff was permitted to conduct discovery on her retaliation claim until January 10, 2001. The deadline was subsequently extended to February 10, 2001. The deadline was extended again until March 2, 2001. After another extension, the deadline for the completion of discovery lapsed on June 11, 2001. After almost seven months, Plaintiff served on June 10, 2001, one day before the deadline for the completion of all discovery, by first-class mail a motion to compel additional discovery. After almost seven months of discovery, a motion to compel received after the expiration of the deadline for the completion of all discovery is untimely. For this reason, Plaintiff's request for further depositions is denied. Plaintiff also moves for requests for admission, mostly to confirm the genuineness of various documents. Redding Defendants object, arguing that since the documents are settlement communications, they are inadmissible at trial. Redding Defendants' objection is meritless. Mere inadmissibility at trial is not a bar to discovery. See FED. R. CIV. P. 26(b)(1) (Nov. 30, 2000) ("[r]elevant information need not be admissible at trial"). Given that the burden and expense in responding to requests for admission is minimal and given that it may make a trial on the merits more efficient, Plaintiff's request for admissions is granted. Given its untimely nature, any request for attorneys' fees in conjunction with the granting of the request is denied. On July 27, 2001, Plaintiff had moved for a 30-day extension of time in which to conduct additional discovery. The motion had been denied, noting that any extension of time would be considered as part of the resolution of the motion to compel. In light of the above, the motion for an extension of any other discovery remains denied. VI. PLAINTIFF'S MOTION FOR RELIEF FROM ORDER Pursuant to FED. R. CIV. P. 60(b)(6), Plaintiff moves for relief from the previous summary judgment ruling,[7] upholding the hearing officer's decision to place Lindsey at St. Vincent's. See Lillbask, 117 F.Supp.2d at 199-202. She asserts changes in circumstances, changes in the law, and the interests of justice. FED. R. CIV. P. 60(b) provides, "On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: ... (6) any other reason justifying relief from the operation of the judgment." 517 Motions under FED. R. CIV. P. 60(b) are committed to the sound discretion of the district court and are generally granted only upon a showing of exceptional circumstances. Jedrejcic v. Croatian Olympic Comm., 190 F.R.D. 60, 76 (E.D.N.Y.1999) (citation omitted); see also Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir.1986) ("properly invoked only when there are extraordinary circumstances justifying relief"). While an intervening change of the law can be a basis for granting a FED. R. CIV. P. 60(b)(6) motion, Matarese v. LeFevre, 801 F.2d 98, 107 (2d Cir.1986), the burden is on the movant to show a "significant change in the law," Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 384, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992); Thompson v. County of Franklin, 127 F.Supp.2d 145, 163 (N.D.N.Y.2000) (a mere change in the law rarely constitutes extraordinary circumstances justifying vacatur of a final judgment under FED. R. CIV. P. 60(b)(6)). Plaintiff shows neither a "significant change in the law" or "extraordinary circumstances" to justify relief under FED. R. CIV. P. 60(b).[8] Plaintiff first points to a proposed settlement agreement in P.J. v. Conn. Bd. of Educ., No. 2:91cv180(RNC) (D. Conn. filed Jan. 2, 1991). The settlement agreement had not yet been signed by the plaintiffs in that case or by the State nor had it been approved by U.S. District Judge Robert Chatigny. The text of the proposed settlement agreement she offers is clearly marked "DRAFT." For these reasons, the proposed settlement agreement is not a "significant change in the law."[9] She also points to the Second Circuit case of M.S. ex rel. S.S. v. Board of Education, 231 F.3d 96 (2d Cir.2000), cert. denied, 532 U.S. 942, 121 S.Ct. 1403, 149 L.Ed.2d 346 (2001), decided about one month after the first summary judgment in the present case was decided. Contrary to Plaintiff's assertions, this decision substantially reiterates existing law, namely the two-prong test of Rowley, 458 U.S. 176, 102 S.Ct. 3034, 73 L.Ed.2d 690, and merely applies that law to the facts of the case before it. Even if the case does represent a change in law, the change is not "significant" enough to justify granting a FED. R. CIV. P. 60(b)(6) motion. She next points to a response her counsel received from the U.S. Department of Education to an inquiry she sent them. She asserts the response stands for the proposition that the Connecticut PPT requirement of CONN. GEN. STAT. § 76h(a)(1) is inconsistent with the IDEA. An advisory letter from a single staff attorney at the U.S. Department of Education to a private lawyer about a Connecticut statute is not dispositive. See 20 U.S.C. § 1406(f)(1) ("[a]ny written response by the Secretary under subsection (e) regarding a policy, question, or interpretation ... shall include an explanation that the written response(1) is provided as informal guidance and is not legally binding"); Doe ex rel. Doe v. Bd. of Educ., No. 94C6449, 1996 WL 392160, at 2 (N.D.Ill. July 11, 1996), aff'd, 115 F.3d 1273 (7th Cir.1997) (such interpretive rules not legally binding on the courts); Raymond S. ex rel. Joseph S. v. Ramirez, 918 518 F.Supp. 1280, 1291 (N.D.Iowa 1996) (such interpretive rules have not been subjected to notice and comment and are issued merely to advise the public of the agency's construction of the statutes and rules it administers). The relevant portion of the letter is not even persuasive. For instance, the letter rests its conclusion on the finding that the application of the Connecticut requirement that all issues be first raised at a PPT meeting "would bar any review of school district actions if a district refused to conduct a PPT meeting." The reasoning is incorrect. A parent denied a PPT meeting could simply appeal the refusal to a hearing officer. See Lillbask, 117 F.Supp.2d at 196. Should the hearing officer decide that the parent's request was reasonable, the school district would be obliged to provide a PPT meeting. See id. Should the hearing officer decide that the PPT request was not reasonable, the parent could still request a district court review that decision. See id. "A contrary conclusion would allow PPT meetings to be transformed from the IDEA's goal of a healthy interaction between parents and educators into a weapon in the hands of parents to hold educators and experts hostage to meetings without limit." See id. at 195. VII. CLAIMS OF THE FOURTH AMENDED COMPLAINT A. Paragraph 45 Plaintiff was previously granted summary judgment that State Defendants violated the IDEA and CONN. GEN. STAT. § 10-76h(b) as to Hearings 97-028, 97-046, and 97-131. That ruling is not disturbed. See infra, IV.C. Plaintiff's claim that State Defendants violated the IDEA and CONN. GEN. STAT. § 10-76h(b) as to Hearing 97-231 is dismissed as moot. See infra, IV.B. No claim remains for trial. B. Paragraph 46 State Defendants were previously granted summary judgment on this claim. No claim remained. C. Paragraph 47 Redding Defendants were previously granted summary judgment that the failure to grant Plaintiff's request for a PPT, in this instance, did not violate the IDEA, § 504 of the Rehabilitation Act, CONN. GEN. STAT. § 10-76h(a)(1), the due process clause of the U.S. constitution, or the equal protection clause of the U.S. constitution. Redding Defendants are granted summary judgment that the failure to grant Plaintiffs request for a PPT, in this instance, did not violate Connecticut due process and equal protections. See infra, IV.D, IV.H. Plaintiff is denied summary judgment on this claim. See id. No claim remains. D. Paragraph 48 State Defendants and Redding Defendants were each previously granted summary judgment on this claim. No claim remained. E. Paragraph 49 State Defendants and Redding Defendants were each previously granted summary judgment that Plaintiff's federal due process rights have not been violated. State Defendants and Redding Defendants are each granted summary judgment that Plaintiff's Connecticut due process rights have not been violated in making comments about the conduct of her attorney. See infra, IV.E. Plaintiff is denied summary judgment on this claim. See id. No claim remains. F. Paragraph 50 State Defendants and Redding Defendants were each previously granted summary 519 judgment on this claim. No claim remained. G. Paragraph 51 Redding Defendants are denied summary judgment as to the claim that the IEP placing Lindsey at St. Vincent's was in retaliation against Plaintiff. See infra, IV.I. H. Paragraph 52 State Defendants and Redding Defendants were each previously granted summary judgment that CONN. GEN. STAT. § 10-76h(a)(1) is not unconstitutional under the due process clause of the U.S. Constitution. State Defendants and Redding Defendants are each granted summary judgment that CONN. GEN. STAT. § 10-76h(a)(1) is not unconstitutional under the due process clause of the Connecticut constitution. No claim remains. See infra, III.F. Plaintiff is denied summary judgment on this claim. See id. VIII. SCHEDULING The only claim remaining for trial is the retaliation claim against Redding Defendants. A Trial Preparation Order will issue, with Part A due by May 3, 2002, Part B due by May 20, 2002, and Part C due by April 4, 2002. The IDEA stay-put provision, 20 U.S.C. § 1415(j), provides, "[D]uring the pendency of any proceedings conducted pursuant to this section ... the child shall remain in the then-current educational placement of such child ... until all such proceedings have been completed." The only remaining claim, for retaliation, is brought under the Rehabilitation Act, not the IDEA. With the resolution of all the administrative appeal claims above, the stay-put order dissolves. IX. CONCLUSION Plaintiff's motion to submit evidence, (Dkt. No. 287), is denied. State Defendants' motion for enlargement of time nunc pro tunc, (Dkt. No. 246), is denied. State Defendants' motion for reconsideration, (Dkt. No. 242-2), is denied. State Defendants' supplemental motion for summary judgment, (Dkt. No. 242-1) is granted in part and denied in part. Redding Defendant's motion for summary judgment, (Dkt. No. 256), is granted in part and denied in part. Plaintiff's motion for summary judgment as to Connecticut constitution, (Dkt. No. 275), is denied. Plaintiff's motion to compel, (Dkt. No. 263), is granted in part and denied in part. Plaintiff's motion for relief from order, (Dkt. No. 268), is denied. A Trial Preparation Order will issue, with Part A due by May 3, 2002, Part B due by May 20, 2002, and Part C due by April 4, 2002. The stay-put order is dissolved. SO ORDERED. NOTES [1] These same reasoning was applied in deciding the motions for summary judgment. Plaintiff sought to submit additional evidence regarding Lindsey's then present development, including his August 29, 2000 report card and an August 1, 2000 letter from Willows Pediatric Group. Neither submission was considered in deciding the motions on the ground that neither dealt with matters relevant either to the administrative hearings or at the time Plaintiff's action was filed in this court. See Lillbask, 117 F.Supp.2d at 188. [2] Plaintiff does not bring separate claims for violation of the Barbara R. consent decree, violation of 34 C.F.R. § 300.511(a), or violation of CONN. GEN. STAT. § 10-76h(b), all of which require hearing officers to reach a decision within 45 days of receipt of a hearing request. [3] Not reached is whether monetary damages are available under 42 U.S.C. § 1983 for violations of the IDEA. See, e.g., R.B. ex rel. L.B. v. Bd. of Educ., 99 F.Supp.2d 411, 418 (S.D.N.Y.2000). Although in previous briefs Plaintiff has referred to § 1983, she does not actually plead this claim and so it was not recognized. [4] State Defendants do not argue that monetary damages are unavailable under CONN. GEN. STAT. § 10-76h(b). [5] This is the civil due process clause. The criminal due process clause can be found at Article 1 § 8. [6] Plaintiff calls this case into doubt See Ramos v. Town of Vernon, 254 Conn. 799, 761 A.2d 705 (2000). [7] Plaintiff also argues for reconsideration of the previous summary judgment ruling. D. CONN. L. CIV. R. 9(e) requires motions for reconsideration be brought within ten days of the filing of the decision or order from which relief is sought. To the extent she argues for "reconsideration" instead of "relief," Plaintiff's motion is denied as untimely. [8] As an additional matter, FED. R. CIV. P. 60(b) provides relief from a "final judgment, order, or proceeding." With the case still pending, absent a FED. R. CIV. P. 54(b) certification, the previous summary judgment is interlocutory and not subject to FED. R. CIV. P. 60(b). See Burke v. Warren County Sheriff's Dep't, 916 F.Supp. 181, 183 (N.D.N.Y.1996). [9] State Defendants also argue that the terms of the proposed settlement agreement, even if they were in effect at the time the Fourth Hearing Officer made his decision, would have had no effect on the way he reached the decision that he did. This issue need not be addressed.	{ "pile_set_name": "FreeLaw" }
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA L.M.-M., et al., Plaintiffs, v. Civil Action No. 19-2676 (RDM) KENNETH T. CUCCINELLI II, in his purported official capacity as acting Director of U.S. Citizenship and Immigration Services, et al., Defendants. MEMORANDUM OPINION AND ORDER Under the Appointments Clause of Article II of the Constitution, the President must obtain “the Advice and Consent of the Senate” before appointing any principal officer of the United States and, unless Congress vests the appointment power in the President, a court, or a department head alone, before appointing any inferior officer as well. U.S. Const., Art. II, § 2, cl. 2. This requirement is “more than a matter of ‘etiquette or protocol’; it is among the significant structural safeguards of the constitutional scheme.” Edmond v. United States, 520 U.S. 651, 659 (1997) (quoting Buckley v. Valeo, 424 U.S. 1, 125 (1976) (per curiam)). By dividing authority between the President and the Senate, the Appointments Clause serves as a check on both branches of government and a means of “promot[ing] . . . judicious choice[s] of [persons] for filling the offices of the union.” The Federalist No. 76, at 454–59 (C. Rossiter ed. 1961) (A. Hamilton). “The constitutional process of Presidential appointment and Senate confirmation, however, can take time,” raising the prospect that the duties and functions assigned to an office requiring Presidential appointment and Senate confirmation (referred to as a “PAS” office) can go unperformed if the President and Senate “cannot promptly agree on a replacement.” NLRB v. SW General, Inc., 137 S. Ct. 929, 934–35 (2017). Recognizing this reality, Congress has, since the early days of the Republic, authorized “the President to direct certain officials to temporarily carry out the duties of a vacant PAS office in an acting capacity, without Senate confirmation.” Id. at 934. The Federal Vacancies Reform Act of 1998 (“FVRA”), 5 U.S.C. § 3345 et seq., represents the “latest version of that authorization.” SW General, Inc., 137 S. Ct. at 934. Subject to exceptions not relevant here, it sets forth the exclusive means of temporarily filling vacancies in PAS offices. The default rule under the FVRA is that the “first assistant” to the vacant office automatically serves as the acting official when a vacancy arises. 5 U.S.C. § 3345(a)(1). That default rule applies unless the President, and only the President, directs that (1) a person who has been confirmed by the Senate to serve in another PAS office or (2) an officer or employee of the agency in question, who has worked for that agency in a senior position for at least 90 of the 365 days preceding the vacancy, “perform the functions and duties of the vacant office temporarily in an acting capacity.” Id. § 3345(a)(2) and (3). The question presented in this case is whether the acting Director of the United States Citizenship and Immigration Services (“USCIS”), Kenneth Cuccinelli II, was appointed in conformity with the FVRA. The relevant events began on June 1, 2019, when Lee Francis Cissna, the Senate- confirmed Director of USCIS, resigned, and, as the FVRA prescribes, his “first assistant,” Deputy Director Mark Koumans, automatically assumed the post of acting Director. See Dkt. 22-1 at 14 (Pls.’ SUMF ¶¶ 81–84); Dkt. 17-2 at 5–7, 12 (USCIS order of succession); Dkt. 12-6 at 2 (Monk Decl. ¶ 6). Koumans’s tenure, however, was short-lived. Nine days after Director Cissna’s resignation, the then-serving acting Secretary of the Department of Homeland Security, 2 Kevin McAleenan, appointed Cuccinelli “to serve as the Principal Deputy Director of [USCIS],” Dkt. 17-4 at 5 (Blackwell Decl., Ex. 1), a position that did not exist prior to Cuccinelli’s appointment, see Dkt. 17-2 at 12 (Johnson Decl., Ex. 1 at D-1). That same day, acting Secretary McAleenan also revised USCIS’s order of succession, designating the newly created position of Principal Deputy Director as “the First Assistant and most senior successor to the Director of USCIS.” Dkt. 17-4 at 7 (Blackwell Decl., Ex. 2). These two changes—both of which occurred after the vacancy arose—allowed Cuccinelli to leapfrog Koumans to become USCIS’s acting Director. But neither of these changes was designed to endure. Acting Secretary McAleenan specified that Cuccinelli’s appointment as Principal Deputy Director “will remain in effect until the earlier to occur of (1) the appointment of a Director of USCIS by the President of the United States, or (2) the express revocation of this appointment.” Id. at 5 (Blackwell Decl., Ex. 1). And acting Secretary McAleenan specified that the revised order of succession, which re-designated the Principal Deputy Director position as the “first assistant” to the Director, “will terminate automatically, without further action, upon the appointment of a new Director of USCIS by the President.” Id. at 7 (Blackwell Decl., Ex.2). In other words, as soon as the vacant office is filled, the status quo will be restored. On July 2, 2019, three weeks after assuming his new office, Cuccinelli issued a memorandum announcing a revised policy for scheduling credible-fear interviews in expedited removal proceedings. AR 113. Under the revised policy, USCIS (1) reduced the time allotted for asylum seekers to consult with others prior to their credible-fear interviews from 72 or 48 hours to “one full calendar day from the date of arrival at a detention facility,” AR 113 (“reduced-time-to-consult directive”), and (2) prohibited asylum officers from granting asylum 3 seekers extensions of time to prepare for their credible-fear interviews, “except in the most extraordinary of circumstances,” id.; see also AR 114 (“prohibition-on-extensions directive”). Although not reflected in the memorandum, Plaintiffs assert that Cuccinelli also cancelled “[t]he in-person [legal] orientation process that was” previously “in place” at the Dilley Detention Center in Dilley, Texas. Dkt. 12-2 at 3–4 (Fluharty Decl. ¶¶ 6–7) (“in-person-orientation directive”). Before its cancellation, according to Plaintiffs, that policy “allowed asylum seekers to ask questions about their legal rights, provided the only means of transmitting information to asylum seekers who cannot read, and facilitated understanding for asylum seekers with special needs, including disabilities or competency issues.” Dkt. 12 at 18; see also Dkt. 12-2 at 3–4 (Fluharty Decl. ¶¶ 6–7). Taken together, Plaintiffs refer to these revised policies as the “Asylum Directives.” Plaintiffs, five individual native Honduran asylum seekers (two adults and three of their minor children) and the Refugee and Immigrant Center for Education and Legal Services (“RAICES”), a nonprofit organization that provides legal services to refugees, challenge the lawfulness of the Asylum Directives on multiple grounds. First, they allege that Cuccinelli was not lawfully appointed to serve as the acting Director of USCIS and that, as a result, the Asylum Directives must be set aside under the Appointments Clause, the FVRA, 5 U.S.C. § 3348(d)(1), the Administrative Procedure Act (“APA”), 5 U.S.C. §706(2)(A), and as ultra vires. Dkt. 1 at 63–68 (Compl. ¶¶ 225–36). Second, they allege that the Asylum Directives themselves are inconsistent with various statutory and regulatory requirements, including an asylum applicant’s statutory right to “consult with a person or persons of the alien’s choosing prior to the [credible- fear] interview,” 8 U.S.C. § 1225(b)(1)(B)(iv), and the regulatory authority of asylum officers freely to reschedule credible-fear interviews whenever the asylum seeker “is unable to participate 4 effectively . . . because of illness, fatigue, or other impediments,” 8 C.F.R. § 208.30(d)(1). Dkt. 1 at 57–58 (Compl. ¶¶ 194–97). Third, they contend that the Asylum Directives are arbitrary and capricious because USCIS failed to consider how the Directives harm asylum seekers, acted based on “animus toward immigrants” and failed to provide an adequate justification for the policy changes. Id. at 58–59 (Compl. ¶¶ 198–204). Fourth, they further allege that USCIS failed to comply with the APA’s notice-and-comment and advanced-notice requirements. Id. at 59–60 (Compl. ¶¶ 207–08). Fifth, Plaintiffs maintain that the Asylum Directives discriminate against asylum seekers with “trauma-related and other mental impairments” in violation of the Rehabilitation Act, 29 U.S.C. § 701 et seq. Id. at 60–62 (Compl. ¶¶ 209–18). Finally, they allege that the Asylum Directives violate the First Amendment by interfering with the ability of the individual Plaintiffs and RAICES “to communicate and [to] associate” with one another regarding the individual Plaintiffs’ legal rights. Id. at 62–63 (Compl. ¶¶ 219–23). As explained below, the Court is satisfied that at least one Plaintiff has Article III standing and that the Court has statutory jurisdiction over Plaintiffs’ challenges to the reduced- time-to-consult and prohibition-on-extensions directives. The Court is not persuaded, however, that it has statutory jurisdiction over Plaintiffs’ challenge to the in-person-orientation directive. On the merits, the Court concludes that Cuccinelli was not lawfully appointed to serve as acting Director and that, as a result, he lacked authority to issue the reduced-time-to-consult and prohibition-on-extensions directives. The remedy for that deficiency, moreover, is compelled by the FVRA and the APA: the Asylum Directives must be set aside. Finally, having reached that conclusion, the Court need not—and does not—reach Plaintiffs’ alternative legal challenges. 5 I. BACKGROUND A. The Expedited Removal System Congress first introduced the concept of expedited removal when it enacted the Illegal Immigration Reform and Immigrant Responsibility Act (“IIRIRA”) in 1996. Pub. L. No. 104- 208, Div. C, 110 Stat. 3009–546, 3009 (1996) (codified as amended in scattered sections of 8 U.S.C.). Expedited removal procedures allow the Department of Homeland Security (“the Department”) to remove a subset of aliens—those arriving at the border and those who recently entered the United States without inspection—with considerably less process than the formal proceedings required to remove other aliens. See 8 U.S.C. § 1225(b)(1)(A)(i). IIRIRA, in particular, authorizes the Department to remove aliens subject to expedited removal procedures “without further hearing or review[.]” Id. If an alien subject to expedited removal “indicates either an intention to apply for asylum . . . or a fear of persecution,” however, then the immigration officer is required to “refer the alien for an interview by an asylum officer,” id. § 1225(b)(1)(A)(ii), who must determine whether the alien has a “credible fear of persecution,” id. § 1225(b)(1)(B). IIRIRA sets out procedures that are to be used when an alien is referred to an asylum officer for a credible-fear interview. The alien must be “provide[d] [with] information concerning the asylum interview” and must be allowed to “consult with a person or persons of the alien’s choosing prior to the interview,” although “[s]uch consultation shall be at no expense to the Government and shall not unreasonably delay the process.” Id. § 1225(b)(1)(B)(iv). If the asylum officer determines that the alien has a credible fear of persecution, “the alien [is] detained for further consideration of the application for asylum,” id. § 1225(b)(1)(B)(ii), and is typically placed in formal removal proceedings. If the asylum officer determines that the alien does not 6 have a credible fear of persecution, “the officer shall order the alien removed from the United States without further hearing or review.” Id. § 1225(b)(1)(B)(iii)(I). USCIS oversees credible-fear interviews. Although the now-defunct Immigration and Naturalization Service (“INS”) once oversaw asylum applications, see, e.g., U.S. Department of Justice, Immigration and Naturalization, Asylum, 39 Fed. Reg. 41,832 (Dec. 3, 1974), the “functions” of adjudicating “asylum and refugee applications” and of “establish[ing] the policies for performing [that] function” were transferred to the Director of USCIS by the Homeland Security Act of 2002, Pub. L. No. 107-296, Subtitle E, 116 Stat. 2195 (codified at 6 U.S.C. § 271 et seq.), 6 U.S.C. § 271(a)(3)(A) and (b)(3). Consistent with those authorities, the USCIS Director establishes policies for processing aliens that have been referred to USCIS for a credible-fear determination. See, e.g., USCIS, Policy Memorandum, Guidance for Processing Reasonable Fear, Credible Fear, Asylum, and Refugee Claims in Accordance with Matter of A- B- (July 11, 2018), available at https://tinyurl.com/y6xt6j8l (last accessed March 1, 2020). B. Cuccinelli’s Appointment On June 1, 2019, Lee Francis Cissna resigned as Director of USCIS, creating a vacancy in that PAS position. Dkt. 22-1 at 14 (Pls.’ SUMF ¶ 81); Dkt. 26 at 2 (Response to Pls.’ SUMF). Under USCIS’s order of succession at the time, Deputy Director Mark Koumans served as the Director’s “first assistant” and thus, pursuant to the FVRA’s default rule, automatically became the acting Director. Dkt. 12-6 at 13 (Monk Decl., Ex. 4). A few days later, on June 6, 2019, the Department’s Office of Human Capital & Training sent Kenneth Cuccinelli II a letter “[c]ongratulat[ing] [him] on [his] noncareer Senior Executive Service (SES) appointment as Principal Deputy Director, ES-0301, U.S. Citizenship and Immigration Service,” effective on June 10, 2019. Dkt. 17-3 at 5 (Monroe Decl., Ex. 1). Prior to his appointment to that position, 7 Cuccinelli had never been employed by the federal government. Dkt. 12-6 at 9 (Monk Decl., Ex. 2). Although not stated in the letter, it is undisputed that the Principal Deputy Director position did not exist prior to Cuccinelli’s appointment. Dkt. 22-1 at 14 (Pls.’ SUMF ¶ 85); Dkt. 26 at 2 (Response to Pls.’ SUMF). Consistent with the Department’s letter, on June 10, 2019, then- acting Secretary McAleenan appointed Cuccinelli “to serve as the Principal Deputy Director of [USCIS].” Dkt. 17-4 at 5 (Blackwell Decl., Ex. 1). The appointment will expire without further action upon “the appointment of a Director of USCIS by the President of the United States.” Id. On the same day as Cuccinelli’s appointment, acting Secretary McAleenan also issued a memorandum entitled “Amendment to the Order of Succession for [USCIS].” Id. at 7 (Blackwell Decl. Ex. 2). The memorandum consists of a single paragraph, which provides as follows: Pursuant to Paragraph II.K of Department of Homeland Security . . . Delegation No. 0106, DHS Orders of Succession and Delegations of Authority for Named Positions (last updated on April 10, 2019), I am exercising my reserved right to re-designate the order of succession for [USCIS] . . . . I hereby designate the Principal Deputy Director of USCIS as the First Assistant and most senior successor to the Director of USCIS in such order of succession. Annex D of DHS Delegation No. 0106 is hereby modified in accordance with this designation. This designation, and the corresponding modification to Annex D of DHS Delegation No. 0106, will terminate automatically, without further action, upon the appointment of a new Director of USCIS by the President. I reserve the right to amend or revoke this designation and such modification at any time. Id. at 7 (Blackwell Decl. Ex. 2). The acting Secretary thus designated the newly created position of Principal Deputy Director as the “first assistant” to the Director for purposes of the FVRA, see Dkt. 17-2 at 5–6, 12 (Johnson Decl., Ex. 1), but only until the appointment of a new Director of USCIS by the President, Dkt. 17-4 at 7 (Blackwell Decl., Ex. 2). As a result, on the first day Cuccinelli reported to USCIS for work, he displaced Deputy Director Koumans as the acting Director. See Dkt. 12-6 at 9 (Monk Decl., Ex. 2). That appointment—and the parallel 8 designation—will expire when the vacant office is filled. Dkt. 17-4 at 5 (Blackwell Decl., Ex. 1); id. at 7 (Blackwell Decl. Ex. 2). C. The Asylum Directives On July 2, 2019, Cuccinelli sent the acting Secretary of Homeland Security a memorandum notifying him that, “effective July 8, 2019, USCIS [1] is reducing the credible fear . . . consultation period to one full calendar day from the date of arrival at the detention facility . . . and [2] will deny requests for extensions, as unreasonably delaying the process, except in the most extraordinary circumstances.” AR 113. The memorandum explained that the Immigration and National Act (“INA”), Pub. L. No. 82-414, 66 Stat. 163 (1952) (codified as amended at 8 U.S.C. § 1101 et seq.), provides asylum seekers “in the credible fear process” the right “to consult with a person(s) of their choosing, as long as the consultation is at no expense to the government and does not unreasonably delay the process.” AR 113. Under the pre-existing policy, those held at Family Residential Centers (“FRCs”) were “given 72 hours after arrival at the facility and re-orientation by USCIS to seek and receive consultation,” and at all other detention facilities, “single adults [were] generally not interviewed until at least 48 hours after arrival at the detention facility in order to [be able to] seek and receive consultation before the interview [took] place.” Id. According to the memorandum, Cuccinelli decided to reduce the credible-fear consultation period, and to limit the availability of extensions to only “the most extraordinary circumstances,” for two reasons. Id. First, he explained that USCIS had recently “completed revisions to [its] Form M-444, Information About Credible Fear Interview,” AR 113–14. USCIS gives that form to detainees upon their arrival at a detention facility to comply with its statutory and regulatory obligations to provide asylum seekers subject to expedited removal with 9 “information concerning the asylum interview.” 8 U.S.C. § 1225(b)(1)(B)(iv); 8 CFR § 208.30(d)(2); 6 U.S.C. § 271(b)(3) (transferring to the Director responsibility for the function of adjudicating asylum applications). By “using plain language principles in order to provide greater clarity to the alien during the consultation process,” AR 113–14, Cuccinelli explained, the revised M-444 form “makes the [credible-fear] process easier for aliens to understand,” and thus justifies a shortened consultation period, AR 114. Second, the memorandum asserted, without elaboration, that the policy shifts were also justified because “USCIS must do its part to ensure the processing of aliens is not unduly delayed in light of the situation at the Southwest Border.” AR 114. The memorandum’s concluding paragraph, repeated both rationales, stating: Given the critical need [at the Southwestern border], coupled with the improvements made to the M-444[,] which makes the [credible-fear] process easier for aliens to understand, [the acting USCIS Director has] decided to reduce the timeframe for consultation to one full calendar day at both the FRCs and all other facilities. In practice, this means individuals will have longer than 24 hours to consult depending on when they arrive at the facility. Reducing the time period for consultation could lead to longer delays at a later point in the process for some cases, as USCIS may receive more frequent requests to reschedule interviews. However, USCIS is also establishing a new policy of requiring extraordinary circumstances warranting approval of a request to reschedule so that USCIS can ensure, consistent with the statute, that the consultation period does not unreasonably delay the overall process. AR 114. On July 8, 2019, USCIS updated its “Credible Fear Procedures Manual” to reflect the policy changes announced in the memorandum. AR 115–17. The updated manual notes that it is now the policy of “the Asylum Program to allow a minimum of one full calendar day to transpire between the arrival of an alien at a detention site or receipt of initial M-444 (whichever is later) and any credible[-]fear interview.” AR 117. It further states that “[i]f USCIS is prepared to proceed with the interview after the consultation period has passed, asylum offices normally will deny requests for extensions of the consultation period, . . . except in extraordinary 10 circumstances.” Id. Finally, the updated manual notes that “[e]xtraordinary circumstances may include, but are not limited to, serious illness or mental or physical disability of the alien, a member of the alien’s immediate family, or the alien’s consultant, and facility issues that prevent the alien from contacting a consultant.” AR 117. Although not memorialized in the memorandum, or in any other written policy produced in this litigation, Plaintiffs offer evidence that Cuccinelli adopted a third, significant change in policy relating to the ability of asylum seekers to prepare for their credible-fear interviews. Prior to issuance of the memorandum, “USCIS officials at [the Dilley Detention Center in South Texas] would provide an oral, in-person legal orientation, which allowed asylum seekers to ask questions about their legal rights.” Dkt. 12-2 at 3 (Fluharty Decl. ¶ 6). As part of that process: [M]others and their minor children watched a video that explained the nature and purpose of the credible[-]fear interview . . . and sat down individually with an asylum officer who: (1) provided them with a written copy of Form M-444, (2) asked them if they had any questions regarding the interview process, (3) confirmed which language they speak and understand best, (4) confirmed whether the family prefers to speak with a male or female officer, and (5) provided the family with two copies of Form G-56, which indicated the day and time their interview would take place. Id. According to Plaintiffs, that process “has now been canceled.” Id. (Fluharty Decl. ¶ 7). D. Plaintiffs Plaintiff L.M.-M. is a Honduran national who, along with her two minor children, Plaintiffs B.M.-M. and V.M.-M, is “currently seeking asylum in the United States.” Dkt. 12-3 at 1 (L.M.-M. Decl. ¶ 1). She attests that she fled Honduras because she has been “targeted by the Honduran government” due to her “political opinion” and “because [her] partner and the father of [her] youngest child beat [and] raped” her, “hit [her] daughters,” “threatened to harm [her] if [she] ever left him, and when [she] did leave him, . . . continued to pursue and threaten [her].” Id. at 1–2 (L.M.-M. Decl. ¶ 2). On August 10, 2019, L.M.-M. and her daughters entered the 11 United States and soon thereafter were detained and placed in expedited removal proceedings. Id. at 2 (L.M.-M. Decl. ¶ 4). L.M.-M. and her daughters were detained at two separate facilities before they were transferred to the USCIS “detention center in Dilley, Texas on August 13, 2019.” Id. The day after they arrived, L.M.-M. attended a “Know Your Rights presentation” and spoke with a legal assistant from the Dilley Pro Bono Project for less than an hour. Id. at 3 (L.M.-M. Decl. ¶ 8). She continued to confer with the legal assistant for about forty-five minutes after dinner, but her appointment was cut short by the guards before she “finished discussing [her] case.” Id. at 3–4 (L.M.-M. Decl. ¶ 8). That same evening, she was given a “piece of paper” that said she had a meeting scheduled “in the asylum building” at 10:00 a.m. the next morning. Id. at 4 (L.M.-M. Decl. ¶ 9). The paper “did not explain what [her] appointment would be about or any other information about the credible[-]fear process.” Id. L.M.-M. attests that, at her credible-fear interview the next day, she “was unable to talk about [her] fear of [her] abusive partner.” Id. at 4 (L.M.-M. Decl. ¶ 10). She also avers that she “was worn out and tired from the exhaustive intake process the day before as well as the many other appointments and meetings [she] had to attend.” Id. The interviewer determined that L.M.-M. did not have a credible fear of persecution, and that determination was “subsequently affirmed by an Immigration Judge.” Dkt. 22-1 at 23 (Pls.’ SUMF ¶ 151) (citing Dkt. 22-4 at 1 (Supp. L.M.-M. Decl. ¶ 2)). L.M.-M. and her children are currently subject to orders of expedited removal. See id. Like L.M.-M., Plaintiff M.A.-H. is a Honduran national who, along with her minor daughter, Plaintiff I.M.-A., is seeking asylum in the United States. Dkt. 12-4 at 1 (M.A.-H. Decl. ¶ 1). Plaintiff M.A.-H. attests that she “suffered persecution in Honduras” because she supports 12 the “National Party in Honduras;” that she endured “sexual abuse, rape, and physical abuse” while in Honduras; and that she feared that her daughter, who “ha[d] been stalked by . . . MS-13 [gang] members,”1 “would soon be kidnapped, drugged, and raped” in Honduras. Id. at 1–3 (M.A.-H. Decl. ¶¶ 3–9). Upon entering the United States, she and her daughter were detained by immigration officials, placed in expedited removal proceedings, and then transferred to the Dilley Detention Center. Id. at 5–6 (M.A.-H. Decl. ¶¶ 16, 22). M.A.-H. and her daughter “arrived at Dilley on August 21 at 4:00 p.m.” Id. at 6 (M.A.- H. Decl. ¶ 22). She received neither an M-444 form nor an in-person legal orientation. Id. USCIS officials did give her some “documents to sign,” which they assured her “were not legal documents.” Id. She signed the documents even though she was unable to read them, and, because the USCIS officials did not explain what the documents were, she did not understand what she was signing. Id. The next day she attended an orientation about the facility, received a medical examination, and sought a legal appointment—but there were no remaining appointments available that day. Id. at 6–7 (M.A.-H. Decl. ¶ 23). “[A]round 7:00 pm that night,” M.A.-H received a notice informing her that her credible-fear interview would take place at “8:00 am the next morning.” Id. at 7 (M.A.-H. Decl. ¶ 23). At 7:30 a.m., M.A.-H. went to look for a lawyer, but when she found one, the lawyer told her that there was insufficient “time to prepare [for her credible-fear interview] and that [she] should go and ask for more time in order to obtain legal orientation.” Id. (M.A.-H. Decl. ¶ 24). M.A.-H. requested “additional time to prepare and “was given 30 minutes.” Id. (M.A.-H. Decl. ¶ 25). She then returned to the lawyer, who advised her to request 24 hours to prepare, but the asylum officer denied that request and pressed forward with the interview. Id. In addition to being denied the opportunity 1 MS-13 is a transnational criminal organization. See Dkt. 12 at 44. 13 to prepare or to substantively consult with counsel, the short turnaround time between arriving at Dilley and her credible-fear interview prevented M.A.-H. from “sp[eaking] with [her] brother[] or son,” both of whom had “additional information that would have helped [her] explain the circumstances that caused [her] fear and . . . [her] need to leave” Honduras. Id. (M.A.-H. Decl. ¶ 24). Asylum officers determined that M.A.-H. and her minor daughter did not have a credible fear of persecution, and an Immigration Judge affirmed those determinations. Dkt. 22-1 at 27 (Pls.’ SUMF ¶ 188) (citing Dkt. 22-5 (Supp. M.A.-H. Decl. ¶ 13)). As a result, like L.M.-M. and her children, M.A.-H. and her daughter are subject to orders of expedited removal.2 See id. M.A.-H. attests that, due to the Asylum Directives, she did not have an adequate opportunity to prepare for her credible-fear interview and that, with additional time to consult, she “would have understood the process better” and “would have been in a better position to describe the threats facing [her] daughter” and the abuse that she herself had suffered. Dkt. 12-4 at 8 (M.A.-H. Decl. ¶ 26). Plaintiff “RAICES is a . . . non-profit organization headquartered in San Antonio, Texas.” Dkt. 12-5 at 2 (Meza Decl. ¶ 3). Its stated “mission is to defend the rights of immigrants and refugees, empower individuals, families and communities, and advocate for liberty and justice.” Id. (Meza Decl. ¶ 4). Although RAICES accepts “cases of clients in detention centers throughout Texas,” it serves as “the primary non-profit service provider at” the Karnes County Residential Center in Karnes City, Texas (“Karnes”) and “strives to provide free, universal representation through all phases of the immigration process during detention at Karnes.” Id. at 2 Defendants have agreed not to remove any of the named Plaintiffs pending the adjudication of this motion. See Dkt. 8. 14 2–3 (Meza Decl. ¶¶ 4–7). RAICES serves “between 80–95% of the population at Karnes” by, among other things, “conduct[ing] consultations and intakes, prepar[ing] detainees for their credible[-]fear interviews and represent[ing] detainees at their credible[-]fear interviews,” and “appealing negative decisions from their credible[-]fear interviews.” Id. at 3 (Meza Decl. ¶ 6–7). E. Procedural Background The reduced-time-to-consult and prohibition-on-extensions directives took effect on July 8, 2019, see AR 113, and 60 days later, on September 6, 2019, the individual Plaintiffs and RAICES brought this suit, Dkt. 1, alleging that (1) Cuccinelli’s appointment to serve as acting Director of USCIS was unlawful under both the FVRA and the Appointments Clause and that, as a result, the Asylum Directives are invalid; (2) the Asylum Directives are, in any event, contrary to law, including the statutory requirement that USCIS provide asylum applicants with a meaningful opportunity to “consult with a person or persons of the alien’s choosing prior to the [credible-fear] interview,” 8 U.S.C. § 1225(b)(1)(B)(iv), and the regulatory authority of asylum officers freely to reschedule credible-fear interviews whenever the asylum seeker “is unable to participate effectively . . . because of illness, fatigue, or other impediments,” 8 C.F.R. § 208.30(d)(1); (3) the Asylum Directives are arbitrary and capricious; (4) USCIS failed to comply with the APA’s notice-and-comment and advanced-notice requirements; (5) the Asylum Directives violate the Rehabilitation Act, 29 U.S.C. § 701 et seq.; and (6) the Asylum Directives violate the First Amendment by interfering with the ability of the individual Plaintiffs and RAICES to communicate and associate regarding the asylum process. Three weeks after filing their complaint, Plaintiffs moved for a preliminary injunction. Dkt. 12. That motion relies on only four of the claims set forth in the complaint—Plaintiffs’ FVRA challenge to Cuccinelli’s appointment; their contention that the Asylum Directives violate various statutory and regulatory requirements; their claim that the directives are arbitrary and 15 capricious; and their Rehabilitation Act claim. Dkt. 12 at 12. On December 3, 2019, the Court held a hearing on Plaintiffs’ motion for a preliminary injunction. Minute Entry (Dec. 3, 2019). At the hearing, the Court raised the question whether that motion should be treated as an expedited motion for summary judgment, and neither Plaintiffs nor Defendants opposed proceeding in that fashion. Dkt. 24 at 6 (Dec. 3, 2019 Hrg. Tr.). The Court, accordingly, directed that Plaintiffs’ pending motion for a preliminary injunction be treated as a partial motion for summary judgment on counts I, II, IV, and VI of the complaint, see Fed. R. Civ. P. 65(a)(2); Minute Order (Jan. 9, 2020), and set a schedule for Plaintiffs’ to supplement their submission and for Defendants to respond to Plaintiffs’ motion for partial summary judgment, Entry Order (Dec. 3, 2019). Defendants, in turn, cross-moved for partial summary judgment on Counts I and II of the complaint. Dkt. 25 at 8. II. ANALYSIS Before reaching the merits of Plaintiffs’ claims, the Court must determine whether it has jurisdiction. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998). Defendants assert that the Court lacks jurisdiction for several reasons. First, they argue that neither the individual Plaintiffs nor RAICES has Article III standing. Dkt. 17 at 26–30. Second, they contend that RAICES lacks statutory standing to sue under the INA. Id. at 24. Third, they maintain that the Court’s statutory jurisdiction is limited to challenges to “written policy directive[s]” and thus does not include Plaintiffs’ challenge to the discontinuance of the in-person legal orientation program at the Dilley Detention Center. Id. at 25–26. As explained below, the Court agrees with Defendants’ final contention—that the Court lacks statutory 16 jurisdiction over Plaintiffs’ challenge to the in-person-orientation directive.3 But with respect to the reduced-time-to-consult and prohibition-on-extensions directives, the Court concludes that the individual Plaintiffs have Article III standing and that those claims fall within the Court’s statutory jurisdiction. Finally, having reached that conclusion, the Court need not decide whether RAICES also has standing to pursue those same claims and to seek the same relief. See Town of Chester, N.Y. v. Laroe Estates, Inc., 137 S. Ct. 1645, 1651 (2017) (“At least one plaintiff must have standing to seek each form of relief requested.”). Because Defendant’s Article III standing argument turns in part on the scope of the Court’s statutory jurisdiction, the Court begins by addressing Defendants’ arguments concerning that issue. Statutory Jurisdiction Although their arguments are cast in terms of Article III redressability, Defendants posit that the Court lacks statutory jurisdiction under 8 U.S.C. § 1252(e)—or 28 U.S.C. § 1331—to review an order of expedited removal, except under limited circumstances not present here. Dkt. 17 at 30. That argument rests on the premise that IIRIRA “does not authorize review of a credible-fear determination once an order of expedited removal has issued.” Id. Plaintiffs disagree and argue instead that asylum seekers subject to expedited removal orders may “challenge the policies by which [their expedited] orders [of removal] were issued.” Dkt. 19 at 11. The plain text of the statute and instructive D.C. Circuit precedent confirm that Plaintiffs have the better argument. That conclusion is not a total victory for Plaintiffs, however. Rather, 3 Earlier in the proceeding, Defendants also argued that the claims brought by two additional plaintiffs, S.G.-C and B.O.-G, were moot because their negative credible-fear determinations were overturned. Dkt. 17 at 22. That point was well taken. After oral argument on Plaintiffs’ motion for a preliminary injunction, Plaintiffs voluntarily dismissed those Plaintiffs from the case pursuant Federal Rule of Civil Procedure 41(a)(1)(A)(i). Dkt. 23. 17 as explained below, Defendants are correct that the Court lacks statutory jurisdiction over one of Plaintiffs’ challenges. IIRIRA expressly contemplates that its expedited removal provision, 8 U.S.C.§ 1225(b), and the regulations and policies adopted to implement that provision, might be subject to judicial challenge. The statute thus permits “judicial review of the . . . [expedited removal] system” and its implementing regulations and policies, Am. Immigration Lawyers Ass’n v. Reno, 199 F.3d 1352, 1354 (D.C. Cir. 2000) (hereinafter “AILA”), but (1) limits the scope of relief available in habeas corpus and (2) channels and sets time limits on systemic challenges to the expedited removal system and the regulations and written guidance that implement it, see 8 U.S.C.§ 1252(e). Defendants contend that this provision precludes the Court from redressing the individual Plaintiffs’ injuries because, “once an order of expedited removal has issued,” an alien may obtain judicial review only in limited circumstances not applicable here. Dkt. 17 at 30. That contention fails for several reasons. The Court’s analysis of the meaning IIRIRA’s channeling provision is guided by the “familiar principle of statutory construction: the presumption favoring judicial review of administrative action.” Kucana v. Holder, 558 U.S. 233, 251 (2010). Under that principle, which the courts have “consistently applied to legislation regarding immigration, and particularly to questions concerning the preservation of federal-court jurisdiction,” if “a statute is reasonably susceptible to divergent interpretation,” courts must “adopt the reading that accords with the traditional understanding[]” that “executive determinations are generally subject to judicial review.” Id. (internal quotations omitted). Here, far from unambiguously foreclosing judicial review, IIRIRA’s channeling provision, § 1252(e), is best read to permit individual asylum seekers expeditiously to bring systemic challenges to IIRIRA’s expedited removal provision and 18 its implementing regulations and policies, even if those individuals are subject to final orders of removal. The Court begins with the text of the statute. See BP Am. Prod. Co. v. Burton, 549 U.S. 84, 91 (2006). Defendants are correct that IIRIRA divests courts of jurisdiction to review “any individual determination or to entertain any other cause of action or claim arising from or relating to the implementation or operation of an order” of expedited removal, except as provided in 8 U.S.C. § 1252(e). See 8 U.S.C. § 1252(a)(2)(A)(i). It is also true that “no court shall have jurisdiction to review” any “procedures and policies adopted” by USCIS “to implement the” expedited review provisions of the IIRIRA, except as provided in 8 U.S.C. § 1252(e). Id. § 1252(a)(2)(A)(iv). Defendants incorrectly assert, however, that § 1252(e) permits this Court to consider only “whether the petitioner is an alien, whether the petitioner was actually ordered removed, or whether the petitioner can provide that he or she was lawfully admitted as a permanent resident, refugees, or asylee.” Dkt. 17 at 30. Implicit in Defendants’ argument is the suggestion that § 1252(e)(2)—the provision governing “habeas corpus proceedings”—constitutes the exclusive avenue of judicial recourse once the affected person is subject to an order of expedited removal. But that premise ignores the very next paragraph of § 1252(e)—entitled “challenges on validity of the system”—which provides for judicial review of systemic challenges to the expedited removal system and its implementing regulations or written policies. Section 1252(e)(3) provides, in relevant part: (A) In general Judicial review of determinations under section 1225(b) of this title and its implementation is available in an action instituted in the United States District Court for the District of Columbia, but shall be limited to determinations of— 19 (i) whether such section, or any regulation issued to implement such section, is constitutional; or (ii) whether such a regulation, or a written policy directive, written policy guideline, or written procedure issued by or under the authority of the Attorney General to implement such section, is not consistent with applicable provisions of this subchapter or is otherwise in violation of law. (B) Deadlines for bringing actions Any action instituted under this paragraph must be filed no later than 60 days after the date the challenged section, regulation, directive, guideline, or procedure . . . is implemented. 8 U.S.C. § 1252(e)(3).4 Under § 1252(e)(3), a court has jurisdiction to review “determinations” made in the expedited removal context if three conditions are satisfied: First, the plaintiff must challenge the constitutionality or lawfulness of § 1225(b)—IIRIRA’s expedited removal provision—or the constitutionality or lawfulness of “a regulation, written policy directive, written policy guidance, or written procedure” adopted to implement that provision. 8 U.S.C. § 1252(e)(3)(A). Second, the challenge must be “instituted in the United States District Court for the District of Columbia.” Id. Third, the action “must be filed no later than 60 days after the date the challenged section, regulation, directive, guidance, or procedure . . . is first implemented.” Id. § 1252(e)(3)(B). 4 Although IIRIRA refers to actions taken “by or under the authority of the Attorney General,” 8 U.S.C. § 1252(e)(3), those authorities were transferred to the Department of Homeland Security and USCIS following the creation of those agencies and the reassignment of responsibility for implementing the immigration laws from the INS to the Department of Homeland Security and USCIS. See, e.g., Homeland Security Act of 2002, Public Law 107–296, § 451(b)(3), 116 Stat. 2135, 2196 (transferring “function” of “adjudications of asylum . . . applications” from the Commissioner of the INS to the Director of the Bureau of Citizenship and Immigration Services, which eventually became USCIS). 20 With one exception discussed below, the individual Plaintiffs’ claims satisfy all three conditions. Plaintiffs brought this action in the correct jurisdiction within 60 days of issuance of the Asylum Directives. The directives set forth in the July 2 memorandum were implemented on July 8, 2019, see AR 113, and Plaintiffs filed suit in this Court 60 days later, on September 6, 2019. Dkt. 1. The suit also challenges the lawfulness of two “written policy directive[s],” “policy guideline[s],” or “procedure[s],” 8 U.S.C. § 1252(e)(3)(A)(ii)—the reduced-time-to- consult and prohibition-on-extensions directives are memorialized in the July 2 memorandum and are also reflected in USCIS’s “Credible Fear Procedures Manual.” AR 113–17. Thus, the individual Plaintiffs’ claims fall squarely within the plain terms of § 1252(e)(3). Had Congress intended to close the door to judicial review on aliens who are subject to final orders of expedited removal even when their challenges satisfy the requirements of § 1252(e)(3)—as Defendants contend—it knew how to say so. Section 1252(a)(2)(C), for example, provides that, with an exception not relevant here, “no court shall have jurisdiction to review a final order of removal against an alien who is removable by reason of having committed” certain criminal offenses. 8 U.S.C. § 1252(a)(2)(C). Although Congress provided that “no Court shall have jurisdiction to review . . . any individual determination or to entertain any other cause or claim arising from or relating to the implementation or operation of an [expedited] order of removal,” it included an express carve out for claims brought “as provided in [§ 1252(e)].” Id. § 1252(a)(2)(i); see also id. § 1252(a)(5) (reiterating the carve out for challenges pursuant to 8 U.S.C. § 1252(e)). Thus, the statute expressly contemplates that aliens may seek judicial review of written directives implementing the expedited removal system if the aliens satisfy the conditions set out in § 1252(e). See AILA, 199 F.3d at 1360 (“Congress meant to allow litigation challenging the [expedited removal] system by. . . aliens against whom the 21 [expedited removal] procedures had been applied”). The individual Plaintiffs’ challenge is just such an action. Defendants’ contention that § 1252(e) strips the Court of jurisdiction over the individual Plaintiffs’ challenge is also is at odds with the D.C. Circuit’s decision in American Immigration Lawyers Association v. Reno, 199 F.3d 1352 (D.C. Cir. 2000), a case that Defendants trumpet in support of their contention that RAICES lacks statutory standing. See, e.g., Dkt. 17 at 23. In AILA, the D.C. Circuit addressed a challenge to the expedited removal provision and its implementing regulations by immigrants’ rights organizations and by individual aliens on the ground that the statute and regulations violated the constitutional and statutory rights of the individual plaintiffs and of unnamed aliens who might someday be subject to them. 199 F.3d at 1357. The D.C. Circuit affirmed the district court’s dismissal of the individual plaintiffs on the ground that they filed suit after the 60-day period established by § 1252(e)(3) had expired. Id. That left, then, only the claims of the organizational plaintiffs. As to those claims, the D.C. Circuit rejected the contention that the organizational plaintiffs had standing to sue on behalf of aliens—who, according to the plaintiffs in that case, could not protect their own rights—because “nothing [would] prevent[]” “an alien returned to his native country” from bringing a systemic challenge to IIRIRA and its implementing regulations, so long as suit was brought within 60 days. Id. at 1362–63. But, if Defendants were correct that an alien ordered removed under § 1225(b) may sue only under § 1252(e)(2), that pillar of AILA would fall. Indeed, if Defendants were right, it is difficult to imagine when, if ever, anyone could bring a systemic challenge under § 1252(e)(3). Defendants do advance one persuasive argument, however. That argument takes aim at Plaintiffs’ challenge to the portion of the Asylum Directives that, Plaintiffs say, discontinued 22 USCIS’s policy of “providing an oral, in-person legal orientation to those detained at the Dilley Detention Center.” See Dkt. 1 at 47 (Compl. ¶ 155). As Defendants note, the problem with Plaintiffs’ challenge to the in-person-orientation directive is that § 1252(e)(3)(A)(ii) only provides this Court with jurisdiction to review “written policy directive[s], written policy guideline[s], or written procedure[s],” 8 U.S.C. § 1252(e)(3)(A)(ii) (emphasis added), and, according to the declaration of USCIS’s Deputy Chief of the Asylum Division, “USCIS has not promulgated, authorized or implemented any written policy that there shall not be an in person legal orientation for individuals seeking asylum at the Dilley Family Residential Center or any other location.” Dkt. 17-1 at 3 (Caudill-Mirillo Decl. ¶ 4) (emphasis added). The Court “must give effect, if possible, to every . . . word of [the] statute,” Williams v. Taylor, 529 U.S. 362, 404 (2002) (internal quotations and citations omitted), and, accordingly, cannot read § 1252(e)(3)(A) to reach “unwritten actions” of USCIS, see Khan v. Holder, 608 F.3d 325, 331 (7th Cir. 2010) (observing that § 1252(e)(3) bars review of “unwritten action” and expressing concerns about Congress’s decision to immunize unwritten action from judicial review); American Immigration Lawyers Association v. Reno, 18 F. Supp. 2d 38, 57–58 (D.D.C. 1998), aff’d, 199 F.3d 1352 (same). That conclusion forecloses Plaintiffs’ challenges to the in-person-orientation directive. Article III Standing “Because Article III limits federal judicial jurisdiction to cases and controversies, see U.S. Const. art. III, § 2, federal courts are without authority” to decide disputes unless the plaintiff has standing—that is, “a personal stake in the outcome of the controversy [sufficient] to warrant [her] invocation of federal-court jurisdiction.” Chamber of Commerce v. EPA, 642 F.3d 192, 199 (D.C. Cir. 2011) (quoting Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). “[T]he irreducible constitutional minimum of standing contains three elements”—injury in fact, causation, and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). First, 23 injury in fact requires “an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) actual or imminent, not conjectural or hypothetical.” Id. (internal quotations and citation omitted). Second, causation requires a “causal connection between the injury and the conduct complained of.” Id. That is, the injury must be “fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.” Id. (citation omitted) (internal quotes omitted). Finally, redressability requires a “likel[ihood], as opposed to mere speculati[on], that the injury will be redressed by a favorable decision.” Id. at 561 (citation omitted) (internal quotes omitted). “The party invoking federal jurisdiction bears the burden of establishing these elements,” and the manner and degree of proof required varies based on the stage of the ligation. Id. Defendants do not dispute that the Asylum Directives limited the time the individual Plaintiffs had to prepare and to consult before their credible-fear interviews took place. Instead, they argue that the individual Plaintiffs allege a violation of their “procedural” rights—their rights to have an opportunity meaningfully to consult with others and to prepare before their credible-fear interviews—but have failed to show that they have suffered any concrete injury as a result of that alleged procedural violation. See Dkt. 17 at 27. In other words, according to Defendants, the individual Plaintiffs “have not offered any tangible proof that the July 2 changes to the consultation period and the standard governing continuances would have had any impact on the outcome of their credible-fear interviews,” id., and have therefore failed to “satisfy the traceability [and] redressability” elements of Lujan, id. Defendants’ argument misunderstands how standing is analyzed in procedural-rights cases. Although every case brought in an Article III court must satisfy the three “irreducible” elements of standing, a “person who has been accorded a procedural right to protect his concrete 24 interests can assert that right without meeting all the normal standards for redressability and immediacy.” Lujan, 504 U.S. at 572 n.7. Thus, for example, a person “living adjacent to the site for proposed construction of a federally licensed dam has standing to challenge the licensing agency’s failure to prepare an environmental impact statement, even though he cannot establish with any certainty that the statement will cause the license to be withheld or altered, and even though the dam will not be completed for many years.” Id. That scenario, as the Supreme Court has explained, is very different from a case in which the plaintiff does not live near—and has no plans to live near—the hypothetical dam. Id. As a starting point, a party asserting a procedural right must—like any other plaintiff— identify a “particularized injury” resulting from the government’s contemplated action. See Fla. Audubon Soc’y v. Bentsen, 94 F.3d 658, 664 (D.C. Cir. 1996) (en banc). Here, because the individual Plaintiffs sought and were denied asylum through allegedly unlawful procedures, they have identified a “particularized” and “concrete” interest. See Hotel & Rest. Emps. Union, Local 25 v. Smith, 846 F.2d 1499, 1502 (D.C. Cir. 1988) (en banc) (observing that individuals suffer an injury in fact if their “asylum claims have been processed in [an] illegal manner”); see generally Judicial Watch, Inc. v. U.S. Senate, 432 F.3d 359, 363–66 (D.C. Cir. 2005) (Williams, J., concurring) (explaining that, as a general matter, a “judicially cognizable” interest satisfies Lujan’s “injury in fact” requirement). It is difficult to imagine an interest more “particularized” than a person’s interest in seeking asylum and avoiding the risk of deportation. Cf. INS v. Cardoza-Fonseca, 480 U.S. 421, 449 (1987) (“Deportation is always a harsh measure; it is all the more replete with danger when the alien makes a claim that he or she will be subject to death or persecution if forced to return to his or her home country.”). 25 The individual Plaintiffs have also satisfied the causation prong of Lujan. To establish causation in a procedural-rights case, the plaintiff must establish “two causal links: ‘one connecting the omitted [procedural step] to some substantive government decision that may have been wrongly decided because of the lack of [that procedural requirement] and one connecting that substantive decision to the plaintiff’s particularized injury.’” Ctr. for Biological Diversity v. EPA, 861 F.3d 174, 184 (D.C. Cir. 2017) (quoting Fla. Audubon Soc’y, 94 F.3d at 668). “Importantly, with respect to the first link, the party . . . need not show that but for the alleged procedural deficiency the agency would have reached a different substantive result.” Id. Rather, the plaintiff need establish only “that the procedural step was connected to the substantive result.” Id. (quoting Sugar Cane Growers Co-op. of Fla. v. Veneman, 289 F.3d 89, 94 (D.C. Cir. 2002)). Here, uncontroverted declarations proffered by the individual Plaintiffs establish that the denial of their asserted right to consult and to prepare for their credible-fear interviews was “connected to the substantive result.” Ctr. for Biological Diversity, 861 F.3d at 184 (citation omitted). As one Plaintiff explains, if she “had more time to prepare for the interview, [she] would have spoken with the Dilley Pro Bono Project and [she] would have understood the process better.” Dkt. 12-4 at 8 (M.A.-H. Decl. ¶ 26). She “would have been in a better position to describe the threats facing [her] daughter, which include[d] being kidnapped and trafficked by transnational criminal organizations” and would have been able to speak with her brother or son, both of whom had “additional information that would have helped [her] explain the circumstances in Honduras that caused [her] fear and [her] need to leave” Honduras. Id. (M.A.- H. Decl. ¶¶ 24, 26–27). With respect to the second link, the party seeking to establish standing in a procedural-rights case must “demonstrate a causal connection between the agency action and 26 the alleged injury.” Ctr. for Biological Diversity, 861 F.3d at 184 (quoting City of Dania Beach, Fla. v. FAA, 485 F.3d 1181, 1186 (D.C. Cir. 2007)). That requirement is also easily satisfied here. But for the asylum officers’ determinations that the individual Plaintiffs did not have a credible fear of persecution, they would have been “detained for further consideration of [their] application[s] for asylum.” 8 U.S.C. § 1225(b)(1)(B)(ii). The individual Plaintiffs’ alleged injuries are also redressable under the “relaxed redressability requirement” that applies in procedural-rights cases. Ctr. for Biological Diversity, 861 F.3d at 185 (quoting WildEarth Guardians v. Jewell, 738 F.3d 298, 306 (D.C. Cir. 2013)). Under that standard, the individual Plaintiffs “need not show that compliance with” the rules that preceded promulgation of the Asylum Directives “would alter the” results of the credible-fear interviews. Id. (quoting Nat’l Parks Conservation Ass’n v. Manson, 414 F.3d 1, 5 (D.C. Cir. 2005)). Rather, they need establish only “that a revisitation of” the credible-fear inquiry “could reach a different conclusion.” Id. They have done so. Both of the adult individual Plaintiffs have offered declarations detailing additional, pertinent information that they would like to present and have attested that they did not present this information because the Asylum Directives deprived them of adequate time to confer with others. See Dkt. 12-3 at 5 (L.M.-M Decl. ¶ 13); Dkt. 12-4 at 8 (M.A.-H. Decl. ¶ 26). It is possible that, if given another chance, the individual Plaintiffs will fare no better than they did the first time. The Court, however, need decide only whether an asylum officer “could reach a different conclusion” with the additional information, and that undemanding test is satisfied on the present record.5 5 Defendants may not rely on the contention that Plaintiffs’ claims are not redressable because the individual Plaintiffs are subject to expedited orders of removal. Dkt. 17 at 30. As explained above, Defendants are incorrect —at least with respect to the reduced-time-to-consult and prohibition-on-extensions directives—that § 1252(e) strips this Court of jurisdiction to review the individual Plaintiffs’ claims. 27 Plaintiffs’ FVRA challenge adds a twist to the Court’s standing analysis. If the Court were to hold that Cuccinelli was appointed in violation of the FVRA, USCIS might reinstate the Asylum Directives under the authority of a properly appointed official. That concern, however, is answered by an array of decisions from the Supreme Court, the D.C. Circuit, and this Court reaching the merits of challenges to actions “taken by . . . government official[s] on the ground that the official invalidly [held] office,” Andrade v. Lauer, 729 F.2d 1475, 1494 (D.C. Cir. 1984) (collecting cases), even when a properly appointed official might have reimposed the challenged action. Notably, the Supreme Court and the D.C. Circuit reached the merits in SW General, Inc. v. NLRB, 796 F.3d 67 (D.C. Cir. 2015), aff’d, 137 S. Ct. 929, a case—like this one—involving a challenge to an appointment under the FVRA. And although those decisions did not expressly address standing, other, similar decision have done so. See, e.g., State Nat’l Bank of Big Spring v. Lew, 795 F.3d 48, 53 (D.C. Cir. 2015) (holding that a bank had standing to challenge the recess appointment of the Director of the Consumer Financial Protection Bureau because the bank was regulated by that agency); Olympic Fed. Sav. & Loan Ass’n v. Director, Office of Thrift Supervision, 732 F. Supp. 1183, 1188–89 (D.D.C. 1990) (holding that the plaintiff’s challenge to the appointment of the agency director and acting director was redressable, even though the plaintiff faced a continuing “threat of government intervention” by other officials). Even setting this precedent aside, however, any redressability question raised by the individual Plaintiffs’ FVRA claim is put to rest by the principle that courts must assume, for purposes of assessing standing, that the Plaintiffs will prevail on the merits. See Cutler v. U.S. Dep't of Health & Human Servs., 797 F.3d 1173, 1179–80 (D.C. Cir. 2015) (observing that a court “must assume that the party asserting federal jurisdiction is correct on the legal merits of his claim,” including “that the requested relief would be granted” (internal quotation omitted)). 28 Plaintiffs’ FVRA claim does not merely assert that Cuccinelli’s appointment was improper. It also posits that, under the FVRA, the directives “shall have no force or effect,” 5 U.S.C. § 3348(d)(1), and, that a properly appointment official may not ratify the directives, id. § 3348(d)(2), see Dkt. 28 at 17–21 (arguing that the FVRA requires vacatur of the Asylum Directives and precludes ratification). If Plaintiffs are right about the FVRA’s meaning, as the Court must assume for present purposes, the individual Plaintiffs will likely be entitled to new credible-fear interviews and will be able to take advantage of the additional time to prepare that they have now received. As a result, the individual Plaintiffs’ FVRA claims redressable. * * * The Court, accordingly, concludes that it has statutory jurisdiction over the individual Plaintiffs’ claims and that they have Article III standing. Having reached that conclusion, the Court need not decide whether RAICES also has standing to pursue those same claims and to seek the same relief. See Town of Chester, N.Y., 137 S. Ct. at 1651 (“At least one plaintiff must have standing to seek each form of relief requested in the complaint.”). Should subsequent developments suggest that the scope of relief available to the individual Plaintiffs and RAICES differs, the Court can return to the jurisdictional questions regarding RAICES’s challenges. Merits Plaintiffs challenge the Asylum Directives on a variety of grounds, several of which carry considerable force.6 The Court need reach only one of those grounds, though, because it is sufficient to resolve the case. That challenge asserts that the Asylum Directives were issued by 6 In light of the Court’s conclusion that it lacks statutory jurisdiction to consider Plaintiffs’ challenge related to the in-person-orientation directive, the Court will use the phrase “Asylum Directives” to refer only to the reduced-time-to-consult and prohibition-on-extensions directives for the remainder of this opinion. 29 Cuccinelli in his capacity as acting Director of USCIS; that Cuccinelli was not lawfully appointed to that position under the FVRA and thus lacked the authority to issue the Directives; and that, accordingly, the Directives are invalid and without legal force or effect. As explained below, the Court agrees and will, accordingly, set aside the reduced-time-to-consult and prohibition-on-extensions directives. 1. Constitutional and Statutory Framework The Appointments Clause provides that the President “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint . . . Officers of the United States,” unless “the Congress . . . by Law vest[s] the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of the Departments.” U.S. Const. art. II, § 2, cl. 2. Principal officers, in other words, must be appointed by the President, with the advice and consent of the Senate, and inferior officers must be appointed in that same manner, unless Congress supplants that default rule by vesting the appointment power in the President, a court, or a department head. Edmond, 520 U.S. at 660. Here, the parties do not dispute that the Director of USCIS is an “officer[],” and “not mere[ly] [an] employee[]” of the agency, see Lucia v. SEC, 138 S. Ct. 2044, 2052 (2018), and they do not contend that Congress specified an alternative appointment process. As a result, the default rule applies, and only the President, with the advice and consent of the Senate, may appoint someone to serve in that position. The fact that an officer holds a PAS office does not mean, however, that one who performs the duties of that office in an acting capacity is also a PAS officer. The Supreme Court has long recognized that, when a “subordinate officer is charged with the performance of the duty of the superior for a limited time, and under special and temporary conditions, he is not thereby transformed into the superior and permanent official.” United States v. Eaton, 169 U.S. 331, 343 (1898). Consistent with this understanding, Congress has provided the Executive 30 Branch with the means of filling vacancies in PAS offices on a temporary basis since the earliest days of the Republic. See SW General, Inc., 137 S. Ct. at 935; Thomas A. Berry, S.W. General: The Court Reins in Unilateral Appointments, 2017 Cato Sup. Ct. Rev. 151, 153 (hereinafter “Berry, Unilateral Appointments”). Although Congress enacted the first of these laws in 1792, see Act of May 8, 1792, ch. 37, § 8, 1 Stat. 281; see also SW General, Inc., 137 S. Ct. at 935 (quoting same), and enacted a series of related laws over the next seven decades, see, e.g., Act of Feb. 13, 1795, ch. 21, 1 Stat. 415; Act of Feb. 20, 1863, ch. 45, 12 Stat. 656, it did not enact the first comprehensive “Vacancies Act” until 1868, SW General, Inc., 137 S. Ct. at 935 (citing Act of July 23, 1868, ch. 227, 15 Stat. 168). The 1868 Act “expanded the number of PAS offices that the President could fill with acting officers,” and, of particular relevance here, it adopted “a default rule that the ‘first or sole assistant . . . shall’ perform” the functions of the vacant office, “with an exception allowing the President to instead fill the post with a person already serving in a PAS office.” SW General, Inc., 137 S. Ct. at 935. Although the Vacancies Act has been “amended several times over the subsequent decades,” it has retained the “core structure” established by the 1868 Act. See Berry, Unilateral Appointments, at 154. The current iteration of the Vacancies Act, the FVRA, follows that structure. It provides that a vacancy in a PAS office can be filled in one of three ways. First, absent action by the President, “the first assistant to the office of such officer [who has died, resigned, or is otherwise unable to perform the functions and duties of the office] shall perform the functions and duties of the office temporarily in an acting capacity,” subject to certain limitations. 5 U.S.C. § 3345(a)(1) (emphasis added). Second, “the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with 31 the advice and consent of the Senate, to perform the functions and duties of the vacant office,” again subject to certain limitations. Id. § 3345(a)(2). Third, “the President (and only the President) may direct an officer or employee of” the agency experiencing the vacancy “to perform the functions and duties of the vacant office,” but only if that individual served in a senior position in that agency for at least 90 days “during the 365-day period preceding” the occurrence of the vacancy. 7 Id. § 3345(a)(3). 2. Application of the FVRA to Cuccinelli’s Appointment The parties agree that the question whether Cuccinelli was lawfully appointed to serve as the acting Director of USCIS is answered, one way or another, by the FVRA. Within that framework, the parties focus their arguments on the question whether, as Plaintiffs contend, see Dkt. 12 at 34, the first-assistant default rule applies only to individuals serving as first assistants at the time the vacancy arises or, as Defendants contend, see Dkt. 17 at 38, the default rule also applies to individuals first appointed to the position of first assistant after the vacancy in the PAS office arises. That dispute poses a difficult question that the Office of Legal Counsel has answered differently at different times, compare 23 Op. O.L.C. 60, 63–64 (1999) (“the better understanding is that you must be the first assistant when the vacancy occurs in order to be the acting officer by virtue of being the first assistant”), with 25 Op. O.L.C. 177, 179–80 (2001) (rejecting that view), and that the courts have not had the occasion to resolve, see SW General, Inc., 796 F.3d at 76 (“Although we do not decide its meaning today,” the default rule “may refer to the person who is serving as first assistant when the vacancy occurs”). Now is not the time to 7 Specifically, the employee must be employed in a position for which the rate of pay “is equal to or greater than the minimum rate of pay payable for a position at GS–15 of the General Schedule.” 5 U.S.C. § 3345(a)(3)(B). 32 resolve that question because Cuccinelli’s appointment fails to comply with the FVRA for a more fundamental and clear-cut reason: He never did and never will serve in a subordinate role—that is, as an “assistant”—to any other USCIS official. For this reason alone, Defendants’ contention that his appointment satisfies the FVRA cannot be squared with the text, structure, or purpose of the FVRA. The Court starts, as it must, the with the statutory text. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999). The FVRA provides in relevant part: (a) If an officer of an Executive agency . . . whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate, dies, resigns, or is otherwise unable to perform the functions and duties of the office— (1) the first assistant to the office of such officer shall perform the functions and duties of the office temporarily in an acting capacity subject to the time limitations of section 3346; (2) notwithstanding paragraph (1), the President (and only the President) may direct a person who serves in an office for which appointment is required to be made by the President, by and with the advice and consent of the Senate, to perform the functions and duties of the vacant office temporarily in an acting capacity subject to the time limitations of section 3346; or (3) notwithstanding paragraph (1), the President (and only the President) may direct an officer or employee of such Executive agency to perform the functions and duties of the vacant office temporarily in an acting capacity, subject to the time limitations of section 3346, if— (A) during the 365-day period preceding the date of death, resignation, or beginning of inability to serve of the applicable officer, the officer or employee served in a position in such agency for not less than 90 days; and (B) the rate of pay for the position described under subparagraph (A) is equal to or greater than the minimum rate of pay payable for a position at GS-15 of the General Schedule. 33 5 U.S.C. § 3345(a). Here, because the acting Secretary—and not the President—directed that Cuccinelli serve as the acting Director, and because he did not hold another PAS position at the time of his designation and had not previously served as an officer or employee of the Department of Homeland Security or USCIS, §§ 3345(a)(2) and (a)(3) are plainly inapt. Plaintiffs’ challenge to Cuccinelli’s status as acting Director of USCIS, accordingly, rises or falls based on whether Cuccinelli was “the first assistant to the office of [the] officer” who resigned— that is, the office of former-USCIS Director Cissna. Because the FVRA does not provide a statutory definition of the phrase “first assistant,” see Federal Vacancies Reform Act of 1998, S. Rep. No. 105-250 at 12 (July 15, 1998) (hereinafter “Senate Report”), the Court must construe that phrase “in accordance with its ordinary or natural meaning,” FDIC v. Meyer, 510 U.S. 471, 476 (1994). Defendants contend that Cuccinelli’s service as acting USCIS Director is lawful “by dint of his appointment as Principal Deputy Director.” Dkt. 17 at 46. That argument, however, fails to confront the essential meaning of the word “assistant,” which under any plausible construction comprehends a role that is, in some manner and at some time, subordinate to the principal. An “assistant” is “one who acts as a subordinate to another or as an official in a subordinate capacity.” Assistant, Webster’s Third New International Dictionary at 132 (1993). A “first assistant,” in turn, is the senior or principal assistant to the official or office at issue—in other words, the assistant who is “foremost in rank” or the “chief” assistant. First, Webster’s Third New International Dictionary at 856 (1993). Thus, although the “first assistant” holds a rank senior to other “assistants,” he remains an “assistant” to the principal. Under that commonsense understanding of the meaning of the default provision, Cuccinelli does not qualify as a “first assistant” because he was assigned 34 the role of principal on day-one and, by design, he never has served and never will serve “in a subordinate capacity” to any other official at USCIS. Defendants fail to address this fundamental problem with Cuccinelli’s designation. Instead, they argue that the default rule does not require that an individual have served as the assistant to the particular PAS officeholder who left, thereby creating the vacancy; it is enough, in their view, that the acting official hold an office that is subordinate to the PAS office, even if that office was vacant at the time of the acting official assumed the position of “first assistant.” Dkt. 17 at 38–39. As noted above, the soundness of that contention is far from settled. But, for present purposes, the Court need not decide that question because, even under Defendants’ reading of the statute, Cuccinelli does not hold an office that was or that ever will serve as the “first assistant” to the office of the USCIS Director. The office of Principal Deputy Director was created after the vacancy in the office of the Director arose; that office was nominally designated as the office of the “first assistant” to the Director after the vacancy arose; and it will cease to exist as the office of the “first assistant” as soon as the PAS vacancy is filled. See Dkt. 17-4 at 5, 7 (Blackwell Decl., Ex. 1, Ex. 2). Cuccinelli may have the title of Principal Deputy Director, and the Department of Homeland Security’s order of succession may designate the office of the Principal Deputy Director as the “first assistant” to the Director. But labels—without any substance—cannot satisfy the FVRA’s default rule under any plausible reading of the statute.8 Defendants make a second argument that fails for the same reason. That argument focuses on § 3345(b)(1), which provides as follows: 8 To borrow from a long-running riff on the television show The Office, there may well be a difference between one who serves as “the assistant regional manager” and “the assistant to the regional manager.” But either way, that person is, at best, second in command. Here, the acting Secretary created a position that is second in command in name only. 35 (1) Notwithstanding subsection (a)(1), a person may not serve as an acting officer under this section, if— (A) during the 365-day period preceding the date of the death, resignation, or beginning of inability to serve, such person— (i) did not serve in the position of first assistant to the office of such officer; or (ii) served in the position of first assistant to the office of such office for less than 90 days; and (B) the President submits a nomination of such person to the Senate for appointment to such office. 5 U.S.C. § 3345(b)(1). Subject to an exception not relevant here, this provision prevents a person from serving “as an acting official while nominated to fill the [vacant] office if the person was not the first assistant to the office for at least 90 of the 365 days preceding the vacancy.” SW General, Inc., 137 S. Ct. at 950 (Sotomayor, J., dissenting). Defendants contend that § 3345(b)(1) makes sense only if it is possible for someone who is appointed to serve as the first assistant after the vacancy arose to serve in an acting capacity under § 3345(a)(1). Otherwise, Defendants contend, there was no reason for Congress to declare that, “[n]otwithstanding subsection (a)(1),” a first assistant who is nominated by the President to fill the PAS position may not serve as the acting officer if he did not serve as the first assistant “during the 365-day period preceding the date of the” vacancy. See Dkt. 17 at 42. That contention reads too much into the “notwithstanding” clause, which is merely a clarifying clause that does not speak to the scope of § 3345(a)(1). See SW General, Inc., 137 S. Ct. at 941 (“The ‘notwithstanding’ clause simply shows that (b)(1) overrides (a)(1), and nothing more.”). But, more importantly, like the preceding argument, even if it were sound it would be unavailing on the facts of this case. That is, even if Defendants were correct, and § 3345(b)(1)(A) implied that the first-assistant default rule found in § 3345(a)(1) includes those chosen to serve as first 36 assistants after the relevant vacancy arose, that would not solve Defendants’ difficulty in this case because Cuccinelli was never and will never be the “assistant” to anyone or any office at USCIS—before or after the vacancy arose. Historical practice can, at times, aid in defining phrases that Congress has used and reused in a series of statutory enactments. Nothing in the historical record of the Vacancies Act, however, counsels in favor of construing the phrase “first assistant” to include those who hold the title of “first assistant” but occupy an office that, in actuality, was not, is not, and never will be subordinate to the principal office. To the contrary, as recently as 1978, the Department of Justice “interpreted the term ‘first assistant’ as applying only to officials whose appointment has been specifically provided for by statute,” 2 Op. O.L.C. 113, 115 n.5 (citing 19 Op. A.G. 503 (1890); 28 Op. A.G. 95 (1909)); see also Doolin Sav. Bank, 139 F.3d at 209 n.3—that is, those who hold an office that Congress created as subordinate to the principal office, see, .e.g., 31 U.S.C. § 301 (establishing a Deputy Secretary of the Treasury and providing that the deputy shall carry out the duties and powers of the Secretary “when the office of Secretary is vacant”). To be sure, by the time Congress enacted the FVRA a practice had developed of designating some first assistants by regulation, and Congress was apparently aware of that practice. See Senate Report at 12 (“Other departments and agencies have established first assistants by regulation”); see also 23 Op. O.L.C. 60, 63 (1999). But those offices, like “first assistant” offices created by statute, existed before the principal office was vacated and continued to exist after that vacancy was filled. At oral argument, the Court asked counsel for Defendants whether, prior to enactment of the FVRA, there was any example of a person that became the “first assistant” to a PAS office after it became vacant (i.e., a “post-vacancy” first assistant) and thereby assumed the duties of 37 the vacant PAS office. Dkt. 24 at 98–99 (Mot. Hr’g Tr. 98:19–99:4). Defendants answered the Court’s question in their supplemental brief, asserting that “the historical record prior to the FVRA’s enactment does not reveal a substantial practice of naming post-vacancy first assistants under the Vacancies Act.” Dkt. 25 at 18 n.4. The absence of a “substantial practice” is putting it mildly—in fact, Defendants failed to identify a single example of a post-vacancy first assistant serving in an acting capacity prior to enactment of the FVRA. That history casts some doubt on whether Congress intended the phrase “first assistant” to encompass those appointed to the first- assistant position after the vacancy arose. But this case goes far beyond that scenario and pushes doubt to disbelief. There is no evidence that at any time prior to Cuccinelli’s appointment did Congress or the Executive Branch imagine that an agency could create a new position after a vacancy arose; could then alter the agency’s order of succession to treat that new position as the “first assistant” to the vacant office; and could further specify that all would return to its original state once the PAS vacancy was filled. The structure and purpose of the FVRA further confirm that Cuccinelli was not lawfully designated to serve as the acting Director of USCIS. See Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2364 (2019) (court must “careful[ly] examin[e]” the “structure of the law itself”). The operative provisions of the FVRA take the following form: “The general rule is that the first assistant to the vacant office shall [automatically] become the acting officer.” SW General, Inc., 137 S. Ct. at 934–35. That default rule controls, except under two strictly defined circumstances. First, “the President (and only the President) may direct” that another PAS official temporarily perform the functions of the vacant office. 5 U.S.C. § 3345(a)(2). That is a limited group of potential designees; it is a group that has already passed the tests of Senate confirmation and presidential appointment; and the President must take personal responsibility 38 for the designation.9 Second, “the President (and only the President) may direct an officer or employee of” the agency to temporarily perform the functions of the vacant office but only if that “officer or employee” worked at the agency for at least 90 days in the year before the vacancy arose and did so in a senior capacity (payable at least at the GS-15 level). 5 U.S.C. § 3345(a)(3). That is also a limited group; it is a group that is likely to include officials with both experience and seniority; and, again, the President must take personal responsibility for the designation. Defendants’ reading of the FVRA would decimate this carefully crafted framework. The President would be relieved of responsibility and accountability for selecting acting officials, and the universe of those eligible to serve in an acting capacity would be vastly expanded. Except when the first assistant position is fixed by statute, the agency head—or, at times, even a subordinate agency official—could create a new office after the vacancy arose, designate that office as the “first assistant” to the vacant office, and fill the office with nearly anyone, regardless of whether that person had received prior Senate approval through the confirmation process and without regard to her seniority, experience, or tenure. One is left to wonder, if Congress had intended—or even imagined—such a result, why would it have gone to the trouble of requiring that “the President (and only the President)” act in order to overcome the default rule and why would it have limited the pool of potential presidential designees to PAS officials and 9 See Senate Report at 12 (“Under this legislation, when an acting officer is to be designated, as opposed to automatically gaining acting status as a first assistant, only the President may designate an acting officer in a position that requires Senate confirmation.”); id. at 13 (“This provision allows the President limited flexibility in appointing temporary officers, restricting the pool to persons who have already received Senate confirmation for their current position.”); see also Administrative Conference of the United States, Acting Agency Officials and Delegations of Authority 1 (Dec. 1, 2019) (noting that there are over 1,200 PAS positions in the Executive Branch), available at https://www.acus.gov/sites/default/files/documents/final-report-acting- agency-officials-12012019.pdf. 39 senior officials who had served in the agency at issue for at least 90 days in the year before the vacancy arose? It is not an answer to say, as Defendants posited at oral argument, see Dkt. 24 (Mot. Hr’g Tr. 88:9–17), that paragraphs (a)(2) and (a)(3) have meaning at least as applied to first assistant positions created by statute, thus avoiding the risk of Executive Branch overreaching. Congress enacted the FVRA, in large part, to “recla[im]” its “Appointments Clause power,” SW General, Inc., 796 F.3d at 70, in the face of the long-standing Department of Justice “position that, in many instances, the head of an executive agency had independent authority apart from the Vacancies Act to temporarily fill vacant offices,” SW General, Inc., 137 S. Ct. at 935. Congress was concerned, most notably, that the Attorney General and other department heads had made frequent use of organic vesting and delegation statutes to assign the duties of PAS offices to officers and employees, with little or no check from Congress. See Senate Report at 3–4. In one case, for example, the Attorney General designated someone “brought in from outside Government to serve as Acting Assistant Attorney General for the Civil Rights Division . . . , immediately after the Senate refused to confirm him to that very office.” SW General, Inc., 137 S. Ct. at 936. That designation and many others like it prompted Congress to enact the FVRA. See Senate Report at 3–4. But that position did not have a statutory first assistant, nor did other offices that Congress pointed to as examples of Executive Branch overreach motivating the FVRA’s passage.10 See, e.g., Senate Report at 3 (discussing the Solicitor General and other 10 See, e.g., 28 U.S.C. § 504 (“The President shall appoint in the Department of Justice, by and with the advice and consent of the Senate, a Deputy Attorney General”); Reorganization Plan No. 5 of 1950, § 2 (renaming “The Assistant to the Attorney General” to “Deputy Attorney General”); 28 U.S.C. § 505 (“The President shall appoint in the Department of Justice, by and with the advice and consent of the Senate, a Solicitor General . . . .”); id. § 506 (“The President shall appoint, by and with the advice and consent of the Senate, 11 Assistant Attorneys 40 positions at the Department of Justice). Simply put, overreaching in filling vacancies for positions that have statutorily designated first assistants was not the primary problem that Congress had in mind. See 5 U.S.C. § 3347(a)(1) (authorizing persons to perform the functions and duties of a vacant office if a statute expressly provides for such temporary performance by a particular officer or employee); Senate Report at 15–16. * * * For all of these reasons, the Court concludes that Cuccinelli was designated to serve as the acting Director of USCIS in violation of the FVRA. C. Remedy That leaves the question of remedy. 1. Asylum Directives The first form of relief that Plaintiffs seek is invalidation of the Asylum Directives, Dkt. 12 at 35—a form of relief that is necessarily circumscribed by the Court’s conclusion that it lacks statutory jurisdiction to consider Plaintiffs’ challenge to the in-person-orientation Directive, see supra Part II.A. In support of this request, Plaintiffs press two arguments, which the Court will consider in turn. a. FVRA Plaintiffs’ first argument turns on whether Cuccinelli was performing a “function or duty” of the vacant office—that is, whether the Director’s issuance of a written policy governing General . . . .”); 28 C.F.R. § 0.137(b) (requiring by regulation that the principal deputy in each PAS office within the Department of Justice serve as first assistant and, “[w]here there is no position of [p]rincipal [d]eputy to the PAS office,” providing that the Attorney General will designate a first assistant in writing). 41 how USCIS processes credible-fear determinations is a “function or duty” of the USCIS Director office within the meaning of the FVRA. Under the FVRA’s vacant-office provision, if a person is not lawfully serving in conformity with the FVRA, “[a]n action taken” by that person “in the performance of any function or duty of [the] vacant office . . . shall have no force or effect” and “may not be ratified.” 5 U.S.C. § 3348(d)(1)–(2) (emphasis added); but cf. id. § 3348(e) (exempting certain offices not at issue here). The phrase “function or duty,” in turn, is defined as follows: (2) the term “function or duty” means any function or duty of the applicable office that— (A) (i) is established by statute; and (ii) is required by statute to be performed by the applicable officer (and only that officer); or (B) (i)(I) is established by regulation; and (II) is required by such regulation to be performed by the applicable officer (and only that officer); and (ii) includes a function or duty to which clause (i)(I) and (II) applies, and the applicable regulation is in effect at any time during the 180-day period preceding the date on which the vacancy occurs. 5 U.S.C. § 3348(a)(2)(A). Plaintiffs argue that, in issuing the Asylum Directives, Cuccinelli performed a “function” of the USCIS Director office. As Plaintiffs and amicus curiae explain, and as Defendants do not dispute, Cuccinelli promulgated the Directives at issue pursuant to 6 U.S.C. § 271, see Dkt. 12 at 35; Dkt. 15 at 25; Dkt. 28 at 18, which assigns to the Director of USCIS the “[f]unctions” of (1) “establish[ing] the policies for performing [the] functions . . . transferred to the Director” by the Homeland Security Act “or otherwise vested in the Director by law,” 6 U.S.C. § 271(a)(3)(A), and (2) “establish[ing] national immigration services policies and priorities,” id. § 271(a)(3)(D); 42 see also id. § 113(a)(1)(E) (establishing the PAS position of Director of the Bureau of Citizenship and Immigration Services, which was later renamed USCIS). Those functions, accordingly, are assigned by statute to the office of the USCIS Director, and they are not assigned by statute to any other office. In other words, according to Plaintiffs and amicus curiae, the function at issue is assigned by statute to the USCIS Director and only to the USCIS Director. Although Defendants do not directly contest any of this, see Dkt. 25 at 1, 19 (arguing only that the Asylum Directives “could be ratified by another official”); id. at 20 (asserting that “relief should be limited to vacatur of the challenged Policies”), they do hint at a potential response in previewing a different argument that they might make at some point in the future. In a single page of their supplemental brief, Defendants assert that, even if the Court concludes that the directives were promulgated without legal authority, they “could be ratified by another official.” Dkt. 25 at 19. As Defendants acknowledge, no one has even attempted to ratify the directives and, accordingly, the question of ratification is hypothetical and not ripe for consideration. Id. Defendants’ ratification argument does have some bearing on the question currently before the Court, however, because the same definition of “function or duty” applies both to the provision that renders actions taken by those serving in violation of the FVRA to have “no force or effect” and to the provision that precludes ratification of any such action. Compare 5 U.S.C. § 3348(d)(1) with id. § 3348(d)(2). Under Defendants’ reading of the statute, the phrase “function or duty” includes only “non-delegable duties”—that is, only those duties that are assigned to a single official and that may not be reassigned. See Dkt. 25 at 19. From that premise, Defendants then argue, or at least suggest, that no function or duty assigned to any Department of Homeland Security official other 43 than the Secretary constitutes a “function or duty” within the meaning of the vacant-office provision of the FVRA. Id. That follows, according to Defendants, because the Department’s organic statute vests “[a]ll functions of all officers, employees, and organizational units of the Department” in the Secretary, 6 U.S.C. § 112(a)(3), and authorizes the Secretary to delegate any of his “functions to any officer” within the Department,” id. § 112(b)(1). See Dkt. 25 at 19. Put differently, in Defendants’ view, the functions assigned to the USCIS Director by the Homeland Security Act are not functions “required . . . to be performed by [the USCIS Director] . . . and only that officer” because the Department’s organic statute vests the Secretary with all the functions and duties of the Department. Because similar vesting and delegation statutes can be found throughout the Executive Branch, see Dkt. 28 at 19 n.6 (noting that “[e]very cabinet-level department has some version of [the Department’s] vesting and delegation statutes”),11 the logic of this position would cover all (or almost all) departments subject to the FVRA. In considering these arguments, the Court starts, once again, with the statutory text. See Ross v. Blake, 136 S. Ct. 1850, 1856 (2016). Here, the textual analysis turns on what Congress meant by inserting “and only that office” in both the statutory and regulatory prongs of the definition of “function or duty.” On the one hand, that clause could require that the statute or regulation at issue provide that the function or duty at issue is assigned to one particular office, 11 Plaintiffs support that contention with the following examples: 10 U.S.C. § 113(d) (Department of Defense); 20 U.S.C. §§ 3441, 3347, 3472 (Department of Education); 22 U.S.C. § 2651a(a) (Department of State); 28 U.S.C. § 510 (Department of Justice); 31 U.S.C. § 321(b), (c) (Department of the Treasury); 38 U.S.C. §§ 303, 512 (Department of Veterans Affairs); 42 U.S.C. §§ 3534(a), 3535(d) (Department of Housing and Urban Development); 42 U.S.C. §§ 7151, 7152, 7252 (Department of Energy); 43 U.S.C. § 1457c (Department of the Interior); 49 U.S.C. § 322(b) (Department of Transportation); Reorganization Plan No. 5 of 1950, § 2 (Department of Commerce); Reorganization Plan No. 6 of 1950, § 2 (Department of Labor); Reorganization Plan No. 2 of 1953, § 4 (Department of Agriculture); Reorganization Plan No. 3 of 1966, § 2 (Department of Health and Human Services). See Dkt. 28 at 19 n.6. 44 just as the function of establishing policies for performing the functions of USCIS and establishing “national immigration services and polices” is assigned only to the office of the USCIS Director, 6 U.S.C. § 271(a)(3). Or, on the other hand, it could mean that the function may not be reassigned and is not subject to the department head’s general vesting-and-delegating authority. This latter reading is the one Defendants advocate. In their view, the vacant office provision of the FVRA applies only in those rare circumstances in which the function at issue is not only assigned to a single office but also may not be reassigned. See Dkt. 25 at 19. The Court is unpersuaded for two reasons. First, the vacant-office provision specifies that, “[u]nless an officer or employee is performing the functions and duties” of the vacant office in accordance with the FVRA’s appointment requirements, 5 U.S.C. § 3345, its time limitations, id. § 3346, and its exclusivity provision, id. § 3347, “the office shall remain vacant” and, in the case of a subcabinet office, “only the head of such Executive agency may perform any function or duty of such office.” Id. § 3348(b). Significantly, this fallback provision presupposes that the head of the department will have authority to discharge the functions and duties of the vacant, subcabinet office. But, if Defendants’ understanding of the “functions or duties” of an office were accepted, the fallback would be rendered meaningless. It would apply only to cases, if any, where the relevant subcabinet office is the sole office permitted to perform the “functions or duties” at issue and where the department head’s vesting-and-delegation authority is insufficient to overcome that exclusive assignment of authority. And, more importantly, unless the vacant-office provision is implausibly read as an affirmative grant of authority otherwise denied to the department head, the fallback provision would apply only in circumstances where the department head has no authority to perform the functions of the vacant office. In other words, the fallback provision, 45 which requires the department head to perform the functions of the vacant office, would apply only in those circumstances in which the department head lacks statutory authority to perform those functions. This conundrum is avoided by reading the definition of “functions or duties” and fallback provisions in tandem. “[I]nterpretation of a phrase of uncertain reach” should not be “confined to a single sentence”—or here, two sentences, see 5 U.S.C. § 3348(a)(2)(A)(ii) & (B)(i)(II)—“when the text of the whole statute gives instruction as to its meaning,” Maracich v. Spears, 570 U.S. 48, 65 (2013). Here, any ambiguity in the meaning of “and only that officer” is resolved by reading that phrase in light of the fallback. The inclusion of a fallback in the statutory scheme accords with the fact that agency organic statutes typically vest “[a]ll functions of all officers, employees, and organizational units of the [d]epartment” in the department head, see, e.g., 6 U.S.C. § 112(a)(3); 28 U.S.C. § 509, and mandates that the department head exercise that authority with respect to the “functions and duties” of a vacant office, 5 U.S.C. § 3348(b). It follows that, however narrowly defined, the functions or duties of a subcabinet office must include the duties specifically assigned by statute to that office, even if the department’s organic statute generally vests the department head with all functions of the department. That is, the mere fact that a department head is also vested with all functions specifically vested in other department officers and employees cannot, standing alone, defeat the enforcement mechanisms found in the FVRA’s vacant-office provision. A second textual clue supports this same conclusion and further clarifies what the statute allows and what it precludes. In enacting the FVRA, Congress recognized the need for administrative flexibility, see Senate Report at 13, and did not withdraw the vesting-and- delegation authority of the Executive Branch departments and agencies. But it also recognized 46 that few PAS positions have “any meaningful statutory duties” and that the duties of these offices are, instead, defined by “internal departmental regulations” that “can be changed at will without undergoing the notice and comment process.”12 Id. at 18. To avoid circumvention of the vacant-office provision, Congress, accordingly, added a 180-day lookback to the definition of regulatorily assigned functions or duties. See 5 U.S.C. § 3348(a)(2)(B)(ii). The lookback provision thus defines the functions or duties of a vacant office to include those that were established by regulation and are “in effect at any time during the 180-day period preceding the date on which the vacancy occurs.” Id. The 180-day regulatory lookback is at odds with Defendants’ contention that the statutory definition of “functions or duties” reaches only those duties that the agency may not reassign— that is, those duties that are, in accordance with Defendants’ lexicon, “non-delegable.” Dkt. 25 at 19. Contrary to Defendants’ reading of the statute, the lookback provision contemplates that agencies may and will use their organic authorities to issue rules reassigning duties and that duties subject to that authority may, at least at times, fall within the statutory definition of “functions or duties.” What matters under the vacant-office provision is whether the rules—i.e., the delegations and assignments—as they existed “at any time during the 180-day period preceding the date on which the vacancy occurs,” 5 U.S.C. § 3348(a)(2)(B)(ii), assigned the functions or duties to the vacant office and “only [to] that office[,]” id. § 3348(a)(2). If so, then 12 A delegation of authority to perform defined agency duties may be exempt from the notice- and-comment process as a rule of “agency organization.” See 5 U.S.C. § 553(b)(A); Hogg v. United States, 428 F.2d 274, 280 (6th Cir. 1970) (“We hold that the Administrative Procedure Act does not require that all internal delegations of authority . . . be published in order to be effective.”); see generally Jennifer Nou, Subdelegating Powers, 117 Colum. L. Rev. 473, 518– 522, 521 (2017) (discussing the regulatory landscape of agency sub-delegations and observing that an agency head may, but need not, subject an internal sub-delegation to notice and comment). 47 the statutory definition of “function or duty” is satisfied, and actions taken by a person who is not serving in conformity with the FVRA “in the performance of [that] function or duty” have “no force or effect.” 5 U.S.C. § 3348(d). The only support Defendants offer for their more sweeping “non-delegable” argument is a citation to the D.C. Circuit’s decision in Guedes v. ATF, 920 F.3d 1 (D.C. Cir. 2019). Dkt. 25 at 19. But the meaning of the vacant-office provision was neither disputed nor decided in Guedes. Indeed, neither below nor on appeal did the parties dispute whether the official’s appointment satisfied the FVRA, see Guedes v. ATF, 356 F. Supp. 3d 109, 138 (D.D.C. 2019), nor did the parties contest that, by the time the dispute reached the D.C. Circuit, the challenged rule had been validly ratified by a properly appointed official, see Guedes, 920 F.3d at 12; see also Bump-Stock-Type Devices, 84 Fed. Reg. 9,239, 9,240 (Mar. 14, 2019) (ratifying the final rule in dispute in Guedes). In any event, the word “non-delegable” appears nowhere in the statute, and instead is found only in the legislative history. See Senate Report at 18 (“The functions or duties of the office that can be performed only by the head of the executive agency are therefore defined as the non-delegable functions or duties of the officer as they existed at any point during the 180 days prior to the [vacancy][.]”). But even as used in the legislative history, the word does not have the meaning Defendants assign to it. To the contrary, the Senate Report uses the term in the same breath in which it affirms that the “non-delegable” functions and duties include those assigned by regulation 180 days before the vacancy arose, even if later reassigned. Id. Finally, Defendants’ construction of the vacant-office provision is at odds with the statutory purpose of the FVRA. As Plaintiffs note, “[e]very cabinet-level department has some version of [a] vesting and delegation statute[].” Dkt. 28 at 19 n.6 (collecting statutory vesting 48 and delegation statutes). It was the pervasive use of those vesting-and-delegation statutes, along with “the lack of an effective enforcement process,” that convinced Congress of the need to enact the FVRA. Senate Report at 7. Yet, if Defendants were correct that the mere existence of these vesting-and-delegation statutes (and the absence of an express statutory bar on vesting and delegating a specific function or duty) were sufficient to negate the enforcement mechanisms Congress included in the FVRA, Congress would have done little “to restore [the] constitutionally mandated procedures that must be satisfied before acting officials may serve in positions that require Senate confirmation.” Senate Report at 8; see also U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 565 (D.C. Cir. 2004) (“When a statute delegates authority to a federal officer or agency, subdelegation to a subordinate federal officer or agency is presumptively permissible absent affirmative evidence of a contrary congressional intent.”). The Court recognizes that requiring department heads to perform the functions or duties of a vacant office could impose substantial burdens on those who already labor under enormous responsibilities. That choice, however, is not the Court’s, but Congress’s. Nor is the Executive Branch without tools to address this concern. In most circumstances, departments and agencies can avoid this burden if the first assistant lawfully assumes the acting role pursuant to § 3345(a)(1), or if the President directs that a PAS officer or eligible senior agency official assume that role pursuant to §§ 3345(a)(2) or (a)(3), respectively. When the 210-day clock on service of an acting official nears expiration, moreover, the President can extend the period by submitting a nomination for the vacant PAS office to the Senate. 5 U.S.C. § 3346(a). If that nomination is rejected, withdrawn, or returned, the acting official may serve for another 210 days, and, if a second nomination is submitted, she may continue to serve until that nominee is confirmed or for 210 days after the nomination is rejected, withdrawn, or returned.” Id. at 49 § 3346(b). Department heads and other officials may also delegate duties to multiple officials, so long as they do so 180 days before the vacancy arises. Id. § 3348(a)(2)(B)(ii). The Court’s holding, moreover, is a narrow one: the Court merely concludes that where, as here, a statute assigns a function to a single PAS office, and where, as here, the department head did not reassign that function using his vesting-and-delegation authority or any other authority at least 180 days before the vacancy occurred, that function is a “function or duty” of the vacant PAS office within the meaning of § 3348, and it must be performed either by a properly serving acting official or by the department head. b. APA The Court, in any event, is also persuaded by Plaintiffs’ alternative theory—that, because Cuccinelli was exercising the authority of the USCIS Director in violation of the FVRA, the directives were not issued “in accordance with law,” and must, accordingly, be set aside under the APA. Dkt. 12 at 35 (quoting 5 U.S.C. § 706(2)(A)). The D.C. Circuit’s decision in SW General, Inc. v. NLRB, 796 F.3d 67 (D.C. Cir. 2015), provides helpful guidance on this point. That case involved a violation of the FVRA in the appointment of the acting general counsel of the NLRB. Id. at 69. But because the NLRB is expressly exempted from the vacant-office provision of the FVRA, the D.C. Circuit had to determine the consequences of the improper appointment without the aid of that provision. Id. at 78. In addressing that question, the Court of Appeals started with the premise that agency action taken without lawful authority is at least voidable, if not void ab initio.13 Id. at 79. It then considered whether one of two doctrines might save the action at issue that case. 13 Because the NLRB “did not seek certiorari on this issue,” the Supreme Court did “not consider it.” SW General, Inc., 137 S. Ct. at 938 n.2. 50 Under the first such rule, the APA’s “rule of prejudicial error,” 5 U.S.C. § 706, reviewing courts must consider whether the agency’s error affected the outcome. Jicarilla Apache Nation v. U.S. Dep’t of Interior, 613 F.3d 1112, 1121 (D.C. Cir. 2010). “The burden to demonstrate prejudicial error is on the party challenging agency action,” but it “is ‘not . . . a particularly onerous requirement.’” Id. (quoting Shinseki v. Sanders, 556 U.S. 396, 410 (2009)). As in SW General, Inc., that rule does not pose a substantial hurdle to Plaintiffs’ claim here. 796 F.3d at 80. The Court “cannot be confident that” the same Directives “would have issued under an” acting Director “other than” Cuccinelli. Id. Under the second such rule, the de facto officer doctrine, a court may “confer[] validity upon acts performed by a person acting under the color of official title even though it is later discovered that the legality of that person’s appointment or election to office is deficient.” Id. at 81 (quoting Ryder v. United States, 515 U.S. 177, 180 (1995)). That doctrine, however, has seen substantial contraction over time and, under governing D.C. Circuit law, collateral attacks on an official’s authority are permitted when two requirements are satisfied: First, the plaintiff must bring his action at or about the time that the challenged government action is taken. Second, the plaintiff must show that the agency or department involved has had reasonable notice under all of the circumstances of the claimed defect in the official’s title to office. Id. at 81–82 (quoting Andrade v. Lauer, 729 F.2d 1475, 1499 (D.C. Cir. 1984)). Here, Plaintiffs promptly brought suit within 60 days of the challenge action, and Defendants do not challenge the timeliness of the suit. Moreover, the Department had notice of the claimed defect in Cuccinelli’s service as early as June 18, 2019—eight days after Cuccinelli took office and before he issued the Asylum Directives—when the House Committee on the Judiciary sent acting Secretary McAleenan a letter expressing “deep concern” that “Cuccinelli was appointed in a manner that circumvents the [FVRA].” See U.S. House of Representatives, Committee on the 51 Judiciary, Letter to Acting Secretary Kevin McAleenan (June. 18, 2019), available at https://tinyurl.com/s9xlzyy (last accessed Feb. 28, 2020).14 The de facto doctrine—which in any event was not raised as a defense, see Dkt. 25 at 19 n.5—would thus not pose a barrier to Plaintiffs’ challenge. * * * Thus, under either theory—application of the FVRA vacant-office provision or general principles of administrative law—the reduced-time-to-consult and the prohibition-on-extensions directives “have no force or effect,” 5 U.S.C. § 3348(d)(1), and must be “set aside” as action taken “in excess of statutory . . . authority,” 5 U.S.C. § 706. As Defendants acknowledge binding D.C. Circuit precedent requires that, “[w]hen a reviewing court determines that agency regulations are unlawful, the ordinary result is that the rules are vacated—not that their application to the individual [plaintiffs] is proscribed.” Dkt. 25 at 23 n.6 (quoting Nat’l Mining Ass’n v. U.S. Army Corps of Eng’rs, 145 F.3d 1399, 1409 (D.C. Cir. 1998)). Although Defendants are correct that 8 U.S.C. § 1252(e)(1)(B) divests the Court of jurisdiction to certify a class, Plaintiffs have not asked the Court to do so, and the class action rule has no bearing on the nature of the relief that the Court must provide. To the contrary, the structure of 8 U.S.C. § 1252(e)(3) itself contemplates that courts may issue declaratory judgments relating to the “implementation of” the expedited removal provisions of IIRIRA that affect the interests of those not before the Court; most notably, to expedite resolution of any legal challenges, Congress required all challenges to the validity of new implementing rules or polices be brought within 60 days of their adoption. Id. § 1252(e)(3)(B). Defendants are also correct that the Supreme Court 14 Although the June 18, 2019 letter is not in the record, the Court takes judicial notice of that public document pursuant to Federal Rule of Evidence 201(b)(2). 52 has cautioned that a district court vacating an agency action under the APA should not issue an injunction unless doing so would “have [a] meaningful practical effect independent of [the policy’s] vacatur.” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165 (2010); see also OA v. Trump, 404 F. Supp. 3d 109, 153–54 (D.D.C. 2019). This is because “[a]n injunction is a drastic and extraordinary remedy, which should not be granted as a matter of course” or where “a less drastic remedy . . . [is] sufficient to redress” the plaintiffs’ injury. Monsanto Co., 561 U.S. at 165. Thus, absent the need to take further action, the Court will decline Plaintiffs’ request for an injunction and will set aside the two directives at issue. 2. Removal Orders Plaintiffs also request that the Court set aside their individual removal orders “as well as those of any asylum seekers who were processed under the Directives but have not yet been removed.” Dkt. 28 at 26. Starting with the five remaining individual Plaintiffs, the Court must once again consider the “rule of prejudicial error.” 5 U.S.C. § 706. At this point, the question is not simply whether the Directives would have issued in the same form even if Koumans had not been replaced by Cuccinelli as acting Director, but whether the five individual Plaintiffs were prejudiced by the resulting reduced time to consult and to prepare for their credible-fear interviews. Having reviewed Plaintiffs’ extensive declarations, and given the minimal burden required to establish prejudicial error, Jicarilla Apache Nation, 613 F.3d at 1121 (“If prejudice is obvious to the court, the party challenging agency action need not demonstrate anything further.”), the Court is convinced that the negative credible-fear determinations that each of the five individual Plaintiffs received must be set aside. As a practical matter, this also means that their removal orders are deficient. If an alien indicates an intention to apply for asylum, expedited removal requires that an asylum officer 53 conduct a credible-fear interview of any alien seeking asylum, and that has yet to occur here. See 8 U.S.C. § 1225(b)(1)(A)(ii). Until a legally sufficient interview occurs, the individual Plaintiffs are not subject to expedited removal. The Court will, accordingly, vacate their negative credible-fear determinations (and any removal orders that are premised on those determinations) and will remand their cases to USCIS for further proceedings consistent with this decision. The Court is unconvinced, however, that it should extend this relief to other asylum seekers who were processed under the defective directives. Those individuals are not parties to this case, nor is this case a class action. This Court’s jurisdiction, moreover, is limited to claims brought challenging “determinations” made under the expedited removal provision of IIRIRA within 60 days of promulgation of the allegedly unlawful regulation or policy. 8 U.S.C. § 1252(e)(3). To be sure, the Court has concluded that the two directives are invalid and must be set aside. The consequences of that holding with respect to parties not before the Court, however, lies beyond this Court’s jurisdiction. See id. § 1252(a)(2) (“[N]o court shall have jurisdiction to review . . . any individual determination . . . except as provided in subsection (e)”); see also id. § 1252(e)(1) (“[N]o court may . . . certify a class under Rule 23 of the Federal Rules of Civil Procedure in any action for which judicial review is authorized” under 8 U.S.C. § 1252(e)). The Court will, accordingly, deny Plaintiffs’ request to vacate the removal orders— or any negative credible-fear determinations—with respect to those who are not parties to this action. CONCLUSION For the foregoing reasons, the Court GRANTS in part and DENIES in part Plaintiffs’ partial motion for summary judgment, Dkt. 29, and GRANTS in part and DENIES in part 54 Defendants’ partial motion for summary judgment, Dkt. 30. The Court concludes that it has jurisdiction over Plaintiffs’ challenges to the reduced-time-to-consult and prohibition-on- extensions directives and that it lacks jurisdiction over Plaintiffs’ challenge relating to the in- person-orientation directive. The Court also concludes that Cuccinelli was not lawfully appointed to serve as the acting Director of USCIS and that, accordingly, the reduced-time-to- consult and prohibition-on-extensions directives must be set aside as ultra vires under both the FVRA, 5 U.S.C. § 3348(d)(1), and the APA, 5 U.S.C. §706(2)(A). Finally, the Court sets aside the individual Plaintiffs’ negative credible-fear determinations and expedited removal orders and remands to USCIS for further proceedings consistent with this decision. SO ORDERED. /s/ Randolph D. Moss RANDOLPH D. MOSS United States District Judge Date: March 1, 2020 55	{ "pile_set_name": "FreeLaw" }
718 F.2d 88 36 UCC Rep.Serv. 1579, 14 Fed. R. Evid. Serv. 272 Kenneth GUMBS and Yvonne Gumbs, Appellees,v.INTERNATIONAL HARVESTER, INC., Appellant. No. 82-3341. United States Court of Appeals,Third Circuit. Argued April 25, 1983.Decided Sept. 30, 1983. Richard H. Hunter (argued), Isherwood Hunter & Colianni, Christiansted, St. Croix, U.S.V.I., for appellant. Desmond L. Maynard, St. Thomas, V.I., for appellees. Before GIBBONS, SLOVITER and BECKER, Circuit Judges. OPINION OF THE COURT BECKER, Circuit Judge. 1 This appeal in a Virgin Islands products liability case requires us to determine the quantum of evidence necessary to make out a case of breach of implied warranty of fitness for a particular purpose under U.C.C. Sec. 2-315, V.I.Code Ann. tit. 11A, Sec. 2-315 (1965). Because under this cause of action a buyer must prove that he actually relied on the seller's skill or judgment in selecting the goods in question, and because at trial the plaintiff presented no such evidence, we must set aside a verdict grounded on section 2-315. The appeal also requires us to explore the relationship between the elements of liability under Restatement (Second) of Torts Sec. 402A (strict products liability) and section 2-314 of the Uniform Commercial Code, V.I.Code Ann. tit. 11A, Sec. 2-314 (1965) (breach of seller's implied warranty of merchantability). Because we conclude that the requisites for liability under sections 402A and 2-314 are, under the facts of this case, coextensive, we therefore set aside as irreconcilably inconsistent, the jury's findings that a truck chassis manufactured and sold by defendant, International Harvester ("Harvester") was not defective and unreasonably dangerous, but that the sale breached Harvester's implied warranty of merchantability. To provide guidance for the district court on retrial, we also consider a number of evidentiary issues presented by the record. I. Facts and Procedural History 2 Plaintiff Kenneth Gumbs, a truck driver, was employed by Tri-Island Enterprises, Inc. of St. Thomas to deliver water on the island of St. Thomas in an International Harvester Series 1800 truck on which was mounted a tank capable of holding 2700 gallons of water. On February 9, 1978, at about 4:00 a.m., plaintiff was driving the truck loaded to a gross weight of 33,000 pounds. He came to Cassi Hill (a 10% grade), shifted down into gear at the top of the hill, and began his descent. Plaintiff testified at trial that he heard a clanging sound, and that the truck began to gain speed. He applied the brakes to no avail and could not control the steering. At the first turn, a switchback, the truck hit the guardrail, went off the road, and rolled 325 feet to the bottom of a ravine, destroying the truck and injuring plaintiff's back. 3 Harry Howe, president of Tri-Island Enterprises, had purchased the series 1800 truck from International Harvester of Puerto Rico, Inc., after visiting the Harvester sales office in Chicago to discuss modifications to the vehicle.1 Howe purchased this truck to replace an older International Harvester truck that had also been used to transport water. International Harvester of Puerto Rico removed the water tank from the older truck and installed it on the new truck. 4 Plaintiff sued Harvester in the District Court for the District of the Virgin Islands. He alleged that the accident was due to a defective U-bolt in the right rear axle of the Harvester truck that broke and caused him to lose control of the vehicle.2 In the complaint, plaintiff predicated his claim on common-law negligence, strict liability (Sec. 402A), and breach of an implied warranty of merchantability (U.C.C. Sec. 2-314). During the course of the trial, the Court dismissed the negligence claim, but accepted the plaintiff's contention that the jury should be instructed that he could also recover under a theory of implied warranty of fitness for a particular purpose (U.C.C. Sec. 2-315). 5 The case was submitted to the jury on special interrogatories. The court submitted an interrogatory on section 402A and another on implied warranty of merchantability: 6 1. Do you find that defendant INTERNATIONAL HARVESTER, INC., being in the business of manufacturing and selling series 1800 Loadstar trucks, manufactured and sold the truck in question in this case in a defective condition, unreasonably dangerous to users or consumers thereof, and that the said truck was expected to and did reach the ultimate consumer (in this case Tri-Island Enterprises Inc. and its employee KENNETH GUMBS) without substantial change in the condition in which defendant manufactured and sold the said truck? 7 .... 8 3. Do you find that the defendant INTERNATIONAL HARVESTER, INC. breached it's [sic] implied warranty of merchantability? 9 Special Interrogatories Submitted to the Jury, at 1 (capitalization in the original). The court additionally instructed the jury that interrogatory number three could also be answered in the affirmative if the jury found that Harvester breached an implied warranty of fitness for a particular purpose: 10 The question No. 3 goes to the cause about implied breach of warranty. The implied breach of warranty of merchantability or the implied breach of warranty for a particular purpose or both, and that question asks: Do you find the defendant International Harvester, Inc. breached its implied warranty of merchantability. Again, you answer yes or no. 11 Transcript, May 15, 1982, at 47. 12 The jury found no liability on the section 402A strict liability theory, but answered affirmatively to the third interrogatory, which, by virtue of the jury charge, encompassed both breach of implied warranty of merchantability and implied warranty of fitness for a particular purpose. Having found that a breach of warranty--under either section 2-314 or 2-315--caused the accident and plaintiff's injuries, the jury awarded the plaintiff $268,569.00. It reduced this amount by 20% for comparative fault, however.3 13 Harvester moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The district court denied that motion by memorandum order entered June 11, 1982. Harvester appeals and advances two principal arguments. First, Harvester asserts there was no evidence upon which the jury could have based a finding of breach of warranty of fitness for a particular purpose. Second, noting that the jury's affirmative answer to the breach of warranty interrogatory must therefore rest on a breach of an implied warranty of merchantability, Harvester argues that the elements of the breach of implied warranty of merchantability and strict liability actions are identical, and therefore that the verdicts must be set aside as inconsistent. 14 II. Implied Warranty of Fitness for a Particular Purpose 15 Section 2-315 of the Uniform Commercial Code, codified at V.I.Code Ann. tit. 11A, Sec. 2-315, creates a cause of action for breach of implied warranty of fitness for a particular purpose. The section provides: 16 Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. 17 If a plaintiff is to recover on the implied warranty of fitness for a particular purpose, he must establish the existence of three conditions: 18 (1) The seller must have reason to know the buyer's particular purpose. 19 (2) The seller must have reason to know that the buyer is relying on the seller's skill or judgment to furnish appropriate goods. 20 (3) The buyer must, in fact, rely upon the seller's skill or judgment. 21 J. White & R. Summers, Handbook of the Law under the Uniform Commercial Code at 358 (2d ed. 1980).4 22 The evidence showed that, prior to the purchase in question, Mr. Howe, the plaintiff's employer, had dealt with Harvester for 11 years and had purchased nine Harvester trucks during that period. Before ordering the truck in question, Howe went to Harvester's Chicago sales office to inquire about new modifications that might be available that would be an improvement over the previous model. Howe considered the possibility of an automatic transmission and a different type of ignition but decided they would not be improvements. Instead, Howe made certain specifications of his own. To compensate for the extra twisting and jarring on St. Thomas roads, Howe asked Harvester to add two leaves to the front suspension spring. Harvester complied with Howe's request. The record does not reveal that Harvester supplied any recommendations of its own as to the suitability of the series 1800 truck for hauling water in St. Thomas. 23 On appeal, Harvester asserts that plaintiff did not adduce any evidence of Howe's actual reliance on Harvester's skill or judgment and thus failed to prove the existence of a warranty of fitness for a particular purpose. Plaintiff's rejoinder--indeed his whole position on the matter, both in his brief and at oral argument--is as follows: 24 What we are concerned about are vehicles sold in St. Thomas, Virgin Islands because that is the place in which this vehicle was going to be operated. Don't sell me a vehicle that you are going to use in Nevada, which is a flat place; Texas, a flat place, Florida, [sic] flat place--that is wide expansive territory. The roadway goes for miles and miles straightway [sic]. Nothing like we have here. So what I am saying is that International Harvester knowing where Bud Howe had his operations; knowing the task that the truck has to perform should have sold Bud Howe a vehicle for St. Thomas, Virgin Islands. 25 Transcript, May 14, 1982, at 133-34. The plaintiff thus argues that the seller's knowledge of the intended use of the vehicle is sufficient in itself to create an implied warranty of fitness for a particular purpose. 26 Seller's knowledge of the intended use of a product is a necessary element of the implied warranty, but it is distinct from the actual reliance requirement. V.I.Code Ann. tit. 11A, Sec. 2-315 & Comment 1 ("The buyer, of course, must actually rely on the seller."). Harvester's knowledge that Mr. Howe would use the Series 1800 truck in his water-hauling business in St. Thomas cannot substitute for proof that Mr. Howe relied on the skill or knowledge of Harvester to select a suitable truck.5 27 The record is devoid of evidence that Howe received any recommendations from Harvester as to the suitability of the truck for hauling water in the Virgin Islands. A Harvester engineer testified that if a customer indicated the intended use of a truck, Harvester "would like" to make recommendations. This evidence, standing alone as it does, is plainly insufficient to support a finding of actual reliance. Indeed, Howe could not have relied on Harvester's skill or knowledge because, as far as the record indicates, he did not receive any recommendations from Harvester or any representation of suitability of the truck for hauling water in St. Thomas.6 28 In sum, the sole evidence that supports the plaintiff's section 2-315 theory, Harvester's knowledge that the truck was to be used to deliver water in the Virgin Islands, is not sufficient to establish the actual reliance of the buyer on the seller's skill or judgment. Therefore, this theory of recovery should not have been submitted to the jury.7III. The Relationship Between Restatement Sec. 402A and U.C.C. Sec. 2-314 29 As we have stated, the jury found that Harvester was liable for breach of an implied warranty of merchantability or an implied warranty of fitness for a particular purpose, or both. But because the jury had insufficient evidence to find for the plaintiff based on the warranty of fitness theory, the verdict must therefore rest on the warranty of merchantability theory. 30 Harvester argues that, because the elements needed to prove breach of a warranty of merchantability (Sec. 2-314)8 and those needed to prove a violation of section 402A9 are identical,10 and because the jury found it not liable under section 402A and liable under section 2-314, the jury verdicts are irreconcilably inconsistent. Therefore, Harvester argues, a new trial is required. Plaintiff rejoins that the section 402A definition of defect is more stringent than the section 2-314 requirement because of the additional and arguably qualifying "unreasonably dangerous" language in section 402A. Plaintiff adds that the verdict was appropriate since the court presented a choice of theories to the jury. 31 In considering these contentions, we do not write on tabula rasa; both courts and commentators have addressed the question and concluded that the elements of the two theories are essentially the same. See, e.g., Sterner Aero AB v. Page Airmotive, Inc., 499 F.2d 709, 712 (10th Cir.1974) ("Many jurisdictions have gradually abandoned the whole concept of implied warranty in products liability, adopting instead the simpler and more manageable concept of strict liability in tort as exemplified by Sec. 402A .... [S]trict liability in tort is substantially similar to implied warranty stripped of the contract defenses"); Davis v. Wyeth Laboratories, Inc., 399 F.2d 121 (9th Cir.1968) (difference between strict liability in warranty and tort is "largely one of terminology"); Neofes v. Robertshaw Controls Co., 409 F.Supp. 1376 (S.D.Ind.1976) (under Indiana law a count based on tortious breach of implied warranty is duplicitous of a count based on strict liability and both counts may not be pursued in the same law suit); Greeno v. Clark Equipment Co., 237 F.Supp. 427, 429 (N.D.Ind.1965) ("[I]t may fairly be said that the liability which [Sec. 402A] would impose is hardly more than what exists under implied warranty when stripped of the contract doctrines of privity, disclaimer, ...."); Bachner v. Pearson, 479 P.2d 319 (Alaska 1970) (no distinction between warranty and strict tort in products liability cases); Dickey v. Lockport Prestress, Inc., 384 N.Y.S.2d 609, 52 App.Div.2d 1075 (1976) (strict products liability and liability to a remote user based on implied warranty are one and the same cause of action, "the former having replaced the latter by evolutionary decisions of the [N.Y.] Court of Appeals"); L. Frumer & M. Friedman, 2 Products Liability Sec. 16 A[f][i] (1983) ("[I]t is fairly clear that if it is shown that the product was not fit for the ordinary purpose for which it was manufactured, it would also be defective for purposes of a strict liability in tort action"); J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code Sec. 9-7, at 355 (2d ed. 1980) (Merchantability and the unreasonably dangerous standard are "nearly synonymous"); Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn.L.Rev. 791, 804 (1966) (The change from warranty to strict liability in tort is "more one of theory than substance. It is only the rules of contract which have been jettisoned, where there is no contract. The substance of the seller's undertaking remains unaffected, and as Chief Justice Traynor himself has agreed, the precedents of the 'warranty' cases will still determine what he must deliver. They will determine also the extent of his liability, except insofar as limitations derived from the law of contract have been applied"). Virgin Island courts have also tended to merge the two theories, applying warranty terms to strict liability causes of action and vice-versa. See Poole v. Ford Motor Co., 17 V.I. 354 (D.V.I.1980); Battiste v. St. Thomas Diving Club, Inc., 15 V.I. 184 (D.V.I.1979). 32 It is true that comment (i) to section 402A provides: "[t]he rule stated in this Section applies only where the defective condition of the product makes it unreasonably dangerous to the user or consumer .... The article sold must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics." But this explanation does not necessarily distinguish section 402A from section 2-314.11 In any event, whether or not there may be an imperfect coincidence between the scope of strict liability in tort and the warranty of merchantability, the defect at issue in this case plainly falls within the common core of both causes of action; we can conceive of no theory under which the allegedly defective U-bolt could have been defective and unfit for its ordinary purposes under section 2-314 but not also defective and unreasonably dangerous within section 402A. Plaintiff has adduced no evidence and advanced no theory as to how this could be so. In this case, then, the jury's answers to interrogatories numbers one and three are irreconcilable. The case must therefore be retried. Andrasko v. Chamberlain Manufacturing Corp., 608 F.2d 944 (3d Cir.1979). 33 The parties extensively briefed several evidentiary issues arising from the conduct of the trial which, in light of our vacatur and remand, are not dispositive on this appeal. However, because they are important questions which are likely to arise again on retrial, we address them for the guidance of the district court and counsel. IV. Evidentiary Questions on Remand A. The Adverse Inference Instruction 34 Sonny Oliver, an automobile mechanic who was driving to work on Cassi Hill Road on the morning of plaintiff's accident, saw the Harvester truck in the valley and stopped out of curiosity to inspect it. According to Oliver's trial testimony, he observed that the right rear U-bolts were broken. A few weeks later, plaintiff retained Oliver to inspect the vehicle and give an opinion as to the cause of the accident. Oliver went to St. Thomas Dairy where the truck had been towed, and he inspected it again. He removed from the cab of the vehicle the remaining portion of a sheared dowel pin and gave it to plaintiff's counsel. This pin was received into evidence but was not linked to plaintiff's theory of the accident, which focused on the U-bolt. Oliver testified that his second inspection of the vehicle confirmed his theory that the U-bolt was the cause of the accident. Oliver explained that he could have removed or otherwise preserved the broken U-bolt but did not do so, stating at trial, "What am I going to do with the U-bolt?" (Transcript, May 12, 1982, p. 310). During Oliver's second inspection of the truck, he took photographs but did not retain them and did not know where they could be found. (Transcript, May 12, 1982, p. 318). 35 Harvester contends that Oliver was plaintiff's agent, and that he should have preserved the U-bolt and photographs since they were important evidence on the causation issue. Harvester requested that the court instruct the jury that it could infer from plaintiff's failure to produce this evidence that the tenor of the evidence was unfavorable to the plaintiff's case. The court refused to give such an instruction, but did not explain the basis of the refusal. 36 The unexplained failure or refusal of a party to judicial proceedings to produce evidence that would tend to throw light on the issues authorizes, under certain circumstances, an inference or presumption unfavorable to such party. Felice v. Long Island R.R. Co., 426 F.2d 192 (2d Cir.1970), cert. denied, 400 U.S. 820, 91 S.Ct. 37, 27 L.Ed.2d 47 (1970); United States v. Cherkasky Meat Co., 259 F.2d 89 (3d Cir.1958); 31A C.J.S. Evidence Sec. 156(2); 29 Am.Jur.2d Evidence Sec. 178. For the rule to apply, it is essential that the evidence in question be within the party's possession or control. Wigmore, 2 Treatise on the Anglo-American System of Evidence in Trials at Common Law Sec. 291. (3)(3) (3d ed. 1940); McCormick, Handbook of the Law of Evidence Sec. 272 (2d ed. 1972). Further, it must appear that there has been an actual suppression or withholding of the evidence; no unfavorable inference arises when the circumstances indicate that the document or article in question has been lost or accidentally destroyed, or where the failure to produce it is otherwise properly accounted for. 31A C.J.S. Evidence Sec. 156(2); 29 Am.Jur.2d Evidence Sec. 177 ("Such a presumption or inference arises, however, only when the spoilation or destruction [of evidence] was intentional, and indicates fraud and a desire to suppress the truth, and it does not arise where the destruction was a matter of routine with no fraudulent intent). See Smith v. Uniroyal, Inc., 420 F.2d 438 (7th Cir.1970). 37 Harvester failed to demonstrate that the broken U-bolt and the photographs were (1) within the control of the plaintiff; or (2) that the plaintiff intentionally or fraudulently lost or destroyed the U-bolt. Indeed, this case appears to be closely on point with the Smith case. In Smith, the plaintiffs alleged that a defective tire manufactured by the defendant exploded causing the plaintiff to lose control of his car and crash. The auto and the tire were transported to a garage where an expert hired by the plaintiff examined them. Subsequently they were sent to a storage pool in Jefferson, Indiana, and finally salvaged in Louisville, Kentucky. Neither the plaintiffs nor the expert that they retained preserved the tire and as a result the defendant's experts were unable to examine it. At trial the defendant argued that "under the circumstances the plaintiffs breached a duty to preserve the tire" and that therefore an adverse inference instruction to the jury was appropriate. The district court and the Seventh Circuit disagreed. The Seventh Circuit stated, "while the record, through investigation by counsel, shows the journey taken by the tire up to its unfortunate demise, it does not show that plaintiffs had knowledge of the tire's location and willfully permitted it to be destroyed nor does it show plaintiff's control of their tire." Smith, 420 F.2d at 441 (quoting the district court with approval).12 38 Since, on the record before us, the plaintiff did not have control of the U-bolt and photographs, and since there is no evidence in the record that the plaintiff willfully permitted the U-bolt and photographs to be lost or destroyed, the district court properly refused to give the adverse inference instruction.13 39 B. Motion to Exclude the U.S. Department of Transportation Investigation 40 Plaintiff attempted to introduce evidence of certain other accidents involving U-bolts on Harvester trucks that were the subject of a U.S. Department of Transportation ("U.S.D.O.T.") investigation in 1973. Plaintiff sought the admission of two letters, one from U.S.D.O.T. to Harvester and a second from Harvester to U.S.D.O.T., in order to demonstrate Harvester's knowledge of the investigation. In addition, during direct examination of a Harvester engineer, plaintiff sought to introduce the details of the accidents extracted from the U.S.D.O.T. investigative file. U.S.D.O.T. had examined alleged rear-axle U-bolt nut-torque-loss on Harvester Series 1600, 1700, and 1800 loadstar trucks manufactured in 1972 and 1973, but closed the investigation without making any findings. 41 Two days before the trial, Harvester moved to exclude evidence of the investigation and references to the earlier accidents as irrelevant, misleading, and prejudicial under Rules 401 and 403 of the Federal Rules of Evidence. Harvester asserted that the investigation was irrelevant because the bolts had been changed in response to the U.S.D.O.T. inquiry before the plaintiff's truck was built, and because the subject matter of the investigation was the loosening of the U-bolts, while plaintiff alleged that the U-bolt on the truck he was driving had snapped. Plaintiff rejoined that the investigation was admissible since some of the incidents described were substantially similar to the plaintiff's accident. The district court, evincing displeasure with the tardiness of Harvester's in limine motion, nevertheless heard oral argument on the point during the trial. The court denied the motion, finding that the investigation "is highly relevant if there was some history of trouble with this U-bolt." (Transcript, May 13, 1982, p. 131). 42 Under the Federal Rules of Evidence, all relevant evidence is admissible.14 Fed.R.Evid. 401 defines "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it is without the evidence." In products liability cases evidence of prior accidents involving the same product under similar circumstances is admissible to show notice to the defendant of the danger, to show existence of the danger, and to show the cause of the accident. L. Frumer & M. Friedman, 1 Products Liability Sec. 1201 (1983). McCormick, Handbook of the Law of Evidence, Sec. 200. 43 The trial judge has wide discretion to admit or exclude evidence under the provisions of the Federal Rules of Evidence. J.H. Wigmore, 2 Evidence Sec. 444 (Chadbourn Rev.1979); McCormick, supra, Sec. 200 (2d ed. 1972). However, for evidence to be relevant there must be some logical relationship between the proffered evidence and plaintiff's theory of the case. The mere fact that the U.S.D.O.T. report concerned U-bolt failures in Harvester trucks is not enough to make the report admissible even under the liberal standard of admissibility of Fed.R.Evid. 401. The plaintiff has the burden of establishing sufficient similarity between the accidents that were the subject of the U.S.D.O.T. investigation and his own theory of how his accident occurred, so that admission of the U.S.D.O.T. report into evidence "will make the existence of any fact that is of consequence to the determination of the action more probable" than it would be without the evidence. Fed.R.Evid. 401. The plaintiff has failed to carry this burden. 44 First, Harvester changed the U-bolt nuts that it uses in the manufacture of its trucks before the truck operated by plaintiff was manufactured and, hence, the parts are not the same as those that had been under investigation. Second, plaintiff argues that the U-bolt on the truck he was driving snapped, while the U.S.D.O.T. investigation examined the loosening of U-bolts due to nut-torque-loss. Because of these two factors, the accidents that were the subject of the U.S.D.O.T. investigation were not logically related to plaintiff's accident and admission into evidence of the 1973 U.S.D.O.T. report was an abuse of discretion. C. Expert Testimony of Future Earnings Loss 45 Plaintiff offered the testimony of Dr. Jones-Hendrickson, a professor of economics, in order to establish plaintiff's past and prospective earnings loss. Dr. Jones-Hendrickson testified that the total economic loss sustained by plaintiff was $268,569. In arriving at this figure, Dr. Jones-Hendrickson calculated the plaintiff's future earnings loss based on plaintiff's remaining life expectancy of eighteen years rather than plaintiff's remaining work-life expectancy of seven and one-half years (until plaintiff reached age sixty-five). Dr. Jones-Hendrickson also based his projections on an annual income of $14,000, more than twice the plaintiff's average annual income for the four years preceding the accident, and added $1700 in annual fringe benefits even though there was no evidence that the plaintiff had ever received fringe benefits in the past. At trial, Harvester objected to Dr. Jones-Hendrickson's testimony on the ground that these factual predicates were improper. The district court, however, admitted the testimony. 46 On the basis of the record adduced at the trial Harvester's objections should have been sustained. Dr. Jones-Hendrickson's estimate of plaintiff's future earnings loss was not accompanied by evidence that plaintiff could be expected to work beyond age sixty-five. Similarly, Jones-Hendrickson's calculation of fringe benefits loss was not accompanied by evidence that plaintiff ever received fringe benefits. And Dr. Jones-Hendrickson doubled plaintiff's proven annual income to estimate future earning loss, but no evidence was presented to demonstrate that plaintiff was likely to experience such a dramatic increase in income. On remand, plaintiff's expert's testimony must be accompanied by a sufficient factual foundation before it can be submitted to the jury. V. Conclusion 47 For the reasons stated above, we conclude that plaintiff failed to present sufficient evidence to support a finding that Harvester breached its implied warranty of fitness for a particular purpose. This being so, the jury's affirmative answer to special interrogatory number three must be grounded on a finding that Harvester breached its implied warranty of merchantability. However, under the circumstances of this case the evidence required to prove liability under section 402A (strict liability in tort) and section 2-314 (warranty of merchantability) is the same. Therefore, the jury's answers to the first and third interrogatories are hopelessly irreconcilable. We will accordingly vacate the judgment and remand for a new trial on plaintiff's section 2-314 and section 402A claims. 48 In addition, we have considered several evidentiary issues which are likely to arise again in the new trial. We hold that the trial court's refusal to grant defendant's request for an adverse inference instruction was correct, but that the court erred in permitting the U.S.D.O.T. report to be entered into evidence and in permitting plaintiff's expert to testify as to plaintiff's future earnings loss without first requiring plaintiff to establish a factual basis for this testimony. 1 The truck in question was manufactured in the United States. International Harvester of Puerto Rico, Inc. is not a party to this case 2 When a U-bolt snaps, the rear axle is separated from the chassis and slides back, pulling the drive shaft and distorting both steering and braking. Harvester maintained that if a U-bolt had snapped, the drive shaft would have fallen and gouged the road as the truck travelled almost 200 feet on the pavement before rolling down the hill. However, there was only a small gouge in the road at the point where the truck left the surface. Harvester contends that the U-bolt broke after the truck hit the guardrail and rolled down the hill. According to Harvester, the accident occurred because the plaintiff was speeding, he had worked 81 hours that week and was fatigued, and the road was wet from rain. Plaintiff presented four witnesses (a mechanic, a tow-truck operator, a Harvester engineer, and an accident reconstruction expert), in order to demonstrate that the U-bolt was defective and caused the accident. The question of sufficiency of evidence is not before us on this appeal 3 Instructions accompanying the verdict form allowed the jury to reduce damages for comparative fault under the warranty theory but not the strict liability theory. Neither party objected to this application of the comparative fault principle. A Virgin Island Statute provides that damages in an action based upon negligence can be reduced for the comparative fault of the plaintiff. V.I.Code Ann. tit. 5, Sec. 1451 (1978). This Court has extended the statute to Sec. 402A cases. Murray v. Fairbanks Morse, 610 F.2d 149 (3d Cir.1979). We do not decide here whether comparative fault is also applicable to an implied warranty recovery 4 The district court instructed the jury: Such a warranty [of fitness for a particular purpose] doesn't automatically arise from the contract of sale but depends on two factors which must exist at the time the sale is made. One that the seller at the time of the conduct [sic] of sale has reason to know or knew of the particular purpose for which the buyer is purchasing the product, and two, the seller has reason to know or knew that the buyer is relying on the skill of the seller to provide goods which would be fit for that intended purpose. If you find both of the above conditions to exist each by a preponderance of the evidence then you may find that there was a breach of the implied warranty of fitness for the particular purpose. Transcript, May 15, 1982, at 43-44. This is an incorrect statement of the law, because it failed to inform the jury that the plaintiff must prove actual reliance as well. 5 There is also no evidence in the record demonstrating that Harvester knew or had reason to know that the buyer was relying on its skill or judgment to select a truck for use in hauling water in the Virgin Islands. However, Harvester does not raise an objection on this point, and, given our holding that the plaintiff failed to prove actual reliance, it is a moot point since on retrial plaintiff is foreclosed from reasserting his implied-warranty-of-fitness-for-a-particular-purpose claim 6 The relative state of the knowledge of the two parties about the product is highly relevant, and in the unusual case in which the buyer is more knowledgeable than the seller, the seller may win on the grounds the buyer did not rely. J. White & R. Summers, Uniform Commercial Code 360 (2d ed. 1979). Even though the Harvester sales representative in Chicago knew that Howe was going to use the truck in St. Thomas, there is no evidence that he knew about the hilly terrain on the island. Moreover, it was Howe, who plainly had knowledge of the hilly terrain on St. Thomas, who requested that the springs be modified to withstand the additional stress. The apparently superior knowledge of the buyer is further support for our holding that the buyer did not actually rely on the seller 7 Harvester also objected to the late interposition of the Sec. 2-315 theory. There is much force to this contention, see Price v. Inland Oil Co., 646 F.2d 90 (3d Cir.1981), but we need not reach the timeliness issue in view of our disposition of the Sec. 2-315 claim 8 Plaintiff based his warranty of merchantability claim on V.I.Code Ann. tit. 11A, Sec. 2-314 (1965) which codifies the Uniform Commercial Code Sec. 2-314 and provides in relevant part: (1) Unless excluded or modified [Sec. 2-316], a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind .... (2) Goods to be merchantable must be at least such as ... (c) are fit for the ordinary purposes for which such goods are used .... 9 Plaintiff based the strict liability claim on Restatement (Second) of Torts Sec. 402A, which states: One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product, .... V.I.Code Ann. tit. 1, Sec. 4 (1967) adopts the Restatement as the common law in the Virgin Islands: The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute, and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary. 10 Both theories require that the product in question be defective at the time it leaves the hands of the seller. Compare Restatement (Second) of Torts Sec. 402A comment (g) ("The burden of proof that the product was in a defective condition at the time that it left the hands of the particular seller is upon the injured plaintiff") with Clark v. DeLaval Separator Corp., 639 F.2d 1320, 1326 (5th Cir.1981) (product must be defective in design, material or manufacture at the time of sale for an implied warranty of merchantability to be breached.) 11 Since the phrase "unreasonably dangerous" can suggest a higher standard of defect, many states do not use the phrase in jury instructions on strict liability. Instead, they explain the concept of defect in terms similar to the warranty theory of defect. See J. Beasley, Products Liability and the Unreasonably Dangerous Requirement 101-62 (1981) (12 states do not use the words "unreasonably dangerous" in strict liability actions); Azzarello v. Black Bros. Co., 480 Pa. 547, 554-59, 391 A.2d 1020, 1025-27 (1978) ("It is clear that the term 'unreasonably dangerous' has no place in the instructions to a jury as to the question of defect in [a products liability action]," and its inclusion in the jury charge is misleading and entitles the plaintiff to a new trial.) 12 The only real distinction between Smith and this case is that in Smith the plaintiffs owned the car and defective tire, while in this case the plaintiff's employer owned the truck and allegedly-defective U-bolt. Whatever the equitable concerns are of permitting the owner of important evidence to sell it for salvage, they do not exist where the plaintiff never owned the evidence 13 It is possible that on remand additional evidence about the plaintiff's role in permitting destruction of the U-bolt and the photographs will be developed by Harvester 14 Fed.R.Evid. 402 ("All relevant evidence is admissible, except as otherwise provided by the Constitution ... Act of Congress ... these rules, or by other rules prescribed by the Supreme Court.")	{ "pile_set_name": "FreeLaw" }
576 F.Supp. 420 (1983) T.G. and P.G., Individually, and on Behalf of Their Infant Child, "D.G.", Plaintiffs, v. BOARD OF EDUCATION OF PISCATAWAY, N.J., and the Community Mental Health Center of Rutgers Medical School, Defendants v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, INC., and Blue Cross-Blue Shield, Third-Party Defendants. Civ. A. No. 82-3948. United States District Court, D. New Jersey. December 12, 1983. Theodore A. Sussan, Spotswood, N.J., for plaintiffs. Irwin I. Kimmelman, Atty. Gen. of New Jersey by Robert K. Walsh, Newark, N.J., for Defendant Community Mental Health 421 Center of the University of Medicine & Dentistry of N.J. Pitney, Hardin, Kipp & Szuch, by Peter Laughlin, Newark, N.J., for third party defendant Blue Cross Plan of N.J. Rubin, Lerner & Rubin by David B. Rubin, New Brunswick, N.J., for defendant Board of Educ. of Piscataway. Shanley & Fisher by Charles A. Reid, III, Newark, N.J., for third party defendant Prudential Ins. Co. of America, Inc. Vanderbilt & Siegel by Alan A. Siegel, Livingston, N.J., for third party defendant Blue Shield Plan of N.J. HAROLD A. ACKERMAN, District Judge. This matter arises under the Education For All Handicapped Children Act, 20 U.S.C. § 1401 et seq. (the Act). Plaintiff D.G. is an eleven-year old boy who was classified as emotionally disturbed by the Child Study Team (CST) of the defendant Board of Education of Piscataway (Board). D.G. and his parents T.G. and P.G. commenced this action on November 22, 1982, seeking to have the defendant Board pay the principal charges plus any interest due and owing to the defendant Community Mental Health Center of the Rutgers Medical School for "psychotherapy" services allegedly provided as part of plaintiff D.G.'s Individualized Education Plan (IEP) developed by the CST. The defendant Community Mental Health Center has counterclaimed for the amount due and owing, cross-claimed for same against the defendant Board, and impleaded the Prudential Insurance Company of America, Blue Cross of New Jersey, and Blue Shield of New Jersey, all of whom are plaintiff T.G.'s health insurance carriers. This matter is presently before me on motions for summary judgment brought by plaintiffs, defendant Board of Education, and by third-party defendants Prudential Insurance Company of America, Blue Cross of New Jersey and Blue Shield of New Jersey. Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment is not to be granted unless, after all reasonable inferences have been drawn in favor of the non-moving party, there remains no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. See DeLong Corp. v. Raymond International, 622 F.2d 1135 (3d Cir.1980). With this standard in mind, I turn first to consider plaintiffs' motion for summary judgment. For the reasons which follow, I have determined to grant plaintiffs' motion. The undisputed facts relevant to this motion are as follows: Pursuant to the requirements of the Act, the Child Study Team of the defendant Board carefully evaluated plaintiff D.G.'s condition and as a result classified him as emotionally disturbed. Following discussion with D.G.'s parents, the CST recommended that D.G. be placed in a therapeutic environment in order to maximize the benefits he would receive. Specifically, the Child Study Team's IEP recommended that D.G. "[b]e provided with a totally therapeutic environment in a special education day school for the Emotionally Disturbed that will provide him with the controls and individual attention necessary for his social and emotional development. This is viewed as the least restrictive environment to meet his needs." It was agreed upon between the defendant Board and D.G.'s parents that the child would be placed in the Child Day Hospital of the Community Mental Health Center of the Rutgers Medical School, University of Medicine and Dentistry of New Jersey. This placement commenced on September 30, 1980. The Child Day Hospital is a specialized treatment program for seriously emotionally impaired children. As such, the Hospital provides, in its own words, "individual child psychotherapy, family therapy, and a broad spectrum of milieu therapy on an integrated, intensive basis." Educational services are also provided in an effort to enhance learning by each of the children involved while they are in therapy. When D.G.'s parents placed him in the Child Day Hospital, 422 they were told that the program required without exception that every child participate in the "therapeutic treatment" portion of the day program. D.G. remained at the Hospital until January 20, 1983, when, due to the success of the Hospital's program, he was able to return to his local school. The program at the Hospital had consisted of individual child psychotherapy two days a week, family therapy with the parents, and with or without the child, weekly or as indicated, mileau therapy on a daily basis, including therapeutic activity group, individual and group counseling and behavior modification, as well as special education on a daily basis in self-contained and departmentalized classes. On October 24, 1980, plaintiffs T.G. and P.G. were informed by the Community Mental Health Center that the psychotherapy provided to D.G. as part of the Hospital's program would be assessed to them, and not to the school district, and that it would be charged at a rate of $45.00 per day. The Center has to date received no payments for these charges, which at the time of D.G.'s discharge had grown to a total of $25,200.00. In 1982 the parents sought to have the Board take responsibility for the cost of the psychotherapy. The Board refused to do so, giving the parents three reasons for its decision. First, it suggested that psychotherapy was not part of the IEP agreed to by both the Board and the parents. Second, it pointed to the fact that the New Jersey Department of Education had issued a policy statement to the effect that "psychotherapy" other than that necessary for diagnostic and evaluative purposes, was not a "related service" for which a local school district would be responsible under the mandate of the Act. Finally, the defendant Board took the position that nothing else in the Act or its implementing regulations required it to pay for this service. Plaintiffs then as now responded that psychotherapy is a "related service" within the meaning of the Act, and that in any event it was an integral and, in fact, required part of the Independent Education Program agreed upon by the defendant Board, the cost of which should be borne by the Board. The Education For All Handicapped Children Act requires that all handicapped children be provided, at public expense, with a "free appropriate public education which emphasizes special education and related services designed to meet their unique needs." 20 U.S.C. § 1400(c). As Justice Rehnquist, speaking for the Supreme Court in Board of Education v. Rowley, 176 U.S. 458, 102 S.Ct. 3034, 73 L.Ed.2d 690 (1982), stated, "the Act represents an ambitious federal effort to promote the education of handicapped children, and was passed in response to Congress' perception that a majority of handicapped children in the United States `were either totally excluded from schools or [were] sitting idly in regular classrooms awaiting the time when they were old enough to "drop out"'". Id. at 179, 102 S.Ct. at 3037 (citations omitted). Under the Act, the "free appropriate public education" to be provided must be specially "tailored to meet the unique needs of the handicapped child" by means of the IEP. Id. at 181, 102 S.Ct. at 3038. The IEP is to be prepared at a meeting between a qualified representative of the local educational agency, the child's teacher, the child's parents or guardians, and where appropriate, the child. Local educational authorities must review, and if necessary, revise each child's IEP, including its statement of goals and objectives and list of specific services to be provided, at least annually. 20 U.S.C. § 1414(a)(5). Here there is no dispute that an appropriate IEP was prepared and agreed upon by the defendant Board and plaintiff parents. Further, there is no dispute that these parties also agreed to the implementation of the IEP through D.G.'s placement in the Child Day Hospital. The sole issue before me is whether the "psychotherapy" or counseling services provided by the Hospital staff to D.G. constitutes a covered "related service" within the meaning of 20 U.S.C. § 1400(c). 423 The Act itself provides the starting point for my analysis. Section 1401(17) provides that: The term `related services' means transportation, and such developmental, corrective, and other supportive services (including speech pathology and audiology, psychological services, physical and occupational therapy, recreation, and medical and counseling service, except that such medical services shall be for diagnostic and evaluative purposes only) as may be required to assist a handicapped child to benefit from special education..." The Federal Regulations promulgated pursuant to the Act provide a further layer of definitions. 34 C.F.R. § 300.13(b)(8) provides that "psychological services" as used in the Act includes: ... (V) Planning and managing a program of psychological services, including psychological counseling for children and parents. Additionally, 34 C.F.R. § 300.13(b)(2) provides that "`Counseling services' means services provided by qualified social workers, psychologists guidance counselors, or other qualified personnel." Thus, while no explicit reference to "psychotherapy" is made in either the Act or the regulations, the definitions of "related services" which are provided are indicative of a Congressional intent to include it where appropriate among those services to be provided at no cost to the parents under the Act. This conclusion is reinforced by the fact that the only two published opinions on this issue have both reached the same result. See Papacoda v. State of Connecticut, 528 F.Supp. 68 (D.Conn.1981); and In the Matter of the "A" Family, 184 Mont. 145, 602 P.2d 157 (1979). In the latter of these two cases, the Montana Supreme Court determined that, as a matter of federal law, the psychotherapy provided to an emotionally disturbed child who was placed in a residential setting pursuant to his IEP was a "related service" under the Act, despite the fact that the Montana State Board of Education had promulgated regulations which considered psychiatric therapy to be outside the definition of "related services" and thus chargeable to the parents. The Montana Supreme Court held that the federal regulations defining "related services" and "psychological services" superceded the inconsistent state regulations. In Papacoda, the District Court held that psychotherapy provided to an emotionally disturbed child as an integral part of that child's special education was a "related service" within the meaning of the Act. Both of these opinions pre-dated the Supreme Court's opinion in Board of Education v. Rowley. I find, however, that Rowley does not require a different result. In Rowley, the respondents the parents of a child with only minimal residual hearing who had been furnished by the petitioner Board with a hearing aid for use in the classroom and who received additional instruction from tutors filed suit to review a decision denying their request for a sign-language interpreter to accompany the child in all her classes. The District Court, although finding that she performed better than the average child in her class and was advancing easily from grade to grade, determined that she was not performing as well academically as she would without her handicap. 483 F.Supp. 528, 532. This disparity between her achievement and her potential led the district court to decide that she was not receiving a "free appropriate education," which it defined as "an opportunity to achieve [her] full potential commensurate with the opportunity provided to other children." Id. at 534. A divided panel of the Second Circuit affirmed. The Supreme Court reversed, holding that the Act's requirement is satisfied by the Board's provision of "personalized instruction with sufficient support services to permit the child to benefit educationally from that instruction." 458 U.S. at 203, 102 S.Ct. at 3049. The Court noted that "such instruction and services must be provided at public expense, must meet the State's educational standards, must approximate the grade levels used in the State's regular 424 education, and must comport with the child's I.E.P." Id. I conclude that the therapy provided to D.G. at the Child Day Hospital is of a different nature from the extraordinary sign-language services requested for the handicapped child in Rowley. To the contrary, both the defendant Board and the plaintiff parents agreed upon D.G.'s placement at Child Day Hospital, and the therapy provided to D.G. by the Hospital was a required part of its program. As such, the therapy was designed as an essential service to allow D.G. to simply benefit from the educational program planned for him. It was not designed as part of a package to maximize his performance in accordance with his potential, as was the case in Rowley. Additionally, while sign language translation services are not mentioned in either the Act or its regulations, both mention psychological services. In fact it is undisputed here that the so-called psychotherapy which D.G. received at the Hospital, while administered under the supervision of a trained psychiatrist, was actually provided on a day-to-day basis by a staff member with no more credentials than a Masters in Social Work degree. Thus D.G.'s therapy might be described equally appropriately as "counseling services" or "psychological counseling" both of which are specifically included by the regulations among the "related services" required to be provided at no cost to the parents under the Act. My conclusion that the services received by D.G. must be paid for by the defendant Board is unaffected by its argument that New Jersey's policy is to the contrary. The defendant Board has submitted a copy of a "Policy Statement" by James W. Richardson, Director of the Bureau of Special Education of the New Jersey Department of Education concluding that "`psychotherapy,' as a related service that goes beyond that which can be educationally provided by personnel employed by the local school district, is not the responsibility of the local school district." In so stating, Mr. Richardson relies on the definition of "related services" found in Section 6:28-1.2 of the N.J.Admin.Code. I find, however, that the definitions contained in the federal regulations must supercede inconsistent state regulations and "policy statements." See 34 C.F.R. § 300.2(a). In these circumstances I find that the therapy provided to D.G. falls within the category of "related services" the cost of which must be assumed by the defendant Board of Education of Piscataway. I will therefore grant plaintiffs' motion for summary judgment as against the defendant Board. In light of this disposition of plaintiffs' motion, I will also grant the motions for dismissal by third-party defendants Prudential Insurance Company of America, Blue Cross of New Jersey and Blue Shield of New Jersey.	{ "pile_set_name": "FreeLaw" }
298 Pa. Superior Ct. 189 (1982) 444 A.2d 724 COMMONWEALTH of Pennsylvania v. Danny GLASCO, Appellant. Superior Court of Pennsylvania. Argued February 24, 1981. Filed April 16, 1982. 191 Frank M. Jackson, Philadelphia, for appellant. Alan Sacks, Assistant District Attorney, Philadelphia, for Commonwealth, appellee. Before SPAETH, WIEAND and JOHNSON, JJ. WIEAND, Judge: Danny Glasco was tried by a jury which found him not guilty of rape[1] but guilty of simple assault,[2] indecent assault,[3] and involuntary deviate sexual intercourse.[4] On direct appeal, Glasco argues (1) that the verdicts were inconsistent, (2) that the prosecuting attorney improperly expressed an opinion concerning guilt, and (3) that the trial court erred in permitting a character witness to be asked on cross-examination regarding Glasco's prior, unrelated arrests. There is merit in the last of these contentions; and, therefore, we reverse and remand for a new trial. The charges against appellant arose from a single episode which occurred in appellant's apartment during the early morning hours of July 29, 1978. Both appellant and the complaining witness testified regarding the sexual acts which occurred. The principal issue at trial was whether they were consensual or forced. Appellant argues, therefore, 192 that the verdicts finding him guilty of involuntary deviate sexual intercourse and assault are inconsistent with the finding that he was not guilty of rape. "[T]he law in Pennsylvania . . . long has been that inconsistencies in the jury's verdict do not require the granting of a new trial so long as the evidence was sufficient to support the guilty verdicts that the jury did return." Commonwealth v. Jackson, 230 Pa.Superior Ct. 386, 389-390, 326 A.2d 623, 626 (1974). Accord: Dunn v. United States, 284 U.S. 390, 393-394, 52 S.Ct. 189, 190-91, 76 L.Ed. 356 (1932); Commonwealth v. Strand, 464 Pa. 544, 547, 347 A.2d 675, 676-677 (1975); Commonwealth v. Reed, 458 Pa. 8, 11 n. 2, 326 A.2d 356, 358 n. 2 (1974); Commonwealth v. Carter, 444 Pa. 405, 408, 282 A.2d 375, 376-377 (1971); Commonwealth v. Rosetta, 266 Pa.Superior Ct. 543, 545, 405 A.2d 952, 953 (1979). In determining whether the evidence presented at trial was sufficient to support the verdicts, we must view the evidence in the light most favorable to the Commonwealth as verdict winner and accept as true all of the evidence and reasonable inferences upon which, if believed, the jury could properly have based its verdict. Commonwealth v. Parker, 494 Pa. 196, 198, 431 A.2d 216, 217 (1981); Commonwealth v. Watson, 494 Pa. 467, 470, 431 A.2d 949, 950 (1981); Commonwealth v. Burns, 490 Pa. 352, 354, 416 A.2d 506, 507 (1980). The jury was entitled to draw reasonable inferences from the evidence, resolve any issues of credibility and believe all, part or none of the evidence presented. Commonwealth v. Stockard, 489 Pa. 209, 213, 413 A.2d 1088, 1090 (1980); Commonwealth v. Rose, 463 Pa. 264, 267-268, 344 A.2d 824, 826 (1975). So viewed, the evidence at appellant's trial was sufficient to prove guilt beyond a reasonable doubt on charges of simple assault, indecent assault and involuntary deviate sexual intercourse. Appellant contends that he is entitled to a new trial because the trial court erred in permitting the prosecuting attorney, over objection, to cross-examine a character witness regarding appellant's prior arrests for unrelated offenses. 193 The prosecuting attorney also inquired concerning the witness' knowledge of an arrest which had occurred subsequent to the date of the offense for which appellant was being tried. Thus, although appellant had not been convicted of prior crimes, the jury learned that he had been arrested in 1972 for assault and battery with intent to ravish and rape, assault with intent to commit sodomy and solicitation to commit sodomy, and in 1977 for kidnapping, indecent assault, aggravated assault, simple assault, and unlawful restraint. In addition, the jury learned that approximately five months after the incident in question, appellant was arrested for rape.[5] In his closing argument the prosecutor commented on appellant's character witness' testimony: "One can call a parish priest. One can call your neighbor. One can call somebody in the neighborhood who knows the defendant, but who does the defendant call; he calls his own brother. You have to decide how much weight you could 194 give to reputation, especially in light of the cross-examination about [sic] Lee Glasco about the defendant's reputation in the community." (N.T. 3.90-3.91) The Supreme Court in Commonwealth v. Scott, 496 Pa. 188, 436 A.2d 607 (1981), abrogated the prior rule which permitted cross-examination of character witnesses concerning the defendant's prior unrelated arrests. Chief Justice O'Brien, writing for a unanimous court, noted that "[d]espite any cautionary instruction the court may have given the jury, the undue prejudice to appellant is obvious . . . . Had appellant been convicted of the charges, it would be easier to say that he must suffer the consequences of placing his character at issue." Id., 496 Pa. at 197, 436 A.2d at 611-612. Although the instant case was tried prior to the decision in Scott, the issue of the propriety of cross-examining the character witness about appellant's unrelated arrests has been preserved. Therefore, we are required to follow the holding in Scott and award a new trial. Because we are required to award a new trial for this reason, it is unnecessary that we consider appellant's argument that during final summation the prosecuting attorney improperly expressed an opinion concerning appellant's guilt. Reversed and remanded for a new trial. NOTES [1] The trial court sustained demurrers to charges of recklessly endangering another person, making terroristic threats, and aggravated assault. [2] 18 Pa.C.S. § 2701. [3] 18 Pa.C.S. § 3126. [4] 18 Pa.C.S. § 3123. [5] The record discloses the following questions and answers during cross examination: Q: Did these people ever tell you he was arrested for rape on December 7th, 1978? A: No, they did not. Q: And he is your own brother, and no one ever told you that? A: Someone told me that Danny was arrested. That's how I found out, but Danny's friends did not tell me. Q: Did these people who you discussed his reputation in the community with for being a peaceful, law-abiding citizen ever tell you on November 7th, 1972 he was arrested for assault and battery with intent to ravish and rape; solicitation to commit sodomy; assault with intent to commit sodomy; and assault and battery with intent to ravish; did these people ever tell you that? A: No, they did not. . . . . Q: Did these people who you discussed the defendant's reputation with ever tell you on June 17th, 1977 he was arrested for indecent assault; did they ever tell you that? A: No, they did not. Q: Did they ever tell you on June 17th, 1977 he was arrested for kidnapping and unlawful restraint? A: No, they did not. . . . . Q: Did they ever tell you on June 17th, 1977 he was arrested for simple and aggravated assault? . . . . A: No, they did not. (N.T. 2.22-2.24)	{ "pile_set_name": "FreeLaw" }
448 F.2d 477 Harry BOYD, Jr., Petitioner-Appellant,v.UNITED STATES of America, Respondent-Appellee. No. 71-2217 Summary Calendar.* United States Court of Appeals,Fifth Circuit. Sept. 14, 1971. Harry Boyd, Jr., pro se. John W. Stokes, Jr., U. S. Atty., E. Ray Taylor, Jr., Asst. U. S. Atty., Atlanta, Ga., for respondent-appellee. Before COLEMAN, SIMPSON, and MORGAN, Circuit Judges. PER CURIAM: 1 Harry Boyd, Jr. has appealed from the district court's denial of his mandamus petition seeking credit on his federal sentence for certain time spent in state custody. We affirm, for the reasons stated in the district court's final order and order on rehearing, which are appended hereto. Jackson v. Attorney General, 5th Cir. 1971, 447 F.2d 747. 2 Affirmed. APPENDIX Civil Action Number 14,833 3 United States District Court Northern District of Georgia Atlanta Division Filed: Apr. 13, 1971 4 Harry Boyd, Jr., Petitioner, versus United States of 5 America, Respondent. 6 This case came on for decision on the uncontroverted facts shown by the parties' responses to the show cause order filed March 8, 1971. Since the relevant facts are undisputed, there is no need for an evidentiary hearing. Petitioner's motion for the same and for appointed counsel are denied. The petition, too, must be denied. 7 Petitioner was arrested March 14, 1969, by state officials in Montgomery, Alabama, and was extradited to Louisiana May 9, 1969, where he was held by Louisiana officials in connection with traffic violations and state charges of forgery and knowing receipt of stolen money orders. Bail of $20,000 was set on the state charges. On May 17, 1969, a detainer was filed against the petitioner with Louisiana officials, by local Texas authorities in connection with certain Texas charges. On August 4, 1969, a federal detainer was also lodged against the petitioner, based upon charges that he committed certain bailable federal offenses. He was indicted on the federal charges February 5, 1970, and bail was set at $3,000. He was returned to Alabama, tried in the United States District Court for the Middle District of Alabama, and convicted of violating 18 U. S.C.A. Sec. 2314 (transportation of stolen securities in interstate commerce) and 18 U.S.C.A. Sec. 371 (conspiracy). The state charges of forgery, and receipt of stolen money orders were nol-prossed, and petitioner was committed to serve his federal sentence June 25, 1970. 8 Petitioner claims that under 18 U.S.C.A. Sec. 3568 and Davis v. Attorney General, 425 F.2d 238 (5th Cir. 1970) he is entitled to credit on his federal sentence for the time he spent in custody between his original arrest and his federal commitment. However, the Court does not agree that during that period, petitioner was in custody "in connection with the offense or acts for which [the federal] sentence was imposed." In Davis the petitioner was refused release on state bail because a federal detainer had been lodged against him. Since that detainer had been issued on a mandatory release violator's warrant, in Davis the prisoner could not have secured his release by obtaining admission to federal bail as well as state bail. Here, to the contrary, petitioner could have obtained his release by posting state bond, applying to be admitted to federal bail, and then posting federal bond or obtaining release on his personal recognizance or unsecured bond pursuant to Section 3(a) of the Bail Reform Act of 1966, 18 U.S.C.A. Sec. 3146. In short, petitioner was not in custody "in connection with" his federal offenses because, at any time during his pre-trial state custody, he could have been admitted to federal bail by taking appropriate steps under the Bail Reform Act of 1966, Pub.L. 89-465, 80 Stat. 217. 9 The thrust of Davis is to the effect that denial of state bail must be caused by the federal detainer. If state bail is granted, petitioner is then free to seek federal bail and no credit for state custody is allowed. As a corollary, it seems useless for a prisoner to make state bail if immediate federal custody -not subject to bail-is to follow. Consequently, in those two instances the courts will grant credit towards a subsequent federal sentence for the "jail time" spent in state custody. However, some petitioners appear to contend that the mere presence of a state and federal charge at the same time automatically grants credit. It does not. If both charges are bailable, a prisoner is free to seek the right of bail in each instance. Failure to do so does not inure to receive double credit. Thus, Davis applies only where a prisoner continues in state custody solely because of the presence of a federal detainer issued in connection with a non-bailable federal offense, or a federal offense for which bail has been refused. 10 Under 18 U.S.C.A. Sec. 3568, the Attorney General is to credit a prisoner only with those days spent in custody "in connection with the offense or acts" for which his federal sentence was imposed. It appearing that the time petitioner was in state custody between his arrest and federal commitment was not spent in custody "in connection with the offense or acts" for which his federal sentence was imposed, it follows that petitioner is not entitled to the credit he seeks, and the motion for a writ of mandamus is denied. 11 It is so ordered. 12 This the 9th day of April, 1971. 13 (Signed) SIDNEY O. SMITH, JR. Sidney O. Smith, Jr. United States District Judge 14 Civil Action Number 14,833 United States District Court 15 Northern District of Georgia Atlanta Division 16 Filed: May 14, 1971 Harry Boyd, Jr., versus United States of America 17 Petitioner has filed a motion to vacate the judgment entered on his petition for a writ of mandamus. The motion will be denied. 18 Only two points need discussion. Petitioner argues that the documentary evidence raises an issue of fact as to whether a federal detainer was filed with Louisiana officials on August 4, 1969, as determined by the Court, or on June 30, 1969. And he also urges that federal bail was not in fact set until February 9, 1970. Under the theory upon which the case was decided, the dates the detainer was filed, and federal bail was actually set are not crucial facts. The Court merely held that Davis does not apply where the federal detainer is based on a bailable offense, because the petitioner is free to post state bail and then obtain admission to federal bail. Whether a prisoner chooses to take these steps, and when they actually are taken is of no consequence. 19 Here, petitioner could have posted his Louisiana bail any time after it was set, which apparently was in May, 1969. He would have had to make similar arrangements in connection with Texas charges, a detainer for which was filed with Louisiana officials May 17, 1969. Then, the only cause for holding him would have been the federal detainer. 20 Assuming that the petitioner could have made all arrangements to post state bail by June or July, 1969, and even recalling that he was not actually indicted on the federal charges until February, 1970, once a federal warrant was the sole cause of his confinement he could have quickly obtained a preliminary hearing and either a complete discharge or admission to bail, under Fed. R.Crim.P. 5 and the Bail Reform Act of 1966, Pub.L. 89-465, 80 Stat. 217. It follows that petitioner's contentions as to the date the federal detainer was lodged against him and the date federal bail was finally set do not affect the Court's decision. 21 Accordingly, the motion to vacate judgment is denied. 22 It is so ordered. 23 This the 12th day of May, 1971. 24 (Signed) SIDNEY O. SMITH, JR. Sidney O. Smith, Jr. United States District Judge * Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5th Cir. 1970, 431 F.2d 409, Part I	{ "pile_set_name": "FreeLaw" }
14 Mass. App. Ct. 12 (1982) 436 N.E.2d 431 MARY R. CARROLL vs. JAMES J. GILLESPIE & another.[1] Appeals Court of Massachusetts, Plymouth. January 21, 1982. June 14, 1982. Present: GOODMAN, CUTTER, & GREANEY, JJ. Robert F. Murphy for the defendants. Joseph A. D'Agostino for the plaintiff. GREANEY, J. The plaintiff brought this action to recover damages from the defendants James J. Gillespie (Gillespie) and Gillespie Ford Sales, Inc. (dealership) on six separate theories, including malicious prosecution, abuse of process and slander. At trial in the Superior Court, the defendants filed motions for directed verdicts, Mass.R.Civ.P. 50(a), 365 Mass. 814 (1974), which were denied as to the three 13 claims above.[2] The issues were then submitted to the jury by way of special questions. Mass.R.Civ.P. 49(a), 365 Mass. 812-813 (1974). In answer to those questions, the jury found for the plaintiff on the claims for malicious prosecution and abuse of process, and assessed damages in the amount of $7,500 on each claim. The jury found for the defendants on the claim for slander. Judgment was entered on the verdicts in the amount of $15,000, and the defendants appealed.[3] The issue presented is whether the defendants' motions for directed verdicts on the claims for malicious prosecution and abuse of process were properly denied. We hold that they were. The evidence presented at trial leaves material facts in dispute. See note 10, infra. We therefore view the evidence in the light most favorable to the plaintiff. Willis v. Gurry, 331 Mass. 19, 20, 21-22 (1954). Quaranto v. Silverman, 345 Mass. 423, 424 (1963). Smith v. Eliot Sav. Bank, 355 Mass. 543, 545 (1969). Seelig v. Harvard Coop. Soc., 1 Mass. App. Ct. 341, 343-344 (1973). So viewing the evidence, the jury could have found the following facts. The plaintiff lived with one Frank Carroll in a house which they owned in Marshfield. During the period in issue, Carroll was working in Alliance, Ohio, and the plaintiff made several trips between Marshfield and Alliance, living for various periods in each place. In December, 1975, 14 while in Marshfield, the plaintiff damaged Carroll's car in an accident, and it was taken to be repaired at Gillespie Ford. Due to a mistake, however, the dealership's form order for the repairs was made out in the name of "Fran" (rather than Frank) Carroll.[4] Several weeks later, lacking local transportation, the plaintiff joined Carroll in Ohio. She remained there for several months, apparently due in part to the fact that the insurance coverage for the repairs was disputed, and ultimately denied. In the last week of March, 1976, the plaintiff returned to Marshfield, and Carroll sent her the funds necessary to pay for the repairs. The funds were sent in the form of a certified check for $1,500, drawn by Carroll on the First National City Bank of Alliance, Ohio. The check, however, was payable not to the dealership, but to "Mrs. Mary Carroll." On April 1, 1976, the plaintiff went to the dealership to pick up the car. In payment for the repairs, the plaintiff gave the certified check to the dealership's cashier. The bill totalled $1,425.65, and the cashier returned $74.35 in change. By inadvertence, however, the plaintiff had failed to endorse the check, and the cashier failed to notice that there was no signature on the back. Several days later, the plaintiff left Marshfield and rejoined Carroll in Ohio.[5] On April 2, 1976, the dealership deposited the check to its account with the Lincoln Trust Company in Marshfield. 15 On April 12, 1976, the bank returned the check to the dealership with a stamped notation that it lacked the endorsement of the payee. The dealership received the check by April 13, 1976. On April 14, 1976, the dealership redeposited the check. At that time, a signature appeared on the back in the name of "Mrs. Mary Carroll." On June 16, 1976, the Ohio bank which issued the check asked the plaintiff in Alliance to examine the endorsement. She did so, and stated that the signature was not hers. At the request of the bank, she then signed a form affidavit which stated that she had not endorsed the check nor authorized anyone else to do so; that she had not received any proceeds or benefit from the check; and that the signature of endorsement was a forgery. The Ohio bank then returned the check to the Lincoln Trust Company. On June 24, 1976, Lincoln Trust informed Gillespie by letter that there had been an "alleged forgery of endorsement," and returned the check along with a copy of the plaintiff's affidavit. On June 25, 1976, Gillespie went to the Plymouth District Court and met with Sergeant Andrew P. Gerard, a Marshfield police officer and the town prosecutor. From the officer's testimony at trial, and his original written report, the account of that meeting most favorable to the plaintiff appears as follows. Gillespie showed the officer the check, the affidavit, and the bank's letter, and told him that he had received a bad check for car repairs from a woman who identified herself as Fran Carroll. Specifically, Gillespie represented that the endorsement on the check had been forged, that "Mrs. Carroll was the person that forged it," and that she had done so "in the ... [dealership] office." He also stated that his son had seen a "for sale" sign on her house, that she was "about to leave for Ohio with the motor vehicle" which the dealership had repaired, and that she also used the name Romanski.[6] Gillespie further told the 16 officer that "he wanted his money for the check" and that "he wanted the police to arrest" the plaintiff. Officer Gerard advised Gillespie, according to "standard policy," that the acts which he alleged amounted to felonies, that these were serious charges, and that they were likely to lead to the plaintiff's arrest. He further informed Gillespie that the police department was "not concerned with the restitution of his monies ... [but with] criminal acts," and that it was "not a collection agency." Gillespie acknowledged that he understood the seriousness of his charges, including the possibility that the plaintiff would be arrested. The officer proceeded to confirm that there was a "for sale" sign on the plaintiff's house and that no one was at home. He then applied for complaints charging the plaintiff with forgery, uttering a false instrument, and larceny by false pretense.[7] The complaints issued that same day, along with three warrants for the plaintiff's arrest. On or about August 13, 1976, the plaintiff returned to Marshfield. Gillespie apparently learned of her return. On August 16, 1976, he called the Marshfield police and told them that she was at home. That evening, two officers went to the plaintiff's home and arrested her. She was placed in the back of the cruiser, taken to the police station, and booked on the outstanding charges. The plaintiff spent that night in jail. She was arraigned the following morning, and then released on bail pending trial. At the arraignment, the judge asked Officer Gerard to inquire of Gillespie whether he could provide a witness at trial who actually saw the plaintiff sign the check. The officer did so that afternoon, and Gillespie said that he could. At trial on October 19, 1976, Gillespie failed to appear but sent the dealership's cashier, one Joseph Comich, as a witness. Comich testified that he had accepted the check, but could not recall whether he saw the plaintiff endorse it, or whether 17 it was endorsed when he received it. Officer Gerard attempted to consult Gillespie but was told that he could add nothing to the cashier's testimony. Following trial, the plaintiff was acquitted on all three charges. At the trial of the present action Gillespie was called by the plaintiff. He admitted that when he met with Officer Gerard on June 25, 1976, he did not know who had endorsed the check, and that he currently had "no idea" whether it was the plaintiff who signed it. Gillespie denied telling the officer that the check was signed in the dealership office. At trial, his testimony was that he (Gillespie) "was told" that sometime between April 12 and April 14, 1976, an employee of the dealership went to the plaintiff's house with the check and gave it to Carroll, who took it inside, and returned it bearing an endorsement. On cross-examination, however, he testified that this employee did not see the plaintiff at the house; that the employee did not see who signed the check; and further, that none of the dealership's employees saw the signing of the check at any time. Gillespie admitted telling Officer Gerard that "I wanted to collect my money," and admitted that this was, in fact, his purpose.[8] He denied telling the officer that he wanted the plaintiff arrested, but conceded that he probably said that he "wanted her brought into court." In general, Gillespie 18 took the position that he left the matter "in the incapable [sic] hands of Sergeant Gerard."[9] 1. Malicious prosecution. In an action for malicious prosecution, "the essence of the tort is ... interference with the right to be free from unjustifiable litigation." Foley v. Polaroid Corp., 381 Mass. 545, 552 (1980), citing Prosser, Torts § 119, at 834 (4th ed. 1971). The essential element to be proved is that the defendant lacked probable cause to believe that the plaintiff had committed the crime charged, and the plaintiff has the burden of proving that element. Morreale v. DeZotell, 10 Mass. App. Ct. 281, 281-282 (1980), and cases cited. The defendants argue that the plaintiff's proof was insufficient to support a finding that Gillespie lacked probable cause. In addition, they contend that even if probable cause was lacking, Officer Gerard's official decision to bring the complaints relieved the defendants of responsibility for the prosecutions. We review these arguments in the context of motions for directed verdicts under the rule that "if there is any evidence to support ... [findings] essential to the maintenance of the cause of action, it must be submitted to the jury." Willis v. Gurry, 331 Mass. at 21-22. See Boyle v. Wenk, 378 Mass. 592, 593 (1979).[10] 19 Probable cause in the context of a civil action for malicious prosecution[11] has long been defined as "such a state of facts in the mind of the ... [defendant] as would lead a man of ordinary caution and prudence to believe, or entertain an honest and strong suspicion," that the plaintiff had committed a crime (emphasis supplied). Lincoln v. Shea, 361 Mass. 1, 4-5 (1972), quoting from Muniz v. Mehlman, 327 Mass. 353, 359 (1951), quoting from Bacon v. Towne, 4 Cush. 217, 238-239 (1849). As this definition suggests, probable cause is judged by an objective, rather than a subjective, standard. Seelig v. Harvard Coop. Soc., 1 Mass. App. Ct. at 344. See Coblyn v. Kennedy's, Inc., 359 Mass. 319, 326 (1971). Thus, the defendant's belief in the plaintiff's guilt must have been such as would exist "in the mind of a reasonable man." Bacon v. Towne, supra at 239. Stone v. Crocker, 24 Pick. 81, 86 (1832) ("an ingenuous and unprejudiced man, of common capacity, in the defendant's situation"). In determining whether the defendant's belief was reasonable in an objective sense (or more accurately, whether the evidence supported a finding that it was unreasonable), we examine the information known to him "at the time he instituted the complaint rather than ... what may turn out later to have been the actual state of things." Lincoln v. Shea, supra at 5, quoting from Muniz v. Mehlman, supra. Implicit in this inquiry, however, is the question whether it 20 was reasonable for the defendant to have relied upon that information, given its quality, quantity, and the availability of additional information. The answer to this question depends on the facts of the individual case. In several instances, the information known to the defendant was held to have been so trustworthy as to require the conclusion, as matter of law, that reliance upon it was reasonable. See Seelig v. Harvard Coop. Soc., supra at 346-347 (defendant knew that plaintiff had made written confession, though he was unaware that police officer may have dictated portions). See also Lincoln v. Shea, supra at 5-6 (defendant knew that plaintiff's driver's license was under suspension, though he was unaware that the snowplow plaintiff was driving did not fit the statutory definition of a motor vehicle). In some situations, then, knowledge of reliable information relieves the defendant of "the obligation of sifting and evaluating other possibly exculpatory evidence" regarding the crime of which the plaintiff is suspected. Seelig v. Harvard Coop. Soc., supra at 347.[12] In several other cases, however, the information known to the defendant was held to have been sufficiently unreliable or incomplete to support a finding that it was unreasonable to rely upon it without additional information. See Griffin v. Dearborn, 210 Mass. 308, 313 (1911) (where defendant knew that his horse was taken by G's minor son, and did not know whether the son did so, as the son claimed, on order from G, "[t]he defendant's immediate prosecution of the son without any precedent investigation" could be found to lack reasonable grounds); Smith v. Eliot Sav. Bank, 355 Mass. at 548 (where defendant bank failed to pursue information as to whereabouts of S, in whose name unauthorized withdrawals were made, and teller identified the plaintiff as forger seven months after brief withdrawal transaction, jury could have found that identification was 21 "so suspect that a `man of ordinary caution and prudence' would not have relied upon it," quoting from Bacon v. Towne, 4 Cush. at 239). From these cases, it appears that private persons are not at liberty to initiate criminal prosecutions precipitously, on the basis of information which is neither reasonably complete nor reliable. Rather, where a person has some information which suggests that another has committed a crime, it is first "[h]is duty ... to ascertain ... whether there is reasonable and probable cause for a prosecution." Herniman v. Smith, [1938] A.C. 305, 319, quoted in Higgins v. Pratt, 316 Mass. 700, 709 (1944), and Muniz v. Mehlman, 327 Mass. at 360. Where that duty is not satisfied, a complainant will be subject to liability under the general principle outlined long ago by Chief Justice Shaw: "A man ought not to take out legal process, to ... arrest the person of another, without some knowledge on the subject; and he ought to be responsible for the consequences, if he does this in utter recklessness and ignorance." Willis v. Noyes, 12 Pick. 324, 327 (1832), quoted in Higgins v. Pratt, supra at 710. More recently, the principle for determining liability has been defined in specific terms by the Restatement (Second) of Torts (1977), which summarizes the current test of probable cause as follows: "the defendant has probable cause only when a reasonable man in his position would believe, and the defendant does in fact believe, that he has sufficient information as to both the facts and the applicable law to justify him in initiating the criminal proceeding without further investigation or verification." Id., § 662, Comment j, at 429.[13] 22 Applying these principles here, in the context of motions for directed verdicts, we think that the information known to Gillespie was insufficient to require the conclusion, as matter of law, that it was reasonable to initiate complaints against the plaintiff without obtaining additional information. Gillespie specifically represented to Officer Gerard that the plaintiff had committed a "forgery." In view of that representation, the issue of probable cause turned on whether it was reasonable for Gillespie to believe that it was the plaintiff who endorsed the check. We examine the essential evidence on that issue. Gillespie testified at trial that he was not personally involved in the dealership's handling of the check until June 24, 1976, when he received the check back from the bank along with a copy of the plaintiff's affidavit. Even if we accept that testimony, however, it is clear that Gillespie learned at least the following facts at that time: that the check was not endorsed when the dealership originally received it; that it had previously been returned by the bank for that reason; that it was then redeposited by the dealership with a signature on the back; and that the plaintiff had sworn in an affidavit that she did not sign the check, and that her signature had, in fact, been forged. In addition, Gillespie admitted at trial that he had no personal knowledge then, or at any other time, whether the plaintiff had signed the check. Based on these facts, the jury could certainly have found that at the time Gillespie first became involved in the matter, which was the day before he met with Officer Gerard, he lacked 23 probable cause to charge that the plaintiff had committed a forgery. Moreover, the jury could have concluded that given the plaintiff's assertion that she did not endorse the check, and particularly given Gillespie's previous lack of involvement, a reasonable person in his position would have considered the possibility that one of his own employees had signed the check, and would have investigated that possibility.[14] Gillespie testified that he attempted in several ways to obtain additional information on the matter. However, we do not think those efforts, viewed in the light most favorable to the plaintiff, were sufficient to require a finding that his duty of reasonable investigation had been satisfied.[15] Nor did those efforts yield sufficient information to require a 24 finding that probable cause existed. The only additional information which Gillespie obtained was that an employee had allegedly taken the check to the plaintiff's house and returned to the dealership with the endorsement. We do not deal with the credibility of Gillespie's testimony on this point. It is clear from his own testimony, however, that he may have heard this information from an employee other than the one involved; that the employee did not see the plaintiff endorse the check; and that he did not even see her present at the house. Given such defects, this information lacked reliability, and did nothing to show that it was reasonable for Gillespie to believe that the plaintiff was the person who signed the check.[16] Moreover, it appears that Gillespie did not relate this account of the endorsement to Officer Gerard, but told him that the check was endorsed in the office of the dealership, a discrepancy which is not explained by the record. In sum, we think the evidence permitted a finding that Gillespie recklessly made categorical statements to Officer Gerard accusing the plaintiff of forgery based on ambiguous and superficial information, and that those statements resulted in the plaintiff's arrest.[17] It is established in a related 25 context that an individual's freedom of movement cannot be subject to the "`honest ... suspicion' of a shopkeeper ... [acting] on his own `inarticulate hunches.'" Coblyn v. Kennedy's, Inc., 359 Mass. at 325 (false arrest). Likewise, in the present context, probable cause requires not only a subjective belief that another has committed a crime, but also objective facts which provide reasonable support for that belief. See Restatement (Second) of Torts, supra. In the present case, we conclude that the objective facts supporting the defendants' belief were insufficient to require that verdicts be directed in their favor, and that the issue of probable cause was properly left to the jury. Our conclusion is not altered by the defendants' alternative argument that Officer Gerard's official decision to bring the complaints relieved them of responsibility for the prosecutions. It is apparent from the discussion above that this is not a case in which the defendant "made a fair and full presentation of facts to the officer and left the course to be pursued to his judgment without pressure or coercion." Mason v. Jacot, 235 Mass. 521, 525-526 (1920), summarizing the situation in Burnham v. Collateral Loan Co., 179 Mass. 268, 273-274 (1901). See Seelig v. Harvard Coop. Soc., 355 Mass. 532, 536 (1969). Here, Gillespie specifically told Officer Gerard that "he wanted the police to arrest" the plaintiff, or at least that he "wanted her brought into court." In this situation, the officer's application for the complaints "might fairly be regarded as within the terms of the directions given to [him]" by the defendant. Mason v. Jacot, 26 supra at 525. See Griffin v. Dearborn, supra. Accordingly, the defendants' motions for directed verdicts were properly denied on this ground. 2. Abuse of process. As to the abuse of process claim, the defendants likewise argue that the denial of their motions for directed verdicts was error. On the evidence discussed above, we disagree. The essence of this tort is the malicious use of legal process "to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed." Jones v. Brockton Pub. Mkts., Inc., 369 Mass. 387, 389 (1975), quoting from Quaranto v. Silverman, 345 Mass. at 426. Chemawa County Golf, Inc. v. Wnuk, 9 Mass. App. Ct. 506, 508-509 (1980). See Restatement (Second) of Torts, supra, § 682, Comment a, at 474; Prosser, Torts, supra, § 121, at 856-857. Here, the evidence was sufficient to support findings that Gillespie initiated the complaints with knowledge that they were groundless, see Lorusso v. Bloom, 321 Mass. 9, 10 (1947), and cases cited; Prosser, Torts, supra; that he sought to use the criminal process to collect a civil debt, see note 8, supra; cf. Griffin v. Dearborn, supra; Pihl v. Morris, 319 Mass. 577, 580 (1946); and that he did so in spite of Officer Gerard's explicit warning that this was not its proper purpose. The defendant's motions were therefore properly denied. Judgment affirmed. NOTES [1] Gillespie Ford Sales, Inc. [2] The motions were allowed as to the plaintiff's additional claims. Verdicts were directed at the close of the plaintiff's case on a claim for false imprisonment, and at the close of all the evidence on claims for libel and intentional infliction of emotional distress. The plaintiff does not challenge the propriety of these rulings on appeal. [3] The defendants have not argued that the award of damages for both malicious prosecution and abuse of process constitutes an impermissible double recovery in these circumstances. See and compare Darmetko v. Boston Housing Authy., 378 Mass. 758, 761-763 (1979); Simon v. Solomon, 385 Mass. 91, 107-111 (1982). Cf. McGrath v. Mishara, 386 Mass. 74, 83-87 (1982). Accordingly, we do not consider that issue, and express no opinion as to its merits. Mass.R.A.P. 16(a) (4), as amended, 367 Mass. 921 (1975); Barclay v. DeVeau, 384 Mass. 676, 682 n. 14 (1981). We note, however, that the judge's charge on damages is not included in the appendix. [4] The plaintiff testified, without contradiction, that she informed an employee of the dealership that the car was owned by Frank Carroll. In addition, both the repair order and a subsequent written estimate were introduced in evidence, and the jury could have found that the name on those forms was filled out in the same handwriting as the repairs which they itemize. Cf. Priorelli v. Guidi, 251 Mass. 449, 450 (1925); Buker v. Melanson, 8 Mass. App. Ct. 325, 330 (1979). Based on this evidence, the jury could properly have concluded that the name "Fran" Carroll was listed on the repair order by mistake, and that the mistake was made by the employee of the dealership who filled out the form. [5] The plaintiff did not take the car with her to Ohio. Upon driving it home from the dealership, she found that it was not in proper working condition, and the car was returned to the dealership the following day. [6] The plaintiff's legal name was Mary Romanski. She testified, however, that she considered Frank Carroll her common law husband, and that she had conducted all of her business, and maintained all of her identification, in the name of Mary Carroll since she began living with Frank in 1973. She also testified that she had never used the name Fran Carroll. [7] See respectively G.L.c. 267, § 1; G.L.c. 267, § 5; G.L.c. 266, § 30. [8] On this point, Gillespie's testimony was as follows: "Q. You intended that ... [the plaintiff] should be tried on these charges, did you not? .... A. Unless my money was secured before then, sir. Q. Isn't it true, Mr. Gillespie, [that] what you really wanted out of this was to collect your money? A. In essence, yes, sir. .... Q. Mr. Gillespie, isn't this what you wanted, you wanted your money? A. Yes, sir. Very simple, I wanted my money, sir." [9] The Marshfield police department's entire file on the case was introduced in evidence without objection. The file contained various reports, notes and other documents which tended to corroborate material aspects of Officer Gerard's testimony, and to contradict Gillespie's testimony. From this, the jury could have concluded that portions of Gillespie's trial testimony, particularly concerning his meeting with the officer, were false. [10] We are aware that there is special "distribution of function between judge and jury which distinguishes malicious prosecution actions from other torts." Seelig v. Harvard Coop. Soc., 1 Mass. App. Ct. at 345. See Stone v. Crocker, 24 Pick. 81, 84-85 (1832); Annot., 87 A.L.R.2d 183, 186-188 (1963). "It has been said repeatedly that when the facts are fully established or undisputed, probable cause becomes a question of law." Keefe v. Johnson, 304 Mass. 572, 577 (1939). Lincoln v. Shea, 361 Mass. 1, 5 (1972). In those situations, this rule apparently has the practical effect of requiring the judge to decide the issue of probable cause, even though the evidence, viewed under the usual directed verdict standard, is sufficient to permit the jury to decide the issue. It is equally well established, however, that the rule applies only in the situations specified, Casavan v. Sage, 201 Mass. 547, 553 (1909); Griffin v. Dearborn, 210 Mass. 308, 312-313 (1911), and that "[w]hen the facts are disputed ... probable cause is a question for the jury." Seelig v. Harvard Coop. Soc., supra at 344. See Stone v. Crocker, supra at 85. In the present case, it suffices to say that the evidence set out above raises disputes of material fact, and that they bear not on whether the plaintiff actually committed the crimes charged, but on whether the defendants had probable cause to believe that she did. See Lincoln v. Shea, supra at 5 n. 1. We therefore proceed to the usual inquiry whether the evidence most favorable to the plaintiff supports a finding that probable cause was lacking. [11] We have no occasion to compare "probable cause" for this purpose with "probable cause" justifying various actions in criminal prosecutions. [12] Cf. Burnham v. Collateral Loan Co., 179 Mass. 268, 275 (1901) (investigation unnecessary where it would be immaterial to crime suspected); Keefe v. Johnson, 304 Mass. 572, 578 (1939) (investigation unnecessary where there is no one of whom to inquire). [13] The test articulated by the Restatement is in accord with the law of a number of other jurisdictions. See Watzek v. Walker, 14 Ariz. App. 545, 548-549 (1971) (holding that investigation was insufficient prior to prosecution for forgery of check); Food Fair Stores, Inc. v. Kincaid, 335 So.2d 560, 563 (Fla. Dist. Ct. App. 1976); Hoene v. Associated Dry Goods Corp., 487 S.W.2d 479, 483 (Mo. 1972); Boose v. Rochester, 71 App. Div.2d 59, 67-68 (N.Y. 1979); Lambert v. Sears, Roebuck & Co., 280 Or. 123, 131-132 (1977). See also Prosser, Torts, supra at 842. The Restatement suggests that the following factors are important in determining whether further investigation should have been made: "the necessity of prompt action to prevent escape; the availability of information other than that in the possession of the accuser; the existence of a ready opportunity to obtain an explanation from the person accused or to ascertain his reputation; the character of the source from which the accuser's information comes. The accuser may properly be required to make inquiry as to the veracity of his informants when his belief is founded upon their information. He may even be required to distrust the accuracy of his own observations when they are made under such circumstances that they may be suspected of inaccuracy. In all these cases the fact that an investigation might prove dangerous, or the probability that it would be futile, are matters to be taken into account." Id. at 428-429. [14] The plaintiff testified that she was in Ohio between April 12 and April 14, 1976, which raises the inference that she could not have been the person who endorsed the check for redeposit. Gillespie testified that he learned from his records that the check must have been endorsed during that period, although there is nothing to show that he did so prior to meeting with Officer Gerard. It is apparent, however, that he did not learn that the plaintiff had been in Ohio during that period. We note that this misapprehension might well have been avoided if Gillespie had simply written to the plaintiff at the Ohio address stated in her affidavit, which he might reasonably have been expected to do in the course of his investigation. See Smith v. Eliot Sav. Bank, supra (involving defendant's failure to pursue information regarding suspect's whereabouts). In addition, we note that Gillespie's belief at the time of his complaint that the plaintiff was moving to Ohio was not alone sufficient to establish probable cause. See Londy v. Driscoll, 175 Mass. 426, 427 (1900) (involving prosecution against a Boston resident who travelled frequently brought by a person who believed that the resident lived out of State). [15] Gillespie testified that he asked several of the dealership's employees "who had signed" the check. The record does not show, however, that he did so prior to meeting with Officer Gerard. In any event, he later stated, either in contradiction of the testimony above or by way of clarification, that he did not ask any employee whether that employee had signed the check. In addition, Gillespie testified that on the morning of his meeting with Officer Gerard, he first went to the plaintiff's house in an effort to talk to her. That testimony, however, is contradicted by Officer Gerard's report, which states that Gillespie told him that he sent his son to the house. Finally, Gillespie implied that he had made other attempts to consult the plaintiff, but his testimony contains no specification of when or how he did so. [16] Even if it had been reasonable for Gillespie to believe that the plaintiff signed the check, it is difficult to understand how he could reasonably have believed that she had committed a forgery. The check was payable to Mary Carroll, it was endorsed in that name, and Gillespie believed that it was the plaintiff who had endorsed it. Thus, Gillespie could only have believed that the plaintiff was not Mary Carroll, but Mary Romanski or Fran Carroll. Gillespie testified, however, that he did not begin to deal with this matter until the check was returned with the plaintiff's affidavit; and that affidavit, also in the name of Mary Carroll, stated not only that she had not endorsed the check, but further, that someone had forged her signature. When questioned at trial why, in light of this information, he proceeded to charge the plaintiff with forgery, Gillespie conceded that it seemed "pretty stupid" in hindsight. [17] In fairness, it should be noted that the plaintiff was not entirely blameless in this matter. She was, of course, justified in disclaiming the endorsement if the signature was not hers. But just as Gillespie failed to talk to her in order to resolve this problem, she also failed to consult him. In addition, the defendant suggests that the plaintiff's affidavit was at least partially false insofar as it asserted that she had not received "any benefit" from the check. Although it is true that the car was returned to the plaintiff in exchange for the check, we note that it was returned to the dealership the following day on the ground that the repairs were insufficient, see note 5, supra, and there is nothing to show whether the car was thereafter returned to the plaintiff, or whether the defendants were thereafter paid in full for the repairs. At trial, the plaintiff testified as to her state of mind regarding the "benefit" allegation in the affidavit, and she was cross-examined on that subject. For present purposes, it suffices to say that Gillespie's knowledge of that allegation was not sufficient to establish, as matter of law, that it was reasonable for him to initiate the complaints without additional information.	{ "pile_set_name": "FreeLaw" }
404 B.R. 140 (2009) In re NEW TOWNE DEVELOPMENT, LLC, Debtor. No. 09-10029. United States Bankruptcy Court, M.D. Louisiana. April 24, 2009. 142 William E. Steffes, Steffes, Vingiello & McKenzie, LLC, Baton Rouge, LA, for debtor. 143 MEMORANDUM OPINION DOUGLAS D. DODD, Bankruptcy Judge. Introduction Michael L. Huye, J. David Matthews and Shearwater Communities, L.L.C. (collectively "Petitioning Creditors") filed an involuntary bankruptcy petition against alleged debtor New Towne Development Group, L.L.C. ("New Towne") on January 13, 2009. Shortly afterward Old Towne Development Group, L.L.C. ("Old Towne"), New Towne's principal secured creditor, moved to dismiss or convert the case or alternatively for appointment of a chapter 11 trustee. The court denied Old Towne's motion to dismiss the involuntary chapter 11 petition because as a non-petitioning creditor, it lacked standing.[1] When the alleged debtor did not oppose the involuntary petition, the court ordered relief on March 3, 2009.[2] Because New Towne is now a debtor, Old Towne's Motion to Dismiss Chapter 11 or Appoint Chapter 11 Trustee or Convert to Chapter 7 (P-6, refiled as P-24), as well as the Motion of Petitioning Creditors to Appoint Chapter 11 Trustee (P-18), now are ripe. The History of New Towne and the Dispute Leading it to Bankruptcy Court New Towne Development Group, L.L.C. is a Louisiana limited liability company formed in 2006.[3] Its members signed an operating agreement dated September 10, 2007[4] contemplating the acquisition and development of real property.[5] The dispute that culminated in the filing of an involuntary petition relates to control of the debtor, so its membership and management are relevant. New Towne's members are Shearwater Communities, L.L.C. ("Shearwater") (50%), JRJ Development, L.L.C. ("JRJ") (30%) and Welltown Investments, L.L.C. ("Welltown") (20%).[6] The company's members delegated authority to run the project to a board of managers[7] that Matthews chaired initially.[8] John Engquist, Patrick and Michael Campesi, J. David Matthews and Christopher Mestayer later comprised New 144 Towne's board of managers,[9] though Matthews and Mestayer handled New Towne's day to day affairs. New Towne bought about 420 acres of land in Zachary, Louisiana on September 11, 2007 using financing from BancorpSouth Bank ("BancorpSouth"). It planned to create a traditional neighborhood development to be named Americana.[10] By April 2008, some of New Towne's members decided to end Matthews's association with the project.[11] At an April 18, 2008 meeting New Towne's board of managers voted to revoke Matthews's authority to act for the company.[12] It also terminated him as chair of the board of managers and as project developer.[13] New Towne's members met August 12, 2008 to discuss a capital call to enable the company to pay expenses that included interest on its debt to BancorpSouth for the land purchase. The payment was due September 9, 2008. Matthews, as representative of Shearwater, was the only member to vote against a $1.2 million capital call.[14] The managers did vote to make a capital contribution of $500,000,[15] but that was not enough to pay between $700,000 and $750,000 in interest coming due on the bank debt. In early September 2008, Matthews rejected Engquist and the Campesis' offer to buy Matthews's interest in New Towne or to sell him their own interests.[16] After BancorpSouth made demand on New Towne when the company failed to timely pay the accrued interest, Engquist and the Campesis informed Matthews that they were recusing themselves from making decisions regarding possible restructuring of New Towne's loan with the bank due to the conflict arising from their separate interests as guarantors.[17] Engquist and 145 the Campesis subsequently formed Old Towne and through it bought the bank's note.[18] Old Towne then sued to foreclose on its mortgage on the land.[19] New Towne unsuccessfully sued to enjoin the sheriff's sale[20] scheduled for January 14, 2009. The Involuntary Petition The Petitioning Creditors filed an involuntary petition January 13, 2009, the day before the scheduled sheriff's sale on New Towne's land.[21] Although Old Towne offered extensive evidence on the nature of the debt held by each of the petitioners and their prepetition dealings with the debtor, the validity of their claims is not relevant to these motions except as noted in this opinion. New Towne's Assets and Debts John Engquist, now chairman of the debtor's board of managers, testified that the debtor has eight creditors other than Old Towne.[22] New Towne owes about $95,000 to those creditors, all of which hold unsecured claims. Mr. Engquist also testified that on the petition date the debtor owed about $13,000,000 plus $400,000 in accrued interest on the note then held by Old Towne. New Towne now has no income, less than $100,000 cash, no assets that are not incidental to ownership of the land, and conducts no business on the property. It has a single contract employee, its bookkeeper. Malcolm Corcoran, an expert appraiser, first appraised New Towne's unimproved land at $11,690,000 in August 2007. At Matthews's request Mr. Corcoran in October 2008 revisited his report concerning the land, which (along with two more tracts New Towne had acquired) he opined was then worth $24,130,000.[23] However, Corcoran testified at the hearing that changes in the country's economy and bank lending practices since October 2008 had reduced the property's fair market value to between $17 and $18 million, assuming the debtor were given 12 months to market and sell the property. In his opinion the property would bring less in a distress sale. Analysis a. Summary of Arguments Old Towne contends that the evidence supports (1) dismissal pursuant to 11 U.S.C. § 1112(b) because the involuntary petition was filed in bad faith; (2) conversion under 11 U.S.C. § 1112(b) because the management deadlock leaves the debtor unable to 146 raise money through capital contributions to develop the unimproved land, repay its mortgage debt or have a reasonable prospect for reorganizing under chapter 11; (3) dismissal under 11 U.S.C. § 305 as being in the creditors' best interest; or (4) appointment of a trustee because New Towne is unable to act for itself as a result of its members' dispute. The Petitioning Creditors agree that appointment of a trustee is proper because of the management deadlock. They also argue that a trustee is necessary because New Towne's current managers are depleting the company's cash through gross mismanagement and incompetence, dishonesty, conflicts of interest, self-dealing and had also authorized prepetition transfers that may be avoidable under the Bankruptcy Code.[24] They oppose dismissal or conversion. b. Dismissal or conversion under 11 U.S.C. § 1112(b) Section 1112(b)(1) provides for dismissal or conversion of a chapter 11 case on motion of a party in interest. Following BAPCPA's[25] 2005 amendments to the Bankruptcy Code, section 1112(b)(1) is "no longer permissive, but instead mandates conversion or dismissal if the movant establishes exclusive cause, and no unusual circumstances establish that conversion or dismissal is not in the best interest of creditors." In re Gilroy, 2008 WL 4531982 at 4 (1st Cir.BAP August 4, 2008). However, "[w]hether cause exists under § 1112(b) and, if so, whether dismissal is appropriate are questions left to the sound discretion of the bankruptcy court." In re Corinthian LLC, 2009 WL 363165 at 4 (Bankr.E.D.Pa. February 11, 2009). Section 1112(b)(4)'s list of potential causes for dismissal or conversion of a chapter 11 case does not include lack of good faith, but the Bankruptcy Code implicitly requires a person filing chapter 11 petition to do so only in good faith. Matter of Little Creek Development Co., 779 F.2d 1068, 1072 (5th Cir.1986). Indicators of a bad faith filing include: (1) the debtor has only one asset, such as a tract of land; (2) secured creditors' liens encumber the property; (3) the debtor has no employees, little or no cash flow and no source of income to fund a plan; (4) there are few, if any, unsecured creditors and their claims are small; and (5) there has been a foreclosure action on the property and the debtor has not been successful in defending the foreclosure. Id. at 1073. However, the Fifth Circuit recognized that "[d]etermining whether the debtor's filing for relief is in good faith depends largely upon the bankruptcy court's on-the-spot evaluation of the debtor's financial condition, motives, and the local financial realities." Id. at 1072. Had this case begun as a voluntary chapter 11 reorganization, Little Creek would have supported the conclusion that it was not filed in good faith. However, the case began with an involuntary petition after a dispute among the debtor's members that left the debtor unable to function. David Matthews, who was facing the loss of any value to his interest in New Towne, controlled two of the three petitioning creditors and was the driving force behind the bankruptcy filing. Matthews 147 had voted against a capital call to raise money to pay interest on the company's bank debt, and so helped precipitate a default. The involuntary bankruptcy petition was filed by the debtorwhich by then was not being controlled by the company's members who had joined to form Old Towneon the eve of a sheriff's sale after Mr. Matthews failed to convince a state court to enjoin the sale. These facts taken together cast doubt on Mr. Matthews's good faith joining in petitioning for chapter 11 relief. Nonetheless, whether or not the involuntary petition was filed in good faith, "unusual circumstances" within the meaning of 11 U.S.C. § 1121(b)(1) support a finding and conclusion that dismissal or conversion is not in the best interests of New Towne or its creditors. Section 1112(b) does not define unusual circumstances, "but the phrase contemplates conditions that are not common in chapter 11 cases." In re Pittsfield Weaving Co., 393 B.R. 271, 274 (Bankr. D.N.H.2008), citing In re Fisher, 2008 WL 1775123 at 5 (Bankr.D.Mont. Apr.15, 2008). Moreover, "[c]ourts have much discretion in determining whether there are unusual circumstances that weigh against conversion or dismissal." Id. at 274-75, citing In re The 1031 Tax Group, LLC, 374 B.R. 78, 93 (Bankr.S.D.N.Y.2007) (section 1112(b) "explicitly provides for this discretion where a court is able to identify `unusual circumstances ... that establish that the requested conversion is not or dismissal is not in the best interests of creditors and the estate'"). This case presents "conditions that are not common in chapter 11 cases," and are unusual even among involuntary bankruptcies. It has featured fevered activity by the parties since the Petitioning Creditors filed the involuntary petition in January 2009. The motion practice so far has revolved around facts underlying the New Towne and Shearwater members' disputes that have occupied the state courts since Matthews filed a quo warranto proceeding in the 19th Judicial District after Mestayer challenged Matthews's ability to act as Shearwater's manager.[26] However, although these disputes and the challenges to the validity of the Petitioning Creditors' claims were the focus of the evidence at the hearing, the prospect of reorganizing the debtor is a more important consideration in ruling on Old Towne's motion to dismiss or convert. It is not possible at this early stage of the case to conclude that New Towne has no reasonable prospect for an effective reorganization. The management deadlock left the debtor itself unable to focus on the possibility of reorganization, a process that often does not begin promptly after the order for relief even in a voluntary case.[27] The court did not order relief until March 3, 2009only 14 business days before the March 23 hearing on these motions, and for much of the brief period between the petition and hearing the parties were locked in discovery and motion practice. Because of this it also is unlikely that Old Towne or other parties in interest have been able to develop a proposal for reorganizing this debtor. 148 Moreover, the evidence did not establish that confirming a chapter 11 plan is not feasible. Old Towne holds about $13.4 million in debt secured by land worth between $17 million and $18 million[28] (albeit subject to a claim for ad valorem property taxes), even considering the recent national economic downturn. The possibility of equity in New Towne's land creates the prospect that a party in interest could develop a reorganization plan to pay all administrative expenses and also all unsecured claims (including those held by the eight "legitimate" creditors named in Old Towne's memorandum,[29] none of which appears to be an insider within the meaning of 11 U.S.C. § 101(31)). Dismissing the bankruptcy petition and allowing the sheriff's sale to proceed, or converting the case and leaving the panel trustee virtually certain to face a demand for stay relief, would reduce the likelihood of payment of the legitimate unsecured creditors' claims. Moreover, bankruptcy court is the appropriate forum for a party with standing to test the validity of the Petitioning Creditors' claims. Old Towne argues that conversion or dismissal is appropriate because the management deadlock leaves the debtor currently unable to locate financing to complete the project.[30] Though Mr. Matthews thwarted the debtor's members vote for a capital call to pay accrued interest on the bank loan, no evidence established that any party had tried to obtain other financing to complete the project before the bankruptcy was filed. In any case, a chapter 11 plan need not contemplate completing the project: other types of plans may yield benefit for creditors with unsecured claims. The evidence supports a finding and conclusion that because of "unusual circumstances," the best interests of the creditors and the estate are not served by dismissing or converting the case. c. Dismissal under 11 U.S.C. § 305 Section 305(a)(1) allows the court to dismiss a bankruptcy case at any time if "the interests of the creditors and the debtor would be better served by such dismissal." Just as dismissal under § 1112(b) is not in the best interests of the creditors or the estate, dismissal under § 305 does not best serve either the creditors' or New Towne's interests. d. Appointment of a Trustee Before the court ordered relief under 11 U.S.C. § 303, its power to appoint an interim chapter 11 trustee was doubtful. Compare 11 U.S.C. § 303(g) (providing for appointment of an interim trustee in a chapter 7 case in the "gap" period between the commencement of the case and the order for relief). Now that chapter 11 relief has been ordered and New Towne is a debtor, the court may order the appointment of a chapter 11 trustee if a party has 149 established a basis for the appointment. 11 U.S.C. § 1104(a). Section 1104(a)(1) requires the court to appoint a chapter 11 trustee if a party in interest proves cause, such as fraud, dishonesty, incompetence, gross mismanagement or a similar cause. However, "cause can consist of other factors, including an actual conflict of interest." In re Cajun Electric Power Co-op., Inc., 191 B.R. 659, 661 (M.D.La.1995), aff'd, Matter of Cajun Electric Power Co-op., Inc., 74 F.3d 599 (5th Cir.1996). Evidence of fraud or dishonesty is not necessary for the court to determine that cause exists for the appointment of a trustee under § 1104(a)(1). Id. at 662. Indeed, Old Towne and the Petitioning Creditors agreed that the court should appoint a trustee if it did not dismiss or convert the case.[31] The evidence supports a finding and conclusion that cause exists to appoint a chapter 11 trustee. The Shearwater membership dispute effectively has paralyzed New Towne's management, and necessitates installing a neutral third party to operate the debtor unhampered by its members' disagreements. Another factor supporting the need for a trustee is the self-imposed recusal of the debtor's members who purchased the bank debt from some aspects of managing the debtor. Specifically, fifty percent of New Towne's membership owns Old Towne, its principal creditor. Engquist and the Campesis have recused themselves from any discussions concerning the debtor's liability on the promissory note that Old Towne acquired from BancorpSouth, in order to protect their interests on the personal guaranties of New Towne's bank debt. Because the mortgage debt is by far the principal consideration in this chapter 11 case, neither Mr. Engquist nor any of the other members of New Towne who guarantied the mortgage debt can participate in the debtor's formulation of a chapter 11 plan providing for that debt. Additionally, by insisting that he is a creditor of New Towne, Mr. Matthews cannot fulfill the responsibilities of managing the debtor in possession. The debtor in possession has not yet filed schedules or a statement of financial affairs, in part because it does not have counsel. A trustee will retain counsel to fulfill those duties without being hampered by the internal disputes that have left the debtor effectively unable to manage itself.[32] Finally, even if cause to appoint a chapter 11 trustee under § 1104(a)(1) did not exist, the reasons set forth in this opinion support the appointment "in the interests of creditors, any equity holders, and other interests of the estate" under Bankruptcy Code section 1104(a)(2). e. Sanctions Old Towne also seeks sanctions against the Petitioning Creditors under 11 U.S.C. § 303(i). Section 303(i) only provides for damages if the involuntary petition is dismissed. Sanctions under § 303(i) are not appropriate because the court did not dismiss the petition pursuant to 11 U.S.C. § 303. Conclusion In summary, Old Towne's motion to dismiss or convert pursuant to 11 U.S.C. 150 § 1112(b) and its motion to dismiss pursuant to 11 U.S.C. § 305 will be denied by separate order. The motions of both Old Towne and the Petitioning Creditors for the appointment of a chapter 11 trustee will be granted. NOTES [1] Amended Order Denying Motion to Dismiss Case (P-95). [2] Order for Involuntary Relief (P-89). Because New Towne is now a chapter 11 debtor, issues relating to the propriety of involuntary relief are moot. [3] Articles of Organization of New Towne Development Group, L.L.C. dated August 25, 2006 (Exhibit PC-8). According to the initial report included with the articles, the initial managers of New Towne were Christopher Mestayer and David Matthews. [4] Operating Agreement of New Towne Development Group, L.L.C. (Exhibit OT-3) ("New Towne Operating Agreement"). [5] New Towne Operating Agreement, article 1.3. [6] Shearwater's members are J. David Matthews and Christopher Mestayer. John M. Engquist is the sole member of JRJ. Welltown's two members are Patrick and Michael Campesi. [7] New Towne Operating Agreement, article 5.1. The agreement authorizes the board of managers upon a majority vote to perform specified actions to operate the company. New Towne Operating Agreement, article 5.2. However other enumerated actions, including approval of a request for additional capital contributions in excess of $500,000, require the affirmative vote of 75% of the company's members. New Towne Operating Agreement, article 5.3 [8] New Towne Operating Agreement, article 5.6 [9] New Towne Operating Agreement article 5.1, schedule 5.1. [10] See New Towne Operating Agreement, article 1.4, Definitions (defining project as the Americana traditional neighborhood development). [11] John Engquist testified that the managers did not want Matthews as the "face of the project" after they learned among other things that he previously had filed bankruptcy and allowed nearby property he owned to be liened. Engquist insisted that Matthews's earlier misrepresentations about these subjects troubled him and the other managers. [12] April 18, 2008 Resolution of Board of Managers (Exhibit OT-17). [13] April 22, 2008 Resolution of Board of Managers (Exhibit OT-18). Because Matthews was continuing to represent himself to engineers and architects as the project developer, on May 8, 2008 the board passed yet another resolution ratifying the first two resolutions. (Exhibit OT-19). [14] Matthews claimed to own a 51% interest in Shearwater. Thus his vote resulted in a negative vote on Shearwater's behalf, and because Shearwater owns 50% of New Towne, the resolution failed. Matthews and Mestayer dispute the percent of Shearwater each other owns. Mestayer contends that he owns 50% of Shearwater, but Matthews claims Mestayer owns only 49%. Mestayer also disputes Matthews's claim to be Shearwater's sole manager. In May 2008 Matthews and Shearwater sued Mestayer to resolve the ownership dispute in a state court quo warranto action. No party offered a copy of the lawsuit into evidence at the hearing, though Dr. Michael Burdine attached copies of a proposed amended petition to his memorandum in support of a motion to quash a subpoena duces tecum (P-42). This opinion notes the dispute only to explain events leading to New Towne's bankruptcy: it does not resolve it. [15] August 12, 2008 Resolution of Board of Managers (Exhibit OT-21). [16] September 5, 2008 letter from Engquist to Matthews and Mestayer (Exhibit OT-38). [17] September 17, 2008 letter from Ashley Moore, attorney for Engquist and the Campesis, to Matthews (Exhibit OT-58). [18] Notarial Act of Assignment of Promissory Note and All Obligations of Security Related Thereto by BancorpSouth Bank to Old Towne Development Group, L.L.C. (Exhibit OT-22). [19] Verified Petition for Executory Process, Old Towne Development Group, LLC v. New Towne Development Group, LLC, Case No. 571,934, 19th Judicial District Court, Parish of East Baton Rouge (Exhibit OT-23). [20] Petition for Injunction to Enjoin Sheriff's Sale in Executory Proceeding, Old Towne Development Group, LLC v. New Towne Development Group, LLC, Case No. 571,934, 19th Judicial District Court, Parish of East Baton Rouge (Exhibit OT-25). [21] Notice of sheriff's sale (Exhibit OT-24). [22] New Towne also owes about $215,000 in property tax on the land. See Exhibit OT-34. Engquist testified that the taxes were not paid because the property was in foreclosure. Under Louisiana law, the successful purchaser at the sheriff's sale must pay unpaid ad valorem taxes, which are secured by a senior privilege on the immovable property. [23] October 8, 2008 restricted use appraisal report (Exhibit OT-48 and Exhibit PC-11). [24] Petitioning Creditors' Motion to Appoint Chapter 11 Trustee ¶¶ (5), (6) (P-18). The Petitioning Creditors produced no evidence supporting these allegations. [25] Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. No. 109-8, 119 Stat. 23. [26] The state court had not ruled in that action as of the conclusion of the hearing on these matters. [27] Perhaps in part because of the deadlock, New Towne itself has remained inactive. Its schedules and statement of financial affairs were due March 18, 2009, 15 days after the order for relief. Fed. R. Bankr.P. 1007(a)(2). They had not been filed as of the date of this memorandum opinion. Also, the debtor in possession has not yet retained counsel. [28] Additionally, Mr. Engquist confirmed that Old Towne does not hold a mortgage on the two adjacent parcels of land New Towne bought after the original purchase and that those parcels were not included in BancorpSouth's collateral. Corcoran's appraisal in October 2008 included these two tracts of land in its total value of $24,130,00. The appraisal does not break out the value of each tract included in the total acreage of the property appraised. However, on page 8 of the appraisal, the purchase prices for the two separately purchased tracts were listed at $85,000 and $345,000. October 8, 2008 restricted use appraisal report (Exhibit OT-48 and Exhibit PC-11). [29] Post-trial Brief of Old Towne Development Group, L.L.C., p. 3 (P-161). [30] Mr. Engquist could not estimate the cost of completing the Americana development though he believed it will total "millions of dollars." [31] Old Towne's Motion to Dismiss Chapter 11 or Appoint Chapter 11 Trustee or Convert to Chapter 7 (P-6/24); Petitioning Creditors' Motion to Appoint Chapter 11 Trustee (P-18). [32] Appointing a trustee also terminates the period in which only the debtor has the right to file a plan of reorganization under 11 U.S.C. § 1121(b) and so enables other parties in interest to propose a chapter 11 plan.	{ "pile_set_name": "FreeLaw" }
810 F.Supp. 79 (1992) BANFF, LTD., Plaintiff, v. COLBERTS, INC., and Tamara Import, a division of Colberts, Inc., and Tamara Imports, Inc., Defendants. No. 91 Civ. 6585 (RLC). United States District Court, S.D. New York. November 12, 1992. 80 Grossman & King, New York City (Dennis Grossman, of counsel), for plaintiff. Weiss Dawid Fross Zelnick & Lehrman, P.C., New York City (Susan Upton Douglass, of counsel), for defendants. OPINION ROBERT L. CARTER, District Judge. Plaintiff Banff, Ltd. ("Banff") brought this action alleging trademark infringement and false designation of origin under sections 35 and 43(a) of the Lanham Act, 15 U.S.C. §§ 1117, 1125(a), and pendent state claims. The defendants, having prevailed after a jury trial, presently seek an award of attorney fees and costs in accordance with Lanham Act § 35(a). Banff is a New York corporation which designs, manufactures, and markets women's apparel, and has used the federally-registered trademark "Vanessa" since 1982. Beginning in 1987, defendant Tamara Import, a division of defendant Colberts, Inc. ("Colberts") also began selling women's apparel with a label that read "Vanessa". After receiving the plaintiff's complaint, however, the defendants did not contest Banff's exclusive trademark right, and promptly stopped using the infringing word. Since plaintiff did not attribute any lost sales to the defendants' unauthorized use of the name "Vanessa" and conceded that it did not know a single instance of actual confusion by consumers, the sole factual issue presented at trial was whether defendants' infringement was willful. See, e.g., W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664 (2d Cir.1970). That question was resolved by a jury in favor of defendants. Pursuant to section 35(a) of the Lanham Act, the court may award reasonable attorney fees to the prevailing party in "exceptional cases." This provision was designed, in part, to protect innocent defendants "against unfounded suits brought by trademark owners for harassment and the like." S.Rep. No. 93-1400, 93rd Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Ad.News 7132, 7136; see also Motown Productions, Inc. v. Cacomm, Inc., 849 F.2d 781, 786 (2d Cir.1988).[1] Thus, a case is "exceptional" for the purpose of recovering a prevailing defendant's attorney fees only if the plaintiff's claim was baseless, capricious, unreasonable, or otherwise pursued in bad faith. See, e.g., Warner Bros., Inc. v. American Broadcasting Companies, Inc., 222 U.S.P.Q. (BNA) 544 (S.D.N.Y. 1982) (Motley, J.); Simon Says Enterprises, Inc. v. Schaffer, 218 U.S.P.Q. (BNA) 146 (S.D.N.Y.1982) (Lowe, J.).[2] The defendants argue that this case is "exceptional" because the plaintiff's claim was unreasonable and in bad faith. According to the defendants, plaintiff could not rationally have believed that the infringement was willful. At trial, however, the plaintiff presented testimony that a buyer for Colberts retail stores once placed an order for Banff "Vanessa" sweaters. The general merchandise manager for Colberts was also aware of the order. 81 Although no evidence was presented that these employees reported their awareness of plaintiff's label to any superiors at Colberts or the Tamara Import division, a reasonable juror could have concluded otherwise. Thus, the plaintiff's case was not "so patently baseless" that it constituted bad faith. Diamond Supply Co. v. Prudential Paper Products Co., 589 F.Supp. 470, 476 (S.D.N.Y.1984) (Duffy, J.); see also Warner Bros., 222 U.S.P.Q. (BNA) at 544. In addition, the defendants emphasize that this court twice rejected two legal theories underlying plaintiff's action. Def. Mem. pp. 6-8.[3] According to one of Banff's theories, a trademark owner is automatically entitled to damages for infringement if its trademark is displayed with statutory notice of federal registration. Since Banff did just that with respect to its "Vanessa" labels, plaintiff maintained that the defendants could not escape liability even if there was no proof of "willfulness" or actual confusion to consumers. Although plaintiff cited no case law to support this argument, Banff claimed its position was grounded in section 29 of the Lanham Act, 15 U.S.C. § 1111. However, section 29 is inapposite. It merely provides that a registrant, who fails to display the requisite indicia of federal trademark registration, cannot recover damages in a suit for infringement unless the defendant had actual notice of the registration. This section has not been used affirmatively to establish an infringer's willfulness or to circumvent the requirement that intent be shown.[4] According to plaintiff's second misguided theory, Banff could recover damages for unjust enrichment even if defendants infringed unintentionally. This suggestion was squarely rejected by the Second Circuit on the eve of trial in this case. See, George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1537 (2d Cir.1992), petition for certiorari filed (1992). Even so, plaintiff's action proceeded to trial because Banff properly pleaded a cause of action for willful trademark infringement. Thus, Banff's reliance on faulty interpretations of the law does not support an award of attorney fees on the basis that the lawsuit was unfounded. Finally, the defendants contend that Banff's bad faith was exemplified when it rejected a settlement offer, did not take the defendants' depositions prior to trial, and never examined some of the documents which defendants had been asked to produce. Def. Mem. p. 4. Although some of plaintiff's pre-trial tactics were imprudent, its conduct is insufficient to establish bad faith.[5] Moreover, there is no basis from which to conclude that Banff acted capriciously or pursued this litigation in order to harass the defendants. See Diamond Supply, 589 F.Supp. at 476; Motown Productions, 849 F.2d at 786. *82 CONCLUSION Accordingly, defendants' motion for attorney fees pursuant to section 35 of the Lanham Act is denied. IT IS SO ORDERED. NOTES [1] On the other hand, a prevailing plaintiff may be entitled to attorney fees upon a showing that the infringement was done "willfully, intentionally, and with a callous and reckless disregard." Getty Petroleum Corp. v. Bartco. Petroleum Corp., 858 F.2d 103, 114 (2d Cir.1988), cert. denied, 490 U.S. 1006, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989). [2] Not surprisingly, defendants are rarely awarded attorney fees in trademark infringement cases. Yeshiva University v. New England Educational Institute, 631 F.Supp. 146, 149 (S.D.N.Y. 1986) (Sand, J.) See also Robin C. Larner, Annotation, Award of Attorneys' Fees Under § 35(a) of Lanham Act (15 USCS § 1117(a)) Authorizing Award in "Exceptional Cases", 82 A.L.R. Fed. 143 (1991). [3] These theories, discussed below, were rejected at pretrial conference and again upon motions following trial. The same arguments were also the basis of plaintiff's motion to amend the judgment, under Rule 59(e), F.R.Civ.P., denied October 27, 1992. [4] Likewise, section 22 of the Lanham Act, 15 U.S.C. § 1072, also relied on by plaintiff, lends no support to plaintiff's position. Although it provides that registration is "constructive notice" of ownership, its purpose was to remove the common law "good faith" defense to infringement claims, not to eliminate the willfulness requirement. See, e.g., Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 362 (2d Cir.1959). [5] Plaintiff's conduct does not remotely compare to the behavior adjudged bad faith in other trademark infringement cases. See, e.g., Simon Says Enterprises, 218 U.S.P.Q. (BNA) at 146 (plaintiff acted willfully and in bad faith because it falsely claimed an exclusive right to use the children's game, "Simon Says" as an entertainment; allowed defendant to use the term "Simon Sez" in promoting his act for three years before suing; and commenced this action when it had reason to know it was barred by laches); Viola Sportswear, Inc. v. Mimun, 574 F.Supp. 619 (E.D.N.Y.1983) (president of plaintiff corporation admitted that there was no basis upon which a reasonable person could conclude that the charges in the complaint were valid); Orient Express Trading Co. v. Federated Department Stores, Inc., 1988 WL 3385, 1987 U.S.Dist. LEXIS 12435 (S.D.N.Y.) (Motley, J.), aff'd, 842 F.2d 650 (2d Cir.1988) (plaintiff fraudulently obtained the trademarks to create a basis for its litigation).	{ "pile_set_name": "FreeLaw" }
509 So.2d 158 (1987) Horace E. REEVES, et ux. v. Stan WEBER, et al. No. 86 CA 0531. Court of Appeal of Louisiana, First Circuit. May 27, 1987. Byard Edwards, Jr., Ponchatoula, Dennis Kronlage, James A. Dukes, Hammond, for plaintiff-appellee. Jack Ricci, Metairie, for defendant-appellant Merrill Lynch Realty, Inc., Stan Weber, Carolyn Edwards and Bonnie B. Richardson. Eddie J. Lambert, William Downing, Baton Rouge, Charles Barbera, Metairie, Robert W. Troyer, Ponchatoula, for Lincoln Financial Corp. Before SAVOIE, CRAIN and JOHN S. COVINGTON, JJ. CRAIN, Judge. This is an appeal from a judgment awarding damages to a purchaser of a house for the failure of the real estate agent to disclose information of termite damage when the agent had such information. On November 15, 1982, Mr. and Mrs. Horace Reeves purchased a house in Ponchatoula, Louisiana. One of the forms signed that day by Mr. and Mrs. Reeves was a certificate of inspection and treatment that stated that the house was termite 159 infested, had been treated but had visible damage to the wood in contact with the ground. The certificate further stated that the exterminator did not estimate a need for repair but that he wasn't a contractor. Mr. Reeves signed this certificate allegedly without reading it. On February 8, 1983, Mr. Reeves discovered the termite damage when he had his house exterior cleaned with a high pressure washer. On May 8, 1984, Mr. and Mrs. Reeves instituted suit against various parties, including the real estate broker and agent that dealt with the sale. A default judgment was rendered against the vendors and the plaintiffs proceeded against the realtors at the trial level. A peremptory exception of prescription was filed on behalf of the real estate broker/agent but this was overruled by the trial judge. After trial, the trial judge found that the real estate agent possessed knowledge of the termite damage and had not provided this information to the purchasers. The basis of this finding was that the realtor had possession of the termite certificate prior to the sale. The trial court further found that this intentional act on the part of the plaintiffs' agent put this within the 10 year prescription period of La.C.C. art. 3544 (now C.C. art. 3499). The appellant's assignments of error are: 1) that the trial court erred in finding that the real estate agent knew of the termite damage. 2) that the trial court erred in finding that the plaintiff was not aware of the termite problem. 3) that the proper prescriptive period for this action was not the 10 year period of La.Civ.Code art. 3499, as used by the trial court, but should be La.Civ.Code 3492, which provides a 1 year liberative prescriptive period for delictual actions. The duties of a real estate broker are an unsettled area of law in Louisiana. La.C.C. art. 3016 defines a broker as a person employed to negotiate a matter between two parties, and who for that reason is considered as the mandatary of both. The obligations of a broker differ from those of an ordinary mandatary in that "his engagement is double and that he should observe the same fidelity towards all parties, and not favor one more than another." La.C.C. art. 3017. However, the courts in Louisiana have supplemented the Code's mandate articles by reference to common law rules relating to brokerage contracts. 19 La.L.Rev. 794-795. Other duties are imposed upon real estate brokers as a result of the passage of special real estate statutes. See La.R.S. 37:1431 et seq. Ultimately, the precise duties of a real estate broker must be determined by an examination of the nature of the task the real estate agent undertakes to perform and the agreements he makes with the involved parties. Latter & Blum, Inc. v. Richmond, 388 So.2d 368, 372 (La.1980). Some cases have imposed common mandatary status on the broker at the time he has found a prospective purchaser. Uhlich v. Medallion Realty, Inc., 334 So.2d 788 (La.App. 4 Cir.), writ denied, 338 So.2d 701 (La.1976); Treadaway v. Piazza, 156 So.2d 328 (La.App. 4 Cir.1963); Martin v. Fontenot, 27 So.2d 457 (La.App. 1 Cir.1946). Treadaway and Martin deal with contractual disputes concerning the agent's commission and not with the mandatary relationship. Later cases from the same circuits specify that the earlier cases were not classifying the relationship as mandate but were only concerned with the recognition of a fiduciary duty. As stated in Mintz & Mintz Realty Co., Inc. v. Sturm, 419 So.2d 981 (La.App. 4 Cir.), writ denied, 423 So.2d 1163 and 423 So.2d 1164 (La.1982): "A real estate broker or salesman (agent) is not considered to be an agent within the purview of the mandate provisions contained in art. 2985 et seq. of the Louisiana Civil Code." See also Leggio v. Realty Mart, Inc., 303 So.2d 920 (La.App. 1 Cir.1974), writ denied 307 So.2d 629 (La.1975). Since the relationship between brokervendor-purchaser is not mandate, the trial court's assessment of the real estate agent as being an agent of the purchaser for purposes of prescription under La.C.C. art. 3497 is in error. It then becomes necessary for us to determine the type of action 160 involved to determine the prescriptive period. "Brokers are not responsible for events which arise in the affairs in which they are employed; they are only, as other agents, answerable for fraud or faults." La.C.C. art. 3018. A purchaser's remedy against a real estate broker is limited to fraud under La.C.C. art. 1847(6) (now art. 1953 et seq.) or for negligent misrepresentation[1] under La.C.C. art. 2315. Braydon v. Melancon, 462 So.2d 262 (La.App. 1 Cir. 1984); Davis v. Davis, 353 So.2d 1060 (La. App. 2 Cir.1977). Proof of fraud must be clearly and convincingly established and not merely by a preponderance of the evidence. The evidence here reflects that the real estate broker/agent knew of a defect. However, it is difficult to conclude there was a failure to disclose it to the plaintiffs since the certificate disclosing the termite problem was signed, but supposedly not read, by the plaintiffs. In any event the facts do not indicate an intentional misrepresentation necessary for the finding of fraud. Josephs v. Austin, 420 So.2d 1181, 1184 (La.App. 5 Cir.1982), writ denied, 427 So.2d 870 (La.1983). The real estate agent here admitted knowledge of the language on the termite certificate but thought that the problem had been corrected by the treatment. Fraud was neither alleged by the plaintiff nor found by the trial court. This issue has not been raised on appeal. Therefore, the purchaser's action here should be limited to negligent misrepresentation. The broker/agent owes a specific duty to communicate accurate information to seller or purchaser, or both when the circumstances warrant. Braydon, 462 So.2d at 263; Josephs, 420 So.2d at 1185; Guidry v. Barras, 368 So.2d 1129 (La.App. 3 Cir.1979). The real estate broker/agent owes a duty to disclose any material defects of which he is aware to the purchaser. Desoto v. Ellis, 393 So.2d 847 (La.App. 2 Cir.1981); Mintz, at 419 So.2d 983; Guidry, at 368 So.2d 1133. An action by the purchaser, based on a real estate agent's failure to disclose a known defect in the premises, stems from a general duty owed by the broker/agent to the public at large. The action for failing to disclose arises ex delicto, rather than from contract. Since more than one year elapsed between discovery of the defective condition and filing of suit, the action has prescribed. Payne v. Trichel, 397 So.2d 16 (La.App. 3 Cir. 1981); Kearney v. Maloney, 296 So.2d 865 (La.App. 4 Cir.1974). Without making any factual determination that there was negligent misrepresentation, we find the present suit is based in tort. Mr. Reeves admitted that he discovered the termite damage in February 1983 and no action was taken until May 22, 1984, more than a year from discovery and more than a year and a half after purchase. The peremptory exception of prescription, filed by the real estate agent, should have been sustained. Since we find grounds to reverse based on appellant's assignment of error number three, we need not examine the remaining assignments of error. All costs are to be paid by appellees. REVERSED AND RENDERED. NOTES [1] Insofar as liability for negligent misrepresentation, brokers and agents are treated the same.	{ "pile_set_name": "FreeLaw" }
841 So.2d 947 (2003) STATE of Louisiana v. Karen TERRASE. No. 02-KA-1009. Court of Appeal of Louisiana, Fifth Circuit. February 25, 2003. 948 Bruce G. Whittaker, New Orleans, LA, for Appellant. Paul D. Connick, Jr., District Attorney, Terry M. BoudreauxAppellate Counsel, Alan D. Alario, IICounsel of Record on Appeal, Assistant District Attorneys, Gretna, LA, for Appellee. Panel composed of Judges JAMES L. CANNELLA, THOMAS F. DALEY and SUSAN M. CHEHARDY. 949 JAMES L. CANNELLA, Judge. The Defendant, Karen Terrase, appeals from her conviction of theft of over $500 and sentence as a habitual offender to five years imprisonment at hard labor. We conditionally affirm the conviction and finding as a second felony offender, vacate the enhanced sentence, and remand for evidentiary hearing, re-sentencing, amendment of commitments and notice. On September 27, 2000 the Defendant was charged with a violation of La. R.S. 14:67 B. She pled not guilty. On the date of trial, January 24, 2002, defense counsel indicated that the Defendant waived a jury trial. Following the bench trial, the Defendant was found guilty as charged. In April of 2002, she filed a motion for new trial and the State filed a habitual offender bill of information alleging her to be a second felony offender. On April 11, 2002, the trial judge denied the Defendant's motion for new trial. The Defendant waived sentencing delays and she was sentenced to five years imprisonment at hard labor. The Defendant then admitted the allegations in the habitual offender bill of information, waiving a hearing on the matter. The trial judge then vacated the original sentence and imposed an enhanced sentence of five years imprisonment at hard labor. On the same day, the Defendant filed a motion for appeal and it was granted. Her motion for reconsideration of sentence was denied. At trial, Judy Velasquez (Velasquez) testified that her family owns and runs Meineke Discount Mufflers (Meineke) in Harvey. She was working there on September 5, 2000 with the Defendant, an employee, and friend. Velasquez testified that the shop has no cash register, so money is kept in drawers behind the counter. Velasquez regularly begins each business day with fifty dollars in a cash drawer. Another drawer, termed the "drop box," holds the shop's bank deposits, and might contain up to five thousand dollars at any given time. The drop box is kept locked at all times and the key hangs on a rack behind the counter. Velasquez testified that anyone working with her has access to the key. When the theft occurred, Velasquez was standing in the doorway between the garage area and the customer service area, talking on the telephone with a friend, Donna Davis (Davis). She saw the Defendant take money from the lock box and leave the premises. Velasquez told Davis that "Karen just ripped off the drawer and she's leaving in her car." Davis testified that, during the conversation, Velasquez said "Donna, Karen just took my money." According to Velasquez's calculations, the Defendant stole one thousand dollars. Afterwards, Velasquez telephoned the Defendant and asked her to return the money. The Defendant made no effort to repay the money and Velasquez never heard from the Defendant again. Velasquez testified that she was required to replace the missing money herself. Deputy Chad Gautreaux of the Jefferson Parish Sheriff's Office testified that, on September 7, 2000, he received the report of a theft at Meineke that had occurred on September 5, 2000. The deputy stated that Velasquez told him that she saw the Defendant close the money drawer and leave the shop in a hurry. Velasquez told him that one thousand dollars was stolen. The deputy did not recall Velasquez telling him that she actually saw the Defendant take the money from the drawer. The Defendant denied stealing the money. She testified that she was working at Meineke on September 5, 2000 and that her job was to perform personal and business errands for Velasquez. She claimed that she did not leave the shop 950 that day until closing time. The Defendant further testified that she did not have access to the drop box key and that Velasquez kept the key. The Defendant claimed that Velasquez' accusation stemmed from a dispute over the Defendant's former boyfriend. On appeal, the Defendant contends that the trial judge erred in allowing her to proceed to a bench trial without first obtaining from her a waiver of her right to trial by jury and that her sentence is excessive. She also requests a patent error review. La.C.Cr.P. art. 782 and La. Const. art. I, § 17 provides that a defendant is entitled to a trial by jury of six persons when the sentence is with or without hard labor. The sentence for theft of over $500 is with or without hard labor. La.R.S. 14:67 B (1). Although the right to a jury trial may be waived in non-capital cases, it must be "knowingly and intelligently" waived. La.C.Cr.P. art. 780 A. Waiver of this right is never presumed. State v. McCarroll, 337 So.2d 475, 480 (La.1976). Prior to the commencement of trial, the following exchange took place: Mr. Credo [prosecutor]: Your Honor, State would then ask that Counsel could waive jury in this matter? Is that correct? Mr. Fleming [defense counsel]: Yes, we would in fact elect a bench trial in this matter, Judge. The record contains no further discussion of Defendant's jury rights. The State argues that defense counsel's statement constitutes sufficient evidence that the Defendant knowingly and intelligently waived her right to trial by jury. We disagree. In State v. Pierre, 98-1123, p. 8 (La.App. 5th Cir.4/14/99), 733 So.2d 674, 679, we held that the defense attorney's statement that, "we're going to waive the jury, Your Honor" did not, on its own, constitute a valid waiver of the defendant's right to a trial by jury. The facts here are comparable to those in Pierre. Where no valid jury waiver is found in the record, Louisiana appellate courts have traditionally set aside the defendant's conviction and remanded for a new trial. State v. Williams, 404 So.2d 954 (La.1981); State v. Miller, 517 So.2d 1113 (La.App. 5th Cir.1987), writ denied, 523 So.2d 1335 (La. 1988). However, the Louisiana Supreme Court, in State v. Nanlal, 97-0786 (La.9/26/97), 701 So.2d 963, 964, set out a procedure by which the case is initially remanded to the trial court for an evidentiary hearing on the question of whether the defendant validly waived the right to a jury trial. The Nanlal Court held that, if the evidence shows the defendant did not make a valid waiver, the trial court must set aside the conviction and sentence and grant the defendant a new trial. The Supreme Court reserved the defendant's right to appeal any adverse ruling of the waiver issue. Id. This Court has followed the procedure set out in Nanlal. See: State v. Hampton, 00-1002, p. 12 (La.App. 5th Cir.1/24/01), 782 So.2d 1045, 1054; State v. Vortisch, 00-67, p. 9 (La. App. 5th Cir.5/30/00), 763 So.2d 765, 770; Pierre, 98-1123 at p. 8, 733 So.2d at 679. Based on the foregoing, we will remand for an evidentiary hearing on the question of whether the Defendant in this case validly waived her right to a jury trial. If she did not, the trial judge must set aside the conviction and sentence. If she did, then the trial judge should rule that she did and this Court affirms the conviction and enhanced sentence. In this last instance, we reserve the Defendant's right to appeal the adverse ruling of the waiver issued. 951 Next, the Defendant asserts that the trial judge imposed an excessive sentence. She argues that the sentence was not proportionate to the crime. In the motion to reconsider sentence under La. C.Cr.P. art. 881.1, the Defendant only stated that she is "a single mother, and a sentence of incarnation [sic] places an undue hardship on defendant, her child, and her family." The Eighth Amendment to the United States Constitution and Article I, § 20 of the Louisiana Constitution prohibit the imposition of excessive punishment. A sentence is considered excessive if it is grossly disproportionate to the offense or imposes needless and purposeless pain and suffering. State v. Lobato, 603 So.2d 739, 751 (La.1992); State v. Munoz, 575 So.2d 848, 851 (La.App. 5th Cir.1991), writ denied, 577 So.2d 1009 (La.1991). The Defendant's sentence of five years imprisonment at hard labor as a second felony offender was the minimum allowed under La.R.S. 14:67 B(1) and La. R.S. 15:529.1 A(1)(a). It is presumed that a mandatory minimum sentence under the Habitual Offender Law is constitutional. State v. Williams, 01-1007, p. 11 (La.App. 5th Cir.2/26/02), 811 So.2d 1026, 1032. However, if the trial judge finds that an enhanced punishment mandated by La. R.S. 15:529.1 makes no "measurable contribution to acceptable goals of punishment" or that the sentence amounts to nothing more than "the purposeful imposition of pain and suffering" and is "grossly out of proportion to the severity of the crime," the trial judge has the option and duty to reduce such sentence to one that would not be constitutionally excessive. State v. Dorthey, 623 So.2d 1276, 1280 (La.1993). A trial judge may only depart from the mandatory sentence if he finds clear and convincing evidence that would rebut the presumption of constitutionality. Williams, 01-1007 at p. 11, 811 So.2d at 1032; State v. Johnson, 97-1906, p. 8 (La. App. 5th Cir.3/4/98), 709 So.2d 672, 676. However, the burden is on the defendant to rebut the presumption of constitutionality by showing that he is exceptional because of unusual circumstances and that the sentence is not meaningfully tailored to the culpability of the offender, the gravity of the offense, and the circumstances of the case. Johnson, 97-1906 at p. 8, 709 So.2d at 676, quoting State v. Young, 94-1636, pp. 5-6 (La.App. 4th Cir.10/26/95), 663 So.2d 525, 528, writ denied, 95-3010 (La.3/22/96), 669 So.2d 1223. The Louisiana Supreme Court has cautioned that downward departures from the mandatory minimum sentences should be made only in rare cases. State v. Lindsey, 99-3256, p. 5 (La.10/17/00), 770 So.2d 339, 343. Here, the Defendant failed to show any unusual or special circumstances that might serve to rebut the presumption of constitutionality. After our review, we find that the sentence was not excessive. The record was reviewed for errors patent. LSA-C.Cr.P. art. 920; State v. Oliveaux, 312 So.2d 337 (La. 1975); State v. Perrilloux, 99-1314 (La.App. 5th Cir.5/17/00), 762 So.2d 198. The review reveals several patent errors. First, both the original and habitual offender commitments indicate that the Defendant was found guilty of "theft $300+," rather than theft valued at over five hundred dollars. The two offenses involve different sections of the statute and different penalties. Thus, we will order the commitments corrected. Second, both the original and habitual offender commitments show that the Defendant's sentence is to be served at *952 hard labor.[1] However, the transcripts do not reflect that the trial judge ordered the sentence to be served at hard labor. Generally, where the transcript conflicts with the minute entry, the transcript prevails. State v. Lynch, 441 So.2d 732, 734 (La. 1983). Thus, we vacate the enhanced sentence and remand for re-sentencing as a second felony offender, since the method of sentence was not in the transcripts and hard labor is not mandatory for this offense. See: La.R.S. 14:67 B (1). Third, although the commitments reflect otherwise, the sentencing transcripts indicate that the trial court did not advise the Defendant of the two-year prescriptive period for applying for postconviction relief pursuant to La.C.Cr.P. art. 930.8. Thus, we will remand the case with an order for the trial judge to send written notice, within 10 days of the rendering of this opinion, informing the Defendant that she has two years from the date the conviction and sentence become final to file her application for post-conviction relief, then to file written proof in the record that the Defendant received the notice. Accordingly, we hereby conditionally affirm the Defendant's conviction and finding as a second felony offender. We vacate and set aside her enhanced sentence and order her to be re-sentenced. We remand for an evidentiary hearing on the question of whether the Defendant validly waived her right to a jury trial and for further proceedings, if necessary, pursuant to Nanlal. We further order the commitments to be corrected to show that the Defendant was convicted of theft of goods of over five hundred dollars. Also, we remand the case with an order to the trial judge to send to the Defendant written notice within 10 days from the rendering of this opinion informing the Defendant that she has two years from the date the conviction and sentence become final to file her application for post-conviction relief, then to file written proof in the record that the Defendant received the notice. CONVICTION AND FINDING AS A SECOND FELONY OFFENDER CONDITIONALLY AFFIRMED. CASE REMANDED FOR EVIDENTIARY HEARING, RE-SENTENCING, CORRECTION OF COMMITMENTS AND NOTICE OF POST-CONVICTION PRESCRIPTIVE PERIOD. NOTES [1] We also note that the trial judge did not specifically find that the Defendant was a second felony offender. However, where the habitual offender bill alleges only one prior felony, the trial judge's finding that the Defendant is a habitual offender can only relate to a second offense. See, State v. Esteen, 01-879 at p. 28, 821 So.2d at 78, fn. 22.	{ "pile_set_name": "FreeLaw" }
FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT JONI GOLDYN,  No. 04-17338 Petitioner-Appellant, v.  D.C. No. CV-97-01769-RLH LOY HAYES, OPINION Respondent-Appellee.  Appeal from the United States District Court for the District of Nevada Roger L. Hunt, District Judge, Presiding Argued and Submitted October 21, 2005—San Francisco, California Filed February 1, 2006 Before: Robert R. Beezer and Alex Kozinski, Circuit Judges, and Cormac J. Carney,* District Judge. Opinion by Judge Kozinski The Honorable Cormac J. Carney, United States District Judge for the Central District of California, sitting by designation. 1245 GOLDYN v. HAYES 1247 COUNSEL Franny A. Forsman, Federal Public Defender, and Paul G. Turner, Assistant Federal Public Defender, Las Vegas, Nevada, for the petitioner-appellant. Brian Sandoval, Attorney General; Rene L. Hulse, Senior Deputy Attorney General; and Victor Hugo Schulze II, Dep- uty Attorney General, Las Vegas, Nevada, for the respondent- appellee. OPINION KOZINSKI, Circuit Judge: Petitioner spent 12 years in prison for conduct that is not a crime. We vacate her conviction pursuant to Jackson v. Vir- ginia, 443 U.S. 307 (1979). 1248 GOLDYN v. HAYES Facts In November 1987, Joni Goldyn opened checking and sav- ings accounts with the Nevada Federal Credit Union (NFCU). Generous to a fault, NFCU also showered Goldyn with a $1,000 loan, a $500 line of credit attached to her checking account, a credit card and a “check guarantee card.” By Janu- ary 1988, Goldyn had depleted the funds in her accounts, used up most of her $500 line of credit, and accumulated various bank fees, resulting in a net negative balance. But Goldyn continued writing checks, and merchants continued accepting them, presumably relying on her check guarantee card. More importantly, NFCU continued covering her checks, as the check guarantee card obligated it to do. As NFCU’s collection officer testified at trial: “If a member uses a check guarantee card with the check, the bank is liable, and we do have to honor those checks.” Goldyn was convicted by a jury of five counts of Drawing and Passing Checks with Insufficient Funds on Deposit, in violation of Nev. Rev. Stat. 205.130. Because she had previ- ously been convicted of three felonies and one gross misdemeanor—all fraud related—she was sentenced as a habitual criminal to five life sentences. After twelve years in prison, she was released and placed on lifetime parole.1 On federal habeas, Goldyn presents a simple argument: If the bank was obligated to cover them, then she can’t have written bad checks. 1 Although Goldyn was released, we retain jurisdiction over her habeas petition because the petition was filed while she was imprisoned. See United States v. Spawr Optical Research, Inc., 864 F.2d 1467, 1470 (9th Cir. 1988). In any event, she remains in “custody” for purposes of habeas jurisdiction while she is on parole. See Jones v. Cunningham, 371 U.S. 236, 243 (1963). Further, Goldyn’s case is not moot because “the adverse consequences of [her] criminal conviction remain.” Spawr Optical Research, 864 F.2d at 1470; see Chaker v. Crogan, 428 F.3d 1215, 1219 (9th Cir. 2005) (citing Chacon v. Wood, 36 F.3d 1459, 1463 (9th Cir. 1994), for the proposition that there is an “irrefutable presumption that collateral consequences result from any criminal conviction”). GOLDYN v. HAYES 1249 Analysis [1] Our analysis begins and ends with the statutory text. The statute under which Goldyn was convicted is violated when “a person . . . willfully, with an intent to defraud, draws or passes a check or draft to obtain [money or property] . . . when the person has insufficient money, property or credit with the drawee of the instrument to pay it in full upon its pre- sentation.” Nev. Rev. Stat. 205.130(1) (emphasis added). “Credit” is further defined as “an arrangement or understand- ing with a person, firm, corporation, bank or depositary for the payment of a check or other instrument.” Id. at 205.130(4). It is undisputed that Goldyn had insufficient funds in her account to cover the five checks she wrote. But it is also undisputed that, at the time Goldyn wrote the checks, she was in possession of a check guarantee card from NFCU.2 This card represented NFCU’s commitment to merchants accepting Goldyn’s checks that it would cover the checks even if Gol- dyn had insufficient funds in her account to cover the checks herself. As the Nevada Supreme Court recognized, “[t]he credit union paid the checks because [Goldyn’s] use of a check guarantee card to draw the checks obligated it to do so.” In fact, even though Goldyn’s purchases totaled more than her $500 line of credit, and even though Goldyn already had a negative balance in her account, NFCU covered all five checks, and the merchants lost no money. [2] Over the twelve years she spent in prison, Goldyn asserted her innocence seven times before three courts.3 Yet 2 NFCU allegedly sent Goldyn a letter a few days before Goldyn wrote the five checks at issue, informing her that her check guarantee account was being closed due to excessive overdrafts. But the letter was sent “re- turn receipt requested,” and no receipt was ever returned. Goldyn claims she never received the letter. In any event, Goldyn’s account obviously had not yet been closed, as NFCU continued to cover her checks. 3 The Nevada trial court entered its amended judgment of conviction in April 1991. The Nevada Supreme Court dismissed Goldyn’s direct appeal 1250 GOLDYN v. HAYES no court appears to have taken her argument seriously. The Nevada Supreme Court rejected Goldyn’s argument with the following incomplete analysis: The elements of the crime of issuing a check against insufficient funds are: 1) with the intent to defraud; 2) making or passing a check for the payment of money; 3) without sufficient funds in the drawee institution to cover the check in full upon presenta- tion. Appellant opened her checking account under an assumed name. Appellant received cash or mer- chandise in return for each of the checks at issue, and did not have sufficient funds in her account to cover the checks. Appellant’s check guarantee card carried a $500 line of credit, but appellant’s over- drafts far exceeded that amount. The credit union paid the checks because appellant’s use of a check guarantee card to draw the checks obligated it to do so. Although the payee of the checks was not injured, the credit union was injured by having to cover appellant’s bad checks. The jury could reason- ably infer from the evidence presented that appellant, with an intent to defraud, drew and passed each of the checks at issue without having sufficient funds in the drawee institution to cover the checks. (Citations omitted.) The state court correctly identified that Goldyn “did not have sufficient funds in her account to cover the checks.” But standing alone, this is not a crime; the statute is only violated in March 1992. The state trial court denied her petition for post-conviction relief in September 1994, and her state habeas petition in August 1995. Goldyn appealed both denials to the Nevada Supreme Court, which denied both in November 1997. Finally, Goldyn filed a federal habeas petition, which the United States District Court for the District of Nevada denied in July 2004. GOLDYN v. HAYES 1251 if she wrote the checks without sufficient funds “or credit.”4 Nev. Rev. Stat. 205.130(1). Thus, Goldyn’s undisputed lack of funds is of no consequence if she had sufficient credit to cover the checks. [3] Although the state court recognized that Goldyn’s check guarantee card “obligated” NFCU to pay Goldyn’s checks, it apparently failed to recognize that obligation as a form of credit. Instead, the state court focused on Goldyn’s $500 credit limit, even though undisputed evidence in the record demonstrates that the $500 “limit” did not cap the bank’s obli- gations under the check guarantee card. At trial, NFCU’s col- lection officer explained this very clearly: Q: The five hundred dollar line of credit was, you previously testified, attached to [Goldyn’s] checking account. Is that right? A: That’s correct. Q: And is that a type of overdraft protection? A: Yes, it is. Q: And could a member extend the credit line beyond five hundred dollars without approval from the bank? 4 The information under which Goldyn was charged also lacked the criti- cal words “or credit.” This raises another serious constitutional issue. See United States v. Debrow, 346 U.S. 374, 376 (1953) (“An indictment is required to set forth the elements of the offense sought to be charged. The true test of the sufficiency of an indictment is . . . whether it contains the elements of the offense intended to be charged, and sufficiently apprises the defendant of what he must be prepared to meet . . . .” (internal quota- tion marks omitted)). But Goldyn has never challenged the sufficiency of the information on this ground, so we need not address it. We mention it merely as another example of inexcusable sloppiness in the handling of this case. 1252 GOLDYN v. HAYES A: They could. Q: How? A: By exceeding the amount of five hundred dol- lars and continue [sic] to write checks. The state court overlooked the fact that, by giving Goldyn a check guarantee card, NFCU had obligated itself to continue doling out money to cover her checks, even after that so- called limit was surpassed.5 The state court also mentioned the irrelevant fact that Gol- dyn opened her checking account under an assumed name. Had Goldyn been charged with defrauding NFCU into giving her the check guarantee card, her representations when she opened the account would, of course, have been relevant. But Goldyn was charged with writing bad checks, a completely different crime with different potential victims—the mer- chants who accepted the checks, not the bank. The bottom line is that the checks Goldyn wrote were not bad, and the merchants who accepted her checks were not injured; they were paid in full. Finally, the state court’s observation that “the credit union was injured by having to cover appellant’s bad checks” reveals a misunderstanding of both the crime of conviction and the concept of a check guarantee card. The crime of writ- 5 It is possible, of course, that NFCU covered Goldyn’s purchases with no intention of being repaid. In common parlance, this would be known as a “gift.” Although such a gift would certainly have been generous, we will not presume the credit union intended such generosity absent any evi- dence to that effect. In any event, NFCU’s decision to cover Goldyn’s checks cannot be described as anything other than a “gift” or “credit”— either it intended for Goldyn to repay the money (in which case it was extending her credit), or it didn’t (in which case it was giving her a gift of money). In either case, Goldyn’s checks were covered by “money, property or credit” as specified in Nev. Rev. Stat. 205.130(1). GOLDYN v. HAYES 1253 ing bad checks protects merchants from trading their wares for worthless paper; it does not protect a financial institution from making unwise loans. A financial institution that has given its account holder a check guarantee card is not “in- jured” when it is forced to cover her overdrawn checks— that’s the entire purpose of a check guarantee card. The finan- cial institution is only injured when the money it lends by covering an account holder’s checks—the credit it has extended her—is not repaid. But that “injury” is part of the credit risk a financial institution assumes as its everyday busi- ness; when it chooses to guarantee its account holder’s over- drawn checks, it becomes her unsecured creditor. NFCU can try to collect its money from Goldyn using the debt collection procedures it would employ for any other defaulted loan, including a civil lawsuit. But failure to repay a loan is not a crime; the days of imprisoning insolvent debtors are long gone. See, e.g., U.S. Const. amend. XIII (1865); Nev. Const. art. I, § 14 (1864). The check guarantee card was a private agreement between the Nevada Federal Credit Union and Goldyn: NFCU agreed to put its own balance sheet behind Goldyn’s checks so that merchants would feel comfortable accepting them, and Gol- dyn agreed to repay NFCU with interest. This is a service that financial institutions offer their customers to make it easier for them to negotiate their checks; presumably they are remu- nerated for this service, and the risk associated with it, by charging interest. NFCU could have conducted a background check on Goldyn, or required collateral from her, before entering into such a risky arrangement. The wisdom of its decision not to do so should be of no concern to the state prosecutor’s office or the criminal courts. Of course, if Gol- dyn fraudulently represented herself to NFCU in order to qualify for the check guarantee card, she might have been prosecuted for defrauding the bank. But the state has the responsibility of charging her with the right crime—fraud against the bank, not writing bad checks. And Goldyn cannot 1254 GOLDYN v. HAYES be sent to prison for a crime she didn’t commit because she might be guilty of a different crime altogether. [4] “Perhaps some would say that [Goldyn’s] innocence is a mere technicality, but that would miss the point. In a society devoted to the rule of law, the difference between violating or not violating a criminal statute cannot be shrugged aside as a minor detail.” Dretke v. Haley, 541 U.S. 386, 399-400 (2004) (Kennedy, J., dissenting). No check Goldyn wrote that was backed by her check guarantee card—representing the bank’s commitment to pay Goldyn’s checks in full, regardless of the funds in her account—could possibly have been a bad check. And, because “there is no factual basis for [Goldyn’s] convic- tion . . . it follows inexorably that [she] has been denied due process of law. Thompson v. Louisville, 362 U.S. 199 (1960); Jackson v. Virginia, 443 U.S. 307 (1979).” Haley, 541 U.S. at 397 (Stevens, J., dissenting); see also id. at 395 (majority opinion) (citing In re Winship, 397 U.S. 358, 364 (1970), for the proposition that due process requires proof of each ele- ment of a crime beyond a reasonable doubt). [5] No rational trier of fact could have found that Goldyn committed the crime of writing bad checks as defined by Nevada law. See Jackson, 443 U.S. at 319. And no rational judicial system would have upheld her conviction. See 28 U.S.C. § 2254(d)(1). We are saddened and disappointed that the state supreme court unanimously affirmed a conviction carrying multiple life sentences based on such cursory and inadequate review of the record in light of the applicable stat- ute. * * The Nevada Federal Credit Union probably made a fool- hardy decision when it gave Goldyn a check guarantee card and lent her money. And Goldyn breached her private agree- ment with NFCU when she failed to repay the money it loaned her. But the state cannot remedy NFCU’s error in GOLDYN v. HAYES 1255 judgment, or avenge Goldyn’s breach of contract, by convict- ing her of a crime she didn’t commit. Had the Nevada courts and prosecutor’s office taken more seriously their “obligation to serve the cause of justice,” United States v. Agurs, 427 U.S. 97, 111 (1976), Goldyn would not have spent twelve years behind bars for conduct that is not a crime.6 [6] We remand to the district court for the entry of a judg- ment granting the petition for writ of habeas corpus and directing the clerk to immediately issue an unconditional writ of habeas corpus vacating Goldyn’s conviction and ordering expungement of all state and federal records thereof. We direct the clerk of this court to issue the mandate forth- with. REVERSED. 6 Because we are granting Goldyn’s habeas petition for the reasons expressed above, we do not consider her numerous other claims, some of which raise similarly significant issues that cast further doubt on the state’s commitment to the pursuit of justice in this case.	{ "pile_set_name": "FreeLaw" }
657 P.2d 1154 (1983) Dale W. BECCARD and Helen M. Beccard, Appellants, v. NEVADA NATIONAL BANK, a Nevada corporation, Respondent. No. 13199. Supreme Court of Nevada. February 9, 1983. 1155 Murray Dolan, Sparks, for appellants. Guild, Hagen & Clark, and Mary Ann Morgan and Charles David Russell, Reno, for respondent. OPINION PER CURIAM:[1] This is an appeal from an order granting a new trial to respondent Nevada National Bank (hereinafter the Bank). Appellants Dale and Helen Beccard (hereinafter the Beccards) executed a promissory note for $25,000 in favor of the Bank. The money was to be used for the costs of growing and selling a crop of hay. The Beccards defaulted on their first quarterly interest payment, and the Bank ultimately repossessed and sold the hay. The Beccards subsequently filed suit against the Bank. At trial there was conflicting evidence regarding the quality and quantity of the repossessed hay and the reasonableness of the ultimate sale. The jury returned a verdict in favor of the Beccards and assessed damages at $45,500. The Bank then filed motions alternatively seeking a judgment notwithstanding the verdict, a new trial, or an amendment to the judgment. The trial court rejected all of the Bank's motions but the one seeking a new trial, which it granted. The court's decision was predicated on the size of the jury award, which the court reasoned could not have been made unless the jury was improperly influenced by the remarks of the Beccards' counsel during closing argument.[2] The closing arguments of counsel were not reported. In its motion for a new trial, however, the Bank complained of the following "highly prejudicial and inflammatory statements" allegedly made by the Beccards' counsel: 1. That counsel never trusted anybody who did not look at him, and that a witness for the Bank had not looked at him, thereby implying that the witness could not be trusted. 1156 2. That a witness for the Bank was a "client" of the Bank and, later, that even if the witness was not a client, the Bank "wanted him as a customer," thereby implying that the witness could not be trusted. 3. That the Bank's witnesses were all from a small rural community in Nevada where no one wished to offend bankers, thereby implying that the witnesses were not to be trusted. 4. That the testimony of a witness for the Bank was to be distrusted because he failed to produce weigh slips, when in fact the witness was not obligated to produce the documents and had testified that he was unable to obtain them. 5. That employees of the Bank could not be trusted to tell the truth. 6. That a witness for the Bank had failed to bring certain documents to court and was therefore not to be trusted, when in fact the witness was not obligated to produce the documents. 7. That the case should remind the jury of a "movie script involving the landlord and the little old lady, where the landlord advised the old lady ... her rent or her home," and that the Beccards had "lost everything." 8. That the Beccards' testimony that certain amounts of hay were involved was consistent with and supported by other evidence, when in fact the testimony was not supported by other evidence. The parties agree that no objection to these remarks was made either at the time of argument or any time before the motion for a new trial was made fifteen days after the verdict was filed. The Beccards contend that a new trial should not be granted where, as here, the moving party fails to object to the alleged misconduct at trial and raises the allegation for the first time in a motion for a new trial. We agree. The failure to object to allegedly prejudicial remarks at the time an argument is made, and for a considerable time afterwards, strongly indicates that the party moving for a new trial did not consider the arguments objectionable at the time they were delivered, but made that claim as an afterthought. Curtis Publishing Company v. Butts, 351 F.2d 702, 714 (5th Cir.1965), aff'd, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). Specific objections must be made to allegedly improper closing arguments in order to preserve the contention for appellate review. Southern Pac. Transp. Co. v. Fitzgerald, 94 Nev. 241, 244, 577 P.2d 1234, 1235-36 (1978). Similar considerations lead us to conclude that the trial court in this case erred in granting a new trial under NRCP 59(a)(6) based upon the statements recited above, since the moving party failed to object to the allegedly improper closing arguments at trial and raised the allegation for the first time in a motion for a new trial.[3]See Curtis Publishing Company v. Butts, supra. The Bank maintains that counsel's conduct during closing argument may be so egregious as to warrant a new trial even in the absence of objection. The authorities relied upon by the Bank to support this contention are not persuasive. We need not resolve this issue, however, as none of the recited statements, alone or in sum, can be characterized as "egregious." The order granting a new trial is reversed, and the jury verdict is reinstated. NOTES [1] Justice THOMAS STEFFEN voluntarily disqualified himself from the consideration of this case. [2] The trial court did not recite the statutory authority upon which it relied in granting the motion for a new trial. It is apparent from the court's order, however, that the basis for its decision was NRCP 59(a)(6), under which a new trial may be granted for "[e]xcessive damages appearing to have been given under the influence of passion or prejudice." [3] We note that "the mere fact that a verdict is large is not conclusive that it is the result of passion or prejudice... ." Miller v. Schnitzer, 78 Nev. 301, 309, 371 P.2d 824, 828 (1962). The trial court is precluded from substituting its view of the evidence for that of a jury in a case where the losing party is not entitled to judgment as a matter of law. See Fox v. Cusick, 91 Nev. 218, 533 P.2d 466 (1975).	{ "pile_set_name": "FreeLaw" }
Filed 3/4/16 P. v. Moore CA4/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE THE PEOPLE, Plaintiff and Respondent, G051505 v. (Super. Ct. No. 10WF0769) MARK DAMON MOORE, OPINION Defendant and Appellant. Appeal from a postjudgment order of the Superior Court of Orange County, Christopher Evans, Commissioner. Reversed and remanded with directions. John L. Dodd, under appointment by the Court of Appeal, for Defendant and Appellant. Kamala D. Harris, Attorney General, Julie L. Garland, Assistant Attorney General, Barry Carlton and Karl T. Terp, Deputy Attorneys General, for Plaintiff and Respondent. Pursuant to Proposition 47, the trial court placed appellant Mark Damon Moore on one year of parole after reducing his felony drug conviction to a misdemeanor. Appellant does not contest the imposition of parole in and of itself, but he does assert the trial court erred in failing to apply his excess custody credits toward his parole period and eligible sentencing fines. We agree. Therefore, we reverse the trial court’s order and remand the matter for further proceedings. FACTUAL AND PROCEDURAL BACKROUND In 2010, appellant pleaded guilty to felony drug possession and possessing drug paraphernalia, a misdemeanor. (Health & Saf. Code, § 11350, subd. (a); Bus. & Prof. Code, § 4140.) As part of the plea bargain, the trial court dismissed two prior strike allegations and four prior prison term enhancements. (Pen. Code, §§ 667, subds. (d)- (e)(2), 1170.12, subds. (b)-(c)(2), 667.5, subd. (b).)1 The court also placed appellant on three years’ probation subject to various terms and conditions, including that he spend a year in jail or a community-based drug treatment facility. Four months later, in March 2011, the trial court revoked appellant’s probation because he absconded from his drug treatment program. The court sentenced appellant to two years in prison on the felony count, plus a concurrent term of six months for his misdemeanor offense. Appellant completed his prison sentence and was released on postrelease community supervision (PRCS), a form of parole. In late 2014, while still on PRCS, he filed a petition for resentencing under section 1170.18, which was added to the Penal Code pursuant to Proposition 47. Although the prosecution did not object to resentencing, it did ask that appellant be placed on parole. Appellant opposed further supervision given he had already served his underlying prison sentence. However, after reducing appellant’s felony conviction to a misdemeanor and resentencing him to 365 1 All further statutory references are to the Penal Code. 2 days in jail, the court placed him on parole for one year. In so doing, the court applied appellant’s custody credits toward his misdemeanor sentence but not his parole term. DISCUSSION Appellant contends the trial court erred by failing to reduce the length of his parole by his excess custody credits, i.e., the difference between the amount of custody credit he had on his original sentence and the term he received on resentencing. We agree. This is not the first time we have addressed this issue. While this appeal was pending, we held in People v. Morales (2015) 238 Cal.App.4th 42 (Morales) that defendants like appellant, who are on PRCS at the time they seek Proposition 47 relief, are still serving their underlying sentence and are therefore subject to parole upon resentencing. However, they are entitled to have their excess custody credits counted toward their parole period. On August 26, 2015, the California Supreme Court granted review of Morales (S228030), as well as People v. Hickman (2015) 237 Cal.App.4th 984 (Hickman), a decision from the Second District which reached the opposite conclusion from Morales on the credits issue (S227964). The split reemerged after the Second District reaffirmed the holding of Hickman in People v. McCoy (2015) 239 Cal.App.4th 431 (McCoy), and this court reaffirmed the holding of Morales in People v. Armogeda (2015) 240 Cal.App.4th 1039 (Armogeda). However, the Supreme Court has granted review of both McCoy (S229296) and Armogeda (S230374). Based on the foregoing, it is apparent the California Supreme Court is going to speak to the issue presented in this appeal. And when it does, its ruling will be dispositive of that issue. In the meantime, we continue to adhere to the position this court exposed in Morales and Armogeda that defendants who are resentenced under Proposition 47 are entitled to have the length of their parole reduced by their excess custody credits. 3 In arguing otherwise, the Attorney General claims the plain language and intent of Proposition 47 require the imposition of a full year of parole without any reduction for custody credits. However, Proposition 47 states that anyone who is resentenced under its provisions “shall be given credit for time served” and that nothing in the law “is intended to diminish or abrogate any rights or remedies otherwise available to the petitioner or applicant.” (§ 1170.18, subds. (d) & (m).) With these provisions in mind, we turn our attention to the law respecting the allocation of custody credits in criminal cases. The general rule, as reflected in section 2900.5, subdivision (a), is that defendants are entitled to credit against their “term of imprisonment” for any time spent in custody prior to sentencing. For purposes of this section, “term of imprisonment” includes parole. (§ 2900.5, subd. (c).) Therefore, presentence custody credit also applies against the parole portion of the defendant’s sentence. (In re Ballard (1981) 115 Cal.App.3d 647; In re Sosa (1980) 102 Cal.App.3d 1002, 1005.) In fact, section 1170, subdivision (a)(3) makes clear that a defendant is not required to serve time on parole if his or her “in-custody credits equal the total sentence, including both confinement time and the period of parole.” The drafters of Proposition 47 could easily have included language in the initiative to exempt persons resentenced under its terms from these well-established rules. But rather than do so, they specifically extended to defendants seeking resentencing relief all the rights and remedies to which they would otherwise be entitled. (§ 1170.18, subd. (m).) This includes the right to have presentence credits deducted from any parole period they are ordered to serve at the time of resentencing. Respondent assails this conclusion on the basis defendants who were originally sentenced to long prison terms, and are thus in the greatest need of parole, will be in the best position to avoid postrelease supervision upon resentencing, due to their accumulated custody credits. However, that is a necessary consequence of our credits 4 system, which recognizes presentence custody is a form of punishment. (In re Watson (1977) 19 Cal.3d 646, 651.) Indeed, basic fairness explains why, as reflected in section 2900.5, defendants are entitled to a reduction in their parole if their presentence confinement exceeds the length of their sentence. (In re Sosa, supra, 102 Cal.App.3d at p. 1006.) Appellant is not only entitled to have his parole term shortened in light of his excess custody credits, he is also entitled to have the amount of his eligible fines reduced as well. (§ 2900.5, subd. (a); People v. Robinson (2012) 209 Cal.App.4th 401, 406-407; People v. McGarry (2002) 96 Cal.App.4th 644, 646.) Although respondent argues no reduction is required because appellant agreed to the fines as part of his plea bargain, excess custody credits must be applied toward the defendant’s eligible fines irrespective of whether he was convicted “by plea or by verdict.” (§ 2900.5, subd. (a).) Therefore, the trial court was remiss in failing to apply appellant’s excess custody credits in its original resentencing decision. DISPOSITION The trial court’s resentencing order is reversed and the matter is remanded with directions for the court to apply appellant’s excess custody credits toward the length of his parole and the amount of his eligible fines. BEDSWORTH, ACTING P. J. WE CONCUR: FYBEL, J. IKOLA, J. 5	{ "pile_set_name": "FreeLaw" }
529 F.2d 1297 Jack GOLDTRAP, d/b/a Jack's Fruit Company, not incorporated,Plaintiff-Appellee,v.Doyle CONNER, Commissioner of Agriculture of the State ofFlorida, et al., Defendants-Third Party PlaintiffsAppellants,v.GROWERS MARKETING SERVICE, INC., Third Party Defendant. No. 75--1010. United States Court of Appeals,Fifth Circuit. April 7, 1976.Rehearing and Rehearing En BancDenied May 10, 1976. Appeal from the United States District Court for the Middle District of Florida, Charles R. Scott, Judge. Robert A. Chastain, Gen. Counsel, State of Fla., Dept. of Agriculture & Consumer Services, Tallahassee, Fla., for Doyle Conner and others. Britt Whitaker, Tampa, Fla., for Jack Goldtrap. Robert L. Trohn, Lakeland, Fla., for Growers Marketing Service. Before BROWN, Chief Judge, TUTTLE and GEE, Circuit Judges. PER CURIAM: 1 This case, which has been much litigated in the Florida Courts, Growers Marketing Service, Inc. v. Conner, Fla.Dist.Ct.App., 1971, 249 So.2d 486; Jack's Fruit Co. v. Growers Marketing Service, Inc., Fla., 1972, 261 So.2d 171, makes its second appearance in this Court, Jack's Fruit Company v. Growers Marketing Service, Inc., 5 Cir., 1973, 488 F.2d 493. The arguments conclusively show that the District Court had no jurisdiction in this case and accordingly the judgment entered is vacated and the case remanded to the District Court with direction to dismiss for want of jurisdiction.1 2 VACATED and REMANDED with directions to dismiss. 1 With this decision falls the supersedeas bond given by the appellant as well as any other liabilities imposed by the decree now vacated	{ "pile_set_name": "FreeLaw" }
96 Ill. App.3d 477 (1981) 421 N.E.2d 580 FRANCES TRILLET et al., Plaintiffs-Appellants, v. GARLAND BACHMAN, Defendant-Appellee. No. 80-284. Illinois Appellate Court Third District. Opinion filed May 28, 1981. John Olivero and William La Sorella, both of Peru, for appellants. Michael T. Reagan, of Hupp, Irion & Reagan, of Ottawa, for appellee. Reversed and remanded. Mr. PRESIDING JUSTICE SCOTT delivered the opinion of the court: After trial by jury in La Salle County involving a collision of motor vehicles, a verdict was returned for the defendant, Garland Bachman, and the plaintiffs, Frances Trillet and Arthur J. Trillet, Jr., executor of the estate of Arthur W. Trillet, deceased, perfected this appeal. On May 7, 1976, the plaintiff Frances Trillet was with her husband, the owner and a passenger in an automobile being driven north on what is known as "plank road." The road is a two-lane concrete highway stretching from the city of Peru to and beyond Interstate Highway 80. A first cousin of Mrs. Trillet, Mr. Baker, was driving the motor vehicle. Mrs. Trillet as a passenger was in the right front seat and her husband, Arthur W. Trillet, was seated directly behind her. Mrs. Baker was also in the back 478 seat behind her husband. On the date of the accident Mrs. Trillet was but a few weeks shy of her 68th birthday. The Trillets and the Bakers were all going to an A.R.R.P. (an association for retirees) meeting which was to be held at the Peru Armory which is located on the west side of "plank road" and north of the city of Peru. When the Trillet vehicle came to the armory driveway Mr. Baker activated his left turn signal and stopped in the northbound lane of traffic. Mr. Baker remained at a complete stop for some period of time, then unexpectedly drove the Trillet vehicle into the southbound lane of traffic, at which time it was almost instantaneously struck by the vehicle being driven by the defendant Bachman. Mrs. Trillet received crushing injuries, as did her husband, who in addition suffered a heart attack. Medical testimony was adduced that Mr. Trillet's death was attributable to the accident. During the course of the trial Mrs. Trillet testified that she had driven a car since she was 15 years old until 1973 when she suffered a stroke. Based upon her driving experience she believed herself capable of judging the speed of a car and her opinion was that the Bachman vehicle was traveling at about 65 miles per hour when it was probably 50 feet or more from her car just prior to the collision. She further testified that when she first saw the Bachman vehicle it was approximately one-half mile away. Defendant Bachman in his testimony denied that he was ever driving 65 miles per hour but that on the contrary he was at all times within the posted speed limit. It was Bachman's testimony that when he first saw the Trillet vehicle he was going between 45 and 50 miles per hour and that he began decreasing his speed because he was approaching a 40-mile-perhour zone. It was his further testimony that when the Trillet automobile began its turn he was approximately 140 to 150 feet from it, that he started to apply his brakes, blew his horn and headed for a ditch. Bachman also testified that he visited the scene of the accident about a week later and noticed skid marks left by his car which he estimated to be about 120 to 130 feet in length. Evidence established that at the time of the accident it was daylight and visibility and road conditions were good. Additional facts and the procedural aspects of the trial of this case will be set forth as they become pertinent to the determination of this appeal. The plaintiff raises several issues in this appeal, and we will first consider the contention that the trial court erred in failing to direct a verdict in favor of the plaintiffs on the issue of contributory negligence. The trial court did deny a plaintiffs' motion for a directed verdict on the issue of contributory negligence and further gave the jury (over plaintiffs' 479 objections) two instructions tendered by the defendant on this precise issue. During closing argument, counsel for the defendant, in arguing contributory negligence, stated: "There simply wouldn't have been an impact, if Mr. and Mrs. Trillet had been doing what the owner of a car, riding as a passenger, should do, and that is exercise some control on how that car is operated." It is the contention of the plaintiffs that these remarks of counsel for the defendant do not correctly state the law and consequently the error of the trial court in refusing to direct a verdict for the plaintiffs on the issue of contributory negligence was compounded. For reasons hereinafter set forth we agree with the plaintiffs. 1 In support of the argument that error was committed by the trial court on the contributory negligence issue, the plaintiffs rely on the case of Bauer v. Johnson (1980), 79 Ill.2d 324, 403 N.E.2d 237. Plaintiffs' reliance on the law set forth in this recent case of our supreme court is well taken. In Bauer the court set forth the historical background relating to the duty of a passenger to control and warn the driver of a vehicle of a dangerous situation. Historically such duty was predicated upon various theories, i.e., master-servant, principal-agent, or joint enterprise relationships. Finally, in Palmer v. Miller (1942), 380 Ill. 256, 43 N.E.2d 973, it was established in Illinois that owner-passenger could be liable for the negligence of a driver if the passenger negligently failed to control the driver. The case of Bauer does not abolish the liability of a passenger-owner who fails to warn or control a driver, but does make it clear that mere presence of a passenger-owner who fails to warn or control does not impose liability per se upon that individual. In Bauer our supreme court in summarization stated: "In sum, a plaintiff passenger in a vehicle will be barred from recovery if the negligence of the driver is a legally contributing cause of harm and if the plaintiff was negligent in failing to control the conduct of the driver. The passenger's ownership of the car is relevant only insofar as it is a circumstance which gives the passenger reason to believe that his or her advice, directions or warnings would be heeded. (Restatement (Second) of Torts sec. 495, comment e (1965).) But no passenger has a duty to keep a lookout or to control the driver unless the plaintiff knows or should know that such actions are essential to his or her safety. Restatement (Second) of Torts sec. 495, comments c and d (1965)." 79 Ill.2d 324, 332. 2 As we interpret the above language, the plaintiffs were under a duty to control only if they noticed or reasonably should have noticed negligence 480 on the part of the driver Baker, or other conditions which would require their assistance. Baker, the driver, was 73 years of age, he had come to a complete stop in the northbound lane of traffic and was apparently patiently waiting there for a period of time before attempting to make a left turn. A string of other vehicles was also waiting lined up behind the vehicle being operated by Baker. The evidence establishes that the plaintiff, Mrs. Trillet, saw the defendant's vehicle when it was approaching them at a distance of one-half mile away. At that time and for some time thereafter there was no indication that there was any imminent danger. All vehicles were properly located; however, at the last possible second or fraction of a second Baker proceeded with his left turn, thereby entering the southbound lane of traffic and was struck almost instantaneously by the defendant's vehicle. There was no reason why either Mr. or Mrs. Trillet should have anticipated Baker's actions, and once commenced there was nothing that they could have done or said to avert the collision. The time element between the turn and the impact was so scant as to make any warning or effort to wrest control of the vehicle from Baker an exercise in futility. Baker's actions resulted in all of his passengers being trapped in a cage which was thrust without warning into a holocaust. Like the situation in Bauer, the record in the instant case is devoid of any evidence of road conditions requiring the plaintiffs' assistance in driving the vehicle, nor was there any evidence of driver incompetence until it was too late for anyone to be of assistance. In the instant case, as in the case of Bauer, there was no substantial factual dispute left to be resolved by the jury on the issue of contributory negligence. The motion of the plaintiffs on this issue should have been granted and the instructions to the jury on the same were erroneously given. The defendant argues that a general verdict is presumed to include a favorable finding on every issue necessary to support it. While we recognize this general rule of law (Woolsey v. Rupel (1957), 13 Ill. App.2d 48, 140 N.E.2d 855), we find it inapplicable in the instant case. In light of the remarks of counsel for the defendant which mistakenly stated the law as to contributory negligence of an owner-passenger, it cannot be presumed that the jury determined the issue in question correctly. The defendant argues that since plaintiffs' motion for directed verdict on the issue of contributory negligence was not in writing it was not properly before the court. While the better practice would be to present written motions, we find no such mandatory requirement in the Civil Practice Act. Defendant's reliance on the case of Greene v. Noonan (1939), 372 Ill. 286, 23 N.E.2d 720, is misplaced. In Greene our supreme court noted that it was unable from the record to determine whether the motion in question was in writing or not but it was clear that the motion was made, it 481 presented a question of law, and the trial court was required to pass upon it. 23 N.E.2d 720, 722-23. For the reasons stated the plaintiffs were entitled to have a directed verdict on the issue of contributory negligence and consequently the judgment of the trial court for the defendant must be reversed and this case remanded for a new trial. 3 The plaintiffs raise another issue which should be determined in this appeal in order to foreclose difficulties which would most likely occur in a retrial of this case. The issue presented is whether the trial court committed error in denying plaintiffs' motion for a continuance for the purpose of providing them with time to procure a "reconstruction expert witness" who would testify at the trial. The defendant argues that this issue is not properly before this court, since when made the trial court was informed that it was for the purpose of procuring an expert witness who would reconstruct the accident, but that in this appeal the plaintiffs have changed their position by claiming that they wanted an expert witness to testify as to the skid marks left by the defendant's automobile so as to give the jury a basis for determining stopping distance at various speeds. Whether properly before this court or not is immaterial, since the evidence desired by the plaintiffs would have been inadmissible. Our supreme court has held that speed of an automobile is not a matter beyond the ken of an average juror and that jurors can draw their own conclusions on the basis of eyewitness testimony and hence admission of reconstruction testimony concerning speed of an automobile was error. (Peterson v. Lou Bachrodt Chevrolet Co. (1979), 76 Ill.2d 353, 392 N.E.2d 1.) In the instant case the plaintiff Mrs. Trillet observed the defendant's automobile twice, and she testified as to its speed and movement. The defendant testified as to the speed of his automobile at various points in its progress. The jury also had before it physical facts as to length and placement of skid marks, and photographs of the damaged vehicles. With such evidence it was not beyond the ability of the jury to determine the speed of the vehicles. The case of Peterson is controlling in that the testimony of a reconstruction expert would have been inadmissible and thus the motion for continuance was properly denied. It should further be noted that continuances are governed by Supreme Court Rule 231 (Ill. Rev. Stat. 1979, ch. 110A, par. 231). The rule requires that movant must show due diligence in obtaining material evidence as well as the facts which constitute the evidence. The plaintiffs failed to meet either of these requirements. The motion for continuance was not made until four days prior to trial date and there was no specific fact or facts tendered to the court as to what the evidence would demonstrate. *482 The plaintiffs raise several other issues; however, they are of such a nature as to not likely recur in the retrial of this case and hence need not be considered. For the reasons set forth the judgment of the Circuit Court of LaSalle County for the defendant is reversed, and this case is remanded for a new trial consistent with this opinion. Reversed and remanded with directions. ALLOY and BARRY, JJ., concur.	{ "pile_set_name": "FreeLaw" }
837 N.E.2d 972 (2005) Krste PRENTOSKI, Appellant (Plaintiff below), v. FIVE STAR PAINTING, INC., Appellee (Defendant below). No. 93S02-0511-EX-605. Supreme Court of Indiana. November 23, 2005. George C. Patrick, Crown Point, for Appellant. Sharon Funcheon Murphy, Indianapolis, for Appellee. PER CURIAM. A Single Hearing Member of the Worker's Compensation Board dismissed Krste Prentoski's second application for adjustment of benefits after finding it untimely under Indiana Code Section 22-3-3-27(c). That subsection provides, "[A]pplications for increased permanent partial impairment are barred unless filed within one (1) year from the last day for which compensation was paid[.]" Ind.Code § 22-3-3-27(c) (emphasis added). The Full Board affirmed. Later, the Court of Appeals affirmed after agreeing the application was untimely because it was not filed within one year after the last date for which compensation was paid, even though it was filed within one year after the date on which Prentoski received a lump-sum payment from his employer's insurance carrier *973 for permanent partial impairment benefits that the Board determined were owed to him. Prentoski v. Five Star Painting, Inc., 827 N.E.2d 98, 102-03 (Ind.Ct.App. 2005). Prentoski petitioned to transfer. A long line of Court of Appeals opinions has interpreted the language in Indiana Code Section 22-3-3-27(c) and similarly worded predecessor statutes to mean that the limitations period begins running on the last date "for which" compensation was paid rather than on some other date. See, e.g., Gibson v. Indus. Bd., 176 Ind.App. 489, 376 N.E.2d 502, 504 (1978) ("[T]he Legislature did not choose a specified period of time after the date of the injury, or after the date of the award, or after the last payment of compensation.... Rather, the Legislature chose the last day for which compensation was paid."); Lambert v. Powers, 76 Ind.App. 77, 131 N.E. 420, 421 (1921) ("Time for filing such application does not run from the date of the award ... but from the end of the compensation period fixed by the award."). However, as Judge Sullivan notes in his concurring opinion, a few opinions have initially quoted the statute correctly but then referred imprecisely to "the last date that [the employee] received" benefits under an earlier award, Luz v. Hart Schaffner & Marx, 771 N.E.2d 1230, 1234 (Ind. Ct.App.2002), trans. denied; or "`the last day on which compensation was paid[.]'" Halteman Swim Club v. Duguid, 757 N.E.2d 1017, 1020 (Ind.Ct.App.2001) (quoting Gregg v. Sun Oil Co., 180 Ind.App. 379, 388 N.E.2d 588, 590 (1979); Berry v. Anaconda Corp., 534 N.E.2d 250, 253 (Ind.Ct. App.1989) (same)). To clarify, we agree the Court of Appeals' analysis of the statute of limitations in the present case correctly focused on the last date "for which" compensation was paid rather than the last date "on which" compensation was paid. We therefore grant transfer, adopt that portion of the opinion of the Court of Appeals that addresses the statute of limitations, and incorporate it by reference. See Ind. Appellate Rule 58(A)(1). We summarily affirm the part of the opinion of the Court of Appeals that addresses whether a hearing was required on Five Star's motion to dismiss. See App. R. 58(A)(2). All Justices concur.	{ "pile_set_name": "FreeLaw" }
SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Fourth Judicial Department 269 KA 07-00713 PRESENT: SCUDDER, P.J., LINDLEY, VALENTINO, AND DEJOSEPH, JJ. THE PEOPLE OF THE STATE OF NEW YORK, RESPONDENT, V MEMORANDUM AND ORDER JARVIS LASSALLE, DEFENDANT-APPELLANT. ERICKSON WEBB SCOLTON & HAJDU, LAKEWOOD (LYLE T. HAJDU OF COUNSEL), FOR DEFENDANT-APPELLANT. JARVIS LASSALLE, DEFENDANT-APPELLANT PRO SE. FRANK A. SEDITA, III, DISTRICT ATTORNEY, BUFFALO (DONNA A. MILLING OF COUNSEL), FOR RESPONDENT. Appeal from a judgment of the Erie County Court (Shirley Troutman, J.), rendered February 26, 2007. The judgment convicted defendant, upon his plea of guilty, of robbery in the first degree. It is hereby ORDERED that the judgment so appealed from is unanimously reversed on the law, the plea is vacated and the matter is remitted to Erie County Court for further proceedings on the indictment. Memorandum: Defendant was convicted upon a plea of guilty of robbery in the first degree (Penal Law § 160.15 [4]). On a prior appeal, we affirmed the judgment of conviction (People v Lassalle, 55 AD3d 1286, lv denied 11 NY3d 926), but we subsequently granted defendant’s second motion for a writ of error coram nobis (People v Lassalle, 114 AD3d 1226). Upon reviewing the appeal de novo, we agree with defendant that the judgment of conviction must be reversed and his plea vacated “because County Court failed to advise [him] prior to his entry of the plea[] that his sentence[] would include [a] period[] of postrelease supervision” (People v Burns, 70 AD3d 1301, 1302, citing People v Catu, 4 NY3d 242, 245). Contrary to the contention of the People, the mere fact that the court informed defendant that a period of postrelease supervision could have been imposed as part of a maximum sentence does not establish that defendant “was aware that the terms of the court’s promised sentence included a period of [postrelease supervision]” (People v Cornell, 16 NY3d 801, 802). Moreover, as we noted in the codefendant’s appeal, we may address the merits of defendant’s contention notwithstanding a valid waiver of the right to appeal or the absence of a postallocution motion (see Burns, 70 AD3d at 1302). -2- 269 KA 07-00713 In view of our decision, we do not address defendant’s remaining contentions raised in his pro se supplemental brief. Entered: March 20, 2015 Frances E. Cafarell Clerk of the Court	{ "pile_set_name": "FreeLaw" }
State of New York Supreme Court, Appellate Division Third Judicial Department Decided and Entered: June 23, 2016 521157 ________________________________ In the Matter of GEORGE CHAVIS, Appellant, v MEMORANDUM AND ORDER BRIAN FISCHER, as Commissioner of Corrections and Community Supervision, Respondent. ________________________________ Calendar Date: May 3, 2016 Before: Lahtinen, J.P., McCarthy, Egan Jr., Devine and Aarons, JJ. __________ George Chavis, Stormville, appellant pro se. Eric T. Schneiderman, Attorney General, Albany (Allyson B. Levine of counsel), for respondent. __________ Appeal from a judgment of the Supreme Court (Hayden, J.), entered September 23, 2014 in Chemung County, which, in a proceeding pursuant to CPLR article 78, granted respondent's motion to dismiss the petition. Petitioner commenced this CPLR article 78 proceeding challenging a prison disciplinary determination finding him guilty of making threats and harassment. Respondent moved to dismiss the petition noting that the determination of guilt had been administratively reversed and a new hearing ordered. Supreme Court dismissed the petition as moot and this appeal ensued. -2- 521157 We affirm. Petitioner's challenge to the initial determination was moot once that determination was administratively reversed and a new hearing ordered (see Matter of Boykin v Prack, 137 AD3d 1393, 1394 [2016]; Matter of Hamilton v Selsky, 13 AD3d 844, 845 [2004], lv denied 5 NY3d 704 [2005]; Matter of Lebron v Goord, 309 AD2d 1034, 1034 [2003], lv denied 3 NY3d 602 [2004]). We are unpersuaded by petitioner's contention that a rehearing, and not expungement, was improper (see Matter of Boykin v Prack, 137 AD3d at 1394). To the extent that petitioner challenges the determination resulting from the rehearing, the rehearing occurred after the commencement of this proceeding and, therefore, any challenges thereto are not properly before this Court. Lahtinen, J.P., McCarthy, Egan Jr., Devine and Aarons, JJ., concur. ORDERED that the judgment is affirmed, without costs. ENTER: Robert D. Mayberger Clerk of the Court	{ "pile_set_name": "FreeLaw" }
NO. 12-03-00221-CV IN THE COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT TYLER, TEXAS § IN RE: HIGHLAND PINES NURSING HOME LTD. D/B/A HIGHLAND PINES § ORIGINAL PROCEEDING NURSING & REHABILITATION CENTER, RELATOR § MEMORANDUM OPINION PER CURIAM On January 21, 2004, this court delivered an opinion conditionally granting the petition for writ of mandamus filed by Highland Pines Nursing Home Ltd. d/b/a Highland Pines Nursing & Rehabilitation Center as relator. That opinion ordered Respondent to vacate its order signed on May 20, 2003 denying Relator's motion to dismiss and enter an order consistent with our opinion. On February 4, 2004, this court received an order from the trial court that complied with our order and opinion of January 21, 2004. All issues attendant to this original proceeding having been disposed of, this mandamus proceeding has now been rendered moot; therefore, the writ need not issue. Accordingly, this original proceeding is dismissed as moot. Opinion delivered February 11, 2004. Panel consisted of Worthen, C.J., Griffith, J., and DeVasto,J. (PUBLISH)	{ "pile_set_name": "FreeLaw" }
16 S.W.3d 82 (2000) David Brian POLASEK, Appellant, v. The STATE of Texas, Appellee. No. 01-98-00328-CR. Court of Appeals of Texas, Houston (1st Dist.). March 16, 2000. Rehearing Overruled May 12, 2000. 83 Donald W. Rogers, Jr., Houston, for Appellant. Calvin Hartmann, John B. Holmes, William Delmore, III, Houston, for State. The original panel consisted of Justices O'CONNOR, TAFT and PRICE.[] En banc Court consists of Chief Justice SCHNEIDER and Justices COHEN, MIRABAL, O'CONNOR, WILSON, HEDGES, ANDELL, TAFT, NUCHIA, PRICE, and ROBERTSON.[*] EN BANC OPINION ON MOTION FOR REHEARING TIM TAFT, Justice. On December 2, 1999, a majority of this Court sitting en banc affirmed appellant's conviction for criminal trespass. Although we deny appellant's motion for rehearing, we withdraw our original opinion and issue this one in its place. A jury convicted appellant, David Brian Polasek, of criminal trespass. The trial court sentenced appellant, as a second offender, to 120 days in jail. We determine the validity of a change in the appellate rules, calling for the court reporter to record proceedings unless excused by agreement of the parties, where the predecessor rule and statute required a court reporter to record proceedings only upon request. As a threshold matter, we call attention to the unusual procedure that required us to utilize two visiting justices to obtain an en banc decision that could have been contrary to the decision of a majority of elected justices on the Court. We note that both of the issues we address arise from substantive changes made in amending the appellate rules. We also address several procedural issues raised in appellant's motion for rehearing. We affirm. I. En Banc Procedure In his motion for rehearing, appellant presents several complaints about the en banc procedure employed by this Court in: (1) denying oral argument; (2) denying notice of en banc consideration of the case; (3) denying notice of the name of the visiting justice appointed as a tie breaker; (4) 84 considering the case en banc before a panel issued an opinion; and (5) continuing the participation of the tie-breaking visiting justice after a tie no longer existed. Appellant also moves to disqualify Justice Sam Robertson, the visiting justice appointed as tie breaker. A. Denial of Oral Argument Appellant first claims this Court abused its discretion by refusing to hear oral argument in this case. Appellant relies on rule 39.8 of the Rules of Appellate Procedure, which states, "In its discretion, the court of appeals may decide a case without oral argument if argument would not significantly aid the court in determining the legal and factual issues presented in the appeal." Tex.R.App. P. 39.8. Appellant argues that oral argument obviously would have been of assistance to resolve a question of first impression as to the validity and requirements of a new rule of appellate procedure. Appellant also points to the resulting disagreement among the members of the en banc court as demonstrating the need for oral argument. Appellant claims he has been deprived of his constitutional rights to due process of law, due course of law, and open courts. The fallacy of appellant's arguments is its assumption that the determination of whether to hear oral argument is objective. It is not. A majority of the panel or en banc court determines whether it thinks oral argument would be helpful. Notice is given to the parties accordingly. A party may persist and request reconsideration of the decision to deny oral argument, but ultimately a majority of the panel will decide whether it thinks oral argument would be helpful. On the other hand, even if there is no request for oral argument, or an outright waiver, the court may decide oral argument would be helpful and may order the parties to appear to present it. The purpose of oral argument is to help the court. Therefore, it must be the court that decides what it thinks would be helpful. At any point in the process, the court can always stop and hold oral arguments, if a majority of the court thinks it would be helpful. Although not mentioned by appellant, it could be argued that an additional reason for not denying oral argument is that the former rule of appellate procedure afforded a right to present oral argument. See former Tex.R.App. P. 75(a) ("Right to Argument. When a case is properly prepared for submission, any party who has filed briefs in accordance with the rules prescribed therefor and who has made a timely request for oral argument under (f) hereof may, upon the call of the case for submission, submit an oral argument to the court.") (emphasis in original to indicate title of subsection).[1] We point out a crucial distinction between the change in the rule pertaining to oral argument and the other rules we examine below. Contrary to the rules relating to the composition of an en banc court and the presence of a court reporter to record proceedings, the rule pertaining to oral argument does not have its roots in a statute. Therefore, this is an area in which the courts are free to formulate rules of their own making for the benefit of the appellate process without concern for substantively changing a rule that the legislature has made. Thus, there is not the same concern for recognizing the basic principle of separation of powers in the case of a rule originally formulated by the courts, as for a rule with legislative roots that the legislature authorized the courts to enact without changing the substantive rights of the litigants. Because we view our internal decision whether to grant, deny, or require oral argument as absolutely discretionary and unreviewable, we overrule appellant's first objection. B. Denial of Notice of En Banc Consideration Appellant seizes on language in our original opinion making reference to an opinion 85 "issued" by the Panel. Appellant complains this panel opinion was not filed by the clerk of the court so that appellant would have an opportunity to address it. Appellant also complains that he did not receive notice that the case would be considered en banc. Appellant again claims denial of his constitutional rights to due process, due course of law, and open courts. Our use of the term "issued" in regard to the panel opinion was erroneous. No panel opinion was ever issued in this case. What happened is that a member of the court requested en banc review before the panel opinion issued. This procedure is authorized by rule 41.2(c) of the Rules of Appellate Procedure, which states, in pertinent part, "A vote to determine whether a case will be heard or reheard en banc need not be taken unless a justice of the court requests a vote." Tex.R.App. P. 41.2(c). The rules do not require notice to the parties of these internal operations of the court. Any objections to the process can be made, as appellant has in this case, upon issuance of the en banc decision of the court. We do not see how this denies appellant's rights to due process of law, due course of law, and open courts. We overrule appellant's second objection. C. Denial of the Names of Appointed Visiting Justices Appellant relies on rule 39.9(d) of the Rules of Appellate Procedure to argue that notice must be given to the parties as to the identity of the justices who will hear a case. Appellant extrapolates the rule to argue that it requires notice of the identity of a visiting justice appointed to break a tie. Appellant claims he was deprived of his right to move to disqualify or recuse Justice Robertson in this case, as a result of not being given notice. Appellant relies on Justice O'Connor's dissenting opinion on rehearing in Benavides v. State, 992 S.W.2d 511 (Tex.App.-Houston [1st Dist.] 1999, pet. ref'd). Justice O'Connor's dissenting opinion stated her belief that this Court should have considered issues we address here regarding lack of notice to the parties whenever en banc review is requested internally. Id. at 533-34 (O'Connor, J., dissenting). However, rule 39.9(d) expressly warns that the notice parties receive regarding the identity of the members of the panel to which the case will be argued or submitted is subject to change by the Court. Tex.R.App. P. 39.9(d). Two such changes occurred in this case as a result of a request for en banc review and the necessity of a tie breaker. As in Benavides, and in this case, we can consider any objections to the procedure or motions to recuse or disqualify on motion for rehearing. See Benavides, 992 S.W.2d at 533 (O'Connor, J., dissenting). Again, we see no denial of appellant's constitutional rights in this procedure. D. Motion to Disqualify Justice Robertson As an additional part of his third objection, appellant moves to disqualify Justice Robertson pursuant to rule 16.1 of the Rules of Appellate Procedure. Appellant asserts that Justice Robertson is a non-elected justice whose service violates Article V, section 6 of the Texas Constitution, which requires justices of the courts of appeals to be elected by qualified voters of their respective districts at a general election for a term of six years. We note that appellant makes no complaint about Justice Price, who is also a visiting justice in this case. Of course, Justice Price has voted in favor of appellant's position, while Justice Robertson has not. Appellant's selectivity in moving to disqualify detracts somewhat from the seriousness of his claim. Justice Robertson was appointed by the Chief Justice of the Texas Supreme Court pursuant to rule 41.2(b) of the Rules of Appellate Procedure. TEX.R.APP. P. 41.2(b). The Texas Legislature has also authorized the Chief Justice of the Texas Supreme Court to assign qualified justices 86 for active service regardless of whether a vacancy exists in the court to which the justice is assigned. TEX. GOV'T CODE ANN. § 74.003(b) (Vernon 1998). Appellant makes no constitutional attack on section 74.003(b). Even though many, if not all, of the courts of appeals use visiting justices appointed pursuant to section 74.003(b), there appears to have been no reported case involving a motion for disqualification. We believe that appointment of visiting justices to sit on courts of appeals pursuant to rule 41.2(b) and section 74.003(b) does not violate article V, section 6 of the Texas Constitution. Indeed, the constitutional provision expressly provides that courts of appeals have other officials as may be provided by law. TEX. CONST. art. V, § 6 ("The state shall be divided into courts of appeals districts, with each district having a Chief Justice, two or more other Justices, and such other officials as may be provided by law."). Visiting justices have been provided by law. Accordingly, we overrule appellant's motion to disqualify Justice Robertson. We also overrule appellant's third objection. E. En Banc Review Before Panel Opinion Issued Appellant argues that en banc review should not have been conducted until after issuance of a panel opinion, relying again on Justice O'Connor's dissenting opinion in Benavides. We have already decided that our procedure is in compliance with rule 41.2(b) (providing for en banc review upon court vote requested by a justice). Appellant claims that rule 41.1(a) provides support for his position. The pertinent part of rule 41.1(a) states "Unless a court of appeals with more than three justices votes to decide a case en banc, a case must be assigned to a panel of the court consisting of three justices." TEX.R.APP. P. 41.1(a). We do not see how rule 41.1(a) supports appellant's position. It does not say anything about en banc review occurring only after issuance of a panel opinion. All it says is that, unless the court votes to decide the case en banc, it will be heard by a panel of three justices. Appellant also argues that rule 41.2(c) of the Rules of Appellate Procedure contemplates en banc review only in extraordinary circumstances or to maintain uniformity in the court's decisions, stating that en banc consideration is not favored. TEX. R.APP. P. 41.2(c). Appellant claims that, because this is a case of first impression, en banc review could not have been granted to obtain uniformity in the court's decisions. Appellant also asserts that no extraordinary circumstances are shown. We hold that our internal decision to proceed en banc is a matter of absolute discretion that is not reviewable, however, and we reject appellant's position that en banc review can come only after a panel opinion was issued. We overrule appellant's fourth objection. F. Tie-Breaking Justice Should Not Remain After Realignment Finally, appellant claims that, because rule 41.2(b) only authorizes appointment of a justice to break a tie, the final count showing a six-to-four vote for affirmance eliminated the tie thereby requiring that Justice Robertson be excused. It is true that, after Justice Robertson was appointed, the five-to-five tie changed to six-to-four. However, there is nothing in rule 41.2(b) that requires the tie-breaking justice to be excused under these circumstances. The rule states that the appointment is for the temporarily-assigned justice "to sit with the court of appeals to consider the case." TEX.R.APP. P. 41.2(b). Accordingly, we reject appellant's final attack on the en banc procedures taken in this case. We overrule appellant's fifth objection. II. Constitution of En Banc Court Appellant is not the only one with a complaint about the procedure in this case. We address a change in the appellate rules that required us to resort to appointment 87 of an eleventh justice, i.e., a second visiting justice, to resolve this case. Under former Texas Rule of Appellate Procedure 79(d),[2] a majority of the membership of the court constituted a quorum: "Where a case is submitted to an en banc court, whether on motion for rehearing or otherwise, a majority of the membership of the court shall constitute a quorum and the concurrence of a majority of the court sitting en banc shall be necessary to a decision." Former TEX.R.APP. P. 79(d) (superseded effective September 1, 1997). Former rule 79(d) tracked section 22.223(b) of the Government Code: "When convened en banc, a majority of the membership of the court constitutes a quorum and the concurrence of a majority of the court sitting en banc is necessary for a decision." TEX. GOV'T CODE ANN. § 22.223(b) (Vernon 1988). Although no case had authoritatively construed the provision,[3] which was enacted in 1985, the practice of this Court had been to include only elected justices of this Court in en banc decisions. The new rules added a new definition of en banc court: "An en banc court consists of all members of the court who are not disqualified or recused andif the case was originally argued before or decided by a panelany members of the panel who are not members of the court but remain eligible for assignment to the court." TEX. R.APP. P. 41.2(a). When en banc review was called for in this case, we employed the new definition of "en banc court" by including the visiting justice from the panel that originally issued the opinion. The vote was five to five, so the presence of the visiting justice triggered the requirement, under both the old and new rule, of asking the Chief Justice of the Supreme Court of Texas to appoint another visiting justice to break the tie. See TEX.R.APP. P. 41.2(b). This created the possibility that the two visiting justices could have voted with a minority of four elected justices on this Court to defeat the will of the majority of the elected justices. Such a frustration of the will of the majority of elected justices did not happen in this case, but we point out this potential result of the change of the definition of en banc court for the consideration of the rule-making committee. We also bring this up for the high courts to consider whether the rule makers have the authority to make substantive changes from an appellate rule previously established by statute.[4] The court of criminal appeals has held that there is no such authority. In Lyon v. State, the court of criminal appeals was faced with the construction of a rule of appellate procedure that appeared to vary from the repealed statutory provision from which it was derived. 872 S.W.2d 732, 735-36 (Tex.Crim. App.1994). Because the legislative delegation of rule-making authority to the court of criminal appeals expressly precluded substantive changes, the court was constrained to interpret the rule so as not to modify the previous statutory provision. Id. Stronger reason exists in this case to adhere to the statute, which has not been repealed. The result in our case is the same whether the new rule or the old rule (and existing statute) is applied, so the question of the validity of the rule amendment is not ripe for our consideration. Furthermore, it is more appropriate for the high courts to resolve the issue because they have the rule-making authority. We merely emphasize the importance of the issue in light of its ramifications to the 88 important, basic principles of separation of powers and rule of law. III. Court Reporter's Duty In his sole point of error, appellant contends the judgment should be reversed because the trial court violated the mandatory provisions of rule 13.1(a) of the Texas Rules of Appellate Procedure, thereby depriving appellant of a meaningful record on appeal. Even though appellant did not request a court reporter to record the voir dire examination or final arguments, and did not object to the court reporter's failure to record those portions of the trial, appellant argues the trial court committed fundamental, automatically reversible error by not requiring the court reporter to record the proceedings. The new rule requires court reporters to make a full record of the proceedings unless excused by agreement of the parties. TEX.R.APP. P. 13.1(a). Appellant acknowledges that the old rule required the court reporter to record proceedings only when requested by the trial court or the attorney for any party. TEX.R.APP. P. 11(a)(1) and (2) (superseded effective September 1, 1997).[5] Appellant even acknowledges an existing government code provision requiring the court reporter to take notes only upon request. See TEX. GOV'T CODE ANN. § 52.046(a) (Vernon 1998). What appellant does not mention is that the old rule was also the embodiment of former article 40.09, section 4 of the Code of Criminal Procedure.[6] Former article 40.09, section 4 provided: "At the request of either party the court reporter shall take shorthand notes of all trial proceedings, including voir dire examination, objections to the court's charge, and final arguments." The new rule is, thus, not only a change from the previous rule, but a change from the repealed statute from which the rule was derived, and the substantial body of case law applying it. See e.g., Walthall v. State, 594 S.W.2d 74, 81 (Tex.Crim.App.1980). Moreover, the new rule is at odds with an existing statute, section 52.046(a) of the Texas Government Code. TEX. GOV'T CODE ANN. § 52.046 (Vernon 1998).[7] Under these circumstances, we suggest there is a genuine problem with the validity of the new rule. See Lyon, 872 S.W.2d at 735-36 (because legislative delegation of rule-making authority to court of criminal appeals expressly precluded substantive changes, the court was constrained to interpret rule so as not to modify previous statutory provision).[8] Appellant makes clear that the new rule changes the substantive rights of the litigants by relying upon Marin v. State, which distinguishes between rights implemented only on request and rights which must be must be implemented unless expressly waived. 851 S.W.2d 275, 279 (Tex. Crim.App.1993). The old rule based on the former statute, and still existing in section 52.046(a) of the Texas Government Code, required that the right to a court reporter be implemented on request. Appellant argues that the new rule establishes a right to the court reporter unless waived by the parties. Thus, appellant argues, because he did not waive his right to a court reporter, he may not only raise the lack of a court reporter on appeal, but assert it as automatic reversible error. To accept appellant's position would change the right to have a court reporter from a right that must be requested to a right 89 that must be expressly waived. We view this as an enlargement of a defendant's substantive rights, in violation of the mandate that rules not modify the substantive rights of the litigants. Accordingly, we hold that rule 13.1(a) is void. The proper rule is that stated in section 52.046(a) of the Texas Government Code: (a) On request, an official court reporter shall: (1) attend all sessions of the court; (2) take full shorthand notes of oral testimony offered before the court, including objections made to the admissibility of evidence, court rulings and remarks on the objections, and exceptions to the rulings; (3) take full shorthand notes of closing arguments if requested to do so by the attorney of a party to the case, including objections to the arguments, court rulings and remarks on the objections, and exceptions to the rulings; ... TEX. GOV'T CODE ANN. § 52.046(a) (Vernon 1998). Therefore, we overrule appellant's sole point of error. Conclusion We affirm the judgment of the trial court. Chief Justice SCHNEIDER and Justices WILSON, HEDGES and NUCHIA join the en banc opinion. Justice ROBERTSON, joined by Justice COHEN, concurring. Justice PRICE, joined by Justices MIRABAL, O'CONNOR, and ANDELL, dissenting. Justice O'CONNOR dissenting. Justice ROBERTSON not participating in motion to disqualify. SAM ROBERTSON, Justice (Retired), concurring on motion for rehearing. I concur in the en banc opinion authored by Justice Taft. However, believing that the construction of rule 13 of the Texas Rules of Appellate Procedure is governed by basic and well-established law, I write this brief concurrence to state my views. In 1939, the legislature gave the Supreme Court of Texas the authority to promulgate rules in civil matters, so long as they did "not abridge, enlarge or modify the substantive rights of any litigant." See former TEX.REV.CIV. STAT. ANN. art. 1731a, § 2 (repealed and codified in TEX. GOV'T CODE ANN. § 22.004(a) (Vernon 1988)).[1] In Few v. Charter Oak Fire Insurance Co., 463 S.W.2d 424 (Tex.1971), the supreme court, faced with a conflict between a rule, promulgated by the supreme court, and a statute, passed by the legislature, stated that "when a rule of the court conflicts with a legislative enactment, the rule must yield." Id. at 425. In 1985, the legislature codified the Government Code and included therein as section 22.004 the provisions of article 1731a. TEX. GOV'T CODE ANN. § 22.004 (Vernon 1988). In 1987, the legislature enacted, as part of the Government Code, section 22.108. TEX. GOV'T CODE ANN. § 22.108 (Vernon 1988). In language almost identical to that of section 22.004, the legislature gave to the Court of Criminal Appeals rulemaking authority relative to "posttrial, appellate and review procedure" in criminal cases. It seems clear to me that the construction of section 22.108 must be consistent with the supreme court's construction of section 22.004. The statutes governing court reporters were codified as a part of the Government Code. Section 52.046 provides, in part, that the court reporter, upon request, shall record all proceedings of the cause. TEX. GOV'T CODE ANN. § 52.046 (Vernon 1998). Rule 13 of the Texas Rules of Appellate Procedure, as promulgated by the supreme 90 court and the Court of Criminal Appeals, provides the court reporter must "make a full record of the proceedings unless excused by agreement of the parties." Thus, the question of whether the duty of the court reporter to record the proceedings depends upon a request presents a conflict between the statute and the rule. If the rule is construed so that it is inconsistent with the statute, the rule must fall. Accordingly, I concur in the judgment of affirmance. Justice COHEN joins this concurring opinion. FRANK C. PRICE, Justice (Assigned), dissenting on motion for rehearing. On September 1, 1997, rule 13.1 of the amended Texas Rules of Appellate Procedure took effect. It provides in relevant part as follows: 13.1 Duties of Court Reporters and Recorders The official court reporter or court recorder must: (a) attend court sessions and make a full record of the proceedings unless excused by agreement of the parties;.... TEX.R.APP. P. 13.1(a). The notes and comments following rule 13.1(a) state: Paragraph 13.1(a) merges paragraphs (a)(1) and (2) of former Rule 11 and now requires the reporter to make a record of voir dire and closing arguments unless excused by agreement of the parties. TEX.R.APP. P. 13.1, notes & cmts. Formerly, this issue was controlled by rule 11(a)(1) and (2) (repealed 1997), of the Texas Rules of Appellate Procedure.[1] Former rule 11 provided as follows: Rule 11. Duties of Court Reporters (a) The duties of official court reporters shall be performed under supervision of the presiding judge of the court and shall include, but not be limited to: (1) attending all sessions of court and making a full record of the evidence when requested by the judge or any party to a case, together with all objections to the admissibility of the evidence, the rulings and remarks of the court thereon; (2) making a full record of jury arguments and voir dire examination when requested to do so by the attorney for any party to a case, together with all objections to such arguments, the rulings and remarks of the court thereon;.... Former Tex.R.App. P. 11(a)(1), (2). Resolution of the Differences In analyzing the language of former rule 11 and present rule 13.1(a), I find there is a procedural difference regarding who has the responsibility to insure the presence of the court reporter. Former rule 11 put this burden on the parties, either to request the presence of the reporter and/or object to the reporter's absence. Rule 13.1(a), on the other hand, places an independent duty on the trial judge to take the initiative to implement the procedure to require the presence of a reporter unless such reporter is excused by agreement of the parties. The majority mischaracterizes the difference between the old and the new rule as one of substance. They maintain the change enlarges or modifies the substantive rights of a litigant, thus, violating the delegated authority to promulgate rules given to the Court of Criminal Appeals by the legislature. Contrary to the majority's assertions, the court, by enacting rule 13.1(a), did not create a substantive change from former rule 11. The substantive 91 matter of both rules is a litigant's right to a court reporter. Rule 13.1(a) merely altered the procedural requisites for providing a court reporter. It is interesting to note that the majority cites the Court of Criminal Appeals's decision in Lyon v. State, 872 S.W.2d 732, 735-36 (Tex.Crim.App.1994), as an explanation of the court's authority to promulgate a comprehensive set of appellate rules in criminal cases and how the legislature expressly provided that these rules could not abridge, enlarge, or modify the substantive rights of a litigant. The majority then turns around and accuses the court of creating rule 13.1(a) in violation of its own decision. Surely the court was aware of Lyon v. State when it enacted rule 13.1(a) and, thus, considered the distinction between former rule 11 and current rule 13.1(a) to be only a procedural variance. Are we to believe that the Court of Criminal Appeals is going to change the procedural requisites of rule 11 into the more streamlined provisions of rule 13.1(a) and require the same body of case law to control its misapplication on appeal? If that is true, then why change the rule? I cannot imagine the court announcing that it is going to change a rule that will have no effect on our system of jurisprudence. The language of rule 13.1(a) is clear and unambiguous and should be given its literal meaning. A fair reading of the rule's plain language gives a right to a litigant that must be implemented by the system unless expressly waived. As such, rule 13.1(a) does not create a right that is subject to forfeiture through procedural default by failing to object or request or utilizing some other method to bring it to the trial court's attention. Therefore, the failure of the judge, under rule 13.1(a), to insure the presence of a court reporter to make a full and complete record of all trial proceedings is an error that can be urged on appeal whether or not it was first urged in the trial court. Marin v. State, 851 S.W.2d 275, 280 (Tex.Crim.App.1993). Conclusion My disagreement with the majority today is the fact they refuse to follow the plain language of the new rule 13.1(a) governing the court reporter's duty to record proceedings. Thus, I respectfully dissent. Justices MIRABAL, O'CONNOR, and ANDELL join this dissenting opinion. MICHOL O'CONNOR, Justice, dissenting form en banc on motion for rehearing. I join Justice Price in his dissent from section III, regarding the court reporter's duty to transcribe the proceedings. I write separately to dissent from section I of the opinion, regarding the composition of the en banc court. I agree with the appellant in almost all his arguments regarding our en banc procedure and the appointment of the visiting justice in this case. I believe (1) we should have granted the parties oral argument on the en banc case, (2) we should have given the parties notice that we were going to consider the case en banc, (3) we should have given the parties notice of the name of the visiting justice who was appointed as a tie-breaker, (4) we should have issued a panel opinion before considering the case en banc, and (5) we should have excluded the justice appointed to break the tie once there was no longer a tie on the court. I also agree with the appellant that the appointment of visiting judges violates the Texas Constitution article 5, section 6, which requires the election of judges. NOTES [] The Honorable Frank C. Price, former Justice, Court of Appeals, First District of Texas at Houston, participating by assignment. [**] The Honorable Sam Robertson, retired Justice, Court of Appeals, Fourteenth District of Texas at Houston, participating by assignment. [1] TEX.R.APP. P. 75(a), 49 Tex. B.J. 580 (Tex. Sup.Ct. and Tex.Crim.App.1986). [2] TEX.R.APP. P. 79(d), 49 Tex. B.J. 581 (Tex. Sup.Ct. and Tex.Crim.App.1986). [3] One opinion addressed the provision, but not in a situation involving a visiting justice. See Saenz v. Fidelity & Guar. Ins., 925 S.W.2d 607, 610-12 (Tex.1996). [4] In this case, the rule change conflicts not only with a prior statute, but also with an existing statute. [5] TEX.R.APP. P. 11, 49 Tex. B.J. 561 (Tex. Sup. Ct. and Tex.Crim.App.1986). [6] Act of May 19, 1967, 60th Leg., R.S., ch. 659, § 27, 1967 Tex. Gen. Laws 1732, 1742, repealed by Act of June 14, 1986, 69th Leg., R.S., ch. 685, § 4, 1986 Tex. Gen. Laws 2472, 2473. [7] This variance is aptly addressed at greater length in Justice Robertson's concurring opinion. [8] Counsel for appellant appears to have taken this very position in his article on the subject of court rule-making authority. See generally Don Rogers, Texas Constitutional Aspects of Court Rulemaking, THE HOUSTON LAWYER, Sept./Oct.1997. [1] Act of May 15, 1939, 46th Leg., R.S., ch. 25, § 2, 1939 Tex. Gen. Laws 201. [1] TEX.R.APP. P. 11, 49 Tex. B.J. 561 (Tex. Sup. Ct. and Tex.Crim.App.1986).	{ "pile_set_name": "FreeLaw" }
283 F.Supp.2d 1335 (2003) VIRAJ FORGINGS, LTD. & Isibars, Ltd. Plaintiffs, v. UNITED STATES, Defendant. SLIP OP. 03-114, Court No. 01-00889. United States Court of International Trade. September 3, 2003. 1336 1337 Miller & Chevalier Chartered, Washington, DC (Peter Koenig) for Plaintiffs. Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Patricia M. McCarthy, Assistant Director; Stephen C. Tosini, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; and James K. Lockett, Senior Attorney-Advisor, Office of Chief Counsel for Import Administration U.S. Department of Commerce, for Defendants, of counsel. OPINION WALLACH, Judge. I. Introduction This matter comes before the Court on Plaintiff, Viraj Forgings, Ltd.'s, ("Viraj") Motion for Judgment on the Agency Record, pursuant to USCIT Rule 56.2. At issue are certain aspects of the United States Department of Commerce's ("Commerce") decision in Certain Stainless Steel Flanges from India; Final Results of Antidumping Duty Administrative Review, 66 Fed.Reg. 48,244 (Sept. 19, 2001) ("Final Results") and the accompanying Memorandum from Joseph A. Spetrini, Deputy Assistant Secretary AD/CVD Enforcement Group III, to Fayar Shirzad, Assistant Secretary for Import Administration, Issues and Decision Memorandum for the Final Results in the Antidumping Duty Administrative of Certain Stainless Steel Flanges from India (Sept. 19, 2001) ("Decision Memoranda"). Pub. Doc. 158; Defendant's Public Appendix for Defendant's Memorandum in Opposition to Plaintiff's Motion for Summary Judgment Upon the Agency Record, 2 ("Pub.App."). For the reasons set forth below, the Court remands the challenged determination. II. Background Plaintiff Viraj is an Indian manufacturer of stainless steel flanges.[1] In 1994, Commerce published an antidumping duty order for stainless steel flanges from India in Amended Final Determination and Antidumping Order; Certain Forged Stainless Steel Flanges from India, 59 Fed.Reg. 5,994 (Feb. 9, 1994). In 2000, Commerce published the opportunity to request a review of the antidumping order. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 65 Fed.Reg. 7,348 (Feb. 14, 2000). In conformity with 19 C.F.R. § 351.213(b)(1) (1999), petitioners Gerlin Inc., Ideal Forging Corporation, and Maas Flange Corporation requested reviews of manufacturers Isibars, Panchmahal, Patheja, and Viraj. Commerce subsequently published a notice of initiation of antidumping duty administrative reviews covering the period of investigation from February 1, 1999 through January 31, 2000. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 65 Fed.Reg. 16,875 (Mar. 30, 2000). The scope of the administrative review covered "certain forged stainless steel flanges from India both finished and not-finished," and included five general types of flanges that also generally matched the American Society for Testing and Materials ("ASTM") specification A-182. Final Results, 66 Fed.Reg. at 48,244. In April of 2000, as part of the antidumping review, Commerce sent an antidumping 1338 questionnaire to respondents. Certain Forged Stainless Steel Flanges From India; Preliminary Results of Antidumping Duty Administrative Review, 66 Fed.Reg. 14,127, 14,128 (Mar. 9, 2001) ("Preliminary Results"). Plaintiff stated in its questionnaire responses that the cost of the raw materials, mainly stainless steel, accounted for the preponderance of the cost of production during the period of review. Plaintiff also stated that the costs of the other factors of production such as labor, fixed overhead, and variable overhead were roughly proportional to the cost of materials. The petitioners filed sales-below-cost allegations based on Plaintiff's questionnaire responses and Commerce initiated an investigation to determine whether Plaintiff's sales of flanges during the period of investigation were made below the cost of production. Id. at 14,129. Commerce verified the information provided by Plaintiff and preliminarily determined that Plaintiff's dumping margin was 21.10 percent. Id. at 14,130. On September 19, 2001, Commerce published the Final Results containing the weighted-average dumping margin for the firms under review, which adopted the 21.10 percent dumping margin from the preliminary determination for Viraj. Final Results, 66 Fed.Reg. at 48,245. On October 18, 2001, Plaintiff filed a summons with the Court initiating this suit and challenging Commerce's final results. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) (2000). III. Standard of Review This Court will not sustain determinations, findings or conclusions of Commerce that are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." Fujitsu General Ltd. v. United States, 88 F.3d 1034, 1038 (Fed.Cir.1996); 19 U.S.C. § 1516a(b)(1)(B) (1999). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 199, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Therefore, in order for Commerce's determination to be sustained, the determination must be reasonable, supported by the record as a whole, and the grounds that the administrative agency acted upon clearly disclosed. See Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1563 (Fed. Cir.1984); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir. 1984); see also SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943). IV. Arguments Plaintiff challenges the Final Results on three grounds. First, Plaintiff claims that Commerce impermissibly ignored its past precedent and regulations when it selected Germany as the third-country comparison market pursuant to 19 U.S.C. § 1677b(a)(1)(B)(ii) (1999) and 19 C.F.R. § 351.404(e) (1999). Second, Plaintiff argues that Commerce impermissibly compared non-comparable merchandise and ignored its past precedent and regulations when it treated United States ASTM standard forgings and German Deutsches Institut für Normung e. V. ("DIN") standard flanges as foreign like products under 19 U.S.C. § 1677(16) (1999). Third, Plaintiff contends that Commerce's decision to calculate the dumping margin on a per-kilogram basis rather than a per piece basis resulted in an inaccurate dumping margin, 1339 was an unexplained departure from its past precedents, and was contrary to law. V. Discussion A. Background Antidumping laws require that Commerce impose antidumping duties on imported merchandise sold, or likely to be sold, in the United States at less than its fair value when those sales injure or threaten injury to a United States industry. 19 U.S.C. § 1673 (1999). The amount of duty that Commerce imposes is the amount by which the price charged for the subject merchandise in the home market or the "normal value" exceeds the price charged in the United States. 19 U.S.C. § 1677b(a)(1)(A), (B). In most instances, Commerce bases normal value calculations on sales of the foreign like product in the home market. However, Plaintiff stated in its questionnaire response that it sold no flanges in its home market, India. Based on this fact, Commerce concluded that Plaintiff's sales to a third country should be used as the basis for normal value calculations. Preliminary Results, 66 Fed. Reg. at 14, 128-14, 129; see 19 U.S.C. § 1677b(a)(1)(C); see also 19 C.F.R. § 351.404(b). The initial threshold for determining whether a third country constitutes a viable comparison market is whether "[t]he Secretary is satisfied that sales of the foreign like product in that country are of sufficient quantity to form the basis of normal value." 19 C.F.R. § 351.404(b)(1). Sufficient quantity for a third country comparison market "is 5 percent or more of the aggregate quantity (or value) of its sales of the subject merchandise to the United States." 19 C.F.R. § 351.404(b)(2) (2000). In this review, Commerce had to calculate normal value as the price at which the flanges were first sold for consumption, in one of the three countries plaintiff listed in its questionnaire (Australia, Canada, or Germany) in usual commercial quantities and in the ordinary course of trade. In calculating normal value based on prices in a third country, "where prices in more than one third country satisfy the criteria of section 773(a)(1)(B)(ii) of the Act ... [Commerce] generally will select the third country based on the following criteria: (1) The foreign like product exported to a particular third country is more similar to the subject merchandise exported to the United States than is the foreign like product exported to other third countries; (2) The volume of sales to a particular third country is larger than the volume of sales to other third countries; (3) Such other factors as the Secretary considers appropriate." 19 C.F.R. § 351.404(e). Plaintiff indicated in its questionnaire responses that its exports of flanges to Australia comprised the smallest market; its exports to Canada had 12 times the required 5 percent threshold with 60 percent of U.S. Sales; and its exports to the largest market, Germany, had 20 times the required 5 percent threshold with 104 percent of U.S. Sales. Plaintiff Viraj's Reply to the Defendant's Reply to Viraj's Rule 56.2 Motion for Judgment on the Agency Record ("Plaintiff's Reply") at 19; see also Defendant's Memorandum in Opposition to Plaintiff Viraj's Motion for Judgment upon the Agency Record ("Defendant's Opposition") at 4. In order to calculate normal value for this review, Commerce chose Germany, the largest market Plaintiff reported, as the third country comparison market and verified 1340 that the German sales were above the cost of production. Preliminary Results, 66 Fed.Reg. at 14,128-29 (stating that "[w]e found no reason to determine that quantity was not the appropriate basis for these comparisons."). In addition to determining the appropriate third country comparison market, Commerce must also choose "foreign like products"[2] to compare to the merchandise exported to the United States. Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1375 (Fed.Cir.2001). The statute governing foreign like product provides that "foreign like product" means merchandise in the first of the following categories in respect of which a determination for the purposes of part II of this subtitle can be satisfactorily made: (A) The subject merchandise and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise. (B) Merchandise (i) produced in the same country and by the same person as the subject merchandise, (ii) like that merchandise in component material or materials and in the purposes for which used, and (iii) approximately equal in commercial value to that merchandise. (C) Merchandise (i) produced in the same country and by the same person and of the same general class or kind as the subject merchandise, (ii) like that merchandise in the purposes for which used, and (iii) which the administering authority determines may reasonably be compared with that merchandise. 19 U.S.C. § 1677(16) (1999). Accuracy, as well as the statute, requires Commerce to first look for identical merchandise with which to match the United States model to the comparable home market or third country model.[3]See Torrington Co. v. United States, 146 F.Supp.2d 845, 874 (CIT 2001); 19 U.S.C. § 1677(16). If identical merchandise is unavailable, Commerce must look to merchandise under the second category, and, if that is not available, under the third category. 19 U.S.C. § 1677(16). Whenever possible, Commerce must make an "apples-to-apples" comparison of merchandise to effectuate a fair comparison between the normal value and United States price. See Torrington Co. v. United States, 68 F.3d 1347, 1352-53 (Fed.Cir.1995). Thus, in "accordance with the statutory mandate, [of 19 U.S.C. § 1677(16)] absent identical merchandise, Commerce must `choose the most similar merchandise for comparison.'" Hussey Copper, Ltd. v. United States, 17 CIT 993, 995, 834 F.Supp. 413, 417 (1993) (quoting Timken Co. v. United States, 10 CIT 86, 96, 630 F.Supp. 1327, 1336 (1986)). Commerce determined the cost of production by calculating "the sum of the costs of materials and fabrication employed in producing the foreign like product, plus selling, general, and administrative 1341 expenses (SG & A) and packing." Defendant's Opposition at 5; Preliminary Results, 66 Fed.Reg. at 14,129. Commerce next calculated German market sales prices and excluded sales that were less than the cost of production. Defendant's Opposition at 5. Where Plaintiff sold less than 20 percent of the German merchandise below the cost of production, Commerce averaged the cost of all merchandise sales. Id.; see 19 U.S.C. § 1677b(b)(2)(C). Where Plaintiff sold more than 20 percent at below the cost of production Commerce excluded all below cost sales from the sample it averaged. Defendant's Opposition at 5; see § 1677b (b)(2)(C), (D). Commerce then developed a methodology to compare the German DIN proof or fully machined flanges to the ASTM rough forgings, because the merchandise sold to Germany and the United States were made to these two different industrial standards.[4] In the Decision Memoranda, Commerce agreed with the petitioners that flanges, "`whether produced to DIN standards or ASTM standards, will still look the same, serve the same function and be of comparable size and weight ... [and][w]hile conceding that flanges produced to DIN standards could be slightly different from the merchandise sold in the United States, the actual differences .... are very likely minor or nonexistent.'" Decision Memoranda at 29; Pub.App. 2 at 38. In order to make the merchandise comparable, Commerce converted all flanges and forgings from cost-per-piece, which is how Plaintiff sold the merchandise, to cost-per-kilogram. Preliminary Results, 66 Fed.Reg. at 14,128 (stating that "[t]he record demonstrates that there can be large differences between the weight (and corresponding cost and price) of stainless steel flanges based on relative sizes, so comparisons of aggregate data would be distorted for these products if volume comparisons were based on the number of pieces."). In its cost of production analysis, Commerce "determined that only grade, type, size, pressure rating, and finish were required to define models for purposes of matching." (collectively "matching criteria"). Id. at 14,129. The antidumping statute provides for adjustments to normal value if differences in physical characteristics between the foreign like product and the merchandise exported to the United States exist. See 19 U.S.C. § 1677b(a)(6)(C). Therefore, Commerce adjusts normal value for the "difference in cost attributable to the difference in physical characteristics" if the foreign like product is not identical to the merchandise exported to the United States. Mitsubishi Heavy Indus. v. United States, 23 CIT 326, 340, 54 F.Supp.2d 1183, 1196 (1999). Commerce applied the standard 20 percent difference in merchandise ("DIFMER") deviation gap to exclude Plaintiff's products that had a greater than 20 percent difference in cost of production per kilogram from the dumping margin calculations.[5]Id.; Decision Memoranda at 1342 24-26; see also Plaintiff's Reply, Attachment 9 at 48. B. Commerce's Selection of Germany as the Third Country Comparison Market was Inconsistent with its Prior Determination and Unsupported by Substantial Evidence During an administrative review, Commerce recalculates a company's dumping margin in order to determine whether that company has continued to sell its merchandise in the United States for less than a comparable foreign like product sold in either the company's home market or the applicable third country comparison market. See NTN Bearing Corp. v. United States, 295 F.3d 1263, 1267 (Fed.Cir.2002); 19 U.S.C. § 1675(a)(2)(A) (1999). Plaintiff argues that Commerce's selection of Germany as the third country comparison market in this review was inconsistent with its own regulations and prior determination. Commerce claims that it chose Germany as the third country comparison market for the purpose of calculating normal value because Germany was the largest market of the three countries Plaintiff listed. Defendant's Opposition at 14, Decision Memoranda at 29-30; Pub.App. 2 at 38-39. Commerce considers the legal interpretations of prior antidumping and countervailing duty determinations precedential. Citrosuco Paulista, S.A. v. United States, 12 CIT 1196, 1209, 704 F.Supp. 1075, 1088 (1988); M.M. & P. Maritime Advancement, Training, Education & Safety Program v. Dept. of Commerce Intern. Trade Admin., 729 F.2d 748, 755 (Fed.Cir.1984). Commerce need not "forever hew" to its precedents, but should the agency reverse itself, as a result of the sagacity acquired from experience and changed circumstances, it must confront the issue squarely and explain why its departure was reasonable. Davila-Bardales v. INS, 27 F.3d 1, 5 (1st Cir.1994); see also Baoding Yude Chem. Indus. v. United States, 170 F.Supp.2d 1335, 1340 (CIT 2001). The flexibility to change its position, requires that the agency must explain the basis for its change, and that explanation must be in accordance with law, and supported by substantial evidence. 1343 Cultivos Miramonte S.A. v. United States, 21 CIT 1059, 1064, 980 F.Supp. 1268, 1274 (1997). During oral argument, Defendant stated that Commerce "weighed the relative importance of markets, to having an exact model match, and in this case determined that the market was more important."[6] In a prior review of stainless steel flanges from India, Commerce chose Canada as the appropriate third country comparison market rather than the largest available market, Japan. See Certain Forged Stainless Steel From India; Final Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 51,263 (Oct. 1, 1996) ("Akai Decision"). The exporter in that review, Akai Impex, Ltd. ("Akai") argued against the use of Canada as its third country comparison market. Plaintiff's Reply, Attachment 10 at 67. Akai claimed that Japan was the more appropriate comparison market because Japan was the largest of the third country markets available for comparison. Id. Additionally, Akai wanted Commerce to determine normal value by comparing Akai's sales made to the United States ASTM standard to sales made to the Japanese Industrial Standards ("JIS"). Id. Akai's reasoning was that "the merchandise end use, raw material and process of manufacturing is [sic] same" and the end product in terms of "Dollar per K.G." could be a reasonable comparison methodology. Id. However, Commerce choose the smaller market, Canada, which had goods made to the similar ASTM standard, and compared the merchandise on a price-per-piece basis rather than engaging in the methodology Akai proposed. Commerce has changed its position in this review and used the method previously proposed by Akai, yet eschewed by Commerce. Defendant admits to a change in position in its brief but claims that "Commerce explained in the Decision Memorandum that, in this case, the German market was decidedly the largest market, whereas, in the earlier decision, the two markets were of roughly equal size." Defendant's Opposition at 14. Thus, Defendant alleges that Commerce adequately explained its factual distinction and departure from Akai. Id.; Decision Memoranda at 30; Pub.App. 2 at 39. Specifically, Commerce stated in the Decision Memorandum that it chose Germany because (1) "in volume, Viraj's German market surpasses its Canadian market significantly;" (2) the Akai Impex precedent "involved a different set of markets, of relative different size;" and (3) Germany was the "largest available comparison market." Decision Memoranda at 30; Pub.App. 2 at 39. Commerce's reasoning assumes and reiterates its conclusion that Germany is the appropriate comparison market without adequate explanation or support. Neither the preliminary nor final results in the Akai Decision mention that the size of the Canadian and Japanese markets was a factor in the previous determination. See Certain Forged Stainless Steel Flanges from India; Preliminary Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 14,073 (Mar. 29, 1996); Akai Decision, 61 Fed.Reg. 51,263. Moreover, Defendant does not provide the court with evidence that the size of the market in the Akai Decision was a determining factor. If the factual distinction that Commerce is attempting to make is that the size of the 1344 market had bearing on Commerce's determination, then that distinction must be supported by evidence. Without such evidence, Commerce's claim is merely unsupported conjecture. "It is well established that an agency's action must be upheld, if at all, on the basis articulated by the agency itself." Motor Vehicle Mfrs. Ass'n. v. State Farm, 463 U.S. 29, 50, 103 S.Ct. 2856, 2870, 77 L.Ed.2d 443, 462 (1983). The Court cannot speculate on Commerce's claims of a(1) "different relative size;" (2) whether the markets were of "roughly equal size;" or (3) whether market size was even a factor in the Akai Decision. The only evidence provided to the court regarding Commerce's prior practice for determining the appropriate comparison market is the published results from the Akai Decision and the public records from Akai that Plaintiff provided. Plaintiff's Reply, Attachment 10 at 67. That evidence indicates that previously, Commerce's practice has been to chose a smaller market where merchandise was made to the same industrial standard. Lacking further evidence, the Court must view Defendant's claim as unsupported by the prior review. On remand, Commerce must either rationally articulate the basis for its departure from its previous practice or provide adequate evidence to support its claim of a factual distinction. i. Commerce's Claim of a Longstanding Policy of Choosing the Largest Available Third Country Market as the Comparison Market is Unsupported by Substantial Evidence Defendant also claims that in this determination "Commerce ... followed its long-standing policy of giving more weight to market size, where product differences are easily adjusted, to conclude that German and U.S. market flanges were substantially similar and that the substantially larger size of the market in Germany made it the best available comparison market."[7] Defendant's Opposition at 13-14; See also Decision Memoranda at 29-30; Pub.App. 2 at 38-39. During oral argument, Defendant was unable to provide any evidence to support its claim of a longstanding policy or practice. Plaintiff contends that Commerce's claim of a longstanding practice is unsupported and its decision was an impermissible, unexplained departure from its prior precedent. Commerce may base its normal value calculations on third-country prices pursuant to 19 U.S.C. § 1677b(a)(1)(B)(ii). The appropriate third country comparison market is generally chosen based on: (1) a more similar foreign like product to the subject merchandise exported to the United States than other third countries; (2) the volume of sales is larger than the volume of sales to other third countries; and (3) other factors as the Secretary considers appropriate. 19 C.F.R. § 351.404(e). Defendant argues that Commerce followed the same practices that it did in prior reviews and that "weighing all of the 19 C.F.R. § 351.404(e) factors, Commerce determined that Germany was the most comparable third-country market." Defendant's Opposition at 15. The comments to the 1997 regulations in Antidumping Duties; Countervailing Duties, 62 Fed.Reg. 27,296, 27,358 (May 19, 1997), explain that "§ 351.404(e) is sufficiently clear that (1) not all of the 1345 three criteria need be present in order to justify the selection of a particular market, and (2) no single criterion is dispositive." Antidumping Duties; Countervailing Duties, 62 Fed.Reg. at 27,358 (emphasis added). Therefore, pursuant to 19 C.F.R. § 351.404(e), Commerce is not required to choose the appropriate comparison market solely because the goods are identical, any more than it is required to choose the appropriate comparison market solely because the market is the largest available. Defendant's claim, without evidence, that it is following a longstanding policy, is problematic for the Court because Plaintiff has provided evidence that Commerce used sales of merchandise to a third country market that was not the largest available in a prior review. See Akai Decision, 61 Fed.Reg. 51,263. Hence, Commerce's conclusory statement that it is following a longstanding policy without providing adequate evidence that such a practice exists, as well as its failure to conform itself to its prior review, renders its decision unsupported by substantial evidence and not in accordance with its regulations. On remand, Commerce must conform itself to its prior precedent, adequately explain the basis for its departure from its prior precedent, or provide substantial evidence of its longstanding practice. ii. Plaintiff's Claim that Commerce was Required to Choose Canada as the Appropriate Third Country Comparison Market is Unavailing Plaintiff argues that Commerce should have determined that Canada was the appropriate third country comparison market, because the merchandise it sold in Canada was made to the same ASTM standards as the merchandise sold in the United States. Plaintiff's sales to Canada meet the statutory requirements for third country comparison markets. First, Plaintiff's exports to Canada had 12 times the required 5 percent threshold, with 60 percent of U.S. Sales. Second, the exports to Canada were made to the same standard as the exports to the United States, thus, meeting the criteria of § 351.404(e)(1). Finally, while both Australia and Canada flanges are made to ASTM standards, Plaintiff's exports to Canada exceed those to Australia; thus, Canada meets the requirements of § 351.404(e)(2). Had Commerce initially determined that Canada was the appropriate market, it could have easily conformed its determination to prior reviews and compared identical merchandise. However, Commerce chose to use Germany, and § 351.404(e) states that the factors should generally be used to determine which market is the appropriate third country market. Defendant accurately points out the court must defer to Commerce's choice of market when Commerce has assessed and weighed "market size and strength, product and market similarity, and other factors it deems relevant." Defendant's Opposition at 13. Defendant's reason for choosing Germany was that "Commerce weighted both of the enumerated factors and followed its longstanding policy of giving more weight to market size." Id. Because of the prior precedent, and Defendant's failure to provide evidence of the longstanding policy, the court is unable to uphold Commerce's determination that Germany was the appropriate market. However, Plaintiff's conclusion that Commerce's failure to provide adequate evidence requires that Commerce chose Canada as the third country comparison market is inaccurate. The evidence before the Court is that three markets meet the third country market viability requirements and that Germany was the largest, followed by Canada, and finally, Australia. 1346 Commerce has not provided evidence, pursuant to § 351.404(e)(1), that certain "foreign like products" are more similar than others, as explained below. Nor has Commerce provided the Court with evidence of any other criteria it may have used in determining the appropriate market. Thus, Plaintiff's assumption that Canada was the only appropriate third country comparison market, although compelling, is premature. Therefore, the Court rejects Plaintiff's claim that the only appropriate comparison market is Canada. C. Commerce's Claim that ASTM Forgings and DIN Proof Machined and Fully Machined Flanges are Comparable is Unsupported by Substantial Evidence Plaintiff argues that the rough forgings sold in the United States should not be compared to proof-machined or fully machined flanges sold in Germany. Commerce claimed that ASTM forgings and DIN flanges could be compared by adjusting for the matching criteria. See Preliminary Results, 66 Fed.Reg. at 14,129. Defendant stated that "because United States and German market flanges are manufactured to different standards, Commerce applied 19 U.S.C. § 1677(16)(B) to match the appropriate foreign like products to corresponding U.S. market flanges." Defendant's Opposition at 17; Decision Memoranda at 26-28; Pub.App. 2 at 35-37. Commerce's methodology for making the German DIN standard proof or fully machined flanges comparable to the ASTM standard United States rough forgings consisted of converting all flanges and forgings from a cost-per-piece basis, which is how Plaintiff sold the merchandise, to a cost-per-kilogram basis. Preliminary Results, 66 Fed.Reg. at 14,129. In its cost of production analysis, Commerce determined that it would define comparable models based on matching criteria, of (1) grade, (2) type, (3) size, (4) pressure rating, and (5) finish. Id. Finally, Commerce applied the standard 20 percent difference in merchandise ("DIFMER") deviation gap to exclude products that had a greater than 20 percent difference in cost of production per kilogram from the dumping margin calculations. Id.; Decision Memoranda at 24-26; Pub.App. 2 at 33-35. Commerce agreed with petitioners that flanges, "whether produced to DIN standards or ASTM standards, will still look the same, serve the same function and be of comparable size and weight [, and] [w]hile conceding that flanges produced to DIN standards could be slightly different from the merchandise sold in the United States, the actual differences .... are very likely minor or nonexistent."[8] Decision Memoranda at 29; Pub.App. 2 at 38; Defendant's Opposition at 7 (emphasis added). During oral argument Defendant admitted that the petitioners had not provided evidence for their assertion that any differences between German flanges and United States flanges were in fact "likely" insignificant or minor. See Decision Memoranda 1347 at 29; Pub.App. 2 at 38 (emphasis added). Commerce must determine the appropriate "foreign like product," in accordance with 19 U.S.C. § 1677(16)(B), and must "make a fair comparison between the United States price charged for the subject merchandise" ... and the price charged for the corresponding "foreign like product." Pesquera, 266 F.3d at 1375. While it is certainly simpler for Commerce to identify and compare identical merchandise when it exists; lacking identical goods for comparison Commerce must find similar merchandise in order to make a proper comparison with the United States imports. See NTN Bearing Corp. of Am. v. United States, 127 F.3d 1061, 1063 (Fed. Cir.1997). The Tariff Act of 1930, broadly defines "such or similar," and the methodology that Commerce may use to match U.S. products with third country products.[9]See Koyo Seiko Co. v. United States, 66 F.3d 1204, 1209 (Fed.Cir.1995). Because the Act does not specify a model match method, the Act implicitly authorizes Commerce to choose a method by which to identify such or similar merchandise. Id. However, when Commerce has chosen a methodology that is patently unreasonable, unsupported by the evidence, or contrary to the antidumping laws, Commerce's determination may not be sustained by this Court. See NTN Bearing Corp. v. United States, 14 CIT 623, 633, 747 F.Supp. 726, 736 (CIT 1990); see also Zenith Elecs. Corp. v. United States, 77 F.3d 426, 430 (Fed.Cir.1996); 19 U.S.C. § 1516a(b)(1)(B). Commerce apparently used the second criteria of § 351.404(e), the larger market size of Germany, in order to deem the DIN flanges and ASTM forgings substantially similar foreign like products. Commerce's determination begs the question of whether the merchandise is similar by propagating a conditional fallacy that the antecedent, Germany as the appropriate market because it is the largest market available, affirms the consequent, German DIN flanges and ASTM forgings are similar and comparable merchandise. This argument errs because there is no record evidence that Commerce independently determined that the foreign like product that Commerce used, German DIN flanges, were in fact either fundamentally identical or similar to the United States ASTM forgings for the purposes of the 19 U.S.C. § 1677(16) hierarchy; nor has Defendant provided evidence of a longstanding policy.[10] In response to Commerce's supplemental questions, Plaintiff indicated that rough forgings were sold in United States while only proof or fully-machined flanges were sold to Germany.[11] Plaintiff requested 1348 that proof and fully-machined flanges made to DIN standards be compared to proof and fully-machined flanges made to ASTM standards for the United States. Plaintiff asserted that "[a] customer who has ordered an [ASTM] 304L flange will not accept a[DIN] 1.4541 flange as a substitute," and that DIN flanges weighed significantly less than the rough forgings sold to the U.S. and yet were higher in both cost and value. Plaintiff's Reply, Attachment 8 at 41. Plaintiff claimed that the ASTM forgings that Commerce compared to DIN flanges were not functional without significant further processing and that "comparing a rough forging to a flange is like comparing a cloth and a garment made from cloth the two cannot be compared." Plaintiff's Reply, Attachment 10 at 64. Additionally, Plaintiff stated that DIN standard flanges and ASTM standard forgings are sold to different end users.[12] The lack of interchangeability between products will not defeat a finding of "similar merchandise." See Sony Corp. of America v. United States, 13 C.I.T. 353, 359, 712 F.Supp. 978, 983 (1989). Pursuant to 19 U.S.C. § 1677(16)(B)(ii), Commerce must find that the third country comparison product is "like" the subject merchandise in the purpose for which it is used. Koyo Seiko Co., 66 F.3d at 1210. In this review, Commerce assumed that the merchandise was comparable because of market size without adequately elucidating any comparable qualities of ASTM forgings and DIN flanges or supporting its choice with substantial evidence. Conversely, Plaintiff provided record evidence that suggests that the ASTM forgings and DIN flanges that Commerce compared were not similar.[13] Plaintiff argues and 1349 the record shows that first, the materials used in producing the flanges and forgings are of different composition. The type of liquid that is going to pass through the flange generally dictates the grade of steel used. See Plaintiff's Reply, Attachment 7 at 36. German DIN flanges use steel with a higher level of nickel and titanium, and it is the addition of nickel which improves the quality of the steel. The European flanges Plaintiff sells are used in "highly corrosive areas where better corrosion capacity of steel is always preferred." Plaintiff's Reply at 17; Plaintiff's Reply, Attachment 6 at 32. Accordingly, Plaintiff states that these general chemical differences between German DIN standard merchandise and United States ASTM merchandise exist and are critical to the buyer.[14] Second, Plaintiff provided evidence that the DIN and ASTM flanges' physical structure differs, and that flanges must meet different standards and specifications. "Standards are determined by the type of liquid which will pass through a system (e.g., acid, water), the pressure, and the flow-rate of the liquid." Plaintiff's Reply, Attachment 7 at 36. A DIN flange that is put to the same application as an ASTM flange has a different outside diameter and a DIN standard flange is thinner than its ASTM counterpart. Finally, and perhaps most importantly, given Commerce's use of cost-per-kilogram price comparisons, the record evidence regarding the differences between DIN and ASTM flanges, reveals that DIN standard flanges weigh less than the supposedly similar ASTM forgings. The record indicates that extensive machining may be required to convert a rough forging into a finished flange made to the German DIN standard. This machining may result in a 30% average weight loss from forging to finished flange. Memorandum from Michael Heaney, Sr. Import Compliance Specialist and Thomas Killiam, Import Compliance Specialist, to The File, Sales Verification of Viraj Forgings-Certain Forged Stainless Steel Flanges from India at 35 (Feb. 7, 2001); Plaintiff's Reply at 4, n. 4; Plaintiff's Reply, Attachment 7 at 35. The court can only uphold Commerce's determination if it is based on substantial evidence. Substantial evidence "must be enough reasonably to support a conclusion." Ceramica Regiomontana, S.A. v. United States, 10 C.I.T. 399, 405, 636 F.Supp. 961, 966 (1986). It is not necessary for Commerce to compare merchandise that is "technically substitutable, purchased by the same type of customers, or applied to the same end use as the U.S. model," Koyo Seiko Co., 66 F.3d at 1210, and thus, a comparison of DIN flanges and ASTM forgings might be permissible should Commerce determine and provide substantial evidence that the products are "like" merchandise in accordance with 19 U.S.C. § 1677(16). However, the court "cannot defer to a decision which is based on inadequate analysis or reasoning." 1350 USX Corp. v. United States, 11 CIT 82, 88, 655 F.Supp. 487, 492 (1987). While Plaintiff's evidence and reasoning in and of itself does not indicate that Commerce could not compare ASTM and DIN flanges and forgings, it does indicate that differences exist between forgings and flanges. Without adequate record evidence as to whether the differences are insignificant, the Court cannot uphold Commerce's determination that the differences are "likely" minor or insignificant and thus, the products "like" for the purposes of calculating normal value pursuant to 19 U.S.C. § 1677(16). D. Commerce's Comparison of ASTM Forgings and DIN Proof Machined and Fully Machined Flanges is a Departure from its Prior Determination and its Reasoning is Unsupported by Substantial Evidence As noted above, Commerce compared Viraj's U.S. sales with contemporaneous sales in Germany and considered stainless steel flanges identical based on the matching criteria. See Preliminary Results, 66 Fed.Reg. at 14,129. In the Akai Decision, Commerce chose Canada, which uses the same standards as the U.S., as the appropriate third country comparison market. Akai Decision, 61 Fed.Reg. at 51,263-65. Plaintiff claims that in order to be consistent with previous determinations, Commerce should have used the Canadian market and compared ASTM flanges to other ASTM standard merchandise.[15] Plaintiff's Motion at 6-7; Plaintiff's Reply at 19. In the Akai Decision, Commerce determined the most similar third-country model, based on the alloy grade, size, type, and the ASTM standard, and compared the merchandise to the U.S. model on a cost-per-piece basis; and then adjusted for product differences using DIFMER.[16] [T]he Department selected alloy grade, size, type, and the ASTM standard 1351 designation as the hierarchy of physical characteristics to use in determining the identical or most similar third-country model to compare to each U.S. model ... in determining NV, the Department must base its valuation on the price of "such or similar merchandise" sold in the home market (third country) (see 19 U.S.C. § 1677b(a)(1)(A)).... When several third-country models are equally similar in physical characteristics, we choose the third-country model which, when compared to the U.S. model, has the lowest difference in variable costs of manufacturing, provided the difmer does not exceed 20 percent of the total cost of manufacturing of the U.S. model.... The Department's adoption of the "20 percent difmer" test, pursuant to 19 CFR § 353.57(b)(1992), ensures the selection of the home market (third-country) model with the greatest commercial similarity to the U.S. model. Therefore, when the four physical criteria of alloy, type, size, and ASTM standard designation were equally similar, we matched the U.S. model to the third-country model having the least difference in variable costs between it and the U.S. model, provided the cost difference was no greater than 20 percent. Akai Decision, 61 FR at 51,264-65 (citations omitted); See also Certain Forged Stainless Steel Flanges From India, 61 Fed.Reg. 14,073. In this review, Commerce converted all of the merchandise to cost-per-kilogram, determined that differences in the goods were likely minor, and compared Plaintiff's U.S. sales with contemporaneous sales of the foreign like product in Germany by consider[ing] stainless steel flanges identical based on the following five criteria: grade, type, size, pressure rating, and finish ... us[ing] a 20 percent difference-in-merchandise (difmer) cost deviation cap as the maximum difference in cost allowable for similar merchandise, which we calculated as the absolute value of the difference between the U.S. and comparison market variable costs of manufacturing divided by the total cost of manufacturing of the U.S. product. Preliminary Results, 66 Fed.Reg. at 14,129. Commerce has broad discretion to devise model-match methodologies to determine what constitutes similar merchandise. See, e.g. Torrington Co. v. United States, 881 F.Supp. 622, 635 (CIT 1995). However, the product's standard was apparently not used as one of the criteria because Commerce agreed with petitioners that the actual differences between ASTM and DIN standard merchandise were "very likely minor or non-existent." Decision Memoranda at 29-30; Pub.App. 2 at 38-39. Commerce's previous model-match methodology compared ASTM standard merchandise and then used DIFMER to adjust for differences on a cost-per-piece basis. Defendant's insistence during oral argument that by selecting the largest comparison market, merchandise might be 1352 rendered comparable, is a significant departure from its prior method for determining comparable merchandise. While Commerce has the flexibility to change its methodology, its change must be reasonable. See Cultivos Miramonte S.A., 980 F.Supp. at 1274. Volume of sales to a particular third country market compared to sales with other third countries is certainly a factor that Commerce may consider, pursuant to 19 C.F.R. § 351.404(e), in determining the appropriate third country comparison market and merchandise. However, Commerce's premise, that forgings and flanges "likely" had minor differences, and, thus, DIN and ASTM merchandise were sufficiently comparable, is neither supported by substantial evidence nor born out by the administrative record, prior administrative reviews, or illustrative case law. Commerce's insufficient assertion, that differences between ASTM forgings and DIN flanges are "likely" minor and that use of the largest comparison renders merchandise comparable, ultimately results in its model match methodology and reasoning unsupported by substantial evidence. Therefore, because Commerce changed its methodology and matching criteria from previous reviews, and no record evidence exists to support its claims that the goods are similar, the Court finds that Commerce has departed from its prior precedent without adequate explanation or support by substantial evidence. E. Commerce's Calculation of the Anti-dumping Margin Based on Per Kilogram Prices is Not in Accordance with Law Plaintiff alleges that in prior anti-dumping reviews Commerce has held that if merchandise is sold per piece, not by weight, the dumping margin must be calculated per piece in order to avoid distortion in the dumping margin. See Final Determination of Sales at Less than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand, 57 Fed.Reg. 21,065, 21,069-70 (May 18, 1992) ("Carbon Steel"). Defendant claims that it has long been Commerce's policy to compare prices for similar steel products across markets by weight, and "in all cases where the agency made per piece comparisons, the weights of the compared products were identical." Defendant's Opposition at 21. The Defendant mentions two instances in which per piece costs were used and questions Plaintiff's reliance on the first, Carbon Steel, in its brief because Carbon Steel was a "decade-old decision."[17]Id. Defendant states that "the use of per-piece comparisons in earlier reviews comparing identical products does not tie the agency to such a methodology where weight governs the cost of production of different products." Decision Memoranda at 24; Pub.App. 2 at 33. Additionally, Commerce stated that "Viraj has not cited, nor can we find, any examples of cases in the past six years to substantiate the assertion that per-piece analysis was continued beyond the early and distinct instances." Analysis Memo, Comment 13. The calculation of the dumping margin in Commerce's previous review of Plaintiff, as well as in Plaintiff's New Shipper review, was accomplished on a per piece basis. See Plaintiff's Reply at 8; Plaintiff's Attachment 1; Non Pub. App., NPD 2 at 3. In prior reviews when the Plaintiff's comparison market and United States sales were similar rather 1353 than identical, due to physical differences, including weight, the DIFMER adjustment was made on the dumping margin calculation to account for differences. See Plaintiff's Reply, Attachment 1. The court is concerned with Commerce's easy dismissal of past precedents. Precedent, unless inapplicable or properly invalidated, binds this court and Commerce. The court agrees with Commerce to the extent that an agency is not forever tied to a methodology. However, if an agency departs from its prior precedent without adequate explanation, its actions are unlawful. M.M. & P. Advancement Training, Education Safety Program v. DOC, 729 F.2d 748, 755 (Fed.Cir.1984). The Final Results in Carbon Steel state that Commerce "converted all prices and adjustments from a weight basis to a unit (per piece) basis because merchandise is sold by piece instead of weight."[18]Carbon Steel, 57 Fed.Reg. at 21,065 (emphasis added). Among the explanations in Defendant's brief, what remains clear is that Defendant's arguments sublimate the results of the Carbon Steel determination into a different form. Commerce argues that the Carbon Steel comparisons were de facto per-kilogram comparisons because the products were identical; and therefore, the Carbon Steel determination is distinguishable. Defendant's explanation for its departure, which it claims is not actually a departure at all, is that "in Carbon Steel, whenever Commerce seemingly made comparisons of merchandise on a per-piece basis, the comparisons were of identical merchandise." Defendant's Opposition at 21. (Emphasis added). If the comparison by weight or by piece was truly unimportant in cases of identical merchandise, this Court is left to speculate on why Commerce would bother converting from cost-per-weight to cost-per-piece in Carbon Steel because, according to Defendant, it should not matter how the merchandise was compared if it was identical. Yet in Carbon Steel, Commerce specifically explained that it was going to convert from per weight to per piece "because" that was the way the merchandise was sold. Because Defendant has not submitted any evidence to the contrary, the court bases its decision on Commerce's prior determinations and the reasoning stated in the Carbon Steel review, that Commerce converted all prices and adjustments from a weight basis to a per piece basis because the merchandise was sold by piece instead of weight. Therefore, Commerce must either conform itself to its prior precedent and compare 1354 Plaintiff's merchandise in the manner in which it is sold, or adequately explain its departure and support all of its factual arguments with substantial evidence. F. Commerce's Reasoning for Its Price Per Kilogram Methodology for Comparing Rough Forgings to Proof-Machined and Finished Flanges is Unsupported by Substantial Evidence Plaintiff claims that Commerce, by converting Viraj's reported per piece prices and costs to per kilogram amounts, increased the dumping margin from 8.95 percent to 21.1 percent. Plaintiff's Motion at 3. Defendant argues that in cases where differences in the cost of production of similar products are almost entirely attributable to weight, Commerce has consistently harmonized the process by using weight as the common denominator rather than per piece price comparisons. Defendant claims that Commerce "took careful note of the commercial realities of the flange market" and that the "raw material costs dominate the cost of production." Defendant's Opposition at 22, 26. Therefore, Defendant stated that logically "if a flange has a higher weight, and the cost of raw materials predominates, one expects a higher cost and a higher price ... [and a]ccordingly Commerce explained in the Final Results, as well as in earlier decisions, why weight is a better basis in this type of scenario." Id. at 22. Hence, "Commerce agreed with the petitioners and determined that it would follow its standard methodology of comparing prices by weight," Defendant's Opposition at 8. Plaintiff supplied Commerce and the Court with merchandise comparisons that show that Commerce's comparisons of forgings to flanges by cost-per-kilogram create significantly different results than those claimed by Commerce. See Plaintiff's Reply, Attachment 10 at 70. The record indicates that, on average, a forging has a 30 percent weight loss when machined from its rough state into a finished state. Plaintiff's Reply at 4-5 & n. 4. Additionally, a finished flange can have up to a 50 percent higher price per piece than its heavier rough forging counterpart. See Plaintiff's Reply, Attachment 10 at 64. The record also indicates that the cost-per-kilogram, for a proof machined flange, may be up to 167 percent more than the rough forging; and a fully finished flange may be up to 234 percent more than the rough forging. See Plaintiff's Reply, Attachment 4 at 17-19. Thus, given the 30 percent weight loss, the value added from the machining process gives the lighter flange a higher cost of production on a per kilogram basis than the heavier rough forging. If Defendant's claim were accurate, then logically, a heavier forging should cost more per-kilogram than the lighter flange. The record evidence indicates the opposite. See Non Pub.App., NPD 2 at 3. Commerce has broad discretion to determine similar merchandise, however, its methodology and reasoning must be supported by substantial record evidence. In this case, Plaintiff claims, and the record evidence suggests, that the value added from machining gives the lighter proof or fully machined flange a higher cost of production on a cost-per-kilogram basis, than the heavier rough forging, even though on a cost-per-piece basis the heavier forging costs more.[19]See Non Pub.App., NPD 2 1355 at 3, 5, 47-50; Plaintiff's Reply, Attachment 4 at 16-19. Therefore, the record evidence indicates that the finish must be more determinative of cost than the weight of the piece. Additionally, Defendant contends that Commerce has referred to the use of weight as "our standard methodology" since 1993 and cites to Notice of Final Results of Antidumping Duty Administrative Reviews and Determination Not to Revoke in Part: Certain Corrosion-Resistant Carbon Steel Flat Products and Cut-to-Length Carbon Steel Plate from Canada, 66 Fed.Reg. 3543 (Jan. 26, 2001) ("Corrosion-Resistant Carbon Steel") and accompanying Memorandum from Joseph A. Spetrini, Deputy Assistant Secretary, to Troy H. Cribb, Assistant Secretary for Import Administration, Issues and Decision Memo for the Final Results of the Antidumping Duty Administrative Reviews and the Determination not to Revoke in Part of Certain Corrosion Resistant Carbon Steel Flat Products and Cut-to-Length Carbon Steel Plate from Canada8/01/98 through 7/31/99 (Jan. 16, 2001) ("Carbon Steel Memo"). In Corrosion-Resistant Carbon Steel, the product under review was sold on a weight basis. Commerce stated that the use of weight "provided the Department with results which are both consistent and predictable in formulating the margin analysis." Carbon Steel Memo at Comment 1. However, Commerce also stated that it used weight comparisons because a large number of steel products are most commonly priced using weight as the standard measurement. Because weight is so commonly used in this manner, many companies track costs based on a weight unit measure for determining selling expenses, inputs and other information. Thus, the Department is able to make comparisons between steel products on a consistent unit basis by using a weight based standard. Id. Plaintiff argues that, unlike the products in Corrosion-Resistant Carbon Steel, stainless steel flanges and forgings are not sold on a weight basis nor does Plaintiff track its costs on a weight basis. During the review, Plaintiff argued to Commerce that in all past flange cases, Commerce calculated the dumping margin on a per piece basis, and that no adequate explanation had been given for why, for the first time, the dumping margin calculation was done on a per kilogram basis. Plaintiff's Attachment 10 at 58. Additionally, Plaintiff contended that the dumping analysis should be done on the "basis of prices as they actually exist in the market, not on artificially created prices that have no market or real world basis." See id. Plaintiff claims that no meritorious justification has been offered by Commerce as a rationale for departing from real world prices and using artificially created per kilogram prices and that by comparing the merchandise on a cost-per-kilogram basis, Commerce compared and treated as comparable flanges with greatly different per piece weights. Commerce considers differences in physical characteristics of similar merchandise pursuant to 19 U.S.C. 1356 § 1677b(a)(6)(C)(ii)[20] and 19 C.F.R. § 351.411 (1999).[21] In response to Plaintiff's arguments, Defendant states that Plaintiff's concerns regarding the comparison of dissimilar merchandise are addressed by including size among the comparison criteria, and using the DIFMER to remove those results that were greater than 20 percent. Defendant's Opposition at 25. The DIFMER adjustment to normal value is used to account for the differences in cost attributable to differences in physical characteristics between merchandise. Defendant claims that "Commerce explained in the Final Results as well as in earlier decisions, why weight is a better basis in this type of scenario." Defendant's Opposition at 22. In past flange cases, Commerce calculated the dumping margin on a cost-per-piece basis. Commerce has previously determined that weight was a better basis for comparison in steel cases where the product was sold based on its weight. Plaintiff's products are not priced strictly according to weight but rather the amount of machining and finishing involved. Therefore, Commerce's decision in Corrosion-Resistant Steel Plate and its decision in Stainless Steel Flanges do not appear to be analogous. Plaintiff claims that had its merchandise been compared on cost-per-piece basis, rather than Commerce's cost-per-kilogram basis, the comparisons Commerce made would not have passed the DIFMER margin. Hence, Plaintiff claims that the resulting differences, between DIFMER done on a per-piece-basis and DIFMER calculated on a cost-per-kilogram basis, are indicative of an improper comparison by Commerce. The possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131, 141 (1966). As long as the agency's decisions are rational, the Court may not substitute its judgment for that of the 1357 agency. American Silicon Techs. v. United States, 23 CIT 589, 591, 63 F.Supp.2d 1324, 1326 (1999). Thus, the court does not find that Commerce may not make weight comparisons of flanges. However, the record evidence provided by Plaintiff indicates that Commerce made an erroneous assumption regarding the comparability of rough forgings and proof and fully machined flanges in this review. If Commerce decides to use weight on remand, it must ensure that it is in fact comparing the most similar products and that its methodology and reasoning comport with its results. The record does not contain sufficient evidence of the comparability of ASTM standard forgings and DIN standard flanges. In addition, Commerce's explanation for its comparison of rough forgings and finished flanges on a cost-per-kilogram basis, based upon the Defendant's stated reasoning that a heavier forging that weighs more cost more than the same standard good in a fully finished state, is inaccurate. The evidence presented and verified by Commerce indicates that the cost of production is substantially different when comparing ASTM forgings to DIN flanges on a cost-per-kilogram and cost-per-piece basis. While inconsistent results are permitted, Commerce must base its determinations on substantial evidence. Plaintiff has presented sufficient evidence to support the conclusion that Commerce's new cost-per-kilogram methodology and comparison of rough forgings to finished flanges is distortive, and thus, unreasonable. While Commerce has discretion to determine and apply a methodology necessary to yield similar merchandise comparisons under 19 U.S.C. § 1677(16), when such patent inconsistencies appear in Commerce's determination, it may not be upheld. See Koyo, 66 F.3d at 1209. V. Conclusion This court is vested with the power to order a remand to Commerce pursuant to 28 U.S.C. § 2643(c)(1) (1994). For the reasons stated above, this determination is remanded to Commerce. The remand results are due within 90 says from the date of this opinion; Plaintiff shall have 30 days thereafter within which to file comments; and Commerce may reply within 11 days of Plaintiff's filing. NOTES [1] During oral argument counsel for Plaintiff stated that Isibars, Ltd., an original plaintiff in this action, had abandoned its claim challenging Commerce's determination. [2] The words "such or similar merchandise" were used in 19 U.S.C. § 1677(16) prior to 1995, and were replaced (following the enactment of the Uruguay Round Agreement Act ("URAA"), Pub.L. No. 103-465, 108 Stat. 4809 (1994)) by the term "foreign like product." [3] The term "identical merchandise" does not require Commerce to make comparisons of merchandise that are "exactly the same," rather Commerce is permitted to compare merchandise that is "the same with minor differences." Pesquera, 266 F.3d at 1383 (Fed.Cir.2001). [4] Standardization, in manufacturing, means establishing "desirable criteria for the shape, size, quality and other aspects of a product." See Dictionary of Materials and Manufacturing 375 (Vernon John ed., 1990). The Deutsches Institut fur Normung ("DIN") is a non-governmental organization established to promote the development of standardization in Germany. See id. The American Society for Testing and Materials ("ASTM") is the main body in the United States responsible for issuing standards covering materials, procedures and tests. See id. at 15. [5] Although dated July 29, 1992, the Import Administration Policy Bulletin 92.2, Differences in Merchandise; 20% Rule, continues to be applied. See U.S. Import Administration, Policy Bulletin 92.2, Differences in Merchandise; 20% Rule (1992) ("Policy Bulletin"); see also Mitsubishi Heavy Indus. v. United States, 23 CIT 326, 340, 54 F.Supp.2d 1183, 1196 (1999). The bulletin explains that: To limit the potential differences in commercial value caused by physical differences, we employ the 20% guideline. If the commercial value of two products is greatly different, then a comparison is not reasonable.... When the variable cost difference exceeds 20%, we consider that the probable differences in values of the items to be compared is so large that they cannot reasonably be compared. Since the merchandise is not identical, does not have approximately equal commercial value, and has such large differences in commercial value that it cannot reasonably be compared, the merchandise cannot be considered similar.... Sales of products in domestic or third country markets with variable manufacturing cost differences exceeding 20% of the total average cost of manufacture, on a model specific basis, of the product exported to the United States will normally not be utilized in determining foreign market value. Any use of products with the cost of merchandise differences exceeding 20% shall be noted and fully explained. Id. Commerce may conduct a DIFMER analysis when foreign merchandise is not identical to the exported merchandise, Mitsubishi Heavy Indus., Ltd. v. United States, 97 F.Supp.2d 1203, 1206 n. 4 (CIT 2000), and the analysis "adjusts normal value for the difference in cost attributable to the difference in physical characteristics." Id.; See also Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056, 1059 (Fed.Cir.2001) (explaining that, unless otherwise justified, Commerce will make a finding that the merchandise cannot be reasonably compared should the DIFMER exceed 20 percent). [6] Counsel for the defendant also stated during oral argument that Germany was chosen as the third market country because it has a large open market. This of course was notwithstanding the fact that Canada has a large open market and that Viraj exported identical, rather than similar, merchandise to Canada. See Defendant's Opposition at 11. [7] The Decision Memorandum states that "[w]e agree with petitioners that Viraj fails to provide justification for deviating from our general practice, which is to use the largest comparison market." Decision Memorandum at 30; Pub.App. 2 at 39. [8] The types of flanges covered in this review were (1) weld neck, used for butt-weld line connection; (2) threaded, used for threaded line connections; (3) slip-on and lap joint, used with stub-ends/butt-weld line connections; (4) socket weld, used to fit pipe into a machined recession; and (5) blind, used to seal off a line. Final Results, 66 Fed.Reg. at 48,244. Flanges are used for connecting pipes. See Letter from Ablondi, Foster, Sobin & David, to U.S. Secretary of Commerce, Stainless Steel Flanges From India at 2; Defendant's Non Public Appendix for Defendant's Memorandum in Opposition to Plaintiff's Motion for Judgment Upon the Agency Record, Non Public Document ("NPD") 2 at 16 ("Non Pub. App.") (discussing the use of flanges for connecting pipes). [9] Cases involving claims made prior to 1995 use the term "such or similar merchandise," subsequently replaced by the term "foreign like product" see infra p. 1340 note 2. [10] During oral argument when the Court questioned Defendant as to whether it would be more accurate for Commerce to compare finished flanges to finished flanges, and ASTM standard merchandise to other ASTM standard goods. Defendant responded that it would not be more accurate as the larger market size was more correctable. However, Defendant failed to explain how market size made differences between the merchandise more correctable. [11] Commerce verified Viraj's sales and Plaintiff indicated that "80% of flanges sold in the United States are unfinished" whereas 100% of flanges sold in Germany are either proof or fully machined. Memorandum from Thomas H. Killiam, Financial Analyst, to The File, Antidumping Duty Order on Certain Forged Stainless Steel Flanges from IndiaAnalysis Memorandum for Preliminary Results of New Shipper Administrative Review (Sept. 25, 1996) ("Analysis Memo"); Plaintiff's Reply, Attachment 1. [12] Rough forgings are a raw material supplied to machine shops in the United States who then machine the final product to make a flange. Once machined, the machine shop sells the product to a distributor. Plaintiff's Reply, Attachment 10 at 66. Fully machined flanges are sold to distributors who sell the product to the end user oil refineries, food processing industries, etc. Id. [13] In addition to the physical evidence, provided by Viraj, Plaintiff cited two Customs cases to illustrate that flanges and forgings were not comparable. Plaintiff's Reply at 5; see Decision Memoranda at 26; Pub.App. 35; see also Midwood Industries, Inc. v. United States, 64 Cust. Ct. 499, 507-08, 313 F.Supp. 951, 956-57 (Cust.Ct.1970); see also Boltex Mfg. Co., L.P. v. United States, 140 F.Supp.2d 1339, 1346-51 (CIT 2000). Commerce claimed that the cases "were not directly applicable to the question of merchandise comparability for antidumping purposes, since they involved Customs classification issues." Decision Memoranda at 26; Non Pub.App. 35. The Court agrees with Commerce that the classification issues are not directly applicable, however, the discussion in these cases of the differences between forgings and finished flanges is illustrative of differences between the two goods. In Midwood, this court stated that, the imported articles, referred to ... as `forgings' of one kind or another, are producers' goods which are not in fact used by the consumer in such state of manufacture and are not capable of use by the consumer in that state .... [T]he imported forgings are made as close to the dimensions of ultimate finished form as is possible, they, nevertheless, remain forgings unless and until converted by some manufacturer into consumers' goods, i.e., flanges and fittings. And as producers' goods the forgings are a material of further manufacture, having, as such, a special value and appeal only for manufacturers of flanges and fittings. But, as consumers' goods the flanges and fittings produced from these forgings are end use products, having, as such, a special value and appeal for industrial users and for distributors of industrial products. Consequently, the two classes of goods, namely, the imported forgings, and the fittings and flanges made therefrom, are different articles of commerce in a tariff sense. Midwood, 64 Cust. Ct. at 507-08, 313 F.Supp. 951. More recently, Boltex explained that Midwood has not been overruled and reiterated the Midwood opinion's discussion of the various processes involved in converting forgings into fittings and flanges. Boltex, 140 F.Supp.2d at 1346-51. [14] Plaintiff provided information regarding the percentage difference between the chemical composition of the merchandise Commerce compared: ASTM 304L DIN 1.4541 % Difference Nickel (Ni) 8-12 9-12 5% Carbon (C) .030 .080 166% Chromium (Cr) 18-20 17-19 5% Titanium (Ti) NIL .70 Infinite Plaintiff's Reply, Attachment 8 at 41. [15] On September 25, 1995, Viraj requested a new shipper review. The method and explanation Commerce provided is similar to the Akai Decision. The analysis memorandum for its preliminary results discusses the model match methodology that Commerce used in determining Viraj's New Shipper dumping margin. Plaintiff's Reply, Attachment 1 at 2; Memorandum from Thomas H. Killiam, Financial Analyst, to The File, Antidumping Duty Order on Certain Forged Stainless Steel Flanges from IndiaAnalysis Memorandum for Preliminary Results of New Shipper Administrative Review (Sept. 25, 1996) ("Memo"). The Memo states that: In accordance with section 771(10) of the Act, we searched for the third country model which is most like or most similar in characteristics with each U.S. model. To perform the model match, we first searched for the most similar third country model with regard to alloy. If there were several third country models with identical alloy, we then searched for the most similar third country model with regard to ... type and standard. If, as a result of this analysis, several third country models were deemed equally similar, we chose the third country model which, when compared to the U.S. model, had the lowest difference in variable cost of manufacturing (difmer), provided the difmer did not exceed 20 percent of the total cost of manufacturing of the U.S. model. Plaintiff's Reply, Attachment 1 at Pages 3-4 (emphasis added). [16] DIFMER allows differences between products to be increased or decreased by "the amount of any difference" (or lack thereof) between the export price ... and the [amount] wholly or partly due tothe fact that merchandise described in subparagraph ... (B) and (C) of section 1677(16) of this title is used in determining normal value. 19 U.S.C. § 1677b(a)(6)(C). Sections (B) and (C) of § 1677(16), provide for the determination of "foreign like product" from, (B) Merchandise (i) produced in the same country and by the same person as the subject merchandise, (ii) like that merchandise in component material or materials and in the purposes for which used, and (iii) approximately equal in commercial value to that merchandise. (C) Merchandise (i) produced in the same country and by the same person and of the same general class or kind as the subject merchandise, (ii) like that merchandise in the purposes for which used, and (iii) which the administering authority determines may reasonably be compared with that merchandise. [17] The other determination was a per piece comparison made in the 1995 investigation involving Isibars, Ltd. In that review, Commerce used the home market sales rather than third country sales. [18] In Carbon Steel, Commerce applied the 10/90/10 test and determined that home market sales were inadequate. Under the test, if between 90% and 100% of the home market sales for a model were below the cost of production, and the below-cost sales occurred over an extended period, Commerce considered the remaining above-cost sales to be inadequate and used constructed value to calculate foreign market value. The respondent requested that Commerce apply the 10/90/10 test for measuring sales below cost of production on a product weight basis and claimed that price and cost were directly related to product weight. The petitioners argued that respondent's request was an attempt to obscure the significance of respondents below-cost sales and that because respondent sold its merchandise on a per piece basis, and respondent had not supported its claim that applying the 10/90/10 rule on a per piece basis would not account for differences among the heavy and light pipe fittings, and requested that Commerce apply the 10/90/10 test on a per piece basis. Ultimately, Commerce agreed with the petitioner and stated that it was Commerce's standard practice to apply the 10/90/10 test on the basis on which the subject merchandise is sold. Commerce converted the prices and adjustments reported on a per weight basis to a per piece basis because the respondent sold pipe fittings on a per piece basis. [19] Plaintiff explained in its supplemental answers that where grade, size, and type are the same, the following effect occurs for the same flange with different finishes: 2. Proof-Machined 6.500 kg. $15.27 $2.349 Finish of Flange Weight Per Piece $ Price Per Piece $ Price Per Kilogram 1. Rough 7.100 kg. $16.29 $2.294 3. Fully-Finished 5.200 kg. $15.72 $3.023 Therefore, Plaintiff claims that the price of the product is not more correlative with weight, as Commerce claimed, but rather with finish. See Non Pub.App., NPD 2 at 3, 5, 47-50; Plaintiff's Attachment 4 at 16-19. [20] Section 1677b deals with determining the normal value and requires a fair comparison between the export price or constructed export price and normal value. The price is increased or decreased by the amount of any "difference (or lack thereof) between the export price or constructed export price and the price ... that is established to the satisfaction of the administering authority to be wholly or partly due to (i) the fact that the quantities in which the subject merchandise is sold or agreed to be sold to the United States are greater than or less than the quantities in which the foreign like product is sold, agreed to be sold, or offered for sale, (ii) the fact that merchandise described in subparagraph (B) or (C) of section 1677(16) of this title is used in determining normal value, or (iii) other differences in the circumstances of sale". 19 U.S.C. § 1677b(a)(6)(C)(ii). [21] Sec. 351.411 Differences in physical characteristics. (a). In comparing United States sales with foreign market sales, the Secretary may determine that the merchandise sold in the United States does not have the same physical characteristics as the merchandise sold in the foreign market, and that the difference has an effect on prices. In calculating normal value, the Secretary will make a reasonable allowance for such differences. (See section 773(a)(6)(C)(ii) of the Act.) (b). Reasonable allowance. In deciding what is a reasonable allowance for differences in physical characteristics, the Secretary will consider only differences in variable costs associated with the physical differences. Where appropriate, the Secretary may also consider differences in the market value. The Secretary will not consider differences in cost of production when compared merchandise has identical physical characteristics.	{ "pile_set_name": "FreeLaw" }
Cite as 2017 Ark. App. 454 ARKANSAS COURT OF APPEALS DIVISION III CV-17-202 No. GABRIELLE POTTERTON Opinion Delivered: September 20, 2017 APPELLANT APPEAL FROM THE V. WASHINGTON COUNTY CIRCUIT COURT ARKANSAS DEPARTMENT OF HUMAN [NO. 72JV-16-796] SERVICES AND MINOR CHILD APPELLEES HONORABLE STACEY ZIMMERMAN, JUDGE AFFIRMED RITA W. GRUBER, Chief Judge Gabrielle Potterton appeals from the Washington County Circuit Court’s adjudication and disposition order entered on December 27, 2016, in this dependency- neglect case. She does not challenge the court’s finding of dependency-neglect. Her sole point on appeal is that the circuit court’s sua sponte finding of aggravated circumstances violated her right to due process. We hold that appellant did not preserve this issue for appeal, and we affirm the circuit court’s order. The Arkansas Department of Human Services (DHS) placed a seventy-two-hour hold on B.N. (born on May 25, 2016) on October 12, 2016, after the child was taken to Arkansas Children’s Hospital due to a bump on his head. Doctors at the hospital discovered that he had a bilateral skull fracture, a subdural hematoma, and bruising on his face and hands. Doctors also discovered that B.N. had older injuries, including rib fractures that dated back three to six weeks. The circuit court issued an order for emergency custody on October Cite as 2017 Ark. App. 454 17, 2016. In the court’s probable-cause order, entered on October 19, 2016, it ordered appellant to have no contact or visitation with B.N. The court entered an adjudication and disposition order on December 27, 2016, finding beyond a reasonable doubt that B.N. was dependent-neglected as a result of neglect, physical abuse, and parental unfitness. The court specifically found by clear and convincing evidence that appellant had caused the injuries to B.N. Finally, the court found by clear and convincing evidence that appellant had subjected B.N. to aggravated circumstances. The court set the goal of the case as reunification with a concurrent goal of adoption. Appellant’s sole point on appeal is that the court erred in finding aggravated circumstances where DHS did not file any pleadings alleging aggravated circumstances and, thus, that she was not on notice that she needed to defend against such a finding. She alleges that this violated her right to due process. We have held in termination cases that due process demands that a parent be notified of the grounds that may constitute a basis for termination; at a minimum, it requires notice reasonably calculated to afford a natural parent the opportunity to be heard prior to termination of his or her parental rights. Dornan v. Ark. Dep’t of Human Servs., 2014 Ark. App. 355, at 16 (citing Jackson v. Ark. Dep’t of Human Servs., 2013 Ark. App. 411, 429 Ark. App. 276 (reversing because Jackson was not placed on notice that he must defend against a particular ground on which the circuit court based termination: the department never specifically argued that the circuit court should rely on the ground, the circuit court took the matter under advisement without ruling from the bench, and the first specific mention of this ground was in the circuit court’s order terminating parental rights)). The 2 Cite as 2017 Ark. App. 454 dependency-neglect statute governing requests for “no reunification services” also requires the motion requesting the hearing to “identify sufficient facts and grounds in sufficient detail to put the defendant on notice as to the basis of the motion.” Ark. Code Ann. § 9-27-365 (Repl. 2015) (emphasis added). Although the order appealed from in this case was neither an order of termination nor an order for no reunification services, the proceedings and orders pertaining to the termination of parental rights “build on one another,” and the findings of previous hearings are elements of subsequent hearings. Neves da Rocha v. Ark. Dep’t of Human Servs., 93 Ark. App. 386, 393, 219 S.W.3d 660, 664 (2005). The focus of an adjudication hearing is on the child, not the parent. Seago v. Ark. Dep’t of Human Servs., 2009 Ark. App. 767, at 28, 360 S.W.3d 733, 747. At this stage of a proceeding, the juvenile code is concerned with whether the child is dependent-neglected. Id. An adjudication of dependency-neglect occurs without reference to which parent committed the acts or omissions leading to the adjudication; the juvenile is simply dependent-neglected. Id. In the case at bar, the petition for emergency custody and dependency-neglect did not specifically allege aggravated circumstances, but DHS’s evidence at the adjudication hearing suggested that B.N.’s injuries were attributable to appellant. Testimony was introduced that criminal charges were pending against appellant for first-degree domestic battery as a result of an investigation into B.N.’s injuries; that appellant had signed a confession admitting to actions that might have injured B.N.; and that there had been a true finding issued against appellant with B.N. as the victim “for cuts, bruises, welts, bone fracture, throwing and striking, brain damage, and skull fracture.” Appellant’s attorney began her closing argument to the court with the following statement: 3 Cite as 2017 Ark. App. 454 “We can’t obviously deny the child was injured, but we do deny that he was injured at the hand of Gabrielle Potterton.” She concluded her argument as follows: “So we would ask that the court, of course, follow the recommendations of DHS, but to not find that the mother committed these acts in the adjudication order, and let the criminal action handle that matter.” The court then issued oral rulings, which included the following statements: “And, Mom, I don’t have to wait for your criminal case to find by clear and convincing evidence that you’ve subjected your child to aggravated circumstances. No doubt in my mind that you did. Clear and convincing evidence I find that you, ma’am, caused the skull fractures to his head.” Appellant did not object. And when, at the conclusion of the hearing, the court asked if appellant “had anything else,” appellant’s attorney said, “No, Your Honor.” Because appellant failed to raise or develop this issue in the circuit court, and noting particularly her failure to object to the court’s clear finding of aggravated circumstances at the adjudication hearing, we hold that appellant’s argument is not preserved for appeal. 1 It is well settled that with the notable exception of matters involving subject-matter jurisdiction, we will not consider issues raised for the first time on appeal, even when the issue is a matter of constitutional magnitude. Maxwell v. Ark. Dep’t of Human Servs., 90 Ark. App. 223, 234, 205 S.W.3d 801, 808 (2005); see also Walters v. Ark. Dep’t of Human Servs., 77 Ark. App. 191, 72 S.W.3d 533 (2002) (holding that failure to raise the challenge below 1 Unlike in this case, in Jackson, supra, the court’s order terminating parental rights was the first time the ground relied on in that case was ever mentioned. 4 Cite as 2017 Ark. App. 454 is fatal to the appellate court’s consideration on appeal; even constitutional issues will not be considered when raised for the first time on appeal). Affirmed. WHITEAKER and BROWN, JJ., agree. Dusti Standridge, for appellant. Mary Goff, Office of Chief Counsel, for appellee. Chrestman Group, PLLC, by: Keith L. Chrestman, attorney ad litem for minor child. 5	{ "pile_set_name": "FreeLaw" }
598 F.Supp. 853 (1984) COLDWELL BANKER COMMERCIAL GROUP, INC., a Delaware Corporation v. Marvin P. NODVIN. No. C83-1212A. United States District Court, N.D. Georgia, Atlanta Division. December 5, 1984. 854 James D. Meadows & Jerry B. Blackstock, Powell & Goldstein, Atlanta, Ga., for plaintiff. Jerome J. Froelich, Jr., Robert B. Remar, Remar, Arnold & Zimring, Atlanta, Ga., for defendant. 855 ORDER OF COURT MOYE, Chief Judge. The above-styled action was submitted to the jury on special interrogatories under Fed.R.Civ.P. 49(a). This action is now before the Court on the entry of a final judgment. After a review of the special interrogatories, the parties' briefs, and the relevant case law, this Court concludes that the plaintiff is entitled to a judgment in the amount of $40,000.00. I. FACTUAL BACKGROUND In October 1982, Ray Uttenhove, an agent for the plaintiff real estate brokerage firm Coldwell Banker Commercial Group, Inc. (plaintiff), asked the defendant Marvin P. Nodvin (defendant), if he was interested in selling 25 acres of real estate he owned near Interstate Highway 85. At this time, the plaintiff was acting as an agent for Silver Dollar City, Inc. (SDC), which was interested in buying this property. On December 23, 1982, the defendant entered into a contract with Harry Hargrave, a director for SDC, for the sale of the property for $790,000.00. The plaintiff was made a party to this contract so that it could enforce its right to a commission. This contract contained the following provision: In negotiating this agreement, Broker has rendered a valuable service for which reason Broker is made a party to this agreement .... Seller agrees to pay Broker the full commission at closing. Commission to be paid in this transaction shall be Forty Thousand and No/100 ($40,000.00) Dollars, which seller agrees to pay to Broker in accordance with the provisions hereof, only if this contract is closed.[1] On April 21, 1983, the defendant appeared at the scheduled closing but refused to complete the transaction. He claims that the plaintiff did not tender the proper documents and that the plaintiff defrauded him in various ways. On May 13, 1983, the defendant sold his property to SDC, the same purchaser, for $950,000.00. The plaintiff has filed this lawsuit in two counts: breach of contract and quantum meruit. The defendant argues that he has no obligation to pay the plaintiff its commission under the contract because the contract never closed and that the plaintiff is not entitled to recover under quantum meruit for various legal reasons. The defendant has also counterclaimed against the plaintiff for fraud and misrepresentation. Before reaching these issues, the Court will review the jury's answers to the special interrogatories.[2] II. THE INTERROGATORIES The jury found that the original $790,000.00 contract closed when the defendant sold his property to SDC on May 13, 1983, for $950,000.00. Interr. No. I(1). The jury also found, however, that the plaintiff failed to tender to the defendant all the documents specified in the $790,000.00 contract on the scheduled closing date. Interr. No. II(1). In addition, the jury found that the plaintiff was not damaged by the defendant's closing of the contract on May 13, 1983. Interr. No. I(9). The jury concluded that the plaintiff was the procuring cause of the sale of the property, Interr. No. I(2),[3] and that the plaintiff rendered valuable services to the defendant. Interr. No. I(3). The jury found that the reasonable value of those services was $40,000. Interr. No. II(19). The jury also found that the plaintiff was not acting as the agent for the defendant, Interr. No. III(1), but as the agent for the purchaser, 856 SDC. Interr. No. II(7). The fact that the plaintiff was acting as an agent for the buyer was, according to the jury, disclosed to the defendant. Interr. No. II(15). The jury also found that the defendant caused the plaintiff unnecessary trouble and expense in collecting its commission, Interr. No. I(6), and that the defendant was stubbornly litigious. Interr. No. I(4). The jury reached seemingly contradictory answers on the issue of the defendant's alleged bad faith. In Interr. No. I(5), the jury found that the defendant acted in bad faith in refusing to pay its commission, and in Interr. No. I(7), the jury found that the defendant acted in bad faith by "conspiring to deprive or defraud [the plaintiff] out of its brokerage commission." In Interr. No. I(8), however, the jury concluded that the defendant did not "act in bad faith by attempting to deprive or defraud [the plaintiff] out of its brokerage fees." The jury found that the reasonable value of the plaintiff's expenses of litigation was $42,000.00. The jury also found that the plaintiff was not entitled to exemplary damages. Interr. No. I(11). The jury answered all of the questions relating to the defendant's counterclaim adversely to the defendant. It is clear, therefore, that the defendant is not entitled to any damages on its counterclaim. In sum, the jury found that the plaintiff rendered valuable services to the defendant in the sum of $40,000.00 and that the plaintiff was the procuring cause of the sale of the defendant's land to SDC. In addition, the jury found that the plaintiff was entitled to its litigation expenses in the amount of $42,000.00. The issues before this Court are whether these findings are supported by the evidence and are appropriate under applicable Georgia law. III. DISCUSSION As a preliminary matter, under Georgia law the plaintiff is required to make an election between inconsistent remedies prior to the entering of the judgment. UIV Corporation v. Oswald, 139 Ga.App. 697, 229 S.E.2d 512 (1976). Because there cannot be recovery under both an express contract and quantum meruit, e.g., Classic Restorations v. Bean, 155 Ga.App. 694, 699, 272 S.E.2d 557 (1980), the plaintiff is required to make an election of remedies prior to the entering of the judgment.[4]Steinemann v. Vaughn & Co., 169 Ga. App. 573, 313 S.E.2d 701 (1984). In its brief, the plaintiff has stated that if it is required to elect remedies, it would elect to recover under Count II of its complaint which sounds in quantum meruit. The defendant has developed three arguments to support its position that the plaintiff is not entitled to any recovery in this case.[5] First, the defendant claims that the plaintiff is not entitled to recovery under the doctrine of quantum meruit because there was an express contract between the parties. Secondly, the defendant argues that a prerequisite to recovery in this case is the existence of an agency between the parties and the jury explicitly found that no such agency relationship existed. Finally, the defendant contends that the plaintiff cannot recover because it was actually acting as an agent for the purchaser not for the defendant.[6] This Court will analyze each of these arguments separately. A. Recovery Under Quantum Meruit When There Is An Express Contract It is undisputed that the parties entered into an express contract that detailed the 857 parties' obligations before a commission would have to be paid. The defendant claims that there can be no recovery in quantum meruit when the parties have entered into an express contract. Although there are Georgia cases which support this proposition, e.g., Bean, supra, there are also numerous Georgia cases which have allowed plaintiffs to assert both breach of contract and quantum meruit in the same lawsuit. E.g., Steinemann, supra; Starling, Inc., et al. v. Housing Authority of Atlanta, 170 Ga.App. 858, 318 S.E.2d 728 (1984); Stowers v. Hall, 159 Ga.App. 501, 283 S.E.2d 714 (1981); Sharp-Boylston Company, et al. v. Lundeen, 145 Ga.App. 672, 244 S.E.2d 622 (1978). The Lundeen case is extremely similar to the present action. In Lundeen, the plaintiff broker sued the defendant buyer for a real estate commission under both an express oral contract and the doctrine of quantum meruit. The Court stated the following: After reviewing the evidence, it appears to this Court that the only clear provision in the oral agency contract between the [buyer] and the [broker], was that [the buyer] would compensate [the broker], if through his efforts, [the buyer] leased or purchased a building. Under these circumstances, we are unable to find any error in the trial court's direction of a verdict for the [buyer] on Count 1, breach of an oral contract. It was, however, error to direct a verdict in [the buyer's] favor on Count 2, recovery in quantum meruit .... Even though the [buyer's] ultimate purchase ... of the property was not due to the [broker's] efforts, the evidence shows that it was [the broker] who procured the initial information on the building, .... Under these circumstances, the jury should have been allowed to decide whether [the broker] was entitled to any recovery in quantum meruit. Lundeen at 673-74, 244 S.E.2d 622. Thus, the Lundeen court specifically held that the plaintiff real estate broker could sue the buyer under an express oral contract and under the theory of quantum meruit. After an exhaustive review of the Georgia cases on this subject, this Court concludes that it is permissible to assert the inconsistent theories of breach of contract and quantum meruit in the same action as long as an election is made prior to the entering of the judgment. See Steinemann, supra, 169 Ga.App. at 579, 313 S.E.2d 701. The plaintiff has elected to recover under quantum meruit. Accordingly, the defendant's argument that the plaintiff is barred from any such recovery because of the existence of an express contract is without merit. B. The Absence of An Agency Relationship The defendant argues that the plaintiff cannot recover under the theory of quantum meruit because the jury found that it was not acting as the agent for the defendant. There are two Georgia statutes which arguably support the plaintiff's recovery under quantum meruit. O.C.G.A. § 10-6-32 provides the following: The fact that property is placed in the hands of a broker to sell shall not prevent the owner from selling, unless otherwise agreed. The broker's commissions are earned when, during the agency, he finds a purchaser who is ready, able, and willing to buy and who actually offers to buy on the terms stipulated by the owner. In Interr. No. II(14), however, the jury found that the plaintiff did not "as Marvin Nodvin's agent, find a purchaser ready, able and willing to buy who actually offered to buy on the terms stipulated by Mr. Nodvin." Therefore, the jury found that the plaintiff was not entitled to its commission under O.C.G.A. § 10-6-32. The other statutory section upon which the plaintiff relies is O.C.G.A. § 9-2-7 which states the following: Ordinarily, when one renders service or transfers property which is valuable to another, which the latter accepts, a promise is implied to pay the reasonable value thereof. However, this presumption 858 does not usually arise in cases between very near relatives. The issue before this Court is whether this section requires[7] in the context of a broker suing for services performed, the existence of an agency relationship.[8] The defendant makes the bold allegation that "[i]n every case where a broker has recovered on a theory of quantum meruit, it was, in fact, acting as agent for the defendant." Defendant's Reply Brief at 6. The defendant has failed, however, to produce a Georgia case which has explicitly held that an agency relationship is a prerequisite to recovery under quantum meruit. Furthermore, unlike O.C.G.A. § 10-6-32, there is no language in O.C.G.A. § 9-2-7 which indicates that an agency relationship is a prerequisite for recovery. Rather, all that is required is the rendering of a valuable service to another and the acceptance by that person of that service. The standard which Georgia courts have seemed to adopt is that there can be no recovery for services "rendered voluntarily and with no expectation ... that they will be compensated." E.g., Brightwell v. Oglethorpe Tel. Co., 47 Ga.App. 521, 526, 171 S.E. 162 (1933). But, this standard is quite different from the standard of agency which the defendant urges this Court to adopt. The defendant has failed to convince this Court that the existence of an agency relationship is a prerequisite to recovery under O.C.G.A. § 9-2-7. In the present case, the jury found that the plaintiff rendered valuable services to the defendant which he accepted. This Court finds, as a factual matter,[9] that these services were not rendered voluntarily but were rendered upon the expectation that they would be paid for. This finding is supported by the fact that the parties entered into an express contract which was supported by consideration on both sides. Therefore, this Court finds that the plaintiff has satisfied all of the requirements of O.C.G.A. § 9-2-7. C. Plaintiff's Status As The Agent of The Buyer The defendant contends that the plaintiff is not entitled to any recovery because it was acting as the agent for the buyer, SDC, and was therefore not attempting to secure the best price for the defendant. This situation can be analogized to the situation where there is a dual agency. In such a case, Georgia law is clear: Contracts of dual agency are not void per se, but are void only when the fact that the agent represented both parties was unknown. The burden of making out a defense to a prima facie liability rests upon the defendant; and where dual agency is relied on, it is necessary for the defendant to allege and prove not only the incompatible relationship, but also that it was unknown. Williamson v. Martin-Ozburn Realty Co., 19 Ga.App. 425, 428, 91 S.E. 510 (1916) (emphasis added); see also, Erwin v. Wender, 78 Ga.App. 94, 98, 50 S.E.2d 244 (1948). In the present case, the jury specifically found that the plaintiff did not conceal from the defendant that it was acting as an agent for SDC. Interr. No. II(15). This finding is supported by the evidence. Therefore, the defendant's argument that the plaintiff is not entitled to recover under quantum meruit because it was acting as SDC's agent is without merit. 859 In sum, the jury found that the plaintiff rendered valuable services to the defendant which he accepted in the sum of $40,000.00. This finding is amply supported by the record and is allowable under Georgia law. Accordingly, the plaintiff is entitled to recover $40,000.00 from the defendant under the theory of quantum meruit. IV. EXPENSES OF LITIGATION Under Georgia law, attorney's fees and expenses of litigation are not allowed in contract actions unless the defendant "has acted in bad faith in making the contract, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." O.C.G.A. § 13-6-11. The jury only has to make one of these findings to award attorney's fees in contract actions. Marler v. River Creek Associates, 138 Ga.App. 471, 226 S.E.2d 311 (1976). The jury found that the defendant in the present case was stubbornly litigious and did cause the plaintiff unnecessary trouble and expense. Interr. Nos. I(4) and I(6). The jury reached contradictory findings as to the defendant's bad faith. Interrogatory Nos. I(5), I(7), I(8) II(3), and II(17). The issues before the Court are whether the facts support a finding of stubborn litigiousness and unnecessary trouble and expense and, whether the jury actually found that the defendant acted in bad faith.[10] Under Georgia law, in the absence of bad faith, there can be no recovery of attorney's fees if there exists a bona fide controversy between the parties.[11]Beaudry Ford, Inc. v. Bonds, 139 Ga.App. 230, 228 S.E.2d 208 (1976); Georgia-Carolina Brick & Tile Co. v. Brown, 153 Ga.App. 747, 266 S.E.2d 531 (1980); Thompson Enterprises, Inc. v. Coskrey, 168 Ga.App. 181, 308 S.E.2d 399 (1983). The evidence in this case overwhelmingly establishes that there existed a bona fide controversy between the parties. The jury found that the purchaser, SDC, did not tender to the defendant all of the documents specified in the original contract between the parties. Interr. No. II(1). In fact, the defendant presented an expert witness who testified that the documents tendered to the defendant on the scheduled closing date were unenforceable under Georgia law. See Testimony of Mr. Killorin. The plaintiff did not present any evidence to rebutt this testimony. Because the sales contract between the defendant and SDC was unenforceable, the defendant did not have an obligation under the contract to pay the plaintiff its commission.[12]Busbin v. Suburban Realty, Inc., 236 Ga. 783, 225 S.E.2d 316 (1976). In fact, the jury specifically found that the plaintiff was not entitled to any damages on its breach of contract claim. Interr. No. I(9). Thus, the jury found against the plaintiff on one of its two major claims. The defendant's argument in this case was that he was not obligated to pay the plaintiff its commission because the plaintiff never produced proper closing documents and because the plaintiff defrauded the defendant. Although the jury found for the plaintiff on the latter claim, there was evidence to support the defendant's position. More importantly, however, Georgia courts have repeatedly held that the "mere refusal to pay a disputed claim is not the equivalent of stubborn litigiousness or causing unnecessary trouble and expense." Franchise Enterprise, Inc. v. 860 Ridgeway, 157 Ga.App. 458, 460, 278 S.E.2d 33 (1981). After a review of all of the evidence in this case, this Court concludes that no reasonable jury could have found that there was no bona fide controversy between the parties. The defendant has consistently argued in this case that the plaintiff was not entitled to any recovery under quantum meruit because the plaintiff was rendering valuable services for the buyer, SDC, not for the defendant. The evidence clearly shows that the first contract presented to the defendant by the plaintiff for the sale of his land was for the sum of $175,000.00. The defendant eventually sold his land to SDC for $950,000.00. As will be discussed in the next section of this order, this Court believes that the jury found that the defendant, in good faith, believed he did not owe the plaintiff any money for simply introducing him to the buyer. The mere fact that the defendant was mistaken in this belief does not entitle the plaintiff to attorney's fees under Georgia law. Because there is no evidence in the record to support the jury's findings that the defendant was stubbornly litigious or caused the plaintiff unnecessary trouble and expense, this Court vacates their findings on these issues.[13] The jury made seemingly contradictory findings on the issue of the defendant's alleged bad faith. In Interr. Nos. I(5) and I(7), the jury found that the defendant acted in bad faith in refusing to pay the plaintiff its commission.[14] And, in Interr. No. II(3), the jury found that the defendant did not have a valid reason for failing to close the $790,000.00 contract. These answers, however, are inconsistent with various other answers given by the jury. For example, in Interr. No. I(8), the jury found that the defendant did not act in bad faith by attempting to defraud the defendant out of its commission. And, in Interr. No. II(17), the jury answered no to the following question: Did Mr. Nodvin refuse to close the contract in bad faith and solely to avoid paying the commission? Furthermore, the jury found that the parties intended that a commission be paid only in the event that the $790,000.00 closed. Interr. Nos. II(4) and (5), and that the $790,000.00 contract did not close on the terms and conditions as set forth in that contract.[15] Interr. No. II(2). This Court believes that it is impossible to reconcile the answers to Interr. Nos. 7 and 8. It is possible, however, to reconcile the other answers given by the jury. Based on the jury's answers to Interr. Nos. II(3) and II(17), this Court believes that the jury found that the defendant, in fact, did not have a valid reason for failing to close the contract but that the defendant subjectively felt that he had a valid reason for not closing the contract.[16] Similarly, the jury must have decided that, in light of the services rendered to the defendant by the plaintiff, the defendant was mistaken in thinking that he did not have to pay the plaintiff for its services simply because the buyer did not tender to the defendant all of the documents required by the $790,000.00 861 sales contract. This mistaken assumption by the defendant, however, without more, does not entitle the plaintiff to attorney's fees in this case. This Court has carefully reviewed all of the Interrogatories given to the jury and all of the evidence in the record. This Court finds that the jury must have decided that the defendant made a honest mistake in deciding that he was not obligated to pay the plaintiff for its services and that this finding is supported by the evidence. Accordingly, there was no bad faith on the part of the defendant and the plaintiff is not entitled to its litigation expenses.[17] V. THE DEFENDANT'S COUNTERCLAIM The jury found against the defendant on every issue raised by his counterclaim. These findings are supported by the evidence and therefore judgment will be entered against the defendant on his counterclaim. In sum, the Clerk of the Court is DIRECTED to enter a judgment for the plaintiff in the amount of $40,000.00. The plaintiff is not entitled to any expenses of litigation. The Clerk is further DIRECTED to enter judgment against the defendant on his counterclaim. This order resolves all of the issues in this case.[18]862 863 864 865 866 867 868 869 870 871 *872 NOTES [1] This clause was substituted by the parties for a clause in the original preprinted form contract which specifically gave the plaintiff its commission if the contract did not close due to the seller's actions. [2] The Court will only mention those answers that are relevant to the judgment. [3] The jury also found that, during the agency, the plaintiff did not find a ready, willing, and able purchaser who offered to buy on the terms stipulated by the defendant. Interr. No. II(14). [4] The plaintiff argues that it is entitled to recover its commission under a "procuring cause" theory. This Court is not convinced that there is such a theory under Georgia law independent of quantum meruit or O.C.G.A. § 10-6-32. [5] The analytical framework of this order is not indicative of which side has the burden of proof on any particular issue. Because the jury clearly found for the plaintiff, however, it is useful to analyze their answers in relation to the defendant's legal arguments. [6] The defendant also makes various arguments in support of its position that the plaintiff is not entitled to attorney's fees in this case. Those arguments will be discussed in section 3 of this order. [7] The defendant does not appear to be arguing that O.C.G.A. § 10-6-32 is the exclusive remedy for a real estate broker suing under quantum meruit. In any event, Georgia courts have allowed recovery under O.C.G.A. § 9-2-7 to brokers suing under quantum meruit. E.g., Lundeen, supra, 145 Ga.App. at 674, 244 S.E.2d 622. [8] The jury specifically found that the plaintiff rendered valuable services to the defendant which he accepted in the amount of $40,000. Thus, except for the agency issues, the plaintiff has clearly met the requirements for recovery under the theory of quantum meruit. [9] Fed.R.Civ.P. 49(a) gives this Court the authority to resolve any factual questions relevant to the judgment which were not submitted to the jury. [10] Of course, this Court must also determine if a finding of bad faith was supported by the evidence. The legal standard which this Court must apply when reviewing the jury's findings of stubborn litigiousness and unnecessary trouble and expense is whether any jury could have reasonably made those findings. See Bigelow-Sanford, Inc. v. Gunny Corp., 649 F.2d 1060, 1066 (5th Cir.1981). [11] It appears that the absence of a bona fide controversy is a prerequisite to the recovery of attorney's fees under both the stubbornly litigious standard and the unnecessary trouble and expense standard. See generally Franchise Enterprises, Inc. v. Ridgeway, 157 Ga.App. 458, 278 S.E.2d 33 (1981). [12] The plaintiff produced no evidence that demonstrated that the buyer ever tendered the appropriate documents to the defendant in accordance with the $790,000.00 contract. [13] It is important to note that the jury was not asked whether or not a bona fide controversy was present in this case. It is therefore unclear whether the jury's findings on stubborn litigiousness and unnecessary trouble and expense are findings sufficient, in and of themselves, to warrant the imposition of attorney's fees in this case. In any event, this Court finds that there is no evidence in the record to support these findings. [14] In Interrogatory No. 7, the jury found that the defendant acted in bad faith by conspiring to defraud the plaintiff out of its commission. [15] This answer is seemingly inconsistent with Interrogatory No. 1. [16] This conclusion is consistent with the answer to Interr. No. 8 but inconsistent with the answer to Interr. No. 7. As noted earlier, these two Interrogatories are impossible to reconcile. In addition, the jury also must have concluded that the fact that there was an improper tender at the closing did not justify the plaintiff's refusal to go through with the sales transaction. In light of the contractural language in this case, that finding is contrary to Georgia law. See, Busbin, supra. [17] This Court finds that the jury's answers to the questions concerning bad faith are susceptible only to the interpretation heretofore described. [18] Attached as Exhibit "A" is a copy of the jury's answers to the Special Interrogatories.	{ "pile_set_name": "FreeLaw" }
30 Cal.App.3d 494 (1973) 106 Cal. Rptr. 340 RALPH WILLIAMS FORD, Plaintiff and Respondent, v. NEW CAR DEALERS POLICY AND APPEALS BOARD et al., Defendant and Appellants. Docket No. 40265. Court of Appeals of California, Second District, Division Two. February 9, 1973. 496 COUNSEL Evelle J. Younger, Attorney General, and Alan Hager, Deputy Attorney General, for Defendants and Appellants. Linder, Schurmer, Drane & Bullis and Ellis J. Horvitz, for Plaintiff and Respondent. OPINION FLEMING, J. The New Car Dealers Policy and Appeals Board, pursuant to its authority under Vehicle Code sections 3050 to 3057, affirmed a decision of the Director of Motor Vehicles finding that Ralph Williams Ford (Williams) on three specified occasions in 1968 violated Vehicle Code, section 4456, and on nine specified occasions in 1968 violated Vehicle Code, section 11713, subdivision (g).[1] The board, separately for each 497 group of violations, revoked Williams' dealer's license, certificate, and special plates; stayed the revocation; and placed Williams on a three-year probation whose conditions included a 10-day suspension of its dealer licensing privileges. The superior court confirmed the board's findings with respect to the violations but ordered the cause remanded to the board for reconsideration because in the court's view the board, (1) wrongfully imposed administrative penalties for violations of section 4456, (2) violated due process of law in finding Williams guilty of uncharged violations, and (3) imposed improper procedural terms for future revocation of probation. The board and the department appeal the judgment. 1. Section 4456. (1) The board found that on three occasions Williams violated section 4456 by failing to file timely reports of sale and documents and fees for the transfer or registration of vehicles. The board noted that these violations represented only a small part of the untimely reports of sale submitted by Williams. The superior court, on an independent review of the evidence pursuant to Code of Civil Procedure, section 1094.5, confirmed the findings of the board, but concluded that the $3 forfeiture imposed by section 4456 (now by § 4456.5) was the sole penalty applicable to these violations, and therefore administrative penalties of suspension and revocation were not authorized. We disagree with the conclusion of the superior court that the penalty for these 1968 violations was limited to a $3 forfeiture, since at that time administrative penalties authorized by section 11705 were clearly applicable to such violations.[2] (See Evilsizor v. Dept. of Motor Vehicles (1967) 251 Cal. App.2d 216, 218-220 [59 Cal. Rptr. 375].) Not until 1970 did the Legislature enact section 4456.5 to limit the penalty for certain violations of section 4456 to a $3 forfeiture. Williams argues that the changes brought 498 about by the enactment of section 4456.5 in 1970 should be used to reinterpret the intent of the Legislature in enacting the earlier texts of section 4456 in 1959, 1961, and 1963. We decline this invitation to embark on a voyage of retrospective reinterpretation. Williams also contends that because the subsequently enacted section 4456.5 reduced in certain instances the penalties for violation of section 4456, the section should be applied retroactively by the courts to the violations that occurred in this case. We do not agree. It is presumed that legislative changes do not apply retroactively unless there is a clear legislative intent that they should do so. (Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, 65 Cal.2d 349, 371 [55 Cal. Rptr. 23, 420 P.2d 735].) Had the Legislature merely mitigated the penalty for a violation of section 4456 we might well conclude it had made an express determination that its former penalty had been too severe and that a lesser penalty would be more appropriate. (See In re Estrada, 63 Cal.2d 740, 745 [48 Cal. Rptr. 172, 408 P.2d 948].) But in adopting section 4456.5 the Legislature enacted a new, comprehensive scheme which completely revised the scope of the penalties attached to violations of section 4456. The basic penalty for violation of section 4456 is made a $3 forfeiture, but failure to pay fees to the department within 20 days continues subject to the penalty of suspension and revocation. And failure to present a proper application in compliance with section 4456 within 40 days creates a presumption of failure or neglect that provides prima facie grounds for suspension and revocation under section 11705. We do not believe the Legislature could have reasonably intended these complex changes to be applied retroactively to cases, such as this one, that had reached final administrative decision prior to the effective date of the new law. As the court said in Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, at page 372: "The Legislature's alteration of the method for enforcement of a statute, however, ordinarily reflects its decision that the revised method will work greater future deterrence and achieve greater administrative efficiency. Yet the design for efficacy of deterrence and efficiency of administration hardly affects the case which has already reached a final administrative decision based upon the old procedure." 2. Uncharged Violations. (2) The board adopted the findings of the Director of Motor Vehicles relating to the accounting procedures used by Williams before and after the filing of the accusation of registration-fee overcharges. Key findings included: 499 "XI 3(d).... Respondent did not maintain any journals, subsidiary ledgers or any other type of accounting records wherein it could be ascertained the name of the purchaser, the amount of money deposited by said purchaser for payment to the Department, the actual amount of money required by the Department and the dates and amount of the refund of the overcharge to said purchaser.... "(e). Respondent's employees on the managerial level, including the certified public accountant auditor, knew that the deposits made by purchasers for the fees due the Department, were fiduciary moneys requiring the highest degree of accountability.... "(f). At the end of respondent's 1968 accounting period, the expense account to which respondent credited the refunds from the Department had a credit balance of $16,570.03 ... "(g). With one exception, respondent did not refund the excess deposit fees to purchasers identified in Finding X hereof until subsequent to the service of the Accusation." The superior court concluded that these findings "concern[ed] matters not charged in the Accusation, and the implied finding that there was a $16,570.03 credit balance from overcharged fees that had not been refunded or credited to the accounts of customers to whom they belonged, is not within the scope of any charge alleged in the Accusation. [These findings] were improperly considered by the Board in determining the nature and extent of the penalty ..." In our view the superior court misconstrued the relationship between charges and findings in the administrative proceedings. The board did not find that Williams committed any violations other than those charged in the accusation. Williams produced evidence of its accounting procedures in an attempt to show it had not made the overcharges set forth in the accusation. In response to that evidence the board made findings which showed that it did not credit the evidence produced by Williams to rebut proof of overcharges, and that Williams' accounting procedures were inadequate to disclose what refunds, if any, were routinely made to overcharged purchasers. The board's basic finding that on nine occasions the price of vehicles sold by Williams included as an added cost specified licensing or transfer fees not owed to the state (Veh. Code, § 11713, subd. (g)) remained unaffected by additional findings on the subject of Williams' accounting procedures. These additional findings, however, were pertinent to questions of due care, penalty, and conditions of probation. Once the board found the charged violations had taken place, it was entitled to consider related deficiencies in order to evaluate the amount of due care exercised by Williams 500 in past attempts to comply with the statute and in order to determine what administrative penalty and what conditions of probation would be suitable. (Mills v. State Bar, 6 Cal.2d 565, 567 [58 P.2d 1273].) Evidence of other possible violations need not be disregarded by the board in arriving at an appropriate penalty and appropriate conditions of probation, merely because that evidence was produced by Williams. In re Ruffalo, 390 U.S. 544 [20 L.Ed.2d 117, 88 S.Ct. 1222], and related cases are not controlling. In Ruffalo, an attorney was disbarred from the practice of law on a finding he was guilty of an instance of misconduct that had not been charged against him in the disbarment proceedings until after he had presented evidence to rebut the instances of misconduct with which he had been initially charged. The court overturned the disbarment on the ground that procedural due process requires fair notice of a charge before proceedings commence. (390 U.S. at pp. 550-551 [20 L.Ed.2d at pp. 121-123].) At bench Williams was given fair notice of the nine charged violations it was found to have committed. Other potential violations and related deficiencies were considered only in connection with a determination of the type and extent of the sanction to be imposed for the charged violations. 3. Condition of Probation. (3a) A condition of probation imposed by the board on Williams stated: "Should the Director of Motor Vehicles at any time during the existence of said probationary period determine upon reliable evidence that appellant has violated any of the terms and conditions of probation, he may, in his discretion and without a hearing, revoke said probation and order the suspension or revocation of appellant's license, certificate and special plates ..." (Italics added.) The superior court properly concluded that the italicized portion of this condition of probation violated due process of law. (4) The Fourteenth Amendment protects the pursuit of one's profession from abridgment by arbitrary state action, and a state cannot exclude a person from any occupation in a manner or for reasons that contravene due process of law. (Endler v. Schutzbank, 68 Cal.2d 162, 169-170 [65 Cal. Rptr. 297, 436 P.2d 297].) Here, the revocation of probation, and therefore the revocation of Williams' dealer's license, is left to the discretion of the Director of Motor Vehicles. (5) But "an individual must be afforded notice and an opportunity for a hearing before he is deprived of any significant property interest, ..." (Randone v. Appellate Department, 5 Cal.3d 536, 541 [96 Cal. Rptr. 709, 488 P.2d 13].) Although Williams received notice and a hearing on its past 501 violations, the conditions of probation dispense with notice and hearing on any future violations that may bring about a revocation of its license. (3b) In criminal law "fundamental principles of due process and fair play demand, ... that after a summary revocation of probation and before sentencing a hearing is required at which the defendant is entitled to be represented by counsel, to be advised of the alleged violation and given an opportunity to deny or explain it, and, if necessary, present witnesses on his own behalf." (People v. Youngs, 23 Cal. App.3d 180, 188 [99 Cal. Rptr. 101]; People v. Vickers, 8 Cal.3d 451, 458-461 [105 Cal. Rptr. 305, 503 P.2d 313]; see also, Morrissey v. Brewer, 408 U.S. 471 [33 L.Ed.2d 484, 92 S.Ct. 2593].) Due process requires a comparable opportunity for notice and hearing on the revocation of an occupational license. (Cf. Goldberg v. Kelly, 397 U.S. 254 [25 L.Ed.2d 287, 90 S.Ct. 1011].) The judgment granting the writ of mandate is reversed, and the cause is remanded to the superior court with instructions to issue its writ for the sole purpose of directing the board to strike from page 32 of its final order the phrase "without a hearing" and substitute therefor the phrase "on notice and hearing." Appellants to receive their costs on appeal. Roth, P.J., and Herndon, J., concurred. A petition for a rehearing was denied March 8, 1973, and respondent's petition for a hearing by the Supreme Court was denied April 4, 1973. Clark, J., did not participate therein. NOTES [1] Vehicle Code section 4456 in pertinent part authorizes the dealer to issue a temporary identification device to the purchaser, provided the dealer applies to the department on behalf of the purchaser for registration or transfer of the vehicle within 20 days of sale. Vehicle Code section 11713, subdivision (g) makes it unlawful and a violation of the Vehicle Code for a license holder to include as an added cost to the selling price of a vehicle an amount for licensing or transfer of title which is not owed to the state, unless the amount has been paid by the dealer prior to the sale. [2] Vehicle Code section 11705 (now renumbered § 11705, subds. (a)(7) and (a) (9)) provides that the department after notice and hearing may suspend or revoke a dealer's license upon determining that the dealer has violated one or more of the terms and provisions of those parts of the Vehicle Code that include sections 4456 and 11713, subdivision (g).	{ "pile_set_name": "FreeLaw" }
350 So.2d 743 (1977) Phillip Harold LEE v. STATE. 7 Div. 533. Court of Criminal Appeals of Alabama. October 4, 1977. 744 Larry W. Morris, Alexander City, for appellant. William J. Baxley, Atty. Gen. and Joseph G. L. Marston, III, Asst. Atty. Gen., for the State. DeCARLO, Judge. Violation of the Alabama Uniform Controlled Substances Act (possession of marijuana not for personal use); three years. Lawrence T. Turner, an agent of the ABC Board of the State of Alabama, had as his primary duty, the enforcement of whiskey and narcotic laws. Turner was stationed in Clay and Randolph Counties and lived in Wedowee, Alabama. About one week prior to May 20, 1976, he received a telephone call from an unidentified caller who told him "there was about three-hundred marijuana plants in a casket box" on the back side of Phillip Lee's pasture. Several days after the call, Turner and Harry Sheppard, another agent, went to the Lee pasture. After walking for approximately an hour they found the marijuana in a metal casket box on the bank of a small branch at the edge of a honeysuckle patch. Turner testified that there was "a well-worn trail" leading to the location of the marijuana. He went on to say that there were car and tractor tracks leading to the trail. According to Turner it was sometime after lunch on May 19, 1976 when they found the box, at which time, Agent Sheppard returned to Ashland, Alabama to get the 745 sheriff and deputies. They returned and remained there until dark on May 19th. The following day Turner and Sheppard met Deputy Ray Latham and the three went to the pasture "at daylight." Turner said he and the other two officers were in a ditch some fifty or sixty yards from where the casket was located. That afternoon at approximately 1:20 or 1:25, they heard a tractor. Turner recalled that they watched the tractor come into view and go straight to the marijuana and stop. He testified that the person driving the tractor was Phillip Lee, the appellant, and that in his judgment the tractor had come from the direction of the appellant's house. Turner said the tractor was driven straight to the casket where it stopped. After the appellant stopped the tractor, he went to the metal casket and "started pulling the marijuana plants, and shaking the dirt off them." The officer observed the appellant for about fifteen or twenty seconds before approaching him from behind. Turner spoke to the appellant and asked, "How are you doing Phillip?" The appellant turned and responded, "G-damn, I didn't think this would ever happen to me." Turner testified that Lee was placed under arrest and the marijuana was carried to the appellant's house on his tractor. The appellant had pulled up thirty-six plants and the officers pulled an additional thirty-seven plants from the casket. Upon arriving at the appellant's house, the sheriff was called, and when he arrived, the marijuana was turned over to him. During Turner's testimony, he stated that he had received training in the identification of marijuana and narcotic "plants". Turner stated that he knew the characteristics of a marijuana plant and that some even grow to a height of eight feet. Turner said he was familiar with growing a marijuana plant and that, "it takes plenty of water and sunshine." Turner acknowledged that it would be his judgment that the seventy-three marijuana plants found in the metal casket were being grown correctly. Harry Sheppard, also employed in the drug and alcohol division of the ABC Board, was with Officer Turner when marijuana was found on Phillip Lee's farm in May of 1976. His testimony was substantially the same as that of Officer Turner, except during cross-examination, he said that he had previously been hunting marijuana on the appellant's farm. Sheppard said that he saw a casket down at the hog parlor a year before that had marijuana in it. Ray Latham, a deputy sheriff for Clay County, was with agents Sheppard and Turner when they were conducting the surveillance of Phillip Lee's farm. In addition to giving a similar account of what had occurred prior to and after the arrest of Phillip Lee, Latham said that the marijuana plants were placed in his possession at the sheriff's office for transport to the State laboratory. He said he took a sampling from the plants, sealed them in a brown envelope and carried them to the State toxicologist's office in Auburn. Latham testified that the plants remained in his custody and control from the time they were given to him by Sheriff Morris, and that they were in the same condition when he delivered them to Auburn as they were when he was given possession of them at the sheriff's office in Clay County. Billy Morris, Sheriff of Clay County, stated that on May 19th he accompanied Agent Sheppard to Lee's farm where he saw marijuana growing in a metal casket. He said the following day he saw the appellant at his farm and saw marijuana plants lying on the ground in the appellant's yard. Morris took two bunches of marijuana to his office and placed them in an evidence vault where they remained for about a month until they were dried. After drying, some leaves were sealed in an envelope and given to Deputy Latham, who was instructed to take the envelope to the lab in Auburn and have the marijuana analyzed. Fred Taylor Noggle, Jr., was the director of the Auburn Toxicology Laboratory. He related that he specialized in the examination and identification of dangerous drugs and narcotics and during the five and one-half years he had been a toxicologist, he 746 had examined several thousand narcotic drugs. Noggle testified that Deputy Latham delivered an envelope to him containing a green-brown vegetable matter. According to him, the laboratory analysis of the substance revealed the presence of marijuana which contained the substance, tetrahydrocanabinol. During cross-examination, Noggle testified that marijuana was not usually found growing wild in Alabama. At the completion of Noggle's testimony, the State rested and after the jury had retired from the courtroom, the appellant made a motion to exclude the State's evidence on the ground that a prima facie case had not been made. The motion was denied and the appellant was called to testify in his own behalf. Phillip Lee stated that in May of 1976 he lived on his father and mother's 130 acre farm and had lived there around fourteen or fifteen years. According to Lee, on the day in question, he had gone "over to the back forty" to do some "bush-hogging." He said that he rode over there on the tractor to "pick up" the "bush-hog." Lee said that sitting at the edge of the field was one of the caskets that had originally been at the barn for the purpose of feeding livestock. According to him, out of curiosity, he went to see what the casket was doing there. He stated there were some kind of plants growing in the casket but said, "I didn't have much of a chance to do anything next . . . the arresting officers came out of the bushes there." Lee denied pulling up any of the plants or having planted the marijuana in the casket. He also denied that he had assisted anyone in moving the casket to the area where it was found. Lawrence Turner and Harry Sheppard were recalled for rebuttal testimony and each testified that prior to the time the marijuana was found in the casket they did not at any time see the "bush-hog" in the area. Each testified on cross-examination that they did not see a bush-hog but they were not looking for one. I It is contended that the verdict, "we the jury find the defendant guilty of violation of the Alabama Controlled Substances Act," fails to show whether the jury found the defendant guilty of a felony or of a misdemeanor. Counsel argues that the trial court was therefore without authority to impose a felony sentence. The Alabama Uniform Controlled Substances Act, T. 22, § 258(47)(a), Code of Alabama 1940, Recompiled 1958, in pertinent part reads: " . . . Any person who possesses. . . controlled substances . . . is guilty of a felony and upon conviction for first offense may be imprisoned not less than 2 nor more than 15 years and, in addition, may be fined not more than $25,000: except any person who possesses any marihuana for his personal use only is guilty of a misdemeanor and upon conviction for the offense shall be imprisoned in the county jail for not more than 1 year, and in addition, shall be fined not more than $1,000; but the penalties for the subsequent offenses relating to possession of marihuana shall be the same as specified in the first sentence of this section 258(47)(a)." Possession of marijuana for personal use is a lesser included offense under an indictment charging possession of marijuana. Van Nostrand v. State, 56 Ala.App. 141, 319 So.2d 760; Butts v. State, Ala.Cr. App., 346 So.2d 497. Where marijuana is for personal use only the crime is a misdemeanor for the first offense, otherwise, it is a felony. Palmer v. State, 54 Ala.App. 707, 312 So.2d 399, reversed on other grounds. The degree of possession whether a felony or misdemeanor depends upon the use of the prohibited substance. Powers v. State, 49 Ala.App. 690, 275 So.2d 369, reversed on other grounds. The burden of proving that the possession was for personal use is a defensive matter and the burden of bringing himself within the misdemeanor exception of the act creating the offense was upon the appellant. 747 Fuller v. State, 39 Ala.App. 219,96 So.2d 829; Schenher v. State, 38 Ala.App. 573, 90 So.2d 234. See Johnson v. State, 51 Ala.App. 649, 288 So.2d 186; Corbin v. State, 55 Ala.App. 33, 312 So.2d 604, footnote 1, p. 34. In the present case the trial court specifically instructed the jury on three possible verdicts returnable under the indictment presented against this appellant. The three proposed verdicts given to the jury without an exception being noted by the appellant were: (1), "We, the jury find the defendant guilty of violation of the Alabama Uniform Controlled Substances Act." (2), "We, the jury, find the defendant guilty of possession of marijuana for his own personal use." (3), We the jury find the defendant not guilty." The burden of proving that the appellant did not possess the marijuana for his personal use was not on the State. It was the duty of the appellant to bring himself within that exception in the statute. There is no evidence from which the jury might conclude beyond a reasonable doubt that the appellant's possession was in fact for his personal use. We are of the opinion that the evidence was sufficient to sustain the conviction, and the motion to exclude was properly overruled. II The appellant also maintained that the verdict of the jury was not sufficiently definite to allow an entry and pronouncement of judgment on the law. Counsel argues that the indictment charged the defendant with a general violation of the Alabama Uniform Controlled Substances Act, which defines violations and punishments for both felonies and misdemeanors. Counsel insists that where the indictment charges a felony in one count and a misdemeanor in another, a general verdict is without effect and the court is without authority to pronounce judgment. In Blount v. State, 49 Ala. 381, the Supreme Court ruled that where a verdict merely ascertained the defendant's guilt without more it is properly construed to mean guilty as charged in the indictment and authorizes the pronouncement of sentence. The court reasoned: "The verdict was responsive to the issue, ascertained and declared the guilt of the appellants, and authorized the judgment rendered. That the words `as charged in the bill of indictment,' or words of similar import, are not added to the finding of guilty, does not render the verdict incomplete. The law supplied them by referring the finding to the indictment, and the offence therein charged." In Ramsey v. State, 43 Ala.App. 617, 197 So.2d 763, this court said that no requirement exists for the jury to indicate by its verdict whether a defendant is guilty of a felony or a misdemeanor and, in fact, it is without authority to so specify in its verdict. This court in Russell v. State, 231 Ala. 297, 165 So. 255, further stated: "The verdict will be referred to the indictment, without adding `as charged in the indictment,' or other like recital." In the present case the single count indictment was framed under the Alabama Uniform Controlled Substances Act and was an indictment for a felony. Even though the penalty provision of § 258(47)(A), of the act provides for an exception which is a partial defense it does not create separate degrees of the offense. The exception relates to the first time conviction for possession of marijuana for personal use and as such would not make the general verdict form as used in Isbell v. State, 54 Ala.App. 85, 304 So.2d 904, defective in the present case. Therefore a general verdict refers to the felony indictment and the form used in this case was sufficient to warrant sentencing under the felony provisions of the act. III The appellant insists that his failure to object at trial to a faulty verdict does not waive his right to have error corrected on appeal. He argues that this court has the *748 right to notice errors of the lower court when an error is very plain and it is necessary to meet the ends of justice. Swindle v. State, 50 Ala.App. 403, 279 So.2d 574. No objection was interposed to the reception of the verdict by the trial counsel but it is assigned as error on this appeal by new and retained counsel. In our judgment, the verdict in this case is not so unintelligible as to render it invalid and one need not speculate on what the jury intended to do. The intention of the jury can be gleaned from the choice of verdicts they had before them and the verdict ultimately rendered. See Vol. 23A of C.J.S. Criminal Law § 1416. IV The appellant's motion to exclude the State's evidence on the grounds that a prima facie case was not established and his later motion for a new trial were each properly overruled. There are three essential elements necessary for the proof of possession of controlled substances. Those elements are: " . . . (1) actual or potential physical control (2) intention to exercise dominion and (3) external manifestation of intent and control." Cook v. State, Ala.Cr.App., 341 So.2d 183, citing DeGruy v. State, 56 Ala.App. 521, 323 So.2d 406. The law seems clear that when the presence of the accused at the scene is established along with evidence of his knowledge of the presence of the prohibited substance which can be shown circumstantially, the issue of the defendant's guilt should be submitted to the jury. Radke v. State, 292 Ala. 290, 293 So.2d 314; Parks v. State, 46 Ala.App. 722, 248 So.2d 761; Daniels v. State, 49 Ala.App. 654, 275 So.2d 169; Fields v. State, Ala.Cr.App., 333 So.2d 861. After reviewing the evidence submitted at trial, a substantial portion of which is recited above, it is our judgment that the requirements set forth in Cook v. State, supra, and Radke v. State, supra, were met. Legal evidence was presented to the jury from which they could by fair inference find the defendant guilty. The existence of such evidence is a question of law and its weight and probative value is for the jury. Under these circumstances, this court has no authority to disturb the verdict. Haggler v. State, 49 Ala.App. 259, 270 So.2d 690. No error appearing in the record, this case is due to be affirmed. AFFIRMED. All the Judges concur.	{ "pile_set_name": "FreeLaw" }
Case: 15-30968 Document: 00513588407 Page: 1 Date Filed: 07/12/2016 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit No. 15-30968 FILED Summary Calendar July 12, 2016 Lyle W. Cayce Clerk UNITED STATES OF AMERICA, Plaintiff-Appellee v. BRANDI ALYSHA PINNER, Defendant-Appellant Appeal from the United States District Court for the Western District of Louisiana USDC No. 5:14-CR-5-1 Before DAVIS, JONES, and GRAVES, Circuit Judges. PER CURIAM: * In 2013, Brandi Alysha Pinner pleaded guilty to aiding and abetting the distribution of methamphetamine and was sentenced to 15 months of imprisonment and three years of supervised release. Pinner has appealed the district court’s judgment revoking her supervised release and sentencing her to 12 months of imprisonment. Pinner contends that the district court * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. Case: 15-30968 Document: 00513588407 Page: 2 Date Filed: 07/12/2016 No. 15-30968 improperly considered the factors listed in 18 U.S.C. § 3553(a)(2)(A) in determining her revocation sentence. A properly preserved objection to a revocation sentence is reviewed under the plainly unreasonable standard. United States v. Warren, 720 F.3d 321, 326 (5th Cir. 2013). However, because the instant objection was not asserted in the district court, our review is limited to plain error. See id. “To prevail on plain error review, a defendant must show that an error occurred, that the error was clear or obvious, and that the error affected his substantial rights.” United States v. Walker, 742 F.3d 614, 616 (5th Cir. 2014). If those factors are established, the decision to correct the forfeited error is within the court’s sound discretion. Id. In determining whether to revoke a term of supervised release, the district court must consider the factors set forth in 18 U.S.C. § 3553(a)(1), (a)(2)(B)-(D), and (a)(4)-(7). 18 U.S.C. § 3583(e); see United States v. Miller, 634 F.3d 841, 844 (5th Cir. 2011). “Missing from this list is § 3553(a)(2)(A), which allows a court to impose a sentence that reflects ‘the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.’” Miller, 634 F.3d at 844 (quoting § 3553(a)(2)(A)). This court has held that “[w]hen sentencing a defendant under § 3583(e), a district court may not consider § 3553(a)(2)(A) because Congress deliberately omitted that factor from the permissible factors enumerated in the statute.” Miller, 634 F.3d at 844. After Miller, this court clarified that a sentencing error occurs when an impermissible consideration is a dominant factor in the court’s revocation sentence, but not when it is merely a secondary concern or an additional justification for the sentence. See Walker, 742 F.3d at 616. In setting forth its reasons at the revocation hearing, the district court first cited a permissible factor set forth in § 3553(a)(1), stating that “the history 2 Case: 15-30968 Document: 00513588407 Page: 3 Date Filed: 07/12/2016 No. 15-30968 and characteristics of the defendant” justify the above-guidelines one-year revocation sentence. The court went on to cite § 3553(a)(2)(A) before stating that Pinner’s “offenses are serious,” that she was, “as part of the revocation proceeding, receiv[ing] just punishment” of 12 months, and that her prevarications and inconsistent statements to the court and during the investigation of her medical condition “justify a one-year sentence in order to promote respect for the law.” The court twice described the revocation sentence as “pure punishment” and stated that Pinner “will be punished for the violations and the inability to follow rules and the false information that she has supplied to this Court” regarding her medical condition. Even assuming that the district court plainly erred by making the § 3553(a)(2)(A) considerations a dominant factor in imposing the revocation sentence and that this error affected Pinner’s substantial rights, this court is not required to correct the forfeited error. See Walker, 742 F.3d at 616. Under the fourth prong of plain-error review, this court “has the discretion to remedy the error—discretion which ought to be exercised only if the error seriously affects the fairness, integrity or public reputation of judicial proceedings.” United States v. Rivera, 784 F.3d 1012, 1018 (5th Cir.), reh’g denied, 797 F.3d 307 (5th Cir. 2015) (internal quotation marks and citation omitted) (emphasis in original). “In analyzing the fourth prong, we look to the degree of the error and the particular facts of the case to determine whether to exercise our discretion.” United States v. Prieto, 801 F.3d 547, 554 (5th Cir. 2015) (internal quotation marks and citation omitted). “In the past, we have declined to remedy some errors that may have caused sentence increases.” Rivera, 784 F.3d at 1018-19, n.3 (collecting cases). “[T]he goal of revocation is to punish a defendant for violating the terms of the supervised release.” Miller, 634 F.3d at 843. The Sentencing Manual 3 Case: 15-30968 Document: 00513588407 Page: 4 Date Filed: 07/12/2016 No. 15-30968 contemplates a distinction “between punishment for the offense constituting the supervised release violation[] and sanctioning the violation itself.” Rivera, 797 F.3d at 308-09. “Drawing a (very) fine line,” the Guidelines Manual states that “the revoking court should not sentence the defendant with an aim to punish the offense that constitutes the supervised release violation” but that “the district court is instead punishing the defendant’s breach of the court’s trust.” Rivera, 797 F.3d at 309. “[T]he Manual also states that ‘the nature of the conduct leading to the revocation [may] be considered in measuring the extent of the breach of trust.’ Id. (quoting U.S.S.G. Ch. 7, Pt. A, intro. comment. (U.S. Sentencing Comm’n 2014)). In the instant case, the transcript of the revocation hearing indicates that the district court was focused not on punishing Pinner for offenses alleged in the revocation petition, but upon sanctioning her for the breaches of trust exemplified by her repeated failures to comply with her supervised release conditions and her misrepresentations to the court. See Rivera, 797 F.3d at 308-09. Although it may have erred in articulating the reasons for its determination, the district court was attempting to effectuate the appropriate goal of sanctioning Pinner’s supervised release violations and breaches of trust. See Miller, 634 F.3d at 843-44; Rivera, 797 F.3d at 308-09; U.S.S.G. Ch. 7, Pt. A, intro. comment. As the particular facts of this case thus indicate only a small degree of error that does not seriously affect the fairness, integrity, or public reputation of judicial proceedings, we will not exercise our discretion to remedy it. See Prieto, 801 F.3d at 554; Rivera, 784 F.3d at 1018-19. The judgment is AFFIRMED. 4	{ "pile_set_name": "FreeLaw" }
Case: 09-40797 Document: 00511149437 Page: 1 Date Filed: 06/22/2010 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED June 22, 2010 No. 09-40797 Conference Calendar Lyle W. Cayce Clerk UNITED STATES OF AMERICA, Plaintiff-Appellee v. AARON TABLEROS-MONTOYA, Defendant-Appellant Appeal from the United States District Court for the Southern District of Texas USDC No. 5:09-CR-608-1 Before JOLLY, STEWART, and OWEN, Circuit Judges. PER CURIAM:* The Federal Public Defender appointed to represent Aaron Tableros- Montoya (Tableros) has moved for leave to withdraw and has filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967). Tableros has not filed a response. Our independent review of the record and counsel’s brief discloses no nonfrivolous issue for appeal. Accordingly, counsel’s motion for leave to withdraw is GRANTED, counsel is excused from further responsibilities herein, and the APPEAL IS DISMISSED. See 5 TH C IR. R. 42.2. * Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR . R. 47.5.4.	{ "pile_set_name": "FreeLaw" }
7 So.3d 526 (2009) Lakeary HECK, Petitioner, v. STATE of Florida, Respondent. No. SC07-2132. Supreme Court of Florida. March 19, 2009. Carey Haughwout, Public Defender, and Ellen Griffin, Assistant Public Defender, Fifteenth Judicial Circuit, West Palm Beach, FL, for Petitioner. Bill McCollum, Attorney General, Tallahassee, FL, August A. Bonavita, Assistant Attorney General, West Palm Beach, FL, for Respondent. PER CURIAM. We have for review Heck v. State, 966 So.2d 515 (Fla. 4th DCA 2007), in which the Fourth District Court of Appeal relied upon its decision in Yisrael v. State, 938 So.2d 546 (Fla. 4th DCA 2006) (en banc), disapproved in part, 993 So.2d 952 (Fla. 2008), and certified conflict with the First District Court of Appeal's decision in Gray v. State, 910 So.2d 867 (Fla. 1st DCA 2005). We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. We stayed proceedings in this case pending our disposition of Yisrael, in which we: (1) approved the decision of the First District in Gray, and (2) disapproved the reasoning and rule of law articulated by the Fourth District in its underlying decision, but ultimately approved the result reached by that court on other grounds. See Yisrael v. State, 993 So.2d 952, 960-61 (Fla.2008). We subsequently issued an order directing the State to show cause why we should not exercise jurisdiction, summarily quash the decision under review, and remand for reconsideration in light of our decision in Yisrael. In response, the State asserts that documents submitted during sentencing complied with this Court's Yisrael decision. Our review of the facts presented within the four corners of the decision below reveals that the Fourth District addressed a "Certification of Records," which was submitted along with "the accompanying pages of DOC computer print-outs to establish the predicates for [prison-releasee-reoffender] sentencing." 966 So.2d at 518 (emphasis supplied). The method used to *527 establish Heck's status as a prison-releasee reoffender thus complied with the analysis provided by the First District in Desue v. State, 908 So.2d 1116, 1117 (Fla. 1st DCA 2005), Gray, 910 So.2d at 869-70, and Parker v. State, 973 So.2d 1167, 1168-69 (Fla. 1st DCA 2007), review denied, No. SC07-1847, 1 So.3d 173, 2009 WL 427313 (Fla. Feb. 19, 2009), each of which was decided prior to Heck. As a result, in Heck, there was no need to certify conflict. Accordingly, we grant the petition for review and, as we did in Yisrael, approve the ultimate result reached by the Fourth District Court of Appeal below, but disapprove its reliance upon the rule expressed in Yisrael v. State, 938 So.2d 546 (Fla. 4th DCA 2006), because the business-records certification provided in this case was used as a permissible means of authenticating an attached Crime and Time Report. See Yisrael, 993 So.2d at 960-61; see also Smith v. State, 990 So.2d 1162, 1164-65 (Fla. 3d DCA 2008); Parker, 973 So.2d at 1168-69. It is so ordered. QUINCE, C.J., and PARIENTE, LEWIS, CANADY, POLSTON, and LABARGA, JJ., concur.	{ "pile_set_name": "FreeLaw" }
328 N.W.2d 789 (1983) 213 Neb. 330 Marian G. PFLASTERER, Appellant, v. Sam KOLIOPOULOS, Appellee. No. 81-755. Supreme Court of Nebraska. January 14, 1983. Ben F. Shrier, Omaha, for appellant. Martin A. Cannon and Cynthia G. Irmer of Matthews, Cannon & Riedmann, P.C., Omaha, for appellee. 790 KRIVOSHA, C.J., BOSLAUGH, McCOWN, CLINTON, WHITE, HASTINGS, and CAPORALE, JJ. CAPORALE, Justice. This is the third in a series of cases involving the estate of Theodore N. Ganaros, deceased (Ganaros). In the first case, Pflasterer v. Omaha Nat. Bank, 201 Neb. 427, 268 N.W.2d 104 (1978), we determined that an agreement existed between Ganaros and his daughter Marian G. Pflasterer, plaintiff-appellant in the instant appeal, to will all but $28,000 of decedent's estate to Pflasterer. We held she was entitled to specific performance of that agreement and impressed a trust on the assets of the estate for Pflasterer's benefit. In the second case, Omaha Nat. Bank v. Koliopoulos, 204 Neb. 752, 285 N.W.2d 496 (1979), hereinafter referred to as Koliopoulos I, we rejected the executor's effort to set aside the transfer by Ganaros of his 255 shares of the capital stock of Ted's Enterprises, Inc., (all of the shares owned by Ganaros) to his nephew Sam Koliopoulos, the defendant-appellee herein. We stated that Ganaros was competent to carry out his "long-held desire to see that his nephew eventually owned all shares of Ted's Enterprises, Inc." Id. at 753-54, 285 N.W.2d at 498. We observed that the subject stock transfer occurred after the making of the contract which we enforced in the first case, and specifically stated we did not decide, the issue not being presented, any rights as between Pflasterer and Koliopoulos. In this action Pflasterer seeks to impress a constructive trust on the 255 shares of capital stock in Ted's Enterprises, Inc., which were the subject of Koliopoulos I. Pflasterer asserts herein that the transfer occurred without adequate consideration, that Koliopoulos was therefore not a bona fide third party purchaser, and thus he should be declared to be a constructive trustee in equity for Pflasterer's benefit. Koliopoulos answered with a number of alternative defenses, including the affirmative defense that, as a result of Koliopoulos I, this action is barred by the doctrine of res judicata. The District Court found for Koliopoulos on the general issues of the propriety of the transfer of the capital stock; the sufficiency of consideration, if required; and the presence or absence of intent to defraud Pflasterer. The trial court dismissed Pflasterer's petition and this appeal followed. Pflasterer assigns as error the findings that her father could properly dispose of the stock at issue in his company during his lifetime without receiving fair and adequate consideration therefor; that the conveyance from her father to Koliopoulos did not constitute a fraudulent conveyance with an intent to defraud; and, finally, that there was fair and adequate consideration to support the transfer at issue. We conclude, for the reasons set forth hereinafter, that this case is barred by virtue of the final judgment rendered in Koliopoulos I. We, therefore, affirm the trial court's judgment. Such disposition makes unnecessary any consideration of Pflasterer's assignments of error. The record establishes Koliopoulos I was instituted by the executor of Ganaros' estate at Pflasterer's specific and written behest. Not only are the very same shares of capital stock of Ted's Enterprises, Inc., involved in both Koliopoulos I and this case, but among the reasons given by Pflasterer to the executor for instituting Koliopoulos I and seeking to set aside the transfer was the claim that there existed "no real consideration for the transfer." (Emphasis in original.) The Koliopoulos I petition alleged, among other things, that there had been no consideration for the transfer and prayed for an order directing Koliopoulos to "deliver, assign, transfer and convey" the shares of capital stock to Pflasterer. The bill of exceptions in Koliopoulos I, received in evidence in this case, establishes that although Pflasterer's evidence therein was directed toward her father's mental and physical condition at the relevant times, Koliopoulos' evidence bore on the consideration issue as well, at least to the extent of touching upon the financial condition of Ted's Enterprises, Inc., and the inducements 791 proffered by Ganaros to Koliopoulos at certain relevant times in order to persuade Koliopoulos to return to the business operated by Ted's Enterprises, Inc. However, as will be seen by the body of case law discussed infra, it matters not whether the evidence in Koliopoulos I actually addressed consideration as an issue. Our most recent review of the elements of res judicata is found in Brommer v. City of Hastings, 212 Neb. 367, 322 N.W.2d 787 (1982). We said therein that the scope of the res judicata bar encompasses not only the issues actually litigated in the prior proceeding but also those issues which could have been raised. We also said that any right, fact, or matter in issue and directly adjudicated in a prior proceeding, or necessarily involved in the determination of such action before a competent court in which the judgment or decree was rendered upon the merits, is conclusively settled by such a judgment and may not again be litigated between the parties or their privies, whether the claim, demand, purpose, or subject matter of the two suits would or would not be the same. In the earlier case of DeCosta Sporting Goods, Inc. v. Kirkland, 210 Neb. 815, 316 N.W.2d 772 (1982), we had said that a right or fact in issue and directly adjudicated in an action in which a judgment has been rendered upon the merits is, by that judgment, conclusively settled and may not again be relitigated between the parties and their privies. We also said that, generally, the rule of res judicata is grounded upon public policy requiring a termination of litigation and on the general belief that a person should not be vexed more than once for the same cause of action. In Vantage Enterprises, Inc. v. Caldwell, 196 Neb. 671, 244 N.W.2d 678 (1976), we held that a suit on express contract effectively barred a subsequent action on quantum meruit based upon the same facts and evidence. We said therein that to constitute res judicata, the former suit must be founded on the same cause of action as the latter suit and that the general test to determine the identity of causes of action is whether the same evidence will sustain both the present and former actions. The above-cited cases teach that a former action bars all those issues which could have been raised upon the same facts sought to be presented in a subsequent action. Therefore, if Pflasterer and the executor of Ganaros' estate were privies, or if Pflasterer may be otherwise bound by the bank's action in bringing Koliopoulos I, then res judicata will necessarily bar this proceeding. Even if the same issues had not been raised and evidence thereon adduced in both suits, such could have been done since the general aim of Koliopoulos I was to set aside the inter vivos transfer of the subject capital stock by the deceased Ganaros to Koliopoulos, and it is that very same result, based upon the very same set of facts, which is sought in the instant case. Although it is true that Omaha National Bank in Koliopoulos I was acting as an executor, for purposes of that suit per se the bank is more properly characterized as having acted as a trustee for the benefit of Pflasterer. This was by virtue of the fact that in Pflasterer v. Omaha Nat. Bank, 201 Neb. 427, 268 N.W.2d 104 (1978), we found said bank to be a constructive trustee of the assets of the estate for the benefit of Pflasterer. "It is a well-established principle of law that a trustee, who holds title to property, may defend for the beneficiary; and, when the title is attacked and the trustee defends with the knowledge and consent of the beneficiary, the beneficiary will be concluded by the result of the litigation to the same extent as the trustee is concluded by it.... [The beneficiary] is as effectually bound by the decisions in the two former cases as if he had been a party thereto." Van Etten v. Passumpsic Savings Bank, 79 Neb. 632, 637, 113 N.W. 163, 165 (1907). Pflasterer not only had knowledge of and gave consent to trustee Omaha National Bank to prosecute Koliopoulos I but in fact served an express written demand upon it to so do; she is necessarily bound by that proceeding and may not now litigate issues which could have properly been raised, and in fact were raised, at that time. This is but a variation on the more general *792 principle enunciated in Drainage District v. Kirkpatrick-Pettis Co., 140 Neb. 530, 538, 300 N.W. 582, 587 (1941), in which we stated: "`In many instances, persons not made nominal parties to the action or proceeding are, nevertheless, represented by such parties, and therefore are, in the absence of collusion, bound by the judgment....'" In arguing for a contrary result Pflasterer apparently relies on our observation in Koliopoulos I that "No issue being here presented as to any rights as between Pflasterer and Koliopoulos, none is decided." 204 Neb. at 755, 285 N.W.2d at 498. Her reliance is misplaced. To say we do not decide an issue which is not presented is not to say that its presentation in a future action may not be barred by applicable legal principles. AFFIRMED. CLINTON, J., dissents.	{ "pile_set_name": "FreeLaw" }
985 A.2d 538 (2009) 411 Md. 741 KIM HARGETT v. STATE. Pet. Docket No. 418. Court of Appeals of Maryland. Denied December 18, 2009. Petition for writ of certiorari denied.	{ "pile_set_name": "FreeLaw" }
689 F.2d 188 Allstate Ins. Co.v.Young 80-7829 UNITED STATES COURT OF APPEALS Fifth Circuit 9/27/82 1 S.D.Ga. REVERSED 2 --------------- Fed.R.App.P. 34(a); 5th Cir. R. 18.	{ "pile_set_name": "FreeLaw" }
897 F.2d 527 U.S.v.Craver* NO. 89-2555 United States Court of Appeals,Fifth Circuit. FEB 22, 1990 1 Appeal From: E.D.Tex. 2 AFFIRMED. * Fed.R.App.P. 34(a); 5th Cir.R. 34.2	{ "pile_set_name": "FreeLaw" }
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 07a0224p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________ X Petitioner-Appellant, - PATRICO RAMONEZ, - - - No. 06-1852 v. , > MARY BERGHUIS, - Respondent-Appellee. - N Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 05-71488—George C. Steeh, District Judge. Argued: May 30, 2007 Decided and Filed: June 18, 2007 Before: DAUGHTREY and MOORE, Circuit Judges; SHADUR, District Judge.* _________________ COUNSEL ARGUED: Jacqueline J. McCann, STATE APPELLATE DEFENDER OFFICE, Detroit, Michigan, for Appellant. Raina I. Korbakis, OFFICE OF THE ATTORNEY GENERAL, Lansing, Michigan, for Appellee. ON BRIEF: Jacqueline J. McCann, STATE APPELLATE DEFENDER OFFICE, Detroit, Michigan, for Appellant. Raina I. Korbakis, OFFICE OF THE ATTORNEY GENERAL, Lansing, Michigan, for Appellee. _________________ OPINION _________________ SHADUR, District Judge. Patrico Ramonez (“Ramonez”) appeals the district court’s denial of his petition for a writ of habeas corpus naming his custodian, Mary Berghuis (“Berghuis”), as respondent. Ramonez is in custody pursuant to a conviction in Michigan state court. As he did on direct appeal, Ramonez argues that his trial counsel W. Frederick Moore (“Moore”) failed to investigate and call at trial three witnesses to the alleged crime, Charles Tames (“Charles”), Rene Tames (“Rene”) and Joel “Big Bun” Hackett (“Hackett”). Ramonez asserts that Moore’s performance was thus constitutionally deficient, prejudicing his defense in violation of the Sixth Amendment (as applied to the states through the Fourteenth). * The Honorable Milton I. Shadur, United States District Judge for the Northern District of Illinois, sitting by designation. 1 No. 06-1852 Ramonez v. Berghuis Page 2 Both the state trial court and the Michigan Court of Appeals found that Moore’s representation of Ramonez met the constitutional standard for effective assistance of counsel set out by Strickland v. Washington, 466 U.S. 668 (1984). Because it is clear that the Michigan Court of Appeals’ application of the Strickland standard for a defense counsel’s duty to investigate was unreasonable, we reverse the judgment of the district court and remand with instructions to grant a conditional writ of habeas corpus. Background On March 13, 2001 a Michigan state jury convicted Ramonez of third-degree home invasion (Mich. Comp. Laws §750.110a(4)),1 assault with intent to do great bodily harm (id. §750.84) and aggravated stalking (id. §750.411h). Those convictions arose from a complaint by Christina Fox (“Fox”), Ramonez’s ex-girlfriend and mother of two of his children. Fox testified at trial2 that at 4:30 or 5 a.m. April 21, 2000 she and the two children were asleep in the living room of her house when she heard a knock on the door. After cracking the front door, Fox saw that it was Ramonez knocking. As her relationship with Ramonez had been violent and they had separated some years earlier, Fox became frightened upon seeing Ramonez and attempted to slam the door shut. Ramonez, however, forced the door open, knocking Fox to the ground in the process. According to Fox, she then found herself lying on the floor between the foyer and the living room, where Ramonez pinned her down, began to strangle her and threatened her life. By kicking Ramonez, Fox was able to free herself and take off running for the front door before he punched her again, knocking her over. Fox was nonetheless able to make it out to her front porch. Once outside she encountered Charles, Rene and Hackett at the bottom of the stairs to her porch. Attempting to flee, Fox lost her footing and fell on the stairs. Ramonez again pinned her to the ground, while one of the other three covered her mouth to muffle her screaming. Finally the3 altercation ended after Fox saw lights go on nearby, and the four men let her go and drove away. After the prosecution rested, Ramonez and Moore brought before the judge their disagreement as to Moore’s decision not to call any witnesses on Ramonez’s behalf and Ramonez’s intention to testify despite Moore’s advice. Ramonez wanted to call Charles, Rene and Hackett to testify to his story of what happened that day. Ramonez complained that he had4 told Moore about those witnesses months earlier, but Moore had failed to communicate with them. Moore stated that it was his strategic decision not to call any witnesses, and the judge decided he was disinclined to interfere with counsel’s judgment. With no other witnesses in his defense, Ramonez felt compelled to testify on his own behalf. Ramonez testified that on the day in question he did go to Fox’s house to check on his children. He 1 In that respect the indictment had charged Ramonez with the more serious offense of first degree home invasion (id. §750.110a(2)). 2 Both this and the next paragraph set out the version of events as recounted by Fox, without the need for constant repetition of “according to Fox” or like language. 3 At trial the prosecution buttressed that testimony by Fox with the responding police officer’s testimony regarding bruising to Fox’s neck and shoulder as well as evidence of prior alleged incidents of domestic abuse by Ramonez against Fox. Additionally the prosecution offered testimony by Fox regarding later harassing phone calls by Ramonez to support the stalking charge. 4 Ramonez also wished to call his sisters as witnesses, but that issue is not furthered on this appeal. No. 06-1852 Ramonez v. Berghuis Page 3 claimed that Fox voluntarily invited him into her house, but once inside Ramonez did not see his kids and, believing that Fox appeared to be high, he became angry. Ramonez then pushed her against a wall--but he denied choking her--and Fox took off running out the front door. She then fell on the front steps, where Rene attempted to help her to her feet. Fox then ran off. After the jury’s guilty verdict, the trial court sentenced Ramonez to concurrent terms of 2 to 10 years for the home invasion conviction, 12 to 20 years for the assault charge and 2 to 10 years for the aggravated stalking conviction. Ramonez appealed on ineffective assistance of counsel grounds, asserting Moore’s failure to investigate and to call Rene, Charles and Hackett. To facilitate the evaluation of that claim, the Michigan Court of Appeals remanded the case to the district court for an evidentiary hearing. At the hearing Moore testified that he was aware of Rene, Charles and Hackett prior to trial, but he never made contact with them. Moore defended his decision not to call them based on what he characterized as his trial strategy to focus on the action inside Fox’s home. He believed that the three witnesses could not testify to that action because they were never inside the house. Moore’s plan had been to rely on cross-examination to point out discrepancies in Fox’s story and discredit her testimony. Even so, Moore did attempt to reach Charles (but only Charles) just three or four days before trial, but he did not succeed in speaking with him--the two simply exchanged phone messages. Each of Charles, Rene and Hackett testified at that hearing. Charles is Ramonez’s son, Rene his stepson and Hackett an acquaintance of the three other men from work. Each testified that the three were driving in a car with Ramonez on the night in question, ultimately arriving at Fox’s house. There was some inconsistency in their testimony: Rene remembered stopping at a bar first, while Charles did not remember if they made any other stops and Hackett’s recollection was that they did not make any other stops. Each then testified that he observed Ramonez go up to Fox’s front door, where Fox then invited him inside (each affirmatively stated that Ramonez did not force his way into the house). All three witnesses testified that even from their vantage point in the car they could see the interaction between Ramonez and Fox inside the house through the doorway--only Hackett allowed that he may have lost sight of them for some two minutes. Each said that he witnessed yelling and a physical altercation between Fox and Ramonez, but that Ramonez did not choke or punch Fox. All testified that the three men got out of the car and went up to Fox’s porch where the altercation was continuing outside the house. Their stories differed somewhat as to what then occurred outside the house, with Hackett simply saying that Fox ran off, Rene remembering Fox falling and one of them helping her up and Charles remembering having words with Fox and attempting to help her off the ground before she fled. All three affirmed that they would have been willing to testify even if the prosecutor had threatened to charge them as accessories to the crime. At the conclusion of the hearing the trial court denied the motion for a new trial on ineffective assistance of counsel grounds. Applying state law that mirrors the two-step Strickland analysis, the court found Moore’s decision not to call the witnesses reasonable because of his trial strategy to focus on what occurred inside the house and his expectation that the witnesses could not offer competent testimony in that regard, due to what he thought was their limited vantage point outside the house. And as to prejudice, the trial court found that Hackett “was not a particularly helpful witness” and that Rene was an “incredible witness,” so that the witnesses’ testimony could not have changed the outcome of the trial. As to Ramonez’s ineffective assistance of counsel claims, the Michigan Court of Appeals affirmed the trial court’s judgment on essentially the same reasoning (other claims made at the state level are not the subject of this federal habeas effort). Ramonez’s application for leave to appeal to No. 06-1852 Ramonez v. Berghuis Page 4 the Michigan Supreme Court was denied, making that intermediate appellate court opinion the 5final state court decision on his claims. On the ensuing collateral attack under 28 U.S.C. §2254, the district court below rejected Ramonez’s petition for a writ of habeas corpus, finding that the Michigan Court of Appeals’ decision was at least a reasonable application of Strickland. On August 14, 2006 the district court granted Ramonez’s motion for a certificate of appealability to this Court. AEDPA6 Review We review de novo a district court’s denial of a writ of habeas corpus (Dando v. Yukins, 461 F.3d 791, 795-96 (6th Cir. 2006)). And where as here the district court has reviewed only trial transcripts and other court records, any factual determinations by the district court are also reviewed de novo (id.). Federal court examination of a habeas petition by a prisoner in custody pursuant to a state court judgment is circumscribed by AEDPA, in this instance more specifically under this part of Section 2254(d): An application for a writ of habeas corpus on behalf of a person in custody pursuant to the judgment of a State court shall not be granted with respect to any claim that was adjudicated on the merits in State court proceedings unless the adjudication of the claim -- (1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States.... Under that first “contrary to” clause of Section 2254(d)(1), we may grant the writ only if the state court decision was based on a conclusion of law opposite to that reached in Supreme Court precedent (Dando, 461 F.3d at 796). And as to the other alternative, Williams v. Taylor, 529 U.S. 362, 413 (2000) teaches: Under the “unreasonable application” clause, a federal habeas court may grant the writ if the state court identifies the correct governing legal principle from [the Supreme] Court’s decisions but unreasonably applies that principle to the facts of the prisoner’s case. To issue a writ on that ground, the federal court must find the state court’s application of Supreme Court precedent “objectively unreasonable,” not merely “incorrect or erroneous” (Wiggins v. Smith, 539 U.S. 510, 520-21 (2003)). Finally, Section 2254(e)(1) requires us to presume that state court fact determinations are correct. To overcome that presumption, the statute requires the petitioner to demonstrate any state court error by clear and convincing evidence. Michigan Court of Appeals’ Application of Strickland Strickland, 466 U.S. at 687 sets forth the familiar two-prong test for evaluating a claim of ineffective assistance of counsel: To prevail the petitioner must establish both (1) that defense 5 Further citations to provisions of Title 28 will simply take the form “Section --.” 6 Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. No. 104-132, 110 Stat. 1214 (1996)(“AEDPA”). No. 06-1852 Ramonez v. Berghuis Page 5 counsel’s performance was constitutionally deficient and (2) that the deficient performance prejudiced the defense sufficiently to undermine the reliability of the trial (id.). That first element requires the petitioner to “show that counsel’s representation fell below an objective standard of reasonableness” (Strickland, 466 U.S. at 688), for which purpose we must (id. at 689)(internal quotation marks omitted)): indulge a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action might be considered sound trial strategy. And as to the prejudice element, Strickland, id. at 694 instructs: The defendant must show that there is a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome. For those purposes Combs v. Coyle, 205 F.3d 269, 278 (6th Cir. 2000) has held that “[b]oth the performance and prejudice components of the ineffectiveness inquiry are mixed questions of law and fact.” They are thus not findings of “historical facts” (McGhee v. Yukins, 229 F.3d 506, 513 (6th Cir. 2000)) that are subject to the Section 2254(e)(1) presumption of correctness for state court factual findings. As Ramonez does not dispute, the Michigan Court of Appeals correctly articulated the Strickland standard, so there is no issue under AEDPA’s “contrary to” Supreme Court precedent prong. Hence the only question is whether that court applied the Strickland standard reasonably in coming to its judgment that Moore’s investigation leading to his decision not to call the three witnesses, and that decision itself, were sufficient for constitutional purposes. On that score Ramonez asserts that Moore’s decision to limit (or more accurately, not to pursue at all until it was too late) any investigation regarding the three potential witnesses was objectively unreasonable, leading to an uninformed and therefore unreasonable decision not to call those witnesses at trial. Strickland, 466 U.S. at 690-91 set forth a defense counsel’s duty to investigate: As the Court of Appeals concluded, strategic choices made after thorough investigation of law and facts relevant to plausible options are virtually unchallengeable; and strategic choices made after less than complete investigation are reasonable precisely to the extent that reasonable professional judgments support the limitations on investigation. In other words, counsel has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary. In any ineffectiveness case, a particular decision not to investigate must be directly assessed for reasonableness in all the circumstances, applying a heavy measure of deference to counsel’s judgments. And Towns v. Smith, 395 F.3d 251, 258 (6th Cir. 2005) dispels any doubt that a lawyer’s Strickland duty “includes the obligation to investigate all witnesses who may have information concerning his or her client’s guilt or innocence.” In its effort to apply that standard, the district court stated that while it would have found Moore’s performance deficient due to his failure even to speak with the three witnesses before trial, it could not say that the Michigan Court of Appeals’ contrary conclusion was an unreasonable application of Strickland, thus making it unchallengeable under AEDPA. In so finding the district No. 06-1852 Ramonez v. Berghuis Page 6 court considered it within reason for the Michigan court to conclude, based on the information available to Moore before trial and in conformity with his chosen trial strategy, that Moore made a reasonable professional call not to interview the witnesses and not to call them at trial. Even given the required deference to the Michigan Court of Appeals, the district court’s restraint in those terms does not withstand analysis. As the district court’s opinion makes clear, the state court focused largely on the notion that Moore’s decision not to call the three witnesses was rooted in what it perceived to be a reasonable trial strategy--one of focusing on undermining Fox’s credibility as to what happened between her and Ramonez inside the house--and because the three witnesses were never inside the house, Moore thought that they could add little to that effort. But that belief was grounded on a fatally flawed foundation, for if Moore had only engaged in the minimal--and essential--step of interviewing the witnesses, he would have learned that they could testify as to what took place in the house, and that their testimony would have supported Ramonez’s version of events. That being so, the state court ignored the central teaching of Strickland, as reaffirmed by Wiggins, 539 U.S. at 522-23, that the investigation leading to the choice of a so-called trial strategy must itself have been reasonably conducted lest the “strategic” choice erected upon it rest on a rotten foundation. Towns, 395 F.3d at 258)(internal quotation marks omitted) made that same point: A purportedly strategic decision is not objectively reasonable when the attorney has failed to investigate his options and make a reasonable choice between them. In evaluating Moore’s decision to limit his investigation as to the three witnesses (or more precisely, not to investigate them at all), Berghuis contends that the decision not to interview the witnesses was reasonable in light of Fox’s testimony in the preliminary hearing that the assault occurred inside the house. On that basis she urges that Moore was justified in concluding, without bothering to speak to the witnesses, that they would have nothing to add to his case. But that argument is at odds with other crucial parts of the record. Months before trial Ramonez began insisting to Moore that the three witnesses were present at the time and could tell him what really happened at Fox’s house. At the same preliminary hearing on which Berghuis relies, Fox testified that Ramonez kicked in her door to gain entry to the house. Such asserted action was clearly not inside the house, such as to render the observers outside the house unable to verify or dispute the parties’ divergent versions. Moreover, Fox also testified at that same hearing that three men witnessed the assault continue outside on her front porch (even stating that one of them assisted Ramonez by covering her mouth to keep her from yelling). If Moore was seeking to show that Fox was embellishing her story of the altercation with Ramonez, why would he not also have found it useful to look into this part of her tale? With such information available to him, how could he rationally have concluded that neither Charles nor Rene nor Hackett could possibly have anything to add to Ramonez’s case? Of course the answer is he didn’t--at least not entirely. Instead, believing that Charles (at least) might be able to “shed light on” some fact issues, Moore did attempt to reach him--but only a few days before trial. Despite months of lead time, Moore just put off the effort until he did not leave himself enough time to actually reach Charles. At trial Moore had to concede that Charles, Rene and Hackett could have had something to add: I’m not going to say the nature of their testimony would not add. Because that suggests they don’t have anything at all to testify to. It’s my opinion that they could potentially add some information which would contradict what the complainant has testified to. No. 06-1852 Ramonez v. Berghuis Page 7 Having thus recognized the possibility that the three witnesses could provide testimony beneficial to Ramonez, it was objectively unreasonable for Moore not to interview them (or at least make reasonable efforts to interview them) before coming to his ultimate choice of trial conduct (see Towns, 395 F.3d at 259). In sum, the point is this: Constitutionally effective counsel must develop trial strategy in the true sense--not what bears a false label of “strategy”--based on what investigation reveals witnesses will actually testify to, not based on what counsel guesses they might say in the absence of a full investigation. Moore’s performance fell well on the wrong side of that line. Having thus successfully demonstrated that Moore’s decision to limit his investigation into the potential testimony of the three witnesses was constitutionally deficient (and that the state court’s conclusion to the contrary was objectively unreasonable), Ramonez must show a reasonable probability that but for that deficiency the outcome of the trial would have been different (Strickland, 466 U.S. at 694). To that end Ramonez points to multiple aspects of the three witnesses’ testimony at the ineffective assistance of counsel hearing to show that each could have benefitted his defense materially. First, each would have testified that rather than Ramonez forcing his way into Fox’s home, Fox opened the door and voluntarily invited Ramonez into the house. Such evidence as to permission to enter the premises would have gone directly toward negating the “breaking and entering” element of the home invasion crime of which Ramonez was ultimately convicted (see Mich. Comp. Laws. Ann. §750.110a(1)(c) and 110(a)(4); see also People v. Brownfield, 548 N.W.2d 248, 249-50 (Mich. Ct. App. 1996)). Attacking that element would have been a vital point to focus on at trial. Indeed, Ramonez points out that the jury likely questioned the breaking and entering issue: It sent a note to the judge requesting testimony on whether or not Ramonez forced his way into the house, then a later note stating that it was deadlocked on the home invasion count.7 Second, each of the three witnesses testified that despite his position outside the house, he was able to see most (if not all) of the action between Ramonez and Fox that occurred just inside the open front door. And third, each of the witnesses was in a position to challenge Fox’s testimony as to the physical altercation between herself and Ramonez outside the house on the front porch. With the trial in principal part boiling down to a credibility contest between Fox and Ramonez, there is at least a reasonable probability that the witnesses’ corroboration of Ramonez’s story and their contradiction of Fox’s on those points could have influenced the jury. In that respect the Michigan Court of Appeals simply observed in perfunctory fashion that “the three witnesses would not have provided testimony that would have changed the trial’s outcome.” In spite of the obviously helpful testimony of the three witnesses (if believed by a jury), Berghuis contends that Section 2254(e)(1) demands that we defer to the Michigan trial court’s assessment of the lack of credibility and helpfulness of the three witnesses, assertedly undercutting any reasonable probability that the jury would have altered the verdict based on their testimony. But Section 2254(e)(1) does not support that proposition. Initially, we note that the state trial court made an explicit adverse credibility finding only as to one of the three witnesses, Rene. Its statement that Hackett was “not a particularly helpful witness” reads more like an observation on the substance of Hackett’s testimony than a statement about his credibility. And the court did not even speak about Charles. Nothing more in the state court opinions can be characterized as factual findings (see Wiggins, 539 U.S. at 530-31). In sum, 7 As to the first question the judge properly instructed the jury to rely on its collective memory of the issue, and as to the second issue the judge provided a standard deadlock instruction. No. 06-1852 Ramonez v. Berghuis Page 8 it cannot be said that the state court made a factual determination that would arguably demand deference from this court as to all three witnesses. More importantly, a state court’s blanket assessment of the credibility of a potential witness--at least when made in the context of evaluating whether there is a reasonable probability that the witness’s testimony, if heard by the jury, would have changed the outcome of the trial--is not a fact determination within the bounds of Section 2254(e)(1). After all, what the state court has really done is to state its view that there is not a reasonable probability that the jury would believe the testimony and thus change its verdict. And in that regard Barker v. Yukins, 199 F.3d 867, 874 (6th Cir. 1999) has made it clear that our Constitution leaves it to the jury, not the judge, to evaluate the credibility of witnesses in deciding a criminal defendant’s guilt or innocence. In the context of deciding whether a defective self-defense jury instruction was harmless error, Barker, id. held that the state court crossed that line when it found the defective instruction had no consequence because the jury would not have believed the self-defense testimony of the defendant anyway. Whether to believe the defendant’s testimony on that score was an issue for the jury and not the judge. Our later decisions help demonstrate the difference between such credibility determinations that are for the jury and those appropriately made by state judges entitled to the Section 2254(e)(1) presumption. Examples of such deference to a judge’s assessment of credibility of witnesses include instances where credibility determinations are within a judge’s proper role, such as in assessing a juror’s impartiality at voir dire (Dennis v. Mitchell, 354 F.3d 511, 520 (6th Cir. 2003)) or in factual determinations at a Miranda suppression hearing (Hill v. Brigano, 199 F.3d 833, 840-41 (6th Cir. 1999)). Or in the context of a Strickland evidentiary hearing, it is for the judge to evaluate the credibility of the criminal defendant and the former defense counsel in deciding what advice counsel had in fact given to the defendant during his trial, and such findings are entitled to the Section 2254(e)(1) presumption (see Sophanthavong v. Palmateer, 378 F.3d 859, 867 (9th Cir. 2004)). Those examples, involving credibility determinations within the judge’s province, are different in kind from a finding that a jury would not believe a witness’s testimony--what the state court effectively did here. While there would have been plenty of grist for the cross-examination mill as to Ramonez’s three witnesses, the question whether those witnesses were believable for purposes of evaluating Ramonez’s guilt is properly a jury question. As Matthews v. Abramajtys, 319 F.3d 780, 790 (6th Cir. 2003)(emphasis added) has stated: The actual resolution of the conflicting evidence, the credibility of witnesses, and the plausibility of competing explanations is exactly the task to be performed by a rational jury, considering a case presented by competent counsel on both sides. In the end, weighing the prosecution’s case against the proposed witness testimony is at the heart of the ultimate question of the Strickland prejudice prong, and thus it is a mixed question of law and fact not within the Section 2254(e)(1) presumption. Even though the jury could have discredited the potential witnesses here based on factors such as bias and inconsistencies in their respective stories, there certainly remained a reasonable probability that the jury would not have. Ramonez’s case was therefore prejudiced where their testimony would have helped corroborate his testimony and contradict that of complaining witness Fox (see Workman v. Tate, 957 F.2d 1339, 1346 (6th Cir. 1992)), but where counsel’s default in carrying out his constitutional obligations resulted in that testimony not being introduced at trial. All it would have taken is for “one juror [to] have struck a different balance” between the competing stories (Wiggins, 529 U.S. at 537).8 8 Wiggins was a death penalty case in which a single juror’s vote would have spared defendant’s life. In Ramonez’s case, of course, even a single juror’s holdout would have resulted in a hung jury rather than a conviction, while a jury’s unanimous striking of “a different balance” would have produced an acquittal. No. 06-1852 Ramonez v. Berghuis Page 9 Berghuis’ remaining arguments in claimed support of the reasonableness of the state court’s prejudice conclusion may be quickly set aside. Any assertion that Charles, Rene and Hackett would not have testified on Ramonez’s behalf in any event due to the prosecution’s threat to charge them as accessories if they showed up to testify is flatly belied by their affirmations under oath that they would have testified on Ramonez’s behalf--even under threat of prosecution. Finally, despite the weight of evidence supporting the prosecution’s case, it is simply unreasonable to say that leaving Ramonez hamstrung without the support of available corroborating witnesses in the swearing contest between himself and Fox did not prejudice his case. In short, we conclude that the state court’s judgment to the contrary was an unreasonable application of Strickland. Conclusion Because the Michigan Court of Appeals’ application of the Strickland standard was objectively unreasonable, the district court erred in failing to grant the writ. We therefore REVERSE the decision below and REMAND this case to the district court with instructions to grant a conditional writ of habeas corpus, giving the State of Michigan 120 days within which to provide Ramonez a new trial or, failing that, to release him.	{ "pile_set_name": "FreeLaw" }
885 A.2d 542 (2005) PENNSYLVANIA ORTHOPAEDIC SOCIETY On Behalf of Its Members and All Others Similarly Situated Individuals v. INDEPENDENCE BLUE CROSS, et al. Robert P. Good, M.D., On Behalf of Himself and All Others Similarly Situated v. Independence Blue Cross, QCC Insurance Company, Keystone Health Plan East, Inc., AmeriHealth HMO, Inc. and AmeriHealth Inc. John R. Gregg, M.D. and Vincent J. DiStefano, M.D., on Behalf of Themselves and All Others Similarly Situated v. Independence Blue Cross, QCC Insurance Company, Keystone Health Plan East, Inc., AmeriHealth HMO, Inc. and AmeriHealth, Inc. Appeal of: Objectors, Class Members and/or Enjoined Persons or Entities, the Medical Society of the State of New York, the South Carolina Medical Association, the Tennessee Medical Association, the Medical Society of New Jersey, Joseph Fallon, M.D., Terrence R. Malloy, M.D. and Bruce Zakheim, M.D. Appeal of: American Medical Association. Appeal of: Objectors, Martin D. Trichtinger, M.D., William W. Lander, M.D., Nancy S. Roberts, M.D., Beverly K. Dolberg, M.D. and the Pennsylvania Medical Society. Appeal of: Objector and Class Member Louis P. Bucky, M.D. Appeal of: Objector Class Member Rosalind Kaplan, M.D. Superior Court of Pennsylvania. Argued May 24, 2005. Filed October 12, 2005. 544 Joe R. Whatley, Jr., Birmingham, AL, for Class Members and/or Enjoined Persons, appellant. David H. Weinstein, Philadelphia, for Kaplan, appellee. Edward F. Mannino, Philadelphia, for Independence Blue, appellee. Peter J. Hoffman, Philadelphia, for Pennsylvania Medical Society, appellee. Philip H. Lebowitz, Philadelphia, for American Medical Association, appellee. David S. Senoff, Jerome M. Marcus and Jonathan Auerbach, Philadelphia, for Pennsylvania Orthopaedic Society, appellee. BEFORE: DEL SOLE, P.J., BENDER and PANELLA, JJ. OPINION BY DEL SOLE, P.J.: ¶ 1 Presented for our review are five consolidated appeals from a trial court order entered in a class action case. The order at issue made certain rulings regarding objections to a proposed class action settlement, membership in the class and the invalidity of prior timely "opt-outs." In addition the order granted a limited injunction enjoining certain communication to class members. Upon review we find appealable only that portion of the trial court order which granted the defendants' request to temporarily restrain communications. The remaining rulings of the trial court contained in the order, which are challenged by various parties in these appeals, were interlocutory and are not appealable. ¶ 2 The underlying action was commenced by the filing of three separate lawsuits against various health insurance companies or health maintenance organizations over a dispute regarding the appropriate reimbursements paid to health care providers for medical care provided to patient subscribers. The plaintiffs and defendants later jointly moved for preliminary approval of a class action settlement which the trial court granted, conditionally certifying the class for purpose of settlement. Notice was sent to the class and/or published advising members they could choose to opt out of the class action settlement agreement. Various individuals, practice groups and professional societies filed objections to the class action settlement. The defendants' filed an Opposition to Objection to the Class Action Settlement and a Motion to Invalidate Opt-Outs. In addition the defendants' motion sought approval of a corrective notice to certain class members and a temporary restraining order seeking to limit communications concerning the class settlement agreement. A fairness hearing was held following 545 which the trial court entered a multifaceted order which is the subject of this appeal. ¶ 3 The order dated April 22, 2004, granted certification of the class and approval of the settlement, overruling all objections to the settlement agreement. It further granted a motion to invalidate the election previously made by those who had chosen to opt out of the class. In accordance therewith it required the parties to disseminate correspondence and notice to those class members who had submitted a timely opt-out advising them that their prior opt-out had been invalidated and declared void and informing them of a new opportunity to opt out of the class during a period ending June 9, 2004. In accordance with the terms of the settlement agreement, if more than 6 percent of the settlement class members timely and properly exercised an opt-out, the released parties would have a right to terminate and withdraw from the settlement agreement. The order further provided that from its entry until midnight, June 9, 2004, certain named societies and associations and "all others acting by or through them and/or on their behalf" were "enjoined" from communicating with class members about the settlement unless the communication was first approved by the trial court. Order of Court, 5/22/04. Finally, the order provided that the trial court would continue to consider whether fees and costs should be paid to remedy prior improper communication to class members. Five appeals from this order were filed. ¶ 4 After the time for the second opt-out passed, the trial court entered an order dated September 1, 2004, captioned "Final Order Judgment and Discontinuance with Prejudice." Therein the history of the case was recounted, including the trial court's action and reasoning for invalidating prior opt-outs. The trial court order provided a definition of the settlement class and of the term "providers." The trial court ruled that there were 2,043 opt-outs submitted during the second opt-out period which were postmarked on or before June 9, 2004, and were signed and submitted by a class member who had timely submitted an opt-out during the first period. The trial court included the names of those class members who were to be excluded from the settlement agreement by virtue of their valid opt-outs as an attachment to its order. It then ruled that all other potential class members were to be included in the settlement class and to "be conclusively and forever bound by the Class Action Settlement Agreement." Order of Court, 9/1/04, at 6. The order further set forth a figure as the amount of attorneys' fees and costs recoverable and announced incentive awards to class representatives. No appeal was taken from this order. ¶ 5 Initially we address the appealability of the matter before us. The appeals in this matter were taken following the trial court's April 22, 2004, order ("the April order"). The April order was not final. While it approved the settlement agreement, it also invalidated the existing opt-outs and allowed for a new opt-out period. Depending on the number of individual members of the class who elected to opt out at the conclusion of the second opt-out period, the defendants had the ability to void the settlement agreement. Thus, the members of the class were not yet determined and the entire settlement agreement had the potential of being voided at the discretion of one of the parties upon notice of the number of valid opt-outs in the new period following the April order. Accordingly, the April order was not final and appealable pursuant to Pa.R.A.P. 341(b), as it did not terminate the action or dispose of all parties and all claims. 546 ¶ 6 Appellees argue that Pa.R.A.P. 905(a) mandates that the notices of appeal filed following the April order be considered timely and properly filed from the September 1, 2004, final order which followed. The Rule provides in pertinent part: A notice of appeal filed after the announcement of a determination but before the entry of an appealable order shall be treated as filed after such entry and on the day thereof. Pa.R.A.P. 905(a). ¶ 7 Appellees posit that the application of this Rule makes the instant appeals proper and timely. Appellees' position is untenable. The Rule does not abrogate the requirements of finality. Rather, it is applied in those situations where an appeal is filed after a trial court makes a final determination, but before the official act of entering judgment has been performed. In these circumstances the Rule acts to perfect a premature appeal. See Jones v. Rivera, 866 A.2d 1148, 1149 n. 1 (Pa.Super.2005) (applying Rule 905(a) to consider timely an appeal filed after the denial of post-trial motions where judgment was subsequently entered on the docket); Caruso v. Medical Professional Liability Catastrophe Loss Fund, 858 A.2d 620, 623 n. 5 (Pa.Super.2004) (deeming the appellants' premature appeal from denial of motion to mold the verdict timely filed on the date judgment was entered on the docket pursuant to the appellants' praecipe, citing Rule 905(a)); Sobien v. Mullin, 783 A.2d 795, 797 n. 1 (Pa.Super.2001) (finding an appeal filed following the denial of post-trial motions and an award of delay damages was perfected when judgment was entered on the docket). ¶ 8 In this case the April order was not an announcement of a final determination which required only the entry of a formal judgment to become appealable. Rather, the April order only preliminarily approved the settlement, which, as described above, was capable of being voided at the discretion of the defendants should the opt-outs exceed the stated percentage. The fact that the stated percentage of opt-outs was ultimately not reached and that the settlement agreement was not voided did not render the April order final and an appeal therefrom proper upon entry of the "final order" and "judgment" entered in September. Simply stated, the appeals in this matter were filed prematurely following a non-final order. Appellants' failure to file timely appeals following the entry of the final order in this matter in September forecloses appellate review of the trial court's ruling with the exception of that portion of the April order which limited communications in the matter. ¶ 9 Pennsylvania Rule of Appellate Procedure 311(a)(4) does permit interlocutory appeals as of right from an order which grants an injunction. The relevant part of the April order in this case states: Effectively immediately upon entry of this Order, and continuing thereafter until Midnight, June 9, 2004, the New Jersey Lawyers, medical societies/associations, including, but not limited to, the Pennsylvania Medical Society (hereinafter "PMS") and the Medical Society of New Jersey (hereinafter, "MSNJ"), and each of their partners, shareholders, attorneys, employees, agents, servants, representatives, members and all others acting by or through them and/or on their behalf are enjoined from communicating directly or indirectly or through or in concert with others with, or in any manner intended to reach, class members about the Class Action Settlement unless the communication is first approved by this court. Order of Court, 5/22/04, at ¶ 6 (footnote naming New Jersey Lawyers omitted). 547 ¶ 10 An order which grants a request to enjoin certain conduct, as was done by the trial court in the April order, is an interlocutory matter specifically authorized for appeal as of right by Rule 311(a)(4). Injunctive relief is considered an extraordinary equitable remedy and it is to be granted only where the moving party has established that immediate and irreparable harm, which cannot be compensated by damages, will result if the injunction is denied. DiLucente Corp. v. Pennsylvania Roofing Co., 440 Pa.Super. 450, 655 A.2d 1035, 1037 (1995) (citation omitted). Furthermore, the party seeking to enjoin certain conduct must demonstrate that greater injury would result by refusing the injunction than by granting it. Id. ¶ 11 The trial court found that the appropriate standard was met when it issued its order based on its finding that communications sent by certain lawyers and medical associates to members of the settlement class were false, misleading, and confusing, and that it was likely that the misleading communications were effective in procuring opt-outs. Trial Court Opinion, 5/22/04, at 99, 109. The trial court concluded that the limitation on speech imposed by its order would further the compelling interest of ensuring that the class members' decisions to participate or to opt out would be made based on an independent analysis of their own self interest. Id. at 113. The trial court decided that it had an obligation to ensure that the class was not influenced and that it had the authority under Pa.R.C.P. 1713 to impose a temporary and limited restraint on speech. ¶ 12 Pennsylvania Rules of Civil Procedure governing class actions allow for a trial court to make appropriate orders to control a case. Rule 1713 provides that notice to members of the class "may be given in such manner as the court may direct" "for the protection of the members of the class." Pa.R.C.P. 1713(a)(2). The explanatory comment to the rule notes that it "copies Federal Rule 23(d)," with the exception of a federal provision regarding an amendment of the pleadings. See Pa.R.C.P.1712, Explanatory Comment 1977. ¶ 13 A seminal case in which the United States Supreme Court discussed Federal Rule 23 is Gulf Oil Co. v. Bernard, 452 U.S. 89, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981). In Gulf Oil, the District Court had granted a temporary restraining order limiting communications between plaintiffs' counsel and the putative class, without making any findings of fact. The Supreme Court noted that "(b)ecause of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties." Id. at 100, 101 S.Ct. 2193. However, the Supreme Court ultimately reversed the District Court's order and ruled that the District Court abused its discretion where it made no factual findings and provided no evidence that it carefully weighed competing interests thus revealing no grounds to conclude that it was necessary or appropriate to impose the order. ¶ 14 The Supreme Court stated: [A]n order limiting communications between parties and potential class members should be based on a clear record and specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties. Id. at 102, 101 S.Ct. 2193. It ruled that a court may not exercise the power to restrict communication "without a specific record showing by the moving party of the particular abuses by which it is threatened." 548 Id. (citing Coles v. Marsh, 560 F.2d 186, 189 (3d Cir.1977)). ¶ 15 The trial court in the instant case held a hearing and then made a record finding that members of the settlement class were sent communications which were false, misleading and confusing. The trial court listed six categories of misleading communications, those which: (1) gave a false impression of the scope of relief provided by the settlement; (2) gave a false impression of the scope of the release; (3) made misleading comparisons to the settlement in another class action case; (4) failed to inform the class members of the drafters' pecuniary interest in the matter; (5) misrepresented that the communications were from a named defendant, AmeriHealth; and (6) failed to include the trial court's approved Notice and failed to provide contact information for counsel in the litigation. Trial Court Opinion, at 99. The trial court in its opinion set forth specific examples of troubling communications in each of the six categories. Id. at 100-108. ¶ 16 The Supreme Court in Gulf Oil recognized that misleading communications can have an adverse effect on the fair conduct of class action litigation. The Court quoted Waldo v. Lakeshore Estates, Inc. 433 F.Supp. 782, 790-91 (E.D.La. 1977), as stating: "[unapproved] communications to class members that misrepresent the status or effect of the pending action also have an obvious potential for confusion and/or adversely affecting the administration of justice." Gulf Oil, 452 U.S. at 101, 101 S.Ct. 2193. The trial court in this instance painstakingly identified the misleading communications which were sent in letters, facsimiles and through websites. It detailed how certain statements gave false impressions by not mentioning other relevant facts, thus leaving the recipient with an invalid and unfair description of the terms of the settlement agreement or of the source of the communication and/or its interest in the litigation. The trial court noted that other communications improperly implied a more advantageous source of relief was available in separate class action litigation. The trial court properly recognized that such conduct compromised the ability of class members to make an informed reasoned choice regarding their participation in the class and acceptance of the settlement. It noted the language of Georgine v. Amchem Prods., 160 F.R.D. 478, 496 (E.D.Pa. 1995) which found misleading one-sided attacks on the proposed settlement without any mention of its benefits, and communications which failed to reveal to the recipient the drafter's financial motive to obtain additional opt-outs. ¶ 17 Appellants challenge the specific findings made by the trial court and its ultimate conclusion that the conduct described warranted the restrictions imposed. Upon review of the trial court's detailed opinion, we find that it made findings based upon a careful examination of the particular claims of misconduct. It identified the challenged statements and those responsible for them and explained why they were particularly misleading under the circumstances of this case. We find no grounds upon which to disturb these findings of improper conduct, or the trial court's conclusion that its restriction on communication for the second opt-out period was warranted and acceptable both under the Rule and the Constitution. ¶ 18 "In general, an order limiting communications regarding ongoing litigation between a class and class opponents will satisfy first amendment concerns if it is grounded in good cause and issued with a `heightened sensitivity' for first amendment concerns." Kleiner v. First Nat'l Bank of Atlanta, 751 F.2d 1193, 1205 (11th 549 Cir.1985) (citations omitted.) The trial court in its opinion recognized that a determination of good cause must be made upon consideration of "the severity and likelihood of the perceived harm; the precision with which the order is drawn; the availability of less onerous alternatives and the duration of the order." Trial Court Opinion at 113 (citing Hampton Hardware Inc. v. Cotter & Co., 156 F.R.D. 630, 633 (N.D.Tex.1994) (citing Kleiner, 751 F.2d at 1206)). ¶ 19 Upon review we find the trial court engaged in a proper analysis and appropriately found good cause for the issuance of its order based upon the improper communications that had occurred. The trial court's order was limited in time and scope and provided that communications could be made upon review and approval of those communications by the court. Because a number of improper communications had occurred and there was appropriate concern for the integrity of the class, the trial court's order did not violate first amendment protections. ¶ 20 We are, however, troubled by claims made by Appellant, the American Medical Association ("the AMA"). The AMA acknowledges that it did not object to the class certification or the settlement and did not seek to intervene in the class action case. See Brief for Appellant AMA at 8. Yet, it contends that the trial court improperly impacted its first amendment rights by restricting its communications with class members. We would agree with the AMA that under the facts of this case the trial court was without authority to restrain the AMA's communications; however, we do not read the order to apply to it. The order limits certain societies and associations "and all others acting by or through them and/or on their behalf." The AMA states that it is the largest professional association of physicians in the country and is a not-for-profit corporation. Id. at 7. There is no indication that it acts on behalf of any of the organizations named in the court's order or through them. The AMA advises us that it refrained from sharing its opinion of the settlement with its members and elected not to print any stories about the settlement in its various publications because of the trial court's order. Id. at 11. We conclude that these restrictions were not warranted under the terms of the order. ¶ 21 Order affirmed. Motion to quash denied as moot.	{ "pile_set_name": "FreeLaw" }
222 S.W.3d 103 (2006) Dorothy HOOPER, Individually and as Representative of the Estate of Gayland W. Hooper, Deceased, Mark Hooper, Matthew Hooper, and Melissa Hooper, Appellants, v. Sudha N. CHITTALURU, M.D. and Arvind M. Pai, M.D., Appellees. No. 14-05-00058-CV. Court of Appeals of Texas, Houston (14th Dist.). June 29, 2006. 106 James E. Girards, Michael C. Engelhart, for appellants. Deanna Dean Smith, Oliver W. Sprott, Jr., Marvin C. Moos, Joel Randal Sprott, R. Brent Cooper, Diana L. Faust, William Joel Akins, Heather Jean Reynolds Johnson, for appellees. Panel consists of Chief Justice HEDGES and Justices YATES and GUZMAN. OPINION ON REHEARING LESLIE BROCK YATES, Justice. This appeal arises from a medical malpractice suit filed by appellants Dorothy Hooper, Individually and as Representative of the Estate of Gayland W. Hooper, Deceased, Mark Hooper, Matthew Hooper, and Melissa Hooper (collectively "Hooper") against appellees Sudha N. Chittaluru, M.D. and Arvind M. Pai, M.D.[1] The jury found that Dr. Chittaluru and Dr. Pai were not negligent but that Hooper was negligent in causing his own death. In two issues, Hooper claims the trial court abused its discretion in preventing him from calling Dr. Chittaluru's expert witness during his case in chief. We agree and reverse and remand for a new trial. FACTUAL AND PROCEDURAL BACKGROUND Gayland Hooper died in April 2002. Before his death, he was under the care of Dr. Chittaluru, an internist, and Dr. Pai, a cardiologist, for problems related to his heart and to high blood pressure. After his death, Hooper's family sued Dr. Chittaluru and Dr. Pai, alleging they caused Hooper's death through negligent treatment and by prescribing him Viagra. Pursuant to the trial court's scheduling order, Dr. Chittaluru designated Dr. Mark Lambert, a cardiologist, as an expert witness. In Dr. Lambert's initial report, consisting of one and a half pages, he concluded that Hooper died of heart disease and that Viagra was not implicated in his death. During Dr. Lambert's deposition, Hooper's counsel asked him several questions about other aspects of Dr. Chittaluru's and Dr. Pai's care of Hooper, and Dr. Lambert's testimony was largely favorable to Hooper. Before the deposition, Hooper 107 had cross-designated both defendants' experts in his response to requests for disclosure. The day after the deposition, Hooper supplemented his designation to include references to Dr. Lambert's deposition testimony. Soon thereafter, Dr. Pai moved to strike Dr. Lambert's testimony, arguing that Hooper failed to disclose Dr. Lambert's opinions in a timely manner. The trial court granted the motion, and at trial, the court upheld its prior ruling and prohibited Hooper from calling Dr. Lambert as a witness. At trial, Hooper presented evidence regarding the alleged negligence of Dr. Chittaluru and Dr. Pai through testimony from Dr. Steven Fugaro, an internist, as well as testimony from Hooper's family. Dr. Chittaluru and Dr. Pai defended their treatment of Hooper and presented evidence that Hooper caused his own death by failing to comply with some of their treatment recommendations and refusing to change his lifestyle. The jury found that Hooper alone was negligent, and this appeal followed. LEGAL STANDARDS We review a trial court's decision to exclude evidence for an abuse of discretion. Interstate Northborough P'ship v. State, 66 S.W.3d 213, 220 (Tex.2001); Frazier v. Havens, 102 S.W.3d 406, 410 (Tex. App.-Houston [14th Dist.] 2003, no pet.) To obtain reversal of a judgment based on error in the exclusion of evidence, the appellant must show (1) the trial court did in fact commit error and (2) the error probably resulted in an improper judgment. Interstate Northborough, 66 S.W.3d at 220; Frazier, 102 S.W.3d at 410. This usually requires a demonstration that the judgment turns on the excluded evidence. See Interstate Northborough, 66 S.W.3d at 220; Knox v. Taylor, 992 S.W.2d 40, 63 (Tex. App.-Houston [14th Dist.] 1999, no pet.). If the evidence is merely cumulative and does not concern a material issue dispositive of the case, then its exclusion is harmless error. See Interstate Northborough, 66 S.W.3d at 220; Knox, 992 S.W.2d at 63. In determining whether the trial court abused its discretion, we review the entire record. See Interstate Northborough, 66 S.W.3d at 220; Knox, 992 S.W.2d at 63. We must uphold the trial court's evidentiary ruling if there is any legitimate basis for doing so, even if that ground was not raised below. See State Bar of Tex. v. Evans, 774 S.W.2d 656, 658 n. 5 (Tex. 1989); Santos v. Comm'n for Lawyer Discipline, 140 S.W.3d 397, 401 (Tex.App.-Houston [14th Dist.] 2004, no pet.). Thus, we will examine all bases for upholding the trial court's judgment that are suggested in the record or urged by appellees. ANALYSIS A. Preservation of error. Dr. Pai argues that Hooper failed to preserve his complaint for appeal because his offer of proof was defective. Rule 103 provides that error cannot be predicated on the exclusion of evidence unless the substance of the evidence was made known to the trial court through an offer of proof or was apparent from the context. TEX.R. EVID. 103(a)(2). To preserve error, the offer of proof must be specific enough to enable the reviewing court to determine the admissibility of the disputed evidence. In re N.R.C., 94 S.W.3d 799, 806 (Tex.App.-Houston [14th Dist.] 2002, pet. denied). After the trial court again ruled that Hooper could not call Dr. Lambert, Hooper submitted Dr. Lambert's entire deposition as his offer of proof. Dr. Pai complains that the offer of proof was inadequate because Hooper (1) offered Dr. Lambert's entire deposition instead of specific portions and (2) failed to explain 108 why Dr. Lambert's testimony was not cumulative of Dr. Fugaro's. We reject both of these arguments. First, when Hooper's counsel offered the entire deposition, he explained that when he attempted to identify a portion by page and line, he had included over ninety percent of the deposition and thus believed offering the entire deposition would be more convenient for everyone. This is not a case in which testimony on an isolated issue is buried in the middle of a voluminous deposition. See Carreon v. Nat'l Standard Ins. Co., No. 01-85-0233-CV, 1986 WL 20850, at 5 (Tex. App.-Houston [1st Dist.] July 31, 1986, writ ref'd n.r.e.) (not designated for publication) (finding offer of proof inadequate when it was contained in only a few passages of a sixty-two page deposition). The "nature of the disputed evidence was apparent to all," and thus the offer was sufficiently specific. Fox v. State, 115 S.W.3d 550, 559 (Tex.App.-Houston [14th Dist.] 2002, pet. ref'd). Second, neither Dr. Pai nor Dr. Chittaluru objected to Dr. Lambert's testimony as cumulative, and thus, unlike in Welch, which Dr. Pai cites, Hooper had no obligation to explain why it was not. See Welch v. McLean, 191 S.W.3d 147, 163-65 (Tex.App.-Fort Worth 2005, no pet.). We conclude that Hooper's offer of proof was sufficient to preserve error. B. Did the trial court err in excluding Dr. Lambert's testimony? 1. The propriety of calling an opponent's expert adversely. The trial court's order striking Dr. Lambert's testimony did not provide a reason for the decision. However, in the hearing on Hooper's motion to reconsider, the court repeatedly stated, "You cannot hijack her expert." This implies that the trial court believed it is inherently improper to call an opponent's expert adversely. Appellees do not argue this point on appeal, and we can find no authority to support such a broad, general proposition. Indeed, all available authority suggests otherwise. For example, the Texas Supreme Court has disapproved of attempts to assert ownership over an expert. See Tom L. Scott, Inc. v. McIlhany, 798 S.W.2d 556 (Tex.1990) (rejecting defendants' re-designation of testifying experts as consulting experts pursuant to settlement agreement that purported to give control over group of settling plaintiffs' experts to defendants). This is because such practice is inconsistent with the primary objective of discovery to seek the truth. See id. at 559-60. Several courts have addressed issues involving cross-designated experts, implicitly assuming that such practice is permissible. See, e.g., Crawford v. Hope, 898 S.W.2d 937, 944 (Tex.App.-Amarillo 1995, writ denied) (finding no abuse of discretion in preventing plaintiff from calling defendant's expert because plaintiff did not cross-designate that expert); Dennis v. Haden, 867 S.W.2d 48, 52 (Tex.App.-Texarkana 1993, writ denied) (finding harmful error in prohibiting plaintiff from calling defendant's expert as rebuttal witness); Kreymer v. N. Tex. Mun. Water Dist., 842 S.W.2d 750, 753 (Tex.App.-Dallas 1992, no writ) (discussing procedure for cross-examining expert designated by both parties). We see no reason why expert testimony should automatically be treated differently than any other evidence produced by opponents, such as documents, that unquestionably can be used against the producing party. We conclude that Hooper should not have been prohibited from calling Dr. Lambert as a witness solely on the basis that Dr. Lambert was Dr. Chittaluru's expert. Thus, unless there is another legitimate basis for excluding Dr. Lambert's 109 testimony, the trial court abused its discretion. 2. Designation issues. The record indicates that the trial court may have been concerned with the manner in which Hooper cross-designated Dr. Lambert, and both appellees have made arguments concerning the timeliness of Hooper's cross-designation. A trial court may exclude an expert who is not properly designated. See TEX.R. CIV. P. 193.6(a). However, we determine that Hooper timely cross-designated Dr. Lambert as to both Dr. Chittaluru and Dr. Pai. Therefore, excluding Dr. Lambert's testimony on this basis would have been an abuse of discretion. The court's docket control order specifies that Hooper was to designate experts by November 14, 2003, and the defendants were to designate by January 3, 2004. Hooper timely designated his own experts and included a general cross-designation of the defendants' experts. Hooper did not identify the defendants' experts by name or provide the substance of their opinions because he did not yet have access to that information. See TEX.R. CIV. P. 195.1 (providing that a party may discover information about another party's testifying expert only through requests for disclosure, reports, and depositions). Dr. Chittaluru designated Dr. Lambert the day before her expert designation deadline. Hooper then supplemented his cross-designation to include Dr. Lambert's name, but Dr. Chittaluru did not provide a report or otherwise fully disclose Dr. Lambert's opinions, so Hooper had no other information to provide. In a hearing involving discovery issues, Hooper complained of Dr. Chittaluru's failure to disclose Dr. Lambert's opinions. The trial court ordered Dr. Chittaluru to disclose within a week or Dr. Lambert would be stricken, and the court set deadlines for the depositions of each sides' experts. Dr. Lambert was deposed, and Hooper supplemented his cross-designation the next day to include information from the deposition. The court's docket sheet, which the judge initialed, notes that the motion to strike was granted because Hooper had not cross-designated Dr. Lambert as an expert as to Dr. Pai. This is simply incorrect. None of Hooper's designations specify that his designation of Dr. Lambert is limited to Dr. Chittaluru, and Hooper's post-deposition supplement details many criticisms specific to Dr. Pai's care of Hooper. Thus, if we consider the reason given on the docket sheet,[2] which neither appellee advances on appeal, that is an erroneous reason for striking Dr. Lambert's testimony. Appellees make various arguments regarding the timeliness of Hooper's cross-designation. Dr. Chittaluru argues that Hooper's cross-designation was untimely because Hooper did not identify Dr. Lambert by name before Hooper's initial expert designation deadline in November and did not supplement his cross-designation until a month after Dr. Chittaluru provided her tardy report on Dr. Lambert, which she contends was not reasonably prompt. Dr. Pai asserted in his motion to strike that Hooper's post-deposition supplementation of Dr. Lambert's opinions was untimely because he should have disclosed those opinions earlier. 110 The Texas Rules of Civil Procedure provide that expert designations must be supplemented "reasonably promptly after the party discovers the need for such a response." See TEX.R. CIV. P. 193.5(b); TEX.R. CIV. P. 195.6. Hooper's cross-designations were reasonably prompt and included the information that was available to him at the time. He could not possibly have disclosed Dr. Lambert's name before Dr. Chittaluru disclosed it to him or detailed Dr. Lambert's favorable opinions before he learned of them during the deposition. The discovery rules do not require Hooper to do the impossible. See Frazin v. Hanley, 130 S.W.3d 373, 377-78 (Tex. App.-Dallas 2004, no pet.) (reversing strike of late-disclosed experts in response to new counterclaim filed after expert deadline because appellant could not have designated earlier). Further, exclusion of evidence for failure to timely disclose is not appropriate if there is no surprise to the opposing parties. See TEX.R. CIV. P. 193.6(a)(2). Thus, to the extent Hooper could have provided any of his cross-designation supplements earlier, his failure to do so still does not justify exclusion because he had no information to disclose beyond that which he and Dr. Pai had already received from Dr. Chittaluru. We conclude there was no basis for striking Dr. Lambert's testimony based on deficient cross-designation. Thus, exclusion of Dr. Lambert's testimony on this basis would have been an abuse of discretion. 3. Cumulativeness. Dr. Chittaluru and Dr. Pai argue, for the first time on appeal, that Dr. Lambert's testimony would have been cumulative of Dr. Fugaro's testimony. A trial court has authority to prevent the "needless presentation of cumulative evidence" under Texas Rule of Evidence 403. However, "[t]he mere fact that another witness may have given the same or substantially the same testimony is not the decisive factor." In re N.R.C., 94 S.W.3d at 807. We consider whether the excluded testimony would have added substantial weight to the appellant's case. Id.; Bohmfalk v. Linwood, 742 S.W.2d 518, 521 (Tex. App.-Dallas 1987, no writ). Litigants often have a legitimate need to offer similar evidence from different witnesses. For example, testimony from a disinterested witness may lend substantial weight to similar testimony from an interested witness, particularly on a hotly-contested issue. See In re N.R.C., 94 S.W.3d at 807; Sims v. Brackett, 885 S.W.2d 450, 454 (Tex.App.-Corpus Christi 1994, writ denied). The parties dispute the extent and significance of the overlap between Dr. Lambert's and Dr. Fugaro's testimony. We need not analyze any differences between their testimony because even if their testimony is identical, other factors render it non-cumulative. Dr. Lambert and Dr. Pai are both cardiologists, while Dr. Fugaro is an internist. Because of this difference in expertise, the jury could have determined that Dr. Lambert was better qualified to comment on a cardiologist's standard of care and whether Dr. Pai breached that standard. Further, hired experts risk being perceived by the jury as interested in providing testimony helpful to the party paying them. Thus, damaging testimony against a party by its own expert (or even a co-defendant's expert) carries more weight than similar testimony from an expert paid by the other side. Because of these differences in qualifications and potential for perceived bias involving testimony on controlling issues, Dr. Lambert's testimony would have added substantial weight to Hooper's case and thus was not cumulative. See Benavides v. 111 Cushman, Inc., 189 S.W.3d 875, 883-84 (Tex.App.-Houston [1st Dist.] 2006, no pet. h.) (concluding that two experts with similar testimony were not cumulative because their qualifications were different and one was called adversely by the plaintiff); Sims, 885 S.W.2d at 454 ("The difference in the two expert's [sic] credentials and [the first expert]'s lack of a personal relationship with [the plaintiff] in all likelihood would have enhanced [the first expert]'s credibility compared to [the second expert]'s."); Dennis, 867 S.W.2d at 52 (finding harm in precluding plaintiff from calling defendant's former expert as rebuttal witness because his testimony was non-cumulative and "would have allowed the jury to know that at least one previous expert hired by [the defendant] thought that [the defendant] was at fault to some extent"). Thus, cumulativeness is not a legitimate basis for upholding the trial court's decision to strike Dr. Lambert's testimony. 4. Non-opposition to motion. The local rules for the civil district courts of Harris County provide that "[f]ailure to file a response [to a motion] may be considered a representation of no opposition." HARRIS (TEX.) CIV. DIST. CT. R. 3.3.2. Dr. Pai argues that because Hooper did not file a written response to his motion to strike, the trial court could have considered it unopposed and granted the motion on that basis alone. We reject this argument. Dr. Pai's motion was set for a hearing on three days' notice, and the local rules require written responses to be filed two days before the hearing. HARRIS (TEX.) CIV. DIST. CT. R. 3.3.3. Thus, Hooper would have had the difficult burden of filing a written response within one day. Instead, he attended the hearing and contested the motion orally. Though no transcription of the hearing is in the record, it is undisputed that Hooper orally contested the motion at the hearing, so we accept it as true. See TEX.R.APP. P. 38.1(f). The cases Dr. Pai cites involve situations in which the appellants filed no written response and, unlike here, did nothing to otherwise indicate any opposition to the motion before it was granted. See Cire v. Cummings, 134 S.W.3d 835, 844 (Tex. 2004); Indep. Bankers Mortgage Co. v. Osborne, No. 01-92-00114-CV, 1993 WL 282921, at 2 (Tex.App.-Houston [1st Dist.] July 29, 1993, no writ) (not designated for publication). Because Hooper made his opposition clear at the hearing on this motion, granting the motion solely on the basis that it was unopposed would have been an abuse of discretion. C. Was excluding Dr. Lambert's testimony harmful? Having found no legitimate basis for the trial court's exclusion of Dr. Lambert's testimony, we must next determine if that error was harmful. We conclude that it was. Cumulativeness is not only a potential basis for excluding evidence but is also a factor in analyzing harm. The erroneous exclusion of evidence that is merely cumulative and does not concern a material issue dispositive of the case is harmless error. See Interstate Northborough, 66 S.W.3d at 220; Knox, 992 S.W.2d at 63. As discussed above, Dr. Lambert's testimony was not cumulative because of the difference in their qualifications[3] and 112 the fact that he was not retained by the party for whom he would have been testifying. See Benavides, 189 S.W.3d at 883-84; Sims, 885 S.W.2d at 454; Dennis, 867 S.W.2d at 52. Thus, the exclusion of his testimony was harmful. Appellees argue that excluding Dr. Lambert's testimony was harmless because Hooper did not challenge the sufficiency of the evidence to support the jury's negligence findings, which they contend are independent bases for the judgment. Appellees are correct that a judgment may be affirmed on unchallenged, independent grounds supporting the judgment. See Britton v. Tex. Dep't of Crim. Justice, 95 S.W.3d 676, 681 (Tex.App.-Houston [1st Dist.] 2002, no pet.); Kelly v. Klein, 827 S.W.2d 609, 611 (Tex.App.-Houston [14th Dist.] 1992, no writ). However, that rule is inapplicable in this case. The jury's negligence findings are not independent bases to support the verdict but are at the heart of Hooper's appeal. Hooper's entire point is that the jury might have reached a different verdict if Dr. Lambert had been allowed to testify, not that there was insufficient evidence to support the conclusion reached. We reject appellees' argument that the trial court's error in excluding Dr. Lambert's testimony was harmless because Hooper did not challenge the sufficiency of the evidence. The jury was asked the broad-form question of whether the negligence, if any, of Dr. Chittaluru, Dr. Pai, or Hooper proximately caused Hooper's death. Appellees contend the excluded evidence is irrelevant to their negligence because Dr. Lambert's deposition testimony does not show either that Dr. Chittaluru was negligent or that either doctor's actions proximately caused Hooper's death. Although the majority of Dr. Lambert's testimony focused on Dr. Pai's negligence, he clearly testified that Dr. Chittaluru breached the standard of care in her treatment of Hooper's high blood pressure. Dr. Lambert also testified that Dr. Chittaluru's negligence was "an issue" in Hooper's death, that Dr. Pai's negligence was "the big issue" in Hooper's death, and that Hooper would likely have lived longer had he been treated properly. Because Dr. Lambert's testimony implicated negligence and proximate cause[4] as to both doctors, it was 113 central to a material issue dispositive to the case, and thus excluding it was harmful. See Interstate Northborough, 66 S.W.3d at 220; Knox, 992 S.W.2d at 63. Further, appellees argue that any error was harmless because Dr. Lambert's testimony would not have changed the jury's finding that Hooper was negligent. Though Dr. Lambert disapproved of some aspects of Hooper's behavior and lifestyle, his testimony was not exclusively critical of Hooper. For example, he described instances in which Hooper was not counseled properly on ways to take care of himself. Nevertheless, even if Dr. Lambert was entirely critical of Hooper, excluding his testimony was still harmful. The jury's finding that Hooper was negligent did not automatically bar his recovery, but the findings that Dr. Pai and Dr. Chittaluru were not negligent did. If the jury had found that either of the two doctors was negligent, it would have had to answer the next question, which would have required it to allocate the percentage of negligence between Hooper and the doctors. Because Dr. Lambert's testimony implicated the negligence of both doctors, his testimony could have caused the jury to find either or both of them negligent, which could have changed the ultimate outcome, even if they still concluded that Hooper was negligent. Accordingly, we find the trial court's ruling excluding Dr. Lambert's testimony probably resulted in an improper judgment. CONCLUSION Because we determine the trial court committed harmful error in excluding Dr. Lambert's testimony, we reverse the trial court's judgment and remand this case for a new trial. NOTES [1] Hooper sued Arvind M. Pai, M.D., P.A. No jury question was submitted as to the professional association, and Hooper has asserted no error relating to this. Thus, this appeal concerns only Dr. Chittaluru and Dr. Pai. [2] We generally may not consider docket entries because "they are only made for the clerk's convenience and are usually unreliable." State Farm Fire & Cas. Co. v. Reed, 826 S.W.2d 659, 661 (Tex.App.-Houston [14th Dist.] 1992), aff'd on other grounds, 873 S.W.2d 698 (Tex.1993). [3] Dr. Pai argues that excluding Dr. Lambert's testimony was harmless because Hooper had designated another cardiologist whom he could have called but did not. However, even though Dr. Lambert and the other doctor were both cardiologists, the other doctor was not retained by the defense, and thus the impact of his testimony would not have been as significant. [4] Dr. Pai and Dr. Chittaluru moved for rehearing, arguing in part that Dr. Lambert's testimony did not establish proximate cause and thus excluding it was harmless. They contend that because Dr. Lambert testified only to possible causes of Hooper's death and did not definitely state that either doctor's conduct more likely than not caused Hooper's death, his testimony was insufficient to establish proximate cause and at most, established loss of a chance of living longer, which Texas law does not recognize as a basis for recovery. Appellees are correct that reasonable probability, not mere possibility or loss of a less-than-even chance of avoiding death, is necessary to establish proximate cause. See Park Place Hosp. v. Milo, 909 S.W.2d 508, 511 (Tex.1995); Bradley v. Rogers, 879 S.W.2d 947, 953-59 (Tex.App.-Houston [14th Dist.] 1994, writ denied). However, in a multiple-expert case, it is not necessary for each expert to independently establish proximate cause. Rather, we consider the evidence as a whole, and expert testimony on possible causes of death is appropriate to assist the jury in reaching its ultimate conclusion regarding causation. See Lenger v. Physician's Gen. Hosp., Inc., 455 S.W.2d 703, 706-07 (Tex. 1970); Purina Mills, Inc. v. Odell, 948 S.W.2d 927, 936 (Tex.App.-Texarkana 1997, writ denied); Bormaster v. Henderson, 624 S.W.2d 655, 659 (Tex.App.-Houston [14th Dist.] 1981, no writ). Thus, Dr. Lambert did not need to independently establish proximate cause, and his testimony regarding appellees' roles in Hooper's death, in combination with the other expert evidence already admitted, would have added substantial weight to Hooper's case, thereby possibly persuading the jury to reach a different outcome. Accordingly, we maintain our conclusion that excluding Dr. Lambert's testimony was harmful.	{ "pile_set_name": "FreeLaw" }
929 N.E.2d 785 (2010) T.L. v. STATE. Supreme Court of Indiana. February 25, 2010. Transfer denied. All Justices concur.	{ "pile_set_name": "FreeLaw" }
Docket No. 103562. IN THE SUPREME COURT OF THE STATE OF ILLINOIS JOHN BUENZ, as Special Adm’r of the Estate of Olga L. Buenz, Deceased, v. FRONTLINE TRANSPORTATION COMPANY et al. (Frontline Transportation Company, Appellant; China Ocean Shipping Company Americas, Inc., Appellee). Opinion filed January 25, 2008. JUSTICE GARMAN delivered the judgment of the court, with opinion. Justices Fitzgerald, Karmeier and Burke concurred in the judgment and opinion. Chief Justice Thomas and Justices Freeman and Kilbride took no part in the decision. OPINION On October 1, 2003, Olga Buenz was involved in a multiple- vehicle traffic accident that resulted in her death. Twelve separate actions were filed by various plaintiffs and later consolidated. Each action named China Ocean Shipping Company Americas, Inc. (COSCO), and Frontline Transportation Company (Frontline) as defendants. Plaintiff John Buenz, Olga’s husband, filed a wrongful- death action alleging negligence on the part of defendants COSCO, Frontline, and Vincente A. Zepeda, Frontline’s alleged employee and the driver of the tractor-trailer that Buenz alleges caused the accident. In June 2004, COSCO filed a counterclaim against Frontline and Zepeda. Count IV of this counterclaim sought a declaration that Frontline be obligated, pursuant to express contractual terms set forth in an equipment interchange agreement, to indemnify COSCO for “any and all costs, expenses, damages, and liability * in the Buenz litigation.” COSCO moved for and was granted summary judgment on this count by the circuit court of Cook County. In addition to granting the motion for summary judgment, the court entered a written finding pursuant to Rule 304(a) that there was no just reason to delay appeal or enforcement of the judgment. 210 Ill. 2d R. 304(a). Subsequently, the court specified that its order applied to all pending consolidated cases. It is undisputed that the meaning and legal effect of the equipment interchange agreement is identical in each case. After its motion to reconsider was denied, Frontline appealed. The appellate court affirmed and remanded. 368 Ill. App. 3d 10. Frontline then petitioned for and was allowed leave to appeal to this court pursuant to Rule 315 (210 Ill. 2d R. 315). BACKGROUND John Buenz’s complaint alleged that a tractor-trailer operated by Zepeda, a Frontline employee, struck a minibus in which his wife Olga was a passenger, causing her death. The complaint further alleged that COSCO “owned and/or owned a leasehold on, maintained, and/or controlled the trailer and/or container which were part of the tractor trailer” driven by Zepeda. While the complaint alleged that Frontline committed various negligent acts which caused the accident and the death of Olga Buenz, it also alleged that COSCO committed several negligent acts that contributed to the accident. These acts and omissions included COSCO’s permitting the tractor and/or container to be used and operated when it knew or should have known that it was not in safe operating condition; permitting the trailer to be used and operated when it knew or should have known that it was not equipped with proper brakes; and failing to inspect and repair the trailer. -2- To defend against these claims, COSCO relied on an equipment interchange agreement. This agreement dealt with the relationship between COSCO and Frontline regarding the use and/or interchange of equipment. In relevant part, the agreement provided: “3. ACQUIRING CARRIER [defined as Frontline] Responsibility and Liability: D. The ACQUIRING CARRIER shall be responsible to The Line [defined as COSCO] for the performance of this agreement whether such equipment may be in the possession of itself or others, until return of the equipment to The Line. F. INDEMNITY–The ACQUIRING CARRIER shall indemnify The Line against, and hold The Line harmless for any and all claims, demands, actions, suits, proceedings, costs, expenses, damages, and liability, including without limitation attorney’s fees, arising out of, [in] connection with, or resulting from the possession, use, operation or returning of the equipment during all periods when the equipment shall be out of the possession of The Line.” The parties agree that the interchange agreement described above was in full force and effect at the time of the collision at issue in this case. Moreover, there is no dispute that Frontline is in the business of providing freight transportation by interstate trucks, including tractor- trailers. Additionally, Frontline has admitted that it had a contractual relationship with Zepeda, the driver of the tractor-trailer involved in the accident. Frontline contends that COSCO is not entitled to indemnification based upon the interchange agreement. Specifically, Frontline asserts that the phrase “any and all,” as used in the interchange agreement, is neither explicit nor clear enough to signify the parties’ intention that Frontline indemnify COSCO for claims resulting from COSCO’s own negligence. Additionally, Frontline argues that the negligence claims filed against COSCO do not fall within the scope of the indemnity provision because they relate to periods in which the equipment was in, rather than out, of the possession of COSCO. COSCO responds that the facts, viewed in conjunction with the explicit language of the interchange agreement, establish as a matter of law that in the underlying litigation Frontline is obligated to -3- indemnify and hold COSCO harmless for any and all costs, expenses, damages, and liability, including attorney fees. COSCO argues that the phrase “any and all” contained in the interchange agreement establishes the parties’ intent that COSCO be indemnified even against claims arising out of its own negligence. COSCO asserts that Frontline’s argument that the negligence claims filed against it do not fall within the scope of the indemnity provision has been forfeited, as it was not raised in Frontline’s petition for leave to appeal. Barring forfeiture, COSCO asserts that the negligence claims against it do fall within the scope of the conduct described in the indemnity provision. ANALYSIS As noted, Frontline asserts that the appellate court improperly affirmed the circuit court’s grant of COSCO’s motion for summary judgment and subsequent denial of Frontline’s motion to reconsider. This court reviews the grant of summary judgment de novo. Forsythe v. Clark USA, Inc., 224 Ill. 2d 274, 280 (2007). Reviewing a summary judgment disposition, this court construes all evidence strictly against the movant and liberally in favor of the nonmoving party. Forsythe, 224 Ill. 2d at 280. An indemnity agreement is a contract and is subject to contract interpretation rules. Virginia Surety Co. v. Northern Insurance Co. of New York, 224 Ill. 2d 550, 556 (2007). The cardinal rule of contract interpretation is to discern the parties’ intent from the contract language. Virginia Surety, 224 Ill. 2d at 556. Where the contract language is unambiguous, it should be given its plain and ordinary meaning. Virginia Surety, 224 Ill. 2d at 556. I. Construction of the Equipment Interchange Agreement This court has previously considered whether an indemnity agreement provided indemnification for an indemnitee’s own negligence. In Westinghouse Electric Elevator Co. v. LaSalle Monroe Building Corp., 395 Ill. 429, 430 (1946), an elevator repair company employee was hit by a falling elevator and died. It was conceded that the injury and death were due to the negligence of the building owner’s employee’s negligence. The elevator repair company made payments pursuant to the Workers’ Compensation Act and then sued -4- the building owner to recover the amount paid based on the owner’s negligence. The parties’ indemnity contract provided: “ ‘The contractor [repair company/indemnitor] further agrees to indemnify and hold the owner, the owner’s employees and agents, the Architects and Engineers, and the City of Chicago, wholly harmless from any damages, claims, demands or suit by any person or persons arising out of any acts or omissions by the Contractor, his agents, servants or employees in the course of any work done in connection with any of the matters set out in these specifications, and the contractor shall carry at his own expense insurance in a company satisfactory to the owner to cover the aforesaid liabilities.’ ” Westinghouse Electric, 395 Ill. at 432. Construing the above language, both the trial and appellate courts found in favor of the elevator repair company. This court affirmed, holding that the contract language was insufficient to indemnify the owner/indemnitee for the owner/indemnitee’s own negligence. The language of the contract at issue in Westinghouse supports this conclusion. The repair company/indemnitor “agrees to indemnify and hold the owners * wholly harmless from any damages * arising out of any acts or omissions by the Contractor [repair company/indemnitor].” Westinghouse Electric, 395 Ill. at 432. This clearly refers to and provides indemnity for acts or omissions by the repair company/indemnitor. Because the negligence at issue in Westinghouse was that of the owner, then, it could not be considered an act or omission by the repair company and the indemnity contract could not apply. This court recognized, however, that in certain circumstances a contract could indemnify a person for that person’s own negligence. We stated that “[i]t is quite generally held that an indemnity contract will not be construed as indemnifying one against his own negligence, unless such a construction is required by clear and explicit language of the contract [citations] or such intention is expressed in unequivocal terms.” Westinghouse Electric, 395 Ill. at 433. We then held that, under the facts of Westinghouse, to adopt a construction of the contract that would provide indemnity for the owner/indemnitee “would impose on the contractor [repair company] the duty to indemnify against injuries entirely without his control, and such should -5- not be adopted in the absence of clear language in the contract including injuries arising from the negligence of [the owner’s] own servants.” Westinghouse Electric, 395 Ill. at 434. This court has had occasion to review other contracts that were purported to indemnify an indemnitee for its own negligence. Tatar v. Maxon Construction Co., 54 Ill. 2d 64, 66 (1973) (no indemnity for indemnitee’s own negligence where indemnity clause covered “ ‘all expenses, claims, suits, or judgments * by reason of, arising out of, or connected with, accidents, injuries, or damages, which may occur upon or about the Subcontractor’s work’ ”); Zadak v. Cannon, 59 Ill. 2d 118, 121 (1974) (no indemnity for indemnitee’s own negligence where language referred to “claims ‘arising out of any such work’–‘such work’ being that performed by [indemnitor’s] employees under the contract”); Schek v. Chicago Transit Authority, 42 Ill. 2d 362, 363 (1969) (providing indemnity for indemnitee’s own negligence where language stated that indemnitor “ ‘shall indemnify and save harmless * Chicago Transit Authority [indemnitee] from all claims for any such loss, damage, injury or death, whether caused by the negligence of Licensor, Chicago Transit Authority, their agents or employees, or otherwise’ ”).1 We have also noted, however, that it 1 It is important to note that the Construction Contract Indemnification for Negligence Act currently voids any agreement in a construction contract to indemnify or hold harmless a person from that person’s own negligence. 740 ILCS 35/0.01 et seq. (West 2006). As such, if Westinghouse, Tatar, and Zadak were heard today, there would be no argument concerning whether the language in each case was unequivocal enough to indemnify an indemnitee for that indemnitee’s own negligence because the act described above would specifically void any such construction. This case does not involve a construction contract, however, so the Construction Contract Indemnification for Negligence Act does not apply. The parties do not dispute that barring a statutory provision to the contrary, contracts that clearly and explicitly provide indemnity against one’s own negligence are valid and enforceable. See, e.g., Scheck, 42 Ill. 2d at 363-64; Blackshare v. Banfield, 367 Ill. App. 3d 1077, 1079 (2006); Hankins v. Pekin Insurance Co., 305 Ill. App. 3d 1088, 1093 (1999); Burlington Northern R.R. Co. v. Pawnee Motor Service, Inc., 171 Ill. App. 3d 1043, 1045 (1988). Accordingly, the general discussion of such contracts found in Westinghouse, Tatar, and Zadak remains good law. -6- “serve[s] no useful purpose to attempt to analyze or reconcile the numerous cases interpreting indemnity clauses” since each individual case “depends upon the particular language used and the factual setting of the case.” Zadak, 59 Ill. 2d at 121. While these cases, and the others cited below, do not involve the precise language in this case, they do provide guidance for our analysis of the similar language at issue here. Frontline asserts that a review of case law from various appellate districts establishes that the interchange agreement between COSCO and Frontline does not provide COSCO indemnity from its own negligence. Chiefly, Frontline relies upon Karsner v. Lechters Illinois, Inc., 331 Ill. App. 3d 474 (2002). Frontline acknowledges that the appellate court in this case declined to follow Karsner, but Frontline contends that the language of the indemnification provision in Karsner is similar to the language of the indemnification provision at issue in this case. In Karsner, the plaintiff filed an action against the defendants for injuries he sustained while unloading a trailer containing the defendants’ merchandise. Karsner, 331 Ill. App. 3d at 475. The plaintiff claimed that the defendants had negligently loaded the trailer such that when he delivered and unloaded the trailer he was injured. Karsner, 331 Ill. App. 3d at 475. The defendants filed a third-party indemnity action against the plaintiff’s employer and its parent company (collectively, the employer). Karsner, 331 Ill. App. 3d at 475. The defendants and the employer had a contract which contained the following provision: “ ‘Carrier [the employer] shall indemnify and hold Lechters [a defendant] harmless from and against any and all claims, actions [sic] damages, liability and expense, including attorneys fees, in connection with loss of life, personal injury, and/or damage to property arising from or out of the pick-up, transportation and delivery of the property of Lechters by carrier, and the use of any motor vehicle or other equipment by Carrier in connection therewith.’ ” Karsner, 331 Ill. App. 3d at 476. Like the agreement in this case, the agreement in Karsner broadly provided indemnity from and against “any and all claims.” -7- The Karsner court, construing the provision quoted above, found that even though “the contract states that Navajo [the employer] shall indemnify and ‘hold Lechters harmless from and against any and all claims, actions [sic] damages, liability and expense,’ this language is insufficient to give Lechters indemnity for its own negligence.” Karsner, 331 Ill. App. 3d at 477. Supporting its position, the Karsner court pointed to this court’s decision in Westinghouse as well as another appellate decision, McNiff v. Millard Maintenance Service Co., 303 Ill. App. 3d 1074 (1999). Additionally, the Karsner court indicated a concern that any interpretation which required the employer to indemnify the defendants for the defendants’ own negligence would contravene established public policy. In citing Westinghouse, the Karsner court pointed out that Westinghouse “provid[ed] that the language ‘hold * harmless from any damages, claims, demands or suit by any person, arising out of any acts or omissions’ was not clear and specific language rendering the subcontractor liable for the general contractor’s own negligence.” Karsner, 331 Ill. App. 3d at 477. What the Karsner court did not point out, however, was that the indemnity agreement in Westinghouse contained language in addition to that expressed directly above. The agreement in Westinghouse, more fully expressed, stated that the indemnitor “ ‘agrees to indemnify and hold the owner * wholly harmless from any damages * arising out of any acts or omissions by the Contractor [indemnitor].’ ” (Emphasis added.) Westinghouse Electric, 395 Ill. at 432. This limiting language clearly indicates that the agreement provided indemnity only for acts or omissions by the indemnitor. In citing McNiff, the Karsner court pointed out that McNiff “provid[ed] that the phrase, ‘indemnify * from and against any and all * liabilities’ was insufficient to provide indemnification for the indemnitee’s own negligence.” Karsner, 331 Ill. App. 3d at 477. The indemnification agreement in McNiff also provided, however, that the indemnification covered any and all claims “ ‘relating to * allegedly or actually arising out of or incidental to the Work, including, without limiting the foregoing, all acts and omissions of the officers, employees and agents of Contractor [the indemnitor] or any of its subcontractors.’ ” McNiff, 303 Ill. App. 3d at 1076. The McNiff -8- court’s finding, then, is specifically supported by limiting language within the contract. The above analysis makes evident that the Karsner court’s reliance on Westinghouse and McNiff is misplaced. The indemnification language in Westinghouse is specifically limited to “any and all” claims arising out of or in connection with the acts or omissions of the indemnitor just as the indemnification language in McNiff is specifically limited to “any and all” claims arising out of what the McNiff court considered to be the indemnitor’s work. In Karsner, by contrast, no limiting language is evident, as the contract at issue provided that the “ ‘[the indemnitor] shall indemnify and hold [the indemnitee] harmless from and against any and all claims * arising from or out of the pick-up, transportation and delivery of the property of [the indemnitee] by [the indemnitor], and the use of any motor vehicle or other equipment by [the indemnitor] in connection therewith.’ ” Karsner, 331 Ill. App. 3d at 476. Focusing on this language alone, the indemnitee in Karsner was entitled to indemnification, even for its own negligence, as the injury at issue arose from the delivery of the indemnitee’s property by the indemnitor. This was not, however, the Karsner court’s holding. Frontline points to other cases which it claims have held, like Karsner, that the inclusion of the phrase “any and all” within an indemnification clause is insufficient to indemnify an indemnitee for its own negligence. See, e.g., Blackshare v. Banfield, 367 Ill. App. 3d 1077 (2006); Hankins v. Pekin Insurance Co., 305 Ill. App. 3d 1088 (1999). A closer inspection of Blackshare and Hankins reveals, however, just as a closer inspection of Westinghouse and McNiff revealed, that these cases do not stand for that proposition. As in Westinghouse and McNiff, the language of the indemnification agreements in Blackshare and Hankins contained limiting language expressly restricting indemnification liability. In Blackshare, a power cooperative brought an indemnification action against an electrical contractor based upon a written contract. Blackshare, 367 Ill. App. 3d 1077. The contract provided that the “[c]ontractor shall defend and indemnify and save Owner and all of Owner’s employees harmless from any and all claims * arising or alleged to arise from personal injuries, including death, or damage to property, occurring during the performance of the work and due to -9- the negligent acts or omissions of the Contractor.” See Blackshare, 367 Ill. App. 3d at 1078. The Blackshare court found critical the limiting language of the above provision that promised indemnity for damages that were “due to the negligent acts or omissions of the Contractor” and held that the contract limited the electrical contractor’s indemnity obligation to a percentage equal to that of the contractor’s negligence, not extending to indemnification for the power cooperative’s own negligence. Blackshare, 367 Ill. App. 3d at 1078. In Hankins, a cartage carrier sought indemnification coverage for its own negligence against a cartage operator based upon a written contract. Hankins, 305 Ill. App. 3d 1088. The agreement provided that the cartage operator would indemnity and hold harmless the cartage carrier “ ‘from and against all claims, damages, losses[,] and expenses * which might arise out of the performance of any work to be performed hereunder by CARTAGE OPERATOR * caused in whole or in part by CARTAGE OPERATOR’S negligent act or omission.’ ” Hankins, 305 Ill. App. 3d at 1089. Interpreting this language, the Hankins court found that the indemnification provided was limited to indemnity for injury caused in whole or in part by the cartage operator’s negligence, not extending to that of the cartage carrier’s negligence. Hankins, 305 Ill. App. 3d at 1093. Focusing on the language used in Blackshare and Hankins, then, it is apparent that they do not stand, as Frontline asserts, for the proposition that the inclusion of the phrase “any and all” within an indemnification clause is insufficient to indemnify an indemnitee for its own negligence. To be sure, Blackshare and Hankins contain similar “any and all” language to that used in this case. Like Westinghouse and McNiff, however, they also contained express clauses limiting indemnification to negligence occasioned by the indemnitor. Accordingly, both cases merely stand for the proposition that when an indemnity contract expressly limits itself to the negligence of the indemnitor, courts will not strain, simply because the contract also contains “any and all” language, to read into that contract indemnification for an indemnitee’s own negligence. Indeed, to do so would violate this court’s recognition in Westinghouse that “[i]t is quite generally held that an indemnity contract will not be construed as indemnifying one against his own negligence, unless such a -10- construction is required by clear and explicit language of the contract [citations] or such intention is expressed in unequivocal terms.” Westinghouse Electric, 395 Ill. at 433. The indemnification agreement in Karsner, unlike the agreements found in Westinghouse, McNiff, Blackshare, and Hankins, included clear and explicit contract language providing indemnification for the indemnitee’s own negligence in exactly the type of situation presented in that case–where the injury arose from the delivery of the indemnitee’s property by the indemnitor. This makes clear, then, that Karsner stands alone for the proposition that the inclusion of the phrase “any and all” within an indemnification clause is insufficient to indemnify an indemnitee for its own negligence. It is not simply the use of the phrase “any and all” that determines whether a particular contract provides indemnification for an indemnitee’s own negligence. The phrase must be read in the context of the entire contract. If the contract warrants it, though, the use of the phrase “any and all” may indicate, as COSCO contends, that the parties intended an indemnitee be indemnified, even for the indemnitee’s own negligence. See, e.g., Economy Mechanical Industries, Inc. v. T.J. Higgins Co., 294 Ill. App. 3d 150, 155 (1997) (interpreting contract language which provided that “[indemnitor] will at all times protect, indemnify and save and keep harmless the [indemnitee] against and from any and all loss, cost, damage or expense, arising out of or from any accident or other occurrence” to provide indemnification for an indemnitee’s own negligence (emphasis omitted)); Rios v. Field, 132 Ill. App. 2d 519, 522 (1971) (holding that the use of the phrase “any and all,” even if it is “the sole descriptive reference to the cause of the injury, claim or loss indemnified,” can render an agreement “sufficiently broad to include indemnification for claims or injuries caused by indemnitee’s own negligence” subject to any limitations in the agreement); Haynes v. Montgomery Ward & Co., 47 Ill. App. 2d 340, 341, 346-47 (1964) (where contract provided that “[the indemnitor] holds the [indemnitee] harmless for any and all injuries or accident sustained by [the indemnitor’s] employees while on the premises of [the indemnitee] or while en route to perform any services for [the indemnitee],” the court held that “[t]he words ‘any and all’ are all inclusive; their conciseness does not limit their scope; their coverage -11- would not have been extended by making them more specific. If the words ‘any and all’ are to have their commonly accepted meaning, they cover the accident in this case”); Washington Group International, Inc. v. Mason Manufacturing, Inc., 263 F. Supp. 2d 1115, 1118 (N.D. Ill. 2003) (utilizing Illinois law, rejecting Karsner, and finding that “[t]he current contract states that [the indemnitor] will indemnify [the indemnitee] for ‘any and all’ loss arising from the inspections” and “most cases dealing with similar ‘any and all’ language have determined that this is sufficient to provide coverage for the indemnitee’s own negligence”). Karsner’s analysis to the contrary is thus overruled. Considering the above, we turn to the indemnity agreement at issue in this case. Of crucial importance, the agreement between Frontline and COSCO provides that “[Frontline] shall indemnify [COSCO] against, and hold [COSCO] harmless for any and all claims * arising out of, [in] connection with, or resulting from the possession, use, operation or returning of the equipment during all periods when the equipment shall be out of the possession of COSCO.” This contract contains no limiting language to suggest that the indemnity provided is not intended to cover claims resulting from COSCO’s own negligence. Accordingly, we find that the express language of the interchange agreement entered into between Frontline and COSCO clearly and explicitly provides indemnification for COSCO’s own negligence pursuant to the rest of the contract terms. As our appellate court aptly put it in the past, “[t]he words ‘any and all’ are all inclusive; their conciseness does not limit their scope; their coverage would not have been extended by making them more specific.” Haynes, 47 Ill. App. 2d at 346. Frontline did not agree to indemnify COSCO for “any and all” claims arising out of Frontline’s negligence. Instead, Frontline agreed to indemnify COSCO for “any and all claims * arising out of * the possession, use, operation or returning of the equipment during all periods when the equipment shall be out of the possession of COSCO.” This agreement is very broad and, considering its common unambiguous meaning, encompasses even claims which arise out of COSCO’s negligence. Again pointing to Karsner, Frontline contends that it might contravene public policy to hold, as we do, that a contract can provide indemnification for an indemnitee’s own negligence in a circumstance -12- such as at issue in this case. In Karsner, the appellate court noted that the Construction Contract Indemnification for Negligence Act specifically provided that no construction contract shall allow for the indemnification of a person’s own negligence because such a provision is “ ‘void as against public policy and wholly unenforceable.’ ” Karsner, 331 Ill. App. 3d at 477, quoting 740 ILCS 35/1 (West 2000). Additionally, the court pointed to the Managed Care Reform and Patient Rights Act, which provided that no person or health-care provider may be indemnified for its own negligence in the performance of his, her, or its duties. Karsner, 331 Ill. App. 3d at 477, citing 215 ILCS 134/95 (West 2000). Based on these statutes, the Karsner court found that “in the absence of an express agreement, it is against Illinois public policy to require indemnification for a person’s own negligence.” Karsner, 331 Ill. App. 3d at 477. Our finding does not contradict public policy, however. As we recognized in Westinghouse, when an agreement clearly and explicitly provides indemnification for an indemnitee’s own negligence, it should be construed accordingly. Westinghouse Electric, 395 Ill. at 433. The agreement at issue in this case is specific and clear enough to provide indemnification for claims arising out of COSCO’s negligence. Moreover, while certain statutes specifically prohibit the enforcement of agreements that indemnify an indemnitee for its own negligence, there is no such statute at play in this case. Had the General Assembly wanted to prohibit the enforcement of indemnification agreements that indemnify an indemnitee for its own negligence in circumstances such as these, it could have, just as it has in other situations. See, e.g., 740 ILCS 35/1 (West 2006); 215 ILCS 134/95 (West 2006). The General Assembly chose not to create such a prohibition in such circumstances, however, and we will not judicially create one. II. The Scope of the Indemnification Clause Having determined that the agreement at issue in this case is explicit and clear enough to signify the parties’ intention that Frontline indemnify COSCO for claims resulting from COSCO’s own negligence, we turn to the scope of the agreement. Frontline contends that the negligence claims asserted against COSCO in the underlying litigation do not fall within the scope of the agreement’s indemnification clause. In response, COSCO asserts that this issue has -13- been forfeited, as it was not raised in Frontline’s petition for leave to appeal. Notwithstanding forfeiture, COSCO asserts that substantively analyzing the issue reveals that the negligence claims alleged against COSCO do fall within the scope of the indemnification agreement. While Frontline raised the scope issue in the appellate court, it did not include it in its petition for leave to appeal. Supreme Court Rule 315(c)(3) provides that a petition for leave to appeal must contain “a statement of the points relied upon in asking the Supreme Court to review the judgment of the Appellate Court.” 210 Ill. 2d R. 315(c)(3). In its petition for leave to appeal under a “Points Relied Upon For Reversal” heading, Frontline argued that “[t]he Appellate Court erred because it improperly treated the language of the interchange agreement, containing an indemnification provision, as including language which would indemnify defendants/respondents, [COSCO], for claims resulting from COSCO’s own negligence.” In the very next sentence, Frontline stated that “[t]he issue in this case is whether the language ‘any and all’ in the interchange agreement is sufficient to indemnify COSCO for their own negligence.” Frontline failed to argue in its petition, however, that the negligence claims asserted against COSCO in the underlying litigation do not fall within the scope of the agreement’s indemnification clause. This issue was only raised in its brief, which it styled as a “Supplemental Brief to Petition for Leave to Appeal.” A party’s failure to raise an issue in its petition for leave to appeal may be deemed a forfeiture of that issue. Sullivan v. Edward Hospital, 209 Ill. 2d 100, 124-25 (2004).2 By failing to raise the scope issue in 2 Sullivan expresses the cited rule in terms of waiver. As this court has noted, there is a difference between waiver and forfeiture. While waiver is the voluntary relinquishment of a known right, forfeiture is the failure to timely comply with procedural requirements. Gallagher v. Lenart, 226 Ill. 2d 208, 229 (2007); People v. Blair, 215 Ill. 2d 427, 444 n.2 (2005). These characterizations apply equally to criminal and civil matters. Thus, while Sullivan spoke in terms of waiver, a party’s failure to raise an issue in its petition for leave to appeal may equally be deemed a forfeiture of that issue. People v. McCarty, 223 Ill. 2d 109, 122 (2006) (“the failure to raise an issue in a petition for leave to appeal results in the forfeiture of that issue before this court”). -14- its petition for leave to appeal, then, Frontline has forfeited that issue in this court. That Frontline later raised the issue in its brief does not cure the forfeiture. Finding the scope issue forfeited, we will not address the issue on the merits. CONCLUSION We find that the interchange agreement entered into between Frontline and COSCO expressly and unambiguously requires Frontline to indemnify COSCO for the negligence that it is alleged to have committed in the underlying litigation. Additionally, we find that Frontline forfeited its argument that the negligence claims alleged against COSCO do not fall within the scope of the indemnification agreement. As such, we affirm the appellate court’s judgment affirming the trial court’s grant of summary judgment on count IV of COSCO’s counterclaim. Affirmed. CHIEF JUSTICE THOMAS and JUSTICES FREEMAN and KILBRIDE took no part in the consideration or decision of this case. -15-	{ "pile_set_name": "FreeLaw" }

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